Core Viewpoint - The Hanover Insurance Group, Inc. has announced a registered offering of $500 million in senior unsecured notes with a 5.50% interest rate, maturing on September 1, 2035, to refinance existing debt and for general corporate purposes [1]. Group 1: Offering Details - The company plans to use the net proceeds from the issuance to repay its outstanding 7.625% Senior Notes due in October 2025 and redeem its 4.500% Senior Notes due in April 2026 [1]. - The debt offering is expected to close around August 21, 2025, subject to customary closing conditions [1]. - Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, and Morgan Stanley & Co. LLC are acting as joint book-running managers for the offering [1]. Group 2: Company Overview - The Hanover Insurance Group, Inc. is a holding company for several property and casualty insurance companies, making it one of the largest insurance businesses in the United States [4]. - The company provides insurance solutions through a select group of independent agents and brokers, offering both standard and specialized insurance protection for small and mid-sized businesses, as well as personal items like homes and automobiles [4].

WORCESTER, Mass., Aug. 7, 2025 /PRNewswire/ -- The Hanover Insurance Group, Inc. (NYSE: THG) announced today the appointment of Toni E. Mitchell to president of its technology and life sciences business, reinforcing the company's commitment to innovation, underwriting excellence, and operational agility in a rapidly evolving industry. Toni E. Mitchell In this role, Toni will lead efforts to expand The Hanover's market presence, achieve strategic and disciplined growth, and deliver unique, tailored solu ...

I ventured into investing in high school in 2011, mainly in REITs, preferred stocks, and high-yield bonds, starting a fascination with markets and the economy that has not faded despite the years. More recently I have been combining long stock positions with covered calls and cash secured puts. I approach investing purely from a fundamental long-term point of view. On Seeking Alpha I mostly cover REITs and financials, with occasional articles on ETFs and other stocks driven by a macro trade idea.Analyst’s D ...

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited interim consolidated financial statements for The Hanover Insurance Group, Inc. as of June 30, 2025 [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Net income significantly increased to $285.3 million for the six months ended June 30, 2025, driven by higher revenues and lower expenses Consolidated Income Statement Highlights (in millions, except per share data) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Total Revenues** | $3,257.6 | $3,087.8 | | Premiums | $3,053.8 | $2,921.8 | | Net Investment Income | $211.6 | $180.1 | | **Total Losses and Expenses** | $2,898.7 | $2,891.2 | | **Income from Continuing Operations** | $285.1 | $155.9 | | **Net Income** | $285.3 | $156.0 | | **Diluted EPS** | $7.80 | $4.30 | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income for the six months ended June 30, 2025, rose substantially to $454.4 million, primarily due to improved unrealized gains on investments Consolidated Comprehensive Income (in millions) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Net Income** | $285.3 | $156.0 | | **Other Comprehensive Income (Loss)** | $169.1 | $(23.6) | | *Changes in net unrealized gains (losses) on investment securities* | $167.5 | $(28.1) | | **Comprehensive Income** | $454.4 | $132.4 | [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to $15.73 billion as of June 30, 2025, leading to a growth in total shareholders' equity to $3.22 billion Consolidated Balance Sheet Highlights (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Investments** | $9,941.3 | $9,409.8 | | **Total Assets** | $15,732.1 | $15,274.5 | | **Loss and Loss Adjustment Expense Reserves** | $7,636.2 | $7,461.2 | | **Total Liabilities** | $12,515.8 | $12,432.7 | | **Total Shareholders' Equity** | $3,216.3 | $2,841.8 | [Consolidated Statements of Shareholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity) Total shareholders' equity increased to $3.22 billion, driven by net income and a positive change in accumulated other comprehensive income - Key drivers of the change in shareholders' equity for the first six months of 2025 were net income of **$285.3 million**, offset by **$65.6 million** in dividends and **$38.6 million** in share repurchases[14](index=14&type=chunk) - Accumulated other comprehensive loss improved significantly, decreasing from a loss of **$456.3 million** at the beginning of the period to a loss of **$287.2 million** at the end, primarily due to unrealized gains on investments[14](index=14&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities increased to $245.5 million for the six months ended June 30, 2025, despite a net decrease in cash and cash equivalents Consolidated Cash Flows (in millions) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | $245.5 | $198.2 | | **Net Cash used in Investing Activities** | $(334.4) | $(108.8) | | **Net Cash used in Financing Activities** | $(102.8) | $(64.0) | | **Net Change in Cash and Cash Equivalents** | $(191.7) | $25.4 | [Notes to Interim Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Interim%20Consolidated%20Financial%20Statements) The notes provide detailed supplementary information on accounting policies, investments, segments, and loss reserves - The company adopted ASC Update No. 2023-07 on segment reporting effective January 1, 2024, which requires enhanced disclosures about segment expenses and profit/loss measures[23](index=23&type=chunk) - The company's business operations are divided into four reporting segments: Core Commercial, Specialty, Personal Lines, and Other, with performance evaluated based on operating income before interest and taxes[62](index=62&type=chunk)[64](index=64&type=chunk) - For the six months ended June 30, 2025, the company recorded net favorable prior year loss and LAE development of **$56.2 million**, an increase from **$54.8 million** in the same period of 2024[85](index=85&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of the company's financial performance, segment results, investments, and liquidity for the first half of 2025 [Executive Overview](index=35&type=section&id=Executive%20Overview) Net income for the first six months of 2025 significantly improved to $285.3 million, driven by higher operating income, better Personal Lines underwriting, and lower catastrophe losses Six Months Ended June 30, 2025 vs 2024 (in millions) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | **Net Income** | $285.3 | $156.0 | | **Operating Income (pre-tax, pre-interest)** | $396.3 | $245.1 | | **Pre-tax Catastrophe Losses** | $203.1 | $244.0 | - The company's strategy focuses on the independent agency distribution channel, leveraging specialty market capabilities and developing growth solutions for agents[99](index=99&type=chunk) - Improved Personal Lines results were a primary driver, benefiting from earned pricing outpacing loss trends and moderated frequency in auto collision and homeowners coverages[101](index=101&type=chunk) [Results of Operations - Segments](index=40&type=section&id=Results%20of%20Operations%20-%20Segments) Operating income before interest and taxes improved to $396.3 million, with Personal Lines showing a dramatic turnaround and Specialty growing, while Core Commercial declined Segment Operating Income (Loss) Before Interest & Taxes (in millions) | Segment | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Core Commercial** | $110.7 | $154.7 | | **Specialty** | $135.8 | $101.4 | | **Personal Lines** | $151.6 | $(11.5) | | **Other** | $(1.8) | $0.5 | | **Total** | $396.3 | $245.1 | Segment Combined Ratios | Segment | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Core Commercial** | 98.2% | 92.8% | | **Specialty** | 87.0% | 90.4% | | **Personal Lines** | 92.6% | 105.0% | | **Total** | 93.3% | 97.3% | [Investments](index=53&type=section&id=Investments) Net investment income increased to $211.6 million, driven by higher interest rates, and the investment portfolio grew to $10.19 billion with improved unrealized losses Net Investment Income (in millions) | Period | 2025 | 2024 | | :--- | :--- | :--- | | **Three Months Ended June 30** | $105.5 | $90.4 | | **Six Months Ended June 30** | $211.6 | $180.1 | - The fixed maturity portfolio, valued at **$9.08 billion**, is the largest asset class, with approximately **95%** rated as investment-grade by the NAIC[180](index=180&type=chunk)[183](index=183&type=chunk) - Gross unrealized losses on fixed maturities improved by **$160.3 million** during the first half of 2025, primarily due to lower interest rates[193](index=193&type=chunk) [Liquidity and Capital Resources](index=60&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with $338.8 million in liquid assets and access to significant credit facilities, supporting operations and shareholder returns - Net cash provided by operating activities increased to **$245.5 million** in H1 2025 from **$198.2 million** in H1 2024[213](index=213&type=chunk) - In H1 2025, the company repurchased **234,000 shares** for **$38.6 million**, with approximately **$265 million** remaining under its repurchase authorization[221](index=221&type=chunk) - The holding company held **$338.8 million** in liquid assets and had access to a **$150 million** revolving credit facility and a **$317.5 million** FHLB borrowing facility, both undrawn at quarter-end[218](index=218&type=chunk)[222](index=222&type=chunk)[223](index=223&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=62&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There have been no material changes to the company's market risks or their management during the first six months of 2025 - There have been no material changes to the company's market risks or its management of them in the first six months of 2025 compared to what was reported in the 2024 Form 10-K[228](index=228&type=chunk) [Controls and Procedures](index=64&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - The CEO and CFO concluded that as of the end of Q2 2025, the company's disclosure controls and procedures were effective at a reasonable assurance level[232](index=232&type=chunk) - No changes were identified during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[233](index=233&type=chunk) [PART II. OTHER INFORMATION](index=64&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=64&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal and regulatory matters, with management not expecting a material effect on financial position - The company is a defendant in various legal proceedings and subject to regulatory examinations arising in the normal course of business[235](index=235&type=chunk) - The ultimate outcome of these proceedings is not expected to have a material effect on the company's financial position[235](index=235&type=chunk) [Risk Factors](index=65&type=section&id=Item%201A.%20Risk%20Factors) This section outlines various risk factors, including adverse claims, catastrophe losses, regulatory changes, and cybersecurity threats, that could impact future results - The company identifies several key risk factors that could impact future performance, including: * Adverse claims experience and catastrophe losses * Changes in regulation, legislation, and economic conditions * Volatility in financial markets affecting the investment portfolio * Competition and disruption in distribution channels * Impacts of changing climate conditions * Cybersecurity risks and technology failures[238](index=238&type=chunk)[240](index=240&type=chunk) - The company states that readers should not place undue reliance on forward-looking statements and that it does not undertake responsibility to update them[240](index=240&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=68&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2025, the company repurchased 170,265 shares for $38.6 million, with approximately $265 million remaining under its repurchase authorization Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Program | Approx. Value Remaining for Purchase (in millions) | | :--- | :--- | :--- | :--- | :--- | | **April 2025** | 113,437 | $160.29 | 112,850 | $274 | | **May 2025** | 32,674 | $167.54 | 32,508 | $269 | | **June 2025** | 24,154 | $169.69 | 24,154 | $265 | | **Total** | **170,265** | **$163.01** | **169,512** | **$265** | [Other Information](index=68&type=section&id=Item%205.%20Other%20Information) Dennis F. Kerrigan, EVP and Chief Legal Officer, adopted a Rule 10b5-1 trading plan on May 12, 2025, for the potential sale of up to 14,917 shares - Executive Vice President and Chief Legal Officer, Dennis F. Kerrigan, adopted a Rule 10b5-1 trading plan on May 12, 2025, for the potential sale of up to **14,917 shares** upon option exercise[243](index=243&type=chunk) [Exhibits](index=69&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications and iXBRL financial statements - Filed exhibits include CEO and CFO certifications (302 and 906), a description of non-employee director compensation, and iXBRL data files[247](index=247&type=chunk) [Signatures](index=70&type=section&id=SIGNATURES) - The report was duly signed on July 31, 2025, by John C. Roche, President, Chief Executive Officer and Director, and Jeffrey M. Farber, Executive Vice President and Chief Financial Officer[249](index=249&type=chunk)

Financial Data and Key Metrics Changes - Operating return on equity (ROE) reached 18.7%, a record for the second quarter [10] - Operating earnings were $4.35 per diluted share, with earnings growth of approximately 25% on an ex-cat basis [10] - The overall combined ratio improved by approximately seven points year-over-year, while the ex-cat combined ratio improved by three points [10][24] - Net investment income increased by 16.7% to $105.5 million [25][37] - Book value increased by 6% sequentially and 13.2% year-to-date [38] Business Line Data and Key Metrics Changes - Personal lines achieved a strong current accident year ex-cat combined ratio of 84.8%, reflecting a 5.4-point improvement from the prior year [27] - Core Commercial delivered a combined ratio of 93%, with a combined ratio excluding catastrophes of 88.9% [32] - Specialty segment net written premium growth was 4.6%, with a mid-80s combined ratio [17] - Personal lines growth was 3.7%, with double-digit growth in targeted diversification states [31] Market Data and Key Metrics Changes - The market environment is characterized by significant variability across insurance product lines, with rising competition in property and building pricing pressures in liability [9] - The company is experiencing favorable conditions in the lower mid-market and smaller size account space, particularly in the Specialty segment [18] Company Strategy and Development Direction - The company is focused on a specialized and diversified portfolio of products through a select distribution model targeting top independent agents [8] - Investments in data, analytics, and technology are being made to enhance operational efficiency and scalability [19][20] - The company aims to maintain significant price increases in response to higher severity and unpredictable nature of catastrophe losses [12] Management's Comments on Operating Environment and Future Outlook - Management expressed a positive business outlook, with widespread profitability and target level returns across most segments [9] - The company is well-positioned to capitalize on emerging opportunities and continue delivering high-quality results [10] - Management remains cautious about potential impacts from tariffs and is actively monitoring market conditions [13] Other Important Information - The company completed a successful renewal of its property treaties, reflecting effective property and catastrophe management initiatives [35] - The third quarter catastrophe load is expected to be 6.8%, with ongoing efforts to improve the portfolio's risk profile [39] Q&A Session Summary Question: Specialty segment and decelerating rate environment - Management highlighted the resilience of pricing and ongoing profitability in the Specialty segment, emphasizing differentiation in lower middle market and small business [42][44] Question: Commercial auto charge and trends - Management noted that commercial auto is a relatively small line, with increased reserves being prudent rather than indicative of a larger trend [46][47] Question: Catastrophe load guidance for Q3 - The expected catastrophe load of 6.8% reflects improvements in both personal and commercial lines, with ongoing efforts to manage risk [52][53] Question: Competitive environment in commercial lines - Management discussed the diversification of the portfolio as a strength, with expectations for continued resilience in small commercial despite competitive pressures [54][56] Question: Investment income guidance - Management expressed confidence in the investment income outlook, driven by strong cash flows and favorable reinvestment rates [59][61] Question: Distribution strategy in personal lines - Management is focused on diversifying the business across existing states rather than rapidly expanding into new ones, while adding agents to enhance growth [67][68] Question: Technology and operational efficiency - Management emphasized the importance of targeted tech-driven investments to enhance operating models and efficiency, positioning the company for scalable growth [70][74]

Financial Data and Key Metrics Changes - Operating return on equity (ROE) reached 18.7%, a record for the second quarter [9] - Operating earnings were $4.35 per diluted share, with earnings growth of approximately 25% on an ex-cat basis [9] - The overall combined ratio improved by approximately seven points year-over-year, while the ex-cat combined ratio improved by three points [9][23] - Net investment income increased by 16.7% to $105.5 million [24] Business Line Data and Key Metrics Changes - Personal lines business showed strong profitability with a current accident year ex-cat combined ratio of 84.8%, reflecting a 5.4-point improvement from the prior year [27] - Core Commercial segment delivered a combined ratio of 93%, with a combined ratio excluding catastrophes of 88.9% [32] - Specialty segment achieved a current accident year loss ratio ex-cat of 49%, favorable compared to expectations and the prior year [34] Market Data and Key Metrics Changes - Personal lines growth was 3.7%, with double-digit growth in targeted diversification states [31] - Net written premium growth in Core Commercial improved by 4.4%, led by 5.6% growth in small commercial [33] - Specialty net written premium growth was 4.6%, with retention improving to 81.8% [35] Company Strategy and Development Direction - The company is focused on a diversified portfolio and specialized products through a select distribution model targeting top independent agents [7] - Investments in data, analytics, and technology are prioritized to enhance operational efficiency and customer experience [18][19] - The company aims to capitalize on emerging opportunities in a dynamic market environment characterized by variability across insurance product lines [8] Management's Comments on Operating Environment and Future Outlook - Management expressed a positive business outlook with widespread profitability across most segments [8] - The company is well-positioned to sustain profit margins while executing its targeted growth strategy [12] - Management remains cautious about potential impacts from tariffs but has not yet seen material effects [12] Other Important Information - The company repurchased approximately 295,000 shares of common stock totaling $48.2 million [40] - The third quarter catastrophe load is expected to be 6.8% [40] Q&A Session Summary Question: Inquiry about the Specialty segment and rate environment - Management acknowledged the resilient pricing in the Specialty segment and emphasized their focus on lower middle market and small business [44][46] Question: Concerns regarding commercial auto charges - Management clarified that commercial auto is a relatively small line for them, and the increase in reserves is primarily IBNR [48][49] Question: Catastrophe load guidance for Q3 - Management confirmed a 6.8% catastrophe load for Q3, with improvements expected in both personal and commercial lines [53][54] Question: Competitive environment in commercial lines - Management noted that their diversified portfolio helps maintain pricing stability despite competitive pressures [56][58] Question: Investment income guidance - Management expressed confidence in their investment income performance, driven by strong cash flows and favorable reinvestment rates [61][63]

Financial Performance - The company's net income was $1571 million, or $430 per diluted share[6] - The company's operating income was $1587 million, or $435 per diluted share[6] - The company's net return on average equity was 201%, and the operating return on average equity was 187%[5,6] - The company's book value per share increased by 60% from March 31, 2025, to $8962[5] Underwriting Results - The company's combined ratio was 925%, with a combined ratio excluding catastrophes of 855%[5] - Catastrophe losses amounted to $1075 million, representing 70 points on the combined ratio[5] - The company's net premiums written increased by 41%[5] - The company's net investment income increased by 167% to $1055 million[5] Segment Performance - Core Commercial net premiums written grew by 44% to $5360 million[11] - Specialty net premiums written grew by 46% to $3682 million[18] - Personal Lines net premiums written grew by 37% to $6796 million[26] Pricing and Retention - Renewal price increases were 123% in Personal Lines, 107% in Core Commercial, and 78% in Specialty[5] - Core Commercial retention improved sequentially to 851%[17]

Core Insights - Hanover Insurance Group (THG) reported $1.66 billion in revenue for the quarter ended June 2025, reflecting a year-over-year increase of 5.5% [1] - The earnings per share (EPS) for the same period was $4.35, a significant increase from $1.88 a year ago, resulting in an EPS surprise of +41.69% compared to the consensus estimate of $3.07 [1] Financial Performance Metrics - GAAP Loss and LAE Ratio was reported at 61.9%, better than the average estimate of 66% from three analysts [4] - GAAP Expense Ratio matched the average estimate at 30.6% [4] - GAAP Combined Ratio was 92.5%, outperforming the estimated average of 96.6% [4] - Core Commercial - Loss and LAE Ratio was 60.1%, compared to the average estimate of 63.7% [4] - Operating Revenues for Core Commercial - Net Investment Income was $47.7 million, slightly above the estimate of $47.34 million [4] - Operating Revenues for Personal Lines - Net Premiums Earned was $635.1 million, representing a year-over-year change of +4.9% [4] - Total Revenues from Premiums earned was $1.55 billion, consistent with the average estimate, also showing a +4.9% year-over-year change [4] - Net investment income was reported at $105.5 million, a +16.7% increase compared to the year-ago quarter [4] Stock Performance - Hanover Insurance shares have returned -0.5% over the past month, while the Zacks S&P 500 composite increased by +3.4% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Earnings Performance - Hanover Insurance Group reported quarterly earnings of $4.35 per share, exceeding the Zacks Consensus Estimate of $3.07 per share, and showing a significant increase from $1.88 per share a year ago, representing an earnings surprise of +41.69% [1] - The company has surpassed consensus EPS estimates for the last four quarters, with a previous quarter's earnings of $3.87 per share against an expected $3.58, resulting in a surprise of +8.1% [2][1] Revenue Analysis - For the quarter ended June 2025, Hanover Insurance posted revenues of $1.66 billion, which was slightly below the Zacks Consensus Estimate by 0.1%, but an increase from $1.57 billion year-over-year [2] - The company has not been able to beat consensus revenue estimates over the last four quarters [2] Stock Performance and Outlook - Hanover Insurance shares have increased by approximately 7.6% since the beginning of the year, while the S&P 500 has gained 8.3% [3] - The future stock price movement will largely depend on management's commentary during the earnings call and the earnings outlook [3][4] Earnings Estimates and Industry Context - The current consensus EPS estimate for the upcoming quarter is $3.26 on revenues of $1.67 billion, and for the current fiscal year, it is $14.49 on revenues of $6.68 billion [7] - The Zacks Industry Rank indicates that the Insurance - Property and Casualty sector is currently in the bottom 35% of over 250 Zacks industries, which may negatively impact stock performance [8]

[Segment Descriptions](index=3&type=section&id=Segment%20Descriptions) The Hanover Insurance Group operates through three main business segments: Core Commercial, Specialty, and Personal Lines, with an 'Other' segment for run-off businesses and holding company assets [Segment Descriptions](index=3&type=section&id=Segment%20Descriptions) The Hanover Insurance Group operates through three main business segments: Core Commercial, which serves small to mid-sized businesses; Specialty, which provides coverage for niche markets with special risk needs like professional liability and marine; and Personal Lines, which offers automobile and homeowners insurance to individuals. An 'Other' segment handles run-off businesses and holding company assets and expenses - Core Commercial: Provides coverage for small businesses (premiums ≤$50k) and mid-sized businesses (premiums ≥$50k), focusing on industries like technology, manufacturing, and retail[5](index=5&type=chunk) - Specialty: Offers tailored insurance for professional firms (lawyers, engineers), program business, marine, and surety bonds[5](index=5&type=chunk) - Personal Lines: Includes personal automobile coverage and homeowners insurance for individuals, covering residences and personal property[5](index=5&type=chunk) [Financial Highlights](index=4&type=section&id=Financial%20Highlights) The Hanover Insurance Group reported significant Q2 2025 year-over-year growth in net premiums written, operating income, and book value per share [Financial Highlights](index=4&type=section&id=Financial%20Highlights) For the second quarter of 2025, The Hanover Insurance Group reported significant year-over-year growth. Net premiums written increased to $1,583.8 million, and operating income after taxes rose to $158.7 million, or $4.35 per diluted share. For the six months ended June 30, 2025, operating income reached $300.5 million, a substantial increase from $180.0 million in the prior year period. The company's balance sheet strengthened, with book value per share increasing to $89.62 Q2 & YTD 2025 vs 2024 Earnings | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | **Operating Income After Taxes** | $158.7M | $68.1M | $300.5M | $180.0M | | **Net Income** | $157.1M | $40.5M | $285.3M | $156.0M | | **Operating EPS (Diluted)** | $4.35 | $1.88 | $8.22 | $4.96 | Q2 & YTD 2025 vs 2024 Premiums | Metric (in millions) | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | **Gross Premiums Written** | $1,752.6 | $1,679.3 | $3,442.5 | $3,305.1 | | **Net Premiums Written** | $1,583.8 | $1,521.1 | $3,094.6 | $2,975.1 | | **Net Premiums Earned** | $1,545.3 | $1,473.2 | $3,053.8 | $2,921.8 | Balance Sheet Highlights (as of June 30) | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | **Total Assets** | $15,732.1M | $14,872.2M | | **Total Shareholders' Equity** | $3,216.3M | $2,552.2M | | **Book Value Per Share** | $89.62 | $70.96 | | **Total Debt/Equity** | 24.4% | 30.7% | [Consolidated Financial Statements](index=5&type=section&id=Consolidated%20Financial%20Statements) The company's Q2 2025 consolidated financial statements show increased revenues and income, alongside growth in total assets and shareholders' equity [Income Statements](index=5&type=section&id=Income%20Statements) The consolidated income statement for Q2 2025 shows a 7.7% increase in total revenues to $1,654.4 million, driven by higher premiums earned and net investment income. Total losses and expenses decreased by 2.0%, leading to a significant rise in income from continuing operations to $156.9 million from $40.4 million in Q2 2024. For the first six months of 2025, income from continuing operations grew 82.9% to $285.1 million Consolidated Income Statement Highlights (in millions) | Metric | Q2 2025 | Q2 2024 | % Change | YTD 2025 | YTD 2024 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Premiums Earned** | $1,545.3 | $1,473.2 | 4.9% | $3,053.8 | $2,921.8 | 4.5% | | **Total Revenues** | $1,654.4 | $1,536.7 | 7.7% | $3,257.6 | $3,087.8 | 5.5% | | **Losses and LAE** | $957.2 | $1,007.6 | -5.0% | $1,912.5 | $1,942.8 | -1.6% | | **Income from Continuing Operations** | $156.9 | $40.4 | N/M | $285.1 | $155.9 | 82.9% | | **Net Income** | $157.1 | $40.5 | N/M | $285.3 | $156.0 | 82.9% | - Net investment income increased by **16.7% to $105.5 million** in Q2 2025 compared to Q2 2024[10](index=10&type=chunk) [Balance Sheets](index=6&type=section&id=Balance%20Sheets) As of June 30, 2025, the company's total assets grew by 3.0% to $15.73 billion compared to year-end 2024. This was supported by a 5.6% increase in total investments. Total liabilities saw a marginal increase of 0.7%, while total shareholders' equity rose significantly by 13.2% to $3.22 billion, reflecting strong earnings Consolidated Balance Sheet Highlights (in millions) | Metric | June 30, 2025 | Dec 31, 2024 | % Change | | :--- | :--- | :--- | :--- | | **Total Investments** | $9,941.3 | $9,409.8 | 5.6% | | **Total Assets** | $15,732.1 | $15,274.5 | 3.0% | | **Loss and LAE Reserves** | $7,636.2 | $7,461.2 | 2.3% | | **Total Liabilities** | $12,515.8 | $12,432.7 | 0.7% | | **Total Shareholders' Equity** | $3,216.3 | $2,841.8 | 13.2% | - The company's debt structure shifted, with short-term debt increasing significantly while long-term debt was reduced by **51.8%**[13](index=13&type=chunk) [Pre-tax Operating Results and Related Metrics](index=7&type=section&id=Pre-tax%20Operating%20Results%20and%20Related%20Metrics) The company's pre-tax operating results show improved combined ratios across segments, driven by lower catastrophe losses and stable expense management [Consolidated](index=7&type=section&id=Consolidated) Consolidated results for Q2 2025 showed significant improvement, with the combined ratio decreasing to 92.5% from 99.2% in Q2 2024. This was driven by a lower loss and LAE ratio of 61.9% and a stable expense ratio. GAAP underwriting profit was $110.3 million, a stark contrast to the $6.2 million profit in the prior-year quarter. The improvement was largely due to lower catastrophe losses, which were $113.5 million in Q2 2025 compared to $177.1 million in Q2 2024 Consolidated Combined Ratio - Q2 | Ratio | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Total Loss and LAE Ratio** | 61.9% | 68.4% | | **Expense Ratio** | 30.6% | 30.8% | | **Combined Ratio** | 92.5% | 99.2% | | **Combined Ratio, ex-CAT** | 85.5% | 88.5% | Consolidated Combined Ratio - YTD | Ratio | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | | **Total Loss and LAE Ratio** | 62.6% | 66.5% | | **Expense Ratio** | 30.7% | 30.8% | | **Combined Ratio** | 93.3% | 97.3% | | **Combined Ratio, ex-CAT** | 86.6% | 88.9% | - Current year catastrophe losses decreased to **7.4%** of net premiums earned in Q2 2025 from **12.1%** in Q2 2024[16](index=16&type=chunk) [Core Commercial](index=10&type=section&id=Core%20Commercial) The Core Commercial segment reported a combined ratio of 93.0% for Q2 2025, a slight deterioration from 91.8% in Q2 2024, despite lower catastrophe losses. The total loss and LAE ratio increased to 60.1% from 58.4%. Net premiums written grew 4.4% in the quarter, driven by both Small Commercial and Middle Market sub-segments. Renewal price changes remained strong at 10.7%, though slightly lower than the prior year Core Commercial Combined Ratio - Q2 | Ratio | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Total Loss and LAE Ratio** | 60.1% | 58.4% | | **Expense Ratio** | 32.9% | 33.4% | | **Combined Ratio** | 93.0% | 91.8% | Core Commercial Net Premiums Written (in millions) | Sub-segment | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Small Commercial** | $334.3 | $316.5 | | **Middle Market** | $201.7 | $196.9 | | **Total** | $536.0 | $513.4 | - Renewal price change for Core Commercial was **10.7%** in Q2 2025, compared to **11.7%** in Q2 2024. Premium retention improved to **85.1%** from **83.2%**[25](index=25&type=chunk) [Specialty](index=12&type=section&id=Specialty) The Specialty segment delivered strong performance in Q2 2025 with a combined ratio of 86.5%, a significant improvement from 93.1% in Q2 2024. This was driven by a lower loss ratio, particularly from reduced catastrophe losses and favorable prior year development. Net premiums written grew 4.6% to $368.2 million, with growth across all sub-segments. Renewal price change moderated to 7.8% from 11.7% in the prior-year quarter Specialty Combined Ratio - Q2 | Ratio | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Total Loss and LAE Ratio** | 49.6% | 56.4% | | **Expense Ratio** | 36.9% | 36.7% | | **Combined Ratio** | 86.5% | 93.1% | - Net premiums written grew **4.6%** in Q2 2025, with the Marine sub-segment showing strong growth[30](index=30&type=chunk) - Renewal price change for the Specialty segment was **7.8%** in Q2 2025, down from **11.7%** in Q2 2024. Premium retention was **81.8%**[30](index=30&type=chunk) [Personal Lines](index=14&type=section&id=Personal%20Lines) Personal Lines showed a dramatic turnaround in Q2 2025, posting an operating income of $57.4 million compared to a loss of $30.4 million in Q2 2024. The combined ratio improved to 95.5% from 109.1%, primarily due to a significant reduction in the loss ratio from 83.8% to 70.5%. This was driven by substantially lower catastrophe losses, especially in the Homeowners line. Net premiums written grew 3.7%, and renewal price changes remained robust at 12.3% Personal Lines Combined Ratio - Q2 | Ratio | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Total Loss and LAE Ratio** | 70.5% | 83.8% | | **Expense Ratio** | 25.0% | 25.3% | | **Combined Ratio** | 95.5% | 109.1% | - The improvement was driven by a lower loss ratio in the Homeowners and Other line, which fell to **74.5%** from **102.8%** in Q2 2024, due to lower catastrophe losses[33](index=33&type=chunk) Personal Lines Renewal Price Change - Q2 | Line of Business | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Personal Automobile** | 9.8% | 18.0% | | **Homeowners** | 15.7% | 19.1% | | **Total** | 12.3% | 18.5% | [Investments](index=18&type=section&id=Investments) The company's investment portfolio shows increased net investment income and yields, primarily from high-quality fixed maturities with moderate duration [Net Investment Income and Yields](index=18&type=section&id=Net%20Investment%20Income%20and%20Yields) Total net investment income for Q2 2025 was $105.5 million, a 16.7% increase from Q2 2024. The growth was primarily driven by higher income from fixed maturities. The annualized pre-tax yield on the total investment portfolio was 4.11% for the quarter, up from 3.73% in the prior-year period Net Investment Income (in millions) | Source | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | **Fixed Maturities** | $98.4 | $76.5 | $191.7 | $152.2 | | **Total** | $105.5 | $90.4 | $211.6 | $180.1 | Pre-tax Yields | Portfolio | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **Fixed Maturities** | 4.24% | 3.53% | | **Total** | 4.11% | 3.73% | [Investment Portfolio](index=19&type=section&id=Investment%20Portfolio) As of June 30, 2025, the total investment portfolio had a fair value of $9.94 billion. Fixed maturities constituted the largest portion at 89.1% ($9.08 billion) of the total portfolio. The portfolio is primarily composed of corporate bonds (39.7%) and asset-backed securities, including residential and commercial mortgage-backed securities (36.2%) Investment Portfolio Composition (June 30, 2025) | Investment Type | Fair Value (in millions) | % of Total | | :--- | :--- | :--- | | **Total Fixed Maturities** | $9,078.9 | 89.1% | | **Corporates** | $4,038.6 | 39.7% | | **Residential mortgage-backed** | $2,520.4 | 24.7% | | **Total Investments** | $9,941.3 | 97.6% | - The fixed maturity portfolio had a net unrealized loss of **$299.0 million** at the end of Q2 2025[48](index=48&type=chunk) [Credit Quality and Duration of Fixed Maturities](index=20&type=section&id=Credit%20Quality%20and%20Duration%20of%20Fixed%20Maturities) The fixed maturity portfolio as of June 30, 2025, is of high credit quality, with 78.2% of holdings rated 'A' or better (NAIC 1) and 16.8% rated 'Baa' (NAIC 2). The portfolio has a weighted average duration of 4.4 years, indicating a moderate sensitivity to interest rate changes - **95.0%** of the fixed maturity portfolio is rated investment grade (NAIC 1 and 2)[51](index=51&type=chunk) - The weighted average duration of the fixed maturity portfolio is **4.4 years**[52](index=52&type=chunk) [Top 10 Corporate and Municipal Fixed Maturity Holdings](index=21&type=section&id=Top%2010%20Corporate%20and%20Municipal%20Fixed%20Maturity%20Holdings) The top 10 corporate and municipal holdings represent 2.91% of total invested assets as of June 30, 2025. The largest single issuer exposure is to Morgan Stanley, with a fair value of $43.0 million. Other top holdings include Minnesota Housing Finance Agency, Goldman Sachs, and the State of Ohio - The top 10 holdings have a total fair value of **$296.2 million**[54](index=54&type=chunk) - The largest holding is Morgan Stanley (**$43.0M** fair value), followed by Minnesota Housing Finance Agency (**$32.5M** fair value)[54](index=54&type=chunk) [Reconciliation of Operating Income to Net Income](index=22&type=section&id=Reconciliation%20of%20Operating%20Income%20to%20Net%20Income) The reconciliation details the transition from operating income to net income, accounting for non-operating items like investment gains/losses [Reconciliation of Operating Income to Net Income](index=22&type=section&id=Reconciliation%20of%20Operating%20Income%20to%20Net%20Income) For Q2 2025, operating income after taxes was $158.7 million ($4.35 per share). After accounting for non-operating items, primarily net realized and unrealized investment losses and their tax effects, the company reported income from continuing operations of $156.9 million ($4.30 per share) and net income of $157.1 million ($4.30 per share) Reconciliation for Q2 2025 (in millions) | Metric | Amount | Per Share (Diluted) | | :--- | :--- | :--- | | **Operating Income After Taxes** | $158.7 | $4.35 | | Net Realized/Unrealized Losses & Other | ($1.8) | ($0.05) | | **Income from Continuing Operations** | $156.9 | $4.30 | | Discontinued Operations | $0.2 | $0.00 | | **Net Income** | $157.1 | $4.30 | [Other Information](index=23&type=section&id=Other%20Information) This section provides definitions for non-GAAP financial measures, premium-related metrics, and key corporate details including stock symbol and financial strength ratings [Non-GAAP Financial Measures](index=23&type=section&id=Non-GAAP%20Financial%20Measures) The company utilizes several non-GAAP measures to evaluate operating performance, including operating income, book value per share excluding unrealized gains/losses, and combined ratios excluding catastrophe losses and reserve development. Management believes these measures provide investors with a clearer view of the core operational performance by excluding volatile items like investment market fluctuations and unpredictable catastrophe events - Operating income excludes net realized/unrealized investment gains/losses, discontinued operations, and other non-operating items to highlight core business performance[61](index=61&type=chunk) - Metrics excluding catastrophe losses and prior year reserve development are provided to help investors understand underlying profitability and the variability of periodic earnings[63](index=63&type=chunk)[64](index=64&type=chunk) [Premium Related Metric Definitions](index=24&type=section&id=Premium%20Related%20Metric%20Definitions) The report defines key premium-related metrics used to assess business trends. 'Renewal Price Change' measures the average premium change on renewed policies from rate and exposure changes. 'Rate' specifically isolates the impact of base rate changes. 'Retention' measures the ratio of renewed premium or policies to the amount available for renewal - Renewal Price Change: Captures the net effect of base rate changes, pricing adjustments, and changes in policy exposure[70](index=70&type=chunk) - Retention: For Commercial lines, it's based on premium; for Personal Lines, it's based on the number of policies[70](index=70&type=chunk) [Corporate Information](index=25&type=section&id=Corporate%20Information) The Hanover Insurance Group, Inc. trades on the NYSE under the symbol 'THG'. The company paid a quarterly cash dividend of $0.90 per share in Q1 and Q2 2025. As of July 30, 2025, its principal subsidiaries, The Hanover Insurance Company and Citizens Insurance Company of America, hold strong financial strength ratings, including an 'A' from A.M. Best and S&P Global Quarterly Dividends Per Share | Quarter | 2025 | 2024 | | :--- | :--- | :--- | | **Q1** | $0.900 | $0.850 | | **Q2** | $0.900 | $0.850 | Financial Strength Ratings (as of July 30, 2025) | Agency | The Hanover Ins. Co. | Citizens Ins. Co. of America | | :--- | :--- | :--- | | **A.M. Best** | A | A | | **S&P Global** | A | A | | **Moody's** | A2 | - |