AM Best Affirms Credit Ratings of The Hanover Insurance Group, Inc. and Its Subsidiaries

AM Best has affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of "a+" (Excellent) of the property/casualty subsidiaries of The Hanover Insurance Group, Inc. (NYSE:THG), which are collectively referred to as The Hanover. Additionally, AM Best has affirmed the Long-Term ICR of "bbb+" (Good) and all Long-Term Issue Credit Ratings (Long-Term IR) of The Hanover Insurance Group, Inc., which is the parent holding company. The outlook of these Credit Ratings (ratings) is stable. All companies are headquartered in Worcester, MA. (See below for a detailed listing of the companies and ratings.)

The ratings reflect The Hanover's balance sheet strength, which AM Best assesses at the strongest level, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management (ERM).

The Hanover's balance sheet strength assessment is supported by its risk-adjusted capitalization, which is at the strongest level, as measured by Best's Capital Adequacy Ratio (BCAR). The overall balance sheet strength assessment also considers the solid organic surplus growth over the recent five-year period despite ongoing stockholder dividends, as well as the group's stable loss reserve position and favorable development patterns. Balance sheet strength also reflects the comprehensive reinsurance program and the benefits derived from the additional financial flexibility available through the parent company, The Hanover Insurance Group, Inc. These positive factors are offset somewhat by higher premium and underwriting leverage measures, as well as the group's regional exposure to natural catastrophe and terror events. The Hanover's financial leverage remains within acceptable levels relative to the group's current ratings with improved interest coverage.

The Hanover's ratings reflect its adequate operating performance. While pre-tax operating earnings have trailed the commercial casualty composite over the long term, improved operating performance in 2024 reflects ongoing initiatives to enhance results inclusive of additional rate, combined with a reduction in reported catastrophe losses relative to 2023. Rate and exposure increases drove strong top-line growth in commercial lines in 2024 as results benefited from lower catastrophe losses combined with favorable reserve development on prior-year losses. The decline in catastrophe losses in 2024 led to improvement in personal lines results, which benefit from ongoing exposure management initiatives, combined with the benefit of earned premium reflective of ongoing rate improvement. Recent 2024 initiatives, which are showing demonstrated earnings improvement include ongoing rate actions, in combination with higher insurance-to-value ratios, increases in deductibles for roofs and all perils, as well as selective non renewals where appropriate.

The ratings also consider the group's favorable business profile and diversified product offerings, especially within its commercial and specialty lines of business. The Hanover's business profile assessment reflects its strong market position, reflective of its leading position in many of its targeted niche segments, as well as an experienced management team. The group's product range includes personal lines, core commercial offerings and specialty coverages, with business expansion supported by strong relationships with its independent agency partners. The Hanover has implemented an appropriately designed and embedded ERM program to address the organization's risks. The group's ERM program is appropriate for the scale, scope, and complexity of the organization and the ability to monitor key risks and tolerances is well-established.

The FSR of A (Excellent) and the Long-Term ICRs of "a+" (Excellent) have been affirmed with stable outlooks for the following subsidiaries of The Hanover Insurance Group, Inc.:

• AIX Specialty Insurance Company
• Allmerica Financial Alliance Insurance Company
• Allmerica Financial Benefit Insurance Company
• Campmed Casualty & Indemnity Company, Inc.
• Citizens Insurance Company of America
• Citizens Insurance Company of Ohio
• Citizens Insurance Company of the Midwest
• Citizens Insurance Company of Illinois
• The Hanover American Insurance Company
• The Hanover Atlantic Insurance Company Ltd.
• The Hanover Insurance Company
• The Hanover Casualty Company (formerly known as Hanover Lloyd's Insurance Company)
• Massachusetts Bay Insurance Company
• NOVA Casualty Company
• Verlan Fire Insurance Company

The following Long-Term IRs have been affirmed with a stable outlook:

The Hanover Insurance Group, Inc.—

-- "bbb+" (Good) on $199.5 million 7.625% senior unsecured debentures, due 2025 (of which $61.8 million remains outstanding)

-- "bbb+" (Good) on $375.0 million 4.5% senior unsecured fixed rate notes, due 2026

-- "bbb-" (Good) on $165.7 million 8.207% subordinated deferrable debentures, due 2027 (of which $50.1 million remains outstanding)

-- "bbb+" (Good) on $300 million 2.5% senior unsecured notes, due 2030

The following indicative Long-Term IRs under the shelf registration have been affirmed with a stable outlook:

The Hanover Insurance Group, Inc.—

-- "bbb+" (Good) on senior unsecured debt

-- "bbb-" (Good) on subordinated debt

-- "bbb-" (Good) on preferred stock

This press release relates to Credit Ratings that have been published on AM 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 AM Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best's Credit Ratings, Best's Performance Assessments, Best's Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best's Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2025 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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