TOWARD A GLOBAL ING BRAND

ANNUAL REPORT ING GROUP 2001

TOWARD A GLOBAL ING BRAND

2 • A N N U A L R E P O R T I N G G R O U P 2 0 0 1

CONTENTS

TOWARD A

GLOBAL

ING BRAND

PAGE 9 -12

H I G H L I G H T S 2 0 0 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

1 0 Y E A R S K E Y F I G U R E S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

M E S S A G E F R O M T H E C H A I R M A N . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

P R O F I L E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

T O W A R D A G L O B A L I N G B R A N D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

S T R U C T U R E A N D C O M P O S I T I O N O F T H E B O A R D S . . . . . . . . . . . . . . . . . . . 1 3

E X E C U T I V E C E N T R E S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 4

P R O D U C T S & S E R V I C E S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 5

I N F O R M AT I O N F O R S H A R E H O L D E R S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 6

I N G I N S O C I E T Y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 8

R E P O R T O F T H E S U P E R V I S O RY B O A R D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 0

R E P O R T O F T H E E X E C U T I V E B O A R D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2

F I N A N C I A L H I G H L I G H T S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2

G R O U P S T R AT E G Y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 4

O U T L O O K F O R 2 0 0 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 6

I N G E U R O P E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 7

I N G A M E R I C A S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2

I N G A S I A / PA C I F I C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 6

I N G A S S E T M A N A G E M E N T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 9

H U M A N R E S O U R C E S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 3

R I S K M A N A G E M E N T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 5

F I N A N C I A L I N F O R M AT I O N . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 8

A U D I T O R ’ S R E P O R T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 9

S U M M A RY A N N U A L F I G U R E S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 0

A D D I T I O N A L I N F O R M AT I O N : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1

- R A R O C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1

- E M B E D D E D VA L U E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 2

- R AT I O S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 4

- C R E D I T R AT I N G S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 5

C O R P O R AT E G O V E R N A N C E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 6

G O V E R N A N C E AT I N G . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 6

I N F O R M AT I O N O N S U P E R V I S O RY B O A R D M E M B E R S . . . . . . . . . . . . . . . . 6 8

I N F O R M AT I O N O N E X E C U T I V E B O A R D M E M B E R S . . . . . . . . . . . . . . . . . . . . 6 9

R E M U N E R AT I O N E X E C U T I V E B O A R D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 9

R E M U N E R AT I O N S U P E R V I S O RY B O A R D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 1

S T O C K O P T I O N P L A N . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 1

R E P O R T S O F T H E ‘ S T I C H T I N G E N ’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 3

W O R K S C O U N C I L S A N D A D V I S O RY C O U N C I L . . . . . . . . . . . . . . . . . . . . . . . . . 7 4

0

0 .5

1 .0

1 .5

2 .0

2 .5

0100999897

OPERAT IONAL NET PROF IT

PER SHARE

in euros

A N N U A L R E P O R T I N G G R O U P 2 0 0 1 • 3

R E S U LT S 2 0 0 1 . . . . . . . . . . . . . . . . . . . . . . 2 2

ING’s operational net profit

increased by 6.1% to 4,252

million and operational net profit

per share advanced by 5.3% to

2.20. Dividend rose by 3.2%

to 0.97 per share. This

means a pay-out ratio of 44.1%.

Total assets under management

rose by 2% to 513 billion.

I M PA C T O F S E P T E M B E R 1 1

E V E N T S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2

Indirectly, ING was confronted

with (re-)insurance claims relat-

ing to the WTC disaster. After

external catastrophe cover of

100 million and internal

charges to catastrophe provi-

sions, the total loss after tax in

the 2001 annual results was

100 million.

I N T E G R AT I O N I N U N I T E D S TAT E S

S T E P P E D U P . . . . . . . . . . . . . . . . . . . . . . . . 3 2

Integration of ReliaStar and

Aetna Financial Services with

ING’s insurance activities pro-

gressed as planned. In December

2001, the next step in the ongoing

integration process was announc-

ed together with an expense

reduction programme to counter

the impact of weaker market

conditions.

ASSET MANAGEMENT UNITS IN US

MERGED INTO ING AELTUS . . . . . . . 4 0

In June 2001, ING formed ING

Aeltus Group, a new institu-

tional investment management

firm that combines two existing

ING entities in the US: Aeltus

Investment Management and

ING Furman Selz Asset Mana-

gement. ING Aeltus had 69

billion in assets under manage-

ment at year-end 2001.

I N T E G R AT I O N O F W H O L E S A L E

A C T I V I T I E S C O N T I N U I N G . . . . . . . . 2 8

In 2001, all wholesale operations,

including corporate and invest-

ment banking and group insur-

ance, were combined under the

Executive Centre ING Europe.

Further restructuring is under-

way to bring the cost base in

line with the changed market

conditions.

I N G D I R E C T: A N O T H E R Y E A R O F

R E C O R D G R O W T H . . . . . . . . . . . . . . . . . . 2 8

ING Direct delivered another

year of record growth by doub-

ling its client base and funds

entrusted. At year-end, total

clients stood at 2.6 million and

funds entrusted at 24 billion.

These figures include DiBa in

Germany in which ING expand-

ed its 49% stake to a majority

interest of 70% in February

2002.

P E N S I O N S J O I N T V E N T U R E I N

G E R M A N Y . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 0

BHF-Bank (part of ING Group),

BHW and BGAG established

BHW Invest FT, a joint venture

to enter the newly defined field

of pension products based on

the new ‘Riester’ legislation.

BHW Invest FT has already

received its first mandates from

pension funds.

S T R AT E G I C A L L I A N C E W I T H

P I R A E U S B A N K . . . . . . . . . . . . . . . . . . . . . 3 0

In December 2001, ING and

Piraeus Bank agreed on a strate-

gic alliance in the Greek market.

Between them, the two partners

have local market shares of 14%

in life insurance, 10% in banking

and 8% in asset management and

will distribute their products

through 2,500 agents and 300

bank branches.

I N G AT TA I N E D 1 0 0 % O F

S E G U R O S C O M E R C I A L A M É R I C A ,

M E X I C O . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 4

ING increased its stake in Se-

guros Comercial América (SCA)

from 42% to full ownership.

SCA is the largest private

insurer in Mexico.

I N G A N D A U S T R A L I A N B A N K A N Z

T O F O R M J O I N T V E N T U R E . . . . . . . 3 8

ING Australia and ANZ Bank

agreed on a joint venture in

funds management and life

insurance in Australia and New

Zealand. The proposed joint

venture, to be known as ING

Australia Limited, would be

owned 51% by ING and 49% by

ANZ.

S T R O N G P R O G R E S S I N I N G B R A N D

B U I L D I N G . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Many rebranding programmes

were successfully initiated in

ING markets, such as the

United States, Mexico, Chile,

Poland, the Czech Republic,

Taiwan and Malaysia. In the

Netherlands, ING business units

will introduce an ING

endorsement as a first step

toward the ING brand.

H I G H L I G H T S 2 0 0 1

R E S U LT S 2 0 0 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2

I M PA C T O F S E P T E M B E R 1 1 E V E N T S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2

I N G D I R E C T: A N O T H E R Y E A R O F R E C O R D G R O W T H . . . . . . . . . . . . . . 2 8

I N T E G R AT I O N O F W H O L E S A L E A C T I V I T I E S . . . . . . . . . . . . . . . . . . . . . . . . . 2 8

P E N S I O N S J O I N T V E N T U R E I N G E R M A N Y . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 0

S T R AT E G I C A L L I A N C E W I T H P I R A E U S B A N K . . . . . . . . . . . . . . . . . . . . . . . 3 0

I N T E G R AT I O N I N U N I T E D S TAT E S S T E P P E D U P . . . . . . . . . . . . . . . . . . . . 3 2

I N G AT TA I N E D 1 0 0 % O F S E G U R O S C O M E R C I A L A M É R I C A . . . . . 3 4

I N G A N D A N Z B A N K T O F O R M J O I N T V E N T U R E . . . . . . . . . . . . . . . . . . . 3 8

A S S E T M A N A G E M E N T U N I T S I N U N I T E D S TAT E S M E R G E D . . . . . 4 0

CONTINUED PROFIT GROWTH


1 9 9 2 1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6

BALANCE SHEET (in billions of euros)

Shareholders’ equity 7 10 10 11 16

Total assets 147 154 160 180 221

ASSETS UNDER MANAGEMENT 47 53 57 95 112

(in billions of euros)

MARKET CAPITAL ISATION 6 11 10 14 22


RESULTS (in millions of euros)

Income from insurance operations (1)13 ,027 13 ,424 12 ,757 13 ,447 15 ,226

Income from banking operations 3 ,130 3 ,529 3 ,706 4 ,428 5 ,316

Operational result before taxation

Insurance operations 641 707 832 956 1 ,134

Banking operations 477 607 685 795 968

Dividend on own shares -23 -27 -33

Operational result before taxation 1 ,118 1 ,314 1 ,494 1 ,724 2 ,069

Operational net profit 830 921 1 ,045 1 ,202 1 ,507

Net profit 830 921 1 ,045 1 ,202 1 ,507

F IGURES PER ORDINARY SHARE

(EUR 0.24 nominal value)

Operational net profit 0 .69 0 .73 0 .79 0 .87 1 .04

Net profit 0 .69 0 .73 0 .79 0 .87 1 .04

Distributable net profit 0 .69 0 .73 0 .79 0 .87 1 .04

Dividend 0 .29 0 .32 0 .34 0 .38 0 .46

Shareholders’ equity 5 .70 7 .46 7 .23 7 .56 10 .63

RATIOS (in %)

ING GROUP

Return on equity (ROE) 8 .7 8 .6 10 .6 12 .1 11 .5

Operational net profit growth 16 11 13 15 25

Pay-out ratio 41 .9 43 .4 43 .0 43 .2 43 .9

INSURANCE OPERAT IONS

Premium/expense growth gap 2 9 4 -2 3

Life premiums as a % of total premiums 64 68 69 69 70

Combined ratio non-life insurance 107 108 105 104 103

BANKING OPERAT IONS

BIS ratio ING Bank 10 .25 10 .90 11 .12 11 .07 10 .89

Tier-1 ratio ING Bank 5 .98 6 .18 6 .59 6 .79 7 .57

Efficiency ratio 71 .9 70 .2 68 .9 70 .9 72 .1

EMPLOYEES (average full-time equivalents) 50 ,650 49 ,030 46 ,980 52 ,140 55 ,990

1) Restated. 2) Excluding ING Direct.

10 YEARS KEY F IGURES

0

50

100

150

200

250

300

350

400

450

500

550

600

650

700

TOTAL ASSETS

in billions of euros

92 93 94 95 96 97 98 99 00 01

0

500

1 ,000

1 ,500

2 ,000

2 ,500

3 ,000

3 ,500

4 ,000

4 ,500

5 ,000

5 ,500

6 ,000

OPERAT IONAL RESULTS

in millions of euros

92 93 94 95 96 97 98 99 00 01

Operational net profit

Operational result

before taxation


1 0 Y E A R S K E Y F I G U R E S

1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1

22 29 35 25 22

282 395 493 650 705

174 253 345 503 513

32 50 58 83 57

19 ,535 26 ,908 29 ,720 38 ,307 63 ,077

6 ,306 8 ,415 9 ,876 11 ,302 11 ,111

1 ,688 2 ,065 2 ,400 3 ,162 3 ,571

1 ,276 804 1 ,981 2 ,605 2 ,170

-44

2 ,920 2 ,869 4 ,381 5 ,767 5 ,741

2 ,180 2 ,103 3 ,229 4 ,008 4 ,252

2 ,206 2 ,669 4 ,922 11 ,984 4 ,577

1 .40 1 .12 1 .68 2 .09 2 .20

1 .42 1 .42 2 .56 6 .27 2 .37

1 .42 1 .42 1 .84 2 .56 2 .20

0 .52 0 .63 0 .82 1 .13 0 .97

13 .30 15 .21 17 .90 13 .04 11 .03

12 .0 8 .3 10 .3 12 .2 18 .4

45 -4 53 24 6

36 .9 43 .9 44 .4 43 .9 44 .1

6 9 7 2 3

75 82 84 86 88

102 106 107 104 104

10 .77 10 .86 10 .38 10 .75 10 .57

7 .13 7 .14 7 .02 7 .22 7 .03

72 .8 79 .7 73 .6 (2) 72 .1 (2) 71 .7 (2)

64 ,160 82 ,750 86 ,040 92 ,650 112 ,000

BALANCE SHEET (in billions of euros)

Shareholders’ equity

Total assets

ASSETS UNDER MANAGEMENT


MARKET CAPITAL ISATION


RESULTS (in millions of euros)

Income from insurance operations (1)

Income from banking operations


Insurance operations

Banking operations

Dividend on own shares



Net profit

F IGURES PER ORDINARY SHARE

(EUR 0.24 nominal value)


Net profit

Distributable net profit

Dividend

Shareholders’ equity

RATIOS (in %)

ING GROUP

Return on equity (ROE)

Operational net profit growth

Pay-out ratio

INSURANCE OPERAT IONS

Premium/expense growth gap

Life premiums as a % of total premiums

Combined ratio non-life insurance

BANKING OPERAT IONS

BIS ratio ING Bank

Tier-1 ratio ING Bank

Efficiency ratio

EMPLOYEES (average full-time equivalents)

0

10

20

30

40

50

60

70

80

MARKET CAP ITAL ISAT ION


92 93 94 95 96 97 98 99 00 01

0

10 ,000

20 ,000

30 ,000

40 ,000

50 ,000

60 ,000

100 ,000

70 ,000

80 ,000

90 ,000

110 ,000

EMPLOYEES

average full-time equivalents

92 93 94 95 96 97 98 99 00 01

International

Netherlands


2001 was a tough year in several respects. The slowdown in eco-

nomic growth in most of our key markets was aggravated by the

terrorist attacks in the US on September 11. This cast a shadow over

the entire year, not only financially, but also socially and politically.

Mainly through our new US subsidiary ReliaStar, we were con-

fronted with unexpected large reinsurance claims totalling

approximately 600 million from workers’ compensation

insurance contracts of some large companies based in the World

Trade Center. Handling such claims is part of our function as a

financial services provider and we find comfort to know that the

compensation paid will be used to support the families that were

struck by this disaster.

The world is changing and more than ever before companies are

searching for a new role in modern society. ING and its founding

companies have been very conscious of their social responsibility for

more than 150 years. In 2001, we published a new annual report,

‘ING in Society’, which documents our policies in the field of cor-

porate responsibility, sustainability and business principles. ING’s

selection as sustainability leader for the financial sector in the 2001

Dow Jones Sustainable Indices shows that our efforts are recognised.

The new edition of ‘ING in Society’ will become available this

summer.

A cornerstone of our social and economic policies is that we aim for

an optimal balance between the interests of all our stakeholders.

Our 50 million clients expect value for money and excellent service.

Our shareholders in many countries expect good financial perfor-

mance. Our more than 110,000 employees from 65 countries form a

greatly diversified and dedicated workforce, for whom we want to be

a good employer. And last but not least, we aim to be a good corpo-

rate citizen that fulfils a useful role in society.

It is my personal conviction that by balancing these interests, we will

ultimately deliver added value for the benefit of all our stakeholders.

Reliability, transparency and quality at a fair price are essential

elements to obtain a ‘licence to operate’. All of us at ING realise

that we have to earn that licence every day, in all our activities.

We have set ambitious goals. We intend to be a leader in our core

countries. We want to rank among the world’s ten largest financial

services companies and be among the top five in Europe and the US.

We already are the number one international life insurer in Latin

America and we hold the number two spot in Asia. And we aim to

be one of the world’s ten largest asset managers.

A global ING brand will help us to build a reputation that ING is

an innovator and offers different solutions to financial needs of indi-

viduals, families, corporations and institutions. From a multitude of

local labels, we are transforming to one powerful ING brand, based

on one ING culture. The progress that we have made in 2001 is sub-

stantial.

We have also made headway in strengthening our position in several

key business lines. Our life insurance operations again recorded

double-digit revenue growth with a substantial contribution from

our blossoming businesses in developing markets. The return to

savings in a weak stock market was reflected by the spectacular

development of ING Direct, which, just as in 2000, more than

doubled its number of clients to 1.75 million and its funds entrusted

to 18 billion. Our employee benefits and pensions operations in

Europe and the US also expanded their portfolios substantially in

line with the increased demand for wealth accumulation products

and services. In a difficult market, our assets under management

continued to grow, exceeding 510 billion. We advise governments

of several countries in reforming their pension systems.

In difficult economic circumstances, ING managed to uphold its 11-year track record of

uninterrupted profit growth and closed the 2001 accounts with a 6.1% increase in net

operational profit and a 5.3% rise in profit per share. We recorded this profit growth

thanks to our broad business mix, the confidence of our clients and business partners,

and the hard work of our staff.

WE WILL DEL IVER ADDED VALUE FOR ALL OUR STAKEHOLDERS


M E S S A G E F R O M T H E C H A I R M A N

Though our attention was primarily focused on integrating the

major acquisitions of recent years and restructuring our wholesale

activities, we were able to strengthen our position in a number of core

markets. In Poland, we acquired 88% of the shares in Bank Slaski.

In Germany, we agreed to increase our stake in DiBa, the number

one German direct bank, to 70% and in Mexico, we obtained full

ownership of the leading insurer Seguros Comercial América.

A joint venture with a well-established local partner can be a very

effective entry strategy. We did that to enter the life markets in India

and China. We broadened our presence in Greece through a partner-

ship with Piraeus Bank and we intend to do the same with ANZ Bank

in Australia. In Canada, we improved our position to become the larg-

est non-life insurer through co-operation with Zurich and in Germany

we entered into a partnership in the important field of pensions.

It is rewarding to team up with partners who share our vision of com-

Providing financial services is first and foremost a people business.

Our human resources policy is aimed at attracting, developing and

retaining talent throughout ING. In the same vein, we will continue

to support the intermediaries we work with. Professional advice will

continue to have a distinct added value in assisting clients to select

the products that best suit their needs. My colleagues in the Execu-

tive Board join me in thanking our clients and shareholders, our staff

and our business partners for their confidence in ING. We will do

our utmost to make 2002 a successful year!

Yours sincerely,

EWALD KIST

Chairman of the Executive Board

PERFORMANCE IMPROVEMENT, BOTH THROUGH ONGOING REVENUE GROWTH AND

STR ICT COST CONTROL , I S OUR TOP PR IOR ITY IN 2002

Chairman Ewald Kist in front of the new ING head office in Amsterdam, which

will be ready mid 2002.

bining insurance, banking and asset management.

We have now accumulated 11 years of experience

with our integrated financial services concept.

New synergies are pursued every day and co-oper-

ation has become an innate element of our corpo-

rate culture. This expertise gives us a lead on the

increasing number of competitors that have sub-

sequently chosen to walk down the same path.

Our goals for 2002 are clear. Performance improve-

ment, both through ongoing revenue growth and

strict cost control, is our top priority. Completing

the integrations of our US and wholesale business-

es is another main objective. Operational excel-

lence and synergy are also key words that feature

prominently in the strategy section of this report.

At this moment it is too early for a profit expec-

tation for 2002. The Executive Board is positive,

but cautious about the economic outlook for the

year ahead. Given the uncertainty about improve-

ment of the economies in which ING is active, we

consider it prudent not to make a profit forecast

for 2002 yet.


M I S S I O N

ING’s mission is to be a leading, global, client-focused, innovative

and low-cost provider of financial services through the distribution

channels of the client’s preference in markets where ING can create

value.

P R O F I L E

ING Group is a global financial institution of Dutch origin offering

banking, insurance and asset management to over 50 million private,

corporate and institutional clients in 65 countries. With a diverse

workforce of over 110,000 people, ING comprises a broad spectrum

of prominent companies that increasingly serve their clients under

the ING brand.

Key to ING is its distribution philosophy: ‘click–call–face’. This is a

flexible mix of internet, call centres, intermediaries and branches with

which ING can fully deliver what today’s clients expect: unlimited

access, maximum convenience, immediate and accurate execution,

personal advice, tailor-made solutions and competitive rates.

ING’s strategy is to achieve stable growth while maintaining healthy

profitability. The Group’s financial strength, its broad range of prod-

ucts and services, the wide diversity of its profit sources and the

good spread of risks form the basis for ING’s continuity and growth

potential. More than 70% of ING’s shares are held by investors

outside the Netherlands.

ING seeks a careful balance between the interests of its stake-

holders: its customers, shareholders, employees and society at large.

It expects all its employees to act in accordance with the Group’s

Business Principles. These principles are based on ING’s core values:

responsiveness to the needs of customers, entrepreneurship, profes-

sionalism, teamwork and integrity.

S T R AT E G Y

ING aims to be a top-10 global financial institution. Through a

variety of ING companies – managed by the Executive Centres ING

Europe, ING Americas, ING Asia/Pacific and ING Asset Manage-

ment – ING wants to deliver added value to clients in banking,

insurance and asset management. ING wants to ensure operational

excellence, achieve synergies and emphasise cost control within one

ING culture. The long-term financial targets are an average annual

growth of operational net profit per share of at least 12%, an aver-

age annual operational net return on shareholders’ equity (ROE) of

at least 18% and improving efficiency ratios.

PROFILE

MISS ION, PROFILE , STRATEGY

TOWARD A GLOBAL ING BRAND


ING used to be a group of companies, each

having a substantial degree of autonomy and

often working under its own name and logo.

Some of these brands were nationally known,

while others had mainly a regional reputation.

As ING expanded over the years to become a

global player and progressed toward a more

centralised management style with emphasis

on shared expertise and synergy, the need for a

strong common brand increased.

1 0 • A N N U A L R E P O R T I N G G R O U P 2 0 0 1

T O W A R D A G L O B A L I N G B R A N D

USA

ING USA consisted of a variety of companies under their own brand name.

They added ING to their name to take advantage of the strength of the global

ING brand. The campaign “It’s not an ending. it’s a beginning” was designed

to build awareness of the ING brand in the US market, thereby supporting

the sales and distribution networks. Its key message was to demonstrate

ING’s presence in the US market. The campaign was well-received by ING’s

distributors and customers. It was rated the third best advertising campaign of

2001 in the US financial services industry. In the first three months ING USA

total aided awareness rose by almost 30%.

POLAND

Bank Slaski and Nationale-Nederlanden were the main brands of ING in

Poland. An intensive PR and advertising campaign introduced the ING brand

to the Polish market. The awareness level prior to the campaign was less than

10%. The results greatly exceeded expectations: more than 50% aided name

awareness compared to a target of 30%. The campaign managed to build

strong foundations of ING brand equity and the lion icon is now widely

recognised in Poland as the ING symbol.

AUSTRALIA

Mercantile Mutual changed its name into ING to better support its position

as a provider of integrated financial services. The phased advertising

campaign utilised television, outdoor and press mediums. The well-known

Scottish comedian Billy Connolly plays the role of the critical customer. The

target was 70% aided name awareness after four weeks. Awareness levels went

up to almost 90%, which proves the big success of the campaign.

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A N N U A L R E P O R T I N G G R O U P 2 0 0 1 • 1 1

ING is active in 65 countries and ranks

among the world’s largest 15 financial services

companies in terms of market capitalisation.

However, on a worldwide scale the name

recognition of the ING brand name does not

reflect this position today. The financial

sector is characterised by consolidation and

ongoing changes in consumer requirements,

technology, distribution and legislation. In

such an environment, clients are looking for

stability, reliability and familiarity. A strong,

universal brand can help to achieve this as a

brand offers a promise to clients in terms of

quality of products and services, value for

money, corporate style and culture.

A strong brand can also help to attract the

best employees, facilitate synergies and foster

one corporate culture within the Group.

Furthermore, one brand creates considera-

ble long-term cost savings as maintaining

and promoting one brand is much cheaper

than 70 individual brands.

Among the world’s best known 100 brands,

there are only four financials. Though the

contacts are frequent – either personal, by

phone, mail or internet – financial services

companies have apparently not succeeded

in reaching the hearts and minds of their

customers. This presents a window of

opportunity for ING in building a global

brand.

Rebranding – the transfer from the local

name and logo to the ING name and the

orange lion – is one part of the mission.

The other is loading the ING brand in such

a way that it conveys the same associations

to stakeholders all over the world. This

repositioning aims to achieve that ING is

perceived as a company that offers different

solutions to financial requirements than its

competitors. As a pioneer in combining

insurance, banking and asset management

and in applying various distribution

approaches, ING built a reputation as an

innovator in the financial sector.

BUILDING A STRONG GLOBAL BRAND


Advertising campaigns in very

different markets, all using the

strength of the ING lion: USA,

India and Mexico.



The move toward a global brand is endorsed

by the entire top management of ING.

Executive Board chairman Ewald Kist as

ING brand manager stimulates and guides

the transfer. A Global Branding Committee

with brand specialists and senior managers

from all over ING coordinates the rebranding

and repositioning initiatives together with a

dedicated Branding Department.

ING has not chosen to pursue a ‘big-bang

scenario’, but rather a gradual approach with

pilot projects that offer valuable lessons for

the continuation of the process. The com-

panies in the Americas, South, Central and

Eastern Europe, Asia and Australia, as well

as the wholesale and asset management

operations have meanwhile adopted the

ING name and logo. The Belgian companies

have chosen a two-step route to switch to the

ING brand and the companies in the

Netherlands carry an ING endorsement as

their first stage toward rebranding.

The length and the approach of the

rebranding project vary by country, com-

pany and type of business.

Similarly, the repositioning route toward the

desired brand image is carefully determined

for each business unit. Panels with internal

and external participants from all over the

world, supported by numerous studies,

defined the required brand positioning to

distinguish ING from its competitors.

The repositioning process is inextricably

bound up with the corporate culture. It is

absolutely vital that all employees know

what the ING brand stands for.

They will have to live the brand. Communi-

cation and training programmes ensure that

the employees embrace the brand values.

Special courses at the ING Business School,

a brand and reputation intranet site, brand

books and videos will be available in the

course of 2002.

The whole rebranding and repositioning

will take years. Gradually, stakeholders will

experience that ING makes a difference in

the world of financial services.

INTRODUCING AND L IV ING THE BRAND

ING Life Taiwan launched a brand

awareness campaign, while ING Bank

in the Netherlands used the

introduction of the euro to profile

itself in a very competitive market.


S U P E R V I S O RY B O A R D

Cor Herkströter1 (64) Chairman

Mijndert Ververs2 (68) Vice-Chairman

Lutgart van den Berghe2 (50)

Jan Berghuis2, 3 (67)

Luella Gross Goldberg (64)

Paul van der Heijden1 (52)

Aad Jacobs2 (65)

Jan Kamminga3 (54)

Godfried van der Lugt (61)

Paul Baron de Meester4 (66)

Johan Stekelenburg (60)

Hans Tietmeyer (70)

Jan Timmer1 (68)

1) Member Remuneration and Appointments Committee.

2) Member Audit Committee.

3) Unti l 17 Apri l 2002.

4) Member Audit Committee as of 17 Apri l 2002.

E X E C U T I V E B O A R D

Ewald Kist (57) Chairman

Michel Tilmant (49) Vice-Chairman

Fred Hubbell (50)

Hessel Lindenbergh (58)

Cees Maas (54) Chief Financial Officer

Alexander Rinnooy Kan (52)

For more information on the Supervisory Board and Executive

Board members, see pages 68 and 69.

E X E C U T I V E C O M M I T T E E S

I N G E U R O P E

Michel Tilmant (49) Chairman

Hessel Lindenbergh (58) Chairman

Durk Brands (59)

Erik Dralans (53)

Ralf-Hartmut Fiedler (47)

Peter Gloystein (56)

Diederik Laman Trip (55)

Jan Nijssen (48)

Luc Vandewalle (57)

Hans Verkoren (54) ING Direct

Ted de Vries (54)

I N G A M E R I C A S

Fred Hubbell (50) Chairman

Glenn Hilliard (58)

Tom McInerney (45)

I N G A S I A / PA C I F I C

Fred Hubbell (50) Chairman

Patrick Poon (54)

Phil Shirriff (56)

I N G A S S E T M A N A G E M E N T

Alexander Rinnooy Kan (52) Chairman

Harry van Tooren (54)

E-business

Jacques Kemp (52)

STRUCTURE AND COMPOSIT ION OF THE BOARDS

C O M P O S I T I O N O F T H E B O A R D S as at 31 December 2001

S T R U C T U R E

S U P E R V I S O RY B O A R D

E X E C U T I V E B O A R D

I N G E U R O P E I N G A M E R I C A S I N G A S I A / PA C I F I C I N G A S S E T M A N A G E M E N T


I N G E U R O P E

ING is one of the leading

financial institutions in Europe,

delivering banking, insurance

and asset management services

to retail, corporate and insti-

tutional clients via a multi-

distribution approach.

The core countries in Western

Europe are the Netherlands, Bel-

gium, Luxembourg, Germany,

France, Switzerland and the

United Kingdom; Italy, Spain

and Greece in South Europe,

as well as Poland, the Czech

Republic and Hungary in

Central Europe.

The responsibility for the ING

Direct formula, at the moment

seven operations on various

continents, lies also with ING

Europe. The same applies to

private banking operations and

the global wholesale banking

activities, including former ING

Barings.


North America has always been

one of ING’s most important

international markets. ING is

concentrating on selling life

insurance, pension and invest-

ment products.

After the acquisition of Equita-

ble of Iowa in 1997 and ReliaStar

and Aetna Financial Services in

2000, ING became one of the

top-5 life insurers in the US. In

Canada, ING is the largest non-

life insurer. The privatisation of

the pension system in various

Latin American countries offers

new opportunities for ING.

The core countries are the

United States, Canada, Mexico,

Argentina, Brazil and Chile.


ING was the first European

company to start a life insur-

ance company in Japan, Taiwan

and South Korea. Meanwhile,

the ING companies have built

up good market positions in

these countries, further strength-

ened by the acquisition of

Aetna International in 2000.

Australia was one of the first

international markets where

ING introduced its integrated

financial services model. ING

enjoys a strong position in life

insurance, non-life insurance

and mutual funds in Australia.

Banking products for the retail

and small and medium-sized

enterprises have been added

over the years.

The core countries are Australia,

China, Japan, Korea, Malaysia

and Taiwan.


Asset management is ING’s

third core activity, alongside

insurance and banking. The

activities, which are organised

on a world-wide basis, comprise

the asset management of ING’s

insurance companies, the mana-

gement of ING’s mutual funds,

asset and relationship manage-

ment for institutional investors,

real estate, private equity and

venture capital activities.

The business units of ING Asset

Management are ING Invest-

ment Management, Baring Asset

Management, ING Real Estate,

Parcom Ventures, Baring Private

Equity Partners, ING Aeltus

and ING Trust.

EXECUTIVE CENTRES


R E TA I L C L I E N T S

I N S U R A N C E ING’s life insurance and pension products range from

guaranteed-benefit to investment-linked products. In several core

markets, ING also provides insurance cover for risks such as fire and

property, motor, health, accident and disability.

S AV I N G S ING offers a full range of savings instruments, from basic

savings deposits to ING Direct’s high return, no fees Internet savings

accounts and sophisticated products that combine savings and

investments.

I N V E S T I N G – M U T U A L F U N D S , S E C U R I T Y B R O K E R A G E ING offers a wide

array of investment products, such as country and sector mutual

funds, either ING funds or third-party funds, and various forms of

security brokerage.

P E R S O N A L L O A N S A N D M O R T G A G E S From a credit limit on a current

account to a mortgage loan tied to a securities portfolio, ING can

provide the ideal finance form for most situations in all countries

where it offers full retail banking services.

P R I VAT E B A N K I N G Private banking products and services offered

include investment management, portfolio management, pension

planning, lending, estate planning and trust services.

W H O L E S A L E C L I E N T S

C O R P O R AT E L O A N S ING offers corporate clients all types of credit:

from a current account overdraft facility to a bridge loan for a take-

over deal. Specialisations are trade and commodity finance and

structured-finance capabilities.

PAY M E N T S – C A S H M A N A G E M E N T Optimisation of cash flows can

liberate money tied up in numerous local bank accounts for more

productive uses. ING’s know-how and experience translate into

effective solutions.

E M P L O Y E E B E N E F I T S – P E N S I O N S More and more companies offer

their employees benefits such as pensions, healthcare insurance, sick

pay and disability benefits. ING has developed a unique and flexible

approach to provide tailor-made employee benefits services. ING

combines these services with administrative support, financial-

education programmes and advisory.

I N V E S T M E N T B A N K I N G ING offers a comprehensive and integrated

range of investment-banking products, tailored to suit the needs and

balance sheets of corporate clients in Europe, Asia and the Americas.

PRODUCTS & SERVICES

ING’s range of services includes corporate finance, M&A advisory,

origination of capital-markets products and securitisation.

F I N A N C I A L M A R K E T S Corporate and institutional clients can rely on

ING for sales, trading and distribution of equity and debt-market

products, including research, treasury, foreign exchange, money

markets and derivatives. ING also offers custody and administration

of securities portfolios as well as integrated brokerage, cash and

derivatives clearing, settlement and securities lending.

I N S T I T U T I O N A L C L I E N T S

I N S T I T U T I O N A L I N V E S T M E N T M A N A G E M E N T Institutional investors can

tap into ING’s experience in asset management in the form of dis-

cretionary portfolio management or by participating in pooled

funds and mutual funds.

F U N D A D M I N I S T R AT I O N S E R V I C E S Enabling investors to outsource

non-core functions, ING provides a comprehensive range of fund

administration, custody, trust, banking and accounting services.

R E A L E S TAT E Developing, financing, managing and investing in real

estate require specialised skills. As the second largest real-estate

investor in the world, ING has demonstrated its command of these

skills. To institutional investors, ING offers a family of real-estate

funds focusing on retail property, offices and residential property.

P R I VAT E E Q U I T Y ING has several specialised units that offer opportu-

nities to make direct or indirect investments in unlisted securities.

A LT E R N AT I V E A S S E T S Hedge funds and products such as collateralised

debt obligations can produce attractive returns for our clients. While

carefully managing the risk profile, ING offers clients the oppor-

tunity to invest in these assets.

www.ing.com gives access to all ING websites.

0 .0

2 .5

5 .0

7 .5

10 .0

12 .5

15 .0

17 .5

20 .0

22 .5

25 .0

ING SHARE

PR ICE /EARNINGS RAT IO

0100999897

DEVELOPMENT ING GROUP SHARE PR ICE

Index: 1 January 2000 = 100

50

75

100

125

150

01/00 04/00 07/00 10/00 01/01 01/0204/01 07/01 10/01

ING

Amsterdam AEX index

New York Dow Jones index


C A S H D I V I D E N D O N LY

ING abolished the optional stock dividend as

from the final dividend 2000. The current policy

of cash dividend prevents dilution of the profit

per share. Also, as a consequence of income tax

changes in the Netherlands per 1 January 2001,

the stock dividend lost its appeal to Dutch

private shareholders.

W A R R A N T S E X P I R E D

Until 15 March 2001, fourteen ING Group warrants

and additional payment of 61.71 could be

exchanged for five (depositary receipts for) ING

Group ordinary shares of 0.48 nominal

value. These warrants have now expired, leaving

ING Group warrants B as the only currently valid

category of warrants.

I S S U A N C E O F C F C E R T I F I C AT E S T E R M I N AT E D

With effect from 2 July 2001, the bearer depositary

receipts for ordinary shares and preference shares

A are no longer available in the form of CF

certificates, but only in book-entry form. These

bearer depositary receipts are now incorporated

in two global depositary receipts which will be

held in custody by the Nederlands Centraal

Instituut voor Giraal Effectenverkeer B.V.

(‘Necigef’) in Amsterdam.

L I S T I N G S

Depositary receipts for ING Group ordinary

shares are listed on the stock exchanges of

Amsterdam, Brussels, Frankfurt, Paris, the Swiss

exchanges and the New York Stock Exchange.

Depositary receipts for preference shares are

listed on Euronext Amsterdam. Warrants B are

listed on the Amsterdam and Brussels stock

exchanges. Short-term and long-term options on

ING Group depositary receipts for ordinary

shares are traded on Euronext Amsterdam

(Derivatives Markets) and the Chicago Board

Options Exchange.

INFORMATION FOR SHAREHOLDERS

DIVIDEND HISTORY

in euros

1997 1998 1999 2000 2001

Interim dividend 0 .22 0 .30 0 .32 0 .41 0 .47

Final dividend 0 .30 0 .33 0 .50 0 .72* 0 .50

Total 0 .52 0 .63 0 .82 1 .13 0 .97

* Including an exceptional dividend of EUR 0.19.

S T O C K S P L I T O F 2 : 1

A stock split in a ratio of 2:1 was effected on

2 July 2001, approved by the Annual General

Meeting of Shareholders on 17 April 2001. The

split halved the nominal value of the (depositary

receipts for) ING Group ordinary shares from

0.48 to 0.24. The nominal value of

ING Group preference shares A ( 1.20) was

not changed.

The exchange ratio of the warrants B, issued on

5 January 1998, has been adjusted as follows:

with an additional payment of the (unaltered)

exercise price of 49.92, one warrant B

entitles the holder to two ING Group (depositary

receipts for) ordinary shares up to 5 January 2008.

GEOGRAPHICAL D ISTR IBUT ION

OF ING SHARES

in %

The Netherlands

United Kingdom

US and Canada

Switzerland

Belgium

Luxembourg

Germany

Other

25

23

20

5

8

8

4

7


S H A R E H O L D E R S W I T H S TA K E S O F 5 % O R M O R E

Under the Dutch Act on the Disclosure of

Significant Interests, three holders of depositary

receipts with a (potential) interest of between

5% and 10% in ING Group were known as at

31 December 2001. They were ABN AMRO,

Aegon and Fortis Utrecht.

I M P O R TA N T D AT E S I N 2 0 0 2 *

Annual General Meeting of Shareholders

(RAI Conference Centre, Amsterdam)

- Wednesday, 17 April 2002, 2.00 pm

ING share quotation ex final dividend 2001

- Friday, 19 April 2002

Payment 2001 final dividend

- Friday, 26 April 2002

Publication first-quarter results 2002

- Thursday, 23 May 2002

Publication second-quarter results 2002

- Thursday, 22 August 2002

ING share quotation ex interim dividend 2002

- Monday, 26 August 2002

Publication third-quarter results 2002

- Thursday, 21 November 2002

* All dates shown are provisional.

I N V E S T O R R E L AT I O N S

In addition to financial press releases, ING also

publishes a Shareholders’ News and Shareholders’

Bulletin. For more information, please contact:

ING Group

Investor Relations Department (AA 13.09)

P.O. Box 810

1000 AV Amsterdam

The Netherlands

telephone +31 20 541 54 62

fax + 31 20 541 54 51

www.ing.com

I N F O R M A T I O N F O R S H A R E H O L D E R S

PRICES DEPOSITARY RECEIPTS FOR ORDINARY SHARES Euronext Amsterdam, in euros

1997 1998 1999 2000 2001

Price - high 23 .92 34 .83 30 .59 42 .76 43 .97

Price - low 13 .80 15 .70 22 .18 24 .26 22 .80

Price - year-end 19 .38 25 .98 29 .97 42 .54 28 .64

Price/earnings ratio1 13 .9 23 .3 17 .9 20 .4 13 .0

1 Based on the share price at the end of December and net operational profit per ordinary share for the financial year.

AUTHORISED AND ISSUED CAPITAL


YEAR-END YEAR-END

2000 2001

Ordinary shares

- authorised 720 .0 720 .0

- issued 472 .9 478 .2

Preference shares

- authorised 360 .0 360 .0

- issued 104 .5 104 .5

Cumulative preference

shares

- authorised 1 ,080 .0 1 ,080 .0

- issued – –

SHARES AND WARRANTS IN ISSUE in millions of euros

YEAR-END 2000 YEAR-END 2001

(Depositary receipts for) ordinary

shares of EUR 0.24 nominal value 1 ,970 .5 1 ,992 .7

(Depositary receipts for) preference

shares of EUR 1.20 nominal value 87 .1 87 .1

Warrants A 29 .9 –

Warrants B 17 .1 17 .2

(Depositary receipts for) own ordinary

shares held by ING Group and its subsidiaries 54 .8 69 .1


It is clear that these events will only strengthen our policy toward

sustainable development. As a worldwide provider of financial serv-

ices, ING has an important economic function in society. Many of

our products and services, like mortgages and pension schemes,

imply a long-term financial relationship and commitment. By pro-

viding these products and services to more than 50 million custo-

mers all over the world, it is essential that we maintain the trust of

our clients in the many different countries and cultures we operate

in. This is one of the reasons ING created sustainable ways of doing

business and developed corporate values and business principles

which apply to all its business operations.

T R A N S PA R E N C Y

With the publication of its first annual report ‘ING in Society 2000’,

ING took a further step to openness about its social and environ-

mental performance. ‘ING in Society’ aims to inform ING’s stake-

holders worldwide about non-financial aspects like social responsible

entrepreneurship and sustainability within an international frame-

work and in an integrated way. The report was well received by many

stakeholders who responded to the enclosed questionnaire or via the

Internet site of ING. The Central Works Council of ING discussed

the report and was also positive. The report also fulfilled an

important function in creating a framework for further dialogue

with our stakeholders. The ING in Society report illustrates how

ING handles the interests of each group of stakeholders. We seek to

find a careful balance between the interests of all our stakeholders.

In addition to clients, shareholders and employees, ING sees society

as its fourth major stakeholder. The Group aims to act as a respon-

sible international company that pays attention to the social and

environmental consequences of its activities. Building on good and

long-standing relationships with local communities is one of the

priorities in the coming years.

C O R P O R AT E VA L U E S A N D B U S I N E S S P R I N C I P L E S

ING’s employees are expected to act in accordance with the ING

Business Principles which were communicated throughout the Group

in 2000. In 2001, the process of embedding these principles into the

organisation was continued. In the Netherlands, the management of

the Dutch business units discussed the functioning of the Business

Principles. Throughout ING, the Business Principles introduction

and training programme was communicated to staff and mana-

gement. Many ING managers attended the ING Business Principles

programme at the ING Business school. Through this extensive

training programme the ING Business Principles have increasingly

become a regular part of the day-to-day business at ING.

B U I L D I N G O N A S T R O N G C O R P O R AT E B R A N D A N D C U LT U R E

In the next few years, the name of ING will become more visible

worldwide. In many countries the name of ING is or will be tied to

the local brands that often have a long-standing relationship in the

communities in which they operate. In this process toward one ING

ING IN SOCIETY

COMMITTED TO GOOD

CORPORATE C IT IZENSHIP

In the year 2001, sustainable development and corporate social responsibility became

a much debated issue on the corporate agenda of many internationally operating

companies. After 10 years of economic growth, the economic slowdown and the drama-

tic events of September 11 had a strong impact on the world economy and forced many

companies to review their future strategies. It also brought up the question whether this

will have an impact on the continuation of the process to more sustainable ways of

doing business.

Department is developing a risk management

system with regard to social, environmental and

reputation risks.

In co-operation with the University of Amster-

dam, a research project has been started aimed

at developing tools to value corporate responsi-

bility. In 2001, ING also supported the inaugu-

ration of a Chair of Business Ethics and Repu-

tation Management at the Vlerick Leuven Gent

Management School in Belgium.

I N T E R N AT I O N A L R E P R E S E N TAT I O N

Due to the expanding international activities, ING

wants to make a contribution to the international

debate on sustainable development. Therefore,

ING became a member of the World Business

Council for Sustainable Development in 2001.

This organisation is a growing force in develop-

ing sustainable policies for the international

business community. ING participated in many

other international organisations, such as the


brand it is essential to maintain the confidence and trust of our clients

by showing the added value that ING can create to the well-known

company names. The newly branded companies are committed to

act according to the high ING standards regarding sustainability,

corporate values and business principles.

M E A S U R I N G S U S TA I N A B L E P E R F O R M A N C E

ING wants to be accountable to its stakeholders for the way it

conducts business. For several years an extensive Environmental

Management System has been operational in the Netherlands. In the

coming years, ING will extend its international reporting practices

by implementing reporting standards on social, environmental and

safety performance in all its business units. Gradually, while accu-

mulating more data, ING will be able to broaden and deepen the

coverage of its reporting practices. In 2001, a new global compliance

incident registration system was developed to monitor and register

compliance risks. ING’s International Credit Risk Management

International Chambers of Commerce and the World Economic

Forum, to discuss the business case for sustainable development and

Corporate Social Responsibility.

O U T L O O K

ING’s efforts in the field of corporate social responsibility are being

acknowledged. In 2001, ING was selected as ‘the leading financial

services company’ in the Dow Jones Sustainability World Indices

and became part of the FTSE4Good index. ING has also been

included in several sustainable investment funds as an investment

option. For the coming years, ING will focus on maintaining this

position by harmonising and developing global reporting and

information systems, developing group-wide sustainable policies and

initiating dialogues with its stakeholders.

T H E N E W I N G I N S O C I E T Y R E P O R T 2 0 0 1 W I L L B E P U B L I S H E D I N

J U N E 2 0 0 2 .

I N G I N S O C I E T Y

ING WANTS TO BE ACCOUNTABLE TO I TS STAKEHOLDERS FOR THE WAY

IT CONDUCTS BUS INESS


S U P E R V I S O RY B O A R D M E E T I N G S

The annual retreat of the Supervisory Board and

the Executive Board in January was almost

entirely dedicated to the Medium Term Plan

2001 – 2003. During the other four meetings, the

development of the results was central to the

discussion. In the third quarter, the downturn in

the economy became increasingly visible in the

ING results, which, combined with the conse-

quences of the September 11 events, led to a

downward adjustment of the profit forecast for

the whole year. Other subjects of discussion in-

cluded management development, the share split,

the adjustment of the profile of the Supervisory

Board, the joint venture of ING Australia and

ANZ Bank and the increased interests in Bank

Slaski, Seguros Comercial América and DiBa.

The Supervisory Board further discussed subjects

such as the integration of ING Barings in ING

Europe, the integration of the American business

units within ING Americas and the development

toward a worldwide ING brand.

Several general managers gave presentations

about their business units, which also provided

the Supervisory Board an insight into the manage-

ment potential under the Executive Board. The

largest Dutch business units, the activities in

Central Europe and the developments in the field

of Operations/IT came up for discussion.

During a session in August, the Supervisory Board

met without the Executive Board to assess its own

functioning and that of the Executive Board.

During this meeting, the future profile of the

Supervisory Board was also discussed.

S U P E R V I S O RY B O A R D C O M M I T T E E S

The purpose of both Supervisory Board com-

mittees – the Audit Committee and the Remu-

neration & Appointments Committee – is to

discuss specific subjects in depth and to advise on

these to the full Supervisory Board. The Audit

Committee discussed the annual results and the

six months’ results, the reports and management

letters of the external auditors, the provision

policy and risk management. In October, an extra

meeting took place to discuss the impact of the

events of September 11 and the further deteriora-

tion of the economy, after which it was deter-

mined that a downward adjustment of the profit

forecast for 2001 was inevitable.

The Remuneration & Appointments Committee

discussed, among other things, the management

potential under the Executive Board, the em-

ployment conditions for the members of the

Executive Board including their compensation

and the disclosure of the remuneration of the

Executive Board and Supervisory Board in the

annual report.

After a number of years during which the results developed

favourably, 2001 was predominantly governed by a poor

economic climate. ING did not remain unaffected. Notwith-

standing the attention to the results, 2001 was also a building

year of integration, synergy and acquisitions to strengthen

and optimise the existing activities. All these subjects were

discussed during five meetings of the Supervisory Board and

three meetings of the Audit Committee. The Remuneration &

Appointments Committee met once.


C O M P O S I T I O N O F T H E E X E C U T I V E B O A R D A N D

T H E S U P E R V I S O RY B O A R D

The composition of the Executive Board did not

change in 2001. During the Annual General

Meeting of Shareholders of 17 April 2001, the

Supervisory Board bade farewell to Mr. Verhagen,

who was vice-chairman. Ms. Goldberg and

Mr. Van der Lugt were appointed as new mem-

bers. These changes were announced in the

previous annual report.

After the Shareholders’ Meeting of 17 April 2002

Messrs. Berghuis and Kamminga will retire as

members of the Supervisory Board after having

reached the maximum term. Mr. Karel Vuursteen

is proposed for appointment to the Supervisory

Board. Mr. Vuursteen (Dutch nationality, 1942) is

Chairman of the Executive Board of Heineken

until 25 April 2002. He has been proposed for

appointment because of his experience as chair-

man of a multinational, his knowledge of the

international business world and his branding

expertise. After internal deliberations Ms. Van

den Berghe and Messrs. Herkströter, De Meester,

Stekelenburg and Ververs will be proposed for

reappointment. They have each proven their

merits as members of the Supervisory Board of

R E P O R T O F T H E S U P E R V I S O R Y B O A R D

RET IREMENT OF J A N B E R G H U I S A N D

JAN KAMMINGA

We bid farewell to two Supervisory Board

members who both have a very long record of

service. Jan Berghuis was appointed Super-

visory Board member of NMB Bank in 1987

and in 1991 he was one of the newly appointed

Supervisory Board members of ING Group,

which makes him the longest serving Super-

visory Board member of ING Group.

We owe him much gratitude for his strong

and undiminished involvement during all

those years, as from 1998 also as a member of

the Audit Committee. He monitored the

Executive Board with a discerning mind, but

always in the interest of ING.

Jan Kamminga became a member of the

Supervisory Board of NMB Bank in 1988,

then in his capacity as chairman of the Dutch

employers’ organisation for SME, MKB

Nederland. His role as Supervisory Board

member was characterised by his special

connection with small and medium-sized enter-

prises and the independent-insurance broker

system, also after he became a member of the

Supervisory Board of ING Group in 1994.

His departure calls for a special word of

gratitude for his attention to the significant

importance of the Dutch business units and

the interests of their clients.

T H E S U P E R V I S O RY B O A R D A N D

T H E E X E C U T I V E B O A R D

ING and will continue to dedicate themselves

to ING on the basis of their different back-

grounds. The Central Works Council has met

with Mr. Vuursteen and with each Supervisory

Board member who is proposed for reappoint-

ment and has given its concurring advice to the

proposed appointment and reappointments.

A N N U A L A C C O U N T S A N D D I V I D E N D

In its meeting of 28 February 2002, the Super-

visory Board adopted the annual accounts and is

now submitting these for the approval of the

shareholders. The proposed dividend for 2001

has been set at 0.97 per share. After the

interim dividend of 0.47, the final dividend

will amount to 0.50 per share.

Looking back on 2001, the Supervisory Board

would like to express its gratitude to the Execu-

tive Board for its great efforts during a difficult

economic year and to all employees worldwide

who, in their daily work, give meaning to the

qualities and values ING stands for.

Amsterdam, 28 February 2002

T H E S U P E R V I S O RY B O A R D

From top to bottom, left to right:

COR HERKSTRÖTER Chairman

MIJNDERT VER VERS Vice-Chairman

LUTGART VAN DEN BERGHE

JAN BERGHUIS

LUELLA GROSS GOLDBERG

PAUL VAN DER HE I JDEN

AAD JACOBS

JAN KAMMINGA

GODFR IED VAN DER LUGT

PAUL BARON DE MEESTER

JOHAN STEKELENBURG

HANS T IETMEYER

JAN T IMMER

RESULT BEFORE TAXATION BY

EXECUTIVE CENTRE


ING Europe 73%

ING Americas 16%

ING Asia/Pacific 5%

ING Asset Management 5%

Other 1%

Total

4,188

899

313

264

77

5,741


The weaker economy and depressed equity mar-

kets drove up risk costs and strongly reduced fee

income in investment banking, asset manage-

ment and equity-linked insurance products. ING

was confronted with claims relating to the WTC

disaster to an amount of approximately 600

million (before catastrophe cover and before tax).

After external catastrophe cover of 100 million

and internal charges to catastrophe provisions,

the total loss after tax in the 2001 annual results

is 100 million ( 150 million before tax).

P R O F I T G R O W T H

Operational net profit from insurance was 19.7%

higher at 2,810 million compared to

2,348 million a year earlier. In the first full year

since their acquisition, ReliaStar, Aetna Finan-

cial Services and Aetna International contributed

0.07 per share (after funding costs) to the net

result. The operational net profit from banking

declined by 13.1% from 1,660 million in 2000

to 1,442 million. In view of the deteriorated

economic situation the loan loss provisions were

strengthened by 750 million, equalling 32 basis

points of credit-risk-weighted assets, compared

to the very low level of 400 million (19 basis

points) in the year before.

R E V E N U E S

Total revenues, including ReliaStar, Aetna Finan-

cial Services and Aetna International, reached

74.2 billion (+49.6%). Total insurance

revenues increased by 64.7% to 63.1 billion

with life premiums up 78.1%, non-life premiums

advancing 44.2% and investment income rising by

28.6%. In the current difficult economic climate,

banking income contracted slightly by 1.7%

to 11.1 billion as the decrease in commission

of 23.8% outweighed the increases in interest

income of 4.9% and other income of 20.6%.

E F F I C I E N C Y

The organic growth of Group operating expenses

was limited to approximately 1%, reflecting tight

cost control throughout the company. Operating

expenses in insurance increased by 4.6% orga-

nically. In banking, operating expenses decreased

by 1.1% due to tight cost control, lower bonuses

and the sale of the investment banking activities

in the US. The efficiency ratio (excluding ING

Direct) improved from 72.1% in 2000 to 71.7%

in 2001. Including acquisitions, divestments and

exchange rate fluctuations, total Group operating

expenses increased by 21.4%.

F INANCIAL HIGHLIGHTS

PROFIT GROWTH, DESPITE

ECONOMIC SLOWDOWN

The world-wide economic slowdown, the decline in equity

markets and the September 11 events had a negative impact on

ING’s 2001 results. However, ING’s broad mix of businesses

proved essential to conclude this difficult year with a 6.1%

growth in operational net profit to 4,252 million.

C E E S M A A S

ING has set ambitious

financial targets, based on

medium-term objectives.

We believe that ING has the

potential to continue to meet

these targets in a challenging

economic environment.


OF GROSS PREMIUM INCOME


The Netherlands 14%

Belgium 4%

Rest of Europe 3%

North America 64%

South America 2%

Asia 9%

Australia 4%

Other

Total

7,164

1,878

1,657

31,896

1,111

4,782

2,029

-57

50,460


OF BANK LENDING


The Netherlands 49%

Belgium 22%

Rest of Europe 18%

North America 7%

South America 1%

Asia 2%

Australia 1%

Total

125.2

55.4

45.9

17.0

2.6

4.5

3.6

254.2


S H A R E H O L D E R S ’ E Q U I T Y

Shareholders’ equity decreased by 3.8 billion

(-14.9%) to 21.5 billion, mainly due to reva-

luation of the equity portfolio and the write-off

of goodwill regarding acquisitions.

R E T U R N O N E Q U I T Y

The operational net return on equity increased

from 12.2% for the full year 2000 to 18.4% in 2001.

The improvement reflects a higher operational

net profit and a substantially lower capital base,

mainly caused by the write-off of goodwill and

the revaluation of the equity investment port-

folio.

D I V I D E N D

For 2001, a total dividend is proposed of

0.97 per (depositary receipt for an) ordinary

share, an increase of 3.2% compared to the 2000

dividend of 0.94 (excluding the exceptional

dividend of 0.19 paid in 2000 from the profit

from the sale of CCF shares). Taking into

account the interim dividend of 0.47, made

payable in September 2001, the proposal results

in a final dividend of 0.50 per (depositary

receipt for an) ordinary share. The pay-out ratio

as a percentage of distributable net profit is

44.1% (2000: 43.9%).

I N G E U R O P E

ING Europe reported an operational pre-tax profit

of 4,188 million, a decrease of 7.8% from a

year earlier. The result from insurance went up

2.4% to 2,252 million, but the banking

operations saw their operational result before

taxation decrease to 1,936 million (-17.4%).

Lower commission income and higher loan loss

provisions – especially in corporate and invest-

ment banking – outweighed the positive effects of

a higher interest margin and tight cost control.


The 46.9% increase in the operational result

before tax of ING Americas reflected the con-

solidation of the ReliaStar and Aetna businesses

that were acquired in 2000. At 899 million

the operational result was, however, lower than

expected. The shortfall was mainly caused by

lower sales and fee income due to weak equity

markets and the claims relating to the World

Trade Center attacks. The Canadian operations

and the businesses in Latin America (except

Argentina) performed well. Seguros Comercial

América, now wholly-owned by ING, contri-

buted 35 million to the result.


The operational result before tax of ING Asia/

Pacific rose by 39.1% to 313 million.

The consolidation of the Aetna International

businesses in the region was to a large extent

responsible for the high percentage increase.

Nevertheless, good life results in Korea, Taiwan

and non-life results in Australia ensured that the

performance of ING Asia/Pacific was fully

meeting expectations.


ING Asset Management saw its pre-tax opera-

tional result decrease by 18.5% to 264 million

as falling equity markets affected management

fees. However, total assets under management

increased 2.0% to 513 billion. A net inflow of

new assets under management of 41 billion,

first time inclusions of 11 billion and a

positive effect of 5 billion from exchange

rate fluctuations more than compensated for

revaluation declines.

R E P O R T O F T H E E X E C U T I V E B O A R D


GROUP STRATEGY

STRATEGY FOCUSES ON

SYNERGY, EFF IC IENCY AND

COST CONTROL

G R O U P O B J E C T I V E S

1 . D E L I V E R A D D E D VA L U E T O C L I E N T S T H R O U G H A M U LT I - P R O D U C T /

D I S T R I B U T I O N A P P R O A C H A N D A C U S T O M E R - C E N T R I C O R G A N I S AT I O N

This is the most important objective as ING’s existence depends

first and foremost on its ability to serve its 50 million clients around

the world to their full satisfaction. Today’s private clients are

wealthier, better educated and more critical. They want to be in

control of their own (financial) destiny. At the same time, they still

look for advice, especially as legislation and tax regulations become

more complex. They appreciate a full range of financial solutions

and they expect value for money, quality, convenience, instant

delivery and a personal approach. ING aims to offer them the

products and services they need to meet their goals for each phase of

their life. Similarly, the Group strives for total fulfilment of the

financial needs of its corporate clients. ING’s wide international

network is a competitive edge in serving corporations in all countries

where they operate.

2 . B U I L D O N I N G ’ S S P E C I A L S K I L L S : L I F E I N S U R A N C E G R E E N F I E L D S ,

E M P L O Y E E B E N E F I T S A N D I N G D I R E C T

One of ING’s special talents is to build life insurance operations

from scratch in developing countries. Including the newly started joint

venture in India, ING currently has 16 greenfields. Their continued

growth (premium growth +11.2% in 2001) is a promising sign for

ING’s long-term development.

ING has also built up special expertise in offering employers a

wide range of employee benefits in combination with sophisticated

administrative support. The combination of European and US expertise

makes ING particularly well-positioned to play a leading role in

providing solutions to the universal dilemma of offering adequate

retirement provisions for an ageing population.

The ING Direct concept, which starts with a high-interest retail

savings account and is gradually broadened with other products, has

turned out to be highly successful in six countries. Both the number

of clients and the funds entrusted more than doubled again last year.

ING intends to launch ING Direct in one or two additional coun-

tries in the next few years and extend its presence in the US.

In the past, the management and strategic development of ING Group were mainly

governed by the insurance and banking structures of the original merger partners.

As the international operations have increased in size and scope and as the integration

of insurance, banking and asset management has progressed, the managerial and

strategic focus has shifted to the four Executive Centres. ING has defined strategic

objectives for each Executive Centre (EC). These objectives, as well as the plans that

have been developed to achieve them, are discussed in the EC chapters. In addition to

the specific EC objectives, ING has a number of Group objectives that relate to all

its activities as well as financial targets for profit growth, profitability and efficiency.

The Group objectives and financial targets are discussed in this chapter.



3 . E M P H A S I S E C O S T C O N T R O L

ING’s main priority for 2002 is to adjust to the new economic reality

by adapting the cost base to subdued revenue prospects. Although

there is some optimism about the start of a gradual recovery of the

economy in the course of this year, the financial sector will have to

reckon with lower revenue and profit growth than in the second half

of the 1990s.

Financial services providers that succeed in outperforming their

peers in cost control, will be the winners in the financial sector in

the years ahead. ING will have to intensify its current cost reduction

measures without sacrificing investments in projects that will

generate future cost savings, such as the shared service centres.

4 . A C H I E V E S Y N E R G I E S B Y M A X I M I S I N G C O - O P E R AT I O N

In the early years of ING’s existence, most synergy projects were

based on largely voluntary co-operation between business units. In

2001, ING moved from voluntary to committed synergies and made

the variable component of the remuneration of senior managers

partly dependent on the synergy contribution of their business unit

to the Group.

In addition to numerous smaller commercial initiatives, five main

synergy projects have been defined: the integration of the European

wholesale banking operations, the creation of shared services centres

in Europe, the global co-ordination of corporate IT and procure-

ment, the integration of the US retail businesses and the integration

of the Aetna and ING operations in Asia and Latin America.

Currently, some of these projects still require considerable invest-

ments. Over the years, these investments will start to pay back so

that significant, structural benefits can be generated in the longer

term.

5 . E N S U R E O P E R AT I O N A L E X C E L L E N C E ( I T A N D E - B U S I N E S S )

Focusing on ‘operational excellence’ has been an ongoing part of

ING’s strategic approach to improve both efficiency and effectiveness.

In Operations/IT ING continues to rationalise its infrastructure by

consolidating data centres, outsourcing global networks and reducing

redundant IT assets.

ING’s application strategy is to seek more common solutions that

are maintained centrally but deployed locally. Leveraging internet

technology and applying a consistent e-business approach will enable

ING to deliver more web-based solutions for customers, employees,

suppliers and strategic partners.

6 . B U I L D O N E I N G C U LT U R E A N D O N E G L O B A L B R A N D

In 2001, ING made substantial progress in transforming its multi-

tude of different labels into one powerful ING brand and position

ING as a company with innovative approaches and solutions to finan-

cial services. As economic insecurity increases, people are looking

for trust. In these times it is therefore essential to invest in a strong

corporate brand and to make it trustworthy. The implementation of

the branding and repositioning plans is closely connected with ING’s

efforts to foster one ING culture. Branding is all about corporate

culture and change management. The branding/repositioning project

will prove a success if our customers throughout the world are pre-

sented with a company with a similar face, attitude and look and feel.

With its special design, the new ING headquarters – ING House –

will be an attractive carrier for the new brand.

F I N A N C I A L TA R G E T S

1 . P R O F I T G R O W T H : A N AV E R A G E A N N U A L G R O W T H O F O P E R AT I O N A L

N E T P R O F I T P E R S H A R E O F AT L E A S T 1 2 %

Due to the economic downturn and the losses from claims relating

to the attacks on the World Trade Center, ING recorded an increase

of 5.3% in operational net profit per share, which is considerably

below the target. However, on a longer-term basis, ING continues to

meet this target. Since its creation in 1991, the compound annual

growth rate in profit per share has been 13%.

2 . P R O F I TA B I L I T Y: A N AV E R A G E A N N U A L O P E R AT I O N A L N E T R E T U R N

O N S H A R E H O L D E R S ’ E Q U I T Y ( R O E ) O F AT L E A S T 1 8 %

With an ROE of 18.4% ING met this target in 2001. An important

factor was that the Group’s equity, which had already been consider-

ably reduced in recent years due to the write-offs related to acquisi-

tions, further declined in 2001 as a result of downward revaluations

in the investment portfolio due to the decline in worldwide stock

markets.

3 . E F F I C I E N C Y: A B A N K I N G E F F I C I E N C Y R AT I O L E S S T H A N 7 0 % A N D

D E C L I N I N G B Y AT L E A S T 1 % - P O I N T E A C H Y E A R , A S W E L L A S

I N S U R A N C E P R E M I U M G R O W T H E X C E E D I N G E X P E N S E G R O W T H B Y AT

L E A S T 2 %

The bank efficiency ratio improved from 72.1% in 2000 to 71.1% in

2001, almost meeting the target. Further rationalisation of the

wholesale operations, including further downscaling of the equities

activities, will have a positive impact on the cost control programmes

that are underway throughout the banking operations.

The insurance efficiency ratio was met in 2001. There was a posi-

tive difference of 2.8% between premium growth and expenditure

growth. Strict cost control will be undertaken to further improve this

measure.

To summarise economic developments in 2001, the September 11 events exacerbated the

downturn, the first signs of which were already visible in 2000. Equity markets reached their

lowest point on September 21 and have since somewhat rebounded. Recovery of the eco-

nomies of the US and Europe may be expected. Japan is still suffering from a recession.


A M E R I C A S

ING believes that the US economy has bottomed out and is on its

way to gradual recovery in the second half of 2002. Fiscal and mone-

tary stimuli in the US will support economic growth and consumer

spending, leading to a rise in equity markets. ING sees attractive

opportunities in savings, pensions and employee benefits in the US.

While growth in domestic product (GDP) is expected to pick up, it

will be sub-par for most of 2002. For 2003 and 2004 a recovery of the

US economy to its long-term potential growth rates seems likely. As

the recovery kicks in and short-term rates rise, long-term rates can

be expected to increase (moderately) from current levels. The crisis in

Argentina is severe, but contagion to other countries has up to now

been relatively limited. ING believes that in the long term there are

good opportunities in Argentina.

E U R O P E

The introduction of the euro has gone smoothly. Recessional tenden-

cies in Europe appear to be levelling off and economic recovery is

expected to follow the US, albeit with a certain time lag. Long-term

interest rates will gradually go up in line with the economic recovery.

The growth potential of the US economy is estimated to be higher

than that of the European Union. As a result of demographic changes

(the ageing of the population), the financial prospects of many social

security systems in Europe are not that rosy. Especially state pension

schemes are under pressure and reforms are inevitable. Governments

are diminishing their role in this area, which opens up a market that

private parties are eager to enter. Besides, fringe benefits are growing

in importance. These developments create opportunities for ING in

the field of life insurance, savings, pensions, employee benefits and

asset management.

A S I A

The US economic slowdown, the recession in Japan and the down-

turn in global demand for IT and electronics continue to exert

pressures on growth in Asia. Growth is also hampered by the fact

that the inevitable restructuring of the banking sector still has a long

way to go in many countries. An Asian recovery in 2002 is highly

uncertain. For the next few years, growth is likely to be less than in

recent years. The economy in Japan still shows no signs of improve-

ment. Decreased consumer spending, ongoing deflation, rising

unemployment and continuously low investment spending cloud the

economic outlook. In China, the economic slowdown is less severe

than in other Asian countries owing to the relatively closed nature of

its economy, accommodating policies (including large public infra-

structure outlays), large inflows of foreign investment and continued

growth in private consumption. Its membership of the World Trade

Organisation has increased the urgency of structural reform. How-

ever, widespread structural imbalances and market imperfections

mean that it will take considerable time for reforms to take hold.

Many Asian governments are planning to reform their pension

systems. With its extensive expertise, ING can contribute to these

reforms which will stimulate the local economy.

P R O F I T E X P E C TAT I O N F O R 2 0 0 2

The Executive Board is positive, but cautious about the economic

outlook for the year ahead. Given the uncertainty about improve-

ment of the economies in which ING is active, the Executive Board

considers it prudent not to make a profit forecast for 2002 yet.

OUTLOOK

OUTLOOK FOR 2002 ST ILL

UNCERTAIN

NUMBER OF STAFF

full-time equivalents, year-end

ING Europe 63%

Rest of ING 37%

71,344

41,799

RESULT BEFORE TAXAT ION


ING Europe 73%

Rest of ING 27%

4,188

1,553



ING EUROPE

To be a top-5 European financial institution pursuing a financial services

strategy focusing on retail and wholesale financial services, including

employee benefits.

ING EUROPE SEEKS SCALE

AND FURTHER GROWTH

S T R AT E G Y

On the retail side, strategy focuses on retail wealth

accumulation and financial protection (i.e. retail

banking, asset management, asset gathering, life

insurance and pensions) and private banking,

supported by the click-call-face (multi-product,

multi-channel) distribution approach. In the home

markets of the Netherlands, Belgium and Poland,

the strategy is wealth accumulation supported by

an efficient mix of channels appropriate to client

segments and products, and focused on cost

reduction. In the large mature markets ING is

developing its retail position around ING Direct,

selectively and carefully adding new activities and

face channels as appropriate. In the developing

markets, particularly Central Europe, ING wants

to become a market leader in pensions, life and

wholesale banking by leveraging its market value,

including via distribution alliances.

On the wholesale side, ING’s strategy is to offer

wholesale banking products and services as well

as employee benefits to its European and inter-

national clients. ING wants to focus on offering

its products and services in those markets and to

those clients that are profitable on a sustainable

basis. The ING Europe strategy is also built

around synergy, which means working together,

In terms of profit contribution, Europe is ING’s most important

geographic region. The Benelux is a key profit generator, but it

is a small and mature market. A core objective of ING Europe

is, therefore, to expand ING’s home base, making it possible to

compete on an equal basis with other companies that already

have a ‘natural’ home base of similar size. To achieve this, ING

will increasingly seek scale and growth in Europe in the coming

years while simultaneously trying to extract high value from the

existing global franchise. ING Europe, after all, not only refers

to ING’s European activities, but also to ING Direct and

wholesale banking, which are global businesses.


sharing know-how to increase commercial effec-

tiveness, cutting IT, operational and development

costs and increasing cross-selling. A vast program

is underway affecting all business units, regions

and functions at all levels.

N E W S T R U C T U R E

A major accomplishment in the year 2001 was the

smooth transition toward an integrated European

organisational structure. The new ING Europe

is structured along the main functional areas

of Retail, Wholesale, Operations/IT and ING

Direct, as well as seven geographic regions. The

new integrated structure will bring more focus

into ING’s European and global business.

R E TA I L

With the new European organisation in place, the

management of Retail Europe works together

with the regions to set the priorities for future

growth. In particular, this includes developing a

common set of retail value drivers: scale, cost,

cross-sell, value of new business and customer

satisfaction. A lot of attention went to the inte-

gration of the retail activities in The Netherlands,

the implementation of our click-call-face strategy

around ING Direct in large mature markets and

country-by-country measures to improve scale,

including by way of financial advisors in Central

Europe. In January 2002, private banking was

established as a separate business line within

ING Europe, functionally combining the private

banking businesses of BBL, ING Bank Neder-

land, CenE Bankiers, BHF-Bank and ING Baring

Private Bank.

I N G D I R E C T

ING Direct is a crucial part of ING’s retail strate-

gy. The strategy of ING Direct is to be a low-cost

provider of financial services in large mature

markets by offering its clients best value for money

and excellent service via call-centers and the

Internet. ING Direct uses a high-rate, no-fees,

no-minimum savings account as an entry product,

and with this product alone ING Direct is able to

exceed the ING Group profit hurdle rate. After

reaching a minimum customer base, ING Direct

business units complement the savings account by

cross-selling a focused range of other financial

products concerned with wealth accumulation:

mortgages, mutual funds, e-brokerage, pension

and life insurance.

In 2001 ING Direct grew faster than expected.

Including the participation in DiBa in Germany,

the number of customers increased to 2.6 million

and retail funds entrusted grew to 24 billion.

Measured by retail funds entrusted, ING Direct

is now a top-10 bank in Australia, Canada,

France and Spain. Two of the six ING Direct

operations (Australia and Canada) are now

profitable.

I N G W H O L E S A L E

Within the new ING Europe organisation, ING

Wholesale was established in 2001 by integrating

the wholesale banking activities of ING Barings,

ING Bank, BBL, BHF-Bank, the wholesale

insurance activities of Nationale-Nederlanden

and the specialised subsidiaries of Charterhouse,

Ferri and Vermeulen-Raemdonck. ING Wholesale

now includes three functional areas (Corporate

Financial Services, Investment Banking and

Financial Markets), five European regions (the

Netherlands, South-West Europe, Germany,

Central Europe and the United Kingdom) as well

as the regions of Americas and Asia.

Within Corporate Financial Services, fully inte-

grated departments were formed during the year

for Global Clients, Corporate Clients, European

Business Desks, Financial Institutions, Employee

Benefits, Structured Finance and the Debt

Products Group (a joint venture with Financial

Markets). Employee Benefits in Europe comprises

a substantial part of the profits of Corporate

Financial Services and is one of the strategic

spearheads of ING Group, anticipating pension

reform trends and international mobilisation of

workforces. Seven Employee Benefits units already

Achievement of an

acceptable profit level

despite unfavourable

market circumstances.

Integration of wholesale

businesses into one

functional Wholesale

organisation.

Major Operations/IT

investment programme to

improve quality of service

and cost efficiency.

Majority stake in Polish

Bank Slaski (88%) and

subsequent integration

of all banking activities

into ING Bank Slaski.

Faster than expected

growth of ING Direct in

terms of number of clients

and funds entrusted.




M I C H E L T I L M A N T

Our European strategy is

built around synergy.

By working together we

increase our commercial

effectiveness, while our

upgraded Operations/IT

framework is the bedrock

for operational efficiency.

exist and at least two new units will be opened in

the forthcoming year.

Investment Banking is the Group’s provider

of high-value-added Mergers & Acquisitions,

Advisory and Equity Capital Markets services.

The market environment was generally very diffi-

cult in 2001, with significantly reduced activity

throughout the industry. Anticipating the current

modest market conditions, the business was

restructured early in 2001 resulting in significant

cost reductions.

Financial Markets falls into three major seg-

ments: Treasury, Strategic Trading, and Sales,

Trading and Research. Overall, Financial Markets

had a strong performance in most of its core

businesses and regions. The businesses of Trea-

sury, Debt Markets and Foreign Exchange posted

particularly positive increases in profit. Depressed

market circumstances resulted in an Equities

deficit overall. However, the Equities businesses

in the Netherlands, South-West Europe and

Germany delivered break-even results in 2001.

The lower results in the Equity Markets business

were compensated by the strong performance in

the rest of Financial Markets. Measures have

been taken to restructure the equities business.

O P E R AT I O N S / I T

During the year 2001, ING Europe refined its plan

to upgrade IT and Operations as the bedrock for

greater operational efficiency. That year saw the

first wave of implementations. Several shared

service centres were established in Banking

(mortgages, securities services, international

payments and financial markets) as well as in

Insurance (claims handling, life insurance).

A number of IT infrastructure projects were

launched. Furthermore, a selection of standard

applications was deployed for ING (CRM,

Financial Markets back-office and front-office

applications, HR etc.). A great number of synergy

projects were launched in the regions and business

units as well. In the Netherlands, steps were taken

to regroup support functions. In South-West

Europe, the three insurance companies were

merged and the Swiss operations were combined.

In Central Europe a retail banking shared service

centre was set up.

G E O G R A P H I C R E G I O N S

In addition to its functional lines, ING Europe

is also organised along seven geographic regions.

T H E N E T H E R L A N D S

The Netherlands as ING’s original home base is

still one of the key markets. Nationale-Neder-

landen is market leader in insurance, while ING

Bank and Postbank belong to the leading banks.

Their combined results increased by 6% in 2001,

also owing to adequate cost management. The

sale of Tiel Utrecht was successfully completed

as part of the strategic portfolio management. In

the same context it was also decided to split up

Westland/Utrecht mortgage bank into a real estate

finance unit within ING Real Estate and a retail

mortgage bank. The retail mortgage bank will be

combined with other units to create an ‘inter-

mediary bank’.

In 2001, a significant restructuring effort was

started, optimising the existing franchise by im-

proving cross-selling and transforming the existing

product- and channel-oriented business units into

dedicated retail, intermediary and wholesale func-

I N G E U R O P E


tions. As the independent intermediaries play an

important role in distribution in the Netherlands

we also intend to strengthen their position by

improving our support.

The functional line Intermediaries was added

alongside Retail, Wholesale, and Operations/IT,

recognising the vital importance, strong position

in the market and unique dynamics of this

distribution channel in the Netherlands.

S O U T H - W E S T E U R O P E

ING’s activities in South-West Europe comprise

business units in Belgium (all financial services),

France (corporate; retail wealth accumulation),

Luxembourg (retail market and asset manage-

ment), Portugal (corporate), Spain (corporate;

retail wealth accumulation) and Switzerland

(private banking and trade and commodity

finance). In Belgium, BBL is a core player, par-

ticularly in private banking and wealth accumu-

lation and in the mid-sized corporate market.

A key objective in South-West Europe is to move

to a single ING organisation. Several synergy

projects are of note in this regard: the integration

of the Belgian insurance companies, the merger

of Caisse Privée Banque activities with BBL and

the merger of BBL and ING Baring Private Bank

in Switzerland.

The insurance activities in Belgium succeeded

in substantially increasing market share during

the year 2001, especially for unit-linked insurance

products. Strict cost-control measures were also

taken. The integration of the three insurance com-

panies will lead to stronger organic growth and

an increase in cost efficiency.

In Spain, an ambitious growth scenario is

being developed. In Spain and France, local busi-

nesses are co-operating more closely, particularly

with ING Direct.

G E R M A N Y

For ING in Germany, the year 2001 was a year of

restructuring for BHF-Bank. The risk profile was

significantly reduced, while at the same time new

business lines were developed. The ING platforms

approach for corporate banking and financial

markets was put into place. BHF-Bank, BHW

and BGAG established a pensions joint venture.

Based on the so-called ‘Riester’ legislation, ING

has the objective of securing a market share in

pension products related to both individual and

group pension schemes. Since DiBa decided to

apply the same strategy as ING Direct, strong

growth was realised in Germany.

C E N T R A L E U R O P E

The Central Europe region covers a cluster of

ING Group activities in a wide range of countries,

including the Poland home market. Throughout

Central Europe, the ING re-branding programme

was completed. After a successful tender bid on

Bank Slaski in Poland, all banking activities were

integrated into ING Bank Slaski (no. 5 market

position), in which ING has an 88% stake at

present. All life (no. 3 market position), employee

benefits and pension activities (no. 2 market

position) were integrated in Poland. The Polish

Pension Fund showed a strong increase in profit

as well as in assets under management. Employee

Benefits were introduced in Hungary, and a

pension fund was started in Bulgaria. In the

Czech Republic the first ‘Orange House’ opened,

which is the physical location in which the retail

and small & medium-sized enterprise clients are

serviced according to the click–call–face concept.

Throughout Central Europe, initiatives were

started to share back-offices activities between

H E S S E L L I N D E N B E R G H

We will seek scale and

growth in Europe, while

simultaneously extracting

high value from wholesale

banking, a global business

with a European focus,

and ING Direct, which

has operations in Europe,

North America and

Australia.


Orange House in Prague is part of ING’s ‘click–call–face’ approach.



insurance and bank units, as well as between

countries in the region. In Greece a strategic

alliance between Piraeus Bank and ING was

established in the field of bancassurance,

employee benefits and asset management. ING

will continue to develop its positions in Central

Europe, predominantly through leveraging market

value, however without losing sight of the oppor-

tunities to improve our relative position.

U N I T E D K I N G D O M

In the UK, the integration of ING Barings,

Charterhouse Securities, BBL and BHF-Bank

in London and BBL in Dublin into the new

ING Wholesale organisation was completed.

A M E R I C A S (wholesale banking, l inked to EC Europe)

In the Americas region, the US domestic invest-

ment banking business of ING Barings as well as

the US domestic business of BHF-Bank were

sold successfully. Costs and headcount were re-

duced. In Latin America three branches were

transformed into representative offices. The inte-

gration of the various labels created more

commercial possibilities.

A S I A (wholesale banking, l inked to EC Europe)

In the Asia region, significant progress was realised

in treasury and fixed-income activities with the

completion of a build up of resources in these

businesses. As the market volumes softened in Asia

during the year, especially in the form of lower

equity and capital market activities, steps were

taken to reduce costs and headcount in line with

business opportunities. Also, with the integration

of BBL, BHF-Bank and ING Bank in Asia, the

number of locations was reduced from 36 to 18

as offices were consolidated and co-located.

O U T L O O K

Europe Retail’s primary goal is to continue stable

growth in the home markets (the Netherlands,

Belgium and Poland), to develop the ING Direct

strategy in the large mature markets and to

develop our field forces to build a focused

STRONG GROWTH OF ING DIRECT IN CL IENTS AND FUNDS ENTRUSTED

NUMBER OF CL IENTS (X 1 ,000) FUNDS ENTRUSTED ( IN EUR MILL ION)

YEAR-END 2000 YEAR-END 2001 YEAR-END 2000 YEAR-END 2001

Canada 342 480 2 ,152 3 ,379

Spain 186 397 1 ,934 3 ,820

Australia 123 278 1 ,262 2 ,930

France 57 181 929 3 ,211

US 60 338 699 3 ,322

Italy (since April 2001) 75 1 ,159

Sub-total 768 1 ,749 6 ,976 17 ,821

DiBa (acquired in 2002) 827 6 ,215

Total 768 2 ,576 6 ,976 24 ,036

portfolio of long-term sustainable positions in

emerging markets.

Private Banking has been established as a new

business line within EC Europe, functionally

combining the private banking businesses of

ING Bank, BBL, C&E Bankiers, BHF and ING

Baring Private Banking. This will optimise

group-wide synergies.

ING Direct will strive for further growth by

expanding its geographic coverage in the USA

and Canada and by opening new operations.

France and Spain are expected to reach

profitability in 2003, which is expected for the

USA at the end of 2003/early 2004.

ING Wholesale’s goal is to intensify cross-selling

in the Netherlands, Belgium and Poland, to strength-

en its market position in the major European

countries of the UK, Germany, France, Spain

and Italy and to enlarge European client business.

In line with the global rebranding programme,

ING Wholesale will migrate to a unified global

ING brand in 2002. Rebranding will reinforce

and reflect ING’s integrated wholesale approach.

In Operations & IT, all initiatives will be focused

on synergies to the fullest. The IT platforms will

lead to lower costs, improved quality of service

and reduced operational risk. A cost-efficient,

modern Operations and IT environment will

underpin the growth in business.

In Belgium, BBL added

ING to its own strong

brand name.

I N G E U R O P E

NUMBER OF STAFF


ING Americas 24%

Rest of ING 76%

27,656

85,487



ING Americas 16%

Rest of ING 84%

899

4,842


S T R AT E G Y

Rationalisation is the first of the five key strate-

gies. The company is rationalising its business

portfolio to achieve economies of scale and build

a wealth management and/or risk management

focus in its core markets. Restructuring and

integrating businesses – the second strategy – will

drive down unit expenses and eliminate redun-

dancies. In the US, ING restructured its core

businesses into US Financial Services to better

focus on product manufacturing and distribution

channels. In doing so, ING is on its way to realis-

ing its third strategy, which is creating a winning

customer value proposition, while at the same

time reflecting its customer-centric focus in its

brand values. Aligning ING’s culture with the

customer proposition and business strategy – the

fourth strategy – enables the company to attract,

retain and motivate a highly professional and

diverse workforce which reflects the customer

base. As well, initiatives have been launched to

leverage ING’s global capabilities and extend

expertise in branding, direct marketing, asset

management, risk management, IT and procure-

ment across country platforms, which is the fifth

of ING Americas’ key strategies.

M A R K E T P O S I T I O N

ING Americas’ goal is to be a market leader in

each of the core countries. In the US ING has a

top-5 position in life insurance, variable annui-

ties, fixed annuities and retirement plans, and has

ING AMERICAS’ BUSINESSES ARE

POISED TO DELIVER REVENUES

AND EARNINGS GROWTH

ING AMERICAS

The mission of ING Americas is to continue to build strong

integrated financial services (IFS) platforms in its core markets

to satisfy the needs of ING’s customers by offering multiple

products through a variety of channels. The five key strategies

that were pursued in 2001 will continue to be the key strategies.

These strategies will drive ING Americas in building strong

business platforms and a true IFS organisation.

Build leading market positions through integrated financial services platforms

in the core countries.



the largest independent broker-dealer network.

In Canada, ING is the number-1 non-life insurer.

In Mexico, ING is the largest health and

property & casualty insurer and is number 2 in

life insurance. In Argentina, Brazil, Chile and

Mexico, ING is the top international insurer.

F I N A N C I A L P L A N 2 0 0 1 N O T M E T

During 2001 ING Americas focused on integra-

tion and branding after the acquisitions of Relia-

Star, Aetna Financial Services and Aetna Inter-

national. Amidst a global economic slump, which

was magnified by the tragic events of September

11, it was impossible for ING Americas and most

other companies focused on the wealth manage-

ment market to meet the financial plan for 2001.

I N T E G R AT I O N

The integration efforts of ReliaStar and Aetna

Financial Services with ING’s US organisation,

and Aetna International with ING Latin America,

started in 2001 with significant progress. In the

US alone, almost 200 projects were identified

throughout the integration process. By the end of

2001, 94 projects – which included a common

finance system and shared service organisation –

had already been completed. The rest of the

projects are scheduled to be completed during

2002. All these integration efforts have achieved

revenue and expense synergies planned for 2001

and are on track with business plans for 2002

expense savings. The next integration step in the

US was taken by combining retail and wholesale

businesses into ING US Financial Services,

focusing on separating product manufacturing and

distribution to get closer to the customer. The

acquisitions also have re-characterised the US

business from a traditional life and annuity

insurance company to a multi-product wealth-

management company. In December 2001, ING

Americas further streamlined operations by

moving its mutual funds business to US Finan-

cial Services to enhance cross-selling opportuni-

ties. In Latin America, the integration of Aetna

International with ING Latin America has almost

been completed and all businesses are now well-

positioned to build strong financial platforms.

B R I N G I N G I T A L L T O G E T H E R – T H E I N G B R A N D

Following the strategy of the global brand posi-

tioning, ING Americas promoted its brand

throughout the region to raise awareness of the

ING name and services, not only externally to

F R E D H U B B E L L

Our mission is to continue

to build strong integrated

financial services platforms

in each of our core markets

and satisfy the needs of

our clients by offering

multi-products through

multi-channels.

ING Direct Café in New York: the success of attracting clients via the Internet and call centers combined with personal contact.


customers but also internally to employees. A

common Human Resources platform has been

launched by which all employees can get the same

‘ING’ branded paycheque and benefits. Brand

campaigns, including the successful ‘It’s not an

ending, it’s a beginning’ US programme, are steps

toward an evolutionary brand strategy to position

ING as an innovative and refreshingly different

financial services provider. A successful advertising

campaign was launched in Canada around the

ING brand. ING also rebranded its Mexican retail

businesses – Seguros Comercial América and

Afore Bital – under the ING Comercial América

label. It also moved its acquired Aetna Inter-

national insurance business in Chile under the

ING Chile label.

S A L E S M O M E N T U M M A I N TA I N E D

Among the key positives in 2001 were the partner-

ship and teamwork fostered through integration.

There was a solid union of people and cultures

across a multitude of businesses and sites. This

was so successful that it allowed the region to step

up the ‘One ING’ goal and accelerate the next

phase of US integration. The businesses main-

tained their market shares during this complex

integration process, amongst others because of

the strength of the ING Advisors Network, the

largest network in the US market place with over

10,000 representatives.

W O R L D T R A D E C E N T E R C L A I M S L O S S

The September 11 attacks resulted in approxi-

mately USD 535 million claims loss, primarily

through ING Re, the reinsurance operation, which

had an unusual concentration of reinsurance risk

in the upper floors of the World Trade Center

towers. ING Re had USD 100 million catastrophe

reinsurance cover and had never previously been

confronted with catastrophe claims over USD 7

million for one single event. Subsequently, it was

decided to exit the personal accident and workers’

compensation catastrophe lines that caused these

excessive claims.

C A N A D A R E A L I G N M E N T

The alliance with Zurich Canada and acquisition

of some of its activities was a major strategic

realignment, which moves ING Canada to the

number one position in non-life lines. ING

acquired Zurich’s personal and car and home

insurance operations in Canada as well as its

portfolio of small and mid-market commercial

risks. In turn, Zurich acquired ING Canada’s large

commercial and corporate lines. Both companies

will offer their complete product lines to each

other’s distributors and customers in Canada.

S T R O N G P R E S E N C E I N L AT I N A M E R I C A

During 2001, ING continued to build a strong

presence in Latin America with the integration of

Aetna International, acquired in late 2000.

In Mexico, through the mid-year completion of

the Seguros Comercial América acquisition, ING

became the country’s leading private insurance

company. ING’s combined retail operations in

Mexico serve almost 10 million clients and were

rebranded to ING Comercial América.

ING Chile, the country’s number one insurer,

was named ‘Best Foreign Company’. ING Argen-

tina was given the prestigious Mercury ‘Excel-

lence in Marketing’ award and became the first

life insurance company to win the award since its

inception in 1982.

In Buenos Aires, ING began construction of a

new corporate office building in the city’s Puerto

Madero district that should be completed in the

second quarter of 2002. It will house the head

offices of all of ING’s operations in Argentina.

As part of its rationalisation strategy, ING sold

its Argentine subsidiary Aetna Vida SA as well as

Asistencia Médica Social Argentina SA (AMSA).

ING exited Colombia with the sale of Cruz

Blanca, a health insurance company.

E - B U S I N E S S

The ING US web site was re-launched last year

to give a sharper customer focus. The site will

Revenues and earnings

were lower than expected

due to weak economies

and the World Trade Center

attacks.

ReliaStar and Aetna

Financial Services are being

integrated into ING US

Financial Services, one

of the top-5 US life

insurance companies.

A successful brand

advertising campaign

was launched bringing

the new US companies

under the ING name.

The Aetna International

businesses were combined

with those of ING in

South America to form

the leading international

insurance company on

that continent.

ING acquired the remaining

55% of Seguros Comercial

América, Mexico’s largest

private insurance company.

ING Canada and Zurich

Canada formed a strategic

alliance that makes ING

the leading non-life

insurer in the country.




easily migrate to the new www.ing-usa.com, which

will add more interactive functionality for cus-

tomers in 2002. ING has seen an increasing need

to create technologies with which ING businesses

can organise and access customer information.

These technologies enable customers and distribu-

tors to access their personal account information

and perform functions. A web strategy providing

customer-distributor links lies at the heart of

becoming a customer-focused organisation. As

ING web sites evolve throughout this year and

beyond, they will begin to direct users to contact

ING-associated financial advisors. The web page,

then, becomes a workhorse for customers who

want more personalisation – as well as for ING

advisors – by immediately engaging users on a

variety of levels.

O U T L O O K

Due to generally poor equity markets in the US

in 2001, ING began the year 2002 with assets

under management considerably below expecta-

tion. The announced reduction of annual oper-

ating expenses by over USD 250 million will help

reduce expenses in line with lower revenue

expectations. In addition, as significant progress

in integration has been made in 2001 and the

remaining integration projects will be completed

by the end of 2002, ING US Financial Services

will achieve its IFS platform operationally and

managerially by the close of the year. Assuming a

modest recovery in the region’s economic growth

and stock markets, ING businesses are well-

positioned to contribute their fair share to the

Group’s profit.

The company’s overall goal for the coming year is

to strengthen its business platforms in key coun-

tries that deliver revenue and earnings growth

across a wide range of market conditions – and

that ultimately lead to the region’s intent to be the

consummate integrated financial provider. Fun-

damentally, the plan calls for continuing aggres-

sive portfolio management, continued business

restructuring, enhancing performance, lowering

expenses, customer-focused product development

as well as building the ING brand and culture.


ING Comercial América offers its insurance clients mobile assistance in Mexico City.


ING ASIA/PACIF IC

S T R AT E G Y

With already a leading life insurance position in

Asia/Pacific after the integration with the Aetna

International businesses, the strategy will be to

focus on key strategic markets where scale,

distribution, management and technology are the

drivers of sustainable profit growth. Building the

brand awareness and positioning the ING brand

in the region help establish the Integrated Finan-

cial Services business platform. Rounding out

ING’s product range with innovative products

such as mutual funds, defined contribution plans,

variable life and unit-linked products in selected

markets, positions ING closer to its customers with

more product choices. Distribution ability needs

to be enhanced by diversifying distribution and

implementing a CRM business model. In other

words, ING Asia/Pacific is aiming to build on its

strength as a traditional life insurer distributing

through agents sales forces to gradually become a

multi-channel financial services provider focused

on delivering superior products and services to

customers in the middle and upper retail market.

STRONG MARKET

POSIT IONS IN AS IA/PACIF IC

The year 2001 has been a year of integration for ING Asia/

Pacific. Following the Aetna International acquisition in

December 2000, all the Aetna businesses were fully integrated

with ING’s businesses in the region in 2001. In spite of the

significant integration efforts which distracted management

focus throughout the year, the region delivered its profit target

according to plan. Shifting toward one strong ING global

brand is also part of the integration efforts. 2001 was marked by

major rebranding and brand awareness campaigns throughout

the region. Country platforms have been set up to build brand

using combined scale to leverage cost structures and enhance

revenue synergies.

Be a leading player in the core markets Australia, Japan, Korea, Taiwan, China

(including Hong Kong) and Malaysia, while further developing the (major)

greenfields in China and India.

NUMBER OF STAFF


ING Asia/Pacific 7%

Rest of ING 93%

7,976

105,167



ING Asia/Pacific 5%

Rest of ING 95%

313

5,428



form. An award-winning advertising campaign,

centering on the “good man” image of ING

insurance agents in Hong Kong, was highly

successful in reinforcing ING’s brand.

N E W O P P O R T U N I T I E S I N J A PA N

With the divestment of Aetna Heiwa Life Japan

in the latter half of 2001, ING has taken a step

further in streamlining its operations to focus on

product manufacturing and independent distri-

bution channels in Japan. ING Principal Pen-

sions, ING’s joint venture established with the

Principal Financial Group, was among the first

to become operational and enter the promising

defined contributions market in November follow-

ing the long awaited new legislation on Japanese

pensions.

R E G R O U P I N G O F O P E R AT I O N S I N A U S T R A L I A

To consolidate its strong position in key markets

and to ensure it continues to prosper in an increas-

ingly competitive environment, ING in Australia

started the process of regrouping its operations

into customer and adviser segments, where his-

torically its focus has been on product or distri-

bution. With a new function-based organisation,

Results of ING Asia/Pacific

fully met expectations,

with good results in Korea,

Taiwan and Australia.

Successful integration of

Aetna International with

ING companies.

ING Life Korea has become

the fastest growing foreign

life insurer in the country

with 7% market share in

new premiums.

Revenues in life insurance

joint venture in Shanghai

more than doubled.

New promising joint

ventures in India and

Japan.

ING is one of the largest life insurers in Taiwan.

S T R O N G M A R K E T P O S I T I O N S

As the second largest international life insurer in

the Asia/Pacific region, ING has now become a

dominant player. In Australia, ING ranks among

the top five insurance and asset management

institutions with a market share of 6% for retail

funds under management. Measured by new

premium income, ING is now the fourth largest

life insurer in Taiwan, having strengthened its

position from the previous year, and is easily the

largest foreign life insurer there. In Hong Kong,

ING ranks sixth with a 5% market share. In Korea,

ING is the fastest growing foreign life insurer

with a 7% market share in new life premiums.

ING ranks 19th in Japan up from 24th last year,

and is among the top three for corporate-owned

life insurance (COLI) new business with a market

share of 3%. In China, ING’s joint venture PALIC

in Shanghai now ranks as the second largest

foreign joint venture and fifth overall with a 4%

market share in new life premium. ING’s and

Aetna’s experience in establishing new emerging

market operations is benefiting this company – it

already has 100,000 customers and revenue growth

over 100% on a pro-forma basis. As the third

largest insurance company in terms of premium

income and with 10% market share in terms of

new business, ING strengthened its position in

Malaysia in individual life insurance and main-

tained its leadership in employee benefits.

R E B R A N D I N G T O I N G

In Australia, the ING brand was smoothly adopt-

ed using a transition logo to explain the name

change from Mercantile Mutual to ING. The

nine-months transition campaign indicated strong

consumer awareness and ensures success when

removing the Mercantile Mutual link in January

2002. In Taiwan, Life of Georgia and Aetna were

smoothly integrated under the new brand name

ING Antai. In Hong Kong and Macau, the

change from Aetna to ING Life coincided with

the integration and realignment of its operations

to establish a single strong financial services plat-


the restructuring includes all ING Australia’s life

insurance, funds management and adviser opera-

tions. In terms of shared synergies, expertise and

knowledge, Australia continues to serve as a

regional hub, transferring its mature market skills

to other ING businesses in developing markets of

the Asia/Pacific region.

J O I N T V E N T U R E W I T H A N Z B A N K

A preliminary agreement was reached with ANZ

Bank, one of the leading banks in Australia, to

form a joint venture in funds management and

life insurance in Australia and New Zealand with

a view to strengthen the competitive position of

ING Australia in the top of the financial services

market. If completed as planned, the joint

venture will rank fourth in terms of retail funds

under management and will be the exclusive

supplier of life insurance and funds management

products to the ANZ Bank branch network and

to ING Australia’s many distribution channels.

I N D I A A S A G R O W T H M A R K E T

ING Vysya Life insurance, a joint venture between

ING and Vysya Bank in India, established opera-

tions in Bangalore, Delhi and Mumbai after it

was granted an operational licence by the Indian

Insurance Regulation and Development Authority.

India is one of the key long-term growth markets

in Asia. ING Vysya Life Insurance started selling

policies in September through its highly profes-

sional sales force of over 300 tied agents as well as

through the 480 outlets of Vysya Bank which are

concentrated in the southern part of the Indian

subcontinent.

B E C O M I N G A R E C O G N I S E D E - L E A D E R

A key priority is becoming a recognised e-leader

in key markets. Through the use of the Internet

and other digital technology, ING works to

foster new and powerful relationships with its

customers, agents, employees and partners by

lowering costs per transaction and increasing

revenue per customer, while at the same time

increasing satisfaction and customer retention.

Altogether there are 24 on-going e-business

projects across the region with many in the form

of self-service platforms.

O U T L O O K

The year 2001 was a successful year for ING

Asia/Pacific, which achieved its sales and earnings

targets despite the deteriorating economic climate.

ING Asia/Pacific views itself as a financial

product manufacturer and distributor, organising

around operational excellence to build a customer-

focused organisation throughout the Asia/Pacific

region. Key will be staying ahead of competition

and demonstrating expertise in addressing the

negative elements, such as low equity markets

and current low interest rates, that impact the

business environment. The diversification of ING’s

business portfolio across the region together with

a close eye on expense levels will help to alleviate

these economic adversities. All in all, ING Asia/

Pacific expects substantial growth in revenues and

earnings in 2002 through further integrating the

business activities, optimising synergy, expanding

distribution opportunities, building one powerful

brand and focusing on meeting customer needs.

F R E D H U B B E L L

We aim to build on our

strength as a traditional life

insurer to gradually become

a multi-channel provider

of superior financial

services for the middle and

upper retail market.


NUMBER OF STAFF



Rest of ING 95%

5,275

107,868




Rest of ING 95%

264

5,477



ING ASSET MANAGEMENT

I N V E S T M E N T P E R F O R M A N C E U N D E R P R E S S U R E

As is normal in a highly volatile market, ING’s

investment performance came under pressure.

For ING’s key funds, 53% performed better than

their relative benchmark on a 1-year basis and

60% on a 3-year basis per 31 December 2001.

Although these investment performance statistics

slipped slightly, ING’s performance against peers

improved with 75% of the funds showing above-

median (first or second quartile) performance on

a 1-year basis versus 72% on a 3-year basis.

S T R AT E G Y

ING Asset Management is committed to delivering

excellence in investment performance and client

service quality through its ‘global investment


INCREASED IN DIFF ICULT

MARKET C IRCUMSTANCES

The year 2001 was very difficult for the asset management

industry. The business is sensitive to the level of market prices as

revenues are linked to funds under management. In addition, a

drop in asset prices often coincides with net outflows. Under these

difficult circumstances, ING Asset Management generated a

pre-tax profit of 264 million – 18.5% below last year’s

324 million. A significant part of the decline was caused

by lower results on seed capital invested to sponsor third-party

private equity funds. ING’s assets under management still

increased 2% from 503 billion to 513 billion thanks to a

strong inflow of new funds ( 41 billion). The share of third-

party assets declined slightly from 71% to 68%.

Become a global top-10 (currently no.12 in assets under management) and

remain a European top-5 (currently no. 4) asset manager with an

above-average investment performance.


expertise, local client focus’ business model. By

consistently meeting these commitments, ING

Asset Management intends to reach its objective

to be a top-five asset manager in Europe as well

as a top-ten asset manager globally.

O R G A N I S AT I O N

As of 2002, ING Asset Management’s private

banking activities will be transferred to ING

Europe. Aeltus, the asset-management unit of

Aetna, has been merged with ING Furman Selz

Asset Management to form ING Aeltus. The

wholesale real estate business of Westland/Utrecht

Hypotheekbank and ING Bank Nederland will

be transferred to ING Real Estate.

After these transfers, ING Asset Management

comprises a group of attractively homogeneous

business units. Each activity is of a truly global

character, combining global product sourcing

with a global customer base. Throughout ING

Asset Management, there is a strong emphasis on

product design and manufacturing. Distribution

and marketing efforts focus on institutional and

wholesale clients, either representing institutional

investors or retail distribution channels.

ING Asset Management is pursuing cost reduc-

tions on all levels, among others by integrating

or outsourcing back-office processes and by

reducing overlaps in product offerings that do

not add value. Furthermore, ING Asset

Management is consistently strengthening its risk

management infrastructure across its business

units. This effort has, for example, resulted in an

AA+ rating from Fitch-AMR for Baring Asset

Management’s London investment operations.

A C T I V E M O N E Y M A N A G E M E N T F O R

I N S T I T U T I O N A L I N V E S T O R S

Baring Asset Management, ING Investment

Management and ING Aeltus offer active money

management services to institutional investors.

Institutional client assets under management

amounted to 166 billion, which makes ING

one of the larger third-party money managers in

the world with strong market positions in Europe,

the US and Asia/Pacific. At Baring Asset Mana-

gement a deterioration of investment performance

in some products led to a higher than expected loss

of mandates. The investment process has been

reviewed and improved. It is expected that a

further loss of mandates is stemmed now that the

performance is improving.

ING Aeltus strengthened its managed-account

business, resulting in substantial inflows of funds.

ING Investment Management performed very

satisfactorily and won a number of prestigious new

mandates. ING Investment Management manages

133 billion of assets on behalf of ING

Insurance.

In the US, the integration of the general-account

investment platforms of Aetna, Reliastar and ING

has been completed, resulting in an expansion of

investment capabilities and cost savings.

M O R E C O M P E T I T I O N I N M U T U A L F U N D S

In 2001, retail investors reduced their investments

in equity funds in reaction to negative returns. In

the mutual fund business, average holding periods

are falling due to the emergence of theme funds,

but also because investors are becoming more

sensitive to performance. Furthermore, the emer-

gence of open architecture, whereby distribution

channels are selling products from various pro-

viders, has led to a more competitive en-

vironment. Alternative investments (funds of

hedge funds, private equity) as well as principal

protected products are gaining ground.

The different business units of ING Asset Mana-

gement managed 181 billion in mutual funds.

Net inflow was mainly due to inflow in the US

and in Asia. ING Pilgrim successfully launched

principal protected products in the US, which are

managed by ING Aeltus.

In very difficult market

circumstances, assets under

management still increased

by 2% from EUR 503 billion

to EUR 513 billion.

ING’s key funds performed

well against their peers

with 75% of the funds

showing above median

performance on a 1-year

basis per 31 December 2001.

Profit decline due to lower

returns on seed capital and

lower management fees.

In the US, Aeltus, the former

asset management unit of

Aetna, has been merged

with ING Furman Selz Asset

Management to form ING

Aeltus.

The wholesale real estate

business of Westland/

Utrecht Hypotheekbank

and ING Bank Nederland

is being integrated within

ING Real Estate.




0

50

100

150

200

250

300

350

400

450

500

0100999897


BY CL IENT CATEGORY


External clients

Internal clients

L E A D I N G P O S I T I O N I N R E A L E S TAT E

ING Real Estate operates as asset manager, devel-

oper and financier. With 31 billion of assets

under management, ING Real Estate ranks in the

top three of global real estate asset managers.

The development and financing activities are in

themselves highly profitable businesses, but they

also support ING’s real estate asset management

business. For example, the launch of the Ibérica

Retail Fund was jump-started thanks to the wealth

of in-house expertise in the development of

shopping centres.

After making a public bid in November 2001 for

the shares of Filo, a Spanish real estate and

shopping centre developer and management com-

pany, ING Real Estate reached agreement with

the four main Filo shareholders to acquire their

stakes totalling 81.5% in December 2001.

The average profit growth of the development acti-

vities has been 2% annually over the last four years

and further growth is expected. Currently, the port-

folio of development projects under construction

amounts to 1.3 billion. Several prestigious

projects have been added this year, such as the Zlota

project in Warsaw, the New York Times Tower

project and the Gershwin project in Amsterdam.

In 2002, the wholesale real estate financing busi-

nesses of ING business unit Westland/Utrecht

Hypotheekbank and ING Bank will be transferred

to ING Real Estate. With a loan portfolio of ap-

proximately 15 billion, the new combination

will be leading in the Dutch real estate financing

market. ING Real Estate expanded its inter-

national financing business, especially in Europe

and the US. A notable area of growth is the design

of innovative (off-balance sheet) financing struc-

tures for ING’s international client base.

N E W I N I T I AT I V E S I N A LT E R N AT I V E A S S E T S

‘Alternative’ investments – notably hedge funds

and private equity – offer attractive performance

characteristics and diversification benefits.

ING Aeltus expanded its hedge fund product

range with a diversified fund of hedge funds. With

7.4 billion of assets under management, ING

Aeltus is a leading investment manager in the area

of high-yield bonds and leveraged loans. A new

European CDO (collateralised debt obligations)

product was launched, which marked the first step

of this product line outside the US market.

Private equity was affected by the deteriorating

markets and the aftermath of the Internet bubble.

In spite of these difficulties, Baring Private Equity

Partners was able to launch new private equity

funds for Russia, Eastern Europe and Asia,

raising its total assets under management to

2.3 billion.

ING Aeltus launched two new private equity

funds. Especially the ‘secondaries’ fund, which

buys private equity partnership interests from

investors who wish to reduce their exposure to

this asset class, met good demand from institu-

tional investors in the US and Europe.


ING’s call centres offer clients the opportunity to manage their investment port-

folio very efficiently.



At Parcom, the captive private equity company

of ING Asset Management, substantial profits

from its (middle market) buy-out business more

than outweighed the losses from write-downs on

some investments in young ICT companies.

F U N D A D M I N I S T R AT I O N A N D T R U S T S E R V I C E S

S T I L L G R O W I N G

The continuing trend to outsource non-core

functions by asset managers is a stimulus to the

fund administration business of the Financial

Services Group of Baring Asset Management.

Assets under administration, in custody and held

in trust, were 65.4 billion at year-end. The

Financial Services Group has built an excellent

reputation as an offshore administrator of private

equity funds and hedge funds, which business

has been growing rapidly in the last two years.

ING Trust specialises in trustee services and the

formation and management of offshore compa-

nies used for, amongst other things, tax planning,

estate planning and asset protection. By acquiring

Intra Beheer in April 2001, ING Trust has become

a leading player in the Dutch market for offshore

trust services.

O U T L O O K

Asset management continues to be a highly attrac-

tive business for ING because growth prospects

remain excellent and capital utilisation is low. In

Europe and Asia, demographic trends continue

to offer significant growth potential. In the US,

the emergence of the open architecture model

allows ING to further bolster the distribution of

its top-performing funds. While in the short term

the business remains vulnerable to adverse market

developments, the asset management industry will

continue to expand rapidly at profitable margins

in the longer term.

A L E X A N D E R R I N N O O Y K A N

We are committed to delive-

ring excellence in global

investment performance and

local client delivery service.

ING Real Estate is market leader in the Netherlands in the development of shopping centres.


ING is an attractive employer, also because of its

long-term commitment to training and develop-

ment, its diversity of experience and background

and its commitment to its people. ING has a

culture made up of all the businesses the Group

comprises. The company is proud of its Dutch

heritage and embraces its international diversity.

L E A D E R S H I P A N D TA L E N T M A N A G E M E N T

In terms of leadership, ING has made great

progress in forming its Management Council

targeted at a size of 200 senior leaders. Over the

past year these managers have been further linked

through a common performance management

process which recognises and rewards them on

measurable results and their commitment to

ING shared synergies.

The first International Conference outside of

Europe was held in June 2001 in Atlanta, recog-

nising ING’s expansion in the Americas and

further emphasising its cultural diversity. ING

takes effective talent management seriously and

consistently evaluates the longer-term career plans

of young people rated as top talent throughout

the organisation. Simultaneously, each business

unit tracks and plans talent management within

its own organisation.

I N G B U S I N E S S S C H O O L

In terms of management development, the ING

Business School in the Netherlands continues to

flourish as a dedicated learning centre for ING

leadership. During 2001 ING Business School

surpassed previous enrolments with over 1,100

participants. The courses continue to focus on

the various technical aspects of our core busi-

nesses as well as leadership development. Key

additions included “ING Mindset”, which was

conducted in various satellite locations with the

intention of bringing home the values, culture

and reach of the ING enterprise. The ING

Business School will continue to develop courses,

which are ‘time sensitive’ to our current and

near-term business priorities such as branding,

leveraging synergies, leading effectively through

change etc.

The ING Business School also provides the

opportunity to network and share best practices

HUMAN RESOURCESR E P O R T O F T H E E X E C U T I V E B O A R D

ING’s success is determined by the quality of its people. Active

in 65 countries, ING remains in the enviable position of being

an attractive employer. In March 2002, Fortune selected ING

as one of Europe’s “10 great companies to work for”. We plan

to further develop our employer brand. Each separate business

of ING has a distinguished reputation as an employer. Our goal

is to maintain that reputation locally, and strenghten it by refer-

ring to ING’s global employment opportunities.

TAKING ADVANTAGE OF THE

DIVERSITY OF OUR PEOPLE

Development of talent,

performance management

and stimulating diversity

defined as key issues in

human resources.

ING Business School proves

to be a successful learning

centre as part of

management development.

Management Council of 200

top managers developed as

backbone of ING leadership.

One ING collective

labour agreement for

34,500 employees in

the Netherlands.


with ING colleagues from around the world.

These acquaintances are valuable as they are fre-

quently relied upon to solve business challenges

long after the courses have been concluded.

D I V E R S I T Y I N B R O A D S E N S E

ING is characterised by a high degree of diver-

sity. The challenge is to utilise this resource as

much as possible. During 2001 the Diversity

Council, which advises the Executive Board on

these matters, was broadened beyond women.

Clearly the advancement of women in leadership

remains a top priority, yet we also realise that one

size does not fit all. Our goal is to ensure that

ING’s workforce at all levels reflects the customer

base and geographic mix of the locations where

we do business. The Diversity Council has a

detailed action plan, which covers three primary

categories of focus: demonstrating commitment,

changing behaviour and assigning ownership.

During 2001 ING announced that diversity would

be a component of the medium-term plans of its

business units. It is considered a business issue

as well as a social issue. Businesses were asked to

set measurable objectives as is being done for all

other key initiatives. We will discuss progress

toward these objectives regularly and ensure

our leaders see this topic as part of their overall

leadership objectives. Diversity is part of ING’s

strength.

C O L L E C T I V E L A B O U R A G R E E M E N T I N T H E

N E T H E R L A N D S

The differences in the employment conditions of

the various business units of ING in the Nether-

lands were removed in 2001. Before that time,

there were separate conditions for employees of

ING Insurance and ING Bank. This situation

was corrected when ING introduced its own

Collective Labour Agreement for all its employ-

ees in the Netherlands in 2000. This makes it

easier for employees to transfer to another

business unit to further develop their career.

In addition, the employment conditions have

been modernised to suit the needs of ING’s

current workforce in the Netherlands. Within

certain boundaries, employees can distinguish

between several options regarding working hours,

pension provisions and number of holidays.

Another important theme in the Collective

Labour Agreement is the introduction of variable

compensation based on performance manage-

ment. In this way, ING has increased its appeal as

an employer.


EMPLOYEES

full-time equivalents,

year-end 2001

The Netherlands 31%

Belgium 12%

Rest of Europe 21%

North America 21%

South America 6%

Asia 7%

Australia 2%

Other

Total

34,463

13,685

23,402

23,886

6,892

8,141

2,600

74

113,143

A L E X A N D E R R I N N O O Y K A N

Thanks to the drive,

commitment and expertise

of our people, ING is well-

positioned to compete in

the global market place.


R I S K P O L I C Y

On Executive Board level, the Risk Policy Committee evaluates and

manages ING Group’s overall risk profile, aiming for a good balance

between risk, return and capital. The principal risks that are monitored

are credit risk, market risk, liquidity risk, actuarial and underwriting

risks, operational risk and solvency risk.

B A S E L I I

The Basel Committee is planning to introduce a new capital adequacy

framework called Basel II, which is to replace the original Basel Agree-

ment from 1988. In January 2001, the second consultative paper

from the Basel Committee was published, which incorporated the

comments banks made in response to the proposals. During 2002, a

further consultative paper is expected. Basel II is expected to be intro-

duced in 2005. Within ING, various risk management units are

preparing for the introduction of Basel II to make sure ING is com-

pletely compliant by 2005. The focus of ING’s preparations are in

the areas of credit risk, market risk and operational risk manage-

ment.

I M PA C T S E P T E M B E R 1 1 O N R I S K M A N A G E M E N T

September 11 altered the very concept of what constitutes a catas-

trophe, and this has potential implications for the risk profile of all

the life, annuity, health and non-life portfolios. ING initiated a study

of the Group’s concentration risk exposure in those portfolios

and its reinsurance policy, particularly with respect to catastrophe

reinsurance.

C R E D I T R I S K

B A N K I N G C R E D I T R I S K

ING’s general credit risk policy is to maintain an internationally

diversified loan portfolio, avoiding large concentrations. The emphasis

is on expanding business within the European region by means of top-

down concentration limits in the areas of country, individual bor-

rower and industries. The focus is also on more relationship banking

activities, while maintaining stringent internal risk/return guidelines.

Additions to provisions in 2001 showed a significant increase after a

period of annual declines since 1998. The deterioration of economic

conditions necessitated a strong increase in the addition to the

provision for loan losses of the banking operations.

I N S U R A N C E C R E D I T R I S K

ING’s Insurance’s policy is to maintain a fixed-income investment

portfolio with an average credit quality comparable to a Standard &

Poor’s rating of AA-/A+ (A3/A1 of Moody’s). The provision for

loan losses amounted to 165 million at year-end 2001 (2000:

248 million).

RISK MANAGEMENTR E P O R T O F T H E E X E C U T I V E B O A R D

ADDIT IONS TO THE PROVISION FOR LOAN LOSSES ING BANK

amounts in millions of euros

2000 2001

Netherlands 75 113

International 325 637

Total 400 750

HIGH PRIORITY FOR

R ISK MANAGEMENT

The Executive Board places a high priority on risk management. By nature of the Group’s

size and its wide diversity of activities, types of clients and geographic regions, ING

recognises that it has a special responsibility in maintaining the highest quality

of risk management and applying the most up-to-date and reliable methods available.

ING has comprehensive risk management procedures on all levels within the Group.


C O U N T RY R I S K

The country provision methodology is more closely linked to the risk

definitions with respect to determining where the country risk occurs.

Some countries with perceptually high risk, but which have not yet de-

faulted, require no mandatory provisions. Instead of provisions, addi-

tional capital has to be allocated to transactions that incur country risk,

the amount of which is a function of the risk of the country as well as

the risk of the transaction itself. For countries that are near default or

have recently defaulted, adequate provisioning remains a requirement.

The Dutch Central Bank continually monitors our policies with respect

to capital allocation and provisioning for country risk. The table below

shows the largest cross-border lending exposures in emerging markets.

M A R K E T R I S K

B A N K M A R K E T R I S K

ING’s policy is to maintain an internationally diversified and mainly

client-related trading portfolio, while avoiding large risk concentra-

tions. The emphasis is on expanding business in liquid markets. ING

applies value-at-risk and stress-testing scenarios for market risk mana-

gement. Value-at-Risk measures the maximum overnight loss that

could occur under normal market circumstances if the trading posi-

tions remain unchanged for a time interval of one day. Apart from

market risks in its trading portfolios, ING Bank has a structural

interest rate risk on its balance sheet. As at 31 December 2001,

an increase in interest rates of 1% gradually during the year

could potentially have an adverse effect on interest income of

79.2 million (year-end 2000: 4 million).

I N S U R A N C E M A R K E T R I S K

The insurance market risks are monitored through asset and liability

management policies and procedures. To this end, a structure is

established on business unit, regional and corporate level. The risk of

loss occurring through adverse changes of prices in the financial mar-

kets is monitored through a set of preferred risk measures. Earnings-

at-Risk positions measure short-term volatility, whereas Embedded-

Value-at-Risk measures longer-term volatility. As a number of busi-

ness units is in the process of upgrading systems to report on the

at-risk market risk measures, the total market risk exposure for the

insurance operations of ING is measured using scenario analyses.

The insurance operations are exposed to interest rate movements

with respect to guaranteed interest rates and policyholders reason-


VALUE-AT-RISK BY CATEGORY


YEAR-END 2000 YEAR-END 2001

Foreign exchange 2 .3 3 .1

Equities 6 .6 7 .7

Emerging markets 7 .9 9 .2

Interests 4 .8 24 .9

Sub-total 21 .6 44 .9

Diversification effect -5 .4 -12 .1

Total 16 .2 32 .8

LARGEST (>EUR 750 MILL ION) CROSS-BORDER LENDING EXPOSURES IN EMERGING MARKETS

in millions of euros, figures exclude local currency-denominated loans

GROSS EXPOSURE RISK REDUCING FACTORS PROVIS IONS ON FOREIGN

CURRENCY LOANS

PRIMARY TRADE

COLLATERAL F INANCE

2000 2001 2001 2001 2000 2001

Poland 1 ,640 2 ,227 189 8 41 46

Indonesia 1 ,551 1 ,586 1 ,099 38 447 304

Hong Kong 2 ,048 1 ,566 216 124 27 37

Russia 884 1 ,468 1 ,013 370 34 8

South Korea 1 ,557 1 ,440 20 716 35 14

Brazil 979 1 ,214 286 705 - -

Mexico 1 ,628 1 ,095 334 89 5 5

Argentina 901 846 302 230 8 98

Turkey 824 830 468 277 - -


able expectations with respect to crediting rates. Asset portfolios

backing these liabilities are managed accordingly. The current product

portfolio also comprises products where interest-rate risks are entirely

passed on to the policyholder, thereby reducing ING’s exposure to

interest movements.

The insurance operations are exposed to movements in equity

markets since they have an impact on the level of charges deducted

for unit-linked and variable business. A 10% decrease in stock mar-

ket prices would lower the pre-tax budgeted result for the insurance

operations in 2002 by 2.7%.

L I Q U I D I T Y R I S K

ING closely monitors its liquidity risk to maintain an adequate

cushion to meet its financial liabilities when due. Liquidity risk is

managed at Group and local level by a combination of existing

investment mandates, guidelines for asset & liability management,

specific limits for certain business units and Treasury policies and

procedures.

A C T U A R I A L A N D U N D E R W R I T I N G R I S K S

Actuarial risks arise with respect to the adequacy of insurance pre-

mium rate levels, provisions with respect to insurance liabilities and

solvency capital, taking into consideration the supporting assets (fair

and book value, currency and interest sensitivity), changes in interest

rates and exchange rates and developments in mortality, morbidity,

lapses and expenses as well as general market conditions. Specific

attention is given to the adequacy of provisioning, considering the low

interest rates in a number of countries in which ING operates. ING

is of the opinion that its provisions are adequate.

ING Insurance’s actuarial and underwriting risks are controlled at

ING Group level. Insurance Risk Management provides guidelines

for product design, reserving, underwriting, pricing criteria and

reinsurance strategy. Consistent with other business in ING Group,

the current embedded-value methodology is extended to a risk-

adjusted capital allocation and performance measurement tool.

O P E R AT I O N A L R I S K

ING’s policy is to minimise operational risks by raising the opera-

tional risk awareness among its management and staff, setting clear

governance and implementing a periodic operational risk iden-

tification, assessment and mitigation process. During 2001, an

operational risk management (ORM) governance framework was set

up. ORM departments were established in the business units.

Furthermore, operational risk committees have been installed in EC

Europe.

S O LV E N C Y R AT I O S

The following table shows the solvency ratios for the banking opera-

tions and ING’s targets:

For the insurance activities, the required solvency margin is based on

European Union directives. At the end of 2001, ING’s solvency margin

exceeded the required solvency margin, as shown by the following table:

M O R E I N F O R M AT I O N

Detailed figures on regulatory requirements and ratios of the banking

and insurance operations are given on page 64. A comprehensive

chapter on risk management has been added to the separately issued

Annual Accounts. This information is also available on the Internet

site of ING Group (www.ing.com).

Amsterdam, 28 February 2002

T H E E X E C U T I V E B O A R D ,

EWALD K IST, Chairman

MICHEL T I LMANT, Vice-Chairman

FRED HUBBELL

HESSEL L INDENBERGH

CEES MAAS , Chief Financial Officer

ALEXANDER R INNOOY KAN


BANK

2000 2001 ING target

Tier-1 ratio 7 .22% 7.03% approx . 7%

BIS ratio 10 .75% 10.57% at least 10%

INSURANCE


2000 2001

Available solvency margin 19 ,897 20 ,650

Required solvency margin 7 ,989 9 ,845

Surplus funds 11 ,908 10 ,805

R I S K M A N A G E M E N T

TOWARD A GLOBAL ING BRAND

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