S&P Global Ratings has maintained its “A” issuer credit rating on IAG and Suncorp, with the outlook remaining stable for both insurers.

The ratings agency says IAG can defend its market positions locally and in New Zealand.

“The group has established brands and distribution channels and ongoing marketing and technology advances that help to capture and retain business,” S&P says.

“We continue to view IAG’s capitalisation as robust, with very strong capital resources and increased reinsurance covers contributing to ongoing earnings stability.”

IAG’s plan to sell operations in Thailand, Indonesia and Vietnam will have little impact because the three markets are not a major revenue driver.

“While these Asian acquisitions were part of a well-considered strategy, we understand IAG’s ability to add value peaked and [extracting] further mass-market scale in those markets is either uneconomic or unattainable,” S&P says.

“We understand IAG continues to assess options for presently retained assets, principally in Malaysia and India, and we anticipate any decision to sell will result in an orderly exit with a reasonable return of allocated capital.”

Suncorp is expected to produce a solid operating performance this financial year, with earnings momentum from its property and casualty arm.

The sale of its life insurance business to TAL Dai-ichi, which is awaiting regulatory approval, will enhance the group’s returns.

“We affirmed the ratings reflecting our expectation that the group’s operating performance will counter near-term potential headwinds and strengthen... credit fundamentals over the next 12 months,” S&P says.

“In addition, the strong quality and allocation of capital across regulated entities continues to support the group’s ability to withstand stresses.”

Suncorp “retains sufficient flexibility to reallocate central resources, if required”, the ratings agency says.