With a soft market making it more difficult to compete, and the economy contracting, it was only a matter of time before consolidation started heating up in the property-casualty industry, and 2008 saw more than its share of major deals.
For one, there was Liberty Mutual's purchase of Safeco, announced in April, with a $6.2 billion price tag. Safeco became part of Liberty's Agency Markets unit, with the combined entity represented by some 15,000 independent agents nationwide.
The merger was hailed by agent groups, but rating agencies reacted skeptically, raising concerns about the burden that debt financing would place on Liberty's capital adequacy. Even before the subprime crisis exploded, Fitch Ratings said Liberty might have a hard time raising capital in an already challenging credit market.
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