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ING US reports Q2 net loss of USD82m


ING US has reported a Q2 2013 net loss available to common shareholders of USD82m, or USD0.33 per share, compared with Q2 2012 net income available to common shareholders of USD634m, or USD2.76 per share.

After-tax operating earnings totalled USD177m, or USD0.71 per share, compared with USD129m, or USD0.56 per share in Q2 2012.
A USD220m after-tax loss, including an after-tax loss of USD79m related to non-performance risk, in the closed block variable annuity (CBVA) segment drove the net loss available to common shareholders and reflects the CBVA hedging programme’s focus on protecting regulatory and rating agency capital from market movements, rather than minimising GAAP earnings volatility. As a result, under the current CBVA hedging programme, CBVA typically will be expected to experience a loss when the equity market appreciates and a gain when the equity market depreciates.
ING US’s ongoing business includes the retirement, annuities, investment management, individual life, and employee benefits segments. The corporate, CBVA, closed block institutional spread products and closed block other segments are not reflected in ongoing business results.
Ongoing business operating earnings before income taxes of USD307m, compared with USD192m in Q2 2012.
Ongoing business adjusted operating earnings before income taxes of USD303m, compared with USD279m in Q2 2012. The following items primarily account for this increase:
• Increased fee based margin (USD43m positive variance) on higher assets due to market appreciation and positive net flows;
• Lower investment spread and other investment income (USD36m negative variance), driven primarily by lower investment income (despite higher prepayment fee income), partly offset by reductions in crediting rates;
• Higher underwriting income (USD25m positive variance) in individual life and employee benefits;
• Higher trail commissions (USD7m negative variance); and
• Lower amortization of DAC/VOBA and other intangibles (USD5m positive variance).
Annualised ongoing business adjusted operating return on equity (ROE) of 9.9 per cent for the first half of 2013, compared with 8.3 per cent for FY’12.
"ING US had a strong second quarter as we continued to deliver on our ROE improvement objective with our ongoing business adjusted operating ROE growing – on an annualised basis – to 9.9 per cent for the first half of 2013, up from 8.3 per cent for the full year 2012," says Rodney O Martin, Jr, chairman and chief executive officer, ING US.
"During the quarter, we saw positive results among several key measures. Total assets under management and administration grew to USD482bn supported by net flows in our retirement and investment management segments of USD442m and USD3.1bn, respectively. At the same time, we continued to re-position our individual life segment with a focus on less capital-intensive products, while also investing in our employee benefits product set.
"With a diverse business and distribution mix, ING US is well positioned to help address America’s need for retirement readiness. We remain focused on leveraging our strengths to achieve further success and create value for both our shareholders and our customers.”

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