Hanover Insurance Group Inc · NYSE:THG
Hanover Insurance — Q3 2023 Earnings Presentation
22 slides from Hanover Insurance's earnings presentation, Nov 2, 2023
Slide 1: Third Quarter 2023 Results
The Hanover Insurance Group, Inc. Third Quarter 2023 Results November 2, 2023 To be read in conjunction with the press release dated November 1, 2023, and conference call scheduled for November 2, 2023 1
Slide 2: Third Quarter 2023 Operating Highlights
Third Quarter 2023 Operating Highlights • Combined ratio of 104.4%; combined ratio, excluding catastrophes(1), of 90.7% • Catastrophe losses of $195.8 million, or 13.7 points of the combined ratio, driven by severe convective storm activity in the Midwestern United States, with hail and wind damage
Slide 3: Third Quarter Consolidated Financial Results
Third Quarter Consolidated Financial Results Three months ended Nine months ended ($ in millions, except per share amounts) September 30, September 30, September 30, September 30, 2022 2023 2022 2023 Net income (loss) $0.5 $8.6 $128.1 ($72.6) Per diluted/(basic) share $0.01 $0.24 $3.54 ($2.03) (4) O
Slide 4: Third Quarter Underwriting Results
Third Quarter Underwriting Results ($ in millions) Net Premiums Written and Growth • Third quarter 2023 combined ratio of 104.4%, increased 3.4 points from the prior-year quarter, driven by catastrophe losses ↑ 9.5% ↑ 6.0% primarily from severe convective storm ↑ 9.1% ↑ 8.3% ↑ 8.6% activity across t
Slide 5: Third Quarter and Year-to-Date Catastrophe Losses
Third Quarter and Year-to-Date Catastrophe Losses Consolidated Personal Lines • Catastrophe losses in the third quarter were driven by Q3 CAY CAT Losses of $195.8m Q3 CAY CAT Losses of $144.3m severe convective storms across multiple states (13.7 pts of CR) (24.4pts of CR) Specialty • Approximately
Slide 6: Third Quarter Core Commercial Underwriting Highlights
Third Quarter Core Commercial Underwriting Highlights Three months ended Nine months ended September 30 September 30 • Third quarter 2023 combined ratio, ex-CAT, of ($ in millions) 2022 2023 2022 2023 90.1%, improved 4.6 points from the prior- year quarter and was favorable to the Net premiums writt
Slide 7: Third Quarter Core Commercial Growth Highlights
Third Quarter Core Commercial Growth Highlights ($ in millions) Net Premiums Written and Growth • Net premiums written growth of 4.2% in the $565.9 ↑ 4.2% $589.4 third quarter of 2023, driven by: • Growth of 6.8% in small commercial, $292.5 $297.4 propelled by strong pricing • Growth of 1.7% in midd
Slide 8: Third Quarter Specialty Underwriting Highlights
Third Quarter Specialty Underwriting Highlights Three months ended Nine months ended September 30 September 30 • Third quarter 2023 combined ratio, ex- ($ in millions) 2022 2023 2022 2023 CAT, of 81.3%, decreased 5.1 points Net premiums written $329.1 $338.7 $934.2 $988.4 from the prior-year quarter
Slide 9: Third Quarter Specialty Growth Highlights
Third Quarter Specialty Growth Highlights ($ in millions) Net Premiums Written and Growth • Net premiums written growth of 2.9% in the $329.1 ↑ 2.9% $338.7 third quarter 2023, in line with the company’s expectations $20.6 $22.8 • Included the non-renewal of certain $100.3 $107.4 programs within Spec
Slide 10: Third Quarter Personal Lines Underwriting Highlights
Third Quarter Personal Lines Underwriting Highlights Three months ended Nine months ended • Third quarter 2023 combined ratio, ex-CAT, September 30 September 30 of 96.4%, improved 1.8 points from the ($ in millions) 2022 2023 2022 2023 prior-year quarter due to improvements in Net premiums written $
Slide 11: Third Quarter Personal Lines Growth Highlights
Third Quarter Personal Lines Growth Highlights ($ in millions) Net Premiums Written and Growth ↑ 9.5% • Third quarter 2023 net premiums written growth of 9.5%, driven by robust pricing increases $668.3 $610.4 • Renewal price increases of 18.0%, including 23.4% in homeowners and 14.3% in auto, outpac
Slide 12: Net Investment Income Trends
Net Investment Income Trends ($ in millions) Net Investment Income* $87.6 $84.2 • Net investment income of $84.2 million, up 15.3% $75.9 $78.7 from the prior-year quarter, reflecting an approximate $73.0 $18.2 $12.9 $10.3 $10.4 19% increase in net investment income in our fixed $12.7 maturity portfo
Slide 13: Investment Portfolio – Total Invested Assets and Cash of $8.9 Billion
Investment Portfolio – Total Invested Assets and Cash of $8.9 Billion As of September 30, 2023 High quality, well-diversified investment portfolio Fixed Maturities: $7.6 Billion Equities, Cash and Other: $1.3 Billion Industrials Marketable Securities ETF Financials Utilities High-quality, well-ladde
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 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 18: 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 19: 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 20: 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 21: 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 September 30 June
Slide 22: 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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