The Hanover profit plummets 71%, combined ratio soars as cat losses bite
The Hanover Insurance Group's third quarter 2021 results were dragged down by “considerable” catastrophe losses despite its chief executive claiming “strong, sustained growth” in all business segments.
The insurer saw its net profits plummet almost 71 percent to $34 million in the last quarter, compared with $118.9 million in the prior-year quarter.
The impact was also seen in its combined ratio, which ballooned to 102.3 percent in Q3 2021, compared with 94.2 percent in the third quarter of 2020.
Catastrophe losses had a negative impact of $153.5 million during the period, including $75 million associated with Hurricane Ida.
The Hanover’s net premiums written, however, increased 8.4 percent to $1.37 billion in Q3 this year, compared with $1.27 billion in the same period of 2020, driven by growth in all business segments.
The company saw rate increases of 6.9 percent in core commercial lines and 2.1 percent in personal lines.
John Roche (pictured), president and chief executive officer of The Hanover, said he is “very pleased” with the growth in this quarter, as well as “solid bottom line performance in the face of considerable catastrophe activity”.
“Our high-quality, diversified business performed well once again, in spite of the challenges presented in the quarter, including the severe weather and inflationary pressures that impacted the industry largely in personal lines,” he said.
Roche noted that “some lines experienced more pressure than others, we delivered an underlying loss result in line with our third quarter targets, due largely to the diversification we have managed in our book and the broad-based profitability we are achieving across our business.
“Our losses from Hurricane Ida were in line or better relative to the industry due to our continued focus on exposure management and data and analytics. As we look ahead, we remain committed to managing our business for sustainable long-term, profitable performance.”
“Our underlying loss performance was in line with our expectations,” the company's chief financial officer Jeffrey Farber added. “[...] we are confident we will hit our full-year expense target.”
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