ING to offload Malaysian insurance business to AIA
12 October 2012
News, Asia, Malaysia
ING has reached an agreement with AIA Group Ltd on the sale of ING’s insurance operations in Malaysia, which include its life insurance business, its market-leading employee benefits business and its 60% stake in ING Public Takaful Ehsan Berhad. Under the terms agreed, ING is expected to receive a total consideration of approximately 1.3 billion euros (US$1.68 billion).
The agreement, which is subject to regulatory approvals, is part of the previously announced intended divestment of ING’s Asian insurance and investment management businesses. The process for the remaining businesses is ongoing. Further announcements will be made if and when appropriate, it said in an ING statement.
“Today’s announcement is the first major step in the divestment of our Asian insurance and investment management businesses and shows that ING continues to make steady progress in the restructuring of our company,” said Jan Hommen, CEO of ING Group. “AIA is an established player in Asia, and the combination of our strong insurance operations with their longstanding track record in Malaysia will create a market leader well positioned to benefit from the growth opportunities available in the country.”
The proposed transaction values ING’s Malaysian insurance operations at 16.9x 2011 earnings and 2.2x 1H2012 book value of approximately 600 million euros, both on an International Financial Reporting Standards (IFRS) basis. Earnings until closing are to the benefit of AIA. At closing, ING expects the sale to deliver a net gain of approximately 780 million euros, subject to potential adjustments at closing, customary for this type of transaction.
ING is a leading life insurer in Malaysia offering a complete suite of insurance products, including life, general, employee benefits and Takaful. The latter is offered through ING Public Takaful Ehsan Berhad, a joint venture with Public Bank Berhad, Malaysia’s third-largest bank, and Public Islamic Bank Berhad, one of Malaysia’s top five Islamic banks. ING’s insurance businesses in Malaysia serve more than 1.6 million customers through approximately 1,200 employees and approximately 9,200 tied agents.
AIA is the largest independent publicly-listed pan-Asian Life insurance company. It is active across 15 markets in Asia Pacific and has leading positions across many of these markets. AIA has a longstanding presence in Malaysia, having first established operations there in 1948.
ING Investment Management’s funds management business in Malaysia is outside the scope of this transaction. The transaction does not impact ING’s Asian banking activities.
Subject to regulatory approvals in Malaysia and the Netherlands, the transaction is expected to close in the first quarter of 2013.
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