Fitch Affirms Liberty Mutual; Outlook to Stable From Positive On Acquisition Announcement.

CHICAGO -- Fitch Ratings has affirmed the following ratings:

Liberty Mutual Group Inc.'s (LMG)

--Issuer Default Rating (IDR) at 'BBB';

--Senior unsecured notes at 'BBB-';

--$600 million commercial paper program at 'F2'.

Liberty Mutual Insurance Company's (LMIC)

--Issuer Default Rating (IDR) at 'BBB+';

--Surplus Notes at 'BBB'.

Members of the Liberty Mutual Inter-company Pool (LMIC Pool)

--Insurer Financial Strength (IFS) at 'A-'.

Members of the Peerless Insurance Company Inter-company Pool (Peerless Pool)

--IFS at 'A-'.

The Rating Outlook has been revised to Stable from Positive.

The affirmations follow today's announcement by LMG that it plans to acquire Ohio Casualty Corporation (OCAS) for $2.7 billion in cash. LMG's announcement states that the company intends to fund the transaction with cash and short-term debt.

Fitch's decision to revise the Rating Outlook to Stable from Positive reflects concerns about the transaction's effect on LMG's combined pro-forma balance sheet and risk profile. Fitch believes that the transaction's completion will increase LMG's underwriting leverage, exposure to intangible assets, and may result in a modest increase in financial leverage.

Additionally, Fitch believes that it is possible that a portion of the cash proceeds will ultimately be funded by LMG's operating companies making their capitalization more supportive of a Stable Rating Outlook.

Fitch had revised its Rating Outlook on LMG to Positive from Stable in October 2006 citing improvements in LMG's profitability and heightened comfort with the company's capital adequacy.

Fitch has affirmed the following ratings with a Stable Rating Outlook:

Liberty Mutual Group, Inc.

--Issuer Default Rating (IDR) at 'BBB';

--$600 million Commercial Paper Program at'F2';

--5.75% Senior Notes due 2014 at 'BBB-';

--6.7% Senior Notes due 2016 at 'BBB-';

--7.00% Senior Notes due 2034 at 'BBB-';

--6.50% Senior Notes due 2035 at 'BBB-';

--7.50% Senior Notes due 2036 at 'BBB-'.

Liberty Mutual Insurance Co.

--IDR at 'BBB+'

--8.50% Surplus Notes due 2025 at 'BBB';

--7.875% Surplus Notes due 2026 at 'BBB';

--7.697% Surplus Notes due 2097 at 'BBB'.

Liberty Mutual Inter-company Pool Members:

Liberty Mutual Insurance Co

--Insurer financial strength (IFS) at 'A-'.

Employers Ins. Co. of Wausau

--IFS at 'A-'.

Liberty Mutual Fire Ins. Co.

--IFS at 'A-'.

Liberty Insurance Corp.

--IFS at 'A-'.

Wausau Business Ins. Co.

--IFS at 'A-'.

Wausau General Insurance Co.

--IFS at 'A-'.

Wausau Underwriters Ins. Co.

--IFS at 'A-'.

LM Insurance Co.

--IFS at 'A-'.

The First Liberty Insurance Co.

--IFS at 'A-'.

Peerless Inter-Company Pool Members:

Peerless Insurance Co.

--IFS at 'A-'.

Peerless Indemnity Co.

--IFS at 'A-'.

Golden Eagle Insurance Co.

--IFS at 'A-'.

Indiana Insurance Co.

--IFS at 'A-'.

The Netherlands Insurance Co.

--IFS at 'A-'.

Montgomery Mutual Insurance Co.

--IFS 'A-'.

Liberty Lloyds of Texas Insurance Company

--IFS 'A-'

Liberty County Mutual Insurance Company

--IFS 'A-'

Liberty Insurance Underwriters, Inc.

--IFS 'A-'

Bridgefield Employers Insurance Company

--IFS 'A-'

LM Property and Casualty Insurance Company

--IFS 'A-'

LM General Insurance Company

--IFS 'A-'

LM Personal Insurance Company

--IFS 'A-'

National Insurance Association

--IFS 'A-'

Mid-America Fire & Casualty Company

--IFS 'A-'

Globe American Casualty Company

--IFS 'A-'

American Ambassador Casualty Company

--IFS 'A-'

Hawkeye Security Company

--IFS 'A-'

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site. The issuer did not participate in the rating process other than through the medium of its public disclosure.