ING 1st Nine Months Operating Net Up 8.4%, Announces Canadian Pact With Zurich

November 26, 2001

Holland’s ING Group posted a rise in operational net profit of 8.4 percent to 3.304 billion euros ($2.9 billion) compared to the same period last year. It also announced an agreement between ING Canada and Zurich North America Canada to form a strategic alliance aimed at integrating their products, services and distribution networks in the Canadian p/c market.

Net profits from combined insurance operations rose 25.2 percent to € 2.116 billion ($1.86 billion); however ING’s profits from its banking operations slipped by 12.5 percent and assets under management declined by 3.3 percent as compared to last year during the period. The company attributed the fall to the drop in equity values and the downturn in the world economy.

ING noted that that the events of Sept. 11 had a direct impact on its bottom line, especially the expected claims at its ReliaStar subsidiary. ING estimates gross losses at around € 600 million ($ 526 million), but expects to recover about $88 million of that from its reinsurers.

The losses at ReliaStar prompted ING to create a catastrophe reserve of € 275 million ($242 million) plus taking a € 75 million ($66 million) charge against the Group’s existing insurance catastrophe provision. It announced that “ING has also decided that ING ReliaStar Re will exit the personal accident catastrophe line as well as the workers’ compensation lines that contributed to the net losses related to Sept. 11.”

The next day ING announced that it had agreed to “acquire Zurich’s Canadian personal and group P&C insurance operations.” The companies will also “leverage their expertise in the commercial and corporate lines, with Zurich renewing the large commercial and corporate policies underwritten by both organizations and ING assuming all other commercial risks.” They’ll also offer “their complete product lines to each other’s distributors and customers.”

When the agreement is completed ING, which currently has a 12 percent market share, and Zurich will have about 15 percent of the Canadian p/c market. The agreement is a good deal more than an alliance. There’ll be one combined source for products from the two companies presented to brokers. Approximately 1000 current Zurich employees will switch to ING.

Barry J. Gilway, President and CEO of Zurich Canada noted in the announcement that, “By consolidating and focusing our capacity in defined segments of the marketplace, we will offer both brokers and consumers increased expertise.”

In further restructuring its Canadian operations Zurich also entered an agreement with Chubb Corp.’s Canadian subsidiary to sell the renewal solicitation rights to the non-automobile portion of Zurich’s “Preeminence” personal insurance book of business. The unit concentrates on policies for high-net-worth individuals in Quebec, Ontario and British Colombia. Chubb Ins. co. of Canada, already the country’s leading provider of p/c insurance in this sector, will offer qualified persons its “Masterpiece” (TM) insurance policy.

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