Moody's rates Ohio Casualty convertible Baa3

Moody's Investors Service said it assigned a Baa3 rating to Ohio Casualty Corp.'s $65,557,000 of 5% convertible notes due 2022 that it will exchange for a like amount of currently outstanding 5% convertible notes due 2022, which are also rated Baa3 by Moody's.

Following the completion of the exchange offer, the total principal amount of the old notes will be $118,693,000.

The outlook is stable.

According to Moody's, the company's ratings reflect its established regional presence in small business commercial and personal lines, its improving operating performance, its strong capitalization and liquidity, its reasonable level of operating leverage and moderate parent company financial leverage. These strengths are tempered somewhat by the company's relatively high equity investment allocation (approximately 37% of statutory surplus), 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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