The Hanover Insurance Group, Inc. Second Quarter 2022 Results August 3, 2022 To be read in conjunction with the press release dated August 2, 2022, and conference call scheduled for August 3, 2022 Second Quarter Operating Highlights The Hanover Reports Second Quarter Net Income and Operating Income(1) of $0.63 and $2.32 per Diluted Share, Respectively; Combined Ratio of 96.2%; Combined Ratio, Excluding Catastrophes(2), of 90.2% • Net premiums written increase of 10.4%*, with strong growth from each segment ...

Financial Data and Key Metrics Changes - The company reported an 11.1% operating return on equity and a 10.4% net written premium growth for Q2 2022 [11] - Year-to-date operating return on equity reached 13.4%, with operating earnings per share increasing by 24% compared to the prior year [11] - After-tax operating income for Q2 was $83.9 million or $2.32 per share, with a combined ratio of 96.2%, up from 94.4% in Q2 2021 [29] Business Line Data and Key Metrics Changes - Core commercial business achieved a top line growth of 7.7% with a combined ratio of 92.6% [12] - Specialty segment delivered high single-digit normalized growth with a combined ratio of 87.2%, improving by 3.4 points from the prior year [33] - Personal Lines experienced a combined ratio of 93%, above profitability targets, with significant pricing increases implemented [34][20] Market Data and Key Metrics Changes - The core commercial renewal pricing increase reached 11%, driven by economic activity and increases in insured values [13] - Personal Auto renewal price change was 2.9% in Q2, with expectations to increase to 6% to 7% in Q4 and at least 8% in 2023 [35] - Homeowners line saw a renewal price increase of 9.3% in Q2, with expectations for further increases [39] Company Strategy and Development Direction - The company is focused on leveraging advanced technology, underwriting discipline, and talent management to drive growth and profitability [15] - A commitment to enhancing agent partnerships and providing innovative tools, such as the TAP Sales platform, is central to the strategy [14] - The company aims to maintain prudent pricing discipline and align pricing with recent loss dynamics to ensure superior performance [22] Management's Comments on Operating Environment and Future Outlook - The current macro environment is described as dynamic, presenting both challenges and opportunities [23] - Management expressed confidence in the company's ability to navigate complexities and leverage strengths for future growth [24] - The company anticipates continued inflationary pressure in Personal Lines and has adjusted its full-year combined ratio guidance to a range of 90.5% to 91.5% [49] Other Important Information - Net investment income for the quarter was $70.5 million, with expectations for a long-term positive impact from the rising interest rate environment [43][44] - The company successfully completed its reinsurance program, enhancing its reinsurance limits and capacity [46][47] - Book value per share decreased by 9.3% from March 31, 2022, reflecting investment marks [48] Q&A Session Summary Question: Concerns about rate increases through regulators in larger states - Management noted initial challenges but indicated that the need for rate increases has been recognized across states, with no anticipated problems going forward [56][57] Question: Update on cross-sell initiatives in Specialty and Commercial - Management reported gaining momentum in cross-selling Specialty business, contributing positively to growth [58][60] Question: Impact of increasing reinsurance spend on accident year loss ratio - Management confirmed that the allocation of reinsurance costs is not relevant to the home business due to retention levels [64][67] Question: Differentiation in competitive environment by state - Management acknowledged varying competitive pressures by state, with regional players facing similar inflationary pressures [78][81] Question: Thoughts on exposure increases and profitability - Management emphasized the importance of evaluating exposure increases and their impact on loss costs versus pricing across different lines [82][84]

Hanover Insurance Group, Inc. (NYSE:THG) Q1 2022 Earnings Conference Call May 4, 2022 10:00 AM ET Company Participants Oksana Lukasheva - VP, IR & Financial Planning John Roche - President, CEO & Director Jeffrey Farber - EVP & CFO Richard Lavey - EVP & President, Hanover Agency Markets Bryan Salvatore - EVP & President of Specialty Conference Call Participants Matthew Carletti - JMP Securities Meyer Shields - KBW Grace Carter - Bank of America Merrill Lynch Bob Farnam - Boenning and Scattergood Operator Go ...

[PART I. FINANCIAL INFORMATION](index=2&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for The Hanover Insurance Group, Inc. and its subsidiaries, including statements of income, comprehensive income, balance sheets, shareholders' equity, and cash flows, along with detailed notes explaining the basis of presentation, accounting policies, and specific financial line items [Consolidated Statements of Income](index=3&type=section&id=Consolidated%20Statements%20of%20Income) Presents the company's revenues, net income, and earnings per share for the three months ended March 31, 2022 and 2021 **Revenues (Three Months Ended March 31, Millions):** | Metric | 2022 | 2021 | Change | | :----------------------------------- | :----- | :----- | :----- | | Premiums | $1,263.8 | $1,161.8 | +$102.0 | | Net investment income | $76.9 | $76.8 | +$0.1 | | Total net realized & unrealized investment gains (losses) | $(15.9) | $37.5 | $(53.4) | | Total revenues | $1,330.7 | $1,282.1 | +$48.6 | **Net Income & EPS (Three Months Ended March 31):** | Metric | 2022 | 2021 | Change | | :----------------------------------- | :----- | :----- | :----- | | Net income (Millions) | $104.8 | $92.7 | +$12.1 | | Basic EPS | $2.95 | $2.55 | +$0.40 | | Diluted EPS | $2.90 | $2.51 | +$0.39 | [Consolidated Statements of Comprehensive Income](index=4&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Details the comprehensive income and loss, highlighting significant changes in other comprehensive loss, net of tax **Comprehensive Income (Loss) (Three Months Ended March 31, Millions):** | Metric | 2022 | 2021 | Change | | :----------------------------------- | :----- | :----- | :----- | | Net income | $104.8 | $92.7 | +$12.1 | | Total other comprehensive loss, net of tax | $(378.8) | $(184.8) | $(194.0) | | Comprehensive loss | $(274.0) | $(92.1) | $(181.9) | - Changes in net unrealized losses on available-for-sale investment securities (net of tax) significantly increased from **$(185.5) million in 2021** to **$(379.9) million in 2022**[10](index=10&type=chunk) [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Provides a snapshot of assets, liabilities, and shareholders' equity, noting changes in total assets and accumulated other comprehensive income **Balance Sheet Highlights (Millions):** | Metric | March 31, 2022 | December 31, 2021 | Change | | :----------------------------------- | :--------------- | :---------------- | :----- | | Total assets | $13,847.2 | $14,254.3 | $(407.1) | | Total investments | $8,775.3 | $9,152.6 | $(377.3) | | Loss and loss adjustment expense reserves | $6,512.2 | $6,447.6 | +$64.6 | | Total liabilities | $11,014.4 | $11,109.4 | $(95.0) | | Total shareholders' equity | $2,832.8 | $3,144.9 | $(312.1) | - Accumulated other comprehensive income (loss) shifted from a gain of **$122.2 million** at December 31, 2021, to a loss of **$(256.6) million** at March 31, 2022[13](index=13&type=chunk) [Consolidated Statements of Shareholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity) Outlines changes in shareholders' equity, including retained earnings and accumulated other comprehensive income (loss) **Shareholders' Equity (Millions):** | Metric | March 31, 2022 | March 31, 2021 | | :----------------------------------- | :------------- | :------------- | | Total shareholders' equity | $2,832.8 | $3,046.8 | | Accumulated other comprehensive income (loss) | $(256.6) | $187.7 | | Retained earnings | $3,061.0 | $2,734.9 | - Net depreciation on available-for-sale securities was **$(379.9) million** for the three months ended March 31, 2022, compared to **$(185.5) million** for the same period in 2021[15](index=15&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash flows from operating, investing, and financing activities, showing the net change in cash and cash equivalents **Cash Flows (Three Months Ended March 31, Millions):** | Metric | 2022 | 2021 | Change | | :----------------------------------- | :----- | :----- | :----- | | Net cash provided by operating activities | $200.1 | $141.8 | +$58.3 | | Net cash used in investing activities | $(112.2) | $(78.6) | $(33.6) | | Net cash used in financing activities | $(46.8) | $(71.7) | +$24.9 | | Net change in cash and cash equivalents | $41.1 | $(8.5) | +$49.6 | - Operating cash flow increase was partly due to **$148.9 million** cash received for MCCA refund in 2022, with no such receipt in 2021[18](index=18&type=chunk) [Notes to Interim Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Interim%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures supporting the interim consolidated financial statements [1. Basis of Presentation and Principles of Consolidation](index=8&type=section&id=1.%20Basis%20of%20Presentation%20and%20Principles%20of%20Consolidation) Explains the scope and accounting principles used for the interim consolidated financial statements, including estimates and assumptions - Interim consolidated financial statements include THG, The Hanover Insurance Company, Citizens Insurance Company of America, and other insurance/non-insurance subsidiaries, as well as discontinued operations (former accident and health and life insurance businesses)[20](index=20&type=chunk) - Preparation of financial statements requires estimates and assumptions, and actual results could differ from those estimates[21](index=21&type=chunk) [2. New Accounting Pronouncements](index=8&type=section&id=2.%20New%20Accounting%20Pronouncements) Discusses the impact of recent accounting updates, specifically ASC Update No. 2022-02, on the company's financial reporting - ASC Update No. 2022-02 eliminates Troubled Debt Restructuring (TDR) recognition and measurement guidance, enhancing disclosure for loan refinancing and restructurings[23](index=23&type=chunk) - The company does not expect a material impact on its financial position or results of operations from the implementation of ASC Update No. 2022-02[23](index=23&type=chunk) [3. Investments](index=9&type=section&id=3.%20Investments) Details the company's investment portfolio, focusing on fixed maturities, unrealized gains/losses, and impairment recognition **Fixed Maturities (Millions):** | Metric | March 31, 2022 | December 31, 2021 | | :----------------------------------- | :------------- | :---------------- | | Amortized Cost, Net of Allowance for Credit Losses | $7,644.8 | $7,514.8 | | Fair Value | $7,382.2 | $7,723.9 | | Gross Unrealized Gains | $49.6 | $257.1 | | Gross Unrealized Losses | $312.2 | $48.0 | - Gross unrealized losses on fixed maturities increased significantly from **$48.0 million** at December 31, 2021, to **$312.2 million** at March 31, 2022[25](index=25&type=chunk) - Net realized and unrealized gains (losses) on equity securities were **$(18.0) million** for Q1 2022, a significant decrease from **$39.1 million** in Q1 2021[32](index=32&type=chunk) - The company recognized **$0.9 million** in impairments on fixed maturities for Q1 2022, compared to none in Q1 2021[30](index=30&type=chunk) [4. Fair Value](index=11&type=section&id=4.%20Fair%20Value) Explains the fair value hierarchy and presents investment assets categorized by valuation levels, highlighting changes in Level 3 assets - Fair value is defined using a three-level hierarchy: Level 1 (unadjusted quoted prices in active markets), Level 2 (quoted prices for similar assets/liabilities or observable market data), and Level 3 (unobservable inputs)[33](index=33&type=chunk)[34](index=34&type=chunk) **Investment Assets at Fair Value (March 31, 2022, Millions):** | Asset Type | Total | Level 1 | Level 2 | Level 3 | | :----------------------------------- | :------ | :------ | :------ | :------ | | Fixed maturities | $7,382.2 | $218.8 | $7,140.4 | $23.0 | | Equity securities | $607.0 | $602.2 | $— | $4.8 | | Other investments | $4.3 | $— | $— | $4.3 | | **Total** | **$7,993.5** | **$821.0** | **$7,140.4** | **$32.1** | - Total Level 3 assets decreased from **$39.8 million** at December 31, 2021, to **$32.1 million** at March 31, 2022[48](index=48&type=chunk)[51](index=51&type=chunk) [5. Income Taxes](index=16&type=section&id=5.%20Income%20Taxes) Reports income tax expense and effective federal tax rates for continuing operations for the periods presented - Income tax expense from continuing operations was **$24.7 million** for Q1 2022, up from **$21.3 million** for Q1 2021[55](index=55&type=chunk) - Consolidated effective federal tax rates were **19.0%** for Q1 2022 and **18.7%** for Q1 2021[55](index=55&type=chunk) [6. Pension Plans](index=16&type=section&id=6.%20Pension%20Plans) Details net periodic pension costs and recognized actuarial losses for the company's pension plans - Net periodic pension cost was **$0.8 million** for Q1 2022, compared to a net benefit of **$(0.1) million** for Q1 2021[57](index=57&type=chunk) - Recognized net actuarial loss increased from **$0.8 million** in Q1 2021 to **$1.3 million** in Q1 2022[57](index=57&type=chunk) [7. Other Comprehensive Income (Loss)](index=17&type=section&id=7.%20Other%20Comprehensive%20Income%20(Loss)) Summarizes total other comprehensive loss, net of tax, and changes in net unrealized losses on available-for-sale securities - Total other comprehensive loss, net of tax, was **$(378.8) million** for Q1 2022, compared to **$(184.8) million** for Q1 2021[59](index=59&type=chunk) - Net unrealized losses arising during the period for securities having no credit losses (pre-tax) increased from **$(234.1) million** in Q1 2021 to **$(477.5) million** in Q1 2022[59](index=59&type=chunk) [8. Segment Information](index=18&type=section&id=8.%20Segment%20Information) Provides financial data by operating segment, including revenues and operating income, reflecting the recent disaggregation of commercial lines - The company now operates with four segments: Core Commercial, Specialty, Personal Lines, and Other, with Core Commercial and Specialty disaggregated from the former Commercial Lines segment in Q1 2022[60](index=60&type=chunk)[101](index=101&type=chunk) **Operating Revenues (Three Months Ended March 31, Millions):** | Segment | 2022 | 2021 | Change | | :----------------------------------- | :----- | :----- | :----- | | Core Commercial | $511.1 | $472.9 | +$38.2 | | Specialty | $301.3 | $274.2 | +$27.1 | | Personal Lines | $530.7 | $493.3 | +$37.4 | | Other | $3.5 | $4.2 | $(0.7) | | **Total Operating Revenues** | **$1,346.6** | **$1,244.6** | **+$102.0** | **Operating Income (Loss) before Interest Expense and Income Taxes (Three Months Ended March 31, Millions):** | Segment | 2022 | 2021 | Change | | :----------------------------------- | :----- | :----- | :----- | | Core Commercial | $67.5 | $(14.8) | +$82.3 | | Specialty | $50.0 | $17.0 | +$33.0 | | Personal Lines | $36.3 | $81.8 | $(45.5) | | Other | $0.6 | $1.1 | $(0.5) | | **Total Operating Income** | **$154.4** | **$85.1** | **+$69.3** | [9. Stock-based Compensation](index=20&type=section&id=9.%20Stock-based%20Compensation) Reports stock-based compensation expense and details the number of stock options and restricted stock units granted - Stock-based compensation expense was **$6.7 million** for Q1 2022, up from **$5.6 million** for Q1 2021[66](index=66&type=chunk) - **140,339 stock options** were granted in Q1 2022 (vs. 178,040 in Q1 2021), and **143,208 time-based restricted stock units** were granted (vs. 168,092 in Q1 2021)[68](index=68&type=chunk)[69](index=69&type=chunk) - Performance-based and market-based restricted stock units granted totaled **47,954** in Q1 2022 (vs. 62,143 in Q1 2021)[69](index=69&type=chunk) [10. Earnings Per Share and Shareholders' Equity Transactions](index=21&type=section&id=10.%20Earnings%20Per%20Share%20and%20Shareholders'%20Equity%20Transactions) Details diluted shares outstanding, share repurchases, and the remaining capacity under the stock repurchase program - Diluted shares outstanding were **36.1 million** for Q1 2022, down from **36.9 million** for Q1 2021[71](index=71&type=chunk) - The company repurchased approximately **0.1 million shares** at an aggregate cost of **$16.3 million** during Q1 2022[185](index=185&type=chunk) - Approximately **$345 million** remained available under the **$1.3 billion** stock repurchase program as of March 31, 2022[72](index=72&type=chunk)[185](index=185&type=chunk) [11. Liabilities for Outstanding Claims, Losses and Loss Adjustment Expenses](index=22&type=section&id=11.%20Liabilities%20for%20Outstanding%20Claims,%20Losses%20and%20Loss%20Adjustment%20Expenses) Presents gross reserves for losses and LAE, along with net favorable/unfavorable development by segment - Gross reserve for losses and LAE was **$6,512.2 million** at March 31, 2022, up from **$6,447.6 million** at December 31, 2021[76](index=76&type=chunk) - Net favorable loss and LAE development was **$6.0 million** for Q1 2022, compared to **$8.2 million** for Q1 2021[76](index=76&type=chunk) - Q1 2022 favorable development: Specialty (**$13.2 million**) and Core Commercial (**$6.4 million**)[77](index=77&type=chunk) - Q1 2022 unfavorable development: Personal Lines (**$13.6 million**), mainly due to higher severity and longer cycle times in homeowners claims[77](index=77&type=chunk) [12. Commitments and Contingencies](index=23&type=section&id=12.%20Commitments%20and%20Contingencies) Discusses legal proceedings, regulatory actions, and residual market participation, assessing their potential financial impact - Legal proceedings and regulatory actions are not expected to have a material effect on financial position, though they could impact quarterly/annual results[80](index=80&type=chunk) - The company is required to participate in residual markets for high-risk insureds or disrupted lines of business[81](index=81&type=chunk) [13. Subsequent Events](index=23&type=section&id=13.%20Subsequent%20Events) Confirms no subsequent events occurred that require financial statement adjustment or additional disclosure - There were no subsequent events requiring adjustment to the financial statements or additional disclosure[82](index=82&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations for the three months ended March 31, 2022, highlighting key performance drivers, segment results, investment performance, liquidity, and critical accounting estimates, while also addressing the impact of the Pandemic, inflation, and regulatory matters [Introduction](index=25&type=section&id=Introduction) Introduces the scope of management's discussion, covering interim consolidated results for the company and its subsidiaries - This discussion covers the interim consolidated results of operations and financial condition of The Hanover Insurance Group, Inc. and its subsidiaries[87](index=87&type=chunk) - Results of operations include principal property and casualty insurance companies and discontinued operations (former accident and health and life insurance businesses)[88](index=88&type=chunk) [Executive Overview](index=25&type=section&id=Executive%20Overview) Provides a high-level summary of key financial performance, including net income, operating income, catastrophe losses, and claims cost trends - Net income for Q1 2022 was **$104.8 million**, an increase of **$12.1 million** from **$92.7 million** in Q1 2021[91](index=91&type=chunk) - Operating income before interest expense and income taxes increased by **$69.3 million** to **$154.4 million** in Q1 2022, primarily due to lower catastrophe losses and earned premium growth[92](index=92&type=chunk) - Pre-tax catastrophe losses decreased by **$87.8 million** to **$45.5 million** in Q1 2022, compared to **$133.3 million** in Q1 2021[93](index=93&type=chunk) - The company is experiencing higher claims costs in automobile and homeowners lines due to inflation and supply chain disruptions, compounded by the evolving impact of the COVID-19 Pandemic[94](index=94&type=chunk) [Description of Operating Segments](index=26&type=section&id=Description%20of%20Operating%20Segments) Outlines the company's four operating segments, noting the recent disaggregation of the former Commercial Lines segment - The company's primary business operations are provided through four operating segments: Core Commercial, Specialty, Personal Lines, and Other[101](index=101&type=chunk) - During the first quarter of 2022, the former Commercial Lines segment was disaggregated into Core Commercial and Specialty segments[101](index=101&type=chunk) [Results of Operations - Consolidated](index=26&type=section&id=Results%20of%20Operations%20-%20Consolidated) Presents consolidated net income and operating income, explaining the impact of investment losses and the nature of non-GAAP operating income - Consolidated net income increased by **$12.1 million** to **$104.8 million** in Q1 2022[103](index=103&type=chunk) - Operating income before interest expense and income taxes increased by **$69.3 million** to **$154.4 million** in Q1 2022[103](index=103&type=chunk)[105](index=105&type=chunk) - The increase in consolidated net income was partially offset by higher after-tax net realized and unrealized investment losses of approximately **$43.8 million**[103](index=103&type=chunk) - Operating income is a non-GAAP measure that excludes certain items like net realized and unrealized investment gains and losses, which management believes are not indicative of core operations[106](index=106&type=chunk) [Results of Operations - Segments](index=28&type=section&id=Results%20of%20Operations%20-%20Segments) Details the financial performance of each operating segment, including net premiums written and underwriting profit **Operating Income before Interest Expense and Income Taxes (Three Months Ended March 31, Millions):** | Segment | 2022 | 2021 | Change | | :----------------------------------- | :----- | :----- | :----- | | Core Commercial | $67.5 | $(14.8) | +$82.3 | | Specialty | $50.0 | $17.0 | +$33.0 | | Personal Lines | $36.3 | $81.8 | $(45.5) | | Other | $0.6 | $1.1 | $(0.5) | | **Total** | **$154.4** | **$85.1** | **+$69.3** | - Net premiums written increased by **$116.2 million** to **$1,312.3 million** for Q1 2022, primarily due to rate and exposure increases and continued strong retention[112](index=112&type=chunk) [Core Commercial](index=29&type=section&id=Core%20Commercial) Highlights Core Commercial segment's net premiums written, underwriting profit, and the impact of catastrophe losses - Net premiums written increased by **$46.0 million** to **$526.6 million** in Q1 2022 (**9.6% increase YoY**)[95](index=95&type=chunk)[117](index=117&type=chunk) - Underwriting profit was **$32.2 million** in Q1 2022, a favorable change of **$83.5 million** from a **$51.3 million loss** in Q1 2021[118](index=118&type=chunk) - Catastrophe losses decreased by **$74.7 million** to **$19.7 million** in Q1 2022[118](index=118&type=chunk) - Current accident year underwriting profit, excluding catastrophes, increased by **$5.1 million** to **$45.5 million**[119](index=119&type=chunk) [Specialty](index=29&type=section&id=Specialty) Reports Specialty segment's net premiums written, underwriting profit, and favorable development on prior year loss reserves - Net premiums written increased by **$26.0 million** to **$302.8 million** in Q1 2022 (**9.4% increase YoY**)[97](index=97&type=chunk)[121](index=121&type=chunk) - Underwriting profit was **$33.9 million** in Q1 2022, an increase of **$31.9 million** from **$2.0 million** in Q1 2021[122](index=122&type=chunk) - Catastrophe losses decreased by **$16.8 million** to **$7.6 million** in Q1 2022[122](index=122&type=chunk) - Net favorable development on prior year's loss reserves increased by **$12.6 million** to **$13.2 million**[122](index=122&type=chunk) [Personal Lines](index=31&type=section&id=Personal%20Lines) Details Personal Lines segment's net premiums written, decreased underwriting profit, and unfavorable loss reserve development - Net premiums written increased by **$44.2 million** to **$482.9 million** in Q1 2022 (**10.1% increase YoY**)[100](index=100&type=chunk)[126](index=126&type=chunk) - Underwriting profit decreased by **$46.6 million** to **$12.3 million** in Q1 2022[128](index=128&type=chunk) - Catastrophe losses increased by **$3.7 million** to **$18.2 million** in Q1 2022[128](index=128&type=chunk) - Net unfavorable development on prior year's loss reserves was **$13.6 million** in Q1 2022, compared to **$5.2 million** favorable development in Q1 2021, primarily due to homeowners[128](index=128&type=chunk) - Current accident year underwriting profit, excluding catastrophes, decreased by **$24.1 million** to **$44.1 million**, mainly due to higher personal automobile loss severity from supply chain issues and increased vehicle prices[129](index=129&type=chunk) [Other](index=31&type=section&id=Other) Reports the operating income for the Other segment, noting a slight decrease from the prior year - Operating income for the Other segment was **$0.6 million** in Q1 2022, down from **$1.1 million** in Q1 2021[131](index=131&type=chunk) [Reserve for Losses and Loss Adjustment Expenses](index=32&type=section&id=Reserve%20for%20Losses%20and%20Loss%20Adjustment%20Expenses) Discusses the gross reserve for losses and LAE, along with net favorable/unfavorable development and reinsurance recoverables - Gross reserve for losses and LAE was **$6,512.2 million** at March 31, 2022, up from **$6,447.6 million** at December 31, 2021[134](index=134&type=chunk) - Net favorable loss and LAE development (excluding catastrophes) was **$6.0 million** for Q1 2022, compared to **$8.2 million** for Q1 2021[137](index=137&type=chunk)[139](index=139&type=chunk) - Q1 2022 favorable development: Core Commercial (**$6.4 million**, mainly workers' compensation) and Specialty (**$13.2 million**, across marine, specialty industrial, professional & executive, and surety lines)[139](index=139&type=chunk) - Q1 2022 unfavorable development: Personal Lines (**$13.6 million**, mainly homeowners due to higher severity and longer repair cycle times)[139](index=139&type=chunk) - Reinsurance recoverables increased to **$1,940.3 million** at March 31, 2022, from **$1,907.3 million** at December 31, 2021[141](index=141&type=chunk) [Investments](index=34&type=section&id=Investments) Analyzes net investment income, changes in total cash and investments, and the impact of interest rates on fixed maturities - Net investment income was **$76.9 million** for Q1 2022, stable compared to **$76.8 million** for Q1 2021[143](index=143&type=chunk) - Total cash and investments decreased by **$336.2 million (3.6%)** to **$9,047.3 million** at March 31, 2022, primarily due to net market value depreciation[145](index=145&type=chunk) - Gross unrealized losses on fixed maturities increased by **$264.2 million** to **$312.2 million** at March 31, 2022, primarily due to higher interest rates and wider credit spreads[159](index=159&type=chunk) - Approximately **95%** of the fixed maturity portfolio consisted of investment grade securities at both March 31, 2022 and December 31, 2021[149](index=149&type=chunk) - The company views gross unrealized losses on fixed maturities as non-credit related and does not intend to sell these securities before recovery of amortized cost[160](index=160&type=chunk) [Other Items](index=37&type=section&id=Other%20Items) Covers net realized and unrealized investment results and losses from discontinued life businesses - Net realized and unrealized investment results shifted from gains of **$37.5 million** in Q1 2021 to losses of **$15.9 million** in Q1 2022, primarily due to changes in the fair value of equity securities[167](index=167&type=chunk) - Losses from discontinued life businesses increased to **$0.5 million** in Q1 2022 from **$0.1 million** in Q1 2021, reflecting adverse loss trends in the long-term care pool[168](index=168&type=chunk) [Income Taxes](index=37&type=section&id=Income%20Taxes) Reports the provision for income taxes and effective federal tax rates for continuing operations and operating income - The provision for income taxes from continuing operations was **$24.7 million** in Q1 2022, up from **$21.3 million** in Q1 2021[170](index=170&type=chunk) - Consolidated effective federal tax rates were **19.0%** for Q1 2022 and **18.7%** for Q1 2021[170](index=170&type=chunk) - Effective tax rates for operating income were **19.3%** for Q1 2022 and **19.8%** for Q1 2021[171](index=171&type=chunk) [Critical Accounting Estimates](index=38&type=section&id=Critical%20Accounting%20Estimates) Identifies key accounting estimates that require significant judgment, including reserves, reinsurance, pensions, and investment credit losses - Critical accounting estimates include: Reserve for losses and loss expenses, Reinsurance recoverable balances, Pension benefit obligations, and Investment credit losses[173](index=173&type=chunk) [Statutory Surplus of Insurance Subsidiaries](index=38&type=section&id=Statutory%20Surplus%20of%20Insurance%20Subsidiaries) Presents the total statutory capital and surplus and the Risk-Based Capital (RBC) ratio for the insurance subsidiaries - Total Statutory Capital and Surplus increased by **$89.6 million** to **$2,809.6 million** at March 31, 2022[174](index=174&type=chunk) - The Hanover Insurance Company's RBC Ratio (Industry Scale) was **235%**, and (Regulatory Scale) was **470%** at March 31, 2022[175](index=175&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) Discusses cash flow from operations, holding company liquidity, share repurchases, and available borrowing capacity - Net cash provided by operating activities increased by **$58.3 million** to **$200.1 million** in Q1 2022, partly due to a **$183.3 million** MCCA surplus refund[178](index=178&type=chunk) - The holding company held **$333.1 million** in fixed maturities and cash at March 31, 2022, deemed sufficient for current year obligations[182](index=182&type=chunk) - The company repurchased approximately **0.1 million shares** for **$16.3 million** in Q1 2022, with **$345 million** remaining under the stock repurchase program[185](index=185&type=chunk) - Access to additional liquidity includes **$116.6 million** borrowing capacity with FHLB and a **$200.0 million** unsecured revolving credit facility (unused)[186](index=186&type=chunk)[187](index=187&type=chunk) - The company was in compliance with the covenants of its debt and credit agreements at March 31, 2022[188](index=188&type=chunk) [Contingencies and Regulatory Matters](index=40&type=section&id=Contingencies%20and%20Regulatory%20Matters) Addresses regulatory orders related to the Pandemic and potential legislation for business interruption claims - Regulatory orders related to the Pandemic include premium refunds/credits, payment grace periods, and reassessment of rates[189](index=189&type=chunk) - Proposed legislation for retroactive payment of unfunded Pandemic business interruption claims could create 'substantial solvency risks' for the property and casualty insurance sector[190](index=190&type=chunk) [Risks and Forward - Looking Statements](index=40&type=section&id=Risks%20and%20Forward%20-%20Looking%20Statements) Highlights inherent risks and uncertainties that could cause actual results to differ from forward-looking statements - Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially[207](index=207&type=chunk) - Key risk factors include changes in demand, claims experience, regulatory and economic conditions, market volatility, and operational challenges[208](index=208&type=chunk)[212](index=212&type=chunk) - The company does not undertake any responsibility to update or revise its forward-looking statements, except as required by law[211](index=211&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reported no material changes in its market risks, management strategies, or sensitivity to interest rate and equity price risk during the first three months of 2022, consistent with disclosures in its 2021 Annual Report on Form 10-K - No material changes in market risks, management, or sensitivity to interest rates and equity price risk in Q1 2022[197](index=197&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2022, providing reasonable assurance for timely and accurate reporting. No material changes to internal control over financial reporting occurred during the quarter - Disclosure controls and procedures were effective as of March 31, 2022, providing reasonable assurance for timely and accurate reporting[201](index=201&type=chunk) - No material changes to internal control over financial reporting occurred during Q1 2022[202](index=202&type=chunk) - Control systems provide reasonable, not absolute, assurance and can be subject to inherent limitations like error, collusion, or management override[200](index=200&type=chunk) [PART II. OTHER INFORMATION](index=40&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings and regulatory actions in the normal course of business. While the ultimate outcomes are difficult to predict, they are not expected to have a material effect on the company's financial position, though they could impact periodic results - The company is a defendant in various legal proceedings and subject to governmental/self-regulatory agency examinations[205](index=205&type=chunk) - Ultimate resolutions are not expected to materially affect financial position, but could impact results of operations for a particular period[205](index=205&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) This section outlines numerous risk factors that could cause actual results to differ materially from forward-looking statements, including changes in demand, claims experience, regulatory and economic conditions, market volatility, and operational challenges - Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially[207](index=207&type=chunk) - Key risk factors include changes in demand, ability to retain profitable policies and increase rates, adverse claims experience (including catastrophes), long-term profitability of products, disruption in distribution channels, changes in frequency and loss severity trends, regulatory/economic/political conditions, volatile developments (weather, pandemics, civil unrest), changes in weather patterns, limitations on claims adjustment, reinsurance recoverability, market volatility, interest rate fluctuations, inflationary pressures, and default rates affecting investment returns[208](index=208&type=chunk)[212](index=212&type=chunk) - New risk factors may emerge over time, and the business is conducted in competitive markets, involving a higher degree of risk[207](index=207&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 194,228 shares of common stock in Q1 2022 at an average price of $138.76 per share, with approximately $345 million remaining available under its stock repurchase program **Issuer Purchases of Equity Securities (Q1 2022):** | Period | Total Shares Purchased | Average Price Paid per Share | Total Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value Remaining Under Plans or Programs (Millions) | | :-------------------- | :--------------------- | :--------------------------- | :---------------------------------------------------------------- | :------------------------------------------------------------------- | | January 1 - 31, 2022 | 47,921 | $134.37 | 47,285 | $355 | | February 1 - 28, 2022 | 41,780 | $138.29 | 41,450 | $349 | | March 1 - 31, 2022 | 104,527 | $140.96 | 30,094 | $345 | | **Total** | **194,228** | **$138.76** | **118,829** | **$345** | - The total shares purchased include shares withheld to satisfy tax withholding amounts due from employees related to the receipt of stock which resulted from the exercise or vesting of equity awards[213](index=213&type=chunk) [Item 6. Exhibits](index=45&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including various stock option and restricted stock unit agreements, CEO/CFO certifications, and XBRL financial statements - Exhibits include forms of stock option and restricted stock unit agreements, CEO/CFO certifications (Sarbanes-Oxley Act), and iXBRL formatted financial statements[217](index=217&type=chunk) [SIGNATURES](index=46&type=section&id=SIGNATURES) The report is signed by John C. Roche, President, Chief Executive Officer and Director, and Jeffrey M. Farber, Executive Vice President and Chief Financial Officer, on May 4, 2022 - The report was signed by John C. Roche (President, CEO, Director) and Jeffrey M. Farber (Executive Vice President and Chief Financial Officer) on May 4, 2022[219](index=219&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 THE HANOVER INSURANCE GROUP, INC. (Exact name of registrant as specified in its charter) OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from: to Delaware 04-3263626 (State or other jurisdiction of incorporation or organization ...

The Hanover Insurance Group, Inc. (NYSE: THG) Bank of America Securities Insurance Conference February 16, 2022 Key Takeaways 1. Differentiated strategy accelerates growth Growing market share with our consumer- and agent-centric approach, while leveraging our diverse product set and proprietary analytical tools 2. Specialized capabilities are a critical growth driver Further developing specialized capabilities across our business portfolio to position us for continued growth, including expansion of our spe ...

Hanover Insurance Group, Inc. (NYSE:THG) Q4 2021 Earnings Conference Call February 3, 2022 10:00 AM ET Company Participants Oksana Lukasheva - VP, IR & Financial Planning John Roche - President, CEO & Director Jeffrey Farber - EVP & CFO Richard Lavey - EVP & President, Hanover Agency Markets Bryan Salvatore - EVP & President of Specialty Conference Call Participants Matthew Carletti - JMP Securities Paul Newsome - Piper Sandler & Co. Meyer Shields - KBW Robert Farnam - Boenning and Scattergood Grace Carter ...

The Hanover Insurance Group, Inc. Third Quarter 2021 Results October 28, 2021 To be read in conjunction with the press release dated October 27, 2021, and conference call scheduled for October 28, 2021 Third Quarter 2021 Operating Highlights The Hanover Reports Third Quarter Net Income and Operating Income(1) of $0.94 and $0.85 per Diluted Share, Respectively; Combined Ratio of 102.3%; Combined Ratio, Excluding Catastrophes(2), of 89.4% • Catastrophe losses of $153.5 million, or 12.9% of net premiums earned ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-13754 THE HANOVER INSURANCE GROUP, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of ...

The Hanover Insurance Group, Inc. (NYSE:THG) Q3 2021 Earnings Conference Call October 28, 2021 10:00 AM ET Company Participants Oksana Lukasheva - Investor Relations Jack Roche - President & Chief Executive Officer Jeff Farber - Chief Financial Officer Bryan Salvatore - President, Specialty Lines Dick Lavey - President, Agency Markets Conference Call Participants Paul Newsome - Piper Sandler Mike Zaremski - Wolfe Research Bob Farnam - Boenning & Scattergood Grace Carter - Bank of America Meyer Shields - KBW ...