A.M. Best Affirms Ratings of Harleysville Insurance.OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating (FSR (Free System Resource) In Windows 3.x, the amount of unused memory in various 64K blocks reserved for managing current applications. Every open window takes some space in this area. See Windows memory limitation. ) of A- (Excellent) and issuer credit ratings (ICR (Intelligent Character Recognition or Image Character Recognition) The machine recognition of hand-printed characters as well as machine printing that is difficult to recognize. ) of "a-"of Harleysville Insurance (Harleysville) (Harleysville, PA) and its property/casualty pooling members. Concurrently, A.M. Best has affirmed the FSR of B++ (Very Good) and ICR of "bbb+" of Harleysville Life Insurance Company (Harleysville Life) (Lansdale, PA). In addition, A.M. Best has affirmed the debt rating of "bbb-" of Harleysville Group Inc.'s (HGIC HGIC Harleysville Group Inc ) (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : HGIC) (Harleysville, PA) existing senior note and the indicative ratings of "bbb-" on senior debt, "bb+" on subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". , "bb" on trust preferred securities and "bb" on preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. that are filed as part of its universal shelf registration. The outlook for all ratings is stable. (See link below for a detailed list of ratings.) The ratings reflect Harleysville's excellent risk-adjusted capitalization, improved operating performance, its prudent management of catastrophe exposures, the future benefits to be derived from management's recent 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 , as well as the group's solid regional market franchise and well-established agency relationships. The affirmation of the ratings also acknowledges the benefits that should be derived from Harleysville's re-underwriting and pricing initiatives; its more stable prior year loss reserve development; investments in technology to support underwriting effectiveness and to make it easier for agents to do business with Harleysville; and continuing improvements in its claims operations. Despite these attributes, Harleysville's commercial lines underwriting performance, while improved, has lagged the industry over the past several years during a period of increased pricing and more stringent underwriting standards. In addition, although Harleysville has initiated substantive actions to lower costs and enhance operating efficiencies, its expense ratio remains high. Harleysville is afforded financial flexibility through its publicly-traded holding company, HGIC, which has access to the capital markets. HGIC maintains moderate financial leverage with a debt-to-total capital ratio of 15.9% at March 31, 2006, which is enhanced by excellent cash coverage of its holding company obligations. The ratings of Harleysville Life are based on its integral position as the life/health company of its property/casualty parent, Harleysville Mutual Insurance Company, and affiliates. The ratings also recognize a more than adequate level of risk-adjusted capitalization, a trend of ordinary life premium growth and the continued turnaround in operating profitability in the group accident and health line of business. Partially offsetting these factors are Harleysville Life's inconsistent statutory operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before and continued geographic concentration in Pennsylvania. For a complete list of Harleysville Group Inc.'s FSRs, ICRs and debt ratings, please visit www.ambest.com/press/050905harleysville.pdf. For Best's Debt Ratings, all other Best's Ratings Best's rating A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders. , an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings. 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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