UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
THE
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
The following information is being furnished under Item 2.02 – Results of Operations and Financial Condition. Such information, including the exhibits attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section.
On August 2, 2023, The Hanover Insurance Group, Inc. (the Company) issued a press release announcing its financial results for the quarter ended June 30, 2023. The release is furnished as Exhibit 99.1 hereto. Additionally, on August 2, 2023, the Company made available on its website unaudited financial information contained in its Financial Supplement for the period ended June 30, 2023. The supplement is furnished as Exhibit 99.2 hereto.
Item 9.01 Financial Statements and Exhibits.
(a) |
Not applicable. |
(b) |
Not applicable. |
(c) |
Not applicable. |
(d) |
Exhibits. |
The following exhibits are furnished herewith.
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Exhibit 99.1 |
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Exhibit 99.2 |
The Hanover Insurance Group, Inc. Unaudited Financial Supplement for the period ended June 30, 2023. |
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Exhibit 104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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Exhibit Index
Exhibit 99.1 |
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Exhibit 99.2 |
The Hanover Insurance Group, Inc. Unaudited Financial Supplement for the period ended June 30, 2023. |
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Exhibit 104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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The Hanover Insurance Group, Inc. (Registrant) |
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Date: August 2, 2023 |
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By: |
/s/ Jeffrey M. Farber |
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Jeffrey M. Farber |
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Executive Vice President and Chief Financial Officer |
4
Exhibit 99.1
i
The Hanover Reports Second Quarter Results
Second Quarter Highlights
WORCESTER, Mass., August 2, 2023 - The Hanover Insurance Group, Inc. (NYSE: THG) today reported a net loss of $69.2 million, or $(1.94) per basic share, in the second quarter of 2023, compared to net income of $22.7 million, or $0.63 per diluted share, in the prior-year quarter. Operating loss(4) was $68.3 million, or $(1.91) per basic share, in the second quarter of 2023, compared to operating income of $83.9 million, or $2.32 per diluted share, in the prior-year quarter.
“With elevated storm activity presenting challenges for our industry, we are focused on advancing our margin recapture plan and our proven strategy, leveraging innovative tools and deep underwriting expertise to address the substantial volatility we are experiencing,” said John C. Roche, president and chief executive officer at The Hanover. “We are pleased with the progress we have made to date and have every confidence we can build on our strong market position and capitalize on our diversified portfolio to drive long-term, sustainable profitable growth.”
*Unless otherwise stated, net premiums written growth and other growth comparisons are to the same period of the prior year
(1) See information about this and other non-GAAP measures and definitions used throughout this press release on the final pages of this document.
The Hanover Insurance Group, Inc. may also be referred to as “The Hanover” or “the company” interchangeably throughout this press release.
“Our Specialty business continued to deliver exceptional results, generating an 88.4% combined ratio and solid premium growth of 7.6% in the second quarter,” said Roche. “Our Core Commercial business significantly reduced ex-CAT large losses and posted an improvement in the loss ratio compared to the second quarter last year, while increasing pricing by 11.3%, demonstrating the effectiveness of our margin recapture plan. We are laser focused on leveraging every opportunity available to us to restore profitability in Personal Lines as quickly as possible, and we believe the current hard market represents a substantial tailwind. Personal Lines renewal pricing continues to track above our original expectations, as demonstrated by average price increases of 21.7% in homeowners and 12.0% in auto. Our successful pricing actions, in combination with expected changes to product terms and conditions in homeowners coming online starting in the third quarter, foreshadow meaningful improvement in this business. We have a long and successful history effectively navigating challenging environments and we are confident in our ability to do so again.”
“We achieved solid underlying performance in the second quarter, generating an ex-CAT combined ratio of 92.8%, while growing our premiums by 8.6%, primarily driven by pricing increases,” said Jeffrey M. Farber, executive vice president and chief financial officer at The Hanover. “Additionally, we posted a second quarter expense ratio(5) of 30.6%, keeping us on track to achieve our savings target for the full year 2023. Our high quality, diversified investment portfolio provides a strong stream of income, and we continue to benefit from attractive reinvestment yields, which should bolster our future returns. We remain focused on the ongoing execution of our long-term strategic and business priorities, and on delivering value for our shareholders, agents, customers, and other stakeholders.
2
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Three months ended |
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Six months ended |
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June 30 |
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June 30 |
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($ in millions, except per share data) |
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2023 |
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2022 |
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2023 |
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2022 |
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Net premiums written |
$ |
1,446.8 |
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$ |
1,332.8 |
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$ |
2,868.3 |
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$ |
2,645.1 |
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Growth |
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8.6 |
% |
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10.4 |
% |
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8.4 |
% |
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10.1 |
% |
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Net premiums earned |
$ |
1,411.7 |
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$ |
1,293.8 |
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$ |
2,791.7 |
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$ |
2,557.6 |
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Current accident year loss and LAE ratio, excluding catastrophes(3) |
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62.3 |
% |
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60.1 |
% |
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61.9 |
% |
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59.6 |
% |
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Prior-year development ratio |
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(0.1) |
% |
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(0.7) |
% |
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(0.2) |
% |
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(0.6) |
% |
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Catastrophe ratio |
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18.5 |
% |
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6.0 |
% |
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15.6 |
% |
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4.8 |
% |
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Expense ratio |
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30.6 |
% |
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30.8 |
% |
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30.6 |
% |
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31.0 |
% |
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Combined ratio |
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111.3 |
% |
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96.2 |
% |
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107.9 |
% |
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94.8 |
% |
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Combined ratio, excluding catastrophes |
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92.8 |
% |
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90.2 |
% |
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92.3 |
% |
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90.0 |
% |
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Current accident year combined ratio, excluding catastrophes |
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92.9 |
% |
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90.9 |
% |
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92.5 |
% |
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90.6 |
% |
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Net income (loss) |
$ |
(69.2) |
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$ |
22.7 |
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$ |
(81.2) |
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$ |
127.6 |
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per diluted (basic) share |
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(1.94) |
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0.63 |
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(2.27) |
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3.53 |
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Operating income (loss) |
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(68.3) |
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83.9 |
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(63.7) |
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201.6 |
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per diluted (basic) share |
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(1.91) |
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2.32 |
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(1.78) |
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5.58 |
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Book value per share |
$ |
62.62 |
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$ |
72.33 |
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$ |
62.62 |
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$ |
72.33 |
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Ending shares outstanding (in millions) |
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35.8 |
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35.6 |
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35.8 |
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35.6 |
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Second Quarter Operating Highlights
Core Commercial
Core Commercial operating income before income taxes was $60.1 million in the second quarter of 2023, compared to $66.9 million in the second quarter of 2022. The Core Commercial combined ratio was 95.8%, compared to 92.6% in the prior-year quarter. Catastrophe losses in the second quarter of 2023 were $33.3 million, or 6.5 points of the combined ratio, compared to $17.8 million, or 3.7 points, in the prior-year quarter.
Prior-year reserve development, excluding catastrophes, was immaterial in the second quarter of 2023. This compared to net favorable prior-year reserve development, excluding catastrophes, of $2.8 million, or 0.6 points, in the prior-year quarter.
Core Commercial current accident year combined ratio, excluding catastrophes, improved 0.3 points to 89.2% in the second quarter of 2023, from 89.5% in the prior-year quarter. The current accident year loss and LAE ratio, excluding catastrophes, of 56.2%, improved 0.8 points from the prior-year quarter, primarily due to favorable property large loss trends in commercial multiple peril.
3
Net premiums written were $486.8 million in the quarter, up 7.2% from the prior-year quarter, driven by growth of 7.5% in middle market and 7.0% in small commercial. In the second quarter, Core Commercial renewal price increases averaged 11.3%, while average rate increases were 7.8%.
The following table summarizes premiums and the components of the combined ratio for Core Commercial:
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Three months ended |
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Six months ended |
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June 30 |
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June 30 |
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($ in millions) |
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2023 |
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2022 |
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2023 |
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2022 |
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Net premiums written |
$ |
486.8 |
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$ |
454.2 |
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$ |
1,052.1 |
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$ |
980.8 |
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Growth |
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7.2 |
% |
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7.7 |
% |
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7.3 |
% |
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8.7 |
% |
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Net premiums earned |
$ |
515.6 |
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$ |
480.1 |
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$ |
1,023.0 |
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$ |
954.8 |
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Operating income before taxes |
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60.1 |
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66.9 |
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71.3 |
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134.4 |
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Loss and LAE ratio |
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62.8 |
% |
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60.1 |
% |
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67.3 |
% |
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60.2 |
% |
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Expense ratio |
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33.0 |
% |
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32.5 |
% |
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32.9 |
% |
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32.7 |
% |
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Combined ratio |
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95.8 |
% |
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92.6 |
% |
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100.2 |
% |
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92.9 |
% |
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Prior-year development ratio |
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0.1 |
% |
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(0.6) |
% |
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0.4 |
% |
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(1.0) |
% |
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Catastrophe ratio |
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6.5 |
% |
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3.7 |
% |
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9.5 |
% |
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3.9 |
% |
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Combined ratio, excluding catastrophes |
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89.3 |
% |
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88.9 |
% |
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90.7 |
% |
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|
89.0 |
% |
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Current accident year combined ratio, excluding catastrophes |
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89.2 |
% |
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89.5 |
% |
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90.3 |
% |
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90.0 |
% |
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Specialty
Specialty operating income before income taxes was $54.4 million in the second quarter of 2023, compared to $45.2 million in the second quarter of 2022. The Specialty combined ratio was 88.4%, compared to 89.4% in the prior-year quarter. Catastrophe losses in the second quarter of 2023 were $9.1 million, or 2.8 points of the combined ratio, compared to $6.6 million, or 2.2 points, in the prior-year quarter.
Second quarter 2023 results included net favorable prior-year reserve development, excluding catastrophes, of $11.7 million, or 3.7 points, driven primarily by lower-than-expected losses in our professional and executive lines claims-made business. This compared to net favorable prior-year reserve development, excluding catastrophes, of $1.2 million, or 0.4 points, in the prior-year quarter.
Specialty current accident year combined ratio, excluding catastrophes, increased 1.7 points to 89.3% in the second quarter of 2023, from 87.6% in the prior-year quarter. The current accident year loss and LAE ratio, excluding catastrophes, of 54.0% in the second quarter of 2023 is in line with the company’s expectations. The increase in the underlying loss ratio relative to the prior-year quarter reflects prudently increased loss selections in certain liability coverages, as well as a comparison to the unusually low level of losses in specialty property lines in the second quarter of 2022, partially offset by the benefit of rate increases earning in.
4
Net premiums written were $325.4 million in the quarter, up 7.6% from the prior-year quarter, driven primarily by renewal price change, led by our Hanover specialty industrial and marine businesses. In the second quarter, Specialty renewal price increases averaged 11.4%, while average rate increases were 6.4%.
The following table summarizes premiums and the components of the combined ratio for Specialty:
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Three months ended |
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Six months ended |
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June 30 |
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June 30 |
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($ in millions) |
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2023 |
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2022 |
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2023 |
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2022 |
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Net premiums written |
$ |
325.4 |
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$ |
302.3 |
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$ |
649.7 |
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$ |
605.1 |
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Growth |
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7.6 |
% |
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14.0 |
% |
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7.4 |
% |
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11.7 |
% |
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Net premiums earned |
$ |
319.8 |
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$ |
293.5 |
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$ |
631.5 |
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$ |
577.3 |
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Operating income before taxes |
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54.4 |
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45.2 |
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102.7 |
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95.2 |
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Loss and LAE ratio |
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53.1 |
% |
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54.1 |
% |
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53.9 |
% |
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53.2 |
% |
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Expense ratio |
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35.3 |
% |
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35.3 |
% |
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35.3 |
% |
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35.4 |
% |
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Combined ratio |
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88.4 |
% |
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89.4 |
% |
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89.2 |
% |
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88.6 |
% |
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Prior-year development ratio |
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(3.7) |
% |
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(0.4) |
% |
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(4.7) |
% |
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(2.5) |
% |
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Catastrophe ratio |
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2.8 |
% |
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2.2 |
% |
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4.8 |
% |
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2.5 |
% |
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Combined ratio, excluding catastrophes |
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85.6 |
% |
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|
87.2 |
% |
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|
84.4 |
% |
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|
86.1 |
% |
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Current accident year combined ratio, excluding catastrophes |
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89.3 |
% |
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87.6 |
% |
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89.1 |
% |
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88.6 |
% |
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Personal Lines
Personal Lines operating loss before income taxes was $194.1 million in the second quarter of 2023, compared to operating income before income taxes of $2.8 million in the second quarter of 2022. The Personal Lines combined ratio was 138.0%, compared to 103.2% in the prior-year quarter. Catastrophe losses in the second quarter of 2023 were $219.2 million, or 38.0 points of the combined ratio, driven primarily by hail damage that significantly impacted the company’s homeowners book of business, particularly in Michigan. This compared to catastrophe losses of $53.0 million, or 10.2 points of the combined ratio, in the prior-year quarter.
Second quarter 2023 results included net unfavorable prior-year reserve development, excluding catastrophes, of $9.3 million, or 1.6 points, driven by liability coverages. This compared to net favorable prior-year reserve development, excluding catastrophes, of $5.2 million, or 1.0 point, in the second quarter of 2022.
Personal Lines current accident year combined ratio, excluding catastrophe losses, increased 4.4 points to 98.4% in the second quarter of 2023, from 94.0% in the prior-year quarter. The current accident year loss and LAE ratio, excluding catastrophes, increased 5.2 points to 72.5%, driven by the impact of inflation and, to a lesser extent, pressure on liability coverages in personal auto and higher large fire losses in homeowners.
5
The expense ratio decreased by 0.8 points to 25.9% in the second quarter of 2023, compared to the prior-year quarter, primarily due to fixed cost leverage from premium growth and lower performance-based agency compensation.
Net premiums written were $634.6 million in the quarter, up 10.1% from the prior-year quarter, driven primarily by renewal price change. Policies in force in the quarter were relatively flat compared to the first quarter of 2023. In the second quarter, Personal Lines renewal price increases averaged 15.9%, while average rate increases were 9.8%.
The following table summarizes premiums and components of the combined ratio for Personal Lines:
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Three months ended |
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Six months ended |
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June 30 |
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June 30 |
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($ in millions) |
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2023 |
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2022 |
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2023 |
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2022 |
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|
Net premiums written |
$ |
634.6 |
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$ |
576.3 |
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$ |
1,166.5 |
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$ |
1,059.2 |
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Growth |
|
10.1 |
% |
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|
10.7 |
% |
|
|
10.1 |
% |
|
|
10.4 |
% |
|
Net premiums earned |
$ |
576.3 |
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|
$ |
520.2 |
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$ |
1,137.2 |
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|
$ |
1,025.5 |
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Operating income (loss) before taxes |
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(194.1) |
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|
2.8 |
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(240.7) |
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|
39.1 |
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Loss and LAE ratio |
|
112.1 |
% |
|
|
76.5 |
% |
|
|
99.3 |
% |
|
|
73.3 |
% |
|
Expense ratio |
|
25.9 |
% |
|
|
26.7 |
% |
|
|
26.0 |
% |
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|
26.9 |
% |
|
Combined ratio |
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138.0 |
% |
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|
103.2 |
% |
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|
125.3 |
% |
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|
100.2 |
% |
|
Prior-year development ratio |
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1.6 |
% |
|
|
(1.0) |
% |
|
|
1.8 |
% |
|
|
0.8 |
% |
|
Catastrophe ratio |
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38.0 |
% |
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|
10.2 |
% |
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|
27.2 |
% |
|
|
6.9 |
% |
|
Combined ratio, excluding catastrophes |
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100.0 |
% |
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|
93.0 |
% |
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|
98.1 |
% |
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|
93.3 |
% |
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Current accident year combined ratio, excluding catastrophes |
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98.4 |
% |
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|
94.0 |
% |
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|
96.3 |
% |
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|
92.5 |
% |
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Investments
Net investment income was $87.6 million for the second quarter of 2023, above the prior-year quarter by $17.1 million, primarily due to higher bond reinvestment rates and continued investment of operational cashflows. Net investment income in the quarter also benefited from higher non-recurring partnership income resulting from a real estate sale in an older tax credit partnership. Total pre-tax earned yield on the investment portfolio for the second quarter 2023 was 3.73%, up from 3.19% in the prior-year quarter. The average pre-tax earned yield on fixed maturities was 3.31% for the second quarter of 2023, up from 2.97% in the prior-year quarter.
The company held $8.8 billion in cash and invested assets on June 30, 2023. Fixed maturities and cash represented approximately 88% of the investment portfolio. Approximately 95% of the company’s fixed maturity portfolio is rated investment grade. As of June 30, 2023, net unrealized losses on the fixed maturity portfolio were $777.5 million before income taxes, a decrease in fair value of $82.5 million since March 31, 2023.
Shareholders’ Equity and Capital Actions
On June 30, 2023, book value per share was $62.62, down 6.4% from March 31, 2023, primarily due to a net operating loss, a decrease in the fair value of fixed maturity investments and to a lesser extent, the quarterly ordinary dividend. During the quarter, the company did not repurchase any shares of common stock in the open market. The company has approximately $330 million of remaining capacity under its existing share repurchase program.
6
On June 30, 2023, operating subsidiary’s statutory capital and surplus was $2.51 billion, after payment of a $100 million statutory dividend to its parent company. This compared to statutory capital and surplus of $2.67 billion on March 31, 2023.
Earnings Conference Call
The company will host a conference call to discuss its second quarter results on Thursday, August 3, at 10:00 a.m. E.T. A PowerPoint slide presentation will accompany the prepared remarks and has been posted on The Hanover’s website. Interested investors and others can listen to the call and access the presentation through The Hanover's website, located in the “Investors” section at www.hanover.com. Investors may access the conference call by dialing 1-844-413-3975 in the U.S. and 1-412-317-5458 internationally. Webcast participants should go to the website 15 minutes early to register, download and install any necessary audio software. A re-broadcast of the conference call will be available on The Hanover’s website approximately two hours after the call.
About The Hanover
The Hanover Insurance Group, Inc. is the holding company for several property and casualty insurance companies, which together constitute one of the largest insurance businesses in the United States. The company provides exceptional insurance solutions through a select group of independent agents and brokers. Together with its agent partners, the company offers standard and specialized insurance protection for small and mid-sized businesses, as well as for homes, automobiles, and other personal items. For more information, please visit hanover.com.
Contact Information
Investors: |
Media: |
|
Oksana Lukasheva olukasheva@hanover.com 1-508-525-6081 |
Michael F. Buckley mibuckley@hanover.com 1-508-855-3099 |
Emily P. Trevallion etrevallion@hanover.com 1-508-855-3263 |
Definition of Reported Segments
Continuing operations include four operating segments: Core Commercial, Specialty, Personal Lines and Other. The Core Commercial segment includes commercial multiple peril, commercial automobile, workers’ compensation and other commercial lines coverages provided to small and mid-sized businesses. The Specialty segment includes four divisions of business: professional and executive lines, specialty property and casualty (“Specialty P&C”), marine, and surety and other. Specialty P&C includes coverages such as program business (provides commercial insurance to markets with specialized coverage or risk management needs related to groups of similar businesses), specialty industrial and commercial property, excess and surplus lines, and specialty general liability coverage. The Personal Lines segment markets automobile, homeowners and ancillary coverages to individuals and families. The “Other” segment includes Opus Investment Management, Inc., which provides investment management services to institutions, pension funds and other organizations, and the operations of the holding company, as well as a block of run-off voluntary assumed property and casualty pools business in which the company has not actively participated since 1995, and run-off direct asbestos and environmental business.
7
Financial Supplement
The Hanover's second quarter news release and financial supplement are available in the “Investors” section of the company’s website at hanover.com.
The Hanover Insurance Group, Inc. |
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Condensed Consolidated Income Statements |
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Three months ended |
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Six months ended |
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June 30 |
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June 30 |
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($ in millions) |
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2023 |
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2022 |
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2023 |
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2022 |
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Revenues |
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Premiums earned |
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$ |
1,411.7 |
$ |
1,293.8 |
$ |
2,791.7 |
$ |
2,557.6 |
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Net investment income |
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87.6 |
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70.5 |
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166.3 |
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147.4 |
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Net realized and unrealized investment gains (losses): |
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Net realized gains (losses) from sales and other |
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0.1 |
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(19.2) |
|
(1.0) |
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(16.2) |
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Net change in fair value of equity securities |
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(1.1) |
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(59.0) |
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(8.2) |
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(77.0) |
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Impairments on investments: |
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Credit-related recoveries (impairments) |
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(1.7) |
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0.5 |
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(6.2) |
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(0.1) |
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Losses on intent to sell securities |
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- |
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(0.2) |
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(10.3) |
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(0.5) |
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(1.7) |
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0.3 |
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(16.5) |
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(0.6) |
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Total net realized and unrealized investment losses |
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(2.7) |
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(77.9) |
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(25.7) |
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(93.8) |
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Fees and other income |
|
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7.8 |
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6.5 |
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15.8 |
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12.4 |
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Total revenues |
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1,504.4 |
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1,292.9 |
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2,948.1 |
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2,623.6 |
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Losses and expenses |
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Losses and loss adjustment expenses |
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1,139.9 |
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845.5 |
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2,157.3 |
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1,633.0 |
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Amortization of deferred acquisition costs |
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292.7 |
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269.3 |
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581.5 |
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532.2 |
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Interest expense |
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8.6 |
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8.5 |
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17.1 |
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17.0 |
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Other operating expenses |
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153.9 |
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141.4 |
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300.4 |
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283.2 |
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Total losses and expenses |
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1,595.1 |
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1,264.7 |
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3,056.3 |
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2,465.4 |
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Income (loss) from continuing operations before income taxes |
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(90.7) |
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28.2 |
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(108.2) |
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158.2 |
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Income tax expense (benefit) |
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(20.7) |
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5.4 |
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(26.2) |
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30.1 |
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Income (loss) from continuing operations |
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(70.0) |
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22.8 |
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(82.0) |
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128.1 |
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Discontinued operations (net of taxes): |
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Income from discontinued Chaucer business |
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0.8 |
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- |
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0.8 |
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- |
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Loss from discontinued life businesses |
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- |
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(0.1) |
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- |
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(0.5) |
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Net income (loss) |
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$ |
(69.2) |
$ |
22.7 |
$ |
(81.2) |
$ |
127.6 |
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8
The Hanover Insurance Group, Inc. |
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Condensed Consolidated Balance Sheets |
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June 30 |
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December 31 |
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($ in millions) |
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2023 |
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2022 |
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Assets |
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Total investments |
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$ |
8,640.4 |
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$ |
8,509.8 |
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Cash and cash equivalents |
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167.6 |
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305.0 |
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Premiums and accounts receivable, net |
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1,673.8 |
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1,601.4 |
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Reinsurance recoverable on paid and unpaid losses and unearned premiums |
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1,997.3 |
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1,964.5 |
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Other assets |
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1,621.8 |
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1,530.3 |
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Assets of discontinued businesses |
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85.8 |
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84.1 |
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Total assets |
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$ |
14,186.7 |
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$ |
13,995.1 |
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Liabilities |
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Loss and loss adjustment expense reserves |
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$ |
7,313.3 |
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$ |
7,012.6 |
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Unearned premiums |
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3,020.8 |
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2,954.2 |
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Debt |
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782.8 |
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782.4 |
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Other liabilities |
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721.2 |
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802.0 |
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Liabilities of discontinued businesses |
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110.7 |
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110.2 |
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Total liabilities |
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11,948.8 |
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11,661.4 |
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Total shareholders’ equity |
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2,237.9 |
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2,333.7 |
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Total liabilities and shareholders’ equity |
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$ |
14,186.7 |
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$ |
13,995.1 |
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9
The following is a reconciliation from operating income (loss) to net income (loss)(4):
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The Hanover Insurance Group, Inc. |
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Three months ended June 30 |
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Six months ended June 30 |
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2023 |
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2022 |
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2023 |
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2022 |
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($ in millions, except per share data) |
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$ Amount |
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Per Share* |
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$ Amount |
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Per Share (Diluted) |
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$ Amount |
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Per Share* |
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$ Amount |
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Per Share (Diluted) |
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Operating income (loss) |
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Core Commercial |
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$ |
60.1 |
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$ |
66.9 |
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$ |
71.3 |
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$ |
134.4 |
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Specialty |
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54.4 |
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45.2 |
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102.7 |
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95.2 |
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Personal Lines |
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(194.1) |
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2.8 |
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(240.7) |
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39.1 |
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Other |
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0.2 |
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0.1 |
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0.5 |
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0.7 |
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Total |
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(79.4) |
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|
|
|
115.0 |
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(66.2) |
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269.4 |
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Interest expense |
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(8.6) |
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(8.5) |
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(17.1) |
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(17.0) |
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Operating income (loss) before income taxes |
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(88.0) |
|
$ |
(2.46) |
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|
106.5 |
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$ |
2.94 |
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(83.3) |
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$ |
(2.33) |
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|
252.4 |
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$ |
6.98 |
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Income tax benefit (expense) on operating income |
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19.7 |
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|
0.55 |
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(22.6) |
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(0.62) |
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19.6 |
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0.55 |
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(50.8) |
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(1.40) |
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Operating income (loss) after income taxes |
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(68.3) |
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(1.91) |
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83.9 |
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2.32 |
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(63.7) |
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(1.78) |
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201.6 |
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5.58 |
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Non-operating items: |
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Net realized gains (losses) from sales and other |
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0.1 |
|
|
- |
|
|
(19.2) |
|
|
(0.53) |
|
|
(1.0) |
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|
(0.04) |
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(16.2) |
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(0.45) |
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Net change in fair value of equity securities |
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|
(1.1) |
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|
(0.03) |
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(59.0) |
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|
(1.63) |
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(8.2) |
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|
(0.23) |
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(77.0) |
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|
(2.13) |
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Impairments on investments: |
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Credit-related recoveries (impairments) |
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(1.7) |
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(0.05) |
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0.5 |
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|
0.01 |
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(6.2) |
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(0.17) |
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(0.1) |
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- |
|
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Losses on intent to sell securities |
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- |
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- |
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(0.2) |
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- |
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(10.3) |
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(0.29) |
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(0.5) |
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(0.02) |
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|||
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(1.7) |
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(0.05) |
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0.3 |
|
|
0.01 |
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(16.5) |
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|
(0.46) |
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(0.6) |
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|
(0.02) |
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Other non-operating items |
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- |
|
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- |
|
|
(0.4) |
|
|
(0.01) |
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0.8 |
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0.03 |
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(0.4) |
|
|
(0.01) |
|
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Income tax benefit on non-operating items |
|
|
1.0 |
|
|
0.03 |
|
|
17.2 |
|
|
0.47 |
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|
6.6 |
|
|
0.18 |
|
|
20.7 |
|
|
0.58 |
|
|||
Income (loss) from continuing operations, net of taxes |
|
|
(70.0) |
|
|
(1.96) |
|
|
22.8 |
|
|
0.63 |
|
|
(82.0) |
|
|
(2.30) |
|
|
128.1 |
|
|
3.55 |
|
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Discontinued operations (net of taxes): |
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|
|
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Income from discontinued Chaucer business |
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|
0.8 |
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0.02 |
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|
- |
|
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- |
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0.8 |
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0.03 |
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- |
|
|
- |
|
|||
Loss from discontinued life businesses |
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- |
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- |
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(0.1) |
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- |
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- |
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- |
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(0.5) |
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(0.02) |
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Net income (loss) |
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$ |
(69.2) |
|
$ |
(1.94) |
|
$ |
22.7 |
|
$ |
0.63 |
|
$ |
(81.2) |
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$ |
(2.27) |
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$ |
127.6 |
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$ |
3.53 |
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Dilutive weighted average shares outstanding |
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|
36.0 |
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|
36.1 |
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|
36.1 |
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|
36.1 |
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Basic weighted average shares outstanding |
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|
35.7 |
|
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35.6 |
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35.7 |
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35.6 |
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|||
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*Per share data is calculated using basic shares outstanding due to antidilution.
10
Forward-Looking Statements and Non-GAAP Financial Measures
Forward-Looking Statements
Certain statements in this document and comments made by management may be “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, may be forward-looking statements. Words such as, but not limited to, “believes,” “anticipates,” “expects,” “may,” “projects,” “projections,” “plan,” “likely,” “potential,” “targeted,” “forecasts,” “should,” “could,” “continue,” “outlook,” “guidance,” “modeling,” “target profitability,” “target margins,” “moving forward,” “confident,” “will,” and other similar expressions are intended to identify forward-looking statements. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. The company cautions investors that any such forward-looking statements are estimates, beliefs, expectations and/or projections that involve significant judgment, and that historical results, trends and forward-looking statements are not guarantees and are not necessarily indicative of future performance. Actual results could differ materially from those anticipated.
These statements include, but are not limited to, the company’s statements regarding:
11
Additional Risks and Uncertainties
Investors are further cautioned and should consider the risks and uncertainties in the company’s business that may affect such estimates and future performance that are discussed in the company’s most recently filed reports on Form 10-K and Form 10-Q and other documents filed by The Hanover Insurance Group, Inc. with the Securities and Exchange Commission (“SEC”) and that are also available at www.hanover.com under “Investors.” These risks and uncertainties include, but are not limited to:
12
13
Investors should not place undue reliance on forward-looking statements, which speak only as of the date they are made and should understand the risks and uncertainties inherent in or particular to the company’s business. The company does not undertake the responsibility to update or revise such forward-looking statements, except as required by law.
Non-GAAP Financial Measures
As discussed on page 38 of the company’s Annual Report on Form 10-K for the year ended December 31, 2022, the company uses non-GAAP financial measures as important measures of its operating performance, including operating income (loss), operating income (loss) before interest expense and income taxes, operating income (loss) per diluted (basic) share, and components of the combined ratio, both excluding and/or including catastrophe losses, prior-year reserve development and the expense ratio. Management believes these non-GAAP financial measures are important indications of the company’s operating performance. The definition of other non-GAAP financial measures and terms can be found in the 2022 Annual Report on pages 63-66.
14
Operating income (loss) and operating income (loss) per diluted (basic) share are non-GAAP measures. They are defined as net income (loss) excluding the after-tax impact of net realized and unrealized investment gains (losses), gains and/or losses on the repayment of debt, other non-operating items, and results from discontinued operations. Net realized and unrealized investment gains (losses), which include changes in the fair value of equity securities still held, are excluded for purposes of presenting operating income (loss), as they are, to a certain extent, determined by interest rates, financial markets and the timing of sales. Operating income (loss) also excludes net gains and losses from disposals of businesses, gains and losses related to the repayment of debt, costs to acquire businesses, restructuring costs, the cumulative effect of accounting changes, and certain other items. Operating income (loss) is the sum of the segment income (loss) from: Core Commercial, Specialty, Personal Lines, and Other, after interest expense and income taxes. In reference to one of the company’s four segments, “operating income (loss)” is the segment income (loss) before both interest expense and income taxes. The company also uses “operating income (loss) per diluted (basic) share” (which is after both interest expense and income taxes). Operating income per share is calculated by dividing operating income by the weighted average number of diluted shares of common stock. Operating loss per share is calculated by dividing operating loss by the weighted average number of basic shares of common stock due to antidilution. The company believes that metrics of operating income (loss) and operating income (loss) in relation to its four segments provide investors with a valuable measure of the performance of the company’s continuing businesses because they highlight the portion of net income (loss) attributable to the core operations of the business. Income (loss) from continuing operations is the most directly comparable GAAP measure for operating income (loss) (and operating income (loss) before income taxes) and measures of operating income (loss) that exclude the effects of catastrophe losses and/or prior-year reserve development should not be misconstrued as substitutes for income (loss) from continuing operations or net income (loss) determined in accordance with GAAP. A reconciliation of operating income (loss) to income (loss) from continuing operations and net income (loss) for the relevant periods is included on page 10 of this news release and in the Financial Supplement.
The company may provide measures of operating income (loss) and combined ratios that exclude the impact of catastrophe losses (which in all respects include prior accident year catastrophe loss development). A catastrophe is a severe loss, resulting from natural or manmade events including, but is not limited to, hurricanes, tornados, windstorms, earthquakes, hail, severe winter weather, freeze events, fire, explosions, civil unrest and terrorism. Due to the unique characteristics of each catastrophe loss, there is an inherent inability to reasonably estimate the timing or loss amount in advance. The company believes a separate discussion excluding the effects of catastrophe losses is meaningful to understand the underlying trends and variability of earnings, loss and combined ratio results, among others.
Prior accident year reserve development, which can either be favorable or unfavorable, represents changes in the company’s estimate of costs related to claims from prior years. Calendar year loss and loss adjustment expense (“LAE”) ratios determined in accordance with GAAP, excluding prior accident year reserve development, are sometimes referred to as “current accident year loss ratios.” The company believes a discussion of loss and combined ratios, excluding prior accident year reserve development, is helpful since it provides insight into both estimates of current accident year results and the accuracy of prior-year estimates.
15
The loss and combined ratios in accordance with GAAP are the most directly comparable GAAP measures for the loss and combined ratios calculated excluding the effects of catastrophe losses and/or prior-year reserve development. The presentation of loss and combined ratios calculated excluding the effects of catastrophe losses and/or prior-year reserve development should not be misconstrued as substitutes for the loss and/or combined ratios determined in accordance with GAAP.
Endnotes
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Three months ended |
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June 30, 2023 |
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|
|||||||||
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Core Commercial |
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Specialty |
|
Personal Lines |
|
Total |
|
||||
|
Total combined ratio (GAAP) |
|
95.8 |
% |
|
88.4 |
% |
|
138.0 |
% |
|
111.3 |
% |
|
|
Less: Catastrophe ratio |
|
6.5 |
% |
|
2.8 |
% |
|
38.0 |
% |
|
18.5 |
% |
|
|
Combined ratio, excluding catastrophe losses (non-GAAP) |
|
89.3 |
% |
|
85.6 |
% |
|
100.0 |
% |
|
92.8 |
% |
|
|
Less: Prior-year reserve development ratio |
|
0.1 |
% |
|
(3.7) |
% |
|
1.6 |
% |
|
(0.1) |
% |
|
|
Current accident year combined ratio, excluding catastrophe losses (non-GAAP) |
|
89.2 |
% |
|
89.3 |
% |
|
98.4 |
% |
|
92.9 |
% |
|
|
|
|
June 30, 2022 |
|
|
|||||||||
|
Total combined ratio (GAAP) |
|
92.6 |
% |
|
89.4 |
% |
|
103.2 |
% |
|
96.2 |
% |
|
|
Less: Catastrophe ratio |
|
3.7 |
% |
|
2.2 |
% |
|
10.2 |
% |
|
6.0 |
% |
|
|
Combined ratio, excluding catastrophe losses (non-GAAP) |
|
88.9 |
% |
|
87.2 |
% |
|
93.0 |
% |
|
90.2 |
% |
|
|
Less: Prior-year reserve development ratio |
|
(0.6) |
% |
|
(0.4) |
% |
|
(1.0) |
% |
|
(0.7) |
% |
|
|
Current accident year combined ratio, excluding catastrophe losses (non-GAAP) |
|
89.5 |
% |
|
87.6 |
% |
|
94.0 |
% |
|
90.9 |
% |
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended |
|
|
|||||||||
|
|
|
June 30, 2023 |
|
|
|||||||||
|
|
|
Core Commercial |
|
Specialty |
|
Personal Lines |
|
Total |
|
||||
|
Total combined ratio (GAAP) |
|
100.2 |
% |
|
89.2 |
% |
|
125.3 |
% |
|
107.9 |
% |
|
|
Less: Catastrophe ratio |
|
9.5 |
% |
|
4.8 |
% |
|
27.2 |
% |
|
15.6 |
% |
|
|
Combined ratio, excluding catastrophe losses (non-GAAP) |
|
90.7 |
% |
|
84.4 |
% |
|
98.1 |
% |
|
92.3 |
% |
|
|
Less: Prior-year reserve development ratio |
|
0.4 |
% |
|
(4.7) |
% |
|
1.8 |
% |
|
(0.2) |
% |
|
|
Current accident year combined ratio, excluding catastrophe losses (non-GAAP) |
|
90.3 |
% |
|
89.1 |
% |
|
96.3 |
% |
|
92.5 |
% |
|
|
|
|
June 30, 2022 |
|
|
|||||||||
|
Total combined ratio (GAAP) |
|
92.9 |
% |
|
88.6 |
% |
|
100.2 |
% |
|
94.8 |
% |
|
|
Less: Catastrophe ratio |
|
3.9 |
% |
|
2.5 |
% |
|
6.9 |
% |
|
4.8 |
% |
|
|
Combined ratio, excluding catastrophe losses (non-GAAP) |
|
89.0 |
% |
|
86.1 |
% |
|
93.3 |
% |
|
90.0 |
% |
|
|
Less: Prior-year reserve development ratio |
|
(1.0) |
% |
|
(2.5) |
% |
|
0.8 |
% |
|
(0.6) |
% |
|
|
Current accident year combined ratio, excluding catastrophe losses (non-GAAP) |
|
90.0 |
% |
|
88.6 |
% |
|
92.5 |
% |
|
90.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16
17
|
|
|
Three months ended |
|
|
|||||||||
|
|
|
June 30, 2023 |
|
|
|||||||||
|
|
|
Core Commercial |
|
Specialty |
|
Personal Lines |
|
Total |
|
||||
|
Total loss and LAE ratio |
|
62.8 |
% |
|
53.1 |
% |
|
112.1 |
% |
|
80.7 |
% |
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior-year reserve development ratio |
|
0.1 |
% |
|
(3.7) |
% |
|
1.6 |
% |
|
(0.1) |
% |
|
|
Catastrophe ratio |
|
6.5 |
% |
|
2.8 |
% |
|
38.0 |
% |
|
18.5 |
% |
|
|
Current accident year loss and LAE ratio, excluding catastrophes |
|
56.2 |
% |
|
54.0 |
% |
|
72.5 |
% |
|
62.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2022 |
|
|
|||||||||
|
Total loss and LAE ratio |
|
60.1 |
% |
|
54.1 |
% |
|
76.5 |
% |
|
65.4 |
% |
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior-year reserve development ratio |
|
(0.6) |
% |
|
(0.4) |
% |
|
(1.0) |
% |
|
(0.7) |
% |
|
|
Catastrophe ratio |
|
3.7 |
% |
|
2.2 |
% |
|
10.2 |
% |
|
6.0 |
% |
|
|
Current accident year loss and LAE ratio, excluding catastrophes |
|
57.0 |
% |
|
52.3 |
% |
|
67.3 |
% |
|
60.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended |
|
|
|||||||||
|
|
|
June 30, 2023 |
|
|
|||||||||
|
|
|
Core Commercial |
|
Specialty |
|
Personal Lines |
|
Total |
|
||||
|
Total loss and LAE ratio |
|
67.3 |
% |
|
53.9 |
% |
|
99.3 |
% |
|
77.3 |
% |
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior-year reserve development ratio |
|
0.4 |
% |
|
(4.7) |
% |
|
1.8 |
% |
|
(0.2) |
% |
|
|
Catastrophe ratio |
|
9.5 |
% |
|
4.8 |
% |
|
27.2 |
% |
|
15.6 |
% |
|
|
Current accident year loss and LAE ratio, excluding catastrophes |
|
57.4 |
% |
|
53.8 |
% |
|
70.3 |
% |
|
61.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2022 |
|
|
|||||||||
|
Total loss and LAE ratio |
|
60.2 |
% |
|
53.2 |
% |
|
73.3 |
% |
|
63.8 |
% |
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior-year reserve development ratio |
|
(1.0) |
% |
|
(2.5) |
% |
|
0.8 |
% |
|
(0.6) |
% |
|
|
Catastrophe ratio |
|
3.9 |
% |
|
2.5 |
% |
|
6.9 |
% |
|
4.8 |
% |
|
|
Current accident year loss and LAE ratio, excluding catastrophes |
|
57.3 |
% |
|
53.2 |
% |
|
65.6 |
% |
|
59.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18
19
Exhibit 99.2
FINANCIAL SUPPLEMENT
SECOND QUARTER 2023
THE HANOVER INSURANCE GROUP |
|
FINANCIAL SUPPLEMENT |
|
|
|
|
|
|
|
TABLE OF CONTENTS |
|
|
|
|
|
Segment Descriptions.................................................................................................... |
1 |
Financial Highlights......................................................................................................... |
2 |
Consolidated Financial Statements |
|
Income Statements............................................................................................................. |
3 |
Balance Sheets................................................................................................................... |
4 |
Pre-tax Operating Results and Related Metrics |
|
Consolidated....................................................................................................................... |
5-7 |
Core Commercial............................................................................................................... |
8-9 |
Specialty.............................................................................................................................. |
10-11 |
Personal Lines.................................................................................................................... |
12-15 |
Investments |
|
Net Investment Income and Yields..................................................................................... |
16 |
Investment Portfolio............................................................................................................. |
17 |
Credit Quality and Duration of Fixed Maturities............................................................... |
18 |
Top 25 Corporate and Municipal Fixed Maturity Holdings............................................. |
19 |
Reconciliation of Operating Income (Loss) to Net Income (Loss)...................... |
20 |
Other Information |
|
Non-GAAP Financial Measures........................................................................................ |
21 |
Premium Related Metric Definitions................................................................................. |
22 |
Corporate Information......................................................................................................... |
23 |
Market and Dividend Information...................................................................................... |
23 |
Financial Strength and Debt Ratings................................................................................ |
23 |
|
|
THE HANOVER INSURANCE GROUP |
||||||||
|
|
|
|
|
|
|
|
|
BASIS OF PRESENTATION |
||||||||
|
|
|
|
|
|
|
|
|
SEGMENT DESCRIPTIONS |
|
|
|
|
|
|
|
|
CORE COMMERCIAL |
|
|
|
|
|
|
|
|
Sub-segment |
Customer and business type |
|
Primary lines of business |
|||||
Small Commercial |
Coverage to small businesses, with annual premiums of $50,000 or less; |
|
● Business owners' policy/commercial multiple peril |
|||||
|
|
|
|
|
|
|
|
|
Middle Market |
Coverage to mid-sized businesses with annual premiums starting at $50,000, focusing on those between $50,000 and $250,000. Products are tailored to certain specific industry segments, including technology, manufacturing, human services, retail, real estate, among others. |
|
● Commercial multiple peril |
|||||
SPECIALTY |
|
|
|
|
|
|
|
|
Sub-segment |
Customer and business type |
|
Primary lines of business |
|||||
Professional and Executive Lines |
Coverage to small to mid-sized non-public companies, including lawyer, engineer, accountant, and various other professional and advisory firms including healthcare; provide protection for directors, officers and employees against actual or alleged errors, negligence or bad faith, employment practices. |
|
● Professional liability |
|||||
|
|
|
|
|
|
|
|
|
Specialty Property & Casualty |
Program business - coverage to markets with specialty or risk management needs related to groups of similar businesses; |
|
● Commercial multiple peril |
|||||
|
|
|
|
|
|
|
|
|
Marine |
Includes coverage for inland and ocean marine, and insures against physical losses to property, such as contractor's equipment, builders' risk and goods in transit. Also covers jewelers block, fine art and other valuables. |
|
● Inland/ocean marine |
|||||
|
|
|
|
|
|
|
|
|
Surety and Other |
Provides coverage for construction and other firms, as well as sole proprietors in the event of claims for non-performance or non-payment, and commercial surety coverage related to fiduciary or regulatory obligations. |
|
● Bond |
|||||
PERSONAL LINES |
|
|
|
|
|
|
|
|
Sub-segment |
Customer and business type |
|
Primary lines of business |
|||||
Personal Automobile |
Includes coverage for individuals against losses incurred from personal bodily injury, bodily injury to third parties, property damage to an insured's vehicle, and property damage to other vehicles and other property. |
|
● Personal automobile |
|||||
|
|
|
|
|
|
|
|
|
Homeowners and Other |
Includes coverage for individuals for losses to their residences and personal property, such as those caused by fire, wind, hail, water damage (excluding flood), theft and vandalism, and against third-party liability claims. |
|
● Homeowners |
|||||
OTHER |
|
|
|
|
|
|
|
|
Included in Other are Opus, which provides investment advisory services to affiliates and also manages assets for unaffiliated institutions such as insurance companies, retirement plans and foundations; earnings on holding company assets; holding company and other expenses; and our run-off voluntary assumed property and casualty pools and run-off direct asbestos and environmental businesses. |
1
THE HANOVER INSURANCE GROUP |
||||||||||||||||||||||||
FINANCIAL HIGHLIGHTS |
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 |
|
|
Q2 |
|
|
Q3 |
|
|
Q4 |
|
|
Q1 |
|
|
Q2 |
|
|
Jun-YTD |
|
|
Jun-YTD |
|
(In millions, except earnings per share) |
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
2022 (1) |
|
|
2023 (2) |
|
|
2023 (1) |
|
|
2022 |
|
|
2023 (1) |
|
PREMIUMS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross premiums written |
$ |
1,470.1 |
|
$ |
1,473.9 |
|
$ |
1,660.3 |
|
$ |
1,476.5 |
|
$ |
1,577.3 |
|
$ |
1,589.9 |
|
$ |
2,944.0 |
|
$ |
3,167.2 |
|
Net premiums written |
|
1,312.3 |
|
|
1,332.8 |
|
|
1,505.4 |
|
|
1,326.0 |
|
|
1,421.5 |
|
|
1,446.8 |
|
|
2,645.1 |
|
|
2,868.3 |
|
Net premiums earned |
|
1,263.8 |
|
|
1,293.8 |
|
|
1,331.2 |
|
|
1,363.5 |
|
|
1,380.0 |
|
|
1,411.7 |
|
|
2,557.6 |
|
|
2,791.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) before interest and taxes |
$ |
154.4 |
|
$ |
115.0 |
|
$ |
53.9 |
|
$ |
(38.2) |
|
$ |
13.2 |
|
$ |
(79.4) |
|
$ |
269.4 |
|
$ |
(66.2) |
|
Operating income (loss) after taxes |
|
117.7 |
|
|
83.9 |
|
|
35.7 |
|
|
(37.4) |
|
|
4.6 |
|
|
(68.3) |
|
|
201.6 |
|
|
(63.7) |
|
Income (loss) from continuing operations |
|
105.3 |
|
|
22.8 |
|
|
0.6 |
|
|
(11.9) |
|
|
(12.0) |
|
|
(70.0) |
|
|
128.1 |
|
|
(82.0) |
|
Net income (loss) (3) |
|
104.9 |
|
|
22.7 |
|
|
0.5 |
|
|
(12.1) |
|
|
(12.0) |
|
|
(69.2) |
|
|
127.6 |
|
|
(81.2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PER SHARE DATA (DILUTED) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) after taxes |
$ |
3.26 |
|
$ |
2.32 |
|
$ |
0.99 |
|
$ |
(1.05) |
|
$ |
0.13 |
|
$ |
(1.91) |
|
$ |
5.58 |
|
$ |
(1.78) |
|
Income (loss) from continuing operations |
|
2.91 |
|
|
0.63 |
|
|
0.02 |
|
|
(0.33) |
|
|
(0.34) |
|
|
(1.96) |
|
|
3.55 |
|
|
(2.30) |
|
Net income (loss) (3) |
|
2.90 |
|
|
0.63 |
|
|
0.01 |
|
|
(0.34) |
|
|
(0.34) |
|
|
(1.94) |
|
|
3.53 |
|
|
(2.27) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
- |
|
Dilutive weighted average shares outstanding |
|
36.1 |
|
|
36.1 |
|
|
36.1 |
|
|
36.1 |
|
|
36.1 |
|
|
36.0 |
|
|
36.1 |
|
|
36.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
- |
|
Basic weighted average shares outstanding |
|
35.5 |
|
|
35.6 |
|
|
35.6 |
|
|
35.6 |
|
|
35.6 |
|
|
35.7 |
|
|
35.6 |
|
|
35.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE SHEET |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31 |
|
|
June 30 |
|
|
September 30 |
|
|
December 31 |
|
|
March 31 |
|
|
June 30 |
|
|
|
|
|
|
|
(In millions, except per share data) |
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
2023 |
|
|
2023 |
|
|
|
|
|
|
|
Total assets (3) |
$ |
13,847.7 |
|
$ |
13,599.7 |
|
$ |
13,743.6 |
|
$ |
13,995.1 |
|
$ |
14,091.7 |
|
$ |
14,186.7 |
|
|
|
|
|
|
|
Total loss and loss adjustment expense reserves |
|
6,512.2 |
|
|
6,606.9 |
|
|
6,774.0 |
|
|
7,012.6 |
|
|
7,143.4 |
|
|
7,313.3 |
|
|
|
|
|
|
|
Total shareholders' equity (3) |
|
2,830.9 |
|
|
2,576.2 |
|
|
2,304.9 |
|
|
2,333.7 |
|
|
2,389.0 |
|
|
2,237.9 |
|
|
|
|
|
|
|
Total shareholders' equity, excluding net unrealized appreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(depreciation) on fixed maturity investments, net of tax (3) |
|
3,032.0 |
|
|
3,035.5 |
|
|
3,007.2 |
|
|
2,971.1 |
|
|
2,934.2 |
|
|
2,847.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and Casualty Companies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statutory surplus |
$ |
2,809.6 |
|
$ |
2,693.5 |
|
$ |
2,681.8 |
|
$ |
2,690.4 |
|
$ |
2,674.5 |
|
$ |
2,508.3 |
|
|
|
|
|
|
|
Premium to surplus ratio |
|
1.82:1 |
|
|
1.94:1 |
|
|
2.00:1 |
|
|
2.03:1 |
|
|
2.09:1 |
|
|
2.27:1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value per share (3) |
$ |
79.53 |
|
$ |
72.33 |
|
$ |
64.84 |
|
$ |
65.61 |
|
$ |
66.89 |
|
$ |
62.62 |
|
|
|
|
|
|
|
Book value per share, excluding net unrealized appreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(depreciation) on fixed maturity investments, net of tax (3) |
$ |
85.17 |
|
$ |
85.22 |
|
$ |
84.60 |
|
$ |
83.53 |
|
$ |
82.16 |
|
$ |
79.68 |
|
|
|
|
|
|
|
Tangible book value per share (total book value excluding goodwill |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and intangibles) (3) |
$ |
74.04 |
|
$ |
66.85 |
|
$ |
59.36 |
|
$ |
60.13 |
|
$ |
61.44 |
|
$ |
57.17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares outstanding |
|
35.6 |
|
|
35.6 |
|
|
35.6 |
|
|
35.6 |
|
|
35.7 |
|
|
35.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt/equity (3) |
|
27.6 % |
|
|
30.4 % |
|
|
33.9 % |
|
|
33.5 % |
|
|
32.8 % |
|
|
35.0 % |
|
|
|
|
|
|
|
Total debt/total capital (3) |
|
21.6 % |
|
|
23.3 % |
|
|
25.3 % |
|
|
25.1 % |
|
|
24.7 % |
|
|
25.9 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Per share data is calculated using basic shares outstanding due to antidilution. |
|
|||||||||||||||||||||||
(2) Operating income metrics are calculated using diluted shares outstanding; loss from continuing operations, net of taxes and net loss metrics are calculated using basic shares outstanding due to antidilution. |
|
|||||||||||||||||||||||
(3) Effective January 1, 2023, in accordance with the implementation of Accounting Standards Updated 2018-12, Targeted Improvements to the Accounting for Long-Duration Contracts, the Company has revised the prior period metrics, which includes a benefit of approximately $4.1 million to the January 1, 2022 beginning balance of retained earnings. |
|
2
|
|
THE HANOVER INSURANCE GROUP |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED INCOME STATEMENTS |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months ended June 30 |
|
Six Months ended June 30 |
||||||||
(In millions) |
|
2023 |
|
2022 |
% Change |
|
|
2023 |
|
2022 |
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
Premiums earned |
$ |
1,411.7 |
$ |
1,293.8 |
9.1 |
|
$ |
2,791.7 |
$ |
2,557.6 |
9.2 |
Net investment income |
|
87.6 |
|
70.5 |
24.3 |
|
|
166.3 |
|
147.4 |
12.8 |
Net realized and unrealized investment gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
Net realized gains (losses) from sales and other |
|
0.1 |
|
(19.2) |
N/M |
|
|
(1.0) |
|
(16.2) |
(93.8) |
Net change in fair value of equity securities |
|
(1.1) |
|
(59.0) |
(98.1) |
|
|
(8.2) |
|
(77.0) |
(89.4) |
Impairments on investments: |
|
|
|
|
|
|
|
|
|
|
|
Credit-related recoveries (impairments) |
|
(1.7) |
|
0.5 |
N/M |
|
|
(6.2) |
|
(0.1) |
N/M |
Losses on intent to sell securities |
|
- |
|
(0.2) |
N/M |
|
|
(10.3) |
|
(0.5) |
N/M |
|
|
(1.7) |
|
0.3 |
N/M |
|
|
(16.5) |
|
(0.6) |
N/M |
Total net realized and unrealized investment losses |
|
(2.7) |
|
(77.9) |
(96.5) |
|
|
(25.7) |
|
(93.8) |
(72.6) |
Fees and other income |
|
7.8 |
|
6.5 |
20.0 |
|
|
15.8 |
|
12.4 |
27.4 |
Total revenues |
|
1,504.4 |
|
1,292.9 |
16.4 |
|
|
2,948.1 |
|
2,623.6 |
12.4 |
|
|
|
|
|
|
|
|
|
|
|
|
LOSSES AND EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Losses and loss adjustment expenses |
|
1,139.9 |
|
845.5 |
34.8 |
|
|
2,157.3 |
|
1,633.0 |
32.1 |
Amortization of deferred acquisition costs |
|
292.7 |
|
269.3 |
8.7 |
|
|
581.5 |
|
532.2 |
9.3 |
Interest expense |
|
8.6 |
|
8.5 |
1.2 |
|
|
17.1 |
|
17.0 |
0.6 |
Other operating expenses |
|
153.9 |
|
141.4 |
8.8 |
|
|
300.4 |
|
283.2 |
6.1 |
Total losses and expenses |
|
1,595.1 |
|
1,264.7 |
26.1 |
|
|
3,056.3 |
|
2,465.4 |
24.0 |
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations before income taxes |
|
(90.7) |
|
28.2 |
N/M |
|
|
(108.2) |
|
158.2 |
N/M |
Income tax expense (benefit) |
|
(20.7) |
|
5.4 |
N/M |
|
|
(26.2) |
|
30.1 |
N/M |
Income (loss) from continuing operations |
|
(70.0) |
|
22.8 |
N/M |
|
|
(82.0) |
|
128.1 |
N/M |
Discontinued operations (net of taxes): |
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued Chaucer business |
|
0.8 |
|
- |
N/M |
|
|
0.8 |
|
- |
N/M |
Loss from discontinued life businesses |
|
- |
|
(0.1) |
N/M |
|
|
- |
|
(0.5) |
N/M |
Net income (loss) |
$ |
(69.2) |
$ |
22.7 |
N/M |
|
$ |
(81.2) |
$ |
127.6 |
N/M |
|
|
|
|
|
|
|
|
|
|
|
|
3
THE HANOVER INSURANCE GROUP |
||||||
|
|
|
|
|
|
|
CONSOLIDATED BALANCE SHEETS |
||||||
|
|
|
|
|
|
|
|
|
June 30 |
|
December 31 |
|
|
(In millions, except per share data) |
|
2023 |
|
2022 |
|
% Change |
ASSETS |
|
|
|
|
|
|
Investments: |
|
|
|
|
|
|
Fixed maturities, at fair value (amortized cost of $8,375.5 and $8,294.5) |
$ |
7,598.0 |
$ |
7,481.8 |
|
1.6 |
Equity securities, at fair value |
|
232.7 |
|
241.9 |
|
(3.8) |
Other investments |
|
809.7 |
|
786.1 |
|
3.0 |
Total investments |
|
8,640.4 |
|
8,509.8 |
|
1.5 |
Cash and cash equivalents |
|
167.6 |
|
305.0 |
|
(45.0) |
Accrued investment income |
|
55.5 |
|
54.5 |
|
1.8 |
Premiums and accounts receivable, net |
|
1,673.8 |
|
1,601.4 |
|
4.5 |
Reinsurance recoverable on paid and unpaid losses and unearned premiums |
|
1,997.3 |
|
1,964.5 |
|
1.7 |
Deferred acquisition costs |
|
606.4 |
|
604.8 |
|
0.3 |
Deferred income tax asset |
|
203.7 |
|
199.2 |
|
2.3 |
Goodwill |
|
178.8 |
|
178.8 |
|
- |
Other assets |
|
577.4 |
|
493.0 |
|
17.1 |
Assets of discontinued businesses |
|
85.8 |
|
84.1 |
|
2.0 |
Total assets |
$ |
14,186.7 |
$ |
13,995.1 |
|
1.4 |
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
Loss and loss adjustment expense reserves |
$ |
7,313.3 |
$ |
7,012.6 |
|
4.3 |
Unearned premiums |
|
3,020.8 |
|
2,954.2 |
|
2.3 |
Expenses and taxes payable |
|
651.7 |
|
731.7 |
|
(10.9) |
Reinsurance premiums payable |
|
69.5 |
|
70.3 |
|
(1.1) |
Debt |
|
782.8 |
|
782.4 |
|
0.1 |
Liabilities of discontinued businesses |
|
110.7 |
|
110.2 |
|
0.5 |
Total liabilities |
|
11,948.8 |
|
11,661.4 |
|
2.5 |
|
|
|
|
|
|
|
SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
Preferred stock, par value $0.01 per share; |
|
|
|
|
|
|
20.0 million shares authorized; none issued |
|
- |
|
- |
|
- |
Common stock, par value $0.01 per share; 300.0 million shares |
|
|
|
|
|
|
authorized; 60.5 million shares issued |
|
0.6 |
|
0.6 |
|
- |
Additional paid-in capital |
|
1,923.0 |
|
1,913.1 |
|
0.5 |
Accumulated other comprehensive loss |
|
(670.9) |
|
(701.5) |
|
4.4 |
Retained earnings |
|
2,853.0 |
|
2,992.9 |
|
(4.7) |
Treasury stock at cost (24.7 million and 24.9 million shares) |
|
(1,867.8) |
|
(1,871.4) |
|
(0.2) |
Total shareholders' equity |
|
2,237.9 |
|
2,333.7 |
|
(4.1) |
Total liabilities and shareholders' equity |
$ |
14,186.7 |
$ |
13,995.1 |
|
1.4 |
4
THE HANOVER INSURANCE GROUP |
||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP UNDERWRITING AND OPERATING INCOME INFORMATION AND RATIOS |
||||||||||||||||||||||||||||||
CONSOLIDATED |
||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months ended June 30 |
||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
|
2022 |
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core |
|
|
|
|
|
Personal |
|
|
|
|
|
|
|
|
Core |
|
|
|
|
|
Personal |
|
|
|
|
|
|
(In millions, except percentage data) |
|
|
Commercial |
|
|
Specialty |
|
|
Lines |
|
|
Other |
|
|
Total |
|
|
Commercial |
|
|
Specialty |
|
|
Lines |
|
|
Other |
|
|
Total |
Gross premiums written |
|
$ |
553.8 |
|
$ |
381.5 |
|
$ |
654.6 |
|
$ |
- |
|
$ |
1,589.9 |
|
$ |
525.6 |
|
$ |
354.6 |
|
$ |
593.7 |
|
$ |
- |
|
$ |
1,473.9 |
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
Net premiums written |
|
$ |
486.8 |
|
$ |
325.4 |
|
$ |
634.6 |
|
$ |
- |
|
$ |
1,446.8 |
|
$ |
454.2 |
|
$ |
302.3 |
|
$ |
576.3 |
|
$ |
- |
|
$ |
1,332.8 |
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
Net premiums earned |
|
$ |
515.6 |
|
$ |
319.8 |
|
$ |
576.3 |
|
$ |
- |
|
$ |
1,411.7 |
|
$ |
480.1 |
|
$ |
293.5 |
|
$ |
520.2 |
|
$ |
- |
|
$ |
1,293.8 |
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
Losses and LAE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
Current year, excluding catastrophe losses |
|
|
289.9 |
|
|
172.5 |
|
|
417.6 |
|
|
- |
|
|
880.0 |
|
|
273.6 |
|
|
153.5 |
|
|
350.2 |
|
|
- |
|
|
777.3 |
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
Prior year unfavorable (favorable) development, excluding catastrophe losses |
|
|
0.7 |
|
|
(11.7) |
|
|
9.3 |
|
|
- |
|
|
(1.7) |
|
|
(2.8) |
|
|
(1.2) |
|
|
(5.2) |
|
|
- |
|
|
(9.2) |
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
Current year catastrophe losses |
|
|
38.3 |
|
|
13.1 |
|
|
210.2 |
|
|
- |
|
|
261.6 |
|
|
28.7 |
|
|
9.7 |
|
|
51.0 |
|
|
- |
|
|
89.4 |
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
Prior year unfavorable (favorable) catastrophe development |
|
|
(5.0) |
|
|
(4.0) |
|
|
9.0 |
|
|
- |
|
|
- |
|
|
(10.9) |
|
|
(3.1) |
|
|
2.0 |
|
|
- |
|
|
(12.0) |
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
Total losses and LAE |
|
|
323.9 |
|
|
169.9 |
|
|
646.1 |
|
|
- |
|
|
1,139.9 |
|
|
288.6 |
|
|
158.9 |
|
|
398.0 |
|
|
- |
|
|
845.5 |
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
Amortization of deferred acquisition costs and other underwriting expenses |
|
|
171.2 |
|
|
113.8 |
|
|
153.1 |
|
|
- |
|
|
438.1 |
|
|
157.2 |
|
|
104.3 |
|
|
142.1 |
|
|
- |
|
|
403.6 |
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
GAAP underwriting profit (loss) |
|
|
20.5 |
|
|
36.1 |
|
|
(222.9) |
|
|
- |
|
|
(166.3) |
|
|
34.3 |
|
|
30.3 |
|
|
(19.9) |
|
|
- |
|
|
44.7 |
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
Net investment income |
|
|
39.7 |
|
|
18.6 |
|
|
26.4 |
|
|
2.9 |
|
|
87.6 |
|
|
32.6 |
|
|
14.8 |
|
|
20.6 |
|
|
2.5 |
|
|
70.5 |
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
Other income |
|
|
1.1 |
|
|
1.8 |
|
|
4.1 |
|
|
0.8 |
|
|
7.8 |
|
|
0.9 |
|
|
1.5 |
|
|
3.4 |
|
|
0.7 |
|
|
6.5 |
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
Other operating expenses |
|
|
(1.2) |
|
|
(2.1) |
|
|
(1.7) |
|
|
(3.5) |
|
|
(8.5) |
|
|
(0.9) |
|
|
(1.4) |
|
|
(1.3) |
|
|
(3.1) |
|
|
(6.7) |
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
Operating income (loss) before income taxes |
|
$ |
60.1 |
|
$ |
54.4 |
|
$ |
(194.1) |
|
$ |
0.2 |
|
$ |
(79.4) |
|
$ |
66.9 |
|
$ |
45.2 |
|
$ |
2.8 |
|
$ |
0.1 |
|
$ |
115.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss and LAE ratio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current year, excluding catastrophe losses |
|
|
56.2 % |
|
|
54.0 % |
|
|
72.5 % |
|
|
N/M |
|
|
62.3 % |
|
|
57.0 % |
|
|
52.3 % |
|
|
67.3 % |
|
|
N/M |
|
|
60.1 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior year unfavorable (favorable) development, excluding catastrophe losses |
|
|
0.1 % |
|
|
(3.7)% |
|
|
1.6 % |
|
|
N/M |
|
|
(0.1)% |
|
|
(0.6)% |
|
|
(0.4)% |
|
|
(1.0)% |
|
|
N/M |
|
|
(0.7)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current year catastrophe losses |
|
|
7.5 % |
|
|
4.1 % |
|
|
36.4 % |
|
|
N/M |
|
|
18.5 % |
|
|
6.0 % |
|
|
3.3 % |
|
|
9.8 % |
|
|
N/M |
|
|
6.9 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior year unfavorable (favorable) catastrophe development |
|
|
(1.0)% |
|
|
(1.3)% |
|
|
1.6 % |
|
|
N/M |
|
|
- |
|
|
(2.3)% |
|
|
(1.1)% |
|
|
0.4 % |
|
|
N/M |
|
|
(0.9)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loss and LAE ratio |
|
|
62.8 % |
|
|
53.1 % |
|
|
112.1 % |
|
|
N/M |
|
|
80.7 % |
|
|
60.1 % |
|
|
54.1 % |
|
|
76.5 % |
|
|
N/M |
|
|
65.4 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expense ratio |
|
|
33.0 % |
|
|
35.3 % |
|
|
25.9 % |
|
|
N/M |
|
|
30.6 % |
|
|
32.5 % |
|
|
35.3 % |
|
|
26.7 % |
|
|
N/M |
|
|
30.8 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined ratio |
|
|
95.8 % |
|
|
88.4 % |
|
|
138.0 % |
|
|
N/M |
|
|
111.3 % |
|
|
92.6 % |
|
|
89.4 % |
|
|
103.2 % |
|
|
N/M |
|
|
96.2 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5
THE HANOVER INSURANCE GROUP |
||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP UNDERWRITING AND OPERATING INCOME INFORMATION AND RATIOS |
||||||||||||||||||||||||||||||
CONSOLIDATED |
||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months ended June 30 |
||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
|
2022 |
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core |
|
|
|
|
|
Personal |
|
|
|
|
|
|
|
|
Core |
|
|
|
|
|
Personal |
|
|
|
|
|
|
(In millions, except percentage data) |
|
|
Commercial |
|
|
Specialty |
|
|
Lines |
|
|
Other |
|
|
Total |
|
|
Commercial |
|
|
Specialty |
|
|
Lines |
|
|
Other |
|
|
Total |
Gross premiums written |
|
$ |
1,187.9 |
|
$ |
774.0 |
|
$ |
1,205.3 |
|
$ |
- |
|
$ |
3,167.2 |
|
$ |
1,117.5 |
|
$ |
733.7 |
|
$ |
1,092.8 |
|
$ |
- |
|
$ |
2,944.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums written |
|
$ |
1,052.1 |
|
$ |
649.7 |
|
$ |
1,166.5 |
|
$ |
- |
|
$ |
2,868.3 |
|
$ |
980.8 |
|
$ |
605.1 |
|
$ |
1,059.2 |
|
$ |
- |
|
$ |
2,645.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums earned |
|
$ |
1,023.0 |
|
$ |
631.5 |
|
$ |
1,137.2 |
|
$ |
- |
|
$ |
2,791.7 |
|
$ |
954.8 |
|
$ |
577.3 |
|
$ |
1,025.5 |
|
$ |
- |
|
$ |
2,557.6 |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
Losses and LAE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current year, excluding catastrophe losses |
|
|
586.8 |
|
|
339.3 |
|
|
799.3 |
|
|
- |
|
|
1,725.4 |
|
|
546.2 |
|
|
307.5 |
|
|
671.6 |
|
|
- |
|
|
1,525.3 |
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
Prior year unfavorable (favorable) development, excluding catastrophe losses |
|
|
4.2 |
|
|
(29.8) |
|
|
20.9 |
|
|
- |
|
|
(4.7) |
|
|
(9.2) |
|
|
(14.4) |
|
|
8.4 |
|
|
- |
|
|
(15.2) |
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
Current accident year catastrophe losses |
|
|
102.9 |
|
|
38.9 |
|
|
294.8 |
|
|
- |
|
|
436.6 |
|
|
48.4 |
|
|
17.3 |
|
|
69.2 |
|
|
- |
|
|
134.9 |
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
Prior year unfavorable (favorable) catastrophe development |
|
|
(5.7) |
|
|
(8.3) |
|
|
14.0 |
|
|
- |
|
|
- |
|
|
(10.9) |
|
|
(3.1) |
|
|
2.0 |
|
|
- |
|
|
(12.0) |
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
Total losses and LAE |
|
|
688.2 |
|
|
340.1 |
|
|
1,129.0 |
|
|
- |
|
|
2,157.3 |
|
|
574.5 |
|
|
307.3 |
|
|
751.2 |
|
|
- |
|
|
1,633.0 |
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
Amortization of deferred acquisition costs and other underwriting expenses |
|
|
339.1 |
|
|
224.6 |
|
|
303.3 |
|
|
- |
|
|
867.0 |
|
|
313.8 |
|
|
205.8 |
|
|
281.9 |
|
|
- |
|
|
801.5 |
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
GAAP underwriting profit (loss) |
|
|
(4.3) |
|
|
66.8 |
|
|
(295.1) |
|
|
- |
|
|
(232.6) |
|
|
66.5 |
|
|
64.2 |
|
|
(7.6) |
|
|
- |
|
|
123.1 |
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
Net investment income |
|
|
75.8 |
|
|
35.6 |
|
|
49.0 |
|
|
5.9 |
|
|
166.3 |
|
|
68.0 |
|
|
31.0 |
|
|
43.2 |
|
|
5.2 |
|
|
147.4 |
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
Other income |
|
|
2.3 |
|
|
3.6 |
|
|
8.4 |
|
|
1.5 |
|
|
15.8 |
|
|
1.9 |
|
|
2.8 |
|
|
6.2 |
|
|
1.5 |
|
|
12.4 |
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
Other operating expenses |
|
|
(2.5) |
|
|
(3.3) |
|
|
(3.0) |
|
|
(6.9) |
|
|
(15.7) |
|
|
(2.0) |
|
|
(2.8) |
|
|
(2.7) |
|
|
(6.0) |
|
|
(13.5) |
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
Operating income (loss) before income taxes |
|
$ |
71.3 |
|
$ |
102.7 |
|
$ |
(240.7) |
|
$ |
0.5 |
|
$ |
(66.2) |
|
$ |
134.4 |
|
$ |
95.2 |
|
$ |
39.1 |
|
$ |
0.7 |
|
$ |
269.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss and LAE ratio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current year, excluding catastrophe losses |
|
|
57.4% |
|
|
53.8 % |
|
|
70.3 % |
|
|
N/M |
|
|
61.9 % |
|
|
57.3 % |
|
|
53.2 % |
|
|
65.6 % |
|
|
N/M |
|
|
59.6 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior year unfavorable (favorable) development, excluding catastrophe losses |
|
|
0.4% |
|
|
(4.7)% |
|
|
1.8 % |
|
|
N/M |
|
|
(0.2)% |
|
|
(1.0)% |
|
|
(2.5)% |
|
|
0.8 % |
|
|
N/M |
|
|
(0.6)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current year catastrophe losses |
|
|
10.1% |
|
|
6.1 % |
|
|
26.0 % |
|
|
N/M |
|
|
15.6 % |
|
|
5.0 % |
|
|
3.0 % |
|
|
6.7 % |
|
|
N/M |
|
|
5.3 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior year unfavorable (favorable) catastrophe development |
|
|
(0.6)% |
|
|
(1.3)% |
|
|
1.2 % |
|
|
N/M |
|
|
- |
|
|
(1.1)% |
|
|
(0.5)% |
|
|
0.2 % |
|
|
N/M |
|
|
(0.5)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loss and LAE ratio |
|
|
67.3% |
|
|
53.9 % |
|
|
99.3 % |
|
|
N/M |
|
|
77.3 % |
|
|
60.2 % |
|
|
53.2 % |
|
|
73.3 % |
|
|
N/M |
|
|
63.8 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expense ratio |
|
|
32.9% |
|
|
35.3 % |
|
|
26.0 % |
|
|
N/M |
|
|
30.6 % |
|
|
32.7 % |
|
|
35.4 % |
|
|
26.9 % |
|
|
N/M |
|
|
31.0 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined ratio |
|
|
100.2% |
|
|
89.2 % |
|
|
125.3 % |
|
|
N/M |
|
|
107.9 % |
|
|
92.9 % |
|
|
88.6 % |
|
|
100.2 % |
|
|
N/M |
|
|
94.8 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6
THE HANOVER INSURANCE GROUP |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP UNDERWRITING INFORMATION AND RELATED RATIOS |
||||||||||||||||
CONSOLIDATED |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
Q1 |
|
Q2 |
|
Jun-YTD |
|
Jun-YTD |
(In millions, except percentage data) |
|
2022 |
|
2022 |
|
2022 |
|
2022 |
|
2023 |
|
2023 |
|
2022 |
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross premiums written |
$ |
1,470.1 |
$ |
1,473.9 |
$ |
1,660.3 |
$ |
1,476.5 |
$ |
1,577.3 |
$ |
1,589.9 |
$ |
2,944.0 |
$ |
3,167.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Net premiums written |
$ |
1,312.3 |
$ |
1,332.8 |
$ |
1,505.4 |
$ |
1,326.0 |
$ |
1,421.5 |
$ |
1,446.8 |
$ |
2,645.1 |
$ |
2,868.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Net premiums earned |
$ |
1,263.8 |
$ |
1,293.8 |
$ |
1,331.2 |
$ |
1,363.5 |
$ |
1,380.0 |
$ |
1,411.7 |
$ |
2,557.6 |
$ |
2,791.7 |
|
|
. |
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Losses and LAE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
Current year, excluding catastrophe losses |
|
748.0 |
|
777.3 |
|
853.5 |
|
862.6 |
|
845.4 |
|
880.0 |
|
1,525.3 |
|
1,725.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
Prior year favorable development, excluding catastrophe losses |
|
(6.0) |
|
(9.2) |
|
(4.0) |
|
(1.4) |
|
(3.0) |
|
(1.7) |
|
(15.2) |
|
(4.7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
Current year catastrophe losses |
|
45.5 |
|
89.4 |
|
90.1 |
|
189.6 |
|
175.0 |
|
261.6 |
|
134.9 |
|
436.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
Prior year favorable catastrophe development |
|
- |
|
(12.0) |
|
- |
|
- |
|
- |
|
- |
|
(12.0) |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
Total losses and LAE |
|
787.5 |
|
845.5 |
|
939.6 |
|
1,050.8 |
|
1,017.4 |
|
1,139.9 |
|
1,633.0 |
|
2,157.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
Amortization of deferred acquisition costs and other underwriting expenses |
|
397.9 |
|
403.6 |
|
410.0 |
|
426.8 |
|
428.9 |
|
438.1 |
|
801.5 |
|
867.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
GAAP underwriting profit (loss) |
|
78.4 |
|
44.7 |
|
(18.4) |
|
(114.1) |
|
(66.3) |
|
(166.3) |
|
123.1 |
|
(232.6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income |
|
76.9 |
|
70.5 |
|
73.0 |
|
75.9 |
|
78.7 |
|
87.6 |
|
147.4 |
|
166.3 |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
Other income |
|
5.9 |
|
6.5 |
|
7.0 |
|
7.1 |
|
8.0 |
|
7.8 |
|
12.4 |
|
15.8 |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
Other operating expenses |
|
(6.8) |
|
(6.7) |
|
(7.7) |
|
(7.1) |
|
(7.2) |
|
(8.5) |
|
(13.5) |
|
(15.7) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) before income taxes |
$ |
154.4 |
$ |
115.0 |
$ |
53.9 |
$ |
(38.2) |
$ |
13.2 |
$ |
(79.4) |
$ |
269.4 |
$ |
(66.2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss and LAE ratio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Current year, excluding catastrophe losses |
|
59.2 % |
|
60.1 % |
|
64.1 % |
|
63.3 % |
|
61.2 % |
|
62.3 % |
|
59.6 % |
|
61.9 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Prior year favorable development, excluding catastrophe losses |
|
(0.5)% |
|
(0.7)% |
|
(0.3)% |
|
(0.1)% |
|
(0.2)% |
|
(0.1)% |
|
(0.6)% |
|
(0.2)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Current year catastrophe losses |
|
3.6 % |
|
6.9 % |
|
6.8 % |
|
13.9 % |
|
12.7 % |
|
18.5 % |
|
5.3 % |
|
15.6 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
Prior year favorable catastrophe development |
|
- |
|
(0.9)% |
|
- |
|
- |
|
- |
|
- |
|
(0.5)% |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
Total loss and LAE ratio |
|
62.3 % |
|
65.4 % |
|
70.6 % |
|
77.1 % |
|
73.7 % |
|
80.7 % |
|
63.8 % |
|
77.3 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
Expense ratio |
|
31.1 % |
|
30.8 % |
|
30.4 % |
|
30.9 % |
|
30.7 % |
|
30.6 % |
|
31.0 % |
|
30.6 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
Combined ratio |
|
93.4 % |
|
96.2 % |
|
101.0 % |
|
108.0 % |
|
104.4 % |
|
111.3 % |
|
94.8 % |
|
107.9 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
Combined ratio, excluding catastrophe losses |
|
89.8 % |
|
90.2 % |
|
94.2 % |
|
94.1 % |
|
91.7 % |
|
92.8 % |
|
90.0 % |
|
92.3 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year combined ratio, excluding catastrophe losses |
|
90.3 % |
|
90.9 % |
|
94.5 % |
|
94.2 % |
|
91.9 % |
|
92.9 % |
|
90.6 % |
|
92.5 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7
THE HANOVER INSURANCE GROUP |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP UNDERWRITING AND OPERATING INCOME INFORMATION AND RATIOS |
||||||||||||||||
CORE COMMERCIAL |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
Q1 |
|
Q2 |
|
Jun-YTD |
|
Jun-YTD |
(In millions, except percentage data) |
|
2022 |
|
2022 |
|
2022 |
|
2022 |
|
2023 |
|
2023 |
|
2022 |
|
2023 |
Gross premiums written |
$ |
591.9 |
$ |
525.6 |
$ |
638.7 |
$ |
520.1 |
$ |
634.1 |
$ |
553.8 |
$ |
1,117.5 |
$ |
1,187.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
Net premiums written |
$ |
526.6 |
$ |
454.2 |
$ |
565.9 |
$ |
453.2 |
$ |
565.3 |
$ |
486.8 |
$ |
980.8 |
$ |
1,052.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
Net premiums earned |
$ |
474.7 |
$ |
480.1 |
$ |
492.7 |
$ |
503.0 |
$ |
507.4 |
$ |
515.6 |
$ |
954.8 |
$ |
1,023.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Losses and LAE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current year, excluding catastrophe losses |
|
272.6 |
|
273.6 |
|
304.2 |
|
302.7 |
|
296.9 |
|
289.9 |
|
546.2 |
|
586.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior year unfavorable (favorable) development, excluding catastrophe losses |
|
(6.4) |
|
(2.8) |
|
1.3 |
|
(2.4) |
|
3.5 |
|
0.7 |
|
(9.2) |
|
4.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current year catastrophe losses |
|
19.7 |
|
28.7 |
|
34.1 |
|
128.5 |
|
64.6 |
|
38.3 |
|
48.4 |
|
102.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior year favorable catastrophe development |
|
- |
|
(10.9) |
|
(1.4) |
|
(5.0) |
|
(0.7) |
|
(5.0) |
|
(10.9) |
|
(5.7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total losses and LAE |
|
285.9 |
|
288.6 |
|
338.2 |
|
423.8 |
|
364.3 |
|
323.9 |
|
574.5 |
|
688.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of deferred acquisition costs and other underwriting expenses |
|
156.6 |
|
157.2 |
|
162.2 |
|
166.7 |
|
167.9 |
|
171.2 |
|
313.8 |
|
339.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP underwriting profit (loss) |
|
32.2 |
|
34.3 |
|
(7.7) |
|
(87.5) |
|
(24.8) |
|
20.5 |
|
66.5 |
|
(4.3) |
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment income |
|
35.4 |
|
32.6 |
|
33.4 |
|
34.8 |
|
36.1 |
|
39.7 |
|
68.0 |
|
75.8 |
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
Other income |
|
1.0 |
|
0.9 |
|
1.0 |
|
1.1 |
|
1.2 |
|
1.1 |
|
1.9 |
|
2.3 |
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
Other operating expenses |
|
(1.1) |
|
(0.9) |
|
(1.5) |
|
(1.1) |
|
(1.3) |
|
(1.2) |
|
(2.0) |
|
(2.5) |
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) before income taxes |
$ |
67.5 |
$ |
66.9 |
$ |
25.2 |
$ |
(52.7) |
$ |
11.2 |
$ |
60.1 |
$ |
134.4 |
$ |
71.3 |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss and LAE ratio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
Current year, excluding catastrophe losses |
|
57.4 % |
|
57.0 % |
|
61.7 % |
|
60.2 % |
|
58.5 % |
|
56.2 % |
|
57.3 % |
|
57.4 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior year unfavorable (favorable) development, excluding catastrophe losses |
|
(1.3)% |
|
(0.6)% |
|
0.3 % |
|
(0.5)% |
|
0.7 % |
|
0.1 % |
|
(1.0)% |
|
0.4 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current year catastrophe losses |
|
4.1 % |
|
6.0 % |
|
6.9 % |
|
25.6 % |
|
12.7 % |
|
7.5 % |
|
5.0 % |
|
10.1 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior year favorable catastrophe development |
|
- |
|
(2.3)% |
|
(0.3)% |
|
(1.0)% |
|
(0.1)% |
|
(1.0)% |
|
(1.1)% |
|
(0.6)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loss and LAE ratio |
|
60.2 % |
|
60.1 % |
|
68.6 % |
|
84.3 % |
|
71.8 % |
|
62.8 % |
|
60.2 % |
|
67.3 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expense ratio |
|
32.8 % |
|
32.5 % |
|
32.7 % |
|
32.9 % |
|
32.9 % |
|
33.0 % |
|
32.7 % |
|
32.9 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined ratio |
|
93.0 % |
|
92.6 % |
|
101.3 % |
|
117.2 % |
|
104.7 % |
|
95.8 % |
|
92.9 % |
|
100.2 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined ratio, excluding catastrophe losses |
|
88.9 % |
|
88.9 % |
|
94.7 % |
|
92.6 % |
|
92.1 % |
|
89.3 % |
|
89.0 % |
|
90.7 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year combined ratio, excluding catastrophe losses |
|
90.2 % |
|
89.5 % |
|
94.4 % |
|
93.1 % |
|
91.4 % |
|
89.2 % |
|
90.0 % |
|
90.3 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8
THE HANOVER INSURANCE GROUP |
||||||||||||||||
PREMIUMS WRITTEN AND RELATED METRICS |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CORE COMMERCIAL |
||||||||||||||||
|
||||||||||||||||
|
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
Q1 |
|
Q2 |
|
Jun-YTD |
|
Jun-YTD |
(In millions, except percentage data) |
|
2022 |
|
2022 |
|
2022 |
|
2022 |
|
2023 |
|
2023 |
|
2022 |
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Written Premium |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross |
$ |
591.9 |
$ |
525.6 |
$ |
638.7 |
$ |
520.1 |
$ |
634.1 |
$ |
553.8 |
$ |
1,117.5 |
$ |
1,187.9 |
Ceded |
|
(65.3) |
|
(71.4) |
|
(72.8) |
|
(66.9) |
|
(68.8) |
|
(67.0) |
|
(136.7) |
|
(135.8) |
Net |
$ |
526.6 |
$ |
454.2 |
$ |
565.9 |
$ |
453.2 |
$ |
565.3 |
$ |
486.8 |
$ |
980.8 |
$ |
1,052.1 |
Growth |
|
9.6% |
|
7.7% |
|
5.9% |
|
5.9% |
|
7.3% |
|
7.2% |
|
8.7% |
|
7.3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums written by segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Small Commercial |
$ |
283.7 |
$ |
272.8 |
$ |
273.4 |
$ |
260.1 |
$ |
311.9 |
$ |
291.8 |
$ |
556.5 |
$ |
603.6 |
Middle Market |
|
242.9 |
|
181.4 |
|
292.5 |
|
193.1 |
|
253.4 |
|
195.0 |
|
424.3 |
|
448.5 |
Total |
$ |
526.6 |
$ |
454.2 |
$ |
565.9 |
$ |
453.2 |
$ |
565.3 |
$ |
486.8 |
$ |
980.8 |
$ |
1,052.1 |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums written by line of business |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Multiple Peril |
$ |
256.0 |
$ |
224.0 |
$ |
300.2 |
$ |
231.3 |
$ |
277.8 |
$ |
241.5 |
$ |
480.0 |
$ |
519.3 |
Commercial Automobile |
|
96.1 |
|
82.5 |
|
95.7 |
|
78.8 |
|
100.3 |
|
90.4 |
|
178.6 |
|
190.7 |
Workers' Compensation |
|
113.0 |
|
92.6 |
|
98.2 |
|
91.0 |
|
123.2 |
|
96.3 |
|
205.6 |
|
219.5 |
Other Core Commercial |
|
61.5 |
|
55.1 |
|
71.8 |
|
52.1 |
|
64.0 |
|
58.6 |
|
116.6 |
|
122.6 |
Total |
$ |
526.6 |
$ |
454.2 |
$ |
565.9 |
$ |
453.2 |
$ |
565.3 |
$ |
486.8 |
$ |
980.8 |
$ |
1,052.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Related Metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premium Retention |
|
86.2% |
|
84.2% |
|
85.6% |
|
85.0% |
|
84.0% |
|
83.5% |
|
85.3% |
|
83.8% |
Renewal Price Change |
|
9.7% |
|
11.0% |
|
11.2% |
|
10.2% |
|
11.5% |
|
11.3% |
|
10.3% |
|
11.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9
THE HANOVER INSURANCE GROUP |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP UNDERWRITING AND OPERATING INCOME INFORMATION AND RATIOS |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SPECIALTY |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
Q1 |
|
Q2 |
|
Jun-YTD |
|
Jun-YTD |
(In millions, except percentage data) |
|
2022 |
|
2022 |
|
2022 |
|
2022 |
|
2023 |
|
2023 |
|
2022 |
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross premiums written |
$ |
379.1 |
$ |
354.6 |
$ |
392.3 |
$ |
374.1 |
$ |
392.5 |
$ |
381.5 |
$ |
733.7 |
$ |
774.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Net premiums written |
$ |
302.8 |
$ |
302.3 |
$ |
329.1 |
$ |
309.5 |
$ |
324.3 |
$ |
325.4 |
$ |
605.1 |
$ |
649.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Net premiums earned |
$ |
283.8 |
$ |
293.5 |
$ |
303.3 |
$ |
308.4 |
$ |
311.7 |
$ |
319.8 |
$ |
577.3 |
$ |
631.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Losses and LAE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Current year, excluding catastrophe losses |
|
154.0 |
|
153.5 |
|
162.3 |
|
158.8 |
|
166.8 |
|
172.5 |
|
307.5 |
|
339.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Prior year favorable development, excluding catastrophe losses |
|
(13.2) |
|
(1.2) |
|
(5.1) |
|
- |
|
(18.1) |
|
(11.7) |
|
(14.4) |
|
(29.8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Current year catastrophe losses |
|
7.6 |
|
9.7 |
|
10.2 |
|
13.9 |
|
25.8 |
|
13.1 |
|
17.3 |
|
38.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Prior year favorable catastrophe development |
|
- |
|
(3.1) |
|
(1.6) |
|
(4.0) |
|
(4.3) |
|
(4.0) |
|
(3.1) |
|
(8.3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Total losses and LAE |
|
148.4 |
|
158.9 |
|
165.8 |
|
168.7 |
|
170.2 |
|
169.9 |
|
307.3 |
|
340.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Amortization of deferred acquisition costs and other underwriting expenses |
|
101.5 |
|
104.3 |
|
105.5 |
|
111.2 |
|
110.8 |
|
113.8 |
|
205.8 |
|
224.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
GAAP underwriting profit |
|
33.9 |
|
30.3 |
|
32.0 |
|
28.5 |
|
30.7 |
|
36.1 |
|
64.2 |
|
66.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Net investment income |
|
16.2 |
|
14.8 |
|
15.2 |
|
15.9 |
|
17.0 |
|
18.6 |
|
31.0 |
|
35.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Other income |
|
1.3 |
|
1.5 |
|
1.4 |
|
1.2 |
|
1.8 |
|
1.8 |
|
2.8 |
|
3.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Other operating expenses |
|
(1.4) |
|
(1.4) |
|
(1.7) |
|
(1.7) |
|
(1.2) |
|
(2.1) |
|
(2.8) |
|
(3.3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Operating income before income taxes |
$ |
50.0 |
$ |
45.2 |
$ |
46.9 |
$ |
43.9 |
$ |
48.3 |
$ |
54.4 |
$ |
95.2 |
$ |
102.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
Loss and LAE ratio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Current year, excluding catastrophe losses |
|
54.3 % |
|
52.3% |
|
53.6 % |
|
51.5 % |
|
53.5 % |
|
54.0 % |
|
53.2% |
|
53.8 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Prior year favorable development, excluding catastrophe losses |
|
(4.7)% |
|
(0.4)% |
|
(1.7)% |
|
- |
|
(5.8)% |
|
(3.7)% |
|
(2.5)% |
|
(4.7)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Current year catastrophe losses |
|
2.7 % |
|
3.3% |
|
3.3 % |
|
4.5 % |
|
8.3 % |
|
4.1 % |
|
3.0% |
|
6.1 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Prior year favorable catastrophe development |
|
- |
|
(1.1)% |
|
(0.5)% |
|
(1.3)% |
|
(1.4)% |
|
(1.3)% |
|
(0.5)% |
|
(1.3)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Total loss and LAE ratio |
|
52.3 % |
|
54.1 % |
|
54.7 % |
|
54.7 % |
|
54.6 % |
|
53.1 % |
|
53.2 % |
|
53.9 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expense ratio |
|
35.4 % |
|
35.3 % |
|
34.5 % |
|
35.8 % |
|
35.3 % |
|
35.3 % |
|
35.4 % |
|
35.3 % |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined ratio |
|
87.7 % |
|
89.4 % |
|
89.2 % |
|
90.5 % |
|
89.9 % |
|
88.4 % |
|
88.6 % |
|
89.2 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
Combined ratio, excluding catastrophe losses |
|
85.0 % |
|
87.2 % |
|
86.4 % |
|
87.3 % |
|
83.0 % |
|
85.6% |
|
86.1 % |
|
84.4 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year combined ratio, excluding catastrophe losses |
|
89.7 % |
|
87.6 % |
|
88.1 % |
|
87.3 % |
|
88.8 % |
|
89.3% |
|
88.6 % |
|
89.1 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10
THE HANOVER INSURANCE GROUP |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PREMIUMS WRITTEN AND RELATED METRICS |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SPECIALTY |
||||||||||||||||
|
|
|
||||||||||||||
|
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
Q1 |
|
Q2 |
|
Jun-YTD |
|
Jun-YTD |
(In millions, except percentage data) |
|
2022 |
|
2022 |
|
2022 |
|
2022 |
|
2023 |
|
2023 |
|
2022 |
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Written Premiums |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross |
$ |
379.1 |
$ |
354.6 |
$ |
392.3 |
$ |
374.1 |
$ |
392.5 |
$ |
381.5 |
$ |
733.7 |
$ |
774.0 |
Ceded |
|
(76.3) |
|
(52.3) |
|
(63.2) |
|
(64.6) |
|
(68.2) |
|
(56.1) |
|
(128.6) |
|
(124.3) |
Net |
$ |
302.8 |
$ |
302.3 |
$ |
329.1 |
$ |
309.5 |
$ |
324.3 |
$ |
325.4 |
$ |
605.1 |
$ |
649.7 |
Growth |
|
9.4% |
|
14.0% |
|
12.6% |
|
8.7% |
|
7.1% |
|
7.6% |
|
11.7% |
|
7.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Net premiums written by segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Professional and Executive Lines |
$ |
111.0 |
$ |
94.6 |
$ |
105.8 |
$ |
99.1 |
$ |
111.0 |
$ |
99.4 |
$ |
205.6 |
$ |
210.4 |
Specialty Property & Casualty |
|
90.4 |
|
98.5 |
|
102.4 |
|
110.8 |
|
101.7 |
|
103.6 |
|
188.9 |
|
205.3 |
Marine |
|
84.3 |
|
91.2 |
|
100.3 |
|
84.4 |
|
94.1 |
|
104.4 |
|
175.5 |
|
198.5 |
Surety and Other |
|
17.1 |
|
18.0 |
|
20.6 |
|
15.2 |
|
17.5 |
|
18.0 |
|
35.1 |
|
35.5 |
Total |
$ |
302.8 |
$ |
302.3 |
$ |
329.1 |
$ |
309.5 |
$ |
324.3 |
$ |
325.4 |
$ |
605.1 |
$ |
649.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Related Metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premium Retention |
|
84.2% |
|
83.5% |
|
82.6% |
|
83.1% |
|
82.5% |
|
80.5% |
|
83.9% |
|
81.5% |
Renewal Price Change |
|
12.6% |
|
12.0% |
|
12.4% |
|
13.2% |
|
12.6% |
|
11.4% |
|
12.3% |
|
12.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11
THE HANOVER INSURANCE GROUP |
|||||||||||||
GAAP UNDERWRITING AND OPERATING INCOME INFORMATION AND RATIOS |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PERSONAL LINES |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months ended June 30 |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
2022 |
||||||||||
(In millions, except percentage data) |
|
Auto |
|
Home and Other |
|
Total |
|
|
Auto |
|
Home and Other |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums written |
$ |
368.1 |
$ |
266.5 |
$ |
634.6 |
|
$ |
340.2 |
$ |
236.1 |
$ |
576.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums earned |
$ |
338.5 |
$ |
237.8 |
$ |
576.3 |
|
$ |
314.7 |
$ |
205.5 |
$ |
520.2 |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
Losses and LAE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
Current year, excluding catastrophe losses |
|
268.1 |
|
149.5 |
|
417.6 |
|
|
226.5 |
|
123.7 |
|
350.2 |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
Prior year unfavorable (favorable) development, excluding catastrophe losses |
|
5.0 |
|
4.3 |
|
9.3 |
|
|
(2.7) |
|
(2.5) |
|
(5.2) |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
Current year catastrophe losses |
|
12.7 |
|
197.5 |
|
210.2 |
|
|
3.4 |
|
47.6 |
|
51.0 |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
Prior year unfavorable (favorable) catastrophe development |
|
(0.3) |
|
9.3 |
|
9.0 |
|
|
(0.6) |
|
2.6 |
|
2.0 |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
Total losses and LAE |
|
285.5 |
|
360.6 |
|
646.1 |
|
|
226.6 |
|
171.4 |
|
398.0 |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
Amortization of deferred acquisition costs and other underwriting expenses |
|
|
|
|
|
153.1 |
|
|
|
|
|
|
142.1 |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
GAAP underwriting loss |
|
|
|
|
|
(222.9) |
|
|
|
|
|
|
(19.9) |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
Net investment income |
|
|
|
|
|
26.4 |
|
|
|
|
|
|
20.6 |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
Other income |
|
|
|
|
|
4.1 |
|
|
|
|
|
|
3.4 |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
Other operating expenses |
|
|
|
|
|
(1.7) |
|
|
|
|
|
|
(1.3) |
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
Operating income (loss) before income taxes |
|
|
|
|
$ |
(194.1) |
|
|
|
|
|
$ |
2.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss and LAE ratio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current year, excluding catastrophe losses |
|
79.1 % |
|
62.8 % |
|
72.5 % |
|
|
72.0% |
|
60.2 % |
|
67.3 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior year unfavorable (favorable) development, excluding catastrophe losses |
|
1.5 % |
|
1.8 % |
|
1.6 % |
|
|
(0.9)% |
|
(1.2)% |
|
(1.0)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current year catastrophe losses |
|
3.8 % |
|
83.1 % |
|
36.4 % |
|
|
1.1 % |
|
23.1 % |
|
9.8 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior year unfavorable (favorable) catastrophe development |
|
(0.1)% |
|
3.9 % |
|
1.6 % |
|
|
(0.2)% |
|
1.3 % |
|
0.4 % |
Total loss and LAE ratio |
|
84.3 % |
|
151.6 % |
|
112.1 % |
|
|
72.0 % |
|
83.4 % |
|
76.5 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expense ratio |
|
|
|
|
|
25.9 % |
|
|
|
|
|
|
26.7 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined ratio |
|
|
|
|
|
138.0 % |
|
|
|
|
|
|
103.2 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12
THE HANOVER INSURANCE GROUP |
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
GAAP UNDERWRITING AND OPERATING INCOME INFORMATION AND RATIOS |
|
||||||||||||||||||||||||
PERSONAL LINES |
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Six Months ended June 30 |
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
2023 |
|
|
2022 |
|
||||||||||||||||||||
(In millions, except percentage data) |
|
Auto |
|
|
Home & Other |
|
|
Total |
|
|
|
Auto |
|
|
Home & Other |
|
|
Total |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net premiums written |
$ |
|
691.1 |
|
$ |
|
475.4 |
|
$ |
|
1,166.5 |
|
|
$ |
|
638.6 |
|
$ |
|
420.6 |
|
$ |
|
1,059.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net premiums earned |
$ |
|
669.3 |
|
$ |
|
467.9 |
|
$ |
|
1,137.2 |
|
|
$ |
|
622.4 |
|
$ |
|
403.1 |
|
$ |
|
1,025.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Losses and LAE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Current year, excluding catastrophe losses |
|
|
518.9 |
|
|
|
280.4 |
|
|
|
799.3 |
|
|
|
|
443.0 |
|
|
|
228.6 |
|
|
|
671.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Prior year unfavorable (favorable) development, excluding catastrophe losses |
|
|
12.9 |
|
|
|
8.0 |
|
|
|
20.9 |
|
|
|
|
(2.9 |
) |
|
|
11.3 |
|
|
|
8.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Current year catastrophe losses |
|
|
16.6 |
|
|
|
278.2 |
|
|
|
294.8 |
|
|
|
|
3.8 |
|
|
|
65.4 |
|
|
|
69.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Prior year unfavorable (favorable) catastrophe development |
|
|
(0.5 |
) |
|
|
14.5 |
|
|
|
14.0 |
|
|
|
|
(1.0 |
) |
|
|
3.0 |
|
|
|
2.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total losses and LAE |
|
|
547.9 |
|
|
|
581.1 |
|
|
|
1,129.0 |
|
|
|
|
442.9 |
|
|
|
308.3 |
|
|
|
751.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Amortization of deferred acquisition costs and other underwriting expenses |
|
|
|
|
|
|
|
|
303.3 |
|
|
|
|
|
|
|
|
|
|
281.9 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
GAAP underwriting loss |
|
|
|
|
|
|
|
|
(295.1 |
) |
|
|
|
|
|
|
|
|
|
(7.6 |
) |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net investment income |
|
|
|
|
|
|
|
|
49.0 |
|
|
|
|
|
|
|
|
|
|
43.2 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other income |
|
|
|
|
|
|
|
|
8.4 |
|
|
|
|
|
|
|
|
|
|
6.2 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other operating expenses |
|
|
|
|
|
|
|
|
(3.0 |
) |
|
|
|
|
|
|
|
|
|
(2.7 |
) |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating income (loss) before income taxes |
|
|
|
|
|
|
$ |
|
(240.7 |
) |
|
|
|
|
|
|
|
$ |
|
39.1 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Loss and LAE ratio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Current year, excluding catastrophe losses |
|
|
77.6 |
% |
|
|
59.9 |
% |
|
|
70.3 |
% |
|
|
|
71.3 |
% |
|
|
56.7 |
% |
|
|
65.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Prior year unfavorable (favorable) development, excluding catastrophe losses |
|
|
1.9 |
% |
|
|
1.7 |
% |
|
|
1.8 |
% |
|
|
|
(0.5 |
)% |
|
|
2.8 |
% |
|
|
0.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Current year catastrophe losses |
|
|
2.5 |
% |
|
|
59.5 |
% |
|
|
26.0 |
% |
|
|
|
0.6 |
% |
|
|
16.3 |
% |
|
|
6.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Prior year unfavorable (favorable) catastrophe development |
|
|
(0.1 |
)% |
|
|
3.1 |
% |
|
|
1.2 |
% |
|
|
|
(0.2 |
)% |
|
|
0.7 |
% |
|
|
0.2 |
% |
Total loss and LAE ratio |
|
|
81.9 |
% |
|
|
124.2 |
% |
|
|
99.3 |
% |
|
|
|
71.2 |
% |
|
|
76.5 |
% |
|
|
73.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Expense ratio |
|
|
|
|
|
|
|
|
26.0 |
% |
|
|
|
|
|
|
|
|
|
26.9 |
% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Combined ratio |
|
|
|
|
|
|
|
|
125.3 |
% |
|
|
|
|
|
|
|
|
|
100.2 |
% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13
THE HANOVER INSURANCE GROUP |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP UNDERWRITING INFORMATION AND RELATED RATIOS |
||||||||||||||||
PERSONAL LINES |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
Q1 |
|
Q2 |
|
Jun-YTD |
|
Jun-YTD |
(In millions, except percentage data) |
|
2022 |
|
2022 |
|
2022 |
|
2022 |
|
2023 |
|
2023 |
|
2022 |
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross premiums written |
$ |
499.1 |
$ |
593.7 |
$ |
629.3 |
$ |
582.3 |
$ |
550.7 |
$ |
654.6 |
$ |
1,092.8 |
$ |
1,205.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
Net premiums written |
$ |
482.9 |
$ |
576.3 |
$ |
610.4 |
$ |
563.3 |
$ |
531.9 |
$ |
634.6 |
$ |
1,059.2 |
$ |
1,166.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Net premiums earned |
$ |
505.3 |
$ |
520.2 |
$ |
535.2 |
$ |
552.1 |
$ |
560.9 |
$ |
576.3 |
$ |
1,025.5 |
$ |
1,137.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Losses and LAE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Current year, excluding catastrophe losses |
|
321.4 |
|
350.2 |
|
387.0 |
|
401.1 |
|
381.7 |
|
417.6 |
|
671.6 |
|
799.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Prior year unfavorable (favorable) development, excluding catastrophe losses |
|
13.6 |
|
(5.2) |
|
(0.2) |
|
(0.2) |
|
11.6 |
|
9.3 |
|
8.4 |
|
20.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Current year catastrophe losses |
|
18.2 |
|
51.0 |
|
45.8 |
|
47.2 |
|
84.6 |
|
210.2 |
|
69.2 |
|
294.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Prior year unfavorable catastrophe development |
|
- |
|
2.0 |
|
3.0 |
|
9.0 |
|
5.0 |
|
9.0 |
|
2.0 |
|
14.0 |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Total losses and LAE |
|
353.2 |
|
398.0 |
|
435.6 |
|
457.1 |
|
482.9 |
|
646.1 |
|
751.2 |
|
1,129.0 |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Amortization of deferred acquisition costs and other underwriting expenses |
|
139.8 |
|
142.1 |
|
142.3 |
|
148.9 |
|
150.2 |
|
153.1 |
|
281.9 |
|
303.3 |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
GAAP underwriting profit (loss) |
|
12.3 |
|
(19.9) |
|
(42.7) |
|
(53.9) |
|
(72.2) |
|
(222.9) |
|
(7.6) |
|
(295.1) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Net investment income |
|
22.6 |
|
20.6 |
|
21.4 |
|
22.2 |
|
22.6 |
|
26.4 |
|
43.2 |
|
49.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income |
|
2.8 |
|
3.4 |
|
3.9 |
|
4.0 |
|
4.3 |
|
4.1 |
|
6.2 |
|
8.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other operating expenses |
|
(1.4) |
|
(1.3) |
|
(1.4) |
|
(1.4) |
|
(1.3) |
|
(1.7) |
|
(2.7) |
|
(3.0) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) before income taxes |
$ |
36.3 |
$ |
2.8 |
$ |
(18.8) |
$ |
(29.1) |
$ |
(46.6) |
$ |
(194.1) |
$ |
39.1 |
$ |
(240.7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss and LAE ratio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Current year, excluding catastrophe losses |
|
63.6 % |
|
67.3 % |
|
72.3 % |
|
72.6 % |
|
68.0 % |
|
72.5 % |
|
65.6 % |
|
70.3 % |
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Prior year unfavorable (favorable) development, excluding catastrophe losses |
|
2.7 % |
|
(1.0)% |
|
- |
|
- |
|
2.1 % |
|
1.6 % |
|
0.8 % |
|
1.8 % |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Current year catastrophe losses |
|
3.6 % |
|
9.8 % |
|
8.5 % |
|
8.6 % |
|
15.1 % |
|
36.4 % |
|
6.7 % |
|
26.0 % |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Prior year unfavorable catastrophe development |
|
- |
|
0.4 % |
|
0.6 % |
|
1.6 % |
|
0.9 % |
|
1.6 % |
|
0.2 % |
|
1.2 % |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Total loss and LAE ratio |
|
69.9 % |
|
76.5 % |
|
81.4 % |
|
82.8 % |
|
86.1 % |
|
112.1 % |
|
73.3 % |
|
99.3 % |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Expense ratio |
|
27.2 % |
|
26.7 % |
|
25.9 % |
|
26.3 % |
|
26.1 % |
|
25.9 % |
|
26.9 % |
|
26.0 % |
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Combined ratio |
|
97.1 % |
|
103.2 % |
|
107.3 % |
|
109.1 % |
|
112.2 % |
|
138.0 % |
|
100.2 % |
|
125.3 % |
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
- |
|
- |
Combined ratio, excluding catastrophe losses |
|
93.5 % |
|
93.0 % |
|
98.2 % |
|
98.9 % |
|
96.2 % |
|
100.0 % |
|
93.3 % |
|
98.1 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year combined ratio, excluding catastrophe losses |
|
90.8 % |
|
94.0 % |
|
98.2 % |
|
98.9 % |
|
94.1 % |
|
98.4 % |
|
92.5 % |
|
96.3 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
THE HANOVER INSURANCE GROUP |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PREMIUMS WRITTEN AND RELATED METRICS |
||||||||||||||||
PERSONAL LINES |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
Q1 |
|
Q2 |
|
Jun-YTD |
|
Jun-YTD |
(In millions, except percentage data) |
|
2022 |
|
2022 |
|
2022 |
|
2022 |
|
2023 |
|
2023 |
|
2022 |
|
2023 |
Written Premiums |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross |
$ |
499.1 |
$ |
593.7 |
$ |
629.3 |
$ |
582.3 |
$ |
550.7 |
$ |
654.6 |
$ |
1,092.8 |
$ |
1,205.3 |
Ceded |
|
(16.2) |
|
(17.4) |
|
(18.9) |
|
(19.0) |
|
(18.8) |
|
(20.0) |
|
(33.6) |
|
(38.8) |
Net |
$ |
482.9 |
$ |
576.3 |
$ |
610.4 |
$ |
563.3 |
$ |
531.9 |
$ |
634.6 |
$ |
1,059.2 |
$ |
1,166.5 |
Growth |
|
10.1% |
|
10.7% |
|
11.3% |
|
12.2% |
|
10.1% |
|
10.1% |
|
10.4% |
|
10.1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums written by line of business |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal Automobile |
$ |
298.4 |
$ |
340.2 |
$ |
354.0 |
$ |
324.6 |
$ |
323.0 |
$ |
368.1 |
$ |
638.6 |
$ |
691.1 |
Homeowners and Other |
|
184.5 |
|
236.1 |
|
256.4 |
|
238.7 |
|
208.9 |
|
266.5 |
|
420.6 |
|
475.4 |
Total |
$ |
482.9 |
$ |
576.3 |
$ |
610.4 |
$ |
563.3 |
$ |
531.9 |
$ |
634.6 |
$ |
1,059.2 |
$ |
1,166.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Related Metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Renewal Price Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal Automobile |
|
2.4% |
|
2.9% |
|
4.1% |
|
6.7% |
|
8.9% |
|
12.0% |
|
2.7% |
|
10.5% |
Homeowners |
|
7.7% |
|
9.3% |
|
12.1% |
|
15.5% |
|
18.9% |
|
21.7% |
|
8.6% |
|
20.5% |
Total (1) |
|
4.3% |
|
5.4% |
|
7.3% |
|
10.1% |
|
12.7% |
|
15.9% |
|
4.9% |
|
14.4% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Policy Retention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal Automobile |
|
88.5% |
|
88.4% |
|
87.3% |
|
85.7% |
|
84.5% |
|
84.2% |
|
88.4% |
|
84.3% |
Homeowners |
|
89.2% |
|
89.7% |
|
88.1% |
|
87.0% |
|
85.6% |
|
85.7% |
|
89.5% |
|
85.6% |
Total (1) |
|
88.8% |
|
89.1% |
|
87.7% |
|
86.4% |
|
85.0% |
|
84.9% |
|
89.0% |
|
85.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PIF change from prior year period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal Automobile |
|
8.0 % |
|
8.0 % |
|
7.1% |
|
5.8% |
|
4.5% |
|
2.7% |
|
8.0% |
|
2.7% |
Homeowners |
|
7.5 % |
|
7.6 % |
|
6.8% |
|
5.6% |
|
4.6% |
|
3.1% |
|
7.6% |
|
3.1% |
Total (1) |
|
7.8 % |
|
7.8 % |
|
7.0% |
|
5.7% |
|
4.6% |
|
2.9% |
|
7.8% |
|
2.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Related metrics exclude Other Personal Lines. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15
THE HANOVER INSURANCE GROUP |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INVESTMENT INCOME AND YIELDS |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
Q1 |
|
Q2 |
|
YTD |
|
YTD |
(In millions, except yields) |
2022 |
|
2022 |
|
2022 |
|
2022 |
|
2023 |
|
2023 |
|
2022 |
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Investment Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed maturities |
$55.8 |
|
$57.6 |
|
$60.3 |
|
$65.6 |
|
$68.3 |
|
$69.4 |
|
$113.4 |
|
$137.7 |
|
Limited partnerships |
15.2 |
|
7.8 |
|
7.5 |
|
5.2 |
|
5.3 |
|
13.1 |
|
23.0 |
|
18.4 |
|
Mortgage loans |
4.4 |
|
4.0 |
|
4.0 |
|
3.7 |
|
4.0 |
|
4.0 |
|
8.4 |
|
8.0 |
|
Equity securities |
3.6 |
|
3.1 |
|
3.1 |
|
2.2 |
|
1.9 |
|
1.9 |
|
6.7 |
|
3.8 |
|
Other investments |
0.8 |
|
0.8 |
|
1.0 |
|
2.0 |
|
2.5 |
|
2.7 |
|
1.6 |
|
5.2 |
|
Investment expenses |
(2.9) |
|
(2.8) |
|
(2.9) |
|
(2.8) |
|
(3.3) |
|
(3.5) |
|
(5.7) |
|
(6.8) |
Total |
$76.9 |
|
$70.5 |
|
$73.0 |
|
$75.9 |
|
$78.7 |
|
$87.6 |
|
$147.4 |
|
$166.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax Yields |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed maturities |
2.95% |
|
2.97% |
|
3.02% |
|
3.20% |
|
3.27% |
|
3.31% |
|
2.96% |
|
3.29% |
|
Total |
3.52% |
|
3.19% |
|
3.21% |
|
3.26% |
|
3.34% |
|
3.73% |
|
3.35% |
|
3.53% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax yields represent annualized net investment income for the period divided by the monthly average invested assets at amortized cost or cost, which excludes accumulated changes in fair value for fixed maturities and equity securities. |
16
THE HANOVER INSURANCE GROUP |
||||||||
|
|
|
|
|
|
|
|
|
INVESTMENT PORTFOLIO |
||||||||
June 30, 2023 |
||||||||
(In millions) |
|
|
|
|
||||
|
|
|
|
|
|
|
Change in |
Change in |
|
|
Weighted |
Amortized |
|
|
Net |
Net |
Net |
|
|
Average |
Cost |
Fair Value / |
% of |
Unrealized |
Unrealized |
Unrealized |
Investment Type |
|
Quality |
or Cost (1) |
Carry Value |
Total |
Loss |
During Q2 |
YTD |
|
|
|
|
|
|
|
|
|
Fixed maturities: |
|
|
|
|
|
|
|
|
U.S. Treasury and government agencies |
|
AAA |
$482.3 |
$424.4 |
4.9% |
$(57.9) |
$(6.8) |
$0.8 |
Foreign government |
|
BBB+ |
2.2 |
2.1 |
- |
(0.1) |
(0.1) |
- |
Municipals: |
|
|
|
|
|
|
|
|
Taxable |
|
AA |
1,250.9 |
1,103.5 |
12.5% |
(147.4) |
(15.7) |
15.3 |
Tax-exempt |
|
AA+ |
32.9 |
32.1 |
0.4% |
(0.8) |
(0.3) |
(0.1) |
Corporate: |
|
|
|
|
|
|
|
|
NAIC 1 |
|
A |
1,614.7 |
1,507.9 |
17.1% |
(106.8) |
(14.3) |
0.3 |
NAIC 2 |
|
BBB |
2,036.1 |
1,839.9 |
20.9% |
(196.2) |
(17.0) |
15.2 |
NAIC 3 and below |
|
B+ |
387.8 |
379.8 |
4.3% |
(8.0) |
1.3 |
7.9 |
Total corporate |
|
BBB+ |
4,038.6 |
3,727.6 |
42.3% |
(311.0) |
(30.0) |
23.4 |
Asset-backed: |
|
|
|
|
|
|
|
|
Residential mortgage-backed |
|
AAA |
1,298.9 |
1,155.0 |
13.1% |
(143.9) |
(19.0) |
(2.4) |
Commercial mortgage-backed |
|
AAA |
919.0 |
827.4 |
9.4% |
(91.6) |
(8.2) |
(3.9) |
Other asset-backed |
|
AA |
350.7 |
325.9 |
3.7% |
(24.8) |
(2.4) |
2.1 |
Total fixed maturities |
|
A+ |
8,375.5 |
7,598.0 |
86.3% |
(777.5) |
(82.5) |
35.2 |
Limited partnerships and other investments |
|
|
427.1 |
427.1 |
4.8% |
- |
- |
- |
Mortgage and other loans |
|
|
382.6 |
382.6 |
4.3% |
- |
- |
- |
Equity securities |
|
|
232.7 |
232.7 |
2.7% |
- |
- |
- |
Total investments |
|
|
9,417.9 |
8,640.4 |
98.1% |
(777.5) |
(82.5) |
35.2 |
Cash and cash equivalents |
|
|
167.6 |
167.6 |
1.9% |
- |
- |
- |
Total |
|
|
$9,585.5 |
$8,808.0 |
100.0% |
$(777.5) |
$(82.5) |
$35.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17
THE HANOVER INSURANCE GROUP |
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||
CREDIT QUALITY AND DURATION OF FIXED MATURITIES |
|
||||||||||||
June 30, 2023 |
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||
(In millions) |
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|||
CREDIT QUALITY OF FIXED MATURITIES |
|
||||||||||||
|
|
Rating Agency |
|
Amortized |
|
|
Fair |
|
% of Total |
|
|||
NAIC Designation |
Equivalent Designation |
|
Cost (1) |
|
|
Value |
|
Fair Value |
|
||||
1 |
Aaa/Aa/A |
$ |
|
5,861.6 |
|
$ |
|
5,302.8 |
|
|
69.8 |
% |
|
2 |
Baa |
|
|
2,126.0 |
|
|
|
1,915.5 |
|
|
25.2 |
% |
|
3 |
Ba |
|
|
163.5 |
|
|
|
159.6 |
|
|
2.1 |
% |
|
4 |
B |
|
|
191.2 |
|
|
|
186.7 |
|
|
2.5 |
% |
|
5 |
Caa and lower |
|
|
16.6 |
|
|
|
15.6 |
|
|
0.2 |
% |
|
6 |
In or near default |
|
|
16.6 |
|
|
|
17.8 |
|
|
0.2 |
% |
|
Total fixed maturities |
|
$ |
|
8,375.5 |
|
$ |
|
7,598.0 |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
DURATION OF FIXED MATURITIES |
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
Amortized |
|
|
Fair |
|
% of Total |
|
|||
|
|
|
|
Cost (1) |
|
|
Value |
|
Fair Value |
|
|||
|
0-2 Years |
$ |
|
1,857.3 |
|
$ |
|
1,807.9 |
|
|
23.8 |
% |
|
|
2-4 Years |
|
|
2,247.1 |
|
|
|
2,112.5 |
|
|
27.8 |
% |
|
|
4-6 Years |
|
|
2,120.1 |
|
|
|
1,912.0 |
|
|
25.2 |
% |
|
|
6-8 Years |
|
|
1,832.5 |
|
|
|
1,513.7 |
|
|
19.9 |
% |
|
|
8-10 Years |
|
|
187.5 |
|
|
|
148.7 |
|
|
1.9 |
% |
|
|
10+ Years |
|
|
131.0 |
|
|
|
103.2 |
|
|
1.4 |
% |
|
Total fixed maturities |
|
|
$ |
|
8,375.5 |
|
$ |
|
7,598.0 |
|
|
100.0 |
% |
Weighted Average Duration |
|
|
|
4.1 |
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
(1) Net of allowance for credit losses of $2.5 million. |
|
|
|
|
|
|
|
|
18
|
|
|
|
|
TOP 25 CORPORATE AND MUNICIPAL FIXED MATURITY HOLDINGS |
||||
June 30, 2023 |
||||
|
|
|
|
|
(In millions, except percentage data) |
|
|
|
|
Issuer |
Amortized Cost |
Fair Value |
As a Percent of Invested Assets |
Ratings (1) |
Minnesota Housing Finance Agency |
$45.2 |
$38.4 |
0.44% |
AAA |
Colorado Housing & Finance Authority |
40.5 |
38.6 |
0.44% |
AAA |
Morgan Stanley |
34.9 |
31.9 |
0.36% |
A- |
State of Ohio |
34.2 |
27.4 |
0.31% |
AA+ |
Bank of New York Mellon |
32.2 |
30.7 |
0.35% |
A |
Mitsubishi Financial Group |
31.1 |
29.2 |
0.33% |
A- |
Energy Transfer LP |
31.0 |
28.4 |
0.32% |
BBB |
Citizens Financial Group |
30.9 |
26.7 |
0.30% |
BBB+ |
Massachusetts School Building Authority |
30.9 |
25.6 |
0.29% |
AA+ |
Capital One Financial |
29.9 |
26.9 |
0.31% |
BBB |
Goldman Sachs |
28.0 |
25.5 |
0.29% |
BBB+ |
JPMorgan Chase |
27.9 |
26.0 |
0.29% |
A- |
State of Oregon |
27.2 |
22.6 |
0.26% |
AA+ |
District of Columbia |
27.0 |
22.3 |
0.25% |
AAA |
Westpac Banking |
26.9 |
25.3 |
0.29% |
A |
US Bancorp |
26.9 |
25.3 |
0.29% |
A- |
UBS Group |
26.6 |
24.0 |
0.27% |
A- |
Citigroup |
26.1 |
24.3 |
0.28% |
BBB+ |
Truist Financial |
26.1 |
24.6 |
0.28% |
A- |
Bank of America |
25.8 |
24.7 |
0.28% |
A- |
CVS Health |
25.6 |
23.7 |
0.27% |
BBB |
California State University |
25.0 |
20.2 |
0.23% |
AA- |
Charles Schwab |
24.6 |
22.3 |
0.25% |
A- |
Cigna |
23.6 |
21.4 |
0.24% |
A- |
ANZ Group |
23.3 |
20.6 |
0.23% |
A- |
Top 25 Corporate and Municipal |
$731.4 |
$656.6 |
7.45% |
|
|
|
|
|
|
(1) - Represents nationally recognized rating agency sources. |
|
|
|
|
19
THE HANOVER INSURANCE GROUP |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET INCOME (LOSS) |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months ended June 30 |
|
Six Months ended June 30 |
||||||||||||||||
|
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||||||
(In millions, except per share data) |
|
|
$ |
Per |
|
|
$ |
Per |
|
|
$ |
Per |
|
|
$ |
Per |
||||
OPERATING INCOME (LOSS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Core Commercial |
|
$ |
60.1 |
|
|
|
$ |
66.9 |
|
|
|
$ |
71.3 |
|
|
|
$ |
134.4 |
|
|
Specialty |
|
|
54.4 |
|
|
|
|
45.2 |
|
|
|
|
102.7 |
|
|
|
|
95.2 |
|
|
Personal Lines |
|
|
(194.1) |
|
|
|
|
2.8 |
|
|
|
|
(240.7) |
|
|
|
|
39.1 |
|
|
Other |
|
|
0.2 |
|
|
|
|
0.1 |
|
|
|
|
0.5 |
|
|
|
|
0.7 |
|
|
Total |
|
|
(79.4) |
|
|
|
|
115.0 |
|
|
|
|
(66.2) |
|
|
|
|
269.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(8.6) |
|
|
|
|
(8.5) |
|
|
|
|
(17.1) |
|
|
|
|
(17.0) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) before income taxes |
|
|
(88.0) |
$ |
(2.46) |
|
|
106.5 |
$ |
2.94 |
|
|
(83.3) |
$ |
(2.33) |
|
|
252.4 |
$ |
6.98 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit (expense) on operating income (loss) |
|
|
19.7 |
|
0.55 |
|
|
(22.6) |
|
(0.62) |
|
|
19.6 |
|
0.55 |
|
|
(50.8) |
|
(1.40) |
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Operating income (loss) after income taxes |
|
|
(68.3) |
|
(1.91) |
|
|
83.9 |
|
2.32 |
|
|
(63.7) |
|
(1.78) |
|
|
201.6 |
|
5.58 |
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Non-operating items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realized gains (losses) from sales and other |
|
|
0.1 |
|
- |
|
|
(19.2) |
|
(0.53) |
|
|
(1.0) |
|
(0.04) |
|
|
(16.2) |
|
(0.45) |
Net change in fair value of equity securities |
|
|
(1.1) |
|
(0.03) |
|
|
(59.0) |
|
(1.63) |
|
|
(8.2) |
|
(0.23) |
|
|
(77.0) |
|
(2.13) |
Impairments on investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit-related recoveries (impairments) |
|
|
(1.7) |
|
(0.05) |
|
|
0.5 |
|
0.01 |
|
|
(6.2) |
|
(0.17) |
|
|
(0.1) |
|
- |
Losses on intent to sell securities |
|
|
- |
|
- |
|
|
(0.2) |
|
- |
|
|
(10.3) |
|
(0.29) |
|
|
(0.5) |
|
(0.02) |
|
|
|
(1.7) |
|
(0.05) |
|
|
0.3 |
|
0.01 |
|
|
(16.5) |
|
(0.46) |
|
|
(0.6) |
|
(0.02) |
Other non-operating items |
|
|
- |
|
- |
|
|
(0.4) |
|
(0.01) |
|
|
0.8 |
|
0.03 |
|
|
(0.4) |
|
(0.01) |
Income tax benefit on non-operating items |
|
|
1.0 |
|
0.03 |
|
|
17.2 |
|
0.47 |
|
|
6.6 |
|
0.18 |
|
|
20.7 |
|
0.58 |
Income (loss) from continuing operations, net of taxes |
|
|
(70.0) |
|
(1.96) |
|
|
22.8 |
|
0.63 |
|
|
(82.0) |
|
(2.30) |
|
|
128.1 |
|
3.55 |
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Discontinued operations (net of taxes): |
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Income from discontinued Chaucer business |
|
|
0.8 |
|
0.02 |
|
|
- |
|
- |
|
|
0.8 |
|
0.03 |
|
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued life businesses |
|
|
- |
|
- |
|
|
(0.1) |
|
- |
|
|
- |
|
- |
|
|
(0.5) |
|
(0.02) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) |
|
$ |
(69.2) |
$ |
(1.94) |
|
$ |
22.7 |
$ |
0.63 |
|
$ |
(81.2) |
$ |
(2.27) |
|
$ |
127.6 |
$ |
3.53 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Per share data is calculated using basic shares outstanding due to antidilution. |
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
20
THE HANOVER INSURANCE GROUP |
|
Non-GAAP Financial Measures |
|
The Hanover uses non-GAAP financial measures as important measures of the Company’s operating performance, which we believe provide investors with additional information regarding management’s evaluation of our results of operations and financial performance. The Company's non-GAAP measures include operating income (loss) before interest expense and income taxes, total operating income (loss) after income taxes, total operating income (loss) after income taxes per share, total book value per share, total book value per share excluding net unrealized gains and losses related to fixed maturity investments and market risk, net of tax, tangible book value per share and measures of operating income (loss) and combined ratios excluding catastrophe losses (catastrophe losses as discussed here and in all other measures include catastrophe loss development) and reserve development. |
|
Operating income (loss) before interest expense and income taxes is net income (loss), excluding interest expense on debt, income taxes and net realized and unrealized investment gains and losses, which includes changes in the fair value of equity securities still held because fluctuations in these gains and losses are determined by interest rates, financial markets and the timing of sales. Operating income (loss) before interest expense and income taxes also excludes net gains and losses on disposals of businesses, discontinued operations, restructuring costs, the cumulative effect of accounting changes and certain other items. Operating income (loss) before interest expense and income taxes is the sum of the operating income (loss) from: Core Commercial, Specialty, Personal Lines, and Other. After-tax operating income (loss) EPS (sometimes referred to as “after-tax operating income (loss) per share”) is also a non-GAAP measure. It is defined as net income (loss) excluding the after-tax impact of net realized and unrealized investment gains (losses), as well as results from discontinued operations and other non-operating items for a period divided by the average number of diluted (basic) shares of common stock. The Hanover believes that measures of operating income (loss) before interest expense and income taxes provide investors with a valuable measure of the performance of the Company’s ongoing businesses because they highlight net income (loss) attributable to the core operations of the business. |
|
Book value per share is total shareholders’ equity divided by the number of common shares outstanding. Book value per share excluding net unrealized gains and losses related to fixed maturity investments, net of tax, is total shareholders’ equity excluding the after-tax effect of unrealized investment gains and losses on fixed maturities and market risk divided by the number of common shares outstanding. Tangible book value per share is total shareholders' equity, excluding goodwill and intangible assets, divided by the number of common shares outstanding. |
|
The Hanover also provides measures of operating income and loss ratios that exclude the effects of catastrophe losses. A catastrophe is a severe loss, resulting from natural or manmade events, including, among others, hurricanes, tornadoes and other windstorms, earthquakes, hail, severe winter weather, fire, explosions and terrorism. Each catastrophe has unique characteristics. Catastrophes are not predictable as to timing or loss amount in advance. The Hanover believes that providing certain financial metrics and trends excluding the effects of catastrophes is meaningful for investors to understand the variability of periodic earnings and loss ratios. |
|
Prior year reserve development, which can be favorable or unfavorable, represents changes in our estimate of the costs to pay claims from prior years. We believe that a discussion of operating income (loss) excluding prior year reserve development is helpful to investors since it provides insight into both our estimate of current year accident results and changes to prior-year reserve estimates. |
|
Operating income (loss) before and after interest expense and income taxes and measures of operating income (loss) that exclude the effects of catastrophe losses or reserve development should not be construed as substitutes for net income (loss) determined in accordance with GAAP. A reconciliation of income (loss) from continuing operations to operating income (loss) before interest expense and income taxes and income (loss) from continuing operations per diluted (basic) share to operating income (loss) after taxes per diluted (basic) share for the three and six months ended June 30, 2023 and 2022 is set forth on page 20 of this document. The presentation of loss ratios calculated excluding the effects of reserve development and/or catastrophe losses should not be construed as a substitute for loss ratios determined in accordance with GAAP. |
|
Additional reconciliations are provided in the press release relating to the current period(s) financial results, which is available on the Company's website, www.hanover.com. |
21
THE HANOVER INSURANCE GROUP |
||||||||||||||
|
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|
|
|
|
|
PREMIUM RELATED METRIC DEFINITIONS |
||||||||||||||
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Renewal Price Change |
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
● |
Core Commercial and Specialty: Represents the average change in premium on renewed policies caused by the estimated net effect of base rate changes, discretionary pricing, specific inflationary changes or changes in policy level exposure or insured risks. |
|||||||||||||
|
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
● |
Personal Lines: Represents the average change in premium on policies charged at renewal caused by the net effects of filed rate, inflation adjustments or other changes in policy level exposure or insured risks. Actual written price changes may differ, as not all policies are retained. |
|||||||||||||
|
|
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|
|
|||||||||||||
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|
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|
|
|
Rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
● |
Core Commercial and Specialty: Represents the average change in premium on renewed policies caused by the base rate changes, discretionary pricing, and inflation, excluding the impact of changes in policy level exposure or insured risks. |
|||||||||||||
|
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
● |
Personal Lines: Represents the estimated cumulative premium effect of approved rate actions applied to policies at renewal. Actual written rate changes may differ, as not all policies are retained. Personal Lines rate changes do not include inflation or changes in policy level exposure or insured risks. |
|||||||||||||
|
|
|||||||||||||
|
|
|||||||||||||
|
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|
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|
|
|
|
|
|
Retention |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
● |
Core Commercial and Specialty: Represents the ratio of net retained premium for the noted period to the premium available to renew over the same period. |
|||||||||||||
|
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
● |
Personal Lines: Represents the ratio of net retained policies for the noted period to those policies available to renew over the same period and includes policies that were canceled and rewritten. |
|||||||||||||
|
|
|||||||||||||
|
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|
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|
|
|
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|
|
|
|
|
Policies in Force (PIF) Change |
|
|
|
|
|
|
|
|
|
|
|||
● |
Represents the change in the number of policies in force at the end of a given period from the end of the same period in the prior year. |
22
|
|
|
|
|
|
|
|
|
|
|
|
|
CORPORATE OFFICES AND |
|
|
INDUSTRY RATINGS AS OF August 2, 2023 |
|
|
TRANSFER AGENT |
||||||
PRINCIPAL SUBSIDIARIES |
|
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|||
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|
|||
THE HANOVER INSURANCE GROUP, INC. |
|
|
|
A.M. |
|
|
|
|
Computershare Investor Services |
|||
440 Lincoln Street |
|
|
Financial Strength Ratings |
Best |
S&P Global |
Moody's |
|
|
PO Box 43006 |
|||
Worcester, MA 01653 |
|
|
The Hanover Insurance |
|
|
|
|
|
Providence, RI 02940-3006 |
|||
|
|
|
Company |
A |
A |
A2 |
|
|
1-800-317-4454 |
|||
The Hanover Insurance Company |
|
|
Citizens Insurance Company |
|
|
|
|
|
|
|||
440 Lincoln Street |
|
|
of America |
A |
A |
- |
|
|
|
|||
Worcester, MA 01653 |
|
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|
|
|
|
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|
|||
|
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|
|
COMMON STOCK |
|||
Citizens Insurance Company of America |
|
|
|
A.M. |
|
|
|
|
|
|||
808 North Highlander Way |
|
|
Debt Ratings |
Best |
S&P Global |
Moody's |
|
|
Common stock of The Hanover Insurance Group, Inc. is traded |
|||
Howell, MI 48843 |
|
|
The Hanover Insurance Group, Inc. |
|
|
|
|
on the New York Stock Exchange under the symbol "THG". |
||||
|
|
|
Senior Debt |
bbb+ |
BBB |
Baa2 |
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Subordinated Debentures |
bbb- |
BB+ |
Baa3 |
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MARKET AND DIVIDEND INFORMATION |
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INQUIRIES |
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The following tables set forth the high and low closing |
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The above ratings are accurate as of August 2, 2023, and may be revised, |
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Oksana Lukasheva |
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sales prices of our common stock and quarterly cash |
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superseded or withdrawn by the respective rating agency at any time. For |
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Senior Vice President |
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dividends for the periods indicated: |
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the most current information concerning the financial ratings of The Hanover |
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Corporate Finance |
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Insurance Group and its subsidiaries, please visit the websites of the |
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olukasheva@hanover.com |
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Quarter Ended |
2023 |
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respective rating agencies. |
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Price Range |
Dividends |
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High |
Low |
Per Share |
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March 31 |
$148.20 |
$121.57 |
$0.810 |
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June 30 |
$130.32 |
$110.25 |
$0.810 |
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Quarter Ended |
2022 |
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Dividends |
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High |
Low |
Per Share |
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March 31 |
$150.95 |
$131.19 |
$0.750 |
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June 30 |
$154.28 |
$136.34 |
$0.750 |
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September 30 |
$148.36 |
$124.89 |
$0.750 |
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December 31 |
$147.47 |
$131.27 |
$0.810 |
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23
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