S&P Global Ratings has upgraded its long-term issuer credit ratings on AIA Group from “A” to “A+” as the outlook on the insurer remains stable.
S&P Global Ratings also affirmed its “A-1” short-term issuer credit ratings on the insurer and raised its long-term rating on the insurer's medium-term senior unsecured notes program from “A” to “A+.” Moreover, it raised the rating on the outstanding subordinated notes from “A-” to “A” and affirmed its “A-1” short-term issue ratings.
S&P Global Ratings stated that it raised AIA's ratings because it has built up its liquid assets, lessening its reliance on cash flows from its operating subsidiaries to meet its growing debt obligations. It also highlighted that the insurer has built a strong record of dividend remittances from its operating subsidiaries in various jurisdictions over the years since its listing in 2010.
Consequently, AIA Group Ltd's rating is now one notch lower than the ratings on the core operating companies of AIA, instead of two notches.
S&P Global Ratings expects AIA to maintain strong liquidity buffers at the holding company level and to maintain its track record of earning material dividends from its diverse operating units over the next two years.
“This ample liquidity, together with its diversified dividend income streams, places AIA Group Ltd. in a better position to service its obligations,” it said. “In addition, AIA Group Ltd. uses promissory notes to manage the timing of the dividend streams from its operating units. These promissory notes, which are issued by its main operating entities, are payable on demand by AIA Group Ltd. when funds are required.”
