Insurer NN weighs up sale of €300bn asset management unit
Dutch group has come under pressure from activist hedge fund Elliott
Dutch insurer NN Group is considering a sale of its asset management division, after coming under pressure from activist hedge fund Elliott Management last year to improve returns and streamline the group.
The insurer, which is based in The Hague, said on Monday it was considering “a broad range of options” including a merger, joint venture or a partial divestment for NN Investment Partners, which has about €300bn in assets under management.
The review was intended to speed up growth at the investment arm, NN said. The company will focus on how the asset manager can “continue to provide the best investment offering and service to NN’s insurance business and asset management clients in a rapidly evolving industry,” it added.
NN said it was “committed to conducting this process with the utmost diligence in the interests of all stakeholders, including customers, employees and shareholders.”
Elliott disclosed a 3 per cent stake in NN last year, citing a “material and sustainable value-creation opportunity”. Its proposals included cutting costs, shifting investments and selling non-core businesses.
NN later met some of these demands, but it stopped short of promising non-core disposals such as a sale of its Japanese operation. Elliott declined to comment on NN’s announcement on Monday.
A need for scale is the driving force behind the review of the asset management business, according to analysts at Citi. “The outcome of the review may also provide read-across for other insurers with asset management divisions that could benefit from further scale,” they added.
Asset management accounts for about 8 per cent of NN’s full-year operating profit, Citi said, but it was a “key component” of the insurer’s defined contribution pension products.
NN Group, which has a market capitalisation of more than €13bn, was spun out of Dutch bank ING after the 2008 financial crisis. Its shares were up slightly at €41.64 in Monday morning trading.
The company’s communications with investors have also come in for criticism from Elliott, which said last year that NN’s undervaluation partly reflected its “deeply flawed approach to investor communications, marked by a lack of transparency and clarity, which in turn exacerbate the company’s complexity”.
At the time, NN defended its “active investor-relations programme”.