ING Advocates Latest Capital Management Model for China Insurance Industry

ING Advocates Latest Capital Management Model for China Insurance Industry

April 12, 2006

    BEIJING, April 12 /Xinhua-PRNewswire/ -- ING today
stated that China's insurance industry should consider a
long-term and measured transition towards the adoption of
the latest market consistent economic capital insurance
management models in which the sector can measure and
manage risks, reflect potential liabilities and set minimum
levels of required capital more accurately.

    Economic capital models, which have been developed over
the last five years mainly within the context of the
European insurance industry, move away from the traditional
'book value' based model which is widely used across China. 
The economic capital model, favoured by ING and the European
industry, encourages participants to measure risks by their
economic value, reflecting the current market value of the
assets and liabilities of the company and offering a market
assessment of a company's risks.  The economic models allow
a more accurate calculation of capital and form a framework
to manage insurance companies more effectively. 

    The recommendations were made at the
"International Seminar on Economic Capital",
which was held today at the China World Hotel in the
Chinese capital.  Co-organised by the China Insurance
Regulatory Commission (CIRC) and ING, it marks the first
seminar of its kind held in China.

    John Hele, Deputy CFO of ING Group, speaking at the
industry briefing, said: "Given the complex business
environment and demands by European Union regulators for
companies to manage risks actively, insurers in Europe are
moving towards an economic capital framework in which the
benefits and risks of a diversified base of products,
investments and geographic spread of business are taken
into account in risk management."

    "While ING's adoption of the model required
significant resources, we are already seeing the benefits
being able to reduce all risks through a series of
measures," Mr. Hele added.  "The new model aligns
product pricing, risk taking, risk management, value
creation and performance measurement throughout the
business."

    Although there are a number of alternative risk
management frameworks being developed and practiced
worldwide and many European insurers are at various stages
of this development, regulators, rating agencies and
analysts are placing a lot of emphasis on Economic Capital
and this pressure is driving the process forward.

    ING is a global financial institution of Dutch origin
offering banking, insurance and asset management to over 60
million private, corporate and institutional clients in 50
countries.  With a diverse workforce in excess of 115,000
people, ING comprises a broad spectrum of prominent
companies that increasingly serve their clients under the
ING brand.
    
    For more information, please contact:

     Karen Williams,
     ING Asia/Pacific
     Tel:   [phone]
     Email: [e-mail]

     Polly Leung,
     ING Asia/Pacific
     Tel:   [phone]
     Email: [e-mail]

SOURCE  ING