S&P Global Ratings has taken action on its issuer credit ratings for Income Insurance, placing them on CreditWatch with negative implications. This decision stems from heightened uncertainty surrounding potential changes in Income Insurance’s ownership structure.
Income Insurance recently disclosed discussions regarding a potential shareholding transaction with Allianz SE on 14 June, withholding specifics about the transaction’s implications for management and control. Consequently, S&P Global currently excludes group support from Allianz SE in its assessment.
The current ratings, positioned two notches above Income Insurance’s stand-alone credit profile (SACP), reflect its robust ties with the Singapore government. However, significant alterations in ownership could diminish the likelihood of support from NTUC Enterprise Co-operative, Income Insurance’s principal shareholder.
The anticipated privatization indicates the government’s inclination to decrease its stake in Income Insurance, potentially curtailing future support. Despite these developments, S&P Global anticipates Income Insurance will uphold satisfactory capitalization and a robust market position within Singapore’s insurance sector over the next two years.
Nonetheless, the prospect of privatization might divert management’s focus from strategic growth initiatives until the transaction concludes. The CreditWatch placement reflects apprehensions over diminished extraordinary support from the Singapore government post-transaction via NTUC Enterprise.
S&P Global intends to resolve the CreditWatch status within 90 days, contingent upon gaining clarity on the shareholder’s intentions and the transaction’s implications on management and control. The agency may downgrade ratings by one notch if it perceives ownership changes as diminishing government support likelihood. Conversely, ratings affirmation hinges on sustained government backing for Income Insurance despite a diluted NTUC Enterprise shareholding.
On a stand-alone basis, S&P Global expects Income Insurance to sustain its robust market standing and adequate capitalization.
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