Group 1 - The Hanover Insurance Group (THG) has a long history dating back to 1852, indicating the durability of its business model [1] - The company's longevity is a significant factor that contributes to its reputation and stability in the insurance industry [1]

For the quarterly period ended March 31, 2025 or Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-13754 THE HANOVER INSURANCE GROUP, INC. (Exact name of registrant as specified in its charter) Delaware 04-32636 ...

Financial Data and Key Metrics Changes - The company achieved operating earnings per share of $3.87, a first-quarter record, and a combined ratio of 94.1%, slightly outperforming expectations [20] - Net written premiums grew by 3.9% in the first quarter [20] - Catastrophe losses were 6.3%, with California wildfire losses accounting for $35 million [21] - Excluding catastrophes, the combined ratio improved to 87.8%, reflecting a 1.7-point improvement over the prior year [21] Business Line Data and Key Metrics Changes - Personal Lines achieved net written premium growth of 3%, with a 7.1% increase excluding the Midwest [7][9] - Core Commercial net written premium growth was 3.8%, driven by middle market momentum [10] - Specialty segment's premium growth was 5.4%, with upper single-digit to double-digit growth in profitable lines [14] Market Data and Key Metrics Changes - The company noted increased competition in the small commercial market, particularly in certain sectors [40][56] - The competitive environment in Personal Lines is becoming more aggressive, especially in the direct channel [56] Company Strategy and Development Direction - The company is focused on profitable growth in high-potential markets while managing exposure in the Midwest [7] - There is an emphasis on targeted catastrophe mitigation efforts and adjusting pricing in states with improved profitability [9][10] - The company plans to leverage investments in field sales and underwriting to accelerate new agency appointments [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating economic uncertainties, citing a strong book of business and diversified premium streams [17][18] - The company anticipates strong underwriting profitability driven by pricing exceeding loss trends and higher net investment income [36] Other Important Information - The company has repurchased approximately 178,000 shares of common stock year-to-date, with $274 million remaining under the share repurchase program [34] - The second quarter catastrophe load is expected to be 7.9% [35] Q&A Session Summary Question: Comments on small commercial pricing environment - Management acknowledged increased competition in small commercial and indicated adjustments in new business pricing to regain growth momentum [40][41] Question: Competitive environment in Personal Lines - Management confirmed that the competitive landscape is becoming more aggressive, particularly in the auto insurance sector, but expressed confidence in their strategy [55][56] Question: Frequency benefits in home insurance - Management attributed favorable frequency to higher deductibles and customer reluctance to file small claims, indicating this trend may continue [67][70] Question: Casualty loss trend assumptions - Management noted that casualty loss trend assumptions have been raised consistently over the past five years, reflecting ongoing adjustments to market conditions [74] Question: Clarification on catastrophe reserve releases - Management clarified that their guidance does not include prior year development (PYD) and emphasized a prudent approach to managing their balance sheet [75]

Financial Data and Key Metrics Changes - The company achieved operating earnings per share of $3.87, a first-quarter record, and a combined ratio of 94.1%, slightly outperforming expectations [21] - Net written premiums grew by 3.9% in the first quarter [21] - Catastrophe losses were 6.3%, with California wildfire losses accounting for $35 million [22] - Excluding catastrophes, the combined ratio improved to 87.8%, reflecting a 1.7-point improvement over the prior year [22] Business Line Data and Key Metrics Changes - Personal Lines achieved net written premium growth of 3%, with a 7.1% increase excluding the Midwest [9][10] - Core Commercial saw net written premium growth of 3.8%, driven by middle market momentum [11] - Specialty segment's premium growth was 5.4%, with 7.3% growth excluding programs [15] Market Data and Key Metrics Changes - The company noted increased competition in the small commercial market, particularly in certain sectors [41][58] - The personal lines market is becoming more competitive, with increased shopping and consistent terms across markets [59][61] Company Strategy and Development Direction - The company is focused on profitable growth in high-potential markets while managing exposure in the Midwest [10] - There is an emphasis on targeted catastrophe mitigation efforts and adjusting pricing in states where profitability has improved [10][14] - The company plans to leverage investments in field sales and underwriting to accelerate growth in high-opportunity sectors [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating economic uncertainties, citing a strong book of business and diversified premium streams [18] - The company is prepared to face potential tariffs and recessionary impacts, with a focus on maintaining profitability [19] - Management expects premium growth to increase in the second quarter, driven by strong underwriting profitability and higher net investment income [36][37] Other Important Information - The company repurchased approximately 178,000 shares of common stock year-to-date through April, with $274 million remaining under the share repurchase program [35] - The second quarter catastrophe load is expected to be 7.9% [36] Q&A Session Summary Question: Comments on small commercial pricing environment - Management confirmed increased competition in small commercial and noted adjustments in new business pricing to regain growth momentum [41][43] Question: Clarification on liability pricing expectations - Management indicated that the expectation of liability pricing increases applies to all casualty lines, not just umbrella [45] Question: Insights on competitive environment in Personal Lines - Management discussed the deliberate strategy to diversify the book of business while improving profitability across various states [54][56] Question: Frequency benefits in home insurance - Management attributed favorable frequency to higher deductibles and customer reluctance to submit small claims, which is expected to continue [70][72] Question: Casualty loss trend assumptions - Management refrained from providing specific numbers due to variability across different lines but confirmed that assumptions have increased meaningfully over the years [75] Question: Catastrophe reserve releases and guidance - Management clarified that their guidance does not include prior year development (PYD) for catastrophe loads [76]

Financial Performance - Hanover Insurance Group reported $1.62 billion in revenue for the quarter ended March 2025, a year-over-year increase of 4.9% [1] - The EPS for the same period was $3.87, compared to $3.13 a year ago, representing an EPS surprise of +8.10% against the consensus estimate of $3.58 [1] - The reported revenue was a surprise of -1.51% compared to the Zacks Consensus Estimate of $1.65 billion [1] Key Metrics - GAAP Loss and LAE Ratio was 63.3%, slightly better than the estimated 63.7% [4] - GAAP Expense Ratio was reported at 30.8%, compared to the estimated 30.5% [4] - GAAP Combined Ratio was 94.1%, slightly better than the estimated 94.2% [4] - Premiums earned were $1.51 billion, below the four-analyst average estimate of $1.54 billion, but showed a year-over-year change of +4.1% [4] - Net investment income was $106.10 million, exceeding the average estimate of $101.72 million, with a year-over-year change of +18.3% [4] Segment Performance - Core Commercial - Loss and LAE Ratio was 70%, worse than the estimated 65.1% [4] - Personal Lines - Net Premiums Earned were $627.90 million, below the three-analyst average estimate of $639.92 million, with a year-over-year change of +4.9% [4] - Core Commercial - Net Premiums Earned were $541 million, slightly below the estimated $549.22 million, representing a +2.3% change year-over-year [4] Stock Performance - Shares of Hanover Insurance have returned -5.1% over the past month, compared to the Zacks S&P 500 composite's -0.2% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Financial Performance - Hanover Insurance Group reported quarterly earnings of $3.87 per share, exceeding the Zacks Consensus Estimate of $3.58 per share, and up from $3.13 per share a year ago, representing an earnings surprise of 8.10% [1] - The company posted revenues of $1.62 billion for the quarter ended March 2025, which was 1.51% below the Zacks Consensus Estimate, compared to $1.55 billion in the same quarter last year [2] - Over the last four quarters, Hanover Insurance has surpassed consensus EPS estimates three times [2] Stock Performance - Hanover Insurance shares have increased approximately 7.3% since the beginning of the year, while the S&P 500 has declined by 5.5% [3] - The current status of estimate revisions for Hanover Insurance is mixed, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $3.02 on revenues of $1.67 billion, and for the current fiscal year, it is $14.20 on revenues of $6.73 billion [7] - The outlook for the insurance industry, particularly the Property and Casualty sector, is favorable, with the Zacks Industry Rank placing it in the top 17% of over 250 Zacks industries [8]

Financial Performance - The company reported net income of $1282 million, or $350 per diluted share[5,6] - Operating income reached $1418 million, translating to $387 per diluted share[5,6] - The company achieved a net return on equity of 174% and an operating return on equity of 172%[5,6] - Net investment income increased by 183% to $1061 million, driven by higher earned yields and cashflows[5,10] Underwriting Results - The combined ratio was 941%, with a combined ratio excluding catastrophes at 878%[5] - Catastrophe losses amounted to $956 million, contributing 63 points to the combined ratio[5,10] - Net premiums written grew by 39%[5] Segment Performance - Core Commercial net premiums written increased by 38% to $6046 million, but the combined ratio increased to 1034%[11] - Specialty net premiums written increased by 54% to $3583 million, with a combined ratio of 877%[19] - Personal Lines net premiums written increased by 30% to $5479 million, and the combined ratio improved significantly to 897%[27] Growth and Pricing - Personal Lines renewal price increases were 131%, with rate increases of 118%[5] - Core Commercial renewal price increases were 111%, with rate increases of 91%[5] - Specialty renewal price increases were 84%, including rate increases of 59%[5]

Financial Performance - Gross premiums written for Q1 2025 were $1,689.9 million, a 3.9% increase from Q1 2024's $1,625.8 million[8] - Net premiums earned in Q1 2025 reached $1,508.5 million, reflecting a 4.1% growth compared to $1,448.6 million in Q1 2024[10] - Operating income after taxes for Q1 2025 was $141.8 million, up 27.5% from $111.9 million in Q1 2024[8] - Net income for Q1 2025 increased to $128.2 million, an 11.0% rise from $115.5 million in Q1 2024[10] - Total revenues for Q1 2025 were $1,603.2 million, a 3.4% increase from $1,551.1 million in Q1 2024[10] - Total assets as of March 31, 2025, were $15,470.3 million, up from $14,594.1 million a year earlier[8] - Total shareholders' equity increased to $3,044.4 million in Q1 2025, compared to $2,522.7 million in Q1 2024[8] - Net investment income for Q1 2025 was $106.1 million, an 18.3% increase from $89.7 million in Q1 2024[10] - Total liabilities slightly decreased by 0.1% to $12,425.9 million from $12,432.7 million[12] - Shareholders' equity increased by 7.1% to $3,044.4 million from $2,841.8 million[12] Underwriting and Loss Ratios - GAAP underwriting profit for Q1 2025 was $82.9 million, an increase from $60.7 million in Q1 2024[16] - Loss and LAE ratio for Q1 2025 was 63.3%, compared to 64.6% in Q1 2024[16] - Current year catastrophe losses in Q1 2025 amounted to $107.6 million, up from $93.9 million in Q1 2024[16] - The combined ratio for Q1 2025 was 94.1%, an improvement from 95.5% in Q1 2024[16] - The current year loss and LAE ratio, excluding catastrophe losses, was 59.2% for Q1 2025, down from 65.6% in Q1 2024[31] Investment Performance - Total investments rose by 3.0% to $9,689.5 million compared to $9,409.8 million[12] - Net investment income for Q1 2025 was $30.5 million, an increase from $25.6 million in Q1 2024[35] - The total fixed maturities were valued at $8,808.3 million, with a fair value of $9,178.7 million, representing 88.0% of total investments[38] - The weighted average duration of fixed maturities is 4.5 years, with 30.5% of the maturities falling within the 6-8 year range[42] - The total unrealized loss in fixed maturities year-to-date was $(370.4) million, with a net unrealized gain of $138.9 million[38] Shareholder Information - The Hanover Insurance Group's common stock price ranged from $174.61 to $147.13 in Q1 2025, with a dividend of $0.900 per share[63] - In 2024, the stock price ranged from $136.58 to $122.20 in Q1, with consistent dividends of $0.850 per share for Q2 and Q3, and $0.900 in Q4[63] Ratings and Financial Strength - The Hanover Insurance Company holds an A rating from A.M. Best and an A rating from S&P for financial strength[64] - The company's senior debt is rated bbb+ by A.M. Best, BBB by S&P, and Baa2 by Moody's[64] - The subordinated debentures are rated bbb- by A.M. Best, BB+ by S&P, and Baa3 by Moody's[64] Strategic Initiatives - New product development and market expansion strategies are being prioritized to enhance growth in 2025[20]

Core Financial Performance - The Hanover Insurance Group reported net income of $128.2 million, or $3.50 per diluted share, for Q1 2025, an increase from $115.5 million, or $3.18 per diluted share, in Q1 2024 [2][4] - Operating income was $141.8 million, or $3.87 per diluted share, compared to $111.9 million, or $3.08 per diluted share, in the prior-year quarter [2][4] - The company achieved a net return on equity of 17.4% and an operating return on equity of 17.2% in Q1 2025 [2][4] Underwriting and Premiums - Net premiums written increased by 3.9% to $1,510.8 million in Q1 2025, compared to $1,454.0 million in Q1 2024 [4][5] - The combined ratio improved to 94.1% from 95.5% in the prior-year quarter, with a combined ratio excluding catastrophes at 87.8% compared to 89.5% [4][5] - Catastrophe losses amounted to $95.6 million, contributing 6.3 points to the combined ratio [5] Segment Performance - Core Commercial operating income before taxes was $26.8 million, down from $71.5 million in Q1 2024, with a combined ratio of 103.4% compared to 93.9% [6][9] - Specialty segment operating income before taxes increased to $64.6 million from $58.8 million, with a combined ratio of 87.7% [10][13] - Personal Lines operating income before taxes surged to $94.2 million from $18.9 million, with a combined ratio of 89.7% [15][19] Investment Income - Net investment income rose by 18.3% to $106.1 million, driven by higher earned yields and cash flows from operations [20][21] - The total pre-tax earned yield on the investment portfolio increased to 4.14% from 3.70% in the prior-year quarter [20] Shareholder Actions - The company repurchased approximately 173,000 shares of common stock for a total of $28.4 million year-to-date through April 29, 2025 [25] - Book value per share increased by 6.8% to $84.56 from December 31, 2024, reflecting strong earnings and a decrease in unrealized losses [23]

The Hanover Insurance Group (THG) is expected to register an improvement in its top and bottom lines when it reports first-quarter 2025 results on April 30, after the closing bell.The Zacks Consensus Estimate for THG’s first-quarter revenues is pegged at $1.7 billion, indicating a 6.5% increase from the year-ago reported figure. The consensus estimate for the bottom line is pegged at $3.58 per share. The estimate suggests a year-over-year increase of 144.4%. The Zacks Consensus Estimate for THG’s first-quar ...