ING buys Club Life
ING has fulfilled its long-held ambition of entering the life insurance market with the announcement it is to purchase Club Life for about $15 million.
Tuesday, December 16th 2003, 9:28AM
Under the terms of the deal ING will buy 100% of the company then allow the minorities to buy back into the business. Details of that offer can’t be released until a prospectus is issued, however the offer will only be made to existing shareholders.
Club Life founder and chief executive Naomi Ballantyne says the business will be called ING Life and she is staying on as chief executive.
“I didn’t start this business to get out of it quickly,” she says. “I’m too young to retire.”
She says leaving and establishing a new company isn’t an option partly because the life insurance market has changed significantly.
“There isn’t the opportunity to do another Sovereign,” she says.
She says to make real value out of Club Life she has to stick with it for the long term.
ING has been wanting to get move from being a funds management company to a broader financial services company for a number of years. This deal finally achieves that goal.
The deal came about as Club Life needed more capital to grow, however Hellaby was reluctant to supply more money as its strategy is to invest in companies that provide good dividend streams. Consequently it was looking to either sell its stake or find a new institutional investor.
Ballantyne says the ING deal is a good one for Club Life. ING offers the company distribution, plus it has global clout that will help the business.
Club Life will have better leverage with reinsurers as part of a large global bank, plus it will get access to international research in the insurance market.
Ballantyne isn’t too worried that the Club Life name disappears because it had “no consumer awareness”. What’s more the business didn’t have the resources to build the brand.
Hellaby Holdings chief executive David Houldsworth says the company was pleased to have been associated with Club Life during its start-up phase and was proud of the substantial growth the company had achieved over the past two years.
However, a rapidly growing life insurance business requires significant ongoing capital injections and this is inconsistent with Hellaby's current philosophy of investing in businesses that generate positive cash flows.
ING is one of the world's largest, investment, banking and insurance companies and Hellaby believes that Club Life will benefit significantly from an association with a company that has a long-term commitment to the life insurance industry.
The sale of its shareholding in Club Life and the repayment of associated loans will generate cash of $11.5 million to Hellaby Holdings but should have no material impact on the group's current year earnings.
Earlier story
Club Life looking for more capital to grow
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