ING Groep N.V. intends to split its banking and insurance operations, divest itself of the insurance operations, and find a new home for its ING Direct USA Internet banking unit.
ING, Amsterdam, would end up being about as half as big as it used to be, with a focus on banking outside the United States. To get rid of the the insurance operations and the U.S. Internet banking business, ING may sell some businesses to other companies and sell other businesses to the public through stock offerings, according to ING Chief Executive Officer Jan Hommen says
One of the companies that merged to form ING in 1991 entered the U.S. insurance market in 1966, by acquiring Life of Georgia. ING became a much bigger presence in the U.S. insurance market in 1997, when it acquired Equitable Life Insurance Company of Iowa, Des Moines, Iowa. In 2000, the Dutch financial services giant further expanded its presence by acquiring ReliaStar Financial Corp., Minneapolis, and the financial services operations of Aetna Inc., Hartford.
ING sold Life of Georgia to a unit of Prudential P.L.C., London, in 2004, and it recently announced plans to sell ING Re’s U.S. and Canadian group life, accident and health reinsurance business to Reinsurance Group of America Inc., Chesterfield, Mo.
But ING is still a significant presence in the U.S. retirement services, life insurance and rollover annuity markets.
ING says it came up with the current restructuring plan in an effort to implement a “Back to Basics” streamlining initiative, eliminate “double leverage,” and pay the Dutch State back for the rounds of government financial support that ING has received since the current financial crisis began.
ING also came up with the plan to satisfy European Commission fair competition requirements, Hommen says.
“Negotiations with the European Commission on the restructuring plan have acted as a catalyst to accelerate the strategic decision to completely separate banking and insurance operations,” Hommen says.
Originally, combining banking and insurance services helped provide capital efficiency and earnings stability, but today, “the widespread demand for greater simplicity, reliability and transparency has made a split the optimal course of action,” Hommen says.