We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Hanover Insurance (THG) Up 8% YTD: More Room for Upside Left?
Read MoreHide Full Article
Shares of The Hanover Insurance Group (THG - Free Report) have gained 7.9% year to date, outperforming the industry’s increase of 4.4%. The Finance sector and the Zacks S&P 500 composite have lost 5.6% and 9.5% in the same time frame. With a market capitalization of $5 billion, the average volume of shares traded in the last three months was 1.2 million.
Image Source: Zacks Investment Research
Focus on driving growth in the most profitable Core Commercial and Specialty segments, stable retention, better pricing and strong market presence continue to drive Hanover Insurance Group. This Zacks Rank #3 (Hold) insurer has a solid track record of beating earnings estimates in the trailing 13 quarters.
Return on equity in the trailing 12 months was 10.2%, better than the industry average of 5.6%. This highlights a company’s efficiency in utilizing shareholders’ fund. Hanover Insurance targets operating return on equity of 14% in the long run, banking on improved rates and cost management.
Can it Retain the Momentum?
The Zacks Consensus Estimate for Hanover Insurance’s 2022 earnings is pegged at $10.42, indicating a 19.4% increase from the year-ago reported figure on 7.3% higher revenues of $5.5 billion. The consensus estimate for 2023 earnings is pegged at $11.37, indicating a 9.1% increase from the year-ago reported figure on 5.6% higher revenues of $5.8 billion.
The long-term earnings growth rate is currently pegged at 13.8%, better than the industry average of 11.4%. THG has a Growth Score of B.
Business Tailwinds
Hanover Insurance has evolved into a balanced, small/middle market-focused commercial and personal lines carrier. THG looks to be the premier P&C franchise in the independent agency channel.
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.
Its 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.
As digitalization ramps up across the insurance industry, this insurer is no exception. THG continues to invest in technology to upgrade the front-end capabilities.
Hanover Insurance has been hiking dividends for the last 16 years, in addition to paying special dividends. THG’s dividend witnessed an 11-year CAGR of 10.5%. Its yield of 2.2% is better than the industry average of 0.3%.
Guidance
Hanover Insurance expects to deliver mid-single-digit growth in target returns in Personal Lines in 2022 as it intends to increase prices in both home and auto.
Net written premium is expected to increase on the higher end of mid-single digits, driven by growth in most profitable businesses.
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%.
Net investment income in 2022 is estimated to be in line with the 2021 level.
Long-Term Target
The Hanover Insurance Group expects net premium written to witness a five-year CAGR of more than 7% to $7 billion. The bottom line is expected to be between 12% and 13% and book value per share is likely to be between 7% and 8% by 2026.
Kinsale Capital’s earnings surpassed estimates in each of the last four quarters, the average beat being 32.04%. In the past year, Kinsale Capital has rallied 36.4%.
The Zacks Consensus Estimate for KNSL’s 2022 and 2023 earnings has moved 3.8% and 3.5% north, respectively, in the past seven days.
United Fire’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 275.45%. In the past year, United Fire has declined 11.8%.
The Zacks Consensus Estimate for UFCS’ 2022 and 2023 earnings has moved 122.2% and 76.9% north, respectively, in the past 30 days.
Arch Capital’s earnings surpassed estimates in each of the last four quarters, the average beat being 35.84%. In the past year, Arch Capital has rallied 31.6%.
The Zacks Consensus Estimate for ACGL’s 2022 and 2023 earnings has moved 2.9% and 1.6% north, respectively, in the past seven days. Arch Capital’s expected long-term earnings growth rate is pegged at 10%.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Hanover Insurance (THG) Up 8% YTD: More Room for Upside Left?
Shares of The Hanover Insurance Group (THG - Free Report) have gained 7.9% year to date, outperforming the industry’s increase of 4.4%. The Finance sector and the Zacks S&P 500 composite have lost 5.6% and 9.5% in the same time frame. With a market capitalization of $5 billion, the average volume of shares traded in the last three months was 1.2 million.
Image Source: Zacks Investment Research
Focus on driving growth in the most profitable Core Commercial and Specialty segments, stable retention, better pricing and strong market presence continue to drive Hanover Insurance Group. This Zacks Rank #3 (Hold) insurer has a solid track record of beating earnings estimates in the trailing 13 quarters.
Return on equity in the trailing 12 months was 10.2%, better than the industry average of 5.6%. This highlights a company’s efficiency in utilizing shareholders’ fund. Hanover Insurance targets operating return on equity of 14% in the long run, banking on improved rates and cost management.
Can it Retain the Momentum?
The Zacks Consensus Estimate for Hanover Insurance’s 2022 earnings is pegged at $10.42, indicating a 19.4% increase from the year-ago reported figure on 7.3% higher revenues of $5.5 billion. The consensus estimate for 2023 earnings is pegged at $11.37, indicating a 9.1% increase from the year-ago reported figure on 5.6% higher revenues of $5.8 billion.
The long-term earnings growth rate is currently pegged at 13.8%, better than the industry average of 11.4%. THG has a Growth Score of B.
Business Tailwinds
Hanover Insurance has evolved into a balanced, small/middle market-focused commercial and personal lines carrier. THG looks to be the premier P&C franchise in the independent agency channel.
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.
Its 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.
As digitalization ramps up across the insurance industry, this insurer is no exception. THG continues to invest in technology to upgrade the front-end capabilities.
THG has a favorable VGM Score of A.
Solid Dividend History
Hanover Insurance has been hiking dividends for the last 16 years, in addition to paying special dividends. THG’s dividend witnessed an 11-year CAGR of 10.5%. Its yield of 2.2% is better than the industry average of 0.3%.
Guidance
Hanover Insurance expects to deliver mid-single-digit growth in target returns in Personal Lines in 2022 as it intends to increase prices in both home and auto.
Net written premium is expected to increase on the higher end of mid-single digits, driven by growth in most profitable businesses.
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%.
Net investment income in 2022 is estimated to be in line with the 2021 level.
Long-Term Target
The Hanover Insurance Group expects net premium written to witness a five-year CAGR of more than 7% to $7 billion. The bottom line is expected to be between 12% and 13% and book value per share is likely to be between 7% and 8% by 2026.
Stocks to Consider
Some better-ranked insurers include Kinsale Capital Group (KNSL - Free Report) , United Fire Group (UFCS - Free Report) and Arch Capital Group (ACGL - Free Report) , each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Kinsale Capital’s earnings surpassed estimates in each of the last four quarters, the average beat being 32.04%. In the past year, Kinsale Capital has rallied 36.4%.
The Zacks Consensus Estimate for KNSL’s 2022 and 2023 earnings has moved 3.8% and 3.5% north, respectively, in the past seven days.
United Fire’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 275.45%. In the past year, United Fire has declined 11.8%.
The Zacks Consensus Estimate for UFCS’ 2022 and 2023 earnings has moved 122.2% and 76.9% north, respectively, in the past 30 days.
Arch Capital’s earnings surpassed estimates in each of the last four quarters, the average beat being 35.84%. In the past year, Arch Capital has rallied 31.6%.
The Zacks Consensus Estimate for ACGL’s 2022 and 2023 earnings has moved 2.9% and 1.6% north, respectively, in the past seven days. Arch Capital’s expected long-term earnings growth rate is pegged at 10%.