Posted on 04 Feb 2010
Hanover Insurance Group Inc.'s fourth-quarter profit surged 68% as the rallying equity markets and growth in premiums helped the bottom line.
Shares were down 1.5% at $42.05 in after-hours trading as earnings fell short of analysts' expectations. The stock is up less than 10% over the past year.
Property and casualty insurers have benefited from a mild hurricane season and rallying capital markets, though raising rates has been difficult. With its balance sheet firming up, Hanover has been returning capital to shareholders and recently agreed to buy health-care insurance products provider Campania Group.
Hanover reported a profit of $57.3 million, or $1.14 a share, compared with a year-earlier profit of $34.1 million, or 66 cents a share. The latest quarter included 22 cents a share of realized investment gains, while the year-ago had 73 cents of losses. Analysts were looking for operating earnings--which exclude those gains and losses--of 99 cents, according to a poll by Thomson Reuters.
Net premiums written grew 5%.
The combined ratio--the percentage of each dollar in premiums spent on claims and expenses--rose to 97.7% from 94.9%.
Personal lines segment income fell 49%, while commercial lines saw a 5.6% decline.