The Hanover Insurance Group reported higher first‑quarter profits and stronger underwriting margins, as prior rate and underwriting actions continued to flow through its Core Commercial, Specialty and Personal Lines portfolios.
Net income for the first quarter of 2026 rose to $186.8 million, or $5.20 per diluted share, from $128.2 million, or $3.50 per diluted share, a year earlier. Operating income increased to $188.5 million, or $5.25 per diluted share, compared to $141.8 million, or $3.87 per diluted share, in the prior‑year quarter.
The carrier posted net and operating return on equity of 20.9% and 20.3%, respectively. The combined ratio improved to 91.7% from 94.1%, while the combined ratio excluding catastrophes strengthened to 85.4% from 87.8%. The current accident year loss and LAE ratio excluding catastrophes improved by two points to 56.3%.
“We delivered excellent first quarter results, with an operating return on equity of over 20% while generating balanced top‑line growth and building for the future,” said John Roche (pictured, left), president and chief executive officer at The Hanover.
Roche highlighted sustained margins in Personal Lines, strong Core Commercial performance with “resilient pricing” and accelerating growth in Small Commercial, and “exceptional profitability” in Specialty, particularly in management liability, surety, specialty GL and E&S.
Across the group, net premiums written increased 3.2% to $1,559.7 million, while net premiums earned rose to $1,570.6 million from $1,508.5 million.
In Core Commercial, operating income before income taxes rose to $74.8 million from $26.8 million. The combined ratio improved to 96.6% from 103.4%. Catastrophe losses were $30.4 million, or 5.4 points of the combined ratio, compared with $46.0 million, or 8.5 points, a year earlier, helped by favorable prior‑year catastrophe reserve development.
Core Commercial’s current accident year combined ratio excluding catastrophes fell 3.6 points to 91.5%, with the current accident year loss and LAE ratio excluding catastrophes improving to 58.8%, driven by lower property large losses. The expense ratio declined 0.7 points to 32.7%, reflecting fixed‑cost leverage from earned premium growth. Net premiums written in Core Commercial grew 4.3% to $630.4 million, including 6.4% growth in small commercial and 1.5% in middle market. Renewal price increases averaged 8.6%, including average rate increases of 7.5%.
Specialty generated operating income before income taxes of $84.0 million, up from $64.6 million. The combined ratio improved to 84.2% from 87.7%, with catastrophe losses of $9.6 million, or 2.7 points, compared with $14.7 million, or 4.3 points, in the prior‑year quarter.
Specialty reported net favorable prior‑year reserve development, excluding catastrophes, of $14.2 million, or 3.9 points. The current accident year combined ratio excluding catastrophes improved 2.7 points to 85.4%. The current accident year loss and LAE ratio excluding catastrophes was 49.0%, reflecting lower property losses, while the expense ratio declined 0.6 points to 36.4%. Net premiums written increased 2.3% to $366.7 million.
Personal Lines posted operating income before income taxes of $89.2 million, compared to $94.2 million in the prior‑year quarter. The combined ratio rose to 91.5% from 89.7%, primarily due to higher catastrophe activity, but underlying profitability strengthened.
Catastrophe losses in Personal Lines were $58.9 million, or 9.1 points of the combined ratio, versus $34.9 million, or 5.6 points, a year earlier. This included $80.2 million of current‑year catastrophe losses, partially offset by $21.3 million of favorable prior‑year catastrophe reserve development, largely related to 2025 events. Excluding catastrophes, the current accident year combined ratio improved to 83.8% from 84.5%, and the current accident year loss and LAE ratio excluding catastrophes declined 1.1 points to 58.1%, supported by earned pricing running ahead of loss trends and lower homeowners property claim frequency.
The Personal Lines expense ratio increased 0.4 points to 25.7%, mainly due to the timing of variable agency compensation. Net premiums written rose 2.7% to $562.6 million, driven primarily by higher new business. Renewal price increases averaged 8.4%, including 4.3% of rate, while policies in force were flat compared with the fourth quarter of 2025.
Meanwhile, net investment income rose 19.6% to $126.9 million, reflecting continued deployment of operating cash flows, higher earned yields on fixed maturities and higher partnership income. As of March 31, The Hanover held $11.0 billion in cash and invested assets; fixed maturities and cash represented about 93% of the portfolio, with roughly 95% of fixed maturities rated investment grade.
Book value per share at March 31 was $101.86, up 1.0% from year‑end. Book value per share excluding net unrealized depreciation on fixed maturity investments, net of tax, was $107.14, up 2.8%. Operating insurance company statutory capital and surplus rose to $3.54 billion from $3.34 billion at year‑end 2025.
“We are extremely pleased with our financial metrics this quarter, including first quarter record operating earnings per share of $5.25 and a combined ratio of 91.7%,” said Jeffrey Farber (pictured, right), executive vice president and chief financial officer. “Our ability to sustain strong underwriting margins is evident in the 2.4‑point improvement in our ex‑CAT combined ratio compared to the prior‑year quarter.”
Year‑to‑date through April 28, 2026, the company repurchased approximately 580,000 shares of common stock for about $101 million, leaving around $72 million of remaining capacity under its existing share repurchase program.
Relative to US commercial and personal lines peers, The Hanover’s 91.7% combined ratio and 20%‑plus operating return on equity place it toward the upper end of the current profitability range, at a time when many carriers continue to report mid‑90s combined ratios and low‑ to mid‑teens operating ROEs.
Overall net premiums written grew just over 3%, below the high single‑digit growth of some larger commercial‑focused competitors, but small commercial and targeted specialty lines are expanding faster than the group average.
“Our performance underscores disciplined execution and the cumulative impact of prior pricing and property underwriting actions that are now bearing fruit," Roche said.
