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The Hanover Insurance (THG)
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Hanover Insurance (THG) AI Stock Analysis

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THG

Hanover Insurance

(NYSE:THG)

Rating:81Outperform
Price Target:
$195.00
▲(13.92% Upside)
Hanover Insurance's stock is rated highly due to strong financial performance and positive earnings call results. The financial performance shows consistent growth, while technical indicators suggest stable momentum. The valuation is attractive, and despite some challenges noted in the earnings call, the positive outlook contributes to a robust overall score.
Positive Factors
Earnings
Company had $101.1 million of operating income, well ahead of consensus expectations of $52.7 million.
Pricing Power
Pricing power increases are estimated to provide significant benefit beyond loss-expense inflation.
Profit Margins
Hanover’s home-insurance profit margins are on track to beat consensus, potentially by a meaningful margin.
Negative Factors
Expense Ratio
Total company expense ratio of 32.3% was above consensus expectations of 30.9%.
Loss Ratio
Core loss ratio for the Core Commercial segment came in at 58.9%, which was slightly higher than consensus of 57.9%.

Hanover Insurance (THG) vs. SPDR S&P 500 ETF (SPY)

Hanover Insurance Business Overview & Revenue Model

Company DescriptionThe Hanover Insurance Group, Inc. (THG) is a holding company for several property and casualty insurance companies that provide coverage for individuals, families, and businesses. Based in Worcester, Massachusetts, Hanover Insurance offers a wide range of insurance products, including auto, home, and business insurance, catering primarily to small and mid-sized businesses. The company operates through a network of independent agents and brokers across the United States, ensuring personalized service and comprehensive coverage options tailored to meet the diverse needs of its clients.
How the Company Makes MoneyThe 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 Earnings Call Summary

Earnings Call Date:Jul 30, 2025
(Q2-2025)
|
% Change Since: 3.59%|
Next Earnings Date:Oct 29, 2025
Earnings Call Sentiment Positive
The Hanover Insurance Group's second-quarter earnings call reflects strong performance with record operating ROE, significant earnings growth, and improved combined ratios. The Personal Lines and Specialty segments performed exceptionally well, contributing to positive financial results. However, challenges include increased reserving in commercial auto and potential tariff impacts. Despite these lowlights, the highlights significantly outweigh them, indicating a robust performance and positive outlook.
Q2-2025 Updates
Positive Updates
Record Operating ROE
The company achieved an operating return on equity (ROE) of 18.7%, a record for the second quarter.
Strong Operating Earnings Growth
Operating earnings reached $4.35 per diluted share, with earnings growth of approximately 25% on an ex-CAT basis.
Improved Combined Ratio
The overall combined ratio improved by approximately 7 points year-over-year, and the ex-CAT combined ratio improved by 3 points.
Personal Lines Growth and Profitability
The Personal Lines segment achieved balanced growth and strong profitability, with net written premium growth driven by renewal price increases and rising new business activity.
Specialty Segment Performance
The Specialty segment achieved a net written premium growth of 4.6% and an impressive mid-80s combined ratio.
Investment Income Increase
Net investment income increased by 16.7% to $105.5 million.
Share Repurchase Program
The company repurchased approximately 295,000 shares of common stock totaling $48.2 million.
Negative Updates
Commercial Auto Reserve Adjustment
Increased reserving in commercial auto due to rising severity and litigation activity.
Potential Tariff Impact
The company anticipates some minor loss cost increases due to tariffs emerging in the back half of the year.
Elevated Competition in Middle Market
Observed elevated competition in some areas of the middle market sector, leading to selective passing on certain new business opportunities.
Company Guidance
During The Hanover Insurance Group's second-quarter earnings call for Fiscal Year 2025, the company reported notable financial metrics and provided forward-looking guidance. Operating Return on Equity (ROE) reached a record 18.7% for the quarter, with operating earnings of $4.35 per diluted share, reflecting an approximate 25% earnings growth on an ex-catastrophe basis. The overall combined ratio improved by about 7 points, and the ex-catastrophe combined ratio by 3 points, compared to the previous year. The net written premium growth was driven by an 8% increase in targeted diversification states, indicating effective strategic focus. Personal Lines showed a strong performance with a current accident year ex-catastrophe combined ratio improving by 5.4 points, while Specialty lines achieved a mid-80s combined ratio with a net written premium growth of 4.6%. The company remains optimistic about future growth, anticipating net written premium growth between 6% and 7% in the second half of 2025, supported by strategic investments in technology and data analytics to enhance operational efficiency.

Hanover Insurance Financial Statement Overview

Summary
Hanover Insurance demonstrates a solid financial standing with consistent revenue growth and strong cash flow metrics. The balance sheet shows a stable financial position with low leverage, and the income statement reflects high gross profit margins, although EBIT margins indicate some operational challenges.
Income Statement
82
Very Positive
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
78
Positive
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
85
Very Positive
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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue6.27B6.22B5.96B5.43B5.16B4.81B
Gross Profit1.26B1.24B652.90M716.30M1.04B1.01B
EBITDA586.30M573.40M81.50M191.00M572.20M500.10M
Net Income438.70M426.00M35.30M116.00M422.80M358.70M
Balance Sheet
Total Assets15.47B15.27B14.61B14.00B14.25B13.44B
Cash, Cash Equivalents and Short-Term Investments315.10M435.50M316.10M305.00M230.90M120.60M
Total Debt784.30M784.10M783.20M782.40M781.60M780.80M
Total Liabilities12.43B12.43B12.15B11.66B11.11B10.24B
Stockholders Equity3.04B2.84B2.47B2.33B3.14B3.20B
Cash Flow
Free Cash Flow777.20M796.20M349.80M704.50M815.70M692.70M
Operating Cash Flow786.60M806.40M361.70M722.30M823.70M707.60M
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 Price171.18
Price Trends
50DMA
168.22
Positive
100DMA
166.70
Positive
200DMA
161.25
Positive
Market Momentum
MACD
0.89
Negative
RSI
57.13
Neutral
STOCH
48.21
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 171.18 is above the 20-day moving average (MA) of 166.28, above the 50-day MA of 168.22, and above the 200-day MA of 161.25, indicating a bullish trend. The MACD of 0.89 indicates Negative momentum. The RSI at 57.13 is Neutral, neither overbought nor oversold. The STOCH value of 48.21 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

Overall Rating
UnderperformOutperform
Sector (70)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
81
Outperform
$6.12B11.2819.23%2.10%4.47%102.98%
74
Outperform
$6.17B19.1119.49%3.95%10.29%-4.70%
70
Outperform
$7.37B8.9515.07%1.89%6.87%43.53%
70
Outperform
$4.75B12.7712.19%1.92%12.27%66.53%
70
Neutral
CHF14.07B15.3711.33%3.90%3.36%20.02%
65
Neutral
$4.59B154.710.61%0.06%-4.09%-94.77%
58
Neutral
$0.0011.3912.21%2.05%-6.08%
* Financial Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
THG
Hanover Insurance
171.18
42.74
33.28%
AXS
Axis Capital
94.33
22.49
31.31%
RLI
RLI
67.18
-3.70
-5.22%
SIGI
Selective Insurance Group
78.01
-5.64
-6.74%
KMPR
Kemper
61.49
2.83
4.82%
WTM
White Mountains Insurance Group
1,785.01
85.91
5.06%

Hanover Insurance Corporate Events

Executive/Board ChangesShareholder Meetings
Hanover Insurance Holds Annual Shareholder Meeting
Neutral
May 14, 2025

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.

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.Date of analysis: Aug 02, 2025