DUTCH insurance and bank group ING sold virtually all its Latin American insurance operations to a Columbian firm for a better-than-expected €2.68bn (£2.4bn) yesterday.
The sale of the businesses to Grupo de Inversiones Suramericana, known as GrupoSura, values the insurance assets at six times its forecast 2011 earnings and 1.8 times its estimated €1.5bn book value.
Alongside that, ING said it would sell its 36 per cent stake in Brazilian non-life insurer Sul America, estimated to be worth another €800m.
RBS analyst Thomas Nagtegaal said the total €3.6bn price for both the LatAm business and Sul America was above the top end of his expectations.
But he said all proceeds from the sale would be used to repay debt in the ING Insurance business, cutting its leverage to 25 per cent, so ING’s investors would see little benefit.
ING expects to make €1bn profit from the sale of the pensions, savings, investment management and life insurance businesses in Chile, Colombia, Mexico and Uruguay as well as two stakes in Peruvian insurers. It has to divest its entire insurance division, becoming a pure banking business, to meet the conditions of its bailout by the Dutch state in the financial crisis.
Its commercial, mortgage and leasing businesses in the region are not affected by the deal, while GrupoSura also takes on the €65m debt held within the insurance operations.
ING’s chief executive Jan Hommen said the group would now prepare its other investment management and insurance businesses for initial public offerings. It plans one for its US arm and another for Europe and Asia.