The Hanover’s CoR improves to 95.5% in Q3’24, net income climbs to $102.1m

The Hanover Insurance Group has released its financial results for the third quarter of 2024, which includes its combined ratio improving 8.9 points to 95.5%, driven in part by lower catastrophe losses, while net income increased to $102.1 million.

At the same time, operating income was $111.3 million for the third quarter of 2024, compared to an operating income of $6.8 million in the prior-year quarter.

The Hanover also posted net and operating return on equity of 15.0% and 14.4% for Q3’24.

Net premiums written also climbed by 4.2%, reaching $1.66 billion, compared to $1.59 billion from the prior year quarter.

In terms of investment, The Hanover’s net investment income sat at $91.8 million for Q3’24, representing an increase of 9.0% from the prior-year quarter.

By segment, core commercial delivered a $55.9 million operating income before income taxes in the quarter, compared to last year’s $43.1 million. The core commercial combined ratio sat at 97.0% for Q3’24, compared to 98.7% in the prior-year quarter. As well as this, catastrophe losses in the third quarter of 2024 were $31.7 million, or 5.9 points of the combined ratio. This compared to catastrophe losses of $44.6 million, or 8.6 points, in the prior-year quarter. 

Moving towards the firm’s specialty segment, operating income before income taxes was $73.0 million in the quarter, a slight increase compared to $70.3 million in the third quarter of 2023.

The segments combined ratio sat at 83.9%, compared to 83.4% in the prior-year quarter, while catastrophe losses in Q3’24 were $4.4 million, or 1.3 points of the combined ratio, compared to $6.9 million, or 2.1 points, in the prior-year quarter.

As for personal lines, the segment produced an operating income before income taxes of $21.7 million, compared to an operating loss before income taxes of $100.4 million in the prior year quarter. The segment’s combined ratio was 100.6%, a notable improvement compared to 120.8% in the prior-year quarter.

In addition, catastrophe losses in Q3’24 were $69.8 million, or 11.4 points of the combined ratio. This compared to catastrophe losses of $144.3 million, or 24.4 points of the combined ratio, in the prior-year quarter.

John C. Roche, president and chief executive officer at The Hanover, commented on the company’s Q3’24 results: “We are pleased to report excellent results for the third quarter, marked by outstanding execution, including 14.4% operating return on equity in the quarter and 12.8% year-to-date. In addition to driving strong underlying results, we continue to prioritize reducing the impact from weather-related volatility, with approximately half of our Personal Lines portfolio now under new or enhanced deductible levels. We achieved Personal Lines topline growth of 6.8% driven by strong pricing, and we are on track to return to our target profitability on an earned basis next year.”

He continued: “In Core Commercial and Specialty, we achieved robust pricing increases of approximately 13% and 10%, respectively, while meeting our profitability expectations. We’re positioned exceptionally well to capitalize on the opportunities in our targeted growth areas, as we leverage our strong market presence, specialized product portfolio, extraordinary talent, and dynamic team culture. Through our disciplined focus on balancing profitability and growth, our third quarter results build on our solid momentum, showcasing our resilience and paving the way for a prosperous future.”

Jeffrey M. Farber, executive vice president and chief financial officer at The Hanover, said: “Excluding catastrophes, our third quarter combined ratio was 88.3%, the best in several years, and an improvement of over two points compared to the prior-year quarter.

“In addition, our year-to-date ex-CAT combined ratio stands at 88.7%, besting our original guidance range for the year. Our reserves are strong, and we continue to believe we are well positioned to navigate liability trends, as evidenced by the favorable prior-year development experienced across all three of our segments. Our high-quality investment portfolio delivered increases in net investment income of 9%, and 15% excluding partnerships, propelled by higher earned yields and increased cashflows. A combination of earnings and an improved unrealized position in the quarter drove a sequential increase in book value per share, up 12.6%. Looking ahead, we remain committed to improving our superior returns even more and driving enhanced shareholder value.”

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