Hanover Insurance (THG)
NYSE:THG
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Hanover Insurance
(NYSE:THG)
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Rating:77Outperform
Price Target:
$201.00
▲(10.53% Upside)
Action:ReiteratedDate:04/30/26
Score is driven primarily by improved financial performance and cash generation alongside an attractive valuation (low P/E with a solid dividend). The earnings call reinforced strong near-term operating execution and capital returns, while the main constraint is the business’s historical earnings volatility and ongoing catastrophe/liability severity risk; technical signals are supportive but largely neutral.
Positive Factors
Cash generation
Free cash flow has closely tracked reported earnings (~97%–99%) with a step‑up to $1.17B in 2025 from $0.80B in 2024. Durable FCF supports dividends, buybacks and reinvestment, providing internal capital that cushions underwriting cyclicality and funds strategic initiatives.
Negative Factors
Earnings volatility
Hanover's results have shown material year‑to‑year swings (low ROE in 2022–2023 then strong 2024–2025 reversals). This underwriting volatility reduces earnings predictability, complicates capital allocation and raises the risk that returns can deteriorate quickly in weaker underwriting cycles.
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Positive Factors
Negative Factors
Cash generation
Free cash flow has closely tracked reported earnings (~97%–99%) with a step‑up to $1.17B in 2025 from $0.80B in 2024. Durable FCF supports dividends, buybacks and reinvestment, providing internal capital that cushions underwriting cyclicality and funds strategic initiatives.
Read all positive factors
Hanover Insurance (THG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$6.25B
Dividend Yield1.97%
Average Volume (3M)302.04K
Price to Earnings (P/E)8.2
Beta (1Y)0.37
Revenue Growth5.72%
EPS Growth56.27%
CountryUS
Employees4,900
SectorFinancial
Sector Strength70
IndustryInsurance - Property & Casualty
Share Statistics
EPS (TTM)5.25
Shares Outstanding35,188,800
10 Day Avg. Volume294,847
30 Day Avg. Volume302,037
Financial Highlights & Ratios
PEG Ratio0.18
Price to Book (P/B)1.83
Price to Sales (P/S)0.99
P/FCF Ratio5.59
Enterprise Value/Market Cap1.10
Enterprise Value/Revenue1.04
Enterprise Value/Gross Profit3.62
Enterprise Value/Ebitda7.75
Forecast
1Y Price Target
$199.40Price Target Upside9.65% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering5
EPS Forecast (FY)17.07
Revenue Forecast (FY)$6.69B
Hanover Insurance Business Overview & Revenue Model
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...
How the Company Makes Money
Hanover primarily makes money through (1) underwriting income and (2) investment income generated from its invested insurance “float.” Underwriting-related revenue begins with policyholders paying premiums for property and casualty coverage across...
Hanover Insurance Earnings Call Summary
Earnings Call Date:Apr 29, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Aug 05, 2026
Earnings Call Sentiment Positive
The call conveyed a strongly positive operational and financial performance for Q1: record profitability metrics, margin improvements across segments, double‑digit investment income growth, and disciplined underwriting actions that produced favorable prior‑year development. Challenges included elevated catastrophe activity, modest intentional near‑term premium growth (particularly in programs and property‑exposed specialty lines), and ongoing elevated liability severity industry‑wide. Management highlighted durable portfolio diversification, continued technology investments, and cautious, disciplined growth — indicating confidence that positives outweigh the manageable headwinds.Positive Updates
Record First Quarter Financial Performance
Reported record Q1 results including operating return on equity of 20.3% and operating diluted EPS of $5.25; all-in combined ratio improved ~2.5 points to 91.7% and ex-cat combined ratio improved similarly to 85.4% (both Q1 records).
Negative Updates
Elevated Catastrophe Activity and Seasonality Risk
Catastrophe losses represented 6.3 points of the combined ratio in Q1 driven primarily by an unusually severe hail/wind event in March (Illinois & Michigan) and a January winter storm; management expects a Q2 cat load of 7.9%, indicating continued near-term cat exposure.
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Q1-2026 Updates
Positive
Negative
Record First Quarter Financial Performance
Reported record Q1 results including operating return on equity of 20.3% and operating diluted EPS of $5.25; all-in combined ratio improved ~2.5 points to 91.7% and ex-cat combined ratio improved similarly to 85.4% (both Q1 records).
Read all positive updates
Company Guidance
Management said Q1 was a very strong start and the low point for 2026 growth, reiterating disciplined underwriting and selective growth while providing the following targets and metrics: operating ROE 20.3% and operating EPS $5.25; all‑in combined ratio 91.7% (ex‑cat 85.4%, both Q1 records); Q1 net written premiums +3.2% (Personal +2.7%, Core Commercial +4.3%, Specialty +2.3%); Personal Lines ex‑cat CY combined ratio 83.8% (home ex‑cat loss ratio 46.7%, auto ex‑cat loss ratio 66.7%), PIF flat sequentially with PIF growth expected in 2026 and pricing: auto +6.7%, home +10.8%, umbrella ~19%; Core Commercial ex‑cat CY CR 91.5% (ex‑cat loss ratio 58.8%), Small Commercial +6.4% (sequential improvement >1.5 pts), Middle Market +1.5%; Specialty ex‑cat CY CR 85.4% (ex‑cat loss ratio 49%, below its low‑50s target), E&S +8.1%; catastrophe losses were 6.3 pts of the combined ratio with 3.1 pts of favorable prior‑year cat development and $25M of favorable ex‑cat PY reserve development (Specialty $14.2M/3.9 pts, Personal $9.2M/1.4 pts, Core Commercial $1.6M/0.3 pts); Q1 expense ratio 30.7% with a full‑year expense ratio planned at 30.3%; investment income +19.6%, fixed‑maturity yield 4.42% (vs 4.08% a year ago), portfolio duration ~4.4 years, ~88% cash and investment‑grade fixed income (fixed‑maturity rating AA‑, 95% IG); book value per share $101.80 (+1% seq, +2.8% ex‑unrealized) and active buybacks (~503k shares/$87M in Q1 plus ~$14M through Apr 28); management also expects specialty growth and overall top‑line momentum to ramp from here.Hanover Insurance Financial Statement Overview
Summary
Income Statement
74
Positive
Balance Sheet
72
Positive
Cash Flow
78
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 6.60B | 6.22B | 5.96B | 5.43B | 5.16B |
| Gross Profit | 2.87B | 1.24B | 652.90M | 716.30M | 1.04B |
| EBITDA | 887.00M | 573.40M | 81.50M | 191.00M | 572.20M |
| Net Income | 662.50M | 426.00M | 35.30M | 116.00M | 422.80M |
Balance Sheet | |||||
| Total Assets | 16.95B | 15.27B | 14.61B | 14.00B | 14.25B |
| Cash, Cash Equivalents and Short-Term Investments | 1.12B | 2.02B | 8.30B | 7.79B | 7.95B |
| Total Debt | 1.22B | 784.10M | 783.20M | 782.40M | 781.60M |
| Total Liabilities | 13.37B | 12.43B | 12.15B | 11.66B | 11.11B |
| Stockholders Equity | 3.57B | 2.84B | 2.47B | 2.33B | 3.14B |
Cash Flow | |||||
| Free Cash Flow | 1.17B | 796.20M | 349.80M | 704.50M | 815.70M |
| Operating Cash Flow | 1.18B | 806.40M | 361.70M | 722.30M | 823.70M |
| Investing Cash Flow | -666.20M | -541.50M | -228.50M | -507.60M | -460.20M |
| Financing Cash Flow | 175.20M | -145.50M | -122.10M | -140.60M | -253.20M |
Hanover Insurance Technical Analysis
Positive
181.85
Price Trends
174.59
Positive
176.10
Positive
173.71
Positive
Market Momentum
1.65
Negative
63.04
Neutral
66.79
Neutral
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 181.85 is above the 20-day moving average (MA) of 175.01, above the 50-day MA of 174.59, and above the 200-day MA of 173.71, indicating a bullish trend. The MACD of 1.65 indicates Negative momentum. The RSI at 63.04 is Neutral, neither overbought nor oversold. The STOCH value of 66.79 is Neutral, 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
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $5.07B | 11.67 | 12.93% | 1.85% | 8.76% | 99.32% | |
77 Outperform | $6.25B | 8.17 | 20.92% | 1.97% | 5.72% | 56.27% | |
74 Outperform | $5.30B | 9.63 | 25.65% | 1.34% | 9.44% | 15.60% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
67 Neutral | $7.26B | 8.30 | 16.27% | 1.80% | 9.30% | 0.69% | |
67 Neutral | $4.70B | 23.95 | 13.40% | 4.05% | 9.01% | 40.14% | |
56 Neutral | $1.95B | -74.49 | 5.08% | 3.15% | 3.36% | -55.22% |
* Financial Sector Average
THG
Hanover Insurance
177.51
15.33
9.45%
AXS
Axis Capital
97.96
2.22
2.31%
MCY
Mercury General
95.65
41.18
75.59%
RLI
RLI
51.15
-19.09
-27.18%
SIGI
Selective Insurance Group
84.68
-0.52
-0.61%
KMPR
Kemper
33.27
-24.15
-42.06%
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.