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1. Company Snapshot

1.a. Company Description

The Hanover Insurance Group, Inc., through its subsidiaries, provides various property and casualty insurance products and services in the United States.The company operates through three segments: Commercial Lines, Personal Lines, and Other.The Commercial Lines segment offers commercial multiple peril, commercial automobile, and workers' compensation insurance products, as well as management and professional liability, marine, specialty industrial and commercial property, monoline general liability, surety, umbrella, fidelity, crime, and other commercial coverages.


The Personal Lines segment provides personal automobile and homeowner's coverages, as well as other personal coverages, such as personal umbrella, inland marine, fire, personal watercraft, personal cyber, and other miscellaneous coverages.The Other segment markets investment management services to institutions, pension funds, and other organizations.The Hanover Insurance Group, Inc.


markets its products and services through independent agents and brokers.The company was formerly known as Allmerica Financial Corp.and changed its name to The Hanover Insurance Group, Inc.


in December 2005.The Hanover Insurance Group, Inc.was founded in 1852 and is headquartered in Worcester, Massachusetts.

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1.b. Last Insights on THG

The Hanover Insurance Group's recent performance was negatively driven by elevated catastrophe losses of $107.5 million, or 7.0 points of the combined ratio, which may have pressured its underwriting results. Additionally, the company's high loss and loss adjustment expense ratio of 61.9% may have contributed to the negative drivers.

1.c. Company Highlights

2. The Hanover Insurance Group Posts Robust Q3 Results

The Hanover Insurance Group's third-quarter results reflect strong performance across its business, with an operating return on equity of over 21%, driven by robust net investment income, a strong ex-CAT performance, and a quiet catastrophe quarter. The company's combined ratio was 91.1%, with a 3-point catastrophe loss that came in 3.8 points below assumption. Operating earnings per share were $5.09, significantly beating estimates of $3.79. Net investment income increased 27.5% to $117 million, reflecting growth in the asset base, improved partnership results, and higher reinvestment yields.

Publication Date: Nov -02

📋 Highlights
  • Strong Operating Return on Equity: Achieved over 21% driven by $5.09 operating earnings per share and a 91.1% combined ratio with 3.8-point under catastrophe loss assumptions.
  • Personal Lines Growth: 3.6% growth with an ex-CAT combined ratio of 85.8%, 10.5% renewal price increase (auto +8%, home +13.9%).
  • Segment Performance: Core Commercial (94.3% ex-CAT ratio, +3.5% premium growth) and Specialty (86% ex-CAT ratio, high single-digit premium growth).
  • Investment Income Surge: Net investment income rose 27.5% to $117M, boosting book value by 21% year-to-date.
  • Capital Allocation: $55M spent on share repurchases (323,000 shares) with $210M remaining, alongside 5.2% fourth-quarter CAT load and 7% sequential book value growth.

Segment Performance

Personal Lines delivered an outstanding current accident year ex-CAT combined ratio of 85.8%, with growth of 3.6%, primarily driven by new business momentum in target diversification states. The segment achieved a renewal price increase of 10.5%, with auto pricing up 8% and home pricing up 13.9%. Core Commercial posted a current accident year ex-CAT combined ratio of 94.3%, with net written premium growth of 3.5%, fueled by double-digit new business growth in small commercial. Specialty's current accident year combined ratio ex-CAT was 86%, with net written premiums growing at a high single-digit pace.

Valuation and Outlook

With a Price-to-Book Ratio of 1.79, the stock appears reasonably valued. The company's book value increased approximately 7% sequentially and 21% year-to-date. Analysts estimate next year's revenue growth at 5.9%. The company's focus on speed, efficiency, and ease of doing business with agents is expected to drive recurring growth. Hanover's expense ratio goal is 20 basis points of improvement per year, and it remains committed to this objective. The company's positioning in small commercial and Specialty is expected to drive sustainable profitable growth.

Growth Drivers and Challenges

The company is working to elevate its underwriting appetite and explore additional sectors for growth. Its technology investments are expected to drive recurring growth, with agents looking for strategic markets to help them become more efficient and better serve customers. However, the Core Commercial segment's accident year loss ratio was impacted by large workers' comp and commercial auto. The company expects a 9.9-point price increase in Core Commercial to drive margin expansion in 2026.

3. NewsRoom

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The Hanover Insurance Group, Inc. Increases Quarterly Dividend to $0.95 Per Common Share

Dec -01

Source: prnewswire.com

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AXQ Capital LP Sells 451 Shares of The Hanover Insurance Group, Inc. $THG

Nov -25

Source: defenseworld.net

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2,798 Shares in The Hanover Insurance Group, Inc. $THG Acquired by Aviva PLC

Nov -14

Source: defenseworld.net

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5 Best Dividend Stocks To Hold In Uncertain Times

Nov -07

Source: seekingalpha.com

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The Hanover: The Need For Property/Casualty Insurance Is A Proven Business Model

Nov -04

Source: seekingalpha.com

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The Hanover Enhances Its Offering for Complex Industrial Property Risks

Nov -03

Source: prnewswire.com

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Ethic Inc. Sells 123 Shares of The Hanover Insurance Group, Inc. $THG

Oct -31

Source: defenseworld.net

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The Hanover Insurance Group, Inc. (THG) Q3 2025 Earnings Call Transcript

Oct -30

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.84%)

6. Segments

Personal Lines

Expected Growth: 3%

The Hanover's Personal Lines segment growth is driven by increasing adoption of telematics-based insurance products, expansion into new states, and strategic partnerships with agents and brokers. Additionally, the company's focus on digital transformation and customer experience enhancements has improved retention rates and attracted new customers, contributing to the 3% growth.

Core Commercial

Expected Growth: 2%

The 2% growth in Core Commercial from The Hanover Insurance Group, Inc. is driven by a combination of factors, including a strong economy, increased demand for commercial insurance products, and the company's strategic expansion into new markets and lines of business, such as cyber insurance and management liability.

Specialty

Expected Growth: 4%

The Hanover's Specialty segment growth is driven by increasing demand for niche insurance products, expansion into new markets, and strategic partnerships. Additionally, the company's focus on digital transformation, data analytics, and risk management capabilities also contribute to its growth. Furthermore, the rising need for specialized insurance coverage in industries such as healthcare, technology, and financial services also fuels growth.

Reconciling Items

Expected Growth: 1%

The Hanover Insurance Group, Inc.'s growth is driven by increasing premiums, expansion into new markets, and strategic acquisitions. Additionally, the company's focus on digital transformation, improved underwriting practices, and effective risk management have contributed to its growth. Furthermore, a strong capital position and favorable regulatory environment have also supported the company's growth momentum.

Other

Expected Growth: 2%

The Hanover Insurance Group, Inc.'s 'Other' segment growth is driven by increasing demand for specialty insurance products, expansion into new markets, and strategic partnerships. Additionally, the company's focus on digital transformation and investments in data analytics are enhancing underwriting capabilities, leading to improved risk selection and pricing.

7. Detailed Products

Personal Lines

Insurance products for individuals and families, including auto, homeowners, umbrella, and specialty insurance

Commercial Lines

Insurance products for businesses, including workers' compensation, commercial auto, general liability, and property insurance

Specialty Insurance

Specialized insurance products for unique risks, including marine, aviation, and professional liability insurance

Workers' Compensation

Insurance products for employers to provide wage replacement and medical benefits to employees injured on the job

Management Liability

Insurance products for directors, officers, and organizations to protect against management-related risks

Professional Liability

Insurance products for professionals, including doctors, lawyers, and accountants, to protect against errors and omissions

8. The Hanover Insurance Group, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The Hanover Insurance Group, Inc. operates in a highly competitive industry, but the threat of substitutes is mitigated by the complexity and customization of insurance products.

Bargaining Power Of Customers

Individual customers have limited bargaining power due to the complexity of insurance products and the lack of price sensitivity.

Bargaining Power Of Suppliers

The Hanover Insurance Group, Inc. relies on a network of independent agents and brokers, which can exert some bargaining power, but the company's scale and diversification mitigate this risk.

Threat Of New Entrants

The insurance industry has high barriers to entry, including regulatory hurdles, capital requirements, and the need for established distribution networks, making it difficult for new entrants to compete with The Hanover Insurance Group, Inc.

Intensity Of Rivalry

The Hanover Insurance Group, Inc. operates in a highly competitive industry with many established players, leading to intense rivalry and pricing pressure.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 24.11%
Debt Cost 5.34%
Equity Weight 75.89%
Equity Cost 7.32%
WACC 6.84%
Leverage 31.77%

11. Quality Control: The Hanover Insurance Group, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
WR Berkley

A-Score: 7.0/10

Value: 5.3

Growth: 7.9

Quality: 6.5

Yield: 4.0

Momentum: 8.5

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
Mercury General

A-Score: 6.8/10

Value: 7.3

Growth: 6.9

Quality: 6.6

Yield: 6.0

Momentum: 8.0

Volatility: 6.3

1-Year Total Return ->

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Stock-Card
Hanover Insurance

A-Score: 6.8/10

Value: 7.3

Growth: 4.8

Quality: 6.6

Yield: 4.0

Momentum: 8.5

Volatility: 9.3

1-Year Total Return ->

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Stock-Card
RLI

A-Score: 6.5/10

Value: 6.0

Growth: 6.9

Quality: 8.2

Yield: 7.0

Momentum: 1.5

Volatility: 9.3

1-Year Total Return ->

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Stock-Card
Markel

A-Score: 6.4/10

Value: 7.0

Growth: 7.2

Quality: 7.1

Yield: 0.0

Momentum: 8.0

Volatility: 9.3

1-Year Total Return ->

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Stock-Card
Loews

A-Score: 6.1/10

Value: 6.2

Growth: 6.8

Quality: 5.3

Yield: 0.0

Momentum: 8.0

Volatility: 10.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

178.07$

Current Price

178.07$

Potential

-0.00%

Expected Cash-Flows