OREANDA-NEWS. Fitch Ratings has placed the ratings of Willis Group Holdings PLC (Willis), including the 'BBB-' Issuer Default Ratings (IDRs) of Willis, Willis North America Inc. (WNA), and Trinity Acquisition plc on Rating Watch Positive. A full list of ratings actions follows at the end of this release.

KEY RATING DRIVERS
Fitch's rating action follows today's announcement that Willis and professional services and analytics firm Towers Watson & Co. (TW) have agreed to an all-stock merger valued at approximately $18 billion that will be known as Willis Towers Watson (WTW)

The transaction creates a larger, more diverse entity with operating franchises in several non-capital intensive fee and commission based businesses, including: insurance brokerage, and consulting services in employee benefits, human resources and risk and capital management. The transaction also creates opportunities to leverage existing TW relationships to increase penetration in the larger U.S. P/C corporate market and to expand TW's international profile.

Relatively low debt utilization at TW fosters considerably lower pro forma financial leverage for the combined WTW entity relative to Willis current debt/EBITDA of 3.0x at March 31, 2015, although ultimate long term capital management plans and tolerance for debt leverage of are uncertain. Maintenance of debt /EBITDA ratios of 2.0x or lower would be viewed positively in the rating assessment.

Lower leverage, coupled with the inherent profitability of Willis and TW's operations boosts pro forma interest coverage meaningfully as well compared with Willis reported EBITDA/interest expense of 5.6x for the trailing 12 months ending March 31, 2015.

Key challenges and sources of uncertainty for WTW upon closing of the transaction by Dec. 31, 2015 include: integration of corporate and systems function, realization of anticipated expense savings, retaining key employee and clients going forward.

Willis' ratings continue to reflect the company's strong liquidity profile with good cash flow generation and increasing financial flexibility, favorable competitive position as one of the top three global insurance brokers, positive organic growth and an operating EBIT margin of 17.1% at March 31, 2015, that remains in line with the company's closest peers.

RATING SENSITIVITIES
Key rating triggers that could result in an upgrade include successful execution of the TW merger and the purchase of remaining shares of Gras Savoye, both anticipated to close in 4Q15, as well as, maintaining profit margins in key Willis and TW segments that are similar to historical norms, sustaining a debt-to-EBITDA ratio of 2.0x or better, and generating EBITDA-to-interest ratios averaging in the high single digits.

Key rating triggers that could result in a return to a Stable Outlook include, the unsuccessful close of the TW transaction or a material near term change in financial profile or operating performance of the combined company, a failure to maintain average EBITDA-to-interest ratios of 5x or higher, an increase in financial leverage evidenced by debt / EBITDA above 3.0x, or a material goodwill impairment that cast doubt on the new entities ability to generate future earnings and cash flows.

FULL LIST OF RATING ACTIONS

Fitch has placed the following ratings on Rating Watch Positive:

Willis Group Holdings PLC
--IDR 'BBB-';
--4.125% senior unsecured notes due 2016 'BBB-';
--5.75% senior unsecured notes due 2021 'BBB-'.

Willis North America Inc.
--IDR 'BBB-';
--5.625% senior unsecured notes due 2015 'BBB-';
--6.2% senior unsecured notes due 2017 'BBB-';
--7.00% senior notes due 2019 'BBB-'.

Trinity Acquisition plc
--IDR 'BBB-';
--4.625% senior unsecured notes due Aug. 15, 2023 'BBB-';
--6.125% senior unsecured notes due Aug. 15, 2043 'BBB-'.