Is The Hanover Insurance Group (THG) a High-Quality P&C Company?

Madison Investments, an investment advisor, released its “Madison Small Cap Fund” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. The second quarter started as a continuation of the first quarter. As the liberation day tariffs were catastrophic, sending both equities and treasuries steeply lower. Later, the administration set a pause in the tariff implementation, which led equities to rebound, supported by better-than-expected macroeconomic data, particularly regarding inflation and employment. The Russell 2000 Index is up 8.5% for the quarter and down only 1.79% year-to-date. The Madison Small Cap Fund (class Y) returned 4.42% in the quarter, lagging the Russell 2000 and Russell 2500. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second-quarter 2025 investor letter, Madison Small Cap Fund highlighted stocks such as The Hanover Insurance Group, Inc. (NYSE:THG). The Hanover Insurance Group, Inc. (NYSE:THG) is a US-based insurance company that offers various property and casualty insurance products and services. The one-month return of The Hanover Insurance Group, Inc. (NYSE:THG) was 0.47%, and its shares gained 17.37% of their value over the last 52 weeks. On September 17, 2025, The Hanover Insurance Group, Inc. (NYSE:THG) stock closed at $174.92 per share, with a market capitalization of $6.257 billion.

Madison Small Cap Fund stated the following regarding The Hanover Insurance Group, Inc. (NYSE:THG) in its second quarter 2025 investor letter:

"The Hanover Insurance Group, Inc. (NYSE:THG), a regionally focused property & casualty (P&C) insurance company, is relatively underfollowed and we believe misunderstood. We believe this is a high-quality P&C company in the small cap space for several reasons. The company sold its international business in 2018 and refocused its efforts on domestic diversification, moving away from its legacy states, Michigan and Massachusetts. Its current business mix is well diversified between commercial (37%), personal (50%), and specialty (23%). We believe the company isn’t receiving full credit for the growth of its specialty business and the strengthening of its personal lines in recent years. We assess its Intrinsic Value at $210."

The Hanover Insurance Group, Inc. (NYSE:THG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 32 hedge fund portfolios held The Hanover Insurance Group, Inc. (NYSE:THG) at the end of the second quarter, compared to 35 in the previous quarter. While we acknowledge the potential of The Hanover Insurance Group, Inc. (NYSE:THG) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered The Hanover Insurance Group, Inc. (NYSE:THG) and shared The London Company Small Cap Strategy's views on the company. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.