S&P rates Insurance Australia notes BBB

S&P said it assigned its BBB long-term issue credit rating to the issuance of A$350 million in unsecured subordinated notes by Insurance Australia Group Ltd.

The agency said that under its insurance hybrid criteria, it rates the notes three notches below the A issuer credit rating.

The BBB issue rating reflects the additional risk arising from subordination to higher ranking securities and creditors, deferability of interest payments and nonviability contingent capital terms, the agency said.

S&P said it assesses the notes to have intermediate equity content and may support the assessment of Insurance Australia's capital position within certain tolerance levels.

“The issue's modest impact on financial leverage and fixed-charge cover does not affect the group's strong financial flexibility,” the agency said in a news release.

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