The Hanover Insurance Group (THG) Q4 2024 earnings summary

Executive summary

• Achieved record net and operating ROE for both Q4 (23.5% and 24.4%) and full year 2024 (16.1% and 15.8%), with record net and operating income per diluted share of $4.59 and $5.32 for Q4, and $11.70 and $13.34 for the year.

• Net premiums written grew 7.4% in Q4 and 4.7% for the year, surpassing $6B annually for the first time, with strong renewal price increases across all segments.

• Combined ratio improved to 89.2% in Q4 and 94.8% for the year; excluding catastrophes, ratios were 87.5% and 88.4%, respectively.

• Strategic investments in technology, talent, and innovation enhanced efficiency and competitive positioning.

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

Financial highlights

• Q4 net income: $167.9M ($4.59/diluted share), up from $107.9M ($2.98) in Q4 2023; full year net income: $426.0M ($11.70), up from $35.3M ($0.98) in 2023.

• Q4 operating income after tax: $194.6M ($5.32/diluted share); full year: $485.9M ($13.34).

• 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 net unrealized depreciation, up 10.4% to $90.35.

• Debt/total capital improved to 21.6% from 24.1% year-over-year.

Outlook and guidance

• 2025 net written premium growth expected at 6%-7%; specialty and small commercial to exceed this, personal lines and middle market below.

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

• Expense ratio expected to decrease to 30.5%; combined ratio ex-CAT guided to 88.5%-89.5%.

• CAT load for 2025 set at 6.5%; Q1 CAT load at 6%.

• Effective tax rate projected at 21%.