Financial Products
ING Financial Products (FP), a strategic business unit within the ING family of companies, offers a wide range of traditional and alternative financial products that provide principal preservation to institutional buyers such as pension plans, financial institutions, and municipalities.
FP has been a strong player in traditional stable value markets. Recognized by its markets for product innovation and technical capabilities, the team takes a consultative approach with clients. FP provides both traditional and alternative structures to create customized solutions to meet clients’ varied needs. With assets of over $15 billion as of 6/30/2008, FP issues traditional contracts primarily through two of ING America Insurance Holdings Inc.’s strongly rated insurance carriers – Security Life of Denver Insurance Company and ING USA Annuity & Life Insurance Co. Both have claims paying ability AA/Aa3 and short term debt ratings A-1+/P-1 by S&P and Moody’s respectively. For alternative structures, additional carriers may also be available through the vast ING worldwide network.
Traditional Markets
Principal preservation offered in a more traditional stable value form includes products such as guaranteed investment contracts (GICs) for pension plans, and funding agreements (FAs) for clients such as money market fund managers (2a7), banks, municipalities, or corporate cash managers. For each product, FP offers a wide array of structures that can be tailored to fit the clients’ needs. Whether a strategy calls for enhanced yield, unique cash flows, or a different structuring option such as a separate account or trust, FP will work with its clients to create an optimal approach.
Capital and Investment Products
Leveraging on FP’s ability to provide customized principal preservation options, product ideas are generated, tailored for specific clients or offered as alternatives to FP’s client base as a whole. Through ongoing dialogue with clients and constant monitoring of the capital and derivative markets, FP strives to find trade ideas that follow market trends and are timely to client needs. Within its current markets, many clients are not able to access the capital markets directly or efficiently and so FP provides structures to help fill this role. For example, FP has offered products similar to the following:
- GICs linked to indices (fed funds, CMT, etc.) that provide better hedges or matching in client portfolios to help clients exceed their performance hurdles
- Products with enhancements such as caps and floors, extendibles, floating-to-fixed, callable, yield curve or interest rate volatility strategies
- Payoffs and deposits linked to equity returns that better match the cash flow needs of a client
- CMBS or MBS index trades that allow for specific risk/return amortization structures
Principal Preservation Applied to Alternative Structures
Extending FP’s principal preservation capabilities into alternative structures is a natural fit due to the risk management and capital market expertise of FP’s business associates. Given an underlying asset class, FP can structure and develop a principal wrapped product that can be packaged into capital and regulatory efficient structures that may be attractive to the buyer. Examples of such alternatives include the following:
- A principal-protected fund of hedge funds, managed futures or balanced/equity mutual funds.
- An equity-linked or index-linked insurance contract with a guaranteed return of principal and/or minimum coupon at maturity.
- Alpha enhanced products overlaid on various beta indices.
- Aid in structuring products to help raise financing for special projects (e.g., buyers get return of principal plus a potential return on a specific venture opportunity).
- Custom tailored solutions to guarantee customers’ future income streams in return for a lump sum deposit.
Insurance and Capital Market Structuring
FP’s clients have an array of needs that span income protection opportunities, asset liability management needs, structured products for the balance sheet, and capital and regulatory management. FP will help create a customized financial solution based on specific client desires to operate in their comfort zone along the entire risk/return spectrum. A product example FP could offer is:
- Capital and surplus efficient transactions which may include market or credit risk profile transformation.
Conclusion
ING Financial Products will work with you to understand your needs in order to find a win-win solution by leveraging its strong risk management, capital markets knowledge, and financial markets experience. The team at FP would be happy to discuss different terms and structures that could best fit your requirements.
Securities products, sponsored by ING Financial Products, are sold through ING Investment Management Services LLC, a member of ING Group. This product overview is not an offer for the purchase or sale of any instrument. The trade ideas discussed in this report may not be suitable for all customers and may not be available in all states. Customers must make their own decisions based on their specific investment objectives and financial position and after review by their own tax, legal and accounting advisors. The funding agreements described herein are not being offered in connection with any funding agreement or medium term notes registered by ING USA Annuity and Life Insurance Company with the Securities and Exchange Commission. © 2007 ING North America Insurance Corporation. All rights reserved. (09/30/2007)
