ING to Sell Reinsurance Unit to Berkshire Hathaway

The Netherlands ING Group announced that it has reached an agreement with Berkshire Hathaway to sell its reinsurance unit NRG N.V. for approximately €300 million ($440 million). ING said the sale is part of its “strategy to focus on its core insurance, banking and asset management businesses.”

The bulletin noted: “NRG was established in 1968 as Nederlandse Reassurantie Groep, as a result of the merger of the two main Dutch reinsurance companies at the time, Algemeene Herverzekering Maatschappij and Universeele Reassurantie Maatschappij. ING became majority shareholder in 1974 and the sole owner in 1991, following the acquisition of Victory Reinsurance Company. ING decided in 1993 to run off NRG, stopping the underwriting of new business. Since then, NRG’s life reinsurance subsidiaries were sold and a number of the remaining insurance liabilities were successfully settled.”

The bulletin added that Berkshire Hathaway’s acquisition of NRG “will be made by one of the insurance companies within the Group.” It also indicated that the sale “will result in a capital loss after tax of around €100 million [$146.8 million] for ING in 2007 and an improvement of 47 basis points of the debt/equity ratio of ING Group in 2008. The transaction is subject to regulatory approval and is expected to close in the first half of 2008.”

The acquisition of NRG is the third major investment Berkshire’s Warren Buffett has made in a week. On Christmas Day Berkshire announced that it had reached an agreement to purchase a 60 percent interest in Chicago-based Marmon Holdings, Inc., a private company owned by trusts for the benefit of members of the Pritzker Family. On Friday the 21st, the Wall Street Journal reported that Berkshire would launch a municipal bond insurer in New York, reportedly named Hathaway Assurance Corp.

Source: ING – www.ing.com and Berkshire Hathaway – www.berkshirehathaway.com

Topics Reinsurance