A.M. Best Co. has assigned a debt rating of “bbb” to the recent issuance of $1.0 billion 2.90% five-year senior unsecured notes of ING U.S., Inc. (ING U.S.) (headquartered in New York, NY). ING U.S. is currently the holding company for the U.S. operations of ING Groep N.V. (ING Group) (Netherlands) (NYSE: ING). The assigned outlook is stable.
The rating recognizes ING U.S.’ strong market position in the life insurance and retirement markets, profitable operating results and sound level of risk-adjusted capital. Although historically supported by its European parent, A.M. Best notes that ING Group has filed with the SEC for an initial public offering (IPO) of its U.S.-based retirement, insurance and investment operations during 2013.
The assigned rating also reflects A.M. Best’s expected completion of this process, which will demonstrate ING U.S.’ ability to successfully execute its capital plans. The new senior notes, together with the $850 million 5.5% 10-year notes issued in July 2012 and proceeds from the anticipated IPO, should facilitate ING U.S. achieving its targeted independent capital structure. As such, ING U.S.’ financial leverage and interest coverage are expected to fall within A.M. Best’s guidelines for its current ratings. The proceeds from the new senior notes will be used for general corporate purposes, including the repayment of outstanding borrowings.
Partially offsetting these positive rating factors is ING U.S.’ ongoing exposure to both equity markets and interest rates through product guarantees, spread compression as well as its material holdings of below investment grade structured securities and commercial mortgage loans. Additionally, the inherent uncertainty surrounding the timing and execution of the IPO process could negatively affect the group’s business profile with respect to products, customers, distribution and market positions, in addition to having an unfavorable effect on leverage and interest coverage metrics.The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology. Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com. Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.