MOODY'S AFFIRMS LIBERTY MUTUAL RATINGS; OUTLOOK MOVED TO STABLE FROM NEGATIVE
Moody's Investors Service has affirmed its ratings of members of the Liberty Mutual Group (insurance financial strength at Aa3) and moved the rating outlook to stable from negative. The stable outlook applies to all members of the Liberty Mutual Intercompany Reinsurance Pool as well as to Liberty Life Assurance Company of Boston (rated A1 for insurance financial strength), surplus notes issued by Liberty Mutual Insurance Company (A2) and the Medium-Term Note program of Liberty Mutual Capital Corporation (rated A1). The Prime-1 rating of Liberty Mutual Capital Corporation is also affirmed.
Commenting on its action, Moody's noted that Liberty Mutual benefits from a solid franchise and well-balanced diversification. Liberty draws revenue from large and small commercial insurance accounts, through multiple distribution channels in the U.S. and abroad. Further, Liberty's presence in the personal marketplace has expanded in recent years, with personal insurance now accounting for over one-third of the company's premium volume. In addition to property/casualty insurance, Liberty takes part in the asset management and annuities businesses through its controlling interest in Liberty Financial Companies. Liberty Mutual also maintains a presence in the life insurance and group insurance marketplaces.
Moody's noted that Liberty Mutual, like most property/casualty insurers, has seen its core earnings suffer from the intense price competition that dominated the industry for the past several years. Looking ahead, the rating agency expects Liberty's earnings to benefit from the improving market conditions as well as the company's commitment to maintaining pricing and underwriting discipline. The anticipated improvement in earnings should, Moody's noted, translate into stronger levels of interest coverage. Moody's stated that the rating would need to be reevaluated should the improvement in earnings not materialize, or if increased financial leverage were to prevent or blunt the anticipated improvement in core earnings.
Liberty Mutual Insurance Company, based in Boston, is engaged in property and casualty insurance in the USA and internationally, and in diversified financial services through its majority-owned Liberty Financial Companies affiliate. Liberty Mutual had approximately $13 billion of revenue in 1999, and has policyholders’ surplus of approximately $7.05 billion
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