The Hanover Insurance Group posted record second-quarter net income of $191.6 million in the second quarter of 2026, with a consolidated combined ratio of 91.2% as underwriting margins improved across all three business segments.
The Worcester, Massachusetts-based insurer earned $5.38 per diluted share for the three months ended June 30, 2026. That compared with $157.1 million, or $4.30 per diluted share, a year earlier. Net premiums written grew 4.6% to $1.66 billion.
The US property and casualty industry posted a combined ratio of 92.4% in Q1 2026, according to Verisk and the American Property Casualty Insurance Association (APCIA). Hanover's 91.2% Q2 figure, or 85.5% excluding catastrophes, was a meaningful beat against that benchmark. Operating income was $189.2 million, or $5.31 per diluted share, with net and operating return on equity at 21.2% and 19.8%, respectively.
Net investment income rose 13.4% to $119.6 million, reflecting higher earned yields and strong operating cash flows. The pre-tax earned yield on fixed maturities was 4.45%, up from 4.24% a year earlier. That momentum continued from the first quarter of 2026, when Hanover similarly posted operating return on equity above 20%.
Catastrophe losses totaled $91.8 million, or 5.7 points of the combined ratio, down from seven points in the prior-year quarter.
Hanover's personal lines posted the standout segment result. Operating income before taxes rose to $104.9 million from $57.4 million a year earlier, while the combined ratio improved to 88.9% from 95.5%. Net premiums written were $697.6 million, up 2.6%, with renewal price increases averaging 8.7%.
Core commercial net premiums written grew 7.2% to $574.8 million. The segment's combined ratio widened to 95.7% from 93%. Operating income before taxes fell to $77.5 million from $83.9 million. The company increased loss ratio selections in liability coverages during the quarter.
The pressure is not unique to Hanover. Social inflation continues to push loss severity across general liability and umbrella lines. According to the Swiss Re Institute, annual liability claim costs rose approximately 7% in 2024, the highest annual increase in two decades.
Core commercial renewal price increases still averaged 7.8% in the quarter. That ran counter to a broader commercial market in which average P&C premiums declined for the first time in nearly nine years in Q1 2026, according to Verisk.
Specialty net premiums written rose 4.4% to $384.4 million. Its combined ratio was 88.3%, against 86.5% a year ago. The segment reported $10.8 million in net favorable prior-year reserve development, excluding catastrophes.
Book value per share increased to $105.40 at June 30, up 3.5% from March 31. Year-to-date buybacks totaled $149 million across approximately 827,000 shares through July 24.
John C. Roche, president and chief executive officer, said the results reflected "the strength of our business model, the durable earnings power we have built across The Hanover and the disciplined execution of our team." Roche plans to retire December 31, 2026, following nine years as CEO and a 40-year career in the industry.
Richard W. Lavey, currently chief operating officer and president of Hanover Agency Markets, has been named CEO-elect.
Jeffrey M. Farber, executive vice president and chief financial officer, cited the 91.2% combined ratio and 85.5% ex-catastrophe figure as evidence of sustained underwriting discipline. Farber said continued favorable prior-year reserve development "reinforces our confidence in the strength of our reserve position."
