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Hanover Insurance (THG)
NYSE:THG
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Hanover Insurance
(NYSE:THG)
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Rating:79Outperform
Price Target:
$203.00
â–²(16.10% Upside)
Hanover Insurance's strong financial performance and positive earnings call sentiment are the most significant factors contributing to the score. The technical analysis supports a bullish outlook, while the valuation remains attractive. The company's strategic investments and growth prospects further enhance its position in the industry.
Positive Factors
Revenue Growth
Consistent revenue growth indicates a stable demand for Hanover's insurance products, supporting long-term business sustainability and expansion.
Investment in Technology
Investments in technology and AI enhance operational efficiency and competitive positioning, driving future growth and innovation.
Strong Cash Flow
Robust cash flow growth supports financial flexibility, enabling strategic investments and resilience against economic fluctuations.
Negative Factors
Commercial Auto Reserve Adjustment
Higher reserves for commercial auto suggest increased claims costs, potentially impacting profitability and requiring careful risk management.
Market Competition
Intense competition in the middle market can pressure pricing and margins, challenging Hanover's ability to maintain market share.
Debt Issuance
Issuing new debt increases financial obligations, which could affect cash flow allocation and financial strategy if not managed prudently.
Hanover Insurance (THG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$6.26B
Dividend Yield2.05%
Average Volume (3M)192.67K
Price to Earnings (P/E)11.5
Beta (1Y)0.28
Revenue Growth4.47%
EPS Growth102.98%
CountryUS
Employees4,900
SectorFinancial
Sector Strength70
IndustryInsurance - Property & Casualty
Share Statistics
EPS (TTM)4.35
Shares Outstanding35,770,447
10 Day Avg. Volume210,850
30 Day Avg. Volume192,670
Financial Highlights & Ratios
PEG Ratio0.01
Price to Book (P/B)1.95
Price to Sales (P/S)0.89
P/FCF Ratio6.97
Enterprise Value/Market Cap1.12
Enterprise Value/Revenue1.09
Enterprise Value/Gross Profit4.96
Enterprise Value/Ebitda9.54
Forecast
1Y Price Target
$196.00Price Target Upside12.10% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering6
Hanover Insurance Business Overview & Revenue Model
Company DescriptionThe 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.
How the Company Makes MoneyHanover Insurance generates revenue primarily through the underwriting of insurance policies. The company collects premiums from policyholders, which serve as the main source of income. Additionally, THG invests the premiums it collects in various financial instruments, generating investment income. Key revenue streams include commercial lines, personal lines, and specialty insurance products. The company also benefits from strategic partnerships with independent agents and brokers, which help expand its market reach and customer base. Furthermore, effective risk management practices and a focus on underwriting discipline contribute to profitability by minimizing claims costs.
Hanover Insurance Earnings Call Summary
Earnings Call Date:Jul 30, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Oct 29, 2025
Earnings Call Sentiment Positive
The earnings call reflected strong performance and growth across various segments, particularly in Personal Lines and Specialty. Despite some challenges in commercial auto and competitive pressures in the middle market, the positive developments, including record operating ROE, significant earnings growth, and strategic investments in technology, indicate a strong positive momentum going forward.Q2-2025 Updates
Positive Updates
Record Operating ROE
Operating ROE was 18.7%, a record for the second quarter.
Significant Earnings Growth
Operating earnings of $4.35 per diluted share and earnings growth of approximately 25% on an ex-CAT basis.
Improved Combined Ratios
Overall combined ratio and ex-CAT combined ratio improved by approximately 7 points and 3 points, respectively, compared to the second quarter of last year.
Strong Personal Lines Performance
Personal Lines business achieved more balanced growth and strong profitability, with net written premium growth driven by renewal price increases and improving retention.
Specialty Segment Profitability
Specialty segment achieved a net written premium growth of 4.6% and an impressive mid-80s combined ratio, with E&S growing 22%.
Investment in Technology
Strategic investments in data and technology, including generative AI and AI capabilities, to enhance operational efficiency and growth.
Negative Updates
Commercial Auto Reserve Adjustment
Increased reserving in commercial auto in response to rising severity and litigation activity.
Market Competition in Middle Market
Elevated competition in some areas of the middle market sector, leading to selective business opportunities.
Tariff Concerns
Potential minor loss cost increases due to tariffs anticipated in the back half of the year.
Company Guidance
In the second quarter earnings call for The Hanover Insurance Group, key financial metrics highlighted a robust performance. The company reported an operating return on equity (ROE) of 18.7%, a record for the second quarter, alongside operating earnings of $4.35 per diluted share. Earnings growth was approximately 25% on an ex-catastrophe basis. The combined ratio improved by around 7 points year-over-year, reaching 92.5%, while the ex-catastrophe combined ratio was 85.5%, showing a 3-point improvement. Personal Lines exhibited strong performance with a current accident year ex-catastrophe combined ratio of 84.8%, improving by 5.4 points from the previous year, and net written premium growth of 3.7%. Specialty Lines also performed well with a 4.6% increase in net written premiums and a mid-80s combined ratio, while Core Commercial maintained a solid sub-90s ex-catastrophe combined ratio, showing the effectiveness of prior strategic actions. Overall growth prospects for the second half of 2025 were positive, with expected net written premium growth in the 6% to 7% range. The company also noted ongoing investments in technology and analytics to drive operational efficiency and future growth.Hanover Insurance Financial Statement Overview
Summary
Hanover Insurance exhibits solid financial performance with consistent revenue growth and improved profitability margins. The balance sheet shows a stable leverage position and strong equity returns, while cash flow metrics indicate efficient cash generation and management.Income Statement
Hanover Insurance has shown consistent revenue growth, with a TTM revenue growth rate of 1.84%. The gross profit margin improved to 22.03% in TTM, indicating better cost management. The net profit margin also increased to 8.70%, reflecting enhanced profitability. However, the EBIT and EBITDA margins, while improved, remain moderate at 11.50% and 11.46%, respectively, suggesting room for operational efficiency improvements.75
Positive
Balance Sheet
The company's debt-to-equity ratio has decreased to 0.24 in TTM, indicating a stable leverage position. Return on equity improved to 18.54%, showcasing effective use of equity to generate profits. The equity ratio stands at 20.44%, suggesting a solid equity base relative to total assets. Overall, the balance sheet reflects a stable financial position with manageable debt levels.70
Positive
Cash Flow
Hanover Insurance's cash flow performance is strong, with a free cash flow growth rate of 8.70% in TTM. The operating cash flow to net income ratio is robust at 1.54, indicating efficient cash generation relative to net income. The free cash flow to net income ratio is nearly 1, demonstrating effective conversion of earnings into cash flow. The cash flow metrics highlight strong liquidity and cash management.80
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 6.39B | 6.22B | 5.96B | 5.43B | 5.16B | 4.82B |
| Gross Profit | 1.41B | 1.24B | 652.90M | 716.30M | 1.04B | 1.02B |
| EBITDA | 732.00M | 573.40M | 81.50M | 191.00M | 572.20M | 500.10M |
| Net Income | 555.30M | 426.00M | 35.30M | 116.00M | 422.80M | 358.70M |
Balance Sheet | ||||||
| Total Assets | 15.73B | 15.27B | 14.61B | 14.00B | 14.25B | 13.44B |
| Cash, Cash Equivalents and Short-Term Investments | 244.10M | 435.50M | 316.10M | 305.00M | 230.90M | 120.60M |
| Total Debt | 784.60M | 784.10M | 783.20M | 782.40M | 781.60M | 780.80M |
| Total Liabilities | 12.52B | 12.43B | 12.15B | 11.66B | 11.11B | 10.24B |
| Stockholders Equity | 3.22B | 2.84B | 2.47B | 2.33B | 3.14B | 3.20B |
Cash Flow | ||||||
| Free Cash Flow | 844.80M | 796.20M | 349.80M | 704.50M | 815.70M | 692.70M |
| Operating Cash Flow | 853.70M | 806.40M | 361.70M | 722.30M | 823.70M | 707.60M |
| Investing Cash Flow | -762.90M | -541.50M | -228.50M | -507.60M | -460.20M | -608.80M |
| Financing Cash Flow | -184.30M | -145.50M | -122.10M | -140.60M | -253.20M | -193.90M |
Hanover Insurance Technical Analysis
Positive
174.85
Price Trends
170.87
Positive
169.09
Positive
163.73
Positive
Market Momentum
1.40
Positive
50.68
Neutral
15.87
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For THG, the sentiment is Positive. The current price of 174.85 is below the 20-day moving average (MA) of 175.89, above the 50-day MA of 170.87, and above the 200-day MA of 163.73, indicating a neutral trend. The MACD of 1.40 indicates Positive momentum. The RSI at 50.68 is Neutral, neither overbought nor oversold. The STOCH value of 15.87 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for THG.
Hanover Insurance Risk Analysis
Hanover Insurance disclosed 39 risk factors in its most recent earnings report. Hanover Insurance reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Hanover Insurance Peers Comparison
Overall Rating
UnderperformOutperform
Sector (68)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | 4.40B | 11.26 | 19.81% | 1.60% | 14.93% | 22.19% | |
79 Outperform | $6.26B | 11.50 | 19.23% | 2.05% | 4.47% | 102.98% | |
76 Outperform | 5.93B | 18.79 | 22.72% | 4.05% | 10.29% | -4.70% | |
75 Outperform | 4.71B | 12.82 | 11.39% | 1.96% | 12.27% | 66.53% | |
71 Outperform | 7.45B | 9.13 | 14.44% | 1.85% | 6.87% | 43.53% | |
58 Neutral | 3.25B | 9.95 | 0.00% | 2.45% | 2.75% | 572.22% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% |
* Financial Sector Average
Performance Comparison
THG
Hanover Insurance
174.85
31.11
21.64%
AXS
Axis Capital
95.36
18.94
24.78%
MCY
Mercury General
79.51
20.60
34.97%
RLI
RLI
64.61
-9.40
-12.70%
SIGI
Selective Insurance Group
77.43
-11.23
-12.67%
KMPR
Kemper
51.83
-7.49
-12.63%
Hanover Insurance Corporate Events
Private Placements and FinancingBusiness Operations and Strategy
Hanover Insurance Announces $500M Senior Notes Offering
Neutral
Aug 21, 2025
On August 19, 2025, The Hanover Insurance Group, Inc. announced the pricing of a $500 million senior notes offering with a 5.50% interest rate due in 2035. The proceeds from this issuance are intended to repay existing debts and for general corporate purposes, potentially impacting the company’s financial strategy and market positioning.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.