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S&P cuts Liberty Mutual, Safeco
Standard & Poor's said it lowered the counterparty credit rating on Liberty Mutual Group Inc. to BBB- from BBB and on Safeco Corp. to BBB- from BBB+.
Ratings were removed from CreditWatch, where they were placed on April 23, with negative implications after Liberty Mutual said it signed a definitive agreement to purchase Safeco for about $6.2 billion in cash and the assumption of $504 million of Safeco's senior debt.
The downgrades follow the close of this acquisition on Sept. 22.
The outlook is stable.
Liberty's diminished financial flexibility, below-rating-level earnings, and aggressive pricing and growth strategy drove downgrades, the agency said.
Reduced capital adequacy and expectation that earnings and coverage ratios will be pressured over the next two years by the ongoing deterioration in U.S. commercial lines pricing also are concerns, S&P added.
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