OREANDA-NEWS. Fitch Ratings has placed on Rating Watch Negative the Insurer Financial Strength ratings of 'BB' on the International scale and 'AAA(slv)' on the National scale of Seguros e Inversiones y Filial, S.A. (SISA). SISA's parent company is Citigroup, Inc.

This action follows the Dec. 21, 2015 announcement that Citigroup in El Salvador, which does not include Citibank, N.A., has agreed to sell its insurance and consumer and commercial banking operations to Terra Group (not rated by Fitch). The transaction is subject to approval by El Salvador regulators.

Terra Group is a conglomerate based in Honduras that participates in several key industry sectors of Central American economies as well as in some South American countries. Terra Group has a track record of 37 years with investments in El Salvador since 2008, but this will be its first incursion into the financial and insurance sector.

KEY RATING FACTORS

According to Fitch's Financial Groups Criteria, the current ratings are based on the potential support that SISA and its subsidiary would receive from its shareholders if needed. The agency believes that Citigroup (Fitch international scale rating 'A'/Outlook Stable) has the financial capacity to support these subsidiaries. In Fitch's view, support from Citigroup will be forthcoming until the transaction is approved by regulators.

SENSITIVITY OF RATINGS

Fitch's decision to place SISA and its subsidiary on Rating Watch Negative indicates that the companies' ratings will no longer benefit from the financial strength of Citigroup once the transaction is completed. Upon the completion of the acquisition by Terra Group, SISA will be rated strictly on the basis of their own financial profiles.

Fitch has taken the following rating actions on SISA:

--Fitch National scale IFS rating of 'AAA(slv)' placed on
Rating Watch Negative;
--Fitch International scale IFS rating of 'BB' placed on Rating Watch Negative.