The Hanover Insurance Group Inc. (THG) filed Quarterly Report for the period ended 2009-09-30.
Allmerica Financial Corp. is a non-insurance holding company. The Company offers financial products and services in two major areas: RiskManagement and Asset Accumulation. Within these broad areas the Companyconducts business principally in three operating segments. These segments are Risk Management Allmerica Financial Services and Allmerica Asset Management. In addition to the three operating segments the Company also has a Corporate segment which consists primarily of cash investments Corporate debt and Capital Securities. The Hanover Insurance Group Inc. has a market cap of $2.1 billion; its shares were traded at around $41.24 with a P/E ratio of 15.8 and P/S ratio of 0.8. The dividend yield of The Hanover Insurance Group Inc. stocks is 1.1%. The Hanover Insurance Group Inc. had an annual average earning growth of 32.3% over the past 5 years.
Highlight of Business Operations:
Our investment holdings totaled $5.2 billion at September 30, 2009 and consist primarily of investment grade fixed maturities and cash and cash equivalents, with net unrealized gain positions of approximately $120 million. The improvement in our unrealized loss position at December 31, 2008 to this unrealized gain position at September 30, 2009, particularly in investment-grade securities, is due primarily to market appreciation. We recognized impairment charges of $29.3 million during the first nine months of 2009. These impairment charges primarily related to credit-related losses on below investment grade fixed maturities in the industrial sector and perpetual preferred securities in the financial sector.
With respect to underwriting results, the first nine months of 2009 were relatively flat compared to the same period in 2008. Pre-tax catastrophe losses were $92.3 million, a decrease of $63.3 million from the same period in 2008. This was essentially offset by higher current year claims, lower favorable development on prior year’s loss and loss adjustment expense (“LAE”) reserves, and higher expenses. The higher current year claims were primarily the result of an unusually high level of non-catastrophe weather-related losses.
Our consolidated net income for the third quarter of 2009 was $49.7 million, compared to a net loss of $61.8 million for the same period in 2008. The $111.5 million improvement in earnings is primarily due to an improvement in net realized losses. In the third quarter of 2009, we did not have any net realized losses, whereas in the same period of 2008, we incurred $52.8 million of net realized losses, primarily due to impairments. In addition, a decrease in after-tax catastrophe related activity of $47.8 million also contributed to this improvement. Also, in 2008 we recognized a $21.8 million loss associated with the discontinued FAFLIC business due to its then pending sale.
Our consolidated net income for the first nine months of 2009 was $139.9 million, compared to a net loss of $13.5 million for the same period of 2008. The $153.4 million improvement is primarily due to a $92.9 million loss recognized in 2008 associated with the discontinued FAFLIC business due to its then pending sale. This loss did not recur in 2009. In addition, there was an improvement in net realized investment losses of $51.0 million. In 2009, we recognized a pre-tax gain of $34.5 ($22.3 million net of taxes) related to the retirement of corporate debt in connection with the repurchase of our mandatorily redeemable preferred securities and our senior debentures (see also “Significant Transactions”). These increases in earnings for the period compared to the same period in 2008 were partially offset by the recognition, in 2008, of a $10.1 million gain on the sale of AMGRO.
The Property and Casualty group’s segment income increased $59.8 million, to $73.6 million, in the third quarter of 2009, compared to $13.8 million in the third quarter of 2008. Catastrophe related activity decreased $73.5 million in the third quarter of 2009, compared with the same period i
THG is in the portfolios of John Keeley of Keeley Fund Management, Robert Olstein of Olstein Financial Alert Fund, David Dreman of Dreman Value Management, HOTCHKIS & WILEY of HOTCHKIS & WILEY Capital Management LLC, NWQ Managers of NWQ Investment Management Co, Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.
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