S&P rates Hanover notes BBB-

Standard & Poor's said that it assigned a BBB- senior debt rating to Hanover Insurance Group Inc.'s $300 million of senior notes due in 2021.

The outlook is stable.

S&P said it expects that Hanover will use the notes' net proceeds to partially fund the acquisition of Chaucer Holdings plc.

The debt issuance will result in an increase in Hanover's financial leverage and a decrease in its fixed-charge coverage, the agency said. However, Hanover's financial profile remains supportive of the ratings.

The ratings on Hanover consider the company's strong competitive position in its core states, strong operating performance and strong capital position as well as management's successful track record of expanding its property/casualty business lines and geographic reach, the agency added.

However its geographic concentration in its top four states, relatively high expense structure and increased catastrophe exposure due to expansion into new states and outside the United States continue to be weaknesses and are limiting rating factors, S&P said.

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