Liberty Mutual Holding Company’s planned $1 billion cash acquisition of State Auto Group should not affect its financial strength rating at all, Fitch Ratings said.

The reason: Liberty Mutual is already in good shape, and its acquisition of State Auto, a super-regional insurance holding company based in Columbus, Ohio, won’t move the financial needle very much anyway.

“Given the relative size of the two organizations on a standalone basis, State Auto should provide a modest benefit to Liberty’s already favorable business profile,” Fitch said in a July 14 investor note.

As a result, Fitch said it doesn’t expect Liberty’s ratings to see any impact. Fitch said it currently maintains an ‘A-‘ Insurer Financial Strength Rating on Liberty and its operating subsidiaries.

Liberty is currently the fifth-largest property/casualty insurer in the U.S. based on direct premiums written and has a top 10 market position in nearly every major P/C line in the U.S. in which it operates. The company reported more than $41 billion of net written premiums in 2020, Fitch noted. In contrast, State Auto was the 48th largest U.S. P/C insurer in 2020, and Liberty’s acquisition of the company is expected to add about $2.3 billion of statutory premiums to Liberty. Fitch said the deal will increase Liberty’s pro-forma book of business by less than 6 percent. It’s expected to close in 2022, once customary closing conditions are met.

Similarly, A.M. Best also said the deal will not lead to ratings instability. The firm said its credit ratings for Liberty Mutual Holding Company and its subsidiaries remain unchanged following the State Auto acquisition announcement.

Liberty Mutual gains plenty from the transaction oin at least one crucial way: Being able to tap into State Auto’s network of about 3,400 independent agencies across 33 states, A.M. Best noted. As well, the ratings agency recapped that the transaction will help Liberty Mutual beef up its presence in the personal and small commercial insurance lines of business.

Sources: Fitch Ratings, A.M. Best