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EXHIBIT 99
ReliaStar Reports First Half 2000 Results
Merger with ING on Track to Close in Early September
August 7, 2000
MINNEAPOLIS - ReliaStar Financial Corp. (NYSE: RLR) announced today that for the
first six months of 2000, operating income per common share on a diluted basis
before merger-related expenses was $1.53, compared with $1.50 in the same period
last year. Operating income for the first half of 2000 excluding $7.6 million
(after-tax) in merger-related expenses was $139.1 million, compared with $134.6
million during the same period in 1999.
Net income per common share on a diluted basis was $1.47 during the first six
months of 2000, compared with $1.52 in the same period last year. Total net
income in the first half was $133.4 million, compared with $136.1 million in the
first half of 1999.
"In the first half of 2000, we have continued to achieve the strong sales growth
that characterizes the real strength of ReliaStar's franchise," said John G.
Turner, chairman and CEO, "although operating results were affected by less
favorable claims experience and increased annuity lapse rates." Turner added,
"With the upcoming combination of ReliaStar and ING, we look forward to further
fueling our sales growth engine and realizing the full earnings potential of our
businesses." The acquisition of ReliaStar will double ING's U.S. operations to
approximately $75 billion of assets under management, and place it among the top
10 U.S. providers of term life, fixed and variable annuities, and universal and
variable universal life.
Second Quarter Results
Operating income per common share on a diluted basis before merger-related
expenses was $0.72 in the second quarter, compared with $0.81 in the same period
last year. Operating income excluding after-tax merger-related expenses of $7.6
million ($0.09 per diluted share) totaled $65.5 million in the second quarter,
compared with $71.8 million in the second quarter of 1999.
Net income per common share on a diluted basis was $0.65 in the second quarter,
compared with $0.81 in the same period last year. Total net income in the second
quarter was $59.3 million, compared with $71.7 million in the second quarter of
1999.
Revenue Measures
Total statutory premiums and deposits and fee revenues for the first half of
2000 were $2.3 billion, an increase of 14 percent from the first half of 1999.
For the second quarter of 2000, statutory premiums and deposits and fee revenues
totaled $1.2 billion, an increase of 8 percent from the second quarter of 1999.
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Operations
For the first half of 2000, total insurance product sales climbed to $1.1
billion, an increase of 13 percent from the first half of 1999. Total insurance
product sales for the second quarter were $549 million, an increase of 14
percent from $483 million in the same period last year. "In the second quarter,
we had especially strong sales growth in our individual fixed and variable
annuities, individual life insurance, 401(k) plans, and group product lines,"
said Bob Salipante, president and COO. "With the addition of Pilgrim mutual
funds late last year, we are supplementing this strong growth in insurance
product sales with a tremendous increase in mutual fund sales." Mutual fund
sales in the second quarter of 2000 totaled $1.3 billion, up over 300 percent
from the same period last year. Salipante added, "the work we've done over the
past two years in the areas of product development, recruiting and distribution
support, as well as our efforts to foster cross-selling among our various
distribution channels, has really paid off--enabling us to achieve this
consistent sales growth across most of our business lines."
Cross-selling results for the first six months of 2000 totaled $578.0 million,
up 112 percent from $272.2 million in the first half of 1999. During the second
quarter of 2000, cross-selling efforts generated $310.5 million in enterprise
sales, up 111 percent from $147.4 million in the second quarter of 1999,
reflecting strong cross-unit sales by both ReliaStar's employee benefits sales
force and the personal producing general agent (PPGA) channel.
The ReliaStar Life and Annuity (RLA) segment, which is focused on sales of
individual life insurance and annuities primarily through personal producing
general agents and brokerage general agents, reported first half sales totaling
$625.9 million, an increase of 27 percent from the first half of 1999. For the
second quarter of 2000, RLA sales totaled $323.0 million, up 24 percent from the
same period last year. Sales of individual life insurance were up 31 percent for
the first half and 30 percent for the second quarter of 2000, compared with the
same periods last year. RLA segment operating income for the first half of 2000
totaled $96.8 million, up 5 percent from $92.2 million in the first half of
1999. Operating income for RLA totaled $48.7 million for the second quarter, up
3 percent from $47.1 million in the second quarter of 1999. The earnings
benefits of higher sales levels in the current period were partially offset by
the effects of increased annuity lapses.
The Worksite Financial Services (WFS) segment, which specializes in the sales of
group life and disability insurance, 401(k) plans and voluntary life insurance
products at the worksite, had sales totaling $433.7 million for the first six
months of 2000, an increase of 24 percent over $350.4 million in the same period
of 1999. During the second quarter of 2000, sales reached $201.1 million, an
increase of 39 percent over the $144.2 million in the second quarter of 1999.
WFS operating income in the first half of 2000 was $29.1 million, compared with
$31.2 million in the first six months of 1999. Operating income for the segment
was $13.5 million in the second quarter, compared with $16.3 million in the same
period a year ago. Claims experience in the group life and health lines was less
favorable in the second quarter of 2000 than in the same period of 1999.
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In the Reinsurance segment, sales for the first half of 2000 were $74.7 million,
compared with $158.8 million in the first six months of 1999. This decrease is
consistent with our expectations. For the second quarter of 2000, reinsurance
sales totaled $24.8 million, down from $77.4 million in the second quarter of
1999. The current environment is difficult for business lines affected by
medical costs and ReliaStar has chosen to maintain a high level of underwriting
discipline on both new and renewing business. Additionally, ReliaStar terminated
its relationships with two managing general underwriters in the third quarter of
1999. For the first half of 2000, operating income was $9.7 million, down from
$19.5 million in the first half of 1999. Operating income in the Reinsurance
segment was $2.7 million for the second quarter, compared with $12.8 million in
the same period last year. Results in 2000 reflect lower premium volumes across
reinsurance lines of business and adverse claims experience.
The Pilgrim mutual fund segment had first half sales of $3.6 billion, compared
with $524 million in mutual fund sales in the same period a year ago. For the
second quarter of 2000, Pilgrim mutual fund sales totaled $1.3 billion, up from
mutual fund sales of $313 million in the same period last year. For the first
half of 2000, mutual fund operating income reached $14.4 million, compared with
$3.1 million in the first half of last year. Operating income for the mutual
fund segment totaled $7.8 million in the second quarter, compared with $1.4
million in the second quarter of 1999. Mutual fund segment results in 1999 do
not include the results of Pilgrim, which was acquired in the fourth quarter of
1999. Assets under management for this segment totaled $16.8 billion at June 30,
2000, up from $4.4 billion at June 30, 1999. On July 26, 2000, ReliaStar
completed the acquisition of Lexington Global Asset Managers, which was
announced on February 29, 2000. Lexington brings $3.4 billion in assets under
management, a complementary portfolio of 13 mutual funds and strong
international equity fund management expertise to the Pilgrim mutual fund
operation.
As of June 30, 2000, ReliaStar had $38.3 billion in total assets under
management, compared with $24 billion as of June 30, 1999. ReliaStar had 90.2
million common shares outstanding as of June 30, 2000, compared with 86.5
million shares at June 30, 1999. Weighted average common shares outstanding, on
a diluted basis, totaled 91.4 million during the second quarter of 2000 and 89.0
million during the second quarter of 1999.
Other Developments
ING and ReliaStar to Merge
On May 1, 2000, ING Group and ReliaStar announced that they had reached a
definitive agreement whereby ING will acquire ReliaStar in a cash exchange of
$54 per common share for a total purchase price of approximately $5.1 billion,
plus the assumption of approximately $1 billion in debt. The Company believes
that the merger with ING will occur on or about September 1, 2000. ReliaStar's
shareholders approved the transaction on July 27, 2000. All the required
regulatory filings have been made and, based upon ReliaStar's discussions with
those regulators, the Company has no reason to believe that there are any
impediments to timely approvals.
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Leaders from ING Americas region and ReliaStar have been working closely
together since early June to develop detailed plans for integrating the two
organizations. Integration teams with participation by representatives from each
of ReliaStar and ING are charged to capture best practices for each business or
functional area. The ING-ReliaStar integration is driven by the desire to build
the optimum organization for achieving a leadership position within the
financial services industry. "Clearly, the successful integration of our two
companies is a key step on the path to industry leadership for ING," said
Turner, who is leading the integration effort as chairman of the Integration
Steering Committee. "So our objectives around the integration process itself
include putting together an implementation plan that will allow us to meet
strategic and financial goals. We will execute that plan in such a way that we
maintain strong relationships with distributors and customers, and minimize any
negative impact on our associates and communities." ReliaStar managers will play
key roles in the new ING Americas operation. Turner will become a member of
ING's Executive Committee for the Americas and vice chairman of the ING U.S.
Holdings board, and general manager and CEO for ING's Mutual Funds business in
the Americas. Salipante will become general manager and CEO for ING's U.S.
Retail Financial Services segment. Wayne Huneke, ReliaStar senior executive vice
president, will become chief administrative officer for ING U.S. Retail
Financial Services.
On July 20, 2000, ING Group announced that it had reached an agreement to
purchase the financial services and international business segments of Aetna.
The transaction is expected to close by year-end. The combination of ING's life
insurance and annuity position, ReliaStar's life insurance, mutual fund and
worksite businesses and Aetna's asset management, annuities and retirement plan
businesses will result in greater scale, a broader product portfolio and
enhanced revenue-generating synergies, such as significant additional
cross-selling opportunities.
Litigation Dismissed
On July 19, 2000, the New York Supreme Court dismissed a case brought by
American International Group against ReliaStar and Unicover Managers (now
operating as Cragwood) over disputed contracts involving workers' compensation
insurance. The decision by the New York Court was consistent with management's
assessment of ReliaStar's exposure in this litigation.
ReliaStar Financial Corp. is a Minneapolis-based holding company whose
subsidiaries offer individuals and institutions life insurance and annuities,
employee benefits products and services, life and health reinsurance, retirement
plans, mutual funds, bank products and personal finance education. Based on
revenues, ReliaStar Financial Corp. is the 8th largest publicly held life
insurance holding company in the United States and has $38.3 billion in assets
under management and life insurance in force of $378.4 billion.
Certain Forward-Looking Information
This report and earlier filings contain forward-looking information, including
information under the caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations" which discuss earnings guidance, known
trends
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and uncertainties, interest, reinsurance claims experience, withdrawal and
surrender activity, direction of new investment cash flow, impacts of changes in
interest rates on the Insurers' investment portfolio and strategies to mitigate
such effects. The Private Securities Litigation Reform Act of 1995 provides a
"safe harbor" for forward- looking information to encourage companies to provide
prospective information about themselves without fear of litigation so long as
such information is identified as forward-looking and is accompanied by
meaningful cautionary statements identifying important factors that could cause
actual results to differ materially from those projected in the information.
Forward-looking information is indicated by the use of such words as
"anticipates," "expects," "believes," "should," "could," "intends," "estimates,"
and "may," or other comparable language. ReliaStar identifies the following
important factors that could cause ReliaStar's actual results to differ
materially from any results that might be projected by ReliaStar in
forward-looking information. All of these factors are difficult to predict, and
many are beyond the control of the Company. Accordingly, although ReliaStar
believes that the assumptions underlying the forward-looking information are
reasonable, there can be no assurances that those assumptions will approximate
actual experience.
The important factors include the following:
o General economic conditions, including prevailing interest rates and the
performance of the stock market which may affect the Company's ability to
sell its products;
o The market value of the Company's investments;
o The lapse rate and profitability of the insurance policies issued by
ReliaStar;
o Mortality and morbidity factors in ReliaStar's insurance business
(including the effect of the Company's reinsurance and retrocession risk
management programs);
o Changes in federal tax laws, which could adversely affect the tax
advantages of certain of the Company's products;
o Legislative or regulatory changes affecting financial institutions,
including those affecting bank sales and underwriting of insurance products
and regulation of the sale, underwriting and pricing of insurance products;
o Industry consolidation and competition; and
o Retention of key employees.
You should also consider other risks and uncertainties discussed in documents
filed by ReliaStar with the Securities and Exchange Commission. ReliaStar has no
obligation to update forward-looking information.
ReliaStar Media Contact:
Ruth Weber Kelley, (612) 372-5628
ReliaStar Investor Contact:
Karin G. Van Vleet, (612) 342-3979
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ReliaStar Financial Corp.
Financial Highlights (Unaudited)
(In Millions, Except Per Share Data)
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Three Months
Ended June 30
2000 1999
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Premium Revenues $322.4 $293.5
Total Revenues 832.4 735.8
Operating Income $57.9 $71.8
Net Realized Investment
Gains (Losses) (After-Tax) 1.4 (0.1)
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Net Income $59.3 $71.7
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Per Common Share:
Basic:
Operating Income $0.64 $0.82
Net Realized Investment
Gains (Losses) (After-Tax) 0.02 0.00
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Net Income $0.66 $0.82
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Diluted:
Operating Income $0.63 $0.81
Net Realized Investment
Gains (Losses) (After-Tax) 0.02 0.00
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Net Income $0.65 $0.81
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Weighted Average Common Shares:
Basic 89.9 87.9
Diluted 91.4 89.0
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Revenue Measures
Statutory Premiums and Deposits (Statutory
Accounting Basis)
ReliaStar Life and Annuities Segment
Life $203.1 $192.3
Annuities 381.0 327.8
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Total 584.1 520.1
Worksite Financial Services Segment 360.2 404.7
Reinsurance Segment 122.5 100.6
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Total Statutory Premiums and Deposits 1,066.8 1,025.4
Fee Revenues (GAAP Accounting Basis) 109.6 60.6
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Total Statutory Premiums and Deposits
and Fee Revenues $1,176.4 $1,086.0
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Assets Under Management (End of Period)
Invested Assets $14,868.0 $14,500.3
Managed Assets 23,392.2 9,486.4
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Total Assets Under Management $38,260.2 $23,986.7
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Notes:
Premium revenues are determined in accordance with generally accepted accounting
principles and do not recognize premiums and deposits received on interest
sensitive products.
Invested assets exclude unrealized investment gains and losses recorded in
accordance with SFAS No. 115. The amounts excluded were an unrealized loss of
$324.8 million at June 30, 2000, and an unrealized gain of $81.2 million at June
30, 1999.
Certain prior period financial data has been restated to conform to current
period presentation.
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ReliaStar Financial Corp.
Financial Highlights (Unaudited)
(In Millions, Except Per Share Data)
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Six Months
Ended June 30
2000 1999
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Premium Revenues $624.3 $579.6
Total Revenues 1,633.0 1,454.6
Operating Income $131.5 $134.6
Net Realized Investment
Gains (Losses) (After-Tax) 1.9 1.5
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Net Income $133.4 $136.1
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Per Common Share:
Basic:
Operating Income $1.47 $1.52
Net Realized Investment
Gains (Losses) (After-Tax) 0.02 0.02
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Net Income $1.49 $1.54
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Diluted:
Operating Income $1.45 $1.50
Net Realized Investment
Gains (Losses) (After-Tax) 0.02 0.02
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Net Income $1.47 $1.52
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Weighted Average Common Shares:
Basic 89.6 88.4
Diluted 90.8 89.6
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Revenue Measures
Statutory Premiums and Deposits (Statutory
Accounting Basis)
ReliaStar Life and Annuities Segment
Life $405.8 $373.6
Annuities 732.1 615.3
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Total 1,137.9 988.9
Worksite Financial Services Segment 768.0 745.3
Reinsurance Segment 219.9 208.1
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Total Statutory Premiums and Deposits 2,125.8 1,942.3
Fee Revenues (GAAP Accounting Basis) 217.8 118.5
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Total Statutory Premiums and Deposits
and Fee Revenues $2,343.6 $2,060.8
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Assets Under Management (End of Period)
Invested Assets $14,868.0 $14,500.3
Managed Assets 23,392.2 9,486.4
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Total Assets Under Management $38,260.2 $23,986.7
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Notes:
Premium revenues are determined in accordance with generally accepted accounting
principles and do not recognize premiums and deposits received on interest
sensitive products.
Invested assets exclude unrealized investment gains and losses recorded in
accordance with SFAS No. 115. The amounts excluded were an unrealized loss of
$324.8 million at June 30, 2000, and an unrealized gain of $81.2 million at June
30, 1999.
Certain prior period financial data has been restated to conform to current
period presentation.
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