Fitch Affirms Harleysville Group Inc.CHICAGO -- Fitch 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 'BBB' issuer default rating (IDR IDR In currencies, this is the abbreviation for the Indonesian Rupiah. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ) on Harleysville Group Inc. (HGIC HGIC Harleysville Group Inc ) and the 'BBB-' rating on HGIC's senior unsecured notes due July 15, 2013. Fitch also has affirmed the 'A-'insurer financial strength (IFS) rating on the Harleysville intercompany pool (Harleysville). The Rating Outlook is Stable. The ratings reflect HGIC's low financial leverage and reasonable coverage and Harleysville's strong risk-based capitalization and high quality investment portfolio. The ratings also reflect Fitch's concerns about Harleysville's ability to further improve results given the company's status as a midsized regional company and cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. pressures in its core commercial lines. HGIC's overall statutory combined ratio for year-end 2005 was 102.2% versus a 105.9% for year-end 2004. Fitch recognizes HGIC's improvement in 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. results and credits both management enacted initiatives and a favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. underwriting environment over the past two years. However, Fitch also notes HGIC's results continued to lag peer and industry results. Fitch notes that HGIC's combined ratio through Sept. 30, 2005 is approximately 4.8 percentage points higher than the commercial lines industry aggregate combined ratio. HGIC uses a modest amount of financial leverage and because of its comparatively low annual cash interest requirements; generates reasonable earnings-based and cash-based interest coverage. At Dec. 31, 2005, the company's debt-to-capital ratio was 17.6%, and Fitch estimates its operating earnings-based interest coverage at 15.7 times (x). HGIC is a holding company that is 56% owned by Harleysville Mutual Insurance Company (Harleysville Mutual). HGIC's subsidiaries and Harleysville Mutual participate in an underwriting pooling agreement, in which member premiums, losses, and expenses are aggregated and Harleysville Mutual and HGIC assumes 28% and 72% of the aggregated totals, respectively. In addition, all pool members are managed by HGIC. As a result, Fitch has assigned common ratings to all members of the Harleysville intercompany pool. Fitch affirms the following with a Stable Outlook: Harleysville Group Inc. -- $100 million senior debt 5.75% due July 15, 2013 'BBB-'; -- Issuer default rating 'BBB'. Harleysville Atlantic Harleysville Insurance Harleysville of New Jersey Harleysville of New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of Harleysville of Ohio Harleysville Lake States Harleysville Preferred Harleysville Worcester Harleysville Mutual Harleysville Pennland -- Insurer financial strength at 'A-'. Mid-America Insurance Company -- Insurer financial strength rating at 'A-'. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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