AM Best Revises Issuer Credit Rating Outlook to Positive for The Hartford Financial Services Group, Inc. and Its Subsidiaries

Rhea-AI Summary

AM Best has revised the issuer credit rating outlook to positive for The Hartford Financial Services Group and its subsidiaries. The long-term issuer credit ratings (ICRs) and financial strength ratings (FSRs) for several subsidiaries have been affirmed, reflecting Hartford's strong balance sheet, consistent return metrics, and favorable business profile.

The positive outlook is attributed to favorable top and bottom-line growth due to rate actions, new products, and expense efficiencies. Hartford has reported favorable combined ratios across all core lines of business through Q1 2024 and benefits from strong risk-adjusted capitalization, liquidity, and financial flexibility.

Notably, Hartford's diversified investment portfolio and effective enterprise risk management (ERM) are key strengths. However, the outlook for the FSR remains stable.

Positive

• Outlook for long-term issuer credit ratings revised to positive.
• Consistent return metrics despite economic pressures.
• Top and bottom-line growth due to rate actions, new products, and expense efficiencies.
• Favorable combined ratios across all core lines of business in Q1 2024.
• Strong risk-adjusted capitalization.
• Favorable liquidity and financial flexibility.
• Diversified and highly rated investment portfolio.
• Effective enterprise risk management.

Negative

• Outlook for financial strength rating remains stable, not positive.

Insights

Financial Analyst

The Hartford Financial Services Group, Inc. has received a positive outlook from AM Best, reflecting strong financial health. This is significant for investors as it signifies increased confidence in the company's financial stability and risk management. Additionally, an upgrade in issuer credit rating typically leads to lower borrowing costs and may positively impact profitability.

The key takeaway here is that Hartford's financial metrics, including its combined ratios and return metrics, have shown resilience despite macroeconomic pressures. Combined ratio, which is a measure of profitability used by insurance companies, has been favorable, indicating that the company is making more in premiums than it is paying out in claims and expenses. This metric has been a consistent performer across all lines of business, which is a strong signal for potential investors.

Additionally, the positive outlook on the long-term issuer credit ratings (ICR) suggests a robust balance sheet and favorable liquidity and financial flexibility. With access to a $750 million five-year revolving credit facility and the Federal Home Loan Bank of Boston, Hartford has multiple sources of liquidity. This is particularly important for insurance companies which need to ensure they can meet claims obligations even in times of economic stress.

To summarize, the positive revision in the outlook for The Hartford Financial Services Group, Inc. indicates robust growth and financial stability, making it potentially more attractive to investors.

OLDWICK, N.J.--(BUSINESS WIRE)-- AM Best has revised the outlook to positive from stable for the Long-Term Issuer Credit Ratings (Long-Term ICRs) and affirmed the 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 revised the outlooks to positive from stable for the Long-Term ICR and 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 the FSR is stable. (See below for a detailed listing of the companies and Long-Term IRs.)

The Credit Ratings (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 revision of the outlook to positive for the Long-Term ICRs reflects Hartford’s overall return metrics that have been consistent in recent years and compare favorably with peers and to the overall industry, despite macroeconomic pressures and catastrophic events. The organization has reported favorable top and bottom-line growth reflecting rate actions, new product implementation and expense efficiencies in recent years. Furthermore, Hartford reported favorable combined ratios across all core lines of business through the first quarter of 2024. AM Best notes that the organization’s Group Benefits segment continues to provide favorable results and overall diversity to the enterprise.

The organization’s balance sheet strength assessment reflects its strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), as well as its favorable liquidity and financial flexibility. AM Best notes that the group’s financial leverage and coverage metrics remain well within expectations and that it continues to maintain various liquidity sources through its $750 million five-year revolving credit facility, membership with the Federal Home Loan Bank of Boston and access to capital markets as needed. Hartford maintains a diversified and highly rated investment portfolio, generating a steady stream of net investment income. Strong contributions across all core lines of business reflect the Hartford’s diverse distribution channels and product offerings. Additionally, the organization’s effective brand and market presence are notable factors supporting its favorable business profile assessment. AM Best views Hartford’s ERM capabilities as well-matched to its overall risk profile.

The FSR of A+ (Superior) and the Long-Term ICRs of “aa-” (Superior) have been affirmed with the outlooks of the Long-Term ICRs revised to positive from stable, while the outlook of the FSR is stable, 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 the outlooks revised to positive from stable:

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 the outlooks revised to positive from stable:

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. For more information, visit www.ambest.com.

Copyright © 2024 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240618377411/en/

Kate Steffanelli

Associate Director

+1 908 882 2337

kate.steffanelli@ambest.com

Michael Lagomarsino, CFA, FRM

Senior Director

+1 908 882 1993

michael.lagomarsino@ambest.com

Christopher Sharkey

Associate Director, Public Relations

+1 908 882 2310

christopher.sharkey@ambest.com

Al Slavin

Senior Public Relations Specialist

+1 908 882 2318

al.slavin@ambest.com

Source: AM Best

FAQ

What recent change did AM Best make to The Hartford's issuer credit rating?

AM Best revised the issuer credit rating outlook for The Hartford Financial Services Group to positive from stable.

Why did AM Best revise The Hartford's issuer credit rating outlook to positive?

The revision reflects Hartford's consistent return metrics, favorable top and bottom-line growth, and effective enterprise risk management.

What is the current financial strength rating (FSR) for The Hartford's subsidiaries?

The financial strength rating for The Hartford's subsidiaries remains A+ (Superior) with a stable outlook.

What factors contributed to The Hartford's favorable combined ratios in Q1 2024?

Favorable combined ratios were driven by rate actions, new product implementations, and expense efficiencies.

How does The Hartford maintain its financial flexibility?

The Hartford maintains financial flexibility through sources like a $750 million revolving credit facility, Federal Home Loan Bank membership, and access to capital markets.