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
