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 March 31, 2025


☐	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)

Delaware

04-3263626

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

440 Lincoln Street, Worcester, Massachusetts 01653

(Address of principal executive offices) (Zip Code)

(508) 855-1000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbols	Name of each exchange on which registered
Common Stock, $.01 par value	THG	New York Stock Exchange
7 5/8% Senior Debentures due 2025	THG	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s common stock was 35,916,283 as of April 29, 2025.

Table of Contents

TABLE OF CONTENTS


PART I.	FINANCIAL INFORMATION	2

Item 1.	Financial Statements	2
	Consolidated Statements of Income	2
	Consolidated Statements of Comprehensive Income	3
	Consolidated Balance Sheets	4
	Consolidated Statements of Shareholders’ Equity	5
	Consolidated Statements of Cash Flows	6
	Notes to Interim Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37

Item 4.	Controls and Procedures	37

PART II.	OTHER INFORMATION	38

Item 1.	Legal Proceedings	38

Item 1A.	Risk Factors	39

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41

Item 5.	Other Information	41

Item 6.	Exhibits	42

SIGNATURES		43

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

THE HANOVER INSURANCE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)


	Three Months Ended
	March 31,
(In millions, except per share data)	2025			2024
Revenues
Premiums	$	1,508.5		$	1,448.6
Net investment income		106.1			89.7
Net realized and unrealized investment gains (losses):
Net realized losses from sales and other		(18.8	)		(1.3	)
Net change in fair value of equity securities and other		1.0			6.5
Credit-related recoveries on investments		—			0.3
Total net realized and unrealized investment gains (losses)		(17.8	)		5.5
Fees and other income		6.4			7.3
Total revenues		1,603.2			1,551.1
Losses and expenses
Losses and loss adjustment expenses		955.3			935.2
Amortization of deferred acquisition costs		313.9			299.0
Interest expense		8.5			8.5
Other operating expenses		165.4			163.1
Total losses and expenses		1,443.1			1,405.8
Income before income taxes		160.1			145.3
Income tax expense:
Current		30.0			28.7
Deferred		1.9			1.1
Total income tax expense		31.9			29.8
Net income	$	128.2		$	115.5
Earnings per common share:
Basic:
Net income per share	$	3.56		$	3.22
Weighted average shares outstanding		36.0			35.8
Diluted:
Net income per share	$	3.50		$	3.18
Weighted average shares outstanding		36.6			36.3

The accompanying notes are an integral part of these interim consolidated financial statements.

Table of Contents

THE HANOVER INSURANCE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)


	Three Months Ended
	March 31,
(In millions)	2025			2024
Net income	$	128.2		$	115.5
Other comprehensive income (loss), net of tax:
Available-for-sale securities:
Changes in net unrealized gains (losses) on investment securities:
Having no credit losses recognized in the Consolidated Statements of Income		111.3			(33.9	)
Having credit losses recognized in the Consolidated Statements of Income		(0.1	)		(0.2	)
Total available-for-sale securities		111.2			(34.1	)
Pension and postretirement benefits:
Net change in net actuarial loss		1.4			1.4
Long-duration insurance contracts:
Net change in market risk		(1.0	)		1.0
Total other comprehensive income (loss), net of tax		111.6			(31.7	)
Comprehensive income	$	239.8		$	83.8

The accompanying notes are an integral part of these interim consolidated financial statements.

Table of Contents

THE HANOVER INSURANCE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)


	March 31,			December 31,
(In millions, except share data)	2025			2024
Assets
Investments:
Fixed maturities, at fair value (amortized cost of $9,178.7 and $9,051.5)	$	8,808.3		$	8,542.2
Equity securities, at fair value		161.0			157.7
Other investments		720.2			709.9
Total investments		9,689.5			9,409.8
Cash and cash equivalents		315.1			435.5
Accrued investment income		66.0			69.8
Premiums and accounts receivable, net		1,809.0			1,800.8
Reinsurance recoverable on paid and unpaid losses and unearned premiums		2,034.2			1,994.5
Deferred acquisition costs		656.9			662.8
Deferred income tax asset		141.9			174.2
Goodwill		178.8			178.8
Other assets		493.2			462.6
Assets of discontinued businesses		85.7			85.7
Total assets	$	15,470.3		$	15,274.5
Liabilities
Loss and loss adjustment expense reserves	$	7,608.9		$	7,461.2
Unearned premiums		3,259.3			3,283.3
Expenses and taxes payable		618.6			757.8
Reinsurance premiums payable		45.8			37.7
Short-term debt		61.8			61.8
Long-term debt		722.5			722.3
Liabilities of discontinued businesses		109.0			108.6
Total liabilities		12,425.9			12,432.7
Commitments and contingencies
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		1,978.3			1,973.6
Accumulated other comprehensive loss		(344.7	)		(456.3	)
Retained earnings		3,306.8			3,209.6
Treasury stock at cost (24.5 million and 24.6 million shares)		(1,896.6	)		(1,885.7	)
Total shareholders’ equity		3,044.4			2,841.8
Total liabilities and shareholders’ equity	$	15,470.3		$	15,274.5

The accompanying notes are an integral part of these interim consolidated financial statements.

Table of Contents

THE HANOVER INSURANCE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)


	Three Months Ended
	March 31,
(In millions)	2025			2024
Preferred Stock
Balance at beginning and end of period	$	—		$	—
Common Stock
Balance at beginning and end of period		0.6			0.6
Additional Paid-in Capital
Balance at beginning of period		1,973.6			1,939.2
Employee and director stock-based awards and other		4.7			2.1
Balance at end of period		1,978.3			1,941.3
Accumulated Other Comprehensive Income (Loss), net of tax
Net Unrealized Appreciation (Depreciation) on Investments:
Balance at beginning of period		(403.5	)		(462.8	)
Net appreciation (depreciation) on available-for-sale securities		111.2			(34.1	)
Balance at end of period		(292.3	)		(496.9	)
Defined Benefit Pension and Postretirement Plans:
Balance at beginning of period		(55.2	)		(54.8	)
Net amount recognized as net periodic benefit cost		1.4			1.4
Balance at end of period		(53.8	)		(53.4	)
Long Duration Insurance Contracts:
Balance at beginning of period		2.4			0.4
Net change in market risk		(1.0	)		1.0
Balance at end of period		1.4			1.4
Total accumulated other comprehensive loss		(344.7	)		(548.9	)
Retained Earnings
Balance at beginning of period		3,209.6			2,909.4
Cumulative effect of accounting change, net of taxes		1.9			—
Balance at beginning of period, as adjusted		3,211.5			2,909.4
Net income		128.2			115.5
Dividends to shareholders		(32.9	)		(31.0	)
Balance at end of period		3,306.8			2,993.9
Treasury Stock
Balance at beginning of period		(1,885.7	)		(1,866.4	)
Shares purchased at cost		(11.0	)		—
Net shares reissued at cost under employee stock-based compensation plans		0.1			2.2
Balance at end of period		(1,896.6	)		(1,864.2	)
Total shareholders’ equity	$	3,044.4		$	2,522.7

The accompanying notes are an integral part of these interim consolidated financial statements.

Table of Contents

THE HANOVER INSURANCE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	Three Months Ended
	March 31,
(In millions)	2025			2024
Cash Flows From Operating Activities
Net income	$	128.2		$	115.5
Adjustments to reconcile net income to net cash provided by operating activities:
Net realized and unrealized investment (gains) losses		18.1			(5.5	)
Net amortization and depreciation		(1.1	)		0.8
Stock-based compensation expense		6.6			6.7
Amortization of defined benefit plan costs		1.6			1.7
Deferred income tax expense		1.9			1.1
Change in deferred acquisition costs		5.9			1.5
Change in premiums receivable, net of reinsurance premiums payable		(0.1	)		(36.6	)
Change in loss, loss adjustment expense and unearned premium reserves		122.9			24.9
Change in reinsurance recoverable		(39.7	)		56.3
Change in expenses and taxes payable		(167.3	)		(89.6	)
Other, net		(38.1	)		(18.1	)
Net cash provided by operating activities		38.9			58.7
Cash Flows From Investing Activities
Proceeds from disposals and maturities of fixed maturities		696.6			213.8
Proceeds from disposals of equity securities and other investments		20.5			17.9
Purchase of fixed maturities		(806.9	)		(289.5	)
Purchase of equity securities and other investments		(20.7	)		(14.4	)
Capital expenditures		(1.8	)		(2.6	)
Net cash used in investing activities		(112.3	)		(74.8	)
Cash Flows From Financing Activities
Proceeds from exercise of employee stock options		6.8			4.2
Dividends paid to shareholders		(32.4	)		(30.5	)
Repurchases of common stock		(11.0	)		—
Other financing activities		(10.9	)		(9.1	)
Net cash used in financing activities		(47.5	)		(35.4	)
Net change in cash and cash equivalents		(120.9	)		(51.5	)
Net change in cash related to discontinued operations		0.5		—
Cash and cash equivalents, beginning of period		435.5			316.1
Cash and cash equivalents, end of period	$	315.1		$	264.6

The accompanying notes are an integral part of these interim consolidated financial statements.

Table of Contents

THE HANOVER INSURANCE GROUP, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Basis of Presentation and Principles of Consolidation

The accompanying unaudited consolidated financial statements of The Hanover Insurance Group, Inc. and its subsidiaries (“THG” or the “Company”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the requirements of Form 10-Q. Certain financial information that is provided in annual financial statements, but is not required in interim reports, has been omitted.

The interim consolidated financial statements of THG include the accounts of The Hanover Insurance Company and Citizens Insurance Company of America, THG’s principal property and casualty companies, and other insurance and non-insurance subsidiaries. These legal entities conduct their operations through several reporting segments discussed in Note 8 – “Segment Information.” All intercompany accounts and transactions have been eliminated.

The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

In the opinion of the Company’s management, the accompanying interim consolidated financial statements reflect all adjustments, consisting of normal recurring items, necessary for a fair presentation of the financial position and results of operations. The results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the Company’s 2024 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 24, 2025.

2. New Accounting Pronouncements

Recently Implemented Standards

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) Update No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This Update requires entities to disclose significant segment expenses and other segment items on an annual and interim basis, and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Additionally, it requires entities to disclose the title and position of the Chief Operating Decision Maker (“CODM”), and an explanation of how the CODM uses the reported measures of segment profit or loss. The Update does not change how entities identify operating segments, aggregate them, or apply the quantitative thresholds to determine reportable segments. This Update was effective for annual reporting periods beginning after December 15, 2023, and interim reporting periods beginning after December 15, 2024. The Company implemented this guidance effective January 1, 2024, on a retrospective basis, and it did not have a material effect on its financial position or results of operations, as the Update is disclosure related.

Recently Issued Standards

In November 2024, the FASB issued ASC Update No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40). This Update requires entities to disclose, at each interim and annual reporting period, specified information about certain costs and expenses in the notes to financial statements. Entities must disclose the amounts, in a tabular format, of relevant expense captions presented on the face of the income statement within continuing operations that contain expenses associated with employee compensation, depreciation, and intangible asset amortization. Additionally, the Update requires qualitative disclosure of amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, and the disclosure of total of selling expenses, among other items. This Update is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods, as clarified in ASC Update No. 2025-01, beginning after December 15, 2027, with early adoption permitted. This guidance may be implemented either on a prospective or retrospective basis. The Company does not expect implementation of this guidance to have a material effect on its financial position or results of operations, as the Update is disclosure related.

In December 2023, the FASB issued ASC Update No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This Update requires entities to disclose an annual tabular rate reconciliation, using both percentages and currency amounts, broken out into specific categories, to the extent those items exceed a specified threshold. In addition, all entities are required to disclose annual income taxes paid, net of refunds received, disaggregated by federal, state, and foreign jurisdictions, and for individual jurisdictions when the amount is at least five percent of total income tax payments, net of refunds received. This Update is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted. This guidance may be implemented either on a prospective or retrospective basis. The Company does not expect implementation of this guidance to have a material effect on its financial position or results of operations, as the Update is disclosure related.

Table of Contents

3. Investments

A. Fixed maturities

The amortized cost and fair value of available-for-sale fixed maturities were as follows:


	March 31, 2025
						Amortized Cost,
			Allowance			Net of Allowance		Gross		Gross
	Amortized		for Credit			for Credit		Unrealized		Unrealized
(in millions)	Cost		Losses			Losses		Gains		Losses		Fair Value
U.S. Treasury and government agencies	$	538.8	$	—		$	538.8	$	1.6	$	47.7	$	492.7
Foreign governments		2.3		—			2.3		0.1		—		2.4
Municipals		972.4		—			972.4		2.0		90.5		883.9
Corporates		4,030.6		(0.5	)		4,030.1		25.0		116.3		3,938.8
Residential mortgage-backed		2,375.7		—			2,375.7		14.0		126.7		2,263.0
Commercial mortgage-backed		436.9		—			436.9		0.2		32.5		404.6
Other asset-backed		822.5		—			822.5		3.1		2.7		822.9
Total fixed maturities	$	9,179.2	$	(0.5	)	$	9,178.7	$	46.0	$	416.4	$	8,808.3


	December 31, 2024
						Amortized Cost,
			Allowance			Net of Allowance		Gross		Gross
	Amortized		for Credit			for Credit		Unrealized		Unrealized
(in millions)	Cost		Losses			Losses		Gains		Losses		Fair Value
U.S. Treasury and government agencies	$	552.6	$	—		$	552.6	$	0.4	$	58.8	$	494.2
Foreign governments		1.8		—			1.8		0.1		—		1.9
Municipals		1,001.5		—			1,001.5		1.5		109.2		893.8
Corporates		3,953.5		(0.6	)		3,952.9		14.4		161.4		3,805.9
Residential mortgage-backed		2,277.6		—			2,277.6		2.8		156.3		2,124.1
Commercial mortgage-backed		564.2		—			564.2		0.1		42.1		522.2
Other asset-backed		700.9		—			700.9		2.5		3.3		700.1
Total fixed maturities	$	9,052.1	$	(0.6	)	$	9,051.5	$	21.8	$	531.1	$	8,542.2

The Company enters into various agreements that may require its fixed maturities to be held as collateral by others. At March 31, 2025 and December 31, 2024, fixed maturities with fair values of $344.7 million and $130.9 million, respectively, were held as collateral for the Federal Home Loan Bank (“FHLB”) collateralized borrowing program. Additionally, the Company deposits funds with various state governmental authorities and trustees. For a discussion of the Company’s deposits with these state governmental authorities and trustees, see Note 2 – “Investments” in the Notes to Consolidated Financial Statements in the Company’s 2024 Annual Report on Form 10-K.

The amortized cost and fair value by maturity periods for fixed maturities are shown in the following table. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties, or the Company may have the right to put or sell the obligations back to the issuers.


	March 31, 2025
	Amortized Cost, Net
	of Allowance for		Fair
(in millions)	Credit Losses		Value
Due in one year or less	$	351.4	$	350.4
Due after one year through five years		2,009.2		1,973.4
Due after five years through ten years		2,795.2		2,635.6
Due after ten years		387.8		358.4
		5,543.6		5,317.8
Mortgage-backed and other asset-backed securities		3,635.1		3,490.5
Total fixed maturities	$	9,178.7	$	8,808.3

Table of Contents

B. Fixed maturity securities in an unrealized loss position

The following tables provide information about the Company’s available-for-sale fixed maturity securities that were in an unrealized loss position at March 31, 2025 and December 31, 2024, including the length of time the securities have been in an unrealized loss position:


	March 31, 2025
	12 months or less				Greater than 12 months				Total
	Gross				Gross				Gross
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
(in millions)	Losses		Value		Losses		Value		Losses		Value
Investment grade:
U.S. Treasury and government agencies	$	3.4	$	129.1	$	44.3	$	244.2	$	47.7	$	373.3
Municipals		1.5		108.0		89.0		658.3		90.5		766.3
Corporates		8.6		773.4		99.1		1,240.9		107.7		2,014.3
Residential mortgage-backed		4.5		476.3		122.2		742.1		126.7		1,218.4
Commercial mortgage-backed		0.3		26.8		31.2		364.4		31.5		391.2
Other asset-backed		2.1		268.2		0.6		74.1		2.7		342.3
Total investment grade		20.4		1,781.8		386.4		3,324.0		406.8		5,105.8
Below investment grade:
Foreign governments		—		0.4		—		—		—		0.4
Corporates		3.4		148.9		5.2		45.2		8.6		194.1
Commercial mortgage-backed		—		—		1.0		5.1		1.0		5.1
Total below investment grade		3.4		149.3		6.2		50.3		9.6		199.6
Total fixed maturities	$	23.8	$	1,931.1	$	392.6	$	3,374.3	$	416.4	$	5,305.4


	December 31, 2024
	12 months or less				Greater than 12 months				Total
	Gross				Gross				Gross
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
(in millions)	Losses		Value		Losses		Value		Losses		Value
Investment grade:
U.S. Treasury and government agencies	$	7.8	$	194.4	$	51.0	$	240.8	$	58.8	$	435.2
Municipals		3.0		132.5		106.2		680.9		109.2		813.4
Corporates		22.8		1,360.3		132.0		1,523.3		154.8		2,883.6
Residential mortgage-backed		16.5		896.8		139.8		747.2		156.3		1,644.0
Commercial mortgage-backed		0.7		23.7		41.4		485.4		42.1		509.1
Other asset-backed		2.5		181.4		0.8		78.5		3.3		259.9
Total investment grade		53.3		2,789.1		471.2		3,756.1		524.5		6,545.2
Below investment grade:
Foreign governments		—		0.1		—		—		—		0.1
Corporates		1.3		70.8		5.3		49.8		6.6		120.6
Commercial mortgage-backed		—		—		—		0.8		—		0.8
Total below investment grade		1.3		70.9		5.3		50.6		6.6		121.5
Total fixed maturities	$	54.6	$	2,860.0	$	476.5	$	3,806.7	$	531.1	$	6,666.7

The Company views gross unrealized losses on fixed maturities as non-credit related and through its assessment of unrealized losses has determined that these securities will recover, allowing the Company to realize the anticipated long-term economic value. The Company currently does not intend to sell, nor does it expect to be required to sell these securities before recovery of their amortized cost. The Company employs a systematic methodology to evaluate declines in fair value below amortized cost for fixed maturity securities. In determining impairments, the Company evaluates several factors and circumstances, including the issuer’s overall financial condition; the issuer’s credit and financial strength ratings; the issuer’s financial performance, including earnings trends and asset quality; any specific events which may influence the operations of the issuer; the general outlook for market conditions in the industry or geographic region in which the issuer operates; and the degree to which the fair value of an issuer’s securities is below the Company’s amortized cost. The Company also considers any factors that might raise doubt about the issuer’s ability to make contractual payments as they come due and whether the Company expects to recover the entire amortized cost basis of the security.

Table of Contents

C. Proceeds from sales

The proceeds from sales of available-for-sale fixed maturities and gross realized gains and gross realized losses on those sales were as follows:


	Three Months Ended March 31,
	2025		2024
(in millions)
Proceeds from sales	$	415.9	$	27.8
Gross gains		0.4		0.1
Gross losses		19.4		1.5

D. Impairments (Recoveries)

For the three months ended March 31, 2025 there were no impairments. For three months ended March 31, 2024, the Company recognized $0.3 million of recoveries on previously impaired fixed maturities.

At March 31, 2025 and December 31, 2024, the allowance for credit losses on mortgage loans was $5.7 million, and the allowance for credit losses on available-for-sale debt securities was $0.5 million and $0.6 million, respectively.

The following table provides a rollforward of the allowance for credit losses on mortgage loans:


	Three Months Ended March 31,
(in millions)	2025			2024
Allowance for credit losses as of the beginning of the period	$	5.7		$	10.0
Additional credit losses on investments for which an allowance was previously recognized		0.1			—
Reductions for disposals		(0.1	)		(0.3	)
Allowance for credit losses as of the end of the period	$	5.7		$	9.7

The methodology and significant inputs used to measure the amount of credit losses were as follows:

Mortgage loans – the Company estimated losses by applying expected loss rates, which are based on historical data. Embedded in expected loss rates are mortgage risk ratings and risk factors associated with property type such as office, retail, lodging, multi-family and industrial. Risk ratings, based on property characteristics and metrics including the geographic market, are predominantly driven by estimates of loan-to-value and debt service coverage ratios. Ratings may be adjusted to reflect current conditions and to incorporate reasonable and supportable forecasts, such as volatility of cash flows and valuation.

Fixed maturities, Corporate bonds – the Company utilized a financial model that derives expected cash flows based on probability-of-default factors by credit rating and asset duration, and loss-given-default factors based on security type. These factors are based on historical data provided by an independent third-party rating agency. In addition, other qualitative market data relevant to the realizability of contractual cash flows may be considered, including current conditions and reasonable and supportable forecasts.

E. Equity securities

Pre-tax net realized and unrealized gains (losses) on equity securities recognized in income included the following:


	Three Months Ended March 31,
(in millions)	2025		2024
Net realized and unrealized gains (losses) on equity securities recognized in income:
On securities still held	$	1.0	$	6.5
On securities sold during the period		0.4		—
Total net realized and unrealized gains (losses) on equity securities recognized in income	$	1.4	$	6.5

4. Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability, i.e., exit price, in an orderly transaction between market participants. The Company emphasizes the use of observable market data whenever available in determining fair value. Fair values presented for certain financial instruments are estimates which, in many cases, may differ significantly from the amounts that could be realized upon immediate liquidation. A hierarchy of the three broad levels of fair value is as follows, with the highest priority given to Level 1 as these are the most observable, and the lowest priority given to Level 3:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 – Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data, including model-derived valuations.

Table of Contents

Level 3 – Unobservable inputs that are supported by little or no market activity.

When more than one level of input is used to determine fair value, the financial instrument is classified as Level 2 or Level 3 according to the lowest level input that has a significant impact on the fair value measurement.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments and have not changed since last year.

Fixed Maturities

Level 1 securities generally include U.S. Treasury issues and other securities that are highly liquid, and for which quoted market prices are available. Level 2 securities are valued using pricing for similar securities and pricing models that incorporate observable inputs including, but not limited to, yield curves and issuer spreads. Level 3 securities include issues for which little observable data can be obtained, primarily due to the illiquid nature of the securities, and for which significant inputs used to determine fair value are based on the Company’s own assumptions.

The Company utilizes third-party pricing services for the valuation of the majority of its fixed maturity securities and receives one quote per security. When quoted market prices in an active market are available, they are provided by the pricing service as the fair value and such values are classified as Level 1. Since fixed maturities other than U.S. Treasury securities generally do not trade on a daily basis, the pricing services prepare estimates of fair value for those securities using pricing techniques based on a market approach. Inputs into the fair value pricing common to all asset classes include: benchmark U.S. Treasury security yield curves; reported trades of identical or similar fixed maturity securities; broker/dealer quotes of identical or similar fixed maturity securities and structural characteristics such as maturity date, coupon, mandatory principal payment dates, frequency of interest and principal payments, and optional redemption features. Inputs into the fair value applications that are unique by asset class include, but are not limited to:

•

U.S. government agencies – determination of direct versus indirect government support and whether any contingencies exist with respect to the timely payment of principal and interest.

•

Foreign governments – estimates of appropriate market spread versus underlying related sovereign treasury curve(s) dependent on liquidity and direct or contingent support.

•

Municipals – overall credit quality, including assessments of the level and variability of: sources of payment such as income, sales or property taxes, levies or user fees; credit support such as insurance; state or local economic and political base; natural resource availability; and susceptibility to natural or man-made catastrophic events such as hurricanes, earthquakes or acts of terrorism.

•

Corporate fixed maturities – overall credit quality, including assessments of the level and variability of: economic sensitivity; liquidity; corporate financial policies; management quality; regulatory environment; competitive position; ownership; restrictive covenants; and security or collateral.

•

Residential mortgage-backed securities – estimates of prepayment speeds based upon: historical prepayment rate trends; underlying collateral interest rates; geographic concentration; vintage year; borrower credit quality characteristics; interest rate and yield curve forecasts; government or monetary authority support programs; tax policies; and delinquency/default trends; and in the case of non-agency collateralized mortgage obligations, severity of loss upon default and length of time to recover proceeds following default.

•

Commercial mortgage-backed securities – overall credit quality, including assessments of the value and supply/demand characteristics of: collateral type such as office, retail, residential, lodging, or other; geographic concentration by region, state, metropolitan statistical area and locale; vintage year; historical collateral performance including defeasance, delinquency, default and special servicer trends; and capital structure support features.

•

Other asset-backed securities – overall credit quality, including assessments of the underlying collateral type such as corporate loans, credit card receivables, automobile loan receivables and equipment lease receivables; geographic diversification; vintage year; historical collateral performance including delinquency, default and casualty trends; economic conditions influencing use rates and resale values; and contract structural support features.

Generally, all prices provided by the pricing services, except actively traded securities with quoted market prices, are reported as Level 2.

Table of Contents

The Company holds privately placed fixed maturity securities and certain other fixed maturity securities that do not have an active market and for which the pricing services cannot provide fair values. The Company determines fair values for these securities using either matrix pricing, which utilizes the market approach, or broker quotes. The Company will use observable market data as inputs into the fair value techniques, as discussed in the determination of Level 2 fair values, to the extent it is available, but is also required to use a certain amount of unobservable judgment due to the illiquid nature of the securities involved. Unobservable judgment reflected in the Company’s matrix model accounts for estimates of additional spread required by market participants for factors such as issue size, credit stress, structural complexity, high bond coupon, or other unique features. These matrix-priced securities are reported as Level 2 or Level 3, depending on the significance of the impact of unobservable judgment on the security’s value. Additionally, the Company may obtain non-binding broker quotes, which are reported as Level 3.

Equity Securities

Level 1 consists of publicly traded securities, including exchange-traded funds, valued at quoted market prices. Level 2 includes securities that are valued using pricing for similar securities and pricing models that incorporate observable inputs. Level 3 consists of common or preferred stock of private companies for which observable inputs are not available.

The Company utilizes a third-party pricing service for the valuation of the majority of its equity securities and receives one quote for each equity security. When quoted market prices in an active market are available, they are provided by the pricing service as the fair value and such values are classified as Level 1. The Company holds certain equity securities that have been issued by privately-held entities that do not have an active market and for which the pricing service cannot provide fair values. The Company estimates fair value for these securities based on prices from recent financing rounds, which may be adjusted for liquidity and other factors, or based on the issuer’s book value and market multiples, and reports them as Level 3. Additionally, the Company may obtain non-binding broker or dealer quotes, which are reported as Level 3.

Other Investments

Other investments primarily include limited partnerships not subject to the equity method of accounting and mortgage participations. The fair values of limited partnerships not subject to the equity method of accounting are based on the net asset value (“NAV”) provided by the general partner, adjusted for recent financial information, and are excluded from the fair value hierarchy.

The estimated fair values of the financial instruments were as follows:


	March 31, 2025				December 31, 2024
	Carrying		Fair		Carrying		Fair
(in millions)	Value		Value		Value		Value
Financial Assets carried at:
Fair Value through Accumulated Other Comprehensive Loss:
Fixed maturities	$	8,808.3	$	8,808.3	$	8,542.2	$	8,542.2
Fair Value through Net Income:
Equity securities		161.0		161.0		157.7		157.7
Other investments		97.0		97.0		86.9		86.9
Amortized Cost/Cost:
Other investments		332.0		316.0		343.7		324.2
Cash and cash equivalents		315.1		315.1		435.5		435.5
Total financial instruments	$	9,713.4	$	9,697.4	$	9,566.0	$	9,546.5

Financial Liabilities carried at:
Amortized Cost:
Debt	$	784.3	$	751.9	$	784.1	$	744.4

The Company has processes designed to ensure that the values received from its third-party pricing services are accurately recorded, that the data inputs and valuation approaches and techniques utilized are appropriate and consistently applied, and that the assumptions are reasonable and consistent with the objective of determining fair value. The Company reviews the pricing services’ policies describing its methodology, processes, practices and inputs, including various financial models used to value securities. For assets carried at fair value, the Company performs a review of the fair value hierarchy classifications and of prices received from its pricing services on a quarterly basis. Also, the Company reviews the portfolio pricing, including a process for which securities with changes in prices that exceed a defined threshold are verified to independent sources, if available. If upon review, the Company is not satisfied with the validity of a given price, a pricing challenge would be submitted to the applicable pricing service along with supporting documentation for its review. The Company does not adjust quotes or prices obtained from the pricing services unless the pricing service agrees with the Company’s challenge. During the first three months of 2025 and 2024, the Company did not adjust any prices received from its pricing services.

Table of Contents

Changes in the observability of valuation inputs may result in a reclassification of certain financial assets or liabilities within the fair value hierarchy. As previously discussed, the Company utilizes third-party pricing services for the valuation of the majority of its fixed maturities and equity securities. The pricing services have indicated that they will only produce an estimate of fair value if there is objectively verifiable information to produce a valuation. If a pricing service discontinues pricing an investment, the Company will use observable market data to the extent it is available, but may also be required to make assumptions for market-based inputs that are unavailable due to market conditions.

The following tables provide, for each hierarchy level, the Company’s investment assets that were measured at fair value on a recurring basis.


	March 31, 2025
(in millions)	Total		Level 1		Level 2		Level 3
Fixed maturities:
U.S. Treasury and government agencies	$	492.7	$	358.7	$	134.0	$	—
Foreign governments		2.4		—		2.4		—
Municipals		883.9		—		876.3		7.6
Corporates		3,938.8		—		3,938.8		—
Residential mortgage-backed, U.S. agency backed		1,944.6		—		1,944.6		—
Residential mortgage-backed, non-agency		318.4		—		318.4		—
Commercial mortgage-backed		404.6		—		399.5		5.1
Other asset-backed		822.9		—		822.9		—
Total fixed maturities		8,808.3		358.7		8,436.9		12.7
Equity securities		161.0		140.3		—		20.7
Other investments		17.7		—		13.8		3.9
Total investment assets at fair value	$	8,987.0	$	499.0	$	8,450.7	$	37.3


	December 31, 2024
(in millions)	Total		Level 1		Level 2		Level 3
Fixed maturities:
U.S. Treasury and government agencies	$	494.2	$	363.9	$	130.3	$	—
Foreign governments		1.9		—		1.9		—
Municipals		893.8		—		886.2		7.6
Corporates		3,805.9		—		3,805.9		—
Residential mortgage-backed, U.S. agency backed		1,790.7		—		1,790.7		—
Residential mortgage-backed, non-agency		333.4		—		333.4		—
Commercial mortgage-backed		522.2		—		516.3		5.9
Other asset-backed		700.1		—		700.1		—
Total fixed maturities		8,542.2		363.9		8,164.8		13.5
Equity securities		157.7		136.9		—		20.8
Other investments		3.9		—		—		3.9
Total investment assets at fair value	$	8,703.8	$	500.8	$	8,164.8	$	38.2

Limited partnerships measured at fair value using the NAV based on an ownership interest in partners’ capital have not been included in the hierarchy tables. At March 31, 2025 and December 31, 2024, the fair values of these investments were $79.3 million and $83.0 million, respectively, approximately 1% of total investment assets.

Table of Contents

The following tables provide, for each hierarchy level, the Company’s estimated fair values of financial instruments that were not carried at fair value:


	March 31, 2025
(in millions)	Total		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	315.1	$	315.1	$	—	$	—
Other investments		316.0		—		6.1		309.9
Total financial instruments	$	631.1	$	315.1	$	6.1	$	309.9

Liabilities:
Debt	$	751.9	$	—	$	751.9	$	—


	December 31, 2024
(in millions)	Total		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	435.5	$	435.5	$	—	$	—
Other investments		324.2		—		6.1		318.1
Total financial instruments	$	759.7	$	435.5	$	6.1	$	318.1

Liabilities:
Debt	$	744.4	$	—	$	744.4	$	—

The following tables provide a reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3).


	Fixed Maturities
(in millions)	Municipals			Corporates			Commercial mortgage- backed			Total			Equities and Other			Total Assets
Three Months Ended March 31, 2025
Balance January 1, 2025	$	7.6		$	—		$	5.9		$	13.5		$	24.7		$	38.2
Total gains (losses):
Included in net realized and unrealized investment gains (losses)		—			—			—			—			(0.1	)		(0.1	)
Included in other comprehensive income (loss) - changes in net unrealized gains (losses) on investment securities		0.2			—			0.1			0.3			—			0.3
Settlements		(0.2	)		—			(0.9	)		(1.1	)		—			(1.1	)
Balance March 31, 2025	$	7.6		$	—		$	5.1		$	12.7		$	24.6		$	37.3
Changes in net unrealized gains (losses) for the period included in other comprehensive income (loss) for assets held at the end of the period	$	0.2		$	—		$	0.1		$	0.3		$	—		$	0.3

Three Months Ended March 31, 2024
Balance January 1, 2024	$	8.6		$	0.1		$	7.0		$	15.7		$	11.4		$	27.1
Transfers out of Level 3		—			(0.1	)		—			(0.1	)		—			(0.1	)
Total losses included in other comprehensive income (loss) - changes in net unrealized gains (losses) on investment securities		(0.1	)		—			(0.1	)		(0.2	)		—			(0.2	)
Settlements		(0.3	)		—			(0.1	)		(0.4	)		—			(0.4	)
Balance March 31, 2024	$	8.2		$	—		$	6.8		$	15.0		$	11.4		$	26.4
Changes in net unrealized gains (losses) for the period included in other comprehensive income (loss) for assets held at the end of the period	$	(0.1	)	$	—		$	(0.1	)	$	(0.2	)	$	—		$	(0.2	)

There were no securities transferred between Level 2 and Level 3 during the three months ended March 31, 2025. During the three months ended March 31, 2024, a fixed maturity security was transferred from Level 3 to Level 2 because it was valued by a pricing service with observable inputs rather than being valued by the Company’s internal matrix model. The Company held no Level 3 liabilities for the three months ended March 31, 2025 and 2024.

Table of Contents

The following table provides quantitative information about the significant unobservable inputs used by the Company in the fair value measurements of Level 3 assets. Valuations of $11.9 million for an equity security based on a dealer quote for which there was a lack of transparency as to inputs used to develop the valuation have been excluded.

 
March 31, 2025

December 31, 2024

 
Valuation

Significant

Fair

Range

Fair

Range

(in millions)

Technique

Unobservable Inputs

Value

(Wtd Average)

Value

(Wtd Average)

Fixed maturities:

Municipals

Discounted 
cash flow

Discount for: 
   Small issue size

7.6

6.1 - 6.8% (6.7%)

7.6

6.1 - 6.8% (6.7%)

Commercial
mortgage-backed

Discounted 
cash flow

Discount for: 
   Small issue size
   Above-market coupon     
   Lease structure

5.1

5.0% (5.0%)
―
0.3% (0.3%)

5.9

0 - 5.0% (4.7%)
5% (0.5%)
3% (0.3%)

Equity securities

Market
comparables

Net tangible asset

1.4

N/A

1.4

N/A

Internal price based on financing round

Discount for: 
   Market liquidity

7.4

27.0% (27.0%)

7.4

27.0% (27.0%)

Other

Discounted 
cash flow

Discount rate

3.9

16.6% (16.6%)

3.9

16.6% (16.6%)

The weighted average of the unobservable inputs was weighted by the relative fair value of the securities to which the inputs were applied. Each unobservable input is based on the Company’s subjective opinion and therefore inherently contains a degree of uncertainty. Where discounted cash flows were used in the valuation of fixed maturities, the internally-developed discount rate was adjusted by the significant unobservable inputs shown in the table. Increases (decreases) in any of these inputs in isolation would result in a lower (higher) fair value measurement. Increases (decreases) in unobservable inputs used in the valuation of equity securities would result in a higher (lower) fair value measurement. There were no interrelationships between these inputs which might magnify or mitigate the effect of changes in unobservable inputs on the fair value measurement.

5. Income Taxes

Income tax expense for the three months ended March 31, 2025 and 2024 has been computed using estimated annual effective tax rates. These rates are revised, if necessary, at the end of each successive interim period to reflect current estimates of the annual effective tax rates.

The tax provision was comprised of a U.S. federal income tax expense of $31.9 million and $29.8 million for the three months ended March 31, 2025 and 2024, respectively.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state jurisdictions, and have previously filed in foreign jurisdictions. The Company and its subsidiaries are subject to U.S. federal and state income tax examinations and foreign examinations for years after 2020.

6. Pension Plans

The components of net periodic pension cost for the defined benefit pension plans included in the Company’s results of operations are as follows:


	Three Months Ended March 31,
	2025			2024
(in millions)	Pension Plans
Interest cost	$	5.1		$	5.1
Expected return on plan assets		(4.7	)		(5.1	)
Recognized net actuarial loss		1.6			1.7
Net periodic pension cost	$	2.0		$	1.7

Table of Contents

7. Other Comprehensive Income (Loss)

The following tables provide changes in other comprehensive income (loss).


	Three Months Ended March 31,
	2025									2024
				Tax									Tax
				Benefit			Net of						Benefit			Net of
(in millions)	Pre-Tax			(Expense)			Tax			Pre-Tax			(Expense)			Tax
Changes in net unrealized gains (losses) on investment securities:
Net unrealized gains (losses) arising during period for those having no credit losses in Consolidated Statements of Income	$	122.3		$	(25.7	)	$	96.6		$	(43.9	)	$	9.2		$	(34.7	)
Net unrealized gains (losses) arising during period for those having credit losses in Consolidated Statements of Income		—			—			—			0.1			(0.1	)		—
Amount of losses realized from sales and other recognized in Consolidated Statements of Income		18.9			(4.3	)		14.6			1.5			(0.7	)		0.8
Amount of credit-related recoveries on prior impairments recognized in the Consolidated Statements of Income		(0.1	)		—			(0.1	)		(0.3	)		0.1			(0.2	)
Amount of additional impairment losses recognized in the Consolidated Statements of Income		0.2			(0.1	)		0.1			—			—			—
Net unrealized gains (losses)		141.3			(30.1	)		111.2			(42.6	)		8.5			(34.1	)
Pension and postretirement benefits:
Amortization of net actuarial losses recognized as net periodic benefit cost		1.7			(0.3	)		1.4			1.7			(0.3	)		1.4
Long-duration insurance contracts:
Net change in market risk		(1.3	)		0.3			(1.0	)		1.3			(0.3	)		1.0
Other comprehensive income (loss)	$	141.7		$	(30.1	)	$	111.6		$	(39.6	)	$	7.9		$	(31.7	)

Table of Contents

Reclassifications out of accumulated other comprehensive loss were as follows:


	Three Months Ended
	March 31,
(in millions)	2025			2024
	Amount Reclassified from
Details about Accumulated Other	Accumulated Other						Affected Line Item in the Statement
Comprehensive Loss Components	Comprehensive Loss						Where Net Income is Presented
Net unrealized losses on investment securities	$	(18.8	)	$	(1.5	)	Net realized losses from sales and other
		0.1			0.3		Recoveries on investment impairments
		(18.7	)		(1.2	)	Total before tax
		4.3			0.6		Income tax (expense) benefit
		(14.4	)		(0.6	)	Continuing operations; net of tax
		(0.2	)		—		Discontinued operations; net of tax
		(14.6	)		(0.6	)	Net of tax
Amortization of defined benefit pension and postretirement actuarial losses		(1.7	)		(1.7	)	Loss adjustment expenses and other operating expenses (1)
		0.3			0.3		Income tax (expense) benefit
		(1.4	)		(1.4	)	Continuing operations; net of tax
Net change in market risk		0.3			0.3		Income from discontinued life businesses
		(0.1	)		(0.1	)	Income tax (expense) benefit
		0.2			0.2		Discontinued operations; net of tax
Total reclassifications for the period	$	(15.8	)	$	(1.8	)	Expense reflected in income, net of tax

(1)

The amount reclassified from accumulated other comprehensive loss for the pension and postretirement benefits was allocated approximately 40% to loss adjustment expenses and 60% to other operating expenses for the three months ended March 31, 2025 and 2024.

8. Segment Information

The Company’s primary business operations include insurance products and services provided through four reporting segments: Core Commercial, Specialty, Personal Lines and Other. Core Commercial includes commercial multiple peril, commercial automobile, workers’ compensation, and other commercial coverages provided to small and mid-sized businesses. Specialty includes four divisions of business: Professional and Executive Lines, Specialty Property and Casualty (“Specialty P&C”), Marine, and Surety and Other. Specialty P&C includes coverages such as program business, which provides commercial insurance to markets with specialized coverage or risk management needs related to groups of similar businesses, specialty industrial and commercial property, excess and surplus lines and specialty general liability coverage. Personal Lines includes personal automobile, homeowners and other personal coverages. The Other segment primarily includes earnings on holding company assets; holding company and other expenses, including certain costs associated with retirement benefits due to the Company’s former life insurance subsidiaries’ employees and agents; run-off voluntary assumed property and casualty pools and run-off direct asbestos and environmental, and product liability businesses.

The Company reports interest expense related to debt separately from the earnings of its reporting segments. This consists primarily of interest on the Company’s senior and subordinated debentures.

The separate financial information is presented consistent with the way results are regularly evaluated by the CODM in deciding how to allocate resources and in assessing performance. Results of the reporting segments are evaluated based on operating income before interest expense and income taxes, which excludes certain items that are included in net income, such as net realized and unrealized investment gains and losses. Such gains and losses are excluded since they are determined by interest rates, financial markets and the timing of sales. Also, operating income before interest expense and income taxes excludes net gains and losses on disposals of businesses, gains and losses related to the repayment of debt, discontinued operations, costs to acquire businesses, restructuring costs, the cumulative effect of accounting changes and certain other items. Although the items excluded from operating income before interest expense and income taxes may be important components in understanding and assessing the Company’s overall financial performance, management believes that the presentation of operating income before interest expense and income taxes enhances an investor’s understanding of the Company’s results of operations by highlighting net income attributable to the core operations of the business. However, operating income before interest expense and income taxes should not be construed as a substitute for income before income taxes or as a substitute for net income.

Table of Contents

Summarized below is financial information with respect to the Company’s reporting segments.


	Three Months Ended
	March 31, 2025
(in millions)		Core Commercial				Specialty				Personal Lines				Other				Total
Operating revenues:
Premiums	$		541.0		$		339.6		$		627.9		$		—		$		1,508.5
Net investment income			48.0				24.3				30.5				3.3				106.1
Fees and other income			1.3				1.3				3.7				0.1				6.4
Total operating revenues	$		590.3		$		365.2		$		662.1		$		3.4				1,621.0
Net realized and unrealized investment losses																			(17.8	)
Total revenues																	$		1,603.2
Operating income (loss) before interest expense and income taxes:
Net premiums earned	$		541.0		$		339.6		$		627.9		$		—		$		1,508.5
Losses and LAE:
Current accident year losses and LAE			334.2				173.3				372.2				—				879.7
Prior year favorable development, excluding catastrophes			(1.3	)			(15.9	)			(2.8	)			—				(20.0	)
Current year catastrophe losses			54.5				17.2				35.9				—				107.6
Prior year favorable catastrophe development			(8.5	)			(2.5	)			(1.0	)			—				(12.0	)
Total losses and LAE			378.9				172.1				404.3				—				955.3
Amortization of deferred acquisition costs and other underwriting expenses(1)			182.1				126.3				161.9				—				470.3
Underwriting income (loss)			(20.0	)			41.2				61.7				—				82.9
Net investment income			48.0				24.3				30.5				3.3				106.1
Fees and other income			1.3				1.3				3.7				0.1				6.4
Other segment items(2)			(2.5	)			(2.2	)			(1.7	)			(2.6	)			(9.0	)
Operating income before interest expense and income taxes	$		26.8		$		64.6		$		94.2		$		0.8				186.4
Interest on debt																			(8.5	)
Operating income before income taxes																			177.9
Non-operating income (loss) items:
Net realized and unrealized investment losses																			(17.8	)
Income before income taxes																	$		160.1

(1)

Includes expenses directly incurred by each reporting segment, as well as corporate and other general expenses that are allocated using a consistent and reasonable approach, generally based on net premiums earned.

(2)

Other segment items in Core Commercial, Specialty and Personal Lines primarily includes uncollectible premium charge-offs and non-insurance agency operating expenses, whereas other segment items in the Other segment includes operating costs related to certain of THG’s former life insurance businesses, including defined benefit pension-related costs, as well as holding company expenses.

Table of Contents


	Three Months Ended
	March 31, 2024
(in millions)		Core Commercial				Specialty				Personal Lines				Other				Total
Operating revenues:
Premiums	$		528.9		$		320.9		$		598.8		$		—		$		1,448.6
Net investment income			40.8				20.3				25.6				3.0				89.7
Fees and other income			1.3				1.3				4.0				0.7				7.3
Total operating revenues	$		571.0		$		342.5		$		628.4		$		3.7				1,545.6
Net realized and unrealized investment gains																			5.5
Total revenues																	$		1,551.1
Operating income (loss) before interest expense and income taxes:
Net premiums earned	$		528.9		$		320.9		$		598.8		$		—		$		1,448.6
Losses and LAE:
Current accident year losses and LAE			309.4				156.6				392.7				—				858.7
Prior year favorable development, excluding catastrophes			(9.2	)			(1.1	)			(0.1	)			—				(10.4	)
Current year catastrophe losses			24.5				10.2				59.2				—				93.9
Prior year favorable catastrophe development			(3.8	)			(3.2	)			—				—				(7.0	)
Total losses and LAE			320.9				162.5				451.8				—				935.2
Amortization of deferred acquisition costs and other underwriting expenses(1)			177.1				119.5				156.1				—				452.7
Underwriting income (loss)			30.9				38.9				(9.1	)			—				60.7
Net investment income			40.8				20.3				25.6				3.0				89.7
Fees and other income			1.3				1.3				4.0				0.7				7.3
Other segment items(2)			(1.5	)			(1.7	)			(1.6	)			(3.2	)			(8.0	)
Operating income before interest expense and income taxes	$		71.5		$		58.8		$		18.9		$		0.5				149.7
Interest on debt																			(8.5	)
Operating income before income taxes																			141.2
Non-operating income (loss) items:
Net realized and unrealized investment gains																			5.5
Other non-operating items																			(1.4	)
Income before income taxes																	$		145.3

(1)

(2)

Other segment items in Core Commercial, Specialty and Personal Lines primarily includes uncollectible premium charge-offs and non-insurance agency operating expenses, whereas other segment items in the Other segment includes operating costs related to certain of THG’s former investment and life insurance businesses, including defined benefit pension-related costs, as well as holding company expenses.

The following table provides identifiable assets for the Company’s segments and discontinued operations:


(in millions)	March 31, 2025		December 31, 2024
Property and Casualty	$	15,384.6	$	15,188.8
Assets of discontinued businesses		85.7		85.7
Total	$	15,470.3	$	15,274.5

The Company reviews the assets of its insurance subsidiaries collectively and does not allocate them among the Core Commercial, Specialty, Personal Lines and Other segments.

9. Stock-based Compensation

As of March 31, 2025, there were 1,787,587 and 1,221,601 shares available for grant under The Hanover Insurance Group 2022 Long-Term Incentive Plan and 2023 Employee Stock Purchase plan, respectively.

Table of Contents

Compensation cost for the Company’s stock-based awards and the related tax benefits were as follows:


	Three Months Ended March 31,
(in millions)	2025			2024
Stock-based compensation expense	$	6.6		$	6.7
Tax benefit		(1.4	)		(1.4	)
Stock-based compensation expense, net of taxes	$	5.2		$	5.3

Stock Options

Information on the Company’s stock option activity for the three months ended March 31, 2025 and 2024 is summarized below.


	Three Months Ended March 31,
	2025					2024
(in whole shares and dollars)	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
Outstanding, beginning of period		1,111,871		$	117.43		1,137,042		$	111.57
Granted		140,393			161.82		150,731			134.26
Exercised		(92,520	)		89.99		(66,405	)		81.26
Forfeited or cancelled		—			—		(2,277	)		134.26
Outstanding, end of period		1,159,744			124.99		1,219,091			115.98

Restricted Stock Units

The Company currently issues time-based, market-based and performance-based restricted stock units to eligible employees, all of which generally vest after three years of continued employment.

The following table summarizes activity information about employee restricted stock units:


	Three Months Ended March 31,
	2025					2024
(in whole shares and dollars)	Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value
Time-based restricted stock units:
Outstanding, beginning of period		386,712		$	137.44		376,626		$	132.04
Granted		136,535			160.40		154,826			133.26
Vested		(118,406	)		139.49		(118,768	)		115.43
Forfeited		(2,108	)		140.39		(7,370	)		131.90
Outstanding, end of period		402,733			144.60		405,314			137.37
Performance-based and market-based restricted stock units:
Outstanding, beginning of period		126,211		$	140.47		120,504		$	132.76
Granted		52,360			178.39		53,336			132.27
Vested		(31,052	)		141.58		(41,290	)		112.36
Forfeited		(14,369	)		152.88		(6,339	)		108.06
Outstanding, end of period		133,150			153.78		126,211			140.47

In the first three months of 2025 and 2024, the Company granted market-based awards totaling 23,492 shares and 25,414 shares, respectively, to certain members of senior management, which are included in the table above as performance and market-based restricted stock activity. The vesting of these stock units is based on the relative total shareholder return (“TSR”) of the Company. This metric is generally based on relative TSR for a three-year period as compared to a pre-selected group of property and casualty companies. The fair value of market-based awards was estimated at the date of grant using a valuation model. These units have the potential to range from 0% to 200% of the shares disclosed for grant year 2025 and from 0% to 150% of the shares disclosed for grant years 2024 and 2023. The amounts reported as forfeited in the table above in 2025 and 2024 of 14,369 shares and 6,339 shares, respectively, related to market-based awards that achieved a payout below 100%. These awards were forfeited in the first quarter of 2025 and 2024, respectively.

The Company also granted performance-based restricted stock units in 2025 and 2024, totaling 28,868 shares and 27,992 shares, respectively, which are based upon the Company’s achievement of return on equity objectives. These units have the potential to range from 0% to 200% of the shares disclosed for grant year 2025 and from 0% to 150% of the shares disclosed for grant years 2024 and 2023. Increases above the 100% target level are reflected as granted in the period after which performance-based stock unit goals are achieved. Decreases below the 100% target level are reflected as forfeited. Included in the amounts granted above in 2025 and 2024 are 5,246 shares and 2,615 shares, respectively, related to performance-based awards that achieved a payout in excess of 100%. These awards vested in the first quarter of 2025 and 2024, respectively.

Table of Contents

10. Earnings Per Share and Shareholders’ Equity Transactions

The following table provides weighted average share information used in the calculation of the Company’s basic and diluted earnings per share:


	Three Months Ended
	March 31,
(in millions, except per share data)	2025			2024
Basic shares used in the calculation of earnings per share		36.0			35.8
Dilutive effect of securities:
Employee stock options		0.3			0.2
Non-vested stock grants		0.3			0.3
Diluted shares used in the calculation of earnings per share		36.6			36.3
Per share effect of dilutive securities on net income	$	(0.06	)	$	(0.04	)

Diluted earnings per share for the three months ended March 31, 2025 and March 31, 2024 excludes 0.1 million and 0.5 million, respectively, shares of common stock issuable under the Company’s stock compensation plans, because their effect would be antidilutive.

The Board of Directors authorized a stock repurchase program which provides for aggregate repurchases of the Company’s common stock of up to $1.3 billion. Under the repurchase authorization, the Company may repurchase, from time to time, common stock in amounts, at prices and at such times as the Company deems appropriate, subject to market conditions and other considerations. Repurchases may be executed using open market purchases, privately negotiated transactions, accelerated repurchase programs or other transactions. The Company is not required to purchase any specific number of shares or to make purchases by any certain date under this program. During the first three months of 2025, the Company repurchased approximately 65,000 shares under this program at an aggregate cost of $11.0 million and had approximately $292 million available for additional repurchases at March 31, 2025.

11. Liabilities for Outstanding Claims, Losses and Loss Adjustment Expenses

Reserve Rollforward and Prior Year Development

The Company regularly updates its reserve estimates as new information becomes available and further events occur which may impact the resolution of unsettled claims. Reserve adjustments are reflected in results of operations as adjustments to losses and loss adjustment expenses (“LAE”). Often these adjustments are recognized in periods subsequent to the period in which the underlying policy was written and loss event occurred. These types of subsequent adjustments are described as loss and LAE “development.” Such development can be either favorable or unfavorable to the Company’s financial results and may vary by line of business. In this section, all amounts presented include catastrophe losses and LAE, unless otherwise indicated.

The table below provides a reconciliation of the gross beginning and ending reserve for unpaid losses and loss adjustment expenses.


	Three Months Ended
	March 31,
(in millions)	2025			2024
Gross reserve for losses and LAE, beginning of period	$	7,461.2		$	7,308.1
Reinsurance recoverable on unpaid losses		1,829.8			1,795.0
Net reserve for losses and LAE, beginning of period		5,631.4			5,513.1
Net incurred losses and LAE in respect of losses occurring in:
Current year		987.3			952.6
Prior years		(32.0	)		(17.4	)
Total incurred losses and LAE		955.3			935.2
Net payments of losses and LAE in respect of losses occurring in:
Current year		236.5			236.1
Prior years		613.2			654.7
Total payments		849.7			890.8
Net reserve for losses and LAE, end of period		5,737.0			5,557.5
Reinsurance recoverable on unpaid losses		1,871.9			1,773.6
Gross reserve for losses and LAE, end of period	$	7,608.9		$	7,331.1

As a result of continuing trends in the Company’s business, reserves, including catastrophes, have been re-estimated for all prior accident years and were decreased by $32.0 million and $17.4 million in 2025 and 2024, respectively.

Table of Contents

2025

For the three months ended March 31, 2025, net favorable loss and LAE development was $32.0 million, primarily as a result of net favorable development of $18.4 million in Specialty, $9.8 million in Core Commercial and $3.8 million in Personal Lines. Specialty Lines favorable loss and LAE development was primarily due to lower than expected non-catastrophe losses of $8.6 million in the Marine division and, to a lesser extent, in the Professional and Executive Lines division. Within Core Commercial, favorable development was primarily due to lower than expected catastrophe losses in our commercial multiple peril line related to events from accident years 2021 through 2023, including several convective storms across multiple states and Winter Storm Elliot. Additionally, favorable development resulting from lower than expected non-catastrophe losses in the workers’ compensation line was largely offset by higher than expected non-catastrophe losses in the commercial automobile line.

2024

For the three months ended March 31, 2024, net favorable loss and LAE development was $17.4 million, primarily as a result of favorable Core Commercial development of $13.0 million. The favorable development in Core Commercial was primarily due to lower than expected losses and LAE in the commercial multiple peril line, primarily related to 2022 and 2023 events, including hurricane Ian and tornadic activity and, to a lesser extent, due to lower than expected losses and LAE across several other lines of business.

12. Commitments and Contingencies

Legal Proceedings

The Company has been named a defendant in various legal proceedings arising in the normal course of business. In addition, the Company is involved, from time to time, in examinations, investigations and proceedings by governmental and self-regulatory agencies. The potential outcome of any such action or regulatory proceedings in which the Company has been named a defendant or the subject of an inquiry, examination or investigation, and its ultimate liability, if any, from such action or regulatory proceedings, is difficult to predict at this time. The ultimate resolutions of such proceedings are not expected to have a material effect on the Company’s financial position, although they could have a material effect on the results of operations for a particular quarterly or annual period.

Residual Markets

The Company is required to participate in residual markets in various states, which generally pertain to high risk insureds, disrupted markets or lines of business or geographic areas where rates are regarded as excessive. The results of the residual markets are not subject to the predictability associated with the Company’s own managed business, and are significant to both the personal and commercial automobile lines of business.

13. Subsequent Events

There were no subsequent events requiring adjustment to the financial statements and no additional disclosure required in the notes to the consolidated financial statements.

Table of Contents

PART I

ITEM 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

TABLE OF CONTENTS


Introduction		24
Executive Overview		24
Description of Segments		25
Results of Operations - Consolidated		26
Results of Operations - Segments		27
Investments		31
Other Items		35
Income Taxes		35
Critical Accounting Estimates		35
Statutory Surplus of Insurance Subsidiaries		36
Liquidity and Capital Resources		36
Contingencies and Regulatory Matters		37

Table of Contents

Introduction

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to assist readers in understanding the interim consolidated results of operations and financial condition of The Hanover Insurance Group, Inc. and its subsidiaries (“THG”). Consolidated results of operations and financial condition are prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). This discussion should be read in conjunction with the interim consolidated financial statements and related footnotes included elsewhere in this Quarterly Report on Form 10-Q and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 24, 2025.

Results of operations include the accounts of The Hanover Insurance Company (“Hanover Insurance”) and Citizens Insurance Company of America (“Citizens”), our principal property and casualty companies, and certain other insurance and non-insurance subsidiaries.

The following discussion contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this discussion and analysis, words such as: “believes,” “anticipates,” “expects,” “projections,” “outlook,” “should,” “could,” “plan,” “guidance,” “likely,” “on track to,” “potential,” “continue,” “targeted,” “designed,” and similar expressions are intended to identify forward-looking statements. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. We caution readers that accuracy with respect to forward-looking projections is difficult and subject to risks and uncertainties. Those risks and uncertainties, in some cases, have affected, and in the future could affect, our actual results and could cause our actual results to differ materially from historical results and from those expressed in any of our forward-looking statements. For important factors that could cause actual results to differ materially from those contained in forward-looking statements, see “Risk Factors” in Part II – Item 1A of this Quarterly Report on Form 10-Q and in Part I – Item 1A of our 2024 Annual Report on Form 10-K.

Executive Overview

Business operations consist of four reporting segments: Core Commercial, Specialty, Personal Lines and Other.

Our strategy, which focuses on the independent agency distribution channel, supports THG’s commitment to our select independent agents. It is designed to generate profitable growth by leveraging the strengths of our distribution approach, including expansion of our agency footprint in underpenetrated geographies, as warranted. As part of that strategy, we have increased our capabilities in specialty markets and made investments designed to develop growth solutions for our agency distribution channel that meet the needs of our customers. Our goal is to grow responsibly in all of our businesses, while managing volatility.

During the three months ended March 31, 2025, our net income was $128.2 million, compared to $115.5 million for the three months ended March 31, 2024, an improvement of $12.7 million. This favorable change was primarily due to higher after-tax operating income, partially offset by after-tax net realized losses from investments.

Operating income before interest expense and income taxes (a non-GAAP financial measure; see also “Results of Operations – Consolidated – Non-GAAP Financial Measures”) was $186.4 million for the three months ended March 31, 2025, compared to $149.7 million for the three months ended March 31, 2024, an improvement of $36.7 million. This increase was primarily due to improvements in current accident year underwriting results in Personal Lines and from higher net investment income, partially offset by higher current accident year large property losses in our Core Commercial segment. The lower Personal Lines current accident year losses were primarily due to the benefit of earned pricing outpacing loss trends in both personal automobile and homeowners lines, and moderated frequency trends, particularly in automobile collision and homeowners coverages.

Pre-tax catastrophe losses were $95.6 million for the three months ended March 31, 2025, compared to $86.9 million during the same period of 2024, an increase of $8.7 million. Catastrophe losses in the first quarter of 2025 were primarily due to severe convective storms in the Midwest and the California Palisades and Eaton wildfires. Net favorable development on prior years’ loss reserves was $20.0 million for the three months ended March 31, 2025, compared to $10.4 million for the three months ended March 31, 2024, an increase of $9.6 million.

Core Commercial

Core Commercial includes two businesses, small commercial and middle market, both of which focus on account business, including coverage for commercial multiple peril, commercial automobile, workers’ compensation and other (commercial umbrella, monoline general liability, claims-made liability, and monoline property). Small commercial focuses on small businesses, with annual policy premiums generally up to $50,000. Middle market provides coverage to mid-sized businesses with annual policy premiums generally between $50,000 and $500,000. Middle market offers coverage in distinct industry segments, including technology, human services, manufacturing, retail, and real estate, among others. We believe that our account-focused approach to the small commercial market and distinctiveness in the middle market, including our diversified portfolio of products, delivers significant value to agents and policyholders. We continue to pursue our core strategy of developing strong relationships with retail agents, enhancing franchise value through selective distribution, distinctive products and coverages, and through continued investment in products for additional industry segmentation.

Table of Contents

Net premiums written increased 3.8% in the first three months of 2025, compared to the same period in 2024, primarily driven by renewal price increases. Operating income before interest expense and income taxes decreased in the first three months of 2025, compared to the same period in 2024, primarily due to higher catastrophe losses and higher current accident year large property losses. The competitive nature of the Core Commercial market requires us to be highly disciplined in our underwriting process to ensure that we write business at acceptable margins, and we continue to seek rate increases across many lines of business.

Specialty

Specialty offers a comprehensive suite of products focused predominately on small to mid-sized businesses. This includes numerous specialized product areas that are organized into four distinct divisions – Professional and Executive Lines, Specialty Property and Casualty (“Specialty P&C”), Marine, and Surety and Other. We believe that this diverse set of Specialty products, distributed primarily through retail agents, supplemented by select specialists, helps to enhance our overall agent value and increase growth opportunities by providing agents easier access to placement solutions for Specialty needs, including those that complement Core Commercial accounts.

Net premiums written increased 5.4% in the first three months of 2025, compared to the same period in 2024, primarily due to renewal price increases. Operating income before interest expense and income taxes increased in the first three months of 2025 compared to the same period in 2024, primarily due to higher net favorable development on prior year loss reserves and higher net investment income, partially offset by higher catastrophe losses and higher current accident year underwriting results. The competitive nature of the Specialty market requires us to be highly disciplined in our underwriting process to ensure that we write business at acceptable margins, and we continue to seek rate increases across many lines of business.

Personal Lines

Personal Lines focuses on working with high quality, value-oriented agencies that deliver consultative selling to customers and stress the importance of account rounding, which is the conversion of single policy customers to accounts with multiple policies and/or additional coverages, to address customers’ broader needs and objectives. Approximately 89% of our policies in force (“PIF”) have been issued to customers with multiple policies and/or coverages with us. We are focused on seeking profitable growth opportunities, building a distinctive position in the market in order to meet our customers’ needs, and diversifying geographically. We continue to seek appropriate rate increases that meet or exceed underlying loss cost trends, subject to regulatory and competitive considerations.

Net premiums written increased 3.0% in the first three months of 2025, compared to the same period in 2024, primarily due to increased new business and renewal price increases. Operating income before interest expense and income taxes improved in the first three months of 2025, compared to the same period in 2024, primarily due to improvements in current accident year underwriting results and lower catastrophe losses.

Description of Segments

Primary business operations include insurance products and services currently provided through four reporting segments: Core Commercial, Specialty, Personal Lines and Other. Core Commercial includes commercial multiple peril, commercial automobile, workers’ compensation, and other commercial lines coverages provided to small and mid-sized businesses. Specialty includes four divisions of business: Professional and Executive Lines, Specialty P&C, Marine, and Surety and Other. Specialty P&C includes coverages such as program business (providing commercial insurance to markets with specialized coverage or risk management needs related to groups of similar businesses), specialty industrial and commercial property, excess and surplus lines and specialty general liability coverage. Personal Lines includes personal automobile, homeowners and other personal coverages, such as umbrella. The “Other” segment includes earnings on holding company assets; holding company and other expenses, including certain costs associated with retirement benefits due to our former life insurance subsidiaries’ employees and agents; and our run-off voluntary assumed property and casualty pools, run-off direct asbestos and environmental, and product liability businesses.

We report interest expense on debt separately from the earnings of our reporting segments. This consists primarily of interest on our senior and subordinated debentures.

Table of Contents

Results of Operations – Consolidated

Consolidated net income for the three months ended March 31, 2025 was $128.2 million, compared to $115.5 million for the three months ended March 31, 2024, an increase of $12.7 million. This increase was due to higher after-tax operating income of $29.9 million, partially offset by an $18.3 million unfavorable change in after-tax net realized and unrealized investment results, from $5.5 million of gains in 2024 to $17.8 million of losses in 2025. Operating income before interest expense and income taxes was $186.4 million for the three months ended March 31, 2025, compared to $149.7 million for the three months ended March 31, 2024, an increase of $36.7 million. This increase was primarily due to improvements in current accident year underwriting results in our Personal Lines segment and from higher net investment income, partially offset by higher current accident year large property losses in our Core Commercial segment.

The following table reflects operating income before interest expense and income taxes for each reporting segment and a reconciliation to consolidated net income from operating income before interest expense and income taxes (a non-GAAP measure).


	Three Months Ended
	March 31,
(in millions)	2025			2024
Operating income before interest expense and income taxes:
Core Commercial	$	26.8		$	71.5
Specialty		64.6			58.8
Personal Lines		94.2			18.9
Other		0.8			0.5
Operating income before interest expense and income taxes		186.4			149.7
Interest expense on debt		(8.5	)		(8.5	)
Operating income before income taxes		177.9			141.2
Income tax expense on operating income		(36.1	)		(29.3	)
Operating income		141.8			111.9
Non-operating items:
Net realized and unrealized investment gains (losses)		(17.8	)		5.5
Other non-operating		—			(1.4	)
Income tax benefit (expense) on non-operating items		4.2			(0.5	)
Net income	$	128.2		$	115.5

Non-GAAP Financial Measures

In addition to consolidated net income, discussed above, we assess our financial performance based upon pre-tax “operating income,” and we assess the operating performance of each of our four reporting segments based upon the pre-tax operating income generated by each segment. As reflected in the table above, operating income before interest expense and income taxes excludes interest expense on debt and certain other items, which we believe are not indicative of our core operations, such as net realized and unrealized investment gains and losses. Such gains and losses are excluded since they are determined by interest rates, financial markets and the timing of sales. Also, operating income before interest expense and income taxes excludes net gains and losses on disposals of businesses, gains and losses related to the repayment of debt, discontinued operations, costs to acquire businesses, restructuring costs, the cumulative effect of accounting changes and certain other items. Although the items excluded from operating income before interest expense and income taxes are important components in understanding and assessing our overall financial performance, we believe a discussion of operating income before interest expense and income taxes enhances an investor’s understanding of our results of operations by highlighting net income attributable to the core operations of the business. However, operating income before interest expense and income taxes, which is a non-GAAP measure, should not be construed as a substitute for income before income taxes or income from continuing operations, and operating income should not be construed as a substitute for net income.

Catastrophe losses and prior years’ reserve development are significant components in understanding and assessing the financial performance of our business. Management reviews and evaluates catastrophes and prior years’ reserve development separately from the other components of earnings. References to “current accident year underwriting results” exclude prior accident year reserve development and may also be presented “excluding catastrophes.” Prior years’ reserve development and catastrophes are not predictable as to timing or the amount that will affect the results of our operations and have an effect on each year’s operating income and net income. Management believes that providing certain financial metrics and trends excluding the effects of catastrophes and prior years’ reserve development helps investors to understand the variability in periodic earnings and to evaluate the underlying performance of our operations. Discussion of catastrophe losses in this Management’s Discussion and Analysis includes development on prior years’ catastrophe reserves and, unless otherwise indicated, such development is excluded from discussions of prior year loss and loss adjustment expenses (“LAE”) reserve development.

Table of Contents

Results of Operations – Segments

The following is our discussion and analysis of the results of operations by reporting segment. The operating results are presented before interest expense, income taxes and other items which management believes are not indicative of our core operations, including realized gains and losses, as well as unrealized gains and losses on equity securities, and the results of discontinued operations.

The following table summarizes the results of operations for the periods indicated:


	Three Months Ended
	March 31,
(in millions)	2025		2024
Operating revenues:
Net premiums written	$	1,510.8	$	1,454.0
Net premiums earned	$	1,508.5	$	1,448.6
Net investment income		106.1		89.7
Other income		6.4		7.3
Total operating revenues		1,621.0		1,545.6
Losses and operating expenses:
Losses and LAE		955.3		935.2
Amortization of deferred acquisition costs		313.9		299.0
Other operating expenses		165.4		161.7
Total losses and operating expenses		1,434.6		1,395.9
Operating income before interest expense and income taxes	$	186.4	$	149.7

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

Operating income before interest expense and income taxes was $186.4 million for the three months ended March 31, 2025, compared to $149.7 million for the three months ended March 31, 2024, an improvement of $36.7 million. This increase was primarily due to improvements in current accident year underwriting results in Personal Lines and from higher net investment income, partially offset by higher current accident year large property losses in our Core Commercial segment. The lower Personal Lines current accident year losses were primarily due to the benefit of earned pricing outpacing loss trends in both the personal automobile and homeowners lines, and moderated frequency trends, particularly in automobile collision and homeowners coverages.

Net premiums written increased $56.8 million for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The increase in net premiums written was due to an increase in new business and renewal price increases.

Premium Production and Underwriting Results

The following tables summarize premiums written on a gross and net basis, net premiums earned and, catastrophe loss, loss and LAE (including catastrophe losses), expense, and combined ratios for our Core Commercial, Specialty and Personal Lines segments. Loss and LAE, catastrophe loss and combined ratios shown below include prior year reserve development. These items are not meaningful for our Other segment.


	Three Months Ended March 31, 2025
(dollars in millions)	Gross Premiums Written		Net Premiums Written		Net Premiums Earned		Catastrophe Loss Ratios		Loss & LAE Ratios		Expense Ratios		Combined Ratios
Core Commercial	$	693.1	$	604.6	$	541.0		8.5		70.0		33.4		103.4
Specialty		424.4		358.3		339.6		4.3		50.7		37.0		87.7
Personal Lines		572.4		547.9		627.9		5.6		64.4		25.3		89.7
Total	$	1,689.9	$	1,510.8	$	1,508.5		6.3		63.3		30.8		94.1

	Three Months Ended March 31, 2024
(dollars in millions)	Gross Premiums Written		Net Premiums Written		Net Premiums Earned		Catastrophe Loss Ratios		Loss & LAE Ratios		Expense Ratios		Combined Ratios
Core Commercial	$	660.0	$	582.4	$	528.9		3.9		60.7		33.2		93.9
Specialty		408.4		339.8		320.9		2.2		50.6		37.0		87.6
Personal Lines		557.4		531.8		598.8		9.9		75.5		25.5		101.0
Total	$	1,625.8	$	1,454.0	$	1,448.6		6.0		64.6		30.9		95.5

Table of Contents

The following table summarizes U.S. GAAP underwriting results for our Core Commercial, Specialty, Personal Lines and Other segments and reconciles them to operating income before interest expense and income taxes.


	Three Months Ended March 31,
	2025															2024
(in millions)	Core Commercial			Specialty			Personal Lines			Other			Total			Core Commercial			Specialty			Personal Lines			Other			Total
Underwriting profit, excluding prior year reserve development and catastrophes	$	24.7		$	40.0		$	93.8		$	—		$	158.5		$	42.4		$	44.8		$	50.0		$	—		$	137.2
Prior year favorable loss and LAE reserve development on non-catastrophe losses		1.3			15.9			2.8			—			20.0			9.2			1.1			0.1			—			10.4
Prior year favorable catastrophe development		8.5			2.5			1.0			—			12.0			3.8			3.2			—			—			7.0
Current year catastrophe losses		(54.5	)		(17.2	)		(35.9	)		—			(107.6	)		(24.5	)		(10.2	)		(59.2	)		—			(93.9	)
Underwriting profit (loss)		(20.0	)		41.2			61.7			—			82.9			30.9			38.9			(9.1	)		—			60.7
Net investment income		48.0			24.3			30.5			3.3			106.1			40.8			20.3			25.6			3.0			89.7
Fees and other income		1.3			1.3			3.7			0.1			6.4			1.3			1.3			4.0			0.7			7.3
Other operating expenses		(2.5	)		(2.2	)		(1.7	)		(2.6	)		(9.0	)		(1.5	)		(1.7	)		(1.6	)		(3.2	)		(8.0	)
Operating income before interest expense and income taxes	$	26.8		$	64.6		$	94.2		$	0.8		$	186.4		$	71.5		$	58.8		$	18.9		$	0.5		$	149.7

Core Commercial

Core Commercial net premiums written were $604.6 million for the three months ended March 31, 2025, compared to $582.4 million for the three months ended March 31, 2024. The $22.2 million increase in net premiums written was primarily driven by renewal price increases and improved retention.

Core Commercial underwriting loss for the three months ended March 31, 2025 was $20.0 million, compared to underwriting profit of $30.9 million for the three months ended March 31, 2024, an unfavorable change of $50.9 million. Catastrophe losses for the three months ended March 31, 2025 were $46.0 million, compared to $20.7 million for the three months ended March 31, 2024, an increase of $25.3 million. Net favorable development on prior years’ loss reserves for the three months ended March 31, 2025 was $1.3 million, compared to $9.2 million for the three months ended March 31, 2024, a decrease of $7.9 million.

Core Commercial current accident year underwriting profit, excluding catastrophes, was $24.7 million for the three months ended March 31, 2025, compared to $42.4 million for the three months ended March 31, 2024. The $17.7 million decrease in underwriting results was primarily driven by higher current accident year large property losses in our commercial multiple peril and other core commercial lines of business.

We continue to manage underwriting performance through rate actions, risk selection and mitigation, pricing segmentation, specific underwriting actions and targeted new business growth. Our ability to achieve overall rate increases is affected by many factors, including regulatory activity and the competitive pricing environment, particularly within the workers’ compensation line.

Specialty

Specialty net premiums written were $358.3 million for the three months ended March 31, 2025, compared to $339.8 million for the three months ended March 31, 2024. The $18.5 million increase in net premiums written was primarily due to renewal price increases.

Table of Contents

Specialty underwriting profit for the three months ended March 31, 2025 was $41.2 million, compared to $38.9 million for the three months ended March 31, 2024, an increase of $2.3 million. Catastrophe losses for the three months ended March 31, 2025 were $14.7 million, compared to $7.0 million for the three months ended March 31, 2024, an increase of $7.7 million. Net favorable development on prior years’ loss reserves for the three months ended March 31, 2025 was $15.9 million, compared to $1.1 million for the three months ended March 31, 2024, an increase of $14.8 million.

Specialty current accident year underwriting profit, excluding catastrophes, was $40.0 million for the three months ended March 31, 2025, compared to $44.8 million for the three months ended March 31, 2024. The $4.8 million decrease in underwriting results was primarily driven by higher current accident year losses in our specialty industrial line of business. In contrast, we experienced an unusually low level of current accident year losses in our specialty industrial property line of business in the first quarter of 2024.

Personal Lines

Personal Lines net premiums written were $547.9 million for the three months ended March 31, 2025, compared to $531.8 million for the three months ended March 31, 2024. The $16.1 million increase in net premiums written was primarily due to increased new business and renewal price increases.

Net premiums written in the personal automobile line of business were $323.8 million for the three months ended March 31, 2025, compared to $317.0 million for the three months ended March 31, 2024, an increase of $6.8 million. Personal automobile PIF decreased by 4.9% since March 31, 2024. Net premiums written in the homeowners and other lines of business for the three months ended March 31, 2025 were $224.1 million, compared to $214.8 million for the three months ended March 31, 2024, an increase of $9.3 million. Homeowners PIF decreased by 4.0% since March 31, 2024.

Personal Lines underwriting profit for the three months ended March 31, 2025 was $61.7 million, compared to underwriting loss of $9.1 million for the three months ended March 31, 2024, an improvement in underwriting results of $70.8 million. Catastrophe losses for the three months ended March 31, 2025 were $34.9 million, compared to $59.2 million for the three months ended March 31, 2024, a decrease of $24.3 million. Net favorable development on prior years’ loss reserves for the three months ended March 31, 2025 was $2.8 million, compared to $0.1 million for the three months ended March 31, 2024, an increase of $2.7 million.

Personal Lines current accident year underwriting profit, excluding catastrophes, was $93.8 million for the three months ended March 31, 2025, compared to $50.0 million for the three months ended March 31, 2024. The $43.8 million increase in underwriting results was primarily due to lower current accident year losses in our personal automobile and homeowners lines. The lower Personal Lines current accident year losses were primarily due to the benefit of earned pricing outpacing loss trends in both personal automobile and homeowners lines, and moderated frequency trends, particularly in automobile collision and homeowners coverages.

We have been taking actions to improve financial results and reduce volatility within our Personal Lines segment. These actions include increasing pricing, changing certain policy terms and conditions, and being more selective on new business quoting, where permissible, around certain geographies, driver and vehicle history, and building and roof condition type. We were able to obtain pricing increases of approximately 15% in our homeowners line and approximately 12% in our personal automobile line during the first quarter of 2025 and believe that our ability to obtain pricing increases will continue. Consistent with our expectations, PIF declined in the first three months of 2025, driven by lower renewal business. As a result of our targeted actions in the Midwest, we expect our sequential PIF counts to continue to shrink throughout the year, although moderating from the levels we have recently experienced. Additionally, our Personal Lines net premiums written may be affected by price competition and the regulatory and overall macroeconomic environment. These factors, along with the aforementioned actions, may also affect our ability to maintain and improve underwriting results.

Other

Our Other segment had operating income of $0.8 million for the three months ended March 31, 2025, compared to $0.5 million for the three months ended March 31, 2024, an increase of $0.3 million.

Table of Contents

Reserve for Losses and Loss Adjustment Expenses

The table below provides a reconciliation of the gross beginning and ending reserve for unpaid losses and loss adjustment expenses.


	Three Months Ended
	March 31,
(in millions)	2025			2024
Gross reserve for losses and LAE, beginning of period	$	7,461.2		$	7,308.1
Reinsurance recoverable on unpaid losses		1,829.8			1,795.0
Net reserve for losses and LAE, beginning of period		5,631.4			5,513.1
Net incurred losses and LAE in respect of losses occurring in:
Current year		987.3			952.6
Prior year non-catastrophe loss development		(20.0	)		(10.4	)
Prior year catastrophe loss development		(12.0	)		(7.0	)
Total incurred losses and LAE		955.3			935.2
Net payments of losses and LAE in respect of losses occurring in:
Current year		236.5			236.1
Prior years		613.2			654.7
Total payments		849.7			890.8
Net reserve for losses and LAE, end of period		5,737.0			5,557.5
Reinsurance recoverable on unpaid losses		1,871.9			1,773.6
Gross reserve for losses and LAE, end of period	$	7,608.9		$	7,331.1

The table below summarizes the gross reserve for losses and LAE by line of business and division.


	March 31,		December 31,
(in millions)	2025		2024
Commercial multiple peril	$	1,615.6	$	1,563.4
Workers’ compensation		773.5		773.0
Commercial automobile		529.6		523.1
Other core commercial		770.2		753.9
Total Core Commercial		3,688.9		3,613.4
Specialty Property & Casualty		891.2		846.2
Professional and Executive Lines		631.3		610.1
Marine		135.4		134.2
Surety and Other		75.8		85.4
Total Specialty		1,733.7		1,675.9
Personal automobile		1,662.2		1,673.2
Homeowners and Other		461.9		435.8
Total Personal Lines		2,124.1		2,109.0
Total Other		62.2		62.9
Total loss and LAE reserves	$	7,608.9	$	7,461.2

Loss and LAE reserves in our “Other core commercial” lines include monoline general liability, commercial umbrella, and monoline property. “Specialty Property & Casualty” includes specialty industrial and commercial property, excess and surplus lines and specialty general liability coverage, and program business. “Professional and Executive Lines” includes management liability, fidelity and crime, professional liability and other property and liability lines for healthcare firms. Loss and LAE reserves in our “Total Other” segment relate to our run-off voluntary assumed property and casualty reinsurance pools business, and our run-off direct asbestos and environmental, and product liability businesses.

The following table summarizes prior year favorable development for the periods indicated:


	Three Months Ended March 31,
	2025									2024
(in millions)	Non-Catastrophe Losses			Catastrophe Losses			Total			Non-Catastrophe Losses			Catastrophe Losses			Total
Core Commercial	$	(1.3	)	$	(8.5	)	$	(9.8	)	$	(9.2	)	$	(3.8	)	$	(13.0	)
Specialty		(15.9	)		(2.5	)		(18.4	)		(1.1	)		(3.2	)		(4.3	)
Personal Lines		(2.8	)		(1.0	)		(3.8	)		(0.1	)		—			(0.1	)
Total prior year favorable development	$	(20.0	)	$	(12.0	)	$	(32.0	)	$	(10.4	)	$	(7.0	)	$	(17.4	)

Table of Contents

It is not possible to know whether the factors that affected loss reserves in the first three months of 2025 will also occur in future periods. We encourage you to read our 2024 Annual Report on Form 10-K for more information about our reserving process and the judgments, uncertainties and risks associated therewith.

Catastrophe Loss Development

For the three months ended March 31, 2025, favorable catastrophe loss development was $12.0 million, primarily due to lower than expected losses in our commercial multiple peril line related to events from accident years 2021 through 2023, including several convective storms across multiple states, and Winter Storm Elliot. For the three months ended March 31, 2024, favorable catastrophe development was $7.0 million, primarily due to lower than expected losses in our commercial multiple peril line related to 2022 and 2023 events, including hurricane Ian and tornadic activity.

2025 Loss and LAE Development, excluding catastrophes

For the three months ended March 31, 2025, net favorable loss and LAE development, excluding catastrophes, was $20.0 million. Specialty favorable loss and LAE development of $15.9 million was primarily due to lower than expected losses in our Marine division and, to a lesser extent, in our Professional and Executive Lines division. Within Core Commercial, lower than expected losses in our workers’ compensation line were largely offset by higher than expected losses in our commercial automobile line.

2024 Loss and LAE Development, excluding catastrophes

For the three months ended March 31, 2024, net favorable loss and LAE development, excluding catastrophes, was $10.4 million. Core Commercial favorable loss and LAE development of $9.2 million was due to lower than expected losses across several lines of business.

Reinsurance Recoverables

Reinsurance recoverables were $2,034.2 million and $1,994.5 million at March 31, 2025 and December 31, 2024, respectively, of which $69.3 million and $74.2 million, respectively, represent billable recoverables. A reinsurance recoverable is billable after an eligible reinsured claim is paid by an insurer. Billable reinsurance recoverables related to the Michigan Catastrophic Claims Association (the “MCCA”) were $36.2 million and $39.3 million at March 31, 2025 and December 31, 2024, respectively, and billable non-MCCA reinsurance recoverables totaled $33.1 million and $34.9 million at March 31, 2025 and December 31, 2024, respectively. At March 31, 2025 and December 31, 2024, there were $0.8 million of billed balances outstanding greater than 90 days.

Investments

Investment Results

Net investment income before income taxes was as follows:


	Three Months Ended March 31,
(dollars in millions)	2025			2024
Fixed maturities	$	93.3		$	75.7
Limited partnerships		7.5			9.2
Mortgage loans		2.9			3.7
Equity securities		0.9			0.8
Other investments		5.3			3.8
Investment expenses		(3.8	)		(3.5	)
Net investment income	$	106.1		$	89.7
Earned yield, fixed maturities		4.08	%		3.52	%
Earned yield, total portfolio		4.14	%		3.70	%

The increase in net investment income for the three months ended March 31, 2025 was primarily due to the impact of reinvesting at higher interest rates and the continued investment of operational cashflows, slightly offset by lower partnership income. Income from partnerships can vary significantly from period to period based on the performance in the underlying portfolios.

Table of Contents

Investment Portfolio

We held cash and investment assets diversified across several asset classes, as follows:


	March 31, 2025					December 31, 2024
(dollars in millions)	Carrying Value		% of Total Carrying Value			Carrying Value		% of Total Carrying Value
Fixed maturities, at fair value	$	8,808.3		88.0	%	$	8,542.2		86.8	%
Limited partnerships and other investments		426.1		4.3			405.0		4.1
Mortgage and other loans		294.1		3.0			304.9		3.1
Equity securities, at fair value		161.0		1.6			157.7		1.6
Cash and cash equivalents		315.1		3.1			435.5		4.4
Total cash and investments	$	10,004.6		100.0	%	$	9,845.3		100.0	%

Cash and Investments

Total cash and investments increased $159.3 million, or 1.6%, for the three months ended March 31, 2025 as compared to December 31, 2024. The increase was primarily due to net market value appreciation and continued investment of cashflows from operations, partially offset by the funding of financing activities, including our dividend payment.

The following table provides information about the investment types of our fixed maturities portfolio:


	March 31, 2025
(in millions) Investment Type	Weighted Average Quality	Amortized Cost, Net of Allowance for Credit Losses		Fair Value		Net Unrealized Gain (Loss)			Change in Net Unrealized for the Year
U.S. Treasury and government agencies	AA+	$	538.8	$	492.7	$	(46.1	)	$	12.3
Foreign governments	BB		2.3		2.4		0.1			—
Municipals:
Taxable	AA		948.9		860.6		(88.3	)		19.7
Tax-exempt	AA		23.5		23.3		(0.2	)		(0.5	)
Corporates	BBB+		4,030.1		3,938.8		(91.3	)		55.7
Asset-backed:
Residential mortgage-backed	AA+		2,375.7		2,263.0		(112.7	)		40.8
Commercial mortgage-backed	AAA		436.9		404.6		(32.3	)		9.7
Other asset-backed	AAA		822.5		822.9		0.4			1.2
Total fixed maturities	A+	$	9,178.7	$	8,808.3	$	(370.4	)	$	138.9

The improvement in net unrealized losses on fixed maturities was primarily due to lower interest rates, partially offset by wider credit spreads.

Amortized cost and fair value by rating category were as follows:


		March 31, 2025							December 31, 2024
(dollars in millions) NAIC Designation	Rating Agency Equivalent Designation	Amortized Cost, Net of Allowance for Credit Losses		Fair Value		% of Total Fair Value			Amortized Cost, Net of Allowance for Credit Losses		Fair Value		% of Total Fair Value
1	Aaa/Aa/A	$	7,062.3	$	6,755.1		76.7	%	$	7,000.1	$	6,577.8		77.0	%
2	Baa		1,673.0		1,612.8		18.3			1,623.5		1,535.3		18.0
3	Ba		226.5		227.4		2.6			221.7		222.5		2.6
4	B		189.0		187.7		2.1			180.3		182.4		2.1
5	Caa and lower		22.7		21.3		0.2			20.5		19.6		0.2
6	In or near default		5.2		4.0		0.1			5.4		4.6		0.1
Total fixed maturities		$	9,178.7	$	8,808.3		100.0	%	$	9,051.5	$	8,542.2		100.0	%

Table of Contents

Based on ratings by the National Association of Insurance Commissioners (“NAIC”), approximately 95% of our fixed maturity portfolio consisted of investment-grade securities at March 31, 2025 and December 31, 2024. The quality of our fixed maturity portfolio remains strong based on ratings, capital structure position, support through guarantees, underlying security, issuer diversification and yield curve position. Our U.S. Treasury and government agencies fixed maturities are directly or indirectly backed by the full faith and credit of the U.S. government. Our municipal bonds include revenue bonds and general obligations of state and local issuers. Corporate fixed maturities include publicly traded and privately placed securities in the industrial, financial, and utility sectors. Residential mortgage-backed securities are structured securities that are collateralized by residential real estate loans and are primarily U.S. agency-backed. Our commercial mortgage-backed securities are structured securities that are collateralized by commercial real estate loans and are well-diversified by geography, property type, expected maturity and vintage year. Our other asset-backed securities are structured securities that are primarily collateralized by consumer and corporate borrowings, including collateralized loan obligations.

Our investment portfolio primarily consists of fixed maturity securities whose fair value is susceptible to market risk, including interest rate changes. See also “Quantitative and Qualitative Disclosures about Market Risk” included in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our 2024 Annual Report on Form 10-K. Duration is a measurement used to quantify our inherent interest rate risk and analyze invested assets relative to our reserve liabilities.

The duration of our fixed maturity portfolio was as follows:


	March 31, 2025							December 31, 2024
(dollars in millions) Duration	Amortized Cost, Net of Allowance for Credit Losses		Fair Value		% of Total Fair Value			Amortized Cost, Net of Allowance for Credit Losses		Fair Value		% of Total Fair Value
0-2 years	$	1,703.0	$	1,699.7		19.3	%	$	1,590.6	$	1,587.6		18.6	%
2-4 years		1,861.0		1,841.0		20.9			2,172.8		2,130.5		24.9
4-6 years		2,408.8		2,251.3		25.6			2,376.9		2,175.1		25.5
6-8 years		2,835.9		2,690.1		30.5			2,557.0		2,346.3		27.5
8-10 years		221.5		208.5		2.4			219.1		201.2		2.3
10+ years		148.5		117.7		1.3			135.1		101.5		1.2
Total fixed maturities	$	9,178.7	$	8,808.3		100.0	%	$	9,051.5	$	8,542.2		100.0	%
Weighted average duration				4.5						4.4

Our fixed maturity and equity securities are carried at fair value. Financial instruments, whose value was determined using significant management judgment or estimation, constituted less than 1% of the total assets we measured at fair value. See also Note 4 – “Fair Value” in the Notes to Interim Consolidated Financial Statements.

Limited partnerships and other investments consist primarily of our interest in corporate middle market and real estate limited partnerships. Corporate middle market limited partnerships may invest in senior or subordinated debt, preferred or common equity or a combination thereof, of privately-held middle market businesses. Real estate limited partnerships hold equity ownership positions in real properties and invest in debt secured by real properties. Our limited partnerships are generally accounted for under the equity method, or as a practical expedient using the fund’s net asset value, with financial information provided by the partnership on a two or three month lag.

Mortgage and other loans consist of commercial mortgage loan participations, which represent our interest in commercial mortgage loans originated by a third-party. We share, on a pro-rata basis, in all related cash flows of the underlying mortgage loans, which are primarily investment-grade quality and diversified by geographic area and property type.

Equity securities primarily consist of U.S. income-oriented large capitalization common stocks and a broadly diversified U.S. equity index exchange-traded fund.

Although we expect to invest new funds primarily in investment-grade fixed maturities, we have invested, and expect to continue to invest, a portion of funds in below investment-grade fixed maturities, limited partnerships, common equity securities and other investment assets.

Impairments (Recoveries)

For the three months ended March 31, 2025, impairments were not significant. For the three months ended March 31, 2024, we recognized $0.3 million of recoveries on previously impaired fixed maturities.

Table of Contents

We held no fixed maturity securities or mortgage loans on non-accrual status at March 31, 2025 and December 31, 2024. The carrying value of fixed maturity securities on non-accrual status at March 31, 2024 was $14.8 million. At March 31, 2024, a mortgage loan with a carrying value of $7.1 million was also on non-accrual status. The effects on income of non-accruals compared with amounts that would have been recognized in accordance with the original terms of the fixed maturities and mortgage loan were not material for the three months ended March 31, 2024. Any defaults in the fixed maturities or mortgage loan portfolios in future periods may negatively affect investment income.

Unrealized Losses

Gross unrealized losses on fixed maturities at March 31, 2025 were $416.4 million, an improvement of $114.7 million compared to December 31, 2024, primarily due to lower interest rates, partially offset by wider credit spreads. At March 31, 2025, gross unrealized losses consisted primarily of $126.7 million on residential mortgage-backed securities, $116.3 million on corporate fixed maturities, $90.5 million on municipals and $47.7 million on U.S. government securities. See Note 3 – “Investments” in the Notes to Interim Consolidated Financial Statements.

We view gross unrealized losses on fixed maturities as non-credit related since it is our assessment that these securities will recover, allowing us to realize their anticipated long-term economic value. Further, we do not intend to sell, nor is it more likely than not we will be required to sell, such debt securities before this expected recovery of amortized cost (see also “Liquidity and Capital Resources”). Inherent in our assessment are the risks that market factors may differ from our expectations; we may decide to subsequently sell a security for unforeseen business needs or an economic purpose; or changes in the credit assessment from our original assessment may lead us to determine that a sale at the current value would maximize recovery on such investments. To the extent that there are such adverse changes, an impairment would be recognized as a realized loss. Although unrealized losses on fixed maturities are not reflected in the results of financial operations until they are realized, the fair value of the underlying investment, which does reflect the unrealized loss, is reflected in our Consolidated Balance Sheets.

The following table sets forth gross unrealized losses for fixed maturities by maturity period at March 31, 2025 and December 31, 2024. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations, with or without call or prepayment penalties, or we may have the right to put or sell the obligations back to the issuers.


	March 31,		December 31,
(in millions)	2025		2024
Due in one year or less	$	1.2	$	2.0
Due after one year through five years		47.6		55.1
Due after five years through ten years		174.5		235.0
Due after ten years		31.2		37.3
		254.5		329.4
Mortgage-backed and other asset-backed securities		161.9		201.7
Total fixed maturities	$	416.4	$	531.1

Our investment portfolio and shareholders’ equity can be significantly impacted by changes in market values of our securities. Market volatility could increase and defaults on fixed income securities could occur. As a result, we could incur additional realized and unrealized losses in future periods, which could have a material adverse impact on our results of operations and/or financial position.

The U.S. economy continued to expand at a solid pace during the first quarter of 2025, reflecting a stable labor market and moderating inflation. However, heightened geopolitical risks, including those driven by tariffs, create economic uncertainty, the extent of which is unknown. These risks, among others, may increase the likelihood of defaults on our fixed income investments, particularly with respect to non-investment grade debt securities. Although we perform rigorous credit analysis of our fixed income investments, it is difficult to identify with specificity which issuers, industries or markets, if any, will be most affected. As a result, the value of our fixed maturity portfolio could change rapidly in ways we cannot currently anticipate, and we could incur additional realized and unrealized losses in future periods.

Table of Contents

Other Items

Net income also included the following items:


	Three Months Ended March 31,
(in millions)	Core Commercial			Specialty			Personal Lines			Other			Total
2025
Net realized and unrealized investment losses	$	(8.0	)	$	(4.0	)	$	(5.2	)	$	(0.6	)	$	(17.8	)

2024
Net realized and unrealized investment gains	$	2.6		$	1.3		$	1.6		$	—		$	5.5
Other non-operating		—			—			—			(1.4	)		(1.4	)

We manage investment assets for our Core Commercial, Specialty, Personal Lines and Other segments based on the requirements of our combined property and casualty insurance companies. We allocate the investment income, expenses, and net realized and unrealized investment gains and losses to our Core Commercial, Specialty, Personal Lines and Other segments based on earned premium and actuarial information related to the underlying businesses.

Net realized and unrealized investment losses were $17.8 million for the three months ended March 31, 2025, compared to net realized and unrealized investment gains of $5.5 million for the three months ended March 31, 2024. For the three months ended March 31, 2025, net realized and unrealized investment losses were primarily due to $18.8 million of net realized losses from sales of investments, primarily lower-yield fixed maturities, in consideration of expiring tax gains from 2022, partially offset by changes in the fair value of equity securities. For the three months ended March 31, 2024, net realized and unrealized investment gains were primarily due to $6.5 million of changes in the fair value of equity securities, partially offset by net realized losses from sales of fixed maturities and other investments.

Income Taxes

We file a consolidated U.S. federal income tax return that includes our holding company and its domestic subsidiaries (including non-insurance operations).

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

The provision for income taxes from continuing operations was an expense of $31.9 million and $29.8 million for the three months ended March 31, 2025 and 2024, respectively. These amounts resulted in consolidated effective tax rates of 19.9% and 20.5% on pre-tax income for the three months ended March 31, 2025 and 2024, respectively. These provisions include excess tax benefits primarily related to stock-based compensation of $2.1 million and $1.1 million for the three months ended March 31, 2025 and 2024, respectively. Absent excess tax benefits, the provision for income taxes would have been an expense of $34.4 million and $31.3 million for the three months ended March 31, 2025 and 2024, respectively, or 21.5% for both periods.

The income tax provision on operating results was an expense of $36.1 million and $29.3 million for the three months ended March 31, 2025 and 2024, respectively. These provisions resulted in effective tax rates on operating income of 20.3% and 20.8% for the three months ended March 31, 2025 and 2024, respectively. These provisions reflect the aforementioned excess tax benefits related to stock-based compensation. Absent this item, the provision for income taxes would have been an expense of $38.2 million and $30.4 million for the three months ended March 31, 2025 and 2024, respectively, or 21.5% for both periods.

Critical Accounting Estimates

Interim consolidated financial statements have been prepared in conformity with U.S. GAAP and include certain accounting policies that we consider to be critical due to the amount of judgment and uncertainty inherent in the application of those policies. While we believe that the amounts included in our consolidated financial statements reflect our best judgment, the use of different assumptions could produce materially different accounting estimates. As disclosed in our 2024 Annual Report on Form 10-K, we believe the following accounting estimates are critical to our operations and require the most subjective and complex judgment:

•

Reserve for losses and loss expenses

•

Reinsurance recoverable balances

•

Pension benefit obligations

•

Investment credit losses

For a more detailed discussion of these critical accounting estimates, see our 2024 Annual Report on Form 10-K.

Table of Contents

Statutory Surplus of Insurance Subsidiaries

The following table reflects statutory surplus for our insurance subsidiaries:


	March 31,		December 31,
(in millions)	2025		2024
Total Statutory Capital and Surplus	$	3,098.3	$	2,971.7

The statutory capital and surplus for our insurance subsidiaries increased $126.6 million during the first three months of 2025. This increase was primarily due to operating profits, partially offset by net realized and unrealized investment losses.

Liquidity and Capital Resources

Liquidity is a measure of our ability to generate sufficient cash flows to meet the cash requirements of business operations. As a holding company, our primary ongoing source of cash is dividends from our insurance subsidiaries. However, dividend payments to us by our insurance subsidiaries are subject to limitations imposed by regulators, such as prior notice periods and the requirement that dividends in excess of a specified percentage of statutory surplus or prior years’ statutory earnings receive prior approval (so called “extraordinary dividends”). During the first three months of 2025, Hanover Insurance did not provide dividends to the holding company.

Sources of cash for our insurance subsidiaries primarily consist of premiums collected, investment income and maturing investments. Primary cash outflows are payments for losses and loss adjustment expenses, policy and contract acquisition expenses, other underwriting expenses, and investment purchases. Cash outflows related to losses and loss adjustment expenses can be variable because of uncertainties surrounding settlement dates for liabilities for unpaid losses and because of the potential for large losses, either individually or in the aggregate. We periodically adjust our investment policy to respond to changes in short-term and long-term cash requirements.

Net cash provided by operating activities was $38.9 million during the first three months of 2025, as compared to $58.7 million during the first three months of 2024, a decrease of $19.8 million. The decrease in cash provided was primarily due to higher payments made in the first quarter of 2025 related to prior year’s variable compensation costs, partially offset by an increase in premiums received and lower loss and LAE payments made during the first three months of 2025, as compared to the same period in 2024.

Net cash used in investing activities was $112.3 million during the first three months of 2025, as compared to $74.8 million during the first three months of 2024. During the first three months of 2025 and 2024, cash used in investing activities primarily related to net purchases of fixed maturities.

Net cash used in financing activities was $47.5 million during the first three months of 2025, as compared to $35.4 million during the first three months of 2024. During the first three months of 2025, cash used in financing activities primarily resulted from a quarterly dividend payment to our shareholders and, to a lesser extent, from repurchases of common stock through the open market. During the first three months of 2024, cash used in financing activities primarily resulted from a quarterly dividend payment to our shareholders.

Dividends to common shareholders are subject to quarterly board approval and declaration. During the first three months of 2025, as declared by the Board, we paid a quarterly dividend, of $0.90 per share, to our shareholders totaling $32.4 million. We believe that our holding company assets are sufficient to provide for future shareholder dividends should the Board of Directors declare them.

At March 31, 2025, THG, as a holding company, held approximately $236.6 million of fixed maturities and cash. We believe our holding company assets will be sufficient to meet our short-term obligations, which we expect to consist primarily of quarterly dividends to our shareholders (as and to the extent declared), interest on our senior and subordinated debentures, and certain costs associated with benefits due to our former life insurance subsidiaries’ employees and agents. As discussed below, we have, and opportunistically may continue to, repurchase our common stock and debt. We do not expect that it will be necessary to dividend additional funds from our insurance subsidiaries in order to fund short-term holding company obligations; however, we may decide to do so.

We expect to continue to generate sufficient positive operating cash to meet all short-term and long-term cash requirements relating to current operations, including the funding of our qualified defined benefit pension plan. We believe that this plan is fully funded. The ultimate payment amounts for our benefit plan is based on several assumptions, including but not limited to, the rate of return on plan assets, the discount rate for benefit obligations, mortality experience, interest crediting rates, inflation and the ultimate valuation and determination of benefit obligations. Since differences between actual plan experience and our assumptions are almost certain, changes, both positive and negative, to our current funding status and ultimately our obligations in future periods are likely.

Our insurance subsidiaries maintain a high degree of liquidity within their respective investment portfolios in fixed maturity and short-term investments. Volatility and uncertainty in the financial markets continued to affect the value of investments currently held by THG and its subsidiaries, many of which remain in unrealized loss positions. We believe that the quality of the assets we hold will allow us to realize the long-term economic value of our portfolio, including the securities that are currently in an unrealized loss position. We do not anticipate the need to sell these securities to meet our insurance subsidiaries’ cash requirements since we expect our insurance subsidiaries to generate sufficient operating cash to meet all short-term and long-term cash requirements relating to current operations. However, unforeseen business needs or other items may occur which could cause us to sell those securities in a loss position before their values fully recover, thereby resulting in the recognition of impairment charges in that time period.

Table of Contents

The Board of Directors authorized a stock repurchase program which provides for aggregate repurchases of our common stock of up to $1.3 billion. Under the repurchase authorization, we may repurchase, from time to time, common stock in amounts, at prices and at such times as we deem appropriate, subject to market conditions and other considerations. Repurchases may be executed using open market purchases, privately negotiated transactions, accelerated repurchase programs, or other transactions. We are not required to purchase any specific number of shares or to make purchases by any certain date under this program. During the first three months of 2025, we repurchased approximately 65,000 shares, at an aggregate cost of $11.0 million. As of March 31, 2025, we had repurchased approximately 8.1 million shares under this $1.3 billion program and had approximately $292 million available for additional repurchases.

We maintain our membership in the Federal Home Loan Bank (“FHLB”) to provide access to additional liquidity based on our holdings of FHLB stock and pledged collateral. At March 31, 2025, we had access to borrowing capacity of $325.8 million. There were no outstanding borrowings under this short-term facility at March 31, 2025; however, we have borrowed and may continue to borrow, from time to time, through this facility to provide short-term liquidity.

On July 21, 2023, we entered into a credit agreement that provides for a five-year unsecured revolving credit facility not to exceed $150.0 million at any one time outstanding, with the option to increase the facility up to $300.0 million (assuming no default and satisfaction of other specified conditions, including the receipt of additional lender commitments). The agreement also includes an uncommitted subfacility of $50.0 million for standby letters of credit. Borrowings, if any, under this agreement are unsecured and incur interest at a rate per annum equal to, at our election, either (i) the greatest of, (a) the prime commercial lending rate of the administrative agent, (b) the NYFRB Rate plus half a percent, or (c) the one month Adjusted Term SOFR Rate plus one percent; each subject to a margin that ranges from 0.125% to 0.625% depending on our debt rating, or (ii) Adjusted SOFR Rate for the applicable interest period, plus a margin that ranges from 1.125% to 1.625% depending on our debt rating. The agreement also contains certain financial covenants such as maintenance of specified levels of consolidated equity and leverage ratios. During the first three months of 2025, we had no borrowings under this credit agreement.

At March 31, 2025, we were in compliance with the covenants of our debt and credit agreements.

Contingencies and Regulatory Matters

Information regarding litigation, legal contingencies and regulatory matters appears in Part I – Note 12 “Commitments and Contingencies” in the Notes to Interim Consolidated Financial Statements.

ITEM 3

QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK

Our market risks, the ways we manage them, and sensitivity to changes in interest rates, and equity price risk are summarized in Management’s Discussion and Analysis of Financial Condition and Results of Operations as of December 31, 2024, included in our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no material changes in the first three months of 2025 to these risks or our management of them.

ITEM 4

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures Evaluation

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our “disclosure controls and procedures,” as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Limitations on the Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls over financial reporting will prevent all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or

Table of Contents

deterioration in the degree of compliance with policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

Based on our controls evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this quarterly report, our disclosure controls and procedures were effective to provide reasonable assurance that (i) the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) material information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate “internal control over financial reporting,” as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting, as required by Rule 13a-15(d) of the Exchange Act, to determine whether any changes occurred during the period covered by this quarterly report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on the evaluation, the Chief Executive Officer and Chief Financial Officer concluded that there were no such changes during the quarter ended March 31, 2025, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

The Company has been named a defendant in various legal proceedings arising in the normal course of business. In addition, the Company is involved, from time to time, in examinations, investigations and proceedings by governmental and self-regulatory agencies. The potential outcome of any such action or regulatory proceedings in which the Company has been named a defendant or the subject of an inquiry, examination or investigation, and its ultimate liability, if any, from such actions or regulatory proceedings, is difficult to predict at this time. The ultimate resolutions of such proceedings are not expected to have a material effect on the Company’s financial position, although they could have a material effect on the results of operations for a particular quarterly or annual period.

Table of Contents

ITEM 1A – RISK FACTORS

This document contains, and management may make, certain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, may be forward-looking statements. When used in our Management’s Discussion and Analysis, words such as: “believes,” “anticipates,” “expects,” “projections,” “outlook,” “should,” “could,” “plan,” “guidance,” “likely,” “on track to,” “potential,” “continue,” “targeted,” “designed,” and similar expressions are intended to identify forward-looking statements. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. We caution readers that accuracy with respect to forward-looking projections is difficult and subject to risks and uncertainties. Those risks and uncertainties, in some cases, have affected, and in the future could affect, our actual results and could cause our actual results for the remainder of 2025 and beyond to differ materially from historical results and from those expressed in any of our forward-looking statements. We operate in a business environment that is continually changing, and as such, new risk factors may emerge over time. Additionally, our business is conducted in competitive markets and, therefore, involves a higher degree of risk. We cannot predict these new risk factors, nor can we assess the impact, if any, that they may have on our business in the future.

Some of the factors that could cause actual results to differ include, but are not limited to, the following:

•

changes in the demand for our products;

•

risks and uncertainties with respect to our ability to retain profitable policies in force and attract profitable policies, and to increase rates commensurate with, or in excess of, loss trends;

•

adverse claims experience or changes in our estimates of loss and loss adjustment expense reserves, including with respect to catastrophes, which may result in lower current year underwriting results or adverse loss development, and could impact our carried reserves;

•

uncertainties with respect to the long-term profitability of our products, including with respect to newer products, or longer-tail products covering casualty losses;

•

disruption in our distribution channels, including the loss or disruption of our independent agency channel, and the impact of competition and consolidation in the industry and among agents and brokers;

•

changes in frequency and loss severity trends, exacerbated by fluctuations in economic conditions;

•

changes in regulation, legislation, economic, market and political conditions, particularly with respect to rates, policy terms and conditions, payment flexibility, and regions where we have geographical concentrations;

•

volatile and unpredictable developments, including severe weather and other natural physical events, catastrophes, pandemics, civil unrest, and terrorist actions, and the uncertainty in estimating the resulting losses;

•

impacts of changing climate conditions and weather patterns, causing higher levels of losses from weather events to persist and leading to new or enhanced regulations;

•

limitations on the physical ability to adjust claims or the availability of sufficient information to accurately estimate a loss at a point in time and the limitations and assumptions used to model property and casualty losses in general;

•

risks and uncertainties with respect to our ability to collect all amounts due from reinsurers and to maintain current levels of reinsurance in the future at commercially reasonable rates, or at all;

•

heightened volatility, fluctuations in interest rates (which have a significant impact on the market value of our investment portfolio and thus our book value), inflationary pressures, default rates, tariffs, difficult economic, market and political conditions, and other factors that affect investment returns from our investment portfolio;

•

recessionary economic periods that may inhibit our ability to increase pricing or renew business, and which may be accompanied by higher claims activity in certain lines;

•

risks and uncertainties associated with our participation in shared market mechanisms, mandatory reinsurance programs and mandatory and voluntary pooling arrangements, including the MCCA;

•

an increase in mandatory assessments by state guaranty funds;

•

actions by our competitors, many of which are larger or have greater financial resources than we do;

•

loss, prolonged illness or retirement of key employees;

•

operating difficulties and other unintended consequences from the introduction of new products and related technology changes and applications, including the use of pricing models and artificial intelligence, as well as new operating models, particularly as business processes become more digital;

Table of Contents

•

changes in our claims-paying and financial strength ratings;

•

negative changes in our level of statutory surplus;

•

risks and uncertainties with respect to our growth or operating strategies, or with respect to our expense and strategic initiatives;

•

our ability to declare and pay dividends;

•

changes in accounting principles and related financial reporting requirements;

•

errors or omissions in connection with the administration of any of our products;

•

risks and uncertainties with our operations and technology, including our internal and external information systems, such as cloud-based data information storage or network systems, information security, cyber risks, artificial intelligence, remote working capabilities, and/or outsourcing relationships and third-party operations and data security that may negatively impact our ability to conduct business;

•

an inability to be compliant with recently implemented regulations or existing regulations, such as those relating to Sarbanes-Oxley, or a failure of internal controls;

•

risks, uncertainties or unfavorable developments associated with enacted legislation, litigation matters, social inflation and the possibility of adverse judicial decisions, including those related to exposures to potentially harmful products or substances or those which expand policy coverage beyond its intended scope or award “bad faith,” or other non-contractual damages, and including those related to the Michigan legislation which was effective July 2, 2020 and reformed the prior requirements that all personal and commercial automobile polices issued in the state include no-fault personal injury protection coverage without a cap on maximum benefits allowed and the resulting increase in litigation challenging or associated with this reform;

•

risks and uncertainties associated with pandemics and related economic and socio-economic conditions; and

•

other factors described in such forward-looking statements.

In addition, historical and future reported financial results include estimates with respect to premiums written and earned, reinsurance recoverables, current accident year “picks,” loss and loss adjustment reserves and development, fair values of certain investments, other assets and liabilities, tax, contingent and other liabilities, and other items. These estimates are subject to change as more information becomes available.

Readers should not place undue reliance on forward-looking statements, which speak only as of the date they are made. We do not undertake any responsibility to update or revise our forward-looking statements, except as required by law.

For a more detailed discussion of our risks and uncertainties, see also Item 1A – Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2024.

Table of Contents

ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

Shares purchased in the first quarter of 2025 are as follows:



					Total Number of		Approximate Dollar Value of
					Shares Purchased as		Shares That May Yet
					Part of Publicly		be Purchased Under the
	Total Number of		Average Price		Announced Plans or		Plans or Programs
Period	Shares Purchased(1)		Paid per Share		Programs		(in millions)
January 1 - 31, 2025		—	$	—		—	$	303
February 1 - 28, 2025		60,956		170.00		—		303
March 1 - 31, 2025		64,987		169.79		64,846		292
Total		125,943	$	169.89		64,846	$	292

(1)

Includes 60,956 and 141 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 for the months ended February 28, and March 31, 2025.

ITEM 5 – OTHER INFORMATION

During the three months ended March 31, 2025, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted, modified, or terminated a contract, instruction or written plan for the purchase or sale of the Company’s securities intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or a non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933).

Table of Contents

ITEM 6 – EXHIBITS


EX – 31.1	Certification of the Chief Executive Officer, pursuant to 15 U.S.C. 78m, 78o(d), as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002.

EX – 31.2	Certification of the Chief Financial Officer, pursuant to 15 U.S.C. 78m, 78o(d), as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002.

EX – 32.1	Certification of the Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.

EX – 32.2	Certification of the Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.

EX – 101	The following materials from The Hanover Insurance Group, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 formatted in Inline eXtensible Business Reporting Language (“iXBRL”): (i) Consolidated Statements of Income for the three months ended March 31, 2025 and 2024; (ii) Consolidated Statements of Comprehensive Income for the three months ended March 31, 2025 and 2024; (iii) Consolidated Balance Sheets at March 31, 2025 and December 31, 2024; (iv) Consolidated Statements of Shareholders’ Equity for the three months ended March 31, 2025 and 2024; (v) Consolidated Statements of Cash Flows for the three months ended March 31, 2025 and 2024, and (vi) related notes to these financial statements.

EX – 104	The cover page from The Hanover Insurance Group Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, formatted in iXBRL (embedded within EX – 101).

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


		The Hanover Insurance Group, Inc.
		Registrant

May 1, 2025		/s/ John C. Roche
Date		John C. Roche
		President, Chief Executive Officer and Director


May 1, 2025		/s/ Jeffrey M. Farber
Date		Jeffrey M. Farber
		Executive Vice President and Chief Financial Officer