It has been about a month since the last earnings report for Hanover Insurance Group (THG). Shares have lost about 1.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Hanover Insurance due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
THG Q2 Earnings Beat on Personal Lines Gains, Revenues Miss
The Hanover Insurance Group reported second-quarter 2026 operating earnings of $5.31 per share, up 22.1% year over year. The figure beat the Zacks Consensus Estimate of $3.88 by 36.9%.
Total revenues increased 4.6% year over year to $1.72 billion but missed the consensus mark of $1.73 billion by 0.4%. Results benefited from stronger Personal Lines underwriting, lower catastrophe losses and higher net investment income. The consolidated combined ratio improved to 91.2%.
THG Underwriting Results Improve
The consolidated loss and loss adjustment expense ratio improved 1.7 percentage points year over year to 60.2%. Catastrophe losses totaled $91.8 million, contributing 5.7 points to the combined ratio, compared with a catastrophe ratio of 7% in the prior-year quarter.
The combined ratio excluding catastrophes remained unchanged at 85.5%. The current accident year loss and LAE ratio excluding catastrophes improved 30 basis points to 55.8%, while favorable prior-year reserve development contributed 1.3 points. Net premiums earned increased to $1.60 billion from $1.55 billion.
The Hanover's Core Commercial Growth Accelerates
Core Commercial net premiums written rose 7.2% year over year to $574.8 million. Growth accelerated from the first quarter, supported by increases of 6% in small commercial and 9.4% in the middle market. Renewal price increases averaged 7.8%, including rate increases of 7%.
Segment profitability weakened despite the faster premium growth. Operating income before taxes declined to $77.5 million from $83.9 million, while the combined ratio increased to 95.7% from 93%. The current accident year combined ratio excluding catastrophes deteriorated 1.8 points to 91.2%, reflecting higher liability loss selections and a difficult comparison with unusually low property losses a year earlier.
THG Specialty Underwriting Margins Narrow
Specialty net premiums written increased 4.4% to $384.4 million, reflecting improved growth momentum from the first quarter. Renewal pricing rose 3.6%, including average rate increases of 2.1%.
Operating income before taxes declined to $68.4 million from $71.2 million. The combined ratio increased to 88.3% from 86.5%, as the current accident year loss and LAE ratio, excluding catastrophes, rose 2.6 points to 51.6%. Lower catastrophe losses provided some support, falling to $10 million from $14.6 million.
The Hanover's Personal Lines Results Strengthen
Personal Lines net premiums written increased 2.6% year over year to $697.6 million. Growth reflected higher new business and continued renewal pricing, with renewal price increases averaging 8.7% and rate increases averaging 4.8%. Policies in force were essentially unchanged sequentially.
Operating income before taxes surged to $104.9 million from $57.4 million. The combined ratio improved 6.6 points to 88.9%, aided by lower catastrophe losses and better underlying loss experience. The current accident year combined ratio, excluding catastrophes, improved to 81.9% from 84.8%, as earned pricing exceeded loss trends and property claim frequency remained favorable.
THG Investment Income and Capital Position Advance
Net investment income increased 13.4% year over year to $119.6 million, driven by operating cash flows and higher earned yields. The portfolio’s pretax earned yield increased to 4.28% from 4.11%, while the fixed-maturity yield improved to 4.45% from 4.24%.
The Hanover ended June with $11.2 billion in cash and invested assets. Book value per share increased 3.5% from March 31, 2026, to $105.40. During the quarter, THG repurchased about 0.3 million shares for approximately $55 million. Through July 24, repurchases totaled roughly 0.8 million shares for $149 million, leaving about $660 million under the company’s authorization.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a upward trend in fresh estimates.
The consensus estimate has shifted 7.98% due to these changes.
VGM Scores
Currently, Hanover Insurance has a average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Hanover Insurance has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Hanover Insurance belongs to the Zacks Insurance - Property and Casualty industry. Another stock from the same industry, Progressive (PGR), has gained 1.2% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026.
Progressive reported revenues of $23.01 billion in the last reported quarter, representing a year-over-year change of +6.4%. EPS of $4.85 for the same period compares with $4.88 a year ago.
Progressive is expected to post earnings of $3.98 per share for the current quarter, representing a year-over-year change of -1.7%. Over the last 30 days, the Zacks Consensus Estimate has changed +9.3%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Progressive. Also, the stock has a VGM Score of B.
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This article originally published on Zacks Investment Research (zacks.com).