Board-Ansicht
Mix-Ansicht- ING’s problems are starting to resemble Allianz’s - leibovitz, 13.12.2001, 09:44
ING’s problems are starting to resemble Allianz’s
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ING/Allianz: Investing surplus capital in a related business should be a sure way to create value. But this is not always the case. Just look at two of Europe’s biggest insurers, Germany’s Allianz and Holland’s ING. Not only are their businesses starting to resemble each other, now their problems are too. Both have reinvested large amounts of excess capital in acquisitions that have quickly soured.
Take ING first. Last year it sold down long-held stakes in Dutch firms like Fortis and ABN Amro and reinvested the proceeds in the US, buying insurers Aetna and Reliastar for $14bn. Markets cheered this active redeployment of capital, even though it was a risky push abroad, and the rerating pushed ING stock to new highs. Then Allianz followed suit, snapping up Germany’s Dresdner bank for E24bn, unwinding some of its complex web cross-shareholdings en route. Again, investors at first applauded Allianz for selling down stakes over which it had no active control. Unfortunately, neither move now looks quite so astute.
Part of that is due to poor market timing - both banking and life insurance are on the down leg of the business cycle. But that does not mean the idea of redeploying surplus capital is inherently wrong. The most worrying aspect is that each of the deals brought nasty and unexpected surprises: for ING, an unforeseen E600m World Trade Center claim and lower than expected profits; for Allianz, a bank that is performing worse than it first imagined. ING and Allianz now both trade at a 20% discount to fair value, according to Goldman Sachs’ estimates. But such level-pegging may be unfair. At least ING took on businesses it understands, while Allianz has bought a bank whose business it is only just getting to know and whose problems will likely take years to resolve.
Author: John Paul Rathbone
http://www.breakingviews.com/ve.asp?lid=1&sid=3470
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