New York, July 11, 2012 -- Moody's Investors Service has assigned a Baa3 senior debt rating
with a stable outlook to $850 million of 10-year senior
notes issued in a 144A private placement by ING U.S.,
Inc. (ING US -- formerly known as ING American Insurance Holdings,
Inc., guaranteed issuer rating at Baa3, stable outlook).
The notes are guaranteed by Lion Connecticut Holdings, Inc.
(LCH; issuer rating at Baa3, stable outlook), a wholly-owned
intermediate holding company of ING US that directly owns most of the
ING US life insurance companies. Both ING US and LCH and their
affiliates are all wholly, indirectly-owned subsidiaries
of ING Groep, N.V. (senior debt at A3, negative
outlook). Proceeds from the notes will be used for repayment of
commercial paper, to retire intercompany loans and pay down bank
debt.
RATING RATIONALE
Moody's said that the Baa3 guaranteed senior debt rating is based
on an unconditional and irrevocable guarantee by LCH, which also
supports the issuer rating of ING US. Because of the structural
subordination of ING US' obligations to those of LCH, ING
US' senior debt rating would be a notch lower (Ba1) without the
LCH guarantee. LCH is the direct owner of most of ING US'
life insurance subsidiaries, which have established positions 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.
"ING US' private placement is another step on its path toward
an independent capital structure and ultimate separation from ING NV,"
said Vice President and Senior Credit Officer, Laura Bazer.
"The notes, which will replace shorter term bank borrowings,
will also better ladder the company's debt maturities,"
the analyst added. The rating agency noted, however,
that separation risks and uncertainties about the group's ultimate
IPO and other capital raising initiatives remain.
Although still owned by ING Groep, NV at this time, Moody's
analyzes ING US' financial flexibility based on its independent
capital structure and financial flexibility (i.e.,
with no support from ING NV affiliates), which it anticipates will
be slightly weaker than that at the consolidated ING NV level.
The rating agency said that it expects ING US to continue its capital
initiatives in 2012, resulting in adjusted financial leverage in
the range of 20%-30%, earnings coverage of
2-4x, and cash coverage of 1.5-3x.
Moody's said the following factors could lead to an upgrade of ING
US' group's ratings: the successful completion of ING
US' IPO/exit from ING NV ownership without deterioration to business,
profitability, or other financial metrics; reduction in earnings
volatility, resulting in ROC's consistently at 6% or better;
NAIC RBC ratio consistently at or above 375%, while maintaining
good capital adequacy at offshore captives; and stand-alone
cash coverage of over 3x, and earnings coverage of at least 5x,
each on a consistent basis.
The rating agency added that the following factors could result in a downgrade
of the group's ratings: the erosion of ING US' business franchise,
distribution, and employee base, as a result of the potentially
long lead time until the launch of the ING US IPO or an unsuccessful IPO;
ROC's consistently below 4%; consolidated NAIC RBC ratio falling
below 300% (excluding the captive, which, separately,
must be adequately capitalized); adjusted financial leverage of greater
than 30%; cash coverage of less than 1.5x; earnings
coverage of below 2x.
The following rating was assigned with a stable outlook:
ING U.S., Inc. (formerly ING America Insurance
Holdings, Inc.): guaranteed senior debt at Baa3.
ING US companies are wholly, indirectly-owned subsidiaries
of the ING Verzekeringen N.V., and members of the
ING Groep, N.V. The two largest subsidiaries,
ING USA Annuity and Life Insurance Company, and ING Life Insurance
& Annuity Company reported statutory assets of approximately $72
billion and $75 billion at Q1 2012, and statutory surplus
of approximately $2 billion and $2 billion, respectively.
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
The Global Scale Credit Ratings on this press release that are issued
by one of Moody's affiliates outside the EU are endorsed by Moody's
Investors Service Ltd., One Canada Square, Canary Wharf,
London E 14 5FA, UK, in accordance with Art.4 paragraph
3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies.
Further information on the EU endorsement status and on the Moody's
office that has issued a particular Credit Rating is available on www.moodys.com.
For ratings issued on a program, series or category/class of debt,
this announcement provides relevant 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 relevant 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 relevant 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.
Information sources used to prepare the rating are the following :
parties involved in the ratings, public information, and confidential
and proprietary Moody's Investors Service information.
Moody's considers the quality of information available on the rated
entity, obligation or credit satisfactory for the purposes of issuing
a rating.
Moody's adopts all necessary measures so that the information it
uses in assigning a rating is of sufficient quality and from sources Moody's
considers to be reliable including, when appropriate, independent
third-party sources. However, Moody's is not
an auditor and cannot in every instance independently verify or validate
information received in the rating process.
Please see the ratings disclosure page on www.moodys.com
for general disclosure on potential conflicts of interests.
Please see the ratings disclosure page on www.moodys.com
for information on (A) MCO's major shareholders (above 5%) and
for (B) further information regarding certain affiliations that may exist
between directors of MCO and rated entities as well as (C) the names of
entities that hold ratings from MIS that have also publicly reported to
the SEC an ownership interest in MCO of more than 5%. A
member of the board of directors of this rated entity may also be a member
of the board of directors of a shareholder of Moody's Corporation;
however, Moody's has not independently verified this matter.
Please see Moody's Rating Symbols and Definitions on the Rating Process
page on www.moodys.com for further information on the meaning
of each rating category and the definition of default and recovery.
Please see ratings tab on the issuer/entity page on www.moodys.com
for the last rating action and the rating history.
The date on which some ratings were first released goes back to a time
before Moody's ratings were fully digitized and accurate data may not
be available. Consequently, Moody's provides a date that
it believes is the most reliable and accurate based on the information
that is available to it. Please see the ratings disclosure page
on our website www.moodys.com for further information.
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.
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 rates ING US senior debt Baa3; stable outlook
