Worcester, MA – The Hanover Insurance Group, Inc. (NYSE: THG) recently reported net income of $163.5 million, or $4.53 per diluted share, in the fourth quarter of 2021, compared to $164.6 million, or $4.43 per diluted share, in the prior-year quarter. Operating income(7) was $122.1 million, or $3.38 per diluted share, for the fourth quarter of 2021. This compared to operating income of $112.0 million, or $3.02 per diluted share, in the prior-year quarter. The difference between net and operating income in the fourth quarter of 2021 was primarily due to the after-tax increase in the fair value of equity securities of $42.0 million, or $1.16 per fully diluted share, which is excluded from operating income.
Net income for the full year 2021 was $418.7 million, or $11.49 per diluted share. This compares to net income of $358.7 million, or $9.42 per diluted share, in the prior year. Operating income was $318.3 million, or $8.73 per diluted share, in 2021, compared to operating income of $355.0 million, or $9.32 per diluted share, in the prior year.
“2021 was an exceptional year for our company, as we enhanced our competitive position, continued our positive financial momentum and advanced our unique culture,” said John C. Roche, president and chief executive officer at The Hanover. “We delivered strong performance in the fourth quarter, with record operating earnings of $3.38 per diluted share, as well as net premiums written growth of 9.2%. Our performance in the quarter and the year underscores the effectiveness of our distinctive strategy, the relevancy of our product and service offerings, and the strength of our agency partnerships. At the same time, we made important progress across all of our businesses throughout the year. In Personal Lines, our thoughtful pricing strategy, combined with continued strong performance, has positioned us to deliver sustained, profitable growth and value creation in the year ahead. In Commercial Lines, robust rate increases generated meaningful margin expansion, particularly in our specialty business, while our focus on innovative products and technology advancements continued to drive impressive growth. Our ability to generate broad-based profitability, along with our superior underwriting and advanced data and analytics capabilities, proved to be more critical than ever in 2021, as we navigated extremely dynamic market conditions and challenges. We begin 2022 with a proven strategy and a talented, committed team, eager to build on our unique competitive advantage and position us for even greater success.”
“We are very pleased with the outstanding financial results we delivered this year,” said Jeffrey M. Farber, executive vice president and chief financial officer at The Hanover. “Our fourth quarter results reflect a sub-90s ex-CAT combined ratio and an excellent operating return on equity(8) of 16.8%, providing an incredibly strong ending to an already successful year. We delivered a full-year operating return on equity of 11.2%, despite significant catastrophe activity and increasing severity trends. Furthermore, our business is delivering underlying profitability above pre-pandemic levels, which speaks to the sustainability of our strong financial performance. In line with prior guidance, we achieved a 30-basis-point improvement in our full-year expense ratio, reflecting the benefit of growth and operational efficiencies generated by our investments in technology and data analytics. We continued to be responsible stewards of our capital and deliver value to our shareholders in 2021, returning $265 million through dividends and share repurchases. We start the new year with great optimism and enthusiasm, in an excellent financial position, supported by a strong balance sheet and a high-quality investment portfolio.”
The complete results release is available here: The Hanover Fourth Quarter and Full Year 2021 Results
Source: The Hanover