The Hanover Insurance Group, Inc. has reported net income of $115.5 million for Q1 2024, compared to a net loss of $12 million in the prior-year quarter. The firm’s operating income was $111.9 million for the quarter, compared with $4.6 million in the prior-year period.
The insurer has reported a combined ratio of 95.5% along with catastrophe losses of $86.9 million for Q1 2024, an improvement from the combined ratio of 104.4% in the prior-year quarter.
Net premiums written increased by 2.3% to $1.5 billion for Q1 2024.
The firm has reported a renewal price increase of 22.8% in Personal Lines, 11.5% in Core Commercial and 11% in Specialty. The rate increases for Q1 2023 reported were 15.8% in Personal Lines, 9.3% in Core Commercial and 8.4% in Specialty.
For Q1 2024, net investment income of $89.7 million increased 14% from the prior-year quarter, driven by higher bond reinvestment rates, higher partnership income, and the continued investment of operational cashflows
By segment, core commercial operating income before taxes was $71.5 million for Q1 2024, compared to $11.2 million in Q1 2023. The combined ratio was 93.9% compared to 104.7% in the prior-year quarter. Catastrophe losses in Q1 2024 were $20.7 million compared to catastrophe losses of $63.9 million in Q1 2023. Net premiums written were $582.4 million in the quarter, an increase of 3% year-on-year.
In specialty, the operating income before taxes was $58.8 million for Q1 2024, compared to $48.3 million in Q1 2023, and the combined ratio was 87.6%, compared to 89.9% in the prior-year quarter. The segment’s catastrophe losses were $7 million in Q1 2024 compared to $21.5 million in the prior-year quarter. First quarter 2024 results included net favourable prior-year reserve development, excluding catastrophes, of $1.1 million. Net favourable prior-year reserve development, excluding catastrophes, was $18.1 million in the prior-year quarter.
In personal lines, operating income before income taxes was $18.9 million for Q1 2024, compared to an operating loss before income taxes of $46.6 million in Q1 2023. The combined ratio was 101%, compared to 112.2% in the prior year quarter. Catastrophe losses hit $59.2 million in Q1 2024, compared to catastrophe losses of $89.6 million in the prior-year quarter. Net premiums written were $531.8 million in the quarter, flat compared to the prior-year quarter.
John C. Roche, President and Chief Executive Officer, The Hanover, commented: “The year is off to an excellent start, highlighted by strong underwriting margins and operating return on equity(5) of 15%. In Specialty, we produced another quarter of exceptional profitability, reporting a sub-90s combined ratio while investing in capabilities and positioning ourselves for enhanced growth. We delivered strong performance in Core Commercial, growing our small commercial business by 8% while diligently executing on property profitability actions in middle market.
“In Personal Lines, we continued to take a disciplined and discerning approach to our growth, as we reposition this book to add more earnings resiliency and to drive strong, sustainable returns. We also began to reaccelerate new business in states where we reached target profitability on a written basis, while continuing to manage micro-concentrations and CAT vulnerability elsewhere, primarily in the Midwest. Our successful execution in the market is a testament to our proven strategy, experienced team and the strong relationships we have with the best independent agents across the country.”
Jeffrey M. Farber, Executive Vice President and Chief Financial Officer, The Hanover, said: “Our overall ex-CAT combined ratio, at 89.5%, improved more than two points in the quarter, validating the effectiveness of pricing and other margin recapture initiatives across our three segments. We continued to get near historical pricing increases in each of our businesses, giving us clear visibility to accelerated improvement in underwriting margins going forward.
“In the first quarter, we implemented renewal price increases of 23% in Personal Lines, 12% in Core Commercial and 11% in Specialty. And, at the same time, we increased net investment income by 14% to $89.7 million, helped by investment of cash flow and higher new money yields. As we continue to drive our organization forward, we have strong line of sight to delivering on our long-term return on equity target of 14% or higher, and we remain committed to generating superior returns for our valued shareholders.”
