Hanover Insurance Group (THG) Tops Q2 EPS by 5c, Revenues Beat

Hanover Insurance Group (NYSE: THG) reported Q2 EPS of $1.88, $0.05 better than the analyst estimate of $1.83. Revenue for the quarter came in at $1.2 billion versus the consensus estimate of $1.14 billion.

Second Quarter Highlights

• Net premiums written increase of 4.0%, which reflects growth in more profitable segments, partially offset by the continued execution of profit improvement initiatives
• Continued price increases of 6.4% in Core Commercial Lines(2) and 5.0% in Personal Lines(3)
• Catastrophe losses of $59.6 million, or 5.4 points, including current year losses of $66.6 million, or 6.0 points, and favorable development on prior-year catastrophes of $7.0 million, or 0.6 points
• Net investment income of $69.6 million, up 6.1% from the prior-year quarter, driven by the investment of increased cash flows from operations and remaining undeployed equity from the sale of Chaucer
• Announced $150 million accelerated share repurchase ("ASR") program at the end of June, after the completion of the prior $250 million ASR program announced at the end of 2018
• Book value per share of $74.39, up 3.4% from March 31, 2019

"We are pleased with our performance in the quarter, generating an adjusted ROE(4) of 12.2% and increasing growth momentum, especially in our most profitable segments," said John C. Roche, president and chief executive officer at The Hanover. "We performed well in this dynamic market, as evidenced by pricing increases of 6.4% in Core Commercial Lines and 5% in Personal Lines. We also are pleased with the progress we continued to make across our organization during the quarter, as we advanced our distinctive, agency-centered strategy. The financial and strategic momentum we have established enables us to continue to invest in our business, emphasizing innovation and modernization, and deliver attractive returns to our shareholders. We are more energized than ever about the potential of our company."

"We delivered a strong underwriting performance during the quarter, with an ex-cat combined ratio of 90.7%(5)," said Jeffrey M. Farber, executive vice president and chief financial officer. "We produced underlying loss ratios in line with our expectations, as we continued to earn meaningful price increases and actively manage the mix of our business. Our investment portfolio performed well, generating a 6.1% increase in net investment income, driven by higher cash flows and Chaucer sale proceeds. In June, we announced another ASR agreement, returning an additional $150 million of the proceeds from the Chaucer sale, further demonstrating our commitment to responsibly manage capital to the benefit of our shareholders."

For earnings history and earnings-related data on Hanover Insurance Group (THG) click here.

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