Moody's: Liberty view stable

Moody's Investors Service said it changed the outlook for Liberty Mutual Group Inc. and its subsidiaries to stable from negative and affirmed the company's Baa2 senior unsecured debt rating, Baa3 junior subordinated debt rating and Prime-2 commercial paper rating.

The agency also affirmed Liberty Mutual Insurance Co.'s surplus notes at Baa2 and long-term issuer credit rating at Baa1 and the senior debt of Ohio Casualty Corp. and Safeco Corp. at Baa2.

Moody's said the outlook change is based on the group's steadily reduced, though still elevated, financial and operational leverage profile; the fact that, notwithstanding the recent postponement of the Agency Markets initial public offering, Liberty Mutual can now access equity capital markets; the overall successful integration of acquisitions made in recent years; and the group's strengthened leadership position in the U.S. property and casualty insurance sector.

The ratings reflect Liberty Mutual's leadership position in both commercial and personal lines insurance throughout the United States, its significant international presence, the breadth of its product and distribution platform and its overall strong asset quality and good profitability in recent years, the agency said.

These strengths are tempered by the insurance group's elevated operational and financial leverage, below-average underwriting margins relative to peers and exposures to losses from natural and man-made catastrophes and the potential for adverse reserve development in long-tail casualty lines, Moody's said.

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