AM Best Places Credit Ratings of State Automobile Mutual Insurance Company and Its Operating Subsidiaries Under Review with Positive Implications

AM Best has placed under review with positive implications the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-” (Excellent) of State Automobile Mutual Insurance Company (SAM) and its operating subsidiaries. Concurrently, AM Best has placed under review with positive implications the Long-Term ICR of “bbb-” (Good) of SAM’s intermediate holding company, State Auto Financial Corporation (STFC) [NASDAQ: STFC]. All of the above companies are headquartered in Columbus, OH. (See below for a listing of the companies.)

The Credit Ratings (ratings) of SAM and its operating subsidiaries have been placed under review with positive implications following the announcement that SAM and STFC entered into an agreement and plan of merger and combination with Liberty Mutual Holding Company Inc. (LMHC) and its subsidiaries. SAM and STFC will merge into two LMHC entities and individually become the surviving members. Under the terms of the agreement, LMHC will acquire all of the publicly held shares of common stock of STFC for $52 per share or approximately $1.0 billion in a cash transaction. The agreement requires SAM member approval, STFC shareholder approval, regulatory approval and other customary closing conditions.

The positive implications status reflects AM Best’s expectation that LMHC will merge SAM and its operating subsidiaries into the existing organization, with the latter benefiting from the strategic relationship and intended support provided by LMHC. The ratings will remain under review until all approvals are finalized, the transaction closes and AM Best evaluates the overall impact.

The ratings have been placed under review with positive implications for the following operating subsidiaries of State Automobile Mutual Insurance Company:

• State Auto Property & Casualty Insurance Company
• Milbank Insurance Company
• State Auto Insurance Company of Ohio
• Patrons Mutual Insurance Company of Connecticut
• Meridian Security Insurance Company
• State Auto Insurance Company of Wisconsin
• Rockhill Insurance Company
• Plaza Insurance Company
• American Compensation Insurance Company
• Bloomington Compensation Insurance Company

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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