<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 June 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 organization)                     Identification No.)



           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 July 30, 1999 was 85,991,170.
<PAGE>

Part I-Financial Information
Item 1. Financial Statements
                           RELIASTAR FINANCIAL CORP.
                     Condensed Consolidated Balance Sheets
                                 (in millions)
                                  (unaudited)
<TABLE>
<CAPTION>
                                                                        June 30, 1999         December 31, 1998
                                                                        -------------         -----------------
<S>                                                                     <C>                        <C>
ASSETS
Fixed Maturity Securities                                                $   11,271.5              $   11,625.1
Equity Securities                                                                64.0                      60.3
Mortgage Loans on Real Estate                                                 2,233.7                   2,154.8
Real Estate and Leases                                                           34.1                      53.3
Policy Loans                                                                    721.0                     702.3
Other Invested Assets                                                           122.3                     144.6
Short-Term Investments                                                          134.9                     168.7
                                                                         ------------              ------------
     Total Investments                                                       14,581.5                  14,909.1
Cash                                                                             36.3                      21.5
Accounts and Notes Receivable                                                   334.4                     287.7
Reinsurance Receivable                                                          514.2                     417.7
Deferred Policy Acquisition Costs                                             1,337.4                   1,214.9
Present Value of Future Profits                                                 453.7                     422.5
Property and Equipment, Net                                                     114.9                     117.3
Accrued Investment Income                                                       186.2                     196.0
Other Assets                                                                    417.9                     399.8
Participation Fund Account Assets                                               310.8                     311.6
Assets Held in Separate Accounts                                              5,058.9                   4,310.6
                                                                         ------------              ------------
       TOTAL ASSETS                                                      $   23,346.2              $   22,608.7
                                                                         ============              ============

LIABILITIES
Future Policy and Contract Benefits                                      $   13,617.3              $   13,519.8
Pending Policy Claims                                                           478.4                     433.5
Other Policyholder Funds                                                        336.1                     304.6
Notes and Mortgages Payable                                                     615.7                     509.4
Income Taxes                                                                    117.1                     199.0
Other Liabilities                                                               679.9                     663.2
Participation Fund Account Liabilities                                          310.8                     311.6
Liabilities Related to Separate Accounts                                      5,053.4                   4,305.1
                                                                         ------------              ------------
       TOTAL LIABILITIES                                                     21,208.7                  20,246.2
                                                                         ------------              ------------

Company-Obligated Mandatorily Redeemable Preferred
   Securities Issued by Consolidated Subsidiaries                               242.5                     242.3
                                                                         ------------              ------------

SHAREHOLDERS' EQUITY
Common Stock (Shares Issued: 1999 and 1998, 98.1)                                  .9                        .9
Additional Paid-in Capital                                                      995.1                   1,003.0
Retained Earnings                                                             1,239.1                   1,137.6
Accumulated Other Comprehensive Income                                           37.8                     257.2
Note Receivable from ESOP                                                       (18.6)                    (19.8)
Unamortized Restricted Stock Awards                                              (1.0)                      (.7)
Treasury Common Stock, at Cost (Shares Held: 1999, 11.6; 1998, 9.2)            (358.3)                   (258.0)
                                                                         ------------              ------------
       TOTAL SHAREHOLDERS' EQUITY                                             1,895.0                   2,120.2
                                                                         ------------              ------------

       TOTAL LIABILITIES AND
       SHAREHOLDERS' EQUITY                                              $   23,346.2              $   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 June 30    Six Months Ended June 30
                                                                   --------------------------    ------------------------
                                                                     1999          1998            1999          1998
                                                                   --------      --------        ---------    ----------
<S>                                                                <C>           <C>             <C>          <C>
REVENUES
Premiums                                                           $  283.0      $  257.3        $   559.4    $    492.3
Net Investment Income                                                 282.3         274.3            559.6         548.7
Realized Investment Gains (Losses), Net                                 (.9)         10.3              1.6          17.5
Policy and Contract Charges                                           112.6         102.1            221.8         202.7
Other Income                                                           64.9          77.8            126.6         150.2
                                                                   --------      --------        ---------    ----------
     Total                                                            741.9         721.8          1,469.0       1,411.4
                                                                   --------      --------        ---------    ----------

BENEFITS AND EXPENSES
Benefits to Policyholders                                             397.5         385.0            808.6         765.3
Sales and Operating Expenses                                          163.3         153.9            316.2         303.1
Amortization of Deferred Policy Acquisition Costs
     and Present Value of Future Profits                               47.0          48.2             87.5          90.1
Interest Expense                                                       10.1           6.4             19.6          12.9
Dividends and Experience Refunds to Policyholders                       6.8          10.6             14.3          16.5
                                                                   --------      --------        ---------    ----------
     Total                                                            624.7         604.1          1,246.2       1,187.9
                                                                   --------      --------        ---------    ----------

Income from Continuing Operations Before Income Taxes and
    Dividends on Preferred Securities of Subsidiaries                 117.2         117.7            222.8         223.5
Income Tax Expense                                                     42.2          41.5             80.1          79.5
Dividends on Preferred Securities of Subsidiaries, Net of Tax           3.3           3.3              6.6           6.6
                                                                   --------      --------        ---------    ----------

Income from Continuing Operations                                      71.7          72.9            136.1         137.4

Loss from Discontinued Operations, Net of Tax                             -          (3.5)               -          (3.4)
                                                                   --------      --------        ---------    ----------

Net Income                                                         $   71.7      $   69.4        $   136.1    $    134.0
                                                                   ========      ========        =========    ==========

PER COMMON SHARE
Basic
Income from Continuing Operations                                  $    .82      $    .80        $    1.54    $     1.51
Loss from Discontinued Operations                                         -          (.04)               -          (.04)
                                                                   --------      --------        ---------    ----------
Net Income                                                         $    .82      $    .76        $    1.54    $     1.47
                                                                   ========      ========        =========    ==========

Diluted
Income from Continuing Operations                                  $    .81      $    .79        $    1.52    $     1.48
Loss from Discontinued Operations                                         -          (.04)               -          (.04)
                                                                   --------      --------        ---------    ----------
Net Income                                                         $    .81      $    .75        $    1.52    $     1.44
                                                                   ========      ========        =========    ==========

Weighted Average Common Shares
     Basic                                                             87.9          91.2             88.4          91.1
     Diluted                                                           89.0          92.9             89.6          92.8
</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>
                                                                             Six Months Ended June 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             (12.7)        (18.9)
   Loss on Treasury Shares Reissued for Acquisitions                  -           (.9)
   Tax Benefit on Stock Options Exercised                           4.8           9.1
                                                               --------      --------
      End of Period                                               995.1       1,009.1
                                                               --------      --------

Retained Earnings
   Beginning  of Year                                           1,137.6         964.8
   Net Income                                                     136.1         134.0       $136.1         $ 134.0
   Common Dividends to Shareholders: (Per Share: 1999,
       $.39; 1998, $.34)                                          (34.6)        (31.0)
   Other, Net                                                         -           (.2)
                                                               --------      --------
      End of Period                                             1,239.1       1,067.6
                                                               --------      --------

Accumulated Other Comprehensive Income
   Beginning of Year                                              257.2         226.2
   Change for the Period                                         (219.4)         18.8       (219.4)           18.8
                                                               --------      --------       ------         -------
      End of Period                                                37.8         245.0
                                                               --------      --------

Note Receivable from ESOP
   Beginning of Year                                              (19.8)        (20.8)
   Repayments, Accrued or Paid                                      1.2            .5
                                                               --------      --------
      End of Period                                               (18.6)        (20.3)
                                                               --------      --------

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

Treasury Common Stock
   Beginning of Year                                             (258.0)       (178.9)
   Acquired                                                      (127.2)        (33.7)
   Reissued for Acquisitions                                          -          21.2
   Reissued, Other                                                 26.9          42.4
                                                               --------      --------
      End of Period                                              (358.3)       (149.0)
                                                               --------      --------

Comprehensive Income (Loss)                                                                 $(83.3)        $ 152.8
                                                                                            ======         =======

Total Shareholders' Equity                                     $1,895.0      $2,152.3
                                                               ========      ========
</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>
                                                                                   Six Months Ended June 30
                                                                             -----------------------------------
                                                                                  1999                  1998
                                                                             -------------        --------------
<S>                                                                           <C>                   <C>
OPERATING ACTIVITIES
Net Income                                                                    $      136.1          $      134.0
Adjustments to Reconcile Net Income to Net Cash Provided by
  Operating Activities
     Interest Credited to Insurance Contracts                                        278.4                 276.3
     Future Policy Benefits                                                         (332.6)               (217.3)
     Capitalization of Policy Acquisition Costs                                     (137.8)               (110.9)
     Amortization of Deferred Policy Acquisition Costs and Present
        Value of Future Profits                                                       87.5                  90.1
     Deferred Income Taxes                                                            21.8                   7.2
     Net Change in Receivables and Payables                                          (24.8)                 (1.9)
     Other Assets                                                                     (8.3)                (60.9)
     Realized Investment Gains, Net                                                   (1.6)                (17.5)
     Other                                                                             (.1)                 (5.7)
                                                                             -------------        --------------
          Net Cash Provided by Operating Activities                                   18.6                  93.4
                                                                             -------------        --------------

INVESTING ACTIVITIES
Proceeds from Sales of Fixed Maturity Securities                                     327.2                 196.2
Proceeds from Maturities or Repayment of Fixed Maturity Securities                   703.1                 573.0
Cost of Fixed Maturity Securities Acquired                                        (1,108.7)               (956.6)
Sales (Purchases) of Equity Securities, Net                                            5.0                 (18.5)
Proceeds of Mortgage Loans Sold, Matured or Repaid                                   169.6                 309.2
Cost of Mortgage Loans Acquired                                                     (248.1)               (167.8)
Sales of Real Estate and Leases, Net                                                  21.4                  11.8
Policy Loans Issued, Net                                                             (18.7)                (13.1)
Sales (Purchases) of Other Invested Assets, Net                                       (2.6)                   .3
Sales (Purchases) of Short-Term Investments, Net                                      33.8                 (95.4)
Cash Acquired with Acquisitions, Net                                                     -                   1.3
                                                                             -------------        --------------
          Net Cash Used by Investing Activities                                     (118.0)               (159.6)
                                                                             -------------        --------------

FINANCING ACTIVITIES
Deposits to Insurance Contracts                                                      849.7                 722.2
Maturities and Withdrawals from Insurance Contracts                                 (694.2)               (699.4)
Increase in Notes and Mortgages Payable                                              106.4                  71.5
Repayment of Notes and Mortgages Payable                                               (.1)                (17.5)
Issuance of Common Stock Under Stock Option and Other Plans                           14.2                  20.1
Dividends on Common Stock                                                            (34.6)                (31.0)
Acquisition of Treasury Common Stock                                                (127.2)                (33.7)
                                                                             -------------        --------------
          Net Cash Provided by Financing Activities                                  114.2                  32.2
                                                                             -------------        --------------
Increase (Decrease) in Cash                                                           14.8                 (34.0)
Cash at Beginning of Period                                                           21.5                  46.4
                                                                             -------------        --------------
Cash at End of Period                                                        $        36.3        $         12.4
                                                                             =============        ==============
</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 June 30        Six Months Ended June 30
                                                           --------------------------        ------------------------
OPERATING INCOME/1/                                         1999                1998          1999               1998
-----------------                                         --------           ---------      -------           --------
<S>                                                       <C>                <C>            <C>                <C>
Personal Financial Services                               $   27.8           $   23.6       $  53.0           $   46.0
Worksite Financial Services                                   15.4               13.9          29.9               27.8
Tax-Sheltered and Fixed Annuities                             21.0               19.7          41.8               36.5
Reinsurance                                                   12.8               11.6          19.5               21.0
                                                          --------           --------       -------           --------
     Total Reportable Segments                                77.0               68.8         144.2              131.3
Other Business Units                                           2.0                2.2           4.6                5.9
Corporate                                                     (7.2)              (3.5)        (14.2)              (8.6)
                                                          --------           --------       -------           --------
Operating Income                                              71.8               67.5         134.6              128.6
Net Realized Investment Gains (Losses)                         (.1)               5.4           1.5                8.8
                                                          --------           --------       -------           --------
Consolidated Income from Continuing Operations            $   71.7           $   72.9       $ 136.1           $  137.4
                                                          ========           ========       =======           ========
</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 June 30       Six Months Ended June 30
                                                          --------------------------       ------------------------
OPERATING REVENUES                                          1999               1998         1999                1998
------------------                                        --------           -------     ----------         --------
<S>                                                       <C>                <C>         <C>               <C>
Personal Financial Services                               $  223.6           $  229.3    $    441.4        $    450.4
Worksite Financial Services                                  194.9              191.1         389.6             387.6
Tax-Sheltered and Fixed Annuities                            153.5              149.2         300.6             294.3
Reinsurance                                                  109.5               86.0         220.3             156.8
                                                          --------           --------    ----------        ----------
     Total Reportable Segments                               681.5              655.6       1,351.9           1,289.1
Other Business Units                                          54.6               51.3         105.2              97.0
Corporate                                                      6.7                4.6          10.3               7.8
                                                          --------           --------    ----------        ----------
     Operating Revenues                                      742.8              711.5       1,467.4           1,393.9
Realized Investment Gains (Losses), Net                        (.9)              10.3           1.6              17.5
                                                          --------           --------    ----------        ----------
Consolidated Revenues                                     $  741.9           $  721.8    $  1,469.0        $  1,411.4
                                                          ========           ========    ==========        ==========

<CAPTION>
                                                                                            June 30       December 31
ASSETS UNDER MANAGEMENT                                                                     1999              1998
-----------------------                                                                  ----------        ----------
<S>                                                                                      <C>               <C>
Personal Financial Services                                                              $  7,163.5        $  6,887.0
Worksite Financial Services                                                                 3,796.1           3,512.1
Tax-Sheltered and Fixed Annuities                                                           7,848.4           7,594.7
Reinsurance                                                                                   330.3             309.9
                                                                                         ----------        ----------
     Total Reportable Segments                                                             19,138.3          18,303.7
Other Business Units                                                                        4,427.5           4,018.4
Corporate                                                                                     420.9             389.8
                                                                                         ----------        ----------
     Assets Under Management                                                               23,986.7          22,711.9
Net Unrealized Investment Gains                                                                81.2             526.2
Other Balance Sheet Assets                                                                  3,705.8           3,389.0
Off-Balance Sheet Mutual Fund Client Assets                                                (4,427.5)         (4,018.4)
                                                                                         ----------        ----------
Consolidated Assets                                                                      $ 23,346.2        $ 22,608.7
                                                                                         ==========        ==========
</TABLE>

Note 3.  Subsequent Event - Acquisition

On July 22, 1999, the Company signed a definitive agreement to acquire Pilgrim
Capital Corp. (Pilgrim), a Phoenix-based asset management and mutual fund
company. As of June 30, 1999, Pilgrim had assets under management of $7.6
billion and annual asset sales of $1.1 billion. The acquisition will be effected
through a stock-and-cash transaction valued at $258 million, which includes the
Company's assumption of approximately $31 million of Pilgrim debt. The
acquisition will be accounted for as a purchase.

The definitive agreement provides for Pilgrim shareholders to receive .50 shares
of ReliaStar common stock plus $12.50 in cash for each Pilgrim share, subject to
adjustment at the time of closing. Completion of the acquisition is expected in
the fourth quarter of 1999, and is subject to normal closing conditions,
including approval by Pilgrim's stockholders, fund trustees/directors and fund
shareholders, and various regulatory approvals.


                                       7
<PAGE>

Items 2 and 3.
                           RELIASTAR FINANCIAL CORP.

                     Management's Discussion and Analysis
               of Financial Condition and Results of Operations

RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
                                                                       Three Months          Six Months
                                                                      Ended June 30         Ended June 30
                                                                    ------------------    --------------------
                                                                     1999        1998      1999          1998
                                                                    ------      ------    ------        ------
<S>                                                                 <C>          <C>      <C>           <C>
Operating Income (Loss)/1/
   Personal Financial Services Segment                              $ 27.8        $ 23.6    $  53.0      $ 46.0
   Worksite Financial Services Segment                                15.4          13.9       29.9        27.8
   Tax-Sheltered and Fixed Annuities Segment                          21.0          19.7       41.8        36.5
   Reinsurance Segment                                                12.8          11.6       19.5        21.0
   Other Business Units                                                2.0           2.2        4.6         5.9
   Corporate                                                          (7.2)         (3.5)     (14.2)       (8.6)
                                                                    ------        ------    -------      ------
Operating Income                                                      71.8          67.5      134.6       128.6
Net Realized Investment Gains (Losses), Net of Tax                     (.1)          5.4        1.5         8.8
                                                                    ------        ------    -------      ------
Income From Continuing Operations                                     71.7          72.9      136.1       137.4
Loss From Discontinued Operations, Net of Tax                            -          (3.5)         -        (3.4)
                                                                    ------        ------    -------      ------
   Net Income                                                       $ 71.7        $ 69.4    $ 136.1      $134.0
                                                                    ======        ======    =======      ======
</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).

ReliaStar Financial Corp. (the Company or ReliaStar) has four reportable
operating segments: Personal Financial Services (PFS), Worksite Financial
Services, 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 Personal Financial Services (PFS) segment sells life insurance and annuity
products to individuals. Operating income of the PFS segment for the second
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 favorable interest
spreads, growth in assets under management and ongoing expense management.
Year-to-date operating income increased 15% over the comparable period in 1998
primarily due to growth in assets under management, favorable mortality
experience, favorable interest spreads and lower expense levels.

The interest spread of 250 basis points in the second quarter of 1999 compares
to 241 basis points in the second quarter of 1998. The increase in interest
spread reflects a 7 basis point decrease in the portfolio yield and a 16 basis
point reduction in the average crediting rate. We expect that the average
interest spread for the remainder of 1999 will be lower than the rate
experienced in the first six months of 1999, primarily as a result of declining
portfolio yields. It should be noted that the interest spread calculation is an
annualized measure and can be overly influenced in a particular

                                       8
<PAGE>

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 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 $7.2 billion as of June 30, 1999,
from $6.6 billion as of June 30, 1998. Separate account assets under management
increased to $2.4 billion as of June 30, 1999, from $1.9 billion as of June 30,
1998.

Total sales (annualized new premiums and deposits) decreased 12% for the second
quarter of 1999 and were $87.5 million compared with $99.7 million in the same
period of 1998. The decline in sales is primarily due to a reduction in sales of
PFS variable annuity products. Sales during the second quarter of 1999 of
individual life insurance increased 11% to $29.1 million compared to the second
quarter of last year. Total sales for the first six months of 1999 were $171.0
million compared to $184.2 million in the same period of 1998. The decrease in
sales reflects an 11% decrease in variable annuity sales which was partially
offset by a 12% increase in individual life sales.

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

The Worksite Financial Services (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
second quarter of 1999 increased $1.5 million, or 11%, compared with the same
period in 1998. Year-to-date operating income increased 8% compared with the
same period in 1998. The increase in quarter and year-to-date operating income
was primarily due to higher investment income and lower operating expense levels
across the segment and growth in assets under management in the retirement plans
unit.

Total sales for the second quarter of 1999 were $144.2 million compared with
$100.7 million in the same period of 1998. Sales for the second quarter of 1999
increased 43% compared with the same period in 1998, reflecting a 58% increase
in retirement plan sales, a 2% increase in group health sales and a 10% decrease
in group life sales. Total sales for the first six months of 1999 were $350.4
million compared to $257.7 million for the same period of 1998. The increase in
sales reflects a 19% increase in individual life sales, a 14% increase in group
life sales, a 33% increase in group health sales and a 42% increase in
retirement plan sales.

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

The Tax-Sheltered and Fixed Annuities (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 second quarter of 1999 increased
$1.3 million, or 7%, compared with the same period in 1998. Year-to-date
operating income increased 15% over the same period in 1998. The increase for
the quarter and year-to-date was primarily due to increased interest spreads and
growth in assets under management, partially offset by higher expense levels.

The interest spread of 289 basis points in the second quarter of 1999 compares
to 254 basis points in the second quarter of 1998. This increase in interest
spread reflects a 38 basis point reduction in the average crediting rate and a 3
basis point decrease in the portfolio yield. We expect that the average interest
spread for the remainder of 1999 will be lower than the rate experienced in the
first half of 1999, primarily as a result of declining portfolio yields. 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 $7.8 billion as of June 30, 1999,
from $7.3 billion as of June 30, 1998. Separate account assets under management
increased to $539 million as of June 30, 1999, from $244 million as of June 30,
1998.

                                       9
<PAGE>

Total sales for the second quarter of 1999 were $173.8 million compared with
$150.0 million in the same period of 1998. The increase in sales reflects a 44%
increase in sales of variable annuities, while sales of fixed annuities
increased slightly. Total sales for the first six months of 1999 were $322.2
million compared with $285.9 million for the same period of 1998. The increase
in sales reflects a 49% increase in variable annuity sales and a 4% decrease in
fixed annuity sales.

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

The Reinsurance segment sells group life, health, and specialty reinsurance
products in the United States and internationally. Operating income of the
Reinsurance segment for the second quarter of 1999 increased $1.2 million, or
10%, compared with the same period in 1998. The increase in operating income was
primarily due to growth in earned premium and lower expense ratios, partially
offset by higher overall claims experience. The ratio of claims to net earned
premium was 63.6% in the second quarter of 1999, compared with 58.7% in the
second quarter of 1998. Less favorable mortality and morbidity loss ratios were
experienced in the group life, group medical, and international lines of
reinsurance business. Claims experience and overall profitability of workers
compensation carve-out reinsurance in the second 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 7% compared with the same
period in 1998. The decrease was primarily due to higher overall claims
experience, partially offset by growth in earned premium and lower expense
ratios. 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 second quarter of 1999 were $77.4 million compared with
$48.7 million in the same period of 1998, an increase of 59%, primarily due to
increased sales in the long-term disability line of business. Total sales for
the first half of 1999 were $158.8 million compared to $100.7 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 second quarter of 1999
decreased $.2 million, or 9%, compared with the same period in 1998.
Year-to-date operating income decreased $1.3 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 assets
under management.

Corporate
---------

Corporate includes financing costs, goodwill amortization and other unallocated
costs. Operating losses of Corporate for the second quarter of 1999 and
year-to-date increased $3.7 million and $5.6 million, respectively, compared
with the same periods in 1998. The increase in operating losses was primarily
due to financing costs related to the 1998 and 1999 common stock buyback
programs.

                                      10
<PAGE>

Realized Investment Gains and Losses

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

<TABLE>
<CAPTION>
                                                                     Three Months              Six Months
                                                                     Ended June 30            Ended June 30
                                                                   -----------------         ---------------
                                                                   1999         1998         1999       1998
                                                                   ----         ----         ----       ----
<S>                                                                <C>          <C>          <C>        <C>
Net Gains (Losses) on Sales of Investments
    Fixed Maturity Securities
     Gross Gains                                                   $5.5         $8.3        $11.5       $9.2
     Gross Losses                                                  (5.6)        (1.5)        (8.0)      (1.7)
    Equity Securities                                               (.1)          .3          1.2         .9
    Mortgage Loans                                                   .5          (.3)          .5        (.3)
    Foreclosed Real Estate                                          1.9          3.0          1.7        3.0
    Real Estate                                                      .3           .3           .9         .3
    Other                                                           5.1          4.2          6.1       13.9
Provision for Losses on Investments
   Fixed Maturity Securities                                        (.1)        (2.8)        (3.5)      (6.3)
   Foreclosed Real Estate                                             -         (1.2)         (.4)      (1.5)
   Other                                                           (8.4)           -         (8.4)         -
                                                                   ----         ----         ----       ----
Pretax Realized Investment Gains (Losses)                           (.9)        10.3          1.6       17.5
DAC/PVFP Amortization/1/                                             .9         (1.8)          .8       (3.8)
Income Taxes                                                        (.1)        (3.1)         (.9)      (4.9)
                                                                   ----         ----         ----       ----
       Net Realized Investment Gains (Losses), Net of Tax          $(.1)        $5.4         $1.5       $8.8
                                                                   ====         ====         ====       ====
</TABLE>

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


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.

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

                                       11
<PAGE>

effective on April 30, 1999 by the SEC. As of June 30, 1999, $500.0 million of
debt and equity securities were available for issuance under this shelf
registration.

As of June 30, 1999, the Company had an unsecured revolving credit facility with
a group of banks totaling $250.0 million for general corporate purposes and
$145.0 million remained available for borrowing under this facility.

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 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.

The Company has agreed to acquire Pilgrim Capital Corporation (see "Known Trends
and Uncertainties Which May Affect Future Reported Results - Subsequent Event-
Acquisition"). In this transaction, which is expected to close in the fourth
quarter of 1999, each outstanding share of Pilgrim common stock will be
exchanged for .50 shares of ReliaStar common stock plus $12.50 in cash (subject
to adjustment at the time of closing). As of July 20, 1999, Pilgrim had
5,084,477 outstanding shares of common stock, along with options to purchase an
additional 1,270,000 shares. ReliaStar will also assume approximately $31
million of debt.

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 June 30, 1999, the Insurers' investment portfolios included $7.8
billion (33% of consolidated assets) of short-term investments and investment
grade marketable bonds. The June 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.
While the Insurers have experienced an increase in withdrawal and surrender
activity attributable to their individual fixed annuity products, the 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

                                       12
<PAGE>

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 June 30, 1999 was $36.3 million. During the first
six months of 1999, net cash provided by operating and financing activities was
$18.6 million and $114.2 million, respectively, which was offset by net cash
used by investing activities of $118.0 million.

The $18.6 million of net cash provided by operating activities was primarily the
result of positive cash flow from premiums and investment income in excess of
cash outflows for insurance benefits and sales and operating expenses. Net cash
provided by financing activities of $114.2 million 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.

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.

                                       13
<PAGE>

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

<TABLE>
<CAPTION>
                                                          June 30, 1999            December 31, 1998
                                                      ---------------------      ---------------------
                                                       Amount       Percent        Amount      Percent
                                                       ------       -------        ------      -------
<S>                                                   <C>           <C>          <C>           <C>
Investment Grade Bonds:
    Marketables                                       $ 7,632.3        52.3%     $ 7,823.4        52.5%
    Private Placements                                  2,677.3        18.4        2,881.6        19.3
                                                      ---------     -------      ---------     -------
        Subtotal                                       10,309.6        70.7       10,705.0        71.8

Below Investment Grade Bonds:
    Marketables                                           460.2         3.2          391.3         2.6
    Private Placements                                    472.8         3.2          510.4         3.4
                                                      ---------     -------      ---------     -------
           Subtotal                                       933.0         6.4          901.7         6.0

Equity Securities                                          64.0          .4           60.3          .4
Commercial Mortgages                                    1,802.3        12.4        1,726.8        11.6
Mortgages, Residential and Other                          431.4         3.0          428.0         2.9
Real Estate                                                34.1          .2           53.3          .3
Short-Term Investments                                    134.9          .9          168.7         1.2
Other                                                     872.2         6.0          865.3         5.8
                                                      ---------     -------      ---------     -------
    Total Invested Assets                             $14,581.5       100.0%     $14,909.1       100.0%
                                                      =========     =======      =========     =======
</TABLE>

Fixed Maturity Securities

The amounts invested in fixed maturity securities as of June 30, 1999 and
December 31, 1998 were $11.3 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 June 30, 1999 were $9.3 million
and $7.6 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 June 30, 1999, the weighted average book yields of the Company's
investment grade portfolio and below investment grade portfolio were 7.5% and
8.3%, 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.

                                       14
<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>
                                                    June 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               $5,156.8    $124.2  $  (49.6)   $5,231.4    $  853.3    $17.0    $ (10.2)  $  860.1
2                2,397.2      44.2     (40.5)    2,400.9     1,820.3     22.5      (25.6)   1,817.2
3                  387.7       4.4     (13.8)      378.3       330.4      3.0       (3.2)     330.2
4                   86.9       1.5      (8.1)       80.3       114.6      1.8       (5.8)     110.6
5                     .1         -         -          .1        30.7        -       (1.6)      29.1
6                    2.2         -       (.7)        1.5         3.2        -        (.3)       2.9
Redeemable
 Preferred
 Stock             16.7         .5       (.6)       16.6        12.7        -        (.4)      12.3
                --------    ------  --------    --------    --------    -----    -------   --------
    Total       $8,047.6    $174.8  $ (113.3)   $8,109.1    $3,165.2    $44.3    $ (47.1)  $3,162.4
                ========    ======  ========    ========    ========    =====    =======   ========

<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>
                                                        June 30, 1999             December 31, 1998
                                                    --------------------         --------------------
                                                    Amortized     Fair           Amortized     Fair
                                                       Cost       Value             Cost       Value
                                                       ----       -----             ----       -----
<S>                                                 <C>        <C>               <C>        <C>
Maturing in:
  One Year or Less                                  $   465.3  $   468.2         $   459.5  $   462.9
  One to Five Years                                   3,500.8    3,558.8           3,555.5    3,710.1
  Five to Ten Years                                   2,897.9    2,891.9           3,022.9    3,191.1
  Ten Years or Later                                  1,271.9    1,270.2           1,296.1    1,375.8
Mortgage-Backed/Structured Finance                    3,076.9    3,082.4           2,793.0    2,885.2
                                                    ---------  ---------         ---------  ---------
    Total                                           $11,212.8  $11,271.5         $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

                                       15
<PAGE>

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.

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
                                            ------------------------------   -------------------------------
                                              June 30,      December 31,       June 30,       December 31,
                                                1999            1998             1999             1998
                                                ----            ----             ----             ----
<S>                                            <C>             <C>              <C>              <C>
Basic Materials                                  6.4%            6.5%             5.6%             7.0%
Consumer Non-Cyclical                            5.2             5.8             15.2             14.6
Consumer Products/Services                       9.1             8.4             18.2             18.7
Energy                                           6.0             6.0              7.9              7.3
Financial Services                              19.4            20.2             14.8             15.8
Government                                       2.2             2.8               .2               .2
Industrial                                       4.4             5.0             11.2             11.1
Mortgage-Backed/Structured
   Finance                                      33.0            30.8             13.6             11.4
Real Estate                                      1.3             1.4              2.1              2.2
Retailing                                        1.7             1.9              4.4              4.7
Technology                                       2.0             2.0              1.8              2.1
Utilities                                        9.3             9.2              5.0              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 June 30, 1999. The
largest investment in below investment grade bonds of any one industry grouping
was approximately 1.7% of invested assets at June 30, 1999. The portfolio of
below investment grade bonds is regularly analyzed and managed in an effort to
avoid concentration risks.

                                       16
<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):
                                                     June 30, 1999
                                          ----------------------------------
                                           Amortized
                                             Cost                Fair Value
                                             ----                ----------
Adjustable Rate Pass Through:
  Below 6%                                 $   34.8               $   34.8
  6% - 7%                                      52.6                   52.1
  7% - 8%                                      53.2                   53.0

Fixed Rate Pass Through:
  Below 9%                                     66.0                   66.5
  Above 9%                                      5.9                    6.1

Planned Amortization Class:
  Below 7%                                    279.2                  288.7
  7% - 8%                                     300.1                  309.4
  8% - 9%                                      56.6                   58.3
  Above 9%                                      1.3                    1.4

Other:
  Below 7%                                    303.0                  306.3
  7% - 8%                                      87.0                   91.4
  8% - 9%                                      15.5                   16.2
  Above 9%                                      6.0                    6.1
                                           --------               --------
    Total                                  $1,261.2               $1,290.3
                                           ========               ========

The Company invests in public and private asset-backed securities in addition to
the MBS securities described above. As of June 30, 1999, the Insurers held
asset-backed securities with an amortized cost of $1,815.7 million and a fair
value of $1,792.1 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 June
30, 1999, approximately 98% of the Company's asset-backed securities had
investment grade ratings. Approximately 37% of these securities are
collateralized by manufactured housing loans, 21% by commercial mortgage loans,
20% by high yield bank loans and corporate bonds and 13% 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 June 30,
1999 being approximately $2.9 million.

                                       17
<PAGE>

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

                                                 June 30,      December 31,
                                                   1999            1998
                                                   ----            ----
Property Type
-------------
Apartment                                          24.6%           24.5%
Industrial                                         19.3            20.6
Retail                                             20.4            19.6
Special Purpose                                    21.1            19.1
Office                                             12.7            14.1
Hotel/Motel                                         1.9             2.1
                                                  -----           -----
  Total                                           100.0%          100.0%
                                                  =====           =====

                                                 June 30,      December 31,
                                                   1999            1998
                                                   ----            ----
Geographic Region
-----------------
Midwest                                            36.7%           37.4%
Pacific                                            24.6            24.2
Southeast                                          15.1            14.7
Northeast                                           9.6            10.1
Mountain                                            9.0             8.3
Southwest                                           5.0             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 June 30, 1999 were 7.9% and 8.3 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 June 30, 1999 and December 31, 1998, the Insurers held $430.9
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).

                                                  June 30,      December 31,
                                                    1999            1998
                                                  --------      ------------
Unrealized Investment Gains                         $73.7          $526.2
DAC/PVFP Adjustment                                 (19.0)         (128.6)
Deferred Income Taxes                               (16.9)         (140.4)
                                                    -----          ------
    Net Unrealized Investment Gains                 $37.8          $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.

                                       18
<PAGE>

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 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):

                                                     June 30, 1999
                                        ---------------------------------------
                                          Asset        Portfolio        Target
                                        Duration       Duration        Duration
                                        --------       --------        --------
Personal Financial Services                4.2            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                                4.6            4.6           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 June 30, 1999, the Company had 60 interest rate swap contracts in effect with
a notional amount of $1.04 billion. 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 six months of 1999, one interest rate swap contract was entered
into with a notional amount of $150.0 million as of June 30, 1999, and one
interest rate swap contract matured with a notional amount of $5.0 million.
There were no terminations of interest rate swap contracts prior to maturity
during the first six months of 1999. The Company had no deferred gains or losses
at June 30, 1999 related to interest rate swap contracts terminated early. The
estimated fair value of the interest rate swap contracts in effect at June 30,
1999 was an unrealized gain of $7.9 million, which is reported with other
invested assets in the Condensed Consolidated Balance Sheets.

                                       19
<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 June 30, 1999 (dollars in millions).

                                               Notional       Range of Fixed
                                                 Amount       Rates Received
                                                 ------       --------------
Maturing in:
  One Year or Less                             $  335.0           5.5 - 6.9%
  One to Three Years                              482.5           5.3 - 8.2%
  Three to Five Years                             225.0           6.0 - 7.0%
                                               --------
    Total                                      $1,042.5
                                               ========
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 June 30, 1999, the Company held $1.0 billion 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 48 call options with a
notional amount of $47.9 million and an estimated fair value of $16.9 million as
of June 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 $660.0 million and a fair value of $0.1 million as of June 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 as follows (in millions):

                                               June 30,      December 31,
                                                 1999            1998
                                               --------      ------------
Private Placement Bonds                         $ 10.1          $  9.5
Marketable Bonds                                    .4             1.1
Commercial Mortgage Loans                          4.5             8.7
Residential and Other Mortgage Loans               6.1             6.1
Investment Real Estate/1/                         13.2             8.3
Foreclosed Real Estate                            12.7            30.5
Other                                                -              .4
                                                ------          ------
     Total                                      $ 47.0          $ 64.6
                                                ======          ======

/1/The amounts shown represent real estate acquired as an investment which the
Company has determined to be Problem Investments.

                                       20
<PAGE>

The amortized cost of Problem Investments in the preceding table 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 as follows (in
millions):

                                                 June 30,     December 31,
                                                   1999           1998
                                                 --------     ------------
Private Placement Bonds                            $10.4          $9.0
Marketable Bonds                                       -           2.0
Commercial Mortgage Loans                            3.9           7.6
Residential and Other Mortgage Loans                 1.1           1.1
Foreclosed Real Estate                              15.2          21.3
Other                                                  -           4.4

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 $41.0 million, $11.5 million and $.1 million,
respectively, at June 30, 1999.

                                       21
<PAGE>

KNOWN TRENDS AND UNCERTAINTIES WHICH MAY AFFECT FUTURE REPORTED RESULTS

Competition.

ReliaStar competes with all 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 its distributors and excellent customer
service are required to successfully compete in these markets.  Aggressive price
competition in insurance premiums or other product fees and commissions could
adversely affect ReliaStar's earnings and ability to retain distributors.

Financial Markets Conditions.

The product 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 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.

Financial Services Regulation.

The United States Congress is considering legislation which would eliminate 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 such legislation, if any, on the Company's
financial condition and prospects cannot be predicted.

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.


                                       22
<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 attempt 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 contingency plans in
place, it is not reasonably possible to develop contingency plans which would
comprehensively address widespread systems failures.

Impact of Accounting Pronouncements to be Adopted in the Future

Accounting for Derivative Instruments and Hedging Activities

In June 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 July 22, 1999, the Company signed a definitive agreement to acquire Pilgrim
Capital Corp., a Phoenix-based asset management and mutual fund company. As of
June 30, 1999, Pilgrim had assets under management of $7.6 billion and annual
asset sales of $1.1 billion. The acquisition will be effected through a stock-
and-cash transaction valued at $258 million, which includes the Company's
assumption of approximately $31 million of Pilgrim debt. The acquisition will be
accounted for as a purchase.

The definitive agreement provides for Pilgrim shareholders to receive .50 shares
of ReliaStar common stock plus $12.50 in cash for each Pilgrim share, subject to
adjustment at the time of closing. Completion of the acquisition is expected in
the fourth quarter of 1999, and is subject to normal closing conditions,
including approval by Pilgrim's stockholders, fund trustees/directors and fund
shareholders, and various regulatory approvals.

ReliaStar and Pilgrim will have to integrate Pilgrim's and the Company's
existing mutual fund management teams, operations, distribution channels, and
sales and marketing efforts. If this integration is not successful, the
Company's results of operations could be adversely affected.

Certain Forward-Looking Information

All statements contained in this Form 10-Q, press releases and other public
disclosures relative to markets for the Company's products and trends in the
Company's operations or financial results, as well as other statements including
words such as "anticipate," "believe," "expect," and other similar expressions,
constitute forward-looking statements under the Private Securities Litigation
Reform Act of 1995. These forward-looking statements are subject to known and
unknown risks, uncertainties and other factors that may cause actual results to
be materially different from those contemplated by the forward-looking
statements. Such factors include, among other things: general economic
conditions and other factors, including prevailing interest rate levels and
stock market performance, which may affect the Company's ability to sell its
products, the market value of the Company's investments and the lapse rate and
profitability of the Company's policies; the Company's ability to achieve
anticipated levels of operating efficiencies; mortality and morbidity (including
the effect of the Company's reinsurance and retrocession risk management
programs); changes in federal income tax laws that may affect the relative tax
advantages of some of the Company's products; and regulatory changes or actions,
including those relating to regulation of financial services affecting bank
sales and underwriting of insurance products and regulation of the sale,
underwriting and pricing of insurance products.

                                       23
<PAGE>

Part II. Other Information

                            RELIASTAR FINANCIAL CORP.


Item 4.  Submission of Matters to a Vote of Security Holders

         (a) The Registrant's annual meeting was held on May 13, 1999.

         (b) The following matters were submitted to a vote of security holders:

             Proposal 1 - Election of Directors:

<TABLE>
<CAPTION>                                                                     Expiring
              Nominees                    Votes For       Votes Withheld         Term
              ---------------------      -----------      --------------       --------
              <S>                         <C>                 <C>                <C>
              Carolyn H. Baldwin          76,926,786          620,590            2002
              Richard U. DeSchutter       76,946,542          600,834            2002
              James J. Howard             76,976,629          570,747            2002
              John H. Flittie             76,921,993          625,383            2000
</TABLE>

             David C. Cox, Luella G. Goldberg, William A. Hodder, Randy C.
             James, Richard L. Knowlton, David A. Koch, James J. Renier and
             John G. Turner continued to serve as directors following the
             meeting.

             Proposal 2 - Proposal to Ratify the Appointment of Independent
             Public Accountants:

             Votes for:              76,968,944
             Votes against:             370,387
             Votes to abstain:          208,045

             Proposal 3 - Proposal to Approve the ReliaStar Annual Incentive
             Bonus Plan for Designated Executive Officers:

             Votes for:              72,273,924
             Votes against:           3,688,333
             Votes to abstain:        1,585,119

                                       24
<PAGE>

Item 5.  Other Information:

On July 9, 1999, Bob Salipante, President and Chief Operating Officer, was
elected to the Board of Directors of Reliastar Financial Corp.

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

        (a) Exhibits:

                (10)(a)  ReliaStar Annual Incentive Bonus Plan for Designated
                         Executive Officers effective as of January 1, 1999

                (10)(b)  The ReliaStar Stock Ownership Plan for NonEmployee
                         Directors (as amend and restated effective May 13,
                         1999)

                (10)(c)  ReliaStar Deferred Compensation Plan for NonEmployee
                         Directors (as amended and restated effective May 13,
                         1999)

                (11)     Statement re Computation of Per Share Earnings

                (27)     Financial Data Schedule

        (b) Reports on Form 8-K:

                None for the period of this report.

                                       25
<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       August 12, 1999
                                        --------------------------
                                        RELIASTAR FINANCIAL CORP.








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

                                       26
[{"type": "10-Q", "sequence": "1", "description": "FORM 10-Q", "secsgml_size_bytes": 113281}]
{"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": "99689418"}, "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 June 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 organization)                     Identification No.)

           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 July 30, 1999 was 85,991,170.
Part I-Financial Information
Item 1. Financial Statements
                           RELIASTAR FINANCIAL CORP.
                     Condensed Consolidated Balance Sheets
                                 (in millions)
                                  (unaudited)
June 30, 1999         December 31, 1998
                                                                        -------------         -----------------
ASSETS
Fixed Maturity Securities                                                $   11,271.5              $   11,625.1
Equity Securities                                                                64.0                      60.3
Mortgage Loans on Real Estate                                                 2,233.7                   2,154.8
Real Estate and Leases                                                           34.1                      53.3
Policy Loans                                                                    721.0                     702.3
Other Invested Assets                                                           122.3                     144.6
Short-Term Investments                                                          134.9                     168.7
                                                                         ------------              ------------
     Total Investments                                                       14,581.5                  14,909.1
Cash                                                                             36.3                      21.5
Accounts and Notes Receivable                                                   334.4                     287.7
Reinsurance Receivable                                                          514.2                     417.7
Deferred Policy Acquisition Costs                                             1,337.4                   1,214.9
Present Value of Future Profits                                                 453.7                     422.5
Property and Equipment, Net                                                     114.9                     117.3
Accrued Investment Income                                                       186.2                     196.0
Other Assets                                                                    417.9                     399.8
Participation Fund Account Assets                                               310.8                     311.6
Assets Held in Separate Accounts                                              5,058.9                   4,310.6
                                                                         ------------              ------------
       TOTAL ASSETS                                                      $   23,346.2              $   22,608.7
                                                                         ============              ============

LIABILITIES
Future Policy and Contract Benefits                                      $   13,617.3              $   13,519.8
Pending Policy Claims                                                           478.4                     433.5
Other Policyholder Funds                                                        336.1                     304.6
Notes and Mortgages Payable                                                     615.7                     509.4
Income Taxes                                                                    117.1                     199.0
Other Liabilities                                                               679.9                     663.2
Participation Fund Account Liabilities                                          310.8                     311.6
Liabilities Related to Separate Accounts                                      5,053.4                   4,305.1
                                                                         ------------              ------------
       TOTAL LIABILITIES                                                     21,208.7                  20,246.2
                                                                         ------------              ------------

Company-Obligated Mandatorily Redeemable Preferred
   Securities Issued by Consolidated Subsidiaries                               242.5                     242.3
                                                                         ------------              ------------

SHAREHOLDERS' EQUITY
Common Stock (Shares Issued: 1999 and 1998, 98.1)                                  .9                        .9
Additional Paid-in Capital                                                      995.1                   1,003.0
Retained Earnings                                                             1,239.1                   1,137.6
Accumulated Other Comprehensive Income                                           37.8                     257.2
Note Receivable from ESOP                                                       (18.6)                    (19.8)
Unamortized Restricted Stock Awards                                              (1.0)                      (.7)
Treasury Common Stock, at Cost (Shares Held: 1999, 11.6; 1998, 9.2)            (358.3)                   (258.0)
                                                                         ------------              ------------
       TOTAL SHAREHOLDERS' EQUITY                                             1,895.0                   2,120.2
                                                                         ------------              ------------

       TOTAL LIABILITIES AND
       SHAREHOLDERS' EQUITY                                              $   23,346.2              $   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 June 30    Six Months Ended June 30
                                                                   --------------------------    ------------------------
                                                                     1999          1998            1999          1998
                                                                   --------      --------        ---------    ----------
REVENUES
Premiums                                                           $  283.0      $  257.3        $   559.4    $    492.3
Net Investment Income                                                 282.3         274.3            559.6         548.7
Realized Investment Gains (Losses), Net                                 (.9)         10.3              1.6          17.5
Policy and Contract Charges                                           112.6         102.1            221.8         202.7
Other Income                                                           64.9          77.8            126.6         150.2
                                                                   --------      --------        ---------    ----------
     Total                                                            741.9         721.8          1,469.0       1,411.4
                                                                   --------      --------        ---------    ----------

BENEFITS AND EXPENSES
Benefits to Policyholders                                             397.5         385.0            808.6         765.3
Sales and Operating Expenses                                          163.3         153.9            316.2         303.1
Amortization of Deferred Policy Acquisition Costs
     and Present Value of Future Profits                               47.0          48.2             87.5          90.1
Interest Expense                                                       10.1           6.4             19.6          12.9
Dividends and Experience Refunds to Policyholders                       6.8          10.6             14.3          16.5
                                                                   --------      --------        ---------    ----------
     Total                                                            624.7         604.1          1,246.2       1,187.9
                                                                   --------      --------        ---------    ----------

Income from Continuing Operations Before Income Taxes and
    Dividends on Preferred Securities of Subsidiaries                 117.2         117.7            222.8         223.5
Income Tax Expense                                                     42.2          41.5             80.1          79.5
Dividends on Preferred Securities of Subsidiaries, Net of Tax           3.3           3.3              6.6           6.6
                                                                   --------      --------        ---------    ----------

Income from Continuing Operations                                      71.7          72.9            136.1         137.4

Loss from Discontinued Operations, Net of Tax                             -          (3.5)               -          (3.4)
                                                                   --------      --------        ---------    ----------

Net Income                                                         $   71.7      $   69.4        $   136.1    $    134.0
                                                                   ========      ========        =========    ==========

PER COMMON SHARE
Basic
Income from Continuing Operations                                  $    .82      $    .80        $    1.54    $     1.51
Loss from Discontinued Operations                                         -          (.04)               -          (.04)
                                                                   --------      --------        ---------    ----------
Net Income                                                         $    .82      $    .76        $    1.54    $     1.47
                                                                   ========      ========        =========    ==========

Diluted
Income from Continuing Operations                                  $    .81      $    .79        $    1.52    $     1.48
Loss from Discontinued Operations                                         -          (.04)               -          (.04)
                                                                   --------      --------        ---------    ----------
Net Income                                                         $    .81      $    .75        $    1.52    $     1.44
                                                                   ========      ========        =========    ==========

Weighted Average Common Shares
     Basic                                                             87.9          91.2             88.4          91.1
     Diluted                                                           89.0          92.9             89.6          92.8
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)
Six Months Ended June 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             (12.7)        (18.9)
   Loss on Treasury Shares Reissued for Acquisitions                  -           (.9)
   Tax Benefit on Stock Options Exercised                           4.8           9.1
                                                               --------      --------
      End of Period                                               995.1       1,009.1
                                                               --------      --------

Retained Earnings
   Beginning  of Year                                           1,137.6         964.8
   Net Income                                                     136.1         134.0       $136.1         $ 134.0
   Common Dividends to Shareholders: (Per Share: 1999,
       $.39; 1998, $.34)                                          (34.6)        (31.0)
   Other, Net                                                         -           (.2)
                                                               --------      --------
      End of Period                                             1,239.1       1,067.6
                                                               --------      --------

Accumulated Other Comprehensive Income
   Beginning of Year                                              257.2         226.2
   Change for the Period                                         (219.4)         18.8       (219.4)           18.8
                                                               --------      --------       ------         -------
      End of Period                                                37.8         245.0
                                                               --------      --------

Note Receivable from ESOP
   Beginning of Year                                              (19.8)        (20.8)
   Repayments, Accrued or Paid                                      1.2            .5
                                                               --------      --------
      End of Period                                               (18.6)        (20.3)
                                                               --------      --------

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

Treasury Common Stock
   Beginning of Year                                             (258.0)       (178.9)
   Acquired                                                      (127.2)        (33.7)
   Reissued for Acquisitions                                          -          21.2
   Reissued, Other                                                 26.9          42.4
                                                               --------      --------
      End of Period                                              (358.3)       (149.0)
                                                               --------      --------

Comprehensive Income (Loss)                                                                 $(83.3)        $ 152.8
                                                                                            ======         =======

Total Shareholders' Equity                                     $1,895.0      $2,152.3
                                                               ========      ========
See accompanying notes to condensed consolidated financial statements.

                                       4
RELIASTAR FINANCIAL CORP.
                Condensed Consolidated Statements of Cash Flows
                                 (in millions)
                                  (unaudited)
Six Months Ended June 30
                                                                             -----------------------------------
                                                                                  1999                  1998
                                                                             -------------        --------------
OPERATING ACTIVITIES
Net Income                                                                    $      136.1          $      134.0
Adjustments to Reconcile Net Income to Net Cash Provided by
  Operating Activities
     Interest Credited to Insurance Contracts                                        278.4                 276.3
     Future Policy Benefits                                                         (332.6)               (217.3)
     Capitalization of Policy Acquisition Costs                                     (137.8)               (110.9)
     Amortization of Deferred Policy Acquisition Costs and Present
        Value of Future Profits                                                       87.5                  90.1
     Deferred Income Taxes                                                            21.8                   7.2
     Net Change in Receivables and Payables                                          (24.8)                 (1.9)
     Other Assets                                                                     (8.3)                (60.9)
     Realized Investment Gains, Net                                                   (1.6)                (17.5)
     Other                                                                             (.1)                 (5.7)
                                                                             -------------        --------------
          Net Cash Provided by Operating Activities                                   18.6                  93.4
                                                                             -------------        --------------

INVESTING ACTIVITIES
Proceeds from Sales of Fixed Maturity Securities                                     327.2                 196.2
Proceeds from Maturities or Repayment of Fixed Maturity Securities                   703.1                 573.0
Cost of Fixed Maturity Securities Acquired                                        (1,108.7)               (956.6)
Sales (Purchases) of Equity Securities, Net                                            5.0                 (18.5)
Proceeds of Mortgage Loans Sold, Matured or Repaid                                   169.6                 309.2
Cost of Mortgage Loans Acquired                                                     (248.1)               (167.8)
Sales of Real Estate and Leases, Net                                                  21.4                  11.8
Policy Loans Issued, Net                                                             (18.7)                (13.1)
Sales (Purchases) of Other Invested Assets, Net                                       (2.6)                   .3
Sales (Purchases) of Short-Term Investments, Net                                      33.8                 (95.4)
Cash Acquired with Acquisitions, Net                                                     -                   1.3
                                                                             -------------        --------------
          Net Cash Used by Investing Activities                                     (118.0)               (159.6)
                                                                             -------------        --------------

FINANCING ACTIVITIES
Deposits to Insurance Contracts                                                      849.7                 722.2
Maturities and Withdrawals from Insurance Contracts                                 (694.2)               (699.4)
Increase in Notes and Mortgages Payable                                              106.4                  71.5
Repayment of Notes and Mortgages Payable                                               (.1)                (17.5)
Issuance of Common Stock Under Stock Option and Other Plans                           14.2                  20.1
Dividends on Common Stock                                                            (34.6)                (31.0)
Acquisition of Treasury Common Stock                                                (127.2)                (33.7)
                                                                             -------------        --------------
          Net Cash Provided by Financing Activities                                  114.2                  32.2
                                                                             -------------        --------------
Increase (Decrease) in Cash                                                           14.8                 (34.0)
Cash at Beginning of Period                                                           21.5                  46.4
                                                                             -------------        --------------
Cash at End of Period                                                        $        36.3        $         12.4
                                                                             =============        ==============
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 June 30        Six Months Ended June 30
                                                           --------------------------        ------------------------
OPERATING INCOME/1/                                         1999                1998          1999               1998
-----------------                                         --------           ---------      -------           --------
Personal Financial Services                               $   27.8           $   23.6       $  53.0           $   46.0
Worksite Financial Services                                   15.4               13.9          29.9               27.8
Tax-Sheltered and Fixed Annuities                             21.0               19.7          41.8               36.5
Reinsurance                                                   12.8               11.6          19.5               21.0
                                                          --------           --------       -------           --------
     Total Reportable Segments                                77.0               68.8         144.2              131.3
Other Business Units                                           2.0                2.2           4.6                5.9
Corporate                                                     (7.2)              (3.5)        (14.2)              (8.6)
                                                          --------           --------       -------           --------
Operating Income                                              71.8               67.5         134.6              128.6
Net Realized Investment Gains (Losses)                         (.1)               5.4           1.5                8.8
                                                          --------           --------       -------           --------
Consolidated Income from Continuing Operations            $   71.7           $   72.9       $ 136.1           $  137.4
                                                          ========           ========       =======           ========
/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 June 30       Six Months Ended June 30
                                                          --------------------------       ------------------------
OPERATING REVENUES                                          1999               1998         1999                1998
------------------                                        --------           -------     ----------         --------
Personal Financial Services                               $  223.6           $  229.3    $    441.4        $    450.4
Worksite Financial Services                                  194.9              191.1         389.6             387.6
Tax-Sheltered and Fixed Annuities                            153.5              149.2         300.6             294.3
Reinsurance                                                  109.5               86.0         220.3             156.8
                                                          --------           --------    ----------        ----------
     Total Reportable Segments                               681.5              655.6       1,351.9           1,289.1
Other Business Units                                          54.6               51.3         105.2              97.0
Corporate                                                      6.7                4.6          10.3               7.8
                                                          --------           --------    ----------        ----------
     Operating Revenues                                      742.8              711.5       1,467.4           1,393.9
Realized Investment Gains (Losses), Net                        (.9)              10.3           1.6              17.5
                                                          --------           --------    ----------        ----------
Consolidated Revenues                                     $  741.9           $  721.8    $  1,469.0        $  1,411.4
                                                          ========           ========    ==========        ==========
June 30       December 31
ASSETS UNDER MANAGEMENT                                                                     1999              1998
-----------------------                                                                  ----------        ----------
Personal Financial Services                                                              $  7,163.5        $  6,887.0
Worksite Financial Services                                                                 3,796.1           3,512.1
Tax-Sheltered and Fixed Annuities                                                           7,848.4           7,594.7
Reinsurance                                                                                   330.3             309.9
                                                                                         ----------        ----------
     Total Reportable Segments                                                             19,138.3          18,303.7
Other Business Units                                                                        4,427.5           4,018.4
Corporate                                                                                     420.9             389.8
                                                                                         ----------        ----------
     Assets Under Management                                                               23,986.7          22,711.9
Net Unrealized Investment Gains                                                                81.2             526.2
Other Balance Sheet Assets                                                                  3,705.8           3,389.0
Off-Balance Sheet Mutual Fund Client Assets                                                (4,427.5)         (4,018.4)
                                                                                         ----------        ----------
Consolidated Assets                                                                      $ 23,346.2        $ 22,608.7
                                                                                         ==========        ==========
Note 3.  Subsequent Event - Acquisition

On July 22, 1999, the Company signed a definitive agreement to acquire Pilgrim
Capital Corp. (Pilgrim), a Phoenix-based asset management and mutual fund
company. As of June 30, 1999, Pilgrim had assets under management of $7.6
billion and annual asset sales of $1.1 billion. The acquisition will be effected
through a stock-and-cash transaction valued at $258 million, which includes the
Company's assumption of approximately $31 million of Pilgrim debt. The
acquisition will be accounted for as a purchase.

The definitive agreement provides for Pilgrim shareholders to receive .50 shares
of ReliaStar common stock plus $12.50 in cash for each Pilgrim share, subject to
adjustment at the time of closing. Completion of the acquisition is expected in
the fourth quarter of 1999, and is subject to normal closing conditions,
including approval by Pilgrim's stockholders, fund trustees/directors and fund
shareholders, and various regulatory approvals.

                                       7
Items 2 and 3.
                           RELIASTAR FINANCIAL CORP.

                     Management's Discussion and Analysis
               of Financial Condition and Results of Operations

RESULTS OF OPERATIONS

Results of operations by operating segment are summarized below (in millions):
Three Months          Six Months
                                                                      Ended June 30         Ended June 30
                                                                    ------------------    --------------------
                                                                     1999        1998      1999          1998
                                                                    ------      ------    ------        ------
Operating Income (Loss)/1/
   Personal Financial Services Segment                              $ 27.8        $ 23.6    $  53.0      $ 46.0
   Worksite Financial Services Segment                                15.4          13.9       29.9        27.8
   Tax-Sheltered and Fixed Annuities Segment                          21.0          19.7       41.8        36.5
   Reinsurance Segment                                                12.8          11.6       19.5        21.0
   Other Business Units                                                2.0           2.2        4.6         5.9
   Corporate                                                          (7.2)         (3.5)     (14.2)       (8.6)
                                                                    ------        ------    -------      ------
Operating Income                                                      71.8          67.5      134.6       128.6
Net Realized Investment Gains (Losses), Net of Tax                     (.1)          5.4        1.5         8.8
                                                                    ------        ------    -------      ------
Income From Continuing Operations                                     71.7          72.9      136.1       137.4
Loss From Discontinued Operations, Net of Tax                            -          (3.5)         -        (3.4)
                                                                    ------        ------    -------      ------
   Net Income                                                       $ 71.7        $ 69.4    $ 136.1      $134.0
                                                                    ======        ======    =======      ======
/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).

ReliaStar Financial Corp. (the Company or ReliaStar) has four reportable
operating segments: Personal Financial Services (PFS), Worksite Financial
Services, 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 Personal Financial Services (PFS) segment sells life insurance and annuity
products to individuals. Operating income of the PFS segment for the second
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 favorable interest
spreads, growth in assets under management and ongoing expense management.
Year-to-date operating income increased 15% over the comparable period in 1998
primarily due to growth in assets under management, favorable mortality
experience, favorable interest spreads and lower expense levels.

The interest spread of 250 basis points in the second quarter of 1999 compares
to 241 basis points in the second quarter of 1998. The increase in interest
spread reflects a 7 basis point decrease in the portfolio yield and a 16 basis
point reduction in the average crediting rate. We expect that the average
interest spread for the remainder of 1999 will be lower than the rate
experienced in the first six months of 1999, primarily as a result of declining
portfolio yields. It should be noted that the interest spread calculation is an
annualized measure and can be overly influenced in a particular

                                       8
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 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 $7.2 billion as of June 30, 1999,
from $6.6 billion as of June 30, 1998. Separate account assets under management
increased to $2.4 billion as of June 30, 1999, from $1.9 billion as of June 30,
1998.

Total sales (annualized new premiums and deposits) decreased 12% for the second
quarter of 1999 and were $87.5 million compared with $99.7 million in the same
period of 1998. The decline in sales is primarily due to a reduction in sales of
PFS variable annuity products. Sales during the second quarter of 1999 of
individual life insurance increased 11% to $29.1 million compared to the second
quarter of last year. Total sales for the first six months of 1999 were $171.0
million compared to $184.2 million in the same period of 1998. The decrease in
sales reflects an 11% decrease in variable annuity sales which was partially
offset by a 12% increase in individual life sales.

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

The Worksite Financial Services (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
second quarter of 1999 increased $1.5 million, or 11%, compared with the same
period in 1998. Year-to-date operating income increased 8% compared with the
same period in 1998. The increase in quarter and year-to-date operating income
was primarily due to higher investment income and lower operating expense levels
across the segment and growth in assets under management in the retirement plans
unit.

Total sales for the second quarter of 1999 were $144.2 million compared with
$100.7 million in the same period of 1998. Sales for the second quarter of 1999
increased 43% compared with the same period in 1998, reflecting a 58% increase
in retirement plan sales, a 2% increase in group health sales and a 10% decrease
in group life sales. Total sales for the first six months of 1999 were $350.4
million compared to $257.7 million for the same period of 1998. The increase in
sales reflects a 19% increase in individual life sales, a 14% increase in group
life sales, a 33% increase in group health sales and a 42% increase in
retirement plan sales.

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

The Tax-Sheltered and Fixed Annuities (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 second quarter of 1999 increased
$1.3 million, or 7%, compared with the same period in 1998. Year-to-date
operating income increased 15% over the same period in 1998. The increase for
the quarter and year-to-date was primarily due to increased interest spreads and
growth in assets under management, partially offset by higher expense levels.

The interest spread of 289 basis points in the second quarter of 1999 compares
to 254 basis points in the second quarter of 1998. This increase in interest
spread reflects a 38 basis point reduction in the average crediting rate and a 3
basis point decrease in the portfolio yield. We expect that the average interest
spread for the remainder of 1999 will be lower than the rate experienced in the
first half of 1999, primarily as a result of declining portfolio yields. 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 $7.8 billion as of June 30, 1999,
from $7.3 billion as of June 30, 1998. Separate account assets under management
increased to $539 million as of June 30, 1999, from $244 million as of June 30,
1998.

                                       9
Total sales for the second quarter of 1999 were $173.8 million compared with
$150.0 million in the same period of 1998. The increase in sales reflects a 44%
increase in sales of variable annuities, while sales of fixed annuities
increased slightly. Total sales for the first six months of 1999 were $322.2
million compared with $285.9 million for the same period of 1998. The increase
in sales reflects a 49% increase in variable annuity sales and a 4% decrease in
fixed annuity sales.

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

The Reinsurance segment sells group life, health, and specialty reinsurance
products in the United States and internationally. Operating income of the
Reinsurance segment for the second quarter of 1999 increased $1.2 million, or
10%, compared with the same period in 1998. The increase in operating income was
primarily due to growth in earned premium and lower expense ratios, partially
offset by higher overall claims experience. The ratio of claims to net earned
premium was 63.6% in the second quarter of 1999, compared with 58.7% in the
second quarter of 1998. Less favorable mortality and morbidity loss ratios were
experienced in the group life, group medical, and international lines of
reinsurance business. Claims experience and overall profitability of workers
compensation carve-out reinsurance in the second 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 7% compared with the same
period in 1998. The decrease was primarily due to higher overall claims
experience, partially offset by growth in earned premium and lower expense
ratios. 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 second quarter of 1999 were $77.4 million compared with
$48.7 million in the same period of 1998, an increase of 59%, primarily due to
increased sales in the long-term disability line of business. Total sales for
the first half of 1999 were $158.8 million compared to $100.7 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 second quarter of 1999
decreased $.2 million, or 9%, compared with the same period in 1998.
Year-to-date operating income decreased $1.3 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 assets
under management.

Corporate
---------

Corporate includes financing costs, goodwill amortization and other unallocated
costs. Operating losses of Corporate for the second quarter of 1999 and
year-to-date increased $3.7 million and $5.6 million, respectively, compared
with the same periods in 1998. The increase in operating losses was primarily
due to financing costs related to the 1998 and 1999 common stock buyback
programs.

                                      10
Realized Investment Gains and Losses

The sources of net realized investment gains (losses) were as follows (in
millions):
Three Months              Six Months
                                                                     Ended June 30            Ended June 30
                                                                   -----------------         ---------------
                                                                   1999         1998         1999       1998
                                                                   ----         ----         ----       ----
Net Gains (Losses) on Sales of Investments
    Fixed Maturity Securities
     Gross Gains                                                   $5.5         $8.3        $11.5       $9.2
     Gross Losses                                                  (5.6)        (1.5)        (8.0)      (1.7)
    Equity Securities                                               (.1)          .3          1.2         .9
    Mortgage Loans                                                   .5          (.3)          .5        (.3)
    Foreclosed Real Estate                                          1.9          3.0          1.7        3.0
    Real Estate                                                      .3           .3           .9         .3
    Other                                                           5.1          4.2          6.1       13.9
Provision for Losses on Investments
   Fixed Maturity Securities                                        (.1)        (2.8)        (3.5)      (6.3)
   Foreclosed Real Estate                                             -         (1.2)         (.4)      (1.5)
   Other                                                           (8.4)           -         (8.4)         -
                                                                   ----         ----         ----       ----
Pretax Realized Investment Gains (Losses)                           (.9)        10.3          1.6       17.5
DAC/PVFP Amortization/1/                                             .9         (1.8)          .8       (3.8)
Income Taxes                                                        (.1)        (3.1)         (.9)      (4.9)
                                                                   ----         ----         ----       ----
       Net Realized Investment Gains (Losses), Net of Tax          $(.1)        $5.4         $1.5       $8.8
                                                                   ====         ====         ====       ====
/1/Due to pretax realized investment gains and losses.

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.

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

                                       11
effective on April 30, 1999 by the SEC. As of June 30, 1999, $500.0 million of
debt and equity securities were available for issuance under this shelf
registration.

As of June 30, 1999, the Company had an unsecured revolving credit facility with
a group of banks totaling $250.0 million for general corporate purposes and
$145.0 million remained available for borrowing under this facility.

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 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.

The Company has agreed to acquire Pilgrim Capital Corporation (see "Known Trends
and Uncertainties Which May Affect Future Reported Results - Subsequent Event-
Acquisition"). In this transaction, which is expected to close in the fourth
quarter of 1999, each outstanding share of Pilgrim common stock will be
exchanged for .50 shares of ReliaStar common stock plus $12.50 in cash (subject
to adjustment at the time of closing). As of July 20, 1999, Pilgrim had
5,084,477 outstanding shares of common stock, along with options to purchase an
additional 1,270,000 shares. ReliaStar will also assume approximately $31
million of debt.

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 June 30, 1999, the Insurers' investment portfolios included $7.8
billion (33% of consolidated assets) of short-term investments and investment
grade marketable bonds. The June 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.
While the Insurers have experienced an increase in withdrawal and surrender
activity attributable to their individual fixed annuity products, the 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

                                       12
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 June 30, 1999 was $36.3 million. During the first
six months of 1999, net cash provided by operating and financing activities was
$18.6 million and $114.2 million, respectively, which was offset by net cash
used by investing activities of $118.0 million.

The $18.6 million of net cash provided by operating activities was primarily the
result of positive cash flow from premiums and investment income in excess of
cash outflows for insurance benefits and sales and operating expenses. Net cash
provided by financing activities of $114.2 million 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.

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.

                                       13
The following table provides information regarding the composition of the
Company's invested assets (in millions):
June 30, 1999            December 31, 1998
                                                      ---------------------      ---------------------
                                                       Amount       Percent        Amount      Percent
                                                       ------       -------        ------      -------
Investment Grade Bonds:
    Marketables                                       $ 7,632.3        52.3%     $ 7,823.4        52.5%
    Private Placements                                  2,677.3        18.4        2,881.6        19.3
                                                      ---------     -------      ---------     -------
        Subtotal                                       10,309.6        70.7       10,705.0        71.8

Below Investment Grade Bonds:
    Marketables                                           460.2         3.2          391.3         2.6
    Private Placements                                    472.8         3.2          510.4         3.4
                                                      ---------     -------      ---------     -------
           Subtotal                                       933.0         6.4          901.7         6.0

Equity Securities                                          64.0          .4           60.3          .4
Commercial Mortgages                                    1,802.3        12.4        1,726.8        11.6
Mortgages, Residential and Other                          431.4         3.0          428.0         2.9
Real Estate                                                34.1          .2           53.3          .3
Short-Term Investments                                    134.9          .9          168.7         1.2
Other                                                     872.2         6.0          865.3         5.8
                                                      ---------     -------      ---------     -------
    Total Invested Assets                             $14,581.5       100.0%     $14,909.1       100.0%
                                                      =========     =======      =========     =======
Fixed Maturity Securities

The amounts invested in fixed maturity securities as of June 30, 1999 and
December 31, 1998 were $11.3 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 June 30, 1999 were $9.3 million
and $7.6 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 June 30, 1999, the weighted average book yields of the Company's
investment grade portfolio and below investment grade portfolio were 7.5% and
8.3%, 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.

                                       14
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):
June 30, 1999
---------------------------------------------------------------------------------------------------
                              Marketables                               Private Placements
                ----------------------------------------    ---------------------------------------
                            Gross Unrealized                            Gross Unrealized
NAIC            Amortized   ----------------     Fair       Amortized   ----------------    Fair
Rating            Cost      Gains   (Losses)     Value        Cost      Gains   (Losses)    Value
------            ----      -----   --------     -----        ----      -----   --------    -----
1               $5,156.8    $124.2  $  (49.6)   $5,231.4    $  853.3    $17.0    $ (10.2)  $  860.1
2                2,397.2      44.2     (40.5)    2,400.9     1,820.3     22.5      (25.6)   1,817.2
3                  387.7       4.4     (13.8)      378.3       330.4      3.0       (3.2)     330.2
4                   86.9       1.5      (8.1)       80.3       114.6      1.8       (5.8)     110.6
5                     .1         -         -          .1        30.7        -       (1.6)      29.1
6                    2.2         -       (.7)        1.5         3.2        -        (.3)       2.9
Redeemable
 Preferred
 Stock             16.7         .5       (.6)       16.6        12.7        -        (.4)      12.3
                --------    ------  --------    --------    --------    -----    -------   --------
    Total       $8,047.6    $174.8  $ (113.3)   $8,109.1    $3,165.2    $44.3    $ (47.1)  $3,162.4
                ========    ======  ========    ========    ========    =====    =======   ========
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).
June 30, 1999             December 31, 1998
                                                    --------------------         --------------------
                                                    Amortized     Fair           Amortized     Fair
                                                       Cost       Value             Cost       Value
                                                       ----       -----             ----       -----
Maturing in:
  One Year or Less                                  $   465.3  $   468.2         $   459.5  $   462.9
  One to Five Years                                   3,500.8    3,558.8           3,555.5    3,710.1
  Five to Ten Years                                   2,897.9    2,891.9           3,022.9    3,191.1
  Ten Years or Later                                  1,271.9    1,270.2           1,296.1    1,375.8
Mortgage-Backed/Structured Finance                    3,076.9    3,082.4           2,793.0    2,885.2
                                                    ---------  ---------         ---------  ---------
    Total                                           $11,212.8  $11,271.5         $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

                                       15
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.

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
                                            ------------------------------   -------------------------------
                                              June 30,      December 31,       June 30,       December 31,
                                                1999            1998             1999             1998
                                                ----            ----             ----             ----
Basic Materials                                  6.4%            6.5%             5.6%             7.0%
Consumer Non-Cyclical                            5.2             5.8             15.2             14.6
Consumer Products/Services                       9.1             8.4             18.2             18.7
Energy                                           6.0             6.0              7.9              7.3
Financial Services                              19.4            20.2             14.8             15.8
Government                                       2.2             2.8               .2               .2
Industrial                                       4.4             5.0             11.2             11.1
Mortgage-Backed/Structured
   Finance                                      33.0            30.8             13.6             11.4
Real Estate                                      1.3             1.4              2.1              2.2
Retailing                                        1.7             1.9              4.4              4.7
Technology                                       2.0             2.0              1.8              2.1
Utilities                                        9.3             9.2              5.0              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 June 30, 1999. The
largest investment in below investment grade bonds of any one industry grouping
was approximately 1.7% of invested assets at June 30, 1999. The portfolio of
below investment grade bonds is regularly analyzed and managed in an effort to
avoid concentration risks.

                                       16
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):
                                                     June 30, 1999
                                          ----------------------------------
                                           Amortized
                                             Cost                Fair Value
                                             ----                ----------
Adjustable Rate Pass Through:
  Below 6%                                 $   34.8               $   34.8
  6% - 7%                                      52.6                   52.1
  7% - 8%                                      53.2                   53.0

Fixed Rate Pass Through:
  Below 9%                                     66.0                   66.5
  Above 9%                                      5.9                    6.1

Planned Amortization Class:
  Below 7%                                    279.2                  288.7
  7% - 8%                                     300.1                  309.4
  8% - 9%                                      56.6                   58.3
  Above 9%                                      1.3                    1.4

Other:
  Below 7%                                    303.0                  306.3
  7% - 8%                                      87.0                   91.4
  8% - 9%                                      15.5                   16.2
  Above 9%                                      6.0                    6.1
                                           --------               --------
    Total                                  $1,261.2               $1,290.3
                                           ========               ========

The Company invests in public and private asset-backed securities in addition to
the MBS securities described above. As of June 30, 1999, the Insurers held
asset-backed securities with an amortized cost of $1,815.7 million and a fair
value of $1,792.1 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 June
30, 1999, approximately 98% of the Company's asset-backed securities had
investment grade ratings. Approximately 37% of these securities are
collateralized by manufactured housing loans, 21% by commercial mortgage loans,
20% by high yield bank loans and corporate bonds and 13% 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 June 30,
1999 being approximately $2.9 million.

                                       17
The commercial mortgage loan portfolio diversification by property type and
geographic region of the United States was as follows:

                                                 June 30,      December 31,
                                                   1999            1998
                                                   ----            ----
Property Type
-------------
Apartment                                          24.6%           24.5%
Industrial                                         19.3            20.6
Retail                                             20.4            19.6
Special Purpose                                    21.1            19.1
Office                                             12.7            14.1
Hotel/Motel                                         1.9             2.1
                                                  -----           -----
  Total                                           100.0%          100.0%
                                                  =====           =====

                                                 June 30,      December 31,
                                                   1999            1998
                                                   ----            ----
Geographic Region
-----------------
Midwest                                            36.7%           37.4%
Pacific                                            24.6            24.2
Southeast                                          15.1            14.7
Northeast                                           9.6            10.1
Mountain                                            9.0             8.3
Southwest                                           5.0             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 June 30, 1999 were 7.9% and 8.3 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 June 30, 1999 and December 31, 1998, the Insurers held $430.9
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).

                                                  June 30,      December 31,
                                                    1999            1998
                                                  --------      ------------
Unrealized Investment Gains                         $73.7          $526.2
DAC/PVFP Adjustment                                 (19.0)         (128.6)
Deferred Income Taxes                               (16.9)         (140.4)
                                                    -----          ------
    Net Unrealized Investment Gains                 $37.8          $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.

                                       18
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 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):

                                                     June 30, 1999
                                        ---------------------------------------
                                          Asset        Portfolio        Target
                                        Duration       Duration        Duration
                                        --------       --------        --------
Personal Financial Services                4.2            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                                4.6            4.6           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 June 30, 1999, the Company had 60 interest rate swap contracts in effect with
a notional amount of $1.04 billion. 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 six months of 1999, one interest rate swap contract was entered
into with a notional amount of $150.0 million as of June 30, 1999, and one
interest rate swap contract matured with a notional amount of $5.0 million.
There were no terminations of interest rate swap contracts prior to maturity
during the first six months of 1999. The Company had no deferred gains or losses
at June 30, 1999 related to interest rate swap contracts terminated early. The
estimated fair value of the interest rate swap contracts in effect at June 30,
1999 was an unrealized gain of $7.9 million, which is reported with other
invested assets in the Condensed Consolidated Balance Sheets.

                                       19
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 June 30, 1999 (dollars in millions).

                                               Notional       Range of Fixed
                                                 Amount       Rates Received
                                                 ------       --------------
Maturing in:
  One Year or Less                             $  335.0           5.5 - 6.9%
  One to Three Years                              482.5           5.3 - 8.2%
  Three to Five Years                             225.0           6.0 - 7.0%
                                               --------
    Total                                      $1,042.5
                                               ========
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 June 30, 1999, the Company held $1.0 billion 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 48 call options with a
notional amount of $47.9 million and an estimated fair value of $16.9 million as
of June 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 $660.0 million and a fair value of $0.1 million as of June 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 as follows (in millions):

                                               June 30,      December 31,
                                                 1999            1998
                                               --------      ------------
Private Placement Bonds                         $ 10.1          $  9.5
Marketable Bonds                                    .4             1.1
Commercial Mortgage Loans                          4.5             8.7
Residential and Other Mortgage Loans               6.1             6.1
Investment Real Estate/1/                         13.2             8.3
Foreclosed Real Estate                            12.7            30.5
Other                                                -              .4
                                                ------          ------
     Total                                      $ 47.0          $ 64.6
                                                ======          ======

/1/The amounts shown represent real estate acquired as an investment which the
Company has determined to be Problem Investments.

                                       20
The amortized cost of Problem Investments in the preceding table 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 as follows (in
millions):

                                                 June 30,     December 31,
                                                   1999           1998
                                                 --------     ------------
Private Placement Bonds                            $10.4          $9.0
Marketable Bonds                                       -           2.0
Commercial Mortgage Loans                            3.9           7.6
Residential and Other Mortgage Loans                 1.1           1.1
Foreclosed Real Estate                              15.2          21.3
Other                                                  -           4.4

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 $41.0 million, $11.5 million and $.1 million,
respectively, at June 30, 1999.

                                       21
KNOWN TRENDS AND UNCERTAINTIES WHICH MAY AFFECT FUTURE REPORTED RESULTS

Competition.

ReliaStar competes with all 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 its distributors and excellent customer
service are required to successfully compete in these markets.  Aggressive price
competition in insurance premiums or other product fees and commissions could
adversely affect ReliaStar's earnings and ability to retain distributors.

Financial Markets Conditions.

The product 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 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.

Financial Services Regulation.

The United States Congress is considering legislation which would eliminate 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 such legislation, if any, on the Company's
financial condition and prospects cannot be predicted.

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.

                                       22
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 attempt 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 contingency plans in
place, it is not reasonably possible to develop contingency plans which would
comprehensively address widespread systems failures.

Impact of Accounting Pronouncements to be Adopted in the Future

Accounting for Derivative Instruments and Hedging Activities

In June 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 July 22, 1999, the Company signed a definitive agreement to acquire Pilgrim
Capital Corp., a Phoenix-based asset management and mutual fund company. As of
June 30, 1999, Pilgrim had assets under management of $7.6 billion and annual
asset sales of $1.1 billion. The acquisition will be effected through a stock-
and-cash transaction valued at $258 million, which includes the Company's
assumption of approximately $31 million of Pilgrim debt. The acquisition will be
accounted for as a purchase.

The definitive agreement provides for Pilgrim shareholders to receive .50 shares
of ReliaStar common stock plus $12.50 in cash for each Pilgrim share, subject to
adjustment at the time of closing. Completion of the acquisition is expected in
the fourth quarter of 1999, and is subject to normal closing conditions,
including approval by Pilgrim's stockholders, fund trustees/directors and fund
shareholders, and various regulatory approvals.

ReliaStar and Pilgrim will have to integrate Pilgrim's and the Company's
existing mutual fund management teams, operations, distribution channels, and
sales and marketing efforts. If this integration is not successful, the
Company's results of operations could be adversely affected.

Certain Forward-Looking Information

All statements contained in this Form 10-Q, press releases and other public
disclosures relative to markets for the Company's products and trends in the
Company's operations or financial results, as well as other statements including
words such as "anticipate," "believe," "expect," and other similar expressions,
constitute forward-looking statements under the Private Securities Litigation
Reform Act of 1995. These forward-looking statements are subject to known and
unknown risks, uncertainties and other factors that may cause actual results to
be materially different from those contemplated by the forward-looking
statements. Such factors include, among other things: general economic
conditions and other factors, including prevailing interest rate levels and
stock market performance, which may affect the Company's ability to sell its
products, the market value of the Company's investments and the lapse rate and
profitability of the Company's policies; the Company's ability to achieve
anticipated levels of operating efficiencies; mortality and morbidity (including
the effect of the Company's reinsurance and retrocession risk management
programs); changes in federal income tax laws that may affect the relative tax
advantages of some of the Company's products; and regulatory changes or actions,
including those relating to regulation of financial services affecting bank
sales and underwriting of insurance products and regulation of the sale,
underwriting and pricing of insurance products.

                                       23
Part II. Other Information

                            RELIASTAR FINANCIAL CORP.

Item 4.  Submission of Matters to a Vote of Security Holders

         (a) The Registrant's annual meeting was held on May 13, 1999.

         (b) The following matters were submitted to a vote of security holders:

             Proposal 1 - Election of Directors:
Expiring
              Nominees                    Votes For       Votes Withheld         Term
              ---------------------      -----------      --------------       --------
Carolyn H. Baldwin          76,926,786          620,590            2002
              Richard U. DeSchutter       76,946,542          600,834            2002
              James J. Howard             76,976,629          570,747            2002
              John H. Flittie             76,921,993          625,383            2000
David C. Cox, Luella G. Goldberg, William A. Hodder, Randy C.
             James, Richard L. Knowlton, David A. Koch, James J. Renier and
             John G. Turner continued to serve as directors following the
             meeting.

             Proposal 2 - Proposal to Ratify the Appointment of Independent
             Public Accountants:

             Votes for:              76,968,944
             Votes against:             370,387
             Votes to abstain:          208,045

             Proposal 3 - Proposal to Approve the ReliaStar Annual Incentive
             Bonus Plan for Designated Executive Officers:

             Votes for:              72,273,924
             Votes against:           3,688,333
             Votes to abstain:        1,585,119

                                       24
Item 5.  Other Information:

On July 9, 1999, Bob Salipante, President and Chief Operating Officer, was
elected to the Board of Directors of Reliastar Financial Corp.

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

        (a) Exhibits:

                (10)(a)  ReliaStar Annual Incentive Bonus Plan for Designated
                         Executive Officers effective as of January 1, 1999

                (10)(b)  The ReliaStar Stock Ownership Plan for NonEmployee
                         Directors (as amend and restated effective May 13,
                         1999)

                (10)(c)  ReliaStar Deferred Compensation Plan for NonEmployee
                         Directors (as amended and restated effective May 13,
                         1999)

                (11)     Statement re Computation of Per Share Earnings

                (27)     Financial Data Schedule

        (b) Reports on Form 8-K:

                None for the period of this report.

                                       25
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       August 12, 1999
                                        --------------------------
                                        RELIASTAR FINANCIAL CORP.

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

                                       26