View this article online: https://www.insurancejournal.com/news/east/2015/07/30/377051.htm
The Hanover Insurance Group Inc. in Worcester, Massachusetts, reported on July 29 net income of $120.7 million for its 2015 second quarter, up 46 percent from $82.6 million net income during last year’s second quarter.
Net premiums written for the latest quarter were $1.293 billion, up 1.3 percent from $1.276 billion a year ago. Net investment income for the quarter came in at $70.7 million, up 5.5 percent from $67.0 million a year ago. The combined ratio for the quarter improved to 95.7 percent (91.8 percent excluding catastrophes) from 96.8 percent (92.1 percent excluding catastrophes) during the prior-year quarter.
“We are pleased to report another quarter of very strong financial performance, generating operating income of $1.56 per share, up 20 percent compared to the prior-year quarter,” said Frederick H. Eppinger, president and CEO of The Hanover.
The company reported continued price increases in Commercial and Personal Lines. “Our domestic businesses grew by 4 percent, led by Commercial Lines, and reflected pricing increases in the quarter of 5.5 percent for Core Commercial, and 5.2 percent for Personal Lines,” Eppinger said.
The Hanover also said it completed the transfer of the Chaucer unit’s U.K. motor business, which resulted in a net gain of $40.3 million. Effective June 30, 2015, Hanover completed the transfer of its Chaucer’s U.K. motor business to Markerstudy Group, an unaffiliated U.K.-based insurance provider. The deal was executed through a 100 percent reinsurance arrangement for prior claim liabilities and in-force policies written by this division and the sale of two entities associated with this business. Chaucer’s U.K. motor business had net premiums written of $297.7 million, with a net combined ratio of 100.7 percent, in full-year 2014.
The Hanover said its Commercial Lines net premiums written were $569.1 million in the second quarter, up 5.2 percent from the prior-year quarter, driven by pricing increases, as well as improved retention and targeted new business growth. The Commercial Lines combined ratio was 98.3 percent, compared to 98.4 percent a year ago. Catastrophe losses were $23.2 million, or 4.2 points of the combined ratio, compared to $17.0 million, or 3.3 points, in the prior-year quarter.
Commercial Lines operating income before taxes was $48.2 million, compared to $44.2 million a year ago. Results also reflected net unfavorable prior-year reserve development of $6.0 million, compared to $1.8 million a year ago.
The Hanover said its Personal Lines net premiums written were $378.3 million in the quarter, up 2.0 percent compared to the prior-year quarter, primarily due to rate increases. The Personal Lines combined ratio was 95.7 percent, compared to 98.3 percent in the prior-year quarter. Catastrophe losses were $20.9 million, compared to $27.2 million in the prior-year quarter.
Personal Lines operating income before taxes was $32.1 million in the quarter, compared to $22.7 million a year ago. Results also reflected net favorable prior-year reserve development of $1.9 million, compared to $2.2 million a year ago.
The Chaucer unit’s net premiums written were $346.0 million in the quarter, down 5.0 percent over the prior-year quarter, driven by foreign exchange movements and, to a lesser extent, lower business writings in the energy line, The Hanover said. Chaucer’s combined ratio was 90.6 percent, compared to 92.1 percent in the prior-year quarter. Catastrophe losses were $2.4 million, compared to $11.5 million in the prior-year quarter. Chaucer’s operating income before taxes was $42.0 million in the quarter, compared to $38.1 million in the second quarter of 2014.