Massachusetts-based property and casualty insurer The Hanover Insurance Group has reported an 18.4% increase in net income during the third quarter of 2019, helped by lower catastrophe losses.
The company posted net income of $118.9 million in Q3 2019, compared with $100.4 million for the same period last year.
Catastrophe losses came to $35.2 million for the quarter, driven by several wind and hail events in the Upper Midwest, compared to $44.9 million last year.
The Hanover’s combined ratio also improved slightly, from 95.1% to 94.4%, with catastrophe losses contributing 4.2% in 2018 and 3.1% this year.
Results were also helped by a 3.6% increase in net investment income, which rose to $68.8 million in Q3, driven by the continued investment of operational cash flows and remaining proceeds from the Chaucer sale.
Net premiums written increased by 5.6%, reflecting growth in more profitable segment, and price increases averaged 5.5% in Core Commercial Lines and 5.0% in Personal Lines.
For Commercial Lines specifically, operating income increase by 13.8% to $74.1 million last quarter, with catastrophe losses down 32.3% to $22.0 million, and a combined ratio of 95.2%.
These results included $5.6 million of net favorable prior-year reserve development, driven by continued favourability in workers’ compensation.
For Personal Lines, operating income grew by 4.1% to $50.2 million, with catastrophe losses increasing 6.4% to 13.2 million, and combined ratio deteriorating slightly to 93.3%.
The Hanover noted that these results included $5.6 million of net unfavourable prior-year reserve development, primarily driven by bodily injury severity in personal auto.
“We are pleased with our performance in the quarter, sustaining the positive momentum we have established across our business and building on the strong results we posted for the first half of the year,” said John C. Roche, President and Chief Executive Officer at The Hanover.
“Our performance reflects the breadth and relevance of our product mix, deep industry expertise and our unique partnership approach with agents,” he remarked.
Jeffrey M. Farber, Executive Vice President and Chief Financial Officer, also commented: “We delivered an ex-cat combined ratio of 91.3% during the quarter. Underlying loss ratios were solid, but slightly above our expectations due to increased property loss activity across several areas of the business. At the same time, liability lines performed consistent with our expectations.”
“The company’s market position and strong agency relationships allowed us to implement rate increases, where needed,” he continued.
“We remain committed to a diligent capital management framework, as we wrapped up the $150 million ASR announced in June and continue to review additional capital deployment options, all with the interests of our shareholders in mind.”