Hanover Insurance (THG) AI Stock Analysis

• Market Cap: $5.95B
• Dividend Yield: 2.17%
• Average Volume (3M): 213.52K
• Price to Earnings (P/E): 13.8
• Beta (1Y): 0.34
• Revenue Growth: 3.09%
• EPS Growth: 168.29%
• Country: US
• Employees: 4,900
• Sector: Financial
• Sector Strength: 79
• Industry: Insurance - Property & Casualty
• EPS (TTM): 3.87
• Shares Outstanding: 35,916,283
• 10 Day Avg. Volume: 245,000
• 30 Day Avg. Volume: 213,519
• PEG Ratio: 0.85
• Price to Book (P/B): 1.87
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 9.27
• Enterprise Value/Market Cap: 0.99
• Enterprise Value/Revenue: 0.24
• Enterprise Value/Gross Profit: 4.70
• Enterprise Value/Ebitda: 2.87
• 1Y Price Target: $185.75
• Price Target Upside: 10.90% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 4

• Rating: 78 Outperform
• Price Target: $190.00 ▲(13.43%Upside)

Hanover Insurance is positioned well with strong financial performance, highlighted by robust revenue and cash flow growth, and a solid balance sheet. The earnings call further underscores its strong operating performance despite challenges from catastrophe losses. Technical indicators suggest neutral to slightly bullish sentiment, and the stock's valuation is fair, supported by a reasonable P/E ratio and a moderate dividend yield. Overall, Hanover Insurance reflects a stable investment with potential for growth, balanced by industry-specific risks.

Positive Factors

Investment Income

Material uplift from net investment income is expected relative to peers.

Operating Income

Company had $101.1 million of operating income, well ahead of consensus expectations of $52.7 million.

Profit Margins

Hanover’s home-insurance profit margins are on track to beat consensus, potentially by a meaningful margin.

Negative Factors

Core Commercial Segment

Core loss ratio for the Core Commercial segment came in at 58.9%, which was slightly higher than consensus of 57.9%.

Expense Ratio

Total company expense ratio of 32.3% was above consensus expectations of 30.9%.

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 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 Money

The Hanover Insurance Group generates revenue primarily through the underwriting and sale of insurance policies, which include personal lines like auto and home insurance, as well as various commercial lines for businesses. The company earns premiums from policyholders, which constitute the primary source of income. Additionally, Hanover Insurance invests the premiums it collects in a diversified portfolio of investments, generating investment income. The company's earnings are also influenced by its risk management and claims handling efficiency, which can impact the profitability of its underwriting operations. Partnerships with independent agents and brokers play a significant role in Hanover's distribution strategy, allowing the company to reach a broad customer base and maintain strong market presence.

Hanover Insurance Financial Statement Overview

Summary

Hanover Insurance demonstrates a solid financial standing with a consistent upward trend in revenue and profitability. While operational efficiency reflected in EBIT margins could see improvement, the company maintains a healthy balance sheet with low leverage and strong equity position. Cash flow metrics underscore effective cash management, supporting the company's growth and operational stability.

Income Statement

The income statement reflects a strong financial performance with consistent revenue growth from 2020 to TTM 2025. The TTM gross profit margin is high at approximately 94.7%, indicating efficient management of costs relative to revenue. There is a noticeable improvement in net profit margin from the previous year, reaching about 7.0% in TTM. However, there was a dip in EBIT margin, indicating some operational challenges, though EBITDA margin remains robust around 6.6%.

Balance Sheet

The balance sheet indicates a stable financial position with a debt-to-equity ratio of approximately 0.26 in TTM, suggesting manageable leverage. The return on equity shows improvement, standing at approximately 14.4% in TTM, reflecting efficient use of equity. The equity ratio is solid at about 19.7%, demonstrating a healthy proportion of equity financing, though some room for improvement exists compared to industry standards.

Cash Flow

The company's cash flow position is strong, with a positive trajectory in free cash flow growth. The operating cash flow to net income ratio is robust at approximately 1.8 in TTM, indicating strong cash generation relative to net income. Free cash flow to net income ratio is also favorable at around 1.77, highlighting efficient cash management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	6.27B	6.22B	5.96B	5.43B	5.16B	4.81B
Gross Profit	1.26B	1.24B	652.90M	716.30M	1.04B	1.01B
EBITDA	586.30M	573.40M	81.50M	191.00M	572.20M	500.10M
Net Income	438.70M	426.00M	35.30M	116.00M	422.80M	358.70M
Balance Sheet
Total Assets	15.47B	15.27B	14.61B	14.00B	14.25B	13.44B
Cash, Cash Equivalents and Short-Term Investments	315.10M	435.50M	316.10M	305.00M	230.90M	120.60M
Total Debt	784.30M	784.10M	783.20M	782.40M	781.60M	780.80M
Total Liabilities	12.43B	12.43B	12.15B	11.66B	11.11B	10.24B
Stockholders Equity	3.04B	2.84B	2.47B	2.33B	3.14B	3.20B
Cash Flow
Free Cash Flow	777.20M	796.20M	349.80M	704.50M	815.70M	692.70M
Operating Cash Flow	786.60M	806.40M	361.70M	722.30M	823.70M	707.60M
Investing Cash Flow	-579.00M	-540.90M	-228.50M	-507.60M	-460.20M	-608.80M
Financing Cash Flow	-157.60M	-145.50M	-122.10M	-140.60M	-253.20M	-193.90M

Hanover Insurance Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 167.50
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: 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 167.5 is below the 20-day moving average (MA) of 170.90, above the 50-day MA of 167.38, and above the 200-day MA of 158.41, indicating a neutral trend. The MACD of -0.14 indicates Positive momentum. The RSI at 49.63 is Neutral, neither overbought nor oversold. The STOCH value of 35.25 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for THG.

Hanover Insurance Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AXS	81 Outperform	$8.09B	9.84	15.43%	1.75%	6.76%	54.56%
THG	78 Outperform	$5.95B	13.80	15.74%	2.17%	3.09%	168.29%
RLI	72 Outperform	$6.54B	23.45	17.99%	0.90%	9.18%	-16.06%
SIGI	68 Neutral	$5.12B	22.99	7.48%	1.77%	13.37%	-35.09%
Sector *	64 Neutral	$6.68B	10.87	6.50%	5.06%	24.88%	-1.54%
WTM	62 Neutral	$4.51B	152.69	0.61%	0.06%	-4.09%	-94.77%
KMPR	58 Neutral	$4.03B	11.78	12.57%	1.99%	-6.08%	―

Hanover Insurance Corporate Events

Hanover Insurance Holds Annual Shareholder Meeting

On May 13, 2025, The Hanover Insurance Group held its annual meeting where shareholders elected directors, approved executive compensation, and ratified PricewaterhouseCoopers LLP as the accounting firm for 2025. These decisions reflect the company’s ongoing governance practices and commitment to maintaining financial transparency and accountability.

The most recent analyst rating on (THG) stock is a Buy with a $162.00 price target. To see the full list of analyst forecasts on Hanover Insurance stock, see the THG Stock Forecast page.

Hanover Insurance Appoints Richard Lavey as COO

On March 31, 2025, The Hanover Insurance Group appointed Richard W. Lavey as Executive Vice President and Chief Operating Officer. In this newly created role, Lavey will enhance the company’s business strategy and foster integration between business and technology, while maintaining his current responsibilities.