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 | 9-10 | |
Investments | ||
Net Investment Income | 11 | |
Net Realized Investment Gains (Losses) | 12 | |
Unrealized Losses | 13 | |
Credit Quality of Fixed Maturities | 14 | |
Top 25 Financial Holdings | 15 | |
Top 25 Non-Financial Holdings | 16 | |
Property and Casualty Statutory Ratios | 17 | |
Historical Financial Highlights | 18-19 | |
Other Information | 20 | |
Corporate Information | ||
Market and Dividend Information | ||
Industry Ratings |
THE HANOVER INSURANCE GROUP
FINANCIAL HIGHLIGHTS
Quarter ended March 31 | |||||||||||
(In millions) | 2009 | 2008 | % Change | ||||||||
SEGMENT INCOME | |||||||||||
Property and Casualty | |||||||||||
Personal Lines | $ | 3.1 | $ | 27.1 | (88.6 | ) | |||||
Commercial Lines | 47.2 | 68.0 | (30.6 | ) | |||||||
Other | (0.8 | ) | 1.3 | N/M | |||||||
Total Property and Casualty | 49.5 | 96.4 | (48.7 | ) | |||||||
Interest expense on corporate debt | (10.0 | ) | (10.0 | ) | — | ||||||
Total segment income | 39.5 | 86.4 | (54.3 | ) | |||||||
Federal income tax expense on P&C segment income | (16.6 | ) | (32.6 | ) | (49.1 | ) | |||||
Federal income tax benefit on other segment income | 3.5 | 3.5 | — | ||||||||
Total federal income tax expense on segment income | (13.1 | ) | (29.1 | ) | (55.0 | ) | |||||
Total segment income after taxes | $ | 26.4 | $ | 57.3 | (53.9 | ) | |||||
RECONCILIATION FROM SEGMENT INCOME TO NET INCOME | |||||||||||
Total segment income after taxes | $ | 26.4 | $ | 57.3 | (53.9 | ) | |||||
Net realized investment losses | (6.1 | ) | (0.3 | ) | N/M | ||||||
Other non-segment items | (0.1 | ) | — | N/M | |||||||
�� | |||||||||||
Income from continuing operations | 20.2 | 57.0 | (64.6 | ) | |||||||
Discontinued operations (net of taxes): | |||||||||||
Gain (loss) from discontinued FAFLIC business | 5.0 | (3.5 | ) | N/M | |||||||
Loss from discontinued accident and health business | (3.3 | ) | — | N/M | |||||||
Gain on disposal of variable life and annuity business | 3.9 | 6.2 | (37.1 | ) | |||||||
Other | — | (1.2 | ) | N/M | |||||||
Net income | $ | 25.8 | $ | 58.5 | (55.9 | ) | |||||
1
THE HANOVER INSURANCE GROUP
FINANCIAL HIGHLIGHTS
Quarter ended March 31 | |||||||||||
2009 | 2008 | % Change | |||||||||
PER SHARE DATA (DILUTED) | |||||||||||
Total segment income | $ | 0.77 | $ | 1.65 | (53.3 | ) | |||||
Federal income tax expense on segment income | (0.26 | ) | (0.55 | ) | (52.7 | ) | |||||
Total segment income after taxes | 0.51 | 1.10 | (53.6 | ) | |||||||
Net realized investment losses | (0.12 | ) | (0.01 | ) | N/M | ||||||
Income from continuing operations | 0.39 | 1.09 | (64.2 | ) | |||||||
Discontinued operations (net of taxes): | |||||||||||
Gain (loss) from discontinued FAFLIC business | 0.10 | (0.07 | ) | N/M | |||||||
Loss from discontinued accident and health business | (0.06 | ) | — | N/M | |||||||
Gain on disposal of variable life and annuity business | 0.07 | 0.12 | (41.7 | ) | |||||||
Other | — | (0.02 | ) | N/M | |||||||
Net income | $ | 0.50 | $ | 1.12 | (55.4 | ) | |||||
2
THE HANOVER INSURANCE GROUP
FINANCIAL HIGHLIGHTS
(In millions, except per share data) | March 31 2009 | December 31 2008 | % Change | ||||||||
BALANCE SHEET | |||||||||||
Shareholders’ equity | |||||||||||
Property and Casualty Group | $ | 2,070.8 | $ | 1,995.5 | 3.8 | ||||||
First Allmerica Financial Life Insurance Company (consolidated) (1) | — | 78.1 | N/M | ||||||||
THG Holding Company debt (2) | (499.5 | ) | (499.5 | ) | — | ||||||
THG Holding Company | 396.3 | 313.1 | 26.6 | ||||||||
Total shareholders’ equity | $ | 1,967.6 | $ | 1,887.2 | 4.3 | ||||||
Property and Casualty Companies (3) | |||||||||||
Total adjusted statutory capital | $ | 1,610.2 | $ | 1,600.7 | 0.6 | ||||||
Premium to surplus ratio | 1.6:1 | 1.6:1 | — | ||||||||
Book value per share | |||||||||||
Property and Casualty Group | $ | 40.65 | $ | 39.20 | 3.7 | ||||||
First Allmerica Financial Life Insurance Company (consolidated) | — | 1.53 | N/M | ||||||||
THG Holding Company debt (2) | (9.81 | ) | (9.81 | ) | — | ||||||
THG Holding Company | 7.78 | 6.16 | 26.3 | ||||||||
Total book value per share | $ | 38.62 | $ | 37.08 | 4.2 | ||||||
THG book value per share, excluding accumulated other comprehensive loss | $ | 45.16 | $ | 44.64 | 1.2 | ||||||
Shares outstanding (4) | 50.9 | 50.9 | |||||||||
Stock price | $ | 28.82 | $ | 42.97 | (32.9 | ) | |||||
Price/book value per share | 0.7 | x | 1.2 | x | (0.5 | ) x | |||||
Debt/equity | 27.0 | % | 28.1 | % | (1.1 | ) pts | |||||
Debt/total capital | 21.2 | % | 22.0 | % | (0.8 | ) pts |
(1) | FAFLIC was sold to Commonwealth Annuity and Life Insurance Company effective January 2, 2009. December 31, 2008 reflects a dividend to THG Holding Company of $136.3 million. |
(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, and all other insurance subsidiaries. |
(4) | Shares outstanding do not include common stock equivalents. |
3
THE HANOVER INSURANCE GROUP
CONSOLIDATED INCOME STATEMENTS
Quarter ended March 31 | |||||||||||
(In millions) | 2009 | 2008 | % Change | ||||||||
REVENUES | |||||||||||
Premiums | $ | 632.0 | $ | 617.7 | 2.3 | ||||||
Net investment income | 64.9 | 64.6 | 0.5 | ||||||||
Net realized investment losses | (6.1 | ) | (0.3 | ) | N/M | ||||||
Fees and other income | 8.1 | 13.3 | (39.1 | ) | |||||||
Total revenues | 698.9 | 695.3 | 0.5 | ||||||||
LOSSES AND EXPENSES | |||||||||||
Losses and loss adjustment expenses | 428.3 | 380.1 | 12.7 | ||||||||
Policy acquisition expenses | 143.1 | 137.4 | 4.1 | ||||||||
Other operating expenses | 94.2 | 91.7 | 2.7 | ||||||||
Total losses and expenses | 665.6 | 609.2 | 9.3 | ||||||||
Income from continuing operations before federal income taxes | 33.3 | 86.1 | (61.3 | ) | |||||||
Federal income tax expense | 13.1 | 29.1 | (55.0 | ) | |||||||
Income from continuing operations | 20.2 | 57.0 | (64.6 | ) | |||||||
Discontinued operations (net of taxes): | |||||||||||
Gain (loss) from discontinued FAFLIC business | 5.0 | (3.5 | ) | N/M | |||||||
Loss from discontinued accident and health business | (3.3 | ) | — | N/M | |||||||
Gain on disposal of variable life and annuity business | 3.9 | 6.2 | (37.1 | ) | |||||||
Other | — | (1.2 | ) | N/M | |||||||
Net income | $ | 25.8 | $ | 58.5 | (55.9 | ) | |||||
4
THE HANOVER INSURANCE GROUP
CONSOLIDATED INCOME STATEMENTS
Quarter ended March 31 | |||||||||||
2009 | 2008 | % Change | |||||||||
PER SHARE DATA (DILUTED) | |||||||||||
Income from continuing operations | $ | 0.39 | $ | 1.09 | (64.2 | ) | |||||
Discontinued operations (net of taxes): | |||||||||||
Gain (loss) from discontinued FAFLIC business | 0.10 | (0.07 | ) | N/M | |||||||
Loss from discontinued accident and health business | (0.06 | ) | — | N/M | |||||||
Gain on disposal of variable life and annuity business | 0.07 | 0.12 | (41.7 | ) | |||||||
Other | — | (0.02 | ) | N/M | |||||||
Net income (1) | $ | 0.50 | $ | 1.12 | (55.4 | ) | |||||
Weighted average shares outstanding | 51.4 | 52.3 | |||||||||
(1) | Basic income per share was $0.51 and $1.13 for the quarters ended March 31, 2009 and 2008, respectively. |
5
THE HANOVER INSURANCE GROUP
CONSOLIDATED BALANCE SHEETS
(In millions, except per share data) | March 31 2009 | December 31 2008 | % Change | ||||||||
ASSETS | |||||||||||
Investments: | |||||||||||
Fixed maturities, at fair value (amortized cost of $4,517.1 and $4,382.0) | $ | 4,317.8 | $ | 4,140.9 | 4.3 | ||||||
Equity securities, at fair value (cost of $97.7 and $97.6) | 77.2 | 76.2 | 1.3 | ||||||||
Mortgage loans | 30.7 | 31.1 | (1.3 | ) | |||||||
Other long-term investments | 18.1 | 18.4 | (1.6 | ) | |||||||
Total investments | 4,443.8 | 4,266.6 | 4.2 | ||||||||
Cash and cash equivalents | 345.8 | 397.7 | (13.1 | ) | |||||||
Accrued investment income | 53.8 | 52.3 | 2.9 | ||||||||
Premiums, accounts and notes receivable, net | 584.9 | 578.5 | 1.1 | ||||||||
Reinsurance receivable on paid and unpaid losses, benefits and unearned premiums | 1,114.8 | 1,129.6 | (1.3 | ) | |||||||
Deferred policy acquisition costs | 264.2 | 264.8 | (0.2 | ) | |||||||
Deferred federal income taxes | 269.3 | 285.6 | (5.7 | ) | |||||||
Goodwill | 169.6 | 169.9 | (0.2 | ) | |||||||
Other assets | 320.6 | 315.7 | 1.6 | ||||||||
Assets of discontinued operations | 131.3 | 1,769.5 | (92.6 | ) | |||||||
Total assets | $ | 7,698.1 | $ | 9,230.2 | (16.6 | ) | |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
LIABILITIES | |||||||||||
Policy liabilities and accruals: | |||||||||||
Losses and loss adjustment expenses | $ | 3,156.5 | $ | 3,201.3 | (1.4 | ) | |||||
Unearned premiums | 1,237.5 | 1,246.3 | (0.7 | ) | |||||||
Contractholder deposit funds and other policy liabilities | 1.8 | 1.8 | — | ||||||||
Total policy liabilities and accruals | 4,395.8 | 4,449.4 | (1.2 | ) | |||||||
Expenses and taxes payable | 614.9 | 622.3 | (1.2 | ) | |||||||
Reinsurance premiums payable | 54.2 | 61.3 | (11.6 | ) | |||||||
Long-term debt | 530.5 | 531.4 | (0.2 | ) | |||||||
Liabilities of discontinued operations | 135.1 | 1,678.6 | (92.0 | ) | |||||||
Total liabilities | 5,730.5 | 7,343.0 | (22.0 | ) | |||||||
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 | 1,802.8 | 1,803.8 | (0.1 | ) | |||||||
Accumulated other comprehensive loss | (333.1 | ) | (384.8 | ) | (13.4 | ) | |||||
Retained earnings | 976.3 | 949.8 | 2.8 | ||||||||
Treasury stock at cost (9.6 million shares) | (479.0 | ) | (482.2 | ) | (0.7 | ) | |||||
Total shareholders’ equity | 1,967.6 | 1,887.2 | 4.3 | ||||||||
Total liabilities and shareholders’ equity | $ | 7,698.1 | $ | 9,230.2 | (16.6 | ) | |||||
6
PROPERTY & CASUALTY
THE HANOVER INSURANCE GROUP
PROPERTY AND CASUALTY
CONDENSED INCOME STATEMENTS
Quarter ended March 31 | ||||||||||
(In millions) | 2009 | 2008 | % Change | |||||||
REVENUES | ||||||||||
Net premiums written | $ | 629.9 | $ | 628.5 | 0.2 | |||||
Change in unearned premiums, net of prepaid reinsurance premiums | 2.1 | (10.8 | ) | N/M | ||||||
Net premiums earned | 632.0 | 617.7 | 2.3 | |||||||
Net investment income | 64.7 | 64.4 | 0.5 | |||||||
Other income | 9.3 | 15.6 | (40.4 | ) | ||||||
Total segment revenue | 706.0 | 697.7 | 1.2 | |||||||
LOSSES AND OPERATING EXPENSES | ||||||||||
Losses and loss adjustment expenses | 428.3 | 380.1 | 12.7 | |||||||
Policy acquisition expenses | 143.1 | 137.4 | 4.1 | |||||||
Other operating expenses | 85.1 | 83.8 | 1.6 | |||||||
Total losses and operating expenses | 656.5 | 601.3 | 9.2 | |||||||
Segment income before federal income taxes | $ | 49.5 | $ | 96.4 | (48.7 | ) | ||||
7
THE HANOVER INSURANCE GROUP
PROPERTY AND CASUALTY GROUP (1)
SELECT BALANCE SHEET INFORMATION
(In millions, except per share data) | March 31 2009 | December 31 2008 | % Change | ||||||
ASSETS | |||||||||
Investments: | |||||||||
Fixed maturities, at fair value (amortized cost of $4,092.3 and $4,154.9) | $ | 3,917.3 | $ | 3,912.1 | 0.1 | ||||
Equity securities, at fair value (cost of $89.9 and $88.3) | 67.9 | 66.9 | 1.5 | ||||||
Mortgage loans | 32.1 | 32.7 | (1.8 | ) | |||||
Other long-term investments | 13.1 | 13.5 | (3.0 | ) | |||||
Total investments | 4,030.4 | 4,025.2 | 0.1 | ||||||
Cash and cash equivalents | 341.1 | 377.8 | (9.7 | ) | |||||
Accrued investment income | 50.0 | 48.6 | 2.9 | ||||||
Premiums, accounts, and notes receivable, net | 584.9 | 579.2 | 1.0 | ||||||
Reinsurance receivable on paid and unpaid losses, benefits and unearned premiums | 1,114.8 | 1,129.6 | (1.3 | ) | |||||
Deferred policy acquisition costs | 264.2 | 264.8 | (0.2 | ) | |||||
Deferred federal income tax asset | 257.5 | 220.8 | 16.6 | ||||||
Goodwill | 169.6 | 169.9 | (0.2 | ) | |||||
Other assets | 328.1 | 309.3 | 6.1 | ||||||
Assets of discontinued operations | 131.3 | — | N/M | ||||||
Total assets | $ | 7,271.9 | $ | 7,125.2 | 2.1 | ||||
LIABILITIES | |||||||||
Policy liabilities and accruals: | |||||||||
Losses and loss adjustment expenses | $ | 3,156.5 | $ | 3,201.3 | (1.4 | ) | |||
Unearned premiums | 1,237.5 | 1,246.3 | (0.7 | ) | |||||
Contractholder deposit funds and other policy liabilities | 1.8 | 1.8 | — | ||||||
Total policy liabilities and accruals | 4,395.8 | 4,449.4 | (1.2 | ) | |||||
Expenses and taxes payable | 594.3 | 596.4 | (0.4 | ) | |||||
Reinsurance premiums payable | 54.2 | 61.3 | (11.6 | ) | |||||
Long-term debt | 21.7 | 22.6 | (4.0 | ) | |||||
Liabilities of discontinued operations | 135.1 | — | N/M | ||||||
Total liabilities | $ | 5,201.1 | $ | 5,129.7 | 1.4 | ||||
(1) | Property and Casualty group includes The Hanover Insurance Company, Citizens Insurance Company of America, and AIX Holdings, 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 March 31, 2009 | |||||||||||||||||||||||||||||||||||||||||||
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 | $ | 249.2 | $ | 89.7 | $ | 8.3 | $ | 347.2 | $ | 33.5 | $ | 48.0 | $ | 93.1 | $ | 108.1 | $ | 282.7 | $ | — | $ | 629.9 | |||||||||||||||||||||
Net premiums earned | $ | 246.0 | $ | 107.8 | $ | 9.9 | $ | 363.7 | $ | 30.2 | $ | 46.4 | $ | 90.1 | $ | 101.6 | $ | 268.3 | $ | — | $ | 632.0 | |||||||||||||||||||||
Losses excluding prior year loss reserve development and catastrophe losses | 164.6 | 57.5 | 3.2 | 225.3 | 20.0 | 24.9 | 50.2 | 41.2 | 136.3 | — | 361.6 | ||||||||||||||||||||||||||||||||
Prior year loss reserve (favorable) unfavorable development | (14.0 | ) | 5.8 | (0.2 | ) | (8.4 | ) | (6.9 | ) | (2.9 | ) | (2.5 | ) | (10.9 | ) | (23.2 | ) | — | (31.6 | ) | |||||||||||||||||||||||
Pre-tax catastrophe losses | 1.1 | 24.7 | 0.2 | 26.0 | — | 0.2 | 10.1 | 1.1 | 11.4 | — | 37.4 | ||||||||||||||||||||||||||||||||
Loss adjustment expenses (1) | 31.2 | 10.3 | 0.4 | 41.9 | (1.4 | ) | 4.0 | 6.4 | 9.6 | 18.6 | 0.2 | 60.7 | |||||||||||||||||||||||||||||||
Policy acquisition expenses and other underwriting expenses | 105.4 | 109.7 | (0.2 | ) | 214.9 | ||||||||||||||||||||||||||||||||||||||
Policyholders’ dividends | — | 0.2 | — | 0.2 | |||||||||||||||||||||||||||||||||||||||
GAAP underwriting (loss) income | (26.5 | ) | 15.3 | — | (11.2 | ) | |||||||||||||||||||||||||||||||||||||
Net investment income | 27.6 | 31.6 | 5.5 | 64.7 | |||||||||||||||||||||||||||||||||||||||
Other income | 3.5 | 4.4 | 1.4 | 9.3 | |||||||||||||||||||||||||||||||||||||||
Other operating expenses | (1.5 | ) | (4.1 | ) | (7.7 | ) | (13.3 | ) | |||||||||||||||||||||||||||||||||||
Segment income (loss) before federal income taxes | $ | 3.1 | $ | 47.2 | $ | (0.8 | ) | $ | 49.5 | ||||||||||||||||||||||||||||||||||
Quarter ended March 31, 2008 | |||||||||||||||||||||||||||||||||||||||||||
Personal Lines | Commercial Lines | ||||||||||||||||||||||||||||||||||||||||||
Auto | Home | Other | Total | Workers’ Comp | Auto | Multiple Peril | Other | Total | Other P&C | Total P&C | |||||||||||||||||||||||||||||||||
Net premiums written | $ | 259.3 | $ | 83.3 | $ | 9.1 | $ | 351.7 | $ | 38.2 | $ | 53.5 | $ | 94.6 | $ | 90.5 | $ | 276.8 | $ | — | $ | 628.5 | |||||||||||||||||||||
Net premiums earned | $ | 251.4 | $ | 108.1 | $ | 9.8 | $ | 369.3 | $ | 31.4 | $ | 50.8 | $ | 88.7 | $ | 77.5 | $ | 248.4 | $ | — | $ | 617.7 | |||||||||||||||||||||
Losses excluding prior year loss reserve development and catastrophe losses | 166.0 | 57.1 | 3.0 | 226.1 | 21.6 | 27.2 | 42.7 | 30.8 | 122.3 | — | 348.4 | ||||||||||||||||||||||||||||||||
Prior year loss reserve (favorable) unfavorable development | (16.2 | ) | 4.1 | (0.5 | ) | (12.6 | ) | (9.6 | ) | (5.9 | ) | (16.7 | ) | (9.5 | ) | (41.7 | ) | 1.0 | (53.3 | ) | |||||||||||||||||||||||
Pre-tax catastrophe losses | 0.5 | 9.8 | 0.7 | 11.0 | — | — | 6.7 | 1.6 | 8.3 | — | 19.3 | ||||||||||||||||||||||||||||||||
Loss adjustment expenses | 33.1 | 7.9 | 0.4 | 41.4 | 3.5 | 4.8 | 8.8 | 6.7 | 23.8 | 0.3 | 65.5 | ||||||||||||||||||||||||||||||||
Policy acquisition expenses and other underwriting expenses | 108.6 | 99.4 | (0.3 | ) | 207.7 | ||||||||||||||||||||||||||||||||||||||
Policyholders’ dividends | — | 0.2 | — | 0.2 | |||||||||||||||||||||||||||||||||||||||
GAAP underwriting (loss) profit | (5.2 | ) | 36.1 | (1.0 | ) | 29.9 | |||||||||||||||||||||||||||||||||||||
Net investment income | 29.7 | 30.9 | 3.8 | 64.4 | |||||||||||||||||||||||||||||||||||||||
Other income | 4.2 | 4.3 | 7.1 | 15.6 | |||||||||||||||||||||||||||||||||||||||
Other operating expenses | (1.6 | ) | (3.3 | ) | (8.6 | ) | (13.5 | ) | |||||||||||||||||||||||||||||||||||
Segment income before federal income taxes | $ | 27.1 | $ | 68.0 | $ | 1.3 | $ | 96.4 | |||||||||||||||||||||||||||||||||||
(1) | Loss adjustment expenses includes unfavorable development of $0.3 million in Personal Lines and favorable development of $9.9 million in Commercial Lines. Favorable development of $9.6 million is included in Total P&C. |
9
THE HANOVER INSURANCE GROUP
PROPERTY AND CASUALTY
GAAP UNDERWRITING RATIOS
Quarter ended March 31, 2009 | ||||||||||||||||||||||||||||||||
Personal Lines | Commercial Lines | |||||||||||||||||||||||||||||||
Auto | Home | Other | Total | Workers’ Comp | Auto | Multiple Peril | Other | Total | Other P&C | Total P&C | ||||||||||||||||||||||
Losses, excluding catastrophe losses and development | 66.9 | % | 53.3 | % | 32.3 | % | 61.9 | % | 66.2 | % | 53.7 | % | 55.7 | % | 40.6 | % | 50.8 | % | N/M | 57.2 | % | |||||||||||
Catastrophe losses | 0.4 | % | 22.9 | % | 2.0 | % | 7.1 | % | — | 0.4 | % | 11.2 | % | 1.1 | % | 4.2 | % | N/M | 5.9 | % | ||||||||||||
Loss development | (5.6 | )% | 5.4 | % | (2.0 | )% | (2.2 | )% | (22.9 | )% | (6.3 | )% | (2.7 | )% | (10.8 | )% | (8.6 | )% | N/M | (4.9 | )% | |||||||||||
Total losses | 61.7 | % | 81.6 | % | 32.3 | % | 66.8 | % | 43.3 | % | 47.8 | % | 64.2 | % | 30.9 | % | 46.4 | % | N/M | 58.2 | % | |||||||||||
Loss adjustment expenses (1) | 12.7 | % | 9.6 | % | 4.0 | % | 11.5 | % | (4.6 | )% | 8.6 | % | 7.1 | % | 9.4 | % | 6.9 | % | N/M | 9.6 | % | |||||||||||
Policy acquisition and other underwriting expenses (2) | 28.1 | % | 40.7 | % | N/M | 33.4 | % | |||||||||||||||||||||||||
Policyholders’ dividends | — | 0.1 | % | N/M | — | |||||||||||||||||||||||||||
Combined | 106.4 | % | 94.1 | % | N/M | 101.2 | % | |||||||||||||||||||||||||
Policies in force (3) | (1.0 | )% | 1.6 | % | (5.1 | )% | (0.1 | )% | (0.4 | )% | 2.3 | % | (0.1 | )% | 1.5 | % | 0.9 | % | — | — | ||||||||||||
Retention (3), (4) | 74.1 | % | 81.3 | % | N/M | 77.8 | % | 72.6 | % | 75.1 | % | 79.7 | % | 77.5 | % | 77.2 | % | |||||||||||||||
Quarter ended March 31, 2008 | ||||||||||||||||||||||||||||||||
Personal Lines | Commercial Lines | |||||||||||||||||||||||||||||||
Auto | Home | Other | Total | Workers’ Comp | Auto | Multiple Peril | Other | Total | Other P&C | Total P&C | ||||||||||||||||||||||
Losses, excluding catastrophe losses and development | 66.0 | % | 52.8 | % | 30.6 | % | 61.2 | % | 68.8 | % | 53.5 | % | 48.1 | % | 39.7 | % | 49.2 | % | N/M | 56.5 | % | |||||||||||
Catastrophe losses | 0.2 | % | 9.1 | % | 7.1 | % | 3.0 | % | — | — | 7.6 | % | 2.1 | % | 3.3 | % | N/M | 3.1 | % | |||||||||||||
Loss development | (6.4 | )% | 3.8 | % | (5.1 | )% | (3.4 | )% | (30.6 | )% | (11.6 | )% | (18.8 | )% | (12.2 | )% | (16.7 | )% | N/M | (8.6 | )% | |||||||||||
Total losses | 59.8 | % | 65.7 | % | 32.6 | % | 60.8 | % | 38.2 | % | 41.9 | % | 36.9 | % | 29.6 | % | 35.8 | % | N/M | 51.0 | % | |||||||||||
Loss adjustment expenses | 13.2 | % | 7.3 | % | 4.1 | % | 11.2 | % | 11.1 | % | 9.4 | % | 9.9 | % | 8.6 | % | 9.6 | % | N/M | 10.6 | % | |||||||||||
Policy acquisition and other underwriting expenses (2) | 28.5 | % | 39.7 | % | N/M | 32.9 | % | |||||||||||||||||||||||||
Policyholders’ dividends | — | 0.1 | % | N/M | — | |||||||||||||||||||||||||||
Combined | 100.5 | % | 85.2 | % | N/M | 94.5 | % | |||||||||||||||||||||||||
Policies in force (3) | 0.2 | % | (2.5 | )% | (4.4 | )% | (1.3 | )% | 1.2 | % | 3.1 | % | (2.1 | )% | 6.2 | % | 2.1 | % | — | (0.9 | )% | |||||||||||
Retention (3), (4) | 72.9 | % | 82.0 | % | N/M | 77.6 | % | 82.3 | % | 81.3 | % | 82.6 | % | 79.0 | % | 81.8 | % |
(1) | Loss adjustment expenses includes unfavorable development of $0.3 million in Personal Lines and favorable development of $9.9 million in Commercial Lines. Favorable development of $9.6 million is included in Total P&C. |
(2) | Policy acquisition and other underwriting expenses are reduced by installment fee revenues for purposes of the ratio calculation. |
(3) | Policies in force and retention rates do not include recent acquisitions of Professionals Direct, Inc., Verlan Fire Insurance Company, and AIX, Inc. |
(4) | 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. |
10
INVESTMENTS
THE HANOVER INSURANCE GROUP
NET INVESTMENT INCOME
Quarter ended March 31 | ||||||||||||||
(In millions, except yields) | 2009 | 2008 | ||||||||||||
Yield | Yield | |||||||||||||
Fixed maturities (1) | $ | 64.4 | 5.81 | % | $ | 62.9 | 5.65 | % | ||||||
Equity securities | 1.0 | — | 1.0 | — | ||||||||||
Mortgages (2) | 0.6 | 8.40 | % | 0.3 | 10.56 | % | ||||||||
All other | 0.7 | — | 1.7 | — | ||||||||||
Investment expenses | (1.8 | ) | — | (1.3 | ) | — | ||||||||
Total (3) | $ | 64.9 | 5.30 | % | $ | 64.6 | 5.48 | % | ||||||
(1) | Includes purchase accounting adjustments of $(0.7) million and $(0.8) million for the quarters ended March 31, 2009 and 2008, respectively. |
(2) | There were no mortgage prepayment fees for the quarter ended March 31, 2009. Excluding mortgage prepayment fees of $0.1 million for the quarter ended March 31, 2008, mortgage yields were 8.34%. |
(3) | Excludes discontinued operations of $1.4 million and $16.1 million for the quarters ended March 31, 2009 and 2008, respectively. |
11
THE HANOVER INSURANCE GROUP
COMPONENTS OF NET REALIZED INVESTMENT GAINS (LOSSES)
Quarter ended March 31 | ||||||||
(In millions) | 2009 | 2008 | ||||||
Net gains on securities transactions | $ | 10.6 | $ | 4.8 | ||||
Other than temporary impairments | (16.5 | ) | (5.3 | ) | ||||
Other | (0.2 | ) | 0.2 | |||||
Net realized investment losses (1) | $ | (6.1 | ) | $ | (0.3 | ) | ||
(1) | Excludes discontinued operations of $(3.2) million and $(4.7) million for the quarters ended March 31, 2009 and 2008, respectively. |
12
THE HANOVER INSURANCE GROUP
AGING OF GROSS UNREALIZED LOSSES ON SECURITIES AVAILABLE FOR SALE
March 31, 2009 | December 31, 2008 | |||||||||||
(In millions) | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | ||||||||
INVESTMENT GRADE FIXED MATURITIES: | ||||||||||||
12 months or less | $ | 99.7 | $ | 1,198.9 | $ | 150.2 | $ | 1,724.1 | ||||
Greater than 12 months | 138.3 | 723.4 | 94.4 | 469.8 | ||||||||
Total investment grade fixed maturities | 238.0 | 1,922.3 | 244.6 | 2,193.9 | ||||||||
BELOW INVESTMENT GRADE FIXED MATURITIES: | ||||||||||||
12 months or less | 41.8 | 144.0 | 64.2 | 152.5 | ||||||||
Greater than 12 months | 7.3 | 12.1 | — | — | ||||||||
Total below investment grade fixed maturities | 49.1 | 156.1 | 64.2 | 152.5 | ||||||||
PERPETUAL PREFERRED SECURITIES: | ||||||||||||
12 months or less | — | — | — | — | ||||||||
Greater than 12 months | 8.5 | 22.1 | 13.4 | 28.5 | ||||||||
Total perpetual preferred securities | 8.5 | 22.1 | 13.4 | 28.5 | ||||||||
COMMON EQUITY SECURITIES: | ||||||||||||
12 months or less | 14.8 | 40.1 | 11.4 | 32.3 | ||||||||
Greater than 12 months | — | — | — | — | ||||||||
Total common equity securities | 14.8 | 40.1 | 11.4 | 32.3 | ||||||||
Total (1) | $ | 310.4 | $ | 2,140.6 | $ | 333.6 | $ | 2,407.2 | ||||
(1) | Includes discontinued accident and health business of $11.4 million in gross unrealized losses with $45.2 million in fair value at March 31, 2009 and $15.7 million in gross unrealized losses with $52.3 million in fair value at December 31, 2008. |
13
THE HANOVER INSURANCE GROUP
CREDIT QUALITY OF FIXED MATURITIES
(In millions) | March 31, 2009 | December 31, 2008 | ||||||||||||
NAIC Designation | Rating Agency Equivalent Designation | Amortized Cost | Fair Value | Amortized Cost | Fair Value | |||||||||
1 | Aaa/Aa/A | $ | 3,147.8 | $ | 3,070.9 | $ | 3,098.1 | $ | 2,997.8 | |||||
2 | Baa | 1,162.9 | 1,075.8 | 1,074.8 | 981.5 | |||||||||
3 | Ba | 143.7 | 139.1 | 151.5 | 133.2 | |||||||||
4 | B | 107.6 | 85.8 | 111.0 | 83.8 | |||||||||
5 | Caa and lower | 44.7 | 29.7 | 37.1 | 24.5 | |||||||||
6 | In or near default | 11.7 | 8.5 | 8.8 | 5.5 | |||||||||
Total fixed maturities (1) | $ | 4,618.4 | $ | 4,409.8 | $ | 4,481.3 | $ | 4,226.3 | ||||||
(1) | Includes discontinued accident and health business of $101.3 million in amortized cost and $92.0 million in fair value at March 31, 2009 and $99.3 million in amortized cost and $85.4 million in fair value at December 31, 2008. |
14
THE HANOVER INSURANCE GROUP
TOP 25 FINANCIAL FIXED MATURITY HOLDINGS
(In millions, except percentage data) Issuer | As of March 31, 2009 | ||||||||||
Amortized Cost | Fair Value | % of Inv. Assets | S&P Ratings | ||||||||
Bank of America | $ | 52.2 | $ | 38.6 | 0.79 | % | A- | ||||
Goldman Sachs | 26.3 | 23.1 | 0.47 | % | A | ||||||
Wells Fargo | 25.6 | 20.1 | 0.41 | % | AA | ||||||
Morgan Stanley | 25.3 | 23.8 | 0.49 | % | A | ||||||
GE Capital | 25.0 | 24.0 | 0.49 | % | AA+ | ||||||
PNC Bank | 23.7 | 21.4 | 0.44 | % | A | ||||||
JP Morgan | 19.3 | 17.6 | 0.36 | % | A+ | ||||||
Capital One | 17.4 | 16.4 | 0.34 | % | BBB+ | ||||||
Aetna | 16.3 | 15.8 | 0.32 | % | A- | ||||||
American Express | 16.2 | 13.6 | 0.28 | % | A | ||||||
CIT Group | 16.0 | 17.9 | 0.37 | % | BBB | ||||||
Fifth Third Bancorp | 15.0 | 11.2 | 0.23 | % | BBB+ | ||||||
Wellpoint | 14.8 | 14.4 | 0.29 | % | A- | ||||||
HSBC Bank | 14.4 | 13.2 | 0.27 | % | A | ||||||
Genworth Global Funding | 13.3 | 5.5 | 0.11 | % | BBB | ||||||
Manufacturers & Traders Bank | 13.1 | 9.3 | 0.19 | % | A- | ||||||
Regions Bank | 12.9 | 8.5 | 0.17 | % | BBB | ||||||
Bank of Scotland | 12.9 | 12.1 | 0.25 | % | A | ||||||
Charter One | 12.1 | 9.7 | 0.20 | % | BBB+ | ||||||
Credit Suisse First Boston | 11.6 | 10.9 | 0.22 | % | A+ | ||||||
Union Bank of California | 11.5 | 8.2 | 0.17 | % | A | ||||||
Bank of New York | 11.4 | 11.6 | 0.24 | % | AA- | ||||||
Student Loan Market | 11.4 | 9.5 | 0.20 | % | BBB- | ||||||
Lincoln National | 10.7 | 2.1 | 0.04 | % | BBB | ||||||
Branch Bank & Trust | 10.5 | 10.0 | 0.21 | % | A+ | ||||||
Top 25 Financial | 438.9 | 368.5 | 7.55 | % | |||||||
Other Financial | 209.6 | 183.5 | 3.76 | % | |||||||
Total Financial | $ | 648.5 | $ | 552.0 | 11.31 | % | |||||
15
THE HANOVER INSURANCE GROUP
TOP 25 NON-FINANCIAL FIXED MATURITY HOLDINGS
(In millions, except percentage data) Issuer | As of March 31, 2009 | ||||||||||
Amortized Cost | Fair Value | % of Inv. Assets | S&P Ratings | ||||||||
CVS | $ | 25.5 | $ | 24.8 | 0.51 | % | BBB+ | ||||
Valero Energy | 24.7 | 23.4 | 0.48 | % | BBB | ||||||
Dominion Resources | 23.2 | 22.8 | 0.47 | % | A- | ||||||
Kroger | 20.5 | 21.0 | 0.43 | % | BBB- | ||||||
AT&T | 19.8 | 20.3 | 0.41 | % | A | ||||||
Union Pacific | 19.0 | 19.9 | 0.41 | % | BBB | ||||||
Encana | 17.6 | 17.1 | 0.35 | % | A- | ||||||
Safeway | 17.5 | 17.9 | 0.37 | % | BBB | ||||||
Textron | 17.1 | 12.4 | 0.25 | % | BB+ | ||||||
BP Capital Markets | 16.9 | 17.0 | 0.35 | % | AA | ||||||
Sempra Energy | 16.9 | 17.0 | 0.35 | % | BBB+ | ||||||
Home Depot | 16.9 | 15.3 | 0.31 | % | BBB+ | ||||||
Miller Brewing | 16.4 | 15.7 | 0.32 | % | BBB+ | ||||||
Canadian National Railways | 16.1 | 16.7 | 0.34 | % | A- | ||||||
Consolidated Edison | 15.8 | 15.8 | 0.32 | % | A- | ||||||
Comcast | 15.8 | 16.0 | 0.33 | % | BBB+ | ||||||
Schering-Plough | 15.4 | 15.5 | 0.32 | % | A- | ||||||
Pacific Gas & Electric | 15.2 | 15.7 | 0.32 | % | BBB+ | ||||||
Verizon | 15.0 | 14.6 | 0.30 | % | A | ||||||
Shell | 15.0 | 15.2 | 0.31 | % | AA+ | ||||||
Atmos Energy | 14.9 | 14.0 | 0.29 | % | BBB+ | ||||||
Plains All-America Pipeline | 14.8 | 13.1 | 0.27 | % | BBB- | ||||||
Enterprise Products | 14.0 | 12.4 | 0.25 | % | BBB- | ||||||
PSEG Energy | 13.9 | 13.1 | 0.27 | % | BB- | ||||||
Lowe’s | 13.6 | 13.7 | 0.28 | % | A+ | ||||||
Top 25 Non-Financial | 431.5 | 420.4 | 8.61 | % | |||||||
Other Non-Financial | 1,194.0 | 1,133.2 | 23.21 | % | |||||||
Total Non-Financial | $ | 1,625.5 | $ | 1,553.6 | 31.82 | % | |||||
16
PROPERTY & CASUALTY
STATUTORY RATIOS
THE HANOVER INSURANCE GROUP
PROPERTY AND CASUALTY
STATUTORY UNDERWRITING RATIOS
Quarter ended March 31, 2009 | ||||||||||||||||||||||||||||||||
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 | 66.9 | % | 53.3 | % | 32.0 | % | 61.9 | % | 65.5 | % | 53.8 | % | 55.8 | % | 41.3 | % | 51.1 | % | N/M | 57.6 | % | |||||||||||
Catastrophe losses | 0.4 | % | 22.9 | % | 2.0 | % | 7.1 | % | — | 0.4 | % | 11.2 | % | 1.1 | % | 4.2 | % | N/M | 5.9 | % | ||||||||||||
Loss development | (5.7 | )% | 5.4 | % | (2.0 | )% | (2.3 | )% | (22.7 | )% | (6.2 | )% | (2.8 | )% | (10.7 | )% | (8.6 | )% | N/M | (5.0 | )% | |||||||||||
Total losses | 61.6 | % | 81.6 | % | 32.0 | % | 66.7 | % | 42.8 | % | 48.0 | % | 64.2 | % | 31.7 | % | 46.7 | % | N/M | 58.5 | % | |||||||||||
Loss adjustment expenses (1) | 12.7 | % | 9.6 | % | 4.0 | % | 11.6 | % | (4.3 | )% | 8.4 | % | 7.1 | % | 9.4 | % | 6.9 | % | N/M | 9.6 | % | |||||||||||
Policy acquisition and other underwriting expenses | 29.4 | % | 39.9 | % | N/M | 34.0 | % | |||||||||||||||||||||||||
Policyholders’ dividends | — | 0.1 | % | N/M | — | |||||||||||||||||||||||||||
Combined | 107.7 | % | 93.6 | % | N/M | 102.1 | % | |||||||||||||||||||||||||
Quarter ended March 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 | 66.0 | % | 52.7 | % | 30.3 | % | 61.2 | % | 68.1 | % | 53.5 | % | 48.3 | % | 40.9 | % | 49.6 | % | N/M | 56.5 | % | |||||||||||
Catastrophe losses | 0.2 | % | 9.2 | % | 7.1 | % | 3.0 | % | — | — | 7.6 | % | 1.9 | % | 3.3 | % | N/M | 3.1 | % | |||||||||||||
Loss development | (6.4 | )% | 3.8 | % | (5.1 | )% | (3.4 | )% | (30.3 | )% | (11.6 | )% | (18.9 | )% | (12.2 | )% | (16.8 | )% | N/M | (8.6 | )% | |||||||||||
Total losses | 59.8 | % | 65.7 | % | 32.3 | % | 60.8 | % | 37.8 | % | 41.9 | % | 37.0 | % | 30.6 | % | 36.1 | % | N/M | 51.0 | % | |||||||||||
Loss adjustment expenses | 13.1 | % | 7.2 | % | 4.0 | % | 11.1 | % | 11.4 | % | 9.3 | % | 9.8 | % | 8.6 | % | 9.5 | % | N/M | 10.5 | % | |||||||||||
Policy acquisition and other underwriting expenses | 29.8 | % | 38.5 | % | N/M | 33.6 | % | |||||||||||||||||||||||||
Policyholders’ dividends | — | — | N/M | — | ||||||||||||||||||||||||||||
Combined | 101.7 | % | 84.1 | % | N/M | 95.1 | % | |||||||||||||||||||||||||
(1) | Loss adjustment expenses includes unfavorable development of $0.3 million in Personal Lines and favorable development of $9.9 million in Commercial Lines. Favorable development of $9.6 million is included in Total P&C. |
17
Historical Highlights
THE HANOVER INSURANCE GROUP
HISTORICAL FINANCIAL HIGHLIGHTS
(In millions, except per share data) | Q1 09 | 2008 | Q4 08 | Q3 08 | Q2 08 | Q1 08 | ||||||||||||||||||
SEGMENT INCOME (1) | ||||||||||||||||||||||||
Property and Casualty | ||||||||||||||||||||||||
Personal Lines | $ | 3.1 | $ | 123.5 | $ | 39.7 | $ | 18.1 | $ | 38.6 | $ | 27.1 | ||||||||||||
Commercial Lines | 47.2 | 169.7 | 55.6 | (6.6 | ) | 52.7 | 68.0 | |||||||||||||||||
Other Property and Casualty | (0.8 | ) | 9.0 | 2.2 | 2.3 | 2.9 | 1.3 | |||||||||||||||||
Total Property and Casualty | 49.5 | 302.2 | 97.5 | 13.8 | 94.2 | 96.4 | ||||||||||||||||||
Interest expense on corporate debt | (10.0 | ) | (39.9 | ) | (10.0 | ) | (10.0 | ) | (9.9 | ) | (10.0 | ) | ||||||||||||
Total segment income before federal income taxes | $ | 39.5 | $ | 262.3 | $ | 87.5 | $ | 3.8 | $ | 84.3 | $ | 86.4 | ||||||||||||
Federal income tax expense on segment income | (13.1 | ) | (86.3 | ) | (27.9 | ) | (0.5 | ) | (28.8 | ) | (29.1 | ) | ||||||||||||
Total segment income after federal income taxes | $ | 26.4 | $ | 176.0 | $ | 59.6 | $ | 3.3 | $ | 55.5 | $ | 57.3 | ||||||||||||
Federal income tax settlement | — | 6.4 | — | 6.4 | — | — | ||||||||||||||||||
Net realized investment losses | (6.1 | ) | (97.8 | ) | (37.1 | ) | (52.8 | ) | (7.6 | ) | (0.3 | ) | ||||||||||||
Other non-segment items | (0.1 | ) | (0.1 | ) | (0.1 | ) | — | — | — | |||||||||||||||
Federal income tax benefit (expense) on non-segment income | — | — | 0.4 | (0.4 | ) | — | — | |||||||||||||||||
Income (loss) from continuing operations | 20.2 | 84.5 | 22.8 | (43.5 | ) | 47.9 | 57.0 | |||||||||||||||||
Discontinued operations (net of taxes): | ||||||||||||||||||||||||
Gain (loss) from discontinued FAFLIC business | 5.0 | (84.8 | ) | 8.1 | (21.7 | ) | (67.7 | ) | (3.5 | ) | ||||||||||||||
Loss from discontinued accident and health business | (3.3 | ) | — | — | — | — | — | |||||||||||||||||
Gain on disposal of discontinued variable life and annuity business | 3.9 | 11.3 | 3.2 | 2.7 | (0.8 | ) | 6.2 | |||||||||||||||||
Gain from operations of AMGRO | — | 10.1 | — | — | 10.4 | — | ||||||||||||||||||
Other | — | (0.5 | ) | — | 0.7 | — | (1.2 | ) | ||||||||||||||||
NET INCOME (LOSS) | $ | 25.8 | $ | 20.6 | $ | 34.1 | $ | (61.8 | ) | $ | (10.2 | ) | $ | 58.5 | ||||||||||
PER SHARE DATA (DILUTED) | ||||||||||||||||||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS | $ | 0.39 | $ | 1.63 | $ | 0.44 | $ | (0.85 | ) | $ | 0.92 | $ | 1.09 | |||||||||||
(LOSS) INCOME FROM DISCONTINUED OPERATIONS | $ | 0.11 | $ | (1.23 | ) | $ | 0.22 | $ | (0.36 | ) | $ | (1.12 | ) | $ | 0.03 | |||||||||
NET INCOME (LOSS) | $ | 0.50 | $ | 0.40 | $ | 0.66 | $ | (1.21 | ) | $ | (0.20 | ) | $ | 1.12 | ||||||||||
WEIGHTED AVERAGE SHARES OUTSTANDING (DILUTED) (2) | 51.4 | 51.7 | 51.4 | 51.0 | 51.8 | 52.3 | ||||||||||||||||||
BALANCE SHEET | ||||||||||||||||||||||||
Total assets | $ | 7,698.1 | $ | 9,230.2 | $ | 9,254.8 | $ | 9,463.8 | $ | 9,700.6 | ||||||||||||||
Total shareholders’ equity | $ | 1,967.6 | $ | 1,887.2 | $ | 2,040.1 | $ | 2,212.7 | $ | 2,320.7 | ||||||||||||||
Book value per share | $ | 38.62 | $ | 37.08 | $ | 40.09 | $ | 43.57 | $ | 45.23 | ||||||||||||||
Book value per share, excluding accumulated other comprehensive (loss) income | $ | 45.16 | $ | 44.64 | $ | 44.37 | $ | 45.55 | $ | 45.70 |
(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. |
18
THE HANOVER INSURANCE GROUP
HISTORICAL FINANCIAL HIGHLIGHTS
(In millions, except per share data) | 2007 | Q4 07 | Q3 07 | Q2 07 | Q1 07 | |||||||||||||||
SEGMENT INCOME (1) | ||||||||||||||||||||
Property and Casualty | ||||||||||||||||||||
Personal Lines | $ | 208.2 | $ | 57.8 | $ | 48.8 | $ | 55.0 | $ | 46.6 | ||||||||||
Commercial Lines | 169.3 | 42.6 | 39.2 | 38.9 | 48.6 | |||||||||||||||
Other Property and Casualty | 4.8 | (2.4 | ) | 0.3 | 2.5 | 4.4 | ||||||||||||||
Total Property and Casualty | 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 | ) | ||||||||||
Total segment income before federal income taxes | $ | 342.4 | $ | 88.0 | $ | 78.3 | $ | 86.5 | $ | 89.6 | ||||||||||
Federal income tax expense on segment income | (113.7 | ) | (27.2 | ) | (26.6 | ) | (29.8 | ) | (30.1 | ) | ||||||||||
Total segment income after federal income taxes | $ | 228.7 | $ | 60.8 | $ | 51.7 | $ | 56.7 | $ | 59.5 | ||||||||||
Net realized investment (losses) gains | (0.9 | ) | (0.6 | ) | (0.8 | ) | 0.2 | 0.3 | ||||||||||||
Federal income tax benefit (expense) on non-segment income | 0.5 | 0.1 | 0.6 | (0.1 | ) | (0.1 | ) | |||||||||||||
Income from continuing operations | 228.3 | 60.3 | 51.5 | 56.8 | 59.7 | |||||||||||||||
Discontinued operations (net of taxes): | ||||||||||||||||||||
Income from discontinued FAFLIC business | 10.9 | 2.6 | 1.5 | 2.7 | 4.1 | |||||||||||||||
Gain (loss) on disposal of discontinued variable life and annuity business | 13.1 | 12.9 | 0.1 | 0.3 | (0.2 | ) | ||||||||||||||
Other | 0.8 | — | 0.8 | — | — | |||||||||||||||
NET INCOME | $ | 253.1 | $ | 75.8 | $ | 53.9 | $ | 59.8 | $ | 63.6 | ||||||||||
PER SHARE DATA (DILUTED) | ||||||||||||||||||||
INCOME FROM CONTINUING OPERATIONS | $ | 4.36 | $ | 1.15 | $ | 0.98 | $ | 1.09 | $ | 1.15 | ||||||||||
INCOME FROM DISCONTINUED OPERATIONS | $ | 0.47 | $ | 0.29 | $ | 0.05 | $ | 0.05 | $ | 0.07 | ||||||||||
NET INCOME | $ | 4.83 | $ | 1.44 | $ | 1.03 | $ | 1.14 | $ | 1.22 | ||||||||||
WEIGHTED AVERAGE SHARES | ||||||||||||||||||||
OUTSTANDING (DILUTED) | 52.4 | 52.6 | 52.5 | 52.3 | 51.9 | |||||||||||||||
BALANCE SHEET | ||||||||||||||||||||
Total assets | $ | 9,815.6 | $ | 9,845.2 | $ | 9,805.7 | $ | 9,776.2 | ||||||||||||
Total shareholders' equity | $ | 2,299.0 | $ | 2,192.6 | $ | 2,099.4 | $ | 2,100.7 | ||||||||||||
Book value per share | $ | 44.37 | $ | 42.34 | $ | 40.55 | $ | 40.92 | ||||||||||||
Book value per share, excluding accumulated other comprehensive (loss) income | $ | 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. |
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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:
2009 | ||||||||
Price Range | Dividends Per Share | |||||||
Quarter Ended | High | Low | ||||||
March 31 | $ | 43.37 | $ | 28.49 | — | |||
June 30 | ||||||||
September 30 | ||||||||
December 31 |
2008 | |||||||||
Price Range | Dividends Per Share | ||||||||
Quarter Ended | 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 |
INDUSTRY RATINGS AS OF MAY 6, 2009
Financial Strength Ratings | A.M. Best | Standard & Poor’s | Moody’s | Fitch | ||||
Property and Casualty Insurance Companies: | ||||||||
The Hanover Insurance Company | A- | A- | A3 | A- | ||||
Citizens Insurance Companyof America | A- | A- | A3 | A- |
Debt Ratings | A.M. Best | Standard & Poor’s | Moody’s | Fitch | ||||
The Hanover Insurance Group, Inc. | bbb- | BBB- | Baa3 | BBB- | ||||
The Hanover Insurance Group, Inc. | bb | BB- | Ba1 | BB+ | ||||
The Hanover Insurance | — | — | 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
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