The Hanover Insurance Group has posted a net income of $8.6 million for the third quarter of 2023, compared to net income of $0.5 million in the prior-year quarter.
Operating income sat $6.8 million in Q3, compared to operating income of $35.7 million from Q322.
At the same time, The Hanover posted a combined ratio of 104.4%, compared to last year’s 101%.
The company noted that catastrophe losses of $195.8 million, or 13.7 points of the combined ratio, were driven by severe convective storm activity in the Midwestern United States, with hail and wind damage representing the majority of reported losses and primarily impacting the Personal Lines segment.
Moreover, Personal Lines current accident year combined ratio, excluding catastrophe losses, decreased 1.8 points to 96.4% in Q3, from 98.2% in the prior-year quarter. This was primarily driven by a lower current accident year loss and LAE ratio, excluding catastrophes, and expense ratio, stated The Hanover.
Net premiums written within Personal Lines came in at $668.3 million for Q3, a 9.5% rise from the prior-year quarter, which was driven primarily by renewal price change. Personal Lines renewal price increases averaged 18.0%, while average rate increases were 10.7%.
Meanwhile, within its Specialty division, Specialty current accident year combined ratio, excluding catastrophes, decreased 5.2 points to 82.9%, from 88.1% in the prior-year quarter.
Net premiums written for the Specialty segment were $338.7 million, up 2.9% from the prior-year quarter, inclusive of the non-renewal of certain programs within Specialty P&C due to lower-than-expected performance.
In the third quarter, Specialty renewal price increases averaged 12.9%, while average rate increases were 8.4%.
John C. Roche, president and chief executive officer at The Hanover, commented on the company’s results: “While severe weather adversely impacted third quarter results for us and the industry, we are pleased with our underlying performance, which demonstrates the inherent strengths of our business and the effectiveness of our margin recapture plan.
“Our positive momentum is reflective of our enhanced underlying margins in Core Commercial, the continuing strength of our Specialty franchise and improvements in personal auto. These achievements give us even greater confidence in our ability to dramatically enhance performance in Personal Lines and the company overall. The personal lines market remains exceptionally firm, positioning us to achieve additional price increases, reshape our book of business and reach our target profitability objectives.”
Adding: “We also have taken decisive action to respond to elevated catastrophe loss trends. We introduced increased all-peril as well as wind and hail deductibles on targeted new business in the third quarter, and are on track to deliver these adjustments on renewals in early 2024.”
Jeffrey M. Farber, executive vice president and chief financial officer at The Hanover, added: “Our 90.7% third quarter combined ratio, excluding catastrophes, represented an improvement of 3.5 points, compared to the third quarter of 2022, and an improvement of two points sequentially.
“This result was driven by markedly improved property loss experience in Core Commercial, as well as exceptional performance in our Specialty segment, which delivered an ex-CAT combined ratio of 81.3%. We achieved personal auto and home renewal price changes of 14% and 23%, respectively. In addition, we delivered net investment income of $84.2 million in the quarter, driven by an approximate 19% increase in net investment income in our fixed maturity portfolio. We expect the higher interest rate environment to help drive additional growth in net investment income in the future, adding significant earnings power to our business.
“Looking ahead, we are well-positioned in the market, with a proven business strategy, broad and innovative capabilities, tremendous distribution partners, strong balance sheet, and exceptional talent, which will enable us to execute on our long-term targets while delivering increased value for our shareholders.”
