485BPOS 1 final.htm REGISTRATION STATEMENT marathonplusiica -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing
Commission on April 17, 2008    Registration No. 811-08582 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION 
Washington, D.C. 20549
 
FORM N-4

Post-Effective Amendment No. 4 To
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 
and
Amendment to
 
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 

Variable Annuity Account I
(Exact Name of Registrant)
of
ING LIFE INSURANCE AND ANNUITY COMPANY 
(Name of Depositor)
One Orange WayWindsor, Connecticut 06095-4774 
(860) 580-4646
           and Telephone Number of Depositor’s Principal 
 
Michael A. Pignatella, Esq.
ING
One Orange Way
Windsor, Connecticut 06095-4774
(860) 580-2831
(Name and Address of Agent for Service of Process) 
 
Copy to:
John S. (Scott) Kreighbaum, Esq.
ING
1475 Dunwoody Drive
West Chester, PA 19380-1478
(610) 425-3404

Approximate Date of Proposed Public Offering: 
As soon as practical after the effective date of the Registration Statement 
It is proposed that this filing will become effective: 
 
    immediately upon filing pursuant to paragraph (b) of Rule 485 
                       X    on April 28, 2008 pursuant to paragraph (b) of Rule 485 

If appropriate, check the following box: 
                                                 this post-effective amendment designates a new effective date for a previously filed 
                                                 post-effective amendment. 
Title of Securities Being Registered: Group Deferred Variable and Fixed Annuity Contracts 

  ING Life Insurance and Annuity Company
Variable Annuity Account I

ING MARATHON PLUS (IICA)

April 28, 2008

The Contracts. The contracts described in this prospectus are group or individual “ING Marathon Plus” deferred
variable annuity contracts issued by ING Life Insurance and Annuity Company (“ILIAC,” the “Company,” “we,”
“us,” “our”). Prior to January 1, 2006, the Contract was issued by ING Insurance Company of America (“IICA”).
On December 31, 2005, IICA merged with and into ING Life Insurance and Annuity Company, and ING Life
Insurance and Annuity Company assumed responsibility for all of IICA’s obligations under the contracts. See
“Other Topics: The Company” for information about the merger of IICA with and into the Company. They were
issued to you, the contract holder, as either a nonqualified deferred annuity; a qualified individual retirement annuity
(“IRA”) under section 408(b) of the Internal Revenue Code of 1986, as amended (“Tax Code”); a qualified Roth
IRA under section 408A of the Tax Code; or as a qualified contract for use with certain employer sponsored
retirement plans. We do not currently offer this Contract for sale to new purchasers.

Prior to May 1, 1998, the contracts were available as tax-deferred annuities as described under section 401(a) of the
Tax Code.

The contracts are not available as SIMPLE IRAs under Tax Code section 408(p). We do not currently offer this
contract for sale to new purchasers.

Why Reading this Prospectus Is Important. This prospectus contains facts about the contracts and their
investment options that you should know before purchasing. This information will help you decide if the contracts
are right for you. Please read this prospectus carefully and keep it for future reference.

Investment Options. The contracts offer variable investment options and fixed interest options. When we establish
your account you instruct us to direct account dollars to any of the available options.

Variable Investment Options. These options are called subaccounts. The subaccounts are within Variable
Annuity Account I (the “separate account”), a separate account of the Company. Each subaccount invests in one of
the mutual funds mentioned under the list of investment portfolios available under your Contract. Earnings on
amounts invested in a subaccount will vary depending upon the performance of its underlying fund. You do not
invest directly in or hold shares of the funds.

The Funds. Information about the funds in which the subaccounts invest is located in Appendix III—Description of
Underlying Funds and in each fund prospectus. A prospectus containing more information on each Underlying
Fund may be obtained by calling our Customer Service Center at 800-531-4547. Read this prospectus in
conjunction with the fund prospectuses, and retain the prospectuses for future reference.

Getting Additional Information. You may obtain free of charge the April 28, 2008, Statement of Additional
Information (“SAI”) about the separate account by indicating your request on your application or calling us at
1-800-531-4547. You may also obtain an SAI for any of the funds by calling that number. The Securities and
Exchange Commission (“SEC”) also makes available to the public reports and information about the separate
account and the funds. Certain reports and information, including this prospectus and SAI, are available on the
EDGAR Database on the SEC web site, http://www.sec.gov, or at the SEC Public Reference Room in Washington,
D.C. You may call 1-202-551-5850 to get information about the operations of the Public Reference Room. You
may obtain copies of reports and other information about the separate account and the funds, after paying a
duplicating fee, by sending an e-mail request to publicinfo@sec.gov or by writing to the SEC Public Reference
Room, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. When looking for information regarding the

ILIAC Marathon Plus (IICA)

contracts offered through this prospectus, you may find it useful to use the number assigned to the registration
statement under the Securities Act of 1933. This number is 333-130825. The SAI table of contents is listed in this
prospectus. The SAI is incorporated into this prospectus by reference.

Additional Disclosure Information. Neither the SEC nor any state securities commission has approved or
disapproved the securities offered through this prospectus or passed on the accuracy or adequacy of this prospectus.
Any representation to the contrary is a criminal offense. We do not intend for this prospectus to be an offer to sell or
a solicitation of an offer to buy these securities in any state that does not permit their sale. We have not authorized
anyone to provide you with information that is different than that contained in this prospectus.

Fixed Interest Options.

  • ILIAC Guaranteed Account (the “Guaranteed Account”) (formerly, IICA Guaranteed Account)
  • Fixed Account

Except as specifically mentioned, this prospectus describes only the investment options offered through the separate
account. However, we describe the fixed interest options in appendices to this prospectus. There is also a separate
Guaranteed Account prospectus. To obtain a copy, write to our Customer Service Center at P.O. Box 9271, Des
Moines, Iowa 50306-9271, call (800) 366-0066, or access the SEC’s website (http://www.sec.gov).

Availability of Options. Some funds or fixed interest options may be unavailable through your contract or in your
state.

These contracts are not deposits with, obligations of or guaranteed by any bank, nor are they insured by the
FDIC. The contracts are subject to investment risk, including the possible loss of the principal amount of
your investment.

We pay compensation to broker/dealers whose registered representatives sell the Contract. See “Other
Topics – Contract Distribution,” for further information about the amount of compensation we pay.

The investment portfolios are listed on the next page.

ILIAC Marathon Plus (IICA)

The investment portfolios available under your Contract are:     
 
 ING Investors Trust    ING Variable Funds 
       ING BlackRock Large Cap Growth Portfolio (Class I)       ING VP Growth and Income Portfolio (Class I) 
       ING Evergreen Omega Portfolio (Class I)     
       ING FMRSM Diversified Mid Cap Portfolio (Class I)    ING Variable Portfolios, Inc. 
       ING JPMorgan Emerging Markets Equity Portfolio (Class I)       ING BlackRock Global Science and Technology Portfolio 
       ING JPMorgan Value Opportunities Portfolio (Class S)             (Class I) 
       ING Marsico International Opportunities Portfolio (Class S)       ING Opportunistic Large Cap Growth Portfolio (Class I) 
       ING MFS Total Return Portfolio (Class I)       ING Opportunistic Large Cap Value Portfolio (Class I) 
       ING Oppenheimer Main Street Portfolio (Class I)       ING VP Index Plus LargeCap Portfolio (Class I) 
       ING PIMCO High Yield Portfolio (Class S)       ING VP Small Company Portfolio (Class I) 
       ING Van Kampen Capital Growth Portfolio (Class I)     
       ING VP Index Plus International Equity Portfolio (Class I)    ING Variable Products Trust 
       ING VP High Yield Bond (Class I) 
 ING Partners, Inc.     
       ING Legg Mason Partners Aggressive Growth Portfolio    ING VP Balanced Portfolio, Inc. (Class I) 
           (Initial Class)     
       ING Neuberger Berman Partners Portfolio (Initial Class)    ING VP Intermediate Bond Portfolio (Class I) 
       ING Oppenheimer Global Portfolio (Initial Class)     
       ING Oppenheimer Strategic Income Portfolio (Initial Class)    ING VP Money Market Portfolio (Class I) 
       ING Templeton Foreign Equity Portfolio (Initial Class)     
       ING Thornburg Value Portfolio (Initial Class)    Calvert Variable Series, Inc. 
       ING T. Rowe Price Diversified Mid Cap Growth Portfolio       Calvert Social Balanced Portfolio 
           (Initial Class)     
       ING T. Rowe Price Growth Equity Portfolio (Initial Class)    Fidelity Variable Insurance Products 
       ING UBS U.S. Large Cap Equity Portfolio (Initial Class)       Fidelity VIP Contrafund Portfolio (Class I) 
       ING Van Kampen Equity and Income Portfolio (Initial Class)       Fidelity VIP Equity-Income Portfolio (Class I) 
       Fidelity VIP Index 500 Portfolio (Class I) 
 ING Strategic Allocation Portfolios, Inc.     
       ING VP Strategic Allocation Conservative Portfolio (Class I)     
       ING VP Strategic Allocation Growth Portfolio (Class I)     
       ING VP Strategic Allocation Moderate Portfolio (Class I)     

ILIAC Marathon Plus (IICA)

 TABLE OF CONTENTS     
 
 
 
    Page 
CONTRACT OVERVIEW    1 
CONTRACT PHASES    2 
FEE TABLE    3 
CONDENSED FINANCIAL INFORMATION    6 
INVESTMENT OPTIONS    6 
TRANSFERS AMONG INVESTMENT OPTIONS (EXCESSIVE TRADING POLICY)    7 
PURCHASE AND RIGHTS    10 
RIGHT TO CANCEL    12 
FEES    13 
YOUR ACCOUNT VALUE    18 
WITHDRAWALS    20 
SYSTEMATIC DISTRIBUTION OPTIONS    21 
DEATH BENEFIT    22 
THE INCOME PHASE    26 
TAXATION    29 
OTHER TOPICS    39 
STATEMENT OF ADDITIONAL INFORMATION    46 
APPENDIX I – ILIAC Guaranteed Account    I-1 
APPENDIX II – Fixed Account    II-1 
APPENDIX III – Description of Underlying Funds    III-1 
APPENDIX IV – Condensed Financial Information    IV-1 

ILIAC Marathon Plus (IICA)

CONTRACT OVERVIEW

The following is intended as a summary. Please read each section of this prospectus for additional detail.

Questions:

Contacting the Company. To answer your questions, contact your sales representative or write or call our
Customer Service Center at:

  ING
P.O. Box 9271
Des Moines, IA 50306-9271
1-800-531-4547

Sending Forms and Written Requests in Good Order. If you are writing to change your beneficiary, request a
withdrawal or for any other purpose, contact us or your sales representative to learn what information is required for
the request to be in “good order.” We can only act upon requests that are received in good order.

Generally, a request is considered to be in “good order” when it is signed, dated and made with such clarity and
completeness that we are not required to exercise any discretion in carrying it out.

Sending Additional Purchase Payments. Use the following addresses when sending additional purchase
payments.

If using the U.S. Postal Service:    If using express mail: 
 
ING    ING 
Attn: Customer Service    Attn: Customer Service Center 
P.O. Box 9271    909 Locust Street 
Des Moines, IA 50306-9271    Des Moines, IA 50309-2899 

Express mail packages should not be sent to the P.O. Box address.

Contract Design:

The contract described in this prospectus is a group or individual deferred variable annuity contract. It is intended to
be a retirement savings vehicle that offers a variety of investment options to help meet long-term financial goals.
The term “contract” in this prospectus refers to individual contracts and to certificates issued under group contracts.

Contract Facts:

Free Look/Right to Cancel. You may cancel your contract within ten days (some states require more than ten
days) of receipt. See “Right To Cancel.”

Death Benefit. Your beneficiary may receive a financial benefit in the event of your death prior to the income
phase. Any death benefit during the income phase will depend upon the income phase payment option selected. See
“Death Benefit” and “The Income Phase.”

Withdrawals. During the accumulation phase you may withdraw all or part of your account value. Certain fees,
taxes and early withdrawal penalties may apply. In addition, the Tax Code restricts full and partial withdrawals in
some circumstances. See “Withdrawals.” Amounts withdrawn from the Guaranteed Account may be subject to a
market value adjustment. See Appendix I.

Systematic Distribution Options. These are made available for you to receive periodic withdrawals from your
account, while retaining the account in the accumulation phase. See “Systematic Distribution Options.”

ILIAC Marathon Plus (IICA)    1 

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Fees and Expenses. Certain fees and expenses are deducted from the value of your contract. See “Fee Table” and
“Fees.”

Taxation. You will generally not pay taxes on any earnings from the annuity contract described in this prospectus
until they are withdrawn. Tax-qualified retirement arrangements (e.g., IRAs, 401(a) and 457 plans) also
defer payment of taxes on earnings until they are withdrawn. If you are considering funding a tax-qualified
retirement arrangement with an annuity contract, you should know that the annuity contract does not provide any
additional tax deferral of earnings beyond the tax deferral provided by the tax-qualified retirement arrangement.
However, annuities do provide other features and benefits which may be valuable to you. You should discuss your
decision with your financial representative.

Taxes will generally be due when you receive a distribution. Tax penalties may apply in some circumstances. See
“Taxation.”

Use of an Annuity Contract in an IRA or other Qualified Plan. Under the federal tax laws, earnings on amounts
held in annuity contracts are generally not taxed until they are withdrawn. However, in the case of an Individual
Retirement Account or other qualified retirement account, an annuity contract is not necessary to obtain this
favorable tax treatment. However, annuities do provide other features and benefits (such as the guaranteed death
benefit or the option of lifetime income phase options at established rates) which may be valuable to you. You
should discuss your alternatives with your sales representative taking into account the additional fees and expenses
you may incur in an annuity. See “Purchase and Rights.”

CONTRACT PHASES

I. The Accumulation Phase (accumulating dollars under your contract)

STEP 1: You provide us with your completed application and initial purchase payment. We establish an account
for you and credit that account with your initial purchase payment.

STEP 2: You direct us to invest your purchase payment in one or more of the following investment options:

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  • Fixed Interest Options; or
  • Variable Investment Options. (The variable investment options are the subaccounts of Variable Annuity Account I. Each one invests in a specific mutual fund.)

STEP 3: Each subaccount you select purchases shares of its assigned fund.

II. The Income Phase (receiving income phase payments from your contract)

When you want to begin receiving payments from your contract you may select from the options available. The
contract offers several income phase payment options (see “The Income Phase”). In general, you may:

  • Receive income phase payments for a specified period of time or for life;
  • Receive income phase payments monthly, quarterly, semi-annually or annually;
  • Select an income phase payment option that provides for payments to your beneficiary; or
  • Select income phase payments that are fixed or vary depending upon the performance of the variable investment options you select.
ILIAC Marathon Plus (IICA)    2 

FEE TABLE

The following tables describe the fees and expenses that you will pay when buying, owning, and surrendering the
contract. The first table describes the fees and expenses that you will pay at the time that you buy the contract,
surrender the contract, or transfer contract value between investment options. State premium taxes may also be
deducted.* See “The Income Phase” for the different fees that may apply after you begin receiving payments under
the contract.

Maximum Transaction Fees:

Early Withdrawal Charge
(As a percentage of payments withdrawn.)

Contracts Other Than Roth IRA Contracts:

Years from Receipt     
of Purchase Payment    Early Withdrawal Charge 
Less than 2    7% 
2 or more but less than 4    6% 
4 or more but less than 5    5% 
5 or more but less than 6    4% 
6 or more but less than 7    3% 
7 or more    0% 
 

Roth IRA Contracts1

Completed Account Years    Early Withdrawal Charge 
Less than 1    5% 
1 or more but less than 2    4% 
2 or more but less than 3    3% 
3 or more but less than 4    2% 
4 or more but less than 5    1% 
5 or more    0% 
 
Annual Maintenance Fee2                                                               $30.00 
Transfer Charge3                                                               $10.00 

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1      If the purchase payment is a rollover from another contract issued by us or one of our affiliates and the early withdrawal charge was waived, the early withdrawal charge will be based on the number of completed account years since the date of the initial payment to the former contract.
 
2      The annual maintenance fee will be waived if your account value is $50,000 or greater on the date this fee is due. See “Fees Transactions Fees — Annual Maintenance Fee.”
 
3      We currently do not impose this charge, but we reserve the right to charge $10 per transfer after the 12th transfer each calendar year.
 
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* State premium taxes (which currently range from 0% to 4.0% of premium payments) may apply, but are not
reflected in the fee tables or examples. See “Fees – Premium and Other Taxes.”

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.

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ILIAC Marathon Plus (IICA)    3 

Fees Deducted from Investments in the Separate Account

Amount During the Accumulation Phase.
(Daily deductions, equal to the following percentages on an annual basis, from amounts invested in the
subaccounts.)

·    Contracts other than Roth IRA Contracts Issued before May 1, 1998     
 
    Mortality and Expense Risk Charge    1.25%1 
    Administrative Expense Charge    0.15% 
    Total Separate Account Expenses*    1.40% 
 
·    Roth IRA Contracts and Contracts Issued on or after May 1, 1998     
 
    Mortality and Expense Risk Charge    1.10%1 
    Administrative Expense Charge    0.15% 
    Total Separate Account Expenses*    1.25% 

Amount During the Income Phase.
(Daily deductions, equal to the following percentages on an annual basis, from amounts invested in the
subaccounts.)

·    All Contracts     
 
    Mortality and Expense Risk Charge                       1.25%1 
    Administrative Expense Charge    0.00% - 0.25%2 
    Total Separate Account Expenses    1.25% - 1.50% 

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1      Under certain contracts the mortality and expense risk charge during the accumulation period may be reduced. See “Fees — Fees Deducted from Investments in the Separate Account – Mortality and Expense Risk Charge.”
 
2      We currently do not deduct an administrative expense charge during the income phase; however, we reserve the right to deduct the daily charge of not more than 0.25% per year. See “The Income Phase — Charges Deducted.”
 
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Fees Deducted by the Funds:

The next item shows the minimum and maximum total operating expenses charged by a Trust or Fund that you may
pay periodically during the time that you own the Contract. More detail concerning each Trust or Fund’s fees and
expenses is contained in the prospectus for each Trust or Fund.

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Total Annual Trust or Fund Operating Expenses    Minimum    Maximum 
 
 
(expenses that are deducted from Trust or Fund assets, including         
management fees, distribution and/or service (12b-1) fees1, and    0.10%    1.25 % 
other expenses):         
 
 

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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 the fund prospectuses. The Company may also receive additional compensation from certain funds for administrative, record keeping 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.
 

Examples:

These examples are intended to help you compare the costs of investing in the Contract with the cost of investing in

ILIAC Marathon Plus (IICA)    4 

other variable annuity Contracts. These costs include contract owner transaction expenses, applicable to each type
of contract, contract fees, separate account annual expenses, and Trust or Fund fees and expenses. The 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 without taking into account any fee waiver or expense reimbursement arrangements that may
apply.

Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

For Contracts Other Than Roth IRA Contracts

1)    If you withdraw your entire account value at the end of the applicable time period:     
    1 year    3 years    5 years    10 years 
    $955    $1,384    $1,839    $2,850 

2)      If you do not withdraw your entire account value or if you select an income phase payment option at the end of the applicable time period:*
 
1 year    3 years    5 years    10 years 
$255    $784    $1,339    $2,850 
 
 
 

For Roth IRA Contracts

1)    If you withdraw your entire account value at the end of the applicable time period:     
    1 year    3 years    5 years    10 years 
    $789    $1,126    $1,509    $2,988 

2)      If you do not withdraw your entire account value or if you select an income phase payment option at the end of the applicable time period:*
 
1 year    3 years    5 years    10 years 
$269    $826    $1,409    $2,988 
 
 
 

*      This example does not apply during the income phase if you selected a nonlifetime income phase payment option with variable payments and take a lump-sum withdrawal after payments start. In this case the lump-sum payment is treated as a withdrawal during the accumulation phase and may be subject to an early withdrawal charge (refer to Example 1).
 

Fund Fee Information. The fund prospectuses show the investment advisory fees, 12b-1 fees and other
expenses including service fees (if applicable) charged annually by each fund. Fund fees are one factor that impacts
the value of a fund share. Please refer to the fund prospectuses for more information and to learn more about
additional factors.

The Company may receive compensation from each of the funds or the funds’ affiliates based on an annual
percentage of the average net assets held in that fund by the Company. The percentage paid may vary from one
fund company to another. For certain funds, some of this compensation may be paid out of 12b-1 fees or service
fees that are deducted from fund assets. Any such fees deducted from fund assets are disclosed in the fund
prospectuses. The Company may also receive additional compensation from certain funds for administrative,
recordkeeping or other services provided by the Company to the funds or the funds’ affiliates. These additional
payments may also be used by the Company to finance distribution. These additional payments are made by the
funds or the funds’ affiliates to the Company and do not increase, directly or indirectly, the fund fees and expenses.
Please see “Fees – Fund Expenses” for more information.

In the case of fund companies affiliated with the Company, where an affiliated investment adviser employs
subadvisers to manage the funds, no direct payments are made to the Company or the affiliated investment adviser
by the subadvisers. Subadvisers may provide reimbursement for employees of the Company or its affiliates to

ILIAC Marathon Plus (IICA)

5

attend business meetings or training conferences. Investment management fees are apportioned between the
affiliated investment adviser and subadviser. This apportionment varies by subadviser, resulting in varying amounts
of revenue retained by the affiliated investment adviser. This apportionment of the investment advisory fee does not
increase, directly or indirectly, fund fees and expenses. Please see “Fees – Fund Expenses” for more information.

How Fees are Deducted. Fees are deducted from the value of the fund shares on a daily basis, which in turn
affects the value of each subaccount that purchases fund shares.

CONDENSED FINANCIAL INFORMATION

Understanding Condensed Financial Information. In Appendix IV of this prospectus, we provide condensed
financial information about the Variable Annuity Account I (the separate account) subaccounts you may invest in
through the contract. The numbers show the year-end unit values of each subaccount from the time purchase
payments were first received in the subaccounts under the contract.

INVESTMENT OPTIONS

The contract offers variable investment options and fixed interest options.

Variable Investment Options. These options are called subaccounts. The subaccounts are within Variable
Annuity Account I (the separate account), a separate account of the Company. Each subaccount invests in a specific
mutual fund. You do not invest directly in or hold shares of the funds.

Mutual Fund (fund) Descriptions. We provide brief descriptions of the funds in Appendix III. Investment results
of the funds are likely to differ significantly and there is no assurance that any of the funds will achieve their
respective investment objectives. Shares of the funds will rise and fall in value and you could lose money by
investing in the funds. Shares of the funds are not bank deposits and are not guaranteed, endorsed or insured by any
financial institution, the Federal Deposit Insurance Corporation or any other government agency. Unless otherwise
noted, all funds are diversified as defined under the Investment Company Act of 1940. Refer to the fund
prospectuses for additional information. Fund prospectuses may be obtained, free of charge, from our Customer
Service Center at the address and phone number listed in “Contract Overview—Questions: Contacting the
Company,” by accessing the SEC’s web site, or by contacting the SEC Public Reference Room.

Fixed Interest Options. If available in your state, the ILIAC Guaranteed Account (the Guaranteed Account) or the
Fixed Account are the fixed interest options available under your contract. The Guaranteed Account offers certain
guaranteed minimum interest rates for a stated period of time. Amounts must remain in the Guaranteed Account for
specific periods to receive the quoted interest rates, or a market value adjustment will be applied. The market value
adjustment may be positive or negative. The Fixed Account guarantees payment of the minimum interest rate
specified in the contract. The Fixed Account is only available in certain states. For a description of these options,
see Appendices I and II and the Guaranteed Account prospectus.

Selecting Investment Options:

  • Choose options appropriate for you. Your sales representative can help you evaluate which investment options may be appropriate for your financial goals, investment time horizon and risk tolerance. You should periodically review these factors to determine if you need to change your investment strategy.
  • 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

ILIAC Marathon Plus (IICA)

6

    subject to additional risks.
  • Be informed. Read this prospectus, the fund prospectuses, the Guaranteed Account and Fixed Account appendices and the Guaranteed Account prospectus.

Limits on Availability of Options. Some funds or fixed interest options may be unavailable through your contract
or in your state. We may add, withdraw or substitute funds, subject to the conditions in your contract and
compliance with regulatory requirements. In the case of a substitution, the new fund may have different fees and
charges than the fund it replaced.

Limits on How Many Investment Options You May Select. Although there is currently no limit, we reserve the
right to limit the number of investment options you may select at any one time or during the life of the contract. For
purposes of determining any limit, each subaccount and each guaranteed term of the Guaranteed Account, or an
investment in the Fixed Account in certain contracts where the Guaranteed Account is not available, will be
considered an option.

Additional Risks of Investing in the Funds (Mixed and Shared Funding)
“Shared funding” occurs when shares of a fund, which the subaccounts buy for variable annuity contracts, are also
bought by other insurance companies for their variable annuity contracts.

“Mixed funding” occurs when shares of a fund, which the subaccounts buy for variable annuity contracts, are bought
for variable life insurance contracts issued by us or other insurance companies.

  • 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.

TRANSFERS AMONG INVESTMENT OPTIONS (EXCESSIVE TRADING POLICY)

You may transfer amounts among the available subaccounts. During the accumulation phase we allow you 12 free
transfers each calendar year. We reserve the right to charge $10 for each additional transfer. We currently do not
impose this charge. During the income phase, if approved in your state, transfers are limited to four per year and
allowed only if you select variable payments.

Transfers from the Guaranteed Account are subject to certain restrictions and may be subject to a market value
adjustment. Transfers from the Fixed Account are subject to certain restrictions, and transfers into the Fixed
Account from any of the other investment options are not allowed. Transfers must be made in accordance with the
terms of your contract.

Transfer Requests. Requests may be made in writing, by telephone or, where applicable, electronically.

Limits on Frequent or Disruptive Transfers

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

  • Increased trading and transaction costs;
  • Forced and unplanned portfolio turnover;
  • Lost opportunity costs; and

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  • Large asset swings that decrease the fund’s ability to provide maximum investment return to all contract owners.

This in turn can have an adverse effect on fund performance. Accordingly, individuals or organizations that use
market-timing investment strategies or make frequent transfers should not purchase the contract.

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

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

  • Meets or exceeds our current definition of Excessive Trading, as defined below; or
  • Is determined, in our sole discretion, to be disruptive or not in the best interests of other owners of our variable insurance and retirement products.

We currently define Excessive Trading as:

  • More than one purchase and sale of the same fund (including money market funds) within a 60 calendar day period (hereinafter, a purchase and sale of the same fund is referred to as a “round-trip”). This means two or more round-trips involving the same fund within a 60 calendar day period would meet our definition of Excessive Trading; or
  • Six round-trips involving the same fund within a twelve month period.

The following transactions are excluded when determining whether trading activity is excessive:

  • Purchases or sales of shares related to non-fund transfers (for example, new purchase payments, withdrawals and loans);
  • Transfers associated with scheduled dollar cost averaging, scheduled rebalancing or scheduled asset allocation programs;
  • Purchases and sales of fund shares in the amount of $5,000 or less;
  • Purchases and sales of funds that affirmatively permit short-term trading in their fund shares, and movement between such funds and a money market fund; and
  • Transactions initiated by us, another member of the ING family of insurance companies or a fund.

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

If we determine that an individual or entity has violated our Excessive Trading Policy, we will send them a letter
stating that their Electronic Trading Privileges have been suspended for a period of six months. Consequently, all

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

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

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

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

We do not allow exceptions to our Excessive Trading Policy. We reserve the right to modify our Excessive Trading
Policy, or the policy as it relates to a particular fund, at any time without prior notice, depending on, among other
factors, the needs of the underlying fund(s), the best interests of contract owners and fund investors and/or state or
federal regulatory requirements. If we modify our policy, it will be applied uniformly to all contract owners or, as
applicable, to all contract owners investing in the underlying fund.

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

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

Agreements to Share Information with Fund Companies. As required by Rule 22c-2 under the 1940 Act, we
have entered into information sharing agreements with each of the fund companies whose funds are offered through
the contract. Contract owner trading information is shared under these agreements as necessary for the fund
companies to monitor fund trading and our implementation of our Excessive Trading Policy. Under these
agreements, the company is required to share information regarding contract owner transactions, including but not
limited to information regarding fund transfers initiated by you. In addition to information about contract owner
transactions, this information may include personal contract owner information, including names and social security
numbers or other tax identification numbers.

As a result of this information sharing, a fund company may direct us to restrict a contract owner’s transactions if

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the fund determines that the contract owner has violated the fund’s excessive/frequent trading policy. This could
include the fund directing us to reject any allocations of premium or contract value to the fund or all funds within the
fund family.

Value of Your Transferred Dollars. The value of amounts transferred into or out of subaccounts will be based on
the subaccount unit values next determined after we receive your transfer request in good order at our Service
Center or, if you are participating in the dollar cost averaging or account rebalancing programs, after your scheduled
transfer or reallocation.

Telephone and Electronic Transactions: Security Measures. To prevent fraudulent use of telephone and
electronic transactions (including, but not limited to, internet transactions), we have established security procedures.
These include recording calls on our toll-free telephone lines and requiring use of a personal identification number
(PIN) to execute transactions. You are responsible for keeping your PIN and account information confidential.
Please be advised that the risk of a fraudulent transaction is increased with a telephone or electronic transaction (for
example, a facsimile withdrawal request form), even if appropriate identifying information is provided. If we fail to
follow reasonable security procedures, we may be liable for losses due to unauthorized or fraudulent telephone or
other electronic transactions. We are not liable for losses resulting from telephone or electronic Instructions we
believe to be genuine. If a loss occurs when rely on such instructions, you will bear the loss.

The Dollar Cost Averaging Program. Dollar cost averaging is an investment strategy whereby you purchase fixed
dollar amounts of an investment at regular intervals, regardless of price. Under this program a fixed dollar amount is
automatically transferred from certain subaccounts, the Guaranteed Account or Fixed Account to any of the other
subaccounts. A market value adjustment will not be applied to dollar cost averaging transfers from a guaranteed
term of the Guaranteed Account during participation in the dollar cost averaging program. If such participation is
discontinued, we will automatically transfer the remaining balance in that guaranteed term to another guaranteed
term of the same duration, unless you initiate a transfer into another investment option. In either case a market value
adjustment will apply. See Appendix I for more information about dollar cost averaging from the Guaranteed
Account. If dollar cost averaging is stopped with respect to amounts invested in the Fixed Account, the remaining
balance will be transferred to the money market subaccount.

Dollar cost averaging neither ensures a profit nor guarantees against loss in a declining market. You should consider
your financial ability to continue purchases through periods of low price levels. There is no additional charge for this
program and transfers made under this program do not count as transfers when determining the number of free
transfers that may be made each calendar year. For additional information about this program, contact your sales
representative or call us at the number listed in “Contract Overview—Questions: Contacting the Company.”

In certain states purchase payments allocated to the Fixed Account may require participation in the dollar cost
averaging program.

The Account Rebalancing Program. Account rebalancing allows you to reallocate your account value to match
the investment allocations you originally selected. Only account values invested in the subaccounts may be
rebalanced. We automatically reallocate your account value annually (or more frequently as we allow). Account
rebalancing neither ensures a profit nor guarantees against loss in a declining market. There is no additional charge
for this program and transfers made under this program do not count as transfers when determining the number of
free transfers that may be made each account year. You may participate in this program by completing the account
rebalancing section of your application or by contacting us at the address and/or number listed in “Contract
Overview—Questions: Contacting the Company.”

PURCHASE AND RIGHTS

How to Purchase: Please note that this contract is no longer available for purchase, although you may continue to
make purchase payments under existing contracts. We and our affiliates offer various other products with different
features and terms than these contracts that may offer some or all of the same funds. These products have different
benefits, fees and charges, and may offer different share classes of the funds offered in this contract that are less

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10

expensive. These other products may or may not better match your needs. You should be aware that there are
alternative options available, and, if you are interested in learning more about these other products, contact your
registered representative.

  • Individual Contracts. In some states, where group contracts are not available, you may purchase the contract directly from us by completing an application and delivering it and your initial purchase payment to us. Upon our approval we will issue you a contract and set up an account for you under the contract.
  • Group Contracts. In most states we have distributors, usually broker-dealers or banks, who hold the

  contract as a group contract (see “Other Topics – Contract Distribution”). You may purchase an interest
(or, in other words, participate) in the group contract by contacting a distributor and completing an
application and delivering it with your initial purchase payment to that distributor. Upon our approval, we
will set up an account for you under the group contract and issue you a certificate showing your rights
under the contract.

  • Joint Contracts (generally spouses). For a nonqualified contract, you may participate in a group contract as a joint contract holder. References to “contract holder” in this prospectus mean both contract holders under joint contracts. Tax law prohibits the purchase of qualified contracts by joint contract holders.

Factors to Consider in the Purchase Decision. You should discuss 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. You should take note of the following issues,
among others:

1.      Long-Term Investment – This contract is designed for people seeking long-term tax-deferred accumulation of assets, generally for retirement or other long-term purposes. Early withdrawals may cause you to incur surrender charges and/or tax penalties. The value of deferred taxation on earnings grows with the amount of time funds are left in the contract. You should not buy this contract if you are looking for a short-term investment or expect to need to make withdrawals before you are 59½.
 
2.      Investment Risk – The value of investment options available under this contract may fluctuate with the markets and interest rates. You should not buy this contract in order to invest in these options if you cannot risk getting back less money than you put in.
 
3.      Features and Fees – The fees for this contract reflect costs associated with the features and benefits it provides. In some cases, you have the option to elect certain benefits that carry additional charges. As you consider this contract, you should determine the value that these various benefits and features have for you, taking into account the charges for those features.
 
4.      Exchanges – If this contract will be a replacement for another annuity contract, you should compare the two contracts carefully. You should consider whether any additional benefits under this contract justify any increased charges that might apply. Also, be sure to talk to your sales representative or tax adviser to make sure that the exchange will be handled so that it is tax-free.
 

Maximum Issue Age. The maximum issue age for you and the annuitant (if you are not the annuitant) on the date
we establish your account is 90 (age 85 for those contracts issued in Pennsylvania).

Your Rights Under the Contract

  • Individual Contracts. You have all contract rights.
  • Group Contracts. The holder of the group contract has title to the contract and, generally, only the right to accept or reject any modifications to the contract. You have all other rights to your account under the contract.

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  • Joint Contracts. Joint contract holders have equal rights under the contract with respect to their account. All rights under the contract must be exercised by both joint contract holders with the exception of transfers among investment options. See the “Death Benefit” section for the rights of the surviving joint contract holder upon the death of a joint contract holder prior to the income phase start date.

Purchase Payment Methods. The following purchase payment methods are allowed:

  • One lump sump;
  • Periodic payments; or
  • Transfer or rollover from a pre-existing retirement plan or account.*

We reserve the right to reject any payments to a prospective or existing account without advance notice.

* In some states an IRA contract can only accept a lump-sum, rollover payment.     
Purchase Payment Amounts.         
The minimum initial purchase payment amounts are as follows:         
 
 
    Nonqualified    Qualified 
 
 
                 Minimum Initial Purchase Payment    $5,000    $1,500 
 
 

Additional purchase payments must be at least $50 (we may change this amount from time to time). A purchase
payment of more than $1,000,000 will be allowed only with our consent.

Acceptance or Rejection of Your Application. We must accept or reject your application within two business days
of receipt. If the application is incomplete, we may hold any forms and accompanying purchase payment(s) for five
business days. We may hold purchase payments for longer periods, pending acceptance of the application, only with
your permission. If the application is rejected, the application and any purchase payments will be returned to you.

We may also refuse to accept certain forms of premium payments or loan repayments, if applicable, (traveler’s
checks, for example) or restrict the amount of certain forms of premium payments or loan repayments. In addition,
we may require information as to why a particular form of payment was used (third party checks, for example) and
the source of the funds of such payment in order to determine whether or not we will accept it. Use of an
unacceptable form of payment may result in us returning your premium payment and not issuing the contract.

Allocating Purchase Payments to the Investment Options. We will allocate your purchase payments among the
investment options you select. Allocations must be in whole percentages and there may be limits on the number of
investment options you may select. When selecting investment options you may find it helpful to review the
“Investment Options” section.

RIGHT TO CANCEL

When and How to Cancel. You may cancel your contract within ten days of receipt (some states require more than
ten days) by returning it to our Service Center along with a written notice of cancellation.

Refunds. We will issue you a refund within seven days of our receipt of your contract and written notice of
cancellation. Unless your state requires otherwise or unless you purchased an IRA, your refund will equal the
purchase payments made plus any earnings or minus any losses attributable to those purchase payments allocated
among the subaccounts. In other words, you will bear the entire investment risk for amounts allocated among the
subaccounts during this period and the amount refunded could be less than the amount paid. If your state requires or
if you purchased an IRA, we will refund all purchase payments made.

If the purchase payments for your canceled contract came from a rollover from another contract issued by us or one

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of our affiliates where an early withdrawal charge was reduced or eliminated, the purchase payments will be
restored to your prior contract.

FEES

The following repeats and adds to information provided in the “Fee Table” section. Please review
both sections for information on fees.

TRANSACTION FEES

Early Withdrawal Charge
Withdrawals of all or a portion of your account value may be subject to a charge. In the case of a partial withdrawal,
where you requested a specified dollar amount, the amount withdrawn from your account will be the amount you
specified plus adjustment for any applicable early withdrawal charge.

Amount. A percentage of the purchase payments that you withdraw. The percentage will be determined by the
early withdrawal charge schedule that applies to your account.

Early Withdrawal Charge Schedules

Contracts Other Than Roth IRA Contracts:

Years from Receipt     
of Purchase Payment    Early Withdrawal Charge 
Less than 2    7% 
2 or more but less than 4    6% 
4 or more but less than 5    5% 
5 or more but less than 6    4% 
6 or more but less than 7    3% 
7 or more    0% 
 

Roth IRA Contracts1

Completed Account Years    Early Withdrawal Charge 
Less than 1    5% 
1 or more but less than 2    4% 
2 or more but less than 3    3% 
3 or more but less than 4    2% 
4 or more but less than 5    1% 
5 or more    0% 
 

1      If the purchase payment is a rollover from another contract issued by us or one of our affiliates and the early withdrawal charge has been waived, the early withdrawal charge will be based on the number of completed account years since the date of the initial purchase payment to the former contract.
 

Purpose. This is a deferred sales charge. It reimburses us for some of the sales and administrative expenses
associated with the contract. If our expenses are greater than the amount we collect for the early withdrawal charge,
we may use any of our corporate assets, including potential profit that may arise from the mortality and expense risk
charge, to make up any difference.

First In, First Out. The early withdrawal charge is calculated separately for each purchase payment withdrawn. For
purposes of calculating your early withdrawal charge, we consider that your first purchase payment to the account
(first in) is the first you withdraw (first out).

For example: For contracts other than Roth IRAs, we calculate the early withdrawal charge based on the number of

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years since the purchase payment was received. If your initial purchase payment was made three years ago, we will
deduct an early withdrawal charge equal to 6% of the portion of that purchase payment withdrawn. The next time
you make a withdrawal we will assess the charge against the portion of the first purchase payment that you did not
withdraw and/or your subsequent purchase payments to your account in the order they were received.

For Roth IRAs, we calculate the early withdrawal charge based on the number of completed account years. If three
years have elapsed since your initial purchase payment was made, we will deduct an early withdrawal charge equal
to 2% of the portion of that purchase payment withdrawn. The next time you make a withdrawal we will assess the
charge against the portion of the first purchase payment that you did not withdraw and/or your subsequent purchase
payments to your account in the order they were received.

Earnings may be withdrawn after all purchase payments have been withdrawn. There is no early withdrawal charge
for withdrawal of earnings.

Free Withdrawals. There is no early withdrawal charge if, during each calendar year, the amount withdrawn is
10% or less than:

  • Your account value as of the last valuation day of the preceding calendar year or the date of your first purchase payment, whichever is later (if approved in your state); or
  • Your account value on the next valuation day after we receive your withdrawal request.

The free withdrawal amount will be adjusted for amounts withdrawn under a systematic distribution option or taken
as a required minimum distribution during the calendar year.

Waiver. The early withdrawal charge is waived for purchase payments withdrawn if the withdrawal is:

  • Used to provide income phase payments to you;
  • Paid due to the annuitant’s death during the accumulation phase in an amount up to the sum of purchase payments made, minus the total of all partial withdrawals, amounts applied to an income phase payment option and deductions made prior to the annuitant’s death;
  • Paid upon a full withdrawal where your account value is $2,500 or less and no part of the account has been withdrawn during the prior 12 months;
  • Taken because of the election of a systematic distribution option but, with respect to the Systematic Withdrawal Option (SWO) and the Life Expectancy Option (LEO), only to the extent that the amount taken is 10% or less of your account value on the later of the date we established your account or the most recent anniversary of that date (see “Systematic Distribution Options”);
  • Applied as a rollover to certain Roth IRAs issued by us or an affiliate;
  • If approved in your state, taken under a qualified contract, when the amount withdrawn is equal to the required minimum distribution by the Tax Code for your account calculated using a method permitted under the Tax Code and agreed to by us (including required minimum distributions using the Estate Conservation Option (ECO) systematic distribution option); or
  • Paid upon termination of your account by us (see “Other Topics — Involuntary Terminations”).

Nursing Home Waiver. You may withdraw all or a portion of your account value without an early withdrawal
charge if:

· More than one year has elapsed since the account effective date;

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  • The withdrawal is requested within three years of the annuitant’s admission to a licensed nursing care facility (in New Hampshire non-licensed facilities are included); and
  • The annuitant has spent at least 45 consecutive days in such nursing care facility.

We will not waive the early withdrawal charge if the annuitant was in a nursing care facility on the date we
established your account. It will also not apply if otherwise prohibited by state law.

Annual Maintenance Fee

Maximum Amount. $30.00

When/How. Each year during the accumulation phase we deduct this fee from your account value. We deduct it on
your account anniversary and at the time of full withdrawal. It is deducted proportionally from each investment
option.

Purpose. This fee reimburses us for our administrative expenses related to the establishment and maintenance of
your account.

Elimination. We will not deduct the annual maintenance fee if your account value is $50,000 or more on the date
this fee is to be deducted.

Transfer Charge

Amount. During the accumulation phase we currently allow you 12 free transfers each calendar year. We reserve
the right to charge $10 for each additional transfer. We currently do not impose this charge.

Purpose. This charge reimburses us for administrative expenses associated with transferring your dollars among
investment options.

Redemption Fees. If applicable, we may deduct the amount of any redemption fees imposed by the underlying
portfolios as a result of withdrawals, transfers or other fund transactions you initiate. Redemption fees, if any, are
separate and distinct from any transaction charges or other charges deducted from your contract value. For a more
complete description of the funds’ fees and expenses, review each fund’s prospectus.

FEES DEDUCTED FROM INVESTMENTS IN THE SEPARATE ACCOUNT

Mortality and Expense Risk Charge

Maximum Amount. During the accumulation phase the amount of this charge depends upon which contract you
purchase. The amount of this charge, on an annual basis, is equal to the following percentages of your account value
invested in the subaccounts:

·    Contracts other than Roth IRAs Issued before May 1, 1998    1.25% 
·    Contracts Issued on or after May 1, 1998, and all Roth IRA Contracts    1.10% 

During the income phase this charge, on an annual basis, is equal to 1.25% of amounts held in the subaccounts. See
“The Income Phase – Charges Deducted.”

When/How. We deduct this charge daily from the subaccounts corresponding to the funds you select. We do not
deduct this charge from any fixed interest option.

Purpose. This charge compensates us for the mortality and expense risks we assume under the contract.

· The mortality risks are those risks associated with our promise to make lifetime income phase payments

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15

    based on annuity rates specified in the contract.
  • The expense risk is the risk that the actual expenses we incur under the contract will exceed the maximum costs that we can charge.

If the amount we deduct for this charge is not enough to cover our mortality costs and expenses under the contract,
we will bear the loss. We may use any excess to recover distribution costs relating to the contract and as a source of
profit. We expect to make a profit from this charge.

Administrative Expense Charge

Maximum Amount. During the accumulation phase the amount of this charge, on an annual basis, is equal to
0.15% of your account value invested in the subaccounts. There is currently no administrative expense charge
during the income phase. We reserve the right, however, to charge an administrative expense charge of up to 0.25%
during the income phase.

When/How. If imposed, we deduct this charge daily from the subaccounts corresponding to the funds you select.
We do not deduct this charge from the fixed interest options. This charge may be assessed during the accumulation
phase or the income phase. If we are currently imposing this charge when you enter the income phase, the charge
will apply to you during the entire income phase.

Purpose. This charge helps defray our administrative expenses that cannot be covered by the mortality and expense
risk charge described above. This charge is not intended to exceed the average expected cost of administering the
contract. We do not expect to make a profit from this charge.

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 administrative expenses, we may reduce or eliminate the early withdrawal charge, annual maintenance fee,
mortality and expense risk charge or administrative expense charge. Our decision to reduce or eliminate any of these
fees will be based on one or more of the following:

  • The size and type of group to whom the contract is offered;
  • The amount of expected purchase payments;
  • A prior or existing relationship with the Company, such as being an employee or former employee of the Company or one of our affiliates, receiving distributions or making transfers from other contracts issued by us or one of our affiliates or transferring amounts held under qualified retirement plans sponsored by us or one of our affiliates;
  • The type and frequency of administrative and sales services provided; or
  • The level of annual maintenance fees and early withdrawal charges.

In the case of an exchange of another contract issued by us or one of our affiliates where the early withdrawal charge
has been waived, the early withdrawal charge for certain contracts offered by this prospectus may be determined
based on the dates purchase payments were received in the prior contract.

The reduction or elimination of any of these fees 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 fees may be subject to state approval.

FUND EXPENSES

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As shown in the fund prospectuses,
each fund deducts management fees from the amounts allocated to the fund. In addition, each fund deducts other
expenses which may include service fees that may be used to compensate service providers, including the company
and its affiliates, for administrative and contract owner services provided on behalf of the fund. Furthermore,
certain funds may deduct a distribution or 12b-1 fee, which is used to finance any activity that is primarily intended
to result in the sale of fund shares. For a more complete description of the funds’ fees and expenses, review
each fund’s prospectus.

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

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

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

Revenues received by the company from affiliated funds may include:

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

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

Types of Revenue Received from Unaffiliated Funds. Revenue received from each of the unaffiliated funds
or their affiliates is based on an annual percentage of the average net assets held in that fund by the company. Some
unaffiliated funds or their affiliates pay us more than others and some of the amounts we receive may be significant.

Revenues received by the company or its affiliates from unaffiliated funds include:

  • or certain funds, compensation paid from 12b-1 fees or service fees that are deducted from fund assets; and
  • additional payments for administrative, recordkeeping or other services that we provide to the funds or their affiliates, such as processing purchase and redemption requests, and mailing fund prospectuses, periodic reports and proxy materials. These additional payments do not increase directly or indirectly the fees and

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expenses shown in each fund prospectus. These additional payments may be used by us to finance
distribution of the contract.

These revenues are received as cash payments, and if the unaffiliated fund families currently offered through the
contract were individually ranked according to the total amount they paid to the company or its affiliates in 2007,
that ranking would be as follows:

  • Fidelity Variable Insurance Products Portfolio
  • Calvert Variable Series, Inc.

If the revenues received from affiliated funds were included in this list, payments from Directed Services LLC and
other company affiliates would be at the top of the list.

In addition to the types of revenue received from affiliated and unaffiliated funds described above, affiliated and
unaffiliated funds and their investment advisers, subadvisers or affiliates may participate at their own expense in
company sales conferences or educational and training meetings. In relation to such participation, a fund’s
investment adviser, subadviser or affiliate may make fixed dollar payments to help offset the cost of the meetings or
sponsor events associated with the meetings. In exchange for these expense offset or sponsorship arrangements, the
investment adviser, subadviser or affiliate may receive certain benefits and access opportunities to company sales
representatives and wholesalers rather than monetary benefits. These benefits and opportunities include, but are not
limited to, co-branded marketing materials, targeted marketing sales opportunities, training opportunities at
meetings, training modules for sales personnel and opportunity to host due diligence meetings for representatives
and wholesalers.

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

Please note that certain management personnel and other employees of the company or its affiliates may receive a
portion of their total employment compensation based on the amount of net assets allocated to affiliated funds. For
more information, please see “Other Topics – Contract Distribution.”

PREMIUM AND OTHER TAXES

Maximum Amount. Some states and municipalities charge a premium tax on annuities. These taxes currently range
from 0% to 4.0%, depending upon the jurisdiction.

When/How. We reserve the right to deduct a charge for premium taxes from your account value or from purchase
payments to the account at any time, but not before there is a tax liability under state law. For example, we may
deduct a charge for premium taxes at the time of a complete withdrawal or we may reflect the cost of premium taxes
in our income phase payment rates when you commence income phase payments.

We will not deduct a charge for any municipal premium tax of 1% or less, but we reserve the right to reflect such an
expense in our annuity purchase rates.

In addition, we reserve the right to assess a charge for any federal taxes due against the separate account. See
“Taxation.”

YOUR ACCOUNT VALUE

During the accumulation phase your account value at any given time equals:

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  • The current dollar value of amounts invested in the subaccounts; plus
  • The current dollar values of amounts invested in the fixed interest options, including interest earnings to date.

Subaccount Accumulation Units. When you select a fund as an investment option, your account dollars invest in
“accumulation units” of the Variable Annuity Account I subaccount corresponding to that fund. The subaccount
invests directly in the fund shares. The value of your interests in a subaccount is expressed as the number of
accumulation units you hold multiplied by an “accumulation unit value,” as described below, for each unit.

Accumulation Unit Value (AUV). The value of each accumulation unit in a subaccount is called the accumulation
unit value or AUV. The AUV varies daily in relation to the underlying fund’s investment performance. The value
also reflects deductions for fund fees and expenses, the mortality and expense risk charge and the administrative
expense charge (if any). We discuss these deductions in more detail in “Fee Table” and “Fees.”

Valuation. We determine the AUV every normal business day after the close of the New York Stock Exchange
(normally at 4:00 p.m. Eastern Time). At that time we calculate the current AUV by multiplying the AUV last
calculated by the “net investment factor” of the subaccount. The net investment factor measures the investment
performance of the subaccount from one valuation to the next.

Current AUV = Prior AUV x Net Investment Factor

Net Investment Factor. The net investment factor for a subaccount between two consecutive valuations equals the
sum of 1.0000 plus the net investment rate.

Net Investment Rate. The net investment rate is computed according to a formula that is equivalent to the
following:

  • 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 any other fees deducted from investments in the separate account. See “Fees.”

The net investment rate may be either positive or negative.

Hypothetical Illustration. As a hypothetical illustration assume that your initial purchase payment to a qualified
contract is $5,000 and you direct us to invest $3,000 in Fund A and $2,000 in Fund B. Also assume that you did not
elect the premium bonus option and on the day we receive the purchase payment the applicable AUVs after the next
close of business of the New York Stock Exchange (normally at 4:00 p.m. Eastern Time) are $10 for Subaccount A
and $20 for Subaccount B. Your account is credited with 300 accumulation units of Subaccount A and 100
accumulation units of Subaccount B.

Step 1: You make an initial purchase payment of $5000.

Step 2:

A.      You direct us to invest $3,000 in Fund A. The purchase payment purchases 300 accumulation units of Subaccount A ($3,000 divided by the current $10 AUV).
 
B.      You direct us to invest $2,000 in Fund B. The purchase payment purchases 100 accumulation units
 

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  of Subaccount B ($2,000 divided by the current $20 AUV).

Step 3: The separate account purchases shares of the applicable funds at the then current market value (net asset

  value or NAV).

Each fund’s subsequent investment performance, expenses and charges, and the daily charges deducted from the
subaccount, will cause the AUV to move up or down on a daily basis.

Purchase Payments to Your Account. If all or a portion of your initial purchase payment is directed to the
subaccounts, it will purchase subaccount accumulation units at the AUV next computed after our acceptance of your
application as described in “Purchase and Rights.” Subsequent purchase payments or transfers directed to the
subaccounts will purchase subaccount accumulation units at the AUV next computed following our receipt of the
purchase payment or transfer request in good order. The AUV will vary day to day.

WITHDRAWALS

You may withdraw all or a portion of your account value at any time during the accumulation phase.



Steps for Making A Withdrawal:

  		•  Select the withdrawal amount.
     
      (1)      Full Withdrawal: You will receive, reduced by any required withholding tax, your account value allocated to the subaccounts, the Guaranteed Account (plus or minus any applicable market value adjustment) and the Fixed Account, minus any applicable early withdrawal charge and annual maintenance fee.
     
      (2)      Partial Withdrawal (Percentage or Specified Dollar Amount): You will receive, reduced by any required withholding tax, the amount you specify, subject to the value available in your account.
     
       However, the amount actually withdrawn from your account will be adjusted by any applicable early withdrawal charge and any positive or negative market value adjustment for amounts withdrawn from the Guaranteed Account. See Appendices I and II and the Guaranteed Account prospectus for more information about withdrawals from the Guaranteed Account and the Fixed Account.
     
  		•  Select investment options. If you do not specify this, we will withdraw dollars in the same proportion as the values you hold in the various investment options bear to your total account value.
     
  		•  Properly complete a disbursement form and deliver it to our Service Center.
     





    Calculation of Your Withdrawal. We determine your account value every normal business day after the close of
    the New York Stock Exchange (normally at 4:00 p.m. Eastern Time). We pay withdrawal amounts based on your
    account value as of the next valuation after we receive a request for withdrawal in good order at our Service Center.

    Delivery of Payment. Payments for withdrawal requests will be made in accordance with SEC requirements.
    Normally, your withdrawal amount will be sent no later than seven calendar days following our receipt of your
    properly completed disbursement form in good order.

    Reinstating a Full Withdrawal. Within 30 days after a full withdrawal, if allowed by law and the contract, you

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    20

    may elect to reinstate all or a portion of your withdrawal. We must receive any reinstated amounts within 60 days of
    the withdrawal. We reserve the right, however, to accept a reinstatement election received more than 30 days after
    the withdrawal and accept proceeds received more than 60 days after the withdrawal. We will credit your account
    for the amount reinstated based on the subaccount values next computed following our receipt of your request and
    the amount to be reinstated. We will credit the amount reinstated proportionally for annual maintenance fees and
    early withdrawal charges imposed at the time of withdrawal. We will deduct from the amounts reinstated any annual
    maintenance fee which fell due after the withdrawal and before the reinstatement. We will reinstate in the same
    investment options and proportions in place at the time of withdrawal. The reinstatement privilege may be used only
    once. Special rules apply to reinstatements of amounts withdrawn from the Guaranteed Account (see Appendix I and
    the Guaranteed Account prospectus). We will not credit your account for market value adjustments that we deducted
    at the time of your withdrawal or refund any taxes that were withheld. Seek competent advice regarding the tax
    consequences associated with reinstatement.

    SYSTEMATIC DISTRIBUTION OPTIONS

    Systematic distribution options may be exercised at any time during the accumulation phase. The following
    systematic distribution options may be available:

    • SWO—Systematic Withdrawal Option. SWO is a series of automatic partial withdrawals from your account based on a payment method you select. Consider this option if you would like a periodic income while retaining investment flexibility for amounts accumulated in the account. An early withdrawal charge will not be deducted from and a market value adjustment will not be applied to any part of your account value paid under a SWO.
    • ECO—Estate Conservation Option. ECO offers the same investment flexibility as SWO, but is designed for those who want to receive only the minimum distribution that the Tax Code requires each year. Under ECO we calculate the minimum distribution amount required by law, generally at age 70½, and pay you that amount once a year. ECO is not available under nonqualified contracts. An early withdrawal charge will not be deducted from and a market value adjustment will not be applied to any part of your account value paid under an ECO.
    • LEO—Life Expectancy Option. LEO provides for annual payments for a number of years equal to your life expectancy or the life expectancy of you and a designated beneficiary. It is designed to meet the substantially equal periodic payment exception to the 10% premature distribution penalty under Tax Code section 72. See “Taxation.” An early withdrawal charge will not be deducted from and a market value adjustment will not be applied to any part of your account value paid under a LEO.

    Other Systematic Distribution Options. We may add additional systematic distribution options from time to time.
    You may obtain additional information relating to any of the systematic distribution options from your sales
    representative or by calling us at the number listed in “Contract Overview—Questions: Contacting the Company.”

    Systematic Distribution Option Availability. Withdrawals under a systematic distribution option are limited to
    your free withdrawal amount. See “Fees – Early Withdrawal Charge – Free Withdrawals.” If allowed by applicable
    law, we may discontinue the availability of one or more of the systematic distribution options for new elections at
    any time and/or to change the terms of future elections.

    Eligibility for a Systematic Distribution Option. To determine if you meet the age and account value criteria and
    to assess terms and conditions that may apply, contact your sales representative or the Company at the number listed
    in “Contract Overview—Questions: Contacting the Company.”

    Terminating a Systematic Distribution Option. You may revoke a systematic distribution option at any time by
    submitting a written request to our Service Center. ECO, once revoked, may not, unless allowed under the Tax
    Code, be elected again.

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    Charges and Taxation. When you elect a systematic distribution option your account value remains in the
    accumulation phase and subject to the charges and deductions described in the “Fees” and “Fee Table” sections.
    Taking a withdrawal under a systematic distribution option, or later revoking the option, may have tax
    consequences. If you are concerned about tax implications, consult a qualified tax adviser before electing an option.

    DEATH BENEFIT

    This section provides information about the death benefit during the accumulation phase. For death benefit
    information applicable to the income phase, see “The Income Phase.”

    Terms to Understand:

    Account Year/Account Anniversary: A period of 12 months measured from the date we established your account
    and each anniversary of this date. Account anniversaries are measured from this date.

    Annuitant(s): The person(s) on whose life(lives) or life expectancy(ies) the income phase payments are based.

    Beneficiary(ies): The person(s) or entity(ies) entitled to receive a death benefit under the contract.

    Claim Date: The date proof of death and the beneficiary’s right to receive the death benefit are received in good
    order at our Customer Service Center. Please contact our Customer Service Center to learn what information is
    required for a request for payment of the death benefit to be in good order.

    Contract Holder (You/Your): The contract holder of an individually owned contract or the certificate holder of a
    group contract. The contract holder and annuitant may be the same person.

    Market Value Adjustment: An adjustment that may be made to amounts withdrawn from the Guaranteed
    Account. The adjustment may be positive or negative.

    During the Accumulation Phase

    When is a Death Benefit Payable? During the accumulation phase a death benefit is payable when the contract
    holder or the annuitant dies. If there are joint contract holders, the death benefit is payable when either one dies.

    Who Receives Death Benefit Proceeds? If you would like certain individuals or entities to receive the death benefit
    when it becomes payable, you may name them as your beneficiaries. However, if you are a joint contract holder and
    you die, the beneficiary will automatically be the surviving joint contract holder. In this circumstance any other
    beneficiary you have named will be treated as the primary or contingent beneficiary, as originally named, of the
    surviving joint contract holder. The surviving joint contract holder may change that beneficiary designation. If you
    die and no beneficiary exists, the death benefit will be paid in a lump sum to your estate.

    Designating Your Beneficiary. You may designate a beneficiary on your application or by contacting your sales
    representative or us as indicated in “Contract Overview — Questions: Contacting the Company.”

    Death Benefit Amount

    Minimum Guaranteed Death Benefit. If approved in your state, upon the death of the annuitant the death benefit
    will be the greater of:

    (1)      The account value on the claim date; or
     
    (2)      The minimum guaranteed death benefit as of the date of death, adjusted for purchase payments made and any amounts deducted from your account (including withdrawals, payments made under an income phase payment plan and fees and expenses) since the date the minimum guaranteed death benefit was determined.
     

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    Determining the Minimum Guaranteed Death Benefit. On the day we establish your account, the minimum
    guaranteed death benefit equals the amount of your initial purchase payment. Thereafter, the minimum guaranteed
    death benefit is determined once a year on the account anniversary (until the account anniversary immediately
    before the annuitant’s 85th birthday) and equals the greater of:

    (1)      The minimum guaranteed death benefit as last determined, adjusted for any purchase payments made and any amounts deducted from your account (including withdrawals, payments made under an income phase payment plan and fees and expenses) since the date the minimum guaranteed death benefit was determined; or
     
    (2)      Your account value on that account anniversary.
     

    After the annuitant’s 85th birthday, the minimum guaranteed death benefit equals the minimum guaranteed death
    benefit on the account anniversary immediately before the annuitant’s 85th birthday, adjusted for payments made and
    any amounts deducted from your account (including withdrawals, payments made under an income phase payment
    plan and fees and expenses) since that account anniversary.

    Death Benefit Greater than the Account Value. If the minimum guaranteed death benefit is greater than your
    account value on the claim date, the amount by which the death benefit exceeds the account value will be deposited
    and allocated to the money market subaccount available under the contract, thereby increasing the account value
    available to the beneficiary to an amount equal to the death benefit.

    Prior to the election of a death benefit payment by the beneficiary, the account value will remain in the account and
    continue to be affected by the investment performance of the investment option(s) selected. The beneficiary has the
    right to allocate or transfer any amount to any available investment option (subject to a market value adjustment, as
    applicable). The amount paid to the beneficiary will equal the adjusted account value on the day the payment is
    processed. Unless your beneficiary elects otherwise, the distribution will be made into an interest bearing account,
    backed by our general account, that is accessed by the beneficiary through a checkbook feature. The beneficiary
    may access death benefit proceeds at any time without penalty. Interest earned on this account may be less than
    interest paid on other settlement options.

    Death Benefit Amounts in Certain Cases

    If the Contract Holder is not the Annuitant. Under nonqualified contracts only, the minimum guaranteed death
    benefit described above will not apply if the contract holder who is not the annuitant dies. Rather, the death benefit
    proceeds will be equal to the account value on the claim date, plus or minus any market value adjustment. An early
    withdrawal charge may apply to any full or partial payment of this death benefit.

    If the spousal beneficiary continues the account at the death of the contract holder who was not also the annuitant,
    the annuitant will not change and the minimum guaranteed death benefit will not apply on the death of the spousal
    beneficiary. Rather, the death benefit proceeds will equal the account value on the claim date, plus or minus any
    market value adjustment, and minus any applicable early withdrawal charge.

    If the Spousal Beneficiary Continues the Account. If the spousal beneficiary continues the account at the death of
    the contract holder who was also the annuitant, the spousal beneficiary becomes the annuitant. In this circumstance
    the minimum guaranteed death benefit payable at the death of a spousal beneficiary shall be determined as described
    above, except that the initial minimum guaranteed death benefit will equal the minimum guaranteed death benefit
    payable at the death of the original contract holder/annuitant.

    Alternative Death Benefit. If the minimum guaranteed death benefit is not approved in your state, the following
    death benefit will apply:

    Upon the death of the annuitant, the death benefit will be the greatest of:

    (1)      The total payments made to your account, adjusted for any amounts deducted from your account (including withdrawals, payments made under an income phase payment plan and fees and expenses);
     

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    (2)      The highest account value on any account anniversary until the account anniversary immediately before the annuitant’s 75th birthday or date of death, whichever is earlier, adjusted for payments made and any amounts deducted from your account (including withdrawals, payments made under an income phase payment plan and fees and expenses) since that account anniversary; or
     
    (3)      The account value as of the date of death.
     

    Death Benefit Greater than the Account Value. If the alternative death benefit is greater than the account value as
    of the date of death, the amount by which the death benefit exceeds the account value will be deposited and
    allocated to the money market subaccount available under the contract, thereby increasing the account value
    available to the beneficiary to an amount equal to the death benefit.

    Prior to the election of a death benefit payment by the beneficiary, the account value will remain in the account and
    continue to be affected by the investment performance of the investment option(s) selected. The beneficiary has the
    right to allocate or transfer any amount to any available investment option (subject to a market value adjustment, as
    applicable). The amount paid to the beneficiary will equal the adjusted account value on the day the payment is
    processed. Unless your beneficiary elects otherwise, the distribution will be made into an interest bearing account,
    backed by our general account, that is accessed by the beneficiary through a checkbook feature. The beneficiary
    may access death benefit proceeds at any time without penalty. Interest earned on this account may be less than
    interest paid on other settlement options.

    Death Benefit Amounts in Certain Cases

    If the Contract Holder is not the Annuitant. Under nonqualified contracts only, the alternative death benefit
    described above will not apply if the contract holder who is not the annuitant dies. Rather, the death benefit proceeds
    will be equal to the account value on the date the request for payment is received, plus or minus any market value
    adjustment. An early withdrawal charge may apply to any full or partial payment of this death benefit.

    If the spousal beneficiary continues the account at the death of the contract holder who was not the annuitant, the
    annuitant will not change and the alternative death benefit described above will not apply on the death of the spousal
    beneficiary. Rather, the death benefit proceeds will equal the account value on the date the request for payment is
    received, plus or minus any market value adjustment, and minus any early withdrawal charge, if approved in your
    state. If your state has not approved deduction of an early withdrawal charge in this situation, then an early
    withdrawal charge will apply only to payments made since the death of the original contract holder/annuitant.

    If the Spousal Beneficiary Continues the Account. If the spousal beneficiary continues the account at the death of
    the contract holder who was also the annuitant, the spousal beneficiary will become the annuitant. In this
    circumstance the death benefit payable at the death of a spousal beneficiary shall equal the account value on the date
    the request for payment is received, plus or minus any market value adjustment and minus any applicable early
    withdrawal charge applicable to payments made since the death of the original contract holder/annuitant.

    Guaranteed Account. For amounts held in the Guaranteed Account, see Appendix I for a discussion of the
    calculation of the death benefit.

    Death Benefit—Methods of Payment

    For Qualified Contracts. Under a qualified contract if the annuitant dies the beneficiary may choose one of the
    following three methods of payment:

    • Apply some or all of the account value, plus or minus any market value adjustment, to any of the income phase payment options (subject to the Tax Code distribution rules) See “Taxation ”;
    • Receive, at any time, a lump-sum payment equal to all or a portion of the account value, plus or minus any market value adjustment; or

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    • Elect SWO or ECO or LEO (described in “Systematic Distribution Options”), provided the election would satisfy the Tax Code minimum distribution rules.

    Payments from a Systematic Distribution Option. If the annuitant was receiving payments under a systematic
    distribution option and died before the Tax Code’s required beginning date for minimum distributions, payments
    under the systematic distribution option will stop. The beneficiary, or contract holder on behalf of the beneficiary,
    may elect a systematic distribution option provided the election is permitted under the Tax Code minimum
    distribution rules. If the annuitant dies after the required beginning date for minimum distributions, payments will
    continue as permitted under the Tax Code minimum distribution rules, unless the option is revoked.

    Distribution Requirements. Subject to Tax Code limitations, a beneficiary may be able to defer distribution of the
    death benefit. Death benefit payments must satisfy the distribution rules in Tax Code Section 401(a)(9). See
    “Taxation.”

    For Nonqualified Contracts.

    (1)      If you die and the beneficiary is your surviving spouse, or if you are a non-natural person and the annuitant dies and the beneficiary is the annuitant’s surviving spouse, then the beneficiary becomes the successor contract holder. In this circumstance the Tax Code does not require distributions under the contract until the successor contract holder’s death.
     
      As the successor contract holder, the beneficiary may exercise all rights under the account and has the following options:
     
      (a)      Continue the contract in the accumulation phase;
     
      (b)      Elect to apply some or all of the account value, plus or minus any market value adjustment, to any of the income phase payment options; or
     
      (c)      Receive at any time a lump-sum payment equal to all or a portion of the account value, plus or any market value adjustment.
     
      If you die and are not the annuitant, an early withdrawal charge will apply if a lump sum is elected.
     
    (2)      If you die and the beneficiary is not your surviving spouse, he or she may elect option 1(b) or option 1(c) above (subject to the Tax Code distribution rules).
     
      In this circumstance the Tax Code requires any portion of the account value, plus or minus any market value adjustment, not distributed in installments over the beneficiary’s life or life expectancy, beginning within one year of your death, must be paid within five years of your death. See “Taxation.”
     
    (3)      If you are a natural person but not the annuitant and the annuitant dies, the beneficiary may elect option 1(b) or 1(c) above. If the beneficiary does not elect option 1(b) within 60 days from the date of death, the gain, if any, will be included in the beneficiary’s income in the year the annuitant dies.
     

    Payments from a Systematic Distribution Option. If the contract holder or annuitant dies and payments were
    made under SWO, payments will stop. A beneficiary, however, may elect to continue SWO.

    Taxation. In general, payments received by your beneficiary after your death are taxed to the beneficiary in the
    same manner as if you had received those payments. Additionally, your beneficiary may be subject to tax penalties
    if he or she does not begin receiving death benefit payments within the time-frame required by the Tax Code. See
    “Taxation.”

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    THE INCOME PHASE

    During the income phase you stop contributing dollars to your account and start receiving payments from your
    accumulated account value.

    Initiating Payments. At least 30 days prior to the date you want to start receiving payments you must notify us in
    writing of all of the following:

    • Payment start date;
    • Income phase payment option (see the income phase payment options table in this section);
    • Payment frequency (i.e., monthly, quarterly, semi-annually or annually);
    • Choice of fixed, variable or a combination of both fixed and variable payments; and
    • Selection of an assumed net investment rate (only if variable payments are elected).

    Your account will continue in the accumulation phase until you properly initiate income phase payments. Once an
    income phase payment option is selected it may not be changed.

    What Affects Payment Amounts? Some of the factors that may affect the amount of your income phase payments
    include your age, gender, account value, the income phase payment option selected, the number of guaranteed
    payments (if any) selected and whether you select fixed, variable or a combination of both fixed and variable
    payments and, for variable payments, the assumed net investment rate selected.

    Fixed Payments. Amounts funding fixed income phase payments will be held in the Company’s general account.
    The amount of fixed payments does not vary with investment performance over time.

    Variable Payments. Amounts funding your variable income phase payments will be held in the subaccount(s) you
    select. Not all subaccounts available during the accumulation phase may be available during the income phase.
    Payment amounts will vary depending upon the performance of the subaccounts you select. For variable income
    phase payments, you must select an assumed net investment rate.

    Assumed Net Investment Rate. If you select variable income phase payments, you must also select an assumed net
    investment rate of either 5% or 3½%. If you select a 5% rate, your first income phase payment will be higher, but
    subsequent payments will increase only if the investment performance of the subaccounts you selected is greater
    than 5% annually, after deduction of fees. Payment amounts will decline if the investment performance is less than
    5%, after deduction of fees.

    If you select a 3½% rate, your first income phase payment will be lower and subsequent payments will increase
    more rapidly or decline more slowly depending upon changes to the net investment rate of the subaccounts you
    selected. For more information about selecting an assumed net investment rate, call us for a copy of the SAI. See
    “Contract Overview—Questions: Contacting the Company.”

    Minimum Payment Amounts. The income phase payment option you select must result in:

    • A first income phase payment of at least $50; and
    • Total yearly income phase payments of at least $250.

    If your account value is too low to meet these minimum payment amounts, you will receive one lump-sum payment.
    Unless prohibited by law, we reserve the right to increase the minimum payment amount based on increases
    reflected in the Consumer Price Index-Urban (CPI-U) since July 1, 1993.

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    Restrictions on Start Dates and the Duration of Payments. Income phase payments may not begin during the
    first account year, or, unless we consent, later than the later of:

    (a)      first day of the month following the annuitant’s 85th birthday; or
     
    (b)      tenth anniversary of the last purchase payment made to your account (fifth anniversary for contracts issued in Pennsylvania).
     

    Income phase payments will not begin until you have selected an income phase payment option. Failure to select an
    income phase payment option by the later of the annuitant’s 85th birthday or the tenth anniversary of your last
    purchase payment (the fifth anniversary for contracts issued in Pennsylvania) may have adverse tax consequences.
    You should consult with a qualified tax adviser if you are considering either of these courses of action.

    For qualified contracts only, income phase payments may not extend beyond:

    (a)      The life of the annuitant;
     
    (b)      The joint lives of the annuitant and beneficiary;
     
    (c)      A guaranteed period greater than the annuitant’s life expectancy; or
     
    (d)      A guaranteed period greater than the joint life expectancies of the annuitant and beneficiary.
     

    When income phase payments start the age of the annuitant plus the number of years for which payments are
    guaranteed may not exceed 95.

    If income phase payments start when the annuitant is at an advanced age, such as over 85, it is possible that the
    contract will not be considered an annuity for federal tax purposes.

    See “Taxation” for further discussion of rules relating to income phase payments.

    Charges Deducted. We make a daily deduction for mortality and expense risks from amounts held in the
    subaccounts. Therefore, if you choose variable income phase payments and a nonlifetime income phase payment
    option, we still make this deduction from the subaccounts you select, even though we no longer assume any
    mortality risks. We may also deduct a daily administrative charge from amounts held in the subaccounts. See
    “Fees.”

    Death Benefit during the Income Phase. The death benefits that may be available to a beneficiary are outlined in
    the income phase payment options table below. If a lump-sum payment is due as a death benefit, we will make
    payment within seven calendar days after we receive proof of death acceptable to us and the request for the payment
    in good order at our Customer Service Center. Unless your beneficiary elects otherwise, the distribution will be
    made into an interest bearing account, backed by our general account, that is accessed by the beneficiary through a
    checkbook feature. The beneficiary may access death benefit proceeds at any time without penalty. Interest earned
    on this account may be less than interest paid on other settlement options. If continuing income phase payments are
    elected, the beneficiary may not elect to receive a lump sum at a future date unless the income phase payment option
    specifically allows a withdrawal right. We will calculate the value of any death benefit at the next valuation after we
    receive proof of death and a request for payment. Such value will be reduced by any payments made after the date of
    death.

    Beneficiary Rights. A beneficiary’s right to elect an income phase payment option or receive a lump-sum payment
    may have been restricted by the contract holder. If so, such rights or options will not be available to the beneficiary.

    Partial Entry into the Income Phase. You may elect an income phase payment option for a portion of your
    account dollars, while leaving the remaining portion invested in the accumulation phase. Whether the Tax Code
    considers such payments taxable as income phase payments or as withdrawals is currently unclear; therefore, you
    should consult with a qualified tax adviser before electing this option. The same or different income phase payment

    ILIAC Marathon Plus (IICA)

    27

    option may be selected for the portion left invested in the accumulation phase.

    Taxation. To avoid certain tax penalties, you or your beneficiary must meet the distribution rules imposed by the
    Tax Code. Additionally, when selecting an income phase payment option, the Tax Code requires that your expected
    payments will not exceed certain durations. See “Taxation” for additional information.

    Income Phase Payment Options.

    The following table lists the income phase payment options and accompanying death benefits available during the
    income phase. We may offer additional income phase payment options under the contract from time to time.

    Once income phase payments begin the income phase payment option selected may not be changed.

    Terms to understand:
    Annuitant(s): The person(s) on whose life expectancy(ies) the income phase payments are based.

    Beneficiary(ies): The person(s) or entity(ies) entitled to receive a death benefit under the contract.

    Lifetime Income Phase Payment Options

    Life Income    Length of Payments: For as long as the annuitant lives. It is possible that only one 
        payment will be made if the annuitant dies prior to the second payment’s due date. 
        Death Benefit—None: All payments end upon the annuitant’s death. 
    		 
    Life Income —    Length of Payments: For as long as the annuitant lives, with payments guaranteed for 
    Guaranteed    your choice of 5 to 30 years or as otherwise specified in the contract. 
    Payments    Death Benefit—Payment to the Beneficiary: If the annuitant dies before we have made 
        all the guaranteed payments, we will continue to pay the beneficiary the remaining 
        payments, unless the beneficiary elects to receive a lump-sum payment equal to the 
        present value of the remaining guaranteed payments. 
    		 
    Life Income —    Length of Payments: For as long as either annuitant lives. It is possible that only one 
    Two Lives    payment will be made if both annuitants die before the second payment’s due date. 
        Continuing Payments: When you select this option you choose for: 
        (a)    100%, 66 2/3% or 50% of the payment to continue to the surviving annuitant after 
            the first death; or 
        (b)    100% of the payment to continue to the annuitant on the second annuitant’s death, 
            and 50% of the payment to continue to the second annuitant on the annuitant’s death. 
        Death Benefit — None: All payments end upon the death of both annuitants. 
    		 
    Life Income —    Length of Payments: For as long as either annuitant lives, with payments guaranteed 
    Two Lives —    from 5 to 30 years or as otherwise specified in the contract. 
    Guaranteed    Continuing Payments: 100% of the payment to continue to the surviving annuitant after 
    Payments    the first death. 
        Death Benefit — Payment to the Beneficiary: If both annuitants die before we have 
        made all the guaranteed payments, we will continue to pay the beneficiary the remaining 
        payments, unless the beneficiary elects to receive a lump-sum payment equal to the 
        present value of the remaining guaranteed payments. 
    		 
    Life Income —    Length of Payments: For as long as the annuitant lives. 
    Cash Refund Option    Death Benefit — Payment to the Beneficiary: Following the annuitant’s death, we will 
    (limited availability    pay a lump-sum payment equal to the amount originally applied to the income phase 
    — fixed payment    payment option (less any premium tax) and less the total amount of income payments 
    only)    paid. 
    		 
    Life Income— Two    Length of Payments: For as long as either annuitant lives. 
    Lives—Cash Refund    Continuing Payments: 100% of the payment to continue after the first death. 
    Option (limited    Death Benefit — Payment to the Beneficiary: When both annuitants die we will pay a 
    availability —    lump-sum payment equal to the amount applied to the income phase payment option 
    		 

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      fixed payment only) (less any premium tax) and less the total amount of income payments paid.

    Nonlifetime Income Phase Payment Option

    Nonlifetime—    Length of Payments: You may select payments for 5 to 30 years. In certain cases a 
    Guaranteed    lump-sum payment may be requested at any time (see below). 
    Payments    Death Benefit—Payment to the Beneficiary: If the annuitant dies before we make all 
        the guaranteed payments, we will continue to pay the beneficiary the remaining 
        payments, unless the beneficiary elects to receive a lump-sum payment equal to the 
        present value of the remaining guaranteed payments. We will not impose any early 
        withdrawal charge. 
    		 

      Lump-Sum Payment: If the “Nonlifetime—Guaranteed Payments” option is elected with variable payments, you
    may request at any time that all or a portion of the present value of the remaining payments be paid in one lump
    sum. Any such lump-sum payment will be treated as a withdrawal during the accumulation phase and we will
    charge any applicable early withdrawal charge. See “Fees—Early Withdrawal Charge.” Lump-sum payments will
    be sent within seven calendar days after we receive the request for payment in good order at our Service Center.

    Calculation of Lump-Sum Payments. If a lump-sum payment is available under the income phase payment
    options above, the rate used to calculate the present value of the remaining guaranteed payments is the same rate
    we used to calculate the income phase payments (i.e., the actual fixed rate used for fixed payments or the 3½% or
    5% assumed net investment rate used for variable payments).

    TAXATION

    Introduction
    This section discusses our understanding of current federal income tax laws affecting the contract. You should keep
    the following in mind when reading it:

    • 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;
    • Tax laws change. It is possible that a change in the future could affect contracts issued in the past;
    • 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; and
    • We do not make any guarantee about the tax treatment of the contract or transactions involving the contract.

    We do not intend this information to be tax advice. For advice about the effect of federal income taxes or any other
    taxes on amounts held or paid out under the contract, consult a tax adviser. For more comprehensive information,
    contact the Internal Revenue Service (IRS).

    Types of Contracts: Non-Qualified or Qualified
    The Contract may be purchased on a non-tax-qualified basis (non-qualified contracts) or purchased on a tax-
    qualified basis (qualified contracts).

    Non-qualified contracts are purchased with after tax contributions and are not related to retirement plans that receive
    special income tax treatment under the Tax Code.

    Qualified Contracts are designed for use by individuals whose premium payments are comprised solely of proceeds
    from and/or contributions under retirement plans that are intended to qualify for special income tax treatment under
    Sections 401, 408 or 408A, and some provisions of 403 and 457 of the Tax Code.

    Taxation of Non-Qualified Contracts

    Taxation of Gains Prior to Distribution
    Tax Code Section 72 governs taxation of annuities in general. We believe that if you are a natural person you

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    will generally not be taxed on increases in the value of a non-qualified Contract until a distribution occurs or until
    annuity payments begin. This assumes that the Contract will qualify as an annuity contract for federal income tax
    purposes. For these purposes, the agreement to assign or pledge any portion of the contract value generally will be
    treated as a distribution. In order to be eligible to receive deferral of taxation, the following requirements must be
    satisfied:

    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 Tax Code Section 817(h) and by the Treasury in Reg. Sec. 1.817 -5,
    which affects how the funds’ assets may be invested. If it is determined, however, that your Contract does not
    satisfy the applicable diversification requirements and rulings because a subaccount’s corresponding fund fails to be
    adequately diversified for whatever reason, we will take appropriate steps to bring your Contract into compliance
    with such regulations and rulings, and we reserve the right to modify your Contract as necessary to do so.

    Investor Control. Although earnings under non-qualified contracts are generally not taxed until
    withdrawn, the IRS has stated in published rulings that a variable contract owner will be considered the owner of
    separate account assets if the contract owner possesses incidents of investment control over the assets. In these
    circumstances, income and gains from the separate account assets would be currently includible in the variable
    contract owner’s gross income. Future guidance regarding the extent to which owners could direct their investments
    among subaccounts without being treated as owners of the underlying assets of the separate account may adversely
    affect the tax treatment of existing contracts. The Company therefore reserves the right to modify the contract as
    necessary to attempt to prevent the contract holder from being considered the federal tax owner of a pro rata share of
    the assets of the separate account.

    Required Distributions. In order to be treated as an annuity contract for federal income tax purposes, the

    Tax Code requires any non-qualified Contract to contain certain provisions specifying how your interest in the
    Contract will be distributed in the event of your death. The non-qualified Contracts contain provisions that are
    intended to comply with these Tax Code requirements, although no regulations interpreting these requirements have
    yet been issued. We intend to review such distribution provisions and modify them if necessary to assure that they
    comply with the applicable requirements when such requirements are clarified by regulation or otherwise.

    Non-Natural Holders of a Non-Qualified Contract. If you are not a natural person, a non-qualified
    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. Income on the contract is any increase over the year in the excess of
    the contract value over the “investment in the contract” (generally, the premiums or other consideration you paid for
    the contract less any nontaxable withdrawals) during the taxable year. There are some exceptions to this rule and a
    non-natural person should consult with its tax adviser prior to purchasing the Contract. When the contract owner is
    not a natural person, a change in the annuitant is treated as the death of the contract owner.

    Delayed Annuity Starting Date. If the Contract’s annuity starting date occurs (or is scheduled to occur) at
    a time when the annuitant has reached an advanced age (e.g., after age 85), it is possible that the Contract would not
    be treated as an annuity for federal income tax purposes. In that event, the income and gains under the Contract
    could be currently includible in your income.

    Taxation of Distributions

    General. When a withdrawal from a non-qualified Contract occurs, the amount received will be treated as
    ordinary income subject to tax up to an amount equal to the excess (if any) of the contract value (unreduced by the
    amount of any surrender charge) immediately before the distribution over the contract owner’s investment in the
    contract at that time. Investment in the contract is generally equal to the amount of all contributions to the contract,
    plus amounts previously included in your gross income as the result of certain loans, assignments or gifts, less the
    aggregate amount of non-taxable distributions previously made.

    In the case of a surrender under a non-qualified Contract, the amount received generally will be taxable only to the
    extent it exceeds the contract owner’s cost basis in the contract.

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

    • made on or after the taxpayer reaches age 59½;
    • made on or after the death of a contract owner (the annuitant if the contract owner is a non-natural person);
    • attributable to the taxpayer’s becoming disabled as defined in the Tax Code;
    • made as part of a series of 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; or
    • the distribution is allocable to investment in the contract before August 14, 1982.

    The 10% penalty does not apply to distributions from an immediate annuity as defined in the Tax Code. Other
    exceptions may be applicable under certain circumstances and special rules may be applicable in connection with
    the exceptions enumerated above. A tax adviser should be consulted with regard to exceptions from the penalty tax.

    Tax-Free Exchanges. Section 1035 of the Tax Code permits the exchange of a life insurance, endowment
    or annuity contract for an annuity contract on a tax-free basis. In such instance, the “investment in the contract” in
    the old contract will carry over to the new contract. You should consult with your tax advisor regarding procedures
    for making Section 1035 exchanges.

    If your Contract is purchased through a tax-free exchange of a life insurance, endowment or annuity contract that
    was purchased prior to August 14, 1982, then any distributions other than annuity payments will be treated, for tax
    purposes, as coming:

    • First, from any remaining “investment in the contract” made prior to August 14, 1982 and exchanged into the Contract;
    • Next, from any “income on the contract” attributable to the investment made prior to August 14, 1982;
    • Then, from any remaining “income on the contract;” and
    • Lastly, from any remaining “investment in the contract.”

    The IRS has concluded that in certain instances, the partial exchange of a portion of one annuity contract for another
    contract will be tax-free. However, the IRS has reserved the right to treat transactions it considers abusive as
    ineligible for favorable partial 1035 tax-free exchange treatment. It is not certain whether the IRS would treat an
    immediate withdrawal or annuitization after a partial exchange as abusive. In addition, it is unclear how the IRS
    will treat a partial exchange from a life insurance, endowment, or annuity contract directly into an immediate
    annuity. Currently, we will accept a partial 1035 exchange from a non-qualified annuity into a deferred annuity or
    an immediate annuity as a tax-free transaction unless we believe that we would be expected to treat the transaction
    as abusive. We are not responsible for the manner in which any other insurance company, for tax reporting
    purposes, or the IRS, with respect to the ultimate tax treatment, recognizes or reports a partial exchange. We
    strongly advise you to discuss any proposed 1035 exchange with your tax advisor prior to proceeding with the
    transaction.

    Taxation of Annuity Payments. Although tax consequences may vary depending on the payment option
    elected under an annuity contract, a portion of each annuity payment is generally not taxed and the remainder is
    taxed as ordinary income. The non-taxable portion of an annuity payment is generally determined in a manner that
    is designed to allow you to recover your investment in the contract ratably on a tax-free basis over the expected
    stream of annuity payments, as determined when annuity payments start. Once your investment in the contract has
    been fully recovered, however, the full amount of each subsequent annuity payment is subject to tax as ordinary
    income. The tax treatment of partial annuitizations is unclear. We currently treat any partial annuitizations as
    withdrawals rather than as annuity payments. Please consult your tax adviser before electing a partial annuitization.

    Death Benefits. Amounts may be distributed from a Contract because of your death or the death of the

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    annuitant. Generally, such amounts are includible in the income of the recipient as follows: (i) if distributed in a
    lump sum, they are taxed in the same manner as a surrender of the Contract, or (ii) if distributed under a payment
    option, they are taxed in the same way as annuity payments. Special rules may apply to amounts distributed after a
    Beneficiary has elected to maintain Contract value and receive payments.

    Different distribution requirements apply if your death occurs:

    • After you begin receiving annuity payments under the Contract; or
    • Before you begin receiving such distributions.

    If your death occurs after you begin receiving annuity payments, distributions must be made at least as rapidly as
    under the method in effect at the time of your death.

    If your death occurs before you begin receiving annuity payments, your entire balance must be distributed within
    five years after the date of your death. For example, if you died on September 1, 2007, your entire balance must be
    distributed by August 31, 2012. However, if distributions begin within one year of your death, then payments may
    be made over one of the following timeframes:

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

    If the designated beneficiary is your spouse, the contract may be continued with the surviving spouse as the new
    contract owner. If the contract owner is a non-natural person and the primary annuitant dies, the same rules apply on
    the death of the primary annuitant as outlined above for the death of a contract owner.

    The Contract offers a death benefit that may exceed the greater of the premium payments and the contract value.
    Certain charges are imposed with respect to the death benefit. It is possible that these charges (or some portion
    thereof) could be treated for federal tax purposes as a distribution from the Contract.

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

    Immediate Annuities. Under Section 72 of the Tax Code, an immediate annuity means an annuity (1)

    which is purchased with a single premium, (2) with annuity payments starting within one year from the date of
    purchase, and (3) which provides a series of substantially equal periodic payments made annually or more
    frequently. While this Contract is not designed as an immediate annuity, treatment as an immediate annuity would
    have significance with respect to exceptions from the 10% early withdrawal penalty, to contracts owned by non-
    natural persons, and for certain exchanges.

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

    Withholding. We will withhold and remit to the IRS a part of the taxable portion of each distribution
    made under a Contract unless the distributee notifies us at or before the time of the distribution that he or she elects
    not to have any amounts withheld. Withholding is mandatory, however, if the distributee fails to provide a valid
    taxpayer identification number or if we are notified by the IRS that the taxpayer identification number we have on
    file is incorrect. The withholding rates applicable to the taxable portion of periodic annuity payments are the same
    as the withholding rates generally applicable to payments of wages. In addition, a 10% withholding rate applies to the
    taxable portion of non-periodic payments. Regardless of whether you elect not to have federal income tax withheld,

    ILIAC Marathon Plus (IICA)

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    you are still liable for payment of federal income tax on the taxable portion of the payment.

    If you or your 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.

    Taxation of Qualified Contracts

    General
    The Contracts are primarily designed for use with IRAs under Tax Code Section 401, 408 or 408A, and
    some provisions of 403 and 457 (We refer to all of these as “qualified plans”).
    The tax rules applicable to participants in these qualified plans vary according to the type of plan and the terms and
    conditions of the plan itself. The ultimate effect of federal income taxes on the amounts held under a Contract, or on
    annuity payments, depends on the type of retirement plan and your tax status. Special favorable tax treatment may
    be available for certain types of contributions and distributions. In addition, certain requirements must be satisfied
    in purchasing a qualified contract with proceeds from a tax-qualified plan in order to continue receiving favorable
    tax treatment.

    Adverse tax consequences may result from: contributions in excess of specified limits; distributions before age 59½
    (subject to certain exceptions); distributions that do not conform to specified commencement and minimum
    distribution rules; and in other specified circumstances. Some qualified plans may be subject to additional
    distribution or other requirements that are not incorporated into the Contract. No attempt is made to provide more
    than general information about the use of the Contracts with qualified plans. Contract owners, annuitants, and
    beneficiaries are cautioned that the rights of any person to any benefits under these qualified plans may be subject to
    the terms and conditions of the plans themselves, regardless of the terms and conditions of the Contract. The
    Company is not bound by the terms and conditions of such plans to the extent such terms contradict the Contract,
    unless we consent.

    Contract owners and beneficiaries generally are responsible for determining that contributions, distributions and
    other transactions with respect to the contract comply with applicable law. Therefore, you should seek competent
    legal and tax advice regarding the suitability of a contract for your particular situation. The following discussion
    assumes that qualified contracts are purchased with proceeds from and/or contributions under retirement plans or
    programs that qualify for the intended special federal tax treatment.

    Tax Deferral
    Under the federal tax laws, earnings on amounts held in annuity contracts are generally not taxed until they are
    withdrawn. However, in the case of a qualified plan (as defined in this prospectus), an annuity contract is not
    necessary to obtain this favorable tax treatment and does not provide any tax benefits beyond the deferral already
    available to the qualified plan itself. Annuities do provide other features and benefits (such as death benefits or the
    option of lifetime income phase options at established rates) that may be valuable to you. You should discuss your
    alternatives with your financial representative taking into account the additional fees and expenses you may incur in
    an annuity.

    Section 401(a), 401(k), Roth 401(k) and 403(a) Plans. Sections 401(a), 401(k) and 403(a) of the Tax
    Code permit certain employers to establish various types of retirement plans for employees, and permits self-
    employed individuals to establish these plans for themselves and their employees. These retirement plans may
    permit the purchase of Contracts to accumulate retirement savings under the plans. Employers intending to use the
    Contract with such plans should seek competent legal advice.

    The contracts may also be available as a Roth 401(k), as described in Tax Code Section 402A, and we may set up
    accounts for you under the Contract for Roth 401(k) contributions (“Roth 401(k) accounts”). Tax Code Section
    402A allows employees of certain private employers to contribute after-tax salary contributions to a Roth 401(k),
    which provides for tax-free distributions, subject to certain restrictions.

    Individual Retirement Annuities. Section 408 of the Tax Code permits eligible individuals to contribute
    to an individual retirement program known as an Individual Retirement Annuity ("IRA"). IRAs are subject to limits
    on the amounts that can be contributed, the deductible amount of the contribution, the persons who may be eligible,

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    33

    and the time when distributions commence. Contributions to IRAs must be made in cash or as a rollover or a
    transfer from another eligible plan. Also, distributions from IRAs, individual retirement accounts, and other types of
    retirement plans may be "rolled over" on a tax-deferred basis into an IRA. If you make a tax-free rollover of a
    distribution from an IRA you may not make another tax-free rollover from the IRA within a 1-year period. Sales of
    the contract for use with IRAs may be subject to special requirements of the IRS.

    The IRS has not reviewed the contracts described in this prospectus for qualification as IRAs and has not addressed,
    in a ruling of general applicability, whether the contract's death benefit provisions comply with IRS qualification
    requirements.

    Roth IRAs. Section 408A of the Tax Code permits certain eligible individuals to contribute to a Roth IRA.
    Contributions to a Roth IRA are subject to limits on the amount of contributions and the persons who may be
    eligible to contribute, are not deductible, and must be made in cash or as a rollover or transfer from another Roth
    IRA or other IRA. Certain qualifying individuals may convert an IRA, SEP, or a SIMPLE to a Roth IRA. Such
    rollovers and conversions are subject to tax, and other special rules may apply. If you make a tax-free rollover of a
    distribution from a Roth IRA to another Roth IRA, you may not make another tax-free rollover from the Roth IRA
    within a 1-year period. A 10% penalty may apply to amounts attributable to a
    conversion to a Roth IRA if the amounts are distributed during the five taxable years beginning with the year in
    which the conversion was made.

    Sales of a contract for use with a Roth IRA may be subject to special requirements of the IRS. The IRS has not
    reviewed the contracts described in this prospectus for qualification as IRAs and has not addressed, in a ruling of
    general applicability, whether the contract's death benefit provisions comply with IRS qualification requirements.














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

    Distributions – General
    Certain tax rules apply to distributions from the Contract. A distribution is any amount taken from a Contract
    including withdrawals, annuity payments, rollovers, exchanges and death benefit proceeds. We report the taxable
    portion of all distributions to the IRS.

    Section 401(a), 401(k) and 403(a) Plans. All distributions from these plans are taxed as received unless
    one of the following is true:

    • The distribution is an eligible rollover distribution and is rolled over to another plan eligible to receive rollovers or to a traditional IRA in accordance with the Tax Code;
    • You made after-tax contributions to the plan. In this case, depending upon the type of distribution, the amount will be taxed according to the rules detailed in the Tax Code; or
    • The distribution is a qualified health insurance premium of a retired safety officer as defined in the Pension Protection Act of 2006.

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    A payment is an eligible rollover distribution unless it is:

    • part of a series of substantially equal periodic payments (at least one per year) made over the life expectancy of the participant or the joint life expectancy of the participant and his designated beneficiary or for a specified period of 10 years or more;
    • a required minimum distribution under Tax Code Section 401(a)(9);
    • a hardship withdrawal;
    • otherwise excludable from income; or
    • not recognized under applicable regulations as eligible for rollover.

    The Tax Code imposes a 10% penalty tax on the taxable portion of any distribution from a Contract used with a
    401(a), 401(k) or 403(a) plan unless certain exceptions, including one or more of the following, have occurred:

    • You have attained age 59½;
    • You have become disabled, as defined in the Tax Code;
    • You have died and the distribution is to your beneficiary;
    • You have separated from service with the sponsor at or after age 55;
    • The distribution amount is rolled over into another eligible retirement plan or to an IRA in accordance with the terms of the Tax Code;
    • You have separated from service with the plan sponsor and the distribution amount is made in substantially equal periodic payments (at least annually) over your life or the life expectancy or the joint lives or joint life expectancies of you and your designated beneficiary;
    • The distribution is made due to an IRS levy upon your plan;
    • The withdrawal amount is paid to an alternate payee under a Qualified Domestic Relations Order (QDRO); or
    • The distribution is a qualified reservist distribution as defined under the Pension Protection Act of 2006 (401(k) plans only).

    In addition, the 10% penalty tax does not apply to the amount of a distribution equal to unreimbursed medical
    expenses incurred by you during the taxable year that qualify for deduction as specified in the Tax Code. The Tax
    Code may provide other exceptions or impose other penalties in other circumstances.

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

    • The distribution is rolled over to another IRA or to a plan eligible to receive rollovers as permitted under the Tax Code; or
    • You made after-tax contributions to the IRA. In this case, the distribution will be taxed according to rules detailed in the Tax Code.



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

    • You have attained age 59 1/2;
    • You have become disabled, as defined in the Tax Code;
    • You have died and the distribution is to your beneficiary;
    • The distribution amount is rolled over into another eligible retirement plan or to an IRA in accordance with the terms of the Tax Code;
    • The distribution is made due to an IRS levy upon your plan;
    • The withdrawal amount is paid to an alternate payee under a Qualified Domestic Relations Order

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      (QDRO); or
    • The distribution is a qualified reservist distribution as defined under the Pension Protection Act of 2006.

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

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

    • Made after the five-taxable year period beginning with the first taxable year for which a contribution was made to a Roth IRA of the owner; and
    • Made after you attain age 59 1/2, die, become disabled as defined in the Tax Code, or for a qualified first-time home purchase.

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

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



     










    ILIAC Marathon Plus (IICA)

    36











    Special Hurricane-Related Relief. The Katrina Emergency Tax Relief Act and the Gulf Opportunity Zone
    Act provide tax relief to victims of Hurricanes Katrina, Rita and Wilma. The relief includes a waiver of the 10%
    penalty tax on qualified hurricane distributions from eligible retirement plans. In addition, the
    20% mandatory withholding rules do not apply to these distributions and the tax may be spread out ratably over a
    three-year period. A recipient of qualified hurricane distribution may also elect to re-contribute all or a portion of
    the distribution to an eligible retirement plan within three (3) years of receipt without tax consequences. Other relief
    may also apply. You should consult a competent tax adviser for further information.

    Lifetime Required Minimum Distributions (Section 401(a), 401(k), Roth 401(k), 403(a) and IRAs
    only). To avoid certain tax penalties, you and any designated beneficiary must also meet the minimum
    distribution requirements imposed by the Tax Code.
    These rules may dictate the following:

    • Start date for distributions;
    • The time period in which all amounts in your account(s) must be distributed; and
    • Distribution amounts.

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

    • Over your life or the joint lives of you and your designated beneficiary; or
    • Over a period not greater than your life expectancy or the joint life expectancies of you and your designated beneficiary.

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

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

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

    Required Distributions Upon Death (Section 401(a), 401(k), Roth 401(k), 403(a), IRAs and
    Roth IRAs Only). Different distribution requirements apply after your death, depending upon if you have been
    receiving required minimum distributions. Further information regarding required distributions upon death may be
    found in your contract.

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

    If your death occurs before you begin receiving minimum distributions under the contract, your entire balance must

    ILIAC Marathon Plus (IICA)

    37

    be distributed by December 31 of the calendar year containing the fifth anniversary of the date of your death. For
    example, if you died on September 1, 2007, your entire balance must be distributed to the designated beneficiary
    by December 31, 2012. However, if distributions begin by December 31 of the calendar year following the
    calendar year of your death, and you have named a designated beneficiary, then payments may be made over either
    of the following time frames:

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

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

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

    No designated beneficiary. If there is no designated beneficiary, the entire interest generally must be
    distributed by the end of the calendar containing the fifth anniversary of the contract owner’s death.

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

    Withholding
    Any taxable distributions under the contract are generally subject to withholding. Federal income tax liability
    rates vary according to the type of distribution and the recipient's tax status.

    401(a), 401(k), Roth 401(k) and 403(a). Generally, distributions from these plans are subject to
    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.

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


    Non-resident Aliens. If you or your designated beneficiary is a non-resident alien, then any withholding is

    governed by Tax Code Section 1441 based on the individual's citizenship, the country of domicile and treaty status.

    Assignment and Other Transfers

    IRAs and Roth IRAs. The Tax Code does not allow a transfer or assignment of your rights under the
    contracts except in limited circumstances. 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. Anyone contemplating such an
    assignment or transfer should contact a qualified tax adviser regarding the potential tax effects of such a transaction.



    ILIAC Marathon Plus (IICA)

    38




    Tax Consequences of Enhanced Death Benefits
    The Contract offers a death benefit that may exceed the greater of the premium payments and the contract value. It
    is possible that the IRS could characterize such a death benefit as an incidental death benefit. There are limitations
    on the amount of incidental benefits that may be provided under pension and profit sharing plans. In addition, the
    provision of such benefits may result in currently taxable income to contract owners, and the presence of the death
    benefit could affect the amount of required minimum distributions. Finally, certain charges are imposed with
    respect to some of the available death benefits. It is possible those charges (or some portion thereof) could be
    treated for federal tax purposes as a distribution from the Contract.

    Possible Changes in Taxation
    Although the likelihood of legislative change and tax reform 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.

    Taxation of Company
    We are taxed as a life insurance company under the Tax Code. The Separate Account is not a separate entity from
    us. Therefore, it is not taxed separately as a “regulated investment company,” but is taxed as part of the Company.

    We automatically apply investment income and capital gains attributable to the separate account to increase reserves
    under the contracts. Because of this, under existing federal tax law we believe that any such income and gains will
    not be taxed to the extent that such income and gains are applied to increase reserves under the contracts. In
    addition, any foreign tax credits attributable to the separate account will be first used to reduce any income taxes
    imposed on the separate account before being used by the Company.

    In summary, we do not expect that we will incur any federal income tax liability attributable to the separate account
    and we do not intend to make any provision for such taxes. However, changes in federal tax laws and/or their
    interpretation may result in our being taxed on income or gains attributable to the separate account. In this case, we
    may impose a charge against the separate account (with respect to some or all of the Contracts) to set aside
    provisions to pay such taxes. We may deduct this amount from the separate account, including from your account
    value invested in the subaccounts.

    OTHER TOPICS

    The Company

    We issue the contract described in this prospectus and are responsible for providing each contract’s insurance and
    annuity benefits.

    Prior to January 1, 2006, the contracts were issued by ING Insurance Company of America (“IICA”), a wholly
    owned subsidiary of ours. IICA was a life insurance company organized under the insurance laws of the State of
    Connecticut in 1990 and redomesticated under the insurance laws of the State of Florida on January 5, 2000. Prior
    to May 1, 2002, IICA was known as Aetna Insurance Company of America. Effective December 31, 2005, IICA
    merged with and into ILIAC, and ILIAC assumed responsibility for IICA’s obligations under the contracts.

    ILIAC is a stock life insurance company organized under the insurance laws of the State of Connecticut in 1976 and
    an indirect wholly-owned subsidiary of ING Groep, N.V. (“ING”), a global financial institution active in the fields
    of insurance, banking and asset management. Through a merger, ILIAC’s operations include the business of Aetna
    Variable Annuity Life Insurance Company (formerly known as Participating Annuity Life Insurance Company, an
    Arkansas life insurance company organized in 1954). Prior to May 1, 2002, ILIAC was known as Aetna Life
    Insurance and Annuity Company. Although we are a subsidiary of ING, ING is not responsible for the obligations

    ILIAC Marathon Plus (IICA)

    39

    under the Contract. The obligations under the Contract are solely the responsibility of ILIAC.

    We are engaged in the business of selling life insurance and annuities. Our principal executive offices are located at:

    One Orange Way
    Windsor, Connecticut 06095-4774

    Regulatory Matters

    As with many financial services companies, the Company and its affiliates have received informal and formal
    requests for information from various state and federal governmental agencies and self-regulatory organizations in
    connection with inquiries and investigations of the products and practices of the financial services industry. In each
    case, the Company and its affiliates have been and are providing full cooperation.

    Insurance and Retirement Plan Products and Other Regulatory Matters.
    Federal and state regulators and self-regulatory agencies are conducting broad inquiries and
    investigations involving the insurance and retirement industries. These initiatives currently focus on, among other
    things, compensation, revenue sharing, and other sales incentives; potential conflicts of interest; potential anti-
    competitive activity; reinsurance; sales and marketing practices (including sales to seniors); specific product types
    (including group annuities and indexed annuities); and disclosure. It is likely that the scope of these industry
    investigations will further broaden before they conclude. The Company and certain of its U.S. affiliates have
    received formal and informal requests in connection with such investigations, and are cooperating fully with each
    request for information. Some of these matters could result in regulatory action involving the Company. These
    initiatives also may result in new legislation and regulation that could significantly affect the financial services
    industry, including businesses in which the Company is engaged. In light of these and other developments, U.S.
    affiliates of ING, including the Company, periodically review whether modifications to their business practices are
    appropriate.

    Investment Product Regulatory Issues. Since 2002, there has been increased governmental and regulatory
    activity relating to mutual funds and variable insurance products. This activity has primarily focused on
    inappropriate trading of fund shares; directed brokerage; compensation; sales practices, suitability, and supervision;
    arrangements with service providers; pricing; compliance and controls; adequacy of disclosure; and document
    retention.

    In addition to responding to governmental and regulatory requests on fund trading issues, ING management, on its
    own initiative, conducted, through special counsel and a national accounting firm, an extensive internal review of
    mutual fund trading in ING insurance, retirement, and mutual fund products. The goal of this review was to identify
    any instances of inappropriate trading in those products by third parties or by ING investment professionals and
    other ING personnel.

    The internal review identified several isolated arrangements allowing third parties to engage in frequent trading of
    mutual funds within the variable insurance and mutual fund products of certain affiliates of the Company, and
    identified other circumstances where frequent trading occurred despite measures taken by ING intended to combat
    market timing. Each of the arrangements has been terminated and disclosed to regulators, to the independent trustees
    of ING Funds (U.S.) and in Company reports previously filed with the SEC pursuant to the Securities Exchange Act
    of 1934, as amended.

    Action may be taken by regulators with respect to certain ING affiliates before investigations
    relating to fund trading are completed. The potential outcome of such action is difficult to predict but could subject
    certain affiliates to adverse consequences, including, but not limited to, settlement payments,
    penalties, and other financial liability. It is not currently anticipated, however, that the actual outcome of any such
    action will have a material adverse effect on ING or ING’s U.S.-based operations, including the Company.

    ING has agreed to indemnify and hold harmless the ING Funds from all damages resulting from wrongful conduct
    by ING or its employees or from ING’s internal investigation, any investigations conducted by any governmental or
    self-regulatory agencies, litigation or other formal proceedings, including any proceedings by the SEC.

    ILIAC Marathon Plus (IICA)

    40

    Management reported to the ING Funds Board that ING management believes that the total amount of any
    indemnification obligations will not be material to ING or ING’s U.S.-based operations, including the Company.

    Product Regulation. Our products are subject to a complex and extensive array of state and federal tax,
    securities and insurance laws, and regulations, which are administered and enforced by a number of governmental
    and self-regulatory authorities. Specifically, U.S. federal income tax law imposes requirements relating to
    nonqualified annuity product design, administration, and investments that are conditions for beneficial tax treatment
    of such products under the Internal Revenue Code. (See “Taxation” for further discussion of some of these
    requirements.) Failure to administer certain nonqualified contract features (for example, contractual annuity start
    dates in nonqualified annuities) could affect such beneficial tax treatment. In addition, state and federal securities
    and insurance laws impose requirements relating to insurance and annuity product design, offering and distribution,
    and administration. Failure to meet any of these complex tax, securities, or insurance requirements could subject the
    Company to administrative penalties, unanticipated remediation, or other claims and costs.

    Variable Annuity Account I

    Variable Annuity Account I was established as a separate account in 1994. Prior to January 1, 2006, Variable
    Annuity Account I was known as Variable Annuity Account I (a Separate Account of ING Insurance Company of
    America). In connection with the merger of IICA with and into ILIAC, the separate account was transferred to
    ILIAC on December 31, 2005, and renamed Variable Annuity Account I (a Separate Account of ING Life Insurance
    and Annuity Company). Variable Annuity Account I is registered with the SEC as a unit investment trust under the
    Investment Company Act of 1940, as amended (“1940 Act”). Variable Annuity Account I is a separate investment
    account used for our variable annuity contracts. We own all the assets in Variable Annuity Account I but such
    assets are kept separate from our other accounts.

    The separate account is divided into subaccounts. The subaccounts invest directly in shares of a pre-assigned fund.

    Although we hold title to the assets of the separate account, such assets are not chargeable with the liabilities of any
    other business that we conduct. Income, gains or losses of the separate account are credited to or charged against the
    assets of the separate account without regard to other income, gains or losses of the Company. All obligations
    arising under the contract are obligations of the Company.

    Contract Distribution

    The Company’s subsidiary, ING Financial Advisers, LLC, serves as the principal underwriter for the Contracts. ING
    Financial Advisers, LLC, a Delaware limited liability company, is registered as a broker-dealer with the SEC. ING
    Financial Advisers, LLC is also a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”)
    and the Securities Investor Protection Corporation. ING Financial
    Advisers, LLC’s principal office is located at One Orange Way, Windsor,
    Connecticut 06095-4774.

    The Contracts are offered to the public by individuals who are registered representatives of ING Financial Advisers,
    LLC or other broker-dealers that have entered into a selling arrangement with ING Financial Advisers, LLC. We
    refer to ING Financial Advisers, LLC and the other broker-dealers selling the Contracts as “distributors.”

    All registered representatives selling the Contracts must also be licensed as insurance agents for the Company.

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

    • Bancnorth Investment Group, Inc.
    • Directed Services LLC
    • Financial Network Investment Corporation
    • Guaranty Brokerage Services, Inc.
    • ING America Equities, Inc.
    • ING DIRECT Securities, Inc.
    • ING Funds Distributor, LLC
    • ING Investment Management Services LLC
    • ING Private Wealth Management LLC
    • Multi-Financial Securities Corporation
    • PrimeVest Financial Services, Inc.
    • ShareBuilder Securities Corporation

    ILIAC Marathon Plus (IICA)

    41

    ·    ING Financial Markets LLC    ·    Systematized Benefits Administrators, Inc. 
    ·    ING Financial Partners, Inc.         

    Registered representatives of distributors who solicit sales of the Contracts typically receive a portion of the
    compensation paid to the distributor in the form of commissions or other compensation, depending upon the
    agreement between the distributor and the registered representative. This compensation, as well as other incentives
    or payments, is not paid directly by contract owners or the separate account. We intend to recoup this compensation
    and other sales expenses paid to distributors through fees and charges imposed under the Contracts.

    Commission Payments. Persons who offer and sell the contracts may be paid a commission. The maximum
    percentage amount that may be paid with respect to a given purchase payment is the first-year percentage which
    ranges from 0% to a maximum of 6.5% of the first year of payments to an account. Renewal commissions paid on
    payments made after the first year and asset-based service fees may also be paid.

    We may also pay ongoing annual compensation of up to 40% of the commissions paid during the year in connection
    with certain premium received during that year, if the registered representative attains a certain threshold of sales of
    Company contracts. Individual registered representatives may receive all or a portion of compensation paid to their
    distributor, depending upon the firm’s practices. Commissions and annual payments, when combined, could exceed
    6.5% of total premium payments. To the extent permitted by SEC and FINRA rules and other applicable
    laws and regulations, we may also pay or allow other promotional incentives or payments in the form of cash
    payments or other compensation to distributors, which may require the registered representative to attain a certain
    threshold of sales of Company products.

    We have special compensation arrangements with certain distributors based on those firms’ aggregate or anticipated
    sales of the Contracts or other criteria. These special compensation arrangements will not be offered to all
    distributors, and the terms of such arrangements may differ among distributors based on various factors. Any such
    compensation payable to a distributor will not result in any additional direct charge to you by us.

    Some sales personnel may receive various types of non-cash compensation as special sales incentives, including
    trips, and we may also pay for some sales personnel to attend educational and/or business seminars. Any such
    compensation will be paid in accordance with SEC and FINRA rules. Management personnel of the
    Company, and of its affiliated broker-dealers, may receive additional compensation if the overall amount of
    investments in funds advised by the Company or its affiliates meets certain target levels or increases over time.
    Compensation for certain management personnel, including sales management personnel, may be enhanced if the
    overall amount of investments in the contracts and other products issued or advised by the Company or its affiliates
    increases over time. Certain sales management personnel may also receive compensation that is a specific
    percentage of the commissions paid to distributors or of purchase payments received under the contracts.

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

    • Marketing/distribution allowances which may be based on the percentages of premium received, the aggregate commissions paid and/or the aggregate assets held in relation to certain types of designated insurance products issued by the Company and/or its affiliates during the year;
    • Loans or advances of commissions in anticipation of future receipt of premiums (a form of lending to agents/registered representatives). These loans may have advantageous terms such as reduction or elimination of the interest charged on the loan and/or forgiveness of the principal amount of the loan, which terms may be conditioned on fixed insurance product sales;
    • Education and training allowances to facilitate our attendance at certain educational and training meetings to provide information and training about our products. We also hold training programs from time to time at our expense;

    ILIAC Marathon Plus (IICA)

    42

    • Sponsorship payments or reimbursements for broker/dealers to use in sales contests and/or meetings for their agents/registered representatives who sell our products. We do not hold contests based solely on the sales of this product;
    • Certain overrides and other benefits that may include cash compensation based on the amount of earned commissions, agent/representative recruiting or other activities that promote the sale of policies; and
    • Additional cash or noncash compensation and reimbursements permissible under existing law. This may include, but is not limited to, cash incentives, merchandise, trips, occasional entertainment, meals and tickets to sporting events, client appreciation events, business and educational enhancement items, payment for travel expenses (including meals and lodging) to pre-approved training and education seminars, and payment for advertising and sales campaigns.

    We may pay commissions, dealer concessions, wholesaling fees, overrides, bonuses, other allowances and benefits
    and the costs of all other incentives or training programs from our resources, which include the fees and charges
    imposed under the contracts.

    The following is a list of the top 25 selling firms that, during 2007, received the most compensation, in the
    aggregate, from us in connection with the sale of registered variable annuity contracts issued by us, ranked by total
    dollars received.

    1.      Symetra Investment Services, Inc.
     
    2.      AIG Financial Advisors, Inc.
     
    3.      Financial Network Investment Corporation
     
    4.      Linsco/Private Ledger Corporation
     
    5.      Lincoln Investment Planning, Inc.
     
    6.      Walnut Street Securities, Inc.
     
    7.      Valor Insurance Agency, Inc.
     
    8.      NFP Securities, Inc.
     
    9.      ING Financial Partners, Inc.
     
    10.      National Planning Corporation
     
    11.      Multi-Financial Securities Corporation
     
    12.      Jefferson Pilot Securities Corporation
     
    13.      Securities America, Inc.
     
    14.      Cadaret, Grant & Co., Inc.
     
    15.      Wachovia Securities, LLC
     
    16.      First Heartland Capital, Inc.
     
    17.      Northwestern Mutual Investment Services, LLC
     
    18.      A.G. Edwards & Sons, Inc.
     
    19.      Financial Telesis Inc./JHW Financial & Insurance Services
     
    20.      Tower Square Securities, Inc.
     
    21.      Mutual Service Corporation
     
    22.      Morgan Keegan and Company, Inc.
     
    23.      Ameritas Investment Corporation
     
    24.      Lincoln Financial Advisors Corporation
     
    25.      Waterstone Financial Group
     

    If the amounts paid to ING Financial Advisers, LLC, were included, ING Financial Advisers, LLC would be at the
    top of the list.

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

    Payment Delay or Suspension

    We reserve the right to suspend or postpone the date of any payment of benefits or values under any one of the
    following circumstances:

    • On any valuation date when the New York Stock Exchange is closed (except customary weekend and holiday closings) or when trading on the New York Stock Exchange is restricted;
    • When an emergency exists as determined by the SEC so that disposal of the securities held in the subaccounts is not reasonably practicable or it is not reasonably practicable to fairly determine the value of

    ILIAC Marathon Plus (IICA)

    43

    the subaccount’s assets; or

    · During any other periods the SEC may by order permit for the protection of investors.

    The conditions under which restricted trading or an emergency exists shall be determined by the rules and
    regulations of the SEC.

    Voting Rights

    Each of the subaccounts holds shares in a fund and each is entitled to vote at regular and special meetings of that
    fund. Under our current view of applicable law, we will vote the shares for each subaccount as instructed by persons
    having a voting interest in the subaccount. If you are a contract holder under a group contract, you have a fully
    vested interest in the contract and may instruct the group contract holder how to direct the Company to cast a certain
    number of votes. We will vote shares for which instructions have not been received in the same proportion as those
    for which we received instructions. Each person who has a voting interest in the separate account will receive
    periodic reports relating to the funds in which he or she has an interest, as well as any proxy materials and a form on
    which to give voting instructions. Voting instructions will be solicited by a written communication at least 14 days
    before the meeting.

    The number of votes (including fractional votes) you are entitled to direct will be determined as of the record date
    set by any fund you invest in through the subaccounts.

    • During the accumulation phase the number of votes is equal to the portion of your account value invested in the fund, divided by the net asset value of one share of that fund.
    • During the income phase the number of votes is equal to the portion of reserves set aside for the contract’s share of the fund, divided by the net asset value of one share of that fund.

    Contract Modifications

    We may change the contract as required by federal or state law or as otherwise permitted in the contract. In addition,
    we may, upon 30 days’ written notice to the group contract holder, make other changes to a group contract that
    would apply only to individuals who become participants under that contract after the effective date of such
    changes. If a group contract holder does not agree to a change, we reserve the right to refuse to establish new
    accounts under the contract. Certain changes will require the approval of appropriate state or federal regulatory
    authorities.

    Transfer of Ownership: Assignment

    We will accept assignments or transfers of ownership of a nonqualified contract or a qualified contract where such
    assignments or transfers are not prohibited, with proper notification. The date of any assignment or transfer of
    ownership will be the date we receive the notification at our Service Center. An assignment or transfer of ownership
    may have tax consequences and you should consult with a tax adviser before assigning or transferring ownership of
    the contract.

    An assignment of a contract will only be binding on the Company if it is made in writing and sent to the Company at
    our Service Center. We will use reasonable procedures to confirm that the assignment is authentic, including
    verification of signature. If we fail to follow our own procedures, we will be liable for any losses to you directly
    resulting from such failure. Otherwise, we are not responsible for the validity of any assignment. The rights of the
    contract holder and the interest of the annuitant and any beneficiary will be subject to the rights of any assignee we
    have on our records.

    Involuntary Terminations

    We reserve the right to terminate any account with a value of $2,500 or less immediately following a partial
    withdrawal. However, an IRA may only be closed out when payments to the contract have not been received for a

    ILIAC Marathon Plus (IICA)

    44

    24-month period and the paid-up annuity benefit at maturity would be less than $20 per month. If such right is
    exercised, you will be given 90 days’ advance written notice. No early withdrawal charge will be deducted for
    involuntary terminations. We do not intend to exercise this right in cases where the account value is reduced to
    $2,500 or less solely due to investment performance.

    Legal Matters and Proceedings

    We are not aware of any pending legal proceedings which involve Variable Annuity Account I as a party.

    The Company is involved in threatened or pending lawsuits/arbitrations arising from the normal conduct of
    business. Due to the climate in insurance and business litigation/arbitration, suits against the Company sometimes
    include claims for substantial compensatory, consequential or punitive damages and other types of relief. Moreover,
    certain claims are asserted as class actions, purporting to represent a group of similarly situated individuals. While it
    is not possible to forecast the outcome of such lawsuits/arbitrations, in light of existing insurance, reinsurance and
    established reserves, it is the opinion of management that the disposition of such lawsuits/arbitrations will not have a
    materially adverse effect on the Company’s operations or financial position.

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

    ILIAC Marathon Plus (IICA)

    45

    STATEMENT OF ADDITIONAL INFORMATION

    The Statement of Additional Information (“SAI”) contains more specific information on the separate account and the
    contract, as well as the financial statements of the separate account and the Company. The following is a list of the contents
    of the SAI.

      General Information and History
    Variable Annuity Account I
    Offering and Purchase of Contracts
    Income Phase Payments
    Sales Material and Advertising
    Independent Registered Public Accounting Firm
    Financial Statements of the Separate Account
    Consolidated Financial Statements of ING Life Insurance and Annuity Company

    You may request an SAI by calling the Company at the number listed in “Contract Overview — Questions: Contacting the
    Company.”

    ILIAC Marathon Plus (IICA)

    46

      APPENDIX IV

    CONDENSED FINANCIAL INFORMATION

    Except for subaccounts which did not commence operations as of December 31, 2007, the following tables give (1) the accumulation unit value (AUV) at
    the beginning of the period, (2) the AUV at the end of the period and (3) the total number of accumulation units outstanding at the end of the period for
    each subaccount of Variable Annuity Account I available under the contracts for the indicated periods. For those subaccounts that commenced operations
    during the period ended December 31, 2007, the “Value at beginning of period” shown is the value at first date of investment.

    TABLE I
    FOR CONTRACTS WITH TOTAL SEPARATE ACCOUNT CHARGES OF 1.40%

        2007    2006    2005    2004    2003    2002    2001    2000    1999    1998 
    CALVERT SOCIAL BALANCED PORTFOLIO                                         
    (Funds were first received in this option during December 1997)                                         
    Value at beginning of period    $13.48    $12.57    $12.07    $11.30    $9.61    $11.092    $12.089    $12.656    $11.437    $9.976 
    Value at end of period    $13.66    $13.48    $12.57    $12.07    $11.30    $9.61    $11.092    $12.089    $12.656    $11.437 
    Number of accumulation units outstanding at end of period    12,925    9,616    14,120    24,894    26,484    11,931    11,652    8,297    12,298    12,288 
    FEDERATED FUND FOR US GOVT. SECURITIES II                                         
    Value at beginning of period    $15.92    $15.51    $15.41                             
    Value at end of period    $16.69    $15.92    $15.51                             
    Number of accumulation units outstanding at end of period    74,991    91,363    181,455                             
    FIDELITY® VIP CONTRAFUND® PORTFOLIO                                         
    Value at beginning of period    $30.32    $27.52    $23.87    $20.96    $16.55    $18.515    $21.40    $23.242    $18.97    $14.802 
    Value at end of period    $35.15    $30.32    $27.52    $23.87    $20.96    $16.55    $18.515    $21.40    $23.242    $18.97 
    Number of accumulation units outstanding at end of period    572,159    725,198    884,670    987,722    1,061,457    1,144,943    1,299,125    1,565,470    1,826,356    1,853,911 
    FIDELITY® VIP EQUITY-INCOME PORTFOLIO                                         
    Value at beginning of period    $24.78    $20.91    $20.03    $18.22    $14.18    $17.311    $18.474    $17.279    $16.482    $14.974 
    Value at end of period    $24.81    $24.78    $20.91    $20.03    $18.22    $14.18    $17.311    $18.474    $17.279    $16.482 
    Number of accumulation units outstanding at end of period    747,375    939,247    1,186,833    1,549,447    1,817,918    2,000,319    2,297,364    2,335,570    2,597,042    2,792,889 
    FIDELITY® VIP INDEX 500 PORTFOLIO                                         
    Value at beginning of period    $24.22    $21.22    $20.53    $18.83    $14.87    $19.397    $22.383    $25.027    $21.063    $16.646 
    Value at end of period    $25.18    $24.22    $21.22    $20.53    $18.83    $14.87    $19.397    $22.383    $25.027    $21.063 
    Number of accumulation units outstanding at end of period    365,035    492,861    730,266    993,587    1,196,859    1,193,376    1,469,435    1,723,480    1,838,819    1,953,506 
    FIDELITY® VIP INVESTMENT GRADE BOND                                         
    PORTFOLIO                                         
    Value at beginning of period    $16.64    $16.17    $16.05                             
    Value at end of period    $17.12    $16.64    $16.17                             
    Number of accumulation units outstanding at end of period    15,324    15,932    18,605                             
    ING EVERGREEN OMEGA PORTFOLIO                                         
    (Funds were first received in this option during September 2005)                                         
    Value at beginning of period    $10.62    $10.17    $9.92                             
    Value at end of period    $11.72    $10.62    $10.17                             
    Number of accumulation units outstanding at end of period    72,800    83,905    106,764                             

    IICA Mthn Plus

    IV-1

                                                                                                                       Condensed Financial Information (continued)                 
     
     
        2007    2006    2005    2004    2003    2002    2001    2000    1999    1998 
    ING FMRSM LARGE CAP GROWTH PORTFOLIO                                         
    (Funds were first received in this option during September 2005)                                         
    Value at beginning of period    $10.04    $9.90    $9.66                             
    Value at end of period    $10.27    $10.04    $9.90                             
    Number of accumulation units outstanding at end of period    662,915    872,703    114,102                             
    ING JPMORGAN EMERGING MARKETS EQUITY                                         
    PORTFOLIO                                         
    (Funds were first received in this option during December 2005)                                         
    Value at beginning of period    $14.73    $10.97    $10.69                             
    Value at end of period    $20.16    $14.73    $10.97                             
    Number of accumulation units outstanding at end of period    57,901    47,791    20,857                             
    ING JPMORGAN INTERNATIONAL PORTFOLIO                                         
    (Funds were first received in this option during November 1997)                                         
    Value at beginning of period    $16.41    $13.62    $12.55    $10.71    $8.39    $10.384    $14.415    $18.181    $11.64    $9.912 
    Value at end of period    $17.81    $16.41    $13.62    $12.55    $10.71    $8.39    $10.384    $14.415    $18.181    $11.64 
    Number of accumulation units outstanding at end of period    80,810    81,055    87,472    145,478    127,225    141,521    105,209    76,956    87,650    79,756 
    ING JPMORGAN VALUE OPPORTUNITIES PORTFOLIO                                         
    (Funds were first received in this option during May 2005)                                         
    Value at beginning of period    $12.59    $10.64    $10.30                             
    Value at end of period    $12.27    $12.59    $10.64                             
    Number of accumulation units outstanding at end of period    98,828    133,015    145,473                             
    ING LEGG MASON PARTNERS AGGRESSIVE GROWTH                                         
    PORTFOLIO                                         
    (Funds were first received in this option during November 1997)                                         
    Value at beginning of period    $11.68    $10.74    $9.77    $9.03    $6.63    $10.395    $14.097    $20.074    $13.494    $10.554 
    Value at end of period    $11.33    $11.68    $10.74    $9.77    $9.03    $6.63    $10.395    $14.097    $20.074    $13.494 
    Number of accumulation units outstanding at end of period    445,030    545,503    682,314    872,366    1,184,775    1,301,937    1,798,491    2,155,759    2,336,393    2,557,155 
    ING MARSICO INTERNATIONAL OPPORTUNITIES                                         
    PORTFOLIO                                         
    (Funds were first received in this option during April 2006)                                         
    Value at beginning of period    $10.69    $9.97                                 
    Value at end of period    $12.70    $10.69                                 
    Number of accumulation units outstanding at end of period    81,552    78,239                                 
    ING MFS TOTAL RETURN PORTFOLIO                                         
    (Funds were first received in this option during May 2005)                                         
    Value at beginning of period    $11.53    $10.42    $10.13                             
    Value at end of period    $11.86    $11.53    $10.42                             
    Number of accumulation units outstanding at end of period    598,111    719,175    1,007,580                             
    ING OPPENHEIMER GLOBAL PORTFOLIO                                         
    (Funds were first received in this option during April 2005)                                         
    Value at beginning of period    $13.97    $12.00    $10.06                             
    Value at end of period    $14.67    $13.97    $12.00                             
    Number of accumulation units outstanding at end of period    1,154,427    1,421,076    1,845,044                             
    ING OPPENHEIMER MAIN STREET PORTFOLIO®                                         
    (Funds were first received in this option during May 2005)                                         
    Value at beginning of period    $12.55    $11.04    $10.24                             
    Value at end of period    $12.93    $12.55    $11.04                             
    Number of accumulation units outstanding at end of period    21,882    23,059    40,711                             

    IICA Mthn Plus

    IV-2

                                                                                                                       Condensed Financial Information (continued)                 
     
     
        2007    2006    2005    2004    2003    2002    2001    2000    1999    1998 
    ING OPPENHEIMER STRATEGIC INCOME PORTFOLIO                                         
    (Funds were first received in this option during April 2005)                                         
    Value at beginning of period    $10.80    $10.10    $10.01                             
    Value at end of period    $11.58    $10.80    $10.10                             
    Number of accumulation units outstanding at end of period    426,901    472,345    630,746                             
    ING PIMCO HIGH YIELD PORTFOLIO                                         
    (Funds were first received in this option during August 2005)                                         
    Value at beginning of period    $11.29    $10.51    $10.44                             
    Value at end of period    $11.45    $11.29    $10.51                             
    Number of accumulation units outstanding at end of period    93,631    135,391    150,818                             
    ING THORNBURG VALUE PORTFOLIO                                         
    (Funds were first received in this option during November 1997)                                         
    Value at beginning of period    $14.33    $12.44    $12.42    $11.16    $8.84    $12.836    $17.303    $18.612    $12.686    $10.152 
    Value at end of period    $15.15    $14.33    $12.44    $12.42    $11.16    $8.84    $12.836    $17.303    $18.612    $12.686 
    Number of accumulation units outstanding at end of period    97,021    104,331    119,686    178,324    206,430    333,609    329,528    535,004    473,282    358,518 
    ING T. ROWE PRICE DIVERSIFIED MID CAP GROWTH                                         
    PORTFOLIO                                         
    (Funds were first received in this option during April 2005)                                         
    Value at beginning of period    $12.57    $11.69    $10.04                             
    Value at end of period    $14.06    $12.57    $11.69                             
    Number of accumulation units outstanding at end of period    282,338    317,037    447,605                             
    ING T. ROWE PRICE GROWTH EQUITY PORTFOLIO                                         
    (Funds were first received in this option during November 1997)                                         
    Value at beginning of period    $22.69    $20.31    $19.40    $17.89    $13.85    $18.318    $20.694    $20.993    $17.406    $13.834 
    Value at end of period    $24.59    $22.69    $20.31    $19.40    $17.89    $13.85    $18.318    $20.694    $20.993    $17.406 
    Number of accumulation units outstanding at end of period    395,796    489,126    651,997    859,736    992,016    1,092,108    1,299,610    1,516,955    1,472,258    1,616,748 
    ING UBS U.S. LARGE CAP EQUITY PORTFOLIO                                         
    (Funds were first received in this option during November 1997)                                         
    Value at beginning of period    $12.04    $10.66    $9.88    $8.74    $7.09    $9.574    $12.274    $13.032    $10.656    $8.786 
    Value at end of period    $12.01    $12.04    $10.66    $9.88    $8.74    $7.09    $9.574    $12.274    $13.032    $10.656 
    Number of accumulation units outstanding at end of period    326,655    390,460    497,936    630,854    739,569    916,120    1,177,274    1,421,458    1,550,656    1,761,234 
    ING VAN KAMPEN EQUITY AND INCOME PORTFOLIO                                         
    (Funds were first received in this option during April 2005)                                         
    Value at beginning of period    $12.09    $10.88    $10.06                             
    Value at end of period    $12.34    $12.09    $10.88                             
    Number of accumulation units outstanding at end of period    471,290    598,404    759,682                             
    ING VP BALANCED PORTFOLIO                                         
    Value at beginning of period    $21.21    $19.56    $19.03    $17.64    $15.05    $17.016    $18.018    $18.376    $16.405    $14.228 
    Value at end of period    $22.08    $21.21    $19.56    $19.03    $17.64    $15.05    $17.016    $18.018    $18.376    $16.405 
    Number of accumulation units outstanding at end of period    163,716    200,792    157,366    195,681    240,188    273,826    315,543    364,760    387,565    369,652 
    ING VP GLOBAL SCIENCE AND TECHNOLOGY                                         
    PORTFOLIO                                         
    (Funds were first received in this option during May 2000)                                         
    Value at beginning of period    $4.17    $3.94    $3.58    $3.67    $2.56    $4.424    $5.824    $9.106         
    Value at end of period    $4.89    $4.17    $3.94    $3.58    $3.67    $2.56    $4.424    $5.824         
    Number of accumulation units outstanding at end of period    101,881    76,584    91,603    162,127    410,635    115,373    74,229    34,998         
    ING VP GROWTH AND INCOME PORTFOLIO                                         
    Value at beginning of period    $17.81    $15.81    $14.83    $13.88    $11.16    $15.096    $18.765    $21.374    $18.461    $16.354 
    Value at end of period    $18.86    $17.81    $15.81    $14.83    $13.88    $11.16    $15.096    $18.765    $21.374    $18.461 
    Number of accumulation units outstanding at end of period    222,094    289,635    409,644    511,623    624,677    718,631    896,573    1,015,824    1,172,637    1,217,448 
     
     
     
    IICA Mthn Plus                                         
                IV-3                             

        Condensed Financial Information (continued)                 
     
     
        2007    2006    2005    2004    2003    2002    2001    2000    1999    1998 
    ING VP GROWTH PORTFOLIO                                         
    (Funds were first received in this option during May 1997)                                         
    Value at beginning of period    $15.42    $15.23    $14.13    $13.36    $10.40    $14.84    $20.638    $23.771    $17.862    $13.158 
    Value at end of period    $17.92    $15.42    $15.23    $14.13    $13.36    $10.40    $14.84    $20.638    $23.771    $17.862 
    Number of accumulation units outstanding at end of period    25,704    60,251    38,833    57,496    72,287    79,048    109,809    256    156,242    284,771 
    ING VP INDEX PLUS LARGECAP PORTFOLIO                                         
    Value at beginning of period    $21.48    $19.01    $18.30    $16.78    $13.49    $17.439    $20.478    $22.923    $18.704    $14.414 
    Value at end of period    $22.24    $21.48    $19.01    $18.30    $16.78    $13.49    $17.439    $20.478    $22.923    $18.704 
    Number of accumulation units outstanding at end of period    91,167    151,075    193,784    219,239    279,207    305,209    345,653    445,665    536,795    654,767 
    ING VP INTERMEDIATE BOND PORTFOLIO                                         
    Value at beginning of period    $16.37    $15.95    $15.69    $15.17    $14.47    $13.549    $12.637    $11.689    $11.943    $11.201 
    Value at end of period    $17.11    $16.37    $15.95    $15.69    $15.17    $14.47    $13.549    $12.637    $11.689    $11.943 
    Number of accumulation units outstanding at end of period    288,015    305,336    372,441    419,545    585,875    855,016    580,831    422,109    516,266    500,098 
    ING VP MONEY MARKET PORTFOLIO                                         
    Value at beginning of period    $13.17    $12.74    $12.54    $12.58    $12.65    $12.624    $12.319    $11.744    $11.335    $10.90 
    Value at end of period    $13.65    $13.17    $12.74    $12.54    $12.58    $12.65    $12.624    $12.319    $11.744    $11.335 
    Number of accumulation units outstanding at end of period    633,870    635,323    640,751    677,901    1,135,320    2,039,666    2,045,640    1,690,766    2,775,866    2,041,170 
    ING VP SMALL COMPANY PORTFOLIO                                         
    (Funds were first received in this option during May 1997)                                         
    Value at beginning of period    $27.43    $23.81    $21.90    $19.42    $14.33    $18.926    $18.458    $17.54    $13.595    $13.638 
    Value at end of period    $28.63    $27.43    $23.81    $21.90    $19.42    $14.33    $18.926    $18.458    $17.54    $13.595 
    Number of accumulation units outstanding at end of period    106,341    149,129    192,426    286,551    409,801    357,092    342,594    343,701    136,571    225,982 
    ING VP STRATEGIC ALLOCATION CONSERVATIVE                                         
    PORTFOLIO                                         
    Value at beginning of period    $17.88    $16.73    $16.34    $15.35    $13.70    $14.522    $15.088    $14.599    $13.825    $13.112 
    Value at end of period    $18.65    $17.88    $16.73    $16.34    $15.35    $13.70    $14.522    $15.088    $14.599    $13.825 
    Number of accumulation units outstanding at end of period    83,593    61,416    70,291    81,018    97,343    98,588    114,194    79,712    94,121    95,815 
    ING VP STRATEGIC ALLOCATION GROWTH                                         
    PORTFOLIO                                         
    Value at beginning of period    $19.97    $17.89    $17.09    $15.47    $12.62    $14.841    $17.018    $17.374    $15.409    $14.983 
    Value at end of period    $20.68    $19.97    $17.89    $17.09    $15.47    $12.62    $14.841    $17.018    $17.374    $15.409 
    Number of accumulation units outstanding at end of period    94,339    107,970    136,356    100,636    64,273    52,779    57,017    66,806    74,094    83,798 
    ING VP STRATEGIC ALLOCATION MODERATE                                         
    PORTFOLIO                                         
    Value at beginning of period    $18.72    $17.07    $16.54    $15.22    $12.92    $14.481    $15.792    $15.949    $14.676    $14.054 
    Value at end of period    $19.46    $18.72    $17.07    $16.54    $15.22    $12.92    $14.481    $15.792    $15.949    $14.676 
    Number of accumulation units outstanding at end of period    113,872    107,680    97,208    84,249    63,658    34,383    33,977    39,050    42,322    40,712 
    ING VP VALUE OPPORTUNITY PORTFOLIO                                         
    (Funds were first received in this option during May 1997)                                         
    Value at beginning of period    $21.46    $18.76    $17.77    $16.37    $13.32    $18.25    $20.48    $18.847    $15.985    $13.246 
    Value at end of period    $21.80    $21.46    $18.76    $17.77    $16.37    $13.32    $18.25    $20.48    $18.847    $15.985 
    Number of accumulation units outstanding at end of period    55,997    69,523    91,012    132,862    146,199    200,434    310,005    280,864    150,268    311,397 

    IICA Mthn Plus

    IV-4

                                                                                                                       Condensed Financial Information (continued)                 
     
     
     
    TABLE II
     
    FOR CONTRACTS ISSUED WITH TOTAL SEPARATE ACCOUNT CHARGES OF 1.25%
     
     
        2007    2006    2005    2004    2003    2002    2001    2000    1999    1998 
    CALVERT SOCIAL BALANCED PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $13.37    $12.45    $11.93    $11.16    $9.47    $10.919    $11.882    $12.421    $11.208    $10.596 
    Value at end of period    $13.57    $13.37    $12.45    $11.93    $11.16    $9.47    $10.919    $11.882    $12.421    $11.208 
    Number of accumulation units outstanding at end of period    2,600    5,115    4,427    9,781    11,187    7,060    8,516    10,043    12,257    11,121 
    FIDELITY® VIP CONTRAFUND® PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $20.28    $18.38    $15.92    $13.96    $11.00    $12.292    $14.186    $15.383    $12.537    $11.136 
    Value at end of period    $23.55    $20.28    $18.38    $15.92    $13.96    $11.00    $12.292    $14.186    $15.383    $12.537 
    Number of accumulation units outstanding at end of period    111,431    144,395    189,474    270,618    284,306    282,851    331,463    375,961    410,630    353,548 
    FIDELITY® VIP EQUITY-INCOME PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $16.45    $13.86    $13.25    $12.03    $9.35    $11.401    $12.148    $11.346    $10.806    $10.957 
    Value at end of period    $16.49    $16.45    $13.86    $13.25    $12.03    $9.35    $11.401    $12.148    $11.346    $10.806 
    Number of accumulation units outstanding at end of period    167,211    214,849    308,442    440,175    477,417    482,335    502,916    484,590    576,813    476,634 
    FIDELITY® VIP INDEX 500 PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $14.27    $12.49    $12.06    $11.04    $8.71    $11.342    $13.067    $14.589    $12.259    $11.159 
    Value at end of period    $14.86    $14.27    $12.49    $12.06    $11.04    $8.71    $11.342    $13.067    $14.589    $12.259 
    Number of accumulation units outstanding at end of period    86,806    115,177    170,290    255,117    275,998    318,692    360,463    425,196    738,298    409,685 
    ING FMRSM LARGE CAP GROWTH PORTFOLIO                                         
    (Funds were first received in this option during April 2006)                                         
    Value at beginning of period    $10.06    $10.11                                 
    Value at end of period    $10.31    $10.06                                 
    Number of accumulation units outstanding at end of period    106,468    131,528                                 
    ING JPMORGAN EMERGING MARKETS EQUITY                                         
    PORTFOLIO                                         
    (Funds were first received in this option during December 2005)                                         
    Value at beginning of period    $14.76    $10.97    $10.76                             
    Value at end of period    $20.23    $14.76    $10.97                             
    Number of accumulation units outstanding at end of period    12,984    5,321    1,129                             
    ING JPMORGAN INTERNATIONAL PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $15.69    $13.00    $11.96    $10.19    $7.97    $9.855    $13.658    $17.201    $10.995    $11.145 
    Value at end of period    $17.06    $15.69    $13.00    $11.96    $10.19    $7.97    $9.855    $13.658    $17.201    $10.995 
    Number of accumulation units outstanding at end of period    12,412    15,818    30,651    38,432    32,476    34,668    35,605    34,335    34,698    30,516 
    ING JPMORGAN VALUE OPPORTUNITIES PORTFOLIO                                         
    (Funds were first received in this option during May 2005)                                         
    Value at beginning of period    $12.62    $10.65    $10.31                             
    Value at end of period    $12.32    $12.62    $10.65                             
    Number of accumulation units outstanding at end of period    1,731    2,702    1,281                             

    IICA Mthn Plus

    IV-5

                                                                                                                       Condensed Financial Information (continued)                 
     
     
        2007    2006    2005    2004    2003    2002    2001    2000    1999    1998 
    ING LEGG MASON PARTNERS AGGRESSIVE GROWTH                                         
    PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $10.34    $9.49    $8.62    $7.96    $5.83    $9.13    $12.362    $17.577    $11.797    $11.104 
    Value at end of period    $10.04    $10.34    $9.49    $8.62    $7.96    $5.83    $9.13    $12.362    $17.577    $11.797 
    Number of accumulation units outstanding at end of period    39,989    53,971    85,413    96,144    123,870    146,220    178,926    204,067    258,892    205,549 
    ING MARSICO INTERNATIONAL OPPORTUNITIES                                         
    PORTFOLIO                                         
    (Funds were first received in this option during May 2006)                                         
    Value at beginning of period    $10.70    $10.19                                 
    Value at end of period    $12.74    $10.70                                 
    Number of accumulation units outstanding at end of period    9,732    1,795                                 
    ING MFS TOTAL RETURN PORTFOLIO                                         
    (Funds were first received in this option during May 2005)                                         
    Value at beginning of period    $11.56    $10.43    $10.02                             
    Value at end of period    $11.91    $11.56    $10.43                             
    Number of accumulation units outstanding at end of period    136,400    165,817    237,360                             
    ING OPPENHEIMER GLOBAL PORTFOLIO                                         
    (Funds were first received in this option during April 2005)                                         
    Value at beginning of period    $14.00    $12.02    $10.06                             
    Value at end of period    $14.73    $14.00    $12.02                             
    Number of accumulation units outstanding at end of period    149,191    186,321    270,034                             
    ING OPPENHEIMER MAIN STREET PORTFOLIO®                                         
    (Funds were first received in this option during May 2005)                                         
    Value at beginning of period    $12.58    $11.05    $10.42                             
    Value at end of period    $12.98    $12.58    $11.05                             
    Number of accumulation units outstanding at end of period    8,763    12,420    13,386                             
    ING OPPENHEIMER STRATEGIC INCOME PORTFOLIO                                         
    (Funds were first received in this option during April 2005)                                         
    Value at beginning of period    $10.83    $10.11    $10.01                             
    Value at end of period    $11.63    $10.83    $10.11                             
    Number of accumulation units outstanding at end of period    89,896    123,268    193,543                             
    ING PIMCO HIGH YIELD PORTFOLIO                                         
    (Funds were first received in this option during May 2005)                                         
    Value at beginning of period    $11.32    $10.52    $10.23                             
    Value at end of period    $11.49    $11.32    $10.52                             
    Number of accumulation units outstanding at end of period    2,036    6,071    15,707                             
    ING THORNBURG VALUE PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $13.73    $11.90    $11.86    $10.64    $8.42    $12.203    $16.424    $17.64    $12.005    $11.503 
    Value at end of period    $14.54    $13.73    $11.90    $11.86    $10.64    $8.42    $12.203    $16.424    $17.64    $12.005 
    Number of accumulation units outstanding at end of period    20,758    23,342    51,670    68,660    83,398    119,891    126,600    145,704    145,648    108,102 
    ING T. ROWE PRICE DIVERSIFIED MID CAP GROWTH                                         
    PORTFOLIO                                         
    (Funds were first received in this option during April 2005)                                         
    Value at beginning of period    $12.61    $11.70    $10.04                             
    Value at end of period    $14.12    $12.61    $11.70                             
    Number of accumulation units outstanding at end of period    31,600    35,649    67,621                             

    IICA Mthn Plus

    IV-6

        Condensed Financial Information (continued)                 
     
     
        2007    2006    2005    2004    2003    2002    2001    2000    1999    1998 
    ING T. ROWE PRICE GROWTH EQUITY PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $15.97    $14.27    $13.61    $12.53    $9.69    $12.795    $14.433    $14.62    $12.103    $11.12 
    Value at end of period    $17.33    $15.97    $14.27    $13.61    $12.53    $9.69    $12.795    $14.433    $14.62    $12.103 
    Number of accumulation units outstanding at end of period    67,347    75,304    114,098    132,419    117,552    109,183    121,445    132,805    121,008    120,157 
    ING UBS U.S. LARGE CAP EQUITY PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $13.30    $11.76    $10.89    $9.61    $7.79    $10.501    $13.442    $14.25    $11.634    $11.178 
    Value at end of period    $13.29    $13.30    $11.76    $10.89    $9.61    $7.79    $10.501    $13.442    $14.25    $11.634 
    Number of accumulation units outstanding at end of period    43,209    36,959    50,188    69,767    88,444    110,061    137,737    145,226    154,290    131,761 
    ING VAN KAMPEN EQUITY AND INCOME PORTFOLIO                                     
    (Funds were first received in this option during April 2005)                                         
    Value at beginning of period    $12.12    $10.89    $10.06                             
    Value at end of period    $12.39    $12.12    $10.89                             
    Number of accumulation units outstanding at end of period    81,815    116,768    182,409                             
    ING VP BALANCED PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $14.81    $13.63    $13.24    $12.25    $10.44    $11.787    $12.462    $12.69    $11.312    $10.708 
    Value at end of period    $15.43    $14.81    $13.63    $13.24    $12.25    $10.44    $11.787    $12.462    $12.69    $11.312 
    Number of accumulation units outstanding at end of period    61,732    90,278    53,785    79,752    100,168    100,062    97,168    106,603    122,860    112,689 
    ING VP GLOBAL SCIENCE AND TECHNOLOGY                                         
    PORTFOLIO                                         
    (Funds were first received in this option during May 2000)                                         
    Value at beginning of period    $4.21    $3.98    $3.60    $3.69    $2.57    $4.435    $5.83    $8.85         
    Value at end of period    $4.95    $4.21    $3.98    $3.60    $3.69    $2.57    $4.435    $5.83         
    Number of accumulation units outstanding at end of period    5,750    1,441    13,786    13,985    51,590    10,727    2,710    2,543         
    ING VP GROWTH AND INCOME PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $10.80    $9.58    $8.97    $8.38    $6.73    $9.087    $11.278    $12.827    $11.063    $11.063 
    Value at end of period    $11.46    $10.80    $9.58    $8.97    $8.38    $6.73    $9.087    $11.278    $12.827    $11.063 
    Number of accumulation units outstanding at end of period    74,617    92,441    262,047    320,334    347,069    407,326    384,290    419,418    474,578    794,335 
    ING VP GROWTH PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $11.34    $11.19    $10.36    $9.78    $7.60    $10.831    $15.039    $17.296    $12.977    $11.455 
    Value at end of period    $13.20    $11.34    $11.19    $10.36    $9.78    $7.60    $10.831    $15.039    $17.296    $12.977 
    Number of accumulation units outstanding at end of period    17,976    20,200    23,464    29,696    31,978    37,025    50,862    89,897    74,875    75,506 
    ING VP INDEX PLUS LARGECAP PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $14.57    $12.88    $12.38    $11.33    $9.10    $11.741    $13.766    $15.387    $12.535    $11.157 
    Value at end of period    $15.11    $14.57    $12.88    $12.38    $11.33    $9.10    $11.741    $13.766    $15.387    $12.535 
    Number of accumulation units outstanding at end of period    41,812    61,797    86,451    106,738    113,492    139,607    182,887    190,980    208,800    215,324 
    ING VP INTERMEDIATE BOND PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $14.71    $14.32    $14.06    $13.57    $12.93    $12.087    $11.256    $10.396    $10.606    $10.118 
    Value at end of period    $15.40    $14.71    $14.32    $14.06    $13.57    $12.93    $12.087    $11.256    $10.396    $10.606 
    Number of accumulation units outstanding at end of period    95,428    104,114    118,765    132,044    156,673    208,945    203,572    146,073    284,700    211,071 
    ING VP MONEY MARKET PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $12.20    $11.78    $11.58    $11.60    $11.64    $11.603    $11.306    $10.762    $10.371    $10.097 
    Value at end of period    $12.67    $12.20    $11.78    $11.58    $11.60    $11.64    $11.603    $11.306    $10.762    $10.371 
    Number of accumulation units outstanding at end of period    193,745    183,382    183,467    266,154    309,034    604,639    896,013    726,382    370,653    319,753 
     
    IICA Mthn Plus                                         
                IV-7                             

        Condensed Financial Information (continued)                 
     
     
        2007    2006    2005    2004    2003    2002    2001    2000    1999    1998 
    ING VP SMALL COMPANY PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $19.86    $17.22    $15.81    $14.00    $10.31    $13.599    $13.243    $12.565    $9.724    $11.126 
    Value at end of period    $20.76    $19.86    $17.22    $15.81    $14.00    $10.31    $13.599    $13.243    $12.565    $9.724 
    Number of accumulation units outstanding at end of period    40,023    56,421    78,633    101,386    109,954    78,472    104,124    109,027    80,258    71,465 
    ING VP STRATEGIC ALLOCATION CONSERVATIVE                                         
    PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $13.59    $12.70    $12.38    $11.61    $10.35    $10.953    $11.362    $10.978    $10.38    $10.404 
    Value at end of period    $14.20    $13.59    $12.70    $12.38    $11.61    $10.35    $10.953    $11.362    $10.978    $10.38 
    Number of accumulation units outstanding at end of period    856    1,237    7,956    21,114    11,808    16,425    29,205    23,848    29,162    29,301 
    ING VP STRATEGIC ALLOCATION GROWTH                                         
    PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $13.20    $11.81    $11.26    $10.18    $8.29    $9.733    $11.143    $11.359    $10.059    $10.694 
    Value at end of period    $13.69    $13.20    $11.81    $11.26    $10.18    $8.29    $9.733    $11.143    $11.359    $10.059 
    Number of accumulation units outstanding at end of period    10,704    11,124    9,031    6,479    9,774    5,274    6,934    16,321    16,116    17,615 
    ING VP STRATEGIC ALLOCATION MODERATE                                         
    PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $13.26    $12.07    $11.68    $10.73    $9.09    $10.179    $11.084    $11.177    $10.27    $10.504 
    Value at end of period    $13.81    $13.26    $12.07    $11.68    $10.73    $9.09    $10.179    $11.084    $11.177    $10.27 
    Number of accumulation units outstanding at end of period    7,831    8,957    10,535    9,987    6,168    12,126    17,957    16,607    9,394    18,307 
    ING VP VALUE OPPORTUNITY PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $15.82    $13.81    $13.07    $12.01    $9.76    $13.355    $14.964    $13.75    $11.644    $11.097 
    Value at end of period    $16.10    $15.82    $13.81    $13.07    $12.01    $9.76    $13.355    $14.964    $13.75    $11.644 
    Number of accumulation units outstanding at end of period    17,009    21,879    37,696    54,950    53,100    58,978    76,652    71,351    77,073    110,097 

    IICA Mthn Plus

    IV-8

      APPENDIX I

    ILIAC Guaranteed Account

    The ILIAC Guaranteed Account (the “Guaranteed Account”) (formerly the IICA Guaranteed Account) is a
    fixed interest option available during the accumulation phase under the contract. This Appendix is only a
    summary of certain facts about the Guaranteed Account. Please read the Guaranteed Account prospectus
    carefully before investing in this option.

    In General. Amounts invested in the Guaranteed Account earn specified interest rates if left in the Guaranteed
    Account for specified periods of time. If you withdraw or transfer those amounts before the specified periods elapse,
    we may apply a market value adjustment (described below), which may be positive or negative.

    When deciding to invest in the Guaranteed Account, contact your sales representative or the Company to learn:

    • The interest rate(s) we will apply to amounts invested in the Guaranteed Account.
      We change the rate(s) periodically. Be certain you know the rate we guarantee on the day your accountdollars are invested in the Guaranteed Account. Guaranteed interest rates will never be less than an annualeffective rate of 3%.
    • The period of time your account dollars need to remain in the Guaranteed Account in order to earn the rate(s). You are required to leave your account dollars in the Guaranteed Account for a specified period of time in order to earn the guaranteed interest rate(s).

    Deposit Period. During a deposit period, we offer a specific interest rate for dollars invested for a certain
    guaranteed term. For a specific interest rate and guaranteed term to apply, account dollars must be invested in the
    Guaranteed Account during the deposit period for which that rate and term are offered.

    Interest Rates. We guarantee different interest rates, depending upon when account dollars are invested in the
    Guaranteed Account. For guaranteed terms one year or longer, we may apply more than one specified interest rate.
    The interest rate we guarantee is an annual effective yield. That means the rate reflects a full year’s interest. We
    credit interest daily at a rate that will provide the guaranteed annual effective yield over one year. Guaranteed
    interest rates will never be less than an annual effective rate of 3%. Among other factors, the safety of the interest
    rate guarantees depends upon the Company’s claims-paying ability.

    Guaranteed Terms. The guaranteed term is the period of time account dollars must be left in the Guaranteed
    Account in order to earn the guaranteed interest rate. For guaranteed terms one year or longer, we may offer
    different rates for specified time periods within a guaranteed term. We offer different guaranteed terms at different
    times. We also may offer more than one guaranteed term of the same duration with different interest rates. Check
    with your sales representative or our Customer Service Center to learn what terms are being offered. The Company
    also reserves the right to limit the number of guaranteed terms or the availability of certain guaranteed terms.

    Fees and Other Deductions. If all or a portion of your account value in the Guaranteed Account is withdrawn or
    transferred, you may incur one or more of the following:

    • Market Value Adjustment — as described in this appendix and in the Guaranteed Account prospectus;
    • Tax penalties and/or tax withholding—see “Taxation;”
    • Early withdrawal charge—see “Fees;” or
    • Maintenance fee—see “Fees.”

    ILIAC Marathon Plus (IICA)

    I-1

    We do not make deductions from amounts in the Guaranteed Account to cover mortality and expense risks. Rather,
    we consider these risks when determining the interest rate to be credited.

    Market Value Adjustment (“MVA”). If your account value is withdrawn or transferred from the Guaranteed
    Account before the guaranteed term is completed, an MVA may apply. The MVA reflects investment value changes
    caused by changes in interest rates occurring since the date of deposit. The MVA may be positive or negative.

    If interest rates at the time of withdrawal or transfer have increased since the date of deposit, the value of the
    investment decreases and the MVA will be negative. This could result in your receiving less than the amount you
    paid into the Guaranteed Account. If interest rates at the time of withdrawal or transfer have decreased since the date
    of deposit, the value of the investment increases and the MVA will be positive.

    MVA Waiver. For withdrawals or transfers from a guaranteed term before the guaranteed term matures, the MVA
    may be waived for:

    • Transfers due to participation in the dollar cost averaging program;
    • Amounts distributed under a systematic distribution option (described in “Systematic Distribution Options”), if available;
    • Withdrawals for minimum distributions required by the Tax Code and for which the early withdrawal charge is waived; and
    • Withdrawals due to your exercise of the right to cancel your contract (described in “Right to Cancel”).

    Death Benefit. When a death benefit is paid under the contract within six months of the date of death, only a
    positive aggregate MVA amount, if any, is applied to the account value attributable to amounts withdrawn from the
    Guaranteed Account. This provision does not apply upon the death of a spousal beneficiary or joint contract holder
    who continued the account after the first death. If a death benefit is paid more than six months from the date of
    death, a positive or negative aggregate MVA amount, as applicable, will be applied.

    Partial Withdrawals. For partial withdrawals during the accumulation phase, amounts to be withdrawn from the
    Guaranteed Account will be withdrawn pro-rata from each group of deposits having the same length of time until
    the maturity date (“Guaranteed Term Group”). Within each Guaranteed Term Group, the amount will be withdrawn
    first from the oldest deposit period, then from the next oldest and so on until the amount requested is satisfied.

    Guaranteed Terms Maturity. As a guaranteed term matures, assets accumulating under the Guaranteed Account
    may be (a) transferred to a new guaranteed term, (b) transferred to other available investment options, or (c)
    withdrawn. Amounts withdrawn may be subject to an early withdrawal charge, taxation and, if you are under age
    59½, tax penalties may apply.

    If no direction is received from you at our Service Center by the maturity date of a guaranteed term, the amount
    from the maturing guaranteed term will be transferred to a new guaranteed term of a similar length. If the same
    guaranteed term is no longer available, the next shortest guaranteed term available in the current deposit period will
    be used. If no shorter guaranteed term is available, the next longer guaranteed term will be used.

    If you do not provide instructions concerning the maturity value of a maturing guaranteed term, the maturity value
    transfer provision applies. This provision allows transfers or withdrawals without an MVA if the transfer or
    withdrawal occurs during the calendar month immediately following a guaranteed term maturity date. This waiver
    of the MVA only applies to the first transaction regardless of the amount involved in the transaction. Under the
    Guaranteed Account each guaranteed term is counted as one funding option. If a guaranteed term matures and is
    renewed for the same term, it will not count as an additional investment option for purposes of any limitation on the
    number of investment options.

    ILIAC Marathon Plus (IICA)

    I-2

    Subsequent Purchase Payments. Purchase payments received after your initial purchase payment to the
    Guaranteed Account will be allocated in the same proportions as the last allocation, unless you properly instruct us
    to do otherwise. If the same guaranteed term(s) is not available, the next shortest term will be used. If no shorter
    guaranteed term is available, the next longer guaranteed term will be used.

    Dollar Cost Averaging. The Company may offer more than one guaranteed term of the same duration and credit
    one with a higher rate contingent upon use only with the dollar cost averaging program. If amounts are applied to a
    guaranteed term which is credited with a higher rate using dollar cost averaging and the dollar cost averaging is
    discontinued, the amounts will be transferred to another guaranteed term of the same duration and an MVA will
    apply.

    Transfer of Account Dollars. Generally, account dollars invested in the Guaranteed Account may be transferred
    among guaranteed terms offered through the Guaranteed Account and/or to other investment options offered through
    the contract. However, transfers may not be made during the deposit period in which your account dollars are
    invested in the Guaranteed Account or for 90 days after the close of that deposit period. We will apply an MVA to
    transfers made before the end of a guaranteed term. The 90-day wait does not apply to (1) amounts transferred on
    the maturity date or under the maturity value transfer provision; (2) amounts transferred from the Guaranteed
    Account before the maturity date due to the election of an income phase payment option; (3) amounts distributed
    under the ECO or SWO (see “Systematic Distribution Options”); and (4) amounts transferred from an available
    guaranteed term in connection with the dollar cost averaging program.

    Transfers after the 90-day period are permitted from guaranteed term(s) to other guaranteed term(s) available during
    a deposit period or to other available investment options. Transfers of the Guaranteed Account values on or within
    one calendar month of a term’s maturity date are not counted as one of the 12 free transfers of accumulated values in
    the account.

    Reinstating Amounts Withdrawn from the Guaranteed Account. If amounts are withdrawn and then reinstated
    in the Guaranteed Account, we apply the reinstated amount to the current deposit period. This means the guaranteed
    annual interest rate and guaranteed terms available on the date of reinstatement will apply. We reinstate amounts
    proportionately in the same way as they were allocated before withdrawal. We will not credit your account for
    market value adjustments that we deducted at the time of withdrawal or refund any taxes that were withheld.

    The Income Phase. The Guaranteed Account cannot be used as an investment option during the income phase.
    However, you may notify us at least 30 days in advance to elect a fixed or variable payment option and to transfer
    your Guaranteed Account dollars to the general account or any of the subaccounts available during the income
    phase. Transfers made due to the election of a lifetime income phase payment option will be subject to only a
    positive aggregate MVA.

    Distribution. The Company’s affiliate, ING Financial Advisers, LLC (ING Financial) (prior to May 1, 2002 known
    as Aetna Investment Services, LLC) serves as the principal underwriter of the contract. ING Financial, a Delaware
    limited liability company, is registered with the Securities and Exchange Commission under the Securities Exchange
    Act of 1934 as a broker-dealer and is a member of the National Association of Securities Dealers, Inc. and the
    Securities Investor Protection Corporation. From time to time customers of certain broker-dealers may be offered
    special guaranteed rates in connection with the Guaranteed Account offered through the contract and ING Financial
    may negotiate different commissions for these broker-dealers.

    ILIAC Marathon Plus (IICA)

    I-3

      APPENDIX II

    Fixed Account

    General Disclosure.

    • The Fixed Account is an investment option available during the accumulation phase under the contract.
    • Amounts allocated to the Fixed Account are held in the Company’s general account which supports insurance and annuity obligations.
    • Interests in the Fixed Account have not been registered with the SEC in reliance on exemptions under the Securities Act of 1933, as amended.
    • Disclosure in this prospectus regarding the Fixed Account may be subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of the statements.
    • Disclosure in this appendix regarding the Fixed Account has not been reviewed by the SEC.
    • Additional information about this option may be found in the contract.

    Interest Rates.

    • The Fixed Account guarantees that amounts allocated to this option will earn the minimum interest rate specified in the contract. We may credit a higher interest rate from time to time, but the rate we credit will never fall below the guaranteed minimum specified in the contract. Amounts applied to the Fixed Account will earn the interest rate in effect at the time money is applied. Amounts in the Fixed Account will reflect a compound interest rate as credited by us. The rate we quote is an annual effective yield. Among other factors, the safety of the interest rate guarantees depends upon the Company’s claims-paying ability.
    • Our determination of credited interest rates reflects a number of factors, including mortality and expense risks, interest rate guarantees, the investment income earned on invested assets and the amortization of any capital gains and/or losses realized on the sale of invested assets. Under this option we assume the risk of investment gain or loss by guaranteeing the amounts you allocate to this option and promising a minimum interest rate and income phase payment.

    Dollar Cost Averaging. Amounts you invest in the Fixed Account must be transferred into the other investment
    options available under the contract over a period not to exceed 12 months. If you discontinue dollar cost averaging,
    the remaining balance amounts in the Fixed Account will be transferred into the money market subaccount available
    under the contract, unless you direct us to transfer the balance into other available options.

    Withdrawals. Under certain emergency conditions we may defer payment of any withdrawal for a period of up to
    six months or as provided by federal law.

    Charges. We do not make deductions from amounts in the Fixed Account to cover mortality and expense risks. We
    consider these risks when determining the credited rate. If you make a withdrawal from amounts in the Fixed
    Account, an early withdrawal charge may apply. See “Fees.”

    Transfers. During the accumulation phase you may transfer account dollars from the Fixed Account to any other
    available investment option. We may vary the dollar amount that you are allowed to transfer, but it will never be less
    than 10% of your account value held in the Fixed Account.

    By notifying our Service Center at least 30 days before income phase payments begin, you may elect to have
    amounts transferred to one or more of the subaccounts available during the income phase to provide variable
    payments.

    ILIAC Marathon Plus (IICA)

    II-1

      APPENDIX III

    Description of Underlying Funds

    During the accumulation phase, you may allocate your premium payments and contract value to any of the
    investment portfolios available under this Contract. They are listed in this appendix. You bear the entire investment
    risk for amounts you allocate to any investment portfolio, and you may lose your principal.

    The investment results of the mutual funds (“funds”) are likely to differ significantly and there is no assurance that
    any of the funds will achieve their respective investment objectives. You should consider the investment objectives,
    risks and charges and expenses 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.

    List of Fund Name Changes     
    		 
    Former Fund Name    Current Fund Name 
    ING VP Global Science and Technology Portfolio    ING BlackRock Global Science and Technology Portfolio 
    ING VP Growth Portfolio    ING Opportunistic Large Cap Growth Portfolio 
    ING VP Value Opportunity Portfolio    ING Opportunistic Large Cap Value Portfolio 
    		 
     
     
    Fund Name and     
    Investment Adviser/Subadviser     Investment Objective 
    		 
    ING Investors Trust     
             7337 E. Doubletree Ranch Road, Scottsdale, AZ 85258     
    		 
    ING BlackRock Large Cap Growth Portfolio (Class I)     Seeks long-term growth of capital. 
     
         Investment Adviser: Directed Services LLC     
         Investment Subadviser: BlackRock Investment     
         Management, LLC     
    		 
     
    ING Evergreen Omega Portfolio (Class I)     Seeks long-term capital growth. 
     
         Investment Adviser: Directed Services LLC     
         Investment Subadviser: Evergreen Investment     
         Management Company, LLC     

    ILIAC Marathon Plus (IICA)

    III-1

    Fund Name and     
    Investment Adviser/Subadviser    Investment Objective 
    		 
    ING FMRSM Diversified Mid Cap Portfolio* (Class I)    Seeks long-term growth of capital. 
     
       Investment Adviser: Directed Services LLC     
       Investment Subadviser: Fidelity Management & Research     
       Co.     
     
    * FMRSM is a service mark of Fidelity Management &     
       Research Company     
    		 
     
    ING JPMorgan Emerging Markets Equity Portfolio    Seeks capital appreciation. 
       (Class I)     
     
       Investment Adviser: Directed Services LLC     
       Investment Subadviser: J.P. Morgan Investment     
       Management Inc.     
    		 
     
    ING JPMorgan Value Opportunities Portfolio (Class S)    Seeks long-term capital appreciation. 
     
       Investment Adviser: Directed Services LLC     
       Investment Subadviser: J.P. Morgan Investment     
       Management Inc.     
    		 
     
    ING Marsico International Opportunities Portfolio    Seeks long-term growth of capital. 
       (Class S)     
     
       Investment Adviser: Directed Services LLC     
       Investment Subadviser: Marsico Capital Management,     
       LLC     
    		 
     
    ING MFS Total Return Portfolio (Class I)    Seeks above-average income (compared to a portfolio 
        entirely invested in equity securities) consistent with the 
       Investment Adviser: Directed Services LLC    prudent employment of capital. Secondarily seeks reasonable 
       Investment Subadviser: Massachusetts Financial Services    opportunity for growth of capital and income. 
       Company     
    		 
     
    ING Oppenheimer Main Street Portfolio (Class I)    Seeks long-term growth of capital and future income. 
     
       Investment Adviser: Directed Services LLC     
       Investment Subadviser: OppenheimerFunds, Inc.     
    		 
     
    ING PIMCO High Yield Portfolio (Class S)    Seeks maximum total return, consistent with preservation of 
        capital and prudent investment management. 
       Investment Adviser: Directed Services LLC     
       Investment Subadviser: Pacific Investment Management     
       Company LLC     
    		 
     
    ING Van Kampen Capital Growth Portfolio (Class I)    Seeks long-term capital appreciation. 
     
       Investment Adviser: Directed Services LLC     
       Investment Subadviser: Van Kampen     

    ILIAC Marathon Plus (IICA)

    III-2

    Fund Name and     
    Investment Adviser/Subadviser    Investment Objective 
    		 
    ING VP Index Plus International Equity Portfolio (Class I)    Seeks to outperform the total return performance of the 
        Morgan Stanley Capital International Europe Australasia and 
        Far East® Index (“MSCI EAFE® Index”), while maintaining a 
       Investment Adviser: ING Investments, LLC     
       Investment Subadviser: ING Investment Management    market level of risk. 
       Advisors, B.V.     
    		 
     
    ING Partners, Inc.     
             7337 East Doubletree Ranch Road, Scottsdale, AZ 85258     
    		 
    ING Legg Mason Partners Aggressive Growth Portfolio    Seeks long-term growth of capital. 
       (Initial Class)     
     
       Investment Adviser: Directed Services LLC     
       Investment Subadviser: ClearBridge Advisors, LLC     
    		 
     
    ING Neuberger Berman Partners Portfolio (Initial Class)    Seeks capital growth. 
     
       Investment Adviser: Directed Services LLC     
       Investment Subadviser: Neuberger Berman Management     
       Inc.     
    		 
     
    ING Oppenheimer Global Portfolio (Initial Class)    Seeks capital appreciation. 
     
       Investment Adviser: Directed Services LLC     
       Investment Subadviser: OppenheimerFunds, Inc.     
    		 
     
    ING Oppenheimer Strategic Income Portfolio    Seeks a high level of current income principally derived from 
       (Initial Class)    interest on debt securities. 
     
       Investment Adviser: Directed Services LLC     
       Investment Subadviser: OppenheimerFunds, Inc.     
    		 
     
    ING Templeton Foreign Equity Portfolio (Initial Class)    Seeks long-term capital growth. 
     
       Investment Adviser: Directed Services LLC     
       Investment Subadviser: Templeton Investment Counsel,     
       LLC     
    		 
     
    ING Thornburg Value Portfolio (Initial Class)    Seeks capital appreciation. 
     
       Investment Adviser: Directed Services LLC     
       Investment Subadviser: Thornburg Investment     
       Management     
    		 
     
    ING T. Rowe Price Diversified Mid Cap Growth Portfolio    Seeks long-term capital appreciation. 
       (Initial Class)     
     
       Investment Adviser: Directed Services LLC     
       Investment Subadviser: T. Rowe Price Associates, Inc.     

    ILIAC Marathon Plus (IICA)

    III-3

    Fund Name and     
    Investment Adviser/Subadviser    Investment Objective 
    		 
    ING T. Rowe Price Growth Equity Portfolio (Initial Class)    Seeks long-term capital growth, and secondarily, increasing 
        dividend income. 
       Investment Adviser: Directed Services LLC     
       Investment Subadviser: T. Rowe Price Associates, Inc.     
    		 
     
    ING UBS U.S. Large Cap Equity Portfolio (Initial Class)    Seeks long-term growth of capital and future income. 
     
       Investment Adviser: Directed Services LLC     
       Investment Subadviser: UBS Global Asset Management     
       (Americas) Inc.     
    		 
     
    ING Van Kampen Equity and Income Portfolio    Seeks total return, consisting of long-term capital 
       (Initial Class)    appreciation and current income. 
     
       Investment Adviser: Directed Services LLC     
       Investment Subadviser: Van Kampen     
    		 
     
    ING Strategic Allocation Portfolios, Inc.     
    		 
    ING VP Strategic Allocation Conservative Portfolio    Seeks to provide total return consistent with preservation of 
       (Class I)    capital. 
     
       Investment Adviser: ING Investments, LLC     
       Investment Subadviser: ING Investment Management     
       Co.     
    		 
     
    ING VP Strategic Allocation Growth Portfolio (Class I)    Seeks to provide capital appreciation. 
     
       Investment Adviser: ING Investments, LLC     
       Investment Subadviser: ING Investment Management     
       Co.     
    		 
     
    ING VP Strategic Allocation Moderate Portfolio (Class I)    Seeks to provide total return (i.e., income and capital 
        appreciation, both realized and unrealized). 
       Investment Adviser: ING Investments, LLC     
       Investment Subadviser: ING Investment Management     
       Co.     
    		 
     
    ING Variable Funds     
    		 
    ING VP Growth and Income Portfolio (Class I)    Seeks to maximize total return through investments in a 
        diversified portfolio of common stocks and securities 
       Investment Adviser: ING Investments, LLC    convertible into common stock. 
       Investment Subadviser: ING Investment Management     
       Co.     

    ILIAC Marathon Plus (IICA)

    III-4

    Fund Name and     
    Investment Adviser/Subadviser    Investment Objective 
    		 
    ING Variable Portfolios, Inc.     
             7337 E. Doubletree Ranch Road, Scottsdale, AZ 85258     
    		 
    ING BlackRock Global Science and Technology Portfolio    Seeks long-term capital appreciation. 
         (Class I) (formerly, ING VP Global Science and     
         Technology Portfolio)     
     
       Investment Adviser: ING Investments, LLC     
       Investment Subadviser: BlackRock Advisors, LLC     
    		 
     
    ING Opportunistic Large Cap Growth Portfolio (Class I)    Seeks growth of capital through investment in a diversified 
         (formerly, ING VP Growth Portfolio)    portfolio consisting primarily of common stocks and 
        securities convertible into common stocks believed to offer 
       Investment Adviser: ING Investments, LLC    growth potential. 
       Investment Subadviser: ING Investment Management     
       Co.     
    		 
     
    ING Opportunistic Large Cap Value Portfolio (Class I)    Seeks growth of capital primarily through investment in a 
         (formerly, ING VP Value Opportunity Portfolio)    diversified portfolio of common stocks. 
     
       Investment Adviser: ING Investments, LLC     
       Investment Subadviser: ING Investment Management     
       Co.     
    		 
     
    ING VP Index Plus LargeCap Portfolio (Class I)    Seeks to outperform the total return performance of the 
        Standard & Poor’s 500 Composite Stock Price Index (S&P 
       Investment Adviser: ING Investments, LLC    500 Index), while maintaining a market level of risk. 
       Investment Subadviser: ING Investment Management     
       Co.     
    		 
     
    ING VP Small Company Portfolio (Class I)    Seeks growth of capital primarily through investment in a 
        diversified portfolio of common stocks and securities of 
       Investment Adviser: ING Investments, LLC    companies with smaller market capitalizations. 
       Investment Subadviser: ING Investment Management     
       Co.     
    		 
     
    ING Variable Products Trust     
             7337 E. Doubletree Ranch Road, Scottsdale, AZ 85258     
    		 
    ING VP High Yield Bond (Class I)    Seeks to provide investors with a high level of current income 
        and total return. 
       Investment Adviser: ING Investments, LLC     
       Investment Subadviser: ING Investment Management     
       Co.     
    		 
     
    ING VP Balanced Portfolios, Inc.     
    		 
    ING VP Balanced Portfolio (Class I)    Seeks to maximize investment return, consistent with 
        reasonable safety of principal, by investing in a diversified 
       Investment Adviser: ING Investments, LLC    portfolio of one or more of the following asset classes: 
        stocks, bonds and cash equivalents, based on the judgment of 
       Investment Subadviser: ING Investment Management    the portfolio’s management, of which of those sectors or mix 
       Co.    thereof offers the best investment prospects. 

    ILIAC Marathon Plus (IICA)

    III-5

    Fund Name and     
    Investment Adviser/Subadviser    Investment Objective 
    		 
    ING VP Intermediate Bond Portfolio     
    		 
    ING VP Intermediate Bond Portfolio (Class I)    Seeks to maximize total return consistent with reasonable 
        risk, through investment in a diversified portfolio consisting 
       Investment Adviser: ING Investments, LLC    primarily of debt securities. 
       Investment Subadviser: ING Investment Management     
       Co.     
    		 
     
     
    ING VP Money Market Portfolio     
    		 
    ING VP Money Market Portfolio (Class I)    Seeks to provide high current return, consistent with 
        preservation of capital and liquidity, through investment in 
       Investment Adviser: ING Investments, LLC    high-quality money market instruments. There is no 
        guarantee that the ING VP Money Market Subaccount 
       Investment Subadviser: ING Investment Management    will have a positive or level return. 
       Co.     
    		 
     
     
    Calvert Variable Series, Inc.     
    		 
    Calvert Social Balanced Portfolio    A don-diversified portfolio that seeks to achieve a 
        competitive total return through an actively managed 
       Investment Adviser: Calvert Asset Management    portfolio of stocks, bonds and money market instruments 
       Company, Inc.    which offer income and capital growth opportunity and which 
       Investment Subadviser: New Amsterdam Partners LLC    satisfy the investment and social criteria. 
       and SSgA Funds Management, Inc.     
    		 
     
     
    Fidelity Variable Insurance Products     
    82 Devonshire Street, Boston, MA 02109     
    		 
    Fidelity VIP Contrafund Portfolio (Class I)    Seeks long-term capital appreciation. 
     
       Investment Adviser: Fidelity Management & Research     
       Company     
       Investment Subadviser: FMR Co., Inc.; Fidelity Research     
       & Analysis Company; Fidelity Management & Research     
       (U.K.) Inc.; Fidelity International Investment Advisors;     
       Fidelity International Investment Advisors (U.K.) Limited;     
       Fidelity Investments Japan Limited     
    		 
     
    Fidelity VIP Equity-Income Portfolio (Class I)    Seeks reasonable income. Also considers the potential for 
        capital appreciation. Seeks to achieve a yield which exceeds 
       Investment Adviser: Fidelity Management & Research    the composite yield on the securities comprising the Standard 
        & Poor’s 500® Index (S&P 500®). 
       Company     
       Investment Subadviser: FMR Co., Inc.; Fidelity Research     
       & Analysis Company; Fidelity Management & Research     
       (U.K.) Inc.; Fidelity International Investment Advisors;     
       Fidelity International Investment Advisors (U.K.) Limited;     
       Fidelity Investments Japan Limited     
    		 
     
    Fidelity VIP Index 500 Portfolio (Class I)    Seeks investment results that correspond to the total return of 
        common stocks publicly traded in the United States, as 
        represented by the S&P 500® 
       Investment Adviser: Fidelity Management & Research     
       Company     
       Investment Subadviser: Geode Capital Management,     
       LLC (GeodeSM); FMR Co., Inc.     

    ILIAC Marathon Plus (IICA)

    III-6

    “Standard & Poor’s®”, “S&P®”, “S&P 500®”, “Standard & Poor’s 500”, and “500” are trademarks of The McGraw-
    Hill Companies, Inc. and have been licensed for use by ING Life Insurance and Annuity Company. The product is
    not sponsored, endorsed, sold or promoted by Standard & Poor’s and Standard & Poor’s makes no representation
    regarding the advisability of investing in the product.

    ILIAC Marathon Plus (IICA)

    III-7

    PART B

    VARIABLE ANNUITY ACCOUNT I
    OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    ING MARATHON PLUS (IICA)

    Statement of Additional Information

    Dated
    April 28, 2008

    Group Variable Annuity Contracts for Employer-Sponsored Deferred Compensation Plans

    This Statement of Additional Information is not a prospectus and should be read in conjunction
    with the current prospectus for Variable Annuity Account I (the “Separate Account”) dated April
    28, 2008.

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

    ING
    USFS Customer Service
    Defined Contribution Administration, TS21

    One Orange Way
    Windsor, Connecticut 06095-4774
    (860) 580-4646

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

    TABLE OF CONTENTS
     
        Page 
     
    General Information and History    2 
    Variable Annuity Account I    3 
    Offering and Purchase of Contracts    4 
    Income Phase Payments    4 
    Sales Material and Advertising    5 
    Independent Registered Public Accounting Firm    6 
    Financial Statements of the Separate Account    S-1 
    Consolidated Financial Statements of ING Life Insurance and Annuity Company    C-1 

    GENERAL INFORMATION AND HISTORY

    ING Life Insurance and Annuity Company (the “Company,” we, us, our) is a stock life insurance
    company which was organized under the insurance laws of the State of Connecticut in 1976. Prior to
    May 1, 2002, the Company was known as Aetna Life Insurance and Annuity Company. Through a
    merger, it succeeded to the business of Aetna Variable Annuity Life Insurance Company (formerly
    Participating Annuity Life Insurance Company organized in 1954).

    As of December 31, 2007, the Company had $62 billion invested through its products, including $49
    billion in its separate accounts (of which the Company’s investment management affiliates manage or
    oversee the management of $19 billion). Based on assets, ING Life Insurance and Annuity Company is
    ranked among the top 2% of all life and health insurance companies rated by A.M. Best Company as of
    July 17, 2007. The Company is an indirect wholly owned subsidiary of ING Groep N.V., a global
    financial institution active in the fields of insurance, banking and asset management and is a direct,
    wholly owned subsidiary of Lion Connecticut Holdings Inc. The Company is engaged in the business of
    issuing life insurance policies and annuity contracts. Our Home Office is located at One Orange Way,
    Windsor, Connecticut 06095-4774.

    In addition to serving as the principal underwriter and the depositor for the separate account, the
    Company is a registered investment adviser under the Investment Advisers Act of 1940.

    Other than the mortality and expense risk charge and administrative expense charge, described in the
    prospectus, all expenses incurred in the operations of the separate account are borne by the Company.
    However, the Company does receive compensation for certain administrative or distribution costs from
    the funds or affiliates of the funds used as funding options under the contract. (See “Fees” in the
    prospectus).

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

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

    2

    VARIABLE ANNUITY ACCOUNT I

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

    The investment portfolios available under your Contract are:

    ING Investors Trust
    ING BlackRock Large Cap Growth Portfolio (Class I)
    ING Evergreen Omega Portfolio (Class I)
    ING FMRSM Diversified Mid Cap Portfolio (Class I)
    ING JPMorgan Emerging Markets Equity Portfolio (Class I)
    ING JPMorgan Value Opportunities Portfolio (Class S)
    ING Marsico International Opportunities Portfolio (Class S)
    ING MFS Total Return Portfolio (Class I)
    ING Oppenheimer Main Street Portfolio (Class I)
    ING PIMCO High Yield Portfolio (Class S)
    ING Van Kampen Capital Growth Portfolio (Class I)
    ING VP Index Plus International Equity Portfolio (Class I)

    ING Partners, Inc.
    ING Legg Mason Partners Aggressive Growth Portfolio
    (Initial Class)
    ING Neuberger Berman Partners Portfolio (Initial Class)
    ING Oppenheimer Global Portfolio (Initial Class)
    ING Oppenheimer Strategic Income Portfolio (Initial Class)
    ING Templeton Foreign Equity Portfolio (Initial Class)
    ING Thornburg Value Portfolio (Initial Class)
    ING T. Rowe Price Diversified Mid Cap Growth Portfolio
    (Initial Class)
    ING T. Rowe Price Growth Equity Portfolio (Initial Class)
    ING UBS U.S. Large Cap Equity Portfolio (Initial Class)
    ING Van Kampen Equity and Income Portfolio (Initial Class)

    ING Strategic Allocation Portfolios, Inc.
    ING VP Strategic Allocation Conservative Portfolio (Class I)
    ING VP Strategic Allocation Growth Portfolio (Class I)
    ING VP Strategic Allocation Moderate Portfolio (Class I)

    ING Variable Funds
    ING VP Growth and Income Portfolio (Class I)

    ING Variable Portfolios, Inc.
    ING BlackRock Global Science and Technology Portfolio
    (Class I)
    ING Opportunistic Large Cap Growth Portfolio (Class I)
    ING Opportunistic Large Cap Value Portfolio (Class I)
    ING VP Index Plus LargeCap Portfolio (Class I)
    ING VP Small Company Portfolio (Class I)

    ING Variable Products Trust
    ING VP High Yield Bond (Class I)

    ING VP Balanced Portfolio, Inc. (Class I)

    ING VP Intermediate Bond Portfolio (Class I)

    ING VP Money Market Portfolio (Class I)

    Calvert Variable Series, Inc.
    Calvert Social Balanced Portfolio

    Fidelity Variable Insurance Products
    Fidelity VIP Contrafund Portfolio (Class I)
    Fidelity VIP Equity-Income Portfolio (Class I)
    Fidelity VIP Index 500 Portfolio (Class I)

    3

    OFFERING AND PURCHASE OF CONTRACTS

    The Company’s subsidiary, ING Financial Advisers, LLC serves as the principal underwriter for
    contracts. ING Financial Advisers, LLC, a Delaware limited liability company, is registered as a broker-
    dealer with the SEC. ING Financial Advisers, LLC is also a member of the National Association of
    Securities Dealers, Inc. and the Securities Investor Protection Corporation. ING Financial Advisers,
    LLC’s principal office is located at One Orange Way, Windsor, Connecticut 06095-4774. The contracts
    are distributed through life insurance agents licensed to sell variable annuities who are registered
    representatives of ING Financial Advisers, LLC or of other registered broker-dealers who have entered
    into sales arrangements with ING Financial Advisers, LLC. The offering of the contracts is continuous.
    A description of the manner in which contracts are purchased may be found in the prospectus under the
    sections entitled “Contract Ownership and Rights” and “Your Account Value.”

    Compensation paid to the principal underwriter, ING Financial Advisers, LLC, for the years ending
    December 31, 2007, 2006 and 2005 amounted to $215,695.68, $26,090.63 and $22,235.01, respectively.
    These amounts reflect compensation paid to ING Financial Advisers, LLC attributable to regulatory and
    operating expenses associated with the distribution of all registered variable annuity products issued by
    Variable Annuity Account I of ING Life Insurance and Annuity Company.

    INCOME PHASE PAYMENTS

    When you begin receiving payments under the contract during the income phase (see “Income Phase” in
    the prospectus), the value of your account is determined using accumulation unit values as of the tenth
    valuation before the first income phase payment is due. Such value (less any applicable premium tax
    charge) is applied to provide payments to you in accordance with the income phase payment option and
    investment options elected.

    The annuity option tables found in the contract show, for each option, the amount of the first payment for
    each $1,000 of value applied. Thereafter, variable payments fluctuate as the Annuity Unit value(s)
    fluctuates with the investment experience of the selected investment option(s). The first and subsequent
    payments also vary depending on the assumed net investment rate selected (3.5% or 5% per annum).
    Selection of a 5% rate causes a higher first payment, but payments will increase thereafter only to the
    extent that the net investment rate increases by more than 5% on an annual basis. Payments would
    decline if the rate failed to increase by 5%. Use of the 3.5% assumed rate causes a lower first income
    phase payment, but subsequent income phase payments would increase more rapidly or decline more
    slowly as changes occur in the net investment rate.

    When the income phase begins, the annuitant is credited with a fixed number of Annuity Units (which
    does not change thereafter) in each of the designated investment options. This number is calculated by
    dividing (a) by (b), where (a) is the amount of the first payment based upon a particular investment
    option, and (b) is the then current Annuity Unit value for that investment option. As noted, Annuity Unit
    values fluctuate from one valuation to the next (see “Account Value” in the prospectus); such fluctuations
    reflect changes in the net investment factor for the appropriate subaccount(s) (with a ten day valuation lag
    which gives the Company time to process payments) and a mathematical adjustment which offsets the
    assumed net investment rate of 3.5% or 5% per annum.

    The operation of all these factors can be illustrated by the following hypothetical example. These
    procedures will be performed separately for the investment options selected during the income phase.

    4

    EXAMPLE:

    Assume that, at the date payments are to begin, there are 3,000 accumulation units credited under a
    particular contract or account and that the value of an accumulation unit for the tenth valuation
    prior to retirement was $13.650000. This produces a total value of $40,950.

    Assume also that no premium tax charge is payable and that the annuity table in the contract provides, for
    the payment option elected, a first monthly variable payment of $6.68 per $1,000 of value applied; the
    annuitant’s first monthly payment would thus be 40.950 multiplied by $6.68, or $273.55.

    Assume then that the value of an Annuity Unit upon the valuation on which the first payment was due
    was $13.400000. When this value is divided into the first monthly payment, the number of Annuity Units
    is determined to be 20.414. The value of this number of Annuity Units will be paid in each subsequent
    month.

    Suppose there were 30 days between the initial and second payment valuation dates. If the net investment
    factor with respect to the appropriate subaccount is 1.0032737 as of the tenth valuation preceding the due
    date of the second monthly income phase payment, multiplying this factor by .9971779* = .9999058^30
    (to take into account 30 days of the assumed net investment rate of 3.5% per annum built into the number
    of Annuity Units determined above) produces a result of 1.000442. This is then multiplied by the
    Annuity Unit value for the prior valuation ($13.400000 from above) to produce an Annuity Unit value of
    $13.405928 for the valuation occurring when the second income phase payment is due.

    The second monthly income phase payment is then determined by multiplying the number of Annuity
    Units by the current Annuity Unit value, or 20.414 times $13.405928, which produces a payment of
    $273.67.

    *If an assumed net investment rate of 5% is elected, the appropriate factor to take into account such
    assumed rate would be .9959968 = .9998663^30.

    SALES MATERIAL AND ADVERTISING

    We may include hypothetical illustrations in our sales literature that explain the mathematical principles
    of dollar cost averaging, compounded interest, tax deferred accumulation, and the mechanics of variable
    annuity contracts. We may also discuss the difference between variable annuity contracts and other types
    of savings or investment products such as, personal savings accounts and certificates of deposit.

    We may distribute sales literature that compares the percentage change in accumulation unit values for
    any of the subaccounts to established market indices such as the Standard & Poor’s 500 Stock Index and
    the Dow Jones Industrial Average or to the percentage change in values of other management investment
    companies that have investment objectives similar to the subaccount being compared.

    We may publish in advertisements and reports, the ratings and other information assigned to us by one or
    more independent rating organizations such as A.M. Best Company, Duff & Phelps, Standard & Poor’s
    Corporation and Moody’s Investors Service, Inc. The purpose of the ratings is to reflect our financial
    strength and/or claims-paying ability. We may also quote ranking services such as Morningstar’s
    Variable Annuity/Life Performance Report and Lipper’s Variable Insurance Products Performance
    Analysis Service (VIPPAS), which rank variable annuity or life subaccounts or their underlying funds by
    performance and/or investment objective. We may categorize funds in terms of the asset classes they
    represent and use such categories in marketing material for the contracts. We may illustrate in
    advertisements the performance of the underlying funds, if accompanied by performance which also
    shows the performance of such funds reduced by applicable charges under the separate account. We may
    also show in advertisements the portfolio holdings of the underlying funds, updated at various intervals.

    5

    From time to time, we will quote articles from newspapers and magazines or other publications or reports
    such as The Wall Street Journal, Money magazine, USA Today and The VARDS Report.

    We may provide in advertising, sales literature, periodic publications or other materials information on
    various topics of interest to current and prospective contract holders or participants. These topics may
    include the relationship between sectors of the economy and the economy as a whole and its effect on
    various securities markets, investment strategies and techniques (such as value investing, market timing,
    dollar cost averaging, asset allocation, constant ratio transfer and account rebalancing), the advantages
    and disadvantages of investing in tax-deferred and taxable investments, customer profiles and
    hypothetical purchase and investment scenarios, financial management and tax and retirement planning,
    and investment alternatives to certificates of deposit and other financial instruments, including
    comparison between the contracts and the characteristics of and market for such financial instruments.

    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

    Ernst & Young LLP, 55 Ivan Allen Jr. Boulevard, Suite 1000, Atlanta, GA 30308 an Independent
    Registered Public Accounting Firm, performs annual audits of ING Life Insurance and Annuity Company
    and Variable Annuity Account I.

    6

    FINANCIAL STATEMENTS
    Variable Annuity Account I of
    ING Life Insurance and Annuity Company
    Year ended December 31, 2007
    with Report of Independent Registered Public Accounting Firm

    This page intentionally left blank.

    VARIABLE ANNUITY ACCOUNT I OF

    ING LIFE INSURANCE AND ANNUITY COMPANY

    Financial Statements

    Year ended December 31, 2007

    Contents
     
    Report of Independent Registered Public Accounting Firm    1 
     
    Audited Financial Statements     
     
    Statements of Assets and Liabilities    3 
    Statements of Operations    17 
    Statements of Changes in Net Assets    32 
    Notes to Financial Statements    50 

    This page intentionally left blank.

    Report of Independent Registered Public Accounting Firm

    The Board of Directors and Participants
    ING Life Insurance and Annuity Company

    We have audited the accompanying statements of assets and liabilities of the Divisions constituting
    Variable Annuity Account I of ING Life Insurance and Annuity Company (the “Account”) as of
    December 31, 2007, and the related statements of operations and changes in net assets for the periods
    disclosed in the financial statements. These financial statements are the responsibility of the Account’s
    management. Our responsibility is to express an opinion on these financial statements based on our
    audits. The Account is comprised of the following Divisions:

    AIM Variable Insurance Funds:    ING Investors Trust (continued): 
       AIM V.I. Capital Appreciation Fund - Series I Shares       ING VP Index Plus International Equity Portfolio - Institutional 
       AIM V.I. Core Equity Fund - Series I Shares             Class 
    Calvert Variable Series, Inc.:       ING VP Index Plus International Equity Portfolio - Service Class 
       Calvert Social Balanced Portfolio    ING Partners, Inc.: 
    EuroPacific Growth Fund®:       ING American Century Select Portfolio - Initial Class 
       EuroPacific Growth Fund® - Class R-4       ING Baron Small Cap Growth Portfolio - Service Class 
    Federated Insurance Series:       ING JPMorgan International Portfolio - Initial Class 
       Federated American Leaders Fund II       ING Legg Mason Partners Aggressive Growth Portfolio - Initial 
       Federated Capital Income Fund II             Class 
       Federated Equity Income Fund II       ING Lord Abbett U.S. Government Securities Portfolio - Initial 
       Federated Fund for U.S. Government Securities II             Class 
       Federated High Income Bond Fund II       ING Neuberger Berman Partners Portfolio - Initial Class 
       Federated International Equity Fund II       ING Oppenheimer Global Portfolio - Initial Class 
       Federated Mid Cap Growth Strategies Fund II       ING Oppenheimer Strategic Income Portfolio - Initial Class 
       Federated Prime Money Fund II       ING T. Rowe Price Diversified Mid Cap Growth Portfolio - 
    Fidelity® Variable Insurance Products:             Initial Class 
       Fidelity® VIP Equity-Income Portfolio - Initial Class       ING T. Rowe Price Growth Equity Portfolio - Initial Class 
       Fidelity® VIP Growth Portfolio - Initial Class       ING Thornburg Value Portfolio - Initial Class 
       Fidelity® VIP High Income Portfolio - Initial Class       ING UBS U.S. Large Cap Equity Portfolio - Initial Class 
    Fidelity® Variable Insurance Products II:       ING Van Kampen Equity and Income Portfolio - Initial Class 
       Fidelity® VIP Contrafund® Portfolio - Initial Class    ING Strategic Allocation Portfolios, Inc.: 
       Fidelity® VIP Index 500 Portfolio - Initial Class       ING VP Strategic Allocation Conservative Portfolio - Class I 
    Fidelity® Variable Insurance Products V:       ING VP Strategic Allocation Growth Portfolio - Class I 
       Fidelity® VIP Investment Grade Bond Portfolio - Initial Class       ING VP Strategic Allocation Moderate Portfolio - Class I 
    The Growth Fund of America®, Inc.:    ING Variable Funds: 
       The Growth Fund of America® - Class R-4       ING VP Growth and Income Portfolio - Class I 
    ING Investors Trust:    ING Variable Portfolios, Inc.: 
       ING BlackRock Large Cap Growth Portfolio - Institutional Class       ING VP Global Science and Technology Portfolio - Class I 
       ING Evergreen Omega Portfolio - Institutional Class       ING VP Growth Portfolio - Class I 
       ING FMRSM Diversified Mid Cap Portfolio - Institutional Class       ING VP Index Plus LargeCap Portfolio - Class I 
       ING FMRSM Large Cap Growth Portfolio - Institutional Class       ING VP Index Plus MidCap Portfolio - Class I 
       ING Global Resources Portfolio - Service Class       ING VP Index Plus SmallCap Portfolio - Class I 
       ING JPMorgan Emerging Markets Equity Portfolio - Institutional       ING VP International Equity Portfolio - Class I 
             Class       ING VP Small Company Portfolio - Class I 
       ING JPMorgan Value Opportunities Portfolio - Service Class       ING VP Value Opportunity Portfolio - Class I 
       ING Lord Abbett Affiliated Portfolio - Institutional Class    ING Variable Products Trust: 
       ING Marsico International Opportunities Portfolio - Service       ING VP High Yield Bond Portfolio - Class I 
             Class       ING VP International Value Portfolio - Class I 
       ING MFS Total Return Portfolio - Institutional Class       ING VP SmallCap Opportunities Portfolio - Class I 
       ING Oppenheimer Main Street Portfolio® - Institutional Class    ING VP Balanced Portfolio, Inc.: 
       ING PIMCO High Yield Portfolio - Service Class       ING VP Balanced Portfolio - Class I 
       ING Pioneer Fund Portfolio - Institutional Class    ING VP Intermediate Bond Portfolio: 
       ING Stock Index Portfolio - Institutional Class       ING VP Intermediate Bond Portfolio - Class I 

    ING VP Money Market Portfolio:
    ING VP Money Market Portfolio - Class I
    ING VP Natural Resources Trust:
    ING VP Natural Resources Trust
    Lord Abbett Series Fund, Inc.:
    Lord Abbett Series Fund - Growth and Income Portfolio -
    Class VC
    Oppenheimer Variable Account Funds:
    Oppenheimer Main Street Fund®/VA
    Oppenheimer Main Street Small Cap Fund®/VA

    PIMCO Variable Insurance Trust:
    PIMCO Real Return Portfolio - Administrative Class
    Pioneer Variable Contracts Trust:
    Pioneer Equity Income VCT Portfolio - Class I
    Pioneer Mid Cap Value VCT Portfolio - Class I

    We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
    Board (United States). Those standards require that we plan and perform the audit to obtain reasonable
    assurance about whether the financial statements are free of material misstatement. We were not engaged
    to perform an audit of the Account’s internal control over financial reporting. Our audits include
    consideration of internal control over financial reporting as a basis for designing audit procedures that are
    appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
    the Account’s internal control over financial reporting. Accordingly, we express no such opinion. An
    audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the
    financial statements, assessing the accounting principles used and significant estimates made by
    management, and evaluating the overall financial statement presentation. Our procedures included
    confirmation of securities owned as of December 31, 2007, by correspondence with the transfer agents.
    We believe that our audits provide a reasonable basis for our opinion.

    In our opinion, the financial statements referred to above present fairly, in all material respects, the
    financial position of each of the respective Divisions constituting Variable Annuity Account I of ING Life
    Insurance and Annuity Company at December 31, 2007, the results of their operations and changes in
    their net assets for the periods disclosed in the financial statements, in conformity with U.S. generally
    accepted accounting principles.

    /s/ Ernst & Young LLP

    Atlanta, Georgia
    March 21, 2008

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Assets and Liabilities

    December 31, 2007
    (Dollars in thousands)

                    Federated     
        AIM V.I. Core    Calvert Social    EuroPacific    American    Federated 
        Equity Fund -    Balanced    Growth Fund®    Leaders Fund    Capital Income 
        Series I Shares    Portfolio    - Class R-4    II    Fund II 
           
    		 
    		 
    		 
    Assets                     
    Investments in mutual funds                     
         at fair value    $ 7,056    $ 212    $ 9,071    $ 30,605    $ 3,636 
    Total assets    7,056    212    9,071    30,605    3,636 
    Net assets    $ 7,056    $ 212    $ 9,071    $ 30,605    $ 3,636 
       
    		 
    		 
    		 
    		 
     
    Net assets                     
    Accumulation units    $ 7,056    $ 212    $ 9,071    $ 30,540    $ 3,606 
    Contracts in payout (annuitization)                     
         period    -    -    -    65    30 
    Total net assets    $ 7,056    $ 212    $ 9,071    $ 30,605    $ 3,636 
       
    		 
    		 
    		 
    		 
     
    Total number of mutual fund shares    242,384    110,628    180,841    1,786,649    377,969 
       
    		 
    		 
    		 
    		 
     
    Cost of mutual fund shares    $ 6,084    $ 218    $ 8,824    $ 33,550    $ 3,146 
       
    		 
    		 
    		 
    		 

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

    3

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Assets and Liabilities

    December 31, 2007
    (Dollars in thousands)

            Federated            Federated Mid 
        Federated    Fund for U.S.    Federated High    Federated    Cap Growth 
        Equity Income    Government    Income Bond    International    Strategies 
        Fund II    Securities II    Fund II    Equity Fund II    Fund II 
       
    		 
    		 
    		     
    Assets                     
    Investments in mutual funds                     
         at fair value    $ 7,375    $ 1,252    $ 4,660    $ 6,060    $ 10,082 
    Total assets    7,375    1,252    4,660    6,060    10,082 
    Net assets    $ 7,375    $ 1,252    $ 4,660    $ 6,060    $ 10,082 
       
    		 
    		 
    		 
    		 
     
    Net assets                     
    Accumulation units    $ 7,312    $ 1,252    $ 4,647    $ 6,019    $ 10,082 
    Contracts in payout (annuitization)                     
         period    63    -    13    41    - 
                   
    		   
    Total net assets    $ 7,375    $ 1,252    $ 4,660    $ 6,060    $ 10,082 
       
    		 
    		 
    		 
    		 
     
    Total number of mutual fund shares    454,990    108,551    622,184    323,916    333,181 
       
    		 
    		 
    		 
    		 
     
    Cost of mutual fund shares    $ 5,379    $ 1,231    $ 4,591    $ 4,230    $ 7,064 
       
    		 
    		 
    		 
    		 

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

    4

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Assets and Liabilities

    December 31, 2007
    (Dollars in thousands)

            Fidelity® VIP    Fidelity® VIP    Fidelity® VIP    Fidelity® VIP 
        Federated    Equity-Income    Growth        High Income    Contrafund® 
        Prime Money    Portfolio -    Portfolio -        Portfolio -    Portfolio - 
        Fund II    Initial Class    Initial Class    Initial Class    Initial Class 
       
    		 
    		 
    		 
    		 
    Assets                         
    Investments in mutual funds                         
         at fair value    $ 907    $ 21,348    $ -    $ 3    $ 26,669 
    Total assets    907    21,348        -    3    26,669 
    Net assets    $ 907    $ 21,348    $ -    $ 3    $ 26,669 
       
    		 
    		 
    		 
    		 
     
    Net assets                         
    Accumulation units    $ 907    $ 21,348    $ -    $ -    $ 26,669 
    Contracts in payout (annuitization)                         
         period    -    -        -    3    - 
    Total net assets    $ 907    $ 21,348    $ -    $ 3    $ 26,669 
       
    		 
    		 
    		 
    		 
     
    Total number of mutual fund shares    907,062    892,860        -    530    955,893 
       
    		 
    		 
    		 
    		 
    		 
     
    Cost of mutual fund shares    $ 907    $ 20,576    $ -    $ 3    $ 26,284 
       
    		 
    		 
    		 
    		 

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

    5

      VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

      Statements of Assets and Liabilities

      December 31, 2007
    (Dollars in thousands)

                    ING BlackRock    ING        ING FMRSM 
            Fidelity® VIP        Large Cap    Evergreen    Diversified 
        Fidelity® VIP    Investment    The Growth    Growth    Omega    Mid Cap 
        Index 500    Grade Bond    Fund of    Portfolio -    Portfolio -    Portfolio - 
        Portfolio -    Portfolio -    America® -    Institutional    Institutional    Institutional 
        Initial Class    Initial Class    Class R-4    Class    Class        Class 
       
    		 
    		 
    		 
    		 
    		 
    		 
    Assets                             
    Investments in mutual funds                             
         at fair value    $ 10,482    $ 262    $ 26,386    $ 3,118    $ 853    $ 2,772 
    Total assets    10,482    262    26,386    3,118        853    2,772 
    Net assets    $ 10,482    $ 262    $ 26,386    $ 3,118    $ 853    $ 2,772 
       
    		 
    		               
     
    Net assets                             
    Accumulation units    $ 10,482    $ 262    $ 26,386    $ 3,071    $ 853    $ 2,772 
    Contracts in payout (annuitization)                             
         period    -    -    -    47        -    - 
    Total net assets    $ 10,482    $ 262    $ 26,386    $ 3,118    $ 853    $ 2,772 
       
    		 
    		 
    		           
     
    Total number of mutual fund shares    63,904    20,559    781,571    251,878    66,243    180,840 
       
    		 
    		               
     
    Cost of mutual fund shares    $ 8,693    $ 261    $ 25,739    $ 3,169    $ 729    $ 2,569 
       
    		 
    		 
    		 
    		 
    		 

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

    6

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Assets and Liabilities

    December 31, 2007
    (Dollars in thousands)

                ING         
                JPMorgan         
        ING FMRSM        Emerging    ING     
        Large Cap        Markets    JPMorgan    ING Marsico 
        Growth    ING Global    Equity    Value    International 
        Portfolio -    Resources    Portfolio -    Opportunities    Opportunities 
        Institutional    Portfolio -    Institutional    Portfolio -    Portfolio - 
        Class    Service Class    Class    Service Class    Service Class 
       
    		 
    		 
    		 
    		 
    Assets                     
    Investments in mutual funds                     
         at fair value    $ 7,906    $ 307    $ 1,430    $ 1,234    $ 1,160 
    Total assets    7,906    307    1,430    1,234    1,160 
    Net assets    $ 7,906    $ 307    $ 1,430    $ 1,234    $ 1,160 
       
    		 
    		 
    		 
    		 
     
    Net assets                     
    Accumulation units    $ 7,906    $ 307    $ 1,430    $ 1,234    $ 1,160 
    Contracts in payout (annuitization)                     
         period    -    -    -    -    - 
    Total net assets    $ 7,906    $ 307    $ 1,430    $ 1,234    $ 1,160 
       
    		 
    		 
    		 
    		 
     
    Total number of mutual fund shares    700,870    11,711    53,277    105,017    68,017 
       
    		 
    		 
    		 
    		 
     
    Cost of mutual fund shares    $ 7,613    $ 245    $ 1,079    $ 1,163    $ 1,008 
       
    		 
    		 
    		 
    		 

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

    7

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Assets and Liabilities

    December 31, 2007
    (Dollars in thousands)

    ING
        ING MFS    Oppenheimer             
        Total Return    Main Street    ING PIMCO    ING Pioneer    ING Stock 
        Portfolio -    Portfolio® -    High Yield    Fund Portfolio    Index Portfolio 
        Institutional    Institutional    Portfolio -    - Institutional    - Institutional 
        Class    Class        Service Class    Class    Class 
       
    		 
    		 
    		 
    		 
    		 
    Assets                         
    Investments in mutual funds                         
         at fair value    $ 8,718    $ 397    $ 1,095    $ 5    $ 20,670 
    Total assets    8,718        397    1,095    5    20,670 
    Net assets    $ 8,718    $ 397    $ 1,095    $ 5    $ 20,670 
       
    		 
    		 
    		 
    		 
     
    Net assets                         
    Accumulation units    $ 8,718    $ 397    $ 1,095    $ -    $ 20,670 
    Contracts in payout (annuitization)                         
         period    -        -    -    5    - 
    Total net assets    $ 8,718    $ 397    $ 1,095    $ 5    $ 20,670 
       
    		 
    		 
    		 
    		 
     
    Total number of mutual fund shares    477,443    19,369    110,765    376    1,597,404 
       
    		 
    		 
    		 
    		 
     
    Cost of mutual fund shares    $ 8,633    $ 349    $ 1,131    $ 4    $ 19,815 
       
    		 
    		 
    		 
    		 

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

    8

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Assets and Liabilities

    December 31, 2007
    (Dollars in thousands)

        ING VP Index            ING Legg     
        Plus            Mason    ING Lord 
        International    ING Baron    ING    Partners    Abbett U.S. 
        Equity    Small Cap    JPMorgan    Aggressive    Government 
        Portfolio -    Growth    International    Growth    Securities 
        Institutional    Portfolio -    Portfolio -    Portfolio -    Portfolio - 
        Class    Service Class    Initial Class    Initial Class    Initial Class 
       
    		 
    		 
    		 
    		 
    Assets                     
    Investments in mutual funds                     
         at fair value    $ 4,689    $ 1,178    $ 1,696    $ 5,462    $ 612 
    Total assets    4,689    1,178    1,696    5,462    612 
    Net assets    $ 4,689    $ 1,178    $ 1,696    $ 5,462    $ 612 
       
    		 
    		 
    		 
    		 
     
    Net assets                     
    Accumulation units    $ 4,317    $ 1,178    $ 1,654    $ 5,458    $ 612 
    Contracts in payout (annuitization)                     
         period    372    -    42    4    - 
    Total net assets    $ 4,689    $ 1,178    $ 1,696    $ 5,462    $ 612 
       
    		 
    		 
    		 
    		 
     
    Total number of mutual fund shares    330,906    60,576    96,807    113,063    60,373 
       
    		 
    		 
    		 
    		 
     
    Cost of mutual fund shares    $ 4,756    $ 1,166    $ 1,413    $ 3,684    $ 613 
       
    		 
    		 
    		 
    		 

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

    9

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Assets and Liabilities

    December 31, 2007
    (Dollars in thousands)

                ING    ING T. Rowe     
        ING Neuberger    ING    Oppenheimer    Price    ING T. Rowe 
        Berman    Oppenheimer    Strategic    Diversified Mid Price Growth 
        Partners    Global    Income    Cap Growth    Equity 
        Portfolio -    Portfolio -    Portfolio -    Portfolio -    Portfolio - 
        Initial Class    Initial Class    Initial Class    Initial Class    Initial Class 
       
    		 
    		 
    		 
    		 
    Assets                     
    Investments in mutual funds                     
         at fair value    $ 3,925    $ 40,002    $ 11,696    $ 4,416    $ 11,371 
    Total assets    3,925    40,002    11,696    4,416    11,371 
    Net assets    $ 3,925    $ 40,002    $ 11,696    $ 4,416    $ 11,371 
       
    		 
    		 
    		 
    		 
     
    Net assets                     
    Accumulation units    $ 3,925    $ 39,928    $ 11,688    $ 4,416    $ 11,250 
    Contracts in payout (annuitization)                     
         period    -    74    8    -    121 
    Total net assets    $ 3,925    $ 40,002    $ 11,696    $ 4,416    $ 11,371 
       
    		 
    		 
    		 
    		 
     
    Total number of mutual fund shares    347,316    2,371,207    1,044,276    463,851    183,729 
       
    		 
    		 
    		 
    		 
     
    Cost of mutual fund shares    $ 3,611    $ 31,357    $ 10,859    $ 3,917    $ 8,288 
       
    		 
    		 
    		 
    		 

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

    10

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Assets and Liabilities

    December 31, 2007
    (Dollars in thousands)

                ING Van    ING VP    ING VP 
            ING UBS U.S.    Kampen    Strategic    Strategic 
        ING    Large Cap    Equity and    Allocation    Allocation 
        Thornburg    Equity    Income    Conservative    Growth 
        Value Portfolio    Portfolio -    Portfolio -    Portfolio -    Portfolio - 
        - Initial Class    Initial Class    Initial Class    Class I    Class I 
       
    		 
    		 
    		 
    		 
    Assets                     
    Investments in mutual funds                     
         at fair value    $ 1,796    $ 4,497    $ 6,830    $ 1,574    $ 2,097 
    Total assets    1,796    4,497    6,830    1,574    2,097 
    Net assets    $ 1,796    $ 4,497    $ 6,830    $ 1,574    $ 2,097 
       
    		 
    		 
    		 
    		 
     
    Net assets                     
    Accumulation units    $ 1,772    $ 4,497    $ 6,830    $ 1,571    $ 2,097 
    Contracts in payout (annuitization)                     
         period    24    -    -    3    - 
    Total net assets    $ 1,796    $ 4,497    $ 6,830    $ 1,574    $ 2,097 
       
    		 
    		 
    		 
    		 
     
    Total number of mutual fund shares    52,813    423,881    180,875    116,543    126,583 
       
    		 
    		 
    		 
    		 
     
    Cost of mutual fund shares    $ 1,432    $ 3,634    $ 6,311    $ 1,554    $ 1,970 
       
    		 
    		 
    		 
    		 

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

    11

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Assets and Liabilities

    December 31, 2007
    (Dollars in thousands)

        ING VP                 
        Strategic    ING VP    ING VP Global         
        Allocation    Growth and    Science and    ING VP    ING VP Index 
        Moderate    Income    Technology    Growth    Plus LargeCap 
        Portfolio -    Portfolio -    Portfolio -    Portfolio -    Portfolio - 
        Class I    Class I    Class I    Class I    Class I 
       
    		 
    		 
    		 
    		 
    Assets                     
    Investments in mutual funds                     
         at fair value    $ 2,355    $ 5,158    $ 3,259    $ 3,511    $ 2,790 
    Total assets    2,355    5,158    3,259    3,511    2,790 
    Net assets    $ 2,355    $ 5,158    $ 3,259    $ 3,511    $ 2,790 
       
    		 
    		 
    		 
    		 
     
    Net assets                     
    Accumulation units    $ 2,324    $ 5,089    $ 3,259    $ 3,434    $ 2,659 
    Contracts in payout (annuitization)                     
         period    31    69    -    77    131 
    Total net assets    $ 2,355    $ 5,158    $ 3,259    $ 3,511    $ 2,790 
       
    		 
    		 
    		 
    		 
     
    Total number of mutual fund shares    155,329    208,319    598,002    280,218    153,898 
       
    		 
    		 
    		 
    		 
     
    Cost of mutual fund shares    $ 2,246    $ 3,566    $ 2,536    $ 2,853    $ 2,535 
       
    		 
    		 
    		 
    		 

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

    12

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Assets and Liabilities

    December 31, 2007
    (Dollars in thousands)

        ING VP Index    ING VP Index    ING VP Small    ING VP Value    ING VP High 
        Plus MidCap    Plus SmallCap    Company    Opportunity    Yield Bond 
        Portfolio -    Portfolio -    Portfolio -    Portfolio -    Portfolio - 
        Class I    Class I    Class I    Class I    Class I 
       
    		 
    		 
    		 
    		 
    Assets                     
    Investments in mutual funds                     
         at fair value    $ 13,245    $ 9    $ 19,997    $ 1,553    $ 3,602 
    Total assets    13,245    9    19,997    1,553    3,602 
    Net assets    $ 13,245    $ 9    $ 19,997    $ 1,553    $ 3,602 
       
    		 
    		 
    		 
    		 
     
    Net assets                     
    Accumulation units    $ 13,245    $ 9    $ 19,899    $ 1,553    $ 3,602 
    Contracts in payout (annuitization)                     
         period    -    -    98    -    - 
    Total net assets    $ 13,245    $ 9    $ 19,997    $ 1,553    $ 3,602 
       
    		 
    		 
    		 
    		 
     
    Total number of mutual fund shares    722,593    566    1,022,318    96,745    1,228,731 
       
    		 
    		 
    		 
    		 
     
    Cost of mutual fund shares    $ 13,295    $ 9    $ 20,350    $ 1,288    $ 3,686 
       
    		 
    		 
    		 
    		 

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

    13

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY
    Statements of Assets and Liabilities
    December 31, 2007
    (Dollars in thousands)
     
     
     
    ING VP
        ING VP    SmallCap        ING VP    ING VP    ING VP Money 
        International    Opportunities        Balanced    Intermediate    Market 
        Value Portfolio    Portfolio -        Portfolio -    Bond Portfolio    Portfolio - 
        - Class I    Class I        Class I    - Class I    Class I 
       
    		 
    		 
    		 
    		 
    		 
    Assets                         
    Investments in mutual funds                         
         at fair value    $ -    $ 7    $ 21,927    $ 8,518    $ 15,804 
    Total assets    -    7        21,927    8,518    15,804 
    Net assets    $ -    $ 7    $ 21,927    $ 8,518    $ 15,804 
       
    		 
    		 
    		 
    		 
     
    Net assets                         
    Accumulation units    $ -    $ 7    $ 21,883    $ 8,518    $ 15,785 
    Contracts in payout (annuitization)                         
         period    -    -        44    -    19 
    Total net assets    $ -    $ 7    $ 21,927    $ 8,518    $ 15,804 
       
    		 
    		 
    		 
    		 
     
    Total number of mutual fund shares    6    337        1,517,415    643,827    1,169,903 
       
    		 
    		 
    		 
    		 
    		 
     
    Cost of mutual fund shares    $ -    $ 7    $ 20,323    $ 8,516    $ 15,443 
       
    		 
    		 
    		 
    		 

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

    14

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY
    Statements of Assets and Liabilities
    December 31, 2007
    (Dollars in thousands)
     
     
        Lord Abbett                     
        Series Fund -                PIMCO Real     
        Growth and        Oppenheimer    Return    Pioneer Equity 
        Income    Oppenheimer    Main Street    Portfolio -    Income VCT 
        Portfolio -    Main Street    Small Cap        Administrative    Portfolio - 
        Class VC    Fund®/VA    Fund®/VA        Class    Class I 
       
    		 
    		 
    		 
    		 
    		 
    Assets                         
    Investments in mutual funds                         
         at fair value    $ 9,464    $ 57    $ 2    $ -    $ 15 
               
    		 
    		   
    Total assets    9,464    57        2    -    15 
                       
    		   
    Net assets    $ 9,464    $ 57    $ 2    $ -    $ 15 
       
    		 
    		 
    		 
    		 
     
    Net assets                         
    Accumulation units    $ 9,464    $ -    $ 2    $ -    $ 15 
    Contracts in payout (annuitization)                         
         period    -    57        -    -    - 
                       
    		   
    Total net assets    $ 9,464    $ 57    $ 2    $ -    $ 15 
       
    		 
    		 
    		 
    		 
     
    Total number of mutual fund shares    339,098    2,222    86    33    633 
       
    		 
    		 
    		 
    		 
     
    Cost of mutual fund shares    $ 9,684    $ 50    $ 2    $ -    $ 17 
       
    		 
    		 
    		 
    		 

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

    15

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Assets and Liabilities

    December 31, 2007
    (Dollars in thousands)

        Pioneer Mid 
        Cap Value VCT 
        Portfolio - Class 
        I 
       
    Assets     
    Investments in mutual funds     
         at fair value    $ - 
       
    Total assets    - 
       
    Net assets    $ - 
       
     
    Net assets     
    Accumulation units    $ - 
    Contracts in payout (annuitization)     
    period    - 
       
    Total net assets    $ - 
       
     
    Total number of mutual fund shares    15 
       
     
    Cost of mutual fund shares    $ - 
       

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

    16

    VARIABLE ANNUITY ACCOUNT I OF         
                                                       ING LIFE INSURANCE AND ANNUITY COMPANY     
        Statements of Operations             
                                                                               For the year ended December 31, 2007         
        (Dollars in thousands)                 
     
     
     
     
        AIM V.I.                         
        Capital                         
        Appreciation    AIM V.I. Core    Calvert Social    EuroPacific    Federated 
        Fund - Series I    Equity Fund -        Balanced    Growth Fund®    American 
        Shares        Series I Shares        Portfolio    - Class R-4    Leaders Fund II 
       
    		 
    		     
    		 
    		 
    		   
    Net investment income (loss)                             
    Income:                             
       Dividends    $ -    $ 80    $ 5    $ 146    $ 581 
       
    		               
    Total investment income        -    80        5    146    581 
    Expenses:                             
       Mortality and expense risk and                             
    other charges        -    68        3    62    539 
       
    		 
    		                   
    Total expenses        -    68        3    62    539 
       
    		 
    		                   
    Net investment income (loss)        -    12        2    84    42 
     
    Realized and unrealized gain (loss)                             
       on investments                             
    Net realized gain (loss) on investments        1    366        6    85    (380) 
    Capital gains distributions        -    -        12    535    4,329 
       
    		 
    		 
    		               
    Total realized gain (loss) on investments                             
       and capital gains distributions        1    366        18    620    3,949 
    Net unrealized appreciation                             
       (depreciation) of investments        -    49        (17)    243    (7,907) 
       
    		 
    		                   
    Net realized and unrealized gain (loss)                             
       on investments        1    415        1    863    (3,958) 
    Net increase (decrease) in net assets                             
       resulting from operations    $ 1    $ 427    $ 3    $ 947    $ (3,916) 
       
    		 
    		 
    		 
    		 

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

    17

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Operations

    For the year ended December 31, 2007
    (Dollars in thousands)

                Federated Fund         
        Federated    Federated    for U.S.    Federated High    Federated 
        Capital Income Equity Income    Government    Income Bond    International 
        Fund II    Fund II    Securities II    Fund II    Equity Fund II 
       
    		 
    		 
    		 
    		   
    Net investment income (loss)                     
    Income:                     
       Dividends    $ 201    $ 250    $ 62    $ 462    $ 12 
    Total investment income    201    250    62    462    12 
    Expenses:                     
       Mortality and expense risk and                     
    other charges    55    119    18    78    92 
    Total expenses    55    119    18    78    92 
    Net investment income (loss)    146    131    44    384    (80) 
     
    Realized and unrealized gain (loss)                     
       on investments                     
    Net realized gain (loss) on investments    (7)    534    (21)    134    (38) 
    Capital gains distributions    -    -    -    -    - 
       
    		 
    		 
    		 
    		 
    Total realized gain (loss) on investments                     
       and capital gains distributions    (7)    534    (21)    134    (38) 
    Net unrealized appreciation                     
       (depreciation) of investments    (38)    (573)    35    (395)    644 
    Net realized and unrealized gain (loss)                     
       on investments    (45)    (39)    14    (261)    606 
    Net increase (decrease) in net assets                     
       resulting from operations    $ 101    $ 92    $ 58    $ 123    $ 526 
       
    		 
    		 
    		 
    		 

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

    18

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Operations

    For the year ended December 31, 2007
    (Dollars in thousands)

        Federated Mid            Fidelity® VIP    Fidelity® VIP    Fidelity® VIP 
        Cap Growth    Federated    Equity-Income    Growth        High Income 
        Strategies Fund    Prime Money    Portfolio -    Portfolio -    Portfolio -     
        II    Fund II        Initial Class    Initial Class    Initial Class 
       
    		 
    		 
    		 
    		 
    		 
    Net investment income (loss)                                 
    Income:                                 
       Dividends    $ -    $ 47    $ 407    $ -    $ - 
       
    		         
    		 
    Total investment income    -        47    407        -        - 
    Expenses:                                 
       Mortality and expense risk and                                 
    other charges    156        13    350        1        - 
                               
    		 
    Total expenses    156        13    350        1        - 
                               
    		 
    Net investment income (loss)    (156)        34    57        (1)        - 
     
    Realized and unrealized gain (loss)                                 
       on investments                                 
    Net realized gain (loss) on investments    (536)        -    2,317        22        - 
    Capital gains distributions    -        -    1,795        -        - 
       
    		 
    		 
    		     
    		 
    		 
    		 
    Total realized gain (loss) on investments                                 
       and capital gains distributions    (536)        -    4,112        22        - 
    Net unrealized appreciation                                 
       (depreciation) of investments    2,400        -    (3,913)        -        - 
           
    		 
    		     
    		 
    		 
    		 
    Net realized and unrealized gain (loss)                                 
       on investments    1,864        -    199        22        - 
           
    		 
    		             
    		 
    Net increase (decrease) in net assets                                 
       resulting from operations    $ 1,708    $ 34    $ 256    $ 21    $ - 
       
    		 
    		 
    		 
    		 

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

    19

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Operations

    For the year ended December 31, 2007
    (Dollars in thousands)

                        ING BlackRock 
                Fidelity® VIP        Large Cap 
        Fidelity® VIP    Fidelity® VIP    Investment    The Growth    Growth 
        Contrafund®    Index 500    Grade Bond    Fund of    Portfolio - 
        Portfolio -    Portfolio -    Portfolio -    America® -    Institutional 
        Initial Class    Initial Class    Initial Class    Class R-4    Class 
       
    		 
    		 
    		 
    		 
    Net investment income (loss)                     
    Income:                     
       Dividends    $ 240    $ 434    $ 11    $ 253    $ - 
                       
    Total investment income    240    434    11    253    - 
    Expenses:                     
       Mortality and expense risk and                     
    other charges    357    172    4    238    32 
    Total expenses    357    172    4    238    32 
    Net investment income (loss)    (117)    262    7    15    (32) 
     
    Realized and unrealized gain (loss)                     
       on investments                     
    Net realized gain (loss) on investments    3,196    1,525    -    116    - 
    Capital gains distributions    6,415    -    -    1,481    - 
           
    		 
    		     
    Total realized gain (loss) on investments                     
       and capital gains distributions    9,611    1,525    -    1,597    - 
    Net unrealized appreciation                     
       (depreciation) of investments    (5,628)    (1,232)    -    479    (51) 
               
    		       
    Net realized and unrealized gain (loss)                     
       on investments    3,983    293    -    2,076    (51) 
               
    		       
    Net increase (decrease) in net assets                     
       resulting from operations    $ 3,866    $ 555    $ 7    $ 2,091    $ (83) 
       
    		 
    		 
    		 
    		 

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

    20

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Operations

    For the year ended December 31, 2007
    (Dollars in thousands)

                ING FMRSM        ING JPMorgan 
        ING Evergreen    ING FMRSM    Large Cap        Emerging 
        Omega    Diversified Mid    Growth    ING Global    Markets Equity 
        Portfolio -    Cap Portfolio -    Portfolio -    Resources    Portfolio - 
        Institutional    Institutional    Institutional    Portfolio -    Institutional 
        Class    Class    Class    Service Class    Class 
       
    		 
    		 
    		 
    		 
    Net investment income (loss)                     
    Income:                     
       Dividends    $ 3    $ 8    $ 20    $ -    $ 12 
                   
    		   
    Total investment income    3    8    20    -    12 
    Expenses:                     
       Mortality and expense risk and                     
    other charges    13    40    127    4    14 
    Total expenses    13    40    127    4    14 
    Net investment income (loss)    (10)    (32)    (107)                             (4)    (2) 
     
    Realized and unrealized gain (loss)                     
       on investments                     
    Net realized gain (loss) on investments    36    (1)    94    8    88 
    Capital gains distributions    8    12    -    27    2 
               
    		       
    Total realized gain (loss) on investments                     
       and capital gains distributions    44    11    94    35    90 
    Net unrealized appreciation                     
       (depreciation) of investments    51    382    262    62    233 
    Net realized and unrealized gain (loss)                     
       on investments    95    393    356    97    323 
    Net increase (decrease) in net assets                     
       resulting from operations    $ 85    $ 361    $ 249    $ 93    $ 321 
       
    		 
    		 
    		 
    		 

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

    21

    VARIABLE ANNUITY ACCOUNT I OF             
                                                       ING LIFE INSURANCE AND ANNUITY COMPANY         
        Statements of Operations                 
                                                                               For the year ended December 31, 2007             
        (Dollars in thousands)                     
     
     
     
            ING Lord                    ING     
        ING JPMorgan    Abbett        ING Marsico    ING MFS Total    Oppenheimer 
        Value    Affiliated        International    Return    Main Street 
        Opportunities    Portfolio -        Opportunities    Portfolio -    Portfolio® - 
        Portfolio -    Institutional            Portfolio -    Institutional    Institutional 
        Service Class    Class        Service Class    Class    Class     
       
    		 
    		 
    		 
    		 
    		 
    		 
    Net investment income (loss)                                 
    Income:                                 
       Dividends    $ 17    $ -    $ 10    $ 291    $ 5 
           
    		           
    Total investment income    17        -        10    291        5 
    Expenses:                                 
       Mortality and expense risk and                                 
    other charges    21        -        13    132        6 
           
    		 
    		                   
    Total expenses    21        -        13    132        6 
           
    		 
    		 
    		 
    		           
    Net investment income (loss)    (4)        -        (3)    159        (1) 
     
    Realized and unrealized gain (loss)                                 
       on investments                                 
    Net realized gain (loss) on investments    105        -        36    113        18 
    Capital gains distributions    79        -        61    498        - 
           
    		 
    		             
    		 
    Total realized gain (loss) on investments                                 
       and capital gains distributions    184        -        97    611        18 
    Net unrealized appreciation                                 
       (depreciation) of investments    (195)        -        65    (468)        (3) 
           
    		 
    		                   
    Net realized and unrealized gain (loss)                                 
       on investments    (11)        -        162    143        15 
           
    		 
    		                   
    Net increase (decrease) in net assets                                 
       resulting from operations    $ (15)    $ -    $ 159    $ 302    $ 14 
       
    		 
    		 
    		 
    		 

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

    22

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Operations

    For the year ended December 31, 2007
    (Dollars in thousands)

                    ING VP Index     
                    Plus    ING VP Index 
        ING PIMCO    ING Pioneer    ING Stock    International    Plus 
        High Yield    Fund Portfolio    Index Portfolio    Equity Portfolio    International 
        Portfolio -    - Institutional    - Institutional    - Institutional    Equity Portfolio 
        Service Class    Class    Class    Class    - Service Class 
       
    		 
    		 
    		 
    		 
    Net investment income (loss)                     
    Income:                     
       Dividends    $ 91    $ -    $ 320    $ -    $ - 
           
    		     
    		 
    Total investment income    91    -    320    -    - 
    Expenses:                     
       Mortality and expense risk and                     
    other charges    19    -    198    11    36 
           
    		           
    Total expenses    19    -    198    11    36 
           
    		           
    Net investment income (loss)    72    -    122    (11)    (36) 
     
    Realized and unrealized gain (loss)                     
       on investments                     
    Net realized gain (loss) on investments    (9)    -    171    (4)    465 
    Capital gains distributions    7    -    561    -    8 
           
    		     
    		   
    Total realized gain (loss) on investments                     
       and capital gains distributions    (2)    -    732    (4)    473 
    Net unrealized appreciation                     
       (depreciation) of investments    (49)    -    (96)    (67)    (175) 
           
    		           
    Net realized and unrealized gain (loss)                     
       on investments    (51)    -    636    (71)    298 
           
    		           
    Net increase (decrease) in net assets                     
       resulting from operations    $ 21    $ -    $ 758    $ (82)    $ 262 
       
    		 
    		 
    		 
    		 

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

    23

    VARIABLE ANNUITY ACCOUNT I OF         
                                                       ING LIFE INSURANCE AND ANNUITY COMPANY     
        Statements of Operations             
                                                                               For the year ended December 31, 2007         
        (Dollars in thousands)                 
     
     
     
                        ING Legg    ING Lord 
            ING Baron            Mason Partners    Abbett U.S. 
        ING American    Small Cap    ING JPMorgan    Aggressive    Government 
        Century Select    Growth    International    Growth    Securities 
        Portfolio -    Portfolio -        Portfolio -    Portfolio -    Portfolio - 
        Initial Class    Service Class        Initial Class    Initial Class    Initial Class 
       
    		 
    		 
    		 
    		 
    		 
    Net investment income (loss)                         
    Income:                         
       Dividends    $ 24    $ -    $ 38    $ -    $ 30 
           
    		     
    		   
    Total investment income    24    -        38    -    30 
    Expenses:                         
       Mortality and expense risk and                         
    other charges    16    8        24    86    8 
    Total expenses    16    8        24    86    8 
    Net investment income (loss)    8    (8)        14    (86)    22 
     
    Realized and unrealized gain (loss)                         
       on investments                         
    Net realized gain (loss) on investments    457    11        150    720    11 
    Capital gains distributions    -    -        -    -    - 
       
    		 
    		 
    		 
    		 
    		 
    Total realized gain (loss) on investments                         
       and capital gains distributions    457    11        150    720    11 
    Net unrealized appreciation                         
       (depreciation) of investments    (189)    3        (27)    (788)                             (1) 
    Net realized and unrealized gain (loss)                         
       on investments    268    14        123    (68)    10 
    Net increase (decrease) in net assets                         
       resulting from operations    $ 276    $ 6    $ 137    $ (154)    $ 32 
       
    		 
    		 
    		 
    		 

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

    24

    VARIABLE ANNUITY ACCOUNT I OF         
                                                       ING LIFE INSURANCE AND ANNUITY COMPANY     
        Statements of Operations             
    For the year ended December 31, 2007         
        (Dollars in thousands)                 
     
     
     
                    ING    ING T. Rowe     
        ING Neuberger        Oppenheimer    Price     
        Berman    ING        Strategic    Diversified Mid    ING T. Rowe 
        Partners    Oppenheimer        Income    Cap Growth    Price Growth 
        Portfolio -    Global Portfolio    Portfolio -    Portfolio -    Equity Portfolio 
        Initial Class    - Initial Class    Initial Class    Initial Class    - Initial Class 
       
    		 
    		 
    		 
    		 
    Net investment income (loss)                         
    Income:                         
       Dividends    $ 12    $ 446    $ 503    $ 9    $ 58 
    Total investment income    12    446        503    9    58 
    Expenses:                         
       Mortality and expense risk and                         
    other charges    62    503        133    64    167 
    Total expenses    62    503        133    64    167 
    Net investment income (loss)                           (50)    (57)        370                           (55)    (109) 
     
    Realized and unrealized gain (loss)                         
       on investments                         
    Net realized gain (loss) on investments    191    2,335        266    325    770 
    Capital gains distributions    199    1,670        -    393    548 
               
    		 
    		       
    Total realized gain (loss) on investments                         
       and capital gains distributions    390    4,005        266    718    1,318 
    Net unrealized appreciation                         
       (depreciation) of investments    (4)    (1,716)        160    (152)    (218) 
    Net realized and unrealized gain (loss)                         
       on investments    386    2,289        426    566    1,100 
    Net increase (decrease) in net assets                         
       resulting from operations    $ 336    $ 2,232    $ 796    $ 511    $ 991 
       
    		 
    		 
    		 
    		 

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

    25

    VARIABLE ANNUITY ACCOUNT I OF         
                                                       ING LIFE INSURANCE AND ANNUITY COMPANY     
        Statements of Operations             
                                                                               For the year ended December 31, 2007         
        (Dollars in thousands)                 
     
     
                        ING VP    ING VP 
                    ING Van    Strategic    Strategic 
            ING UBS U.S.    Kampen Equity    Allocation    Allocation 
        ING Thornburg    Large Cap        and Income    Conservative    Growth 
        Value Portfolio    Equity Portfolio        Portfolio -    Portfolio - Class    Portfolio - Class 
        - Initial Class    - Initial Class        Initial Class    I    I 
       
    		 
    		 
    		 
    		 
    		 
    Net investment income (loss)                         
    Income:                         
       Dividends    $ 10    $ 36    $ 181    $ 45    $ 34 
    Total investment income    10    36        181    45    34 
    Expenses:                         
       Mortality and expense risk and                         
    other charges    28    73        106    19    30 
    Total expenses    28    73        106    19    30 
    Net investment income (loss)    (18)    (37)        75    26    4 
     
    Realized and unrealized gain (loss)                         
       on investments                         
    Net realized gain (loss) on investments    241    510        395    25    113 
    Capital gains distributions    -    -        205    34    115 
       
    		 
    		               
    Total realized gain (loss) on investments                         
       and capital gains distributions    241    510        600    59    228 
    Net unrealized appreciation                         
       (depreciation) of investments    (114)    (428)        (464)    (33)    (160) 
    Net realized and unrealized gain (loss)                         
       on investments    127    82        136    26    68 
    Net increase (decrease) in net assets                         
       resulting from operations    $ 109    $ 45    $ 211    $ 52    $ 72 
       
    		 
    		 
    		 
    		 

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

    26

                                                                           VARIABLE ANNUITY ACCOUNT I OF             
                                                       ING LIFE INSURANCE AND ANNUITY COMPANY         
        Statements of Operations                 
                                                                               For the year ended December 31, 2007             
        (Dollars in thousands)                     
     
     
        ING VP                         
        Strategic    ING VP    ING VP Global             
        Allocation    Growth and        Science and        ING VP    ING VP Index 
        Moderate    Income        Technology        Growth    Plus LargeCap 
        Portfolio - Class    Portfolio - Class    Portfolio - Class    Portfolio - Class    Portfolio - Class 
        I    I        I        I    I 
       
    		 
    		 
    		 
    		 
    		 
    		 
    Net investment income (loss)                             
    Income:                             
       Dividends    $ 50    $ 72    $ -    $ 6    $ 50 
               
    		       
    Total investment income    50    72        -        6    50 
    Expenses:                             
       Mortality and expense risk and                             
    other charges    32    79        29        37    53 
    Total expenses    32    79        29        37    53 
    Net investment income (loss)    18    (7)        (29)        (31)    (3) 
     
    Realized and unrealized gain (loss)                             
       on investments                             
    Net realized gain (loss) on investments    68    662        82        501    367 
    Capital gains distributions    84    -        -        -    - 
           
    		 
    		 
    		 
    		 
    		 
    Total realized gain (loss) on investments                             
       and capital gains distributions    152    662        82        501    367 
    Net unrealized appreciation                             
       (depreciation) of investments    (92)    (304)        363        14    (210) 
    Net realized and unrealized gain (loss)                             
       on investments    60    358        445        515    157 
    Net increase (decrease) in net assets                             
       resulting from operations    $ 78    $ 351    $ 416    $ 484    $ 154 
       
    		 
    		 
    		 
    		 

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

    27

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Operations

    For the year ended December 31, 2007
    (Dollars in thousands)

        ING VP Index    ING VP Index    ING VP    ING VP Small    ING VP Value 
        Plus MidCap    Plus SmallCap    International    Company    Opportunity 
        Portfolio - Class    Portfolio - Class    Equity Portfolio    Portfolio - Class    Portfolio - Class 
        I    I    - Class I    I    I 
       
    		 
    		 
    		 
    		 
    Net investment income (loss)                     
    Income:                     
       Dividends    $ 88    $ -    $ 86    $ 36    $ 29 
           
    		           
    Total investment income    88    -    86    36    29 
    Expenses:                     
       Mortality and expense risk and                     
    other charges    124    -    27    223    24 
           
    		           
    Total expenses    124    -    27    223    24 
           
    		           
    Net investment income (loss)    (36)    -    59    (187)    5 
     
    Realized and unrealized gain (loss)                     
       on investments                     
    Net realized gain (loss) on investments    58    -    41    659    103 
    Capital gains distributions    849    1    243    2,952    - 
                       
    Total realized gain (loss) on investments                     
       and capital gains distributions    907    1    284    3,611    103 
    Net unrealized appreciation                     
       (depreciation) of investments    (468)    (1)    (233)    (2,477)    (74) 
    Net realized and unrealized gain (loss)                     
       on investments    439    -    51    1,134    29 
           
    		           
    Net increase (decrease) in net assets                     
       resulting from operations    $ 403    $ -    $ 110    $ 947    $ 34 
       
    		 
    		 
    		 
    		 

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

    28

                                                                           VARIABLE ANNUITY ACCOUNT I OF                 
                                                       ING LIFE INSURANCE AND ANNUITY COMPANY         
        Statements of Operations                 
                                                                               For the year ended December 31, 2007                 
        (Dollars in thousands)                     
     
     
                ING VP                 
        ING VP High    ING VP    SmallCap            ING VP    ING VP 
        Yield Bond    International    Opportunities        Balanced    Intermediate 
        Portfolio - Class    Value Portfolio    Portfolio -        Portfolio - Class    Bond Portfolio 
        I    - Class I    Class I            I    - Class I 
       
    		 
    		 
    		 
    		 
    		 
    		 
    Net investment income (loss)                             
    Income:                             
       Dividends    $ 307    $ 11    $ -    $ 577    $ 316 
               
    		       
    Total investment income    307    11        -        577    316 
    Expenses:                             
       Mortality and expense risk and                             
    other charges    54    5        -        239    104 
               
    		 
    		           
    Total expenses    54    5        -        239    104 
               
    		 
    		           
    Net investment income (loss)    253    6        -        338    212 
     
    Realized and unrealized gain (loss)                             
       on investments                             
    Net realized gain (loss) on investments    16    (74)        -        1,013    6 
    Capital gains distributions    -    109        -        855    - 
       
    		     
    		 
    		         
    Total realized gain (loss) on investments                             
       and capital gains distributions    16    35        -        1,868    6 
    Net unrealized appreciation                             
       (depreciation) of investments    (236)    -        -        (1,251)    161 
           
    		 
    		 
    		           
    Net realized and unrealized gain (loss)                             
       on investments    (220)    35        -        617    167 
               
    		 
    		           
    Net increase (decrease) in net assets                             
       resulting from operations    $ 33    $ 41    $ -    $ 955    $ 379 
       
    		 
    		 
    		 
    		 

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

    29

    VARIABLE ANNUITY ACCOUNT I OF                 
                                                       ING LIFE INSURANCE AND ANNUITY COMPANY             
        Statements of Operations                 
    For the year ended December 31, 2007                 
        (Dollars in thousands)                     
     
     
                Lord Abbett                 
                Series Fund -                 
        ING VP Money        Growth and            Oppenheimer 
        Market    ING VP    Income    Oppenheimer    Main Street 
        Portfolio -    Natural    Portfolio - Class    Main Street    Small Cap     
        Class I    Resources Trust    VC    Fund®/VA        Fund®/VA     
       
    		     
    		 
    		 
    		 
    		 
    Net investment income (loss)                             
    Income:                             
       Dividends    $ 600    $ 1    $ 116    $ 1    $ - 
                       
    Total investment income    600    1    116        1        - 
    Expenses:                             
       Mortality and expense risk and                             
    other charges    195    -    89        1        - 
           
    		             
    		 
    Total expenses    195    -    89        1        - 
           
    		             
    		 
    Net investment income (loss)    405    1    27        -        - 
     
    Realized and unrealized gain (loss)                             
       on investments                             
    Net realized gain (loss) on investments    158    59    174        -        - 
    Capital gains distributions    -    54    643        -        - 
       
    		         
    		 
    		 
    		 
    Total realized gain (loss) on investments                             
       and capital gains distributions    158    113    817        -        - 
    Net unrealized appreciation                             
       (depreciation) of investments    3    (131)    (662)        2        - 
                           
    		 
    Net realized and unrealized gain (loss)                             
       on investments    161    (18)    155        2        - 
                           
    		 
    Net increase (decrease) in net assets                             
       resulting from operations    $ 566    $ (17)    $ 182    $ 2    $ - 
       
    		 
    		 
    		 
    		 

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

    30

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Operations

    For the year ended December 31, 2007
    (Dollars in thousands)

        PIMCO Real         
        Return    Pioneer Equity    Pioneer Mid 
        Portfolio -    Income VCT    Cap Value VCT 
        Administrative    Portfolio - Class    Portfolio - Class 
        Class    I    I 
       
    		 
    		 
    Net investment income (loss)             
    Income:             
       Dividends    $ -    $ -    $ - 
       
    		 
    		 
    Total investment income    -    -    - 
    Expenses:             
       Mortality and expense risk and             
    other charges    -    -    - 
       
    		 
    		 
    Total expenses    -    -    - 
       
    		 
    		 
    Net investment income (loss)    -    -    - 
     
    Realized and unrealized gain (loss)             
       on investments             
    Net realized gain (loss) on investments    -    -    - 
    Capital gains distributions    -    -    - 
       
    		 
    		 
    Total realized gain (loss) on investments             
       and capital gains distributions    -    -    - 
    Net unrealized appreciation             
       (depreciation) of investments    -    (2)    - 
       
    		     
    Net realized and unrealized gain (loss)             
       on investments    -    (2)    - 
       
    		     
    Net increase (decrease) in net assets             
       resulting from operations    $ -    $ (2)    $ - 
       
    		 
    		 

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

    31

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Changes in Net Assets

    For the years ended December 31, 2007 and 2006
    (Dollars in thousands)

        AIM V.I.             
        Capital                 
        Appreciation    AIM V.I. Core    Calvert Social    EuroPacific 
        Fund - Series I    Equity Fund -    Balanced    Growth Fund® 
        Shares        Series I Shares    Portfolio    - Class R-4 
       
    		 
    		 
    		 
    		 
    Net assets at January 1, 2006    $ 11    $ 2,862    $ 233    $ - 
     
    Increase (decrease) in net assets                     
    Operations:                     
       Net investment income (loss)        (9)    (17)    1    52 
       Total realized gain (loss) on investments                     
             and capital gains distributions        (71)    288    10    214 
       Net unrealized appreciation (depreciation)                     
             of investments        (2)    435    1    4 
    Net increase (decrease) in net assets from operations        (82)    706    12    270 
    Changes from principal transactions:                     
       Total unit transactions        75    2,772    (47)    3,741 
    Increase (decrease) in net assets derived from                     
       principal transactions        75    2,772    (47)    3,741 
    Total increase (decrease)        (7)    3,478    (35)    4,011 
    Net assets at December 31, 2006        4    6,340    198    4,011 
     
    Increase (decrease) in net assets                     
    Operations:                     
       Net investment income (loss)        -    12    2    84 
       Total realized gain (loss) on investments                     
             and capital gains distributions        1    366    18    620 
       Net unrealized appreciation (depreciation)                     
             of investments        -    49    (17)    243 
       
    		 
    		           
    Net increase (decrease) in net assets from operations        1    427    3    947 
    Changes from principal transactions:                     
       Total unit transactions        (5)    289    11    4,113 
    Increase (decrease) in net assets derived from                     
       principal transactions        (5)    289    11    4,113 
    Total increase (decrease)        (4)    716    14    5,060 
    Net assets at December 31, 2007    $ -    $ 7,056    $ 212    $ 9,071 
       
    		 
    		 
    		 

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

    32

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Changes in Net Assets

    For the years ended December 31, 2007 and 2006
    (Dollars in thousands)

        Federated            Federated Fund 
        American    Federated    Federated    for U.S. 
        Leaders Fund    Capital Income    Equity Income    Government 
                     II    Fund II    Fund II    Securities II 
       
    		 
    		 
    		 
    Net assets at January 1, 2006    $ 50,030    $ 4,443    $ 10,855    $ 2,814 
     
    Increase (decrease) in net assets                 
    Operations:                 
       Net investment income (loss)    68    200    95    74 
       Total realized gain (loss) on investments                 
             and capital gains distributions    5,827    (386)    (357)    (109) 
       Net unrealized appreciation (depreciation)                 
             of investments    467    731    2,213    69 
    Net increase (decrease) in net assets from operations    6,362    545    1,951    34 
    Changes from principal transactions:                 
       Total unit transactions    (11,683)    (873)    (3,334)    (1,394) 
    Increase (decrease) in net assets derived from                 
       principal transactions    (11,683)    (873)    (3,334)    (1,394) 
    Total increase (decrease)    (5,321)    (328)    (1,383)    (1,360) 
    Net assets at December 31, 2006    44,709    4,115    9,472    1,454 
     
    Increase (decrease) in net assets                 
    Operations:                 
       Net investment income (loss)    42    146    131    44 
       Total realized gain (loss) on investments                 
             and capital gains distributions    3,949    (7)    534    (21) 
       Net unrealized appreciation (depreciation)                 
             of investments    (7,907)    (38)    (573)    35 
    Net increase (decrease) in net assets from operations    (3,916)    101    92    58 
    Changes from principal transactions:                 
       Total unit transactions    (10,188)    (580)    (2,189)    (260) 
    Increase (decrease) in net assets derived from                 
       principal transactions    (10,188)    (580)    (2,189)    (260) 
    Total increase (decrease)    (14,104)    (479)    (2,097)    (202) 
    Net assets at December 31, 2007    $ 30,605    $ 3,636    $ 7,375    $ 1,252 
       
    		 
    		 
    		 

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

    33

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Changes in Net Assets

    For the years ended December 31, 2007 and 2006
    (Dollars in thousands)

                Federated Mid     
        Federated High    Federated    Cap Growth    Federated 
        Income Bond    International    Strategies Fund    Prime Money 
        Fund II    Equity Fund II    II    Fund II 
       
    		     
    		 
    Net assets at January 1, 2006    $ 7,274    $ 7,951    $ 14,150    $ 1,062 
     
    Increase (decrease) in net assets                 
    Operations:                 
       Net investment income (loss)    502    (91)    (183)    31 
       Total realized gain (loss) on investments                 
             and capital gains distributions    67    (1,672)    (523)    - 
       Net unrealized appreciation (depreciation)                 
             of investments    11    2,975    1,533    - 
                   
    Net increase (decrease) in net assets from operations    580    1,212    827    31 
    Changes from principal transactions:                 
       Total unit transactions    (1,747)    (1,952)    (3,787)    (120) 
    Increase (decrease) in net assets derived from                 
       principal transactions    (1,747)    (1,952)    (3,787)    (120) 
    Total increase (decrease)    (1,167)    (740)    (2,960)    (89) 
    Net assets at December 31, 2006    6,107    7,211    11,190    973 
     
    Increase (decrease) in net assets                 
    Operations:                 
       Net investment income (loss)    384    (80)    (156)    34 
       Total realized gain (loss) on investments                 
             and capital gains distributions    134    (38)    (536)    - 
       Net unrealized appreciation (depreciation)                 
             of investments    (395)    644    2,400    - 
                   
    Net increase (decrease) in net assets from operations    123    526    1,708    34 
    Changes from principal transactions:                 
       Total unit transactions    (1,570)    (1,677)    (2,816)    (100) 
    Increase (decrease) in net assets derived from                 
       principal transactions    (1,570)    (1,677)    (2,816)    (100) 
    Total increase (decrease)    (1,447)    (1,151)    (1,108)    (66) 
    Net assets at December 31, 2007    $ 4,660    $ 6,060    $ 10,082    $ 907 
       
    		 
    		 
    		 

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

    34

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Changes in Net Assets

    For the years ended December 31, 2007 and 2006
    (Dollars in thousands)

        Fidelity® VIP    Fidelity® VIP    Fidelity® VIP    Fidelity® VIP 
        Equity-Income    Growth    High Income    Contrafund® 
        Portfolio -    Portfolio -    Portfolio -    Portfolio - 
        Initial Class    Initial Class    Initial Class    Initial Class 
       
    		 
    		 
    		 
    Net assets at January 1, 2006    $ 29,126    $ 27,439    $ 6,230    $ 27,881 
     
    Increase (decrease) in net assets                 
    Operations:                 
       Net investment income (loss)    529    (74)    (20)    (27) 
       Total realized gain (loss) on investments                 
             and capital gains distributions    5,372    5,707    (221)    4,938 
       Net unrealized appreciation (depreciation)                 
             of investments    (1,204)    (4,560)    394    (2,340) 
    Net increase (decrease) in net assets from operations    4,697    1,073    153    2,571 
    Changes from principal transactions:                 
       Total unit transactions    (6,972)    (28,504)    (6,380)    (4,686) 
    Increase (decrease) in net assets derived from                 
       principal transactions    (6,972)    (28,504)    (6,380)    (4,686) 
    Total increase (decrease)    (2,275)    (27,431)    (6,227)    (2,115) 
    Net assets at December 31, 2006    26,851    8    3    25,766 
     
    Increase (decrease) in net assets                 
    Operations:                 
       Net investment income (loss)    57    (1)    -    (117) 
       Total realized gain (loss) on investments                 
             and capital gains distributions    4,112    22    -    9,611 
       Net unrealized appreciation (depreciation)                 
             of investments    (3,913)    -    -    (5,628) 
           
    		 
    		   
    Net increase (decrease) in net assets from operations    256    21    -    3,866 
    Changes from principal transactions:                 
       Total unit transactions    (5,759)    (29)    -    (2,963) 
               
    		   
    Increase (decrease) in net assets derived from                 
       principal transactions    (5,759)    (29)    -    (2,963) 
               
    		   
    Total increase (decrease)    (5,503)    (8)    -    903 
               
    		   
    Net assets at December 31, 2007    $ 21,348    $ -    $ 3    $ 26,669 
       
    		 
    		 
    		 

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

    35

      VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

      Statements of Changes in Net Assets

      For the years ended December 31, 2007 and 2006
    (Dollars in thousands)

                    ING BlackRock     
            Fidelity® VIP        Large Cap     
        Fidelity® VIP    Investment    The Growth    Growth    ING Evergreen 
        Index 500    Grade Bond    Fund of    Portfolio -    Omega Portfolio 
        Portfolio -    Portfolio -    America® -    Institutional    - Institutional 
        Initial Class    Initial Class    Class R-4    Class    Class 
       
    		 
    		 
    		 
    		 
    Net assets at January 1, 2006    $ 17,622    $ 301    $ -    $ -    $ 1,086 
     
    Increase (decrease) in net assets                     
    Operations:                     
       Net investment income (loss)    97    7    123    -    (13) 
       Total realized gain (loss) on investments                     
             and capital gains distributions    2,249    -    689    -    14 
       Net unrealized appreciation (depreciation)                     
             of investments    (415)    -    168    -    43 
           
    		     
    		   
    Net increase (decrease) in net assets from operations    1,931    7    980    -    44 
    Changes from principal transactions:                     
       Total unit transactions    (5,973)    (43)    19,703    -    (239) 
                   
    		 
    Increase (decrease) in net assets derived from                     
       principal transactions    (5,973)    (43)    19,703    -    (239) 
                   
    		 
    Total increase (decrease)    (4,042)    (36)    20,683    -    (195) 
                   
    		 
    Net assets at December 31, 2006    13,580    265    20,683    -    891 
     
    Increase (decrease) in net assets                     
    Operations:                     
       Net investment income (loss)    262    7    15    (32)    (10) 
       Total realized gain (loss) on investments                     
             and capital gains distributions    1,525    -    1,597    -    44 
       Net unrealized appreciation (depreciation)                     
             of investments    (1,232)    -    479    (51)    51 
           
    		     
    		   
    Net increase (decrease) in net assets from operations    555    7    2,091    (83)    85 
    Changes from principal transactions:                     
       Total unit transactions    (3,653)    (10)    3,612    3,201    (123) 
                       
    Increase (decrease) in net assets derived from                     
       principal transactions    (3,653)    (10)    3,612    3,201    (123) 
                       
    Total increase (decrease)    (3,098)    (3)    5,703    3,118    (38) 
                       
    Net assets at December 31, 2007    $ 10,482    $ 262    $ 26,386    $ 3,118    $ 853 
       
    		 
    		 
    		 
    		 

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

    36

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Changes in Net Assets

    For the years ended December 31, 2007 and 2006
    (Dollars in thousands)

            ING FMRSM        ING JPMorgan 
        ING FMRSM    Large Cap        Emerging 
        Diversified Mid    Growth    ING Global    Markets Equity 
        Cap Portfolio -    Portfolio -    Resources    Portfolio - 
        Institutional    Institutional    Portfolio -    Institutional 
        Class    Class    Service Class    Class 
       
    		 
    		 
    		 
    Net assets at January 1, 2006    $ -    $ 1,130    $ -    $ 241 
     
    Increase (decrease) in net assets                 
    Operations:                 
       Net investment income (loss)    (26)    (102)    -    (4) 
       Total realized gain (loss) on investments                 
             and capital gains distributions    136    (57)    -    36 
       Net unrealized appreciation (depreciation)                 
             of investments    (179)    3    -    112 
               
    		   
    Net increase (decrease) in net assets from operations    (69)    (156)    -    144 
    Changes from principal transactions:                 
       Total unit transactions    2,886    9,110    -    398 
               
    		   
    Increase (decrease) in net assets derived from                 
       principal transactions    2,886    9,110    -    398 
               
    		   
    Total increase (decrease)    2,817    8,954    -    542 
               
    		   
    Net assets at December 31, 2006    2,817    10,084    -    783 
     
    Increase (decrease) in net assets                 
    Operations:                 
       Net investment income (loss)    (32)    (107)    (4)    (2) 
       Total realized gain (loss) on investments                 
             and capital gains distributions    11    94    35    90 
       Net unrealized appreciation (depreciation)                 
             of investments    382    262    62    233 
    Net increase (decrease) in net assets from operations    361    249    93    321 
    Changes from principal transactions:                 
       Total unit transactions    (406)    (2,427)    214    326 
    Increase (decrease) in net assets derived from                 
       principal transactions    (406)    (2,427)    214    326 
    Total increase (decrease)    (45)    (2,178)    307    647 
    Net assets at December 31, 2007    $ 2,772    $ 7,906    $ 307    $ 1,430 
       
    		 
    		 
    		 

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

    37

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Changes in Net Assets

    For the years ended December 31, 2007 and 2006
    (Dollars in thousands)

            ING Lord             
        ING JPMorgan    Abbett        ING Marsico    ING MFS Total 
        Value    Affiliated        International    Return 
        Opportunities    Portfolio -        Opportunities    Portfolio - 
        Portfolio -    Institutional    Portfolio -    Institutional 
        Service Class    Class        Service Class    Class 
       
    		 
    		 
    		 
    		 
    Net assets at January 1, 2006    $ 1,561    $ -    $ -    $ 12,974 
     
    Increase (decrease) in net assets                     
    Operations:                     
       Net investment income (loss)    (16)        -    (6)    132 
       Total realized gain (loss) on investments                     
             and capital gains distributions    57        -    -    579 
       Net unrealized appreciation (depreciation)                     
             of investments    230        -    87    391 
           
    		 
    		       
    Net increase (decrease) in net assets from operations    271        -    81    1,102 
    Changes from principal transactions:                     
       Total unit transactions    (123)        -    775    (3,868) 
           
    		 
    		       
    Increase (decrease) in net assets derived from                     
       principal transactions    (123)        -    775    (3,868) 
           
    		 
    		       
    Total increase (decrease)    148        -    856    (2,766) 
           
    		 
    		       
    Net assets at December 31, 2006    1,709        -    856    10,208 
     
    Increase (decrease) in net assets                     
    Operations:                     
       Net investment income (loss)    (4)        -    (3)    159 
       Total realized gain (loss) on investments                     
             and capital gains distributions    184        -    97    611 
       Net unrealized appreciation (depreciation)                     
             of investments    (195)        -    65    (468) 
           
    		 
    		       
    Net increase (decrease) in net assets from operations    (15)        -    159    302 
    Changes from principal transactions:                     
       Total unit transactions    (460)        -    145    (1,792) 
           
    		 
    		       
    Increase (decrease) in net assets derived from                     
       principal transactions    (460)        -    145    (1,792) 
           
    		 
    		       
    Total increase (decrease)    (475)        -    304    (1,490) 
           
    		 
    		       
    Net assets at December 31, 2007    $ 1,234    $ -    $ 1,160    $ 8,718 
       
    		 
    		 
    		 

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

    38

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Changes in Net Assets

    For the years ended December 31, 2007 and 2006
    (Dollars in thousands)

        ING                 
        Oppenheimer             
        Main Street    ING PIMCO    ING Pioneer    ING Stock 
        Portfolio® -    High Yield    Fund Portfolio -    Index Portfolio 
        Institutional    Portfolio -    Institutional    - Institutional 
        Class    Service Class    Class    Class 
       
    		 
    		 
    		 
    Net assets at January 1, 2006    $ 597    $ 1,750    $ 5    $ - 
     
    Increase (decrease) in net assets                     
    Operations:                     
       Net investment income (loss)        (1)    91    -    (41) 
       Total realized gain (loss) on investments                     
             and capital gains distributions        30    7    -    26 
       Net unrealized appreciation (depreciation)                     
             of investments        31    22    1    951 
    Net increase (decrease) in net assets from operations        60    120    1    936 
    Changes from principal transactions:                     
       Total unit transactions        (211)    (273)    (1)    17,568 
    Increase (decrease) in net assets derived from                     
       principal transactions        (211)    (273)    (1)    17,568 
    Total increase (decrease)        (151)    (153)    -    18,504 
                   
    		   
    Net assets at December 31, 2006        446    1,597    5    18,504 
     
    Increase (decrease) in net assets                     
    Operations:                     
       Net investment income (loss)        (1)    72    -    122 
       Total realized gain (loss) on investments                     
             and capital gains distributions        18    (2)    -    732 
       Net unrealized appreciation (depreciation)                     
             of investments        (3)    (49)    -    (96) 
                   
    		   
    Net increase (decrease) in net assets from operations        14    21    -    758 
    Changes from principal transactions:                     
       Total unit transactions        (63)    (523)    -    1,408 
                   
    		   
    Increase (decrease) in net assets derived from                     
       principal transactions        (63)    (523)    -    1,408 
                   
    		   
    Total increase (decrease)        (49)    (502)    -    2,166 
                   
    		   
    Net assets at December 31, 2007    $ 397    $ 1,095    $ 5    $ 20,670 
       
    		 
    		 
    		 

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

    39

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Changes in Net Assets

    For the years ended December 31, 2007 and 2006
    (Dollars in thousands)

        ING VP Index             
        Plus    ING VP Index        ING Baron 
        International    Plus    ING American    Small Cap 
        Equity Portfolio    International    Century Select    Growth 
        - Institutional    Equity Portfolio    Portfolio -    Portfolio - 
        Class    - Service Class    Initial Class    Service Class 
       
    		 
    		 
    		 
    Net assets at January 1, 2006    $ -    $ -    $ 4,963    $ - 
     
    Increase (decrease) in net assets                 
    Operations:                 
       Net investment income (loss)    -    1    (6)    - 
       Total realized gain (loss) on investments                 
             and capital gains distributions    -    35    57    - 
       Net unrealized appreciation (depreciation)                 
             of investments    -    175    (217)    9 
       
    		           
    Net increase (decrease) in net assets from operations    -    211    (166)    9 
    Changes from principal transactions:                 
       Total unit transactions    -    2,850    (1,186)    243 
       
    		           
    Increase (decrease) in net assets derived from                 
       principal transactions    -    2,850    (1,186)    243 
       
    		           
    Total increase (decrease)    -    3,061    (1,352)    252 
       
    		           
    Net assets at December 31, 2006    -    3,061    3,611    252 
     
    Increase (decrease) in net assets                 
    Operations:                 
       Net investment income (loss)    (11)    (36)    8    (8) 
       Total realized gain (loss) on investments                 
             and capital gains distributions    (4)    473    457    11 
       Net unrealized appreciation (depreciation)                 
             of investments    (67)    (175)    (189)    3 
    Net increase (decrease) in net assets from operations    (82)    262    276    6 
    Changes from principal transactions:                 
       Total unit transactions    4,771    (3,323)    (3,887)    920 
    Increase (decrease) in net assets derived from                 
       principal transactions    4,771    (3,323)    (3,887)    920 
    Total increase (decrease)    4,689    (3,061)    (3,611)    926 
    Net assets at December 31, 2007    $ 4,689    $ -    $ -    $ 1,178 
       
    		 
    		 
    		 

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

    40

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Changes in Net Assets

    For the years ended December 31, 2007 and 2006
    (Dollars in thousands)

            ING Legg    ING Lord     
            Mason Partners    Abbett U.S.    ING Neuberger 
        ING JPMorgan    Aggressive    Government    Berman 
        International    Growth    Securities    Partners 
        Portfolio -    Portfolio -    Portfolio -    Portfolio - 
        Initial Class    Initial Class    Initial Class    Initial Class 
       
    		 
    		 
    		 
    Net assets at January 1, 2006    $ 1,618    $ 8,161    $ -    $ - 
     
    Increase (decrease) in net assets                 
    Operations:                 
       Net investment income (loss)    (7)    (104)    20    (46) 
       Total realized gain (loss) on investments                 
             and capital gains distributions    245    913    1    (38) 
       Net unrealized appreciation (depreciation)                 
             of investments    72    (175)    -    318 
               
    		   
    Net increase (decrease) in net assets from operations    310    634    21    234 
    Changes from principal transactions:                 
       Total unit transactions    (305)    (1,851)    558    5,277 
    Increase (decrease) in net assets derived from                 
       principal transactions    (305)    (1,851)    558    5,277 
    Total increase (decrease)    5    (1,217)    579    5,511 
    Net assets at December 31, 2006    1,623    6,944    579    5,511 
     
    Increase (decrease) in net assets                 
    Operations:                 
       Net investment income (loss)    14    (86)    22    (50) 
       Total realized gain (loss) on investments                 
             and capital gains distributions    150    720    11    390 
       Net unrealized appreciation (depreciation)                 
             of investments    (27)    (788)                             (1)    (4) 
    Net increase (decrease) in net assets from operations    137    (154)    32    336 
    Changes from principal transactions:                 
       Total unit transactions    (64)    (1,328)    1    (1,922) 
    Increase (decrease) in net assets derived from                 
       principal transactions    (64)    (1,328)    1    (1,922) 
    Total increase (decrease)    73    (1,482)    33    (1,586) 
    Net assets at December 31, 2007    $ 1,696    $ 5,462    $ 612    $ 3,925 
       
    		 
    		 
    		 

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

    41

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Changes in Net Assets

    For the years ended December 31, 2007 and 2006
    (Dollars in thousands)

            ING    ING T. Rowe     
            Oppenheimer    Price     
        ING    Strategic    Diversified Mid    ING T. Rowe 
        Oppenheimer    Income    Cap Growth    Price Growth 
        Global Portfolio    Portfolio -    Portfolio -    Equity Portfolio 
        - Initial Class    Initial Class    Initial Class    - Initial Class 
       
    		 
    		 
    		 
    Net assets at January 1, 2006    $ 41,289    $ 11,614    $ 6,024    $ 15,034 
     
    Increase (decrease) in net assets                 
    Operations:                 
       Net investment income (loss)    (477)    (91)    (76)    (153) 
       Total realized gain (loss) on investments                 
             and capital gains distributions    1,909    75    495    898 
       Net unrealized appreciation (depreciation)                 
             of investments    4,840    733    (91)    667 
    Net increase (decrease) in net assets from operations    6,272    717    328    1,412 
    Changes from principal transactions:                 
       Total unit transactions    (5,672)    (1,867)    (1,917)    (3,934) 
    Increase (decrease) in net assets derived from                 
       principal transactions    (5,672)    (1,867)    (1,917)    (3,934) 
    Total increase (decrease)    600    (1,150)    (1,589)    (2,522) 
    Net assets at December 31, 2006    41,889    10,464    4,435    12,512 
     
    Increase (decrease) in net assets                 
    Operations:                 
       Net investment income (loss)    (57)    370    (55)    (109) 
       Total realized gain (loss) on investments                 
             and capital gains distributions    4,005    266    718    1,318 
       Net unrealized appreciation (depreciation)                 
             of investments    (1,716)    160    (152)    (218) 
    Net increase (decrease) in net assets from operations    2,232    796    511    991 
    Changes from principal transactions:                 
       Total unit transactions    (4,119)    436    (530)    (2,132) 
    Increase (decrease) in net assets derived from                 
       principal transactions    (4,119)    436    (530)    (2,132) 
    Total increase (decrease)    (1,887)    1,232    (19)    (1,141) 
    Net assets at December 31, 2007    $ 40,002    $ 11,696    $ 4,416    $ 11,371 
       
    		 
    		 
    		 

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

    42

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Changes in Net Assets

    For the years ended December 31, 2007 and 2006
    (Dollars in thousands)

                    ING VP 
                ING Van    Strategic 
            ING UBS U.S.    Kampen Equity    Allocation 
        ING Thornburg    Large Cap    and Income    Conservative 
        Value Portfolio    Equity Portfolio    Portfolio -    Portfolio - Class 
        - Initial Class    - Initial Class    Initial Class    I 
       
    		 
    		 
    		 
    Net assets at January 1, 2006    $ 2,132    $ 5,898    $ 10,252    $ 1,280 
     
    Increase (decrease) in net assets                 
    Operations:                 
       Net investment income (loss)    (18)    (32)    53    11 
       Total realized gain (loss) on investments                 
             and capital gains distributions    158    278    692    122 
       Net unrealized appreciation (depreciation)                 
             of investments    128    400    237    (54) 
    Net increase (decrease) in net assets from operations    268    646    982    79 
    Changes from principal transactions:                 
       Total unit transactions    (557)    (1,351)    (2,585)    (241) 
    Increase (decrease) in net assets derived from                 
       principal transactions    (557)    (1,351)    (2,585)    (241) 
    Total increase (decrease)    (289)    (705)    (1,603)    (162) 
    Net assets at December 31, 2006    1,843    5,193    8,649    1,118 
     
    Increase (decrease) in net assets                 
    Operations:                 
       Net investment income (loss)    (18)    (37)    75    26 
       Total realized gain (loss) on investments                 
             and capital gains distributions    241    510    600    59 
       Net unrealized appreciation (depreciation)                 
             of investments    (114)    (428)    (464)    (33) 
    Net increase (decrease) in net assets from operations    109    45    211    52 
    Changes from principal transactions:                 
       Total unit transactions    (156)    (741)    (2,030)    404 
    Increase (decrease) in net assets derived from                 
       principal transactions    (156)    (741)    (2,030)    404 
    Total increase (decrease)    (47)    (696)    (1,819)    456 
    Net assets at December 31, 2007    $ 1,796    $ 4,497    $ 6,830    $ 1,574 
       
    		 
    		 
    		 

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

    43

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Changes in Net Assets

    For the years ended December 31, 2007 and 2006
    (Dollars in thousands)

        ING VP    ING VP         
        Strategic    Strategic    ING VP    ING VP Global 
        Allocation    Allocation    Growth and    Science and 
        Growth    Moderate    Income    Technology 
        Portfolio - Class    Portfolio - Class    Portfolio - Class    Portfolio - Class 
        I    I    I    I 
       
    		 
    		 
    		 
    Net assets at January 1, 2006    $ 2,546    $ 1,787    $ 9,080    $ 2,334 
     
    Increase (decrease) in net assets                 
    Operations:                 
       Net investment income (loss)    4    6    (30)    (26) 
       Total realized gain (loss) on investments                 
             and capital gains distributions    202    81    1,301    98 
       Net unrealized appreciation (depreciation)                 
             of investments    67    97    (336)    67 
    Net increase (decrease) in net assets from operations    273    184    935    139 
    Changes from principal transactions:                 
       Total unit transactions    (516)    197    (3,755)    (41) 
    Increase (decrease) in net assets derived from                 
       principal transactions    (516)    197    (3,755)    (41) 
    Total increase (decrease)    (243)    381    (2,820)    98 
    Net assets at December 31, 2006    2,303    2,168    6,260    2,432 
     
    Increase (decrease) in net assets                 
    Operations:                 
       Net investment income (loss)    4    18    (7)    (29) 
       Total realized gain (loss) on investments                 
             and capital gains distributions    228    152    662    82 
       Net unrealized appreciation (depreciation)                 
             of investments    (160)                           (92)    (304)    363 
    Net increase (decrease) in net assets from operations    72    78    351    416 
    Changes from principal transactions:                 
       Total unit transactions    (278)    109    (1,453)    411 
    Increase (decrease) in net assets derived from                 
       principal transactions    (278)    109    (1,453)    411 
    Total increase (decrease)    (206)    187    (1,102)    827 
    Net assets at December 31, 2007    $ 2,097    $ 2,355    $ 5,158    $ 3,259 
       
    		 
    		 
    		 

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

    44

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Changes in Net Assets

    For the years ended December 31, 2007 and 2006
    (Dollars in thousands)

        ING VP    ING VP Index    ING VP Index    ING VP Index 
        Growth    Plus LargeCap    Plus MidCap    Plus SmallCap 
        Portfolio - Class    Portfolio - Class    Portfolio - Class    Portfolio - Class 
        I    I    I    I 
       
    		 
    		 
    		 
    Net assets at January 1, 2006    $ 3,378    $ 20,638    $ 7,660    $ 4 
     
    Increase (decrease) in net assets                 
    Operations:                 
       Net investment income (loss)    (40)    34    (40)    - 
       Total realized gain (loss) on investments                 
             and capital gains distributions    60    5,125    642    - 
       Net unrealized appreciation (depreciation)                 
             of investments    47    (3,316)    126    - 
                   
    Net increase (decrease) in net assets from operations    67    1,843    728    - 
    Changes from principal transactions:                 
       Total unit transactions    530    (18,186)    2,090    2 
    Increase (decrease) in net assets derived from                 
       principal transactions    530    (18,186)    2,090    2 
    Total increase (decrease)    597    (16,343)    2,818    2 
    Net assets at December 31, 2006    3,975    4,295    10,478    6 
     
    Increase (decrease) in net assets                 
    Operations:                 
       Net investment income (loss)    (31)    (3)    (36)    - 
       Total realized gain (loss) on investments                 
             and capital gains distributions    501    367    907    1 
       Net unrealized appreciation (depreciation)                 
             of investments    14    (210)    (468)    (1) 
    Net increase (decrease) in net assets from operations    484    154    403    - 
    Changes from principal transactions:                 
       Total unit transactions    (948)    (1,659)    2,364    3 
    Increase (decrease) in net assets derived from                 
       principal transactions    (948)    (1,659)    2,364    3 
    Total increase (decrease)    (464)    (1,505)    2,767    3 
    Net assets at December 31, 2007    $ 3,511    $ 2,790    $ 13,245    $ 9 
       
    		 
    		 
    		 

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

    45

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Changes in Net Assets

    For the years ended December 31, 2007 and 2006
    (Dollars in thousands)

        ING VP    ING VP Small    ING VP Value    ING VP High 
        International    Company    Opportunity    Yield Bond 
        Equity Portfolio    Portfolio - Class    Portfolio - Class    Portfolio - Class 
        - Class I    I    I    I 
       
    		 
    		 
    		 
    Net assets at January 1, 2006    $ 1,898    $ 17,154    $ 2,278    $ - 
     
    Increase (decrease) in net assets                 
    Operations:                 
       Net investment income (loss)    8    (139)    2    188 
       Total realized gain (loss) on investments                 
             and capital gains distributions    419    3,728    194    (7) 
       Net unrealized appreciation (depreciation)                 
             of investments    (14)    (932)    86    76 
    Net increase (decrease) in net assets from operations    413    2,657    282    257 
    Changes from principal transactions:                 
       Total unit transactions    (114)    (159)    (665)    4,225 
    Increase (decrease) in net assets derived from                 
       principal transactions    (114)    (159)    (665)    4,225 
    Total increase (decrease)    299    2,498    (383)    4,482 
    Net assets at December 31, 2006    2,197    19,652    1,895    4,482 
     
    Increase (decrease) in net assets                 
    Operations:                 
       Net investment income (loss)    59    (187)    5    253 
       Total realized gain (loss) on investments                 
             and capital gains distributions    284    3,611    103    16 
       Net unrealized appreciation (depreciation)                 
             of investments    (233)    (2,477)    (74)    (236) 
    Net increase (decrease) in net assets from operations    110    947    34    33 
    Changes from principal transactions:                 
       Total unit transactions    (2,307)    (602)    (376)    (913) 
    Increase (decrease) in net assets derived from                 
       principal transactions    (2,307)    (602)    (376)    (913) 
    Total increase (decrease)    (2,197)    345    (342)    (880) 
    Net assets at December 31, 2007    $ -    $ 19,997    $ 1,553    $ 3,602 
       
    		 
    		 
    		 

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

    46

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Changes in Net Assets

    For the years ended December 31, 2007 and 2006
    (Dollars in thousands)

            ING VP             
        ING VP    SmallCap        ING VP    ING VP 
        International    Opportunities    Balanced    Intermediate 
        Value Portfolio    Portfolio -        Portfolio - Class    Bond Portfolio - 
        - Class I    Class I        I    Class I 
       
    		 
    		 
    		 
    		 
    Net assets at January 1, 2006    $ 690    $ 1    $ 17,405    $ 8,134 
     
    Increase (decrease) in net assets                     
    Operations:                     
       Net investment income (loss)    18        -    197    190 
       Total realized gain (loss) on investments                     
             and capital gains distributions    174        -    586    (208) 
       Net unrealized appreciation (depreciation)                     
             of investments    (32)        -    887    213 
           
    		 
    		       
    Net increase (decrease) in net assets from operations    160        -    1,670    195 
    Changes from principal transactions:                     
       Total unit transactions    (594)        3    2,364    (988) 
    Increase (decrease) in net assets derived from                     
       principal transactions    (594)        3    2,364    (988) 
    Total increase (decrease)    (434)        3    4,034    (793) 
    Net assets at December 31, 2006    256        4    21,439    7,341 
     
    Increase (decrease) in net assets                     
    Operations:                     
       Net investment income (loss)    6        -    338    212 
       Total realized gain (loss) on investments                     
             and capital gains distributions    35        -    1,868    6 
       Net unrealized appreciation (depreciation)                     
             of investments    -        -    (1,251)    161 
       
    		 
    		 
    		       
    Net increase (decrease) in net assets from operations    41        -    955    379 
    Changes from principal transactions:                     
       Total unit transactions    (297)        3    (467)    798 
    Increase (decrease) in net assets derived from                     
       principal transactions    (297)        3    (467)    798 
    Total increase (decrease)    (256)        3    488    1,177 
    Net assets at December 31, 2007    $ -    $ 7    $ 21,927    $ 8,518 
       
    		 
    		 
    		 

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

    47

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Changes in Net Assets

    For the years ended December 31, 2007 and 2006
    (Dollars in thousands)

                Lord Abbett     
                Series Fund -     
        ING VP Money        Growth and     
        Market    ING VP    Income    Oppenheimer 
        Portfolio -    Natural    Portfolio - Class    Main Street 
        Class I    Resources Trust    VC    Fund®/VA 
       
    		     
    		 
    Net assets at January 1, 2006    $ 12,320    $ 379    $ 3,871    $ 5,863 
     
    Increase (decrease) in net assets                 
    Operations:                 
       Net investment income (loss)    213    (5)    33    40 
       Total realized gain (loss) on investments                 
             and capital gains distributions    113    96    277    1,243 
       Net unrealized appreciation (depreciation)                 
             of investments    139    (25)    502    (948) 
    Net increase (decrease) in net assets from operations    465    66    812    335 
    Changes from principal transactions:                 
       Total unit transactions    873    (141)    2,641    (6,140) 
    Increase (decrease) in net assets derived from                 
       principal transactions    873    (141)    2,641    (6,140) 
    Total increase (decrease)    1,338    (75)    3,453    (5,805) 
    Net assets at December 31, 2006    13,658    304    7,324    58 
     
    Increase (decrease) in net assets                 
    Operations:                 
       Net investment income (loss)    405    1    27    - 
       Total realized gain (loss) on investments                 
             and capital gains distributions    158    113    817    - 
       Net unrealized appreciation (depreciation)                 
             of investments    3    (131)    (662)    2 
    Net increase (decrease) in net assets from operations    566    (17)    182    2 
    Changes from principal transactions:                 
       Total unit transactions    1,580    (287)    1,958    (3) 
    Increase (decrease) in net assets derived from                 
       principal transactions    1,580    (287)    1,958    (3) 
    Total increase (decrease)    2,146    (304)    2,140    (1) 
    Net assets at December 31, 2007    $ 15,804    $ -    $ 9,464    $ 57 
       
    		 
    		 
    		 

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

    48

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY

    Statements of Changes in Net Assets

    For the years ended December 31, 2007 and 2006
    (Dollars in thousands)

                PIMCO Real         
        Oppenheimer    Return        Pioneer Equity    Pioneer Mid 
        Main Street    Portfolio -        Income VCT    Cap Value VCT 
        Small Cap        Administrative    Portfolio - Class    Portfolio - Class 
        Fund®/VA        Class        I    I 
       
    		 
    		 
    		 
    		 
    		 
    Net assets at January 1, 2006    $ -    $ -    $ 1    $ - 
     
    Increase (decrease) in net assets                         
    Operations:                         
       Net investment income (loss)        -        -    -    - 
       Total realized gain (loss) on investments                         
             and capital gains distributions        -        -    -    - 
       Net unrealized appreciation (depreciation)                         
             of investments        -        -    -    - 
       
    		 
    		 
    		 
    		 
    		 
    Net increase (decrease) in net assets from operations        -        -    -    - 
    Changes from principal transactions:                         
       Total unit transactions        -        -    -    - 
       
    		 
    		 
    		 
    		 
    		 
    Increase (decrease) in net assets derived from                         
       principal transactions        -        -    -    - 
       
    		 
    		 
    		 
    		 
    		 
    Total increase (decrease)        -        -    -    - 
       
    		 
    		 
    		 
    		 
    		 
    Net assets at December 31, 2006        -        -    1    - 
     
    Increase (decrease) in net assets                         
    Operations:                         
       Net investment income (loss)        -        -    -    - 
       Total realized gain (loss) on investments                         
             and capital gains distributions        -        -    -    - 
       Net unrealized appreciation (depreciation)                         
             of investments        -        -    (2)    - 
       
    		 
    		 
    		 
    		     
    Net increase (decrease) in net assets from operations        -        -    (2)    - 
    Changes from principal transactions:                         
       Total unit transactions        2        -    16    - 
               
    		 
    		     
    Increase (decrease) in net assets derived from                         
       principal transactions        2        -    16    - 
               
    		 
    		     
    Total increase (decrease)        2        -    14    - 
               
    		 
    		     
    Net assets at December 31, 2007    $ 2    $ -    $ 15    $ - 
       
    		 
    		 
    		 

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

    49

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY
    Notes to Financial Statements

    1. Organization

      Variable Annuity Account I of ING Life Insurance and Annuity Company (the
    “Account”) was established by ING Insurance Company of America (“IICA”) to support
    the operations of variable annuity contracts (“Contracts”).

    Effective December 31, 2005 (the “merger date”), IICA was merged with and into ING
    Life Insurance and Annuity Company (“ILIAC” or the “Company”). As of the merger
    date, IICA ceased to exist and was succeeded by ILIAC. In conjunction with the merger,
    the Account was transferred to ILIAC and had its name changed to Variable Annuity
    Account I of ING Life Insurance and Annuity Company. The Company is an indirect
    wholly owned subsidiary of ING America Insurance Holdings, Inc. (“ING AIH”), an
    insurance holding company domiciled in the State of Delaware. ING AIH is an indirect
    wholly owned subsidiary of ING Groep N.V., a global financial services holding
    company based in The Netherlands.

    The Account is registered as a unit investment trust with the Securities and Exchange
    Commission under the Investment Company Act of 1940, as amended. ILIAC provides
    for variable accumulation and benefits under the Contracts by crediting annuity
    considerations to one or more divisions within the Account or the fixed separate account,
    which is not part of the Account, as directed by the contractowners. The portion of the
    Account’s assets applicable to Contracts will not be charged with liabilities arising out of
    any other business ILIAC may conduct, but obligations of the Account, including the
    promise to make benefit payments, are obligations of ILIAC. The assets and liabilities of
    the Account are clearly identified and distinguished from the other assets and liabilities of
    ILIAC.

    Contracts are identified in Note 8 (Unit Summary) by the qualifiers ILIAC I, ILIAC II,
    and ILIAC III. ILIAC I Contracts represent certain individual and group Contracts issued
    as non-qualified deferred annuity Contracts or Individual Retirement Annuity Contracts
    issued beginning June 28, 1995. ILIAC II Contracts represent certain individual and
    group Contracts issued as non-qualified deferred annuity Contracts or Individual
    Retirement Annuity Contracts issued beginning May 1, 1998. Contracts are no longer
    sold under qualifiers ILIAC I and ILIAC II. ILIAC III Contracts represent certain group
    Contracts issued as fund vehicles for Internal Revenue Code Section 403(b) and 401(e)
    plans issued beginning September 24, 2000.

    At December 31, 2007, the Account had 67 active investment divisions (the “Divisions”),
    24 of which invest in independently managed mutual funds and 43 of which invest in
    mutual funds managed by an affiliate, either ING Investments, LLC (“IIL”) or Directed
    Services LLC (“DSL”), formerly Directed Services, Inc. The assets in each Division are
    invested in shares of a designated fund (“Fund”) of various investment trusts (the
    “Trusts”).

    50

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY
    Notes to Financial Statements

    Investment Divisions with asset balances at December 31, 2007 and related Trusts are as
    follows:

    AIM Variable Insurance Funds:
    AIM V.I. Core Equity Fund - Series I Shares
    Calvert Variable Series, Inc:
    Calvert Social Balanced Portfolio
    EuroPacific Growth Fund®:
    EuroPacific Growth Fund® - Class R-4*
    Federated Insurance Series:
    Federated American Leaders Fund II
    Federated Capital Income Fund II
    Federated Equity Income Fund II
    Federated Fund for U.S. Government Securities II
    Federated High Income Bond Fund II
    Federated International Equity Fund II
    Federated Mid Cap Growth Strategies Fund II
    Federated Prime Money Fund II
    Fidelity® Variable Insurance Products:
    Fidelity® VIP Equity-Income Portfolio - Initial Class
    Fidelity® VIP Growth Portfolio - Initial Class
    Fidelity® VIP High Income Portfolio - Initial Class
    Fidelity® Variable Insurance Products II:
    Fidelity® VIP Contrafund® Portfolio - Initial Class
    Fidelity® VIP Index 500 Portfolio - Initial Class
    Fidelity® Variable Insurance Products V:
    Fidelity® VIP Investment Grade Bond Portfolio -
    Initial Class
    The Growth Fund of America®, Inc.:
    The Growth Fund of America® - Class R-4*
    ING Investors Trust:
    ING BlackRock Large Cap Growth Portfolio -
    Institutional Class**
    ING Evergreen Omega Portfolio - Institutional Class
    ING FMRSM Diversified Mid Cap Portfolio -
    Institutional Class*
    ING FMRSM Large Cap Growth Portfolio -
    Institutional Class
    ING Global Resources Portfolio - Service Class**
    ING JPMorgan Emerging Markets Equity Portfolio -
    Institutional Class
    ING JPMorgan Value Opportunities Portfolio -
    Service Class
    ING Marsico International Opportunities Portfolio -
    Service Class*
    ING MFS Total Return Portfolio - Institutional Class
    ING Oppenheimer Main Street Portfolio® -
    Institutional Class
    ING PIMCO High Yield Portfolio - Service Class
    ING Pioneer Fund Portfolio - Institutional Class
    ING Stock Index Portfolio - Institutional Class*
    ING VP Index Plus International Equity Portfolio -
    Institutional Class**
    ING Partners, Inc.:
    ING Baron Small Cap Growth Portfolio - Service
    Class*
    ING JPMorgan International Portfolio - Initial Class

    ING Partners, Inc. (continued):
    ING Legg Mason Partners Aggressive Growth
    Portfolio - Initial Class
    ING Lord Abbett U.S. Government Securities
    Portfolio - Initial Class*
    ING Neuberger Berman Partners Portfolio - Initial
    Class*
    ING Oppenheimer Global Portfolio - Initial Class
    ING Oppenheimer Strategic Income Portfolio - Initial
    Class
    ING T. Rowe Price Diversified Mid Cap Growth
    Portfolio - Initial Class
    ING T. Rowe Price Growth Equity Portfolio - Initial
    Class
    ING Thornburg Value Portfolio - Initial Class
    ING UBS U.S. Large Cap Equity Portfolio - Initial
    Class
    ING Van Kampen Equity and Income Portfolio -
    Initial Class
    ING Strategic Allocation Portfolios, Inc.:
    ING VP Strategic Allocation Conservative Portfolio -
    Class I
    ING VP Strategic Allocation Growth Portfolio - Class
    I
    ING VP Strategic Allocation Moderate Portfolio -
    Class I
    ING Variable Funds:
    ING VP Growth and Income Portfolio - Class I
    ING Variable Portfolios, Inc.:
    ING VP Global Science and Technology Portfolio -
    Class I
    ING VP Growth Portfolio - Class I
    ING VP Index Plus LargeCap Portfolio - Class I
    ING VP Index Plus MidCap Portfolio - Class I
    ING VP Index Plus SmallCap Portfolio - Class I
    ING VP Small Company Portfolio - Class I
    ING VP Value Opportunity Portfolio - Class I
    ING Variable Products Trust:
    ING VP High Yield Bond Portfolio - Class I*
    ING VP International Value Portfolio - Class I
    ING VP SmallCap Opportunities Portfolio - Class I
    ING VP Balanced Portfolio, Inc.:
    ING VP Balanced Portfolio - Class I
    ING VP Intermediate Bond Portfolio:
    ING VP Intermediate Bond Portfolio - Class I
    ING VP Money Market Portfolio:
    ING VP Money Market Portfolio - Class I
    Lord Abbett Series Fund, Inc:
    Lord Abbett Series Fund - Growth and Income
    Portfolio - Class VC
    Oppenheimer Variable Account Funds:
    Oppenheimer Main Street Fund®/VA
    Oppenheimer Main Street Small Cap Fund®/VA

    51

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY
    Notes to Financial Statements

      PIMCO Variable Insurance Trust:
    PIMCO Real Return Portfolio - Administrative Class*
    Pioneer Variable Contracts Trust:
    Pioneer Equity Income VCT Portfolio - Class I
    Pioneer Mid Cap Value VCT Portfolio - Class I*

    *      Division became available in 2006
     
    **      Division became available in 2007
     

    The names of certain Divisions were changed during 2007. The following is a summary
    of current and former names for those Divisions:

    Current Name
    ING Investors Trust:
    ING Wells Fargo Disciplined Value Portfolio -
    Service Class
    ING Partners, Inc.:
    ING Davis New York Venture Portfolio - Service
    Class

    Former Name
    ING Investors Trust:
    ING Wells Fargo Mid Cap Disciplined Portfolio -
    Service Class
    ING Partners, Inc.:
    ING Davis Venture Value Portfolio - Service Class

    The following Divisions were closed during 2007:

    AIM V.I. Capital Appreciation Fund - Series I Shares
    ING American Century Select Portfolio - Initial Class
    ING VP Index Plus International Equity Portfolio - Service Class
    ING VP International Equity Portfolio - Class I
    ING VP Natural Resources Trust

    The following Divisions were available to contractowners during 2007, but did not have
    any activity as of December 31, 2007:

    Capital One Funds:
    Capital One Mid Cap Equity Fund - Class A
    Evergreen Equity Trust:
    Evergreen Special Values Fund - Class A
    Franklin Templeton Variable Insurance Products Trust:
    Franklin Small Cap Value Securities Fund - Class 2
    ING Investors Trust:
    ING AllianceBernstein Mid Cap Growth Portfolio -
    Service Class
    ING BlackRock Large Cap Growth Portfolio - Service
    Class
    ING Evergreen Health Sciences Portfolio - Service
    Class
    ING FMRSM Diversified Mid Cap Portfolio - Service
    Class
    ING JPMorgan Emerging Markets Equity Portfolio -
    Service Class
    ING JPMorgan Small Cap Core Equity Portfolio -
    Service Class
    ING Julius Baer Foreign Portfolio - Service Class
    ING Legg Mason Value Portfolio - Service Class

    ING Investors Trust (continued):
    ING Marsico Growth Portfolio - Service Class
    ING MFS Utilities Portfolio - Service Class
    ING Oppenheimer Main Street Portfolio® - Service
    Class
    ING Pioneer Equity Income Portfolio - Institutional
    Class
    ING Pioneer Mid Cap Value Portfolio - Institutional
    Class
    ING T. Rowe Price Capital Appreciation Portfolio -
    Service Class
    ING Templeton Global Growth Portfolio - Service
    Class
    ING Van Kampen Growth and Income Portfolio -
    Service Class
    ING Van Kampen Real Estate Portfolio - Service
    Class
    ING Wells Fargo Disciplined Value Portfolio -
    Service Class
    ING Wells Fargo Small Cap Disciplined Portfolio -
    Service Class

    52

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY
    Notes to Financial Statements

        ING Partners, Inc.:    ING Variable Products Trust: 
           ING American Century Large Company Value       ING VP Financial Services Portfolio - Class I 
                 Portfolio - Service Class       ING VP MidCap Opportunities Portfolio - Class I 
           ING American Century Small-Mid Cap Value       ING VP Real Estate Portfolio - Class I 
                 Portfolio - Service Class    Lazard Funds, Inc.: 
           ING Baron Asset Portfolio - Service Class       Lazard Mid Cap Portfolio - Open Shares 
           ING Columbia Small Cap Value II Portfolio - Service    Lord Abbett Series Fund, Inc.: 
                 Class       Lord Abbett Series Fund - Mid-Cap Value Portfolio - 
           ING Davis New York Venture Portfolio - Service    Class VC 
                 Class    Neuberger Berman Advisers Management Trust: 
           ING JPMorgan Mid Cap Value Portfolio - Service       Neuberger Berman Socially Responsive Fund® - Trust 
                 Class             Class 
           ING Neuberger Berman Partners Portfolio - Service    New Perspective Fund®, Inc.: 
                 Class       New Perspective Fund® - Class R-4 
           ING OpCap Balanced Value Portfolio - Service Class    Oppenheimer Developing Markets Fund: 
           ING PIMCO Total Return Portfolio - Service Class       Oppenheimer Developing Markets Fund - Class A 
           ING Pioneer High Yield Portfolio - Initial Class    Pioneer Variable Contracts Trust: 
           ING Solution 2015 Portfolio - Service Class       Pioneer Emerging Markets VCT Portfolio - Class I 
           ING Solution 2025 Portfolio - Service Class       Pioneer High Yield VCT Portfolio - Class I 
           ING Solution 2035 Portfolio - Service Class       Premier VIT OpCap Mid Cap Portfolio 
           ING Solution 2045 Portfolio - Service Class    Templeton Income Trust: 
           ING Solution Income Portfolio - Service Class       Templeton Global Bond Fund - Class A 
           ING T. Rowe Price Diversified Mid Cap Growth    Wanger Advisors Trust: 
                 Portfolio - Service Class       Wanger Select 
           ING Templeton Foreign Equity Portfolio - Service       Wanger U.S. Smaller Companies 
                 Class    Washington Mutual Investors FundSM, Inc.: 
           ING Van Kampen Comstock Portfolio - Service Class       Washington Mutual Investors FundSM, Inc. - Class R-4 
           ING Van Kampen Equity and Income Portfolio -     
                 Service Class     
     
     
        The following Division was available to contractowners during 2007, but had no net 
        assets as of December 31, 2007:     
     
        ING Lord Abbett Affiliated Portfolio - Institutional Class     
     
     
     
    2.    Significant Accounting Policies     
     
        The following is a summary of the significant accounting policies of the Account: 
     
     
        Use of Estimates     
     
     
        The preparation of financial statements in conformity with accounting principles 
        generally accepted in the United States requires management to make estimates and 
        assumptions that affect the amounts reported in the financial statements and 
        accompanying notes. Actual results could differ from reported results using those 
        estimates.     

    53

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY
    Notes to Financial Statements

      Investments

    Investments are made in shares of a Fund and are recorded at fair value, determined by
    the net asset value per share of the respective Fund. Investment transactions in each Fund
    are recorded on the trade date. Distributions of net investment income and capital gains
    from each Fund are recognized on the ex-distribution date. Realized gains and losses on
    redemptions of the shares of the Fund are determined on the specific identification basis.
    The difference between cost and current market value of investments owned on the day of
    measurement is recorded as unrealized appreciation or depreciation of investments.

    Federal Income Taxes

    Operations of the Account form a part of, and are taxed with, the total operations of
    ILIAC, which is taxed as a life insurance company under the Internal Revenue Code.
    Earnings and realized capital gains of the Account attributable to the contractowners are
    excluded in the determination of the federal income tax liability of ILIAC.

    Contractowner Reserves

    Prior to the annuity date, the Contracts are redeemable for the net cash surrender value of
    the Contracts. The annuity reserves of the Account are represented by net assets on the
    Statements of Assets and Liabilities and are equal to the aggregate account values of the
    contractowners invested in the Account Divisions. To the extent that benefits to be paid
    to the contractowners exceed their account values, ILIAC will contribute additional funds
    to the benefit proceeds. Conversely, if amounts allocated exceed amounts required,
    transfers may be made to ILIAC.

    Changes from Principal Transactions

    Included in Changes from Principal Transactions on the Statements of Changes in Net
    Assets are items which relate to contractowner activity, including deposits, surrenders and
    withdrawals, benefits, and contract charges. Also included are transfers between the
    fixed account and the Divisions, transfers between Divisions, and transfers to (from)
    ILIAC related to gains and losses resulting from actual mortality experience (the full
    responsibility for which is assumed by ILIAC). Any net unsettled transactions as of the
    reporting date are included in Due to related parties on the Statements of Assets and
    Liabilities.

    54

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY
    Notes to Financial Statements

    3.      New Accounting Pronouncements
     
      Fair Value Measurements
     
      In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“FAS”) No. 157, “Fair Value Measurements” (“FAS No. 157”). FAS No. 157 provides guidance for using fair value to measure assets and liabilities whenever other standards require (or permit) assets or liabilities to be measured at fair value. FAS No. 157 does not expand the use of fair value to any new circumstances.
     
      Under FAS No. 157, the FASB clarifies the principle that fair value should be based on the assumptions market participants would use when pricing the asset or liability. In support of this principle, FAS No. 157 establishes a fair value hierarchy that prioritizes the information used to develop such assumptions. The fair value hierarchy gives the highest priority to quoted prices in active markets and the lowest priority to unobservable data. FAS No. 157 also requires separate disclosure of fair value measurements by level within the hierarchy and expanded disclosure of the effect on earnings for items measured using unobservable data.
     
      The provisions of FAS No. 157 are effective for financial statements issued for fiscal years beginning after November 15, 2007. The Company is in the process of determining the impact of adoption of FAS No. 157 on the Account.
     
    4.      Charges and Fees
     
      Under the terms of the Contracts, certain charges are allocated to the Contracts to cover ILIAC’s expenses in connection with the issuance and administration of the Contracts. Following is a summary of these charges:
     
      Mortality and Expense Risk Charges
     
      ILIAC assumes mortality and expense risks related to the operations of the Account and, in accordance with the terms of the Contracts, deducts a daily charge from the assets of the Account. Daily charges are deducted at annual rates of up to 1.25% of the average daily net asset value of each Division of the Account to cover these risks, as specified in the Contracts.
     

    55

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY
    Notes to Financial Statements

      Asset Based Administrative Charges

    A daily charge to cover administrative expenses of the Account is deducted at an annual
    rate of up to 0.25% of the assets attributable to the Contracts.

    Contract Maintenance Charges

    An annual Contract or certificate maintenance fee of up to $30 may be deducted from the
    accumulation value of Contracts to cover ongoing administrative expenses, as specified in
    the Contract.

    Contingent Deferred Sales Charges

    For certain Contracts, a contingent deferred sales charge (“Surrender Charge”) is imposed
    as a percentage that ranges up to 7.00% of each premium payment if the Contract is
    surrendered or an excess partial withdrawal is taken, as specified in the Contract.

    Premium Taxes

    For certain Contracts, premium taxes are deducted, where applicable, from the
    accumulation value of each Contract. The amount and timing of the deduction depends
    on the contractowner’s state of residence and currently ranges up to 4.00% of premiums.

    5. Related Party Transactions

      During the year ended December 31, 2007, management and service fees were paid
    indirectly to DSL, an affiliate of the Company, in its capacity as investment manager to
    ING Investors Trust and ING Partners, Inc. The Trusts’ advisory agreement provided for
    fees at annual rates ranging from 0.26% to 1.25% of the average net assets of each
    respective Fund.

    Management fees were also paid indirectly to IIL, an affiliate of the Company, in its
    capacity as investment adviser to ING VP Intermediate Bond Portfolio, ING VP Balanced
    Portfolio, Inc., ING VP Money Market Portfolio, ING Strategic Allocation Portfolios,
    Inc., ING Variable Funds, ING Variable Portfolios, Inc., and ING Variable Products
    Trust. The annual fee rate ranged from 0.25% to 1.00% of the average net assets of each
    respective Fund.

    56

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY
    Notes to Financial Statements

    6. Purchases and Sales of Investment Securities

    The aggregate cost of purchases and proceeds from sales of investments follow:

            Year ended December 31         
                           2007        2006     
       
    		 
    		 
    		 
        Purchases        Sales    Purchases        Sales 
       
    		 
    		 
    		 
    		 
    		 
            (Dollars In Thousands)         
    AIM Variable Insurance Funds:                         
         AIM V.I. Capital Appreciation Fund - Series I Shares    $ 39    $ 44    $ 2,243    $ 2,177 
         AIM V.I. Core Equity Fund - Series I Shares    1,220        919    3,810        1,055 
    Calvert Variable Series, Inc.:                         
         Calvert Social Balanced Portfolio    79        54    25        68 
    EuroPacific Growth Fund®:                         
         EuroPacific Growth Fund® - Class R-4    5,861        1,129    4,044        38 
    Federated Insurance Series:                         
         Federated American Leaders Fund II    4,985        10,804    6,793        12,448 
         Federated Capital Income Fund II    299        732    497        1,169 
         Federated Equity Income Fund II    415        2,473    383        3,622 
         Federated Fund for U.S. Government Securities II    195        412    233        1,553 
         Federated High Income Bond Fund II    530        1,717    724        1,969 
         Federated International Equity Fund II    107        1,864    230        2,273 
         Federated Mid Cap Growth Strategies Fund II    69        3,042    182        4,152 
         Federated Prime Money Fund II    823        889    539        628 
    Fidelity® Variable Insurance Products:                         
         Fidelity® VIP Equity-Income Portfolio - Initial Class    2,642        6,552    5,219        8,400 
         Fidelity® VIP Growth Portfolio - Initial Class    159        189    2,545        31,124 
         Fidelity® VIP High Income Portfolio - Initial Class    -        -    209        6,609 
    Fidelity® Variable Insurance Products II:                         
         Fidelity® VIP Contrafund® Portfolio - Initial Class    10,460        7,127    5,464        8,103 
         Fidelity® VIP Index 500 Portfolio - Initial Class    1,476        4,869    1,485        7,361 
    Fidelity® Variable Insurance Products V:                         
         Fidelity® VIP Investment Grade Bond Portfolio - Initial Class    11        14    12        47 
    The Growth Fund of America®, Inc.:                         
         The Growth Fund of America® - Class R-4    6,734        1,628    20,949        452 
    ING Investors Trust:                         
         ING BlackRock Large Cap Growth Portfolio - Institutional                         
               Class    3,768        599    -        - 
         ING Evergreen Omega Portfolio - Institutional Class    122        247    3        254 
         ING FMRSM Diversified Mid Cap Portfolio - Institutional Class    491        917    4,458        1,308 
         ING FMRSM Large Cap Growth Portfolio - Institutional Class    101        2,637    11,516        2,499 
         ING Global Resources Portfolio - Service Class    314        77    -        - 
         ING JPMorgan Emerging Markets Equity Portfolio -                         
               Institutional Class    666        340    694        293 
         ING JPMorgan Value Opportunities Portfolio - Service Class    166        552    445        566 
         ING Lord Abbett Affiliated Portfolio - Institutional Class    22        22    -        - 
         ING Marsico International Opportunities Portfolio - Service                         
               Class    544        341    809        40 
         ING MFS Total Return Portfolio - Institutional Class    1,099        2,235    1,290        4,530 
         ING Oppenheimer Main Street Portfolio® - Institutional Class    36        99    201        414 

    57

    VARIABLE ANNUITY ACCOUNT I OF                         
    ING LIFE INSURANCE AND ANNUITY COMPANY                         
    Notes to Financial Statements                         
    		 
    		 
    		 
    		 
    		 
    		 
     
     
     
            Year ended December 31         
                           2007        2006     
       
    		 
    		 
    		 
        Purchases        Sales    Purchases        Sales 
       
    		 
    		 
    		 
    		 
    		 
            (Dollars In Thousands)         
                       ING Investors Trust (continued):                         
                             ING PIMCO High Yield Portfolio - Service Class    $ 261    $ 706    $ 341    $ 508 
                             ING Pioneer Fund Portfolio - Institutional Class    -        1    -        1 
                             ING Stock Index Portfolio - Institutional Class    4,357        2,266    18,200        672 
                             ING VP Index Plus International Equity Portfolio - Institutional                         
                                   Class    5,264        504    -        - 
                             ING VP Index Plus International Equity Portfolio - Service                         
                                   Class    424        3,775    4,180        1,261 
                       ING Partners, Inc.:                         
                             ING American Century Select Portfolio - Initial Class    32        3,911    218        1,410 
                             ING Baron Small Cap Growth Portfolio - Service Class    1,014        101    243        - 
                             ING JPMorgan International Portfolio - Initial Class    413        463    541        853 
                             ING Legg Mason Partners Aggressive Growth Portfolio - Initial                         
                                   Class    133        1,548    276        2,231 
                             ING Lord Abbett U.S. Government Securities Portfolio - Initial                         
                                   Class    358        335    636        58 
                             ING Neuberger Berman Partners Portfolio - Initial Class    827        2,600    6,160        929 
                             ING Oppenheimer Global Portfolio - Initial Class    5,175        7,684    3,740        9,828 
                             ING Oppenheimer Strategic Income Portfolio - Initial Class    3,592        2,786    1,992        3,950 
                             ING T. Rowe Price Diversified Mid Cap Growth Portfolio -                         
                                   Initial Class    1,173        1,365    805        2,680 
                             ING T. Rowe Price Growth Equity Portfolio - Initial Class    986        2,680    591        4,657 
                             ING Thornburg Value Portfolio - Initial Class    484        658    95        670 
                             ING UBS U.S. Large Cap Equity Portfolio - Initial Class    1,098        1,876    228        1,611 
                             ING Van Kampen Equity and Income Portfolio - Initial Class    702        2,453    1,440        3,638 
                       ING Strategic Allocation Portfolios, Inc.:                         
                             ING VP Strategic Allocation Conservative Portfolio - Class I    834        369    530        727 
                             ING VP Strategic Allocation Growth Portfolio - Class I    441        600    481        955 
                             ING VP Strategic Allocation Moderate Portfolio - Class I    792        581    590        347 
                       ING Variable Funds:                         
                             ING VP Growth and Income Portfolio - Class I    134        1,594    222        4,007 
                       ING Variable Portfolios, Inc.:                         
                             ING VP Global Science and Technology Portfolio - Class I    831        449    603        670 
                             ING VP Growth Portfolio - Class I    805        1,784    1,051        560 
                             ING VP Index Plus LargeCap Portfolio - Class I    748        2,410    2,457        20,611 
                             ING VP Index Plus MidCap Portfolio - Class I    4,244        1,067    3,351        677 
                             ING VP Index Plus SmallCap Portfolio - Class I    4        -    2        - 
                             ING VP International Equity Portfolio - Class I    1,286        3,290    1,926        2,032 
                             ING VP Small Company Portfolio - Class I    5,920        3,758    6,209        3,810 
                             ING VP Value Opportunity Portfolio - Class I    85        456    250        913 
                       ING Variable Products Trust:                         
                             ING VP High Yield Bond Portfolio - Class I    808        1,460    5,820        1,489 
                             ING VP International Value Portfolio - Class I    738        920    1,696        2,261 
                             ING VP SmallCap Opportunities Portfolio - Class I    3        -    3        - 

    58

    VARIABLE ANNUITY ACCOUNT I OF                 
    ING LIFE INSURANCE AND ANNUITY COMPANY                 
    Notes to Financial Statements                 
    		 
    		 
    		 
    		 
     
     
     
            Year ended December 31     
        2007    2006     
       
    		 
    		 
        Purchases    Sales    Purchases    Sales 
       
    		 
    		 
    		 
            (Dollars In Thousands)     
                       ING VP Balanced Portfolio, Inc.:                 
                             ING VP Balanced Portfolio - Class I    $ 4,663    $ 3,939    $ 6,253 $    3,692 
                       ING VP Intermediate Bond Portfolio:                 
                             ING VP Intermediate Bond Portfolio - Class I    2,946    1,938    2,232    3,029 
                       ING VP Money Market Portfolio:                 
                             ING VP Money Market Portfolio - Class I    14,181    12,197    15,736    14,650 
                       ING VP Natural Resources Trust:                 
                             ING VP Natural Resources Trust    55    287    24    145 
                       Lord Abbett Series Fund, Inc.:                 
                             Lord Abbett Series Fund - Growth and Income Portfolio - Class                 
                                   VC    3,931    1,304    3,370    467 
                       Oppenheimer Variable Account Funds:                 
                             Oppenheimer Main Street Fund®/VA    1    3    72    6,173 
                             Oppenheimer Main Street Small Cap Fund®/VA    2    -    -    - 
                       PIMCO Variable Insurance Trust:                 
                             PIMCO Real Return Portfolio - Administrative Class    -    -    398    1 
                       Pioneer Variable Contracts Trust:                 
                             Pioneer Equity Income VCT Portfolio - Class I    15    -    5    4 
                             Pioneer Mid Cap Value VCT Portfolio - Class I    -    -    -    - 

    59

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY
    Notes to Financial Statements

    7. Changes in Units

      The net changes in units outstanding follow:

                Year ended December 31         
                 2007            2006     
       
    		 
    		 
    		 
    		 
    		 
        Units    Units    Net Increase       Units       Units    Net Increase 
        Issued    Redeemed    (Decrease)     Issued    Redeemed    (Decrease) 
       
    		 
    		 
    		 
    		 
    		 
    AIM Variable Insurance Funds:                         
         AIM V.I. Capital Appreciation Fund - Series I Shares    3,996    4,419    (423)    245,356    246,201    (845) 
         AIM V.I. Core Equity Fund - Series I Shares    111,613    85,303    26,310    429,673    120,163    309,510 
    Calvert Variable Series, Inc.:                         
         Calvert Social Balanced Portfolio    4,554    3,760    794    3,860    7,677    (3,817) 
    EuroPacific Growth Fund®:                         
         EuroPacific Growth Fund® - Class R-4    285,568    62,552    223,016    244,382    2,456    241,926 
    Federated Insurance Series:                         
         Federated American Leaders Fund II    2,968    393,824    (390,856)    20,038    507,723    (487,685) 
         Federated Capital Income Fund II    5,972    43,071    (37,099)    17,786    79,720    (61,934) 
         Federated Equity Income Fund II    9,272    135,788    (126,516)    15,774    233,411    (217,637) 
         Federated Fund for U.S. Government Securities II    8,112    24,484    (16,372)    10,025    100,118    (90,093) 
         Federated High Income Bond Fund II    3,692    90,131    (86,439)    12,234    115,849    (103,615) 
         Federated International Equity Fund II    3,686    83,985    (80,299)    15,449    121,002    (105,553) 
         Federated Mid Cap Growth Strategies Fund II    2,150    101,616    (99,466)    11,087    165,005    (153,918) 
         Federated Prime Money Fund II    59,424    66,984    (7,560)    48,643    58,097    (9,454) 
    Fidelity® Variable Insurance Products:                         
         Fidelity® VIP Equity-Income Portfolio - Initial Class    24,264    263,528    (239,264)    130,438    471,398    (340,960) 
         Fidelity® VIP Growth Portfolio - Initial Class    17,448    18,381    (933)    337,753    3,050,041    (2,712,288) 
         Fidelity® VIP High Income Portfolio - Initial Class    1    18    (17)    11,664    538,926    (527,262) 
    Fidelity® Variable Insurance Products II:                         
         Fidelity® VIP Contrafund® Portfolio - Initial Class    213,575    228,920    (15,345)    212,230    363,226    (150,996) 
         Fidelity® VIP Index 500 Portfolio - Initial Class    49,748    205,946    (156,198)    98,536    391,054    (292,518) 
    Fidelity® Variable Insurance Products V:                         
         Fidelity® VIP Investment Grade Bond Portfolio - Initial Class    -    608    (608)    129    2,802    (2,673) 
    The Growth Fund of America®, Inc.:                         
         The Growth Fund of America® - Class R-4    355,559    106,955    248,604    1,575,495    37,650    1,537,845 

    60

    VARIABLE ANNUITY ACCOUNT I OF                         
    ING LIFE INSURANCE AND ANNUITY COMPANY                         
    Notes to Financial Statements                         
    		 
    		 
    		 
    		 
    		 
    		 
     
     
     
                Year ended December 31         
            2007            2006     
       
    		 
    		 
    		 
    		 
    		 
        Units    Units    Net Increase       Units    Units    Net Increase 
        Issued    Redeemed    (Decrease)     Issued    Redeemed    (Decrease) 
       
    		 
    		 
    		 
    		 
    		 
                       ING Investors Trust:                         
                               ING BlackRock Large Cap Growth Portfolio - Institutional Class    376,395    57,274    319,121    -    -    - 
                               ING Evergreen Omega Portfolio - Institutional Class    9,539    20,644    (11,105)    258    23,117    (22,859) 
                               ING FMRSM Diversified Mid Cap Portfolio - Institutional Class    43,808    81,210    (37,402)    437,274    151,612    285,662 
                               ING FMRSM Large Cap Growth Portfolio - Institutional Class    10,571    245,419    ( 234,848)    1,160,224    270,096    890,128 
                               ING Global Resources Portfolio - Service Class    28,126    6,497    21,629    -    -    - 
                               ING JPMorgan Emerging Markets Equity Portfolio - Institutional Class    37,908    20,135    17,773    64,230    33,104    31,126 
                               ING JPMorgan Value Opportunities Portfolio - Service Class    5,723    40,881    (35,158)    42,063    53,100    (11,037) 
                               ING Lord Abbett Affiliated Portfolio - Institutional Class    1,956    1,956    -    -    -    - 
                               ING Marsico International Opportunities Portfolio - Service Class    40,663    29,413    11,250    83,617    3,583    80,034 
                               ING MFS Total Return Portfolio - Institutional Class    30,199    180,679    (150,480)    81,959    441,907    (359,948) 
                               ING Oppenheimer Main Street Portfolio® - Institutional Class    2,277    7,112    (4,835)    23,686    42,304    (18,618) 
                               ING PIMCO High Yield Portfolio - Service Class    14,403    60,198    (45,795)    22,221    47,283    (25,062) 
                               ING Pioneer Fund Portfolio - Institutional Class    10    60    (50)    63    118    (55) 
                               ING Stock Index Portfolio - Institutional Class    261,929    159,876    102,053    1,480,137    56,698    1,423,439 
                               ING VP Index Plus International Equity Portfolio - Institutional Class    539,197    50,994    488,203    -    -    - 
                               ING VP Index Plus International Equity Portfolio - Service Class    36,618    317,141    (280,523)    421,517    140,993    280,524 
                       ING Partners, Inc.:                         
                               ING American Century Select Portfolio - Initial Class    847    348,075    (347,228)    22,825    138,640    (115,815) 
                               ING Baron Small Cap Growth Portfolio - Service Class    54,604    5,344    49,260    14,256    -    14,256 
                               ING JPMorgan International Portfolio - Initial Class    22,172    26,033    (3,861)    44,129    64,639    (20,510) 
                               ING Legg Mason Partners Aggressive Growth Portfolio - Initial Class    12,196    126,133    (113,937)    311,036    480,590    (169,554) 
                               ING Lord Abbett U.S. Government Securities Portfolio - Initial Class    30,707    30,824    (117)    61,011    5,502    55,509 
                               ING Neuberger Berman Partners Portfolio - Initial Class    59,404    239,192    (179,788)    670,012    136,640    533,372 
                               ING Oppenheimer Global Portfolio - Initial Class    223,806    501,895    (278,089)    424,638    869,460    (444,822) 
                               ING Oppenheimer Strategic Income Portfolio - Initial Class    281,411    241,866    39,545    234,081    416,450    (182,369) 
                               ING T. Rowe Price Diversified Mid Cap Growth Portfolio - Initial Class    57,716    96,465    (38,749)    91,295    253,835    (162,540) 
                               ING T. Rowe Price Growth Equity Portfolio - Initial Class    29,001    112,085    (83,084)    42,927    242,149    (199,222) 
                               ING Thornburg Value Portfolio - Initial Class    30,889    41,042    (10,153)    9,853    53,810    (43,957) 
                               ING UBS U.S. Large Cap Equity Portfolio - Initial Class    90,592    148,147    (57,555)    31,367    152,071    (120,704) 
                               ING Van Kampen Equity and Income Portfolio - Initial Class    29,067    191,118    (162,051)    137,838    364,742    (226,904) 

    61

    VARIABLE ANNUITY ACCOUNT I OF                         
    ING LIFE INSURANCE AND ANNUITY COMPANY                         
    Notes to Financial Statements                         
    		 
    		 
    		 
    		 
    		 
    		 
     
     
     
                Year ended December 31         
                 2007            2006     
       
    		 
    		 
    		 
    		 
    		 
           Units    Units    Net Increase       Units       Units    Net Increase 
         Issued    Redeemed    (Decrease)     Issued    Redeemed    (Decrease) 
       
    		 
    		 
    		 
    		 
    		 
                       ING Strategic Allocation Portfolios, Inc.:                         
                             ING VP Strategic Allocation Conservative Portfolio - Class I    41,184    19,399    21,785    58,250    73,856    (15,606) 
                             ING VP Strategic Allocation Growth Portfolio - Class I    14,244    28,295    (14,051)    27,013    53,306    (26,293) 
                             ING VP Strategic Allocation Moderate Portfolio - Class I    34,242    29,476    4,766    32,407    21,092    11,315 
                       ING Variable Funds:                         
                             ING VP Growth and Income Portfolio - Class I    4,122    89,189    (85,067)    31,037    320,754    (289,717) 
                       ING Variable Portfolios, Inc.:                         
                             ING VP Global Science and Technology Portfolio - Class I    173,991    95,606    78,385    160,612    171,659    (11,047) 
                             ING VP Growth Portfolio - Class I    73,187    163,263    (90,076)    111,273    58,645    52,628 
                             ING VP Index Plus LargeCap Portfolio - Class I    51,786    133,180    (81,394)    270,500    2,049,814    (1,779,314) 
                             ING VP Index Plus MidCap Portfolio - Class I    159,457    47,459    111,998    151,305    40,751    110,554 
                             ING VP Index Plus SmallCap Portfolio - Class I    141    -    141    118    -    118 
                             ING VP International Equity Portfolio - Class I    75,085    239,409    (164,324)    172,372    187,030    (14,658) 
                             ING VP Small Company Portfolio - Class I    151,522    159,064    (7,542)    236,196    220,525    15,671 
                             ING VP Value Opportunity Portfolio - Class I    2,787    21,184    (18,397)    16,891    54,197    (37,306) 
                       ING Variable Products Trust:                         
                             ING VP High Yield Bond Portfolio - Class I    45,806    130,505    (84,699)    575,486    153,075    422,411 
                             ING VP International Value Portfolio - Class I    35,668    51,043    (15,375)    116,601    154,447    (37,846) 
                             ING VP SmallCap Opportunities Portfolio - Class I    348    -    348    309    -    309 
                       ING VP Balanced Portfolio, Inc.:                         
                             ING VP Balanced Portfolio - Class I    249,008    252,869    (3,861)    453,086    289,564    163,522 
                       ING VP Intermediate Bond Portfolio:                         
                             ING VP Intermediate Bond Portfolio - Class I    175,110    116,562    58,548    149,428    209,834    (60,406) 
                       ING VP Money Market Portfolio:                         
                             ING VP Money Market Portfolio - Class I    1,094,086    959,572    134,514    1,962,607    1,883,786    78,821 
                       ING VP Natural Resources Trust:                         
                             ING VP Natural Resources Trust    -    10,840    (10,840)    -    5,365    (5,365) 
                       Lord Abbett Series Fund, Inc.:                         
                             Lord Abbett Series Fund - Growth and Income Portfolio - Class VC    231,570    90,027    141,543    254,368    45,079    209,289 

    62

    VARIABLE ANNUITY ACCOUNT I OF                         
    ING LIFE INSURANCE AND ANNUITY COMPANY                         
    Notes to Financial Statements                         
    		 
    		 
    		 
    		 
    		 
    		 
     
     
     
                Year ended December 31         
            2007            2006     
       
    		 
    		 
    		 
    		 
    		 
        Units    Units    Net Increase    Units    Units    Net Increase 
        Issued    Redeemed    (Decrease)    Issued    Redeemed    (Decrease) 
       
    		 
    		 
    		 
    		 
    		 
                       Oppenheimer Variable Account Funds:                         
                             Oppenheimer Main Street Fund®/VA    4    227    (223)    23,174    464,885    (441,711) 
                             Oppenheimer Main Street Small Cap Fund®/VA    120    -    120    -    -    - 
                       PIMCO Variable Insurance Trust:                         
                             PIMCO Real Return Portfolio - Administrative Class    -    -    -    35    -    35 
                       Pioneer Variable Contracts Trust:                         
                             Pioneer Equity Income VCT Portfolio - Class I    954    1    953    367    320    47 
                             Pioneer Mid Cap Value VCT Portfolio - Class I    -    -    -    16    -    16 

    63

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY
    Notes to Financial Statements

    8. Unit Summary

    Unit value information for units outstanding, by Contract type, as of December 31, 2007
    follows:

                                                     Division/Contract    Units    Unit Value    Extended Value 
    		 
    		 
    		 
    AIM V.I. Core Equity Fund - Series I Shares             
    Contracts in accumulation period:             
    ILIAC III    673,262.865    $ 10.48    $ 7,055,795 
        673,262.865        $ 7,055,795 
       
    		     
    Calvert Social Balanced Portfolio             
    Contracts in accumulation period:             
    ILIAC I    12,925.017    $ 13.66    $ 176,556 
    ILIAC II    2,599.515    13.57    35,275 
    ILIAC III    30.332    11.66    354 
        15,554.864        $ 212,185 
       
    		     
    EuroPacific Growth Fund® - Class R-4             
    Contracts in accumulation period:             
    ILIAC III    464,941.173    $ 19.51    $ 9,071,002 
        464,941.173        $ 9,071,002 
       
    		     
    Federated American Leaders Fund II             
    Annuity contracts in payout    3,468.466    $ 18.68    $ 64,791 
    Contracts in accumulation period:             
    ILIAC I    1,295,736.362    23.57    30,540,506 
        1,299,204.828        $ 30,605,297 
       
    		     
    Federated Capital Income Fund II             
    Annuity contracts in payout    2,146.393    14.03    30,114 
    Contracts in accumulation period:             
    ILIAC I    229,094.444    15.74    3,605,947 
        231,240.837        $ 3,636,061 
       
    		     
    Federated Equity Income Fund II             
    Annuity contracts in payout    4,307.048    14.71    63,357 
    Contracts in accumulation period:             
    ILIAC I    427,854.642    17.09    7,312,036 
        432,161.690        $ 7,375,393 
       
    		     
    Federated Fund for U.S. Government Securities II             
    Contracts in accumulation period:             
    ILIAC I    74,990.794    16.69    1,251,596 
        74,990.794        $ 1,251,596 
       
    		     
    Federated High Income Bond Fund II             
    Annuity contracts in payout    823.795    16.06    13,230 
    Contracts in accumulation period:             
    ILIAC I    256,311.523    18.13    4,646,928 
        257,135.318        $ 4,660,158 
       
    		     
    Federated International Equity Fund II             
    Annuity contracts in payout    2,033.726    20.51    41,712 
    Contracts in accumulation period:             
    ILIAC I    279,293.055    21.55    6,018,765 
        281,326.781        $ 6,060,477 
       
    		     

    64

    VARIABLE ANNUITY ACCOUNT I OF             
    ING LIFE INSURANCE AND ANNUITY COMPANY             
    Notes to Financial Statements             
    		 
    		 
    		 
     
     
     
                                                                         Division/Contract    Units    Unit Value    Extended Value 
    		 
    		 
    		 
                       Federated Mid Cap Growth Strategies Fund II             
                       Contracts in accumulation period:             
                       ILIAC I    340,955.469    29.57    10,082,053 
        340,955.469        $ 10,082,053 
       
    		     
                       Federated Prime Money Fund II             
                       Contracts in accumulation period:             
                       ILIAC I    68,612.838    13.22    907,062 
        68,612.838        $ 907,062 
       
    		     
                       Fidelity® VIP Equity-Income Portfolio - Initial Class             
                       Contracts in accumulation period:             
                       ILIAC I    747,375.440    24.81    18,542,385 
                       ILIAC II    167,210.740    16.49    2,757,305 
                       ILIAC III    3,261.344    14.90    48,594 
        917,847.524        $ 21,348,284 
       
    		     
                       Fidelity® VIP Growth Portfolio - Initial Class             
                       Contracts in accumulation period:             
                       ILIAC III    1.906    $ 10.43    $ 20 
        1.906        $ 20 
       
    		     
                       Fidelity® VIP High Income Portfolio - Initial Class             
                       Annuity contracts in payout    295.922    $ 10.71    $ 3,169 
        295.922        $ 3,169 
       
    		     
                       Fidelity® VIP Contrafund® Portfolio - Initial Class             
                       Contracts in accumulation period:             
                       ILIAC I    572,159.015    35.15    20,111,389 
                       ILIAC II    111,430.705    23.55    2,624,193 
                       ILIAC III    228,180.343    17.24    3,933,829 
        911,770.063        $ 26,669,411 
       
    		     
                       Fidelity® VIP Index 500 Portfolio - Initial Class             
                       Contracts in accumulation period:             
                       ILIAC I    365,034.824    $ 25.18    $ 9,191,577 
                       ILIAC II    86,806.237    14.86    1,289,941 
        451,841.061        $ 10,481,518 
       
    		     
                       Fidelity® VIP Investment Grade Bond Portfolio - Initial Class             
                       Contracts in accumulation period:             
                       ILIAC I    15,323.523    $ 17.12    $ 262,339 
        15,323.523        $ 262,339 
       
    		     
                       The Growth Fund of America® - Class R-4             
                       Contracts in accumulation period:             
                       ILIAC III    1,786,448.819    $ 14.77    26,385,849 
        1,786,448.819        $ 26,385,849 
       
    		     

    65

    VARIABLE ANNUITY ACCOUNT I OF             
    ING LIFE INSURANCE AND ANNUITY COMPANY             
    Notes to Financial Statements             
    		 
    		 
    		 
     
     
     
    Division/Contract    Units    Unit Value    Extended Value 
    		 
    		 
    		 
                       ING BlackRock Large Cap Growth Portfolio - Institutional             
                           Class             
                       Annuity contracts in payout    4,796.804    $ 9.78    $ 46,913 
                       Contracts in accumulation period:             
                       ILIAC I    278,695.894    9.77    2,722,859 
                       ILIAC II    35,574.645    9.78    347,920 
                       ILIAC III    53.753    10.42    560 
        319,121.096        $ 3,118,252 
       
    		     
                       ING Evergreen Omega Portfolio - Institutional Class             
                       Contracts in accumulation period:             
                       ILIAC I    72,799.839    $ 11.72    $ 853,214 
        72,799.839        $ 853,214 
       
    		     
                       ING FMRSM Diversified Mid Cap Portfolio - Institutional Class             
                       Contracts in accumulation period:             
                       ILIAC I    191,674.524    11.16    2,139,088 
                       ILIAC II    56,585.727    11.19    633,194 
        248,260.251        $ 2,772,282 
       
    		     
                       ING FMRSM Large Cap Growth Portfolio - Institutional Class             
                       Contracts in accumulation period:             
                       ILIAC I    662,915.186    $ 10.27    $ 6,808,139 
                       ILIAC II    106,467.532    10.31    1,097,680 
        769,382.718        $ 7,905,819 
       
    		     
                       ING Global Resources Portfolio - Service Class             
                       Contracts in accumulation period:             
                       ILIAC I    21,629.312    14.18    306,704 
        21,629.312        $ 306,704 
       
    		     
                       ING JPMorgan Emerging Markets Equity Portfolio -             
                           Institutional Class             
                       Contracts in accumulation period:             
                       ILIAC I    57,901.261    20.16    1,167,289 
                       ILIAC II    12,984.027    20.23    262,667 
        70,885.288        $ 1,429,956 
       
    		     
                       ING JPMorgan Value Opportunities Portfolio - Service Class             
                       Contracts in accumulation period:             
                       ILIAC I    98,827.953    $ 12.27    $ 1,212,619 
                       ILIAC II    1,731.197    12.32    21,328 
        100,559.150        $ 1,233,947 
       
    		     
                       ING Marsico International Opportunities Portfolio - Service             
                           Class             
                       Contracts in accumulation period:             
                       ILIAC I    81,551.618    $ 12.70    $ 1,035,706 
                       ILIAC II    9,731.975    12.74    123,985 
        91,283.593        $ 1,159,691 
       
    		     

    66

    VARIABLE ANNUITY ACCOUNT I OF             
    ING LIFE INSURANCE AND ANNUITY COMPANY             
    Notes to Financial Statements             
    		 
    		 
    		 
     
     
     
    Division/Contract    Units    Unit Value    Extended Value 
    		 
    		 
    		 
                       ING MFS Total Return Portfolio - Institutional Class             
                       Contracts in accumulation period:             
                       ILIAC I    598,110.873    11.86    7,093,595 
                       ILIAC II    136,399.662    11.91    1,624,520 
        734,510.535        $ 8,718,115 
       
    		     
                       ING Oppenheimer Main Street Portfolio® - Institutional Class             
                       Contracts in accumulation period:             
                       ILIAC I    21,881.516    $ 12.93    $ 282,928 
                       ILIAC II    8,762.953    12.98    113,743 
        30,644.469        $ 396,671 
       
    		     
                       ING PIMCO High Yield Portfolio - Service Class             
                       Contracts in accumulation period:             
                       ILIAC I    93,630.966    $ 11.45    $ 1,072,075 
                       ILIAC II    2,035.755    11.49    23,391 
        95,666.721        $ 1,095,466 
       
    		     
                       ING Pioneer Fund Portfolio - Institutional Class             
                       Annuity contracts in payout    398.390    12.42    4,948 
        398.390        $ 4,948 
       
    		     
                       ING Stock Index Portfolio - Institutional Class             
                       ILIAC III    1,525,491.649    13.55    20,670,412 
        1,525,491.649        $ 20,670,412 
       
    		     
                       ING VP Index Plus International Equity Portfolio - Institutional             
    Class             
                       Annuity contracts in payout    39,543.646    $ 9.41    $ 372,106 
                       Contracts in accumulation period:             
                       ILIAC I    375,726.243    9.62    3,614,486 
                       ILIAC II    72,929.363    9.63    702,310 
                       ILIAC III    4.171    9.56    40 
        488,203.423        $ 4,688,942 
       
    		     
                       ING Baron Small Cap Growth Portfolio - Service Class             
                       Contracts in accumulation period:             
                       ILIAC III    63,515.476    $ 18.55    $ 1,178,212 
        63,515.476        $ 1,178,212 
       
    		     
                       ING JPMorgan International Portfolio - Initial Class             
                       Annuity contracts in payout    2,195.212    $ 19.00    $ 41,709 
                       Contracts in accumulation period:             
                       ILIAC I    80,810.217    17.81    1,439,230 
                       ILIAC II    12,412.006    17.06    211,749 
                       ILIAC III    276.641    12.17    3,367 
        95,694.076        $ 1,696,055 
       
    		     

    67

    VARIABLE ANNUITY ACCOUNT I OF             
    ING LIFE INSURANCE AND ANNUITY COMPANY             
    Notes to Financial Statements             
    		 
    		 
    		 
     
     
     
    Division/Contract    Units    Unit Value    Extended Value 
    		 
    		 
    		 
                       ING Legg Mason Partners Aggressive Growth Portfolio - Initial             
    Class             
                       Annuity contracts in payout    358.688    $ 11.25    $ 4,035 
                       Contracts in accumulation period:             
                       ILIAC I    445,030.001    11.33    5,042,190 
                       ILIAC II    39,988.566    10.04    401,485 
                       ILIAC III    2,001.756    7.18    14,373 
        487,379.011        $ 5,462,083 
       
    		     
                       ING Lord Abbett U.S. Government Securities Portfolio - Initial             
    Class             
                       Contracts in accumulation period:             
                       ILIAC I    53,148.773    $ 11.04    $ 586,762 
                       ILIAC II    2,243.593    11.06    24,814 
        55,392.366        $ 611,576 
       
    		     
                       ING Neuberger Berman Partners Portfolio - Initial Class             
                       Contracts in accumulation period:             
                       ILIAC I    240,029.056    $ 11.09    $ 2,661,922 
                       ILIAC II    113,556.086    11.12    1,262,744 
        353,585.142        $ 3,924,666 
       
    		     
                       ING Oppenheimer Global Portfolio - Initial Class             
                       Annuity contracts in payout    5,211.654    $ 14.26    $ 74,318 
                       Contracts in accumulation period:             
                       ILIAC I    1,154,427.027    14.67    16,935,444 
                       ILIAC II    149,191.446    14.73    2,197,590 
                       ILIAC III    1,445,094.514    14.39    20,794,910 
        2,753,924.641        $ 40,002,262 
       
    		     
                       ING Oppenheimer Strategic Income Portfolio - Initial Class             
                       Annuity contracts in payout    680.499    $ 11.64    $ 7,921 
                       Contracts in accumulation period:             
                       ILIAC I    426,900.905    11.58    4,943,512 
                       ILIAC II    89,895.516    11.63    1,045,485 
                       ILIAC III    491,714.462    11.59    5,698,971 
        1,009,191.382        $ 11,695,889 
       
    		     
                       ING T. Rowe Price Diversified Mid Cap Growth Portfolio -             
                           Initial Class             
                       Contracts in accumulation period:             
                       ILIAC I    282,337.643    $ 14.06    $ 3,969,667 
                       ILIAC II    31,599.970    14.12    446,192 
        313,937.613        $ 4,415,859 
       
    		     
                       ING T. Rowe Price Growth Equity Portfolio - Initial Class             
                       Annuity contracts in payout    7,009.413    17.33    121,473 
                       Contracts in accumulation period:             
                       ILIAC I    395,796.188    24.59    9,732,628 
                       ILIAC II    67,347.423    17.33    1,167,131 
                       ILIAC III    26,577.238    13.16    349,756 
        496,730.262        $ 11,370,988 
       
    		     

    68

    VARIABLE ANNUITY ACCOUNT I OF             
    ING LIFE INSURANCE AND ANNUITY COMPANY             
    Notes to Financial Statements             
    		 
    		 
    		 
     
     
     
                                                                         Division/Contract    Units    Unit Value    Extended Value 
    		 
    		 
    		 
                       ING Thornburg Value Portfolio - Initial Class             
                       Annuity contracts in payout    1,213.035    $ 19.73    $ 23,933 
                       Contracts in accumulation period:             
                       ILIAC I    97,020.869    15.15    1,469,866 
                       ILIAC II    20,758.417    14.54    301,827 
        118,992.321        $ 1,795,626 
       
    		     
                       ING UBS U.S. Large Cap Equity Portfolio - Initial Class             
                       Contracts in accumulation period:             
                       ILIAC I    326,655.223    12.01    3,923,129 
                       ILIAC II    43,208.843    13.29    574,246 
        369,864.066        $ 4,497,375 
       
    		     
                       ING Van Kampen Equity and Income Portfolio - Initial Class             
                       Contracts in accumulation period:             
                       ILIAC I    471,290.151    12.34    5,815,720 
                       ILIAC II    81,815.122    12.39    1,013,689 
                       ILIAC III    35.566    12.25    436 
        553,140.839        $ 6,829,845 
       
    		     
                       ING VP Strategic Allocation Conservative Portfolio - Class I             
                       Annuity contracts in payout    195.875    $ 17.01    $ 3,332 
                       Contracts in accumulation period:             
                       ILIAC I    83,592.609    18.65    1,559,002 
                       ILIAC II    856.393    14.20    12,161 
        84,644.877        $ 1,574,495 
       
    		     
                       ING VP Strategic Allocation Growth Portfolio - Class I             
                       Contracts in accumulation period:             
                       ILIAC I    94,338.882    20.68    1,950,928 
                       ILIAC II    10,704.494    13.69    146,545 
        105,043.376        $ 2,097,473 
       
    		     
                       ING VP Strategic Allocation Moderate Portfolio - Class I             
                       Annuity contracts in payout    2,120.397    14.47    30,682 
                       Contracts in accumulation period:             
                       ILIAC I    113,872.438    19.46    2,215,958 
                       ILIAC II    7,830.841    13.81    108,144 
        123,823.676        $ 2,354,784 
       
    		     
                       ING VP Growth and Income Portfolio - Class I             
                       Annuity contracts in payout    4,316.694    16.10    69,499 
                       Contracts in accumulation period:             
                       ILIAC I    222,093.748    18.86    4,188,688 
                       ILIAC II    74,616.652    11.46    855,107 
                       ILIAC III    4,597.171    9.72    44,685 
        305,624.265        $ 5,157,979 
       
    		     
                       ING VP Global Science and Technology Portfolio - Class I             
                       Contracts in accumulation period:             
                       ILIAC I    101,880.771    $ 4.89    $ 498,197 
                       ILIAC II    5,750.396    4.95    28,464 
                       ILIAC III    541,078.600    5.05    2,732,447 
        648,709.767        $ 3,259,108 
       
    		     

    69

    VARIABLE ANNUITY ACCOUNT I OF             
    ING LIFE INSURANCE AND ANNUITY COMPANY             
    Notes to Financial Statements             
    		 
    		 
    		 
     
     
     
                                                                         Division/Contract    Units    Unit Value    Extended Value 
    		 
    		 
    		 
                       ING VP Growth Portfolio - Class I             
                       Annuity contracts in payout    4,151.142    $ 18.63    $ 77,336 
                       Contracts in accumulation period:             
                       ILIAC I    25,704.486    17.92    460,624 
                       ILIAC II    17,976.261    13.20    237,287 
                       ILIAC III    310,896.125    8.80    2,735,886 
        358,728.014        $ 3,511,133 
       
    		     
                       ING VP Index Plus LargeCap Portfolio - Class I             
                       Annuity contracts in payout    6,570.946    $ 19.91    $ 130,828 
                       Contracts in accumulation period:             
                       ILIAC I    91,167.405    22.24    2,027,563 
                       ILIAC II    41,811.967    15.11    631,779 
        139,550.318        $ 2,790,170 
       
    		     
                       ING VP Index Plus MidCap Portfolio - Class I             
                       Contracts in accumulation period:             
                       ILIAC III    643,905.287    20.57    13,245,132 
        643,905.287        $ 13,245,132 
       
    		     
                       ING VP Index Plus SmallCap Portfolio - Class I             
                       Contracts in accumulation period:             
                       ILIAC III    460.706    $ 18.65    $ 8,592 
        460.706        $ 8,592 
       
    		     
                       ING VP Small Company Portfolio - Class I             
                       Annuity contracts in payout    3,341.443    $ 29.36    $ 98,105 
                       Contracts in accumulation period:             
                       ILIAC I    106,341.075    28.63    3,044,545 
                       ILIAC II    40,022.855    20.76    830,874 
                       ILIAC III    843,760.826    18.99    16,023,018 
        993,466.199        $ 19,996,542 
       
    		     
                       ING VP Value Opportunity Portfolio - Class I             
                       Contracts in accumulation period:             
                       ILIAC I    55,996.911    $ 21.80    $ 1,220,733 
                       ILIAC II    17,008.956    16.10    273,844 
                       ILIAC III    4,729.903    12.30    58,178 
        77,735.770        $ 1,552,755 
       
    		     
                       ING VP High Yield Bond Portfolio - Class I             
                       Contracts in accumulation period:             
                       ILIAC I    287,684.650    $ 10.66    $ 3,066,718 
                       ILIAC II    50,027.574    10.69    534,795 
        337,712.224        $ 3,601,513 
       
    		     
                       ING VP International Value Portfolio - Class I             
                       Contracts in accumulation period:             
                       ILIAC III    4.276    $ 18.66    $ 80 
        4.276        $ 80 
       
    		     
                       ING VP SmallCap Opportunities Portfolio - Class I             
                       Contracts in accumulation period:             
                       ILIAC III    755.378    $ 9.82    $ 7,418 
        755.378        $ 7,418 
       
    		     

    70

    VARIABLE ANNUITY ACCOUNT I OF             
    ING LIFE INSURANCE AND ANNUITY COMPANY             
    Notes to Financial Statements             
    		 
    		 
    		 
     
     
     
    Division/Contract    Units    Unit Value    Extended Value 
    		 
    		 
    		 
                       ING VP Balanced Portfolio - Class I             
                       Annuity contracts in payout    2,235.077    $ 19.64    $ 43,897 
                       Contracts in accumulation period:             
                       ILIAC I    163,716.080    22.08    3,614,851 
                       ILIAC II    61,731.518    15.43    952,517 
                       ILIAC III    1,328,886.069    13.03    17,315,385 
        1,556,568.744        $ 21,926,650 
       
    		     
                       ING VP Intermediate Bond Portfolio - Class I             
                       Contracts in accumulation period:             
                       ILIAC I    288,015.017    $ 17.11    $ 4,927,937 
                       ILIAC II    95,428.101    15.40    1,469,593 
                       ILIAC III    141,448.137    14.99    2,120,308 
        524,891.255        $ 8,517,838 
       
    		     
                       ING VP Money Market Portfolio - Class I             
                       Annuity contracts in payout    1,454.754    $ 12.79    $ 18,606 
                       Contracts in accumulation period:             
                       ILIAC I    633,870.044    13.65    8,652,326 
                       ILIAC II    193,745.241    12.67    2,454,752 
                       ILIAC III    386,917.702    12.09    4,677,835 
        1,215,987.741        $ 15,803,519 
       
    		     
                       Lord Abbett Series Fund - Growth and Income Portfolio - Class             
    VC             
                       Contracts in accumulation period:             
                       ILIAC III    682,845.097    $ 13.86    $ 9,464,233 
        682,845.097        $ 9,464,233 
       
    		     
                       Oppenheimer Main Street Fund®/VA             
                       Annuity contracts in payout    5,121.087    $ 11.11    $ 56,895 
        5,121.087        $ 56,895 
       
    		     
                       Oppenheimer Main Street Small Cap Fund®/VA             
                       Contracts in accumulation period:             
                       ILIAC III    119.611    13.08    1,565 
        119.611        $ 1,565 
       
    		     
                       PIMCO Real Return Portfolio - Administrative Class             
                       Contracts in accumulation period:             
                       ILIAC III    35.168    $ 11.93    $ 420 
        35.168        $ 420 
       
    		     
                       Pioneer Equity Income VCT Portfolio - Class I             
                       Contracts in accumulation period:             
                       ILIAC III    1,058.485    $ 14.20    $ 15,030 
        1,058.485        $ 15,030 
       
    		     
                       Pioneer Mid Cap Value VCT Portfolio - Class I             
                       Contracts in accumulation period:             
                       ILIAC III    16.311    $ 17.95    $ 293 
        16.311        $ 293 
       
    		     

    71

    VARIABLE ANNUITY ACCOUNT I OF
    ING LIFE INSURANCE AND ANNUITY COMPANY
    Notes to Financial Statements

    9. Financial Highlights

      A summary of unit values, units outstanding and net assets for variable annuity contracts, expense ratios, excluding expenses of
    underlying funds, investment income ratios, and total return for the years ended December 31, 2007, 2006, 2005, 2004 and 2003
    follows:

                    Investment         
        Units    Unit Fair Value    Net Assets    Income    Expense RatioB    Total ReturnC 
        (000's)    (lowest to highest)    (000's)    RatioA    (lowest to highest)    (lowest to highest) 
       
    		 
    		 
    		 
    		 
    		 
    AIM V.I. Core Equity Fund - Series I Shares                         
             2007    673    $10.48    $7,056    1.19%    1.00%    6.94% 
             2006    647    $9.80    $6,340    0.74%    1.00%    15.57% 
             2005    337    $8.48    $2,862    1.50%    1.00%    4.31% 
             2004    345    $8.13    $2,813    1.01%    1.00%    7.82% 
             2003    334    $7.54    $2,525    1.06%    1.00%    23.20% 
    Calvert Social Balanced Portfolio                         
             2007    16    $11.66 to $13.66    $212    2.44%    1.00% to 1.40%    1.34% to 1.75% 
             2006    15    $11.46 to $13.48    $198    2.06%    1.00% to 1.40%    7.24% to 7.71% 
             2005    19    $10.64 to $12.57    $233    1.26%    1.00% to 1.40%    4.14% to 4.62% 
             2004    35    $10.17 to $12.07    $417    1.66%    1.00% to 1.40%    6.81% to 7.17% 
             2003    38    $9.49 to $11.30    $424    2.64%    1.00% to 1.40%    17.59% to 18.18% 
    EuroPacific Growth Fund® - Class R-4                         
             2007    465    $19.51    $9,071    2.23%    1.00%    17.67% 
             2006    242    $16.58    $4,011    (d)    1.00%    (d) 
             2005    (d)    (d)    (d)    (d)    (d)    (d) 
             2004    (d)    (d)    (d)    (d)    (d)    (d) 
             2003    (d)    (d)    (d)    (d)    (d)    (d) 
    Federated American Leaders Fund II                         
             2007    1,299    $18.68 to $23.57    $30,605    1.54%    1.25% to 1.40%    -10.96% to -10.79% 
             2006    1,690    $20.94 to $26.47    $44,709    1.52%    1.25% to 1.40%    15.19% to 15.37% 
             2005    2,175    $22.98    $50,030    1.61%    1.40%    3.56% 
             2004    3,130    $22.19    $69,516    1.46%    1.40%    8.24% 
             2003    3,991    $20.50    $81,925    1.52%    1.40%    25.92% 

    72

    VARIABLE ANNUITY ACCOUNT I OF                         
    ING LIFE INSURANCE AND ANNUITY COMPANY                     
    Notes to Financial Statements                         
    		 
    		 
    		 
    		 
    		 
    		 
     
     
     
                    Investment         
        Units    Unit Fair Value    Net Assets    Income    Expense RatioB    Total ReturnC 
        (000's)    (lowest to highest)    (000's)    RatioA    (lowest to highest)    (lowest to highest) 
       
    		 
    		 
    		 
    		 
    		 
                       Federated Capital Income Fund II                         
                                 2007    231    $14.03 to $15.74    $3,636    5.19%    1.25% to 1.40%    2.54% to 2.71% 
                                 2006    268    $13.66 to $15.35    $4,115    6.06%    1.25% to 1.40%    14.04% to 14.21% 
                                 2005    328    $13.46    $4,443    5.73%    1.40%    4.83% 
                                 2004    528    $12.84    $6,812    4.55%    1.40%    8.35% 
                                 2003    682    $11.85    $8,126    6.54%    1.40%    18.98% 
                       Federated Equity Income Fund II                         
                                 2007    432    $14.71 to $17.09    $7,375    2.97%    1.25% to 1.40%    0.65% to 0.75% 
                                 2006    559    $14.60 to $16.98    $9,472    2.34%    1.25% to 1.40%    21.37% to 21.67% 
                                 2005    774    $13.99    $10,855    2.31%    1.40%    1.89% 
                                 2004    1,118    $13.73    $15,392    1.95%    1.40%    11.26% 
                                 2003    1,398    $12.34    $17,322    1.88%    1.40%    25.53% 
                       Federated Fund for U.S. Government Securities II                         
                                 2007    75    $16.69    $1,252    4.58%    1.40%    4.84% 
                                 2006    91    $15.92    $1,454    4.73%    1.40%    2.64% 
                                 2005    181    $15.51    $2,814    4.21%    1.40%    0.65% 
                                 2004    239    $15.41    $3,685    4.81%    1.40%    2.12% 
                                 2003    335    $15.09    $5,051    4.20%    1.40%    0.94% 
                       Federated High Income Bond Fund II                         
                                 2007    257    $16.06 to $18.13    $4,660    8.58%    1.25% to 1.40%    1.97% to 2.16% 
                                 2006    344    $15.72 to $17.78    $6,107    8.91%    1.25% to 1.40%    9.28% to 9.39% 
                                 2005    446    $16.27    $7,274    9.33%    1.40%    1.18% 
                                 2004    769    $16.08    $12,379    7.18%    1.40%    8.94% 
                                 2003    982    $14.76    $14,508    7.74%    1.40%    20.49% 
                       Federated International Equity Fund II                         
                                 2007    281    $20.51 to $21.55    $6,060    0.18%    1.25% to 1.40%    8.02% to 8.12% 
                                 2006    362    $18.97 to $19.95    $7,211    0.22%    1.25% to 1.40%    17.22% to 17.46% 
                                 2005    466    $17.02    $7,951    0.00%    1.40%    7.52% 
                                 2004    642    $15.83    $10,192    0.00%    1.40%    12.51% 
                                 2003    833    $14.07    $11,757    0.00%    1.40%    30.04% 

    73

    VARIABLE ANNUITY ACCOUNT I OF                         
    ING LIFE INSURANCE AND ANNUITY COMPANY                     
    Notes to Financial Statements                         
    		 
    		 
    		 
    		 
    		 
    		 
     
     
     
                    Investment         
        Units    Unit Fair Value    Net Assets    Income    Expense RatioB    Total ReturnC 
        (000's)    (lowest to highest)    (000's)    RatioA    (lowest to highest)    (lowest to highest) 
       
    		 
    		 
    		 
    		 
    		 
                       Federated Mid Cap Growth Strategies Fund II                         
                                 2007    341    $29.57    $10,082    -    1.40%    16.37% 
                                 2006    440    $25.41    $11,190    -    1.40%    6.72% 
                                 2005    594    $23.81    $14,150    -    1.40%    11.11% 
                                 2004    820    $21.43    $17,572    -    1.40%    13.81% 
                                 2003    1,079    $18.83    $20,317    -    1.40%    38.15% 
                       Federated Prime Money Fund II                         
                                 2007    69    $13.22    $907    5.00%    1.40%    3.52% 
                                 2006    76    $12.77    $973    4.50%    1.40%    2.98% 
                                 2005    86    $12.40    $1,062    2.31%    1.40%    1.31% 
                                 2004    176    $12.24    $2,153    0.78%    1.40%    -0.57% 
                                 2003    306    $12.31    $3,768    0.72%    1.40%    -0.73% 
                       Fidelity® VIP Equity-Income Portfolio - Initial Class                         
                                 2007    918    $14.90 to $24.81    $21,348    1.69%    1.00% to 1.40%    0.12% to 0.54% 
                                 2006    1,157    $14.82 to $24.78    $26,851    3.25%    1.00% to 1.40%    18.51% to 19.04% 
                                 2005    1,498    $12.45 to $20.91    $29,126    1.75%    1.00% to 1.40%    4.39% to 4.80% 
                                 2004    1,993    $11.88 to $20.03    $36,905    1.59%    1.00% to 1.40%    9.93% to 10.41% 
                                 2003    2,298    $10.76 to $18.22    $38,898    1.70%    1.00% to 1.40%    28.49% to 29.02% 
                       Fidelity® VIP Growth Portfolio - Initial Class                         
                                 2007    -    $10.43    -    -    1.00%    25.66% 
                                 2006    1    $8.30    $8    0.76%    1.00%    5.87% 
                                 2005    2,713    $7.84 to $16.98    $27,439    0.49%    1.00% to 1.40%    4.30% to 4.67% 
                                 2004    2,818    $7.49 to $16.28    $29,108    0.27%    1.00% to 1.40%    1.94% to 2.32% 
                                 2003    2,757    $7.32 to $15.97    $29,686    0.24%    1.00% to 1.40%    31.01% to 31.65% 
                       Fidelity® VIP High Income Portfolio - Initial Class                         
                                 2007    -    $10.71    $3    -    1.25%    1.52% 
                                 2006    -    $10.55    $3    0.15%    1.25%    9.78% 
                                 2005    523    $12.41    $6,230    13.78%    1.25% to 1.40%    1.31% to 1.42% 
                                 2004    856    $9.13 to $12.25    $9,798    8.58%    1.25% to 1.40%    8.02% to 8.18% 
                                 2003    1,216    $8.44 to $11.34    $12,642    6.01%    1.25% to 1.40%    25.44% to 25.78% 

    74

    VARIABLE ANNUITY ACCOUNT I OF                         
    ING LIFE INSURANCE AND ANNUITY COMPANY                     
    Notes to Financial Statements                         
    		 
    		 
    		 
    		 
    		 
    		 
     
     
     
                    Investment         
        Units    Unit Fair Value    Net Assets    Income    Expense RatioB    Total ReturnC 
        (000's)    (lowest to highest)    (000's)    RatioA    (lowest to highest)    (lowest to highest) 
       
    		 
    		 
    		 
    		 
    		 
                       Fidelity® VIP Contrafund® Portfolio - Initial Class                         
                                 2007    912    $17.24 to $35.15    $26,669    0.92%    1.00% to 1.40%    15.93% to 16.41% 
                                 2006    927    $14.81 to $30.32    $25,766    1.24%    1.00% to 1.40%    10.17% to 10.60% 
                                 2005    1,078    $13.39 to $27.52    $27,881    0.30%    1.00% to 1.40%    15.29% to 15.73% 
                                 2004    1,263    $11.57 to $23.87    $27,934    0.34%    1.00% to 1.40%    13.88% to 14.33% 
                                 2003    1,349    $10.12 to $20.96    $26,252    0.44%    1.00% to 1.40%    26.65% to 27.30% 
                       Fidelity® VIP Index 500 Portfolio - Initial Class                         
                                 2007    452    $14.86 to $25.18    $10,482    3.61%    1.25% to 1.40%    3.96% to 4.13% 
                                 2006    608    $14.27 to $24.22    $13,580    1.96%    1.25% to 1.40%    14.14% to 14.25% 
                                 2005    901    $12.49 to $21.22    $17,622    1.95%    1.25% to 1.40%    3.36% to 3.57% 
                                 2004    1,249    $12.06 to $20.53    $23,475    1.39%    1.25% to 1.40%    9.03% to 9.24% 
                                 2003    1,473    $11.04 to $18.83    $25,584    1.36%    1.25% to 1.40%    26.63% to 26.75% 
                       Fidelity® VIP Investment Grade Bond Portfolio -                         
                           Initial Class                         
                                 2007    15    $17.12    $262    4.17%    1.40%    2.88% 
                                 2006    16    $16.64    $265    4.04%    1.40%    2.91% 
                                 2005    19    $16.17    $301    3.65%    1.40%    0.75% 
                                 2004    27    $16.05    $432    4.87%    1.40%    3.02% 
                                 2003    41    $15.58    $636    3.93%    1.40%    3.73% 
                       The Growth Fund of America® - Class R-4                         
                                 2007    1,786    $14.77    $26,386    1.08%    1.00%    9.81% 
                                 2006    1,538    $13.45    $20,683    (d)    1.00%    (d) 
                                 2005    (d)    (d)    (d)    (d)    (d)    (d) 
                                 2004    (d)    (d)    (d)    (d)    (d)    (d) 
                                 2003    (d)    (d)    (d)    (d)    (d)    (d) 
                       ING BlackRock Large Cap Growth Portfolio -                         
                           Institutional Class                         
                                 2007    319    $9.77 to $10.42    $3,118    (e)    1.00% to 1.40%    (e) 
                                 2006    (e)    (e)    (e)    (e)    (e)    (e) 
                                 2005    (e)    (e)    (e)    (e)    (e)    (e) 
                                 2004    (e)    (e)    (e)    (e)    (e)    (e) 
                                 2003    (e)    (e)    (e)    (e)    (e)    (e) 

    75

    VARIABLE ANNUITY ACCOUNT I OF                         
    ING LIFE INSURANCE AND ANNUITY COMPANY                     
    Notes to Financial Statements                         
    		 
    		 
    		 
    		 
    		 
    		 
     
     
     
                    Investment         
        Units    Unit Fair Value    Net Assets    Income    Expense RatioB    Total ReturnC 
        (000's)    (lowest to highest)    (000's)    RatioA    (lowest to highest)    (lowest to highest) 
       
    		 
    		 
    		 
    		 
    		 
                       ING Evergreen Omega Portfolio - Institutional Class                         
                                 2007    73    $11.72    $853    0.34%    1.40%    10.36% 
                                 2006    84    $10.62    $891    0.00%    1.40%    4.42% 
                                 2005    107    $10.17    $1,086    (c)    1.40%    (c) 
                                 2004    (c)    (c)    (c)    (c)    (c)    (c) 
                                 2003    (c)    (c)    (c)    (c)    (c)    (c) 
                       ING FMRSM Diversified Mid Cap Portfolio -                         
    Institutional Class                         
                                 2007    248    $11.16 to $11.19    $2,772    0.29%    1.25% to 1.40%    13.18% to 13.37% 
                                 2006    286    $9.86 to $9.87    $2,817    (d)    1.25% to 1.40%    (d) 
                                 2005    (d)    (d)    (d)    (d)    (d)    (d) 
                                 2004    (d)    (d)    (d)    (d)    (d)    (d) 
                                 2003    (d)    (d)    (d)    (d)    (d)    (d) 
                       ING FMRSM Large Cap Growth Portfolio -                         
    Institutional Class                         
                                 2007    769    $10.27 to $10.31    $7,906    0.22%    1.25% to 1.40%    2.29% to 2.49% 
                                 2006    1,004    $10.04 to $10.06    $10,084    0.00%    1.25% to 1.40%    1.41% 
                                 2005    114    $9.90    $1,130    (c)    1.40%    (c) 
                                 2004    (c)    (c)    (c)    (c)    (c)    (c) 
                                 2003    (c)    (c)    (c)    (c)    (c)    (c) 
                       ING Global Resources Portfolio - Service Class                         
                                 2007    22    $14.18    $307    (e)    1.40%    (e) 
                                 2006    (e)    (e)    (e)    (e)    (e)    (e) 
                                 2005    (e)    (e)    (e)    (e)    (e)    (e) 
                                 2004    (e)    (e)    (e)    (e)    (e)    (e) 
                                 2003    (e)    (e)    (e)    (e)    (e)    (e) 
                       ING JPMorgan Emerging Markets Equity Portfolio -                         
    Institutional Class                         
                                 2007    71    $20.16 to $20.23    $1,430    1.08%    1.25% to 1.40%    36.86% to 37.06% 
                                 2006    53    $14.73 to $14.76    $783    0.83%    1.25% to 1.40%    34.28% to 34.55% 
                                 2005    22    $10.97    $241    (c)    1.25% to 1.40%    (c) 
                                 2004    (c)    (c)    (c)    (c)    (c)    (c) 
                                 2003    (c)    (c)    (c)    (c)    (c)    (c) 

    76

    VARIABLE ANNUITY ACCOUNT I OF                         
    ING LIFE INSURANCE AND ANNUITY COMPANY                     
    Notes to Financial Statements                         
    		 
    		 
    		 
    		 
    		 
    		 
     
     
     
                    Investment         
        Units    Unit Fair Value    Net Assets    Income    Expense RatioB    Total ReturnC 
        (000's)    (lowest to highest)    (000's)    RatioA    (lowest to highest)    (lowest to highest) 
       
    		 
    		 
    		 
    		 
    		 
                       ING JPMorgan Value Opportunities Portfolio - Service                         
                           Class                         
                                 2007    101    $12.27 to $12.32    $1,234    1.16%    1.25% to 1.40%    -2.54% to -2.38% 
                                 2006    136    $12.59 to $12.62    $1,709    0.34%    1.25% to 1.40%    18.33% to 18.50% 
                                 2005    147    $10.64 to $10.65    $1,561    (c)    1.25% to 1.40%    (c) 
                                 2004    (c)    (c)    (c)    (c)    (c)    (c) 
                                 2003    (c)    (c)    (c)    (c)    (c)    (c) 
                       ING Marsico International Opportunities Portfolio -                         
                           Service Class                         
                                 2007    91    $12.70 to $12.74    $1,160    0.99%    1.25% to 1.40%    18.80% to 19.07% 
                                 2006    80    $10.69 to $10.70    $856    (d)    1.25% to 1.40%    (d) 
                                 2005    (d)    (d)    (d)    (d)    (d)    (d) 
                                 2004    (d)    (d)    (d)    (d)    (d)    (d) 
                                 2003    (d)    (d)    (d)    (d)    (d)    (d) 
                       ING MFS Total Return Portfolio - Institutional Class                         
                                 2007    735    $11.86 to $11.91    $8,718    3.08%    1.25% to 1.40%    2.86% to 3.03% 
                                 2006    885    $11.53 to $11.56    $10,208    2.48%    1.25% to 1.40%    10.65% to 10.83% 
                                 2005    1,245    $10.42 to $10.43    $12,974    (c)    1.25% to 1.40%    (c) 
                                 2004    (c)    (c)    (c)    (c)    (c)    (c) 
                                 2003    (c)    (c)    (c)    (c)    (c)    (c) 
                       ING Oppenheimer Main Street Portfolio® -                         
                           Institutional Class                         
                                 2007    31    $12.93 to $12.98    $397    1.19%    1.25% to 1.40%    3.03% to 3.18% 
                                 2006    35    $12.55 to $12.58    $446    1.04%    1.25% to 1.40%    13.68% to 13.85% 
                                 2005    54    $11.04 to $11.05    $597    (c)    1.25% to 1.40%    (c) 
                                 2004    (c)    (c)    (c)    (c)    (c)    (c) 
                                 2003    (c)    (c)    (c)    (c)    (c)    (c) 
                       ING PIMCO High Yield Portfolio - Service Class                         
                                 2007    96    $11.45 to $11.49    $1,095    6.76%    1.25% to 1.40%    1.42% to 1.50% 
                                 2006    141    $11.29 to $11.32    $1,597    6.92%    1.25% to 1.40%    7.42% to 7.60% 
                                 2005    167    $10.51 to $10.52    $1,750    (c)    1.25% to 1.40%    (c) 
                                 2004    (c)    (c)    (c)    (c)    (c)    (c) 
                                 2003    (c)    (c)    (c)    (c)    (c)    (c) 

    77

    VARIABLE ANNUITY ACCOUNT I OF                         
    ING LIFE INSURANCE AND ANNUITY COMPANY                     
    Notes to Financial Statements                         
    		 
    		 
    		 
    		 
    		 
    		 
     
     
     
                    Investment         
        Units    Unit Fair Value    Net Assets    Income    Expense RatioB    Total ReturnC 
        (000's)    (lowest to highest)    (000's)    RatioA    (lowest to highest)    (lowest to highest) 
       
    		 
    		 
    		 
    		 
    		 
                       ING Pioneer Fund Portfolio - Institutional Class                         
                                 2007    -    $12.42    $5    -    1.25%    4.02% 
                                 2006    -    $11.94    $5    -    1.25%    15.59% 
                                 2005    -    -    $5    (c)    -    (c) 
                                 2004    (c)    (c)    (c)    (c)    (c)    (c) 
                                 2003    (c)    (c)    (c)    (c)    (c)    (c) 
                       ING Stock Index Portfolio - Institutional Class                         
                                 2007    1,525    $13.55    $20,670    1.63%    1.00%    4.23% 
                                 2006    1,423    $13.00    $18,504    (d)    1.00%    (d) 
                                 2005    (d)    (d)    (d)    (d)    (d)    (d) 
                                 2004    (d)    (d)    (d)    (d)    (d)    (d) 
                                 2003    (d)    (d)    (d)    (d)    (d)    (d) 
                       ING VP Index Plus International Equity Portfolio -                         
    Institutional Class                         
                                 2007    488    $9.41 to $9.63    $4,689    (e)    1.00% to 1.40%    (e) 
                                 2006    (e)    (e)    (e)    (e)    (e)    (e) 
                                 2005    (e)    (e)    (e)    (e)    (e)    (e) 
                                 2004    (e)    (e)    (e)    (e)    (e)    (e) 
                                 2003    (e)    (e)    (e)    (e)    (e)    (e) 
                       ING Baron Small Cap Growth Portfolio - Service Class                         
                                 2007    64    $18.55    $1,178    -    1.00%    5.04% 
                                 2006    14    $17.66    $252    (d)    1.00%    (d) 
                                 2005    (d)    (d)    (d)    (d)    (d)    (d) 
                                 2004    (d)    (d)    (d)    (d)    (d)    (d) 
                                 2003    (d)    (d)    (d)    (d)    (d)    (d) 
                       ING JPMorgan International Portfolio - Initial Class                         
                                 2007    96    $12.17 to $19.00    $1,696    2.29%    1.00% to 1.40%    8.53% to 8.95% 
                                 2006    100    $11.17 to $17.47    $1,623    0.99%    1.00% to 1.40%    20.48% to 20.69% 
                                 2005    118    $13.00 to $13.62    $1,618    0.87%    1.25% to 1.40%    8.53% to 8.70% 
                                 2004    184    $11.96 to $12.55    $2,312    1.25%    1.25% to 1.40%    17.18% to 17.37% 
                                 2003    160    $10.19 to $10.71    $1,701    1.01%    1.25% to 1.40%    27.65% to 27.85% 

    78

    VARIABLE ANNUITY ACCOUNT I OF                         
    ING LIFE INSURANCE AND ANNUITY COMPANY                     
    Notes to Financial Statements                         
    		 
    		 
    		 
    		 
    		 
    		 
     
     
     
                    Investment         
        Units    Unit Fair Value    Net Assets    Income    Expense RatioB    Total ReturnC 
        (000's)    (lowest to highest)    (000's)    RatioA    (lowest to highest)    (lowest to highest) 
       
    		 
    		 
    		 
    		 
    		 
                       ING Legg Mason Partners Aggressive Growth                         
                           Portfolio - Initial Class                         
                                 2007    487    $7.18 to $11.33    $5,462    0.00%    1.00% to 1.40%    -3.00% to -2.58% 
                                 2006    601    $7.37 to $11.68    $6,944    0.00%    1.00% to 1.40%    8.75% to 9.19% 
                                 2005    770    $6.75 to $10.74    $8,161    0.00%    1.00% to 1.40%    9.93% to 10.29% 
                                 2004    971    $6.12 to $9.77    $9,369    0.00%    1.00% to 1.40%    8.19% to 8.70% 
                                 2003    1,311    $5.63 to $9.03    $11,703    0.00%    1.00% to 1.40%    36.20% to 36.65% 
                       ING Lord Abbett U.S. Government Securities                         
                           Portfolio - Initial Class                         
                                 2007    55    $11.04 to $11.06    $612    5.04%    1.25% to 1.40%    5.85% to 5.94% 
                                 2006    56    $10.43 to $10.44    $579    (d)    1.25% to 1.40%    (d) 
                                 2005    (d)    (d)    (d)    (d)    (d)    (d) 
                                 2004    (d)    (d)    (d)    (d)    (d)    (d) 
                                 2003    (d)    (d)    (d)    (d)    (d)    (d) 
                       ING Neuberger Berman Partners Portfolio - Initial Class                         
                                 2007    354    $11.09 to $11.12    $3,925    0.25%    1.25% to 1.40%    7.36% to 7.54% 
                                 2006    533    $10.33 to $10.34    $5,511    (d)    1.25% to 1.40%    (d) 
                                 2005    (d)    (d)    (d)    (d)    (d)    (d) 
                                 2004    (d)    (d)    (d)    (d)    (d)    (d) 
                                 2003    (d)    (d)    (d)    (d)    (d)    (d) 
                       ING Oppenheimer Global Portfolio - Initial Class                         
                                 2007    2,754    $14.26 to $14.73    $40,002    1.09%    1.00% to 1.40%    5.01% to 5.50% 
                                 2006    3,032    $13.56 to $14.00    $41,889    0.07%    1.00% to 1.40%    16.42% to 16.78% 
                                 2005    3,470    $11.68 to $12.02    $41,289    (c)    1.00% to 1.40%    (c) 
                                 2004    (c)    (c)    (c)    (c)    (c)    (c) 
                                 2003    (c)    (c)    (c)    (c)    (c)    (c) 
                       ING Oppenheimer Strategic Income Portfolio - Initial                         
                           Class                         
                                 2007    1,009    $11.58 to $11.64    $11,696    4.54%    1.00% to 1.40%    7.22% to 7.61% 
                                 2006    970    $10.77 to $10.84    $10,464    0.37%    1.00% to 1.40%    6.93% to 7.38% 
                                 2005    1,147    $10.03 to $10.11    $11,614    (c)    1.00% to 1.40%    (c) 
                                 2004    (c)    (c)    (c)    (c)    (c)    (c) 
                                 2003    (c)    (c)    (c)    (c)    (c)    (c) 

    79

    VARIABLE ANNUITY ACCOUNT I OF                         
    ING LIFE INSURANCE AND ANNUITY COMPANY                     
    Notes to Financial Statements                         
    		 
    		 
    		 
    		 
    		 
    		 
     
     
     
                    Investment         
        Units    Unit Fair Value    Net Assets    Income    Expense RatioB    Total ReturnC 
        (000's)    (lowest to highest)    (000's)    RatioA    (lowest to highest)    (lowest to highest) 
       
    		 
    		 
    		 
    		 
    		 
                       ING T. Rowe Price Diversified Mid Cap Growth                         
                           Portfolio - Initial Class                         
                                 2007    314    $14.06 to $14.12    $4,416    0.20%    1.25% to 1.40%    11.85% to 11.97% 
                                 2006    353    $12.57 to $12.61    $4,435    0.00%    1.25% to 1.40%    7.53% to 7.78% 
                                 2005    515    $11.69 to $11.70    $6,024    (c)    1.25% to 1.40%    (c) 
                                 2004    (c)    (c)    (c)    (c)    (c)    (c) 
                                 2003    (c)    (c)    (c)    (c)    (c)    (c) 
                       ING T. Rowe Price Growth Equity Portfolio - Initial                         
                           Class                         
                                 2007    497    $13.16 to $24.59    $11,371    0.49%    1.00% to 1.40%    8.37% to 8.76% 
                                 2006    580    $12.10 to $22.69    $12,512    0.23%    1.00% to 1.40%    11.72% to 12.24% 
                                 2005    772    $10.78 to $20.31    $15,034    0.48%    1.00% to 1.40%    4.69% to 5.07% 
                                 2004    998    $10.26 to $19.40    $18,659    0.15%    1.00% to 1.40%    8.44% to 8.92% 
                                 2003    1,115    $9.42 to $17.89    $19,372    0.15%    1.00% to 1.40%    29.17% to 29.57% 
                       ING Thornburg Value Portfolio - Initial Class                         
                                 2007    119    $14.54 to $19.73    $1,796    0.55%    1.25% to 1.40%    5.72% to 5.90% 
                                 2006    129    $13.73 to $18.63    $1,843    0.48%    1.25% to 1.40%    15.19% to 15.38% 
                                 2005    171    $11.90 to $12.44    $2,132    0.77%    1.25% to 1.40%    0.16% to 0.34% 
                                 2004    247    $11.86 to $12.42    $3,062    0.41%    1.25% to 1.40%    11.29% to 11.47% 
                                 2003    290    $10.64 to $11.16    $3,225    0.19%    1.25% to 1.40%    26.24% to 26.37% 
                       ING UBS U.S. Large Cap Equity Portfolio - Initial                         
                           Class                         
                                 2007    370    $12.01 to $13.29    $4,497    0.74%    1.25% to 1.40%    -0.25% to -0.08% 
                                 2006    427    $12.04 to $13.30    $5,193    0.79%    1.25% to 1.40%    12.95% to 13.10% 
                                 2005    548    $10.66 to $11.76    $5,898    0.87%    1.25% to 1.40%    7.89% to 7.99% 
                                 2004    701    $9.88 to $10.89    $6,993    0.71%    1.25% to 1.40%    13.04% to 13.32% 
                                 2003    828    $8.74 to $9.61    $7,314    0.56%    1.25% to 1.40%    23.27% to 23.36% 
                       ING Van Kampen Equity and Income Portfolio - Initial                         
                           Class                         
                                 2007    553    $12.25 to $12.39    $6,830    2.34%    1.00% to 1.40%    2.07% to 2.51% 
                                 2006    715    $11.95 to $12.12    $8,649    1.98%    1.00% to 1.40%    11.12% to 11.58% 
                                 2005    942    $10.71 to $10.89    $10,252    (c)    1.00% to 1.40%    (c) 
                                 2004    (c)    (c)    (c)    (c)    (c)    (c) 
                                 2003    (c)    (c)    (c)    (c)    (c)    (c) 

    80

    VARIABLE ANNUITY ACCOUNT I OF                         
    ING LIFE INSURANCE AND ANNUITY COMPANY                     
    Notes to Financial Statements                         
    		 
    		 
    		 
    		 
    		 
    		 
     
     
     
                    Investment         
        Units    Unit Fair Value    Net Assets    Income    Expense RatioB    Total ReturnC 
        (000's)    (lowest to highest)    (000's)    RatioA    (lowest to highest)    (lowest to highest) 
       
    		 
    		 
    		 
    		 
    		 
    ING VP Strategic Allocation Conservative Portfolio -                         
    Class I                         
    2007    85    $14.20 to $18.65    $1,574    3.34%    1.25% to 1.40%    4.31% to 4.49% 
    2006    63    $13.59 to $17.88    $1,118    2.27%    1.25% to 1.40%    6.87% to 7.03% 
    2005    78    $12.38 to $16.73    $1,280    2.38%    1.25% to 1.40%    2.39% to 2.58% 
    2004    102    $12.38 to $16.34    $1,589    1.85%    1.25% to 1.40%    6.45% to 6.63% 
    2003    109    $11.61 to $15.35    $1,648    2.37%    1.25% to 1.40%    12.04% to 12.17% 
    ING VP Strategic Allocation Growth Portfolio - Class I                         
    2007    105    $13.69 to $20.68    $2,097    1.55%    1.25% to 1.40%    3.56% to 3.71% 
    2006    119    $13.20 to $19.97    $2,303    1.63%    1.25% to 1.40%    11.63% to 11.77% 
    2005    145    $11.81 to $17.89    $2,546    1.10%    1.25% to 1.40%    4.68% to 4.88% 
    2004    107    $11.26 to $17.09    $1,793    0.83%    1.25% to 1.40%    10.47% to 10.61% 
    2003    74    $10.18 to $15.47    $1,094    1.11%    1.25% to 1.40%    22.58% to 22.80% 
                       ING VP Strategic Allocation Moderate Portfolio - Class I                         
    2007    124    $13.81 to $19.46    $2,355    2.21%    1.25% to 1.40%    3.95% to 4.18% 
    2006    119    $13.26 to $18.72    $2,168    1.68%    1.25% to 1.40%    9.67% to 9.86% 
    2005    108    $12.07 to $17.07    $1,787    1.69%    1.25% to 1.40%    3.20% to 3.34% 
    2004    94    $11.68 to $16.54    $1,510    1.49%    1.25% to 1.40%    8.67% to 8.85% 
    2003    70    $10.73 to $15.22    $1,035    1.13%    1.25% to 1.40%    17.80% to 18.04% 
    ING VP Growth and Income Portfolio - Class I                         
    2007    306    $9.72 to $18.86    $5,158    1.26%    1.00% to 1.40%    5.90% to 6.35% 
    2006    391    $9.14 to $17.81    $6,260    0.95%    1.00% to 1.40%    12.65% to 12.98% 
    2005    676    $8.09 to $15.81    $9,080    0.98%    1.00% to 1.40%    6.61% to 7.15% 
    2004    836    $7.55 to $14.83    $10,555    2.28%    1.00% to 1.40%    6.84% to 7.24% 
    2003    977    $7.04 to $13.88    $11,684    0.00%    1.00% to 1.40%    24.37% to 24.82% 
    ING VP Global Science and Technology Portfolio -                         
    Class I                         
    2007    649    $4.89 to $5.05    $3,259    0.00%    1.00% to 1.40%    17.27% to 17.99% 
    2006    570    $4.17 to $4.28    $2,432    0.00%    1.00% to 1.40%    5.78% to 6.20% 
    2005    581    $3.94 to $4.03    $2,334    0.00%    1.00% to 1.40%    10.06% to 10.56% 
    2004    593    $3.58 to $3.65    $2,151    0.00%    1.00% to 1.40%    -2.45% to -2.14% 
    2003    784    $3.67 to $3.73    $2,897    0.00%    1.00% to 1.40%    43.36% to 44.02% 

    81

    VARIABLE ANNUITY ACCOUNT I OF                         
    ING LIFE INSURANCE AND ANNUITY COMPANY                     
    Notes to Financial Statements                         
    		 
    		 
    		 
    		 
    		 
    		 
     
     
     
                    Investment         
        Units    Unit Fair Value    Net Assets    Income    Expense RatioB    Total ReturnC 
        (000's)    (lowest to highest)    (000's)    RatioA    (lowest to highest)    (lowest to highest) 
       
    		 
    		 
    		 
    		 
    		 
                       ING VP Growth Portfolio - Class I                         
                                 2007    359    $8.80 to $18.63    $3,511    0.16%    1.00% to 1.40%    16.21% to 16.71% 
                                 2006    449    $7.54 to $16.00    $3,975    0.05%    1.00% to 1.40%    1.25% to 1.62% 
                                 2005    391    $7.42 to $15.23    $3,378    0.66%    1.00% to 1.40%    7.78% to 8.32% 
                                 2004    383    $6.85 to $14.13    $3,236    0.13%    1.00% to 1.40%    5.76% to 6.20% 
                                 2003    368    $6.45 to $13.36    $3,073    -    1.00% to 1.40%    28.46% to 29.00% 
                       ING VP Index Plus LargeCap Portfolio - Class I                         
                                 2007    140    $15.11 to $22.24    $2,790    1.41%    1.25% to 1.40%    3.54% to 3.71% 
                                 2006    221    $10.40 to $21.48    $4,295    1.79%    1.00% to 1.40%    12.99% to 13.41% 
                                 2005    1,991    $9.17 to $19.01    $20,638    1.22%    1.00% to 1.40%    3.88% to 4.32% 
                                 2004    1,802    $8.79 to $18.30    $18,465    1.00%    1.00% to 1.40%    9.06% to 9.46% 
                                 2003    1,638    $8.03 to $16.78    $16,152    1.05%    1.00% to 1.40%    24.39% to 24.88% 
                       ING VP Index Plus MidCap Portfolio - Class I                         
                                 2007    644    $20.57    $13,245    0.74%    1.00%    4.42% 
                                 2006    532    $19.70    $10,478    0.56%    1.00%    8.36% 
                                 2005    421    $18.18    $7,660    0.71%    1.00%    10.05% 
                                 2004    5    $16.52    $85    -    1.00%    15.44% 
                                 2003    4    $14.31    $63    -    1.00%    31.04% 
                       ING VP Index Plus SmallCap Portfolio - Class I                         
                                 2007    -    $18.65    $9    -    1.00%    -7.17% 
                                 2006    1    $20.09    $6    0.33%    1.00%    12.68% 
                                 2005    -    $17.83    $4    0.24%    1.00%    6.58% 
                                 2004    -    $16.73    $3    -    1.00%    20.79% 
                                 2003    3    $13.85    $37    -    1.00%    34.86% 
                       ING VP Small Company Portfolio - Class I                         
                                 2007    993    $18.99 to $29.36    $19,997    0.18%    1.00% to 1.40%    4.37% to 4.86% 
                                 2006    1,001    $18.11 to $28.08    $19,652    0.39%    1.00% to 1.40%    15.20% to 15.64% 
                                 2005    981    $15.66 to $23.81    $17,154    0.14%    1.00% to 1.40%    8.72% to 9.13% 
                                 2004    948    $14.35 to $21.90    $16,310    0.27%    1.00% to 1.40%    12.77% to 13.26% 
                                 2003    940    $12.67 to $19.42    $15,188    0.25%    1.00% to 1.40%    35.52% to 36.09% 

    82

    VARIABLE ANNUITY ACCOUNT I OF                         
    ING LIFE INSURANCE AND ANNUITY COMPANY                     
    Notes to Financial Statements                         
    		 
    		 
    		 
    		 
    		 
    		 
     
     
     
                    Investment         
        Units    Unit Fair Value    Net Assets    Income    Expense RatioB    Total ReturnC 
        (000's)    (lowest to highest)    (000's)    RatioA    (lowest to highest)    (lowest to highest) 
       
    		 
    		 
    		 
    		 
    		 
                       ING VP Value Opportunity Portfolio - Class I                         
                                 2007    78    $12.30 to $21.80    $1,553    1.68%    1.00% to 1.40%    1.58% to 1.99% 
                                 2006    96    $12.06 to $21.46    $1,895    1.42%    1.00% to 1.40%    14.39% to 14.86% 
                                 2005    133    $10.50 to $18.76    $2,278    2.11%    1.00% to 1.40%    5.57% to 5.95% 
                                 2004    195    $9.91 to $17.77    $3,146    1.06%    1.00% to 1.40%    8.55% to 9.14% 
                                 2003    204    $9.08 to $16.37    $3,076    0.79%    1.00% to 1.40%    22.90% to 23.37% 
                       ING VP High Yield Bond Portfolio - Class I                         
                                 2007    338    $10.66 to $10.69    $3,602    7.60%    1.25% to 1.40%    0.47% to 0.66% 
                                 2006    422    $10.61 to $10.62    $4,482    (d)    1.25% to 1.40%    (d) 
                                 2005    (d)    (d)    (d)    (d)    (d)    (d) 
                                 2004    (d)    (d)    (d)    (d)    (d)    (d) 
                                 2003    (d)    (d)    (d)    (d)    (d)    (d) 
                       ING VP International Value Portfolio - Class I                         
                                 2007    -    $18.66    $0    8.59%    1.00%    12.27% 
                                 2006    15    $16.62    $256    5.68%    1.00%    28.14% 
                                 2005    53    $12.97    $690    2.41%    1.00%    8.35% 
                                 2004    11    $11.97    $134    (b)    1.00%    (b) 
                                 2003    (b)    (b)    (b)    (b)    (b)    (b) 
                       ING VP SmallCap Opportunities Portfolio - Class I                         
                                 2007    1    $9.82    $7    -    1.00%    8.99% 
                                 2006    -    $9.01    $4    -    1.00%    11.51% 
                                 2005    -    $8.08    $1    (c)    1.00%    (c) 
                                 2004    (c)    (c)    (c)    (c)    (c)    (c) 
                                 2003    (c)    (c)    (c)    (c)    (c)    (c) 
                       ING VP Balanced Portfolio - Class I                         
                                 2007    1,557    $13.03 to $22.08    $21,927    2.66%    1.00% to 1.40%    4.10% to 4.49% 
                                 2006    1,560    $12.47 to $21.21    $21,439    2.14%    1.00% to 1.40%    8.44% to 8.91% 
                                 2005    1,394    $11.45 to $19.56    $17,405    2.40%    1.00% to 1.40%    2.79% to 3.25% 
                                 2004    1,239    $11.09 to $19.03    $15,527    1.93%    1.00% to 1.40%    7.88% to 8.30% 
                                 2003    1,092    $10.24 to $17.64    $13,216    1.95%    1.00% to 1.40%    17.21% to 17.70% 

    83

    VARIABLE ANNUITY ACCOUNT I OF                         
    ING LIFE INSURANCE AND ANNUITY COMPANY                     
    Notes to Financial Statements                         
    		 
    		 
    		 
    		 
    		 
    		 
     
     
     
                    Investment         
        Units    Unit Fair Value    Net Assets    Income    Expense RatioB    Total ReturnC 
        (000's)    (lowest to highest)    (000's)    RatioA    (lowest to highest)    (lowest to highest) 
       
    		 
    		 
    		 
    		 
    		 
                       ING VP Intermediate Bond Portfolio - Class I                         
                                 2007    525    $14.99 to $17.11    $8,518    3.99%    1.00% to 1.40%    4.52% to 4.97% 
                                 2006    466    $14.28 to $16.37    $7,341    3.78%    1.00% to 1.40%    2.63% to 3.03% 
                                 2005    527    $13.86 to $15.95    $8,134    3.70%    1.00% to 1.40%    1.66% to 2.14% 
                                 2004    569    $13.57 to $15.69    $8,673    7.86%    1.00% to 1.40%    1.57% to 3.61% 
                                 2003    743    $13.57 to $15.17    $11,032    1.87%    1.25% to 1.40%    4.84% to 4.95% 
                       ING VP Money Market Portfolio - Class I                         
                                 2007    1,216    $12.09 to $13.65    $15,804    4.07%    1.00% to 1.40%    3.64% to 4.04% 
                                 2006    1,081    $11.62 to $13.17    $13,658    2.98%    1.00% to 1.40%    3.38% to 3.84% 
                                 2005    1,002    $11.19 to $12.74    $12,320    1.39%    1.00% to 1.40%    1.59% to 2.01% 
                                 2004    1,106    $10.97 to $12.54    $13,362    1.11%    1.00% to 1.40%    -0.32% to 0.09% 
                                 2003    1,630    $10.96 to $12.58    $19,909    2.08%    1.00% to 1.40%    -0.55% to 0.09% 
                       Lord Abbett Series Fund - Growth and Income                         
                           Portfolio - Class VC                         
                                 2007    683    $13.86    $9,464    1.38%    1.00%    2.44% 
                                 2006    541    $13.53    $7,324    1.53%    1.00%    16.04% 
                                 2005    332    $11.66    $3,871    1.53%    1.00%    2.28% 
                                 2004    77    $11.40    $883    (b)    1.00%    (b) 
                                 2003    (b)    (b)    (b)    (b)    (b)    (b) 
                       Oppenheimer Main Street Fund®/VA                         
                                 2007    5    $11.11    $57    1.74%    1.25%    3.06% 
                                 2006    5    $10.78    $58    2.24%    1.25%    13.59% 
                                 2005    441    $11.02 to $14.24    $5,863    1.52%    1.25% to 1.40%    4.48% to 4.65% 
                                 2004    641    $10.53 to $13.63    $8,147    0.82%    1.25% to 1.40%    7.92% to 8.00% 
                                 2003    672    $9.75 to $12.63    $7,918    0.89%    1.25% to 1.40%    25.05% to 25.16% 
                       Oppenheimer Main Street Small Cap Fund®/VA                         
                                 2007    -    $13.08    $2    (e)    1.00%    (e) 
                                 2006    (e)    (e)    (e)    (e)    (e)    (e) 
                                 2005    (e)    (e)    (e)    (e)    (e)    (e) 
                                 2004    (e)    (e)    (e)    (e)    (e)    (e) 
                                 2003    (e)    (e)    (e)    (e)    (e)    (e) 

    84

    VARIABLE ANNUITY ACCOUNT I OF                         
    ING LIFE INSURANCE AND ANNUITY COMPANY                     
    Notes to Financial Statements                         
    		 
    		 
    		 
    		 
    		 
    		 
     
     
     
                    Investment         
        Units    Unit Fair Value    Net Assets    Income    Expense RatioB    Total ReturnC 
        (000's)    (lowest to highest)    (000's)    RatioA    (lowest to highest)    (lowest to highest) 
       
    		 
    		 
    		 
    		 
    		 
                       PIMCO Real Return Portfolio - Administrative Class                         
                                 2007    -    $11.93    -    -    1.00%    9.45% 
                                 2006    -    $10.90    -    (d)    1.00%    (d) 
                                 2005    (d)    (d)    (d)    (d)    (d)    (d) 
                                 2004    (d)    (d)    (d)    (d)    (d)    (d) 
                                 2003    (d)    (d)    (d)    (d)    (d)    (d) 
                       Pioneer Equity Income VCT Portfolio - Class I                         
                                 2007    1    $14.20    $15    -    1.00%    -0.21% 
                                 2006    -    $14.23    $1    5.20%    1.00%    21.21% 
                                 2005    -    $11.74    $1    2.71%    1.00%    4.63% 
                                 2004    -    $11.22    -    -    1.00%    - 
                                 2003    -    -    -    (a)    -    (a) 
                       Pioneer Mid Cap Value VCT Portfolio - Class I                         
                                 2007    -    $17.95    -    -    1.00%    4.48% 
                                 2006    -    $17.18    -    (d)    1.00%    (d) 
                                 2005    (d)    (d)    (d)    (d)    (d)    (d) 
                                 2004    (d)    (d)    (d)    (d)    (d)    (d) 
                                 2003    (d)    (d)    (d)    (d)    (d)    (d) 

    (a)      As investment Division had no investments until 2003, this data is not meaningful and is therefore not presented.
     
    (b)      As investment Division had no investments until 2004, this data is not meaningful and is therefore not presented.
     
    (c)      As investment Division had no investments until 2005, this data is not meaningful and is therefore not presented.
     
    (d)      As investment Division had no investments until 2006, this data is not meaningful and is therefore not presented.
     
    (e)      As investment Division had no investments until 2007, 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, administrative and other charges, as defined in Note 4. Certain items in this table are presented as a range of minimum and maximum values; however, such information is calculated independently for each column in the table.
     
    C      Total Return is calculated as the change in unit value for each Contract presented in the Statements of Assets and Liabilities. Certain items in this table are presented as a range of minimum and maximum values; however, such information is calculated independently for each column in the table.
     

    85

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

    Index to Consolidated Financial Statements

    Page

    Report of Independent Registered Public Accounting Firm    C-2 
    Consolidated Financial Statements:     
             Consolidated Statements of Operations for the years ended     
                       December 31, 2007, 2006, and 2005    C-3 
             Consolidated Balance Sheets as of     
                       December 31, 2007 and 2006    C-4 
             Consolidated Statements of Changes in Shareholder's Equity     
                       for the years ended December 31, 2007, 2006, and 2005    C-6 
             Consolidated Statements of Cash Flows for the years ended     
                       December 31, 2007, 2006, and 2005    C-7 
    Notes to Consolidated Financial Statements    C-9 

    C-1

    Report of Independent Registered Public Accounting Firm

    The Board of Directors
    ING Life Insurance and Annuity Company

    We have audited the accompanying consolidated balance sheets of ING Life Insurance and
    Annuity Company and subsidiaries as of December 31, 2007 and 2006, and the related
    consolidated statements of operations, changes in shareholder’s equity, and cash flows for each
    of the three years in the period ended December 31, 2007. These financial statements are the
    responsibility of the Company’s management. Our responsibility is to express an opinion on
    these financial statements based on our audits.

    We conducted our audits in accordance with the standards of the Public Company Accounting
    Oversight Board (United States). Those standards require that we plan and perform the audit to
    obtain reasonable assurance about whether the financial statements are free of material
    misstatement. We were not engaged to perform an audit of the Company’s internal control over
    financial reporting. Our audits included consideration of internal control over financial reporting
    as a basis for designing audit procedures that are appropriate in the circumstances, but not for the
    purpose of expressing an opinion on the effectiveness of the Company’s internal control over
    financial reporting. Accordingly, we express no such opinion. An audit also includes
    examining, on a test basis, evidence supporting the amounts and disclosures in the financial
    statements, assessing the accounting principles used and significant estimates made by
    management, and evaluating the overall financial statement presentation. We believe that our
    audits provide a reasonable basis for our opinion.

    In our opinion, the financial statements referred to above present fairly, in all material respects,
    the consolidated financial position of ING Life Insurance and Annuity Company and subsidiaries
    as of December 31, 2007 and 2006, and the results of their operations and their cash flows for
    each of the three years in the period ended December 31, 2007, in conformity with U.S.
    generally accepted accounting principles.

    As discussed in Note 14 to the financial statements, the Company restated 2006 and 2005
    retained earnings (deficit), asset, and liability amounts presented in their consolidated balance
    sheets and changes in shareholder’s equity.

    /s/ Ernst & Young LLP

    Atlanta, Georgia
    March 25, 2008

    C-2

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

    Consolidated Statements of Operations
    (In millions)

        Year Ended December 31,     
        2007    2006        2005 
       
    		 
    		 
    		 
    Revenue:                 
    		 
    		 
    		 
    		 
       Net investment income    $ 1,054.7    $ 1,029.7    $ 1,037.1 
       Fee income    789.3    714.8        609.6 
    		 
    		 
    		 
    		 
       Premiums    46.8    37.5        43.2 
       Broker-dealer commission revenue    568.4    429.2        378.1 
    		 
    		 
    		 
    		 
       Net realized capital gains (losses)    (8.2)    3.0        22.0 
       Other income    0.9    15.7        7.7 
    		 
    		 
    		 
    		 
    Total revenue    2,451.9    2,229.9        2,097.7 
       
    		 
    		 
    		 
    Benefits and expenses:                 
    		 
    		 
    		 
    		 
       Interest credited and other benefits                 
    		 
    		 
    		 
    		 
    to contractowners    822.2    783.7        739.6 
       Operating expenses    652.2    568.3        524.3 
    		 
    		 
    		 
    		 
       Broker-dealer commission expense    568.4    429.2        378.1 
       Amortization of deferred policy acquisition                 
             cost and value of business acquired    129.2    21.3        159.9 
    		 
    		 
    		 
    		 
       Interest expense    5.5    2.9        1.6 
       
    		 
    		 
    		 
    Total benefits and expenses    2,177.5    1,805.4        1,803.5 
    		 
    		 
    		 
    		 
    Income before income taxes    274.4    424.5        294.2 
    Income tax expense    56.0    122.7        21.5 
    		 
    		 
    		 
    		 
    Net income    $ 218.4    $ 301.8    $ 272.7 
       
    		 
    		 

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

    C-3

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

    Consolidated Balance Sheets
    (In millions, except share data)

        As of December 31, 
        2007    2006 
       
    		 
            (Restated) 
    Assets         
    Investments:         
    		 
    		 
       Fixed maturities, available-for-sale, at fair value         
    		 
    		 
             (amortized cost of $13,374.7 at 2007 and $15,150.1 at 2006)    $ 13,316.3    $ 15,112.2 
       Equity securities, available-for-sale, at fair value         
    (cost of $440.1 at 2007 and $233.6 at 2006)    446.4    251.7 
    		 
    		 
       Mortgage loans on real estate    2,089.4    1,879.3 
       Policy loans    273.4    268.9 
    		 
    		 
       Limited partnerships/corporations    636.1    359.2 
       Other investments    202.7    39.7 
    		 
    		 
       Securities pledged (amortized cost of $940.2 at 2007 and $1,106.2 at 2006)    934.1    1,099.5 
       
    		 
    Total investments    17,898.4    19,010.5 
    		 
    		 
    Cash and cash equivalents    252.3    311.2 
    Short-term investments under securities loan agreement    183.9    283.1 
    		 
    		 
    Accrued investment income    168.3    180.4 
    Receivables for securities sold    5.6    90.1 
    		 
    		 
    Reinsurance recoverable    2,594.4    2,715.4 
    Deferred policy acquisition costs    728.6    622.6 
    		 
    		 
    Value of business acquired    1,253.2    1,340.2 
    Notes receivable from affiliate    175.0    175.0 
    		 
    		 
    Short-term loan to affiliate    -    45.0 
    Due from affiliates    10.6    9.1 
    		 
    		 
    Property and equipment    147.4    75.1 
    Other assets    112.1    73.8 
    		 
    		 
    Assets held in separate accounts    48,091.2    43,550.8 
       
    		 
    Total assets    $ 71,621.0    $ 68,482.3 
       
    		 

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

    C-4

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

    Consolidated Balance Sheets
    (In millions, except share data)

        As of December 31, 
        2007    2006 
       
    		 
            (Restated) 
    Liabilities and Shareholder's Equity         
    		 
    		 
    Future policy benefits and claims reserves    $ 18,569.1    $ 19,984.1 
    Payables for securities purchased    0.2    42.6 
    		 
    		 
    Payables under securities loan agreement    165.1    283.1 
    Notes payable    9.9    - 
    		 
    		 
    Borrowed money    738.4    833.2 
    Due to affiliates    130.7    82.8 
    		 
    		 
    Current income taxes    56.8    59.8 
    Deferred income taxes    275.9    261.1 
    		 
    		 
    Other liabilities    542.7    371.1 
    Liabilities related to separate accounts    48,091.2    43,550.8 
    		 
    		 
    Total liabilities    68,580.0    65,468.6 
       
    		 
     
    Shareholder's equity         
    		 
    		 
       Common stock (100,000 shares authorized; 55,000         
    		 
    		 
             issued and outstanding; $50 per share value)    2.8    2.8 
       Additional paid-in capital    4,159.3    4,299.5 
    		 
    		 
       Accumulated other comprehensive loss    (33.8)    (14.0) 
       Retained earnings (deficit)    (1,087.3)    (1,274.6) 
    		 
    		 
    Total shareholder's equity    3,041.0    3,013.7 
       
    		 
    Total liabilities and shareholder's equity    $ 71,621.0    $ 68,482.3 
       
    		 

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

    C-5

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

    Consolidated Statements of Changes in Shareholder’s Equity
    (In millions)

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

    Balance at December 31, 2004
    Prior period adjustment ($43.1 pretax)
    Balance at January 1, 2005
    Comprehensive income:

    $ 2.8    $ 4,566.8    $ 67.1    $ (1,877.1)    $ 2,759.6 
    -    -    -    28.0    28.0 
    		 
    		 
    		 
    		 
    2.8    4,566.8    67.1    (1,849.1)    2,787.6 

             Net income    -    -    -    272.7    272.7 
             Other comprehensive loss, net of tax:                     
    		 
    		 
    		 
    		 
    		 
                 Change in net unrealized capital gains (losses)                     
    		 
    		 
    		 
    		 
    		 
                       on securities ($(108.4) pretax)    -    -    (77.5)    -    (77.5) 
                 Minimum pension liability ($(1.1) pretax)    -    -    5.1    -    5.1 
    		 
    		 
    		 
    		 
    		 
       Total comprehensive income                    200.3 
                       
       Dividends paid    -    (20.5)    -    -    (20.5) 
    		 
    		 
    		 
    		 
    		 
       Employee share-based payments    -    3.3    -    -    3.3 
       
    		 
    		 
    		 
    		 
    Balance at December 31, 2005    2.8    4,549.6    (5.3)    (1,576.4)    2,970.7 
    		 
    		 
    		 
    		 
    		 
       Comprehensive income:                     
             Net income    -    -    -    301.8    301.8 
    		 
    		 
    		 
    		 
    		 
             Other comprehensive loss, net of tax:                     
                 Change in net unrealized capital gains (losses)                     
                       on securities ($(23.4) pretax)    -    -    (10.7)    -    (10.7) 
    		 
    		 
    		 
    		 
    		 
                 Pension liability and FAS No. 158                     
    		 
    		 
    		 
    		 
    		 
                       transition adjustment ($3.9 pretax)    -    -    2.5    -    2.5 
    		 
    		 
    		 
    		 
    		 
                        293.6 
                       
       Total comprehensive income                     
    		 
    		 
    		 
    		 
    		 
       Cumulative effect of change in accounting                     
    		 
    		 
    		 
    		 
    		 
             principle ($(0.8) pretax)            (0.5)    -    (0.5) 
       Dividends paid    -    (256.0)    -    -    (256.0) 
    		 
    		 
    		 
    		 
    		 
       Employee share-based payments    -    5.9    -    -    5.9 
       
    		 
    		 
    		 
    		 
    Balance at December 31, 2006    2.8    4,299.5    (14.0)    (1,274.6)    3,013.7 
    		 
    		 
    		 
    		 
    		 
       Cumulative effect of change in                     
    		 
    		 
    		 
    		 
    		 
             accounting principle    -    -    -    (31.1)    (31.1) 
       
    		 
    		 
    		 
    		 
    Balance at January 1, 2007    2.8    4,299.5    (14.0)    (1,305.7)    2,982.6 
    		 
    		 
    		 
    		 
    		 
       Comprehensive income:                     
             Net income    -    -    -    218.4    218.4 
    		 
    		 
    		 
    		 
    		 
             Other comprehensive loss, net of tax:                     
                 Change in net unrealized capital gains (losses)                     
                       on securities ($(27.7) pretax), including                     
                       tax valuation allowance of $(6.4)    -    -    (24.4)    -    (24.4) 
    		 
    		 
    		 
    		 
    		 
                 Pension liability ($7.1 pretax)    -    -    4.6    -    4.6 
                       
       Total comprehensive income                    198.6 
    		 
    		 
    		 
    		 
    		 
       Dividends paid    -    (145.0)    -    -    (145.0) 
       Employee share-based payments    -    4.8    -    -    4.8 
    		 
    		 
    		 
    		 
    		 
    Balance at December 31, 2007    $ 2.8    $ 4,159.3    $ (33.8)    $ (1,087.3)    $ 3,041.0 
       
    		 
    		 
    		 
    		 

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

    C-6

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

    Consolidated Statements of Cash Flows
    (In millions)

        Year Ended December 31,     
        2007                 2006           2005 
       
    		 
    		 
    		 
    Cash Flows from Operating Activities:                 
    		 
    		 
    		 
    		 
       Net income    $ 218.4    $ 301.8    $ 272.7 
       Adjustments to reconcile net income to                 
             net cash provided by operating activities:                 
    		 
    		 
    		 
    		 
                 Capitalization of deferred policy acquisition costs, value                 
    		 
    		 
    		 
    		 
                       of business acquired, and sales inducements    (193.4)    (191.0)        (174.0) 
                 Amortization of deferred policy acquisition costs,                 
                       value of business acquired, and sales inducements    133.9    25.9        165.8 
    		 
    		 
    		 
    		 
                 Net accretion/decretion of discount/premium    72.7    83.8        115.5 
                 Future policy benefits, claims reserves, and                 
                       interest credited    599.0    662.5        634.2 
    		 
    		 
    		 
    		 
                 Provision for deferred income taxes    30.4    75.6        11.0 
                 Net realized capital losses (gains)    8.2    (3.0)        (22.0) 
    		 
    		 
    		 
    		 
                 Depreciation    18.2    12.6        12.0 
                 Change in:                 
    		 
    		 
    		 
    		 
                       Accrued investment income    12.1    23.2        (21.6) 
                       Reinsurance recoverable    121.0    81.3        104.6 
    		 
    		 
    		 
    		 
                       Other receivable and assets accruals    (37.0)    (20.1)        2.6 
                       Due to/from affiliates    46.4    20.4        4.6 
    		 
    		 
    		 
    		 
                       Other payables and accruals    17.8    86.3        (49.8) 
                 Other, net    (16.4)    5.9        3.3 
    		 
    		 
    		 
    		 
    Net cash provided by operating activities    1,031.3    1,165.2        1,058.9 
       
    		 
    		 
    		 
    Cash Flows from Investing Activities:                 
    		 
    		 
    		 
    		 
       Proceeds from the sale, maturity, or redemption of:                 
             Fixed maturities, available-for-sale    10,235.6    10,355.2        19,232.3 
    		 
    		 
    		 
    		 
             Equity securities, available-for-sale    113.8    91.7        119.8 
             Mortgage loans on real estate    205.4    197.0        179.0 
    		 
    		 
    		 
    		 
       Acquisition of:                 
             Fixed maturities, available-for-sale    (8,425.5)    (8,802.1)        (19,435.9) 
    		 
    		 
    		 
    		 
             Equity securities, available-for-sale    (243.9)    (149.1)        (120.4) 
             Mortgage loans on real estate    (415.1)    (680.3)        (484.8) 
    		 
    		 
    		 
    		 
       Policy loans    (4.5)    (6.5)        0.3 
       Derivatives, net    32.2    1.4        4.2 
    		 
    		 
    		 
    		 
       Limited partnerships, net    (279.5)    (237.6)        (46.3) 
       Other investments    (182.1)    (4.0)        (1.5) 
    		 
    		 
    		 
    		 
       Purchases of property and equipment, net    (90.5)    (54.5)        (14.2) 
       
    		 
    		 
    		 
    Net cash provided by (used in) investing activities    945.9    711.2        (567.5) 
       
    		 
    		 
    		 

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

    C-7

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

    Consolidated Statements of Cash Flows
    (In millions)

        Year Ended December 31,     
        2007                 2006        2005 
       
    		 
    		 
    		 
    Cash Flows from Financing Activities:                 
    		 
    		 
    		 
    		 
       Deposits received for investment contracts    1,600.0    1,875.7        2,024.2 
       Maturities and withdrawals from investment contracts    (3,451.2)    (3,420.7)        (2,237.5) 
    		 
    		 
    		 
    		 
       Short-term loans to affiliates    45.0    86.0        (106.0) 
       Short-term borrowings    (94.8)    (107.9)        (116.3) 
    		 
    		 
    		 
    		 
       Notes payable    9.9    -        - 
       Dividends to Parent    (145.0)    (256.0)        (20.5) 
    		 
    		 
    		 
    		 
    Net cash used in financing activities    (2,036.1)    (1,822.9)        (456.1) 
       
    		 
    		 
    		 
    Net (decrease) increase in cash and cash equivalents    (58.9)    53.5        35.3 
    		 
    		 
    		 
    		 
    Cash and cash equivalents, beginning of year    311.2    257.7        222.4 
       
    		 
    		 
    		 
    Cash and cash equivalents, end of year    $ 252.3    $ 311.2    $ 257.7 
    		 
    		 
    		 
    Supplemental cash flow information:                 
       Income taxes paid, net    $ 45.1    $ 37.6    $ 47.1 
    		 
    		 
    		 
       Interest paid    $ 44.6    $ 40.8    $ 32.0 
       
    		 
    		 

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

    C-8

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

    1. Organization and Significant Accounting Policies

    Basis of Presentation

    ING Life Insurance and Annuity Company (“ILIAC”) is a stock life insurance company

    domiciled in the state of Connecticut.

    ILIAC and its wholly-owned subsidiaries

    (collectively, the “Company”) are providers of financial products and services in the
    United States. ILIAC is authorized to conduct its insurance business in all states and in
    the District of Columbia.

    The consolidated financial statements include ILIAC and its wholly-owned subsidiaries,
    ING Financial Advisers, LLC (“IFA”) and Directed Services LLC (“DSL”). ILIAC is a
    direct, wholly-owned subsidiary of Lion Connecticut Holdings Inc. (“Lion” or “Parent”),
    which is an indirect, wholly-owned subsidiary of ING Groep N.V. (“ING”). ING is a
    global financial services holding company based in The Netherlands, with American
    Depository Shares listed on the New York Stock Exchange under the symbol “ING.”

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

    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 notes that certain provisions under Accounting Principles
    Board (“APB”) Opinion No. 16, “Business Combinations”, provide a source of guidance
    for such transactions. In accordance with APB Opinion No. 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
    consolidated financial statements give effect to the DSL consolidation transactions as if
    they had occurred on January 1, 2004 and include the following:

    C-9

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

                         2006                         2005     
    		 
    		 
    		 
    		 
    Total revenue    $ 594.9    $ 507.7 
    Net income        35.8        28.2 
    		 
    		 
    		 
    		 
    Additional paid-in capital:                 
       Dividends paid        25.0        20.5 
    		 
    		 
    		 
    		 
       Employee share-based payments        0.1        0.2 

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

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

    Description of Business

    The Company offers qualified and nonqualified annuity contracts that include a variety of
    funding and payout options for individuals and employer-sponsored retirement plans
    qualified under Internal Revenue Code Sections 401, 403, 408, and 457, as well as
    nonqualified deferred compensation plans. The Company’s products are offered
    primarily to individuals, pension plans, small businesses, and employer-sponsored groups
    in the health care, government, and education markets (collectively “not-for-profit”
    organizations) and corporate markets. The Company’s products are generally distributed
    through pension professionals, independent agents and brokers, third party
    administrators, banks, dedicated career agents, and financial planners.

    Products offered by the Company include deferred and immediate (payout annuities)
    annuity contracts. Company products also include programs offered to qualified plans
    and nonqualified deferred compensation plans that package administrative and record-
    keeping services along with a variety of investment options, including affiliated and
    nonaffiliated mutual funds and variable and fixed investment options. In addition, the
    Company offers wrapper agreements entered into with retirement plans, which contain
    certain benefit responsive guarantees (i.e. liquidity guarantees of principal and previously
    accrued interest for benefits paid under the terms of the plan) with respect to portfolios of
    plan-owned assets not invested with the Company. The Company also offers investment
    advisory services and pension and retirement savings plan administrative services.

    The Company has one operating segment.

    C-10

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

      Recently Adopted Accounting Standards

    Accounting for Uncertainty in Income Taxes

    In June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB
    Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”), which
    creates a single model to address the accounting for the uncertainty in income tax
    positions recognized in a company’s financial statements. FIN 48 prescribes a
    recognition threshold and measurement criteria that must be satisfied to recognize a
    financial statement benefit of tax positions taken, or expected to be taken, on an income
    tax return. Additionally, FIN 48 provides guidance on derecognition, classification,
    interest and penalties, accounting in interim periods, disclosure, and transition.

    FIN 48 was adopted by the Company on January 1, 2007. As a result of implementing
    FIN 48, the Company recognized a cumulative effect of change in accounting principle of
    $2.9 as a reduction to January 1, 2007 Retained earnings (deficit).

    Accounting by Insurance Enterprises for Deferred Acquisition Costs in Connection with
    Modifications or Exchanges of Insurance Contracts

    In September 2005, the American Institute of Certified Public Accountants ("AICPA")
    issued Statement of Position ("SOP") 05-1, “Accounting by Insurance Enterprises for
    Deferred Acquisition Costs in Connection with Modifications or Exchanges of Insurance
    Contracts” (“SOP 05-1”), which states that when an internal replacement transaction
    results in a substantially changed contract, the unamortized deferred acquisition costs,
    unearned revenue liabilities, and deferred sales inducement assets, related to the replaced
    contract should not be deferred in connection with the new contract. Contract
    modifications that meet various conditions defined by SOP 05-1 and result in a new
    contract that is substantially unchanged from the replaced contract, however, should be
    accounted for as a continuation of the replaced contract.

    SOP 05-1 defines an internal replacement as a modification in product benefits, features,
    rights, or coverage that occurs by the exchange of a contract for a new contract, by
    amendment, endorsement, or rider, to a contract, or by the election of a feature or
    coverage within a contract. SOP 05-1 applies to internal replacements made primarily to
    contracts defined by FAS No. 60, “Accounting and Reporting by Insurance Enterprises”
    (“FAS No. 60”), as short-duration and long-duration insurance contracts, and by FAS No.
    97, “Accounting and Reporting by Insurance Enterprises for Certain Long-Duration
    Contracts and for Realized Gains and Losses from the Sale of Investments” (“FAS No.
    97”), as investment contracts.

    C-11

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

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

    Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans

    In September 2006, the FASB issued FAS No. 158, “Employers' Accounting for Defined
    Benefit Pension and Other Postretirement Plans - An Amendment of FASB Statements
    No. 87, 88, 106, and 132R” (“FAS No. 158”). FAS No. 158 requires an employer to:

    §      Recognize in the statement of financial position, an asset for a plan’s overfunded status or a liability for a plan’s underfunded status;
     
    §      Measure a plan’s assets and obligations that determine its funded status as of the end of the fiscal year; and
     
    §      Recognize changes in the funded status of a defined benefit postretirement plan in the year in which the changes occur, reporting such changes in comprehensive income.
     

      On December 31, 2006, the Company adopted the recognition and disclosure provisions
    of FAS No. 158. The effect of adopting FAS No. 158 on the Company’s financial
    condition at December 31, 2006 is included in the accompanying consolidated financial
    statements. FAS No. 158 did not have a significant effect on the Company’s financial
    condition at December 31, 2006. The provisions regarding the change in the
    measurement date of postretirement benefit plans are not applicable, as the Company
    already uses a measurement date of December 31 for its pension plans.

    The incremental effects of adopting the provisions of FAS No. 158 on the Company’s
    Consolidated Balance Sheets at December 31, 2006 was $(0.5) .

    Accounting for Certain Hybrid Financial Instruments

    In February 2006, the FASB issued FAS No. 155, “Accounting for Certain Hybrid
    Financial Instruments - an amendment of FASB Statements No. 133 and 140” (“FAS No.
    155”), which permits the application of fair value accounting to certain hybrid financial
    instruments in their entirety if they contain embedded derivatives that would otherwise
    require bifurcation under FAS No. 133, “Accounting for Derivative Instruments and
    Hedging Activities” (“FAS No. 133”). Under this approach, changes in fair value would
    be recognized currently in earnings. In addition, FAS No. 155 does the following:

    C-12

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

    §      Clarifies which interest-only strips and principal-only strips are not subject to derivative accounting under FAS No. 133;
     
    §      Requires that interests in securitized financial assets be analyzed to identify interests that are freestanding derivatives or that are hybrid instruments that contain embedded derivatives requiring bifurcation;
     
    §      Clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives; and
     
    §      Allows a qualifying special-purpose entity to hold derivative financial instruments that pertain to beneficial interests, other than another derivative financial instrument.
     

      FAS No. 155 was adopted by the Company on January 1, 2007, and is effective for all
    instruments acquired, issued, or subject to a remeasurement event, occurring on or after
    that date. The adoption of FAS No. 155 did not have a material effect on the Company’s
    financial position, results of operations, or cash flows.

    New Accounting Pronouncements

    Business Combinations

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

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

      FAS No. 141R also amends or eliminates various other authoritative literature.

    The provisions of FAS No. 141R are effective for fiscal years beginning on or after
    December 15, 2008 for all business combinations occurring on or after that date. As
    such, this standard will impact any Company acquisitions that occur on or after
    January 1, 2009.

    C-13

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

      The Fair Value Option for Financial Assets and Financial Liabilities

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

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

      FAS No. 159 is effective for fiscal years beginning after November 15, 2007. As of the
    effective date, the fair value option may be elected for eligible items that exist on that
    date. The effect of the first remeasurement to fair value shall be reported as a cumulative
    effect adjustment to the opening balance of Retained earnings (deficit). The Company
    will not be electing the fair value option for any eligible assets or liabilities in existence
    on January 1, 2008.

    Fair Value Measurements

    In September 2006, the FASB issued FAS No. 157, “Fair Value Measurements” (“FAS
    No. 157”). FAS No. 157 provides guidance for using fair value to measure assets and
    liabilities whenever other standards require (or permit) assets or liabilities to be measured
    at fair value. FAS No. 157 does not expand the use of fair value in any new
    circumstances.

    Under FAS No. 157, the FASB clarifies the principle that fair value should be based on
    the assumptions market participants would use when pricing the asset or liability. In
    support of this principle, FAS No. 157 establishes a fair value hierarchy that prioritizes
    the information used to develop such assumptions. The fair value hierarchy gives the
    highest priority to quoted prices in active markets and the lowest priority to unobservable
    data. FAS No. 157 also requires separate disclosure of fair value measurements by level
    within the hierarchy and expanded disclosure of the effect on earnings for items
    measured using unobservable data.

    The provisions of FAS No. 157 are effective for financial statements issued for fiscal
    years beginning after November 15, 2007. The Company is in the process of determining
    the impact of adoption of FAS No. 157.

    C-14

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

      Use of Estimates

    The preparation of financial statements in conformity with US GAAP requires
    management to make estimates and assumptions that affect the amounts reported in the
    financial statements and accompanying notes. Actual results could differ from reported
    results using those estimates.

    Reclassifications

    Certain reclassifications have been made to prior year financial information to conform to
    the current year classifications.

    Cash and Cash Equivalents

    Cash and cash equivalents include cash on hand, money market instruments, and other
    debt issues with a maturity of 90 days or less when purchased.

    Investments

    All of the Company’s fixed maturities and equity securities are currently designated as
    available-for-sale. Available-for-sale securities are reported at fair value and unrealized
    capital gains (losses) on these securities are recorded directly in Shareholder’s equity,
    after adjustment for related changes in experience-rated contract allocations, DAC,
    VOBA, and deferred income taxes.

    Other-Than-Temporary Impairments

    The Company analyzes the general account investments to determine whether there has
    been an other-than-temporary decline in fair value below the amortized cost basis.
    Management considers the length of time and the extent to which fair value has been less
    than amortized cost, the issuer’s financial condition and near-term prospects, future
    economic conditions and market forecasts, and the Company’s intent and ability to retain
    the investment for a period of time sufficient to allow for recovery in fair value. If it is
    probable that all amounts due according to the contractual terms of a debt security will
    not be collected, an other-than-temporary impairment is considered to have occurred.

    In addition, the Company invests in structured securities that meet the criteria of the
    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” (“EITF 99-20”). Under EITF 99-20, a further determination of the required
    impairment is based on credit risk and the possibility of significant prepayment risk that
    restricts the Company’s ability to recover the investment. An impairment is recognized if
    the fair value of the security is less than amortized cost and there has been adverse
    change in cash flow since the last remeasurement date.

    C-15

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

      When a decline in fair value is determined to be other-than-temporary, the individual
    security is written down to fair value, and the loss is accounted for as a change in Net
    realized capital gains (losses).

    Experience-Rated Products

    Included in available-for-sale securities are investments that support experience-rated
    products. Experience-rated products are products where the customer, not the Company,
    assumes investment (including realized capital gains and losses) and other risks, subject
    to, among other things, minimum principal and interest guarantees. Unamortized realized
    capital gains (losses) on the sale of and unrealized capital gains (losses) on investments
    supporting these products are included in Future policy benefits and claims reserves on
    the Consolidated Balance Sheets. Net realized capital gains (losses) on all other
    investments are reflected in the Consolidated Statements of Operations. Unrealized
    capital gains (losses) on all other investments are reflected in Accumulated other
    comprehensive income (loss) in Shareholder’s equity, net of DAC and VOBA
    adjustments for unrealized capital gains (losses), and related income taxes.

    Purchases and Sales

    Purchases and sales of fixed maturities and equity securities, excluding private
    placements, are recorded on the trade date. Purchases and sales of private placements
    and mortgage loans are recorded on the closing date.

    Valuation

    The fair value for fixed maturities is largely determined by one of two pricing methods:
    published price quotations or valuation techniques with market inputs. Security pricing is
    applied using a hierarchy or “waterfall” approach, whereby prices are first sought from
    published price quotations, including independent pricing services or broker-dealer
    quotations. Published price quotations may be unavailable or deemed unreliable due to a
    limited market for securities that are rarely traded or are traded only in privately
    negotiated transactions. As such, fair values for the remaining securities, consisting
    primarily of privately placed bonds, are then determined using risk-free interest rates,
    current corporate spreads, the credit quality of the issuer, and cash flow characteristics of
    the security.

    The fair values for actively traded equity securities are based on quoted market prices.
    For equity securities not actively traded, estimated fair values are based upon values of
    issues of comparable yield and quality or conversion value, where applicable.

    C-16

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

      Mortgage loans on real estate are reported at amortized cost, less impairment write-
    downs. If the value of any mortgage loan is determined to be impaired (i.e., when it is
    probable the Company will be unable to collect all amounts due according to the
    contractual terms of the loan agreement), the carrying value of the mortgage loan is
    reduced to the present value of expected cash flows from the loan, discounted at the
    loan’s effective interest rate, or fair value of the collateral. If the loan is in foreclosure,
    the carrying value is reduced to the fair value of the underlying collateral, net of
    estimated costs to obtain and sell. The carrying value of the impaired loans is reduced by
    establishing a permanent write-down recorded in Net realized capital gains (losses). At
    December 31, 2007 and 2006, the Company had no allowance for mortgage loan credit
    losses. The properties collateralizing mortgage loans are geographically dispersed
    throughout the United States, with the largest concentration of and 16.8% and 17.7% of
    properties in California at December 31, 2007 and 2006, respectively.

    Policy loans are carried at unpaid principal balances.

    Short-term investments, consisting primarily of money market instruments and other
    fixed maturity issues purchased with an original maturity of 91 days to one year, are
    considered available-for-sale and are carried at fair value.

    Derivative instruments are reported at fair value primarily using the Company’s
    derivative accounting system. The system uses key financial data, such as yield curves,
    exchange rates, Standard & Poor’s (“S&P”) 500 Index prices, and London Inter Bank
    Offered Rates (“LIBOR”), which are obtained from third party sources and uploaded into
    the system. For those derivatives that are unable to be valued by the accounting system,
    the Company typically utilizes values established by third party brokers. Embedded
    derivative instruments are reported at fair value based upon internally established
    valuations that are consistent with external valuation models or market quotations.

    Repurchase Agreements

    The Company engages in dollar repurchase agreements (“dollar rolls”) and repurchase
    agreements to increase the return on investments and improve liquidity. These
    transactions involve a sale of securities and an agreement to repurchase substantially the
    same securities as those sold. Company policies require a minimum of 95% of the fair
    value of securities pledged under dollar rolls and repurchase agreement transactions to be
    maintained as collateral. Cash collateral received is invested in fixed maturities, and the
    carrying value of the securities pledged in dollar rolls and repurchase agreement
    transactions is included in Securities pledged on the Consolidated Balance Sheets. The
    repurchase obligation related to dollar rolls and repurchase agreements is included in
    Borrowed money on the Consolidated Balance Sheets.

    C-17

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

      The Company also enters into reverse repurchase agreements. These transactions involve
    a purchase of securities and an agreement to sell substantially the same securities as those
    purchased. Company policies require a minimum of 102% of the fair value of securities
    pledged under reverse repurchase agreements to be pledged as collateral. Reverse
    repurchase agreements are included in Cash and cash equivalents on the Consolidated
    Balance Sheets.

    Securities Lending

    The Company engages in securities lending whereby certain securities from its portfolio
    are loaned to other institutions for short periods of time. Initial collateral, primarily cash,
    is required at a rate of 102% of the market value of the loaned domestic securities. The
    collateral is deposited by the borrower with a lending agent, and retained and invested by
    the lending agent according to the Company’s guidelines to generate additional income.
    The market value of the loaned securities is monitored on a daily basis with additional
    collateral obtained or refunded as the market value of the loaned securities fluctuates.

    Derivatives

    The Company’s use of derivatives is limited mainly to hedging purposes to reduce the
    Company’s exposure to cash flow variability of assets and liabilities, interest rate risk,
    credit risk, and market risk. Generally, derivatives are not accounted for using hedge
    accounting treatment under FAS No. 133, as the Company has not historically sought
    hedge accounting treatment.

    The Company enters into interest rate, equity market, credit default, and currency
    contracts, including swaps, caps, floors, and options, to reduce and manage risks
    associated with changes in value, yield, price, cash flow, or exchange rates of assets or
    liabilities held or intended to be held, or to assume or reduce credit exposure associated
    with a referenced asset, index, or pool. The Company also utilizes options and futures on
    equity indices to reduce and manage risks associated with its annuity products. Open
    derivative contracts are reported as either Other investments or Other liabilities, as
    appropriate, on the Consolidated Balance Sheets. Changes in the fair value of such
    derivatives are recorded in Net realized capital gains (losses) in the Consolidated
    Statements of Operations.

    The Company also has investments in certain fixed maturity instruments, and has issued
    certain retail annuity products, that contain embedded derivatives whose market value is
    at least partially determined by, among other things, levels of or changes in domestic
    and/or foreign interest rates (short- or long-term), exchange rates, prepayment rates,
    equity markets, or credit ratings/spreads.

    Embedded derivatives within fixed maturity instruments are included in Fixed maturities,
    available-for-sale, on the Consolidated Balance Sheets, and changes in fair value are
    recorded in Net realized capital gains (losses) in the Consolidated Statements of
    Operations.

    C-18

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

      Embedded derivatives within retail annuity products are included in Future policy
    benefits and claims reserves on the Consolidated Balance Sheets, and changes in the fair
    value are recorded in Interest credited and benefits to contractowners in the Consolidated
    Statements of Operations.

    Deferred Policy Acquisition Costs and Value of Business Acquired

    General

    DAC represents policy acquisition costs that have been capitalized and are subject to
    amortization. Such costs consist principally of certain commissions, underwriting,
    contract issuance, and certain agency expenses, related to the production of new and
    renewal business.

    VOBA represents the outstanding value of in force business capitalized in purchase
    accounting when the Company was acquired and is subject to amortization. The value is
    based on the present value of estimated net cash flows embedded in the Company’s
    contracts.

    FAS No. 97 applies to universal life and investment-type products, such as fixed and
    variable deferred annuities. Under FAS No. 97, DAC and VOBA are amortized, with
    interest, over the life of the related contracts in relation to the present value of estimated
    future gross profits from investment, mortality, and expense margins, plus surrender
    charges.

    Internal Replacements

    Contractowners may periodically exchange one contract for another, or make
    modifications to an existing contract. Beginning January 1, 2007, these transactions are
    identified as internal replacements and are accounted for in accordance with Statement of
    Position 05-1.

    Internal replacements that are determined to result in substantially unchanged contracts
    are accounted for as continuations of the replaced contracts. Any costs associated with
    the issuance of the new contracts are considered maintenance costs and expensed as
    incurred. Unamortized DAC and VOBA related to the replaced contracts continue to be
    deferred and amortized in connection with the new contracts. For deferred annuities, the
    estimated future gross profits of the new contracts are treated as revisions to the estimated
    future gross profits of the replaced contracts in the determination of amortization.

    Internal replacements that are determined to result in contracts that are substantially
    changed are accounted for as extinguishments of the replaced contracts, and any
    unamortized DAC and VOBA related to the replaced contracts are written off to Net
    amortization of deferred policy acquisition costs and value of business acquired in the
    Consolidated Statements of Operations.

    C-19

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

      As a result of implementing SOP 05-1, the Company recognized a cumulative effect of
    change in accounting principle of $43.4, before tax, or $28.2, net of $15.2 of income
    taxes, as a reduction to January 1, 2007 Retained earnings (deficit).

    Unlocking

    Changes in assumptions can have a significant impact on DAC and VOBA balances and
    amortization rates. Several assumptions are considered significant in the estimation of
    future gross profits associated with variable deferred annuity products. One of the most
    significant assumptions involved in the estimation of future gross profits is the assumed
    return associated with the variable account performance. To reflect the volatility in the
    equity markets, this assumption involves a combination of near-term expectations and
    long-term assumptions regarding market performance. The overall return on the variable
    account is dependent on multiple factors, including the relative mix of the underlying
    sub-accounts among bond funds and equity funds, as well as equity sector weightings.
    Other significant assumptions include surrender and lapse rates, estimated interest spread,
    and estimated mortality.

    Due to the relative size and sensitivity to minor changes in underlying assumptions of
    DAC and VOBA balances, the Company performs quarterly and annual analyses of DAC
    and VOBA. The DAC and VOBA balances are evaluated for recoverability.

    At each evaluation date, actual historical gross profits are reflected, and estimated future
    gross profits and related assumptions are evaluated for continued reasonableness. Any
    adjustment in estimated future gross profits requires that the amortization rate be revised
    (“unlocking”), retroactively to the date of the policy or contract issuance. The
    cumulative unlocking adjustment is recognized as a component of current period
    amortization. In general, sustained increases in investment, mortality, and expense
    margins, and thus estimated future gross profits, lower the rate of amortization.
    Sustained decreases in investment, mortality, and expense margins, and thus estimated
    future gross profits, however, increase the rate of amortization.

    Property and Equipment

    Property and equipment are carried at cost, less accumulated depreciation. Expenditures
    for replacements and major improvements are capitalized; maintenance and repair
    expenditures are expensed as incurred.

    At December 31, 2007 and 2006, total accumulated depreciation and amortization was
    $120.7 and $107.5, respectively. Depreciation on property and equipment is provided on
    a straight-line basis over the estimated useful lives of the assets with the exception of
    land and artwork, which are not depreciated or amortized. The Company’s property and
    equipment are depreciated using the following estimated useful lives.

    C-20

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

        Estimated Useful Lives 
    Buildings    40 years 
    Furniture and fixtures    5 years 
    Leasehold improvements    10 years, or the life of the lease, whichever is shorter 
    Equipment    3 years 
    Software    3 years 

      Reserves

    The Company records as liabilities reserves to meet the Company’s future obligations
    under its variable annuity and fixed annuity products.

    Future policy benefits and claims reserves include reserves for deferred annuities and
    immediate annuities with and without life contingent payouts.

    Reserves for individual and group deferred annuity investment contracts and individual
    immediate annuities without life contingent payouts are equal to cumulative deposits, less
    charges and withdrawals, plus credited interest thereon, net of adjustments for investment
    experience that the Company is entitled to reflect in future credited interest. Reserves
    interest rates vary by product and ranged from 1.6% to 7.8% for the years 2007, 2006,
    and 2005. Certain reserves also include unrealized gains and losses related to
    investments and unamortized realized gains and losses on investments for experience-
    rated contracts. Reserves on experienced-rated contracts reflect the rights of
    contractowners, plan participants, and the Company. Reserves for group immediate
    annuities without life contingent payouts are equal to the discount value of the payment at
    the implied break-even rate.

    Reserves for individual immediate annuities with life contingent payout benefits are
    computed on the basis of assumed interest discount rates, mortality, and expenses,
    including a margin for adverse deviations. Such assumptions generally vary by annuity
    type plan, year of issue, and policy duration. For the years 2007, 2006, and 2005, reserve
    interest rates ranged from 5.1% to 5.9% .

    The Company has a significant concentration of reinsurance arising from the disposition
    of its individual life insurance business. In 1998, the Company entered into an indemnity
    reinsurance arrangement with certain subsidiaries of Lincoln National Corporation
    (“Lincoln”). Effective March 1, 2007, the reinsurance agreements were assigned to a
    single subsidiary of Lincoln, and that subsidiary established a trust to secure its
    obligations to the Company under the reinsurance transaction. The Company includes an
    amount in Reinsurance recoverable on the Consolidated Balance Sheets, which equals the
    Company’s total individual life reserves. Individual life reserves are included in Future
    policy benefits and claims reserves on the Consolidated Balance Sheets.

    Unpaid claims and claim expenses for all lines of insurance include benefits for reported
    losses and estimates of benefits for losses incurred but not reported.

    C-21

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

      Certain variable annuities offer guaranteed minimum death benefits (“GMDB”). The
    GMDB is accrued in the event the contractowner account value at death is below the
    guaranteed value and is included in reserves.

    Revenue Recognition

    For most annuity contracts, charges assessed against contractowner funds for the cost of
    insurance, surrenders, expenses, and other fees are recorded as revenue as charges are
    assessed. Other amounts received for these contracts are reflected as deposits and are not
    recorded as premiums or revenue. When annuity payments with life contingencies begin
    under contracts that were initially investment contracts, the accumulated balance in the
    account is treated as a single premium for the purchase of an annuity and reflected in both
    Premiums and Interest credited and other benefits to contractowners in the Consolidated
    Statements of Operations.

    Premiums on the Consolidated Statements of Operations primarily represent amounts
    received for immediate annuities with life contingent payouts.

    Separate Accounts

    Separate account assets and liabilities generally represent funds maintained to meet
    specific investment objectives of contractowners who bear the investment risk, subject, in
    limited cases, to certain minimum guarantees. Investment income and investment gains
    and losses generally accrue directly to such contractowners. The assets of each account
    are legally segregated and are not subject to claims that arise out of any other business of
    the Company or its affiliates.

    Separate account assets supporting variable options under variable annuity contracts are
    invested, as designated by the contractowner or participant (who bears the investment
    risk subject, in limited cases, to minimum guaranteed rates) under a contract, in shares of
    mutual funds that are managed by the Company or its affiliates, or in other selected
    mutual funds not managed by the Company or its affiliates.

    Separate account assets and liabilities are carried at fair value and shown as separate
    captions in the Consolidated Balance Sheets. Deposits, investment income, and net
    realized and unrealized capital gains (losses) of the separate accounts, however, are not
    reflected in the Consolidated Statements of Operations (with the exception of realized
    and unrealized capital gains (losses) on the assets supporting the guaranteed interest
    option). The Consolidated Statements of Cash Flows do not reflect investment activity of
    the separate accounts.

    C-22

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

      Assets and liabilities of separate account arrangements that do not meet the criteria for
    separate presentation in the Consolidated Balance Sheets (primarily the guaranteed
    interest option), and revenue and expenses related to such arrangements, are consolidated
    in the financial statements with the general account. At December 31, 2007 and 2006,
    unrealized capital losses of $11.0 and $7.3, respectively, after taxes, on assets supporting
    a guaranteed interest option are reflected in Shareholder’s equity.

    Reinsurance

    The Company utilizes indemnity reinsurance agreements to reduce its exposure to losses

    from GMDBs in its annuity insurance business.

    Reinsurance permits recovery of a

    portion of losses from reinsurers, although it does not discharge the Company’s primary
    liability as the direct insurer of the risks. The Company evaluates the financial strength
    of potential reinsurers and continually monitors the financial strength and credit ratings of
    its reinsurers. Only those reinsurance recoverable balances deemed probable of recovery
    are reflected as assets on the Company’s Consolidated Balance Sheets.

    Of the Reinsurance recoverable on the Consolidated Balance Sheets, $2.6 billion and
    $2.7 billion at December 31, 2007 and 2006, respectively, is related to the reinsurance
    recoverable from certain subsidiaries of Lincoln arising from the disposal of the
    Company’s individual life insurance business in 1998 (see the Reinsurance footnote).
    Effective March 1, 2007, the reinsurance agreements were assigned to a single subsidiary
    of Lincoln, and that subsidiary established a trust to secure its obligations to the
    Company under the reinsurance transaction.

    Income Taxes

    The Company is taxed at regular corporate rates after adjusting income reported for
    financial statement purposes for certain items. Deferred income tax expenses/benefits
    result from changes during the year in cumulative temporary differences between the tax
    basis and book basis of assets and liabilities.

    C-23

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

    2.    Investments                     
     
        Fixed Maturities and Equity Securities                 
     
        Fixed maturities and equity securities, available-for-sale, were as follows as of 
        December 31, 2007.                     
     
                    Gross    Gross     
                    Unrealized    Unrealized     
                Amortized    Capital    Capital               Fair 
                     Cost    Gains    Losses               Value 
           
    		 
    		 
    		 
    		 
        Fixed maturities:                     
       
    		 
    		 
    		 
    		 
    		 
           U.S. Treasuries    $ 11.2    $ 0.7    $ -    $ 11.9 
           U.S. government agencies and authorities        0.6    -    -    0.6 
       
    		 
    		 
    		 
    		 
    		 
           State, municipalities, and political subdivisions        66.1    0.1    2.2    64.0 
     
           U.S. corporate securities:                     
       
    		 
    		 
    		 
    		 
    		 
                 Public utilities        1,049.1    10.8    15.6    1,044.3 
                 Other corporate securities        3,855.1    46.1    65.2    3,836.0 
       
    		 
    		 
    		 
    		 
    		 
           Total U.S. corporate securities        4,904.2    56.9    80.8    4,880.3 
           
    		 
    		 
    		 
    		 
     
           Foreign securities(1):                     
       
    		 
    		 
    		 
    		 
    		 
                 Government        379.3    17.1    6.6    389.8 
                 Other        1,955.8    29.9    40.3    1,945.4 
       
    		 
    		 
    		 
    		 
    		 
           Total foreign securities        2,335.1    47.0    46.9    2,335.2 
       
    		 
    		 
    		 
    		 
    		 
     
           Residential mortgage-backed securities        4,146.1    101.8    63.5    4,184.4 
           Commercial mortgage-backed securities        1,927.3    10.7    52.3    1,885.7 
       
    		 
    		 
    		 
    		 
    		 
           Other asset-backed securities        924.3    5.5    41.5    888.3 
       
    		 
    		 
    		 
    		 
    		 
     
           Total fixed maturities, including                     
       
    		 
    		 
    		 
    		 
    		 
                 securities pledged        14,314.9    222.7    287.2    14,250.4 
           Less: securities pledged        940.2    8.0    14.1    934.1 
       
    		 
    		 
    		 
    		 
    		 
        Total fixed maturities        13,374.7    214.7    273.1    13,316.3 
        Equity securities        440.1    13.8    7.5    446.4 
       
    		 
    		 
    		 
    		 
    		 
     
        Total investments, available-for-sale    $ 13,814.8    $ 228.5    $ 280.6    $ 13,762.7 
           
    		 
    		 
    		 
     
        (1) Primarily U.S. dollar denominated.                     

    C-24

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

    Fixed maturities and equity securities, available-for-sale, were as follows as of
    December 31, 2006.

            Gross    Gross     
            Unrealized    Unrealized     
        Amortized    Capital    Capital               Fair 
                   Cost    Gains    Losses               Value 
       
    		 
    		 
    		 
    Fixed maturities:                 
    		 
    		 
    		 
    		 
       U.S. Treasuries    $ 25.5    $ 0.1    $ -    $ 25.6 
       U.S. government agencies and authorities    276.6    3.6    3.3    276.9 
    		 
    		 
    		 
    		 
       State, municipalities, and political subdivisions    45.4    1.1    0.1    46.4 
     
       U.S. corporate securities:                 
    		 
    		 
    		 
    		 
             Public utilities    1,111.4    9.1    15.7    1,104.8 
             Other corporate securities    4,281.8    47.6    62.3    4,267.1 
    		 
    		 
    		 
    		 
       Total U.S. corporate securities    5,393.2    56.7    78.0    5,371.9 
       
    		 
    		 
    		 
     
       Foreign securities(1):                 
    		 
    		 
    		 
    		 
             Government    466.0    31.8    3.5    494.3 
             Other    2,000.4    28.3    33.3    1,995.4 
    		 
    		 
    		 
    		 
       Total foreign securities    2,466.4    60.1    36.8    2,489.7 
    		 
    		 
    		 
    		 
     
       Residential mortgage-backed securities    4,529.8    52.4    82.2    4,500.0 
       Commercial mortgage-backed securities    2,261.3    14.0    28.6    2,246.7 
    		 
    		 
    		 
    		 
       Other asset-backed securities    1,258.1    6.5    10.1    1,254.5 
       
    		 
    		 
    		 
     
       Total fixed maturities, including                 
             securities pledged    16,256.3    194.5    239.1    16,211.7 
    		 
    		 
    		 
    		 
       Less: securities pledged    1,106.2    6.4    13.1    1,099.5 
       
    		 
    		 
    		 
    Total fixed maturities    15,150.1    188.1    226.0    15,112.2 
    		 
    		 
    		 
    		 
    Equity securities    233.6    20.4    2.3    251.7 
    		 
    		 
    		 
    		 
     
    Total investments, available-for-sale    $ 15,383.7    $ 208.5    $ 228.3    $ 15,363.9 
       
    		 
    		 
    		 

      (1) Primarily U.S. dollar denominated.

    At December 31, 2007 and 2006, net unrealized losses were $58.2 and $26.5,
    respectively, on total fixed maturities, including securities pledged to creditors, and
    equity securities. At December 31, 2007 and 2006, $16.4 and $52.4, respectively, of net
    unrealized capital gains (losses) was related to experience-rated contracts and was not
    reflected in Shareholder’s equity but in Future policy benefits and claim reserves.

    C-25

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

    The amortized cost and fair value of total fixed maturities as of December 31, 2007, are

    shown below by contractual maturity. Actual maturities may differ from contractual 
    maturities as securities may be restructured, called, or prepaid.     
     
        Amortized    Fair 
        Cost    Value 
       
    		 
    Due to mature:         
    		 
    		 
       One year or less    $ 363.4    $ 363.6 
       After one year through five years    2,440.7    2,451.6 
    		 
    		 
       After five years through ten years    2,779.9    2,761.2 
       After ten years    1,733.2    1,715.6 
    		 
    		 
       Mortgage-backed securities    6,073.4    6,070.1 
       Other asset-backed securities    924.3    888.3 
    		 
    		 
    Less: securities pledged    940.2    934.1 
       
    		 
    Fixed maturities, excluding securities pledged    $ 13,374.7    $ 13,316.3 
       
    		 

      The Company did not have any investments in a single issuer, other than obligations of
    the U.S. government and government agencies, with a carrying value in excess of 10% of
    the Company’s Shareholder’s equity at December 31, 2007 or 2006.

    At December 31, 2007 and 2006, fixed maturities with fair values of $13.9 and $11.2,
    respectively, were on deposit as required by regulatory authorities.

    The Company invests in various categories of collateralized mortgage obligations
    (“CMOs”) that are subject to different degrees of risk from changes in interest rates and,
    for CMOs that are not agency-backed, defaults. The principal risks inherent in holding
    CMOs are prepayment and extension risks related to dramatic decreases and increases in
    interest rates resulting in the prepayment of principal from the underlying mortgages,
    either earlier or later than originally anticipated. At December 31, 2007 and 2006,
    approximately 11.3% and 8.4%, respectively, of the Company’s CMO holdings were
    invested in those types of CMOs which are subject to more prepayment and extension
    risk than traditional CMOs, such as interest-only or principal-only strips.

    Equity Securities

    Equity securities, available-for-sale, included investments with fair values of $279.5 and
    $219.5 in ING proprietary funds as of December 31, 2007 and 2006, respectively.

    Repurchase Agreements

    The Company engages in dollar repurchase agreements (“dollar rolls”) and repurchase
    agreements. At December 31, 2007 and 2006, the carrying value of the securities
    pledged in dollar rolls and repurchase agreement transactions was $757.6 and $832.4,
    respectively. The repurchase obligation related to dollar rolls and repurchase agreements
    totaled $734.8 and $833.2 at December 31, 2007 and 2006, respectively.

    C-26

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

      The Company also engages in reverse repurchase agreements. At December 31, 2007
    and 2006, the Company did not have any reverse repurchase agreements.

    The primary risk associated with short-term collateralized borrowings is that the
    counterparty will be unable to perform under the terms of the contract. The Company’s
    exposure is limited to the excess of the net replacement cost of the securities over the
    value of the short-term investments, an amount that was immaterial at December 31,
    2007 and 2006. The Company believes the counterparties to the dollar rolls, repurchase,
    and reverse repurchase agreements are financially responsible and that the counterparty
    risk is minimal.

    Unrealized Capital Losses

    Unrealized capital losses in fixed maturities at December 31, 2007 and 2006, were
    primarily related to interest rate movement or spread widening to mortgage and other
    asset-backed securities. Mortgage and other asset-backed securities include U.S.
    government-backed securities, principal protected securities, and structured securities,
    which did not have an adverse change in cash flows. The following table summarizes the
    unrealized capital losses by duration and reason, along with the fair value of fixed
    maturities, including securities pledged, in unrealized capital loss positions at
    December 31, 2007 and 2006.

        Less than    More than    More than     
        Six    Six Months    Twelve     
        Months    and less than    Months    Total 
        Below    Twelve Months    Below    Unrealized 
        Amortized    Below Amortized    Amortized    Capital 
    2007    Cost    Cost    Costs    Loss 
    		 
    		 
    		 
    		 
    Interest rate or spread widening    $ 18.8    $ 62.3    $ 48.8    $ 129.9 
    Mortgage and other                 
       asset-backed securities    30.1    69.0    58.2    157.3 
    		 
    		 
    		 
    		 
    Total unrealized capital losses    $ 48.9    $ 131.3    $ 107.0    $ 287.2 
       
    		 
    		 
    		 
    Fair value    $ 2,256.2    $ 2,217.7    $ 3,612.1    $ 8,086.0 
       
    		 
    		 
    		 

    C-27

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

        Less than    More than    More than     
        Six    Six Months    Twelve     
        Months    and less than    Months    Total 
        Below    Twelve Months    Below    Unrealized 
        Amortized    Below Amortized    Amortized    Capital 
    2006    Cost    Cost    Costs    Loss 
    		 
    		 
    		 
    		 
    Interest rate or spread widening    $ 10.8    $ 4.8    $ 102.6    $ 118.2 
    Mortgage and other                 
       asset-backed securities    11.0    2.5    107.4    120.9 
    		 
    		 
    		 
    		 
    Total unrealized capital losses    $ 21.8    $ 7.3    $ 210.0    $ 239.1 
       
    		 
    		 
    		 
    Fair value    $ 2,447.4    $ 501.5    $ 6,726.2    $ 9,675.1 
       
    		 
    		 
    		 

      Of the unrealized capital losses aged more than twelve months, the average market value
    of the related fixed maturities is 96.9% of the average book value. In addition, this
    category includes 761 securities, which have an average quality rating of AA. No other-
    than-temporary impairment loss was considered necessary for these fixed maturities as of
    December 31, 2007.

    Other-Than-Temporary Impairments

    The following table identifies the Company’s other-than-temporary impairments by type
    for the years ended December 31, 2007, 2006, and 2005.

    Limited partnerships

    U.      S. Treasuries
     
    U.      S. corporate
     

    Foreign

    2007        2006        2005     
    		 
    		 
    		 
    		 
    		 
        No. of        No. of        No. of 
    Impairment    Securities    Impairment    Securities    Impairment    Securities 
    		 
    		 
    		 
    		 
    		 
    $ 3.0    1    $ -    -    $ -    - 
    -    -    6.4    4    0.1    2 
    		 
    		 
    		 
    		 
    		 
    36.3    113    24.4    67    3.9    15 
    19.1    54    4.2    10    0.3    1 
    		 
    		 
    		 
    		 
    		 

    Residential mortgage-backed    7.1    30    16.6    76    44.7    82 
    Other asset-backed    10.5    21    7.0    1    -    - 
    		 
    		 
    		 
    		 
    		 
    		 
    Equity securities    -    -    0.1    3    -    - 
       
    		 
    		 
    		 
    		 
    		 
     
    Total    $ 76.0    219    $ 58.7    161    $ 49.0    100 
       
    		 
    		 
    		 
    		 
    		 

    The above schedule includes $16.4, $16.1, and $43.3 for the years ended December 31,
    2007, 2006, and 2005, respectively, in other-than-temporary write-downs related to the
    analysis of credit-risk and the possibility of significant prepayment risk. The remaining
    $59.6, $42.6, and $5.7 in write-downs for the years ended December 31, 2007, 2006, and
    2005, respectively, are related to investments that the Company does not have the intent
    to retain for a period of time sufficient to allow for recovery in fair value. The following
    table summarizes these write-downs recognized by type for the years ended
    December 31, 2007, 2006, and 2005.

    C-28

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

                                   2007        2006                                   2005     
       
    		 
    		 
    		 
    		 
    		 
            No. of        No. of        No. of 
             Impairment    Securities    Impairment    Securities         Impairment    Securities 
    		 
    		 
    		 
    		 
    		 
    		 
    U.S. Treasuries    $ -    -    $ 6.4    4    $ 0.1    2 
    U.S. corporate                       31.6    102    24.4    67                           2.3    13 
    		 
    		 
    		 
    		 
    		 
    		 

    Foreign    19.1    54    4.2    10    -    - 
    Residential mortgage-backed    2.6    2    0.6    1    3.3    2 
    		 
    		 
    		 
    		 
    		 
    		 
    Other asset-backed    6.3    16    7.0    1    -    - 
       
    		 
    		 
    		 
    		 
    		 
    Total    $ 59.6    174    $ 42.6    83    $ 5.7    17 
       
    		 
    		 
    		 
    		 
    		 

      The remaining fair value of the fixed maturities with other-than-temporary impairments
    at December 31, 2007, 2006, and 2005 was $1,210.8, $704.4, and $475.0, respectively.

    The Company may sell securities during the period in which fair value has declined
    below amortized cost for fixed maturities or cost for equity securities. In certain
    situations new factors, including changes in the business environment, can change the
    Company’s previous intent to continue holding a security.

    Net Investment Income

    Sources of Net investment income were as follows for the years ended December 31,
    2007, 2006, and 2005.

    Fixed maturities, available-for-sale
    Equity securities, available-for-sale
    Mortgage loans on real estate
    Policy loans
    Short-term investments and cash equivalents
    Other
    Gross investment income
    Less: investment expenses
    Net investment income

    2007    2006    2005 
    		 
    		 
    $ 895.5    $ 969.0    $ 978.9 
    38.5    10.5    9.7 
    		 
    		 
    118.5    93.6    73.0 
    14.1    13.2    30.0 
    		 
    		 
    2.2    2.4    2.7 
    88.3    44.5    38.7 
    		 
    		 
    1,157.1    1,133.2    1,133.0 
    102.4    103.5    95.9 
    		 
    		 
    $ 1,054.7    $ 1,029.7    $ 1,037.1 
    		 
    		 

    Net Realized Capital Gains (Losses)

    Net realized capital gains (losses) are comprised of the difference between the amortized
    cost of investments and proceeds from sale and redemption, as well as losses incurred
    due to other-than-temporary impairment of investments and changes in fair value of
    derivatives. The cost of the investments on disposal is determined based on specific
    identification of securities. Net realized capital gains (losses) on investments were as
    follows for the years ended December 31, 2007, 2006, and 2005.

    C-29

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

        2007                   2006                   2005     
    		 
    		 
    		 
    		 
    Fixed maturities, available-for-sale    $ (50.3)    $ (67.0)    $ 1.0 
    Equity securities, available-for-sale    6.4    9.3        12.4 
    		 
    		 
    		 
    		 
    Derivatives    (123.0)    (3.9)        17.9 
    Other    (2.6)    -        (0.3) 
    		 
    		 
    		 
    		 
    Less: allocation to experience-rated contracts    161.3    (64.6)        9.0 
       
    		 
    		 
    		 
    Net realized capital (loss) gains    $ (8.2)    $ 3.0    $ 22.0 
    		 
    		 
    		 
    After-tax net realized capital (loss) gains    $ (5.3)    $ 2.0    $ 14.3 
       
    		 
    		 

      The increase in Net realized capital losses for the year ended December 31, 2007, was
    primarily due to realized losses on derivatives, primarily related to losses on interest rate
    swaps and widening of credit spreads.

    Net realized capital gains (losses) allocated to experience-rated contracts were deducted
    from Net realized capital gains (losses) and an offsetting amount was reflected in Future
    policy benefits and claim reserves on the Consolidated Balance Sheets. Net unamortized
    realized capital gains allocated to experienced-rated contractowners were $53.8, $164.5,
    $240.3, at December 31, 2007, 2006, and 2005, respectively.

    Proceeds from the sale of fixed maturities and equity securities, available-for-sale, and
    the related gross gains and losses, excluding those related to experience-related contracts,
    were as follows for the years ended December 31, 2007, 2006, and 2005.

        2007    2006    2005 
    		 
    		 
    		 
    Proceeds on sales    $ 5,738.8    $ 6,481.2    $ 10,062.3 
    Gross gains    66.4    109.0    161.1 
    		 
    		 
    		 
    Gross losses    (101.2)    110.9    93.9 

    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”). FAS No. 107
    requires disclosure of fair value information about financial instruments, whether or not
    recognized in the balance sheet, for which it is practicable to estimate that value. In cases
    where quoted market prices are not available, fair values are based on estimates using
    present value or other valuation techniques. Those techniques are significantly affected
    by the assumptions used, including the discount rate and estimates of future cash flows.
    In that regard, the derived fair value estimates, in many cases, could not be realized in
    immediate settlement of the instrument.

    C-30

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

      FAS No. 107 excludes certain financial instruments, including insurance contracts, and
    all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate
    fair value amounts presented do not represent the underlying value of the Company.

    The following valuation methods and assumptions were used by the Company in
    estimating the fair value of the following financial instruments:

    Fixed maturities, available-for-sale: The fair values for the actively traded marketable
    bonds are determined based upon the quoted market prices or dealer quotes. The fair
    values for marketable bonds without an active market are obtained through several
    commercial pricing services which provide the estimated fair values. Fair values of
    privately placed bonds are determined using a matrix-based pricing model. The model
    considers the current level of risk-free interest rates, current corporate spreads, the credit
    quality of the issuer, and cash flow characteristics of the security. Also considered are
    factors such as the net worth of the borrower, the value of collateral, the capital structure
    of the borrower, the presence of guarantees, and the Company’s evaluation of the
    borrower's ability to compete in their relevant market. Using this data, the model
    generates estimated market values which the Company considers reflective of the fair
    value of each privately placed bond.

    Equity securities, available-for-sale: Fair values of these securities are based upon quoted
    market price. For equity securities not actively traded, estimated fair values are based
    upon values of issues of comparable yield and quality or conversion price, where
    applicable.

    Mortgage loans on real estate: The fair values for mortgage loans on real estate are
    estimated using discounted cash flow analyses and rates currently being offered in the
    marketplace for similar loans to borrowers with similar credit ratings. Loans with similar
    characteristics are aggregated for purposes of the calculations.

    Cash and cash equivalents, Short-term investments under securities loan agreement, and
    Policy loans: The carrying amounts for these assets approximate the assets’ fair values.

    Assets held in separate accounts: Assets held in separate accounts are reported at the
    quoted fair values of the individual securities in the separate accounts.

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

    With a fixed maturity: Fair value is estimated by discounting cash flows at interest
    rates currently being offered by, or available to, the Company for similar contracts.

    Without a fixed maturity: Fair value is estimated as the amount payable to the
    contractowner upon demand. However, the Company has the right under such
    contracts to delay payment of withdrawals, which may ultimately result in paying an
    amount different than that determined to be payable on demand.

    C-31

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

      Other financial instruments reported as assets and liabilities: The carrying amounts for
    these financial instruments (primarily derivatives and limited partnerships) approximate
    the fair values of the assets and liabilities. Derivatives are carried at fair value, which is
    determined using the Company’s derivative accounting system in conjunction with key
    financial data from third party sources or through values established by third party
    brokers, on the Consolidated Balance Sheets.

    The carrying values and estimated fair values of certain of the Company’s financial
    instruments were as follows at December 31, 2007 and 2006.

            2007        2006 
       
    		 
    		 
    		 
        Carrying                   Fair    Carrying    Fair 
        Value    Value    Value    Value 
       
    		 
    		 
    		 
    Assets:                 
    		 
    		 
    		 
    		 
       Fixed maturities, available-for-sale,                 
    		 
    		 
    		 
    		 
             including securities pledged    $ 14,250.4    $ 14,250.4    $ 16,211.7    $ 16,211.7 
       Equity securities, available-for-sale    446.4    446.4    251.7    251.7 
    		 
    		 
    		 
    		 
       Mortgage loans on real estate    2,089.4    2,099.3    1,879.3    1,852.6 
       Policy loans    273.4    273.4    268.9    268.9 
    		 
    		 
    		 
    		 
       Cash, cash equivalents, and                 
    		 
    		 
    		 
    		 
             short-term investments under                 
    		 
    		 
    		 
    		 
             securities loan agreement    436.2    436.2    594.3    594.3 
       Other investments    838.8    838.8    398.9    398.9 
    		 
    		 
    		 
    		 
       Assets held in separate accounts    48,091.2    48,091.2    43,550.8    43,550.8 
    Liabilities:                 
    		 
    		 
    		 
    		 
       Investment contract liabilities:                 
             With a fixed maturity    1,251.1    1,308.7    1,475.1    1,529.2 
    		 
    		 
    		 
    		 
             Without a fixed maturity    13,421.9    13,379.1    14,407.2    14,367.8 
       Derivatives    200.3    200.3    45.1    45.1 

      Fair value estimates are made at a specific point in time, based on available market
    information and judgments about various financial instruments, such as estimates of
    timing and amounts of future cash flows. Such estimates do not reflect any premium or
    discount that could result from offering for sale at one time the Company’s entire
    holdings of a particular financial instrument, nor do they consider the tax impact of the
    realization of unrealized capital gains (losses). In many cases, the fair value estimates
    cannot be substantiated by comparison to independent markets, nor can the disclosed
    value be realized in immediate settlement of the instruments. In evaluating the
    Company’s management of interest rate, price, and liquidity risks, the fair values of all
    assets and liabilities should be taken into consideration, not only those presented above.

    C-32

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

      Derivative Financial Instruments

        Notional Amount    Fair Value 
       
    		 
        2007    2006    2007    2006 
    		 
    		 
    		 
    		 
    Interest Rate Swaps                 
       Interest rate swaps are used to manage the interest                 
             rate risk in the Company’s fixed maturities portfolio,                 
             as well as the Company’s liabilities. Interest rate                 
             swaps represent contracts that require the exchange                 
             of cash flows at regular interim periods, typically                 
             monthly or quarterly.    $ 7,680.0    $ 3,277.8    $ (111.6) $    16.4 
    		 
    		 
    		 
    		 
     
    Foreign Exchange Swaps                 
       Foreign exchange swaps are used to reduce the risk                 
             of a change in the value, yield, or cash flow with                 
             respect to invested assets. Foreign exchange                 
             swaps represent contracts that require the                 
             exchange of foreign currency cash flows for                 
             U.S. dollar cash flows at regular interim periods,                 
             typically quarterly or semi-annually.    224.5    204.4    (45.3)    (30.9) 
    		 
    		 
    		 
    		 
     
    Credit Default Swaps                 
       Credit default swaps are used to reduce the credit loss                 
             exposure with respect to certain assets that the                 
             Company owns, or to assume credit exposure to                 
             certain assets that the Company does not own.                 
             Payments are made to or received from the                 
             counterparty at specified intervals and amounts                 
             for the purchase or sale of credit protection.                 
             In the event of a default on the underlying credit                 
             exposure, the Company will either receive                 
             an additional payment (purchased credit                 
             protection) or will be required to make an additional                 
             payment (sold credit protection) equal to the notional                 
             value of the swap contract.    335.9    756.8    (8.8)    (2.5) 
    		 
    		 
    		 
    		 
     
    Total Return Swaps                 
       Total return swaps are used to assume credit                 
             exposure to a referenced index or asset pool.                 
             The difference between different floating-rate                 
             interest amounts calculated by reference to an                 
             agreed upon notional principal amount is exchanged                 
             with other parties at specified intervals.    -    139.0    -    0.3 

    C-33

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

        Notional Amount                       Fair Value 
       
    		 
                 2007    2006    2007    2006 
    		 
    		 
    		 
    		 
    Swaptions                 
       Swaptions are used to manage interest rate risk in the                 
             Company’s collateralized mortgage obligation portfolio.                 
             Swaptions are contracts that give the Company the                 
             option to enter into an interest rate swap at a specific                 
             future date.    $ 542.3    $ 1,112.0    $ 0.2 $    5.2 
    		 
    		 
    		 
    		 
     
    Embedded Derivatives                 
       The Company also has investments in certain fixed                 

      maturity instruments that contain embedded derivatives
    whose market value is at least partially determined by,
    among other things, levels of or changes in domestic

    and/or foreign interest rates (short- or long-term),                 
    exchange rates, prepayment rates, equity rates, or                 
    credit ratings/spreads.                 
       Within securities    N/A*    N/A*    40.8    (2.7) 
       Within annuity products    N/A*    N/A*    78.1    - 

      * N/A - not applicable.

    Credit Default Swaps

    As of December 31, 2007, the maximum potential future exposure to the Company on the
    sale of credit protection under credit default swaps was $136.2.

    C-34

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

    4. Deferred Policy Acquisition Costs and Value of Business Acquired

    Activity within DAC was as follows for the years ended December 31, 2007, 2006, and

    2005.     
    		 
     
    Balance at January 1, 2005    $ 414.5 
         Prior period adjustment    (1.0) 
    		 
    Balance at January 1, 2005 (restated)    413.5 
         Deferrals of commissions and expenses    123.1 
    		 
         Amortization:     
               Amortization    (59.6) 
    		 
               Interest accrued at 5% to 7%    30.7 
       
         Net amortization included in the Consolidated Statements of Operations    (28.9) 
    		 
         Change in unrealized capital gains (losses) on available-for-sale securities    3.7 
       
    Balance at December 31, 2005    511.4 
    		 
         Deferrals of commissions and expenses    136.0 
         Amortization:     
    		 
               Amortization    (62.1) 
               Interest accrued at 6% to 7%    37.5 
    		 
         Net amortization included in the Consolidated Statements of Operations    (24.6) 
         Change in unrealized capital gains (losses) on available-for-sale securities    (0.2) 
    		 
    Balance at December 31, 2006    622.6 
         Deferrals of commissions and expenses    147.1 
    		 
         Amortization:     
               Amortization    (80.9) 
    		 
               Interest accrued at 5% to 7%    44.8 
       
         Net amortization included in the Consolidated Statements of Operations    (36.1) 
    		 
         Change in unrealized capital gains (losses) on available-for-sale securities    1.0 
         Implementation of SOP 05-01    (6.0) 
    		 
    Balance at December 31, 2007    $ 728.6 
       

      The estimated amount of DAC to be amortized, net of interest, is $45.1, $44.1, $46.0,
    $42.4, and $42.1, for the years 2008, 2009, 2010, 2011 and 2012, respectively. Actual
    amortization incurred during these years may vary as assumptions are modified to
    incorporate actual results.

    C-35

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

    Activity within VOBA was as follows for the years ended December 31, 2007, 2006, and

    2005.     
    		 
     
    Balance at January 1, 2005    $ 1,365.2 
         Prior period adjustment    (2.7) 
    		 
    Balance at January 1, 2005 (restated)    1,362.5 
         Deferrals of commissions and expenses    49.3 
    		 
         Amortization:     
               Amortization    (219.4) 
    		 
               Interest accrued at 5% to 7%    88.4 
       
         Net amortization included in the Consolidated Statements of Operations    (131.0) 
    		 
         Change in unrealized capital gains (losses) on available-for-sale securities    10.9 
       
    Balance at December 31, 2005    1,291.7 
    		 
         Deferrals of commissions and expenses    46.2 
         Amortization:     
    		 
               Amortization    (82.4) 
               Interest accrued at 5% to 7%    85.7 
    		 
         Net amortization included in the Consolidated Statements of Operations    3.3 
         Change in unrealized capital gains (losses) on available-for-sale securities    (1.0) 
    		 
    Balance at December 31, 2006    1,340.2 
         Deferrals of commissions and expenses    40.5 
    		 
         Amortization:     
               Amortization    (177.3) 
    		 
               Interest accrued at 5% to 7%    84.2 
       
         Net amortization included in the Consolidated Statements of Operations    (93.1) 
    		 
         Change in unrealized capital gains (losses) on available-for-sale securities    2.9 
         Implementation of SOP 05-1    (37.3) 
    		 
    Balance at December 31, 2007    $ 1,253.2 
       

      The estimated amount of VOBA to be amortized, net of interest, is $99.4, $90.8, $88.0,
    $82.4, and $77.1, for the years 2008, 2009, 2010, 2011, and 2012, respectively. Actual
    amortization incurred during these years may vary as assumptions are modified to
    incorporate actual results.

    Analysis of DAC and VOBA

    The increase in Amortization of DAC and VOBA for the year ended December 31, 2007,
    was primarily driven by unfavorable unlocking of $131.3 attributable to an increase in
    actual gross profits related to higher fee income and fixed margins in 2007. In addition,
    amortization for the year ended December 31, 2006 was lower due to favorable
    unlocking, as a result of prospective expense assumption changes.

    C-36

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

      The decrease in Amortization of DAC and VOBA in 2006 is primarily driven by
    favorable unlocking of $83.3, resulting from the refinements of the Company’s estimates
    of persistency, expenses and other assumptions. In addition, the decrease in amortization
    reflects lower actual gross profits, primarily due to a legal settlement incurred in 2006.

    Amortization of DAC and VOBA increased in 2005 primarily due to increased gross
    profits, which were driven by higher fixed margins and variable fees because of higher
    average assets under management (“AUM”), partially offset by higher expenses. The
    Company revised long-term separate account return and certain contractowner
    withdrawal behavior assumptions, as well as reflected current experience during 2005,
    resulting in a deceleration of amortization of DAC and VOBA of $11.7.

    5. Dividend Restrictions and Shareholder’s Equity

      ILIAC’s ability to pay dividends to its parent is subject to the prior approval of insurance
    regulatory authorities of the State of Connecticut for payment of any dividend, which,
    when combined with other dividends paid within the preceding 12 months, exceeds the
    greater of (1) ten percent (10%) of ILIAC’s statutory surplus at the prior year end or (2)
    ILIAC’s prior year statutory net gain from operations.

    During 2007, 2006, and 2005, ILIAC paid $145.0, $256.0, and $20.5, respectively, in
    dividends on its common stock to its parent.

    During 2006, Lion contributed to ILIAC DSI, which had $50.5 in equity on the date of
    contribution and was accounted for in a manner similar to a pooling-of-interests. During
    2007, 2006, and 2005, ILIAC did not receive any cash capital contributions from its
    parent.

    The Insurance Department of the State of Connecticut (the “Department”) recognizes as
    net income and capital and surplus those amounts determined in conformity with
    statutory accounting practices prescribed or permitted by the Department, which differ in
    certain respects from accounting principles generally accepted in the United States.
    Statutory net income was $245.5, $138.3, and $258.5, for the years ended December 31,
    2007, 2006, and 2005, respectively. Statutory capital and surplus was $1,388.0 and
    $1,447.5 as of December 31, 2007 and 2006, respectively.

    As of December 31, 2007, ILIAC did not utilize any statutory accounting practices that
    are not prescribed by state regulatory authorities that, individually or in the aggregate,
    materially affect statutory capital and surplus.

    C-37

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

    6.      Additional Insurance Benefits and Minimum Guarantees
     
      The Company calculates an additional liability for certain GMDBs and other minimum guarantees in order to recognize the expected value of these benefits in excess of the projected account balance over the accumulation period based on total expected assessments.
     
      The Company regularly evaluates estimates used to adjust the additional liability balance, with a related charge or credit to benefit expense, if actual experience or other evidence suggests that earlier assumptions should be revised.
     
      As of December 31, 2007, the separate account liability for guaranteed minimum benefits and the additional liability recognized related to minimum guarantees were $7.1 billion and $80.4, respectively. As of December 31, 2006, the separate account liability for guaranteed minimum benefits and the additional liability recognized related to minimum guarantees were $6.4 billion and $0.7, respectively.
     
      The aggregate fair value of equity securities, including mutual funds, supporting separate accounts with additional insurance benefits and minimum investment return guarantees as of December 31, 2007 and 2006 was $7.1 billion and $6.4 billion, respectively.
     
    7.      Income Taxes
     
      Effective January 1, 2006, ILIAC files a consolidated federal income tax return with ING America Insurance Holdings (“ING AIH”) and certain other subsidiaries of ING AIH that are eligible corporations qualified to file consolidated federal income tax returns as part of the ING AIH affiliated group. Effective January 1, 2006, ILIAC is party to a federal tax allocation agreement with ING AIH and its subsidiaries that are part of the group whereby ING AIH charges its subsidiaries for federal taxes each subsidiary would have incurred were it not a member of the consolidated group and credits each subsidiary for losses at the statutory federal tax rate. For calendar year 2005, ILIAC filed a consolidated federal income tax return with its (former) subsidiary, ING Insurance Company of America.
     
                     2007    2006    2005 
       
    		 
    		 
    Current tax expense (benefit):             
    		 
    		 
    		 
       Federal    $ 28.6    $ 23.3    $ 4.9 
       State                             (9.0)    20.0    4.9 
    		 
    		 
    		 
                 Total current tax expense                             19.6    43.3    9.8 
       
    		 
    		 
    Deferred tax expense:             
    		 
    		 
    		 
       Federal                             36.4    79.4    11.7 
       
    		 
    		 
                 Total deferred tax expense                             36.4    79.4    11.7 
    		 
    		 
    		 
    Total income tax expense    $ 56.0    $ 122.7    $ 21.5 
       
    		 
    		 

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

      Income taxes were different from the amount computed by applying the federal income
    tax rate to income before income taxes for the following reasons for the years ended
    December 31, 2007, 2006 and 2005:

        2007    2006    2005 
    		 
    		 
    		 
    Income before income taxes    $ 274.4    $ 424.5    $ 294.2 
    Tax rate                         35.0%    35.0%    35.0% 
    		 
    		 
    		 
    Income tax at federal statutory rate    96.0    148.6    103.0 
    Tax effect of:             
    		 
    		 
    		 
       Dividend received deduction    (26.2)    (36.5)    (25.8) 
       IRS audit settlement    -    -    (58.2) 
    		 
    		 
    		 
       State audit settlement    (21.8)    -    - 
       State tax expense    -    13.0    3.2 
    		 
    		 
    		 
       Other    8.0    (2.4)    (0.7) 
       
    		 
    		 
    Income tax expense    $ 56.0    $ 122.7    $ 21.5 
       
    		 
    		 
     
    Temporary Differences             

    The tax effects of temporary differences that give rise to Deferred tax assets and Deferred
    tax liabilities at December 31, 2007 and 2006, are presented below.

        2007    2006 
       
    		 
    Deferred tax assets:         
    		 
    		 
       Insurance reserves    $ 216.6    $ 250.3 
       Net unrealized capital loss    6.4    - 
    		 
    		 
       Unrealized losses allocable to experience-rated contracts    5.7    18.3 
       Investments    6.7    3.5 
    		 
    		 
       Postemployment benefits    75.9    74.7 
       Compensation    27.3    25.1 
    		 
    		 
       Other    32.4    19.9 
       
    		 
                 Total gross assets before valuation allowance    371.0    391.8 
    		 
    		 
                       Less: valuation allowance    (6.4)    - 
       
    		 
                 Assets, net of valuation allowance    364.6    391.8 
    		 
    		 
     
    Deferred tax liabilities:         
       Value of business acquired    (436.7)    (469.1) 
    		 
    		 
       Net unrealized capital gains    -    (15.9) 
       Deferred policy acquisition costs    (203.8)    (167.9) 
    		 
    		 
                       Total gross liabilities    (640.5)    (652.9) 
       
    		 
    Net deferred income tax liability    $ (275.9)    $ (261.1) 
       
    		 

    Net unrealized capital gains and losses are presented as a component of other
    comprehensive income (loss) in Shareholder’s equity, net of deferred taxes.

    C-39

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

      Valuation allowances are provided when it is considered unlikely that deferred tax assets
    will be realized. As of December 31, 2007, the Company had a $6.4 valuation allowance
    related to unrealized capital losses on investments, which is included in Accumulated
    other comprehensive income (loss). The Company had no valuation allowance as of
    December 31, 2006.

    Tax Sharing Agreement

    ILIAC had a payable of $ 56.8 and $ 59.8 to ING AIH at December 31, 2007 and 2006,
    respectively, for federal income taxes under the inter-company tax sharing agreement.

    See Related Party Transactions footnote for more information.

    Unrecognized Tax Benefits

    As a result of implementing FIN 48, the Company recognized a cumulative effect of
    change in accounting principle of $2.9 as a reduction to January 1, 2007 Retained
    earnings (deficit). In addition, the Company had $68.0 of unrecognized tax benefits as of
    January 1, 2007, of which $52.1 would affect the Company’s effective tax rate if
    recognized.

    A reconciliation of the change in the unrecognized income tax benefits for the year is as
    follows:

    Balance at January 1, 2007    $ 68.0 
    Additions for tax positions related to current year    2.9 
    		 
    Additions (reductions) for tax positions related to prior years    (23.5) 
    Balance at December 31, 2007    $ 47.4 
       

      The Company had $42.6 of unrecognized tax benefits as of December 31, 2007 that
    would affect the Company’s effective tax rate if recognized.

    Interest and Penalties

    The Company recognizes accrued interest and penalties related to unrecognized tax
    benefits in Current income taxes and Income tax expense on the Balance Sheets and
    Statements of Operations, respectively. The Company had accrued interest of $16.9 as of
    December 31, 2007.

    Regulatory Matters

    The Company is under audit by the Internal Revenue Service (“IRS”) for tax years 2002
    through 2005, and is subject to state audit in New York for years 1995 through 2000. It
    is anticipated that the IRS audit of tax years 2002 and 2003 will be finalized within the
    next twelve months. Upon finalization of the IRS exam, it is reasonably possible that the
    unrecognized tax benefits will decrease by up to $17.7. It is also reasonably possible that

    C-40

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

      the aforementioned state tax audits may be settled within the next twelve months. It is
    reasonably possible that the unrecognized tax benefit on uncertain tax positions related to
    the New York state tax audit will decrease by up to $11.4. The timing of the settlement
    and any potential future payment of the remaining allowance of $18.3 cannot be reliably
    estimated.

    On September 25, 2007, the IRS issued Revenue Ruling 2007-61, which announced its
    intention to issue regulations with respect to certain computational aspects of the
    dividend received deduction (“DRD”) on separate account assets held in connection with
    variable annuity and life insurance contracts. Revenue Ruling 2007-61 suspended
    Revenue Ruling 2007-54 issued in August 2007 that purported to change accepted
    industry and IRS interpretations of the statutes governing these computational questions.
    Any regulations that the IRS ultimately proposes for issuance in this area will be subject
    to public notice and comment, at which time insurance companies and other members of
    the public will have the opportunity to raise legal and practical questions about the
    content, scope and application of such regulations. As a result, the ultimate timing,
    substance, and effective date of any such regulations are unknown, but they could result
    in the elimination of some or all of the separate account DRD tax benefit that the
    Company receives.

    Under prior law, life insurance companies were allowed to defer from taxation a portion
    of income. Deferred income of $17.2 was accumulated in the Policyholders Surplus
    Account and would only become taxable under certain conditions, which management
    believed to be remote. In 2004, Congress passed the American Jobs Creation Act of
    2004 allowing certain tax-free distributions from the Policyholders’ Surplus Account
    during 2005 and 2006. During 2006, the Company made a dividend distribution of
    $256.0, which eliminated the $17.2 balance in the Policyholders Surplus Account and,
    therefore, any potential tax on the accumulated balance.

    8. Benefit Plans

      Defined Benefit Plan

    ING North America Insurance Corporation (“ING North America”) sponsors the ING
    Americas Retirement Plan (the “Retirement Plan”), effective as of December 31, 2001.
    Substantially all employees of ING North America and its affiliates (excluding certain
    employees) are eligible to participate, including the Company’s employees other than
    Company agents. The Retirement Plan is a tax-qualified defined benefit plan, the
    benefits of which are guaranteed (within certain specified legal limits) by the Pension
    Benefit Guaranty Corporation (“PBGC”). As of January 1, 2002, each participant in the
    Retirement Plan (except for certain specified employees) earns a benefit under a final
    average compensation formula. Subsequent to December 31, 2001, ING North America
    is responsible for all Retirement Plan liabilities. The costs allocated to the Company for
    its employees’ participation in the Retirement Plan were $17.2, $23.8, and $22.5, for
    2007, 2006, and 2005, respectively, and are included in Operating expenses in the
    Consolidated Statements of Operations.

    C-41

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

      Defined Contribution Plan

    ING North America sponsors the ING Americas Savings Plan and ESOP (the “Savings
    Plan”). Substantially all employees of ING North America and its affiliates (excluding
    certain employees, including but not limited to Career Agents) are eligible to participate,
    including the Company’s employees other than Company agents. Career Agents are
    certain, full-time insurance salespeople who have entered into a career agent agreement
    with the Company and certain other individuals who meet specified eligibility criteria.
    The Savings Plan is a tax-qualified 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. Matching contributions are subject to a 4-year graded vesting schedule
    (although certain specified participants are subject to a 5-year graded vesting schedule).
    All contributions made to the Savings Plan are subject to certain limits imposed by
    applicable law. Pre-tax charges to operations of the Company for the Savings Plan were
    $10.1, $9.7, and $8.9, for the years ended December 31, 2007, 2006, and 2005,
    respectively, and are included in Operating expenses in the Consolidated Statements of
    Operations.

    Non-Qualified Retirement Plans

    Through December 31, 2001, the Company, in conjunction with ING North America,
    offered certain eligible employees (other than Career Agents) a Supplemental Executive
    Retirement Plan and an Excess Plan (collectively, the “SERPs”). Benefit accruals under
    the SERPs ceased, effective as of December 31, 2001. Benefits under the SERPs are
    determined based on an eligible employee’s years of service and average annual
    compensation for the highest five years during the last ten years of employment.

    The Company, in conjunction with ING North America, sponsors the Pension Plan for
    Certain Producers of ING Life Insurance and Annuity Company (formerly the Pension
    Plan for Certain Producers of Aetna Life Insurance and Annuity Company) (the “Agents
    Non-Qualified Plan”). This plan covers certain full-time insurance salespeople who have
    entered into a career agent agreement with the Company and certain other individuals
    who meet the eligibility criteria specified in the plan (“Career Agents”). The Agents
    Non-Qualified Plan was terminated effective January 1, 2002. In connection with the
    termination, all benefit accruals ceased and all accrued benefits were frozen.

    C-42

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

      The SERPs and Agents Non-Qualified Plan, are non-qualified defined benefit pension
    plans, which means all the SERPs benefits are payable from the general assets of the
    Company and Agents Non-Qualified Plan benefits are payable from the general assets of
    the Company and ING North America. These non-qualified defined benefit pension
    plans are not guaranteed by the PBGC.

    Obligations and Funded Status

    The following tables summarize the benefit obligations, fair value of plan assets, and
    funded status, for the SERPs and Agents Non-Qualified Plan, for the years ended
    December 31, 2007 and 2006.

        2007    2006 
       
    		 
    Change in Projected Benefit Obligation:         
    		 
    		 
       Projected benefit obligation, January 1    $ 97.7    $ 106.8 
       Interest cost    5.4    5.5 
    		 
    		 
       Benefits paid    (9.3)    (8.3) 
       Actuarial loss on obligation    (8.2)    (6.3) 
    		 
    		 
       Projected benefit obligation, December 31    $ 85.6    $ 97.7 
    		 
    		 
     
    Fair Value of Plan Assets:         
       Fair value of plan assets, December 31    $ -    $ - 
       
    		 
     
    Amounts recognized in the Consolidated Balance Sheets consist of:     
     
                             2007    2006 
    		 
    		 
    Accrued benefit cost    $ (85.6)    $ (97.7) 
    Intangible assets    -    - 
    		 
    		 
    Accumulated other comprehensive income    4.9    14.1 
       
    		 
    Net amount recognized    $ (80.7)    $ (83.6) 
       
    		 

      At December 31, 2007 and 2006, the projected benefit obligation was $85.6 and $97.7,
    respectively.

    Assumptions

    The weighted-average assumptions used in the measurement of the December 31, 2007
    and 2006 benefit obligation for the SERPs and Agents Non-Qualified Plan, were as
    follows:

        2007    2006 
    		 
    		 
    Discount rate at beginning of period           5.90%           5.50% 
    Rate of compensation increase           4.20%           4.00% 

    C-43

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

      In determining the discount rate assumption, the Company utilizes current market
    information provided by its plan actuaries (particularly the Citigroup Pension Discount
    Curve Liability Index), including a discounted cash flow analysis of the Company’s
    pension obligation and general movements in the current market environment. The
    discount rate modeling process involves selecting a portfolio of high quality, noncallable
    bonds that will match the cash flows of the Retirement Plan. Based upon all available
    information, it was determined that 6.5% was the appropriate discount rate as of
    December 31, 2007, to calculate the Company’s accrued benefit liability. Accordingly,
    as prescribed by SFAS No. 87, “Employers’ Accounting for Pensions”, the 6.5% discount
    rate will also be used to determine the Company’s 2008 pension expense. December 31
    is the measurement date for the SERP’s and Agents Non-Qualified Plan.

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

    Discount rate
    Rate of increase in compensation levels

    2007    2006    2005 
    		 
    		 
           6.50%           5.90%           6.00% 
           4.20%           4.00%           4.00% 

    The weighted average assumptions used in calculating the net pension cost for 2007
    were, as indicated above, a 6.5% discount rate and a 4.2% rate of compensation increase.
    Since the benefit plans of the Company are unfunded, an assumption for return on plan
    assets is not required.

    Net Periodic Benefit Costs

    Net periodic benefit costs for the SERPs and Agents Non-Qualified Plan, for the years
    ended December 31, 2007, 2006, and 2005, were as follows:

    Interest cost
    Net actuarial loss recognized in the year
    Unrecognized past service cost recognized in the year
    The effect of any curtailment or settlement
    Net periodic benefit cost

                   2007                     2006                     2005     
    		 
    		 
    		 
    		 
    		 
    $ 5.4    $ 5.5    $ 6.0 
        0.7        2.0        1.3 
    		 
    		 
    		 
    		 
    		 
        -        0.2        0.2 
        0.4        0.4        0.3 
    		 
    		 
    		 
    		 
    		 
    $ 6.5    $ 8.1    $ 7.8 
    		 
    		 

    Cashflows

    In 2008, the employer is expected to contribute $5.5 to the SERPs and Agents Non-
    Qualified Plan. Future expected benefit payments related to the SERPs, and Agents Non-
    Qualified Plan, for the years ended December 31, 2008 through 2012, and thereafter
    through 2017, are estimated to be $5.5, $4.0, $4.0, $4.3, $4.4 and $21.1, respectively.

    C-44

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

      Other

    On October 4, 2004, the President signed into law The Jobs Creation Act (“Jobs Act”).
    The Jobs Act affects nonqualified deferred compensation plans, such as the Agents
    Nonqualified Plan. ING North America will make changes to impacted nonqualified
    deferred compensation plans, as necessary to comply with the requirements of the Jobs
    Act.

    Stock Option and Share Plans

    ING sponsors the ING Group Long Term Equity Ownership Plan (“leo”), which provides
    employees of the Company who are selected by the ING Board of Directors to be granted
    options and/or performance shares. The terms applicable to an award under leo are set
    out in an award agreement, which is signed by the participant when he or she accepts the
    award.

    Options granted under leo are nonqualified options on ING shares in the form of
    American Depository Receipts (“ADRs”). Leo options have a ten (10) year term and vest
    three years from the grant date. Options awarded under leo may vest earlier in the event
    of the participant’s death, permanent disability or retirement. Retirement for purposes of
    leo means a participant terminates service after attaining age 55 and completing 5 years
    of service. Early vesting in all or a portion of a grant of options may also occur in the
    event the participant is terminated due to redundancy or business divestiture. Unvested
    options are generally subject to forfeiture when a participant voluntarily terminates
    employment or is terminated for cause (as defined in leo). Upon vesting, participants
    generally have up to seven years in which to exercise their vested options. A shorter
    exercise period applies in the event of termination due to redundancy, business
    divestiture, voluntary termination or termination for cause. An option gives the recipient
    the right to purchase an ING share in the form of ADRs at a price equal to the fair market
    value of one ING share on the date of grant. On exercise, participant’s have three options
    (i) retain the shares and remit a check for applicable taxes due on exercise, (ii) request the
    administrator to remit a cash payment for the value of the options being exercised, less
    applicable taxes, or (iii) retain some of the shares and have the administrator liquidate
    sufficient shares to satisfy the participant’s tax obligation. The share price is in Euros and
    converted to U.S. dollars, as determined by ING.

    Awards of performance shares may also be made under leo. Performance shares are a
    contingent grant of ING stock, and, on vesting, the participant has the right to receive a
    cash amount equal to the closing price per ING share on the Euronext Amsterdam Stock
    Market on the vesting date times the number of vested Plan shares. Performance shares
    generally vest three years from the date of grant, with the amount payable based on
    ING’s share price on the vesting date. Payments made to participants on vesting are
    based on the performance targets established in connection with leo and payments can
    range from 0% to 200% of target. Performance is based on ING’s total shareholder
    return relative to a peer group as determined at the end of the vesting period. To vest, a
    participant must be actively employed on the vesting date, although vesting will continue

    C-45

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

      to occur in the event of the participant’s death, disability or retirement. If a participant is
    terminated due to redundancy or business divestiture, vesting will occur but in only a
    portion of the award. Unvested shares are generally subject to forfeiture when an
    employee voluntarily terminates employment or is terminated for cause (as defined in
    leo). Upon vesting, participants have three options (i) retain the shares and remit a check
    for applicable taxes due on exercise, (ii) request the administrator to remit a cash
    payment for the value of the shares, less applicable taxes, or (iii) retain some of the shares
    and have the administrator liquidate sufficient shares to satisfy the participant’s tax
    obligation. The amount is converted from Euros to U.S. dollars based on the daily
    average exchange rate between the Euro and the U.S. dollar, as determined by ING.

    The Company recognized compensation expense for the leo options and performance
    shares of $4.5, $10.1, and $5.6 for the years ended December 31, 2007, 2006, and 2005
    respectively.

    For leo, the Company recognized tax benefits of $3.2, $0.1, and $0.3 in 2007, 2006, and
    2005, respectively.

    Other Benefit Plans

    In addition, the Company, in conjunction with ING North America, sponsors the
    following benefit plans:

    §      The ING 401(k) Plan for ILIAC Agents, which allows participants to defer a specified percentage of eligible compensation on a pre-tax basis. Effective January 1, 2006, the Company match equals 60% of a participant’s pre-tax deferral contribution, with a maximum of 6% of the participant’s eligible pay.
     
    §      The Producers’ Incentive Savings Plan, which allows participants to defer up to a specified portion of their eligible compensation on a pre-tax basis. The Company matches such pre-tax contributions at specified amounts.
     
    §      The Producers’ Deferred Compensation Plan, which allows participants to defer up to a specified portion of their eligible compensation on a pre-tax basis.
     
    §      Certain health care and life insurance benefits for retired employees and their eligible dependents. The post retirement health care plan is contributory, with retiree contribution levels adjusted annually. The life insurance plan provides a flat amount of noncontributory coverage and optional contributory coverage.
     

    The benefit charges allocated to the Company related to these plans for the years ended
    December 31, 2007, 2006, and 2005, were $0.4, $1.4, and $1.3, respectively.

    9. Related Party Transactions

      Operating Agreements

    ILIAC has certain agreements whereby it generates revenues and expenses with affiliated
    entities, as follows:

    C-46

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

    §      Investment Advisory agreement with ING Investment Management LLC (“IIM”), an affiliate, in which IIM provides asset management, administrative, and accounting services for ILIAC’s general account. ILIAC incurs a fee, which is paid quarterly, based on the value of the assets under management. For the years ended December 31, 2007, 2006, and 2005, expenses were incurred in the amounts of $60.5, $62.2, and $61.7, respectively.
     
    §      Services agreement with ING North America for administrative, management, financial, and information technology services, dated January 1, 2001 and amended effective January 1, 2002. For the years ended December 31, 2007, 2006, and 2005, expenses were incurred in the amounts of $167.9, $175.3, and $138.5, respectively.
     
    §      Services agreement between ILIAC and its U.S. insurance company affiliates dated January 1, 2001, and amended effective January 1, 2002 and December 31, 2007.
     
      For the years ended December 31, 2007, 2006, and 2005, net expenses related to the agreement were incurred in the amount of $21.7, $12.4, and $17.8, respectively.
     

      Management and service contracts and all cost sharing arrangements with other affiliated
    companies are allocated in accordance with the Company’s expense and cost allocation
    methods.

    DSL has certain agreements whereby it generates revenues and expenses with affiliated
    entities, as follows:

    §      Underwriting and distribution agreements with ING USA Annuity and Life Insurance Company (“ING USA”) and ReliaStar Life Insurance Company of New York (“RLNY”), affiliated companies, whereby DSL serves as the principal underwriter for variable insurance products. In addition, DSL is authorized to enter into agreements with broker-dealers to distribute the variable insurance products and appoint representatives of the broker-dealers as agents. For the years ended December 31, 2007, 2006, and 2005, commissions were collected in the amount of $568.4, $429.2, and $378.1. Such commissions are, in turn, paid to broker-dealers.
     
    §      Services agreements with ING USA and RLNY, whereby DSL receives managerial and supervisory services and incurs a fee that is calculated as a percentage of average assets of each company’s variable separate accounts deposited in ING
     
      Investors Trust. On August 9, 2007, DSL and ING USA entered into an amendment to the service agreement effective July 31, 2007 to modify the method for calculating the compensation owed to ING USA under the service agreement. As a result of this amendment, DSL pays ING USA the total net revenue associated with ING USA deposits into ING Investors Trust. For the years ended December 31, 2007, 2006, and 2005, expenses were incurred under these services agreements in the amount of $124.4, $70.8, and $46.3, respectively.
     

    C-47

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

    §      Administrative and advisory services agreements with ING Investment LLC and IIM, affiliated companies, in which DSL receives certain services for a fee. The fee for these services is calculated as a percentage of average assets of ING Investors Trust. For the years ended December 31, 2007, 2006, and 2005, expenses were incurred in the amounts of $13.1, $8.8, and $6.4, respectively.
     

      Investment Advisory and Other Fees

    During 2006 and 2005, ILIAC served as investment advisor to certain variable funds
    offered in Company products (collectively, the “Company Funds”). The Company Funds
    paid ILIAC, as investment advisor, daily fees that, on an annual basis, ranged, depending
    on the Fund, from 0.5% to 1.0% of their average daily net assets. Each of the Company
    Funds managed by ILIAC were subadvised by investment advisors, in which case ILIAC
    paid a subadvisory fee to the investment advisors, which included affiliates. Effective
    January 1, 2007, ILIAC’s investment advisory agreement with the Company Funds was
    assigned to DSL. ILIAC is also compensated by the separate accounts for bearing
    mortality and expense risks pertaining to variable life and annuity contracts. Under the
    insurance and annuity contracts, the separate accounts pay ILIAC daily fees that, on an
    annual basis are, depending on the product, up to 3.4% of their average daily net assets.
    The total amount of compensation and fees received by the Company from the Company
    Funds and separate accounts totaled $312.7, $289.9, and $263.0, (excludes fees paid to
    ING Investment Management Co.) in 2007, 2006, and 2005, respectively.

    DSL has been retained by ING Investors Trust (the “Trust”), an affiliate, pursuant to a
    management agreement to provide advisory, management, administrative and other
    services to the Trust. Under the management agreement, DSL provides or arranges for
    the provision of all services necessary for the ordinary operations of the Trust. DSL
    earns a monthly fee based on a percentage of average daily net assets of the Trust. DSL
    has entered into an administrative services subcontract with ING Fund Services, LLC, an
    affiliate, pursuant to which ING Fund Services, LLC, provides certain management,
    administrative and other services to the Trust and is compensated a portion of the fees
    received by DSL under the management agreement. For the years ended December 31,
    2007, 2006, and 2005, revenue received by DSL under the management agreement
    (exclusive of fees paid to affiliates) was $343.8, $233.9, and $174.6, respectively. At
    December 31, 2007 and 2006, DSL had $26.7 and $22.1, respectively, receivable from
    the Trust under the management agreement.

    Financing Agreements

    ILIAC maintains a reciprocal loan agreement with ING AIH, an affiliate, to facilitate the
    handling of unanticipated short-term cash requirements that arise in the ordinary course
    of business. Under this agreement, which became effective in June 2001 and expires on
    April 1, 2011, either party can borrow from the other up to 3% of ILIAC’s statutory
    admitted assets as of the preceding December 31. Interest on any ILIAC borrowing is
    charged at the rate of ING AIH’s cost of funds for the interest period, plus 0.15% .

    C-48

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

      Interest on any ING AIH borrowings is charged at a rate based on the prevailing interest
    rate of U.S. commercial paper available for purchase with a similar duration.

    Under this agreement, ILIAC incurred interest expense of $3.9, $1.8, and $0.7, for the
    years ended December 31, 2007, 2006, and 2005, respectively, and earned interest
    income of $1.7, $3.3, and $1.1, for the years ended December 31, 2007, 2006, and 2005,
    respectively. Interest expense and income are included in Interest expense and Net
    investment income, respectively, on the Consolidated Statements of Operations. At
    December 31, 2007, ILIAC had no amount due from ING AIH under the reciprocal loan
    agreement and $45.0 receivable from ING AIH at December 31, 2006.

    Note with Affiliate

    On December 29, 2004, ING USA issued a surplus note in the principal amount of
    $175.0 (the “Note”) scheduled to mature on December 29, 2034, to ILIAC, in an offering
    that was exempt from the registration requirements of the Securities Act of 1933.
    ILIAC’s $175.0 Note from ING USA bears interest at a rate of 6.26% per year. Any
    payment of principal and/or interest is subject to the prior approval of the Iowa Insurance
    Commissioner. Interest is scheduled to be paid semi-annually in arrears on June 29 and
    December 29 of each year, commencing on June 29, 2005. Interest income for the years
    ended December 31, 2007 and 2006 was $11.1.

    Tax Sharing Agreements

    Effective January 1, 2006, ILIAC is a party to a federal tax allocation agreement with
    ING AIH and its subsidiaries that are part of the ING AIH consolidated group. Under the
    federal tax allocation agreement, ING AIH charges its subsidiaries for federal taxes each
    subsidiary would have incurred were it not a member of the consolidated group and
    credits each subsidiary for losses at the statutory federal tax rate.

    For the years ended December 31, 2006 and 2005, DSI, which merged with and into DSL
    on December 31, 2006, was party to the ING AIH federal tax allocation agreement, as
    described above. Income from DSL, a single member limited liability company, is taxed
    at the member level (ILIAC).

    ILIAC has also entered into a state tax sharing agreement with ING AIH and each of the
    specific subsidiaries that are parties to the agreement. The state tax agreement applies to
    situations in which ING AIH and all or some of the subsidiaries join in the filing of a
    state or local franchise, income tax, or other tax return on a consolidated, combined, or
    unitary basis.

    C-49

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

    10.      Financing Agreements
     
      ILIAC maintains a $100.0 uncommitted, perpetual revolving note facility with the Bank of New York ("BONY"). Interest on any of ILIAC’s borrowing accrues at an annual rate equal to a rate quoted by BONY to ILIAC for the borrowing. Under this agreement, ILIAC incurred minimal interest expense for the years ended December 31, 2007, 2006, and 2005. At December 31, 2007 and 2006, ILIAC had no amounts outstanding under the revolving note facility.
     
      ILIAC also maintains a $75.0 uncommitted line-of-credit agreement with PNC Bank (“PNC”), effective December 19, 2005. Borrowings are guaranteed by ING AIH, with maximum aggregate borrowings outstanding at anytime to ING AIH and its affiliates of $75.0. Interest on any of ILIAC’s borrowing accrues at an annual rate equal to a rate quoted by PNC to ILIAC for the borrowing. Under this agreement, ILIAC incurred minimal interest expense for the years ended December 31, 2007 and 2006. At December 31, 2007 and 2006, ILIAC had no amounts outstanding under the line-of-credit agreement.
     
      ILIAC also maintains $100.0 uncommitted line-of-credit agreement with Svenska Handelsbanken AB (Publ.), effective June 2, 2006. Borrowings are guaranteed by ING AIH, with maximum aggregate borrowings outstanding at anytime to ING AIH and its affiliates of $100.0. Interest on any of the Company’s borrowing accrues at an annual rate equal to the rate quoted by Svenska to the Company for the borrowing. Under this agreement, the Company incurred minimal interest expense for the year ended December 31, 2007. At December 31, 2007, ILIAC had no amounts outstanding under the line-of-credit agreement.
     
      Also see Financing Agreements in the Related Party Transactions footnote.
     
    11.      Reinsurance
     
      At December 31, 2007, the Company had reinsurance treaties with 8 unaffiliated reinsurers covering a significant portion of the mortality risks and guaranteed death benefits under its variable contracts. At December 31, 2007, the Company did not have any outstanding cessions under any reinsurance treaties with affiliated reinsurers. The Company remains liable to the extent its reinsurers do not meet their obligations under the reinsurance agreements.
     

      On, October 1, 1998, the Company disposed of its individual life insurance business
    under an indemnity reinsurance arrangement with certain subsidiaries of Lincoln for $1.0
    billion in cash. Under the agreement, Lincoln contractually assumed from the Company
    certain policyholder liabilities and obligations, although the Company remains obligated
    to contractowners. Effective March 1, 2007, the reinsurance agreements were assigned to
    a single subsidiary of Lincoln, and that subsidiary established a trust to secure its
    obligations to the Company under the reinsurance transaction.

    C-50

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

      The Company assumed $25.0 of premium revenue from Aetna Life, for the purchase and
    administration of a life contingent single premium variable payout annuity contract. In
    addition, the Company is also responsible for administering fixed annuity payments that
    are made to annuitants receiving variable payments. Reserves of $16.1 and $17.4 were
    maintained for this contract as of December 31, 2007 and 2006, respectively.

    Reinsurance ceded in force for life mortality risks were $20.9 billion and $22.4 billion at
    December 31, 2007 and 2006, respectively. At December 31, 2007 and 2006, net
    receivables were comprised of the following:

        2007    2006 
    		 
    		 
    Claims recoverable from reinsurers    $ 2,595.2    $ 2,727.1 
    Payable for reinsurance premiums    (0.9)    (1.2) 
    		 
    		 
    Reinsured amounts due to reinsurer    (5.9)    (0.5) 
    Reserve credits    0.1    0.8 
    		 
    		 
    Other    5.9    (10.8) 
       
    		 
    Total    $ 2,594.4    $ 2,715.4 
       
    		 

      Premiums and Interest credited and other benefits to contractowners were reduced by the
    following amounts for reinsurance ceded for the years ended December 31, 2007, 2006,
    and 2005.

    Deposits ceded under reinsurance
    Premiums ceded under reinsurance
    Reinsurance recoveries

    2007    2006    2005 
    		 
    		 
    $ 188.5    $ 199.0    $ 215.5 
    0.4    0.5    0.4 
    		 
    		 
    419.7    359.0    363.7 

    12. Commitments and Contingent Liabilities

      Leases

    The Company leases certain office space and certain equipment under various operating
    leases, the longest term of which expires in 2014.

    For the years ended December 31, 2007, 2006, and 2005, rent expense for leases was
    $17.7, $17.8, and $17.4, respectively. The future net minimum payments under
    noncancelable leases for the years ended December 31, 2008 through 2012 are estimated
    to be $4.6, $3.5, $2.4, $1.7, and $0.8, respectively, and $0.5, 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.

    C-51

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

      Commitments

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

    At December 31, 2007, the Company had off-balance sheet commitments to purchase
    investments equal to their fair value of $357.8, $226.6 of which was with related parties.
    At December 31, 2006, the Company had off-balance sheet commitments to purchase
    investments equal to their fair value of $706.8, $322.3 of which was with related parties.
    During 2007 and 2006, $87.3 and $79.4, respectively, was funded to related parties under
    off-balance sheet commitments.

    Financial Guarantees

    The Company owns a 3-year credit-linked note arrangement, whereby the Company will
    reimburse the guaranteed party upon payment default of the referenced obligation. Upon
    such default, the Company reimburses the guaranteed party for the loss under the
    reference obligation, and the Company receives that reference obligation in settlement.
    The Company can then seek recovery of any losses under the agreement by sale or
    collection of the received reference obligation. As of December 31, 2007, the maximum
    liability to the Company under the guarantee was $30.0.

    Windsor Property Construction

    During the second half of 2006, NWL entered into agreements for site development and
    facility construction at the Windsor Property (collectively, the "Construction
    Agreements"). Construction of the Windsor Property is complete, and costs incurred
    under the Construction Agreements and other agreements associated with the
    construction, acquisition, and development of the corporate office facility totaled $62.4
    and $27.6 for the years ended December 31, 2007 and 2006, respectively. These costs
    were capitalized in Property and equipment on the Consolidated Balance Sheets.

    Litigation

    The Company is involved in threatened or pending lawsuits/arbitrations arising from the
    normal conduct of business. Due to the climate in insurance and business
    litigation/arbitrations, suits against the Company sometimes include claims for substantial
    compensatory, consequential, or punitive damages, and other types of relief. Moreover,
    certain claims are asserted as class actions, purporting to represent a group of similarly
    situated individuals. While it is not possible to forecast the outcome of such
    lawsuits/arbitrations, in light of existing insurance, reinsurance, and established reserves,

    C-52

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

      it is the opinion of management that the disposition of such lawsuits/arbitrations will not
    have a materially adverse effect on the Company’s operations or financial position.

    Other Regulatory Matters

    Regulatory Matters

    As with many financial services companies, the Company and its affiliates have received
    informal and formal requests for information from various state and federal governmental
    agencies and self-regulatory organizations in connection with inquiries and investigations
    of the products and practices of the financial services industry. In each case, the
    Company and its affiliates have been and are providing full cooperation.

    Insurance and Retirement Plan Products and Other Regulatory Matters

    Federal and state regulators, and self-regulatory agencies, are conducting broad inquiries
    and investigations involving the insurance and retirement industries. These initiatives
    currently focus on, among other things, compensation, revenue sharing, and other sales
    incentives; potential conflicts of interest; potential anti-competitive activity; reinsurance;
    sales and marketing practices (including sales to seniors); specific product types
    (including group annuities and indexed annuities); and disclosure. It is likely that the
    scope of these industry investigations will further broaden before they conclude. The
    Company and certain of its U.S. affiliates have received formal and informal requests in
    connection with such investigations, and are cooperating fully with each request for
    information. Some of these matters could result in regulatory action involving the
    Company. These initiatives also may result in new legislation and regulation that could
    significantly affect the financial services industry, including businesses in which the
    Company is engaged. In light of these and other developments, U.S. affiliates of ING,
    including the Company, periodically review whether modifications to their business
    practices are appropriate.

    Investment Product Regulatory Issues

    Since 2002, there has been increased governmental and regulatory activity relating to
    mutual funds and variable insurance products. This activity has primarily focused on
    inappropriate trading of fund shares; directed brokerage; compensation; sales practices,
    suitability, and supervision; arrangements with service providers; pricing; compliance
    and controls; adequacy of disclosure; and document retention.

    In addition to responding to governmental and regulatory requests on fund trading issues,
    ING management, on its own initiative, conducted, through special counsel and a
    national accounting firm, an extensive internal review of mutual fund trading in ING
    insurance, retirement, and mutual fund products. The goal of this review was to identify
    any instances of inappropriate trading in those products by third parties or by ING
    investment professionals and other ING personnel.

    C-53

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

      The internal review identified several isolated arrangements allowing third parties to
    engage in frequent trading of mutual funds within the variable insurance and mutual fund
    products of certain affiliates of the Company, and identified other circumstances where
    frequent trading occurred despite measures taken by ING intended to combat market
    timing. Each of the arrangements has been terminated and disclosed to regulators, to the
    independent trustees of ING Funds (U.S.) and in Company reports previously filed with
    the Securities and Exchange Commission (“SEC”) pursuant to the Securities Exchange
    Act of 1934, as amended.

    Action may be taken with respect to certain ING affiliates before investigations relating
    to fund trading are completed. The potential outcome of such action is difficult to predict
    but could subject certain affiliates to adverse consequences, including, but not limited to,
    settlement payments, penalties, and other financial liability. It is not currently
    anticipated, however, that the actual outcome of any such action will have a material
    adverse effect on ING or ING’s U.S.-based operations, including the Company.

    ING has agreed to indemnify and hold harmless the ING Funds from all damages
    resulting from wrongful conduct by ING or its employees or from ING’s internal
    investigation, any investigations conducted by any governmental or self-regulatory
    agencies, litigation or other formal proceedings, including any proceedings by the SEC.
    Management reported to the ING Funds Board that ING management believes that the
    total amount of any indemnification obligations will not be material to ING or ING’s
    U.S.-based operations, including the Company.

    C-54

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

    13.    Accumulated Other Comprehensive Income (Loss)         
     
        Shareholder’s equity included the following components of Accumulated other 
        comprehensive income (loss) as of December 31, 2007, 2006, and 2005.     
     
            2007    2006    2005 
           
    		 
    		 
        Net unrealized capital gains (losses):             
       
    		 
    		 
    		 
           Fixed maturities, available-for-sale    $ (64.5)    $ (44.6)    $ (18.0) 
           Equity securities, available-for-sale    6.3    18.1    3.2 
       
    		 
    		 
    		 
           DAC/VOBA adjustment on             
       
    		 
    		 
    		 
        available-for-sale securities    7.8    3.9    5.1 
           Sales inducements adjustment on             
        available-for-sale securities    0.2    0.1    0.1 
       
    		 
    		 
    		 
           Premium deficiency reserve adjustment    -    (37.5)    (23.6) 
           Other investments    (0.7)    0.8    1.2 
       
    		 
    		 
    		 
           Less: allocation to experience-rated contracts    (16.4)    (52.4)    (48.6) 
           
    		 
    		 
        Unrealized capital gains (losses), before tax    (34.5)    (6.8)    16.6 
       
    		 
    		 
    		 
        Deferred income tax asset (liability)    12.1    2.4    (10.3) 
        Asset valuation allowance    (6.4)    -    - 
       
    		 
    		 
    		 
        Net unrealized capital gains (losses)    (28.8)    (4.4)    6.3 
        Pension liability, net of tax    (5.0)    (9.6)    (11.6) 
       
    		 
    		 
    		 
        Accumulated other comprehensive             
       
    		 
    		 
    		 
           (loss) income    $ (33.8)    $ (14.0)    $ (5.3) 
           
    		 
    		 

      Net unrealized capital gains (losses) allocated to experience-rated contracts of $(16.4)
    and $(52.4) at December 31, 2007 and 2006, respectively, are reflected on the
    Consolidated Balance Sheets in Future policy benefits and claims reserves and are not
    included in Shareholder’s equity.

    C-55

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

      Changes in Accumulated other comprehensive income (loss), net of DAC, VOBA, and
    tax (excluding the tax valuation allowance), related to changes in unrealized capital gains
    (losses) on securities, including securities pledged and excluding those related to
    experience-rated contracts, were as follows for the years ended December 31, 2007,
    2006, and 2005.

                     2007        2006    2005 
    		 
    		 
    		 
    		 
    Fixed maturities, available-for-sale    $ (19.9)    $ (26.6)    $ (500.1) 
    Equity securities, available-for-sale        (11.8)        14.9    (5.5) 
    		 
    		 
    		 
    		 
    		 
    DAC/VOBA adjustment on                     
    		 
    		 
    		 
    		 
    		 
       available-for-sale securities        3.9        (1.2)    14.6 
    Sales inducements adjustment on                     
       available-for-sale securities        0.1        -    0.2 
    		 
    		 
    		 
    		 
    		 
    Premium deficiency reserve adjustment        37.5        (13.9)    (23.6) 
    Other investments        (1.5)        (0.4)    (0.1) 
    		 
    		 
    		 
    		 
    		 
    Less: allocation to experience-rated contracts        36.0        (3.8)    (406.1) 
       
    		 
    		 
    		 
    		 
    Unrealized capital gains (losses), before tax        (27.7)        (23.4)    (108.4) 
    		 
    		 
    		 
    		 
    		 
    Deferred income tax asset (liability)        9.7        12.7    30.9 
       
    		 
    		 
    		 
    		 
    Net change in unrealized capital gains (losses)    $ (18.0)    $ (10.7)    $ (77.5) 
       
    		 
    		 
     
                 2007        2006    2005 
    		 
    		 
    		 
    		 
    		 
    Net unrealized capital holding gains (losses) arising                     
    		 
    		 
    		 
    		 
    		 
       during the year (1)    $ (66.9)    $ (43.6)    $ (38.2) 
    Less: reclassification adjustment for gains                     
       (losses) and other items included in Net income(2)        (48.9)    (32.9)    39.3 
    		 
    		 
    		 
    		 
    Net change in unrealized capital gains (losses) on securities $    (18.0)    $ (10.7)    $ (77.5) 
       
    		 
    		 

    (1)      Pretax unrealized holding gains (losses) arising during the year were $(102.9), $(95.4), and $(53.4), for the years ended December 31, 2007, 2006, and 2005, respectively.
     
    (2)      Pretax reclassification adjustments for gains (losses) and other items included in Net income were $(75.2), $(72.0), and $55.0, for the years ended December 31, 2007, 2006, and 2005, respectively.
     

    C-56

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

    14. Changes to Prior Years Presentation

      During 2007, the Company identified $43.1 in unreconciled net liabilities. While the
    correction of this error is not material to the prior period financial statements, correction
    of the error through the current period income statement would be material to the 2007
    Statements of Operations. In accordance with the guidance provided in SEC Staff
    Accounting Bulletin (“SAB”) Topic IN, “Financial Statements - Considering the Effects
    of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial
    Statements” (“SAB 108”), the Company has restated the prior period financial statements
    to correct this error by adjusting January 1, 2005 Retained earnings and December 31,
    2006 DAC, VOBA, Future policy benefits and claims reserves, Other liabilities, and
    Deferred taxes as follows:

        Previously         
        Reported    Adjustment    Restated 
       
    		 
    		 
     
    January 1, 2005             
    		 
    		 
    		 
    Retained earnings (net of tax)    $ (1,877.1)    $ 28.0    $ (1,849.1) 
    Total shareholder's equity (net of tax)    2,759.6    28.0    2,787.6 
     
    December 31, 2006             
    		 
    		 
    		 
    Deferred policy acquisition cost    $ 623.6    $ (1.0)    $ 622.6 
    Value of business acquired    1,342.9    (2.7)    1,340.2 
    		 
    		 
    		 
    Total assets    68,486.0    (3.7)    68,482.3 
    		 
    		 
    		 
     
    Future policy benefits and claims reserves    $ 19,995.8    $ (11.7)    $ 19,984.1 
    Other liabilities    406.2    (35.1)    371.1 
    		 
    		 
    		 
    Deferred taxes    246.0    15.1    261.1 
    Total liabilities    65,500.3    (31.7)    65,486.6 

    C-57

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

    QUARTERLY DATA (UNAUDITED)                     
    (Dollar amounts in millions, unless otherwise stated)                 
     
    2007    First    Second        Third        Fourth 
    		 
    		 
    		 
    		 
    		 
    		 
    Total revenue    $ 579.1    $ 594.9    $ 601.4    $ 676.5 
       
    		 
    		 
    		 
    Income (loss) before income taxes    100.7    115.8        85.8               (27.9) 
    		 
    		 
    		 
    		 
    		 
    		 
    Income tax expense (benefit)    28.5    33.6        22.3               (28.4) 
       
    		 
    		 
    		 
    		 
    		 
    Net income    $ 72.2    $ 82.2    $ 63.5    $ 0.5 
       
    		 
    		 
    		 
     
    2006    First*    Second*        Third*        Fourth 
    		 
    		 
    		 
    		 
    		 
    		 
    Total revenue    $ 532.5    $ 551.2    $ 548.5    $ 597.7 
       
    		 
    		 
    		 
    Income before income taxes    80.4    116.9        84.3        142.9 
    		 
    		 
    		 
    		 
    		 
    		 
    Income tax expense    21.6    34.2        16.6        50.3 
       
    		 
    		 
    		 
    		 
    		 
    Net income    $ 58.8    $ 82.7    $ 67.7    $ 92.6 
       
    		 
    		 
    		 
     
     
    *Amounts have been restated to reflect the contribution of Directed Services, Inc. on December 1, 2006. See the "Organization     
     and Significant Accounting Policies" footnote for further information regarding the contribution.             

    C-58

    CONDENSED FINANCIAL INFORMATION

    Except for subaccounts which did not commence operations as of December 31, 2007, the following tables give (1) the accumulation unit
    value (AUV) at the beginning of the period, (2) the AUV at the end of the period and (3) the total number of accumulation units outstanding
    at the end of the period for each subaccount of Variable Annuity Account I available under the contracts for the indicated periods. For those
    subaccounts that commenced operations during the period ended December 31, 2007, the “Value at beginning of period” shown is the value
    at first date of investment.

    TABLE I

    FOR CONTRACTS WITH TOTAL SEPARATE ACCOUNT CHARGES OF 1.40%

        2007    2006    2005    2004    2003    2002    2001    2000    1999    1998 
    CALVERT SOCIAL BALANCED PORTFOLIO                                         
    (Funds were first received in this option during December 1997)                                         
    Value at beginning of period    $13.48    $12.57    $12.07    $11.30    $9.61    $11.092    $12.089    $12.656    $11.437    $9.976 
    Value at end of period    $13.66    $13.48    $12.57    $12.07    $11.30    $9.61    $11.092    $12.089    $12.656    $11.437 
    Number of accumulation units outstanding at end of period    12,925    9,616    14,120    24,894    26,484    11,931    11,652    8,297    12,298    12,288 
    FEDERATED FUND FOR US GOVT. SECURITIES II                                         
    Value at beginning of period    $15.92    $15.51    $15.41                             
    Value at end of period    $16.69    $15.92    $15.51                             
    Number of accumulation units outstanding at end of period    74,991    91,363    181,455                             
    FIDELITY® VIP CONTRAFUND® PORTFOLIO                                         
    Value at beginning of period    $30.32    $27.52    $23.87    $20.96    $16.55    $18.515    $21.40    $23.242    $18.97    $14.802 
    Value at end of period    $35.15    $30.32    $27.52    $23.87    $20.96    $16.55    $18.515    $21.40    $23.242    $18.97 
    Number of accumulation units outstanding at end of period    572,159    725,198    884,670    987,722    1,061,457    1,144,943    1,299,125    1,565,470    1,826,356    1,853,911 
    FIDELITY® VIP EQUITY-INCOME PORTFOLIO                                         
    Value at beginning of period    $24.78    $20.91    $20.03    $18.22    $14.18    $17.311    $18.474    $17.279    $16.482    $14.974 
    Value at end of period    $24.81    $24.78    $20.91    $20.03    $18.22    $14.18    $17.311    $18.474    $17.279    $16.482 
    Number of accumulation units outstanding at end of period    747,375    939,247    1,186,833    1,549,447    1,817,918    2,000,319    2,297,364    2,335,570    2,597,042    2,792,889 
    FIDELITY® VIP INDEX 500 PORTFOLIO                                         
    Value at beginning of period    $24.22    $21.22    $20.53    $18.83    $14.87    $19.397    $22.383    $25.027    $21.063    $16.646 
    Value at end of period    $25.18    $24.22    $21.22    $20.53    $18.83    $14.87    $19.397    $22.383    $25.027    $21.063 
    Number of accumulation units outstanding at end of period    365,035    492,861    730,266    993,587    1,196,859    1,193,376    1,469,435    1,723,480    1,838,819    1,953,506 
    FIDELITY® VIP INVESTMENT GRADE BOND                                         
    PORTFOLIO                                         
    Value at beginning of period    $16.64    $16.17    $16.05                             
    Value at end of period    $17.12    $16.64    $16.17                             
    Number of accumulation units outstanding at end of period    15,324    15,932    18,605                             

    IICA Mthn Plus

    1

                                                                                                                       Condensed Financial Information (continued)                 
    		 
    		 
    		 
    		 
     
     
        2007    2006    2005    2004    2003    2002    2001    2000    1999    1998 
    ING EVERGREEN OMEGA PORTFOLIO                                         
    (Funds were first received in this option during September 2005)                                         
    Value at beginning of period    $10.62    $10.17    $9.92                             
    Value at end of period    $11.72    $10.62    $10.17                             
    Number of accumulation units outstanding at end of period    72,800    83,905    106,764                             
    ING FMRSM LARGE CAP GROWTH PORTFOLIO                                         
    (Funds were first received in this option during September 2005)                                         
    Value at beginning of period    $10.04    $9.90    $9.66                             
    Value at end of period    $10.27    $10.04    $9.90                             
    Number of accumulation units outstanding at end of period    662,915    872,703    114,102                             
    ING JPMORGAN EMERGING MARKETS EQUITY                                         
    PORTFOLIO                                         
    (Funds were first received in this option during December 2005)                                         
    Value at beginning of period    $14.73    $10.97    $10.69                             
    Value at end of period    $20.16    $14.73    $10.97                             
    Number of accumulation units outstanding at end of period    57,901    47,791    20,857                             
    ING JPMORGAN INTERNATIONAL PORTFOLIO                                         
    (Funds were first received in this option during November 1997)                                         
    Value at beginning of period    $16.41    $13.62    $12.55    $10.71    $8.39    $10.384    $14.415    $18.181    $11.64    $9.912 
    Value at end of period    $17.81    $16.41    $13.62    $12.55    $10.71    $8.39    $10.384    $14.415    $18.181    $11.64 
    Number of accumulation units outstanding at end of period    80,810    81,055    87,472    145,478    127,225    141,521    105,209    76,956    87,650    79,756 
    ING JPMORGAN VALUE OPPORTUNITIES PORTFOLIO                                         
    (Funds were first received in this option during May 2005)                                         
    Value at beginning of period    $12.59    $10.64    $10.30                             
    Value at end of period    $12.27    $12.59    $10.64                             
    Number of accumulation units outstanding at end of period    98,828    133,015    145,473                             
    ING LEGG MASON PARTNERS AGGRESSIVE GROWTH                                         
    PORTFOLIO                                         
    (Funds were first received in this option during November 1997)                                         
    Value at beginning of period    $11.68    $10.74    $9.77    $9.03    $6.63    $10.395    $14.097    $20.074    $13.494    $10.554 
    Value at end of period    $11.33    $11.68    $10.74    $9.77    $9.03    $6.63    $10.395    $14.097    $20.074    $13.494 
    Number of accumulation units outstanding at end of period    445,030    545,503    682,314    872,366    1,184,775    1,301,937    1,798,491    2,155,759    2,336,393    2,557,155 
    ING MARSICO INTERNATIONAL OPPORTUNITIES                                         
    PORTFOLIO                                         
    (Funds were first received in this option during April 2006)                                         
    Value at beginning of period    $10.69    $9.97                                 
    Value at end of period    $12.70    $10.69                                 
    Number of accumulation units outstanding at end of period    81,552    78,239                                 
    ING MFS TOTAL RETURN PORTFOLIO                                         
    (Funds were first received in this option during May 2005)                                         
    Value at beginning of period    $11.53    $10.42    $10.13                             
    Value at end of period    $11.86    $11.53    $10.42                             
    Number of accumulation units outstanding at end of period    598,111    719,175    1,007,580                             
    ING OPPENHEIMER GLOBAL PORTFOLIO                                         
    (Funds were first received in this option during April 2005)                                         
    Value at beginning of period    $13.97    $12.00    $10.06                             
    Value at end of period    $14.67    $13.97    $12.00                             
    Number of accumulation units outstanding at end of period    1,154,427    1,421,076    1,845,044                             

    IICA Mthn Plus

    2

                                                                                                                       Condensed Financial Information (continued)                 
    		 
    		 
    		 
    		 
     
     
        2007    2006    2005    2004    2003    2002    2001    2000    1999    1998 
    ING OPPENHEIMER MAIN STREET PORTFOLIO®                                         
    (Funds were first received in this option during May 2005)                                         
    Value at beginning of period    $12.55    $11.04    $10.24                             
    Value at end of period    $12.93    $12.55    $11.04                             
    Number of accumulation units outstanding at end of period    21,882    23,059    40,711                             
    ING OPPENHEIMER STRATEGIC INCOME PORTFOLIO                                         
    (Funds were first received in this option during April 2005)                                         
    Value at beginning of period    $10.80    $10.10    $10.01                             
    Value at end of period    $11.58    $10.80    $10.10                             
    Number of accumulation units outstanding at end of period    426,901    472,345    630,746                             
    ING PIMCO HIGH YIELD PORTFOLIO                                         
    (Funds were first received in this option during August 2005)                                         
    Value at beginning of period    $11.29    $10.51    $10.44                             
    Value at end of period    $11.45    $11.29    $10.51                             
    Number of accumulation units outstanding at end of period    93,631    135,391    150,818                             
    ING THORNBURG VALUE PORTFOLIO                                         
    (Funds were first received in this option during November 1997)                                         
    Value at beginning of period    $14.33    $12.44    $12.42    $11.16    $8.84    $12.836    $17.303    $18.612    $12.686    $10.152 
    Value at end of period    $15.15    $14.33    $12.44    $12.42    $11.16    $8.84    $12.836    $17.303    $18.612    $12.686 
    Number of accumulation units outstanding at end of period    97,021    104,331    119,686    178,324    206,430    333,609    329,528    535,004    473,282    358,518 
    ING T. ROWE PRICE DIVERSIFIED MID CAP GROWTH                                         
    PORTFOLIO                                         
    (Funds were first received in this option during April 2005)                                         
    Value at beginning of period    $12.57    $11.69    $10.04                             
    Value at end of period    $14.06    $12.57    $11.69                             
    Number of accumulation units outstanding at end of period    282,338    317,037    447,605                             
    ING T. ROWE PRICE GROWTH EQUITY PORTFOLIO                                         
    (Funds were first received in this option during November 1997)                                         
    Value at beginning of period    $22.69    $20.31    $19.40    $17.89    $13.85    $18.318    $20.694    $20.993    $17.406    $13.834 
    Value at end of period    $24.59    $22.69    $20.31    $19.40    $17.89    $13.85    $18.318    $20.694    $20.993    $17.406 
    Number of accumulation units outstanding at end of period    395,796    489,126    651,997    859,736    992,016    1,092,108    1,299,610    1,516,955    1,472,258    1,616,748 
    ING UBS U.S. LARGE CAP EQUITY PORTFOLIO                                         
    (Funds were first received in this option during November 1997)                                         
    Value at beginning of period    $12.04    $10.66    $9.88    $8.74    $7.09    $9.574    $12.274    $13.032    $10.656    $8.786 
    Value at end of period    $12.01    $12.04    $10.66    $9.88    $8.74    $7.09    $9.574    $12.274    $13.032    $10.656 
    Number of accumulation units outstanding at end of period    326,655    390,460    497,936    630,854    739,569    916,120    1,177,274    1,421,458    1,550,656    1,761,234 
    ING VAN KAMPEN EQUITY AND INCOME PORTFOLIO                                         
    (Funds were first received in this option during April 2005)                                         
    Value at beginning of period    $12.09    $10.88    $10.06                             
    Value at end of period    $12.34    $12.09    $10.88                             
    Number of accumulation units outstanding at end of period    471,290    598,404    759,682                             
    ING VP BALANCED PORTFOLIO                                         
    Value at beginning of period    $21.21    $19.56    $19.03    $17.64    $15.05    $17.016    $18.018    $18.376    $16.405    $14.228 
    Value at end of period    $22.08    $21.21    $19.56    $19.03    $17.64    $15.05    $17.016    $18.018    $18.376    $16.405 
    Number of accumulation units outstanding at end of period    163,716    200,792    157,366    195,681    240,188    273,826    315,543    364,760    387,565    369,652 
    ING VP GLOBAL SCIENCE AND TECHNOLOGY                                         
    PORTFOLIO                                         
    (Funds were first received in this option during May 2000)                                         
    Value at beginning of period    $4.17    $3.94    $3.58    $3.67    $2.56    $4.424    $5.824    $9.106         
    Value at end of period    $4.89    $4.17    $3.94    $3.58    $3.67    $2.56    $4.424    $5.824         
    Number of accumulation units outstanding at end of period    101,881    76,584    91,603    162,127    410,635    115,373    74,229    34,998         
     
     
    IICA Mthn Plus                                         
                    3                         

        Condensed Financial Information (continued)                 
    		 
    		 
    		 
    		 
    		 
     
     
        2007    2006    2005    2004    2003    2002    2001    2000    1999    1998 
    ING VP GROWTH AND INCOME PORTFOLIO                                         
    Value at beginning of period    $17.81    $15.81    $14.83    $13.88    $11.16    $15.096    $18.765    $21.374    $18.461    $16.354 
    Value at end of period    $18.86    $17.81    $15.81    $14.83    $13.88    $11.16    $15.096    $18.765    $21.374    $18.461 
    Number of accumulation units outstanding at end of period    222,094    289,635    409,644    511,623    624,677    718,631    896,573    1,015,824    1,172,637    1,217,448 
    ING VP GROWTH PORTFOLIO                                         
    (Funds were first received in this option during May 1997)                                         
    Value at beginning of period    $15.42    $15.23    $14.13    $13.36    $10.40    $14.84    $20.638    $23.771    $17.862    $13.158 
    Value at end of period    $17.92    $15.42    $15.23    $14.13    $13.36    $10.40    $14.84    $20.638    $23.771    $17.862 
    Number of accumulation units outstanding at end of period    25,704    60,251    38,833    57,496    72,287    79,048    109,809    256    156,242    284,771 
    ING VP INDEX PLUS LARGECAP PORTFOLIO                                         
    Value at beginning of period    $21.48    $19.01    $18.30    $16.78    $13.49    $17.439    $20.478    $22.923    $18.704    $14.414 
    Value at end of period    $22.24    $21.48    $19.01    $18.30    $16.78    $13.49    $17.439    $20.478    $22.923    $18.704 
    Number of accumulation units outstanding at end of period    91,167    151,075    193,784    219,239    279,207    305,209    345,653    445,665    536,795    654,767 
    ING VP INTERMEDIATE BOND PORTFOLIO                                         
    Value at beginning of period    $16.37    $15.95    $15.69    $15.17    $14.47    $13.549    $12.637    $11.689    $11.943    $11.201 
    Value at end of period    $17.11    $16.37    $15.95    $15.69    $15.17    $14.47    $13.549    $12.637    $11.689    $11.943 
    Number of accumulation units outstanding at end of period    288,015    305,336    372,441    419,545    585,875    855,016    580,831    422,109    516,266    500,098 
    ING VP MONEY MARKET PORTFOLIO                                         
    Value at beginning of period    $13.17    $12.74    $12.54    $12.58    $12.65    $12.624    $12.319    $11.744    $11.335    $10.90 
    Value at end of period    $13.65    $13.17    $12.74    $12.54    $12.58    $12.65    $12.624    $12.319    $11.744    $11.335 
    Number of accumulation units outstanding at end of period    633,870    635,323    640,751    677,901    1,135,320    2,039,666    2,045,640    1,690,766    2,775,866    2,041,170 
    ING VP SMALL COMPANY PORTFOLIO                                         
    (Funds were first received in this option during May 1997)                                         
    Value at beginning of period    $27.43    $23.81    $21.90    $19.42    $14.33    $18.926    $18.458    $17.54    $13.595    $13.638 
    Value at end of period    $28.63    $27.43    $23.81    $21.90    $19.42    $14.33    $18.926    $18.458    $17.54    $13.595 
    Number of accumulation units outstanding at end of period    106,341    149,129    192,426    286,551    409,801    357,092    342,594    343,701    136,571    225,982 
    ING VP STRATEGIC ALLOCATION CONSERVATIVE                                         
    PORTFOLIO                                         
    Value at beginning of period    $17.88    $16.73    $16.34    $15.35    $13.70    $14.522    $15.088    $14.599    $13.825    $13.112 
    Value at end of period    $18.65    $17.88    $16.73    $16.34    $15.35    $13.70    $14.522    $15.088    $14.599    $13.825 
    Number of accumulation units outstanding at end of period    83,593    61,416    70,291    81,018    97,343    98,588    114,194    79,712    94,121    95,815 
    ING VP STRATEGIC ALLOCATION GROWTH                                         
    PORTFOLIO                                         
    Value at beginning of period    $19.97    $17.89    $17.09    $15.47    $12.62    $14.841    $17.018    $17.374    $15.409    $14.983 
    Value at end of period    $20.68    $19.97    $17.89    $17.09    $15.47    $12.62    $14.841    $17.018    $17.374    $15.409 
    Number of accumulation units outstanding at end of period    94,339    107,970    136,356    100,636    64,273    52,779    57,017    66,806    74,094    83,798 
    ING VP STRATEGIC ALLOCATION MODERATE                                         
    PORTFOLIO                                         
    Value at beginning of period    $18.72    $17.07    $16.54    $15.22    $12.92    $14.481    $15.792    $15.949    $14.676    $14.054 
    Value at end of period    $19.46    $18.72    $17.07    $16.54    $15.22    $12.92    $14.481    $15.792    $15.949    $14.676 
    Number of accumulation units outstanding at end of period    113,872    107,680    97,208    84,249    63,658    34,383    33,977    39,050    42,322    40,712 
    ING VP VALUE OPPORTUNITY PORTFOLIO                                         
    (Funds were first received in this option during May 1997)                                         
    Value at beginning of period    $21.46    $18.76    $17.77    $16.37    $13.32    $18.25    $20.48    $18.847    $15.985    $13.246 
    Value at end of period    $21.80    $21.46    $18.76    $17.77    $16.37    $13.32    $18.25    $20.48    $18.847    $15.985 
    Number of accumulation units outstanding at end of period    55,997    69,523    91,012    132,862    146,199    200,434    310,005    280,864    150,268    311,397 

    IICA Mthn Plus

    4

                                                                                                                       Condensed Financial Information (continued)                 
    		 
    		 
    		 
    		 
     
     
     
    TABLE II
     
    FOR CONTRACTS ISSUED WITH TOTAL SEPARATE ACCOUNT CHARGES OF 1.25%
     
     
        2007    2006    2005    2004    2003    2002    2001    2000    1999    1998 
    CALVERT SOCIAL BALANCED PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $13.37    $12.45    $11.93    $11.16    $9.47    $10.919    $11.882    $12.421    $11.208    $10.596 
    Value at end of period    $13.57    $13.37    $12.45    $11.93    $11.16    $9.47    $10.919    $11.882    $12.421    $11.208 
    Number of accumulation units outstanding at end of period    2,600    5,115    4,427    9,781    11,187    7,060    8,516    10,043    12,257    11,121 
    FIDELITY® VIP CONTRAFUND® PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $20.28    $18.38    $15.92    $13.96    $11.00    $12.292    $14.186    $15.383    $12.537    $11.136 
    Value at end of period    $23.55    $20.28    $18.38    $15.92    $13.96    $11.00    $12.292    $14.186    $15.383    $12.537 
    Number of accumulation units outstanding at end of period    111,431    144,395    189,474    270,618    284,306    282,851    331,463    375,961    410,630    353,548 
    FIDELITY® VIP EQUITY-INCOME PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $16.45    $13.86    $13.25    $12.03    $9.35    $11.401    $12.148    $11.346    $10.806    $10.957 
    Value at end of period    $16.49    $16.45    $13.86    $13.25    $12.03    $9.35    $11.401    $12.148    $11.346    $10.806 
    Number of accumulation units outstanding at end of period    167,211    214,849    308,442    440,175    477,417    482,335    502,916    484,590    576,813    476,634 
    FIDELITY® VIP INDEX 500 PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $14.27    $12.49    $12.06    $11.04    $8.71    $11.342    $13.067    $14.589    $12.259    $11.159 
    Value at end of period    $14.86    $14.27    $12.49    $12.06    $11.04    $8.71    $11.342    $13.067    $14.589    $12.259 
    Number of accumulation units outstanding at end of period    86,806    115,177    170,290    255,117    275,998    318,692    360,463    425,196    738,298    409,685 
    ING FMRSM LARGE CAP GROWTH PORTFOLIO                                         
    (Funds were first received in this option during April 2006)                                         
    Value at beginning of period    $10.06    $10.11                                 
    Value at end of period    $10.31    $10.06                                 
    Number of accumulation units outstanding at end of period    106,468    131,528                                 
    ING JPMORGAN EMERGING MARKETS EQUITY                                         
    PORTFOLIO                                         
    (Funds were first received in this option during December 2005)                                         
    Value at beginning of period    $14.76    $10.97    $10.76                             
    Value at end of period    $20.23    $14.76    $10.97                             
    Number of accumulation units outstanding at end of period    12,984    5,321    1,129                             
    ING JPMORGAN INTERNATIONAL PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $15.69    $13.00    $11.96    $10.19    $7.97    $9.855    $13.658    $17.201    $10.995    $11.145 
    Value at end of period    $17.06    $15.69    $13.00    $11.96    $10.19    $7.97    $9.855    $13.658    $17.201    $10.995 
    Number of accumulation units outstanding at end of period    12,412    15,818    30,651    38,432    32,476    34,668    35,605    34,335    34,698    30,516 
    ING JPMORGAN VALUE OPPORTUNITIES PORTFOLIO                                         
    (Funds were first received in this option during May 2005)                                         
    Value at beginning of period    $12.62    $10.65    $10.31                             
    Value at end of period    $12.32    $12.62    $10.65                             
    Number of accumulation units outstanding at end of period    1,731    2,702    1,281                             

    IICA Mthn Plus

    5

                                                                                                                       Condensed Financial Information (continued)                 
    		 
    		 
    		 
    		 
     
     
        2007    2006    2005    2004    2003    2002    2001    2000    1999    1998 
    ING LEGG MASON PARTNERS AGGRESSIVE GROWTH                                         
    PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $10.34    $9.49    $8.62    $7.96    $5.83    $9.13    $12.362    $17.577    $11.797    $11.104 
    Value at end of period    $10.04    $10.34    $9.49    $8.62    $7.96    $5.83    $9.13    $12.362    $17.577    $11.797 
    Number of accumulation units outstanding at end of period    39,989    53,971    85,413    96,144    123,870    146,220    178,926    204,067    258,892    205,549 
    ING MARSICO INTERNATIONAL OPPORTUNITIES                                         
    PORTFOLIO                                         
    (Funds were first received in this option during May 2006)                                         
    Value at beginning of period    $10.70    $10.19                                 
    Value at end of period    $12.74    $10.70                                 
    Number of accumulation units outstanding at end of period    9,732    1,795                                 
    ING MFS TOTAL RETURN PORTFOLIO                                         
    (Funds were first received in this option during May 2005)                                         
    Value at beginning of period    $11.56    $10.43    $10.02                             
    Value at end of period    $11.91    $11.56    $10.43                             
    Number of accumulation units outstanding at end of period    136,400    165,817    237,360                             
    ING OPPENHEIMER GLOBAL PORTFOLIO                                         
    (Funds were first received in this option during April 2005)                                         
    Value at beginning of period    $14.00    $12.02    $10.06                             
    Value at end of period    $14.73    $14.00    $12.02                             
    Number of accumulation units outstanding at end of period    149,191    186,321    270,034                             
    ING OPPENHEIMER MAIN STREET PORTFOLIO®                                         
    (Funds were first received in this option during May 2005)                                         
    Value at beginning of period    $12.58    $11.05    $10.42                             
    Value at end of period    $12.98    $12.58    $11.05                             
    Number of accumulation units outstanding at end of period    8,763    12,420    13,386                             
    ING OPPENHEIMER STRATEGIC INCOME PORTFOLIO                                         
    (Funds were first received in this option during April 2005)                                         
    Value at beginning of period    $10.83    $10.11    $10.01                             
    Value at end of period    $11.63    $10.83    $10.11                             
    Number of accumulation units outstanding at end of period    89,896    123,268    193,543                             
    ING PIMCO HIGH YIELD PORTFOLIO                                         
    (Funds were first received in this option during May 2005)                                         
    Value at beginning of period    $11.32    $10.52    $10.23                             
    Value at end of period    $11.49    $11.32    $10.52                             
    Number of accumulation units outstanding at end of period    2,036    6,071    15,707                             
    ING THORNBURG VALUE PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $13.73    $11.90    $11.86    $10.64    $8.42    $12.203    $16.424    $17.64    $12.005    $11.503 
    Value at end of period    $14.54    $13.73    $11.90    $11.86    $10.64    $8.42    $12.203    $16.424    $17.64    $12.005 
    Number of accumulation units outstanding at end of period    20,758    23,342    51,670    68,660    83,398    119,891    126,600    145,704    145,648    108,102 
    ING T. ROWE PRICE DIVERSIFIED MID CAP GROWTH                                         
    PORTFOLIO                                         
    (Funds were first received in this option during April 2005)                                         
    Value at beginning of period    $12.61    $11.70    $10.04                             
    Value at end of period    $14.12    $12.61    $11.70                             
    Number of accumulation units outstanding at end of period    31,600    35,649    67,621                             

    IICA Mthn Plus

    6

        Condensed Financial Information (continued)                 
    		 
    		 
    		 
    		 
    		 
     
     
        2007    2006    2005    2004    2003    2002    2001    2000    1999    1998 
    ING T. ROWE PRICE GROWTH EQUITY PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $15.97    $14.27    $13.61    $12.53    $9.69    $12.795    $14.433    $14.62    $12.103    $11.12 
    Value at end of period    $17.33    $15.97    $14.27    $13.61    $12.53    $9.69    $12.795    $14.433    $14.62    $12.103 
    Number of accumulation units outstanding at end of period    67,347    75,304    114,098    132,419    117,552    109,183    121,445    132,805    121,008    120,157 
    ING UBS U.S. LARGE CAP EQUITY PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $13.30    $11.76    $10.89    $9.61    $7.79    $10.501    $13.442    $14.25    $11.634    $11.178 
    Value at end of period    $13.29    $13.30    $11.76    $10.89    $9.61    $7.79    $10.501    $13.442    $14.25    $11.634 
    Number of accumulation units outstanding at end of period    43,209    36,959    50,188    69,767    88,444    110,061    137,737    145,226    154,290    131,761 
    ING VAN KAMPEN EQUITY AND INCOME PORTFOLIO                                     
    (Funds were first received in this option during April 2005)                                         
    Value at beginning of period    $12.12    $10.89    $10.06                             
    Value at end of period    $12.39    $12.12    $10.89                             
    Number of accumulation units outstanding at end of period    81,815    116,768    182,409                             
    ING VP BALANCED PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $14.81    $13.63    $13.24    $12.25    $10.44    $11.787    $12.462    $12.69    $11.312    $10.708 
    Value at end of period    $15.43    $14.81    $13.63    $13.24    $12.25    $10.44    $11.787    $12.462    $12.69    $11.312 
    Number of accumulation units outstanding at end of period    61,732    90,278    53,785    79,752    100,168    100,062    97,168    106,603    122,860    112,689 
    ING VP GLOBAL SCIENCE AND TECHNOLOGY                                         
    PORTFOLIO                                         
    (Funds were first received in this option during May 2000)                                         
    Value at beginning of period    $4.21    $3.98    $3.60    $3.69    $2.57    $4.435    $5.83    $8.85         
    Value at end of period    $4.95    $4.21    $3.98    $3.60    $3.69    $2.57    $4.435    $5.83         
    Number of accumulation units outstanding at end of period    5,750    1,441    13,786    13,985    51,590    10,727    2,710    2,543         
    ING VP GROWTH AND INCOME PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $10.80    $9.58    $8.97    $8.38    $6.73    $9.087    $11.278    $12.827    $11.063    $11.063 
    Value at end of period    $11.46    $10.80    $9.58    $8.97    $8.38    $6.73    $9.087    $11.278    $12.827    $11.063 
    Number of accumulation units outstanding at end of period    74,617    92,441    262,047    320,334    347,069    407,326    384,290    419,418    474,578    794,335 
    ING VP GROWTH PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $11.34    $11.19    $10.36    $9.78    $7.60    $10.831    $15.039    $17.296    $12.977    $11.455 
    Value at end of period    $13.20    $11.34    $11.19    $10.36    $9.78    $7.60    $10.831    $15.039    $17.296    $12.977 
    Number of accumulation units outstanding at end of period    17,976    20,200    23,464    29,696    31,978    37,025    50,862    89,897    74,875    75,506 
    ING VP INDEX PLUS LARGECAP PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $14.57    $12.88    $12.38    $11.33    $9.10    $11.741    $13.766    $15.387    $12.535    $11.157 
    Value at end of period    $15.11    $14.57    $12.88    $12.38    $11.33    $9.10    $11.741    $13.766    $15.387    $12.535 
    Number of accumulation units outstanding at end of period    41,812    61,797    86,451    106,738    113,492    139,607    182,887    190,980    208,800    215,324 
    ING VP INTERMEDIATE BOND PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $14.71    $14.32    $14.06    $13.57    $12.93    $12.087    $11.256    $10.396    $10.606    $10.118 
    Value at end of period    $15.40    $14.71    $14.32    $14.06    $13.57    $12.93    $12.087    $11.256    $10.396    $10.606 
    Number of accumulation units outstanding at end of period    95,428    104,114    118,765    132,044    156,673    208,945    203,572    146,073    284,700    211,071 
    ING VP MONEY MARKET PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $12.20    $11.78    $11.58    $11.60    $11.64    $11.603    $11.306    $10.762    $10.371    $10.097 
    Value at end of period    $12.67    $12.20    $11.78    $11.58    $11.60    $11.64    $11.603    $11.306    $10.762    $10.371 
    Number of accumulation units outstanding at end of period    193,745    183,382    183,467    266,154    309,034    604,639    896,013    726,382    370,653    319,753 
     
    IICA Mthn Plus                                         
                    7                         

        Condensed Financial Information (continued)                 
    		 
    		 
    		 
    		 
    		 
     
     
        2007    2006    2005    2004    2003    2002    2001    2000    1999    1998 
    ING VP SMALL COMPANY PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $19.86    $17.22    $15.81    $14.00    $10.31    $13.599    $13.243    $12.565    $9.724    $11.126 
    Value at end of period    $20.76    $19.86    $17.22    $15.81    $14.00    $10.31    $13.599    $13.243    $12.565    $9.724 
    Number of accumulation units outstanding at end of period    40,023    56,421    78,633    101,386    109,954    78,472    104,124    109,027    80,258    71,465 
    ING VP STRATEGIC ALLOCATION CONSERVATIVE                                         
    PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $13.59    $12.70    $12.38    $11.61    $10.35    $10.953    $11.362    $10.978    $10.38    $10.404 
    Value at end of period    $14.20    $13.59    $12.70    $12.38    $11.61    $10.35    $10.953    $11.362    $10.978    $10.38 
    Number of accumulation units outstanding at end of period    856    1,237    7,956    21,114    11,808    16,425    29,205    23,848    29,162    29,301 
    ING VP STRATEGIC ALLOCATION GROWTH                                         
    PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $13.20    $11.81    $11.26    $10.18    $8.29    $9.733    $11.143    $11.359    $10.059    $10.694 
    Value at end of period    $13.69    $13.20    $11.81    $11.26    $10.18    $8.29    $9.733    $11.143    $11.359    $10.059 
    Number of accumulation units outstanding at end of period    10,704    11,124    9,031    6,479    9,774    5,274    6,934    16,321    16,116    17,615 
    ING VP STRATEGIC ALLOCATION MODERATE                                         
    PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $13.26    $12.07    $11.68    $10.73    $9.09    $10.179    $11.084    $11.177    $10.27    $10.504 
    Value at end of period    $13.81    $13.26    $12.07    $11.68    $10.73    $9.09    $10.179    $11.084    $11.177    $10.27 
    Number of accumulation units outstanding at end of period    7,831    8,957    10,535    9,987    6,168    12,126    17,957    16,607    9,394    18,307 
    ING VP VALUE OPPORTUNITY PORTFOLIO                                         
    (Funds were first received in this option during May 1998)                                         
    Value at beginning of period    $15.82    $13.81    $13.07    $12.01    $9.76    $13.355    $14.964    $13.75    $11.644    $11.097 
    Value at end of period    $16.10    $15.82    $13.81    $13.07    $12.01    $9.76    $13.355    $14.964    $13.75    $11.644 
    Number of accumulation units outstanding at end of period    17,009    21,879    37,696    54,950    53,100    58,978    76,652    71,351    77,073    110,097 

    IICA Mthn Plus

    8

    PART C - OTHER INFORMATION

    Item 24. Financial Statements and Exhibits

    (a)     Financial Statements: 
      (1)  Included in Part A: 
        Condensed Financial Information 
      (2)  Included in Part B: 
    Consolidated Financial Statements of ING Life Insurance and Annuity Company:
        -     Report of Independent Registered Public Accounting Firm 
        -     Consolidated Statements of Operations for the years ended December 31, 2007, 2006 
             and 2005 
        -     Consolidated Balance Sheets as of December 31, 2007 and 2006 
        -     Consolidated Statements of Changes in Shareholder’s Equity for the years ended 
             December 31, 2007, 2006 and 2003 
        -     Consolidated Statements of Cash Flows for the years ended December 31, 2007, 2006 
             and 2005 
        -     Notes to Consolidated Financial Statements 
        Financial Statements of Variable Annuity Account I: 
        -     Report of Independent Registered Public Accounting Firm 
        -     Statements of Assets and Liabilities as of December 31, 2007 
        -     Statements of Operations for the year ended December 31, 2007 
        -     Statements of Changes in Net Assets for the years ended December 31, 2007 and 2006 
        -     Notes to Financial Statements 
     
    (b)   Exhibits:   
       (1)    Resolution establishing Variable Annuity Account I · Incorporated by reference to 
          Registration Statement on Form N-4 (File No. 33-59749), as filed on June 1, 1995. 
       (2)    Not Applicable. 
       (3.1)    Standard Form of Broker-Dealer Agreement · Incorporated by reference to Post- 
          Effective Amendment No. 32 to Registration Statement on Form N-4 (File No. 33- 
          81216), as filed on April 11, 2006. 
       (3.2)    Underwriting Agreement dated November 17, 2006 between ING Life Insurance and 
          Annuity Company and ING Financial Advisers, LLC · Incorporated by reference to Post 
          Effective Amendment No. 34 to Registration Statement on Form N-4 (File No. 033- 
          75996), as filed on December 20, 2006. 
       (3.3)    Form of Rule 22c-2 Agreement · Incorporated herein by reference to Post-Effective 
          Amendment No. 10 to Registration Statement on Form N-4 (File Nos. 333-115515), as 
          filed on April 12, 2007. 
     
       (4.1)    Variable Annuity Contract (G-MP2(5/97)) · Incorporated by reference to Post-Effective 
          Amendment No. 6 to Registration Statement on Form N-4 (File No. 33-59749), as filed 
          on November 26, 1997. 
       (4.2)    Variable Annuity Contract Certificate (MP2CERT(5/97)) · Incorporated by reference to 
          Post-Effective Amendment No. 6 to Registration Statement on Form N-4 (File No. 33- 
          59749), as filed on November 26, 1997. 
       (4.3)    Variable Annuity Contract (IMP2(5/97)) · Incorporated by reference to Post-Effective 
          Amendment No. 6 to Registration Statement on Form N-4 (File No. 33-59749), as filed 
          on November 26, 1997. 
       (4.4)    Variable Annuity Contract (G2-CDA-94(IR)) · Incorporated by reference to 
          Registration Statement on Form N-4 (File No. 33-59749), as filed on June 1, 1995. 

    (4.5)    Variable Annuity Contract (G2-CDA-94(NQ)) · Incorporated by reference to 
        Registration Statement on Form N-4 (File No. 33-59749), as filed on June 1, 1995. 
    (4.6)    Variable Annuity Contract (G-MP2(5/96)) · Incorporated by reference to Post-Effective 
        Amendment No. 4 to Registration Statement on Form N-4 (File No. 33-59749), as filed 
        on April 16, 1997. 
    (4.7)    Certificate of Group Annuity Coverage (MP2CERT(5/96)) · Incorporated by reference 
        to Post-Effective Amendment No. 4 to Registration Statement on Form N-4 (File No. 
        33-59749), as filed on April 16, 1997. 
    (4.8)    Endorsement (MP2NQEND(4/95)) · Incorporated by reference to Post-Effective 
        Amendment No. 8 to Registration Statement on Form N-4 (File No. 33-59749), as filed 
        on April 17, 1998. 
    (4.9)    Endorsement (MP2NQCERTEND(4/95)) · Incorporated by reference to Post-Effective 
        Amendment No. 8 to Registration Statement on Form N-4 (File No. 33-59749), as filed 
        on April 17, 1998. 
    (4.10)    Endorsement (MP2IREND(4/95)) · Incorporated by reference to Post-Effective 
        Amendment No. 8 to Registration Statement on Form N-4 (File No. 33-59749), as filed 
        on April 17, 1998. 
    (4.11)    Endorsement (MP2END(9/97)) to Contract G-MP2(5/96) and Certificate 
        MP2CERT(5/96) · Incorporated by reference to Post-Effective Amendment No. 6 to 
        Registration Statement on Form N-4 (File No. 33-59749), as filed on November 26, 
        1997. 
    (4.12)    Endorsement (IMP2END(9/97)) to Contract G-MP2(5/96) and Certificate 
        MP2CERT(5/96) · Incorporated by reference to Post-Effective Amendment No. 6 to 
        Registration Statement on Form N-4 (File No. 33-59749), as filed on November 26, 
        1997. 
    (4.13)    Endorsement ENMCHG2(05/02) to contracts G2-CDA-99(TORP)(FL) and certificate 
        GTCC2-99(TORP)(FL) · Incorporated by reference to Post-Effective Amendment No. 5 
        to Registration Statement on Form N-4 (File No. 333-87131), as filed on April 17, 2002. 
    (4.14)    ILIAC Merger Endorsement · Incorporated by reference Registration Statement on 
        Form N-4 (File No. 333-130822), as filed on January 3, 2006. 
    (5)    Not applicable 
    (6.1)    Restated Certificate of Incorporation (amended and restated as of January 1, 2002) of 
        ING Insurance Company of America · Incorporated by reference to ING Insurance 
        Company of America Annual Report on Form 10-K (File No. 33-81010), as filed on 
        March 28, 2002. 
    (6.2)    Amended and Restated By-Laws of ING Life Insurance and Annuity Company, 
        effective January 1, 2005 · Incorporated by reference to the ILIAC 10-Q, as filed on 
                      May 13, 2005 (File No. 033-23376, Accession No. 0001047469-05-014783).
    (7)    Not Applicable 
    (8.1)    Fund Participation Agreement effective as of May 1, 1998 between Aetna Insurance 
        Company of America, Aetna Variable Fund, Aetna Variable Encore Fund, Aetna 
        Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund, on behalf of each of its 
        series, Aetna Generation Portfolios, Inc. on behalf of each of its series, and Aetna 
                      Variable Portfolios, Inc. on behalf of each of its series and Aeltus Investment
        Management · Incorporated by reference to Post-Effective Amendment No. 11 to 
        Registration Statement on Form N-4 (File No. 33-59749), as filed on April 18, 2000. 
    (8.2)    Amendment No. 1 dated as of May 1, 2000 to Fund Participation Agreement dated as of 
        May 1, 1998 between Aetna Insurance Company of America, Aetna Variable Fund, 
        Aetna Variable Encore Fund, Aetna Income Shares, Aetna Balanced VP, Inc., Aetna 
        Generation Portfolios, Inc. on behalf of each of its series, and Aetna Variable Portfolios, 

    Inc. on behalf of each of its series, and Aeltus Investment Management, Inc. ·
    Incorporated by reference to Post-Effective Amendment No. 11 to Registration
        Statement on Form N-4 (File No. 33-59749), as filed on April 18, 2000. 
    (8.3)    Amendment No. 2 dated June 26, 2001 to Fund Participation Agreement dated as of 
        May 1, 1998, as amended on May 1, 2000 between Aetna Insurance Company of 
        America, Aetna Variable Fund, Aetna Variable Encore Fund, Aetna Income Shares, 
        Aetna Balanced VP, Inc., Aetna Generation Portfolios, Inc. on behalf of each of its 
        series, and Aetna Variable Portfolios, Inc. on behalf of each of its series and Aeltus 
        Investment Management, Inc. · Incorporated by reference to Post-Effective Amendment 
        No. 1 to Registration Statement on Form N-4 (File No. 333-130822), as filed on April 
        13, 2006. 
    (8.4)    Service Agreement with Investor Advisor effective as of May 1, 1998 between Aeltus 
        Investment Management, Inc. and Aetna Insurance Company of America · Incorporated 
        by reference to Post-Effective Amendment No. 11 to Registration Statement on Form N- 
        4 (File No. 33-59749), as filed on April 18, 2000. 
    (8.5)    First Amendment effective as of May 1, 2000 to Service Agreement with Investment 
        Advisor effective May 1, 1998 between Aeltus Investment Management, Inc. and Aetna 
                       Insurance Company of America · Incorporated by reference to Post-Effective
        Amendment No. 11 to Registration Statement on Form N-4 (File No. 33-59749), as filed 
        on April 18, 2000. 
    (8.6)    Second Amendment dated as of June 26, 2001 to Service Agreement with Investment 
        Advisor effective May 1, 1998, as amended on May 1, 2000 between Aeltus Investment 
    Management, Inc. and Aetna Insurance Company of America · Incorporated by
        reference to Post-Effective Amendment No. 7 to Registration Statement on Form N-4 
        (File No. 333-87131), as filed on April 14, 2004. 
    (8.7)    Fund Participation Agreement dated August 30, 1995 among Aetna Insurance Company 
        of America, Alger American Fund and Fred Alger Management, Inc. · Incorporated by 
        reference to Post-Effective Amendment No. 1 to Registration Statement on Form N-4 
        (File No. 33-59749), as filed on April 22, 1996. 
    (8.8)    Fund Participation Agreement effective as of December 1, 1997 among Calvert 
        Responsibly Invested Balanced Portfolio, Calvert Asset Management Company, Inc. 
        and Aetna Insurance Company of America · Incorporated by reference to Post-Effective 
        Amendment No. 7 to Registration Statement on Form N-4 (File No. 33-59749), as filed 
        on February 13, 1998. 
    (8.9)    Service Agreement effective as of December 1, 1997 between Calvert Asset 
        Management Company, Inc. and Aetna Insurance Company of America · Incorporated 
        by reference to Post-Effective Amendment No. 7 to Registration Statement on Form N-4 
        (File No. 33-59749), as filed on February 13, 1998. 
    (8.10)    Rule 22c-2 Agreement dated no later than April 16, 2007 and is effective as of October 
        16, 2007 between Calvert Distributors, Inc., ING Life Insurance and Annuity Company, 
        ING National Trust, ING USA Annuity and Life Insurance Company, ReliaStar Life 
        Insurance Company, ReliaStar Life Insurance Company of New York, Security Life of 
                      Denver Insurance Company and Systematized Benefits Administrators Inc. ·
                      Incorporated by reference to Post-Effective Amendment No. 50 to Registration
        Statement on Form N-4 (File No. 033-75962), as filed on June 15, 2007. 
    (8.11)    Fund Participation Agreement dated July 1, 1994 by and among Insurance Management 
        Series, Federated Advisers and Aetna Insurance Company of America · Incorporated by 
        reference to Post-Effective Amendment No. 5 to Registration Statement on Form N-4 
        (File No. 33-59749), as filed on July 29, 1997. 
    (8.12)    Fund Participation Agreement dated October 20, 1995 by and among Aetna Insurance 

        Company of America, Variable Insurance Products Fund and Fidelity Distributors 
                       Corporation · Incorporated by reference to Post-Effective Amendment No. 1 to
        Registration Statement on Form N-4 (File No. 33-59749), as filed on April 22, 1996. 
    (8.13)    First Amendment made and entered into as of May 1, 1997 to Fund Participation 
    Agreement dated October 20, 1995 by and among Aetna Insurance Company of
        America, Variable Insurance Products Fund and Fidelity Distributors Corporation · 
    Incorporated by reference to Post-Effective Amendment No. 11 to Registration
        Statement on Form N-4 (File No. 33-59749), as filed on April 18, 2000. 
    (8.14)    Fund Participation Agreement dated October 20, 1995 by and among Aetna Insurance 
        Company of America, Variable Insurance Products Fund II and Fidelity Distributors 
                       Corporation · Incorporated by reference to Post-Effective Amendment No. 1 to
        Registration Statement on Form N-4 (File No. 33-59749), as filed on April 22, 1996. 
    (8.15)    First Amendment made and entered into as of May 1, 1997 to Fund Participation 
    Agreement dated October 20, 1995 by and among Aetna Insurance Company of
        America, Variable Insurance Products Fund II and Fidelity Distributors Corporation · 
    Incorporated by reference to Post-Effective Amendment No. 11 to Registration
        Statement on Form N-4 (File No. 33-59749), as filed on April 18, 2000. 
    (8.16)    Letter Agreement dated May 16, 2007 and effective July 2, 2007 between ING Life 
        Insurance and Annuity Company, Variable Insurance Products Fund, Variable Insurance 
        Products Fund I, Variable Insurance Products Fund II, Variable Insurance Product Fund 
        V and Fidelity Distributors Corporation · Incorporated by reference to Post-Effective 
        Amendment No. 51 to the Registration Statement on Form N-4 (File No. 033-75962), as 
        filed on July 27, 2007. 
    (8.17)    Service Agreement effective as of June 1, 2002 by and between Fidelity Investments 
        Institutional Operations Company, Inc. and ING Financial Advisers, LLC · Incorporated 
        by reference to Post-Effective Amendment No. 33 to Registration Statement on Form N- 
        4 (File No. 33-75988), as filed on August 5, 2004. 
    (8.18)    Service Contract effective as of June 1, 2002 by and between Directed Services, Inc., 
        ING Financial Advisers, LLC, and Fidelity Distributors Corporation · Incorporated by 
        reference to Post-Effective Amendment No. 33 to Registration Statement on Form N-4 
        (File No. 33-75988), as filed on August 5, 2004. 
    (8.19)    Amendment effective as of July 1, 2000 to Service Agreement effective as of November 
        1, 1995 and amended effective January 1, 1997 by and between Fidelity Investments 
                       Institutional Operations Company and Aetna Insurance Company of America ·
        Incorporated by reference to Post-Effective Amendment No. 2 to Registration Statement 
        on Form N-4 (File No. 333-87131), as filed on December 13, 2000. 
    (8.20)    Rule 22c-2 Agreement dated no later than April 16, 2007 and is effective as of October 
        16, 2007 between Fidelity Distributors Corporation, ING Life Insurance and Annuity 
        Company, ING National Trust, ING USA Annuity and Life Insurance Company, 
        ReliaStar Life Insurance Company, ReliaStar Life Insurance Company of New York, 
        Security Life of Denver Insurance Company and Systematized Benefits Administrators 
        Inc. · Incorporated by reference to Post-Effective Amendment No. 50 to Registration 
        Statement on Form N-4 (File No. 033-75962), as filed on June 15, 2007 
    (8.21)    Fund Participation Agreement dated September 1, 1995 between Aetna Insurance 
        Company of America, Lexington Natural Resources Trust and Lexington Management 
                       Corporation · Incorporated by reference to Post-Effective Amendment No. 1 to
        Registration Statement on Form N-4 (File No. 33-59749), as filed on April 22, 1996. 
    (8.22)    Fund Participation Agreement dated September 1, 1995 between Aetna Insurance 
                       Company of America, Lexington Emerging Markets Fund, Inc. and Lexington
        Management Corporation · Incorporated by reference to Post-Effective Amendment No. 

        1 to Registration Statement on Form N-4 (File No. 33-59749), as filed on April 22, 
        1996. 
    (8.23)    Participation Agreement made and entered into as of April 30, 1996 by and among MFS 
        Variable Insurance Trust, Aetna Insurance Company of America and Massachusetts 
        Financial Services Company · Incorporated by reference to Post-Effective Amendment 
        No. 13 to Registration Statement on Form N-4 (File No. 33-59749), as filed on April 11, 
        2001. 
    (8.24)    First Amendment made and entered into as of September 3, 1996 to Participation 
        Agreement dated April 30, 1996 by and among MFS Variable Insurance Trust, Aetna 
        Insurance Company of America and Massachusetts Financial Services Company · 
        Incorporated by reference to Post-Effective Amendment No. 3 to Registration Statement 
        on Form N-4 (File No. 33-59749), as filed on September 16, 1996. 
    (8.25)    Second Amendment made and entered into as of May 1, 1998 to Participation 
        Agreement dated April 30, 1996, and as amended on September 3, 1996, by and among 
        MFS Variable Insurance Trust, Aetna Insurance Company of America and 
        Massachusetts Financial Services Company · Incorporated by reference to Post- 
        Effective Amendment No. 11 to Registration Statement on Form N-4 (File No. 33- 
        59749), as filed on April 18, 2000. 
    (8.26)    Third Amendment effective July 1, 1999 to Participation Agreement dated April 30, 
        1996, and as amended on September 3, 1996 and May 1, 1998, by and among MFS 
        Variable Insurance Trust, Aetna Insurance Company of America and Massachusetts 
        Financial Services Company · Incorporated by reference to Post-Effective Amendment 
        No. 11 to Registration Statement on Form N-4 (File No. 33-59749), as filed on April 18, 
        2000. 
    (8.27)    Fourth Amendment effective as of November 17, 2000 to Participation Agreement dated 
        April 30, 1996, and as amended on September 3, 1996, May 1, 1998 and July 1, 1999, 
        by and among MFS Variable Insurance Trust, Aetna Insurance Company of America 
        and Massachusetts Financial Services Company · Incorporated by reference to Post- 
        Effective Amendment No. 13 to Registration Statement on Form N-4 (File No. 33- 
        59749), as filed on April 11, 2001. 
    (8.28)    Participation Agreement dated as of December 5, 2001 among Portfolio Partners, Inc., 
        Aetna Life Insurance and Annuity Company, Aetna Investment Services, LLC and 
        Aetna Insurance Company of America · Incorporated by reference to Post-Effective 
        Amendment No. 5 to Registration Statement on Form N-4 (File No. 333-87131), as filed 
        on April 17, 2002. 
    (8.29)    Amendment dated as of March 5, 2002 to Participation Agreement dated as of 
        December 5, 2001 by and between Portfolio Partners, Inc., Aetna Life Insurance and 
        Annuity Company, Aetna Investment Services, LLC and Aetna Insurance Company of 
        America · Incorporated by reference to Post-Effective Amendment No. 5 to Registration 
        Statement on Form N-4 (File No. 333-87131), as filed on April 17, 2002. 
    (8.30)    Amendment dated May 1, 2003 to the Participation Agreement dated as of December 5, 
        2001 and subsequently amended on March 5, 2002 between ING Partners, Inc., ING 
        Life Insurance and Annuity Company and ING Financial Advisers, LLC and ING 
                      Insurance Company of America. · Incorporated by reference to Post-Effective
        Amendment No. 6 to Registration Statement on Form N-4 (File No. 333-87131), as filed 
        on April 15, 2003. 
    (8.31)    Amendment dated November 1, 2004 to the Participation Agreement between ING 
        Partners, Inc., ING Life Insurance and Annuity Company and ING Financial Advisers, 
        LLC dated as of November 28, 2001 and subsequently amended on March 5, 2002 and 
        May 1, 2003 · Incorporated by reference to Post-Effective Amendment No. 20 to 

        Registration Statement on Form N-4 (File No. 333-32575), as filed on April 1, 2005. 
    (8.32)    Shareholder Servicing Agreement (Service Class Shares) dated as May 1, 2002 between 
        Portfolio Partners, Inc. and Aetna Insurance Company of America (to be renamed ING 
                      Insurance Company of America) · Incorporated by reference to Post-Effective
        Amendment No. 5 to Registration Statement on Form N-4 (File No. 333-87131), as filed 
        on April 17, 2002. 
    (8.33)    Amendment dated May 1, 2003 by and between ING Partners, Inc. and ING Insurance 
        Company of America to the Shareholder Servicing Agreement (Service Class Shares) 
        dated May 1, 2002. · Incorporated by reference to Post-Effective Amendment No. 6 to 
        Registration Statement on Form N-4 (File No. 333-87131), as filed on April 15, 2003. 
    (8.34)    Form of Amendment dated November 1, 2004 to the Shareholder Servicing Agreement 
        (Service Class Shares) by and between ING Partners, Inc. and ING Life Insurance and 
        Annuity Company dated November 27, 2001, as amended on March 5, 2002 and May 1, 
        2003 ·Incorporated by reference to Post Effective Amendment No. 1 to Registration 
        Statement on Form N-4 (File No. 333-130825), as filed on April 17, 2006. 
    (8.35)    Amendment dated April 29, 2005 to the Participation Agreement between ING Partners, 
        Inc., ING Life Insurance and Annuity Company and ING Financial Advisers, LLC dated 
        as of November 28, 2001 and subsequently amended on March 5, 2002, May 1, 2003 
        and November 1, 2004 · Incorporated by reference to Post-Effective Amendment No. 
        32 to Registration Statement on Form N-4 (File No. 33-81216), as filed on April 11, 
        2006. 
    (8.36)    Form of Amendment dated December 7, 2005 to the Shareholder Servicing Agreement 
        (Service Class Shares) by and between ING Partners, Inc. and ING Life Insurance and 
        Annuity Company dated November 27, 2001, as amended on March 5, 2002 and May 1, 
                      2003, November 1, 2004 and April 29, 2005. ·Incorporated by reference to Post
        Effective Amendment No. 1 to Registration Statement on Form N-4 (File No. 333- 
        130825), as filed on April 17, 2006. 
    (8.37)    Fund Participation Agreement dated October 9, 1995 among Aetna Insurance Company 
        of America, TCI Portfolios, Inc. and Investors Research Corporation · Incorporated by 
        reference to Post-Effective Amendment No. 1 to Registration Statement on Form N-4 
        (File No. 33-59749), as filed on April 22, 1996. 
    (8.38)    Participation Agreement dated April 30, 2003 among ING Life Insurance and Annuity 
        Company, The GCG Trust (renamed effective May 1, 2003, ING Investors Trust) and 
        Directed Services, Inc. · Incorporated by reference to Post-Effective Amendment No. 54 
        to Registration Statement on Form N-1A (File No. 33-23512), as filed on August 1, 
        2003. 
    (8.39)    Amendment dated October 9, 2006 to the Participation Agreement dated April 30, 2003 
        among ING Life Insurance and Annuity Company, ING Investors Trust and Directed 
        Services, Inc. ·Incorporated by reference to Post Effective Amendment No. 47 to 
        Registration Statement on Form N-4 (File No. 033-75962), as filed on November 26, 
        2006. 
    (8.40)    Rule 22c-2 Agreement dated no later than April 16, 2007 is effective October 16, 2007 
        between ING Funds Services, LLC, ING Life Insurance and Annuity Company, ING 
                      National Trust, ING USA Annuity and Life Insurance Company, ReliaStar Life
        Insurance Company, ReliaStar Life Insurance Company of New York, Security Life of 
                      Denver Insurance Company and Systematized Benefits Administrators Inc. ·
    Incorporated by reference to Post-Effective Amendment No. 50 to Registration
        Statement on Form N-4 (File No. 033-75962), as filed on June 15, 2007. 
     
    (9)    Opinion and Consent of Counsel, attached. 

    (10)    Consent of Independent Registered Public Accounting Firm, attached. 
    (11)    Not applicable. 
    (12)    Not applicable. 
    (13.1)    Powers of Attorney, attached. 
    (13.2)    Authorization for Signatures · Incorporated by reference to Post-Effective Amendment 
        No. 5 to Registration Statement on Form N-4 (File No. 33-75986), as filed on April 12, 
        1996. 

    Item 25. Directors and Officers of the Depositor* 
    Name and Principal Business Address    Positions and Offices with Depositor 
    Richard T. Mason1    President 
    Thomas J. McInerney1    Director and Chairman 
    Kathleen A. Murphy1    Director 
    Catherine H. Smith1    Director and Senior Vice President 
    Bridget M. Healy2    Director 
    Robert G. Leary2    Director 
    David A. Wheat3    Director, Executive Vice President and Chief Financial 
    Steven T. Pierson3    Senior Vice President and Chief Accounting Officer 
    Sue A. Collins1    Senior Vice President and Chief Actuary 
    Boyd G. Combs3    Senior Vice President, Tax 
    Valerie G. Brown3    Senior Vice President 
    Shaun P. Mathews4    Senior Vice President 
    David S. Pendergrass3    Senior Vice President and Treasurer 
    Stephen J. Preston5    Senior Vice President 
    Harry N. Stout5    Senior Vice President 
    Christopher Abreu1    Vice President and Actuary 
    Louis E Bachetti    Vice President 
    581 Main Street, 4th Fl.     
    Woodbridge, NJ 07095     
    Pamela Mulvey Barcia1    Vice President 

    Ronald R. Barhorst1    Vice President 
    Bradley E. Barks3    Vice President 
    Jeoffrey A. Block6    Vice President 
    Dianne Bogoian1    Vice President 
    Ira S. Braunstein3    Vice President, Investments 
    Mary A. Broesch5    Vice President and Actuary 
    Kevin P. Brown1    Vice President 
    Robert P. Browne3    Vice President, Investments 
    Anthony V. Camp1    Vice President 
    Kevin L. Christensen6    Vice President 
    Nancy D. Clifford1    Vice President 
    Monte J. Combe7    Vice President 
    Patricia M. Corbett6    Vice President 
    Kimberly Curley7    Vice President and Actuary 
    Karen Czizik7    Vice President 
    William Delahanty3    Vice President 
    J. Randolph Dobo7    Vice President 
    Michael C. Eldredge1    Vice President 
    Joseph Elmy3    Vice President, Tax 
    Patricia L. Engelhardt1    Vice President 
    William A. Evans4    Vice President 
    Ronald E. Falkner1    Vice President, Corporate Real Estate 
    Daniel J. Foley    Vice President, Investments 
    259 N Radnor-Chester Rd., Suite 205     
    Radnor, PA 19087     
    John P. Foley3    Vice President, Investments 
    Stephen E. Gallant3    Vice President, Investments 

    Molly A. Garrett1    Vice President 
    Robert A. Garrey1    Vice President 
    Lisa S. Gilarde1    Vice President 
    Saskia M. Goedhart1    Vice President 
    Brian K. Haendiges1    Vice President 
    Steven J. Haun6    Vice President 
    June P. Howard3    Vice President 
    William S. Jasien    Vice President 
    12701 Fair Lakes Circle, Ste. 470     
    Fairfax, VA 22033     
    David A. Kelsey1    Vice President 
    Kenneth E. Lacy3    Vice President 
    Richard K. Lau5    Vice President and Actuary 
    William H. Leslie, IV1    Vice President 
    Frederick C. Litow3    Vice President 
    Laurie A. Lombardo1    Vice President 
    William L. Lowe1    Vice President 
    Alan S. Lurty5    Vice President 
    Christopher P. Lyons3    Vice President, Investments 
    Gregory R. Michaud3    Vice President, Investments 
    Gregory J. Miller1    Vice President 
    Paul L. Mistretta3    Vice President 
    Maurice M. Moore3    Vice President, Investments 
    Brian J. Murphy1    Vice President 
    Michael J. Murphy5    Vice President 
    Todd E. Nevenhoven6    Vice President 
    Michael J. Pise1    Vice President 

    Deborah J. Prickett6    Vice President 
    Srinivas D. Reddy1    Vice President 
    Robert A. Richard1    Vice President 
    Linda E. Senker5    Vice President, Compliance 
    Spencer T. Shell3    Vice President, Assistant Treasurer and Assistant Secretary 
    Frank W. Snodgrass    Vice President 
    9020 Overlook Blvd.     
    Brentwood, TN 37027     
    Libby J. Soong1    Vice President and Chief Compliance Officer 
    Christina M. Starks    Vice President 
    2000 21st Avenue NW     
    Minot, North Dakota 58703     
    Carl Steinhilber1    Vice President 
    Sandra L. Stokley6    Vice President 
    Alice Su5    Vice President and Actuary 
    Lisa A. Thomas1    Vice President and Appointed Actuary 
    Eugene M. Trovato1    Vice President 
    Mary A. Tuttle7    Vice President 
    William J. Wagner7    Vice President 
    Kurt W. Wassenar3    Vice President, Investments 
    Christopher R. Welp6    Vice President 
    Michellen A. Wildin7    Vice President 
    Matthew L. Condos1    Actuary 
    Scott N. Shepherd1    Actuary 
    Joy M. Benner8    Secretary 
    Jane A. Boyle1    Assistant Secretary 
    Diana R. Cavender8    Assistant Secretary 
    Maria C. Foster8    Assistant Secretary 

    Linda H. Freitag3    Assistant Secretary 
    Daniel F. Hinkel3    Assistant Secretary 
    Joseph D. Horan3    Assistant Secretary 
    Megan A. Huddleston1    Assistant Secretary 
    Rita J. Kummer3    Assistant Secretary 
    Susan A. Masse1    Assistant Secretary 
    Terri W. Maxwell3    Assistant Secretary 
    James M. May, III3    Assistant Secretary 
    Randall K. Price7    Assistant Secretary 
    Patricia M. Smith1    Assistant Secretary 
    John F. Todd1    Assistant Secretary 
    Susan M. Vega8    Assistant Secretary 
    Diane I. Yell    Assistant Secretary 
    100 Washington Square     
    Minneapolis, MN 55401     
    Glenn A. Black3    Tax Officer 
    Terry L. Owens3    Tax Officer 
    James H. Taylor3    Tax Officer 
    *    These individuals may also be directors and/or officers of other affiliates of the Company. 

     

    1    The principal business address of these directors and these officers is One Orange Way Windsor, 
        Connecticut 06095. 
    2    The principal business address of these directors is 230 Park Avenue, New York, New York 10169. 
    3    The principal business address of these directors and these officers is 5780 Powers Ferry Road, 
        N.W., Atlanta, Georgia 30327. 
    4    The principal business address of these officers is 10 State House Square, Hartford, Connecticut 
        06103. 
    5    The principal business address of these officers is 1475 Dunwoody Drive, West Chester, 
        Pennsylvania 19380-1478. 
    6    The principal business address of these officers is 909 Locust Street, Des Moines, Iowa 50309. 
    7    The principal business address of these officers is 1290 Broadway, Denver, Colorado 80203. 
    8    The principal business address of these officers is 20 Washington Avenue South, Minneapolis, 
        Minnesota 55401. 

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

    Incorporated herein by reference to Item 26 in Post-Effective Amendment No. 10 to Registration
    Statement on Form N-4 for Variable Annuity Account C of ING Life Insurance and Annuity Company
    (File No. 333-105479), as filed with the Securities and Exchange Commission on April 11, 2008.

    Item 27. Number of Contract Owners

    As of March 31, 2008, there were 3,611 individuals holding interests in variable annuity contracts funded
    through Variable Annuity Account I of ING Life Insurance and Annuity Company.

    Item 28. Indemnification

    Section 33-779 of the Connecticut General Statutes (“CGS”) provides that a corporation may provide
    indemnification of or advance expenses to a director, officer, employee or agent only as permitted by
    Sections 33-770 to 33-778, inclusive, of the CGS. Reference is hereby made to Section 33-771(e) of the
    CGS regarding indemnification of directors and Section 33-776(d) of CGS regarding indemnification of
    officers, employees and agents of Connecticut corporations. These statutes provide in general that
    Connecticut corporations incorporated prior to January 1, 1997 shall, except to the extent that their
    certificate of incorporation expressly provides otherwise, indemnify their directors, officers, employees
    and agents against “liability” (defined as the obligation to pay a judgment, settlement, penalty, fine,
    including an excise tax assessed with respect to an employee benefit plan, or reasonable expenses
    incurred with respect to a proceeding) when (1) a determination is made pursuant to Section 33-775 that
    the party seeking indemnification has met the standard of conduct set forth in Section 33-771 or (2) a
    court has determined that indemnification is appropriate pursuant to Section 33-774. Under Section 33-
    775, the determination of and the authorization for indemnification are made (a) by two or more
    disinterested directors, as defined in Section 33-770(3); (b) by special legal counsel; (c) by the
    shareholders; or (d) in the case of indemnification of an officer, agent or employee of the corporation, by
    the general counsel of the corporation or such other officer(s) as the board of directors may specify. Also,
    Section 33-772 with Section 33-776 provide that a corporation shall indemnify an individual who was
    wholly successful on the merits or otherwise against reasonable expenses incurred by him in connection
    with a proceeding to which he was a party because he is or was a director, officer, employee, or agent of
    the corporation. Pursuant to Section 33-771(d), in the case of a proceeding by or in the right of the
    corporation or with respect to conduct for which the director, officer, agent or employee was adjudged
    liable on the basis that he received a financial benefit to which he was not entitled, indemnification is
    limited to reasonable expenses incurred in connection with the proceeding against the corporation to
    which the individual was named a party.

    Section 33-777 of the statute does specifically authorize a corporation to procure indemnification
    insurance on behalf of an individual who is or was a director of the corporation. Consistent with the
    statute, ING America Insurance Holdings, Inc. maintains a Professional Liability umbrella insurance
    policy issued by an international insurer. The policy covers ING America Insurance Holdings, Inc. and
    any company in which ING America Insurance Holdings, Inc. has a controlling interest of 50% or more.
    This would encompass the principal underwriter as well as the depositor. Additionally, the parent
    company of ING America Insurance Holdings, Inc., ING Groep N.V., maintains an excess umbrella cover
    with limits in excess of $125,000,000. The policy provides for the following types of coverage: errors
    and omissions/professional liability, directors and officers, employment practices, fiduciary and fidelity.

    Section 20 of the ING Financial Advisers, LLC Limited Liability Company Agreement executed as of
    November 28, 2000 provides that ING Financial Advisers, LLC will indemnify certain persons against
    any loss, damage, claim or expenses (including legal fees) incurred by such person if he is made a party
    or is threatened to be made a party to a suit or proceeding because he was a member, officer, director,

    employee or agent of ING Financial Advisers, LLC, as long as he acted in good faith on behalf of ING
    Financial Advisers, LLC and in a manner reasonably believed to be within the scope of his authority. An
    additional condition requires that no person shall be entitled to indemnity if his loss, damage, claim or
    expense was incurred by reason of his gross negligence or willful misconduct. This indemnity provision
    is authorized by and is consistent with Title 8, Section 145 of the General Corporation Law of the State of
    Delaware.

    Item 29. Principal Underwriter

    (a)      In addition to serving as the principal underwriter for the Registrant, ING Financial Advisers, LLC also acts as the principal underwriter for ING Partners, Inc. (a management investment company registered under the Investment Company Act of 1940 (1940 Act)). Additionally, ING Financial Advisers, LLC acts as the principal underwriter for Variable Life Account B of ING Life Insurance and Annuity Company (ILIAC), Variable Life Account C of ILIAC, Variable Annuity Account C of ILIAC, Variable Annuity Account I of ILIAC and Variable Annuity Account G of ILIAC
     
      (separate accounts of ILIAC registered as unit investment trusts under the 1940 Act). ING Financial Advisers, LLC is also the principal underwriter for (i) Separate Account N of ReliaStar Life Insurance Company (RLIC) (a separate account of RLIC registered as a unit investment trust under the 1940 Act.), (ii) ReliaStar Select Variable Account of ReliaStar Life Insurance Company (a separate account of RLIC registered as a unit investment trusts under the 1940 Act), (iii) MFS ReliaStar Variable Account (a separate account of RLIC registered as a unit investment trusts under the 1940 Act), (iv) Northstar Variable Account (a separate account of RLIC registered as a unit investment trusts under the 1940 Act) (v) ReliaStar Life Insurance Company of New York Variable Annuity Funds A, B, C (a management investment company registered under the 1940 Act), (vi) ReliaStar Life Insurance Company of New York Variable Annuity Funds D, E, F, G, H, I (a management investment company registered under the 1940 Act), (vii) ReliaStar Life Insurance Company of New York Variable Annuity Funds M, P, and Q (a management investment company registered under the1940 Act), and (viii) ReliaStar Life Insurance Company of New York Variable Annuity Funds M P (a management investment company registered under the1940 Act).
     
    (b)      The following are the directors and officers of the Principal Underwriter:
     
    Name and Principal Business Address    Positions and Offices with Principal Underwriter 
    Ronald R. Barhorst    Director and President 
    4225 Executive Square     
    La Jolla, CA 92037     
    Brian D. Comer1    Director and Senior Vice President 
    William L. Lowe1    Director and Senior Vice President 
    Kathleen A. Murphy1    Senior Vice President 
    Boyd G. Combs2    Senior Vice President, Tax 
    William Jasien3    Senior Vice President 
    Louis E. Bachetti    Senior Vice President 
    581 Main Street, 4th Fl.     
    Woodbridge, NJ 07095     

    Daniel H. Hanlon1    Senior Vice President 
    Pamela Mulvey Barcia1    Vice President 
    Robert H. Barley1    Vice President 
    M. Bishop Bastien    Vice President 
    980 Ninth Street     
    Sacramento, CA 95814     
    Nancy B. Bocella1    Vice President 
    Dianne C. Bogoian1    Vice President 
    J. Robert Bolchoz    Vice President 
    Columbia, SC     
    David A. Brounley1    Vice President 
    Anthony V. Camp, Jr.1    Vice President 
    Mary Kathleen Carey-Reid1    Vice President 
    Nancy D. Clifford1    Vice President 
    William P. Elmslie    Vice President 
    New York, NY     
    Joseph J. Elmy2    Vice President, Tax 
    Brian K. Haendiges1    Vice President 
    Bernard P. Heffernon    Vice President 
    10740 Nall Ave., Ste. 120     
    Overland Park, KS 66211     
    David Kelsey1    Vice President 
    Christina Lareau1    Vice President 
    George D. Lessner    Vice President 
    Richardson, Texas     
    Katherine E. Lewis    Vice President 
    2675 N Mayfair Road, Ste. 501     
    Milwaukee, WI 53226     
    David J. Linney    Vice President 
    2900 N. Loop W., Ste. 180     
    Houston, TX 77092     
    Frederick C. Litow2    Vice President 
    Mark R. Luckinbill    Vice President 
    2841 Plaza Place, Ste. 210     
    Raleigh, NC 27612     

    Richard T. Mason    Vice President 
    440 S. Warren St., Ste. 702     
    Syracuse, NY 13202     
    Scott T. Neeb    Vice President 
    4600 Ulster Street     
    Denver, CO 80237     
    David Pendergrass2    Vice President and Treasurer 
    Ethel Pippin1    Vice President 
    Michael J. Pise1    Vice President 
    Srinivas D. Reddy1    Vice President 
    Deborah Rubin3    Vice President 
    Todd Smiser    Vice President and Assistant Secretary 
    2525 Cabot Drive, Suite 100     
    Lisle, IL 60532     
    Frank W. Snodgrass    Vice President 
    150 4th Ave., N., Ste. 410     
    Nashville, TN 37219     
    Marilyn S. Sponzo1    Vice President and Chief Compliance Officer 
    Christina M. Starks    Vice President 
    2000 21st Avenue NW     
    Minot, ND 58703     
    S. Bradford Vaughan, Jr.    Vice President 
    601 Union St., Ste. 810     
    Seattle, WA 98101     
    Forrest R. Wilson    Vice President 
    2202 N. Westshore Blvd.     
    Tampa, FL 33607     
    Judeen T. Wrinn1    Vice President 
    Nancy S. Stillman1    Assistant Vice President 
    Richard E. Gelfand    Chief Financial Officer 
    1475 Dunwoody Drive     
    West Chester, PA 19380-1478     
    Joy M. Benner4    Secretary 
    Diana R. Cavender4    Assistant Secretary 
    Randall K. Price4    Assistant Secretary 
    John F. Todd1    Assistant Secretary 

    Susan M. Vega4    Assistant Secretary 
    Glenn A. Black2    Tax Officer 
    Terry L. Owens2    Tax Officer 
    James H. Taylor2    Tax Officer 

    1    The principal business address of these directors and these officers is One Orange Way, Windsor, 
        Connecticut 06095-4774. 
    2    The principal business address of these officers is 5780 Powers Ferry Road, N.W., Atlanta, Georgia 
        30327. 
    3    The principal business address of these officers is 12701 Fair Lakes Circle, Suite 470, Fairfax, 
        Virginia 22033. 
    4    The principal business address of these officers is 20 Washington Avenue South, Minneapolis, 
        Minnesota 55401. 

    (c) Compensation to Principal Underwriter during last fiscal year:     
     
    (1)    (2)    (3)    (4)    (5) 
        Net Underwriting    Compensation on         
    Name of Principal    Discounts and    Redemption or    Brokerage     
    Underwriter    Commissions    Annuitization    Commissions    Compensation* 
    ING Financial                $215,695.68 
    Advisers, LLC                 

    *    Reflects approximate compensation paid to ING Financial Advisers, LLC attributable to regulatory 
        and operating expenses associated with the distribution of all registered variable annuity products 
        issued by Variable Annuity Account I of ING Life Insurance and Annuity Company during 2007. 

    Item 30. Location of Accounts and Records

    All accounts, books and other documents required to be maintained by Section 31(a) of the 1940 Act and
    the rules under it relating to the securities described in and issued under this Registration Statement are
    maintained by ING Life Insurance and Annuity Company at One Orange Way, Windsor, Connecticut
    06095-4774 and at ING Americas at 5780 Powers Ferry Road, Atlanta, Georgia 30327-4390.

    Item 31. Management Services

    Not applicable

    Item 32. Undertakings

    Registrant hereby undertakes:

    (a)    to file a post-effective amendment to this registration statement on Form N-4 as frequently as is 
        necessary to ensure that the audited financial statements in the registration statement are never 
        more than sixteen months old for as long as payments under the variable annuity contracts may 
        be accepted; 

    (b)    to include as part of any application to purchase a contract offered by a prospectus which is part 
        of this registration statement on Form N-4, a space that an applicant can check to request a 
        Statement of Additional Information; and 
     
    (c)    to deliver any Statement of Additional Information and any financial statements required to be 
        made available under this Form N-4 promptly upon written or oral request. 

    The Company hereby represents that it is relying upon and complies with the provisions of Paragraphs (1)
    through (4) of the SEC Staff’s No-Action Letter dated November 28, 1988 with respect to language
    concerning withdrawal restrictions applicable to plans established pursuant to Section 403(b) of the
    Internal Revenue Code. See American Counsel of Life Insurance; SEC No-Action Letter, [1988 WL
    1235221 *13 (S.E.C.)]

    Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to
    directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or
    otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission
    such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In
    the event that a claim for indemnification against such liabilities (other than the payment by the Registrant
    of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful
    defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in
    connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the
    matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question
    of whether such indemnification by it is against public policy as expressed in the Act and will be
    governed by the final adjudication of such issue.

    ING Life Insurance and Annuity Company represents that the fees and charges deducted under the
    contracts covered by this registration statement, in the aggregate, are reasonable in relation to the services
    rendered, the expenses expected to be incurred, and the risks assumed by the insurance company.

                                               SIGNATURES

      As required by the Securities Act of 1933, and the Investment Company Act of 1940, the
    Registrant, Variable Annuity Account I of ING Life Insurance and Annuity Company, certifies
    that it meets the requirements of Securities Act Rule 485(b) for effectiveness of this Post-
    Effective Amendment to its Registration Statement on Form N-4 (File No. 333-130825) and has
    duly caused this Post-Effective Amendment to be signed on its behalf by the undersigned,
    thereunto duly authorized, in the City of West Chester, Commonwealth of Pennsylvania, on the
    17th day of April, 2008.

    VARIABLE ANNUITY ACCOUNT I OF 
    ING LIFE INSURANCE AND ANNUITY COMPANY 
        (Registrant) 
     
    By:           ING LIFE INSURANCE AND ANNUITY COMPANY 
               (Depositor) 
     
    By:     
               Richard T. Mason* 
               President 

    By:  /s/ John S. Kreighbaum 
      John S. (Scott) Kreighbaum as 
      Attorney-in-Fact 

      Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment No. 4
    to the Registration Statement has been signed by the following persons in the capacities indicated
    on April 17, 2008.

    Signatures    Officer Titles 

     
    Richard T. Mason*    President 
        (Principal Executive Officer) 

     
    Thomas J. McInerney*    Director and Chairman 

     
    Kathleen A. Murphy*    Director 

     
    Catherine H. Smith*    Director and Senior Vice President 

     

    Bridget M. Healy* 

    		   Director 

     
    Robert G. Leary*    Director 

    David A. Wheat*  Director, Executive Vice President and Chief 
        Financial Officer 
    _____________ 
     
    Steven T. Pierson*  Senior Vice President and Chief Accounting Officer 
     
     
    By:  /s/ John S. Kreighbaum   
      John S. (Scott) Kreighbaum as 
      Attorney-in-Fact   
     
    *Executed by John S. (Scott) Kreighbaum on behalf of those indicated pursuant to Powers of Attorney. 

        VARIABLE ANNUITY ACCOUNT I     
       

    EXHIBIT INDEX

     

    		   
    ITEM    EXHIBIT    PAGE # 
    (9)    Opinion and Consent of Counsel    EX-99.B9 
    (10)    Consent of Independent Registered Public Accounting Firm    EX-99.B10 
    (13.1)    Powers of Attorney    EX-99.B13.1