WORCESTER, Mass. – The Hanover Insurance Group, Inc. (NYSE: THG) today reported net income of $49.3 million, or $1.09 per diluted share, for the fourth quarter of 2011. The company reported net income of $58.4 million, or $1.27 per diluted share, in the fourth quarter of 2010.
Fourth Quarter 2011 Financial Highlights
- Net income of $49.3 million, or $1.09 per diluted share; segment income after tax of $45.2 million, or $1.00 per diluted share(1)
- Combined ratio of 99.0%; ex-catastrophe combined ratio(2) of 93.7%
- Catastrophe losses before taxes of $55.6 million, including $38.5 million from Thailand floods
- Net investment income of $69.0 million
- Net premiums written of $977.1 million, 36% higher than the prior-year quarter driven by:
- Net premiums written of $206.5 million added with Chaucer acquisition
- Net premiums written growth of 13% in Commercial Lines
- Continuing and accelerating improvement in Commercial Lines pricing trends; improved retention
- Book value per share of $56.24 at December 31, 2011, an increase of 2.3% from September 30, 2011
Full Year 2011 Financial Highlights
- Net income of $37.1 million, or $0.81 per diluted share; segment income after tax of $14.6 million, or $0.32 per diluted share
- Combined ratio of 104.6%; ex-catastrophe combined ratio of 94.6%
- Catastrophe losses before taxes of $361.6 million
- Net investment income of $258.2 million
- Net premiums written of $3.6 billion, 17.9% higher than the prior-year quarter, driven by the addition of Chaucer premiums in the second half of 2011, and by growth of 8% in Commercial Lines
- Book value per share of $56.24 at December 31, 2011, an increase of 2.7% from December 31, 2010
Segment income before interest expense and taxes was $77.1 million in the fourth quarter of 2011, which included $55.6 million in pre-tax catastrophe losses. In the fourth quarter 2010, the company reported segment income before interest expense and taxes of $76.2 million, which included $16.8 million in pre-tax catastrophes losses.
The Hanover’s results include the operations of Chaucer Holdings PLC (“Chaucer”) from July 1, 2011, and accordingly, current and prior periods are not directly comparable. Results for the twelve months ended December 31, 2011, include results of Chaucer only for the period of July 1 through December 31, 2011.
“We are pleased to report solid results for the quarter,” said Frederick H. Eppinger, chief executive officer at The Hanover. “Our performance reflects the benefit of our strategy to improve the geographic diversification and mix of our business, especially with respect to Commercial Lines.
“2011 was an unprecedented year, as it was impacted by global catastrophes, low interest rates and a challenging market environment,” he said. “However, we continued to improve our position in the market. We enhanced our product portfolio, grew in targeted states and strengthened our already strong position with winning agents. We also integrated Chaucer into our organization, further diversifying our business and penetrating attractive specialty markets. Strategically, 2011 was a very important year for us. We have positioned ourselves to continue to improve our financial performance and capitalize on profitable growth opportunities in an improving market and economic environment.
“During this past quarter and into January, we have continued to see improvement in pricing trends,” Eppinger said. “In our core Commercial Lines, prices increased 4% as we put a fifth consecutive quarter of accelerating price increases on the books, and in Personal Lines, we continued to achieve rate increases of over 5%. At the same time, we continued to improve our retention, reaching 86% in Commercial Lines and 81% in Personal Lines. We believe this is a testament to our much-improved market position and the strong relationships we have with our agents and brokers.
“We also are pleased that our focus on risk management in our underwriting portfolio has enabled us to maintain a strong balance sheet. We were able to grow book value during this tumultuous year, reporting a value of $56.24 at year end 2011, representing an increase of almost 3% since year end 2010,” he said.
The complete earnings release is available here: The Hanover 4Q 2011 Results
Source: The Hanover
(1) Pre-tax segment income, segment income after taxes and segment income after taxes per diluted share are non-GAAP measures. These measures are used multiple times throughout this document. The reconciliation of these measures to the closest GAAP measures, income from continuing operations and income from continuing operations per diluted share, respectively, is provided on page 13 of this press release. See the disclosure on the use of non-GAAP measures under the heading “Forward-Looking Statements and Non-GAAP Financial Measures.”
(2) Ex-catastrophe combined ratio is a non-GAAP measure. This measure is used multiple times throughout this document. The combined ratio (which includes catastrophe losses) is the closest GAAP measure. See the disclosure on the use of non-GAAP measures under the heading “Forward-Looking Statements and Non-GAAP Financial Measures.”