Moody's: ING U.S. IPO a credit positive

Image courtesy of Voya Financial Image courtesy of Voya Financial

ING U.S., upon completion of their initial public offering and their subsequent transformation into Voya Financial, has received $600 million in new capital and a greater ability to access additional funds.

Although the IPO fell short of the 1.4 billion the company forecasted, it was the second largest IPO in the U.S. this year and Moody’s investor service views it as a credit positive.

ING U.S., the retirement investment management and insurance operations unit of the Netherlands-based ING Group, will be operating completely as Voya Financial 18-24 months from now and is listed under the symbol “VOYA” on the New York Stock Exchange.

The development follows an agreement reached by ING Group and European Commission in 2009 to focus on banking and divest insurance operations in the wake of a $12.71 billion cash infusion by the Dutch government. ING Group will bring its ownership down to zero percent by 2016.

The IPO paves the way for two crucial approvals by U.S. life insurance regulators. One is regulatory permission for the one-time reset to zero of certain negative statutory capital accounts and the other is allowing its subsidiaries to pay 1.4 billion in extraordinary insurance dividends to VOYA and Lion Connecticut holding companies, both of which have outstanding debt.

Voya will utilize these approvals, together with their IPO proceeds to improve financial leverage and flexibility, while reducing intercompany and boosting capital levels.

Moody’s cautioned that although the IPO is a credit positive, Voya subsidiaries’ may still have dividend trouble in 2014 and beyond due to a “troublesome legacy block of variable annuities.”

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