| ||
| ||
| ||
 |
|
|
|||||||||||||||||||||||||||||||||||||||||||||
ING dives to shock loss
AMSTERDAM, The Netherlands (Reuters) -- ING, Europe's biggest insurer, stunned investors on Monday with a net loss of 9.6 billion euros ($10.4 billion) for 2002 under U.S. accounting standards after a huge goodwill charge, knocking its shares. ING said a 13.1 billion-euro after tax goodwill impairment charge it was forced to take last year would send it deep into the red, compared with a 4.3 billion euros net profit it posted last month under Dutch accounting principles. While ING labelled this an accounting change, shares slipped five percent and analysts said the size of the writedown called the profitability of the group's recently acquired operations into question because it valued them at substantially less than ING had thought. They were puzzled as to why ING did not announce this when it reported its 2002 results on February 21. Under Dutch GAAP rules, goodwill from acquisitions was valued at 16.6 billion euros on December 31, 2001. From the start of 2002 ING reported its accounts according to U.S. GAAP and this, combined with declining markets, forced the large charge. By 0930 GMT ING's shares were 6.4 percent down at 10.93 euros, underperforming the DJ Stoxx Insurance index and dragging other European insurance stocks lower. ING fell to a session low of 10.58 euros. "The fact that they would have to impair goodwill was not unthinkable but the size of this writedown calls into question the future profitability of certain of ING's activities," said F.van Lanschot Bankiers analyst Bart Horsten. Activities affected included ING's U.S. units Aetna and Reliastar, as well as certain Latin American and Asian activities, Horsten said. ING could not immediately say which businesses were affected by the writedown. Hedging limits solvency declineThe banking and insurance group said in a statement slumping equity markets had resulted in its equity revaluation reserve slipping to a negative 500 million euros on March 14 from a positive 600 million euros at the end of last year. "ING Group's first-quarter 2003 results will only be affected if the revaluation reserve is negative on March 31 2003," the bancassurer said in a statement. ING also said the solvency of its key insurance arm had fallen to 157 percent on March 10 from 169 percent at the end of December after falling stock markets eroded its available capital. But the solvency level -- the ability of insurers to pay out future claims on policies -- is still well above the 100 percent minimum required by regulators. Investors have grown increasingly anxious about the solvency of insurers to gauge whether they can withstand further financial shocks. Weak share prices have cut the value of insurers' equity investments and insurance companies worldwide are watching their profits shrink and their capital bases slim. Analysts said the fact that ING had hedged some of its stock market investments had limited the fall in solvency. "It would have fallen a lot further if it hadn't been for the hedging deals. It's still adequate but it is nearing the 150 percent internal target that ING has," Horsten said. ING boosted its solvency by about $1.7 billion late last year but some analysts have wondered whether it will be forced to raise more capital to boost its solvency and maintain its credit ratings. ING said the capital adequacy, or the level of capital over and above the regulatory minimum, of its smaller banking unit was unchanged with a Tier-One ratio of 7.31 percent. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
|
|
|||||||||||||||||||||||||||||||||||||||||||||
|
|
