<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 September 30, 1999

                                       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  1-10640

                           RELIASTAR FINANCIAL CORP.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

           DELAWARE                                           41-1620373
------------------------------------                      ----------------------
(State or other jurisdiction of                           (I.R.S. Employer
incorporation or Identification No.)                        organization)


            20 WASHINGTON AVENUE SOUTH, MINNEAPOLIS, MINNESOTA 55401
            --------------------------------------------------------
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (612) 372-5432
              ----------------------------------------------------
              (Registrant's telephone number, including area code)


         ---------------------------------------------------------------
         (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 [ ]

Number of shares of common stock outstanding as of October 29, 1999 was
88,750,866.
<PAGE>

Part I-Financial Information
Item 1. Financial Statements

                            RELIASTAR FINANCIAL CORP.
                      Condensed Consolidated Balance Sheets
                                  (in millions)
                                   (unaudited)

<TABLE>
<CAPTION>

                                                                   September 30, 1999         December 31, 1998
                                                                   ------------------         -----------------
<S>                                                                <C>                        <C>
ASSETS
Fixed Maturity Securities                                                $   11,150.7              $   11,625.1
Equity Securities                                                                59.1                      60.3
Mortgage Loans on Real Estate                                                 2,261.3                   2,154.8
Real Estate and Leases                                                           20.8                      53.3
Policy Loans                                                                    736.8                     702.3
Other Invested Assets                                                           120.0                     144.6
Short-Term Investments                                                          137.1                     168.7
                                                                         ------------              ------------
     Total Investments                                                       14,485.8                  14,909.1
Cash                                                                             22.7                      21.5
Accounts and Notes Receivable                                                   469.6                     287.7
Reinsurance Receivable                                                          542.1                     417.7
Deferred Policy Acquisition Costs                                             1,391.3                   1,214.9
Present Value of Future Profits                                                 431.0                     422.5
Property and Equipment, Net                                                     116.8                     117.3
Accrued Investment Income                                                       197.3                     196.0
Other Assets                                                                    450.8                     399.8
Participation Fund Account Assets                                               310.3                     311.6
Assets Held in Separate Accounts                                              5,023.4                   4,310.6
                                                                         ------------              ------------
       TOTAL ASSETS                                                      $   23,441.1              $   22,608.7
                                                                         ============              ============

LIABILITIES
Future Policy and Contract Benefits                                      $   13,588.6              $   13,519.8
Pending Policy Claims                                                           563.1                     433.5
Other Policyholder Funds                                                        362.3                     304.6
Notes and Mortgages Payable                                                     665.6                     509.4
Income Taxes                                                                     71.8                     199.0
Other Liabilities                                                               801.2                     663.2
Participation Fund Account Liabilities                                          310.3                     311.6
Liabilities Related to Separate Accounts                                      5,017.9                   4,305.1
                                                                         ------------              ------------
       TOTAL LIABILITIES                                                     21,380.8                  20,246.2
                                                                         ------------              ------------

Company-Obligated Mandatorily Redeemable Preferred
   Securities Issued by Consolidated Subsidiaries                               242.6                     242.3
                                                                         ------------              ------------

SHAREHOLDERS' EQUITY
Common Stock (Shares Issued: 1999 and 1998, 98.1)                                  .9                        .9
Additional Paid-in Capital                                                      991.4                   1,003.0
Retained Earnings                                                             1,267.6                   1,137.6
Accumulated Other Comprehensive Income                                          (50.0)                    257.2
Note Receivable from ESOP                                                       (17.5)                    (19.8)
Unamortized Restricted Stock Awards                                               (.8)                      (.7)
Treasury Common Stock, at Cost (Shares Held: 1999, 11.9; 1998, 9.2)            (373.9)                   (258.0)
                                                                         ------------              ------------
       TOTAL SHAREHOLDERS' EQUITY                                             1,817.7                   2,120.2
                                                                         ------------              ------------

       TOTAL LIABILITIES AND
       SHAREHOLDERS' EQUITY                                              $   23,441.1              $   22,608.7
                                                                         ============              ============
</TABLE>

See accompanying notes to condensed consolidated financial statements.

                                       2
<PAGE>

                            RELIASTAR FINANCIAL CORP.
                   Condensed Consolidated Statements of Income
                      (in millions, except per share data)
                                   (unaudited)

<TABLE>
<CAPTION>

                                                               Three Months Ended September 30        Nine Months Ended September 30
                                                               -------------------------------        ------------------------------
                                                                   1999             1998                 1999              1998
                                                               ------------      -------------        -----------     --------------
<S>                                                            <C>               <C>                  <C>             <C>
REVENUES
Premiums                                                          $   283.4      $  248.5              $   842.8     $     740.8
Net Investment Income                                                 273.6         277.3                  833.2           826.0
Realized Investment Gains (Losses), Net                                (1.4)          1.0                    0.2            18.5
Policy and Contract Charges                                           116.5          95.7                  338.3           298.4
Other Income                                                           71.7          86.4                  198.3           236.6
                                                                  ---------      --------              ---------     -----------
     Total                                                            743.8         708.9                2,212.8         2,120.3
                                                                  ---------      --------              ---------     -----------

BENEFITS AND EXPENSES
Benefits to Policyholders                                             438.6         373.0                1,247.2         1,138.3
Sales and Operating Expenses                                          159.7         162.1                  475.9           465.2
Amortization of Deferred Policy Acquisition Costs
     and Present Value of Future Profits                               49.8          47.1                  137.3           137.2
Interest Expense                                                       11.6           6.8                   31.2            19.7
Dividends and Experience Refunds to Policyholders                       8.8           8.0                   23.1            24.5
                                                                  ---------      --------              ---------     -----------
     Total                                                            668.5         597.0                1,914.7         1,784.9
                                                                  ---------      --------              ---------     -----------

Income from Continuing Operations Before Income Taxes
      and Dividends on Preferred Securities of Subsidiaries            75.3         111.9                  298.1           335.4
Income Tax Expense                                                     25.9          40.0                  106.0           119.5
Dividends on Preferred Securities of Subsidiaries,
      Net of Tax                                                        3.3           3.3                    9.9             9.9
                                                                  ---------      --------              ---------     -----------
Income from Continuing Operations                                      46.1          68.6                  182.2           206.0

Loss from Discontinued Operations, Net of Tax                            -              -                      -            (3.4)
                                                                  --------       --------              ---------     -----------

Net Income                                                        $    46.1      $   68.6              $   182.2     $     202.6
                                                                  =========      ========              =========     ===========

PER COMMON SHARE
Basic
Income from Continuing Operations                                 $     .54      $    .75              $    2.08     $      2.26
Loss from Discontinued Operations                                        -              -                      -            (.04)
                                                                  --------       --------              ---------     -----------
Net Income                                                        $     .54      $    .75              $    2.08     $      2.22
                                                                  =========      ========              =========     ===========

Diluted
Income from Continuing Operations                                 $     .53      $    .74              $    2.05     $      2.22
Loss from Discontinued Operations                                        -              -                      -            (.04)
                                                                   -------       --------              ---------     -----------
Net Income                                                        $     .53      $    .74              $    2.05     $      2.18
                                                                  =========      ========              =========     ===========

Weighted Average Common Shares
     Basic                                                             86.1          91.5                   87.6            91.2
     Diluted                                                           87.3          93.1                   88.8            92.9
</TABLE>

See accompanying notes to condensed consolidated financial statements.

                                       3
<PAGE>

                            RELIASTAR FINANCIAL CORP.
            Condensed Consolidated Statements of Shareholders' Equity
                      (in millions, except per share data)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                        Nine Months Ended September 30
                                                               ----------------------------------------------------
                                                               Shareholders' Equity         Comprehensive Income
                                                               ---------------------    ---------------------------
                                                                 1999          1998        1999             1998
                                                               ---------    --------    ---------       -----------
<S>                                                            <C>          <C>         <C>             <C>
Common Stock
   Beginning and End of Period                                 $      .9    $      .9
                                                               ---------    ---------

Additional Paid-in Capital
   Beginning of Year                                             1,003.0      1,019.8
   Loss on Treasury Shares Reissued for Benefit Plans              (18.2)       (22.5)
   Loss on Treasury Shares Reissued for Acquisitions                   -          (.9)
   Tax Benefit on Stock Options Exercised                            6.6         10.5
                                                               ---------    ---------
      End of Period                                                991.4      1,006.9
                                                               ---------      -------

Retained Earnings
   Beginning  of Year                                            1,137.6        964.8
   Net Income                                                      182.2        202.6    $   182.2         $ 202.6
   Common Dividends to Shareholders: (Per Share: 1999,
       $.595; 1998, $.525)                                         (52.4)       (47.9)
   Other, Net                                                         .2           .1
                                                               ---------    ---------
      End of Period                                              1,267.6      1,119.6
                                                               ---------    ---------

Accumulated Other Comprehensive Income
   Beginning of Year                                               257.2        226.2
   Change for the Period                                          (307.2)       110.8       (307.2)          110.8
                                                               ---------    ---------       ------         -------
      End of Period                                                (50.0)       337.0
                                                               ---------    ---------

Note Receivable from ESOP
   Beginning of Year                                               (19.8)       (20.8)
   Repayments, Accrued or Paid                                       2.3           .9
                                                               ---------    ---------
      End of Period                                                (17.5)       (19.9)
                                                               ---------    ---------

Unamortized Restricted Stock Awards
   Beginning of Year                                                 (.7)        (1.0)
   Awards, Net                                                       (.4)          -
   Amortization of Restricted Stock Awards                            .3           .1
                                                               ---------    ---------
      End of Period                                                  (.8)         (.9)
                                                               ---------    ---------

Treasury Common Stock
   Beginning of Year                                              (258.0)      (178.9)
   Acquired                                                       (153.5)       (36.0)
   Reissued for Acquisitions                                           -         21.2
   Reissued, Other                                                  37.6         52.0
                                                               ---------   ----------
      End of Period                                               (373.9)      (141.7)
                                                               ---------   ----------

Comprehensive Income (Loss)                                                                $(125.0)        $ 313.4
                                                                                           =======         =======

Total Shareholders' Equity                                      $1,817.7     $2,301.9
                                                                ========     ========
</TABLE>

See accompanying notes to condensed consolidated financial statements.

                                       4
<PAGE>

                            RELIASTAR FINANCIAL CORP.
                 Condensed Consolidated Statements of Cash Flows
                                  (in millions)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                               Nine Months Ended September 30
                                                                              -----------------------------------
                                                                                   1999                  1998
                                                                              -------------         -------------
<S>                                                                           <C>                   <C>
OPERATING ACTIVITIES
Net Income                                                                    $      182.2          $      202.6
Adjustments to Reconcile Net Income to Net Cash Provided by
  Operating Activities
     Interest Credited to Insurance Contracts                                        418.3                 436.7
     Future Policy Benefits                                                         (554.3)               (515.1)
     Capitalization of Policy Acquisition Costs                                     (210.2)               (174.7)
     Amortization of Deferred Policy Acquisition Costs and Present
        Value of Future Profits                                                      137.3                 137.2
     Deferred Income Taxes                                                            45.0                  10.5
     Net Change in Receivables and Payables                                           25.1                 (22.0)
     Other Assets                                                                    (36.8)                304.7
     Realized Investment Gains, Net                                                    (.2)                (18.5)
     Other, net                                                                       (7.7)                (18.4)
                                                                             -------------        --------------
          Net Cash Provided (Used) by Operating Activities                            (1.3)                343.0
                                                                             -------------        --------------

INVESTING ACTIVITIES
Proceeds from Sales of Fixed Maturity Securities                                     622.7                 308.3
Proceeds from Maturities or Repayment of Fixed Maturity Securities                 1,025.1                 803.3
Cost of Fixed Maturity Securities Acquired                                        (1,739.4)             (1,458.6)
Sales (Purchases) of Equity Securities, Net                                            1.7                 (39.1)
Proceeds of Mortgage Loans Sold, Matured or Repaid                                   273.3                 497.2
Cost of Mortgage Loans Acquired                                                     (378.9)               (334.9)
Sales of Real Estate and Leases, Net                                                  39.7                  25.1
Policy Loans Issued, Net                                                             (34.5)                (25.8)
Sales (Purchases) of Other Invested Assets, Net                                         .5                 (12.3)
Sales of Short-Term Investments, Net                                                  31.6                   2.1
Cash (Paid for) from Acquisitions, Net                                               (14.8)                  1.3
                                                                             -------------        --------------
          Net Cash Used by Investing Activities                                     (173.0)               (233.4)
                                                                             --------------       --------------

FINANCING ACTIVITIES
Deposits to Insurance Contracts                                                    1,260.2               1,242.1
Maturities and Withdrawals from Insurance Contracts                               (1,054.4)             (1,080.3)
Increase in Notes and Mortgages Payable                                              156.3                  64.0
Repayment of Notes and Mortgages Payable                                               (.1)               (290.9)
Issuance of Common Stock Under Stock Option and Other Plans                           19.4                  29.5
Dividends on Common Stock                                                            (52.4)                (47.9)
Acquisition of Treasury Common Stock                                                (153.5)                (36.0)
                                                                             -------------        ---------------
          Net Cash Provided (Used) by Financing Activities                           175.5                (119.5)
                                                                             -------------        ---------------
Increase (Decrease) in Cash                                                            1.2                  (9.9)
Cash at Beginning of Period                                                           21.5                  46.4
                                                                             -------------        --------------
Cash at End of Period                                                        $        22.7        $         36.5
                                                                             =============        ==============
</TABLE>

See accompanying notes to condensed consolidated financial statements.

                                       5
<PAGE>

                            RELIASTAR FINANCIAL CORP.
              Notes to Condensed Consolidated Financial Statements
                                   (unaudited)

Note 1. Basis of Presentation

The condensed consolidated financial statements have been prepared in conformity
with generally accepted accounting principles and such principles were applied
on a basis consistent with that reflected in the Annual Report of ReliaStar
Financial Corp. (the Company or ReliaStar) for the year ended December 31, 1998
filed with the Securities and Exchange Commission (SEC). The financial
information included herein, other than the condensed consolidated balance sheet
as of December 31, 1998, has been prepared by management without audit by
independent certified public accountants. The condensed consolidated balance
sheet as of December 31, 1998 has been derived from, and does not include all of
the disclosures contained in, the audited consolidated financial statements for
the year ended December 31, 1998.

The information furnished includes all adjustments and accruals consisting only
of normal, recurring accrual adjustments which are, in the opinion of
management, necessary for a fair statement of results for the interim period.
The results of operations for any interim period are not necessarily indicative
of results for the full year. The unaudited interim condensed consolidated
financial statements should be read in conjunction with the financial statements
and notes thereto contained in the Company's 1998 Annual Report.

Note 2.  Segment Information

The Company operates in four reportable segments which are differentiated by
products and/or marketing focus. The Personal Financial Services (PFS) segment
sells life insurance and annuity products to individuals. The Worksite Financial
Services segment sells group and individual insurance products, 401(k) plans and
financial services to employers and their employees at the worksite. The
Tax-Sheltered and Fixed Annuities (TSA/FA) segment sells 403(b) annuities and
other retirement products, primarily to the K-12 schoolteacher market. The
Reinsurance segment sells group life, health and specialty reinsurance products
in the U.S. and internationally.

In the first quarter of 1999, management responsibility for the closed block of
individual life insurance of Northern Life was transferred from the TSA/FA
segment to the PFS segment. At the same time, management responsibility for the
fixed annuities of Security-Connecticut Life and the former Lincoln Security
Life were transferred from the PFS segment to the TSA/FA segment. Previously
reported segment financial data has been restated to reflect these changes and
conform with current period presentation.

Operations not included in the four reportable segments are classified as Other
Business Units and include the Company's mutual fund operation, broker/dealer
operations, banking and trust operations and personal financial education
company. Financing costs, goodwill amortization, unallocated costs and
consolidating/eliminating adjustments are reported in Corporate.

                                       6
<PAGE>

Selected segment data follows (in millions):

<TABLE>
<CAPTION>
                                                         Three Months Ended September 30        Nine Months Ended September 30
                                                         -------------------------------        ------------------------------
OPERATING INCOME/1/                                         1999                1998                 1999               1998
-------------------                                      ---------           ---------           ----------        -----------
<S>                                                      <C>                 <C>                 <C>               <C>
Personal Financial Services                               $   27.6           $   23.4            $     80.6        $     69.4
Worksite Financial Services                                   16.6               15.4                  46.5              43.2
Tax-Sheltered and Fixed Annuities                             18.5               19.8                  60.3              56.3
Reinsurance                                                  (13.9)              10.4                   5.6              31.4
                                                          ---------          --------            ----------        ----------
     Total Reportable Segments                                48.8               69.0                 193.0             200.3
Other Business Units                                           2.7                3.4                   7.3               9.3
Corporate                                                     (4.4)              (4.8)                (18.6)            (13.4)
                                                          ---------          --------            ----------        ----------
Operating Income                                              47.1               67.6                 181.7             196.2
Net Realized Investment Gains (Losses)                        (1.0)               1.0                    .5               9.8
                                                          ---------          --------            ----------        ----------
Consolidated Income from Continuing Operations            $   46.1           $   68.6            $    182.2        $    206.0
                                                          ========           ========            ==========        ==========
</TABLE>

/1/  Operating income is after-tax and excludes realized investment gains and
     losses and their impact on the amortization of deferred policy acquisition
     costs (DAC) and present value of future profits (PVFP).

<TABLE>
<CAPTION>
                                                         Three Months Ended September 30         Nine Months Ended September 30
                                                         -------------------------------         ------------------------------
OPERATING REVENUES                                          1999               1998                  1999             1998
------------------                                        --------           -------             ----------        -----------
<S>                                                       <C>                <C>                 <C>               <C>
Personal Financial Services                               $  220.9           $  211.0            $    662.3        $    661.4
Worksite Financial Services                                  194.2              204.5                 583.8             592.1
Tax-Sheltered and Fixed Annuities                            147.0              148.1                 447.6             442.4
Reinsurance                                                  120.2               91.8                 340.5             248.6
                                                          --------           --------            ----------        ----------
     Total Reportable Segments                               682.3              655.4               2,034.2           1,944.5
Other Business Units                                          55.2               48.6                 160.4             145.6
Corporate                                                      7.7                3.9                  18.0              11.7
                                                          --------           --------            ----------        ----------
     Operating Revenues                                      745.2              707.9               2,212.6           2,101.8
Realized Investment Gains (Losses), Net                       (1.4)               1.0                    .2              18.5
                                                          --------           --------            ----------        ----------
Consolidated Revenues                                     $  743.8           $  708.9            $  2,212.8        $  2,120.3
                                                          ========           ========            ==========        ==========
</TABLE>

<TABLE>
<CAPTION>
                                                                                        September 30      December 31
ASSETS UNDER MANAGEMENT                                                                     1999              1998
-----------------------                                                                 ------------      -----------
<S>                                                                                     <C>               <C>
Personal Financial Services                                                              $  7,055.9        $  6,887.0
Worksite Financial Services                                                                 3,792.4           3,512.1
Tax-Sheltered and Fixed Annuities                                                           7,921.8           7,594.7
Reinsurance                                                                                   368.4             309.9
                                                                                         ----------        ----------
     Total Reportable Segments                                                             19,138.5          18,303.7
Other Business Units                                                                        4,503.8           4,018.4
Corporate                                                                                     435.4             389.8
                                                                                         ----------        ----------
     Assets Under Management                                                               24,077.7          22,711.9
Net Unrealized Investment Gains (Losses)                                                      (64.7)            526.2
Other Balance Sheet Assets                                                                  3,931.9           3,389.0
Off-Balance Sheet Mutual Fund Client Assets                                                (4,503.8)         (4,018.4)
                                                                                         ----------        ----------
Consolidated Assets                                                                      $ 23,441.1        $ 22,608.7
                                                                                         ==========        ==========
</TABLE>

Note 3. Acquisitions

During July 1999, the Company completed the acquisition of the Financial
Northeastern Companies (FNC) located in Fairfield, New Jersey. FNC is engaged in
securities and certificates of deposit  brokerage and insurance  marketing.  The
acquisition was accounted for using the purchase method of accounting.  The cash
purchase price was approximately $15 million,  and goodwill of approximately $13
million was recorded.

Subsequent to the balance sheet date, on October 29, 1999, the Company completed
the acquisition of Pilgrim Capital Corporation (Pilgrim), a Phoenix-based asset
management and mutual fund company. As of September 30, 1999, Pilgrim had assets
under management of $7.7 billion and sales of $610 million for the nine months
ended September 30, 1999. The acquisition was effected through a stock-and-cash
transaction and includes the Company's assumption of approximately $28 million
of Pilgrim debt. The acquisition was accounted for using the purchase method of
accounting. Pilgrim shareholders received approximately 2.6 million shares of
ReliaStar common stock plus approximately $63.9 million in cash.

                                       7
<PAGE>

Items 2 and 3.  Management's Discussion and Analysis of Financial Condition and
                Results of Operations And Quantitative and Qualitative
                Disclosures About Market Risk

                            RELIASTAR FINANCIAL CORP.

RESULTS OF OPERATIONS

Results of operations by operating segment are summarized below (in millions):

<TABLE>
<CAPTION>
                                                                       Three Months             Nine Months
                                                                    Ended September 30        Ended September 30
                                                                    ------------------        ------------------
                                                                     1999        1998          1999        1998
                                                                    ------      ------        ------      ------
<S>                                                                 <C>         <C>          <C>          <C>
Operating Income (Loss) /1/
   Personal Financial Services Segment                              $27.6        $23.4    $   80.6      $  69.4
   Worksite Financial Services Segment                               16.6         15.4        46.5         43.2
   Tax-Sheltered and Fixed Annuities Segment                         18.5         19.8        60.3         56.3
   Reinsurance Segment                                              (13.9)        10.4         5.6         31.4
   Other Business Units                                               2.7          3.4         7.3          9.3
   Corporate                                                         (4.4)        (4.8)      (18.6)       (13.4)
                                                                   ------        -----    --------      -------
Operating Income                                                     47.1         67.6       181.7        196.2
Net Realized Investment Gains (Losses), Net of Tax                   (1.0)         1.0          .5          9.8
                                                                   ------        -----    --------      -------
Income From Continuing Operations                                    46.1         68.6       182.2        206.0
Loss From Discontinued Operations, Net of Tax                           -            -           -         (3.4)
                                                                   ------        -----    --------      -------
   Net Income                                                       $46.1        $68.6    $  182.2      $ 202.6
                                                                   ======        =====    ========      =======
</TABLE>

/1/  Operating income is after-tax and excludes realized investment gains and
     losses and their impact on the amortization of deferred policy acquisition
     costs (DAC) and present value of future profits (PVFP).

ReliaStar Financial Corp. (the Company or ReliaStar) has four reportable
operating segments: Personal Financial Services (PFS), Worksite Financial
Services (WFS), Tax-Sheltered and Fixed Annuities (TSA/FA), and Reinsurance; and
conducts its operations primarily through its life insurance subsidiaries:
ReliaStar Life Insurance Company (ReliaStar Life), Northern Life Insurance
Company (Northern), Security-Connecticut Life Insurance Company
(Security-Connecticut), and ReliaStar Life Insurance Company of New York (RLNY).
These subsidiaries are sometimes collectively referred to as the Insurers.

In the first quarter of 1999, management responsibility for the closed block of
individual life insurance of Northern was transferred from the TSA/FA segment to
the PFS segment. At the same time, management responsibility for the fixed
annuities of Security-Connecticut and the former Lincoln Security Life were
transferred from the PFS segment to the TSA/FA segment. Previously reported
segment financial data has been restated to reflect these changes and conform
with current period presentation.

The discussion of segment operating results that follows refers to the above
after-tax segment results and, in each instance, amounts are after-tax unless
otherwise indicated.

Personal Financial Services
---------------------------

The PFS segment sells life insurance and annuity products to individuals.
Operating income of the PFS segment for the third quarter of 1999 increased $4.2
million, or 18%, compared with the same period in 1998. The increase in
operating income was primarily due to improved mortality, higher sales and
growth in assets under management, offset in part by slightly higher expense
levels, primarily associated with the transition to the new consolidated service
center in Minot, ND. Year-to-date operating income increased 16% over the
comparable period in 1998 primarily due to favorable mortality experience,
growth in assets under management and higher sales.

The interest spread on interest-sensitive products of 232 basis points in the
third quarter of 1999 compares to 236 basis points in the third quarter of 1998.
The decrease in interest spread reflects a 20 basis point decrease in the
portfolio yield and a 16 basis point reduction in the average crediting rate. It
should be noted that the interest spread calculation is an annualized measure
and can be overly influenced in a particular period by the level of prepayments,
recoveries on problem investments and other variances in the level of net
investment income. For approximately one-half of the business included in the
PFS segment, crediting rates on in force business are reset annually at the
beginning of the calendar year and are guaranteed for one year. The balance of
the business has crediting rates that can be changed on the policy anniversary
or some other
                                       8
<PAGE>

date. Initial crediting rates offered on new business can be changed at any time
in response to competition and market interest rates and are guaranteed to the
end of the calendar year on most new premiums received.

Total assets under management increased to $7.1 billion as of September 30,
1999, from $6.5 billion as of September 30, 1998. Separate account assets under
management increased to $2.4 billion as of September 30, 1999, from $1.8 billion
as of September 30, 1998.

Total sales (annualized new premiums and deposits) increased 10% for the third
quarter of 1999 and were $90.3 million compared with $82.4 million in the same
period of 1998. The increase in sales is due to an 11% increase in both
individual life and variable annuity sales, partially offset by a decline in
fixed annuity sales, compared to the third quarter of last year. Total sales for
the first nine months of 1999 were $261.3 million compared to $266.6 million in
the same period of 1998. The decrease in sales reflects an 8% decrease in
annuity sales which was partially offset by a 12% increase in individual life
sales.

Worksite Financial Services
---------------------------

The WFS segment sells group and individual life insurance products, retirement
plans and financial services to employers and their employees at the worksite.
Operating income of the WFS segment for the third quarter of 1999 increased $1.2
million, or 8%, compared with the same period in 1998. The increase in operating
income was primarily due to improved mortality experience in the employee
benefits unit and growth in assets under management in the retirement plans
unit, partially offset by reduced earnings from the closed block of pension
business. Year-to-date operating income increased 8% compared with the same
period in 1998. The increase in year-to-date operating income was primarily due
to higher investment income and higher sales in the voluntary payroll deduction
unit and growth in assets under management in the retirement plans unit,
partially offset by reduced earnings from the closed block of pension business.

Total sales for the third quarter of 1999 were $141.8 million compared with
$117.3 million in the same period of 1998. Sales for the third quarter of 1999
increased 21% compared with the same period in 1998, reflecting a 17% increase
in retirement plan sales, a 147% increase in group health sales and a 43%
increase in group life sales. Total sales for the first nine months of 1999 were
$492.2 million compared to $375.0 million for the same period of 1998. The
increase in sales reflects a 33% increase in retirement plan sales, a 19%
increase in group life sales, a 47% increase in group health sales and a 10%
increase in individual life sales.

Tax-Sheltered and Fixed Annuities
---------------------------------

The TSA/FA segment sells 403(b) annuities and other retirement products,
primarily to the K-12 schoolteacher market. Operating income of the TSA/FA
segment for the third quarter of 1999 decreased $1.3 million, or 7%, compared
with the same period in 1998. The decrease in operating income was primarily due
to higher expense levels, including those associated with the transition to the
new consolidated service center, partially offset by improved interest spreads
and growth in assets under management. Year-to-date operating income increased
7% over the same period in 1998. The increase in year-to-date operating income
was primarily due to improved interest spreads and growth in assets under
management, partially offset by higher expense levels.

The interest spread on interest-sensitive products of 276 basis points in the
third quarter of 1999 compares to 247 basis points in the third quarter of 1998.
This increase in interest spread reflects a 41 basis point reduction in the
average crediting rate and a 12 basis point decrease in the portfolio yield. It
should be noted that the interest spread calculation is an annualized measure
and can be overly influenced in a particular period by the level of prepayments,
recoveries on problem investments and other variances in the level of net
investment income. For most of the business included in the TSA/FA segment,
crediting rates on in force business are reset annually at the beginning of the
calendar year and are guaranteed for one year. The balance of the business has
crediting rates that can be changed on the policy anniversary or some other
date. Initial crediting rates offered on new business can be changed at any time
in response to competition and market interest rates and are guaranteed to the
end of the calendar year on most new deposits received.

Total assets under management increased to $7.9 billion as of September 30,
1999, from $7.4 billion as of September 30, 1998. Separate account assets under
management increased to $579 million as of September 30, 1999, from $263 million
as of September 30, 1998.

Total sales for the third quarter of 1999 were $175.2 million compared with
$174.2 million in the same period of 1998. The increase in sales reflects a 15%
increase in sales of variable annuities, while sales of fixed annuities
decreased 6%. Total sales for the first nine months of 1999 were $497.4 million
compared with $460.1 million for the same period of 1998. The increase in sales
reflects a 36% increase in variable annuity sales and a 5% decrease in fixed
annuity sales.

Reinsurance
-----------

                                       9
<PAGE>

The Reinsurance segment sells group life, health, and specialty reinsurance
products in the United States and internationally. The Reinsurance segment
recorded an operating loss of $13.9 million in the third quarter of 1999,
compared with operating income of $10.4 million in the third quarter of 1998.
The loss in the quarter was primarily due to losses from medical reinsurance
business written by two independent managing underwriters with whom the Company
has terminated its relationships. Because of increased claims in the third
quarter we conducted an extensive review of our medical business and determined
that claims experience for certain business written by two managing underwriters
was developing much worse than was assumed for pricing and reported in previous
quarters. Our review concluded that the business was not profitable, and as a
result, a pretax accrual of $25 million ($16.2 million, after-tax) was recorded
for all incurred and prospective losses on all premiums written by these two
managing underwriters. The third quarter 1999 operating loss generated by all
reinsurance business written by these two managing underwriters was $18.0
million, including the $16.2 million charge. Concurrent with the review of the
medical reinsurance business, we undertook a broader review of the Company's
reinsurance businesses. As a result, we discovered that there were deficiencies
in the Company's claims reporting processes in the international reinsurance
line. This required reserves to be strengthened by $8 million, pretax ($5.1
million, after-tax). Claims experience and overall profitability of workers
compensation carve-out reinsurance in the third quarter of 1999 were consistent
with those of the same period in 1998 and in line with the Company's
expectations. Year-to-date operating income decreased 82% compared with the same
period in 1998. Earnings in the reinsurance business can fluctuate based upon a
number of factors, including pricing, market capacity, the availability and
pricing of retrocessional programs, loss experience and the risk profile of the
book of business included in this segment.

Total sales for the third quarter of 1999 were $46.0 million compared with $48.6
million in the same period of 1998, a decrease of 5%. The decrease in sales was
primarily due to decreased sales in the life and medical lines of business.
Total sales for the first nine months of 1999 were $204.8 million compared to
$149.3 million in the same period of 1998.

Other Business Units
--------------------

Other Business Units include the Company's mutual fund operation, broker/dealer
operations, banking operation and personal finance education company. These
business units are not large enough to be classified as reportable segments.
Operating income of the Other Business Units for the third quarter of 1999
decreased $.7 million, or 21%, compared with the same period in 1998.
Year-to-date operating income decreased $2.0 million compared with the same
period in 1998. The decrease in year-to-date operating income was primarily due
to lower earnings in the mutual fund operation as a result of a gain recorded in
the first quarter of 1998 on the sale of 12b-1 fees attributable to a portion of
the mutual fund operation's Class B shares, partially offset by growth in mutual
fund assets under management.


Corporate
---------

Corporate includes financing costs, goodwill amortization and other unallocated
costs. Operating losses of Corporate for the third quarter of 1999 decreased $.4
million compared with the same period in 1998. The operating losses of Corporate
for the first nine months increased $5.2 million compared with the same period
in 1998. The increase in year-to-date operating losses was primarily due to
financing costs related to common stock buyback programs completed during 1998
and 1999.

Realized Investment Gains and Losses

The sources of net realized investment gains (losses) were as follows (in
millions):

<TABLE>
<CAPTION>
                                                                      Three Months              Nine Months
                                                                   Ended September 30         Ended September 30
                                                                   ------------------         ------------------
                                                                    1999        1998           1999       1998
                                                                   ------      ------         ------     ------
<S>                                                                <C>         <C>            <C>        <C>
Net Gains (Losses) on Sales of Investments
    Fixed Maturity Securities
     Gross Gains                                                   $2.3         $5.7         $13.8      $14.9
     Gross Losses                                                  (5.7)        (1.5)        (13.7)      (3.2)
    Equity Securities                                               (.2)          .1           1.0        1.0
    Mortgage Loans                                                    -           .2            .5        (.1)
    Foreclosed Real Estate                                          5.2         (1.2)          6.9        1.8
    Real Estate                                                      .3           .4           1.2         .7
    Other                                                           1.3           .7           7.4       14.6
Provision for Losses on Investments
   Fixed Maturity Securities                                          -         (1.2)         (3.5)      (7.5)
   Foreclosed Real Estate                                           (.5)         2.3           (.9)        .8
   Real Estate                                                        -          (.2)            -        (.2)
   Other                                                           (4.1)        (4.3)        (12.5)      (4.3)
                                                                  -----         ----         -----       ----
Pretax Realized Investment Gains (Losses)                          (1.4)         1.0            .2       18.5
DAC/PVFP Amortization /1/                                           (.2)          .6            .6       (3.2)
Income Taxes                                                         .6          (.6)          (.3)      (5.5)
                                                                  -----         ----         -----       ----
       Net Realized Investment Gains (Losses), Net of Tax         ($1.0)        $1.0         $  .5       $9.8
                                                                  =====         ====         =====       ====
</TABLE>

/1/ Due to pretax realized investment gains and losses.

                                       10
<PAGE>

The Company establishes allowances and writes down the value of specific assets
based upon its periodic review of individual problem investments. The Company's
recording of allowances and write-downs based upon a review of individual
problem assets results in fluctuations in the level of the provision for losses
on investments reported in each period. The provision for losses on investments
is affected to a significant degree by general economic conditions and the
status of the real estate market. While the Company believes it has set aside
appropriate reserves and allowances for problem investments, subsequent economic
and market conditions may require the establishment of additional reserves.

FINANCIAL CONDITION

Liquidity and Capital Resources - ReliaStar Financial Corp.

ReliaStar, as parent, is dependent upon dividends, interest and payments for
other charges received from its subsidiaries to pay dividends to shareholders,
service its debt and pay other obligations. The payment of dividends, interest
or other charges is subject to restrictions imposed by applicable insurance laws
and regulations.

The payment of future dividends by ReliaStar to its shareholders will be largely
dependent upon the ability of ReliaStar Life to pay dividends to the Company.
Under Minnesota insurance law regulating the payment of dividends by ReliaStar
Life, any such payment must be in an amount deemed prudent by ReliaStar Life's
Board of Directors and, unless otherwise approved by the Commissioner of the
Minnesota Department of Commerce (the Commissioner), must be paid solely from
the adjusted earned surplus of ReliaStar Life. Adjusted earned surplus means the
earned surplus as determined in accordance with statutory accounting practices
(unassigned funds) less 25% of the amount of such earned surplus which is
attributable to net unrealized capital gains. Further, without approval of the
Commissioner, ReliaStar Life may not pay in any calendar year any dividend
which, when combined with other dividends paid within the preceding 12 months,
exceeds the greater of (i) 10% of ReliaStar Life's statutory surplus at the
prior year-end or (ii) 100% of ReliaStar Life's statutory net gain from
operations (not including realized capital gains) for the prior calendar year.
For 1999, the amount of dividends which can be paid by ReliaStar Life without
Commissioner approval is $156.4 million.


During the second quarter of 1999, the Company terminated a systematic program
it had started in the first quarter of 1999 to repurchase shares of its common
stock in open market transactions. The Company repurchased 1,095,000 shares
under this program for $47.5 million. The shares were repurchased for the
Company's stock option plans, stock compensation programs and dividend
reinvestment program. In addition, on July 16, 1999, the Company completed a
$100 million general common share repurchase program that was announced on May
13, 1999, whereby 2,354,500 shares of common stock were repurchased.


On October 29, 1999, the Company completed the acquisition of Pilgrim Capital
Corporation (see "Known Trends and Uncertainties Which May Affect Future
Reported Results- Subsequent Event- Acquisition"). ReliaStar reissued
approximately 2.6 million shares of common stock from treasury, and
approximately $63.9 million in cash. The Company also assumed approximately
$28 million of Pilgrim debt.

As of September 30, 1999, the Company had an unsecured revolving credit facility
with a group of banks totaling $250.0 million for general corporate purposes and
$94.0 million remained available for borrowing under this facility.

On March 3, 1999, the Company filed a shelf registration statement with the
Securities and Exchange Commission (SEC) for the issuance of up to $500 million
of debt and equity securities. The registration statement was declared effective
on April 30, 1999 by the SEC. During October 1999, the Company completed the
issuance of $200 million of 8% notes payable due October 30, 2006. The proceeds
from this offering will be used to reduce outstanding short-term borrowings and
finance the acquisition of Pilgrim Capital Corporation. Subsequent to the $200
million issuance, $300 million of debt and equity securities were available for
issuance under this shelf registration.

Liquidity and Capital Resources - Insurers

Liquidity for life insurance companies is measured by their ability to pay
scheduled contractual benefits, pay operating expenses and fund investment
commitments. Sources of liquidity include scheduled and unscheduled principal
and interest payments on investments, premium payments and deposits and the sale
of liquid investments. These sources of liquidity for the Insurers significantly
exceed scheduled uses.

Liquidity is also affected by unscheduled benefit payments, including death
benefits, benefits under insured accident and health policies and contract
withdrawals and surrenders. The amount of withdrawals and surrenders is affected
by a variety of factors such as credited interest rates for competing products,
general economic conditions, the Insurers' claims paying ratings and events in
the industry which affect policyholders' confidence.


The Insurers' investment portfolios represent a significant source of liquid
assets. As of September 30, 1999, the Insurers' investment portfolios included
$7.7 billion (33% of consolidated assets) of short-term investments and
investment grade marketable bonds. The

                                       11
<PAGE>

September 30, 1999 investment portfolio also included $2.7 billion of investment
grade privately placed bonds which, while not publicly traded, are a source of
liquidity.

Some of the policies and annuities issued by the Insurers contain provisions
which allow contractholders to withdraw or surrender their contracts under
defined circumstances. These policies and annuities generally contain provisions
which apply penalties or otherwise restrict the ability of contractholders to
make such withdrawals or surrenders. The Insurers monitor the surrender and
policy loan activity of their insurance products and manage the composition of
their investment portfolios, including liquidity, in light of such activity. The
current level of withdrawal and surrender activity is well below a level which
would have a material effect on liquidity.

Changes in interest rates may affect the incidence of policy surrenders and
other withdrawals. In addition to the potential impact on liquidity,
unanticipated withdrawals in a changed interest rate environment could adversely
affect earnings if the Company were required to sell investments at reduced
values in order to meet liquidity demands. The Company seeks assets which have
duration characteristics similar to the liabilities which they support. The
Company also uses derivative instruments, such as interest rate swaps, to adjust
the duration of the asset and liability portfolios (see
Investments-Market-Sensitive Instruments and Risk Management).

The Company's long-term goals contemplate continued growth in its insurance
businesses. To achieve these growth goals, the Insurers will need to increase
their statutory surplus. Statutory surplus is computed according to rules
prescribed by the National Association of Insurance Commissioners (NAIC), as
modified by each Insurer's state of domicile. Statutory accounting rules are
different from generally accepted accounting principles (GAAP) and are intended
to reflect a more conservative perspective by, for example, requiring immediate
recognition of selling expenses. Additional statutory surplus may be secured
through various sources such as internally generated statutory earnings or
equity infusions by ReliaStar with funds generated through debt or equity
offerings.

The state of domicile of each of the Insurers imposes NAIC-developed minimum
risk-based capital requirements on insurance enterprises. The formulas for
determining the amount of risk-based capital specify various weighting factors
that are applied to financial balances and various levels of activity, based
upon the nature and perceived degree of risk associated with such balances and
levels of activity. Regulatory compliance is measured by a company's risk-based
capital ratio, which is calculated as a company's regulatory total adjusted
capital, as defined, divided by its authorized control level risk-based capital,
as defined. Companies with ratios below specific trigger points are classified
within certain regulatory action levels, each of which requires specified
corrective action. The risk-based capital ratio of each of the Insurers
significantly exceeds the ratio at which regulatory corrective action would be
required.

Consolidated Cash Flows

The Company's cash balance at September 30, 1999 was $22.7 million. During the
first nine months of 1999, net cash provided by financing activities was $175.5
million, which was offset by net cash used by operating and investing activities
of $1.3 million and $173.0 million, respectively.

The $175.5 million of net cash provided by financing activities was primarily
the result of proceeds from net deposits to insurance contracts and short-term
borrowings, partially offset by the acquisition of ReliaStar common stock. Cash
outflows for insurance benefits and sales and operating expenses essentially
offset positive cash flow from premiums and investment income, resulting in net
cash used by operating activities of $1.3 million.


INVESTMENTS

The current investment strategy for the Company is designed to maintain the
overall quality of the portfolios, to maintain an appropriate liquidity
position, to assure appropriate asset/liability structures, to achieve asset
type diversification and to avoid issuer concentration.

The Company intends to direct most of its new investment cash flow during the
remainder of 1999 to the acquisition of investment grade marketable and
privately placed bonds and commercial mortgages. The marketable bonds category
includes both corporate issues and structured finance securities such as
collateralized mortgage obligations (CMOs) and other mortgage-backed securities.
The Company will make new investments in below investment grade bonds subject to
overall limitations.

The assets held by each of the Insurers are legally segregated and support only
their respective contractual obligations. The investment portfolios of each
Insurer are structured to reflect the characteristics of the liabilities which
they support. The Company internally allocates assets within the Insurers to
facilitate segment asset/liability matching. These segment allocations are
solely for portfolio management purposes, and generally all of the assets
allocated to a segment are available to satisfy the respective liabilities of
all segments within each Insurer. Assets within these portfolios are selected to
provide duration, cash flow and return characteristics which are compatible with
the liabilities they support. All of the investments in the Insurers' portfolios
are subject to diversification, quality and reserving requirements of state laws
regulating the Insurers.

                                       12
<PAGE>

The following table provides information regarding the composition of the
Company's invested assets (in millions):

<TABLE>
<CAPTION>
                                                       September 30, 1999          December 31, 1998
                                                      ---------------------      ---------------------
                                                       Amount       Percent        Amount      Percent
                                                      -------      --------      ---------     -------
<S>                                                   <C>          <C>           <C>           <C>
Investment Grade Bonds:
    Marketables                                       $ 7,531.9       52.0%      $ 7,823.4       52.5%
    Private Placements                                  2,669.5       18.4         2,881.6       19.3
                                                      ---------      -----       ---------       ----
        Subtotal                                       10,201.4       70.4        10,705.0       71.8

Below Investment Grade Bonds:
    Marketables                                           463.3        3.2           391.3        2.6
    Private Placements                                    457.8        3.2           510.4        3.4
                                                      ---------      -----       ---------       ----
           Subtotal                                       921.1        6.4           901.7        6.0

Equity Securities                                          59.1         .4            60.3         .4
Commercial Mortgages                                    1,830.4       12.6         1,726.8       11.6
Mortgages, Residential and Other                          430.9        3.0           428.0        2.9
Real Estate                                                20.8         .1            53.3         .3
Short-Term Investments                                    137.1        1.0           168.7        1.2
Policy Loans                                              736.8        5.1           702.3        4.7
Other                                                     148.2        1.0           163.0        1.1
                                                      ---------      -----       ---------       ----
    Total Invested Assets                             $14,485.8      100.0%      $14,909.1        100%
                                                      =========      =====       =========       ====
</TABLE>

Fixed Maturity Securities

The amounts invested in fixed maturity securities as of September 30, 1999 and
December 31, 1998 were $11.2 billion and $11.6 billion, respectively. The
average marketable and private placement bond investments in a single corporate
issuer (excluding structured finance securities such as CMOs, mortgage-backed
pass throughs and asset-backed securities) as of September 30, 1999 were
$9.1 million and $7.7 million, respectively.

All of the Insurers' marketable and privately placed bonds are required to be
evaluated by the Securities Valuation Office (SVO) of the NAIC. The SVO
evaluates the investments of insurers for regulatory reporting purposes and
assigns securities to one of six investment categories. The NAIC's categories
closely follow the public rating agencies' categories for marketable bonds. NAIC
categories 1 and 2 include bonds considered investment grade (BBB or higher) by
the public rating agencies. Categories 3 through 6 are referred to as below
investment grade (BB or lower).

As of September 30, 1999, the weighted average book yields of the Company's
investment grade portfolio and below investment grade portfolio were 7.4% and
8.1%, respectively. The weighted average book yield is not necessarily
reflective of the net investment income ultimately realized by the Company.
Investments with greater credit risk have a greater risk of default than
investment grade securities, and accordingly, some of the incremental book yield
of the below investment grade portfolio may not be realized.

                                       13
<PAGE>

The following tables identify the amortized cost and the fair value of the
Company's fixed maturity securities with respect to each NAIC credit rating
category (in millions):

<TABLE>
<CAPTION>
                                                    September 30, 1999
----------------------------------------------------------------------------------------------------------
                                Marketables                                Private Placements
                ------------------------------------------    -------------------------------------------
                                Gross Unrealized                             Gross Unrealized
NAIC            Amortized      ------------------   Fair      Amortized      -----------------      Fair
Rating            Cost         Gains     (Losses)   Value       Cost         Gains    (Losses)      Value
------          ---------      -----     --------   -----     ---------      -----    --------      -----
<S>             <C>          <C>       <C>         <C>        <C>            <C>      <C>        <C>
1               $5,112.6      $ 95.0    $  (78.8)   $5,128.8   $  850.4      $ 11.7    $ (14.9)   $  847.2
2                2,433.6        30.8       (61.3)    2,403.1    1,841.6        15.9      (35.2)    1,822.3
3                  398.5         3.2       (15.3)      386.4      334.7         1.1       (6.3)      329.5
4                   79.8          .8        (5.4)       75.2      106.0          .5       (3.5)      103.0
5                    9.8           -        (8.9)         .9       25.8           -       (3.4)       22.4
6                    2.2           -        (1.4)         .8        3.2           -        (.3)        2.9
Redeemable
  Preferred
  Stock             11.0          .3        (1.4)        9.9       18.3           -          -        18.3
                --------      ------    --------    --------   --------      ------    -------    --------
    Total       $8,047.5      $130.1    $ (172.5)   $8,005.1   $3,180.0      $ 29.2    $ (63.6)   $3,145.6
                ========      ======    ========    ========   ========      ======    =======    ========
</TABLE>

<TABLE>
<CAPTION>
                                                     December 31, 1998
---------------------------------------------------------------------------------------------------------
                                Marketables                                Private Placements
                ------------------------------------------    -------------------------------------------
                                Gross Unrealized                             Gross Unrealized
NAIC            Amortized      ------------------   Fair      Amortized      -----------------      Fair
Rating            Cost         Gains     (Losses)   Value       Cost         Gains    (Losses)      Value
------          ---------      -----     --------   -----     ---------      -----    --------      -----
<S>             <C>          <C>       <C>         <C>        <C>            <C>      <C>        <C>
1               $5,183.4      $284.8      $(17.1)   $5,451.1   $  849.4      $ 56.1     $  (.6)   $  904.9
2                2,279.0       107.9       (14.6)    2,372.3    1,884.1        93.8       (1.2)    1,976.7
3                  301.8         6.9        (5.4)      303.3      352.2         7.1       (1.5)      357.8
4                   97.5         1.1       (11.2)       87.4      113.0         1.6       (1.8)      112.8
5                     .3           -         (.1)         .2       35.3          .2       (1.6)       33.9
6                     .4           -           -          .4        6.6           -        (.7)        5.9
Redeemable
  Preferred
  Stock             16.3          .3        (5.9)       10.7        7.7           -          -         7.7
                --------      ------      ------    --------   --------      ------     ------    --------
    Total       $7,878.7      $401.0      $(54.3)   $8,225.4   $3,248.3      $158.8     $ (7.4)   $3,399.7
                ========      ======      ======    ========   ========      ======     ======    ========
</TABLE>

The amortized cost and fair value of fixed maturity securities by contractual
maturity are shown below. Expected maturities will differ from contractual
maturities because borrowers may have the right to call or prepay obligations
with or without prepayment penalties (in millions).

<TABLE>
<CAPTION>
                                                      September 30, 1999               December 31, 1998
                                                    ---------------------            -------------------
                                                      Amortized    Fair               Amortized    Fair
                                                        Cost       Value                Cost       Value
                                                    -----------    ------            ----------    -----
<S>                                                 <C>         <C>                  <C>         <C>
Maturing in:
   One Year or Less                                 $    476.7  $   478.9             $   459.5  $   462.9
   One to Five Years                                   3,451.9    3,474.7               3,555.5    3,710.1
   Five to Ten Years                                   2,907.5    2,865.9               3,022.9    3,191.1
   Ten Years or Later                                  1,251.1    1,225.9               1,296.1    1,375.8
Mortgage-Backed/Structured Finance                     3,140.3    3,105.3               2,793.0    2,885.2
                                                    ----------  ---------             ---------  ---------
     Total                                          $ 11,227.5  $11,150.7             $11,127.0  $11,625.1
                                                    ==========  =========             =========  =========
</TABLE>

The fair values for actively traded marketable bonds are based upon quoted
market prices. The fair values for marketable bonds without an active market are
obtained through several commercial pricing services which provide the estimated
fair values. Fair market values for privately placed bonds which are not
considered problems are determined utilizing a matrix-based pricing model. The
model considers the current level of risk-free interest rates, current corporate
spreads, the credit quality of the issuer and cash flow characteristics of the
security. Using this data, the model generates estimated market values which the
Company considers reflective of the fair value of each privately placed bond.
Fair values for privately placed bonds which are considered problems are
determined through consideration of factors such as the net worth of borrower,
the value of collateral, the capital structure of the borrower, the presence of
guarantees and the Company's evaluation of the borrower's ability to compete in
their relevant market (see Problem Investments).

Fair values of fixed income securities fluctuate due to a number of factors,
including the market level of interest rates, fluctuations in the corporate
spreads over the risk-free rate and changes in the credit quality of specific
investments.

                                       14
<PAGE>

The Company's marketable and private placement bond portfolios were diversified
by industry (based upon amortized cost) as set forth in the following table:

<TABLE>
<CAPTION>
                                                     Marketables                  Private Placements
                                            ----------------------------     -----------------------------
                                            September 30,   December 31,     September 30,    December 31,
                                                1999            1998             1999             1998
                                            -------------   ------------     -------------    ------------
<S>                                          <C>            <C>              <C>              <C>
Basic Materials                                  6.3%            6.5%             6.2%             7.0%
Consumer Non-Cyclical                            4.9             5.8             15.5             14.6
Consumer Products/Services                       9.7             8.4             17.3             18.7
Energy                                           5.6             6.0              7.2              7.3
Financial Services                              18.6            20.2             14.8             15.8
Government                                       2.2             2.8               .1               .2
Industrial                                       4.9             5.0             11.0             11.1
Mortgage-Backed/Structured
   Finance                                      33.8            30.8             14.3             11.4
Real Estate                                      1.3             1.4              2.0              2.2
Retailing                                        1.7             1.9              4.5              4.7
Technology                                       2.0             2.0              1.9              2.1
Utilities                                        9.0             9.2              5.2              4.9
                                              ------           -----            -----           ------
    Total                                      100.0%          100.0%           100.0%           100.0%
                                               =====           =====            =====            =====
</TABLE>

Below Investment Grade Investments

Issuers of below investment grade debt frequently have relatively high levels of
indebtedness and are more sensitive to adverse economic conditions, such as
recession or increasing interest rates, than are issuers of investment grade
securities.

The largest investment in below investment grade bonds of any one borrower was
approximately one-tenth of one percent of invested assets at September 30, 1999.
The largest investment in below investment grade bonds of any one industry
grouping was approximately 1.5% of invested assets at September 30, 1999. The
portfolio of below investment grade bonds is regularly analyzed and managed in
an effort to avoid concentration risks.

                                       15
<PAGE>

Mortgage-Backed/Structured Finance Securities

The Company's investment policy permits the acquisition of mortgage-backed
securities and collateralized mortgage obligations (collectively referred to as
MBS securities) provided that the Company's aggregate investment in MBS
securities shall not exceed 50% of its statutory assets and the Company shall
not acquire any interests in residual, interest only, principal only or inverse
floater tranches of MBS securities. The Company's investment strategy has been
to invest primarily in actively traded MBS securities which are structured to
reduce prepayment risk as compared to direct investments in the underlying
mortgage collateral. The amortized cost and estimated fair value of investments
in MBS securities, categorized by interest rates on the underlying collateral,
were as follows (in millions):

<TABLE>
<CAPTION>
                                                                         September 30, 1999
                                                                   --------------------------------
                                                                   Amortized
                                                                      Cost               Fair Value
                                                                   ---------             ----------
<S>                                                                <C>                   <C>
Adjustable Rate Pass Through:
    Below 6%                                                         $ 7.3                  $ 7.2
    6% - 7%                                                           63.1                   62.4
    7% - 8%                                                           30.0                   30.1

Fixed Rate Pass Through:
    Below 9%                                                          62.6                   62.9
    Above 9%                                                           5.0                    5.2

Planned Amortization Class:
    Below 7%                                                         228.9                  235.6
    7% - 8%                                                          265.2                  272.3
    8% - 9%                                                           51.6                   52.9
    Above 9%                                                           1.1                    1.1

Other:
    Below 7%                                                         300.1                  298.8
    7% - 8%                                                          111.9                  115.2
    8% - 9%                                                           14.8                   15.3
    Above 9%                                                           5.4                    5.4
                                                                  --------               --------
      Total                                                       $1,147.0               $1,164.4
                                                                  ========               ========
</TABLE>

The Company invests in public and private asset-backed securities in addition to
the MBS securities described above. As of September 30, 1999, the Insurers held
asset-backed securities with an amortized cost of $1,993.3 million and a fair
value of $1,940.9 million. These securities are collateralized by diversified
pools of manufactured housing loans, credit card receivables, automobile loans,
home equity loans, commercial mortgage loans, and high yield bank loans and
corporate bonds. The investment strategy has been to purchase primarily senior
structures and tranches that minimize prepayment and default risk. As of
September 30, 1999, approximately 98% of the Company's asset-backed securities
had investment grade ratings. Approximately 34% of these securities are
collateralized by manufactured housing loans, 21% by commercial mortgage loans,
18% by high yield bank loans and corporate bonds and 15% by home equity loans.
None of the remaining collateral types exceed, on an individual basis, 10% of
total asset-backed securities.

Mortgage Loans

The Company's commercial mortgage loans range in size from $2 million to $26
million, with the average commercial mortgage loan investment as of September
30, 1999 being approximately $3.1 million.

                                       16
<PAGE>

The commercial mortgage loan portfolio diversification by property type and
geographic region of the United States was as follows:

<TABLE>
<CAPTION>
                                                                          September 30,     December 31,
                                                                              1999              1998
                                                                          -------------     ------------
<S>                                                                       <C>               <C>
Property Type
-------------
Apartment                                                                     24.7%             24.5%
Industrial                                                                    19.3              20.6
Retail                                                                        21.5              19.6
Special Purpose                                                               21.3              19.1
Office                                                                        11.3              14.1
Hotel/Motel                                                                    1.9               2.1
                                                                             -----             -----
     Total                                                                   100.0%            100.0%
                                                                             =====             =====
</TABLE>

<TABLE>
<CAPTION>
                                                                          September 30,     December 31,
                                                                              1999              1998
                                                                          -------------     ------------
<S>                                                                       <C>               <C>
Geographic Region
-----------------
Midwest                                                                       36.6%             37.4%
Pacific                                                                       23.0              24.2
Southeast                                                                     15.8              14.7
Northeast                                                                     11.1              10.1
Mountain                                                                       8.7               8.3
Southwest                                                                      4.8               5.3
                                                                             -----             -----
     Total                                                                   100.0%            100.0%
                                                                             =====             =====
</TABLE>

The weighted average yield and the weighted average maturity of the loans in the
commercial mortgage loan portfolio as of September 30, 1999 were 7.8% and 8.5
years, respectively.

The Company invests in individual and pools of individual residential mortgage
loans in addition to the structured finance securities backed by residential
mortgages. As of September 30, 1999 and December 31, 1998, the Insurers held
$430.4 million and $427.1 million, respectively, of non-securitized residential
mortgage loans.


Unrealized Investment Gains and Losses

All of the Company's debt and equity securities are classified as
available-for-sale and carried at fair value on the Condensed Consolidated
Balance Sheets with unrealized investment gains and losses excluded from income
and reported as a component of accumulated other comprehensive income in
shareholders' equity.

Unrealized investment gains, net of unrealized investment losses, are reported
net of related DAC, PVFP and tax effects in accumulated other comprehensive
income as shown below (in millions).

<TABLE>
<CAPTION>
                                                                          September 30,     December 31,
                                                                              1999              1998
                                                                          -------------     ------------
<S>                                                                       <C>               <C>
Unrealized Investment Gains (Losses)                                         $(70.1)           $526.2
DAC/PVFP Adjustment                                                            (7.9)           (128.6)
Deferred Income Taxes                                                          28.0            (140.4)
                                                                             ------            ------

     Net Unrealized Investment Gains (Losses)                                $(50.0)           $257.2
                                                                             ======            ======
</TABLE>

Market-Sensitive Instruments and Risk Management

The Company's market risk-sensitive instruments include those financial
instruments as defined by Statement of Financial Accounting Standards (SFAS) No.
107, "Disclosures about Financial Instruments," and are all considered to be
entered into for other than trading purposes. The Company's primary market risk
exposure associated with these instruments is the risk associated with changes
in market interest rates.

Changes in interest rates impact the market value of fixed interest rate
securities. The change in market value of the Company's fixed maturity
securities is not expected to have a significant effect on results of operations
or liquidity because: (i) the Company has the present intent and practice to
hold most of its available-for-sale fixed maturity securities to maturity and
(ii) the Company's asset/liability management activity is designed to monitor
and adjust for the effects of changes in market interest rates.

The insurance liabilities of the Company are also sensitive to changes in market
interest rates. Changes in interest rates may affect the incidence of policy
surrenders and other withdrawals. In addition to the potential impact on
liquidity, unanticipated withdrawals in

                                       17
<PAGE>

a changed interest rate environment could adversely affect earnings if the
Company were required to sell investments at reduced values in order to meet
liquidity demands.

The Company has established procedures for evaluating these liabilities and
attempts to structure investment asset portfolios with yield, cash flow and
interest rate sensitivities appropriate to support the insurance liabilities.
The Company also uses derivative instruments, such as interest rate swaps, to
adjust the duration of the asset and liability portfolios. In addition, the
Insurers monitor the surrender and policy loan activity of their insurance
products and manage the composition of their investment portfolios in light of
such activity.

The Company manages the composition of its long-term capital by considering
factors such as market conditions and the ratio of long-term debt and
trust-originated preferred securities to total long-term capital.

The Company manages its interest rate risk by managing its assets within target
duration ranges, based on the Company's liability profile. The Company uses
duration analysis to estimate the amount of sensitivity to market interest rate
changes. The duration of a bond or portfolio can be thought of as the life, in
years, of a notional zero-coupon bond whose fair value would change by the same
amount in response to any change in market interest rates. The portfolio
duration includes the duration impact added by interest rate swaps and caps and
equity-indexed call options.

The target duration ranges are determined by the Company based upon the
subjective evaluation of a number of characteristics of the liabilities,
including such factors as the ability of the Company to modify interest
crediting rates, the presence and magnitude of surrender charges, historical and
projected lapse experience, the level of market interest rates and competition.
A goal of this risk control process is to optimize portfolio performance
relative to the product liability requirements.

The following table sets forth the asset duration, portfolio duration and target
duration for the investment portfolio of each business segment (in years):

<TABLE>
<CAPTION>
                                                                      September 30, 1999
                                                      ----------------------------------------------
                                                        Asset             Portfolio          Target
                                                      Duration            Duration          Duration
                                                      --------            --------          --------
<S>                                                   <C>                 <C>               <C>
Personal Financial Services                              4.3                4.3              3.5-5.0
Worksite Financial Services                              3.4                3.6              3.0-6.0
Tax-Sheltered and Fixed Annuities                        4.0                4.1              4.0-5.5
Reinsurance                                              4.8                4.8              3.5-8.0
</TABLE>

The Company uses interest rate swaps as part of this asset/liability management
program. The Company has acquired a significant amount of certain shorter
duration investments, such as floating rate or adjustable rate investments.
Acquisition of these assets shortens the duration of an asset portfolio. The
Company uses interest rate swaps to extend the duration of these portfolios as
an alternative to purchasing longer duration investments.


At September 30, 1999, the Company had 57 interest rate swap contracts in effect
with a notional amount of $927.5 million. At December 31, 1998, the Company had
60 interest rate swap contracts in effect with a notional amount of $897.5
million. During the first nine months of 1999, one interest rate swap contract
was entered into with a notional amount of $75.0 million as of September 30,
1999, and four interest rate swap contracts matured with a total notional amount
of $45.0 million. There were no terminations of interest rate swap contracts
prior to maturity during the first nine months of 1999. The Company had no
deferred gains or losses at September 30, 1999 related to interest rate swap
contracts terminated early. The estimated fair value of the interest rate swap
contracts in effect at September 30, 1999 was an unrealized gain of $5.0
million, which is reported with other invested assets in the Condensed
Consolidated Balance Sheets.

                                       18
<PAGE>

Most of the interest rate swap contracts are standard contracts whereby the
Company pays a floating rate of interest (generally based upon the LIBOR rate as
determined from time to time) and receives a fixed rate (generally a specified
contract rate). The following table details the characteristics of the Company's
interest rate swap contracts at September 30, 1999 (dollars in millions).


                                 Notional             Range of Fixed
                                  Amount              Rates Received
                                 --------             --------------
Maturing in:
   One Year or Less                $370.0                  5.4 - 6.9%
   One to Three Years               347.5                  5.3 - 8.2%
   Three to Five Years              210.0                  6.0 - 7.0%
                                   ------
     Total                         $927.5
                                   ======

The Company monitors the effect of the swap position on reported income. The
Company's investment portfolio includes a substantial amount of floating rate
investments. Changes in market interest rates have an opposite (and
approximately offsetting) effect on the reported income from the swap portfolio.
Accordingly, the reported investment income (or loss) attributable to the
Company's swap position will be approximately offset by the changed investment
income of the Company's floating or adjustable rate investments in a changing
rate environment. At September 30, 1999, the Company held $948 million of
adjustable rate invested assets, short-term investments and cash.

The Company holds certain call option contracts indexed to the performance of
the S&P 500 Index as part of its asset/liability management strategy for its
equity-indexed annuity products. The Company held 51 call options with a
notional amount of $53.5 million and an estimated fair value of $15.2 million as
of September 30, 1999.

The Company also uses interest rate caps as part of its overall interest rate
risk management strategy for certain annuity products primarily to hedge the
risk of investment losses due to product surrenders in an increasing interest
rate environment. The Company held nine interest rate caps with a notional
amount of $585.0 million and a fair value of $0.1 million as of September 30,
1999.

Problem Investments

The Company classifies invested assets of the Insurers as problem investments
where: (i) an asset is delinquent in a required payment of principal or
interest; (ii) an asset is the subject of a foreclosure action or the borrower
is in bankruptcy; (iii) a loan has been restructured; or (iv) a loan has been
foreclosed and the collateral is owned (Problem Investments). The Company
reports a mortgage loan as delinquent when a required payment of principal or
interest is 60 days past due. Fixed maturity securities are reported as
delinquent following the contractual grace period allowed for any required
payment of principal or interest. The Company generally considers a loan as
restructured when one or more of the following terms is changed for the benefit
of the borrower: (i) interest rate for a specified period of time or for the
life of the loan; (ii) maturity date; (iii) principal face amount or timing of
principal repayments on a contingent or absolute basis; or (iv) amount or timing
of payment of accrued interest.

The amortized cost of Problem Investments, net of related write-offs and
allowances and non-recourse debt, was $39.1 million and $64.6 million, at
September 30, 1999 and December 31, 1998, respectively.

                                       19
<PAGE>

The amortized cost of Problem Investments reflects reductions for write-offs and
allowances taken by the Company. The cumulative amounts of such write-offs and
allowances on problem invested assets of the Insurers in the Condensed
Consolidated Balance Sheets were $22.4 million and $45.4 million, at September
30, 1999 and December 31, 1998, respectively.

The Company establishes the carrying value of all Problem Investments. For
problem marketable securities, the fair value is the quoted market value. For
problem private placement debt securities, the fair value is determined through
consideration of factors such as the net worth of the borrower, the value of
collateral, the capital structure of the borrower, the presence of guarantees
and the Company's evaluation of the borrower's ability to compete in their
relevant market.

For problem and potential problem securities, the Company determines whether a
decline in fair value below the amortized cost is other than temporary. If the
decline in fair value is determined to be other than temporary, the Company
writes down the cost basis to fair value and the amount of the write-down is
recorded as a realized loss. Subsequent changes in the fair value of problem
available-for-sale securities which are determined to be temporary are reflected
directly in equity as unrealized investment gains or losses.

Fair value for problem real estate and problem mortgage loans is determined
taking into consideration one or more of the following factors, depending on the
circumstances for each property, including: (i) property valuation techniques
utilizing discounted cash flows at the time of stabilization including capital
expenditures and stabilization costs; (ii) sales of comparable properties; (iii)
geographic location of the property and related market conditions; and (iv)
disposition costs. In many instances, there is not an active market for such
properties. Therefore, the fair value determined by the Company may be greater
than the price which may be realized if the Company were forced to liquidate
such properties on an immediate sale basis. If fair value of a problem mortgage
loan or real estate investment is less than the carrying value, the Company
records a write-off or an increase in the allowance for uncollectible amounts.
Foreclosed properties are managed by the Company in order to maximize net
realizable value. The Company has the intent and ability to hold these assets
until appropriate sales opportunities arise.

The Company also monitors its portfolios in an attempt to identify loans which
are not currently classified as Problem Investments, but where the Company has
knowledge which causes it to have serious doubts as to the ability of borrowers
to comply with the present loan repayment terms. These loans (Potential Problem
Investments) are subject to increased scrutiny and review by the Company. The
amounts of private placements, marketable bonds, and mortgage loan Potential
Problem Investments were $36.1 million, $11.5 million and $.5 million,
respectively, at September 30, 1999.

                                       20
<PAGE>

KNOWN TRENDS AND UNCERTAINTIES WHICH MAY AFFECT FUTURE REPORTED RESULTS

Competition

Aggressive competition in insurance premiums or other product fees and
commissions could adversely affect ReliaStar's earnings and ability to retain
distributors. ReliaStar competes with the largest financial service companies in
the United States. Many of these companies are much larger and have more
resources than ReliaStar. The products sold by ReliaStar are similar to those
sold by its competitors. ReliaStar must compete to attract and retain customers
and distributors. Innovative products, strong support for distributors, and
excellent customer service are required to successfully compete in these
markets.

Financial Services Regulation

The United States Congress has enacted legislation which eliminates many of the
restrictions on affiliations among banks, insurers and brokers. It is possible
that larger, diversified financial service companies will have more resources
than ReliaStar's current competitors, which may give them a competitive
advantage. The impact of this legislation, if any, on the Company's financial
condition and prospects cannot be predicted.

Financial Markets Conditions

The products sold by ReliaStar provide value to its customers, in part, through
crediting equity gains and losses and fixed interest income. Changes in the
strengths of these markets affect ReliaStar's sales of certain products. For
instance, ReliaStar has experienced a decline in the new sales of fixed income
products in the recent low interest rate environment. ReliaStar seeks to control
this risk by maintaining a mix of products designed to be attractive in
alternative financial market conditions. Changes in market interest rates also
affect the value of the fixed income assets held by ReliaStar. ReliaStar
attempts to minimize the impact of interest rate changes through asset and
liability management.

Claims Volatility

Many of ReliaStar's products provide customers with benefits in the event of
death or disability. It is not possible to predict with certainty when claims
will occur. If ReliaStar incurs more claims than expected in any period,
ReliaStar's earnings will be unfavorably affected. ReliaStar maintains
reinsurance and retrocessional arrangements with many reinsurers in an attempt
to minimize these fluctuations.

Claims Paying and Credit Ratings

ReliaStar's insurance products and debt instruments are rated by a number of
public rating agencies. Favorable ratings are necessary to reach certain
customer product markets and also affect the Company's cost of borrowing. A
reduction in one or more ratings could affect ReliaStar's sales or the cost it
pays to borrow. ReliaStar monitors its businesses and financial condition in an
effort to maintain the ratings required to achieve its business objectives.

Guaranty Funds

Through a system of state associations, the insurance industry provides
protection to its customers in the event that an insurer becomes insolvent.
These associations assess member insurers to provide for the cost of benefits to
the customers of insolvent insurers. If the industry is affected by a
substantial future insolvency the Insurers would be subjected to assessments
which could be material.

Litigation

ReliaStar frequently encounters litigation with customers as a routine part of
its business. Some of these cases seek large amounts of punitive damages or
damages on a class basis. Juries considering similar claims in a number of
jurisdictions have awarded large punitive damage awards. While ReliaStar does
not believe it will become liable for such damages, it can make no assurances
that it will not be subjected to such an award.

                                       21
<PAGE>

Year 2000 Systems Modifications

The Company's business units utilize data processing systems in the
administration of the insurance and financial services products which they
market. Most of the Company's data processing systems have required
modifications to enable them to process dates including the year 2000 and
beyond.

In 1995, the Company initiated an enterprise wide program of identifying and
modifying systems affected by the year 2000. The Company developed a plan
whereby all systems would be identified, modified and tested for Year 2000
compliance. The Company initiated a structured review and reporting system
whereby senior management is regularly advised of the status of the project. As
of June 30, 1999, ReliaStar had converted, tested for Year 2000 compliance and
put into production all of its core business applications

The Company conducts business with a multitude of business entities whose
ability to comply with Year 2000 systems issues may affect the business
operations of the Company. The Company has made an effort to determine whether
such entities have adequate plans for Year 2000 compliance, and the Company is
not aware of any instances where a key supplier or vendor will not be compliant.
The Company does not have the ability to assure with any certainty the
compliance capacity of third parties.

The Company's business would be adversely affected if it does not meet its goals
relative to Year 2000 preparedness, and the Company's plans and actions reflect
the importance of this project. Although the Company has developed contingency
plans, it is not reasonably possible to develop contingency plans for all
possible scenarios or which would comprehensively address widespread systems
failures.

Earnings Guidance

1999: Current analyst estimates for the Company's operating earnings per share
in the fourth quarter of 1999 range from $0.80 to $0.87. Manangement currently
expresses comfort with estimates in the lower half of this range, excluding the
impact of the Pilgrim transaction.

2000: Operating income from the Reinsurance segment in 2000 are expected to be
in the range of $40 - $44 million. Current analyst estimates for the Company's
operating earnings per share in 2000 range from $3.45 to $3.75. Management
currently expresses comfort with estimates in the lower third of this range.

The above guidance is forward-looking information and the ability of the Company
to meet the indicated earnings estimates is subject to the factors described in
"Certain Forward-Looking Information" conforming with the Company's
expectations.

Impact of Accounting Pronouncements to be Adopted in the Future

Accounting for Derivative Instruments and Hedging Activities

In September 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 provides a comprehensive and
consistent standard for the recognition and measurement of derivatives and
hedging activities. SFAS No. 137, an amendment of SFAS No. 133, was issued in
June of 1999 and defers the effective date of SFAS No. 133 to fiscal years
beginning after June 15, 2000. The Company has not completed its analysis
of the impact on future financial results of applying this pronouncement.


Subsequent Event- Acquisition


On October 29, 1999, the Company completed the acquisition of Pilgrim Capital
Corporation, a Phoenix-based asset management and mutual fund company. As of
September 30, 1999, Pilgrim had assets under management of $7.7 billion and
sales of $610 million for the nine months ended September 30, 1999. The
acquisition was effected through a stock-and-cash transaction and includes the
Company's assumption of approximately $28 million of Pilgrim debt. The
acquisition was accounted for as a purchase.


ReliaStar and Pilgrim will have to integrate Pilgrim's and ReliaStar's mutual
fund management teams, operations, distribution channels, and sales and
marketing efforts. If the companies are not successful in this integration, then
ReliaStar's anticipated benefits from this merger might not be realized.

                                       22
<PAGE>

Certain Forward-Looking Information

This report and earlier filings contain forward-looking information, including
information under the caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations" which discuss earnings guidance, known
trends and uncertainties, interest spreads for the remainder of 1999,
reinsurance claims experience, withdrawal and surrender activity, direction of
new investment cash flow, impacts of changes in interest rates on the Insurers'
investment portfolio and strategies to mitigate such effects. The Private
Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-
looking information to encourage companies to provide prospective information
about themselves without fear of litigation so long as such information is
identified as forward-looking and is accompanied by meaningful cautionary
statements identifying important factors that could cause actual results to
differ materially from those projected in the information. Forward-looking
information is indicated by the use of such words as "anticipates," "expects,"
"believes," "should," "could," "intends," "estimates," and "may," or other
comparable language. ReliaStar identifies the following important factors that
could cause ReliaStar's actual results to differ materially from any results
that might be projected by ReliaStar in forward-looking information. All of
these factors are difficult to predict, and many are beyond the control of the
Company. Accordingly, although ReliaStar believes that the assumptions
underlying the forward-looking information are reasonable, there can be no
assurances that those assumptions will approximate actual experience.

The important factors include the following:

o    General economic conditions, including prevailing interest rates and the
     performance of the stock market which may affect the Company's ability to
     sell its products;
o    The market value of the Company's investments;
o    The lapse rate and profitability of the insurance policies issued by
     ReliaStar;
o    Mortality and morbidity factors in ReliaStar's insurance business
     (including the effect of the Company's reinsurance and retrocession risk
     management programs);
o    Changes in federal tax laws, which could adversely affect the tax
     advantages of certain of the Company's products;
o    Legislative or regulatory changes affecting financial institutions,
     including those affecting bank sales and underwriting of insurance products
     and regulation of the sale, underwriting and pricing of insurance products;
o    Industry consolidation and competition; and
o    Retention of key employees.

You should also consider other risks and uncertainties discussed in documents
filed by ReliaStar with the Securities and Exchange Commission. ReliaStar has no
obligation to update forward-looking information.

                                       23
<PAGE>

Part II. Other Information


                            RELIASTAR FINANCIAL CORP.


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

         (a)   Exhibits:

               2    Agreement and Plan of Merger, dated as of July 22, 1999,
                    among ReliaStar Financial Corp., NorthStar Holding, Inc.,
                    and Pilgrim Capital Corporation (incorporated by reference
                    to Exhibit 2 to the Registrant's Current Report on Form 8-K
                    dated July 22, 1999, File No. 1-10640)

               3(a) Certificate of Incorporation, as amended, of Registrant
                    (incorporated by reference to Exhibit 4(a) to the
                    Registrant's Registration Statement on Form S-8,
                    Registration No. 333-42125)

               3(b) Bylaws, as amended, of Registrant (incorporated by reference
                    to Exhibit 3 to the Registrant's Quarterly Report on Form
                    10-Q for the quarter ended March 31, 1999, File No. 1-10640)

               4    Amended and Restated Rights Agreement dated as of February
                    11, 1999 between ReliaStar Financial Corp. and Norwest Bank
                    Minnesota, National Association, as Rights Agent
                    (incorporated by reference to Exhibit 1 to the Registrant's
                    Amendment to Registration Statement of Form 8-A/A dated
                    February 26, 1999)

               10(a) Credit Agreement, dated as of June 30, 1999, by and between
                    ReliaStar Financial Corp, the Lenders which are signatories
                    thereto, and U.S. Bank National Association, as Agent.

                11  Statement re Computation of Per Share Earnings

                27  Financial Data Schedule

         (b)   Reports on Form 8-K filed during the quarter ended September 30,
               1999:

                    Form 8-K dated as of July 22, 1999, with respect to the
                    acquisition of Pilgrim Capital Corporation

                    Form 8-K dated as of September 22, 1999, with respect to the
                    Registrant's on-site meeting with securities analysts.

                                       24
<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.





                             Dated  November 11, 1999
                                    -----------------

                                    RELIASTAR FINANCIAL CORP.








                             /s/ James R. Miller
                             --------------------------------------
                             by James R. Miller
                             Senior Vice President, Chief Financial
                             Officer and Treasurer

                                       25
[{"type": "10-Q", "sequence": "1", "description": "FORM 10-Q", "secsgml_size_bytes": 117563}]
{"company-data": {"conformed-name": "RELIASTAR FINANCIAL CORP", "cik": "0000841528", "assigned-sic": "6311", "irs-number": "411620373", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "001-10640", "film-number": "99754904"}, "business-address": {"street1": "20 WASHINGTON AVE S", "city": "MINNEAPOLIS", "state": "MN", "zip": "55401", "phone": "6123725432"}, "mail-address": {"street1": "20 WASHINGTON AVENUE SOUTH", "city": "MINNEAPOLIS", "state": "MN", "zip": "55401"}, "former-company": {"former-conformed-name": "NWNL COMPANIES INC", "date-changed": "19920703"}}
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 September 30, 1999

                                       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  1-10640

                           RELIASTAR FINANCIAL CORP.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

           DELAWARE                                           41-1620373
------------------------------------                      ----------------------
(State or other jurisdiction of                           (I.R.S. Employer
incorporation or Identification No.)                        organization)

            20 WASHINGTON AVENUE SOUTH, MINNEAPOLIS, MINNESOTA 55401
            --------------------------------------------------------
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (612) 372-5432
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

         ---------------------------------------------------------------
         (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 [ ]

Number of shares of common stock outstanding as of October 29, 1999 was
88,750,866.
Part I-Financial Information
Item 1. Financial Statements

                            RELIASTAR FINANCIAL CORP.
                      Condensed Consolidated Balance Sheets
                                  (in millions)
                                   (unaudited)
September 30, 1999         December 31, 1998
                                                                   ------------------         -----------------
ASSETS
Fixed Maturity Securities                                                $   11,150.7              $   11,625.1
Equity Securities                                                                59.1                      60.3
Mortgage Loans on Real Estate                                                 2,261.3                   2,154.8
Real Estate and Leases                                                           20.8                      53.3
Policy Loans                                                                    736.8                     702.3
Other Invested Assets                                                           120.0                     144.6
Short-Term Investments                                                          137.1                     168.7
                                                                         ------------              ------------
     Total Investments                                                       14,485.8                  14,909.1
Cash                                                                             22.7                      21.5
Accounts and Notes Receivable                                                   469.6                     287.7
Reinsurance Receivable                                                          542.1                     417.7
Deferred Policy Acquisition Costs                                             1,391.3                   1,214.9
Present Value of Future Profits                                                 431.0                     422.5
Property and Equipment, Net                                                     116.8                     117.3
Accrued Investment Income                                                       197.3                     196.0
Other Assets                                                                    450.8                     399.8
Participation Fund Account Assets                                               310.3                     311.6
Assets Held in Separate Accounts                                              5,023.4                   4,310.6
                                                                         ------------              ------------
       TOTAL ASSETS                                                      $   23,441.1              $   22,608.7
                                                                         ============              ============

LIABILITIES
Future Policy and Contract Benefits                                      $   13,588.6              $   13,519.8
Pending Policy Claims                                                           563.1                     433.5
Other Policyholder Funds                                                        362.3                     304.6
Notes and Mortgages Payable                                                     665.6                     509.4
Income Taxes                                                                     71.8                     199.0
Other Liabilities                                                               801.2                     663.2
Participation Fund Account Liabilities                                          310.3                     311.6
Liabilities Related to Separate Accounts                                      5,017.9                   4,305.1
                                                                         ------------              ------------
       TOTAL LIABILITIES                                                     21,380.8                  20,246.2
                                                                         ------------              ------------

Company-Obligated Mandatorily Redeemable Preferred
   Securities Issued by Consolidated Subsidiaries                               242.6                     242.3
                                                                         ------------              ------------

SHAREHOLDERS' EQUITY
Common Stock (Shares Issued: 1999 and 1998, 98.1)                                  .9                        .9
Additional Paid-in Capital                                                      991.4                   1,003.0
Retained Earnings                                                             1,267.6                   1,137.6
Accumulated Other Comprehensive Income                                          (50.0)                    257.2
Note Receivable from ESOP                                                       (17.5)                    (19.8)
Unamortized Restricted Stock Awards                                               (.8)                      (.7)
Treasury Common Stock, at Cost (Shares Held: 1999, 11.9; 1998, 9.2)            (373.9)                   (258.0)
                                                                         ------------              ------------
       TOTAL SHAREHOLDERS' EQUITY                                             1,817.7                   2,120.2
                                                                         ------------              ------------

       TOTAL LIABILITIES AND
       SHAREHOLDERS' EQUITY                                              $   23,441.1              $   22,608.7
                                                                         ============              ============
See accompanying notes to condensed consolidated financial statements.

                                       2
RELIASTAR FINANCIAL CORP.
                   Condensed Consolidated Statements of Income
                      (in millions, except per share data)
                                   (unaudited)
Three Months Ended September 30        Nine Months Ended September 30
                                                               -------------------------------        ------------------------------
                                                                   1999             1998                 1999              1998
                                                               ------------      -------------        -----------     --------------
REVENUES
Premiums                                                          $   283.4      $  248.5              $   842.8     $     740.8
Net Investment Income                                                 273.6         277.3                  833.2           826.0
Realized Investment Gains (Losses), Net                                (1.4)          1.0                    0.2            18.5
Policy and Contract Charges                                           116.5          95.7                  338.3           298.4
Other Income                                                           71.7          86.4                  198.3           236.6
                                                                  ---------      --------              ---------     -----------
     Total                                                            743.8         708.9                2,212.8         2,120.3
                                                                  ---------      --------              ---------     -----------

BENEFITS AND EXPENSES
Benefits to Policyholders                                             438.6         373.0                1,247.2         1,138.3
Sales and Operating Expenses                                          159.7         162.1                  475.9           465.2
Amortization of Deferred Policy Acquisition Costs
     and Present Value of Future Profits                               49.8          47.1                  137.3           137.2
Interest Expense                                                       11.6           6.8                   31.2            19.7
Dividends and Experience Refunds to Policyholders                       8.8           8.0                   23.1            24.5
                                                                  ---------      --------              ---------     -----------
     Total                                                            668.5         597.0                1,914.7         1,784.9
                                                                  ---------      --------              ---------     -----------

Income from Continuing Operations Before Income Taxes
      and Dividends on Preferred Securities of Subsidiaries            75.3         111.9                  298.1           335.4
Income Tax Expense                                                     25.9          40.0                  106.0           119.5
Dividends on Preferred Securities of Subsidiaries,
      Net of Tax                                                        3.3           3.3                    9.9             9.9
                                                                  ---------      --------              ---------     -----------
Income from Continuing Operations                                      46.1          68.6                  182.2           206.0

Loss from Discontinued Operations, Net of Tax                            -              -                      -            (3.4)
                                                                  --------       --------              ---------     -----------

Net Income                                                        $    46.1      $   68.6              $   182.2     $     202.6
                                                                  =========      ========              =========     ===========

PER COMMON SHARE
Basic
Income from Continuing Operations                                 $     .54      $    .75              $    2.08     $      2.26
Loss from Discontinued Operations                                        -              -                      -            (.04)
                                                                  --------       --------              ---------     -----------
Net Income                                                        $     .54      $    .75              $    2.08     $      2.22
                                                                  =========      ========              =========     ===========

Diluted
Income from Continuing Operations                                 $     .53      $    .74              $    2.05     $      2.22
Loss from Discontinued Operations                                        -              -                      -            (.04)
                                                                   -------       --------              ---------     -----------
Net Income                                                        $     .53      $    .74              $    2.05     $      2.18
                                                                  =========      ========              =========     ===========

Weighted Average Common Shares
     Basic                                                             86.1          91.5                   87.6            91.2
     Diluted                                                           87.3          93.1                   88.8            92.9
See accompanying notes to condensed consolidated financial statements.

                                       3
RELIASTAR FINANCIAL CORP.
            Condensed Consolidated Statements of Shareholders' Equity
                      (in millions, except per share data)
                                   (unaudited)
Nine Months Ended September 30
                                                               ----------------------------------------------------
                                                               Shareholders' Equity         Comprehensive Income
                                                               ---------------------    ---------------------------
                                                                 1999          1998        1999             1998
                                                               ---------    --------    ---------       -----------
Common Stock
   Beginning and End of Period                                 $      .9    $      .9
                                                               ---------    ---------

Additional Paid-in Capital
   Beginning of Year                                             1,003.0      1,019.8
   Loss on Treasury Shares Reissued for Benefit Plans              (18.2)       (22.5)
   Loss on Treasury Shares Reissued for Acquisitions                   -          (.9)
   Tax Benefit on Stock Options Exercised                            6.6         10.5
                                                               ---------    ---------
      End of Period                                                991.4      1,006.9
                                                               ---------      -------

Retained Earnings
   Beginning  of Year                                            1,137.6        964.8
   Net Income                                                      182.2        202.6    $   182.2         $ 202.6
   Common Dividends to Shareholders: (Per Share: 1999,
       $.595; 1998, $.525)                                         (52.4)       (47.9)
   Other, Net                                                         .2           .1
                                                               ---------    ---------
      End of Period                                              1,267.6      1,119.6
                                                               ---------    ---------

Accumulated Other Comprehensive Income
   Beginning of Year                                               257.2        226.2
   Change for the Period                                          (307.2)       110.8       (307.2)          110.8
                                                               ---------    ---------       ------         -------
      End of Period                                                (50.0)       337.0
                                                               ---------    ---------

Note Receivable from ESOP
   Beginning of Year                                               (19.8)       (20.8)
   Repayments, Accrued or Paid                                       2.3           .9
                                                               ---------    ---------
      End of Period                                                (17.5)       (19.9)
                                                               ---------    ---------

Unamortized Restricted Stock Awards
   Beginning of Year                                                 (.7)        (1.0)
   Awards, Net                                                       (.4)          -
   Amortization of Restricted Stock Awards                            .3           .1
                                                               ---------    ---------
      End of Period                                                  (.8)         (.9)
                                                               ---------    ---------

Treasury Common Stock
   Beginning of Year                                              (258.0)      (178.9)
   Acquired                                                       (153.5)       (36.0)
   Reissued for Acquisitions                                           -         21.2
   Reissued, Other                                                  37.6         52.0
                                                               ---------   ----------
      End of Period                                               (373.9)      (141.7)
                                                               ---------   ----------

Comprehensive Income (Loss)                                                                $(125.0)        $ 313.4
                                                                                           =======         =======

Total Shareholders' Equity                                      $1,817.7     $2,301.9
                                                                ========     ========
See accompanying notes to condensed consolidated financial statements.

                                       4
RELIASTAR FINANCIAL CORP.
                 Condensed Consolidated Statements of Cash Flows
                                  (in millions)
                                   (unaudited)
Nine Months Ended September 30
                                                                              -----------------------------------
                                                                                   1999                  1998
                                                                              -------------         -------------
OPERATING ACTIVITIES
Net Income                                                                    $      182.2          $      202.6
Adjustments to Reconcile Net Income to Net Cash Provided by
  Operating Activities
     Interest Credited to Insurance Contracts                                        418.3                 436.7
     Future Policy Benefits                                                         (554.3)               (515.1)
     Capitalization of Policy Acquisition Costs                                     (210.2)               (174.7)
     Amortization of Deferred Policy Acquisition Costs and Present
        Value of Future Profits                                                      137.3                 137.2
     Deferred Income Taxes                                                            45.0                  10.5
     Net Change in Receivables and Payables                                           25.1                 (22.0)
     Other Assets                                                                    (36.8)                304.7
     Realized Investment Gains, Net                                                    (.2)                (18.5)
     Other, net                                                                       (7.7)                (18.4)
                                                                             -------------        --------------
          Net Cash Provided (Used) by Operating Activities                            (1.3)                343.0
                                                                             -------------        --------------

INVESTING ACTIVITIES
Proceeds from Sales of Fixed Maturity Securities                                     622.7                 308.3
Proceeds from Maturities or Repayment of Fixed Maturity Securities                 1,025.1                 803.3
Cost of Fixed Maturity Securities Acquired                                        (1,739.4)             (1,458.6)
Sales (Purchases) of Equity Securities, Net                                            1.7                 (39.1)
Proceeds of Mortgage Loans Sold, Matured or Repaid                                   273.3                 497.2
Cost of Mortgage Loans Acquired                                                     (378.9)               (334.9)
Sales of Real Estate and Leases, Net                                                  39.7                  25.1
Policy Loans Issued, Net                                                             (34.5)                (25.8)
Sales (Purchases) of Other Invested Assets, Net                                         .5                 (12.3)
Sales of Short-Term Investments, Net                                                  31.6                   2.1
Cash (Paid for) from Acquisitions, Net                                               (14.8)                  1.3
                                                                             -------------        --------------
          Net Cash Used by Investing Activities                                     (173.0)               (233.4)
                                                                             --------------       --------------

FINANCING ACTIVITIES
Deposits to Insurance Contracts                                                    1,260.2               1,242.1
Maturities and Withdrawals from Insurance Contracts                               (1,054.4)             (1,080.3)
Increase in Notes and Mortgages Payable                                              156.3                  64.0
Repayment of Notes and Mortgages Payable                                               (.1)               (290.9)
Issuance of Common Stock Under Stock Option and Other Plans                           19.4                  29.5
Dividends on Common Stock                                                            (52.4)                (47.9)
Acquisition of Treasury Common Stock                                                (153.5)                (36.0)
                                                                             -------------        ---------------
          Net Cash Provided (Used) by Financing Activities                           175.5                (119.5)
                                                                             -------------        ---------------
Increase (Decrease) in Cash                                                            1.2                  (9.9)
Cash at Beginning of Period                                                           21.5                  46.4
                                                                             -------------        --------------
Cash at End of Period                                                        $        22.7        $         36.5
                                                                             =============        ==============
See accompanying notes to condensed consolidated financial statements.

                                       5
RELIASTAR FINANCIAL CORP.
              Notes to Condensed Consolidated Financial Statements
                                   (unaudited)

Note 1. Basis of Presentation

The condensed consolidated financial statements have been prepared in conformity
with generally accepted accounting principles and such principles were applied
on a basis consistent with that reflected in the Annual Report of ReliaStar
Financial Corp. (the Company or ReliaStar) for the year ended December 31, 1998
filed with the Securities and Exchange Commission (SEC). The financial
information included herein, other than the condensed consolidated balance sheet
as of December 31, 1998, has been prepared by management without audit by
independent certified public accountants. The condensed consolidated balance
sheet as of December 31, 1998 has been derived from, and does not include all of
the disclosures contained in, the audited consolidated financial statements for
the year ended December 31, 1998.

The information furnished includes all adjustments and accruals consisting only
of normal, recurring accrual adjustments which are, in the opinion of
management, necessary for a fair statement of results for the interim period.
The results of operations for any interim period are not necessarily indicative
of results for the full year. The unaudited interim condensed consolidated
financial statements should be read in conjunction with the financial statements
and notes thereto contained in the Company's 1998 Annual Report.

Note 2.  Segment Information

The Company operates in four reportable segments which are differentiated by
products and/or marketing focus. The Personal Financial Services (PFS) segment
sells life insurance and annuity products to individuals. The Worksite Financial
Services segment sells group and individual insurance products, 401(k) plans and
financial services to employers and their employees at the worksite. The
Tax-Sheltered and Fixed Annuities (TSA/FA) segment sells 403(b) annuities and
other retirement products, primarily to the K-12 schoolteacher market. The
Reinsurance segment sells group life, health and specialty reinsurance products
in the U.S. and internationally.

In the first quarter of 1999, management responsibility for the closed block of
individual life insurance of Northern Life was transferred from the TSA/FA
segment to the PFS segment. At the same time, management responsibility for the
fixed annuities of Security-Connecticut Life and the former Lincoln Security
Life were transferred from the PFS segment to the TSA/FA segment. Previously
reported segment financial data has been restated to reflect these changes and
conform with current period presentation.

Operations not included in the four reportable segments are classified as Other
Business Units and include the Company's mutual fund operation, broker/dealer
operations, banking and trust operations and personal financial education
company. Financing costs, goodwill amortization, unallocated costs and
consolidating/eliminating adjustments are reported in Corporate.

                                       6
Selected segment data follows (in millions):
Three Months Ended September 30        Nine Months Ended September 30
                                                         -------------------------------        ------------------------------
OPERATING INCOME/1/                                         1999                1998                 1999               1998
-------------------                                      ---------           ---------           ----------        -----------
Personal Financial Services                               $   27.6           $   23.4            $     80.6        $     69.4
Worksite Financial Services                                   16.6               15.4                  46.5              43.2
Tax-Sheltered and Fixed Annuities                             18.5               19.8                  60.3              56.3
Reinsurance                                                  (13.9)              10.4                   5.6              31.4
                                                          ---------          --------            ----------        ----------
     Total Reportable Segments                                48.8               69.0                 193.0             200.3
Other Business Units                                           2.7                3.4                   7.3               9.3
Corporate                                                     (4.4)              (4.8)                (18.6)            (13.4)
                                                          ---------          --------            ----------        ----------
Operating Income                                              47.1               67.6                 181.7             196.2
Net Realized Investment Gains (Losses)                        (1.0)               1.0                    .5               9.8
                                                          ---------          --------            ----------        ----------
Consolidated Income from Continuing Operations            $   46.1           $   68.6            $    182.2        $    206.0
                                                          ========           ========            ==========        ==========
/1/  Operating income is after-tax and excludes realized investment gains and
     losses and their impact on the amortization of deferred policy acquisition
     costs (DAC) and present value of future profits (PVFP).
Three Months Ended September 30         Nine Months Ended September 30
                                                         -------------------------------         ------------------------------
OPERATING REVENUES                                          1999               1998                  1999             1998
------------------                                        --------           -------             ----------        -----------
Personal Financial Services                               $  220.9           $  211.0            $    662.3        $    661.4
Worksite Financial Services                                  194.2              204.5                 583.8             592.1
Tax-Sheltered and Fixed Annuities                            147.0              148.1                 447.6             442.4
Reinsurance                                                  120.2               91.8                 340.5             248.6
                                                          --------           --------            ----------        ----------
     Total Reportable Segments                               682.3              655.4               2,034.2           1,944.5
Other Business Units                                          55.2               48.6                 160.4             145.6
Corporate                                                      7.7                3.9                  18.0              11.7
                                                          --------           --------            ----------        ----------
     Operating Revenues                                      745.2              707.9               2,212.6           2,101.8
Realized Investment Gains (Losses), Net                       (1.4)               1.0                    .2              18.5
                                                          --------           --------            ----------        ----------
Consolidated Revenues                                     $  743.8           $  708.9            $  2,212.8        $  2,120.3
                                                          ========           ========            ==========        ==========
September 30      December 31
ASSETS UNDER MANAGEMENT                                                                     1999              1998
-----------------------                                                                 ------------      -----------
Personal Financial Services                                                              $  7,055.9        $  6,887.0
Worksite Financial Services                                                                 3,792.4           3,512.1
Tax-Sheltered and Fixed Annuities                                                           7,921.8           7,594.7
Reinsurance                                                                                   368.4             309.9
                                                                                         ----------        ----------
     Total Reportable Segments                                                             19,138.5          18,303.7
Other Business Units                                                                        4,503.8           4,018.4
Corporate                                                                                     435.4             389.8
                                                                                         ----------        ----------
     Assets Under Management                                                               24,077.7          22,711.9
Net Unrealized Investment Gains (Losses)                                                      (64.7)            526.2
Other Balance Sheet Assets                                                                  3,931.9           3,389.0
Off-Balance Sheet Mutual Fund Client Assets                                                (4,503.8)         (4,018.4)
                                                                                         ----------        ----------
Consolidated Assets                                                                      $ 23,441.1        $ 22,608.7
                                                                                         ==========        ==========
Note 3. Acquisitions

During July 1999, the Company completed the acquisition of the Financial
Northeastern Companies (FNC) located in Fairfield, New Jersey. FNC is engaged in
securities and certificates of deposit  brokerage and insurance  marketing.  The
acquisition was accounted for using the purchase method of accounting.  The cash
purchase price was approximately $15 million,  and goodwill of approximately $13
million was recorded.

Subsequent to the balance sheet date, on October 29, 1999, the Company completed
the acquisition of Pilgrim Capital Corporation (Pilgrim), a Phoenix-based asset
management and mutual fund company. As of September 30, 1999, Pilgrim had assets
under management of $7.7 billion and sales of $610 million for the nine months
ended September 30, 1999. The acquisition was effected through a stock-and-cash
transaction and includes the Company's assumption of approximately $28 million
of Pilgrim debt. The acquisition was accounted for using the purchase method of
accounting. Pilgrim shareholders received approximately 2.6 million shares of
ReliaStar common stock plus approximately $63.9 million in cash.

                                       7
Items 2 and 3.  Management's Discussion and Analysis of Financial Condition and
                Results of Operations And Quantitative and Qualitative
                Disclosures About Market Risk

                            RELIASTAR FINANCIAL CORP.

RESULTS OF OPERATIONS

Results of operations by operating segment are summarized below (in millions):
Three Months             Nine Months
                                                                    Ended September 30        Ended September 30
                                                                    ------------------        ------------------
                                                                     1999        1998          1999        1998
                                                                    ------      ------        ------      ------
Operating Income (Loss) /1/
   Personal Financial Services Segment                              $27.6        $23.4    $   80.6      $  69.4
   Worksite Financial Services Segment                               16.6         15.4        46.5         43.2
   Tax-Sheltered and Fixed Annuities Segment                         18.5         19.8        60.3         56.3
   Reinsurance Segment                                              (13.9)        10.4         5.6         31.4
   Other Business Units                                               2.7          3.4         7.3          9.3
   Corporate                                                         (4.4)        (4.8)      (18.6)       (13.4)
                                                                   ------        -----    --------      -------
Operating Income                                                     47.1         67.6       181.7        196.2
Net Realized Investment Gains (Losses), Net of Tax                   (1.0)         1.0          .5          9.8
                                                                   ------        -----    --------      -------
Income From Continuing Operations                                    46.1         68.6       182.2        206.0
Loss From Discontinued Operations, Net of Tax                           -            -           -         (3.4)
                                                                   ------        -----    --------      -------
   Net Income                                                       $46.1        $68.6    $  182.2      $ 202.6
                                                                   ======        =====    ========      =======
/1/  Operating income is after-tax and excludes realized investment gains and
     losses and their impact on the amortization of deferred policy acquisition
     costs (DAC) and present value of future profits (PVFP).

ReliaStar Financial Corp. (the Company or ReliaStar) has four reportable
operating segments: Personal Financial Services (PFS), Worksite Financial
Services (WFS), Tax-Sheltered and Fixed Annuities (TSA/FA), and Reinsurance; and
conducts its operations primarily through its life insurance subsidiaries:
ReliaStar Life Insurance Company (ReliaStar Life), Northern Life Insurance
Company (Northern), Security-Connecticut Life Insurance Company
(Security-Connecticut), and ReliaStar Life Insurance Company of New York (RLNY).
These subsidiaries are sometimes collectively referred to as the Insurers.

In the first quarter of 1999, management responsibility for the closed block of
individual life insurance of Northern was transferred from the TSA/FA segment to
the PFS segment. At the same time, management responsibility for the fixed
annuities of Security-Connecticut and the former Lincoln Security Life were
transferred from the PFS segment to the TSA/FA segment. Previously reported
segment financial data has been restated to reflect these changes and conform
with current period presentation.

The discussion of segment operating results that follows refers to the above
after-tax segment results and, in each instance, amounts are after-tax unless
otherwise indicated.

Personal Financial Services
---------------------------

The PFS segment sells life insurance and annuity products to individuals.
Operating income of the PFS segment for the third quarter of 1999 increased $4.2
million, or 18%, compared with the same period in 1998. The increase in
operating income was primarily due to improved mortality, higher sales and
growth in assets under management, offset in part by slightly higher expense
levels, primarily associated with the transition to the new consolidated service
center in Minot, ND. Year-to-date operating income increased 16% over the
comparable period in 1998 primarily due to favorable mortality experience,
growth in assets under management and higher sales.

The interest spread on interest-sensitive products of 232 basis points in the
third quarter of 1999 compares to 236 basis points in the third quarter of 1998.
The decrease in interest spread reflects a 20 basis point decrease in the
portfolio yield and a 16 basis point reduction in the average crediting rate. It
should be noted that the interest spread calculation is an annualized measure
and can be overly influenced in a particular period by the level of prepayments,
recoveries on problem investments and other variances in the level of net
investment income. For approximately one-half of the business included in the
PFS segment, crediting rates on in force business are reset annually at the
beginning of the calendar year and are guaranteed for one year. The balance of
the business has crediting rates that can be changed on the policy anniversary
or some other
                                       8
date. Initial crediting rates offered on new business can be changed at any time
in response to competition and market interest rates and are guaranteed to the
end of the calendar year on most new premiums received.

Total assets under management increased to $7.1 billion as of September 30,
1999, from $6.5 billion as of September 30, 1998. Separate account assets under
management increased to $2.4 billion as of September 30, 1999, from $1.8 billion
as of September 30, 1998.

Total sales (annualized new premiums and deposits) increased 10% for the third
quarter of 1999 and were $90.3 million compared with $82.4 million in the same
period of 1998. The increase in sales is due to an 11% increase in both
individual life and variable annuity sales, partially offset by a decline in
fixed annuity sales, compared to the third quarter of last year. Total sales for
the first nine months of 1999 were $261.3 million compared to $266.6 million in
the same period of 1998. The decrease in sales reflects an 8% decrease in
annuity sales which was partially offset by a 12% increase in individual life
sales.

Worksite Financial Services
---------------------------

The WFS segment sells group and individual life insurance products, retirement
plans and financial services to employers and their employees at the worksite.
Operating income of the WFS segment for the third quarter of 1999 increased $1.2
million, or 8%, compared with the same period in 1998. The increase in operating
income was primarily due to improved mortality experience in the employee
benefits unit and growth in assets under management in the retirement plans
unit, partially offset by reduced earnings from the closed block of pension
business. Year-to-date operating income increased 8% compared with the same
period in 1998. The increase in year-to-date operating income was primarily due
to higher investment income and higher sales in the voluntary payroll deduction
unit and growth in assets under management in the retirement plans unit,
partially offset by reduced earnings from the closed block of pension business.

Total sales for the third quarter of 1999 were $141.8 million compared with
$117.3 million in the same period of 1998. Sales for the third quarter of 1999
increased 21% compared with the same period in 1998, reflecting a 17% increase
in retirement plan sales, a 147% increase in group health sales and a 43%
increase in group life sales. Total sales for the first nine months of 1999 were
$492.2 million compared to $375.0 million for the same period of 1998. The
increase in sales reflects a 33% increase in retirement plan sales, a 19%
increase in group life sales, a 47% increase in group health sales and a 10%
increase in individual life sales.

Tax-Sheltered and Fixed Annuities
---------------------------------

The TSA/FA segment sells 403(b) annuities and other retirement products,
primarily to the K-12 schoolteacher market. Operating income of the TSA/FA
segment for the third quarter of 1999 decreased $1.3 million, or 7%, compared
with the same period in 1998. The decrease in operating income was primarily due
to higher expense levels, including those associated with the transition to the
new consolidated service center, partially offset by improved interest spreads
and growth in assets under management. Year-to-date operating income increased
7% over the same period in 1998. The increase in year-to-date operating income
was primarily due to improved interest spreads and growth in assets under
management, partially offset by higher expense levels.

The interest spread on interest-sensitive products of 276 basis points in the
third quarter of 1999 compares to 247 basis points in the third quarter of 1998.
This increase in interest spread reflects a 41 basis point reduction in the
average crediting rate and a 12 basis point decrease in the portfolio yield. It
should be noted that the interest spread calculation is an annualized measure
and can be overly influenced in a particular period by the level of prepayments,
recoveries on problem investments and other variances in the level of net
investment income. For most of the business included in the TSA/FA segment,
crediting rates on in force business are reset annually at the beginning of the
calendar year and are guaranteed for one year. The balance of the business has
crediting rates that can be changed on the policy anniversary or some other
date. Initial crediting rates offered on new business can be changed at any time
in response to competition and market interest rates and are guaranteed to the
end of the calendar year on most new deposits received.

Total assets under management increased to $7.9 billion as of September 30,
1999, from $7.4 billion as of September 30, 1998. Separate account assets under
management increased to $579 million as of September 30, 1999, from $263 million
as of September 30, 1998.

Total sales for the third quarter of 1999 were $175.2 million compared with
$174.2 million in the same period of 1998. The increase in sales reflects a 15%
increase in sales of variable annuities, while sales of fixed annuities
decreased 6%. Total sales for the first nine months of 1999 were $497.4 million
compared with $460.1 million for the same period of 1998. The increase in sales
reflects a 36% increase in variable annuity sales and a 5% decrease in fixed
annuity sales.

Reinsurance
-----------

                                       9
The Reinsurance segment sells group life, health, and specialty reinsurance
products in the United States and internationally. The Reinsurance segment
recorded an operating loss of $13.9 million in the third quarter of 1999,
compared with operating income of $10.4 million in the third quarter of 1998.
The loss in the quarter was primarily due to losses from medical reinsurance
business written by two independent managing underwriters with whom the Company
has terminated its relationships. Because of increased claims in the third
quarter we conducted an extensive review of our medical business and determined
that claims experience for certain business written by two managing underwriters
was developing much worse than was assumed for pricing and reported in previous
quarters. Our review concluded that the business was not profitable, and as a
result, a pretax accrual of $25 million ($16.2 million, after-tax) was recorded
for all incurred and prospective losses on all premiums written by these two
managing underwriters. The third quarter 1999 operating loss generated by all
reinsurance business written by these two managing underwriters was $18.0
million, including the $16.2 million charge. Concurrent with the review of the
medical reinsurance business, we undertook a broader review of the Company's
reinsurance businesses. As a result, we discovered that there were deficiencies
in the Company's claims reporting processes in the international reinsurance
line. This required reserves to be strengthened by $8 million, pretax ($5.1
million, after-tax). Claims experience and overall profitability of workers
compensation carve-out reinsurance in the third quarter of 1999 were consistent
with those of the same period in 1998 and in line with the Company's
expectations. Year-to-date operating income decreased 82% compared with the same
period in 1998. Earnings in the reinsurance business can fluctuate based upon a
number of factors, including pricing, market capacity, the availability and
pricing of retrocessional programs, loss experience and the risk profile of the
book of business included in this segment.

Total sales for the third quarter of 1999 were $46.0 million compared with $48.6
million in the same period of 1998, a decrease of 5%. The decrease in sales was
primarily due to decreased sales in the life and medical lines of business.
Total sales for the first nine months of 1999 were $204.8 million compared to
$149.3 million in the same period of 1998.

Other Business Units
--------------------

Other Business Units include the Company's mutual fund operation, broker/dealer
operations, banking operation and personal finance education company. These
business units are not large enough to be classified as reportable segments.
Operating income of the Other Business Units for the third quarter of 1999
decreased $.7 million, or 21%, compared with the same period in 1998.
Year-to-date operating income decreased $2.0 million compared with the same
period in 1998. The decrease in year-to-date operating income was primarily due
to lower earnings in the mutual fund operation as a result of a gain recorded in
the first quarter of 1998 on the sale of 12b-1 fees attributable to a portion of
the mutual fund operation's Class B shares, partially offset by growth in mutual
fund assets under management.

Corporate
---------

Corporate includes financing costs, goodwill amortization and other unallocated
costs. Operating losses of Corporate for the third quarter of 1999 decreased $.4
million compared with the same period in 1998. The operating losses of Corporate
for the first nine months increased $5.2 million compared with the same period
in 1998. The increase in year-to-date operating losses was primarily due to
financing costs related to common stock buyback programs completed during 1998
and 1999.

Realized Investment Gains and Losses

The sources of net realized investment gains (losses) were as follows (in
millions):
Three Months              Nine Months
                                                                   Ended September 30         Ended September 30
                                                                   ------------------         ------------------
                                                                    1999        1998           1999       1998
                                                                   ------      ------         ------     ------
Net Gains (Losses) on Sales of Investments
    Fixed Maturity Securities
     Gross Gains                                                   $2.3         $5.7         $13.8      $14.9
     Gross Losses                                                  (5.7)        (1.5)        (13.7)      (3.2)
    Equity Securities                                               (.2)          .1           1.0        1.0
    Mortgage Loans                                                    -           .2            .5        (.1)
    Foreclosed Real Estate                                          5.2         (1.2)          6.9        1.8
    Real Estate                                                      .3           .4           1.2         .7
    Other                                                           1.3           .7           7.4       14.6
Provision for Losses on Investments
   Fixed Maturity Securities                                          -         (1.2)         (3.5)      (7.5)
   Foreclosed Real Estate                                           (.5)         2.3           (.9)        .8
   Real Estate                                                        -          (.2)            -        (.2)
   Other                                                           (4.1)        (4.3)        (12.5)      (4.3)
                                                                  -----         ----         -----       ----
Pretax Realized Investment Gains (Losses)                          (1.4)         1.0            .2       18.5
DAC/PVFP Amortization /1/                                           (.2)          .6            .6       (3.2)
Income Taxes                                                         .6          (.6)          (.3)      (5.5)
                                                                  -----         ----         -----       ----
       Net Realized Investment Gains (Losses), Net of Tax         ($1.0)        $1.0         $  .5       $9.8
                                                                  =====         ====         =====       ====
/1/ Due to pretax realized investment gains and losses.

                                       10
The Company establishes allowances and writes down the value of specific assets
based upon its periodic review of individual problem investments. The Company's
recording of allowances and write-downs based upon a review of individual
problem assets results in fluctuations in the level of the provision for losses
on investments reported in each period. The provision for losses on investments
is affected to a significant degree by general economic conditions and the
status of the real estate market. While the Company believes it has set aside
appropriate reserves and allowances for problem investments, subsequent economic
and market conditions may require the establishment of additional reserves.

FINANCIAL CONDITION

Liquidity and Capital Resources - ReliaStar Financial Corp.

ReliaStar, as parent, is dependent upon dividends, interest and payments for
other charges received from its subsidiaries to pay dividends to shareholders,
service its debt and pay other obligations. The payment of dividends, interest
or other charges is subject to restrictions imposed by applicable insurance laws
and regulations.

The payment of future dividends by ReliaStar to its shareholders will be largely
dependent upon the ability of ReliaStar Life to pay dividends to the Company.
Under Minnesota insurance law regulating the payment of dividends by ReliaStar
Life, any such payment must be in an amount deemed prudent by ReliaStar Life's
Board of Directors and, unless otherwise approved by the Commissioner of the
Minnesota Department of Commerce (the Commissioner), must be paid solely from
the adjusted earned surplus of ReliaStar Life. Adjusted earned surplus means the
earned surplus as determined in accordance with statutory accounting practices
(unassigned funds) less 25% of the amount of such earned surplus which is
attributable to net unrealized capital gains. Further, without approval of the
Commissioner, ReliaStar Life may not pay in any calendar year any dividend
which, when combined with other dividends paid within the preceding 12 months,
exceeds the greater of (i) 10% of ReliaStar Life's statutory surplus at the
prior year-end or (ii) 100% of ReliaStar Life's statutory net gain from
operations (not including realized capital gains) for the prior calendar year.
For 1999, the amount of dividends which can be paid by ReliaStar Life without
Commissioner approval is $156.4 million.

During the second quarter of 1999, the Company terminated a systematic program
it had started in the first quarter of 1999 to repurchase shares of its common
stock in open market transactions. The Company repurchased 1,095,000 shares
under this program for $47.5 million. The shares were repurchased for the
Company's stock option plans, stock compensation programs and dividend
reinvestment program. In addition, on July 16, 1999, the Company completed a
$100 million general common share repurchase program that was announced on May
13, 1999, whereby 2,354,500 shares of common stock were repurchased.

On October 29, 1999, the Company completed the acquisition of Pilgrim Capital
Corporation (see "Known Trends and Uncertainties Which May Affect Future
Reported Results- Subsequent Event- Acquisition"). ReliaStar reissued
approximately 2.6 million shares of common stock from treasury, and
approximately $63.9 million in cash. The Company also assumed approximately
$28 million of Pilgrim debt.

As of September 30, 1999, the Company had an unsecured revolving credit facility
with a group of banks totaling $250.0 million for general corporate purposes and
$94.0 million remained available for borrowing under this facility.

On March 3, 1999, the Company filed a shelf registration statement with the
Securities and Exchange Commission (SEC) for the issuance of up to $500 million
of debt and equity securities. The registration statement was declared effective
on April 30, 1999 by the SEC. During October 1999, the Company completed the
issuance of $200 million of 8% notes payable due October 30, 2006. The proceeds
from this offering will be used to reduce outstanding short-term borrowings and
finance the acquisition of Pilgrim Capital Corporation. Subsequent to the $200
million issuance, $300 million of debt and equity securities were available for
issuance under this shelf registration.

Liquidity and Capital Resources - Insurers

Liquidity for life insurance companies is measured by their ability to pay
scheduled contractual benefits, pay operating expenses and fund investment
commitments. Sources of liquidity include scheduled and unscheduled principal
and interest payments on investments, premium payments and deposits and the sale
of liquid investments. These sources of liquidity for the Insurers significantly
exceed scheduled uses.

Liquidity is also affected by unscheduled benefit payments, including death
benefits, benefits under insured accident and health policies and contract
withdrawals and surrenders. The amount of withdrawals and surrenders is affected
by a variety of factors such as credited interest rates for competing products,
general economic conditions, the Insurers' claims paying ratings and events in
the industry which affect policyholders' confidence.

The Insurers' investment portfolios represent a significant source of liquid
assets. As of September 30, 1999, the Insurers' investment portfolios included
$7.7 billion (33% of consolidated assets) of short-term investments and
investment grade marketable bonds. The

                                       11
September 30, 1999 investment portfolio also included $2.7 billion of investment
grade privately placed bonds which, while not publicly traded, are a source of
liquidity.

Some of the policies and annuities issued by the Insurers contain provisions
which allow contractholders to withdraw or surrender their contracts under
defined circumstances. These policies and annuities generally contain provisions
which apply penalties or otherwise restrict the ability of contractholders to
make such withdrawals or surrenders. The Insurers monitor the surrender and
policy loan activity of their insurance products and manage the composition of
their investment portfolios, including liquidity, in light of such activity. The
current level of withdrawal and surrender activity is well below a level which
would have a material effect on liquidity.

Changes in interest rates may affect the incidence of policy surrenders and
other withdrawals. In addition to the potential impact on liquidity,
unanticipated withdrawals in a changed interest rate environment could adversely
affect earnings if the Company were required to sell investments at reduced
values in order to meet liquidity demands. The Company seeks assets which have
duration characteristics similar to the liabilities which they support. The
Company also uses derivative instruments, such as interest rate swaps, to adjust
the duration of the asset and liability portfolios (see
Investments-Market-Sensitive Instruments and Risk Management).

The Company's long-term goals contemplate continued growth in its insurance
businesses. To achieve these growth goals, the Insurers will need to increase
their statutory surplus. Statutory surplus is computed according to rules
prescribed by the National Association of Insurance Commissioners (NAIC), as
modified by each Insurer's state of domicile. Statutory accounting rules are
different from generally accepted accounting principles (GAAP) and are intended
to reflect a more conservative perspective by, for example, requiring immediate
recognition of selling expenses. Additional statutory surplus may be secured
through various sources such as internally generated statutory earnings or
equity infusions by ReliaStar with funds generated through debt or equity
offerings.

The state of domicile of each of the Insurers imposes NAIC-developed minimum
risk-based capital requirements on insurance enterprises. The formulas for
determining the amount of risk-based capital specify various weighting factors
that are applied to financial balances and various levels of activity, based
upon the nature and perceived degree of risk associated with such balances and
levels of activity. Regulatory compliance is measured by a company's risk-based
capital ratio, which is calculated as a company's regulatory total adjusted
capital, as defined, divided by its authorized control level risk-based capital,
as defined. Companies with ratios below specific trigger points are classified
within certain regulatory action levels, each of which requires specified
corrective action. The risk-based capital ratio of each of the Insurers
significantly exceeds the ratio at which regulatory corrective action would be
required.

Consolidated Cash Flows

The Company's cash balance at September 30, 1999 was $22.7 million. During the
first nine months of 1999, net cash provided by financing activities was $175.5
million, which was offset by net cash used by operating and investing activities
of $1.3 million and $173.0 million, respectively.

The $175.5 million of net cash provided by financing activities was primarily
the result of proceeds from net deposits to insurance contracts and short-term
borrowings, partially offset by the acquisition of ReliaStar common stock. Cash
outflows for insurance benefits and sales and operating expenses essentially
offset positive cash flow from premiums and investment income, resulting in net
cash used by operating activities of $1.3 million.

INVESTMENTS

The current investment strategy for the Company is designed to maintain the
overall quality of the portfolios, to maintain an appropriate liquidity
position, to assure appropriate asset/liability structures, to achieve asset
type diversification and to avoid issuer concentration.

The Company intends to direct most of its new investment cash flow during the
remainder of 1999 to the acquisition of investment grade marketable and
privately placed bonds and commercial mortgages. The marketable bonds category
includes both corporate issues and structured finance securities such as
collateralized mortgage obligations (CMOs) and other mortgage-backed securities.
The Company will make new investments in below investment grade bonds subject to
overall limitations.

The assets held by each of the Insurers are legally segregated and support only
their respective contractual obligations. The investment portfolios of each
Insurer are structured to reflect the characteristics of the liabilities which
they support. The Company internally allocates assets within the Insurers to
facilitate segment asset/liability matching. These segment allocations are
solely for portfolio management purposes, and generally all of the assets
allocated to a segment are available to satisfy the respective liabilities of
all segments within each Insurer. Assets within these portfolios are selected to
provide duration, cash flow and return characteristics which are compatible with
the liabilities they support. All of the investments in the Insurers' portfolios
are subject to diversification, quality and reserving requirements of state laws
regulating the Insurers.

                                       12
The following table provides information regarding the composition of the
Company's invested assets (in millions):
September 30, 1999          December 31, 1998
                                                      ---------------------      ---------------------
                                                       Amount       Percent        Amount      Percent
                                                      -------      --------      ---------     -------
Investment Grade Bonds:
    Marketables                                       $ 7,531.9       52.0%      $ 7,823.4       52.5%
    Private Placements                                  2,669.5       18.4         2,881.6       19.3
                                                      ---------      -----       ---------       ----
        Subtotal                                       10,201.4       70.4        10,705.0       71.8

Below Investment Grade Bonds:
    Marketables                                           463.3        3.2           391.3        2.6
    Private Placements                                    457.8        3.2           510.4        3.4
                                                      ---------      -----       ---------       ----
           Subtotal                                       921.1        6.4           901.7        6.0

Equity Securities                                          59.1         .4            60.3         .4
Commercial Mortgages                                    1,830.4       12.6         1,726.8       11.6
Mortgages, Residential and Other                          430.9        3.0           428.0        2.9
Real Estate                                                20.8         .1            53.3         .3
Short-Term Investments                                    137.1        1.0           168.7        1.2
Policy Loans                                              736.8        5.1           702.3        4.7
Other                                                     148.2        1.0           163.0        1.1
                                                      ---------      -----       ---------       ----
    Total Invested Assets                             $14,485.8      100.0%      $14,909.1        100%
                                                      =========      =====       =========       ====
Fixed Maturity Securities

The amounts invested in fixed maturity securities as of September 30, 1999 and
December 31, 1998 were $11.2 billion and $11.6 billion, respectively. The
average marketable and private placement bond investments in a single corporate
issuer (excluding structured finance securities such as CMOs, mortgage-backed
pass throughs and asset-backed securities) as of September 30, 1999 were
$9.1 million and $7.7 million, respectively.

All of the Insurers' marketable and privately placed bonds are required to be
evaluated by the Securities Valuation Office (SVO) of the NAIC. The SVO
evaluates the investments of insurers for regulatory reporting purposes and
assigns securities to one of six investment categories. The NAIC's categories
closely follow the public rating agencies' categories for marketable bonds. NAIC
categories 1 and 2 include bonds considered investment grade (BBB or higher) by
the public rating agencies. Categories 3 through 6 are referred to as below
investment grade (BB or lower).

As of September 30, 1999, the weighted average book yields of the Company's
investment grade portfolio and below investment grade portfolio were 7.4% and
8.1%, respectively. The weighted average book yield is not necessarily
reflective of the net investment income ultimately realized by the Company.
Investments with greater credit risk have a greater risk of default than
investment grade securities, and accordingly, some of the incremental book yield
of the below investment grade portfolio may not be realized.

                                       13
The following tables identify the amortized cost and the fair value of the
Company's fixed maturity securities with respect to each NAIC credit rating
category (in millions):
September 30, 1999
----------------------------------------------------------------------------------------------------------
                                Marketables                                Private Placements
                ------------------------------------------    -------------------------------------------
                                Gross Unrealized                             Gross Unrealized
NAIC            Amortized      ------------------   Fair      Amortized      -----------------      Fair
Rating            Cost         Gains     (Losses)   Value       Cost         Gains    (Losses)      Value
------          ---------      -----     --------   -----     ---------      -----    --------      -----
1               $5,112.6      $ 95.0    $  (78.8)   $5,128.8   $  850.4      $ 11.7    $ (14.9)   $  847.2
2                2,433.6        30.8       (61.3)    2,403.1    1,841.6        15.9      (35.2)    1,822.3
3                  398.5         3.2       (15.3)      386.4      334.7         1.1       (6.3)      329.5
4                   79.8          .8        (5.4)       75.2      106.0          .5       (3.5)      103.0
5                    9.8           -        (8.9)         .9       25.8           -       (3.4)       22.4
6                    2.2           -        (1.4)         .8        3.2           -        (.3)        2.9
Redeemable
  Preferred
  Stock             11.0          .3        (1.4)        9.9       18.3           -          -        18.3
                --------      ------    --------    --------   --------      ------    -------    --------
    Total       $8,047.5      $130.1    $ (172.5)   $8,005.1   $3,180.0      $ 29.2    $ (63.6)   $3,145.6
                ========      ======    ========    ========   ========      ======    =======    ========
December 31, 1998
---------------------------------------------------------------------------------------------------------
                                Marketables                                Private Placements
                ------------------------------------------    -------------------------------------------
                                Gross Unrealized                             Gross Unrealized
NAIC            Amortized      ------------------   Fair      Amortized      -----------------      Fair
Rating            Cost         Gains     (Losses)   Value       Cost         Gains    (Losses)      Value
------          ---------      -----     --------   -----     ---------      -----    --------      -----
1               $5,183.4      $284.8      $(17.1)   $5,451.1   $  849.4      $ 56.1     $  (.6)   $  904.9
2                2,279.0       107.9       (14.6)    2,372.3    1,884.1        93.8       (1.2)    1,976.7
3                  301.8         6.9        (5.4)      303.3      352.2         7.1       (1.5)      357.8
4                   97.5         1.1       (11.2)       87.4      113.0         1.6       (1.8)      112.8
5                     .3           -         (.1)         .2       35.3          .2       (1.6)       33.9
6                     .4           -           -          .4        6.6           -        (.7)        5.9
Redeemable
  Preferred
  Stock             16.3          .3        (5.9)       10.7        7.7           -          -         7.7
                --------      ------      ------    --------   --------      ------     ------    --------
    Total       $7,878.7      $401.0      $(54.3)   $8,225.4   $3,248.3      $158.8     $ (7.4)   $3,399.7
                ========      ======      ======    ========   ========      ======     ======    ========
The amortized cost and fair value of fixed maturity securities by contractual
maturity are shown below. Expected maturities will differ from contractual
maturities because borrowers may have the right to call or prepay obligations
with or without prepayment penalties (in millions).
September 30, 1999               December 31, 1998
                                                    ---------------------            -------------------
                                                      Amortized    Fair               Amortized    Fair
                                                        Cost       Value                Cost       Value
                                                    -----------    ------            ----------    -----
Maturing in:
   One Year or Less                                 $    476.7  $   478.9             $   459.5  $   462.9
   One to Five Years                                   3,451.9    3,474.7               3,555.5    3,710.1
   Five to Ten Years                                   2,907.5    2,865.9               3,022.9    3,191.1
   Ten Years or Later                                  1,251.1    1,225.9               1,296.1    1,375.8
Mortgage-Backed/Structured Finance                     3,140.3    3,105.3               2,793.0    2,885.2
                                                    ----------  ---------             ---------  ---------
     Total                                          $ 11,227.5  $11,150.7             $11,127.0  $11,625.1
                                                    ==========  =========             =========  =========
The fair values for actively traded marketable bonds are based upon quoted
market prices. The fair values for marketable bonds without an active market are
obtained through several commercial pricing services which provide the estimated
fair values. Fair market values for privately placed bonds which are not
considered problems are determined utilizing a matrix-based pricing model. The
model considers the current level of risk-free interest rates, current corporate
spreads, the credit quality of the issuer and cash flow characteristics of the
security. Using this data, the model generates estimated market values which the
Company considers reflective of the fair value of each privately placed bond.
Fair values for privately placed bonds which are considered problems are
determined through consideration of factors such as the net worth of borrower,
the value of collateral, the capital structure of the borrower, the presence of
guarantees and the Company's evaluation of the borrower's ability to compete in
their relevant market (see Problem Investments).

Fair values of fixed income securities fluctuate due to a number of factors,
including the market level of interest rates, fluctuations in the corporate
spreads over the risk-free rate and changes in the credit quality of specific
investments.

                                       14
The Company's marketable and private placement bond portfolios were diversified
by industry (based upon amortized cost) as set forth in the following table:
Marketables                  Private Placements
                                            ----------------------------     -----------------------------
                                            September 30,   December 31,     September 30,    December 31,
                                                1999            1998             1999             1998
                                            -------------   ------------     -------------    ------------
Basic Materials                                  6.3%            6.5%             6.2%             7.0%
Consumer Non-Cyclical                            4.9             5.8             15.5             14.6
Consumer Products/Services                       9.7             8.4             17.3             18.7
Energy                                           5.6             6.0              7.2              7.3
Financial Services                              18.6            20.2             14.8             15.8
Government                                       2.2             2.8               .1               .2
Industrial                                       4.9             5.0             11.0             11.1
Mortgage-Backed/Structured
   Finance                                      33.8            30.8             14.3             11.4
Real Estate                                      1.3             1.4              2.0              2.2
Retailing                                        1.7             1.9              4.5              4.7
Technology                                       2.0             2.0              1.9              2.1
Utilities                                        9.0             9.2              5.2              4.9
                                              ------           -----            -----           ------
    Total                                      100.0%          100.0%           100.0%           100.0%
                                               =====           =====            =====            =====
Below Investment Grade Investments

Issuers of below investment grade debt frequently have relatively high levels of
indebtedness and are more sensitive to adverse economic conditions, such as
recession or increasing interest rates, than are issuers of investment grade
securities.

The largest investment in below investment grade bonds of any one borrower was
approximately one-tenth of one percent of invested assets at September 30, 1999.
The largest investment in below investment grade bonds of any one industry
grouping was approximately 1.5% of invested assets at September 30, 1999. The
portfolio of below investment grade bonds is regularly analyzed and managed in
an effort to avoid concentration risks.

                                       15
Mortgage-Backed/Structured Finance Securities

The Company's investment policy permits the acquisition of mortgage-backed
securities and collateralized mortgage obligations (collectively referred to as
MBS securities) provided that the Company's aggregate investment in MBS
securities shall not exceed 50% of its statutory assets and the Company shall
not acquire any interests in residual, interest only, principal only or inverse
floater tranches of MBS securities. The Company's investment strategy has been
to invest primarily in actively traded MBS securities which are structured to
reduce prepayment risk as compared to direct investments in the underlying
mortgage collateral. The amortized cost and estimated fair value of investments
in MBS securities, categorized by interest rates on the underlying collateral,
were as follows (in millions):
September 30, 1999
                                                                   --------------------------------
                                                                   Amortized
                                                                      Cost               Fair Value
                                                                   ---------             ----------
Adjustable Rate Pass Through:
    Below 6%                                                         $ 7.3                  $ 7.2
    6% - 7%                                                           63.1                   62.4
    7% - 8%                                                           30.0                   30.1

Fixed Rate Pass Through:
    Below 9%                                                          62.6                   62.9
    Above 9%                                                           5.0                    5.2

Planned Amortization Class:
    Below 7%                                                         228.9                  235.6
    7% - 8%                                                          265.2                  272.3
    8% - 9%                                                           51.6                   52.9
    Above 9%                                                           1.1                    1.1

Other:
    Below 7%                                                         300.1                  298.8
    7% - 8%                                                          111.9                  115.2
    8% - 9%                                                           14.8                   15.3
    Above 9%                                                           5.4                    5.4
                                                                  --------               --------
      Total                                                       $1,147.0               $1,164.4
                                                                  ========               ========
The Company invests in public and private asset-backed securities in addition to
the MBS securities described above. As of September 30, 1999, the Insurers held
asset-backed securities with an amortized cost of $1,993.3 million and a fair
value of $1,940.9 million. These securities are collateralized by diversified
pools of manufactured housing loans, credit card receivables, automobile loans,
home equity loans, commercial mortgage loans, and high yield bank loans and
corporate bonds. The investment strategy has been to purchase primarily senior
structures and tranches that minimize prepayment and default risk. As of
September 30, 1999, approximately 98% of the Company's asset-backed securities
had investment grade ratings. Approximately 34% of these securities are
collateralized by manufactured housing loans, 21% by commercial mortgage loans,
18% by high yield bank loans and corporate bonds and 15% by home equity loans.
None of the remaining collateral types exceed, on an individual basis, 10% of
total asset-backed securities.

Mortgage Loans

The Company's commercial mortgage loans range in size from $2 million to $26
million, with the average commercial mortgage loan investment as of September
30, 1999 being approximately $3.1 million.

                                       16
The commercial mortgage loan portfolio diversification by property type and
geographic region of the United States was as follows:
September 30,     December 31,
                                                                              1999              1998
                                                                          -------------     ------------
Property Type
-------------
Apartment                                                                     24.7%             24.5%
Industrial                                                                    19.3              20.6
Retail                                                                        21.5              19.6
Special Purpose                                                               21.3              19.1
Office                                                                        11.3              14.1
Hotel/Motel                                                                    1.9               2.1
                                                                             -----             -----
     Total                                                                   100.0%            100.0%
                                                                             =====             =====
September 30,     December 31,
                                                                              1999              1998
                                                                          -------------     ------------
Geographic Region
-----------------
Midwest                                                                       36.6%             37.4%
Pacific                                                                       23.0              24.2
Southeast                                                                     15.8              14.7
Northeast                                                                     11.1              10.1
Mountain                                                                       8.7               8.3
Southwest                                                                      4.8               5.3
                                                                             -----             -----
     Total                                                                   100.0%            100.0%
                                                                             =====             =====
The weighted average yield and the weighted average maturity of the loans in the
commercial mortgage loan portfolio as of September 30, 1999 were 7.8% and 8.5
years, respectively.

The Company invests in individual and pools of individual residential mortgage
loans in addition to the structured finance securities backed by residential
mortgages. As of September 30, 1999 and December 31, 1998, the Insurers held
$430.4 million and $427.1 million, respectively, of non-securitized residential
mortgage loans.

Unrealized Investment Gains and Losses

All of the Company's debt and equity securities are classified as
available-for-sale and carried at fair value on the Condensed Consolidated
Balance Sheets with unrealized investment gains and losses excluded from income
and reported as a component of accumulated other comprehensive income in
shareholders' equity.

Unrealized investment gains, net of unrealized investment losses, are reported
net of related DAC, PVFP and tax effects in accumulated other comprehensive
income as shown below (in millions).
September 30,     December 31,
                                                                              1999              1998
                                                                          -------------     ------------
Unrealized Investment Gains (Losses)                                         $(70.1)           $526.2
DAC/PVFP Adjustment                                                            (7.9)           (128.6)
Deferred Income Taxes                                                          28.0            (140.4)
                                                                             ------            ------

     Net Unrealized Investment Gains (Losses)                                $(50.0)           $257.2
                                                                             ======            ======
Market-Sensitive Instruments and Risk Management

The Company's market risk-sensitive instruments include those financial
instruments as defined by Statement of Financial Accounting Standards (SFAS) No.
107, "Disclosures about Financial Instruments," and are all considered to be
entered into for other than trading purposes. The Company's primary market risk
exposure associated with these instruments is the risk associated with changes
in market interest rates.

Changes in interest rates impact the market value of fixed interest rate
securities. The change in market value of the Company's fixed maturity
securities is not expected to have a significant effect on results of operations
or liquidity because: (i) the Company has the present intent and practice to
hold most of its available-for-sale fixed maturity securities to maturity and
(ii) the Company's asset/liability management activity is designed to monitor
and adjust for the effects of changes in market interest rates.

The insurance liabilities of the Company are also sensitive to changes in market
interest rates. Changes in interest rates may affect the incidence of policy
surrenders and other withdrawals. In addition to the potential impact on
liquidity, unanticipated withdrawals in

                                       17
a changed interest rate environment could adversely affect earnings if the
Company were required to sell investments at reduced values in order to meet
liquidity demands.

The Company has established procedures for evaluating these liabilities and
attempts to structure investment asset portfolios with yield, cash flow and
interest rate sensitivities appropriate to support the insurance liabilities.
The Company also uses derivative instruments, such as interest rate swaps, to
adjust the duration of the asset and liability portfolios. In addition, the
Insurers monitor the surrender and policy loan activity of their insurance
products and manage the composition of their investment portfolios in light of
such activity.

The Company manages the composition of its long-term capital by considering
factors such as market conditions and the ratio of long-term debt and
trust-originated preferred securities to total long-term capital.

The Company manages its interest rate risk by managing its assets within target
duration ranges, based on the Company's liability profile. The Company uses
duration analysis to estimate the amount of sensitivity to market interest rate
changes. The duration of a bond or portfolio can be thought of as the life, in
years, of a notional zero-coupon bond whose fair value would change by the same
amount in response to any change in market interest rates. The portfolio
duration includes the duration impact added by interest rate swaps and caps and
equity-indexed call options.

The target duration ranges are determined by the Company based upon the
subjective evaluation of a number of characteristics of the liabilities,
including such factors as the ability of the Company to modify interest
crediting rates, the presence and magnitude of surrender charges, historical and
projected lapse experience, the level of market interest rates and competition.
A goal of this risk control process is to optimize portfolio performance
relative to the product liability requirements.

The following table sets forth the asset duration, portfolio duration and target
duration for the investment portfolio of each business segment (in years):
September 30, 1999
                                                      ----------------------------------------------
                                                        Asset             Portfolio          Target
                                                      Duration            Duration          Duration
                                                      --------            --------          --------
Personal Financial Services                              4.3                4.3              3.5-5.0
Worksite Financial Services                              3.4                3.6              3.0-6.0
Tax-Sheltered and Fixed Annuities                        4.0                4.1              4.0-5.5
Reinsurance                                              4.8                4.8              3.5-8.0
The Company uses interest rate swaps as part of this asset/liability management
program. The Company has acquired a significant amount of certain shorter
duration investments, such as floating rate or adjustable rate investments.
Acquisition of these assets shortens the duration of an asset portfolio. The
Company uses interest rate swaps to extend the duration of these portfolios as
an alternative to purchasing longer duration investments.

At September 30, 1999, the Company had 57 interest rate swap contracts in effect
with a notional amount of $927.5 million. At December 31, 1998, the Company had
60 interest rate swap contracts in effect with a notional amount of $897.5
million. During the first nine months of 1999, one interest rate swap contract
was entered into with a notional amount of $75.0 million as of September 30,
1999, and four interest rate swap contracts matured with a total notional amount
of $45.0 million. There were no terminations of interest rate swap contracts
prior to maturity during the first nine months of 1999. The Company had no
deferred gains or losses at September 30, 1999 related to interest rate swap
contracts terminated early. The estimated fair value of the interest rate swap
contracts in effect at September 30, 1999 was an unrealized gain of $5.0
million, which is reported with other invested assets in the Condensed
Consolidated Balance Sheets.

                                       18
Most of the interest rate swap contracts are standard contracts whereby the
Company pays a floating rate of interest (generally based upon the LIBOR rate as
determined from time to time) and receives a fixed rate (generally a specified
contract rate). The following table details the characteristics of the Company's
interest rate swap contracts at September 30, 1999 (dollars in millions).

                                 Notional             Range of Fixed
                                  Amount              Rates Received
                                 --------             --------------
Maturing in:
   One Year or Less                $370.0                  5.4 - 6.9%
   One to Three Years               347.5                  5.3 - 8.2%
   Three to Five Years              210.0                  6.0 - 7.0%
                                   ------
     Total                         $927.5
                                   ======

The Company monitors the effect of the swap position on reported income. The
Company's investment portfolio includes a substantial amount of floating rate
investments. Changes in market interest rates have an opposite (and
approximately offsetting) effect on the reported income from the swap portfolio.
Accordingly, the reported investment income (or loss) attributable to the
Company's swap position will be approximately offset by the changed investment
income of the Company's floating or adjustable rate investments in a changing
rate environment. At September 30, 1999, the Company held $948 million of
adjustable rate invested assets, short-term investments and cash.

The Company holds certain call option contracts indexed to the performance of
the S&P 500 Index as part of its asset/liability management strategy for its
equity-indexed annuity products. The Company held 51 call options with a
notional amount of $53.5 million and an estimated fair value of $15.2 million as
of September 30, 1999.

The Company also uses interest rate caps as part of its overall interest rate
risk management strategy for certain annuity products primarily to hedge the
risk of investment losses due to product surrenders in an increasing interest
rate environment. The Company held nine interest rate caps with a notional
amount of $585.0 million and a fair value of $0.1 million as of September 30,
1999.

Problem Investments

The Company classifies invested assets of the Insurers as problem investments
where: (i) an asset is delinquent in a required payment of principal or
interest; (ii) an asset is the subject of a foreclosure action or the borrower
is in bankruptcy; (iii) a loan has been restructured; or (iv) a loan has been
foreclosed and the collateral is owned (Problem Investments). The Company
reports a mortgage loan as delinquent when a required payment of principal or
interest is 60 days past due. Fixed maturity securities are reported as
delinquent following the contractual grace period allowed for any required
payment of principal or interest. The Company generally considers a loan as
restructured when one or more of the following terms is changed for the benefit
of the borrower: (i) interest rate for a specified period of time or for the
life of the loan; (ii) maturity date; (iii) principal face amount or timing of
principal repayments on a contingent or absolute basis; or (iv) amount or timing
of payment of accrued interest.

The amortized cost of Problem Investments, net of related write-offs and
allowances and non-recourse debt, was $39.1 million and $64.6 million, at
September 30, 1999 and December 31, 1998, respectively.

                                       19
The amortized cost of Problem Investments reflects reductions for write-offs and
allowances taken by the Company. The cumulative amounts of such write-offs and
allowances on problem invested assets of the Insurers in the Condensed
Consolidated Balance Sheets were $22.4 million and $45.4 million, at September
30, 1999 and December 31, 1998, respectively.

The Company establishes the carrying value of all Problem Investments. For
problem marketable securities, the fair value is the quoted market value. For
problem private placement debt securities, the fair value is determined through
consideration of factors such as the net worth of the borrower, the value of
collateral, the capital structure of the borrower, the presence of guarantees
and the Company's evaluation of the borrower's ability to compete in their
relevant market.

For problem and potential problem securities, the Company determines whether a
decline in fair value below the amortized cost is other than temporary. If the
decline in fair value is determined to be other than temporary, the Company
writes down the cost basis to fair value and the amount of the write-down is
recorded as a realized loss. Subsequent changes in the fair value of problem
available-for-sale securities which are determined to be temporary are reflected
directly in equity as unrealized investment gains or losses.

Fair value for problem real estate and problem mortgage loans is determined
taking into consideration one or more of the following factors, depending on the
circumstances for each property, including: (i) property valuation techniques
utilizing discounted cash flows at the time of stabilization including capital
expenditures and stabilization costs; (ii) sales of comparable properties; (iii)
geographic location of the property and related market conditions; and (iv)
disposition costs. In many instances, there is not an active market for such
properties. Therefore, the fair value determined by the Company may be greater
than the price which may be realized if the Company were forced to liquidate
such properties on an immediate sale basis. If fair value of a problem mortgage
loan or real estate investment is less than the carrying value, the Company
records a write-off or an increase in the allowance for uncollectible amounts.
Foreclosed properties are managed by the Company in order to maximize net
realizable value. The Company has the intent and ability to hold these assets
until appropriate sales opportunities arise.

The Company also monitors its portfolios in an attempt to identify loans which
are not currently classified as Problem Investments, but where the Company has
knowledge which causes it to have serious doubts as to the ability of borrowers
to comply with the present loan repayment terms. These loans (Potential Problem
Investments) are subject to increased scrutiny and review by the Company. The
amounts of private placements, marketable bonds, and mortgage loan Potential
Problem Investments were $36.1 million, $11.5 million and $.5 million,
respectively, at September 30, 1999.

                                       20
KNOWN TRENDS AND UNCERTAINTIES WHICH MAY AFFECT FUTURE REPORTED RESULTS

Competition

Aggressive competition in insurance premiums or other product fees and
commissions could adversely affect ReliaStar's earnings and ability to retain
distributors. ReliaStar competes with the largest financial service companies in
the United States. Many of these companies are much larger and have more
resources than ReliaStar. The products sold by ReliaStar are similar to those
sold by its competitors. ReliaStar must compete to attract and retain customers
and distributors. Innovative products, strong support for distributors, and
excellent customer service are required to successfully compete in these
markets.

Financial Services Regulation

The United States Congress has enacted legislation which eliminates many of the
restrictions on affiliations among banks, insurers and brokers. It is possible
that larger, diversified financial service companies will have more resources
than ReliaStar's current competitors, which may give them a competitive
advantage. The impact of this legislation, if any, on the Company's financial
condition and prospects cannot be predicted.

Financial Markets Conditions

The products sold by ReliaStar provide value to its customers, in part, through
crediting equity gains and losses and fixed interest income. Changes in the
strengths of these markets affect ReliaStar's sales of certain products. For
instance, ReliaStar has experienced a decline in the new sales of fixed income
products in the recent low interest rate environment. ReliaStar seeks to control
this risk by maintaining a mix of products designed to be attractive in
alternative financial market conditions. Changes in market interest rates also
affect the value of the fixed income assets held by ReliaStar. ReliaStar
attempts to minimize the impact of interest rate changes through asset and
liability management.

Claims Volatility

Many of ReliaStar's products provide customers with benefits in the event of
death or disability. It is not possible to predict with certainty when claims
will occur. If ReliaStar incurs more claims than expected in any period,
ReliaStar's earnings will be unfavorably affected. ReliaStar maintains
reinsurance and retrocessional arrangements with many reinsurers in an attempt
to minimize these fluctuations.

Claims Paying and Credit Ratings

ReliaStar's insurance products and debt instruments are rated by a number of
public rating agencies. Favorable ratings are necessary to reach certain
customer product markets and also affect the Company's cost of borrowing. A
reduction in one or more ratings could affect ReliaStar's sales or the cost it
pays to borrow. ReliaStar monitors its businesses and financial condition in an
effort to maintain the ratings required to achieve its business objectives.

Guaranty Funds

Through a system of state associations, the insurance industry provides
protection to its customers in the event that an insurer becomes insolvent.
These associations assess member insurers to provide for the cost of benefits to
the customers of insolvent insurers. If the industry is affected by a
substantial future insolvency the Insurers would be subjected to assessments
which could be material.

Litigation

ReliaStar frequently encounters litigation with customers as a routine part of
its business. Some of these cases seek large amounts of punitive damages or
damages on a class basis. Juries considering similar claims in a number of
jurisdictions have awarded large punitive damage awards. While ReliaStar does
not believe it will become liable for such damages, it can make no assurances
that it will not be subjected to such an award.

                                       21
Year 2000 Systems Modifications

The Company's business units utilize data processing systems in the
administration of the insurance and financial services products which they
market. Most of the Company's data processing systems have required
modifications to enable them to process dates including the year 2000 and
beyond.

In 1995, the Company initiated an enterprise wide program of identifying and
modifying systems affected by the year 2000. The Company developed a plan
whereby all systems would be identified, modified and tested for Year 2000
compliance. The Company initiated a structured review and reporting system
whereby senior management is regularly advised of the status of the project. As
of June 30, 1999, ReliaStar had converted, tested for Year 2000 compliance and
put into production all of its core business applications

The Company conducts business with a multitude of business entities whose
ability to comply with Year 2000 systems issues may affect the business
operations of the Company. The Company has made an effort to determine whether
such entities have adequate plans for Year 2000 compliance, and the Company is
not aware of any instances where a key supplier or vendor will not be compliant.
The Company does not have the ability to assure with any certainty the
compliance capacity of third parties.

The Company's business would be adversely affected if it does not meet its goals
relative to Year 2000 preparedness, and the Company's plans and actions reflect
the importance of this project. Although the Company has developed contingency
plans, it is not reasonably possible to develop contingency plans for all
possible scenarios or which would comprehensively address widespread systems
failures.

Earnings Guidance

1999: Current analyst estimates for the Company's operating earnings per share
in the fourth quarter of 1999 range from $0.80 to $0.87. Manangement currently
expresses comfort with estimates in the lower half of this range, excluding the
impact of the Pilgrim transaction.

2000: Operating income from the Reinsurance segment in 2000 are expected to be
in the range of $40 - $44 million. Current analyst estimates for the Company's
operating earnings per share in 2000 range from $3.45 to $3.75. Management
currently expresses comfort with estimates in the lower third of this range.

The above guidance is forward-looking information and the ability of the Company
to meet the indicated earnings estimates is subject to the factors described in
"Certain Forward-Looking Information" conforming with the Company's
expectations.

Impact of Accounting Pronouncements to be Adopted in the Future

Accounting for Derivative Instruments and Hedging Activities

In September 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 provides a comprehensive and
consistent standard for the recognition and measurement of derivatives and
hedging activities. SFAS No. 137, an amendment of SFAS No. 133, was issued in
June of 1999 and defers the effective date of SFAS No. 133 to fiscal years
beginning after June 15, 2000. The Company has not completed its analysis
of the impact on future financial results of applying this pronouncement.

Subsequent Event- Acquisition

On October 29, 1999, the Company completed the acquisition of Pilgrim Capital
Corporation, a Phoenix-based asset management and mutual fund company. As of
September 30, 1999, Pilgrim had assets under management of $7.7 billion and
sales of $610 million for the nine months ended September 30, 1999. The
acquisition was effected through a stock-and-cash transaction and includes the
Company's assumption of approximately $28 million of Pilgrim debt. The
acquisition was accounted for as a purchase.

ReliaStar and Pilgrim will have to integrate Pilgrim's and ReliaStar's mutual
fund management teams, operations, distribution channels, and sales and
marketing efforts. If the companies are not successful in this integration, then
ReliaStar's anticipated benefits from this merger might not be realized.

                                       22
Certain Forward-Looking Information

This report and earlier filings contain forward-looking information, including
information under the caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations" which discuss earnings guidance, known
trends and uncertainties, interest spreads for the remainder of 1999,
reinsurance claims experience, withdrawal and surrender activity, direction of
new investment cash flow, impacts of changes in interest rates on the Insurers'
investment portfolio and strategies to mitigate such effects. The Private
Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-
looking information to encourage companies to provide prospective information
about themselves without fear of litigation so long as such information is
identified as forward-looking and is accompanied by meaningful cautionary
statements identifying important factors that could cause actual results to
differ materially from those projected in the information. Forward-looking
information is indicated by the use of such words as "anticipates," "expects,"
"believes," "should," "could," "intends," "estimates," and "may," or other
comparable language. ReliaStar identifies the following important factors that
could cause ReliaStar's actual results to differ materially from any results
that might be projected by ReliaStar in forward-looking information. All of
these factors are difficult to predict, and many are beyond the control of the
Company. Accordingly, although ReliaStar believes that the assumptions
underlying the forward-looking information are reasonable, there can be no
assurances that those assumptions will approximate actual experience.

The important factors include the following:

o    General economic conditions, including prevailing interest rates and the
     performance of the stock market which may affect the Company's ability to
     sell its products;
o    The market value of the Company's investments;
o    The lapse rate and profitability of the insurance policies issued by
     ReliaStar;
o    Mortality and morbidity factors in ReliaStar's insurance business
     (including the effect of the Company's reinsurance and retrocession risk
     management programs);
o    Changes in federal tax laws, which could adversely affect the tax
     advantages of certain of the Company's products;
o    Legislative or regulatory changes affecting financial institutions,
     including those affecting bank sales and underwriting of insurance products
     and regulation of the sale, underwriting and pricing of insurance products;
o    Industry consolidation and competition; and
o    Retention of key employees.

You should also consider other risks and uncertainties discussed in documents
filed by ReliaStar with the Securities and Exchange Commission. ReliaStar has no
obligation to update forward-looking information.

                                       23
Part II. Other Information

                            RELIASTAR FINANCIAL CORP.

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

         (a)   Exhibits:

               2    Agreement and Plan of Merger, dated as of July 22, 1999,
                    among ReliaStar Financial Corp., NorthStar Holding, Inc.,
                    and Pilgrim Capital Corporation (incorporated by reference
                    to Exhibit 2 to the Registrant's Current Report on Form 8-K
                    dated July 22, 1999, File No. 1-10640)

               3(a) Certificate of Incorporation, as amended, of Registrant
                    (incorporated by reference to Exhibit 4(a) to the
                    Registrant's Registration Statement on Form S-8,
                    Registration No. 333-42125)

               3(b) Bylaws, as amended, of Registrant (incorporated by reference
                    to Exhibit 3 to the Registrant's Quarterly Report on Form
                    10-Q for the quarter ended March 31, 1999, File No. 1-10640)

               4    Amended and Restated Rights Agreement dated as of February
                    11, 1999 between ReliaStar Financial Corp. and Norwest Bank
                    Minnesota, National Association, as Rights Agent
                    (incorporated by reference to Exhibit 1 to the Registrant's
                    Amendment to Registration Statement of Form 8-A/A dated
                    February 26, 1999)

               10(a) Credit Agreement, dated as of June 30, 1999, by and between
                    ReliaStar Financial Corp, the Lenders which are signatories
                    thereto, and U.S. Bank National Association, as Agent.

                11  Statement re Computation of Per Share Earnings

                27  Financial Data Schedule

         (b)   Reports on Form 8-K filed during the quarter ended September 30,
               1999:

                    Form 8-K dated as of July 22, 1999, with respect to the
                    acquisition of Pilgrim Capital Corporation

                    Form 8-K dated as of September 22, 1999, with respect to the
                    Registrant's on-site meeting with securities analysts.

                                       24
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.

                             Dated  November 11, 1999
                                    -----------------

                                    RELIASTAR FINANCIAL CORP.

                             /s/ James R. Miller
                             --------------------------------------
                             by James R. Miller
                             Senior Vice President, Chief Financial
                             Officer and Treasurer

                                       25