Insurer’s combined ratio rises to 92.3% amid higher catastrophe losses, while underlying underwriting results and renewal pricing remain strong
Worcester-based insurer, The Hanover Insurance Group, reported a net income of $172.6 million, compared with $178.7 million a year earlier, for third-quarter 2026 with higher catastrophe losses offsetting improvements in underlying underwriting results.
Net premiums written increased 3.1% to $1.79 billion, compared with $1.74 billion in the third quarter of 2025. The insurer reported a combined ratio of 92.3%, up from 91.1% in the prior-year quarter.
Operating income totaled $183.1 million, compared with $185.6 million a year earlier. On a per-share basis, operating earnings increased to $5.15 from $5.09.
“In the third quarter, we continued to translate strategic clarity, disciplined execution and the breadth of our diversified franchise into exceptional performance,” said John C. Roche, president and chief executive officer at The Hanover.
‘With operating return on equity of 18.7% and record third-quarter operating earnings per share of $5.15, our results reflect excellent underwriting execution and the benefits of our past portfolio actions. Our business mix continues to support strong performance and stable renewal pricing. A differentiated Specialty business, a preferred Personal Lines franchise, and a leading position with the top-performing agents in Core Commercial continue to provide avenues for profitable growth across market conditions, while we remain patient where conditions warrant greater selectivity,” added Roche. “At the same time, we continue to invest in technology, AI, and other capabilities that are delivering meaningful business impact and strengthening our future position. We are confident in our outlook, and our goal of long-term profitability and value creation will continue to guide every underwriting and growth decision we make.”
Underwriting Results Improve Despite Higher Catastrophe Losses
Catastrophe losses totaled $109.7 million during the quarter, accounting for 6.8 points of The Hanover’s combined ratio, compared with 3.0 points in the third quarter of 2025.
Excluding catastrophes, the company’s combined ratio improved to 85.5%, compared with 88.1% a year earlier. Its current accident year combined ratio, excluding catastrophes, improved 2.3 points to 86.6%.
Net investment income increased 12.7% to $131.9 million.
The Hanover reported a third-quarter net return on equity of 19.4% and an operating return on equity of 18.7%.
“We are very pleased with our third quarter performance highlighted by nearly two points of improvement in our current accident year ex-catastrophe loss ratio, favorable reserve development, continued growth in net investment income, and the strength of our capital position,” said Jeffrey M. Farber, executive vice president and chief financial officer at The Hanover. “Net investment income increased 12.7%, driven by higher earned yields, strong cash flows and increased partnership income. The consistent capital generation of our business enabled us to repurchase approximately $86 million of stock during the quarter, totaling $263 million year-to-date through October 26th. As we discussed at our September Investor Day, profitability, earnings growth and capital allocation priorities continue to guide our decisions. With substantial financial flexibility, we remain well-positioned to invest in the business, return capital to shareholders and capture attractive opportunities as they emerge.”
Core Commercial: Premiums Rise, Catastrophes Pressure Results
Core Commercial net premiums written increased 4.6% to $648.9 million, reflecting growth of 2.8% in small commercial and 6.7% in middle market business.
The segment’s combined ratio rose to 100.5%, compared with 97.3% a year earlier, largely reflecting higher catastrophe losses. Those losses totaled $45.3 million, compared with $17.8 million in the prior-year quarter.
Excluding catastrophes, the combined ratio improved to 92.7% from 94.1%. The expense ratio also declined by one percentage point to 32.7%.
Core Commercial operating income before taxes was $55.5 million, compared with $65.1 million in the third quarter of 2025.
Specialty: Strong Underwriting Performance Continues
The Hanover’s Specialty segment reported posted strong results as well with a 3.3% increase in net premiums written of $391.6 million as compared to the prior year quarter.
As for the segment’s combined ratio, it improved to 84.0%, as compared to 84.9% a year earlier. Excluding catastrophes, the combined ratio declined to 80.6% from 83.2%.
Specialty operating income before taxes increased to $88.1 million from $78.2 million.
Results benefited from $14.8 million in favorable prior-year reserve development, excluding catastrophes, compared with $10.0 million a year earlier. The company also reported lower-than-expected property losses.
Personal Lines: Pricing Gains Continue to Outpace Loss Trends
Personal Lines net premiums written increased 1.7% to $752.0 million, supported by renewal price increases and higher new business.
The segment reported a combined ratio of 89.7%, compared with 89.2% in the third quarter of 2025. Catastrophe losses increased to $52.0 million from $22.4 million.
Excluding catastrophes, the combined ratio improved substantially, falling to 81.8% from 85.7%.
The Hanover attributed the improvement in its underlying results to earned pricing increases that continued to outpace loss trends, along with favorable property claims frequency.
Personal Lines operating income before taxes increased to $103.6 million from $101.1 million. Policies in force remained essentially flat compared with the second quarter of 2026.
Renewal Pricing Across Business Segments
The Hanover continued to report renewal price increases across its three principal business segments during the quarter.
| Business Segment | Renewal Price Increase | Rate Increase |
|---|---|---|
| Personal Lines | 8.7% | 4.9% |
| Core Commercial | 7.4% | 6.1% |
| Specialty | 4.3% | 1.9% |
John C. Roche, The Hanover’s president and chief executive officer, said the company’s diversified business mix continues to support its underwriting and pricing strategy. He also emphasized the company’s willingness to remain selective in pursuing growth across its business segments.
Nine-Month Results
For the first nine months of 2026, The Hanover reported net income of $551.0 million, compared with $464.0 million during the corresponding period in 2025.
Net premiums written increased 3.6% to $5.01 billion. The nine-month combined ratio improved to 91.8%, compared with 92.6% a year earlier.
The company reported a nine-month operating return on equity of 19.6%.
Source: The Hanover Insurance Group’s Third-Quarter 2026 Earnings Release.
