OREANDA-NEWS. Fitch Ratings has downgraded Ageas Insurance Company (Asia) Limited's (AICA) Insurer Financial Strength (IFS) Rating to 'A-' from 'A', and Long-Term Issuer Default Rating (IDR) to 'BBB+' from 'A-'. Fitch has simultaneously downgraded senior unsecured debt due 2023 issued through Ageas Capital (Asia) Ltd to 'BBB+' from 'A-'.The Outlook is Stable.

KEY RATING DRIVERS

Fitch's rating action follows the announcement on 30 August 2015 that Ageas SA/NV has agreed to sell AICA to JD Capital for HKD10.7bn in cash. Fitch does not rate JD Capital. The transaction is expected to be completed within the first half of 2016, subject to regulatory approvals, customary closing conditions and approval from JD Capital's shareholders.

Fitch downgraded AICA as the rating agency now assesses AICA based on its standalone credit profile. Fitch previously viewed AICA as 'Very Important' to the group and as such, rated AICA one notch above our standalone IFS assessment.

The Stable Outlook reflects Fitch's expectation that AICA will maintain capital under JD Capital that is commensurate with the current rating. Fitch believes that the new shareholder does not intend to upstream any dividends from AICA in the medium term and also to maintain AICA's statutory solvency ratio at well above regulatory preferred solvency requirement of 150%.

RATING SENSITIVITIES

An upgrade of AICA is unlikely in the near term, given its small market position in Hong Kong.

Key rating triggers for a downgrade would include a decline in AICA's local statutory solvency ratio to below 250% (409% at end-June 2015), or pre-tax return on assets below 1% (1.7% in 2014), all on a sustained basis.