ING Progresses on Insurance Operations Sale

Major changes are in the wind for Dutch insurer ING. Not only did it announce today that it has agreed to sell the majority of its real estate investment management business, but Bloomberg reports that ING is considering IPOs in Europe and the United States for its insurance operations.

According to the report, as a precursor to tomorrow's announcement of its fourth quarter earnings, ING is poised to sell its insurance operations as a condition for gaining European Union approval for a bailout. The bank and insurer combined will likely report a net income of EUR 596 million, Bloomberg says, but had a loss of EUR 712 million in the same period last year when it set aside funds for extra payments to the Netherlands after receiving state aid of EUR 10 billion in 2008.

As a result, Bloomberg says that ING is considering two IPOs—one in Europe and one in the United States.

ING also released a statement today that it reached an agreement to sell the majority of its ING Real Estate Investment Management business (ING REIM) in multiple transactions for a combined price of approximately $1 billion (EUR 770 million). Additionally, as part of the transactions, ING also agreed to sell up to approximately $100 million of its equity interest in existing ING REIM funds. Both transactions are expected to close in the second half of 2011, and are subject to approvals by certain stakeholders including various regulators.

“With these transactions we continue to deliver on our strategic objectives of reducing exposure to real estate, simplifying our company and further strengthening our capital base,” Jan Hommen, CEO of ING Group, said in a statement.

In the first deal, ING entered into an agreement with global commercial real estate services firm CB Richard Ellis Group Inc., to sell ING REIM Europe, ING REIM Asia and Clarion Real Estate Securities (CRES), ING REIM’s U.S.-based manager of listed real estate securities, as well as part of ING’s equity interests in funds managed by these businesses. The proceeds for these REIM businesses and the equity interests amount to approximately $1 billion. ING REIM Europe, ING REIM Asia and CRES combined have EUR 44.7 billion in assets under management as of Dec. 31 2010.

In the second transaction, ING has agreed to sell the private market real estate investment manager of its U.S. operations, Clarion Partners, to Clarion Partners management in partnership with private equity firm Lightyear Capital LLC for $100 million. Clarion Partners has EUR 16.5 billion in assets under management as of Dec. 31 2010.

ING will retain the Real Estate Investment Management business in Australia (ING REIMA), which has EUR 4.8 billion in assets under management as of Dec. 31 2010. However, ING says it will undertake a phased withdrawal from its Australian real estate investment management activities in a timely and controlled manner.

Combined, ING says the transactions are expected to result in an after-tax gain on disposal of approximately EUR 500 million at current exchange rates.

 

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