The Hanover Insurance Group (NYSE:THG) reported record second-quarter operating performance, citing improved underwriting margins, accelerating premium growth and higher investment income across its diversified insurance portfolio.
President and Chief Executive Officer Jack Roche said the company generated operating earnings of $5.31 per diluted share and an operating return on equity of about 20%
Net written premiums increased 4.6%, led by Core Commercial and Specialty lines, while Personal Lines continued to produce what Roche described as strong margins and improving business momentum. “Disciplined underwriting and targeted growth can coexist,” Roche said, pointing to portfolio refinements, investments in risk selection and operating capabilities, and a focus on markets with attractive expected returns. Combined Ratio Improves as Reserve Development Adds Support Chief Financial Officer Jeff Farber said Hanover posted a combined ratio of 91.2% for the quarter, improving 1.3 percentage points from a year earlier. The combined ratio excluding catastrophe losses was 85.5%, while the current accident-year loss ratio excluding catastrophes was 55.8%.
Catastrophe losses accounted for 5.7 points of the combined ratio, including 0.8 points of favorable prior-year catastrophe development. Farber said catastrophe losses came in below the company’s modeled expectations despite frequent catastrophe activity in its operating regions. The company also reported $21.5 million of favorable prior-year reserve development excluding catastrophes, with favorable development in all three operating segments: – Specialty generated $10.8 million of favorable development, or 3 points, across multiple coverages. – Personal Lines produced $10.1 million of favorable development, or 1.5 points, primarily from Homeowners and, to a lesser extent, Personal Auto property coverages. – Core Commercial generated $0.6 million of favorable development.