THG - Earnings call transcript Q3 2019 | The Hanover Insurance Group, Inc.

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Operator

Good morning. And welcome to The Hanover Insurance Group's Third Quarter 2019 Earnings Conference Call. My name is Kate and I will be your operator for today's call [Operator Instructions].

I would now like to turn the conference over to Oksana Lukasheva. Please go ahead.

Oksana Lukasheva

Operator. you, Thank Good morning. us joining our conference for quarterly for you call. thank And

Financial today's We Executive remarks Chief call from begin Officer Jeff Jack our Chief prepared and with will Farber. President Roche, and Officer, our

answer President Agency Specialty Lavey, Lines. to are President Bryan of your prepared Markets our Here remarks after Dick Salvatore and of questions

After will section Our release and supplements today's questions financial earnings website of Q&A for in our be session. we can found a call the at in the www.hanover.com. press answer the complete Investor presentation, slide presentation

Our prepared the to our your forward-looking other today guidance historical questions including year. of fact remarks and statements of responses than statements remainder for the include

respect this section in actual to the are to on SEC. We from statements differ to factors respect the deck forward-looking forward-looking release materially with press with the anticipated. our reliance and statements refer presentation could There and on certain you in cause two slide results those our you that caution filings

will the discussion A reconciliation and ratios measures others. financial among also as closest and catastrophes these excluding be such the in Today's supplements non-GAAP can presentation historical year non-GAAP GAAP loss to a release as financial on press which earlier. measure or the posted our basis accident slide financial of are operating the combined income reference website found certain measures mentioned on I

call to Jack. over the turn will I comments, those With

Jack Roche

dynamics. our morning in call. and the update Oksana. context thank will strategic on Good quarter our Personal on for This and our current I perspective industry the performance Commercial our you. consolidated Thank morning progress and agency of and highlights provide everyone review you joining Lines financial for you

will And the in-depth financial results. open for provide review As questions. usual, then will an up Jeff line over we

while are growing business. pleased our profitably earnings we quarter strong with as We results delivered third our

of delivering our our with their the successfully expertise which Our performance needs deep product same I'll the time, meet agents enable customers. quarter. to our to and approach advance and the overall relevance on breadth of our current partnership strategy the we for unique continue while initiatives. industry of highlights mix reflects At all our start

our in equity earnings and year. adjusted quarter experience strong a We XX.X% an XX.X% catastrophe on of ratio operating from year-to-date. First, momentum continued building positive the return We and better-than-planned improvement. we continued on expense delivered benefited

net the business in Second, in grew exceed time, Lines X.X% within from or growth the At respectively. Professional we representing outlined and quarters increase generated classes and to initiatives, Personal and year. the as this second such written our X.X% that execute and Lines an X% underwriting premium particular, first Commercial. our of our In meet of business we target returns improvement Specialty Lines earlier Small portfolio, same as we continue Product on

rate accelerated initiatives top-quartile associated above a disciplined These underscore quarter business growing committed in newer to growth the equity, our focus to dynamic as our this more and thoughtful average. premium at to began return and actions, Despite We remain this to overall market. growth substantively growth. drivers industry approach on in prudent contribute delivering portfolio a while the the our

we but several in quarter as of property terms pricing, property non-cat including can uncorrelated homeowners, auto areas Third, minor of businesses loss saw business, We with adjustments is our slightly underwriting. improved was these some believe performance during personal volatility specialty as this effectively well We damage. coverages. and losses our elevated physical in in address and manageable, solid, the property in losses than our our expectations higher our

On are the remain elevated, they but liability trends with in line expectations. side,

years. to actions the the to several You've address heard as us well discuss last other the deterioration trends liability them in as

of this concerned medical these other are industry as about frequent and of that aggressive tax are involvement. attorney reporting procedures, attributed delayed participants, [indiscernible] to society have some more we We trends social Like increase the referencing and inflation. cost

We some selection for and have through reserving, book underwriting, our risk trends these in time. pricing, addressing been

couple last the slip liability-related of uptick writings some fall incidents. and and our an reduced we severity Over other where in and years, of we metro saw markets,

strong litigious states, Maine, Massachusetts our positive fact, less in a and trends manner. and penetration In particular, presence in Michigan, our in loss influencing in is

that and liability Additionally, has our trends. the we believe lower-size selection, will risk of of and industry focus complexity these mute and risks limits and impact

relatively For minor pressure on information today. and areas financially, such me-too based should issues example, related recent as major statute the we for industry liability have certain Reviver us be

And achieve not we immune better are are course, increases are impact loss to with than working line not them. we hard the or trends. in Of surprised rate trends, but we to the of with

line our of to top business Lines, we mid-single-digit our business result rate as X%, by grew Personal a highlights Turning by new increases. growth approximately In at segment.

and remain deep Our focus face the increasing agency of in partnerships differentiators in for us especially the account important market, competition.

our We carrier Account business. account business represents agents in business continue of for choice increase markets, to our executing our strategy XX% both targeted new of be our and on to portfolio. preferred now overall penetration

in we year. complex customers we and in high continues account-centric Hanover the high a robust the are this and worth sector. become the believe attractive our for focuses agent new with with Prestige made has the upper which business our offering, is limits it Overall, as to personal by Lines be business. partners geographic challenges approach needs, Our Personal so We have our very Lines progress insurance pleased in middle market more plays Personal without on well to source received sector net of

achieve to pricing see quarter. the the Core time beginning time. generated Commercial, and We continued emphasis look Commercial the from areas the increases growth component profitability. reflects was for closely we opportunities In top segments The where continue we to focus market line the exposure In decrease growth pricing, price most profit we we consistently rate which entirely pricing Lines, quarter slight increasing since trends, in year. in to rationally, due X.X% continually been of of quarter potential. the the monitor average behave from the on of slowly second and and of and in loss A fluctuates our on to component has

meaningful We instance. have need for like rate been most, them that in increases businesses those Commercial implementing Auto

momentum In business some agency our support Small across size our specialty our spillover, particularly smaller to and property pricing Specialty, experiencing broad plan. strong, broad-based large portfolio in account from are areas. a continues be Commercial from and coming New mid-sized account in market firming businesses

set a continue clients. financial Specialty Hanover introduced this institutions, Lines We cyber. seeing Commercial and product and opportunities month, tremendous surplus such product in we for or in our Earlier as out capabilities lines round are new to specialty standalone Cyber Advantage, excess

a appetite and this as underwriting an have conservative management targeted emerging reinsurance to very and utilize We tool. risk line, in we continue important

market reflection product dynamics business themselves our we've capabilities I deliver our of to pleased results. Overall, broad partners. the the our opportunities we through with that business agent The profitable the our growth is am across present achieved established with continue and have a relevance momentum and to we and service customers

the leading Our the early last months brokers further in strategy validated CIAB industry's October, Conference. In our with was our several the over with met Annual and many agent we at agents conversations partners.

brokers industry at the Insurtech across Las globe. from event participated and investors, the I Connect tech insurance an month, entrepreneurs, last that Vegas, leaders in brings together Additionally, Conference

to company strategy the more the industry, our our is have and talk will and our continue and more with The that confidence well-founded drive we partners in around forward. we others

to efficiencies. to continue capabilities. operational an on create observe ways client focus We increasing digital consolidation, efficiencies data to Agents market workflow enhance agency and seek and use service

partner our believe industry trends grow this as firms take focus to advancements. sets only level. apart both with technological the Insurtech's embraces their to further becomes we seeking and next us continue strategy to will our and alike to believe are advantage. the our where carriers is We and fragmented market play less That to Agencies

years, Over the developed with have approach our partnership best-in-class consultative the we agents.

tools of and in effectively our of set allow to a agency help customers. management fallible benchmarking agents operational acquire We portfolio gain books analytics. and have efficiencies business agents through tools their manage These new to invested

And understand growth create or account We also opportunities. ultimately, whether help beneficial needs, mutually them better rounding strategies specialization customer's through roadmaps. their

The in embrace its is unique orientation. Insurtech we way in digital innovation agency

efficiency way is customers. way engage and For a equation, efficiency and provide Assist agents. agent the Digital insurance it customers the We from us, and a call both with but is to new a the improvements It a proxy eliminate across for our value digital our to not to way to chain Model.

introduced a by reduce leveraging customer pertinent Insurago acquire claims of data, From agents underwriting in digitally-inclined to year. underwriting like platform acquisition this tools connectivity standpoint, data We the pre-filling analytics earlier process. helped customers customer enhanced the questions the use and we processes of we facing digital notably management quoting number the and through by platforms, intuitive the

to claims technologies capabilities. customer-facing improve in also We're and self-service investing handling servicing,

in tools We the to is and dynamics. live solutions current capabilities, industry of rates agency policy and confident drone chat handling. these well-positioned are we technology collaboration streamline and improve of innovative encouraging, and are take and Acceptance to that for adoption the company processing many advantage are robotics, incorporating video claims

the So comments, strategic of to our the as advancing in I said half independent and momentum quarter, strong on agency our continued and the be building year premier channel. in in the opening vision my we third franchise casualty property a first

agent company capabilities. our making our are our with all of more partners to relevant building We even

next areas investing we drive We profitable that growth. are strategy are our the in intently And level. those focused on generating about to will disciplined

will With that, to call turn the I Jeff. over

Jeff Farber

Good you, morning, Jack. everyone. Thank

third For income fully million per or in per diluted income prior the compared $XX the generated year million per or $XXX.X the year. $XX.X third was After-tax compared quarter. $X.XX quarter diluted million in with with $X.XX operating million share diluted per or or share quarter, last $X.XX $X.XX share net diluted of $XXX.X share we

third development the quarter. the year Our combined immaterial quarter XX.X% year quarter. was compared was XXXX in Prior prior reserve ratio XX.X% of during in with the

injuries inherently ratio, can Lines, by X.X reserve unfavorable of which the from pressure homeowners' bodily Personal Lines volatile. development onetime continued some million $X.X reported of Personal liability year combined points prior severity In and be claims, auto driven we or

Commercial Lines, year driven comp. prior favorability in by of of reserve workers' $X.X development million continued In combined we ratio, favorable Commercial points recorded X.X or the Lines

Our profile continues generally, of favorable chosen and industry smaller-sized loss our experience accounts, mix lower-risk drive performance. excellent insureds to

on a quiet relatively our domestic Catastrophe or ratio, points million reflecting combined quarter catastrophe X.X footprint. losses the were in $XX.X

increase in versus was Excluding property by catastrophes, year The driven businesses. elevated quarter. prior losses in was several ratio XX.X% our combined the XX.X%

points Our our year from XX.X% expenses fixed on expense ratio XX was the from improvement The growth. premium continued to we basis from quarter benefit prior the to leverage improved as savings to also same businesses due in from organization. investments our we the agency compensation in the our fund the expense strategic At time, continued prior year quarter. across timing of to

two main in ratio deliver up losses excluding expense of same due accident from damage. will results last basis remain XX delivered year from to I XX.X% Starting expected higher financial physical of XX.X% improvement ratio our Personal businesses. We now quarter. in to the the combined current committed fourth points the year a with of review we period Lines the catastrophes

In weather losses. the non-cat XX.X% period homeowners, our loss X.X ratio accident was ex-cat current primarily prior points year higher to than due year

weather We loss have The quarters are than of Personal had higher addressing which taking areas. targeted elevated year X.X third XXXX. the this accident year of XX.X% the in auto we quarter non-cat first experience ratio in was rate points X with current ex-cat

are the expectations of timing the tracking in selections loss trends in Liability This increase our in with XXXX line quarter. auto. reflects liability

Northeast. in side the standing from an as hits increase in losses Midwest in comprehensive On particularly the as coverage we well animal the and saw hail property's

As discussed Lines of in profitable to repairs. target by and also the in pressure some Despite physical we cost remains loss increases watching the severity delivers Personal others damage business highly due returns. industry are our for

the the and declined slightly of but address Lines targeted a organic new and and through our rate indication competitive discipline it the X.X% where With rates that to remains quarter momentum. written driven rate said, areas mix increases Retention net Personal pursue of market business level. in continue by pressure to healthy increased initiatives. we and needed premiums at very

Personal strong market Lines set. is differentiated growth a our in product of in position reflection Our

prior was XX.X% accident Moving Lines, with current ratio the our catastrophes year consistent quarter. to combined year excluding Commercial

and in ratio year. points year timing loss quarter basis prior in Lines XX Our other offset This in accident auto ex-cat quarter improvements comp Commercial the to by third Commercial year last Marine. the Lines Commercial loss profitability was workers losses accident year affected in adjustments XX%. was decreased property of of current in primarily by Lines current the from large

as In the addition, quarter. for in consistent physical in loss the quarter with achieved auto was property favorable experience with the prior of and QX second market rate. damage support remained liability selections this commercial this Auto coverage need quarters. consistent continued rate XX% also additional We increases to

X.X on year current points our Turning improved experience to to updated an based by over accident loss loss prior trends. view XX.X%. The year ratio comp. workers'

comp closely pleased remain track targeted solid Line's by actions. written continue our with Commercial we we given premiums impact business. the led improvement monitor While net Specialty to for in rate ongoing X.X% workers grew to the profit performance pressure. despite this continued favorably the line Growth of continues quarter

performance. higher year quarter, for lower period, X.X% by Net investment $XX.X operations, the flows from million the our onto offset Moving increased prior income investment due a than to cash partially partnership income. was

are minor rates, income fixed reinvestment of interest reduced lower which a seeing yields from In on impact addition, we assets. have the

securities $X.X cash were September representing assets and the XX% invested and Cash at fixed with XXXX, income of total. billion XX,

and XX% of X.X duration Our investment-grade. maturity fixed a portfolio investment years has is

with high-quality, portfolio average a of Our remains well-laddered A+. and weighted diversified

the Our net anticipate of slightly favorable rate on statutory operating for was forward due compensation. deductions the lower going to tax excess the rate impact tax certain than We of will XX%. the XX.X%, rate effective quarter the rate effective approximate stock tax statutory

we in income. a adjustment the of quarter, contingent related consideration true-ups million increase items, non-operating final a resulted sale, Chaucer the other various $XX.X including to tax-related to During which final the and after-tax made

Turning position. now to equity and our capital

quarterly book payment Our second at per the $XX.XX net gains share offset attributable partially unrealized regular X.X% $XX.XX, for on of and and with was the was the income the by realized quarter dividends. per of share quarter. end This was up increase investments. The to compared value

And approximately million program ASR of into XX, we agreement. received October $XXX final with the on delivery X,XXX,XXX total, under we yesterday. XX. June shares completed Scotiabank entered we shares on the The XXX,XXX In purchased

equity-related cycle, of a usual of us planning the the as complete give clear we the which needs Chaucer financial view deployable or $XXX so, remaining next to Over Our and now is month sale approximately will annual investment will opportunities. million

soon, position in capital we XXXX. ROE related will remaining In or quarter clear, end equity putting operating us the To better for after to deployment addition, in equity an presenting a XX.X% the be and on Chaucer the income be operating not sale. cat season decisions. XX.X% to Annualized was make net will un-deployed adjusting on return for adjusted investment

we quartile to us to in Our strong our customers. financial sustainable quarter focus, managing And that as reinforces are expenses, third strategic carefully areas and performance delivering results. discipline agents our investing top the our commitment important and positioning always, to are continue

the Looking ahead, forth are we target, year. performance progressing through set our at the beginning of

at that We set also our X.X%. note assumption fourth catastrophe quarter is

With that, will line your we for the questions. open now

Operator

question [Operator JMP. Carletti instructions] of The first comes from Matt

Matt Carletti

business? align more if little what a to success color Jack, of Commercial, bit get your trying you talking And from new you if more specialty-oriented about was there wondering, been coming the that stronger and I where you've sources heard of business referenced, that a think I opening I some if specifically, And growth little seeing a you're bit and so, comments, grow. the particularly in on could that's initiatives.

Jack Roche

orientation. getting of clearly, some started of, additional we focused financial with new that forward on some We've we kind are of P&C the and traction the practice been with areas We retail followed a on E&S institutions elaborate a in moving I the up of advanced with, specialty. can coverages, that professional Bryan that and Yes, within further. think, coverages some

a model across to forward I moving when Model Matt, of our would more embedded more And agents. getting number been saying agents. accelerate more both resources to well We've deeper say order regions broadly, and product, more better with we Line get in with that got a initiatives, of product the as products, also across the alignment our broader to our But have more the penetration specialty firm existing we we're our deployed have matures, our that as cyber penetration business initiatives agents, we're in as product. from

I that. you if want Bryan, So don't to on elaborate further know

Bryan Salvatore

traction came the embedding starting really for we're do on definitely mentioned, referenced. Specialty biggest are as Jack that think initiatives, newer get from the our offerings, those some impact X.X%. the quarter, I lines. the and product But to Specialty we profitable So numbers Jack was And our for more strong. relationships with of is growth driven growth the share fulsomely quarter And by lot a our The just some the that, was that of around to Specialty for Lines. most

So for and example, In professional and lines our healthcare XX% our we liability our growth. made E&S growth. and over double-digit businesses, had HSI

these from So on. pushing seeing that initiatives some really traction we're

Matt Carletti

could, I Jeff. for other, just probably one then more And if

drivers You, kind Jeff moved it have nuisance, auto emerge? we've, persists, the continue a it's of, seen they the same you, Kind any kind do as behind that anything, it new on you get worse that's think, of, you kind an of, to industry-wide mentioned, reason and you there, I BI move of Or just, and has and kind not, think away? it Is drivers it. the continuing of, problem. of, as be and other to

Jeff Farber

the Personal really auto, general. really -- same. comments related were with the to It's would respect to of which I Lines in more

active the the we're us. for of that's a reportings, increased the book Overall, lot as delayed of you medical. getting of a lawyer So rate. some really And profitable involvement, some know,

BI in favorable no XX% And or we unfavorable Auto we're rate. overall, fact, development. Personal had getting of specifically, In

had we comp, offset so certainly workers And the which Auto Personal development.

Operator

is from Christopher Campbell of question The next KBW.

Christopher Campbell

so pricing. And Congrats way extrusion kind slowed break in just that just, those rate you of components. question hand And guys in you trying quarter. understand down down kind I on we the there, guess, this industry the bake survey. Commercial the opposite know and first from exposure to the go I into of, could It is, quarter in pieces. the great

Jack Roche

Jack. This is

up Dick that, love a of specifics. some of couple the about for kind of, comments and I'd to, Let follow me on make overarching

changed pricing. what steadily, to that say the But have anything pricing. was there's some prepared to -- exposure around money rate is overall really exposure the about -- our our our remarks, the that new bounce And which components in it increases of, from element said been in getting over we happening relevant we second dip wouldn't is we entirely what As quarter-to-quarter. has does quarter that been I attributable call in or that

the have and noise on anticipating And so and more that's based I encouraging of a in hearing think, that we're seen, will that quarter. more the of you're lot expansion that, that we continue

would And bit Specialty so And finish be would right, side some much All off doesn't kind is little good get started could of provide color. improvement attention. the quarter then on we what just that if that a last maybe building just are Bryan of, with pricing necessarily seeing the we about of with, commentary Dick as of Dick?

Dick Lavey

few we And comments loss about of believe or is essentially by to dynamic at course, couple them. that essentially, of so business, the pricing a of close trend. just differs a maybe line So

on highest the we're quarter. So Auto here, our in XX price what seeing the most the side, Commercial increases needed are we points

trend, this and of for quarters seeing this course, our and and several level, small broad-based is acceptance both in market need frankly, going above business loss our on commercial to continue Of level middle forward. believe that we

believe decreases that experiencing through due exposure we comp rate filed and On negative as industry, this, which the below the that we've some we're increase negative higher just rate. acts been still this is referenced percentage the payrolls, side, able rate transfer of to definitely the on Jack loss long-term and economy to line, work offsetting manage like rate effectively, however, the rise, exposures state strong but and

there. higher we we as Small growth quarters, frequency to positive a book room we're GL, our of, And and where is property sides. see low on several that good from And the, going line's point closely the of there this essentially And So coming been to last our growing labor up in watching at Commercial that over both our small have it's push on then performance see much to market kind when news XX comp Good we all a the commercial side, mid-single-digit rate, pricing. X the do advantage. in some work is competition firm pricing. in tightens

Jeff Farber

to that Jack lot And accounts those said, spillover, of which the operate the is large marketplace lot that we're in getting then to to Line been segments, us getting I that so Specialty been have is relative seeing relative getting also a and of it say think now, we Specialty, firming. I'll of a remind we're That we below and exists. pricing it measured, appropriate but and some the seeing I something price And the rate said get across it. this after attention that achieving we way it recently. that are do And have price, ability is, going and would the

Christopher Campbell

that XXX for the Well, ratio on year-over-year core thanks the Touching helpful. loss then comp, color. noticed That's as about workers' fell basis leases very $X noticed the was reserve points well. million I I by year-over-year down

guess the So rates you're accident picks aren't seeing down why if I then less coming workers' the redundancies years comp older rising? in and loss are and cost

Jack Roche

Yes.

said is I is us small for the differential that it's for and business between what Dick true loss our business think commercial our that's foremost industry pretty and market middle the and a substantial. major ratio first factor

growth rationally. middle-market when math combined quite flattish robust actually the Commercial So have works growth Small workers' you with comp

frankly where said the continue is trend current years that we are about what the critic own that very accident we we are so still our biggest What benign. that loss are loss of we prior we to trend And loss the current are versus the be development experiencing seeing seeing are surprised And in trends? in we with years?

continuation trends many combination the benign of and a change So we very the us loss benefiting mix believe is industry. in and of

Christopher Campbell

very at just a then aggregate the a question so on level. And reserves,

and consecutive is XXth no your like I quarter back like of development. looking net was So this

the it the or either guess reserve very I a like potential release building movements naturally up could that more So Hanover's down charge be sizable likely just like why And guess aren't flowing? a road? how I

Jeff Farber

I are and challenges. committed see to be we and good loss to with very And trends feel we Overall, given of we Jeff. reserve position. things. reacting about we our our And is comfortable want all the think when reserves the This

feel not I soon releases in details comfortable to think we lots show the the and we anytime lines. with reserves appropriate it's our and position. expect But, favorable meaningful of

shore fortunately. going always where got we need to items more up we little see have a you're bit now So and to

had to We in plenty offset room to other lines able be of have naturally that.

Christopher Campbell

just those then guess a Chaucer trying the certain $XXX as the used of like going all guys of should time? about proceeds. like going? a for you noise target what once one and sense operating returning last over I Chaucer in more beyond I repurchases How And capital terms just should repurchases we one potentially guess the if for are get all repurchases for we attritional income And repurchases kind of be away. modeling Is remaining what this time? we over the the were to have share the that like percentage just thinking plans capital the normal like million? get once Chaucer of then an is additional ASR there be

Jeff Farber

of do are cat gives we season. process We So late in through annual of that we said prepared an What stages have we overall in do capital? going needs final remarks our opportunities? the in the for the have, are what planning we idea us and as stages the that

short preparing we'll investors I order, our back plans and on bit that But we I capital. little final after we've mentioned, anything with providing to be a could decisions we're with coming operating ROE. be wait make determined it, to an to in convenient of to as reasonably do -- surprise meant not going We'll or that sort we have that an just make adjusted those. don't want sure And us. it's and what then So

won't comfortable feel that provided forward. need going -- So to be we pretty or

on supplemented guidance of have do. generally question that XX% we earnings. operating we so then stock we adjusting Historically, And part have haven't a what buyback. to pattern second the we're appropriate, The to that, had of provided Historically, going as on dividends the return your we specific of about X/X capital with can management. really

return So it we're on we do over But routine that and will dividend traditional And focused appropriate. continue buyback very stock to time. equity. probably more think, I to ordinary of level on a dividend, return the as will

got to it So to obviously, we've a we the rapid at to as right-size generate capital right level. continue a continue very

Operator

is The Kumar next Research from of Amit Buckingham question Group.

Amit Kumar

the capital. print. reverse A Chris' on few order, discussion picking Congrats you, let's in the for to questions go on maybe

very the to disposition using remaining comments a forward. that of trying Just on map clear, I'm be are your capital to the ROE won't you by the dots signaling be year-end? complete adjusted excess connect going you just

Jack Roche

how does playing in provide about criteria, environment, think, consistent smart a very to of I question, our level discipline maintain a And approach of today's and terms we we being that is environment we're strict in organically, criteria this are we develop in emerging going are clear good I guardrails, that one in. investigate and only to the not the and to terms high in market, have strict market think, record track a some our while opportunities growth. of that continue pretty of organically both and inorganically -- have in we but we that terms current that

you deliver that be opportunities, that but to focused also very unless can as So we needs the, follow generating short we to we're changes, down our believe what that means assess signaling as we be excess that on continue use capital into do we're amount that then to anticipating. kind shareholder-orientated, Jeff the we know, should we path is said, that for to growth to we when fair in we are a capital returns. there'll significantly XXXX, have how of continuing order, head And capital we a And don't of something and capital some that returning shareholders. plan of, back we and through being relatively the that our

Amit Kumar

Hanover talking of acquisition months confidence point. up inorganic involved capital? is keeping investors you you next that wake won't sort large We've that to talked Could about we over Just some utilize on time, and opportunities been trying of we've in the and give for of, -- some some, this sort few terms guardrails. the see in that about mentioned

Jack Roche

I think this consistent been on I've personally very point, Amit.

can along said when as transformational we the so as year, last And any not we I of anticipate have do the type reviewed. that reiterate market well inventory that this I've conditions based acquisition on

We And or would from commit have, something to have I on transformational, unfortunately, small can our capability-orientated planning find that, will for not able continue but to to that We doing discount acquisitions. we're been look as anything never liking. perspective. I not a we M&A

Amit Kumar

mentioned question rate BI that. and bit on questions. other prepared might've seen. to, some where remarks, state on The the I And bit wanted trends more BI. you and the there think personal the states? the talked two saw a And one you on think thought I auto usual Was I quick are you a do to component plan you've in auto I process you auto have take that the these is on other action? just X about additional that? higher But regional to expand Maybe end,

Jack Roche

what it's last story and years trend back And Amit, how I and Jack, question very think, loss Auto address because arena. consistently continued I helpful the appreciate to we it, has we a Commercial you this tell the over try here. been the is way to couple go of And this Yes, see to good again. in worded elevated have

area. the in question We Lines-oriented. understand on severity the accelerated most as Is that sorry, filed people I and over know, XXXX some I Lines, Commercial for, was observe the industry, Personal So like true? that was in you I'm more back we,

Amit Kumar

Yes, But take sir. me. okay. I'll Yes, correct. discussion your That's that's with

Jack Roche

that. about sorry Yes,

Amit Kumar

go can on… come But Personal. We back to

Jack Roche

on diligent recall is to and stay in follow-up you just on trying think of to actually, I'd have Dick year, Commercial elevation But anyway, proud midway be observe we year Yes, about that also. happy some through concerned and let if me that the what Commercial, loss last up to on we're I the trends to what Auto us. finish we're PL further in start then

and time and decided also the prior year And year so in to and year, up at for those sure us ratios retrospectively accident third the but fix elevated we back at current the accident appropriately. for change third the quarter years prior caused were the look that only our to recent loss truing created make that we quarter, not some XXXX,

make we procedures the we in elevated that that helping mute the trends loss trends. to that in in have but we of So we these pricing approaches, our and last what's back acknowledge our changes address some look in reserves, year, are over think underwriting our our importantly, the claims picks, elevate, and as continued and

as I'd we are it so immune top these trends, be possibly that as like this you believe this addressing and we came if trends we them year as on into not and to to And issues let to not but could these a of sure part, in telling done. remember, much the growth can Auto that we're us. get from bit make get little investment community we away going taper some the were that And to after Commercial

Amit Kumar

and Personal Auto, the on Yes, want you if to...

Jack Roche

answer I you that. on a can give brief

footprint the see outside that we the really BI in the of trend So stage. across PIF the is auto BI stage,

that So very we watch carefully.

know, XX% is we X%, rate the about to we in states, Personal the the the all you are achieve on states. As at your most. And able where it BI Lines individual need performance in

wouldn't states, it. that one and about say we it's specifics two that more So coming I broad-based than of trend from it's watch that.

Amit Kumar

question. last then And

you think, of more the minor this ground-up a was exactly I we did? me-too and reviver. comment old there about us examination for of have today. Was which the a made just some it? And Or maybe information some or regarding is on the bit someone based sort Or Jeff analysis, documents? relatively talk comments

Jack Roche

like, people in portfolios because assessment our mean again. Jack, well on to in exposures portfolios kind how legacy us even as going decided what as any of of these have and forward is and thorough analysis we as if you in industry, believe existing you your pursue. don't price have Clearly, frankly, business an impact would business our done trends have to you I what prior these exposures. most could our imagine This We

So if evolve. laws particularly, reviver you to as -- how about anticipating that could and think continue the

assessment 'XXs, back -- identified have, were exposed. thorough limits what were of policies back We of well and frankly, exposures did what a our what we to types

that And extremely the itself confidence provide we we've not also lends low. have level were an we exposure but additional relatively only business high develop, we limits see of had of reinsurance the that, did to level issue then that a kind did, lastly, this attachment in not So over-participate historically comfort. this we the points as where of

Operator

Instructions] next go from comes question [Operator The ahead. Paul Sandler Newsome of Please O'Neill.

Jon Newsome

to Amit of XX the questions. first Chris enough my and were ask nice XX

about was I Personal talked Did you ask states well a side, physical have but we've was, maybe in frequency. a see the injury actually wanted So of that damage or lot it? all had all the the to of the just on bodily thing as any Lines spike -- that only

Jeff Farber

increase our referenced an part, a to trend but repair severity, and animal bit glass so more and times, we coverage our longer an frequency repair comments towing in hits, did which we comprehensive windshields in also, on So with rentals around to the see tend be times, expensive prior frequency So of in increase longer.

is we for that our emerged and nothing book. that in can't So price something overcome that but

not on collision We or are seeing property the damage side. frequency the

it. So we very good about feel

Operator

This concludes would Oksana back I for not turn our the question-and-answer remarks. session. to Lukasheva closing conference

Oksana Lukasheva

Thank you, today. for participating everybody,

talking to you quarter. forward next to Looking

Operator

The for you Thank conference now today's presentation. attending is concluded.

disconnect. now may You

The Hanover Insurance Group, Inc. (THG) 2 Nov 192019 Q3 Earnings call transcript