The Hanover Insurance (THG)
NYSE:THG
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Hanover Insurance
(NYSE:THG)
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Rating:85Outperform
Price Target:
$223.00
▲(22.63% Upside)
Action:Reiterated
Date:05/14/26
The score is driven primarily by strong financial performance (profitability/ROE rebound, conservative leverage, and high cash earnings conversion) and a very favorable earnings update with record underwriting metrics and growing investment income. Valuation is also supportive with a low P/E and modest yield. Technicals show a healthy uptrend, though momentum is somewhat extended, and catastrophe/liability severity remain key operational risks to monitor.
Positive Factors
Strong cash generation
Hanover converts underwriting and investment earnings into cash at a very high rate (FCF ≈ 0.97–0.99 of net income and large TTM FCF growth). Durable cash conversion supports dividends, buybacks, reinsurance purchases and reserve strengthening across multiple quarters.
Negative Factors
Underwriting/earnings volatility
Profitability has swung widely across underwriting cycles, with sharp margin deterioration in prior years before recovery. This cyclical volatility makes future results sensitive to claim frequency, reserve development and pricing execution, limiting earnings predictability over several quarters.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong cash generation
Hanover converts underwriting and investment earnings into cash at a very high rate (FCF ≈ 0.97–0.99 of net income and large TTM FCF growth). Durable cash conversion supports dividends, buybacks, reinsurance purchases and reserve strengthening across multiple quarters.
Read all positive factors
Hanover Insurance (THG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$6.91B
Dividend Yield1.97%
Average Volume (3M)288.88K
Price to Earnings (P/E)8.2
Beta (1Y)0.37
Revenue Growth6.41%
EPS Growth66.30%
CountryUS
Employees4,900
SectorFinancial
Sector Strength70
IndustryInsurance - Property & Casualty
Share Statistics
EPS (TTM)20.21
Shares Outstanding34,986,786
10 Day Avg. Volume293,556
30 Day Avg. Volume288,880
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 Cap1.07
Enterprise Value/Revenue1.11
Enterprise Value/Gross Profit3.21
Enterprise Value/Ebitda7.77
Forecast
1Y Price Target
$202.17Price Target Upside11.17% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
EPS Forecast (FY)18.53
Revenue Forecast (FY)$6.64B
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.
Read all updates
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
78
Positive
Balance Sheet
84
Very Positive
Cash Flow
90
Very Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 6.68B | 6.60B | 6.22B | 5.96B | 5.43B | 5.16B |
| Gross Profit | 2.31B | 2.87B | 1.24B | 652.90M | 716.30M | 1.04B |
| EBITDA | 953.30M | 887.00M | 573.40M | 81.50M | 191.00M | 572.20M |
| Net Income | 721.10M | 662.50M | 426.00M | 35.30M | 116.00M | 422.80M |
Balance Sheet | ||||||
| Total Assets | 16.53B | 16.95B | 15.27B | 14.61B | 14.00B | 14.25B |
| Cash, Cash Equivalents and Short-Term Investments | 243.50M | 3.00B | 2.02B | 8.30B | 7.79B | 7.95B |
| Total Debt | 843.80M | 1.22B | 784.10M | 783.20M | 782.40M | 781.60M |
| Total Liabilities | 12.96B | 13.37B | 12.43B | 12.15B | 11.66B | 11.11B |
| Stockholders Equity | 3.57B | 3.57B | 2.84B | 2.47B | 2.33B | 3.14B |
Cash Flow | ||||||
| Free Cash Flow | 1.25B | 1.17B | 796.20M | 349.80M | 704.50M | 815.70M |
| Operating Cash Flow | 1.26B | 1.18B | 806.40M | 361.70M | 722.30M | 823.70M |
| Investing Cash Flow | -1.05B | -666.20M | -541.50M | -228.50M | -507.60M | -460.20M |
| Financing Cash Flow | -281.90M | 175.20M | -145.50M | -122.10M | -140.60M | -253.20M |
Hanover Insurance Technical Analysis
Positive
181.85
Price Trends
179.77
Positive
177.07
Positive
176.38
Positive
Market Momentum
4.34
Negative
64.90
Neutral
71.03
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 below the 20-day moving average (MA) of 187.11, above the 50-day MA of 179.77, and above the 200-day MA of 176.38, indicating a bullish trend. The MACD of 4.34 indicates Negative momentum. The RSI at 64.90 is Neutral, neither overbought nor oversold. The STOCH value of 71.03 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 |
|---|---|---|---|---|---|---|---|
85 Outperform | $6.91B | 8.24 | 20.92% | 1.97% | 6.41% | 66.30% | |
80 Outperform | $5.34B | 11.67 | 12.93% | 1.85% | 8.76% | 99.32% | |
78 Outperform | $5.57B | 6.41 | 36.48% | 1.34% | 9.70% | 193.37% | |
73 Outperform | $4.87B | 23.95 | 22.00% | 4.05% | 9.01% | 40.14% | |
68 Neutral | $7.42B | 7.37 | 16.93% | 1.80% | 9.07% | 33.25% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
55 Neutral | $1.74B | -264.26 | 1.52% | 3.15% | 0.51% | -88.36% |
* Financial Sector Average
THG
Hanover Insurance
194.56
31.15
19.06%
AXS
Axis Capital
100.55
1.30
1.31%
MCY
Mercury General
102.93
43.37
72.81%
RLI
RLI
52.64
-18.61
-26.12%
SIGI
Selective Insurance Group
89.22
3.74
4.37%
KMPR
Kemper
29.50
-30.82
-51.10%
Hanover Insurance Corporate Events
Executive/Board ChangesStock BuybackShareholder Meetings
Hanover Insurance Names New Principal Accounting Officer, Expands Buyback
Positive
May 13, 2026
On May 13, 2026, The Hanover Insurance Group appointed longtime executive Patricia A. Norton-Gatto, currently senior vice president and corporate controller, as principal accounting officer, succeeding CFO Jeffrey M. Farber in that role. Norton-Ga...
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.