Property and casualty insurance company The Hanover Insurance Group has announced a preliminary estimate for third quarter catastrophe losses of approximately $90m, before taxes, or 6.8 points of net earned premiums.
In a statement, the firm said that the estimate is approximately $22m above the company’s pre-tax third quarter catastrophe assumption, driven primarily by the effects of Hurricane Ian. Estimated catastrophe losses from Hurricane Ian are approximately $28m, before taxes, primarily in the company’s Commercial Lines book in Florida.
John C. Roche, president and chief executive officer at The Hanover, said: “Our thoughts are with all those affected by Hurricane Ian. We are committed to resolving all insured claims expeditiously and providing the most positive claims experience for our policyholders and agents. The strategic actions we have taken in the past reduced our exposure in coastal areas and helped mitigate the loss impact on our company from this storm.”
The Hanover’s third quarter results were also impacted by elevated ex-CAT loss activity in the company’s Personal and commercial multiple peril (CMP) property lines, largely stemming from ongoing inflationary pressures, as well as property large losses in CMP. As a result, the company expects its third quarter current accident year loss and LAE ratio, excluding catastrophes, and its combined ratio, excluding catastrophes, to be 64.1% and 94.2%, respectively. Taking this and other currently available information into account, The Hanover expects its third quarter operating income per share to be in the range of $0.95 to $1.00.
Roche added: “In the third quarter, inflationary and supply chain pressures surpassed our expectations, and as such we are accelerating property price increases to improve margins in this unprecedented industry environment. We are supplementing price increases with a robust plan of action, parts of which are already in place. We have the utmost confidence in our high-quality diversified book of business and our team’s ability to execute this plan and bring the business to target profitability. We look forward to providing a detailed update on our actions and progress during our third quarter earnings call on 2 November.”
This announcement comes a few months after the firm said that it had seen reported net income of just $22.6m for the second quarter of 2022, compared with $128.5m for the same period last year. At the same time, operating income decreased from $104m to $83.9m, with the company attributed the dip to an after-tax decrease in the fair value of equity securities of $46.6m.