* Sale of insurer could raise 2 billion euros
* Bank hopes to carry out sale within two months
* Listing marks end of five-year period of restructuring (Adds share sale, market cap estimates)
By Thomas Escritt
June 5 Dutch bank ING aims to list its insurance arm within two months, it said on Thursday, in one of the biggest European public share offers of the year which will complete the bank's enforced reformation since its state bail-out five years ago.
Chief Executive Ralph Hamers said that NN Group, the insurance subsidiary which had a book value of 14.7 billion euros ($20 billion) at the end of the first quarter, would be floated "within one to two months", if market conditions allow.
Bankers close to the deal said NN's initial public share offer (IPO) could net the bank up to 2 billion euros, valuing the insurer at around 8 billion euros.
Two bankers estimated the market valuation for the insurance business would be between 7 billion and 8.5 billion euros ($9.5-11.6 billion).
"This signals the launch of the final major transaction in ING's five-year restructuring," said Hamers. "With the IPO of NN Group we will have substantially completed the repositioning of ING to a pure bank."
ING said the insurer, which has a strong position in the Dutch domestic market, a substantial European presence, operations in Japan and a global investment management business, would pay a one-off dividend of 175 million euros next year on profits in the second half of 2014.
Hamers said the listing was expected to take place "within one to two months time, but we are not in a hurry."
NN Group made an operating profit of 905 million euros in 2013 on gross written premiums of 9.5 billion and from results for 2015 onwards intends to pay out 40 to 50 percent of the net operating result in dividends, NN Group's chief executive Lard Friese said.
"We are a leading Dutch insurer with a strong European footprint and a strong Japanese business," Friese said, adding that the company would focus on its Dutch business, targeted international growth, and on cash-generating businesses.
SALE OF ONE-TIME MAINSTAY
The bank valued the insurer's Netherlands Life business at 5.6 billion euros and the Insurance Europe business at 3.1 billion euros. The fund management business had 168 billion euros in assets under management in March.
The insurance business was ING's mainstay before the financial crisis, when it was a leading proponent of the then fashionable bancassurance business model.
But ING, then one of the world's largest banks, was forced to take a 10 billion euro bail-out from the Dutch state during the crisis and has already radically reshaped itself to comply with the terms of the rescue, shedding investment banking operations and cutting thousands of jobs.
The bank is due to pay back its final tranche of state aid with a 1.025 billion euro payment in May 2015, a move that could allow the bank to resume paying dividends.
ING has also spent 850 million euros on boosting the insurance arm's capital ahead of the share offer and the insurer's defined benefit pension plan was made financially independent in the first quarter of the year, at a cost of 541 million euros.
Three Asian investors - private equity firm RRJ Capital, Singapore state investor Temasek and its unit SeaTown - are already due to take part in the share offer as anchor investors having already invested 1.125 billion euros in the insurer.
ING said it aims to have sold more than 50 percent of its shareholding in the insurer before the end of next year and the remaining shares before the end of 2016. ($1=0.7341 euros) (Additional reporting by Anthony Deutsch and Freya Berry; Editing by Matt Driskill, Greg Mahlich)