AM Best


A.M. Best Affirms Credit Ratings of The Hanover Insurance Group, Inc. and Its Subsidiaries


CONTACTS:

Michael T. Venezia
Senior Financial Analyst
+1 908 439 2200, ext. 5034
michael.venezia@ambest.com

Jacqalene Lentz, CPA
Director
+1 908 439 2200, ext. 5762
jacqalene.lentz@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

OLDWICK - JUNE 07, 2018 04:09 PM (EDT)
A.M. Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a” of the subsidiaries of the parent holding company, The Hanover Insurance Group, Inc. (THG) [NYSE: THG], collectively referred to as Hanover Insurance Group Property and Casualty Companies (The Hanover). Additionally, A.M. Best has affirmed the Long-Term ICR of “bbb” and all Long-Term Issue Credit Ratings (Long-Term IR) of THG. The outlook of these Credit Ratings (ratings) is stable. All above named 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 A.M. Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

Additionally, the ratings of The Hanover reflect the group’s consistently strong risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). It also reflects the group’s exposure management and re-underwriting, which have materially improved geographic and product diversification, resulting in profitability and earnings stability. The Hanover’s management of its catastrophe exposures was demonstrated by its better than break-even underwriting results in 2017. In addition, the ratings reflect the group’s sound business profile and diversified product offerings, especially within its commercial and specialty lines of business. Furthermore, ownership of Chaucer, a Lloyd’s market syndicate, has enabled The Hanover to further diversify its risk exposures, while creating a global platform for marketing and cross-selling opportunities for its products. Lastly, the subsidiaries of THG benefit from its moderate financial leverage and financial flexibility.

Partially offsetting these positive rating factors are The Hanover’s comparatively high underwriting leverage and above-average expense position. However, over recent years, improved scale and enhanced operating efficiencies have driven a meaningful decline in the expense ratio.

Future positive rating actions could occur if the current level of favorable risk-adjusted capitalization can be sustained and underwriting results improve. However, a weakening in risk-adjusted capitalization or deterioration in operating performance may result in the outlooks being changed to negative and place pressure on the ratings.

The FSR of A (Excellent) and the Long-Term ICRs of “a” have been affirmed for the following subsidiaries of The Hanover Insurance Group, Inc.:


  • 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

The Long-Term ICR of “bbb” and the following Long-Term IRs of The Hanover Insurance Group, Inc. have been affirmed with a stable outlook:

The Hanover Insurance Group, Inc.

— “bbb” on $199.5 million 7.625% senior unsecured debentures, due 2025 (of which $62.6 million remains outstanding)

— “bbb” on $375.0 million 4.5% senior unsecured fixed rate notes, due 2026

— “bb+” on $166 million 8.207% subordinated deferrable debentures, due 2027 (of which $59.7 million remains outstanding)

— “bb+” on $175 million 6.350% subordinated deferrable debentures, due 2053

The following indicative Long-Term IRs under the shelf registration have been affirmed with a stable outlook:

The Hanover Insurance Group, Inc.

— “bbb” on senior unsecured debt

— “bb+” on subordinated debt

— “bb+” on preferred stock

This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

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