A.M. Best Co. has affirmed the financial strength rating of “A” for The Hanover Insurance Group of Worcester and its subsidiaries, the New Jersey-based ratings firm said.
Existing debt ratings of “bbb” were also affirmed, according to A.M. Best, which issued a stable outlook for all of the company’s ratings.
The positive ratings reflect The Hanover’s generally favorable earnings in years with milder weather patterns, A.M. Best said, noting that the property casualty insurer has “somewhat limited the reduction to its surplus base over the past five years through solid net investment income.
The ratings reflect the group’s “sound business profile and diversified product offerings,” as well as financial leverage and flexibility, A.M. Best said.
However, the company’s comparatively high underwriting leverage and “somewhat elevate” expense structure and pressure on underwriting results caused by weather-related losses in 2011 and 2012 partially offset its positive rating factors, A.M. Best said.
Though The Hanover’s book of business continues to perform “reasonably well,” A.M. Best warned that continued deterioration in overall underwriting performance could result in ratings drops.
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