Reinsurance News

The Hanover grows in Q1 as combined ratio improves to 93.4%

4th May 2022 - Author: Luke Gallin

The Hanover Insurance Group, Inc. recently announced a rise in net income to $104.8 million in the first-quarter of 2022, as a lesser impact from catastrophe events in the period helped strengthen its combined ratio to 93.4%.

the-hanover-insurance-group-logoGroup-wide, operating income also increased from $61.4 million in Q1 2021 to $117.7 million in Q1 2022.

The carrier also recorded premium growth in the quarter when compared with the comparable prior year, as net premiums written (NPW) spiked to $1.3 billion and net premiums earned (NPE) rose to just shy of $1.3 billion.

The company’s Q1 2022 results show premium expansion in all business segments, including in core commercial where NPW increased to $527 million and NPE to $475 million.

Within the firm’s specialty unit, NPW rose to $303 million as NPE hit $284 million. In personal lines, NPW increased to $483 million as NPE expanded to $505 million.

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Across the company, the Hanover’s catastrophe ratio improved significantly, year-on-year, from 11.5% to 3.6%, so came in below the firm’s Q1 2022 assumption by 1.2 percentage points. At the same time, the expense ratio remained relatively flat at 31.1% compared with 31.6% in Q1 2021.

As a result, The Hanover has produced a combined ratio of 93.4% in the first-quarter of 2022, which is a solid improvement on the 98.8% reported a year earlier.

Net investment income in Q1 2022 was in line with the prior year quarter at $76.9 million, as the total pre-tax earned yield on the investment portfolio for the period was 3.52%, down from 3.74% in Q1 2021.

John Roche, President and Chief Executive Officer (CEO) at The Hanover, said: “Our strong first quarter results are compelling evidence that our strategic initiatives are delivering across our business. We continued to build on our positive momentum, achieving operating return on equity of 15.7% and record first quarter operating income per diluted share of $3.26. Our distinctive and winning agency strategy demonstrated its effectiveness, leading to profitable growth of 9.7%, with contributions from each of our business segments.”

“We are laser focused on ensuring pricing adequacy across our business in light of heightened inflationary trends. This discipline is reflected in expanded renewal price increases in each of our business segments, with Core Commercial up 9.7%, Specialty up 12.6%, and Personal Lines up 4.3%, and we believe the market continues to react rationally. The Personal Lines market is firming rapidly and favoring carriers that have shown more pricing discipline in the recent past.

“As we look ahead, we remain on track with our long-term targets for underwriting returns and operating ROE, which will likely be augmented by stronger net investment income. We are focused on driving profitable growth across our portfolio, enabling us to continue to innovate and modernize our business, and create increased value for our shareholders, agents, customers, and other stakeholders,” he added.

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