Hanover Insurance Group (NYSE:THG) and Third Point Reinsurance (NYSE:TPRE) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, institutional ownership, earnings, profitability, valuation and risk.

Volatility and Risk

Hanover Insurance Group has a beta of 0.93, indicating that its stock price is 7% less volatile than the S&P 500. Comparatively, Third Point Reinsurance has a beta of 1.11, indicating that its stock price is 11% more volatile than the S&P 500.

Institutional and Insider Ownership

84.4% of Hanover Insurance Group shares are owned by institutional investors. Comparatively, 72.0% of Third Point Reinsurance shares are owned by institutional investors. 1.3% of Hanover Insurance Group shares are owned by insiders. Comparatively, 12.1% of Third Point Reinsurance shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Dividends

Hanover Insurance Group pays an annual dividend of $2.16 per share and has a dividend yield of 1.8%. Third Point Reinsurance does not pay a dividend. Hanover Insurance Group pays out 45.6% of its earnings in the form of a dividend. Hanover Insurance Group has raised its dividend for 6 consecutive years.

Profitability

This table compares Hanover Insurance Group and Third Point Reinsurance’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hanover Insurance Group 4.29% 9.11% 1.75%
Third Point Reinsurance 13.15% 5.66% 1.96%

Analyst Ratings

This is a breakdown of current ratings and price targets for Hanover Insurance Group and Third Point Reinsurance, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hanover Insurance Group 0 1 1 0 2.50
Third Point Reinsurance 0 1 2 0 2.67

Hanover Insurance Group presently has a consensus target price of $140.00, indicating a potential upside of 18.39%. Third Point Reinsurance has a consensus target price of $17.67, indicating a potential upside of 35.38%. Given Third Point Reinsurance’s stronger consensus rating and higher probable upside, analysts clearly believe Third Point Reinsurance is more favorable than Hanover Insurance Group.

Earnings and Valuation

This table compares Hanover Insurance Group and Third Point Reinsurance’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Hanover Insurance Group $5.18 billion 0.97 $186.20 million $4.74 24.95
Third Point Reinsurance $939.01 million 1.38 $277.79 million $2.63 4.96

Third Point Reinsurance has lower revenue, but higher earnings than Hanover Insurance Group. Third Point Reinsurance is trading at a lower price-to-earnings ratio than Hanover Insurance Group, indicating that it is currently the more affordable of the two stocks.

Summary

Third Point Reinsurance beats Hanover Insurance Group on 10 of the 17 factors compared between the two stocks.

About Hanover Insurance Group

The Hanover Insurance Group, Inc., through its subsidiaries, provides various property and casualty insurance products and services in the United States and internationally. It operates through four segments: Commercial Lines, Personal Lines, Chaucer, and Other. The Commercial Lines segment offers commercial multiple peril, commercial automobile, workers' compensation, and other commercial coverages, such as inland marine, specialty program business, management and professional liability, surety, and specialty property, as well as monoline general liability, umbrella, healthcare, and miscellaneous commercial property insurance products. The Personal Lines segment provides personal automobile and homeowners coverages, as well as other personal coverages, including personal inland marine, umbrella, fire, personal watercraft, earthquake, and other miscellaneous coverages. The Chaucer segment offers marine, aviation, and political insurance; casualty comprising international liability, specialist coverages, and run-off syndicate participations; and energy, property, and assumed reinsurance treaty insurance services. The Other segment markets investment management and advisory services to institutions, pension funds, and other organizations. The company markets its products and services through a network of independent agents and brokers. The Hanover Insurance Group, Inc. was founded in 1852 and is headquartered in Worcester, Massachusetts.

About Third Point Reinsurance

Third Point Reinsurance Ltd., through its subsidiaries, provides specialty property and casualty reinsurance products to insurance and reinsurance companies worldwide. It underwrites homeowners, workers compensation, personal automobile, mortgage, and multi-line reinsurance; professional, transactional, and general liability reinsurance; and marine, travel, and extended warranty reinsurance products. The company was incorporated in 2011 and is based in Pembroke, Bermuda.

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