Funds management giant ING is selling its half share in QBE Mercantile Mutual as well as Mercantile Mutual Insurance (Workers’ Compensation) to QBE. The deal had long been rumoured, with QBE CEO Frank O’Halloran keen to secure a greater slice of the Australian general insurance market.

The sale will go ahead subject to regulatory approval, and QBE will pay $740 million plus another $25 million in 2007. The deal includes $1 billion in cash and liquid investments, and $620 million in net insurance liabilities. Mr O’Halloran is expecting gross written premiums of $650 million in a full year.

Alexander Rinnooy Kan, ING’s Asia Pacific Chairman, says selling its non-core businesses will allow the group to expand its life, funds management, banking and real estate businesses.

“We remain committed to our extensive business interests in Australia and will continue to look for opportunities to build the market shares and returns of these businesses,” he said.

National broking network Austbrokers Holdings – which is 50% owned by ING – says it won’t be affected by the sale. Austbrokers spokesman Greg McDonald told Sunrise Exchange News: “We have nothing to say about this. Austbrokers has nothing to do with QBE Mercantile Mutual and we’re not included in the sale.”

Which doesn’t answer the question at all. Expect news of a new arrangement in the near future.

Peter Smyth, regional General Manager of ING Asia Pacific, says although QBEMM has had a “strong record of profitability… general insurance is no longer a core business”.

“Having secured a good price for the transaction, we are now confident this is an appropriate time to exit this business,” he said.

Mr O’Halloran said in a statement: “We are confident the acquisition of ING’s 50% interest in the Australian joint venture, together with the 30% share of QBE’s workers’ compensation business, will be earnings-per-share positive from year one.”