S&P Affirms ING Group Ratings, Changes Outlook to Negative

December 14, 2001

Standard & Poor’s has affirmed its ratings on Holland’s ING GROEP N.V., its insurance operations ING Verzekeringen NV (INGV), ING Bank NV and other group subsidiaries. Long term ratings are double-‘A’-minus, and short term counterparty ratings single-‘A’-plus; however, S&P revised its outlook on ING Groep and INGV from stable to negative.

S&P’s report described INGV’s situation as follows:

“The financial strength of the insurance operations is based on the sub-group’s very strong business position in The Netherlands and the U.S., and very strong financial flexibility. Capitalization has weakened significantly after the goodwill write-off incurred when INGV acquired both ReliaStar Financial Corp. (AA-/Negative/–) for EUR6.7 billion [$6 billion] and the insurance activities of the Aetna group for EUR8.3 billion [$7.44 billion] in 2000. The acquisitions have given the insurance sub-group the potential to deliver significantly improved earnings, which will help to rebuild capital over the next two years. Standard & Poor’s expects 2002 underlying pretax earnings from North American insurance to show impressive growth toward EUR1.2 billion [$1.07 billion].

Earnings in its domestic market are extremely strong and are not matched elsewhere in the group.”

Concerning its reasons for changing the outlook from stable to negative, S&P gave the following reasons: ” The outlook on ING GROEP NV and INGV is driven by concerns that management may be challenged in translating its recently acquired impressive U.S. life business position into the expected improved earnings. Notwithstanding the recently announced plans to reduce headcount by 15%, the challenge of integration remains significant, culturally, operationally, and legally. In addition, the negative economic trends in the U.S. provide limited margin for error.”

The rating agency also noted that the ING Group ratings,”are driven by the diversification benefit from owning a ‘AA-‘ rated bank and somewhat stronger insurance operations. In addition, geographical diversification and scale, as one of the world’s top 20 financial institutions, provides significant financial flexibility.”|”snp, affirms, ing, group, ratings,, changes, outlook, negative

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