Moody's Downgrades Harleysville
NU Online News Service, April 7, 3:17 p.m. EDT?Moody's Investors Service announced today it has downgraded various ratings of Harleysville, Pa.-based Harleysville Group Inc. because of the insurer's poor 2003 financial results.[@@]
The ratings affected by Moody's action include insurance financial strength ratings of Harleysville Group's intercompany pool members, which were dropped to "A3" from "A2," and the insurer's long-term debt ratings, which were lowered to "Baa2" from "Baa1."
Moody's noted that in 2003, Harleysville had $119 million of adverse loss reserve development, which is a significant amount considering the company's capitalization and core-earnings power.
Moody's also observed that for the 2003 fourth quarter, the insurer posted $42 million pre-tax charge to boost loss and loss-adjustment expense reserves for prior-accident years in its workers' compensation, commercial auto liability, commercial multi-peril and personal automobile liability lines.
For full-year 2003, Harleysville posted a $47.6 million net loss, down from net profit of $46.2 million for full-year 2002.
The ratings agency also commented that Harleysville last year posted "disappointing underlying underwriting performance," given the favorable underwriting conditions that currently exist in the insurance marketplace.
Harleysville faces significant challenges going forward, Moody's said, including re-underwriting a significant part of its personal-lines portfolio and a comprehensive review of its underwriting and claims management processes.
Harleysville offers a broad line of personal and commercial property-casualty insurance. It offers coverage in homeowners, auto, commercial multi-peril and workers' compensation. With about 1,700 agencies, the company operates in more than 30 states, primarily in the Eastern and Midwestern United States, through about 10 subsidiaries.
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