ING sells LatAm insurance for 2.6 billion euros

AMSTERDAM: Dutch bancassurer ING will sell most of its Latin American operation to Colombia's GrupoSura for 2.6 billion euros ($3.7 billion) in a deal resulting from its state rescue in 2008.

ING agreed to split its bank and insurance operations in return for approval for 10 billion euros of state aid it received in the financial crisis in 2008. The company has said it plans to repay the Dutch state in full by May, following various asset sales.

The sale of the Latin American insurance and investment management business, which ING flagged earlier this year, now paves the way for the sale of its US, European and Asian operations, which are worth about 18 billion to 19 billion euros.

ING had said it wanted to sell the US, European and Asian businesses through two separate initial public offerings.

Some analysts say ING might fetch a higher price for its insurance assets through trade sales rather than IPOs.

"ING could also decide to sell other insurance and investment management operations, in particular those in Asia, to a rival instead of listing them," said Theodoor Gilissen analyst Tom Muller. "We know several parties want to expand in Asia."

Muller praised the GrupoSura deal. "This is a great deal (for ING), particularly the price," he said. "They're making quite a book profit on it."

The sale announced on Monday involves ING's insurance, pension, savings and investment management operations in Chile, Colombia, Mexico, Uruguay, and Peru for 2.6 billion euros in cash. GrupoSura will also take on 65 million euros of debt.

"We continue to prepare our remaining insurance and investment management businesses for our base case of two IPOs -- one for the US businesses and one for the European and Asian businesses - so that we will be ready to proceed when markets are favorable," ING Chief Executive Officer Jan Hommen said.

ING shares were down 1.8 percent at 7.94 euros, while the STOXX Europe 600 insurance index fell 1.6 percent.

GrupoSura, or Grupo de Inversiones Suramericana, is a financial holding firm listed on the Colombian stock exchange and has investments in Colombia's biggest insurer and bank.

The company said it would finance the purchase with its own resources, Colombian or international bank credits and share issuances, probably toward the end of the year.

The preferential shares would be an "important" amount and may happen in Colombia as well as the United States, Europe or the MILA exchange that integrates the bourses of Peru, Chile and Colombia, GrupoSura President David Bojanini said.

"After the authorizations, we're going to do a road-show to tell the whole story to investors and the great benefits of GrupoSura's action," Bojanini said, "and we believe we will be doing this issuance around October and November."

ING said the deal would create a Latin American savings and investments group with about $120 billion in assets under management and operations in eight countries.

The businesses have assets under management of 49 billion euros and earned 192 million euros in net income in 2010 on roughly 670 million euros in revenues on an IFRS basis.

The deal is valued at 16 times estimated 2011 earnings, ING said, and at 1.8 times book value on an IFRS basis. It said it would make a 1 billion euro profit on the deal, which is expected to close by year-end.

The agreement excludes ING's 36 percent stake in Brazilian insurer Sul America SA, which the company will seek to divest separately.

Copyright Reuters, 2011