The Hanover Insurance Group doesn’t release its 2014 third quarter financial results until Oct. 29. But Fitch Ratings has given the Massachusetts-based U.S. property/casualty insurer an early bit of good news in advance of those numbers.

Fitch reaffirmed the A- Insurer Financial Strength Rating for The Hanover Insurance Company, the principal operating subsidiary of The Hanover Insurance Group. As well, Fitch affirmed a BBB Issuer Default Rating for the company, and a BBB- rating for its senior unsecured notes.

Overall, Fitch said that Hanover’s rating outlook is stable.

What drove the ratings reaffirmation? Fitch said that the ratings “reflect adequate capitalization” of Hanover’s U.S. operating subsidiaries, plus its belief that “internal capital formation is likely to continue to marginally improve.”

“Fitch believes [The Hanover Group’s] consolidation capitalization adequately supports the company’s risk profile,” the ratings entity said. “However, operating leverage has increased significantly over the last three years, largely due to acquisitions and limited growth in shareholders’ equity,” Fitch cautioned.

Fitch Ratings noted that Hanover’s combined ratio of 97.8 in the first half of 2014, with 4.9 points in catastrophe losses, market continued improvement over the last 18 months.

Fitch said that The Hanover Group could very well continue to improve its profit in the intermediate term “due to premium mix changes,” but said that benefits from premium rate improvements are waning in the face of a more competitive pricing environment for both commercial and personal lines.

Fitch also recognized The Hanover Group’s product mix changes in recent months, including “a more balanced risk appetite, shifts in the company’s geographic mix from traditional northeast markets and exposure management efforts, coupled with a shift from a product perspective toward more specialty commercial lines.”

Fitch’s ratings reaffirmation for The Hanover Group follows a healthy 2014 for the insurer. Second quarter net profit rose to $82.6 million, a 54.7 percent hike over the same period a year ago. Net premiums written for the second quarter also climbed to $1.3 billion, 2.7 percent higher than the 2013 second quarter.

Source: Fitch Ratings