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Jun 30, 2023
Hanover Q2 2023 Earnings Report
Hanover experienced a net loss due to elevated storm activity, but made progress on its margin recapture plan.
Key Takeaways
The Hanover Insurance Group reported a net loss of $69.2 million for the second quarter of 2023, compared to a net income of $22.7 million in the prior-year quarter. The combined ratio was 111.3%, with catastrophe losses significantly impacting results. However, net premiums written increased by 8.6%, and the company is focused on margin recapture and leveraging its diversified portfolio for profitable growth.
Combined ratio was 111.3%, or 92.8% excluding catastrophes.
Catastrophe losses totaled $261.6 million, driven by convective storms and hail damage, primarily affecting Personal Lines.
Net premiums written increased by 8.6%, with contributions from all segments.
Renewal price increases were 15.9% in Personal Lines, 11.4% in Specialty, and 11.3% in Core Commercial.
Hanover
Hanover
Hanover Revenue by Segment
Revenue by Segment
Specialty Net Premiums Earned Revenue
CapyFin.comPersonal Lines Net Premiums Earned Revenue
CapyFin.com Forward Guidance
The Hanover is focused on advancing its margin recapture plan and leveraging its diversified portfolio to drive long-term, sustainable profitable growth. They are implementing pricing actions and changes to product terms and conditions to restore profitability in Personal Lines.
Positive Outlook
- Renewal pricing in Personal Lines continues to track above original expectations, with average price increases of 21.7% in homeowners and 12.0% in auto.
- Changes to product terms and conditions in homeowners are expected to come online starting in the third quarter, foreshadowing meaningful improvement in this business.
- Specialty business continued to deliver exceptional results, generating an 88.4% combined ratio and solid premium growth of 7.6%.
- Core Commercial business significantly reduced ex-CAT large losses and posted an improvement in the loss ratio compared to the second quarter last year, while increasing pricing by 11.3%.
- Expense ratio of 30.6%, keeping the company on track to achieve its savings target for the full year 2023.
Challenges Ahead
- Elevated storm activity presented challenges for the industry.
- Net loss of $69.2 million, or $(1.94) per basic share, in the second quarter of 2023.
- Personal Lines operating loss before income taxes was $194.1 million.
- Personal Lines combined ratio was 138.0%, compared to 103.2% in the prior-year quarter.
- Book value per share decreased by 6.4% from March 31, 2023.
Revenue & Expenses
Visualization of income flow from segment revenue to net income