First Quarter Highlights Combined ratio of 95.5%; combined ratio, excluding catastrophes(1), of 89.5% Catastrophe losses of $86.9 million, or 6.0 points of the combined ratio Net premiums written increase of 2.3%* Renewal price increases(2) of 22.8% in Personal Lines, 11.5% in Core Commercial and 11.0% in Specialty Rate increases(2) of 15.8% in Personal Lines, 9.3% in Core Commercial and 8.4% in Specialty Loss and loss adjustment expense (LAE) ratio of 64.6%, 9.1 points below the prior-year quarter, driven by lower catastrophe and non-catastrophe losses Current accident year loss and LAE ratio, excluding catastrophes(3), of 59.3%, 1.9 points below the prior-year quarter Net investment income of $89.7 million, up 14.0% from the prior-year quarter, primarily due to higher bond reinvestment rates, higher partnership income, and the continued investment of operational cashflows Book value per share of $70.22, up 1.9% from December 31, 2023, primarily due to strong earnings in the quarter WORCESTER, Mass., May 1, 2024 /PRNewswire/ -- The Hanover Insurance Group, Inc. (NYSE:THG) today reported net income of $115.5 million, or $3.18 per diluted share, in the first quarter of 2024, compared to a net loss of $12.0 million, or $0.34 per basic share, in the prior-year quarter. Operating income(4) was $111.9 million, or $3.08 per diluted share, in the first quarter of 2024, compared to operating income of $4.6 million, or $0.13 per diluted share, in the prior-year quarter. "The year is off to an excellent start, highlighted by strong underwriting margins and operating return on equity(5) of 15%," said John C. Roche, president and chief executive officer at The Hanover. "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."  "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," said Jeffrey M. Farber, executive vice president and chief financial officer at The Hanover. "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 $89.7 million, helped by investment of cash flow and higher new money yields. As we continue to drive our organization forward, we have strong line of sight to delivering on our long-term return on equity target of 14% or higher, and we remain committed to generating superior returns for our valued shareholders." Three months ended March 31   ($ in millions, except per share data) 2024 2023 Net premiums written $ 1,454.0 $ 1,421.5 Growth 2.3 % 8.3 % Net premiums earned $ 1,448.6 $ 1,380.0 Current accident year loss and LAE ratio, excluding      catastrophes 59.3 % 61.2 % Prior year development ratio (0.7) % (0.2) % Catastrophe ratio 6.0 % 12.7 % Expense ratio(6) 30.9 % 30.7 % Combined ratio 95.5 % 104.4 % Combined ratio, excluding catastrophes 89.5 % 91.7 % Current accident year combined ratio, excluding catastrophes 90.2 % 91.9 % Net income (loss) $ 115.5 $ (12.0) per diluted (basic) share 3.18 (0.34) Operating income 111.9 4.6 per diluted share 3.08 0.13 Book value per share $ 70.22 $ 66.89 Ending shares outstanding (in millions) 35.9 35.7 *Unless otherwise stated, net premiums written growth and other growth comparisons are to the same period of the prior year (1) See information about this and other non-GAAP measures and definitions used throughout this press release on the final pages of this document. 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 CommercialCore Commercial operating income before income taxes was $71.5 million in the first quarter of 2024, compared to $11.2 million in the first quarter of 2023. The Core Commercial combined ratio was 93.9%, compared to 104.7% in the prior-year quarter. Catastrophe losses in the first quarter of 2024 were $20.7 million, or 3.9 points of the combined ratio. This compared to catastrophe losses of $63.9 million, or 12.6 points, in the prior-year quarter. First quarter 2024 results included net favorable prior-year reserve development, excluding catastrophes, of $9.2 million, or 1.7 points, with favorability in each major line of business. This compared to net unfavorable prior-year reserve development, excluding catastrophes, of $3.5 million, or 0.7 points, in the first quarter of 2023. Core Commercial current accident year combined ratio, excluding catastrophes, remained relatively stable at 91.7%, compared to 91.4% in the prior-year quarter. The current accident year loss and LAE ratio, excluding catastrophes, was 58.5%, in line with the prior-year quarter. The expense ratio increased by 0.3 points to 33.2% in the first quarter of 2024, compared to the prior-year quarter, primarily due to timing of certain expenses. Net premiums written were $582.4 million in the quarter, up 3.0% from the prior-year quarter, consisting of 7.7% growth in small commercial and a decline of 2.8% in middle market, driven by targeted underwriting actions. In the first quarter, Core Commercial renewal price increases averaged 11.5%, while average rate increases were 9.3%. The following table summarizes premiums and the components of the combined ratio for Core Commercial: Three months ended March 31   ($ in millions) 2024 2023 Net premiums written $ 582.4 $ 565.3   Growth 3.0 % 7.3 % Net premiums earned 528.9 507.4 Operating income before taxes 71.5 11.2 Loss and LAE ratio 60.7 % 71.8 % Expense ratio 33.2 % 32.9 % Combined ratio 93.9 % 104.7 % Prior-year development ratio (1.7) % 0.7 % Catastrophe ratio 3.9 % 12.6 % Combined ratio, excluding catastrophes 90.0 % 92.1 % Current accident year combined ratio, excluding catastrophes 91.7 % 91.4 % SpecialtySpecialty operating income before income taxes was $58.8 million in the first quarter of 2024, compared to $48.3 million in the first quarter of 2023. The Specialty combined ratio was 87.6%, compared to 89.9% in the prior-year quarter. Catastrophe losses in the first quarter of 2024 were $7.0 million, or 2.2 points of the combined ratio, compared to $21.5 million, or 6.9 points, in the prior-year quarter. First quarter 2024 results included net favorable prior-year reserve development, excluding catastrophes, of $1.1 million, or 0.3 points. Net favorable prior-year reserve development, excluding catastrophes, was $18.1 million, or 5.8 points, in the prior-year quarter. Specialty current accident year combined ratio, excluding catastrophes, decreased 3.1 points to 85.7% in the first quarter of 2024, from 88.8% in the prior-year quarter. The current accident year loss and LAE ratio, excluding catastrophes, decreased 4.8 points to 48.7% in the first quarter of 2024, primarily driven by a lower incidence of large losses in our Hanover specialty industrial business and the benefit of earned pricing above loss trends. The expense ratio increased by 1.7 points to 37.0% in the first quarter of 2024, compared to the prior-year quarter, primarily due to strategic investments, including talent. Net premiums written were $339.8 million in the quarter, up 4.8% from the prior-year quarter. In the first quarter, Specialty renewal price increases averaged 11.0%, while average rate increases were 8.4%. The following table summarizes premiums and the components of the combined ratio for Specialty: Three months ended March 31   ($ in millions) 2024 2023 Net premiums written $ 339.8 $ 324.3   Growth 4.8 % 7.1 % Net premiums earned 320.9 311.7 Operating income before taxes 58.8 48.3 Loss and LAE ratio 50.6 % 54.6 % Expense ratio 37.0 % 35.3 % Combined ratio 87.6 % 89.9 % Prior-year development ratio (0.3) % (5.8) % Catastrophe ratio 2.2 % 6.9 % Combined ratio, excluding catastrophes 85.4 % 83.0 % Current accident year combined ratio, excluding catastrophes 85.7 % 88.8 % Personal LinesPersonal Lines operating income before income taxes was $18.9 million in the first quarter of 2024, compared to an operating loss before income taxes of $46.6 million in the first quarter of 2023. The Personal Lines combined ratio was 101.0%, compared to 112.2% in the prior-year quarter. Catastrophe losses in the first quarter of 2024 were $59.2 million, or 9.9 points of the combined ratio. This compared to catastrophe losses of $89.6 million, or 16.0 points of the combined ratio, in the prior-year quarter. First quarter 2024 results included immaterial ex-CAT prior-year reserve development. This compared to net unfavorable prior-year reserve development, excluding catastrophes, of $11.6 million, or 2.1 points, in the prior-year quarter. Personal Lines current accident year combined ratio, excluding catastrophe losses, decreased 3.0 points to 91.1% in the first quarter of 2024, from 94.1% in the prior-year quarter. The current accident year loss and LAE ratio, excluding catastrophes, decreased 2.4 points from the prior-year quarter to 65.6%, driven by the benefit of earned pricing outpacing loss trends in both personal auto and homeowners, as well as moderated loss trends, particularly in auto collision coverage. The expense ratio decreased by 0.6 points to 25.5% in the first quarter of 2024, compared to the prior-year quarter, primarily due to lower agency compensation. Net premiums written were $531.8 million in the quarter, flat compared to the prior-year quarter, as renewal price change moved higher, offset by the impact of profit improvement and catastrophe management actions driving lower policies in force. Personal Lines renewal price increases averaged 22.8%, while average rate increases were 15.8%. Policies in force in the first quarter of 2024 decreased 2.9% compared to the fourth quarter of 2023, driven by a 4.2% decrease in the Midwestern United States. The following table summarizes premiums and components of the combined ratio for Personal Lines:                                                                                                                                                             Three months ended March 31   ($ in millions) 2024 2023 Net premiums written $ 531.8 $ 531.9   Growth 0.0 % 10.1 % Net premiums earned 598.8 560.9 Operating income (loss) before taxes 18.9 (46.6) Loss and LAE ratio 75.5 % 86.1 % Expense ratio 25.5 % 26.1 % Combined ratio 101.0 % 112.2 % Prior-year development ratio - 2.1 % Catastrophe ratio 9.9 % 16.0 % Combined ratio, excluding catastrophes 91.1 % 96.2 % Current accident year combined ratio, excluding catastrophes 91.1 % 94.1 % Investments Net investment income was $89.7 million for the first quarter of 2024, above the prior-year quarter by $11.0 million, primarily due to higher bond reinvestment rates, higher partnership income, and continued investment of operational cashflows. Total pre-tax earned yield on the investment portfolio for the first quarter of 2024 was 3.70%, up from 3.34% in the prior-year quarter. The average pre-tax earned yield on fixed maturities was 3.52% for the first quarter of 2024, up from 3.27% in the prior-year quarter. Net realized and unrealized investment gains recognized in earnings were $5.5 million in the first quarter of 2024, primarily driven by an increase in the fair value of equity securities. This compared to net realized and unrealized investment losses recognized in earnings of $23.0 million in the first quarter of 2023. The company held $9.2 billion in cash and invested assets on March 31, 2024. Fixed maturities and cash represented approximately 90% of the investment portfolio. Approximately 95% of the company's fixed maturity portfolio is rated investment grade. As of March 31, 2024, net unrealized losses on the fixed maturity portfolio were $630.0 million before income taxes, compared to $588.6 million before income taxes on December 31, 2023. The company expects to transfer management of its investment-grade fixed maturity portfolio, which accounts for approximately 82% of the company's investments, to an external manager in the second quarter of 2024. In addition, the company expects to exit Opus Investment Management, Inc.'s (Opus) business operations, which provides investment management services to unaffiliated clients, by the end of the second quarter of 2024. The company expects that both changes will have an immaterial impact on its financial results. Shareholders' Equity and Capital Actions                On March 31, 2024, book value per share was $70.22, up 1.9% from December 31, 2023, primarily driven by operating earnings, partially offset by a decrease in the fair value of fixed maturity investments, as well as the ordinary quarterly cash dividend. Book value per share, excluding net unrealized depreciation on fixed maturity investments, net of tax(7), was $84.01 at March 31, 2024, compared to $81.86 at December 31, 2023. During the quarter, the company did not repurchase any shares of common stock. The company has approximately $330 million of remaining capacity under its existing share repurchase program. On March 31, 2024, operating subsidiary's statutory capital and surplus was $2.76 billion. This compared to statutory capital and surplus of $2.64 billion on December 31, 2023. Earnings Conference CallThe company will host a conference call to discuss its first quarter results on Thursday, May 2, 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 U.S. and 1-412-317-5458 internationally. Webcast participants should go to the website 15 minutes early to register, download and install any necessary audio software. A re-broadcast of the conference call will be available on The Hanover's website approximately two hours after the call. About The HanoverThe 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 company offers standard and specialized ...