The Hanover Insurance Group got a ratings upgrade from Standard & Poor’s, which cited continued strategies at the Massachusetts-based insurer designed to reduce risk and improve its bottom line.
S&P raised its long-term counterparty credit rating on Hanover and its subsidiaries from A- to A. As well, its senior debt rating is now BBB, up from BBB-, all with a stable outlook.
“The upgrade is based on our believe that management will continue its efforts to diversify the company’s geographic concentration and product offering to further improve its risk position and earnings,” Standard & Poor’s credit analyst David Veno said in prepared remarks.
Standard & Poor’s cited a number of specific actions Hanover has taken toward diversification, including its westward expansion in the United States. S&P noted that Michigan, Massachusetts, New York and New Jersey currently account for 34 percent of Hanover’s total net premiums written, versus 49 percent in 2010. About 19 percent of U.S. direct premiums written come now from states west of the Mississippi River,” Standard & Poor’s pointed out.
Another element in Hanover’s favor: an effort to reduce catastrophe exposure in some catastrophe-prone areas in the U.S., Standard & Poor’s said.
Standard & Poor’s added the stable outlook and ratings reflect its view that diversification and risk reduction will continue, and “that capital adequacy will remain redundant at the very strong level.”
Last October, Fitch Ratings reaffirmed the A- Insurer Financial Strength Rating for The Hanover Insurance Company, the principal operating subsidiary of The Hanover Insurance Group. Additionally, Fitch affirmed a BBB Issuer Default Rating for the company, and a BBB- rating for its senior unsecured notes – all with stable rating outlook.
Fitch explained its move was based on Hanover’s “adequate capitalization” for its U.S. operating subsidiaries, though it cautioned that operating leverage has increased due to “acquisitions and limited growth in shareholders’ equity.”
Source: Standard & Poor’s