OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has affirmed the issuer credit rating (ICR) of “a-” and the issue ratings of The Hartford Financial Services Group, Inc. (The Hartford) [NYSE: HIG], which is the ultimate parent of the following companies. A.M. Best also has affirmed the financial strength rating (FSR) of A+ (Superior) and the ICR of “aa-” of Hartford Fire Insurance Company and its pooling subsidiaries and affiliates, collectively referred to as the Hartford Insurance Pool. The outlooks for each of The Hartford’s and the Hartford Insurance Pool members’ ratings are stable.
Concurrently, A.M. Best has affirmed the FSR of A (Excellent) and the ICR of “a” of Hartford Life and Accident Insurance Company (HLA), as well as the FSR of A- (Excellent) and the ICRs of “a-” of Hartford Life Insurance Company (HLIC) and Hartford Life and Annuity Insurance Company (collectively referred to as Hartford Life). Additionally, A.M. Best has affirmed all issue ratings for Hartford Life. The outlooks for each of HLA’s and Hartford Life’s ratings are stable.
A.M. Best also has affirmed the ICR of “bbb” and the issue ratings of Hartford Life, Inc. (HLI), the intermediate parent of HLA and Hartford Life. The outlook for these ratings is stable.
All of the above companies are headquartered in Hartford, CT.
Additionally, A.M. Best has affirmed the FSR of A+ (Superior) and the ICR of “aa-” of Hartford Financial Products International, Limited (HFPI) (United Kingdom), a member of Hartford Insurance Pool.
The outlook for each rating is stable. Concurrently, A.M. Best has withdrawn the ratings as the company has requested to no longer participate in A.M. Best’s interactive rating process.
The ratings of the Hartford Insurance Pool reflect its solid risk-adjusted capitalization, improved underwriting and operating profitability and excellent market positions within the property/casualty industry. Underwriting and operating results have been strong over the long term as evidenced by generally favorable combined ratios and pre-tax return on revenue measures. The positive rating factors are derived from the pool's geographic and product line diversity, experienced management team, generally conservative operating fundamentals and diversified underwriting initiatives, which provide balanced growth opportunities. Management has executed various operating initiatives to focus operations on small to middle commercial markets and personal lines of business that are viewed as less volatile and provide opportunities for profitable growth. The group also targets larger insureds in specialty casualty markets, which complements the complete book of business. Although it represents a concentration risk, the personal lines segment benefits from the pool's affinity relationship through a long-term endorsement from the American Association of Retired Persons (AARP). The pool's use of technology platforms throughout the organization, localized support and excellent service further strengthen its business position.
These positive rating factors are somewhat offset by the significant stockholder dividends paid during the most-recent five-year period that have constrained organic surplus growth, as well as adverse loss reserve development occurring during recent calendar years and variability in operating performance due to the impact of weather-related losses early in the five-year period. The pool also maintains above-average exposure to affiliated investments and commercial real estate assets relative to the overall property/casualty peer group.
The affirmation of HLA's ratings reflects its overall competitive market position as a provider of group employee benefit products, its improved earnings performance and a solid level of risk-adjusted capital. HLA's core earnings improvement was driven by modest top line growth, a stable loss ratio and lower insurance operating expenses. However, the group benefit market is viewed as highly competitive and HLA's contribution to The Hartford's overall earnings remains relatively modest.
The affirmation of Hartford Life's ratings reflects its favorable operating earnings, a good level of risk-adjusted capital and continued reduction in balance sheet risk from its variable annuity business. In addition, the ratings of Hartford Life also reflect a limited business profile as its primary business is in runoff. Hartford Life’s discontinued business includes its fixed, variable and institutional annuities product lines. Hartford Life’s contribution to the consolidated group is expected to remain favorable but will decline over time as its levels of business and assets decrease and the persistent low interest rate environment continues to pressure investment income. Hartford Life's risk-adjusted capital remains sufficient to support the obligations of its discontinued annuity business.
The affirmation of HLI’s rating reflects the continued decline in balance sheet risk of its subsidiary’s annuity business, the favorable operating earnings and dividend capacity of its subsidiaries and the implicit support that is afforded by The Hartford.
The Hartford's debt-to-total capital ratio (excluding accumulated other comprehensive income) and interest coverage ratios are within A.M. Best's guidelines for its current ratings. A.M. Best anticipates The Hartford will maintain solid liquidity at the holding company to support any potential capital needs of its operating subsidiaries.
For a complete listing of The Hartford’s FSRs, ICRs and issue ratings, please visit The Hartford Financial Services Group, Inc.
This press release relates to rating(s) that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2016 by A.M. Best Rating Services, Inc. ALL RIGHTS RESERVED.