AM Best


A.M. Best Affirms Ratings of Liberty Mutual Holding Company Inc. and Its Subsidiaries


CONTACTS:


Analysts

Edward Keane

(908) 439-2200, ext. 5291

edward.keane@ambest.com



Michelle Baurkot

(908) 439-2200, ext. 5507

michelle.baurkot@ambest.com

Public Relations

Rachelle Morrow

(908) 439-2200, ext. 5378

rachelle.morrow@ambest.com

Jim Peavy

(908) 439-2200, ext. 5644

james.peavy@ambest.com

FOR IMMEDIATE RELEASE

OLDWICK, N.J. - JUNE 11, 2010 12:00 AM (EDT)
A.M. Best Co. has affirmed the financial strength ratings (FSR) of A (Excellent) and issuer credit ratings (ICR) of "a" of Liberty Mutual Insurance Companies (Liberty Mutual) and Peerless Insurance Company Pool (Peerless Pool) (Keene, NH) and their members, as well as Liberty Mutual Insurance Europe Limited (LMIE) (United Kingdom) and Liberty Life Assurance Company of Boston (Liberty Life). These entities are all operating subsidiaries of the ultimate parent company, Liberty Mutual Holding Company Inc. (LMHC). Concurrently, A.M. Best has affirmed the ICRs of "bbb" for LMHC, Liberty Mutual Group, Inc. (LMGI), Ohio Casualty Corporation and Safeco Corporation, as well as all debt ratings of LMGI. The outlook for all ratings is negative. All companies are domiciled in Boston, MA, except where specified. (See link below for a detailed listing of the companies and ratings.)

The ratings reflect LMGI's favorable operating performance, sound capitalization, strong global brand name recognition, as well as Liberty Mutual's dominant market profile, as it was ranked as the fourth-largest insurance group in the United States, based on direct premiums written, at year-end 2009. The ratings further acknowledge LMGI's sustainable competitive advantages of its multiple distribution channels, active risk management of its catastrophe and investment exposures and solid product and geographic diversification.

As a strategic component of Liberty Mutual's agency markets business unit, the Peerless Pool provides the platform for the group to enhance its ongoing efforts to penetrate small commercial and personal markets. LMGI's market presence has been enhanced in recent years through a number of acquisitions, which have provided it with strong regional brand name recognition, market expertise, increased utilization of its independent agency force, as well as improved geographic spread and product diversification.

These positive rating factors are somewhat offset by the modest deterioration in operating results at Liberty Mutual, driven largely by deteriorating underwriting results and lower investment gains. Additionally, LMGI's overall capitalization was strained in 2008 and early 2009, following deteriorating operating results, modest unrealized capital losses and the capital outlay for the purchase of Safeco Corporation. However, following the recovery of the financial markets in 2009, Liberty Mutual's statutory surplus increased $2.4 billion or 19% in 2009, and the overall group's GAAP equity increased $4.1 billion or 40% to $14.5 billion. As a result, A.M. Best believes LMGI is adequately capitalized to face the challenges posed by current market conditions; however, the rating outlook reflects a modest level of capitalization and the weakened operating performance that will continue to be sensitive to economic conditions and financial market results.

The affirmation of the ratings for LMIE recognize its solid balance sheet strength, strong operating performance within niche markets, brand recognition and the explicit support provided by its parent, Liberty Mutual Insurance Company.

The affirmation of the ratings for Liberty Life acknowledges its established business profile in the individual and group markets, improved position of its investment portfolio and strong risk-adjusted capital position. Furthermore, the ratings also reflect Liberty Mutual's explicit support and its commitment to maintain favorable capital levels at Liberty Life.

Partially offsetting these positive rating factors are Liberty Life's reduction in statutory profitability in recent years and the impact of the economic downturn on its group long-term disability book of business.

For a complete listing of Liberty Mutual Holding Company Inc. and its subsidiaries' FSRs, ICRs and debt ratings, please visit Liberty Mutual.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at Best's Credit Rating Methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers.


Related Companies

For information about each company, including the Best's Credit Reports, group members (where applicable) and news stories, click on the company name. An additional purchase may be required.