XML 45 R20.htm IDEA: XBRL DOCUMENT v3.10.0.1
Dividend Restrictions
12 Months Ended
Dec. 31, 2018
Disclosure Of Restrictions On Dividends Loans And Advances Disclosure [Abstract]  
Dividend Restrictions

13. DIVIDEND RESTRICTIONS

U.S. INSURANCE SUBSIDIARIES

The individual law of all states, including New Hampshire and Michigan, where Hanover Insurance and Citizens are domiciled, respectively, restrict the payment of dividends to stockholders by insurers. These laws affect the dividend paying ability of Hanover Insurance and Citizens.

Pursuant to New Hampshire’s statute, the maximum dividends and other distributions that an insurer may pay in any twelve month period, without prior approval of the New Hampshire Insurance Commissioner, is limited to the lesser of 10% of such insurer’s statutory policyholder surplus as of the preceding December 31, or statutory net income less net realized gains. Hanover Insurance declared and paid dividends to its parent totaling $140.0 million, $296.8 million and $218.8 million in 2018, 2017 and 2016, respectively. In 2017, the $296.8 million dividend included $80.0 million of extra ordinary dividends. At January 1, 2019, the maximum dividend payable without prior approval is $76.7 million. In May 2019, the maximum dividend declared payable without prior approval will increase by $140.0 million to a total amount of $216.7 million.

Pursuant to Michigan’s statute, the maximum dividends and other distributions that an insurer may pay in any twelve month period, without prior approval of the Michigan Insurance Commissioner, is limited to the greater of 10% of policyholders’ surplus as of December 31 of the immediately preceding year or the statutory net income less net realized gains, for the immediately preceding calendar year. Citizens declared dividends to its parent, Hanover Insurance, totaling $87.9 million, $99.9 million and $70.0 million in 2018, 2017 and 2016, respectively. At January 1, 2019, the maximum dividend payable without prior approval is $19.2 million. In December 2019, the maximum dividend declared payable without prior approval will increase by $87.9 million to a total amount of $107.1 million.

The statutes in both New Hampshire and Michigan require that prior notice to the respective Insurance Commissioner of any proposed dividend be provided and such Commissioner may, in certain circumstances, prohibit the payment of the proposed dividend.

CHAUCER

Dividend payments previously paid by Chaucer to THG were regulated by U.K. law, whereby advance notice was provided to the U.K.’s Prudential Regulatory Authority. Dividend payments of $85.0 million and $79.5 million were made in 2018 and 2016, respectively.