ING Groep NV, the biggest Dutch financial services company, reported a surprise 26 percent drop in third-quarter profit after a writedown at its US insurance business.
Net income fell to 371 million euros (US$511 million) from 499 million euros a year earlier, -Amsterdam-based ING said in a statement yesterday. Earnings missed the 938.4 million-euro average estimate of 14 analysts surveyed by Bloomberg as the company wrote down goodwill at the insurance unit by 513 million euros.
ING agreed to split its insurance and banking units by the end of 2013 to gain European Commission approval for a government bailout, which included 10 billion euros of state aid and the transfer of 21.6 billion euros of US mortgage assets. The company plans to separate the two businesses by the end of the year as it prepares to sell the insurer.
“While the option of one IPO [initial public offering] remains open, we are going to prepare ourselves for a base case of two IPOs for our insurance businesses: One Europe-led IPO with solid cashflow combined with strong growth positions in developing markets, and one separate US-focused IPO with a leading franchise in retirement services,” ING chief executive Jan Hommen said in the statement.
ING said its underlying profit, which excludes asset sales and special items, rose to 1.04 billion euros in the quarter from 727 million euros a year earlier. The company also said it expects a writedown of about 1 billion euros before tax in the fourth quarter in its US insurance business as it brings accounting and hedging “more in line with US peers.”
Meanwhile, Prudential PLC, the UK’s biggest insurer, said third-quarter insurance revenue rose 17 percent on higher sales at its Asian and US divisions.
Revenue climbed to ￡809 million (US$1.3 billion) in the three months to Sept. 30 from ￡689 million pounds a year earlier, the London-based insurer said yesterday in a statement. That beat the ￡773 million average estimate of 14 analysts surveyed by the company.
“Prudential continues to grow fast and profitably,” Prudential CEO Tidjane Thiam said in the statement. “This is in line with our stated strategy of allocating capital to the geographies and products with the best profitable growth opportunities.”
Thiam is seeking to increase sales in Asia after Prudential shareholders scuppered his record US$35.5 billion bid for American International Group Inc’s Asian division. The CEO is now in direct competition with his predecessor Mark Tucker, who now heads American International Assurance Group Ltd and led the company to a successful initial public offering last month.
Sales in Asia increased 25 percent to ￡353 million in the third quarter and revenue from the US climbed 16 percent to ￡290 million, the insurer said.
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