The Hanover Reports Excellent Third Quarter Net Income and Operating Income of $2.80 and $3.05 per Diluted Share, Respectively; Net and Operating Return on Equity of 15.0% and 14.4%, Respectively
The Hanover Insurance Group (THG) reported strong Q3 2024 results with net income of $102.1 million ($2.80 per share) and operating income of $111.3 million ($3.05 per share). The company achieved a combined ratio of 95.5% and net premiums written growth of 4.2%. Key highlights include renewal price increases of 15.4% in Personal Lines, 12.9% in Core Commercial, and 10.1% in Specialty. Net investment income rose 9.0% to $91.8 million, primarily due to higher bond reinvestment yields. Book value per share increased 12.6% to $79.90, driven by unrealized gains and strong earnings. The company reported net and operating return on equity of 15.0% and 14.4% respectively for Q3 2024.
Il gruppo assicurativo Hanover (THG) ha riportato risultati solidi nel terzo trimestre del 2024, con un reddito netto di 102,1 milioni di dollari (2,80 dollari per azione) e un reddito operativo di 111,3 milioni di dollari (3,05 dollari per azione). L'azienda ha raggiunto un rapporto combinato del 95,5% e una crescita dei premi netti scritti del 4,2%. I punti salienti includono un aumento dei prezzi di rinnovo del 15,4% nelle linee personali, del 12,9% nel commerciale core e del 10,1% nella specialità. Il reddito netto da investimenti è aumentato del 9,0% a 91,8 milioni di dollari, principalmente grazie a rendimenti più elevati sui reinvestimenti obbligazionari. Il valore contabile per azione è aumentato del 12,6% a 79,90 dollari, guidato da guadagni non realizzati e risultati solidi. L'azienda ha riportato un ritorno netto e operativo sul capitale proprio del 15,0% e del 14,4% rispettivamente per il terzo trimestre del 2024.
El Grupo de Seguros Hanover (THG) reportó resultados sólidos en el tercer trimestre de 2024, con un ingreso neto de 102,1 millones de dólares (2,80 dólares por acción) y un ingreso operativo de 111,3 millones de dólares (3,05 dólares por acción). La compañía logró un ratio combinado del 95,5% y un crecimiento de las primas netas suscritas del 4,2%. Los puntos destacados incluyen aumentos en los precios de renovación del 15,4% en Líneas Personales, del 12,9% en Comercial Básico y del 10,1% en Especialidades. Los ingresos netos por inversiones aumentaron un 9,0% a 91,8 millones de dólares, principalmente debido a mayores rendimientos de reinversión de bonos. El valor contable por acción se incrementó un 12,6% a 79,90 dólares, impulsado por ganancias no realizadas y sólidos resultados. La empresa reportó un retorno neto y operativo sobre el capital propio del 15,0% y 14,4% respectivamente para el tercer trimestre de 2024.
한오버 보험 그룹 (THG)는 2024년 3분기에 1억 2백만 달러(주당 2.80달러)의 순이익과 1억 1천3백만 달러(주당 3.05달러)의 운영이익을 기록하며 강한 실적을 보고했습니다. 이 회사는 95.5%의 종합비율과 4.2%의 순보험료 성장률을 달성했습니다. 주요 하이라이트에는 개인 보험 부문에서 15.4%, 핵심 상업 부문에서 12.9%, 전문 부문에서 10.1%의 갱신 가격 인상이 포함됩니다. 순 투자 수익은 9.0% 증가하여 9천1백80만 달러에 이르렀으며, 이는 주로 채권 재투자 수익률 상승 덕분입니다. 주당 장부 가치는 12.6% 증가하여 79.90달러에 도달했으며, 이는 실현되지 않은 이익과 강력한 수익 덕분입니다. 이 회사는 2024년 3분기에 각각 15.0% 및 14.4%의 순자산 및 운영자본 수익률을 보고했습니다.
Le groupe d'assurance Hanover (THG) a annoncé de solides résultats pour le troisième trimestre 2024, avec un bénéfice net de 102,1 millions de dollars (2,80 dollars par action) et un bénéfice opérationnel de 111,3 millions de dollars (3,05 dollars par action). L'entreprise a réalisé un taux de combinaison de 95,5% et une croissance des primes nettes souscrites de 4,2%. Parmi les points saillants, on note des augmentations de prix de renouvellement de 15,4% en lignes personnelles, 12,9% en commercial de base et 10,1% en spécialités. Le revenu net d'investissement a augmenté de 9,0%, atteignant 91,8 millions de dollars, principalement en raison de rendements de réinvestissement des obligations plus élevés. La valeur comptable par action a augmenté de 12,6% pour atteindre 79,90 dollars, soutenue par des gains non réalisés et de solides résultats. L'entreprise a déclaré un retour net et opérationnel sur capitaux propres de 15,0% et 14,4% respectivement pour le troisième trimestre 2024.
Die Hanover Insurance Group (THG) berichtete im dritten Quartal 2024 von starken Ergebnissen mit einem Nettogewinn von 102,1 Millionen Dollar (2,80 Dollar pro Aktie) und einem operativen Gewinn von 111,3 Millionen Dollar (3,05 Dollar pro Aktie). Das Unternehmen erzielte ein kombiniertes Verhältnis von 95,5% und ein Wachstum der geschriebenen Nettoprämien von 4,2%. Zu den wichtigsten Highlights gehören Preiserhöhungen bei Erneuerungen von 15,4% in den Privatlinien, 12,9% im Kerngewerbe und 10,1% in Spezialverträgen. Der Nettogewinn aus Investitionen stieg um 9,0% auf 91,8 Millionen Dollar, hauptsächlich aufgrund höherer Reinvestitionsrenditen bei Anleihen. Der Buchwert pro Aktie stieg um 12,6% auf 79,90 Dollar, gefördert durch unrealisierten Gewinne und starke Erträge. Das Unternehmen meldete für das dritte Quartal 2024 eine Nettorendite und eine operative Rendite auf das Eigenkapital von 15,0% bzw. 14,4%.
- Net income increased significantly to $102.1 million vs $8.6 million in prior-year quarter
- Strong premium growth with net premiums written up 4.2%
- Net investment income up 9.0% to $91.8 million
- Book value per share increased 12.6% to $79.90
- Combined ratio improved to 95.5% from 104.4% year-over-year
- Achieved substantial renewal price increases across all segments (15.4% Personal, 12.9% Commercial, 10.1% Specialty)
- Expense ratio increased to 31.0% from 30.2% year-over-year
- Personal Lines policies in force decreased 1.1% compared to Q2 2024
- Net realized investment losses of $23.5 million from securities sales
Insights
The Hanover delivered exceptional Q3 2024 results with significant improvements across key metrics. The
Core strengths include robust pricing actions across segments (Personal Lines
The company's strategic focus on reducing weather exposure and maintaining pricing discipline positions it well for sustainable profitability. The high-quality investment portfolio and strong reserve position provide additional financial stability.
Third Quarter Highlights
- Combined ratio of
95.5% ; combined ratio, excluding catastrophes(1), of88.3% - Catastrophe losses of
, or 7.2 points of the combined ratio$105.9 million - Net premiums written increase of
4.2% * - Renewal price increases(2) of
15.4% in Personal Lines,12.9% in Core Commercial and10.1% in Specialty - Rate increases(2) of
14.4% in Personal Lines,10.0% in Core Commercial and7.6% in Specialty - Loss and loss adjustment expense (LAE) ratio of
64.5% , 9.7 points below the prior-year quarter - Current accident year loss and LAE ratio, excluding catastrophes(3), of
58.2% , 2.4 points below the prior-year quarter, led by strong improvement in Personal Lines - Net investment income of
, up$91.8 million 9.0% from the prior-year quarter, primarily due to higher bond reinvestment yields; net investment income from fixed maturities up15.4% from the prior-year quarter - Book value per share of
, up$79.90 12.6% from June 30, 2024, driven by unrealized gains on the fixed maturity portfolio, as well as strong earnings
"We are pleased to report excellent results for the third quarter, marked by outstanding execution, including
"In Core Commercial and Specialty, we achieved robust pricing increases of approximately
"Excluding catastrophes, our third quarter combined ratio was
Three months ended | Nine months ended | |||||||||||||||
September 30 | September 30 | |||||||||||||||
($ in millions, except per share data) | 2024 | 2023 | 2024 | 2023 | ||||||||||||
Net premiums written | $ | 1,663.4 | $ | 1,596.4 | $ | 4,638.5 | $ | 4,464.7 | ||||||||
Growth | 4.2 | % | 6.0 | % | 3.9 | % | 7.6 | % | ||||||||
Net premiums earned | $ | 1,479.2 | $ | 1,431.1 | $ | 4,401.0 | $ | 4,222.8 | ||||||||
Current accident year loss and LAE ratio, | 58.2 | % | 60.6 | % | 58.7 | % | 61.4 | % | ||||||||
Prior-year development ratio | (0.9) | % | (0.1) | % | (0.9) | % | (0.2) | % | ||||||||
Catastrophe ratio | 7.2 | % | 13.7 | % | 8.0 | % | 15.0 | % | ||||||||
Expense ratio(7) | 31.0 | % | 30.2 | % | 30.9 | % | 30.5 | % | ||||||||
Combined ratio | 95.5 | % | 104.4 | % | 96.7 | % | 106.7 | % | ||||||||
Combined ratio, excluding catastrophes | 88.3 | % | 90.7 | % | 88.7 | % | 91.7 | % | ||||||||
Current accident year combined ratio, | 89.2 | % | 90.8 | % | 89.6 | % | 91.9 | % | ||||||||
Net income (loss) | $ | 102.1 | $ | 8.6 | $ | 258.1 | $ | (72.6) | ||||||||
per diluted (basic) share | 2.80 | 0.24 | 7.10 | (2.03) | ||||||||||||
Operating income (loss) | 111.3 | 6.8 | 291.3 | (56.9) | ||||||||||||
per diluted (basic) share | 3.05 | 0.19 | 8.01 | (1.59) | ||||||||||||
Book value per share | $ | 79.90 | $ | 59.21 | $ | 79.90 | $ | 59.21 | ||||||||
Ending shares outstanding (in millions) | 36.0 | 35.8 | 36.0 | 35.8 |
(1) See information about this and other non-GAAP measures and definitions, including Operating Income and Operating Return on Equity in the headline, used throughout this press release on the final pages of this document. |
*Unless otherwise stated, net premiums written growth and other growth comparisons are to the same period of the prior year. |
The Hanover Insurance Group, Inc. may also be referred to as "The Hanover" or "the company" interchangeably throughout this press release. |
Third Quarter Operating Highlights
Core Commercial
Core Commercial operating income before income taxes was
Third quarter 2024 results included net favorable prior-year reserve development, excluding catastrophes, of
Core Commercial current accident year combined ratio, excluding catastrophes, increased 2.2 points to
The expense ratio increased slightly to
Net premiums written were
The following table summarizes premiums and the components of the combined ratio for Core Commercial:
Three months ended | Nine months ended | |||||||||||||||
September 30 | September 30 | |||||||||||||||
($ in millions) | 2024 | 2023 | 2024 | 2023 | ||||||||||||
Net premiums written | $ | 599.2 | $ | 589.4 | $ | 1,695.0 | $ | 1,641.5 | ||||||||
Growth | 1.7 | % | 4.2 | % | 3.3 | % | 6.1 | % | ||||||||
Net premiums earned | 533.3 | 517.4 | 1,599.6 | 1,540.4 | ||||||||||||
Operating income before taxes | 55.9 | 43.1 | 210.6 | 114.4 | ||||||||||||
Loss and LAE ratio | 63.4 | % | 65.4 | % | 60.8 | % | 66.6 | % | ||||||||
Expense ratio | 33.6 | % | 33.3 | % | 33.4 | % | 33.1 | % | ||||||||
Combined ratio | 97.0 | % | 98.7 | % | 94.2 | % | 99.7 | % | ||||||||
Prior-year development ratio | (0.7) | % | 0.5 | % | (0.9) | % | 0.4 | % | ||||||||
Catastrophe ratio | 5.9 | % | 8.6 | % | 4.3 | % | 9.2 | % | ||||||||
Combined ratio, excluding catastrophes | 91.1 | % | 90.1 | % | 89.9 | % | 90.5 | % | ||||||||
Current accident year combined ratio, | 91.8 | % | 89.6 | % | 90.8 | % | 90.1 | % |
Specialty
Specialty operating income before income taxes was
Third quarter 2024 results included net favorable prior-year reserve development, excluding catastrophes, of
Specialty current accident year combined ratio, excluding catastrophes, increased 2.8 points to
The current accident year loss and LAE ratio, excluding catastrophes, of
Net premiums written were
The following table summarizes premiums and the components of the combined ratio for Specialty:
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September 30 | September 30 | |||||||||||||||
($ in millions) | 2024 | 2023 | 2024 | 2023 | ||||||||||||
Net premiums written | $ | 350.2 | $ | 338.7 | $ | 1,042.1 | $ | 988.4 | ||||||||
Growth | 3.4 | % | 2.9 | % | 5.4 | % | 5.8 | % | ||||||||
Net premiums earned | 331.2 | 321.7 | 982.6 | 953.2 | ||||||||||||
Operating income before taxes | 73.0 | 70.3 | 174.4 | 173.0 | ||||||||||||
Loss and LAE ratio | 46.2 | % | 48.3 | % | 51.1 | % | 52.0 | % | ||||||||
Expense ratio | 37.7 | % | 35.1 | % | 37.1 | % | 35.2 | % | ||||||||
Combined ratio | 83.9 | % | 83.4 | % | 88.2 | % | 87.2 | % | ||||||||
Prior-year development ratio | (3.1) | % | (1.6) | % | (2.3) | % | (3.7) | % | ||||||||
Catastrophe ratio | 1.3 | % | 2.1 | % | 3.4 | % | 3.9 | % | ||||||||
Combined ratio, excluding catastrophes | 82.6 | % | 81.3 | % | 84.8 | % | 83.3 | % | ||||||||
Current accident year combined ratio, | 85.7 | % | 82.9 | % | 87.1 | % | 87.0 | % |
Personal Lines
Personal Lines operating income before income taxes was
Prior-year reserve development, excluding catastrophes, was immaterial in the third quarter of both the current and prior years.
Personal Lines current accident year combined ratio, excluding catastrophe losses, decreased 7.2 points to
The expense ratio increased by 0.4 points to
Net premiums written were
The following table summarizes premiums and components of the combined ratio for Personal Lines:
Three months ended | Nine months ended | |||||||||||||||
September 30 | September 30 | |||||||||||||||
($ in millions) | 2024 | 2023 | 2024 | 2023 | ||||||||||||
Net premiums written | $ | 714.0 | $ | 668.3 | $ | 1,901.4 | $ | 1,834.8 | ||||||||
Growth | 6.8 | % | 9.5 | % | 3.6 | % | 9.9 | % | ||||||||
Net premiums earned | 614.7 | 592.0 | 1,818.8 | 1,729.2 | ||||||||||||
Operating income (loss) before taxes | 21.7 | (100.4) | 10.2 | (341.1) | ||||||||||||
Loss and LAE ratio | 75.3 | % | 95.9 | % | 78.2 | % | 98.1 | % | ||||||||
Expense ratio | 25.3 | % | 24.9 | % | 25.3 | % | 25.6 | % | ||||||||
Combined ratio | 100.6 | % | 120.8 | % | 103.5 | % | 123.7 | % | ||||||||
Prior-year development ratio | - | - | (0.2) | % | 1.2 | % | ||||||||||
Catastrophe ratio | 11.4 | % | 24.4 | % | 13.6 | % | 26.2 | % | ||||||||
Combined ratio, excluding catastrophes | 89.2 | % | 96.4 | % | 89.9 | % | 97.5 | % | ||||||||
Current accident year combined ratio, | 89.2 | % | 96.4 | % | 90.1 | % | 96.3 | % |
Investments
Net investment income was
Net realized investment losses from sales of securities recognized in earnings were
The company held
Shareholders' Equity and Capital Actions
On September 30, 2024, book value per share was
On September 30, 2024, operating insurance company's statutory capital and surplus was
During the quarter, the company did not repurchase any shares of common stock. The company has approximately
Earnings Conference Call
The company will host a conference call to discuss its third quarter results on Thursday, October 31, at 10:00 a.m. E.T. A presentation will accompany the prepared remarks and has been posted on The Hanover's website. Interested investors and others can listen to the call and access the presentation through The Hanover's website, located in the "Investors" section at www.hanover.com. Investors may access the conference call by dialing 1-844-413-3975 in the
About The Hanover
The Hanover Insurance Group, Inc. is the holding company for several property and casualty insurance companies, which together constitute one of the largest insurance businesses in
Contact Information
Investors: | Media: | ||||||
Oksana Lukasheva | Michael F. Buckley | Emily P. Trevallion | |||||
olukasheva@hanover.com | mibuckley@hanover.com | etrevallion@hanover.com | |||||
1-508-525-6081 | 1-508-855-3099 | 1-508-855-3263 |
Definition of Segments
Continuing operations include four reporting segments: Core Commercial, Specialty, Personal Lines and Other. The Core Commercial segment includes commercial multiple peril, commercial automobile, workers' compensation and other commercial lines coverages provided to small and mid-sized businesses. The Specialty segment includes four divisions of business: professional and executive lines, specialty property and casualty (Specialty P&C), marine, and surety and other. Specialty P&C includes coverages such as program business (provides commercial insurance to markets with specialized coverage or risk management needs related to groups of similar businesses), specialty industrial and commercial property, excess and surplus lines, and specialty general liability coverage. The Personal Lines segment markets automobile, homeowners and ancillary coverages to individuals and families. The Other segment includes the operations of the holding company and a block of run-off voluntary assumed property and casualty pools business in which the company has not actively participated since 1995, and run-off direct asbestos and environmental, and product liability businesses. The Other segment also included the operations of Opus Investment Management, Inc. during the first half of 2024 and prior, which provided investment management services to institutions, pension funds and other organizations. During the second and third quarters of 2024, the company exited all of Opus' business operations serving unaffiliated entities. Investment management services provided by Opus to THG related to its investment-grade fixed maturities portfolio were also transferred to an external manager during the second quarter of 2024.
Financial Supplement
The Hanover's third quarter news release and financial supplement are available in the "Investors" section of the company's website at hanover.com.
The Hanover Insurance Group, Inc. | ||||||||||
Condensed Consolidated Income Statements | Three months ended | Nine months ended | ||||||||
September 30 | September 30 | |||||||||
($ in millions) | 2024 | 2023 | 2024 | 2023 | ||||||
Revenues | ||||||||||
Premiums earned | $ | 1,479.2 | $ | 1,431.1 | $ | 4,401.0 | $ | 4,222.8 | ||
Net investment income | 91.8 | 84.2 | 271.9 | 250.5 | ||||||
Net realized and unrealized investment gains (losses): | ||||||||||
Net realized losses from sales and other | (23.5) | (0.9) | (55.2) | (1.9) | ||||||
Net change in fair value of equity securities | 11.7 | (5.2) | 19.3 | (13.4) | ||||||
Impairments on investments: | ||||||||||
Credit-related impairments | (0.1) | - | (3.3) | (6.2) | ||||||
Losses on intent to sell securities | (0.5) | - | (2.2) | (10.3) | ||||||
(0.6) | - | (5.5) | (16.5) | |||||||
Total net realized and unrealized investment losses | (12.4) | (6.1) | (41.4) | (31.8) | ||||||
Fees and other income | 6.7 | 7.4 | 21.6 | 23.2 | ||||||
Total revenues | 1,565.3 | 1,516.6 | 4,653.1 | 4,464.7 | ||||||
Losses and expenses | ||||||||||
Losses and loss adjustment expenses | 954.0 | 1,061.5 | 2,896.8 | 3,218.8 | ||||||
Amortization of deferred acquisition costs | 307.8 | 296.6 | 910.3 | 878.1 | ||||||
Interest expense | 8.5 | 8.5 | 25.6 | 25.6 | ||||||
Other operating expenses | 165.3 | 150.9 | 494.1 | 451.3 | ||||||
Total losses and expenses | 1,435.6 | 1,517.5 | 4,326.8 | 4,573.8 | ||||||
Income (loss) before income taxes | 129.7 | (0.9) | 326.3 | (109.1) | ||||||
Income tax expense (benefit) | 27.6 | (9.1) | 68.3 | (35.3) | ||||||
Income (loss) from continuing operations | 102.1 | 8.2 | 258.0 | (73.8) | ||||||
Discontinued operations (net of taxes): | ||||||||||
Income from discontinued life businesses | - | - | 0.1 | - | ||||||
Income from discontinued Chaucer business | - | 0.4 | - | 1.2 | ||||||
Net income (loss) | $ | 102.1 | $ | 8.6 | $ | 258.1 | $ | (72.6) | ||
The Hanover Insurance Group, Inc. | |||||||
Condensed Consolidated Balance Sheets | |||||||
September 30 | December 31 | ||||||
($ in millions) | 2024 | 2023 | |||||
Assets | |||||||
Total investments | $ | 9,530.7 | $ | 8,913.1 | |||
Cash and cash equivalents | 427.1 | 316.1 | |||||
Premiums and accounts receivable, net | 1,881.5 | 1,705.6 | |||||
Reinsurance recoverable on paid and unpaid losses and unearned premiums | 1,960.9 | 2,056.1 | |||||
Other assets | 1,477.7 | 1,535.1 | |||||
Assets of discontinued businesses | 89.1 | 86.6 | |||||
Total assets | $ | 15,367.0 | $ | 14,612.6 | |||
Liabilities | |||||||
Loss and loss adjustment expense reserves | $ | 7,426.8 | $ | 7,308.1 | |||
Unearned premiums | 3,339.2 | 3,102.5 | |||||
Debt | 783.9 | 783.2 | |||||
Other liabilities | 826.0 | 840.2 | |||||
Liabilities of discontinued businesses | 113.4 | 113.0 | |||||
Total liabilities | 12,489.3 | 12,147.0 | |||||
Total shareholders' equity | 2,877.7 | 2,465.6 | |||||
Total liabilities and shareholders' equity | $ | 15,367.0 | $ | 14,612.6 |
The following is a reconciliation from operating income (loss) to net income (loss)(4)(9):
The Hanover Insurance Group, Inc. | |||||||||||||||||||||||||
Three months ended September 30 | Nine months ended September 30 | ||||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
($ in millions, except per share data) | $ Amount | Per Share | $ Amount | Per Share | $ Amount | Per Share | $ Amount | Per Share* | |||||||||||||||||
Operating income (loss) | |||||||||||||||||||||||||
Core Commercial | $ | 55.9 | $ | 43.1 | $ | 210.6 | $ | 114.4 | |||||||||||||||||
Specialty | 73.0 | 70.3 | 174.4 | 173.0 | |||||||||||||||||||||
Personal Lines | 21.7 | (100.4) | 10.2 | (341.1) | |||||||||||||||||||||
Other | - | 0.7 | 0.5 | 1.2 | |||||||||||||||||||||
Total | 150.6 | 13.7 | 395.7 | (52.5) | |||||||||||||||||||||
Interest expense | (8.5) | (8.5) | (25.6) | (25.6) | |||||||||||||||||||||
Operating income (loss) before income taxes | 142.1 | $ | 3.89 | 5.2 | $ | 0.15 | 370.1 | $ | 10.18 | (78.1) | $ | (2.18) | |||||||||||||
Income tax benefit (expense) on operating income | (30.8) | (0.84) | 1.6 | 0.04 | (78.8) | (2.17) | 21.2 | 0.59 | |||||||||||||||||
Operating income (loss) after income taxes | 111.3 | 3.05 | 6.8 | 0.19 | 291.3 | 8.01 | (56.9) | (1.59) | |||||||||||||||||
Non-operating items: | |||||||||||||||||||||||||
Net realized losses from sales and other | (23.5) | (0.64) | (0.9) | (0.03) | (55.2) | (1.52) | (1.9) | (0.06) | |||||||||||||||||
Net change in fair value of equity securities | 11.7 | 0.32 | (5.2) | (0.14) | 19.3 | 0.53 | (13.4) | (0.38) | |||||||||||||||||
Impairments on investments: | |||||||||||||||||||||||||
Credit-related impairments | (0.1) | - | - | - | (3.3) | (0.09) | (6.2) | (0.17) | |||||||||||||||||
Losses on intent to sell securities | (0.5) | (0.01) | - | - | (2.2) | (0.06) | (10.3) | (0.29) | |||||||||||||||||
(0.6) | (0.01) | - | - | (5.5) | (0.15) | (16.5) | (0.46) | ||||||||||||||||||
Other non-operating items | - | - | - | - | (2.4) | (0.07) | 0.8 | 0.02 | |||||||||||||||||
Income tax benefit on non-operating items | 3.2 | 0.08 | 7.5 | 0.21 | 10.5 | 0.29 | 14.1 | 0.40 | |||||||||||||||||
Income (loss) from continuing operations, net of taxes | 102.1 | 2.80 | 8.2 | 0.23 | 258.0 | 7.09 | (73.8) | (2.07) | |||||||||||||||||
Discontinued operations (net of taxes): | |||||||||||||||||||||||||
Income from discontinued life businesses | - | - | - | - | 0.1 | 0.01 | - | - | |||||||||||||||||
Income from discontinued Chaucer business | - | - | 0.4 | 0.01 | - | - | 1.2 | 0.04 | |||||||||||||||||
Net income (loss) | $ | 102.1 | $ | 2.80 | $ | 8.6 | $ | 0.24 | $ | 258.1 | $ | 7.10 | $ | (72.6) | $ | (2.03) | |||||||||
Dilutive weighted average shares outstanding | 36.5 | 36.1 | 36.4 | 36.1 | |||||||||||||||||||||
Basic weighted average shares outstanding | 36.0 | 35.8 | 35.9 | 35.7 | |||||||||||||||||||||
*Per share data is calculated using basic shares outstanding due to antidilution. |
Forward-Looking Statements and Non-GAAP Financial Measures
Forward-Looking Statements
Certain statements in this document and comments made by management may be "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, may be forward-looking statements. Words such as, but not limited to, "believes," "anticipates," "expects," "intends," "may," "projects," "projections," "plan," "likely," "potential," "targeted," "forecasts," "should," "could," "continue," "outlook," "guidance," "modeling," "target profitability," "target margins," "confident," "will," "line of sight," "designed," and other similar expressions are intended to identify forward-looking statements. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. The company cautions investors that any such forward-looking statements are estimates, beliefs, expectations and/or projections that involve significant judgment, and that historical results, trends and forward-looking statements are not guarantees and are not necessarily indicative of future performance. Actual results could differ materially from those anticipated.
These statements include, but are not limited to, the company's statements regarding:
- The company's outlook and its ability to achieve components or the sum of the respective period guidance on its future results of operations including: the combined ratio, excluding catastrophe losses; catastrophe losses; net investment income; growth of net premiums written and/or net premiums earned in total or by line of business; expense ratio; operating return on equity; interest rate assumptions and investment portfolio management, renewal price change, rate, and/or the effective tax rate;
- The company's ability and timing to deliver on expectations set forth related to target margins, target returns and/or return to target profitability in total or by line of business;
- The company's ability to deliver on its long-term targets, including, but not limited to, return on equity;
- Confidence in achieving the company's outlook and expectations, including, but not limited to, pricing increases and growth opportunities, in total or by line of business;
- The impacts of general economic and sociopolitical conditions on the company's operating and financial results, including, but not limited to, the impact on the company's investment portfolio, changes in claims frequency as a result of fluctuations in economic activity, the potential impacts of inflation, and/or claims severity from higher cost of repairs due to, among other things, supply chain disruptions and inflation;
- Uses, including the timing of uses, of capital for share repurchases, special or ordinary cash dividends, business investments or growth, or otherwise, and outstanding shares in future periods as a result of various share repurchase mechanisms, capital management framework, especially in the current environment, and overall comfort with liquidity and capital levels;
- Catastrophe modeling and variability of catastrophe losses due to risk concentrations, changes in weather patterns, severe weather including hurricanes, tornadoes and other windstorms, hail, flood, earthquakes, fire, explosions, severe winter weather and other convective storms, or terrorism, civil unrest, riots or other events, as well as the complexity in estimating losses from large catastrophe events due to delayed reporting of the existence, nature or extent of losses or where "demand surge," regulatory assessments, litigation, coverage and technical complexities or other factors may significantly impact the ultimate amount of such losses;
- Current accident year losses and loss selections (picks), excluding catastrophes, and prior accident year loss reserve development patterns, particularly in complex "longer-tail" liability lines, as well as the inherent variability in short-tail property and non-catastrophe weather losses;
- Changes in frequency and loss severity trends in Core Commercial, Specialty and/or Personal Lines;
- Ability to manage the impact of inflationary pressures, global market disruptions, economic conditions, geopolitical events or otherwise, including, but not limited to, supply chain disruptions, labor shortages, and increases in cost of goods, services, labor, and materials;
- The confidence or concern that the current level of reserves is adequate and/or sufficient for future claim payments, whether due to losses that have been incurred but not reported, circumstances that delay the reporting of losses, business complexity, adverse judgments or developments with respect to case reserves, the difficulties and uncertainties inherent in projecting future losses from historical data, changes in replacement and medical costs, as well as complexities including legislative, regulatory or judicial actions that expand the intended scope of coverages, or other factors;
- Characterization of some business as being "more profitable" in light of inherent uncertainty of ultimate losses incurred, especially for "longer-tail" liability businesses;
- Efforts to manage expenses, including the company's long-term expense savings targets, while allocating capital to business investment, which is at management's discretion;
- Risks and uncertainties with respect to our ability to retain profitable policies in force and attract profitable policies and to increase rates commensurate with, or in excess of, loss trends;
- The positive impact of mix improvement, underwriting initiatives, coverage restrictions, non-renewals, changes in terms and conditions, and pricing segmentation, among others, on the company's results;
- The ability to grow businesses believed to be more profitable or reduce premiums attributable to products or lines of business or geographies believed to be less profitable, as well as the ability to balance rate actions and retention;
- The ability to offset long-term and/or short-term loss trends due to increased frequency; increased "social inflation" from a more litigious environment, lawsuit abuse and higher average cost of resolution; increased property replacement or repair costs; and/or social movements;
- The ability to generate growth in targeted segments through new agency appointments; rate increases (as a result of its market position, agency relationships or otherwise), retention improvements or new business; expansion into new geographies; new product introductions; or otherwise; and
- Investment returns and the effect of macro-economic interest rate trends and overall security yields, including the macro-economic impact of governmental and/or central banking initiatives taken in response to inflationary pressures, and geopolitical circumstances, on new money yields, as well as individual investment and overall investment returns.
Additional Risks and Uncertainties
Investors are further cautioned and should consider the risks and uncertainties in the company's business that may affect such estimates and future performance that are discussed in the company's most recently filed reports on Form 10-K and Form 10-Q and other documents filed by The Hanover Insurance Group, Inc. with the Securities and Exchange Commission (SEC) and that are also available at www.hanover.com under "Investors." These risks and uncertainties include, but are not limited to:
- Changes in regulatory, legislative, economic, market and political conditions, particularly with respect to rates, the use of data, technology, artificial intelligence, cybersecurity, policy terms and conditions, restrictions on cancellations and/or non-renewals, payment flexibility, and regions where the company has geographical concentrations;
- Heightened financial market volatility, fluctuations in interest rates (which have a significant impact on the market value of our investment portfolio and thus our book value), inflationary pressures, default rates, difficult economic, market and political conditions and other factors that affect investment returns from the investment portfolio;
- Recessionary economic periods that may inhibit the company's ability to increase pricing or renew business, or otherwise impact the company's results, and which may be accompanied by higher claims activity in certain lines;
- Data security and privacy incidents, including, but not limited to, those resulting from a malicious cybersecurity attack on the company or its business partners and service providers, or intrusions into the company's network systems, including cloud-based data information storage, or data sources;
- Adverse claims experience, including those driven by large or increased frequency and/or severity of catastrophe events, including those related to hurricanes, tornadoes and other windstorms, hail, flood, earthquakes, fire, explosions, severe winter weather and other convective storms, or due to terrorism, civil unrest, riots, or cybersecurity events (including from products not intended to provide cyber coverage);
- The limitations and assumptions used to model non-catastrophe property and casualty losses (particularly with respect to products with longer-tail liability lines, such as casualty and bodily injury claims, or involving emerging issues related to losses incurred as the result of new lines of business, such as cyber or financial institutions coverage, or reinsurance contracts and reinsurance recoverables), leading to potential adverse development of loss and loss adjustment expense reserves;
- Impacts of changing climate conditions and weather patterns causing higher levels of losses from weather events to persist and leading to new or enhanced regulations;
- Litigation and the possibility of adverse judicial decisions, including those which expand policy coverage beyond its intended scope and/or award "bad faith" or other non-contractual damages, and the impact of "social inflation" and third-party litigation funding affecting judicial awards and settlements;
- The ability to increase or maintain insurance rates in line with anticipated loss costs and/or governmental action, including mandates by state departments of insurance to either raise or lower rates, or provide credits or return premium to insureds;
- Investment impairments, which may be affected by, among other things, the company's ability and willingness to hold investment assets until they recover in value, as well as credit and interest rate risk, and general financial and economic conditions;
- Disruption of the independent agency channel or its operating model, including the impact of competition and consolidation in the industry and among agents and brokers, and the impact of artificial intelligence tools;
- Competition, particularly from competitors who have resource and capability advantages;
- The global macroeconomic environment, including inflation, recessionary effects, global trade disputes, war, energy market disruptions, equity price risk, and interest rate fluctuations, which, among other things, could result in reductions in market values of fixed maturities and other investments, and/or increases in loss costs;
- Adverse state and federal regulation, legislative and/or regulatory actions (including significant revisions to
Michigan's automobile personal injury protection system and related litigation, and various regulations, orders and proposed legislation regarding bad faith, premium grace periods and returns, changes to policy terms and conditions, and rate actions); - Financial ratings actions, in particular, downgrades to the company's ratings;
- Operational and technology risks and evolving technological and product innovation, including risks created by remote work environments, the evolving use of artificial intelligence, and cybersecurity threats;
- Uncertainties in estimating indemnification liabilities recorded in conjunction with obligations undertaken in connection with the sale of various businesses and discontinued operations; and
- The ability to collect from reinsurers, reinsurance availability and pricing, reinsurance terms and conditions, and the performance of the run-off voluntary property and casualty pools business (including those in the Other segment or in discontinued operations).
Investors should not place undue reliance on forward-looking statements, which speak only as of the date they are made and should understand the risks and uncertainties inherent in or particular to the company's business. The company does not undertake the responsibility to update or revise such forward-looking statements, except as required by law.
Non-GAAP Financial Measures
As discussed on page 40 of the company's Annual Report on Form 10-K for the year ended December 31, 2023, the company uses non-GAAP financial measures as important measures of its operating performance, including operating income (loss), operating income (loss) before interest expense and income taxes, operating income (loss) per diluted (basic) share, and components of the combined ratio, both excluding and/or including catastrophe losses, prior-year reserve development and the expense ratio. Management believes these non-GAAP financial measures are important indications of the company's operating performance. The definition of other non-GAAP financial measures and terms can be found in the 2023 Annual Report on pages 64-67.
Operating income (loss) and operating income (loss) per diluted (basic) share are non-GAAP measures. They are defined as net income (loss) excluding the after-tax impact of net realized and unrealized investment gains (losses), gains and/or losses on the repayment of debt, other non-operating items, and results from discontinued operations. Net realized and unrealized investment gains (losses), which include changes in the fair value of equity securities still held, are excluded for purposes of presenting operating income (loss), as they are, to a certain extent, determined by interest rates, financial markets and the timing of sales. Operating income (loss) also excludes net gains and losses from disposals of businesses, gains and losses related to the repayment of debt, costs to acquire businesses, restructuring costs, the cumulative effect of accounting changes, and certain other items. Operating income (loss) is the sum of the segment income (loss) from: Core Commercial, Specialty, Personal Lines, and Other, after interest expense and income taxes. In reference to one of the company's four reporting segments, "operating income (loss)" is the segment income (loss) before both interest expense and income taxes. The company also uses "operating income (loss) per diluted (basic) share" (which is after both interest expense and income taxes). Operating income per share is calculated by dividing operating income by the weighted average number of diluted shares of common stock. Operating loss per share is calculated by dividing operating loss by the weighted average number of basic shares of common stock due to antidilution. The company believes that metrics of operating income (loss) and operating income (loss) in relation to its four reporting segments provide investors with a valuable measure of the performance of the company's continuing businesses because they highlight the portion of net income (loss) attributable to the core operations of the business. Income (loss) from continuing operations is the most directly comparable GAAP measure for operating income (loss) (and operating income (loss) before income taxes) and measures of operating income (loss) that exclude the effects of catastrophe losses and/or prior-year reserve development. These non-GAAP measures should not be misconstrued as substitutes for income (loss) from continuing operations or net income (loss) determined in accordance with GAAP. A reconciliation of operating income (loss) to income (loss) from continuing operations and net income (loss) for the relevant periods is included on page 10 of this news release and in the Financial Supplement.
Operating return on average equity (ROE) is a non-GAAP measure. See end note (5) for a detailed explanation of how this measure is calculated. Operating ROE is based on non-GAAP operating income (loss). In addition, the portion of shareholder equity attributed to unrealized appreciation (depreciation) on fixed maturity investments, net of tax, is excluded. The company believes this measure is helpful in that it provides insight to the capital used by, and results of, the continuing business exclusive of interest expense, income taxes, and other non-operating items. These measures should not be misconstrued as substitutes for GAAP ROE, which is based on net income (loss) and shareholders' equity of the entire company and without adjustments.
Book value per share is total shareholders' equity divided by the number of common shares outstanding. Book value per share excluding net unrealized appreciation (depreciation) on fixed maturity investments, net of tax, is total shareholders' equity excluding the after-tax effect of unrealized appreciation (depreciation) on fixed maturities and market risk divided by the number of common shares outstanding.
The company may provide measures of operating income (loss) and combined ratios that exclude the impact of catastrophe losses (which in all respects include prior accident year catastrophe loss development). A catastrophe is a severe loss, resulting from natural or manmade events including, but is not limited to, hurricanes, tornadoes and other windstorms, hail, flood, earthquakes, fire, explosions, severe winter weather and other convective storms, riots, and terrorism. Due to the unique characteristics of each catastrophe loss, there is an inherent inability to reasonably estimate the timing or loss amount in advance. The company believes a separate discussion excluding the effects of catastrophe losses is meaningful to understand the underlying trends and variability of earnings, loss and combined ratio results, among others.
Prior accident year reserve development, which can either be favorable or unfavorable, represents changes in the company's estimate of costs related to claims from prior years. Calendar year loss and loss adjustment expense (LAE) ratios determined in accordance with GAAP, excluding prior accident year reserve development, are sometimes referred to as "current accident year loss ratios." The company believes a discussion of loss and combined ratios, excluding prior accident year reserve development, is helpful since it provides insight into both estimates of current accident year results and the accuracy of prior-year estimates.
The loss and combined ratios in accordance with GAAP are the most directly comparable GAAP measures for the loss and combined ratios calculated excluding the effects of catastrophe losses and/or prior-year reserve development. The presentation of loss and combined ratios calculated excluding the effects of catastrophe losses and/or prior-year reserve development should not be misconstrued as substitutes for the loss and/or combined ratios determined in accordance with GAAP.
Endnotes | |
(1) | Combined ratio, excluding catastrophes, and current accident year combined ratio, excluding catastrophes, are non-GAAP measures. The combined ratio (which includes catastrophe losses and prior-year loss reserve development) is the most directly comparable GAAP measure. This and other non-GAAP measures are used throughout this document. See the disclosure on the use of this and other non-GAAP measures under the heading "Forward-Looking Statements and Non-GAAP Financial Measures." A reconciliation of the GAAP combined ratio to the combined ratio, excluding catastrophes, and to the current accident year combined ratio, excluding catastrophes, is shown below. |
Three months ended | ||||||||||||||
September 30, 2024 | ||||||||||||||
Core | Specialty | Personal Lines | Total | |||||||||||
Total combined ratio (GAAP) | 97.0 | % | 83.9 | % | 100.6 | % | 95.5 | % | ||||||
Less: Catastrophe ratio | 5.9 | % | 1.3 | % | 11.4 | % | 7.2 | % | ||||||
Combined ratio, excluding catastrophe losses (non-GAAP) | 91.1 | % | 82.6 | % | 89.2 | % | 88.3 | % | ||||||
Less: Prior-year reserve development ratio | (0.7) | % | (3.1) | % | - | (0.9) | % | |||||||
Current accident year combined ratio, excluding catastrophe losses (non-GAAP) | 91.8 | % | 85.7 | % | 89.2 | % | 89.2 | % | ||||||
September 30, 2023 | ||||||||||||||
Total combined ratio (GAAP) | 98.7 | % | 83.4 | % | 120.8 | % | 104.4 | % | ||||||
Less: Catastrophe ratio | 8.6 | % | 2.1 | % | 24.4 | % | 13.7 | % | ||||||
Combined ratio, excluding catastrophe losses (non-GAAP) | 90.1 | % | 81.3 | % | 96.4 | % | 90.7 | % | ||||||
Less: Prior-year reserve development ratio | 0.5 | % | (1.6) | % | - | (0.1) | % | |||||||
Current accident year combined ratio, excluding catastrophe losses (non-GAAP) | 89.6 | % | 82.9 | % | 96.4 | % | 90.8 | % | ||||||
Nine months ended | ||||||||||||||
September 30, 2024 | ||||||||||||||
Core | Specialty | Personal Lines | Total | |||||||||||
Total combined ratio (GAAP) | 94.2 | % | 88.2 | % | 103.5 | % | 96.7 | % | ||||||
Less: Catastrophe ratio | 4.3 | % | 3.4 | % | 13.6 | % | 8.0 | % | ||||||
Combined ratio, excluding catastrophe losses (non-GAAP) | 89.9 | % | 84.8 | % | 89.9 | % | 88.7 | % | ||||||
Less: Prior-year reserve development ratio | (0.9) | % | (2.3) | % | (0.2) | % | (0.9) | % | ||||||
Current accident year combined ratio, excluding catastrophe losses (non-GAAP) | 90.8 | % | 87.1 | % | 90.1 | % | 89.6 | % | ||||||
September 30, 2023 | ||||||||||||||
Total combined ratio (GAAP) | 99.7 | % | 87.2 | % | 123.7 | % | 106.7 | % | ||||||
Less: Catastrophe ratio | 9.2 | % | 3.9 | % | 26.2 | % | 15.0 | % | ||||||
Combined ratio, excluding catastrophe losses (non-GAAP) | 90.5 | % | 83.3 | % | 97.5 | % | 91.7 | % | ||||||
Less: Prior-year reserve development ratio | 0.4 | % | (3.7) | % | 1.2 | % | (0.2) | % | ||||||
Current accident year combined ratio, excluding catastrophe losses (non-GAAP) | 90.1 | % | 87.0 | % | 96.3 | % | 91.9 | % | ||||||
(2) | Renewal price changes in Core Commercial and Specialty represent the average change in premium on renewed policies caused by the estimated net effect of base rate changes, discretionary pricing, specific inflationary changes or changes in policy level exposure or insured risks. Rate increases in Core Commercial and Specialty represent the average change in premium on renewed policies caused by the base rate changes, discretionary pricing, and inflation, excluding the impact of changes in policy level exposure or insured risks. Renewal price change in Personal Lines represents the average change in premium on policies charged at renewal caused by the net effects of filed rate, inflation adjustments or other changes in policy level exposure or insured risks, regardless of whether or not the policies are retained for the duration of their contractual terms. Rate change in Personal Lines is the estimated cumulative premium effect of approved rate actions applied to policies at renewal, regardless of whether or not policies are actually renewed. Accordingly, rate changes do not represent actual increases or decreases realized by the company. Personal Lines rate changes do not include inflation or changes in policy level exposure or insured risks. |
(3) | Current accident year loss and LAE ratio, excluding catastrophe losses, is a non-GAAP measure, which is equal to the loss and LAE ratio (loss ratio), excluding prior-year reserve development and catastrophe losses. The loss ratio (which includes losses, LAE, catastrophe losses and prior-year loss reserve development) is the most directly comparable GAAP measure. A reconciliation of the GAAP loss ratio to the current accident year loss ratio, excluding catastrophe losses, is shown below. |
Three months ended | ||||||||||||||
September 30, 2024 | ||||||||||||||
Core | Specialty | Personal Lines | Total | |||||||||||
Total loss and LAE ratio | 63.4 | % | 46.2 | % | 75.3 | % | 64.5 | % | ||||||
Less: | ||||||||||||||
Prior-year reserve development ratio | (0.7) | % | (3.1) | % | - | (0.9) | % | |||||||
Catastrophe ratio | 5.9 | % | 1.3 | % | 11.4 | % | 7.2 | % | ||||||
Current accident year loss and LAE ratio, excluding catastrophes | 58.2 | % | 48.0 | % | 63.9 | % | 58.2 | % | ||||||
September 30, 2023 | ||||||||||||||
Total loss and LAE ratio | 65.4 | % | 48.3 | % | 95.9 | % | 74.2 | % | ||||||
Less: | ||||||||||||||
Prior-year reserve development ratio | 0.5 | % | (1.6) | % | - | (0.1) | % | |||||||
Catastrophe ratio | 8.6 | % | 2.1 | % | 24.4 | % | 13.7 | % | ||||||
Current accident year loss and LAE ratio, excluding catastrophes | 56.3 | % | 47.8 | % | 71.5 | % | 60.6 | % | ||||||
Nine months ended | ||||||||||||||
September 30, 2024 | ||||||||||||||
Core | Specialty | Personal Lines | Total | |||||||||||
Total loss and LAE ratio | 60.8 | % | 51.1 | % | 78.2 | % | 65.8 | % | ||||||
Less: | ||||||||||||||
Prior-year reserve development ratio | (0.9) | % | (2.3) | % | (0.2) | % | (0.9) | % | ||||||
Catastrophe ratio | 4.3 | % | 3.4 | % | 13.6 | % | 8.0 | % | ||||||
Current accident year loss and LAE ratio, excluding catastrophes | 57.4 | % | 50.0 | % | 64.8 | % | 58.7 | % | ||||||
September 30, 2023 | ||||||||||||||
Total loss and LAE ratio | 66.6 | % | 52.0 | % | 98.1 | % | 76.2 | % | ||||||
Less: | ||||||||||||||
Prior-year reserve development ratio | 0.4 | % | (3.7) | % | 1.2 | % | (0.2) | % | ||||||
Catastrophe ratio | 9.2 | % | 3.9 | % | 26.2 | % | 15.0 | % | ||||||
Current accident year loss and LAE ratio, excluding catastrophes | 57.0 | % | 51.8 | % | 70.7 | % | 61.4 | % | ||||||
(4) | Operating income (loss) and operating income (loss) per diluted (basic) share are non-GAAP measures. Operating income (loss) before income taxes, as referenced in the results of the reporting segments, is defined as, with respect to such segment, operating income (loss) before interest expense and income taxes. The reconciliation of operating income (loss) and operating income (loss) per diluted (basic) share to the closest GAAP measures, income (loss) from continuing operations and income (loss) from continuing operations per diluted (basic) share, respectively, is provided on the preceding pages of this news release. |
(5) | Operating return on average equity (operating ROE) is a non-GAAP measure. Operating ROE is calculated by dividing annualized operating income (loss) after tax for the applicable period (see under the heading in this news release "Non-GAAP Financial Measures" and end note (4)), by average shareholders' equity, excluding unrealized appreciation (depreciation) on fixed maturity investments, net of tax, for the period presented. Total shareholders' equity, excluding net unrealized appreciation (depreciation) on fixed maturity investments, net of tax, is also a non-GAAP measure. Total shareholders' equity is the most directly comparable GAAP measure and is reconciled below. For the calculation of operating ROE, the average of beginning and ending shareholders' equity, excluding net unrealized appreciation (depreciation) on fixed maturity investments, net of tax, is used for the period as shown and reconciled in the table below. |
Period ended | |||||||||||||||
($ in millions) | December 31 | March 31 | June 30 | September 30 | |||||||||||
2023 | 2024 | 2024 | 2024 | ||||||||||||
Total shareholders' equity (GAAP) | $ | 2,465.6 | $ | 2,522.7 | $ | 2,552.2 | 2,877.7 | ||||||||
Less: net unrealized appreciation (depreciation) on fixed maturity investments, net of tax | (462.4) | (495.5) | (488.7) | (248.8) | |||||||||||
Total shareholders' equity, excluding net unrealized appreciation (depreciation) on fixed maturity investments, net of tax | $ | 2,928.0 | $ | 3,018.2 | $ | 3,040.9 | 3,126.5 | ||||||||
Quarter Averages | |||||||||||||||
Average shareholders' equity (GAAP) | 2,715.0 | ||||||||||||||
Average shareholders' equity, excluding net unrealized appreciation (depreciation) on fixed maturity investments, net of tax | 3,083.7 | ||||||||||||||
Year-to-date Averages | |||||||||||||||
Average shareholders' equity (GAAP) | 2,604.6 | ||||||||||||||
Average shareholders' equity, excluding net unrealized appreciation (depreciation) on fixed maturity investments, net of tax | 3,028.4 | ||||||||||||||
($ in millions) | Three months ended | Nine months ended | |||||||
September 30 | September 30 | ||||||||
Net Income ROE | 2024 | 2024 | |||||||
Net income (GAAP) | $ | 102.1 | $ | 258.1 | |||||
Annualized net income* | 408.4 | 344.1 | |||||||
Average shareholders' equity (GAAP) | $ | 2,715.0 | $ | 2,604.6 | |||||
Return on equity | 15.0 | % | 13.2 | % | |||||
Operating Income ROE (non-GAAP) | |||||||||
Operating income after taxes | $ | 111.3 | $ | 291.3 | |||||
Annualized operating income, net of tax* | 445.2 | 388.4 | |||||||
Average shareholders' equity, excluding net unrealized appreciation | $ | 3,083.7 | $ | 3,028.4 | |||||
Operating return on equity | 14.4 | % | 12.8 | % | |||||
*For three months ended September 30, 2024, annualized net income and operating income after taxes is calculated by multiplying three months ended net income and operating income after taxes, respectively, by 4. For nine months ended September 30, 2024, annualized net income and operating income after taxes is calculated by dividing nine months ended net income and operating income after taxes, respectively, by 3 and multiplying by 4. | |
(6) | Net investment income, excluding limited partnership income, is a non-GAAP measure. Net investment income (which includes limited partnership income) is the most directly comparable GAAP measure. A reconciliation of GAAP net investment income to net investment income, excluding limited partnership income, is shown below. |
Three months ended | |||||||
September 30 | September 30 | ||||||
($ in millions) | 2023 | 2024 | |||||
Net investment income | $ | 84.2 | $ | 91.8 | |||
Less: Limited partnership income | 8.1 | 4.0 | |||||
Net investment income, excluding limited partnership income | $ | 76.1 | $ | 87.8 | |||
Increase in net investment income | 9.0 % | ||||||
Increase in net investment income, excluding limited partnership income | 15.4 % |
(7) | Here, and throughout this document, the expense ratio is reduced by installment and other fee revenues for purposes of the ratio calculation. |
(8) | Book value per share, excluding net unrealized appreciation (depreciation) on fixed maturity investments, net of tax, is a non-GAAP measure. Book value per share is the most directly comparable GAAP measure and is reconciled in the table below. |
Period ended | |||||||
June 30 | September 30 | ||||||
2024 | 2024 | ||||||
Book value per share | |||||||
Less: Net unrealized appreciation (depreciation) on fixed maturity investments, net of tax, per share | (13.60) | (6.91) | |||||
Book value per share, excluding net unrealized appreciation (depreciation) on fixed maturity investments, net of tax | |||||||
Change in book value per share | 12.6 % | ||||||
Change in book value per share, excluding net unrealized appreciation (depreciation) on fixed maturity investments, net of tax | 2.7 % |
(9) | The separate financial information of each reporting segment is presented consistent with the way results are regularly evaluated by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Management evaluates the results of the aforementioned reporting segments without consideration of interest expense on debt and on a pre-tax basis. |
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SOURCE The Hanover Insurance Group, Inc.
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