The Hanover Insurance Group has reported a net income of $118.9 million in the third quarter, unchanged from the prior-year period, while operating income rose $0.5 million to $93.5 million.
The difference between net and operating income in the quarter was primarily due to an after-tax increase in the fair value of equity securities.
Current accident year loss and loss adjustment expense ratio excluding catastrophes hit 56.8%, which included favourable loss frequency in short-tail coverages, primarily personal auto, while maintaining prudent reserves in longer-tail liability lines.
COVID-19 ultimate loss expectation remains unchanged with limited losses incurred to date
Catastrophe losses of $65.9 million, or 5.8 points of the combined ratio, including favorable development on prior-year catastrophes of $9.6 million.
Net premiums written grew 2.1%, compared to a decline of 2.3% adjusted for non-recurring premium returns in the second quarter.
The company has also reported rate increases of 5.7% in core commercial lines and 4.7% in Personal Lines.
Net investment income was $67.6 million, slightly below prior-year, primarily due to lower new money yields
“We’re very pleased with our performance in the third quarter, delivering a strong operating ROE of 13.8%, while making strategic gains that position us to continue to deliver sustainable growth and returns going forward,” said John C. Roche, president and chief executive officer at The Hanover.
“Despite industry headwinds and weather challenges, we are driving robust and consistent earnings, enabled by the effectiveness of our exposure and risk management actions taken over the last several years and our outstanding distribution capability.
“We generated record net premiums written of $1.3 billion and overall growth of 2.1%, rebuilding the momentum across our business since the onset of the pandemic.
“We continued to experience an increasingly hardening market in Commercial Lines, with core commercial rate increases of 5.7% and upper-single-digits in Specialty. We are successfully navigating the dynamic and competitive market in Personal Lines, achieving rate increases of 4.7%.”
Commenting on the company’s third quarter results, Jeffrey M. Farber, executive vice president and chief financial officer, noted, “We reported an all-in combined ratio of 94.2%, and 88.4%, excluding catastrophes.
“Our strong underlying loss performance was helped by the benefit of lower claims frequency, particularly in personal auto, while we maintained a prudent reserving approach to liability coverages. Our expense ratio, though slightly elevated in the quarter due to timing of certain expenses, improved by 20 basis points on a year-to-date basis, as we maintained our focus on deliberate expense planning and discipline.”