* IPOs could go ahead as soon as fourth quarter of 2011
* Q3 underlying net 1.043 billion euros vs 727 million
* Analysts consensus 1.052 billion euros
* To take writedown on variable annuity assumption changes
* Share steady in early trading
(Adds details from conference call, analyst reaction, share)
By Marcel Michelson
AMSTERDAM, Nov 10 Dutch bankassurance group ING
ING.AS said on Wednesday it planned two initial public
offerings, rather than one, for its insurance activities as part
of a mandatory split-up imposed because of its state bailout.
Chief executive Jan Hommen told a conference call that two
IPOs could allow ING to achieve a higher valuation and raise
more money for insurance assets with a combined book value of 21
billion euros ($28.94 billion). The group still needs to repay
half of its 10 billion euro Dutch state capital injection.
"While the option of one IPO remains open, we are going to
prepare ourselves for a base case of two IPOs for our insurance
business," Hommen said.
A Europe-focused IPO would have a solid cashflow combined
with strong growth positions in developing markets, he said,
while a separate U.S.-focused IPO would have a strong position
in retirement services.
ING shares opened weaker before trading steady at 7.96
euros, below a year high of 8.18 euros set in October and after
a 15.5 percent rise this year for a market value of some 30
The two IPOs would give ING more flexibilty as investors
used different valuation models for operations in the United
States and Europe while European Solvency II regulatory changes
would make the U.S. business less competitive, Hommen added.
Hommen said while the fourth quarter of 2011 was still
possible as a window for the market operations, 2012 was more
likely for the floats in Amsterdam and New York.
He added that the group is still in talks with many
interested parties about the insurance operations.
The smaller WestlandUtrecht Bank unit will run as standalone
from Nov. 18. The ING brand will stay with banking activities.
Lemer Salah, analyst at SNS Securities, said the IPO plans
could go ahead as soon as the fourth quarter of 2011 especially
if there was a strategic buyer and favourable market conditions.
"The current environment is quite favourable, and there is
no pressure (to sell). It's do-able. They have a lot of time,
they have the resources," he said.
The split of ING into banking and insurance businesses will
reverse its creation through the merger nearly 20 years ago of
bank NMB and insurer Nationale Nederlanden. The separation was
imposed by the European Commission as a bailout condition.
ONLINE BOOMS, INSURANCE SLUGGISH
ING posted a higher third-quarter underlying net profit as a
strong performance by its ING Direct online banking activities
offset still sluggish insurance income, but fell slightly short
of consensus expectations.
ING Direct swung to a profit of 412 million from a loss of
358 million due to lower impairments.
The banking activities had an underlying pretax profit of
1.513 billion euros, versus 250 million last year and a
consensus expectation of 1.305 billion, due to lower charges and
risk costs and healthy margins.
The insurance operations saw operating profit rise to 473
million euros, versus 393 million last year. There was a 356
million euro charge in the third quarter in Japan and the U.S.
Underlying pretax profit fell to 18 million euros, from 551
million and against a consensus of 105 million.
"Insurance results are improving quarter by quarter and I am
pleased about that," Hommen told Dutch NOS radio.
ING sees a writedown on variable annuities in the United
States of some 1 billion euros in the fourth quarter and was
also planning a move towards fair-value accounting on withdrawal
benefit reserves in the U.S. that could lead to a book value
reduction of 1.0 billion to 1.3 billion euros as of January.
(Editing by Sara Webb and Hans Peters)