A.M. Best Affirms Ratings for Harleysville Insurance.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Jan. 28, 2002 A.M. Best Co. has affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. the financial strength rating of A (Excellent) for Harleysville Insurance, Harleysville, Pennsylvania Harleysville is a census-designated place (CDP) in Montgomery County, Pennsylvania, United States. The population was 8,795 at the 2000 census. It belongs to the Lower Salford Township. Harleysville was settled by Pennsylvania Dutch in the 1700s. . Also, A.M. Best has affirmed the "a-" debt rating for Harleysville Group Inc.'s (HGIC HGIC Harleysville Group Inc ) (Nasdaq:HGIC) existing senior notes. These ratings reflect the organization's excellent capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. , generally solid earnings and its strong regional market franchise. These attributes are derived from Harleysville's conservative balance sheet, sound underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. fundamentals and long-standing agency relationships. Under a regional insurer approach, Harleysville benefits from its strong name recognition, extensive local market knowledge and stable market presence. The group continues to find opportunities by broadening its scope beyond traditional Mid-Atlantic and East Coast markets by expanding into the Midwest, subsequently improving its geographic profile, which now spans 31 states. Harleysville ranks among the top 50 property/casualty insurance organizations in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . Harleysville has implemented several personal lines initiatives in recent years to enhance earnings and pursue its focus on the core small commercial account book. These initiatives included exiting the highly regulated Massachusetts and New Jersey private passenger automobile markets through the transfer of renewal rights and the reduction of personal lines writings in certain other states. As a result, the financial strength rating of A- (Excellent) for Harleysville-Garden State Insurance Company, which writes exclusively New Jersey personal automobile insurance, was placed under review with negative implications. Although the transaction has closed, A.M. Best will re-evaluate the rating upon the commencement of the transfer of renewal rights in June 2002 to reflect the company's run-off status. Harleysville continues to operate through a unique corporate structure that affords financial flexibility through HGIC's status as a publicly traded downstream holding company. HGIC maintains a modest financial leverage and excellent fixed-charge coverage fixed-charge coverage The number of times that a firm's operating income exceeds its fixed payments. Fixed-charge coverage is a measure of a firm's ability to meet contractually fixed payments, with high coverage indicating significant flexibility for making . Somewhat offsetting these positive rating factors are Harleysville's earnings variability earnings variability Fluctuations in a corporation's net income or earnings per share during a given period. Past earnings variability is generally considered undesirable because it makes investors less certain of future earnings per share and dividends. as a result of competition and susceptibility susceptibility the state of being susceptible. Refers usually to infectious disease but may be to physical factors such as wetting or to psychological factors such as harassment. to catastrophes and recent investment losses. Earnings in prior years were strained by catastrophe losses and a one-time claims restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. . Total returns in 2000 and 2001 were dampened by unrealized losses Unrealized Loss A loss that results from holding onto an asset rather than cashing it in and officially taking the loss. Notes: Let's say you own a stock that is down 50%, but you haven't sold it to realize the loss yet. This is said to be an unrealized loss. , offsetting improvement in pre-tax results stemming from enhanced commercial lines pricing. Although catastrophe losses on the property book have influenced earnings, management maintains prudent catastrophe mitigation strategies to protect surplus. Recognizing Harleysville's favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. capitalization, its proven track record of solid earnings and competitive advantages, A.M. Best views the rating outlook as stable. The financial strength rating of A (Excellent) has been affirmed for the following property/casualty pooling members of Harleysville Insurance: -- Harleysville Mutual Insurance Company -- Harleysville Insurance Company of New York -- Mid-America Insurance Company -- Harleysville Worcester Insurance Company -- Harleysville-Atlantic Insurance Company -- Harleysville Insurance Company of New Jersey -- Harleysville Insurance Company of Ohio -- Harleysville Insurance Company -- Harleysville Lake States Insurance Company -- Harleysville Preferred Insurance Company -- Harleysville Pennland Insurance Company The financial strength rating of A- (Excellent) has been placed under review with negative implications for the following company: -- Harleysville-Garden State Insurance Company
The following financial strength ratings remain unaffected:
Harleysville Life Insurance Company A- (Excellent)
Berkshire Mutual Insurance Company B+ (Very Good), under review
Mainland Insurance Company NR-3 (Rating Procedure
Inapplicable)
The following existing debt has been affirmed: -- Harleysville Group Inc. -- "a-" rating on $75 million 6.75% senior notes, due 2003 A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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