Best’s News & Research Service - August 25, 2022 10:01 AM (EDT)
AM Best Affirms Credit Ratings of The Hartford Financial Services Group, Inc. and Subsidiaries
- August 25, 2022 10:01 AM (EDT)
Oldwick //BestWire// - AM Best has affirmed the Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” (Excellent) and the Long-Term Issue Credit Ratings (Long-Term IR) of The Hartford Financial Services Group, Inc. (The Hartford) (Delaware) [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-” (Superior) of Hartford Fire Insurance Company (Hartford, CT) and its pooling subsidiaries and affiliates, as well as Hartford Life and Accident Insurance Company (Hartford, CT) and Navigators Insurance Company (New York, NY), collectively known as the Hartford Insurance Group. The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed listing of the companies and Long-Term IRs.)
The ratings of the Hartford Insurance Group reflect its balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management (ERM).
The ratings reflect the Hartford Insurance Group’s risk-adjusted capitalization, which remains at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Additionally, the group reports favorable net cash flows, strong liquidity metrics and has a diverse and well-managed investment portfolio. Hartford Insurance Group also benefits from strong financial flexibility at The Hartford, with access to the capital markets as needed, as well as through its $750 million five-year revolving credit facility, which matures in October 2026. AM Best notes that the Hartford Insurance Group also has access to additional funds through its membership with Federal Home Loan Bank of Boston. The group continues to maintain a comprehensive reinsurance program with highly rated reinsurers.
Hartford Insurance Group’s diverse product portfolio and distribution capabilities are a primary driver of the group’s consistent revenue and earnings reported in recent periods. The group has reported a steady stream of net investment income to supplement revenue, although invested assets have declined modestly given increased interest rates and widening credit spreads. Similar to peers, Hartford Insurance Group’s earnings have been impacted by pressures from the inflationary environment; in particular, auto claims severity and home repair costs. Despite these industry-wide pressures, Hartford Insurance Group continues to report strong return metrics with return on equity in the double digits. Additionally, the group continues to benefit from its Hartford Next cost reduction plan, which has effectively reduced annual operating costs.
The group’s favorable business profile assessment reflects its recognized presence and strong market position in the property/casualty market and its leading position within the group benefits market. Additionally, the group’s experienced management team has proven success in implementation of its business strategies and initiatives supporting its goal of long-term profitable growth. Hartford Insurance Group continues to work to enhance its risk management expertise further, which is considered to be appropriate for the support of its investment, operations and insurance-related risks.
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.
The FSR of A+ (Superior) and the Long-Term ICRs of “aa-” (Superior) have been affirmed with stable outlooks for the following subsidiaries of The Hartford Financial Services Group, Inc.:
- Hartford Fire Insurance Company
- Hartford Accident and Indemnity Company
- Hartford Insurance Company of Illinois
- Hartford Casualty Insurance Company
- Hartford Underwriters Insurance Company
- Pacific Insurance Company, Limited
- Twin City Fire Insurance Company
- Nutmeg Insurance Company
- Hartford Insurance Company of the Midwest
- Hartford Insurance Company of the Southeast
- Hartford Life and Accident Insurance Company
- Property and Casualty Insurance Company of Hartford
- Trumbull Insurance Company
- Sentinel Insurance Company, Ltd.
- Hartford Lloyd’s Insurance Company
- Navigators Insurance Company
- Navigators Specialty Insurance Company
- Maxum Indemnity Company
- Maxum Casualty Insurance Company
The following Long-Term IRs have been affirmed with stable outlooks:
The Hartford Financial Services Group, Inc. —
— “a-” (Excellent) on $600 million 2.8% senior unsecured notes, due 2029
— “a-” (Excellent) on $300 million 5.95% senior unsecured notes, due 2036
— “a-” (Excellent) on $300 million 6.625% senior unsecured notes, due 2040 (approximately $295 million outstanding)
— “a-” (Excellent) on $409 million 6.1% senior unsecured notes, due 2041
— “a-” (Excellent) on $425 million 6.625% senior unsecured notes, due 2042 (approximately $178 million outstanding)
— “a-” (Excellent) on $300 million 4.3% senior unsecured notes, due 2043
— “a-” (Excellent) on $500 million 4.4% senior unsecured notes, due 2048
— “a-” (Excellent) on $800 million 3.6% senior unsecured notes, due 2049
— “a-” (Excellent) on $600 million 2.9% senior unsecured notes, due 2051
— “bbb” (Good) on $500 million floating rate junior subordinated debentures, due 2067
— “bbb” (Good) on $345 million 6% non-cumulative preferred stock
The following indicative Long-Term IRs on securities available under the shelf registration have been affirmed with stable outlooks:
The Hartford Financial Services Group, Inc.—
— “a-” (Excellent) on senior unsecured
— “bbb+” (Good) on senior subordinated
— “bbb” (Good) on junior subordinated
— “bbb” (Good) on preferred stock
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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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 London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.