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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+" of the property/casualty subsidiaries of The Hanover Insurance Group, Inc. (THG) [NYSE: THG], collectively referred to as The Hanover or the group. Additionally, AM Best has affirmed the Long-Term ICR of "bbb+" and all Long-Term Issue Credit Ratings (Long-Term IR) of THG, which is the parent holding company. The outlook of these Credit Ratings (ratings) remains 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 AM Best categorizes as strongest, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management (ERM).

The assessment of the group’s balance sheet strength is based on its risk-adjusted capitalization, which is also at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). It also reflects the group’s well-managed and generally conservative investment portfolio. The group’s high-risk asset holdings are diversified and represent a modest portion of the overall invested asset base. The group’s loss reserves generally have developed favorably in most recent accident years.

The Hanover’s underwriting and operating results have improved in recent years, supporting its adequate operating performance assessment. The group has demonstrated an ability to grow stockholders’ equity organically through the generation of favorable levels of pre-tax operating income and total returns. The group’s business profile assessment reflects its strong market position, as it ranks among the top 25 U.S. property/casualty organizations and holds a leading position in many of its targeted market niches, along with its experienced management team. The group’s product range includes personal lines, core commercial offerings and specialty coverages, with business expansion supported by strong relationships with its independent agency partners.

The Hanover has implemented an appropriately designed and embedded ERM program to address the organization’s risks. A formal framework is in place, and the continual evaluation and monitoring of key risks and tolerances is well-established. Lastly, the subsidiaries of THG benefit from its moderate financial leverage and financial flexibility.

Partially offsetting factors considered in the rating include current insurance market and macroeconomic conditions. Although pricing and underwriting were generally improving across the group’s key lines of business in recent quarters, there is uncertainty about future conditions. Volatility in investment markets and changes in demand for commercial real estate may impact the group’s investment holdings.

The FSR of A (Excellent) and the Long-Term ICRs of "a+" has been affirmed with stable outlooks 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 Casualty Company (formerly known as 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+" has been affirmed with a stable outlook for The Hanover Insurance Group, Inc.

The following Long-Term IRs 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

-- "bbb-" on $166 million 8.207% subordinated deferrable debentures, due 2027 (of which $50.1 million remains outstanding)

-- "bbb-" 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

-- "bbb-" on subordinated debt

-- "bbb-" on preferred stock

This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Michael T. Venezia
Senior Financial Analyst
+1 908 439 2200, ext. 5034

Christopher Sharkey
Manager, Public Relations
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Jacqalene Lentz, CPA
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Jim Peavy
Director, Public Relations
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