Segment Information

9 Months Ended

Sep. 30, 2021

Segment Reporting [Abstract]

Segment Information

8. Segment Information

The Company’s primary business operations include insurance products and services provided through three operating segments: Commercial Lines, Personal Lines and Other. Commercial Lines includes commercial multiple peril, commercial automobile, workers’ compensation, and other commercial coverages, such as management and professional liability, marine, Hanover Programs, specialty industrial and commercial property, monoline general liability and surety. Personal Lines includes personal automobile, homeowners and other personal coverages. Included in the Other segment are Opus Investment Management, Inc., which markets investment management services to institutions, pension funds and other organizations; earnings on holding company assets; holding company and other expenses, including certain costs associated with retirement benefits due to the Company’s former life insurance employees and agents; and a run-off voluntary property and casualty pools business. The separate financial information is presented consistent with the way results are regularly evaluated by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

The Company reports interest expense related to debt separately from the earnings of its operating segments. This consists primarily of interest on the Company’s senior and subordinated debentures.

Management evaluates the results of the aforementioned segments based on operating income before income taxes, excluding interest expense on debt. Operating income before income taxes excludes certain items which are included in net income, such as net realized and unrealized investment gains and losses. Such gains and losses are excluded since they are determined by interest rates, financial markets and the timing of sales. Also, operating income before income taxes excludes net gains and losses on disposals of businesses, gains and losses related to the repayment of debt, discontinued operations, costs to acquire businesses, restructuring costs, the cumulative effect of accounting changes and certain other items. Although the items excluded from operating income before income taxes may be important components in understanding and assessing the Company’s overall financial performance, management believes that the presentation of operating income before income taxes enhances an investor’s understanding of the Company’s results of operations by highlighting net income attributable to the core operations of the business. However, operating income before income taxes should not be construed as a substitute for income before income taxes or income from continuing operations, and operating income should not be construed as a substitute for net income.

Summarized below is financial information with respect to the Company’s business segments.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in millions)	2021			2020			2021			2020
Operating revenues:
Commercial Lines	$	755.5		$	713.3		$	2,261.8		$	2,136.9
Personal Lines		512.6			493.3			1,506.3			1,438.1
Other		4.3			5.5			12.4			15.5
Total		1,272.4			1,212.1			3,780.5			3,590.5
Net realized and unrealized investment gains (losses)		4.0			37.7			72.6			(60.2	)
Total revenues	$	1,276.4		$	1,249.8		$	3,853.1		$	3,530.3
Operating income (loss) before interest expense and income taxes:
Commercial Lines:
Underwriting (loss) income	$	(10.2	)	$	18.7		$	(5.7	)	$	50.4
Net investment income		52.9			44.4			155.7			128.7
Other expense		(0.3	)		(0.8	)		(1.0	)		(6.9	)
Commercial Lines operating income		42.4			62.3			149.0			172.2
Personal Lines:
Underwriting (loss) income		(20.3	)		43.0			48.1			104.5
Net investment income		22.6			19.5			66.5			56.3
Other income		1.3			1.7			3.0			0.9
Personal Lines operating income		3.6			64.2			117.6			161.7
Other:
Underwriting loss		(0.4	)		(0.3	)		(1.0	)		(4.0	)
Net investment income		3.3			3.7			9.0			9.9
Other expense		(1.9	)		(1.5	)		(5.2	)		(5.4	)
Other operating income		1.0			1.9			2.8			0.5
Operating income before interest expense and income taxes		47.0			128.4			269.4			334.4
Interest on debt		(8.5	)		(9.8	)		(25.5	)		(28.6	)
Operating income before income taxes		38.5			118.6			243.9			305.8
Non-operating items:
Net realized and unrealized investment gains (losses)		4.0			37.7			72.6			(60.2	)
Loss from repayment of debt		—			(6.1	)		—			(6.2	)
Other non-operating		—			(1.6	)		—			(1.6	)
Income from continuing operations before income taxes	$	42.5		$	148.6		$	316.5		$	237.8

The following table provides identifiable assets for the Company’s business segments and discontinued operations:

(in millions)	September 30, 2021		December 31, 2020
Property and Casualty Insurance Companies	$	13,997.9	$	13,333.5
Assets of discontinued businesses		107.4		110.2
Total	$	14,105.3	$	13,443.7

The Company reviews the assets of its Property and Casualty Insurance Companies collectively and does not allocate them between the Commercial Lines, Personal Lines and Other segments.