Fitch: ING U.S. IPO and Debt Sale Further Restructuring Process

Wed May 15, 2013 3:09pm EDT

(The following statement was released by the rating agency) NEW YORK, May 15 (Fitch) ING U.S., Inc.'s recent $1.3 billion initial public offering (IPO) and junior sub debt sale are significant steps in the restructuring process of becoming an independent public company, according to Fitch Ratings. The IPO provides the company with increased funding flexibility, distribution awareness and access to capital. Fitch currently rates ING U.S. and its insurance subsidiaries on a stand-alone basis. Both transactions are credit neutral for the 'BBB' rated entity but they are likely to have long-term positive ramifications for the credit. The majority shareholder of ING U.S. is ING Groep N.V. (ING Group), a leading publicly traded global banking and insurance group located in the Netherlands, with a strong franchise in a number of countries in Europe and Asia. ING Group has an agreement with the Dutch government to sell its insurance and investment management operations as part of its repayment for support of more than EUR10 billion that the company received during the financial crisis. ING Group must divest at least 25% of ING U.S. by year-end 2013, which has been satisfied by the recent IPO, and more than 50% by year-end 2014, with the remaining interest divested by year-end 2016. The base case scenario calls for ING U.S. to become a stand-alone business. Fitch views ING U.S.'s debt servicing capacity as modest, but improving. As an independent company, ING U.S. will largely depend on dividend payments from regulated and nonregulated operating subsidiaries as well as cash at the holding company to meet interest payments and other obligations. Historically, the company's U.S. insurance subsidiaries have had limited or no capacity to make ordinary dividend payments to the parent due to negative earned surplus in some statutory subsidiaries and limited positive earned surplus in other statutory subsidiaries. However, statutory dividend capacity will improve since ING U.S. has received regulatory approval to transfer amounts out of paid-in capital into unassigned funds, thereby creating a positive earned surplus account and ordinary statutory dividend capacity. ING US's remaining parental ties include letter of credit facilities provided by ING Bank which have been significantly reduced and replaced by third party providers. The remaining facilities are now on an arms-length basis. We expect leverage to remain around management's stated target of 25%, in line with expectations for the current rating category. Contact: Tana M. Higman Director, Insurance Fitch Ratings, Inc. 70 West Madison Chicago, IL 60602 +1 (312) 368-3122 Kellie Geressy-Nilsen Senior Director Fitch Wire +1-212-908-9123 Fitch Ratings, Inc. One State Street Plaza New York, NY 10004 Media Relations: Brian Bertsch, New York, Tel: +1 212-908-0549, Email: brian.bertsch@fitchratings.com. Additional information is available on www.fitchratings.com. The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article, which may include hyperlinks to companies and current ratings, can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings. ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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