Belgium-Based Insurer Ageas Group's Subordinated Notes Rated 'BBB+'

MILAN (S&P Global Ratings) April 1, 2019--S&P Global Ratings today assigned 
its 'BBB+' rating to the subordinated notes that Ageas SA/NV (Ageas; 
A/Stable/A-1) intends to issue. The notes will have a 30-year tenor and we 
understand they will be callable after 10 years.

We derived the rating using our minimum notching for subordinated debt issues, 
which is two notches below the long-term issuer credit rating on Ageas. We 
have analyzed and rated the proposed debt issue on the understanding that: 
  • The note holders will be subordinated to senior creditors;
  • Interest deferral can occur at the option of the issuer;
  • Interest deferral is mandatory should the group be unable to continue meeting its minimum regulatory solvency capital requirements; and
  • The notes will be eligible as tier 2 under Solvency II.
We believe that Ageas will use the proceeds to strengthen the group's Solvency 
II regulatory capital buffer after its main operating subsidiary, AG 
Insurance, exercised a call on March 21, 2019, on a $550 million perpetual 
hybrid debt issue. Ageas group's Solvency II ratio stood at 215% at year-end 
2018. We do not expect Ageas' financial leverage or fixed-charge coverage 
ratios to change materially following this issuance, taking into account the 
previous call.

We expect to classify the notes as having intermediate equity content, mainly 
because of the issuer's discretion to defer interest, as well as the notes' 
subordination and permanence. Hybrid capital instruments with intermediate 
equity content can comprise up to 25% of total adjusted capital (TAC), which 
is the basis of our consolidated risk-based capital analysis of insurance 
companies. The inclusion in TAC is also subject to the notes being considered 
eligible for regulatory solvency regarding the amount, terms, and conditions.
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