ANNUAL REPORT 2002 ING VERZEKERINGEN N.V.

(ING Insurance)

ING Verzekeringen N.V. (ING Insurance) is part of ING Groep N.V. (ING Group)

Profile of ING Group

Mission INGs mission is to be a leading, global, client-focused, innovative and low-cost provider of financial services through the distribution channels of the clients preference in markets where ING can create value. Profile ING Group is a global financial institution of Dutch origin with 115,000 employees. ING offers banking, insurance and asset management to 60 million clients in 60 countries. The clients are individuals, families, small businesses, large corporations, institutions and governments. ING comprises a broad spectrum of prominent businesses that increasingly serve their clients under the ING brand. Key to INGs retail business is its distribution philosophy of clickcallface. This is a flexible mix of internet, call centres, intermediaries and branches that enables ING to deliver what todays clients expect: unlimited access, maximum convenience, immediate and accurate execution, personal advice, tailor-made solutions and competitive rates. INGs wholesale product offering focuses strongly on its strengths in employee benefits/pensions, financial markets, corporate banking and asset management. ING's strategy is to achieve sustainable growth while maintaining healthy profitability. The Group's financial strength, its broad range of products and services, the wide diversity of its profit sources and the good spread of risks form the basis for ING's continuity and growth potential. ING seeks a careful balance between the interests of its stakeholders: its customers, shareholders, employees and society at large. It expects all its employees to act in accordance with the Group's Business Principles. These principles are based on ING's core values: responsiveness to the needs of customers, entrepreneurship, professionalism, teamwork and integrity. Strategy Given the prospect of low or even zero economic growth, the Executive Board has decided on the following Group strategic objectives for the years 2003-2005: 1. Strenghten capital base and improve other key ratios to maintain a solid financial foundation; 2. Optimise the existing portfolio of businesses; 3. Create value for our clients with a multi-product/multi-channel approach; 4. Develop our special skills direct banking, insurance in developing markets, employee benefits and pensions; 5. Further lower the cost base.

ING Verzekeringen N.V. Amstelveenseweg 500, 1081 KL Amsterdam P.O. Box 810, 1000 AV Amsterdam The Netherlands Telephone +31 20 541 54 11 Telefax +31 20 541 54 44

Commercial Register of Amsterdam, no. 33260659

2 ANNUAL REPORT 2002 ING INSURANCE

CONTENTS
4 5 Composition of the Supervisory Board and the Executive Board Report of the Supervisory Board Report of the Executive board General Main developments Results Profit appropriation Outlook for 2003 Annual Accounts Consolidated balance sheet Consolidated profit and loss account Consolidated statement of comprehensive net profit Consolidated statement of cash flows Accounting principles for the consolidated balance sheet and profit and loss account Accounting principles for the consolidated statement of cash flows Notes to the consolidated balance sheet Additional information relating to the consolidated balance sheet Notes to the consolidated profit and loss account Additional information relating to the consolidated profit and loss account Notes to the consolidated statement of cash flows Parent company balance sheet Parent company profit and loss account Accounting principles for the parent company balance sheet and profit and loss account Notes to the parent company balance sheet

12 14 16 17 18 24 25 36 42 50 54 55 55 56 57

60 61

Other information Auditors report Profit appropriation

ANNUAL REPORT 2002 ING INSURANCE

COMPOSITION OF THE SUPERVISORY BOARD AND THE EXECUTIVE BOARD

As at 31 December 2002 Supervisory board Mijndert Ververs, Chairman Lutgart van den Berghe Luella Gross Goldberg Paul van der Heijden Aad Jacobs Godfried van der Lugt Paul Baron de Meester Johan Stekelenburg Hans Tietmeyer Jan Timmer Karel Vuursteen Executive Board Ewald Kist, Chairman Fred Hubbell Hessel Lindenbergh Cees Maas, Chief Financial Officer Alexander Rinnooy Kan Michel Tilmant

4 ANNUAL REPORT 2002 ING INSURANCE

REPORT OF THE SUPERVISORY BOARD

To the shareholder, The Supervisory Board hereby presents you the 2002 Annual Report of ING Verzekeringen N.V. The Annual Report includes the report of the Executive Board, the Annual Accounts and Other information. Annual Accounts The Annual Accounts have been prepared by the Executive Board and have been discussed by the Supervisory Board. They are presented to you for approval. Approval of the Annual Accounts will serve to ratify the actions of the Executive Board in respect of its management and the members of the Supervisory Board in respect of their supervision during the past financial year. Dividend Adoption of the Annual Accounts also implies that the dividend for 2002 amounts to EUR 605 million. This is the amount that has already been paid as interim dividend. In accordance with the proposed profit appropriation, no additional final dividend will be paid. Meetings In 2002, the Supervisory Board met on seven occasions. The most important subjects were the Medium Term Plan 2002-2004, the annual results 2001, the developments of the results during 2002 and the development of the capital base. Supervisory Board Committees The Audit Committee discussed the annual results and the semi-annual results, the reports of the internal auditor, risk management, the developments in international regulations with regard to accounting principles (IAS), the measures that needed to be taken to strengthen the capital base and the update of the Audit Committee regulations. The Remuneration and Nomination Committee discussed the potential of talented managers who will in time qualify for the highest management levels and the way in which future vacancies in the Executive Board, the Supervisory Board and its committees will be filled Composition of the Supervisory Board During the Annual General Meeting of Shareholders of 17 April 2002, the Supervisory Board bade farewell to Mr. Berghuis and to Mr. Kamminga. Mr. Vuursteen was appointed new member. These changes were announced in the previous annual report. After the Shareholders Meeting of 15 April 2003 Mr. Ververs and Ms. Van der Berghe will retire as members of the Supervisory Board after having reached the maximum term of twelve years. Mr. Ververs has also reached the age of 70, which is the age at which members of the Supervisory Board retire in principle. Mr. Tietmeyer will also retire after the Shareholders Meeting of 15 April 2003, as he will reach the maximum age limit of 72. These three Supervisory Board members have been of exceptional meaning to ING, all from their own background, experience and expertise. This calls for a special word of thanks for the way in which they have exerted their talents to the benefit of ING. Mr. Claus Hoffmann and Mr. Wim Kok are proposed for appointment in the Supervisory Board. Mr. Hoffmann has been CFO of Robert Bosch and has gained extensive expertise in German and European markets, which is of great interest to ING as well. He will also be appointed member of the Audit Committee. Mr. Kok has been proposed for appointments because of his expertise and vision regarding global economic, social and political issues which he gained while serving as Minister of Finance and Prime Minister of the Netherlands and in several previous positions. Composition of the Executive Board The composition of the Executive Board did not change in 2002. As per 1 July 2003, Hessel Lindenbergh will retire as member of the Executive Board, as he has reached the pension-entitlements age of 60. After 20 years, ING bids farewell to an upright and professional banker in heart and soul. His contribution to the development of ING has been significant, for which we would like to thank him sincerely. Gratitude The Supervisory Board would like to express its gratitude to the Executive Board and to all employees worldwide for their efforts during the past difficult year.

Amsterdam, 10 March 2003 THE SUPERVISORY BOARD

ANNUAL REPORT 2002 ING INSURANCE

6 ANNUAL REPORT 2002 ING INSURANCE

REPORT OF THE EXECUTIVE BOARD

General
ING Verzekeringen N.V. (ING Insurance), together with ING Bank N.V., is part of ING Groep N.V. The Annual Report of ING Group pays ample attention to its insurance and banking activities. ING Insurance accounts for the major part of the insurance operations.

Main developments
Operational realised capital gains As planned, ING Insurance realised net capital gains on equity investments of the insurance operations of EUR 820 million against EUR 713 million a year ago (+15%). Net realised capital gains on real estate were EUR 220 million compared to EUR 147 million in 2001. At year-end 2002, the revaluation reserve of equity investments of the insurance operations was EUR 0.8 billion. Starting in 2003, ING Insurance will realise capital gains on equities depending on market opportunities thereby ending its policy of increasing these gains at a fixed and predetermined pace. Capital base ING Insurance was able to absorb substantial book value losses caused by the continued fall of stock markets indices without the capital base dropping below the internal minimum level. This internal level is well-above the legally required level. Nonetheless, in November, ING Insurance announced a series of measures to shore up the capital base in order to continue to be able to withstand potential future volatility of stocks and real estate. First, in December a new subordinated loan has been issued. Further, the non-EU real estate portfolio has been transferred from ING Verzekeringen N.V. to ING Bank N.V.. In addition, the risk of further negative revaluation of equity investments has been limited by hedging transactions to an amount of EUR 3 billion and the sale of equities to an amount of EUR 2 billion. End of period, the capital base of ING Verzekeringen N.V. amounted to EUR 14.7 billion, well in excess (169%) of the legally required level of EUR 8.7 billion. US insurance operations By the end of 2002, most of the integration activities relating to the ReliaStar and Aetna Financial Services acquisitions were completed. Integration was designed to build more streamlined, market-focused US operations and create one integrated financial services platform ranking in the top-5 of the US market. Despite the significant impact on the US operational results from the weak markets, revenue synergies remained on track. Management responded to market impact and achieved cost savings of more than EUR 400 million in excess of forecasts made at the time of the acquisitions. The reorganisation efforts in the US succeeded in reducing expenses by 17.5% or EUR 334 million in 2002. The total US workforce decreased by 16.4% or 1,810 full-time equivalents since the third quarter of 2001, exceeding the 15% target reduction. Double-digit growth of insurance operations in developing markets The result from insurance operations in developing markets showed an increase of EUR 211 million (+44%) to EUR 690 million. Adjusted for the increased ownership in Mexico the increase was 37%. The growth in premium income (+34.5% in local currencies) was positively influenced by the inclusion of premiums from ING Comercial Amrica and negatively influenced by the sale of Aetna Argentina in 2001. Excluding these items, premiums increased by 9.3%. Mexico, Taiwan and Korea accounted for 71% of the total results before tax and 77% of the total premium income. Poland, the Czech Republic, Mexico and Taiwan strongly improved their performance. Joint venture in Australia In April 2002, ING Insurance and ANZ Bank, one of Australias major banks, formed a funds management and a life insurance joint venture in Australia. The joint venture called ING Australia is 51%-owned by ING. ING Australia enjoys a 10% market share in retail life insurance and 8% in retail wealth management business. The formation of the joint venture resulted in a total net profit of EUR 469 million of which EUR 222 million was booked as operational net profit and the balance as non-operational non-distributable profit. Second life company in China opened for business, mutual fund company to follow suit ING Insurance and Beijing Capital Group agreed to establish a joint venture life insurance company in Dalian, China. The new joint venture will be known as ING Capital Life Insurance Company Ltd. Both companies own 50% of the joint venture. ING Capital Life opened for business in December 2002 in the city of Dalian by offering traditional life products. Just before year-end, China Merchants Fund Management Company, a joint venture of ING Investment Management and China Merchants Securities, was the first international joint venture to receive an operational ANNUAL REPORT 2002 ING INSURANCE 7

license for selling mutual funds. As mutual funds are a relatively new concept in China, the company will start with simple and easy-to-understand funds investing in mainland bond and equity markets. Kookmin Bank As part of a restructuring of ING Groups activities, the participating interest in Kookmin Bank has been transferred from ING Verzekeringen N.V. to ING Bank N.V.. Dollar hedge The euro value of the results of the life insurance operations in the US and Canada is proteced from depreciation of the US and Canadian dollar for the year 2001 and 2002. The results were fully hedged at a EUR/USD exchange rate of 0.879. The hedge contributed EUR 55 million to operational net profit (2001: EUR 14 million). In anticipation of a further strengthening of the euro versus the US dollar, ING has also hedged the expected profits of the US insurance operations for the years 2003 and 2004 at a EUR/USD exchange rate of 0.920 and 0.922 respectively. Value of new business and embedded value life operations The value of new life insurance business written during 2002 was EUR 519 million, a substantial increase over the 2001 level of EUR 336 million (revised) in 2001. About half of the value of new business arises from the insurance operations in developing markets. At the end of 2002, the total embedded value of INGs life insurance operations was EUR 23.3 billion compared to EUR 25.8 billion at year-end 2001. The decrease mainly reflects the impact of lower stock prices, credit-related losses and lower currency exchange rates versus the euro.

Results
The operational net profit rose by 26.4% to EUR 3,561 million, reflecting a continued strong performance of the life and non-life business units. Net profit , i.e. including non-operational items, increased by 21.2% to EUR 3,808 million. The geographical analysis includes the operational and the non-operational items. Premium income and result before taxation, excluding non-operational items, developed as follows: 2002 Premium income (in millions of euros) Life insurance Non-life insurance Total Result before taxation (in millions of euros) Life insurance Non-life insurance Total 4,009 654 4,663 3,259 656 3,915 + 23.0 0.3 + 19.1 44,367 7,917 52,284 43,906 5,894 49,800 + 1.0 + 34.3 + 5.0 2001 % change

Europe Life premiums in the Netherlands decreased by 8.0% to EUR 4,927 million. Individual single life premiums were lower due to the changed tax treatment and fierce competition. Group life premiums decreased as a result from lower single premium production and the surrender of a large life contract. Non-life premiums increased by 2.6% to EUR 1,859 million, largely reflecting higher premiums in Loss of income/Accident and Fire. The life result in the Netherlands improved by 1.7% to EUR 2,217 million due to higher realised capital gains, a profit on the surrender of a group life contract and a lower than expected result on interest and mortality. In 2001, the Dutch life result was supported by a partial release of a catastrophe provision and a gain from old reinsurance business. Interest received on an intercompany loan to the US operations was lower. Results on venture capital activities were alsolower. Investment losses were higher. The result on non-life business decreased by 15.4% to EUR 225 million. Miscellaneous reported lower results due to lower realised capital gains. Results from Fire were lower as the number of claims increased, among others following the storm in October. Motor was lower due to higher additions to the technical provision.

8 ANNUAL REPORT 2002 ING INSURANCE

Life premiums in Belgium advanced by 111% to EUR 2,053 million. This increase is mainly caused by the transfer of the BBL Insurance business from ING Bank N.V. Verzekeringen N.V. in the fourth quarter 2001. Life premium income in other countries in Europe increased by 6.8% in local currencies to EUR 1,580 million, mainly due to Italy and Romania. The total life result declined from EUR 176 million in 2001 to EUR 155 million. Italy, Poland, Romania, Hungary and the Czech Republic improved their performance but Greece and Spain did less well than the year before. Americas The result before taxation of ING Americas increased by 20.0% to EUR 1,079 million. Excluding the release of contingent provisions associated with prior acquisitions of EUR 106 million, the results were 8.2% higher than a year ago. The increase reflects responsive expense management, higher investment income, favourable car insurance loss ratios and business growth in Mexico, and lower financing costs. Accelerated amortisation of deferred acquisition costs, higher credit-related investment losses, and lower revenues on assets under management negatively impacted the result. The World Trade Center losses and a restructuring charge relating to the US reorganisation adversely impacted the 2001 results. The hedge programme of the US and Canadian dollar contributed EUR 85 million before tax compared to EUR 22 million a year ago. In the United States, the pre-tax operational result increased by EUR 25 million to EUR 534 million. Excluding the release of contingent provisions, the United States pre-tax operational result decreased by EUR 81 million to EUR 428 million. Significant expense reductions (17.5% organically), higher investment income and lower financing costs could not overcome the continuing impact of the weak economy and financial markets. The weak economy and business climate caused an increase in gross investment losses to EUR 565 million (80 basis points of the total fixed income investment portfolio). Lower current levels of assets under management in the variable product lines resulted in an acceleration of DAC unlocking and a higher net cost of the corresponding guaranteed benefits. These items led to a combined charge of EUR 281 million in 2002 (2001: EUR 18 million). Lower interest rates and lower debt levels positively impacted the financing costs of the US operations. Life premium income in the US by product line (in millions of euros) Life Fixed annuities Variable annuities Rollover payout Employee benefits Defined contribution Reinsurance Institutional markets (GICs) Other Total
*) In constant exchange rates: + 3.2%

2001
2,593 3,272 4,841 317 804 8,254 1,029 7,190

2002
2,635 4,909 4,284 227 787 8,367 935 5,468 18 27,630

% change
2% 50% -12% -28% -2% 1% -9% -24% n.a. -2% *)

28,300

US premiums, excluding GIC premiums, increased 5% (11% at constant exchange rates) due to an increased demand for fixed annuities. Sales of variable annuities decreased due to the shift in the market away from equitybased variable products resulting from the volatility in the financial markets. GIC premiums were lower compared to a record high in 2001 due to reduced levels of short-term contract renewals. Increased premiums for the defined contribution block of business were due to favourable sales in the healthcare, government and education lines of business. Asia/Pacific The pre-tax operational result from the insurance operations in Asia/Pacific was up 86.4% to EUR 577 million from EUR 309 million in 2001. The result includes EUR 222 million profit relating to the formation of the joint venture life and mutual fund operations in Australia with ANZ (ING 51% ownership). The remaining EUR 247 million has been reported as non-operational non-distributable net profit. Excluding the gain related to ANZ, pre-tax operational results increased to EUR 355 million, up 14.9% from EUR 309 million in 2001. The Australian result improved due to better claims ratios and cost control initiatives. Taiwan results improved due to growth of business in combination with tight expense control. The result of the life
ANNUAL REPORT 2002 ING INSURANCE

company in Japan increased by 160% to EUR 31 million as a result of lower claims and surrenders as well as reduced costs due to changes in distribution. The life operations in Korea reported a 32% increase in pre-tax profits reflecting ongoing strong production, better persistency and improved claims. Sales continue to grow rapidly in China, India and Thailand although in general, there were higher start-up expenses. Premium income in Asia/Pacific grew by 14.5% mainly due to the strong sales of a newly introduced single premium variable annuity product in Japan and continued sales growth and high persistency in Korea. Operating expenses for Asia/Pacific were lower as the region continues to focus on reducing costs and integration synergies from the Aetna acquisition are realised. Profit appropriation Pursuant to article 36 of the Articles of Association holders of preference shares will receive EUR 29 million dividend. The remaining net profit of EUR 3,779 million is at the disposal of the Shareholders' Meeting. An interim dividend of EUR 605 million has already been paid. It is proposed to pay no additional final dividend and add the remaining amount of EUR 3,174 million to Other reserves. Outlook for 2003 In view of the current economic and political uncertainties, the Executive Board will not make a forecast for the 2003 result. The Executive Board remains convinced that ING Insurance has a solid base in core markets, will continue to exploit its many synergy opportunities successfully and is adequately responding to todays difficult market conditions.

Amsterdam, 10 March 2003 The Executive Board Ewald Kist, Chairman Fred Hubbell Hessel Lindenbergh Cees Maas, Chief Financial Officer Alexander Rinnooy Kan Michel Tilmant

10 ANNUAL REPORT 2002 ING INSURANCE

ANNUAL ACCOUNTS ING INSURANCE 2002

CONSOLIDATED BALANCE SHEET OF ING INSURANCE AS AT 31 DECEMBER

before profit appropriation
amounts in millions of euros

2002 ASSETS Investments Land and buildings 1 Investments in group companies and participating interests 2 Other financial investments 3 Deposits with insurers 4

2001

7,239 2,423 141,912 94 151,668

8,236 3,494 147,979 31 159,740 82,743

Investments for risk of policyholders and investments of annual life funds 5 Debtors 6 Receivables on account of direct insurance Reinsurance receivables Other receivables

64,281

3,275 797 3,697 7,769

3,438 669 3,889 7,996 475 1,534 1,471 3,480 2,517 11,355 177 14,049 268,008

Other assets Tangible fixed assets 7 Cash 8 Other assets 9

382 3,221 884 4,487

Accrued assets 10 Accrued interest and rents Deferred acquisition costs of insurance business Other accrued assets

2,758 10,636 211 13,605

Total

241,810

The numbers against the items refer to the notes starting on page 25.

12 ANNUAL REPORT 2002 ING INSURANCE

CONSOLIDATED BALANCE SHEET OF ING INSURANCE AS AT 31 DECEMBER

before profit appropriation
amounts in millions of euros

2002 EQUITY AND LIABILITIES Shareholders' equity 11 Third-party interests Group equity Subordinated loans 12 Insurance provisions Provision for unearned premiums and unexpired non-life insurance risks Gross Reinsurance element 10,827 1,163 11,990 2,727

2001

15,450 975 16,425 1,250

4,186 845 3,341

4,351 969 3,382 129,421 8,511 120,910 7,016 1,124 5,892 743 292 131,219

Provision for life policy liabilities 13 Gross Reinsurance element

125,945 5,085 120,860

Claims provision 14 Gross Reinsurance element

7,197 807 6,390

Provision for profit sharing and rebates Other insurance provisions 15

778 186 131,555

Insurance provisions for policies for which policyholders bear the investment risk and for annual life funds Gross Reinsurance element

65,372 1,096 64,276

83,740 972 82,768

General provisions 16 Deferred tax liabilities Other

1,637 560 2,197

1,786 1,360 3,146 269

Deposits from reinsurers Creditors 17 Liabilities relating to direct insurance Liabilities relating to reinsurance Other debentures and private loans 18 Loans from credit institutions 19 Other liabilities 20

197

1,847 342 12,271 3,939 8,759 27,158

2,905 371 14,191 4,737 8,348 30,552 2,379 268,008

Accrued liabilities 21 Total

1,710 241,810

The numbers against the items refer to the notes starting on page 31.

ANNUAL REPORT 2002 ING INSURANCE 13

CONSOLIDATED PROFIT AND LOSS ACCOUNT OF ING INSURANCE FOR THE YEARS ENDED 31 DECEMBER
amounts in millions of euros

2002 I NON-LIFE UNDERWRITING ACCOUNT 22 Premiums written for own account Gross premiums Outward reinsurance premiums Changes in provision for unearned premiums and unexpired non-life insurance risks Gross Reinsurers' share Premiums earned for own account Allocated income and expenses 23 Other underwriting income for own account Claims for own account Gross Reinsurers share Changes in claims provision Gross Reinsurers' share Total claims incurred Operating expenses 24 Other underwriting expenditure for own account Result from non-life underwriting account II LIFE UNDERWRITING ACCOUNT 25 Premiums for own account Gross premiums Outward reinsurance premiums 44,367 1,093 43,274 Allocated income and expenses 23 Other underwriting income for own account Benefits for own account Gross Reinsurers' share Changes in other insurance provisions for own account Provisions for life policy liabilities Gross Reinsurers' share 949 223 29,322 995 28,327 7,917 1,275 6,642 420 75 345 6,297 819 62 4,708 611 4,097 665 40 625 4,722 1,757 45 654

2001

2000

5,894 614 5,280 28 34 6 5,274 797 14 4,077 411 3,666 529 303 226 3,892 1,534 3 656

4,087 187 3,900 47 7 40 3,860 1,026 6 2,700 128 2,572 304 7 311 2,883 1,146

863

43,906 1,395 42,511 1,580 143 27,371 2,153 25,218

24,628 1,004 23,624 14,277 62 15,561 443 15,118

6,917 251 6,666

11,456 834 10,622 318 4,886 69 3,259

10,444 983 9,461 830 2,685 89 9,780

Profit sharing and rebates Operating expenses 24 Other underwriting expenditure for own account Result from life underwriting account

831 4,361 16 4,009

The numbers against the items refer to the notes starting on page 42.

14 ANNUAL REPORT 2002 ING INSURANCE

CONSOLIDATED PROFIT AND LOSS ACCOUNT OF ING INSURANCE FOR THE YEARS ENDED 31 DECEMBER
amounts in millions of euros

2002 III NON-TECHNICAL ACCOUNT Result from insurance operations Result from non-life underwriting account Result from life underwriting account Technical result Income from investments 26 Investment expenses 27 Other income 28 Other expenses Allocated income and expenses transferred to underwriting accounts 23 Result before taxation Taxation 29 Result after taxation Third-party interests Net profit for the period

2001

2000

654 4,009 4,663 919 2,673 1,651 27 130 4,663 759 3,904 96 3,808

656 3,259 3,915 3,079 2,581 1,914 35 2,377 3,915 699 3,216 74 3,142

863 9,780 10,643 15,869 1,680 993 121 15,303 10,643 1,025 9,618 39 9,579

Operational net profit Non-operational net profit 30 Net profit for the period

3,561 247 3,808

2,817 325 3,142

2,367 7,212 9,579

The numbers against the items refer to the notes starting on page 42.

ANNUAL REPORT 2002 ING INSURANCE 15

CONSOLIDATED STATEMENT OF COMPREHENSIVE NET PROFIT OF ING INSURANCE FOR THE YEARS ENDED 31 DECEMBER
amounts in millions of euros

Net profit for the period Other components of comprehensive net profit: unrealised revaluations (1) exchange differences (2) Net profit not recognised in the consolidated profit and loss account Realised revaluations released to the profit and loss account (3) Comprehensive net profit for the period

2002 3,808

2001 3,142

2000 9,579

2,988 971 3,959 1,278 1,429

2,315 234 2,081 1,210 149

530 247 283 7,654 2,208

Comprehensive net profit for the period includes all movements in shareholders equity during the year, except for the cumulative effect of changes in the principles of valuation and determination of results and those resulting from the write-off of goodwill, the enlargement of share capital and distributions to shareholders. Realised revaluations previously recognised in shareholders equity are released from shareholders equity to the profit and loss account. As these revaluations have already been included in comprehensive net profit of the year under report and previous years under the caption unrealised revaluations and are also included in net profit for the period in the year of realisation, these realised results are adjusted in the comprehensive net profit for the period.

(1) In 2002, deferred taxes with regard to unrealised revaluations amounted to EUR 83 million (2001: EUR 2 million; 2000: EUR 353 million). (2) In 2002, deferred taxes with regard to exchange differences amounted to EUR 12 million (2001: EUR 111 million; 2000: EUR 129 million). (3) In 2002, no realised revaluations have been released to the profit and loss account in respect of the sale of investments in shares regarding the financing of acquisitions (2001: EUR 0.3 billion; 2000: EUR 6.7 billion).

16 ANNUAL REPORT 2002 ING INSURANCE

CONSOLIDATED STATEMENT OF CASH FLOWS OF ING INSURANCE FOR THE YEARS ENDED 31 DECEMBER
amounts in millions of euros

Result before taxation Adjusted for: depreciation movements in deferred acquisition costs of insurance business increase in insurance provisions other Trading portfolio purchases/sales (incl. securities and property) Net investment in tangible fixed assets Taxation Movements in: other receivables, prepayments and accrued assets other liabilities and accruals Net cash flow from operating activities 31 participating interests investments in shares and property investments in fixed-interest securities other investments Disposals and redemptions: participating interests investments in shares and property investments in shares regarding financing of acquisitions investments in fixed-interest securities other investments Net investment for risk of policyholders Net cash flow from investing activities 32 Subordinated loans of group companies Bonds, loans contracted and deposits by reinsurers Private placements of ordinary shares Repayment of capital to ING Group NV Cash dividends Net cash flow from financing activities Net cash flow Cash at beginning of year Exchange differences Cash at year-end Cash comprises the following items: Cash and bank balances and call money Cash at year-end Investments and advances:

2002 4,663 211 914 7,444 184 126 109 485 252 437 10,567 1,443 7,203 230,791 24 804 8,487

2001 3,915 208 510 6,299 1,831 148 313 462 3,031 1,747 12,232 1,677 8,141 187,332 61 189 6,277 583 169,330 4 3,001 17,705 1,250 4,770 46 571 5,495 22 1,632 120 1,534

2000 10,643 119 693 10,130 9,012 21 190 177 3,253 3,622 11,168 14,873 10,518 69,688 3 1,010 8,687 9,618 65,994 1 4,844 14,616

214,773 1 6,813 8,583 1,504 748 439 1,453 1,299 61 1,923 1,534 236 3,221

1,612 2,867 673 3,806 358 1,278 4 1,632

3,221 3,221

1,534 1,534

1,632 1,632

The numbers against the items refer to the notes starting on page 54.

ANNUAL REPORT 2002 ING INSURANCE 17

ACCOUNTING PRINCIPLES FOR THE CONSOLIDATED BALANCE SHEET AND PROFIT AND LOSS ACCOUNT OF ING INSURANCE
INTRODUCTION ING Insurance comprises ING Verzekeringen N.V. and its group companies. The financial data of ING Insurance are also included in the consolidated Annual Accounts of ING Groep N.V., which is the holding company of ING Insurance. Copies of these Annual Accounts can be obtained at the office of ING Groep N.V., Amstelveenseweg 500, 1081 KL Amsterdam, the Netherlands. The Annual Accounts of ING Groep N.V. are also available on the Internet at the ING Group website: www.ing.com. CONSOLIDATION PRINCIPLES The consolidated financial statements of ING Insurance include the financial statements of all companies that form an organisational and economic entity and are controlled by ING Insurance. Control is presumed to exist when ING Insurance has, directly or indirectly through group companies, more than one half of the voting power or otherwise exercises effective control. The financial statements of these group companies are consolidated in full on a line-by-line basis, using uniform accounting principles. Third-party interests are presented separately in the consolidated balance sheet and profit and loss account. The financial data of joint ventures are included in proportion to the groups interest where it is relevant to the understanding of ING Insurances shareholders equity and results. Intercompany financial relationships between business units of ING Insurance are eliminated. The parent company profit and loss account has been drawn up in accordance with Section 402, Book 2, of the Dutch Civil Code. A list containing the information referred to in Section 379 (1) and Section 414, Book 2, of the Dutch Civil Code has been filed with the office of the Commercial Register of The Hague, in accordance with Section 379 (5), Book 2, of the Dutch Civil Code.

CHANGES IN THE COMPOSITION OF THE GROUP

amounts in millions of euros, unless stated otherwise

The impact of the most significant changes in the composition of the group on assets, liabilities, shareholders equity and net profit is as follows: 2002
Before acquisition/ disposal After acquisition/ disposal Impact Before acquisition/ disposal After acquisition/ disposal

2001
Impact

Assets Liabilities Shareholders equity Net profit for the period

246,335 235,437 10,898 3,164

241,810 230,983 10,827 3,808

4,525 4,454 71 644

266,685 250,054 16,631 3,152

268,008 252,558 15,450 3,142

1,323 2,504 1,181 10

The impact of a change in the composition of the group is defined as the change in assets, liabilities, shareholders equity or net profit resulting from the acquisition or disposal of a group company, compared to the situation where no acquisition or disposal took place. The impact is included in the financial year in which the acquisition or disposal took place. As part of a restructuring of ING Group's activities the participating interest in Kookmin Bank has been transferred from ING Verzekeringen N.V. to ING Bank N.V.. The transfer was done at fair value at 30 June 2002. As of 31 December 2002 a real estate portfolio has been transferred from ING Verzekeringen N.V. to ING Bank N.V., the transfer was done at fair value. In 2002, ING Insurance strengthened its partnership with Sul Amrica, a leading insurance company in Brazil, by acquiring a 49% stake. The total purchase price of the additional acquisition amounted to EUR 188 million in cash, plus its 49% stake in SulAet as well as its asset management operations (ING Investment Management Brazil). The goodwill amounted to EUR 245 million and is charged to Shareholders equity.The interest in Sul Amrica is included as a participating interest. In 2002, ING Insurance and ANZ, one of Australias major banks, have formed a funds management and life insurance joint venture called ING Australia. The company is 51%-owned by ING and 49%-owned by ANZ. As part of the transaction, the new joint venture acquired net assets from ANZ. This resulted in goodwill of EUR 169 million that is charged to Shareholders equity. Furthermore, ING Group contributed net assets to the new joint venture, which resulted in a net result of EUR 469 million. From this amount, EUR 247 million has been used for financing acquisitions and has therefore been accounted for as non-operational profit. The remainder of EUR 222 million has been recorded as operational profit. In 2001, ING Insurance increased its shareholding in Seguros Comercial Amrica, an insurance company based in Mexico, from 42% to 100%. SCA was de-listed from the Mexican stock exchange effective 9 November 2001. The total purchase price of the additional acquisition amounted to EUR 1,134 million, including EUR 584 million assumed debt. The acquisition was partly financed by the sale of shares. The goodwill amounted to EUR 1,015 million and is charged to Shareholders equity. As from 1 July 2001, the results of Seguros Comercial Amrica have been fully consolidated in the financial statements of ING Group. All retail operations of ING in Mexico now operate under the name ING Comercial Amrica.

18 ANNUAL REPORT 2002 ING INSURANCE

PRINCIPLES OF VALUATION AND DETERMINATION OF RESULTS

GENERAL PRINCIPLES Recognition An asset is recognised in the balance sheet when it is probable that the future economic benefits will flow to the enterprise and the asset can be measured reliably. A liability is recognised in the balance sheet when it is probable that an outflow of resources embodying economic benefits will result from the settlement of a present obligation and the amount at which the settlement will take place can be measured reliably. If the criteria for recognition are no longer met, the assets and liabilities are derecognised. Income is recognised in the profit and loss account when an increase in future economic benefits related to an increase in an asset or a decrease of a liability has arisen that can be measured reliably. Expenses are recognised in the profit and loss account when a decrease in future economic benefits related to a decrease in an asset or an increase of a liability has arisen that can be measured reliably. Valuation Assets and liabilities are shown at face value except where a different valuation principle is stated below. Use of estimates The preparation of the annual accounts necessitates the use of estimates and assumptions. These estimates and assumptions affect the reported amounts of the assets and liabilities and the amounts of the contingent liabilities as at balance sheet date as well as reported income and expenses for the year. The actual outcome may differ from these estimates. Foreign currencies
General The euro is the reporting currency of ING Insurance. Assets and liabilities in foreign currencies are translated at the

spot mid-rates (Amsterdam exchange rates) prevailing on the balance sheet date. Non-monetary items which are expressed in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. Income and expenses arising from foreign currency transactions are translated at the rates prevailing on the transaction date. The following exchange differences are credited or debited, net of any related taxes, to Shareholders equity: exchange differences on participating interests, investments and liabilities assumed in connection with their financing; exchange differences on insurance provisions and on investments serving to cover these liabilities; exchange differences on loans serving to hedge exchange rate risks on foreign interests and investments. All other exchange differences are taken to the profit and loss account.
Forward foreign exchange contracts Forward foreign exchange contracts connected to borrowing and lending positions are translated at the spot mid-rates prevailing on the balance sheet date. Differences between the spot rates prevailing on the balance sheet date and on the contract date are taken to the profit and loss account. Differences between the valuations at the forward rate and the spot rate at the contract date are amortised and charged to the profit and loss account in proportion to the expired part of the terms of the contracts concerned. The other forward foreign exchange contracts are valued at the market quotations for their remaining terms at the balance sheet date. In general, differences resulting from revaluations are taken to the profit and loss account. Exchange differences on forward foreign exchange contracts serving to hedge exchange rate risks on participating interests and investments are taken to Shareholders equity. Business units outside the euro zone Assets and liabilities of business units outside the euro zone are translated at the closing rate prevailing on the balance sheet date. Income and expenses of business units outside the euro zone (excluding business units in countries with hyperinflation) are translated at average exchange rates for the year. The financial statements of a business unit that reports in the currency of a hyperinflationary economy, are restated for the influences of inflation before translation into euros. Income and expenses of business entities in countries with hyperinflation are translated at the closing rate prevailing on the balance sheet date. Exchange differences on assets and liabilities of business units outside the euro zone are credited or debited, net of any related taxes, to Shareholders equity, except for exchange differences on monetary assets and liabilities of business units in countries with hyperinflation. These differences are taken to the profit and loss account. Exchange differences on results arising from differences between the spot rates on the balance sheet date and the average rates for the year are taken to Shareholders equity.

Geographical analyses The geographical analyses of assets, liabilities, income and expenses in the notes to the consolidated balance sheet and profit and loss account are based on the location of the office from which the transactions are originated. Analysis of insurance business Where amounts in respect of insurance business are analysed into life and non-life , health and disability insurance business is included in non-life. Derivatives Derivatives are stated at fair value. Changes in the fair value are included in the profit and loss account. However, derivatives serving to hedge the risks on own positions are recognised in accordance with the accounting principles of the hedged items.
ANNUAL REPORT 2002 ING INSURANCE 19

Hedge accounting Transactions qualify as hedges if these transactions are identified as such and there is a negative correlation between the hedging results and the results of the positions being hedged. Hedging instruments are accounted for in accordance with the accounting principles of the hedged item. Impairments The carrying value of Investments and Tangible fixed assets is reviewed to ascertain whether there has been a permanent diminution in value. These impairments are assessed on an individual basis and are taken to the profit and loss account immediately. However, impairments of assets carried at revalued amounts are first charged directly to any revaluation reserve for these assets. Receivables Receivables are carried at the face value less any diminution in value (impairment) deemed necessary to cover the risk of uncollectibility. Receivables are impaired if it is probable that the principal and interest contractually due will not be collected. In general, to determine the amount of this impairment (provision for loan losses), the degree of risk of uncollectibility is assessed on a static basis: per individual loan, taking into account among other things amounts outstanding at year-end, the financial position, results and cash-flow information of the debtor, the payment history and the value of the collateral; per group of loans subdivided by the degree of risk of uncollectibility (risk classification), determined on the basis of a wide range of aspects with regard to creditworthiness and taking into account empirically determined risk percentages for each risk category. The net amounts added to or withdrawn from these provisions are included in the profit and loss account. Receivables are written off and charged against the provision for loan losses when all the necessary legal procedures have been completed and the amount of the loss is finally determined. Investment and trading portfolios The investment portfolio comprises those assets which are intended for use on a continuing basis and have been identified as such. These investments are held in order to cover the insurance provisions and to manage interest rate, capital and liquidity risk. Positions held with trading intent are those held intentionally for short-term resale and/or with the intent of benefiting from actual or expected short-term price movements or to lock in arbitrage profits. If due to a change in managements intent transfers are made between investment and trading portfolios, these assets are remeasured to fair value and gains and losses are accounted for in accordance with the accounting principles applicable to the portfolio in which the assets were originally held. Reinsurance Reinsurance premiums, commissions and claim settlements, as well as provisions relating to reinsurance, are accounted for in the same way as the original contracts for which the reinsurance was concluded. Receivables as a consequence of reinsurance are deducted from the liabilities relating to the original insurance contracts. SPECIFIC PRINCIPLES Investments
Realised gains and loses on investments Realised gains and loses on investments are determined as the difference between the sale

proceeds and the cost based on a weigthed average basis.

Land and buildings Investments in land and buildings are stated at fair value as at balance sheet date. Changes in the carrying

amount resulting from revaluations of these investments are credited or debited to Shareholders equity, allowing for taxation where necessary. On disposal of these investments, the difference between the sale proceeds and cost is recognised in the profit and loss account. Valuations of investments in land and buildings are made by rotation in such a way as to ensure that all properties are appraised at least once every five years. Value-enhancing investments in existing properties made since the last valuation are capitalised at the cost of the investment until the next valuation. Land and buildings are not depreciated. Land and buildings under construction are stated at the direct purchase and construction cost incurred up to the balance sheet date plus interest during construction and the group's own development and supervision expenses, where necessary less any expected diminution in value on completion.
Investments in group companies and participating interests ING Insurances acquisitions are accounted for under the purchase

method of accounting, whereby the cost of the acquisitions is allocated to the fair value of the assets and liabilities acquired. Goodwill, being the difference between the cost of the acquisition (including assumed debt) and ING Insurances interest in the fair value of the acquired assets and liabilities as at the date of acquisition, is debited to Shareholders equity. The results of the operations of the acquired companies are included in the profit and loss account from their respective dates of acquisition. Adjustments to the fair value as of the date of acquisition of acquired assets and liabilities that are identified before the end of the first annual accounting period commencing after acquisition are recorded as an adjustment to goodwill; any subsequent adjustment is recognised as income or expense. On disposal of group companies the difference between the sale proceeds and cost is included in the profit and loss account; for disposals within 5 years of acquisition, goodwill is adjusted on a pro-rata basis.

20 ANNUAL REPORT 2002 ING INSURANCE

Participating interests in which a significant influence is exercised over the financial and operating policy, investments in associates, are stated at net asset value. ING Insurances share in the results of these investments in associates is recognised in the profit and loss account. Investments in other participating interests are stated at fair value. Each year, the net asset value of the investment is determined, which approximates the fair value. Dividends received are credited to the profit and loss account. Changes due to revaluation are credited or debited to Shareholders' equity. On disposal of participating interests, the difference between the sale proceeds and cost is included in the profit and loss account.
Other financial investments Shares and other non-fixed interest securities held for the groups own risk are stated at fair value as

at balance sheet date. Changes in the carrying amount resulting from revaluations of these investments are credited or debited to Shareholders equity, allowing for taxation where necessary. On disposal of these investments, the difference between the sale proceeds and cost is recognised in the profit and loss account. Fixed-interest securities are stated at redemption value. The difference between redemption value and purchase price is amortised over the weighted average remaining term of the investments concerned, either credited or debited to the profit and loss account. Fixed-interest securities on which interest is not received annually and on which the redemption value is paid out as a lump sum on maturity (such as climbing loans, zero-coupon bonds and savings certificates) are included at purchase price plus the proportion of the difference between purchase price and redemption value related to the period elapsed since the date of purchase. Investments in interest-only securities are initially included at purchase price. Each year, the interest income decreases in proportion to the decline in the net book value of the interest-only security over its remaining term. Investments in principal-only securities are stated at purchase price plus the proportion of the difference between purchase price and redemption value related to the period elapsed since the date of purchase, calculated on the basis of compound interest. The increase in value is included in the profit and loss account as interest income. The results on disposal of fixed-interest securities, i.e. the differences between the proceeds on disposal and the carrying amount of the investments sold, are shown as yield differences. Results on disposal of derivatives related to the investments concerned are likewise shown as yield differences. Allowing for the weighted average remaining term of the investment portfolio, these yield differences are included in the profit and loss account as interest income. Results on disposal due to a structural reduction of investments are included directly in the profit and loss account, including the results on disposal of the related derivatives. Interests in investment pools are stated in accordance with the valuation principles of the pools concerned.
Life insurance products In the case of life insurance products, where there is a relationship between the value of the investments and the level of the insurance provisions, differences resulting from revaluations, realised or unrealised, are initially taken to the profit and loss account. Subsequently, these revaluations are included either in Provision for life policy liabilities, which is part of Insurance provisions or Insurance provisions for policies for which the policyholders bear the investment risk and for annual life funds. Repurchase transactions and reverse repurchase transactions Debentures, other fixed-interest securities, shares and other non-

fixed interest securities which have been sold with an agreement to repurchase (repurchase transactions), are included as assets in the balance sheet. Debentures, other fixed-interest securities, shares and other non-fixed interest securities, which have been acquired in reverse sale and repurchase transactions, are not recognised in the balance sheet.
Securities borrowing and lending Debentures, other fixed-interest securities, shares and other non-fixed interest securities, which

are lent out, are included in the balance sheet. Debentures, other fixed-interest securities, shares and other non-fixed interest securities, which are borrowed, are not recognised in the balance sheet. Investments for risk of policyholders and investments of annual life funds In the valuation of these investments, the same principles are generally applied as those pertaining to the valuation of investments held for the groups own risk. However, fixed-interest securities directly linked to life policy liabilities and the annual funds of the annual life fund operations are stated at fair value plus accrued interest where relevant. Other assets
Tangible fixed assets Tangible fixed assets are stated at cost less accumulated depreciation. The cost of these assets is depreciated

on a straight-line basis over their estimated useful lives, which are as follows: data-processing equipment 2 to 5 years and other movable fixed assets 4 to 10 years. Expenditures for maintenance and repair are charged to the profit and loss account as incurred. Expenditure incurred on major improvements is capitalised and depreciated. On disposal of these assets, the difference between the proceeds on disposal and net book value is recognised in the profit and loss account.
ANNUAL REPORT 2002 ING INSURANCE 21

Other assets Assets that are part of the trading portfolio are stated at fair value, which generally means quoted prices. Changes in the fair value, both realised and unrealised, on these assets are included in the profit and loss account. Fixed-interest securities in the trading portfolio repurchased after issue by group companies and equity participations are stated at the lower of cost and fair value. Unrealised losses and results on disposal of equity participations are included in the profit and loss account.

Computer software that has been purchased or generated internally for internal use is capitalised and amortised on a straightline basis over its useful life. This period will generally not exceed three years. Property under development is held with the intention to sell to third parties and is valued at direct construction cost incurred up to the balance sheet date, including interest during construction and the group's own development and supervision expenses. Rented property and infrastructure works are valued at the estimated proceeds on private sale or the contractually agreed selling price. The difference between the net proceeds on disposal and cost of property under development, rented property and infrastructure works and any downward value adjustments are reflected in the profit and loss account. Accrued assets Direct variable costs for the acquisition of life insurance policies, for which periodic premiums will be receivable, are deferred and amortised over the average period for which these premiums will be received, with allocation to such periods being made on an annuity basis. Costs of acquiring non-life insurance business which vary with and are primarily related to the production of such business are deferred and amortised equally over the period of the insurance. Insurance provisions
Provision for unearned premiums and unexpired insurance risks The provision is calculated in proportion to the unexpired periods

of risk. For insurance policies covering a risk increasing during the term of the policy at premium rates independent of age, this risk is taken into account in determining the provision. Further provisions are made to cover claims under unexpired insurance contracts, which may exceed the unearned premiums and the premiums due in respect of these contracts.
Provision for life policy liabilities The Provision for life policy liabilities is calculated on the basis of a prudent prospective

actuarial method, taking into account the conditions for current insurance contracts. The as yet unamortised interest-rate rebates on periodic and single premium contracts are deducted from the Provision for life policy liabilities. Interest-rate rebates granted during the year are capitalised and amortised in conformity with the anticipated recovery pattern and are debited to the profit and loss account. The adequacy of the Provision for life policy liabilities is evaluated each year and adjusted if necessary with a provision for any shortfall due to the applied principles. The adequacy test takes into account future developments and allows for remaining unamortised interest-rate rebates and deferred acquisition costs.
Claims provision The Claims provision is calculated either on a case-by-case basis or by approximation on the basis of experience. Provisions have also been made for claims incurred but not reported and for future claims handling expenses. The adequacy of the Claims provision is evaluated each year using standard actuarial techniques. Other insurance provision These include the provision to cover the risk of possible catastrophes.

Insurance provisions for policies for which the policyholders bear the investment risk and for annual life funds The Insurance provisions for policies for which the policyholders bear the investment risk and for annual life funds are for the segregated investment deposits calculated on the same basis as the provision for life policy liabilities. For insurances for which policyholders bear the investment risk and for annual life funds, the insurance provisions are generally shown at the balance sheet value of the associated investments. General provisions
General A general provision involves a present obligation arising from past events, the settlement of which is expected to result

in an outflow from the company of resources embodying economic benefits, whereas the timing or amount is uncertain. Unless stated otherwise below, general provisions are discounted using a pre-tax discount rate to reflect the time value of money.
Deferred tax liabilities Deferred corporate tax is stated at the face value and is calculated for temporary valuation differences

between carrying amounts of assets and liabilities in the balance sheet and tax base based on tax rates that are expected to apply in the period when the assets are realised or the liabilities are settled. Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary differences can be utilised. A deferred tax asset is recognised for the carryforward of unused tax losses to the extent that it is probable that future taxable profits will be available for compensation. The effect of dividend withholding tax is not taken into account in respect of the valuation of retained earnings of participating interests.
Pension liabilities and other staff-related liabilities Provisions for pension liabilities and other staff-related liabilities are calculated using the projected unit credit method of actuarial cost allocation. In accordance with this method, the discounted value of the pension liabilities and other staff-related liabilities is determined on the basis of the active period of service up to the balance sheet date, the projected salary at the expected retirement date and the market yields at the balance sheet date on high quality corporate bonds. In order to distribute expenses for pensions and other staff-related expenses evenly over the years, these expenses are calculated using the expected rate of return on plan assets. Differences between this expected return and the actual return on these plan assets and actuarial changes are not recognised in the profit and loss account, unless the accumulated differences and

22 ANNUAL REPORT 2002 ING INSURANCE

changes exceed 10% of the greater of the defined benefit obligation and the fair value of the plan assets. The excess is amortised and charged to the profit and loss account over employees remaining working lives. The rates used for salary developments, interest discount factors and other pension adjustments reflect specific country conditions. At 31 December the weighted averages of basic actuarial assumptions used for valuation purposes were: Annual % Discount rates Expected rates of salary increases (excluding promotional increase) Medical cost trend rates Consumer price inflation 2002 5.75 2.75 4.50 2.00 2001 6.50 3.00 4.50 2.25 2000 6.50 3.00 2.75 2.25

The expected rate of return for 2002 on plan assets was 7.50% (2001: 7.75%; 2000: 7.75%). The expected rate of return on plan assets was weighted by the fair value of these assets. All other assumptions have been weighted by defined benefit obligations. Creditors
Other liabilities Liabilities that are part of the trading portfolio are stated at fair value, which generally means quoted prices.

Changes in the fair value, both realised and unrealised, on these liabilities are included in the profit and loss account. Contingent liabilities Contingent liabilities are commitments or risks of which it is more likely than not that no outflow from ING Insurance of resources embodying economic benefits will occur. The underlying value of these commitments or risks is not recorded as a liability in the balance sheet. Premium income Premiums from life insurance policies are recognised as revenue when due from the policyholder. For non-life insurance policies, premium income is recognised on a pro rata basis over the term of the related policy coverage. Interest income Interest income is recognised in the profit and loss account for all interest bearing instruments on a accrued basis. Interest income includes coupons earned on fixed income investment and trading securities and amortisation of accrued discounts and premiums and yield differences. Taxation Taxation is calculated on the result before taxation shown in the annual accounts, taking into account tax-allowable deductions, charges and exemptions.

ANNUAL REPORT 2002 ING INSURANCE 23

ACCOUNTING PRINCIPLES FOR THE CONSOLIDATED STATEMENT OF CASH FLOWS OF ING INSURANCE
The cash flow statement has been drawn up in accordance with the indirect method, distinguishing between cash flows from operating, investing and financing activities. Cash flows in foreign currencies are translated at the average exchange rates for the year. Where the balance of items in the cash flow statement does not correspond to the movements in the relevant balance sheet items, this is mainly due to differences on translation. In the net cash flow from operating activities, the result before taxation is adjusted for those items in the profit and loss account and movements in balance sheet items which do not result in actual cash flows during the year. The net cash flow shown in respect of Loans and advances granted and repaid only relates to transactions involving actual payments or receipts. The additions to the provision for loan losses which is deducted from the item Debtors in the balance sheet has been adjusted accordingly for the result before taxation and is shown separately in the cash flow statement. The investments in and disposals of participating interests have been included in the cash flow from investing activities at cost/sales price, insofar as payment was made in cash. The cash assets of the consolidated participating interests concerned have been eliminated from the cost/sales price. Cash dividends are included in the cash flow from financing activities. Included in Cash are those assets which can be converted into cash without restriction and without material risk of diminution in value as a result of the transaction. The difference between the net cash flow in accordance with the cash flow statement and the movement in Cash in the balance sheet is due to exchange differences and is separately accounted for as part of the reconciliation of the net cash flow and the balance sheet movement in cash.

24 ANNUAL REPORT 2002 ING INSURANCE

NOTES TO THE CONSOLIDATED BALANCE SHEET OF ING INSURANCE

amounts in millions of euros, unless stated otherwise

ASSETS
1. Land and buildings Land and buildings wholly or partially in use by group companies Other land and buildings 2002 1,061 6,178 7,239 The movements in investments in Land and buildings were as follows: Opening balance Additions Transfer from other assets Changes in the composition of the group Capitalised interest during construction Revaluations Disposals Exchange differences Closing balance 2002 8,236 834 113 1,028 10 254 927 253 7,239 2001 7,764 649 236 159 10 333 499 56 8,236 2001 1,092 7,144 8,236

The balance sheet value as at 31 December 2002 included revaluations of EUR 1,518 million (2001: EUR 1,678 million). The cost or purchase price amounted to EUR 5,721 million (2001: EUR 6,558 million). The appraisal of land and buildings during the last five years in relation to the balance sheet value as at 31 December 2002 was as follows: Years of appraisal (in %) 2002 67 2001 8 2000 14 1999 3 1998 8 100 2. Investments in group companies and participating interests 2002
Ownership (%) Balance sheet value Estimated fair value Ownership (%) Balance sheet value

2001
Estimated fair value

Name of investee Investments in associates: De Goudse Verzekeringen N.V. Q-Park N.V. Seguros Bital, S.A. de C.V. (Grupo Financiero Bital) Vesteda Other investments in associates

20 20 49 22

34 63 22 635 59 813 293 1,106

34 63 120 635 42 894 293 1,187

20 22

34 52

34 52

608 694 806 1,500

592 678 806 1,484

Investments in other participating interests Total investments in participating interests Receivables from: group companies of ING Group participating interests

1,305 12 1,317 2,423

1,397 12 1,409 2,596

1,980 14 1,994 3,494

1,909 13 1,922 3,406

The decrease of Investments in other participating interest mainly caused by the sale of the participating interest in Kookmin Bank to ING Bank.
ANNUAL REPORT 2002 ING INSURANCE 25

The balance sheet value of Investments in group companies and participating interests as at 31 December 2002 included revaluations of EUR 10 million (2001: EUR 45 million). The cost of these Investments in group companies and participating interests amounted to EUR 1,548 million (2001: EUR 1,545 million).

2002

2001 Associates 385 1,543 125 54 1,307 63 6 174 11

Opening balance Additions and advances Changes in the composition of the group Transition to Group companies and investments Revaluations Movements in provision for credit risk exposure Results from participating interests Dividends received Disposals and redemptions Impairments Exchange differences

694 991 233 239 256 134 145 97 36

2002 2001 2002 2001 Other participating Receivables from interests participating interests 806 678 14 10 283 25 4 6 137 3 5 18 98 37 319 1 1

627 5 46

148 3 30

4 1

Closing balance 3. Other financial investments

813

694

293

806

12

14

2002 Shares and other non-fixed-interest securities Debentures and other fixed-interest securities Interests in investment pools Mortgage loans Other loans Deposits with credit institutions Other 11,024 90,334 99 26,993 10,342 897 2,223 141,912

2001 16,625 90,202 86 26,812 11,572 1,326 1,356 147,979

2002 11,024 95,769 99 28,408 10,940 900 2,227 149,367

2001 16,625 92,360 86 27,156 12,077 1,348 1,332 150,984

Balance sheet value

Estimated fair value

As at 31 December 2002, the cost of Other financial investments except for investments in Shares and other non-fixed-interest securities and Interests in investment pools amounted to EUR 131,036 million (2001: EUR 130,559 million). The cost of the investments stated at fair value amounted to: Shares and other non-fixed-interest securities Interests in investment pools 2002 10,197 99 2001 11,452 86

The movements in Other financial investments except for Interests in investments pools, Deposits with credit institutions and Other were as follows: 2002 2001 2002 2001 2002 2001 2002 2001
Other loans

Shares and other nonfixed-interest securities

Debentures and other fixed-interest securities

Mortgage loans

Opening balance Additions and advances Changes in the composition of the group Yield differences Revaluations Disposals and redemptions Impairments Exchange differences Other movements Closing balance

16,625 6,369

18,504 7,491

90,202 194,423

73,143 159,766

26,812 5,359

22,692 5,526

11,572 2,352

11,545 1,619

256 3,365 7,582 292 462 13 11,024

289

3 2,038

578 87

11 3,251 1,930 8 26,993

451 85 2,698 381 375 26,812

1 3,024 630 73 10,342

90 12 1,757 144 81 11,572

2,971 6,422 179,882 145,595 3 115 12,243 2,475 378 125 78 16,625 90,334 90,202

26 ANNUAL REPORT 2002 ING INSURANCE

Non-income-producing investments ING Insurances investments in debentures and other fixed-interest securities, with a

combined carrying value of EUR 339 million (2001: EUR 25 million) were non-income-producing for the year ended 31 December 2002.
Concentrations As at 31 December 2002, ING Insurance had investments in shares and fixed-interest securities of ABN AMRO

Holding N.V with a carrying value that individually exceeded 10% of Shareholders' equity. The total investment amounted to EUR 2,887 million (2001: EUR 3,378 million) and comprised EUR 2,719 million (2001: EUR 3,187 million) in shares and EUR 168 million (2001: EUR 191 million) in fixed-interest securities. Shares and other non-fixed-interest securities Listed Unlisted 2002 9,999 1,025 11,024 Shares and other non-fixed-interest securities can be analysed as follows: 2002 10,197 2,772 1,945 11,024 Debentures and other fixed-interest securities Listed Unlisted 2002 72,853 17,481 90,334 2001 75,020 15,182 90,202 2001 11,452 6,167 994 16,625 2001 15,046 1,579 16,625

Purchase price Revaluation: Gross unrealised gains Gross unrealised losses

As at 31 December 2002, the cost of investments in Debentures and other fixed-interest securities amounted to EUR 90,642 million (2001: EUR 90,160 million). At 31 December 2002 no listed securities issued by ING Group were held (2001: EUR 14 million). The balance sheet value includes Debentures and other fixed-interest securities which are: Lent Sold in repurchase transactions 2002 266 4,409 4,675 Other loans Private loans Policy loans Professional loans 2002 6,817 3,238 287 10,342 2001 7,517 3,791 264 11,572 2001 1,395 1,395

As at 31 December 2002, an amount of EUR 122,864 million (2001: EUR 124,785 million) was expected to be recovered or settled after more than one year from the balance sheet date for Other financial investments except Shares and other non-fixedinterest securities. 4. Deposits with insurers Deposits with insurers relates to receivables under a reinsurance contract which are not freely available. As at 31 December 2002, the fair value amounted to EUR 94 million (2001: EUR 20 million).

ANNUAL REPORT 2002 ING INSURANCE 27

5.

Investments for risk of policyholders and investments of annual life funds Land and buildings Other financial investments: shares and convertible debentures fixed-interest securities other 2002 21 53,099 9,948 1,213 64,281 Opening balance Additions and advances Changes in the composition of the group Disposals and redemptions Exchange differences Other movements Closing balance 82,743 40,691 41,778 8,598 8,777 64,281 2001 85 73,576 7,898 1,184 82,743 81,536 71,054 414 67,857 2,682 5,086 82,743

As at 31 December 2002, the cost of Investments for risk of policyholders and investments of annual life funds amounted to EUR 64,646 million (2001: EUR 84,781 million). 6. Debtors 2002 Receivables on account of direct insurance from: policyholders intermediaries Reinsurance receivables Other receivables: pension assets and other staff related assets ING Group third parties 2,790 485 797 498 26 3,173 7,769 2001 2,924 514 669 491 157 3,241 7,996

As of 2002 pension assets/liabilities and other staff related assets/liabilities are included as one amount in the balance sheet. An analysis of pension assets/liabilities and other staff related assets/liabilities is included under General Provisions. As at 31 December 2002, an amount of EUR 1,336 million (2001: EUR 1,538 million) was expected to be recovered or settled after more than one year from the balance sheet date. 7. Tangible fixed assets Data-processing equipment Other movable fixed assets 2002 102 280 382 Opening balance Additions Changes in the composition of the group Disposals Depreciation Exchange differences Closing balance Gross carrying amount as at 31 December Accumulated depreciation as at 31 December 475 193 1 89 139 59 382 728 346 382 2001 143 332 475 433 245 1 78 135 9 475 884 409 475

28 ANNUAL REPORT 2002 ING INSURANCE

8.

Cash Cash and bank balances Call money 2002 2,993 228 3,221 2001 1,387 147 1,534

9.

Other assets Trading portfolio Equity participations Property Deferred tax assets Other receivables 2002 119 358 66 190 151 884 2001 341 309 70 592 159 1,471

As at 31 December 2002, an amount of EUR 430 million (2001: EUR 322 million) was expected to be recovered or settled after more than one year from the balance sheet date. As at 31 December 2002, the deferred tax assets analysed by its origin were as follows: 2002 Deferred tax assets relating to: insurance provisions other provisions unused tax losses carried forward other 1,295 461 457 431 2,644 Deferred tax liabilities (offset by deferred tax assets) relating to: investments deferred acquisition costs general provisions other 6 1,128 1,099 221 2,454 190 2001 1,618 462 99 2,179 11 580 994 2 1,587 592

The deferred tax assets in connection with unused tax losses carried forward were arrived at as follows: 2002 1,322 49 1,273 35.9% 457 2001 1,549 292 1,257 36.8% 462

Total unused tax losses carried forward Unused tax losses carried forward not recognised as a deferred tax asset Unused tax losses carried forward recognised as a deferred tax asset Average tax rate Deferred tax asset Total unused tax losses carried forward as at 31 December 2002 analysed by expiration terms:

up to five years five to ten years ten to twenty years unlimited

2002 293 202 825 2 1,322

2001 311 363 829 46 1,549

ANNUAL REPORT 2002 ING INSURANCE 29

10. Accrued assets As at 31 December 2002, an amount of EUR 9,208 million (2001: EUR 10,095 million) was expected to be recovered or settled after more than one year from balance sheet date. The movements in Deferred acquisition costs of insurance business were as follows: 2002 Opening balance Capitalised Amortisation Changes in the composition of the group Exchange differences Transfer of portfolios Closing balance 11,035 2,272 1,455 2 1,616 65 10,299 2001
Life insurance

2002 320 162 93 49 3 337

2001 260 83 82 55 1 3 320

2002 11,355 2,434 1,548 2 1,665 62 10,636

2001
Total

Non-life insurance

10,393 2,478 1,444 182 344 554 11,035

10,653 2,561 1,526 127 345 551 11,355

Included in Amortisation for the year 2002 is an amount of EUR 281 million due to deferred acquisition costs unlocking.

30 ANNUAL REPORT 2002 ING INSURANCE

EQUITY AND LIABILITIES

11. Shareholders equity Opening balance Unrealised revaluations after taxation Exchange differences Net profit not recognised in the profit and loss account Realised revaluations released to the profit and loss account Write-off of goodwill Net profit for the period Payment to ING Groep N.V. / by ING Groep N.V. Dividend paid Closing balance 12. Subordinated loans 6.250% bonds, issued by ING Verzekeringen N.V. on 21 June 2001, due on 21 June 2021 6.375% bonds, issued by ING Verzekeringen N.V. on 7 May 2002, due on 7 May 2021 7.2% perpetual subordinated loan issued by ING Verzekeringen N.V. on 12 December 2002 2002 1,250 1,000 477 2,727 13. Provision for life policy liabilities The Provision for life policy liabilities, net of reinsurance, can be analysed as follows: Provision for life policy liabilities Unamortised interest-rate rebates 2002 121,909 1,049 120,860 The provision for life policy liabilities is of a long-term nature. 14. Claims provision 2002 5,892 5,892 Additions: for the current year for prior years interest accrual of provision for disability losses Claim settlements and claim settlement costs: for the current year for prior years 3,970 310 45 4,325 2,397 1,326 3,723 393 289 6,390 2001 5,081 199 5,280 3,617 24 36 3,629 2,042 1,369 3,411 7 401 5,892 2001 121,975 1,065 120,910 2001 1,250 2002 15,450 2,988 971 3,959 1,278 450 3,808 1,453 1,291 10,827 2001 17,875 2,315 234 2,081 1,210 1,733 3,142 17 560 15,450

1,250

Opening balance Changes in the composition of the group

Exchange differences Other movements Closing balance The claims provision is of a long-term nature. 15. Other insurance provisions Other insurance provisions includes the catastrophe provision.

ANNUAL REPORT 2002 ING INSURANCE 31

16. General provisions Deferred tax liabilities Pension liabilities and other staff-related liabilities Reorganisations and relocations Other 2002 1,637 85 475 2,197 2001 1,786 538 184 638 3,146

As of 2002 pension assets / liabilities and other staff related assets / liabilities are included as one amount in the balance sheet. Because the balance of pension assets / liabilities and other staff related assets / liabilities at 31 December 2002 is an asset, the amount is included in the balance sheet under Debtors. As at 31 December 2002, an amount of EUR 1,955 million (2001: EUR 2,717 million) was expected to be settled after more than one year from balance sheet date. The movements in General provisions, other than Pension liabilities and other staff-related liabilities, can be analysed as follows: 2002 Opening balance Changes in the composition of the group Additions Releases Transfer to deferred tax assets Charges Exchange differences Closing balance 1,786 25 1,118 328 402 508 4 1,637 2001 2,003 217 1,031 799 154 365 21 1,786 2002 184 18 2001 58 64 73 2002 638 38 36 23 136 78 475 2001
Other

Deferred tax liabilities

Reorganisations and relocations

656 81 85

104 13 85

13 2 184

45 23 638

Deferred tax liabilities The provision for deferred tax liabilities analysed by its origin was as follows: 2002 Deferred tax assets (offset by deferred tax liabilities) relating to: insurance provisions other provisions unused tax losses carried forward equalisation reserve other 415 6 107 698 132 1,358 Deferred tax liabilities relating to: investments deferred acquisition costs equalisation reserve depreciation general provisions other 2001 125 15 83 921 273 1,417

1,154 1,028 204 5 407 197 2,995 1,637

1,605 1,100 191 36 104 167 3,203 1,786

The deferred tax asset (offset by deferred tax liabilities) in connection with unused tax losses carried forward is arrived at as follows: 2002 634 289 345 31.0% 107 2001 559 268 291 28.6% 83

Total unused tax losses carried forward Unused tax losses carried forward not recognised as a deferred tax asset Unused tax losses carried forward recognised as a deferred tax asset Average tax rate Deferred tax asset

32 ANNUAL REPORT 2002 ING INSURANCE

Total unused tax losses carried forward as at 31 December analysed by expiration terms: 2002 388 2001

up to five years five to ten years ten to twenty years unlimited

246 634

272 33 1 253
559

Pension liabilities and other staff-related liabilities ING Insurance maintains defined benefit retirement plans in the major countries in which it operates. These plans generally cover all employees and provide benefits that are related to the remuneration and service of employees upon retirement. Annual contributions are paid to the fund at a rate necessary to adequately finance the accrued liabilities of the plans calculated in accordance with local legal requirements. Plans in other countries comply with applicable local regulations concerning investment and funding levels. ING Insurance provides other post-employment and post-retirement employee benefits to certain employees. These are primarily post-retirement healthcare benefits and post-employment defined benefit early-retirement plans provided to employees and former employees. Certain group companies sponsor defined contribution pension plans. These do not give rise to balance sheet provisions, other than relating to short-term timing differences included in current liabilities. Pension liabilities and other staff-related liabilities can be summarised as follows: 2002 Defined benefit obligation Fair value of plan assets Funded status Unrecognised past service costs Unrecognised gains/(losses) 2001 2002 2001
Healthcare

2002

2001
Other

2002

2001
Total

Pension liabilities

3,956 3,662 294 4 1,105 815

3,857 3,904 47 3 447 491

276

296

50

280

4,282 3,662

4,433 3,904 529 3 479 47

276 9 18 267

296 6 25 315

50

280

620 5

57 50 223

1,123 498

The movement in Pension liabilities and other staff-related liabilities can be analysed as follows: 2002 Opening balance Plan adjustments Benefit cost Employers contribution Changes in the composition of the group Effect of curtailment or settlement Exchange differences Closing balance 491 152 98 472 127 25 50 815 2001 567 57 142 174 4 9 491 2002 315 23 13 33 2001
Healthcare

2002 223 152 1 13 6

2001
Other

2002 47 120 498 166 25 24

2001
Total

Pension liabilities

298 27 7 24

170 23 23 53

99 107 158 203 4 2 47

25 267

7 315

1 50 223

498

In 2002 the employers contributions amounted EUR 498 million. This includes a payment of EUR 152 million in connection with the transfer of liabilities related to the early retirement scheme in the Netherlands. This resulted in a decrease of the Pension liabilities and other staff related liabilities. Because the balance of Pension liabilities and other staff related liabilities at 31 December 2002 is an asset, the amount is included in the balance sheet under Debtors. Plan adjustments reflects the transfer of liabilities related to the early retirement scheme in the Netherlands. As at 31 December 2002, the defined benefit obligation consisted of funded plans amounting to EUR 3,606 million (2001: EUR 3,403 million) and unfunded plans amounting to EUR 676 million (2001: EUR 1,030 million).

ANNUAL REPORT 2002 ING INSURANCE 33

The assets of funded plans primarily consist of debt securities, equity and real estate funds, of which as at 31 December 2002 EUR 23 million (2001: EUR 42 million) was invested in securities issued by the employer and related parties, including shares of ING Groep N.V. 17. Creditors Analysed by remaining term: 2002
up to 1 year 1 to 5 years over 5 years up to 1 year 1 to 5 years

2001
over 5 years

Liabilities relating to direct insurance Liabilities relating to reinsurance Other debentures and private loans Loans from credit institutions Other liabilities

1,847 342 6,199 3,051 8,038 19,477

4,241 472 284 4,997

1,831 416 437 2,684

2,905 371 5,410 4,067 5,467 18,220

5,360 378 2,013 7,751

3,421 292 868 4,581

As at 31 December 2002, collateral was given with regard to Loans from credit institutions amounting to EUR 7 million (2001: EUR 64 million). 18. Other debentures and private loans 2002 Non-subordinated loans: debenture loans private loans 5,656 6,615 12,271 2001 5,766 8,425 14,191

Debenture loans have been issued with an average interest rate of 5.6% (2001: 6.0%) and are repayable in the years 2003 through 2036. The loans are denominated in various currencies. Some of the loans have been converted into U.S. dollars by means of currency swaps. Others have been converted into loans with a variable-interest rate by means of interest-rate swaps. As at 31 December 2002, loans amounting to EUR 3,917 million (2001: EUR 4,279 million) bore an average fixed-interest rate of 6.1% (2001: 6.4%). The remaining EUR 1,739 million (2001: EUR 1,487 million) bore an average variable-interest rate of 4.5% (2001: 4.8%). The average interest rate of the private loans, with a remaining principal amounting to EUR 1,591 million (2001: EUR 2,931 million), was 6.9% (2001: 7.0%). The remaining EUR 5,024 million (2001: EUR 5,494 million) bore an average variableinterest rate of 1.2% (2001: 2.2%). These loans are repayable in the years 2003 to 2032. Analysed by remaining term: 2002
up to 1 year 1 to 5 years over 5 years up to 1 year 1 to 5 years

2001
over 5 years

Non-subordinated loans: debenture loans private loans

797 5,402 6,199

3,557 684 4,241

1,302 529 1,831

114 5,297 5,411

4,341 1,018 5,359

1,311 2,110 3,421

19. Loans from credit institutions Group companies of ING Group Third parties 2002 184 3,755 3,939 Analysed by remaining term: 2002
up to 1 year 1 to 5 years over 5 years up to 1 year 1 to 5 years

2001 1,247 3,490 4,737 2001

over 5 years

Group companies of ING Group Third parties

167 2,885 3,052

17 454 471

416 416

1,218 2,849 4,067

23 355 378

6 286 292

The average interest rate of Loans from credit institutions with fixed-interest rates, with a remaining principal amounting to EUR 2,971 million (2001: EUR 4,510 million), was 2.7% (2001: 3.8%). The remaining EUR 968 million (2001: EUR 227 million) bore an average variable-interest rate of 2.8% (2001: 4.8%). As at 31 December 2002, loans totalling EUR 7 million (2001: EUR 64 million) were secured by mortgages.

34 ANNUAL REPORT 2002 ING INSURANCE

20. Other liabilities ING Group Group companies of ING Group Income tax Other taxation and social security contributions Other 2002 128 255 732 264 7,380 8,759 Analysed by remaining term: 2002
up to 1 year 1 to 5 years over 5 years up to 1 year 1 to 5 years

2001 174 80 945 214 6,935 8,348

2001
over 5 years

ING Group Group companies of ING Group Income tax Other taxation and social security contributions Other

128 255 596 238 6,821 8,038

115 21 148 284

21 5 411 437

174 80 803 214 4,196 5,467

116

26

1,897 2,013

842 868

21. Accrued liabilities Accrued interest Costs payable Yield differences on fixed-interest investments 2002 994 789 73 1,710 2001 737 859 783 2,379

As at 31 December 2002, an amount of EUR 26 million (2001: EUR 910 million) was expected to be settled after more than one year from the balance sheet date.

ANNUAL REPORT 2002 ING INSURANCE 35

ADDITIONAL INFORMATION RELATING TO THE CONSOLIDATED BALANCE SHEET OF ING INSURANCE

amounts in millions of euros, unless stated otherwise

Assets not freely disposable Assets not freely disposable relate to guarantees provided for certain liabilities included in the balance sheet as well as offbalance sheet contingent liabilities. As at 31 December 2002, assets not freely disposable included investments amounting to EUR 1,660 million (2001: EUR 367 million). Contingent liabilities Contingent liabilities can be analysed as follows: 2002 667 1,383 20,087 686 22,823 2001 619 941 22,363 1,363 25,286

Commitments concerning investments in land and buildings Commitments concerning fixed-interest securities Guarantees Other

Guarantees relate both to credit and non-credit substitute guarantees. Credit-substitute guarantees are guarantees given by ING Insurance in respect of credit granted to customers by a third party. Many of them are expected to expire without being drawn on and do not necessarily represent future cash outflows. In addition, general guarantees within the meaning of Section 403, Book 2, of the Netherlands Civil Code have been given on behalf of a number of group companies. Furthermore, guarantees have been given on behalf of several group companies in the Netherlands. The last two kinds of guarantees are not included in the above-mentioned scheme. It is not expected that these guarantees will be called upon in the future. As at 31 December 2002, the company was jointly and severally liable for or had issued guarantees for amounts totalling EUR 23,597 million (2001: EUR 25,146 million). Other contingent liabilities mainly relate to acceptances of bills and are of a short-term nature. Future rental commitments Future rental commitments for lease contracts as at 31 December 2002, can be analysed as follows: 2003 115 2004 95 2005 81 2006 66 2007 59 Years after 2007 87 Legal proceedings ING Insurance companies are involved in lawsuits and arbitration cases in the Netherlands and in a number of other countries, relating to claims by or against these companies arising in the course of ordinary activities, and also from acquisitions, including the activities as insurer, lender, employer, investor and taxpayer. Several of these cases involve claims of either large or indefinite amounts. Although it is not feasible to predict or to determine the outcome of current or impending legal proceedings, the Executive Board is of the opinion that the outcome is unlikely to have any material adverse effects on the financial position or results of ING Insurance. Derivatives
Use of derivatives ING Insurance uses derivative financial instruments in the normal course of business for non-trading and trading purposes. Derivatives are financial instruments, which include forwards, futures, options and swaps, whose value is based on an underlying asset, index or reference rate.

ING Insurances principal objective in holding or issuing derivatives for non-trading purposes is risk management. To achieve its risk management objective, ING Insurance uses a combination of interest-rate instruments, primarily interest-rate swaps. Net positions in foreign currencies are subject to changes in value as exchange rates change. These fluctuations are managed by entering into currency swaps, forwards and options. The following table reflects the notional amounts and the positive and negative fair value of derivative financial instruments used for non-trading purposes. 2002 Interest-rate contracts Currency contracts Equity contracts 43,223 13,853 5,307 62,383 2001
Notional amount

2002 924 414 81 1,419

2001 600 40

2002 1,514 49 1 1,564

2001 446 120 3 569

Positive year-end fair value

Negative year-end fair value

26,718 16,191 103 43,012

640

36 ANNUAL REPORT 2002 ING INSURANCE

ING Insurances use of these instruments is changed from time to time in response to changing market conditions as well as changes in the mix of the related assets and liabilities. As at 31 December 2002, the notional amount of derivative financial instruments used for trading purposes amounted to EUR 710 million (2001: EUR 446 million).
Numerical information about derivatives activities The following tables give numerical information about the derivatives activities, detailing types of derivatives, credit risks, counterparties and use of the derivatives transactions.

The first table illustrates the relative importance of the various types of derivative products, showing the notional amounts at year-end 2002 and year-end 2001. Notional amounts represent units of account which, in respect of derivatives, reflect the relationship with the underlying assets (bonds, for example, in the case of interest-rate futures). What they do not reflect, however, is the credit risks assumed by entering into derivatives transactions. Listed derivatives are standardised and include futures and certain option contracts. Over-the-counter derivatives contracts are individually negotiated between contracting parties and include forward contracts, options and swaps. Forward contracts are commitments to exchange currencies or to buy or sell other financial instruments at specified future dates. Futures contracts are similar to forwards. However, major exchanges act as intermediaries and require daily cash settlement and collateral deposits. Option contracts give the purchaser, for a premium, the right, but not the obligation, to buy or sell within a limited period of time a financial instrument or currency at a contracted price that may also be settled in cash. Written options give the issuer the obligation to buy or sell within a limited period of time a financial instrument or currency at a contracted price that may also be settled in cash. This subjects ING Insurance to market risk, but not to credit risk, since the counterparties have already performed in accordance with the terms of the contract by paying a cash premium up front. Swap contracts are commitments to settle in cash at a specified future date, based on differentials between specified financial indices as applied to a notional amount. Generally, no cash is exchanged at the outset of the contract and no principal payments are made by either party. The year-end positive fair value represents the maximum loss that ING Insurance would incur on its derivatives transactions if all its counterparties at year-end defaulted. This fair value can and will fluctuate from day to day due to changes in the value of the underlying assets. In order to arrive at an estimate of credit risk at any given time, a margin is added to the fair value figures to arrive, in accordance with internationally accepted criteria, at what is called the unweighted credit equivalents. The weighted credit equivalents are the unweighted credit equivalents multiplied by the weighting factors determined in accordance with standards of the international supervisory authorities. Under certain conditions, the credit risk can be reduced by entering into bilateral netting agreements. In the case of non-observance of the obligation by the counterparty, this kind of agreement gives the right to net off receivables and payables in respect of open derivatives contracts. The effect of reducing the risk by means of bilateral netting agreements is shown at the bottom of the table.

ANNUAL REPORT 2002 ING INSURANCE 37

As at year-end the following contracts were open: 2002

Notional amount Positive fair value Unweighted credit equivalent Weighted credit equivalent Notional amount Positive fair value Unweighted credit equivalent

2001
Weighted credit equivalent

Interest-rate contracts Over-the-counter: swaps forwards options purchased Listed: futures Currency contracts Over-the-counter: swaps forwards options purchased options written Equity contracts Over-the-counter: swaps options purchased options written Listed: options purchased options written futures

37,600 5,579 51 143

890 34

1,183 2 35

362 7

24,320 396 2,002 119

517 83

669 1 99

258 35

7,592 5,264 465 791

117 283 14

336 390 18

71 79 4

8,604 7,723 38 80

29 11

331 88 1

70 18

95 2,619 2,199 27 219 449 63,093

46 35

6 218

1 65

103

3 33 37 1,419 2,188 589 43,458 640 1,197 383

Effect of contractual netting

2 1,417

4 2,184

1 588

3 637

15 1,182

3 380

38 ANNUAL REPORT 2002 ING INSURANCE

The analysis by remaining term, based on the notional amounts, as at 31 December was as follows: 2002
up to 1 year 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years over 5 years total

Interest-rate contracts Over-the-counter: swaps forwards options purchased Listed: futures Currency contracts Over-the-counter: swaps forwards options purchased options written Equity contracts Over-the-counter: swaps options purchased options written Listed: options purchased options written futures

4,649 5,102

5,257 477

8,263

2,940

3,310 5

13,181 46

37,600 5,579 51 143

143

4,328 3,916 465 791

471 1,193

847 108

875

576

495 47

7,592 5,264 465 791

95 2,103 2,199 27 219 449 24,486

150

74

11

41

240

95 2,619 2,199 27 219 449

7,548

9,292

3,826

3,932

14,009

63,093

2001
up to 1 year 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years over 5 years Total

Interest-rate contracts Over-the-counter: swaps forwards options purchased Listed: futures Currency contracts Over-the-counter: swaps forwards options purchased options written Equity contracts Over-the-counter: options purchased Listed: options purchased options written futures

3,778 283 663 119

5,747 113 68

2,732 189

3,086 76

3,597 24

5,380 982

24,320 396 2,002 119

4,041 7,719 38 80

906 4

533

708

1098

1,318

8,604 7,723 38 80

103 3 33 37 16,794 6,941 3,454 3,870 4,719 7,680

103 3 33 37 43,458

Analysis by counterparty: 2002

Notional amount Unweighted credit equivalent Weighted credit equivalent Notional amount Unweighted credit equivalent

2001
Weighted credit equivalent

Public sector Banks Other

838 43,882 18,373 63,093

1,683 505 2,188

336 253 589

192 24,500 18,766 43,458

717 480 1,197

143 240 383

ANNUAL REPORT 2002 ING INSURANCE 39

Fair value of financial assets and liabilities The following table presents the estimated fair values of ING Insurances financial assets and liabilities. Certain balance sheet items are not included in the table as they do not comply with the definition of a financial asset or liability. The aggregation of the fair values presented hereunder does not represent, and should not be construed as representing, the underlying value of ING Insurance. 2002
Estimated fair value Balance sheet value Estimated fair value

2001
Balance sheet value

Financial assets Investments group companies and participating interests other financial investments: shares and other non-fixed-interest securities debentures and other fixed-interest securities other financial investments loans deposits with insurers Debtors Cash Other assets trading portfolio equity participations other receivables Accrued assets (1) Derivatives held for non-trading purposes

2,596 11,024 95,769 3,226 39,348 94 7,769 3,221 119 387 217 2,969 1,419 168,158

2,423 11,024 90,334 3,219 37,335 94 7,769 3,221 119 358 217 2,969 705 159,787

3,406 16,625 92,360 2,766 39,233 20 7,996 1,534 273 376 229 2,694 640 168,152

3,494 16,625 90,202 2,768 38,384 31 7,996 1,534 341 309 229 2,694 614 165,221

Financial liabilities Subordinated loans Insurance provisions related to investment-type contracts Deposits from reinsurers Creditors Accrued liabilities Derivatives held for non-trading purposes

2,727 87,830 197 27,087 1,710 1,564 121,115

2,727 89,165 197 27,158 1,710 188 121,145

1,280 84,703 269 31,892 2,379 569 121,092

1,250 85,723 269 30,552 2,379 107 120,280

(1)

Accrued assets does not include deferred acquisition costs of insurance business.

The estimated fair values correspond with the amounts at which the financial instruments could have been traded on a fair basis at the balance sheet date between knowledgeable, willing parties in arms-length transactions. The fair value of financial assets and liabilities is based on quoted market prices, where available. Because substantial trading markets do not exist for most of these financial instruments various techniques have been developed to estimate their approximate fair values. These techniques are subjective in nature and involve various assumptions about the discount rate and the estimates of the amount and timing of the anticipated future cash flows. Changes in these assumptions could significantly affect the estimated fair values. Consequently, the fair values presented may not be indicative of the net realisable value. In addition, the calculation of the estimated fair value is based on market conditions at a specific point in time and may not be indicative of future fair values. The following methods and assumptions were used by ING Insurance to estimate the fair value of the financial instruments. Financial assets Investments The fair values of the shares of associates and other participating interests are based on quoted market prices or, if unquoted, on estimated market values based on quoted prices for similar securities. Fair values of the receivables from group companies and other participating interests are determined using the same methods as described below for Debentures and other fixed-interest securities. The fair values of Shares and other non-fixed-interest securities are based on quoted market prices or, if unquoted, on estimated market values generally based on quoted prices for similar securities. Fair values for Debentures and other fixed-interest securities are based on quoted market prices, where available. For those securities not actively traded, fair values are estimated using values obtained from private pricing services or by discounting expected future cash flows using a current market rate applicable to the yield, credit quality and maturity of the investment. The fair values of Mortgage loans are estimated by discounting future cash flows using interest rates currently being offered for similar loans to borrowers with similar credit ratings. The fair values of fixed-rate policy loans are estimated by discounting cash flows at the interest rates charged on policy loans of similar policies currently being issued. Loans with similar characteristics are aggregated for purposes of the calculations. The fair values of variable-rate policy loans approximate their carrying values.
Debtors The carrying amount of debtors approximates its fair value. Cash The carrying amount of cash approximates its fair value.

40 ANNUAL REPORT 2002 ING INSURANCE

Other assets The fair values of securities in the trading portfolio and equity participations are based on quoted market prices, where available. For those securities not actively traded, fair values are estimated based on internal discounted cash flow pricing models taking into account current cash flow assumptions and the counterparties' credit standings. The carrying amount of Other receivables approximates its fair value. Accrued assets The carrying amount of accrued assets approximates its fair value.

Financial liabilities Subordinated loans The fair value of the subordinated loans is estimated using discounted cash flows based on interest rates that apply to similar instruments.
Insurance provisions related to investment-type contracts For guaranteed investment contracts, the fair values have been estimated

using a discounted cash flow approach based on interest rates currently being offered for similar contracts with maturities consistent with those remaining for the contracts being valued. For other investment-type contracts, fair values are estimated based on the cash surrender values.
Creditors For publicly traded debt, the fair values are based on quoted market prices. For non-traded, variable-rate debt, the

carrying amounts approximate their fair values. For non-traded, fixed-rate debt, the fair values have been estimated using discounted cash flow calculations based on interest rates charged on similar instruments currently being issued.
Accrued liabilities The carrying amount of accrued liabilities approximates its fair value. Derivatives The fair values of derivatives held for non-trading purposes are based on broker/dealer valuations or on internal discounted cash flow pricing models taking into account current cash flow assumptions and the counterparties' credit standings. The fair values of derivatives held for non-trading purposes generally reflect the estimated amounts that ING Insurance would receive or pay to terminate the contracts at the balance sheet date.

The fair value of other off-balance sheet financial instruments can be summarised as follows: 2002
Estimated fair value Contract amount Estimated fair value

2001
Contract amount

Commitments concerning investments in land and buildings Commitments concerning investments in fixed-interest securities Guarantees Others

667 1,383

667 1,383 20,087 686 22,823

619 941

619 941 22,363 1,363 25,286

For the other off-balance sheet financial instruments the following methods are used in order to determine the fair value. The fair values of the commitments for investments in land and buildings and commitments concerning investments in fixedinterest securities are the same as their contract amounts on account of their short-term nature. The fair value of guarantees is estimated based on fees charged for similar agreements or the estimated cost to terminate them or otherwise settle the obligations with the counterparties. Regulatory requirements The insurance operations are subject to detailed comprehensive regulations with regard to capital position. European Union directives require insurance companies established in member states of the European Union to maintain minimum capital position. 2002
Total ING Verzekeringen N.V. Non-insurance companies, core debt,and other eliminations Insurance companies Total ING Verzekeringen N.V. Non-insurance companies, core debt,and other eliminations

2001
Insurance companies

Available capital Required capital Surplus capital Ratio of available versus required capital

14,717 8,718 5,999

3,131

17,848 8,718 9,130

17,675 9,845 7,830

2,975

20,650 9,845 10,805

169%

205%

180%

210%

ANNUAL REPORT 2002 ING INSURANCE 41

NOTES TO THE CONSOLIDATED PROFIT AND LOSS ACCOUNT OF ING INSURANCE

amount in millions of euros, unless stated otherwise

22.

Non-life underwriting account

Gross premiums written Gross premiums earned (2) Gross claims expenses Operating expenses
(3)

Net reinsurance income/ expenses

Underwriting result

Allocated income and expenses

Result

2002 Health Accident (1) Third-party liability motor Other motor Marine and aviation Fire and other property losses General liability Credit and suretyship Legal assistance Miscellaneous financial losses Indirect business

1,596 869 816 1,682 198 1,718 490 49 28 423 48 7,917

1,571 874 781 1,580 192 1,581 438 44 28 342 66 7,497

1,314 691 670 1,154 93 904 336 5 25 152 29 5,373

312 201 178 367 54 504 140 18 12 108 163 2,057

6 2 9 19 36 165 4 4 106 107 232

61 16 76 40 9 8 34 17 9 24 19 165

192 186 121 108 7 92 57 3 1 21 31 819

131 170 45 148 16 100 23 20 8 3 12 654

2001 Health (4) Accident (1) Third-party liability motor Other motor Marine and aviation Fire and other property losses General liability Credit and suretyship Legal assistance Miscellaneous financial losses Indirect business

1,317 831 638 1,171 128 1,214 344 26 24 156 45 5,894

1,322 843 639 1,128 135 1,247 334 26 24 181 43 5,922

1,015 701 530 919 85 865 272 10 17 167 25 4,606

252 212 193 293 45 435 116 6 10 60 34 1,656

4 3 10 79 3 35 42 1 33 5 199

51 67 74 5 2 18 12 9 3 13 11 141

100 213 137 89 9 86 76 3 2 27 55 797

151 146 63 84 11 68 64 12 1 14 44 656

2000 Health Accident (1) Third-party liability motor Other motor Marine and aviation Fire and other property losses General liability Credit and suretyship Legal assistance Miscellaneous financial losses Indirect business

350 816 674 679 62 1,107 302 21 23 24 29 4,087

342 829 654 667 59 1,095 295 19 23 25 32 4,040

299 673 561 501 49 662 239 15 14 9 3,004

49 198 176 180 21 403 106 6 9 11 38 1,197

3 1 2 11 1 23 20 6 1 8 2

3 43 81 3 10 7 30 7 1 1 5 163

24 364 205 95 10 144 127 1 3 28 25 1,026

21 321 124 92 151 97 8 2 27 20 863

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

Including disability insurance products. Excluding reinsurance. Including other underwriting income. In the 2001 figures, an amount of EUR 52 million has been reclassified from Life underwriting account to Non-Life underwriting account.

42 ANNUAL REPORT 2002 ING INSURANCE

23. Allocated income and expenses Income and expenses that are not directly recorded in operational result from insurance operations, are allocated to the Result from life underwriting and Result from non-life underwriting on the basis of life insurance provisions and non-life insurance provisions of the insurance companies. Investments for risk of policyholders and investments of annual life funds is allocated to Result from life underwriting. For a specification of non-operational results allocated to the Result from non-life underwriting account and Result from life underwriting account, reference is made to note 30 on page 49.

24. Operating expenses 2002 Commission paid gross Administrative expenses with regard to commission paid Commission paid net Expenses allocated Costs of acquiring new business Amortisation of deferred acquisition costs of insurance business Capitalised acquisition costs of insurance business 1,276 165 1,111 281 1,392 94 162 1,324 Administrative and staff costs and depreciation of business equipment allocated Commission and profit-sharing amounts received from reinsurers 750 317 1,757 2001 866 62 804 292 1,096 82 83 1,095 572 133 1,534 2000 637 32 605 287 892 3 13 882 320 56 1,146 2002 2,699 358 2,341 866 3,207 1,454 2,273 2,388 2,078 105 4,361 2001 2,817 479 2,338 1,226 3,564 1,445 2,478 2,531 2,474 119 4,886 2000 1,818 496 1,322 676 1,998 914 1,601 1,311 1,622 248 2,685
Non-life underwriting account Life underwriting account

The total of Expenses allocated and Administrative and staff costs and depreciation of business equipment allocated to the Nonlife and Life underwriting account can be analysed as follows: 2002 1,997 196 227 274 2,694 139 230 724 114 165 369 523 304 5,262 1,287 3,975 2001 2,100 123 187 286 2,696 134 291 643 132 188 190 541 1,052 5,867 1,303 4,564 2000 1,331 69 135 221 1,756 100 140 445 96 148 196 528 389 3,798 893 2,905

Salaries Pension and early-retirement costs Social security costs Other staff costs Salaries, pension and social security costs Depreciation of tangible fixed assets Computer costs Office equipment and accommodation Travel and accommodation expenses Advertising and public relations External advisory fees Commission paid Other Total expenses Expenses allocated to Investment expenses

ANNUAL REPORT 2002 ING INSURANCE 43

Pensions and early-retirement costs can be analysed as follows: 2002 Current service cost Past service cost Interest expenses Expected return on assets Amortisation of unrecognised net (gains)/losses Effect of curtailment or settlement Defined benefit postemployment plans Defined contribution plans 134 2 236 286 16 25 2001 133 238 317 3 4 2000
Pension

2002 7 18

2001 7 20

2000 4 9 13

2002

2001 9

2000
Other

2002

2001 149 271 317 4 4

Healthcare

88 36 170 267 6 2

1 1

13

141 3 12 255 286 1 14 25

12

2000 Total 104 45 195 267 6 2

73

53

19

23

27

25

23

25

96 100 196

103 20 123

69

69

Contributions to defined contribution plans are generally determined as a percentage of pay. The actual return on the plan assets amounted to EUR 317 million (2001: EUR 211 million; 2000: EUR 164 million). Remuneration of the members of the Executive Board and the members and former members of the Supervisory Board The remuneration of the members and former members of the Executive Board and Supervisory Board, who are also members and former members of the Executive Board and Supervisory Board of ING Group, including pension contributions, is paid by ING Group. These and other expenses of ING Group are charged in full by ING Group to its subsidiaries, on the basis of a general allocation formula. The amount outstanding as at 31 December 2002 in respect of loans and advances to members of the Executive Board and Supervisory Board was EUR 2.5 million (2001: EUR 2.8 million) at an average interest rate of 5% (2001: 5.1%). Stock option plan ING Group (the parent company of ING Insurance) has granted option rights on ING Group shares to a number of senior executives (members of the Executive Board and the Executive Committees, general managers and other officers nominated by the Executive Board), to all ING Insurance staff in the Netherlands and to a considerable number of employees outside the Netherlands. The purpose of the option scheme, apart from promoting a lasting growth of ING Insurance, is to attract, retain and motivate senior executives and staff. ING Group purchases direct or indirect its own shares at the time options are granted in order to fulfill the obligations with regard to the existing stock option plan and to hedge the position risk of the options concerned. The purpose of this policy is to avoid an increase in the number of shares, causing a dilution of the net profit per share. As at 31 December 2002, own shares were held in connection to the option plan. As a result the granted option rights were hedged taking into account the following parameters: strike price, opening price, zero coupon interest rate, dividend yield, expected volatility and employee behaviour. The option rights are valid for a period of five or ten years. Option rights which are not exercised within this period lapse. Each year, the ING Group Executive Board will take a decision as to whether the option scheme is to be continued and, if so, to what extent. Option rights granted will remain valid (until expiry date), even if the option scheme is discontinued. The option rights are subject to certain conditions, including a certain continuous period of service. The exercise prices of the options are the same as the quoted prices of ING Group shares at the date on which the options are granted.

44 ANNUAL REPORT 2002 ING INSURANCE

25. Life underwriting account 2002 Premiums written Other underwriting income Benefits Changes in other insurance provisions (1) Profit sharing and rebates Operating expenses Other insurance expenses for own account (2) Allocated income and expenses (2) Result from life underwriting account
(1) (2)

2001 43,906 143 27,371 11,456 308 5,005 69 1,580

2000
Gross

2002 1,093 995 251 66 106

2001 1,395 2,153 834 10 119

2000 1,004 443 983 11 248

2002 43,274 223 28,327 6,666 831 4,361 16 949

2001 42,511 143 25,218 10,622 318 4,886 69 1,580

2000 23,624 62 15,118 9,461 830 2,685 89 14,277

Reinsurers share

Own account

44,367 223 29,322 6,917 897 4,467 16 949

24,628 62 15,561 10,444 841 2,933 89 14,277

3,816

1,558

9,099

193

1,701

681

4,009

3,259

9,780

In the 2001 figures, an amount of EUR 52 million has been transferred from Non-Life underwriting account to Life underwriting account. In the 2001 figures, Other insurance expenses and Allocated income have been decreased with EUR 85 million.

Profit sharing and rebates can be analysed as follows: Distributions on account of interest or underwriting results Bonuses added to policies 2002 1,330 499 831 Analysis of premium income on life insurance policies 2002
Gross Reinsurers share Own account Gross Reinsurers Share

2001 148 466 318

2000 396 434 830

2001
Own Account Gross Reinsurers share

2000
Own account

Policies for which the insurer bears the investment risk Policies for which the policyholder bears the investment risk Total direct business Indirect business

25,915

931

24,984

26,225

906

25,319

13,144

642

12,502

17,161 43,076 1,299 44,375 8 44,367

78 1,009 92 1,101 8 1,093

17,083 42,067 1,207 43,274

16,169 42,394 1,539 43,933 27 43,906

512 1,418 4 1,422 27 1,395

15,657 40,976 1,535 42,511

10,888 24,032 582 24,614 14 24,628

345 987 3 990 14 1,004

10,543 23,045 579 23,624

Eliminations

43,274

42,511

23,624

Premium income has been included before deduction of reinsurance and retrocession premiums granted. Premium income includes EUR 26,928 million (2001: EUR 23,738 million; 2000: EUR 12,483 million) relating to investment type policies of the US, Latin America and Asia-Pacific operations. These policies mainly consist of individual and group fixed and variable annuities, universal life contracts and guaranteed investment contracts.

ANNUAL REPORT 2002 ING INSURANCE 45

Premiums written from direct life business

2002 Policies for which the insurer bears the investment risk Gross Reinsurers share Own account Policies for which the policyholder bears the investment risk Gross Reinsurers share Own account

Periodic premiums Individual policies: without profit sharing with profit sharing Total Group policies: without profit sharing with profit sharing Total Total periodic premiums Single premiums Individual policies: without profit sharing with profit sharing Total Group policies: without profit sharing with profit sharing Total Total single premiums Total life business premiums

9,698 4,556 14,254 1,403 802 2,205 16,459

858 115 973 75 17 92 1,065

8,840 4,441 13,281 1,328 785 2,113 15,394

2,496 2,496 7,646 7,646 10,142

6 6 40 40 46

2,490 2,490 7,606 7,606 10,096

1,553 1,958 3,511 5,729 216 5,945 9,456 25,915

2 2 140 4 136 134 931

1,553 1,956 3,509 5,869 212 6,081 9,590 24,984

6,280 6,280 739 739 7,019 17,161 32 32 32 78

6,280 6,280 707 707 6,987 17,083

The total single premiums include EUR 566 million in 2002 from profit sharing.
2001 Policies for which the insurer bears the investment risk Gross Reinsurers share Own account Policies for which the policyholder bears the investment risk Gross Reinsurers share Own account

Periodic premiums Individual policies: without profit sharing with profit sharing Total Group policies: without profit sharing with profit sharing Total Total periodic premiums Single premiums Individual policies: without profit sharing with profit sharing Total Group policies: without profit sharing with profit sharing Total Total single premiums Total life business premiums

8,849 4,482 13,331 1,018 730 1,748 15,079

698 117 815 64 19 83 898

8,151 4,365 12,516 954 711 1,665 14,181

1,787 1,787 7,012 7,012 8,799

377 377 88 88 465

1,410 1,410 6,924 6,924 8,334

1,830 1,675 3,505 7,408 233 7,641 11,146 26,225

9 9 1 1 8 906

1,830 1,666 3,496 7,409 233 7,642 11,138 25,319

5,529 5,529 1,841 1,841 7,370 16,169 47 47 47 512

5,529 5,529 1,794 1,794 7,323 15,657

The total single premiums include EUR 567 million in 2001 from profit sharing.

46 ANNUAL REPORT 2002 ING INSURANCE

2000 Periodic premiums Individual policies: without profit sharing with profit sharing Total Group policies: without profit sharing with profit sharing Total Total periodic premiums Single premiums Individual policies: without profit sharing with profit sharing Total Group policies: without profit sharing with profit sharing Total

Policies for which the insurer bears the investment risk Gross Reinsurers share Own account

Policies for which the policyholder bears the investment risk Gross Reinsurers share Own account

4,847 2,281 7,128

567 102 669

4,280 2,179 6,459

942 942

1 1

941 941

127 611 738 7,866

21 12 9 660

148 599 747 7,206

698 698 1,640

29 29 30

669 669 1,610

336 1,546 1,882

1 21 20

335 1,567 1,902

8,176 8,176

294 294

7,882 7,882

3,035 361 3,396

2 2

3,035 359 3,394

1,072 1,072

21 21

1,051 1,051

Total single premiums Total life business premiums

5,278 13,144

18 642

5,296 12,502

9,248 10,888

315 345

8,933 10,543

The total single premiums include EUR 472 million in 2000 from profit sharing. 26. Income from investments Income from land and buildings Income from investments in group companies and participating interests: income from disposal of group companies income from investments in associates income from investments in other participating interests Income from other financial investments: shares and other non-fixed-interest securities debentures and other fixed-interest securities mortgage loans deposits with credit institutions other Income from investments for risk of policyholders and from investments of annual life funds Operational result Non-operational results 30 2002 872 189 137 263 1,611 5,829 1,781 49 550 10,642 639 280 919 2001 665 17 119 59 1,432 5,566 1,800 104 701 7,709 2,754 325 3,079 2000 505 300 49 5 1,246 3,380 1,339 53 1,183 441 8,501 7,368 15,869

Income from land and buildings includes an amount in respect of rental income allocated to business units of ING Insurance (the same amount is included in Other expenses) of EUR 50 million (2001: EUR 51 million; 2000: EUR 45 million). Income from investments in land and buildings and shares and other non-fixed-interest securities includes realised results on disposal of EUR 1,357 million (2001: EUR 1,005 million; 2000: EUR 882 million). Analysis of income from investments by counterparty: Participating interests ING Group Group companies of ING Group Third parties 2002 172 3 752 8 919 2001 178 1 76 2,824 3,079 2000 406 1 80 15,382 15,869

ANNUAL REPORT 2002 ING INSURANCE 47

27. Investment expenses Interest expenses Expenses allocated Increase in provision for doubtful investments 2002 1,304 1,287 82 2,673 28. Other income Commission Income from securities Results from financial transactions Other results 2002 1,345 1 112 195 1,651 Commission Commission includes fees for services rendered such as insurance broking. Insurance broking Management fees Other 2002 159 628 558 1,345 2001 131 663 625 1,419 2000 100 251 504 855 2001 1,419 160 16 319 1,914 2000 855 58 10 90 993 2001 1,286 1,303 8 2,581 2000 767 893 20 1,680

Results from financial transactions Included in Results from financial transactions is an aggregate (profit)/loss on foreign currency translation amounting to EUR 33 million in 2002 (2001: EUR 4 million; 2000: EUR 1 million). 29. Taxation Taxation analysed by type: 2002 Total 368 391 759 2001 Total 469 230 699 2000 Total 498 527 1,025

Current taxation Deferred taxation

Netherlands 253 50 303

International 115 341 456

Netherlands 479 82 397

International 10 312 302

Netherlands 486 228 714

International 12 299 311

Reconciliation of the statutory income tax rate to ING Insurance's effective income tax rate: 2002 4,663 34.5% 1,608 858 27 18 759 16.3% 2001 3,915 35.0% 1,370 506 16 149 699 17.9% 2000 10,643 35.0% 3,725 2,677 16 39 1,025 9.6%

Result before taxation Statutory tax rate Statutory tax amount Participating interests exemption Differences caused by different foreign tax rates Other Effective tax amount Effective tax rate

48 ANNUAL REPORT 2002 ING INSURANCE

30. Non-operational net profit 2002 Results on sale of: investments in shares regarding financing of acquisitions allocated to: Results non-life Results life 2001 2000

28 297 325

7,033 335 7,368

Part of the gain on joint-venture ANZ Income from investments Additions/(release) of: provision for the calamity fund for the year 2000 Other expenses Non-operational results before taxation Taxation Non-operational net profit

280 280 325 7,368 91 91 280 33 247 325 7,459 247 7,212

325

ANNUAL REPORT 2002 ING INSURANCE 49

ADDITIONAL INFORMATION RELATING TO THE CONSOLIDATED PROFIT AND LOSS ACCOUNT OF ING INSURANCE
amounts in millions of euros, unless stated otherwise

Result from investments in shares and other non-fixed-interest securities and land and buildings
Direct investment income Realised and unrealised revaluations and exchange differences Operating and management expenses (1) Before taxation After taxation Investment result in % (2)

Shares and other non-fixed-interest securities 2002 608 649 2001 2000 675 1999 657 487 1998 465 1997 1996 436 353 1995 541 Average Land and buildings 2002 2001 2000 1999 1998 1997 1996 1995 Average Total 2002 2001 2000 1999 1998 1997 1996 1995 Average
(1) (2)

4,119 2,858 13 2,794 4,183 4,847 3,646 1,355 1,229

1 1 1 1 2 3 6 2

3,512 2,210 661 3,450 4,668 5,312 4,079 1,702 1,768

2,143 1,950 629 3,051 4,470 4,956 3,824 1,576 1,802

13.5 10.2 2.8 13.3 25.8 37.5 39.9 19.6 11.2

684 634 544 485 459 427 370 358 495

356 927 381 154 121 89 54 247

155 123 106 87 83 106 83 83 103

529 867 1,365 779 530 442 376 221 639

342 581 903 511 350 294 261 153 424

4.2 7.4 14.6 9.7 7.3 6.7 6.8 4.1 7.7

1,292 1,283 1,219 1,142 946 892 806 711 1,036

4,119 2,502 914 3,175 4,337 4,968 3,735 1,301 1,476

156 124 107 88 85 106 86 89 105

2,983 1,343 2,026 4,229 5,198 5,754 4,455 1,923 2,407

1,801 1,369 1,532 3,562 4,820 5,250 4,085 1,729 2,226

7.5 5.1 5.4 12.6 21.8 29.8 30.4 14.8 10.3

In the profit and loss account operating costs relating to investments in land and buildings are netted off against the income from these investments. Investment result after taxation as a percentage of the average amount invested.

The result from investments in shares and other non-fixed-interest securities and land and buildings (excluding investments for risk of policyholders and investments of annual life funds) includes all the income and expenses associated with this category of investments except financing charges. In the annual accounts these income and expenses are partly included in the profit and loss account (dividends, interest, rental income, realised revaluations and exchange differences, operating and management expenses) and partly reflected directly as changes in Shareholders equity (unrealised revaluations and exchange differences). Taxation is allocated on the basis of the standard rate, making allowance for tax exemptions. Geographical analysis of claims ratio, cost ratio and combined ratio for non-life insurance policies 2002 Netherlands Belgium Rest of Europe North America South America Asia Australia Other (1) Total 77.5 76.7 49.8 73.8 79.5 66.6 66.9 94.4 75.0 2001 77.1 78.8 50.1 71.1 77.2 58.6 70.7 63.9 73.8 2000
Claims ratio

2002 28.9 34.7 41.6 25.6 26.6 51.5 29.5 7.8 27.1

2001 30.4 34.3 51.4 29.1 21.6 44.6 32.5 11.4 29.1

2000
Cost ratio

2002 106.4 111.4 91.4 99.4 106.1 118.1 96.4 102.2 102.1

2001 107.5 113.1 101.5 100.2 98.8 103.2 103.2 75.3 102.9

2000 105.5 108.4 105.3 99.9 101.6 100.6 113.1 102.7 104.1

Combined ratio

75.6 72.9 55.3 73.9 51.4 51.5 80.2 80.2 74.7

29.9 35.5 50.0 26.0 50.2 49.1 32.9 22.5 29.4

The claims ratio is the claims, including claims handling expenses, expressed as a percentage of net earned premiums. The cost ratio is the costs expressed as a percentage of net premiums written. The claims ratio and the cost ratio together form the combined ratio. A combined ratio of more than 100% does not necessarily mean that there is a loss on non-life insurance policies, because the result also includes the allocated investment income.

50 ANNUAL REPORT 2002 ING INSURANCE

Analyses of premium income Reinsurance ING Insurance is involved in both ceded and assumed reinsurance for the purpose of spreading risk and limiting exposure on large risks. The effects of reinsurance on premiums written and earned are illustrated below. Premiums written 2002
Non-life Life Total Non-life Life

2001
Total Non-life Life

2000
Total

Direct premiums written, gross Reinsurance assumed premiums written, gross Total gross premiums written Reinsurance ceded

7,869 48 7,917 1,275 6,642

43,076 1,291 44,367 1,093 43,274

50,945 1,339 52,284 2,368 49,916

5,849 45 5,894 614 5,280

42,394 1,512 43,906 1,395 42,511

48,243 1,557 49,800 2,009 47,791

4,058 29 4,087 187 3,900 2002 7,431 66 7,497 1,200 6,297

24,032 596 24,628 1,004 23,624 2001 5,879 43 5,922 648 5,274

28,090 625 28,715 1,191 27,524 2000 4,008 32 4,040 180 3,860

Non-life premiums earned Direct premiums earned, gross Reinsurance assumed premiums earned, gross Total gross premiums earned Reinsurance ceded

In 2002 ING Insurance completed a study which has resulted in adjusted reinsurance covers, particularly with respect to catastrophe exposure for the non-life insurance business. The latter have now been designed to cover a large part of exposures resulting from events with a return period up to once in 250 years. To the extent that the assuming reinsurers are unable to meet their obligations, ING Insurance remains liable to its policyholders for the portion reinsured. Consequently, provisions are made for receivables on reinsurance contracts which are deemed uncollectible. To minimise its exposure to significant losses from reinsurer insolvencies, ING Insurance evaluates the financial condition of its reinsurers and monitors concentrations of credit risk arising from similar geographical regions, activities or economic characteristics of the reinsurer. As at 31 December 2002, the receivables from reinsurers amounted to EUR 797 million (2001: EUR 669 million; 2000: EUR 611 million), against which EUR 20 million (2001: EUR 4 million; 2000: EUR 5 million) was provided for as uncollectible reinsurance. Segment reporting
Analysis by executive centre ING Insurances operating segments relate to the internal business segmentation by executive centres. These include the geographical areas ING Europe, ING Americas (including the Groups reinsurance activities) and ING Asia/Pacific and the global activities of ING Asset Management.

Operating segments are defined as components of an enterprise about which discrete financial information is available that is evaluated regularly by the chief operating decision maker or decision making group in deciding how to allocate resources and in assessing performance. ING Insurances chief operating decision making group is the Executive Board. Each executive centre is headed by an Executive Committee, most members of which are either members of the Executive Board or general managers of business units belonging to that executive centre. The chairman of each Executive Committee is a member of the Executive Board. The Executive Board sets the performance targets and approves and monitors the budgets prepared by the Executive Committees. The Executive Committees formulate the strategic, commercial and financial policy of the executive centres in conformity with the strategy and performance targets set by the Executive Board.

ANNUAL REPORT 2002 ING INSURANCE 51

The accounting policies of the operating segments are the same as those described under Accounting principles for the consolidated balance sheet and profit and loss account (see page 18). Transfer prices for inter-segment transactions are set at arm's length. Geographical distribution of income is based on the origin of sales. The corporate expenses are allocated to the operating segments and geographic areas based on time spend by head office personnel, the relative number of staff, on the basis of income and/or assets of the operating segment. Operating segments have not been aggregated. The following tables present information regarding ING Insurances operating segments. 2002
Europe Americas Asia/Pacific Asset management Total segments Reconciliation Total group

Total income: Income external Income inter-segment

14,821 135 14,956

31,007 137 31,144

8,765 8 8,773

546 2 548

55,139 282 55,421

55,139 282 282 55,139

Segment results before taxation Segment assets Segment liabilities Average number of employees (1)

2,622 89,963 85,090 15,004

1,079 132,255 127,621 26,543

857 22,495 20,667 7,251

105 954 330 2,134

4,663 245,667 233,708 50,932 3,857 3,857

4,663 241,810 229,851 50,932

2001 Total income: Income external Income inter-segment

Europe

Americas

Asia/Pacific

Asset management

Total segments

Reconciliation

Total group

15,552 323 15,875

31,176 126 31,302 899 154,540 153,331 26,139

7,798 1 7,799 308 23,455 21,782 7,792

424 6 430 111 898 265 1,786

54,950 456 55,406 3,915 274,983 258,558 51,053

54,950 456 456 54,950 3,915 6,975 6,975 268,008 251,583 51,053

Segment results before taxation Segment assets Segment liabilities Average number of employees (1)

2,597 96,090 83,180 15,336

2000 Total income: Income external Income inter-segment

Europe

Americas

Asia/Pacific

Asset management

Total segments

Reconciliation

Total group

22,212 273 22,485

17,710 133 17,843 622 141,212 141,839 11,947

5,343

380 5 385 135 785 235 1,375

45,645 411 46,056 10,643 253,548 234,959 32,742

45,645 411 411 45,645 10,643 6,838 6,838 246,710 228,121 32,742

5,343 221 21,143 19,873 3,795

Segment results before taxation Segment assets Segment liabilities Average number of employees (1)

9,665 90,408 73,012 15,625

(1)

The average numbers of employees of joint ventures are included proportionally.

52 ANNUAL REPORT 2002 ING INSURANCE

Geographical analysis Income by geographical area 2002 Netherlands Belgium Rest of Europe North America South America Asia Australia Other 1,859 282 38 5,312 303 66 296 385 2001 1,811 244 34 2,933 618 64 250 211 6,165 271 5,894 2000 2002 2001 2000 2002 2001 2000 2002 10,948 2,215 2,031 30,579 925 6,593 2,244 438 55,973 834 55,139 2001 2000
Total Non-life premiums written Life premiums written Investment income (1)

1,817 4,927 5,353 221 2,053 973 31 1,580 1,623 1,595 28,085 28,965 46 292 493 48 5,969 4,718 328 1,467 1,779 107 3 4 4,193 44,376 43,908 106 9 2

5,551 4,162 5,312 12,547 573 120 305 239 1,299 413 483 451 13,348 2,818 2,064 2,501 194 330 390 89 1,766 558 580 250 1,894 481 449 1,114 4 50 70 60 24,629 1 24,628 3,056 201 2,855 5,525 17,251 375 321

12,476 19,915 1,522 1,033 2,140 1,781 29,834 17,444 1,501 329 5,362 2,064 2,478 3,336 285 171 55,598 46,073 648 428

8,541 Income between geographic areas (2) 624 7,917

(1) (2)

4,087 44,367 43,906

5,150 16,930

54,950 45,645

Including commission and other income. Mainly related to reinsurance premiums ceded between group companies in different geographical areas.

Gross premiums written by geographical area (out of direct insurance operations) 2002 2001 Netherlands Other EU member states Countries outside EU 1,803 345 5,721 7,869 1,772 289 3,788 5,849

2000
Non-life

2002 4,833 2,882 35,361 43,076

2001 5,323 1,788 35,283 42,394

2000
Life

2002 6,636 3,227 41,082 50,945

2001 7,095 2,077 39,071 48,243

2000
Total

1,776 264 2,018 4,058

5,507 1,353 17,172 24,032

7,283 1,617 19,190 28,090

Result before taxation by geographical area 2002 Netherlands Belgium Rest of Europe North America South America Asia Australia Other 225 3 6 370 1 6 39 18 654 2001 266 7 2 242 50 2 21 66 656 2000
Non-life

2002 2,217 76 155 667 60 261 571 2 4,009

2001 2,179 60 176 520 29 228 64 3 3,259

2000
Life

2002 2,442 79 161 1,037 59 255 610 20 4,663

2001 2,445 67 178 762 79 230 85 69 3,915

2000
Total

633 23 2 140 3 3 6 53 863

8,881 59 188 439 9 78 144

9,514 82 190 579 6 81 150 53 10,643

9,780

Net profit for the period by geographical area 2002 2,053 55 117 777 27 154 585 40 3,808 2001 1,992 62 144 597 57 136 97 57 3,142 2000 8,764 76 125 389 8 72 122 39 9,579

Netherlands Belgium Rest of Europe North America South America Asia Australia Other

ANNUAL REPORT 2002 ING INSURANCE 53

NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS OF ING INSURANCE

31. Net cash flow from operating activities The net cash flow shown in respect of Loans and advances granted/repaid only relates to transactions involving actual payments or receipts. 32. Net cash flow from investing activities General and numerical information (at the moment of acquisition) for the most significant companies acquired in 2001 and 2000 is shown in the table below:
amounts in billions of euros

Seguros Comercial Amrica

ReliaStar Financial Corporation

Aetna Financial Services and Aetna International 2000 Life insurance

General Year of acquisition Primary line of business Purchase price Purchase price Assumed debt in purchase price Assets Investments Miscellaneous other assets Liabilities Insurance provisions Miscellaneous other liabilities

2001 Non-life insurance

2000 Life insurance

1.1 0.6

6.7 1.1

8.3 3.0

1.3 1.2

23.8 4.9

58.4 9.3

1.7 0.6

22.3 3.5

61.3 6.6

The effect of the acquisitions in 2002 is limited To finance the acquisition of ReliaStar Financial Corporation, Aetna Financial Services and Aetna International, investments in shares have been sold in the financial year 2000. The proceeds of the sales amounted to EUR 9.6 billion.

54 ANNUAL REPORT 2002 ING INSURANCE

PARENT COMPANY BALANCE SHEET OF ING INSURANCE AS AT 31 DECEMBER

before profit appropriation

amounts in millions of euros

2002

2001

ASSETS
Participating interests in group companies 1 Shares Amounts receivable 14,585 14,672 29,257 Other financial investments Other receivables 2 Other assets Accrued assets Total 3,599 568 264 33,688 10,637 17,128 27,765 190 566 430 196 29,147

EQUITY AND LIABILITIES

Shareholders' equity 3 Share capital Share premium Revaluation reserve Reserve for participating interests Exchange differences reserve Other reserves Net profit for the period 174 4,374 1,754 2 263 978 3,808 10,827 2,727 13,554 575 19,256 303 33,688 174 4,374 7,340 2 203 621 3,142 15,450 1,250 16,700 609 11,642 196 29,147

Subordinated loans

General provisions 4 Creditors 5 Accrued liabilities Total

PARENT COMPANY PROFIT AND LOSS ACCOUNT OF ING INSURANCE FOR THE YEARS ENDED 31 DECEMBER
amounts in millions of euros

Result of group companies after taxation Other results after taxation Net profit for the period

2002 3,400 408 3,808

2001 3,111 31 3,142

2000 8,100 1,479 9,579

The numbers against the items refer to the notes starting on page 57.

ANNUAL REPORT 2002 ING INSURANCE 55

ACCOUNTING PRINCIPLES FOR THE PARENT COMPANY BALANCE SHEET AND PROFIT AND LOSS ACCOUNT OF ING INSURANCE
The principles of valuation and determination of results stated in connection with the consolidated balance sheet and profit and loss account are also applicable to the valuation of directly held participating interests. Changes in balance sheet values due to changes in the revaluation reserve of the participating interests are reflected in the Revaluation reserve, which forms part of Shareholders equity. Changes in balance sheet values due to the results of these participating interests, accounted for in accordance with ING Insurance accounting principles, are included in the profit and loss account. Other changes in the balance sheet value of these participating interests, other than those due to changes in share capital, are included in Other reserves, which forms part of Shareholders equity. A statutory reserve is carried at an amount equal to the share in the results of participating interests since their first inclusion at net asset value less the amount of profit distributions to which rights have accrued in the interim. Profit distributions which can be repatriated to the Netherlands without restriction are likewise deducted from the Reserve for participating interests, which forms part of Shareholders equity.

56 ANNUAL REPORT 2002 ING INSURANCE

NOTES TO THE PARENT COMPANY BALANCE SHEET OF ING INSURANCE

amounts in millions of euros, unless stated otherwise

ASSETS
1. Participating interests in group companies 2002
Ownership (%) Balance sheet value of shares Ownership (%)

2001
Balance sheet value of shares

Name of investee Nationale-Nederlanden Nederland B.V. Nationale-Nederlanden Interfinance B.V. ING Insurance International B.V. Grabenstrasse Staete B.V. ING America Insurance Holding inc. Johan de Wittlaan B.V. Berendaal Beleggingsmaatschappij B.V. Kievietsdaal Beleggingsmaatschappij B.V. Aconto B.V. Vitigudino B.V. Diagonac B.V. N.V. Balmore Bancory B.V. Anardel B.V. ING Vermogensbeheer B.V. ING Holdinvest B.V. ING Investment Management Holdings N.V. ING Insurance Investments Holdings B.V. ING Vastgoed Management Holding B.V. Fred C. Meyster/ ING ME Investments B.V. Ruud Hendriks B.V. Other

100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100

646 2,459 3,775 6,460 2,127 909 246 115 88 852 508 508 37 482 43 140 19 144 17 14,585

100 100 100 100 100

8,080 635 2,248 682 512

100 100 100 100 100 100 100 100 100 100 100 100

240 113 86 833 496 496 34 473 35 58 118 6

10,637

The movements in Participating interests in group companies were as follows: 2002

Shares Receivables Shares

2001
Receivables

Opening balance Advances Investments in group companies Write-off of goodwill Revaluations Result of group companies Dividend Redemptions Exchange differences Closing balance

10,637 10,032 450 4,732 3,400 420 3,334 548 14,585

17,128 10,601

13,287 841 1,733 3,416 3,111 1,439

12,252 8,486

12,606 451 14,672

14 10,637

3,925 315 17,128

The balance sheet value of the Shares as at 31 December 2002 included revaluations of EUR 8,867 million (2001: EUR 6,117 million). 2. Other receivables Receivables from group companies Pensions 2002 2,916 683 3,599 2001 171 395 566

As at 31 December 2002, an amount of EUR 683 million (2001: EUR 395 million) was expected to be recovered or settled after more than one year from the balance sheet date.

ANNUAL REPORT 2002 ING INSURANCE 57

EQUITY AND LIABILITIES

3. Shareholders equity Share capital 2002 Authorised share capital Unissued share capital Issued share capital
Ordinary shares Preference shares (par value EUR 1.13) (par value EUR 1.13) number x 1,000 amount number x 1

680,000 526,116 153,884

768 594 174

50 49 1

2001 Authorised share capital Unissued share capital Issued share capital There have been no movements in share capital.

(par value NLG 2.50) (par value NLG 2.50)

680,000 526,116 153,884

768 594 174

50 49 1

The par value of the shares is currently EUR 1.13. In 2001, the par value of the shares was converted from NLG 2.50 into EUR 1.13. As part of the conversion, the share capital was decreased. This decrease was added to the share premium reserve. Reserves The composition of and movements in the reserves were as follows:
Total Share premium Preference share premium reserve Revaluation reserve Reserve for participating interests Exchange differences reserve Other reserves

Balance as at 31 December 2000 Unrealised revaluations after taxation Exchange differences Net profit not recognised in the profit and loss account Conversion of the share capital into euros Write-off of goodwill Profit appropriation previous year Payment of share premium by ING Group 2000 final dividend and 2001 interim dividend Balance as at 31 December 2001 Unrealised revaluations after taxation Exchange differences Net profit not recognised in the profit and loss account Write-off of goodwill Profit appropriation previous year Payment of share premium by ING Group 2001 final dividend and 2002 interim dividend Balance as at 31 December 2002

8,121 3,181 60

3,814

542

10,521 3,181

143

6,615

60

3,241 1 1,733 9,579 17 610 12,134 5,177 60

3,181 1

60 1,733 9,579

17 610 3,832 542 7,340 5,586 60 2 203 621 409

5,237 450 3,142 1,453 1,291

5,586

60

409 450 3,142 1,453 1,291

6,845

3,832

542

1,754

263

978

The revaluation reserve and the reserve for participating interests include the statutory reserves. Share premium includes a nondistributable amount of EUR 1 million from the conversion of share capital into euros.

58 ANNUAL REPORT 2002 ING INSURANCE

4.

General provisions Deferred tax liabilities Other staff-related liabilities Other 2002 321 151 103 575 2001 232 296 81 609

Other staff-related liabilities includes the provision for early retirement and the provision for other non-activity schemes. Also included in this item are provisions relating to reorganisations, integration of operating processes and relocations. As at 31 December 2002, an amount of EUR 527 million (2001: EUR 596 million) was expected to be settled after more than one year from the balance sheet date. 5. Creditors Debenture loans Amounts owed to group companies Other liabilities 2002 4,432 11,406 3,418 19,256 Analysed by average interest rate, notional amount and term of redemption: 2002
Average interest rate in % Notional amount Term of Average interest redemption rate in % Notional amount

2001 4,317 5,319 2,006 11,642

2001
Term of redemption

Debenture loans in Dutch guilders in Swiss francs in US dollars in German marks in Euros in Norwegian crowns

3.3 6.2 5.6 7.1

1,513 1,526 1,256 137

2007 2006 2008 2004

6.1 3.5 6.2 4.8 7.1

726 1,082 1,808 511 64 126

2009 2006 2007 2003 2008 2004

Some of the loans have been converted into loans with a variable-interest rate by means of interest-rate swaps. As at 31 December 2002, an amount of EUR 3,360 million (2001: EUR 3,749 million) had a variable interest rate of 3.3% (2001: 3.3%). Analysed by remaining term: 2002
up to 1 year 1 year to 5 years over 5 years up to 1 year 1 year to 5 years

2001
over 5 years

Debenture loans Amounts owed to group companies Other liabilities

797 8,830 2,771 12,398

3,457 2,005 420 5,882

178 571 227 976

113 3,699 1,678 5,490

3,253 782 101 4,136

951 838 227 2,016

Amsterdam, 10 March 2003 The Supervisory Board, Mijndert Ververs, Chairman Lutgart van den Berghe Luella Gross Goldberg Paul van der Heijden Aad Jacobs Godfried van der Lugt Paul Baron de Meester Johan Stekelenburg Hans Tietmeyer Jan Timmer Karel Vuursteen The Executive Board, Ewald Kist, Chairman Fred Hubbell Hessel Lindenbergh Cees Maas, Chief Financial Officer Alexander Rinnooy Kan Michel Tilmant

ANNUAL REPORT 2002 ING INSURANCE 59

OTHER INFORMATION
AUDITORS REPORT Introduction We have audited the annual accounts of ING Verzekeringen N.V., The Hague for the year 2002. These annual accounts are the responsibility of the companys management. Our responsibility is to express an opinion on these annual accounts based on our audit. Scope We conducted our audit in accordance with auditing standards generally accepted in the Netherlands. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the annual accounts are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the annual accounts. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the annual accounts. We believe that our audit provides a reasonable basis for our opinion. Opinion In our opinion, the annual accounts give a true and fair view of the financial position of the company as at 31 December 2002 and of the result for the year then ended in accordance with accounting principles generally accepted in the Netherlands and comply with the financial reporting requirements included in Part 9 of Book 2, of the Netherlands Civil Code.

Amsterdam, 10 March 2003 Ernst & Young Accountants

EVENTS AFTER THE BALANCE-SHEET DATE At 31 December 2002, the revaluation reserve of ING Group for equity securities was EUR 0.8 billion positive (after tax). Due to a further decline of the stock markets, partly offset by hedging transactions on approximately EUR 4 billion (at 10 March 2003) of the equities securities portfolio, the revaluation reserve is approximately EUR 0.6 billion negative (after tax) at 10 March 2003 (at opening Amsterdam Stock Exchange). The ratio of available capital versus required capital of ING Verzekeringen N.V. decreased from 169% at 31 December 2002 to approximately 157% at 10 March 2003; still well above the regulatory required capital.

60 ANNUAL REPORT 2002 ING INSURANCE

PROFIT APPROPRIATION The profit is appropriated pursuant to Article 36 of the Articles of Association of ING Verzekeringen N.V., the relevant stipulations of which state that the part of the profit remaining after the dividend to the preference shareholders is made payable, shall be at the disposal of the General Meeting of Shareholders.

PROPOSED PROFIT APPROPRIATION

amount in millions of euros

Net profit Due to holders of preference shares pursuant to Article 36 (3) of the Articles of Association At the disposal of the General Meeting of Shareholders Add to other reserves Dividend

3,808 29 3,779 3,174 605

Disclaimer
Certain of the statements contained in this Annual Report are statements of future expectations and other forward-looking statements. These expectations are based on management's current views and assumptions and involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those in such statements due to, among other things, (i) general economic conditions, in particular economic conditions in ING Insurances core markets, (ii) performance of financial markets, including emerging markets, (iii) the frequency and severity of insured loss events, (iv) mortality and morbidity levels and trends, (v) persistency levels, (vi) interest rate levels, (vii) currency exchange rates, (viii) general competitive factors, (ix) changes in laws and regulations, and (x) changes in the policies of governments and/or regulatory authorities. ING Insurance assumes no obligation to update any forward-looking information contained in this document.
ANNUAL REPORT 2002 ING INSURANCE 61