The Hanover Insurance Group, Inc.

THG

Financial ServicesInsurance - Property & CasualtyNYSE

$186.30

Market Cap: $6.52B

The Hanover Insurance Group, Inc. (THG) Valuation Summary

Updated May 11, 2026 01:46

Model	Range	Fair Value	Upside
▸ Discounted Cash Flow
Growth Exit 5Y	$240.79 – $1,290.88	$406.35	+118.1%
Growth Exit 10Y	$313.87 – $1,643.63	$524.92	+181.8%
EBITDA Exit 5Y	$168.26 – $457.22	$300.30	+61.2%
EBITDA Exit 10Y	$219.94 – $550.18	$359.69	+93.1%
▸ Trading Multiples
P/E	$172.28 – $211.79	$185.86	-0.2%
EV/EBITDA	$192.34 – $221.50	$211.37	+13.5%
EV/Revenue	$177.25 – $395.60	$263.35	+41.4%
▸ PEG
PEG Fair Value	$146.71 – $146.71	$146.71	-21.3%
▸ Earnings Power Value
Earnings Power Value	$376.58 – $588.16	$459.29	+146.5%
▸ Dividend Discount
Dividend Discount	$71.85 – $197.72	$109.57	-41.2%

Valuation History

DCF Analysis

Fair Value

$406.35

Market Price

$186.30

Upside / Downside

+118.1%

Verdict

Undervalued

Using an unlevered Free Cash Flow to Firm (FCFF) model, we project The Hanover Insurance Group, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 1.2% to 6.3% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 233, DPO 4, DIO 60). At a 6.9% WACC with mid-year discounting, the terminal value (86% of enterprise value) is derived from the Gordon Growth Model on Year 6 FCFF at a 2.5% perpetual rate. After subtracting net debt, the equity value implies a fair price of $406.35 per share, suggesting THG is undervalued by 118.1% at the current price of $186.30.

FCFF Present Value Calculation

WACC

6.88%

3% – 20%

Terminal Growth

2.50%

0% – 6%

Forecast Period

5 Yrs

+ Terminal Year

Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.

Currency: USD Millions

	2026	2027	2028	2029	2030	Terminal
Profit Before Tax	1,064	1,115	1,201	1,278	1,359	1,393
(−) Net Interest	41	43	46	49	52	54
(+) D&A	11	12	11	12	13	13
EBITDA	1,116	1,170	1,259	1,338	1,424	1,459

(−) Tax	212	222	239	254	270	277
(−) CapEx	13	13	15	15	16	17
(−) ΔWC	1,158	243	413	363	386	395
Free Cash Flow (FCFF)	-266	691	592	706	751	770

Terminal Value						17,594
WACC / Discount Rate	6.9%
Long-term Growth Rate	2.5%

Timing of FCF (mid year)	0.5	1.5	2.5	3.5	4.5	5
Present Value of FCF	-258	626	501	560	557	12,616

Enterprise Value	14,602
Projection Period	1,986	13.6%
Terminal Value	12,616	86.4%

(−) Current Net Debt	96

Equity Value	14,507
(/) Outstanding Shares	36

Fair Price	$406.35

Sensitivity Analysis

WACC \ Terminal Growth Rate	1.5%	2.0%	2.5%	3.0%	3.5%
4.9%	$560	$647	$772	$962	$1291
5.9%	$425	$473	$535	$618	$737
6.9%	$341	$370	$406	$452	$511
7.9%	$283	$303	$326	$354	$389
8.9%	$241	$255	$271	$290	$312

Current price: $186.30. Green = undervalued, Red = overvalued.

Fair Value

$524.92

Market Price

$186.30

Upside / Downside

+181.8%

Verdict

Undervalued

Using an unlevered Free Cash Flow to Firm (FCFF) model, we project The Hanover Insurance Group, Inc.'s cash flows over 10 years with analyst estimates for the first 3–5 years, fading toward long-term GDP growth for the remaining years with line-by-line expense modeling. Revenue is projected revenue growing from 1.2% to 3.6% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 233, DPO 4, DIO 60). At a 6.9% WACC with mid-year discounting, the terminal value (74% of enterprise value) is derived from the Gordon Growth Model on Year 11 FCFF at a 2.5% perpetual rate. After subtracting net debt, the equity value implies a fair price of $524.92 per share, suggesting THG is undervalued by 181.8% at the current price of $186.30.

FCFF Present Value Calculation

WACC

6.88%

3% – 20%

Terminal Growth

2.50%

0% – 6%

Forecast Period

5 Yrs

+ Terminal Year

Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.

Currency: USD Millions

	2026	2027	2028	2029	2030	2031	2032	2033	2034	2035	Terminal
Profit Before Tax	1,064	1,115	1,201	1,278	1,359	1,437	1,512	1,583	1,648	1,707	1,749
(−) Net Interest	41	43	46	49	52	55	58	61	63	66	67
(+) D&A	11	12	11	12	13	15	15	16	17	18	19
EBITDA	1,116	1,170	1,259	1,338	1,424	1,507	1,586	1,660	1,729	1,790	1,835

(−) Tax	212	222	239	254	270	286	301	315	328	339	348
(−) CapEx	13	13	15	15	16	17	18	19	20	21	21
(−) ΔWC	1,158	243	413	363	386	374	358	336	310	279	286
Free Cash Flow (FCFF)	-266	691	592	706	751	830	909	990	1,071	1,151	1,180

Terminal Value											26,958
WACC / Discount Rate	6.9%
Long-term Growth Rate	2.5%

Timing of FCF (mid year)	0.5	1.5	2.5	3.5	4.5	5.5	6.5	7.5	8.5	9.5	5
Present Value of FCF	-258	626	501	560	557	575	590	601	608	612	13,862

Enterprise Value	18,835
Projection Period	4,973	26.4%
Terminal Value	13,862	73.6%

(−) Current Net Debt	96

Equity Value	18,740
(/) Outstanding Shares	36

Fair Price	$524.92

Sensitivity Analysis

WACC \ Terminal Growth Rate	1.5%	2.0%	2.5%	3.0%	3.5%
4.9%	$761	$867	$1017	$1247	$1644
5.9%	$571	$626	$697	$793	$930
6.9%	$453	$485	$525	$575	$640
7.9%	$372	$393	$417	$447	$483
8.9%	$314	$328	$344	$363	$385

Current price: $186.30. Green = undervalued, Red = overvalued.

Fair Value

$300.32

Market Price

$186.30

Upside / Downside

+61.2%

Verdict

Undervalued

Using an unlevered Free Cash Flow to Firm (FCFF) model, we project The Hanover Insurance Group, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 1.2% to 6.3% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 233, DPO 4, DIO 60). At a 6.9% WACC with mid-year discounting, the terminal value (82% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 8.4x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $300.30 per share, suggesting THG is undervalued by 61.2% at the current price of $186.30.

FCFF Present Value Calculation

WACC

6.88%

3% – 20%

EV/EBITDA Exit Multiple

8.44x

1x – 40x

Forecast Period

5 Yrs

+ Terminal Year

Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.

Currency: USD Millions

	2026	2027	2028	2029	2030	Terminal
Profit Before Tax	1,064	1,115	1,201	1,278	1,359	1,393
(−) Net Interest	41	43	46	49	52	54
(+) D&A	11	12	11	12	13	13
EBITDA	1,116	1,170	1,259	1,338	1,424	1,459

(−) Tax	212	222	239	254	270	—
(−) CapEx	13	13	15	15	16	—
(−) ΔWC	1,158	243	413	363	386	—
Free Cash Flow (FCF)	-266	691	592	706	751	—

Peers' EBITDA Multiple						8.4x
Terminal Value						12,315
WACC / Discount Rate	6.88%

Timing of FCF (mid year)	0.5	1.5	2.5	3.5	4.5	5
Present Value of FCF	-258	626	501	560	557	8,831

Enterprise Value	10,817
Projection Period	1,986	18.4%
Terminal Value	8,831	81.6%

(−) Current Net Debt	96
Equity Value	10,722
(÷) Outstanding Shares	36M
Fair Price	$300	+61.2%

Sensitivity Analysis

WACC \ EV/EBITDA Exit Multiple	4.4x	6.4x	8.4x	10.4x	12.4x
4.9%	$200	$264	$328	$393	$457
5.9%	$191	$253	$314	$375	$437
6.9%	$183	$242	$300	$359	$418
7.9%	$175	$231	$287	$343	$399
8.9%	$168	$222	$275	$329	$382

Current price: $186.30. Green = undervalued, Red = overvalued.

Based on default parameters

Fair Value

$359.71

Market Price

$186.30

Upside / Downside

+93.1%

Verdict

Undervalued

Using an unlevered Free Cash Flow to Firm (FCFF) model, we project The Hanover Insurance Group, Inc.'s cash flows over 10 years with analyst estimates for the first 3–5 years, fading toward long-term GDP growth for the remaining years with line-by-line expense modeling. Revenue is projected revenue growing from 1.2% to 3.6% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 233, DPO 4, DIO 60). At a 6.9% WACC with mid-year discounting, the terminal value (62% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 8.4x to Year 11 EBITDA. After subtracting net debt, the equity value implies a fair price of $359.69 per share, suggesting THG is undervalued by 93.1% at the current price of $186.30.

FCFF Present Value Calculation

WACC

6.88%

3% – 20%

EV/EBITDA Exit Multiple

8.44x

1x – 40x

Forecast Period

5 Yrs

+ Terminal Year

Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.

Currency: USD Millions

	2026	2027	2028	2029	2030	2031	2032	2033	2034	2035	Terminal
Profit Before Tax	1,064	1,115	1,201	1,278	1,359	1,437	1,512	1,583	1,648	1,707	1,749
(−) Net Interest	41	43	46	49	52	55	58	61	63	66	67
(+) D&A	11	12	11	12	13	15	15	16	17	18	19
EBITDA	1,116	1,170	1,259	1,338	1,424	1,507	1,586	1,660	1,729	1,790	1,835

(−) Tax	212	222	239	254	270	286	301	315	328	339	—
(−) CapEx	13	13	15	15	16	17	18	19	20	21	—
(−) ΔWC	1,158	243	413	363	386	374	358	336	310	279	—
Free Cash Flow (FCF)	-266	691	592	706	751	830	909	990	1,071	1,151	—

Peers' EBITDA Multiple											8.4x
Terminal Value											15,488
WACC / Discount Rate	6.88%

Timing of FCF (mid year)	0.5	1.5	2.5	3.5	4.5	5.5	6.5	7.5	8.5	9.5	5
Present Value of FCF	-258	626	501	560	557	575	590	601	608	612	7,964

Enterprise Value	12,937
Projection Period	4,973	38.4%
Terminal Value	7,964	61.6%

(−) Current Net Debt	96
Equity Value	12,842
(÷) Outstanding Shares	36M
Fair Price	$360	+93.1%

Sensitivity Analysis

WACC \ EV/EBITDA Exit Multiple	4.4x	6.4x	8.4x	10.4x	12.4x
4.9%	$295	$359	$422	$486	$550
5.9%	$273	$331	$390	$448	$506
6.9%	$254	$307	$360	$413	$465
7.9%	$236	$284	$333	$381	$429
8.9%	$220	$264	$308	$352	$396

Current price: $186.30. Green = undervalued, Red = overvalued.

Based on default parameters

Trading Multiples

Fair Value

$185.86

Market Price

$186.30

Upside / Downside

-0.2%

Verdict

Overvalued

Using the industry peer median P/E Multiples multiple (trailing + forward), The Hanover Insurance Group, Inc. (THG) has a fair value of $185.86 based on 10 comparable companies in the Insurance - Property & Casualty industry.

P/E Valuation — Insurance - Property & Casualty

USD in millions except Fair Price. Subject company highlighted.

	Mkt Cap ($M)	Trailing P/E	Forward P/E
The Hanover Insurance Group, Inc.THG	6,651	10.1x	16.3x
Chubb LimitedCB	123,976	12.4x	14.5x
The Progressive CorporationPGR	114,507	10.2x	14.5x
The Travelers Companies, Inc.TRV	63,568	10.9x	15.7x
The Allstate CorporationALL	54,869	5.6x	12.7x
CNA Financial CorporationCNA	11,779	9.3x	—
White Mountains Insurance Group, Ltd.WTM	5,182	4.9x	10.5x
Selective Insurance Group, Inc.SIGI	5,070	11.3x	23.3x
RLI Corp.RLI	4,562	11.4x	16.7x
Horace Mann Educators CorporationHMN	1,797	11.4x	22.6x
Kemper CorporationKMPR	1,783	13.2x	5.6x
Industry Median		11.1x	14.5x
(*) Profit after tax		663	407
Equity Value		7,361	5,910
(/) Outstanding shares		36	36
Fair Price		$206	$166

Selected Fair Value (avg of trailing + forward)

$185.86

-0.2%

Fair Value

$211.37

Market Price

$186.30

Upside / Downside

+13.5%

Verdict

Undervalued

Using the industry peer median EV/EBITDA multiple (trailing + forward), The Hanover Insurance Group, Inc. (THG) has a fair value of $211.37 based on 10 comparable companies in the Insurance - Property & Casualty industry.

EV/EBITDA Valuation — Insurance - Property & Casualty

USD in millions except Fair Price. Subject company highlighted.

	Mkt Cap ($M)	Trailing EV/EBITDA	Forward EV/EBITDA
The Hanover Insurance Group, Inc.THG	6,651	7.6x	8.2x
Chubb LimitedCB	123,976	10.2x	11.8x
The Progressive CorporationPGR	114,507	8.2x	9.7x
The Travelers Companies, Inc.TRV	63,568	8.1x	9.1x
The Allstate CorporationALL	54,869	4.4x	5.3x
CNA Financial CorporationCNA	11,779	7.8x	5.6x
White Mountains Insurance Group, Ltd.WTM	5,182	4.1x	25.7x
Selective Insurance Group, Inc.SIGI	5,070	9.0x	10.3x
RLI Corp.RLI	4,562	8.7x	8.1x
Horace Mann Educators CorporationHMN	1,797	8.9x	9.3x
Kemper CorporationKMPR	1,783	9.7x	10.3x
Industry Median		8.4x	9.5x
(*) EBITDA		887	822
= Enterprise Value		7,486	7,797
(-) Net Debt		96	96
Equity Value		7,390	7,702
(/) Outstanding shares		36	36
Fair Price		$207	$216

Selected Fair Value (avg of trailing + forward)

$211.37

+13.5%

Fair Value

$263.35

Market Price

$186.30

Upside / Downside

+41.4%

Verdict

Undervalued

Using the industry peer median EV/Revenue multiple (trailing + forward), The Hanover Insurance Group, Inc. (THG) has a fair value of $263.35 based on 10 comparable companies in the Insurance - Property & Casualty industry.

EV/Revenue Valuation — Insurance - Property & Casualty

USD in millions except Fair Price. Subject company highlighted.

	Mkt Cap ($M)	Trailing EV/Revenue	Forward EV/Revenue
The Hanover Insurance Group, Inc.THG	6,651	1.0x	1.1x
Chubb LimitedCB	123,976	2.4x	2.8x
The Progressive CorporationPGR	114,507	1.4x	1.6x
The Travelers Companies, Inc.TRV	63,568	1.5x	1.7x
The Allstate CorporationALL	54,869	0.9x	1.1x
CNA Financial CorporationCNA	11,779	1.0x	0.7x
White Mountains Insurance Group, Ltd.WTM	5,182	2.2x	13.4x
Selective Insurance Group, Inc.SIGI	5,070	1.1x	1.3x
RLI Corp.RLI	4,562	2.4x	2.3x
Horace Mann Educators CorporationHMN	1,797	1.5x	1.5x
Kemper CorporationKMPR	1,783	0.6x	0.6x
Industry Median		1.4x	1.6x
(*) Revenue		6,598	6,111
= Enterprise Value		9,365	9,629
(-) Net Debt		96	96
Equity Value		9,270	9,533
(/) Outstanding shares		36	36
Fair Price		$260	$267

Selected Fair Value (avg of trailing + forward)

$263.35

+41.4%

PEG Fair Value

Fair Value

$146.71

Market Price

$186.30

Upside / Downside

-21.3%

Verdict

Overvalued

Using the PEG framework with analyst consensus forward EPS growth of 8.0% plus 2.0% dividend yield, the company has a fair value of $146.71 based on NTM EPS (FY2027) of $18.34. The current PEG ratio is 6.60.

PEG Ratio

6.60Expensive

01.02.03.0+

PEG = P/E ÷ (Growth + Yield) = 10.2 ÷ (-0.5% + 2.0%) = 6.60

PEG < 1 = bargain, 1–1.5 = fair, > 2 = expensive.

Growth Category: TurnaroundPEG less reliable

PEG is unreliable for companies with declining earnings.

Fair Value Calculation

EPS Growth RateForward	-0.5%
Dividend Yield	+2.0%
Adjusted Growth (clamped 8–25%)Clamped	8.0%
Fair P/E	8.0x
NTM EPS (FY2027)	$18.34
Fair Value	$146.71

Growth Analysis

Forward GrowthActive

Period	EPS Est.	Growth	Analysts
FY2025 (actual)	$18.51	—	—
FY2027E	$18.34	-0.9%	3

2Y Forward EPS CAGR: -0.5%

Historical Growth

Year	Net Income	EPS	YoY
FY2021	$422.8M	$11.49	—
FY2022	$116.0M	$3.21	-72.1%
FY2023	$35.3M	$0.98	-69.5%
FY2024	$426.0M	$11.70	+1093.9%
FY2025	$662.5M	$18.51	+58.2%

4Y Historical EPS CAGR: 12.7%

Earnings Power Value

Fair Value

$459.29

Market Price

$186.30

Upside / Downside

+146.5%

Verdict

Undervalued

Using the Earnings Power Value framework with a WACC of 6.9% and normalized earnings of $1.1B, the company has a fair value of $459.29 per share. The EPV range is $376.58 – $588.16 based on WACC sensitivity (5.4% – 8.4%).

Currency: USD Millions

	Low	Selected	High
Normalized Earnings	1,134	1,134	1,134
(/) WACC	8.4%	6.9%	5.4%
Enterprise Value	13,539	16,492	21,093
(-) Net debt	96	96	96
Equity Value	13,444	16,397	20,997
(/) Outstanding shares	36	36	36
Fair Price	$376.58	$459.29	$588.16

Dividend Discount Model

Fair Value

$109.57

Market Price

$186.30

Upside / Downside

-41.2%

Verdict

Overvalued

Using the Two-Stage Dividend Discount Model with a Cost of Equity of 7.6% and projected dividend growth of 12.0%, the fair value is $109.57 per share. The DDM range is $71.85 – $197.72 based on sensitivity analysis across Cost of Equity and growth rate assumptions.

Dividend Profile

Current DPS

$3.66

Dividend Yield

2.00%

Payout Ratio

19.7%

Dividend Coverage

5.07x

FCF Payout Ratio11.2%

DPS CAGR (4Y)6.8%

Historical Dividends Per Share

Year	DPS	Payout Ratio	YoY Growth
2025	$3.66	19.7%	+7.3%
2024	$3.41	29.1%	+5.0%
2023	$3.25	332.0%	+7.6%
2022	$3.02	93.9%	+7.4%
2021	$2.81	24.2%	—

Dividend Projections (5-Year)

Year	Projected DPS	Growth	Discount Factor	Present Value
2026	$4.10	12.0%	0.9290	$3.81
2027	$4.59	12.0%	0.8630	$3.96
2028	$5.14	12.0%	0.8017	$4.12
2029	$5.76	12.0%	0.7448	$4.29
2030	$6.45	12.0%	0.6919	$4.46
Terminal Value	$6.61 DPS	2.5%		$88.93

PV of Projected Dividends$20.64

PV of Terminal Value$88.93

Fair Value per Share$109.57

Sensitivity Analysis

Fair value under different Cost of Equity (rows) and DPS Growth Rate (columns) assumptions.

Ke \ Growth	10.0%	11.0%	12.0%	13.0%	14.0%
5.6%	$167	$174	$182	$190	$198
6.6%	$126	$131	$137	$143	$149
7.6%	$101	$105	$110	$114	$119
8.6%	$84	$88	$91	$95	$99
9.6%	$72	$75	$78	$81	$84

Disclaimer: Sweet Value Lab provides estimated intrinsic values for informational purposes only. This is not financial advice. All models rely on assumptions that may not reflect future performance. Always do your own research before making investment decisions.

The Hanover Insurance Group, Inc. (THG) Valuation Summary

Updated May 11, 2026 01:46

Model	Range	Fair Value	Upside
▸ Discounted Cash Flow
Growth Exit 5Y	$240.79 – $1,290.88	$406.35	+118.1%
Growth Exit 10Y	$313.87 – $1,643.63	$524.92	+181.8%
EBITDA Exit 5Y	$168.26 – $457.22	$300.30	+61.2%
EBITDA Exit 10Y	$219.94 – $550.18	$359.69	+93.1%
▸ Trading Multiples
P/E	$172.28 – $211.79	$185.86	-0.2%
EV/EBITDA	$192.34 – $221.50	$211.37	+13.5%
EV/Revenue	$177.25 – $395.60	$263.35	+41.4%
▸ PEG
PEG Fair Value	$146.71 – $146.71	$146.71	-21.3%
▸ Earnings Power Value
Earnings Power Value	$376.58 – $588.16	$459.29	+146.5%
▸ Dividend Discount
Dividend Discount	$71.85 – $197.72	$109.57	-41.2%

Valuation History

DCF Analysis

Fair Value

$406.35

Market Price

$186.30

Upside / Downside

+118.1%

Verdict

Undervalued

FCFF Present Value Calculation

WACC

6.88%

3% – 20%

Terminal Growth

2.50%

0% – 6%

Forecast Period

5 Yrs

+ Terminal Year

Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.

Currency: USD Millions

	2026	2027	2028	2029	2030	Terminal
Profit Before Tax	1,064	1,115	1,201	1,278	1,359	1,393
(−) Net Interest	41	43	46	49	52	54
(+) D&A	11	12	11	12	13	13
EBITDA	1,116	1,170	1,259	1,338	1,424	1,459

(−) Tax	212	222	239	254	270	277
(−) CapEx	13	13	15	15	16	17
(−) ΔWC	1,158	243	413	363	386	395
Free Cash Flow (FCFF)	-266	691	592	706	751	770

Terminal Value						17,594
WACC / Discount Rate	6.9%
Long-term Growth Rate	2.5%

Timing of FCF (mid year)	0.5	1.5	2.5	3.5	4.5	5
Present Value of FCF	-258	626	501	560	557	12,616

Enterprise Value	14,602
Projection Period	1,986	13.6%
Terminal Value	12,616	86.4%

(−) Current Net Debt	96

Equity Value	14,507
(/) Outstanding Shares	36

Fair Price	$406.35

Sensitivity Analysis

WACC \ Terminal Growth Rate	1.5%	2.0%	2.5%	3.0%	3.5%
4.9%	$560	$647	$772	$962	$1291
5.9%	$425	$473	$535	$618	$737
6.9%	$341	$370	$406	$452	$511
7.9%	$283	$303	$326	$354	$389
8.9%	$241	$255	$271	$290	$312

Current price: $186.30. Green = undervalued, Red = overvalued.

Fair Value

$524.92

Market Price

$186.30

Upside / Downside

+181.8%

Verdict

Undervalued

FCFF Present Value Calculation

WACC

6.88%

3% – 20%

Terminal Growth

2.50%

0% – 6%

Forecast Period

5 Yrs

+ Terminal Year

Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.

Currency: USD Millions

	2026	2027	2028	2029	2030	2031	2032	2033	2034	2035	Terminal
Profit Before Tax	1,064	1,115	1,201	1,278	1,359	1,437	1,512	1,583	1,648	1,707	1,749
(−) Net Interest	41	43	46	49	52	55	58	61	63	66	67
(+) D&A	11	12	11	12	13	15	15	16	17	18	19
EBITDA	1,116	1,170	1,259	1,338	1,424	1,507	1,586	1,660	1,729	1,790	1,835

(−) Tax	212	222	239	254	270	286	301	315	328	339	348
(−) CapEx	13	13	15	15	16	17	18	19	20	21	21
(−) ΔWC	1,158	243	413	363	386	374	358	336	310	279	286
Free Cash Flow (FCFF)	-266	691	592	706	751	830	909	990	1,071	1,151	1,180

Terminal Value											26,958
WACC / Discount Rate	6.9%
Long-term Growth Rate	2.5%

Timing of FCF (mid year)	0.5	1.5	2.5	3.5	4.5	5.5	6.5	7.5	8.5	9.5	5
Present Value of FCF	-258	626	501	560	557	575	590	601	608	612	13,862

Enterprise Value	18,835
Projection Period	4,973	26.4%
Terminal Value	13,862	73.6%

(−) Current Net Debt	96

Equity Value	18,740
(/) Outstanding Shares	36

Fair Price	$524.92

Sensitivity Analysis

WACC \ Terminal Growth Rate	1.5%	2.0%	2.5%	3.0%	3.5%
4.9%	$761	$867	$1017	$1247	$1644
5.9%	$571	$626	$697	$793	$930
6.9%	$453	$485	$525	$575	$640
7.9%	$372	$393	$417	$447	$483
8.9%	$314	$328	$344	$363	$385

Current price: $186.30. Green = undervalued, Red = overvalued.

Fair Value

$300.32

Market Price

$186.30

Upside / Downside

+61.2%

Verdict

Undervalued

Using an unlevered Free Cash Flow to Firm (FCFF) model, we project The Hanover Insurance Group, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 1.2% to 6.3% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 233, DPO 4, DIO 60). At a 6.9% WACC with mid-year discounting, the terminal value (82% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 8.4x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $300.30 per share, suggesting THG is undervalued by 61.2% at the current price of $186.30.

FCFF Present Value Calculation

WACC

6.88%

3% – 20%

EV/EBITDA Exit Multiple

8.44x

1x – 40x

Forecast Period

5 Yrs

+ Terminal Year

Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.

Currency: USD Millions

	2026	2027	2028	2029	2030	Terminal
Profit Before Tax	1,064	1,115	1,201	1,278	1,359	1,393
(−) Net Interest	41	43	46	49	52	54
(+) D&A	11	12	11	12	13	13
EBITDA	1,116	1,170	1,259	1,338	1,424	1,459

(−) Tax	212	222	239	254	270	—
(−) CapEx	13	13	15	15	16	—
(−) ΔWC	1,158	243	413	363	386	—
Free Cash Flow (FCF)	-266	691	592	706	751	—

Peers' EBITDA Multiple						8.4x
Terminal Value						12,315
WACC / Discount Rate	6.88%

Timing of FCF (mid year)	0.5	1.5	2.5	3.5	4.5	5
Present Value of FCF	-258	626	501	560	557	8,831

Enterprise Value	10,817
Projection Period	1,986	18.4%
Terminal Value	8,831	81.6%

(−) Current Net Debt	96
Equity Value	10,722
(÷) Outstanding Shares	36M
Fair Price	$300	+61.2%

Sensitivity Analysis

WACC \ EV/EBITDA Exit Multiple	4.4x	6.4x	8.4x	10.4x	12.4x
4.9%	$200	$264	$328	$393	$457
5.9%	$191	$253	$314	$375	$437
6.9%	$183	$242	$300	$359	$418
7.9%	$175	$231	$287	$343	$399
8.9%	$168	$222	$275	$329	$382

Current price: $186.30. Green = undervalued, Red = overvalued.

Based on default parameters

Fair Value

$359.71

Market Price

$186.30

Upside / Downside

+93.1%

Verdict

Undervalued

Using an unlevered Free Cash Flow to Firm (FCFF) model, we project The Hanover Insurance Group, Inc.'s cash flows over 10 years with analyst estimates for the first 3–5 years, fading toward long-term GDP growth for the remaining years with line-by-line expense modeling. Revenue is projected revenue growing from 1.2% to 3.6% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 233, DPO 4, DIO 60). At a 6.9% WACC with mid-year discounting, the terminal value (62% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 8.4x to Year 11 EBITDA. After subtracting net debt, the equity value implies a fair price of $359.69 per share, suggesting THG is undervalued by 93.1% at the current price of $186.30.

FCFF Present Value Calculation

WACC

6.88%

3% – 20%

EV/EBITDA Exit Multiple

8.44x

1x – 40x

Forecast Period

5 Yrs

+ Terminal Year

Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.

Currency: USD Millions

	2026	2027	2028	2029	2030	2031	2032	2033	2034	2035	Terminal
Profit Before Tax	1,064	1,115	1,201	1,278	1,359	1,437	1,512	1,583	1,648	1,707	1,749
(−) Net Interest	41	43	46	49	52	55	58	61	63	66	67
(+) D&A	11	12	11	12	13	15	15	16	17	18	19
EBITDA	1,116	1,170	1,259	1,338	1,424	1,507	1,586	1,660	1,729	1,790	1,835

(−) Tax	212	222	239	254	270	286	301	315	328	339	—
(−) CapEx	13	13	15	15	16	17	18	19	20	21	—
(−) ΔWC	1,158	243	413	363	386	374	358	336	310	279	—
Free Cash Flow (FCF)	-266	691	592	706	751	830	909	990	1,071	1,151	—

Peers' EBITDA Multiple											8.4x
Terminal Value											15,488
WACC / Discount Rate	6.88%

Timing of FCF (mid year)	0.5	1.5	2.5	3.5	4.5	5.5	6.5	7.5	8.5	9.5	5
Present Value of FCF	-258	626	501	560	557	575	590	601	608	612	7,964

Enterprise Value	12,937
Projection Period	4,973	38.4%
Terminal Value	7,964	61.6%

(−) Current Net Debt	96
Equity Value	12,842
(÷) Outstanding Shares	36M
Fair Price	$360	+93.1%

Sensitivity Analysis

WACC \ EV/EBITDA Exit Multiple	4.4x	6.4x	8.4x	10.4x	12.4x
4.9%	$295	$359	$422	$486	$550
5.9%	$273	$331	$390	$448	$506
6.9%	$254	$307	$360	$413	$465
7.9%	$236	$284	$333	$381	$429
8.9%	$220	$264	$308	$352	$396

Current price: $186.30. Green = undervalued, Red = overvalued.

Based on default parameters

Trading Multiples

Fair Value

$185.86

Market Price

$186.30

Upside / Downside

-0.2%

Verdict

Overvalued

P/E Valuation — Insurance - Property & Casualty

USD in millions except Fair Price. Subject company highlighted.

	Mkt Cap ($M)	Trailing P/E	Forward P/E
The Hanover Insurance Group, Inc.THG	6,651	10.1x	16.3x
Chubb LimitedCB	123,976	12.4x	14.5x
The Progressive CorporationPGR	114,507	10.2x	14.5x
The Travelers Companies, Inc.TRV	63,568	10.9x	15.7x
The Allstate CorporationALL	54,869	5.6x	12.7x
CNA Financial CorporationCNA	11,779	9.3x	—
White Mountains Insurance Group, Ltd.WTM	5,182	4.9x	10.5x
Selective Insurance Group, Inc.SIGI	5,070	11.3x	23.3x
RLI Corp.RLI	4,562	11.4x	16.7x
Horace Mann Educators CorporationHMN	1,797	11.4x	22.6x
Kemper CorporationKMPR	1,783	13.2x	5.6x
Industry Median		11.1x	14.5x
(*) Profit after tax		663	407
Equity Value		7,361	5,910
(/) Outstanding shares		36	36
Fair Price		$206	$166

Selected Fair Value (avg of trailing + forward)

$185.86

-0.2%

Fair Value

$211.37

Market Price

$186.30

Upside / Downside

+13.5%

Verdict

Undervalued

EV/EBITDA Valuation — Insurance - Property & Casualty

USD in millions except Fair Price. Subject company highlighted.

	Mkt Cap ($M)	Trailing EV/EBITDA	Forward EV/EBITDA
The Hanover Insurance Group, Inc.THG	6,651	7.6x	8.2x
Chubb LimitedCB	123,976	10.2x	11.8x
The Progressive CorporationPGR	114,507	8.2x	9.7x
The Travelers Companies, Inc.TRV	63,568	8.1x	9.1x
The Allstate CorporationALL	54,869	4.4x	5.3x
CNA Financial CorporationCNA	11,779	7.8x	5.6x
White Mountains Insurance Group, Ltd.WTM	5,182	4.1x	25.7x
Selective Insurance Group, Inc.SIGI	5,070	9.0x	10.3x
RLI Corp.RLI	4,562	8.7x	8.1x
Horace Mann Educators CorporationHMN	1,797	8.9x	9.3x
Kemper CorporationKMPR	1,783	9.7x	10.3x
Industry Median		8.4x	9.5x
(*) EBITDA		887	822
= Enterprise Value		7,486	7,797
(-) Net Debt		96	96
Equity Value		7,390	7,702
(/) Outstanding shares		36	36
Fair Price		$207	$216

Selected Fair Value (avg of trailing + forward)

$211.37

+13.5%

Fair Value

$263.35

Market Price

$186.30

Upside / Downside

+41.4%

Verdict

Undervalued

EV/Revenue Valuation — Insurance - Property & Casualty

USD in millions except Fair Price. Subject company highlighted.

	Mkt Cap ($M)	Trailing EV/Revenue	Forward EV/Revenue
The Hanover Insurance Group, Inc.THG	6,651	1.0x	1.1x
Chubb LimitedCB	123,976	2.4x	2.8x
The Progressive CorporationPGR	114,507	1.4x	1.6x
The Travelers Companies, Inc.TRV	63,568	1.5x	1.7x
The Allstate CorporationALL	54,869	0.9x	1.1x
CNA Financial CorporationCNA	11,779	1.0x	0.7x
White Mountains Insurance Group, Ltd.WTM	5,182	2.2x	13.4x
Selective Insurance Group, Inc.SIGI	5,070	1.1x	1.3x
RLI Corp.RLI	4,562	2.4x	2.3x
Horace Mann Educators CorporationHMN	1,797	1.5x	1.5x
Kemper CorporationKMPR	1,783	0.6x	0.6x
Industry Median		1.4x	1.6x
(*) Revenue		6,598	6,111
= Enterprise Value		9,365	9,629
(-) Net Debt		96	96
Equity Value		9,270	9,533
(/) Outstanding shares		36	36
Fair Price		$260	$267

Selected Fair Value (avg of trailing + forward)

$263.35

+41.4%

PEG Fair Value

Fair Value

$146.71

Market Price

$186.30

Upside / Downside

-21.3%

Verdict

Overvalued

PEG Ratio

6.60Expensive

01.02.03.0+

PEG = P/E ÷ (Growth + Yield) = 10.2 ÷ (-0.5% + 2.0%) = 6.60

PEG < 1 = bargain, 1–1.5 = fair, > 2 = expensive.

Growth Category: TurnaroundPEG less reliable

PEG is unreliable for companies with declining earnings.

Fair Value Calculation

EPS Growth RateForward	-0.5%
Dividend Yield	+2.0%
Adjusted Growth (clamped 8–25%)Clamped	8.0%
Fair P/E	8.0x
NTM EPS (FY2027)	$18.34
Fair Value	$146.71

Growth Analysis

Forward GrowthActive

Period	EPS Est.	Growth	Analysts
FY2025 (actual)	$18.51	—	—
FY2027E	$18.34	-0.9%	3

2Y Forward EPS CAGR: -0.5%

Historical Growth

Year	Net Income	EPS	YoY
FY2021	$422.8M	$11.49	—
FY2022	$116.0M	$3.21	-72.1%
FY2023	$35.3M	$0.98	-69.5%
FY2024	$426.0M	$11.70	+1093.9%
FY2025	$662.5M	$18.51	+58.2%

4Y Historical EPS CAGR: 12.7%

Earnings Power Value

Fair Value

$459.29

Market Price

$186.30

Upside / Downside

+146.5%

Verdict

Undervalued

Currency: USD Millions

	Low	Selected	High
Normalized Earnings	1,134	1,134	1,134
(/) WACC	8.4%	6.9%	5.4%
Enterprise Value	13,539	16,492	21,093
(-) Net debt	96	96	96
Equity Value	13,444	16,397	20,997
(/) Outstanding shares	36	36	36
Fair Price	$376.58	$459.29	$588.16

Dividend Discount Model

Fair Value

$109.57

Market Price

$186.30

Upside / Downside

-41.2%

Verdict

Overvalued

Dividend Profile

Current DPS

$3.66

Dividend Yield

2.00%

Payout Ratio

19.7%

Dividend Coverage

5.07x

FCF Payout Ratio11.2%

DPS CAGR (4Y)6.8%

Historical Dividends Per Share

Year	DPS	Payout Ratio	YoY Growth
2025	$3.66	19.7%	+7.3%
2024	$3.41	29.1%	+5.0%
2023	$3.25	332.0%	+7.6%
2022	$3.02	93.9%	+7.4%
2021	$2.81	24.2%	—

Dividend Projections (5-Year)

Year	Projected DPS	Growth	Discount Factor	Present Value
2026	$4.10	12.0%	0.9290	$3.81
2027	$4.59	12.0%	0.8630	$3.96
2028	$5.14	12.0%	0.8017	$4.12
2029	$5.76	12.0%	0.7448	$4.29
2030	$6.45	12.0%	0.6919	$4.46
Terminal Value	$6.61 DPS	2.5%		$88.93

PV of Projected Dividends$20.64

PV of Terminal Value$88.93

Fair Value per Share$109.57

Sensitivity Analysis

Fair value under different Cost of Equity (rows) and DPS Growth Rate (columns) assumptions.

Ke \ Growth	10.0%	11.0%	12.0%	13.0%	14.0%
5.6%	$167	$174	$182	$190	$198
6.6%	$126	$131	$137	$143	$149
7.6%	$101	$105	$110	$114	$119
8.6%	$84	$88	$91	$95	$99
9.6%	$72	$75	$78	$81	$84