BANGALORE (Thomson Financial) - Standard & Poor's Ratings Services said it
lowered its counterparty credit rating on Willis Group Holdings Ltd. to 'BBB-'
from 'BBB' after the company confirmed it will buy U.S. rival Hilb Rogal & Hobbs
Co. (HRH) for a total of about $2.1 billion.
The ratings agency also said that the outlook on Willis is negative.
"We believe that the transaction will further solidify Willis's competitive
market position and local presence in U.S. insurance brokerage," S&P said.
The ratings firm expects that Willis will successfully complete the
transaction and achieve meaningful expense and revenue synergies.
The negative outlook reflects S&P's concern about the acceptance of a much
greater debt servicing requirement in conjunction with an acquisition in the
face soft market conditions, integration risk, the ability to offset HRH's
contingent commissions which will be phased out, and some uncertainty about the
actual use of anticipated free cash flow.
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