Income Insurance under credit watch after Allianz announcement

S&P Global said it could downgrade the Singaporean insurer.

Allianz SE's proposed acquisition of Income Insurance, announced last week, underscores its strategic focus on expanding in Southeast Asia, particularly in Singapore, analysed S&P Global Ratings.

If the acquisition is approved, Allianz plans to integrate Allianz Insurance Singapore (AIS) into the new entity, which will be rebranded as Allianz Income Insurance Singapore.

This integration will be executed through a scheme of transfer or amalgamation, pending regulatory and shareholder approvals. AIS will remain a key subsidiary of Allianz.

The integration process and completion of the acquisition may take several months, potentially until April 2025. 

Allianz is expected to outline a detailed integration plan for AIS, subject to regulatory approvals. 

S&P Global Ratings will continue to monitor the acquisition's progress and assess AIS's role within the Allianz group.

On the other hand, S&P Global Ratings has placed its ratings on Income Insurance on CreditWatch with negative implications following the news of the acquisition plan. 

The agency is evaluating how this potential acquisition might impact Income Insurance’s creditworthiness. Allianz SE expects the transaction to close by April 2025, pending regulatory approvals.

There is a possibility that S&P may downgrade Income Insurance within the next 90 days or beyond. 

This potential downgrade is linked to the risk of reduced extraordinary support from the Singapore government through its major shareholder, NTUC Enterprise Co-operative.