A.M. Best Affirms Credit Ratings of The Hartford Financial Services Group, Inc. and Its Property/Casualty Subsidiaries; Upgrades Issuer Credit Rating of Hartford Life and Accident Insurance Company

August 2, 2018

OLDWICK, N.J.--(BUSINESS WIRE)--Aug 2, 2018--A.M. Best has affirmed the Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” and the Long- and Short-Term Issue Credit Ratings (Long-Term IR; Short-Term IR) of The Hartford Financial Services Group, Inc. (The Hartford) [NYSE: HIG], which is the ultimate parent of the companies hereinafter mentioned. A.M. Best also has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and Long-Term ICR of “aa-” of Hartford Fire Insurance Company and its pooling subsidiaries and affiliates, collectively known as the Hartford Insurance Pool.

Concurrently, A.M. Best has upgraded the Long-Term ICR to “a+” from “a” and affirmed the FSR of A (Excellent) of Hartford Life and Accident Insurance Company (HLA).

The outlook of these Credit Ratings (ratings) is stable. All of the above companies are headquartered in Hartford, CT.

The ratings of the Hartford Insurance Pool reflect its balance sheet strength, which A.M. Best categorizes as strongest, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management (ERM).

The balance sheet strength assessment is derived from risk-adjusted capitalization at the strongest level, which benefits from a high credit quality investment portfolio and a comprehensive reinsurance program with highly rated insurers. The pool’s balance sheet also benefits from the financial flexibility afforded by the parent company, which has access to the public debt and equity markets. Partially offsetting these benefits are the adverse calendar-year loss reserve development trends observed over the most recent 10-year period primarily related to asbestos and environmental liabilities. However, at the end of 2016, the group entered into a reinsurance agreement with National Indemnity Company to cover up to $1.5 billion in future adverse loss reserve development in its asbestos and environmental liabilities in order to mitigate further uncertainty regarding these reserves.

The pool’s operating returns are in line with the averages for the commercial casualty composite; however, returns have trended less favorably in recent years. While the five-year average combined ratio of 98.5% outperforms the commercial composite average by 1.5 percentage points, underwriting results were negatively impacted by catastrophic events in 2017, producing the highest combined ratio of the five-year period. Investment income has been consistent, as growth in the long-term bond portfolio mostly was offset by declining investment yields.

The favorable business profile reflects the pool’s excellent market position within the property/casualty industry, geographic and product line diversity, experienced management team, generally conservative operating fundamentals and diversified underwriting initiatives, which provide balanced growth opportunities. Management has executed various operating initiatives to focus operations on small to middle commercial markets and personal lines business that are viewed as less volatile and provide opportunities for profitable growth. The pool’s use of technology platforms throughout the organization, localized support and excellent service further strengthen its business profile.

ERM is viewed appropriate for the pool’s size and complexity of its underwriting, investment and other risks based on its ERM framework and controls.

The ratings of HLA reflect its balance sheet strength, which A.M. Best categorizes as very strong, its adequate operating performance, favorable business profile and appropriate ERM. The ratings also reflect the increased importance of HLA to the overall Hartford organization as evidenced by the recent Aetna, Inc. transaction and divestiture of Talcott Resolution.

HLA’s ratings continue to be anchored by its very strong balance sheet, which reflects its strong risk-adjusted capitalization and consists of generally conservative invested assets and a modest amount of operating leverage. Additionally, the company historically has reported favorable reserving and asset-liability matching. With the recent acquisition of Aetna, Inc.’s employee benefits business, the company has materially increased its market position, as well as its distribution and administrative capabilities. As a result, A.M. Best believes that the company will report a favorable trend of revenue and earnings, reflecting its enhanced competitive position, and may benefit from synergies with the overall organization going forward.

The Hartford’s debt-to-total capital ratio (excluding accumulated other comprehensive income) and interest coverage ratios are generally within A.M. Best’s guidelines for its current ratings, although the interest coverage ratio was adversely impacted in 2017 by charges associated with the sale of Talcott Resolution. A.M. Best anticipates The Hartford will maintain solid liquidity at the holding company to support any potential capital needs of its operating subsidiaries.

For a complete listing of The Hartford’s FSRs, Long-Term ICRs and Short- and Long-Term IRs, please visit The Hartford Financial Services Group, Inc.

This press release relates to Credit Ratings that have been published on A.M. 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 A.M. Best’s web page. For additional information regarding the use and limitations of Credit Rating opinions, please view . For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view .

A.M. Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit for more information.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Jonathan Harris, CFA, FRM, CPCU

Senior Financial Analyst – P/C

+1 908 439 2200, ext. 5771



Kate Steffanelli

Senior Financial Analyst – L/H

+1 908 439 2200, ext. 5063



Christopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159



Jim Peavy

Director, Public Relations

+1 908 439 2200, ext. 5644





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PUB: 08/02/2018 12:06 PM/DISC: 08/02/2018 12:06 PM


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