UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant
to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 31,
2014
THE HANOVER INSURANCE GROUP, INC.
(Exact name of registrant as specified in its charter)
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Delaware |
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1-13754 |
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04-3263626 |
(State or other jurisdiction
of incorporation) |
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(Commission
File Number) |
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(I.R.S. Employer
Identification No.) |
440 Lincoln Street, Worcester, Massachusetts 01653
(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code: (508) 855-1000
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) |
¨ |
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)) |
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 July 31, 2014, The Hanover Insurance Group, Inc. (the Company) issued a press release announcing its financial results for the quarter ended
June 30, 2014. The release is furnished as Exhibit 99.1 hereto. Additionally, on July 31, 2014, the Company made available on its website unaudited financial information contained in its Financial Supplement for the period ended
June 30, 2014. The supplement is furnished as Exhibit 99.2 hereto.
Item 9.01 Financial Statements and Exhibits.
The following exhibits are furnished herewith.
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Exhibit 99.1 |
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Press Release, dated July 31, 2014, announcing the Companys financial results for the quarter ended June 30, 2014. |
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Exhibit 99.2 |
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The Hanover Insurance Group, Inc. Unaudited Financial Supplement for the period ended June 30, 2014. |
2
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. |
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(Registrant) |
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Date July 31, 2014 |
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By: |
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/s/ David B. Greenfield |
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David B. Greenfield |
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Executive Vice President, |
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Chief Financial Officer and |
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Principal Accounting Officer |
3
Exhibit Index
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Exhibit 99.1 |
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Press Release, dated July 31, 2014, announcing the Companys financial results for the quarter ended June 30, 2014. |
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Exhibit 99.2 |
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The Hanover Insurance Group, Inc. Unaudited Financial Supplement for the period ended June 30, 2014. |
4
Exhibit 99.1
The Hanover Reports Second Quarter Net Income of $1.84 per Diluted Share;
Operating Income(1) of $1.30 per Diluted Share;
Combined Ratio of 96.8%, including Catastrophe Impact of 4.7 points
WORCESTER, Mass., July 31, 2014 - The Hanover Insurance Group, Inc. (NYSE: THG) today reported net income of $82.6 million, or $1.84 per diluted share,
for the second quarter of 2014, compared to net income of $53.4 million, or $1.19 per diluted share, in the prior-year quarter. Operating income was $58.4 million, or $1.30 per diluted share, in the second quarter of 2014, compared to $46.8 million,
or $1.05 per diluted share, in the prior-year quarter.
Second Quarter Highlights
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Combined ratio of 96.8% |
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Combined ratio, excluding catastrophes, of 92.1%(2) |
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Operating income before taxes, excluding catastrophes, increased by 12% to $157.9 million(3) |
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Net premiums written of $1.3 billion, up 2.7%, driven by growth in Chaucer and Commercial Lines |
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Strong price increases in Commercial and Personal Lines continued in the second quarter |
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Net investment income of $67.0 million |
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Book value per share of $63.65, up 3.9% from March 31, 2014, and up 7.1% from December 31, 2013 |
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In millions,
except per share amounts |
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Three months ended June 30 |
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Six months ended June 30 |
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2014 |
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2013 |
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2014 |
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2013 |
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Net premiums written |
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$ |
1,276.2 |
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$ |
1,242.6 |
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$ |
2,448.5 |
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$ |
2,319.3 |
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Operating income |
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58.4 |
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46.8 |
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105.4 |
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106.7 |
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per diluted share |
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1.30 |
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1.05 |
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2.35 |
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2.37 |
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Net income |
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82.6 |
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53.4 |
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137.2 |
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119.6 |
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per diluted share |
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1.84 |
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1.19 |
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3.06 |
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2.66 |
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Net investment income |
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67.0 |
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67.9 |
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134.0 |
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135.2 |
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Book value per share |
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$ |
63.65 |
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$ |
57.41 |
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$ |
63.65 |
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$ |
57.41 |
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Ending shares outstanding |
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43.9 |
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43.5 |
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43.9 |
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43.5 |
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Combined ratio |
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96.8 |
% |
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98.4 |
% |
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97.5 |
% |
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97.3 |
% |
Combined ratio, excluding catastrophes |
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92.1 |
% |
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92.9 |
% |
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92.6 |
% |
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93.6 |
% |
(1) |
See information about this and other footnotes throughout this press release on the final page of this document. |
We are very pleased with our second quarter results that produced an annualized operating ROE of
9.7%, said Frederick H. Eppinger, president and chief executive officer at The Hanover. The overall underlying combined ratio improved by 1 point, driven by solid underwriting improvement in domestic businesses, and continued strong
results at Chaucer. Book value per share increased to $63.65, up over 7% year-to-date.
We are encouraged by the positive momentum shift in Personal
Lines, where net written premiums grew modestly as rate increases and new business acceleration outpaced the effect of continued exposure management actions. At the same time, we continued to achieve healthy growth in Commercial Lines, in light of
exposure and underwriting initiatives in middle market business. As importantly, we achieved solid pricing increases with 7% in Core Commercial and 6% in Personal Lines with strong retention, reflecting the effectiveness of our distinctive value
proposition and unique approach to independent agents and brokers.
These financial trends further support our confidence in the effectiveness of
our strategic initiatives and drive us closer to our ultimate goal of delivering top quartile performance, Eppinger said.
Second
Quarter Operating Highlights
Commercial Lines
Commercial Lines operating income before taxes was $44.2 million in the quarter, compared to $26.2 million in the second quarter of 2013. The Commercial Lines
combined ratio was 98.4%, compared to 101.8% in the prior-year quarter. Catastrophe losses were $17.0 million, or 3.3 points of the combined ratio, compared to $15.1 million, or 3.1 points, in the prior-year quarter. Second quarter 2014 results also
reflected net unfavorable prior-year reserve development of $1.8 million, or 0.3 points of the combined ratio, compared to net unfavorable reserve development of $0.5 million, or 0.1 points, in the second quarter of 2013.
Commercial Lines current accident year combined ratio, excluding catastrophe losses(4), improved by
almost 4 points to 94.8%, compared to 98.6% in the prior-year quarter. The improvement was attributed to more favorable loss experience due to rate and underwriting actions, as well as a lower expense ratio as a result of growth and improved
efficiencies.
Net premiums written were $541.0 million in the quarter, up 3.7% from the prior-year quarter, driven by growth across all lines except the
commercial auto line, which was essentially flat.
2
The following table summarizes premiums and the components of the combined ratio for Commercial Lines:
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$ in millions |
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Three months ended June 30 |
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Six months ended June 30 |
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2014 |
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2013 |
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2014 |
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2013 |
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Net premiums written |
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$ |
541.0 |
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$ |
521.5 |
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$ |
1,080.3 |
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$ |
1,005.1 |
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Net premiums earned |
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517.6 |
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485.8 |
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1,030.3 |
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962.4 |
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Operating income before taxes |
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44.2 |
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26.2 |
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60.3 |
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59.2 |
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Loss and LAE ratio |
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61.8 |
% |
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64.2 |
% |
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64.5 |
% |
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63.3 |
% |
Expense ratio(5) |
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36.6 |
% |
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37.6 |
% |
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36.7 |
% |
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37.8 |
% |
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Combined ratio |
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98.4 |
% |
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101.8 |
% |
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101.2 |
% |
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101.1 |
% |
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Combined ratio, excluding catastrophe losses |
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95.1 |
% |
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98.7 |
% |
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95.6 |
% |
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98.8 |
% |
Current accident year combined ratio, excluding catastrophe losses |
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94.8 |
% |
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98.6 |
% |
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95.4 |
% |
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98.7 |
% |
Personal Lines
Personal
Lines operating income before taxes was $22.7 million in the quarter, compared to $19.9 million in the second quarter of 2013. The Personal Lines combined ratio was 98.3%, compared to 99.3% in the prior-year quarter. Catastrophe losses were $27.2
million, or 7.8 points of the combined ratio, compared to $32.2 million, or 8.8 points, in the prior-year quarter. Second quarter 2014 results also reflected net favorable prior-year reserve development of $2.2 million, or 0.6 points of the combined
ratio, compared to net unfavorable reserve development of $2.8 million, or 0.8 points, in the second quarter of 2013.
Personal Lines current accident
year combined ratio, excluding catastrophe losses, was 91.1%, compared to 89.7% in the prior-year quarter. The auto loss ratio improved by over 2 points, driven by rate and mix management initiatives, while the homeowners line reflected higher
than expected losses related to first quarter non-catastrophe weather. Second quarter 2014 results were also impacted by a higher expense ratio partly due to the timing of performance-based expenses, as well as a lower earned premium base.
Net premiums written were $370.8 million in the quarter, up 0.1% compared to the prior-year quarter due to rate increases and higher new business levels,
largely offset by exposure and mix management initiatives.
3
The following table summarizes premiums and the components of the combined ratio in Personal Lines:
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$ in millions |
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Three months ended June 30 |
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Six months ended June 30 |
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2014 |
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2013 |
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2014 |
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2013 |
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Net premiums written |
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$ |
370.8 |
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$ |
370.6 |
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$ |
690.0 |
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$ |
712.2 |
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Net premiums earned |
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350.3 |
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366.7 |
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700.5 |
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735.5 |
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Operating income before taxes |
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22.7 |
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19.9 |
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44.3 |
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50.4 |
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Loss and LAE ratio |
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69.9 |
% |
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72.0 |
% |
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70.4 |
% |
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70.6 |
% |
Expense ratio |
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28.4 |
% |
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27.3 |
% |
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28.1 |
% |
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27.3 |
% |
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Combined ratio |
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98.3 |
% |
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99.3 |
% |
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98.5 |
% |
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97.9 |
% |
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Combined ratio, excluding catastrophe losses |
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90.5 |
% |
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90.5 |
% |
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92.0 |
% |
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91.9 |
% |
Current accident year combined ratio, excluding catastrophe losses |
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91.1 |
% |
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89.7 |
% |
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92.5 |
% |
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90.8 |
% |
Chaucer
Chaucers
operating income before taxes was $38.1 million in the quarter, compared to $36.9 million in the second quarter of 2013. Chaucers combined ratio was 92.1%, compared to 89.6% in the prior-year quarter. Catastrophe losses were $11.5 million, or
3.7 points of the combined ratio, compared to $12.5 million, or 5.2 points, in the prior-year quarter. Second quarter 2014 results also reflected net favorable prior-year reserve development of $29.2 million, or 9.5 points of the combined ratio,
compared to $30.7 million, or 12.9 points, in the second quarter of 2013.
Chaucers current accident year combined ratio, excluding catastrophe
losses, was 97.9%, compared to 97.3% in the prior-year quarter. A higher incidence of large losses, primarily in the Marine and Aviation line, drove the loss ratio increase over the prior-year quarter, while the expense ratio was lower than the
prior-year period due to foreign exchange fluctuations.
Net premiums written were $364.4 million in the quarter, up 4.0% over the prior-year quarter,
primarily driven by growth in the Casualty and Other line, following the expansion of our casualty underwriting team in late 2013, partially offset by lower Property premiums.
4
The following table summarizes premiums and the components of the combined ratio in the Chaucer segment:
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$ in millions |
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Three months ended June 30 |
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Six months ended June 30 |
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2014 |
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2013 |
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2014 |
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2013 |
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Net premiums written |
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$ |
364.4 |
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$ |
350.5 |
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$ |
678.2 |
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$ |
602.0 |
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Net premiums earned |
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306.8 |
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238.3 |
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606.9 |
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487.2 |
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Operating income before taxes |
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38.1 |
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36.9 |
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87.3 |
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77.8 |
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Loss and LAE ratio |
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52.4 |
% |
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48.6 |
% |
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52.5 |
% |
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50.4 |
% |
Expense ratio |
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39.7 |
% |
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41.0 |
% |
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37.5 |
% |
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37.8 |
% |
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Combined ratio |
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92.1 |
% |
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89.6 |
% |
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90.0 |
% |
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88.2 |
% |
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Combined ratio, excluding catastrophe losses |
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88.4 |
% |
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84.4 |
% |
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88.2 |
% |
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85.1 |
% |
Current accident year combined ratio, excluding catastrophe losses |
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97.9 |
% |
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97.3 |
% |
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96.2 |
% |
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94.1 |
% |
Investments
Net
investment income was $67.0 million for the second quarter of 2014, compared to $67.9 million in the prior year period. The decrease is due primarily to the impact of lower new money yields, partially offset by the impact of investing higher
operating cash flows. The average pre-tax earned yield on fixed maturities was 3.74% and 3.98% for the quarters ended June 30, 2014 and 2013, respectively.
Net realized investment gains were $22.2 million in the second quarter of 2014, compared to $13.7 million in the second quarter of 2013. Gains in 2014
primarily resulted from the sale of an equity investment acquired with Chaucer in 2011. Gains in 2013 were related to sales of both equities and fixed maturity securities.
The company held $8.4 billion in cash and invested assets at June 30, 2014.
Fixed maturities and cash represented 91% of the investment portfolio. Approximately 94% of the companys fixed maturity portfolio is rated investment
grade. Net unrealized investment gains increased $60.4 million during the second quarter of 2014, to $360.7 million at June 30, 2014, from $300.3 million at March 31, 2014. During the first six months of 2014, net unrealized investment
gains increased $138.4 million. The increase in net unrealized investment gains for the quarter and the year resulted from the impact of lower prevailing interest rates and tightening of credit spreads.
Capitalization and Shareholders Equity
Book value
per share was $63.65, up 7.1% from December 31, 2013, driven by earnings accretion and an increase in net unrealized gains on the investment portfolio.
5
Earnings Conference Call
The Hanover will host a conference call to discuss its second quarter results on Friday, August 1, at 10:00 a.m. Eastern Time. A PowerPoint
slide presentation will accompany the prepared remarks and has been posted on The Hanover Web site. Interested investors and others can listen to the call and access the presentation through The Hanovers Web site, located at
www.hanover.com, in the About Us-Investors section. Investors may access the conference call by dialing 877-546-5021; if calling internationally, please dial 857-244-7553; conference code: 41088650. Web-cast participants should go
to the Web site 15 minutes early to register, download, and install any necessary audio software. A re-broadcast of the conference call will be available on this Web site approximately two hours after the call.
Financial Supplement
The Hanovers second quarter
earnings news release and financial supplement are available in the About Us-Investors section of the companys Web site at www.hanover.com.
6
The Hanover Insurance Group, Inc.
Condensed Consolidated Balance Sheet
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$ in millions |
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June 30, 2014 |
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December 31, 2013 |
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Assets |
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Total investments |
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$ |
7,827.5 |
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$ |
7,593.3 |
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Cash and cash equivalents |
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606.2 |
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486.2 |
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Premiums and accounts receivable, net |
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1,515.9 |
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|
1,324.6 |
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Reinsurance recoverable on paid and unpaid losses and unearned premiums |
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2,416.7 |
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|
2,335.0 |
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Other assets |
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1,598.5 |
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1,639.6 |
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Total assets |
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$ |
13,964.8 |
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$ |
13,378.7 |
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Liabilities |
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Loss and loss adjustment expense reserves |
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$ |
6,448.0 |
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$ |
6,231.5 |
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Unearned premiums |
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|
2,689.0 |
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|
2,515.8 |
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Debt |
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|
903.9 |
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|
903.9 |
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Other liabilities |
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|
1,128.8 |
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|
|
1,133.0 |
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|
|
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Total liabilities |
|
$ |
11,169.7 |
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$ |
10,784.2 |
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Total shareholders equity |
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$ |
2,795.1 |
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$ |
2,594.5 |
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|
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|
Total liabilities and shareholders equity |
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$ |
13,964.8 |
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|
$ |
13,378.7 |
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|
|
|
|
|
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|
Condensed Consolidated Income Statement
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|
Three months ended June 30 |
|
|
Six months ended June 30 |
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$ in millions |
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums earned |
|
$ |
1,174.7 |
|
|
$ |
1,090.8 |
|
|
$ |
2,337.7 |
|
|
$ |
2,185.1 |
|
Net investment income |
|
|
67.0 |
|
|
|
67.9 |
|
|
|
134.0 |
|
|
|
135.2 |
|
Total net realized investment gains |
|
|
22.2 |
|
|
|
13.7 |
|
|
|
26.6 |
|
|
|
21.8 |
|
Fees and other income |
|
|
9.1 |
|
|
|
10.2 |
|
|
|
18.6 |
|
|
|
20.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
1,273.0 |
|
|
|
1,182.6 |
|
|
|
2,516.9 |
|
|
|
2,362.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Losses and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Losses and loss adjustment expenses |
|
|
725.5 |
|
|
|
692.1 |
|
|
|
1,476.0 |
|
|
|
1,375.5 |
|
Amortization of deferred acquisition costs |
|
|
259.6 |
|
|
|
232.7 |
|
|
|
513.3 |
|
|
|
475.2 |
|
Interest expense |
|
|
16.3 |
|
|
|
17.4 |
|
|
|
32.6 |
|
|
|
32.1 |
|
Other operating expenses |
|
|
163.9 |
|
|
|
174.5 |
|
|
|
315.2 |
|
|
|
325.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total losses and expenses |
|
|
1,165.3 |
|
|
|
1,116.7 |
|
|
|
2,337.1 |
|
|
|
2,208.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes |
|
|
107.7 |
|
|
|
65.9 |
|
|
|
179.8 |
|
|
|
154.8 |
|
Income tax expense |
|
|
25.2 |
|
|
|
12.8 |
|
|
|
42.6 |
|
|
|
35.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations |
|
|
82.5 |
|
|
|
53.1 |
|
|
|
137.2 |
|
|
|
119.5 |
|
Discontinued operations |
|
|
0.1 |
|
|
|
0.3 |
|
|
|
|
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
82.6 |
|
|
$ |
53.4 |
|
|
$ |
137.2 |
|
|
$ |
119.6 |
|
7
The following is a reconciliation from operating income to net
income(6):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30 |
|
|
Six months ended June 30 |
|
In millions, except per share amounts |
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
|
$ Amount |
|
|
Per Share Diluted |
|
|
$ Amount |
|
|
Per Share Diluted |
|
|
$ Amount |
|
|
Per Share Diluted |
|
|
$ Amount |
|
|
Per Share Diluted |
|
Operating income (loss) before taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Lines |
|
$ |
44.2 |
|
|
|
|
|
|
$ |
26.2 |
|
|
|
|
|
|
$ |
60.3 |
|
|
|
|
|
|
$ |
59.2 |
|
|
|
|
|
Personal Lines |
|
|
22.7 |
|
|
|
|
|
|
|
19.9 |
|
|
|
|
|
|
|
44.3 |
|
|
|
|
|
|
|
50.4 |
|
|
|
|
|
Chaucer |
|
|
38.1 |
|
|
|
|
|
|
|
36.9 |
|
|
|
|
|
|
|
87.3 |
|
|
|
|
|
|
|
77.8 |
|
|
|
|
|
Other |
|
|
(2.8 |
) |
|
|
|
|
|
|
(1.9 |
) |
|
|
|
|
|
|
(4.7 |
) |
|
|
|
|
|
|
(4.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
102.2 |
|
|
|
|
|
|
|
81.1 |
|
|
|
|
|
|
|
187.2 |
|
|
|
|
|
|
|
183.3 |
|
|
|
|
|
Interest expense |
|
|
(16.3 |
) |
|
|
|
|
|
|
(17.4 |
) |
|
|
|
|
|
|
(32.6 |
) |
|
|
|
|
|
|
(32.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income before income taxes |
|
|
85.9 |
|
|
$ |
1.91 |
|
|
|
63.7 |
|
|
$ |
1.42 |
|
|
|
154.6 |
|
|
$ |
3.45 |
|
|
|
151.2 |
|
|
$ |
3.36 |
|
Income tax expense on operating income |
|
|
(27.5 |
) |
|
|
(0.61 |
) |
|
|
(16.9 |
) |
|
|
(0.37 |
) |
|
|
(49.2 |
) |
|
|
(1.10 |
) |
|
|
(44.5 |
) |
|
|
(0.99 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income after taxes |
|
|
58.4 |
|
|
|
1.30 |
|
|
|
46.8 |
|
|
|
1.05 |
|
|
|
105.4 |
|
|
|
2.35 |
|
|
|
106.7 |
|
|
|
2.37 |
|
Net realized investment gains |
|
|
22.2 |
|
|
|
0.49 |
|
|
|
13.7 |
|
|
|
0.31 |
|
|
|
26.6 |
|
|
|
0.59 |
|
|
|
21.8 |
|
|
|
0.48 |
|
Non-operating items |
|
|
1.9 |
|
|
|
0.05 |
|
|
|
(7.4 |
) |
|
|
(0.17 |
) |
|
|
5.2 |
|
|
|
0.12 |
|
|
|
(9.0 |
) |
|
|
(0.20 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations, net of taxes |
|
|
82.5 |
|
|
|
1.84 |
|
|
|
53.1 |
|
|
|
1.19 |
|
|
|
137.2 |
|
|
|
3.06 |
|
|
|
119.5 |
|
|
|
2.65 |
|
Other discontinued operations, net of taxes |
|
|
0.1 |
|
|
|
|
|
|
|
0.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.1 |
|
|
|
0.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
82.6 |
|
|
$ |
1.84 |
|
|
$ |
53.4 |
|
|
$ |
1.19 |
|
|
$ |
137.2 |
|
|
$ |
3.06 |
|
|
$ |
119.6 |
|
|
$ |
2.66 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding |
|
|
|
|
|
|
44.9 |
|
|
|
|
|
|
|
44.8 |
|
|
|
|
|
|
|
44.8 |
|
|
|
|
|
|
|
45.0 |
|
Forward-Looking Statements and Non-GAAP Financial Measures
Forward-looking statements
Certain statements in this
release or in the above-referenced conference call may be forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Use of the words believes, anticipates, expects,
projections, forecast, outlook, should, could, confident, plan, guidance, on track to and similar expressions is intended to identify
forward-looking statements. The company cautions investors that any such forward-looking statements are estimates or projections that involve significant judgment and that neither historical results and trends nor forward-looking statements are
guarantees or necessarily indicative of future performance. Actual results could differ materially.
In particular, statements in this press release or in
such conference call regarding underlying improvement in trends driven by rate and other underwriting or mix actions, exposure management actions, positive momentum shift in Personal Lines, pricing and retention trends, our ability to
achieve our ultimate goals, and improve shareholder returns, and statements in the above-referenced conference call regarding expectation for operating income per share, combined ratio, net premiums written guidance for 2014, including with respect
to expectations for future reserve development, the ability to deliver on strategic and financial goals to improve the combined ratio, and achieve growth and ROE targets, new business growth, optimizing our business mix,
8
meaningful growth potential with best-performing agents, underwriting strength, retention, the ability to achieve rate increases in classes of business designated as small, middle or large,
maintain or improve ex-catastrophe accident year loss and expense ratios, particularly due to our pricing initiatives and underwriting focus, our confidence in continuing re-underwriting efforts and rate actions, particularly in commercial auto,
future rate and pricing levels (including whether they will exceed loss costs), the potential impact of capital actions and business investments, financial strength, the impact of product, account-based and geographic mix changes on future
profitability, earnings consistency or volatility, margin improvement, expectations for our legacy surety business, maturation and organic growth in specialty lines and the impact growth could have on driving improvement and financial contributions
in those lines, the impact of various agency and exposure management actions on net premiums written, expectations for premium levels, and future growth, including expected return to growth in Personal Lines and its impact on the Personal Lines
expense ratio, remaining on track to achieve improvement in Commercial Lines expense ratio for 2014, catastrophes losses and exposure in certain geographic areas, effective tax rates, weighted shares outstanding, returns on equity, the ability to
improve investment yields, the impact of foreign currency fluctuations, and statements regarding expected financial results, combined ratio, premium growth and profitability of Chaucer Holdings plc (Chaucer), the ability to manage market
headwinds related to Chaucers business, are all forward-looking statements.
Investors should consider the risks and uncertainties in the
companys business that may affect such estimates and future performance, including (i) the inherent difficulties in arriving at such estimates, particularly with respect to current accident year results and loss reserve development or
with respect to lines of business which are more volatile, or with respect to which historical losses are less predictive of future losses, or longer tail products, or, with respect to Chaucer, reported premium; (ii) the complexity
of estimating losses from large catastrophe events or with respect to emerging issues where circumstances may delay reporting of the existence, nature or extent of losses or where demand surge, regulatory assessments, litigation,
coverage and technical complexities or other factors may significantly impact the ultimate amount of such losses; (iii) the difficulties of estimating the impact of the current financial and economic environment on rates, investment income,
foreign exchange rates, which affect Chaucers business and reported results, the investment portfolio and capital, product demand, losses and competitor actions; (iv) the uncertainties of future rating agency requirements, which could
affect the company as well as the companys investment portfolio; (v) inherent volatility with respect to certain businesses, as a result of man-made or natural catastrophes or otherwise; (vi) the impact of the evolving regulatory and
legal environment (including the pending expiration of the federal terrorism reinsurance program); and (vii) the inherent uncertainties of predicting future loss and pricing trends.
Investors are directed to consider the risks and uncertainties in the companys business that may affect future performance (which includes
re-estimations of current or past performance) and that are discussed in readily available documents, including the companys annual report and other documents filed by The Hanover with the Securities and Exchange Commission (SEC)
and which are also available at www.hanover.com under About Us - Investors. These uncertainties include the possibility of adverse catastrophe experiences (including terrorism) and severe weather; the uncertainty in estimating
weather-related losses, and property and casualty losses (particularly with respect to products with longer tails or involving emerging issues and with respect to losses incurred as the result of new lines of business or reinsurance contracts and
reinsurance recoverables); litigation and the possibility of adverse judicial decisions, including those which expand policy coverage beyond
9
its intended scope; the ability to increase or maintain certain property and casualty insurance rates; the impact of new product introductions and expansion in new geographic areas; the impact of
future acquisitions; adverse loss and loss adjustment expense development from prior years and adverse trends in mortality and morbidity and medical costs; changes in frequency and loss trends; the ability to increase renewal rates and new property
and casualty policy counts; investment impairments (which may be affected by, among other things, the companys ability and willingness to hold investment assets until they recover in value) and currency, credit and interest rate risk; the
impact of competition and consolidation in the industry and among agents and brokers; the economic environment; adverse state, federal and, with respect to Chaucer, international legislation or regulation or regulatory actions affecting Chaucer or
the Society and Corporation of Lloyds; financial ratings actions; uncertainties in estimating indemnification liabilities recorded in conjunction with obligations undertaken in connection with the sale of various businesses; and uncertainties
in general economic conditions (including inflation, particularly in various sectors such as healthcare) and in investment and financial markets, which, among other things, could result in increased impairments of fixed income investments,
reductions in market values as the result of increases in interest rates, and the inability to collect from reinsurers and the performance of the discontinued and run-off voluntary pools.
Non-GAAP financial measures
As discussed on page 44 of
the 2013 Annual Report, The Hanover uses non-GAAP financial measures as important measures of its operating performance, including operating income, operating income before interest expense and taxes, operating income per share, and measures of
operating income and loss ratios excluding catastrophe losses and reserve development. Operating income and operating income per share are non-GAAP measures. They are defined as net income excluding the after-tax impact of net realized investment
gains (losses) (including gains and losses on certain derivative instruments), gains and losses from the repayment of the companys debt, other non-operating items, and results from discontinued operations, and, in the case of operating
income per share, divided by the average number of diluted shares of common stock. The definition of other financial measures and terms can be found in the 2013 Annual Report on pages 81-83.
Net realized investment gains and losses (including gains or losses on certain derivative instruments) are excluded for purposes of presenting operating
income since they are largely determined by interest rates, financial markets and the timing of sales. Operating income also excludes net gains and losses on disposals of businesses, discontinued operations, restructuring costs, extraordinary items,
the cumulative effect of accounting changes and certain other items. Operating income is the sum of the segment income from: Commercial Lines, Personal Lines, Chaucer and Other, after interest expense and taxes. Operating income may also be
presented as operating income before taxes, which is operating income before interest expense and taxes. The Hanover believes that measures of operating income provide investors with a valuable measure of the performance of the
companys ongoing businesses because they highlight the portion of net income (losses) attributable to the core operations of the business.
The
Hanover also provides measures of operating income and loss and combined ratios that exclude the effects of catastrophe losses. A catastrophe is a severe loss, resulting from natural or manmade events, including risks such as fire, hurricane,
earthquake, windstorm, explosion, terrorism or other similar events. Each catastrophe
10
has unique characteristics. Catastrophes are not predictable as to timing or loss amount in advance. The Hanover believes that a discussion of the effect of catastrophes is meaningful for
investors to understand the variability of periodic earnings and loss and combined ratios.
Reserve development, which can be favorable or unfavorable,
represents changes in the companys estimate of the costs to resolve claims from prior years. The company believes that a discussion of loss and combined ratios excluding reserve development is helpful to investors since it provides insight
into both its estimate of current year accident results and the accuracy of prior-year estimates. Calendar year loss ratios determined in accordance with GAAP, excluding reserve development, are sometimes referred to as accident-year loss
ratios.
Income from continuing operations is the most directly comparable GAAP measure for operating income (and operating income before taxes) and
measures of operating income that exclude the effects of catastrophe losses or reserve development. Operating income and measures of operating income that exclude the effects of catastrophe losses or reserve development should not be construed as
substitutes for income from continuing operations or net income determined in accordance with GAAP. A reconciliation of operating income to income from continuing operations and net income for the three and six months ended June 30, 2014 and
2013 is set forth in the table on page 8 of this document and in the financial supplement.
Loss and combined ratios calculated in accordance with GAAP
are the most directly comparable GAAP measures for loss and combined ratios calculated excluding the effects of catastrophe losses or reserve development. The presentation of loss and combined ratios calculated excluding the effects of catastrophe
losses or reserve development should not be construed as a substitute for loss or combined ratios determined in accordance with GAAP.
Book value per
share, excluding net unrealized gains and losses, is also a non-GAAP measure. It is calculated as total shareholders equity excluding the after-tax effect of unrealized investment gains and losses, divided by the number of common shares
outstanding.
About The Hanover
The Hanover
Insurance Group, Inc., based in Worcester, Mass., is a leading property and casualty insurer in the United States. For more than 160 years, The Hanover has provided a wide range of property and casualty products and services to businesses,
individuals, and families. The Hanover distributes its products through a select group of agents and brokers. Through its international member company, Chaucer, The Hanover also underwrites business at Lloyds of London in several major
insurance and reinsurance classes, including marine, property and energy. For more information, please visit hanover.com.
11
Contact Information
|
|
|
|
|
Investors: |
|
Media: |
|
|
|
|
|
Oksana Lukasheva |
|
Michael F. Buckley |
|
|
|
|
|
E-mail: olukasheva@hanover.com |
|
E-mail: mibuckley@hanover.com |
|
|
|
|
|
1-508-855-2063 |
|
1-508-855-3099 |
|
|
Definition of Reported Segments
Continuing operations include four operating segments: Commercial Lines, Personal Lines, Chaucer, and Other. The Commercial Lines segment offers a suite of
products targeted at the small to mid-size business markets, which include commercial multiple peril, commercial automobile, workers compensation and other commercial coverages, such as specialty program business, inland marine, management and
professional liability and surety. The Personal Lines segment markets automobile, homeowners and ancillary coverages to individuals and families. The Chaucer reporting segment represents THGs international business written through Lloyds
of London in several major insurance and reinsurance classes, including property, marine and aviation, energy, U.K. motor and casualty. The Other segment includes Opus Investment Management, Inc., which provides investment management services to
institutions, pension funds and other organizations, the operations of the holding company, as well as a block of run-off voluntary pools business, in which we have not actively participated since 1995.
Footnotes
|
(1) |
Operating income (loss) and operating income (loss) per diluted share are non-GAAP measures. Operating income before taxes, as referenced in the results of our three business segments, is defined as, with respect to
such segment, operating income before taxes and interest expense. These measures are used throughout this document. The reconciliation of operating income to the closest GAAP measures, income from continuing operations and income from continuing
operations per diluted share, respectively, is provided on page 8 of this press release. See the disclosure on the use of non-GAAP measures under the heading Forward-Looking Statements and Non-GAAP Financial Measures. |
|
(2) |
Combined ratio, excluding catastrophes, is a non-GAAP measure. This measure and measures excluding prior-year reserve development (accident-year ratios) are used throughout this document. The combined ratio
(which includes catastrophe losses and prior-year loss reserve development) is the closest GAAP measure. See the disclosure on the use of non-GAAP measures under the heading Forward-Looking Statements and Non-GAAP Financial Measures.
|
|
(3) |
Operating income, before taxes, excluding catastrophes, is a non-GAAP measure. It is defined as operating income, before taxes and interest expense, excluding the impact of catastrophe losses. See the disclosure on the
use of non-GAAP measures under the heading Forward-Looking Statements and Non-GAAP Financial Measures. |
12
|
(4) |
This is a non-GAAP measure, which is equal to the combined ratio, excluding prior-year favorable reserve development and catastrophe losses. This measure also is used later in this document. See the disclosure on the
use of non-GAAP measures under the heading Forward-Looking Statements and Non-GAAP Financial Measures. |
|
(5) |
Here, and later in this document, the expense ratio is reduced by installment fee revenues for purposes of the ratio calculation. |
|
(6) |
The separate financial information of each operating segment 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. Management evaluates the results of the aforementioned operating segments without consideration of interest expense on debt and on a pre-tax basis. Operating income (loss) is determined by adjusting net income for net realized
investment gains and losses, including certain gains or losses on derivative instruments. These gains and losses are excluded because they are determined by interest rates, financial markets and the timing of sales. Also, operating income excludes
net gains and losses on disposals of businesses, discontinued operations, gains and losses from the repayment of debt, restructuring costs, extraordinary items, the cumulative effect of accounting changes and certain other items. |
13
Exhibit 99.2
FINANCIAL SUPPLEMENT
SECOND QUARTER 2014
THE HANOVER INSURANCE GROUP
FINANCIAL SUPPLEMENT
TABLE OF CONTENTS
|
|
|
|
|
Business Description |
|
|
1 |
|
|
|
Financial Highlights |
|
|
2 |
|
|
|
Consolidated Financial Statements |
|
|
|
|
|
|
Income Statements |
|
|
3 |
|
|
|
Balance Sheets |
|
|
4 |
|
|
|
GAAP Underwriting Results |
|
|
|
|
|
|
Consolidated |
|
|
5-7 |
|
|
|
Commercial Lines |
|
|
8-10 |
|
|
|
Personal Lines |
|
|
11-13 |
|
|
|
Chaucer |
|
|
14-16 |
|
|
|
Investments |
|
|
|
|
|
|
Net Investment Income and Yields |
|
|
17 |
|
|
|
Investment Portfolio |
|
|
18 |
|
|
|
Credit Quality and Duration of Fixed Maturities |
|
|
19 |
|
|
|
Top 10 Corporate and Municipal Fixed Maturity Holdings |
|
|
20 |
|
|
|
Reconciliation of Operating Income (Loss) to Net Income (Loss) |
|
|
21 |
|
|
|
Other Information |
|
|
|
|
|
|
Non-GAAP Financial Measures |
|
|
22 |
|
|
|
Corporate Information |
|
|
23 |
|
|
|
Market and Dividend Information |
|
|
23 |
|
|
|
Financial Strength and Debt Ratings |
|
|
23 |
|
THE HANOVER INSURANCE GROUP
BASIS OF PRESENTATION
BUSINESS DESCRIPTIONS
COMMERCIAL LINES
Commercial multiple peril coverage insures businesses against third party liability from accidents occurring on their premises or arising out of their
operations, such as injuries sustained from products sold. It also insures business property for damage, such as that caused by fire, wind, hail, water damage (except for flooding), theft and vandalism.
Commercial automobile coverage insures businesses against losses incurred from personal bodily injury, bodily injury to third parties, property damage
to an insureds vehicle, and property damage to other vehicles and property.
Workers compensation coverage insures employers
against employee medical and indemnity claims resulting from injuries related to work. Workers compensation policies are often written in conjunction with other commercial policies.
Other Commercial Lines is comprised of inland marine, which insures businesses against physical losses to property, such as contractors
equipment, builders risk and goods in transit. We also offer underwriting and managing of program business, including to under-served markets where there are specialty coverage or risk management needs. Other Commercial Lines also includes
bonds, which provides businesses with contract surety coverage in the event of performance or payment claims, and commercial surety coverage related to fiduciary or regulatory obligations. Also included in Other Commercial Lines coverages are
umbrella, general liability, fire, specialty property, and professional and management liability.
PERSONAL LINES
Personal automobile coverage insures individuals against losses incurred from personal bodily injury, bodily injury to third parties, property damage to
an insureds vehicle, and property damage to other vehicles and other property.
Homeowners coverage insures individuals for losses to
their residences and personal property, such as those caused by fire, wind, hail, water damage (except for flooding), theft and vandalism, and against third party liability claims.
Other Personal Lines are comprised of personal inland marine (jewelry, art, etc.), umbrella, fire, personal watercraft, earthquake and other
miscellaneous coverages.
CHAUCER
The
Chaucer reporting segment represents THGs international business written through Lloyds and includes international property, marine and aviation, energy, UK motor and international casualty and other coverages.
Property coverage, including direct, facultative and treaty property accounts, insures property, including commercial, auto, and industrial businesses,
against physical loss or damage and business interruption. The property treaty account comprises mainly catastrophe and per risk excess contract acceptances, with a small amount of proportional treaty and reinsurance assumed business.
Marine and Aviation includes coverages that insure marine hull, excess of loss, liability, cargo and specie, in addition to political risk, war, and
satellite business coverages. It also includes aviation coverages that insure airline hull and liability, general aviation and refuellers and products.
Energy coverage, encompassing exploration and production, construction, liabilities downstream and renewables, insures energy businesses against
physical damage, business interruption, control of well, seepage and pollution and liabilities. Energy also includes Nuclear, which predominantly provides coverage relating to power generation at nuclear power stations.
UK Motor coverage insures the UK private car and fleet markets. In addition, it writes specialist classes including commercial vehicle, taxi,
motorcycle, motor trade and classic/specialist vehicles, as well as other UK small commercial products.
Casualty and Other Lines includes
coverages that insure financial institutions crime and professional indemnity, medical malpractice, workers compensation and professional, managerial and general liability, as well as syndicate participations.
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; and voluntary pools business which is
in run-off.
1
THE HANOVER INSURANCE GROUP
FINANCIAL HIGHLIGHTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 |
|
|
Q3 |
|
|
Q4 |
|
|
Q1 |
|
|
Q2 |
|
|
Jun-YTD |
|
|
Jun-YTD |
|
(In millions, except earnings per share) |
|
2013 |
|
|
2013 |
|
|
2013 |
|
|
2014 |
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
PREMIUMS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross premiums written |
|
$ |
1,394.4 |
|
|
$ |
1,313.8 |
|
|
$ |
1,175.4 |
|
|
$ |
1,408.1 |
|
|
$ |
1,423.6 |
|
|
$ |
2,712.5 |
|
|
$ |
2,831.7 |
|
Net premiums written |
|
|
1,242.6 |
|
|
|
1,181.9 |
|
|
|
1,051.5 |
|
|
|
1,172.3 |
|
|
|
1,276.2 |
|
|
|
2,319.3 |
|
|
|
2,448.5 |
|
Net premiums earned |
|
|
1,090.8 |
|
|
|
1,124.7 |
|
|
|
1,140.7 |
|
|
|
1,163.0 |
|
|
|
1,174.7 |
|
|
|
2,185.1 |
|
|
|
2,337.7 |
|
EARNINGS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income before interest and taxes |
|
$ |
81.1 |
|
|
$ |
107.2 |
|
|
$ |
102.9 |
|
|
$ |
85.0 |
|
|
$ |
102.2 |
|
|
$ |
183.3 |
|
|
$ |
187.2 |
|
Operating income after taxes |
|
|
46.8 |
|
|
|
60.9 |
|
|
|
59.6 |
|
|
|
47.0 |
|
|
|
58.4 |
|
|
|
106.7 |
|
|
|
105.4 |
|
Income from continuing operations |
|
|
53.1 |
|
|
|
61.3 |
|
|
|
64.9 |
|
|
|
54.7 |
|
|
|
82.5 |
|
|
|
119.5 |
|
|
|
137.2 |
|
Net income |
|
|
53.4 |
|
|
|
61.3 |
|
|
|
70.1 |
|
|
|
54.6 |
|
|
|
82.6 |
|
|
|
119.6 |
|
|
|
137.2 |
|
PER SHARE DATA (DILUTED) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income after taxes |
|
$ |
1.05 |
|
|
$ |
1.36 |
|
|
$ |
1.33 |
|
|
$ |
1.05 |
|
|
$ |
1.30 |
|
|
$ |
2.37 |
|
|
$ |
2.35 |
|
Income from continuing operations |
|
|
1.19 |
|
|
|
1.37 |
|
|
|
1.45 |
|
|
|
1.22 |
|
|
|
1.84 |
|
|
|
2.65 |
|
|
|
3.06 |
|
Net income |
|
|
1.19 |
|
|
|
1.37 |
|
|
|
1.57 |
|
|
|
1.22 |
|
|
|
1.84 |
|
|
|
2.66 |
|
|
|
3.06 |
|
Weighted average shares outstanding |
|
|
44.8 |
|
|
|
44.6 |
|
|
|
44.8 |
|
|
|
44.8 |
|
|
|
44.9 |
|
|
|
45.0 |
|
|
|
44.8 |
|
|
|
|
|
|
|
|
|
BALANCE SHEET |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions, except per share data) |
|
June 30 2013 |
|
|
September 30 2013 |
|
|
December 31 2013 |
|
|
March 31 2014 |
|
|
June 30 2014 |
|
|
|
|
Total assets |
|
$ |
13,306.4 |
|
|
$ |
13,463.3 |
|
|
$ |
13,378.7 |
|
|
$ |
13,643.0 |
|
|
$ |
13,964.8 |
|
|
Total loss and loss adjustment expense reserves |
|
|
6,063.6 |
|
|
|
6,162.8 |
|
|
|
6,231.5 |
|
|
|
6,323.4 |
|
|
|
6,448.0 |
|
|
Total shareholders equity |
|
|
2,495.7 |
|
|
|
2,544.2 |
|
|
|
2,594.5 |
|
|
|
2,681.1 |
|
|
|
2,795.1 |
|
|
U.S. Property and Casualty Companies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statutory surplus |
|
$ |
1,639.5 |
|
|
$ |
1,751.3 |
|
|
$ |
1,834.3 |
|
|
$ |
1,900.4 |
|
|
$ |
1,974.9 |
|
|
Premium to surplus ratio |
|
|
2.08:1 |
|
|
|
1.95:1 |
|
|
|
1.87:1 |
|
|
|
1.83:1 |
|
|
|
1.77:1 |
|
|
Book value per share |
|
$ |
57.41 |
|
|
$ |
58.43 |
|
|
$ |
59.43 |
|
|
$ |
61.24 |
|
|
$ |
63.65 |
|
|
Book value per share, excluding net unrealized investment gains and losses, net of tax |
|
$ |
53.62 |
|
|
$ |
54.64 |
|
|
$ |
56.07 |
|
|
$ |
56.70 |
|
|
$ |
58.16 |
|
|
Tangible book value per share (total book value excluding goodwill and intangibles) |
|
$ |
50.25 |
|
|
$ |
51.20 |
|
|
$ |
52.22 |
|
|
$ |
54.06 |
|
|
$ |
56.47 |
|
|
Shares outstanding |
|
|
43.5 |
|
|
|
43.6 |
|
|
|
43.7 |
|
|
|
43.8 |
|
|
|
43.9 |
|
|
Total debt/equity |
|
|
37.6 |
% |
|
|
36.9 |
% |
|
|
34.8 |
% |
|
|
33.7 |
% |
|
|
32.3 |
% |
|
Total debt/total capital |
|
|
27.3 |
% |
|
|
27.0 |
% |
|
|
25.8 |
% |
|
|
25.2 |
% |
|
|
24.4 |
% |
|
2
THE HANOVER INSURANCE GROUP
CONSOLIDATED INCOME STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months ended June 30 |
|
|
Six Months ended June 30 |
|
(In millions) |
|
2014 |
|
|
2013 |
|
|
% Change |
|
|
2014 |
|
|
2013 |
|
|
% Change |
|
REVENUES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums earned |
|
$ |
1,174.7 |
|
|
$ |
1,090.8 |
|
|
|
7.7 |
|
|
$ |
2,337.7 |
|
|
$ |
2,185.1 |
|
|
|
7.0 |
|
Net investment income |
|
|
67.0 |
|
|
|
67.9 |
|
|
|
(1.3 |
) |
|
|
134.0 |
|
|
|
135.2 |
|
|
|
(0.9 |
) |
Net realized investment gains |
|
|
22.2 |
|
|
|
13.7 |
|
|
|
62.0 |
|
|
|
26.6 |
|
|
|
21.8 |
|
|
|
22.0 |
|
Fees and other income |
|
|
9.1 |
|
|
|
10.2 |
|
|
|
(10.8 |
) |
|
|
18.6 |
|
|
|
20.8 |
|
|
|
(10.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
1,273.0 |
|
|
|
1,182.6 |
|
|
|
7.6 |
|
|
|
2,516.9 |
|
|
|
2,362.9 |
|
|
|
6.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSSES AND EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Losses and loss adjustment expenses |
|
|
725.5 |
|
|
|
692.1 |
|
|
|
4.8 |
|
|
|
1,476.0 |
|
|
|
1,375.5 |
|
|
|
7.3 |
|
Amortization of deferred acquisition costs |
|
|
259.6 |
|
|
|
232.7 |
|
|
|
11.6 |
|
|
|
513.3 |
|
|
|
475.2 |
|
|
|
8.0 |
|
Interest expense |
|
|
16.3 |
|
|
|
17.4 |
|
|
|
(6.3 |
) |
|
|
32.6 |
|
|
|
32.1 |
|
|
|
1.6 |
|
Other operating expenses |
|
|
163.9 |
|
|
|
174.5 |
|
|
|
(6.1 |
) |
|
|
315.2 |
|
|
|
325.3 |
|
|
|
(3.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total losses and expenses |
|
|
1,165.3 |
|
|
|
1,116.7 |
|
|
|
4.4 |
|
|
|
2,337.1 |
|
|
|
2,208.1 |
|
|
|
5.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes |
|
|
107.7 |
|
|
|
65.9 |
|
|
|
63.4 |
|
|
|
179.8 |
|
|
|
154.8 |
|
|
|
16.1 |
|
Income tax expense |
|
|
25.2 |
|
|
|
12.8 |
|
|
|
96.9 |
|
|
|
42.6 |
|
|
|
35.3 |
|
|
|
20.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations |
|
|
82.5 |
|
|
|
53.1 |
|
|
|
55.4 |
|
|
|
137.2 |
|
|
|
119.5 |
|
|
|
14.8 |
|
Discontinued operations |
|
|
0.1 |
|
|
|
0.3 |
|
|
|
N/M |
|
|
|
|
|
|
|
0.1 |
|
|
|
N/M |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
82.6 |
|
|
$ |
53.4 |
|
|
|
54.7 |
|
|
$ |
137.2 |
|
|
$ |
119.6 |
|
|
|
14.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3
THE HANOVER INSURANCE GROUP
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30 |
|
|
December 31 |
|
|
|
|
(In millions, except per share data) |
|
2014 |
|
|
2013 |
|
|
% Change |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
Investments: |
|
|
|
|
|
|
|
|
Fixed maturities, at fair value (amortized cost of $6,785.1 and $6,815.2) |
|
$ |
7,058.5 |
|
|
$ |
6,970.6 |
|
|
|
1.3 |
|
Equity securities, at fair value (cost of $446.4 and $366.5) |
|
|
530.5 |
|
|
|
430.2 |
|
|
|
23.3 |
|
Other investments |
|
|
238.5 |
|
|
|
192.5 |
|
|
|
23.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investments |
|
|
7,827.5 |
|
|
|
7,593.3 |
|
|
|
3.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
606.2 |
|
|
|
486.2 |
|
|
|
24.7 |
|
Accrued investment income |
|
|
70.0 |
|
|
|
68.0 |
|
|
|
2.9 |
|
Premiums and accounts receivable, net |
|
|
1,515.9 |
|
|
|
1,324.6 |
|
|
|
14.4 |
|
Reinsurance recoverable on paid and unpaid losses and unearned premiums |
|
|
2,416.7 |
|
|
|
2,335.0 |
|
|
|
3.5 |
|
Deferred acquistion costs |
|
|
540.6 |
|
|
|
506.0 |
|
|
|
6.8 |
|
Deferred income taxes |
|
|
145.6 |
|
|
|
239.7 |
|
|
|
(39.3 |
) |
Goodwill |
|
|
185.2 |
|
|
|
184.9 |
|
|
|
0.2 |
|
Other assets |
|
|
542.1 |
|
|
|
526.1 |
|
|
|
3.0 |
|
Assets of discontinued operations |
|
|
115.0 |
|
|
|
114.9 |
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
13,964.8 |
|
|
$ |
13,378.7 |
|
|
|
4.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS EQUITY |
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
Loss and loss adjustment expense reserves |
|
$ |
6,448.0 |
|
|
$ |
6,231.5 |
|
|
|
3.5 |
|
Unearned premiums |
|
|
2,689.0 |
|
|
|
2,515.8 |
|
|
|
6.9 |
|
Expenses and taxes payable |
|
|
569.7 |
|
|
|
637.2 |
|
|
|
(10.6 |
) |
Reinsurance premiums payable |
|
|
443.2 |
|
|
|
374.7 |
|
|
|
18.3 |
|
Debt |
|
|
903.9 |
|
|
|
903.9 |
|
|
|
|
|
Liabilities of discontinued operations |
|
|
115.9 |
|
|
|
121.1 |
|
|
|
(4.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
11,169.7 |
|
|
|
10,784.2 |
|
|
|
3.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
1,824.5 |
|
|
|
1,830.1 |
|
|
|
(0.3 |
) |
Accumulated other comprehensive income |
|
|
267.1 |
|
|
|
177.6 |
|
|
|
50.4 |
|
Retained earnings |
|
|
1,451.7 |
|
|
|
1,349.1 |
|
|
|
7.6 |
|
Treasury stock at cost (16.6 and 16.8 million shares) |
|
|
(748.8 |
) |
|
|
(762.9 |
) |
|
|
(1.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders equity |
|
|
2,795.1 |
|
|
|
2,594.5 |
|
|
|
7.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders equity |
|
$ |
13,964.8 |
|
|
$ |
13,378.7 |
|
|
|
4.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
THE HANOVER INSURANCE GROUP
GAAP UNDERWRITING AND OPERATING INCOME INFORMATION AND RATIOS
CONSOLIDATED
Three Months ended June 30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
2013 |
|
|
|
Commercial |
|
|
Personal |
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
|
Personal |
|
|
|
|
|
|
|
|
|
|
(In millions, except percentage data) |
|
Lines |
|
|
Lines |
|
|
Chaucer |
|
|
Other |
|
|
Total |
|
|
Lines |
|
|
Lines |
|
|
Chaucer |
|
|
Other |
|
|
Total |
|
Gross premiums written |
|
$ |
613.0 |
|
|
$ |
395.2 |
|
|
$ |
415.4 |
|
|
$ |
|
|
|
$ |
1,423.6 |
|
|
$ |
591.0 |
|
|
$ |
397.8 |
|
|
$ |
405.6 |
|
|
$ |
|
|
|
$ |
1,394.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums written |
|
$ |
541.0 |
|
|
$ |
370.8 |
|
|
$ |
364.4 |
|
|
$ |
|
|
|
$ |
1,276.2 |
|
|
$ |
521.5 |
|
|
$ |
370.6 |
|
|
$ |
350.5 |
|
|
$ |
|
|
|
$ |
1,242.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums earned |
|
$ |
517.6 |
|
|
$ |
350.3 |
|
|
$ |
306.8 |
|
|
$ |
|
|
|
$ |
1,174.7 |
|
|
$ |
485.8 |
|
|
$ |
366.7 |
|
|
$ |
238.3 |
|
|
$ |
|
|
|
$ |
1,090.8 |
|
Losses and LAE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year, excluding catastrophe losses |
|
|
300.8 |
|
|
|
219.8 |
|
|
|
178.4 |
|
|
|
|
|
|
|
699.0 |
|
|
|
296.0 |
|
|
|
229.1 |
|
|
|
134.1 |
|
|
|
|
|
|
|
659.2 |
|
Prior year unfavorable (favorable) reserve development |
|
|
1.8 |
|
|
|
(2.2 |
) |
|
|
(29.2 |
) |
|
|
0.4 |
|
|
|
(29.2 |
) |
|
|
0.5 |
|
|
|
2.8 |
|
|
|
(30.7 |
) |
|
|
0.5 |
|
|
|
(26.9 |
) |
Catastrophe losses |
|
|
17.0 |
|
|
|
27.2 |
|
|
|
11.5 |
|
|
|
|
|
|
|
55.7 |
|
|
|
15.1 |
|
|
|
32.2 |
|
|
|
12.5 |
|
|
|
|
|
|
|
59.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total losses and LAE |
|
|
319.6 |
|
|
|
244.8 |
|
|
|
160.7 |
|
|
|
0.4 |
|
|
|
725.5 |
|
|
|
311.6 |
|
|
|
264.1 |
|
|
|
115.9 |
|
|
|
0.5 |
|
|
|
692.1 |
|
Amortization of deferred acquisition costs and other underwriting expenses |
|
|
190.7 |
|
|
|
101.9 |
|
|
|
121.8 |
|
|
|
0.5 |
|
|
|
414.9 |
|
|
|
183.7 |
|
|
|
102.9 |
|
|
|
97.7 |
|
|
|
0.5 |
|
|
|
384.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP underwriting profit (loss) |
|
|
7.3 |
|
|
|
3.6 |
|
|
|
24.3 |
|
|
|
(0.9 |
) |
|
|
34.3 |
|
|
|
(9.5 |
) |
|
|
(0.3 |
) |
|
|
24.7 |
|
|
|
(1.0 |
) |
|
|
13.9 |
|
Net investment income |
|
|
37.2 |
|
|
|
18.0 |
|
|
|
10.7 |
|
|
|
1.1 |
|
|
|
67.0 |
|
|
|
36.0 |
|
|
|
19.1 |
|
|
|
10.7 |
|
|
|
2.1 |
|
|
|
67.9 |
|
Other income |
|
|
2.1 |
|
|
|
3.1 |
|
|
|
3.1 |
|
|
|
0.8 |
|
|
|
9.1 |
|
|
|
1.9 |
|
|
|
3.1 |
|
|
|
4.5 |
|
|
|
0.7 |
|
|
|
10.2 |
|
Other operating expenses |
|
|
(2.4 |
) |
|
|
(2.0 |
) |
|
|
|
|
|
|
(3.8 |
) |
|
|
(8.2 |
) |
|
|
(2.2 |
) |
|
|
(2.0 |
) |
|
|
(3.0 |
) |
|
|
(3.7 |
) |
|
|
(10.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) before income taxes |
|
$ |
44.2 |
|
|
$ |
22.7 |
|
|
$ |
38.1 |
|
|
$ |
(2.8 |
) |
|
$ |
102.2 |
|
|
$ |
26.2 |
|
|
$ |
19.9 |
|
|
$ |
36.9 |
|
|
$ |
(1.9 |
) |
|
$ |
81.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss and LAE ratio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year, excluding catastrophe losses |
|
|
58.2 |
% |
|
|
62.7 |
% |
|
|
58.2 |
% |
|
|
N/M |
|
|
|
59.6 |
% |
|
|
61.0 |
% |
|
|
62.4 |
% |
|
|
56.3 |
% |
|
|
N/M |
|
|
|
60.4 |
% |
Prior year unfavorable (favorable) reserve development |
|
|
0.3 |
% |
|
|
(0.6 |
)% |
|
|
(9.5 |
)% |
|
|
N/M |
|
|
|
(2.5 |
)% |
|
|
0.1 |
% |
|
|
0.8 |
% |
|
|
(12.9 |
)% |
|
|
N/M |
|
|
|
(2.5 |
)% |
Catastrophe losses |
|
|
3.3 |
% |
|
|
7.8 |
% |
|
|
3.7 |
% |
|
|
N/M |
|
|
|
4.7 |
% |
|
|
3.1 |
% |
|
|
8.8 |
% |
|
|
5.2 |
% |
|
|
N/M |
|
|
|
5.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loss and LAE ratio |
|
|
61.8 |
% |
|
|
69.9 |
% |
|
|
52.4 |
% |
|
|
N/M |
|
|
|
61.8 |
% |
|
|
64.2 |
% |
|
|
72.0 |
% |
|
|
48.6 |
% |
|
|
N/M |
|
|
|
63.4 |
% |
Expense ratio |
|
|
36.6 |
% |
|
|
28.4 |
% |
|
|
39.7 |
% |
|
|
N/M |
|
|
|
35.0 |
% |
|
|
37.6 |
% |
|
|
27.3 |
% |
|
|
41.0 |
% |
|
|
N/M |
|
|
|
35.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined ratio |
|
|
98.4 |
% |
|
|
98.3 |
% |
|
|
92.1 |
% |
|
|
N/M |
|
|
|
96.8 |
% |
|
|
101.8 |
% |
|
|
99.3 |
% |
|
|
89.6 |
% |
|
|
N/M |
|
|
|
98.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5
THE HANOVER INSURANCE GROUP
GAAP UNDERWRITING AND OPERATING INCOME INFORMATION AND RATIOS
CONSOLIDATED
Six Months
ended June 30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
2013 |
|
|
|
Commercial |
|
|
Personal |
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
|
Personal |
|
|
|
|
|
|
|
|
|
|
(In millions, except percentage data) |
|
Lines |
|
|
Lines |
|
|
Chaucer |
|
|
Other |
|
|
Total |
|
|
Lines |
|
|
Lines |
|
|
Chaucer |
|
|
Other |
|
|
Total |
|
Gross premiums written |
|
$ |
1,210.8 |
|
|
$ |
738.5 |
|
|
$ |
882.4 |
|
|
$ |
|
|
|
$ |
2,831.7 |
|
|
$ |
1,152.4 |
|
|
$ |
765.0 |
|
|
$ |
795.1 |
|
|
$ |
|
|
|
$ |
2,712.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums written |
|
$ |
1,080.3 |
|
|
$ |
690.0 |
|
|
$ |
678.2 |
|
|
$ |
|
|
|
$ |
2,448.5 |
|
|
$ |
1,005.1 |
|
|
$ |
712.2 |
|
|
$ |
602.0 |
|
|
$ |
|
|
|
$ |
2,319.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums earned |
|
$ |
1,030.3 |
|
|
$ |
700.5 |
|
|
$ |
606.9 |
|
|
$ |
|
|
|
$ |
2,337.7 |
|
|
$ |
962.4 |
|
|
$ |
735.5 |
|
|
$ |
487.2 |
|
|
$ |
|
|
|
$ |
2,185.1 |
|
Losses and LAE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year, excluding catastrophe losses |
|
|
604.4 |
|
|
|
450.4 |
|
|
|
356.5 |
|
|
|
|
|
|
|
1,411.3 |
|
|
|
586.0 |
|
|
|
467.4 |
|
|
|
274.4 |
|
|
|
|
|
|
|
1,327.8 |
|
Prior year unfavorable (favorable) reserve development |
|
|
2.4 |
|
|
|
(3.2 |
) |
|
|
(48.8 |
) |
|
|
0.7 |
|
|
|
(48.9 |
) |
|
|
0.7 |
|
|
|
8.4 |
|
|
|
(44.0 |
) |
|
|
1.1 |
|
|
|
(33.8 |
) |
Catastrophe losses |
|
|
57.2 |
|
|
|
45.6 |
|
|
|
10.8 |
|
|
|
|
|
|
|
113.6 |
|
|
|
22.5 |
|
|
|
43.9 |
|
|
|
15.1 |
|
|
|
|
|
|
|
81.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total losses and LAE |
|
|
664.0 |
|
|
|
492.8 |
|
|
|
318.5 |
|
|
|
0.7 |
|
|
|
1,476.0 |
|
|
|
609.2 |
|
|
|
519.7 |
|
|
|
245.5 |
|
|
|
1.1 |
|
|
|
1,375.5 |
|
Amortization of deferred acquisition costs and other underwriting expenses |
|
|
380.3 |
|
|
|
202.0 |
|
|
|
227.6 |
|
|
|
0.7 |
|
|
|
810.6 |
|
|
|
365.8 |
|
|
|
206.0 |
|
|
|
184.0 |
|
|
|
1.0 |
|
|
|
756.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP underwriting profit (loss) |
|
|
(14.0 |
) |
|
|
5.7 |
|
|
|
60.8 |
|
|
|
(1.4 |
) |
|
|
51.1 |
|
|
|
(12.6 |
) |
|
|
9.8 |
|
|
|
57.7 |
|
|
|
(2.1 |
) |
|
|
52.8 |
|
Net investment income |
|
|
74.5 |
|
|
|
35.9 |
|
|
|
21.2 |
|
|
|
2.4 |
|
|
|
134.0 |
|
|
|
72.1 |
|
|
|
38.1 |
|
|
|
21.2 |
|
|
|
3.8 |
|
|
|
135.2 |
|
Other income |
|
|
4.1 |
|
|
|
6.0 |
|
|
|
7.0 |
|
|
|
1.5 |
|
|
|
18.6 |
|
|
|
3.9 |
|
|
|
6.4 |
|
|
|
9.0 |
|
|
|
1.5 |
|
|
|
20.8 |
|
Other operating expenses |
|
|
(4.3 |
) |
|
|
(3.3 |
) |
|
|
(1.7 |
) |
|
|
(7.2 |
) |
|
|
(16.5 |
) |
|
|
(4.2 |
) |
|
|
(3.9 |
) |
|
|
(10.1 |
) |
|
|
(7.3 |
) |
|
|
(25.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) before income taxes |
|
$ |
60.3 |
|
|
$ |
44.3 |
|
|
$ |
87.3 |
|
|
$ |
(4.7 |
) |
|
$ |
187.2 |
|
|
$ |
59.2 |
|
|
$ |
50.4 |
|
|
$ |
77.8 |
|
|
$ |
(4.1 |
) |
|
$ |
183.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss and LAE ratio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year, excluding catastrophe losses |
|
|
58.7 |
% |
|
|
64.4 |
% |
|
|
58.7 |
% |
|
|
N/M |
|
|
|
60.3 |
% |
|
|
60.9 |
% |
|
|
63.5 |
% |
|
|
56.3 |
% |
|
|
N/M |
|
|
|
60.8 |
% |
Prior year unfavorable (favorable) reserve development |
|
|
0.2 |
% |
|
|
(0.5 |
)% |
|
|
(8.0 |
)% |
|
|
N/M |
|
|
|
(2.1 |
)% |
|
|
0.1 |
% |
|
|
1.1 |
% |
|
|
(9.0 |
)% |
|
|
N/M |
|
|
|
(1.5 |
)% |
Catastrophe losses |
|
|
5.6 |
% |
|
|
6.5 |
% |
|
|
1.8 |
% |
|
|
N/M |
|
|
|
4.9 |
% |
|
|
2.3 |
% |
|
|
6.0 |
% |
|
|
3.1 |
% |
|
|
N/M |
|
|
|
3.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loss and LAE ratio |
|
|
64.5 |
% |
|
|
70.4 |
% |
|
|
52.5 |
% |
|
|
N/M |
|
|
|
63.1 |
% |
|
|
63.3 |
% |
|
|
70.6 |
% |
|
|
50.4 |
% |
|
|
N/M |
|
|
|
63.0 |
% |
Expense ratio |
|
|
36.7 |
% |
|
|
28.1 |
% |
|
|
37.5 |
% |
|
|
N/M |
|
|
|
34.4 |
% |
|
|
37.8 |
% |
|
|
27.3 |
% |
|
|
37.8 |
% |
|
|
N/M |
|
|
|
34.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined ratio |
|
|
101.2 |
% |
|
|
98.5 |
% |
|
|
90.0 |
% |
|
|
N/M |
|
|
|
97.5 |
% |
|
|
101.1 |
% |
|
|
97.9 |
% |
|
|
88.2 |
% |
|
|
N/M |
|
|
|
97.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6
THE HANOVER INSURANCE GROUP
GAAP UNDERWRITING INFORMATION AND RELATED RATIOS
CONSOLIDATED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 |
|
|
Q3 |
|
|
Q4 |
|
|
Q1 |
|
|
Q2 |
|
|
Jun-YTD |
|
|
Jun-YTD |
|
(In millions, except percentage data) |
|
2013 |
|
|
2013 |
|
|
2013 |
|
|
2014 |
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
Gross premiums written |
|
$ |
1,394.4 |
|
|
$ |
1,313.8 |
|
|
$ |
1,175.4 |
|
|
$ |
1,408.1 |
|
|
$ |
1,423.6 |
|
|
$ |
2,712.5 |
|
|
$ |
2,831.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums written |
|
$ |
1,242.6 |
|
|
$ |
1,181.9 |
|
|
$ |
1,051.5 |
|
|
$ |
1,172.3 |
|
|
$ |
1,276.2 |
|
|
$ |
2,319.3 |
|
|
$ |
2,448.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums earned |
|
$ |
1,090.8 |
|
|
$ |
1,124.7 |
|
|
$ |
1,140.7 |
|
|
$ |
1,163.0 |
|
|
$ |
1,174.7 |
|
|
$ |
2,185.1 |
|
|
$ |
2,337.7 |
|
Losses and LAE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year, excluding catastrophe losses |
|
|
659.2 |
|
|
|
688.9 |
|
|
|
680.7 |
|
|
|
712.3 |
|
|
|
699.0 |
|
|
|
1,327.8 |
|
|
|
1,411.3 |
|
Prior year favorable reserve development |
|
|
(26.9 |
) |
|
|
(23.6 |
) |
|
|
(18.9 |
) |
|
|
(19.7 |
) |
|
|
(29.2 |
) |
|
|
(33.8 |
) |
|
|
(48.9 |
) |
Catastrophe losses |
|
|
59.8 |
|
|
|
30.6 |
|
|
|
27.9 |
|
|
|
57.9 |
|
|
|
55.7 |
|
|
|
81.5 |
|
|
|
113.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total losses and LAE |
|
|
692.1 |
|
|
|
695.9 |
|
|
|
689.7 |
|
|
|
750.5 |
|
|
|
725.5 |
|
|
|
1,375.5 |
|
|
|
1,476.0 |
|
Amortization of deferred acquisition costs and other underwriting expenses |
|
|
384.8 |
|
|
|
387.4 |
|
|
|
414.3 |
|
|
|
395.7 |
|
|
|
414.9 |
|
|
|
756.8 |
|
|
|
810.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP underwriting profit |
|
$ |
13.9 |
|
|
$ |
41.4 |
|
|
$ |
36.7 |
|
|
$ |
16.8 |
|
|
$ |
34.3 |
|
|
$ |
52.8 |
|
|
$ |
51.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss and LAE ratio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year, excluding catastrophe losses |
|
|
60.4 |
% |
|
|
61.3 |
% |
|
|
59.8 |
% |
|
|
61.3 |
% |
|
|
59.6 |
% |
|
|
60.8 |
% |
|
|
60.3 |
% |
Prior year favorable reserve development |
|
|
(2.5 |
)% |
|
|
(2.1 |
)% |
|
|
(1.7 |
)% |
|
|
(1.7 |
)% |
|
|
(2.5 |
)% |
|
|
(1.5 |
)% |
|
|
(2.1 |
)% |
Catastrophe losses |
|
|
5.5 |
% |
|
|
2.7 |
% |
|
|
2.4 |
% |
|
|
5.0 |
% |
|
|
4.7 |
% |
|
|
3.7 |
% |
|
|
4.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loss and LAE ratio |
|
|
63.4 |
% |
|
|
61.9 |
% |
|
|
60.5 |
% |
|
|
64.6 |
% |
|
|
61.8 |
% |
|
|
63.0 |
% |
|
|
63.1 |
% |
Expense ratio |
|
|
35.0 |
% |
|
|
34.1 |
% |
|
|
36.0 |
% |
|
|
33.7 |
% |
|
|
35.0 |
% |
|
|
34.3 |
% |
|
|
34.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined ratio |
|
|
98.4 |
% |
|
|
96.0 |
% |
|
|
96.5 |
% |
|
|
98.3 |
% |
|
|
96.8 |
% |
|
|
97.3 |
% |
|
|
97.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined ratio, excluding catastrophe losses |
|
|
92.9 |
% |
|
|
93.3 |
% |
|
|
94.1 |
% |
|
|
93.3 |
% |
|
|
92.1 |
% |
|
|
93.6 |
% |
|
|
92.6 |
% |
Current accident year combined ratio, excluding catastrophe losses |
|
|
95.4 |
% |
|
|
95.4 |
% |
|
|
95.8 |
% |
|
|
95.0 |
% |
|
|
94.6 |
% |
|
|
95.1 |
% |
|
|
94.7 |
% |
7
THE HANOVER INSURANCE GROUP
GAAP UNDERWRITING AND OPERATING INCOME INFORMATION AND RATIOS
COMMERCIAL LINES
Three Months ended June 30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
2013 |
|
|
|
Multiple |
|
|
|
|
|
Workers |
|
|
|
|
|
|
|
|
Multiple |
|
|
|
|
|
Workers |
|
|
|
|
|
|
|
(In millions, except percentage data) |
|
Peril |
|
|
Auto |
|
|
Comp |
|
|
Other |
|
|
Total |
|
|
Peril |
|
|
Auto |
|
|
Comp |
|
|
Other |
|
|
Total |
|
Net premiums written |
|
$ |
171.7 |
|
|
$ |
76.4 |
|
|
$ |
58.6 |
|
|
$ |
234.3 |
|
|
$ |
541.0 |
|
|
$ |
163.2 |
|
|
$ |
76.8 |
|
|
$ |
57.1 |
|
|
$ |
224.4 |
|
|
$ |
521.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums earned |
|
$ |
169.8 |
|
|
$ |
75.8 |
|
|
$ |
59.4 |
|
|
$ |
212.6 |
|
|
$ |
517.6 |
|
|
$ |
157.9 |
|
|
$ |
70.5 |
|
|
$ |
54.8 |
|
|
$ |
202.6 |
|
|
$ |
485.8 |
|
Losses and LAE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year, excluding catastrophe losses |
|
|
86.6 |
|
|
|
54.7 |
|
|
|
42.2 |
|
|
|
117.3 |
|
|
|
300.8 |
|
|
|
87.4 |
|
|
|
50.7 |
|
|
|
38.4 |
|
|
|
119.5 |
|
|
|
296.0 |
|
Prior year unfavorable (favorable) reserve development |
|
|
(4.1 |
) |
|
|
4.1 |
|
|
|
(0.3 |
) |
|
|
2.1 |
|
|
|
1.8 |
|
|
|
(3.9 |
) |
|
|
3.6 |
|
|
|
(4.0 |
) |
|
|
4.8 |
|
|
|
0.5 |
|
Catastrophe losses |
|
|
12.6 |
|
|
|
0.2 |
|
|
|
|
|
|
|
4.2 |
|
|
|
17.0 |
|
|
|
11.1 |
|
|
|
0.1 |
|
|
|
|
|
|
|
3.9 |
|
|
|
15.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total losses and LAE |
|
|
95.1 |
|
|
|
59.0 |
|
|
|
41.9 |
|
|
|
123.6 |
|
|
|
319.6 |
|
|
|
94.6 |
|
|
|
54.4 |
|
|
|
34.4 |
|
|
|
128.2 |
|
|
|
311.6 |
|
Amortization of deferred acquisition costs and other underwriting expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
190.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
183.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP underwriting profit (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9.5 |
) |
Net investment income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36.0 |
|
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.9 |
|
Other operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
44.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
26.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss and LAE ratio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year, excluding catastrophe losses |
|
|
51.0 |
% |
|
|
72.2 |
% |
|
|
71.1 |
% |
|
|
55.1 |
% |
|
|
58.2 |
% |
|
|
55.4 |
% |
|
|
71.9 |
% |
|
|
70.1 |
% |
|
|
59.0 |
% |
|
|
61.0 |
% |
Prior year unfavorable (favorable) reserve development |
|
|
(2.4 |
)% |
|
|
5.4 |
% |
|
|
(0.5 |
)% |
|
|
1.0 |
% |
|
|
0.3 |
% |
|
|
(2.5 |
)% |
|
|
5.1 |
% |
|
|
(7.3 |
)% |
|
|
2.4 |
% |
|
|
0.1 |
% |
Catastrophe losses |
|
|
7.4 |
% |
|
|
0.3 |
% |
|
|
|
|
|
|
2.0 |
% |
|
|
3.3 |
% |
|
|
7.0 |
% |
|
|
0.1 |
% |
|
|
|
|
|
|
1.9 |
% |
|
|
3.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loss and LAE ratio |
|
|
56.0 |
% |
|
|
77.9 |
% |
|
|
70.6 |
% |
|
|
58.1 |
% |
|
|
61.8 |
% |
|
|
59.9 |
% |
|
|
77.1 |
% |
|
|
62.8 |
% |
|
|
63.3 |
% |
|
|
64.2 |
% |
Expense ratio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined ratio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
98.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in policies in force |
|
|
3.6 |
% |
|
|
5.1 |
% |
|
|
8.5 |
% |
|
|
1.8 |
% |
|
|
3.7 |
% |
|
|
2.1 |
% |
|
|
6.8 |
% |
|
|
14.1 |
% |
|
|
6.0 |
% |
|
|
5.8 |
% |
Retention |
|
|
85.2 |
% |
|
|
78.2 |
% |
|
|
75.3 |
% |
|
|
N/M |
|
|
|
82.1 |
% |
|
|
83.5 |
% |
|
|
78.7 |
% |
|
|
78.3 |
% |
|
|
N/M |
|
|
|
81.4 |
% |
8
THE HANOVER INSURANCE GROUP
GAAP UNDERWRITING AND OPERATING INCOME INFORMATION AND RATIOS
COMMERCIAL LINES
Six
Months ended June 30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
2013 |
|
|
|
Multiple |
|
|
|
|
|
Workers |
|
|
|
|
|
|
|
|
Multiple |
|
|
|
|
|
Workers |
|
|
|
|
(In millions, except percentage data) |
|
Peril |
|
|
Auto |
|
|
Comp |
|
|
Other |
|
|
Total |
|
|
Peril |
|
|
Auto |
|
|
Comp |
|
|
Other |
|
|
Total |
|
Net premiums written |
|
$ |
344.6 |
|
|
$ |
152.6 |
|
|
$ |
129.9 |
|
|
$ |
453.2 |
|
|
$ |
1,080.3 |
|
|
$ |
317.2 |
|
|
$ |
149.6 |
|
|
$ |
119.3 |
|
|
$ |
419.0 |
|
|
$ |
1,005.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums earned |
|
$ |
337.3 |
|
|
$ |
151.3 |
|
|
$ |
118.2 |
|
|
$ |
423.5 |
|
|
$ |
1,030.3 |
|
|
$ |
310.5 |
|
|
$ |
140.0 |
|
|
$ |
107.8 |
|
|
$ |
404.1 |
|
|
$ |
962.4 |
|
Losses and LAE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year, excluding catastrophe losses |
|
|
178.9 |
|
|
|
109.1 |
|
|
|
83.7 |
|
|
|
232.7 |
|
|
|
604.4 |
|
|
|
174.3 |
|
|
|
99.6 |
|
|
|
75.5 |
|
|
|
236.6 |
|
|
|
586.0 |
|
Prior year unfavorable (favorable) reserve development |
|
|
(4.8 |
) |
|
|
7.5 |
|
|
|
(1.9 |
) |
|
|
1.6 |
|
|
|
2.4 |
|
|
|
(4.0 |
) |
|
|
5.4 |
|
|
|
(7.5 |
) |
|
|
6.8 |
|
|
|
0.7 |
|
Catastrophe losses |
|
|
44.7 |
|
|
|
0.2 |
|
|
|
|
|
|
|
12.3 |
|
|
|
57.2 |
|
|
|
16.3 |
|
|
|
0.2 |
|
|
|
|
|
|
|
6.0 |
|
|
|
22.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total losses and LAE |
|
|
218.8 |
|
|
|
116.8 |
|
|
|
81.8 |
|
|
|
246.6 |
|
|
|
664.0 |
|
|
|
186.6 |
|
|
|
105.2 |
|
|
|
68.0 |
|
|
|
249.4 |
|
|
|
609.2 |
|
Amortization of deferred acquisition costs and other underwriting expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
380.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
365.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP underwriting loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(14.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12.6 |
) |
Net investment income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
74.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72.1 |
|
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.9 |
|
Other operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
60.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
59.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss and LAE ratio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year, excluding catastrophe losses |
|
|
52.9 |
% |
|
|
72.1 |
% |
|
|
70.8 |
% |
|
|
55.0 |
% |
|
|
58.7 |
% |
|
|
56.2 |
% |
|
|
71.1 |
% |
|
|
70.1 |
% |
|
|
58.6 |
% |
|
|
60.9 |
% |
Prior year unfavorable (favorable) reserve development |
|
|
(1.4 |
)% |
|
|
5.0 |
% |
|
|
(1.6 |
)% |
|
|
0.4 |
% |
|
|
0.2 |
% |
|
|
(1.3 |
)% |
|
|
3.9 |
% |
|
|
(7.0 |
)% |
|
|
1.7 |
% |
|
|
0.1 |
% |
Catastrophe losses |
|
|
13.3 |
% |
|
|
0.1 |
% |
|
|
|
|
|
|
2.9 |
% |
|
|
5.6 |
% |
|
|
5.2 |
% |
|
|
0.1 |
% |
|
|
|
|
|
|
1.5 |
% |
|
|
2.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loss and LAE ratio |
|
|
64.8 |
% |
|
|
77.2 |
% |
|
|
69.2 |
% |
|
|
58.3 |
% |
|
|
64.5 |
% |
|
|
60.1 |
% |
|
|
75.1 |
% |
|
|
63.1 |
% |
|
|
61.8 |
% |
|
|
63.3 |
% |
Expense ratio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined ratio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in policies in force |
|
|
3.6 |
% |
|
|
5.1 |
% |
|
|
8.5 |
% |
|
|
1.8 |
% |
|
|
3.7 |
% |
|
|
2.1 |
% |
|
|
6.8 |
% |
|
|
14.1 |
% |
|
|
6.0 |
% |
|
|
5.8 |
% |
Retention |
|
|
84.9 |
% |
|
|
79.4 |
% |
|
|
77.6 |
% |
|
|
N/M |
|
|
|
82.5 |
% |
|
|
83.3 |
% |
|
|
80.0 |
% |
|
|
78.3 |
% |
|
|
N/M |
|
|
|
81.4 |
% |
9
THE HANOVER INSURANCE GROUP
GAAP UNDERWRITING INFORMATION AND RELATED RATIOS
COMMERCIAL LINES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 |
|
|
Q3 |
|
|
Q4 |
|
|
Q1 |
|
|
Q2 |
|
|
Jun-YTD |
|
|
Jun-YTD |
|
(In millions, except percentage data) |
|
2013 |
|
|
2013 |
|
|
2013 |
|
|
2014 |
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
Gross premiums written |
|
$ |
591.0 |
|
|
$ |
601.7 |
|
|
$ |
541.8 |
|
|
$ |
597.8 |
|
|
$ |
613.0 |
|
|
$ |
1,152.4 |
|
|
$ |
1,210.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums written |
|
$ |
521.5 |
|
|
$ |
530.5 |
|
|
$ |
471.6 |
|
|
$ |
539.3 |
|
|
$ |
541.0 |
|
|
$ |
1,005.1 |
|
|
$ |
1,080.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums earned |
|
$ |
485.8 |
|
|
$ |
492.7 |
|
|
$ |
503.3 |
|
|
$ |
512.7 |
|
|
$ |
517.6 |
|
|
$ |
962.4 |
|
|
$ |
1,030.3 |
|
Losses and LAE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year, excluding catastrophe losses |
|
|
296.0 |
|
|
|
293.7 |
|
|
|
300.2 |
|
|
|
303.6 |
|
|
|
300.8 |
|
|
|
586.0 |
|
|
|
604.4 |
|
Prior year unfavorable reserve development |
|
|
0.5 |
|
|
|
2.3 |
|
|
|
0.3 |
|
|
|
0.6 |
|
|
|
1.8 |
|
|
|
0.7 |
|
|
|
2.4 |
|
Catastrophe losses |
|
|
15.1 |
|
|
|
8.5 |
|
|
|
7.7 |
|
|
|
40.2 |
|
|
|
17.0 |
|
|
|
22.5 |
|
|
|
57.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total losses and LAE |
|
|
311.6 |
|
|
|
304.5 |
|
|
|
308.2 |
|
|
|
344.4 |
|
|
|
319.6 |
|
|
|
609.2 |
|
|
|
664.0 |
|
Amortization of deferred acquisition costs and other underwriting expenses |
|
|
183.7 |
|
|
|
185.4 |
|
|
|
196.3 |
|
|
|
189.6 |
|
|
|
190.7 |
|
|
|
365.8 |
|
|
|
380.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP underwriting profit (loss) |
|
$ |
(9.5 |
) |
|
$ |
2.8 |
|
|
$ |
(1.2 |
) |
|
$ |
(21.3 |
) |
|
$ |
7.3 |
|
|
$ |
(12.6 |
) |
|
$ |
(14.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss and LAE ratio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year, excluding catastrophe losses |
|
|
61.0 |
% |
|
|
59.6 |
% |
|
|
59.7 |
% |
|
|
59.3 |
% |
|
|
58.2 |
% |
|
|
60.9 |
% |
|
|
58.7 |
% |
Prior year unfavorable reserve development |
|
|
0.1 |
% |
|
|
0.5 |
% |
|
|
0.1 |
% |
|
|
0.1 |
% |
|
|
0.3 |
% |
|
|
0.1 |
% |
|
|
0.2 |
% |
Catastrophe losses |
|
|
3.1 |
% |
|
|
1.7 |
% |
|
|
1.5 |
% |
|
|
7.8 |
% |
|
|
3.3 |
% |
|
|
2.3 |
% |
|
|
5.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loss and LAE ratio |
|
|
64.2 |
% |
|
|
61.8 |
% |
|
|
61.3 |
% |
|
|
67.2 |
% |
|
|
61.8 |
% |
|
|
63.3 |
% |
|
|
64.5 |
% |
Expense ratio |
|
|
37.6 |
% |
|
|
37.4 |
% |
|
|
38.8 |
% |
|
|
36.8 |
% |
|
|
36.6 |
% |
|
|
37.8 |
% |
|
|
36.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined ratio |
|
|
101.8 |
% |
|
|
99.2 |
% |
|
|
100.1 |
% |
|
|
104.0 |
% |
|
|
98.4 |
% |
|
|
101.1 |
% |
|
|
101.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined ratio, excluding catastrophe losses |
|
|
98.7 |
% |
|
|
97.5 |
% |
|
|
98.6 |
% |
|
|
96.2 |
% |
|
|
95.1 |
% |
|
|
98.8 |
% |
|
|
95.6 |
% |
Current accident year combined ratio, excluding catastrophe losses |
|
|
98.6 |
% |
|
|
97.0 |
% |
|
|
98.5 |
% |
|
|
96.1 |
% |
|
|
94.8 |
% |
|
|
98.7 |
% |
|
|
95.4 |
% |
10
THE HANOVER INSURANCE GROUP
GAAP UNDERWRITING AND OPERATING INCOME INFORMATION AND RATIOS
PERSONAL LINES
Three Months ended June 30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
2013 |
|
(In millions, except percentage data) |
|
Auto |
|
|
Home |
|
|
Other |
|
|
Total |
|
|
Auto |
|
|
Home |
|
|
Other |
|
|
Total |
|
Net premiums written |
|
$ |
227.3 |
|
|
$ |
132.7 |
|
|
$ |
10.8 |
|
|
$ |
370.8 |
|
|
$ |
227.9 |
|
|
$ |
131.8 |
|
|
$ |
10.9 |
|
|
$ |
370.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums earned |
|
$ |
216.0 |
|
|
$ |
124.2 |
|
|
$ |
10.1 |
|
|
$ |
350.3 |
|
|
$ |
228.5 |
|
|
$ |
127.8 |
|
|
$ |
10.4 |
|
|
$ |
366.7 |
|
Losses and LAE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year, excluding catastrophe losses |
|
|
151.3 |
|
|
|
64.8 |
|
|
|
3.7 |
|
|
|
219.8 |
|
|
|
165.3 |
|
|
|
59.8 |
|
|
|
4.0 |
|
|
|
229.1 |
|
Prior year unfavorable (favorable) reserve development |
|
|
(3.0 |
) |
|
|
1.0 |
|
|
|
(0.2 |
) |
|
|
(2.2 |
) |
|
|
2.8 |
|
|
|
|
|
|
|
|
|
|
|
2.8 |
|
Catastrophe losses |
|
|
1.2 |
|
|
|
25.7 |
|
|
|
0.3 |
|
|
|
27.2 |
|
|
|
2.4 |
|
|
|
28.9 |
|
|
|
0.9 |
|
|
|
32.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total losses and LAE |
|
|
149.5 |
|
|
|
91.5 |
|
|
|
3.8 |
|
|
|
244.8 |
|
|
|
170.5 |
|
|
|
88.7 |
|
|
|
4.9 |
|
|
|
264.1 |
|
Amortization of deferred acquisition costs and other underwriting expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP underwriting profit (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.3 |
) |
Net investment income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19.1 |
|
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.1 |
|
Other operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
22.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
19.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss and LAE ratio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year, excluding catastrophe losses |
|
|
70.0 |
% |
|
|
52.1 |
% |
|
|
36.6 |
% |
|
|
62.7 |
% |
|
|
72.3 |
% |
|
|
46.8 |
% |
|
|
38.4 |
% |
|
|
62.4 |
% |
Prior year unfavorable (favorable) reserve development |
|
|
(1.4 |
)% |
|
|
0.8 |
% |
|
|
(2.0 |
)% |
|
|
(0.6 |
)% |
|
|
1.2 |
% |
|
|
|
|
|
|
|
|
|
|
0.8 |
% |
Catastrophe losses |
|
|
0.6 |
% |
|
|
20.7 |
% |
|
|
3.0 |
% |
|
|
7.8 |
% |
|
|
1.1 |
% |
|
|
22.6 |
% |
|
|
8.7 |
% |
|
|
8.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loss and LAE ratio |
|
|
69.2 |
% |
|
|
73.6 |
% |
|
|
37.6 |
% |
|
|
69.9 |
% |
|
|
74.6 |
% |
|
|
69.4 |
% |
|
|
47.1 |
% |
|
|
72.0 |
% |
Expense ratio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined ratio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
98.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
99.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in policies in force |
|
|
(10.1 |
)% |
|
|
(11.8 |
)% |
|
|
(15.1 |
)% |
|
|
(11.1 |
)% |
|
|
(5.1 |
)% |
|
|
(6.0 |
)% |
|
|
(8.8 |
)% |
|
|
(5.7 |
)% |
Retention |
|
|
74.5 |
% |
|
|
74.5 |
% |
|
|
N/M |
|
|
|
74.7 |
% |
|
|
76.9 |
% |
|
|
79.1 |
% |
|
|
N/M |
|
|
|
78.3 |
% |
11
THE HANOVER INSURANCE GROUP
GAAP UNDERWRITING AND OPERATING INCOME INFORMATION AND RATIOS
PERSONAL LINES
Six
Months ended June 30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
2013 |
|
(In millions, except percentage data) |
|
Auto |
|
|
Home |
|
|
Other |
|
|
Total |
|
|
Auto |
|
|
Home |
|
|
Other |
|
|
Total |
|
Net premiums written |
|
$ |
439.1 |
|
|
$ |
231.7 |
|
|
$ |
19.2 |
|
|
$ |
690.0 |
|
|
$ |
455.0 |
|
|
$ |
237.2 |
|
|
$ |
20.0 |
|
|
$ |
712.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums earned |
|
$ |
430.9 |
|
|
$ |
249.3 |
|
|
$ |
20.3 |
|
|
$ |
700.5 |
|
|
$ |
457.0 |
|
|
$ |
257.5 |
|
|
$ |
21.0 |
|
|
$ |
735.5 |
|
Losses and LAE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year, excluding catastrophe losses |
|
|
311.8 |
|
|
|
130.9 |
|
|
|
7.7 |
|
|
|
450.4 |
|
|
|
335.8 |
|
|
|
123.3 |
|
|
|
8.3 |
|
|
|
467.4 |
|
Prior year unfavorable (favorable) reserve development |
|
|
(4.0 |
) |
|
|
1.0 |
|
|
|
(0.2 |
) |
|
|
(3.2 |
) |
|
|
7.3 |
|
|
|
1.0 |
|
|
|
0.1 |
|
|
|
8.4 |
|
Catastrophe losses |
|
|
1.3 |
|
|
|
43.6 |
|
|
|
0.7 |
|
|
|
45.6 |
|
|
|
2.1 |
|
|
|
40.3 |
|
|
|
1.5 |
|
|
|
43.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total losses and LAE |
|
|
309.1 |
|
|
|
175.5 |
|
|
|
8.2 |
|
|
|
492.8 |
|
|
|
345.2 |
|
|
|
164.6 |
|
|
|
9.9 |
|
|
|
519.7 |
|
Amortization of deferred acquisition costs and other underwriting expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
202.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
206.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP underwriting profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9.8 |
|
Net investment income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38.1 |
|
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.4 |
|
Other operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
44.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
50.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss and LAE ratio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year, excluding catastrophe losses |
|
|
72.3 |
% |
|
|
52.5 |
% |
|
|
38.0 |
% |
|
|
64.4 |
% |
|
|
73.4 |
% |
|
|
47.8 |
% |
|
|
39.5 |
% |
|
|
63.5 |
% |
Prior year unfavorable (favorable) reserve development |
|
|
(0.9 |
)% |
|
|
0.4 |
% |
|
|
(1.0 |
)% |
|
|
(0.5 |
)% |
|
|
1.6 |
% |
|
|
0.4 |
% |
|
|
0.5 |
% |
|
|
1.1 |
% |
Catastrophe losses |
|
|
0.3 |
% |
|
|
17.5 |
% |
|
|
3.4 |
% |
|
|
6.5 |
% |
|
|
0.5 |
% |
|
|
15.7 |
% |
|
|
7.1 |
% |
|
|
6.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loss and LAE ratio |
|
|
71.7 |
% |
|
|
70.4 |
% |
|
|
40.4 |
% |
|
|
70.4 |
% |
|
|
75.5 |
% |
|
|
63.9 |
% |
|
|
47.1 |
% |
|
|
70.6 |
% |
Expense ratio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined ratio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
98.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
97.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in policies in force |
|
|
(10.1 |
)% |
|
|
(11.8 |
)% |
|
|
(15.1 |
)% |
|
|
(11.1 |
)% |
|
|
(5.1 |
)% |
|
|
(6.0 |
)% |
|
|
(8.8 |
)% |
|
|
(5.7 |
)% |
Retention |
|
|
74.5 |
% |
|
|
74.5 |
% |
|
|
N/M |
|
|
|
74.7 |
% |
|
|
76.9 |
% |
|
|
79.1 |
% |
|
|
N/M |
|
|
|
78.3 |
% |
12
THE HANOVER INSURANCE GROUP
GAAP UNDERWRITING INFORMATION AND RELATED RATIOS
PERSONAL LINES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 |
|
|
Q3 |
|
|
Q4 |
|
|
Q1 |
|
|
Q2 |
|
|
Jun-YTD |
|
|
Jun-YTD |
|
(In millions, except percentage data) |
|
2013 |
|
|
2013 |
|
|
2013 |
|
|
2014 |
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
Gross premiums written |
|
$ |
397.8 |
|
|
$ |
398.4 |
|
|
$ |
368.2 |
|
|
$ |
343.3 |
|
|
$ |
395.2 |
|
|
$ |
765.0 |
|
|
$ |
738.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums written |
|
$ |
370.6 |
|
|
$ |
372.9 |
|
|
$ |
342.9 |
|
|
$ |
319.2 |
|
|
$ |
370.8 |
|
|
$ |
712.2 |
|
|
$ |
690.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums earned |
|
$ |
366.7 |
|
|
$ |
363.4 |
|
|
$ |
355.3 |
|
|
$ |
350.2 |
|
|
$ |
350.3 |
|
|
$ |
735.5 |
|
|
$ |
700.5 |
|
Losses and LAE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year, excluding catastrophe losses |
|
|
229.1 |
|
|
|
230.5 |
|
|
|
221.2 |
|
|
|
230.6 |
|
|
|
219.8 |
|
|
|
39.9 |
|
|
|
450.4 |
|
Prior year unfavorable (favorable) reserve development |
|
|
2.8 |
|
|
|
2.1 |
|
|
|
3.2 |
|
|
|
(1.0 |
) |
|
|
(2.2 |
) |
|
|
8.4 |
|
|
|
(3.2 |
) |
Catastrophe losses |
|
|
32.2 |
|
|
|
10.3 |
|
|
|
12.7 |
|
|
|
18.4 |
|
|
|
27.2 |
|
|
|
43.9 |
|
|
|
45.6 |
|
Total losses and LAE |
|
|
264.1 |
|
|
|
242.9 |
|
|
|
237.1 |
|
|
|
248.0 |
|
|
|
244.8 |
|
|
|
92.2 |
|
|
|
492.8 |
|
Amortization of deferred acquisition costs and other underwriting expenses |
|
|
102.9 |
|
|
|
102.5 |
|
|
|
108.4 |
|
|
|
100.1 |
|
|
|
101.9 |
|
|
|
206.0 |
|
|
|
202.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP underwriting profit (loss) |
|
$ |
(0.3 |
) |
|
$ |
18.0 |
|
|
$ |
9.8 |
|
|
$ |
2.1 |
|
|
$ |
3.6 |
|
|
$ |
437.3 |
|
|
$ |
5.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss and LAE ratio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year, excluding catastrophe losses |
|
|
62.4 |
% |
|
|
63.4 |
% |
|
|
62.2 |
% |
|
|
65.8 |
% |
|
|
62.7 |
% |
|
|
63.5 |
% |
|
|
64.4 |
% |
Prior year unfavorable (favorable) reserve development |
|
|
0.8 |
% |
|
|
0.6 |
% |
|
|
0.9 |
% |
|
|
(0.3 |
)% |
|
|
(0.6 |
)% |
|
|
1.1 |
% |
|
|
(0.5 |
)% |
Catastrophe losses |
|
|
8.8 |
% |
|
|
2.8 |
% |
|
|
3.6 |
% |
|
|
5.3 |
% |
|
|
7.8 |
% |
|
|
6.0 |
% |
|
|
6.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loss and LAE ratio |
|
|
72.0 |
% |
|
|
66.8 |
% |
|
|
66.7 |
% |
|
|
70.8 |
% |
|
|
69.9 |
% |
|
|
70.6 |
% |
|
|
70.4 |
% |
Expense ratio |
|
|
27.3 |
% |
|
|
27.5 |
% |
|
|
29.8 |
% |
|
|
27.9 |
% |
|
|
28.4 |
% |
|
|
27.3 |
% |
|
|
28.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined ratio |
|
|
99.3 |
% |
|
|
94.3 |
% |
|
|
96.5 |
% |
|
|
98.7 |
% |
|
|
98.3 |
% |
|
|
97.9 |
% |
|
|
98.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined ratio, excluding catastrophe losses |
|
|
90.5 |
% |
|
|
91.5 |
% |
|
|
92.9 |
% |
|
|
93.4 |
% |
|
|
90.5 |
% |
|
|
91.9 |
% |
|
|
92.0 |
% |
Current accident year combined ratio, excluding catastrophe losses |
|
|
89.7 |
% |
|
|
90.9 |
% |
|
|
92.0 |
% |
|
|
93.7 |
% |
|
|
91.1 |
% |
|
|
90.8 |
% |
|
|
92.5 |
% |
13
THE HANOVER INSURANCE GROUP
GAAP UNDERWRITING AND OPERATING INCOME INFORMATION AND RATIOS
CHAUCER
Three Months ended June 30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
2013 |
|
(In millions, except percentage data) |
|
Property |
|
|
Marine & Aviation |
|
|
Energy |
|
|
UK Motor |
|
|
Casualty & Other |
|
|
Total |
|
|
Property |
|
|
Marine & Aviation |
|
|
Energy |
|
|
UK Motor |
|
|
Casualty & Other |
|
|
Total |
|
Gross premiums written |
|
$ |
68.1 |
|
|
$ |
82.4 |
|
|
$ |
80.7 |
|
|
$ |
95.2 |
|
|
$ |
89.0 |
|
|
$ |
415.4 |
|
|
$ |
93.7 |
|
|
$ |
83.9 |
|
|
$ |
85.4 |
|
|
$ |
86.5 |
|
|
$ |
56.1 |
|
|
$ |
405.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums written |
|
$ |
59.0 |
|
|
$ |
69.9 |
|
|
$ |
64.9 |
|
|
$ |
94.6 |
|
|
$ |
76.0 |
|
|
$ |
364.4 |
|
|
$ |
78.3 |
|
|
$ |
67.3 |
|
|
$ |
73.0 |
|
|
$ |
87.0 |
|
|
$ |
44.9 |
|
|
$ |
350.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums earned |
|
$ |
48.1 |
|
|
$ |
69.3 |
|
|
$ |
48.0 |
|
|
$ |
82.4 |
|
|
$ |
59.0 |
|
|
$ |
306.8 |
|
|
$ |
40.5 |
|
|
$ |
58.2 |
|
|
$ |
34.1 |
|
|
$ |
69.7 |
|
|
$ |
35.8 |
|
|
$ |
238.3 |
|
Losses and LAE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year, excluding catastrophe losses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
178.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
134.1 |
|
Prior year favorable reserve development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(29.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(30.7 |
) |
Catastrophe losses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total losses and LAE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
160.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
115.9 |
|
Amortization of deferred acquisition costs and other underwriting expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
121.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
97.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP underwriting profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24.7 |
|
Net investment income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.7 |
|
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.5 |
|
Other operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
38.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
36.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss and LAE ratio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year, excluding catastrophe losses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56.3 |
% |
Prior year favorable reserve development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9.5 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12.9 |
)% |
Catastrophe losses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loss and LAE ratio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48.6 |
% |
Expense ratio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined ratio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
89.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
THE HANOVER INSURANCE GROUP
GAAP UNDERWRITING AND OPERATING INCOME INFORMATION AND RATIOS
CHAUCER
Six Months ended
June 30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
2013 |
|
(In millions, except percentage data) |
|
Property |
|
|
Marine & Aviation |
|
|
Energy |
|
|
UK Motor |
|
|
Casualty & Other |
|
|
Total |
|
|
Property |
|
|
Marine & Aviation |
|
|
Energy |
|
|
UK Motor |
|
|
Casualty & Other |
|
|
Total |
|
Gross premiums written |
|
$ |
174.9 |
|
|
$ |
210.7 |
|
|
$ |
140.2 |
|
|
$ |
173.0 |
|
|
$ |
183.6 |
|
|
$ |
882.4 |
|
|
$ |
185.9 |
|
|
$ |
192.2 |
|
|
$ |
137.2 |
|
|
$ |
166.2 |
|
|
$ |
113.6 |
|
|
$ |
795.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums written |
|
$ |
118.2 |
|
|
$ |
160.9 |
|
|
$ |
89.3 |
|
|
$ |
150.7 |
|
|
$ |
159.1 |
|
|
$ |
678.2 |
|
|
$ |
126.1 |
|
|
$ |
148.6 |
|
|
$ |
90.7 |
|
|
$ |
147.1 |
|
|
$ |
89.5 |
|
|
$ |
602.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums earned |
|
$ |
94.7 |
|
|
$ |
136.1 |
|
|
$ |
101.2 |
|
|
$ |
159.7 |
|
|
$ |
115.2 |
|
|
$ |
606.9 |
|
|
$ |
85.0 |
|
|
$ |
117.0 |
|
|
$ |
78.9 |
|
|
$ |
136.2 |
|
|
$ |
70.1 |
|
|
$ |
487.2 |
|
Losses and LAE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year, excluding catastrophe losses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
356.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
274.4 |
|
Prior year favorable reserve development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(48.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(44.0 |
) |
Catastrophe losses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total losses and LAE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
318.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
245.5 |
|
Amortization of deferred acquisition costs and other underwriting expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
227.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
184.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP underwriting profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57.7 |
|
Net investment income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21.2 |
|
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9.0 |
|
Other operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1.7 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
87.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
77.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss and LAE ratio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year, excluding catastrophe losses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56.3 |
% |
Prior year favorable reserve development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8.0 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9.0 |
)% |
Catastrophe losses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loss and LAE ratio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50.4 |
% |
Expense ratio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined ratio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15
THE HANOVER INSURANCE GROUP
GAAP UNDERWRITING INFORMATION AND RELATED RATIOS
CHAUCER
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 |
|
|
Q3 |
|
|
Q4 |
|
|
Q1 |
|
|
Q2 |
|
|
Jun-YTD |
|
|
Jun-YTD |
|
(In millions, except percentage data) |
|
2013 |
|
|
2013 |
|
|
2013 |
|
|
2014 |
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
Gross premiums written |
|
$ |
405.6 |
|
|
$ |
313.7 |
|
|
$ |
265.4 |
|
|
$ |
467.0 |
|
|
$ |
415.4 |
|
|
$ |
795.1 |
|
|
$ |
882.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums written |
|
$ |
350.5 |
|
|
$ |
278.5 |
|
|
$ |
237.0 |
|
|
$ |
313.8 |
|
|
$ |
364.4 |
|
|
$ |
602.0 |
|
|
$ |
678.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net premiums earned |
|
$ |
238.3 |
|
|
$ |
268.6 |
|
|
$ |
282.1 |
|
|
$ |
300.1 |
|
|
$ |
306.8 |
|
|
$ |
487.2 |
|
|
$ |
606.9 |
|
Losses and LAE: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year, excluding catastrophe losses |
|
|
134.1 |
|
|
|
164.8 |
|
|
|
159.2 |
|
|
|
178.1 |
|
|
|
178.4 |
|
|
|
274.4 |
|
|
|
356.5 |
|
Prior year favorable reserve development |
|
|
(30.7 |
) |
|
|
(27.8 |
) |
|
|
(22.8 |
) |
|
|
(19.6 |
) |
|
|
(29.2 |
) |
|
|
(44.0 |
) |
|
|
(48.8 |
) |
Catastrophe losses |
|
|
12.5 |
|
|
|
11.8 |
|
|
|
7.5 |
|
|
|
(0.7 |
) |
|
|
11.5 |
|
|
|
15.1 |
|
|
|
10.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total losses and LAE |
|
|
115.9 |
|
|
|
148.8 |
|
|
|
143.9 |
|
|
|
157.8 |
|
|
|
160.7 |
|
|
|
245.5 |
|
|
|
318.5 |
|
Amortization of deferred acquisition costs and other underwriting expenses |
|
|
97.7 |
|
|
|
99.0 |
|
|
|
109.0 |
|
|
|
105.8 |
|
|
|
121.8 |
|
|
|
184.0 |
|
|
|
227.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP underwriting profit |
|
$ |
24.7 |
|
|
$ |
20.8 |
|
|
$ |
29.2 |
|
|
$ |
36.5 |
|
|
$ |
24.3 |
|
|
$ |
57.7 |
|
|
$ |
60.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss and LAE ratio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current accident year, excluding catastrophe losses |
|
|
56.3 |
% |
|
|
61.3 |
% |
|
|
56.4 |
% |
|
|
59.2 |
% |
|
|
58.2 |
% |
|
|
56.3 |
% |
|
|
58.7 |
% |
Prior year favorable reserve development |
|
|
(12.9 |
)% |
|
|
(10.3 |
)% |
|
|
(8.1 |
)% |
|
|
(6.5 |
)% |
|
|
(9.5 |
)% |
|
|
(9.0 |
)% |
|
|
(8.0 |
)% |
Catastrophe losses |
|
|
5.2 |
% |
|
|
4.4 |
% |
|
|
2.7 |
% |
|
|
(0.2 |
)% |
|
|
3.7 |
% |
|
|
3.1 |
% |
|
|
1.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loss and LAE ratio |
|
|
48.6 |
% |
|
|
55.4 |
% |
|
|
51.0 |
% |
|
|
52.5 |
% |
|
|
52.4 |
% |
|
|
50.4 |
% |
|
|
52.5 |
% |
Expense ratio |
|
|
41.0 |
% |
|
|
36.9 |
% |
|
|
38.6 |
% |
|
|
35.3 |
% |
|
|
39.7 |
% |
|
|
37.8 |
% |
|
|
37.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined ratio |
|
|
89.6 |
% |
|
|
92.3 |
% |
|
|
89.6 |
% |
|
|
87.8 |
% |
|
|
92.1 |
% |
|
|
88.2 |
% |
|
|
90.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined ratio, excluding catastrophe losses |
|
|
84.4 |
% |
|
|
87.9 |
% |
|
|
86.9 |
% |
|
|
88.0 |
% |
|
|
88.4 |
% |
|
|
85.1 |
% |
|
|
88.2 |
% |
Current accident year combined ratio, excluding catastrophe losses |
|
|
97.3 |
% |
|
|
98.2 |
% |
|
|
95.0 |
% |
|
|
94.5 |
% |
|
|
97.9 |
% |
|
|
94.1 |
% |
|
|
96.2 |
% |
16
THE HANOVER INSURANCE GROUP
NET INVESTMENT INCOME AND YIELDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 |
|
|
Q2 |
|
|
|
Q2 |
|
|
Q3 |
|
|
Q4 |
|
|
Q1 |
|
|
Q2 |
|
|
YTD |
|
|
YTD |
|
(In millions, except yields) |
|
2013 |
|
|
2013 |
|
|
2013 |
|
|
2014 |
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
Net Investment Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed maturities |
|
$ |
62.6 |
|
|
$ |
63.0 |
|
|
$ |
64.5 |
|
|
$ |
64.7 |
|
|
$ |
63.2 |
|
|
$ |
127.3 |
|
|
$ |
127.9 |
|
Equity securities |
|
|
4.9 |
|
|
|
4.0 |
|
|
|
3.6 |
|
|
|
3.4 |
|
|
|
4.4 |
|
|
|
8.0 |
|
|
|
7.8 |
|
Other investments |
|
|
2.8 |
|
|
|
1.3 |
|
|
|
2.5 |
|
|
|
1.5 |
|
|
|
2.1 |
|
|
|
5.0 |
|
|
|
3.6 |
|
Investment expenses |
|
|
(2.4 |
) |
|
|
(2.6 |
) |
|
|
(2.5 |
) |
|
|
(2.6 |
) |
|
|
(2.7 |
) |
|
|
(5.1 |
) |
|
|
(5.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
67.9 |
|
|
$ |
65.7 |
|
|
$ |
68.1 |
|
|
$ |
67.0 |
|
|
$ |
67.0 |
|
|
$ |
135.2 |
|
|
$ |
134.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax Yields |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed maturities |
|
|
3.98 |
% |
|
|
3.99 |
% |
|
|
3.86 |
% |
|
|
3.79 |
% |
|
|
3.74 |
% |
|
|
4.00 |
% |
|
|
3.76 |
% |
Total |
|
|
3.71 |
% |
|
|
3.61 |
% |
|
|
3.59 |
% |
|
|
3.47 |
% |
|
|
3.42 |
% |
|
|
3.68 |
% |
|
|
3.45 |
% |
Pre-tax yields are calculated as annualized net investment income divided by the average of investment balances, excluding
unrealized capital gains and losses, at the end of each month during the period.
17
THE HANOVER INSURANCE GROUP
INVESTMENT PORTFOLIO
June 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in |
|
|
Change in |
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
Net |
|
|
Net |
|
|
Net |
|
|
|
Average |
|
Amortized |
|
|
Fair |
|
|
% of |
|
|
Unrealized |
|
|
Unrealized |
|
|
Unrealized |
|
Investment Type |
|
Quality |
|
Cost or Cost |
|
|
Value |
|
|
Total |
|
|
Gain (Loss) |
|
|
During Q2 2014 |
|
|
YTD |
|
Fixed maturities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury and government agencies |
|
AAA |
|
$ |
403.5 |
|
|
$ |
403.2 |
|
|
|
4.8 |
% |
|
$ |
(0.3 |
) |
|
$ |
5.1 |
|
|
$ |
10.6 |
|
Foreign government |
|
AAA |
|
|
319.7 |
|
|
|
321.0 |
|
|
|
3.8 |
% |
|
|
1.3 |
|
|
|
(0.5 |
) |
|
|
0.8 |
|
Municipals: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable |
|
AA |
|
|
938.5 |
|
|
|
988.1 |
|
|
|
11.7 |
% |
|
|
49.6 |
|
|
|
14.8 |
|
|
|
31.7 |
|
Tax exempt |
|
AA |
|
|
141.9 |
|
|
|
145.4 |
|
|
|
1.7 |
% |
|
|
3.5 |
|
|
|
0.4 |
|
|
|
3.1 |
|
Corporate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NAIC 1 |
|
A |
|
|
1,794.4 |
|
|
|
1,871.1 |
|
|
|
22.2 |
% |
|
|
76.7 |
|
|
|
7.7 |
|
|
|
20.4 |
|
NAIC 2 |
|
BBB |
|
|
1,536.9 |
|
|
|
1,626.6 |
|
|
|
19.3 |
% |
|
|
89.7 |
|
|
|
16.4 |
|
|
|
28.9 |
|
NAIC 3 and below |
|
B+ |
|
|
387.0 |
|
|
|
411.0 |
|
|
|
4.9 |
% |
|
|
24.0 |
|
|
|
2.7 |
|
|
|
7.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total corporate |
|
BBB+ |
|
|
3,718.3 |
|
|
|
3,908.7 |
|
|
|
46.4 |
% |
|
|
190.4 |
|
|
|
26.8 |
|
|
|
56.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset backed: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage-backed |
|
AA |
|
|
697.3 |
|
|
|
713.6 |
|
|
|
8.5 |
% |
|
|
16.3 |
|
|
|
6.0 |
|
|
|
10.3 |
|
Commercial mortgage-backed |
|
AA+ |
|
|
395.1 |
|
|
|
406.1 |
|
|
|
4.8 |
% |
|
|
11.0 |
|
|
|
3.2 |
|
|
|
5.3 |
|
Asset-backed |
|
AAA |
|
|
170.8 |
|
|
|
172.4 |
|
|
|
2.0 |
% |
|
|
1.6 |
|
|
|
(0.1 |
) |
|
|
(0.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total fixed maturities |
|
A+ |
|
|
6,785.1 |
|
|
|
7,058.5 |
|
|
|
83.7 |
% |
|
|
273.4 |
|
|
|
55.7 |
|
|
|
118.0 |
|
Equity securities |
|
|
|
|
446.4 |
|
|
|
530.5 |
|
|
|
6.3 |
% |
|
|
84.1 |
|
|
|
4.8 |
|
|
|
20.4 |
|
Other investments |
|
|
|
|
235.3 |
|
|
|
238.5 |
|
|
|
2.8 |
% |
|
|
3.2 |
|
|
|
(0.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investments |
|
|
|
|
7,466.8 |
|
|
|
7,827.5 |
|
|
|
92.8 |
% |
|
|
360.7 |
|
|
|
60.4 |
|
|
|
138.4 |
|
Cash and cash equivalents |
|
|
|
|
606.2 |
|
|
|
606.2 |
|
|
|
7.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
$ |
8,073.0 |
|
|
$ |
8,433.7 |
|
|
|
100.0 |
% |
|
$ |
360.7 |
|
|
$ |
60.4 |
|
|
$ |
138.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18
THE HANOVER INSURANCE GROUP
CREDIT QUALITY AND DURATION OF FIXED MATURITIES
June 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
|
|
|
|
|
|
|
|
|
|
|
CREDIT QUALITY OF FIXED MATURITIES |
|
|
|
Rating Agency |
|
Amortized |
|
|
Fair |
|
|
% of Total |
|
NAIC Designation |
|
Equivalent Designation |
|
Cost |
|
|
Value |
|
|
Fair Value |
|
1 |
|
Aaa/Aa/A |
|
$ |
4,818.7 |
|
|
$ |
4,977.7 |
|
|
|
70.5 |
% |
2 |
|
Baa |
|
|
1,567.3 |
|
|
|
1,657.9 |
|
|
|
23.5 |
% |
3 |
|
Ba |
|
|
173.5 |
|
|
|
184.9 |
|
|
|
2.6 |
% |
4 |
|
B |
|
|
184.9 |
|
|
|
195.7 |
|
|
|
2.8 |
% |
5 |
|
Caa and lower |
|
|
40.2 |
|
|
|
41.6 |
|
|
|
0.6 |
% |
6 |
|
In or near default |
|
|
0.5 |
|
|
|
0.7 |
|
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total fixed maturities |
|
$ |
6,785.1 |
|
|
$ |
7,058.5 |
|
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DURATION OF FIXED MATURITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized Cost |
|
|
Fair Value |
|
|
% of Total Fair Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0-2 years |
|
|
|
$ |
1,556.7 |
|
|
$ |
1,599.4 |
|
|
|
22.7 |
% |
2-4 years |
|
|
|
|
1,786.0 |
|
|
|
1,872.5 |
|
|
|
26.5 |
% |
4-6 years |
|
|
|
|
1,744.3 |
|
|
|
1,841.1 |
|
|
|
26.1 |
% |
6-8 years |
|
|
|
|
1,337.6 |
|
|
|
1,377.8 |
|
|
|
19.5 |
% |
8-10 years |
|
|
|
|
292.7 |
|
|
|
296.4 |
|
|
|
4.2 |
% |
10+ years |
|
|
|
|
67.8 |
|
|
|
71.3 |
|
|
|
1.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total fixed maturities |
|
|
|
$ |
6,785.1 |
|
|
$ |
7,058.5 |
|
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Duration |
|
|
|
|
4.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19
THE HANOVER INSURANCE GROUP
TOP 10 CORPORATE AND MUNICIPAL FIXED MATURITY HOLDINGS
June 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions, except percentage data) |
|
|
|
|
|
|
|
|
|
|
|
Issuer |
|
Amortized Cost |
|
|
Fair Value |
|
|
As a Percent of Invested Assets |
|
|
S&P Ratings |
Royal Bank of Scotland: (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Term deposits |
|
$ |
82.0 |
|
|
$ |
82.8 |
|
|
|
0.98 |
% |
|
A- |
Notes |
|
|
14.3 |
|
|
|
14.7 |
|
|
|
0.17 |
% |
|
A |
Lloyds Bank: (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Term deposits |
|
|
48.7 |
|
|
|
48.2 |
|
|
|
0.57 |
% |
|
A |
Notes |
|
|
5.0 |
|
|
|
5.4 |
|
|
|
0.07 |
% |
|
BBB+ |
Citigroup |
|
|
28.8 |
|
|
|
30.4 |
|
|
|
0.36 |
% |
|
A- |
American Express |
|
|
28.6 |
|
|
|
29.7 |
|
|
|
0.35 |
% |
|
A- |
GE Capital |
|
|
27.0 |
|
|
|
28.5 |
|
|
|
0.34 |
% |
|
AA+ |
JP Morgan |
|
|
26.1 |
|
|
|
26.9 |
|
|
|
0.32 |
% |
|
A |
Bank of America |
|
|
26.0 |
|
|
|
27.8 |
|
|
|
0.33 |
% |
|
BBB+ |
Wells Fargo |
|
|
26.0 |
|
|
|
27.8 |
|
|
|
0.33 |
% |
|
A+ |
CVS Caremark |
|
|
22.6 |
|
|
|
24.6 |
|
|
|
0.29 |
% |
|
BBB+ |
Toyota Motor Credit Corp |
|
|
22.4 |
|
|
|
23.3 |
|
|
|
0.28 |
% |
|
AA- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Top 10 Corporate and Municipal Fixed |
|
$ |
357.5 |
|
|
$ |
370.1 |
|
|
|
4.39 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
UK government owns 64% of bank equity |
(2) |
UK government owns 25% of bank equity |
20
THE HANOVER INSURANCE GROUP
RECONCILIATION OF OPERATING INCOME TO NET INCOME
|
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|
Three Months ended June 30 |
|
|
Six Months ended June 30 |
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|
|
2014 |
|
|
2013 |
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|
2014 |
|
|
2013 |
|
(In millions, except per share data) |
|
$ |
|
|
Per Share (Diluted) |
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|
$ |
|
|
Per Share (Diluted) |
|
|
$ |
|
|
Per Share (Diluted) |
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|
$ |
|
|
Per Share (Diluted) |
|
OPERATING INCOME (LOSS) |
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|
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|
|
Commercial Lines |
|
$ |
44.2 |
|
|
|
|
|
|
$ |
26.2 |
|
|
|
|
|
|
$ |
60.3 |
|
|
|
|
|
|
$ |
59.2 |
|
|
|
|
|
Personal Lines |
|
|
22.7 |
|
|
|
|
|
|
|
19.9 |
|
|
|
|
|
|
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44.3 |
|
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|
|
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50.4 |
|
|
|
|
|
Chaucer |
|
|
38.1 |
|
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|
|
36.9 |
|
|
|
|
|
|
|
87.3 |
|
|
|
|
|
|
|
77.8 |
|
|
|
|
|
Other |
|
|
(2.8 |
) |
|
|
|
|
|
|
(1.9 |
) |
|
|
|
|
|
|
(4.7 |
) |
|
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|
|
|
|
(4.1 |
) |
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|
|
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Total |
|
|
102.2 |
|
|
|
|
|
|
|
81.1 |
|
|
|
|
|
|
|
187.2 |
|
|
|
|
|
|
|
183.3 |
|
|
|
|
|
Interest expense |
|
|
(16.3 |
) |
|
|
|
|
|
|
(17.4 |
) |
|
|
|
|
|
|
(32.6 |
) |
|
|
|
|
|
|
(32.1 |
) |
|
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|
|
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|
|
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|
|
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|
|
|
|
|
|
|
|
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|
|
|
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|
|
Operating income before income taxes |
|
|
85.9 |
|
|
$ |
1.91 |
|
|
|
63.7 |
|
|
$ |
1.42 |
|
|
|
154.6 |
|
|
$ |
3.45 |
|
|
|
151.2 |
|
|
$ |
3.36 |
|
Income tax expense on operating income |
|
|
(27.5 |
) |
|
|
(0.61 |
) |
|
|
(16.9 |
) |
|
|
(0.37 |
) |
|
|
(49.2 |
) |
|
|
(1.10 |
) |
|
|
(44.5 |
) |
|
|
(0.99 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income after income taxes |
|
|
58.4 |
|
|
|
1.30 |
|
|
|
46.8 |
|
|
|
1.05 |
|
|
|
105.4 |
|
|
|
2.35 |
|
|
|
106.7 |
|
|
|
2.37 |
|
Net realized investment gains |
|
|
22.2 |
|
|
|
0.49 |
|
|
|
13.7 |
|
|
|
0.31 |
|
|
|
26.6 |
|
|
|
0.59 |
|
|
|
21.8 |
|
|
|
0.48 |
|
Loss from repayment of debt |
|
|
|
|
|
|
|
|
|
|
(11.3 |
) |
|
|
(0.25 |
) |
|
|
|
|
|
|
|
|
|
|
(19.1 |
) |
|
|
(0.42 |
) |
Net benefit (costs) related to acquired businesses |
|
|
(0.2 |
) |
|
|
|
|
|
|
(0.2 |
) |
|
|
(0.01 |
) |
|
|
(1.1 |
) |
|
|
(0.02 |
) |
|
|
0.2 |
|
|
|
0.01 |
|
Net foreign exchange gains (losses) |
|
|
(0.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.3 |
) |
|
|
(0.01 |
) |
|
|
0.7 |
|
|
|
0.01 |
|
Income tax benefit (expense) on non-operating items |
|
|
2.3 |
|
|
|
0.05 |
|
|
|
4.1 |
|
|
|
0.09 |
|
|
|
6.6 |
|
|
|
0.15 |
|
|
|
9.2 |
|
|
|
0.20 |
|
|
|
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|
|
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|
|
Income from continuing operations, net of taxes |
|
|
82.5 |
|
|
|
1.84 |
|
|
|
53.1 |
|
|
|
1.19 |
|
|
|
137.2 |
|
|
|
3.06 |
|
|
|
119.5 |
|
|
|
2.65 |
|
Discontinued operations, net of taxes |
|
|
0.1 |
|
|
|
|
|
|
|
0.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.1 |
|
|
|
0.01 |
|
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|
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|
|
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|
|
|
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|
|
NET INCOME |
|
$ |
82.6 |
|
|
$ |
1.84 |
|
|
$ |
53.4 |
|
|
$ |
1.19 |
|
|
$ |
137.2 |
|
|
$ |
3.06 |
|
|
$ |
119.6 |
|
|
$ |
2.66 |
|
|
|
|
|
|
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21
Non-GAAP Financial Measures
The Hanover uses non-GAAP financial measures as important measures of the Companys operating performance, which we believe provide investors with
additional information regarding managements evaluation of our results of operations and financial performance. The Companys non-GAAP measures include operating income before interest expense and taxes, total operating income after
taxes, total operating income after taxes per share, total book value per share, total book value per share excluding net unrealized gains and losses related to investments, net of tax, tangible book value per share and measures of operating income
and loss ratios excluding catastrophe losses and reserve development. After-tax operating income EPS (sometimes referred to as after-tax operating income per share) is a non-GAAP measure. It is defined as net income (loss) excluding the
after-tax impact of net realized investment gains (losses), as well as results from discontinued operations for a period divided by the average number of diluted shares of common stock.
Operating income before interest expense and taxes is net income, excluding interest expense on debt, income taxes and net realized investment gains and
losses, because fluctuations in these gains and losses are determined by interest rates, financial markets and the timing of sales. Operating income before interest expense and taxes also excludes net gains and losses on disposals of
businesses, discontinued operations, restructuring costs, extraordinary items, the cumulative effect of accounting changes and certain other items. Operating income before interest expense and taxes is the sum of the operating income
from: Commercial Lines, Personal Lines, Chaucer, and Other. The Hanover believes that measures of operating income before interest expense and taxes provide investors with a valuable measure of the performance of the Companys ongoing
businesses because they highlight net income 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 investments, net of tax is total shareholders equity excluding the after-tax effect of unrealized investment gains
and losses divided by the number of common shares outstanding. Tangible book value per share is total shareholders equity, excluding goodwill, 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 risks such as fire, hurricane, earthquake, windstorm, explosion, terrorism or other similar events. 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 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 before and after interest expense and taxes and measures of operating income that exclude the effects of catastrophe losses or reserve
development should not be construed as substitutes for net income determined in accordance with GAAP. A reconciliation of income from continuing operations to operating income before interest expense and taxes and income from continuing operations
per share to operating income after taxes per share for the six months ended June 30, 2014 and 2013 is set forth on page 21 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.
22
CORPORATE OFFICES AND
PRINCIPAL SUBSIDIARIES
THE HANOVER INSURANCE GROUP,
INC.
440 Lincoln Street
Worcester, MA 01653
The Hanover Insurance Company
440 Lincoln Street
Worcester, MA 01653
Citizens Insurance Company of
America
808 North Highlander Way
Howell, MI 48843
Chaucer Holdings PLC
Plantation Place
30 Fenchurch Street
London
EC3M 3AD
MARKET AND DIVIDEND
INFORMATION
The following tables set forth the high and low closing sales prices of our common stock and cash dividends for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
2014 |
|
|
|
Price Range |
|
|
Dividends |
|
|
|
High |
|
|
Low |
|
|
Per Share |
|
March 31 |
|
$ |
61.44 |
|
|
$ |
53.14 |
|
|
$ |
0.370 |
|
June 30 |
|
$ |
64.00 |
|
|
$ |
58.23 |
|
|
$ |
0.370 |
|
|
|
Quarter Ended |
|
2013 |
|
|
|
Price Range |
|
|
Dividends |
|
|
|
High |
|
|
Low |
|
|
Per Share |
|
March 31 |
|
$ |
49.68 |
|
|
$ |
39.19 |
|
|
$ |
0.330 |
|
June 30 |
|
$ |
51.66 |
|
|
$ |
46.73 |
|
|
$ |
0.330 |
|
September 30 |
|
$ |
56.06 |
|
|
$ |
48.67 |
|
|
$ |
0.330 |
|
December 31 |
|
$ |
60.99 |
|
|
$ |
54.83 |
|
|
$ |
0.370 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INDUSTRY RATINGS AS OF JULY 31, 2014 |
|
|
|
|
|
Financial Strength Ratings |
|
A.M. Best |
|
|
Standard & Poors |
|
|
Moodys |
|
The Hanover Insurance Company |
|
|
A |
|
|
|
A- |
|
|
|
A3 |
|
Citizens Insurance Company of America |
|
|
A |
|
|
|
A- |
|
|
|
|
|
|
|
|
|
Debt Ratings |
|
A.M. Best |
|
|
Standard & Poors |
|
|
Moodys |
|
The Hanover Insurance Group, Inc. Senior Debt |
|
|
bbb |
|
|
|
BBB- |
|
|
|
Baa3 |
|
Subordinated Debentures |
|
|
bb+ |
|
|
|
BB |
|
|
|
Ba1 |
|
TRANSFER AGENT
Computershare Investor Services
PO Box 30170
College Station, TX 77842-3170
1-800-317-4454
COMMON STOCK
Common
stock of The Hanover Insurance Group is traded on the New York Stock Exchange under the symbol THG.
INQUIRIES
Oksana
Lukasheva
Vice President
Investor Relations
(508) 855-2063
olukasheva@hanover.com
INVESTOR INFORMATION LINE
Dial 1-800-407-5222 to receive
additional printed information, fax-on-demand services or other prerecorded messages.
Please visit our internet site at http:// www.Hanover.com
23
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