Uncertainty about the future of ING’s Latin American operations has ended. The Dutch group has agreed to sell the bulk of its pensions, life insurance and investment management operations to Colombian investment holding company Grupo de Inversiones Suramericana (Gruposura) for a cash total of €2.62bn ($3.74bn). Gruposura will also assume €65m in debt.

In ING’s restructuring strategy, which centres on separating its banking and insurance operations, it has made it clear that Latin America’s insurance market does not form part of its plans.

Subject to market conditions, ING intends to embark on an initial public offer (IPO) of its insurance operations in the US and another IPO of its operations in Europe and the Asia-Pacific region in 2012.

Included in the transaction with Gruposura are ING’s mandatory pension and voluntary savings businesses in Chile, Colombia, Mexico, Uruguay; its 80% stake in AFP Integra, Peru’s second-largest private pension fund; its life insurance businesses in Chile and Peru; and its 33.7% stake in life insurer InVita Seguros de Vida in Peru. The transaction also includes the local investment management capabilities in these five countries.

Not included in the transaction is ING’s 36% stake in Brazilian insurer SulAmérica which ING noted it will seek to divest separately. SulAmérica is Brazil’s largest independent insurance group and operates in the insurance, private pension and asset management markets. ING’s other interests in Latin America are commercial banking activities in Mexico, Brazil and Argentina, and mortgage and leasing businesses in Mexico.

According to ING, the transaction with Gruposura values the Latin American insurance and investment management business being sold at 16 times the estimated 2011 earnings and 1.8 times the book value at €1.49bn, both on an International Financial Reporting Standard (IFRS) basis. ING expects the sale to deliver a net transaction result of about €1bn.

ING reported that the businesses being sold serve a combined total of more than 10m clients through some 7,000 employees, and have assets under management of €49bn and leadership positions in all of the countries and markets in which they operate. In 2010, the businesses earned €192m in net income from revenue of about €670m on an IFRS basis.

Gruposura’s primary interests are in the financial services market in Latin America. Its subsidiaries include Colombia’s largest insurance holding company Suramericana which has interests in insurers in the life, general and health sectors. Gruposura has an 81.1% stake in Suramericana with the balance held by Munich Re.

Suramericana’s life insurance interests are through Colombia’s largest life company Life Sura which reported written premium income of $162.2m in its year to 31 March 2011. This gave it a market share of 26.4%, well ahead of its closest rival Bolivar, which had a 12.3% market share, and third-placed Colseguros with a 9.2% share.

In Colombia’s general insurance sector, Suramericana’s P&C Sura unit is also the leading player. P&C Sura reported a 15.6% market share as at 31 March 2011 while its nearest rival Colseguros held an 8.9% market share followed by Liberty with an 8.4% share.

In Colombia, Gruposura also has a 48.2% stake in mandatory and voluntary pension management company Proteccion. As at 31 March, Proteccion reported total pension fund assets of $16.1bn. In addition to its insurance and pension interests in Colombia, Gruposura has a 49% stake in the country’s largest bank, Bancolombia which serves almost sevenm customers.

ING noted that following the closing of the deal, Gruposura will be a leading Latin American savings and investments group with about $120bn in assets under management. The combined businesses will serve more than 25m customers in eight countries.