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Hanover reported third-quarter revenue of $1.7 billion, up 4.23% from a year earlier and 0.65% above the consensus. Adjusted earnings were $5.15 per share, compared with the $4.59 consensus estimate. Diluted earnings per share were $4.86, down from $4.90 a year earlier.
The company’s filing shows net income fell to $172.6 million from $178.7 million, primarily because of higher net realized and unrealized investment losses. Hanover said higher catastrophe losses reduced operating income, partly offset by improved underwriting results, principally in Personal Lines, and higher investment income.
Across its insurance businesses, Hanover attributed growth in net premiums written to renewal price increases and, to a lesser extent, new business. Core Commercial, Specialty and Personal Lines each reported higher net premiums written than a year earlier. The filing shows Core Commercial moved to an underwriting loss as catastrophe losses increased.
Hanover’s operating margin declined to 12.7% from 13.6%, while free cash flow fell to $518.0 million from $551.4 million.
| Q3 FY2026 | Q3 FY2025 | Change | |
|---|---|---|---|
| Revenue | $1.7 billion | $1.7 billion | 4.23% |
| Diluted EPS | $4.86 | $4.90 | −0.78% |
| Gross margin | 43.0% | 44.3% | −1.3 percentage points |
| Operating margin | 12.7% | 13.6% | −0.9 percentage points |
| Free cash flow | $518.0 million | $551.4 million | −6.06% |
| Against the consensus | Reported | Consensus | Result |
|---|---|---|---|
| Adjusted EPS | $5.15 | $4.59 | Beat by 12.2% |
| Revenue | $1.7 billion | $1.7 billion | Beat by 0.65% |
Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.
What management said on the call
In its filing, Hanover said competitive conditions in Core Commercial and Specialty require underwriting discipline, and it continues to seek rate increases across many lines where appropriate. The company said it manages underwriting performance through pricing, risk selection and targeted new business growth.
Guidance
Hanover expects its full-year combined ratio to clearly beat its original guidance, including higher expenses for agent profit sharing and employee incentives. Chief Financial Officer Jeff Farber attributed those expense increases to performance on the combined ratio and said the fourth-quarter catastrophe load is 5.2%.
| Metric | For | Guide | Previous guide | Change |
|---|---|---|---|---|
| Operating expenses, Expense Ratio | FY2026 | Hanover expects its expense ratio to rise across the organization in FY2026. | — | — |
| Revenue, Specialty | FY2027 | Hanover expects its Specialty growth trajectory to hold up in FY2027, with improvement in some areas. | — | — |