Hanover Insurance Group Inc · NYSE:THG
Hanover Insurance — Q1 2024 Earnings Presentation
22 slides from Hanover Insurance's earnings presentation, May 2, 2024
Slide 1: The Hanover Insurance Group, Inc. First Quarter 2024 Results
The Hanover Insurance Group, Inc. First Quarter 2024 Results May 2, 2024 To be read in conjunction with the press release dated May 1, 2024, and conference call scheduled for May 2, 2024. Please also see important information regarding forward-looking statements and additional risks and uncertaintie
Slide 2: First Quarter 2024 Operating Highlights
First Quarter 2024 Operating Highlights Net and operating return on equity(1) of 18.5% and 15.1%, respectively • Net income of $3.18 per diluted share; operating income(2) of $3.08 per diluted share • Combined ratio of 95.5%; combined ratio, excluding catastrophes(3), of 89.5% • Catastrophe losses o
Slide 3: Consolidated Financial Results
Consolidated Financial Results Three months ended ($ in millions, except per share amounts) March 31, March 31, 2023 2024 Net income (loss) ($12.0) $115.5 Per diluted/(basic) share ($0.34) $3.18 (2) Operating income before interest expense and income taxes $13.2 $149.7 Operating income after income
Slide 4: First Quarter 2024 Underwriting Results
First Quarter 2024 Underwriting Results ($ in millions) Net premiums written and growth • Combined ratio of 95.5% in the first quarter 2024, ↑ 6.0% improved 8.9 points from the prior-year quarter, ↑ 8.3% ↑ 8.6% ↑ 2.3% ↑ 1.5% primarily driven by lower catastrophe losses • Combined ratio, ex-CAT, impr
Slide 5: Core Commercial Underwriting Highlights
Core Commercial Underwriting Highlights Three months ended March 31 ($ in millions) 2023 2024 • First quarter 2024 combined ratio, ex-CAT, Net premiums written $565.3 $582.4 improved 2.1 points from the prior-year quarter Growth 7.3% 3.0% Net premiums earned $507.4 $528.9 • Net favorable prior-year
Slide 6: Core Commercial Growth Highlights
Core Commercial Growth Highlights ($ in millions) Net premiums written and growth • Net premiums written increased 3.0% in the ↑ 3.0% first quarter $565.3 $582.4 • Driven by growth of 7.7% in small commercial, propelled by strong pricing $253.4 $246.4 • Partially offset by a decline of 2.8% in middl
Slide 7: Property IoT Sensor Utilization
Property IoT Sensor Utilization Estimated TIV protected • Accelerating implementation of our property IoT sensor offerings, primarily in our core commercial middle market business, to proactively mitigate risk and prevent losses • Already have observed numerous occasions of sensors driving loss prev
Slide 8: Specialty Underwriting Highlights
Specialty Underwriting Highlights Three months ended March 31 • First quarter 2024 current accident year ($ in millions) 2023 2024 combined ratio, ex-CAT, decreased 3.1 Net premiums written $324.3 $339.8 points from the prior-year quarter Growth 7.1% 4.8 % • Net favorable prior-year reserve Net prem
Slide 9: Specialty Growth Highlights
Specialty Growth Highlights ($ in millions) Net premiums written and growth • Net premiums written growth of 4.8% in the first quarter of 2024 $324.3 ↑ 4.8% $339.8 • Somewhat slowed down by targeted non- renewals predominately in specialty $17.5 $19.6 property and casualty $99.5 $94.1 • On track to
Slide 10: Personal Lines Underwriting Highlights
Personal Lines Underwriting Highlights Three months ended March 31 ($ in millions) 2023 2024 Net premiums written $531.9 $531.8 • Combined ratio, ex-CAT, improved 5.1 points from Growth 10.1% 0.0% the prior-year quarter driven by improvements in Net premiums earned $560.9 $598.8 both the loss ratio
Slide 11: Personal Lines Growth Highlights
Personal Lines Growth Highlights ($ in millions) Net premiums written and growth → 0.0% $531.9 $531.8 • Net premiums written were flat compared to the prior-year quarter, as strong pricing 1Q23 1Q24 increases were offset by the impact of Personal auto margin improvement initiatives and targeted non-
Slide 12: Net Investment Income Trends
Net Investment Income Trends ($ in millions) Net investment income* $87.6 $89.7 $84.2 $81.6 $78.7 $18.2 $12.9 $7.4 $14.0 • Net investment income of $89.7 million in the first $10.4 quarter, up 14.0% from the prior-year quarter, reflecting higher net investment income in our fixed maturity portfolio
Slide 13: Investment Portfolio – Total Invested Assets and Cash of $9.2 Billion
Investment Portfolio – Total Invested Assets and Cash of $9.2 Billion As of March 31, 2024 High quality, well-diversified investment portfolio Fixed maturities: $8.0 Billion Equities, cash and other: $1.2 Billion 1% 4% 1% 6% Industrials Marketable ETF 28% Securities 2% 10% 22% 10% 30% 17% Financials
Slide 14: 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 15: 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 16: 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 17: Non-GAAP Financial Measures
Non-GAAP Financial Measures Non-GAAP Financial Measures As discussed on page 40 of the company’s Annual Report on Form 10-K for the year ended December 31, 2023, the company uses non-GAAP financial measures as important measures of its operating performance, including operating income (loss), operat
Slide 18: End notes continued
End notes continued (1) 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 (2)), by average shareholders’ equity, excluding unrealized appreciation (dep
Slide 19: End notes continued
End notes continued (2) 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 20: End notes
End notes (3) 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 21: End notes continued
End notes continued (4) 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 22: End notes continued
End notes continued (6) 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 March 31 December
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