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SCHEDULE II CONDENSED FINANCIAL INFORMATION OF REGISTRANT PARENT COMPANY ONLY
 12 Months Ended
Dec. 31, 2020
Condensed Financial Information Of Parent Company Only Disclosure [Abstract]  
SCHEDULE II CONDENSED FINANCIAL INFORMATION OF REGISTRANT PARENT COMPANY ONLY STATEMENTS OF INCOME

SCHEDULE II

THE HANOVER INSURANCE GROUP, INC.

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

PARENT COMPANY ONLY

STATEMENTS OF INCOME

YEARS ENDED DECEMBER 31

 

2020

 

 

2019

 

 

2018

 

(in millions)

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income

 

$

10.7

 

 

$

19.8

 

 

$

11.8

 

Net realized gains (losses) from sales and other

 

 

0.4

 

 

 

5.3

 

 

 

(0.5

)

Other income

 

 

—

 

 

 

0.4

 

 

 

0.8

 

Total revenues

 

 

11.1

 

 

 

25.5

 

 

 

12.1

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

37.0

 

 

 

37.4

 

 

 

37.8

 

Employee benefit related expenses

 

 

2.3

 

 

 

5.0

 

 

 

5.1

 

Interest expense on loan from subsidiary

 

 

7.0

 

 

 

6.9

 

 

 

6.8

 

Loss from repayment of debt

 

 

6.2

 

 

—

 

 

 

1.9

 

Other operating expenses

 

 

9.8

 

 

 

7.1

 

 

 

12.1

 

Total expenses

 

 

62.3

 

 

 

56.4

 

 

 

63.7

 

Net loss before income taxes and equity in income of subsidiaries

 

 

(51.2

)

 

 

(30.9

)

 

 

(51.6

)

Income tax benefit

 

 

22.1

 

 

 

25.6

 

 

 

21.4

 

Equity in income of subsidiaries

 

 

387.2

 

 

 

432.4

 

 

 

288.4

 

Income from continuing operations

 

 

358.1

 

 

 

427.1

 

 

 

258.2

 

Sale of Chaucer business (net of income tax benefit (expense) of $5.3

    and $(42.5) in 2019 and 2018)

 

 

—

 

 

 

(2.1

)

 

 

131.9

 

Income from discontinued life business (net of income tax benefit (expense)

    of $0.5 and $(0.2) in 2020 and 2018)

 

 

0.6

 

 

 

0.1

 

 

 

0.9

 

Net income

 

 

358.7

 

 

 

425.1

 

 

 

391.0

 

Other comprehensive income (loss), net of tax

 

 

219.9

 

 

 

267.6

 

 

 

(122.4

)

Comprehensive income

 

$

578.6

 

 

$

692.7

 

 

$

268.6

 

The condensed financial information should be read in conjunction with the consolidated financial statements and notes thereto.

SCHEDULE II (CONTINUED)

THE HANOVER INSURANCE GROUP, INC.

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

PARENT COMPANY ONLY

BALANCE SHEETS

DECEMBER 31

 

2020

 

 

2019

 

(in millions, except per share data)

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Fixed maturities - at fair value (amortized cost of $369.5 and $321.2)

 

$

381.3

 

 

$

328.5

 

Equity securities - at fair value

 

 

1.1

 

 

 

1.1

 

Cash and cash equivalents

 

 

15.6

 

 

 

12.2

 

Investments in subsidiaries

 

 

3,718.3

 

 

 

3,352.2

 

Net receivable from subsidiaries

 

 

25.2

 

 

 

25.1

 

Other assets

 

 

2.9

 

 

 

3.2

 

Total assets

 

$

4,144.4

 

 

$

3,722.3

 

Liabilities

 

 

 

 

 

 

 

 

Expenses and state taxes payable

 

$

23.2

 

 

$

16.4

 

Current income tax payable

 

 

2.7

 

 

 

3.5

 

Interest payable

 

 

10.5

 

 

 

7.8

 

Debt (1)

 

 

905.8

 

 

 

778.4

 

Total liabilities

 

 

942.2

 

 

 

806.1

 

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

 

 

1,857.4

 

 

 

1,837.3

 

Accumulated other comprehensive income

 

 

372.5

 

 

 

152.6

 

Retained earnings

 

 

2,668.0

 

 

 

2,410.9

 

Treasury stock at cost (24.1 and 22.1 million shares)

 

 

(1,696.3

)

 

 

(1,485.2

)

Total shareholders' equity

 

 

3,202.2

 

 

 

2,916.2

 

Total liabilities and shareholders' equity

 

$

4,144.4

 

 

$

3,722.3

 

(1)

In 2020, the Company issued $300.0 million aggregate principal amount of 2.50% unsecured senior debentures. With the proceeds, THG retired its outstanding $175.0 million principal amount of 6.35% subordinated unsecured debentures. (See Note 6 – “Debt and Credit Arrangements” in Notes to Consolidated Financial Statements).

The condensed financial information should be read in conjunction with the consolidated financial statements and notes thereto.

SCHEDULE II (CONTINUED)

THE HANOVER INSURANCE GROUP, INC.

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

PARENT COMPANY ONLY

STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31

 

2020

 

 

2019

 

 

2018

 

(in millions)

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

358.7

 

 

$

425.1

 

 

$

391.0

 

Adjustments to reconcile net income to net cash provided by (used in)

   operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Loss (gain) from sale of Chaucer business

 

 

—

 

 

 

2.1

 

 

 

(131.9

)

Net realized investment (gains) losses

 

 

(0.4

)

 

 

(5.3

)

 

 

0.6

 

Net loss from repayment of debt

 

 

6.2

 

 

 

—

 

 

 

1.9

 

Equity in net income of subsidiaries

 

 

(387.2

)

 

 

(432.3

)

 

 

(288.4

)

Dividends received from subsidiaries

 

 

60.3

 

 

 

69.9

 

 

 

86.4

 

Deferred income tax benefit

 

 

(8.5

)

 

 

(13.9

)

 

 

(5.3

)

Change in expenses and taxes payable

 

 

5.6

 

 

 

(107.8

)

 

 

59.7

 

Change in net receivable from subsidiaries

 

 

15.5

 

 

 

11.6

 

 

 

8.9

 

Other, net

 

 

4.4

 

 

 

3.9

 

 

 

(0.4

)

Net cash provided by (used in) operating activities

 

 

54.6

 

 

 

(46.7

)

 

 

122.5

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from disposals and maturities of fixed maturities

 

 

166.6

 

 

 

447.9

 

 

 

82.8

 

Proceeds from disposals of equity securities

 

 

—

 

 

 

121.9

 

 

 

—

 

Purchase of fixed maturities

 

 

(32.4

)

 

 

(316.1

)

 

 

(4.0

)

Purchase of equity securities

 

 

—

 

 

 

(121.9

)

 

 

—

 

Net cash received from sale of Chaucer business

 

 

—

 

 

 

35.1

 

 

 

762.0

 

Net cash provided by investing activities

 

 

134.2

 

 

 

166.9

 

 

 

840.8

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from exercise of employee stock options

 

 

6.3

 

 

 

14.4

 

 

 

14.8

 

Proceeds from debt borrowings, net

 

 

296.4

 

 

 

—

 

 

 

—

 

Dividends paid to shareholders

 

 

(99.5

)

 

 

(386.2

)

 

 

(94.3

)

Repayment of debt

 

 

(175.8

)

 

 

—

 

 

 

(11.6

)

Repurchases of common stock

 

 

(212.8

)

 

 

(563.6

)

 

 

(57.7

)

Net cash related to short-term intercompany borrowings

 

 

—

 

 

 

—

 

 

 

(19.8

)

Net cash used in financing activities

 

 

(185.4

)

 

 

(935.4

)

 

 

(168.6

)

Net change in cash and cash equivalents

 

 

3.4

 

 

 

(815.2

)

 

 

794.7

 

Cash and cash equivalents, beginning of year

 

 

12.2

 

 

 

827.4

 

 

 

32.7

 

Cash and cash equivalents, end of year

 

$

15.6

 

 

$

12.2

 

 

$

827.4

 

Included in other operating cash flows was the cash portion of dividends received from unconsolidated subsidiaries. Additionally, investment assets of $185.6 million, $70.1 million and $179.8 million were transferred to the parent company in 2020, 2019 and 2018, respectively, to settle dividend obligations and other intercompany borrowings and balances.

The condensed financial information should be read in conjunction with the consolidated financial statements and notes thereto.