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Mar 31, 2024
Hanover Q1 2024 Earnings Report
Reported strong underwriting margins and an operating return on equity of 15%.
Key Takeaways
The Hanover Insurance Group reported a strong first quarter with net income of $115.5 million, or $3.18 per diluted share, and operating income of $111.9 million, or $3.08 per diluted share. The company's combined ratio was 95.5%, and excluding catastrophes, it was 89.5%.
Combined ratio of 95.5%; combined ratio, excluding catastrophes, of 89.5%.
Catastrophe losses of $86.9 million, or 6.0 points of the combined ratio.
Net premiums written increase of 2.3%.
Renewal price increases of 22.8% in Personal Lines, 11.5% in Core Commercial and 11.0% in Specialty.
Hanover
Hanover
Hanover Revenue by Segment
Revenue by Segment
Core Commercial Net Premiums Earned Revenue
CapyFin.comSpecialty Net Premiums Earned Revenue
CapyFin.comPersonal Lines Net Premiums Earned Revenue
CapyFin.com Forward Guidance
The company has strong line of sight to delivering on its long-term return on equity target of 14% or higher, and we remain committed to generating superior returns for our valued shareholders.
Positive Outlook
- Near historical pricing increases in each of our businesses, giving us clear visibility to accelerated improvement in underwriting margins going forward.
- Implemented renewal price increases of 23% in Personal Lines, 12% in Core Commercial and 11% in Specialty.
- Increased net investment income by 14% to $89.7 million, helped by investment of cash flow and higher new money yields.
- Strong line of sight to delivering on our long-term return on equity target of 14% or higher.
- Remain committed to generating superior returns for our valued shareholders.
Challenges Ahead
- Changes in regulatory, legislative, economic, market and political conditions, particularly with respect to rates, the use of data, technology, artificial intelligence, cybersecurity, policy terms and conditions, restrictions on cancellations and/or non-renewals, payment flexibility, and regions where the company has geographical concentrations.
- Heightened financial market volatility, fluctuations in interest rates (which have a significant impact on the market value of our investment portfolio and thus our book value), inflationary pressures, default rates and other factors that affect investment returns from the investment portfolio.
- Recessionary economic periods that may inhibit the company’s ability to increase pricing or renew business, or otherwise impact the company’s results, and which may be accompanied by higher claims activity in certain lines.
- Data security and privacy incidents, including, but not limited to, those resulting from a malicious cybersecurity attack on the company or its business partners and service providers, or intrusions into the company’s systems, including cloud-based data storage, or data sources.
- Adverse claims experience, including those driven by large or increased frequency and/or severity of catastrophe events, including those related to wildfires, winter storms and freezes, hurricanes, or other severe weather, or due to terrorism, civil unrest, riots, or cybersecurity events (including from products not intended to provide cyber coverage).
Revenue & Expenses
Visualization of income flow from segment revenue to net income