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ING's Plan To Spin Off Insurance Units Raises Branding Concerns
When ING Group bought Aetna's financial services business nine years ago, not many in the Hartford area — or elsewhere in the country, for that matter — had ever heard of the Dutch financial services company.
After tens of millions spent on brand marketing and advertising, the ING name — and its orange lion logo — have now found a prominent place in the country, including in Greater Hartford, where the company employs about 1,870 and sponsors the ING Hartford Marathon.
Could another name change now be in the offing?
On Monday, ING announced that it would split itself in two and spin off its insurance operations — which includes the U.S. retirement services and annuities business headquartered in Windsor — into a new company that would presumably get a new name.
ING said that it is far too early to know what the final result of splitting the Amsterdam-based company will be, including what the new entity might be called. The process could take until the end of 2013 to complete.
"We've invested a lot of money in the brand and it is indeed a well-known name," said Victorina De Boer, an ING spokeswoman in Amsterdam. "This separation is in line with our strategy ... but this is something we have to manage very carefully."
Chris Knopf, chairman and executive creative director at Mintz & Hoke Communications Group in Avon, said that ING has done an extraordinary job in promoting its name in the U.S. market, including the catchy park bench campaign. ING is not his client.
A change now "would be hugely difficult and hugely expensive," Knopf said. "It would be bone-jarring, the cost."
Consider, for example, the color, which is a key component of ING's identity, as yellow is for The Stanley Works or red for Coca-Cola. So much about the branding of the company is tied to the color orange, right down to the wall color in Windsor and the name of the access road, "Orange Way," which leads to the building.
ING's dramatic reorganization comes after a year of cost-cutting and layoffs in the deep recession that sliced about 750 jobs, including 107 in the Hartford area, or about 7 percent of the U.S. workforce of 11,000.
For workers in Windsor, which has the largest number of ING employees in the U.S., De Boer said: "Nothing is going to change for their jobs at this point in time."
It is too soon to know how the change would affect ING's products and services.
Monday's announcement comes as ING seeks to simplify its company after it accepted $15 billion in bailout money from the Dutch government in the financial crisis. In addition to spinning off insurance, ING hopes to raise $11.3 billion through the sale of new shares to repay a large chunk of the bailout.
Like other financial services giants, ING found that balancing banking, insurance and investing took a heavy toll in the recession. Those same challenges are being faced by U.S.-based giants, including Citigroup.
In the 1990s, change in laws mandating the separation of banking, insurance and investment banking led to the rise in financial institutions that could offer one-stop shopping for consumers and businesses. But in recent years, some have begun shedding businesses that once looked attractive but didn't turn out to be as profitable as anticipated.
ING has been shedding assets this year as it sought to raise capital and restructure. It recently announced the sale of part of its North American reinsurance operations to Reinsurance Group of America.
The decision to divide the company means a big promotion for Thomas McInerney, who spent nearly 20 years of his career at Hartford-based Aetna, rising to become president of its financial services business, bought by ING in 2000.
McInerney, who now oversees insurance operations for North and South America, will become chief operating officer for insurance, overseeing the company's global insurance operations. McInerney will add the Benelux countries, central and eastern Europe, Asia Pacific, plus global ING investment management.
"This is a momentous day for us: splitting the bank and insurance is not a decision to be taken lightly," said ING chief executive Jan Hommen, a former board chairman, who took over when his predecessor was replaced. "We're making a decisive move to turn ourself into a simple organization."
In addition, the company said it will sell its U.S. Internet banking arm, ING Direct, by 2013.
•An Associated Press report is included in this story.