S&P rates Liberty Mutual notes BBB-

Standard & Poor's said it assigned a BBB- senior debt rating to Liberty Mutual Group Inc.'s $704 million.

The company proposes to issue the notes in exchange for outstanding debt within its recently acquired subsidiaries Safeco Corp. ($300 million 4.875% due Feb. 1, 2010 and $204 million 7.25% due March 1, 2012) and Ohio Casualty Corp. ($200 million, 7.3% senior notes due June 15, 2014).

The rating is based on the group's strong position in the U.S. property/casualty insurance market, well-diversified business mix by product and geographic region, and broad experience acquiring other insurers, the agency said.

Offsetting these strengths are Liberty's diminished financial flexibility and below-rating-level earnings, S&P noted. In addition, its aggressive pricing and growth strategy in a softening market environment has reduced the capital adequacy.

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