The Hanover Insurance Group (NYSE:THG) used its fourth-quarter earnings call to highlight what management described as one of the best quarters in the company’s three decades as a public company, capping a “record year” driven by underwriting profitability, favorable catastrophe experience, and higher investment income.
Record-year underwriting results and 2026 outlook
Chief Executive Officer Jack Roche said the company delivered “excellent margins while growing with intention,” emphasizing discipline in more competitive markets while leaning into areas with “attractive margins and favorable risk profiles.” Roche said the company continued to invest in product and service capabilities, technology, agency partnerships, and talent.
Catastrophe losses added 4.5 points to the 2025 combined ratio, which management said came in below expectations due to generally benign weather and property management actions. Farber noted the expense ratio improved to 31.1% for the year, but was above the company’s initial expectations due primarily to higher variable agency and employee compensation tied to better underwriting results and lower catastrophes, as well as continued investments to support future growth.
For 2026, management provided guidance that includes:
- Consolidated net written premium growth expected to accelerate to mid-single-digit growth
- Net investment income growth expected in the mid- to upper-single digits versus 2025
- Expense ratio expected to be 30.3% in 2026 (with the company saying it will not provide specific expense ratio guidance in future years)
- Combined ratio ex-catastrophes expected to be 88%–89%
- Catastrophe load assumed at 6.5% for the year and 6.1% for the first quarter
In Q&A, management said a January winter storm (Fern) represented “most” of January catastrophe losses, but Farber said there was “no reason” to modify the first-quarter CAT estimate of 6.1% based on what the company was seeing at the time of the call.
Personal Lines: profitability and diversification efforts
Roche said Personal Lines results reflected underwriting and portfolio actions including pricing, terms and conditions changes, and targeted Midwest deconcentration. Personal Lines net written premium growth was 4.4% in the quarter and 3.7% for the full year, which management attributed primarily to pricing. Retention was described as relatively stable.
Farber reported a 2025 current accident year ex-cat combined ratio for Personal Lines of 85.3% (and 85.4% for the quarter). The improvement was driven by earned pricing in personal auto and homeowners and reduced frequency. The Personal Auto ex-cat current accident year loss ratio was 69.5% for the year; the fourth-quarter result was 75.7%, which Farber said was higher year over year but roughly in line with expectations.
In homeowners, Farber said the ex-cat current accident year loss ratio improved to 45.8% for the year and 36.6% in the fourth quarter, citing earned pricing and favorable weather. He also said deductible changes appeared to reduce smaller claims, benefiting both CAT and non-CAT results.
Management said renewal pricing in Personal Lines was 9.2% in the quarter, including 6.9% for auto and 12.3% for home, while umbrella pricing held around 20%. Roche said the company’s “North Star” in Personal Lines is to be “the best market in the IA channel for preferred accounts,” with a focus on growing thoughtfully and expanding in “diversification states.” He added that he liked a mid-single-digit growth objective over time as prices normalize.
On diversification, Roche said premiums in 11 targeted states grew about 8% in the fourth quarter versus 3% in other states, and that the Midwest’s share of total premiums has declined by roughly four points since the beginning of 2023.
Core Commercial: Small Commercial momentum, Middle Market competition
In Core Commercial, Roche said results reflected active portfolio management and disciplined pricing even as competition increased in select sectors. Farber said the segment posted a fourth-quarter current accident year ex-cat combined ratio of 91.6% and a full-year 2025 result of 92.6%. Fourth-quarter ex-cat current accident year loss ratio improved to 57.4%, while the full-year loss ratio was 59.1%, which Farber said was slightly higher than 2024 due to “prudently increased loss selections” in commercial auto liability and workers’ compensation, partially offset by lower losses in commercial multiple peril.
Core Commercial net written premiums grew 2.5% in the quarter and 3.6% for the year, led by Small Commercial. Farber said growth comparisons were affected by Middle Market reinstatement premium timing (received in fourth-quarter 2024 and paid in 2025). Excluding reinstatement impacts, the company said fourth-quarter Core Commercial growth would have been 4.1%, including 2.6% in Middle Market.
Roche highlighted Small Commercial net written premium growth of nearly 5% in the quarter and for the full year, supported by strong retention and double-digit price increases. He also pointed to double-digit new business growth and described Small Commercial as having meaningful barriers to entry. Roche said the company is expanding distribution through new agency appointments and increased engagement with account managers. He added that the Workers’ Compensation Advantage product is live in 17 states with a national rollout targeted by the end of 2026.
On Middle Market conditions, Roche acknowledged heightened competition in larger property schedules and certain sectors, while describing firmer conditions in parts of liability, citing human services as an area facing market access challenges in professional liability, sexual abuse and molestation coverage, and excess limits.
Specialty and investment income: property competition, strong NII growth
Roche said Specialty continued to generate consistent profitability, though premium growth moderated to about 4% in the fourth quarter (adjusted for reinstatement premium) amid heightened competitive pressure in property lines that impacted Hanover Specialty Industrial Property and, to a lesser extent, Marine. He highlighted double-digit growth in Excess & Surplus Lines and said the company’s AI-powered submission triage is “delivering nicely.” Roche also pointed to accelerated management liability growth in the quarter due to pricing stabilization, strength in the financial institutions segment, and an updated admitted asset manager product launched in the fourth quarter. Surety posted robust double-digit growth, which Roche tied to commercial surety niches and technology capability to write E&S bond products.
Farber said Specialty produced a 2025 current accident year combined ratio ex-cat of 87.4% and 89.5% for the fourth quarter, with loss ratios “within” the company’s long-term expectation of low fifties. In Q&A, Specialty President Bryan Salvatore said management liability results benefited from improved turnaround and operating model investments, and he said the company had not seen any abatement in E&S submission activity, with double-digit growth continuing.
On investments, Farber said net investment income increased 24.9% in the fourth quarter and 22% for the year to $454.4 million, reflecting asset base growth, higher reinvestment yields, improving partnership income, and portfolio repositioning. He also referenced about $4 million of fourth-quarter net investment income benefit from investing proceeds of a $500 million debt issuance in August 2025, offset by higher interest expense.
Book value per share rose about 27% in 2025 to $100.90, and book value excluding unrealized gains and losses increased about 15% to $104.21. Farber said the company raised its quarterly dividend 5.6% to $0.95 per share, marking the 21st consecutive year of dividend increases. The company repurchased $55 million of shares in the fourth quarter and $130 million during 2025, plus about $44 million through January 30.
About The Hanover Insurance Group (NYSE:THG)
The Hanover Insurance Group, Inc (NYSE: THG) is a property and casualty insurance company that provides a range of commercial and personal insurance products. Through its subsidiary companies, Hanover offers coverage for businesses of all sizes, including workers’ compensation, general liability, commercial auto, and professional liability. On the personal lines side, the company underwrites homeowners, personal auto, flood, and umbrella policies designed to meet the needs of individuals and families.
In addition to its core commercial and personal insurance offerings, Hanover maintains a specialty arm that focuses on niche markets through tailored product solutions.
