Now, capital is king. Divestiture and Deleveraging is the on-going theme in the financial industry. A key point here: "a need for capital ... could be a catalyst to a potential sale of ING Canada, given its NON-CORE position within ING Groep"

purelakewater(Lake)

本文发表在 rolia.net 枫下论坛Per Cosmoyx's question, "why ING sell the Canadian unit?" I would say that non-core business plus divestiture / deleveraging strategy makes ING Canada a great candidate considered by its parent company for sale. And personally believe the capital injection was not enough: more capital is needed along the tough road ahead.

In today's environment, if a non-core business is a good business, the parent wants to sell it for a good price to satisfy capital needs. If it's troubled or burning cash, the parent is eager to get rid of it, like MER's 22 cents fire sale of their mortgage-related assets. No risk-taking. Simply risk-aversion. Period.

We may still to see the worst to come. Today, Sunlife reported the first Q loss since being public, sending stocks down 13%. Insurers as a group may show disappointing earnings in the coming 3-9 months: their investment portfolios are so vulnerable to stock market tanks.

As the article said, many banks are prepared for a potential deal. I know another group of my firm has been pitching a couple of buyers for this opportunity. Disagree that capable buyers in NA are limited. Instead, there are several Canadian deep-pockets for whom it makes sense to buy it and they are capable financially. Kingsway fits in terms of strategic business operations, but seems lack of financial strength as being a relatively small player.

Interesting to watch what's going on these days...更多精彩文章及讨论，请光临枫下论坛 rolia.net

(#1253@52)
Last Updated: 2008-10-21

cosmoyx 同学can answer your question if he is not too busy today. :) -specialday(Joyce); 2008-10-21 (#1248@52)

I don't think he could answer that question except bullshitting, which is extremely risky in this forum. That moron knows nothing about the Insurance sector, especially the Canadian P&C. -cosmoyx(My Way); 2008-10-21 {904} (#1249@52)
Likely the ING crisis is over after it was bailed out by the Dutch capital injection yesterday. That said, there is one sentence brought my attention and confusion:
"ING's steady withdrawal from insurance signals the Canadian unit may well be sold. But the latest capital infusion gives the Dutch parent the strength needed to wait out the credit crunch, and exit when ING executives deem the time is right."

Due to my poor knowledge, ING has two biz lines in Canada: Insurance & ING Direct. I am not aware of any trouble with ING Direct.

For the insurance line, ING & AIG are divesting assets in Asia to those deep-pockets. However, I don't think, currently, there are many ppl in North America have the capability to do a deal with them here. Who could or dare to buy from ING? Kinsway? :)

The last question is: without the capital injection requirement, why ING sell the Canadian unit?

obviously that moron does know something. haha! I guess you're not extremely overwhelmed today, so pls continue contributing... :) -specialday(Joyce); 2008-10-21 (#1250@52)

gotta fill up that 臭皮囊 with some junk foods. -cosmoyx(My Way); 2008-10-21 (#1251@52)

haha, guess we all have to.... -specialday(Joyce); 2008-10-21 (#1252@52)

We should arrange a 30 minutes speech for you this Sunday to give us an update on the current financial market conditions. hehe. :) -specialday(Joyce); 2008-10-21 (#1254@52)

有空帮我录音。 -toysrus(diver); 2008-10-21 (#1255@52)

还是来听现场的吧 -specialday(Joyce); 2008-10-21 (#1257@52)

不行，脑子反应慢，要时间慢慢消化收到的信息。 -toysrus(diver); 2008-10-21 (#1258@52)

cosmoyx同学will be the second guest speaker if he decided to come, haha! :) -specialday(Joyce); 2008-10-21 (#1256@52)

No, not him. He may just BS us and attempt to dupe our clients. Btw, words have been spread that he is going to visit Oakvill and 除草 for somebody. -cosmoyx(My Way); 2008-10-22 (#1263@52)

没胆出来见人就直说，找什么借口。// 敢在太岁头上动土，牛人啊。 -specialday(Joyce); 2008-10-22 (#1264@52)

切，激将法？哥哥我读高一的时候就会用了！ -cosmoyx(My Way); 2008-10-23 {40} (#1270@52)
“靓女，瞧你那熊样？有种跟我看电影去？“

More! Breaking some windows. -cosmoyx(My Way); 2008-10-22 (#1265@52)

诚惶诚恐，紧张得出汗啊。。。speaker 还是请三位版主来做吧。 -purelakewater(Lake); 2008-10-21 (#1259@52)

您就别谦虚了。You will be one of the guest speakers for sure, so please start preparing your speech for Sunday, haha! :) -specialday(Joyce); 2008-10-22 (#1260@52)

Great. This becomes interesting. -cosmoyx(My Way); 2008-10-22 {2047} (#1261@52)
本文发表在 rolia.net 枫下论坛I am not sure how capital-desperate ING is now after their 10 bln Euro tier-1 capital injection (by non-voting securities issuing) and the 600mln US$ sale of its Taiwan Life Insurance biz. After these two moves, ING's economic solvency ratio increases from a previously stated 113% to 175%. Also, there will be no '08 dividend distribution. Likely its capital concern is now off the table.

Or they simply want to exit the Canadian P&C biz? Is that non-core biz? North American market altogether accounts for 40% of ING's 2007 total revenue. Although I don't know by what % does the ING Canada contribute to its parent company's top line, I understand it's the leader in Canadian P&C and hard to build that franchise again.

I know P&C biz has very high tax burden (is that the reason why Ms.Jinx99 showed interest in it? :) ) and ROE. Is it because of the industry cyclicality nature so ING decide to exit at this peak point? Will they come back several years later even if divesting its P&C in Canada?

Or is there any other unknown reason so they want to sell ING Canada now? According to the latest management presentation, they have only $8mln structured investments in their $7bln portfolio, and no exposure to CDO & US Sub-prime. How about CDS? how about exposure to Canadian MBS/ABS? I don't have time digging deep into the notes, anybody got any idea?

Another question is the bidding. For the Kingsway line, I was just joking (their mgmt is relatively conservative and perhaps won't be interested even they have the strength). Who will be the most interested? Competitors like Royal-Sun, Aviva? PE guys? Those Canadian families? To me, likely this will be a majorly cash deal if ING needs capital. That means around $3bln.

The last question is the stock price: the price jumped to $35.60 this Monday, then keep dipping to $34 today. Why didn't those merger arbs pumping the stock price up? Does that mean the market think the deal is dubious?

Anyway, we are so lucky experiencing all these and having fun. Great.更多精彩文章及讨论，请光临枫下论坛 rolia.net

You guys should continue your discussion in the finance forum. I'll transfer it over. :) -specialday(Joyce); 2008-10-22 (#1262@52)
Always a pleasure to see your quality comments. Some thoughts. -purelakewater(Lake); 2008-10-22 {1543} (#1266@52)
本文发表在 rolia.net 枫下论坛1. In terms of whether it's a non-core business, took a quick look at ING's books. The ING Canada June 2008 LTM revenue is C$4317.9 mm and profit C$ 322.7 mm. Given the daily average exchange rate of EUR:CAD=0.664 during that 1-year period, The revenue and profit denominated in EUR would be 2866.6 and 214.2 respectively.

ING Groep NV, the parent, June 2008 LTM revenue is EUR 76,778 mm and profit EUR 8,167 mm. So ING Canada's contribution to it's parent is 3.7% in top line and 2.6% in bottom line. ING Canada is a dominant player in Canada, but appears insignificant when measured on the parent level.

2. Stock price of IIC had several huge swings on both ways in the 6-month chart. Most recent price levels may not be a good indicator of possibility of a deal. For one thing, the rumors has been around for quite long, the price may have priced the news already. Any time something possible appeared in the press, it's old news already. For another, equity market is disfunctional in asset pricing, given the huge volatility lately.

3. It's always good to be skeptical on mgt presentations. If it's true that only $8mln structured investments in their $7bln portfolio, and no exposure to CDO & US Sub-prime, why need $10 bn government injection?

4. There probably won't be a sale process given the market conditions. So volatile, so much uncertainty on everything. Chances that somebody makes such a big commitment are slim.

Really happy to meet you if have a chance. Let's enjoy the historical events going on...更多精彩文章及讨论，请光临枫下论坛 rolia.net

Appreciate for the kind words. -cosmoyx(My Way); 2008-10-23 {968} (#1268@52)
For 1), great job! Now it appears to me that the major Insurance biz of ING Groep in North America came from USA (I got that "40% of revenue from North America" data from the parent company's disclosure). If that's the case, it makes sense.

for 2). makes sense!

For 3). the statement "$8mln structured investments in their $7bln portfolio, and no exposure to CDO & US Sub-prime" is for ING Canada, not the parent company. Maybe the parent company or even the group has some problems so they need a capital infusion? who knows? this is such a environment that ppl don't even believe what they actually see, :)

I had a lot of fun chatting with you, glad to meet you here. Btw, I am not in IBD. Unfortunately I won't attend you guy's weekend gathering due to some other obligations, and perhaps not dare to join our Rolian ladies in the future as I am such a notorious 色狼 in this forum. :) Look forward to discussing more of the market in the future.

@Philadelphia

Now, capital is king. Divestiture and Deleveraging is the on-going theme in the financial industry. A key point here: "a need for capital ... could be a catalyst to a potential sale of ING Canada, given its NON-CORE position within ING Groep"

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