Rating agency reviews OnePath Life
Wednesday, June 20th 2018, 8:04AM
S&P Global Ratings said it has affirmed its 'A+' financial strength and issuer credit ratings on OnePath Life, however the outlook remains negative.
"We affirmed the ratings on OnePath Life based on the insurer's strong competitive position and very strong capital and earnings position. The ratings include a one-notch uplift above its 'a' stand-alone credit profile due to expected group support if required."
S&P expects that ANZ "will likely provide extraordinary support to OnePath Life, if required, prior to completion of the sale process, which is expected in fiscal 2019."
Following the potential sale of OnePath Life, we also expect its new owner, Cigna, will likely provide support given that OnePath Life's services are complementary to its existing
capabilities and international strategy.
The negative outlook on OnePath Life reflects:
- The negative outlook on its parent, ANZ group; and
- Assuming the sale proceeds, uncertainty over its capital structure under its prospective new owners; integration risks associated with the transaction; and potential for a lowering of the ratings on Cigna given it is on CreditWatch negative.
There is potential we would lower our rating on OnePath Life in the coming two years. We would expect to do so prior to its sale if we were to downgrade ANZ Group.
We would also expect to lower the rating after the sale in the following three
scenarios:
- A weakening in the entity's capital structure (including dividend policy, investment and reinsurance strategies);
- A substantial disruption to operations as a result of integration challenges; or
- We were to lower the 'AA-' rating on Cigna, which is currently on CreditWatch negative, such that prospectively we are unlikely to factor group support into the rating.
A return to a stable outlook is largely dependent on completion of the sale and resultant group support.
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