The Hanover gets strong credit affirmations
The Hanover Insurance group got strong credit ratings from A.M. Best.
The Hanover Insurance Group in Worcester and its subsidiaries received strong credit ratings as a result of its solid risk-adjusted capitalization, according to a Thursday release.
A.M. Best, an insurance rating information source, gave The Hanover a financial strength credit rating (FSR) of “A” (excellent). Its subsidiaries received a long-term issuer credit rating (ICR) of “a,” meaning they have an excellent ability to meet ongoing financial obligations. A.M. Best also affirmed The Hanover’s long-term ICR of “bbb,” which means good, and its long-term issue credit ratings.
The Hanover has nearly broke even in its underwriting results, and those, coupled with favorable investments, have allowed the company to substantially increase its net income in recent years, A.M. Best said. The company has also benefitted from good risk-adjusted capitalization, as a result of favorable operating earnings and sensible capital management.
The Hanover’s underwriting results have also benefitted partially from relatively milder weather patterns, compared with catastrophic weather-related losses in the past. Its exposure management and re-underwriting have improved geographic and product diversification, resulting in profitability and earnings stability.
Ownership of Chaucer has made it possible for The Hanover to further diversify its risk expenditures, while at the same time creating a worldwide platform for marketing and cross-selling opportunities for its products. This has led to greater consistency in The Hanover’s operating performance and improvement in its long-term earnings and risk-adjusted capitalization.
“The ratings reflect The Hanover’s sound business profile and diversified product offerings, especially within its commercial and specialty lines of business,” A.M. Best said.
The positive ratings were slightly offset by comparatively high underwriting leverage, and above-average expense position. Although the company’s underwriting performance was negatively impacted by reserve strengthening in 2016 because of an increase in average claim severity across multiple lines, it has changed in recent years, because of exposure management, re-underwriting efforts, and milder weather patterns.
Looking forward, more positive ratings will occur if favorable risk-adjusted capitalization can be sustained at its current level, A.M. Best said. Underwriting results should also improve.
The FSR of A and the Long-Term ICRs of “a” was affirmed for the following subsidiaries of The Hanover:
AIX Specialty Insurance Company
Allmerica Financial Alliance Insurance Company
Allmerica Financial Benefit Insurance Company
Campmed Casualty & Indemnity Company, Inc.
Citizens Insurance Company of America
Citizens Insurance Company of Ohio
Citizens Insurance Company of the Midwest
Citizens Insurance Company of Illinois
The Hanover American Insurance Company
The Hanover Atlantic Insurance Company, Ltd.
The Hanover Insurance Company
The Hanover Lloyd's Insurance Company
The Hanover New Jersey Insurance Company
Massachusetts Bay Insurance Company
NOVA Casualty Company
Verlan Fire Insurance Company
WBJ Web Partners
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