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FOR IMMEDIATE RELEASE
OLDWICK - SEPTEMBER 14, 2018 10:57 AM (EDT)
A.M. Best has commented that the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb” of The Hanover Insurance Group, Inc. (THG) [NYSE: THG] (Worcester, MA) is unchanged following the announcement on Sept. 13, 2018, that THG has entered into a definitive agreement with China Reinsurance (Group) Corporation (China Re) under which it will sell three of its wholly owned subsidiaries, The Hanover Insurance International Holdings Ltd., The Hanover Australia Holding Company Pty Ltd and Chaucer Insurance Company Designated Activity Company to China Re. These three companies collectively comprise Chaucer, an international specialty (re)insurer and Lloyd’s market participant. The Long-Term Issue Credit Ratings (Long-Term IR) and the indicative Long-Term IRs of THG and the Financial Strength Rating of A (Excellent) and the Long-Term ICRs of “a” of its operating insurance subsidiaries, collectively referred to as Hanover Insurance Group Property and Casualty Companies (The Hanover) also are unchanged following the announcement. The outlook of these Credit Ratings (ratings) is stable.
Under the terms of the agreement, the total proceeds will be $950 million, including cash consideration from China Re of $820 million plus contingent consideration of up to $45 million, as well as the pre-signing dividend from Chaucer of $85 million, received in the second quarter of this year. This sale will afford The Hanover with additional capital flexibility to continue to invest in growth and innovation initiatives in the United States.
The transaction is expected to close late-2018 or in the first quarter of 2019, subject to customary closing conditions, including regulatory approvals in relevant jurisdictions. A.M. Best will continue to evaluate any developments relative to The Hanover or its subsidiaries’ ratings, should they become necessary.
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