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Reasons to Stay Invested in Hanover Insurance (THG) Stock
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The Hanover Insurance Group’s (THG - Free Report) growth in the most profitable Core Commercial and Specialty segments, stable retention, better pricing, strong market presence and solid capital position make it a stock worth retaining in one’s portfolio.
Hanover Insurance Group has a stellar history of delivering positive surprises in the last 14 reported quarters.
This insurer has an impressive VGM Score of A. This helps to identify stocks with the most attractive value, growth and momentum.
Northbound Estimate Revision
The Zacks Consensus Estimate for 2023 earnings has moved 3.3% north in the past 60 days, reflecting analyst optimism.
Zacks Rank & Price Performance
THG currently carries a Zacks Rank #3 (Hold). Year to date, the stock has gained 4% against the industry’s decline of 5.5%, the Finance sector’s decline of 18.1% and the Zacks S&P 500 composite’s decrease of 20.8%.
Image Source: Zacks Investment Research
Optimistic Growth Projections
The Zacks Consensus Estimate for 2022 earnings stands at $10.55, implying an increase of 20.6% from the year-ago reported figure on 6.8% higher revenues of $5.5 billion. The consensus estimate for 2023 earnings stands at $11.90, implying an increase of 12.8% from the year-ago reported figure on 8.8% higher revenues of $5.7 billion.
THG estimates the bottom line to grow between 12% and 13% over the long term. The expected long-term earnings growth is pegged at 16.1%, better than the industry average of 11.6%.
THG has been hiking dividends for the last 16 years, in addition to paying special dividends. Its yield of 2.1% is better than the industry average of 0.4%.
Growth Drivers
Hanover Insurance, which has evolved into a balanced, small/middle market-focused commercial and personal lines carrier, now looks to be the premier P&C franchise in the independent agency channel. Focus on pricing segmentation and mix management and emphasis on growth in target states, product lines and industry classes in the middle market bode well for THG.
Hanover Insurance expects to increase prices in both home and auto, which, in turn, should help deliver mid-single-digit growth in target returns in Personal Lines in 2022. At Auto, THG expects a near double-digit rate increase for the remainder of 2022.
Rate increases and the successful launch of TAP sales should drive Commercial Lines revenues. Hanover Insurance believes that its market-leading capabilities, operating model and portfolio performance should allow it to benefit in the high-margin $105 billion small commercial market segment.
The Commercial Lines loss ratio is expected to improve in 2022, given the rate increases implemented in 2021. The consolidated expense ratio is projected to improve 20 basis points in 2022 to 31.1%.
Given the accelerated pace in digitalization across the insurance industry, THG continues to invest in technology to upgrade the front-end capabilities.
All these together should help THG deliver the higher end of mid-single-digit net written premium growth in 2022 and a five-year CAGR of more than 7% to $7 billion.
THG estimates an operating return on equity of 14% in the long run, banking on improved rates and cost management.
American Financial delivered a four-quarter average earnings surprise of 41.72%. In the past year, American Financial has rallied 11.2%.
The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 9.8% and 6.9% north, respectively, in the past 60 days.
W.R. Berkley’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 27.08%. In the past year, W.R. Berkley stock has increased 27.2%.
The Zacks Consensus Estimate for WRB’s 2022 and 2023 earnings has moved 7% and 5.1% north, respectively, in the past 60 days.
United Fire Group delivered a four-quarter average earnings surprise of 270.83%. In the past year, the insurer has rallied 5%.
The Zacks Consensus Estimate for UFGS’ 2022 earnings has moved 23.5% north in the past 30 days and implies a 46.2% increase from the year-ago reported figure.
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Reasons to Stay Invested in Hanover Insurance (THG) Stock
The Hanover Insurance Group’s (THG - Free Report) growth in the most profitable Core Commercial and Specialty segments, stable retention, better pricing, strong market presence and solid capital position make it a stock worth retaining in one’s portfolio.
Hanover Insurance Group has a stellar history of delivering positive surprises in the last 14 reported quarters.
This insurer has an impressive VGM Score of A. This helps to identify stocks with the most attractive value, growth and momentum.
Northbound Estimate Revision
The Zacks Consensus Estimate for 2023 earnings has moved 3.3% north in the past 60 days, reflecting analyst optimism.
Zacks Rank & Price Performance
THG currently carries a Zacks Rank #3 (Hold). Year to date, the stock has gained 4% against the industry’s decline of 5.5%, the Finance sector’s decline of 18.1% and the Zacks S&P 500 composite’s decrease of 20.8%.
Image Source: Zacks Investment Research
Optimistic Growth Projections
The Zacks Consensus Estimate for 2022 earnings stands at $10.55, implying an increase of 20.6% from the year-ago reported figure on 6.8% higher revenues of $5.5 billion. The consensus estimate for 2023 earnings stands at $11.90, implying an increase of 12.8% from the year-ago reported figure on 8.8% higher revenues of $5.7 billion.
THG estimates the bottom line to grow between 12% and 13% over the long term. The expected long-term earnings growth is pegged at 16.1%, better than the industry average of 11.6%.
It has a Growth Score of A.
Solid Dividend History
THG has been hiking dividends for the last 16 years, in addition to paying special dividends. Its yield of 2.1% is better than the industry average of 0.4%.
Growth Drivers
Hanover Insurance, which has evolved into a balanced, small/middle market-focused commercial and personal lines carrier, now looks to be the premier P&C franchise in the independent agency channel. Focus on pricing segmentation and mix management and emphasis on growth in target states, product lines and industry classes in the middle market bode well for THG.
Hanover Insurance expects to increase prices in both home and auto, which, in turn, should help deliver mid-single-digit growth in target returns in Personal Lines in 2022. At Auto, THG expects a near double-digit rate increase for the remainder of 2022.
Rate increases and the successful launch of TAP sales should drive Commercial Lines revenues. Hanover Insurance believes that its market-leading capabilities, operating model and portfolio performance should allow it to benefit in the high-margin $105 billion small commercial market segment.
The Commercial Lines loss ratio is expected to improve in 2022, given the rate increases implemented in 2021. The consolidated expense ratio is projected to improve 20 basis points in 2022 to 31.1%.
Given the accelerated pace in digitalization across the insurance industry, THG continues to invest in technology to upgrade the front-end capabilities.
All these together should help THG deliver the higher end of mid-single-digit net written premium growth in 2022 and a five-year CAGR of more than 7% to $7 billion.
THG estimates an operating return on equity of 14% in the long run, banking on improved rates and cost management.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are American Financial Group, Inc. (AFG - Free Report) , W.R. Berkley Corporation (WRB - Free Report) , and United Fire Group (UFCS - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
American Financial delivered a four-quarter average earnings surprise of 41.72%. In the past year, American Financial has rallied 11.2%.
The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 9.8% and 6.9% north, respectively, in the past 60 days.
W.R. Berkley’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 27.08%. In the past year, W.R. Berkley stock has increased 27.2%.
The Zacks Consensus Estimate for WRB’s 2022 and 2023 earnings has moved 7% and 5.1% north, respectively, in the past 60 days.
United Fire Group delivered a four-quarter average earnings surprise of 270.83%. In the past year, the insurer has rallied 5%.
The Zacks Consensus Estimate for UFGS’ 2022 earnings has moved 23.5% north in the past 30 days and implies a 46.2% increase from the year-ago reported figure.