Property and casualty insurance company, The Hanover Insurance Group, has reported net income of just $22.6 million for the second quarter of 2022, compared with $128.5 million for the same period last year.
At the same time, operating income decreased from $104.0 million to $83.9 million, with the company attributed the dip to an after-tax decrease in the fair value of equity securities of $46.6 million.
However, President and CEO John Roche also highlighted the “ongoing headwinds” that The Hanover is facing on its Personal Lines business.
Personal Lines operating income amounted to just $2.8 million for the quarter, down from $32.2 million for the same period last year, on a combined ratio of 103.2%, up from 97.6% previously.
Catastrophe losses for this segment were $53.0 million in Q2, or 10.2 points of the combined ratio, which includes $2.0 million of unfavorable prior-year catastrophe development.
This compared to catastrophe losses of $58.6 million, or 12.3 points of the combined ratio, in the prior-year quarter, which was net of $3.0 million of favorable prior-year catastrophe development.
For the Core Commercial segment, income remained relatively stable at $66.9 million, with a combined ratio of 92.6% and catastrophe losses of $17.8 million.
And Specialty income improved from $34.5 million to $45.2 million on a combined ratio of 89.4%, with catastrophe losses of $6.6 million.
Overall net premiums written increased by 10.4% from $1,207.2 million in Q2 2021 to $1,332.8 million this year.
The Hanover’s net investment income was $70.5 million for the second quarter of 2022, below the prior-year quarter of $75.6 million, primarily due to elevated partnership income in the prior-year quarter, partially offset by the continued investment of operational cashflow.
“We are pleased to report another strong quarter – punctuated by an 11.1% operating return on equity and operating earnings per share of $2.32, as well as double-digit premium growth,” said Roche.
“We remain focused on pricing and other levers to address the ongoing headwinds in Personal Lines, in particular in homeowners,” he continued. “At the same time, very strong performance and returns across our commercial businesses helped to largely offset these pressures, culminating in a consolidated ex-CAT combined ratio of 90.2% in the second quarter.”
“We are pleased with the impressive results within our Core Commercial and Specialty lines as they delivered improved profitability, significant renewal price increases of 11% and 12%, and net written premium growth of 7.7% and 14.0%, respectively. With the ongoing support of our robust agency relationships and talented team, we continue to have confidence in our ability to profitably grow our business and deliver superior returns to our valued shareholders.”
