Sep 30, 2020

Hanover Q3 2020 Earnings Report

Reported strong financial results driven by effective risk management and robust distribution capabilities.

Key Takeaways

The Hanover Insurance Group reported a net income of $118.9 million, or $3.13 per diluted share, and an operating income of $93.5 million, or $2.46 per diluted share, for the third quarter of 2020. The company's combined ratio was 94.2%, and 88.4% excluding catastrophes. They also entered into a $100 million accelerated share repurchase agreement.

Net income of $118.9 million, or $3.13 per diluted share.

Operating income of $93.5 million, or $2.46 per diluted share.

Combined ratio of 94.2%, and 88.4% excluding catastrophes.

Entered into a $100 million accelerated share repurchase agreement.

Total Revenue
$1.27B
Previous year: $1.24B
+2.1%
EPS
$2.46
Previous year: $2.31
+6.5%
Core Commercial Price Increase
5.7%
Personal Lines Price Increase
4.7%
Gross Profit
$1.11B
Previous year: $1.08B
+3.2%
Cash and Equivalents
$232M
Previous year: $158M
+46.9%
Free Cash Flow
$317M
Previous year: $270M
+17.4%
Total Assets
$13.4B
Previous year: $12.6B
+6.1%

Hanover

Hanover

Hanover Revenue by Segment

Forward Guidance

The company is confident in its ability to drive top-and bottom-line growth across its business.

Positive Outlook

  • Strong balance sheet
  • Robust business prospects
  • Commitment to effectively manage capital
  • Strength in company’s earnings power
  • Ability to consistently generate excess capital

Challenges Ahead

  • Industry headwinds
  • Weather challenges
  • Timing of certain expenses slightly elevated expense ratio
  • Dynamic and competitive market in Personal Lines
  • Lower new money yields

Revenue & Expenses

Visualization of income flow from segment revenue to net income