The Hanover Insurance Group has announced its financial results for the first quarter of 2025, reporting a net income of $128.2 million, catastrophe losses of $95.6 million, and a combined ratio of 94.1%.
This year’s Q1 net income compares to the $115.5 million reported in the same period last year, which also saw a combined ratio of 95.5%.
Q1 2025 operating income stood at $141.8 million, compared to $111.9 million in Q1 2024. The company also reported net and operating return on equity of 17.4% and 17.2%, respectively, in the first quarter of 2025.
At 94.1%, Q1 2025’s combined ratio saw a slight improvement compared to Q1 2024’s 95.5%. Combined ratio excluding catastrophes was 87.8%. Notably, catastrophe losses took 6.3 points of the combined ratio.
John C. Roche, president and chief executive officer at The Hanover, stated: “We delivered excellent results in the first quarter, with a 17.2% operating return on equity despite significant U.S. industry catastrophe activity. Our performance in the quarter is a testament to the effectiveness of the catastrophe mitigation actions and the margin enhancement initiatives we have implemented over the past two years.
“As a result, we have continued to increase underwriting margins on an ex-CAT basis, as demonstrated by the 1.7-point improvement in our ex-CAT combined ratio, compared to the same period last year.”
The Hanover also saw its net premiums written increase 3.9%, to $1,510.8 million in Q1 2025. Net premiums earned were $1,508.5 million.
The quarter also experienced loss and loss adjustment expense (LAE) ratio of 63.3%, 1.3 points below the prior-year quarter, Current accident year loss and LAE ratio in Q1 2025, excluding catastrophes were 58.3%, 1.0 point below the prior-year quarter, led by great improvement in Personal Lines.
The firm’s Core Commercial operating income before income taxes was $26.8 million in Q1 2025, with a combined ratio of 103.4%. Catastrophe losses were $46.0 million, 8.5 points of the combined ratio.
Net premiums written were $604.6 million in the quarter, up 3.8% from the prior-year quarter, consisting of 6.7% growth in middle market and 1.7% growth in small commercial.
Specialty operating income before income taxes was $64.6 million in Q1 2025, with a combined ratio of 87.7%. Catastrophe losses were $14.7 million, 4.3 points of the combined ratio.
Net premiums written were $358.3 million in the quarter, up 5.4% from the prior-year quarter.
The reinsurer’s Personal Lines operating income before income taxes stood at $94.2 million with a combined ratio of 89.7%. Catastrophe losses were $34.9 million, 5.6 points of the combined ratio.
Q1 2025 also saw renewal price increases of 13.1% in Personal Lines, 11.1% in Core Commercial, and 8.4% in Specialty. Rate increases were also experienced in the quarter, with Personal Lines seeing 11.8% growth, 9.1% in Core Commercial, and 5.9% in Specialty.
Roche said: “”We fully expect to accelerate premium growth through the year, as we leverage our strong market position and relevant product and service offerings. In Specialty, we anticipate our recent investments in talent and technology will drive increasing growth in our most profitable lines.
“In Core Commercial, we expect a more nuanced pricing strategy to enable us to capitalize on even greater opportunities in the marketplace, particularly in Small Commercial. And, in Personal Lines, we will continue to take advantage of our improved profitability to drive increasing policy counts and premium growth in states targeted for expansion.”
Adding: “Market conditions remain favorable across most of our business segments, as we achieved low double-digit price increases in Personal Lines and Small Commercial, and high single-digit price increases in Specialty and Middle Market. As we navigate an uncertain economic landscape, we are confident we are prepared to face these uncertainties from a position of strength.”
Jeffrey M. Farber, executive vice president and chief financial officer at The Hanover, noted: “Our results reflect record first quarter operating EPS of $3.87 per share, a combined ratio of 94.1% and 18% growth in net investment income, clear evidence that our strategy is driving strong performance in all key areas of our operations.
“Our reserve position remains strong, underscored by favorable prior-year development across each major segment, and prudent IBNR reserves. The significant increase in net investment income reflects the impact of higher new money rates and growth in invested assets from strong operating cash flows, which position us to deliver even stronger investment income performance going forward.”
He concluded: “Additionally, we further demonstrated our commitment to returning capital to shareholders, repurchasing 173,000 shares of common stock, totaling $28.4 million year-to-date through April 29th, underscoring our conviction in the long-term value of and the positive outlook for our business.”
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