S&P puts ING US insurance units on CreditWatch

Standard & Poor's Ratings Services placed its financial strength and counterparty credit ratings of the U.S. life insurance subsidiaries of ING Groep NV on CreditWatch with negative implications Thursday.

The move followed an announcement last week from the Dutch bank and insurer that it is reviewing its businesses and plans to sell operations, hoping to raise as much as $10.6 billion.

The company didn't specify which business it would sell or set any time frame for achieving the target. ING did, however, say it plans to focus mostly on European banking, especially in Belgium and the Netherlands. It does intend to continue offering both banking and insurance in Europe, Asia and the U.S.

"The CreditWatch placement reflects our view that the planned changes within the U.S. insurance operations could lead to a reduction in their financial strength, and a change in the 'core' status of these subsidiaries," said Standard & Poor's credit analyst Donald Chu.

S&P said the noncore U.S. businesses ING has identified, which include employee benefits, financial products, group reinsurance, the adviser network and annuities, represent about half of ING U.S.' normalized earnings.

S&P is evaluating ING's strategy and expects to resolve the CreditWatch by the end of June, after it evaluates the effects on each of the rated subsidiaries.

If the stand-alone credit characteristics of the U.S. insurance subsidiaries become weaker than S&P previously expected, and they are no longer considered "core," S&P said it could lower the ratings. Based on current information, S&P said it would likely affirm the ratings with a negative outlook, or lower the ratings by one to two notches.

"We will base the financial strength ratings on each individual subsidiary on our evaluation of the financial strength characteristics of each individual entity and the future group support specific to that entity," S&P said in a release.