S&P Affirms Liberty Mutual Group Ratings

November 16, 2004

Standard & Poor’s Ratings Services has affirmed its ‘A’ counterparty credit and financial strength ratings on Liberty Mutual Insurance Co. and related entities (see ratings list). At the same time, Standard & Poor’s affirmed its ‘BBB’ counterparty credit rating on Liberty Mutual Group Inc., the holding company. The outlook on all these companies remains stable.

The ratings reflect Liberty’s prominent market position, highly diversified business mix, stronger underwriting results, and improving capitalization. However, underwriting performance has not improved to the extent seen by some of Liberty’s competitors in the current industry cyclical upswing.

Factored into these ratings are Standard & Poor’s analysis and conclusions regarding the effect on statutory capital of all retroactive reinsurance contracts in force at year-end 2003. It should be noted that the retroactive reinsurance agreements benefited only statutory surplus and did not affect the company’s GAAP financial statements, including shareholders’ equity.


Liberty Mutual’s earnings and capital adequacy are expected to improve further in 2004 and 2005. Underwriting results should benefit from the higher rates achieved in 2003 and continued pricing improvements in 2004. Standard & Poor’s expects that Liberty Mutual’s statutory combined ratio will improve to about 100%.

Ratings list

Liberty Mutual Group Inc.
Counterparty credit rating BBB/Stable/–
Senior unsecured debt rating BBB
Liberty Mutual Insurance Co.
Counterparty credit rating A/Stable/A-1
Financial strength rating A/Stable
Surplus notes rating BBB+
Senior unsecured debt rating A
Commercial paper rating A-1
Liberty Mutual Fire Insurance Co.
Employers Insurance Co. of Wausau, a Mutual Co.
Golden Eagle Insurance Corp.
Liberty Insurance Co. of America
Liberty Insurance Corp.
Bridgefield Casualty Insurance Co.
Bridgefield Employers Insurance Co.
Colorado Casualty Insurance Co.
First Liberty Insurance Corp.
LM Insurance Corp.
Liberty Insurance Underwriters Inc.
Wausau General Insurance Co.
Wausau Underwriters Insurance Co.
Liberty Personal Insurance Co.
Liberty Surplus Insurance Corp.
Merchants & Business Men’s Mutual Insurance Co.
Montgomery Indemnity Co.
Montgomery Mutual Insurance Co.
America First Insurance Co.
Consolidated Insurance Co.
Excelsior Insurance Co.
Indiana Insurance Co.
Netherlands Insurance Co.
Peerless Indemnity Insurance Co.
Hawkeye-Security Insurance Co.
Midwestern Indemnity Co.
Peerless Insurance Co.
Prudential Property & Casualty Insurance Co.
of Indiana
Wausau Business Insurance Co.
Counterparty credit rating A/Stable/–
Financial strength rating A/Stable
Liberty Life Assurance Co. of Boston
Liberty Mutual Insurance Europe Ltd.
Financial strength rating A/Stable

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