The Hanover Insurance Group, Inc. has preliminary estimated catastrophe losses of $195.8 million, before taxes, for the third quarter of 2023, which translates to 13.7 points of net earned premium.
Multiple convective storms across the Midwestern United States along with hail and wind damage have been attributed to the majority of reported losses, which primarily impacted the company’s personal lines business.
For the quarter, the firm’s loss and loss adjustment expense (LAE) ratio (GAAP) is 74.2% and the current accident year loss and LAE ratio, excluding catastrophes (non-GAAP) is 60.6%.
Considering the catastrophe loss estimates and other currently available information, The Hanover expects to report a Q3 2023 combined ratio of 104.4%. Excluding catastrophes, the combined ratio falls to 90.7%.
The expected after-tax net income to be generated is $0.24 per diluted share along with operating income of $0.19 per diluted share for the third quarter.
John C. Roche, President and Chief Executive Officer at The Hanover, commented: “Severe weather represented a formidable challenge in the third quarter for us and the industry, generating significant catastrophe losses and adversely impacting bottom line results. We have taken decisive action across our Personal and Core Commercial businesses, which will enable us to more effectively manage catastrophe risks while continuing to deliver comprehensive and innovative insurance solutions for our agent partners and customers.
“Among other actions, we are implementing multiple initiatives to increase catastrophe resiliency in our homeowners business, including strengthening terms and conditions, increasing all-peril deductibles, introducing wind and hail deductibles in additional states, applying aged roof amortization schedules in certain geographies, and reinforcing our emphasis on risk prevention measures.”
“During the quarter we continued to successfully build on our margin recapture plan, implementing double-digit price increases and executing underwriting actions in property lines. We are encouraged by the early progress reflected in our underlying performance.
“Excluding catastrophes, we achieved very strong results, delivering meaningful improvement in our Core Commercial and Specialty segments, as well as in personal auto. We increased homeowners renewal prices by 23.4% in the quarter and expect increases of 27% in the fourth quarter. These results underscore the effectiveness of our profitability enhancement program, and give us even greater confidence in our ability to further improve performance in our personal auto and homeowners books, and to deliver on our long-term profitability targets,” added Roche.
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