Fitch Places ING's U.S. Insurance Subsidiaries on Watch Neg; Affirms ING Verzekeringen's Debt.

CHICAGO -- Fitch Ratings has placed most of ING Verzekeringen N.V.'s (INV) U.S.-based insurance operating subsidiaries' (ING-US) insurer financial strength (IFS) ratings on Rating Watch Negative. At the same time, the agency has affirmed the ratings of INV and its U.S.-based subsidiaries as listed below. The Outlook for INV and all guaranteed and assumed fixed income security ratings in the U.S. is Stable.

The rating action follows ING NV's announcement of the sale of its U.S. reinsurance business to Scottish Re. The transaction is expected to close in the fourth quarter of 2004 and to be executed through a 100% indemnity reinsurance transaction of the in-force individual life reinsurance business to Scottish Re. ING-US will transfer assets of approximately $800 million, including a negative ceding commission of $560 million and certain systems and operating assets.

While Fitch views the disposal of the ING-US' underperforming reinsurance block of business as strategically favorable, the profitability of the block was much less than expected as indicated by the payment of a ceding commission to Scottish Re. Additionally, Fitch views ING-US improvements in risk-adjusted capital and profitability over the last 12 months as less than expected and low for the rating category.

Fitch expects to resolve the Rating Watch after a full review with management of the U.S. insurance operations and a revisiting of Fitch's methodology in regard to continuing to rate ING-US on a group basis within INV. In October 2003, Fitch placed ING's U.S.-based operating subsidiaries on Negative Outlook, reflecting Fitch's view that these operations were underperforming relative to the rest of INV, as reported under Dutch Accounting Principles (DAP) and U.S. Statutory Accounting Principles (SAP). While ING-US' results through the first half of 2004 have been good in terms of both top and bottom line growth, Fitch believes moderate profitability levels have had a negative affect on consolidated capital growth and only modest levels of improvement in terms of return on assets and return on equity. ING-US capital levels compare unfavorably with Fitch's estimate of the industry average RBC of 352% at year-end 2003 and with capital levels for similarly rated U.S. peers.

Fitch believes that benefits of the sale of the noncore reinsurance business include improved focus on ING-US' retail and wealth management business and the release of moderate amounts of strategic capital, as well as reduced mortality risk exposure and potential equity contributions to support the reinsurance block. ING will continue to provide collateral support in the form of lines of credit for current and future XXX and AXXX reserves until Scottish Re replaces or novates existing contracts.

The Stable Outlook for INV and its non-U.S. operations reflects the group's good operating performance and solid franchise in a number of countries, the most significant of which are in the Netherlands, Belgium, Mexico, Canada, Taiwan, Japan, and Australia, as well as those in the U.S. The group also holds a number of strong business positions in many developing countries, reflecting its expertise in running diversified distribution channels, of which bancassurance is a key channel.

The insurer financial strength rating of Life Insurance Company of Georgia has been affirmed at 'A' as the operation is no longer considered core to ING's U.S. operations. The Rating Outlook is Stable.

The rating of Southland Life Insurance Company has been withdrawn as the company was merged into Security Life of Denver Insurance Company in October 2004.

These ratings were initiated by Fitch in response to investor demand. These ratings are based primarily on public information.

Rating list:

ING Life Insurance and Annuity Company

-- Insurer financial strength rating 'AA' placed on Rating Watch Negative.

ING USA Annuity and Life Insurance Company

-- Insurer financial strength rating 'AA' placed on Rating Watch Negative.

ING Life Insurance Company of America

-- Insurer financial strength rating 'AA' placed on Rating Watch Negative.

ReliaStar Life Insurance Company

-- Insurer financial strength rating 'AA' placed on Rating Watch Negative.

ReliaStar Life Insurance Company of New York 

-- Insurer financial strength rating 'AA' placed on Rating Watch Negative.

Security Life of Denver Insurance Company

-- Insurer financial strength rating 'AA' placed on Rating Watch Negative.

Life Insurance Company of Georgia

-- Insurer financial strength rating affirmed at 'A'/Stable.

Southland Life Insurance Company

-- Insurer Financial Strength rating withdrawn

ING Verzekeringen N.V.;

-- Long-term issuer affirmed at 'A+', Outlook Stable;

-- Senior debt affirmed at 'A+', Outlook Stable.

ING America Insurance Holdings, Inc.

-- Commercial paper affirmed at 'F1'.

Equitable of Iowa Companies, Inc.

-- Senior debt affirmed at 'A', Outlook Stable.

Equitable of Iowa Capital Trust I, II

-- Trust preferred stock affirmed at 'A-', Outlook Stable.

Lion Connecticut Holdings, Inc.

-- Long-term issuer affirmed at 'A+', Outlook Stable;

-- Senior debt affirmed at 'A+', Outlook Stable.

ReliaStar Financing I, II

-- Trust preferred securities affirmed at 'A+', Outlook Stable.

ING Verzekeringen N.V. (INV) guarantees the debt and commercial paper of ING America Insurance Holdings, Inc. (AIH), the senior debt of Lion Connecticut Holdings, and the capital trust securities of ReliaStar Financing I, and therefore these ratings reflect Fitch Ratings' 'A+' senior debt rating of INV. While the senior debt and preferred stock of Equitable of Iowa Companies, Inc. and ReliaStar Financial Corporation do not receive the guarantee, their ratings reflect INV's financial strength and resources