A.M. Best Affirms Ratings of Harleysville Insurance Pool and Affirms Debt Rating of Harleysville Group Inc.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Dec. 20, 2002 A.M. Best Co. has affirmed the financial strength ratings of A (Excellent) of Harleysville Insurance's pool members (Harleysville) (Harleysville, Pa.). Also, A.M. Best has affirmed the "a-" debt rating of Harleysville Group Inc.'s (HGIC HGIC Harleysville Group Inc ) (Nasdaq:HGIC) existing senior notes. A positive rating outlook has been assigned to all the ratings. These ratings reflect Harleysville's excellent capitalization, generally solid earnings and 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 well-established agency relationships. Under a regional insurer approach, Harleysville benefits from its strong name recognition, extensive local market knowledge and stable market presence. 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 discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: non-core and unprofitable business lines to focus on small commercial accounts. As a result, the pool exited the highly regulated Massachusetts and New Jersey private passenger automobile markets through the transfer of renewal rights and depopulated de·pop·u·late tr.v. de·pop·u·lat·ed, de·pop·u·lat·ing, de·pop·u·lates To reduce sharply the population of, as by disease, war, or forcible relocation. personal lines exposures in some Midwest and Mid-Atlantic states Mid-At·lan·tic States See Middle Atlantic States. Noun 1. Mid-Atlantic states - a region of the eastern United States comprising New York and New Jersey and Pennsylvania and Delaware and Maryland U.S.A. . 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 modest financial leverage with debt to capital of approximately 11% 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 of approximately 8%. Somewhat offsetting these positive rating factors are Harleysville's unrewarding personal lines results and ongoing susceptibility to catastrophes and weather-related losses, which may lead to 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. . In recent years, personal lines results have been negatively impacted by weather-related losses and rising loss costs. Additionally, total returns have been dampened by investment losses. However, Harleysville has implemented corrective actions A corrective action is a change implemented to address a weakness identified in a management system. Normally corrective actions are instigated in response to a customer complaint, abnormal levels if internal nonconformity, nonconformities identified during an internal audit or to improve earnings that include re-underwriting, pricing adjustments, agency management actions and discontinuing business in unprofitable states. Recognizing Harleysville's favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. capitalization, improved earnings prospects and sustainable competitive advantages, A.M. Best has assigned a positive rating outlook. In a separate rating action, the financial strength rating of B- (Fair) of Berkshire Mutual Insurance Co. (Massachusetts) was changed to NR-3 (Rating Procedure Inapplicable in·ap·pli·ca·ble adj. Not applicable: rules inapplicable to day students. in·ap ) due to its run-off status as a majority of the renewal rights have been transferred to Commerce Insurance Co. (Webster, Mass.). The financial strength rating of A (Excellent) has been affirmed with a positive outlook for the following property/casualty pooling members of Harleysville Insurance: -- Harleysville Mutual Insurance Company -- Harleysville Insurance Company of NY -- Mid-America Insurance Company -- Harleysville Worcester Insurance Company -- Harleysville-Atlantic Insurance Company -- Harleysville Insurance Company of NJ -- Harleysville Insurance Company of OH -- Harleysville Insurance Company -- Harleysville Lake States Insurance -- Harleysville Preferred Insurance Company -- Harleysville Pennland Insurance Company The financial strength ratings of A- (Excellent) remain unaffected for the following companies: -- Harleysville Life Insurance Company -- Harleysville-Garden State Insurance Co 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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