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Income Insurance faces CreditWatch by S&P Global

S&P Global aims to resolve the CreditWatch status within the next 90 days.

S&P Global Ratings has placed its issuer credit ratings for Income Insurance on CreditWatch with negative implications. 

This decision reflects the high uncertainty regarding potential changes in Income Insurance's shareholding structure.

On 14 June, Income Insurance announced discussions for a potential shareholding transaction with Allianz SE, without providing further details on the impact of this transaction on management and control. 

Due to this uncertainty, S&P Global does not currently consider group support from Allianz SE.

Significant changes in the shareholding structure could reduce the likelihood of support from the Singapore government through NTUC Enterprise Co-operative, the majority shareholder of Income Insurance. 

The current rating is two notches above Income Insurance's stand-alone credit profile (SACP) due to its strong relationship with the Singapore government. 

The potential privatisation suggests the government's intent to reduce its shareholding in Income Insurance, potentially decreasing support over time.

Despite the uncertainty, S&P Global expects Income Insurance to maintain satisfactory capitalisation and a strong business position in the Singapore insurance market over the next two years. 

However, potential privatisation may distract management from the insurer's growth strategy until the transaction is completed.

The CreditWatch placement reflects the possibility of reduced extraordinary support from the Singapore government through NTUC Enterprise post-transaction. 

S&P Global aims to resolve the CreditWatch status within the next 90 days, pending more clarity on the shareholder's intentions and the transaction plan's impact on management and control.

S&P Global may lower the ratings by one notch if it believes the shareholding changes will decrease the likelihood of government support. 

Conversely, the ratings agency could affirm the ratings if the Singapore government continues to demonstrate strong support for Income Insurance, even with a diluted NTUC Enterprise shareholding. 

On a stand-alone basis, S&P Global expects Income Insurance to maintain its strong market position and satisfactory capitalisation.

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