The affirmation follows AIA Group Limited's (AIA Group, unrated) statement that it has agreed to acquire ING Management Holdings (Malaysia) Sdn. Bhd. (ING Malaysia).

On 11 October, the AIA Group said it will acquire the entire share capital of ING Malaysia via its wholly-owned subsidiary, American International Assurance Co Ltd, for EUR1.34 billion (USD1.73 billion) in cash.

AIA Group plans to pay the amount after the completion of the deal, which is likely to close by the end of first quarter of 2013 and is subject to approvals from Bank Negara Malaysia, the Ministry of Finance of Malaysia, and the Securities Commission of Malaysia, as well as a statement of no objection from the Dutch Central Bank.

RATINGS RATIONALE

This all-cash transaction will increase modestly the AIA Group's financial leverage. Furthermore, since the consideration represents 2x the book value of ING Malaysia, it will involve a substantial amount of goodwill thereby negatively affecting AIA Group's tangible equity. By making this acquisition in Malaysia, whose Moody's sovereign rating is A3, the AIA Group has further increased its exposure to sovereign environments that are rated materially lower than AIA Bermuda's Aa3 rating.

Nonetheless, the negative impact on the AIA Group's financial profile is not material enough to warrant a lowering of AIA Bermuda's rating. Moody's views that AIA Group will continue to be very well capitalized after the transaction and the likely increase in financial leverage will be well within our expectations for the rating.

Moreover, if the transaction is completed, it will further strengthen AIA's franchise and scale in Malaysia where it would become, on a pro forma basis, market leader by premiums. It will also improve the distribution mix between agency and bancassurance channels. While AIA is paying a significant amount of goodwill for this purchase, Moody's views the acquisition as having a sound strategic logic.

The rated entity AIA Bermuda is a fully owned subsidiary of the entity that will make this acquisition and is therefore only indirectly affected by the purchase. Nonetheless, Moody's rating approach to AIA Bermuda places a significant weight on the overall AIA Group credit profile.

Moody's does not view there to be a strong likelihood of an upgrade to AIA Bermuda's ratings in the medium-term. This transaction will modestly erode some of the cushion in its Aa3 rating and Moody's will wish to assess the execution of this acquisition as well as considering the Group's future risk appetite before considering an upgrade. The rating could eventually be raised if the Group manages its growth prudently and if it reduces its high-risk assets to below 50% of shareholders equity on a sustainable basis.

On the other hand, the rating could be pressured if adjusted financial leverage increases to more than 15%, its capital-to-assets ratio declines to below 10% and/or intangible assets such as goodwill relative to shareholders' equity increases significantly on a Group basis. Another negative rating driver would be if the exposure to countries whose sovereigns are rated below AIA Bermuda's own rating continues to increase materially.

AIA Bermuda makes up about 35% of the Group's assets and operates mostly in Hong Kong and Korea. AIA Bermuda is an important component of AIA Group. The Group has common management, operations and strategic direction.

While the rating does incorporate an assessment of AIA Bermuda as a legal entity, Moody's analysis takes into account the broader AIA Group, given the way the Group manages its capital, with a high degree of fungibility among its different operating entities.

ABOUT AIA

AIA Bermuda is an indirectly wholly-owned subsidiary of AIA Group, also an operating company offering life insurance through its branches in Hong Kong, Macau, Korea, New Zealand, and Taiwan as well as its subsidiaries in Indonesia and Vietnam, and its 26%-owned joint venture in India.

AIA Group offers a wide variety of life insurance products in 15 jurisdictions throughout Asia Pacific. These include traditional individual life, group life and medical, credit life, accident, and health and investment-linked products sold through tied agents, bancassurance, brokers, and direct marketing channels. For the six months ended 31 May 2012, AIA Group reported net income attributable to shareholders of USD1.4 billion. Shareholders' equity was USD23.1 billion at 31 May 2012.

RATING METHODOLOGIES

The principal methodology used in this rating was Moody's Global Rating Methodology for Life Insurers published in May 2010. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

The Global Scale Credit Ratings on this press release that are issued by one of Moody's affiliates outside the EU are endorsed by Moody's Investors Service Ltd., One Canada Square, Canary Wharf, London E 14 5FA, UK, in accordance with Art.4 paragraph 3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies. Further information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is available on www.moodys.com.

Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history. The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Sally Yim VP - Senior Credit Officer Financial Institutions Group Moody'sInvestors Service Hong Kong Ltd. 24/F One Pacific Place 88 Queensway Hong Kong China (Hong Kong S.A.R.) JOURNALISTS: (852) 3758 -1350 SUBSCRIBERS: (852) 3551-3077 Stephen Long MD - Financial Institutions Financial Institutions Group JOURNALISTS: (852) 3758 -1350 SUBSCRIBERS: (852) 3551-3077 Releasing Office: Moody's Investors Service Hong Kong Ltd. 24/F One Pacific Place 88 Queensway Hong Kong China (Hong Kong S.A.R.) JOURNALISTS: (852) 3758 -1350 SUBSCRIBERS: (852) 3551-3077 (C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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