Moody's rates Liberty Mutual notes Baa2

Moody's Investors Service said it assigned a Baa2 rating to the proposed senior unsecured notes of Liberty Mutual Group Inc.

The $704 million proposed offering is associated with the exchange of several tranches of outstanding senior notes issued by Ohio Casualty Corp. (2014 maturity) and Safeco Corp. (2010 and 2012 maturities) for senior notes to be issued by Liberty with like amounts, coupon and maturity as the Ohio Casualty and Safeco notes, the agency said.

The Baa2 senior unsecured debt rating is based on the group's strong market position in both commercial and personal lines insurance in the United States and its diversified international operations, the breadth of its product and distribution platform, its strong asset quality and good profitability in recent years, according to Moody's.

These strengths are tempered by the insurance group's substantial operational leverage following the Safeco acquisition, below-average underwriting margins relative to peers, the potential for adverse reserve development and the operational risks associated with the group's active acquisition strategy, the agency noted.

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