AM Best has affirmed the Long-Term Issuer Credit Rating
(Long-Term ICR) of “a-” and the Long- and Short-Term Issue Credit
Ratings (Long-Term IR; Short-Term IR) of The Hartford Financial
Services Group, Inc. (The Hartford) [NYSE: HIG], which is the
ultimate parent of the companies hereinafter mentioned. AM Best
also has affirmed the Financial Strength Rating (FSR) of A+
(Superior) and the Long-Term ICRs of “aa-” of Hartford Fire
Insurance Company and its pooling subsidiaries and affiliates,
collectively known as the Hartford Insurance Group. Concurrently,
AM Best has upgraded the FSR to A+ (Superior) from A (Excellent)
and the Long-Term ICR to “aa-” from “a+” of Hartford Life and
Accident Insurance Company (HLA), reflective of it receiving full
rating enhancement to the Hartford Insurance Group, driven by its
growing contribution to consolidated revenue and earnings and the
overall diversification it provides. The outlook of these Credit
Ratings (ratings) is stable. All of the above companies are
headquartered in Hartford, CT.
Furthermore, AM Best has affirmed the FSR of A+ (Superior) and
the Long-Term ICRs of “aa-” of Navigators Insurance Company and its
wholly owned and 100% reinsured subsidiary, Navigators Specialty
Insurance Company, collectively referred to as Navigators. Both
companies are domiciled in New York, NY. Concurrently, AM Best has
affirmed the Long-Term ICR of “a-” of The Navigators Group, Inc.
(Delaware), a wholly owned downstream holding company of The
Hartford. The outlook of these ratings is stable. Subsequently, AM
Best has withdrawn the Long-Term ICR of “a-” and the indicative
Long-Term IRs of The Navigators Group, Inc., as it is no longer the
publicly traded ultimate parent of a rated entity as a result of
its acquisition by The Hartford.
In addition, AM Best has revised the outlook to negative from
stable for the Long-Term ICR and affirmed the FSR of A (Excellent)
and the Long-Term ICR of “a+” of Navigators International Insurance
Company Ltd. (NIIC) (United Kingdom). The outlook of the FSR
remains stable.
The ratings of the Hartford Insurance Group reflect its 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 balance sheet strength assessment is derived from
risk-adjusted capitalization at the strongest level, as measured by
Best’s Capital Adequacy Ratio (BCAR), which benefits from adverse
development covers (ADC) for legacy asbestos and environmental
reserves and Navigators’ business, along with a comprehensive
reinsurance program with highly rated reinsurers. The group’s
balance sheet strength also benefits from the financial flexibility
afforded by The Hartford with access to the public debt and equity
markets. Partially offsetting these benefits are variability in
returns on investments and elevated net liability leverage compared
with peers.
The group’s operating results reflect its adequate underwriting
performance that is comparable to similarly assessed peers and
composite norms. The organization has demonstrated an ability to
organically grow stockholders’ equity by producing favorable levels
of pre-tax operating income. Investment income has been consistent,
as growth in the long-term bond portfolio was offset mostly by
declining investment yields. The company’s multiple distribution
capabilities support its strategy to build competitive advantage in
the market. In addition, the acquisition of Aetna Inc.’s group
benefits business added scale and market position, which will
support results as the market becomes more challenging.
The favorable business profile reflects the group’s excellent
market position within the property/casualty industry and its core
group benefits market, geographic and product line diversity,
experienced management team, generally conservative operating
fundamentals and diversified underwriting initiatives, which
provide balanced growth opportunities. The group’s use of
technology platforms throughout the organization, localized support
and excellent service further strengthen its business profile.
ERM is viewed appropriate for the pool’s size and complexity of
its underwriting, investment and other risks based on its ERM
framework and controls.
The ratings of Navigators reflect its balance sheet strength,
which AM Best categorizes as very strong, as well as its adequate
operating performance, favorable business profile and appropriate
ERM. The ratings also reflect the implicit and explicit support
provided to Navigators by The Hartford, its ultimate parent.
The balance sheet strength assessment of Navigators is derived
from risk-adjusted capitalization at the very strong level. AM Best
views the balance sheet’s quantitative and qualitative components
as neutral; however, Navigators is now a part of a larger segment
within The Hartford organization, and since its acquisition, has
effectively integrated with The Hartford.
Navigators’ five- and 10-year average underwriting performance
metrics remain in line with the composite averages. Net investment
income is solid and has grown steadily over the past five years,
supported by a high quality investment portfolio. Recent reserve
strengthening and higher loss and loss adjustment expenses have
adversely impacted results for 2019.
The favorable business profile reflects Navigators’ leading
position as a global provider of insurance to the marine sector,
the multichannel distribution platform that utilizes global,
national and regional brokers, as well as wholesalers. Navigators’
platform has been fully integrated into The Hartford’s global
specialty segment and is expected to complement more traditional
commercial products offered by The Hartford.
Navigators’ ERM is now incorporated into The Hartford’s risk
framework, which AM Best views as appropriate for the group’s size
and complexity of its underwriting, investment and other risks.
The ratings of NIIC reflect its balance sheet strength, which AM
Best categorizes as very strong, as well as its marginal operating
performance, neutral business profile and appropriate enterprise
risk management.
The ratings also reflect, in the form of lift, the support
provided to NIIC by its ultimate parent The Hartford, which
includes a capital maintenance agreement from NIIC’s intermediate
parent, The Navigators Group, Inc.
The revision of the Long-Term ICR outlook to negative reflects
uncertainty as to the future business plans of NIIC, and the impact
that this has on its business profile and its strategic importance
to The Hartford. The FSR remains stable.
The Hartford’s debt-to-total capital ratio and interest coverage
ratios are within AM Best’s guidelines for its current ratings. AM
Best anticipates The Hartford will maintain solid liquidity to
support any potential capital needs of its operating
subsidiaries.
A complete listing of The Hartford Financial Services Group,
Inc.’s FSRs, Long-Term ICRs and Short- and Long-Term IRs also is
available.
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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version on businesswire.com: https://www.businesswire.com/news/home/20200619005431/en/
Ana Daley Financial Analyst +1 908 439 2200,
ext. 5326 ana.daley@ambest.com Christopher Sharkey
Manager, Public Relations +1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com Luca Patron Financial
Analyst +44 20 7397 0304 luca.patron@ambest.com Jim
Peavy Director, Public Relations +1 908 439 2200,
ext. 5644 james.peavy@ambest.com
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