ING Group: ING announces intention to launch Initial Public Offering of NN
Group and listing on Euronext Amsterdam
NOT FOR PUBLICATION OR DISTRIBUTION IN CANADA, JAPAN OR ANY OTHER
JURISDICTION IN VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION.
ING today confirms the intention to proceed with the Initial Public Offering
(IPO) and listing on Euronext Amsterdam of NN Group N.V., an international
insurance and investment management company offering retirement, life
insurance, non-life insurance, investment management and banking (in the
Netherlands) to its customers across Europe and Japan. The IPO will comprise
existing ordinary shares in NN Group, currently wholly owned by ING.
NN Group highlights
*NN Group is a leading Dutch insurer with a strong European insurance and
investment management footprint and an attractive Japanese business,
including its main business lines Nationale-Nederlanden, ING Insurance
Europe, ING Investment Management and ING Life Japan.
*NN Group maintains a strong balance sheet under a conservative regulatory
environment in the Netherlands.
*NN Group's experienced and diverse leadership team has a clear focus on
earnings improvement and cash generation, strong cost control and
delivering an excellent customer experience.
*NN Group's strategic objectives are to generate capital for its
shareholders and improve earnings. Management aims to achieve these
objectives through NN's transformation programme in the Netherlands,
profitable growth and operating leverage in other segments, and diligent
management of its Japan Closed Block VA segment.
*NN Group's dividend policy is focused on returning cash to shareholders.
NN Group intends to pay a dividend in relation to the second half of 2014
of EUR 175 million, payable in 2015. NN Group envisages a dividend pay-out
policy from 2015 onwards, payable from 2016, of 40-50% of the net
operating result from the ongoing business. In addition, capital generated
in excess of NN Group's capital ambition, which may change over time, is
expected to be returned to shareholders, unless it can be used for any
other appropriate corporate purpose, including investments in value
creating corporate opportunities.
*The intended IPO will consist solely of a secondary offering of a minority
holding of NN Group's existing ordinary shares currently held by ING Group
to institutional and retail investors in the Netherlands and to certain
institutional investors in various other jurisdictions.
*ING will receive the net proceeds of the offering and will retain a
significant majority holding in NN Group after its listing. ING will enter
into customary lock-up arrangements with the underwriters in respect of
the sale of its remaining NN Group shares, subject to certain customary
*Today's announcement is in line with ING's previously announced objective
to divest its insurance and investment management businesses and become a
pure bank. ING intends to divest more than 50% of its shareholding in NN
Group before 31 December 2015 and the remaining shares before 31December
2016, in line with the timeline ING has agreed with the European
*As previously announced, ING agreed with three Asian-based investment
firms, RRJ Capital, Temasek and SeaTown, that they will participate in the
IPO as anchor investors for an aggregate amount of EUR 150 million. The NN
Group shares that these three anchor investors will acquire at the IPO
offer price will not be subject to any lock-up. In addition, ING has
issued mandatory exchangeable subordinated notes to these anchor investors
for an aggregate amount of EUR 1,125 million. These notes will accrue a 4%
coupon, and are mandatorily exchangeable into NN Group shares in three
tranches. The first tranche (an aggregate amount of EUR 450 million) plus
accrued interest will be mandatorily exchanged into NN Group shares upon
the settlement of the IPO at a discount of 1.5% to the IPO offer price.
These shares will be subject to a lock-up for six months.
Ralph Hamers, CEO of ING Group, said:
"Today's announcement signals the launch of the final major transaction in
ING's five year restructuring . With the IPO of NN Group, we will have
substantially completed the repositioning of ING as a pure bank. For NN Group
it is a pivotal step in the journey to become a standalone company. I
congratulate NN Group with the progress they have made in preparing for their
future and in establishing a compelling investment case with a clear roadmap
for shareholder returns."
Lard Friese, vice-chairman of NN Group, said
"We are excited to start this new phase towards our standalone future. NN
Group combines strong market positions both in the Netherlands and in targeted
international growth and cash generating businesses. Our business strategy is
focused on increasing cash and capital generation through efficiency, while
delivering excellent service and products to our customers. We thank our
customers, employees, distribution partners and our shareholder ING for their
ongoing support throughout this period of change. We're proud of the progress
we've made in shaping NN Group. The focus we will have as a standalone company
helps us in our dedication to provide our clients with an excellent experience
and to deliver on our company's business objectives. We are enhancing our
inclusive, international business culture in which we all go the extra mile to
help people secure their financial futures."
NN Groupbusiness overview
NN Group is an insurance and investment management group with a strong,
predominantly European presence in more than 18 countries. NN Group has
leading positions in life and non-life insurance in the Netherlands, a strong
life and pensions presence in a number of other European markets (such as
Poland, Hungary and Romania), a growing position in Turkey and a top-3
position in the Japanese Corporate Owned Life Insurance market. NN Group's
investment management business, ING Investment Management, offers its products
and services globally through offices in several countries across Europe, the
United States, the Middle East and Asia, with the Netherlands as its main
investment management hub. NN Bank offers a range of banking products to
retail customers in the Netherlands, providing diversification and strong
cross selling potential with NN's insurance business in the Netherlands. In
addition, NN Group includes a Japanese Closed Block variable annuities
portfolio which is projected to run-off relatively quickly due to the
short-term maturity profile of the products in the portfolio.
NN Group's operating result (before tax) from ongoing business was EUR 905
million in 2013 with Gross Written Premiums of EUR 9,525 million. Over the
first quarter of 2014, the operating result for the ongoing business of NN
Group was EUR 295 million. Shareholders' equity was EUR 14.7 billion at the
end of the first quarter of 2014. As at 31 March 2014, ING Investment
Management had EUR 168 billion of assets under management.
NN Groupstrategy and targets
NN Group's strategic objectives are to generate capital for its shareholders
and improve earnings. Management seeks to achieve these objectives via
transformation in the Netherlands, profitable growth and operating leverage in
other segments and diligent management of its Japan Closed Block VA, supported
by active risk management which aligns risk appetite with business objectives.
Accordingly, management has set the following targets for NN Group:
*Over time and assuming normal markets, current regulatory framework and no
material special items, NN Group expects to generate free cash available
to shareholders in a range around NN Group's net operating result of the
*Management's aim is to achieve an annual operating result before tax of
the ongoing business growth rate on average of 5-7% in the medium term;
*Management's aim is to reduce administrative expenses in Netherlands Life,
Netherlands Non-life and corporate/holding entities by EUR 200 million by
2016, compared with 2013;
*Management's aim is to increase the net operating return on equity of the
ongoing business (from a pro-forma 7.1% in 2013) in the medium term.
Further information on the strategy, targets and remittances per business
segment is shown in Appendix 1 to this press release, which is also available
on www.ing.com and www.nn-group.com.
NN Groupdividend policy
NN Group's dividend policy is focused on returning cash to shareholders. In
relation to the second half of 2014, NN Group has the intention to pay a
dividend of EUR 175 million, payable in 2015. This dividend payment is
discretionary and not based on the dividend policy that NN Group intends to
apply for 2015 and beyond. For 2015 and beyond, NN Group intends to pay an
ordinary dividend annually in line with its medium to long term financial
performance and envisages an ordinary dividend pay-out ratio of 40-50% of the
net operating result from ongoing business.
In addition, capital generated in excess of NN Group's capital ambition, which
may change over time, is expected to be returned to shareholders, unless it
can be used for any other appropriate corporate purpose, including investments
in value creating corporate opportunities. As to the form in which excess
capital may be distributed to shareholders, NN Group is committed to do so in
a form which is most appropriate and efficient for shareholders at that
specific point in time, such as special dividends or share buy backs.
NN Groupcapital framework
The capital framework for NN Group is based on the capitalisation at its
operating units and the cash capital position at the holding company as well
as overall leverage. Following the EUR 850 million capital injection by ING
Group in May 2014, NN Group is well capitalised within its capital framework.
NN Group used the injected funds to reduce debt owed to ING by EUR 200
million, further strengthen the capital base of NN Life by granting a
perpetual loan of EUR 450 million, and increase the cash capital position in
the holding company, by EUR 200 million. These items are reflected in the
pro-forma numbers below.
The operating units are intended to be managed at their commercial capital
levels, which may change over time, with all surplus capital to be returned to
the holding company, subject to regulatory restrictions. All operating units
are currently adequately capitalized. NN Group's largest operating unit, NN
Life had a pro-forma Solvency I ratio of 251% as at 31 March 2014.
The cash capital position in the holding company aims to cover stress events
and to fund 18 months of holding and interest expenses. On a pro-forma basis,
the holding company cash capital position was EUR 0.9 billion as at 31 March
2014. The leverage and fixed cost coverage ratios will be maintained
consistent with a 'single A' financial strength rating. On a pro-forma basis,
the financial leverage was EUR 3.7 billion and the financial leverage ratio
was 24% as at 31 March 2014.
The capital injection from ING Group and the allowable amount of subordinated
debt that can be considered in the IGD capital base, resulted in a pro-forma
IGD ratio of 264% as at 31 March 2014. The reported IGD ratios of NN Group of
254% at 31 December 2013 and of 249% at 31 March 2014 have been revised to
251% and 245% respectively, to reflect a cap on the amount of allowable
subordinated debt considered in the IGD capital base.
NN Group's pro-forma AFR/EC ratio was 203% as at 31 December 2013. In
connection with the calculation of Solvency II ratios, significant
uncertainties remain in how the final regulations will be applied. It is
expected that NN Group's Solvency II ratio will be lower than the AFR/EC ratio
and that this difference may potentially be significant depending on the final
calibrations. Various management actions will be considered to ensure that NN
Group is prepared for the introduction of Solvency II.
NN Groupembedded value
The NN Group embedded value as at 31 December 2013 was EUR 10.3 billion, of
which the most significant components are the Netherlands Life embedded value
of EUR 5.6 billion and the Insurance Europe embedded value of EUR 3.1 billion.
Adjusted for the EUR 850 million capital injection by ING Group and the EUR
0.4 billion negative impact of the agreement to make ING's defined benefit
pension plan in the Netherlands financially independent, the pro-forma
embedded value would have been approximately EUR 10.7 billion as at 31
December 2013. Further details on embedded value are available in Appendix 2
of this press release, which is also available on www.ing.com and
NN Group is managed by a disciplined, highly motivated and experienced team.
The members of NN Group's senior leadership team have occupied significant and
varied roles in the financial services industry with, on average, over 20
years of experience in the financial services industry. The team comprises a
strong combination of new members and members who have longer-term experience
with NN Group and its current shareholder ING Group, and with a deep knowledge
of the business units. The team has developed NN Group's strategy and is
committed to its execution and implementation going forward.
NN Group recognises the importance of good corporate governance. The governing
bodies will comprise an Executive Board, a Management Board and a Supervisory
Board. The Executive Board is entrusted with the management, the strategy and
the operations of NN Group under the supervision of the Supervisory Board. As
of the date of settlement of the IPO, the Executive Board of NN Group will
comprise of Lard Friese, chairman and chief executive officer, and Delfin
Rueda Arroyo, chief financial officer.
The Management Board is the body entrusted with the day-to-day management of
NN Group and the overall strategic direction of the company. In the following
table the composition of the Management Board as at the date of settlement of
the IPO is shown.
NN Group Management Board
Name Position Age
Lard Friese Chairman, Chief executive officer (CEO) 51
Delfin Rueda Chief financial officer (CFO) 50
Stan Beckers Chief executive officer ING Investment 62
Doug Caldwell Chief risk officer (CRO) 44
David Knibbe Chief executive officer Netherlands 43
Dorothee van Vredenburch Chief change and organization (CCO) 49
Vacancy Chief executive officer International -
^1 Mr. Knibbe currently is Chief executive officer Insurance Europe. His
position as Chief executive officer Netherlands Insurance will commence on 1
The Supervisory Board is responsible for supervising the conduct of the
Executive Board and the general course of affairs within NN Group and
providing advice to the Executive Board. The Supervisory Board will consist of
the following members as at the date of settlement of the IPO:
NN Group Supervisory Board
Name Position Age Date of appointment date
Jan Holsboer Chairman 67 1 March 2014 2016
Yvonne van Rooy Member 62 1 March 2014 2016
Ralph Hamers Member 48 Settlement Date 2017
Patrick Flynn Member 53 Settlement Date 2017
Wilfred Nagel Member 57 Settlement Date 2017
Heijo Hauser Member 58 Settlement Date 2018
Hans Schoen Member 59 Settlement Date 2018
Jan Holsboer and Yvonne van Rooy are currently members of the Supervisory
Board of ING Group. As a result of their appointment to the Supervisory Board
of NN Group, they will step down from the Supervisory Board of ING Group as of
the date of settlement of the IPO. The appointment of the members of the NN
Group Supervisory Board has been approved by the Dutch Central Bank (DNB).
Further offering details
Before the IPO, NN Group will issue warrants to ING as the selling
shareholder, which will be exercisable for a number of shares in NN Group up
to 9.99% of the outstanding shares at IPO and at an exercise price equal to
200% of the offer price. The warrants will have a 10 year maturity and will be
settled in new shares against a cash payment. The warrants will be freely
transferable only after ING's lock-up period as selling shareholder has
expired. The warrants will be exercisable as of 1 year after the IPO. However,
while ING holds the warrants it will undertake not to exercise any warrants
until the third anniversary of the IPO. The warrants will include certain
customary anti-dilution provisions which provide for adjustments of both the
exercise price and the number of NN Group shares to which the warrant holder
is entitled to in case of corporate events which lead to an immediate impact
on the share price.
ING Group and NN Group have appointed J.P. Morgan, Morgan Stanley, ING Bank
and Deutsche Bank as joint global co-ordinators for the IPO. BNP Paribas,
Citigroup, Commerzbank, Credit Suisse and Nomura as well as the joint global
coordinators are acting as the joint bookrunners for the IPO. Furthermore, ABN
Amro, HSBC and RBC Capital Markets are the joint lead managers, and Keefe,
Bruyette & Woods and Rabobank International are the senior co-lead managers
for the IPO.
Full information about the offering will be included in the prospectus
relating to the IPO. The prospectus will be published after it has been
approved by the Netherlands Authority for the Financial Markets (AFM). This
approval process is ongoing. Once approved by the AFM, the prospectus will be
published and made available to the public at the start of the offering
period, subject to securities law restrictions in certain jurisdictions. The
approval of the prospectus by the AFM shall not constitute an approval of the
soundness of the transactions proposed to investors.
INFORMATION FOR EDITORS
Ralph Hamers, CEO of ING Group and Lard Friese, Vice-Chairman of NN Group will
discuss the announcements made today at a press conference at 10:00 CET.
Journalists are invited to join the conference at ING House, Amstelveenseweg
500, Amsterdam. Journalists can also join in the listen-only mode at +31 20
531 5871 or watch the live webcast of the press conference.
Photos of NN Group are available at www.flickr.com/photos/nn-group. For
further information on NN Group, please visit www.nn-group.com. Photos of ING
operations, buildings and its executives are available for download at
www.flickr.com/photos/inggroup. Footage (B-roll) of ING is available via
www.videobankonline.com, or can be requested by emailing
ING Group Press enquiries ING Group Investor enquiries
Victorina de Boer ING Group Investor Relations
+31 20 576 6373 +31 20 576 6396
NN Group Press enquiries NN Group Investor enquiries
Ingeborg Klunder Karin de Jong
+31 20 541 6525 +31 20 541 5464
ING is a global financial institution of Dutch origin offering services
through its operating companies ING Bank and NN Group. The purpose of ING Bank
is empowering people to stay a step ahead in life and in business. ING Bank's
63,000 employees offer retail and commercial banking services to customers in
over 40 countries.
ING Group shares are listed (in the form of depositary receipts) on the
exchanges of Amsterdam (INGA NA/ING.AS), Brussels and on the New York Stock
Exchange (ADRs: ING US/ING.N). Sustainability forms an integral part of ING's
corporate strategy, which is evidenced by ING being included in the Dow Jones
Sustainability Index (Europe and World) the FTS4Good index and the Euronext
Vigeo Europe 120 index.
NN GROUP PROFILE
NN Group is an insurance and investment management company with a strong,
predominantly European presence in more than 18 countries. With over 12,000
employees the group offers retirement services, insurance, investments and
banking. NN Group includes Nationale-Nederlanden, ING Insurance Europe, ING
Investment Management and ING Life Japan, which are jointly preparing to
become an independent, standalone company, separate from ING Group. NN Group
is currently a fully-owned subsidiary of ING Group.
IMPORTANT LEGAL INFORMATION
Certain of the statements contained in this document are not historical facts,
including, without limitation, certain statements made of future expectations
and other forward-looking statements that are based on management's current
views and assumptions and involve known and unknown risks and uncertainties
that could cause actual results, performance or events to differ materially
from those expressed or implied in such statements. Actual results,
performance or events may differ materially from those in such statements due
to, without limitation: (1) changes in general economic conditions, in
particular economic conditions in ING's core markets, (2) changes in
performance of financial markets, including developing markets, (3)
consequences of a potential (partial) break-up of the euro, (4) the
implementation of ING's restructuring plan to separate banking and insurance
operations, (5) changes in the availability of, and costs associated with,
sources of liquidity such as interbank funding, as well as conditions in the
credit markets generally, including changes in borrower and counterparty
creditworthiness, (6) the frequency and severity of insured loss events, (7)
changes affecting mortality and morbidity levels and trends, (8) changes
affecting persistency levels, (9) changes affecting interest rate levels, (10)
changes affecting currency exchange rates, (11) changes in investor, customer
and policyholder behaviour, (12) changes in general competitive factors, (13)
changes in laws and regulations, (14) changes in the policies of governments
and/or regulatory authorities, (15) conclusions with regard to purchase
accounting assumptions and methodologies, (16) changes in ownership that could
affect the future availability to us of net operating loss, net capital and
built-in loss carry forwards, (17) changes in credit-ratings, (18) ING's
ability to achieve projected operational synergies and (19) the other risks
and uncertainties detailed in the risk factors section contained in the most
recent annual report of ING Groep N.V.
Any forward-looking statements made by or on behalf of ING speak only as of
the date they are made, and, ING assumes no obligation to publicly update or
revise any forward-looking statements, whether as a result of new information
or for any other reason. This document does not constitute an offer to sell,
or a solicitation of an offer to buy, any securities.
These materials are not for release, distribution or publication, whether
directly or indirectly and whether in whole or in part, into or in Canada or
Japan or any (other) jurisdiction where to do so would constitute a violation
of the relevant laws of such jurisdiction.
These materials are for information purposes only and are not intended to
constitute, and should not be construed as, an offer to sell or a solicitation
of any offer to buy the Shares of NN Group in Canada or Japan or in any other
jurisdiction in which such offer, solicitation or sale would be unlawful prior
to registration, exemption from registration or qualification under the
securities laws of such jurisdiction.
The Shares are not and will not be registered under the U.S. Securities Act of
1933, as amended (the U.S. Securities Act) and will also not be registered
with any authority competent with respect to securities in any state or other
jurisdiction of the United States of America. The Shares may not be offered or
sold in the United States of America absent registration or an applicable
exemption from the registration requirements under the U.S. Securities Act.
There will be no public offering of Shares in the United States. Any Shares
sold in the United States will be sold only to "qualified institutional
buyers" (as defined in Rule 144A under the U.S. Securities Act) in reliance on
In the United Kingdom, this document and any other materials in relation to
the Shares is only being distributed to, and is only directed at, and any
investment or investment activity to which this document relates is available
only to, and will be engaged in only with, "qualified investors" (as defined
in section 86(7) of the Financial Services and Markets Act 2000) and who are
(i) persons having professional experience in matters relating to investments
who fall within the definition of "investment professionals" in Article 19(5)
of the Financial Services and Markets Act 2000 (Financial Promotion) Order
2005 (the "Order"); or (ii) high net worth entities falling within Article
49(2)(a) to (d) of the Order (all such persons together being referred to as
"relevant persons"). Persons who are not relevant persons should not take any
action on the basis of this document and should not act or rely on it.
In Australia this document is for distribution only to professional or
sophisticated investors (i.e. those persons to whom offers can be made without
a disclosure document, in accordance with sections 708(8) and (11) of the
Corporations Act 2001 (Cth)) who are "wholesale clients" within the meaning of
section 761G of the Corporations Act 2001 (Cth). The entity receiving this
document represents and warrants that if it is in Australia it is a wholesale
client and either a professional or sophisticated investor and that it will
not distribute this document to any person outside Australia. This document
is not supplied in connection with any offering of Shares. A decision whether
to subscribe for the Shares should be made on the basis of the information in
the relevant disclosure document which will be issued by NN Group.
NN Group has not authorised any offer to the public of Shares in any Member
State of the European Economic Area other than the Netherlands. With respect
to any Member State of the European Economic Area, other than the Netherlands,
and which has implemented the Prospectus Directive (each a Relevant Member
State), no action has been undertaken or will be undertaken to make an offer
to the public of Shares requiring publication of a prospectus in any Relevant
Member State. As a result, the Shares may only be offered in Relevant Member
States (i) to any legal entity which is a qualified investor as defined in the
Prospectus Directive; or (ii) in any other circumstances falling within
Article 3(2) of the Prospectus Directive. For the purpose of this paragraph,
the expression "offer of Shares to the public" means the communication in any
form and by any means of sufficient information on the terms of the offer and
the Shares to be offered so as to enable the investor to decide to exercise,
purchase or subscribe for the Shares, as the same may be varied in that Member
State by any measure implementing the Prospectus Directive in that Member
State and the expression "Prospectus Directive" means Directive 2003/71/EC
(and amendments thereto, including Directive 2010/73/EU, to the extent
implemented in the Relevant Member State), and includes any relevant
implementing measure in the Relevant Member State.
No action has been taken by NN Group that would permit an offer of Shares or
the possession or distribution of these materials or any other offering or
publicity material relating to such Shares in any jurisdiction where action
for that purpose is required.
The release, publication or distribution of these materials in certain
jurisdictions may be restricted by law and therefore persons in such
jurisdictions into which they are released, published or distributed, should
inform themselves about, and observe, such restrictions.
This announcement does not constitute a prospectus. An offer to acquire Shares
pursuant to a proposed offering will be made, and any investor should make his
investment, solely on the basis of information that will be contained in a
prospectus to be made generally available in the Netherlands in connection
with such offering. When made generally available, copies of such prospectus
may be obtained at no cost from NN Group or through the website of NN Group.
J.P. Morgan, Morgan Stanley, ING Bank and Deutsche Bank and the other
managers named herein act exclusively for ING Group and NN Group and no-one
else in connection with any offering of Shares and will not be responsible to
anyone other than ING Group for providing the protections afforded to their
respective customers or for providing advice in relation to any offering or
any transaction or arrangement referred to herein.
Appendices to ING and NN Group Press Release of 5 June 2014 (PDF)
PDF version of press release
This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf
of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for
the content, accuracy and originality of the information contained therein.
Source: ING Group via Globenewswire
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