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The Hanover improves FY income despite upswing in cat losses

3rd February 2022 - Author: Matt Sheehan

Property and casualty (P&C) insurance company The Hanover Insurance Group, Inc. has reported improved net income for the full-year 2021 period, despite incurring significantly larger catastrophe losses than in the previous year.

the-hanover-insurance-group-logoThe company reported net income of $418.7 million for 2021, compared with $358.7 million in the previous year, as higher investment income helped to offset a decrease in operating income.

Operating income was $432.3 last year with a combined ratio of 97.0%, versus $484.7 million previously, with a combined ratio of 94.4%.

Catastrophe losses were $402.6 million, or 8.4 points of the combined ratio in 2021, compared to $286.7 million, or 6.3 points, in the prior year.

Net investment income was $310.7 million for the full year, compared to $265.1 million in 2020, with the increase driven by unusually high income from limited partnerships, and to a lesser degree, continued investment of higher operating cash flow, partially offset by lower new money yields.

Stratumn, by SIA Partners

Looking at Q4 specifically, The Hanover’s net income remained flat at $163.5 million, while operating income increased slightly from $112.0 million to $122.1 million.

“2021 was an exceptional year for our company, as we enhanced our competitive position, continued our positive financial momentum and advanced our unique culture,” said John C. Roche, President and CEO at The Hanover.

“Our performance in the quarter and the year underscores the effectiveness of our distinctive strategy, the relevancy of our product and service offerings, and the strength of our agency partnerships. At the same time, we made important progress across all of our businesses throughout the year,” he explained.

“Our ability to generate broad-based profitability, along with our superior underwriting and advanced data and analytics capabilities, proved to be more critical than ever in 2021, as we navigated extremely dynamic market conditions and challenges.”

Jeffrey M. Farber, Executive Vice President and Chief Financial Officer at The Hanover, also commented: “We are very pleased with the outstanding financial results we delivered this year. Our fourth quarter results reflect a sub-90s ex-CAT combined ratio and an excellent operating return on equity of 16.8%, providing an incredibly strong ending to an already successful year.”

“We delivered a full-year operating return on equity of 11.2%, despite significant catastrophe activity and increasing severity trends,” he added. “Furthermore, our business is delivering underlying profitability above pre-pandemic levels, which speaks to the sustainability of our strong financial performance,” Farber continued.

“We start the new year with great optimism and enthusiasm, in an excellent financial position, supported by a strong balance sheet and a high-quality investment portfolio.”

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