S&P Affirms Liberty Mutual Ratings; Outlook Neg.Business Editors NEW YORK--(BUSINESS WIRE)--Dec. 22, 2000 Standard & Poor's-- Standard & Poor's today affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. its ratings on Liberty Mutual Insurance Co. (Liberty Mutual), Liberty Life Assurance Co. of Boston Boston, town, England Boston, town (1991 pop. 26,495), E central England, on the Witham River. Boston's fame as a port dates from the 13th cent., when it was a Hanseatic port trading wool and wine. Having recovered from a decline in the 18th and 19th cent. (LLAC), and the members of the Liberty Mutual Intercompany Pool (see list). The outlook is negative. Standard & Poor's ratings on Liberty Financial Cos. Inc. (LFC LFC Liverpool Football Club LFC Lake Forest College (Lake Forest, IL) LFC Level of Free Convection (meteorology) LFC Large Format Camera LFC Load Frequency Control ), Keyport Keyport is the name of some places in the United States of America:
annuity Payment made at a fixed interval. A common example is the payment received by retirees from their pension plan. There are two main classes of annuities: annuities certain and contingent annuities. Co. remain on CreditWatch, where they were placed on Nov. 1, 2000, with developing implications. The affirmations follow Standard & Poor's annual review of the Liberty Mutual organization and reflect Standard & Poor's opinion that favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. pricing trends in the commercial lines market -- combined with management's efforts to re-underwrite or exit unprofitable business lines -- could increase the profitability and ultimate capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. of the organization to a level supportive of the ratings. Although these efforts appear successful, they alone are not expected to improve the fundamentals of the organization to a level consistent with the rating. Profit margins are not likely to reach pre- pre- word element [L.], before (in time or space). pre- pref. 1. Earlier; before; prior to: prenatal. 2. 1998 levels (an ROR ROR Ruby on Rails ROR Rate Of Return ROR Reach Out and Read (national pediatric literacy program) ROR Rotate Right ROR Revolutions On Request (artist group; Finland) ROR Rise of Rome of 5%-7%) until 2003. Similarly, the absolute and relative strengths of capitalization are only expected to improve modestly over the next few years. Standard & Poor's believes LFC's decision to explore its strategic options, including a possible sale, could significantly accelerate management's ability to meet capitalization and earnings expectations. Nevertheless, any long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. improvement in the financial condition of the organization will have to come from the maintenance and adherence adherence /ad·her·ence/ (ad-her´ens) the act or condition of sticking to something. immune adherence to sound underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. principles. In 2000, management completed a reorganization of Liberty Mutual's commercial markets businesses, which was initiated in 1999 following its affiliation with Employers Insurance of Wausau (EIOW). The reorganization aligned Liberty Mutual's products and services around multiple distribution channels and has achieved more than $240 million of annual expense savings to date. In addition, Liberty Mutual re-priced or exited commercial accounts that were not expected to meet corporate profitability goals. The outcome of these efforts was a decrease in customer retention rates across all commercial markets' business segments and a sound foundation for future growth and profitability. However, improving profitability to acceptable levels will require additional rate increases on renewal business, which will be difficult to achieve if market trends in the general commercial lines market begin to soften. Standard & Poor's expects the commercial markets to continue to firm in 2001. Liberty Mutual, the ninth largest writer of property/casualty insurance in the U.S., is a recognized leader in workplace safety and risk-management solutions. The company, through its affiliation with EIOW, has solidified so·lid·i·fy v. so·lid·i·fied, so·lid·i·fy·ing, so·lid·i·fies v.tr. 1. To make solid, compact, or hard. 2. To make strong or united. v.intr. its position as the largest writer of workers' compensation workers' compensation, payment by employers for some part of the cost of injuries, or in some cases of occupational diseases, received by employees in the course of their work. insurance in the U.S. The company is also the ninth largest writer of personal insurance products in the U.S. Keyport -- in conjunction with its parent, LFC -- provides individuals with a broad spectrum of wealth accumulation products. In November 2000, LFC announced its decision to explore its strategic options, including a possible sale. Subsequently, Standard & Poor's placed its ratings on LFC and its subsidiaries on CreditWatch with developing implications. The ratings on LFC and Keyport include credit for being a member of the Liberty Mutual group of companies. In addition, the counterparty Counterparty The other participant, including intermediaries, in a swap or contract. credit and financial strength ratings on Keyport reflect its strong annuity market position, strong operating performance, and strong capitalization. Partially offsetting these strengths are the challenges Keyport faces in overcoming the overall competitive pressures in the individual annuity market and management of interest-rate risk. LLAC's obligations are guaranteed by Liberty Mutual, and thus the rating is tied to that on the parent. In addition, the rating reflects LLAC's strong business profile, strategic importance to the group, strong individual life and annuity operating performance, and high-quality investment portfolio. Offsetting these strengths are the challenges LLAC faces in restoring profitability in its short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. disability business given the competitive pressures in this segment. OUTLOOK: NEGATIVE The outlook reflects Standard & Poor's concerns that recent initiatives might not lead to a sufficient improvement in Liberty's profitability in 2001. Maintaining the current rating largely depends on a significant improvement in capitalization in the near term. Standard & Poor's will continue to monitor the company's progress in these areas if progress is slower than anticipated. In addition, Standard & Poor's expects to resolve the status of the ratings on CreditWatch in the early part of the second quarter of 2001.---CreditWire OUTSTANDING RATINGS AFFIRMED Liberty Mutual Insurance Co. Counterparty credit rating AA-/Negative Financial strength rating AA- Senior unsecured debt rating AA- Surplus notes rating A Commercial paper rating A-1+ Liberty Life Assurance Co. of Boston Financial strength rating AA- MEMBERS OF THE LIBERTY MUTUAL INTERCOMPANY POOL Employers Insurance of Wausau Liberty Mutual Fire Insurance Co. Golden Eagle Insurance Corp. Montgomery Mutual Insurance Co. Liberty Insurance Corp. Wausau Underwriters Insurance Co. Wausau Business Insurance Co. Wausau General Insurance Co. Liberty Surplus Insurance Co. Merchants & Business Men's Mutual Insurance Co. Liberty Insurance Co. of America Montgomery Indemnity Co. LM Insurance Corp. First Liberty Insurance Co. Colorado Casualty Insurance Co. Counterparty credit rating AA-/Negative Financial strength rating AA- OUTSTANDING RATINGS ON CREDITWATCH WITH DEVELOPING IMPLICATIONS Liberty Financial Cos. Inc. Counterparty credit rating A- Senior unsecured debt A- Keyport Life Insurance Co. Counterparty credit rating AA- Short-term counterparty credit rating A-1+ Financial strength rating AA- Short-term financial strength rating A-1+ Keyport Benefit Life Insurance Co. Independence Life & Annuity Co. Financial strength rating AA- |
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