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

Business Wire

OLDWICK, N.J.--(BUSINESS WIRE)--
AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a+” (Excellent) of the property/casualty subsidiaries of The Hanover Insurance Group, Inc. [NYSE: THG], which are collectively referred to as The Hanover. Additionally, AM Best has affirmed the Long-Term ICR of “bbb+” (Good) and all Long-Term Issue Credit Ratings (Long-Term IR) of The Hanover Insurance Group, Inc., which is the parent holding company. The outlook of these Credit Ratings (ratings) is stable. All 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 assesses at the strongest level, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management (ERM).

The Hanover’s strongest level balance sheet strength assessment is supported by its strongest level risk-adjusted capitalization as measured by Best’s Capital Adequacy Ratio (BCAR). The overall balance sheet strength assessment reflects the organic surplus growth over the recent five-year period, stable loss reserve position and favorable development patterns. The balance sheet strength also considers the organization’s comprehensive reinsurance program, as well as the benefits it derived from the additional financial flexibility afforded through The Hanover Insurance Group, Inc. These positive factors are partially offset by higher premium and underwriting leverage measures, as evidenced by gross and net leverage ratios that are comparatively higher than the commercial casualty industry composite, as well as the group’s regional exposure to natural catastrophe and terror events. The Hanover’s financial leverage remains within acceptable levels relative to the group’s current ratings, supported by strong interest coverage measures.

The Hanover’s ratings reflect its adequate operating performance assessment. Viewed over the longer-term five-year period, pre-tax return-on-revenue measures trail that of the commercial casualty composite, as weaker results during the 2022/2023 period were negatively impacted by reported underwriting losses, due to severe convective storm losses across multiple states.

Improved results in recent years reflect ongoing management initiatives intended to both improve and sustain improvement across market cycles, combined with sustained rate increases, as well as favorable reserve releases occurring on prior year losses. Pre-tax return-on-revenue measures reported during 2025, were in line with the commercial casualty industry composite driven by the largest pre-tax operating income of the recent five-year period. The improved results are reflective of sustained improvement in both underwriting profitability and net investment income, as well as a decline in the amount of natural catastrophe losses.

The ratings also reflect the group’s favorable business profile and diversified product offerings, especially within its commercial and specialty lines of business. The Hanover’s business profile assessment considers its strong market position, reflective of its leading position in many of its targeted niche segments led by an experienced management team. The group’s product range includes a balance of 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. The group’s ERM program is appropriate for the scale, scope and complexity of the organization and its ability to monitor key risks and tolerances is well-established.

The FSR of A (Excellent) and the Long-Term ICRs of “a+” (Excellent) have 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)
Massachusetts Bay Insurance Company
NOVA Casualty Company
Verlan Fire Insurance Company

The following Long-Term IRs have been affirmed with stable outlooks:

The Hanover Insurance Group, Inc.—

-- “bbb-” (Good) on $165.7 million 8.207% subordinated deferrable debentures, due 2027 (of which $50.1 million remains outstanding)

-- “bbb+” (Good) on $300 million 2.5% senior unsecured notes, due 2030

-- “bbb+” (Good) on $500 million 5.5% senior unsecured fixed rate notes, due 2035

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

The Hanover Insurance Group, Inc.—

-- “bbb+” (Good) on senior unsecured debt

-- “bbb-” (Good) on subordinated debt

-- “bbb-” (Good) 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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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 London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.