OREANDA-NEWS. Fitch Ratings says that there will be limited immediate impact on Sumitomo Life Insurance Company (Sumitomo Life, A/Stable) from its proposed acquisition of Symetra Financial Corporation (Symetra). This is because the cost of the acquisition - expected to be about JPY467bn - is manageable compared with Sumitomo Life's net assets of JPY1.87trn and cash and equivalents of JPY446bn at end-June 2015.

Fitch expects the deal to be positive for Sumitomo Life's credit profile over the medium term if Sumitomo Life manages the integration appropriately, given Symetra's strong franchise in the US life insurance market and solid underwriting expertise.

Symetra, which specialises in areas such as employee benefits, annuities and life insurance in the US, will enable Sumitomo Life to diversify its risk profile and raise overseas earnings as a share of the Japanese group's revenue. The acquisition should enhance Sumitomo Life's global diversification by increasing overseas adjusted earnings to about 8% of the group's total.

Any negative impact on Sumitomo Life in terms of capital adequacy and financial leverage is likely to be manageable. However, this is Sumitomo Life's first major overseas acquisition, and management may face challenges in smoothly integrating Symetra into the group, and ensuring effective governance across the US and Japan.

The transaction is subject to certain conditions, including the receipt of regulatory approval in Japan and the US.