Exhibit 99.2
THE HANOVER INSURANCE GROUP
STATISTICAL SUPPLEMENT
TABLE OF CONTENTS
Financial Highlights | 1-3 | |
Consolidated Financial Statements | ||
Income Statements | 4-5 | |
Balance Sheets | 6 | |
Property and Casualty | ||
Condensed Income Statements | 7 | |
Property and Casualty Consolidated Balance Sheets | 8 | |
GAAP Underwriting Results | 9-12 | |
Investments | ||
Net Investment Income | 13 | |
Net Realized Investment Gains (Losses) | 14 | |
Unrealized Losses | 15 | |
Credit Quality of Fixed Maturities | 16 | |
Property and Casualty Statutory Ratios | 17-18 | |
Historical Financial Highlights | 19 | |
Other Information | 20 | |
Corporate Information | ||
Market and Dividend Information | ||
Industry Ratings |
THE HANOVER INSURANCE GROUP
FINANCIAL HIGHLIGHTS
Quarter ended December 31 | Year ended December 31 | |||||||||||||||||||||
(In millions) | 2008 | 2007 | % Change | 2008 | 2007 | % Change | ||||||||||||||||
SEGMENT INCOME | ||||||||||||||||||||||
Property and Casualty | ||||||||||||||||||||||
Personal Lines | $ | 39.7 | $ | 57.8 | (31.3 | ) | $ | 123.5 | $ | 208.2 | (40.7 | ) | ||||||||||
Commercial Lines | 55.6 | 42.6 | 30.5 | 169.7 | 169.3 | 0.2 | ||||||||||||||||
Other | 2.2 | (2.4 | ) | N/M | 9.0 | 4.8 | 87.5 | |||||||||||||||
Total Property and Casualty | 97.5 | 98.0 | (0.5 | ) | 302.2 | 382.3 | (21.0 | ) | ||||||||||||||
Interest expense on corporate debt | (10.0 | ) | (10.0 | ) | — | (39.9 | ) | (39.9 | ) | — | ||||||||||||
Total segment income | 87.5 | 88.0 | (0.6 | ) | 262.3 | 342.4 | (23.4 | ) | ||||||||||||||
Federal income tax expense on P&C segment income | (31.4 | ) | (30.7 | ) | 2.3 | (100.3 | ) | (127.7 | ) | (21.5 | ) | |||||||||||
Federal income tax benefit on other segment income | 3.5 | 3.5 | — | 14.0 | 14.0 | — | ||||||||||||||||
Total federal income tax expense on segment income | (27.9 | ) | (27.2 | ) | 2.6 | (86.3 | ) | (113.7 | ) | (24.1 | ) | |||||||||||
Total segment income after taxes | $ | 59.6 | $ | 60.8 | (2.0 | ) | $ | 176.0 | $ | 228.7 | (23.0 | ) | ||||||||||
RECONCILIATION FROM SEGMENT INCOME TO NET INCOME | ||||||||||||||||||||||
Total segment income after taxes | $ | 59.6 | $ | 60.8 | (2.0 | ) | $ | 176.0 | $ | 228.7 | (23.0 | ) | ||||||||||
Federal income tax settlement | — | — | — | 6.4 | — | N/M | ||||||||||||||||
Net realized investment losses | (37.1 | ) | (0.6 | ) | N/M | (97.8 | ) | (0.9 | ) | N/M | ||||||||||||
Loss on derivative instruments | (0.1 | ) | — | N/M | (0.1 | ) | — | N/M | ||||||||||||||
Federal income tax benefit on non-segment income | 0.4 | 0.1 | N/M | — | 0.5 | N/M | ||||||||||||||||
Income from continuing operations | 22.8 | 60.3 | (62.2 | ) | 84.5 | 228.3 | (63.0 | ) | ||||||||||||||
Discontinued operations (net of taxes): | ||||||||||||||||||||||
Income (loss) from operations of discontinued FAFLIC business (Including loss on assets held-for-sale of $5.1 and $77.3 in 2008) | 8.1 | 2.6 | N/M | (84.8 | ) | 10.9 | N/M | |||||||||||||||
Income from operations of discontinued variable life and annuity business (Including gain on disposal of $3.2 and $11.3 in 2008 and $7.7 and $7.9 in 2007) | 3.2 | 12.9 | (75.2 | ) | 11.3 | 13.1 | (13.7 | ) | ||||||||||||||
Income from operations of AMGRO (Including gain on disposal of $11.1 in 2008) | — | — | — | 10.1 | — | N/M | ||||||||||||||||
Other | — | — | — | (0.5 | ) | 0.8 | N/M | |||||||||||||||
Net income | $ | 34.1 | $ | 75.8 | (55.0 | ) | $ | 20.6 | $ | 253.1 | (91.9 | ) | ||||||||||
1
THE HANOVER INSURANCE GROUP
FINANCIAL HIGHLIGHTS
Quarter ended December 31 | Year ended December 31 | |||||||||||||||||||||
2008 | 2007 | % Change | 2008 | 2007 | % Change | |||||||||||||||||
PER SHARE DATA (DILUTED) (1) | ||||||||||||||||||||||
Total segment income | $ | 1.70 | $ | 1.67 | 1.8 | $ | 5.07 | $ | 6.53 | (22.4 | ) | |||||||||||
Federal income tax expense on segment income | (0.54 | ) | (0.51 | ) | 5.9 | (1.67 | ) | (2.17 | ) | (23.0 | ) | |||||||||||
Total segment income after taxes | 1.16 | 1.16 | — | 3.40 | 4.36 | (22.0 | ) | |||||||||||||||
Federal income tax settlement | — | — | — | 0.12 | — | N/M | ||||||||||||||||
Net realized investment losses | (0.73 | ) | (0.01 | ) | N/M | (1.89 | ) | (0.01 | ) | N/M | ||||||||||||
Federal income tax benefit on non-segment income | 0.01 | — | N/M | — | 0.01 | N/M | ||||||||||||||||
Income from continuing operations | 0.44 | 1.15 | (61.7 | ) | 1.63 | 4.36 | (62.6 | ) | ||||||||||||||
Discontinued operations (net of taxes): | ||||||||||||||||||||||
Income (loss) from operations of discontinued FAFLIC business (Including loss on assets held-for-sale of $0.10 and $1.49 in 2008) | 0.16 | 0.05 | N/M | (1.64 | ) | 0.21 | N/M | |||||||||||||||
Income from operations of discontinued variable life and annuity business (Including gain on disposal of $0.06 and $0.22 in 2008 and $0.14 and $0.15 in 2007) | 0.06 | 0.24 | (75.0 | ) | 0.22 | 0.25 | (12.0 | ) | ||||||||||||||
Income from operations of AMGRO (Including gain on disposal of $0.21 in 2008) | — | — | — | 0.20 | — | N/M | ||||||||||||||||
Other | — | — | — | (0.01 | ) | 0.01 | N/M | |||||||||||||||
Net income | $ | 0.66 | $ | 1.44 | (54.2 | ) | $ | 0.40 | $ | 4.83 | (91.7 | ) | ||||||||||
2
THE HANOVER INSURANCE GROUP
FINANCIAL HIGHLIGHTS
(In millions, except per share data) | December 31 2008 | December 31 2007 | % Change | ||||||||
BALANCE SHEET | |||||||||||
Shareholders’ equity | |||||||||||
Property and Casualty Segment | $ | 1,995.5 | $ | 2,194.6 | (9.1 | ) | |||||
First Allmerica Financial Life Insurance Company (consolidated) (1) | 78.1 | 328.3 | (76.2 | ) | |||||||
THG Holding Company debt (2) | (499.5 | ) | (499.5 | ) | — | ||||||
THG Holding Company | 313.1 | 275.6 | 13.6 | ||||||||
Total shareholders’ equity | $ | 1,887.2 | $ | 2,299.0 | (17.9 | ) | |||||
Property and Casualty Companies (3) | |||||||||||
Total adjusted statutory capital | $ | 1,596.8 | $ | 1,666.4 | (4.2 | ) | |||||
Premium to surplus ratio | 1.6:1 | 1.4:1 | — | ||||||||
Book value per share | |||||||||||
Property and Casualty Segment | $ | 39.20 | $ | 42.36 | (7.5 | ) | |||||
First Allmerica Financial Life Insurance Company (consolidated) | 1.53 | 6.34 | (75.9 | ) | |||||||
THG Holding Company debt (2) | (9.81 | ) | (9.64 | ) | 1.8 | ||||||
THG Holding Company | 6.16 | 5.31 | 16.0 | ||||||||
Total book value per share | $ | 37.08 | $ | 44.37 | (16.4 | ) | |||||
THG book value per share, excluding accumulated other comprehensive loss | $ | 44.64 | $ | 44.77 | (0.3 | ) | |||||
Shares outstanding (4) | 50.9 | 51.8 | |||||||||
Stock price | $ | 42.97 | $ | 45.80 | (6.2 | ) | |||||
Price/book value per share | 1.2 x | 1.0 x | 0.2 x | ||||||||
Debt/equity | 28.1 | % | 22.3 | % | 5.8 pts | | |||||
Debt/total capital | 22.0 | % | 18.2 | % | 3.8 pts | |
(1) | Reflects dividend to THG Holding Company of $136.3 million on December 31, 2008. |
(2) | Excludes $9.3 million of holding company debt related to its affiliate, AFC Capital Trust I. |
(3) | Property and Casualty Companies includes The Hanover Insurance Company, Citizens Insurance Company of America, Citizens Insurance Company of Illinois, Nova Casualty Company, and their insurance subsidiaries. |
(4) | Shares outstanding do not include common stock equivalents. |
3
THE HANOVER INSURANCE GROUP
CONSOLIDATED INCOME STATEMENTS
Quarter ended December 31 | Year ended December 31 | |||||||||||||||||||||
(In millions, except per share data) | 2008 | 2007 | % Change | 2008 | 2007 | % Change | ||||||||||||||||
REVENUES | ||||||||||||||||||||||
Premiums | $ | 626.8 | $ | 601.7 | 4.2 | $ | 2,484.9 | $ | 2,372.0 | 4.8 | ||||||||||||
Net investment income | 64.8 | 63.3 | 2.4 | 258.7 | 247.0 | 4.7 | ||||||||||||||||
Net realized investment losses | (37.1 | ) | (0.6 | ) | N/M | (97.8 | ) | (0.9 | ) | N/M | ||||||||||||
Fees and other income | 8.9 | 14.3 | (37.8 | ) | 34.6 | 56.0 | (38.2 | ) | ||||||||||||||
Total revenues | 663.4 | 678.7 | (2.3 | ) | 2,680.4 | 2,674.1 | 0.2 | |||||||||||||||
BENEFITS, LOSSES AND EXPENSES | ||||||||||||||||||||||
Policy benefits, claims, losses and loss adjustment expenses | 386.5 | 366.1 | 5.6 | 1,626.2 | 1,457.4 | 11.6 | ||||||||||||||||
Policy acquisition expenses | 140.1 | 134.1 | 4.5 | 556.2 | 523.6 | 6.2 | ||||||||||||||||
Other operating expenses | 86.5 | 91.1 | (5.0 | ) | 333.6 | 351.6 | (5.1 | ) | ||||||||||||||
Total benefits, losses and expenses | 613.1 | 591.3 | 3.7 | 2,516.0 | 2,332.6 | 7.9 | ||||||||||||||||
Income from continuing operations before federal income taxes | 50.3 | 87.4 | (42.4 | ) | 164.4 | 341.5 | (51.9 | ) | ||||||||||||||
Federal income tax expense | 27.5 | 27.1 | 1.5 | 79.9 | 113.2 | (29.4 | ) | |||||||||||||||
Income from continuing operations | 22.8 | 60.3 | (62.2 | ) | 84.5 | 228.3 | (63.0 | ) | ||||||||||||||
Discontinued operations (net of taxes): | ||||||||||||||||||||||
Income (loss) from operations of discontinued FAFLIC business (Including loss on assets held-for-sale of $5.1 and $77.3 in 2008) | 8.1 | 2.6 | N/M | (84.8 | ) | 10.9 | N/M | |||||||||||||||
Income from operations of discontinued variable life and annuity business (Including gain on disposal of $3.2 and $11.3 in 2008 and $7.7 and $7.9 in 2007) | 3.2 | 12.9 | (75.2 | ) | 11.3 | 13.1 | (13.7 | ) | ||||||||||||||
Income from operations of AMGRO (Including gain on disposal of $11.1 in 2008) | — | — | — | 10.1 | — | N/M | ||||||||||||||||
Other | — | — | — | (0.5 | ) | 0.8 | N/M | |||||||||||||||
Net income | $ | 34.1 | $ | 75.8 | (55.0 | ) | $ | 20.6 | $ | 253.1 | (91.9 | ) | ||||||||||
4
THE HANOVER INSURANCE GROUP
CONSOLIDATED INCOME STATEMENTS
Quarter ended December 31 | Year ended December 31 | ||||||||||||||||||
2008 | 2007 | % Change | 2008 | 2007 | % Change | ||||||||||||||
PER SHARE DATA (DILUTED) | |||||||||||||||||||
Income from continuing operations | $ | 0.44 | $ | 1.15 | (61.7 | ) | $ | 1.63 | $ | 4.36 | (62.6 | ) | |||||||
Discontinued operations (net of taxes): | |||||||||||||||||||
Income (loss) from operations of discontinued FAFLIC business (Including loss on assets held-for-sale of $0.10 and $1.49 in 2008) | 0.16 | 0.05 | N/M | (1.64 | ) | 0.21 | N/M | ||||||||||||
Income from operations of discontinued variable life and annuity business (Including gain on disposal of $0.06 and $0.22 in 2008 and $0.14 and $0.15 in 2007) | 0.06 | 0.24 | (75.0 | ) | 0.22 | 0.25 | (12.0 | ) | |||||||||||
Income from operations of AMGRO (Including gain on disposal of $0.21 in 2008) | — | — | — | 0.20 | — | N/M | |||||||||||||
Other | — | — | — | (0.01 | ) | 0.01 | N/M | ||||||||||||
Net income | $ | 0.66 | $ | 1.44 | (54.2 | ) | $ | 0.40 | $ | 4.83 | (91.7 | ) | |||||||
Weighted average shares outstanding | 51.4 | 52.6 | 51.7 | 52.4 | |||||||||||||||
5
THE HANOVER INSURANCE GROUP
CONSOLIDATED BALANCE SHEETS
(In millions, except per share data) | December 31 2008 | December 31 2007 | % Change | ||||||||
ASSETS | |||||||||||
Investments: | |||||||||||
Fixed maturities, at fair value (amortized cost of $4,468.0 and $4,585.7) | $ | 4,205.8 | $ | 4,584.8 | (8.3 | ) | |||||
Equity securities, at fair value (cost of $55.7 and $37.5) | 47.7 | 44.6 | 7.0 | ||||||||
Mortgage loans | 31.1 | 41.2 | (24.5 | ) | |||||||
Other long-term investments | 18.4 | 30.7 | (40.1 | ) | |||||||
Total investments | 4,303.0 | 4,701.3 | (8.5 | ) | |||||||
Cash and cash equivalents | 416.9 | 210.6 | 98.0 | ||||||||
Accrued investment income | 53.0 | 53.3 | (0.6 | ) | |||||||
Premiums, accounts and notes receivable, net | 578.5 | 626.7 | (7.7 | ) | |||||||
Reinsurance receivable on paid and unpaid losses, benefits and unearned premiums | 1,130.3 | 1,067.3 | 5.9 | ||||||||
Deferred policy acquisition costs | 266.7 | 246.8 | 8.1 | ||||||||
Deferred federal income taxes | 285.8 | 300.8 | (5.0 | ) | |||||||
Goodwill | 169.9 | 126.0 | 34.8 | ||||||||
Other assets | 315.7 | 309.6 | 2.0 | ||||||||
Assets held for sale | 1,710.4 | 2,173.2 | (21.3 | ) | |||||||
Total assets | $ | 9,230.2 | $ | 9,815.6 | (6.0 | ) | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
LIABILITIES | |||||||||||
Policy liabilities and accruals: | |||||||||||
Outstanding claims, losses and loss adjustment expenses | $ | 3,243.8 | $ | 3,165.9 | 2.5 | ||||||
Unearned premiums | 1,246.3 | 1,155.9 | 7.8 | ||||||||
Contractholder deposit funds and other policy liabilities | 1.8 | 1.9 | (5.3 | ) | |||||||
Total policy liabilities and accruals | 4,491.9 | 4,323.7 | 3.9 | ||||||||
Expenses and taxes payable | 630.8 | 633.6 | (0.4 | ) | |||||||
Reinsurance premiums payable | 61.3 | 44.9 | 36.5 | ||||||||
Long-term debt | 531.4 | 511.9 | 3.8 | ||||||||
Liabilities held for sale | 1,627.6 | 2,002.5 | (18.7 | ) | |||||||
Total liabilities | 7,343.0 | 7,516.6 | (2.3 | ) | |||||||
SHAREHOLDERS’ EQUITY | |||||||||||
Preferred stock, par value $.01 per share; authorized 20.0 million shares; issued none | — | — | — | ||||||||
Common stock, par value $.01 per share; authorized 300.0 million shares; issued 60.5 million shares | 0.6 | 0.6 | — | ||||||||
Additional paid-in capital | 1,803.8 | 1,822.6 | (1.0 | ) | |||||||
Accumulated other comprehensive loss | (384.8 | ) | (20.4 | ) | N/M | ||||||
Retained earnings | 949.8 | 946.9 | 0.3 | ||||||||
Treasury stock at cost (9.6 and 8.7 million shares) | (482.2 | ) | (450.7 | ) | 7.0 | ||||||
Total shareholders’ equity | 1,887.2 | 2,299.0 | (17.9 | ) | |||||||
Total liabilities and shareholders’ equity | $ | 9,230.2 | $ | 9,815.6 | (6.0 | ) | |||||
6
PROPERTY & CASUALTY
THE HANOVER INSURANCE GROUP
PROPERTY AND CASUALTY
CONDENSED INCOME STATEMENTS
Quarter ended December 31 | Year ended December 31 | |||||||||||||||||||
(In millions) | 2008 | 2007 | % Change | 2008 | 2007 | % Change | ||||||||||||||
REVENUES | ||||||||||||||||||||
Net premiums written | $ | 597.3 | $ | 561.6 | 6.4 | $ | 2,518.0 | $ | 2,415.3 | 4.3 | ||||||||||
Change in unearned premiums, net of prepaid reinsurance premiums | 29.5 | 40.1 | (26.4 | ) | (33.1 | ) | (43.3 | ) | (23.6 | ) | ||||||||||
Net premiums earned | 626.8 | 601.7 | 4.2 | 2,484.9 | 2,372.0 | 4.8 | ||||||||||||||
Net investment income | 64.7 | 63.2 | 2.4 | 258.0 | 246.3 | 4.8 | ||||||||||||||
Other income | 9.9 | 16.6 | (40.4 | ) | 40.9 | 64.9 | (37.0 | ) | ||||||||||||
Total segment revenue | 701.4 | 681.5 | 2.9 | 2,783.8 | 2,683.2 | 3.7 | ||||||||||||||
LOSSES AND OPERATING EXPENSES | ||||||||||||||||||||
Policy benefits, claims, losses and loss adjustment expenses | 386.5 | 366.1 | 5.6 | 1,626.2 | 1,457.4 | 11.6 | ||||||||||||||
Policy acquisition expenses | 140.1 | 134.1 | 4.5 | 556.2 | 523.6 | 6.2 | ||||||||||||||
Other operating expenses | 77.3 | 83.3 | (7.2 | ) | 299.2 | 319.9 | (6.5 | ) | ||||||||||||
Total losses and operating expenses | 603.9 | 583.5 | 3.5 | 2,481.6 | 2,300.9 | 7.9 | ||||||||||||||
Segment income before federal income taxes | $ | 97.5 | $ | 98.0 | (0.5 | ) | $ | 302.2 | $ | 382.3 | (21.0 | ) | ||||||||
7
THE HANOVER INSURANCE GROUP
PROPERTY AND CASUALTY
SEGMENT BALANCE SHEETS (1)
(In millions, except per share data) | December 31 2008 | December 31 2007 | % Change | |||||||
ASSETS | ||||||||||
Investments: | ||||||||||
Fixed maturities, at fair value (amortized cost of $4,196.8 and $4,201.4) | $ | 3,940.6 | $ | 4,197.6 | (6.1 | ) | ||||
Equity securities, at fair value (cost of $46.4 and $29.9) | 38.4 | 35.3 | 8.8 | |||||||
Mortgage loans | 32.7 | 10.9 | N/M | |||||||
Other long-term investments | 13.5 | 5.8 | N/M | |||||||
Total investments | 4,025.2 | 4,249.6 | (5.3 | ) | ||||||
Cash and cash equivalents | 377.8 | 182.8 | N/M | |||||||
Accrued investment income | 48.6 | 49.5 | (1.8 | ) | ||||||
Premiums, accounts, and notes receivable, net | 579.2 | 626.7 | (7.6 | ) | ||||||
Reinsurance receivable on paid and unpaid losses, benefits and unearned premiums | 1,129.6 | 1,067.3 | 5.8 | |||||||
Deferred policy acquistion costs | 264.8 | 246.8 | 7.3 | |||||||
Deferred federal income tax asset | 220.8 | 195.6 | 12.9 | |||||||
Goodwill | 169.9 | 126.0 | 34.8 | |||||||
Other assets | 309.3 | 211.8 | 46.0 | |||||||
Total assets | $ | 7,125.2 | $ | 6,956.1 | 2.4 | |||||
LIABILITIES AND SHAREHOLDER’S EQUITY | ||||||||||
LIABILITIES | ||||||||||
Policy liabilities and accruals: | ||||||||||
Outstanding claims, losses and loss adjustment expenses | $ | 3,201.3 | $ | 3,165.8 | 1.1 | |||||
Unearned premiums | 1,246.3 | 1,155.9 | 7.8 | |||||||
Contractholder deposit funds and other policy liabilities | 1.8 | 1.9 | (5.3 | ) | ||||||
Total policy liabilities and accruals | 4,449.4 | 4,323.6 | 2.9 | |||||||
Expenses and taxes payable | 596.4 | 389.8 | 53.0 | |||||||
Reinsurance premiums payable | 61.3 | 45.0 | 36.2 | |||||||
Long-term debt | 22.6 | 3.1 | N/M | |||||||
Total liabilities | 5,129.7 | 4,761.5 | 7.7 | |||||||
SHAREHOLDER’S EQUITY | ||||||||||
Common stock, par value $1.00 per share; authorized 20.9 million shares; issued 5.0 million shares | — | — | — | |||||||
Additional paid-in capital | 893.2 | 656.2 | 36.1 | |||||||
Accumulated other comprehensive (loss) income | (350.1 | ) | 10.7 | N/M | ||||||
Retained earnings | 1,452.4 | 1,527.7 | (4.9 | ) | ||||||
Total shareholder’s equity | 1,995.5 | 2,194.6 | (9.1 | ) | ||||||
Total liabilities and shareholder’s equity | $ | 7,125.2 | $ | 6,956.1 | 2.4 | |||||
(1) | Property and Casualty segment includes The Hanover Insurance Company, Citizens Insurance Company of America, and AIX, Inc. and their subsidiaries, Verlan Fire Insurance Company, OPUS Investments, Inc. and other insurance and non-insurance subsidiaries. |
8
THE HANOVER INSURANCE GROUP
PROPERTY AND CASUALTY
GAAP UNDERWRITING PROFIT (LOSS) RECONCILED TO SEGMENT INCOME
Quarter ended December 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||
Personal Lines | Commercial Lines | |||||||||||||||||||||||||||||||||||||||||||
(In millions) | Auto | Home | Other | Total | Workers’ Comp | Auto | Multiple Peril | Other | Total | Other P&C | Total P&C | |||||||||||||||||||||||||||||||||
Net premiums written | $ | 238.9 | $ | 113.0 | $ | 9.4 | $ | 361.3 | $ | 28.8 | $ | 40.2 | $ | 82.8 | $ | 84.1 | $ | 235.9 | $ | 0.1 | $ | 597.3 | ||||||||||||||||||||||
Net premiums earned | $ | 248.3 | $ | 107.1 | $ | 9.7 | $ | 365.1 | $ | 33.6 | $ | 48.1 | $ | 92.9 | $ | 87.1 | $ | 261.7 | $ | — | $ | 626.8 | ||||||||||||||||||||||
Policy benefits, claims, losses excluding prior year loss reserve development and catastrophe losses | 162.5 | 47.1 | 2.7 | 212.3 | 21.0 | 27.0 | 41.0 | 30.3 | 119.3 | — | 331.6 | |||||||||||||||||||||||||||||||||
Prior year loss reserve (favorable) unfavorable development | (7.1 | ) | (4.7 | ) | 0.7 | (11.1 | ) | (5.3 | ) | 1.5 | (7.1 | ) | (3.0 | ) | (13.9 | ) | (1.2 | ) | (26.2 | ) | ||||||||||||||||||||||||
Pre-tax catastrophe losses (recoveries) | — | 9.6 | 0.5 | 10.1 | — | — | (5.8 | ) | 9.8 | 4.0 | — | 14.1 | ||||||||||||||||||||||||||||||||
Pre-tax catastrophe LAE | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Loss adjustment expenses | 29.9 | 10.2 | 0.4 | 40.5 | 3.4 | 3.1 | 11.0 | 7.4 | 24.9 | 0.4 | 65.8 | |||||||||||||||||||||||||||||||||
Policy acquisition expenses and other underwriting expenses | 108.0 | 104.5 | (0.1 | ) | 212.4 | |||||||||||||||||||||||||||||||||||||||
Policyholders’ dividends | — | 1.2 | — | 1.2 | ||||||||||||||||||||||||||||||||||||||||
GAAP underwriting profit | 5.3 | 21.7 | 0.9 | 27.9 | ||||||||||||||||||||||||||||||||||||||||
Net investment income | 29.8 | 31.5 | 3.4 | 64.7 | ||||||||||||||||||||||||||||||||||||||||
Other income | 3.8 | 4.5 | 1.6 | 9.9 | ||||||||||||||||||||||||||||||||||||||||
Other operating income (expenses) | 0.8 | (2.1 | ) | (3.7 | ) | (5.0 | ) | |||||||||||||||||||||||||||||||||||||
Segment income before federal income taxes | $ | 39.7 | $ | 55.6 | $ | 2.2 | $ | 97.5 | ||||||||||||||||||||||||||||||||||||
Quarter ended December 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||
Personal Lines | Commercial Lines | |||||||||||||||||||||||||||||||||||||||||||
Auto | Home | Other | Total | Workers’ Comp | Auto | Multiple Peril | Other | Total | Other P&C | Total P&C | ||||||||||||||||||||||||||||||||||
Net premiums written | $ | 235.2 | $ | 106.7 | $ | 8.9 | $ | 350.8 | $ | 22.1 | $ | 39.7 | $ | 75.9 | $ | 73.1 | $ | 210.8 | $ | — | $ | 561.6 | ||||||||||||||||||||||
Net premiums earned | $ | 252.0 | $ | 105.6 | $ | 9.7 | $ | 367.3 | $ | 27.1 | $ | 48.0 | $ | 86.2 | $ | 73.1 | $ | 234.4 | $ | — | $ | 601.7 | ||||||||||||||||||||||
Policy benefits, claims, losses excluding prior year loss reserve development and catastrophe losses | 163.0 | 44.2 | 2.5 | 209.7 | 18.0 | 29.9 | 35.5 | 29.9 | 113.3 | — | 323.0 | |||||||||||||||||||||||||||||||||
Prior year loss reserve (favorable) unfavorable development | (9.4 | ) | (7.6 | ) | 1.7 | (15.3 | ) | (5.7 | ) | (3.2 | ) | (5.0 | ) | (5.9 | ) | (19.8 | ) | 1.8 | (33.3 | ) | ||||||||||||||||||||||||
Pre-tax catastrophe losses (recoveries) | 0.1 | 5.4 | (0.3 | ) | 5.2 | — | — | 5.5 | 0.6 | 6.1 | — | 11.3 | ||||||||||||||||||||||||||||||||
Pre-tax catastrophe LAE | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Loss adjustment expenses | 32.4 | 7.7 | 0.6 | 40.7 | 3.2 | 4.1 | 10.1 | 6.7 | 24.1 | 0.2 | 65.0 | |||||||||||||||||||||||||||||||||
Policy acquisition expenses and other underwriting expenses | 102.6 | 97.5 | (0.1 | ) | 200.0 | |||||||||||||||||||||||||||||||||||||||
Policyholders’ dividends | — | 0.1 | — | 0.1 | ||||||||||||||||||||||||||||||||||||||||
GAAP underwriting profit (loss) | 24.4 | 13.1 | (1.9 | ) | 35.6 | |||||||||||||||||||||||||||||||||||||||
Net investment income | 30.3 | 28.5 | 4.4 | 63.2 | ||||||||||||||||||||||||||||||||||||||||
Other income | 4.9 | 4.3 | 7.4 | 16.6 | ||||||||||||||||||||||||||||||||||||||||
Other operating expenses | (1.8 | ) | (3.3 | ) | (12.3 | ) | (17.4 | ) | ||||||||||||||||||||||||||||||||||||
Segment income (loss) before federal income taxes | $ | 57.8 | $ | 42.6 | $ | (2.4 | ) | $ | 98.0 | |||||||||||||||||||||||||||||||||||
9
THE HANOVER INSURANCE GROUP
PROPERTY AND CASUALTY
GAAP UNDERWRITING PROFIT (LOSS) RECONCILED TO SEGMENT INCOME
Year ended December 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||
Personal Lines | Commercial Lines | Other P&C | Total P&C | |||||||||||||||||||||||||||||||||||||||||
(In millions) | Auto | Home | Other | Total | Workers’ Comp | Auto | Multiple Peril | Other | Total | |||||||||||||||||||||||||||||||||||
Net premiums written | $ | 1,011.3 | $ | 432.5 | $ | 40.2 | $ | 1,484.0 | $ | 127.2 | $ | 192.8 | $ | 368.5 | $ | 345.2 | $ | 1,033.7 | $ | 0.3 | $ | 2,518.0 | ||||||||||||||||||||||
Net premiums earned | $ | 1,003.9 | $ | 429.4 | $ | 39.2 | $ | 1,472.5 | $ | 125.1 | $ | 196.7 | $ | 364.3 | $ | 326.0 | $ | 1,012.1 | $ | 0.3 | $ | 2,484.9 | ||||||||||||||||||||||
Policy benefits, claims, losses excluding prior year loss reserve development and catastrophe losses | 649.6 | 203.5 | 12.8 | 865.9 | 81.1 | 105.2 | 174.4 | 121.0 | 481.7 | — | 1,347.6 | |||||||||||||||||||||||||||||||||
Prior year loss reserve favorable development | (54.6 | ) | (5.7 | ) | (1.2 | ) | (61.5 | ) | (27.6 | ) | (9.3 | ) | (36.1 | ) | (18.0 | ) | (91.0 | ) | (1.9 | ) | (154.4 | ) | ||||||||||||||||||||||
Pre-tax catastrophe losses | 3.5 | 79.0 | 2.9 | 85.4 | — | 0.6 | 59.0 | 24.7 | 84.3 | — | 169.7 | |||||||||||||||||||||||||||||||||
Pre-tax catastrophe LAE | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Loss adjustment expenses | 125.2 | 36.3 | 1.7 | 163.2 | 13.7 | 15.9 | 40.7 | 26.8 | 97.1 | 1.4 | 261.7 | |||||||||||||||||||||||||||||||||
Policy acquisition expenses and other underwriting expenses | 427.2 | 398.6 | (0.4 | ) | 825.4 | |||||||||||||||||||||||||||||||||||||||
Policyholders’ dividends | — | 1.6 | — | 1.6 | ||||||||||||||||||||||||||||||||||||||||
GAAP underwriting (loss) profit | (7.7) | 39.8 | 1.2 | 33.3 | ||||||||||||||||||||||||||||||||||||||||
Net investment income | 118.9 | 124.4 | 14.7 | 258.0 | ||||||||||||||||||||||||||||||||||||||||
Other income | 16.0 | 18.3 | 6.6 | 40.9 | ||||||||||||||||||||||||||||||||||||||||
Other operating expenses | (3.7 | ) | (12.8 | ) | (13.5 | ) | (30.0 | ) | ||||||||||||||||||||||||||||||||||||
Segment income before federal income taxes | $ | 123.5 | $ | 169.7 | $ | 9.0 | $ | 302.2 | ||||||||||||||||||||||||||||||||||||
Year ended December 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||
Personal Lines | Commercial Lines | Other P&C | Total P&C | |||||||||||||||||||||||||||||||||||||||||
Auto | Home | Other | Total | Workers’ Comp | Auto | Multiple Peril | Other | Total | ||||||||||||||||||||||||||||||||||||
Net premiums written | $ | 1,018.6 | $ | 423.6 | $ | 38.6 | $ | 1,480.8 | $ | 110.8 | $ | 194.8 | $ | 349.1 | $ | 279.5 | $ | 934.2 | $ | 0.3 | $ | 2,415.3 | ||||||||||||||||||||||
Net premiums earned | $ | 1,006.2 | $ | 414.5 | $ | 39.0 | $ | 1,459.7 | $ | 108.4 | $ | 194.3 | $ | 349.4 | $ | 259.9 | $ | 912.0 | $ | 0.3 | $ | 2,372.0 | ||||||||||||||||||||||
Policy benefits, claims, losses excluding prior year loss reserve development and catastrophe losses | 641.4 | 190.9 | 12.1 | 844.4 | 71.0 | 107.3 | 168.7 | 102.3 | 449.3 | — | 1,293.7 | |||||||||||||||||||||||||||||||||
Prior year loss reserve (favorable) unfavorable development | (66.6 | ) | (7.0 | ) | 1.4 | (72.2 | ) | (24.1 | ) | (11.8 | ) | (25.1 | ) | (22.5 | ) | (83.5 | ) | 3.0 | (152.7 | ) | ||||||||||||||||||||||||
Pre-tax catastrophe losses (recoveries) | 2.6 | 22.0 | 0.8 | 25.4 | — | (0.1 | ) | 27.1 | 5.1 | 32.1 | — | 57.5 | ||||||||||||||||||||||||||||||||
Pre-tax catastrophe LAE | 0.1 | 1.3 | — | 1.4 | — | — | 5.1 | 1.2 | 6.3 | — | 7.7 | |||||||||||||||||||||||||||||||||
Loss adjustment expenses | 126.7 | 31.0 | 1.9 | 159.6 | 14.0 | 16.8 | 39.8 | 20.0 | 90.6 | 0.5 | 250.7 | |||||||||||||||||||||||||||||||||
Policy acquisition expenses and other underwriting expenses | 424.6 | 362.3 | (0.3 | ) | 786.6 | |||||||||||||||||||||||||||||||||||||||
Policyholders’ dividends | — | 0.5 | — | 0.5 | ||||||||||||||||||||||||||||||||||||||||
GAAP underwriting profit (loss) | 76.5 | 54.4 | (2.9 | ) | 128.0 | |||||||||||||||||||||||||||||||||||||||
Net investment income | 118.8 | 110.3 | 17.2 | 246.3 | ||||||||||||||||||||||||||||||||||||||||
Other income | 18.8 | 16.1 | 30.0 | 64.9 | ||||||||||||||||||||||||||||||||||||||||
Other operating expenses | (5.9 | ) | (11.5 | ) | (39.5 | ) | (56.9 | ) | ||||||||||||||||||||||||||||||||||||
Segment income before federal income taxes | $ | 208.2 | $ | 169.3 | $ | 4.8 | $ | 382.3 | ||||||||||||||||||||||||||||||||||||
10
THE HANOVER INSURANCE GROUP
PROPERTY AND CASUALTY
GAAP UNDERWRITING RATIOS
Quarter ended December 31, 2008 | ||||||||||||||||||||||||||||||||
Personal Lines | Commercial Lines | Other P&C | Total P&C | |||||||||||||||||||||||||||||
Auto | Home | Other | Total | Workers’ Comp | Auto | Multiple Peril | Other | Total | ||||||||||||||||||||||||
Losses, excluding catastrophe losses and development | 65.5 | % | 44.0 | % | 27.8 | % | 58.1 | % | 62.5 | % | 56.1 | % | 44.1 | % | 34.8 | % | 45.6 | % | N/M | 52.9 | % | |||||||||||
Catastrophe losses | — | 9.0 | % | 5.2 | % | 2.8 | % | — | — | (6.2 | )% | 11.3 | % | 1.5 | % | N/M | 2.2 | % | ||||||||||||||
Loss development | (2.8 | )% | (4.4 | )% | 7.2 | % | (3.1 | )% | (15.8 | )% | 3.2 | % | (7.6 | )% | (3.5 | )% | (5.4 | )% | N/M | (4.2 | )% | |||||||||||
Total losses | 62.7 | % | 48.6 | % | 40.2 | % | 57.8 | % | 46.7 | % | 59.3 | % | 30.3 | % | 42.6 | % | 41.7 | % | N/M | 50.9 | % | |||||||||||
Loss adjustment expenses | 12.0 | % | 9.5 | % | 4.1 | % | 11.1 | % | 10.1 | % | 6.4 | % | 11.8 | % | 8.5 | % | 9.5 | % | N/M | 10.5 | % | |||||||||||
Pre-tax catastrophe LAE | — | — | — | — | — | — | — | — | — | N/M | — | |||||||||||||||||||||
Policy acquisition and other underwriting expenses | 29.6 | % | 40.0 | % | N/M | 33.9 | % | |||||||||||||||||||||||||
Policyholders’ dividends | — | 0.5 | % | N/M | 0.2 | % | ||||||||||||||||||||||||||
Combined | 98.5 | % | 91.7 | % | N/M | 95.5 | % | |||||||||||||||||||||||||
Policies in force (1) | (1.7 | )% | (0.2 | )% | (5.8 | )% | (1.3 | )% | 0.3 | % | 4.0 | % | 0.1 | % | 2.1 | % | 1.4 | % | — | (0.9 | )% | |||||||||||
Retention (1), (2) | 73.6 | % | 80.8 | % | N/M | 77.3 | % | 88.8 | % | 80.8 | % | 84.0 | % | 80.9 | % | 83.5 | % | |||||||||||||||
Quarter ended December 31, 2007 | ||||||||||||||||||||||||||||||||
Personal Lines | Commercial Lines | Other P&C | Total P&C | |||||||||||||||||||||||||||||
Auto | Home | Other | Total | Workers’ Comp | Auto | Multiple Peril | Other | Total | ||||||||||||||||||||||||
Losses, excluding catastrophe losses and development | 64.7 | % | 41.9 | % | 25.8 | % | 57.1 | % | 66.4 | % | 62.3 | % | 41.2 | % | 40.9 | % | 48.3 | % | N/M | 53.7 | % | |||||||||||
Catastrophe losses | — | 5.1 | % | (3.1 | )% | 1.4 | % | — | — | 6.4 | % | 0.8 | % | 2.6 | % | N/M | 1.9 | % | ||||||||||||||
Loss development | (3.7 | )% | (7.2 | )% | 17.5 | % | (4.2 | )% | (21.0 | )% | (6.7 | )% | (5.8 | )% | (8.1 | )% | (8.4 | )% | N/M | (5.6 | )% | |||||||||||
Total losses | 61.0 | % | 39.8 | % | 40.2 | % | 54.3 | % | 45.4 | % | 55.6 | % | 41.8 | % | 33.6 | % | 42.5 | % | N/M | 50.0 | % | |||||||||||
Loss adjustment expenses | 12.9 | % | 7.3 | % | 6.2 | % | 11.1 | % | 11.8 | % | 8.5 | % | 11.7 | % | 9.2 | % | 10.3 | % | N/M | 10.8 | % | |||||||||||
Pre-tax catastrophe LAE | — | — | — | — | — | — | — | — | — | N/M | — | |||||||||||||||||||||
Policy acquisition and other underwriting expenses | 28.0 | % | 41.6 | % | N/M | 33.3 | % | |||||||||||||||||||||||||
Policyholders’ dividends | — | — | N/M | — | ||||||||||||||||||||||||||||
Combined | 93.4 | % | 94.4 | % | N/M | 94.1 | % | |||||||||||||||||||||||||
Policies in force | 2.9 | % | (2.4 | )% | (3.7 | )% | 0.2 | % | 1.6 | % | 2.1 | % | (2.0 | )% | 7.1 | % | 2.3 | % | — | 0.4 | % | |||||||||||
Retention (2) | 73.1 | % | 82.6 | % | N/M | 77.9 | % | 78.9 | % | 78.6 | % | 77.8 | % | 82.1 | % | 78.2 | % |
(1) | 2008 policies in force and retention rates do not include recent acquisitions of Professionals Direct, Inc., Verlan Fire Insurance Company, and AIX, Inc. |
(2) | The retention rate for personal lines is a twelve month rolling average calculation based on policies in force; the retention rate for commercial lines is based on direct voluntary written premiums, based on processed policies in the current period versus the same period in the prior year. Additionally, the retention rates have been adjusted to exclude the effect of our strategic termination of specialty commercial programs which resulted from an extensive review during the fourth quarter of 2001. |
11
THE HANOVER INSURANCE GROUP
PROPERTY AND CASUALTY
GAAP UNDERWRITING RATIOS
Year ended December 31, 2008 | ||||||||||||||||||||||||||||||||
Personal Lines | Commercial Lines | Other P&C | Total P&C | |||||||||||||||||||||||||||||
Auto | Home | Other | Total | Workers’ Comp | Auto | Multiple Peril | Other | Total | ||||||||||||||||||||||||
Losses, excluding catastrophe losses and development | 64.7 | % | 47.4 | % | 32.7 | % | 58.8 | % | 64.8 | % | 53.5 | % | 47.9 | % | 37.1 | % | 47.6 | % | N/M | 54.2 | % | |||||||||||
Catastrophe losses | 0.3 | % | 18.4 | % | 7.4 | % | 5.8 | % | — | 0.3 | % | 16.2 | % | 7.6 | % | 8.3 | % | N/M | 6.8 | % | ||||||||||||
Loss development | (5.5 | )% | (1.4 | )% | (3.1 | )% | (4.2 | )% | (22.1 | )% | (4.8 | )% | (10.0 | )% | (5.5 | )% | (9.0 | )% | N/M | (6.1 | )% | |||||||||||
Total losses | 59.5 | % | 64.4 | % | 37.0 | % | 60.4 | % | 42.7 | % | 49.0 | % | 54.1 | % | 39.2 | % | 46.9 | % | N/M | 54.9 | % | |||||||||||
Loss adjustment expenses | 12.5 | % | 8.5 | % | 4.3 | % | 11.1 | % | 11.0 | % | 8.1 | % | 11.2 | % | 8.2 | % | 9.6 | % | N/M | 10.5 | % | |||||||||||
Pre-tax catastrophe LAE | — | — | — | — | — | — | — | — | — | N/M | — | |||||||||||||||||||||
Policy acquisition and other underwriting expenses | 29.0 | % | 39.4 | % | N/M | 33.2 | % | |||||||||||||||||||||||||
Policyholders’ dividends | — | 0.2 | % | N/M | 0.1 | % | ||||||||||||||||||||||||||
Combined | 100.5 | % | 96.1 | % | N/M | 98.7 | % | |||||||||||||||||||||||||
Policies in force (1) | (1.7 | )% | (0.2 | )% | (5.8 | )% | (1.3 | )% | 0.3 | % | 4.0 | % | 0.1 | % | 2.1 | % | 1.4 | % | — | (0.9 | )% | |||||||||||
Retention (1), (2) | 73.6 | % | 80.8 | % | N/M | 77.3 | % | 81.1 | % | 80.3 | % | 82.5 | % | 76.7 | % | 81.3 | % | |||||||||||||||
Year ended December 31, 2007 | ||||||||||||||||||||||||||||||||
Personal Lines | Commercial Lines | Other P&C | Total P&C | |||||||||||||||||||||||||||||
Auto | Home | Other | Total | Workers’ Comp | Auto | Multiple Peril | Other | Total | ||||||||||||||||||||||||
Losses, excluding catastrophe losses and development | 63.7 | % | 46.1 | % | 31.0 | % | 57.8 | % | 65.5 | % | 55.2 | % | 48.3 | % | 39.4 | % | 49.3 | % | N/M | 54.5 | % | |||||||||||
Catastrophe losses | 0.3 | % | 5.3 | % | 2.1 | % | 1.7 | % | — | (0.1 | )% | 7.8 | % | 2.0 | % | 3.5 | % | N/M | 2.4 | % | ||||||||||||
Loss development | (6.6 | )% | (1.7 | )% | 3.6 | % | (4.9 | )% | (22.2 | )% | (6.0 | )% | (7.2 | )% | (8.7 | )% | (9.2 | )% | N/M | (6.4 | )% | |||||||||||
Total losses | 57.4 | % | 49.7 | % | 36.7 | % | 54.6 | % | 43.3 | % | 49.1 | % | 48.9 | % | 32.7 | % | 43.6 | % | N/M | 50.5 | % | |||||||||||
Loss adjustment expenses | 12.6 | % | 7.5 | % | 4.9 | % | 11.0 | % | 12.9 | % | 8.6 | % | 11.3 | % | 7.7 | % | 9.9 | % | N/M | 10.6 | % | |||||||||||
Pre-tax catastrophe LAE | 0.3 | % | — | 0.1 | % | — | — | 1.5 | % | 0.5 | % | 0.7 | % | N/M | 0.3 | % | ||||||||||||||||
Policy acquisition and other underwriting expenses | 29.1 | % | 39.7 | % | N/M | 33.2 | % | |||||||||||||||||||||||||
Policyholders’ dividends | — | 0.1 | % | N/M | — | |||||||||||||||||||||||||||
Combined | 94.8 | % | 94.0 | % | N/M | 94.6 | % | |||||||||||||||||||||||||
Policies in force | 2.9 | % | (2.4 | )% | (3.7 | )% | 0.2 | % | 1.6 | % | 2.1 | % | (2.0 | )% | 7.1 | % | 2.3 | % | — | 0.4 | % | |||||||||||
Retention (2) | 73.1 | % | 82.6 | % | N/M | 77.9 | % | 76.9 | % | 79.1 | % | 78.0 | % | 84.4 | % | 78.3 | % |
(1) | 2008 policies in force and retention rates do not include recent acquisitions of Professionals Direct, Inc., Verlan Fire Insurance Company, and AIX, Inc. |
(2) | The retention rate for personal lines is a twelve month rolling average calculation based on policies in force; the retention rate for commercial lines is based on direct voluntary written premiums, based on processed policies in the current period versus the same period in the prior year. Additionally, the retention rates have been adjusted to exclude the effect of our strategic termination of specialty commercial programs which resulted from an extensive review during the fourth quarter of 2001. |
12
INVESTMENTS
THE HANOVER INSURANCE GROUP
NET INVESTMENT INCOME
Continuing Operations | ||||||||||||||
Year ended December 31 | ||||||||||||||
(In millions, except yields) | 2008 | 2007 | ||||||||||||
Yield | Yield | |||||||||||||
Fixed maturities (1) | $ | 254.0 | 5.66 | % | $ | 242.6 | 5.62 | % | ||||||
Equity securities | 2.0 | — | 1.8 | — | ||||||||||
Mortgages (2) | 0.9 | 8.37 | % | 2.1 | 13.04 | % | ||||||||
All other | 6.7 | — | 5.7 | — | ||||||||||
Investment expenses | (4.9 | ) | — | (5.2 | ) | — | ||||||||
Total | $ | 258.7 | 5.45 | % | $ | 247.0 | 5.49 | % | ||||||
Discontinued Operations | ||||||||||||||
Year ended December 31 | ||||||||||||||
(In millions, except yields) | 2008 | 2007 | ||||||||||||
Yield | Yield | |||||||||||||
Fixed maturities (1) | $ | 54.9 | 5.58 | % | $ | 65.2 | 5.55 | % | ||||||
Equity securities | 2.4 | 9.37 | % | 2.8 | 8.76 | % | ||||||||
Mortgages (2) | 8.3 | — | 7.5 | — | ||||||||||
All other | 1.9 | — | 3.2 | — | ||||||||||
Investment expenses | (1.3 | ) | — | (1.7 | ) | — | ||||||||
Total | $ | 66.2 | 5.63 | % | $ | 77.0 | 5.52 | % | ||||||
(1) | Includes purchase accounting adjustments of ($3.4) million and ($3.1) million for the years ended December 31, 2008 and 2007, respectively. |
(2) | Excludes mortgage prepayment fees of $0.2 million and $0.8 million for the years ended December 31, 2008 and 2007, respectively. Mortgage yields are 7.01% and 7.96% for the years ended December 31, 2008 and 2007, respectively. |
13
THE HANOVER INSURANCE GROUP
COMPONENTS OF NET REALIZED INVESTMENT GAINS (LOSSES)
Continuing Operations | ||||||||||||||||
Quarter ended December 31 | Year ended December 31 | |||||||||||||||
(In millions) | 2008 | 2007 | 2008 | 2007 | ||||||||||||
Net Realized Gains (Losses) | Net Realized Gains (Losses) | |||||||||||||||
Net gains on securities transactions | $ | 7.4 | $ | 1.7 | $ | 13.1 | $ | 2.3 | ||||||||
Other than temporary impairments (1) | (46.4 | ) | (2.5 | ) | (113.1 | ) | (3.6 | ) | ||||||||
Other | 1.9 | 0.2 | 2.2 | 0.4 | ||||||||||||
Net realized investment losses | $ | (37.1 | ) | $ | (0.6 | ) | $ | (97.8 | ) | $ | (0.9 | ) | ||||
Discontinued Operations | ||||||||||||||||
Quarter ended December 31 | Year ended December 31 | |||||||||||||||
(In millions) | 2008 | 2007 | 2008 | 2007 | ||||||||||||
Net Realized Gains | Net Realized (Losses) Gains | |||||||||||||||
Net gains (losses) on securities transactions | $ | 1.1 | $ | 0.2 | $ | (3.0 | ) | $ | 2.6 | |||||||
Other than temporary impairments (1) | 5.8 | — | (13.0 | ) | (0.1 | ) | ||||||||||
Other | 1.7 | — | 1.6 | (0.1 | ) | |||||||||||
Net realized investment gains (losses) | $ | 8.6 | $ | 0.2 | $ | (14.4 | ) | $ | 2.4 | |||||||
(1) | In the fourth quarter of 2008, $8.7 million of impairments that were recorded previously in 2008 were reclassified from discontinued operations to continuing operations. |
14
THE HANOVER INSURANCE GROUP
AGING OF GROSS UNREALIZED LOSSES ON SECURITIES AVAILABLE FOR SALE
(In millions) | December 31, 2008 | |||||||||||||||||
Gross Unrealized Losses | Fair Value | |||||||||||||||||
Property and Casualty (1) | Holdings to be Transferred to FAFLIC Buyer | Total | Property and Casualty (1) | Holdings to be Transferred to FAFLIC Buyer | Total | |||||||||||||
INVESTMENT GRADE FIXED MATURITIES: | ||||||||||||||||||
12 months or less | $ | 152.0 | $ | 33.1 | $ | 185.1 | $ | 1,732.3 | $ | 382.2 | $ | 2,114.5 | ||||||
Greater than 12 months | 106.0 | 27.3 | 133.3 | 490.1 | 184.9 | 675.0 | ||||||||||||
Total investment grade fixed maturities | 258.0 | 60.4 | 318.4 | 2,222.4 | 567.1 | 2,789.5 | ||||||||||||
BELOW INVESTMENT GRADE FIXED MATURITIES: | ||||||||||||||||||
12 months or less | 64.2 | 0.3 | 64.5 | 152.5 | 1.6 | 154.1 | ||||||||||||
Greater than 12 months | — | — | — | — | — | — | ||||||||||||
Total below investment grade fixed maturities | 64.2 | 0.3 | 64.5 | 152.5 | 1.6 | 154.1 | ||||||||||||
Equity securities | 11.4 | — | 11.4 | 32.3 | — | 32.3 | ||||||||||||
Total fixed maturities and equity securities | $ | 333.6 | $ | 60.7 | $ | 394.3 | $ | 2,407.2 | $ | 568.7 | $ | 2,975.9 | ||||||
December 31, 2007 | ||||||||||||||||||
Gross Unrealized Losses | Fair Value | |||||||||||||||||
Property and Casualty (1) | Holdings to be Transferred to FAFLIC Buyer | Total | Property and Casualty (1) | Holdings to be Transferred to FAFLIC Buyer | Total | |||||||||||||
INVESTMENT GRADE FIXED MATURITIES: | ||||||||||||||||||
12 months or less | $ | 21.2 | $ | 5.9 | $ | 27.1 | $ | 576.0 | $ | 164.0 | $ | 740.0 | ||||||
Greater than 12 months | 25.6 | 8.7 | 34.3 | 963.4 | 251.3 | 1,214.7 | ||||||||||||
Total investment grade fixed maturities | 46.8 | 14.6 | 61.4 | 1,539.4 | 415.3 | 1,954.7 | ||||||||||||
BELOW INVESTMENT GRADE FIXED MATURITIES: | ||||||||||||||||||
12 months or less | 8.2 | 0.1 | 8.3 | 170.1 | 0.9 | 171.0 | ||||||||||||
Greater than 12 months | — | — | — | — | — | — | ||||||||||||
Total below investment grade fixed maturities | 8.2 | 0.1 | 8.3 | 170.1 | 0.9 | 171.0 | ||||||||||||
Equity securities | 0.5 | — | 0.5 | 17.8 | — | 17.8 | ||||||||||||
Total fixed maturities and equity securities | $ | 55.5 | $ | 14.7 | $ | 70.2 | $ | 1,727.3 | $ | 416.2 | $ | 2,143.5 | ||||||
(1) | Property & Casualty includes discontinued group life and health pools of $15.7 million in gross unrealized losses with $52.3 million in fair value at December 31, 2008 and $2.5 million in gross unrealized losses with $58.2 million in fair value at December 31, 2007. |
15
THE HANOVER INSURANCE GROUP
CREDIT QUALITY OF FIXED MATURITIES
(In millions) | December 31, 2008 | |||||||||||||||||||
Amortized Cost | Fair Value | |||||||||||||||||||
NAIC Designation | Rating Agency Equivalent Designation | Property and Casualty (1) | Holdings to be Transferred to FAFLIC Buyer | Total | Property and Casualty (1) | Holdings to be Transferred to FAFLIC Buyer | Total | |||||||||||||
1 | Aaa/Aa/A | $ | 3,125.9 | $ | 661.3 | 3,787.2 | 3,015.6 | $ | 641.8 | $ | 3,657.4 | |||||||||
2 | Baa | 1,088.9 | 284.5 | 1,373.4 | 992.2 | 255.7 | 1,247.9 | |||||||||||||
3 | Ba | 151.5 | 4.0 | 155.5 | 133.2 | 3.8 | 137.0 | |||||||||||||
4 | B | 111.0 | — | 111.0 | 83.8 | — | 83.8 | |||||||||||||
5 | Caa and lower | 37.1 | — | 37.1 | 24.5 | — | 24.5 | |||||||||||||
6 | In or near default | 8.8 | 0.1 | 8.9 | 5.5 | 0.1 | 5.6 | |||||||||||||
Total fixed maturities | $ | 4,523.2 | $ | 949.9 | 5,473.1 | 4,254.8 | $ | 901.4 | $ | 5,156.2 | ||||||||||
December 31, 2007 | ||||||||||||||||||||
Amortized Cost | Fair Value | |||||||||||||||||||
NAIC Designation | Rating Agency Equivalent Designation | Property and Casualty (1) | Holdings to be Transferred to FAFLIC Buyer | Total | Property and Casualty (1) | Holdings to be Transferred to FAFLIC Buyer | Total | |||||||||||||
1 | Aaa/Aa/A | $ | 3,445.1 | $ | 704.4 | $ | 4,149.5 | $ | 3,457.7 | $ | 706.4 | $ | 4,164.1 | |||||||
2 | Baa | 962.4 | 295.2 | 1,257.6 | 950.9 | 293.3 | 1,244.2 | |||||||||||||
3 | Ba | 120.1 | 10.6 | 130.7 | 118.4 | 11.2 | 129.6 | |||||||||||||
4 | B | 147.7 | 4.2 | 151.9 | 146.8 | 4.3 | 151.1 | |||||||||||||
5 | Caa and lower | 32.4 | — | 32.4 | 30.6 | — | 30.6 | |||||||||||||
6 | In or near default | 0.9 | 0.1 | 1.0 | 2.3 | 0.1 | 2.4 | |||||||||||||
Total fixed maturities | $ | 4,708.6 | $ | 1,014.5 | $ | 5,723.1 | $ | 4,706.7 | $ | 1,015.3 | $ | 5,722.0 | ||||||||
(1) | Property & Casualty includes discontinued group life and health pools of $99.3 million in amortized cost and $85.4 million in fair value at December 31, 2008 and $122.9 million in amortized cost and $121.9 million in fair value at December 31, 2007. |
16
PROPERTY & CASUALTY
STATUTORY RATIOS
THE HANOVER INSURANCE GROUP
PROPERTY AND CASUALTY
STATUTORY UNDERWRITING RATIOS
Quarter ended December 31, 2008 | ||||||||||||||||||||||||||||||||
Personal Lines | Commercial Lines | Other P&C | Total P&C | |||||||||||||||||||||||||||||
Auto | Home | Other | Total | Workers’ Comp | Auto | Multiple Peril | Other | Total | ||||||||||||||||||||||||
Losses, excluding catastrophe losses and development | 65.5 | % | 43.9 | % | 28.1 | % | 58.2 | % | 66.0 | % | 56.1 | % | 44.5 | % | 35.0 | % | 46.1 | % | N/M | 53.2 | % | |||||||||||
Catastrophe losses | — | 8.9 | % | 5.2 | % | 2.7 | % | — | — | (6.2 | )% | 11.2 | % | 1.5 | % | N/M | 2.2 | % | ||||||||||||||
Loss development | (2.9 | )% | (4.4 | )% | 7.3 | % | (3.0 | )% | (16.7 | )% | 3.1 | % | (7.7 | )% | (3.5 | )% | (5.4 | )% | N/M | (4.2 | )% | |||||||||||
Total losses | 62.6 | % | 48.4 | % | 40.6 | % | 57.9 | % | 49.3 | % | 59.2 | % | 30.6 | % | 42.7 | % | 42.2 | % | N/M | 51.2 | % | |||||||||||
Loss adjustment expenses | 12.0 | % | 9.6 | % | 3.1 | % | 11.1 | % | 10.4 | % | 6.4 | % | 11.8 | % | 8.4 | % | 9.5 | % | N/M | 10.5 | % | |||||||||||
Pre-tax catastrophe LAE | — | — | — | — | — | — | — | — | — | N/M | — | |||||||||||||||||||||
Policy acquisition and other underwriting expenses | 29.6 | % | 43.0 | % | N/M | 34.8 | % | |||||||||||||||||||||||||
Policyholders’ dividends | — | 0.4 | % | N/M | 0.2 | % | ||||||||||||||||||||||||||
Combined | 98.6 | % | 95.1 | % | N/M | 96.7 | % | |||||||||||||||||||||||||
Quarter ended December 31, 2007 | ||||||||||||||||||||||||||||||||
Personal Lines | Commercial Lines | Other P&C | Total P&C | |||||||||||||||||||||||||||||
Auto | Home | Other | Total | Workers’ Comp | Auto | Multiple Peril | Other | Total | ||||||||||||||||||||||||
Losses, excluding catastrophe losses and development | 64.7 | % | 42.0 | % | 25.8 | % | 57.1 | % | 65.6 | % | 62.3 | % | 40.6 | % | 41.5 | % | 48.2 | % | N/M | 53.7 | % | |||||||||||
Catastrophe losses | — | 5.1 | % | (3.1 | )% | 1.4 | % | — | — | 6.2 | % | 1.0 | % | 2.6 | % | N/M | 1.9 | % | ||||||||||||||
Loss development | (3.7 | )% | (7.2 | )% | 17.5 | % | (4.2 | )% | (20.9 | )% | (6.7 | )% | (5.8 | )% | (8.1 | )% | (8.4 | )% | N/M | (5.6 | )% | |||||||||||
Total losses | 61.0 | % | 39.9 | % | 40.2 | % | 54.3 | % | 44.7 | % | 55.6 | % | 41.0 | % | 34.4 | % | 42.4 | % | N/M | 50.0 | % | |||||||||||
Loss adjustment expenses | 12.1 | % | 6.9 | % | 6.2 | % | 10.5 | % | 11.4 | % | 8.1 | % | 11.4 | % | 9.2 | % | 10.1 | % | N/M | 10.3 | % | |||||||||||
Pre-tax catastrophe LAE | — | — | — | — | — | — | — | — | — | N/M | — | |||||||||||||||||||||
Policy acquisition and other underwriting expenses | 31.6 | % | 44.3 | % | N/M | 36.3 | % | |||||||||||||||||||||||||
Policyholders’ dividends | — | — | N/M | — | ||||||||||||||||||||||||||||
Combined | 96.4 | % | 96.8 | % | N/M | 96.6 | % | |||||||||||||||||||||||||
17
THE HANOVER INSURANCE GROUP
PROPERTY AND CASUALTY
STATUTORY UNDERWRITING RATIOS
Year ended December 31, 2008 | ||||||||||||||||||||||||||||||||
Personal Lines | Commercial Lines | Other P&C | Total P&C | |||||||||||||||||||||||||||||
Auto | Home | Other | Total | Workers’ Comp | Auto | Multiple Peril | Other | Total | ||||||||||||||||||||||||
Losses, excluding catastrophe losses and development | 64.7 | % | 47.4 | % | 32.7 | % | 58.8 | % | 65.5 | % | 53.5 | % | 48.1 | % | 37.4 | % | 47.8 | % | N/M | 54.3 | % | |||||||||||
Catastrophe losses | 0.4 | % | 18.4 | % | 7.4 | % | 5.8 | % | — | 0.3 | % | 16.1 | % | 7.2 | % | 8.2 | % | N/M | 6.8 | % | ||||||||||||
Loss development | (5.4 | )% | (1.3 | )% | (3.1 | )% | (4.2 | )% | (22.3 | )% | (4.7 | )% | (9.9 | )% | (5.5 | )% | (9.0 | )% | N/M | (6.2 | )% | |||||||||||
Total losses | 59.7 | % | 64.5 | % | 37.0 | % | 60.4 | % | 43.2 | % | 49.1 | % | 54.3 | % | 39.1 | % | 47.0 | % | N/M | 54.9 | % | |||||||||||
Loss adjustment expenses | 12.4 | % | 8.5 | % | 4.3 | % | 11.0 | % | 11.0 | % | 8.1 | % | 11.2 | % | 8.2 | % | 9.6 | % | N/M | 10.5 | % | |||||||||||
Pre-tax catastrophe LAE | — | — | — | — | — | — | — | — | — | N/M | — | |||||||||||||||||||||
Policy acquisition and other underwriting expenses | 28.7 | % | 39.4 | % | N/M | 33.1 | % | |||||||||||||||||||||||||
Policyholders’ dividends | — | 0.2 | % | N/M | 0.1 | % | ||||||||||||||||||||||||||
Combined | 100.1 | % | 96.2 | % | N/M | 98.6 | % | |||||||||||||||||||||||||
Year ended December 31, 2007 | ||||||||||||||||||||||||||||||||
Personal Lines | Commercial Lines | Other P&C | Total P&C | |||||||||||||||||||||||||||||
Auto | Home | Other | Total | Workers’ Comp | Auto | Multiple Peril | Other | Total | ||||||||||||||||||||||||
Losses, excluding catastrophe losses and development | 63.7 | % | 46.1 | % | 31.1 | % | 57.9 | % | 64.9 | % | 55.3 | % | 48.2 | % | 39.6 | % | 49.2 | % | N/M | 54.5 | % | |||||||||||
Catastrophe losses | 0.3 | % | 5.7 | % | 2.3 | % | 1.9 | % | — | — | 7.9 | % | 2.0 | % | 3.6 | % | N/M | 2.5 | % | |||||||||||||
Loss development | (6.6 | )% | (1.7 | )% | 3.6 | % | (4.9 | )% | (22.0 | )% | (6.1 | )% | (7.2 | )% | (8.7 | )% | (9.1 | )% | N/M | (6.4 | )% | |||||||||||
Total losses | 57.4 | % | 50.1 | % | 37.0 | % | 54.9 | % | 42.9 | % | 49.2 | % | 48.9 | % | 32.9 | % | 43.7 | % | N/M | 50.6 | % | |||||||||||
Loss adjustment expenses | 12.4 | % | 7.4 | % | 4.9 | % | 10.8 | % | 12.6 | % | 8.5 | % | 11.3 | % | 7.7 | % | 9.8 | % | N/M | 10.5 | % | |||||||||||
Pre-tax catastrophe LAE | — | 0.3 | % | — | 0.1 | % | — | — | 1.5 | % | 0.5 | % | 0.7 | % | N/M | 0.3 | % | |||||||||||||||
Policy acquisition and other underwriting expenses | 29.7 | % | 39.5 | % | N/M | 33.5 | % | |||||||||||||||||||||||||
Policyholders’ dividends | — | 0.1 | % | N/M | — | |||||||||||||||||||||||||||
Combined | 95.5 | % | 93.8 | % | N/M | 94.9 | % | |||||||||||||||||||||||||
18
Historical Highlights
THE HANOVER INSURANCE GROUP
HISTORICAL FINANCIAL HIGHLIGHTS
(In millions, except per share data) | 2008 | Q4 08 | Q3 08 | Q2 08 | Q1 08 | 2007 | Q4 07 | Q3 07 | Q2 07 | Q1 07 | ||||||||||||||||||||||||||||||
SEGMENT INCOME (1) | ||||||||||||||||||||||||||||||||||||||||
Property and Casualty | ||||||||||||||||||||||||||||||||||||||||
Personal Lines | $ | 123.5 | $ | 39.7 | $ | 18.1 | $ | 38.6 | $ | 27.1 | $ | 208.2 | $ | 57.8 | $ | 48.8 | $ | 55.0 | $ | 46.6 | ||||||||||||||||||||
Commercial Lines | 169.7 | 55.6 | (6.6 | ) | 52.7 | 68.0 | 169.3 | 42.6 | 39.2 | 38.9 | 48.6 | |||||||||||||||||||||||||||||
Other Property and Casualty | 9.0 | 2.2 | 2.3 | 2.9 | 1.3 | 4.8 | (2.4 | ) | 0.3 | 2.5 | 4.4 | |||||||||||||||||||||||||||||
Total Property and Casualty | 302.2 | 97.5 | 13.8 | 94.2 | 96.4 | 382.3 | 98.0 | 88.3 | 96.4 | 99.6 | ||||||||||||||||||||||||||||||
Interest expense on corporate debt | (39.9 | ) | (10.0 | ) | (10.0 | ) | (9.9 | ) | (10.0 | ) | (39.9 | ) | (10.0 | ) | (10.0 | ) | (9.9 | ) | (10.0 | ) | ||||||||||||||||||||
Total segment income before federal income taxes | $ | 262.3 | $ | 87.5 | $ | 3.8 | $ | 84.3 | $ | 86.4 | $ | 342.4 | $ | 88.0 | $ | 78.3 | $ | 86.5 | $ | 89.6 | ||||||||||||||||||||
Federal income tax expense on segment income | (86.3 | ) | (27.9 | ) | (0.5 | ) | (28.8 | ) | (29.1 | ) | (113.7 | ) | (27.2 | ) | (26.6 | ) | (29.8 | ) | (30.1 | ) | ||||||||||||||||||||
Total segment income after federal income taxes | $ | 176.0 | $ | 59.6 | $ | 3.3 | $ | 55.5 | $ | 57.3 | $ | 228.7 | $ | 60.8 | $ | 51.7 | $ | 56.7 | $ | 59.5 | ||||||||||||||||||||
Federal income tax settlement | 6.4 | — | 6.4 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Net realized investment (losses) gains | (97.8 | ) | (37.1 | ) | (52.8 | ) | (7.6 | ) | (0.3 | ) | (0.9 | ) | (0.6 | ) | (0.8 | ) | 0.2 | 0.3 | ||||||||||||||||||||||
Losses on derivative instruments | (0.1 | ) | (0.1 | ) | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Federal income tax benefit (expense) on non-segment income | — | 0.4 | (0.4 | ) | — | — | 0.5 | 0.1 | 0.6 | (0.1 | ) | (0.1 | ) | |||||||||||||||||||||||||||
Income (loss) from continuing operations | 84.5 | 22.8 | (43.5 | ) | 47.9 | 57.0 | 228.3 | 60.3 | 51.5 | 56.8 | 59.7 | |||||||||||||||||||||||||||||
Discontinued operations (net of taxes): | ||||||||||||||||||||||||||||||||||||||||
(Loss) income from operations of discontinued FAFLIC business (Including loss on assets held-for-sale of $77.3 in 2008, and $5.1, $6.1 and $66.1 in the fourth, third and second quarters of 2008) | (84.8 | ) | 8.1 | (21.7 | ) | (67.7 | ) | (3.5 | ) | 10.9 | 2.6 | 1.5 | 2.7 | 4.1 | ||||||||||||||||||||||||||
Income (loss) from operations of discontinued variable life and annuity business (Including gain (loss) on disposal of $11.3 in 2008, and $3.2, $2.7, ($0.8) and $6.2 in the fourth, third, second and first quarters of 2008) | 11.3 | 3.2 | 2.7 | (0.8 | ) | 6.2 | 13.1 | 12.9 | 0.1 | 0.3 | (0.2 | ) | ||||||||||||||||||||||||||||
Gain from operations of AMGRO (Including gain on disposal of $11.1 in 2008) | 10.1 | — | — | 10.4 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Other | (0.5 | ) | — | 0.7 | — | (1.2 | ) | 0.8 | — | 0.8 | — | — | ||||||||||||||||||||||||||||
NET INCOME (LOSS) | $ | 20.6 | $ | 34.1 | $ | (61.8 | ) | $ | (10.2 | ) | $ | 58.5 | $ | 253.1 | $ | 75.8 | $ | 53.9 | $ | 59.8 | $ | 63.6 | ||||||||||||||||||
PER SHARE DATA (DILUTED) | ||||||||||||||||||||||||||||||||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS | $ | 1.63 | $ | 0.44 | $ | (0.85 | ) | $ | 0.92 | $ | 1.09 | $ | 4.36 | $ | 1.15 | $ | 0.98 | $ | 1.09 | $ | 1.15 | |||||||||||||||||||
(LOSS) INCOME FROM DISCONTINUED OPERATIONS | $ | (1.23 | ) | $ | 0.22 | $ | (0.36 | ) | $ | (1.12 | ) | $ | 0.03 | $ | 0.47 | $ | 0.29 | $ | 0.05 | $ | 0.05 | $ | 0.07 | |||||||||||||||||
NET INCOME (LOSS) | $ | 0.40 | $ | 0.66 | $ | (1.21 | ) | $ | (0.20 | ) | $ | 1.12 | $ | 4.83 | $ | 1.44 | $ | 1.03 | $ | 1.14 | $ | 1.22 | ||||||||||||||||||
WEIGHTED AVERAGE SHARES OUTSTANDING (DILUTED) (2) | 51.7 | 51.4 | 51.0 | 51.8 | 52.3 | 52.4 | 52.6 | 52.5 | 52.3 | 51.9 | ||||||||||||||||||||||||||||||
BALANCE SHEET | ||||||||||||||||||||||||||||||||||||||||
Total assets | $ | 9,230.2 | $ | 9,254.8 | $ | 9,463.8 | $ | 9,700.6 | $ | 9,815.6 | $ | 9,845.2 | $ | 9,805.7 | $ | 9,776.2 | ||||||||||||||||||||||||
Total shareholders’ equity | $ | 1,887.2 | $ | 2,040.1 | $ | 2,212.7 | $ | 2,320.7 | $ | 2,299.0 | $ | 2,192.6 | $ | 2,099.4 | $ | 2,100.7 | ||||||||||||||||||||||||
Book value per share | $ | 37.08 | $ | 40.09 | $ | 43.57 | $ | 45.23 | $ | 44.37 | $ | 42.34 | $ | 40.55 | $ | 40.92 | ||||||||||||||||||||||||
Book value per share, excluding accumulated other comprehensive (loss) income | $ | 44.64 | $ | 44.37 | $ | 45.55 | $ | 45.70 | $ | 44.77 | $ | 43.62 | $ | 42.51 | $ | 41.33 |
(1) | Represents income or loss of the Company’s operating segments: Personal Lines, Commercial Lines, Other Property and Casualty and interest expense on corporate debt. In accordance with Statement of Financial Accounting Standards No.131, the separate financial information of each segment is presented consistent with the manner in which results are regularly evaluated by the chief operating decision maker in deciding how to allocate resources and in assessing performance. |
(2) | Weighted average shares outstanding for the quarter ended September 30, 2008 represents basic shares outstanding due to antidilution. |
19
Other Information
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
645 West Grand River
Howell, MI 48843
MARKET AND DIVIDEND INFORMATION
The following information shows trading activity for the Company for the periods indicated:
Quarter Ended | 2008 | ||||||||
Price Range | Dividends Per Share | ||||||||
High | Low | ||||||||
March 31 | $ | 47.17 | $ | 40.14 | — | ||||
June 30 | $ | 46.83 | $ | 41.71 | — | ||||
September 30 | $ | 51.00 | $ | 38.01 | — | ||||
December 31 | $ | 45.00 | $ | 31.92 | $ | 0.45 | |||
Quarter Ended | 2007 | ||||||||
Price Range | Dividends Per Share | ||||||||
High | Low | ||||||||
March 31 | $ | 49.11 | $ | 44.70 | — | ||||
June 30 | $ | 49.73 | $ | 44.46 | — | ||||
September 30 | $ | 49.76 | $ | 41.14 | — | ||||
December 31 | $ | 46.21 | $ | 42.23 | $ | 0.40 |
INDUSTRY RATINGS AS OF FEBRUARY 5, 2009
Financial Strength Ratings | A.M. Best | Standard & Poor’s | Moody’s | |||
Property and Casualty Insurance Companies: | ||||||
The Hanover Insurance Company | A- | A- | A3 | |||
Citizens Insurance Companyof America | A- | A- | A3 | |||
Debt Ratings | A.M. Best | Standard & Poor’s | Moody’s | |||
The Hanover Insurance Group, Inc. Senior Debt | bbb- | BBB- | Baa3 | |||
The Hanover Insurance Group, Inc. Capital Securities | bb | BB- | Ba1 | |||
The Hanover Insurance Company Short Term Debt | — | — | Prime-3 |
TRANSFER AGENT
Computershare Limited
PO Box 43076
Providence, RI 02940-3076
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
Robert Myron
Vice President, Corporate Finance and Treasurer
(508) 855-3457
rmyron@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
20