<Page>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   ----------

                                    FORM 10-Q

(Mark One)

/X/     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934

        For the quarterly period ended June 30, 2004

                                       OR

/ /     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934

        For the transition period from ___________________ to

        Commission file number: 333-86276, 333-86278, 333-104456

                     ING LIFE INSURANCE AND ANNUITY COMPANY
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

Connecticut                                                           71-0294708
--------------------------------------------------------------------------------
(State or other jurisdiction of                (IRS employer identification no.)
incorporation or organization)

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

Registrant's telephone number, including area code (860) 723-4646


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

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 whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes / /   No /X/

                      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 August 12, 2004, all of which were directly owned by Lion Connecticut
Holdings Inc.

NOTE: WHEREAS ING LIFE INSURANCE AND ANNUITY COMPANY MEETS THE CONDITIONS SET
FORTH IN GENERAL INSTRUCTION H(1)(a) AND (b) OF FORM 10Q, THIS FORM IS BEING
FILED WITH THE REDUCED DISCLOSURE FORMAT PURSUANT TO GENERAL INSTRUCTION H(2).

<Page>

             ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
          (A WHOLLY-OWNED SUBSIDIARY OF LION CONNECTICUT HOLDINGS INC.)
                  FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 2004


                                      INDEX

<Table>
<Caption>
                                                                                    PAGE
                                                                                    ----
<S>                                                                                   <C>
PART I.     FINANCIAL INFORMATION (UNAUDITED)

Item 1.     Financial Statements:

            Condensed Consolidated Statements of Income                                3
            Condensed Consolidated Balance Sheets                                      4
            Condensed Consolidated Statements of Changes in Shareholder's Equity       6
            Condensed Consolidated Statements of Cash Flows                            7
            Notes to Condensed Consolidated Financial Statements                       8

Item 2.     Management's Narrative Analysis of the Results of
            Operations and Financial Condition                                        17

Item 4.     Controls and Procedures                                                   27

PART II.    OTHER INFORMATION

Item 1.     Legal Proceedings                                                         28

Item 6.     Exhibits and Reports on Form 8-K                                          28

Signatures                                                                            29
</Table>

                                        2
<Page>

             ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
          (A WHOLLY-OWNED SUBSIDIARY OF LION CONNECTICUT HOLDINGS INC.)


PART I.   FINANCIAL INFORMATION (UNAUDITED)

ITEM 1.   FINANCIAL STATEMENTS


                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)
                                   (Millions)


<Table>
<Caption>
                                                            THREE MONTHS ENDED JUNE 30,      SIX MONTHS ENDED JUNE 30,
                                                                2004            2003            2004            2003
                                                            ------------    ------------    ------------    ------------
<S>                                                         <C>             <C>             <C>             <C>
Revenue:
  Premiums                                                  $        7.8    $       17.8    $       17.8    $       28.3
  Fee income                                                       115.8            96.0           235.0           189.1
  Net investment income                                            241.4           236.5           478.9           481.0
  Net realized capital gains (losses)                               (2.6)           29.9            15.9            33.4
                                                            ------------    ------------    ------------    ------------
Total revenue                                                      362.4           380.2           747.6           731.8
                                                            ------------    ------------    ------------    ------------
Benefits, losses and expenses:
  Benefits:
    Interest credited and other benefits to policyholders          178.7           176.2           367.5           362.8
  Underwriting, acquisition, and insurance expenses:
    General expenses                                               104.0           105.9           207.0           207.6
    Commissions                                                     30.1            29.5            63.2            58.3
    Policy acquisition costs deferred                              (41.4)          (40.1)          (83.4)          (79.6)
  Amortization of deferred policy acquisition
    costs and value of business acquired                            36.3            (0.5)           74.2            56.0
                                                            ------------    ------------    ------------    ------------
Total benefits, losses and expenses                                307.7           271.0           628.5           605.1
                                                            ------------    ------------    ------------    ------------
Income before income taxes                                          54.7           109.2           119.1           126.7
Income tax expense                                                  17.0            35.4            37.4            40.5
                                                            ------------    ------------    ------------    ------------
Net income                                                  $       37.7    $       73.8    $       81.7    $       86.2
                                                            ============    ============    ============    ============
</Table>

   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

                                        3
<Page>

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                          (Millions, except share data)

<Table>
<Caption>
                                                                                    JUNE 30,     DECEMBER 31,
                                                                                      2004           2003
                                                                                  ------------   ------------
                                                                                   (UNAUDITED)
<S>                                                                               <C>            <C>
ASSETS
Investments:
  Fixed maturities, available for sale, at fair value (amortized cost of
    $17,124.2 at 2004 and $16,961.7 at 2003)                                      $   17,288.5   $   17,574.3
  Equity securities, at fair value:
    Nonredeemable preferred stock (cost of $51.7 at 2004 and $34.1 at 2003)               52.0           34.4
    Investment in affiliated mutual funds (cost of $102.2 at 2004
      and $112.3 at 2003)                                                                114.3          127.4
    Common stock (cost of $0.1 at 2004 and 2003)                                           0.1            0.1
  Mortgage loans on real estate                                                          999.0          754.5
  Policy loans                                                                           263.5          270.3
  Short-term investments                                                                     -            1.0
  Other investments                                                                       43.7           52.6
  Securities pledged to creditors under securities lending agreement (amortized
    cost of $727.2 at 2004 and $117.7 at 2003)                                           721.6          120.2
                                                                                  ------------   ------------
Total investments                                                                     19,482.7       18,934.8

Cash and cash equivalents                                                                 91.6           57.8
Short-term investments under securities loan agreement                                   729.0          123.9
Accrued investment income                                                                178.7          169.6
Reinsurance recoverable                                                                2,915.6        2,953.2
Deferred policy acquisition costs                                                        355.6          307.9
Sales inducements to contractholders                                                      20.1              -
Value of business acquired                                                             1,392.4        1,415.4
Property, plant and equipment (net of accumulated depreciation
  of $83.9 at 2004 and $79.8 at 2003)                                                     25.3           31.7
Due from affiliates                                                                      126.9           41.5
Other assets                                                                             173.2          174.5
Assets held in separate accounts                                                      31,276.8       33,014.7
                                                                                  ------------   ------------
Total assets                                                                      $   56,767.9   $   57,225.0
                                                                                  ============   ============
</Table>

   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

                                        4
<Page>

<Table>
<Caption>
                                                                                    JUNE 30      DECEMBER 31,
                                                                                      2004           2003
                                                                                  ------------   ------------
                                                                                  (UNAUDITED)
<S>                                                                               <C>            <C>
LIABILITIES AND SHAREHOLDER'S EQUITY
Policy liabilities and accruals:
  Future policy benefits and claims reserves                                      $    3,328.4   $    3,379.9
  Unpaid claims and claim expenses                                                        30.0           25.4
  Other policyholders' funds                                                          16,757.4       15,871.3
                                                                                  ------------   ------------
Total policy liabilities and accruals                                                 20,115.8       19,276.6
Due to affiliates                                                                         55.6           92.4
Payables under securities loan agreement                                                 729.0          123.9
Borrowed money                                                                         1,256.6        1,519.3
Current income taxes                                                                      84.0           85.6
Deferred income taxes                                                                    141.4          184.7
Other liabilities                                                                        459.2          281.9
Liabilities related to separate accounts                                              31,276.8       33,014.7
                                                                                  ------------   ------------
Total liabilities                                                                     54,118.4       54,579.1
                                                                                  ------------   ------------
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                                                           4,646.5        4,646.5
  Accumulated other comprehensive income                                                  30.8          106.8
  Retained deficit                                                                    (2,030.6)      (2,110.2)
                                                                                  ------------   ------------
Total shareholder's equity                                                             2,649.5        2,645.9
                                                                                  ------------   ------------
Total liabilities and shareholder's equity                                        $   56,767.9   $   57,225.0
                                                                                  ============   ============
</Table>

   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

                                        5
<Page>

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

<Table>
<Caption>
                                                                    SIX MONTHS ENDED JUNE 30,
                                                                      2004            2003
                                                                  ------------    ------------
<S>                                                               <C>             <C>
Shareholder's equity, beginning of period                         $    2,645.9    $    2,262.8
Comprehensive income:
  Net income                                                              81.7            86.2
  Other comprehensive income net of tax: Unrealized gain (loss)
    on securities ($(116.9) and $49.4, pretax year to date)              (76.0)           32.1
  Other                                                                   (2.1)              -
                                                                  ------------    ------------
Total comprehensive income                                                 3.6           118.3
                                                                  ------------    ------------
Capital contributions                                                        -           200.0
                                                                  ------------    ------------
Shareholder's equity, end of period                               $    2,649.5    $    2,581.1
                                                                  ============    ============
</Table>

   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

                                        6
<Page>

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                   (Millions)

<Table>
<Caption>
                                                         SIX MONTHS ENDED JUNE 30,
                                                           2004            2003
                                                       ------------    ------------
<S>                                                    <C>             <C>
Net cash provided by operating activities              $      119.9    $      961.8
Cash flows from investing activities
  Proceeds from the sale, maturity or repayment of:
    Fixed maturities available for sale                    15,421.2        13,913.1
    Equity securities                                          28.5            27.0
    Mortgages                                                   7.0             9.4
    Short-term and other investments                           22.7             2.9
  Acquisition of investments:
    Fixed maturities available for sale                   (15,280.9)      (15,682.0)
    Equity securities                                         (34.0)          (18.1)
    Short-term and other investments                          (18.8)          (27.5)
    Mortgages                                                (251.5)         (105.5)
  Change in policy loans                                        6.9            17.6
  Purchases of property and equipment                          (0.1)           (0.9)
  Other, net                                                      -            (7.9)
                                                       ------------    ------------
Net cash used for investing activities                        (99.0)       (1,871.9)
Cash flows from financing activities
  Deposits for investment contracts                         1,020.3           666.3
  Maturities and withdrawals from insurance and
    investment contracts                                     (872.8)         (370.7)
  Capital contribution                                            -           200.0
  Transfers from (to) separate accounts                       128.1           (27.0)
  Change in short-term loans                                 (262.7)          391.3
                                                       ------------    ------------
Net cash provided by financing activities                      12.9           859.9
                                                       ------------    ------------
Net increase (decrease) in cash and cash equivalents           33.8           (50.2)
Cash and cash equivalents, beginning of period                 57.8            65.4
                                                       ------------    ------------
Cash and cash equivalents, end of period               $       91.6    $       15.2
                                                       ============    ============
</Table>

   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

                                        7
<Page>

ING LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY-OWNED SUBSIDIARY OF LION CONNECTICUT HOLDINGS INC.)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.   BASIS OF PRESENTATION

     ING Life Insurance and Annuity Company ("ILIAC"), and its wholly-owned
     subsidiaries (collectively, the "Company") are providers of financial
     products and services in the United States. These condensed consolidated
     financial statements include ILIAC and its wholly-owned subsidiaries, ING
     Insurance Company of America ("IICA"), ING Financial Advisers, LLC, and,
     through February 28, 2002, Aetna Investment Adviser Holding Company, Inc.
     ("IA Holdco"). ILIAC was a wholly-owned subsidiary of ING Retirement
     Holdings, Inc. ("HOLDCO"), which was a wholly-owned subsidiary of ING
     Retirement Services, Inc, ("IRSI"). IRSI was a wholly-owned subsidiary of
     Lion Connecticut Holdings, Inc, ("Lion"), which in turn was ultimately
     owned by ING Groep N.V. ("ING"), a financial services company based in The
     Netherlands. However, on March 30, 2003, a series of mergers occurred in
     the following order: IRSI merged into Lion, HOLDCO merged into Lion and IA
     Holdco merged into Lion. As a result, ILIAC is now a direct wholly-owned
     subsidiary of Lion.

     On February 28, 2002, ILIAC contributed 100% of the stock of IA Holdco and
     its subsidiaries to HOLDCO, (former ILIAC parent company), resulting in a
     distribution totaling $60.1 million. As a result of this transaction, the
     Investment Management Services segment is no longer reflected as an
     operating segment of the Company.

     The condensed consolidated financial statements and notes as of June 30,
     2004 and December 31, 2003 and for the three and six-months ended June 30,
     2004 and 2003 ("interim periods") have been prepared in accordance with
     U.S. generally accepted accounting principles and are unaudited. The
     condensed consolidated financial statements reflect all adjustments
     (consisting only of normal recurring accruals), which are, in the opinion
     of management, necessary for the fair presentation of the consolidated
     financial position, results of operations and cash flows for the interim
     periods. These condensed consolidated financial statements and notes should
     be read in conjunction with the consolidated financial statements and
     related notes as presented in the Company's 2003 Annual Report on Form
     10-K. The results of operations for the interim periods should not be
     considered indicative of results to be expected for the full year. Certain
     reclassifications have been made to 2003 financial information to conform
     to the 2004 presentation.

     The Company conducts its business through one reporting segment, U.S.
     Financial Services ("USFS"), and revenue reported by the Company is
     predominantly derived from external customers.

                                        8
<Page>

2.   RECENTLY ADOPTED ACCOUNTING STANDARDS

     ACCOUNTING AND REPORTING BY INSURANCE ENTERPRISES FOR CERTAIN
     NONTRADITIONAL LONG-DURATION CONTRACTS AND FOR SEPARATE ACCOUNTS

     The Company adopted Statement of Position ("SOP") 03-1, "Accounting and
     Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration
     Contracts and for Separate Accounts," on January 1, 2004. SOP 03-1
     establishes several new accounting and disclosure requirements for certain
     nontraditional long-duration contracts and for separate accounts including,
     among other things, a requirement that assets and liabilities of separate
     account arrangements that do not meet certain criteria be accounted for as
     general account assets and liabilities, and that revenues and expenses
     related to such arrangements be consolidated with the respective revenue
     and expense lines in the Condensed Consolidated Statement of Operations. In
     addition, the SOP requires additional liabilities be established for
     certain guaranteed death and other benefits and for Universal Life products
     with certain patterns of cost of insurance charges, and that sales
     inducements provided to contractholders be recognized on the balance sheet
     separately from deferred acquisition costs and amortized as a component of
     benefits expense using methodology and assumptions consistent with those
     used for amortization of deferred policy acquisition costs.

     The Company evaluated all requirements of SOP 03-1 and determined that it
     is affected by the SOP's requirements to account for certain separate
     account arrangements as general account arrangements and to defer,
     amortize, and recognize separately, sales inducements to contractholders.
     Requirements to establish additional liabilities for minimum guarantee
     benefits are applicable to the Company, however, the Company's policies on
     contract liabilities have historically been, and continue to be, in
     conformity with the requirements newly established. Requirements for
     recognition of additional liabilities for products with certain patterns of
     cost of insurance charges are not applicable to the Company.

     The adoption of SOP 03-1 did not have a significant effect on the Company's
     results of operations, and had no impact on the Company's net income.

     THE MEANING OF OTHER-THAN-TEMPORARY IMPAIRMENT AND ITS APPLICATION TO
     CERTAIN INVESTMENTS

     In March 2004, the Emerging Issues Task Force ("EITF") reached a final
     consensus on EITF Issue No. 03-1, "The Meaning of Other-Than-Temporary
     Impairment and its Application to Certain Investments," adopting a
     three-step impairment model for securities within its scope. The
     three-step model is to be applied on a security-by-security basis as
     follows:

     Step 1: Determine whether an investment is impaired. An investment is
             impaired if its fair value of the investment is less than its cost
             basis.

     Step 2: Evaluate whether an impairment is other-than-temporary.

     Step 3: If the impairment is other-than-temporary, recognize an impairment
             loss equal to the difference between the investment's cost and its
             fair value.

     The Company included this three-stop model in the impairment evaluation for
     the quarter ended June 30, 2004. This guidance resulted in no additional
     impairments for the Company.

     Earlier consensus reached by the EITF on this issue required that certain
     quantitative and qualitative disclosures be made for unrealized losses on
     debt and equity securities that have not been recognized as
     other-than-temporary impairments. These disclosures were adopted by the
     Company, effective December 31, 2003, and included in the Investments
     footnote of the Notes to Consolidated Financial Statments included in the
     Company's 2003 form 10-K. In addition to the disclosure requirements
     adopted by the Company effective December 31, 2003, the final consensus of
     EITF 03-01 reached in March 2004 included additional disclosure
     requirements that are effective for fiscal years ending after
     June 15, 2004.

     In 2003, the Derivative Implementation Group ("DIG") responsible for
     issuing guidance on behalf of the FASB for implementation of FAS No. 133,
     "Accounting for Derivative Instruments and Hedging Activities" issued
     Statement Implementation Issue No. B36, "Embedded Derivatives: Modified
     Coinsurance Arrangements and Debt Instruments That Incorporate Credit Risk
     Exposures That Are Unrelated or Only Partially Related to the Credit
     Worthiness of the Obligor under Those Instruments" ("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 embedded
     derivatives that are required to be bifurcated. The Company adopted DIG B36
     on October 1, 2003. The Company has modified coinsurance treaties that are
     applicable to the guidance. The applicable contracts, however, have been
     determined to generate embedded derivatives with a fair value of zero.
     Therefore, the guidance has no impact on the Company's financial position,
     results of operations or cash flows.

                                        9
<Page>

3.   NEW ACCOUNTING PRONOUNCEMENTS

     FSP FAS 97-1

     The implementation of the American Institute of Certified Public
     Accountants ("AICPA") SOP 03-01, "Accounting and Reporting by Insurance
     Enterprises for certain Nontraditional Long-Duration Contracts and for
     Separate Accounts," has raised questions regarding the interpretation of
     the requirements of SFAS No. 97, concerning when it is appropriate to
     record an unearned revenue liability related to the insurance benefit
     function. To clarify its position, in June of 2004 the Financial Accounting
     Standards Board ("FASB") issued FSP FAS 97-1, "Situations in which
     paragraphs 17(b) and 20 of FASB Statement No. 97, Accounting and Reporting
     by Insurance Enterprises for certain Long-Duration Contracts and for
     Realized Gains and Losses from the Sale of Investments, Permit or Require
     Accrual of an Unearned Revenue Liability." FSP FAS 97-1 outlines that SFAS
     No. 97 is clear in its intent and language, and requires the recognition of
     an unearned revenue liability for amounts that have been assessed to
     compensate insurers for services provided over future periods. The
     requirement of SOP 03-01 is not intended to amend or limit the requirement
     of SFAS No. 97 to recognize a liability for unearned revenue only to those
     situations where profits are expected to be followed by a loss. The
     guidance contained in FSP FAS 97-1 is effective for financial statements
     with fiscal periods beginning subsequent to July 18, 2004. The Company is
     currently evaluating the impact of FSP FAS 97-1 and related accounting
     guidance and anticipates a potential increase in the (net) liability
     established under SOP 03-01 in future accounting periods.


4.   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. Value of business acquired ("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").

                                       10
<Page>

     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.

     VOBA activity for the six month periods ended June 30, 2004 and 2003 was as
     follows:

<Table>
<Caption>
     (MILLIONS)                                    2004          2003
     ----------                                 ----------    ----------
     <S>                                        <C>           <C>
     Balance at December 31                     $  1,415.4    $  1,438.4
     Adjustment for FAS No. 115                       11.9          (8.6)
     Additions                                        27.2          25.0
     Interest accrued at 5% to 7%                     46.5          48.0
     Amortization                                   (108.6)        (91.4)
                                                ----------    ----------
     Balance at June 30                         $  1,392.4    $  1,411.4
                                                ==========    ==========
</Table>


5.   INVESTMENTS

     IMPAIRMENTS

     During the three months ended June 30, 2004, the Company determined that 7
     fixed maturities had other than temporary impairments. As a result, for the
     three months ended June 30, 2004, the Company recognized a pre-tax loss of
     $0.6 million to reduce the carrying value of the fixed maturities to their
     fair value at the time of impairment. During the three months ended June
     30, 2003, the Company determined that 53 fixed maturities had other than
     temporary impairments. As a result, for the three months ended June 30,
     2003, the Company recognized a pre-tax loss of $24.1 million to reduce the
     carrying value of the fixed maturities to their fair value at the time of
     impairment.

     During the six months ended June 30, 2004, the Company determined that 42
     fixed maturities had other than temporary impairments. As a result, for the
     six months ended June 30, 2004, the Company recognized a pre-tax loss of
     $5.8 million to reduce the carrying value of the fixed maturities to their
     fair value at the time of impairment. During the six months ended June 30,
     2003, the Company determined that 75 fixed maturities had other than
     temporary impairments. As a result, for the six months ended June 30, 2003,
     the Company recognized a pre-tax loss of $66.2 million to reduce the
     carrying value of the fixed maturities to their fair value at the time of
     impairment.

     The fair value of the remaining impaired fixed maturities at June 30, 2004
     and 2003 is $71.1 million and $152.9 million, respectively.

                                       11
<Page>

6.   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 limited 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 policyholder or
     participant (who bears the investment risk subject, in limited cases, to
     minimum guaranteed rates) under a contract in shares of mutual funds which
     are managed by the Company, or in other selected mutual funds not managed
     by the Company.

     Separate Account assets and liabilities are carried at fair value and shown
     as separate captions in the Condensed Consolidated Balance Sheets.
     Deposits, investment income and net realized and unrealized capital gains
     and losses of the Separate Accounts are not reflected in the Condensed
     Consolidated Financial Statements (with the exception of realized and
     unrealized capital gains and losses on the assets supporting the guaranteed
     interest option). The Condensed Consolidated Statements of Cash Flows do
     not reflect investment activity of the Separate Accounts.

     Assets and liabilities of separate account arrangements that do not meet
     the criteria in SOP 03-1 for separate presentation in the Condensed
     Consolidated Balance Sheets (those arrangements supporting the guaranteed
     interest option), and revenues and expenses related to such arrangements,
     were reclassified to the general account on January 1, 2004, in accordance
     with the SOP requirements.


7.   ADDITIONAL INSURANCE BENEFITS AND MINIMUM GUARANTEES

     Under SOP 03-1, the Company calculates an additional liability (the "SOP
     reserve") for certain guaranteed benefits in order to recognize the
     expected value of death benefits in excess of the projected account balance
     over the accumulation period based on total expected assessments.

                                       12
<Page>

     The SOP reserve calculated is the minimum guaranteed death benefits
     ("MGDB") reserve and is determined each period by estimating the expected
     value of death benefits in excess of the projected account balance and
     recognizing the excess ratably over the accumulation period based on total
     expected assessments. The Company regularly evaluates estimates used to
     adjust the additional liability balance, with a related charge or credit to
     benefit expense, if actual experience or other evidence suggests that
     earlier assumptions should be revised. The following assumptions and
     methodology were used to determine the MGDB SOP reserve at June 30, 2004:

<Table>
<Caption>
                AREA                                  ASSUMPTIONS/BASIS FOR ASSUMPTIONS
     ---------------------------   -----------------------------------------------------------------------
     <S>                           <C>
     Data used                     Based on 101 investment performance scenarios stratified based on
                                   10,000 random generated scenarios
     Mean investment performance   8.5%
     Volatility                    18.0%
     Mortality                     60.0%, 60.0%, 75.0% of the 90-95 ultimate mortality table for standard,
                                   rachet, and rollup, respectively
     Lapse rates                   Vary by contract type and duration; range between 1.0% and 40.0%
     Discount rates                6.5%, based on the portfolio earned rate of the general account
</Table>

     As of June 30, 2004, the separate account liability subject to SOP 03-1 for
     minimum guaranteed benefits and the additional liability recognized related
     to minimum guarantees is $4,570.8 million and $0.9 million, respectively.
     During the six months ended June 30, 2004, incurred guaranteed benefits and
     paid guaranteed benefits were $0.2 million and $0.1 million, respectively.
     The net amount at risk (net of reinsurance) and the weighted average
     attained age of contractholders is $43.2 million and 67, respectively, as
     of June 30, 2004.

     The aggregate fair value of equity securities (including mutual funds), by
     major investment asset category, supporting separate accounts with
     additional insurance benefits and minimum investment return guarantees as
     of June 30, 2004 is $4,570.8 million.

8.   SALES INDUCEMENTS

     Sales inducements represent benefits paid to contractholders that are
     incremental to the amounts the Company credits on similar contracts and are
     higher than the contract's expected ongoing crediting rates for periods
     after the inducement. As of January 1, 2004, such amounts are reported
     separately on the balance sheet in accordance with SOP 03-1. Prior to 2004,
     sales inducements were recorded as a component of other assets on the
     Condensed Consolidated Balance Sheets. Sales inducements are amortized as a
     component of benefit expense using methodology and assumptions consistent
     with those used for amortization of DAC. During the three months ended June
     30, 2004, the Company capitalized $0.6 million and amortized $1.9 million
     of sales inducements,

                                       13
<Page>

     respectively. During the six months ended June 30, 2004, the Company
     capitalized $1.3 million and amortized $3.3 million of sales inducements,
     respectively. The unamortized balance of capitalized sales inducements as
     of June 30, 2004 is $20.1 million.


9.   BENEFIT PLANS

     NON-QUALIFIED RETIREMENT PLANS

     As of December 31, 2001, the Company, in conjunction with ING, offers
     certain eligible employees (excluding, among others, Career Agents (as
     defined below)) the Supplemental ING Retirement Plan for Aetna Financial
     Services and Aetna International Employees ("SERP"). Effective January 1,
     2002, the Company, in conjunction with ING, offers certain employees (other
     than Career Agents) supplemental retirement benefits under the ING Americas
     Supplemental Executive Retirement Plan (the "Americas Supplemental Plan").
     The Company, in conjunction with ING, sponsors the Pension Plan for Certain
     Producers of ING Life Insurance and Annuity Company (formerly the Pension
     Plan for Certain Producers of Aetna Life Insurance and Annuity Company)
     (the "Agents Non-Qualified Plan"), a non-qualified defined benefit pension
     plan. The Company also sponsors the Producers' Incentive Savings Plan
     ("PIP"), which is a non-qualified deferred compensation plan for eligible
     Career Agents and certain other individuals who meet the eligibility
     criteria specified in the PIP. The Company also sponsors the Producers'
     Deferred Compensation Plan ("DCP"), which is a non-qualified deferred
     compensation plan for eligible Career Agents and certain other individuals
     who meet the eligibility criteria specified in the DCP. Benefit accruals
     under the SERPs ceased effective as of December 31, 2001.

     Net periodic benefit costs for the SERP and the Agents Non-Qualified Plan
     for the periods ended June 30, 2004 and 2003 were as follows:

<Table>
<Caption>
                                                 THREE MONTHS ENDED JUNE 30,    SIX MONTHS ENDED JUNE 30,
     (MILLIONS)                                      2004           2003           2004           2003
     -----------------------------------------   ------------   ------------   ------------   ------------
     <S>                                         <C>            <C>            <C>            <C>
     Interest cost                               $        1.5   $        1.8   $        3.0   $        3.5
     Net actuarial loss recognized in the year              -            0.2              -            0.4
     Unrecognized past service cost
       recognized in year                                   -              -            0.1            0.1
                                                 ------------   ------------   ------------   ------------
     Net periodic benefit cost                   $        1.5   $        2.0   $        3.1   $        4.0
                                                 ============   ============   ============   ============
</Table>

     Contributions for the SERP and Agents' Non-Qualified Plan are expected to
     be $9.4 million during 2004.

     POST-RETIREMENT BENEFITS

     In addition to providing pension benefits, the Company, in conjunction with
     ING, provides certain health care and life insurance benefits for retired
     employees and certain

                                       14
<Page>

     agents, including certain Career Agents. Generally, retired employees and
     eligible Career Agents pay a portion of the cost of these post-retirement
     benefits, usually based on their years of service with the Company. The
     amount a retiree or eligible Career Agent pays for such coverage is subject
     to change in the future.

     Net periodic benefit costs for retired employees' and retired agents'
     post-retirement health care benefits for the periods ended June 30, 2004
     and 2003 were as follows:

<Table>
<Caption>
                                                 THREE MONTHS ENDED JUNE 30,    SIX MONTHS ENDED JUNE 30,
     (MILLIONS)                                      2004           2003           2004           2003
     -----------------------------------------   ------------   ------------   ------------   ------------
     <S>                                         <C>            <C>            <C>            <C>
     Service cost                                $        0.3   $        0.2   $        0.6   $        0.4
     Interest cost                                        0.5            0.4            0.9            0.8
     Net actuarial loss recognized in the year            0.2            0.1            0.3            0.2
     Past service cost - recognized this year            (0.2)          (0.1)          (0.2)          (0.2)
                                                 ------------   ------------   ------------   ------------
     Net periodic benefit cost                   $        0.8   $        0.6   $        1.6   $        1.2
                                                 ============   ============   ============   ============
</Table>

     Contributions for retired employees' and retired agents' post-retirement
     health care benefits are expected to be $1.6 million during 2004.

     CHANGES IN ASSUMPTIONS

     Changes in the weighted-average assumptions used in the measurement of the
     benefit obligation for the Retirement Plan were as follows:

<Table>
<Caption>
                                                                                   2004           2003
                                                                               ------------   ------------
     <S>                                                                               <C>            <C>
     Discount rate at beginning of period                                              6.25%          6.75%
</Table>

     EFFECT OF RECENTLY ENACTED LEGISLATION

     On December 8, 2003, the Medicare Prescription Drug, Improvement and
     Modernization Act of 2003 ("the Act") was enacted. The Act introduced both
     a Medicare prescription drug benefit and a federal subsidy to sponsors of
     retiree healthcare plans. In January 2004, the FASB issued FASB Staff
     Position No. 106-1 ("FSP 106-1"), "Accounting and Disclosure Requirements
     Related to the Medicare Prescription Drug, Improvement and Modernization
     Act of 2003." This statement permitted a sponsor of a postretirement
     benefit plan that provides a prescription drug benefit to make a one-time
     election to defer recognizing the effects of the Act until authoritative
     guidance on accounting for the federal subsidy was issued or until certain
     other events occurred. In May 2004, the FASB issued FASB Staff Position No.
     106-2 ("FSP 106-2"), "Accounting and Disclosure Requirements Related to the
     Medicare Prescription Drug, Improvement and Modernization Act of 2003,"
     which superseded FSP 106-1. FSP 106-2 provides guidance on the accounting
     for the effects of the Act and requires certain disclosures regarding the
     effect of the federal subsidy provided by the Act. FSP 106-2 will become
     effective for the Company in the third quarter of 2004. The Company
     maintains a postretirement benefit plan that provides a prescription drug
     benefit. The Company expects that application of

                                       15
<Page>

     this guidance will not have a material impact on the Company's condensed
     consolidated financial statements.


10.  INCOME TAXES

     The Company's effective tax rates for the three months ended June 30, 2004
     and 2003 were 31.1% and 32.4%, respectively. Effective tax rates for the
     six months ended June 30, 2004 and 2003 were 31.4% and 32.0%, respectively.
     The decrease in the effective tax rates is attributable to the current year
     decrease in pre-tax income being larger than the relative decrease in the
     deduction allowed for dividends received.


11.  COMMITMENTS AND CONTINGENT LIABILITIES

     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
     June 30, 2004 and December 31, 2003, the Company had off-balance sheet
     commitments to purchase investments equal to the fair value of $239.3
     million and $154.3 million, respectively.

     LITIGATION

     The Company is a party to threatened or pending lawsuits/arbitrations
     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/arbitrations, in light of existing insurance, reinsurance and
     established reserves, it is the opinion of management that the disposition
     of such lawsuits/arbitrations will not have a materially adverse effect on
     the Company's operations or financial position.


12.  SUBSEQUENT EVENT

     The Congressional Joint Committee on Taxation has finalized it review of
     the Lion tax return through tax year 2000 and has sent the audit
     examination back to the Internal Revenue Service for finalization. The
     Company was a member of the Lion tax return filings through December 13,
     2000. As a result of the resolution of these audits, the Company expects to
     record a favorable adjustment to its existing tax liability reserves in the
     third quarter of 2004.

                                       16
<Page>

ITEM 2.   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 ING Life Insurance and
          Annuity Company and its wholly-owned subsidiaries ("ILIAC", or the
          "Company") as of June 30, 2004 and December 31, 2003 and for the three
          and six-month periods ended June 30, 2004 and 2003. This review should
          be read in conjunction with the condensed consolidated financial
          statements and other data presented herein, as well as the
          "Management's Narrative Analysis of the Results of Operations and
          Financial Condition" section contained in the Company's 2003 Annual
          Report on Form 10-K.

          NATURE OF BUSINESS

          The Company 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 plan-owned assets not invested with the Company. The
          Company also offers investment advisory services and pension plan
          administrative services.

          RECENTLY ADOPTED ACCOUNTING STANDARDS

          ACCOUNTING AND REPORTING BY INSURANCE ENTERPRISES FOR CERTAIN
          NONTRADITIONAL LONG-DURATION CONTRACTS AND FOR SEPARATE ACCOUNTS

          The Company adopted Statement of Position ("SOP") 03-1, "Accounting
          and Reporting by Insurance Enterprises for Certain Nontraditional
          Long-Duration Contracts and for Separate Accounts," on January 1,
          2004. SOP 03-1 establishes several new accounting and disclosure
          requirements for certain nontraditional long-duration contracts and
          for separate accounts including, among other things, a requirement
          that assets and liabilities of separate account arrangements that do
          not meet certain criteria be accounted for as general account assets
          and liabilities, and that revenues and expenses related to such
          arrangements be consolidated with the respective revenue and expense
          lines in the Condensed Consolidated Statement of Operations. In
          addition, the SOP requires additional liabilities be established for
          certain guaranteed death and other benefits and for Universal Life
          products with certain patterns of cost of insurance charges, and that
          sales inducements provided to contractholders be recognized on the
          balance sheet separately from deferred acquisition costs and amortized
          as a component of benefits expense using methodology and assumptions
          consistent with those used for amortization of deferred policy
          acquisition costs.

                                       17
<Page>

          The Company evaluated all requirements of SOP 03-1 and determined that
          it is affected by the SOP's requirements to account for certain
          separate account arrangements as general account arrangements, and to
          recognize sales inducements to contractholders. Requirements to
          establish additional liabilities for minimum guarantee benefits are
          applicable to the Company, however, the Company's policies on policy
          liabilities have historically been, and continue to be, in conformity
          with the requirements newly established. Requirements for recognition
          of additional liabilities for products with certain patterns of cost
          of insurance charges are not applicable to the Company.

          The adoption of SOP 03-1 did not have a significant effect on the
          Company's results of operations, and had no impact on the Company's
          net income.

          THE MEANING OF OTHER-THAN-TEMPORARY IMPAIRMENT AND ITS APPLICATION TO
          CERTAIN INVESTMENTS

          In March 2004, the Emerging Issues Task Force ("EITF") reached a
          final consensus on EITF Issue No. 03-1, "The Meaning of
          Other-Than-Temporary Impairment and its Application to Certain
          Investments," adopting a three-step impairment model for securities
          within its scope. The three-step model is to be applied on a
          security-by-security basis as follows:

          Step 1: Determine whether an investment is impaired. An investment is
                  impaired if its fair value of the investment is less than its
                  cost basis.

          Step 2: Evaluate whether an impairment is other-than-temporary.

          Step 3: If the impairment is other-than-temporary, recognize an
                  impairment loss equal to the difference between the
                  investment's cost and its fair value.

          The Company included this three-stop model in the impairment
          evaluation for the quarter ended June 30, 2004. This guidance resulted
          in no additional impairments for the Company.

          Earlier consensus reached by the EITF on this issue required that
          certain quantitative and qualitative disclosures be made for
          unrealized losses on debt and equity securities that have not been
          recognized as other-than-temporary impairments. These disclosures were
          adopted by the Company, effective December 31, 2003, and included in
          the Investments footnote of the Notes to Consolidated Financial
          Statments included in the Company's 2003 form 10-K. In addition to
          the disclosure requirements adopted by the Company effective
          December 31, 2003, the final consensus of EITF 03-01 reached in
          March 2004 included additional disclosure requirements that are
          effective for fiscal years ending after June 15, 2004.

          In 2003, the Derivative Implementation Group ("DIG") responsible for
          issuing guidance on behalf of the FASB for implementation of FAS No.
          133, "Accounting for Derivative Instruments and Hedging Activities"
          issued Statement Implementation Issue No. B36, "Embedded Derivatives:
          Modified Coinsurance Arrangements and Debt Instruments That
          Incorporate Credit Risk Exposures That Are Unrelated or Only Partially
          Related to the Credit Worthiness of the Obligor under Those
          Instruments" ("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 embedded derivatives
          that are required to be bifurcated. The Company adopted DIG B36 on
          October 1, 2003. The Company has modified coinsurance treaties that
          are applicable to the guidance. The applicable contracts, however,
          have been determined to generate embedded derivatives with a fair
          value of zero. Therefore, the guidance has no impact on the Company's
          financial position, results of operations or cash flows.

          NEW ACCOUNTING PRONOUNCEMENTS

          FSP FAS 97-1

          The implementation of the American Institute of Certified Public
          Accountants ("AICPA") SOP 03-01, "Accounting and Reporting by
          Insurance Enterprises for certain Nontraditional Long-Duration
          Contracts and for Separate Accounts," has raised questions regarding
          the interpretation of the requirements of SFAS No. 97, concerning when
          it is appropriate to record an unearned revenue liability related to
          the insurance benefit function. To clarify its position, in June of
          2004 the Financial Accounting Standards Board ("FASB") issued FSP FAS
          97-1, "Situations in which paragraphs 17(b) and 20 of FASB Statement
          No. 97, Accounting and Reporting by Insurance Enterprises for certain
          Long-Duration Contracts and for Realized Gains and Losses from the
          Sale of Investments, Permit or Require Accrual of an Unearned Revenue
          Liability." FSP FAS 97-1 outlines that SFAS No. 97 is clear in its
          intent and language, and requires the recognition of an unearned
          revenue liability for amounts that have been assessed to compensate
          insurers for services provided over future periods. The requirement of
          SOP 03-01 is not intended to amend or limit the requirement of SFAS
          No. 97 to recognize a liability for unearned revenue only to those
          situations where profits are expected to be followed by a loss. The
          guidance contained in FSP FAS 97-1 is effective for financial
          statements with fiscal periods

                                       18
<Page>

          beginning subsequent to July 18, 2004. The Company is currently
          evaluating the impact of FSP FAS 97-1 and related accounting guidance
          and anticipates a potential increase in the (net) liability
          established under SOP 03-01 in future accounting periods.

          CRITICAL ACCOUNTING POLICIES

          GENERAL

          The preparation of financial statements in conformity with U.S.
          generally accepted accounting principles 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. 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 condensed consolidated
          financial statements.

          INVESTMENT IMPAIRMENT TESTING

          The Company reviews the general account investments for impairments by
          considering 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. 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
          records impairment losses for the difference.

          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

                                       19
<Page>

          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.

          SALES INDUCEMENTS

          Sales inducements represent benefits paid to contractholders that are
          incremental to the amounts the Company credits on similar contracts
          and are higher than the contract's expected ongoing crediting rates
          for periods after the inducement. Such amounts are reported separately
          on the balance sheet and are amortized as a component of benefit
          expense using methodology and assumptions consistent with those used
          for amortization of DAC.

          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 report
          and in any other statements made by, or on behalf of, the Company,
          whether or not in future filings with the Securities and Exchange
          Commission ("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

                                       20
<Page>

          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 (for
          additional information, see the Legislative Initiatives section
          below). Some may relate 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.

          RESULTS OF OPERATIONS

          Premiums decreased by $10.0 million and $10.5 million for the three
          and six months ended June 30, 2004, respectively, compared to the same
          periods in 2003, primarily due to lower single premium immediate
          annuity sales in 2004 versus 2003.

          Fee income increased by $19.8 million and $45.9 million for the three
          and six months ended June 30, 2004, respectively, compared to the same
          periods in 2003. The increase in fee income during the comparative
          periods was principally due to higher average variable assets under
          management. Substantially all of the fee income on variable assets is
          calculated based on variable assets under management, which increased
          between June 30, 2003 and 2004.

          Net investment income increased by $4.9 million during the three
          months ended June 30, 2004 compared to the same period in 2003. The
          increase in net investment income is primarily due to an increase in
          average assets under management with fixed options, partially offset
          by lower investment yields. Net investment income decreased $2.1
          million during the six months ended June 30, 2004 compared to the same
          periods in 2003. The decrease in net investment income is primarily
          due to lower investment yields, partially offset by an increase in
          average assets under management with fixed options.

          Net realized capital gains decreased by $32.5 million and $17.5
          million for the three and six months ended June 30, 2004,
          respectively, compared to the same periods in 2003. Net realized gains
          result from sales of fixed maturities having a fair value greater than
          book value and are dependent on the volume of trades in the current
          interest rate environment. The 10-year treasury yield has risen from
          an average of 3.77% in the first half of 2003 to 4.31% in the first
          half of 2004, an increase of 54 basis points. In a rising rate
          environment, the market value of fixed maturities held in the
          Company's portfolio decreases. The decrease in net realized gains
          reflects the impact of this variable on the overall sale of fixed
          maturities.

          Interest credited and other benefits to contractholders increased by
          $2.5 million and $4.7 million for the three and six months ended June
          30, 2004, respectively,

                                       21
<Page>

          compared to the same periods in 2003. An increase in average assets
          under management with fixed options, offset by a decrease in credited
          rates to contractholders, resulted in the overall increase in interest
          credited and other benefits to contractholders.

          Underwriting, acquisition, and insurance expenses declined by $2.6
          million for the three months ended June 30, 2004, compared to the same
          period in 2003. During the six months ended June 30, 2004,
          underwriting, acquisition, and insurance expenses increased by $0.5
          million compared to same period in 2003. In both periods, a decrease
          in general expenses and an increase in policy acquisition costs
          deferred were offset by an increase in commissions. Policy acquisition
          costs deferred were primarily affected by the increase in commissions.
          Commissions increased during the period due to an increase in new
          business.

          Amortization of deferred policy acquisition costs and value of
          business acquired increased by $36.8 million and $18.2 million for the
          three and six months ended June 30, 2004, respectively, compared to
          the same periods in 2003. Amortization during the three and six months
          ended June 30, 2003 was low primarily due to improved stock market and
          fund performance compared to the prior year. The positive market
          conditions resulted in negative amortization for the three months
          ended June 30, 2003. Amortization of long-duration products is
          recorded in proportion to actual and estimated future gross profits.
          Estimated 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.

          Net income decreased by $36.1 million and $4.5 million for the three
          and six months ended June 30, 2004, respectively, compared to the
          three and six months ended June 30, 2003. The decline in earnings is
          primarily the result of decreased net realized gains and an increase
          in total benefits, expenses and amortization of long-duration
          products, partially offset by an increase in fee income.

                                       22
<Page>

          The Company's annuity deposits and assets under management are as
          follows:

<Table>
<Caption>
                                                         THREE MONTHS ENDED           SIX MONTHS ENDED
                                                              JUNE 30,                    JUNE 30,
          (MILLIONS) (UNAUDITED)                         2004          2003          2004          2003
                                                      -----------   -----------   -----------   -----------
          <S>                                         <C>           <C>           <C>           <C>
          Deposits:
            Annuities-fixed options                   $     352.4   $     411.8   $     842.2   $     838.7
            Annuities-variable options                    1,054.6         904.3       2,336.7       1,959.8
                                                      -----------   -----------   -----------   -----------
          Total deposits                              $   1,407.0   $   1,316.1   $   3,178.9   $   2,798.5
                                                      ===========   ===========   ===========   ===========

          Assets under management:
            Annuities-fixed options (1)                                           $  16,360.4   $  15,613.0
            Annuities-variable options (2)                                           29,894.3      25,319.4
                                                                                  -----------   -----------
            Subtotal-annuities                                                       46,254.7      40,932.4
            Plan sponsored and other                                                  5,314.0       6,830.0
                                                                                  -----------   -----------
          Total-assets under management                                              51,568.7      47,762.4
          Assets under administration (3)                                            22,607.1      19,214.8
                                                                                  -----------   -----------
          Total assets under management
            and administration                                                    $  74,175.8   $  66,977.2
                                                                                  ===========   ===========
</Table>

          (1)  Excludes net unrealized capital gains of $158.7 million and
               $1,016.1 million at June 30, 2004 and 2003, respectively.
          (2)  Includes $13,863.3 million at June 30, 2004 and $10,618.7 million
               at June 30, 2003 related to deposits into the Company's products
               and invested in unaffiliated mutual funds.
          (3)  Represents assets for which the Company provides administrative
               services only.

          FINANCIAL CONDITION

          INVESTMENTS

          FIXED MATURITIES

          At June 30, 2004 and December 31, 2003, the Company's carrying value
          of available for sale fixed maturities including securities pledged
          under securities lending agreement (hereinafter referred to as "total
          fixed maturities") represented 92.4% and 93.5%, respectively, of the
          total general account invested assets. For the same periods, $13,719.1
          million, or 76.2% of total fixed maturities, and $13,744.9 million, or
          77.7% of total fixed maturities, respectively, supported
          experience-rated products. Total fixed maturities reflected net
          unrealized capital gains of $158.7 million and $615.1 million at June
          30, 2004 and December 31, 2003, respectively.

          It is management's objective that the portfolio of fixed maturities be
          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 June 30, 2004 and December 31, 2003.

          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

                                       23
<Page>

          weakened capacity of the issuer to make principal and interest
          payments than is the case with higher rated fixed maturities.

          The percentage of total fixed maturities by quality rating category is
          as follows:

<Table>
<Caption>
                                                          JUNE 30,    DECEMBER 31,
                                                            2004          2003
                                                         ----------   ------------
          <S>                                                 <C>            <C>
          AAA                                                  48.7%          51.1%
          AA                                                    4.9            4.3
          A                                                    19.3           19.1
          BBB                                                  23.0           21.3
          BB                                                    3.2            3.2
          B and below                                           0.9            1.0
                                                         ----------   ------------
          Total                                               100.0%         100.0%
                                                         ==========   ============
</Table>

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

<Table>
<Caption>
                                                          JUNE 30,    DECEMBER 31,
                                                            2004          2003
                                                         ----------   ------------
          <S>                                                 <C>            <C>
          U.S. Corporate                                       39.5%          38.9%
          Residential Mortgaged-backed                         30.9           33.7
          Foreign (1)                                          12.3           11.6
          Commercial/Multifamily Mortgage-backed                8.5            7.8
          Asset-backed                                          7.5            6.0
          U.S. Treasuries/Agencies                              1.3            2.0
                                                         ----------   ------------
          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 fixed maturity investment 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.

                                       24
<Page>

          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.

          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 America Insurance
          Holdings, Inc. ("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 3.0% 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.

          LEGISLATIVE INITIATIVES

          The Jobs and Growth Tax Relief Reconciliation Act of 2003, which was
          enacted in the second quarter, may impact the Company. The Act's
          provisions, which reduce the tax rates on long-term capital gains and
          corporate dividends, impact the relative competitiveness of the
          Company's products, especially variable annuities.

          Other legislative proposals under consideration include repealing the
          estate tax, changing the taxation of products, changing life insurance
          company taxation and making changes to nonqualified deferred
          compensation arrangements. Some of these proposals, if enacted, could
          have a material effect on life insurance, annuity and other retirement
          savings product sales.

          The impact on the tax position of the Company's products cannot be
          predicted.

                                       25
<Page>

          SUBSEQUENT EVENT

          The Congressional Joint Committee on Taxation has finalized it review
          of the Lion tax return through tax year 2000 and has sent the audit
          examination back to the Internal Revenue Service for finalization. The
          Company was a member of the Lion tax return filings through December
          13, 2000. As a result of the resolution of these audits, the Company
          expects to record a favorable adjustment to its existing tax liability
          reserves in the third quarter of 2004.

                                       26
<Page>

ITEM 4.   CONTROLS AND PROCEDURES

          a)  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 Company's disclosure controls and procedures
              (as defined in Rule 13a-15(e) and 15d-15(e) of the Securities
              Exchange Act of 1934) as of the end of the period covered by this
              report. 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 has not been any change in the internal controls over
              financial reporting of the Company that occurred during the period
              covered by this report that has materially affected or is
              reasonably likely to materially affect these internal controls.

                                       27
<Page>

                           PART II. OTHER INFORMATION


ITEM 1.   LEGAL PROCEEDINGS

          The Company is a party to threatened or pending lawsuits/arbitrations
          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/arbitrations, in light of existing
          insurance, reinsurance and established reserves, it is the opinion of
          management that the disposition of such lawsuits/arbitrations will not
          have a materially adverse effect on the Company's operations or
          financial position.

          As with many financial services companies, the Company and affiliates
          of the Company have received requests for information from various
          governmental and self-regulatory agencies in connection with
          investigations related to trading in investment company shares. In
          each case, full cooperation and responses are being provided. The
          Company is also reviewing its policies and procedures in this area.


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

          (a) EXHIBITS

              31.1   Certificate of David A. Wheat pursuant to Section 302 of
                     the Sarbanes-Oxley Act of 2002.

              31.2   Certificate of Brian D. Comer pursuant to Section 302 of
                     the Sarbanes-Oxley Act of 2002.

              32.1   Certificate of David A. Wheat pursuant to Section 906 of
                     the Sarbanes-Oxley Act of 2002.

              32.2   Certificate of Brian D. Comer pursuant to Section 906 of
                     the Sarbanes-Oxley Act of 2002.

          (b) Reports on form 8-K.

              None.

                                       28
<Page>

                                   SIGNATURES

Pursuant to the requirements 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)

August 12, 2004                By  /s/ David A. Wheat
---------------                    ---------------------------------------------
    (Date)                          David A. Wheat
                                    Director, Senior Vice President and
                                     Chief Financial Officer