The Hanover to cherry pick M&A to bolster high-growth specialty lines

The Hanover Insurance Group would gladly nibble in the M&A field, particularly were it to deliver growth in specialty commercial insurance, but considers itself sufficiently well-poised for organic growth to swear off all but the best targets.

“I hope there will be some small inorganic opportunities to complement the organic growth we have laid out,” its chief executive officer Jack Roche (pictured) told participants during a two-day equity conference hosted by Bank of America Securities.

The current slate of would-be targets looks “a little bit thinner” than in recent years and Hanover won’t ever feel pressured into buying. “We are disciplined: we are not going to grow inorganically just to get a little bit bigger.”

Hanover can hit its growth targets on the back of organic growth alone, Roche insisted. The group is now targeting a 7% compound annual growth rate for net written premium over the course of the next five years.

“We see opportunities for good steady growth over the next couple of years,” he said, with repeated emphasis on specialty lines and small commercial, where Roche “couldn’t be more bullish.”

“We are in the best position we’ve ever been for growth,” he said.

The Hanover Group enjoyed 8.6% growth in net written premium in 2021, led by 11.1% growth for specialty lines, ahead  of 8.0% growth in core commercial and 7.7% in personal lines. Growth in specialty is leveraging new product capabilities plus strong rate growth, to the tune of 8.9% in Q4.

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