The Hanover Insurance Group, Inc. (NYSE: THG) announced its first quarter 2024 financial results on May 1, 2024. The results highlighted strong net income and operating income of $3.18 and $3.08 per diluted share, respectively. The company reported a combined ratio of 95.5% and a combined ratio, excluding catastrophes, of 89.5% for the quarter.
In the press release, John C. Roche, president and chief executive officer at The Hanover, stated, “The year is off to an excellent start, highlighted by strong underwriting margins and operating return on equity of 15%.” The company also reported net premiums written growth of 2.3% and significant renewal price increases across its business segments.
Core Commercial
The Core Commercial segment, which includes commercial multiple peril, commercial automobile, workers’ compensation, and other commercial lines coverages provided to small and mid-sized businesses, reported operating income before taxes of $71.5 million in Q1 2024, compared to $11.2 million in Q1 2023. The combined ratio for this segment improved to 93.9% from 104.7% in the prior year quarter. Net premiums written grew by 3.0%, with renewal price increases averaging 11.5% and rate increases averaging 9.3%.
Specialty
The Specialty segment, which includes four divisions of business: professional and executive lines, specialty property and casualty (Specialty P&C), marine, and surety and other, reported operating income before taxes of $58.8 million in Q1 2024, compared to $48.3 million in Q1 2023. Specialty P&C includes coverages such as program business, specialty industrial and commercial property, excess and surplus lines, and specialty general liability coverage. The combined ratio for this segment improved to 87.6% from 89.9% in the prior year quarter. Net premiums written grew by 4.8%, with renewal price increases averaging 11.0% and rate increases averaging 8.4%.
Personal Lines
The Personal Lines segment, which markets automobile, homeowners, and ancillary coverages to individuals and families, reported operating income before taxes of $18.9 million in Q1 2024, compared to an operating loss before taxes of $46.6 million in Q1 2023. The combined ratio for this segment improved to 101.0% from 112.2% in the prior year quarter. Net premiums written remained flat compared to the prior-year quarter, with renewal price increases averaging 22.8% and rate increases averaging 15.8%.
Investments
The Investments segment includes Opus Investment Management, Inc., which provides investment management services to institutions, pension funds, and other organizations, as well as the holding company’s operations. Net investment income for Q1 2024 was $89.7 million, up 14.0% from the prior-year quarter. The pre-tax earned yield on the investment portfolio increased to 3.70% from 3.34% in Q1 2023. The company reported net realized and unrealized investment gains of $5.5 million in Q1 2024, compared to losses of $23.0 million in Q1 2023.
Shareholders’ Equity
- Book value per share increased by 1.9% from December 31, 2023, to $70.22 as of March 31, 2024.
- Operating subsidiaries’ statutory capital and surplus stood at $2.76 billion as of March 31, 2024, compared to $2.64 billion on December 31, 2023.
- The company has approximately $330 million remaining capacity under its share repurchase program.
Prior Year First Quarter Results
In Q1 2023, The Hanover reported a net loss of $12.0 million, or $0.34 per basic share, and operating income of $4.6 million, or $0.13 per diluted share. The combined ratio was 104.4%, and the combined ratio, excluding catastrophes, was 91.7%.
The Hanover Insurance Group’s strong performance in the first quarter of 2024 demonstrates the company’s resilience in recovering from challenging market conditions. With significant underwriting margins and investment income improvements, the company is well-positioned for continued success in the coming quarters.
The Full Press Release.
The full press release for The Hanover is available by clicking here.
