A.M. Best Comments on Credit Ratings of The Hartford Financial Services Group, Inc. Following Reinsurance Transaction with Na...
January 03 2017 - 2:36PM
Business Wire
A.M. Best has commented that the Credit Ratings (ratings)
of The Hartford Financial Services Group, Inc. (The
Hartford) (NYSE:HIG) and its subsidiaries remain unchanged
following The Hartford’s recent announcement that its principal
operating subsidiary, Hartford Fire Insurance Company and
its pooling subsidiaries and affiliates, collectively referred to
as the Hartford Insurance Pool, have entered into an
reinsurance transaction with National Indemnity Company
(NICO), a subsidiary of Berkshire Hathaway Inc. (Berkshire)
(NYSE: BRK A and BRK B), that provides aggregate adverse
development coverage for asbestos and environmental (A&E)
losses.
Under the terms of the transaction, The Hartford will pay NICO a
reinsurance premium of $650 million in exchange for an aggregate
adverse development cover for A&E losses beyond Dec. 31, 2016,
aggregate net carried reserves, up to a limit of $1.5 billion. The
reinsurance will cover adverse development on substantially all of
the company’s A&E reserves, excluding those held by the
company’s U.K. property and casualty run-off subsidiaries (under
contract to be sold with a closing projected for the first quarter
2017), as well as other non-U.S. operations with less than $3
million in A&E reserves. NICO will provide a collateral trust
account as security for NICO’s claim payment obligations to the
Hartford Insurance Pool. Berkshire will guarantee certain payment
and performance obligations of NICO. The Hartford will retain
responsibility for claims handling and other administrative
services, subject to certain conditions. The Hartford expects to
recognize an after-tax GAAP loss of $423 million in the fourth
quarter of 2016 as a result of this transaction.
Over the longer term, A.M. Best believes the reinsurance
transaction is credit positive for The Hartford and its
subsidiaries as it significantly reduces the uncertainty of the
group’s legacy A&E liabilities and will enhance the group’s
risk-adjusted capitalization. Near term, however, The Hartford’s
ratings will not be affected as risk-adjusted capitalization was
comfortably supportive of its ratings and the variability in
performance due to the adverse development of the A&E
liabilities was not viewed as a substantial negative credit
factor.
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 Recent Rating Activity web page. For
additional information regarding the use and limitations of Credit
Rating opinions, please view Understanding Best’s Credit
Ratings.
A.M. Best is the world’s oldest and most authoritative
insurance rating and information source. For more information,
visit www.ambest.com.
Copyright © 2017 by A.M. Best Rating
Services, Inc. and/or its subsidiaries. ALL RIGHTS
RESERVED.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170103006160/en/
A.M. BestJonathan Harris, CFA, FRM, +1 908-439-2200,
ext. 5771Senior Financial
Analystjonathan.harris@ambest.comorJennifer Marshall, +1
908-439-2200, ext.
5327Directorjennifer.marshall@ambest.comorChristopher
Sharkey, +1 908-439-2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorJim Peavy, +1
908-439-2200, ext. 5644Director, Public
Relationsjames.peavy@ambest.com
Hartford Financial Servi... (NYSE:HIG)
Historical Stock Chart
From Mar 2024 to Apr 2024
Hartford Financial Servi... (NYSE:HIG)
Historical Stock Chart
From Apr 2023 to Apr 2024