Massachusetts-based property and casualty insurer The Hanover Insurance Group (“The Hanover”) has issued a press release announcing preliminary second-quarter results, including significant catastrophe losses.
The company estimates approximately $262 million in pre-tax catastrophe losses for Q2 2023. These losses represent 18.5 percentage points of net earned premium.
Nineteen convective storms across multiple states drove catastrophe losses. Most losses stemmed from hail damage, which primarily impacted Hanover’s personal lines business.
Worst Q2 for the industry since 2011
According to the press release, industry estimates indicate this was the worst Q2 for catastrophe losses since 2011 and potentially the costliest quarter ever for hail.
Hanover’s largest exposure is in Michigan, where severe hailstorms caused extensive damage. Excluding catastrophes, Q2 results were in line with expectations.
Hanover CEO John C. Roche stated: “We experienced significant catastrophe losses in the second quarter, which according to industry estimates, is expected to be the worst second quarter for U.S. catastrophe losses since 2011.”
Strong renewal pricing on homeowner policies and reinsurance
The insurer remains confident in achieving long-term goals and addressing risks through underwriting changes, improving insurance-to-value ratios, risk mitigation initiatives, and implementing policy term adjustments.
During the Quarter, The Hanover achieved strong renewal pricing of 22% on average for homeowners’ policies. The Hanover was able to secure favorable catastrophe reinsurance treaty renewals for July 1, allowing increased catastrophe reinsurance limits at reasonable pricing.
The combined ratio for Q2 to top 113%
Looking at the estimated catastrophe losses and other data available, The Hanover predicts its combined ratio for the second quarter will be around 111.3%. High. But excluding the impact of those big catastrophe claims, the ratio drops to 92.8%.
On the bottom line, The Hanover expects to report a net loss per share of $1.94 after taxes. Its operating loss per share is estimated at $1.91.
As the accompanying article on the Federal Insurance Office’s recent climate change and insurance report explores, major weather events may become the norm and eventually affect all four quarters of every property and casualty insurers’ results.
