Hanover Insurance Group Inc · NYSE:THG
Hanover Insurance — Q2 2023 Earnings Presentation
24 slides from Hanover Insurance's earnings presentation, Aug 3, 2023
Slide 1: The Hanover Insurance Group, Inc. Second Quarter 2023 Results
The Hanover Insurance Group, Inc. Second Quarter 2023 Results August 3, 2023 To be read in conjunction with the press release dated August 2, 2023, and conference call scheduled for August 3, 2023
Slide 2: Second Quarter 2023 Operating Highlights
Second Quarter 2023 Operating Highlights • Combined ratio of 111.3%; combined ratio, excluding catastrophes(1), of 92.8% • Catastrophe losses of $261.6 million, or 18.5 points of the combined ratio, driven by 19 convective storms across multiple states, with hail damage representing the majority of
Slide 3: Second Quarter Consolidated Financial Results
Second Quarter Consolidated Financial Results Three months ended Six months ended ($ in millions, except per share amounts) June 30, June 30, June 30, June 30, 2022 2023 2022 2023 Net income (loss) $22.7 ($69.2) $127.6 ($81.2) Per diluted/(basic) share $0.63 ($1.94) $3.53 ($2.27) (4) Operating incom
Slide 4: Second Quarter Underwriting Results
Second Quarter Underwriting Results • Second quarter 2023 combined ratio of 111.3%, increased 15.1 points from the prior- ($ in millions) Net Premiums Written and Growth year quarter, driven by catastrophe losses stemming from 19 convective storms across multiple states ↑ 9.5% ↑ 10.4% ↑ 9.1% ↑ 8.3%
Slide 5: Second Quarter Catastrophe Losses
Second Quarter Catastrophe Losses • Catastrophe losses in the second quarter were driven CAY CAT Losses of $261.6 million (18.5pts of CR) by 19 convective storms across multiple states Losses by Segment Core Specialty 3% • Losses were predominately in Personal Lines, of which: Commercial − Approxima
Slide 6: CAT Losses from Hail – Historical Trending Detail
CAT Losses from Hail – Historical Trending Detail The Hanover Homeowners Q2 Michigan CAT Hail Losses as % of Homeowners NEP Hanover Observations • The level of hail CAT losses experienced in Michigan during the second quarter 2023 is highly unusual 10-Year Average (2013-2022) • Second quarter 2023 M
Slide 7: Core Commercial Underwriting Highlights
Core Commercial Underwriting Highlights Three months ended Six months ended • Second quarter 2023 combined ratio, June 30 June 30 ex-CAT, of 89.3%, increased 0.4 points ($ in millions) 2022 2023 2022 2023 from the prior-year quarter Net premiums written $454.2 $486.8 $980.8 $1,052.1 Growth 7.7% 7.2%
Slide 8: Core Commercial Growth Highlights
Core Commercial Growth Highlights ($ in millions) Net Premiums Written and Growth • Net premiums written growth of 7.2% in the second quarter of 2023, driven by: $454.2 ↑ 7.2% $486.8 − Growth of 7.0% in small commercial, and 7.5% in middle market, propelled $195.0 by strong pricing $181.4 • Renewal
Slide 9: Specialty Underwriting Highlights
Specialty Underwriting Highlights Three months ended Six months ended • Second quarter 2023 combined ratio, ex- June 30 June 30 CAT, of 85.6%, decreased 1.6 points ($ in millions) 2022 2023 2022 2023 from the prior-year quarter Net premiums written $302.3 $325.4 $605.1 $649.7 Growth 14.0% 7.6% 11.7%
Slide 10: Specialty Growth Highlights
Specialty Growth Highlights ($ in millions) Net Premiums Written and Growth • Net premiums written growth of 7.6% in 7.6% $325.4 the second quarter 2023, driven $302.3 $18.0 primarily by renewal price increases, $18.0 particularly in property $104.4 $91.2 $98.5 $103.6 • Renewal price increases remai
Slide 11: Personal Lines Underwriting Highlights
Personal Lines Underwriting Highlights • Second quarter 2023 combined ratio, ex-CAT, of Three months ended Six months ended 100.0%, increased 7.0 points from the prior-year June 30 June 30 quarter, primarily due to an increase in the loss ($ in millions) 2022 2023 2022 2023 Net premiums written $576
Slide 12: Personal Lines Growth Highlights
Personal Lines Growth Highlights ($ in millions) Net Premiums Written and Growth • Second quarter 2023 net premiums written growth of 10.1%, driven by robust pricing ↑ 10.1% increases $634.6 • Renewal price increases of 15.9%, including $576.3 21.7% in homeowners and 12.0% in auto, outpacing the com
Slide 13: Successfully Executing on Pricing Levers in Property
Successfully Executing on Pricing Levers in Property Achieving Highest Property Renewal Price Change in Years Specialty Core CL Property Property Offerings Homeowners 25.0% 25.0% 25.0% 21.7% Renewal Price Change 20.0% 20.0% 20.0% 15.3% 15.0% 12.6% 15.0% 15.0% 10.0% 10.0% 10.0% 5.0% 5.0% 5.0% 0.0% 0.
Slide 14: Net Investment Income Trends
Net Investment Income Trends ($ in millions) Net Investment Income* • Net investment income of $87.6 million, up 24.3% $78.7 $87.6 from the prior-year quarter, due to higher bond $73.0 $75.9 $70.5 $18.2 reinvestment rates and the continued investment of $10.3 $10.4 $12.7 operational cashflows, as we
Slide 15: Investment Portfolio – Total Invested Assets and Cash of $8.8 Billion
Investment Portfolio – Total Invested Assets and Cash of $8.8 Billion As of June 30, 2023 High quality, well-diversified investment portfolio Fixed Maturities: $7.6 Billion Equities, Cash and Other: $1.2 Billion 1% 4% 6% 14% Marketable Industrials Securities ETFs 11% 28% 2% 17% 32% 15% Financials 34
Slide 16: 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 17: 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 18: 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 19: 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 20: 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 21: 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 22: 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 23: 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 June 30 June 30 20
Slide 24: 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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