Moody's rates Ohio Casualty notes

Moody's Investors Service said it assigned a Baa3 rating to the $200 million of 10-year senior notes to be issued by Ohio Casualty Corp.

The proceeds of the new notes will be used to repurchase the company's existing convertibles.

According to Moody's, Ohio Casualty's ratings reflect its established regional presence in small business commercial and personal lines, its adequate and improving capitalization, its strong liquidity, its reasonable level of operating leverage and moderate parent company financial leverage.

These strengths are mitigated by the company's uneven operating performance in recent years, the company's relatively high equity investment allocation, which presents increased volatility risk to the company's capital and surplus, its high expense ratio relative to its independent agency competitors and by its exposure to regional catastrophe losses.

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