Fitch Ratings has upgraded its rating on The Hanover
Insurance Group's (THG) 7.625% senior notes due 2025 to 'BBB-' from
'BB+.' At the same time, Fitch has upgraded its rating on AFC Capital
Trust I's 8.207% trust preferred securities due 2037 to 'BB+' from
'BB-.' Fitch has also assigned an Issuer Default Rating (IDR) of 'BBB'
to THG and withdrawn THG's long-term issuer rating. A complete list of
ratings follows below. The Rating Outlook is Stable.
Fitch's decision to upgrade its ratings on THG and to assign a 'BBB' IDR to the company reflects Fitch's belief that THG's credit fundamentals support standard notching between its IDR and debt ratings and its property/casualty subsidiaries' insurer financial strength (IFS) ratings.
In recent years, Fitch had maintained non-standard notching between THG's IFS ratings and debt ratings because of potential cash and capital needs of the company's life and annuity operations, and then more recently, concerns about the company's catastrophe exposure.
THG sold its life and annuity operations in August 2005 and while Fitch continues to believe that the geographic composition of the company's premium base results in potentially higher earnings volatility and reinsurance reliance relative to peers, the agency views it as reasonable for the current ratings levels.
Fitch notes that THG generated modest positive earnings-based interest coverage, grew its statutory surplus, and increased its lead operating company's NAIC risk-based capital (RBC) ratio in 2005 despite incurring heavy hurricane-related catastrophe losses.
Fitch's withdrawal of its long-term rating on THG and the narrowing of the notching between the ratings on THG's senior notes and trust preferred securities to one notch from two notches, reflects application of Fitch's new ratings standards which were implemented for most insurers in February 2006.
The following rating has been assigned by Fitch:
The Hanover Insurance Group
-- Issuer Default Rating (IDR) 'BBB'.
The following ratings have been upgraded:
-- 7.625% senior unsecured notes due 2025 'BBB-'.
AFC Capital Trust I
-- 8.207% trust preferred securities due 2037 'BB+'
Fitch also affirms the following IFS ratings with a Stable Rating Outlook:
The Hanover Insurance Company
-- IFS at 'A-'.
Citizens Insurance Company of America
-- IFS at 'A-'.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 'www.fitchratings.com'. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
Fitch's decision to upgrade its ratings on THG and to assign a 'BBB' IDR to the company reflects Fitch's belief that THG's credit fundamentals support standard notching between its IDR and debt ratings and its property/casualty subsidiaries' insurer financial strength (IFS) ratings.
In recent years, Fitch had maintained non-standard notching between THG's IFS ratings and debt ratings because of potential cash and capital needs of the company's life and annuity operations, and then more recently, concerns about the company's catastrophe exposure.
THG sold its life and annuity operations in August 2005 and while Fitch continues to believe that the geographic composition of the company's premium base results in potentially higher earnings volatility and reinsurance reliance relative to peers, the agency views it as reasonable for the current ratings levels.
Fitch notes that THG generated modest positive earnings-based interest coverage, grew its statutory surplus, and increased its lead operating company's NAIC risk-based capital (RBC) ratio in 2005 despite incurring heavy hurricane-related catastrophe losses.
Fitch's withdrawal of its long-term rating on THG and the narrowing of the notching between the ratings on THG's senior notes and trust preferred securities to one notch from two notches, reflects application of Fitch's new ratings standards which were implemented for most insurers in February 2006.
The following rating has been assigned by Fitch:
The Hanover Insurance Group
-- Issuer Default Rating (IDR) 'BBB'.
The following ratings have been upgraded:
-- 7.625% senior unsecured notes due 2025 'BBB-'.
AFC Capital Trust I
-- 8.207% trust preferred securities due 2037 'BB+'
Fitch also affirms the following IFS ratings with a Stable Rating Outlook:
The Hanover Insurance Company
-- IFS at 'A-'.
Citizens Insurance Company of America
-- IFS at 'A-'.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 'www.fitchratings.com'. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.