Standard & Poor’s (S&P) has reduced its financial strength rating on AIA Australia to A+/stable from AA-/negative.

The rerating comes after the Australian insurer’s parent AIA removed its capital guarantee for new policyholders.

In the past S&P rated the Australian operations the same as the Hong Kong-based parent, but says the change in the guarantee is a reason to treat the two separately. 

The reasoning behind the withdrawal was due to AIA no longer seeing the need to guarantee the Australian business, especially with the local operation’s strengthened stand-alone credit profile.

“This event has not led to a revision of AIA Australia’s strong stand-alone-credit profile or our opinion of its strategically important group status, which the revised rating reflects,” S&P credit analyst Lucy Huynh said.

“We understand the working capital guarantee given by AIA in favour of AIA Australia will remain in place, and continue to support its liquidity and short-term capital requirements.”

The ratings agency says the latest move does not indicate any changes to the existing levels of operational integration, financial support or working capital.

“AIA Australia is a strategically important subsidiary of AIA, forming the Australian arm of the group's Asia-Pacific strategy,” the report said.

“While Australia’s life insurance market is mature and sophisticated, it supports strong double-digit premium growth due to the country’s population being underinsured and growth stemming from Australia’s mandatory superannuation regime.”

S&P doesn’t consider the Australian operations are core to its parent, because of its small size, but it expects the local business will not be sold.

Meanwhile, AIA has introduced its eClaims system to members of the REST superannuation fund.

Members will be able to lodge claims electronically through the member access portal on the REST website.

The fund hopes this will reduce the amount of manual claims being lodged leading to a reduction in paperwork.