AM Best Affirms Credit Ratings of The Hanover Insurance Group, Inc. and Its Subsidiaries
AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a+” (Excellent) of the property/casualty subsidiaries of The Hanover Insurance Group, Inc. [NYSE: THG], which are collectively referred to as The Hanover. Additionally, AM Best has affirmed the Long-Term ICR of “bbb+” (Good) and all Long-Term Issue Credit Ratings (Long-Term IR) of The Hanover Insurance Group, Inc., which is the parent holding company. The outlook of these Credit Ratings (ratings) is stable. All companies are headquartered in Worcester, MA. (See below for a detailed listing of the companies and ratings.)
The ratings reflect The Hanover’s balance sheet strength, which AM Best assesses at the strongest level, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management (ERM).
The Hanover’s strongest level balance sheet strength assessment is supported by its strongest level risk-adjusted capitalization as measured by Best’s Capital Adequacy Ratio (BCAR). The overall balance sheet strength assessment reflects the organic surplus growth over the recent five-year period, stable loss reserve position and favorable development patterns. The balance sheet strength also considers the organization’s comprehensive reinsurance program, as well as the benefits it derived from the additional financial flexibility afforded through The Hanover Insurance Group, Inc. These positive factors are partially offset by higher premium and underwriting leverage measures, as evidenced by gross and net leverage ratios that are comparatively higher than the commercial casualty industry composite, as well as the group’s regional exposure to natural catastrophe and terror events. The Hanover’s financial leverage remains within acceptable levels relative to the group’s current ratings, supported by strong interest coverage measures.
