The Hanover Reports Second Quarter Results

WORCESTER, Mass., Aug. 2, 2023

• Combined ratio of 111.3%; combined ratio, excluding catastrophes⁽¹⁾, of 92.8%
• Catastrophe losses of $261.6 million, or 18.5 points of the combined ratio, driven by several convective storms across multiple states, with hail damage representing the majority of reported losses and primarily impacting Personal Lines
• Net premiums written increase of 8.6%*, with contributions from each segment
• Renewal price increases⁽²⁾ of 15.9% in Personal Lines, including 21.7% in homeowners, as well as increases of 11.4% in Specialty and 11.3% in Core Commercial
• Rate increases⁽²⁾ of 9.8% in Personal Lines, 6.4% in Specialty and 7.8% in Core Commercial
• Current accident year loss and loss adjustment expense (LAE) ratio, excluding catastrophes⁽³⁾, of 62.3%, was slightly above the company's expectations due to higher losses in Personal Lines, while performance in Specialty and Core Commercial beat expectations
• Net investment income of $87.6 million, up 24.3% from the prior-year quarter, primarily due to higher bond reinvestment rates and the continued investment of operational cashflows, as well as the benefit of higher non-recurring partnership income
• Book value per share of $62.62, down 6.4% from March 31, 2023

WORCESTER, Mass., Aug. 2, 2023 /PRNewswire/ -- The Hanover Insurance Group, Inc. (NYSE: THG) today reported a net loss of $69.2 million, or $(1.94) per basic share, in the second quarter of 2023, compared to net income of $22.7 million, or $0.63 per diluted share, in the prior-year quarter. Operating loss⁽⁴⁾ was $68.3 million, or $(1.91) per basic share, in the second quarter of 2023, compared to operating income of $83.9 million, or $2.32 per diluted share, in the prior-year quarter.

"With elevated storm activity presenting challenges for our industry, we are focused on advancing our margin recapture plan and our proven strategy, leveraging innovative tools and deep underwriting expertise to address the substantial volatility we are experiencing," said John C. Roche, president and chief executive officer at The Hanover. "We are pleased with the progress we have made to date and have every confidence we can build on our strong market position and capitalize on our diversified portfolio to drive long-term, sustainable profitable growth."

"Our Specialty business continued to deliver exceptional results, generating an 88.4% combined ratio and solid premium growth of 7.6% in the second quarter," said Roche. "Our Core Commercial business significantly reduced ex-CAT large losses and posted an improvement in the loss ratio compared to the second quarter last year, while increasing pricing by 11.3%, demonstrating the effectiveness of our margin recapture plan. We are laser focused on leveraging every opportunity available to us to restore profitability in Personal Lines as quickly as possible, and we believe the current hard market represents a substantial tailwind. Personal Lines renewal pricing continues to track above our original expectations, as demonstrated by average price increases of 21.7% in homeowners and 12.0% in auto. Our successful pricing actions, in combination with expected changes to product terms and conditions in homeowners coming online starting in the third quarter, foreshadow meaningful improvement in this business. We have a long and successful history effectively navigating challenging environments and we are confident in our ability to do so again."

"We achieved solid underlying performance in the second quarter, generating an ex-CAT combined ratio of 92.8%, while growing our premiums by 8.6%, primarily driven by pricing increases," said Jeffrey M. Farber, executive vice president and chief financial officer at The Hanover. "Additionally, we posted a second quarter expense ratio⁽⁵⁾ of 30.6%, keeping us on track to achieve our savings target for the full year 2023. Our high quality, diversified investment portfolio provides a strong stream of income, and we continue to benefit from attractive reinvestment yields, which should bolster our future returns. We remain focused on the ongoing execution of our long-term strategic and business priorities, and on delivering value for our shareholders, agents, customers, and other stakeholders."