The Hanover Insurance Group, Inc. in Worcester, Mass., reported a drop in net income, an increase in commercial lines business and higher losses on personal lines for the first quarter of 2008.
The company’s net income for the first quarter was $58.5 million, or $1.12 per share, compared to $63.6 million, or $1.22 per share, in the first quarter of the prior year.
Property/casualty income was $98.0 million in the first quarter of 2008, down $2.9 million from last year’s first quarter.
The first quarter combined ratio for the property/casualty segment was 95%, compared to 93.8% for last year’s first quarter.
Personal lines segment income was $27.6 million in the first quarter of 2008, compared to $47.4 million in the prior-year quarter.
Net personal lines premiums written were $351.7 million in the first quarter of 2008, compared to $366.3 million in the first quarter of 2007, a decrease of 4.0%.
The combined ratio for personal lines was 101.2% in the first quarter of 2008, compared to 95.9% in the prior-year quarter.
The personal lines loss ratio was 60.8% (versus 54.7% in 2007’s first quarter).
Current accident year losses were higher in the quarter compared to the prior-year quarter due to higher non-catastrophe weather related losses, principally in homeowners, resulting from more severe winter in the Midwest and in the Northeast, the company said.
Commercial lines pre-tax segment income was $68.3 million in the first quarter of 2008, compared to $49.0 million in the first quarter of 2007.
Commercial lines net premiums written were $276.8 million in the first quarter of 2008, compared to $245.7 million in the first quarter of 2007, representing an increase of 12.7%.
The commercial lines combined ratio was 85.3%, compared to the prior year’s 90.8% in the same quarter.
The commercial lines loss ratio was 35.8% (versus 40.2% last year).
Other property/casualty pre-tax segment income was $2.1 million in the first quarter of 2008, a decrease of $2.4 million driven primarily by adverse development of $1.3 million in run-off voluntary pools business, and increased expenses in premium financing business, the sale of which is anticipated to close in the second quarter.
“I am very pleased with the strength of our performance and quality of our earnings in the first quarter of 2008,” said Frederick H. Eppinger, chief executive officer of The Hanover Insurance Group, Inc.
“Although our first quarter growth in written premium reflects actions we have taken to reduce coastal exposures in homeowners and a difficult prior-year comparison in personal lines, we remain confident we can achieve full year growth in written premium and earnings,” he said.
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