OREANDA-NEWS. Fitch Ratings has affirmed Scottish Widows Limited's (SWL; formerly Clerical Medical Investment Group Ltd) Long-term Issuer Default Rating (IDR) at 'A+' and Insurer Financial Strength (IFS) rating at 'AA-'. The Outlooks are Stable.

The agency has also affirmed SWL's and Clerical Medical Finance plc's subordinated debt, which carries a guarantee from SWL, at 'A-'.

At the same time Fitch has withdrawn SW Funding plc's (formerly Scottish Widows plc) IDR of 'A+'/Stable and IFS of 'AA-'/Stable.

KEY RATING DRIVERS
Scottish Widows Group (SWG) merged its eight life insurance entities into Clerical Medical Investment Group at end-2015 via a legal process known as a Part VII transfer (Financial Services and Markets Act 2000) to simplify its corporate structure, increase business efficiency and for capital optimisation purposes. Following the transfer, Clerical Medical Investment Group has been renamed Scottish Widows Limited (SWL) and Scottish Widows plc is now SW Funding plc.

Fitch has affirmed SWL's ratings as the overall business and financial profile (including capital and dividend policies) of SWG remains unchanged.

Fitch is withdrawing SW Funding plc's ratings as the entity is undergoing a reorganisation. Accordingly, Fitch will no longer provide ratings or analytical coverage for SW Funding plc. Substantially all its assets and liabilities, including subordinated debt, have been transferred to SWL. The company is expected to be de-authorised as an insurance company in 1Q16 and it will then be a shell company.

The rating of SWL is based on the credit quality of SWG, the holding company consolidating all insurance operations of Lloyds Banking Group plc (LBG, Long-term IDR A+/Stable) as the agency views SWL as core to SWG under its insurance group rating methodology.

SWL's IDR is aligned with Lloyds Bank plc's IDR of 'A+' to reflect Fitch's view of SWG's importance to LBG, the integration of its operations and management with those of LBG, and its strong position in the UK life and pensions market. This approach implies a single-notch uplift from Fitch's assessment of SWG's standalone creditworthiness.

RATING SENSITIVITIES
Any change in Lloyds Bank plc's rating is likely to lead to a corresponding change in SWL's ratings. The ratings could be downgraded if Fitch no longer sees SWG as integral to Lloyds Banking Group.