OREANDA-NEWS. S&P Global Ratings today placed its 'A-' long-term counterparty credit ratings on NN Group N. V. (NN Group) on CreditWatch with negative implications. We also affirmed our 'A-2' short-term rating of NN Group.

At the same time, we placed our 'A+' long-term counterparty credit and insurer financial strength ratings on NN Re N. V. and our 'A/A-1' long - and short-term counterparty credit ratings on NN Bank N. V., on CreditWatch negative.

The CreditWatch placement follows NN Group's announcement that it intends to acquire Delta Lloyd group for a cash consideration of €2.4 million with existing cash resources and external debt.

Given the announced bid price and likely funding structure, we believe the proposed transaction could weaken the group's capital adequacy over the short term. Furthermore, should the transaction take place, we are uncertain as to the group's abilities to restore capital and earnings to levels supportive of the group's current ratings within a two-year horizon. The uncertainty as to the funding structure and the extent and type of debt used could also weigh on our leverage and coverage metrics and could potentially weigh on the group's financial flexibility.

The long-term benefit of the transaction for NN Group and the impact on its risk-return balance and credit risk profile remain uncertain to us, pending further discussions with the group's management. We have yet to assess the group's plans for business integration and strategic alignment, or to clarify the transaction's impact on our views of the group's risk management practices. We expect to further discuss these factors with NN Group as well as other potential actions it might undertake that could have an impact on its business or financial risk profiles.

We expect to resolve or update the CreditWatch within the next 90 days. Upon the completion of our review, we could either affirm the ratings or lower them by one or, in a worst case scenario, two notches.

The extent of any downside is likely to depend on our view of the group's capital adequacy post transaction and its ability and willingness to restore levels over the medium term. We will also take into consideration the profitability of the group's combined operations, their financial flexibility, and the strength of NN Group's enterprise risk management to manage such material transactions.

We could affirm the ratings if the transaction does not materialize or if we believe that the combined operations would retain materially unchanged credit strengths.