MOODY'S LOWERS INSURANCE FINANCIAL STRENGTH RATINGS (TO Aa3 FROM Aa2) OF MEMBERS OF THE WAUSAU INSURANCE COMPANIES GROUP; NEGATIVE OUTLOOK
Moody's Investors Service has lowered the insurance financial strength ratings of members of the Wausau Insurance Companies Group -- to Aa3 from Aa2. The rating actions follows the completion of Wausau Group's affiliation with Liberty Mutual from Nationwide Insurance and its integration into Liberty Mutual intercompany reinsurance pool, and concludes a review initiated in October 1998 at the time of the announcement of a definitive agreement between Liberty Mutual and Nationwide. The rating change aligns the ratings of the Wausau companies with the Aa3 ratings of the other members of the Liberty Mutual property and casualty insurance intercompany pool.
Wausau specializes in underwriting workers' compensation and other commercial lines through brokers, mostly throughout the midwestern USA. Moody's noted that Wausau's business mix is highly compatible with Liberty Mutual's core commercial lines operations, and that the acquisition significantly expands Liberty Mutual's market presence and distribution platform in several midwestern states. Significantly, Wausau's discontinued operations have remained with Nationwide.
Moody's noted that the negative rating outlook for members of the Wausau Group follows Moody's rating confirmation and negative outlook for other members of the Liberty Mutual Group. The outlook change for Liberty Mutual followed the company's recent announcement of a definitive agreement to acquire the U.S.-based operations of Guardian Royal Exchange -- consisting of approximately $1.3 billion of annual premiums -- for approximately $1.5 billion. Moody's cited increasing leverage, declining operating margins, and risks associated with significant growth through acquisitions and a changing funding mix as concerns.
Insurance financial strength ratings affected are as follows:
Employers Insurance of Wausau, A Mutual Company -- to Aa3 from Aa2;
Wausau Business Insurance Company -- to Aa3 from Aa2;
Wausau Underwriters Insurance Company -- to Aa3 from Aa2;
Wausau General Insurance Company -- to Aa3 from Aa2.
Liberty Mutual Insurance Company, based in Boston, is engaged in property and casualty insurance in the USA and internationally, and in diversified personal financial services through its majority-owned Liberty Financial Companies affiliate. Liberty Mutual had approximately $6.6 billion of net written premiums in 1998, and has policyholders' surplus of approximately $7.0 billion; Employers Insurance of Wausau, based in Wausau, Wisconsin, reported assets of approximately $2.7 billion and policyholders' surplus of approximately $575 million.
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