ING Agrees To Sell South Korea Life Insurance Business For $1.7 Bln

(RTTNews) - Dutch financial services firm ING Groep NV (ING) Monday said it has reached an agreement to sell its wholly-owned life insurance business in South Korea, ING Life Korea, to private equity firm MBK Partners for about 1.84 trillion Korean won or 1.24 billion euros at current exchange rates ($1.66 billion).

Established in 1987, ING Life Korea is South Korea's largest foreign life insurer. It has 1.3 million customers, over 1,000 employees and approximately 6,800 tied agents.

As per the agreement, ING will hold an indirect stake of around 10 percent in ING Life Korea for 120 billion won. The proceeds of the transaction will be used to reduce debt of ING Insurance.

ING has also reached a licensing agreement that will allow ING Life Korea to continue to operate under the ING brand for up to five years. Additionally, over the course of one year, ING will continue to provide technical support and advice to ING Life Korea.

MBK Partners is executing the transaction through Life Investment Ltd, a private equity fund. The deal, expected to close in the fourth quarter, values ING Life Korea at 9.2 times its fiscal year 2012 earnings.

The transaction is expected to result in an after-tax loss of 950 million euros for ING Group, which will be booked in the third quarter.

ING was asked to sell its insurance and investment- management businesses before the end of 2013, as it had taken huge federal aid during the financial crisis.

It was in 2009 that the divestment plan for ING's insurance businesses was announced. Since then, the firm has sold its insurance and investment management operations in Canada, Australia & New Zealand and Latin America, as well as a large portion of its insurance and investment management activities in Asia.

In May, ING's U.S.-based retirement, investment and insurance business was listed on the New York Stock Exchange, reducing ING's stake to approximately 71 percent.

The company has stepped up preparations for the IPO of its European insurance and investment management businesses to be ready to go to market in 2014. The process to divest the remaining insurance and investment management businesses is on-going.

Jan Hommen, CEO of ING Group, said today, "This transaction is a major step in the divestment of our Asian insurance and investment management activities. Together with the scheduled payment of the next tranche of the core Tier 1 securities to the Dutch State in November 2013, this will bring us further into the end phase of the restructuring of our company."

The stock closed at 8.78 euros in Amsterdam on Friday.