CFO purchases can be very informative insider transactions. CFOs have considerable insights into their firms’ financials and some studies have found that these insiders earn higher profits following their purchases of company stock than CEOs.
In this report, we are going to highlight a large CFO purchase at Hanover Insurance Group Inc (THG:US). Hanover Insurance is a holding company which, through its subsidiaries, provides insurance services to individuals and businesses across the US. The company also provides investment management services through its subsidiary, Opus Investment Management. The company is listed on the New York Stock Exchange and currently has a market capitalization of $4.4 billion.
Hanover Insurance Group Inc: Insider Buying
Our data shows that on November 30, CFO Jeffrey Farber bought 5,000 THG shares at a price of $123.60 per share. This trade cost the insider $617,980 and increased his holding to 37,755 shares.
Mr. Farber has considerable company and industry experience. Before joining Hanover in 2016, he held senior executive roles at American International Group (AIG), where he served as the organization’s deputy CFO and as chief risk officer for the company’s commercial and consumer businesses. Prior to AIG, Jeff served as CFO of GAMCO Investors, Inc., a publicly traded asset manager. Overall, he has more than 30 years of experience in the financial services industry. This means he is likely to have a good understanding of Hanover’s prospects and investment potential.
What stands out about this trade from Mr. Farber is its size. The fact that the insider has spent over $600,000 on stock suggests that he is very confident in relation to its prospects. Our Insider Model views this trade as bullish.
Solid Q3 Results
Hanover’s recent Q3 results were solid.
For the quarter, net premiums written amounted to $1,375 million, up 8.4% year on year, reflecting growth in all segments of the business. Meanwhile, net investment income came in at $78.8 million, up 16.6% from the prior-year quarter. Book value per share was $87.04 versus $84.32 a year earlier while the expense ratio improved 0.7 points year on year. The company noted that its losses from Hurricane Ida were in line or better relative to the industry due to its continued focus on exposure management and data and analytics.
“We are very pleased with our strong, sustained growth in the quarter, as well as our solid bottom line performance in the face of considerable catastrophe activity,” commented John C. Roche, President and CEO of the Hanover Insurance Group. “As we look ahead, we remain committed to managing our business for sustainable long-term, profitable performance.”
In light of these solid results, we see the insider buying here as a bullish indicator.