The Hanover Insurance Group (THG) Q4 2024 earnings summary

Executive summary

• Achieved record Q4 and full-year results, with net income of $167.9M ($4.59/share) in Q4 and $426.0M ($11.70/share) for the year, and operating income of $194.6M ($5.32/share) in Q4 and $485.9M ($13.34/share) for the year, both up sharply year-over-year.

• Operating ROE reached 24.4% in Q4 and 15.8% for the year, both all-time highs.

• Net written premiums grew 7.4% in Q4 and 4.7% for the year, surpassing $6B annually for the first time, with Specialty and Small Commercial leading growth.

• Margin recapture, portfolio management, and CAT mitigation actions drove profitability and positioned the company for future growth.

• Board approved a 5.9% increase in the regular quarterly dividend, marking 20 consecutive years of increases, and repurchased 170,000 shares for $26.7 million.

Financial highlights

• Q4 combined ratio improved to 89.2%, a 5-point year-over-year improvement; full-year combined ratio was 94.8%, nearly 9 points better than 2023.

• Excluding catastrophes, combined ratio was 87.5% in Q4 and 88.4% for the year.

• Net investment income rose 23.4% in Q4 and 12.2% for the year, reaching $372.6 million.

• Book value per share increased 14.9% to $79.18; excluding unrealized losses, book value per share reached $90.35.

• Catastrophe losses fell to $26.0M in Q4 (1.7 points) and $375.9M for the year (6.4 points), both significantly lower than 2023.

Outlook and guidance

• 2025 net written premium growth expected at 6%-7%, with Specialty and Small Commercial above this range.

• Net investment income projected to grow 12%-14% in 2025.

• Expense ratio expected to decrease to 30.5% in 2025.

• Combined ratio, excluding catastrophes, guided to 88.5%-89.5% for 2025; CAT load set at 6.5%.

• Management expects continued progress in 2025, leveraging growth initiatives and firm market conditions to optimize geographic mix and achieve broad-based profitability.