The Hanover Insurance Group has reported a net income of $128.5 million for Q2 2021, compared to $115.2 million for the prior year period.
Its operating income came in at $104 million, compared to $62.7 million last year.
The insurer claims that the difference between its net and operating income was primarily due to an after-tax increase in the fair value of equity securities of $20.9 million, which is excluded from operating income.
The Hanover also reported an improved combined ratio of 94.4%, compared to 96.2% for the year prior.
Its catastrophe losses came in at $76.8 million, or 6.5% of net premiums earned, which was primarily due to several wind, rain and hail events in the Midwest in June.
This marks an improvement from Q1 when the insurer booked cat losses of $133 million, and also on the $147.8 million of cat losses reported for Q2 2020.
Net premiums written amounted to $686.8 million in Q2 2021, which is growth of 11.7% on the same period last year.
John C. Roche, president and Chief Executive Officer (CEO) at The Hanover, commented: “We are very pleased with our second quarter performance, achieving exceptional growth and delivering an operating return on equity of 14.7%, reflecting the success of our distinctive agency and customer-centric strategy.
“We delivered strong net premiums written growth of 8.6%, adjusted to exclude the impact of premium returns in 2020, with all major segments contributing.
“Commercial Lines performed extremely well, with growth of 11% in core commercial and 12% in specialty, while achieving robust rate increases of 6.5% and 8.5%, respectively. In Personal Lines, the accelerating premium growth of 5%, adjusted, is a testament to the depth of our agency relationships and our ability to thrive in a competitive marketplace.
“The positive momentum across our business gives us even more confidence in our ability to capitalise on opportunities for profitable growth in this dynamic and increasingly complex environment.”
Jeffrey M. Farber, Executive Vice President and Chief Financial Officer (CFO) commented: “We delivered a strong ex-CAT, current accident year combined ratio of 89%, and grew our book value per share by 4.8% during the quarter, underscoring the profitability of our diversified book of business and our ability to achieve high margins while growing in an uncertain environment.
“We are very pleased with the underwriting margins in our business; however, we are mindful of the potential uncertainties related to social and economic inflation, as well as ongoing court and medical information delays, and we remain prudent in our assessment of loss costs.
“We have placed a considerable amount of emphasis on the quality of our balance sheet and believe it will serve us well. Overall, our second quarter performance demonstrates that we are executing as planned on our capital priorities, maintaining our target liquidity, growing profitably, and returning excess capital to shareholders.”
