The Hanover Reports Record First Quarter Net Income and Operating Income of $5.20 and $5.25 per Diluted Share, Respectively; Record Net and Operating Return on Equity of 20.9% and 20.3%, Respectively
Rhea-AI Summary
The Hanover (NYSE: THG) reported record Q1 2026 net income of $186.8M ($5.20 per diluted share) and operating income of $188.5M ($5.25 per diluted share).
Key metrics: combined ratio 91.7% (ex-CAT 85.4%), net premiums written +3.2% to $1,559.7M, catastrophe losses $98.9M, net investment income $126.9M (+19.6%), and book value per share $101.86. The company repurchased ~$101M of shares year-to-date and will host an earnings call on April 30.
Positive
- Net income of $186.8M (Q1 2026)
- Operating income of $188.5M (Q1 2026)
- Return on equity — net 20.9% and operating 20.3%
- Net investment income up 19.6% to $126.9M
- Net premiums written growth of 3.2% to $1,559.7M
- Combined ratio improved to 91.7% (85.4% ex-CAT)
Negative
- Catastrophe losses of $98.9M, adding 6.3 points to combined ratio
- Net unrealized losses on fixed maturities of $235.6M at March 31, 2026
- Book value growth limited to 1.0% due to increased unrealized losses
Key Figures
Market Reality Check
Peers on Argus
THG was up 0.84% while key peers RLI, SIGI, MCY, WTM, and KMPR all showed small declines. Peer momentum flags only LMND modestly higher, suggesting today’s strength is stock-specific rather than a broad P&C move.
Previous Earnings Reports
| Date | Event | Sentiment | Move | Catalyst |
|---|---|---|---|---|
| Mar 30 | Earnings call notice | Neutral | +0.4% | Announcement of Q1 2026 results release date and webcast details. |
| Feb 03 | Earnings results | Positive | +0.6% | Record Q4 and full-year 2025 net and operating income with improved combined ratio. |
| Dec 18 | Earnings call notice | Neutral | +0.4% | Planned release of Q4 and full-year 2025 financial results and webcast. |
| Sep 22 | Earnings call notice | Neutral | -0.3% | Scheduling announcement for Q3 2025 results and discussion webcast. |
| Jul 30 | Earnings results | Positive | +3.9% | Strong Q2 2025 earnings with solid ROE, growth and higher investment income. |
Earnings-related headlines have generally been followed by modest positive moves, especially when results are described as strong or record-setting.
Over the past year, THG has repeatedly highlighted strong financial performance. Q2 2025 and full-year 2025 results showed record earnings, solid combined ratios, and rising net investment income, with shares reacting positively after those reports. Several other earnings-tagged items were scheduling notices that produced only small price changes. Against this backdrop, the latest Q1 2026 earnings release, featuring record net and operating income and ROE above 20%, continues a pattern of strong profitability and disciplined underwriting across segments.
Historical Comparison
In the past year, THG earnings-related headlines led to average moves of about 0.99%, usually modest but skewed slightly positive.
Recent earnings releases show a progression from strong Q2 2025 results to record full-year 2025 performance and now record Q1 2026 net and operating income with ROE above 20%.
Regulatory & Risk Context
THG has an effective S-3ASR shelf filed on 2025-08-18, with no recorded usage to date. The filing allows the company to issue various securities in the future, subject to prospectus supplements, but no specific amounts or takedowns are indicated in the provided data.
Market Pulse Summary
This announcement highlights record Q1 2026 performance, with net income of $186.8M, operating income of $188.5M, EPS of $5.20 and $5.25, and net and operating ROE of 20.9% and 20.3%. The combined ratio improved to 91.7%, while net investment income rose 19.6%. Management also emphasized disciplined underwriting, higher pricing, and share repurchases of about $101M year-to-date. Investors may watch future catastrophe losses, capital deployment under the effective S-3ASR, and whether earnings momentum persists.
Key Terms
combined ratio financial
catastrophe losses financial
loss and loss adjustment expense (lae) ratio financial
prior-year reserve development financial
AI-generated analysis. Not financial advice.
First Quarter Highlights
- Combined ratio of
91.7% ; combined ratio, excluding catastrophes(1), of85.4% - Catastrophe losses of
$98.9 million - Net premiums written increase of
3.2% * - Renewal price increases(2) of
8.6% in Core Commercial,8.4% in Personal Lines, and4.6% in Specialty - Rate increases(2) of
7.5% in Core Commercial,4.3% in Personal Lines, and2.4% in Specialty - Loss and loss adjustment expense (LAE) ratio of
61.0% , 2.3 points below the prior-year quarter - Current accident year loss and LAE ratio, excluding catastrophes(3), of
56.3% , 2.0 points below the prior-year quarter - Net investment income of
$126.9 million 19.6% from the prior-year quarter - Book value per share of
$101.86 1.0% from December 31, 2025; excluding net unrealized depreciation on fixed maturity investments, net of tax(4), book value per share increased2.8%
"We delivered excellent first quarter results, with an operating return on equity of over
"We are extremely pleased with our financial metrics this quarter, including first quarter record operating earnings per share of
First Quarter 2026 Highlights
Three months ended | ||||||||
March 31 | ||||||||
($ in millions, except per share data) | 2026 | 2025 | ||||||
Net premiums written | $ | 1,559.7 | $ | 1,510.8 | ||||
Growth | 3.2 | % | 3.9 | % | ||||
Net premiums earned | $ | 1,570.6 | $ | 1,508.5 | ||||
Current accident year loss and LAE ratio, | 56.3 | % | 58.3 | % | ||||
Prior-year development ratio | (1.6) | % | (1.3) | % | ||||
Catastrophe ratio | 6.3 | % | 6.3 | % | ||||
Expense ratio(7) | 30.7 | % | 30.8 | % | ||||
Combined ratio | 91.7 | % | 94.1 | % | ||||
Combined ratio, excluding catastrophes | 85.4 | % | 87.8 | % | ||||
Current accident year combined ratio, | 87.0 | % | 89.1 | % | ||||
Net income | $ | 186.8 | $ | 128.2 | ||||
per diluted share | 5.20 | 3.50 | ||||||
Operating income | 188.5 | 141.8 | ||||||
per diluted share | 5.25 | 3.87 | ||||||
Book value per share | $ | 101.86 | $ | 84.56 | ||||
Ending shares outstanding (in millions) | 35.1 | 36.0 | ||||||
(1) See information about this and other non-GAAP measures and definitions, including Operating Income and Operating Return on Equity in the headline, used throughout this press release on the final pages of this document. |
*Unless otherwise stated, net premiums written growth and other growth comparisons are to the same period of the prior year. The Hanover Insurance Group, Inc. may also be referred to as "The Hanover" or "the company" interchangeably throughout this press release. |
First Quarter Operating Highlights
Core Commercial
Core Commercial operating income before income taxes was
First quarter 2026 results included net favorable prior-year reserve development, excluding catastrophes, of
Core Commercial current accident year combined ratio, excluding catastrophes, decreased 3.6 points, to
The expense ratio decreased by 0.7 points, to
Net premiums written were
The following table summarizes premiums and the components of the combined ratio for Core Commercial:
Three months ended | ||||||||
March 31 | ||||||||
($ in millions) | 2026 | 2025 | ||||||
Net premiums written | $ | 630.4 | $ | 604.6 | ||||
Growth | 4.3 | % | 3.8 | % | ||||
Net premiums earned | 563.8 | 541.0 | ||||||
Operating income before taxes | 74.8 | 26.8 | ||||||
Loss and LAE ratio | 63.9 | % | 70.0 | % | ||||
Expense ratio | 32.7 | % | 33.4 | % | ||||
Combined ratio | 96.6 | % | 103.4 | % | ||||
Prior-year development ratio | (0.3) | % | (0.2) | % | ||||
Catastrophe ratio | 5.4 | % | 8.5 | % | ||||
Combined ratio, excluding catastrophes | 91.2 | % | 94.9 | % | ||||
Current accident year combined ratio, | 91.5 | % | 95.1 | % | ||||
Specialty
Specialty operating income before income taxes was
First quarter 2026 results included net favorable prior-year reserve development, excluding catastrophes, of
Specialty current accident year combined ratio, excluding catastrophes, decreased 2.7 points, to
The expense ratio decreased by 0.6 points, to
Net premiums written were
The following table summarizes premiums and the components of the combined ratio for Specialty:
Three months ended | ||||||||
March 31 | ||||||||
($ in millions) | 2026 | 2025 | ||||||
Net premiums written | $ | 366.7 | $ | 358.3 | ||||
Growth | 2.3 | % | 5.4 | % | ||||
Net premiums earned | 359.9 | 339.6 | ||||||
Operating income before taxes | 84.0 | 64.6 | ||||||
Loss and LAE ratio | 47.8 | % | 50.7 | % | ||||
Expense ratio | 36.4 | % | 37.0 | % | ||||
Combined ratio | 84.2 | % | 87.7 | % | ||||
Prior-year development ratio | (3.9) | % | (4.7) | % | ||||
Catastrophe ratio | 2.7 | % | 4.3 | % | ||||
Combined ratio, excluding catastrophes | 81.5 | % | 83.4 | % | ||||
Current accident year combined ratio, | 85.4 | % | 88.1 | % | ||||
Personal Lines
Personal Lines operating income before income taxes was
First quarter 2026 results included net favorable prior-year reserve development, excluding catastrophes, of
Personal Lines current accident year combined ratio, excluding catastrophe losses, decreased 0.7 points, to
The expense ratio increased by 0.4 points, to
Net premiums written were
The following table summarizes premiums and components of the combined ratio for Personal Lines:
Three months ended | ||||||||
March 31 | ||||||||
($ in millions) | 2026 | 2025 | ||||||
Net premiums written | $ | 562.6 | $ | 547.9 | ||||
Growth | 2.7 | % | 3.0 | % | ||||
Net premiums earned | 646.9 | 627.9 | ||||||
Operating income before taxes | 89.2 | 94.2 | ||||||
Loss and LAE ratio | 65.8 | % | 64.4 | % | ||||
Expense ratio | 25.7 | % | 25.3 | % | ||||
Combined ratio | 91.5 | % | 89.7 | % | ||||
Prior-year development ratio | (1.4) | % | (0.4) | % | ||||
Catastrophe ratio | 9.1 | % | 5.6 | % | ||||
Combined ratio, excluding catastrophes | 82.4 | % | 84.1 | % | ||||
Current accident year combined ratio, | 83.8 | % | 84.5 | % | ||||
Investments
Net investment income was
Net realized and unrealized investment losses recognized in earnings were
The company held
Shareholders' Equity and Capital Actions
At March 31, 2026, book value per share was
At March 31, 2026, operating insurance company's statutory capital and surplus was
Year-to-date, through April 28, 2026, the company repurchased approximately 580,000 shares of common stock, totaling approximately
Earnings Conference Call
The company will host a conference call to discuss its first quarter results on Thursday, April 30, at 10:00 a.m. E.T. A presentation will accompany the prepared remarks and has been posted on The Hanover's website. Interested investors and others can listen to the call and access the presentation through The Hanover's website, located in the "Investors" section at www.hanover.com. Investors may access the conference call by dialing 1-844-413-3975 in the
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
Contact Information
Investors: Oksana Lukasheva olukasheva@hanover.com 1-508-525-6081 | Media: Emily P. Trevallion etrevallion@hanover.com 1-508-855-3263 |
Definition of Segments
Continuing operations include four reporting segments: Core Commercial, Specialty, Personal Lines and Other. The Core Commercial segment includes commercial multiple peril, commercial automobile, workers' compensation and other core commercial lines coverages provided to small and mid-sized businesses. The Specialty segment includes four divisions of business: marine and industrial property, professional and executive lines (such as management and professional liability), E&S and alternative markets, and surety and other. E&S and alternative markets includes coverages such as excess and surplus lines, program business (providing commercial insurance to markets with specialized coverage or risk management need related to groups of similar businesses), and specialty general liability coverage. The Personal Lines segment markets automobile, homeowners and ancillary coverages to individuals and families. The Other segment primarily includes the operations of the holding company, and our run-off direct asbestos and environmental business, run-off voluntary assumed property and casualty pools business, and run-off product liability business.
Financial Supplement
The Hanover's first quarter news release and financial supplement are available in the "Investors" section of the company's website at hanover.com.
The Hanover Insurance Group, Inc. | ||||||
Consolidated Statements of Income | Three months ended | |||||
March 31 | ||||||
($ in millions) | 2026 | 2025 | ||||
Revenues | ||||||
Premiums earned | $ | 1,570.6 | $ | 1,508.5 | ||
Net investment income | 126.9 | 106.1 | ||||
Net realized and unrealized investment gains (losses): | ||||||
Net realized losses from sales and other | (4.9) | (18.8) | ||||
Net change in fair value of equity securities and other | 4.6 | 1.0 | ||||
Impairments on investments: | ||||||
Credit-related impairments | (1.6) | - | ||||
Losses on intent to sell securities | (0.4) | - | ||||
Total impairments on investments | (2.0) | - | ||||
Total net realized and unrealized investment losses | (2.3) | (17.8) | ||||
Fees and other income | 6.2 | 6.4 | ||||
Total revenues | 1,701.4 | 1,603.2 | ||||
Losses and expenses | ||||||
Losses and loss adjustment expenses | 957.6 | 955.3 | ||||
Amortization of deferred acquisition costs | 333.2 | 313.9 | ||||
Interest expense | 10.8 | 8.5 | ||||
Other operating expenses | 162.7 | 165.4 | ||||
Total losses and expenses | 1,464.3 | 1,443.1 | ||||
Income before income taxes | 237.1 | 160.1 | ||||
Income tax expense | 50.3 | 31.9 | ||||
Net income | $ | 186.8 | $ | 128.2 | ||
The Hanover Insurance Group, Inc. | |||||||
Condensed Consolidated Balance Sheets | |||||||
March 31 | December 31 | ||||||
($ in millions) | 2026 | 2025 | |||||
Assets | |||||||
Total investments | $ | 10,801.7 | $ | 10,382.7 | |||
Cash and cash equivalents | 243.5 | 1,122.7 | |||||
Premiums and accounts receivable, net | 1,855.9 | 1,861.3 | |||||
Reinsurance recoverable on paid and unpaid losses and unearned premiums | 2,051.7 | 2,011.1 | |||||
Other assets | 1,491.6 | 1,484.5 | |||||
Assets of discontinued businesses | 83.3 | 83.6 | |||||
Total assets | $ | 16,527.7 | $ | 16,945.9 | |||
Liabilities | |||||||
Loss and loss adjustment expense reserves | $ | 7,911.1 | $ | 7,755.2 | |||
Unearned premiums | 3,402.0 | 3,440.4 | |||||
Short-term debt | 50.1 | 375.0 | |||||
Long-term debt | 793.7 | 843.3 | |||||
Other liabilities | 693.9 | 851.9 | |||||
Liabilities of discontinued businesses | 106.5 | 108.6 | |||||
Total liabilities | 12,957.3 | 13,374.4 | |||||
Total shareholders' equity | 3,570.4 | 3,571.5 | |||||
Total liabilities and shareholders' equity | $ | 16,527.7 | $ | 16,945.9 |
The following is a reconciliation from operating income to net income(5)(8):
The Hanover Insurance Group, Inc. | ||||||||||||||
Three months ended March 31 | ||||||||||||||
2026 | 2025 | |||||||||||||
($ in millions, except per share data) | $ | Per Share | $ | Per Share | ||||||||||
Operating income | ||||||||||||||
Core Commercial | $ | 74.8 | $ | 26.8 | ||||||||||
Specialty | 84.0 | 64.6 | ||||||||||||
Personal Lines | 89.2 | 94.2 | ||||||||||||
Other | 2.2 | 0.8 | ||||||||||||
Total | 250.2 | 186.4 | ||||||||||||
Interest expense | (10.8) | (8.5) | ||||||||||||
Operating income before income taxes | 239.4 | $ | 6.67 | 177.9 | $ | 4.86 | ||||||||
Income tax expense on operating income | (50.9) | (1.42) | (36.1) | (0.99) | ||||||||||
Operating income after income taxes | 188.5 | 5.25 | 141.8 | 3.87 | ||||||||||
Non-operating items: | ||||||||||||||
Net realized losses from sales and other | (4.9) | (0.14) | (18.8) | (0.51) | ||||||||||
Net change in fair value of equity securities and other | 4.6 | 0.13 | 1.0 | 0.03 | ||||||||||
Impairments on investments: | ||||||||||||||
Credit-related impairments | (1.6) | (0.04) | - | - | ||||||||||
Losses on intent to sell securities | (0.4) | (0.01) | - | - | ||||||||||
Total impairments on investments | (2.0) | (0.05) | - | - | ||||||||||
Income tax benefit on non-operating items | 0.6 | 0.01 | 4.2 | 0.11 | ||||||||||
Net income | $ | 186.8 | $ | 5.20 | $ | 128.2 | $ | 3.50 | ||||||
Dilutive weighted average shares outstanding | 35.9 | 36.6 | ||||||||||||
Basic weighted average shares outstanding | 35.2 | 36.0 | ||||||||||||
Forward-Looking Statements and Non-GAAP Financial Measures
Forward-Looking Statements
Certain statements in this document may be "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, may be forward-looking statements. Words such as: "believes," "anticipates," "expects," "intends," "may," "projects," "plan," "likely," "potential," "targeted," "forecasts," "should," "could," "continue," and other similar expressions are intended to identify forward-looking statements. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. The company cautions investors that any such forward-looking statements are estimates, beliefs, expectations and/or projections that involve significant judgment, are not guarantees and are not necessarily indicative of future performance. Actual results could differ materially from those anticipated. Investors should not place undue reliance on forward-looking statements, which speak only as of the date they are made and should understand the risks and uncertainties inherent in or particular to the company's business. The company does not undertake the responsibility to update or revise such forward-looking statements, except as required by law. For a list of factors that could cause actual results to differ materially from those contained in the forward-looking statements in this document, see Part I – Item 1A of our 2025 Annual Report on Form 10-K.
Non-GAAP Financial Measures
As discussed on page 39 of the company's Annual Report on Form 10-K for the year ended December 31, 2025, the company uses non-GAAP financial measures as important measures of its operating performance, including operating income, operating income before interest expense and income taxes, operating income per diluted share, and components of the combined ratio, both excluding and/or including catastrophe losses, prior-year reserve development and the expense ratio. Management believes these non-GAAP financial measures are important indications of the company's operating performance. The definition of other non-GAAP financial measures and terms can be found in the 2025 Annual Report on pages 61-64.
Operating income and operating income per diluted share are non-GAAP measures. They are defined as net income excluding the after-tax impact of net realized and unrealized investment gains (losses), gains and/or losses on the repayment of debt, other non-operating items, and results from discontinued operations. Net realized and unrealized investment gains (losses), which include changes in the fair value of equity securities still held, are excluded for purposes of presenting operating income, as they are, to a certain extent, determined by interest rates, financial markets and the timing of sales. Operating income also excludes net gains and losses from disposals of businesses, gains and losses related to the repayment of debt, costs to acquire businesses, restructuring costs, the cumulative effect of accounting changes, and certain other items. Operating income is the sum of the segment income from: Core Commercial, Specialty, Personal Lines, and Other, after interest expense and income taxes. In reference to one of the company's four reporting segments, "operating income" is the segment income before both interest expense and income taxes. The company also uses "operating income per diluted share" (which is after both interest expense and income taxes). Operating income per share is calculated by dividing operating income by the weighted average number of diluted shares of common stock. Operating loss per share is calculated by dividing operating loss by the weighted average number of basic shares of common stock due to antidilution. The company believes that metrics of operating income and operating income in relation to its four reporting segments provide investors with a valuable measure of the performance of the company's continuing businesses because they highlight the portion of net income attributable to the core operations of the business. Net income is the most directly comparable GAAP measure for operating income (and operating income before income taxes) and measures of operating income that exclude the effects of catastrophe losses and/or prior-year reserve development. These non-GAAP measures should not be misconstrued as substitutes for net income determined in accordance with GAAP. A reconciliation of operating income to net income for the relevant periods is included on page 9 of this news release and in the Financial Supplement.
Operating return on average equity (ROE) is a non-GAAP measure. See end note (6) for a detailed explanation of how this measure is calculated. Operating ROE is based on non-GAAP operating income. In addition, the portion of shareholder equity attributed to unrealized appreciation (depreciation) on fixed maturity investments, net of tax, is excluded. The company believes this measure is helpful in that it provides insight to the capital used by, and results of, the continuing business exclusive of interest expense, income taxes, and other non-operating items. These measures should not be misconstrued as substitutes for GAAP ROE, which is based on net income and shareholders' equity of the entire company and without adjustments.
Book value per share is total shareholders' equity divided by the number of common shares outstanding. Book value per share excluding net unrealized appreciation (depreciation) on fixed maturity investments, net of tax, is a non-GAAP measure and is total shareholders' equity excluding the after-tax effect of unrealized appreciation (depreciation) on fixed maturities and market risk divided by the number of common shares outstanding.
The company may provide measures of operating income and combined ratios that exclude the impact of catastrophe losses (which in all respects include prior accident year catastrophe loss development). A catastrophe is a severe loss, resulting from natural or manmade events including, but is not limited to, hurricanes, tornadoes and other windstorms, hail, flood, earthquakes, fires, drought, explosions, severe winter weather and other convective storms, riots, and terrorism. Due to the unique characteristics of each catastrophe loss, there is an inherent inability to reasonably estimate the timing or loss amount in advance. The company believes a separate discussion excluding the effects of catastrophe losses is meaningful to understand the underlying trends and variability of earnings, loss and combined ratio results, among others.
Prior accident year reserve development, which can either be favorable or unfavorable, represents changes in the company's estimate of costs related to claims from prior years. Calendar year loss and loss adjustment expense (LAE) ratios determined in accordance with GAAP, excluding prior accident year reserve development, are sometimes referred to as "current accident year loss ratios." The company believes a discussion of loss and combined ratios excluding prior accident year reserve development is helpful since it provides insight into both estimates of current accident year results and the accuracy of prior-year estimates.
The loss and combined ratios in accordance with GAAP are the most directly comparable GAAP measures for the loss and combined ratios calculated excluding the effects of catastrophe losses and/or prior-year reserve development. The presentation of loss and combined ratios calculated excluding the effects of catastrophe losses and/or prior-year reserve development should not be misconstrued as substitutes for the loss and/or combined ratios determined in accordance with GAAP.
Endnotes
| |
(1) | Combined ratio, excluding catastrophes, and current accident year combined ratio, excluding catastrophes, are non-GAAP measures. These and other non-GAAP measures are used throughout this document. See the disclosure on the use of this and other non-GAAP measures under the headings "Forward-Looking Statements" and "Non-GAAP Financial Measures." The combined ratio (which includes catastrophe losses and prior-year loss reserve development) is the most directly comparable GAAP measure. A reconciliation of the GAAP combined ratio to the combined ratio, excluding catastrophes, and to the current accident year combined ratio, excluding catastrophes, is shown below. |
Three months ended | ||||||||||||||
March 31, 2026 | ||||||||||||||
Core | Specialty | Personal | Total | |||||||||||
Total combined ratio (GAAP) | 96.6 | % | 84.2 | % | 91.5 | % | 91.7 | % | ||||||
Less: Catastrophe ratio | 5.4 | % | 2.7 | % | 9.1 | % | 6.3 | % | ||||||
Combined ratio, excluding catastrophe losses (non-GAAP) | 91.2 | % | 81.5 | % | 82.4 | % | 85.4 | % | ||||||
Less: Prior-year reserve development ratio | (0.3) | % | (3.9) | % | (1.4) | % | (1.6) | % | ||||||
Current accident year combined ratio, excluding | 91.5 | % | 85.4 | % | 83.8 | % | 87.0 | % | ||||||
March 31, 2025 | ||||||||||||||
Total combined ratio (GAAP) | 103.4 | % | 87.7 | % | 89.7 | % | 94.1 | % | ||||||
Less: Catastrophe ratio | 8.5 | % | 4.3 | % | 5.6 | % | 6.3 | % | ||||||
Combined ratio, excluding catastrophe losses (non-GAAP) | 94.9 | % | 83.4 | % | 84.1 | % | 87.8 | % | ||||||
Less: Prior-year reserve development ratio | (0.2) | % | (4.7) | % | (0.4) | % | (1.3) | % | ||||||
Current accident year combined ratio, excluding | 95.1 | % | 88.1 | % | 84.5 | % | 89.1 | % | ||||||
(2) | Renewal price changes in Core Commercial and Specialty represent the average change in premium on renewed policies caused by the estimated net effect of base rate changes, discretionary pricing, specific inflationary changes or changes in policy level exposure or insured risks. Rate increases in Core Commercial and Specialty represent the average change in premium on renewed policies caused by the base rate changes, discretionary pricing, and inflation, excluding the impact of changes in policy level exposure or insured risks. Renewal price change in Personal Lines represents the average change in premium on policies charged at renewal caused by the net effects of filed rate, inflation adjustments or other changes in policy level exposure or insured risks, regardless of whether or not the policies are retained for the duration of their contractual terms. Rate change in Personal Lines is the estimated cumulative premium effect of approved rate actions applied to policies at renewal, regardless of whether or not policies are actually renewed. Accordingly, rate changes do not represent actual increases or decreases realized by the company. Personal Lines rate changes do not include inflation or changes in policy level exposure or insured risks. |
(3) | Current accident year loss and LAE ratio, excluding catastrophe losses, is a non-GAAP measure, which is equal to the loss and LAE ratio (loss ratio), excluding prior-year reserve development and catastrophe losses. The loss ratio (which includes losses, LAE, catastrophe losses and prior-year loss reserve development) is the most directly comparable GAAP measure. The following is a reconciliation of the GAAP loss ratio to the current accident year loss ratio, excluding catastrophe losses. |
Three months ended | ||||||||||||||
March 31, 2026 | ||||||||||||||
Core | Specialty | Personal | Total | |||||||||||
Total loss and LAE ratio | 63.9 | % | 47.8 | % | 65.8 | % | 61.0 | % | ||||||
Less: | ||||||||||||||
Prior-year reserve development ratio | (0.3) | % | (3.9) | % | (1.4) | % | (1.6) | % | ||||||
Catastrophe ratio | 5.4 | % | 2.7 | % | 9.1 | % | 6.3 | % | ||||||
Current accident year loss and LAE ratio, excluding | 58.8 | % | 49.0 | % | 58.1 | % | 56.3 | % | ||||||
March 31, 2025 | ||||||||||||||
Total loss and LAE ratio | 70.0 | % | 50.7 | % | 64.4 | % | 63.3 | % | ||||||
Less: | ||||||||||||||
Prior-year reserve development ratio | (0.2) | % | (4.7) | % | (0.4) | % | (1.3) | % | ||||||
Catastrophe ratio | 8.5 | % | 4.3 | % | 5.6 | % | 6.3 | % | ||||||
Current accident year loss and LAE ratio, excluding | 61.7 | % | 51.1 | % | 59.2 | % | 58.3 | % | ||||||
(4) | Book value per share, excluding net unrealized appreciation (depreciation) on fixed maturity investments, net of tax, is a non-GAAP measure. Book value per share is the most directly comparable GAAP measure and is reconciled in the table below. |
Period ended | ||||||
December 31 | March 31 | |||||
2025 | 2026 | |||||
Book value per share | ||||||
Less: Net unrealized appreciation (depreciation) on fixed | (3.31) | (5.28) | ||||
Book value per share, excluding net unrealized appreciation | ||||||
Versus prior year-end | ||||||
Change in book value per share | 1.0 % | |||||
Change in book value per share, excluding net unrealized | 2.8 % | |||||
(5) | Operating income and operating income per diluted share are non-GAAP measures. Operating income before income taxes, as referenced in the results of the reporting segments, is defined as, with respect to such segment, operating income before interest expense and income taxes. The reconciliation of operating income and operating income per diluted share to the closest GAAP measures, income from continuing operations and income from continuing operations per diluted share, respectively, and to net income and net income per diluted share, respectively, is provided on the preceding pages of this news release. |
(6) | Operating return on average equity (operating ROE) is a non-GAAP measure. Operating ROE is calculated by dividing annualized operating income after tax for the applicable period (see under the heading in this news release "Non-GAAP Financial Measures" and end note (5)), by average shareholders' equity, excluding unrealized appreciation (depreciation) on fixed maturity investments, net of tax, for the period presented. Total shareholders' equity, excluding net unrealized appreciation (depreciation) on fixed maturity investments, net of tax, is also a non-GAAP measure. Total shareholders' equity is the most directly comparable GAAP measure and is reconciled below. For the calculation of operating ROE, the average of beginning and ending shareholders' equity, excluding net unrealized appreciation (depreciation) on fixed maturity investments, net of tax, is used for the period as shown and reconciled in the table below. |
Period Ended | |||||||
($ in millions) | December 31 | March 31 | |||||
2025 | 2026 | ||||||
Total shareholders' equity (GAAP) | $ | 3,571.5 | $ | 3,570.4 | |||
Less: net unrealized appreciation (depreciation) | (117.1) | (185.0) | |||||
Total shareholders' equity, excluding net | $ | 3,688.6 | $ | 3,755.4 | |||
Quarter Averages | |||||||
Average shareholders' equity (GAAP) | $ | 3,571.0 | |||||
Average shareholders' equity, excluding net | $ | 3,722.0 | |||||
($ in millions) | Three months ended | |||||
March 31 | ||||||
Net Income ROE | 2026 | |||||
Net income (GAAP) | $ | 186.8 | ||||
Annualized net income* | 747.2 | |||||
Average shareholders' equity (GAAP) | $ | 3,571.0 | ||||
Return on equity | 20.9 | % | ||||
Operating Income ROE (non-GAAP) | ||||||
Operating income after taxes | $ | 188.5 | ||||
Annualized operating income, net of tax* | 754.0 | |||||
Average shareholders' equity, excluding net unrealized appreciation (depreciation) on | $ | 3,722.0 | ||||
Operating return on equity | 20.3 | % | ||||
*For three months ended March 31, 2026, annualized net income and operating income after taxes is calculated by multiplying three months ended net income and operating income after taxes, respectively, by 4. |
(7) | Here, and throughout this document, the expense ratio is reduced by installment and other fee revenues for purposes of the ratio calculation. |
(8) | The separate financial information of each reporting segment is presented consistent with the way results are regularly evaluated by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Management evaluates the results of the aforementioned reporting segments without consideration of interest expense on debt and on a pre-tax basis. |
View original content to download multimedia:https://www.prnewswire.com/news-releases/the-hanover-reports-record-first-quarter-net-income-and-operating-income-of-5-20-and-5-25-per-diluted-share-respectively-record-net-and-operating-return-on-equity-of-20-9-and-20-3-respectively-302757868.html
SOURCE The Hanover Insurance Group, Inc.