The Hanover Reports Record Fourth Quarter Net Income and Operating Income of $4.59 and $5.32 per Diluted Share, Respectively; Full Year Net Income and Operating Income of $11.70 and $13.34 per Diluted Share, Respectively
The Hanover Insurance Group (THG) reported outstanding financial results for Q4 and full-year 2024. The company achieved record fourth quarter net income of $4.59 per share and operating income of $5.32 per share. Full-year results showed net income of $11.70 per share and operating income of $13.34 per share.
Key Q4 highlights include a combined ratio of 89.2%, net premiums written increase of 7.4%, and net investment income of $100.7 million (up 23.4% year-over-year). The company demonstrated strong pricing power with renewal price increases of 14.2% in Personal Lines, 11.8% in Core Commercial, and 9.5% in Specialty.
For full-year 2024, THG reported net premiums written of $6.1 billion (up 4.7%), combined ratio of 94.8%, and net investment income of $372.6 million (up 12.2%). The company's book value per share increased 14.9% from December 31, 2023. The Board approved a 5.9% increase to the regular quarterly dividend.
Il Hanover Insurance Group (THG) ha riportato risultati finanziari eccezionali per il quarto trimestre e per l'anno intero 2024. L'azienda ha raggiunto un reddito netto record di $4.59 per azione e un reddito operativo di $5.32 per azione. I risultati annuali hanno mostrato un reddito netto di $11.70 per azione e un reddito operativo di $13.34 per azione.
I punti salienti del quarto trimestre includono un rapporto combinato dell'89,2%, un aumento dei premi netti scritti del 7,4% e un reddito da investimenti netti di $100,7 milioni (in aumento del 23,4% rispetto all'anno precedente). L'azienda ha dimostrato una forte capacità di determinazione dei prezzi con aumenti dei prezzi di rinnovo del 14,2% nelle Linee Personali, dell'11,8% nel Commerciale Core e del 9,5% nelle Specialità.
Per l'anno intero 2024, THG ha riportato premi netti scritti di $6.1 miliardi (in aumento del 4,7%), un rapporto combinato del 94,8% e un reddito da investimenti netti di $372,6 milioni (in aumento del 12,2%). Il valore contabile per azione dell'azienda è aumentato del 14,9% rispetto al 31 dicembre 2023. Il Consiglio ha approvato un aumento del 5,9% del dividendo trimestrale regolare.
El Grupo de Seguros Hanover (THG) reportó resultados financieros excepcionales para el cuarto trimestre y el año completo 2024. La compañía logró un ingreso neto récord de $4.59 por acción y un ingreso operativo de $5.32 por acción. Los resultados del año completo mostraron un ingreso neto de $11.70 por acción y un ingreso operativo de $13.34 por acción.
Los aspectos destacados del cuarto trimestre incluyen un ratio combinado del 89.2%, un aumento de 7.4% en las primas netas suscritas y un ingreso neto por inversiones de $100.7 millones (aumento del 23.4% interanual). La compañía demostró un fuerte poder de fijación de precios con aumentos de precios de renovación del 14.2% en Líneas Personales, 11.8% en Comercial Básico y 9.5% en Especialidades.
Para el año completo 2024, THG reportó primas netas suscritas de $6.1 mil millones (aumento del 4.7%), un ratio combinado del 94.8% y un ingreso neto por inversiones de $372.6 millones (aumento del 12.2%). El valor contable por acción de la compañía aumentó un 14.9% desde el 31 de diciembre de 2023. La Junta aprobó un aumento del 5.9% al dividendo trimestral regular.
하노버 보험 그룹 (THG)은 2024년 4분기와 연간 뛰어난 재무 실적을 보고했습니다. 회사는 주당 $4.59의 기록적인 순이익과 주당 $5.32의 운영 이익을 달성했습니다. 전체 연도 결과는 주당 순이익 $11.70과 주당 운영 이익 $13.34를 기록했습니다.
4분기의 주요 하이라이트는 89.2%의 결합 비율, 순수 작성된 보험료 7.4% 증가, 그리고 $100.7백만의 순투자 수익(전년 대비 23.4% 증가)입니다. 회사는 개인 라인에서 14.2%, 코어 상업에서 11.8%, 전문 분야에서 9.5%의 갱신 가격 인상으로 강력한 가격 설정력을 입증했습니다.
2024년 전체 연도에 대해 THG는 $6.1억의 순 작성 보험료 (4.7% 증가), 94.8%의 결합 비율, 그리고 $372.6백만의 순투자 수익(12.2% 증가)을 보고했습니다. 회사의 주당 장부 가치는 2023년 12월 31일 대비 14.9% 증가했습니다. 이사회는 정기 배당금에 대해 5.9% 증가를 승인했습니다.
Le Groupe d'Assurances Hanover (THG) a annoncé des résultats financiers exceptionnels pour le quatrième trimestre et l'année complète 2024. L'entreprise a atteint un bénéfice net record de 4,59 $ par action et un bénéfice d'exploitation de 5,32 $ par action. Les résultats annuels ont montré un bénéfice net de 11,70 $ par action et un bénéfice d'exploitation de 13,34 $ par action.
Les points saillants du quatrième trimestre incluent un taux combiné de 89,2%, une augmentation des primes nettes souscrites de 7,4% et un revenu net d'investissement de 100,7 millions $ (en hausse de 23,4% par rapport à l'année précédente). L'entreprise a démontré une forte capacité à fixer les prix avec des augmentations de prix de renouvellement de 14,2% dans les lignes personnelles, de 11,8% dans le commercial principal et de 9,5% dans les spécialités.
Pour l'année complète 2024, le THG a rapporté des primes nettes souscrites de 6,1 milliards $ (en hausse de 4,7%), un taux combiné de 94,8% et un revenu net d'investissement de 372,6 millions $ (en hausse de 12,2%). La valeur comptable par action de l'entreprise a augmenté de 14,9% par rapport au 31 décembre 2023. Le Conseil a approuvé une augmentation de 5,9% du dividende trimestriel régulier.
Die Hanover Insurance Group (THG) berichtete für das 4. Quartal und das Gesamtjahr 2024 herausragende Finanzresultate. Das Unternehmen erzielte einen rekordverdächtigen Nettogewinn von 4,59 $ pro Aktie und ein Betriebsergebnis von 5,32 $ pro Aktie. Die Ergebnisse für das Gesamtjahr zeigten einen Nettogewinn von 11,70 $ pro Aktie und ein Betriebsergebnis von 13,34 $ pro Aktie.
Zu den wichtigsten Highlights des 4. Quartals gehören ein kombinierter Satz von 89,2%, ein Anstieg der geschriebenen Nettoprämien um 7,4% und ein Nettogewinn aus Anlagen von 100,7 Millionen $ (Anstieg um 23,4% im Vergleich zum Vorjahr). Das Unternehmen zeigte eine starke Preissetzungsmacht mit Preissteigerungen von 14,2% in den Privatkundenbereichen, 11,8% im Kerngeschäft und 9,5% im Spezialbereich.
Für das Gesamtjahr 2024 berichtete THG von geschriebenen Nettoprämien in Höhe von 6,1 Milliarden $ (plus 4,7%), einem kombinierten Satz von 94,8% und einem Nettogewinn aus Anlagen von 372,6 Millionen $ (plus 12,2%). Der Buchwert pro Aktie des Unternehmens stieg um 14,9% seit dem 31. Dezember 2023. Der Vorstand genehmigte eine Erhöhung der regulären vierteljährlichen Dividende um 5,9%.
- Record Q4 operating income of $5.32 per share, up from $3.13 in 2023
- Net premiums written increased 7.4% in Q4 to $1.45 billion
- Strong pricing power with double-digit renewal price increases across segments
- Net investment income up 23.4% to $100.7 million in Q4
- Combined ratio improved to 89.2% in Q4 from 94.2% year-over-year
- Book value per share increased 14.9% year-over-year
- 5.9% increase in quarterly dividend
- Expense ratio increased to 32.3% in Q4 from 30.6% year-over-year
- Policies in force decreased 0.6% in Q4 compared to Q3 2024
Insights
The Hanover's Q4 2024 results reveal a company executing at an exceptional level across multiple dimensions. The 24.4% operating ROE in Q4 and 15.8% for the full year demonstrate superior capital efficiency and underwriting discipline. Three key factors stand out:
First, the pricing environment remains remarkably strong, with Personal Lines achieving 14.2% renewal price increases, Core Commercial at 11.8% and Specialty at 9.5%. These increases significantly outpace loss cost trends, suggesting continued margin expansion potential into 2025.
Second, the company's strategic focus on portfolio optimization is yielding results. The sub-90% combined ratio in Q4 reflects both improved risk selection and the cumulative impact of re-underwriting efforts. The increase in IBNR reserves, particularly in liability lines, demonstrates prudent risk management given industry casualty trends.
Third, the investment portfolio is becoming an increasingly powerful earnings driver. The 23.4% growth in quarterly investment income reflects skilled portfolio management in a higher rate environment. The earned yield on fixed maturities increased to 3.99% from 3.46% year-over-year, creating a sustainable earnings tailwind.
The company's capital management strategy remains balanced, with a 5.9% dividend increase marking 20 consecutive years of increases, while maintaining flexibility through share repurchases. The combination of disciplined underwriting, strong pricing and improving investment income positions The Hanover for continued strong performance in 2025.
Fourth Quarter Highlights
- Net and operating return on equity(1) of
23.5% and24.4% , respectively - Combined ratio of
89.2% ; combined ratio, excluding catastrophes(2), of87.5% - Catastrophe losses of
$26.0 million - Net premiums written increase of
7.4% * - Renewal price increases(3) of
14.2% in Personal Lines,11.8% in Core Commercial, and9.5% in Specialty - Rate increases(3) of
13.1% in Personal Lines,9.2% in Core Commercial, and6.1% in Specialty - Loss and loss adjustment expense (LAE) ratio of
56.9% , 6.7 points below the prior-year quarter - Current accident year loss and LAE ratio, excluding catastrophes(4), of
56.9% , 3.3 points below the prior-year quarter, led by outstanding improvement in Personal Lines - Net investment income of
$100.7 million 23.4% from the prior-year quarter - On December 2, 2024, the Board of Directors approved an increase of
5.9% to the regular quarterly dividend
Full Year Highlights
- Net and operating return on equity of
16.1% and15.8% , respectively - Combined ratio of
94.8% ; combined ratio, excluding catastrophes, of88.4% - Catastrophe losses of
$375.9 million - Net premiums written of
$6.1 billion 4.7% - Loss and LAE ratio of
63.5% , 9.5 points below the prior year - Current accident year loss and LAE ratio, excluding catastrophes, of
58.2% , 2.9 points below the prior year - Net investment income of
$372.6 million 12.2% from 2023, driven primarily by higher bond reinvestment rates and higher cashflows, partially offset by lower partnership income; net investment income from fixed maturities up14.5% in 2024 - Book value per share increased
14.9% from December 31, 2023; excluding net unrealized depreciation on fixed maturity investments, net of tax, book value per share(5) increased10.4%
Net income was
"2024 was an exceptional year for our company, as we delivered excellent financial performance, executed well on our strategic priorities, and continued to invest in innovative tools and technology, further enhancing our strong competitive position and prospects," said John C. Roche, president and chief executive officer at The Hanover. "We delivered record operating return on equity of
"We are very pleased with the outstanding financial results we delivered this year," said Jeffrey M. Farber, executive vice president and chief financial officer at The Hanover. "Our fourth quarter results reflect a sub-90s combined ratio and record operating earnings of
Fourth Quarter and Full Year 2024 Highlights
Three months ended | Year ended | |||||||||||||||
December 31 | December 31 | |||||||||||||||
($ in millions, except per share data) | 2024 | 2023 | 2024 | 2023 | ||||||||||||
Net premiums written | $ | 1,445.1 | $ | 1,345.5 | $ | 6,083.6 | $ | 5,810.2 | ||||||||
Growth | 7.4 | % | 1.5 | % | 4.7 | % | 6.1 | % | ||||||||
Net premiums earned | $ | 1,511.6 | $ | 1,440.3 | $ | 5,912.6 | $ | 5,663.1 | ||||||||
Current accident year loss and LAE ratio, | 56.9 | % | 60.2 | % | 58.2 | % | 61.1 | % | ||||||||
Prior year development ratio | (1.7) | % | (0.6) | % | (1.1) | % | (0.3) | % | ||||||||
Catastrophe ratio | 1.7 | % | 4.0 | % | 6.4 | % | 12.2 | % | ||||||||
Expense ratio(7) | 32.3 | % | 30.6 | % | 31.3 | % | 30.5 | % | ||||||||
Combined ratio | 89.2 | % | 94.2 | % | 94.8 | % | 103.5 | % | ||||||||
Combined ratio, excluding catastrophes | 87.5 | % | 90.2 | % | 88.4 | % | 91.3 | % | ||||||||
Current accident year combined ratio, | 89.2 | % | 90.8 | % | 89.5 | % | 91.6 | % | ||||||||
Net income | $ | 167.9 | $ | 107.9 | $ | 426.0 | $ | 35.3 | ||||||||
per diluted share | 4.59 | 2.98 | 11.70 | 0.98 | ||||||||||||
Operating income | 194.6 | 113.1 | 485.9 | 56.2 | ||||||||||||
per diluted share | 5.32 | 3.13 | 13.34 | 1.56 | ||||||||||||
Book value per share | $ | 79.18 | $ | 68.93 | $ | 79.18 | $ | 68.93 | ||||||||
Ending shares outstanding (in millions) | 35.9 | 35.8 | 35.9 | 35.8 | ||||||||||||
(1) See information about this and other non-GAAP measures and definitions, including Operating Income in the headline, used throughout this press release on the final pages of this document. |
The Hanover Insurance Group, Inc. may also be referred to as "The Hanover" or "the company" interchangeably throughout this press release. |
**Incurred But Not Reported |
Fourth Quarter Operating Highlights
Core Commercial
Core Commercial operating income before income taxes was
Fourth quarter 2024 results included net favorable prior-year reserve development, excluding catastrophes, of
Core Commercial current accident year combined ratio, excluding catastrophes, increased 2.6 points to
The expense ratio increased 1.5 points to
Net premiums written were
The following table summarizes premiums and the components of the combined ratio for Core Commercial:
Three months ended | Year ended | |||||||||||||||
December 31 | December 31 | |||||||||||||||
($ in millions) | 2024 | 2023 | 2024 | 2023 | ||||||||||||
Net premiums written | $ | 500.5 | $ | 465.5 | $ | 2,195.5 | $ | 2,107.0 | ||||||||
Growth | 7.5 | % | 2.7 | % | 4.2 | % | 5.4 | % | ||||||||
Net premiums earned | 549.2 | 519.9 | 2,148.8 | 2,060.3 | ||||||||||||
Operating income before taxes | 71.0 | 52.8 | 281.6 | 167.2 | ||||||||||||
Loss and LAE ratio | 59.9 | % | 63.1 | % | 60.6 | % | 65.8 | % | ||||||||
Expense ratio | 35.1 | % | 33.6 | % | 33.8 | % | 33.2 | % | ||||||||
Combined ratio | 95.0 | % | 96.7 | % | 94.4 | % | 99.0 | % | ||||||||
Prior-year development ratio | (0.5) | % | (0.4) | % | (0.8) | % | 0.2 | % | ||||||||
Catastrophe ratio | 1.5 | % | 5.7 | % | 3.6 | % | 8.3 | % | ||||||||
Combined ratio, excluding catastrophes | 93.5 | % | 91.0 | % | 90.8 | % | 90.7 | % | ||||||||
Current accident year combined ratio, | 94.0 | % | 91.4 | % | 91.6 | % | 90.5 | % | ||||||||
Specialty
Specialty operating income before income taxes was
Fourth quarter 2024 results included net favorable prior-year reserve development, excluding catastrophes, of
Specialty current accident year combined ratio, excluding catastrophes, increased 1.5 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:
Three months ended | Year ended | |||||||||||||||
December 31 | December 31 | |||||||||||||||
($ in millions) | 2024 | 2023 | 2024 | 2023 | ||||||||||||
Net premiums written | $ | 331.8 | $ | 304.9 | $ | 1,373.9 | $ | 1,293.3 | ||||||||
Growth | 8.8 | % | (1.5) | % | 6.2 | % | 4.0 | % | ||||||||
Net premiums earned | 339.4 | 321.0 | 1,322.0 | 1,274.2 | ||||||||||||
Operating income before taxes | 83.3 | 70.5 | 257.7 | 243.5 | ||||||||||||
Loss and LAE ratio | 42.6 | % | 46.8 | % | 48.9 | % | 50.7 | % | ||||||||
Expense ratio | 39.0 | % | 36.4 | % | 37.6 | % | 35.5 | % | ||||||||
Combined ratio | 81.6 | % | 83.2 | % | 86.5 | % | 86.2 | % | ||||||||
Prior-year development ratio | (7.0) | % | (4.4) | % | (3.5) | % | (3.8) | % | ||||||||
Catastrophe ratio | 1.2 | % | 1.7 | % | 2.8 | % | 3.4 | % | ||||||||
Combined ratio, excluding catastrophes | 80.4 | % | 81.5 | % | 83.7 | % | 82.8 | % | ||||||||
Current accident year combined ratio, | 87.4 | % | 85.9 | % | 87.2 | % | 86.6 | % | ||||||||
Personal Lines
Personal Lines operating income before income taxes was
Fourth quarter 2024 net prior-year reserve development, excluding catastrophes, was slightly favorable. This compared to net unfavorable prior-year reserve development, excluding catastrophes, of
Personal Lines current accident year combined ratio, excluding catastrophe losses, decreased 7.0 points, to
The expense ratio increased by 1.2 points, to
Net premiums written were
The following table summarizes premiums and components of the combined ratio for Personal Lines:
Three months ended | Year ended | |||||||||||||||
December 31 | December 31 | |||||||||||||||
($ in millions) | 2024 | 2023 | 2024 | 2023 | ||||||||||||
Net premiums written | $ | 612.8 | $ | 575.1 | $ | 2,514.2 | $ | 2,409.9 | ||||||||
Growth | 6.6 | % | 2.1 | % | 4.3 | % | 7.9 | % | ||||||||
Net premiums earned | 623.0 | 599.4 | 2,441.8 | 2,328.6 | ||||||||||||
Operating income (loss) before taxes | 101.1 | 36.8 | 111.3 | (304.3) | ||||||||||||
Loss and LAE ratio | 61.9 | % | 72.6 | % | 74.0 | % | 91.6 | % | ||||||||
Expense ratio | 26.2 | % | 25.0 | % | 25.6 | % | 25.5 | % | ||||||||
Combined ratio | 88.1 | % | 97.6 | % | 99.6 | % | 117.1 | % | ||||||||
Prior-year development ratio | (0.1) | % | 0.8 | % | (0.2) | % | 1.1 | % | ||||||||
Catastrophe ratio | 2.2 | % | 3.8 | % | 10.7 | % | 20.4 | % | ||||||||
Combined ratio, excluding catastrophes | 85.9 | % | 93.8 | % | 88.9 | % | 96.7 | % | ||||||||
Current accident year combined ratio, | 86.0 | % | 93.0 | % | 89.1 | % | 95.6 | % | ||||||||
Full Year Operating Highlights
The company's combined ratio was
The current accident year combined ratio, excluding catastrophe losses, was
Total net premiums written were
Core Commercial operating income before income taxes was
Specialty operating income before income taxes was
Personal Lines operating income before income taxes was
Investments
Net investment income was
Net realized and unrealized investment losses recognized in earnings were
The company held
Shareholders' Equity and Capital Actions
On December 31, 2024, book value per share was
On December 31, 2024, operating insurance company's statutory capital and surplus was
During the fourth quarter, the company repurchased approximately 170,000 shares of common stock in the open market for
Additionally, in the fourth quarter, the Board of Directors approved an increase to the quarterly dividend of
Earnings Conference Call
The company will host a conference call to discuss its fourth quarter and full year results on Wednesday, February 5, 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 The Hanover 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 fourth quarter and full year 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 | Year ended | ||||||||
December 31 | December 31 | |||||||||
($ in millions) | 2024 | 2023 | 2024 | 2023 | ||||||
Revenues | ||||||||||
Premiums earned | $ | 1,511.6 | $ | 1,440.3 | $ | 5,912.6 | $ | 5,663.1 | ||
Net investment income | 100.7 | 81.6 | 372.6 | 332.1 | ||||||
Net realized and unrealized investment gains (losses): | ||||||||||
Net realized losses from sales and other | (29.0) | (7.0) | (84.2) | (8.9) | ||||||
Net change in fair value of equity securities | (5.1) | 7.8 | 14.2 | (5.6) | ||||||
Impairments on investments: | ||||||||||
Credit-related impairments | (0.3) | (1.5) | (3.6) | (7.7) | ||||||
Losses on intent to sell securities | - | - | (2.2) | (10.3) | ||||||
Total impairments on investments | (0.3) | (1.5) | (5.8) | (18.0) | ||||||
Total net realized and unrealized investment losses | (34.4) | (0.7) | (75.8) | (32.5) | ||||||
Fees and other income | 6.4 | 7.6 | 28.0 | 30.8 | ||||||
Total revenues | 1,584.3 | 1,528.8 | 6,237.4 | 5,993.5 | ||||||
Losses and expenses | ||||||||||
Losses and loss adjustment expenses | 860.6 | 915.8 | 3,757.4 | 4,134.6 | ||||||
Amortization of deferred acquisition costs | 311.4 | 297.9 | 1,221.7 | 1,176.0 | ||||||
Interest expense | 8.5 | 8.5 | 34.1 | 34.1 | ||||||
Other operating expenses | 192.3 | 156.4 | 686.4 | 607.7 | ||||||
Total losses and expenses | 1,372.8 | 1,378.6 | 5,699.6 | 5,952.4 | ||||||
Income before income taxes | 211.5 | 150.2 | 537.8 | 41.1 | ||||||
Income tax expense | 44.2 | 42.9 | 112.5 | 7.6 | ||||||
Income from continuing operations | 167.3 | 107.3 | 425.3 | 33.5 | ||||||
Discontinued operations (net of taxes): | ||||||||||
Income (loss) from discontinued life businesses | (0.1) | 0.6 | - | 0.6 | ||||||
Income from discontinued Chaucer business | 0.7 | - | 0.7 | 1.2 | ||||||
Net income | $ | 167.9 | $ | 107.9 | $ | 426.0 | $ | 35.3 | ||
The Hanover Insurance Group, Inc. | |||||||
Condensed Consolidated Balance Sheets | |||||||
December 31 | December 31 | ||||||
($ in millions) | 2024 | 2023 | |||||
Assets | |||||||
Total investments | $ | 9,409.8 | $ | 8,913.1 | |||
Cash and cash equivalents | 471.8 | 316.1 | |||||
Premiums and accounts receivable, net | 1,807.2 | 1,705.6 | |||||
Reinsurance recoverable on paid and unpaid losses and unearned premiums | 1,994.5 | 2,056.1 | |||||
Other assets | 1,548.2 | 1,535.1 | |||||
Assets of discontinued businesses | 85.7 | 86.6 | |||||
Total assets | $ | 15,317.2 | $ | 14,612.6 | |||
Liabilities | |||||||
Loss and loss adjustment expense reserves | $ | 7,461.2 | $ | 7,308.1 | |||
Unearned premiums | 3,283.3 | 3,102.5 | |||||
Short-term debt | 61.8 | - | |||||
Long-term debt | 722.3 | 783.2 | |||||
Other liabilities | 838.2 | 840.2 | |||||
Liabilities of discontinued businesses | 108.6 | 113.0 | |||||
Total liabilities | 12,475.4 | 12,147.0 | |||||
Total shareholders' equity | 2,841.8 | 2,465.6 | |||||
Total liabilities and shareholders' equity | $ | 15,317.2 | $ | 14,612.6 |
The following is a reconciliation from operating income to net income(6)(8):
The Hanover Insurance Group, Inc. | |||||||||||||||||||||||||
Three months ended December 31 | Year ended December 31 | ||||||||||||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
($ in millions, except per share data) | $ | Per Share | $ | Per Share | $ | Per Share | $ | Per Share | |||||||||||||||||
Operating income (loss) | |||||||||||||||||||||||||
Core Commercial | $ | 71.0 | $ | 52.8 | $ | 281.6 | $ | 167.2 | |||||||||||||||||
Specialty | 83.3 | 70.5 | 257.7 | 243.5 | |||||||||||||||||||||
Personal Lines | 101.1 | 36.8 | 111.3 | (304.3) | |||||||||||||||||||||
Other | (1.0) | (2.0) | (0.5) | (0.8) | |||||||||||||||||||||
Total | 254.4 | 158.1 | 650.1 | 105.6 | |||||||||||||||||||||
Interest expense | (8.5) | (8.5) | (34.1) | (34.1) | |||||||||||||||||||||
Operating income before income taxes | 245.9 | $ | 6.72 | 149.6 | $ | 4.14 | 616.0 | $ | 16.91 | 71.5 | $ | 1.98 | |||||||||||||
Income tax expense on operating income | (51.3) | (1.40) | (36.5) | (1.01) | (130.1) | (3.57) | (15.3) | (0.42) | |||||||||||||||||
Operating income after income taxes | 194.6 | 5.32 | 113.1 | 3.13 | 485.9 | 13.34 | 56.2 | 1.56 | |||||||||||||||||
Non-operating items: | |||||||||||||||||||||||||
Net realized losses from sales and other | (29.0) | (0.79) | (7.0) | (0.19) | (84.2) | (2.31) | (8.9) | (0.25) | |||||||||||||||||
Net change in fair value of equity securities | (5.1) | (0.14) | 7.8 | 0.21 | 14.2 | 0.39 | (5.6) | (0.16) | |||||||||||||||||
Impairments on investments: | |||||||||||||||||||||||||
Credit-related impairments | (0.3) | (0.01) | (1.5) | (0.04) | (3.6) | (0.10) | (7.7) | (0.21) | |||||||||||||||||
Losses on intent to sell securities | - | - | - | - | (2.2) | (0.06) | (10.3) | (0.29) | |||||||||||||||||
Total impairments on investments | (0.3) | (0.01) | (1.5) | (0.04) | (5.8) | (0.16) | (18.0) | (0.50) | |||||||||||||||||
Other non-operating items | - | - | 1.3 | 0.04 | (2.4) | (0.07) | 2.1 | 0.06 | |||||||||||||||||
Income tax benefit (expense) on non-operating | 7.1 | 0.19 | (6.4) | (0.18) | 17.6 | 0.49 | 7.7 | 0.22 | |||||||||||||||||
Income from continuing operations, net of taxes | 167.3 | 4.57 | 107.3 | 2.97 | 425.3 | 11.68 | 33.5 | 0.93 | |||||||||||||||||
Discontinued operations (net of taxes): | |||||||||||||||||||||||||
Income (loss) from discontinued life businesses | (0.1) | - | 0.6 | 0.01 | - | - | 0.6 | 0.02 | |||||||||||||||||
Income from discontinued Chaucer business | 0.7 | 0.02 | - | - | 0.7 | 0.02 | 1.2 | 0.03 | |||||||||||||||||
Net income | $ | 167.9 | $ | 4.59 | $ | 107.9 | $ | 2.98 | $ | 426.0 | $ | 11.70 | $ | 35.3 | $ | 0.98 | |||||||||
Dilutive weighted average shares outstanding | 36.6 | 36.2 | 36.4 | 36.1 | |||||||||||||||||||||
Basic weighted average shares outstanding | 36.0 | 35.8 | 35.9 | 35.7 | |||||||||||||||||||||
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," "optimistic," "committed," "will," "line of sight," "clear visibility to," "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 socioeconomic 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, 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 pandemics, 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, tariffs, 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 (AI), 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 malicious cybersecurity attacks on the company or its business partners and service providers, or intrusions into the company's information 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 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 AI tools;
- Competition, particularly from competitors who have resource and capability advantages, including the advancing use of AI technology;
- The global macroeconomic environment, including inflation, recessionary effects, global trade disputes, war, energy market disruptions, equity price risk, tariffs, 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 AI, 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, operating income before interest expense and income taxes, operating income per diluted 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 and operating income per diluted share are non-GAAP measures. They are defined as net income 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, as they are, to a certain extent, determined by interest rates, financial markets and the timing of sales. Operating income 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 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 per diluted 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 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 attributable to the core operations of the business. Income from continuing operations is the most directly comparable GAAP measure for operating income (and operating income before income taxes) and measures of operating income 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 from continuing operations or net income determined in accordance with GAAP. A reconciliation of operating income to income from continuing operations and net income for the relevant periods is included on page 12 of this news release and in the Financial Supplement.
Operating return on average equity (ROE) is a non-GAAP measure. See end note (1) for a detailed explanation of how this measure is calculated. Operating ROE is based on non-GAAP operating income. 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 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 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) | Operating return on average equity (operating ROE) is a non-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 headings "Forward-Looking Statements" and "Non-GAAP Financial Measures." Operating ROE is calculated by dividing annualized operating income after tax for the applicable period (see under the heading in this news release "Non-GAAP Financial Measures" and end note (6)), 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 | December 31 | |||||||||||||
2023 | 2024 | 2024 | 2024 | 2024 | ||||||||||||||
Total shareholders' equity (GAAP) | $ | 2,465.6 | $ | 2,522.7 | $ | 2,552.2 | $ | 2,877.7 | $ | 2,841.8 | ||||||||
Less: net unrealized appreciation (depreciation) | (462.4) | (495.5) | (488.7) | (248.8) | (401.1) | |||||||||||||
Total shareholders' equity, excluding net | $ | 2,928.0 | $ | 3,018.2 | $ | 3,040.9 | $ | 3,126.5 | $ | 3,242.9 | ||||||||
Quarter Averages | ||||||||||||||||||
Average shareholders' equity (GAAP) | 2,859.8 | |||||||||||||||||
Average shareholders' equity, excluding net | 3,184.7 | |||||||||||||||||
Year-to-date Averages | ||||||||||||||||||
Average shareholders' equity (GAAP) | 2,652.0 | |||||||||||||||||
Average shareholders' equity, excluding net | 3,071.3 | |||||||||||||||||
($ in millions) | Three months ended | Year ended | |||||||
December 31 | December 31 | ||||||||
Net Income ROE | 2024 | 2024 | |||||||
Net income (GAAP) | $ | 167.9 | $ | 426.0 | |||||
Annualized net income* | 671.6 | ||||||||
Average shareholders' equity (GAAP) | $ | 2,859.8 | $ | 2,652.0 | |||||
Return on equity | 23.5 | % | 16.1 | % | |||||
Operating Income ROE (non-GAAP) | |||||||||
Operating income after taxes | $ | 194.6 | $ | 485.9 | |||||
Annualized operating income, net of tax* | 778.4 | ||||||||
Average shareholders' equity, excluding net unrealized appreciation | $ | 3,184.7 | $ | 3,071.3 | |||||
Operating return on equity | 24.4 | % | 15.8 | % | |||||
*For three months ended December 31, 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. | |
(2) | 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. 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 | ||||||||||||||
December 31, 2024 | ||||||||||||||
Core | Specialty | Personal | Total | |||||||||||
Total combined ratio (GAAP) | 95.0 | % | 81.6 | % | 88.1 | % | 89.2 | % | ||||||
Less: Catastrophe ratio | 1.5 | % | 1.2 | % | 2.2 | % | 1.7 | % | ||||||
Combined ratio, excluding catastrophe losses (non-GAAP) | 93.5 | % | 80.4 | % | 85.9 | % | 87.5 | % | ||||||
Less: Prior-year reserve development ratio | (0.5) | % | (7.0) | % | (0.1) | % | (1.7) | % | ||||||
Current accident year combined ratio, excluding | 94.0 | % | 87.4 | % | 86.0 | % | 89.2 | % | ||||||
December 31, 2023 | ||||||||||||||
Total combined ratio (GAAP) | 96.7 | % | 83.2 | % | 97.6 | % | 94.2 | % | ||||||
Less: Catastrophe ratio | 5.7 | % | 1.7 | % | 3.8 | % | 4.0 | % | ||||||
Combined ratio, excluding catastrophe losses (non-GAAP) | 91.0 | % | 81.5 | % | 93.8 | % | 90.2 | % | ||||||
Less: Prior-year reserve development ratio | (0.4) | % | (4.4) | % | 0.8 | % | (0.6) | % | ||||||
Current accident year combined ratio, excluding | 91.4 | % | 85.9 | % | 93.0 | % | 90.8 | % | ||||||
Year ended | ||||||||||||||
December 31, 2024 | ||||||||||||||
Core | Specialty | Personal | Total | |||||||||||
Total combined ratio (GAAP) | 94.4 | % | 86.5 | % | 99.6 | % | 94.8 | % | ||||||
Less: Catastrophe ratio | 3.6 | % | 2.8 | % | 10.7 | % | 6.4 | % | ||||||
Combined ratio, excluding catastrophe losses (non-GAAP) | 90.8 | % | 83.7 | % | 88.9 | % | 88.4 | % | ||||||
Less: Prior-year reserve development ratio | (0.8) | % | (3.5) | % | (0.2) | % | (1.1) | % | ||||||
Current accident year combined ratio, excluding | 91.6 | % | 87.2 | % | 89.1 | % | 89.5 | % | ||||||
December 31, 2023 | ||||||||||||||
Total combined ratio (GAAP) | 99.0 | % | 86.2 | % | 117.1 | % | 103.5 | % | ||||||
Less: Catastrophe ratio | 8.3 | % | 3.4 | % | 20.4 | % | 12.2 | % | ||||||
Combined ratio, excluding catastrophe losses (non-GAAP) | 90.7 | % | 82.8 | % | 96.7 | % | 91.3 | % | ||||||
Less: Prior-year reserve development ratio | 0.2 | % | (3.8) | % | 1.1 | % | (0.3) | % | ||||||
Current accident year combined ratio, excluding | 90.5 | % | 86.6 | % | 95.6 | % | 91.6 | % | ||||||
(3) | 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. |
(4) | 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 | ||||||||||||||
December 31, 2024 | ||||||||||||||
Core | Specialty | Personal | Total | |||||||||||
Total loss and LAE ratio | 59.9 | % | 42.6 | % | 61.9 | % | 56.9 | % | ||||||
Less: | ||||||||||||||
Prior-year reserve development ratio | (0.5) | % | (7.0) | % | (0.1) | % | (1.7) | % | ||||||
Catastrophe ratio | 1.5 | % | 1.2 | % | 2.2 | % | 1.7 | % | ||||||
Current accident year loss and LAE ratio, excluding catastrophes | 58.9 | % | 48.4 | % | 59.8 | % | 56.9 | % | ||||||
December 31, 2023 | ||||||||||||||
Total loss and LAE ratio | 63.1 | % | 46.8 | % | 72.6 | % | 63.6 | % | ||||||
Less: | ||||||||||||||
Prior-year reserve development ratio | (0.4) | % | (4.4) | % | 0.8 | % | (0.6) | % | ||||||
Catastrophe ratio | 5.7 | % | 1.7 | % | 3.8 | % | 4.0 | % | ||||||
Current accident year loss and LAE ratio, excluding catastrophes | 57.8 | % | 49.5 | % | 68.0 | % | 60.2 | % | ||||||
Year ended | ||||||||||||||
December 31, 2024 | ||||||||||||||
Core | Specialty | Personal | Total | |||||||||||
Total loss and LAE ratio | 60.6 | % | 48.9 | % | 74.0 | % | 63.5 | % | ||||||
Less: | ||||||||||||||
Prior-year reserve development ratio | (0.8) | % | (3.5) | % | (0.2) | % | (1.1) | % | ||||||
Catastrophe ratio | 3.6 | % | 2.8 | % | 10.7 | % | 6.4 | % | ||||||
Current accident year loss and LAE ratio, excluding catastrophes | 57.8 | % | 49.6 | % | 63.5 | % | 58.2 | % | ||||||
December 31, 2023 | ||||||||||||||
Total loss and LAE ratio | 65.8 | % | 50.7 | % | 91.6 | % | 73.0 | % | ||||||
Less: | ||||||||||||||
Prior-year reserve development ratio | 0.2 | % | (3.8) | % | 1.1 | % | (0.3) | % | ||||||
Catastrophe ratio | 8.3 | % | 3.4 | % | 20.4 | % | 12.2 | % | ||||||
Current accident year loss and LAE ratio, excluding catastrophes | 57.3 | % | 51.1 | % | 70.1 | % | 61.1 | % | ||||||
(5) | 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 | ||||||||
December 31 | September 30 | December 31 | ||||||
2023 | 2024 | 2024 | ||||||
Book value per share | ||||||||
Less: Net unrealized appreciation (depreciation) on fixed | (12.93) | (6.91) | (11.17) | |||||
Book value per share, excluding net unrealized appreciation | ||||||||
Versus prior quarter | ||||||||
Change in book value per share | (0.9) % | |||||||
Change in book value per share, excluding net unrealized | 4.1 % | |||||||
Versus prior year | ||||||||
Change in book value per share | 14.9 % | |||||||
Change in book value per share, excluding net unrealized appreciation | 10.4 % | |||||||
(6) | Operating income and operating income per diluted 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 and operating income per diluted share to the closest GAAP measures, income from continuing operations and income from continuing operations per diluted share, respectively, is provided on the preceding pages of this news release. |
(7) | Here, and throughout this document, the expense ratio is reduced by installment and other fee revenues for purposes of the ratio calculation. |
(8) | 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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