AM Best has affirmed the Financial Strength Rating (FSR) of A++ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of 'aa+' (Superior) of the members of The Hartford Steam Boiler Group (HSB).

The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed listing of the companies.)

HSB's ratings reflect the group's balance sheet strength, which AM Best categorizes as strongest, as well as its very strong operating performance, favorable business profile and very strong enterprise risk management.

HSB's balance sheet strength assessment continues to be underpinned by risk-adjusted capitalization at the strongest level, as measured by Best's Capital Adequacy Ratio (BCAR), as well as its good liquidity, conservative investment allocations and a history of positive reserve development.

The group has a long track record of favorable operating profits. HSB's five-year return of equity (ROE) of 15.1% is materially better than the commercial property composite five-year ROE of 5.9%. Its 10-year ROE of 19.0% also outperforms the composite 10-year ROE of 6.7%. The performance is primarily driven by solid underwriting returns and enhanced by steady stream of investment income. The five-year average combined ratio of 87.5% significantly outperforms the 103.9% average posted by the commercial property composite over the same duration. Incurred losses consistently have been sustained at very low levels, albeit increased in recent years before subsiding in 2020, reflecting fewer large losses and lower claim counts. Underwriting margins in 2020 also benefited from a 2.8-percentage point reduction in the expense ratio that reflected improvement in administrative expenses, lower travel and medical costs and the impact of expense reduction initiatives.

The group has a long-standing reputation as a valuable partner to insurance companies throughout the industry. This unique position allows the company to distribute its products throughout the United States, as well as in other markets. Additionally, it allows its partners to access the specialized knowledge and innovative products the group provides to the industry, including Internet of Things (IoT) and other loss-control solutions. In recent years, the group has developed innovative solutions to cyber insurance and equipment breakdown policies, including IoT, which have produced favorable returns.

The FSR of A++ (Superior) and the Long-Term ICRs of 'aa+' (Superior) have been affirmed with stable outlooks for the following members of The Hartford Steam Boiler Group:

The Hartford Steam Boiler Inspection and Insurance Company

The Boiler Inspection and Insurance Company of Canada

HSB Specialty Insurance Company

HSB Engineering Insurance Limited

AM Best also has withdrawn the FSR of A++ (Superior) and the Long-Term ICR of 'aa+' (Superior), each with a stable outlook, of The Hartford Steam Boiler Inspection and Insurance Company of Connecticut (Hartford, CT), as the company is a shell company that does not bear insurance risk.

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 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.

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