S&P Assigns Rating of ‘A+’ for ING’s Canadian Subs

May 26, 2005

Standard & Poor’s Ratings Services announced that it has assigned its “A+” long-term counterparty credit and financial strength ratings to the following Canadian subsidiaries of the Netherlands ING Group: Belair Insurance Co. Inc., ING Insurance Co. of Canada, ING Novex Insurance Co. of Canada, and The Nordic Insurance Co. of Canada.

S&P also said: “The “long-term counterparty credit and financial strength ratings on Allianz Insurance Co. of Canada and Trafalgar Insurance Co. of Canada were raised to ‘A+’ and removed from CreditWatch with developing implications, where they were placed Oct. 8, 2004, following the announcement that these companies were being acquired by ING Canada Inc.”

The bulletin noted that these companies “represent the primary operating subsidiaries of Toronto -based insurance holding company ING Canada Inc., and will collectively be referred to as ING Canada. The outlook on all of the above companies is stable.”

S&P observed that through participation reinsurance agreements, “all of the insurance companies within ING Canada effectively operate as one; accordingly, the financial strength ratings have been equalized. As well, the ratings on the Canadian operating companies benefit from the implied support of the very strong ING group.”

S&P credit analyst Donald Chu noted: “The ratings on ING Canada reflect its leading market position, its strong underwriting discipline and operating performance.” The rating agency also indicated that the “reduction in claims frequency, the introduction of government auto reforms, rate increases, and capital gains generated within the companies’ investment portfolio,” further supported the ratings.

It said, however, that “the challenges facing the company include the cyclical nature of this sector’s operating performance, very competitive business environment, commodity-like nature of the company’s products, and the consolidation that continues to occur within the insurance and financial services sector.”

S&P said the “stable outlook reflects the strong operating performance of ING Canada. Through disciplined underwriting and claims management, the company has been able to outperform its competitors. The rating agency indicated that it “believes that this trend will continue and this is reflected in the ratings on the companies. Nevertheless, recently implemented government caps, regulatory reforms and premium freezes and rollbacks are expected to reduce profitability to a more normal level in future. Moreover, the continued low interest rate environment will continue to put pressure on investment returns.”

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