Fitch Ratings has assigned a long-term Issuer Default Rating (IDR) of
'BBB' to ING U.S., Inc. (ING U.S.). Fitch has maintained the Rating
Watch Evolving status on all ratings, including the Insurer Financial
Strength (IFS) ratings for ING U.S.'s life insurance company
subsidiaries. A full list of ratings is provided at the end of this
Fitch's Rating Watch Evolving is based on uncertainty over ING U.S.'s
pending change in ownership and concern over weakness in the company's
operating performance. Based on an agreement with the European
Commission, ING Group has agreed to divest its global insurance
operations by the end of 2013. Fitch expects that the divestiture of ING
U.S. will most likely occur via IPO.
ING U.S.'s standalone credit profile reflects the material progress ING
Verzekeringen, the parent insurance holding company, has made in
restructuring the U.S. life insurance operations in preparation for a
potential IPO. ING U.S. has strengthened statutory capitalization,
improved operating profitability in its ongoing businesses and reduced
intercompany financial leverage. Further, Fitch believes that management
has made good progress reducing the risk profile of current product
offerings and mitigating capital and earnings volatility related to its
closed block variable annuity businesses with increased hedging and the
write-down of deferred acquisition costs.
ING U.S.'s ratings reflect the company's adequate statutory
capitalization on the aggregate U.S. insurance operations including
captives, large scale and solid business profile in retirement and
individual life markets, and improving operating earnings performance
within the core businesses. ING US has also improved the credit quality
of its investment portfolio through reduced exposure to commercial
mortgage backed securities (CMBS), subprime residential mortgage backed
securities and alternative investments.
Fitch's ratings anticipate that a group rating approach for ING U.S.
companies would be the most likely result of an IPO with all operating
subsidiaries receiving a similar rating.
In the event that legal entity and/or product line restructuring occurs,
individual companies receiving ongoing business lines with adequate
capital profile and business outlooks could expect to be affirmed at
current ratings levels. Those companies restructured to contain mainly
runoff businesses/closed blocks could expect to be downgraded at least
one notch depending on the resulting capital profile and business
The key rating triggers that could result in a downgrade include:
--A decline in reported RBC below 385%;
--Financial leverage exceeding 30%-35% resulting after the IPO;
--Significant adverse operating results;
--Further material reserve charges required in insurance/variable
annuity books or a significant weakening of distribution channel or
The key rating triggers that could result in an upgrade include:
--Increased operating profitability and generation of consistent
--A reported RBC above 450%, and financial leverage below 25%;
--Private sale of closed block book at good value with boost to
capitalization and reduction in volatility and risk;
--Acquisition of ING U.S. by a higher rated entity outside of IPO.
The rating actions are as follows:
Fitch has assigned:
ING U.S., Inc.
--Long-term IDR at 'BBB'; Rating Watch Evolving.
Maintain Rating Watch Evolving:
ING Life Insurance and Annuity Company
ING USA Annuity and Life Insurance Company
ReliaStar Life Insurance Company
ReliaStar Life Insurance Company of New York
Security Life of Denver Insurance Company
--Insurer Financial Strength (IFS) at 'A-'; Rating Watch Evolving.
Equitable of Iowa Companies, Inc.
Equitable of Iowa Companies Capital Trust II
--8.424% Trust preferred stock at 'BB'; Rating Watch Evolving.
Additional information is available at 'www.fitchratings.com'.
The ratings above were solicited by, or on behalf of, the issuer, and
therefore, Fitch has been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Insurance Rating Methodology' (Sept. 22, 2011).
Insurance Rating Methodology
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Fitch RatingsPrimary Analyst, ING U.S.Tana M. Higman,
+1-312-368-3122DirectorFitch, Inc.70 W. Madison StreetChicago,
IL 60602orSecondary AnalystAndrew Davidson, CFA,
+1-312-368-3144Senior DirectororPrimary Analyst (ING
Verzekeringen and its subsidiaries) and Secondary Analyst (ING Group):Marc-Philippe
Juilliard, +33 (0)1 4429 91 37Senior DirectorFitch France,
60, rue de Monceau 75008 ParisorCommittee ChairpersonJames
Auden, +1-312-368-3146Managing DirectororMedia
RelationsJulia Belskaya von Tell, Moscow, +7 495 956 99 email@example.com
Source: Fitch Ratings