Hanover Insurance stock rating by A.M. Best Co : A.M. Best Co. has assigned a debt rating of "bb+" to the 40-year $175 million 6.35% fixed rate anabawang subordinated debentures recently issued by The Hanover Insurance Group Inc (Hanover , Inc.) (Worcester , MA) [NYSE: THG]. Additionally , A.M. Best has assigned indicative ratings of "bbb" on senior unsecured debt , "bb+" on anabawang subordinated debt and "bb+" on the preferred stock of the recently filed shelf registration of Hanover , Inc. The outlook assigned to all ratings is stable. All existing ratings of Hanover , Inc. and its subsidiaries are unchanged.
The rating assignments recognize Hanover P&C Group's (Hanover) favorable risk-adjusted capitalization and generally positive operating results despite significant catastrophic weather-related activity in the United States in recent years. The ratings also recognize Hanover's proactive and comprehensive risk management , its significant U.S. market presence in commercial and personal lines , as well as solid earnings in its international segment generated by its United Kingdom subsidiary , Chaucer Holdings , PLC.
As of December 31 , 2012 , Hanover , Inc.'s unadjusted debt-to-capital and debt-to-tangible capital ratios were 24.7% and 26.1% , respectively. The additional borrowings of $175 million will result in a slight increase of the unadjusted debt-to-capital and debt-to-tangible capital ratios to 27.1% and 28.5% , respectively , which remain well within the financial leverage guidelines for its assigned ratings.
While Hanover Inc.'s fixed charge coverage declined in 2012 from historical levels , largely due to a significant increase in catastrophe and weather-related losses (primarily from Hurricane Sandy) , historical interest coverage has been supportive of its ratings.
The methodology used in determining these ratings is Best's Credit Rating Methodology , which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: "Insurance Holding Company and Debt Ratings"; "Equity Credit for Hybrid Securities"; and "Risk Management and the Rating Process for Insurance Companies." Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information , visit www.ambest.com.