The Hanover Insurance Group (NYSE:THG) EPS Estimates Challenged by Midwest Storms

EPS estimates for the fourth quarter for The Hanover Insurance Group (NYSE:THG) could be under pressure in light of the amount of damage from severe storms in the midwest.

Barclays (NYSE:BCS) said, "We met with The Hanover Insurance Group's CEO Fred Eppinger. THG appears confident it can improve its ROE by leveraging its expense base, raising rates in personal lines, and deploying excess capital (roughly $250 mn), although it is unclear to us how long this could take to achieve.

"Catastrophe losses in 4Q10 could be above average fourth quarter catastrophe losses due in part to severe Midwest storms. As a result, we believe THG could face difficulty achieving its FY2010 EPS guidance of $2.85-$3.10 (implies 4Q10 EPS of $1.17-$1.42 vs our $1.01 estimate, which could be optimistic). Higher-than-average 4Q10 catastrophe losses is a negative lateral for Allstate (NYSE:ALL), and to a lesser extent Travelers (NYSE:TRV) & Chubb (NYSE:CB)."

Barclays maintains an "Equalweight" on The Hanover Insurance Group, which closed Wednesday at $47.41, down $0.18, or 0.38 percent. They have a price target of $46 on the company.