Fosun’s plan to buy specialty insurer Ironshore is credit negative for both companies, analysts for Moody’s Investors Services said on Monday.

In an article published in Moody’s Credit Outlook publication, Kai Hu and James Eck, both vice presidents and senior credit officers, said explained that the deal is credit negative for Fosun because it reduces the Chinese investment company’s liquidity and increases its debt.

For Ironshore, Fosun’s May 3, 2015 announcement that it will acquire the 80 percent of the insurer that it doesn’t already own for over $1.8 billion will “introduce a number of uncertainties for Ironshore that adversely affect its credit quality,” the analysts wrote.

“The Ironshore acquisition advances Fosun’s transition toward an insurance-centric investment holding company,” they said, noting that once Fosun’s deals close for both Ironshore and Meadowbrook—another insurers that Fosun proposed acquiring in February for around $433 million–Fosun’s insurance assets will account for close to half of Fosun’s total consolidated assets.

Still, “Fosun faces execution challenges because it lacks experience running a specialty insurance business in the U.S. and will need to access the unpredictable equity market to fund the deal.”

On the plus side for Ironshore, the sale to Fosun would complete an ownership transition—from private equity ownership to becoming a strategic subsidiary of a large investment group with a long-term investment horizon. “We believe this makes Ironshore more able to navigate the operating environment by remaining focused on longer term goals and through access to the group’s resources, should large losses or growth opportunities create a need for capital,” Moody’s said.

On the down side, risks of the acquisition by Fosun for Ironshore’s policyholders and creditors include “Fosun’s aggressive growth trajectory and below-investment-grade credit quality, Fosun’s uncertain longer-term plans for capital management at Ironshore, as well as the potential for increased risk within Ironshore’s investment portfolio.”

The transaction is subject to regulatory approval, and the parties can terminate the agreement if the merger is not completed by March 31, 2016, Moody’s noted.