ING INSURANCE CO OF AMERICA - 10-K Annual Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K

Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

For the fiscal year ended December 31, 2002 Commission file number: 333-49581,
033-63657

ING Insurance Company of America
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(Exact name of registrant as specified in its charter)

Florida 06-1286272
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(State or other jurisdiction of (IRS employer
incorporation or organization identification no.)

Corporate Center One, 2202 North Westshore
Boulevard #350, Tampa, Florida 33607
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(Address of principal executive offices) (Zip code)

Registrant's telephone number, including area code (813) 281-3773

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Former name, former address and former fiscal year, if changed since last report

Securities registered pursuant to Section 12(b) of Act: None
Securities registered pursuant to Section 12(g) of Act: None

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes __X__ No ______

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this form 10-K or any amendment to this
Form 10-K.

Yes __X__ No ______

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 25,500 shares of Common Stock
as of March 24, 2003, all of which were directly owned by ING Life Insurance and
Annuity Company.

NOTE: WHEREAS ING INSURANCE COMPANY OF AMERICA MEETS THE CONDITIONS SET FORTH IN
GENERAL INSTRUCTION I(1)(a) AND (b) OF FORM 10-K, THIS FORM IS BEING FILED WITH
THE REDUCED DISCLOSURE FORMAT PURSUANT TO GENERAL INSTRUCTION I(2).

ING INSURANCE COMPANY OF AMERICA
(A wholly-owned subsidiary of ING Life Insurance and Annuity Company)
Annual Report on Form 10-K
For the Year Ended December 31, 2002

TABLE OF CONTENTS

* Item omitted pursuant to General Instruction I(2) of Form 10-K
** Item prepared in accordance with General Instruction I(2) of Form 10-K

2

PART I

ITEM 1. BUSINESS

Organization of Business

ING Insurance Company of America ("IICA,"or the "Company"), formerly known as
Aetna Insurance Company of America ("AICA") is a stock life insurance company
organized in 1990 under the insurance laws of Connecticut. Effective January 5,
2000, the Company's state of domicile changed from Connecticut to Florida. The
Company is a wholly-owned subsidiary of ING Life Insurance and Annuity Company
("ILIAC"). ILIAC is a wholly-owned subsidiary of ING Retirement Holdings, Inc.
("HOLDCO"), which is a wholly owned subsidiary of ING Retirement Services, Inc.
("IRSI"). IRSI is ultimately owned by ING Groep N.V. ("ING"), a financial
services company based in The Netherlands.

On December 13, 2000, ING America Insurance Holdings, Inc., an indirect
wholly-owned subsidiary of ING, acquired Aetna Inc., comprised of the Aetna
Financial Services business, of which the Company is a part, and Aetna
International businesses, for approximately $7,700.0 million. The purchase price
was comprised of approximately $5,000.0 million in cash and the assumption of
$2,700.0 million of outstanding debt and other net liabilities. In connection
with the acquisition, Aetna Inc. was renamed Lion Connecticut Holdings Inc.
("Lion"). At the time of the sale, Lion entered into certain transition services
agreements with a former related party, Aetna U.S. Healthcare, which was renamed
Aetna Inc. ("former Aetna").

PRODUCTS AND SERVICES

Management has determined that under Statements of Financial Accounting
Standards Number 131 "Disclosure about Segments of an Enterprise and Related
Information," the Company has one operating segment, ING U.S. Financial Services
("USFS").

The Company principally offers annuity contracts to individuals on a qualified
and non-qualified basis and to employer-sponsored retirement plans qualified
under Internal Revenue Code Sections 401, 403 and 408. These contracts may be
deferred or immediate ("payout annuities").

INVESTMENT OPTIONS

The Company's products provide customers with variable and/or fixed investment
options. Variable options generally provide for full assumption by the customer
of investment risks. Assets supporting variable options are held in separate
accounts that invest in affiliated and/or unaffiliated mutual funds. Affiliated
mutual funds include funds managed by Aeltus Investment Management, Inc.
("Aeltus"), an affiliate of the Company, and funds managed by ILIAC and
subadvised by outside investment advisers. Variable separate account investment
income and realized capital gains and losses are not reflected in the Company's
statements of income.

Fully guaranteed fixed options provide guarantees on investment return, maturity
values, and if applicable, benefit payments. Other fixed options are "experience
rated" and require the customer to assume investment (including realized capital
gains and losses on the sale of invested assets) and

3

ITEM 1. BUSINESS (continued)
other risks subject to, among other things, principal and interest guarantees.
The Company will not be issuing these other fixed options in 2002 and beyond.

FEES AND MARGINS

Insurance charges or other fees earned by the Company vary by product and
depend, among other factors, on the funding option selected by the customer
under the product. For annuity products where assets are allocated to variable
funding options, the Company may charge the separate account asset-based
insurance and expense fees. When a customer selects an affiliated mutual fund as
a variable funding option, the Company may receive compensation from the fund's
adviser, administrator or other affiliated entity for the performance of certain
shareholder services. In the case of funds advised by Aeltus, these fees are
equal to one-half of the investment advisory fee Aeltus receives.

In addition, when a customer selects an unaffiliated mutual fund as a variable
funding option, the Company may receive distribution (12b-1) and service plan
fees, as well as, compensation from the fund's adviser, administrator or other
affiliated entity for the performance of certain shareholder services.

For fixed funding options, the Company earns a margin, which is based on the
difference between income earned on the investments supporting the liability and
interest credited to customers.

The Company may also receive other fees or charges depending on the nature of
the products.

ASSETS UNDER MANAGEMENT AND ADMINISTRATION

The substantial portion of fees or other charges and margins is based on assets
under management. Assets under management are principally affected by net
deposits (i.e. deposits, including new contracts, less surrenders), investment
performance (e.g. interest credited to customer accounts for fixed options or
market performance for variable options) and customer retention. Assets under
management, excluding net unrealized capital gains and losses related to market
value adjustments required under Statement of Financial Accounting Standards
("FAS") No. 115, were $689.1 million, $897.4 million and $1,104.0 million at
December 31, 2002, 2001 and 2000, respectively. Assets under management are
available for contractholder withdrawal and are subject to fair value
adjustments and/or deferred surrender charges.

To encourage customer retention and recover acquisition expenses, contracts
typically impose a surrender charge on policyholder balances withdrawn within a
period of time after the contract's inception. The period of time and level of
the charge vary by product. More favorable credited rates may also be offered
after policies have been in force for a period of time. Existing tax penalties
on annuity distributions prior to age 59-1/2 provide further disincentive to
customers for premature surrenders of account balances, but generally do not
impede transfers of those balances to products of competitors.

4

ITEM 1. BUSINESS (continued)
PRINCIPAL MARKETS AND METHOD OF DISTRIBUTION

The Company's products are offered primarily to individuals and
employer-sponsored groups in the education market. The Company's products
generally are sold through a managed network of broker/ dealers and dedicated
career agents.

COMPETITION

Competition arises from an array of financial services companies including other
insurance companies, banks, mutual funds and other investment managers.
Principal competitive factors are reputation for investment performance, product
features, service, cost and the perceived financial strength of the investment
manager or sponsor.

Competition may affect, among other matters, both business growth and the
pricing of the Company's products and services.

RESERVES

Reserves for investment contracts (deferred annuities and immediate annuities
without life contingent payouts) are equal to cumulative deposits plus credited
interest less withdrawals and charges thereon. For the investment contracts
which are experience-rated, the reserves also reflect net realized capital
gains/losses on the sale of invested assets, (which the Company reflects through
credited rates on an amortized basis) and net unrealized capital gains/losses
related to FAS No. 115.

Reserves, as described above, are computed amounts that, with additions from
deposits to be received and with interest on such reserves compounded annually
at assumed rates, are expected to be sufficient to meet the Company's policy
obligations at their maturities or to pay expected death or retirement benefits
or other withdrawal requests.

OTHER MATTERS

REGULATION

The Company's operations are subject to comprehensive regulation throughout the
United States. The laws of the various jurisdictions establish supervisory
agencies, including the state insurance departments, with broad authority to
grant licenses to transact business and regulate many aspects of the products
and services offered by the Company, as well as solvency and reserve adequacy.
Many agencies also regulate investment activities on the basis of quality,
diversification, and other quantitative criteria. The Company's operations and
accounts are subject to examination at regular intervals by certain of these
regulators.

Operations conducted by the Company are subject to regulation by various
insurance agencies where the Company conducts business, in particular the
Florida Department of Insurance. Among other matters, these agencies may
regulate premium rates, trade practices, agent licensing, policy forms, and
underwriting and claims practices.

5

ITEM 1. BUSINESS (continued)
OTHER MATTERS (continued)
The Securities and Exchange Commission ("SEC") and, to a lesser extent, the
states regulate the sales and investment management activities and operations of
the Company. Regulations of the SEC, Department of Labor and Internal Revenue
Service also impact certain of the Company's annuity and other investment and
retirement products. These products involve Separate Accounts and mutual funds
registered under the Investment Company Act of 1940.

MISCELLANEOUS

The Company utilizes the employees of its affiliates (primarily ILIAC) and
receives an expense allocation, at cost, based on the utilization of these
employees.

The Company uses ING's computer facilities. The Company's management believes
that ING's computer facilities, systems and related procedures are adequate to
meet its business needs. ING's data processing systems and backup and security
policies, practices and procedures are regularly evaluated by ING's management
and internal auditors and are modified as considered necessary.

The Company is not dependent upon any single customer and no single customer
accounted for 10% or more of revenue in 2002. In addition, the loss of business
from any one, or a few, independent brokers or agents would not have a material
adverse effect on the earnings of the Company.

ITEM 2. PROPERTIES

The Company's principal executive office is located at Corporate Center One,
2202 North Westshore Boulevard #350, Tampa, Florida 33607 and its principal
office for operations is located at 151 Farmington Avenue, Hartford, Connecticut
06156. The Company occupies office space that is leased by ILIAC or other
affiliates. Expenses associated with these offices are allocated on a direct and
indirect basis to the Company.

ITEM 3. LEGAL PROCEEDINGS

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

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Omitted pursuant to General Instruction I(2)(c) of Form 10-K.

6

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

All of the Company's outstanding shares are owned by ILIAC, which is a
wholly-owned subsidiary of HOLDCO. HOLDCO is a wholly-owned subsidiary of IRSI,
whose ultimate parent is ING.

ITEM 6. SELECTED FINANCIAL DATA

Omitted pursuant to General Instruction I(2)(a) of Form 10-K.

ITEM 7. MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION

OVERVIEW

The following narrative analysis of the results of operations and financial
condition presents a review of the Company for the twelve month periods ended
December 31, 2002 versus 2001.

CHANGE IN ACCOUNTING PRINCIPLE

In June 2001, the Financial Accounting Standards Board ("FASB") issued FAS No.
142, "Goodwill and Other Intangible Assets," effective for fiscal years
beginning after December 15, 2001. Under FAS No.142, goodwill and intangible
assets deemed to have indefinite lives are no longer being amortized but are
subject to annual impairment tests. Other intangible assets are still amortized
over their estimated useful lives. The Company adopted the new standard
effective January 1, 2002.

As required under FAS No. 142, the Company completed the first of the required
impairment tests as of January 1, 2002. Step one of the impairment test was a
screen for potential impairment, while step two measured the amount of the
impairment. All of the Company's operations fall under one reporting unit, USFS,
due to the consolidated nature of the Company's operations. Step one of the
impairment test required the Company to estimate the fair value of the reporting
unit and compare the estimated fair value to its carrying value. The Company
determined the estimated fair value utilizing a discounted cash flow approach
and applying a discount rate equivalent to the Company's weighted average cost
of capital. Fair value was determined to be less than carrying value which
required the Company to complete step two of the test. In step two, the Company
allocated the fair value of the reporting unit determined in step one to the
assets and liabilities of the reporting unit resulting in an implied fair value
of goodwill of zero.

The comparison of the fair value amount allocated to goodwill and the carrying
value of goodwill resulted in an impairment loss upon adoption of $101.8
million, which represents the entire carrying amount, net of accumulated
amortization. This impairment charge is shown as a change in accounting
principle on the Income Statement.

RESULTS OF OPERATIONS

Fee income for the year ended December 31, 2002 decreased by $6.1 million
compared to the same period in 2001, primarily due to the decrease in average
variable assets under management by the Company. Substantially all of the fee
income on variable assets is calculated based on assets under

7

ITEM 7. MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (continued)
RESULTS OF OPERATIONS (continued)
management and administration, which decreased primarily due to the continued
decline in the equity markets.

Net investment income for the year ended December 31, 2002 decreased by $3.2
million compared to the same period in 2001. This decrease in net investment
income is primarily due to a decrease of assets under management with fixed
options, and lower investment yields.

Net realized capital losses for the year ended December 31, 2002 increased by
$3.3 million compared to the same period in 2001. The capital losses are due to
higher impairments in 2002 coupled with sales of fixed maturities.

Interest credited and other benefits to the policyholders for the year ended
December 31, 2002 decreased by $3.2 million compared to the same period in 2001.
This decrease is a result of a decrease in contractholders' funds on deposit and
a reduction in interest credited, which is attributed to lower interest rates
throughout 2002.

Underwriting, acquisition, and insurance expenses for the year ended
December 31, 2002 increased by $1.3 million compared to the same period in 2001.
General expenses increased during the period due to a higher allocation of
corporate and internal service charges from the Company's parent and affiliates.

Amortization of deferred policy acquisition costs and value of business acquired
for the year ended December 31, 2002, increased by $5.8 million compared to the
same period in 2001. Amortization of long-duration products is reflected in
proportion to actual and estimated future gross profits. Estimated future gross
profits are computed based on underlying assumptions related to the underlying
contracts, including but not limited to interest margins, mortality lapse,
premium persistency, expenses, and asset growth. The increase in the
amortization of deferred policy acquisition costs and value of insurance
acquired reflects the impact of these variables on the overall book of business.

Goodwill amortization for the year ended December 31, 2002 decreased by $2.6
million compared to the same period in 2001. This reduction is based on the
change in accounting principle (FAS No. 142) that eliminates amortization of
goodwill.

The cumulative effect of the change in accounting principle for the year ended
December 31, 2002, of $101.8 million is an impairment charge related to the
implementation of FAS No. 142, which addresses accounting for goodwill and other
intangible assets.

Earnings, excluding goodwill amortization, change in accounting principle, and
net realized capital gains and losses (net of taxes), decreased by $8.6 million
for the year ended December 31, 2002, as compared to the year ended
December 31, 2001. Lower earnings are primarily the result of lower fee income,
increases to the amortization of deferred policy acquisition costs and value of
business acquired, and higher operating expenses.

8

ITEM 7. MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (continued)
RESULTS OF OPERATIONS (continued)
The Company's annuity deposits and assets under management were as follows:

(1) Excludes net unrealized capital gains of $8.0 million, $4.2 million and
$0.9 million at December 31, 2002, 2001 and 2000, respectively.
(2) Includes $399.0 million, $564.9 million and $719.8 million at December 31,
2002, 2001 and 2000, respectively, of assets invested through the Company's
products in unaffiliated mutual funds.

FINANCIAL CONDITION

INVESTMENTS

FIXED MATURITIES

At December 31, 2002 and 2001, respectively, the Company's carrying value of
available for sale fixed maturities including fixed maturities pledged to
creditors (hereinafter referred to as "total fixed maturities") represented 100%
of the total general account invested assets. For the same periods, $118.2
million, or 91% of total fixed maturities, and $120.1 million, or 91% of total
fixed maturities, respectively, supported experience-rated products. Total fixed
maturities reflected net unrealized capital gains of $8.0 million and $4.2
million at December 31, 2002 and 2001, respectively.

It is management's objective that the portfolio of fixed maturities be of high
quality and be well diversified by market sector. The fixed maturities in the
Company's portfolio are generally rated by external rating agencies and, if not
externally rated, are rated by the Company on a basis believed to be similar to
that used by the rating agencies. The average quality rating of the Company's
fixed maturities portfolio was AA- at December 31, 2002 and 2001.

Fixed maturities rated BBB and below may have speculative characteristics, and
changes in economic conditions or other circumstances are more likely to lead to
a weakened capacity of the issuer to make principal and interest payments than
is the case with higher rated fixed maturities.

9

ITEM 7. MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (continued)
INVESTMENTS (continued)
The percentage of total fixed maturities by quality rating category is as
follows:

The percentage of total fixed maturities by market sector is as follows:

The Company analyzes the general account investments to determine whether there
has been an other than temporary decline in fair value below the amortized cost
basis in accordance with FAS No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." Management considers the length of the time and the
extent to which the fair value has been less than amortized cost; the financial
condition and near-term prospects of the issuer; future economic conditions and
market forecasts; and the Company's intent and ability to retain the investment
in the issuer for a period of time sufficient to allow for recovery in fair
value. If it is probable that all amounts due according to the contractual terms
of a debt security will not be collected, an other than temporary impairment is
considered to have occurred.

When a decline in fair value is determined to be other than temporary, the
individual security is written down to fair value and the loss accounted for as
a realized loss.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity is the ability of the Company to generate sufficient cash flows to
meet the cash requirements of operating, investing, and financing activities.
The Company's principal sources of liquidity are deposits on annuity contracts
and product charges, investment income, maturing investments, and capital
contributions. Primary uses of liquidity are payments of commissions and
operating expenses, interest and premium credits, investment purchases as well
as withdrawals and surrenders.

10

ITEM 7. MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (continued)
LIQUIDITY AND CAPITAL RESOURCES (continued)
The Company has entered into agreements with ILIAC under which ILIAC has agreed
to cause the Company to have sufficient capital to meet certain capital and
surplus levels. Management believes that its sources of liquidity are adequate
to meet the Company's short-term cash obligations.

The National Association of Insurance Commissioners ("NAIC") risk-based capital
requirements require insurance companies to calculate and report information
under a risk-based capital formula. These requirements are intended to allow
insurance regulators to monitor the capitalization of insurance companies based
upon the type and mixture of risks inherent in a Company's operations. The
formula includes components for asset risk, liability risk, interest rate
exposure, and other factors. The Company has complied with the NAIC's risk-based
capital reporting requirements. Amounts reported indicate that the Company has
total adjusted capital above all required capital levels.

During 2002, liabilities totaling $0.3 million were allocated to the Company
related to a Supplemental Excess Retirement Plan ("SERP") that covers certain
employees of ING Life Insurance Company of America and Aeltus, affiliates of the
Company.

CRITICAL ACCOUNTING POLICIES

GENERAL

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires the use of estimates and
assumptions in certain circumstances that affect amounts reported in the
accompanying financial statements and related footnotes. These estimates and
assumptions are evaluated on an on-going basis based on historical developments,
market conditions, industry trends and other information that is reasonable
under the circumstances. There can be no assurance that actual results will
conform to estimates and assumptions, and that reported results of operations
will not be affected in a materially adverse manner by the need to make future
accounting adjustments to reflect changes in these estimates and assumptions
from time to time.

The Company has identified the following estimates as critical in that they
involve a higher degree of judgment and are subject to a significant degree of
variability; goodwill impairment testing, investment impairment testing and
amortization of deferred acquisition costs and value of business acquired. In
developing these estimates management makes subjective and complex judgments
that are inherently uncertain and subject to material change as facts and
circumstances develop. Although variability is inherent in these estimates,
management believes the amounts provided are appropriate based upon the facts
available upon compilation of the financial statements.

GOODWILL IMPAIRMENT TESTING

The Company tested goodwill as of January 1, 2002 for impairment using fair
value calculations based on the present value of estimated future cash flows
from business currently in force and business that we estimate we will add in
the future. These calculations require management to make estimates on the
amount of future revenues and the appropriate discount rate. The calculated fair

11

ITEM 7. MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (continued)
CRITICAL ACCOUNTING POLICIES (continued)
value of goodwill and the resulting impairment loss recorded is based on these
estimates, which require a significant amount of management judgment. Refer to
Note 1 of the Financial Statements for a discussion of the results of the
Company's goodwill testing procedures and to Management's Narrative Analysis of
the Results of Operations for the impact these procedures had on the Company's
income.

INVESTMENT IMPAIRMENT TESTING

The Company reviews the general account investments for impairments by analyzing
the amount and length of time amortized cost has exceeded fair value, and by
making certain estimates and assumptions regarding the issuing companies'
business prospects, future economic conditions and market forecasts. Based on
the facts and circumstances of each case, management uses judgment in deciding
whether any calculated impairments are temporary or other than temporary. For
those impairments judged to be other than temporary, we reduce the carrying
value of those investments to the current fair value and record impairment
losses for the difference.

AMORTIZATION OF DEFERRED ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED

Deferred policy acquisition costs ("DAC") and value of business acquired
("VOBA") are amortized with interest over the life of the contracts (usually 25
years) in relation to the present value of estimated gross profits from
projected interest margins, asset-based fees, policy administration and
surrender charges less policy maintenance fees.

Changes in assumptions can have a significant impact on the calculation of
DAC/VOBA and its related amortization patterns. Due to the relative size of
DAC/VOBA balance and the sensitivity of the calculation to minor changes in the
underlying assumptions and the related volatility that could result in the
reported DAC/VOBA balance, the Company performs a quarterly analysis of DAC/
VOBA. At each balance sheet date, actual historical gross profits are reflected
and expected future gross profits and related assumptions are evaluated for
continued reasonableness. Any adjustment in estimated profit requires that the
amortization rate be revised retroactively to the date of policy or contract
issuance ("unlocking"), which could be significant. The cumulative difference
related to prior periods is recognized as a component of current period's
amortization, along with amortization associated with the actual gross profits
of the period. In general, increases in estimated returns result in increased
expected future profitability and may lower the rate of amortization, while
increases in lapse/surrender and mortality assumptions or decreases in returns
reduce the expected future profitability of the underlying business and may
increase the rate of amortization.

One of the most significant assumptions involved in the estimation of future
gross profits for deferred annuity products is the assumed return associated
with future separate account performance. To reflect the near-term and long-term
volatility in the equity markets this assumption involves a combination of
near-term expectations and a long-term assumption about market performance. The
overall return generated by the separate account is dependent on several
factors, including the relative mix of the underlying sub-accounts among bond
funds and equity funds as well as equity sector weightings.

12

ITEM 7. MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (continued)
CRITICAL ACCOUNTING POLICIES (continued)
As part of the regular analysis of DAC/VOBA, at the end of third quarter 2002,
the Company unlocked its assumptions by resetting its near-term and long-term
assumptions for the separate account returns to 9% (gross before fund management
fees and mortality and expense and other policy charges), reflecting a blended
return of equity and other sub-accounts. This unlocking adjustment was primarily
driven by the sustained downturn in the equity markets and revised expectations
for future returns. In 2002, the Company recorded an acceleration of DAC/VOBA
amortization totaling $3.5 million before tax, or $2.3 million, net of $1.2
million of federal income tax benefit.

FORWARD-LOOKING INFORMATION/RISK FACTORS

In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, the Company cautions readers regarding certain
forward-looking statements contained in this report and in any other statements
made by, or on behalf of, the Company, whether or not in future filings with the
SEC. Forward-looking statements are statements not based on historical
information and which relate to future operations, strategies, financial
results, or other developments. Statements using verbs such as "expect,"
"anticipate," "believe" or words of similar import generally involve
forward-looking statements. Without limiting the foregoing, forward-looking
statements include statements which represent the Company's beliefs concerning
future levels of sales and redemptions of the Company's products, investment
spreads and yields, or the earnings and profitability of the Company's
activities.

Forward-looking statements are necessarily based on estimates and assumptions
that are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond the Company's control
and many of which are subject to change. These uncertainties and contingencies
could cause actual results to differ materially from those expressed in any
forward-looking statements made by, or on behalf of, the Company. Whether or not
actual results differ materially from forward-looking statements may depend on
numerous foreseeable and unforeseeable developments. Some may be national in
scope, such as general economic conditions, changes in tax law and changes in
interest rates. Some may be related to the insurance industry generally, such as
pricing competition, regulatory developments and industry consolidation. Others
may relate to the Company specifically, such as credit, volatility and other
risks associated with the Company's investment portfolio. Investors are also
directed to consider other risks and uncertainties discussed in documents filed
by the Company with the SEC. The Company disclaims any obligation to update
forward-looking information.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Asset/liability management is integrated into many aspects of the Company's
operations, including investment decisions, product development, and
determination of crediting rates. As part of the risk management process,
different economic scenarios are modeled, including cash flow testing required
for insurance regulatory purposes, to determine that existing assets are
adequate to meet projected liability cash flows. Key variables in the modeling
process include interest rates, anticipated contractholder behavior and variable
separate account performance. Contractholders bear the majority of the
investment risk related to variable insurance products.

13

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK (continued)
The fixed account liabilities are supported by a portfolio principally composed
of fixed rate investments that can generate predictable, steady rates of return.
The portfolio management strategy for the fixed account considers the assets
available for sale. This enables the Company to respond to changes in market
interest rates, changes in prepayment risk, changes in relative values of asset
sectors and individual securities and loans, changes in credit quality outlook,
and other relevant factors. The objective of portfolio management is to maximize
returns, taking in to account interest rate and credit risk, as well as other
risks. The Company's asset/liability management discipline includes strategies
to minimize exposure to loss as interest rates and economic and market
conditions change.

On the basis of these analyses, management believes there is currently no
material solvency risk to the Company.

14

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS

15

REPORT OF INDEPENDENT AUDITORS

The Board of Directors
ING Insurance Company of America

We have audited the accompanying balance sheets of ING Insurance Company of
America as of December 31, 2002 and 2001, and the related income statements,
statements of changes in shareholder's equity, and statements of cash flows for
each of the years then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ING Insurance Company of
America at December 31, 2002 and 2001, and the results of its operations and its
cash flows for each of the years then ended, in conformity with accounting
principles generally accepted in the United States.

As discussed in Note 1 to the financial statements, the Company changed the
accounting principle for goodwill and other intangible assets effective
January 1, 2002.

/s/ Ernst & Young LLP

Atlanta, Georgia
March 21, 2003

16

INDEPENDENT AUDITORS' REPORT

The Shareholder and Board of Directors
ING Insurance Company of America:

We have audited the accompanying statements of income, changes in shareholder's
equity and cash flows of ING Insurance Company of America, formerly known as
Aetna Insurance Company of America, for the period from December 1, 2000 to
December 31, 2000 ("Successor Company"), and for the period from January 1, 2000
to November 30, 2000 ("Preacquisition Company"). These financial statements are
the responsibility of the Companies' management. Our responsibility is to
express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the Successor Company's financial statements referred to above
present fairly, in all material respects, the results of operations and cash
flows of ING Insurance Company of America for the period from December 1, 2000
to December 31, 2000, in conformity with accounting principles generally
accepted in the United States of America. Further, in our opinion, the
Preacquisition Company's financial statements referred to above present fairly,
in all material respects, the results of its operations and its cash flows for
the period from January 1, 2000 to November 30, 2000, in conformity with
accounting principles generally accepted in the United States of America.

As discussed in Note 1 to the financial statements, effective November 30, 2000,
ING America Insurance Holdings Inc. acquired all of the outstanding stock of
Aetna Inc., Aetna Insurance Company of America's indirect parent and sole
shareholder in a business combination accounted for as a purchase. As a result
of the acquisition, the financial information for the periods after the
acquisition is presented on a different cost basis than that for the periods
before the acquisition and, therefore, is not comparable.

/s/ KPMG LLP

Hartford, Connecticut
March 27, 2001

17

ING INSURANCE COMPANY OF AMERICA
(A wholly-owned subsidiary of ING Life Insurance and Annuity Company)

INCOME STATEMENTS
(Millions)

SEE NOTES TO FINANCIAL STATEMENTS

18

ING INSURANCE COMPANY OF AMERICA
(A wholly-owned subsidiary of ING Life Insurance and Annuity Company)

BALANCE SHEETS
(Millions, except share data)

SEE NOTES TO FINANCIAL STATEMENTS

19

ING INSURANCE COMPANY OF AMERICA
(A wholly-owned subsidiary of ING Life Insurance and Annuity Company)

STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
(Millions)

SEE NOTES TO FINANCIAL STATEMENTS

20

ING INSURANCE COMPANY OF AMERICA
(A wholly-owned subsidiary of ING Life Insurance and Annuity Company)

STATEMENTS OF CASH FLOWS
(Millions)

SEE NOTES TO FINANCIAL STATEMENTS

21

ING INSURANCE COMPANY OF AMERICA
(A WHOLLY-OWNED SUBSIDIARY OF ING LIFE INSURANCE AND ANNUITY COMPANY)
NOTES TO FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

ING Insurance Company of America ("IICA," or the "Company"), formerly known
as Aetna Insurance Company of America ("AICA"), is a provider of financial
services in the United States. The Company is a wholly-owned subsidiary of
ING Life Insurance and Annuity Company ("ILIAC"). ILIAC is a wholly-owned
subsidiary of ING Retirement Holdings, Inc. ("HOLDCO"), which is a
wholly-owned subsidiary of ING Retirement Services, Inc. ("IRSI"). IRSI is
ultimately owned by ING Groep N.V. ("ING"), a financial services company
based in The Netherlands.

On December 13, 2000, ING America Insurance Holdings, Inc., ("ING AIH") an
indirect wholly-owned subsidiary of ING, acquired Aetna Inc., comprised of
the Aetna Financial Services business, of which the Company is a part, and
Aetna International businesses, for approximately $7,700.0 million. The
purchase price was comprised of approximately $5,000.0 million in cash and
the assumption of $2,700.0 million of outstanding debt and other net
liabilities. In connection with the acquisition, Aetna Inc. was renamed Lion
Connecticut Holdings Inc. ("Lion"). At the time of the sale, Lion entered
into certain transition services agreements with a former related party,
Aetna U.S. Healthcare, which was renamed Aetna Inc. ("former Aetna").

For accounting purposes, the acquisition was recorded as of November 30,
2000 using the purchase method. The effects of this transaction, including
the recognition of goodwill, were pushed down and reflected on the financial
statements of certain IRSI (a subsidiary of Lion) subsidiaries, including
the Company. The Balance Sheet changes related to accounting for this
purchase were entirely non-cash in nature and accordingly were excluded from
the pre-acquisition Statement of Cash Flows for the eleven months ended
November 30, 2000.

The purchase price was allocated to assets and liabilities based on their
respective fair values. This revaluation resulted in a net increase to
assets, excluding the effects of goodwill, of $3.2 million and a net
increase to liabilities of $1.1 million. Additionally, the Company
established goodwill of $98.9 million. Goodwill was amortized over a period
of 40 years prior to January 1, 2002.

The allocation of the purchase price to assets and liabilities was subjected
to further refinement throughout 2001 as additional information became
available to more precisely estimate the fair values of the Company's
respective assets and liabilities at the purchase date. The refinements to
the Company's purchase price allocations were as follows:

The Company completed a full review relative to the assumptions and profit
streams utilized in the development of value of business acquired ("VOBA")
and determined that certain refinements were necessary. Such refinements
resulted in a reduction of VOBA;

The Company adjusted its reserve for other policyholders' funds in order to
conform its accounting policies with those of ING; and

22

ING INSURANCE COMPANY OF AMERICA
(A WHOLLY-OWNED SUBSIDIARY OF ING LIFE INSURANCE AND ANNUITY COMPANY)
NOTES TO FINANCIAL STATEMENTS (continued)

1. SIGNIFICANT ACCOUNTING POLICIES (continued)
The Company, after giving further consideration to certain exposures in the
general market place, determined that a reduction of its investment
portfolio carrying value was warranted.

The net impact of the refinements in purchase price allocations, as
described above, resulted in a net decrease to assets, excluding the effects
of goodwill, of $9.4 million, a net decrease to liabilities of $3.9 million
and a net increase to the Company's goodwill of $5.5 million.

Unaudited proforma consolidated income from continuing operations and net
income of the Company for the period from January 1, 2000 to November 30,
2000, assuming that the acquisition of the Company occurred at the beginning
of each period, would have been approximately $5.5 million. The pro forma
adjustments, which did not affect revenues, reflect primarily goodwill
amortization, amortization of the favorable lease asset and the elimination
of amortization of the deferred gain on sale associated with the life
business.

The Company has one operating segment ING U.S. Financial Services ("USFS")
and all revenue reported by the company comes from external customers.

DESCRIPTION OF BUSINESS

The Company principally offers annuity contracts to individuals on a
qualified and non-qualified basis and to employer-sponsored retirement plans
qualified under Internal Revenue Code Sections 401, 403 and 408. The
Company's products are offered primarily to individuals and
employer-sponsored groups in the education market. The Company's products
are generally sold through a managed network of broker/dealers and dedicated
career agents.

NEW ACCOUNTING STANDARDS

ACCOUNTING FOR GOODWILL AND INTANGIBLE ASSETS

In June 2001, the Financial Accounting Standards Board ("FASB") issued FAS
No. 142, "Goodwill and Other Intangible Assets," effective for fiscal years
beginning after December 15, 2001. Under FAS No. 142, goodwill and
intangible assets deemed to have indefinite lives will no longer be
amortized but will be subject to annual impairment tests. Other intangible
assets are still amortized over their estimated useful lives. The Company
adopted the new standard effective January 1, 2002.

As required under FAS No. 142, the Company completed the first of the
required impairment tests as of January 1, 2002. Step one of the impairment
test was a screen for potential impairment, while step two measured the
amount of the impairment. All of the Company's operations fall under one
reporting unit, USFS, due to the consolidated nature of the Company's
operations. Step one of the impairment test required the Company to estimate
the fair value of the reporting unit and compare the estimated fair value to
its carrying value. The Company determined the estimated fair value
utilizing a discounted cash flow approach and applying a discount rate
equivalent to the Company's weighted average cost of capital. Fair value was

23

ING INSURANCE COMPANY OF AMERICA
(A WHOLLY-OWNED SUBSIDIARY OF ING LIFE INSURANCE AND ANNUITY COMPANY)
NOTES TO FINANCIAL STATEMENTS (continued)

1. SIGNIFICANT ACCOUNTING POLICIES (continued)
determined to be less than carrying value which required the Company to
complete step two of the test. In step two, the Company allocated the fair
value of the reporting unit determined in step one to the assets and
liabilities of the reporting unit resulting in an implied fair value of
goodwill of zero.

The comparison of the fair value amount allocated to goodwill and the
carrying value of goodwill resulted in an impairment loss of $101.8 million,
which represents the entire carrying amount of goodwill, net of accumulated
amortization. This impairment charge is shown as a change in accounting
principle on the Income Statement.

Application of the nonamortization provision (net of tax) of the new
standard resulted in an increase in net income of $2.6 million for the
twelve months ended December 31, 2002. Had the Company been accounting for
goodwill under FAS No. 142 for all periods presented, the Company's net
income would have been as follows:

ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

In June 1998, the (FASB) issued FAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, as amended and interpreted by FAS No.
137, Accounting for Derivative Instruments and Hedging Activities-Deferral
of the Effective Date of FASB Statement 133, FAS No. 138, Accounting for
Certain Derivative Instruments and Certain Hedging Activities -- an
Amendment of FASB No.133, and certain FAS No. 133 implementation issues.
This standard, as amended, requires companies to record all derivatives on
the balance sheet as either assets or liabilities and measure those
instruments at fair value. The manner in which companies are to record gains
or losses resulting from changes in the fair values of those derivatives
depends on the use of the derivative and whether it qualifies for hedge
accounting. FAS No. 133 was effective for the Company's financial statements
beginning January 1, 2001.

Adoption of FAS No. 133 did not have a material effect on the Company's
financial position or results of operations given the Company's limited
derivative and embedded derivative holdings.

The Company utilizes, interest rate swaps, caps and floors, foreign exchange
swaps and warrants in order to manage interest rate and price risk
(collectively, market risk). These financial

24

ING INSURANCE COMPANY OF AMERICA
(A WHOLLY-OWNED SUBSIDIARY OF ING LIFE INSURANCE AND ANNUITY COMPANY)
NOTES TO FINANCIAL STATEMENTS (continued)

1. SIGNIFICANT ACCOUNTING POLICIES (continued)
exposures are monitored and managed by the Company as an integral part of
the overall risk management program. Derivatives are recognized on the
balance sheet at their fair value. The Company chose not to designate its
derivative instruments as part of hedge transactions. Therefore, changes in
the fair value of the Company's derivative instruments are recorded
immediately in the statements of income as part of realized capital gains
and losses.

The Company occasionally purchases a financial instrument that contains a
derivative that is "embedded" in the instrument. In addition, the Company's
insurance products are reviewed to determine whether they contain an
embedded derivative. The Company assesses whether the economic
characteristics of the embedded derivative are clearly and closely related
to the economic characteristics of the remaining component of the financial
instrument or insurance product (i.e., the host contract) and whether a
separate instrument with the same terms as the embedded instrument would
meet the definition of a derivative instrument. When it is determined that
the embedded derivative possesses economic characteristics that are not
clearly and closely related to the economic characteristics of the host
contract and that a separate instrument with the same terms would qualify as
a derivative instrument, the embedded derivative is separated from the host
contract and carried at fair value. However, in cases where the host
contract is measured at fair value, with changes in fair value reported in
current period earnings or the Company is unable to reliably identify and
measure the embedded derivative for separation from its host contracts, the
entire contract is carried on the balance sheet at fair value and is not
designated as a hedging instrument.

GUARANTEES

In November 2002, the FASB issued Interpretation No. 45 ("FIN 45"),
"Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others," to clarify account
and disclosure requirements relating to a guarantor's issuance of certain
types of guarantees. FIN 45 requires entities to disclose additional
information about certain guarantees, or groups of similar guarantees, even
if the likelihood of the guarantor's having to make any payments under the
guarantee is remote.

The disclosure provisions are effective for financial statements for fiscal
years ended after December 15, 2002. For certain guarantees, the
interpretation also requires that guarantors recognize a liability equal to
the fair value of the guarantee upon its issuance. This initial recognition
and measurement provision is to be applied only on a prospective basis to
guarantees issued or modified after December 31, 2002. The Company has
performed an assessment of its guarantees and believes that all of its
guarantees are excluded from the scope of this interpretation.

25

ING INSURANCE COMPANY OF AMERICA
(A WHOLLY-OWNED SUBSIDIARY OF ING LIFE INSURANCE AND ANNUITY COMPANY)
NOTES TO FINANCIAL STATEMENTS (continued)

1. SIGNIFICANT ACCOUNTING POLICIES (continued)
FUTURE ACCOUNTING STANDARDS

EMBEDDED DERIVATIVES

The FASB issued FAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities" in 1998 and continues to issue guidance for
implementation through its Derivative Implementation Group ("DIG"). DIG
recently released a draft of FASB Statement 133 Implementation Issue B36,
"Embedded Derivatives: Bifurcation of a Debt Instrument That Incorporates
Both Interest Rate Risk and Credit Risk Exposures That are Unrelated or Only
Partially Related to the Creditworthiness of the Issuer of That Instrument"
("DIG B36"). Under this interpretation, modified coinsurance and coinsurance
with funds withheld reinsurance agreements as well as other types of
receivables and payables where interest is determined by reference to a pool
of fixed maturity assets or total return debt index may be determined to
contain bifurcatable embedded derivatives. The required date of adoption of
DIG B36 has not been determined. If the guidance is finalized in its current
form, the Company has determined that certain of its existing investments or
insurance products contain embedded derivatives that may require
bifurcation. The Company has not yet completed its evaluation of the
potential impact, if any, on its financial positions, results of operations,
or cash flows.

FASB INTERPRETATION NO. 46 CONSOLIDATION OF VARIABLE INTEREST ENTITIES

In January 2003, FASB issued Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities" ("VIE"), an interpretation of
Accounting Research Bulletin ("ARB"), No. 51. This Interpretation addresses
consolidation by business enterprises of variable interest entities, which
have one or both of the following characteristics: a) insufficient equity
investment at risk, or b) insufficient control by equity investors. This
guidance is effective for VIEs created after January 31, 2003 and for
existing VIEs as of July 1, 2003. An entity with variable interests in VIEs
created before February 1, 2003 shall apply the guidance no later than the
beginning of the first interim or annual reporting period beginning after
June 15, 2003.

In conjunction with the issuance of this guidance, the Company conducted a
review of its involvement with VIEs and does not believe it has any
significant investments or ownership in VIEs.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual results
could differ from reported results using those estimates.

26

ING INSURANCE COMPANY OF AMERICA
(A WHOLLY-OWNED SUBSIDIARY OF ING LIFE INSURANCE AND ANNUITY COMPANY)
NOTES TO FINANCIAL STATEMENTS (continued)

1. SIGNIFICANT ACCOUNTING POLICIES (continued)
RECLASSIFICATIONS

Certain reclassifications have been made to prior year financial information
to conform to the current year classifications.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash on hand, money market instruments and
other debt issues with a maturity of 90 days or less when purchased.

INVESTMENTS

All of the Company's fixed maturity and equity securities are currently
designated as available-for-sale. Available-for-sale securities are reported
at fair value and unrealized gains and losses on these securities are
included directly in shareholder's equity, after adjustment for related
charges in deferred policy acquisition costs, value of business acquired,
and deferred income taxes.

The Company analyzes the general account investments to determine whether
there has been an other than temporary decline in fair value below the
amortized cost basis in accordance with FAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." Management considers the length
of the time and the extent to which the market value has been less than
cost; the financial condition and near-term prospects of the issuer; future
economic conditions and market forecasts; and the Company's intent and
ability to retain the investment in the issuer for a period of time
sufficient to allow for recovery in market value. If it is probable that all
amounts due according to the contractual terms of a debt security will not
be collected, an other than temporary impairment is considered to have
occurred.

When a decline in fair value is determined to be other than temporary, the
individual security is written down to fair value and the loss accounted for
as a realized loss.

Included in available-for-sale securities are investments that support
experience-rated products. Experience-rated products are products where the
customer, not the Company, assumes investment (including realized capital
gains and losses) and other risks, subject to, among other things, minimum
guarantees. Realized gains and losses on the sale of, as well as unrealized
capital gains and losses on, investments supporting these products are
reflected in other Policyholders' funds. Realized capital gains and losses
on all other investments are reflected in the Company's results of
operations. Unrealized capital gains and losses on all other investments are
reflected in shareholder's equity, net of related income taxes.

Purchases and sales of fixed maturities and equity securities (excluding
private placements) are recorded on the trade date. Purchases and sales of
private placements and mortgage loans are recorded on the closing date.

27

ING INSURANCE COMPANY OF AMERICA
(A WHOLLY-OWNED SUBSIDIARY OF ING LIFE INSURANCE AND ANNUITY COMPANY)
NOTES TO FINANCIAL STATEMENTS (continued)

1. SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair values for fixed maturity securities are obtained from independent
pricing services or broker/ dealer quotations. Fair values for privately
placed bonds are determined using a matrix-based model. The matrix-based
model considers the level of risk-free interest rates, current corporate
spreads, the credit quality of the issuer and cash flow characteristics of
the security. The fair values for equity securities are based on quoted
market prices. For equity securities not actively traded, estimated fair
values are based upon values of issues of comparable yield and quality or
conversion value where applicable.

The Company engages in securities lending whereby certain securities from
its portfolio are loaned to other institutions for short periods of time.
Initial collateral, primarily cash, is required at a rate of 102% of the
market value of the loaned domestic securities. The collateral is deposited
by the borrower with a lending agent, and retained and invested by the
lending agent according to the Company's guidelines to generate additional
income. The market value of the loaned securities is monitored on a daily
basis with additional collateral obtained or refunded as the market value of
the loaned securities fluctuates.

In September 2000, the FASB issued FAS No. 140, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities." In
accordance with this new standard, general account securities on loan are
reflected on the Balance Sheet as "Securities pledged to creditors", which
includes the following:

The Company had no securities pledged to creditors at December 31, 2002.
Total securities pledged to creditors at December 31, 2001 consisted
entirely of fixed maturity securities.

The investment in affiliated mutual funds represents an investment in ING
Investment Management ("IIM") managed mutual funds by the Company, and is
carried at fair value.

Mortgage loans on real estate are reported at amortized cost less impairment
writedowns. If the value of any mortgage loan is determined to be impaired
(i.e., when it is probable the Company will be unable to collect all amounts
due according to the contractual terms of the loan agreement), the carrying
value of the mortgage loan is reduced to the present value of expected cash
flows from the loan, discounted at the loan's effective interest rate, or to
the loan's observable market price, or the fair value of the underlying
collateral. The carrying value of the impaired loans is reduced by
establishing a permanent writedown charged to realized loss.

Short-term investments, consisting primarily of money market instruments and
other fixed maturity securities issues purchased with an original maturity
of 91 days to one year, are considered available for sale and are carried at
fair value, which approximates amortized cost.

28

ING INSURANCE COMPANY OF AMERICA
(A WHOLLY-OWNED SUBSIDIARY OF ING LIFE INSURANCE AND ANNUITY COMPANY)
NOTES TO FINANCIAL STATEMENTS (continued)

1. SIGNIFICANT ACCOUNTING POLICIES (continued)
The Company's use of derivatives is limited to hedging purposes. The Company
enters into interest rate and currency contracts, including swaps, caps, and
floors to reduce and manage risks associated with changes in value, yield,
price, cash flow or exchange rates of assets or liabilities held or intended
to be held. Changes in the fair value of open derivative contracts are
recorded in net realized capital gains and losses.

On occasion, the Company sells call options written on underlying securities
that are carried at fair value. Changes in fair value of these options are
recorded in net realized capital gains or losses.

DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED

Deferred Policy Acquisition Costs ("DAC") is an asset, which represents
certain costs of acquiring certain insurance business, which are deferred
and amortized. These costs, all of which vary with and are primarily related
to the production of new and renewal business, consist principally of
commissions, certain underwriting and contract issuance expenses, and
certain agency expenses. VOBA is an asset, which represents the present
value of estimated net cash flows embedded in the Company's contracts, which
existed at the time the Company was acquired by ING. DAC and VOBA are
evaluated for recoverability at each balance sheet date and these assets
would be reduced to the extent that gross profits are inadequate to recover
the asset.

The amortization methodology varies by product type based upon two
accounting standards: FAS No. 60, "Accounting and Reporting by Insurance
Enterprises" ("FAS No. 60") and FAS No. 97, "Accounting and Reporting by
Insurance Enterprises for Certain Long-Duration Contracts and Realized Gains
and Losses from the sale of Investment" ("FAS No. 97").

Under FAS No. 60, acquisition costs for traditional life insurance products,
which primarily include whole life and term life insurance contracts, are
amortized over the premium payment period in proportion to the premium
revenue recognition.

Under FAS No. 97, acquisition costs for universal life and investment-type
products, which include universal life policies and fixed and variable
deferred annuities, are amortized over the life of the blocks of policies
(usually 25 years) in relation to the emergence of estimated gross profits
from surrender charges, investment margins, mortality and expense margins,
asset-based fee income, and actual realized gains (losses) on investments.
Amortization is adjusted retrospectively when estimates of current or future
gross profits to be realized from a group of products are revised.

DAC and VOBA are written off to the extent that it is determined that future
policy premiums and investment income or gross profits are not adequate to
cover related expenses.

29

ING INSURANCE COMPANY OF AMERICA
(A WHOLLY-OWNED SUBSIDIARY OF ING LIFE INSURANCE AND ANNUITY COMPANY)
NOTES TO FINANCIAL STATEMENTS (continued)

1. SIGNIFICANT ACCOUNTING POLICIES (continued)
Activity for the year-ended December 31, 2002 within VOBA was as follows:

The estimated amount of VOBA to be amortized, net of interest, over the next
five years is $6.7 million, $6.3 million, $5.1 million, $3.6 million and
$2.5 million for the years 2003, 2004, 2005, 2006 and 2007, respectively.
Actual amortization incurred during these years may vary as assumptions are
modified to incorporate actual results.

As part of the regular analysis of DAC/VOBA, at the end of third quarter
2002, the Company unlocked its assumptions by resetting its near-term and
long-term assumptions for the separate account returns to 9% (gross before
fund management fees and mortality and expense and other policy charges),
reflecting a blended return of equity and other sub-accounts. This unlocking
adjustment was primarily driven by the sustained downturn in the equity
markets and revised expectations for future returns. In 2002, the Company
recorded an acceleration of DAC/VOBA amortization totaling $3.5 million
before tax, or $2.3 million, net of $1.2 million of federal income tax
benefit.

POLICY LIABILITIES AND ACCRUALS

Future policy benefits include reserves for universal life, immediate
annuities with life contingent payouts and traditional life insurance
contracts. Reserves for universal life products are equal to cumulative
deposits less withdrawals and charges plus credited interest thereon.
Reserves for traditional life insurance contracts represent the present
value of future benefits to be paid to or on behalf of policyholders and
related expenses less the present value of future net premiums.

Reserves for immediate annuities with life contingent payout contracts are
computed on the basis of assumed investment yield, mortality, and expenses,
including a margin for adverse deviations. Such assumptions generally vary
by plan, year of issue and policy duration. Reserve interest rates range
from 5.5% to 8.0% for all years presented. Investment yield is based on the
Company's experience. Mortality and withdrawal rate assumptions are based on
relevant Company experience and are periodically reviewed against both
industry standards and experience.

Other Policyholders' funds include reserves for deferred annuity investment
contracts and immediate annuities without life contingent payouts. Reserves
on such contracts are equal to cumulative deposits less charges and
withdrawals plus credited interest thereon (rates range from 4.9% to 8.7%
for all years presented) net of adjustments for investment experience that
the Company is entitled to reflect in future credited interest. These
reserves also include unrealized gains/losses related to FAS No. 115 for
experience-rated contracts. Reserves on contracts subject to experience
rating reflect the rights of contractholders, plan participants, and the
Company.

30

ING INSURANCE COMPANY OF AMERICA
(A WHOLLY-OWNED SUBSIDIARY OF ING LIFE INSURANCE AND ANNUITY COMPANY)
NOTES TO FINANCIAL STATEMENTS (continued)

1. SIGNIFICANT ACCOUNTING POLICIES (continued)
REVENUE RECOGNITION

For certain annuity contracts, fee income for the cost of insurance,
surrender expenses, and other fees are recorded as revenue as charges
assessed against policyholders. Other amounts received for these contracts
are reflected as deposits and are not recorded as revenue. Related policy
benefits are recorded in relation to the associated premiums or gross profit
so that profits are recognized over the expected lives of the contracts.
When annuity payments with life contingencies begin under contracts that
were initially investment contracts, the accumulated balance in the account
is treated as a single premium for the purchase of an annuity and reflected
as an offsetting amount in both premiums and current and future benefits in
the Income Statement.

SEPARATE ACCOUNT

Separate Account assets and liabilities generally represent funds maintained
to meet specific investment objectives of contractholders who bear the
investment risk, subject, in some cases, to minimum guaranteed rates.
Investment income and investment gains and losses generally accrue directly
to such contractholders. The assets of each account are legally segregated
and are not subject to claims that arise out of any other business of the
Company.

Separate Account assets supporting variable options under annuity contracts
are invested, as designated by the contractholder or participant under a
contract (who bears the investment risk subject, in limited cases, to
minimum guaranteed rates) in shares of mutual funds which are managed by its
affiliates, or other selected mutual funds not managed by the Company.

Separate Account assets are carried at fair value. At December 31, 2002 and
2001, unrealized gains of $2.7 million and of $1.1 million, respectively,
after taxes, on assets supporting a guaranteed interest option are reflected
in shareholder's equity.

Separate Account liabilities are carried at fair value, except for those
relating to the guaranteed interest option. Reserves relating to the
guaranteed interest option are maintained at fund value and reflect interest
credited at rates ranging from 3.0% to 7.3% in 2002 and 3.0% to 14.0% in
2001.

Separate Account assets and liabilities are shown as separate captions in
the Balance Sheets. Deposits, investment income and net realized and
unrealized capital gains and losses of the Separate Accounts are not
reflected in the Financial Statements (with the exception of realized and
unrealized capital gains and losses on the assets supporting the guaranteed
interest option). The Statements of Cash Flows do not reflect investment
activity of the Separate Accounts.

INCOME TAXES

The Company is taxed at regular corporate rates after adjusting income
reported for financial statement purposes for certain items. Deferred income
tax expenses/benefits result from changes, during the year in cumulative
temporary differences between the tax basis and book basis of assets and
liabilities.

31

ING INSURANCE COMPANY OF AMERICA
(A WHOLLY-OWNED SUBSIDIARY OF ING LIFE INSURANCE AND ANNUITY COMPANY)
NOTES TO FINANCIAL STATEMENTS (continued)

2. INVESTMENTS

Fixed maturities available for sale as of December 31 were as follows:

At December 31, 2002 and 2001, net unrealized appreciation of $8.0 million
and $4.2 million, respectively, on available-for-sale fixed maturities
(including fixed maturities pledged to creditors in 2001) included $7.3
million and $3.9 million, respectively, related to experience-rated
contracts, which were not reflected in shareholder's equity but in other
policyholders' funds.

32

NOTES TO FINANCIAL STATEMENTS (continued)

2. INVESTMENTS (continued)

The amortized cost and fair value of total fixed maturities for the
year-ended December 31, 2002 are shown below by contractual maturity. Actual
maturities may differ from contractual maturities because securities may be
restructured, called, or prepaid.

At December 31, 2002 and 2001, fixed maturities with fair values of $6.5
million and $5.8 million, respectively, were on deposit as required by
regulatory authorities.

The Company did not have investments in equity securities at December 31,
2002 or 2001.

3. FINANCIAL INSTRUMENTS

ESTIMATED FAIR VALUE

The following disclosures are made in accordance with the requirements of
FAS No. 107, "Disclosures about Fair Value of Financial Instruments." FAS
No. 107 requires disclosure of fair value information about financial
instruments, whether or not recognized in the balance sheet, for which it is
practicable to estimate that value. In cases where quoted market prices are
not available, fair values are based on estimates using present value or
other valuation techniques. Those techniques are significantly affected by
the assumptions used, including the discount rate and estimates of future
cash flows. In that regard, the derived fair value estimates, in many cases,
could not be realized in immediate settlement of the instrument.

FAS No. 107 excludes certain financial instruments and all nonfinancial
instruments from its disclosure requirements. Accordingly, the aggregate
fair value amounts presented do not represent the underlying value of the
Company.

The following valuation methods and assumptions were used by the Company in
estimating the fair value of the below financial instruments:

FIXED MATURITIES: The fair values for the actively traded marketable bonds
are determined based upon the quoted market prices. The fair values for
marketable bonds without an active market are obtained through several
commercial pricing services which provide the estimated fair values. Fair
values of privately placed bonds are determined using a matrix-based pricing
model. The model considers the current level of risk-free interest rates,
current corporate spreads, the credit

33

NOTES TO FINANCIAL STATEMENTS (continued)

3. FINANCIAL INSTRUMENTS (continued)
quality of the issuer and cash flow characteristics of the security. Using
this data, the model generates estimated market values which the Company
considers reflective of the fair value of each privately placed bond. Fair
values for privately placed bonds are determined through consideration of
factors such as the net worth of the borrower, the value of collateral, the
capital structure of the borrower, the presence of guarantees and the
Company's evaluation of the borrower's ability to compete in their relevant
market.

CASH AND CASH EQUIVALENTS: The carrying amounts for these assets approximate
the assets' fair value.

INVESTMENT CONTRACT LIABILITIES (INCLUDED IN OTHER POLICYHOLDERS' FUNDS):

WITH A FIXED MATURITY: Fair value is estimated by discounting cash flows at
interest rates currently being offered by, or available to, the Company for
similar contracts.

WITHOUT A FIXED MATURITY: Fair value is estimated as the amount payable to
the contractholder upon demand. However, the Company has the right under
such contracts to delay payment of withdrawals which may ultimately result
in paying an amount different than that determined to be payable on demand.

The carrying values and estimated fair values of the Company's investment
contract liabilities at December 31, 2002 and 2001 were as follows:

Fair value estimates are made at a specific point in time, based on
available market information and judgments about various financial
instruments, such as estimates of timing and amounts of future cash flows.
Such estimates do not reflect any premium or discount that could result from
offering for sale at one time the Company's entire holdings of a particular
financial instrument, nor do they consider the tax impact of the realization
of unrealized gains or losses. In many cases, the fair value estimates
cannot be substantiated by comparison to independent markets, nor can the
disclosed value be realized in immediate settlement of the instruments. In
evaluating the Company's management of interest rate, price and liquidity
risks, the fair values of all assets and liabilities should be taken into
consideration, not only those presented above.

34

NOTES TO FINANCIAL STATEMENTS (continued)

4. NET INVESTMENT INCOME

Sources of net investment income were as follows:

Net investment income includes amounts allocable to experience rated
contractholders of $2.8 million for the year ended December 31, 2002,
$7.3 million for the year ended December 31, 2001, and $0.7 million and
$8.2 million for the one and eleven month periods ended December 31, 2000
and November 30, 2000, respectively. Interest credited to contractholders is
included in current and future benefits.

5. DIVIDEND RESTRICTIONS AND SHAREHOLDER'S EQUITY

In conjunction with the sale of Aetna, Inc. to ING AIH, the Company was
restricted from paying any dividends to its parent for a two year period
from the date of sale without prior approval by the Insurance Commissioner
of the State of Connecticut. This restriction expired on December 13, 2002.
The Company did not pay dividends to its parent in 2002 or 2001.

The Insurance Departments of the State of Florida and the State of
Connecticut (the "Department") recognize as net income and capital and
surplus those amounts determined in conformity with statutory accounting
practices prescribed or permitted by the Department, which differ in certain
respects from generally accepted accounting principles accepted in the
United States of America. Statutory net income was $2.5 million,
$1.1 million and $5.7 million for the years ended December 31, 2002, 2001,
and 2000, respectively. Statutory capital and surplus was $63.7 million and
$59.7 million as of December 31, 2002 and 2001, respectively.

As of December 31, 2002, the Company does not utilize any statutory
accounting practices, which are not prescribed by state regulatory
authorities that, individually or in the aggregate, materially affect
statutory capital and surplus.

For 2001, the Company was required to implement statutory accounting changes
("Codification") ratified by the National Association of Insurance
Commissioners ("NAIC") and state insurance departments. The cumulative
effect of Codification to the Company's statutory surplus as of
December 31, 2001 was an increase of $1.3 million.

35

NOTES TO FINANCIAL STATEMENTS (continued)

6. CAPITAL GAINS AND LOSSES ON INVESTMENT OPERATIONS

Realized capital gains or losses are the difference between the carrying
value and sale proceeds of specific investments sold.

Net realized capital gains (losses) of ($1.7) million, $1.3 million and
$(1.1) million for the years ended December 31, 2002 and 2001, and eleven
months ended November 30, 2000, respectively, allocable to experience rated
contracts, were deducted from net realized capital gains (losses) and an
offsetting amount was reflected in Other policyholders' funds. Net
unamortized gains (losses) allocable to experienced rated contractholders
were $0.1 million, $(1.1) million, and $(1.9) million at December 31, 2002
and 2001, and the eleven months ended November 30, 2000, respectively. There
were no net realized gains (losses) and net unamortized gains (losses) and
net unamortized gains (losses) allocable to experience rated contractholders
for the one month ended December 31, 2000.

Proceeds from the sale of total fixed maturities and the related gross gains
and losses (excluding those related to experience-related contractholders)
were as follows:

Changes in shareholder's equity related to changes in accumulated other
comprehensive income (unrealized capital gains and losses on securities
including securities pledged to creditors and excluding those related to
experience-rated contractholders) were as follows:

Net unrealized capital gains (losses) allocable to experience-rated
contracts of $7.3 million and $3.9 million at December 31, 2002 and 2001,
respectively, are reflected on the Balance Sheets in

36

NOTES TO FINANCIAL STATEMENTS (continued)

6. CAPITAL GAINS AND LOSSES ON INVESTMENT OPERATIONS (continued)
other policyholders' funds and are not included in shareholder's equity.
Shareholder's equity included the following accumulated other comprehensive
income (loss), which is net of amounts allocable to experience-rated
contractholders:

Changes in accumulated other comprehensive income related to changes in
unrealized gains (losses) on securities, including securities pledged to
creditors (excluding those related to experience-rated contractholders) were
as follows:

(1) Pretax unrealized holding gains (losses) arising during the year were
$1.2 million, $2.6 million, $0.5 million and $1.3 million for the
years ended December 31, 2002 and 2001, the one month ended
December 31, 2000 and the eleven months ended November 31, 2000,
respectively.
(2) Pretax reclassification adjustments for gains (losses) and other items
included in net income were $0.5 million, $0.9 million, $(0.3) and
$(0.7) million for the years ended December 31, 2002 and 2001, the one
month ended December 31, 2000 and the eleven months ended
November 31, 2000, respectively.

37

NOTES TO FINANCIAL STATEMENTS (continued)

7. INCOME TAXES

The Company is a subsidiary in the ILIAC consolidated federal income tax
return. The Company files a consolidated federal income tax return with the
ILIAC consolidated group. The Company has a tax allocation agreement with
ILIAC whereby the Company is charged by its parent for taxes it would have
incurred were it not a member of the consolidated group and is credited for
losses at the statutory tax rate.

Income taxes from continuing operations consist of the following:

38

NOTES TO FINANCIAL STATEMENTS (continued)

7. INCOME TAXES (continued)
Income taxes were different from the amount computed by applying the federal
income tax rate to income from continuing operations before income taxes for
the following reasons:

The tax effects of temporary differences that give rise to deferred tax
assets and deferred tax liabilities at December 31 are presented below:

39

NOTES TO FINANCIAL STATEMENTS (continued)

7. INCOME TAXES (continued)
Net unrealized capital gains and losses are presented in shareholder's
equity net of deferred taxes.

The Internal Revenue Service (the "Service") has completed examinations of
the federal income tax returns of the Company through 1997. Discussions are
being held with the Service with respect to proposed adjustments. Management
believes there are adequate defenses against, or sufficient reserves to
provide for, any such adjustments. The Service has commenced its
examinations for the years 1998 through 2000.

8. BENEFIT PLANS

The Company utilizes the employees of ING and its affiliates, primarily
ILIAC. The benefit plan charges allocated to the Company were not
significant for the years ended December 31, 2001, one month ended
December 31, 2000 or eleven months ended November 30, 2000.

As of December 31, 2001, the qualified defined benefit pension plan offered
by ILIAC ("Transition Pension Plan") to its employees was merged into the
ING Americas Retirement Plan. Accordingly, ILIAC transferred the net plan
assets of the Transition Pension Plan to ING North America Insurance
Corporation, the new plan sponsor, and recorded this transfer as a reduction
of paid-in-capital. There were no pension benefit charges allocated to the
Company from the ING Americas Retirement Plan for 2002.

During 2002, liabilities totaling $0.3 million were allocated to the Company
related to a Supplemental Excess Retirement Plan ("SERP") that covers
certain employees of ING Life Insurance Company of America and Aeltus,
affiliates of the Company.

9. RELATED PARTY TRANSACTIONS

RECIPROCAL LOAN AGREEMENT

The Company maintains a revolving loan agreement with ING AIH, a Delaware
corporation and affiliate, to facilitate the handling of unusual and/or
unanticipated short-term cash requirements. Under this agreement, which
became effective in June 2001 and expires on April 1, 2011, IICA can borrow
up to 0.5% of its statutory admitted assets as of the prior December 31 from
ING AIH. Interest on any IICA borrowings is charged at the rate of ING AIH's
cost of funds for the interest period plus 0.15%. Under this agreement, IICA
incurred an immaterial amount of interest expense for the years ended
December 31, 2002 and 2001. At December 31, 2002 and 2001, IICA did not have
any outstanding borrowings from ING AIH under this agreement.

CAPITAL TRANSACTIONS

The Company did not receive capital contributions in 2002, 2001 or 2000.

40

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

10. COMMITMENTS AND CONTINGENT LIABILITIES

LEASES

The Company occupies space that is leased by ILIAC or other affiliates.
Expenses associated with these offices are allocated on a direct and
indirect basis to the Company.

COMMITMENTS

At December 31, 2002 and 2001, the Company had no commitments or contingent
liabilities.

LITIGATION

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

41

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

10. COMMITMENTS AND CONTINGENT LIABILITIES (continued)
QUARTERLY DATA (UNAUDITED)

42

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Omitted pursuant to General Instruction I(2) of Form 10-K.

ITEM 11. EXECUTIVE COMPENSATION

Omitted pursuant to General Instruction I(2) of Form 10-K.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Omitted pursuant to General Instruction I(2) of Form 10-K.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Omitted pursuant to General Instruction I(2) of Form 10-K.

ITEM 14. CONTROLS AND PROCEDURES

a) Within the 90-day period prior to the filing of this report, the Company
carried out an evaluation, under the supervision and with the participation
of its management, including its Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of the Company's
disclosure controls and procedures (as defined in Rule 13a-14 of the
Securities Exchange Act of 1934). Based on that evaluation, the Chief
Executive Officer and the Chief Financial Officer have concluded that the
Company's current disclosure controls and procedures are effective in
ensuring that material information relating to the Company required to be
disclosed in the Company's periodic SEC filings is made known to them in a
timely manner.

b) There have not been any significant changes in the internal controls of the
Company or other factors that could significantly affect these internal
controls subsequent to the date the Company carried out its evaluation.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this report:

1. Financial statements. See Item 8 on Page 14.
2. Financial statement schedules. See Index to Financial Statement
Schedules on Page 44.

EXHIBITS

3.(i) Articles of Incorporation as restated January 1, 2002.
Incorporated by reference to the ING Insurance Company of America
Annual Report on Form 10-K for the year ending December 31, 2002
(File No. 33-81010), as filed on March 28, 2002.

43

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K (continued)
(ii) By-Laws, as amended and restated January 1, 2002. Incorporated by
reference to the ING Insurance Company of America Annual Report
on Form 10-K for the year ending December 31, 2002 (File No.
33-81010), as filed on March 28, 2002.

4.(a) Instruments Defining the Rights of Security Holders, Including
Indentures (Annuity Contracts)

Incorporated herein by reference to Registration Statement on
Form N-4, File No. 33-80750, as amended and filed on April 23,
1997.

Incorporated herein by reference to Registration Statement on
Form N-4, File No. 33-59749, as filed on June 1, 1995.

Incorporated herein by reference to Post-Effective Amendment
No. 4 to Registration Statement on Form N-4, File No. 33-59749, as
filed on April 16, 1997.

Incorporated herein by reference to Post-Effective Amendment
No. 6 to Registration Statement on Form N-4, File No. 33-59749, as
filed on November 26, 1997.

Incorporated herein by reference to Post-Effective Amendment
No. 8 to Registration Statement on Form N-4, File No. 33-59749, as
filed on April 17, 1998.

Incorporated herein by reference to Registration Statement on
Form S-2, File No. 33-63657, as filed on October 25, 1995.

Incorporated herein by reference to Pre-Effective Amendment No. 3
to the Registration Statement on Form S-2, File No. 33-63657, as
filed on January 17, 1996.

Incorporated herein by reference to Post-Effective Amendment No. 3
to Registration Statement on Form S-2, File No. 33-63657, as filed
on November 24, 1997.

10. Material Contracts (Management contracts / compensatory plans or
arrangements)

10.(a) Amended and Restated Asset Purchase Agreement by and among ING
Life Insurance Company, ING Life Insurance and Annuity Company,
The Lincoln National Life Insurance Company and Lincoln Life &
Annuity Company of New York, dated May 21, 1998, incorporated
herein by reference to ING Life Insurance and Annuity Company's
Form 10-Q filed on August 8, 1998.

10.(b) Distribution Agreement, dated as of December 13, 2000, between
Lion Connecticut Holdings Inc. and Aetna Inc., incorporated by
reference to ILIAC's Form 10-K filed on March 30, 2001.

10.(c) Employee Benefits Agreement, dated as of December 13, 2000,
between Lion Connecticut Holdings Inc. and Aetna Inc.,
incorporated by reference to ILIAC's Form 10-K filed on March 30,
2001.

44

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K (continued)
10.(d) Tax Sharing Agreement, dated as of December 13, 2000, among Lion
Connecticut Holdings Inc., Aetna Inc. and ING America Insurance
Holdings, Inc., incorporated by reference to ILIAC's Form 10-K
filed on March 30, 2001.

10.(e) Transition Services Agreement, dated as of December 13, 2000,
between Lion Connecticut Holdings Inc. and Aetna Inc.,
incorporated by reference to ILIAC's Form 10-K filed on March 30,
2001.

10.(f) Lease Agreement, dated as of December 13, 2000, by and between ING
Life Insurance Company and ING Life Insurance and Annuity Company,
incorporated by reference to ILIAC's Form 10-K filed on March 30,
2001.

10.(g) Real Estate Services Agreement, dated as of December 13, 2000,
between Aetna Inc. and ING Life Insurance and Annuity Company,
incorporated by reference to ILIAC's Form 10-K filed on March 30,
2001.

10.(h) 10 State House Square Services Agreement, dated as of
December 13, 2000, between Aetna Inc. and Lion Connecticut
Holdings Inc., incorporated by reference to ILIAC's Form 10-K
filed on March 30, 2001.

Exhibits other than these listed are omitted because they are not
required or not applicable.

(b) Reports on Form 8-K.

None.

45

INDEX TO FINANCIAL STATEMENT SCHEDULES

Schedules other than those listed above are omitted because they are not
required or not applicable.

46

REPORT OF INDEPENDENT AUDITORS

The Board of Directors
ING Insurance Company of America

We have audited the financial statements of ING Insurance Company of America as
of December 31, 2002 and 2001, and for each of the years then ended, and have
issued our report thereon dated March 21, 2003. Our audits also included the
financial statement schedules listed in Item 15. These schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion based on our audits.

In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.

/s/ Ernst & Young LLP

Atlanta, Georgia
March 21, 2003

47

SCHEDULE I
Summary of Investments
As of December 31, 2002
(Millions)

* See Notes 2 and 3 of Notes to Financial Statements.

48

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.

ING INSURANCE COMPANY OF AMERICA
(Registrant)

March 24, 2003 By /s/ Cheryl L. Price
- ------------------- -----------------------
(Date) Cheryl L. Price
Vice President, Chief Financial Officer and
Chief Accounting Officer
(Duly Authorized Officer and Principal
Financial Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated on or before March 27, 2003.

49

CERTIFICATION

I, Cheryl L. Price, certify that:

1. I have reviewed this annual report on Form 10-K of ING Insurance Company of
America;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and
(c) presented in this annual report our conclusion about the effectiveness
of the disclosure controls and procedures based on our evaluation as
of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):

(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies, defenses and
material weaknesses.

Date: March 24, 2003

By /s/ Cheryl L. Price
- --------------------------------------------------
Cheryl L. Price
Vice President, Chief Accounting Officer and Chief
Financial Officer
(Duly Authorized Officer and Principal Accounting
Officer)

50

CERTIFICATION

I, Keith Gubbay, certify that:

1. I have reviewed this annual report on Form 10-K of ING Insurance Company of
America;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and
(c) presented in this annual report our conclusion about the effectiveness
of the disclosure controls and procedures based on our evaluation as
of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):

(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies, defenses and
material weaknesses.

Date March 24, 2003

By /s/ Keith Gubbay
- --------------------------------------------------
Keith Gubbay
President
(Duly Authorized Officer and Principal Officer)

51

CERTIFICATION

Pursuant to 18 U.S.C. Section 1350, the undersigned officer of ING Insurance
Company of America (the "Company") hereby certifies that, to the officer's
knowledge, the Company's Annual Report on Form 10-K for the year ended
December 31, 2002 (the "Report") fully complies with the requirements of
Section 13 or 15(d), as applicable, of the Securities Exchange Act of 1934 and
that the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.

March 24, 2003 By /s/ Cheryl L. Price
- ---------------------------------------- -------------------------------------------------
(Date) Cheryl L. Price
Vice President, Chief Financial Officer and
Chief Accounting Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C.
Section 1350 and is not being filed as part of the Report or as a separate
disclosure document.

52

CERTIFICATION

Pursuant to 18 U.S.C. Section 1350, the undersigned officer of ING Insurance
Company of America (the "Company") hereby certifies that, to the officer's
knowledge, the Company's Annual Report on Form 10-K for the year ended
December 31, 2002 (the "Report") fully complies with the requirements of
Section 13 or 15(d), as applicable, of the Securities Exchange Act of 1934 and
that the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.

March 24, 2003 By /s/ Keith Gubbay
- ---------------------------------------- -------------------------------------------------
(Date) Keith Gubbay
President

The foregoing certification is being furnished solely pursuant to 18 U.S.C.
Section 1350 and is not being filed as part of the Report or as a separate
disclosure document.

53