ING Group NV split up its U.S. wealth management business to put the company in position to increase assets under management when the economy eventually recovers, but analysts remain skeptical that anyone in the industry will grow in the near term.

The Dutch company's U.S. business now has four units: retirement services, annuities, insurance, and investments. Previously, retirement services and annuities, its two largest business lines, operated within the wealth management business.

Kathleen Murphy, who had run that business, stepped down Wednesday to accept a position with Fidelity Investments.

ING said it believes that it now has the appropriate alignment for its U.S. wealth management organization, given the dramatic and rapid transformation of the U.S. retirement savings market.

Many companies have revamped their wealth management lines, but analysts said that unlike some competitors, including Fidelity and Legg Mason Inc., ING is realigning, rather than reducing staff and expenses, to deal with the economic turmoil.

Carmen Effron, who heads the Weston, Conn., consulting firm C.F. Effron Co. LLC, said that ING's decision to split up the wealth management business makes sense, given the current climate.

"When a strong leader leaves" a wealth management firm, "it is an opportunity to realign the marketing and sales," she said. "But the piece that is not clear to me" about ING's strategy "is that, since wealth management is going away, who manages the various distributions, and how do they work together?"

ING's realignment probably will not hurt this year's performance and could increase sales if the coordination between the divisions is excellent and they do not become silos, Ms. Effron said.

Another analyst, who asked not to be identified, said everyone in the industry is struggling to figure out what is needed to jump-start business, though he is unsure any of the changes will work. He said he fears ING's plan of using the same people in different roles may not be enough to "stimulate the troops."

Catherine Smith, the chief executive officer of ING's U.S. retirement services unit, said the changes were made with the customers in mind. "The world is changing rapidly, and if you get too big, it's hard to stay nimble and have customer sensitivity."

Bill Lowe, the chief executive of U.S. annuities, said that there has been some convergence in the annuities and retirement operations during the past few years, and that he expects them to continue to work together and leverage synergies.

Ms. Smith said ING has worked to protect its reputation. "We're positioned for the storm as best as we can be."

Rachel Alt-Simmons, a research director in the insurance practice at TowerGroup, an independent research firm owned by MasterCard Inc., said the economic crisis has affected the insurance industry as a whole in a number of ways.

For example, account values in equity-based products have eroded, reducing asset-based fee income, and since providers are on the hook for variable annuity guarantees — riders that protect policyholder principal and income in a down market — the erosion is requiring many insurers to raise capital to support reserves, Ms. Alt-Simmons said.

(Ratings agencies estimate that insurers have needed to increase reserves by $15 billion to $20 billion over the past year.)

Also, the cost of hedging programs used to mitigate the earnings volatility from the variable annuity guarantees has increased dramatically, she said.

In addition, "there's a crisis of confidence in the financial industry and global equity markets," Ms. Alt-Simmons said. "Many potential investors are waiting on the sidelines, impacting new sales. Policyholders aren't behaving the way the actuaries predicted."

As a result of all this, she said, revenue and sales are down for insurers, because certain products are no longer profitable at current pricing levels.

"Some insurers who relied heavily on variable annuity products for profitability and growth are taking a hit," Ms. Alt-Simmons said. "Investors, ratings agencies, and regulators want to ensure that insurers maintain the appropriate capital levels relative to that risk. As a result, several insurers are in the process of purchasing thrifts and reorganizing as bank holding companies," with the hope that they will be able to use the Treasury Department's Troubled Asset Relief Program, "allowing them to raise additional capital."

Decoupling lines of business can allow ING to provide more resources and funding to higher-growth businesses, she said, and as the annuity market retrenches, insurers are looking to increase investments in lower-risk lines where there are still significant opportunities.

Group retirement and benefit offerings present a strong short-term opportunity, Ms. Alt-Simmons said. "I believe that insurers will increasingly look to offer more innovative retirement and benefit solutions for the group market as well."

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