The Hanover Reports Fourth Quarter Net Income and Operating Income of $2.98 and $3.13 per Diluted Share, Respectively; Net and Operating Return on Equity of 18.8% and 15.7%, Respectively

WORCESTER, Mass., Jan. 31, 2024

• 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
• Net premiums written increase of 1.5%*
• Renewal price increases⁽²⁾ of 20.6% in Personal Lines, including 29.1% in homeowners, as well as increases of 12.4% in Core Commercial and 11.6% in Specialty
• Rate increases⁽²⁾ of 13.2% in Personal Lines, 9.3% in Core Commercial and 9.0% in Specialty
• Loss and loss adjustment expense ("LAE") ratio of 63.6%, 13.5 points below the prior-year quarter, driven by both lower catastrophe and non-catastrophe losses
• Current accident year loss and LAE ratio, excluding catastrophes⁽³⁾, of 60.2%, 3.1 points below the prior-year quarter
• Net investment income of $81.6 million, up 7.5% from the prior-year quarter, primarily due to higher bond reinvestment rates and the continued investment of operational cashflows, partially offset by lower partnership income
• Book value per share of $68.93, up 16.4% from September 30, 2023, primarily due to an increase in the fair value of fixed maturity investments and strong earnings in the quarter
• On December 4, 2023, the Board of Directors approved an increase of 5% to the regular quarterly dividend

Full Year Highlights

• Combined ratio of 103.5%; combined ratio, excluding catastrophes, of 91.3%
• Catastrophe losses of $690.1 million, or 12.2 points of the combined ratio, driven primarily by severe convective storms across multiple states, particularly in the Midwestern United States in the first three quarters of the year
• Net premiums written of $5.8 billion, an increase of 6.1%* from the prior year
• Loss and LAE ratio of 73.0%, 4.0 points above the prior year, driven by higher catastrophe losses
• Current accident year loss and LAE ratio, excluding catastrophes, improved from the prior year, reflecting the benefit of rate increases in each segment and loss ratio improvements in Core Commercial and Specialty, partially offset by a higher loss ratio in Personal Lines in the first half of the year
• Net investment income of $332.1 million, up 12.1% from 2022, driven primarily by higher-than-expected bond reinvestment rates and higher cashflows

WORCESTER, Mass., Jan. 31, 2024 /PRNewswire/ -- The Hanover Insurance Group, Inc. (NYSE: THG) today reported net income of $107.9 million, or $2.98 per diluted share, in the fourth quarter of 2023, compared to a net loss of $12.1 million, or $0.34 per basic share, in the prior-year quarter. Operating income⁽⁴⁾ was $113.1 million, or $3.13 per diluted share, in the fourth quarter of 2023, compared to an operating loss of $37.4 million, or $1.05 per basic share, in the prior-year quarter.

Net income was $35.3 million, or $0.98 per diluted share, in the full year 2023. This compared to net income of $116.0 million, or $3.21 per diluted share, in the prior year. Operating income was $56.2 million, or $1.56 per diluted share, in 2023, compared to operating income of $199.9 million, or $5.53 per diluted share, in the prior year, primary attributable to elevated catastrophe losses through the first three quarters of the year compared to 2022.

"The fourth quarter represented a strong finish to a very productive year, as we delivered operating return on equity⁽⁵⁾ 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," said John C. Roche, president and chief executive officer at The Hanover. "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."

"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," Roche concluded.