Sat, Oct 08, 2011 - Page 11 News List

S&P puts HSBC Asia insurance units on downgrade watch


Standard & Poor’s Ratings Services put three Asia-based insurance units of HSBC Holdings PLC on negative credit watch yesterday after reports that the UK bank may sell some insurance assets.

The units are HSBC Insurance (Asia) Ltd, Hang Seng General Insurance (Hong Kong) Co and HSBC Insurance (Singapore) Pte, it said in a statement yesterday.

“We placed the ratings on CreditWatch to reflect our uncertainty over whether HSBC intends to sell some of its Asian general insurance businesses,” S&P said. “In addition, if the group does plan to sell, it’s unclear to us whether HSBC would sell the subsidiaries as books of business or as entire legal entities.”

Chief executive Stuart Gulliver is reversing HSBC’s expansion over the past two decades, selling assets and cutting jobs as the eurozone debt crisis saps profits and regulators demand thicker capital buffers.

If the sales proceed, S&P could downgrade HSBC Insurance (Asia) and Hang Seng General Insurance by as many as two notches because of reduced group support, it said. A downgrade is still possible without the sale because general insurance underwriting will play a “less integral role” in HSBC’s Asia strategy, it added.

HSBC Insurance (Singapore) may be cut by one notch as it is primarily a life insurer, it said.

S&P currently assigns the “AA” long-term local-currency counterparty credit and insurance financial strength ratings and “cnAAA” to HSBC Insurance (Asia) and Hang Seng General Insurance respectively.

HSBC Insurance (Singapore) has an “A+” long-term local-currency credit and insurance financial strength rating, S&P said.

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