<PAGE>
Filed Pursuant to Rule 424(b)(5)
File No. 333-73245
PROSPECTUS SUPPLEMENT
(To prospectus dated April 20, 1999)
$200,000,000
[LOGO ("ReliaStar" w/starburst "A")]
ReliaStar Financial Corp.
8% Notes due 2006
----------------
ReliaStar will pay interest on the 8% notes due 2006 that we are offering
under this prospectus supplement semi-annually on April 30 and October 30 of
each year, starting on April 30, 2000. The notes will mature on October 30,
2006. The notes are not redeemable before maturity and do not have the benefit
of a sinking fund. Our payment obligation on the notes ranks equally with our
payment obligations on all of our other unsecured senior debt.
----------------
<TABLE>
<CAPTION>
Per Note Total
-------- -----
<S> <C> <C>
Public offering price(1).............................. 99.639% $199,278,000
Underwriting discount................................. .625% $1,250,000
Proceeds, before expenses, to ReliaStar............... 99.014% $198,028,000
</TABLE>
(1) Plus accrued interest from October 8, 1999 if settlement occurs after
that date
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined that
this prospectus supplement and accompanying prospectus are truthful or
complete. Any representation to the contrary is a criminal offense.
The notes will be ready for delivery, in book-entry form only through The
Depository Trust Company, on or about October 8, 1999.
----------------
Merrill Lynch & Co.
Credit Suisse First Boston
Lehman Brothers
J.P. Morgan & Co.
----------------
The date of this prospectus supplement is October 5, 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
Prospectus Supplement
<S> <C>
ReliaStar Financial Corp................................................. S-3
Summary Financial Information............................................ S-5
Ratio of Earnings to Fixed Charges....................................... S-6
Use of Proceeds.......................................................... S-6
Description of Notes..................................................... S-6
Underwriting............................................................. S-8
Validity of Notes........................................................ S-10
Prospectus
About this Prospectus.................................................... 2
ReliaStar Financial Corp................................................. 3
The Trusts............................................................... 4
Use of Proceeds.......................................................... 6
Ratios of Earnings to Fixed Charges and to Combined Fixed Charges and
Preferred Stock Dividends............................................... 6
Description of Debt Securities........................................... 7
Description of Particular Terms of Junior Subordinated Debt Securities
Issued in Connection with Preferred Securities.......................... 15
Description of Preferred Securities of the Trusts........................ 16
Description of the Preferred Securities Guarantee........................ 17
Description of Capital Stock............................................. 19
Description of Depositary Shares......................................... 23
Description of Securities Warrants....................................... 26
Plan of Distribution..................................................... 29
Where You Can Find More Information...................................... 30
Validity of Securities................................................... 30
Experts.................................................................. 31
</TABLE>
----------------
We have not authorized anyone to give any information or to make any
representations concerning the offering of the notes except that which is in
this prospectus supplement or the prospectus, or which is referred to under
"Where You Can Find More Information" in the prospectus. If anyone gives or
makes any other information or representation, you should not rely on it. We
are only offering the notes in states where the offer is permitted. Information
in this prospectus supplement or in the prospectus (including information
incorporated by reference) may change, or ReliaStar's affairs may change, after
the dates printed on the front of the prospectus supplement or prospectus.
----------------
S-2
<PAGE>
RELIASTAR FINANCIAL CORP.
Overview. ReliaStar is a holding company whose subsidiaries specialize in
life insurance and related financial services. Through ReliaStar Life Insurance
Company, Minneapolis, Minnesota, and other subsidiaries, we provide and
distribute individual life insurance and annuities, employee-benefits products
and services, life and health reinsurance, retirement plans, mutual funds,
personal finance education, and bank products. ReliaStar's common stock is
traded on the New York Stock Exchange under the symbol "RLR."
When we refer to "ReliaStar," "we," "our," or "us" in this prospectus
supplement we are referring to ReliaStar Financial Corp., except under the
headings "Summary Financial Information" and "Ratio of Earnings to Fixed
Charges," where we are referring to ReliaStar and its subsidiaries as a whole.
ReliaStar's strategy is to offer, principally through education-based
marketing, a wide variety of products and services designed to address
customers' need for financial security. ReliaStar currently operates in four
business segments: Personal Financial Services, Worksite Financial Services,
Tax-Sheltered and Fixed Annuities, and Reinsurance.
Personal Financial Services. The Personal Financial Services segment serves
individual customers who prefer to purchase insurance and investment products
from a personal financial adviser. This segment principally targets middle- and
upper-income families with niches including military personnel and small-
business owners. Personal Financial Services provides a wide range of products,
including universal life, variable universal life and term life, as well as
fixed and variable annuities through a nationwide network of independent agents
and financial professionals. The military market is served by a dedicated sales
force of career agents. Washington Square Securities, Inc. provides
broker/dealer services to distributors. Unaffiliated broker/dealers also
provide additional distribution.
Worksite Financial Services. This segment targets the sale of employee-
benefits and financial-service products to medium-to-large corporate employers
and affinity groups. Building on these relationships, Worksite Financial
Services also focuses on the sale of individual and payroll-deduction insurance
products to employees at the worksite. Principal products include group and
individual life insurance, non-medical group insurance products, and 401(k)
retirement plans.
Tax-Sheltered and Fixed Annuities. This segment, principally through Northern
Life Insurance Company, focuses on the retirement security needs primarily of
K-12 public and private school teachers. Northern's sales force is comprised of
agents who specialize in the tax-sheltered 403(b) market, providing both fixed
and variable annuities.
Reinsurance. The Reinsurance segment provides specialized group life and
health reinsurance, including special-risk reinsurance products, in the United
States and internationally. Target customers of the Reinsurance segment are
medium and large life insurance and selected non-life insurance companies such
as managed care and healthcare provider organizations. This segment also offers
specialty group insurance products on a direct basis and value-added services,
like catastrophic medical case management. The Reinsurance segment's
international offices are located in Amsterdam, Copenhagen, London and Mexico
City.
Supplementing these four business segments are other business units including
Washington Square Securities, Inc., a broker/dealer; Northstar Investment
Management Corporation, the investment adviser to a proprietary family of
fixed-income and equity mutual funds; PrimeVest Financial Services, Inc. and
the Financial Northeastern Companies, which target the sale of financial
products and services by marketing through unaffiliated banks and credit
unions; Successful Money Management Seminars, Inc., a producer of financial-
education seminar systems; and ReliaStar Bank, a federal savings bank, which
offers a variety of consumer credit and deposit products.
S-3
<PAGE>
Recent Developments. On July 22, 1999 ReliaStar and Pilgrim Capital
Corporation announced that the two companies signed a definitive agreement for
ReliaStar to acquire the Phoenix-based asset management and mutual fund company
in a stock-and-cash transaction valued at approximately $258 million, which
includes ReliaStar's assumption of approximately $31 million of Pilgrim debt.
Pilgrim will be combined with Northstar. The resulting mutual fund organization
will have a family of 33 mutual funds and other managed accounts with total
assets under management of approximately $12 billion and combined annual fund
sales of $2 billion. Completion of the acquisition is subject to customary
closing conditions, including approval by Pilgrim's shareholders, approval by
fund trustees/directors and fund shareholders, and various regulatory
approvals. The transaction is expected to close near the end of October 1999.
ReliaStar's executive offices are located at 20 Washington Avenue South,
Minneapolis, Minnesota 55401, and its telephone number is (612) 372-5432.
S-4
<PAGE>
SUMMARY FINANCIAL INFORMATION
The following selected financial data as of and for the five years ended
December 31, 1998 are derived from ReliaStar's consolidated financial
statements. Data as of and for the six-month periods ended June 30, 1999 and
1998 have been derived from unaudited consolidated financial statements of
ReliaStar. Interim operating results are not necessarily indicative of the
results that may be achieved for the entire year. The following data should be
read in conjunction with ReliaStar's Annual Report on Form 10-K and Quarterly
Reports on Form 10-Q, which are incorporated by reference in this prospectus
supplement. We have eliminated all material intercompany transactions and
balances.
<TABLE>
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
------------------- ---------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
--------- --------- --------- --------- --------- --------- ---------
(unaudited) (audited)
(in millions)
Operating Data:
<S> <C> <C> <C> <C> <C> <C> <C>
Premiums................ $ 559.4 $ 492.3 $ 1,014.1 $ 887.9 $ 836.9 $ 851.5 $ 726.9
Net Investment Income... 559.6 548.7 1,116.9 1,006.3 929.6 884.3 613.4
Realized Investment
Gains (Losses)......... 1.6 17.5 17.6 11.7 11.2 4.9 (27.4)
Policy and Contract
Charges................ 221.8 202.7 427.6 332.9 245.9 218.5 136.2
Other Income............ 126.6 150.2 272.0 238.8 143.4 114.4 102.4
--------- --------- --------- --------- --------- --------- ---------
Total Revenues........ 1,469.0 1,411.4 2,848.2 2,477.6 2,167.0 2,073.6 1,551.5
Benefits and Expenses... 1,246.2 1,187.9 2,447.1 2,122.7 1,866.1 1,816.7 1,391.5
Income Tax Expense...... 80.1 79.5 143.0 125.7 105.0 89.7 56.6
Dividends on Preferred
Securities of
Subsidiaries, Net of
Tax.................... 6.6 6.6 13.2 10.4 5.0 0.0 0.0
--------- --------- --------- --------- --------- --------- ---------
Income from Continuing
Operations............. 136.1 137.4 244.9 218.8 190.9 167.2 103.4
Income (Loss) from
Discontinued
Operations, Net of
Tax.................... 0.0 (3.4) (7.2) 3.2 2.1 (3.5) 1.7
--------- --------- --------- --------- --------- --------- ---------
Net Income.............. $ 136.1 $ 134.0 $ 237.7 $ 222.0 $ 193.0 $ 163.7 $ 105.1
========= ========= ========= ========= ========= ========= =========
Net Income Available to
Common Shareholders.... $ 136.1 $ 134.0 $ 237.7 $ 222.0 $ 187.8 $ 155.4 $ 96.8
========= ========= ========= ========= ========= ========= =========
<CAPTION>
Balance Sheet Data:
<S> <C> <C> <C> <C> <C> <C> <C>
Invested Assets......... $14,581.5 $14,626.4 $14,909.1 $14,420.5 $11,996.3 $11,814.2 $ 7,918.2
Other Assets............ 8,764.7 7,422.0 7,699.6 6,580.3 4,710.7 3,705.0 2,448.6
--------- --------- --------- --------- --------- --------- ---------
Total Assets.......... 23,346.2 22,048.4 22,608.7 21,000.8 16,707.0 15,519.2 10,366.8
Notes and Mortgages
Payable................ 615.7 647.9 509.4 593.5 407.5 422.3 194.6
Other Liabilities....... 20,593.0 19,006.1 19,736.8 18,154.4 14,760.9 13,676.8 9,373.7
--------- --------- --------- --------- --------- --------- ---------
Total Liabilities..... 21,208.7 19,654.0 20,246.2 18,747.9 15,168.4 14,099.1 9,568.3
Trust-Originated
Preferred Securities... 242.5 242.1 242.3 241.9 120.9 0.0 0.0
Shareholders' Equity:
Preferred............. 0.0 0.0 0.0 0.0 0.0 68.7 67.9
Common................ 1,895.0 2,152.3 2,120.2 2,011.0 1,417.7 1,351.4 730.6
</TABLE>
S-5
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Six Months
Ended
June 30, Year Ended December 31,
---------- ------------------------
1999 1998 1997 1996 1995 1994
---------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges..... 7.7 8.2 9.0 10.4 11.6 14.6
</TABLE>
For purposes of calculating these ratios, earnings (consisting of income from
continuing operations before income taxes, extraordinary charges, and
accounting changes, plus fixed charges, amortization of previously capitalized
interest, and adjustments for less-than-50%-owned persons) have been divided by
fixed charges. Fixed charges consist of interest on debt, dividends on trust-
originated preferred securities, amortization of debt expense and discount, and
the interest factor of rental expense (generally deemed to be one-third of net
rental expense).
USE OF PROCEEDS
The net proceeds from the sale of the notes we are offering under this
prospectus supplement are estimated to be approximately $198.0 million (after
giving effect to the underwriting discounts and before deducting estimated
offering expenses), which will be added to our general funds and will be used
for the following purposes:
. acquiring Pilgrim Capital Corporation, which will require cash payments
of approximately $150 million (see "ReliaStar Financial Corp.--Recent
Developments," above for a discussion of the acquisition); and
. reducing the amount outstanding under our $250 million revolving credit
facility with a group of banks, which bears interest at a floating rate
(5.68% as of September 27, 1999) and matures in three years on June 30,
2002. As of September 27, 1999 there was approximately $157 million
outstanding under our revolving credit facility, approximately $150
million of which was used to repurchase ReliaStar common stock.
DESCRIPTION OF NOTES
We provide information to you about the notes (referred to in the
accompanying prospectus as "debt securities" or "senior debt securities") in
two documents that progressively provide more detail--this prospectus
supplement and the prospectus. Because the specific terms of the notes may
differ from the general description in the prospectus, you should rely on the
information in this prospectus supplement over differing information in the
prospectus. You should read this prospectus supplement and the prospectus
together for a complete description of the notes.
General
The notes are unsecured general obligations of ReliaStar. Our payment
obligation on the notes ranks equally with our payment obligations on all of
our other unsecured senior debt. We will issue the notes under an indenture
dated as of January 15, 1995, between us and Citibank, N.A., as trustee. See
"Description of Debt Securities" in the prospectus for further information on
this indenture. We and certain of our subsidiaries may borrow from the senior
trustee and maintain deposit accounts and conduct other banking transactions
with it in the ordinary course of business.
The notes are limited to $200 million aggregate principal amount and will
mature on October 30, 2006. We will issue the notes only in registered form in
denominations of $1,000 and integral multiples of $1,000. We will pay interest
on the notes at the rate per year shown on the cover page of this prospectus
supplement from October 8, 1999, semi-annually on April 30 and October 30 of
each year, starting on April 30, 2000, to
S-6
<PAGE>
the persons in whose names the notes are registered at the close of business on
the April 15 and October 15, as the case may be, preceding each such interest
payment date. The amount of interest payable for any period will be computed on
the basis of the actual number of days elapsed in the period and a year of 360
days and twelve 30-day months.
We may not redeem the notes before maturity, nor may you require us to redeem
the notes before they mature. We are not required to make any sinking-fund
payments with respect to the notes. The notes are subject to defeasance as
described under "Description of Debt Securities--Defeasance and Discharge" in
the prospectus.
Global Certificate; Book-Entry System
We will issue the notes in book-entry form as a single global note registered
in the name of the nominee of The Depository Trust Company, New York, New York,
which will act as depositary. Except in the limited circumstances described
below, beneficial interests in book-entry notes will be shown on, and transfers
of those interests will only be made through, records maintained by DTC and its
participants.
The ownership interest of a purchaser of a note is shown in the records of
DTC's participants. Purchasers will not receive written confirmation from DTC
of their purchases, but they are expected to receive written confirmations
providing details of the transactions, as well as periodic statements of their
holdings, from the participants through which they purchase the notes.
Transfers of ownership in the notes will be accomplished by entries made on the
books of participants acting on behalf of the owners. Owners will not receive
certificates representing their ownership interests in the notes, unless the
use of the book-entry system for the notes is discontinued.
DTC may discontinue providing its services as depositary with respect to the
notes at any time by giving reasonable notice to us. Under such circumstances
and if a successor depositary is not obtained, certificates for the notes are
required to be printed and delivered. Additionally, we may decide to
discontinue use of the system of book-entry transfers through DTC (or any
successor depositary) with respect to the notes. If that occurs, certificates
for the notes will be printed and delivered.
We understand that under existing industry practices, if we request
noteholders to take action, or if an owner of a beneficial interest in a global
note desires to give or take any action that a holder is entitled to give or
take under the indenture, then (1) DTC would authorize the participants holding
the relevant beneficial interests to give or take such action and (2) such
participants would authorize the beneficial owners owning through them to give
or take such action or would otherwise act upon the instructions of beneficial
owners owning through them.
DTC has advised that it is a:
. limited-purpose trust company organized under the laws of the State of
New York;
. "banking organization" within the meaning of the New York Banking Law;
. member of the Federal Reserve System;
. "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and
. "clearing agency" registered under the Exchange Act.
DTC holds the securities of its participants and facilitates the clearance
and settlement of securities transactions among its participants in such
securities through electronic book-entry changes in accounts of the
participants. The electronic book-entry eliminates the need for physical
certificates. DTC's participants include:
. securities brokers and dealers (including the underwriters);
. banks;
S-7
<PAGE>
. trust companies;
. clearing corporations; and
. certain other organizations (some of which, or their representatives,
own DTC).
Banks, brokers, dealers, trust companies, and others that clear through or
maintain a custodial relationship with a participant, either directly or
indirectly, also have access to DTC's book-entry system.
DTC has also advised us that DTC management is aware that some computer
applications, systems and the like for processing data that depend on calendar
dates, including dates before, on and after January 1, 2000, may encounter
"Year 2000 problems." DTC has informed its participants and other members of
the financial community that it has developed and is implementing a program so
that its computer systems, as they relate to the timely payment of
distributions, including principal and income payments, to securityholders,
book-entry deliveries, and settlement of trades within DTC, continue to
function appropriately. This program includes a technical assessment and a
remediation plan, each of which DTC has indicated is complete. Additionally,
DTC's plan includes a testing phase, which is expected to be completed within
appropriate time frames. However, DTC's ability to perform properly its
services also depends upon other parties, including but not limited to issuers,
issuers' agents, third-party vendors from whom DTC licenses software and
hardware and third-party vendors on whom DTC relies for information or the
provision of services, including telecommunication and electrical utility
service providers, among others. DTC has informed its participants and other
members of the financial community that it is contacting, and will continue to
contact, third-party vendors from whom DTC acquires services to impress upon
them the importance of such services being Year 2000 compliant; and to
determine the extent of their efforts for Year 2000 remediation, and, as
appropriate, testing, of their services. In addition, DTC has advised us that
it is in the process of developing contingency plans it deems appropriate.
DTC has advised us that the above information with respect to DTC's Year 2000
efforts has been provided to its participants and other members of the
financial community for informational purposes only and is not intended to
serve as a representation, warranty or contract modification of any kind.
Same-Day Settlement and Payment
Settlement for the notes will be made by the underwriters in immediately
available funds. We will make all payments of principal and interest in
immediately available funds. The notes will trade in DTC's settlement system
until maturity, and therefore DTC will require secondary-trading activity in
the notes to be settled in immediately available funds.
UNDERWRITING
General
Subject to the terms and conditions in an underwriting agreement among us and
each of Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"),
Credit Suisse First Boston Corporation, Lehman Brothers Inc. and J.P. Morgan
Securities Inc., we have agreed to sell to the underwriters, and each of the
underwriters, severally and not jointly, has agreed to purchase from us, the
principal amount of the notes listed opposite its name below.
<TABLE>
<CAPTION>
Principal
Amount
Underwriters of Notes
------------ ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.......................................... $ 80,000,000
Credit Suisse First Boston Corporation......................... 40,000,000
Lehman Brothers Inc............................................ 40,000,000
J.P. Morgan Securities Inc..................................... 40,000,000
------------
Total..................................................... $200,000,000
============
</TABLE>
S-8
<PAGE>
The underwriters have agreed to purchase all of the notes sold pursuant to
the underwriting agreement if any of the notes are purchased. If an underwriter
defaults, the underwriting agreement provides that, in certain circumstances,
the purchase commitments of the nondefaulting underwriters may be increased or
the underwriting agreement may be terminated.
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, or to contribute to
payments the underwriters may be required to make in respect of those
liabilities.
The underwriters are offering the notes, subject to prior sale, when, as and
if issued to and accepted by them, subject to approval of legal matters by
counsel for the underwriters and other conditions. The underwriters reserve the
right to withdraw, cancel or modify such offer and to reject orders in whole or
in part.
Concessions and Discounts
The underwriters have advised us that they propose initially to offer the
notes to the public at the public offering price listed on the cover page of
this prospectus, and to dealers at such price less a concession not to exceed
.375% of the principal amount of the notes. The underwriters may allow, and
such dealers may reallow, a discount not to exceed .25% of the principal amount
of the notes to other dealers. After this offering, the public offering price,
concession and discount may be changed.
The expenses of the offering, not including the underwriting discount, are
estimated at $200,000 and are payable by us.
No Sales of Similar Securities
We have agreed not to sell or transfer any debt securities for 30 days after
the date of this prospectus supplement without first obtaining the written
consent of Merrill Lynch. Specifically, we have agreed not to directly or
indirectly issue, sell, offer to sell, grant any option for the sale of, or
otherwise dispose of debt securities.
New Issue of Notes
The notes are a new issue of securities with no established trading market.
We do not intend to apply for listing of the notes on any national securities
exchange or for quotation of the notes on any automated dealer quotation
system. We have been advised by the underwriters that they presently intend to
make a market in the notes after completion of the offering, although they are
under no obligation to do so and may discontinue any market-making activities
at any time without any notice. We cannot ensure the liquidity of the trading
market for the notes or that an active public market for the notes will
develop. If an active public trading market for the notes does not develop, the
market price and liquidity of the notes may be adversely affected.
Price Stabilization and Short Positions
In connection with the offering, the underwriters are permitted to engage in
transactions that stabilize the market price of the notes. Such transactions
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of the notes. If the underwriters create a short position in the
notes in connection with the offering, i.e., if they sell more notes than are
on the cover page of this prospectus, the underwriters may reduce that short
position by purchasing notes in the open market. In general, purchases of a
security for the purpose of stabilization or to reduce a short position could
cause the price of the security to be higher than it might be in the absence of
such purchases.
Neither we nor any of the underwriters makes any representation or prediction
as to the direction or magnitude of any effect that the transactions described
above may have on the price of the notes. In addition, neither we nor any of
the underwriters makes any representation that the underwriters will engage in
such transactions or that such transactions, once commenced, will not be
discontinued without notice.
S-9
<PAGE>
Other Relationships
Certain underwriters and their affiliates engage in transactions with, and
perform services for, us in the ordinary course of business and have engaged,
and may in the future engage, in commercial banking and investment banking
transactions with us, for which they have received or will receive customary
compensation.
VALIDITY OF NOTES
The validity of the notes we are offering under this prospectus supplement is
being passed upon for us by Faegre & Benson LLP, Minneapolis, Minnesota, and
for the underwriters by Sidley & Austin, Chicago, Illinois.
S-10
<PAGE>
Prospectus
$500,000,000
ReliaStar Financial Corp.
as issuer of
Debt Securities Preferred Stock
Common Stock Depositary SharesSecurities Warrants
Guarantees of Securities
ReliaStar Financing III
ReliaStar Financing IV
ReliaStar Financing V
as issuers of
Preferred Securities Fully and unconditionally guaranteed, as described in this
prospectus, by
ReliaStar Financial Corp.
----------------
The issuers will provide you with more specific terms of these securities in
supplements to this prospectus. You should read this prospectus and the
applicable prospectus supplement carefully before you invest.
----------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
----------------
This prospectus is dated April 20, 1999.
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that ReliaStar Financial
Corp. and ReliaStar Financing III, ReliaStar Financing IV, and ReliaStar
Financing V filed with the Securities and Exchange Commission using a "shelf"
registration process. ReliaStar Financial Corp. is a Delaware corporation and
each of the ReliaStar Financing entities is a Delaware business trust. Under
this process, ReliaStar Financial Corp. may sell either separately or in units:
. debt securities (see "Description of Debt Securities");
. preferred stock (see "Description of Capital Stock");
. common stock (see "Description of Capital Stock");
. depositary shares (see "Description of Depositary Shares"); and
. securities warrants (see "Description of Securities Warrants");
and the trusts may sell preferred securities, representing undivided beneficial
interests in the trusts, to the public (see "Description of Preferred
Securities of the Trusts").
This prospectus also relates to guarantees that may be made by ReliaStar
Financial Corp. of the securities listed above.
The trusts will use the proceeds from sales of their securities to buy a
series of junior subordinated debt securities (see "Description of Debt
Securities") from ReliaStar Financial Corp. with terms that correspond to the
preferred securities.
This prospectus sets forth a general description of the securities. Each time
ReliaStar Financial Corp. or a trust offers securities, the offering entity
will provide a prospectus supplement that will contain more specific
information about the terms of that offering. The prospectus supplement may
also add, update, or change information contained in this prospectus. You
should read both this prospectus and the applicable prospectus supplement,
together with the additional information listed under the heading "Where You
Can Find More Information," before you purchase any securities.
The registration statement that contains this prospectus, including the
exhibits to the registration statement, contains additional information about
ReliaStar Financial Corp., the trusts, and the securities offered under this
prospectus. That registration statement can be read at the Securities and
Exchange Commission's web site or at the SEC's offices listed under the heading
"Where You Can Find More Information."
2
<PAGE>
RELIASTAR FINANCIAL CORP.
20 Washington Avenue South
Minneapolis, Minnesota 55401
(612) 372-5432
ReliaStar is a holding company whose subsidiaries specialize in life
insurance and related financial services. Through ReliaStar Life Insurance
Company, Minneapolis, Minnesota, and other subsidiaries, ReliaStar Financial
Corp. provides and distributes individual life insurance and annuities,
employee-benefits products and services, life and health reinsurance,
retirement plans, mutual funds, personal finance education, and bank products.
When we refer to "ReliaStar," "we," "our," or "us" in this prospectus or in a
prospectus supplement we are referring to ReliaStar Financial Corp., except
under the headings "Summary Financial Information" and "Ratios of Earnings to
Fixed Charges and to Combined Fixed Charges and Preferred Stock Dividends,"
where we are referring to ReliaStar and its subsidiaries as a whole.
ReliaStar's strategy is to offer, principally through education-based
marketing, a wide variety of products and services designed to address
customers' need for financial security. ReliaStar currently operates in four
business segments: Personal Financial Services, Worksite Financial Services,
Tax-Sheltered and Fixed Annuities, and Reinsurance.
Personal Financial Services. The Personal Financial Services segment serves
individual customers who prefer to purchase insurance and investment products
from a personal financial adviser. This segment principally targets middle- and
upper-income families with niches including military personnel and small-
business owners. Personal Financial Services provides a wide range of products,
including universal life, variable universal life, and term life, as well as
fixed and variable annuities, through a nationwide network of independent
agents, financial professionals, and brokerage general agencies. Washington
Square Securities, Inc. provides broker/dealer services to distributors.
Unaffiliated broker/dealers also provide distribution.
Worksite Financial Services. This segment targets the sale of employee-
benefits and financial-service products to medium-to-large corporate employers
and affinity groups. Building on these relationships, Worksite Financial
Services also focuses on the sale of individual and payroll-deduction insurance
products to employees of our corporate clients. Principal products include
group and individual life insurance, non-medical group insurance products, and
401(k) retirement plans.
Tax-Sheltered and Fixed Annuities. This segment, through Northern Life
Insurance Company, focuses on the retirement security needs of K-12 public and
private school teachers. Northern's sale force is comprised of agents who
specialize in the tax-sheltered 403(b) market, providing both fixed and
variable annuities.
Reinsurance. The Reinsurance segment provides specialized life and health
reinsurance, including group and special-risk reinsurance products, in the
United States and internationally. Target customers of the Reinsurance segment
are medium and large life insurance and selected non-life insurance companies
such as worker's compensation insurers and managed care and healthcare provider
organizations. This segment also offers specialty group insurance products on a
direct basis and value-added services, like catastrophic medical case
management. The Reinsurance segment's international offices are located in
Amsterdam, Copenhagen, London, and Mexico City.
Supplementing these four business segments are other business units including
Washington Square Securities, Inc., a broker/dealer; Northstar Investment
Management Corporation, the investment adviser to a proprietary family of
fixed-income and equity mutual funds; PrimeVest Financial Services, Inc., which
targets the sale of financial products and services by marketing through
unaffiliated banks; Successful Money Management Seminars, Inc., a producer of
financial-education seminar systems; and ReliaStar Bank, a federal savings
bank, which offers a variety of consumer credit and deposit products.
3
<PAGE>
THE TRUSTS
Overview
Each trust is a statutory business trust that we formed under the Delaware
Business Trust Act.
We will amend and restate a trust's declaration of trust, the trust's
governing document, at the time the trust proposes to offer its preferred
securities. The amended and restated declaration will be substantially in the
form filed as an exhibit to the registration statement. The term of each trust
is approximately 55 years, but a trust may terminate earlier, as provided in
the declaration and the applicable prospectus supplement.
Each trust exists only for the following purposes:
. issuing its preferred securities to the public;
. issuing its common securities to us in exchange for our capital
contributions to the trust;
. lending to us the net proceeds from the sale of the preferred
securities, together with the capital contributions made by us for the
common securities, in exchange for our junior subordinated debt
securities; and
. engaging in only those other activities necessary or incidental to those
listed above.
The rate and dates of regular payments to you, along with any other payment
dates, for the preferred securities correspond to the interest rate and payment
dates on the related junior subordinated debt securities, which will be the
sole assets of a trust.
We will pay all expenses of each trust as well as those incurred in the
offering of the preferred securities. In addition, we guarantee the payment of
distributions and amounts on liquidation and redemption of preferred securities
to the extent described under "Description of the Preferred Securities
Guarantee" and the applicable prospectus supplement. Our guarantee, when taken
together with our obligations under the junior subordinated debt securities,
the junior subordinated indenture, and the declaration, provides a full and
unconditional guarantee to you of amounts due on the preferred securities.
When this prospectus refers to a "trust" or to the "trusts," it is referring
to the general characteristics of the trusts. If a trust offers to sell its
preferred securities to the public, the particular terms and characteristics of
the trust will be described in a prospectus supplement.
Common Securities
A trust's common securities equal approximately 3% of the trust's total
capital. All of the common securities of the trusts are owned by us and will
not be offered for sale to any other person or entity. The common securities
rank equally with the preferred securities. The trust will make payments on the
preferred securities and common securities proportionately, except that, if an
event of default occurs under the declaration, then our right to payment of
distributions and amounts upon liquidation and otherwise will be junior to your
rights as a holder of the preferred securities.
Trustees
Each trust's affairs will be conducted by three or more trustees appointed by
us as the holder of the common securities. The declaration governs the
trustees' duties and obligations. The trustees will be comprised of the
following:
. two "regular" trustees who are our employees;
. one trustee that is a financial institution, not affiliated with us,
that has a minimum amount of aggregate capital, surplus, and undivided
profits of at least $50 million, which also acts as "property trustee"
and as "indenture trustee" for the purposes of the Trust Indenture Act
of 1939; and
4
<PAGE>
. if the property trustee does not have its principal place of business in
Delaware or otherwise does not meet the requirements of Delaware law, we
will appoint one additional "Delaware trustee" that has its principal
place of business in Delaware.
We may appoint, remove, or replace any of, or increase or reduce the number
of, the trustees. However, if an event of default under the declaration occurs
and is continuing, then only the holders of a majority of the dollar amount of
the preferred securities may replace or remove the property trustee or the
Delaware trustee. Only we can remove or replace the regular trustees.
Administrative Information
The office of the current property trustee for each trust is Wilmington Trust
Company, Rodney Square North, 1100 North Market Street, Wilmington, Delaware
19890-0001, Attention: Corporate Trust Administration, telephone (302) 651-
8504.
The principal place of business of each trust is c/o Reliastar Financial
Corp., 20 Washington Avenue South, Minneapolis, Minnesota 55401, telephone
(612) 372-5432.
5
<PAGE>
USE OF PROCEEDS
Unless the applicable prospectus supplement states otherwise, the net
proceeds from the sale of the securities offered by this prospectus will be
added to our general funds and may be used:
. to meet our working capital requirements;
. to refinance our debt;
. to repurchase our common stock;
. to make advances to our subsidiaries;
. to finance acquisitions if suitable opportunities develop; and
. for general corporate purposes.
Until the net proceeds have been used, they will be invested in short-term
marketable securities.
RATIOS OF EARNINGS TO FIXED CHARGES
AND TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
During the third quarter of 1998, we sold our mortgage banking subsidiary.
The following ratios have been restated for all periods presented to reflect
that transaction.
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges..................... 8.2 9.0 10.4 11.6 14.6
Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends............................. 8.2 9.0 9.0 8.2 8.0
</TABLE>
In calculating these ratios, earnings have been divided by fixed charges.
"Earnings" consist of income from our continuing operations before income
taxes, extraordinary charges, and accounting changes, plus fixed charges,
amortization of previously capitalized interest, and adjustments for less-than-
50%-owned entities. For purposes of calculating the ratios of earnings to
combined fixed charges and preferred stock dividends, earnings have been
divided by fixed charges and pre-tax earnings required to cover preferred stock
dividends. Fixed charges consist of interest on debt, dividends on trust-
originated preferred securities, amortization of debt expense and discount, and
the interest factor of rental expense, which is generally deemed to be one-
third of net rental expense.
6
<PAGE>
DESCRIPTION OF DEBT SECURITIES
This section describes the general terms of our senior debt securities,
senior subordinated debt securities, and junior subordinated debt securities
(all three types of securities are sometimes collectively referred to as "debt
securities"). The prospectus supplement will describe the specific terms of the
debt securities offered by that prospectus supplement and any general terms
outlined in this section that will not apply to those debt securities. See also
"Description of Particular Terms of Junior Subordinated Debt Securities Issued
in Connection with Preferred Securities" below.
The senior debt securities will be issued under an indenture (the "senior
indenture") between us and the trustee named in the applicable prospectus
supplement. The senior subordinated debt securities will be issued under an
indenture (the "senior subordinated indenture") between us and the trustee
named in the applicable prospectus supplement. And the junior subordinated debt
securities will be issued under an indenture (the "junior subordinated
indenture") between us and the trustee named in the applicable prospectus
supplement.
We have summarized the material terms of the three indentures listed above in
this section, but this is only a summary. We have filed the forms of each of
the indentures as exhibits to the registration statement. You should review the
applicable indenture for additional information before you buy any debt
securities. The summary that follows includes references to section numbers of
the indentures so that you can more easily locate these provisions.
General
Debt securities will be our direct obligations. Each of the indentures
permits us to issue debt securities from time to time and does not limit the
amount of debt securities that we may issue. Debt securities issued under an
indenture will be issued as part of a series established by us under the
indenture (Section 301).
Senior debt securities that have not been secured in accordance with the
senior indenture will rank equally with all of our other unsecured debt (as
defined under "Subordination" below), other than debt that by its terms is
subordinated to the senior debt securities. Subordinated debt securities will
be unsecured, will rank equally with all of our other subordinated debt
securities, and will be subordinated to all of our existing and future debt,
other than debt evidenced by junior subordinated debt securities and by
securities issued by a trust. The junior subordinated debt securities will be
unsecured, will rank equally with any of our existing or future securities
issued by a trust, and will be subordinated to all of our existing and future
debt. See "Subordination" below.
Unless a prospectus supplement relating to debt securities states otherwise,
neither the indentures nor the terms of the debt securities will contain any
covenants designed to afford holders of any debt securities protection in a
highly leveraged or other transaction involving us. Such transactions could
adversely affect holders of securities who are not afforded such protections.
Because ReliaStar is primarily a holding company, holders of debt securities
may be affected in the following two ways:
. ReliaStar's rights and the rights of holders to share in the assets of
any of our subsidiaries upon the subsidiary's liquidation or dissolution
may be subject to prior claims of the subsidiary's creditors, including
policy claims; and
. ReliaStar's ability to pay principal and interest payments on the debt
securities will be dependent upon the payment to it of dividends by its
subsidiaries, which may be subject to limitations of insurance laws and
regulations.
A prospectus supplement relating to a series of debt securities will include
specific terms relating to the offering (Section 301). These terms will include
some or all of the following:
. the title and type of the debt securities;
. any limit on the total principal amount of the debt securities;
. the price at which the debt securities will be issued;
7
<PAGE>
. if interest on debt securities is to be paid to a person other than the
person indicated as the holder of the debt securities on the relevant
record date in the security register, the identity of such person;
. the dates on which the principal of and premium, if any, on the debt
securities will be payable, and any rights that we may have to extend
those dates;
. the maturity date of the debt securities;
. if the debt securities will bear interest:
(1) the interest rate;
(2) the date from which interest will accrue;
(3) the record and interest payment dates;
(4) the first interest payment date; and
(5) circumstances, if any, in which we may defer interest payments;
. if the amount of principal of or any premium or interest on the debt
securities is determined by reference to an index, a description of the
method of calculation;
. any optional redemption provisions that would permit us or the holders
of debt securities to elect redemption of the debt securities before
their final maturity;
. any sinking-fund provisions that would obligate us to redeem the debt
securities before their final maturity;
. whether the debt securities will be convertible into shares of common
stock or exchangeable for other securities, and if so, the terms of
conversion or exchange;
. any additions or changes to the covenants contained in the indenture;
. the currency in which the debt securities will be denominated and
payable, if other than U.S. dollars;
. any provisions that would permit us or the holders of the debt
securities to elect the currency in which the debt securities are paid;
. if the debt securities are denominated in a currency other than U.S.
dollars, whether and under what terms the provisions described under the
heading "Defeasance" below apply to those debt securities;
. any changes to or additional events of default;
. whether the debt securities will be issued in whole or in part in the
form of global securities and, if so, the depositary for those global
securities; a "global security" means a debt security that we issue to
represent all or part of a series of debt securities when the securities
are issued only in book-entry form rather than by delivery of
certificates to the holders;
. whether the debt securities will be secured and the provisions relating
to the collateral to be provided as security;
. any special tax implications of the debt securities; and
. any other terms of the debt securities.
Payment; Transfer
We will designate a place of payment where you can receive payment of the
principal of and any premium and interest on the debt securities or transfer
the debt securities. Even though we will designate a place of payment, we may
elect to pay any interest on the debt securities by mailing a check to the
person listed as the owner of the debt securities in the security register
(Sections 305, 1001, and 1002). There will be no service charge for any
registration of transfer or exchange of the debt securities, but we may require
you to pay any tax or other governmental charge payable in connection with a
transfer or exchange of the debt securities (Section 305).
Denominations
Unless the applicable prospectus supplement states otherwise, debt securities
will be issued only in registered form, without coupons, in denominations of
$1,000 or multiples of $1,000.
8
<PAGE>
Original Issue Discount
Debt securities may be issued as original-issue-discount securities and sold
at a substantial discount below their stated principal amount. If a debt
security is an "original-issue-discount security," that means that an amount
less than the principal amount of the debt security will be due and payable
upon a declaration of acceleration of the maturity of the debt security
(Section 101). The applicable prospectus supplement will describe the federal
income tax consequences and other special factors that should be considered
before purchasing any original-issue-discount securities.
Covenants
We have covenanted in the senior indenture that we will not, and will not
permit any "restricted subsidiary" (as defined in the next paragraph) to,
create, incur, issue, assume, or guarantee any indebtedness for borrowed money
that is secured by a mortgage, pledge, lien, or security interest (a "lien") of
or upon any shares of capital stock or indebtedness of any restricted
subsidiary or any indebtedness of any restricted subsidiary owned by us or any
subsidiary, without providing that any debt securities issued under the senior
indenture shall be secured equally with or senior to such indebtedness, so long
as such indebtedness is so secured. These restrictions, however, do not apply
to the following:
. liens upon any indebtedness or shares of capital stock acquired by us or
any restricted subsidiary after September 30, 1994 to secure the payment
of all or part of the purchase price of those shares or indebtedness
upon the acquisition of those shares by us or any restricted subsidiary;
. liens upon any indebtedness or shares of capital stock existing at the
time of acquisition of those shares by us or any restricted subsidiary;
. liens upon indebtedness or shares of capital stock of any entity
existing at the time the entity became a restricted subsidiary;
. liens to secure indebtedness of any restricted subsidiary to us or to
any other restricted subsidiary; and
. extensions, renewals, or replacements of any liens existing on
September 30, 1994 or any lien referred to in the foregoing points
(Section 1007 of the Senior Indenture).
The term "restricted subsidiary" includes the following subsidiaries, so long
as we own, directly or indirectly, 50% or more of their voting stock (Section
101):
. ReliaStar Life Insurance Company and Northern Life Insurance Company;
. any other of our other subsidiaries that have consolidated total assets
of at least 20% of our consolidated total assets; and
. any successor, by merger or otherwise, to all or a principal part of the
business or properties of any subsidiary described in the previous two
points.
We have also covenanted in the senior indenture that, so long as any debt
securities of any series are outstanding, we will not, nor will we permit any
restricted subsidiary to, issue or dispose of any shares of capital stock of
any restricted subsidiary, except in the following instances:
. the shares are issued or disposed of to us or to another restricted
subsidiary;
. the shares constitute directors' qualifying shares;
. the entire outstanding capital stock of the restricted subsidiary then
owned by us and our restricted subsidiaries is disposed of at the same
time for a consideration that is at least equal to fair value; or
. after giving effect to the issuance or disposition, we and our
restricted subsidiaries would own, directly or indirectly, at least 80%
of the outstanding capital stock of that restricted subsidiary (Section
1008 of the Senior Indenture).
9
<PAGE>
We are not restricted by the indentures from becoming liable for any debt or
other obligations, or, except as described above, from creating liens on our
property for any purpose.
Nor are we restricted from paying dividends or making distributions on our
capital stock, from purchasing or redeeming our capital stock, or, except as
described under "Consolidation, Merger, or Sale of Assets" below, from engaging
in corporate transactions that could result in our involvement in a highly
leveraged transaction. The indentures do not require us to maintain any
specified financial ratios or levels of net worth or liquidity. In addition,
the indentures do not require us to repurchase, redeem, or otherwise modify the
terms of any of our debt securities upon a change in control of ReliaStar or
upon other events involving our company that may adversely affect the
creditworthiness of the debt securities.
The applicable prospectus supplement may describe other covenants. See also
"Particular Terms of Junior Subordinated Debt Securities Issued in Connection
with Preferred Securities."
Consolidation, Merger, or Sale of Assets
Each of the indentures generally permits a consolidation or merger between us
and another corporation. The indentures also permit the sale or transfer by us
of all or substantially all of our property and assets and the purchase by us
of all or substantially all of the property and assets of another corporation.
Specifically, these transactions are permitted if:
. the resulting or acquiring corporation assumes all of our
responsibilities and liabilities under the indentures, including the
payment of all amounts due on the debt securities and the performance of
the covenants in the indentures;
. immediately after the transaction, no event of default exists and no
event has occurred that, after notice, lapse of time or both, would
become an event of default; and
. if, as a result of the transaction, any of our properties and assets
would become subject to a lien or other encumbrance not permitted by the
indentures, we or the successor under the indentures, if applicable,
secure the debt securities equally with or senior to all debt secured by
the lien or encumbrance (Section 801).
If we consolidate or merge with or into any other corporation or sell all or
substantially all of our assets in compliance with the indentures, the
resulting or acquiring corporation will be substituted for us in the indentures
with the same effect as if it had been an original party to the indentures. As
a result, the successor corporation may exercise our rights and powers under
the indentures, in our name or in its own name and, except in the case of a
lease of all or substantially all of our properties, we will be released from
all our liabilities and obligations under the indentures and under the debt
securities (Section 802).
Modification and Waiver
Under each of the indentures, except as set forth below, our rights and
obligations and the rights of holders of the debt securities may be modified
with the consent of the holders of a majority in aggregate principal amount of
the outstanding debt securities of each series of debt securities affected by
the modification or amendment. But the following modifications will not be
effective against any holder without the holder's consent:
. a change in the stated maturity date of any payment of principal or
interest;
. a reduction in certain payments due on the debt securities including
payments of principal and interest;
. a change in the place of payment or currency in which any payment on the
debt securities is payable;
. a limitation of the holder's right to sue us for the enforcement of
certain payments due on the debt securities;
. a reduction in the indenture's requirements for a quorum or voting;
10
<PAGE>
. an impairment in any right to convert convertible debt securities; and
. a modification of any of the foregoing requirements or a reduction in
the percentage of outstanding debt securities required to waive
compliance with certain provisions of the applicable indenture or to
waive certain defaults under the applicable indenture (Section 902).
Under each of the indentures, the holders of a majority in aggregate
principal amount of the outstanding debt securities of any series may, on
behalf of all holders of that series:
. waive compliance by us with restrictive covenants; and
. waive any past default, except:
(1) a default in the payment of the principal of or any premium or
interest on any debt securities of that series; or
(2) a default under any provision of the applicable indenture that
itself cannot be modified without the consent of the holders of
each outstanding debt security of that series (Sections 1005 and
513).
Events of Default
Unless otherwise stated in the applicable prospectus supplement, each series
of senior debt securities issued under the senior indenture will provide that
the following events constitute events of default with respect to that series:
. default in payment of principal of or premium, if any, on any senior
debt security of that series when due;
. default for 30 days in payment of interest on any senior debt security
of that series or related coupon, if any, when due;
. default in the deposit of any sinking-fund payment on any senior debt
security of that series when due;
. default in the performance of any covenant in the indenture continued
for 90 days after written notice by the trustee or by the holders of at
least 25% in principal amount of the outstanding senior debt securities
of that series;
. events of bankruptcy, insolvency, or reorganization involving us;
. except for defaults on non-recourse debt that would not have an adverse
effect on the holders of the debt securities or an adverse effect on our
financial condition or the financial condition of a restricted
subsidiary, default by us or by any restricted subsidiary in the payment
of any amount due under other indebtedness having unpaid principal in
excess of $20 million; and
. except for defaults on non-recourse debt that would not have an adverse
effect on the holders of the debt securities or an adverse effect on our
financial condition or the financial condition of a restricted
subsidiary, defaults under any instrument under which any indebtedness
has been issued or by which it is governed, which resulted in the
acceleration of the maturity of the indebtedness without the
acceleration having been rescinded after notice to us (Section 501 of
the Senior Indenture).
Unless otherwise stated in the applicable prospectus supplement, any series
of senior or junior subordinated debt securities issued under the senior
subordinated indenture or the junior subordinated indenture will provide that
the only events of default are the following:
. default in payment of principal of or premium on any subordinated debt
security of that series when due;
. default for 30 days in payment of interest on any subordinated debt
security of that series or related coupon, if any, when due;
. failure to convert any subordinated debt security into common stock upon
the election of a holder to convert the subordinated debt security, if
the terms provide for conversion; and
. events of bankruptcy involving us (Section 501 of the Senior
Subordinated Indenture and the Junior Subordinated Indenture).
11
<PAGE>
Unless specifically stated in the applicable prospectus supplement, there is
no right to accelerate the payment of principal of the senior or junior
subordinated debt securities upon
. a default in payment on the senior or junior subordinated debt
securities; or
. in the performance of any covenant in the senior subordinated indenture
or the junior subordinated indenture.
If such default occurs, the trustee, subject to conditions set forth in the
indentures, may institute judicial proceedings to enforce payment or to obtain
the performance of the covenant (Section 503 of the Senior Subordinated
Indenture and the Junior Subordinated Indenture).
We are required to file annually with each trustee an officers' certificate
concerning the absence of certain defaults under the indentures (Section 1004).
Each indenture provides that if an event of default has occurred and is
continuing, either the trustee or the holders of at least 25% in principal
amount of the outstanding debt securities of the applicable series may declare
the principal of all such debt securities to be due (Section 502). In the case
of original-issue-discount securities, only such portion of the principal
amount as is specified in the terms of the securities may be accelerated. In
certain cases the holders of a majority in principal amount of the outstanding
debt securities of a series may, on behalf of the holders of all senior debt
securities of the series and any related coupons, waive any past default,
except a default in payment on any of the debt securities of the series or a
default under the indenture that may not be modified without the consent of the
holder of each outstanding debt security or coupon affected (Section 513).
Each indenture entitles the trustee, subject to its duty during default to
act with the required standard of care, to be indemnified by the holders of the
debt securities of a series or any related coupons before exercising any right
or power under the indenture at the request of the holders (Section 603). Each
indenture provides that no holder of any debt securities or any related coupons
may institute any proceeding to enforce the indenture, except if the trustee
fails for 60 days to act after it is given the following:
. a notice of default,
. a request to enforce the indenture by the holders of not less than 25%
in aggregate principal amount of the outstanding debt securities of the
series, and
. an offer of reasonable indemnity (Section 507).
This provision will not prevent any holder of debt securities or any related
coupons from enforcing payment on the debt securities at the applicable due
dates (Section 508). The holders of a majority in aggregate principal amount of
the outstanding debt securities of any series may direct the time, method, and
place of conducting any proceedings for any remedy available to the trustee or
for exercising any trust or power conferred on it with respect to the debt
securities of that series. However, the trustee may refuse to follow any
direction that conflicts with law or the indenture or that would be unjustly
prejudicial to holders not joining the direction (Section 512).
Each indenture provides that the trustee will give the holders of debt
securities notice of a default if not cured or waived, but, except in the case
of a default in payment on any debt securities of the series or any related
coupons or in the payment of any sinking-fund installment, the trustee for the
debt securities is protected in withholding notice if it determines in good
faith that the withholding of the notice is in the interest of the holders of
the debt securities (Section 602).
Defeasance and Discharge
Except for junior subordinated debt securities, ReliaStar may be discharged
from all obligations relating to the debt securities of a series upon the
deposit with the trustee, in trust, of money or, to the extent the debt
securities are denominated and payable in U.S. dollars only, eligible
instruments that will provide money in an
12
<PAGE>
amount sufficient to make all required payments on the debt securities of the
series on the scheduled due dates or upon redemption. We may only exercise this
right if the holders of the debt securities will not recognize income, gain, or
loss for federal income tax purposes as a result of the exercise. Similarly, we
may only exercise this right if the holders will be subject to federal income
tax on the same amounts, in the same manner, and at the same times as would
have been the case if we had not done so. We may not exercise this right if the
debt securities are then listed on any domestic or foreign securities exchange
and will be delisted as a result of the action (Section 403). If we exercise
our right described in this paragraph, then holders of the affected debt
securities would be able to look only to the trust fund for payments on the
debt securities.
Except for junior subordinated debt securities, we may terminate certain of
our obligations under each indenture regarding the debt securities of a series,
including obligations to comply with covenants, by depositing in trust with the
trustee money or, to the extent such debt securities are denominated and
payable in U.S. dollars only, certain eligible instruments that will provide
money in an amount sufficient to make all required payments on the debt
securities of the series on the scheduled due dates. This termination will not
relieve us of our obligation to pay when due the principal of or any interest
on the debt securities if they are not paid from the money or eligible
instruments held by the trustee (Section 1501). If we exercise our option to
omit compliance with our obligations as described in this paragraph, and the
debt securities of the series are declared due and payable because of the
occurrence of an event of default, then the amount of money and eligible
instruments on deposit with the trustee will be sufficient to pay amounts due
on the debt securities of the series at the time of the scheduled due dates.
Those amounts may not be sufficient, however, to pay amounts due on the debt
securities of the series at the time of the acceleration resulting from the
event of default. In any case, we will remain liable for those payments as
provided in the applicable indenture.
Subordination
The senior subordinated debt securities are subordinate to all our existing
and future debt (as defined in the next paragraph). The junior subordinated
debt securities rank equally with any preferred or common securities issued by
a trust and are subordinate to all our existing and future debt, other than
securities issued by a trust. If we default in any payments on any debt to
which the senior subordinated debt securities or the junior subordinated debt
securities are subordinated when they become due, then, until the default has
been cured, waived, or ceased to exist, no payment may be made on the senior
subordinated debt securities or the junior subordinated debt securities.
Similarly, in those circumstances we may make no payment in respect of any
redemption, repayment, retirement, purchase, or other acquisition of any of the
senior subordinated debt securities or the junior subordinated debt securities
(Section 1601 of the Senior Subordinated Indenture and the Junior Subordinated
Indenture).
The term "debt" includes the following:
. the principal, premium, if any, and interest in respect of indebtedness
of ReliaStar for money borrowed and indebtedness evidenced by securities
or other similar instruments issued by us;
. capital lease obligations;
. obligations issued or assumed as the deferred purchase price of
property, conditional sale obligations, and obligations under any
installment-sale agreement;
. obligations for the reimbursement on any letter of credit, banker's
acceptance, repurchase agreement, or similar credit transaction;
. obligations of the type referred to above of other entities for which we
are responsible or liable as obligor, guarantor, or otherwise; and
. obligations of the type referred to above of other entities secured by
any lien on any of our properties or assets (Section 101 of the Senior
Subordinated Indenture and the Junior Subordinated Indenture).
13
<PAGE>
The term "debt" does not include the following:
. junior subordinated debentures;
. preferred or common securities issued by a trust; or
. trade accounts payable arising in the ordinary course of business.
As of December 31, 1998, we had approximately $509.4 million of debt
outstanding to which senior and junior subordinated debt securities would be
subordinated.
If any of the following events occurs:
. the insolvency, bankruptcy, receivership, liquidation, reorganization,
readjustment, composition, or other similar proceeding relating to our
company, our creditors, or our property;
. a proceeding for the liquidation, dissolution, or other winding up of
our company, whether or not involving insolvency or bankruptcy
proceedings;
. an assignment by us for the benefit of our creditors; or
. any other marshalling of our assets;
then all senior debt, including any accrued interest, will first be paid in
full before any payment or distribution may be made on account of the principal
of or interest on the senior or junior subordinated debt securities.
In such an event, any payment of the principal of or interest on the senior
subordinated debt securities or junior subordinated debt securities, which
would otherwise be payable on those securities, will be paid directly to the
senior debt holders until all senior debt, including any accrued interest, has
been paid in full (Section 1601 of the Senior Subordinated Indenture and the
Junior Subordinated Indenture).
After payment in full of all sums owing with respect to senior debt, the
holders of senior subordinated debt securities or junior subordinated debt
securities, as the case may be, together with the holders of any obligations of
ReliaStar ranking equally with senior subordinated debt securities or junior
subordinated debt securities, as the case may be, will be repaid from our
remaining assets before any payment or other distribution, whether in cash,
property, or otherwise, may be made on account of any capital stock or
obligations of ReliaStar ranking junior to those securities and those other
obligations (Section 1601 of the Senior Subordinated Indenture and the Junior
Subordinated Indenture). By reason of this subordination, if we become
insolvent, holders of debt may receive more, proportionately, and holders of
the senior and junior subordinated debt securities may receive less,
proportionately, than our other creditors. Subordination does not prevent the
occurrence of any event of default in respect of the debt securities.
Subject to certain exceptions, if any payment is received by a holder of
subordinated debt securities in contravention of the applicable subordinated
indenture before all outstanding senior debt shall have been paid in full, the
payment shall be transferred to the holders of the outstanding senior debt to
the extent necessary to pay that senior debt in full (Section 1601 of the
Senior Subordinated Indenture and the Junior Subordinated Indenture).
The indentures may be modified as provided under "Modification and Waiver"
above, but no modification may, without the consent of the holders of all
senior debt outstanding, modify any of the provisions of the indentures
relating to the subordination of debt securities and any related coupons in a
manner adverse to the senior debt holders (Section 902 of the Senior
Subordinated Indenture and the Junior Subordinated Indenture).
Conversion and Exchange
If any debt securities are convertible into preferred stock, depositary
shares, or common stock at the option of the holders or exchangeable for
preferred stock, depositary shares, or common stock at our option, the
prospectus supplement relating to those debt securities will include the terms
governing conversions and exchanges.
14
<PAGE>
DESCRIPTION OF PARTICULAR TERMS OF JUNIOR SUBORDINATED DEBT
SECURITIES ISSUED IN CONNECTION WITH PREFERRED SECURITIES
General
This section describes the general terms of the junior subordinated indenture
that will be applicable to junior subordinated debt securities issued by us to
a trust in connection with the trust's sale of preferred securities to you.
Other terms of the junior subordinated indenture are discussed under the
heading "Description of Debt Securities" above.
The prospectus supplement will describe the specific terms of a series of
junior subordinated debt securities offered by that prospectus supplement and
any general terms outlined in this section that will not apply to that series
of junior subordinated debt securities.
The distribution rate and dates and the other payment dates for the preferred
securities issued by a trust will correspond to the interest rate and dates and
the other payment dates on the junior subordinated debt securities issued to
the trust, which will be the trust's sole assets.
If a trust is dissolved because of the occurrence of an event listed in the
applicable prospectus supplement, then the trust may distribute junior
subordinated debt securities proportionately to the holders of the trust's
preferred and common securities. We will issue only one series of junior
subordinated debt securities in connection with the issuance of securities by a
particular trust.
Events of Default
When junior subordinated debt securities are issued to a trust by us in
connection with the issuance by the trust of its securities and there has
occurred one of the following:
. any event that would constitute an event of default under the junior
subordinated indenture;
. we are in default with respect to our payment of any obligations under
our guarantee relating to the preferred securities; or
. we give notice of our election to defer payments of interest on the
junior subordinated debt securities by extending the interest payment
period, if we are allowed to do so, and that period, or any extension of
that period, is continuing;
then we may not:
. declare or pay cash dividends on, or make a distribution with respect
to, or repurchase or make a liquidation payment with respect to, any of
our capital stock; or
. make any payment of interest, principal, or premium on, or repay,
repurchase, or redeem any debt securities issued by us that rank equally
with or junior to the junior subordinated debt securities.
Enforcement of Your Rights
If we do not make interest or other payments on the junior subordinated debt
securities when due, then the declaration provides a mechanism whereby the
holders of the preferred securities may direct the property trustee to enforce
the property trustee's rights under the junior subordinated debt securities. If
the property trustee does not enforce those rights, then any holder of
preferred securities may institute a legal proceeding against us to enforce the
property trustee's rights under the junior subordinated debt securities without
first instituting any legal proceeding against the property trustee or any
other entity. In addition, if we fail to pay interest or principal on the
junior subordinated debt securities when due, then, under the junior
subordinated indenture, a holder of preferred securities may directly institute
a proceeding for enforcement of a payment to the holder of the principal of or
interest on junior subordinated debt securities having a principal amount equal
to the aggregate liquidation amount of the holder's preferred securities.
15
<PAGE>
Covenants
For so long as a particular series of a trust's securities remains
outstanding, we will:
. directly or indirectly maintain 100% ownership of the trust's common
securities, except that any of our permitted successors under the junior
subordinated indenture may become the sole owner of the common
securities;
. use reasonable efforts to cause the trust to remain a statutory business
trust, except in connection with the distribution of junior subordinated
debt securities to the holders of the trust's securities in liquidation
of the trust, the redemption of all of the trust's securities, or
mergers or consolidations, each as permitted by the declaration; and
. use reasonable efforts to cause the trust to continue to be classified
as a "grantor trust" for United States federal income tax purposes.
DESCRIPTION OF PREFERRED SECURITIES OF THE TRUSTS
This section describes the general terms of the preferred securities that may
be offered by this prospectus. The prospectus supplement will describe the
specific terms of the preferred securities offered by that prospectus
supplement and any general terms outlined in this section that will not apply
to those preferred securities.
We have summarized the material terms of the preferred securities in this
section, but this is only a summary. We have filed the declaration, the junior
subordinated indenture, and the form of preferred security certificate as
exhibits to the registration statement. You should review these documents for
additional information before you buy any preferred securities.
Each trust may issue only one series of preferred securities. The specific
terms of a series will be listed in the applicable prospectus supplement and
will include:
. the distinctive name of the series of preferred securities;
. the number or aggregate liquidation amount of preferred securities of
the series and the dates upon which distributions will be paid;
. whether distributions on preferred securities are cumulative, and, if
so, the date, or method of determining the date, from which the
distributions shall be cumulative;
. the amounts payable out of the assets of the trust to the holders of
preferred securities upon dissolution, winding-up, or termination of the
trust;
. the obligation, if any, of the trust to purchase or redeem the preferred
securities and the prices at which, the periods within which, and the
terms upon which the preferred securities will be purchased or redeemed,
in whole or in part, under that obligation;
. the voting rights, if any, of the preferred securities in addition to
those required by Delaware law, including the number of votes per
preferred security and any requirement for approval by the holders of
preferred securities of specified actions or amendments to the
declaration;
. United States federal income tax considerations applicable to the
series; and
. any other relevant rights, preferences, or privileges of, or limitations
or restrictions on, the preferred securities, consistent with the
declaration and applicable law.
The distribution rate and payment dates and the other payment dates for the
preferred securities issued by a trust will correspond to the interest rate and
payment dates and the other payment dates on the junior subordinated debt
securities issued to the trust, which will be the trust's sole assets. All
preferred securities are guaranteed by us to the extent described under
"Description of the Preferred Securities Guarantee" below.
16
<PAGE>
The declaration of each trust will be qualified as an indenture under the
Trust Indenture Act. In addition to the terms discussed in this prospectus and
the applicable prospectus supplement, the preferred securities of a series will
have such other terms as are stated in the declaration or made part of the
declaration by the Trust Indenture Act.
In connection with the issuance of preferred securities, each trust will
issue one series of common securities to us. The terms of the common securities
will be substantially identical to the terms of the preferred securities, and
the common securities will rank equally with, and payments will be made on the
common securities proportionately with, the preferred securities. If an event
of default occurs under the declaration, however, our rights, as holder of the
common securities, to payment of distributions and payments upon liquidation,
redemption, and otherwise will be subordinated to the rights of the holders of
the preferred securities.
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEE
This section describes the general terms of our guarantee of payments with
respect to the preferred securities. The prospectus supplement will describe
the specific terms of our guarantee with respect to the preferred securities
offered by that prospectus supplement and any general terms of the guarantee
outlined in this section that will not apply to the guarantee associated with
the series of preferred securities offered by that prospectus supplement. The
guarantee is for the benefit of the holders of preferred securities. The
guarantee will be qualified as an indenture under the Trust Indenture Act, and
Wilmington Trust Company will act as indenture trustee under the guarantee.
We have summarized the material terms of the guarantee in this section, but
this is only a summary. The terms of the guarantee will be those stated in the
applicable guarantee agreement and those made a part of the guarantee agreement
by the Trust Indenture Act. We have filed the form of guarantee agreement as an
exhibit to the registration statement. You should review the form of guarantee
agreement for additional information before you buy any preferred securities.
General
We agree to pay, to the extent described in this prospectus and the
applicable prospectus supplement, in full to the holders of the preferred
securities the "guarantee payments" (as defined below), as and when due,
regardless of any defense or counterclaim that the applicable trust may have or
assert.
The following payments and distributions with respect to the preferred
securities are called the "guarantee payments" and, to the extent not paid or
made by a trust, are subject to the guarantee:
. any accrued and unpaid distributions that are required to be paid on the
preferred securities, but only to the extent that the trust has funds
available for those distributions;
. with respect to preferred securities called for redemption by the trust,
the redemption price, including all accrued and unpaid distributions to
the redemption date, but only to the extent that the trust has funds
available for payment of the redemption price; and
. upon a dissolution, winding-up, or termination of the trust, the lesser
of:
(1) the aggregate of the liquidation amount of, and all accrued and
unpaid distributions on, the preferred securities to the date of
payment, but only to the extent the trust has funds available for
the payment; or
(2) the amount of assets of the trust remaining available for
distribution to holders of the preferred securities in liquidation
of the trust.
17
<PAGE>
The guarantee does not apply to the dissolution, winding-up, or termination
of a trust that is not done in connection with the distribution of junior
subordinated debt securities to the holders of preferred securities or the
redemption of all of the trust's preferred securities. Our obligation to make a
guarantee payment may be satisfied by direct payment of the required amounts by
us to the holders of preferred securities or by causing the trust to pay those
amounts to the holders.
The guarantee is a guarantee, on a subordinated basis, of the guarantee
payments from the time of issuance, but the guarantee only applies to
distributions to the extent the applicable trust has funds available for those
distributions. If we do not make interest payments on the junior subordinated
debt securities purchased by a trust, then the trust will not pay distributions
on the preferred securities and will not have funds available for those
distributions.
Covenants
Under the guarantee agreement, if there has occurred any event that
constitutes an event of default under the guarantee agreement or the
declaration and that event is continuing, then, so long as any preferred
securities issued by the applicable trust remain outstanding, we may not:
. declare or pay cash dividends on, or make a distribution with respect
to, or repurchase or make a liquidation payment with respect to, any of
our capital stock; or
. make any payment of interest, principal, or premium on, or repay,
repurchase, or redeem any debt securities, including guarantees, issued
by us that rank equally with or below the junior subordinated debt
securities.
Modifications of the Guarantee; Assignment
Except for changes that do not adversely affect the rights of holders of
preferred securities, the guarantee agreement may be amended only with the
prior approval of the holders of a majority in aggregate liquidation amount of
the preferred securities then outstanding. All guarantees and agreements
contained in the guarantee agreement bind our successors, assigns, receivers,
trustees, and representatives.
Events of Default
An event of default under the guarantee agreement will occur upon our failure
to make any required guarantee payments. The holders of a majority in aggregate
liquidation amount of the preferred securities may direct the time, method, and
place of conducting any proceeding for any remedy available to the guarantee
trustee in connection with the guarantee and may direct the exercise of any
trust or power conferred upon the guarantee trustee under the guarantee.
The guarantee constitutes a guarantee of payment and not of collection. If we
fail to make the guarantee payments when required, holders of preferred
securities may directly institute a proceeding against us for enforcement of
their right to receive those payments under the guarantee without first
instituting a legal proceeding against the trust, the guarantee trustee, or any
other entity.
We are required to provide annually to the guarantee trustee a statement as
to our performance of certain obligations under the guarantee and as to any
default in that performance.
Information Concerning the Guarantee Trustee
The guarantee trustee, before the occurrence of a default with respect to the
guarantee and after curing all such defaults that may have occurred, will
perform only those duties as are specifically stated in the guarantee
agreement. When an event of default has occurred and is continuing, the
guarantee trustee must exercise the same degree of care as a prudent individual
would exercise in the conduct of his or her own affairs. Subject to
18
<PAGE>
those obligations, the guarantee trustee is under no additional obligation to
exercise any of the powers vested in it by the guarantee agreement at the
request of any holder of preferred securities, unless it is offered reasonable
indemnity against the costs and liabilities that might be incurred in such a
situation.
Termination
The guarantee will terminate as to a series of preferred securities upon
the following events:
. full payment of the redemption price of all of a trust's securities,
including all distributions payable to the redemption date;
. distribution of the junior subordinated debt securities held by the
trust to the holders of the preferred securities; or
. full payment of the amounts payable in accordance with the declaration
upon liquidation of the trust.
Status of the Guarantee
The guarantee constitutes our unsecured obligation that ranks:
. junior to all of our other liabilities;
. equally with our most senior preferred stock;
. equally with any guarantee issued by us in respect of any preferred
stock of any of our affiliates; and
. senior to our common stock.
The terms of the preferred securities provide that each holder of preferred
securities, by acceptance of those securities, agrees to the subordination
provisions and other terms of the guarantee.
Governing Law
The guarantee is governed by New York law.
DESCRIPTION OF CAPITAL STOCK
The following is a summary of the material provisions of our certificate of
incorporation, by-laws, and rights agreement between us and Norwest Bank
Minnesota, National Association. You should refer to these documents, which are
incorporated by reference into this prospectus, for further information.
General
ReliaStar's authorized capital stock consists of 200 million shares of common
stock and seven million shares of preferred stock.
All issued and outstanding shares of common stock are, and the shares offered
by this prospectus will be, fully paid and non-assessable. Holders of shares of
common stock or preferred stock do not have any preemptive rights to subscribe
for or purchase any of our securities, except, with respect to shares of
preferred stock, such preemptive rights as may be provided in the resolutions
of our board of directors providing for the issuance of those shares. Holders
of common stock have the rights described below under "Share Rights Plan."
Preferred Stock
ReliaStar's certificate of incorporation authorizes our board of directors to
issue, without shareholder approval, one or more series of preferred stock with
such designations, voting powers, preferences, and other
19
<PAGE>
special rights, and qualifications, limitations, or restrictions, as may be
stated in the resolutions providing for the issuance of the series.
We have also currently reserved for issuance up to six million shares of
Series A Junior Participating Preferred Stock issuable under the rights
agreement referred to below under "Share Rights Plan."
Dividends
Under Delaware law, subject to restrictions contained in our certificate of
incorporation discussed in the next paragraph, we may declare dividends out of
our surplus or, if there is no surplus, out of net profits for the fiscal year
in which the dividend is declared, for the preceding fiscal year, or both.
Under our certificate of incorporation, so long as there are outstanding any
shares of preferred stock entitled to cumulative dividends, no dividends may be
paid or declared, nor may any distribution be made, on shares of common stock,
nor may any shares of common stock be purchased, redeemed, or otherwise
acquired for value by us, if we are in default with respect to any dividend
payable on, or obligation to redeem or to maintain a purchase, retirement, or
sinking fund with respect to, shares of preferred stock. This prohibition does
not apply, however, to stock dividends or to purchases of common stock in
exchange for, or through application of the proceeds of the sale of, shares of
common stock.
ReliaStar is primarily a holding company owning, directly or indirectly, the
capital stock of ReliaStar Life Insurance Company and other subsidiaries. There
are legal limitations on the extent to which ReliaStar Life Insurance Company
and our other insurance-company subsidiaries may pay dividends, lend, or
otherwise supply funds to ReliaStar or ReliaStar Life Insurance Company.
Our payment of future dividends is largely dependent upon the ability of
ReliaStar Life Insurance Company to pay dividends to us. Under Minnesota
insurance laws and regulations, any such payments may be in an amount deemed
prudent by ReliaStar Life Insurance Company's board of directors and, unless
otherwise approved by the Minnesota Insurance Commissioner, must be paid solely
from the adjusted earned surplus of ReliaStar Life Insurance Company. "Adjusted
earned surplus" means the earned surplus as determined in accordance with
statutory accounting principles (unassigned funds) less 25% of the amount of
earned surplus that is attributable to net unrealized capital gains. Further,
without approval of the Insurance Commissioner, ReliaStar Life Insurance
Company may not pay in any calendar year any dividend that, when combined with
other dividends paid within the preceding 12 months, exceeds the greater of 10%
of its statutory surplus at the prior year end or 100% of its statutory net
gain from operations, not including realized capital gains, for the prior
calendar year.
Voting Rights
Our certificate of incorporation provides that, except as otherwise required
by law, holders of shares of common stock are entitled to one vote per share.
Holders of shares of common stock do not have cumulative voting rights.
Except as otherwise required by law or by the resolutions providing for the
issuance of the shares, holders of shares of preferred stock have no voting
rights.
Our certificate of incorporation requires the affirmative vote of 75% of our
outstanding capital stock entitled to vote, voting as a single class, to take
the following actions:
. approve certain "business combinations" involving an "interested
shareholder" unless the transaction is approved by a majority of the
"continuing directors," as those terms are defined in the certificate of
incorporation;
. remove directors;
. make certain amendments to the certificate of incorporation; and
. for shareholders to amend our by-laws.
20
<PAGE>
Liquidation
Subject to preferential payments due or other rights with respect to any
shares of preferred stock that may then be issued and outstanding, in the event
of any liquidation of ReliaStar the holders of common stock are entitled to
share, in proportion to the number of shares of common stock held, in the
assets remaining after discharge of all obligations and liabilities of
ReliaStar.
Share Rights Plan
Under the rights agreement referred to above, each share of our common stock
has attached one preferred-share purchase right. Each such right entitles the
registered holder to purchase from us one-twentieth of a share of Series A
Junior Participating Preferred Stock at an exercise price of $100, subject to
adjustment.
Until the distribution date for the rights, they will be evidenced by
certificates representing shares of common stock and will be transferred only
with the shares of common stock. The rights will separate from the shares of
common stock and a distribution date for the rights will occur upon the earlier
of the following:
. the close of business on the 15th day after a public announcement that a
person or group of affiliated or associated persons (an "acquiring
person") has acquired, or obtained the right to acquire, beneficial
ownership of 20% or more of the outstanding shares of our common stock;
or
. the close of business on the 15th day after the commencement or
announcement of a tender or exchange offer the consummation of which
would result in a person or group of affiliated or associated persons
becoming the beneficial owner of 20% or more of the outstanding shares
of our common stock.
The rights are not exercisable until the distribution date. They will expire
on September 8, 2004, unless extended or redeemed by us.
Upon the occurrence of any of the following events:
. ReliaStar is the surviving corporation in a merger, consolidation, or
statutory share exchange with an acquiring person, and all outstanding
shares of ReliaStar are not changed or exchanged;
. an acquiring person engages in one of a number of self-dealing
transactions specified in the rights agreement;
. an acquiring person increases by more than 1% its proportion of
beneficial ownership of the outstanding shares of any class of equity
securities or securities exercisable for or convertible into equity
securities of ReliaStar or any of its subsidiaries in a
recapitalization, reclassification, or similar transaction; or
. a person, other than ReliaStar and its affiliates, becomes a beneficial
owner of 20% or more of the outstanding shares of common stock;
then each holder of a right, other than rights beneficially owned by an
acquiring person, will have the right to receive, upon exercise of the right at
the then current exercise price of the right, a number of shares of common
stock having a market value of two times the exercise price of the right,
subject to adjustment.
If ReliaStar is acquired in a merger or other business-combination
transaction or 50% or more of the assets or earning power of ReliaStar and its
subsidiaries, taken as a whole, are sold after a public announcement that a
person has become an acquiring person, then each holder of a right will have
the right to receive, upon exercise at the then current exercise price of the
right, a number of common shares of the acquiring person, or its affiliates,
having a market value of two times the exercise price of the right.
Subject to limitations discussed in the rights agreement, we may exchange
rights for shares of common stock or reduce the 20%-stock-ownership threshold
to not less than 10%.
21
<PAGE>
The rights are redeemable at a price of one cent per right at any time before
the 30th day after a public announcement that a person has become an acquiring
person. The redemption period may be extended if no person has become an
acquiring person.
Limitations on Change in Control
Our certificate of incorporation and by-laws provide that our board of
directors will be divided into three classes serving staggered terms, with one
class of directors to be elected for a three-year term at each annual meeting
of shareholders. As a result, at least two meetings of shareholders will
generally be required for shareholders to effect a change in control of our
board of directors. Our by-laws provide that advance notice of nominations for
the election of directors to be made at, and business to be brought before, an
annual meeting of shareholders by a shareholder must be received by ReliaStar's
Secretary not less than 60 days in advance of the meeting. If public disclosure
of a meeting is made less than 75 days before the meeting, however, the notice
need only be received within 15 days following public disclosure. Our
certificate of incorporation and by-laws also provide that shareholder action
may be taken only at meetings of shareholders, and may not be taken by
shareholder consent, and that shareholders are not permitted to call, or to
require our board of directors to call, special meetings of shareholders.
The certificate of incorporation provides that, when considering a merger,
consolidation, sale of assets, business combination, tender offer, exchange
offer, or other transaction, our board of directors, any committee of the
board, and our directors and officers may, in considering the best interests of
ReliaStar and its shareholders, consider the effects of such transaction upon
our company's and our subsidiaries' employees, customers, and suppliers and
upon communities in which ReliaStar and its subsidiaries are located or do
business.
We have entered into agreements with a number of our executive employees for
specified financial arrangements that we will provide upon termination of
employment under certain circumstances following a change in control of
ReliaStar. In addition, many of our retirement and other employee-benefit
arrangements provide for accelerated vesting of benefits and allocation to
participants of surplus retirement plan benefits upon a change in control of
ReliaStar.
The foregoing provisions and agreements could have the effect of
discouraging, delaying, or preventing a tender or exchange offer, proxy
contest, or other attempt to gain control of or change ReliaStar's management.
Limitation on Certain Liability of Directors and Indemnification
Our certificate of incorporation and by-laws contain provisions limiting the
liability of directors for monetary damages to ReliaStar and its shareholders
for breach of fiduciary duty of care and authorizing the indemnification of
directors, officers, and employees to the fullest extent permitted by Delaware
law. We maintain directors' and officers' liability insurance policies.
Transfer Agent
The transfer agent for our common stock is Norwest Bank Minnesota, National
Association.
22
<PAGE>
DESCRIPTION OF DEPOSITARY SHARES
This section describes the general terms of the depositary shares. The
prospectus supplement will describe the specific terms of the depositary shares
offered by that prospectus supplement and any general terms outlined in this
section that will not apply to those depositary shares.
We have summarized the material terms and provisions of the deposit
agreement, the depositary shares, and the depositary receipts in this section,
but this is only a summary. We have filed the form of deposit agreement,
including the form of depositary receipt, as an exhibit to the registration
statement. You should review the forms of these documents for additional
information before you buy any depositary shares.
General
We may offer fractional interests in preferred stock, rather than full shares
of preferred stock. If we do, we will provide for the issuance by a depositary
(as defined below) to the public of receipts for depositary shares, each of
which will represent a fractional interest in a share of a particular series of
preferred stock.
The shares of any series of preferred stock underlying the depositary shares
will be deposited under a separate deposit agreement between us and a bank or
trust company having its principal office in the United States and having a
combined capital and surplus of at least $50 million (the "depositary"). We
will name the depositary in the applicable prospectus supplement. Subject to
the terms of the deposit agreement, each owner of a depositary share will have
a fractional interest in all the rights and preferences of the preferred stock
underlying the depositary share. Those rights include any dividend, voting,
redemption, conversion, and liquidation rights.
The depositary shares will be evidenced by depositary receipts issued under
the deposit agreement. If you purchase fractional interests in shares of the
related series of preferred stock, you will receive depositary receipts as
described in the applicable prospectus supplement. While the final depositary
receipts are being prepared, we may order the depositary to issue temporary
depositary receipts substantially identical to the final depositary receipts
although not in final form. The holders of the temporary depositary receipts
will be entitled to the same rights as if they held the depositary receipts in
final form. Holders of the temporary depositary receipts can exchange them for
the final depositary receipts at our expense.
If you surrender depositary receipts at the principal office of the
depositary, unless the related depositary shares have previously been called
for redemption, you are entitled to receive at that office the number of shares
of preferred stock and any money or other property represented by those
depositary shares. We will not issue partial shares of preferred stock. If you
deliver depositary receipts evidencing a number of depositary shares that
represent more than a whole number of shares of preferred stock, the depositary
will issue you a new depositary receipt evidencing such excess number of
depositary shares at the same time that the preferred stock is withdrawn.
Holders of shares of preferred stock received in exchange for depositary shares
will no longer be entitled to deposit those shares under the deposit agreement
or to receive depositary shares in exchange for preferred stock.
Dividends and Other Distributions
The depositary will distribute all cash dividends or other cash distributions
received with respect to the preferred stock to the record holders of
depositary shares representing the preferred stock in proportion to the numbers
of depositary shares owned by the holders on the relevant record date. The
depositary will distribute only the amount that can be distributed without
attributing to any holder of depositary shares a fraction of one cent. The
balance not distributed will be added to and treated as part of the next sum
received by the depositary for distribution to record holders of depositary
shares.
23
<PAGE>
If there is a distribution other than in cash, the depositary will distribute
property to the holders of depositary shares, unless the depositary determines
that it is not feasible to make such a distribution. If this occurs, the
depositary may, with our approval, sell the property and distribute the net
proceeds from the sale to the holders of depositary shares.
The deposit agreement will also contain provisions relating to how any
subscription or similar rights offered by us to holders of the preferred stock
will be made available to the holders of depositary shares.
Conversion and Exchange
If any series of preferred stock underlying the depositary shares is subject
to conversion or exchange, the applicable prospectus supplement will describe
the rights or obligations of each record holder of depositary receipts to
convert or exchange the depositary shares.
Redemption of Depositary Shares
If the series of the preferred stock underlying the depositary shares is
subject to redemption, the depositary shares will be redeemed from the
redemption proceeds, in whole or in part, of the series of the preferred stock
held by the depositary. The depositary will mail notice of redemption between
30 and 60 days before the date fixed for redemption to the record holders of
the depositary shares to be redeemed at their addresses appearing in the
depositary's records. The redemption price per depositary share will bear the
same relationship to the redemption price per share of preferred stock that the
depositary share bears to the underlying preferred stock. Whenever we redeem
preferred stock held by the depositary, the depositary will redeem, as of the
same redemption date, the number of depositary shares representing the
preferred stock redeemed. If less than all the depositary shares are to be
redeemed, the depositary shares to be redeemed will be selected by lot or
proportionately, as determined by the depositary.
After the date fixed for redemption, the depositary shares called for
redemption will no longer be outstanding. When the depositary shares are no
longer outstanding, all rights of the holders will cease, except the right to
receive money or other property that the holders of the depositary shares were
entitled to receive upon redemption. Such payments will be made when holders
surrender their depositary receipts to the depositary.
Voting Underlying Preferred Stock
Upon receipt of notice of any meeting at which the holders of the preferred
stock are entitled to vote, the depositary will mail information about the
meeting contained in the notice to the record holders of the depositary shares
relating to the preferred stock. Each record holder of the depositary shares on
the record date for the preferred stock will be entitled to instruct the
depositary as to how the preferred stock underlying the holder's depositary
shares should be voted.
The depositary will try, if practicable, to vote the number of shares of
preferred stock underlying the depositary shares according to the instructions
received. We will agree to take all action requested by and deemed necessary by
the depositary in order to enable the depositary to vote the preferred stock in
that manner. The depositary will not vote any preferred stock for which it does
not receive specific instructions from the holders of the depositary shares
relating to the preferred stock.
Taxation
Owners of depositary shares will be treated for federal income tax purposes
as if they were owners of the preferred stock represented by the depositary
shares. Accordingly, for federal income tax purposes they will have the income
and deductions to which they would be entitled if they were holders of the
preferred stock. In addition:
. no gain or loss will be recognized for federal income tax purposes upon
the withdrawal of preferred stock in exchange for depositary shares as
provided in the deposit agreement;
24
<PAGE>
. the tax basis of the preferred stock to an exchanging owner of
depositary shares will, upon the exchange, be the same as the aggregate
tax basis of the depositary shares exchanged for the preferred stock;
and
. the holding period for the preferred stock, in the hands of an
exchanging owner of depositary shares who held the depositary shares as
a capital asset at the time of the exchange, will include the period
that the owner held those depositary shares.
Amendment and Termination of the Deposit Agreement
The form of depositary receipt evidencing the depositary shares and any
provision of the deposit agreement may be amended by agreement between us and
the depositary at any time. However, any amendment that materially and
adversely alters the rights of the existing holders of depositary shares will
not be effective unless approved by the record holders of at least a majority
of the depositary shares then outstanding. The deposit agreement may be
terminated by us or the depositary only if:
. all outstanding depositary shares relating to the deposit agreement have
been redeemed; or
. there has been a final distribution on the preferred stock of the
relevant series in connection with our liquidation, dissolution, or
winding up of our business and the distribution has been distributed to
the holders of the related depositary shares.
Charges of Depositary
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. We will pay
associated charges of the depositary for the initial deposit of the preferred
stock and any redemption of the preferred stock. Holders of depositary shares
will pay transfer and other taxes and governmental charges and any other
charges that are stated to be their responsibility in the deposit agreement.
Miscellaneous
We will forward to the depositary, for distribution to the holders of
depositary shares, all reports and communications that we must furnish to the
holders of the preferred stock.
Neither the depositary nor we will be liable if the depositary is prevented
or delayed by law or any circumstance beyond its control in performing its
obligations under the deposit agreement. Our obligations and the depositary's
obligations under the deposit agreement will be limited to performance in good
faith of duties listed in the deposit agreement. Neither the depositary nor we
will be obligated to prosecute or defend any legal proceeding connected with
any depositary shares or preferred stock unless satisfactory indemnity is
furnished to us, the depositary, or both. We and the depositary may rely upon
written advice of counsel or accountants, or information provided by persons
presenting preferred stock for deposit, holders of depositary shares, or other
persons believed to be competent and on documents believed to be genuine.
Resignation and Removal of Depositary
The depositary may resign at any time by delivering notice to us. We may also
remove the depositary at any time. Resignations or removals will take effect
upon the appointment of a successor depositary and its acceptance of the
appointment. The successor depositary must be appointed within 60 days after
delivery of the notice of resignation or removal and must be a bank or trust
company having its principal office in the United States and having a combined
capital and surplus of at least $50 million.
25
<PAGE>
DESCRIPTION OF SECURITIES WARRANTS
This section describes the general terms and provisions of the securities
warrants. The prospectus supplement will describe the specific terms of the
securities warrants offered through that prospectus supplement and any general
terms outlined in this section that will not apply to those securities
warrants.
We may issue warrants for the purchase of senior debt securities,
subordinated debt securities, junior subordinated debt securities, preferred
stock, depositary shares, or common stock. Securities warrants may be issued
alone or together with other securities offered by any prospectus supplement
and may be attached to or separate from those securities. Each series of
securities warrants will be issued under a separate securities warrant
agreement between us and a bank or trust company, as warrant agent, which will
be described in the applicable prospectus supplement. The warrant agent will
act solely as our agent in connection with the securities warrants and will not
act as an agent or trustee for any holders of securities warrants.
We have summarized the material terms of the forms of securities warrant
agreements and securities warrants in this section, but this is only a summary.
The summary is not complete. We have also filed the forms of securities warrant
agreements and the certificates representing the securities warrants as
exhibits to the registration statement. You should review the applicable forms
of these documents for additional information before you buy any securities
warrants.
General
If we offer securities warrants, the applicable prospectus supplement will
describe their terms. If securities warrants for the purchase of debt
securities are offered, the applicable prospectus supplement will describe the
terms of the securities warrants, including the following, if applicable:
. the offering price;
. the currencies in which the securities warrants are being offered;
. the designation, aggregate principal amount, currencies, denominations,
and terms of the series of the debt securities that can be purchased if
a holder exercises the securities warrants;
. the designation and terms of any series of debt securities, preferred
stock, or depositary shares with which the securities warrants are being
offered and the number of securities warrants offered with each other
security;
. the date on and after which the holder of the securities warrants may
transfer them separately from the related security;
. the principal amount of the series of related securities that may be
purchased if a holder exercises the securities warrant and the price at
which and currencies in which that principal amount may be purchased
upon exercise;
. the date on which the right to exercise the securities warrants begins
and the date on which it expires;
. United States federal income tax consequences; and
. any other terms of the securities warrants.
Securities warrants for the purchase of debt securities will be in registered
form only.
26
<PAGE>
If securities warrants for the purchase of preferred stock, depositary
shares, or common stock are offered, the applicable prospectus supplement will
describe the terms of the securities warrants, including the following, where
applicable:
. the offering price;
. the total number of shares that can be purchased if a holder of the
securities warrants exercises them;
. in the case of securities warrants for preferred stock or depositary
shares, the designation, total number, and terms of the series of
preferred stock that can be purchased upon exercise or that are
underlying the depositary shares that can be purchased upon exercise;
. the designation and terms of the series of related securities with which
the securities warrants are being offered and the number of securities
warrants being offered with each related security;
. the date on and after which the holder of such securities warrants can
transfer them separately from the related securities;
. the number of shares of related securities that may be purchased if a
holder exercises the securities warrant and the price at which the
related securities may be purchased upon each exercise;
. the date on which the right to exercise the securities warrants begins
and the date on which it expires;
. United States federal income tax consequences; and
. any other terms of the securities warrants.
Securities warrants for the purchase of preferred stock, depositary shares, or
common stock will be in registered form only.
Until any securities warrants to purchase debt securities are exercised, the
holder of those securities warrants will not have any of the rights of holders
of the debt securities that can be purchased upon exercise, including any right
to receive payments of principal, premium, or interest on the underlying debt
securities or to enforce covenants in the applicable indenture. Until any
securities warrants to purchase preferred stock, depositary shares, or common
stock are exercised, holders of those securities warrants will not have any
rights of holders of the underlying preferred stock, depositary shares, or
common stock, including any right to receive dividends or to exercise any
voting rights.
Exercise of Securities Warrants
Each holder of a securities warrant is entitled to purchase the principal
amount of debt securities or the number of shares of preferred stock,
depositary shares, or shares of common stock, as the case may be, at the
exercise price described in the applicable prospectus supplement. After the
close of business on the day when the right to exercise terminates, or a later
date if we extend the time for exercise, unexercised securities warrants will
become void.
A holder of securities warrants may exercise them by following the general
procedure outlined below:
. delivering to the warrant agent the payment required by the applicable
prospectus supplement to purchase the underlying security;
. properly completing and signing the reverse side of the certificate
representing the securities warrants; and
. delivering the certificate representing the securities warrants to the
warrant agent within three business days of the warrant agent receiving
payment of the exercise price.
27
<PAGE>
If you comply with the procedures described above, your securities warrants
will be considered to have been exercised when the warrant agent receives
payment of the exercise price. After you have completed those procedures, we
will, as soon as practicable, issue and deliver to you the debt securities,
preferred stock, depositary shares, or common stock that you purchased upon
exercise. If you exercise fewer than all of the securities warrants represented
by a securities warrant certificate, a new securities warrant certificate will
be issued to you by the warrant agent for the unexercised amount of the
securities warrants. Holders of securities warrants will be required to pay any
tax or governmental charge that may be imposed in connection with transferring
the underlying securities in connection with the exercise of the securities
warrants.
Amendments to Securities Warrant Agreements
We may amend a securities warrant agreement without the consent of the
holders of the applicable securities warrants if the changes are consistent
with the provisions of the securities warrants and do not materially adversely
affect the interests of the holders of the securities warrants. We, along with
the warrant agent, may also amend a securities warrant agreement and the terms
of the securities warrants if a majority of the then-outstanding unexercised
securities warrants affected by the amendment consent. However, no amendment
that accelerates the expiration date, increases the exercise price, reduces the
majority-consent requirement for any such modification or amendment, or
otherwise materially and adversely affects the rights of the holders of the
securities warrants may be made without the consent of each holder affected by
the modification or amendment.
Common Stock Warrant Adjustments
Unless the applicable prospectus supplement states otherwise, the exercise
price of, and the number of shares of common stock covered by, a warrant for
common stock will be adjusted in the manner described in the applicable
prospectus supplement if certain events occur, including:
. if we issue capital stock as a dividend or distribution on the common
stock;
. if we subdivide, reclassify, or combine the common stock;
. if we issue rights or warrants to all holders of common stock entitling
them to purchase common stock at less than the current market price; or
. if we distribute to all holders of common stock evidences of our
indebtedness or our assets or rights or warrants.
Except as stated above, the exercise price and number of shares of common
stock covered by a common stock warrant will not be adjusted if we issue common
stock or any securities convertible into or exchangeable for common stock. No
adjustments will be made for regular periodic cash dividends or distributions,
nor will any adjustments be made for cash dividends or distributions paid out
of retained earnings.
Holders of common stock warrants may have additional rights under the
following circumstances:
. a reclassification or change of the common stock;
. a consolidation or merger involving our company; or
. a sale or conveyance to another corporation of all or substantially all
of our property and assets.
If one of the above transactions occurs and holders of our common stock are
entitled to receive stock, securities, cash, or other property with respect to
or in exchange for common stock, the holders of the common stock warrants then
outstanding will be entitled to receive upon exercise of their common stock
warrants the kind and amount of shares of stock and other securities or
property that they would have received upon the reclassification, change,
consolidation, merger, sale, or conveyance if they had exercised their common
stock warrants immediately before the transaction.
28
<PAGE>
PLAN OF DISTRIBUTION
The securities offered by this prospectus may be sold through agents, through
underwriters or dealers, or directly to one or more purchasers.
Underwriters, dealers, and agents that participate in the distribution of the
securities offered by this prospectus may be "underwriters" as defined in the
Securities Act of 1933, and any discounts or commissions received by them from
us and any profit on the resale of the offered securities by them may be
treated as underwriting discounts and commissions under the Securities Act.
Underwriters or agents will be identified and their compensation will be
described in the applicable prospectus supplement. The prospectus supplement
will also describe other terms of the offering, including any discounts or
concessions allowed or reallowed or paid to dealers and any securities
exchanges on which the offered securities may be listed.
The distribution of the securities offered by this prospectus may occur from
time to time in one or more transactions at a fixed price, which may be
changed, at market prices prevailing at the time of sale, at prices related to
prevailing market prices, or at negotiated prices.
If the applicable prospectus supplement so indicates, we will authorize
dealers or our agents to solicit offers by certain institutions to purchase
offered securities from us under contracts that provide for payment and
delivery on a future date. We must approve all institutions, but they may
include, among others:
. commercial and savings banks;
. insurance companies;
. pension funds;
. investment companies; and
. educational and charitable institutions.
The institutional purchaser's obligations under the contract are only subject
to the condition that the purchase of the offered securities at the time of
delivery is allowed by the laws that govern the purchaser. The dealers and our
agents will not be responsible for the validity or performance of the
contracts.
We may have agreements with the underwriters, dealers, and agents to
indemnify them against civil liabilities, including liabilities under the
Securities Act, or to contribute with respect to payments that the
underwriters, dealers, or agents may be required to make as a result of those
civil liabilities.
Except for shares of our common stock, which are listed on the New York Stock
Exchange, when we or a trust issues the securities offered by this prospectus,
they may be new securities without an established trading market. If we or a
trust sells a security offered by this prospectus to an underwriter for public
offering and sale, the underwriter may make a market for that security, but the
underwriter will not be obligated to do so and could discontinue any market-
making without notice at any time. Therefore, we cannot give any assurances to
you concerning the liquidity of any such security offered by this prospectus.
Underwriters and agents and their affiliates may be customers of, engage in
transactions with, or perform services for us or our subsidiaries in the
ordinary course of their businesses.
29
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file periodic reports, proxy statements, and other information with the
SEC. Our SEC filings are available to the public over the Internet at the SEC's
web site (www.sec.gov). You may also read and copy any document we file with
the SEC at the SEC's public reference facilities at 450 Fifth Street, N.W.,
Washington, D.C. 20549; 7 World Trade Center, Suite 1300, New York, New York
10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. You may obtain copies of the documents at prescribed rates
by writing to the Public Reference Section of the SEC at 450 Fifth Street,
N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of its public reference facilities. Our SEC
filings are also available at the offices of the New York Stock Exchange, where
our common stock is listed under the symbol "RLR." For further information on
obtaining copies of our public filings from the New York Stock Exchange, you
may call (212) 656-5060.
We "incorporate by reference" into this prospectus the information in
documents we file with the SEC, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is an important part of this prospectus, and
information that we file subsequently with the SEC will automatically update
this prospectus. We incorporate by reference the documents listed below:
. Annual Report on Form 10-K for the year ended December 31, 1998,
including information incorporated by reference into that report from
our 1998 Annual Report to Shareholders and portions of our definitive
proxy statement for our 1999 Annual Meeting of Shareholders; and
. the description of our common stock and related rights to purchase
preferred stock contained in our Form 8-K/A dated May 20, 1993 to our
Current Report on Form 8-K dated January 17, 1989 and our Amendment on
Form 8-A/A dated February 26, 1999.
We also incorporate by reference any filings we make with the SEC under
Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934
after the initial filing of the registration statement that contains this
prospectus and before the time that we (or the trusts, if applicable) sell all
the securities offered by this prospectus.
You may request a copy of these filings at no cost by contacting us at the
following address:
Secretary ReliaStar Financial Corp. 20 Washington Avenue South
Minneapolis, Minnesota 55401 (612) 372-5432
You should rely only on the information incorporated by reference or
presented in this prospectus and the applicable prospectus supplement. We have
not authorized anyone else to provide you with different information. You
should not assume that the information in this prospectus and the applicable
prospectus supplement is accurate as of any dates other than the dates on the
front of those documents.
VALIDITY OF SECURITIES
The validity of the debt securities, preferred stock, common stock,
depository shares, and securities warrants will be passed upon for us by Faegre
& Benson LLP, Minneapolis, Minnesota. Certain matters of Delaware law relating
to the validity of the preferred securities will be passed upon for the
applicable trust by special Delaware counsel to the trust. Any underwriters
will be represented by their own legal counsel.
30
<PAGE>
EXPERTS
The consolidated financial statements of ReliaStar and related financial
statement schedules as of December 31, 1998 and 1997 and for each of the three
years in the period ended December 31, 1998, incorporated by reference into
this prospectus from our Annual Report on Form 10-K for the year ended December
31, 1998, have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their reports, which are incorporated in this prospectus by
reference, and have been so incorporated in reliance upon the reports of such
firm given upon their authority as experts in accounting and auditing.
31
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$200,000,000
[LOGO]
ReliaStar Financial Corp.
8% Notes due 2006
------------------------
PROSPECTUS SUPPLEMENT
------------------------
Merrill Lynch & Co.
Credit Suisse First Boston
Lehman Brothers
J.P. Morgan & Co.
October 5, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
