Lloyds Banking Group has announced that the Cleri Med business will be phased out and sales staff have already been moved over to Scottish Widows, but Fitch says it is likely that the business will have to be sold off rather than merged with the other Lloyds life brand.
Fitch says its opinion is influenced, in part, by the recent announcement by ING Group that it intends to dispose of its insurance operations by the end of 2013, as part of its restructuring plan filed with the European Commission, as a result of the state aid it received.
The EU Commission is yet to make an announcement with regard to the restrictions Lloyds will face thanks to its state aid. The negative watch will be resolved once Cleri Med’s position relative to Lloyds becomes clear, says Fitch.
Also, Fitch says there is “an increasing likelihood” that Lloyds will have to dispose of its other life business, Scottish Widows. However, the ratings agency will not downgrade the brand thanks to its “strong, ring-fenced capital, strong franchise and multi-channel distribution capability”.