<Page>
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-K

              Annual Report Pursuant to Section 13 or 15(d) of the
                        Securities Exchange Act of 1934

For the fiscal year ended December 31, 2002   Commission file number: 333-86276,
                                   333-86278,
                                                                       333-60016

                     ING Life Insurance and Annuity Company
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

<Table>
<S>                                                 <C>
                   Connecticut                                          71-0294708
------------------------------------------------------------------------------------------------------
 (State or other jurisdiction of incorporation or                     (IRS employer
                    organization                                   identification no.)

   151 Farmington Avenue, Hartford, Connecticut                           06156
------------------------------------------------------------------------------------------------------
     (Address of principal executive offices)                           (Zip code)
</Table>

       Registrant's telephone number, including area code (866) 723-4646

--------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report

Securities registered pursuant to Section 12(b) of Act:  None
Securities registered pursuant to Section 12(g) of Act:  None

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                             Yes  __X__  No  ______

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this form 10-K or any amendment to this
Form 10-K.

                             Yes  __X__  No  ______

                     APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 55,000 shares of Common Stock
as of March 25, 2003, all of which were directly owned by ING Retirement
Holdings, Inc.

NOTE: WHEREAS ING LIFE INSURANCE AND ANNUITY COMPANY MEETS THE CONDITIONS SET
FORTH IN GENERAL INSTRUCTION I(1)(a) AND (b) OF FORM 10-K, THIS FORM IS BEING
FILED WITH THE REDUCED DISCLOSURE FORMAT PURSUANT TO GENERAL INSTRUCTION I(2).
<Page>
            ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
          (A wholly-owned subsidiary of ING Retirement Holdings, Inc.)
                           Annual Report on Form 10-K
                      For the year ended December 31, 2002

                               TABLE OF CONTENTS

<Table>
<Caption>
Form 10-K
Item No.                                             Page
---------                                            ----
<S>        <C>                                       <C>
                         PART I

Item 1.    Business**..............................    3
Item 2.    Properties**............................    8
Item 3.    Legal Proceedings.......................    8
Item 4.    Submission of Matters to a Vote of
           Security Holders*.......................    8

                         PART II

Item 5.    Market for Registrant's Common Equity
           and Related Stockholder Matters.........    9
Item 6.    Selected Financial Data*................    9
Item 7.    Management's Narrative Analysis of the
             Results of Operations and Financial
             Condition**...........................    9
Item 7A.   Quantitative and Qualitative Disclosure
           About Market Risk.......................   17
Item 8.    Financial Statements and Supplementary
           Data....................................   18
Item 9.    Changes in and Disagreements with
             Accountants on Accounting and
             Financial Disclosure..................   63

                        PART III

Item 10.   Directors and Executive Officers of the
           Registrant*.............................   63
Item 11.   Executive Compensation*.................   63
Item 12.   Security Ownership of Certain Beneficial
           Owners and Management*..................   63
Item 13.   Certain Relationships and Related
           Transactions* ..........................   63
Item 14.   Controls and Procedures.................   63

                         PART IV

Item 15.   Exhibits, Financial Statement Schedules,
           and Reports on Form 8-K.................   63

           Index on Financial Statement
           Schedules...............................   68
           Signatures..............................   75
</Table>

  *  Item omitted pursuant to General Instruction I(2) of Form 10-K
 **  Item prepared in accordance with General Instruction I(2) of Form 10-K

                                       2
<Page>
                                     PART 1

ITEM 1.  BUSINESS.

ORGANIZATION OF BUSINESS

ING Life Insurance and Annuity Company ("ILIAC" or the "Company"), formerly
known as Aetna Life Insurance and Annuity Company ("ALIAC"), is a Connecticut
stock life insurance company, which was originally organized in 1976. ILIAC,
together with its wholly-owned subsidiaries, ING Insurance Company of America
("IICA"), ING Financial Advisers, LLC ("IFA"), and, through February 28, 2002,
ING Investment Adviser Holding Company, Inc. ("IA Holdco") is herein called the
"Company." ILIAC is a wholly-owned subsidiary of ING Retirement Holdings, Inc.
("HOLDCO"), which is a wholly-owned subsidiary of ING Retirement Services, Inc.
("IRSI"). IRSI is ultimately owned by ING Groep N.V. ("ING"), a financial
services company based in The Netherlands.

On December 13, 2000, ING America Insurance Holdings, Inc. ("ING AIH"), an
indirect wholly-owned subsidiary of ING, acquired Aetna Inc., comprised of the
Aetna Financial Services business, of which the Company is a part, and Aetna
International businesses, for approximately $7,700.0 million. The purchase price
was comprised of approximately $5,000.0 million in cash and the assumption of
$2,700.0 million of outstanding debt and other net liabilities. In connection
with the acquisition, Aetna Inc. was renamed Lion Connecticut Holdings Inc.
("Lion"). At the time of the sale, Lion entered into certain transition services
agreements with a former related party, Aetna U.S. Healthcare, which was renamed
Aetna Inc. ("former Aetna").

HOLDCO contributed IFA to the Company on June 30, 2000. On February 28, 2002,
ILIAC distributed 100% of the stock of IA Holdco to HOLDCO in the form of a
$60.1 million dividend distribution. The primary operating subsidiary of IA
Holdco is Aeltus Investment Management, Inc. ("Aeltus"). Accordingly, fees
earned by Aeltus were not included in Company results subsequent to the dividend
date. As a result of this transaction, the Investment Management Services is no
longer reflected as an operating segment of the Company.

PRODUCTS AND SERVICES

Management has determined that under Statements of Financial Accounting
Standards Number 131 "Disclosure about Segments of an Enterprise and Related
Information," the Company has one operating segment, ING U.S. Financial Services
("USFS").

The Company's USFS segment offers qualified and nonqualified annuity contracts
that include a variety of funding and payout options for individuals and
employer sponsored retirement plans qualified under Internal Revenue Code
Sections 401, 403 and 457, as well as nonqualified deferred compensation plans.
Annuity contracts may be deferred or immediate (payout annuities). These
products also include programs offered to qualified plans and nonqualified
deferred compensation plans that package administrative and record-keeping
services along with a variety of investment options, including affiliated and
nonaffiliated mutual funds and variable and fixed investment options. In
addition, the Company also offers wrapper agreements entered into with
retirement plans which contain certain benefit responsive guarantees (i.e.
liquidity guarantees of principal and previously accrued interest for benefits
paid under the terms of the plan) with respect to portfolios of

                                       3
<Page>
ITEM 1.  BUSINESS. (continued)
plan-owned assets not invested with the Company. The Company also offers
investment advisory services and pension plan administrative services.

INVESTMENT OPTIONS

Annuity contracts offered by the Company contain variable and/or fixed
investment options. Variable options generally provide for full assumption (and,
in limited cases, provide for partial assumption) by the customer of investment
risks. Assets supporting variable annuity options are held in separate accounts
that invest in affiliated and/or unaffiliated mutual funds. Affiliated mutual
funds include funds managed by Aeltus, a subsidiary of HOLDCO, funds managed by
ING Investment Management, LLC ("IIM"), an affiliate, and funds managed by ILIAC
and subadvised by outside investment advisers. Variable separate account
investment income and realized capital gains and losses are not reflected in the
Company's consolidated statements of income. Fixed options are either
"fully-guaranteed" or "experience-rated". Fully-guaranteed fixed options provide
guarantees on investment return, maturity values and, if applicable, benefit
payments. Experience-rated fixed options require the customer to assume
investment risks (including realized capital gains and losses on the sale of
invested assets) and other risks subject to, among other things, principal and
interest guarantees.

FEES AND MARGINS

Insurance and expense charges, investment management fees and other fees earned
by the Company vary by product and depend on, among other factors, the funding
option selected by the customer under the product. For annuity products where
assets are allocated to variable funding options, the Company may charge the
separate account asset-based insurance and expense fees.

In addition, where the customer selects an affiliated mutual fund as a variable
funding option, ILIAC may receive compensation from the fund's adviser,
administrator or other affiliated entity for the performance of certain
shareholder services, which is reflected in the USFS segment's results. In the
case of funds advised by Aeltus, these fees are equal to one-half the investment
advisory fee Aeltus receives. Aeltus, whose operating results were reported in
the Investment Management Services' segment, through February 28, 2002, records
the advisory fees net of the amount it pays to ILIAC. In the case of the
variable option mutual funds advised by ILIAC and subadvised by outside
managers, ILIAC receives an investment advisory fee from which it pays a
subadvisory fee to the outside manager.

Additionally, ILIAC may receive administrative service, distribution (12b-1) and
service plan fees. If the customer selects an unaffiliated mutual fund as a
variable funding option, ILIAC and/or IFA may receive 12b-1 and service plan
fees, as well as, compensation from the fund's adviser, administrator or other
affiliated entity for the performance of certain shareholder services.

In connection with programs offered to qualified plans and nonqualified deferred
compensation plans that package administrative and recordkeeping services along
with a menu of investment options, ILIAC and/or IFA may receive 12b-1 and
service plan fees, as well as, compensation from the affiliated or unaffiliated
fund's adviser, administrator or other affiliated entity for the performance of
certain shareholder services. For fixed funding options, ILIAC earns a margin,
which is based on the difference between income earned on the investments
supporting the liability and interest credited to

                                       4
<Page>
ITEM 1.  BUSINESS. (continued)
customers. The Company may also receive other fees or charges depending on the
nature of the products.

ASSETS UNDER MANAGEMENT AND ADMINISTRATION

The substantial portion of the Company's fees or other charges and margins are
based on assets under management. Assets under management are principally
affected by net deposits (i.e., deposits less surrenders), investment
performance (i.e., interest credited to customer accounts for fixed options or
market performance for variable options) and customer retention. The Company's
assets under management, excluding net unrealized capital gains and losses on
debt securities that support fixed annuities, were $46,426.7 million,
$50,781.4 million and $53,262.4 million at December 31, 2002, 2001, and 2000,
respectively.

Approximately 94% and 93% of assets under management at December 31, 2002 and
2001, respectively, allowed for contractholder withdrawal. Approximately 85% and
82% of assets under management at December 31, 2002 and 2001, respectively, are
subject to market value adjustments and/or deferred surrender charges. To
encourage customer retention and recover acquisition expenses, contracts
typically impose a surrender charge on policyholder balances withdrawn within a
period of time after the contract's inception. The period of time and level of
the charge vary by product. In addition, an approach incorporated into certain
recent variable annuity contracts with fixed funding options allows
contractholders to receive an incremental interest rate if withdrawals from the
fixed account are spread over a period of five years. Further, more favorable
credited rates may be offered after policies have been in force for a period of
time. Existing tax penalties on annuity and certain custodial account
distributions prior to age 59 1/2 provide further disincentive to customers for
premature surrenders of account balances, but generally do not impede transfers
of those balances to products of competitors.

Assets under management are summarized in the Results of Operations section of
Management's Narrative Analysis of the Results of Operations and Financial
Condition.

A portion of the Company's fee revenue is also based on assets under
administration. Assets under administration are assets for which the Company
provides administrative services only. Assets under administration were
$13,613.0 million at December 31, 2002, $10,317.4 million at December 31, 2001
and $8,293.7 million at December 31, 2000.

PRINCIPAL MARKETS AND METHOD OF DISTRIBUTION

The Company's products are offered primarily to individuals, pension plans,
small businesses and employer-sponsored groups in the health care, government,
education (collectively "not-for-profit" organizations) and corporate markets.
The Company's products generally are sold through pension professionals,
independent agents and brokers, third party administrators, banks, dedicated
career agents and financial planners.

COMPETITION

Competition arises from an array of financial services companies including other
insurance companies, banks, mutual funds and other investment managers.
Principal competitive factors are

                                       5
<Page>
ITEM 1.  BUSINESS. (continued)
reputation for investment performance, product features, service, cost and the
perceived financial strength of the investment manager or sponsor. Competition
may affect, among other matters, both business growth and the pricing of the
Company's products and services.

RESERVES

Reserves for limited payment contracts (i.e. annuities with life contingent
payout) are computed on the basis of assumed investment yield and mortality,
including a margin for adverse deviation, which is assumed to provide for
expenses. The assumptions vary by plan, year of issue and policy duration.
Reserves for investment contracts (i.e. deferred annuities and immediate
annuities without life contingent payouts) are equal to cumulative deposits plus
credited interest for fixed options less withdrawals and charges thereon. Of
those investment contracts which are "experience-rated", the reserves also
reflect net realized capital gains/losses on the sale of invested assets, which
the Company reflects through credited rates on an amortized basis, and
unrealized capital gains/losses related to FAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities."

Reserves, as described above, are computed amounts that, with additions from
premiums and deposits to be received and with interest on such reserves
compounded annually at assumed rates, are expected to be sufficient to meet the
Company's policy obligations at their maturities or to pay expected death or
retirement benefits or other withdrawal requests.

OTHER MATTERS

REGULATION

The Company's operations are subject to comprehensive regulation throughout the
United States. The laws of the various jurisdictions establish supervisory
agencies, including the state insurance departments, with broad authority to
grant licenses to transact business and regulate many aspects of the products
and services offered by the Company, as well as solvency and reserve adequacy.
Many agencies also regulate investment activities on the basis of quality,
diversification, and other quantitative criteria. The Company's operations and
accounts are subject to examination at regular intervals by certain of these
regulators.

Operations conducted by the Company are subject to regulation by various state
insurance departments in the states where the Company conducts business, in
particular the insurance departments of Connecticut, Florida and New York. Among
other matters, these agencies may regulate premium rates, trade practices, agent
licensing, policy forms, underwriting and claims practices and the maximum
interest rates that can be charged on policy loans.

The Securities and Exchange Commission ("SEC"), the National Association of
Securities Dealers ("NASD") and, to a lesser extent, the states regulate the
sales and investment management activities and operations of the Company.
Regulations of the SEC, Department of Labor ("DOL") and Internal Revenue Service
also impact certain of the Company's annuity, life insurance and other
investment and retirement products. These products involve Separate Accounts and
mutual funds registered under the Investment Company Act of 1940. The Company
also provides a variety of products and services to employee benefit plans that
are covered by the Employee Retirement Income Security Act of 1974 ("ERISA").

                                       6
<Page>
ITEM 1.  BUSINESS. (continued)
OTHER MATTERS (continued)
On June 7, 2001 the Economic Growth and Tax Relief Reconciliation Act of 2001
("EGTRRA") was signed into law. EGTRRA contains important changes to many of the
Internal Revenue Code provisions governing qualified defined contribution and
defined benefit plans, Section 457 deferred compensation plans, Section 403(b)
tax sheltered annuity arrangements and individual retirement accounts and
annuities ("IRAs"). These changes include significant increases in the
contribution limits under retirement plans and IRAs and new rollover provisions
that increase the portability of retirement account assets.

Insurance Holding Company Laws

A number of states, including Connecticut and Florida, regulate affiliated
groups of insurers such as the Company under holding company statutes. These
laws, among other things, place certain restrictions on transactions between
affiliates such as dividends and other distributions that may be paid to the
Company's parent corporation.

Insurance Company Guaranty Fund Assessments

Under insurance guaranty fund laws existing in all states, insurers doing
business in those states can be assessed (up to prescribed limits) for certain
obligations of insolvent insurance companies to policyholders and claimants.
There were no charges to earnings for guaranty fund obligations during 2002 and
no material charges during 2001 and 2000. While the Company has historically
recovered more than half of its guaranty fund assessments through statutorily
permitted premium tax offsets, significant increases in assessments could
jeopardize future efforts to recover such assessments. For information regarding
certain other potential regulatory changes relating to the Company's businesses,
see Management's Analysis of the Results of Operations--Forward-Looking
Information/ Risk Factors.

MISCELLANEOUS

In addition to its own employees and computer facilities and systems, the
Company also uses the services of employees, computer facilities and systems of
certain affiliates. Management believes that the Company's computer facilities,
systems and related procedures are adequate to meet its business needs. The
Company's data processing systems and backup and security policies, practices
and procedures are regularly evaluated by the Company's management and internal
auditors and are modified as considered necessary.

The Company is not dependent upon any single customer and no single customer
accounted for more than 10% of consolidated revenue in 2002. In addition, the
loss of business from any one, or a few, independent brokers or agents would not
have a material adverse effect on the earnings of the Company.

ITEM 2.  PROPERTIES

The Company's home office is located at 151 Farmington Avenue, Hartford,
Connecticut, 06156. All Company office space is leased or subleased by the
Company or its other affiliates. The Company

                                       7
<Page>
ITEM 2.  PROPERTIES (continued)
pays substantially all expenses associated with its leased and subleased office
properties. Expenses not paid directly by the Company are paid for by an
affiliate and allocated back to the Company.

ITEM 3.  LEGAL PROCEEDINGS

The Company is a party to threatened or pending lawsuits arising, from the
normal conduct of business. Due to the climate in insurance and business
litigation, suits against the Company sometimes include claims for substantial
compensatory, consequential or punitive damages and other types of relief.
Moreover, certain claims are asserted as class actions, purporting to represent
a group of similarly situated individuals. While it is not possible to forecast
the outcome of such lawsuits, in light of existing insurance, reinsurance and
established reserves, it is the opinion of management that the disposition of
such lawsuits will not have a materially adverse effect on the Company's
operations or financial position.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Omitted pursuant to General Instruction I(2)(c) of Form 10-K.

                                       8
<Page>
                                    PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

All of the Company's outstanding shares are owned by HOLDCO which is a
wholly-owned subsidiary of IRSI whose ultimate parent is ING.

ITEM 6.  SELECTED FINANCIAL DATA

Omitted pursuant to General Instruction I(2)(a) of Form 10-K.

ITEM 7.  MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION

OVERVIEW

The following narrative analysis of the results of operations and financial
condition presents a review of the Company for the twelve month periods ended
December 31, 2002 versus 2001.

CHANGE IN ACCOUNTING PRINCIPLE

In June 2001, the Financial Accounting Standards Board ("FASB") issued FAS
No. 142, "Goodwill and Other Intangible Assets," effective for fiscal years
beginning after December 15, 2001. Under FAS No. 142, goodwill and intangible
assets deemed to have indefinite lives are no longer amortized but are subject
to annual impairment tests. Other intangible assets are still amortized over
their estimated useful lives. The Company adopted the new standard effective
January 1, 2002.

As required under FAS No. 142, the Company completed the first of the required
impairment tests as of January 1, 2002. Step one of the impairment test was a
screen for potential impairment, while step two measured the amount of the
impairment. All of the Company's operations fall under one reporting unit, USFS,
due to the consolidated nature of the Company's operations. Step one of the
impairment test required the Company to estimate the fair value of the reporting
unit and compare the estimated fair value to its carrying value. The Company
determined the estimated fair value utilizing a discounted cash flow approach
and applying a discount rate equivalent to the Company's weighted average cost
of capital. Fair value was determined to be less than carrying value which
required the Company to complete step two of the test. In step two, the Company
allocated the fair value of the reporting unit determined in step one to the
assets and liabilities of the reporting unit resulting in an implied fair value
of goodwill of zero.

The comparison of the fair value amount allocated to goodwill and the carrying
value of goodwill resulted in an impairment loss upon adoption of
$2,412.1 million, which represents the entire carrying amount of goodwill, net
of accumulated amortization. This impairment charge is shown as a change in
accounting principle on the Consolidated Income Statement.

                                       9
<Page>
ITEM 7.  MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (continued)
RESULTS OF OPERATIONS

USFS

<Table>
<Caption>
(Millions)                                2002       2001     2000 (1)
<S>                                  <C>        <C>        <C>
----------------------------------------------------------------------
Premiums (2)                         $    98.7  $   114.2   $   154.2
Fee income                               408.5      470.8       537.9
Net investment income                    959.2      885.5       905.8
Net realized capital (losses)           (101.0)     (21.1)      (35.6)
----------------------------------------------------------------------
      Total revenue                    1,365.4    1,449.4     1,562.3
----------------------------------------------------------------------
Interest credited and other
  benefits to policyholders              746.4      729.6       795.6
Operating expenses                       358.7      401.8       390.5
Amortization of goodwill                    --       61.9          --
Amortization of deferred policy
  acquisition costs and value of
  business acquired                      181.5      112.0       126.9
----------------------------------------------------------------------
      Total benefits and expenses      1,286.6    1,305.3     1,313.0
----------------------------------------------------------------------
Income from operations before
  income taxes                            78.8      144.1       249.3
Income tax expense                        16.0       71.7        75.0
----------------------------------------------------------------------
Income before cumulative effect of
  change                                  62.8       72.4       174.3
Cumulative effect of change in
  accounting principle                 (2412.1)        --          --
----------------------------------------------------------------------
      Net income (loss)              $(2,349.3) $    72.4   $   174.3
======================================================================
Net realized capital (losses), net
  of tax (included above)            $   (58.3) $   (13.8)  $   (23.1)
======================================================================
Deposits (not included in premiums
  above)
  Annuities--fixed options           $ 1,195.2  $ 1,440.5   $ 1,479.1
  Annuities--variable options          4,335.2    4,155.8     4,678.7
----------------------------------------------------------------------
Total--deposits                      $ 5,530.4  $ 5,596.3   $ 6,157.8
======================================================================
Assets under management
  Annuities--fixed options (3)       $14,984.5  $13,291.9   $12,450.3
  Annuities--variable options (4)     23,148.0   28,495.8    33,084.0
----------------------------------------------------------------------
      Subtotal--annuities             38,132.5   41,787.7    45,534.3
  Plan Sponsored and Other             8,294.2    8,993.7     7,728.1
----------------------------------------------------------------------
  Total--assets under management      46,426.7   50,781.4    53,262.4
Assets under administration (5)       13,613.0   10,317.4     8,293.7
----------------------------------------------------------------------
Total assets under management and
  administration                     $60,039.7  $61,098.8   $61,556.1
======================================================================
</Table>

(1)  Year ended 2000 reflects an aggregation of the pre-acquisition period of
     the eleven months ended November 30, 2000 and the post acquisition period
     of one month ended December 31, 2000.
(2)  Includes $64.8 million in 2002, $75.0 million in 2001 and $107.8 million in
     2000 for annuity premiums on contracts converting from the accumulation
     phase to payout options with life contingencies.
(3)  Excludes net unrealized capital gains of $725.9, $291.0 and $126.9 at
     December 31, 2002, 2001 and 2000, respectively.
(4)  Includes $9,304.1 million, $11,272.2 million and $13,492.1 million at
     December 31, 2002, 2001 and 2000, respectively, of assets invested through
     the Company's products in unaffiliated mutual funds.
(5)  Represents assets for which the Company provides administrative services
     only.

Premiums for the year ended December 31, 2002 decreased by $15.5 million
compared to the same period in 2001, reflecting a decrease in immediate
annuities with life contingencies.

Fee income for the year ended December 31, 2002 decreased by $62.3 million
compared to the same period in 2001, primarily due to the decrease in average
variable assets under management by the

                                       10
<Page>
ITEM 7.  MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (continued)
RESULTS OF OPERATIONS (continued)
Company. Substantially all of the fee income on variable assets is calculated
based on assets under management and administration, which decreased due to the
continued decline in the equity markets, and customer transfers to fixed
options.

Net investment income for the year ended December 31, 2002 increased by
$73.7 million compared to the same period in 2001. This increase in net
investment income is primarily due to an increase in assets under management
with fixed options partially offset by lower investments yields.

Net realized capital losses for the year ended in December 31, 2002 increased by
$79.9 million compared to the same period in 2001. The increase in capital
losses are primarily due to impairments of certain fixed maturities (referred to
in Note 2 of the Notes to Financial Statements).

Interest credited and other benefits to the policyholders for the year ended
December 31, 2002 increased by $16.8 million compared to the same period in
2001, primarily due to an increase in assets under management with fixed options
partially offset by a decrease in credited rates to policyholders.

Operating expenses for the year ended December 31, 2002 decreased by $43.1
million compared to the same period in 2001. The Company incurred a $29.2
million restructuring charge in 2001, there were no restructuring charges in
2002. Operating expenses, excluding the restructuring charge, decreased $13.9
million primarily due to lower employee related costs due to the Company's 2002
restructuring efforts, the reduced employee related costs were partially offset
by higher expense allocations from the Company's parent and affiliates.

Goodwill amortization for the year ended December 31, 2002 decreased by
$61.9 million compared to the same period in 2001. This reduction is based on
the change in accounting principle FAS No. 142 that eliminates amortization of
goodwill.

Amortization of deferred policy acquisition costs and value of business acquired
for the year ended December 31, 2002, increased by $69.5 million compared to the
same period in 2001. Amortization of long-duration products is reflected in
proportion to actual and estimated future gross profits. Estimated future gross
profits are computed based on underlying assumptions related to the underlying
contracts, including but not limited to interest margins, mortality lapse,
premium persistency, expenses, and asset growth. The increase in the
amortization of deferred policy acquisition costs and value of insurance
acquired reflects the impact of these variables on the overall book of business.

The cumulative effect of the change in accounting principle for the year ended
December 31, 2002 of $2,412.1 million is an impairment charge related to the
implementation of FAS No. 142, which addresses accounting for goodwill and other
intangible assets.

Earnings, excluding goodwill amortization, change in accounting principle and
net realized capital gains and losses (net of tax), decreased by $27.0 million
for the year ended December 31, 2002, as compared to the year ended
December 31, 2001. Lower earnings are primarily the result of increases

                                       11
<Page>
ITEM 7.  MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (continued)
RESULTS OF OPERATIONS (continued)
to the amortization of deferred policy acquisition costs and value of business
acquired, and lower fee income partially offset by higher investment income and
lower expenses.

NON-OPERATING SEGMENT

The non-operating segment of the Company relates to Investment Management
Services, which is comprised of IA Holdco and its subsidiaries, which were
distributed to HOLDCO on February 28, 2002.

Investment Management Services' net income for the year ended December 31, 2002,
was $4.7 million. The 2002 results reflect operating results through
February 28, 2002 only.

FINANCIAL CONDITION

INVESTMENTS

FIXED MATURITIES

At December 31, 2002 and 2001, respectively, the Company's carrying value of
available for sale fixed maturities including fixed maturities pledged to
creditors (hereinafter referred to as "total fixed maturities") represented 94%
and 96% of the total general account invested assets, respectively. For the same
periods, $11,808.4 million, or 74% of total fixed maturities including
securities pledged to creditors, and $11,404.0 million, or 81% of total fixed
maturities, respectively, supported experience-rated products. Total fixed
maturities including securities pledged to creditors reflected net unrealized
capital gains of $725.9 million and $291.0 million at December 31, 2002 and
2001, respectively.

It is management's objective that the portfolio of fixed maturities is of high
quality and be well diversified by market sector. The fixed maturities in the
Company's portfolio are generally rated by external rating agencies and, if not
externally rated, are rated by the Company on a basis believed to be similar to
that used by the rating agencies. The average quality rating of the Company's
fixed maturities portfolio was AA- at December 31, 2002 and 2001.

Fixed maturities rated BBB and below may have speculative characteristics and
changes in economic conditions or other circumstances are more likely to lead to
a weakened capacity of the issuer to make principal and interest payments than
is the case with higher rated fixed maturities.

                                       12
<Page>
ITEM 7.  MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (continued)
INVESTMENTS (continued)
The percentage of total fixed maturities by quality rating category is as
follows:

<Table>
<Caption>
                                             December 31, 2002     December 31, 2001
<S>                                       <C>                   <C>
------------------------------------------------------------------------------------
AAA                                                  51.9%                 54.0%
AA                                                    5.0                   6.6
A                                                    20.2                  18.0
BBB                                                  19.2                  16.1
BB                                                    2.5                   2.8
B and Below                                           1.2                   2.5
------------------------------------------------------------------------------------
    Total                                           100.0%                100.0%
====================================================================================
</Table>

The percentage of total fixed maturities by market sector is as follows:

<Table>
<Caption>
                                             December 31, 2002     December 31, 2001
<S>                                       <C>                   <C>
------------------------------------------------------------------------------------
U.S. Corporate                                       47.4%                 41.5%
Residential Mortgage-backed                          34.6                  32.7
Commercial/Multifamily Mortgage-backed                8.6                   9.5
Foreign (1)                                           3.1                   8.5
U.S. Treasuries/Agencies                              0.5                   2.0
Asset-backed                                          5.8                   5.8
------------------------------------------------------------------------------------
    Total                                           100.0%                100.0%
====================================================================================
</Table>

(1)  Primarily U.S. dollar denominated

The Company analyzes the general account investments to determine whether there
has been an other than temporary decline in fair value below the amortized cost
basis in accordance with FAS No. 115, "Accounting for Certain Investments in
Debt and Equity Securities." Management considers the length of time and the
extent to which the fair value has been less than amortized cost; the financial
condition and near-term prospects of the issuer; future economic conditions and
market forecasts; and the Company's intent and ability to retain the investment
in the issuer for a period of time sufficient to allow for recovery in fair
value. If it is probable that all amounts due according to the contractual terms
of a debt security will not be collected, an other than temporary impairment is
considered to have occurred.

In addition, the Company invests in structured securities that meet the criteria
of Emerging Issues Task Force ("EITF") Issue No. 99-20 "Recognition of Interest
Income and Impairment on Purchased and Retained Beneficial Interests in
Securitized Financial Assets." Under EITF Issue No. 99-20, a determination of
the required impairment is based on credit risk and the possibility of
significant prepayment risk that restricts the Company's ability to recover the
investment. An impairment is recognized if the fair value of the security is
less than book value and there has been an adverse change in cash flow since the
last remeasurement date.

When a decline in fair value is determined to be other than temporary, the
individual security is written down to fair value and the loss is accounted for
as a realized loss.

                                       13
<Page>
ITEM 7.  MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (continued)
LIQUIDITY AND CAPITAL RESOURCES

Liquidity is the ability of the Company to generate sufficient cash flows to
meet the cash requirements of operating, investing, and financing activities.
The Company's principal sources of liquidity are deposits on contracts, product
charges, investment income, maturing investments, and capital contributions.
Primary uses of liquidity are payments of commissions and operating expenses,
interest and premium credits, investment purchases, as well as withdrawals and
surrenders.

The Company's liquidity position is managed by maintaining adequate levels of
liquid assets, such as cash or cash equivalents and short-term investments.
Additional sources of liquidity include a borrowing facility to meet short-term
cash requirements. The Company maintains a reciprocal loan agreement with ING
AIH, a Delaware corporation and affiliate. Under this agreement, which became
effective in June 2001 and expires in April, 2011, the Company and ING AIH can
borrow up to 3% of the Company's statutory admitted assets as of the preceding
December 31 from one another. Management believes that its sources of liquidity
are adequate to meet the Company's short-term cash obligations.

The National Association of Insurance Commissioners' ("NAIC") risk-based capital
requirements require insurance companies to calculate and report information
under a risk-based capital formula. These requirements are intended to allow
insurance regulators to monitor the capitalization of insurance companies based
upon the type and mixture of risks inherent in a Company's operations. The
formula includes components for asset risk, liability risk, interest rate
exposure, and other factors. The Company has complied with the NAIC's risk-based
capital reporting requirements. Amounts reported indicate that the Company has
total adjusted capital above all required capital levels.

In 2002, the Company received capital contributions in the form of investments
in affiliated mutual funds of $164.3 million from HOLDCO. The Company did not
receive capital contributions in 2001. In 2000, the Company received capital
contributions of $73.5 million in cash and $56.0 million in assets from HOLDCO.

In conjunction with the sale of Aetna, Inc. to ING AIH, the Company was
restricted from paying any dividends to its parent for a two year period from
the date of sale without prior approval by the Insurance Commissioner of the
State of Connecticut. This restriction expired on December 13, 2002. The Company
did not pay dividends to its parent in 2002 or 2001. The Company paid
$10.1 million in cash dividends to HOLDCO in 2000.

On February 28, 2002, ILIAC distributed 100% of the stock of IA Holdco to HOLDCO
in the form of a $60.1 million distribution.

During 2002, liabilities totaling $15.1 million were allocated to the Company
related to a Supplemental Excess Retirement Plan ("SERP") that covers certain
employees of ING Life Insurance Company of America and Aeltus, affiliates of the
Company.

                                       14
<Page>
ITEM 7.  MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (continued)
CRITICAL ACCOUNTING POLICIES

GENERAL

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires the use of estimates and
assumptions in certain circumstances. These estimates and assumptions are
evaluated on an on-going basis based on historical developments, market
conditions, industry trends and other information that is reasonable under the
circumstances. There can be no assurance that actual results will conform to
estimates and assumptions, and that reported results of operations will not be
affected in a materially adverse manner by the need to make future accounting
adjustments to reflect changes in these estimates and assumptions from time to
time.

The Company has identified the following estimates as critical in that they
involve a higher degree of judgment and are subject to a significant degree of
variability; goodwill impairment testing, investment impairment testing and
amortization of deferred acquisition costs and value of business acquired. In
developing these estimates management makes subjective and complex judgments
that are inherently uncertain and subject to material change as facts and
circumstances develop. Although variability is inherent in these estimates,
management believes the amounts provided are appropriate based upon the facts
available upon compilation of the consolidated financial statements.

GOODWILL IMPAIRMENT TESTING

The Company tested goodwill as of January 1, 2002, for impairment using fair
value calculations based on the present value of estimated future cash flows
from business currently in force and business that we estimate we will add in
the future. These calculations require management to make estimates on the
amount of future revenues and the appropriate discount rate. The calculated fair
value of goodwill and the resulting impairment loss recorded is based on these
estimates, which require a significant amount of management judgment. Refer to
Note 1 of the Consolidated Financial Statements for a discussion of the results
of the Company's goodwill testing procedures and to Management's Narrative
Analysis of the Results of Operations for the impact these procedures had on the
Company's income.

INVESTMENT IMPAIRMENT TESTING

The Company reviews the general account investments for impairments by analyzing
the amount and length of time amortized cost has exceeded fair value, and by
making certain estimates and assumptions regarding the issuing companies'
business prospects, future economic conditions and market forecasts. Based on
the facts and circumstances of each case, management uses judgment in deciding
whether any calculated impairments are temporary or other than temporary. For
those impairments judged to be other than temporary, the Company reduces the
carrying value of those investments to the current fair value and record
impairment losses for the difference.

                                       15
<Page>
ITEM 7.  MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (continued)
CRITICAL ACCOUNTING POLICIES (continued)
AMORTIZATION OF DEFERRED ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED

Deferred policy acquisition costs ("DAC") and value of business acquired
("VOBA") are amortized with interest over the life of the contracts (usually 25
years) in relation to the present value of estimated gross profits from
projected interest margins, asset-based fees, policy administration and
surrender charges less policy maintenance fees.

Changes in assumptions can have a significant impact on the calculation of
DAC/VOBA and its related amortization patterns. Due to the relative size of the
DAC/VOBA balance and the sensitivity of the calculation to minor changes in the
underlying assumptions and the related volatility that could result in the
reported DAC/VOBA balance, the Company performs a quarterly analysis of DAC/
VOBA. At each balance sheet date, actual historical gross profits are reflected
and expected future gross profits and related assumptions are evaluated for
continued reasonableness.

Any adjustment in estimated profit requires that the amortization rate be
revised retroactively to the date of policy or contract issuance ("unlocking"),
which could be significant. The cumulative difference related to prior periods
is recognized as a component of the current period's amortization, along with
amortization associated with the actual gross profits of the period. In general,
increases in estimated returns result in increased expected future profitability
and may lower the rate of amortization, while increases in lapse/surrender and
mortality assumptions or decreases in returns reduce the expected future
profitability of the underlying business and may increase the rate of
amortization.

One of the most significant assumptions involved in the estimation of future
gross profits for variable universal life and deferred annuity products is the
assumed return associated with future separate account performance. To reflect
the near-term and long-term volatility in the equity markets this assumption
involves a combination of near-term expectations and a long-term assumption
about market performance. The overall return generated by the separate account
is dependent on several factors, including the relative mix of the underlying
sub-accounts among bond funds and equity funds as well as equity sector
weightings.

As part of the regular analysis of DAC/VOBA, at the end of third quarter 2002,
the Company unlocked its assumptions by resetting its near-term and long-term
assumptions for the separate account returns to 9% (gross before fund management
fees and mortality and expense and other policy charges), reflecting a blended
return of equity and other sub-accounts. This unlocking adjustment was primarily
driven by the sustained downturn in the equity markets and revised expectations
for future returns. For the year ended December 31, 2002, the Company recorded
an acceleration of DAC/VOBA amortization totaling $45.6 million before tax, or
$29.7 million, net of $15.9 million of federal income tax benefit.

FORWARD-LOOKING INFORMATION/RISK FACTORS

In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, the Company cautions readers regarding certain
forward-looking statements contained in this

                                       16
<Page>
ITEM 7.  MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (continued)
FORWARD-LOOKING INFORMATION/RISK FACTORS (continued)
report and in any other statements made by, or on behalf of, the Company,
whether or not in future filings with the SEC. Forward-looking statements are
statements not based on historical information and which relate to future
operations, strategies, financial results, or other developments. Statements
using verbs such as "expect," "anticipate," "believe" or words of similar import
generally involve forward-looking statements. Without limiting the foregoing,
forward-looking statements include statements which represent the Company's
beliefs concerning future levels of sales and redemptions of the Company's
products, investment spreads and yields, or the earnings and profitability of
the Company's activities.

Forward-looking statements are necessarily based on estimates and assumptions
that are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond the Company's control
and many of which are subject to change. These uncertainties and contingencies
could cause actual results to differ materially from those expressed in any
forward-looking statements made by, or on behalf of, the Company.

Whether or not actual results differ materially from forward-looking statements
may depend on numerous foreseeable and unforeseeable developments. Some may be
national in scope, such as general economic conditions, changes in tax law and
changes in interest rates. Some may be related to the insurance industry
generally, such as pricing competition, regulatory developments and industry
consolidation. Others may relate to the Company specifically, such as credit,
volatility and other risks associated with the Company's investment portfolio.
Investors are also directed to consider other risks and uncertainties discussed
in documents filed by the Company with the SEC. The Company disclaims any
obligation to update forward-looking information.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Asset/liability management is integrated into many aspects of the Company's
operations, including investment decisions, product development, and
determination of crediting rates. As part of the risk management process,
different economic scenarios are modeled, including cash flow testing required
for insurance regulatory purposes, to determine that existing assets are
adequate to meet projected liability cash flows. Key variables in the modeling
process include interest rates, anticipated contractholder behavior and variable
separate account performance. Contractholders bear the majority of the
investment risk related to variable insurance products.

The fixed account liabilities are supported by a portfolio principally composed
of fixed rate investments that can generate predictable, steady rates of return.
The portfolio management strategy for the fixed account considers the assets
available for sale. This enables the Company to respond to changes in market
interest rates, changes in prepayment risk, changes in relative values of asset
sectors and individual securities and loans, changes in credit quality outlook,
and other relevant factors. The objective of portfolio management is to maximize
returns, taking in to account interest rate and credit risk, as well as other
risks. The Company's asset/liability management discipline includes strategies
to minimize exposure to loss as interest rates and economic and market
conditions change.

On the basis of these analyses, management believes there is currently no
material solvency risk to the Company.

                                       17
<Page>
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<Table>
<Caption>
                                                    Page
                                                    ----
<S>                                                 <C>

Reports of Independent Auditors...................    19

Consolidated Financial Statements:

    Consolidated Income Statements for the years
       ended December 31, 2002 and 2001, one month
       ended December 31, 2000 and eleven months
       ended November 30, 2000....................    21

    Consolidated Balance Sheets as of
       December 31, 2002 and 2001.................    22

    Consolidated Statements of Changes in
       Shareholder's Equity for the years ended
       December 31, 2002 and 2001, one month ended
       December 31, 2000 and eleven months ended
       November 30, 2000..........................    23

    Consolidated Statements of Cash Flows for the
       years ended December 31, 2002 and 2001, one
       month ended December 31, 2000 and eleven
       months ended November 30, 2000.............    24

    Notes to Consolidated Financial Statements....    25
</Table>

                                       18
<Page>
                         REPORT OF INDEPENDENT AUDITORS

The Board of Directors
ING Life Insurance and Annuity Company

We have audited the accompanying consolidated balance sheets of ING Life
Insurance and Annuity Company as of December 31, 2002 and 2001, and the related
income statements, statements of changes in shareholder's equity, and statements
of cash flows for each of the years then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of ING Life Insurance
and Annuity Company at December 31, 2002 and 2001, and the results of its
operations and its cash flows for each of the years then ended, in conformity
with accounting principles generally accepted in the United States.

As discussed in Note 1 to the financial statements, the Company changed the
accounting principle for goodwill and other intangible assets effective
January 1, 2002.

                                                /s/ Ernst & Young LLP

Atlanta, Georgia
March 25, 2003

                                       19
<Page>
                          INDEPENDENT AUDITORS' REPORT

The Shareholders and Board of Directors
ING Life Insurance and Annuity Company

We have audited the accompanying consolidated statements of income, changes in
shareholder's equity and cash flows of ING Life Insurance and Annuity Company
and Subsidiaries, formerly known as Aetna Life Insurance and Annuity Company and
Subsidiaries, for the period from December 1, 2000 to December 31, 2000
("Successor Company"), and for the period from January 1, 2000 to November 30,
2000 ("Preacquisition Company"). These consolidated financial statements are the
responsibility of the Companies' management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the Successor Company's consolidated financial statements
referred to above present fairly, in all material respects, the results of
operations and cash flows of ING Life Insurance and Annuity Company and
Subsidiaries for the period from December 1, 2000 to December 31, 2000, in
conformity with accounting principles generally accepted in the United States of
America. Further, in our opinion, the Preacquisition Company's consolidated
financial statements referred to above present fairly, in all material respects,
the results of their operations and their cash flows for the period from
January 1, 2000 to November 30, 2000, in conformity with accounting principles
generally accepted in the United States of America.

As discussed in Note 1 to the consolidated financial statements, effective
November 30, 2000, ING America Insurance Holdings Inc. acquired all of the
outstanding stock of Aetna Inc., Aetna Life Insurance and Annuity Company's
indirect parent and sole shareholder in a business combination accounted for as
a purchase. As a result of the acquisition, the consolidated financial
information for the periods after the acquisition is presented on a different
cost basis than that for the periods before the acquisition and, therefore, is
not comparable.

                                                /s/ KPMG LLP

Hartford, Connecticut
March 27, 2001

                                       20
<Page>
            ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
          (A wholly-owned subsidiary of ING Retirement Holdings, Inc.)

                         CONSOLIDATED INCOME STATEMENTS
                                   (Millions)

<Table>
<Caption>
                                                                             Preacquisition
                                                                One month    Eleven months
                                 Year ended     Year ended        ended          ended
                                December 31,   December 31,   December 31,    November 30,
                                    2002           2001           2000            2000
                                -------------  -------------  -------------  --------------
<S>                             <C>            <C>            <C>            <C>
Revenues:
  Premiums                        $    98.7      $  114.2         $ 16.5        $  137.7
  Fee income                          418.2         553.4           49.8           573.3
  Net investment income               959.5         888.4           78.6           833.8
  Net realized capital gains
    (losses)                         (101.0)        (21.0)           1.8           (37.2)
                                  ---------      --------         ------        --------
      Total revenue                 1,375.4       1,535.0          146.7         1,507.6
                                  ---------      --------         ------        --------
Benefits, losses and expenses:
  Benefits:
    Interest credited and
      other benefits to
      policyholders                   746.4         729.6           68.9           726.7
  Underwriting, acquisition,
    and insurance expenses:
    Operating expenses                361.4         444.2           49.1           414.6
  Amortization:
    Deferred policy
      acquisition costs and
      value of business
      acquired                        181.5         112.0           10.2           116.7
    Goodwill                             --          61.9             --              --
                                  ---------      --------         ------        --------
      Total benefits, losses
        and expenses                1,289.3       1,347.7          128.2         1,258.0
                                  ---------      --------         ------        --------

Income before income taxes,
  discontinued operations and
  cumulative effect of change
  in accounting principle              86.1         187.3           18.5           249.6
  Income tax expense                   18.6          87.4            5.9            78.1
                                  ---------      --------         ------        --------

Income before discontinued
  operations and cumulative
  effect of change in
  accounting principle                 67.5          99.9           12.6           171.5
Discontinued operations, net
  of tax                                 --            --             --             5.7
Cumulative effect of change in
  accounting principle             (2,412.1)           --             --              --
                                  ---------      --------         ------        --------
Net income (loss)                 $(2,344.6)     $   99.9         $ 12.6        $  177.2
                                  =========      ========         ======        ========
</Table>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                       21
<Page>
            ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
          (A wholly-owned subsidiary of ING Retirement Holdings, Inc.)

                          CONSOLIDATED BALANCE SHEETS
                         (Millions, except share data)

<Table>
<Caption>
                                           As of December 31,
                                          --------------------
                                            2002       2001
                                          ---------  ---------
<S>                                       <C>        <C>
                 ASSETS
Investments:
  Fixed maturities, available for sale,
    at fair value (amortized cost of
    $15,041.2 at 2002 and $13,249.2 at
    2001)                                 $15,767.0  $13,539.9
  Equity securities at fair value:
    Nonredeemable preferred stock (cost
      of $34.2 at 2002 and $27.0 at
      2001)                                    34.2       24.6
    Investment in affiliated mutual
      funds (cost of $203.9 at 2002 and
      $22.9 at 2001)                          201.0       25.0
    Common stock (cost of $0.2 at 2002
      and $2.3 at 2001)                         0.2        0.7
  Mortgage loans on real estate               576.6      241.3
  Policy loans                                296.3      329.0
  Short-term investments                        6.2       31.7
  Other investments                            52.2       18.2
  Securities pledged to creditors
    (amortized cost of $154.9 at 2002
    and $466.9 at 2001)                       155.0      467.2
                                          ---------  ---------
        Total investments                  17,088.7   14,677.6
Cash and cash equivalents                      65.4       82.0
Short term investments under securities
  loan agreement                              164.3      488.8
Accrued investment income                     170.9      160.9
Reciprocal loan with affiliate                   --      191.1
Reinsurance recoverable                     2,986.5    2,990.7
Deferred policy acquisition costs             229.8      121.3
Value of business acquired                  1,438.4    1,601.8
Goodwill (net of accumulated
  amortization of $61.9 at 2001)                 --    2,412.1
Property, plant and equipment (net of
  accumulated depreciation of $56.0 at
  2002 and $33.9 at 2001)                      49.8       66.1
Other assets                                  145.8      149.7
Assets held in separate accounts           28,071.1   32,663.1
                                          ---------  ---------
        Total assets                      $50,410.7  $55,605.2
                                          =========  =========
  LIABILITIES AND SHAREHOLDER'S EQUITY
Policy liabilities and accruals:
  Future policy benefits and claims'
    reserves                              $ 3,305.2  $ 3,996.8
  Unpaid claims and claim expenses             30.0       28.8
  Other policyholder's funds               14,756.0   12,135.8
                                          ---------  ---------
        Total policy liabilities and
          accruals                         18,091.2   16,161.4
  Payables under securities loan
    agreement                                 164.3      488.8
  Current income taxes                         84.5       59.2
  Deferred income taxes                       163.1      153.7
  Other liabilities                         1,573.7    1,624.7
  Liabilities related to separate
    accounts                               28,071.1   32,663.1
                                          ---------  ---------
        Total liabilities                  48,147.9   51,150.9
                                          ---------  ---------
Shareholder's equity:
  Common stock (100,000 shares
    authorized; 55,000 shares issued and
    outstanding, $50.00 per share par
    value)                                      2.8        2.8
  Additional paid-in capital                4,416.5    4,292.4
  Accumulated other comprehensive income      108.3       46.6
  Retained earnings (deficit)              (2,264.8)     112.5
                                          ---------  ---------
        Total shareholder's equity          2,262.8    4,454.3
                                          ---------  ---------
          Total liabilities and
            shareholder's equity          $50,410.7  $55,605.2
                                          =========  =========
</Table>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                       22
<Page>
            ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
          (A wholly-owned subsidiary of ING Retirement Holdings, Inc.)

           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
                                   (Millions)

<Table>
<Caption>
                                                Accumulated
                                                   Other
                                   Additional  Comprehensive  Retained       Total
                           Common   Paid-in-      Income      Earnings   Shareholder's
                           Stock    Capital       (Loss)      (Deficit)     Equity
                           ------  ----------  -------------  ---------  -------------
<S>                        <C>     <C>         <C>            <C>        <C>
Balance at December 31,
  1999                      $2.8    $  431.9       $(44.8)    $  995.8     $ 1,385.7
Comprehensive income:
  Net income                  --          --           --        177.2         177.2
  Other comprehensive
    income net of tax:
      Unrealized gain on
        securities ($79.4
        pretax)               --          --         51.6           --          51.6
                                                                           ---------
Comprehensive income                                                           228.8
Adjustment for purchase
  accounting                  --     3,751.7           --     (1,173.0)      2,578.7
Capital contributions         --       129.5           --           --         129.5
Common stock dividends        --       (10.1)          --           --         (10.1)
Other changes                 --         0.8           --           --           0.8
                            ----    --------       ------     ---------    ---------
Balance at November 30,
  2000                       2.8     4,303.8          6.8           --       4,313.4
Comprehensive income:
  Net income                  --          --           --         12.6          12.6
  Other comprehensive
    income net of tax:
      Unrealized gain on
        securities ($28.7
        pretax)               --          --         18.6           --          18.6
                                                                           ---------
Comprehensive income                                                            31.2
                            ----    --------       ------     ---------    ---------
Balance at December 31,
  2000                       2.8     4,303.8         25.4         12.6       4,344.6
Comprehensive income:
  Net income                  --          --           --         99.9          99.9
  Other comprehensive
    income net of tax:
      Unrealized gain on
        securities ($32.5
        pretax)               --          --         21.2           --          21.2
                                                                           ---------
Comprehensive income                                                           121.1
Return of capital             --       (11.3)          --           --         (11.3)
Other changes                 --        (0.1)          --           --          (0.1)
                            ----    --------       ------     ---------    ---------
Balance at December 31,
  2001                       2.8     4,292.4         46.6        112.5       4,454.3
Comprehensive income:
  Net (loss)                  --          --           --     (2,344.6)     (2,344.6)
  Other comprehensive
    income net of tax:
      Unrealized gain on
        securities ($94.9
        pretax)               --          --         61.7           --          61.7
                                                                           ---------
Comprehensive (loss)                                                        (2,282.9)
Distribution of IA Holdco     --       (27.4)          --        (32.7)        (60.1)
Capital contributions         --       164.3           --           --         164.3
SERP -- transfer              --       (15.1)          --           --         (15.1)
Other changes                 --         2.3           --           --           2.3
                            ----    --------       ------     ---------    ---------
Balance at December 31,
  2002                      $2.8    $4,416.5       $108.3     $(2,264.8)   $ 2,262.8
                            ----    --------       ------     ---------    ---------
</Table>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                       23
<Page>
            ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
          (A wholly-owned subsidiary of ING Retirement Holdings, Inc.)

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Millions)

<Table>
<Caption>
                                                                                           Preacquisition
                                                                                           --------------
                                                                             One month     Eleven months
                                      Year ended           Year ended          ended           ended
                                     December 31,         December 31,     December 31,     November 30,
                                         2002                 2001             2000             2000
                                -----------------------  ---------------  ---------------  --------------
<S>                             <C>                      <C>              <C>              <C>
Cash Flows from Operating
  Activities:
Net income (loss)                     $ (2,344.6)          $     99.9         $  12.6        $    177.2
Adjustments to reconcile net
  income to net cash provided
  by operating activities:
  Net amortization or
    (accretion) of discount on
    investments                            115.5                 (1.2)           (2.7)            (32.6)
  Amortization of deferred
    gain on sale                              --                   --              --              (5.7)
  Net realized capital (gains)
    losses                                 101.0                 21.0            (1.8)             37.2
  (Increase) decrease in
    accrued investment income              (10.0)               (13.7)            6.6              (3.1)
  (Increase) decrease in
    premiums due and other
    receivables                            172.7                (95.6)           31.1             (23.7)
  (Increase) decrease in
    policy loans                              --                 10.3             0.1             (25.4)
  (Increase) decrease in
    deferred policy
    acquisition costs                     (108.5)              (121.3)          (12.2)           (136.6)
  (Increase) decrease in value
    of business acquired                   139.4                 13.9              --                --
  Amortization of goodwill                    --                 61.9              --                --
  Impairment of goodwill                 2,412.1                   --              --                --
  Increase (decrease) in
    universal life account
    balances                                  --                 17.6            (3.8)             23.8
  Change in other insurance
    reserve liabilities                    953.7               (136.3)           (5.3)             85.6
  Change in other assets and
    liabilities                             72.8                (68.0)          103.9             (75.2)
  Provision for deferred
    income taxes                            23.6                 89.5           (14.3)             23.1
                                      ----------           ----------         -------        ----------
Net cash provided by (used
  for) operating activities              1,527.7               (122.0)          114.2              44.6
                                      ----------           ----------         -------        ----------
Cash Flows from Investing
  Activities:
  Proceeds from the sale of:
    Fixed maturities available
      for sale                          24,980.4             14,216.7           233.0          10,083.2
    Equity securities                       57.2                  4.4             1.5             118.4
    Mortgages                                2.0                  5.2             0.1               2.1
  Investment maturities and
    collections of:
    Fixed maturities available
      for sale                           1,334.9              1,121.8            53.7             573.1
    Short-term investments              11,796.7              7,087.3             0.4              59.9
  Acquisition of investments:
    Fixed maturities available
      for sale                         (28,105.5)           (16,489.8)         (230.7)        (10,505.5)
    Equity securities                      (81.8)               (50.0)          (27.8)            (17.6)
    Short-term investments             (11,771.3)            (6,991.1)          (10.0)           (113.1)
    Mortgages                             (343.7)              (242.0)             --                --
  (Increase) decrease in
    policy loans                            32.7                   --              --                --
  (Increase) decrease in
    property and equipment                  (5.8)                 7.4             1.9               5.4
  Other, net                               (47.8)                (4.7)            0.3              (4.0)
                                      ----------           ----------         -------        ----------
Net cash provided by (used
  for) investing activities             (2,152.0)            (1,334.8)           22.4             201.9
                                      ----------           ----------         -------        ----------
Cash Flows from Financing
  Activities:
  Deposits and interest
    credited for investment
    contracts                            1,332.5              1,941.5           164.2           1,529.7
  Maturities and withdrawals
    from insurance contracts              (741.4)            (1,082.7)         (156.3)         (1,832.6)
Capital contribution from
  HOLDCO                                      --                   --              --              73.5
Return of capital                             --                (11.3)             --                --
Dividends paid to shareholder                 --                   --              --             (10.1)
Other, net                                  16.6               (105.0)          (73.6)             22.0
                                      ----------           ----------         -------        ----------
Net cash provided by (used
  for) financing activities                607.7                742.5           (65.7)           (217.5)
                                      ----------           ----------         -------        ----------
Net increase (decrease) in
  cash and cash equivalents                (16.6)              (714.3)           70.9              29.0
Effect of exchange rate
  changes on cash and cash
  equivalents                                 --                   --              --               2.0
Cash and cash equivalents,
  beginning of period                       82.0                796.3           725.4             694.4
                                      ----------           ----------         -------        ----------
Cash and cash equivalents, end
  of period                           $     65.4           $     82.0         $ 796.3        $    725.4
                                      ==========           ==========         =======        ==========
Supplemental cash flow
  information:
Income taxes (received) paid,
  net                                 $      6.7           $    (12.3)        $  20.3        $     39.9
                                      ==========           ==========         =======        ==========
</Table>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                       24
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  SIGNIFICANT ACCOUNTING POLICIES

    PRINCIPLES OF CONSOLIDATION

    The consolidated financial statements include ING Life Insurance and Annuity
    Company ("ILAIC" or the "Company") and its wholly-owned subsidiaries, ING
    Insurance Company of America ("IICA"), ING Financial Advisors, LLC ("IFA"),
    and through February 28, 2002, Aetna Investment Adviser Holding
    Company, Inc. ("IA Holdco"). The Company is a wholly-owned subsidiary of ING
    Retirement Holdings, Inc. ("HOLDCO"), which is a wholly-owned subsidiary of
    ING Retirement Services, Inc. ("IRSI"). IRSI is ultimately owned by ING
    Groep N.V. ("ING"), a financial services company based in the Netherlands.

    HOLDCO contributed IFA to the Company on June 30, 2000 and contributed IA
    Holdco to the Company on July 1, 1999. On February 28, 2002, ILIAC
    distributed 100% of the stock of IA Holdco to HOLDCO in the form of a $60.1
    million dividend distribution. The primary operating subsidiary of IA Holdco
    is Aeltus Investment Management, Inc. ("Aeltus"). Accordingly, fees earned
    by Aeltus were not included in Company results subsequent to the dividend
    date. As a result of this transaction, the Investment Management Services is
    no longer reflected as an operating segment of the Company.

    On December 13, 2000, ING America Insurance Holdings, Inc. ("ING AIH"), an
    indirect wholly-owned subsidiary of ING, acquired Aetna Inc., comprised of
    the Aetna Financial Services business, of which the Company is a part, and
    Aetna International businesses, for approximately $7,700.0 million. The
    purchase price was comprised of approximately $5,000.0 million in cash and
    the assumption of $2,700.0 million of outstanding debt and other net
    liabilities. In connection with the acquisition, Aetna Inc. was renamed Lion
    Connecticut Holdings Inc. ("Lion"). At the time of the sale, Lion entered
    into certain transition services agreements with a former related party,
    Aetna U.S. Healthcare, which was renamed Aetna Inc. ("former Aetna").

    For accounting purposes, the acquisition was recorded as of November 30,
    2000 using the purchase method. The effects of this transaction, including
    the recognition of goodwill, were pushed down and reflected on the financial
    statements of certain IRSI (a subsidiary of Lion) subsidiaries, including
    the Company. The Balance Sheet changes related to accounting for this
    purchase were entirely non-cash in nature and accordingly were excluded from
    the pre-acquisition Consolidated Statement of Cash Flows for the eleven
    months ended November 30, 2000.

    The purchase price was allocated to assets and liabilities based on their
    respective fair values. This revaluation resulted in a net increase to
    assets, excluding the effects of goodwill, of $592.0 million and a net
    increase to liabilities of $310.6 million. Additionally, the Company
    established goodwill of $2,297.4 million. Goodwill was amortized over a
    period of 40 years prior to January 1, 2002.

    The allocation of the purchase price to assets and liabilities was subjected
    to further refinement throughout 2001 as additional information became
    available to more precisely estimate the fair

                                       25
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1.  SIGNIFICANT ACCOUNTING POLICIES (continued)
    values of the Company's respective assets and liabilities at the purchase
    date. The refinements to the Company's purchase price allocations were as
    follows:

    The Company completed a full review relative to the assumptions and profit
    streams utilized in the development of value of business acquired ("VOBA")
    and determined that certain refinements were necessary. Such refinements
    resulted in a reduction of VOBA;

    The Company completed the review of the fixed assets that existed at or
    prior to the acquisition and determined that an additional write down was
    necessary;

    The Company completed the review of severance actions related to individuals
    who were employed before or at the acquisition date and determined that an
    additional severance accrual was necessary;

    The Company completed its valuation of certain benefit plan liabilities and,
    as a result, reduced those benefit plan liabilities;

    The Company adjusted its reserve for other policyholders' funds in order to
    conform its accounting policies with those of ING;

    The Company, after giving further consideration to certain exposures in the
    general market place, determined that a reduction of its investment
    portfolio carrying value was warranted;

    The Company determined that the establishment of a liability for certain
    noncancellable operating leases that existed prior to or at the acquisition
    date but were no longer providing a benefit to the Company's operations, was
    warranted; and

    The Company determined that the contractual lease payment of one of its
    operating leases was more than the current market rate, and established a
    corresponding unfavorable lease liability.

    The net impact of the refinements in purchase price allocations, as
    described above, resulted in a net decrease to assets, excluding the effects
    of goodwill, of $236.4 million, a net decrease to liabilities of $59.8
    million and a net increase to the Company's goodwill of $176.6 million.

    Unaudited proforma consolidated income from continuing operations and net
    income of the Company for the period from January 1, 2000 to November 30,
    2000, assuming that the acquisition of the Company occurred at the beginning
    of each period, would have been approximately $118.1 million. The pro forma
    adjustments, which did not affect revenues, reflect primarily goodwill
    amortization, amortization of the favorable lease asset and the elimination
    of amortization of the deferred gain on sale associated with the life
    business.

    In the fourth quarter of 2001, ING announced its decision to pursue a move
    to a fully integrated U.S. structure that would separate manufacturing from
    distribution in its retail and worksite operations to support a more
    customer-focused business strategy. As a result of the integration, the
    Company's Worksite Products and Individual Products operating segments were
    realigned into one reporting segment, U.S. Financial Services ("USFS").

                                       26
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1.  SIGNIFICANT ACCOUNTING POLICIES (continued)
    USFS offers qualified and nonqualified annuity contracts that include a
    variety of funding and payout options for individuals and employer sponsored
    retirement plans qualified under Internal Revenue Code Sections 401, 403 and
    457, as well as nonqualified deferred compensation plans.

    Annuity contracts may be deferred or immediate (payout annuities). These
    products also include programs offered to qualified plans and nonqualified
    deferred compensation plans that package administrative and record-keeping
    services along with a menu of investment options, including affiliated and
    nonaffiliated mutual funds and variable and fixed investment options. In
    addition, USFS offers wrapper agreements entered into with retirement plans
    which contain certain benefit responsive guarantees (i.e. liquidity
    guarantees of principal and previously accrued interest for benefits paid
    under the terms of the plan) with respect to portfolios of plan-owned assets
    not invested with the Company. USFS also offers investment advisory services
    and pension plan administrative services.

    Investment Management Services, through February 28, 2002, provided:
    investment advisory services to affiliated and unaffiliated institutional
    and retail clients on a fee-for-service basis; underwriting services to the
    ING Series Fund, Inc. (formerly known as the Aetna Series Fund, Inc.), and
    the ING Variable Portfolios, Inc. (formerly known as the Aetna Variable
    Portfolios, Inc.); distribution services for other company products; and
    trustee, administrative, and other fiduciary services to retirement plans
    requiring or otherwise utilizing a trustee or custodian.

    Discontinued Operations included universal life, variable universal life,
    traditional whole life and term insurance.

    DESCRIPTION OF BUSINESS

    The Company offers annuity contracts that include a variety of funding and
    payout options for employer-sponsored retirement plans qualified under
    Internal Revenue Code Sections 401, 403, 408 and 457, as well as
    nonqualified deferred. The Company's products are offered primarily to
    individuals, pension plans, small businesses and employer-sponsored groups
    in the health care, government, educations (collectively "not-for-profit"
    organizations) and corporate markets. The Company's products generally are
    sold through pension professionals, independent agents and brokers, third
    party administrators, banks, dedicated career agents and financial planners.

    NEW ACCOUNTING STANDARDS

    ACCOUNTING FOR GOODWILL AND INTANGIBLE ASSETS

    In June 2001, the Financial Accounting Standards Board ("FASB") issued FAS
    No. 142, "Goodwill and Other Intangible Assets," ("FAS No.142"), effective
    for fiscal years beginning after December 15, 2001. Under FAS No. 142,
    goodwill and intangible assets deemed to have indefinite lives will no
    longer be amortized but will be subject to annual impairment tests. Other
    intangible assets are still amortized over their estimated useful lives. The
    Company adopted the new standard effective January 1, 2002.

                                       27
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1.  SIGNIFICANT ACCOUNTING POLICIES (continued)
    As required under FAS No. 142, the Company completed the first of the
    required impairment tests as of January 1, 2002. Step one of the impairment
    test was a screen for potential impairment, while step two measured the
    amount of the impairment. All of the Company's operations fall under one
    reporting unit, USFS, due to the consolidated nature of the Company's
    operations. Step one of the impairment test required the Company to estimate
    the fair value of the reporting unit and compare the estimated fair value to
    its carrying value. The Company determined the estimated fair value
    utilizing a discounted cash flow approach and applying a discount rate
    equivalent to the Company's weighted average cost of capital. Fair value was
    determined to be less than carrying value which required the Company to
    complete step two of the test. In step two, the Company allocated the fair
    value of the reporting unit determined in step one to the assets and
    liabilities of the reporting unit resulting in an implied fair value of
    goodwill of zero.

    The comparison of the fair value amount allocated to goodwill and the
    carrying value of goodwill resulted in an impairment loss of $2,412.1
    million, which represents the entire carrying amount of goodwill, net of
    accumulated amortization. This impairment charge is shown as a change in
    accounting principle on the Consolidated Income Statement.

    Application of the nonamortization provision (net of tax) of the new
    standard resulted in an increase in net income of $61.9 million for the
    twelve months ended December 31, 2002. Had the Company been accounting for
    goodwill under FAS No. 142 for all periods presented, the Company's net
    income would have been as follows:

<Table>
<Caption>
                                                                          Preacquisition
                                                                          --------------
                                                            One month     Eleven months
                                          Year ended          ended           ended
                                         December 31,     December 31,     November 30,
   (Millions)                                2001             2000             2000
   <S>                                  <C>              <C>              <C>
   Reported net income after tax            $ 99.9            $12.6           $177.2
   Add back goodwill amortization, net
     of tax                                   61.9               --               --
   -------------------------------------------------------------------------------------
   Adjusted net income after tax            $161.8            $12.6           $177.2
   =====================================================================================
</Table>

    ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

    In June 1998, the FASB issued FAS No. 133, Accounting for Derivative
    Instruments and Hedging Activities, as amended and interpreted by FAS No.
    137, Accounting for Derivative Instruments and Hedging Activities --
    Deferral of the Effective Date of FASB Statement 133, FAS No.138, Accounting
    for Certain Derivative Instruments and Certain Hedging Activities -- an
    Amendment of FAS No. 133, and certain FAS No. 133 implementation issues.
    This standard, as amended, requires companies to record all derivatives on
    the balance sheet as either assets or liabilities and measure those
    instruments at fair value. The manner in which companies are to record gains
    or losses resulting from changes in the fair values of those derivatives
    depends on the use of the derivative and whether it qualifies for hedge
    accounting. FAS No. 133 was effective for the Company's financial statements
    beginning January 1, 2001.

                                       28
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1.  SIGNIFICANT ACCOUNTING POLICIES (continued)
    Adoption of FAS No.133 did not have a material effect on the Company's
    financial position or results of operations given the Company's limited
    derivative and embedded derivative holdings.

    The Company utilizes, interest rate swaps, caps and floors, foreign exchange
    swaps and warrants in order to manage interest rate and price risk
    (collectively, market risk). These financial exposures are monitored and
    managed by the Company as an integral part of the overall risk management
    program. Derivatives are recognized on the balance sheet at their fair
    value. The Company chose not to designate its derivative instruments as part
    of hedge transactions.

    Therefore, changes in the fair value of the Company's derivative instruments
    are recorded immediately in the consolidated statements of income as part of
    realized capital gains and losses.

    Warrants are carried at fair value and are recorded as either derivative
    instruments or FAS No. 115 available for sale securities. Warrants that are
    considered derivatives are carried at fair value if they are readily
    convertible to cash. The values of these warrants can fluctuate given that
    the companies that underlie the warrants are non-public companies. At
    December 31, 2002 and 2001, the estimated value of these warrants, including
    the value of their effectiveness, in managing market risk, was immaterial.
    These warrants will be revalued each quarter and the change in the value of
    the warrants will be included in the consolidated statements of income.

    The Company, at times, may own warrants on common stock which are not
    readily convertible to cash as they contain certain conditions which
    preclude their convertibility and therefore, will not be included in assets
    or liabilities as derivatives. If conditions are satisfied and the
    underlying stocks become marketable, the warrants would be reclassified as
    derivatives and recorded at fair value as an adjustment through current
    period results of operations.

    The Company occasionally purchases a financial instrument that contains a
    derivative that is "embedded" in the instrument. In addition, the Company's
    insurance products are reviewed to determine whether they contain an
    embedded derivative. The Company assesses whether the economic
    characteristics of the embedded derivative are clearly and closely related
    to the economic characteristics of the remaining component of the financial
    instrument or insurance product (i.e., the host contract) and whether a
    separate instrument with the same terms as the embedded instrument would
    meet the definition of a derivative instrument. When it is determined that
    the embedded derivative possesses economic characteristics that are not
    clearly and closely related to the economic characteristics of the host
    contract and that a separate instrument with the same terms would qualify as
    a derivative instrument, the embedded derivative is separated from the host
    contract and carried at fair value. However, in cases where the host
    contract is measured at fair value, with changes in fair value reported in
    current period earnings or the Company is unable to reliably identify and
    measure the embedded derivative for separation from its host contracts, the
    entire contract is carried on the balance sheet at fair value and is not
    designated as a hedging instrument.

                                       29
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1.  SIGNIFICANT ACCOUNTING POLICIES (continued)
    GUARANTEES

    In November 2002, the FASB issued Interpretation No. 45 ("FIN 45"),
    "Guarantor's Accounting and Disclosure Requirements for Guarantees,
    Including Indirect Guarantees of Indebtedness of Others," to clarify
    accounting and disclosure requirements relating to a guarantor's issuance of
    certain types of guarantees. FIN 45 requires entities to disclose additional
    information of certain guarantees, or groups of similar guarantees, even if
    the likelihood of the guarantor's having to make any payments under the
    guarantee is remote. The disclosure provisions are effective for financial
    statements for fiscal years ended after December 15, 2002. For certain
    guarantees, the interpretation also requires that guarantors recognize a
    liability equal to the fair value of the guarantee upon its issuance. This
    initial recognition and measurement provision is to be applied only on a
    prospective basis to guarantees issued or modified after December 31, 2002.
    The Company has performed an assessment of its guarantees and believes that
    all of its guarantees are excluded from the scope of this interpretation.

    FUTURE ACCOUNTING STANDARDS

    EMBEDDED DERIVATIVES

    The FASB issued Statement of Financial Accounting Standards No. 133,
    "Accounting for Derivative Instruments and Hedging Activities" ("FAS
    No.133") in 1998 and continues to issue guidance for implementation through
    its Derivative Implementation Group ("DIG"). DIG recently released a draft
    of FASB Statement 133 Implementation Issue B36, "Embedded Derivatives:
    Bifurcation of a Debt Instrument That Incorporates Both Interest Rate Risk
    and Credit Risk Exposures That are Unrelated or Only Partially Related to
    the Creditworthiness of the Issuer of That Instrument" ("DIG B36"). Under
    this interpretation, modified coinsurance and coinsurance with funds
    withheld reinsurance agreements as well as other types of receivables and
    payables where interest is determined by reference to a pool of fixed
    maturity assets or total return debt index may be determined to contain
    bifurcatable embedded derivatives. The required date of adoption of DIG B36
    has not been determined. If the guidance is finalized in its current form,
    the Company has determined that certain of its existing reinsurance
    receivables (payables), investments or insurance products contain embedded
    derivatives that may require bifurcation. The Company has not yet completed
    its evaluation of the potential impact, if any, on its consolidated
    financial positions, results of operations, or cash flows.

    FASB INTERPRETATION NO. 46 CONSOLIDATION OF VARIABLE INTEREST ENTITIES

    In January 2003, FASB issued Interpretation No. 46 ("FIN 46"),
    "Consolidation of Variable Interest Entities" ("VIE"), an interpretation of
    Accounting Research Bulletin ("ARB") No. 51. This Interpretation addresses
    consolidation by business enterprises of variable interest entities, which
    have one or both of the following characteristics: a) insufficient equity
    investment at risk, or b) insufficient control by equity investors. This
    guidance is effective for VIEs created after January 31, 2003 and for
    existing VIEs as of July 1, 2003. An entity with variable interest in VIEs
    created before February 1, 2003 shall apply the guidance no later than the
    beginning of the first interim or annual reporting period beginning after
    June 15, 2003.

                                       30
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1.  SIGNIFICANT ACCOUNTING POLICIES (continued)
    In conjunction with the issuance of this guidance, the Company conducted a
    review of its involvement with the VIEs and does not believe it has any
    significant investments or ownership in VIEs.

    USE OF ESTIMATES

    The preparation of financial statements in conformity with accounting
    principles generally accepted in the United States of America requires
    management to make estimates and assumptions that affect the amounts
    reported in the financial statements and accompanying notes. Actual results
    could differ from reported results using those estimates.

    RECLASSIFICATIONS

    Certain reclassifications have been made to prior year financial information
    to conform to the current year classifications.

    CASH AND CASH EQUIVALENTS

    Cash and cash equivalents include cash on hand, money market instruments and
    other debt issues with a maturity of 90 days or less when purchased.

    INVESTMENTS

    All of the Company's fixed maturity and equity securities are currently
    designated as available-for-sale. Available-for-sale securities are reported
    at fair value and unrealized gains and losses on these securities are
    included directly in shareholder's equity, after adjustment for related
    charges in deferred policy acquisition costs, value of business acquired,
    and deferred income taxes.

    The Company analyzes the general account investments to determine whether
    there has been an other than temporary decline in fair value below the
    amortized cost basis in accordance with FAS No. 115, "Accounting for Certain
    Investments in Debt and Equity Securities." Management considers the length
    of time and the extent to which the fair value has been less than amortized
    cost; the financial condition and near-term prospects of the issuer; future
    economic conditions and market forecasts; and the Company's intent and
    ability to retain the investment in the issuer for a period of time
    sufficient to allow for recovery in fair value. If it is probable that all
    amounts due according to the contractual terms of a debt security will not
    be collected, an other than temporary impairment is considered to have
    occurred.

    In addition, the Company invests in structured securities that meet the
    criteria of Emerging Issues Task Force ("EITF") Issue No. 99-20 "Recognition
    of Interest Income and Impairment on Purchased and Retained Beneficial
    Interests in Securitized Financial Assets." Under Issue No. EITF 99-20, a
    determination of the required impairment is based on credit risk and the
    possibility of significant prepayment risk that restricts the Company's
    ability to recover the investment. An impairment is recognized if the fair
    value of the security is less than amortized cost and there has been an
    adverse change in cash flow since the last remeasurement date.

                                       31
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1.  SIGNIFICANT ACCOUNTING POLICIES (continued)
    When a decline in fair value is determined to be other than temporary, the
    individual security is written down to fair value and the loss is accounted
    for as a realized loss.

    Included in available-for-sale securities are investments that support
    experience-rated products. Experience-rated products are products where the
    customer, not the Company, assumes investment (including realized capital
    gains and losses) and other risks, subject to, among other things, minimum
    guarantees. Realized gains and losses on the sale of, as well as unrealized
    capital gains and losses on, investments supporting these products are
    reflected in other policyholders' funds. Realized capital gains and losses
    on all other investments are reflected on all other investments are
    reflected in the Company's results of operations.

    Unrealized capital gains and losses on all other investments are reflected
    in shareholder's equity, net of related income taxes.

    Purchases and sales of fixed maturities and equity securities (excluding
    private placements) are recorded on the trade date. Purchases and sales of
    private placements and mortgage loans are recorded on the closing date.

    Fair values for fixed maturity securities are obtained from independent
    pricing services or broker/ dealer quotations. Fair values for privately
    placed bonds are determined using a matrix-based model. The matrix-based
    model considers the level of risk-free interest rates, current corporate
    spreads, the credit quality of the issuer and cash flow characteristics of
    the security. The fair values for equity securities are based on quoted
    market prices. For equity securities not actively traded, estimated fair
    values are based upon values of issues of comparable yield and quality or
    conversion value where applicable.

    The Company engages in securities lending whereby certain securities from
    its portfolio are loaned to other institutions for short periods of time.
    Initial collateral, primarily cash, is required at a rate of 102% of the
    market value of the loaned domestic securities. The collateral is deposited
    by the borrower with a lending agent, and retained and invested by the
    lending agent according to the Company's guidelines to generate additional
    income. The market value of the loaned securities is monitored on a daily
    basis with additional collateral obtained or refunded as the market value of
    the loaned securities fluctuates.

    In September 2000, the FASB issued FAS No. 140, "Accounting for Transfers
    and Servicing of Financial Assets and Extinguishments of Liabilities." In
    accordance with this new standard,

                                       32
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1.  SIGNIFICANT ACCOUNTING POLICIES (continued)
    general account securities on loan are reflected on the Consolidated Balance
    Sheet as "Securities pledged to creditors", which includes the following:

<Table>
<Caption>
                                                Gross       Gross
   December 31, 2002               Amortized  Unrealized  Unrealized    Fair
   (Millions)                        Cost       Gains       Losses     Value
   <S>                             <C>        <C>         <C>         <C>
   Total securities pledged to
     creditors                      $154.9       $0.1        $ --      $155.0
   ===========================================================================
</Table>

<Table>
<Caption>
                                                Gross       Gross
   December 31, 2001               Amortized  Unrealized  Unrealized    Fair
   (Millions)                        Cost       Gains       Losses     Value
   <S>                             <C>        <C>         <C>         <C>
   Total securities pledged to
     creditors                      $466.9       $1.1        $0.8      $467.2
   ===========================================================================
</Table>

    Total securities pledged to creditors at December 31, 2002 and 2001
    consisted entirely of fixed maturity securities.

    The investment in affiliated mutual funds represents an investment in mutual
    funds managed by the Company and its affiliates, and is carried at fair
    value.

    Mortgage loans on real estate are reported at amortized cost less impairment
    writedowns. If the value of any mortgage loan is determined to be impaired
    (i.e., when it is probable the Company will be unable to collect all amounts
    due according to the contractual terms of the loan agreement), the carrying
    value of the mortgage loan is reduced to the present value of expected cash
    flows from the loan, discounted at the loan's effective interest rate, or to
    the loan's observable market price, or the fair value of the underlying
    collateral. The carrying value of the impaired loans is reduced by
    establishing a permanent writedown charged to realized loss.

    Policy loans are carried at unpaid principal balances, net of impairment
    reserves.

    Short-term investments, consisting primarily of money market instruments and
    other fixed maturity securities issues purchased with an original maturity
    of 91 days to one year, are considered available for sale and are carried at
    fair value, which approximates amortized cost.

    Reverse dollar repurchase agreement and reverse repurchase agreement
    transactions are accounted for as collateralized borrowings, where the
    amount borrowed is equal to the sales price of the underlying securities.
    These transactions are reported in "Other Liabilities."

    The Company's use of derivatives is limited to economic hedging purposes.
    The Company enters into interest rate and currency contracts, including
    swaps, caps, and floors to reduce and manage risks associated with changes
    in value, yield, price, cash flow or exchange rates of assets or liabilities
    held or intended to be held. Changes in the fair value of open derivative
    contracts are recorded in net realized capital gains and losses.

                                       33
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1.  SIGNIFICANT ACCOUNTING POLICIES (continued)
    On occasion, the Company sells call options written on underlying securities
    that are carried at fair value. Changes in the fair value of these options
    are recorded in net realized capital gains or losses.

    DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED

    Deferred Policy Acquisition Costs ("DAC") is an asset, which represents
    certain costs of acquiring certain insurance business, which are deferred
    and amortized. These costs, all of which vary with and are primarily related
    to the production of new and renewal business, consist principally of
    commissions, certain underwriting and contract issuance expenses, and
    certain agency expenses. VOBA is an asset, which represents the present
    value of estimated net cash flows embedded in the Company's contracts, which
    existed at the time the Company was acquired by ING. DAC and VOBA are
    evaluated for recoverability at each balance sheet date and these assets
    would be reduced to the extent that gross profits are inadequate to recover
    the asset.

    The amortization methodology varies by product type based upon two
    accounting standards: FAS No. 60, "Accounting and Reporting by Insurance
    Enterprises" ("FAS No. 60") and FAS No. 97, "Accounting and Reporting by
    Insurance Enterprises for Certain Long-Duration Contracts and Realized Gains
    and Losses from the Sale of Investments" ("FAS No. 97").

    Under FAS No. 60, acquisition costs for traditional life insurance products,
    which primarily include whole life and term life insurance contracts, are
    amortized over the premium payment period in proportion to the premium
    revenue recognition.

    Under FAS No. 97, acquisition costs for universal life and investment-type
    products, which include universal life policies and fixed and variable
    deferred annuities, are amortized over the life of the blocks of policies
    (usually 25 years) in relation to the emergence of estimated gross profits
    from surrender charges, investment margins, mortality and expense margins,
    asset-based fee income, and actual realized gains (losses) on investments.
    Amortization is adjusted retrospectively when estimates of current or future
    gross profits to be realized from a group of products are revised.

    DAC and VOBA are written off to the extent that it is determined that future
    policy premiums and investment income or gross profits are not adequate to
    cover related expenses.

    Activity for the year-ended December 31, 2002 within VOBA was as follows:

<Table>
<Caption>
   (Millions)
   <S>                                                 <C>
   Balance at December 31, 2001                        $1,601.8
   Adjustment for unrealized gain (loss)                 (21.9)
   Additions                                              25.0
   Interest accrued at 7%                                 86.8
   Amortization                                         (253.3)
   ------------------------------------------------------------
   Balance at December 31, 2002                        $1,438.4
   ============================================================
</Table>

                                       34
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1.  SIGNIFICANT ACCOUNTING POLICIES (continued)
    The estimated amount of VOBA to be amortized, net of interest, over the next
    five years is $105.6 million, $102.1 million, $101.9 million, $91.5 million
    and $88.3 million for the years 2003, 2004, 2005, 2006 and 2007,
    respectively. Actual amortization incurred during these years may vary as
    assumptions are modified to incorporate actual results.

    As part of the regular analysis of DAC/VOBA, at the end of third quarter
    2002, the Company unlocked its assumptions by resetting its near-term and
    long-term assumptions for the separate account returns to 9% (gross before
    fund management fees and mortality and expense and other policy charges),
    reflecting a blended return of equity and other sub-accounts. This unlocking
    adjustment was primarily driven by the sustained downturn in the equity
    markets and revised expectations for future returns. In 2002, the Company
    recorded an acceleration of DAC/VOBA amortization totaling $45.6 million
    before tax, or $29.7 million, net $15.9 million of federal income tax
    benefit.

    POLICY LIABILITIES AND ACCRUALS

    Future policy benefits and claims reserves include reserves for universal
    life, immediate annuities with life contingent payouts and traditional life
    insurance contracts. Reserves for universal life products are equal to
    cumulative deposits less withdrawals and charges plus credited interest
    thereon. Reserves for traditional life insurance contracts represent the
    present value of future benefits to be paid to or on behalf of policyholders
    and related expenses less the present value of future net premiums.

    Reserves for immediate annuities with life contingent payout contracts are
    computed on the basis of assumed investment yield, mortality, and expenses,
    including a margin for adverse deviations. Such assumptions generally vary
    by plan, year of issue and policy duration. Reserve interest rates range
    from 2.0% to 9.5% for all years presented. Investment yield is based on the
    Company's experience.

    Mortality and withdrawal rate assumptions are based on relevant Company
    experience and are periodically reviewed against both industry standards and
    experience.

    Because the sale of the domestic individual life insurance business was
    substantially in the form of an indemnity reinsurance agreement, the Company
    reported an addition to its reinsurance recoverable approximating the
    Company's total individual life reserves at the sale date.

    Other policyholders' funds include reserves for deferred annuity investment
    contracts and immediate annuities without life contingent payouts. Reserves
    on such contracts are equal to cumulative deposits less charges and
    withdrawals plus credited interest thereon (rates range from 2.0% to 12.3%
    for all years presented) net of adjustments for investment experience that
    the Company is entitled to reflect in future credited interest. These
    reserves also include unrealized gains/losses related to FAS No.115 for
    experience-rated contracts. Reserves on contracts subject to experience
    rating reflect the rights of contractholders, plan participants and the
    Company.

                                       35
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1.  SIGNIFICANT ACCOUNTING POLICIES (continued)
    Unpaid claims and claim expenses for all lines of insurance include benefits
    for reported losses and estimates of benefits for losses incurred but not
    reported.

    REVENUE RECOGNITION

    For certain annuity contracts, fee income for the cost of insurance,
    expenses, and other fees are recorded as revenue in and are included in the
    fee income line on the Income Statements assessed against policyholders.
    Other amounts received for these contracts are reflected as deposits and are
    not recorded as revenue but are included in the other policyholders' funds
    line on the Balance Sheets. Related policy benefits are recorded in relation
    to the associated premiums or gross profit so that profits are recognized
    over the expected lives of the contracts. When annuity payments with life
    contingencies begin under contracts that were initially investment
    contracts, the accumulated balance in the account is treated as a single
    premium for the purchase of an annuity and reflected as an offsetting amount
    in both premiums and current and future benefits in the Consolidated Income
    Statements.

    SEPARATE ACCOUNTS

    Separate Account assets and liabilities generally represent funds maintained
    to meet specific investment objectives of contractholders who bear the
    investment risk, subject, in some cases, to minimum guaranteed rates.
    Investment income and investment gains and losses generally accrue directly
    to such contractholders. The assets of each account are legally segregated
    and are not subject to claims that arise out of any other business of the
    Company.

    Separate Account assets supporting variable options under universal life and
    annuity contracts are invested, as designated by the contractholder or
    participant under a contract (who bears the investment risk subject, in
    limited cases, to minimum guaranteed rates) in shares of mutual funds which
    are managed by the Company, or other selected mutual funds not managed by
    the Company.

    Separate Account assets are carried at fair value. At December 31, 2002 and
    2001, unrealized gains of $29.7 million and of $10.8 million, respectively,
    after taxes, on assets supporting a guaranteed interest option are reflected
    in shareholder's equity.

    Separate Account liabilities are carried at fair value, except for those
    relating to the guaranteed interest option. Reserves relating to the
    guaranteed interest option are maintained at fund value and reflect interest
    credited at rates ranging from 3.0% to 10.0% in 2002 and 3.0% to 14.0% in
    2001.

    Separate Account assets and liabilities are shown as separate captions in
    the Consolidated Balance Sheets. Deposits, investment income and net
    realized and unrealized capital gains and losses of the Separate Accounts
    are not reflected in the Consolidated Financial Statements (with the
    exception of realized and unrealized capital gains and losses on the assets
    supporting the

                                       36
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1.  SIGNIFICANT ACCOUNTING POLICIES (continued)
    guaranteed interest option). The Consolidated Statements of Cash Flows do
    not reflect investment activity of the Separate Accounts.

    REINSURANCE

    The Company utilizes indemnity reinsurance agreements to reduce its exposure
    to large losses in all aspects of its insurance business. Such reinsurance
    permits recovery of a portion of losses from reinsurers, although it does
    not discharge the primary liability of the Company as direct insurer of the
    risks reinsured. The Company evaluates the financial strength of potential
    reinsurers and continually monitors the financial condition of reinsurers.
    Only those reinsurance recoverable balances deemed probable of recovery are
    reflected as assets on the Company's Balance Sheets. Of the reinsurance
    recoverable on the Balance Sheets, $3.0 billion at both December 31, 2002
    and 2001 is related to the reinsurance recoverable from Lincoln arising from
    the sale of the Company's domestic life insurance business.

    INCOME TAXES

    The Company files a consolidated federal income tax return with its
    subsidiary IICA. The Company is taxed at regular corporate rates after
    adjusting income reported for financial statement purposes for certain
    items. Deferred income tax expenses/benefits result from changes during the
    year in cumulative temporary differences between the tax basis and book
    basis of assets and liabilities.

                                       37
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2.  INVESTMENTS

    Fixed maturities available for sale as of December 31 were as follows:

<Table>
<Caption>
                                                Gross       Gross
                                   Amortized  Unrealized  Unrealized     Fair
   2002 (Millions)                   Cost       Gains       Losses       Value
   <S>                             <C>        <C>         <C>         <C>
   U.S. government and government
     agencies and authorities      $   74.2     $  2.9      $  --      $    77.1

   States, municipalities and
     political subdivisions            10.2        2.5         --           12.7

   U.S. corporate securities:
       Public utilities               627.6       28.1        6.4          649.3
       Other corporate securities   7,742.6      543.5       33.1        8,253.0
   ------------------------------------------------------------------------------
     Total U.S. corporate
       securities                   8,370.2      571.6       39.5        8,902.3
   ------------------------------------------------------------------------------

   Foreign securities:
       Government                     336.9       18.2        6.6          348.5
       Other                          148.0        8.4        1.2          155.2
   ------------------------------------------------------------------------------
     Total foreign securities         484.9       26.6        7.8          503.7
   ------------------------------------------------------------------------------
   Mortgage-backed securities       5,374.2      167.1       34.0        5,507.3
   Other asset-backed securities      882.4       47.0       10.5          918.9
   ------------------------------------------------------------------------------
   Total fixed maturities,
     including fixed maturities
     pledged to creditors          15,196.1      817.7       91.8       15,922.0
   Less: Fixed maturities pledged
     to creditors                     154.9        0.1         --          155.0
   ------------------------------------------------------------------------------

   Fixed maturities                $15,041.2    $817.6      $91.8      $15,767.0
   ==============================================================================
</Table>

                                       38
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2.  INVESTMENTS (continued)

<Table>
<Caption>
                                                Gross       Gross
                                   Amortized  Unrealized  Unrealized     Fair
   2001 (Millions)                   Cost       Gains       Losses       Value
   <S>                             <C>        <C>         <C>         <C>
   U.S. government and government
     agencies and authorities      $  391.0     $ 11.0      $ 4.2      $   397.8

   States, municipalities and
     political subdivisions           173.7        7.7         --          181.4

   U.S. corporate securities:
     Public utilities                 268.5        6.5        7.9          267.1
     Other corporate securities     6,138.8      203.0       62.6        6,279.2
   ------------------------------------------------------------------------------
   Total U.S. corporate
     securities                     6,407.3      209.5       70.5        6,546.3
   ------------------------------------------------------------------------------

   Foreign securities:
     Government                       153.2        5.2        0.9          157.5
   ------------------------------------------------------------------------------
     Total foreign securities         153.2        5.2        0.9          157.5
   ------------------------------------------------------------------------------
     Mortgage-backed securities     4,513.3       90.1       15.9        4,587.5
     Other asset-backed
       securities                   2,077.6       67.1        8.1        2,136.6
   ------------------------------------------------------------------------------
   Total fixed maturities,
     including fixed maturities
     pledged to creditors          13,716.1      390.6       99.6       14,007.1
   Less: Fixed maturities pledged
     to creditors                     466.9        1.1        0.8          467.2
   ------------------------------------------------------------------------------
   Fixed maturities                $13,249.2    $389.5      $98.8      $13,539.9
   ==============================================================================
</Table>

    At December 31, 2002 and 2001, net unrealized appreciation of
    $725.9 million and $291.0 million, respectively, on available-for-sale fixed
    maturities including fixed maturities pledged to creditors included
    $563.1 million and $233.0 million, respectively, related to experience-rated
    contracts, which were not reflected in shareholder's equity but in other
    policyholders' funds.

                                       39
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2.  INVESTMENTS (continued)
    The amortized cost and fair value of total fixed maturities for the
    year-ended December 31, 2002 are shown below by contractual maturity. Actual
    maturities may differ from contractual maturities because securities may be
    restructured, called, or prepaid.

<Table>
<Caption>
                                             Amortized    Fair
   (Millions)                                  Cost       Value
   <S>                                       <C>        <C>
   Due to mature:
     One year or less                        $     --   $      --
     After one year through five years        1,826.6     1,907.8
     After five years through ten years       3,455.2     3,673.3
     After ten years                          3,657.7     3,914.7
     Mortgage-backed securities               5,374.2     5,507.3
     Other asset-backed securities              882.4       918.9
   Less: Fixed maturities securities
     pledged to creditor                        154.9       155.0
   --------------------------------------------------------------
   Fixed maturities                          $15,041.2  $15,767.0
   ==============================================================
</Table>

    At December 31, 2002 and 2001, fixed maturities with carrying values of
    $10.5 million and $9.0 million, respectively, were on deposit as required by
    regulatory authorities.

    The Company did not have any investments in a single issuer, other than
    obligations of the U.S. government, with a carrying value in excess of 10%
    of the Company's shareholder's equity at December 31, 2002 or 2001.

    The Company has various categories of CMOs that are subject to different
    degrees of risk from changes in interest rates and, for CMOs that are not
    agency-backed, defaults. The principal risks inherent in holding CMOs are
    prepayment and extension risks related to dramatic decreases and increases
    in interest rates resulting in the repayment of principal from the
    underlying mortgages either earlier or later than originally anticipated. At
    December 31, 2002 and 2001, approximately 5.5% and 3.0%, respectively, of
    the Company's CMO holdings were invested in types of CMOs which are subject
    to more prepayment and extension risk than traditional CMOs (such as
    interest-only or principal-only strips).

    Investments in equity securities as of December 31 were as follows:

<Table>
<Caption>
   (Millions)                                 2002   2001
   <S>                                       <C>     <C>
   Amortized Cost                            $238.3  $52.2
   Gross unrealized gains                        --    4.5
   Gross unrealized losses                      2.9    6.4
   -------------------------------------------------------
   Fair Value                                $235.4  $50.3
   =======================================================
</Table>

    Beginning in April 2001, the Company entered into reverse dollar repurchase
    agreement and reverse repurchase agreement transactions to increase its
    return on investments and improve liquidity. These transactions involve a
    sale of securities and an agreement to repurchase

                                       40
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2.  INVESTMENTS (continued)
    substantially the same securities as those sold. The dollar rolls and
    reverse repurchase agreements are accounted for as short-term collateralized
    financings and the repurchase obligation is reported as borrowed money in
    "Other Liabilities" on the Consolidated Balance Sheets. The repurchase
    obligation totaled $1.3 billion at December 31, 2002. The primary risk
    associated with short-term collateralized borrowings is that the
    counterparty will be unable to perform under the terms of the contract. The
    Company's exposure is limited to the excess of the net replacement cost of
    the securities over the value of the short-term investments, an amount that
    was not material at December 31, 2002. The Company believes the
    counterparties to the dollar roll and reverse repurchase agreements are
    financially responsible and that the counterparty risk is immaterial.

    IMPAIRMENTS

    During 2002, the Company determined that fifty-six fixed maturity securities
    had other than temporary impairments. As a result, at December 31, 2002, the
    Company recognized a pre-tax loss of $106.4 million to reduce the carrying
    value of the fixed maturity securities to their combined fair value of
    $124.7 million. During 2001, the Company determined that fourteen fixed
    maturity securities had other than temporary impairments. As a result, at
    December 31, 2001, the Company recognized a pre-tax loss of $51.8 million to
    reduce the carrying value of the fixed maturities to their value of
    $10.5 million.

3.  FINANCIAL INSTRUMENTS

    ESTIMATED FAIR VALUE

    The following disclosures are made in accordance with the requirements of
    FAS No. 107, "Disclosures about Fair Value of Financial Instruments." FAS
    No. 107 requires disclosure of fair value information about financial
    instruments, whether or not recognized in the balance sheet, for which it is
    practicable to estimate that value. In cases where quoted market prices are
    not available, fair values are based on estimates using present value or
    other valuation techniques. Those techniques are significantly affected by
    the assumptions used, including the discount rate and estimates of future
    cash flows. In that regard, the derived fair value estimates, in many cases,
    could not be realized in immediate settlement of the instrument.

    FAS No. 107 excludes certain financial instruments and all nonfinancial
    instruments from its disclosure requirements. Accordingly, the aggregate
    fair value amounts presented do not represent the underlying value of the
    Company.

    The following valuation methods and assumptions were used by the Company in
    estimating the fair value of the above financial instruments:

    FIXED MATURITIES: The fair values for the actively traded marketable bonds
    are determined based upon the quoted market prices. The fair values for
    marketable bonds without an active market are obtained through several
    commercial pricing services which provide the estimated fair values. Fair
    values of privately placed bonds are determined using a matrix-based pricing
    model. The model considers the current level of risk-free interest rates,
    current corporate spreads, the credit

                                       41
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

3.  FINANCIAL INSTRUMENTS (continued)
    quality of the issuer and cash flow characteristics of the security. Using
    this data, the model generates estimated market values which the Company
    considers reflective of the fair value of each privately placed bond. Fair
    values for privately placed bonds are determined through consideration of
    factors such as the net worth of the borrower, the value of collateral, the
    capital structure of the borrower, the presence of guarantees and the
    Company's evaluation of the borrower's ability to compete in their relevant
    market.

    EQUITY SECURITIES: Fair values of these securities are based upon quoted
    market value.

    MORTGAGE LOANS ON REAL ESTATE: The fair values for mortgage loans on real
    estate are estimated using discounted cash flow analyses and rates currently
    being offered in the marketplace for similar loans to borrowers with similar
    credit ratings. Loans with similar characteristics are aggregated for
    purposes of the calculations.

    CASH, SHORT-TERM INVESTMENTS AND POLICY LOANS: The carrying amounts for
    these assets approximate the assets' fair values.

    OTHER FINANCIAL INSTRUMENTS REPORTED AS ASSETS: The carrying amounts for
    these financial instruments (primarily premiums and other accounts
    receivable and accrued investment income) approximate those assets' fair
    values.

    INVESTMENT CONTRACT LIABILITIES (INCLUDED IN OTHER POLICYHOLDERS' FUNDS):

    WITH A FIXED MATURITY: Fair value is estimated by discounting cash flows at
    interest rates currently being offered by, or available to, the Company for
    similar contracts.

    WITHOUT A FIXED MATURITY: Fair value is estimated as the amount payable to
    the contractholder upon demand. However, the Company has the right under
    such contracts to delay payment of withdrawals which may ultimately result
    in paying an amount different than that determined to be payable on demand.

                                       42
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

3.  FINANCIAL INSTRUMENTS (continued)
    The carrying values and estimated fair values of certain of the Company's
    financial instruments at December 31, 2002 and 2001 were as follows:

<Table>
<Caption>
                                            2002                    2001
                                   ----------------------  ----------------------
                                    Carrying      Fair      Carrying      Fair
   (Millions)                        Value       Value       Value       Value
   <S>                             <C>         <C>         <C>         <C>
   Assets:
     Fixed maturity securities     $ 15,767.0  $ 15,767.0  $ 13,539.9  $ 13,539.9
     Equity securities                  235.4       235.4        50.3        50.3
     Mortgage loans                     576.6       632.6       241.3       247.7
     Policy loans                       296.3       296.3       329.0       329.0
     Short term investments               6.2         6.2        31.7        31.7
     Cash and cash equivalents           65.4        65.4        82.0        82.0
   Liabilities:
     Investment contract
       liabilities:
     With a fixed maturity           (1,129.8)   (1,121.4)   (1,021.7)     (846.5)
     Without a fixed maturity       (10,783.6)  (10,733.8)  (11,114.1)  (10,624.3)
   ------------------------------------------------------------------------------
</Table>

    Fair value estimates are made at a specific point in time, based on
    available market information and judgments about various financial
    instruments, such as estimates of timing and amounts of future cash flows.
    Such estimates do not reflect any premium or discount that could result from
    offering for sale at one time the Company's entire holdings of a particular
    financial instrument, nor do they consider the tax impact of the realization
    of unrealized gains or losses. In many cases, the fair value estimates
    cannot be substantiated by comparison to independent markets, nor can the
    disclosed value be realized in immediate settlement of the instruments. In
    evaluating the Company's management of interest rate, price and liquidity
    risks, the fair values of all assets and liabilities should be taken into
    consideration, not only those presented above.

    DERIVATIVE FINANCIAL INSTRUMENTS

    INTEREST RATE FLOORS

    Interest rate floors are used to manage the interest rate risk in the
    Company's bond portfolio. Interest rate floors are purchased contracts that
    provide the Company with an annuity in a declining interest rate
    environment. The Company had no open interest rate floors at December 31,
    2002 or 2001.

    INTEREST RATE CAPS

    Interest rate caps are used to manage the interest rate risk in the
    Company's bond portfolio. Interest rate caps are purchased contracts that
    provide the Company with an annuity in an increasing interest rate
    environment. The notional amount, carrying value and estimated fair value of
    the Company's open interest rate caps as of December 31, 2002 were
    $256.4 million, $0.7 million and $0.7 million, respectively. The Company did
    not have interest rate caps at December 31, 2001.

                                       43
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

3.  FINANCIAL INSTRUMENTS (continued)
    INTEREST RATE SWAPS

    Interest rate swaps are used to manage the interest rate risk in the
    Company's bond portfolio and well as the Company's liabilities. Interest
    rate swaps represent contracts that require the exchange of cash flows at
    regular interim periods, typically monthly or quarterly. The notional
    amount, carrying value and estimated fair value of the Company's open
    interest rate swaps as of December 31, 2002 were $400.0 million,
    $(6.8) million and $(6.8) million, respectively. The Company did not have
    interest rate swaps at December 31, 2001.

    FOREIGN EXCHANGE SWAPS

    Foreign exchange swaps are used to reduce the risk of a change in the value,
    yield or cash flow with respect to invested assets. Foreign exchange swaps
    represent contracts that require the exchange of foreign currency cash flows
    for US dollar cash flows at regular interim periods, typically quarterly or
    semi-annually. The notional amount, carrying value and estimated fair value
    of the Company's open foreign exchange rate swaps as of December 31, 2002
    were $49.4 million, $(0.5) million and $(0.5) million, respectively. The
    notional amount, carrying value and estimated fair value of the Company's
    open foreign exchange rate swaps as of December 31, 2001 were 25.0 million,
    $0.7 million and $0.7 million, respectively.

    EMBEDDED DERIVATIVES

    The Company also had investments in certain fixed maturity instruments that
    contain embedded derivatives, including those whose market value is at least
    partially determined by, among other things, levels of or changes in
    domestic and/or foreign interest rates (short- or long-term), exchange
    rates, prepayment rates, equity markets or credit ratings/spreads. The
    estimated fair value of the embedded derivatives within such securities as
    of December 31, 2002 and 2001 was $(1.4) and $(15.5) million, respectively.

                                       44
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

4.  NET INVESTMENT INCOME

    Sources of net investment income were as follows:

<Table>
<Caption>
                                                                                      Preacquisition
                                                                                      --------------
                                                                           One            Eleven
                                     Year ended       Year ended       month ended     months ended
                                    December 31,     December 31,     December 31,     November 30,
   (Millions)                           2002             2001             2000             2000
   <S>                             <C>              <C>              <C>              <C>
   Fixed maturities                   $  964.1          $887.2            $70.3           $768.9
   Nonredeemable preferred stock           3.9             1.5              1.8              9.5
   Investment in affiliated
     mutual funds                           --             7.2              0.5              2.1
   Mortgage loans                         23.3             5.9              0.1              0.5
   Policy loans                            8.7             8.9              0.7              7.9
   Cash equivalents                        1.7            18.2              4.4             50.3
   Other                                  23.4            15.9              2.6             13.1
   -------------------------------------------------------------------------------------------------
   Gross investment income             1,025.1           944.8             80.4            852.3
   Less: investment expenses              65.6            56.4              1.8             18.5
   -------------------------------------------------------------------------------------------------
   Net investment income              $  959.5          $888.4            $78.6           $833.8
   =================================================================================================
</Table>

    Net investment income includes amounts allocable to experience rated
    contractholders of $766.9 million for the year-ended December 31, 2002,
    $704.2 million for the year-ended December 31, 2001, and $55.9 million and
    $622.2 million for the one and eleven month periods ended December 31, 2000
    and November 30, 2000, respectively. Interest credited to contractholders is
    included in future policy benefits and claims reserves.

5.  DIVIDEND RESTRICTIONS AND SHAREHOLDER'S EQUITY

    In conjunction with the sale of Aetna, Inc. to ING AIH, the Company was
    restricted from paying any dividends to its parent for a two year period
    from the date of sale without prior approval by the Insurance Commissioner
    of the State of Connecticut. This restriction expired on December 13, 2002.
    The Company did not pay dividends to its parent in 2002 or 2001.

    The Insurance Department of the State of Connecticut (the "Department")
    recognizes as net income and capital and surplus those amounts determined in
    conformity with statutory accounting practices prescribed or permitted by
    the Department, which differ in certain respects from accounting principles
    generally accepted in the United States of America. Statutory net income
    (loss) was $148.8 million, $(92.3) million and $100.6 million for the
    years-ended December 31, 2002, 2001, and 2000, respectively. Statutory
    capital and surplus was $1,006.0 million and $826.2 million as of
    December 31, 2002 and 2001, respectively.

                                       45
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5.  DIVIDEND RESTRICTIONS AND SHAREHOLDER'S EQUITY (continued)
    As of December 31, 2002, the Company does not utilize any statutory
    accounting practices, which are not prescribed by state regulatory
    authorities that, individually or in the aggregate, materially affect
    statutory capital and surplus.

    For 2001, the Company was required to implement statutory accounting changes
    ("Codification") ratified by the National Association of Insurance
    Commissioners ("NAIC") and state insurance departments. The cumulative
    effect of Codification to the Company's statutory surplus as of January 1,
    2001 was a decrease of $12.5 million.

6.  CAPITAL GAINS AND LOSSES ON INVESTMENT OPERATIONS

    Realized capital gains or losses are the difference between the carrying
    value and sale proceeds of specific investments sold. Net realized capital
    gains (losses) on investments were as follows:

<Table>
<Caption>
                                                                                      Preacquisition
                                                                                      --------------
                                                                           One            Eleven
                                     Year ended       Year ended       month ended     months ended
                                    December 31,     December 31,     December 31,     November 30,
   (Millions)                           2002             2001             2000             2000
   <S>                             <C>              <C>              <C>              <C>
   Fixed maturities                    $ (97.5)         $(20.6)           $1.2            $(36.3)
   Equity securities                      (3.5)           (0.4)            0.6              (0.9)
   -------------------------------------------------------------------------------------------------
   Pretax realized capital gains
     (losses)                          $(101.0)         $(21.0)           $1.8            $(37.2)
   =================================================================================================
   After-tax realized capital
     gains (losses)                    $ (58.3)         $(13.7)           $1.3            $(24.3)
   =================================================================================================
</Table>

    Net realized capital gains (losses) of $63.6 million, $117.0 million,
    $0.9 million and $(17.7) million for the years ended December 31, 2002 and
    2001, the one month period ended December 31, 2000 and the eleven month
    period ended November 30, 2000, respectively, allocable to experience rated
    contracts, were deducted from net realized capital gains and an offsetting
    amount was reflected in other policyholders' funds. Net unamortized gains
    (losses) allocable to experienced-rated contractholders were
    $199.3 million, $172.7 million, $(2.5) million and $47.6 million at
    December 31, 2002 and 2001, the one month ended December 31, 2000 and the
    eleven months ended November 30, 2000, respectively.

                                       46
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

6.  CAPITAL GAINS AND LOSSES ON INVESTMENT OPERATIONS (continued)
    Proceeds from the sale of total fixed maturities and the related gross gains
    and losses (excluding those related to experience-related contractholders)
    were as follows:

<Table>
<Caption>
                                                                                      Preacquisition
                                                                                      --------------
                                                                           One            Eleven
                                     Year ended       Year ended       month ended     months ended
                                    December 31,     December 31,     December 31,     November 30,
   (Millions)                           2002             2001             2000             2000
   <S>                             <C>              <C>              <C>              <C>
   Proceeds on sales                  $24,980.4        $14,216.7         $233.0          $10,083.2
   Gross gains                            276.7             57.0            1.2                2.5
   Gross losses                           374.2             77.6             --               38.8
   -------------------------------------------------------------------------------------------------
</Table>

    Changes in shareholder's equity related to changes in accumulated other
    comprehensive income (unrealized capital gains and losses on securities
    including securities pledged to creditors and excluding those related to
    experience-rated contractholders) were as follows:

<Table>
<Caption>
                                                                                      Preacquisition
                                                                                      --------------
                                                                           One            Eleven
                                     Year ended       Year ended       month ended     months ended
                                    December 31,     December 31,     December 31,     November 30,
   (Millions)                           2002             2001             2000             2000
   <S>                             <C>              <C>              <C>              <C>
   Fixed maturities                    $104.8            $24.0            $24.5           $ 67.6
   Equity securities                     (1.6)             2.0             (1.5)            (4.0)
   Other investments                     (8.3)             6.5              5.7            (15.8)
   -------------------------------------------------------------------------------------------------
     Subtotal                            94.9             32.5             28.7             79.4
     Increase in deferred income
       taxes                             33.2             11.3             10.1             27.8
   -------------------------------------------------------------------------------------------------
     Net changes in accumulated
       other comprehensive income
       (loss)                          $ 61.7            $21.2            $18.6           $ 51.6
   =================================================================================================
</Table>

    Net unrealized capital gains (losses) allocable to experience-rated
    contracts of $563.1 million and $233.0 million at December 31, 2002 and
    2001, respectively, are reflected on the Consolidated Balance Sheets in
    other policyholders' funds and are not included in shareholder's equity.

                                       47
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

6.  CAPITAL GAINS AND LOSSES ON INVESTMENT OPERATIONS (continued)
    Shareholder's equity included the following accumulated other comprehensive
    income (loss), which is net of amounts allocable to experience-rated
    contractholders:

<Table>
<Caption>
                                                                                      Preacquisition
                                                                                      --------------
                                        As of            As of            As of           As of
                                    December 31,     December 31,     December 31,     November 30,
   (Millions)                           2002             2001             2000             2000
   <S>                             <C>              <C>              <C>              <C>
     Net unrealized capital gains
       (losses):
     Fixed maturities                  $162.8            $58.0            $34.0           $ 9.5
     Equity securities                   (3.5)            (1.9)            (3.9)           (2.4)
     Other investments                    7.3             15.6              9.1             3.4
   -------------------------------------------------------------------------------------------------
                                        166.6             71.7             39.2            10.5
   Deferred income taxes                 58.3             25.1             13.8             3.7
   -------------------------------------------------------------------------------------------------
   Net accumulated other
     comprehensive income              $108.3            $46.6            $25.4           $ 6.8
   =================================================================================================
</Table>

    Changes in accumulated other comprehensive income related to changes in
    unrealized gains (losses) on securities, including securities pledged to
    creditors (excluding those related to experience-rated contractholders) were
    as follows:

<Table>
<Caption>
                                                                                      Preacquisition
                                                                                      --------------
                                                                           One            Eleven
                                     Year ended       Year ended       month ended     months ended
                                    December 31,     December 31,     December 31,     November 30,
   (Millions)                           2002             2001             2000             2000
   <S>                             <C>              <C>              <C>              <C>
   Unrealized holding gains
     (losses) arising the year
     (1)                               $(127.4)         $  8.3            $18.6            $51.4
   Less: reclassification
     adjustment for gains
     (losses) and other items
     included in net income (2)           65.7           (12.9)              --             (0.2)
   -------------------------------------------------------------------------------------------------
   Net unrealized gains (losses)
     on securities                     $  61.7          $ 21.2            $18.6            $51.6
   =================================================================================================
</Table>

   (1)  Pretax unrealized holding gains (losses) arising during the year were
        $196.0 million, $12.7 million, $28.6 million and $79.4 million for
        the years ended December 31, 2002 and 2001, the one month ended
        December 31, 2000 and the eleven months ended November 31, 2000,
        respectively.
   (2)  Pretax reclassification adjustments for gains (losses) and other items
        included in net income were $101.0 million, $(19.8) million and
        $(0.1) million for the years ended December 31, 2002 and 2001, and the
        eleven months ended November 30, 2000, respectively. There were no
        pretax reclassification adjustments for gains (losses) and other items
        included in net income for the one month ended December 31, 2000.

                                       48
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

7.  SEVERANCE

    In December 2001, ING announced its intentions to further integrate and
    streamline the U.S.-based operations of ING Americas (a business division of
    ING which includes the Company) in order to build a more customer-focused
    organization. In connection with these actions, the Company recorded a
    charge of $29.2 million pretax. The severance portion of this charge
    ($28.4 million pretax) is based on a plan to eliminate 580 positions
    (primarily operations, information technology and other administrative/staff
    support personnel). Severance actions are expected to be substantially
    complete by March 31, 2003. The facilities portion ($0.8 million pretax) of
    the charge represents the amount to be incurred by the Company to terminate
    a contractual lease obligation.

    Activity for the year ended December 31, 2002 within the severance liability
    and positions eliminated related to such actions were as follows:

<Table>
<Caption>
   (Millions)                                Severance Liability  Positions
   <S>                                       <C>                  <C>
   Balance at December 31, 2001                    $ 28.4              580
   Actions taken                                    (19.2)            (440)
   ------------------------------------------------------------------------
   Balance at December 31, 2002                    $  9.2              140
   ========================================================================
</Table>

8.  INCOME TAXES

    The Company files a consolidated federal income tax return with IICA. The
    Company has a tax allocation agreement with IICA whereby the Company charges
    its subsidiary for taxes it would have incurred were it not a member of the
    consolidated group and credits the member for losses at the statutory tax
    rate.

    Income taxes from continuing operations consist of the following:

<Table>
<Caption>
                                                                                   Preacquisition
                                                                                   --------------
                                                                     One month     Eleven months
                                  Year ended       Year ended          ended           ended
                                 December 31,     December 31,     December 31,     November 30,
(Millions)                           2002             2001             2000             2000
<S>                             <C>              <C>              <C>              <C>
Current taxes (benefits):
  Federal                           $ 28.9           $  3.2            $ 9.4           $  5.3
  State                                1.8              2.2              0.2              2.6
  Net realized capital gains
    (losses)                          11.5             16.1              0.3            (11.5)
-------------------------------------------------------------------------------------------------
    Total current taxes
      (benefits)                      42.2             21.5              9.9             (3.6)
-------------------------------------------------------------------------------------------------
Deferred taxes (benefits):
  Federal                             30.6             89.3             (4.3)            83.2
  Net realized capital gains
    (losses)                         (54.2)           (23.4)             0.3             (1.5)
-------------------------------------------------------------------------------------------------
    Total deferred taxes
      (benefits)                     (23.6)            65.9             (4.0)            81.7
-------------------------------------------------------------------------------------------------
Total income tax expense            $ 18.6           $ 87.4            $ 5.9           $ 78.1
=================================================================================================
</Table>

                                       49
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

8.  INCOME TAXES (continued)
    Income taxes were different from the amount computed by applying the federal
    income tax rate to income from continuing operations before income taxes for
    the following reasons:

<Table>
<Caption>
                                                                                   Preacquisition
                                                                                   --------------
                                                                     One month     Eleven months
                                  Year ended       Year ended          ended           ended
                                 December 31,     December 31,     December 31,     November 30,
(Millions)                           2002             2001             2000             2000
<S>                             <C>              <C>              <C>              <C>
Income from continuing
  operations before income
  taxes and cumulative effect
  of change in accounting
  principle                          $86.1           $187.3            $18.5           $249.6
Tax rate                                35%              35%              35%              35%
-------------------------------------------------------------------------------------------------
Application of the tax rate           30.1             65.6              6.4             87.4
Tax effect of:
  State income tax, net of
    federal benefit                    1.2              1.4              0.1              1.7
  Excludable dividends                (5.3)            (1.8)            (0.9)           (12.6)
  Goodwill amortization                 --             21.6               --               --
  Transfer of mutual fund
    shares                            (6.7)              --               --               --
  Other, net                          (0.7)             0.6              0.3              1.6
-------------------------------------------------------------------------------------------------
Income taxes                         $18.6           $ 87.4            $ 5.9           $ 78.1
=================================================================================================
</Table>

                                       50
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

8.  INCOME TAXES (continued)
    The tax effects of temporary differences that give rise to deferred tax
    assets and deferred tax liabilities at December 31 are presented below:

<Table>
<Caption>
   (Millions)                                 2002     2001
   <S>                                       <C>      <C>
   Deferred tax assets:
     Deferred policy acquisition costs       $    --  $  11.7
     Insurance reserves                        269.8    286.9
     Unrealized gains allocable to
       experience rated contracts              197.1     81.5
     Investment losses                          69.7     36.7
     Postretirement benefits                    29.5     26.3
     Deferred compensation                      58.6     52.0
     Other                                      19.5     27.7
   ----------------------------------------------------------
   Total gross assets                          644.2    522.8
   ----------------------------------------------------------

   Deferred tax liabilities:
     Value of business acquired                509.7    558.5
     Market discount                             4.1      4.6
     Net unrealized capital gains              255.4    106.6
     Depreciation                                3.8      5.1
     Deferred policy acquisition costs          29.2       --
     Other                                       5.1      1.7
   ----------------------------------------------------------
   Total gross liabilities                     807.3    676.5
   ----------------------------------------------------------
   Net deferred tax liability                $(163.1) $(153.7)
   ==========================================================
</Table>

    Net unrealized capital gains and losses are presented in shareholder's
    equity net of deferred taxes.

    The "Policyholders' Surplus Account," which arose under prior tax law, is
    generally that portion of a life insurance company's statutory income that
    has not been subject to taxation. As of December 31, 1983, no further
    additions could be made to the Policyholders' Surplus Account for tax return
    purposes under the Deficit Reduction Act of 1984. The balance in such
    account was approximately $17.2 million at December 31, 2002. This amount
    would be taxed only under certain conditions. No income taxes have been
    provided on this amount since management believes under current tax law the
    conditions under which such taxes would become payable are remote.

    The Internal Revenue Service (the "Service") has completed examinations of
    the federal income tax returns of the Company through 1997. Discussions are
    being held with the Service with respect to proposed adjustments. Management
    believes there are adequate defenses against, or sufficient reserves to
    provide for, any such adjustments. The Service has commenced its
    examinations for the years 1998 through 2000.

                                       51
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

9.  BENEFIT PLANS

    Prior to December 31, 2001, ILIAC, in conjunction with ING, had a qualified
    defined benefit pension plan covering substantially all employees
    ("Transition Pension Plan"). The Transition Pension Plan provided pension
    benefits based on a cash balance formula, which credited employees annually
    with an amount equal to a percentage of eligible pay based on age and years
    of service as well as an interest credit based on individual account
    balances. Contributions were determined using the Projected Unit Credit
    Method and were limited to the amounts that are tax-deductible. The
    accumulated benefit obligation and plan assets were recorded by ILIAC.

    As of December 31, 2001, the Transition Pension Plan merged into the ING
    Americas Retirement Plan ("ING Pension Plan"), which is sponsored by ING
    North America Insurance Corporation ("ING North America"), an affiliate of
    ILIAC. The ING Pension Plan covers substantially all U.S. employees.
    Accordingly, the Company transferred $17.4 million of net assets ($11.3
    million after tax) related to the movement of the Transition Pension Plan to
    ING North America. The Company reported this transfer of net assets as a
    $11.3 million reduction in paid in capital. The new plan's benefits are
    based on years of service and the employee's average annual compensation
    during the last five years of employment. Contributions are determined using
    the Projected Unit Credit Method and are limited to the amounts that are
    tax-deductible. The costs allocated to the Company for its members'
    participation in the ING Pension Plan were $6.0 million for 2002.

    The benefit obligations and the funded status for the Company's qualified
    pension plan over the period ended December 31 are presented below:

<Table>
<Caption>
   (Millions)                                           2001
   <S>                                                 <C>
   Change in benefit obligation:
     Benefit obligation at January 1                   $ 135.1
     Service cost                                          9.4
     Interest cost                                        10.3
     Actuarial loss                                       (0.7)
     Plan amendments                                       4.0
     Curtailments/settlements                              0.4
     Benefits paid                                        (3.0)
     Effect of transfer of assets                       (155.5)
   -----------------------------------------------------------
   Benefit obligation at December 31                   $    --
   ===========================================================
   Funded status:
     Funded status at December 31                      $  (4.3)
     Unrecognized past service cost                        3.4
     Unrecognized net loss                                20.4
     Transfer of funded status to the parent             (19.5)
   -----------------------------------------------------------
   Net amount recognized                               $    --
   ===========================================================
</Table>

                                       52
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

9.  BENEFIT PLANS (continued)
    The reconciliation of the plan assets for the year ended December 31 is
    presented below:

<Table>
<Caption>
   (Millions)                                           2001
   <S>                                                 <C>
   Fair value of plan assets at January 1              $ 160.7
   Actual return on plan assets                           (6.4)
   Benefits paid                                          (3.0)
   Effect of transfer of assets                         (151.3)
   -----------------------------------------------------------
   Fair value of plan assets at December 31            $    --
   ===========================================================
</Table>

    The net periodic benefit cost for the year ended December 31 is presented
    below:

<Table>
<Caption>
   (Millions)                                           2001
   <S>                                                 <C>
   Service cost                                        $  9.4
   Interest cost                                         10.2
   Expected return on assets                            (14.6)
   ----------------------------------------------------------
   Net periodic benefit cost                           $  5.0
   ==========================================================
</Table>

    The weighted average discount rate, expected rate of return on plan assets,
    and rate of compensation increase was 7.5%, 9.3%, and 4.5% for 2001.

    POSTRETIREMENT BENEFIT PLANS

    In addition to providing pension benefits, ILIAC, in conjunction with ING,
    provides certain health care and life insurance benefits for retired
    employees and certain agents. Retired employees are generally required to
    contribute to the plans based on their years of service with the Company.
    The following tables summarize the benefit obligations and the funded status
    for

                                       53
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

9.  BENEFIT PLANS (continued)
    retired agents' and retired employees' postretirement benefits over the
    periods ended December 31:

<Table>
<Caption>
   (Millions)                                 2002    2001
   <S>                                       <C>     <C>
   Change in benefit obligation:
     Benefit obligation at January 1         $ 25.4  $ 19.1
     Service cost                               0.5     0.7
     Interest cost                              1.5     1.7
     Actuarial (gain) loss                      4.0     1.4
     Acquisitions                                --     3.7
     Plan amendments                           (6.5)     --
     Benefits paid                             (1.2)   (1.2)
   --------------------------------------------------------
   Benefit obligation at December 31         $ 23.7  $ 25.4
   ========================================================
   Funded status:
     Funded status at December 31            $(23.7) $(25.4)
     Unrecognized past service cost            (3.6)     --
     Unrecognized net loss                      5.4     1.4
   --------------------------------------------------------
   Net amount recognized                     $(21.9) $(24.0)
   ========================================================
</Table>

    The weighted-average discount rate assumption for retired agents' and
    retired employees postretirement benefits was 6.8% for 2002 and 7.5% for
    2001.

    The medical health care cost trend rates were 10.0%, decreasing to 5.0% by
    2008 for 2002; and 8.5%, gradually decreasing to 5.5% by 2007 for 2001.
    Increasing the health care trend rate by 1% would increase the benefit
    obligation by $1.6 million. Decreasing the health care trend rate by 1%
    would decrease the benefit obligation by $1.4 million as of December 31,
    2002.

    Net periodic benefit costs were as follows:

<Table>
<Caption>
                                                                                   Preacquisition
                                                                                   --------------
                                                                     One month     Eleven months
                                  Year ended       Year ended          ended           ended
                                 December 31,     December 31,     December 31,     November 30,
(Millions)                           2002             2001             2000             2000
<S>                             <C>              <C>              <C>              <C>
Service cost                         $ 0.5            $0.7             $ --             $0.2
Interest cost                          1.5             1.7              0.1              1.2
Actuarial (gain) loss                   --              --               --              0.2
Unrecognized past service cost        (2.9)             --               --               --
-------------------------------------------------------------------------------------------------
Net periodic benefit cost            $(0.9)           $2.4             $0.1             $1.2
=================================================================================================
</Table>

                                       54
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

9.  BENEFIT PLANS (continued)
    There were no gains or losses resulting from curtailments or settlements of
    the postretirement benefit plans during 2002, 2001 or 2000.

    NON-QUALIFIED DEFINED BENEFIT PENSION PLANS

    Prior to December 31, 2001, ILIAC, in conjunction with ING, had a
    non-qualified defined benefit pension plan covering certain eligible
    employees. The plan provided pension benefits based on a cash balance
    formula, which credited employees annually with an amount equal to a
    percentage of eligible pay based on age and years of service as well as an
    interest credit based on individual account balances. As of December 31,
    2001, ILIAC, in conjunction with ING, has a non-qualified defined benefit
    pension plan providing benefits to certain eligible employees based on years
    of service and the employee's average annual compensation during the last
    five years of employment, which was assumed at December 31, 2002 to increase
    at an annual rate of 3.8%. Contributions are determined using the Projected
    Unit Credit Method. ILIAC, in conjunction with ING, also has a non-qualified
    pension plan covering certain agents. The plan provides pension benefits
    based on annual commission earnings.

    During 2002, liabilities, net of tax, totaling $15.1 million were allocated
    to the Company related to a Supplemental Excess Retirement Plan ("SERP")
    that covers certain employees of ING Life Insurance Company of America and
    Aeltus, affiliates of the Company.

    The following tables summarize the benefit obligations and the funded status
    for the Company's non-qualified pension plans for the periods ended
    December 31, 2002 and 2001. These tables have been presented, for comparison
    purposes, as though the SERP transfer had occurred as of January 1, 2001.
    The accompanying consolidated balance sheet and income statement do not
    reflect the SERP transfer until 12/31/02:

<Table>
<Caption>
   (Millions)                                 2002     2001
   <S>                                       <C>      <C>
   Change in benefit obligation:
     Benefit obligation at January 1         $  95.3  $  88.7
     Service cost                                 --      4.4
     Interest cost                               6.8      7.1
     Actuarial (gain) loss                       5.7      0.7
     Plan amendments                             4.5     (4.1)
     Benefits paid                              (5.5)    (1.5)
   ----------------------------------------------------------
   Benefit obligation at December 31         $ 106.8  $  95.3
   ==========================================================
   Funded status:
     Funded status at December 31            $(106.8) $ (95.3)
     Unrecognized past service cost              0.8      1.2
     Unrecognized net loss (gain)                6.4     (7.1)
   ----------------------------------------------------------
   Net amount recognized                     $ (99.6) $(101.2)
   ==========================================================
</Table>

    At December 31, 2002 and 2001, the accumulated benefit obligation was $43.8
    million and $27.3 million, respectively.

                                       55
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

9.  BENEFIT PLANS (continued)
    The weighted-average discount rate assumption for Agents' and employees'
    non-qualified pension plans was 6.8%, and 3.8% for 2002 and 7.5% and 5.3%
    for 2001.

    Net periodic benefit costs were as follows:

<Table>
<Caption>
                                                                                      Preacquisition
                                                                                      --------------
                                                                        One month     Eleven months
                                     Year ended       Year ended          ended           ended
                                    December 31,     December 31,     December 31,     November 30,
   (Millions)                           2002             2001             2000             2000
   <S>                             <C>              <C>              <C>              <C>
   Service cost                         $ 6.8            $ 4.4            $ 0.3           $ 2.1
   Interest cost                           --              7.1              0.3             3.8
   Actuarial (gain) loss                   --               --               --             0.2
   Return on plan assets                   --               --             (0.3)           (3.2)
   Unrecognized past service cost        (0.3)              --               --            (0.1)
   -------------------------------------------------------------------------------------------------
   Net periodic benefit cost            $ 6.5            $11.5            $ 0.3           $ 2.8
   =================================================================================================
</Table>

    There was a curtailment of $2.6 million in 2002. There were no gains or
    losses resulting from curtailments or settlements of the non-qualified
    pension plans during 2000.

    ING SAVINGS AND INVESTMENT PLANS

    ILIAC, in conjunction with ING, also has a Savings Plan. Substantially all
    employees are eligible to participate in a savings plan under which
    designated contributions, which may be invested in a variety of financial
    instruments, are matched up to 6.0% of compensation by ING. Pretax charges
    to operations for the incentive savings plan were $6.8 million, $11.0
    million, and $9.0 million in 2002, 2001, and 2000, respectively.

    ILIAC, in conjunction with former Aetna, had a stock incentive plan that
    provided for stock options, deferred contingent common stock or equivalent
    cash awards or restricted stock to employees. Certain executive, middle
    management and non-management employees were granted options to purchase
    common stock of former Aetna at or above the market price on the date of
    grant. Options generally became 100% vested three years after the grant was
    made, with one-third of the options vesting each year. The former Aetna did
    not recognize compensation expense for stock options granted at or above the
    market price on the date of grant under its stock incentive plans. In
    addition, executives were, from time to time, granted incentive units which
    were rights to receive common stock or an equivalent value in cash. The sale
    of the Company to ING AIH by former Aetna caused all outstanding stock
    options to vest immediately.

    The costs to the Company associated with the former Aetna stock plans for
    2001 and 2000 were $1.8 million and $2.7 million, respectively.

                                       56
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

10. RELATED PARTY TRANSACTIONS

    INVESTMENT ADVISORY AND OTHER FEES

    ILIAC and Aeltus serve as investment advisors and administrators to the
    Company's mutual funds and variable funds (collectively, the Funds). Company
    mutual funds pay Aeltus or ILIAC, as investment advisor or administrator, a
    daily fee which, on an annual basis, ranged, depending on the fund, from
    0.1% to 0.5% of their average daily net assets. All of the funds managed by
    ILIAC and certain of the funds managed by Aeltus are subadvised by
    investment advisors, in which case, Aeltus or ILIAC pays a subadvisory fee
    to the investment advisors. The Company is also compensated by the separate
    accounts (variable funds) for bearing mortality and expense risks pertaining
    to variable life and annuity contracts. Under the insurance and annuity
    contracts, the separate accounts pay the Company a daily fee, which, on an
    annual basis is, depending on the product, up to 3.4% of their average daily
    net assets. The amount of compensation and fees received from the Company
    mutual funds and separate accounts, included in fee income amounted to
    $391.8 million, $421.7 million and $506.3 million in 2002, 2001 and 2000,
    respectively.

    RECIPROCAL LOAN AGREEMENT

    ILIAC maintains a reciprocal loan agreement with ING AIH, a Delaware
    corporation and affiliate, to facilitate the handling of unusual and/or
    unanticipated short-term cash requirements. Under this agreement, which
    became effective in June 2001 and expires on April 1, 2011, ILIAC and ING
    AIH can borrow up to 3% of ILIAC's statutory admitted assets as of the
    preceding December 31 from one another. Interest on any ILIAC borrowings is
    charged at the rate of ING AIH's cost of funds for the interest period plus
    0.15%. Interest on any ING AIH borrowings is charged at a rate based on the
    prevailing interest rate of U.S. commercial paper available for purchase
    with a similar duration. Under this agreement, ILIAC incurred interest
    expense of $0.1 million for the years ended December 31, 2002 and 2001, and
    earned interest income of $2.1 million and $3.3 million for the years ended
    December 31, 2002 and 2001, respectively. At December 31, 2002, ILIAC had no
    receivables and no outstanding borrowings from ING AIH under this agreement.

    CAPITAL TRANSACTIONS

    In 2002, the company received capital contributions in the form of
    investments in affiliated mutual funds of $164.3 million from HOLDCO. The
    Company did not receive capital contributions in 2001.

    OTHER

    Premiums due and other receivables include $0.1 million and $1.0 million due
    from affiliates at December 31, 2002 and 2001, respectively. Other
    liabilities include $1.3 million and $0.6 million due to affiliates for the
    years ended December 31, 2002 and 2001, respectively.

                                       57
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

11. REINSURANCE

    At December 31, 2002, the Company had reinsurance treaties with six
    unaffiliated reinsurers and one affiliated reinsurer covering a significant
    portion of the mortality risks and guaranteed death and living benefits
    under its variable contracts. The Company remains liable to the extent its
    reinsurers do not meet their obligations under the reinsurance agreements.

    On October 1, 1998, the Company sold its domestic individual life insurance
    business to Lincoln for $1 billion in cash. The transaction is generally in
    the form of an indemnity reinsurance arrangement, under which Lincoln
    contractually assumed from the Company certain policyholder liabilities and
    obligations, although the Company remains directly obligated to
    policyholders.

    Effective January 1, 1998, 90% of the mortality risk on substantially all
    individual universal life product business written from June 1, 1991 through
    October 31, 1997 was reinsured externally. Beginning November 1, 1997, 90%
    of new business written on these products was reinsured externally.
    Effective October 1, 1998 this agreement was assigned from the third party
    reinsurer to Lincoln.

    Effective December 31, 1988, the Company entered into a modified coinsurance
    reinsurance agreement ("MODCO") with Aetna Life Insurance Company ("Aetna
    Life"), (formerly an affiliate of the Company), in which substantially all
    of the nonparticipating individual life and annuity business written by
    Aetna Life prior to 1981 was assumed by the Company. Effective January 1,
    1997, this agreement was amended to transition (based on underlying
    investment rollover in Aetna Life) from a modified coinsurance arrangement
    to a coinsurance agreement. As a result of this change, reserves were ceded
    to the Company from Aetna Life as investment rollover occurred. Effective
    October 1, 1998, this agreement was fully transitioned to a coinsurance
    arrangement and this business along with the Company's direct individual
    life insurance business, with the exception of certain supplemental
    contracts with reserves of $66.2 million and $69.9 million as of
    December 31, 2002 and 2001, respectively, was sold to Lincoln.

    On December 16, 1988, the Company assumed $25.0 million of premium revenue
    from Aetna Life, for the purchase and administration of a life contingent
    single premium variable payout annuity contract. In addition, the Company is
    also responsible for administering fixed annuity payments that are made to
    annuitants receiving variable payments. Reserves of $19.6 million and $24.1
    million were maintained for this contract as of December 31, 2002 and 2001,
    respectively.

                                       58
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

11. REINSURANCE (continued)
    The effect of reinsurance on premiums and recoveries was as follows:

<Table>
<Caption>
                                                                                      Preacquisition
                                                                                      --------------
                                                                        One month     Eleven months
                                     Year ended       Year ended          ended           ended
                                    December 31,     December 31,     December 31,     November 30,
   (Millions)                           2002             2001             2000             2000
   <S>                             <C>              <C>              <C>              <C>
   Direct Premiums Federal             $ 97.3           $112.3            $17.2           $143.2
   Reinsurance assumed                    9.7              0.6              0.1              0.8
   Reinsurance ceded                      8.3             (1.3)             0.8              6.3
   -------------------------------------------------------------------------------------------------
   Net Premiums                          98.7            114.2             16.5            137.7
   -------------------------------------------------------------------------------------------------
   Reinsurance Recoveries              $317.6           $363.7            $44.5           $371.6
   =================================================================================================
</Table>

12. COMMITMENTS AND CONTINGENT LIABILITIES

    LEASES

    For the year ended December 31, 2002 rent expense for leases was $18.1
    million. The future net minimum payments under noncancelable leases for the
    years ended December 31, 2003 through 2007 are estimated to be
    $17.5 million, $15.7 million, $14.9 million, $13.6 million and
    $12.1 million, respectively, and $0.2 million, thereafter. The Company pays
    substantially all expenses associated with its leased and subleased office
    properties. Expenses not paid directly by the Company are paid for by an
    affiliate and allocated back to the Company.

    COMMITMENTS

    Through the normal course of investment operations, the Company commits to
    either purchase or sell securities, commercial mortgage loans or money
    market instruments at a specified future date and at a specified price or
    yield. The inability of counterparties to honor these commitments may result
    in either higher or lower replacement cost. Also, there is likely to be a
    change in the value of the securities underlying the commitments. At
    December 31, 2002 and 2001, the Company had off-balance sheet commitments to
    purchase investments of $236.7 million with an estimated fair value of
    $236.7 million and $92.7 million with an estimated fair value of
    $92.7 million, respectively.

    LITIGATION

    The Company is a party to threatened or pending lawsuits arising, from the
    normal conduct of business. Due to the climate in insurance and business
    litigation, suits against the Company sometimes include claims for
    substantial compensatory, consequential or punitive damages and other types
    of relief. Moreover, certain claims are asserted as class actions,
    purporting to represent a group of similarly situated individuals. While it
    is not possible to forecast the outcome of such lawsuits, in light of
    existing insurance, reinsurance and established reserves, it is

                                       59
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

12. COMMITMENTS AND CONTINGENT LIABILITIES (continued)
    the opinion of management that the disposition of such lawsuits will not
    have materially adverse effect on the Company's operations or financial
    position.

13. SEGMENT INFORMATION

    The Company's realignment of Worksite Products and Individual Products
    operating segments into one reporting segment (USFS) is reflected in the
    restated summarized financial information for December 31, 2001 and 2000 in
    the table below. Effective with the third quarter of 2002, items that were
    previously not allocated back to USFS but reported in Other are now
    allocated to USFS and reported in the restated financial information for the
    period ending December 31, 2001 and 2000.

    Summarized financial information for the Company's principal operations for
    December 31, were as follows:

<Table>
<Caption>
                                                   Non-Operating
                                                     Segments
                                              -----------------------
                                               Investment
                                               Management
   (Millions)                      USFS (1)   Services (2)  Other (3)    Total
   <S>                             <C>        <C>           <C>        <C>

               2002
   ------------------------------
     Revenues from external
       customers                   $  507.2      $ 19.2      $ (9.5)   $   516.9
     Net investment income            959.2         0.2         0.1        959.5
   ------------------------------------------------------------------------------
   Total revenue excluding net
     realized capital gains
     (losses)                      $1,466.4      $ 19.4      $ (9.4)   $ 1,476.4
   ==============================================================================
     Operating earnings (4)        $  121.1      $  4.7      $   --    $   125.8
     Cumulative effect of
       accounting change           (2,412.1)         --          --     (2,412.1)
     Net realized capital losses,
       net of tax                     (58.3)         --          --        (58.3)
   ------------------------------------------------------------------------------
   Net income (loss)               $(2,349.3)    $  4.7          --    $(2,344.6)
   ==============================================================================

               2001
   ------------------------------
     Revenues from external
       customers                   $  585.0      $119.6      $(37.0)   $   667.6
     Net investment income            885.5         1.7         1.2        888.4
   ------------------------------------------------------------------------------
   Total revenue excluding net
     realized capital gains
     (losses)                      $1,470.5      $121.3      $(35.8)   $ 1,556.0
   ==============================================================================
     Operating earnings (4)        $   86.2      $ 27.4      $   --    $   113.6
     Net realized capital gains,
       net of tax                     (13.8)        0.1          --        (13.7)
   ------------------------------------------------------------------------------
   Net income                      $   72.4      $ 27.5      $   --    $    99.9
   ==============================================================================
</Table>

                                       60
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

13. SEGMENT INFORMATION (continued)
<Table>
<Caption>
                                                   Non-Operating
                                                     Segments
                                              -----------------------
                                               Investment
                                               Management
   (Millions)                      USFS (1)   Services (2)  Other (3)    Total
   <S>                             <C>        <C>           <C>        <C>
               2000
   ------------------------------
     Revenues from external
       customers                   $  692.1      $138.2      $(53.0)   $   777.3
     Net investment income            905.8         2.8         3.8        912.4
   ------------------------------------------------------------------------------
   Total revenue excluding net
     realized capital gains
     (losses)                      $1,597.9      $141.0      $(49.2)   $ 1,689.7
   ==============================================================================
     Operating earnings (4)        $  197.4      $  9.7      $   --    $   207.1
     Net realized capital gains,
       net of tax                     (23.1)        0.1          --        (23.0)
   ------------------------------------------------------------------------------
   Net income from continuing
     operations                    $  174.3      $  9.8      $   --    $   184.1
   ==============================================================================
</Table>

   (1)  USFS includes deferred annuity contracts that fund defined
        contribution and deferred compensation plans, immediate annuity
        contracts; mutual funds; distribution services for annuities and
        mutual funds; programs offered to qualified plans and nonqualified
        deferred compensation plans that package administrative and record-
        keeping services along with a menu of investment options; wrapper
        agreements containing certain benefit responsive guarantees that are
        entered into with retirement plans, whose assets are not invested with
        the Company; investment advisory services and pension plan
        administrative services. USFS also includes deferred and immediate
        annuity contracts, both qualified and nonqualified, that are sold to
        individuals and provide variable or fixed investment options or a
        combination of both.
   (2)  Investment Management Services include: investment advisory services
        to affiliated and unaffiliated institutional and retail clients;
        underwriting; distribution for Company mutual funds and a former
        affiliate's separate ccounts; and trustee, administrative and other
        services to retirement plans. On February 28, 2002, IA Holdco and its
        subsidiaries, which comprised this segment, were distributed to HOLDCO
        (refer to Note 1).
   (3)  Other includes consolidating adjustments between USFS and Investment
        Management Services.
   (4)  Operating earnings is comprised of net income (loss) excluding net
        realized capital gains and losses. While operating earnings is the
        measure of profit or loss used by the Company's management when
        assessing performance or making operating decisions, it does not
        replace net income as a measure of profitability.

14. DISCONTINUED OPERATIONS--INDIVIDUAL LIFE INSURANCE

    On October 1, 1998, the Company sold its domestic individual life insurance
    business to Lincoln for $1,000.0 million in cash. The transaction was
    generally in the form of an indemnity reinsurance arrangement, under which
    Lincoln contractually assumed from the Company certain policyholder
    liabilities and obligations, although the Company remains directly obligated
    to policyholders. Assets related to and supporting the life policies were
    transferred to Lincoln and the Company recorded a reinsurance recoverable
    from Lincoln. The transaction resulted in an after-tax gain on the sale of
    approximately $117.0 million, of which $57.7 million was deferred and was
    being recognized over approximately 15 years. The remaining portion of the
    gain was recognized immediately in net income and was largely attributed to
    access to the agency sales force and brokerage distribution channel.
    Approximately $5.7 million (after tax) of amortization related to the
    deferred gain was recognized in both 2000 and 1999. During the fourth
    quarter of 1999, the Company refined certain accrual and tax estimates which
    had been established in

                                       61
<Page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

14. DISCONTINUED OPERATIONS--INDIVIDUAL LIFE INSURANCE (continued)
    connection with the recording of the deferred gain. As a result, the
    deferred gain was increased by $12.9 million (after tax) to $65.4 million at
    December 31, 1999.

    In conjunction with the accounting for the 2000 acquisition of the Aetna
    Financial Services business, of which the Company is a part, the deferred
    gain, which was previously part of other liabilities, was written off (Refer
    to Note 1).

    QUARTERLY DATA (UNAUDITED)

<Table>
<Caption>
   2002 (Millions)                 First   Second  Third    Fourth
   <S>                             <C>     <C>     <C>     <C>
   Total Revenue                   $363.5  $351.3  $349.8  $   310.8
   -----------------------------------------------------------------
   Income (loss) from continuing
     operations before income
     taxes                           44.1   39.3    (23.1)      25.8
   Income tax expense (benefit)      15.2   12.9     (9.9)       0.4
   Income (loss) from continuing
     operations                      28.9   26.4    (13.2)      25.4
   -----------------------------------------------------------------
   Cumulative effect of change in
     accounting principle              --     --       --   (2,412.1)
   -----------------------------------------------------------------
   Net income (loss)               $ 28.9  $26.4   $(13.2) $(2,386.7)
   -----------------------------------------------------------------

<Caption>
   2001 (Millions)                 First   Second  Third    Fourth
   <S>                             <C>     <C>     <C>     <C>
   Total Revenue                   $395.5  $411.9  $387.2  $   340.4
   -----------------------------------------------------------------
   Income (loss) from continuing
     operations before income
     taxes                           64.3   95.0     68.9      (40.9)
   Income tax expense (benefit)      28.2   39.1     27.1       (7.0)
   -----------------------------------------------------------------
   Income from continuing
     operations                      36.1   55.9     41.8      (33.9)
   -----------------------------------------------------------------
   Net (loss)                      $ 36.1  $55.9   $ 41.8  $   (33.9)
   -----------------------------------------------------------------
</Table>

                                       62
<Page>
ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE

          None.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

          Omitted pursuant to General Instruction I(2) of Form 10-K.

ITEM 11.  EXECUTIVE COMPENSATION

          Omitted pursuant to General Instruction I(2) of Form 10-K.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

          Omitted pursuant to General Instruction I(2) of Form 10-K.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

          Omitted pursuant to General Instruction I(2) of Form 10-K.

ITEM 14.  CONTROLS AND PROCEDURES

(a)  Within the 90-day period prior to the filing of this report, the Company
     carried out an evaluation, under the supervision and with the participation
     of its management, including its Chief Executive Officer and Chief
     Financial Officer, of the effectiveness of the design and operation of the
     Company's disclosure controls and procedures (as defined in Rule 13a-14 of
     the Securities Exchange Act of 1934). Based on that evaluation, the Chief
     Executive Officer and the Chief Financial Officer have concluded that the
     Company's current disclosure controls and procedures are effective in
     ensuring that material information relating to the Company required to be
     disclosed in the Company's periodic SEC filings is made known to them in a
     timely manner.

(b)  There have not been any significant changes in the internal controls of the
     Company or other factors that could significantly affect these internal
     controls subsequent to the date the Company carried out its evaluation.

                                    PART IV

ITEM 15.  EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
          FORM 8-K

    The following documents are filed as part of this report:

     1.  Financial statements. See Item 8 on Page 17.
     2.  Financial statement schedules. See Index on Financial Statement
         Schedules on Page 62.

EXHIBITS

     3.(i)     Certificate of Incorporation as amended and restated January 1,
               2002. Incorporated by reference to the ING Life Insurance and
               Annuity Company Annual Report on Form 10-K for the year ending
               December 31, 2002 (File No. 33-23376), as filed on March 28,
               2002.

                                       63
<Page>
ITEM 15.  EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
          FORM 8-K (continued)
     3.(ii)    By-Laws, as restated January 1, 2002. Incorporated by reference
               to the ING Life Insurance and Annuity Company Annual Report on
               Form 10-K for the year ending December 31, 2002 (File No.
               33-23376), as filed on March 28, 2002.

     4.(a)    Instruments Defining the Rights of Security Holders, Including
              Indentures (Annuity Contracts)

              Incorporated by reference to Post-Effective Amendment No. 14 to
              Registration Statement on Form N-4 (File No. 33-75964), as filed
              on July 29, 1997.

              Incorporated by reference to Post-Effective Amendment No. 6 to
              Registration Statement on Form N-4 (File No. 33-75980), as filed
              on February 12, 1997.

              Incorporated by reference to Post-Effective Amendment No. 12 to
              Registration Statement on Form N-4 (File No. 33-75964), as filed
              on February 11, 1997.

              Incorporated by reference to Post-Effective Amendment No. 5 to
              Registration Statement on Form N-4 (File No. 33-75986), as filed
              on April 12, 1996.

              Incorporated by reference to Post-Effective Amendment No. 12 to
              Registration Statement on Form N-4 (File No. 333-01107), as filed
              on February 4, 1999.

              Incorporated by reference to Post-Effective Amendment No. 4 to
              Registration Statement on Form N-4 (File No. 33-75988), as filed
              on April 15, 1996.

              Incorporated by reference to Post-Effective Amendment No. 3 to
              Registration Statement on Form N-4 (File No. 33-81216), as filed
              on April 17, 1996.

              Incorporated by reference to Post-Effective Amendment No. 3 to
              Registration Statement on Form N-4 (File No. 33-91846), as filed
              on April 15, 1996.

              Incorporated by reference to Post-Effective Amendment No. 6 to
              Registration Statement on Form N-4 (File No. 33-91846), as filed
              on August 6, 1996.

              Incorporated by reference to Registration Statement on Form N-4
              (File No. 333-01107), as filed on February 21, 1996.

              Incorporated by reference to Post-Effective Amendment No. 12 to
              Registration Statement on Form N-4 (File No. 33-75982), as filed
              on February 20, 1997.

              Incorporated by reference to Post-Effective Amendment No. 7 to
              Registration Statement on Form N-4 (File No. 33-75992), as filed
              on February 13, 1997.

                                       64
<Page>
ITEM 15.  EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
          FORM 8-K (continued)
              Incorporated by reference to Post-Effective Amendment No. 6 to
              Registration Statement on Form N-4 (File No. 33-75974), as filed
              on February 28, 1997.

              Incorporated by reference to Post-Effective Amendment No. 6 to
              Registration Statement on Form N-4 (File No. 33-75962), as filed
              on April 17, 1996.

              Incorporated by reference to Post-Effective Amendment No. 14 to
              Registration Statement on Form N-4 (File No. 33-75962), as filed
              on April 17, 1998.

              Incorporated by reference to Post-Effective Amendment No. 6 to
              Registration Statement on Form N-4 (File No. 33-75982), as filed
              on April 22, 1996.

              Incorporated by reference to Post-Effective Amendment No. 8 to
              Registration Statement on Form N-4 (File No. 33-75980), as filed
              on August 19, 1997.

              Incorporated by reference to Registration Statement on Form N-4
              (File No. 333-56297), as filed on June 8, 1998.

              Incorporated by reference to Post-Effective Amendment No. 3 to
              Registration Statement on Form N-4 (File No. 33-79122), as filed
              on August 16, 1995.

              Incorporated by reference to Post-Effective Amendment No. 32 to
              Registration Statement on Form N-4 (File No. 33-34370), as filed
              on December 16, 1997.

              Incorporated by reference to Post-Effective Amendment No. 30 to
              Registration Statement on Form N-4 (File No. 33-34370), as filed
              on September 29, 1997.

              Incorporated by reference to Post-Effective Amendment No. 26 to
              Registration Statement on Form N-4 (File No. 33-34370), as filed
              on February 21, 1997.

              Incorporated by reference to Post-Effective Amendment No. 35 to
              Registration Statement on Form N-4 (File No. 33-34370), as filed
              on April 17, 1998.

              Incorporated by reference to Post-Effective Amendment No. 1 to
              Registration Statement on Form N-4 (File No. 33-87932), as filed
              on September 19, 1995.

              Incorporated by reference to Post-Effective Amendment No. 8 to
              Registration Statement on Form N-4 (File No. 33-79122), as filed
              on April 17, 1998.

              Incorporated by reference to Post-Effective Amendment No. 7 to
              Registration Statement on Form N-4 (File No. 33-79122), as filed
              on April 22, 1997.

              Incorporated by reference to Post-Effective Amendment No. 21 to
              Registration Statement on Form N-4 (File No. 33-75996), as filed
              on February 16, 2000.

                                       65
<Page>
ITEM 15.  EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
          FORM 8-K (continued)
              Incorporated by reference to Post-Effective Amendment No. 13 to
              Registration Statement on Form N-4 (File No. 333-01107), as filed
              on April 7, 1999.

              Incorporated by reference to Post-Effective Amendment No. 37 to
              Registration Statement on Form N-4 (File No. 33-34370), as filed
              on April 9, 1999.

              Incorporated by reference to Post-Effective Amendment No. 1 to
              Registration Statement on Form N-4 (File No. 333-87305), as filed
              on December 13, 1999.

              Incorporated by reference to Post-Effective Amendment No. 18 to
              Registration Statement on Form N-4 (File No. 33-56297), as filed
              on August 30, 2000.

              Incorporated by reference to Post-Effective Amendment No. 17 to
              Registration Statement on Form N-4 (File No. 33-75996), as filed
              on April 7, 1999.

              Incorporated by reference to Post-Effective Amendment No. 19 to
              Registration Statement on From N-4 (File No. 333-01107), as filed
              on February 16, 2000.

              Incorporated by reference to the Registration Statement on Form
              S-2 (File No. 33-64331), as filed on November 16, 1995.

              Incorporated by reference to Pre-Effective Amendment No. 2 to the
              Registration Statement on Form S-2 (File No. 33-64331), as filed
              on January 17,1996.

     10.      Material Contracts

     10.(a)   Amended and Restated Asset Purchase Agreement by and among Aetna
              Life Insurance Company, ING Life Insurance and Annuity Company,
              The Lincoln National Life Insurance Company and Lincoln Life &
              Annuity Company of New York, dated May 21, 1998, incorporated
              herein by reference to the Company's Form 10-Q filed on August 8,
              1998. (The Company will provide to the Securities and Exchange
              Commission a copy of omitted schedules or similar attachments upon
              request.)

     10.(b)   Distribution Agreement, dated as of December 13, 2000, between
              Lion Connecticut Holdings Inc. and Aetna Inc., incorporated by
              reference to the Company's Form 10-K filed on March 30, 2001.

     10.(c)   Employee Benefits Agreement, dated as of December 13, 2000,
              between Lion Connecticut Holdings Inc. and Aetna Inc.,
              incorporated by reference to the Company's Form 10-K filed on
              March 30, 2001.

                                       66
<Page>
ITEM 15.  EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
          FORM 8-K (continued)
     10.(d)   Tax Sharing Agreement, dated as of December 13, 2000, among Lion
              Connecticut Holdings Inc., Aetna Inc. and ING America Insurance
              Holdings, Inc., incorporated by reference to the Company's Form
              10-K filed on March 30, 2001.

     10.(e)   Transition Services Agreement, dated as of December 13, 2000,
              between Lion Connecticut Holdings Inc. and Aetna Inc.,
              incorporated by reference to the Company's Form 10-K filed on
              March 30, 2001.

     10.(f)   Lease Agreement, dated as of December 13, 2000, by and between ING
              Life Insurance Company and ING Life Insurance and Annuity Company,
              incorporated by reference to the Company's Form 10-K filed on
              March 30, 2001.

     10.(g)   Real Estate Services Agreement, dated as of December 13, 2000,
              between Aetna Inc. and ING Life Insurance and Annuity Company,
              incorporated by reference to the Company's Form 10-K filed on
              March 30, 2001.

     10.(h)   10 State House Square Services Agreement, dated as of
              December 13, 2000, between Aetna Inc. and Lion Connecticut
              Holdings Inc., incorporated by reference to the Company's Form
              10-K filed on March 30, 2001.

(b)  Reports on form 8-K.

    None.

                                       67
<Page>
              INDEX TO CONSOLIDATED FINANCIAL STATEMENT SCHEDULES

<Table>
<Caption>
                                                    Page
                                                    ----
<S>                                                 <C>

Reports of Independent Auditors...................    69

I.        Summary of Investments December 31,
            2002..................................    71

III.      Supplementary Insurance Information as
            of and for the years ended
            December 31, 2002, 2001 and one month
            ended December 31, 2000 and eleven
            months ended November 30, 2000........    72

IV.      Reinsurance as of and for the years ended
            December 31, 2002, 2001 and one month
            ended December 31, 2000 and eleven
            months ended November 30, 2000........    74
</Table>

Schedules other than those listed above are omitted because they are not
required or not applicable.

                                       68
<Page>
                         REPORT OF INDEPENDENT AUDITORS

The Board of Directors
ING Life Insurance and Annuity Company

We have audited the consolidated financial statements of ING Life Insurance and
Annuity Company and Subsidiaries as of December 31, 2002 and 2001, and for each
of the years then ended, and have issued our report thereon dated March 25,
2003. Our audits also included the financial statement schedules listed in Item
15. These schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits.

In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.

                                                /s/ Ernst & Young LLP

Atlanta, Georgia
March 25, 2003

                                       69
<Page>
                          INDEPENDENT AUDITORS' REPORT

The Shareholder and Board of Directors
ING Life Insurance and Annuity Company

Under date of March 27, 2001, we reported on the consolidated statements of
income, changes in shareholder's equity and cash flows of ING Life Insurance
Company of America and Subsidiaries, formerly known as Aetna Life Insurance and
Annuity Company and Subsidiaries, for the period from December 1, 2000 to
December 31, 2000 ("Successor Company"), and for the period from January 1, 2000
to November 30, 2000 ("Preacquisition Company"), as included herein. In
connection with our audit of the aforementioned financial statements, we audited
the related financial statement schedules as listed in the accompanying index.
These financial statement schedules are the responsibility of the Companies'
management. Our responsibility is to express an opinion on these financial
statement schedules based on our audit.

In our opinion, such financial statement schedules, when considered in relation
to the basic consolidated financial statements taken as a whole, present fairly,
in all material respects, the information set forth therein.

As discussed in Note 1 to the consolidated financial statements, effective
November 30, 2000, ING America Insurance Holdings Inc. acquired all of the
outstanding stock of Aetna Inc., Aetna Life Insurance and Annuity Company's
indirect parent and sole shareholder in a business combination accounted for as
a purchase. As a result of the acquisition, the consolidated financial
information for the periods after the acquisition is presented on a different
cost basis than that for the periods before the acquisition and, therefore, is
not comparable.

                                                                /s/ KPMG LLP

Hartford, Connecticut
March 27, 2001

                                       70
<Page>
                                   SCHEDULE I
                             Summary of Investments
                            As of December 31, 2002
                                   (Millions)

<Table>
<Caption>
                                                           Amount shown on
        Type of Investment             Cost      Value*     Balance Sheet
        ------------------           ---------  ---------  ---------------
<S>                                  <C>        <C>        <C>
Fixed maturities:
  U.S. government and government
    agencies and authorities         $    74.2  $    77.1     $    77.1
  States, municipalities and
    political subdivisions                10.2       12.7          12.7
  U.S. corporate securities            8,370.2    8,902.3       8,902.3
  Foreign securities (1)                 484.9      503.7         503.7
  Mortgage-backed securities           5,374.2    5,507.3       5,507.3
  Other asset-backed securities          882.4      918.9         918.9
  Less: Fixed maturities pledged to
    creditors                            154.9      155.0         155.0
                                     ---------  ---------     ---------
    Total fixed maturities
      securities                      15,041.2   15,767.0      15,767.0
                                     ---------  ---------     ---------

Equity securities:
  Non-redeemable preferred stock          34.2       34.2          34.2
  Investment in affiliated mutual
    funds                                203.9      201.0         201.0
  Common stock                             0.2        0.2           0.2
                                     ---------  ---------     ---------
    Total equity securities              238.3      235.4         235.4
                                     ---------  ---------     ---------

Short term investments                     6.2        6.2           6.2
Mortgage loans                           576.6      632.6         576.6
Policy loans                             296.3      296.3         296.3
Other investments                         52.2       52.2          52.2
Securities pledged to creditors          154.9      155.0         155.0
                                     ---------  ---------     ---------
    Total investments                $16,365.7  $17,144.7     $17,088.7
                                     =========  =========     =========
</Table>

  *  See Notes 2 and 3 of Notes to Consolidated Financial Statements.

(1)  The term "foreign" includes foreign governments, foreign political
     subdivisions, foreign public utilities and all other bonds of foreign
     issuers. Substantially all of the Company's foreign securities are
     denominated in U.S. dollars.

                                       71
<Page>
                                  SCHEDULE III
                      Supplementary Insurance Information
            As of and for the years ended December 31, 2002 and 2001
                     and one month ended December 31, 2000
                   and eleven months ended November 30, 2000
                                   (Millions)

<Table>
<Caption>
                                          Future
                            Deferred      policy      Unpaid
                             policy      benefits     claims                  Other
                           acquisition  and claims'  and claim  Unearned  policyholders'
         Segment              costs      reserves    expenses   premiums      funds
<S>                        <C>          <C>          <C>        <C>       <C>
========================================================================================
YEAR ENDED DECEMBER 31,
  2002
USFS                         $229.8      $3,305.2      $30.0      $ --      $14,756.0
Investment Management
  Services                       --            --         --        --             --
Other                            --            --         --        --             --
----------------------------------------------------------------------------------------
Total                        $229.8      $3,305.2      $30.0      $ --      $14,756.0
========================================================================================

YEAR ENDED DECEMBER 31,
  2001
USFS                         $121.3      $1,044.8      $ 4.2      $0.8      $12,129.1
Investment Management
  Services                       --            --         --        --             --
Other                            --            --         --        --             --
Discontinued operations
  (1)                            --       2,952.0       24.6        --            6.7
----------------------------------------------------------------------------------------
Total                        $121.3      $3,996.8      $28.8      $0.8      $12,135.8
========================================================================================
</Table>

  (1)  Domestic individual life insurance business.

                                       72
<Page>
                            SCHEDULE III (continued)
                      Supplementary Insurance Information
            As of and for the years ended December 31, 2002 and 2001
                     and one month ended December 31, 2000
                   and eleven months ended November 30, 2000
                                   (Millions)

<Table>
<Caption>
                                                                                 Amortization of
                                                             Interest credited   deferred policy
                                        Net                      and other      acquisition costs
                                     investment    Other        benefits to       and value of
         Segment           Premiums  income (2)  Income (3)    policyholders    business acquired  Operating expenses
<S>                        <C>       <C>         <C>         <C>                <C>                <C>
=====================================================================================================================
YEAR ENDED DECEMBER 31,
  2002
USFS                        $ 98.7     $959.2      $307.5         $746.4             $181.5              $358.7
Investment Management
  Services                      --        0.2        19.2             --                 --                12.0
Other                           --        0.1        (9.5)            --                 --                (9.3)
---------------------------------------------------------------------------------------------------------------------
Total                       $ 98.7     $959.5      $317.2         $746.4             $181.5              $361.4
=====================================================================================================================
YEAR ENDED DECEMBER 31,
  2001
USFS                        $114.2     $885.5      $449.7         $729.6             $112.0              $463.7
Investment Management
  Services                      --        1.7       119.7             --                 --                78.2
Other                           --        1.2       (37.0)            --                 --               (35.8)
---------------------------------------------------------------------------------------------------------------------
Total                       $114.2     $888.4      $532.4         $729.6             $112.0              $506.1
=====================================================================================================================
ONE MONTH ENDED
  DECEMBER 31, 2000
USFS                        $ 16.5     $ 78.3      $ 44.5         $ 68.9             $ 10.2              $ 43.0
Investment Management
  Services                      --         --        11.5             --                 --                10.2
Other                           --        0.3        (4.4)            --                 --                (4.1)
---------------------------------------------------------------------------------------------------------------------
Total from continuing
  operations                $ 16.5     $ 78.6      $ 51.6         $ 68.9             $ 10.2              $ 49.1
=====================================================================================================================
Discontinued operations     $   --     $   --      $  0.8         $   --             $   --              $   --
=====================================================================================================================
ELEVEN MONTHS ENDED
  NOVEMBER 30, 2000
USFS                        $137.7     $827.5      $457.8         $726.7             $116.7              $347.5
Investment Management
  Services                      --        2.8       126.9             --                 --               112.1
Other                           --        3.5       (48.6)            --                 --               (45.0)
---------------------------------------------------------------------------------------------------------------------
Total from continuing
  operations                $137.7     $833.8      $536.1         $726.7             $116.7              $414.6
=====================================================================================================================
Discontinued operations     $   --     $   --      $  8.2         $   --             $   --              $   --
=====================================================================================================================
</Table>

  (2)  The allocation of net investment income is based upon the investment year
       method or specific identification of certain portfolios within specific
       segments.
  (3)  Includes net realized capital gains and losses and fee income.

                                       73
<Page>
                                  SCHEDULE IV
                            Reinsurance Information
            As of and for the years ended December 31, 2002 and 2001
                     and one month ended December 31, 2000
                   and eleven months ended November 30, 2000
                                   (Millions)

<Table>
<Caption>
                                                                    Percentage of
       (Millions)            Gross      Ceded    Assumed    Net     assumed to net
<S>                        <C>        <C>        <C>      <C>       <C>
==================================================================================
YEAR ENDED DECEMBER 31,
  2002
Life insurance in Force    $32,064.0  $31,853.2  $995.7   $1,206.5
Premiums:
  Discontinued operations      255.7      272.7    17.0         --
  Accident and Health
    Insurance                    2.0        2.0      --         --
  Annuities                     97.3        8.3     9.7       98.7          9.8%
----------------------------------------------------------------------------------
Total Premiums             $   355.0  $   283.0  $ 26.7   $   98.7
==================================================================================
YEAR ENDED DECEMBER 31,
  2001
Life insurance in Force    $34,645.5  $34,614.0  $883.7   $  915.2
Premiums:
  Discontinued operations      301.2      315.0    13.8         --
  Accident and Health
    Insurance                    4.5        4.5      --         --
  Annuities                    112.3       (1.3)    0.6      114.2          0.5%
----------------------------------------------------------------------------------
Total Premiums             $   418.0  $   318.2  $ 14.4   $  114.2
==================================================================================
ONE MONTH ENDED
  DECEMBER 31, 2000
Life insurance in Force    $ 4,027.1  $ 4,024.4  $103.1   $  105.8
Premiums:
  Discontinued operations       39.2       40.9     1.7         --
  Accident and Health
    Insurance                    1.6        1.6      --         --
  Annuities                     17.2        0.8     0.1       16.5          0.6%
----------------------------------------------------------------------------------
Total Premiums             $    58.0  $    43.3  $  1.8   $   16.5
==================================================================================
ELEVEN MONTHS ENDED
  NOVEMBER 30, 2000
Life insurance in Force    $33,607.6  $33,585.7  $860.3   $  882.2
Premiums:
  Discontinued operations      327.4      341.5    14.1         --
  Accident and Health
    Insurance                   13.6       13.6      --         --
  Annuities                    143.2        6.3     0.8      137.7          0.6%
----------------------------------------------------------------------------------
Total Premiums             $   484.2  $   361.4  $ 14.9   $  137.7
==================================================================================
</Table>

                                       74
<Page>
                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.

                                          ING LIFE INSURANCE AND ANNUITY COMPANY
                                               (Registrant)

<Table>
<S>                                                 <C>
March 25, 2003                                      By  /s/ Cheryl L. Price
-------------------                                     -----------------------
        (Date)                                          Cheryl L. Price
                                                        Vice President, Chief Financial Officer and
                                                          Chief Accounting Officer
                                                          (Duly Authorized Officer and Principal
                                                          Financial Officer)
</Table>

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated on or before March 27, 2003.

<Table>
<Caption>
                    SIGNATURES                                            TITLE
<S>                                                 <C>

/s/ Cheryl L. Price
----------------------------------------------
Cheryl L. Price                                     Vice President, Chief Financial Officer and Chief
                                                      Accounting Officer

/s/ Keith Gubbay
----------------------------------------------
Keith Gubbay                                        Director and President

/s/ Thomas J. McInerney
----------------------------------------------
Thomas J. McInerney                                 Director

/s/ P. Randall Lowery
----------------------------------------------
P. Randall Lowery                                   Director

/s/ Mark A. Tullis
----------------------------------------------
Mark A. Tullis                                      Director
</Table>

                                       75
<Page>
                                 CERTIFICATION

I, Cheryl L. Price, certify that:

1.  I have reviewed this annual report on Form 10-K of ING Life Insurance and
    Annuity Company;
2.  Based on my knowledge, this annual report does not contain any untrue
    statement of a material fact or omit to state a material fact necessary to
    make the statements made, in light of the circumstances under which such
    statements were made, not misleading with respect to the period covered by
    this annual report;
3.  Based on my knowledge, the financial statements, and other financial
    information included in this annual report, fairly present in all material
    respects the financial condition, results of operations and cash flows of
    the registrant as of, and for, the periods presented in this annual report;
4.  The registrant's other certifying officers and I are responsible for
    establishing and maintaining disclosure controls and procedures (as defined
    in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

    (a)   designed such disclosure controls and procedures to ensure that
          material information relating to the registrant, including its
          consolidated subsidiaries, is made known to us by others within those
          entities, particularly during the period in which this annual report
          is being prepared;
    (b)   evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and
    (c)   presented in this annual report our conclusion about the effectiveness
          of the disclosure controls and procedures based on our evaluation as
          of the Evaluation Date;

5.  The registrant's other certifying officers and I have disclosed, based on
    our most recent evaluation, to the registrant's auditors and the audit
    committee of registrant's board of directors (or persons performing the
    equivalent function):

    (a)   all significant deficiencies in the design or operation of internal
          controls which could adversely affect the registrant's ability to
          record, process, summarize and report financial data and have
          identified for the registrant's auditors any material weaknesses in
          internal controls; and
    (b)   any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          controls; and

6.  The registrant's other certifying officers and I have indicated in this
    annual report whether or not there were significant changes in internal
    controls or in other factors that could significantly affect internal
    controls subsequent to the date of our most recent evaluation, including any
    corrective actions with regard to significant deficiencies, defenses and
    material weaknesses.

<Table>
<S>                                                 <C>
Date: March 25, 2003

By /s/ Cheryl L. Price
--------------------------------------------------
Cheryl L. Price
Vice President, Chief Financial Officer and Chief
Accounting Officer
(Duly Authorized Officer and Principal Financial
Officer)
</Table>

                                       76
<Page>
                                 CERTIFICATION

I, Keith Gubbay, certify that:

1.  I have reviewed this annual report on Form 10-K of ING Life Insurance and
    Annuity Company;
2.  Based on my knowledge, this annual report does not contain any untrue
    statement of a material fact or omit to state a material fact necessary to
    make the statements made, in light of the circumstances under which such
    statements were made, not misleading with respect to the period covered by
    this annual report;
3.  Based on my knowledge, the financial statements, and other financial
    information included in this annual report, fairly present in all material
    respects the financial condition, results of operations and cash flows of
    the registrant as of, and for, the periods presented in this annual report;
4.  The registrant's other certifying officers and I are responsible for
    establishing and maintaining disclosure controls and procedures (as defined
    in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

    (a)   designed such disclosure controls and procedures to ensure that
          material information relating to the registrant, including its
          consolidated subsidiaries, is made known to us by others within those
          entities, particularly during the period in which this annual report
          is being prepared;
    (b)   evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this annual report (the "Evaluation Date"); and
    (c)   presented in this annual report our conclusion about the effectiveness
          of the disclosure controls and procedures based on our evaluation as
          of the Evaluation Date;

5.  The registrant's other certifying officers and I have disclosed, based on
    our most recent evaluation, to the registrant's auditors and the audit
    committee of registrant's board of directors (or persons performing the
    equivalent function):

    (a)   all significant deficiencies in the design or operation of internal
          controls which could adversely affect the registrant's ability to
          record, process, summarize and report financial data and have
          identified for the registrant's auditors any material weaknesses in
          internal controls; and
    (b)   any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          controls; and

6.  The registrant's other certifying officers and I have indicated in this
    annual report whether or not there were significant changes in internal
    controls or in other factors that could significantly affect internal
    controls subsequent to the date of our most recent evaluation, including any
    corrective actions with regard to significant deficiencies, defenses and
    material weaknesses.

<Table>
<S>                                                 <C>
Date March 25, 2003

By /s/ Keith Gubbay
--------------------------------------------------
Keith Gubbay
President
(Duly Authorized Officer and Principal Officer)
</Table>

                                       77
<Page>
                                 CERTIFICATION

Pursuant to 18 U.S.C. Section 1350, the undersigned officer of ING Life
Insurance and Annuity Company (the "Company") hereby certifies that, to the
officer's knowledge, the Company's Annual Report on Form 10-K for the year ended
December 31, 2002 (the "Report") fully complies with the requirements of
Section 13 or 15(d), as applicable, of the Securities Exchange Act of 1934 and
that the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.

<Table>
<S>                                                 <C>
March 25, 2003                                      By /s/ Cheryl L. Price
----------------------------------------            -------------------------------------------------
(Date)                                              Cheryl L. Price
                                                    Vice President, Chief Financial Officer and
                                                    Chief Accounting Officer
</Table>

The foregoing certification is being furnished solely pursuant to 18 U.S.C.
Section 1350 and is not being filed as part of the Report or as a separate
disclosure document.

                                       78
<Page>
                                 CERTIFICATION

Pursuant to 18 U.S.C. Section 1350, the undersigned officer of ING Life
Insurance and Annuity Company (the "Company") hereby certifies that, to the
officer's knowledge, the Company's Annual Report on Form 10-K for the year ended
December 31, 2002 (the "Report") fully complies with the requirements of
Section 13 or 15(d), as applicable, of the Securities Exchange Act of 1934 and
that the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.

<Table>
<S>                                                 <C>
March 25, 2003                                      By /s/ Keith Gubbay
----------------------------------------            -------------------------------------------------
(Date)                                              Keith Gubbay
                                                    President
</Table>

The foregoing certification is being furnished solely pursuant to 18 U.S.C.
Section 1350 and is not being filed as part of the Report or as a separate
disclosure document.

                                       79