Q3-2023 Results: Hanover’s Net Income Plunges 91%
$195M catastrophe losses cited as catalyst for drop in earned premium in Q3-2023
The Hanover Insurance Group, based in Worcester, MA, issued on October 18, 2023, a preliminary estimate of third-quarter results showing a significant impact from catastrophe losses due to severe weather events. Here are the key takeaways:
The company estimates pre-tax catastrophe losses of $195.8 million or 13.7 points of net earned premium for Q3 2023. These preliminary losses stemmed primarily from wind and hail damage across the Midwest.
According to Hanover’s CEO John C. Roche, “Severe weather represented a formidable challenge in the third quarter for us and the industry, generating significant catastrophe losses and adversely impacting bottom line results.”
As a result of the catastrophe losses, Hanover expects to report a Q3 combined ratio of 104.4% when it announces full results. Excluding catastrophes, the combined ratio was a much better 90.7% based on preliminary estimates.
The company anticipates Q3 net income of $0.24 per diluted share and operating income of $0.19 per diluted share. This expected net income compares to Q3 2022, where net income equaled $2.76 per share. These preliminary estimates are subject to change when final results are reported, but if maintained, they would show a 91% drop in 3Q income year to year.
On a more positive note, Hanover continues to see progress from its margin recapture initiatives. According to CEO Roche, “During the quarter, we continued to successfully build on our margin recapture plan, implementing double-digit price increases and executing underwriting actions in property lines.”
The company generated “meaningful improvement” in its commercial and specialty segments, excluding catastrophes. Hanover increased homeowners renewal prices by 23.4% in Q3 and plans additional increases of 27% in Q4.
The company remains confident in its profitability enhancement program and ability to improve personal auto and homeowners profitability over time.
While the severe weather took a significant toll based on preliminary estimates, Hanover appears to be taking prudent actions to improve underwriting and manage catastrophe exposure going forward. However, it faces challenges from an uncertain macro environment common to all personal line carriers. The final numbers will show just how large the impact was of these catastrophe losses when the company reports final Q3 results in the coming weeks.
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 independent agents and brokers. Together with its agent partners, The Hanover offers standard and specialized insurance protection for small and mid-sized businesses, as well as for homes, automobiles, and other personal items.
Source : Hanover
