A roundup of some of the more unusual items that crossed our desk recently.
Item 8.01 Other Events
ING USA Annuity and Life Insurance Company ("ING USA") is filing this Current
Report on Form 8-K to update the information included in its Annual Report on
Form 10-K ("Form 10-K") for the year ended December 31, 2011 for the following
• Effective January 1, 2012, ING USA voluntarily changed to fair value
accounting for the guaranteed minimum withdrawal benefits with life
payouts ("GMWBL") riders as a retrospective change in accounting
principle. Under fair value accounting, GMWBLs are considered embedded
derivatives, which are measured at estimated fair value separately from
the host annuity contract. Changes in estimated fair value are reported in
Other net realized capital gains (losses) in the Statements of Operations.
Previously, GMWBLs were accounted for by estimating the value of expected
benefits in excess of the projected account balance and recognizing the
excess ratably over the accumulation period based on total expected
assessments. The new accounting method is preferable, as it provides more
useful financial reporting information to financial statement users and
fair value is more closely aligned with the underlying economics of the
guarantee. The financial statements included in Exhibit 99.1 to this Form
8-K update the financial statements included in ING USA's 2011 Form 10-K
to reflect the impact of this accounting change. However, such adjusted
financial statements do not represent a restatement of the 2011 Form 10-K.
• Effective January 1, 2012, ING USA retrospectively adopted ASU 2010-26,
"Financial Services - Insurance (ASC Topic 944): Accounting for Costs
Associated with Acquiring or Renewing Insurance Contracts" ("ASU
2010-26"), which clarifies what costs relating to the acquisition of new
or renewal insurance contracts qualify for deferral. Costs that should be
capitalized include (1) incremental direct costs of successful contract
acquisition and (2) certain costs related directly to successful
acquisition activities (underwriting, policy issuance and processing,
medical and inspection, and sales force contract selling) performed by the
insurer for the contract. Advertising costs should be included in deferred
acquisition costs only if the capitalization criteria in the U.S. GAAP
direct-response advertising guidance are met. All other
acquisition-related costs should be charged to expense as incurred.
Upon adoption, the financial statements for prior periods were adjusted to
reflect the adoption of the new standard. The financial statements included in
Exhibit 99.1 to this Form 8-K update the financial statements included in ING
USA's 2011 Form 10-K to reflect the impact of retrospective adoption. However,
such adjusted financial statements do not represent a restatement of the 2011
• Effective January 1, 2012, ING USA voluntarily changed its method of
recognizing actuarial gains and losses related to its pension and
post-retirement benefit plans. Previously, actuarial gains and losses were
recognized in Accumulated other comprehensive income and, to the extent
outside a corridor, amortized into operating results over the average
remaining service period of active plan participants or the average
remaining life expectancy of inactive plan participants, as applicable.
ING USA has elected to immediately recognize actuarial gains and losses in
the Statements of Operations in the year in which the gains and losses
occur. The new accounting method is preferable, as it eliminates the delay
in recognition of actuarial gains and losses. These gains and losses are
generally only measured annually as of December 31 and, accordingly, will
generally be recorded during the fourth quarter.
ING USA's change in accounting methodology was applied retrospectively. The
financial statements included in Exhibit 99.1 to this Form 8-K update the
financial statements included in ING USA's 2011 Form 10-K to reflect the impact
of this accounting change. However, such adjusted financial statements do not
represent a restatement of the 2011 Form 10-K.
• Effective January 1, 2012, ING USA made certain reclassifications in order
to align with the presentation of the Consolidated Financial Statements of
ING U.S., Inc. These reclassifications include the reporting of embedded
derivatives within fixed maturities with the host contract on the Balance
Sheet and the reporting of changes in fair value of embedded derivatives
within annuity products as Other net realized capital gains (losses) in
the Statements of Operations. These changes in presentation resulted in
reclassifications in the previously reported financial statements of the
2011 Form 10-K. Such reclassifications had no effect on previously
reported net income or shareholder's equity and do not represent a
restatement of the 2011 Form 10-K.
The following items of the 2011 Form 10-K are being updated retrospectively to
reflect the adoption of ASU No. 2010-26 and the implementation of the
aforementioned accounting changes:
• Item 1 - Business
• Item 6 - Selected Financial Data
• Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
• Item 7A - Quantitative and Qualitative Disclosures about Market Risk
• Item 8 - Financial Statements and Supplementary Data
• Item 15 - Exhibits and Financial Statement Schedules
Portions of Parts I and II as well as Part IV of the 2011 Form 10-K, as adjusted
retrospectively, are included as Exhibit 99.1 to this Current Report on Form 8-K
and is incorporated herein by reference. This Current Report on Form 8-K,
including exhibits, should be read in conjunction with and as a supplement to
ING USA's 2011 Form 10-K for the fiscal year ended December 31, 2011, which was
filed with the SEC on March 27, 2012. Except for matters noted above, no other
information in ING USA's 2011 Form 10-K is being updated in this Form 8-K for
events or developments that occurred subsequent to the filing of the 2011 Form
10-K. For significant developments since the filing of the 2011 Form 10-K, refer
to ING USA's Form 10-Qs for the quarterly periods ended March 31, 2012, June 30,
2012 and September 30, 2012 and other more recent filings made by ING USA with
the Securities and Exchange Commission.
Item 9.01 Financial Statements and Exhibits.
(a) Not applicable
(b) Not applicable
(c) Not applicable
23.1 Consent of Ernst & Young LLP
99.1 Revised items in 2011 Annual Report on Form 10-K:
Part I, Item 1. Business
Part II, Item 6. Selected Financial Data
Part II, Item 7. Management's Narrative Analysis of the Results of
Operations and Financial Condition
Part II, Item 7A. Quantitative and Qualitative Disclosures about
Part II, Item 8. Financial Statements and Supplementary Data
Part IV, Item 15. Exhibits and Financial Statement Schedules
101.INS XBRL Instance Document.
101.SCH XBRL Taxonomy Extension Schema Document.
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB XBRL Taxonomy Extension Label Linkbase Document.
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF XBRL Taxonomy Extension Definition Linkbase Document.