ING Americas Stays on Track for First Six Months of 2002; Contributes 20% to ING Group Pre-Tax Results
PRNewswire-FirstCall
ATLANTA
Aug 22, 2002
Aided by strong sales and underwriting performance in Mexico and Canada, good progress on expense reductions, robust sales in its U.S. annuity and institutional market lines, and lower financing costs, ING Americas reported 20% contributions to ING Group's six-month pre-tax results announced earlier today in Amsterdam. ING Americas is part of ING Group (NYSE: ING), one of the world's leading financial services companies.
The Americas' six-month pre-tax results of $568.4 million were ahead of results for the same period in 2001 of $549.1 million. Gains were offset by market related impacts such as investment losses, reduced fees on assets under management, and higher amortization of deferred policy acquisition costs and guaranteed benefits, all resulting from continued equity market declines and economic uncertainty in the U.S.
"Our results for the first six months of this year show that we stepped up to the challenges brought on by difficult market conditions in our hemisphere," said Glenn Hilliard, chairman and CEO of ING Americas. "We are pleased with our six-month results but it is clear that the sluggish U.S. market recovery is affecting us and others in financial services so we continue to be cautious about prospects for the second half."
Country results in the Americas are as follows: United States
ING's two core operating units for its U.S. businesses are U.S. Financial Services (USFS) and U.S. Institutional Businesses (USIB). USFS is composed of individual life, annuity, and mutual funds businesses, and worksite businesses (composed of defined contribution and pension, group insurance and payout management businesses). USIB consists of individual and group reinsurance businesses, and guaranteed investment contracts and other funding agreements.
Businesses in the United States recorded a $50.9 million decrease in pre- tax results compared to the same period in 2001, primarily due to unfavorable market-related impacts, offset by lower operating expenses and financing costs. The major U.S. reorganization -- including integration of the worksite and retail units that began last September is well underway and on track to achieve the cost reductions announced last December.
US Financial Services -- Total first half results for USFS were $449.7 million, compared to $485.0 million for the prior year period.
* Results were adversely affected by equity market-related impacts,
consisting of lower fees on assets under management and higher
amortization of deferred policy acquisition costs and guaranteed
minimum benefits, all of which are driven by continued equity market
weakness in the U.S.
* Strong sales continued for fixed annuities and products with a
guarantee component, such as the ING Principal Protection Funds. Fixed
annuities produced record sales of $1 billion in May, in part due to
the recent introduction of the ING SmartDesign Multi-Rate Index
Annuity.
US Institutional Businesses -- USIB posted good results of $119.8 million. Results for the same period in 2001 were $96.4 million.
* Results were driven by an exceptionally strong performance for the
institutional markets business, which came in above target due to
higher product spreads and continued business growth.
* Individual reinsurance business' contributions were adversely affected
by unfavorable mortality that occurred during the first quarter of the
year.
The remaining unfavorable variance of $39.0 million in the U.S. businesses was due to higher-than-expected investment losses reduced by lower financing costs.
Mexico
ING reported sustained growth for its Mexico business operations and significant progress on its operation centralization initiatives, which are expected to produce savings in 2002 of $35 million. Results for the six-month period of $119.6 million were attributable to favorable underwriting results in auto and health businesses and higher investment income. Results for the same period in 2001 were $33.2 million, which reflect the 49% interest in ING Comercial America, compared to today's 100% stake.
Canada
Another solid performer was the Canadian property and casualty business which reported operating results of $69.9 million for the six-month reporting period, compared to $56.8 million in 2001 primarily due to favorable underwriting results. Other contributing factors included:
* Good customer retention programs as a result of the integration of the
Zurich Canada personal lines and small commercial lines into the ING
Canada business,
* Expense and cost synergies related to the Zurich integration and
centralization of a number of functions
During the second quarter, ING also consolidated several of its companies in Canada under the ING Insurance Company of Canada banner.
South America
The South American businesses reported on target results of $31.8 million. However, due to the deterioration in the exchange rate between the local currency of the various countries and the U.S., these results were lower than the prior year's six-month reporting of $34.5 million.
ING continues to have leading market positions in Chile, Brazil, Peru and Argentina, and is the number one insurer in South America.
Certain of the statements contained in this release 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's 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 assumes no obligation to update any forward-looking information contained in this release.
SOURCE: ING Americas
CONTACT: Dianne Bernez, +1-770-618-3910, or Frank Ranew, +1-770-980-
4863, both of ING Americas
Web site: http://www.ing-usa.com/