OREANDA-NEWS. Fitch Ratings has placed Amlin plc's Long-term Issuer Default Rating (IDR) of 'A-' on Rating Watch Negative (RWN). Amlin's main operating entities' Insurer Financial Strength (IFS) ratings of 'A+' have also been placed on RWN.

A full list of rating actions is at the end of this commentary.

KEY RATING DRIVERS
The RWN follows the announcement that Mitsui Sumitomo Insurance Company Ltd (MSI) (IFS: A/Stable) and Amlin plc (IFS: A+/Stable) have reached agreement on the terms of a recommended cash offer through which MSI will acquire the entire issued and to-be-issued share capital of Amlin.

MSI's ratings are currently constrained by Japan's Long-term local currency IDR (A/Stable), because of its large holdings of Japan government bonds and relatively limited net premiums contribution from overseas (less than 20% of net premiums).

The RWN reflects the lower rating of Amlin's prospective parent. It will be resolved upon completion of the transaction, which is subject to approvals from Amlin's shareholders, financial regulators and competition law authorities in various countries.

The proposed acquisition values Amlin at approximately GBP3.5bn. The consideration represents a multiple of 2.4x to Amlin's net tangible book value per share (on a fully diluted basis) as at 30 June 2015 of 275.2pence.

MSI reported net premiums written of JPY1,696.6bn (approximately GBP9.3bn) and net income of JPY105.2bn (approximately GBP575m) in the 12 months ending 31 March 2015. In the six months ending 30 June 2015, Amlin reported gross written premiums of GBP2,007.6m (FY2014: GBP2,564.0m) and profit before tax of GBP143.3m (FY2014: GBP258.7m).

RATING SENSITIVITIES
Upon completion of the transaction Fitch expects to align Amlin's ratings with those of MSI.

FULL LIST OF RATING ACTIONS
Amlin AG: 'A+' IFS placed on RWN
Amlin Europe N.V.: 'A+' IFS placed on RWN
Amlin plc: A-' IDR placed on 'RWN
Subordinated debt: Long-term rating 'BBB-' placed on RWN.