International ratings agency Moody’s said on Wednesday it had downgraded ratings on the insurance business that Dutch group ING intends to split off under restructuring required by EU authorities.
Moody’s also said it would keep the entire group, and also the banking activities, under surveillance with a view possibly to downgrading the long-term ratings.
ING is to split its insurance and banking activities under radical restructuring arising from EU conditions for allowing Dutch state aid.
Moody’s noted that the insurance business would not now be backed by support from the banking division.
In addition, the stand-alone insurance business would be less diversified geographically than when it was part of the whole group.
The agency downgraded the notation on insurance activities in the United States to A2 from A1, and the notation on senior debt for the insurance side to Baa1 from A2.
Moody’s said: “The current lower rating reflects the standalone credit profile of the insurance holding company — excluding Group support — and the
more limited geographical diversification of the insurance group that is likely to result from the disposal of some operations.”
On Monday, ING announced that it would eventually sell its insurance business and issue shares to raise 7.5 billion euros to repay state aid.
This deep restructuring, amounting to separation of the banking and insurance businesses, arisis from proposals put to European Union competition authorities and will be enacted by the end of 2013.
The group also said that it had reached agreement with the Dutch government on an early repayment of part of the support capital provided in October 2008 and January this year. To finance this, it will raise new capital through a share issue.
