The Hanover Insurance Group in Worcester, Mass., reported a net loss of $55.0 million for the 2012 fourth quarter, in contrast to $49.6 million profit posted for the fourth quarter of 2011.
The Hanover’s latest financial results were hurt by fourth-quarter catastrophe losses of $132.1 million after-tax — including $128.8 million related to Superstorm Sandy.
But the full-year profit improved. Net income for full-year 2012 was $55.9 million, up 52.3 percent compared to $36.7 million income reported for the full-year 2011.
For the 2012 fourth quarter, the overall combined ratio was 115.7 percent (96.9 percent ex-cat), deteriorating from 99.0 percent (93.7 percent ex-cat) one year ago. For the full-year 2012, the combined ratio was 104.4 percent (95.7 percent ex-cat), compared to 104.7 percent (94.7 percent ex-cat) for the full-year 2011.
Net premiums written for the 2012 fourth quarter were $1.034 billion, up 5.8 percent from $977 million during the fourth quarter of 2011. For the full-year 2012, net premiums written were $4.368 billion, up 21.6 percent from $3.593 billion for the full-year 2011.
Net investment income for the 2012 fourth quarter was $70.1 million, up 1.6 percent from $69.0 million in the prior-year period. For the full-year 2012, net investment income was $276.6 million, up 7 percent from $258.2 million in 2011. The company said the increase was mostly due to the acquisition of Chaucer in mid-year 2011 and its related assets and investment income.
“While Superstorm Sandy clearly had a significant impact on our bottom line, we expect losses from this storm will be substantially lower than our market share would indicate, validating the effectiveness of our exposure management actions and underscoring the quality of our underwriting,” said CEO Frederick Eppinger. “Perhaps more importantly, we continued to provide the superior claims service our agents and policyholders have come to expect.”
“We continued to drive forward on our areas of strategic focus during 2012, including mix improvement in our domestic businesses through rate and non-rate actions,” Eppinger said.
Pricing Trend Improvement Continues
The insurer said it’s seeing a continued pricing trend improvement across all major lines.
“The pricing momentum we experienced through the first three quarters of the year continued in the fourth quarter, as demonstrated by pricing increases of 8 percent in both core commercial and personal lines, and over 10 percent in specialty,” Eppinger said.
“We added scale and further improved our operating model in commercial lines, and we continued to benefit from the diversification of business and earnings that Chaucer brings. As a result, we improved our 2012 accident year results, excluding catastrophe losses, setting up a stronger basis going forward,” he said.