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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.
Revenue by Segment
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.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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