Boston-based insurer Liberty Mutual Group on Thursday reported an 11.5 percent year-over-year second-quarter loss, and was also hit with a negative credit watch rating from Standard & Poor's.

The company reported net income of $300 million for the second quarter, down $39 million compared to the same period last year. Year-to-date, Liberty Mutual reported net income of $600 million, down from $629 million in 2007.

Standard & Poor's Rating Services is keeping its 'BBB' counterparty credit rating on Liberty Mutual on "CreditWatch," where it was placed on April 23, the firm said.

"We had put the rating on CreditWatch following Liberty's announcement that it had signed a definitive agreement to purchase Seattle-based Safeco Corp. for about $6.2 billion in cash," explained Standard & Poor's credit analyst John Iten.

The transaction is expected to close by the end of the third quarter of 2008.