The Hanover has reported net income of $107.9 million for Q4 of 2023, marking a drastic improvement compared to the net loss of $12.1 million recorded in the same quarter of 2022.
Operating income in Q4 of 2023 also grew to $113.1 million, up from an operating loss of $37.4 million, in Q4 of 2022.
The Hanover’s Q4 combined ratio stood at 94.2%, (excluding catastrophes 90.2%) while catastrophe losses in the quarter were $57.7 million, or 4 points of the combined ratio.
Elsewhere, net premiums written in Q4 2023 increased 1.5% compared with the same period last year to $1.35 billion, and net investment income was up 7.5% from the prior-year quarter to $81.6 million.
The Hanover explained that the increase in investment income was primarily due to higher bond reinvestment rates and the continued investment of operational cashflows, partially offset by lower partnership income.
Speaking more on Q4, John C. Roche, president and CEO at The Hanover, commented, “The fourth quarter represented a strong finish to a very productive year, as we delivered operating return on equity of 15.7% and a combined ratio of 94.2%, demonstrating meaningful improvement in each of our business segments and validating the strong execution of our margin recapture program.
“We achieved double-digit renewal pricing across all three of our business segments, executed underwriting initiatives and product changes in property lines, and implemented new loss control and preventive measures, taking meaningful steps to reposition our property business to address inflation and changing weather patterns.
While topline growth decelerated at the tail end of the year as a result of our proactive actions, we have positioned ourselves to reaccelerate production and take advantage of robust opportunities in 2024 in multiple segments and geographies, where profitability profiles are very attractive.”
Roche concluded, “Having delivered on our most critical underlying operating and financial targets for 2023, including ex-CAT combined ratio, we enter 2024 with an increased confidence in our profitability and growth trajectory, with the foundation of our proven strategy, capabilities and distribution distinctiveness, as well as our talented and determined team focused on delivering strong and sustainable value for our shareholders and all of our stakeholders.”
Despite the greatly improved Q4 performance, net income for the full year 2023 was $35.3 million, down from a net income of $116.0 million in 2022.
Meanwhile, full year operating income was $56.2 million in 2023, compared to operating income of $199.9 million in the prior year.
The Hanover said this was primarily attributable to elevated catastrophe losses through the first three quarters of the year compared to 2022.
All told, catastrophe losses for the full year totalled $690.1 million, or 12.2 points of the combined ratio (103.5%), driven primarily by severe convective storms across multiple states, particularly in the Midwestern United States.
The Hanover’s full year net premiums written were $5.8 billion, an increase of 6.1% from 2022, while full year investment income grew 12.1% from 2022 to $332.1 million, driven primarily by higher-than-expected bond reinvestment rates and higher cash flows.
