Standard & Poor’s (S&P) has placed the Lumley Group’s ratings on CreditWatch Negative following the announcement of its proposed acquisition by Wesfarmers.

The ratings agency said the A rating held by Lumley General Insurance, Lumley General Insurance (NZ) and Lumley Life for insurer financial strength and counterparty credit ratings may be lowered to A-, equalising them with Wesfarmers and its existing insurance subsidiary, Wesfarmers Federation Insurance.

The sale agreement between the two parties is expected to be signed by the end of this month, with the sale finalised by the end of August.

S&P said the present A ratings on the Lumley entities “reflect their sound business and financial profile in the region, which include good niche market positions, a track record of profitability, and sound capitalisation and balance sheet structure”.