Despite first-quarter profits being dragged dawn by winter storm claims, The Hanover Insurance Group Inc. earned its third ratings upgrade in 15 months, the Worcester, Mass.-based multi-regional insurer said.
Hanover, which posted net income of $25.8 million — compared with $58.5 million in the year-ago quarter — was upgraded by A.M. Best to an “A” rating, up from an “A-.” The rating applies to The Hanover Insurance Company, Citizens Insurance Company of America, the companies of the AIX Group, and all of their subsidiary companies.
A.M. Best cited the company’s risk-adjusted capitalization, underwriting performance and favorable reserve development and improved financial leverage and financial flexibility since 2003 as the reasons for the upgrade.
Moody’s Investors Service and Standard & Poor’s upgraded The Hanover’s ratings last year.
“It is a significant accomplishment to earn an ‘A’ rating any time,” said Frederick H. Eppinger, chief executive officer of The Hanover Insurance Group. “It is even more meaningful now, however, in light of the prevailing environment and at a time when rating agencies are upgrading so few company ratings.”
He added that “while many companies around us are distracted and constrained by the environment, we are more focused, more committed and better prepared than ever to work with our agent partners to capitalize on the tremendous opportunities in our business.”
The Hanover’s first-quarter results showed a sizable, quarter-to-quarter drop in net income, which stemmed largely from the severe winter storm property losses, the company said. The Hanover also reported net realized investment losses included of $6.1 million.
Despite the drop, The Hanover reported an increase in net premiums written to $629.9 million, compared to $628.5 million in the prior-year quarter.
In Personal Lines, net premiums written were $347.2 million in the first quarter of 2009, compared to $351.7 million in the first quarter of 2008. The Personal Lines combined ratio was 106.4 percent in the first quarter of 2009, compared to 100.5 percent in the prior-year quarter. Catastrophe related losses were $26 million, or 7.1 points of the first quarter combined ratio in 2009, compared to $11 million, or 3.0 points in the prior-year quarter.
In Commercial Lines, net premiums written were $282.7 million in the first quarter of 2009, compared to $276.8 million in the first quarter of 2008, representing an increase of 2.1 percent. The Commercial Lines combined ratio was 94.1 percennt in the first quarter of 2009, compared to 85.2 percent in the prior-year quarter. Catastrophe related losses were $11.4 million, or 4.2 points of the first quarter combined ratio in 2009, compared to $8.3 million, or 3.3 points in the prior-year quarter.
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