Hanover Insurance Group Inc · NYSE:THG
Hanover Insurance — Q4 2023 Earnings Presentation
23 slides from Hanover Insurance's earnings presentation, Feb 1, 2024
Slide 1: Fourth Quarter and Full Year 2023 Results
The Hanover Insurance Group, Inc. Fourth Quarter and Full Year 2023 Results February 1, 2024 To be read in conjunction with the press release dated January 31, 2024, and conference call scheduled for February 1, 2024 1
Slide 2: Fourth Quarter and Full Year 2023 Operating Highlights
Fourth Quarter and Full Year 2023 Operating Highlights Fourth Quarter Highlights • Combined ratio of 94.2%; combined ratio, excluding catastrophes(1), of 90.2% • Catastrophe losses of $57.7 million, or 4.0 points of the combined ratio • Renewal price increases(2) of 20.6% in Personal Lines, includin
Slide 3: Consolidated Financial Results
Consolidated Financial Results Three months ended Year ended ($ in millions, except per share amounts) December 31, December 31, December 31, December 31, 2022 2023 2022 2023 Net income (loss) ($12.1) $107.9 $116.0 $35.3 Per diluted/(basic) share ($0.34) $2.98 $3.21 $0.98 (4) Operating income (loss)
Slide 4: Fourth Quarter and Full Year Underwriting Results
Fourth Quarter and Full Year Underwriting Results • Combined ratio of 94.2% in the fourth quarter 2023, improved 13.8 points from the prior-year ($ in millions) Net Premiums Written and Growth quarter, primarily driven by lower catastrophe losses ↑ 6.0% ↑ 9.7% ↑ 6.1% • Combined ratio, excluding cata
Slide 5: Core Commercial Underwriting Highlights
Core Commercial Underwriting Highlights Three months ended Year ended • Fourth quarter 2023 combined ratio, excluding December 31 December 31 catastrophes, improved 1.6 points from the ($ in millions) 2022 2023 2022 2023 prior-year quarter Fourth Quarter Results Net premiums written $453.2 $465.5 $1
Slide 6: Core Commercial Growth Highlights
Core Commercial Growth Highlights ($ in millions) Net Premiums Written and Growth • Net premiums written growth of 2.7% in the fourth quarter ↑ 5.4% • Driven by growth of 6.0% in small ↑ 2.7% Fourth Quarter Results $2,107.0 commercial, propelled by strong pricing $453.2 $465.5 $1,999.9 and new busin
Slide 7: Specialty Underwriting Highlights
Specialty Underwriting Highlights Three months ended Year ended • Fourth quarter 2023 combined ratio, ex-CAT, December 31 December 31 decreased 5.8 points from the prior-year ($ in millions) 2022 2023 2022 2023 quarter Net premiums written $309.5 $304.9 $1,243.7 $1,293.3 • Current accident year loss
Slide 8: Specialty Growth Highlights
Specialty Growth Highlights ($ in millions) Net Premiums Written and Growth • Net premiums written declined 1.5% in the fourth quarter: ↓ 1.5% ↑ 4.0% • Driven by the continued non-renewal of $309.5 $304.9 $1,243.7 $1,293.3 certain programs within Specialty Fourth Quarter Results $15.2 $70.9 $77.0 $1
Slide 9: Personal Lines Underwriting Highlights
Personal Lines Underwriting Highlights Three months ended Year ended • Combined ratio, ex-CAT, improved 5.1 points from December 31 December 31 the prior-year quarter driven by improvements in ($ in millions) 2022 2023 2022 2023 both the underlying loss ratio and expense ratio Net premiums written $
Slide 10: Personal Lines Growth Highlights
Personal Lines Growth Highlights ($ in millions) Net Premiums Written and Growth ↑ 2.1% ↑ 7.9% • Net premiums written growth of 2.1%, as strong pricing increases were partially offset Fourth Quarter Results by the impact of margin recapture initiatives $575.1 $2,232.9 $2,409.9 $563.3 and targeted no
Slide 11: Net Investment Income Trends
Net Investment Income Trends Net Investment Income* ($ in millions) • Net investment income of $81.6 million in the fourth Fourth Quarter quarter, up 7.5% from the prior-year quarter, Results $87.6 reflecting an approximate 13% increase in net $84.2 $81.6 $75.9 $78.7 $18.2 investment income in our f
Slide 12: Investment Portfolio – Total Invested Assets and Cash of $9.2 Billion
Investment Portfolio – Total Invested Assets and Cash of $9.2 Billion As of December 31, 2023 High quality, well-diversified investment portfolio Fixed Maturities: $8.0 Billion Equities, Cash and Other: $1.2 Billion 1% Industrials Marketable Securities ETF 25% 9% 2% 30% Financials 33% Utilities Equi
Slide 13: The Hanover Insurance Group 2024 Outlook
The Hanover Insurance Group 2024 Outlook* Metric Full Year 2024 Expectations** Net Premiums Written • Mid-single digit growth • 30.7%, an improvement of 10 basis points from 2023 Expense Ratio guidance Combined Ratio, Ex-CAT*** • 90% – 91% • 7.0%, reflecting adjustments to internal catastrophe Catas
Slide 14: The Hanover Insurance Group 2024 Catastrophe Guidance
The Hanover Insurance Group 2024 Catastrophe Guidance We have made a significant adjustment in our catastrophe assumptions 2024 Catastrophe Load allows for a ~60% increase in loss Catastrophe Load – 2023 Plan to 2024 Plan dollars based on expected levels of earned rate 7.0% 7.0% 5.1% 5.1% ~60% 15% 2
Slide 15: About The Hanover
About The Hanover The Hanover Insurance Group, Inc. is the holding company for several property and casualty insurance companies, which together constitute one of the largest insurance businesses in the United States. The company provides exceptional insurance solutions through a select group of ind
Slide 16: Forward-Looking Statements
Forward-Looking Statements Certain statements in this document and comments made by management may be “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, may be forward-looking statements. Words s
Slide 17: Additional Risks and Uncertainties
Additional Risks and Uncertainties Investors are further cautioned and should consider the risks and uncertainties in the company’s business that may affect such estimates and future performance that are discussed in the company’s most recently filed reports on Form 10-K and Form 10-Q and other docu
Slide 18: Non-GAAP Financial Measures
Non-GAAP Financial Measures Non-GAAP Financial Measures As discussed on page 38 of the company’s Annual Report on Form 10-K for the year ended December 31, 2022, the company uses non-GAAP financial measures as important measures of its operating performance, including operating income (loss), operat
Slide 19: End notes
End notes (1) Combined ratio, excluding catastrophes, and current accident year combined ratio, excluding catastrophes, are non-GAAP measures. The combined ratio (which includes catastrophe losses and prior-year loss reserve development) is the most directly comparable GAAP measure. This and other n
Slide 20: End notes continued
End notes continued (2) Renewal price changes in Core Commercial and Specialty represent the average change in premium on renewed policies caused by the estimated net effect of base rate changes, discretionary pricing, specific inflationary changes or changes in policy level exposure or insured risk
Slide 21: End notes continued
End notes continued (4) Operating income (loss) and operating income (loss) per diluted (basic) share are non-GAAP measures. The following table provides the reconciliation of operating income (loss) and operating income (loss) per diluted (basic) share to the most directly comparable GAAP measures,
Slide 22: End notes continued
End notes continued (5) Book value per share, excluding net unrealized appreciation (depreciation) on fixed maturity investments, net of tax, is a non-GAAP measure. Book value per share is the most directly comparable GAAP measure and is reconciled in the table below. Period ended December 31 Septem
Slide 23: End notes continued
End notes continued (6) Operating return on average equity (“operating ROE”) is a non-GAAP measure. Operating ROE is calculated by dividing annualized operating income (loss) after tax for the applicable period (see end note (4)), by average shareholders’ equity, excluding unrealized appreciation (d
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