Standard & Poor's announced yesterday it lowered Liberty Mutual Group's financial strength ratings to "A-" from "A," a move the insurer called a "disservice to Liberty Mutual and our policyholders."
S&P said it took the action following the close of Liberty Mutual's $6.2 billion acquisition of Safeco. The rating agency cited Liberty Mutual's "diminished financial flexibility, below-rating-level earnings (as measured by return on revenue), and aggressive pricing and growth strategy" as reasons for the downgrade.
Liberty Mutual, in response said that decision contradicts S&P's prior announcements. The insurer said S&P: put it on CreditWatch with negative implications when the Safeco acquisition was announced in April. The rating agency subsequently said it expected to affirm the ratings if Liberty Mutual's capitalization was not materially below what is required for the current rating.
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