A.M. Best Upgrades Ratings of The Hartford Financial Services Group, Inc. and Its Property/Casualty Subsidiaries
Concurrently,
All companies are headquartered in
The ratings of the
These positive factors are somewhat offset by the significant stockholder dividends paid during the recent five-year period which have constrained organic surplus growth, adverse loss reserve development occurring during recent calendar years, and variability in operating performance given the impact of weather-related losses during the recent five-year period, which weakened underwriting and operating results relative to historical levels. The pool also maintains an above-average exposure to affiliated investments and commercial real estate assets relative to the overall property/casualty peer group.
The upgrade of the ratings of The
In revising the outlook to stable,
Positive rating actions are unlikely in the near term for The
The affirmation of HLA's ratings reflects its overall competitive market position as a provider of group benefit products and improved earnings performance due to lower loss ratios in disability and group life. While HLA’s top line has moderated in recent years, total sales increased in the first quarter of 2015. 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 adequate capitalization and a reduction in overall balance sheet risk in its legacy VA product lines. The ratings also reflect Hartford Life’s limited business profile, which remains in runoff (discontinued business lines primarily include fixed, variable and institutional annuities), and ongoing earnings and capital sensitivity related to equity market and low interest rates in this segment.
The ICR upgrade for HLI reflects the diminished balance sheet risk and the sufficient earnings and dividend capacity of its subsidiaries, and the implicit support that is afforded by The
Positive rating movement for Hartford Life is unlikely given its runoff status. While unlikely in the near to medium term, positive rating action may be taken on HLA if the company demonstrates greater strategic value and earnings contribution to The
The
For a complete listing of
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. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
- A.M. Best’s Liquidity Model for U.S. Life Insurers
- A.M. Best’s Perspective on Operating Leverage
- Analyzing Insurance Holding Company Liquidity
- Analyzing Contingent Capital Facilities
- Catastrophe Analysis in A.M. Best Ratings
- Equity Credit for
Hybrid Securities - Gauging the Basis Risk of Catastrophe Bonds
Insurance Holding Company and Debt Ratings- Rating Members of Insurance Groups
- Risk Management and the Rating Process for Insurance Companies
- The Treatment of Terrorism Risk in the Rating Evaluation
- Understanding BCAR for Property/Casualty Insurers
- Understanding Universal BCAR
- Understanding BCAR for U.S. and Canadian Life/Health Insurers
This press release relates to rating(s) that have been published on
Copyright © 2015 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.
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