Insurance/IM restructuring gathers pace

2012 was a busy year for ING Insurance and Investment Management (IM) as it pressed ahead with its restructuring activities. By the end of the year, much had been achieved including the divestment of several insurance and investment management businesses in Asia, the development of a roadmap for the standalone future of the European insurance and investment management business, and the anticipated IPO of the US insurance and investment management business moving closer to reality.

In January 2012, ING announced that it was looking at options for the divestment of its Asian insurance and investment management business. Previously, the Asian businesses were to be included with the European businesses in a proposed base case divestment by IPO.
By December, the life insurance business in Malaysia had been sold to AIA Group and sales agreements had been announced for the life insurance, general insurance, pension and financial planning units in Hong Kong, Macau and the life insurance operations in Thailand to Pacific Century Group. Sales agreements were also announced for the sale of ING’s investment management operations in Thailand to UOB Asset Management, ING’s investment management operations in Malaysia to Kenanga and a 33.3% stake in China Merchants Fund, an investment management joint venture, to its Chinese joint venture partner.

ING US took another step towards its planned IPO by filing a registration statement with the US regulator, the SEC in preparation with the IPO.

In November, key revisions to ING’s 2009 European Commission (EC) restructuring agreement were announced, after ING reached agreement with the EC. The divestment of ING’s insurance and investment management operations was part of a package of restructuring measures required by the EC in order for ING to gain EC approval for State aid received from the Dutch government in 2008 and early 2009.

In the revised restructuring agreement, among other things, the deadlines for Insurance/IM divestments were extended beyond the original deadline of year-end 2013. The revised agreement gives ING more time and flexibility to complete the required restructuring while leaving its strategic objectives unchanged. The extra time was required due to the market environment, economic climate and more stringent regulatory requirements.

ING remains committed to completing all restructuring as quickly as possible, however these deadlines give the company more flexibility to complete divestments.

Under the agreement, the operations of WestlandUtrecht Bank will be merged with the recently created NN Bank. The combination will accelerate the strategy of NN Bank, which will grow to create a new mid-sized bank in the Netherlands.

Europe

Midway through 2012, ING announced it was stepping up efforts to IPO its European insurance and investment management business. In a strategy update, ING Insurance/IM said that it aimed to be a leading European wealth management and protection company with a combination of cash-generating businesses and leading positions in growth markets.

In September 2012, a new management structure was announced for the European Insurance/IM organisation. The Europe Operating Committee (EOC) was formed and is responsible for the leadership and management of the insurance and IM operations throughout Europe. In November, several new board appointments were made to the Management Board Insurance EurAsia. Delfin Rueda and Dorothee van Vredenburch were appointed as Members of the Management Board Insurance EurAsia (MBE) as of 1 November 2012. Within the MBE, Delfin Rueda was appointed as Chief Financial Officer and Dorothee van Vredenburch is responsible for Human Resources, Corporate Development, Communications and Sustainability for Insurance and Investment Management Eurasia. Matt Rider, Member of the MBE and Chief Administrative Officer stepped down as of 31 December 2012. Doug Caldwell was appointed Chief Risk Officer as of 1 December 2012.

Towards the end of the year, ING announced a restructuring plan for its European insurance/investment management operations by accelerating its transformation programme in preparation for its stand-alone future. In response to changing customer preferences and market dynamics, Insurance Europe is undertaking actions to increase its agility in the current operating environment by reducing support staff in the Netherlands and sharpening the strategic focus of its business units, in particular Nationale-Nederlanden (NN). These initiatives will result in a reduction of the workforce by 1,350 FTEs over the period 2013-2014, of which 1,075 relate to the programme at NN and 275 to support staff in the Netherlands. Over the next two years, substantial investments in IT will be made in order to improve processes and systems. Cost savings generated by all of these measures are expected to reach an annual run-rate of approximately EUR 200 million by the end of 2014.

In the Benelux region, ING has already taken many steps to improve efficiency with costs cut by 22% from 2008 to 2012. Going forward, the accelerated Nationale-Nederlanden transformation programme will further reduce costs and streamline the organisation.

Nationale-Nederlanden plans to accelerate its retail strategy by introducing new products, supported by efficient systems and processes. It is also planning the launch of a new defined contribution (DC) pension solutions business. With this, it hopes to help customers transition from the traditional defined benefit pension plans to modern DC pension solutions.

In general, ING insurance and investment management made solid progress in 2012 in further strengthening its business for a standalone future and for the long-term benefits of all its stakeholders.

ING’s insurance and investment management businesses include its life and non-life insurance, pension and asset management activities. These activities are divided into five business lines: Insurance Benelux, Insurance Central and Rest of Europe, Insurance US (excluding US Closed Block VA), US Closed Block VA and ING Investment Management.