S&P lifts Liberty Mutual, view to stable

Standard & Poor’s said it raised the ratings on Liberty Mutual Insurance Co. to A/A-1 from A-/A-2, along with the ratings on parent company Liberty Mutual Group Inc. to BBB from BBB- and the ratings on all of the group’s other companies by one notch.

The agency also said it revised the outlook on all companies to stable from positive.

Liberty Mutual has entered into an agreement with National Indemnity Co. in which National Indemnity will provide adverse development coverage for all of Liberty Mutual Insurance’s U.S. workers compensation and asbestos and environmental liabilities (A&E) with an aggregate limit of $6.5 billion, S&P said.

At the closing, Liberty Mutual Insurance ceded about $3.3 billion of existing liabilities under a reinsurance agreement, the agency said. National Indemnity will provide roughly $3.2 billion of additional aggregate adverse development coverage.

This agreement covers Liberty Mutual’s potentially volatile U.S. A&E liabilities and largely mitigates potential risks from future adverse reserve developments, the agency said.

This also will reduce potential earnings volatility and significantly lowers required capital per the capital model, improving the view of its capital and earnings profile, S&P added.

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