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02.02.2017 22:20
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The Hanover Reports Results: Full Year Net Income of $3.59 per Diluted Share; Operating Income(1) of $4.27 per Diluted Share; Fourth Quarter Net Loss of $0.32 per Diluted Share(2); Operating Loss of $
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WORCESTER, Mass., Feb. 2, 2017
WORCESTER, Mass., Feb. 2, 2017 /PRNewswire/ -- The Hanover Insurance Group, Inc. (NYSE: THG) today reported a net loss of $13.5 million, or $0.32 per diluted share, for the fourth quarter of 2016. This compared to net income of $77.6 million, or $1.76 per diluted share, in the prior-year quarter. Operating loss was $19.7 million, or $0.46 per diluted share, for the fourth quarter of 2016, inclusive of strengthening domestic prior-year loss and loss adjustment expense reserves of $174.1 million ($113.2 million after taxes), compared to operating income of $80.3 million, or $1.82 per diluted share, in the prior-year quarter.
Net income for the full year of 2016 was $155.1 million, or $3.59 per diluted share. This compared to net income of $331.5 million, or $7.40 per diluted share, in the full year of 2015. Operating income was $184.4 million, or $4.27 per diluted share, in 2016, compared to operating income of $280.0 million, or $6.25 per diluted share, in 2015.
"The fundamentals of our business are very strong, and we are pleased with the underlying results in the quarter and for the full year," said Joseph M. Zubretsky, president and chief executive officer at The Hanover. "The reserve review we conducted during the quarter confirmed that the reserve development was related to business issues we believe we have successfully addressed in the recent past and gave us even greater confidence in the composition of our existing business portfolio. Our underlying performance during the quarter and full year, including the underlying quality of growth, strong retention and underwriting and pricing discipline, reaffirms our confidence in the foundation on which we are building our company. We look forward to sharing our go-forward strategy at our Investor Day later this month, where we will discuss our plan to deliver superior value for our partners, customers and shareholders."
"We have every reason to be optimistic about our current book of business and momentum," said Jeffrey Farber, executive vice president and chief financial officer. "Excluding catastrophe losses, Commercial and Personal Lines reported full year current accident year combined ratios(3) of 92.5% and 88.8%, respectively, or 91.1% for domestic lines combined(4), an improvement of 1.7 points over 2015. Our overall results also reflected a modest level of catastrophe losses, and strong results at Chaucer. We were pleased with controlled topline growth, including strong momentum in Personal Lines, thoughtful balancing of pricing and retention in Commercial Lines, and our disciplined approach to navigating the soft market at Chaucer."
(1) See information about this and other footnotes throughout this press release on the final pages of this document.
Fourth Quarter and Full Year Highlights
- Strengthened domestic prior-year loss and loss adjustment expense reserves by $174.1 million before taxes in the fourth quarter
- Combined ratio of 107.7% in the fourth quarter and 98.6% in the full year, including 1.4 and 2.7 points of catastrophe losses and 12.3 and 3.0 points of unfavorable prior-year development, respectively
- Current accident year combined ratio, excluding catastrophes, of 94.0% in the fourth quarter and 92.9% in the full year, improved from 94.3% and 93.8%, respectively
- Net premiums written(5) up 3.4% in the fourth quarter and 1.6% in the full year, excluding the impact of the UK motor sale on June 30, 2015
- Continued price increases in Commercial and Personal Lines
- Net investment income of $74.2 million in the fourth quarter, up 6.0%, and $279.4 million for the year, consistent with full year 2015
- Book value per share of $67.40, up 1.8% from December 31, 2015; book value per share excluding net unrealized gains on investments(6) of $63.01, up 0.5%
- During 2016, repurchased approximately 1.3 million shares of common stock for $105.6 million, at an average price of $80.58 per share
- On December 6, 2016, the Board of Directors increased the quarterly dividend on common shares by 9%, to $0.50 per common share
| | | | | | | | | |
| | Three months ended | | Twelve months ended | | ||||
| | December 31 | | December 31 | | ||||
| ($ In millions, except per share data and ratios) | 2016 | | 2015 | | 2016 | | 2015 | |
| Net premiums written(5) | $ 1,082.0 | | $ 1,046.1 | | $ 4,698.8 | | $ 4,754.2 | |
| Operating (loss) income after taxes | (19.7) | | 80.3 | | 184.4 | | 280.0 | |
| per diluted share(2) | (0.46) | | 1.82 | | 4.27 | | 6.25 | |
| Net (loss) income | (13.5) | | 77.6 | | 155.1 | | 331.5 | |
| per diluted share(2) | (0.32) | | 1.76 | | 3.59 | | 7.40 | |
| Net investment income | 74.2 | | 70.0 | | 279.4 | | 279.1 | |
| Book value per share | $ 67.40 | | $ 66.21 | | $ 67.40 | | $ 66.21 | |
| Ending shares outstanding | 42.4 | | 43.0 | | 42.4 | | 43.0 | |
| Combined ratio | 107.7% | | 95.0% | | 98.6% | | 95.7% | |
| Prior year development ratio | 12.3% | | (1.6)% | | 3.0% | | (2.0)% | |
| Catastrophe ratio | 1.4% | | 2.3% | | 2.7% | | 3.9% | |
| Combined ratio, excluding catastrophes(7) | 106.3% | | 92.7% | | 95.9% | | 91.8% | |
| Current accident year combined ratio, | | | | | | | | |
| excluding catastrophes(3) | 94.0% | | 94.3% | | 92.9% | | 93.8% | |
| | | | | | | | | |
Fourth Quarter Operating Highlights
Reserve Review
As a result of the fourth quarter comprehensive reserve review, the company recognized domestic unfavorable prior-year reserve development, excluding catastrophes, of $174.1 million, or approximately 5% of domestic net reserves. Aggregate unfavorable development, including development on prior-year catastrophe losses, for the year was $105.4 million, or approximately 2% of total net reserves.
The fourth quarter domestic reserve development was largely driven by an increase in losses in Commercial Lines liability coverages in high-severity claims, as well as higher than anticipated legal defense costs. As a result, the company updated its assumptions, placing greater weight on recently observed increases in severity.
The adverse development in AIX program business primarily related to terminated programs and businesses, and was predominantly due to the general liability and commercial automobile liability coverages. The adverse development in surety was driven by recent large loss activity emergence in contract surety. Additionally, the company recognized unfavorable development in general liability, commercial multiple peril liability lines and commercial auto lines, partially offset by favorable development in the workers' compensation line. The adverse prior-year reserve development for the personal auto line was primarily due to higher than expected severity in bodily injury coverages. The adverse prior-year development for the "Other" segment reflects an updated third party actuarial study related to run-off voluntary assumed reinsurance pools business.
The following table summarizes reserve actions taken during the quarter for domestic lines of businesses:
| | | | | | | | | | |
| | | ($ in millions) unfavorable (favorable) | Net premiums written for the | | Reserve Actions | | Primary Accident Years | | |
| | | | | | | | | ||
| | | Commercial multiple peril | $ 792.9 | | $ 43.7 | | 2012 to 2015 Werbung Mehr Nachrichten zur Hanover Insurance Group Aktie kostenlos abonnieren
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