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Tuesday, Keefe, Bruyette & Woods analysts confirmed their Market Perform rating on The Hanover Insurance Group (NYSE:THG) with a steady price target of $179.00. The analysts provided insights into the company’s commercial reserves, noting their solidity and indicating that The Hanover Insurance Group’s (THG) Generally Accepted Accounting Principles (GAAP) loss and Adjusted Loss and Allocated Loss Adjustment Expenses (ALAE) reserves were slightly overstated by approximately $55 million at the end of 2023 estimates. InvestingPro analysis shows the company maintains a "GREAT" overall financial health score of 3.02, with particularly strong metrics in price momentum and cash flow management. This overstatement is primarily due to robust workers’ compensation redundancies, which more than compensate for the minor perceived deficiencies in personal lines.
The Hanover Insurance Group’s reserve development for the calendar year 2024 is expected to be largely driven by releases in commercial multi-peril and specialty lines. These are anticipated to be partially balanced by nominal reserve strengthening in personal auto liability and workers’ compensation areas. Based on these developments, the Keefe analysts have adjusted their earnings per share (EPS) estimates for the years 2025 and 2026. The new EPS forecasts are $14.55 and $16.30, respectively, an increase from the previous estimates of $14.50 and $16.25. The revision assumes net reserve releases of $40.2 million for 2025 and $44.0 million for 2026, which is an uptick from the former projections of $29.6 million and $32.1 million.
Despite these adjustments to the EPS estimates, the analysts have decided to maintain their target price of $179, which is valued at 11.0 times their projected 2026 EPS. The Market Perform rating remains unchanged, indicating that the stock is expected to perform in line with the broader market according to Keefe, Bruyette & Woods’ analysis.
In other recent news, Hanover Insurance Group reported fourth-quarter earnings that exceeded analyst expectations, with operating earnings of $5.32 per share compared to the consensus estimate of $3.36 per share. Revenue for the quarter rose 7.4% year-over-year to $1.45 billion, surpassing the anticipated $1.43 billion. The company also reported an improved combined ratio of 89.2%, indicating enhanced underwriting profitability. Following these results, Oppenheimer increased its price target for Hanover Insurance to $185, maintaining an Outperform rating, citing potential for double-digit earnings per share growth in the coming years. Keefe, Bruyette & Woods also raised their price target to $179, noting expectations of accelerated premium and net investment income growth. Similarly, BMO Capital Markets adjusted their price target to $189, maintaining an Outperform rating, while expressing confidence in the company’s ability to improve its loss ratios in personal lines. Additionally, Hanover Insurance announced a key executive change, appointing Jeffrey M. Farber as the new Principal Accounting Officer. These developments reflect a period of significant activity and strategic adjustments for Hanover Insurance Group.
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