Underwriting Results Also Improve and Investment Income Climbs
For the fourth quarter of 2025, the Worcester.-based insurer reported net income of $198.5 million, or $5.47 per diluted share, and operating income of $210.1 million, or $5.79 per diluted share, compared with $167.9 million ($4.59 per diluted share) of net income and $194.6 million ($5.32 per diluted share) of operating income in the prior-year quarter. The company said the fourth-quarter 2025 income tax rate was elevated at approximately 24% due to “unusually high state income taxes.”
For full-year 2025, The Hanover reported net income of $662.5 million, or $18.16 per diluted share, and operating income of $696.2 million, or $19.09 per diluted share, versus $426.0 million ($11.70 per diluted share) of net income and $485.9 million ($13.34 per diluted share) of operating income in 2024.
“We delivered outstanding results in 2025, with a strong fourth quarter that capped a record year driven by disciplined execution across the company,” said John C. Roche, president and chief executive officer at The Hanover. “We achieved record annual operating return on equity of 20.1%, the highest in our history, and 23.1% in the fourth quarter, while generating $6.3 billion in net written premiums for the year, reflecting solid year-over-year growth of approximately 4%. We are exceptionally well-positioned across our businesses.”
Key fourth-quarter and full-year results
The company reported a fourth-quarter combined ratio of 89.0% and a full-year combined ratio of 91.6%, improvements from 89.2% and 94.8%, respectively, in the prior-year periods.
Catastrophe losses were $27.0 million in the fourth quarter (1.7 points on the combined ratio) and $276.3 million for the year (4.5 points), compared with $375.9 million (6.4 points) in 2024.
Net premiums written rose 3.0% in the fourth quarter and 3.9% for the year to $6.3 billion, with the company reporting renewal price increases of 9.4% in Core Commercial, 9.2% in Personal Lines, and 6.4% in Specialty during the quarter.
Net investment income increased 24.9% in the fourth quarter to $125.8 million and 22.0% for the year to $454.4 million.
Book value per share was $100.90 at Dec. 31, 2025, up 5.1% from Sept. 30, 2025 and up 27.4% from Dec. 31, 2024, which the company attributed to strong earnings and an improvement in unrealized losses on fixed maturities, partially offset by dividends and share repurchases.
What management highlighted
“In Personal Lines, our market position is driven by our strength as an account writer, with approximately 89% of customers having multiple policies, driving strong retention, ” continued Mr. Roche in his remarks. “In Core Commercial, we continue to see attractive, high-quality opportunities in the small-to-middle-market account segment. In Specialty, while competition is more pronounced in the larger-sized property market, our broad offering and our focus on smaller-sized accounts across most of our portfolio position us for accelerated growth. Taken together, our diversified and specialized product set and disciplined approach to managing profitability at the individual account level enable us to identify and capitalize on the most compelling opportunities in a dynamic market environment as conditions continue to evolve.”
“We are very pleased with our results, both in the quarter and the year,” said Jeffrey M. Farber, executive vice president and chief financial officer added in the company statement.
Continuing, Farber said the company delivered “a sub-90s combined ratio and record operating earnings of $5.79 per-share” in the quarter, and for the year, “improved our underwriting results by more than three points, bringing our combined ratio to 91.6%.” He also cited “favorable prior-year development across all three business segments” and said net investment income rose on “growth in our asset base, higher reinvestment yields, improving partnership income, and the success of our portfolio repositioning efforts.”
Top-line and profitability snapshot
Below are the company’s consolidated quarterly and annual figures as presented in the release:
| ($ in millions, except per share data) | Q4 2025 | Q4 2024 | FY 2025 | FY 2024 |
|---|---|---|---|---|
| Net premiums written | 1,488.6 | 1,445.1 | 6,322.1 | 6,083.6 |
| Net premiums earned | 1,556.6 | 1,511.6 | 6,161.1 | 5,912.6 |
| Combined ratio | 89.0% | 89.2% | 91.6% | 94.8% |
| Combined ratio ex-cat | 87.3% | 87.5% | 87.1% | 88.4% |
| Net income | 198.5 | 167.9 | 662.5 | 426.0 |
| Net income per diluted share | 5.47 | 4.59 | 18.16 | 11.70 |
| Operating income | 210.1 | 194.6 | 696.2 | 485.9 |
| Operating income per diluted share | 5.79 | 5.32 | 19.09 | 13.34 |
| Book value per share | 100.90 | 79.18 | 100.90 | 79.18 |
Segment performance in the fourth quarter
Personal Lines: Operating income before taxes rose to $127.1 million from $101.1 million. The combined ratio improved to 85.5% from 88.1%. Net premiums written were $640.0 million, up 4.4%, which the company attributed primarily to “continued strong pricing increases and higher retention.” Renewal price increases averaged 9.2%, including average rate increases of 6.3%. Policies in force declined 0.6% versus the third quarter of 2025.
Core Commercial: Operating income before taxes was $75.1 million, up from $71.0 million a year earlier. The combined ratio was 96.1% versus 95.0% in the prior-year quarter, with catastrophe losses of $26.9 million (4.8 points) compared with $8.4 million (1.5 points). The company reported net premiums written of $512.8 million, up 2.5%, and said renewal price increases averaged 9.4%, including average rate increases of 7.7%.
Specialty: Operating income before taxes was $82.1 million compared with $83.3 million in the prior-year quarter. The combined ratio was 83.9% versus 81.6%. The company reported a fourth-quarter catastrophe benefit of $1.2 million (0.3 points) due to favorable re-estimates of prior-quarter catastrophe losses, versus catastrophe losses of $4.0 million (1.2 points) in the prior-year quarter. Net premiums written were $335.8 million, up 1.2%; adjusting for reinstatement premiums, growth was 3.6%. Renewal price increases averaged 6.4%, including average rate increases of 4.2%.
Investments, capital position, and shareholder actions
The company attributed higher net investment income to “higher earned yields on the fixed maturity investment portfolio, and the continued investment of cashflows from operations.” It reported a total pre-tax earned yield on the investment portfolio of 4.44% in the fourth quarter of 2025 (up from 3.97% a year earlier) and 4.25% for full-year 2025 (up from 3.78% in 2024).
The company reported $18.0 million of net realized investment losses (pre-tax) in the fourth quarter and $61.7 million for the year, driven by sales of “certain lower-yield fixed income securities” in consideration of expiring tax gains from 2022, partially offset by an $18.8 million increase in the fair value of equity securities.
At Dec. 31, 2025, the company reported $11.5 billion in cash and invested assets, with fixed maturities and cash representing approximately 93% of the portfolio and approximately 95% of fixed maturities rated investment grade. Net unrealized losses on the fixed maturity portfolio were $149.2 million pre-tax at year-end, compared with $188.3 million at Sept. 30, 2025 and $509.3 million at Dec. 31, 2024.
On capital actions, the company said it repurchased about 307,000 shares in the fourth quarter for approximately $55 million and about 754,000 shares in 2025 for approximately $130 million. It also reported additional repurchases in January 2026 of approximately 254,000 shares totaling about $44 million through a 10b5-1 plan, with about $130 million remaining under its repurchase authorization.
The board approved a 5.6% increase in the quarterly dividend to $0.95 per-share, and the company reported paying $33.7 million of ordinary cash dividends in the fourth quarter and $130.6 million for the full year.
