2007 THIRD QUARTER. ING Group. Quarterly report Third quarter

Transcription

1 2007 THIRD QUARTER ING Group Quarterly report Third quarter

2 REPORTING STRUCTURE ING Group Insurance Europe Insurance Americas Insurance Asia/Pacific Corporate Line Insurance ING Group Banking Wholesale Banking Retail Banking ING Direct Corporate Line 2 ING Group - Reporting Structure

3 Content GROUP Chairman s statement 7 Main events 9 Consolidated income statement 10 Consolidated balance sheet 13 Group shareholders equity 14 Key figures 15 Capital management 16 Assets under Management 18 INSURANCE 20 Insurance Total 22 Life & Non-life Insurance 24 Insurance Europe 26 Life Insurance The Netherlands 28 Non-life Insurance The Netherlands 30 Insurance Belgium 32 Life Insurance Central & Rest of Europe 34 Insurance Americas 36 Life Insurance United States 38 Non-life Insurance Canada 42 Total Insurance Latin America 44 Insurance Asia/Pacific 46 Life Insurance Australia & New Zealand 48 Life Insurance Japan 50 Life Insurance South Korea 52 Life Insurance Taiwan 54 Life Insurance Rest of Asia 56 Corporate Line Insurance 58 BANKING 60 Banking Total 62 Wholesale Banking 64 General Lending & PCM 66 Structured Finance 68 Leasing & Factoring 70 Financial Markets 72 ING Real Estate 74 Retail Banking 76 The Netherlands 78 Belgium 80 Poland 82 Other 84 Private Banking 86 ING Direct 88 Corporate Line Banking 92 Appendices 94 Cash flow statement 94 Market indices 95 Total consolidated profit and loss account 95 Glossary 96 Note ING s management structure is organised around 6 Lines of Business (the business segments ). To better understand the performance of these segments this report also provides additional information such as per region or per type of product. ING Group - Content 3

4 4 ING Group - Group ING Group

5 ING results demonstrate resilience in challenging environment. Strong risk management, balance sheet and a large customer deposit base enabled ING to manage the liquidity crisis. The commercial performance of the business remained robust in the third quarter with strong life insurance sales in Central Europe and Asia, and volume growth in banking. ING Group - Group 5

6 Disclaimer The ING Group Condensed consolidated interim accounts for the period ended 30 September 2007 (in accordance with IAS 34 Interim Financial reporting and including the review report from Ernst & Young) are included in the ING Group Statistical Supplement, which is available on In preparing the financial information in this quarterly report, the same accounting principles are applied as in the 3Q 2007 interim accounts. All figures in this quarterly report are unaudited. Small differences are possible in the tables due to rounding. Certain of the statements contained in this document are statements of future expectations and other forwardlooking statements. These expectations are based on management s current views and assumptions and involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those in such statements due to, among other things, (i) general economic conditions, in particular economic conditions in ING s core markets, (ii) changes in the availability of, and costs associated with, sources of liquidity such as interbank funding, as well as conditions in the credit markets generally, including changes in borrower and counterparty creditworthiness, (iii) performance of financial markets, including developing markets, (iv) the frequency and severity of insured loss events, (v) mortality and morbidity levels and trends, (vi) persistency levels, (vii) interest rate levels, (viii) currency exchange rates, (ix) general competitive factors, (x) changes in laws and regulations, and (xi) changes in the policies of governments and/or regulatory authorities. ING assumes no obligation to update any forwardlooking information contained in this document. 6 ING Group - Group

7 GROUP Chairman s Statement The third quarter was marked by turmoil in financial markets as concerns about US subprime lending triggered a liquidity crisis and a repricing of risk. Risk management protected us against the direct impact of this turmoil, demonstrating ING s resilience in a challenging environment, said Michel Tilmant, Chairman of ING Group. Our strong balance sheet and large customer deposit base enabled ING to manage the liquidity crisis with only a negligible increase in funding costs. We incurred no material impairments or revaluations on our subprime residential mortgagebacked securities or leveraged finance transactions. Revaluations of debt securities held were essentially flat as lower interest rates offset credit-spread widening in the third quarter. The commercial performance of the business remained robust. ING achieved strong sales of life insurance in Central Europe and Asia as well as variable annuities in the US. That drove a 47.5% increase in the value of new business to EUR 298 million. The banking businesses continued to show solid volume growth in mortgages, term deposits and current accounts. That was partially offset by outflows from high-balance customers at ING Direct UK, where management actions are being taken to stop the outflow. The market turbulence has made the business environment more challenging. Strategic trading results in Wholesale Banking were impacted by the market turmoil and deal flow slowed in leveraged finance. Revaluations on real estate and private equity investments were less favourable than in recent quarters. Equity market volatility has increased. The yield curve has remained flat, and competition for deposits is intensifying for Retail Banking and ING Direct. The fundamentals underpinning our businesses remain strong and will support growth over the long term. We continue to invest to support ING s wealth management strategy, including the acquisitions of Oyak Bank in Turkey and the Latin American pension business of Santander. Our stake in the Bank of Beijing increased its market value more than ten-fold to EUR 2.1 billion following that bank s IPO in the third quarter. We also continue to invest in existing businesses to optimise our competitive position. The integration of Postbank and ING Bank in the Netherlands is on track. Investments are also planned to optimise the retail distribution model in Belgium to boost profit there by more than EUR 100 million by At Wholesale Banking we are introducing new initiatives to improve efficiency and stimulate growth, which are expected to generate EUR 30 million in cost savings and EUR 100 million in revenue benefits by ING Group - Group 7

8 8 ING Group - Group

9 GROUP Main Events ING Trust On January 4, 2007, ING announced the intention to sell ING Trust to management and Foreman Capital. The sale was completed on July 3, 2007 and has no material impact on the p&l account. AZL On January 9, 2007, ING Group signed a letter of intent to acquire AZL, a Dutch provider of pension fund management services, for EUR 65 million. The acquisition was completed on April 5, 2007 and has no material impact on the capital adequacy ratios of ING Group. Belgian insurance business On January 19, 2007, ING announced to restructure its Belgian insurance business. On June 29, 2007, ING reached an agreement with P&V Verzekeringen to sell its Belgium Broker and Employee Benefits insurance business for EUR 750 million. The transaction, which was closed on September 28, resulted in a net profit of EUR 418 million in 3Q 2007 and an improvement of 130 bp of the debt/ equity ratio of ING Group. Regio Bank On May 14, 2007, ING reached a final agreement with SNS REAAL to sell Regio Bank for a purchase price of EUR 50.5 million. The sale was closed on July 1, The transaction resulted in a net profit of EUR 26 million in 3Q Dutch retail market On May 16, 2007, ING announced to reinforce its position in the Dutch retail market by joining the Postbank and ING Bank under a single ING brand, as of A total cumulative investment for implementation is expected of EUR 890 million over a five-year period and is expected to generate additional annual pre-tax earnings of EUR 440 million as of FTEs will reduce by 2,500 over a five-year period. Seguros ING S.A. de C.V. On May 16, 2007, Seguros ING S.A. de C.V. was notified by a federal appellate court in Mexico City about a final ruling in the judicial process with regard to a civil claim involving Grupo Fertinal S.A. and certain affiliates. According to this ruling, Grupo Fertinal has been awarded approximately USD 94 million plus interest under the policy. The risk in the policy is expected to be covered by provisions taken as well as reinsurance coverage. Buyback On May 16, 2007, ING announced a plan to buyback EUR 5 billion in shares starting in June 2007 and continuing for approximately 12 months. At the end of September million shares were bought for approximately EUR 1.7 billion. Nationale Borg On June 1, 2007, ING completed the sale of Nationale Borg to HAL Investments BV and Egeria. The sale has no material impact on the p&l account. Landmark Investment Management On June 18, 2007, ING reached an agreement with Morgan Stanley Private Equity Asia, Landmark s CEO Hong Choi and Kyobo Life to acquire full ownership of Landmark Investment Management Co. Ltd, the 12th largest asset manager in Korea. Financial details were not disclosed, but there was a negative impact on the debt/equity ratio of 65 bp. OYAK On June 19, 2007, ING announced that it has reached an agreement with OYAK to acquire Oyak Bank (Turkey). Under the terms of the agreement, ING will acquire 100% of the shares in Oyak Bank for a cash consideration of EUR 2.0 billion (USD 2.7 billion), which will be financed entirely from existing internal resources. The transaction is expected to result in a decrease in the Tier 1 ratio of ING Bank NV of approximately 50 bp. The proposed purchase will have no impact on the ongoing share buyback programme. ING expects to close the transaction in 4Q Buyback preference shares On July 2, 2007, ING reached an agreement with Fortis Insurance Netherlands to purchase 28 million A preference shares of ING for a total of EUR 102 million. On October 15, 2007, ING reached an agreement with ABN Amro to purchase 29 million A preference shares of ING, for a total of EUR 106 million, in two tranches: 19 million shares on October 15, 2007 and 10 million shares on December 24, Latin America Pension business On July 27, 2007 ING reached an agreement with Santander to acquire its Latin American pension businesses. ING will acquire 100% of Santander s shares for EUR 960 million, the transaction is expected to close during end of 2007 and in early Partnership Piraeus Bank On October 1, 2007, ING announced that it reached final agreement with Piraeus Bank on a 10-year exclusive distribution partnership in Greece covering life, employee benefits, pension insurances and retail banking products. IPO China Bank of Beijing In the third quarter 2007 the China Bank of Beijing pursued a successful public listing and raised new capital to fund its further growth ambition. Two years ago ING acquired 19.9% shareholding in this company for EUR 166 million. IPO SulAmérica In October SulAmérica completed an initial public offering of 27% of the company, raising EUR 298 million to be used to reduce debt and for investment in the business. As a consequence ING reduced its position in SulAmérica from 49% to 36%. ING Life Korea In the third quarter ING Group completed the purchase of an additional 5.1% stake in ING Life Korea from Kookmin Bank for EUR 153 million. ING Group - Group 9

10 GROUP Consolidated income statement ING Group: Consolidated Income Statement in EUR million 3Q2007 3Q2006 Change 2Q2007 Change 9M2007 9M2006 Change Gross premium income 11,395 10, % 11, % 34,240 35, % Interest result banking operations 2,257 2, % 2, % 6,703 6, % Commission income 1,222 1, % 1, % 3,649 3, % Total investment & other income 3,560 3, % 4, % 11,031 9, % Total underlying income 18,435 17, % 18, % 55,623 54, % Underwriting expenditure 11,983 11, % 11, % 35,487 36, % Operating expenses 3,685 3, % 3, % 11,074 10, % Other interest expenses % % % Addition to loan loss provisions / impairments % % 94 6 n.a. Total underlying expenditure 16,048 15, % 15, % 47,517 47, % Underlying profit before tax 2,388 2, % 3, % 8,106 7, % Taxation % % 1,339 1, % Underlying profit before minority interests 2,017 1, % 2, % 6,767 5, % Minority interests % % % Underlying net profit 1,946 1, % 2, % 6,553 5, % Net gains/losses on divestments Net profit from divested units Special items after tax Net profit (attributable to shareholders) 2,306 1, % 2, % 6,759 5, % Earnings per share (in EUR) % % % Earnings Analysis: Third quarter ING posted 46.8% higher earnings in the third quarter, boosted by a gain of EUR 455 million on the sale of part of ING s stake in ABN Amro and EUR 418 million gain on the sale of the Belgium brokerage business. The underlying net profit, which excludes certain items such as the gain on the Belgium brokerage business, was 19.2% higher compared with the previous year, but excluding the ABN Amro gain 8.6% lower. Currencies had a negative impact of approximately EUR 24 million. ING GROUP Underlying profit before tax (EUR million) Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 Underlying profit before tax from insurance increased 29.0% to EUR 1,285 million, driven by the ABN Amro gain. Excluding that gain underlying profit before tax was down by 16.7%. Life results were down 18.8% excluding the ABN Amro gain, especially in the Netherlands, US and Asia mainly as a consequence of positive one-offs in the prior year, offset by higher results in Central & Rest of Europe. Non-life results were 11.7% lower excluding the ABN Amro gain, mainly due to higher claims in Canada and Mexico. Despite the market and credit turmoil, underlying profit before tax from banking was only down 2.4%. Structured Finance and Financial Markets, which are by nature volatile, were particularly affected by the difficult market environment. ING Direct continued to invest in expanding its product offering and geographical footprint, while its profit before tax declined, mainly due to net outflows in the UK. Strong volume growth of mortgages and current accounts offset a further narrowing of the interest margin. Risk costs were relatively low in 3Q, but increased to EUR 69 million from EUR 44 million in the third quarter last year. Operating expenses were up 8.4%, mainly as a consequence of continued investments in growth areas such as Central Europe, Asia and ING Direct. ING again benefited from a low tax rate, supported by high taxexempted gains and a lower statutory tax rate in the Netherlands. The underlying effective tax rate was 15.5% compared with 19.7% in the third quarter last year. We expect the full year tax rate to be in the range of 15-20%. Net profit improved 46.8% to EUR 2,306 million, supported by the EUR 418 million gain on the sale of the Belgium brokerage business and a EUR 26 million gain on the sale of Regio Bank. Net profit also includes EUR 54 million additional restructuring charges in the Bank and EUR 29 million hedge expenses for the Oyak 10 ING Group - Group

11 ING Group: Key Figures in EUR million 3Q2007 3Q2006 Change 2Q2007 Change 9M2007 9M2006 Change Underlying 1 profit before tax Insurance Europe % % 1,483 1, % Insurance Americas % % 1,606 1, % Insurance Asia/Pacific % % % Corporate Line Insurance Underlying profit before tax from Insurance 1, % 1, % 4,291 3, % Wholesale Banking % % 1,808 1, % Retail Banking % % 1,620 1, % ING Direct % % % Corporate Line Banking Underlying profit before tax from Banking 1,103 1, % 1, % 3,816 3, % Underlying profit before tax 2,388 2, % 3, % 8,106 7, % Taxation % % 1,339 1, % Profit before minority interests 2,017 1, % 2, % 6,767 5, % Minority interests % % % Underlying net profit 1,946 1, % 2, % 6,553 5, % Net gains/losses on divestments Net profit from divested units Special items after tax Net profit (attributable to shareholders) 2,306 1, % 2, % 6,759 5, % Net profit per share (in EUR) % % % KEY FIGURES Net return on equity % 23.8% 23.1% Assets under management (end of period) 636, , , % Total staff (FTEs end of period) 119, , , % 1 Underlying profit before tax and underlying net profit are non-gaap measures for profit excluding divestments and special items 2 Year to date Note: small differences are possible in the tables due to rounding Bank acquisition. In the fourth quarter, additional charges to the restructuring provisions in the Bank are planned. Insurance A softening of the real estate and private equity markets put some pressure on investment income. Underlying profit before tax from insurance rose 29.0% to EUR 1,285 million, including EUR 588 million in realised gains on equities, of which EUR 455 million was from the sale of ABN Amro shares. ING s proprietary investment portfolio is also expected to produce substantial gains in the fourth quarter of this year, including approximately EUR 1.0 billion on stakes in ABN Amro and Numico. Total impairments on the fixed income portfolio were EUR 23 million in the third quarter. Life results increased 41.3%, but dropped 18.8% excluding the ABN Amro gains. The Netherlands showed lower profits resulting from lower revaluations of real estate and private equity investments, while the US was negatively affected by a decline in market-related Deferred Acquisition Costs (DAC) and reserve unlocking. Asia also showed lower life results due to the negative impact of hedge results in Japan, but life results in Central & Rest of Europe improved 15.1%, benefiting from growth in assets under management. Non-life results were 1.9% higher, but excluding the share of the ABN Amro gain in non-life declined 11.7% as the Americas experienced higher claims in Canada and Mexico. The Netherlands improved thanks to higher production and favourable claims experience. Gross premium income increased 5.0%, mainly due to increases in Asia/Pacific, Central Europe and the US, following strong sales of wealth accumulation products. Excluding negative currency impacts, gross premium income improved 8.0%. Assets under management of Insurance were flat in the third quarter, but up 9.1% from a year earlier. Operating expenses increased 14.3% or 18.7% excluding currency effects, partly due to large releases from employee benefit provisions in the third quarter last ING Group - Group 11

12 year. The growth excluding the releases from employee benefits provisions was 7.2%, primarily as a consequence of investments in growth in Central Europe and Asia/Pacific. New sales were up 25.0%, mainly due to strong growth of single-premium products resulting from a shift from traditional life insurance products to unit-linked wealth accumulation products. Total single-premium sales were up 47.8%, driven by strong growth in the US, Australia, Japan and Taiwan. The value of new business showed a strong improvement in the third quarter from the second, up 44.0% to EUR 298 million, driven by the introduction of second pillar pension fund in Romania, elevated sales in Taiwan after a sales push in anticipation of regulatory changes, and extraordinary sales in the US Institutional Markets business. Compared with the third quarter last year, the value of new business increased 47.5% or EUR 96 million thanks to improvements in all business lines. Banking Underlying profit before tax declined 2.4% mainly as a consequence of the market and credit tumult. In Wholesale Banking, results of Structured Finance and Financial Markets were down resulting from the changed market environment, partly offset by continued good Real Estate results. ING Direct suffered from net outflows in the UK where clients are very rate-sensitive, and showed a decline in profit before tax of 32.2%. Retention actions have been taken to reduce the outflows. Retail Banking continued to produce double-digit growth in profit before tax. The interest result declined 1.7% in spite of higher volumes as the interest margin narrowed to 0.91% from 1.06% in the third quarter last year, mainly caused by a flattening of the yield curve and changes in the product mix. Relative to the second quarter, the interest margin narrowed 4 basis points. Strong volume growth was led by significantly higher sales of mortgages at ING Direct, and growth of current accounts and term deposits at Retail Banking. Net risk costs are still low, but increased to EUR 69 million compared with EUR 25 million in the second quarter and EUR 44 million in the third quarter last year. The loan portfolio remained healthy with limited inflow of new impaired files, although a gradual return to more normalised levels is expected over the coming years. Operating expenses rose 5.2%, fully caused by investments to support the growth of the business, notably at ING Direct, ING Real Estate and the retail banking activities in developing markets as well as Formula One sponsoring costs. Expenses in the mature business remained flat. Continued pricing discipline and capital efficiency led to a further improvement in returns with the underlying risk-adjusted return on capital (RAROC) after tax up to 23.4% from 20.6% in the first nine months of Risk Management Credit markets have become turbulent amid concerns about US subprime mortgages, collateralised debt obligations (CDOs), collateralised loan obligations (CLOs) and leveraged finance. This has resulted in a general widening of credit spreads, reduced price transparency, reduced liquidity, credit rating agency downgrades and increased volatility across all markets. Resulting market corrections affected our trading books and asset-backed securities (ABS) through mark-to-market valuations. In addition, these market conditions have led to reduced activity and liquidity in the syndication of leveraged finance activities. To date, this market disruption has had a limited impact on ING. Total impairments in the ABS portfolio were EUR 7 million in 3Q. Specifically, there was EUR 2 million impaired in the US subprime residential mortgage-backed securities (RMBS) and another EUR 5 million in CDO/CLOs. There were no impairments in the US Alt-A RMBS portfolio. At Wholesale Banking there were negative fair value changes in the proprietary trading book that were reflected in the P&L in 3Q, of which EUR 10 million relates to CDOs and EUR 15 million to US subprime. Overall, ING considers its subprime, Alt-A and CDO/CLO exposure to be of relatively high quality. ING does not originate US subprime mortgages. At the end of 3Q, ING s total exposure to US subprime RMBS exposure amounted to EUR 3.1 billion. Alt-A RMBS exposure was EUR 26.9 billion and CDOs and CLOs amounted to EUR 1.1 billion. Changes in revaluation reserves, which on an after-tax basis run through shareholders equity in the balance sheet, were limited. The US subprime RMBS portfolio was fair valued at 96% at the end 3Q against 98% at 31 July The Alt-A RMBS portfolio was fair valued at 98% against 99% in July, while the CDO/CLO book was fair valued at 96%, unchanged from July. The decline in revaluation reserves has been limited as the general widening of credit spreads was partly offset by lower interest rates in the US. Moreover, this demonstrates that the quality of the ABS portfolio is relatively high, as illustrated by the high credit ratings and the very limited number of securities that were downgraded by the rating agencies. The fact that market values of the CDO/CLO portfolios held up well is mainly caused by the fact that the portfolio consists of relatively highly rated tranches and the use of derivatives. ING s leveraged finance pipeline is limited and transactions are in various stages of syndication and negotiation. At the end of the third quarter ING had a leveraged finance pipeline of EUR 2.4 billion, up from EUR 2.3 billion at 31 July. A small markdown of EUR 29 million on leveraged finance deals was taken at the Wholesale Bank to reflect the decrease in fair value during the underwriting period. 12 ING Group - Group

13 GROUP Consolidated balance sheet ING Group: Consolidated Balance Sheet ING Group ING Verzekeringen NV ING Bank NV Holdings/Eliminations in EUR million 30 Sept Dec Sept Dec Sept Dec Sept Dec 06 Cash and balances with central banks 13,397 14,326 2,953 3,017 10,816 11, Amounts due from banks 51,470 39,868 51,470 39,868 Financial assets at fair value through P&L 339, , , , , , Investments 296, , , , , ,091-2 Loans and advances to customers 529, ,437 28,318 37, , , Reinsurance contracts 6,119 6,529 6,119 6,529 Investment in associates 5,228 4,343 4,007 3,151 1,429 1, Investment property 5,129 6,974 1,281 3,310 3,848 3,665-1 Property and equipment 6,120 6, ,051 5,154 4,980 Intangible assets 4,019 3,522 3,698 3, Deferred acquisition costs 10,652 10,163 10,652 10,163 Other assets 37,651 31,063 12,753 10,601 24,946 20, Total assets 1,306,013 1,226, , , , ,985-1,804-2,449 Shareholders equity (in parent) 38,859 38,266 21,255 21,917 23,024 21,298-5,420-4,949 Minority interests 2,177 2, ,770 1,449 1, Total equity 41,036 41,215 22,185 23,687 24,473 22,502-5,622-4,974 Preference shares Subordinated loans 6,502 6,014 3,871 4,043 18,960 18,073-16,329-16,102 Debt securities in issue 72,058 78,133 4,592 5,439 61,092 67,464 6,374 5,230 Other borrowed funds 26,325 29,639 10,393 16,015 15,932 13,624 Insurance and investment contracts 271, , , ,683 Amounts due to banks 148, , , ,839 Customer deposits and other funds on deposits 529, , , ,775-1, Financial liabilities at fair value through P&L 166, ,611 1, , , Other liabilities 44,238 38,278 15,731 14,974 28,656 23, Total liabilities 1,264,977 1,185, , , , ,483 3,818 2,525 Total equity and liabilities 1,306,013 1,226, , , , ,985-1,804-2,449 Balance sheet Consolidated assets increased by EUR 80 billion or 6.5% compared with December 2006 to EUR 1,306 billion. Financial assets at fair value through profit or loss increased EUR 22 billion, or 6.9%. Insurance operations accounted for EUR 10 billion of this rise, mainly due to an increase in investments for risk of policyholders of EUR 9 billion. Banking operations accounted for EUR 12 billion of the rise, driven by an increase in trading derivatives of EUR 6 billion, trading portfolio shares of EUR 4 billion and trading portfolio bonds of EUR 2 billion. Investments decreased EUR 15 billion or -4.7%. Insurance operations accounted for EUR 6 billion of this decrease due to the sale of the brokerage business of ING Belgium (EUR 4 billion) and the sale of EUR 2 billion of ABN Amro shares. At the Bank, the EUR 9 billion decrease is largely due to the sale of a part of the bond portfolio in Belgium (EUR 5 billion) and in The Netherlands (EUR 3 billion) during 1Q Loans and advances to customers increased by EUR 55 billion or 11.7% to EUR 530 billion. In the insurance operations loans and advances decreased by EUR 9 billion, due to the sale of Nationale-Nederlanden mortgages (NNHB) to ING Bank. The banking operations increased loans and advances by EUR 64 billion or 14.6% this year. The main contributors to this strong growth are ING Direct (EUR 17 billion), ING Belgium (EUR 6 billion) and the Netherlands. Dutch corporate loans increased by EUR 16 billion. Residential mortgages in the Netherlands increased by EUR 13 billion of which EUR 9 billion from NNHB and EUR 5 billion from commercial growth. The sale of Regio Bank had a negative influence of EUR 1 billion on the Dutch mortgage book. On the liability side, customer deposits and other funds on deposit in the banking operations increased by EUR 35 billion or 7.0% compared with December This robust growth is mainly caused by EUR 22 billion higher current accounts and EUR 19 billion higher term deposits. The strong growth of financial liabilities at fair value through profit or loss by EUR 20 billion mainly stems from borrowing/repos (EUR 13 billion) and trading derivatives (EUR 7 billion) at the banking operations. At the insurance operations, other borrowed funds decreased by EUR 6 billion after redemption of both debt securities issued and loans from credit institutions. ING Group - Group 13

14 GROUP Group shareholders equity ING Group: Change in Shareholders Equity ING Group ING Verzekeringen NV ING Bank NV Holdings/Eliminations in EUR million 3Q2007 9M2007 3Q2007 9M2007 3Q2007 9M2007 3Q2007 9M2007 Shareholder equity beginning of period 38,166 38,266 22,572 21,917 20,442 21,298-4,848-4,949 Net profit for the period 2,306 6,759 1,504 4, , Unrealised revaluations of equity securities 2,141 3, ,062 1,920 1, Unrealised revaluations of debt securities 73-3, , ,053 Deferred interest crediting to life policyholders , ,113 Realised gains equity securities released to P&L , , Realised gains debt securities released to P&L Change in cashflow hedge reserve Other revaluations Change in treasury shares , ,413 Exchange rate differences Issue of shares Cash dividend -1,414-2,999-1,700-2,300-1, Employeestock option and share plans Other Total changes , ,582 1, Shareholders equity end of period 38,859 38,859 21,255 21,255 23,024 23,024-5,420-5,420 Equity Shareholders equity increased by EUR 0.7 billion or 1.8% in 3Q This increase is mainly driven by net profit in 3Q and the rise in the unrealised revaluation of equity securities. The latter is driven by a EUR 1.9 billion positive revaluation of ING s share in Bank of Beijing following its IPO in 3Q. The positive factors are partly offset by the pay-out of cash dividend to shareholders, the increase in treasury shares following the buyback programme and the hedging of employee share options and adverse exchange rate changes. The realisation of capital gains on shares, including ABN Amro, have no impact on shareholders equity as they are offset by an identical reduction in the revaluation reserve equity securities. The revaluation reserve on debt securities was EUR -1.1 billion (Insurance: EUR -0.5 billion, Bank: EUR -0.6 billion) at the end of 3Q, compared to EUR 2.8 billion (Insurance: EUR 2.2 billion, Bank: EUR 0.6 billion) at the end of During 3Q the revaluation reserve debt securities remained fairly stable as the revaluation improved by EUR 73 million, mainly driven by somewhat lower interest rates in Europe and the US. The revaluation reserve debt securities has no impact on the solvency nor on the leverage ratios. Shareholders equity per share increased from EUR at the end of December 2006 to EUR at the end of September The total number of shares outstanding in the market declined from 2,152 million at the end of 2006 to 2,127 at the end of 3Q. The number of shares in the market is determined by the total number of shares outstanding minus the treasury shares. The total number of shares outstanding actually increased from 2,205 million to 2,226 million. This increase is mainly driven by the exercise of warrants B, which has increased the number of shares outstanding by approximately 16 million this year. At the end of September 2007, 9.3 million warrants B, which are entitled to acquire 18.6 million ING shares, were outstanding. The warrants expire on January 5, IPO Bank of Beijing lifts shareholders equity ING holds treasury shares as a result of the buyback programme and the hedging programme for employee share options. The number of treasury shares almost doubled in 2007 from 52.7 million at 2006 year-end to 99.7 million at the end of 3Q. As a result, the number of shares outstanding in the market has decreased this year. Outstanding number of ING ordinary shares in million Balance 1 January ,152 Exercised warrants B 16 Issued for share based options 5 Delta hedge portfolio 4 Share buyback programme -51 Balance 30 September ,126 Daily average 2, ING Group - Group

15 GROUP Key figures ING Group: Key Figures Year to Date Annual Figures In EUR million 9M2007 9M2006 FY2006 FY2005 FY2004 FY FY Income Insurance operations 45,762 45,142 59,642 57,403 55,602 53,223 59,729 Banking operations 10,917 10,581 14,195 13,848 12,678 11,680 11,201 Total income 2 56,526 55,571 73,621 71,120 68,159 64,736 70,913 Operating expenses Insurance operations 4,110 3,846 5,275 5,195 4,746 4,897 5,203 Banking operations 7,334 6,694 9,087 8,844 8,795 8,184 8,298 Total operating expenses 11,444 10,540 14,362 14,039 13,541 13,081 13,501 Impairments/addition to loan loss provision ,288 2,099 Insurance profit before tax 4,750 3,595 4,935 3,978 4,322 3,506 4,453 Banking profit before tax 3,490 3,872 5,005 4,916 3,418 2,371 1,468 Total profit before tax 8,241 7,467 9,940 8,894 7,740 5,877 5,921 Taxation 1,268 1,621 1,907 1,379 1,709 1,490 1,089 Minority interests Net profit 6,759 5,591 7,692 7,210 5,755 4,043 4,500 Figures per Ordinary share (EUR) Net profit Distributable net profit Dividend Shareholders equity (in parent) Balance Sheet (in EUR billion) Total assets 1,306 1,221 1,226 1, Shareholders equity (in parent) Capital Ratios (%) ING Group debt/equity ratio 9.1% 9.4% 9.0% 9.4% 12.6% Insurance capital coverage ratio 280% 256% 274% 255% 204% 180% 169% Insurance debt/equity ratio 13.4% 13.0% 14.2% 13.4% 14.4% Bank Tier-1 ratio 7.39% 7.48% 7.63% 7.32% 6.92% 7.59% 7.31% Market capitalisation (in EUR billion) Ordinary shares outstanding (million) 2,226 2,205 2,205 2,205 2,205 2,115 1,993 Preference shares outstanding (million) Warrants B in issue until 5 January 2008 (million) Key Performance Indicators - Net return on equity (ROE) 23.8% 23.1% 23.5% 26.6% 25.4% 21.5% 17.4% - Net profit growth 21% 4% 7% 25% n.a. -10% -2% Insurance - Value of new life business Internal rate of return 13.4% 13.8% 13.3% 13.2% 12.1% 10.9% 11.5% - Combined ratio (non-life) 97% 91% 91% 95% 94% 98% 102% Banking - Cost/income ratio (total) 67.2% 63.3% 64.0% 63.9% 69.4% 70.1% 74.1% - RAROC after tax (total) 21.7% 19.8% 19.7% 22.6% 14.5% Assets under management (in EUR billion) Staff (FTEs end of period) 123, , , , , , , Figures according to Dutch GAAP 2. Including inter-company eliminations ING Group - Group 15

16 GROUP Capital Management ING s Capital Base and Key Ratios ING Group ING Insurance ING Bank In EUR million 30 September June September June September June 07 Shareholders equity (in parent) 38,859 38,166 21,255 22,572 23,024 20,442 Group hybrid capital 7,911 8,245 1,569 1,634 6,224 6,397 Core debt 4,688 4,788 Total capitalisation 51,458 51,199 22,824 24,206 29,249 26,840 Adjustments to equity: Revaluation reserves fixed income etc Revaluation reserves excluded from Tier-1-3,119-1,154 Insurance hybrid capital 2,250 2,250 Minorities ,429 1,375 Deductions Tier-1 (as of 2007) Available regulatory capital 25,628 27,351 27,573 26,903 Other qualifying capital 12,544 12,390 DAC/ViF adjustment (50%) 3,491 3,381 Group leverage (core debt) -4,688-4,788 Adjusted Equity (e) 46,591 46,594 29,118 30,731 40,118 39,294 Key Performance Indicators Debt/equity ratios remain well within target ING comfortably managed its sound liquidity position throughout 3Q Share buyback in progress, buyback of preference shares Capital market transactions Due to the turbulence in the financial markets, ING did not conduct major benchmark capital market transactions in the third quarter. However, in early October ING raised USD 1.5 billion in hybrid Tier-1 capital in the US retail market in a very successful transaction. Given the disruption in the asset backed commercial paper (ABCP) market that started in August, ING reconsidered the usage of its two own asset conduits: Mane and Simba. The conduits were set up to reduce regulatory capital under Basel I. The transition to Basel II will make them largely obsolete. Given the increase in funding costs in the ABCP market since August, and given ING s strong liquidity position, ING has decided to wind them down. This has added approximately EUR 6 billion to ING Bank s RWAs, which has been booked in 3Q. No further impact is expected in 4Q. On 1 October ING closed a liquidity transaction which increased ING s already substantial liquidity buffer. Following the transaction, EUR 10.8 billion in ING Bank Dutch residential mortgages were sold to a special purpose vehicle (Orange Lion), which has funded this purchase with EUR 9.9 billion in AAA rated loans and a subordinated loan of EUR 0.9 billion. All of the issued notes have been bought by ING Bank, who can use the AAA notes as collateral for liquidity. As a result, the current liquidity buffer created through internal securitisations increased to EUR 29.3 billion. ING made progress with its EUR 5.0 billion share buyback programme, which is expected to run until June In the third quarter, 19.74% of the programme was executed as 31,939,198 shares were bought back at an average price of EUR As of the end of September 2007, the programme is 33.16% complete. The impact of the share buyback was partially offset by the exercise of 837,746 warrants B, leading to the issue of 1,675,492 shares at a price of EUR in 3Q As part of ING s periodic rebalancing of the delta hedge portfolio for employee options, ING Group sold 4,360,000 (depositary receipts for) ordinary shares from the portfolio. The shares were sold on the open market between 14 and 16 August at an average price of EUR per share. In the future, the quarterly rebalancing will take place on the first Tuesday of March, June, September and December. This means that the next rebalancing will commence on 4 December. On 15 October ING Group announced it had reached agreement with ABN Amro to purchase 28,843,989 depository receipts for A preference shares of ING Group. This transaction will be conducted in two tranches. The first tranche consists of 18,843,989 shares, purchased at a price of EUR 3.65 per share and was completed on 15 October The second tranche of 10,000,000 shares will be purchased at a price of EUR 3.68 per share and is expected to settle on 24 December Earlier on 2 July 2007, ING Group agreed to repurchase 16 ING Group - Group

17 Capital base: ING Group In EUR million 30 September June 07 Shareholders equity (in parent) 38,859 38,166 + Group hybrid capital 7,911 8,245 + Group leverage (core debt) 4,688 4,788 Total capitalisation (Bank + Insurance) 51,458 51,199 -/- Revaluation reserves fixed income & other /- Group leverage (core debt) (d) 4,688 4,788 Adjusted equity (e) 46,591 46,594 Debt/equity ratio (d/(d+e)) 9.14% 9.32% Liquidity and solvency position remains strong in turbulent environment Capital ratios: ING Insurance In EUR million 30 September June 07 Adjusted equity (e) 29,118 30,731 Core debt (d) 4,507 3,809 Debt/equity ratio (d/(d+e)) 13.40% 11.03% Available regulatory capital (a) 25,628 27,351 EU required regulatory capital (b) 9,142 9,203 Capital coverage ratio (a/b) 280% 297% Buffer for equities & real estate (c) 7,082 7,092 Internal capital coverage ratio (a/(b+c)) 158% 168% Capital ratios: ING Bank In EUR million 30 September June 07 Core Tier-1 21,349 20,506 Hybrid Tier-1 6,224 6,397 Total Tier-1 capital 27,573 26,903 Other capital 12,544 12,390 BIS Capital 40,118 39,294 Risk-weighted assets 373, ,414 Tier-1 ratio 7.39% 7.55% BIS ratio 10.75% 11.02% 28,172,583 A preference shares from Fortis at a price of EUR 3.62 per share. Acquisitions and divestments On the acquisition side, agreement has been reached on two transactions: the acquisition of Santander s pension business in Latin America for EUR 960 million and the acquisition of Piraeus 50%-stake in the insurance joint-venture ING Piraeus Life in Greece, in conjunction with an exclusive bank distribution agreement for 10 years. In 3Q the following divestitures were closed: ING Trust to management and Foreman capital, Regiobank to SNS Reaal and the Belgian broker and employee benefits insurance business to P&V Verzekeringen for EUR 750 million. Key capital ratios The leverage position of ING Group remained well within target in 3Q Compared to the previous quarter, the Group s D/E-ratio improved from 9.32% to 9.14%. Equity remained fairly stable, while the core debt decreased. The decrease in core debt is mainly driven by a dividend upstream from ING Insurance to the Group and was only partly offset by the payout of the 2007 interim-dividend to shareholders, and the share buyback. The leverage ratio for Insurance increased from 11.03% to 13.40% as the dividend payout to ING Group had a negative effect on equity, which was not entirely offset by the reduction in core debt, driven by dividends upstreamed by Insurance subsidiaries. The EU capital coverage ratio of ING Insurance declined to 280% from 297%. ING has increased its hybrid target ratio for ING Insurance from 15% to 25%, which is in line with the hybrid ratio for the Bank. The Tier-1 ratio of the Bank decreased from 7.55% to 7.39%. RWAs increased by 4.8% or EUR 17 billion in 3Q led by strong growth in ING Real Estate and General Lending & PCM. Secondly, the wind down of conduits contributed EUR 6 billion to RWAs. Net profit of EUR 805 million only partly offset this high RWA growth. The EUR 1.9 billion positive revaluation of the Bank of Beijng, following its IPO, has no impact on the Tier-1 ratio. This revaluation is added to shareholders equity but prudentially excluded from available Tier-1. Credit Ratings Standard & Poor s maintains a stable outlook on the ratings of ING Group (AA-), ING Insurance (AA-) and ING Bank (AA). Moody s also maintains a stable outlook for ING Group (Aa2), ING Insurance (Aa3) and ING Bank (Aa1). ING Group - Group 17

18 GROUP Assets under Management Assets under Management distributed per Business Line In EUR billion 30 Sep June 07 Third-party AuM Total AuM by Business Line, 30 September 2007 Insurance Europe Insurance Americas Insurance Asia/Pacfic Wholesale Banking Retail ING Direct Banking - for insurance policyholders for institutional clients for retail clients for private banking clients Total third-party AuM Proprietary assets Total assets under management Net inflow (in quarter) Assets under Management by Manager Total Third-party Assets Proprietary Assets In EUR billion 30 Sep June Sep June Sep June 07 ING Investment Management Europe ING Investment Management Americas ING Investment Management Asia/Pacific ING Investment Management ING Real Estate ING Private Banking Other Assets managed internally Funds managed externally Total assets under management Key Performance Indicators Total AuM up EUR 1.2 billion to EUR billion Third-party AuM up EUR 7 billion to EUR billion Net inflow of EUR 8.5 billion in 3Q driven by strong US sales ASSETS UNDER MANAGEMENT Movement in AUM (EUR billion) Q07 Inflow Markets FX Acq/Div 3Q07 Assets under Management Despite turbulent financial markets in the third quarter, net inflow reached EUR 8.5 billion. Assets under Management increased by EUR 1.2 billion, or 0.2% in the third quarter of 2007 to reach EUR billion at the end of September. Price changes of equity and fixed income securities contributed EUR 5.1 billion. Exchange rates had a negative impact of EUR 16.0 billion, mainly due to the weaker US dollar. The impact of acquisitions (mainly Landmark Investment Management in South Korea and Santander s pension business in Mexico) more than offset those of divestments (ING Insurance Belgium), resulting in a positive net impact of EUR 3.5 billion in the quarter. Excluding currencies, assets under management increased by 2.7% in 3Q. Inflow In the third quarter the net inflow amounted to EUR 8.5 billion, which equals 1.3% of AuM. Despite financial market turbulence, net inflow is just EUR 1.9 billion lower than it was in the second quarter. Net inflow in 3Q was led by 18 ING Group - Group

19 Insurance Americas, driven by strong sales in the United States where US Institutional Markets, 3rd party Investment Management and Variable Annuities recorded EUR 4.2 billion of net inflow. Insurance Asia/Pacific continued to generate substantial AuM, particularly through sales in Japan and India. ING Private Banking, reported under Retail Banking, contributed EUR 1.6 billion to the net inflow. Assets under Management by Manager The asset management business units manage EUR billion of assets, of which EUR billion third-party assets and EUR billion proprietary assets of ING Group. Proprietary assets are for 83% invested in fixed income securities and 17% in equities and real estate. In addition, ING s business lines have distributed EUR 92.9 billion of funds managed by external fund managers, illustrating the strength of ING s distribution channels. ING Investment Management ING Investment Management (ING IM) oversees both third-party assets and proprietary assets of ING Group. At the end of September, ING IM managed EUR billion in total assets. The total thirdparty assets at ING IM increased 1.3% in the third quarter to EUR billion, driven by a net inflow of EUR 3.5 billion. At ING IM Europe, third-party assets under management decreased slightly by EUR 0.8 billion to EUR billion. Due to turbulent markets, retail clients withdrew their money from mutual funds. Despite the volatile credit market, the ING Luxembourg International II - Senior Bank Loans Fund generated EUR 0.3 billion of net sales inflows from European investors, after a successful marketing campaign supported by the US and European investment teams and sales forces. The High Yield Strategies also attracted EUR 0.3 billion from clients. ING IM Americas increased its third party asset under management by EUR 0.9 billion to EUR 77.9 billion, despite the negative impact of a weakened US dollar of EUR 2.3 billion. The US Institutional Markets business contributed significantly with net inflows of EUR 2.0 billion. Despite continuing difficult conditions in the credit markets, ING IM Americas successfully issued a Collateralized Loan Obligation (EUR 0.4 billion) and a synthetic Collateralized Debt Obligation (EUR 0.9 billion) to the institutional market during the third quarter. Additionally, the ING International High Dividend Equity Income Funds raised EUR 0.1 billion in an initial public offering of its newest closed-end fund. At ING IM Asia/Pacific, third party assets increased by EUR 3.0 billion to EUR 54.3 billion. ING acquired the full ownership of Landmark Investment Management in South Korea on August 30, 2007, and subsequently completed the merger with ING Investment Management Korea thereby creating the 10th largest Asset Management Company in South Korea. In Malaysia, the ING Baraka Capital Protected Fund set a Malaysian industry record by raising EUR 0.1 billion and thus making it the country s largest closed-end capital protected fund. In China, the Xianfeng Fund attracted EUR 0.5 billion from clients. At the end of the third quarter 2007, ING IM delivered a sound investment performance with 78% of mutual fund assets outperforming their benchmark and 63% outperforming their peer median on a 3-year basis. ING Real Estate Assets under Management at ING Real Estate increased 0.7% to EUR 75.2 billion. The total business portfolio, including real estate lending, reached EUR billion, which is 2.9% higher than at the end of the second quarter. Assets under management of the Investment Management business line within ING Real Estate ended the third quarter at EUR 72.4 billion, unchanged compared to the second quarter New capital inflow and the consolidation of Clarion Capital in the third quarter offset the impact of the sliding US dollar exchange rate versus the Euro and lower values of some real estate securities. In the UK, ING Real Estate won a EUR 0.8 billion mandate from the West Midlands Metropolitan Pension Fund, the biggest mandate in the country s pension fund industry. The Lion Mexico Fund, which invests in a diversified portfolio retail, office, residential and industrial assets across Mexico, successfully raised EUR 0.5 billion equity from investors. Driven by continued inflows of investor capital, the quarter in Europe was marked by sustained acquisition activity, notably in Sweden and Poland. In Asia/Pacific, the China Opportunity Fund reached EUR 0.4 billion. The Development portfolio reached EUR 2.8 billion, a 22% increase versus the second quarter The Development business line consolidated its leadership in area development by kicking off construction work at two of Europe s largest docklands regeneration projects, the Ueberseequartier in Hamburg and the Overhoeks project in Amsterdam. Several projects were successfully sold or pre-sold, including the UN Studio office project in Amsterdam. ING Private Banking ING Private Banking administers EUR 66.8 billion of client assets, of which EUR 5.6 billion is invested in ING investment funds. Total administered assets increased by EUR 0.7 billion in the third quarter driven by a strong net inflow of EUR 1.7 billion, while exchange rates due to the strong Euro had a negative impact of EUR 0.7 billion. Net inflow was mainly raised in Asia (EUR 0.8 billion) and the Netherlands (EUR 0.7 billion). At the end of the third quarter, the assets are spread geographically as follows: the Netherlands (EUR 19.2 billion), Belgium (EUR 14.8 billion), Asia (EUR 12.8 billion), Switzerland (EUR 12.2 billion) and Luxembourg (EUR 7.8 billion). ING Group - Group 19

20 20 ING Group - Insurance Insurance

21 Strong growth in sales and new business value driven by good commercial performance in Central Europe and Asia/Pacific. Profits were boosted by capital gains on ABN Amro shares, mitigated by lower investment income on real estate and private equity in The Netherlands. ING Group - Insurance 21

22 INSURANCE Insurance Total Insurance: Income Statement In EUR million 3Q2007 3Q2006 Change 2Q2007 Change 9m2007 9m2006 Change Gross premium income 11,395 10, % 11, % 34,240 35, % Commission income % % 1,411 1, % Direct investment income 2,606 2, % 2, % 7,809 7, % Realised gains and fair value changes on inv % % 1, % Total investment and other income 3,123 2, % 3, % 9,204 8, % Total underlying income 14,988 13, % 15, % 44,856 44, % Underwriting expenditure 11,983 11, % 11, % 35,487 36, % Operating expenses 1,363 1, % 1, % 4,062 3, % Other interest expenses % % 1,016 1, % Other impairments -0-1 n.a. -0 n.a. 1-3 n.a. Total underlying expenditure 13,702 12, % 13, % 40,565 40, % Underlying profit before tax 1, % 1, % 4,291 3, % of which profit before tax life insurance % 1, % 3,417 2, % of which profit before tax non-life insurance % % 874 1, % Taxation % % % Profit before minority interests 1, % 1, % 3,677 2, % Minority interests % % % Underlying net profit 1, % 1, % 3,548 2, % Net gains/losses on divestments % Net profit from divestments - 21 n.a. 11 n.a % Special items after tax Total net profit 1, % 1, % 3,998 2, % KEY FIGURES Value of new life business % % % Internal rate of return (YTD) 13.4% 13.8% Single premiums 8,992 6, % 7, % 23,052 19, % Annual premiums 1, % % 2,997 2, % New Sales (APE) 1,940 1, % 1, % 5,302 4, % Investment in new business % % 1,489 1, % Assets under Management (in EUR billion) % Life expenses as % of AUM (YTD) 0.73% 0.74% Life expenses as % of gross premiums (YTD) 14.7% 12.5% Non-life expense ratio (YTD) 30.8% 30.5% Non-life claims ratio (YTD) 65.7% 60.5% Non-life combined ratio (YTD) 96.5% 91.0% Gross life reserves 267, , , % Gross non-life reserves 10,537 9,667 10, % Tax ratio 12.6% 13.9% 13.9% 14.3% 16.6% Staff (FTEs end of period) 54,330 57,550 54, % 22 ING Group - Insurance Total

23 Key Performance Indicators VNB in Life up 48% on strong sales in Central Europe, US and Asia/Pacific Underlying profit before tax up 29% due to EUR 455 million gain on ABN Amro shares Recurring expenses up 10% to support business growth in Central Europe and Asia/Pacific Business update Strong sales momentum in Central & Rest of Europe, Asia/Pacific and the US led to significant improvement in the value of new life business, which increased 48% from a year earlier and 44% compared with the second quarter. Sales and VNB were positively impacted by pension reforms in Romania, where ING made a strong start when sales of the new second pillar pension funds began in September. Investment income continued to be supported by high realised gains on equities due largely to continued sales of our stake in ABN Amro. Those gains more than offset negative revaluations of private equity and less positive revalutations of real estate investments as those markets softened after several years of very strong returns. Although equity markets closed the third quarter little-changed from the second, most markets were still up approximately 15% compared to a year earlier. That, combined with solid net inflows, led to higher average assets under management in our wealth management businesses. The non-life businesses continued to be challenged most notably in car and INSURANCE TOTAL Underlying profit before tax (EUR million) Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 property insurance in Canada and Mexico due to increased claims, both in number and amount. Furthermore, sales in Mexico were under pressure from tariff increases and more stringent underwriting policies, while in Canada, premium income in the commercial lines declined reflecting stringent pricing discipline. Disability insurance in the Netherlands continued to perform well due to favourable claims experience on previous underwriting years, despite ongoing rate pressure in this competitive market. Profit Underlying net profit increased 36% to EUR 1,084 million including a EUR 455 million gain on the sale of part of ING s stake in ABN Amro. The effective tax rate declined to 12.6%, reflecting high tax-exempt gains on equity investments. Underlying profit before tax increased 29%, or 32% excluding currency impact. Total impairments on the fixed income portfolio were EUR 23 million in the third quarter. Results from life insurance were also supported by higher fee income, driven by 9% growth in assets under management. This was partly offset by negative fair value changes on private equity and lower positive fair value changes on real estate investments in the Netherlands, a decline in market-related DAC and reserve unlocking in the US and higher claims in the non-life businesses in Canada and Mexico. Additionally, the third quarter last year included substantial releases from employee benefit provisions. Total net profit from insurance increased 83% to EUR 1,502 million, including Strong growth and new business value driven by Central Europe and Asia/Pacific a gain of EUR 418 million on the sale of ING s broker and employee benefits business in Belgium. Income Gross premium income increased 5% to EUR 11,395 million, or 8% excluding currencies, driven by strong sales of wealth accumulation products in Asia/Pacific, Central Europe and the US. Gross non-life premium income declined 2.3% due to a decrease in Mexico, while Canada and the Netherlands saw increases. Commission income increased 16% due to Europe (+31%) after higher asset management fees in Central Europe and the Netherlands, as well as Asia/Pacific (+44%) due to continued business growth. Investment income increased 20%, largely caused by the EUR 455 million gain on the sale of a portion of ING s stake in ABN Amro. Expenses Expenses grew 14%; however, excluding EUR 79 million of employee benefit provision releases in the Netherlands last year, expense growth was 7.2% driven by continued investment for growth in Central Europe, Asia/Pacific and the US. ING Group - Insurance Total 23

24 INSURANCE TOTAL Life & Non-life Insurance Life Insurance: Income Statement In EUR million 3Q2007 3Q2006 Change 2Q2007 Change 9m2007 9m2006 Change Gross premium income 10,031 9, % 9, % 29,677 30, % Commission income % % 1,303 1, % Direct investment income 2,429 2, % 2, % 7,267 6, % Realised gains and fair value changes on inv % % 1, % Total investment and other income 2,870 2, % 3, % 8,400 7, % Total underlying income 13,338 12, % 13, % 39,380 26, % Underwriting expenditure 10,982 10, % 10, % 31,916 32, % Operating expenses 1, % % 3,034 2, % Other interest expenses % % 1, % Other impairments - -1 n.a. -0 n.a. 1-2 n.a. Total underlying expenditure 12,366 11, % 11, % 35,963 36, % Underlying profit before tax % 1, % 3,417 2, % Taxation % % % Profit before minority interests % 1, % 2,954 2, % Minority interests % % % Underlying net profit % 1, % 2,911 2, % KEY FIGURES Value of new life business % % % Internal rate of return (YTD) 13.4% 13.8% Single premiums 8,992 6, % 7, % 23,052 19, % Annual premiums 1, % % 2,997 2, % New Sales (APE) 1,940 1, % 1, % 5,302 4, % Investment in new business % % 1,489 1, % Assets under Management (in EUR billion) % Life expenses as % of AUM (YTD) 0.73% 0.74% Life expenses as % of gross premiums (YTD) 14.7% 12.5% Gross life reserves 267, , , % Life Insurance total Underlying profit before tax from life insurance increased 41% to EUR 972 million, including EUR 413 million from the gain on the sale of ABN Amro shares. This was partly offset by 58% lower life results in the Netherlands due to lower real estate and private equity revaluations versus one-off employee benefit LIFE INSURANCE Underlying profit before tax (EUR million) Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 provisions releases in Furthermore, life results in Asia/Pacific were under pressure due to a EUR 36 million lower result in Japan driven by positive impacts from hedging and accounting volatility in the prior period, compared to negative ones in the current periiod. This was partly compensated by improved results in Australia & New Zealand and South Korea. The US saw a modest increase before EUR 29 million in negative currency impacts caused by a further weakening of the US dollar. Gross life premium income increased 6% to EUR 10.0 billion following 20% growth in Asia/Pacific driven by sales of wealth accumulation products in Japan and Taiwan. Premium income increased 9% in the US before currency impacts, due to higher sales of variable annuities and individual life products. Operating expenses increased 18%, or EUR 156 million, compared with the same quarter last year, when expenses in the Netherlands were favoured by a EUR 65 million in release from employee benefit provisions. Excluding that impact, expenses were up 10%, due to continued business growth in Central & Rest of Europe, Asia/Pacific and the US. Sales momentum was strong as new life sales measured in annual premium equivalent (APE) increased 25% to EUR 1,940 million. Sales (APE) benefited from strong distribution of wealth accumulation products in Taiwan, Australia, Japan, South Korea, the introduction of the second pillar pension fund in Romania, as well as higher 24 ING Group - Insurance Total

25 Non-life Insurance: Income Statement In EUR million 3Q2007 3Q2006 Change 2Q2007 Change 9m2007 9m2006 Change Gross premium income 1,364 1, % 1, % 4,564 4, % Commission income % % % Direct investment income % % % Realised gains and fair value changes on inv % % % Total investment and other income % % % Total underlying income 1,649 1, % 1, % 5,484 5, % Underwriting expenditure 1, % 1, % 3,571 3, % Operating expenses % % 1,028 1, % Other interest expenses % % % Other impairments n.a. Total underlying expenditure 1,336 1, % 1, % 4,610 4, % Underlying profit before tax % % 874 1, % Taxation % % % Profit before minority interests % % % Minority interests % % % Underlying net profit % % % KEY FIGURES Non-life expense ratio (YTD) 30.8% 30.5% Non-life claims ratio (YTD) 65.7% 60.5% Non-life combined ratio (YTD) 96.5% 91.0% Gross non-life reserves 10,537 9,667 10, % variable annuity, life insurance and Institutional Markets sales in the US The value of new business increased 48% to EUR 298 million due to wealth accumulation sales in Asia/Pacific, while the US benefited from higher sales as well as the positive impact from the establishment of the onshore captives last quarter. In Central Europe, the introduction of the second pillar Romanian pension fund added EUR 34 million. Although the internal rate of return of 13.4% declined compared to last year s 13.8% it was up compared to the second quarter. NON-LIFE INSURANCE Underlying profit before tax (EUR million) Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 Non-Life Insurance total Underlying profit before tax from nonlife insurance increased 2% to EUR 314 million including EUR 42 million gains on ABN Amro. Higher claims in car and property insurance in Canada, as well as the impact of Hurricane Dean and higher claims in car insurance in Mexico put pressure on the non-life results of the quarter. These factors were partly offset by the gain on ABN Amro shares, and higher results in the Netherlands following lower claims due to releases of disability insurance provisions. Premium income decreased 3% to EUR 1,364 million due to a decline in Mexico that more than offset increases in Canada and the Netherlands. Canada increased 2% (and 4% excluding currency impact), on increases in the number of automobiles and properties insured as well as average amounts insured, while the commercial lines saw decreases in an aggressive market environment. Premiums in the Netherlands were up 2% following increased distribution through the proprietary bank channel. Operating expenses increased 4.1% as last year s expenses in the Netherlands were favoured by a EUR 14 million employee benefit provision release. The combined ratio deteriorated by 5.5 percentage points to 96.5% due to a worsening of the claims ratio after higher claims in Canada and Mexico. LIFE INSURANCE % based on VNB 9M2007 Asia/Pacific (46%) Americas (24%) Europe (30%) ING Group - Insurance Total 25

26 INSURANCE Insurance Europe Insurance Europe: Income Statement In EUR million 3Q2007 3Q2006 Change 2Q2007 Change 9m2007 9m2006 Change Gross premium income 2,197 2, % 2, % 7,871 7, % Commission income % % % Direct investment income 882 1, % 1, % 3,085 3, % Realised gains and fair value changes on inv % % % Total investment and other income 978 1, % 1, % 3,618 3, % Total underlying income 3,289 3, % 4, % 11,848 11, % Underwriting expenditure 2,321 2, % 2, % 8,545 8, % Operating expenses % % 1,337 1, % Other interest expenses % % % Other impairments 0-2 n.a. -0 n.a. 1-2 n.a. Total underlying expenditure 2,927 2, % 3, % 10,365 9, % Underlying profit before tax % % 1,483 1, % of which profit before tax life insurance % % 1,135 1, % of which profit before tax non-life insurance % % % Taxation % % % Profit before minority interests % % 1,287 1, % Minority interests % % % Underlying net profit % % 1,275 1, % Net gains/losses on divestments % Net profit from divestments - 21 n.a. 11 n.a % Special items after tax Total net profit % % 1,724 1, % KEY FIGURES Value of new life business % % % Internal rate of return (YTD) 14.3% 15.3% Single premiums % % 2,385 2, % Annual premiums % % % New Sales (APE) % % % Investment in new business % % % Assets under Management (in EUR billion) % Life expenses as % of AUM (YTD) 0.72% 0.75% Life expenses as % of gross premiums (YTD) 24.5% 20.3% Non-life expense ratio (YTD) 36.1% 33.3% Non-life claims ratio (YTD) 53.1% 55.5% Non-life combined ratio (YTD) 89.2% 88.8% Gross life reserves 84,429 80,545 82, % Gross non-life reserves 4,552 3,616 4, % Tax ratio 16.6% 14.9% 12.0% 13.2% 15.7% Staff (FTEs end of period) 14,997 14,286 15, % INSURANCE EUROPE Underlying profit before tax (EUR million) Key Performance Indicators Weaker third quarter profit driven by lower investment income Sale of Belgian broker & employee benefits business closed for gain of EUR 418 million Pension fund in Romania off to flying start Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 In the third quarter of 2007 value creation in Central & Rest of Europe was extremely strong, favoured by the flying start of the second pillar pension fund in Romania. In its first two weeks of commercial operation, the ING pension fund in 26 ING Group - Insurance Europe

27 Romania signed on some 360,000 clients, contributing EUR 34 million in value of new business and EUR 37 million of sales (APE). Sales (APE) by life insurance and pension businesses in the region increased 46.5% to EUR 145 million, and the value of new business was up 72.1% to EUR 74 million for the quarter. Life operations in Belgium and the Netherlands were impacted by less favourable fair value changes on real estate and private equity investments. Life sales continued to be challenged by low interest rates and the inverse yield curve as well as the negative publicity regarding certain unit-linked products in the Netherlands. Production in the Benelux developed in line with ING s strategy to enhance bank distribution of standardized insurance products. The close of the sale of the Belgian broker and employee benefits business generated a capital gain of EUR 418 million. The remaining insurance activities in Belgium will focus on retail products distributed through the proprietary bank channel (ING Bank Belgium and Record Bank). Life underlying profit before tax Underlying profit before tax from life insurance declined 44.5% to EUR 227 million. Life profit in the Netherlands decreased EUR 191 million following EUR 210 million lower investment income (dividends as well as fair value changes on real estate and private equity investments). The EUR 65 million higher expenses, due to employee benefits releases in 2006, were offset by a EUR 32 million lower addition to the provision for guarantees on separate account pension contracts, a EUR 31 million higher technical result and EUR 11 million higher commission income. In Belgium, life profits decreased slightly after lower commission income, while Central & Rest of Europe saw EUR 11 million profit growth due to higher sales and assets under management across the region, as well as appreciation of the Hungarian forint. Life premiums decreased slightly to EUR 1,887 million as EUR 120 million lower premiums in Belgium were largely compensated by EUR 102 million premium growth in Central & Rest of Europe. Life premiums in Belgium were down due to less intensive marketing. Central & Rest of Europe posted higher premiums after increased sales across the region, including single premium variable annuity sales in Hungary and Spain, as well as acquisition of the full ownership of the bancassurance joint venture with Piraeus Bank in Greece. Operating expenses from life insurance increased 38.7% to EUR 312 million, following last year s EUR 65 million releases in employee benefits provisions in the Netherlands that related to the life business. Excluding that one-off item, expenses increased 7.6% driven by EUR 7 million higher greenfield expenses in Central & Rest of Europe (Romania and Russia), and EUR 4 million of expenses related to the acquisition of the full ownership of the joint venture with Piraeus Bank in Greece. New business production The value of new business in Europe increased 39.4% to EUR 92 million, predominantly due to developments in Romania. The second pillar pension fund in Romania, which started commercial activities in mid September, contributed EUR 34 million in value of new business and EUR 37 million in sales (APE). Regular premium sales in Romania added another EUR 7 million in value of new business growth. In the Netherlands, the value of new business declined 13.3% to EUR 13 million, largely caused by lower rates for term insurance, and a shift in investments underlying unit-linked policies to guaranteed interest funds. Sales (APE) were constant at EUR 63 million with a slight shift from individual to group life sales. The year-to-date internal rate of return declined from 13.4% to 11.4% for the reasons mentioned above. Non-life underlying profit before tax Underlying profit before tax from non-life insurance improved 32.4% to EUR 135 million, driven by higher results in the Benelux. In the Netherlands, the non-life result improved by EUR 31 million mainly following a EUR 29 million release of disability insurance provisions following improved claims experience and a one-off change in actuarial methods. This release, as well as the favourable claims experience in disability, offset ongoing rate pressure in a competitive market. In Belgium, the non-life result improved after better claims experience in all business lines except Fire. Non-life premiums of EUR 310 million were 2.6% higher than in the third quarter of The premium growth was concentrated in the Netherlands, where premiums rose 2.1% following increased distribution through the proprietary bank channel. In Belgium Fire premiums benefited from the compulsory natural disaster cover introduced in Operating expenses from non-life increased 8.1% to EUR 134 million due to last year s EUR 14 million release in employee benefits provisions in the Netherlands that related to the non-life business. Excluding this item expenses decreased 2.9%. INSURANCE EUROPE % based on VNB 9M2007 Central & Rest of Europe (72%) Netherlands (22%) Belgium (6%) ING Group - Insurance Europe 27

28 INSURANCE EUROPE - additional information Life Insurance The Netherlands Life Insurance The Netherlands: Income Statement In EUR million 3Q2007 3Q2006 Change 2Q2007 Change 9m2007 9m2006 Change Gross premium income 1,094 1, % 1, % 3,871 3, % Commission income % % % Direct investment income % % 2,377 2, % Realised gains and fair value changes on inv % % % Total investment and other income % 1, % 2,819 2, % Total underlying income 1,879 2, % 2, % 6,800 7, % Underwriting expenditure 1,371 1, % 1, % 4,825 4, % Operating expenses % % % Other interest expenses % % % Other impairments - -1 n.a. -0 n.a. 1-1 n.a. Total underlying expenditure 1,743 1, % 1, % 5,962 5, % Underlying profit before tax % % 838 1, % Taxation % % % Profit before minority interests % % % Minority interests % -0 n.a % Underlying net profit % % % KEY FIGURES Value of new life business % % % Internal rate of return (YTD) 11.4% 13.4% Single premiums % % 891 1, % Annual premiums % % % New Sales (APE) % % % Investment in new business % % % Life expenses as % of AUM (YTD) 0.83% 0.79% Life expenses as % of gross premiums (YTD) 32.2% 25.4% Gross life reserves 62,461 62,609 62, % Key Performance Indicators Weaker third quarter profit driven by lower investment income Further improvement in customer satisfaction at Nationale-Nederlanden Mortgages sold to bank as part of strategic asset reallocation LIFE INSURANCE THE NETHERLANDS Underlying profit before tax (EUR million) Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 Market developments The mature Dutch life insurance market remains challenging with basically flat volumes and continued margin pressure, as some competitors adopt aggressive pricing strategies to capture market share. Nationale-Nederlanden s strategy to defend its leading position in the Dutch life market focuses on excellent service to intermediaries and final customers, product innovation and marketing campaigns targeting specific client segments, while improving operational efficiency. Nationale-Nederlanden will continue to balance market share and pricing discipline to maintain acceptable returns. In the group life market, insurers are acting on the requirements of the Dutch pension act Nationale- Nederlanden s long-standing and broad expertise as a provider of corporate pension solutions is an important advantage in advising clients how to comply with legislative changes. In group life, the market grows modestly driven by the strong Dutch economy that boosts overall employment and salary levels. This factor is partly mitigated by the structural shift from final pay to average pay pension plans. As Nationale-Nederlanden s 28 ING Group - Insurance Europe

29 strategy is focussed on value creation, it plans to discontinue several large industry pension fund contracts that have marginal returns. This will free up economic capital and will improve returns. Growth in the Individual life market stabilised, especially due to lower sales of unit-linked products. Earlier this year there was negative publicity about the cost loadings of these products. Nationale-Nederlanden fully supports cost transparency and it is participating actively in efforts by the insurance industry to increase transparency. As unit-linked business constitutes only a small part of Nationale-Nederlanden s business, the adverse development of the unit-linked market had only a limited impact on sales. Meanwhile, Nationale- Nederlanden is countering the trend of declining business volumes in the Individual life market with a renewed emphasis on traditional life policies with profit participation. Business update Further improving customer satisfaction, executing the expense reduction initiatives and optimising financial risk management remain three strategic priorities for Nationale-Nederlanden life. The company made good progress in increasing customer satisfaction in the third quarter of 2007 within all its business lines. Individual life improved its customer satisfaction level by 0.1 to 3.5 on a 5-point scale. Group life continued the upward trend of the previous quarters and realised a 0.1 improvement to 3.3. Cost efficiency remains a critical success factor in the competitive Dutch life insurance market. Nationale-Nederlanden is progressing well with the implementation of its cost reduction initiatives as it reduced internal staff by over 1,000 FTEs over the last two years, slightly above projections. Important changes in regulations (e.g. pension act) and efforts to increase transparency in the unit-linked market temporarily increased the number of external staff to meet customer and regulator expectations. Further staff reductions are anticipated from the re-orientation of Nationale- Nederlanden s captive distribution channel in the coming three years. As part of the regular financial management process, Nationale- Nederlanden conducted a review of its asset and liability management strategy to optimize the allocation of the investments underlying the insurance liabilities in the general account. This study was completed in the third quarter of 2007 and resulted in a recommendation to change the strategic asset allocation by reducing the exposure to equities and residential mortgages, and increasing the share of long term fixed income investments. Equity investments require relatively high economic capital that will now be freed-up. Residential mortgages in the Netherlands have reduced in maturity over the last couple of years, making them less appropriate for covering long-term life insurance and pension liabilities. As a result, Nationale- Nederlanden will sell all remaining residential mortgages (EUR 7.5 billion) to ING Bank. The transfer, which started in May 2007 with the sale of Nationale- Nederlanden s mortgage company, will be completed during RVS, ING s tied agent insurance company, introduced a new concept that enables RVS agents to provide personal financial advice to individual employees covered by corporate contracts of Nationale- Nederlanden and corporate relations of ING Bank in the Netherlands. Both employers and employees responded positively to this concept which generated 1,700 interested employers in the first nine months of 2007 and offers attractive opportunities for cross-selling. Earnings Analysis: Third Quarter Underlying profit before tax of life insurance in the Netherlands was EUR 191 million weaker due to EUR 210 million lower investment income and EUR 65 million higher expenses, as last year included a release of employee benefits provisions. The higher expenses were offset by a EUR 32 million lower increase in the provision for guarantees on separate account pension contracts, a EUR 31 million higher technical result and EUR 11 million higher commission income. The decline in investment income was driven by lower fair value changes on real estate and private equity investments, which were impacted by the turbulence on the financial markets in the third quarter of Investment results in these asset classes have performed well in excess of ING s long-term expectations for the last three years and may imply a reversion to the long term assumptions. Dividend income was EUR 32 million lower, as the third quarter of 2006 included a EUR 36 million super-dividend from Nutreco. Fixed interest income was negatively effected by the EUR 1.7 billion extra dividend paid by Nationale- Nederlanden to ING Insurance at the end of June Investment income was markedly lower than in the second quarter of 2007 due to the seasonality of dividend income. The tax rate was low in 3Q 2007 due to high tax exempt income on shares. Operating expenses increased 42.8% to EUR 217 million following last year s EUR 65 million releases in employee benefits provisions in the Netherlands related to the life business. Excluding that one-off impact, expenses were flat. Cost reductions related to lower internal staffing continued to be largely offset by higher external services related to the implementation of new regulations. The value of new business declined 13.3% to EUR 13 million, largely caused by lower rates for term insurance and traditional immediate annuities, changes in the strategic asset allocation after the asset and liability study in 2007 and a shift in investments underlying unit-linked policies to guaranteed interest funds. Sales (APE) were constant at EUR 63 million, with a slight shift from individual to group life sales. ING Group - Insurance Europe 29

30 INSURANCE EUROPE - additional information Non-life Insurance The Netherlands Non-life Insurance The Netherlands: Income Statement In EUR million 3Q2007 3Q2006 Change 2Q2007 Change 9m2007 9m2006 Change Gross premium income % % 1,333 1, % Commission income % % % Direct investment income % % % Realised gains and fair value changes on inv % % % Total investment and other income % % % Total underlying income % % 1,636 1, % Underwriting expenditure % % % Operating expenses % % % Other interest expenses % % % Other impairments Total underlying expenditure % % 1,297 1, % Underlying profit before tax % % % Taxation % % % Profit before minority interests % % % Minority interests Underlying net profit % % % KEY FIGURES Non-life expense ratio (YTD) 36.6% 33.5% Non-life claims ratio (YTD) 50.7% 53.7% Non-life combined ratio (YTD) 87.3% 87.2% Gross non-life reserves 3,680 3,517 3, % Key Performance Indicators Strong result in disability insurance partly driven by favourable claims environment Increasing focus on proprietary retail bank distribution Nationale-Nederlanden builds centralised factory for car insurance products in Benelux NON-LIFE INSURANCE THE NETHERLANDS Underlying profit before tax (EUR million) Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 Market developments Scale is becoming a key competitive advantage in the Dutch non-life insurance market, which increasingly focuses on price. In the corporate non-life market, the trend is that companies retain a limited number of service providers, leading to larger insurance contracts. Nationale-Nederlanden is benefiting from this development, as evidenced by the premium growth over the quarter. Business update Production in the individual disability market continues to be strong. Nationale- Nederlanden maintained its pricing discipline and improved the quality of the portfolio through advanced risk selection. Nationale-Nederlanden aims to strengthen its position in this market segment through a marketing and sales campaign for all disability and accident products that has been running since August, and will continue through November Nationale-Nederlanden broadened the distribution scope by offering group disability products in several unpenetrated industry sectors with an attractive product range offered at competitive rates. Similar to life, Nationale-Nederlanden improved customer satisfaction in non-life insurance in the third quarter of The property & casualty segment recorded 30 ING Group - Insurance Europe

31 a pronounced improvement in customer satisfaction of 0.1 to 3.6 on a 5-point scale. In the disability segment of Nationale-Nederlanden it remained stable at 3.6. Disability insurer Movir clearly outperformed the market with a customer satisfaction rating of 4.1. Nationale-Nederlanden is developing several initiatives to enhance service to intermediaries and customers. A good example is the introduction of straightthrough-processing of personal lines products for a first group of mandated insurance brokers. The handling of international claims was outsourced to a specialised service provider. As part of ING s multi-channel strategy, Nationale-Nederlanden aims to position itself as ING insurance s factory for standardized non-life insurance products in the Benelux. In personal lines, the first phase of issuing car insurance policies in Belgium started in the third quarter. The next step in this strategy will be the introduction of a car insurance product sold through Postbank in Bank distribution is increasingly important for the distribution of standardized personal lines non-life products. This trend offers a significant opportunity for ING with its strong Benelux retail banking franchises ING Bank (in Belgium and the Netherlands) and Postbank. This opportunity is corroborated by the significant increase in sales of Nationale- Nederlanden non-life products through ING Bank which doubled compared to Postbank continues to leverage its large bank client base in the Netherlands to cross-sell standardised insurance products with special focus on car and home insurance. In January 2007, Postbank launched an improved and simplified home insurance product, which has led to a 50% increase in sales compared to In 2008, Postbank plans to enter the car insurance market, a segment which is expected to contribute significantly to premium growth in the coming years. Production at RVS was slightly lower compared with the third quarter of 2006 due to strong competition. RVS has reduced several rates for car and disability insurance, although the combined ratios of most product groups remain satisfactory. RVS wants to achieve significant premium growth by increasing the number of tied agents and strengthening its brand awareness. The marketing campaign that started at the end of 2006 has increased brand recognition. To achieve growth in the sales force, RVS gives much attention to hiring and training new agents and retention of existing agents. Earnings Analysis: Third Quarter The non-life result in the Netherlands improved EUR 31 million caused mainly by a EUR 29 million release of disability provisions following improved claims experience and a one-off change in actuarial methods and parameters. This release, as well as the favourable claims experience in disability, offset the impact of ongoing rate pressure in this competitive market. Non-life premiums of EUR 287 million were 2.1% higher than last year following increased distribution through the proprietary bank channel. Premiums generally decreased in personal lines, but increased in corporate lines except for disability. Operating expenses increased 9.3% to EUR 129 million, with the percentage increase impacted significantly by last year s EUR 14 million release in employee benefits provisions attributable to non-life. Excluding that impact, operating expense declined 2.3%. The first phase of issuing car insurance policies in Belgium started in the third quarter ING Group - Insurance Europe 31

32 INSURANCE EUROPE - additional information Insurance Belgium Life Insurance Belgium: Income Statement In EUR million 3Q2007 3Q2006 Change 2Q2007 Change 9m2007 9m2006 Change Gross premium income % % % Commission income % % 22-4 n.a. Direct investment income % % % Realised gains and fair value changes on inv % % % Total investment and other income % % % Total underlying income % % 1, % Underwriting expenditure % % 1, % Operating expenses % % % Other interest expenses % % % Other impairments Total underlying expenditure % % 1, % Underlying profit before tax % % % Taxation - 3 n.a. 7 n.a % Profit before minority interests % % % Minority interests Underlying net profit % % % KEY FIGURES Value of new life business % 4 0.0% % Internal rate of return (YTD) 12.7% 11.7% Single premiums % % % Annual premiums % % % New Sales (APE) % % % Investment in new business % % % Life expenses as % of AUM (YTD) 0.12% 0.39% Life expenses as % of gross premiums (YTD) 14.1% 14.7% Gross life reserves 12,657 8,428 12, % Non-life Insurance Belgium: Income Statement In EUR million 3Q2007 3Q2006 Change 2Q2007 Change 9m2007 9m2006 Change Gross premium income % % % Underlying profit before tax 1-3 n.a % % LIFE INSURANCE BELGIUM Underlying profit before tax (EUR million) Key Performance Indicators Sale of Belgian broker & employee benefits business closed for gain of EUR 418 million Start of first phase of new car insurance strategy with Nationale-Nederlanden Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 Business update After a strategic review, ING decided to divest its non-core broker and employee benefits activities in Belgium, as announced in January On 28 September ING closed the sale of these activities to P&V Verzekeringen in a divestment that resulted in a transaction gain of EUR 418 million in the third quarter of ING Group - Insurance Europe

33 The divested activities had a premium income of EUR 362 million in the first half of 2007, on total premiums of EUR 1,005 million for Insurance Belgium (including Luxembourg). The broker and employee benefits business employed approximately 840 FTE s and generated EUR 38 million in pre-tax profit, EUR 11 million in new sales (APE) and EUR -1.5 million in value of new business in the first six months of ING will continue to sell life and non-life insurance products in Belgium exclusively through its proprietary retail bank channels (ING Bank and Record Bank). It is expected that this distribution channel will become more dominant in the future, and will experience above industry average growth rates. Currently, ING has a 7% market share in Individual life sales. The ambition is to further exploit crossselling opportunities in the bank channel. In life insurance, the new bancassurance company continued to show significant premium growth compared to 2006, mainly through the success of life Investment products. The guaranteed interest rate products (Optima range sold through ING Bank and Record Premium range sold through Record Bank) fuelled this increase. However, production in the third quarter of 2007 was lower compared to previous quarter, due to less intensive marketing. Non-life insurance profit was EUR 1 million in the third quarter of The new bancassurance company will focus mainly on personal lines in Fire, Motor and Disability. Fire represents the largest portfolio, and this line drives the growth in non-life premiums in 2007, following the introduction of a compulsory natural disaster cover. In the third quarter, non-life Insurance Belgium started the first phase of a new strategy in Motor, where it acts as claims handler for policies sold through ING Bank Belgium, with sister company Nationale-Nederlanden (Netherlands) serving as underwriter/risk carrier. The second phase with additional marketing efforts is planned to start in early Earnings Analysis: Third Quarter The income statement of Insurance Belgium has been retroactively adjusted for the divestment of the broker and employee benefits business. Key figures have not been restated with the exception of new sales (APE). In life insurance, the underlying profit before tax declined 22.2% to EUR 7 million following lower investment income. Life premium income was 32.8% down on the record third quarter of 2006 due to less intensive marketing. ING Belgium completed the sale of its broker & employee benefits business ING Group - Insurance Europe 33

34 INSURANCE EUROPE - additional information Life Insurance Central & Rest of Europe Life Insurance Central & Rest of Europe: Income Statement In EUR million 3Q2007 3Q2006 Change 2Q2007 Change 9m2007 9m2006 Change Gross premium income % % 1,650 1, % Commission income % % % Direct investment income % % % Realised gains and fair value changes on inv % % % Total investment and other income % % % Total underlying income % % 2,112 1, % Underwriting expenditure % % 1,636 1, % Operating expenses % % % Other interest expenses % % % Other impairments Total underlying expenditure % % 1,863 1, % Underlying profit before tax % % % Taxation % % % Profit before minority interests % % % Minority interests 3-1 n.a % 9-1 n.a. Underlying net profit % % % KEY FIGURES Value of new life business % % % Internal rate of return (YTD) 16.8% 19.0% Single premiums % % % Annual premiums % % % New Sales (APE) % % % Investment in new business % % % Life expenses as % of AUM (YTD) 0.67% 0.78% Life expenses as % of gross premiums (YTD) 15.1% 12.5% Gross life reserves 9,311 9,508 8, % Key Performance Indicators Strong growth in life premiums and pension fund inflows SPVA roll-out in Spain and Hungary and consolidation joint venture in Greece boost premium growth Successful start of Romanian pension fund: over 360,000 clients in first two weeks and main contributor to VNB LIFE INSURANCE CENTRAL & REST OF EUROPE Underlying profit before tax (EUR million) Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 Business update With the prospect of continued aboveaverage economic growth in the years ahead, many Western financial services providers are stepping up their strategic investments in Central and Eastern Europe. In addition, several new players are entering the market, often applying aggressive strategies to capture market share. Building on its first-mover advantage, ING will maintain and expand its leading position through its accelerated growth strategy which focuses on increased top line growth as well as lower unit costs. ING Insurance in Central Europe continued its steady growth in new business production and value creation in the third quarter of The double-digit top line growth is driven by the successful implementation of Insurance Central Europe s accelerated growth strategy, which rests on four pillars: broadened distribution capacity, an updated and expanded product range, new greenfields and increased operational efficiency. Insurance Central Europe increased its client base substantially in the third quarter of 2007, bringing the total to 6.8 million. 34 ING Group - Insurance Europe

35 Total assets under management increased slightly to EUR 20.6 billion, as steady inflows were offset by unfavourable stock markets, especially in Poland. In its strategic plans, Insurance Central Europe assumes that personal advice by agents will continue to be the dominant distribution channel for life insurance and pensions in the region for the years to come. ING is continuing its program to enhance the effectiveness of its tied sales force by emphasising professionalism through permanent education, sound business practices and improved sales support. Assessment of the sales force is primarily based on value creation, persistency and retention. At the same time, ING is stepping up its efforts to recruit new agents and to gain access to other distribution channels such as partnerships with banks and brokers. ING Romania made a remarkable achievement in the first three quarters of 2007 by recruiting, training and licensing a flexible sales force of about 40,000 distributors in connection with the introduction of mandatory private pension accounts as of mid-september In Greece, ING finalised an exclusive 10-year distribution partnership with Piraeus Bank, one the country s leading banks. In the Czech Republic, independent brokers already generate an important share of ING s life and pension production. Direct distribution of simple, standardized products is developed selectively as a lead generator for more advice-driven products. In the Czech Republic, for instance, ING acquired 75,000 clients and assets of EUR 580 million with ING Konto, a direct savings account. ING Spain (as of March) and ING Hungary (as of July) have made successful starts with the sale of variable annuities. At the end of September, the two countries contributed a total of EUR 95 million to premium income via this product. Further roll-out of variable annuities to other countries is expected in the near future. ING is also catering to the need for simple protection products. The companies in Romania, Hungary, Poland and Slovakia have developed basic protection packages that also give ING access to lower income segments. ING sold its first life insurance policies in Russia in July. The Russian market offers substantial potential given its large population and low insurance penetration. However, the Russian life insurance market is still in an early stage of development and will require a long-term effort. Romania introduced mandatory pension funds in September Four million workers will have to select a pension provider by 15 January, ING has set an ambitious target of capturing 30% of this market. The company made a promising start. Sales started on 17 September, and in the first two weeks ING s Romanian pension fund had already acquired more than 360,000 clients. Insurance Central Europe has started over twenty Six Sigma projects to improve operations in such areas as client retention, premium collection, productivity, speed and accuracy. Eventually, ING wants to increase this to forty projects to increase revenues and reduce unit costs. Already in the first year, the benefits of the Six Sigma projects will be higher than the costs of implementing the program. The annual benefits of the program in subsequent years are estimated at around EUR 10 million. Earnings analysis: third quarter Insurance Central Europe showed solid performance in the third quarter of Despite EUR 7 million higher start-up investments in new businesses in Russia and Romania, the underlying profit before tax in the third quarter of 2007 showed a modest increase compared to the corresponding quarter of Higher sales throughout the region and an appreciation of the Hungarian forint had a positive impact on the results. ING Romania benefits from pension reforms, and attracted 360,000 new customers in the first two weeks Both life premium income and pension fund inflows showed favourable increases. Premiums rose by 23% driven by healthy growth across the region, the impact of the full ownership of the bancassurance joint venture with Piraeus Bank in Greece and the successful start of the single premium variable annuity product in Spain and Hungary. The second pillar pension fund in Poland and the third pillar pension fund in Slovakia contributed to the 14% growth in pension fund inflows. Start-up costs for the new life insurance operations in Bulgaria and Russia and the start of the second pillar pension fund in Romania significantly increased expenses. The impact of the acquisition of the full ownership of the joint venture in Greece and higher staff costs also contributed to the increase. The successful start of the Romanian second pillar pension fund in September had a large positive impact (EUR 34 million) on value creation and drove the 72% increase in value of new business. The Romanian pension fund also was the largest contributor to the 47% increase in new sales. ING Group - Insurance Europe 35

36 INSURANCE Insurance Americas Insurance Americas: Income Statement In EUR million 3Q2007 3Q2006 Change 2Q2007 Change 9m2007 9m2006 Change Gross premium income 5,735 5, % 5, % 16,811 18, % Commission income % % % Direct investment income 1,379 1, % 1, % 3,839 3, % Realised gains and fair value changes on inv n.a. 33 n.a n.a. Total investment and other income 1,255 1, % 1, % 3,720 3, % Total underlying income 7,245 7, % 7, % 21,296 22, % Underwriting expenditure 6,115 6, % 5, % 17,605 18, % Operating expenses % % 1,844 1, % Other interest expenses n.a % % Other impairments n.a. Total underlying expenditure 6,765 6, % 6, % 19,690 20, % Underlying profit before tax % % 1,606 1, % of which profit before tax life insurance % % 1, % of which profit before tax non-life insurance % % % Taxation % % % Profit before minority interests % % 1,176 1, % Minority interests % % % Underlying net profit % % 1, % KEY FIGURES Value of new life business % % % Internal rate of return (YTD) 10.8% 11.2% Single premiums 5,704 3, % 4, % 13,666 12, % Annual premiums % % 1,301 1, % New Sales (APE) % % 2,667 2, % Investment in new business % % % Assets under Management (in EUR billion) % Life expenses as % of AUM (YTD) 0.71% 0.71% Life expenses as % of gross premiums (YTD) 14.8% 14.3% Non-life expense ratio (YTD) 28.2% 29.4% Non-life claims ratio (YTD) 70.9% 62.5% Non-life combined ratio (YTD) 99.1% 91.9% Gross life reserves 132, , , % Gross non-life reserves 5,623 5,623 5, % Tax ratio 26.2% 21.1% 26.8% 26.8% 24.8% Staff (FTEs end of period) 27,591 30,939 29, % Key Performance Indicators Underlying profit before tax up 0.6% excluding currencies VNB climbs 69.8% on a strong US performance Sales up strongly across US businesses INSURANCE AMERICAS Underlying profit before tax (EUR million) Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 Insurance Americas is increasing its focus on higher growth markets, including US wealth management, asset management, and faster growth geographies in Latin America. During the third quarter, Insurance Americas posted strong top-line growth across the region but was challenged to increase the bottom line because of difficult market conditions in Canada and the US. The underwriting cycle in Canada continued to turn while liquidity concerns dampened equity market growth in the US In the US, variable annuity sales climbed 30.1% led by the successful introduction of a new withdrawal rider in August. US-basis retirement services 401(k) and education sales increased 11.0%, excluding one large case sold in 3Q ING US is also driving growth in asset management where sales of international 36 ING Group - Insurance Americas

37 mutual funds were strong, and individual life sales continued their rebound. In ING Canada underwriting results continued to soften, as reflected in a 790 basis point net deterioration in its claims ratio to 65.3%. Results in Latin America climbed 31.2% as strong performance, primarily in life businesses and in Brazil, more than compensated for weak results in Mexico s non-life business. Life insurance Life underlying profit before tax increased 11.3% excluding currencies boosted by a doubling of earnings in Latin America. The US business posted earnings of EUR 309 million, up 3.2% excluding currencies, as higher fee income from solid growth in assets under management and higher investment income were largely offset by higher operating expenses and EUR 2 million negative equity-related DAC and reserve unlocking, a decline of EUR 16 million from third quarter The impact of US mortgage-related securities on the P&L has been insignificant. Life profit in Latin America doubled to EUR 56 million driven by strong investment results in Mexico and better performance in the life business in Chile. Life premium income rose 8.3% excluding currencies driven by an 8.5% increase in the US largely due to strong sales of variable annuities and individual life. Premium income in Latin America increased 2.9% excluding currencies, supported by good growth in the life businesses in Chile and Mexico, but tempered by lower annuity results in Mexico because of weaker market conditions. Operating expenses increased 9.1% excluding currency effects, driven by a 15.2% increase in Latin America from business growth. Expenses in the US increased 8.3%, prompted by higher sales-related costs, technology investments and staff to support distribution growth. New business production The value of new life business increased 69.8% to EUR 73 million, fostered by improved individual life results, driven by higher sales and the benefit of the captive structures to address regulatory reserves. A 310 basis point increase in returns in retirement services 401(k) and education business drove up value of new business from these operations by 35.7%, excluding currency effects and discount rate change. On the same basis, variable annuities delivered an 18.8% increase in new business value on strong sales. Variable annuities continued their sales momentum begun in the last quarter with the introduction of LifePay Plus, a new withdrawal benefit for life, which is among the most competitive in the industry. Sales of this product drove a 12.7% sequential increase in variable annuity sales and a 90.0% increase in new business value over the same period. Fixed annuity sales declined 46.9% as returns were not sufficiently attractive. International equity mutual fund sales however, increased 38.4% as the focus on ING s global capabilities has been well received by the market. Institutional markets, ING s spread lending business, benefited from the widening of asset spreads during the quarter to triple sales, generating significant new business value from this activity. Value of new life business in Latin America declined on continued competitive pressures in Mexico s pension business, although results are beginning to improve as the transfer war appears to be slowing. The internal rate of return (IRR) for the region declined 40 basis points to 10.8%, but on a US basis, the IRR for the US business increased 20 basis points to 11.7% mainly driven by improved returns in institutional markets and individual life. Returns in retirement services 401(k) and education and variable annuity remained strong at 18.4% and 13.4% respectively. Non-life insurance Less favorable underwriting experience across the region pushed non-life results down 24.0% excluding currency effects. Profit in Canada fell 18.6% excluding currencies to EUR 108 million, reflecting higher auto frequency and severity in personal property, as well as less favorable developments in prior-year reserves. The increase in the claims ratio was partially offset by a 190 basis point decline in the expense ratio. The non-life businesses in Latin America posted EUR 7 million in underlying profit, a 64.7% decline excluding currencies. A strong contribution from Brazil was more than offset by losses in Mexico from hurricane Dean, a large fire claim and weaker results in the auto business from higher claim costs. Excluding currencies, non-life premium income fell 3.0% as a 4.1% increase in Canada prompted by good unit growth combined with reasonably firm pricing was not enough to offset a 16.7% decline in Latin America. In October, SulAmérica, ING s joint venture business in Brazil concluded a successful initial public offering in which ING s ownership was diluted from 49% to 36%, resulting in a EUR 95 million gain which will be recorded in earnings in 4Q INSURANCE AMERICAS % based on VNB 9M2007 United States (87%) Latin America (13%) ING Group - Insurance Americas 37

38 INSURANCE AMERICAS - additional information Life Insurance United States Life Insurance United States: Income Statement In EUR million 3Q2007 3Q2006 Change 2Q2007 Change 9m2007 9m2006 Change Gross premium income 4,522 4, % 4, % 13,200 14, % Commission income % % % Direct investment income 1, % 1, % 3,174 2, % Realised gains and fair value changes on inv n.a. -2 n.a n.a. Total investment and other income % 1, % 2,946 2, % Total underlying income 5,666 5, % 5, % 16,735 17, % Underwriting expenditure 4,966 4, % 4, % 14,347 15, % Operating expenses % % 1,099 1, % Other interest expenses n.a % % Other impairments Total underlying expenditure 5,356 5, % 5, % 15,651 17, % Underlying profit before tax % % 1, % Taxation % % % Profit before minority interests % % % Minority interests Underlying net profit % % % KEY FIGURES Value of new life business % % % Internal rate of return (YTD) 10.7% 11.1% Single premiums 5,654 3, % 4, % 13,520 12, % Annual premiums % % 1,076 1, % New Sales (APE) % % 2,427 2, % Investment in new business % % % Life expenses as % of AUM (YTD) 0.72% 0.72% Life expenses as % of gross premiums (YTD) 14.1% 13.5% Gross life reserves 128, , , % Life Insurance United States: Breakdown by product line Wealth Management % % % Insurance % % % Asset Management % % % Other % 8 0.0% % Underlying profit before tax excluding investment gains/losses and currencies % % 1, % Investment gains/losses % % % Currency Effects % % % Total US % % 1, % 38 ING Group - Insurance Americas

39 Key Performance Indicators US underlying profit before tax up 3.2% excluding currency Value of new business doubles on better sales across most business lines Management of retirement services and annuities businesses now combined Business update The US life business aims to use its strength in wealth management, asset management and insurance to drive profitable sales, asset and earnings growth and value creation against a backdrop of intensifying competition across all product lines. Liquidity concerns dampened US equity market growth during the third quarter. Wider credit spreads were more than offset by a decline in treasury rates, resulting in an improvement to negative revaluation reserve fixed income securities during the quarter. The impact of mortgage-related securities on the P&L has been insignificant. Total credit-related impairments from all sources were just EUR 9 million in 3Q. The US business purchased a net EUR 139 million of asset-backed securities backed by subprime mortgages in 3Q. The average credit quality of these purchases is AAA, and they were bought at attractive spreads. At 30 September, ING s US businesses held EUR 2.8 billion of securities backed by subprime mortgages, up from EUR 2.7 billion at 30 June. More than 95% of these holdings are rated AA and above and market values declined modestly to 96.6% of notional value LIFE INSURANCE UNITED STATES Underlying profit before tax (EUR million) Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 at 30 September. ING US also held EUR 3.0 billion in Alt-A residential mortgagebacked securities at the end of the third quarter. Equity markets increased a relatively modest 1.6% which contributed to EUR 2 million in negative equity-related DAC and reserve unlocking, a decline of EUR 16 million from third quarter 2006, and EUR 35 million from 2Q Wealth management At the end of the quarter, the management of the retirement services and annuity businesses were combined into one functional organization, bringing together product development and marketing, distribution, finance and risk management, and operations across both product lines. The combination acknowledges the convergence of the markets for retirement and annuity products and seeks to build on ING s competitive advantages to more fully leverage the growth opportunities presented by the evolving needs of baby boomers as they enter retirement. In retirement services, excluding currency, 401(k) and education market sales declined 7.1% or 5.1% on a US-basis over a very strong third quarter 2006, which included a large case acquisition of EUR 128 million. Excluding this case, US-basis retirement services 401(k) and education market sales would have been up 11.0%, led by the 401(k) market, which continues to benefit from new distribution added earlier this year. Returns on these retirement services segments improved 310 basis points to 18.4%. Rollover sales were up strongly with nearly a third of new sales coming from external rollovers. This business continues its dual focus on retaining assets in existing ING retirement plans while also seeking new clients to ING s rollover products. The new organization structure should allow ING US to more aggressively tap the potential of this market. The much-anticipated, revised 403(b) regulations were recently enacted and are expected to offer longer term sales growth and retention opportunities. ING has taken the lead in communicating these changes, and smaller scale players are exiting this market both of which provide ING US with opportunity to capture more market share over the long term. Variable annuity sales in September and in the quarter were the highest in history, up 30.1% year-over-year and 12.7% sequentially. US basis returns remained strong at 13.4%. Furthermore, net flows as a percentage of sales continued to be well above the industry average. In variable annuities, living benefits particularly withdrawal benefits are driving industry sales growth. During the third quarter, ING introduced a new withdrawal benefit for life - LifePay Plus - which is currently among the most competitive products in the market. This product led ING s sales increase for the quarter. Sales of fixed annuities dropped 46.9% as alternative products, including certificates of deposit, became more attractive at current interest rate levels. In addition, market pressure on fixed indexed annuities continues as a result of ongoing media and regulatory scrutiny over the suitability of the product, particularly for older people. ING sells only to individuals age 80 or younger and employs the industry-leading 10 and 10 policy of ING Group - Insurance Americas 39

40 INSURANCE AMERICAS - additional information Life Insurance United States no single year surrender charge of more than 10% and no surrender charge period longer than 10 years. Sales to persons older than age 75 are individually reviewed for suitability. At the end of the second quarter 2007, ING was #12 in both variable and fixed annuity sales. Insurance The individual life business continued its strong recovery in the third quarter as a result of new product introductions in universal life, and the further rollout of term life products and distribution avenues which helped propel individual life sales up 59.5%. Additionally, its overall market rank improved to #13 at the end of 2Q Strong individual life sales stemmed from a 39.0% increase in the sales of strategic accumulator universal life (SAUL) coupled with a few large guaranteed universal life cases. Term sales nearly tripled over the prior year, as the mortgage term product introduced in 2Q 2007 continued to gain momentum. At the end of the third quarter 2007, policies issued a key driver of efficiency were 150% of full-year 2006 levels and equivalent to an annual run rate of 82,000 policies. Strong sales, combined with the existence of on-shore captives for the management of regulatory reserves, helped improve the value of new business year-over-year. Asset management The Asset Management unit manages ING s proprietary assets in the Americas as well as third party monies in ING retail products, mutual funds, institutional fixed income and equity, and alternative strategies. The going global strategy of the mutual funds business, emphasising ING s global capabilities, continues to be well received by the market. Overall mutual fund sales increased 15.8% boosted by a 38.4% increase in sales of international equity funds. Institutional markets, the specialised capital markets business, was able to take advantage of widening credit spreads during the quarter to more than triple sales in its spread lending business, primarily of funding agreements. The assets purchased to back these sales were diversified and consistent with the normal asset allocation and risk evaluation processes. Three percent of the assets purchased to back these products were invested in asset-backed securities with subprime exposure and are captured in the data reported earlier in this section. Profit Underlying profit before tax for the third quarter of 2007 declined 6.1% to EUR 309 million from the year-earlier quarter. Excluding the adverse impact of currency movements, underlying profit was up 3.2% on higher assets under management, led by growth in account balances from fund performance as well as sales. Higher investment income also contributed to the increase. These results were partially offset by higher operating Life insurance United States: US Key Metrics Annual Premium Equivalent (APE) Sales (US Basis) In EUR million 3Q2007 3Q2006 Change 2Q2007 Change 3Q2007 3Q2006 Change 2Q2007 Change Wealth Management Retirement Services - Corporate 401(k), Education and IRA % % % % - Healthcare, Government, Stable Value, and Other % % % % Variable Annuity % % 1,601 1, % 1, % Fixed Annuity % % % % Total Wealth Management % % Insurance Individual Life % % % % Group Insurance % % % % Group Reinsurance 8 0 n.a % 8 0 n.a % Total Insurance % % Asset Management Institutional Markets n.a % 2, n.a. 1, % Investment Management - Retail Mutual Funds 1, % 1, % - Other Third-Party Investment Management 3,667 1, % 1, % Total Asset Management n.a % Total US, excluding currency effects % % Currency Effects (18) 38 n.a. -0 n.a. Total % % 40 ING Group - Insurance Americas

41 expenses and EUR 2 million negative equity-related DAC and reserve unlocking, a decrease of EUR 16 million from favourable unlocking in the third quarter of In the wealth management business, variable annuity assets under management climbed 20.5% in constant currency, while retirement services 401(k) and education assets under management increased 16.2% on the same basis. These higher asset levels contributed to strong growth in fee income, which, along with greater alternative asset income, helped to partially offset the decline from favourable equity unlocking in the prior period, and lower fixed annuity earnings. In the insurance segment, continued positive sales momentum in individual life and higher investment income was partially offset by adverse net mortality, mainly from two large claims. In the asset management segment, a decline in private equity gains dampened results for the quarter. Income US gross premium income of EUR 4,522 million, was up 8.5% excluding currency effects, led by record variable annuity sales and continued growth in retirement services sales. A 59.5% jump in individual life sales also contributed to premium growth. The strong sales were only modestly dampened by lower fixed annuity sales. Expenses Excluding currency effects, operating expenses were up 8.3% compared to the third quarter of 2006 and reflect higher sales related costs, increased spending on technology initiatives and higher staff costs to support customer service and distribution expansion. Expenses as a percentage of assets under management was 0.72%, flat compared to the prior period. However, expenses as a percentage of gross premiums deteriorated 60 basis points due to initiatives to grow the business. Key Figures Value of new business doubled to EUR 64 million compared to the third quarter of 2006, mainly driven by the individual life and asset management businesses. The positive VNB in individual life reflects higher sales and the ongoing benefit of the two captives established in 2Q Institutional markets ability to take advantage of widening credit spreads during the quarter generated a sixfold increase in VNB from that activity. Excluding the impact of currency movements and discount rate change, the VNB in variable annuity and retirement services 401(k) and education was up 26.7% on higher variable annuity sales, particularly sales of the newly launched LifePay Plus product and higher returns in retirement services. The internal rate of return in the US on a US basis was 11.7%, an increase of 20 basis points, as improved returns in institutional markets, much better returns in individual life and better business mix in retirement services more than offset lower annuity margins, particularly on fixed annuities. Life insurance United States: US Key Metrics Value of New Business (VNB) Internal Rate of Return (IRR) In EUR million 3Q2007 3Q2006 Change 2Q2007 Change 3Q2007 3Q2006 Change 2Q2007 Change Wealth Management Retirement Services - Corporate 401(k), Education and IRA % % 18.4% 15.3% 310 bps 18.8% -40 bps - Healthcare, Government, Stable Value, and Other % % 9.3% 10.9% -160 bps 9.1% 20 bps Variable Annuity % % 13.4% 14.6% -120 bps 13.0% 40 bps Fixed Annuity % % 8.5% 11.7% -320 bps 9.0% -50 bps Total Wealth Management % % 12.8% 13.3% -50 bps 12.5% 30 bps Insurance Individual Life 2-15 n.a. 7 n.a. 7.8% 1.7% 610 bps 7.1% 70 bps Group Insurance % 12.2% 11.0% 120 bps 12.3% -10 bps Group Reinsurance 1 0 n.a % 19.4% 17.6% 180 bps 19.3% 10 bps Total Insurance 5-14 n.a. 10 n.a. 9.1% 6.5% 260 bps 9.0% 10 bps Asset Management (Institutional Markets) % % 17.0% 15.1% 190 bps 14.3% 270 bps Other - -1 n.a. - n.a. Total US, excluding currency and discount rate changes % % 11.7% 11.5% 20 bps 11.2% 50 bps Effect of Change in Discount Rate - 6 n.a. - n.a. Currency Effects (1) 0 n.a. (0) n.a. IRR Currency/Risk Adjustment -1.0% -0.4% -60 bps -1.0% 0 bps Total % % 10.7% 11.1% -40 bps 10.2% 50 bps ING Group - Insurance Americas 41

42 INSURANCE AMERICAS - additional information Non-life Insurance Canada Non-life Insurance Canada: Income Statement In EUR million 3Q2007 3Q2006 Change 2Q2007 Change 9m2007 9m2006 Change Gross premium income % % 2,118 2, % Commission income % % % Direct investment income % % % Realised gains and fair value changes on inv % % % Total investment and other income % % % Total underlying income % % 2,422 2, % Underwriting expenditure % % 1,649 1, % Operating expenses % % % Other interest expenses Other impairments Total underlying expenditure % % 2,065 1, % Underlying profit before tax % % % Taxation % % % Profit before minority interests % % % Minority interests % % % Underlying net profit % % % KEY FIGURES Non-life expense ratio (YTD) 27.8% 29.7% Non-life claims ratio (YTD) 65.3% 57.4% Non-life combined ratio (YTD) 93.2% 87.1% Gross non-life reserves 4,367 4,507 4, % Key Performance Indicators ING Canada continues to outperform the industry in a challenging market Premium income up 4.1% in local currency on a 7.1% increase in personal lines Combined ratio of 93.2% reflects cost inflation and seasonal storms in Western Canada NON-LIFE INSURANCE CANADA Underlying profit before tax (EUR million) Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 Business update ING Canada is the largest P&C insurer in Canada with 11% market share. Through scale, superior underwriting capabilities and pricing sophistication, ING Canada has sustained industry-leading results over time. ING Canada distributes its products through three channels: broker, direct-toconsumer and affiliated broker distribution. While the broker channels represent approximately 90% of annual premiums, there is a growing customer response to the direct channel. ING Canada s growth strategy emphasizes product innovation, customer-centricity, and a focus on being the first choice for brokers through enhanced technology, quick response on quotes, and marketing and sales support. To achieve its target returns, ING Canada uses its scale and actuarial expertise to develop superior underwriting and pricing models, and target market segments and risk characteristics that create the greatest opportunities for profitable growth. ING Canada also leverages its scale advantage to reduce material costs on claims, and increase its value proposition by 42 ING Group - Insurance Americas

43 negotiating priority service, quality guarantees and a variety of other customer benefits through its Rely Network of preferred vendors. Approximately 60% of personal auto claims and 70% of personal property claims are processed through Rely Network partners. On average, claim costs are reduced by 20-25% through the Auto Rely Network. ING Canada s goals are to exceed the Canadian property and casualty insurance industry organic growth rate by a minimum of 300 basis points over time and to exceed the industry return on equity by at least 500 basis points annually. On a local Canadian basis, ING Canada s return on equity was 20.8% in 2006, 400 basis points superior to the Canadian industry return of 16.8%. Automobile insurance reforms adopted by the various provinces have been effective at containing and stabilizing claims costs over the last few years; however, there is potential for reform benefits to erode over time. Medical cost inflation will be addressed in the upcoming review of Ontario reform, Bill 198. Rate increases have been approved and are in effect on new policies in Ontario, and will be effective on renewals in November. Sustainability of reform benefits continues to be a key performance driver in auto lines. activity in Western Canada also contributed to the decrease in underwriting income. Higher material costs, increases in labour rates and labour shortages are also affecting construction costs, particularly in Western Canada. The claims ratio increased 790 basis points from the third quarter of Gross premium income Gross premium income rose by 4.1% excluding currency in the third quarter driven by increases in the number of automobiles and properties insured as well as average amounts insured. In commercial lines, lower gross premium income reflects ING s disciplined pricing strategy in an aggressive market environment. As a result, the mix of the commercial lines portfolio has shifted toward smaller business accounts that tend to be less price-sensitive. Key figures The year to date combined ratio deteriorated to 93.2% reflecting higher property severity as well as moderate increases in frequency and severity of personal auto claims. However, the expense ratio improved 190 basis points to 27.8% due to lower profit-sharing commissions, an element of broker compensation tied to profitability. Profit in Canada declined, reflecting higher auto frequency and higher severity in personal property Profit Profit before tax for the third quarter 2007 was EUR 108 million down 20.0%, or 18.6% excluding currencies from the same quarter last year. The decline reflects lower underwriting income and a decrease in net gains on invested assets due to unfavourable bond market conditions in An increase in investment income helped to partially offset the decline. Underwriting profit was lower in the third quarter mainly due to a combination of higher personal auto claims and lower favourable prior year development. An increase in property claims associated with seasonal storm ING Group - Insurance Americas 43

44 INSURANCE AMERICAS - additional information Insurance Latin America Life Insurance Latin America: Income Statement In EUR million 3Q2007 3Q2006 Change 2Q2007 Change 9m2007 9m2006 Change Gross premium income % % % Commission income % % % Direct investment income % % % Realised gains and fair value changes on inv % % % Total investment and other income % % % Total underlying income % % 1, % Underwriting expenditure % % % Operating expenses % % % Other interest expenses % % % Other impairments n.a. Total underlying expenditure % % % Underlying profit before tax % % % Taxation % % % Profit before minority interests % % % Minority interests % % % Underlying net profit % % % KEY FIGURES Value of new life business % % % Internal rate of return (YTD) 11.9% 12.7% Single premiums % % % Annual premiums % % % New Sales (APE) % % % Investment in new business % % % Life expenses as % of AUM (YTD) 0.67% 0.67% Life expenses as % of gross premiums (YTD) 20.7% 21.2% Gross life reserves 3,093 3,132 3, % Key Performance Indicators IRR down 80 basis points; combined ratio deteriorates to 112.0% Successful IPO SulAmérica in Brazil Integration of Santander pension business on track Business update ING is focused on growing pension and wealth management businesses in Latin America, and will become the #2 pension provider in the region upon the closing of its acquisition of Banco Santander s pension business in Mexico, Chile, Colombia and Uruguay. ING also operates non-life businesses in the region. Mexico continues to be an attractive market because of the growth in the middle class and the stability of the economy. At the end of the second quarter 2007, ING Mexico was #7 in life insurance and, with the completion of the Santander acquisition, #3 in the Afore pension business. Although the pension transfer war in Mexico continues, it appears to be diminishing in intensity. New regulations will take effect in March 2008 which require companies to compete on net returns to the customer, and not simply on commission levels. These regulations, plus expected industry consolidation as evidenced by ING s Santander acquisition should hasten the end of the transfer war. ING Mexico is also #2 in both P&C and health, and #3 in auto. In Chile, ING maintains top 5 positions in all of its markets including a #1 position in life, #2 in health and a pro forma #3 in pensions following completion of the Santander acquisition. Products are distributed mainly through tied agents, brokers and exclusive agents. The government in Chile is pursuing reforms in pension regulation that would broaden market participation to include selfemployed professionals and subsidize contributions from lower income workers. In Peru, ING is a dominant pension provider, ranked #1 with more than onethird of the market. ING Fondos, a mutual fund company launched in 2005 which now has three funds, is ranked #5 in the industry. ING has a minority interest in the #3 life company, which distributes life, survivor and disability insurance and annuities mainly through exclusive agents. 44 ING Group - Insurance Americas

45 Non-Life Insurance Latin America: Income Statement In EUR million 3Q2007 3Q2006 Change 2Q2007 Change 9m2007 9m2006 Change Gross premium income % % 1,001 1, % Commission income -1-2 n.a. -1 n.a n.a. Direct investment income % % % Realised gains and fair value changes on inv % 2 0.0% % Total investment and other income % % % Total underlying income % % 1,113 1, % Underwriting expenditure % % % Operating expenses % % % Other interest expenses % 2 0.0% % Other impairments n.a. Total underlying expenditure % % 1,111 1, % Underlying profit before tax % -10 n.a % Taxation -5 5 n.a. -4 n.a n.a. Profit before minority interests % -6 n.a % Minority interests n.a Underlying net profit % -6 n.a % KEY FIGURES Non-life expense ratio (YTD) 29.0% 28.8% Non-life claims ratio (YTD) 83.0% 73.2% Non-life combined ratio (YTD) 112.0% 102.1% Gross non-life reserves 1,256 1,117 1, % ING is a partner in an insurance joint venture in Brazil. The company, SulAmérica, is ranked #2 in health, #3 in auto, #6 in P&C, #10 in life insurance and #12 in pensions. In October, the company completed an initial public offering of 24% of the company, raising 775 million reais (EUR 298 million) to be used to reduce debt and for investment in the business. As a consequence of the offering, ING s stake in SulAmérica was diluted from 49% to 36%, generating a gain of EUR 95 million to be recorded in earnings in 4Q The shares trade on the Brazilian Bovespa. The Santander pension acquisition is progressing on schedule. The acquisition of the Mexican Afore closed on 28 September, and ING adopted Santander s lower fee schedule on 1 October. Information required for regulatory approvals has been submitted in Chile, Colombia and Uruguay, and ING continues negotiations with Santander and its partner Grupo Bapro for the acquisition of its Argentine pension and annuity businesses. Life Insurance Latin America Excluding currency impacts, life underlying profit before tax doubled to EUR 56 million. Profit increase was driven by strong investment results in Mexico, primarily realized capital gains on bond rebalancing in response to favorable spreads, and improved results in Mexico s Individual life business and Chile s annuity business. Life premium income increased 2.9% excluding currency on higher sales in Mexico and Chile life businesses, partially mitigated by lower sales in Mexico s annuity business. Life operating expenses increased EUR 7 million, or 15.2% excluding currencies on business growth. The value of new business decreased 10.0%, excluding currencies, to EUR 9 million due to continued competitive pressures in Mexico s pension business, although results are beginning to improve as the transfer war appears to be slowing. Non-Life Insurance Latin America Excluding currency impacts, non-life underlying profit before tax declined 64.7% to EUR 7 million. Strong results in Brazil were more than offset by losses in Mexico which included the impact of hurricane Dean, a large fire claim in the P&C business and reserve strengthening in the auto business on adverse frequency and severity of claims. Non-life premium income, excluding currency effects, is down 16.7% on lower P&C sales in Mexico, which reflect more stringent underwriting standards, and lower Auto sales in Mexico, resulting from tariff increases and subsequent non-renewal of certain contracts. Non-life operating expenses decreased 16.4% excluding currency reflecting capitalization of acquisition expenses on the close of the Santander acquisition in Mexico and lower operating expenses in Mexico. The increased combined ratio reflects higher claims cost in Mexico auto and P&C businesses partially offset by improved claims experience in Chile health. ING Group - Insurance Americas 45

46 INSURANCE Insurance Asia/Pacific Insurance Asia/Pacific: Income Statement In EUR million 3Q2007 3Q2006 Change 2Q2007 Change 9m2007 9m2006 Change Gross premium income 3,454 2, % 3, % 9,538 9, % Commission income % % % Direct investment income % % 1, % Realised gains and fair value changes on inv n.a n.a n.a. Total investment and other income % % % Total underlying income 4,036 3, % 3, % 10,673 10, % Underwriting expenditure 3,543 2, % 3, % 9,311 9, % Operating expenses % % % Other interest expenses % % % Other impairments n.a Total underlying expenditure 3,885 3, % 3, % 10,209 9, % Underlying profit before tax % % % Taxation % % % Profit before minority interests % % % Minority interests % % % Underlying net profit % % % KEY FIGURES Value of new life business % % % Internal rate of return (YTD) 16.7% 17.1% Single premiums 2,647 1, % 2, % 7,001 4, % Annual premiums % % 1,274 1, % New Sales (APE) % % 1,973 1, % Investment in new business % % % Assets under Management (in EUR billion) % Life expenses as % of AUM (YTD) 0.76% 0.83% Life expenses as % of gross premiums (YTD) 9.2% 8.0% Non-life expense ratio (YTD) 40.9% 39.5% Non-life claims ratio (YTD) 49.5% 49.3% Non-life combined ratio (YTD) 90.4% 88.8% Gross life reserves 50,703 52,175 45, % Gross non-life reserves % Tax ratio 28.9% 26.8% 41.3% 32.6% 29.3% Staff (FTEs end of period) 11,669 12,251 9, % INSURANCE ASIA/PACIFIC Underlying profit before tax (EUR million) Key Performance Indicators Sales up 37.4% driven by strong growth in all Asia/Pacific countries VNB up 43.0% on sustainable profitable growth and margins AUM up 28.6% to EUR 99 billion supported by strong inflows across the region and the Landmark acquisition Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 Business Update ING is a leading provider of life insurance and asset/wealth management products and services. It is the #2 international life insurer in Asia/Pacific with 12 life operations in 10 markets, and generated sales of almost EUR 2.0 billion for the nine months ended 30 September. It is also the region s second largest investment manager (ex-japan) with asset management operations in 12 markets. ING has leading positions in the mature and larger markets of Australia, New Zealand, Japan, South Korea and Taiwan, and is well positioned for future growth in the large and emerging markets of 46 ING Group - Insurance Asia/Pacific

47 Malaysia, China, India and Thailand. The shift in the market from traditional life to wealth accumulation products continued in the third quarter, driving ING s robust sales performance, particularly in Australia, Japan (Single Premium Variable Annuity), South Korea and Taiwan. Similarly, value of new business grew in line with new sales and attractive margins through product innovation and ongoing efforts to improve efficiency. The tied-agent network was also expanded further, notably at ING Life Korea and ING Vysya Life in India. In India, 15 new sales offices were opened this quarter, bringing up the total to Moreover, key strategic alliances continue to be formed. In Hong Kong an alliance was formed with China Construction Bank (Asia). ING Group completed the purchase of an additional 5.1% stake in ING Life Korea from Kookmin Bank for EUR 153 million in September 2007 bringing its stake to 85.1% post transaction. ING Investment Management Korea merged with the recently acquired Landmark Investment Management, becoming the 9th largest South Korean asset manager, with a combined AuM of more than EUR 9 billion. Further, ING China opened a branch in Henan in September, becoming the first foreign insurer to enter China s most populous province with nearly 100 million people. In New Zealand the launch of Kiwisaver, a savings scheme, was met with an encouraging response with over 40,000 customers and 2,700 employers signing up since 1 July In addition to the highly successful Formula One events in Japan and China, Insurance Asia/Pacific sponsored the AFC Asian Cup in July which saw the ING brand reach an audience of almost 500 million people. ING Investment Management Asia increased its Assets under Management with 3.1% compared to the second quarter, driven by the strong market growth in Australia, new fund launches in Taiwan and the acquisition of Landmark in South Korea. Profit Underlying profit before tax from Insurance Asia/Pacific declined to EUR 151 million in the third quarter 2007 compared to EUR 168 million in the same period last year, impacted by unfavourable hedging results and accounting volatility in Japan. Excluding the hedging volatility on the SPVA product in Japan, the underlying profit was up 16.0%. In South Korea, profit before tax rose to EUR 69 million, up 25.5% from the third quarter 2006 on growth of investment linked sales and the combined impact of one-off expenses in the third quarter of 2006 and In Australia, the profit before tax increased 36.1% to EUR 49 million over the same quarter last year driven primarily by Assets under Management growth. In Japan, the result before tax decreased by 59.0% to EUR 25 million from EUR 61 million in the third quarter The year ago period benefited from positive hedge results of EUR 31 million. Hedge results and accounting volatility impacted the SPVA result negatively by approximately EUR 7 million for the third quarter Income Gross premium income for the quarter was EUR 3,454 million, an increase of 20.4% compared to the third quarter of This was driven by the ongoing success of SPVA sales in ING Life Japan as well as strong sales of unit-linked products in ING Life Taiwan. Gross premium income grew in double digits in Japan, 31.5% to EUR 1,500 million, and almost 20% in both Taiwan, at EUR 715 million, and Australia, at EUR 96 million. Gross premium income for Korea was EUR 896 million. Expenses Operating expenses increased 22.7% to EUR 292 million, primarily due to underlying business growth. Additional expense items included in the third quarter related to office relocation costs in ING Life Taiwan, new branches in ING Life Korea, advertising and branding expenses associated with the AFC Asian Cup and Formula One. Infrastructure expansion continued in India and China. New Business Production Total new sales for the region increased 37.4% to EUR 750 million, in line with the growing distribution of wealth accumulation products including superannuation products in Australia, SPVA in Japan and investment-linked products in Taiwan and South Korea. New business sales were up 103.1% to EUR 132 million in Taiwan, 97.1% to EUR 138 million in Australia/New Zealand, 16.5% to EUR 247 million in South Korea, and 8.8% to EUR 173 million in Japan. Value of new business was up 43.0% to EUR 133 million commensurate with new sales production. Value of new business was up 52.8% to EUR 55 million in Taiwan, 19.4% to EUR 43 million in South Korea, 36.4% to EUR 15 million in Australia and 71.4% to EUR 12 million in Japan. The overall internal rate of return remained highly attractive at 16.7% for which was marginally lower than that achieved in 2006 due in part to significantly higher SPVA sales in Japan, which have a lower internal rate of return, relative to other business units. INSURANCE ASIA/PACIFIC % based on VNB 9M2007 Australia and New Zealand (13%) Japan (12%) South Korea (32%) Taiwan (40%) Rest of Asia (3%) ING Group - Insurance Asia/Pacific 47

48 INSURANCE ASIA/PACIFIC - additional information Life Insurance Australia & New Zealand Life Insurance Australia & New Zealand: Income Statement In EUR million 3Q2007 3Q2006 Change 2Q2007 Change 9m2007 9m2006 Change Gross premium income % % % Commission income % % % Direct investment income % % % Realised gains and fair value changes on inv % % % Total investment and other income % % % Total underlying income % % % Underwriting expenditure % % % Operating expenses % % % Other interest expenses Other impairments Total underlying expenditure % % % Underlying profit before tax % % % Taxation % % % Profit before minority interests % % % Minority interests Underlying net profit % % % KEY FIGURES Value of new life business % % % Internal rate of return (YTD) 21.3% 16.1% Single premiums 1, % 1, % 3,407 1, % Annual premiums % % % New Sales (APE) % % % Investment in new business % % % Life expenses as % of AUM (YTD) 0.54% 0.56% Life expenses as % of gross premiums (YTD) 20.7% 18.8% Gross life reserves 9,441 9,637 7, % LIFE INSURANCE AUSTRALIA & NEW ZEALAND Underlying profit before tax (EUR million) 80 Key Performance Indicators Strong new sales (+97.1%) and VNB (+36.4%) driven by superannuation and insurance products, and the inclusion of mutual fund business Assets under management for ING Australia grew 16% to EUR 16 billion due to strong financial markets, new sales and higher retention. ING New Zealand attracted over 40,000 new customers through a new government savings scheme KIWI Saver Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 Business Update In Australia, ING operates an investment management and a life insurance business through ING Australia, a joint venture with ANZ Bank (49%). ING Australia is one of the country s leading financial institutions providing financial services to over one million customers through aligned and open market advisers and ANZ bank. Products and services include: investments, individual and corporate superannuation, pension, retail and group life insurance and general insurance. 48 ING Group - Insurance Asia/Pacific

49 ING Investment Management Australia (INGA) is 100% owned by ING. Key asset classes managed include: equities (domestic and international), private equity, fixed income, property and cash. ING Investment Management is INGA s primary asset manager, but also has institutional clients including: superannuation funds, corporate institutions, government authorities, charities and other financial services entities. At the end of June 2007, ING Australia ranked #2 in new retail risk business, third for risk in-force premium and fourth for retail funds under management (latest available). In the third quarter ING Australia further expanded its distribution network and added 181 new aligned advisors (+16%), to support its organic growth. Currently it has the third largest adviser network in the industry. In New Zealand, ING offers retail investments, wholesale/institutional investment management, property management services and life insurance. This business is transacted through an ING-branded joint venture with ANZ Bank (49%). The Australian and New Zealand funds management market is the 4th largest in the world and is growing rapidly. The life insurance market whilst considerably smaller (ranked 15th) has relatively low penetration rates but is also growing rapidly. with assets under management, which are expected to increase in line with reoccurring annual contributions and an increasing customer base. ING Australia Holdings earns investment income on the management of shareholder capital of EUR 315 million as at 30 September The shareholder capital will be allocated to ING Group over time. Profit Underlying profit before tax increased 36.1% to EUR 49 million over the same quarter last year. The profit growth comes from ING Australia 42% (which also represents 67% of total profit), ING New Zealand 32.7% and is offset by reduced interest income on shareholder capital in ING Australia Holdings of 8.1%. The profit increases in ING Australia and ING New Zealand are due to higher Assets under Management income arising from strong growth in underlying Assets under Management, as well as increased income from the in-force insurance book. Income Gross premium income increased 18.5% from the third quarter last year, driven by new sales in the OneCare product, strong bancassurance sales, along with favourable in-force business retention. Commission income increased to EUR 73 million, up 40.4% from the third quarter 2006, due to higher funds under management arising from strong investment markets and higher net flows. Continued strong profit and value growth driven by sales momentum and favourable investment markets quarter This follows the exceptional sales reported in the second quarter 2007 of EUR 160 million due to one-off raised limits on superannuation contributions for the tax year ended 30 June The value of new business for the quarter increased to EUR 15 million from EUR 11 million in the third quarter of 2006, due to higher investment inflows and higher sales in the insurance business. ING New Zealand maintained its market positions with #1 in the retail funds management market, and #2 in both new business in the risk market and wholesale/ institutional funds management market. ING New Zealand has been appointed as one of the six default providers for the Government s Kiwi Saver, a savings scheme in New Zealand. Since its official launch on 1 July 2007 early response has been very encouraging with over 40,000 customers and 2,700 employers signing up. Management fee revenue will grow Expenses Operating expenses grew 16.7% due to higher volume-driven expenses such as investment management and direct campaign. New Business Production New business sales almost doubled to EUR 138 million, primarily due to exceptional sales of superannuation products and the inclusion of mutual fund sales from 2007 onwards, the impact of which is EUR 59 million in the third ING Group - Insurance Asia/Pacific 49

50 INSURANCE ASIA/PACIFIC - additional information Life Insurance Japan Life Insurance Japan: Income Statement In EUR million 3Q2007 3Q2006 Change 2Q2007 Change 9m2007 9m2006 Change Gross premium income 1,500 1, % 1, % 3,678 4, % Commission income % 5 0.0% % Direct investment income % % % Realised gains and fair value changes on inv n.a n.a n.a. Total investment and other income % -113 n.a % Total underlying income 1,700 1, % 1, % 3,783 4, % Underwriting expenditure 1,580 1, % 1, % 3,527 3, % Operating expenses % % % Other interest expenses % % % Other impairments Total underlying expenditure 1,675 1, % 1, % 3,747 3, % Underlying profit before tax % -1 n.a % Taxation % % % Profit before minority interests % -3 n.a % Minority interests Underlying net profit % -3 n.a % KEY FIGURES Value of new life business % % % Internal rate of return (YTD) 11.5% 12.9% Single premiums 1, % 1, % 2,871 2, % Annual premiums % % % New Sales (APE) % % % Investment in new business % % % Life expenses as % of AUM (YTD) 0.54% 0.51% Life expenses as % of gross premiums (YTD) 6.5% 6.3% Gross life reserves 16,207 17,413 15, % LIFE INSURANCE JAPAN Underlying profit before tax (EUR million) Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 Key Performance Indicators Strong SPVA sales up 46.9% driven by ongoing success of new SPVA product launched in April Tax treatment uncertainty continues to depress COLI sales potential, but volumes stabilised compared to second quarter 2007 Volatile financial markets offset by accounting asymmetry resulted in 3Q SPVA hedge loss Business Update ING Life Japan operates in two market segments: Single Premium Variable Annuities (SPVA) and Corporate Owned Life Insurance (COLI). SPVA products are distributed by security brokers and banks. The main distributors for COLI products are independent agents and security brokers. SPVA Smart Design 1-2-3, the new version of Japan s SPVA product introduced in the second quarter, continues to be very well received. Single premium inflows in the third quarter further solidified ING Life Japan s market leadership position, with a market share of approximately 18%. SPVA products sold in Japan provide 50 ING Group - Insurance Asia/Pacific

51 survival and death benefit guarantees on a basket of underlying funds which invest in Japanese and International equities, and fixed income instruments. Provisions for guaranteed minimum survival benefits are valued on a market value basis and fluctuate according to underlying fund performance and movements of other market parameters, such as interest rates and implied volatility. Provisions for guaranteed minimum death benefits are currently valued on a book value basis. The market risks associated with these guarantees are hedged via a comprehensive hedging programme. The derivatives that underlie this hedging programme are valued at market and flow through the profit and loss account. IFRS earnings volatility is introduced as a consequence of several factors, the most significant being: the accounting mismatch between the book value based death benefit liabilities and the market value based hedging instruments; mismatch between the performance of the index-based hedging instruments and the underlying investments in the product; hedge effectiveness impacted by experienced market volatility and risk factors such as implied volatility that impact the market value of the liability, but which are not currently hedged. Although IFRS earnings will be volatile quarter-to-quarter we estimate long run pre-tax earnings to be approximately 30 basis points of Assets under Management. As of 1 October, the financial instruments exchange law was implemented, resulting in significantly higher compliance procedures when distributing financial products like SPVA to Japanese consumers. third quarter of 2006 compared to 11% in the third quarter of Sales in this segment continue to be under pressure, but have remained steady at second quarter levels. An announcement from the NTA (tax authority) is expected in the fourth quarter. In the interim, ING continues its efforts to expand and build upon its presence in the COLI protection market, and launched a new product in late September. Profit ING Life Japan reported underlying profit before tax of EUR 25 million in the third quarter of 2007, attributable to EUR 3 million from SPVA and EUR 22 million from COLI. Profit before tax was EUR 61 million in the third quarter of 2006 attributable to EUR 42 million from SPVA and EUR 19 million from COLI. The pre-tax margin of the SPVA product amounted to EUR 10 million or 30 bp of AuM on an annualized basis, this is up EUR 2 million compared to last year due to higher AuM. The volatile elements in Q had a negative impact on the result of EUR 8 million, primarily due to increased market volatility, partly off-set by the asymmetry in accounting. The Q SPVA result was positively impacted by a EUR 31 million favorable impact of the hedge strategy. Income Gross premium income for the quarter was EUR 1,500 million, an increase of 31.5% compared to the third quarter of The continued success of the new SPVA product was the main contributor inspite of an 11.5% depreciation of the Japanese Yen against the Euro over this period. Market leadership in SPVA sales with continued success of new product launched in April Expenses Operating expenses increased EUR 7 million or 17.5% from the third quarter of 2006 in line with the growth in gross premium income and new business production. Additional costs were incurred for promotional and branding activities around the Formula One sponsorship. New Business Production New sales (APE) during the quarter were EUR 173 million, up 8.8% compared to third quarter of This growth is driven by the ongoing success of the SPVA sales and in particular, the new Smart Design product. SPVA single premium sales for the third quarter 2007 were EUR 1,162 million up 46.9% from the third quarter Sales performance for the COLI business has now stabilized pending further announcement from the NTA. COLI sales (APE) were EUR 57 million in the third quarter as compared to EUR 50 million in the second quarter The value of new business of EUR 12 million was higher compared to the third quarter 2006, driven by the strong sales in SPVA. VNB decreased compared to the third quarter as SPVA margins declined in the third quarter from increased implied volatility and lower risk free rates. COLI The National Tax Agency (NTA) did not release further information in the third quarter regarding the tax treatment of Increasing Term products. This segment represented 63% of the COLI sales in the Total investment and other income as well as other interest expenses reflect the fair value changes on SPVA derivative instruments. ING Group - Insurance Asia/Pacific 51

52 INSURANCE ASIA/PACIFIC - additional information Life Insurance South Korea Life Insurance South Korea: Income Statement In EUR million 3Q2007 3Q2006 Change 2Q2007 Change 9m2007 9m2006 Change Gross premium income % % 2,741 2, % Commission income n.a. 2 - Direct investment income % % % Realised gains and fair value changes on inv. 4-1 n.a % % Total investment and other income % % % Total underlying income % 1, % 2,998 2, % Underwriting expenditure % % 2,595 2, % Operating expenses % % % Other interest expenses Other impairments Total underlying expenditure % % 2,776 2, % Underlying profit before tax % % % Taxation % % % Profit before minority interests % % % Minority interests % % % Underlying net profit % % % KEY FIGURES Value of new life business % % % Internal rate of return (YTD) 24.8% 35.6% Single premiums % % % Annual premiums % % % New Sales (APE) % % % Investment in new business % % % Life expenses as % of AUM (YTD) 4.36% 11.52% Life expenses as % of gross premiums (YTD) 8.8% 5.5% Gross life reserves 8,640 8,769 7, % Key Performance Indicators Sales up 16.5%, due to strong investment-linked sales Value of new business up 19.4%, with internal rates of return remaining high Market share grew to 6.0% from 5.1% a year earlier LIFE INSURANCE SOUTH KOREA Underlying profit before tax (EUR million) Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 Business Update South Korea is the seventh largest life insurance market in the world and ING s strategic priorities are to strengthen its position as a market leader through professional tied agency distribution, to expand its bancassurance and direct distribution channels while managing its rapid growth. ING Life Korea currently ranks fourth in the life industry and first among foreign insurers. It offers a range of insurance and insurance-related savings products through 7,699 financial consultants, up 23% from the same quarter last year, as well as through the branch networks of its partner banks. ING Life Korea increased its market share to 6.0% on the basis of written premium for the year ended 31 July 2007, up from 5.1% over same period last year, while the top three domestic insurers collectively lost market share from 62.3% to below 60%. ING Life Korea s success is 52 ING Group - Insurance Asia/Pacific

53 supported by investment-linked products, which accounted for 52% of the company s sales in the third quarter 2007, up from 43% in the same quarter last year. The 2007 summer sales contest, which commenced in early July, concluded at the end of the September. It was held for a month longer than the prior year and was a success as evidenced by the impressive sales performance in the third quarter. Growth in bancassurance sales continued to be strong, mainly through Kookmin Bank, despite regulatory restrictions capping the Korean bank s annual insurance sales from one life insurer to 25%, and 33% in the case of common related shareholders such as ING Life Korea and KB Life. KB Life reached its maximum allowable sales limit through Kookmin Bank in the third quarter. In the third quarter, ING Group completed the purchase of an additional 5.1% stake in ING Life Korea from Kookmin Bank for EUR 153 million. This lifts ING s ownership interest to 85.1%; the increased stake will be reflected in fourth quarter underlying net profit, APE and VNB figures. In addition to ING Life Korea, ING also owns a 49% stake in KB Life and a 20% financial stake in KB Asset Management, with Kookmin Bank holding the balance of shares in the two companies. The partnership is cemented by ING s strategic 4% shareholding in Kookmin, Korea s largest bank. ING also operates through the wholly owned ING Investment Management Korea, which was merged with recently acquired Landmark Investment Management. ING Investment Management Korea is the ninth largest asset manager in Korea with over EUR 9 billion in assets under management and a market share of 3.2% as of the end of August Profit Profit before tax rose to EUR 69 million, up 25.5% from the third quarter 2006 on growth of investment-linked sales and the combined impact of one-off expenses in 2006 and In the third quarter 2006, EUR 17 million of one-off reserve adjustments were taken, whereas 2007 included a one-off expense of EUR 4 million. Income Gross premiums increased by 4.9% to EUR 896 million. This increase was primarily the result of ING Life s Korea strategy to shift bancassurance sales away from the less profitable single premium policies to the more profitable regular premium policies. In line with the industry, ING Life Korea experienced an increase in surrenders of both investment-linked and interestsensitive products over the quarter. This was caused by significant volatility in the Korean stock market whereby policyholders surrendered policies to take advantage of stock market movements. Total investment and other income rose 30.9% to EUR 89 million supported by the 28% increase in insurance assets under management to EUR 8 billion and the inclusion of the Landmark acquisition in the third quarter, which added more than EUR 7 billion to ING Investment Management Korea s EUR 2 billion assets under management. Expenses Operating expenses increased 36.7% to EUR 67 million in line with business growth and a one-off expense item of EUR 4 million. ING Life Korea continued to invest in its tied agent sales force and established 23 new branch offices since beginning of the year. Expenses as a percentage of assets under management improved from 11.52% in 9m 2006 to 4.36% in 9m 2007 due to asset growth of in-force investment-linked products and the Landmark acquisition. Sales momentum picks up in third quarter led by variable products Key Figures New sales (APE) rose 16.5% to EUR 247 million, driven by strong growth in investment-linked products during the extended summer sales contest, expansion of the tied agency force and high market valuations. Value of new business grew 19.4% to EUR 43 million due to the ongoing product mix shift towards higher margin investment-linked products. The year-todate internal rate of return on new business remained high at 24.8% for ING Life Korea but was lower than in 2006 partly due to a regulation change which became effective on 1 April ING Group - Insurance Asia/Pacific 53

54 INSURANCE ASIA/PACIFIC - additional information Life Insurance Taiwan Life Insurance Taiwan: Income Statement In EUR million 3Q2007 3Q2006 Change 2Q2007 Change 9m2007 9m2006 Change Gross premium income % % 2,215 2, % Commission income Direct investment income % % % Realised gains and fair value changes on inv n.a. -38 n.a n.a. Total investment and other income % % % Total underlying income % % 2,458 2, % Underwriting expenditure % % 2,290 2, % Operating expenses % % % Other interest expenses % Other impairments Total underlying expenditure % % 2,458 2, % Underlying profit before tax Taxation % 17 - Profit before minority interests n.a Minority interests Underlying net profit n.a KEY FIGURES Value of new life business % % % Internal rate of return (YTD) 19.2% 19.4% Single premiums % % % Annual premiums % % % New Sales (APE) % % % Investment in new business % % % Life expenses as % of AUM (YTD) 7.02% 9.00% Life expenses as % of gross premiums (YTD) 7.8% 7.9% Gross life reserves 12,933 12,874 11, % Key Performance Indicators New business sales up by 103.1% to EUR 132 million on strong tied agency distribution of investment-linked products VNB rises 52.8% to EUR 55 million Reserve adequacy position at 66% Business Update ING Life Taiwan continues to strengthen its tied agency distribution channel to increase the value of new business while actively managing its reserve adequacy level and economic capital on the existing in-force business. Taiwan is the world s ninth largest life insurance market with EUR 27.6 billion in premium income for the first eight months of 2007, growing 23% compared to the same time period last year. Investment linked and participating products are two of the best selling products in the industry. Given the prevailing market conditions and ING Life Taiwan s strategy, the sales mix is geared towards the less capital intensive investment-linked and participating products, supported by the higher margin accident and health riders. 54 ING Group - Insurance Asia/Pacific

55 Investment-linked sales accounted for almost 82% of new business sales in the third quarter compared with an industry average of 57%. ING Life Taiwan has improved its market ranking to 7th place, as measured by adjusted first year premium statistics from the Life Insurance Association of Taiwan, and has over 270 branches and 9,076 agents. Sales in the third quarter were exceptionally strong, driven by a successful third quarter sales campaign, improved agent productivity, and regulatory changes to the current suite of investment-linked products which impacted the commission structure. This was complemented by the overall strong market demand for investment-linked products. The re-filing of the existing products, including investment-linked ones, in order to comply with 221 new product pricing regulations, was completed in the third quarter. Income Gross premium income rose 19.6% to EUR 715 million, driven by strong sales of investment-linked products, which accounted for 32.0% of total year to date premiums. Investment and other income was 9.2% higher due to the continuing growth in the asset base and lower hedge losses. Expenses Operating expenses increased 10.7% to EUR 62 million in line with underlying growth and including office relocation costs. Expenses as a percentage of premiums remained steady at 7.8% in the third quarter 2007 compared to last year. Assets under management for the investment-linked business doubled to over EUR 1 billion, which led to a drop in expenses as a percentage of assets under management from 9.0% in the third quarter of 2006 to 7.02% in third quarter of Sales of investmentlinked products soar in third quarter, boosting VNB Taiwan Ratings Corporation reaffirmed its twaaa insurer financial strength and counterparty credit ratings on ING Life Taiwan, with stable outlook. Only 3 out of 23 insurance companies received this triple A rating, of which ING Life Taiwan is the only foreign-owned company. Profit In line with previous quarters, ING Taiwan strengthened reserves, resulting in a reported profit before tax of zero. New Business New sales increased by 103.1% to EUR 132 million, driven by strong growth in investment-linked sales, which now account for approximately three quarters of new business sales year-to-date. This is due to ING Life Taiwan s ongoing efforts to strengthen its tied agency channel, and a successful third quarter agency sales campaign. Agent productivity continued to improve in the third quarter of 2007 compared to the third quarter last year. Reserve Adequacy As of 30 September, reserve adequacy at the 50% confidence level was steady at EUR 708 million, equivalent to an adequacy position of 66%. This is significantly higher than the adequacy level of EUR 253 million as reported in the third quarter 2006 due to the increase in Taiwanese interest rates. The 10-year swap rate closed at 2.74% on 30 September. In contrast, the adequacy position deteriorated relative to the reported second quarter 2007 figure of EUR 946 million, due to the use of updated assumptions for hedge costs and asset spreads. Value of new business rose 52.8% to EUR 55 million, on the back of strong new business sales growth. ING Group - Insurance Asia/Pacific 55

56 INSURANCE ASIA/PACIFIC - additional information Life Insurance Rest of Asia Life Insurance Rest of Asia: Income Statement In EUR million 3Q2007 3Q2006 Change 2Q2007 Change 9m2007 9m2006 Change Gross premium income % % % Commission income % % % Direct investment income % % % Realised gains and fair value changes on inv % % % Total investment and other income % % % Total underlying income % % % Underwriting expenditure % % % Operating expenses % % % Other interest expenses % % % Other impairments n.a Total underlying expenditure % % % Underlying profit before tax % % % Taxation % % % Profit before minority interests % % % Minority interests % % % Underlying net profit % % % KEY FIGURES Value of new life business % -1 n.a % Internal rate of return (YTD) 9.1% 8.9% Single premiums % % % Annual premiums % % % New Sales (APE) % % % Investment in new business % % % Life expenses as % of AUM (YTD) 0.73% 0.95% Life expenses as % of gross premiums (YTD) 14.8% 16.7% Gross life reserves 3,482 3,482 3, % Key Performance Indicators Double digit sales growth across all countries within the segment VNB improved to EUR 9 million on sales performance LIFE INSURANCE REST OF ASIA Underlying profit before tax (EUR million) Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 Business Update Economic growth in Asia continues to outpace other regions, with increasing amounts of wealth being created. Similarly, growth of life insurance in Asia is expected to outperform other regions in future years, whether to accommodate wealth accumulation for ageing populations or to promote savings plans for the rising working class. ING is well-positioned to secure this long-term growth in the region and to build a strong position in the various markets in which it operates. Rest of Asia consists of diverse businesses at different stages of maturities from strong, medium-sized life operations in Malaysia and Hong Kong to Greenfield operations in China, India and Thailand. In line with ING s commitment to these markets, capital continues to be deployed to facilitate our growth. In Malaysia, ING has life insurance, employee benefits and funds management businesses that serve over 1.5 million customers nationwide. ING Malaysia Life ranked 6th in the individual life new business with a market share of 8% at the end of the second quarter of 2007 while the employee benefits business 56 ING Group - Insurance Asia/Pacific

57 maintained its first position with a market share of 43% at the end of the second quarter of ING Funds, with assets under management of EUR 406 million as of 30 September, has established itself as the fastest growing fund management company in the country with a compound annual growth rate of 139% since its incorporation in Tied agents remain the key sales channel in Malaysia. With 31 branch offices, the channel accounts for 83% of total sales. In Hong Kong, ING has both life insurance and general insurance businesses. The life business operates primarily through tied agents, but efforts continue to strengthen its bancassurance sales channel with one more key strategic alliance secured in the third quarter: China Construction Bank (Asia). ING Life Hong Kong had a market share of 1.4% for new business; and 2.4% in terms of in-force business at the end of the second quarter. In India, ING has a joint venture and sells life insurance products primarily through tied agents and its expanding bancassurance distribution including ING Vysya Bank. As of the end of the third quarter, ING had 43,257 agents (up by 13% from end of second quarter) operating from 206 sales offices in 188 cities across the country. ING Life India ranks 11th among private players and has a market share of 1.1%, on the basis of weighted first year premium end of August offices and over 4,000 tied agents, and six bancassurance partnerships. In Thailand, ING has a life insurance operation which primarily sells traditional savings-based products through tied agency, bancassurance and telemarketing channels. ING maintained its eighth position with a 4.7% market share in term of new sales as of August 2007 (latest available). The company currently has 46 branches and over 7,250 agents (up by 15% from 2006). Furthermore, a new bancassurance partner with Kiatnakin Bank was signed up in the third quarter expanding the ING Life Thailand s distribution reach. Following the 2006 acquisition of ABN Amro Asset Management in Taiwan, ING is now the fourth largest domestic asset funds manager, with a market share of 5.9%. In the offshore fund sales, ING has also grown rapidly with a market share of 11.5%. Total assets under management stood at EUR 8 billion at the end of the third quarter, supported by strong inflows. Profit Underlying profit before tax decreased compared to the third quarter of 2006, both due to accelerated investments in Greenfield businesses particularly in India, China and Thailand, lower profit in ING Life Hong Kong due to one-off gains in third quarter of 2006, and higher operating expenses in third quarter of Fee income growth was led by asset management operations in Taiwan with an increase of EUR 5 million mainly due to income from acquired business being included in the current quarter. Expenses Operating expenses increased 37.2% to EUR 59 million compared to the third quarter of 2006, due to the high growth in new business and continued infrastructure investment. Expenses as a percentage of premium are coming down, indicating improved operational efficiency. New Business Production New life sales are up 47.5% to EUR 59 million compared to the third quarter of 2006 due to continued expansion of distribution capabilities and new alliances. This growth comes from all markets: Malaysia is up by EUR 8 million, Hong Kong and India are up by EUR 5 million, Thailand by EUR 4 million and China by EUR 2 million. Third quarter VNB results benefited by EUR 9 million with the removal of start-up costs for China, India, and Thailand. The removal of these start-up costs for immature businesses reflects a change in policy that took effect in the 3rd quarter The change was made in order to better reflect the long run value creation of the business written, enabling ING to better compare the performance of immature and mature businesses. On a comparable basis VNB remained flat. In China, ING sells life insurance products through two joint ventures namely ING Pacific and ING Capital focusing on the Southern and Northern coastal areas of the Chinese markets. ING s strategy is to expand geographically, strengthen its tied agency force and add successful bancassurance partnerships with local banks. During the quarter, ING China was the first foreign insurer to establish a presence in the province of Henan, the most populous region in China with nearly 100 million people. Currently ING has a presence in six provinces with 12 Income Gross premium income increased 29.9% to EUR 239 million compared to third quarter of 2006, driven by increased new business and a growing in-force portfolio across the region. Malaysia s growth was driven by higher renewal premium income and new sales of its single premium investment-linked products. Likewise, Hong Kong continued to benefit from higher sales of its single premium universal life products. India, Thailand and China, while small in absolute terms, all contributed significant growth. ING Group - Insurance Asia/Pacific 57

58 INSURANCE Corporate Line Insurance Corporate Line Insurance: Underlying profit before tax split In EUR million 3Q2007 2Q2007 1Q2007 4Q2006 3Q2006 2Q2006 1Q2006 Change 3Q vs 3Q Gains on equities Interest on Insurance hybrids Interest on ING Group core debt / cost of preference shares Interest on core debt Insurance Holding and US core debt Fair value changes derivatives Gains on old reinsurance business Formula One sponsoring costs Other Underlying profit before tax The Corporate Line Insurance includes several clearly defined items over which business units have no direct control. In order to provide a fair, comparable and transparent overview of the performance of the business lines, these items were transferred from the operating units to the Corporate Line. The items in the Corporate Line include primarily: interest on core debt funding, non-allocated capital gains on equities, fair value changes on certain derivatives such as swaps on core debt, and profits from old reinsurance run-off portfolios. Other than Formula One sponsoring costs, no excess or overhead expenses are included in this line, as such items are fully allocated to the business lines. Profit The Corporate Line Insurance posted a profit of EUR 291 million compared with a loss of EUR 195 million in the third quarter last year following EUR 469 million higher capital gains on shares largely due to a EUR 455 gain related to the sale of part of ING s stake in ABN Amro. Interest on core debt is the most substantial component and has been fairly stable over the last eight quarters. Capital gains on equities and fair value changes on derivatives can change substantially between quarters, due to developments in equity markets and movements of interest rates. Fair value changes on derivatives correlate positively with movements of long term interest rates. 58 ING Group - Corporate line Insurance

59 ING Group - Corporate line Insurance 59

60 60 ING Group - Banking Banking

61 Results at ING s banking business proved resilient despite the turmoil in credit markets. Profits declined slightly as growth at Retail banking helped offset declines at Wholesale Banking and ING Direct. ING Group - Banking 61