Key Highlights

  • Operating EPS of USD 5.15 beat the USD 4.62 consensus estimate and rose from USD 5.09 a year earlier.
  • Combined ratio reached 92.3%, with catastrophe losses of USD 109.7 million adding 6.8 points, against 3.0 points last year.
  • Net investment income climbed 12.7% to USD 131.9 million as the portfolio's pre-tax earned yield rose to 4.60%.
  • Book value per share of USD 99.69 fell 5.4% on unrealized losses, while USD 86 million was repurchased.

The Hanover Insurance Group, Inc. (NYSE:THG) posted third-quarter 2026 operating income of USD 5.15 per diluted share, above a consensus estimate of USD 4.62 and up from USD 5.09 in the prior-year quarter. Net income was USD 172.6 million, or USD 4.86 per diluted share, compared with USD 178.7 million, or USD 4.90, a year earlier. Net and operating return on equity came in at 19.4% and 18.7%.

Total revenues were USD 1,735.5 million, below a consensus estimate of USD 1.81 billion. Net premiums written were USD 1,792.5 million, up 3.1%. Chief executive John Roche described the operating result as a record for a third quarter and pointed to underwriting execution and the benefits of past portfolio actions.

Underwriting Results by Segment

The combined ratio of 92.3% compared with 91.1% a year earlier. Excluding catastrophes it improved to 85.5% from 88.1%, as the current accident year loss and loss adjustment expense ratio excluding catastrophes fell 1.9 points to 55.7%. Prior-year reserve development was favorable by 1.1 points, and the expense ratio eased to 30.9% from 31.3%.

Specialty produced operating income before taxes of USD 88.1 million and a combined ratio of 84.0%, helped by USD 14.8 million of favorable reserve development. Personal Lines earned USD 103.6 million at a combined ratio of 89.7%, with renewal price increases averaging 8.7%. Core Commercial earned USD 55.5 million, down from USD 65.1 million, and its combined ratio rose to 100.5% from 97.3% as catastrophe losses of USD 45.3 million added 7.8 points.

Investments, Capital and Stated Outlook

Net investment income of USD 131.9 million reflected higher earned yields, steady cash deployment and stronger limited partnership income. Net unrealized losses on the fixed maturity portfolio widened to USD 636.1 million before tax from USD 259.5 million at June 30, which drove book value per share down to USD 99.69. Excluding that unrealized depreciation, net of tax, book value per share was USD 114.26, up 2.7%.

The company repurchased about 386,000 shares for roughly USD 86 million in the quarter and about USD 263 million year to date through October 26, with around USD 546 million of authorization remaining. Operating insurer statutory capital and surplus rose to USD 3.70 billion from USD 3.54 billion. The release carried no numerical guidance. Roche said the company is confident in its outlook, and renewal price increases averaged 7.4% in Core Commercial and 4.3% in Specialty.

Numbers to Revisit

Four readings stand out. Catastrophe losses of USD 109.7 million took the catastrophe ratio to 6.8 points from 3.0, and Core Commercial absorbed 7.8 points of it. Pricing is second: renewal increases of 8.7% in Personal Lines, 7.4% in Core Commercial and 4.3% in Specialty, set against rate increases of 4.9%, 6.1% and 1.9%. The balance sheet is third, with unrealized fixed maturity losses of USD 636.1 million and book value per share of USD 99.69. Capital return is fourth, with USD 546 million of repurchase capacity. A conference call on the results is scheduled for October 29 at 10:00 a.m. ET.