Hanover Insurance Intrinsic Value Calculation – HANOVER INSURANCE Reports FY2022 Q4 Earnings Results on February 2, 2023.

Earnings Overview

On February 2 2023, HANOVER INSURANCE ($NYSE:THG) reported its earnings results for the fourth quarter of FY2022, ending December 31 2022. Compared to the same quarter last year, total revenue was down 107.1% at USD -11.6 million, whereas net income was up 7.3% at USD 1478.7 million.

Transcripts Simplified

In the fourth quarter, we incurred catastrophe losses of $190 million or 13.9 points. Winter storm Elliott accounted for approximately $165 million or 12.1 points of the losses. Over 70% of Elliott losses were within our Core Commercial property book, likely due to unoccupied properties which delayed the discovery and remediation of water damage resulting from burst pipes. Excluding catastrophes, the enterprise combined ratio was 94.1%, and we recorded favorable prior year reserve development of $20.6 million or 0.4 points for the full year, driven by specialty lines and favorability in workers’ comp. Our expense ratio was 30.9% in the fourth quarter and 30.8% for the full year, reflecting strong improvement and fixed cost leverage from growth.

The consolidated underlying loss ratio increased 3.7 points to 63.3% for the fourth quarter and 3.2 points to 61.7% for the full year due to higher loss costs and property large losses in the second half of the year. Core Commercial loss ratio, excluding catastrophes, increased 2.2 points for the fourth quarter and 0.4 points for the full year, mainly due to an uptick in loss cost inflation and property large losses. We continue to push for additional rate across the Core Commercial book of business.

About the Company

Income Snapshot

Below shows the total revenue, net income and net margin for Hanover Insurance. More…

Cash Flow Snapshot

Below shows the cash from operations, investing and financing for Hanover Insurance. More…

Balance Sheet Snapshot

Below shows the total assets, liabilities and book value per share for Hanover Insurance. More…

Key Ratios Snapshot

Some of the financial key ratios for Hanover Insurance are shown below. More…

Price History

On Thursday, February 2, 2023, HANOVER INSURANCE reported their fourth quarter earnings results for FY2022. The stock opened at $132.9, and by the end of the trading day had risen to $137.7, a 3.7% increase from its previous closing price of $132.8. The rise in stock value came as a result of the company’s impressive earnings report. While financial details have yet to be released, investors have reacted positively to the news, as indicated by the stock’s increase in value.

HANOVER INSURANCE provided a strong outlook for the future and they are confident in their ability to navigate the current economic climate. Analysts and shareholders alike will be watching to see how HANOVER INSURANCE performs in the wake of its fourth quarter earnings report. In light of the company’s success this far, investors are hopeful that the company will continue to thrive in the months ahead. Live Quote…

Analysis – Hanover Insurance Intrinsic Value Calculation

GoodWhale has analyzed the financials of HANOVER INSURANCE and calculated its fair value using our proprietary Valuation Line. Our estimated fair value for HANOVER INSURANCE shares is approximately $138.7. Currently, the share price is trading at $137.7, which is close to our estimated fair value, indicating that the price is in line with the intrinsic value of these shares. More…

Peers

The Hanover Insurance Group Inc competes with Global Indemnity Group LLC, Mercury General Corp, American Financial Group Inc, in the insurance market. The company’s main competitors areGlobal Indemnity Group LLC, Mercury General Corp, and American Financial Group Inc.

– Global Indemnity Group LLC ($NYSE:GBLI)

Global Indemnity Group LLC is a provider of insurance products and services. The company offers a range of insurance products, including property and casualty, professional liability, and surety. Global Indemnity Group LLC has a market cap of 307.69M as of 2022, a Return on Equity of -0.24%. The company was founded in 2001 and is headquartered in Wilmington, Delaware.

– Mercury General Corp ($NYSE:MCY)

Mercury General Corporation, together with its subsidiaries, engages in writing personal automobile insurance in the United States. The company was founded in 1961 and is based in Los Angeles, California. Mercury General Corporation operates as a subsidiary of KGI Insurance Agency, Inc.

– American Financial Group Inc ($NYSE:AFG)

American Financial Group Inc. is a holding company that engages in the property and casualty insurance businesses. The company has a market cap of $10.85 billion and a return on equity of 19.27%. American Financial Group’s main subsidiaries are Great American Insurance Company and National Interstate Corporation. Great American Insurance Company is a property and casualty insurer that specializes in writing excess and surplus lines insurance, while National Interstate Corporation is a specialty property and casualty insurance company.

Summary

Despite the 107.1% decrease in revenue for Hanover Insurance‘s fourth quarter ending December 31, 2022, the company’s net income increased 7.3% year over year to USD 1478.7 million. Investors responded positively to the news, as Hanover Insurance’s stock price rose the same day. With strong earnings and positive investor sentiment, Hanover Insurance is a prime investing opportunity for those looking to diversify their portfolios or increase their exposure to the insurance industry. Moving forward, investors should monitor the company’s financial performance in order to make informed investment decisions.