12:00PM New York, 5:00PM London – ING has agreed to sell its reinsurance division in the U.S. to Berkshire Hathaway Inc.

ING Group announced today that it has reached an agreement with Berkshire Hathaway Group to sell its reinsurance unit NRG N.V. for approximately 300 million euros or $440 million.

The sale is part of ING’s strategy to focus on its core insurance, banking and asset management businesses. The sale will help ING to free up capital that will be tied up in potential long term claims that may arise from asbestos and tobacco liabilities.

NRG was established in 1968 as Nederlandse Reassurantie Groep, as a result of the merger of the two main Dutch reinsurance companies at the time. ING became majority shareholder in 1974 and the sole owner in 1991, following the acquisition of Victory Reinsurance Company.

ING decided in 1993 to run off NRG, stopping the underwriting of new business. ING suffered heavy losses after Exxon Valdez oil spill in 1989.

Since then, NRG’s life reinsurance subsidiaries were sold and a number of the remaining insurance liabilities were successfully settled.

The acquisition will be made by one of the insurance companies within the Berkshire Hathaway Group. The sale for approximately 300 million euros will result in a capital loss after tax of around 100 million euros for ING in 2007 and an improvement of 47 basis points of the debt to equity ratio of ING Group in 2008.

The transaction is subject to regulatory approval and is expected to close in the first half of 2008.


11:00AM New York – Early rally in U.S. averages fades as trading enters in the second hour.

Dow Jones Industrial Average rose 35.61 to 13,394.32, Nasdaq increased 9.45 to 2,686.24, and S&P 500 gained 5.07 to 1,481.34.

November new home sales decline of 9% was the steepest level in sixteen years. The new home sales declined to a seasonally adjusted rate of 647,000. The Commerce Department also revised the October new home sales rise to 1.7% at annual rate of 711,000 from 728,000.

November sales fell 34.4% from a year ago in November, second largest decline after 35.3% plunge in 1991.

The median sales price of new houses sold in November 2007 was $239,100; the average sales price was $293,300. The seasonally adjusted estimate of new houses for sale at the end of November was 505,000. This represents a supply of 9.3 months at the current sales rate.

Home builders fell sharply after the report. D R Horton dropped 53 cents to $13.13, Toll Brothers lost 39 cents to $19.95, and Lennar declined 51 cents to $17.19.

Bank stocks after one hour of trading declined on the talks of asset sale from Merrill Lynch, HSBC, and Citigroup. Citigroup is likely to face another round of debt losses as much as$10 billion in the current quarter. The bank may sell its non-strategic assets including stake in Brazilian credit card processor, student and auto loan operations, and branch networks in emerging markets.

Citigroup (C: chart) fell 7 cents to $29.50, Merrill Lynch declined 24 cents to $52.96, and HSBC lost 45 cents to $83.62.

Berkshire Hathaway has agreed to buy a reinsurance company from ING for $433 million. Berkshire also plans to start a new bond reinsurance companies to insure bonds issued by state, municipal agencies, and other state government agencies. The current malaise in the credit market has hurt the rating agencies stocks including Ambac and MBIA.

MBIA (MBI: chart) dropped $3.23 or 14.6% to $19.02 and Ambac lost $4.09 or 14.4%, to $24.96.

Genesco (GCO: chart) jumped 14% or $4.57 to $37.63 after a judge ruled that Finish Line must complete its takeover offer for the company. The judge said that Finish Line and its financial advisor should have factored current earnings troubles at Genesco and should not be used as a reason not to go ahead with the offer.