The Hanover Insurance Group Inc. reported $54.9 million net income for its 2014 third quarter, a 10.4 percent decline compared with $61.3 million net income during the third quarter of 2013.
The Worcester, Massachusetts-based insurer’s earnings were dampened by what the company described as “unusually large catastrophe activity in Michigan,” which contributed to catastrophe losses of $88.1 million in the third quarter. In comparison, catastrophe losses during last year’s third quarter were $30.6 million.
Net premiums written were $1.245 billion for the quarter, up 5.3 percent from $1.182 billion one year ago. Operating income was $47.7 million for the quarter, down 21.7 percent from last year. Net investment income for the quarter was $67.5 million, up 2.7 percent compared to a year ago.
The combined ratio for the third quarter was 98.2 (90.8 excluding catastrophes), compared with 96.0 (93.3 excluding catastrophes) a year ago.
Overall underwriting income for the third quarter was $18.0 million, compared with $41.4 million a year ago.
“The strength of our earnings this quarter, particularly in light of higher-than-expected catastrophe losses, demonstrates that our company is more resilient than ever before and is well-positioned to profitably grow despite industry headwinds,” said Frederick Eppinger, president and chief executive officer.
Eppinger said the company delivered significant underlying improvement in domestic businesses and strong results from its Chaucer segment, which together drove a 2.5-point improvement in the combined ratio excluding catastrophes.
Eppinger also said net premiums written increased by 5 percent, reflecting solid growth in all business segments. “We are especially encouraged by the continued growth momentum in Personal Lines, since growth of almost 2 percent was driven by strong new business writings and rate increases, which outpaced tapering exposure management actions,” he said. “Growth in Commercial Lines and at Chaucer was robust and in line with our expectations.”
Additionally, Eppinger said the company achieved solid pricing increases with 7 percent in Core Commercial and 6 percent in Personal Lines, with improved retention.
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