HANOVER INSURANCE GROUP, INC. - FORM 8-K - EX-99.2

Attached files

file	filename
EX-99.1 - EX-99.1 - HANOVER INSURANCE GROUP, INC.	thg-ex991_7.htm
8-K - 8-K - HANOVER INSURANCE GROUP, INC.	thg-8k_20210429.htm

Exhibit 99.2

FINANCIAL SUPPLEMENT
FIRST QUARTER 2021

	THE HANOVER INSURANCE GROUP
	FINANCIAL SUPPLEMENT



	TABLE OF CONTENTS


	Business Descriptions...................................................................................................	1
	Financial Highlights........................................................................................................	2
	Consolidated Financial Statements
	Income Statements....................................................................................................	3
	Balance Sheets..........................................................................................................	4
	GAAP Underwriting Results
	Consolidated..............................................................................................................	5-6
	Commercial Lines.....................................................................................................	7-8
	Personal Lines...........................................................................................................	9-10
	Investments
	Net Investment Income and Yields...........................................................................	11
	Investment Portfolio...................................................................................................	12
	Credit Quality and Duration of Fixed Maturities.....................................................	13
	Top 25 Corporate and Municipal Fixed Maturity Holdings....................................	14
	Reconciliation of Operating Income to Net Income................................................	15
	Other Information
	Non-GAAP Financial Measures...............................................................................	16
	Corporate Information...............................................................................................	17
	Market and Dividend Information.............................................................................	17
	Financial Strength and Debt Ratings.......................................................................	17

THE HANOVER INSURANCE GROUP

BASIS OF PRESENTATION

BUSINESS DESCRIPTIONS

COMMERCIAL LINES

Commercial multiple peril coverage insures businesses against third-party general liability from accidents occurring on their premises or arising out of their operations, such as injuries sustained from products sold. It also insures business property for damage, such as that caused by fire, wind, hail, water damage (which may include flood), theft and vandalism.

Commercial automobile coverage insures businesses against losses incurred from personal bodily injury, bodily injury to third parties, property damage to an insured’s vehicle, and property damage to other vehicles and property. Commercial automobile policies are often written in conjunction with other commercial policies.

Workers’ compensation coverage insures employers against employee medical and indemnity claims resulting from injuries related to work. Workers’ compensation policies are often written in conjunction with other commercial policies.

Other Commercial Lines is comprised of management and professional liability, which covers primarily professional, management and medical liability, which provides protection for directors, officers and other employees of companies that may be sued in connection with their performance, and errors and omissions protection to companies and individuals against the negligence or bad faith, as well as protection for employment practices liability; marine, which includes inland and ocean marine, and insures businesses against physical losses to property; Hanover Programs, which includes coverage to markets where there are specialty coverage or risk management needs related to groups of similar businesses; specialty industrial and commercial property, which provides insurance to small and medium-sized chemical, paint, solvent and other manufacturing and distribution companies; monoline general liability, which covers bodily injury, property damage and personal injury arising from products sold or accidents occurring on premises, or from operations; surety, which provides businesses with contract surety coverage in the event of claims for non-performance or non-payment and commercial surety coverage related to fiduciary or regulatory obligations; and other commercial lines, which includes umbrella, fidelity and crime.

PERSONAL LINES

Personal automobile coverage insures individuals against losses incurred from personal bodily injury, bodily injury to third parties, property damage to an insured's vehicle, and property damage to other vehicles and other property.

Homeowners coverage insures individuals for losses to their residences and personal property, such as those caused by fire, wind, hail, water damage (excluding flood), theft and vandalism, and against third-party liability claims.

Other Personal Lines are comprised of personal umbrella, inland marine (jewelry, art, etc.), fire, personal watercraft and other miscellaneous coverages.

OTHER

Included in Other are Opus, which provides investment advisory services to affiliates and also manages assets for unaffiliated institutions such as insurance companies, retirement plans and foundations; earnings on holding company assets; holding company and other expenses and a discontinued run-off voluntary property and casualty pools business.

THE HANOVER INSURANCE GROUP
FINANCIAL HIGHLIGHTS


		Q1				Q2				Q3				Q4				Q1
(In millions, except earnings per share)		2020 (1)				2020				2020				2020				2021
PREMIUMS
Gross premiums written	$		1,288.9		$		1,224.0		$		1,406.1		$		1,235.5		$		1,337.6

Net premiums written			1,136.9				1,081.0				1,268.5				1,112.1				1,196.1

Net premiums earned			1,141.4				1,096.6				1,135.4				1,154.0				1,161.8

EARNINGS
Operating income before interest and taxes	$		117.1		$		88.9		$		128.4		$		150.3		$		85.1
Operating income after taxes			86.8				62.7				93.5				112.0				61.4

Income (loss) from continuing operations			(38.7	)			115.3				119.5				165.9				92.8

Net income (loss)			(40.0	)			115.2				118.9				164.6				92.7

PER SHARE DATA (DILUTED)

Operating income after taxes	$		2.23		$		1.63		$		2.46		$		3.02		$		1.66

Income (loss) from continuing operations			(1.01	)			3.01				3.14				4.47				2.52

Net income (loss)			(1.04	)			3.01				3.13				4.43				2.51

Dilutive weighted average shares outstanding			38.9				38.3				38.0				37.1				36.9

Basic weighted average shares outstanding			38.3				38.0				37.7				36.7				36.4



BALANCE SHEET
		March 31				June 30				September 30				December 31				March 31
(In millions, except per share data)		2020				2020				2020				2020				2021

Total assets	$		12,277.4		$		12,838.6		$		13,393.8		$		13,443.7		$		13,448.0
Total loss and loss adjustment expense reserves			5,724.9				5,837.3				5,945.7				6,024.0				6,223.7
Total shareholders' equity			2,736.6				3,071.7				3,155.0				3,202.2				3,046.8
Total shareholders' equity, excluding net unrealized appreciation
(depreciation) on fixed maturity investments, net of tax			2,603.8				2,687.2				2,742.7				2,774.1				2,804.2

Property and Casualty Companies
Statutory surplus	$		2,420.2		$		2,313.4		$		2,422.3		$		2,588.5		$		2,667.7
Premium to surplus ratio		1.91:1				1.98:1				1.90:1				1.78:1				1.75:1

Book value per share	$		72.05		$		81.10		$		84.32		$		87.96		$		84.21
Book value per share, excluding net unrealized appreciation
(depreciation) on fixed maturity investments, net of tax	$		68.55		$		70.95		$		73.30		$		76.20		$		77.50
Tangible book value per share (total book value excluding goodwill
and intangibles)	$		66.81		$		75.86		$		79.03		$		82.55		$		78.78

Shares outstanding			38.0				37.9				37.4				36.4				36.2

Total debt/equity			25.9	%			21.3	%			24.7	%			24.4	%			25.6	%
Total debt/total capital			20.5	%			17.5	%			19.8	%			19.6	%			20.4	%



(1) Operating income per share metrics are calculated using diluted shares outstanding. Income (loss) from continuing operations and net income (loss) per share metrics are calculated using basic shares outstanding due to antidilution.

THE HANOVER INSURANCE GROUP
CONSOLIDATED INCOME STATEMENTS



	Three Months ended March 31
(In millions)		2021				2020			% Change

REVENUES
Premiums earned	$		1,161.8		$		1,141.4			1.8
Net investment income			76.8				69.6			10.3
Net realized and unrealized investment gains (losses):
Net realized gains (losses) from sales and other			(1.6	)			3.1			(151.6	)
Net change in fair value of equity securities			39.1				(136.2	)		(128.7	)
Impairment losses on investments			-				(28.5	)		(100.0	)
Total net realized and unrealized investment gains (losses)			37.5				(161.6	)		(123.2	)
Fees and other income			7.2				6.8			5.9
Total revenues			1,283.3				1,056.2			21.5

LOSSES AND EXPENSES
Losses and loss adjustment expenses			781.3				728.2			7.3
Amortization of deferred acquisition costs			240.3				236.9			1.4
Interest expense			8.5				9.4			(9.6	)
Other operating expenses			139.1				135.6			2.6
Total losses and expenses			1,169.2				1,110.1			5.3

Income (loss) from continuing operations before income taxes			114.1				(53.9	)	N/M
Income tax expense (benefit)			21.3				(15.2	)	N/M
		\
Income (loss) from continuing operations			92.8				(38.7	)	N/M

Discontinued operations (net of taxes):
									-
Loss from discontinued life businesses			(0.1	)			(1.3	)		(92.3	)

Net income (loss)	$		92.7		$		(40.0	)	N/M

THE HANOVER INSURANCE GROUP
CONSOLIDATED BALANCE SHEETS



		March 31				December 31
(In millions, except per share data)		2021				2020			% Change
ASSETS
Investments:
Fixed maturities, at fair value (amortized cost of $7,089.1 and $6,945.6)	$		7,370.3		$		7,454.4			(1.1	)
Equity securities, at fair value			641.0				598.5			7.1
Other investments			793.2				793.2		-
Total investments			8,804.5				8,846.1			(0.5	)
Cash and cash equivalents			112.1				120.6			(7.0	)
Accrued investment income			48.0				51.2			(6.3	)
Premiums and accounts receivable, net			1,369.6				1,339.3			2.3
Reinsurance recoverable on paid and unpaid losses and unearned premiums			1,882.9				1,874.3			0.5
Deferred acquisition costs			491.0				477.5			2.8
Goodwill			178.8				178.8		-
Other assets			461.5				445.7			3.5
Assets of discontinued businesses			99.6				110.2			(9.6	)
Total assets	$		13,448.0		$		13,443.7			-

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES
Loss and loss adjustment expense reserves	$		6,223.7		$		6,024.0			3.3
Unearned premiums			2,553.1				2,482.7			2.8
Expenses and taxes payable			601.8				687.5			(12.5	)
Deferred income tax liability			64.0				97.3			(34.2	)
Reinsurance premiums payable			57.3				48.4			18.4
Debt			781.0				780.8			-
Liabilities of discontinued businesses			120.3				120.8			(0.4	)
Total liabilities			10,401.2				10,241.5			1.6

SHAREHOLDERS' EQUITY
Preferred stock, par value $0.01 per share;
20.0 million shares authorized; none issued			-				-		-
Common stock, par value $0.01 per share; 300.0 million shares
authorized; 60.5 million shares issued			0.6				0.6		-
Additional paid-in capital			1,864.0				1,857.4			0.4
Accumulated other comprehensive income			187.7				372.5			(49.6	)
Retained earnings			2,734.9				2,668.0			2.5
Treasury stock at cost (24.3 million and 24.1 million shares)			(1,740.4	)			(1,696.3	)		2.6
Total shareholders' equity			3,046.8				3,202.2			(4.9	)
Total liabilities and shareholders' equity	$		13,448.0		$		13,443.7			-

THE HANOVER INSURANCE GROUP
GAAP UNDERWRITING AND OPERATING INCOME INFORMATION AND RATIOS

CONSOLIDATED

Three Months ended March 31



		2021																2020


		Commercial				Personal												Commercial				Personal
(In millions, except percentage data)		Lines				Lines				Other				Total				Lines				Lines				Other				Total


Gross premiums written	$		884.0		$		453.6		$		-		$		1,337.6		$		830.5		$		458.4		$		-		$		1,288.9

Net premiums written	$		757.4		$		438.7		$		-		$		1,196.1		$		707.6		$		429.3		$		-		$		1,136.9

Net premiums earned	$		692.9		$		468.9		$		-		$		1,161.8		$		675.9		$		465.5		$		-		$		1,141.4

Losses and LAE:

Current accident year, excluding catastrophe losses			388.9				267.3				-				656.2				413.7				278.6				-				692.3

Prior accident year unfavorable (favorable) reserve development, excluding catastrophe losses			(3.3	)			(5.2	)			0.3				(8.2	)			(3.7	)			(1.6	)			3.3				(2.0	)

Current accident year catastrophe losses			118.8				14.5				-				133.3				27.1				10.8				-				37.9

Prior accident year unfavorable (favorable) catastrophe loss development			-				-				-				-				(3.3	)			3.3				-				-

Total losses and LAE			504.4				276.6				0.3				781.3				433.8				291.1				3.3				728.2

Amortization of deferred acquisition costs and other underwriting expenses			237.8				133.4				-				371.2				231.7				130.3				-				362.0
											-
GAAP underwriting profit (loss)			(49.3	)			58.9				(0.3	)			9.3				10.4				44.1				(3.3	)			51.2
											-
Net investment income			51.8				22.1				2.9				76.8				46.4				20.3				2.9				69.6

Other income			3.6				2.3				1.3				7.2				2.4				2.7				1.7				6.8

Other operating expenses			(3.9	)			(1.5	)			(2.8	)			(8.2	)			(4.6	)			(2.2	)			(3.7	)			(10.5	)

Operating income (loss) before income taxes	$		2.2		$		81.8		$		1.1		$		85.1		$		54.6		$		64.9		$		(2.4	)	$		117.1


Loss and LAE ratio:

Current accident year, excluding catastrophe losses			56.2	%			57.0	%		N/M					56.4	%			61.2	%			59.8	%		N/M					60.7	%

Prior accident year favorable reserve development, excluding catastrophe losses			(0.5	)%			(1.1	)%		N/M					(0.7	)%			(0.5	)%			(0.3	)%		N/M					(0.2	)%

Current accident year catastrophe losses			17.1	%			3.1	%		N/M					11.5	%			4.0	%			2.3	%		N/M					3.3	%

Prior accident year unfavorable (favorable) catastrophe loss development		-				-				N/M					-				(0.5	)%			0.7	%		N/M					-
Total loss and LAE ratio			72.8	%			59.0	%		N/M					67.2	%			64.2	%			62.5	%		N/M					63.8	%

Expense ratio			34.1	%			28.0	%		N/M					31.6	%			34.0	%			27.5	%		N/M					31.4	%

Combined ratio			106.9	%			87.0	%		N/M					98.8	%			98.2	%			90.0	%		N/M					95.2	%

THE HANOVER INSURANCE GROUP
GAAP UNDERWRITING INFORMATION AND RELATED RATIOS


CONSOLIDATED




		Q1				Q2				Q3				Q4				Q1
(In millions, except percentage data)		2020				2020				2020				2020				2021


Gross premiums written	$		1,288.9		$		1,224.0		$		1,406.1		$		1,235.5		$		1,337.6

Net premiums written	$		1,136.9		$		1,081.0		$		1,268.5		$		1,112.1		$		1,196.1

Net premiums earned	$		1,141.4		$		1,096.6		$		1,135.4		$		1,154.0		$		1,161.8

Losses and LAE:

Current accident year, excluding catastrophe losses			692.3				569.1				645.7				666.2				656.2

Prior accident year favorable reserve development, excluding catastrophe losses			(2.0	)			(4.9	)			(2.6	)			(6.0	)			(8.2	)

Current accident year catastrophe losses			37.9				154.8				75.5				35.6				133.3

Prior accident year favorable catastrophe loss development			-				(7.0	)			(9.6	)			(0.5	)			-

Total losses and LAE			728.2				712.0				709.0				695.3				781.3

Amortization of deferred acquisition costs and other underwriting expenses			362.0				346.3				365.0				374.7				371.2

GAAP underwriting profit	$		51.2		$		38.3		$		61.4		$		84.0		$		9.3

Loss and LAE ratio:

Current accident year, excluding catastrophe losses			60.7	%			51.8	%			56.8	%			57.8	%			56.4	%

Prior accident year favorable reserve development, excluding catastrophe losses			(0.2	)%			(0.4	)%			(0.2	)%			(0.5	)%			(0.7	)%

Current accident year catastrophe losses			3.3	%			14.1	%			6.6	%			3.0	%			11.5	%

Prior accident year favorable catastrophe loss development			-				(0.6	)%			(0.8	)%			-				-

Total loss and LAE ratio			63.8	%			64.9	%			62.4	%			60.3	%			67.2	%

Expense ratio			31.4	%			31.3	%			31.8	%			32.1	%			31.6	%

Combined ratio			95.2	%			96.2	%			94.2	%			92.4	%			98.8	%


Combined ratio, excluding catastrophe losses			91.9	%			82.7	%			88.4	%			89.4	%			87.3	%

Current accident year combined ratio, excluding catastrophe losses			92.1	%			83.1	%			88.6	%			89.9	%			88.0	%

THE HANOVER INSURANCE GROUP
GAAP UNDERWRITING AND OPERATING INCOME INFORMATION AND RATIOS

COMMERCIAL LINES

Three Months ended March 31



	2021																				2020


		Multiple								Workers'												Multiple								Workers'
(In millions, except percentage data)		Peril				Auto				Comp				Other				Total				Peril				Auto				Comp				Other				Total

Net premiums written	$		242.5		$		92.2		$		97.2		$		325.5		$		757.4		$		234.9		$		89.9		$		96.9		$		285.9		$		707.6

Net premiums earned	$		231.4		$		85.3		$		79.4		$		296.8		$		692.9		$		227.3		$		85.3		$		82.8		$		280.5		$		675.9

Losses and LAE:

Current accident year, excluding catastrophe losses			133.2				50.9				47.9				156.9				388.9				149.5				56.7				52.5				155.0				413.7

Prior accident year unfavorable (favorable) reserve development, excluding catastrophe losses			(0.8	)			(0.2	)			(3.0	)			0.7				(3.3	)			4.2				4.5				(7.2	)			(5.2	)			(3.7	)

Current accident year catastrophe losses			91.0				0.5				-				27.3				118.8				17.6				0.1				-				9.4				27.1

Prior accident year unfavorable (favorable) catastrophe loss development			0.6				(0.6	)			-				-				-				(3.0	)			0.1				-				(0.4	)			(3.3	)

Total losses and LAE			224.0				50.6				44.9				184.9				504.4				168.3				61.4				45.3				158.8				433.8

Amortization of deferred acquisition costs and other underwriting expenses																			237.8																				231.7

GAAP underwriting profit (loss)																			(49.3	)																			10.4

Net investment income																			51.8																				46.4

Other income																			3.6																				2.4

Other operating expenses																			(3.9	)																			(4.6	)

Operating income before income taxes																	$		2.2																		$		54.6
																														.

Loss and LAE ratio:

Current accident year, excluding catastrophe losses			57.5	%			59.6	%			60.3	%			52.9	%			56.2	%			65.8	%			66.5	%			63.4	%			55.3	%			61.2	%

Prior accident year unfavorable (favorable) reserve development, excluding catastrophe losses			(0.3	)%			(0.2	)%			(3.8	)%			0.2	%			(0.5	)%			1.8	%			5.3	%			(8.7	)%			(1.9	)%			(0.5	)%

Current accident year catastrophe losses			39.3	%			0.6	%			-				9.2	%			17.1	%			7.7	%			0.1	%			-				3.3	%			4.0	%

Prior accident year unfavorable (favorable) catastrophe loss development			0.3	%			(0.7	)%			-				-				-				(1.3	)%			0.1	%			-				(0.1	)%			(0.5	)%
Total loss and LAE ratio			96.8	%			59.3	%			56.5	%			62.3	%			72.8	%			74.0	%			72.0	%			54.7	%			56.6	%			64.2	%

Expense ratio																			34.1	%																			34.0	%

Combined ratio																			106.9	%																			98.2	%



Change in policies in force			2.1	%			(7.2	)%			7.4	%			0.4	%			1.5	%			1.3	%			(11.7	)%			10.0	%			2.1	%			1.6	%

Retention			88.3	%			84.6	%			86.7	%		N/M					87.3	%			88.1	%			79.8	%			81.7	%		N/M					85.3	%

THE HANOVER INSURANCE GROUP
GAAP UNDERWRITING INFORMATION AND RELATED RATIOS


COMMERCIAL LINES




		Q1				Q2				Q3				Q4				Q1
(In millions, except percentage data)		2020				2020				2020				2020				2021


Gross premiums written	$		830.5		$		726.4		$		884.7		$		759.4		$		884.0

Net premiums written	$		707.6		$		614.9		$		760.5		$		650.1		$		757.4

Net premiums earned	$		675.9		$		658.6		$		665.1		$		683.7		$		692.9

Losses and LAE:

Current accident year, excluding catastrophe losses			413.7				349.8				385.1				385.5				388.9

Prior accident year favorable reserve development, excluding catastrophe losses			(3.7	)			(5.1	)			(3.9	)			(6.3	)			(3.3	)

Current accident year catastrophe losses			27.1				70.8				42.5				10.6				118.8

Prior accident year favorable catastrophe loss development			(3.3	)			(6.0	)			(8.9	)			(0.6	)			-

Total losses and LAE			433.8				409.5				414.8				389.2				504.4

Amortization of deferred acquisition costs and other underwriting expenses			231.7				227.8				231.6				238.6				237.8
			-
GAAP underwriting profit (loss)	$		10.4		$		21.3		$		18.7		$		55.9		$		(49.3	)



Loss and LAE ratio:

Current accident year, excluding catastrophe losses			61.2	%			53.2	%			57.9	%			56.3	%			56.2	%

Prior accident year favorable reserve development, excluding catastrophe losses			(0.5	)%			(0.8	)%			(0.6	)%			(0.9	)%			(0.5	)%

Current accident year catastrophe losses			4.0	%			10.7	%			6.4	%			1.6	%			17.1	%

Prior accident year favorable catastrophe loss development			(0.5	)%			(0.9	)%			(1.3	)%			(0.1	)%			-

Total loss and LAE ratio			64.2	%			62.2	%			62.4	%			56.9	%			72.8	%

Expense ratio			34.0	%			34.4	%			34.5	%			34.6	%			34.1	%

Combined ratio			98.2	%			96.6	%			96.9	%			91.5	%			106.9	%



Combined ratio, excluding catastrophe losses			94.7	%			86.8	%			91.8	%			90.0	%			89.8	%

Current accident year combined ratio, excluding catastrophe losses			95.2	%			87.6	%			92.4	%			90.9	%			90.3	%

THE HANOVER INSURANCE GROUP
GAAP UNDERWRITING AND OPERATING INCOME INFORMATION AND RATIOS

PERSONAL LINES

Three Months ended March 31



	2021																2020

(In millions, except percentage data)		Auto				Home				Other				Total				Auto				Home				Other				Total

Net premiums written	$		280.7		$		143.1		$		14.9		$		438.7		$		279.4		$		137.6		$		12.3		$		429.3

Net premiums earned	$		291.1		$		162.5		$		15.3		$		468.9		$		293.3		$		159.2		$		13.0		$		465.5

Losses and LAE:

Current accident year, excluding catastrophe losses			174.7				86.8				5.8				267.3				196.6				77.1				4.9				278.6

Prior accident year unfavorable (favorable) reserve development, excluding catastrophe losses			(5.3	)			-				0.1				(5.2	)			2.9				(3.0	)			(1.5	)			(1.6	)

Current accident year catastrophe losses			0.6				13.9				-				14.5				0.8				9.8				0.2				10.8

Prior accident year unfavorable catastrophe loss development			-				-				-				-				0.9				2.4				-				3.3

Total losses and LAE			170.0				100.7				5.9				276.6				201.2				86.3				3.6				291.1

Amortization of deferred acquisition costs and other underwriting expenses															133.4																130.3

GAAP underwriting profit															58.9																44.1

Net investment income															22.1																20.3

Other income															2.3																2.7

Other operating expenses															(1.5	)															(2.2	)

Operating income before income taxes													$		81.8														$		64.9


Loss and LAE ratio:

Current accident year, excluding catastrophe losses			60.0	%			53.4	%			37.9	%			57.0	%			67.0	%			48.4	%			37.7	%			59.8	%

Prior accident year unfavorable (favorable) reserve development, excluding catastrophe losses			(1.8	)%			-				0.7	%			(1.1	)%			1.0	%			(1.9	)%			(11.5	)%			(0.3	)%

Current accident year catastrophe losses			0.2	%			8.6	%			-				3.1	%			0.3	%			6.2	%			1.5	%			2.3	%

Prior accident year unfavorable catastrophe loss development			-				-				-				-				0.3	%			1.5	%			-				0.7	%
Total loss and LAE ratio			58.4	%			62.0	%			38.6	%			59.0	%			68.6	%			54.2	%			27.7	%			62.5	%

Expense ratio															28.0	%															27.5	%

Combined ratio															87.0	%															90.0	%


Change in policies in force			(2.7	)%			(0.9	)%			37.4	%			0.5	%			0.7	%			1.6	%			58.9	%			3.3	%
										.
Retention			81.7	%			80.3	%		N/M					81.4	%			82.0	%			80.5	%		N/M					81.6	%

THE HANOVER INSURANCE GROUP
GAAP UNDERWRITING INFORMATION AND RELATED RATIOS


PERSONAL LINES




		Q1				Q2				Q3				Q4				Q1
(In millions, except percentage data)		2020				2020				2020				2020				2021

Gross premiums written	$		458.4		$		497.6		$		521.4		$		476.1		$		453.6

Net premiums written	$		429.3		$		466.1		$		508.0		$		462.0		$		438.7

Net premiums earned	$		465.5		$		438.0		$		470.3		$		470.3		$		468.9

Losses and LAE:

Current accident year, excluding catastrophe losses			278.6				219.2				260.6				280.7				267.3

Prior accident year unfavorable (favorable) reserve development, excluding catastrophe losses			(1.6	)			(0.1	)			1.0				-				(5.2	)

Current accident year catastrophe losses			10.8				84.0				33.0				25.0				14.5

Prior accident year unfavorable (favorable) catastrophe loss development			3.3				(1.0	)			(0.7	)			0.1				-

Total losses and LAE			291.1				302.1				293.9				305.8				276.6

Amortization of deferred acquisition costs and other underwriting expenses			130.3				118.5				133.4				136.1				133.4

GAAP underwriting profit	$		44.1		$		17.4		$		43.0		$		28.4		$		58.9



Loss and LAE ratio:

Current accident year, excluding catastrophe losses			59.8	%			50.1	%			55.4	%			59.7	%			57.0	%

Prior accident year unfavorable (favorable) reserve development, excluding catastrophe losses			(0.3	)%			-				0.2	%			-				(1.1	)%

Current accident year catastrophe losses			2.3	%			19.1	%			7.0	%			5.3	%			3.1	%

Prior accident year unfavorable (favorable) catastrophe loss development			0.7	%			(0.2	)%			(0.1	)%			-				-

Total loss and LAE ratio			62.5	%			69.0	%			62.5	%			65.0	%			59.0	%

Expense ratio			27.5	%			26.7	%			27.9	%			28.4	%			28.0	%

Combined ratio			90.0	%			95.7	%			90.4	%			93.4	%			87.0	%



Combined ratio, excluding catastrophe losses			87.0	%			76.8	%			83.5	%			88.1	%			83.9	%

Current accident year combined ratio, excluding catastrophe losses			87.3	%			76.8	%			83.3	%			88.1	%			85.0	%

THE HANOVER INSURANCE GROUP
NET INVESTMENT INCOME AND YIELDS


	Q1			Q2			Q3			Q4			Q1
(In millions, except yields)	2020			2020			2020			2020			2021

Net Investment Income

Fixed maturities	$	56.2		$	56.2		$	55.3		$	54.8		$	54.5
Limited partnerships		6.6			(4.6	)		6.0			8.7			15.1
Mortgage loans		4.3			4.3			4.5			4.4			5.4
Equity securities		3.8			3.6			3.4			4.0			3.8
Other investments		0.9			0.8			0.7			0.8			0.7
Investment expenses		(2.2	)		(2.6	)		(2.3	)		(2.5	)		(2.7	)
Total	$	69.6		$	57.7		$	67.6		$	70.2		$	76.8

Pre-tax Yields
Fixed maturities		3.45	%		3.45	%		3.26	%		3.15	%		3.11	%
Total		3.60	%		2.99	%		3.37	%		3.45	%		3.74	%


Pre-tax yields represent annualized net investment income for the period divided by the monthly average invested assets at amortized cost, which excludes accumulated changes in fair value for fixed maturities and equity securities.

	THE HANOVER INSURANCE GROUP
	INVESTMENT PORTFOLIO
	March 31, 2021
(In millions)
													Change in
		Weighted	Amortized							Net			Net
		Average	Cost		Fair Value /		% of			Unrealized			Unrealized
Investment Type		Quality	or Cost (1)		Carry Value		Total			Gain / (Loss)			YTD

Fixed maturities
U.S. Treasury and government agencies		AAA	$	360.7	$	359.7		4.0	%	$	(1.0	)	$	(16.6	)
Foreign government		A-		2.2		2.6		-			0.4			(0.1	)
Municipals:
	Taxable	AA		1,015.0		1,040.9		11.7	%		25.9			(34.0	)
	Tax-exempt	AA		31.3		32.2		0.4	%		0.9			(0.8	)
Corporate:
	NAIC 1	A		1,404.5		1,491.1		16.7	%		86.6			(52.0	)
	NAIC 2	BBB		2,208.8		2,314.7		26.0	%		105.9			(75.4	)
	NAIC 3 and below	BB-		295.3		309.4		3.5	%		14.1			(7.4	)
Total corporate		BBB+		3,908.6		4,115.2		46.2	%		206.6			(134.8	)
Asset-backed:
	Residential mortgage-backed	AAA		981.5		994.2		11.1	%		12.7			(19.8	)
	Commercial mortgage-backed	AAA		722.8		756.5		8.5	%		33.7			(20.9	)
	Asset-backed	AA-		67.0		69.0		0.8	%		2.0			(0.6	)
Total fixed maturities		A+		7,089.1		7,370.3		82.7	%		281.2			(227.6	)
Equity securities				641.0		641.0		7.2	%		-			-
Mortgage and other loans				442.1		442.1		4.9	%		-			-
Other investments				351.1		351.1		3.9	%		-			-
Total investments				8,523.3		8,804.5		98.7	%		281.2			(227.6	)
Cash and cash equivalents				112.1		112.1		1.3	%		-			-
Total			$	8,635.4	$	8,916.6		100.0	%	$	281.2		$	(227.6	)

(1) Net of allowance for credit losses of $7.9 million.

THE HANOVER INSURANCE GROUP
CREDIT QUALITY AND DURATION OF FIXED MATURITIES
March 31, 2021

(In millions)

CREDIT QUALITY OF FIXED MATURITIES
		Rating Agency		Amortized			Fair		% of Total
NAIC Designation		Equivalent Designation		Cost			Value		Fair Value
1		Aaa/Aa/A	$		4,549.7	$		4,709.3		63.9	%
2		Baa			2,244.1			2,351.6		31.9	%
3		Ba			177.4			185.1		2.5	%
4		B			111.5			117.1		1.6	%
5		Caa and lower			6.4			7.1		0.1	%
6		In or near default			-			0.1		-
Total fixed maturities			$		7,089.1	$		7,370.3		100.0	%


DURATION OF FIXED MATURITIES

				Amortized			Fair		% of Total
				Cost			Value		Fair Value
	0-2 Years		$		1,167.0	$		1,202.8		16.3	%
	2-4 Years				1,650.7			1,766.9		24.0	%
	4-6 Years				1,742.6			1,859.0		25.2	%
	6-8 Years				1,200.8			1,249.9		17.0	%
	8-10 Years				1,024.6			991.2		13.4	%
	10+ Years				303.4			300.5		4.1	%
Total fixed maturities			$		7,089.1	$		7,370.3		100.0	%
Weighted Average Duration					5.0

THE HANOVER INSURANCE GROUP
TOP 25 CORPORATE AND MUNICIPAL FIXED MATURITY HOLDINGS
March 31, 2021


(In millions, except percentage data)
Issuer	Amortized Cost		Fair Value		As a Percent of Invested Assets	Ratings (1)
Morgan Stanley	$	36.0	$	38.3	0.43%	BBB+
Minnesota Housing Finance Agency		35.3		35.2	0.39%	AAA
State of Ohio		34.2		32.9	0.37%	AA+
Truist Financial		32.6		34.8	0.39%	A-
JP Morgan Chase		29.2		30.3	0.34%	A-
AbbVie		28.9		30.6	0.34%	BBB+
Bank of America		26.3		28.7	0.32%	A-
Massachusetts School Building Authority		26.3		25.7	0.29%	AA+
State of Oregon		25.8		25.4	0.28%	AA+
Westpac Banking		25.6		27.0	0.30%	A
Goldman Sachs		25.4		27.2	0.30%	BBB
PNC Bank		24.7		26.5	0.30%	A
US Bancorp		24.7		26.6	0.30%	A
National Grid		24.2		25.2	0.28%	BBB+
Dominion Energy		24.1		25.5	0.29%	BBB+
Raytheon Technologies		23.3		24.1	0.27%	A-
Kroger		23.1		24.2	0.27%	BBB
District of Columbia		23.0		21.6	0.24%	AAA
Sumitomo Mitsui Financial		23.0		23.8	0.27%	A-
Lowe's		22.8		23.9	0.27%	BBB+
Verizon		22.5		24.2	0.27%	BBB+
UBS Group		22.1		22.8	0.26%	A-
AvalonBay Communities		22.0		23.4	0.26%	A-
Toyota		21.9		22.8	0.26%	A+
MassMutual Global Funding II		21.9		23.7	0.27%	AA+
Top 25 Corporate and Municipal	$	648.9	$	674.4	7.56%

(1) - Represents nationally recognized rating agency sources.


THE HANOVER INSURANCE GROUP
RECONCILIATION OF OPERATING INCOME TO NET INCOME(LOSS)




	Three Months ended March 31
	2021							2020
(In millions, except per share data)		$			Per Share (Diluted)				$			Per Share (1)
OPERATING INCOME (LOSS)
Commercial Lines	$		2.2					$		54.6
Personal Lines			81.8							64.9
Other			1.1							(2.4	)
Total			85.1							117.1

Interest expense			(8.5	)						(9.4	)

Operating income before income taxes			76.6		$	2.07				107.7		$	2.77

Income tax expense on operating income			(15.2	)		(0.41	)			(20.9	)		(0.54	)

Operating income after income taxes			61.4			1.66				86.8			2.23

Per share adjustment			-			-				-			0.04
Non-operating items:
Net realized gains (losses) from sales and other			(1.6	)		(0.04	)			3.1			0.08
Net change in fair value of equity securities			39.1			1.06				(136.2	)		(3.56	)
Impairment losses on investments			-			-				(28.5	)		(0.74	)
Income tax benefit (expense) on non-operating items			(6.1	)		(0.16	)			36.1			0.94
Income (loss) from continuing operations, net of taxes			92.8			2.52				(38.7	)		(1.01	)

Discontinued operations (net of taxes):

Loss from discontinued life businesses			(0.1	)		(0.01	)			(1.3	)		(0.03	)

NET INCOME (LOSS)	$		92.7		$	2.51		$		(40.0	)	$	(1.04	)




(1) Operating income per share metrics are calculated using diluted shares outstanding. Income (loss) from continuing operations and net income (loss) per share metrics are calculated using basic shares outstanding due to antidilution.

Non-GAAP Financial Measures

The Hanover uses non-GAAP financial measures as important measures of the Company’s operating performance, which we believe provide investors with additional information regarding management’s evaluation of our results of operations and financial performance. The Company's non-GAAP measures include operating income before interest expense and taxes, total operating income after taxes, total operating income after taxes per share, total book value per share, total book value per share excluding net unrealized gains and losses related to investments, net of tax, tangible book value per share and measures of operating income and loss and combined ratios excluding catastrophe losses (catastrophe losses as discussed here and in all other measures include catastrophe loss development) and reserve development.

Operating income before interest expense and taxes is net income (loss), excluding interest expense on debt, income taxes and net realized and unrealized investment gains and losses, which includes changes in the fair value of equity securities still held because fluctuations in these gains and losses are determined by interest rates, financial markets and the timing of sales. Operating income before interest expense and taxes also excludes net gains and losses on disposals of businesses, discontinued operations, restructuring costs, the cumulative effect of accounting changes and certain other items. Operating income before interest expense and taxes is the sum of the operating income (loss) from: Commercial Lines, Personal Lines, and Other. After-tax operating income EPS (sometimes referred to as “after-tax operating income per share”) is also a non-GAAP measure. It is defined as net income (loss) excluding the after-tax impact of net realized and unrealized investment gains (losses), as well as results from discontinued operations and other non-operating items for a period divided by the average number of diluted shares of common stock. The Hanover believes that measures of operating income before interest expense and taxes provide investors with a valuable measure of the performance of the Company’s ongoing businesses because they highlight net income (loss) attributable to the core operations of the business.

Book value per share is total shareholders’ equity divided by the number of common shares outstanding. Book value per share excluding net unrealized gains and losses related to fixed maturity investments, net of tax, is total shareholders’ equity excluding the after-tax effect of unrealized investment gains and losses on fixed maturities divided by the number of common shares outstanding. Tangible book value per share is total shareholders' equity, excluding goodwill and intangible assets, divided by the number of common shares outstanding.

The Hanover also provides measures of operating income and loss ratios that exclude the effects of catastrophe losses. A catastrophe is a severe loss, resulting from natural or manmade events, including, among others, hurricanes, tornadoes and other windstorms, earthquakes, hail, severe winter weather, fire, explosions and terrorism. Each catastrophe has unique characteristics. Catastrophes are not predictable as to timing or loss amount in advance. The Hanover believes that providing certain financial metrics and trends excluding the effects of catastrophes is meaningful for investors to understand the variability of periodic earnings and loss ratios.

Prior year reserve development, which can be favorable or unfavorable, represents changes in our estimate of the costs to pay claims from prior years. We believe that a discussion of operating income excluding prior year reserve development is helpful to investors since it provides insight into both our estimate of current year accident results and changes to prior-year reserve estimates.

Operating income before and after interest expense and taxes and measures of operating income that exclude the effects of catastrophe losses or reserve development should not be construed as substitutes for net income (loss) determined in accordance with GAAP. A reconciliation of income (loss) from continuing operations to operating income before interest expense and taxes and income (loss) from continuing operations per share to operating income after taxes per share for the three months ended March 31, 2021 and 2020 is set forth on page 15 of this document. The presentation of loss ratios calculated excluding the effects of reserve development and/or catastrophe losses should not be construed as a substitute for loss ratios determined in accordance with GAAP.

Additional reconciliations are provided in the press release relating to the current period(s) financial results, which is available on the Company's website, www.hanover.com

CORPORATE OFFICES AND

INDUSTRY RATINGS AS OF April 29, 2021

TRANSFER AGENT

PRINCIPAL SUBSIDIARIES

THE HANOVER INSURANCE GROUP, INC.

A.M.

Standard

Computershare Investor Services

440 Lincoln Street

Financial Strength Ratings

Best

& Poor's

Moody's

PO Box 505000

Worcester, MA 01653

The Hanover Insurance

Louisville, KY 40233-5000

Company

1-800-317-4454

The Hanover Insurance Company

Citizens Insurance Company

440 Lincoln Street

of America

Worcester, MA 01653

COMMON STOCK

Citizens Insurance Company of America

A.M.

Standard

808 North Highlander Way

Debt Ratings

Best

& Poor's

Moody's

Common stock of The Hanover Insurance Group, Inc. is traded

Howell, MI 48843

The Hanover Insurance Group, Inc.

on the New York Stock Exchange under the symbol "THG".

Senior Debt

bbb+

BBB

Baa2

Subordinated Debentures

bbb-

BB+

Baa3

MARKET AND DIVIDEND INFORMATION

INQUIRIES

The following tables set forth the high and low closing sales prices of our common stock and quarterly cash dividends for the periods indicated:

The above ratings are accurate as of April 29, 2021, and may be revised, superseded or withdrawn by the respective rating agency at any time. For the most current information concerning the financial ratings of The Hanover Insurance Group and its subsidiaries, please visit the websites of the respective rating agencies.

Oksana Lukasheva

Vice President

Investor Relations and Financial Planning and Analysis

olukasheva@hanover.com

Quarter Ended

2021

Price Range

Dividends

High

Low

Per Share

March 31

133.12

112.47

0.700

Quarter Ended

2020

Price Range

Dividends

High

Low

Per Share

March 31

140.54

83.67

0.650

June 30

115.06

84.64

0.650

September 30

107.36

89.10

0.650

December 31

118.34

93.58

0.700

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HANOVER INSURANCE GROUP, INC. Reports