CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - APRIL 23, 2008 12:00 AM (EDT)
A.M. Best Co. has commented that the ratings of Liberty Mutual Insurance Companies (Liberty Mutual) and its members remain unchanged following today's announcement that Liberty Mutual Group, Inc (LMGI), through its operating subsidiaries, will be acquiring Safeco Corporation (Safeco) (Seattle, WA) [NYSE: SAF]. The outlook for Liberty Mutual and LMGI's ratings is stable. All companies are located in Boston, MA, except where specified.
LMGI and Safeco have entered into an agreement in principle for the acquisition of Safeco and are entering the regulatory approval process with the transaction expected to close during third quarter 2008. The entities to be acquired will be integrated as members of the Liberty Insurance Holdings (LIH) (Keene, NH) pool. LMGI has integrated a number of similar transactions over the years, and as in the past, A.M. Best will monitor the progress of this integration going forward.
On March 5, 2008, A.M. Best affirmed the financial strength ratings (FSR) of A (Excellent) and issuer credit ratings (ICR) of "a" of Liberty Mutual and LIH. Additionally, A.M. Best affirmed the FSR of A (Excellent) and ICR of "a" of Liberty Life Assurance Company of Boston (Liberty Life).
With the acquisition of Safeco, LMGI is purchasing a consistently profitable book of business as a regional provider of property/casualty insurance products predominantly in western states. The transaction assists LIH in achieving personal lines scale through enhanced product and geographic diversification while improving the independent agency distribution network. The transaction is not subject to financing contingencies; however, it will be funded with available cash and Liberty Mutual will issue up to $1.5 billion of junior subordinated securities (hybrid debt) and senior debt. Absent this issuance, Liberty Mutual has adequate liquidity to fund the entire transaction with existing cash and using bridge financing to permit an orderly liquidation of investments. Post transaction, Liberty Mutual will have limited financial flexibility for future events relative to its ratings based on current financial leverage measures.
For Best's Ratings, an overview of the rating process and rating methodologies, please visit Best's Rating Center.
Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.