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Rating Action:

Moody's affirms ING US' ratings; rates hybrid Ba1 (hyb); stable outlook

14 May 2013

Approximately $750 million of securities rated

New York, May 14, 2013 -- Moody's Investors Service has affirmed the Baa3 senior debt rating of ING U.S. Inc. (ING US; guaranteed by Lion Connecticut Holdings, Inc. - LCH, issuer rating at Baa3, stable outlook) with a stable outlook. The A3 insurance financial strength (IFS) ratings of the life insurance subsidiaries of ING US were also affirmed with a stable outlook, as were other affiliated ratings (see complete listing, below). The Ba1(hyb) preferred stock rating of Equitable of Iowa Companies Capital Trust II (Equitable of Iowa II) was also affirmed, but its outlook was changed to stable from positive. Separately, Moody's assigned a Ba1(hyb) rating to ING US' $750 million junior subordinated debentures sold under a 144A private placement, subject to receipt and review of final documentation. The outlook on the notes is stable, in line with other ING US ratings. ING US is the majority-owned U.S. life insurance group of the Netherlands-based banking concern, ING Groep, N.V. (ING NV, senior debt at A3, negative outlook). ING US and affiliate debt ratings that are guaranteed by ING Groep, N.V., and ING Verzekeringen, N.V. (senior debt at Baa2, developing outlook) were not affected by this rating action.

RATINGS RATIONALE

Moody's said that the rating affirmations were based on the established positions of ING US' life insurance subsidiaries in the U.S. retirement services and life insurance markets, particularly in the specialized 403(b) and 457 pension sectors, where the company has leading market shares. The affirmation also reflects the company's recent success in completing its initial public offering (IPO), including a primary offering for ING US of $600 million and an approximate $700 million secondary offering by ING NV, together with various regulatory dividend approvals. The timely completion of its IPO, which moves the company a step closer to full independence, together with on-going debt restructuring, strengthen ING US' financial profile and are factored into Moody's expectations for the ratings and stable outlook.

Commenting on ING US' financial profile, Moody's Vice President Laura Bazer said, "Both the $600 million of retained IPO proceeds, and certain related regulatory approvals that will ease dividend payments to the holding companies, improve ING US' overall financial flexibility." Bazer added, "In total, approximately $1.4 billion in approved extraordinary dividend payments and some of the IPO proceeds will be used by ING US to improve the capitalization of a captive reinsurer, which, in Moody's view, was weak." The rating agency noted, however, that while the combined NAIC Risk-Based Capital (RBC) ratio of ING US' insurance subsidiaries after the transaction is expected to remain strong (i.e., over 400%), their ordinary dividend capacity and therefore, ING US' cash coverage metrics, remain weak for the company's rating level.

Commenting on the assignment of a Ba1 (hyb) rating to ING US' hybrid issuance, the rating agency said it was based on an unconditional and irrevocable guarantee by LCH on a junior subordinated basis. Because of the structural subordination of ING US' obligations to those of LCH, ING US' Ba1 junior subordinated debt rating would be a notch lower (Ba2) without the LCH guarantee. LCH is the direct owner of most of ING US' life insurance subsidiaries. Moody's noted that because ING US plans to use the debt proceeds to retire like amounts of existing debt, its leverage metrics -- in the 20-25% range at March 31, 2013 -- were not expected to be affected.

Commenting on Equitable of Iowa II, Moody's said that its ratings and outlook had been disassociated with the ratings of ING US, reflecting Moody's concerns about the possible EU-required interest deferral during the financial crisis. With the financial crisis behind it and ING US' successful recent IPO, the possibility of mandatory regulatory interest deferral on these securities has receded. The Ba1 (hyb) rating and stable outlook reflect a pre-existing guarantee from LCH and normal notching from the ING US' guaranteed senior debt.

Moody's stated that the following factors could lead to an upgrade of ING US' ratings: completion of the Dutch parent company, ING Groep NV's sale of its remaining ownership of ING US without deterioration to business, profitability, or other financial metrics; reduction in earnings volatility, resulting in ROC's consistently at 6% or better; RBC ratio consistently at or above 375%, while maintaining good capital adequacy at offshore captives; stand-alone cash coverage of over 3x, and U.S. GAAP earnings coverage of at least 5x, each on a consistent basis.

Conversely, ING US' ratings could go down as a result of the following factors: ROC's consistently below 4%; consolidated RBC ratio falling below 325% (including the captive); adjusted financial leverage of greater than 30%; cash coverage of less than 1.5x; US GAAP earnings coverage of below 2x.

Affirmations with Stable outlook:

..Issuer: ING U.S., Inc.

....Issuer Rating, Affirmed Baa3

....Senior Unsecured, Affirmed Baa3

..Issuer: ING Security Life Institutional Funding

....Senior Secured Medium-Term Note Program, Affirmed (P)A3

....Senior Secured, Affirmed A3

..ReliaStar Life Insurance Company

....Insurance Financial Strength Rating, Affirmed A3

..ReliaStar Life Insurance Company of New York

....Insurance Financial Strength Rating, Affirmed A3

..Issuer: ING USA Annuity and Life Insurance Company

....Insurance Financial Strength Rating, Affirmed A3

....Insurance Financial Strength Rating, Affirmed P-2

..Issuer: ING USA Global Funding Trust 3

....Senior Secured, Affirmed A3

..Issuer: Security Life of Denver Insurance Company

....Insurance Financial Strength Rating, Affirmed A3

....Insurance Financial Strength Rating, Affirmed P-2

..Issuer: ING Life Insurance & Annuity Company

....Insurance Financial Strength Rating, Affirmed A3

..Issuer: Lion Connecticut Holdings, Inc.

.... Issuer Rating, Affirmed Baa3

Affirmations with outlook changed to Stable from Positive:

..Issuer: Equitable of Iowa Companies Capital Trust II

....Preferred Stock, Affirmed Ba1 (hyb)

Assignments with Stable outlook:

..Issuer: ING U.S., Inc.

....Junior Subordinated, Assigned Ba1 (hyb)

ING US is a partially public (25%) life insurance group traded on the NYSE under the ticker VOYA. At December 31, 2012 it had total U.S. GAAP assets of approximately $221 billion and shareholders' equity of close to $16 billion. Its 75% majority owner is the Netherlands-based banking group, ING Groep, N.V.

The principal methodology used in this rating was Moody's Global Rating Methodology for Life Insurers published in May 2010. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Laura Bazer
VP - Senior Credit Officer
Financial Institutions Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Robert Riegel
MD - Insurance
Financial Institutions Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's affirms ING US' ratings; rates hybrid Ba1 (hyb); stable outlook
No Related Data.
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