Standard & Poor's (S&P) has upgraded Liberty Mutual ratings following the insurer's $6.5 billion adverse cover deal with National Indemnity, a subsidiary of Berkshire Hathaway. S&P has raised Liberty Mutual Insurance Co to ratings to A/A-1 from A-/A-2, its rating on parent company Liberty Mutual Group to BBB from BBB- and raised ratings on its insurance subsidiaries all by one notch. At the same time, S&P revised the outlook on all of these companies to stable from positive. The rating agency said that the agreement between Liberty Mutual and National Indemnity covers Liberty Mutual's potentially volatile US A&E liabilities and largely mitigates potential risks from future adverse reserve developments. "We also believe this will reduce potential earnings volatility and significantly lowers required capital per our capital model, improving our view of its capital and earnings profile," said the rating agency.