Last updated: November 11, 2009 1:59 pm

ING seeks listing for insurance division

ING, the Dutch financial services company, will work towards an initial public offering of its insurance business early next year although it has not ruled out finding a buyer for the assets as a whole or in parts.

Under a restructuring plan imposed by the European Commission to reflect the state aid it received during the financial crisis, ING last month agreed to split its banking and insurance businesses and focus purely on banking.

Jan Hommen, chief executive, said the company was “getting phone calls” about buying either the whole insurance business or certain assets but was still some way off deciding how to proceed. He declined to specify how many potential buyers were interested in the group as a whole.

“Most of the time you start with an IPO option because that keeps all the other options further open, that’s probably the route that will be taken first,” Mr Hommen said, adding that he expected to make a decision on the disposal early next year.

There have been public expressions of interest in ING’s assets from Britain’s Aviva , Poland’s PZU and Spain’s Mapfre, though none have professed an ambition to buy the whole business.

ING received a €10bn capital injection from the Dutch state a year ago and later won state guarantees on a portfolio of risky assets. It is seeking shareholder approval in two weeks’ time for a €7.5bn rights issue to pay back half the capital injection plus premiums and to fund extra payments ordered by the European Commission for its state guarantees.

Analysts estimate that ING’s insurance arm is worth up to €16bn or 1.1 times book value, the levels round which Aegon and Axa, two European peers, trade. Nationale-Nederlanden, the Dutch insurance arm, is the country’s number two insurer by market share and ING also has presences in central and eastern Europe, the US, Latin America and Asia.

The risk in any sale of the business is that potential buyers would want to cherry pick the Latin American and eastern European assets, leaving a Benelux rump that might only be disposed at a discount.

But last month’s initial public offering of Delta Lloyd, the Dutch insurer floated by Aviva, provides a gloomy precedent for resorting to an IPO. It priced at the low end of expectations and fell further in value shortly afterwards.

Yet Mr Hommen, who took over at ING this year having previously served as chairman, said ING was not in a hurry. Under its restructuring agreement with the European Commission, it has until 2013 to make the disposals, which also include the sale of ING Direct USA, its US online and telephone bank.

ING has not retained any advisers on separating its business though Mr Hommen said it may seek advice from a third party “at some point” on a possible IPO.

Asked about the sale of ING Direct USA, Mr Hommen said: “We have had some indications but I cannot say overwhelming interest at this point in time, it’s too early to do that.”

The group also confirmed third-quarter results were in line with preliminary earnings published on October 26 that showed it made a net profit of €499m compared with a loss of €478m a year earlier. ING shares were trading 7.5 per cent higher at €10.72 as the stock regained some of the heavy losses it made in the days following the announcement of the break-up.

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