ING Grouphas reached an agreement with QBE Insurance Group to sell a collection of its Mercantile Mutual general insurance interests and allowing the Holland-based firm to channel its resources into growing its wealth management and remaining businesses.
QBE, subject to regulatory approval, will acquire Mercantile Mutual Insurance Australia (MMIA), Mercantile Mutual Insurance (Workers Compensation), and ING’s 50 per cent stake in the QBE Mercantile Mutual joint venture for $740 million.
ING Asia/Pacific chairman Alexander Rinnooy Kan, says the sale will allow the group to concentrate on expanding its core wealth management (including life insurance), funds management, advice, and direct banking businesses.
“This decision is a result of ING’s policy of active management and alignment of its global portfolio of businesses,” Rinnooy Kan says.
He adds the group will also look to build on its wholesale banking capabilities and grow its real estate operations.
“We remain committed to our extensive business interests in Australia and will continue to look for opportunities to build the market shares and returns of these businesses,” Rinnooy Kan says.
QBE chief executive Frank O’Halloran says the group is confident the acquisition will have a positive impact on its share price.
“The price paid for the acquisition reflects the quality of the insurance profitability of the joint venture and workers’ compensation business,” O’Halloran says.
An additional $25 million is payable by QBE in February 2007 subject to the run-off of pre-joint venture net insurance liabilities.
QBE has also agreed to purchase Mercantile Equities, a small subsidiary of MMIA, the price of which is not material and not included in the underlying price paid.
The transactions are expected to be completed by the end of June 2004 subject to regulatory approvals.
