An Exceptional Year for The Worcester-Based Insurer
The Hanover Insurance Group, Inc. announced a robust financial performance for the fourth quarter and the entire year of 2024. The company reported a net income of $167.9 million, or $4.59 per diluted share for the quarter, up from $107.9 million, or $2.98 per diluted share in the previous year. For the full year, net income soared to $426.0 million, or $11.70 per diluted share, significantly higher than $35.3 million, or $0.98 per diluted share in 2023.
Operating income for the fourth quarter was $194.6 million, or $5.32 per diluted share, compared to $113.1 million, or $3.13 per diluted share in the prior-year quarter. The annual operating income reached $485.9 million, or $13.34 per diluted share.
Quarterly Financial Highlights:
- Net and Operating Return on Equity: Achieved 23.5% and 24.4% respectively.
- Combined Ratio: Stood at 89.2%, with the figure adjusting to 87.5% when excluding catastrophes.
- Catastrophe Losses: Totaled $26.0 million, impacting the combined ratio by 1.7 points.
- Premiums and Pricing: Net premiums written grew by 7.4%. Renewal price increases were 14.2% in Personal Lines, 11.8% in Core Commercial, and 9.5% in Specialty. Rate increases mirrored this growth.
- Loss Ratios: Loss and loss adjustment expense (LAE) ratio improved to 56.9%, down 6.7 points from the prior-year quarter. Excluding catastrophes, the current accident year loss and LAE ratio was 56.9%, an improvement of 3.3 points, led by Personal Lines.
- Net Investment Income: Increased by 23.4% to $100.7 million.
- Dividend: The Board approved a 5.9% increase to the regular quarterly dividend on December 2, 2024.
Annual Financial Highlights:
- Net and Operating Return on Equity: Recorded at 16.1% and 15.8% respectively.
- Combined Ratio: Reported at 94.8%, adjusting to 88.4% excluding catastrophes.
- Catastrophe Losses: Reached $375.9 million, affecting the combined ratio by 6.4 points.
- Net Premiums Written: Increased to $6.1 billion, up 4.7%.
- Loss Ratios: Annual loss and LAE ratio was 63.5%, down 9.5 points from the previous year. Excluding catastrophes, the figure was 58.2%, down 2.9 points.
- Net Investment Income: Grew by 12.2% to $372.6 million, driven by higher bond reinvestment rates and increased cash flows, offset partially by lower partnership income.
- Book Value: Per share increased by 14.9% to close at $56.2 million.
Executive Statements:
“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,” said John C. Roche, president and chief executive officer at The Hanover. “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.”
“We are very pleased with the outstanding financial results we delivered this year,” said Jeffrey M. Farber, executive vice president and chief financial officer at The Hanover. “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.”
