The Hanover reports $1.5bn in NPW for Q4’24 as CoR improves to 89.2%

The Hanover Insurance Group has reported an increase in net premiums written (NPW) for the fourth quarter of 2024 to $1.45 billion or 7.4%, as well as an improved combined ratio of 89.2% from 94.2% in Q4 2023.

The improvement in the combined ratio was driven by a lower catastrophe ratio of 1.7 points, with losses for Q4 2024 reported at $26 million, compared to 4 points for Q4 2023.

Net income for the quarter was $167.9 million, or $4.59 per diluted share, compared to $107.9 million, or $2.98 per diluted share, in the prior-year quarter.

Meanwhile, operating income increased to $194.6 million, or $5.32 per diluted share in Q4’24, compared to $113.1 million, or $3.13 per diluted share, in the prior-year quarter.

The net and operating return on equity hit 23.5% and 24.4%, respectively.

The insurer reports that the renewal price increases for the fourth quarter were 14.2% in Personal Lines, 11.8% in Core Commercial, and 9.5% in Specialty.

Lastly, the company’s net investment income rose by 23.4% in Q4 2024 to $100.7 million.

The firm’s full-year 2024 highlights include an increase of 4.7% in NPW to $6.1 billion compared to $5.8 billion in 2023.

The combined ratio for the year has improved significantly to 94.8% compared to 2023’s 103.5%.

The 2024 catastrophe losses were reported at $375.9 million, which were 6.4 points of the combined ratio.

The net investment income for the year was $372.6 million, a 12.2% increase from 2023. This was driven by higher bond reinvestment rates and higher cash flows, partially offset by lower partnership income, and net investment income from fixed maturities up 14.5% in 2024. Meanwhile, net and operating return on equity of 16.1% and 15.8%, respectively.

The company’s Loss and LAE ratio for 2024 of 63.5% comes in 9.5 points below the prior year.

John C. Roche, President and Chief Executive Officer at The Hanover, commented, “2024 was an exceptional year for our company, as we delivered excellent financial performance, executed well on our strategic priorities, and continued to invest in innovative tools and technology, further enhancing our strong competitive position and prospects.

“We delivered record operating return on equity of 24.4% and 15.8% in the fourth quarter and for the full year, respectively, and exceeded $6 billion in annual net written premiums. Additionally, we made significant progress in executing our catastrophe mitigation initiatives and delivering on our margin recapture plan.

“We expect to make continued progress in 2025, while leveraging our targeted growth initiatives throughout the enterprise and capitalizing on emerging opportunities in the marketplace. We continue to operate in firm market conditions and expect strong pricing will enable us to optimize our geographic mix further and achieve broad-based profitability across all segments. Our strong performance underscores the effectiveness of our distinctive strategy, the relevancy of our product and service offerings, and the strength of our agency value proposition.”

Jeffrey M. Farber, Executive Vice President and Chief Financial Officer, The Hanover, added, “We are very pleased with the outstanding financial results we delivered this year. Our fourth quarter results reflect a sub-90s combined ratio and record operating earnings of $5.32 per share, providing an incredibly strong finish to an already successful year.

“We posted full-year operating earnings of $13.34 per share, our highest ever, while we improved our ex-CAT combined ratio by 2.9 points, to 88.4%. Importantly, we delivered favorable prior-year development across all segments in 2024, while increasing the share of IBNR** in our total reserves. We remain committed to being very thoughtful in our reserving practices in light of industry casualty trends.

“Our net investment income increased 23% for the quarter and 12% for the year, as we benefited from higher cashflows and earned yields, as well as thoughtful portfolio repositioning. Additionally, in the fourth quarter, we resumed stock buybacks and increased our shareholder dividend by 5.9%, marking 20 years of annual increases, showcasing our commitment to shareholder value creation and financial strength. We are entering 2025 with immense confidence and in an excellent financial position, with a strong balance sheet and an earnings-enhancing investment portfolio.”

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