Best, S&P See No Change in Hanover’s Ratings on AIX Purchase

August 7, 2008

A.M. Best Co. and Standard & Poor’s Ratings Services have both indicated that The Hanover Insurance Group’s agreement to purchase all of the stock of AIX Holdings, Inc. (See related article) is unlikely to result in any change in the Group’s ratings.

Best noted that, as with any deal, “there are potential integration and execution risks,” but it anticipates that the “overall operational impact will be modest given THG’s previous acquisitions. In addition, THG has produced favorable operating earnings in recent years and maintains excellent risk-adjusted capitalization.”

S&P indicated that Hanover and most of its insurance affiliates have ‘A-‘ financial strength ratings.” S&P described AIX as a “small specialty property/casualty insurer that focuses on underwriting and managing program business,” with gross premiums written of $85 million in 2007.

“The pending acquisition is part of the company’s strategy of acquiring small specialty underwriters to expand its regional commercial lines business,” said S&P. “Hanover has made two similar acquisitions in the past year, purchasing Professionals Direct Inc. in September 2007 and Verlan Holdings Inc. in March, 2008.”

Source: A.M. Best – and Standard & Poor’s –

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