WORCESTER, Mass., Nov. 2 /PRNewswire-FirstCall/ -- Third Quarter
2009 Financial Highlights -- Net income of $49.7 million, or $0.97
per share, compared to a net loss of $61.8 million, or $1.21 per
share in the third quarter of 2008. The third quarter of 2008
reflected substantial catastrophe losses from hurricanes Ike and
Gustav, a high level of realized losses on investments, and a loss
from the discontinued FAFLIC business -- Segment income after
tax(1) of $45.3 million, or $0.89 per share, compared to $3.3
million, or $0.07 per share in the prior-year quarter -- Combined
ratio of 97.6%, compared to 107.8% in the prior-year quarter;
ex-catastrophe combined ratio(2) of 93.7%, compared to 92.0% in the
prior-year quarter -- Net premiums written of $688.8 million, 5.7%
higher than the prior-year quarter -- Book value per share
increased to $48.06, an increase of 10% from June 30, 2009, and a
30% increase from year end 2008 -- As previously announced, The
Hanover's Board of Directors approved a 67% increase in the
company's annual shareholder dividend and increased its existing
stock repurchase authorization by $100 million (Logo:
http://www.newscom.com/cgi-bin/prnh/20051031/NEM023LOGO ) Financial
Highlights $in millions, except per share amounts Quarter ended
September 30 -------------------------------------- ---------------
2009 2008 ==== ==== Total Segment Income after taxes $45.3 $3.3
Federal income tax settlement - 6.4 Net realized investment losses
- (52.8) Retirement of corporate debt 0.2 - Income tax benefit
(expense) on non-segment income 3.1 (0.4) --- ----- Income (Loss)
from Continuing Operations 48.6 (43.5) Discontinued Operations 1.1
(18.3) --- ------ Net Income (Loss) $49.7 $(61.8) ----- ------- Net
Income (Loss) per share (Diluted)(3) $0.97 $(1.21)
======================================= ===== ====== (1) Segment
income (pre-tax), segment income after-tax and segment income
after-tax per share are non-GAAP measures. The reconciliation of
these measures to the closest GAAP measure, income from continuing
operations, is provided on page 12 of this press release. See
"Non-GAAP financial measures", starting on page 9 of this press
release. (2) Ex-catastrophe combined ratio is a non-GAAP measure.
The closest GAAP measure is the combined ratio. See "Non-GAAP
financial measures", starting on page 9 of this press release. (3)
Per share data for the quarter ended September 30, 2008 represents
basic loss per share due to anti-dilution. The Hanover Insurance
Group, Inc. (NYSE:THG) today reported net income for the third
quarter of 2009 of $49.7 million, or $0.97 per share, compared to a
loss of $61.8 million, or $1.21 per share, in the third quarter of
the prior year. The third quarter of 2008 included $52.8 million of
realized losses on investments, or $1.04 per share, and a loss from
discontinued operations of $18.3 million, or $0.36 per share. The
third quarter of 2009 included $3.1 million, or $0.06 per share, of
federal income tax benefit on non-segment income related to a
release of a tax valuation allowance associated with realized
investment losses recorded earlier in 2009. Total Property and
Casualty pre-tax segment income was $73.6 million in the third
quarter of 2009, compared to $13.8 million in the third quarter of
the prior year. The third quarter of 2009 included significantly
lower pre-tax catastrophe losses of $24.7 million, compared to
$98.2 million in the prior-year quarter. Excluding the pre-tax net
impact of catastrophes, Property and Casualty pre-tax segment
income would have been $98.3 million in the third quarter of 2009,
compared to $112.0 million in the third quarter of 2008. "Our core
business continues to demonstrate strong fundamentals and we are
pleased with the momentum we have in all of our strategic
initiatives," said Frederick H. Eppinger, chief executive officer
at The Hanover. "Our growth for the quarter of 6%, which was driven
by our increasingly specialized commercial business, is ahead of
industry averages and is notable given contractions in the economy.
We also achieved growth in book value per share of 10% during the
quarter." "Our company is in excellent financial condition and our
balance sheet is extremely strong, as underscored by our board of
directors' decision two weeks ago to increase our common stock
dividend by 67% and move to a quarterly dividend schedule next
year. Our recent decision to increase our share repurchase
authorization by $100 million also highlights the strength of our
capital position." The following table details pre-tax segment
income (loss). $in millions, except per share amounts Quarter ended
Year-to-date September 30 September 30
-------------------------------------- ------------- ------------
2009 2008(1) 2009 2008 ---- ------ ---- ---- Personal Lines(2)
$27.4 $18.1 $56.1 $83.8 Commercial Lines(3) 38.7 (6.6) 137.2 114.1
Other Property and Casualty 7.5 2.3 6.5 6.8 --- --- --- --- Total
Property & Casualty 73.6 13.8 199.8 204.7 Interest expense on
corporate debt (6.3) (10.0) (27.2) (29.9) ---- ----- ----- -----
Total pre-tax segment income 67.3 3.8 172.6 174.8 Federal income
tax expense (22.0) (0.5) (56.9) (58.4) ----- ---- ----- ----- Total
segment income after taxes (4) $45.3 $3.3 $115.7 $116.4 ----- ----
------ ------ Per share(4) $0.89 $0.07 $2.25 $2.25 ========= =====
===== ===== ===== (1) Per share data for the quarter ended
September 30, 2008 represents basic loss per share due to
anti-dilution. (2) Includes Personal Lines pre-tax net impact of
catastrophes of $15.4 million and $39.7 million for the third
quarters of 2009 and 2008, respectively. (3) Includes Commercial
Lines pre-tax net impact of catastrophes of $9.3 million and $58.5
million for the third quarters of 2009 and 2008, respectively. (4)
See reconciliation from segment income to net income (loss) at the
end of this document. The following table summarizes the components
of the GAAP combined ratio for the Property and Casualty segment:
Quarter ended Year-to-date September 30 September 30 -------------
------------ 2009 2008 2009 2008 ---- ---- ---- ---- Personal Lines
losses (excluding catastrophes) 56.1% 54.1% 56.8% 54.5% Personal
Lines catastrophe-related losses 4.2% 10.8% 5.9% 6.8% Total
Personal Lines losses 60.3% 64.9% 62.7% 61.3% Commercial Lines
losses (excluding catastrophes) 43.3% 44.1% 41.8% 38.0% Commercial
Lines catastrophe-related losses 3.4% 23.2% 3.5% 10.7% Total
Commercial Lines losses 46.7% 67.3% 45.3% 48.7% Total P&C
Losses 53.0% 65.8% 54.8% 56.2% Loss adjustment expenses 10.3% 10.5%
9.7% 10.5% Policy acquisition and other underwriting expenses 34.3%
31.5% 33.9% 32.4% Combined Ratio 97.6% 107.8% 98.4% 99.1% Combined
Ratio (excluding catastrophes) 93.7% 92.0% 93.5% 90.7%
========================= ==== ==== ==== ==== Personal Lines
Personal Lines pre-tax segment income was $27.4 million in the
third quarter of 2009, compared to $18.1 million in the third
quarter of 2008. The Personal Lines GAAP combined ratio was 100.2%
in the current quarter, compared to 102.8% in the prior-year
quarter. The pre-tax net impact of catastrophes was $15.4 million,
or 4.2 points of the combined ratio in the third quarter of 2009,
compared to $39.7 million, or 10.8 points in the third quarter of
2008. Excluding the pre-tax net impact of catastrophes, Personal
Lines pre-tax segment income would have been $42.8 million in the
current quarter, compared to $57.8 million in the prior-year
quarter. The year-over-year decline in ex-catastrophe earnings is
primarily the result of higher expenses, lower favorable
development of prior-year loss reserves, lower net investment
income and an increase in our ex-catastrophe current accident year
losses, driven by elevated non-catastrophe weather losses in our
homeowners line. Higher underwriting expenses were driven by
continued investments in our Personal Lines business and higher
pension expenses. The year-over-year comparison was also affected
by a reduction of variable compensation expenses made in the third
quarter of 2008. Favorable development of prior-year loss and LAE
reserves in the third quarter of 2009 was $11.0 million, or 3.0
points of the combined ratio, compared to $15.7 million, or 4.3
points in the prior-year quarter. Net premiums written were $396.7
million in the third quarter of 2009, compared to $397.5 million in
the third quarter of 2008. A reduction in the average written
premium per policy, offset by improved pricing, drove the
relatively flat year-over-year results. The lower average written
premium per policy is primarily the result of planned changes in
business mix toward more desirable account business. Commercial
Lines Commercial Lines pre-tax segment income was $38.7 million in
the third quarter of 2009, compared to a loss of $6.6 million in
the third quarter of 2008. The Commercial Lines GAAP combined ratio
was 97.8% in the third quarter of 2009, compared to 115.1% in the
third quarter of 2008. Catastrophe related losses were $9.3 million
or 3.4 points of the third quarter combined ratio in 2009, compared
to $58.5 million, or 23.2 points in the prior-year quarter.
Excluding the pre-tax net impact of catastrophes, Commercial Lines
pre-tax segment income would have been $48.0 million in the third
quarter of 2009, compared to $51.9 million in the prior-year
quarter, primarily due to higher underwriting expenses, partially
offset by lower ex-catastrophe accident year losses. The higher
expenses result from continued investments in our Commercial Lines
businesses, including expenses related to recently acquired
subsidiaries. As in Personal Lines, higher pension costs in the
third quarter of 2009 and a reduction of variable compensation
expenses in the third quarter of 2008 also negatively impacted the
year-over-year expense comparison. Accident year losses were lower
in the third quarter compared to the prior-year quarter,
attributable to lower commercial multi-peril lines large losses,
which were partially offset by a moderate increase in the severity
of losses in other lines of business, which we believe were driven
by economic conditions. Favorable development of prior-year loss
and LAE reserves in the third quarter of 2009 was $21.3 million, or
7.8 points of the combined ratio, compared to $22.4 million, or 8.9
points in the prior-year quarter. Net premiums written were $292.1
million in the third quarter of 2009, compared to $254.1 million in
the third quarter of 2008. Growth in the company's specialty
businesses, including AIX Holdings, Inc., which was acquired in
November 2008, commercial niches, marine and Hanover Professionals
accounted for the year-over-year growth in net written premium.
Other Property & Casualty Other Property & Casualty's
pre-tax segment income was $7.5 million in the third quarter of
2009, compared to $2.3 million in the prior-year quarter. The
increase is attributable to favorable reserve development of $10.5
million from our run-off voluntary pools business, primarily as a
result of a third party actuarial study. This was partially offset
by higher pension expenses and lower net investment income due to a
lower level of holding company invested assets. Investment Results
Net investment income from continuing operations decreased by $3.4
million, to $62.1 million for the third quarter of 2009, compared
to $65.5 million in the same period in 2008. This decrease is
primarily due to our utilization of fixed maturities to fund the
2009 repurchase of corporate debt, which also resulted in a $3.7
million lower pre-tax interest expense during the quarter, compared
to the same period in 2008. In the third quarter of 2009, the
company recognized impairment charges to earnings of $6.1 million
on certain fixed maturity and equity securities, which were offset
by pre-tax net investment gains of $6.1 million from sales of fixed
maturity securities. In the third quarter of 2008, the company
recognized impairments of $53.1 million on fixed maturity
securities, partially offset by pre-tax net realized gains on sales
of securities of $0.3 million. Realized gains/(losses) related to
continuing operations:
--------------------------------------------- Quarter ended
September 30, 2009 ($in millions) ------------- ------------- Net
gains on sales of securities $6.1 --------------------------------
---- Impairment charges to earnings:
------------------------------- Investment grade fixed maturities
(1.7) --------------------------------- ---- Below investment grade
fixed maturities (3.9) --------------------------------------- ----
Equity securities (0.5) ----------------- ---- Total net realized
gains (losses) $- ================================ == Investment
Portfolio The Company held $5.3 billion in cash and investment
assets at September 30, 2009, including cash and investment assets
associated with the discontinued accident and health business.
Fixed maturities and cash with a carrying value of $5.2 billion
represented 97% of our investment portfolio. Approximately 93% of
our fixed maturity portfolio is rated investment grade. The
following table provides information about the company's fixed
maturity and other investments as of September 30, 2009: $ in
millions Investment Type Weighted Amortized Carrying Net Average
Cost Value Unrealized Quality Gain (Loss) Corporates:(1) NAIC 1 A
$902.1 $936.3 $34.2 NAIC 2 BBB 1,059.8 1,103.5 43.7 NAIC 3 or below
B+ 298.2 294.6 (3.6) ----- ----- ---- Total Corporates BBB+ 2,260.1
2,334.4 74.3 MBS/CMBS/ABS: MBS AA+ 922.1 938.4 16.3 CMBS AA+ 336.7
337.8 1.1 ABS A- 67.3 70.1 2.8 Municipals: Taxable AA- 631.2 635.9
4.7 Tax Exempt A+ 204.8 208.2 3.4 U.S. Government AAA 385.8 388.6
2.8 ----- ----- --- Total Fixed Maturities A+ 4,808.0 4,913.4 105.4
Perpetual Preferred Securities 32.4 36.3 3.9 Common Equity
Securities 77.4 85.7 8.3 ---- ---- --- Total fixed maturities and
equity securities 4,917.8 5,035.4 117.6 Cash and cash equivalents
241.3 241.3 - Mortgage loans 20.4 20.4 - Other long-term
investments 14.7 16.7 2.0 ---- ---- --- $5,194.2 $5,313.8 $119.6
======== ======== ====== (1) NAIC 1 is generally equivalent to an
investment grade rating agency designation of "A" or above; NAIC 2
is generally equivalent to an investment grade rating agency
designation of "BBB"; and NAIC 3 or below is generally equivalent
to an non-investment grade rating agency designation of "BB" or
below. Book Value and Capital Management The following exhibit
provides a roll forward of book value for the quarter ended
September 30, 2009: Quarter Ended September 30, 2009
================== $in millions, except per share $Amounts $Per
Share ------------------------------ -------- ---------- Beginning
of Period Book Value $2,221.1 $43.75 Net Income Continuing
Operations 48.6 0.97 Discontinued Operations 1.1 0.02 Change in
AOCI, net of tax Change in Pension and Postretirement Related
Benefits 3.2 0.07 Change in Net Unrealized Investment Position
159.0 3.18 Shares repurchased at cost (1) (29.1) -- Common Stock
Net Activity 3.2 0.07 --- ---- Ending of Period Book Value $2,407.1
$48.06 =========================== ======== ====== (1) Includes the
per share effect of repurchases on beginning book value. At
September 30, 2009, book value per share was $48.06, a 10% increase
from June 30, 2009. During the third quarter 2009, the company
repurchased approximately 725,000 of its common shares for $29.0
million. At the end of the quarter, the company had $103.7 million
of capacity remaining under its recently expanded $200 million
stock repurchase program. As was announced on October 20, 2009, the
company's Board of Directors declared an annual dividend of $0.75
per share, which represents an increase of 30 cents, or 67% from
the dividend paid last year. The board also announced its intention
to move to a quarterly dividend in 2010. Additionally, as was
announced on September 25, 2009, the company completed the process
of refinancing a portion of the $211.6 million senior and
subordinated debt that it had previously repurchased and retired,
by drawing a loan from the Federal Home Loan Bank in the amount of
$125.0 million at a fixed rate of 5.5% over a 20-year term.
Earnings Conference Call The Hanover will host a conference call to
discuss the company's third quarter results on Tuesday, November 3,
at 10:00 a.m. Eastern Time. A PowerPoint slide presentation will
accompany prepared remarks and has been posted on the company's Web
site. Interested investors and others can listen to the call and
access the presentation through The Hanover's Web site, located at
http://www.hanover.com/. Web-cast participants should go to the Web
site 15 minutes early to register, download, and install any
necessary audio software. A re-broadcast of the conference call
will be available on this Web site approximately two hours after
the call. Statistical Supplement The Hanover's third quarter
earnings news release and statistical supplement are available in
the Investors section at http://www.hanover.com/. Forward-Looking
Statements and Non-GAAP Financial Measures Forward-looking
statements Certain statements in this release or in the above
referenced conference call, may be forward-looking statements as
defined in the Private Securities Litigation Reform Act of 1995.
Use of the words "believes," "anticipates," "expects,"
"projections," "outlook," "should," "could," "confident," "plan,"
"guidance," "on track to" and similar expressions is intended to
identify forward-looking statements. The company cautions investors
that any such forward-looking statements are estimates or
projections which involve significant judgment and not guarantees
of future performance, and actual results could differ materially.
In particular, statements in the above referenced conference call
regarding expectations for 2009, 2010 and beyond, including with
respect to net written premium and policies in force growth,
retention, new business growth, the ability to achieve rate
increases, net investment income, the potential impact of capital
actions and business investments, our financial strength, accident
year loss ratios, the impact of product, account-based and
geographic mix changes on future profitability, prior-year loss and
loss adjustment expense reserve development from our continuing and
run-off operations, segment income, expenses and expense ratios,
effective tax rates, weighted shares outstanding and returns on
equity are forward-looking statements. Statements regarding the
possible impact of the current disruption in the credit markets and
in the property and casualty industry, including the effect of
current economic conditions on our business and investment
portfolio, and with respect to the anticipated pricing environment,
are also forward looking statements. Investors should consider the
risks and uncertainties in our business and under current financial
market conditions that may affect such estimates and future
performance, including (i) the inherent difficulties in arriving at
such estimates, particularly with respect to current accident year
results and loss reserve development; (ii) the complexity of
estimating losses from large catastrophe events or with respect to
emerging issues such as "Chinese drywall" where circumstances may
delay reporting of the existence, nature or extent of losses or
where "demand surge," regulatory assessments, litigation, coverage
and technical complexities or other factors may significantly
impact the ultimate amount of such losses; (iii) the difficulties
of estimating the impact of the current financial turmoil on the
value of our investment portfolio and future investment income,
including the amount of realized losses and impairments which will
be recognized in future financial reports and our ability and
intent to hold such investments until recovery; (iv) the
uncertainties in current circumstances of future rating agency
requirements, which could affect the company as well as the
company's investment portfolio; and (v) the impact on our capital
and liquidity of the current financial turmoil. Investors are
directed to consider the risks and uncertainties in the company's
business that may affect future performance and that are discussed
in readily available documents, including the company's annual
report and other documents filed by The Hanover with the Securities
and Exchange Commission and which are also available at
http://www.hanover.com/ under "Investors." These uncertainties
include the possibility of adverse catastrophe experiences
(including terrorism) and severe weather, the uncertainty in
estimating weather-related losses, the uncertainties in estimating
property and casualty losses (particularly with respect to products
with longer tails or involving emerging issues and with respect to
losses incurred as the result of new lines of business), the
possibility of adverse judicial decisions, including those which
expand policy coverage beyond its intended scope, the ability to
increase or maintain certain property and casualty insurance rates,
the impact of new product introductions (such as our Management
Liability products) and expansion in geographic areas, the impact
of the company's acquisition of AIX Holdings, Inc., adverse loss
development and adverse trends in mortality and morbidity and
medical costs, changes in frequency and loss trends, the ability to
improve renewal rates and increase new property and casualty policy
counts, investment impairments (which may be affected by, among
other things, our ability and willingness to hold investment assets
until they recover in value), heightened competition (including
increasing rate pressure, particularly in Commercial Lines), the
continued deterioration of the economic environment, particularly
in the state of Michigan, where the company has a significant
portion of its business, adverse state and federal legislation or
regulation or regulatory actions (including in the state of
Michigan where the Governor announced efforts to freeze automobile
rates and to initiate actions to reduce automobile insurance rates
and to make them "affordable...fair...and equitable"), financial
ratings actions, uncertainties in estimating FIN 45 liabilities
recorded in conjunction with indemnity obligations undertaken in
connection with the sale of various businesses, including our
former life companies, and increased uncertainties in general
economic conditions and in investment and financial markets, which,
among other things, could result in increased impairments of fixed
income investments or the inability to collect from reinsurers and
the performance of the discontinued voluntary pools, including the
inherent uncertainty regarding the types of claims in this pool and
the uncertainty whether the reserves would be sufficient. Non-GAAP
financial measures The Hanover uses non-GAAP financial measures as
important measures of the Company's operating performance,
including total segment income, segment income after tax, segment
income after-tax per share, property and casualty segment income,
and measures of segment income and loss ratios excluding
catastrophe losses and reserve development. Segment income
(sometimes referred to as Property and Casualty segment income) is
net income, excluding federal income taxes and net realized
investment gains and losses, including gains or losses on certain
derivative instruments, because fluctuations in these gains and
losses are determined by interest rates, financial markets and the
timing of sales. Segment income also excludes net gains and losses
on disposals of businesses, discontinued operations, restructuring
costs, extraordinary items, the cumulative effect of accounting
changes and certain other items. Segment income is the sum of the
segment income from: Personal Lines, Commercial Lines, and Other
Property and Casualty. The Hanover believes that measures of total
segment income provide investors with a valuable measure of the
performance of the Company's ongoing businesses because they
highlight net income attributable to the core operations of the
business. The Hanover also provides measures of segment income and
loss ratios that exclude the effects of catastrophe losses. A
catastrophe is a severe loss, resulting from natural or manmade
events, including risks such as fire, hurricane, earthquake,
windstorm, explosion, terrorism or other similar events. Each
catastrophe has unique characteristics. Catastrophes are not
predictable as to timing or loss amount in advance. The Hanover
believes that a discussion of the effect of catastrophes is
meaningful for investors to understand the variability of periodic
earnings and loss ratios. Reserve development, which can be
favorable or unfavorable, represents changes in our estimate of the
costs to pay claims from prior years. We believe that a discussion
of segment income excluding reserve development is helpful to
investors since it provides some insight into our estimate of
current year accident results. Income from continuing operations is
the most directly comparable GAAP measure for total segment income
and measures of segment income that exclude the effects of
catastrophe losses or reserve development. Segment income and
measures of segment income that exclude the effects of catastrophe
losses or reserve development should not be construed as
substitutes for net income determined in accordance with GAAP. A
reconciliation of income from continuing operations to segment
income for the quarters ended September 30, 2009 and 2008 is set
forth in the table at the end of this document and in the
statistical supplement. Loss ratios calculated in accordance with
GAAP are the most directly comparable GAAP measure for loss ratios
calculated excluding the effects of catastrophe losses. The
presentation of loss ratios calculated excluding the effects of
catastrophe losses should not be construed as a substitute for loss
ratios determined in accordance with GAAP. The Hanover Insurance
Group, Inc., based in Worcester, Mass., is the holding company for
a group of insurers that includes The Hanover Insurance Company,
also based in Worcester, Citizens Insurance Company of America,
headquartered in Howell, Michigan, and their affiliates. The
Hanover offers a wide range of property and casualty products and
services to individuals, families and businesses through an
extensive network of independent agents, and has been meeting its
obligations to its agent partners and their customers for more than
150 years. Taken as a group, The Hanover ranks among the top 30
property and casualty insurers in the United States. Contact
Information Investors: Media: Oksana Lukasheva Michael F. Buckley
E-mail: E-mail: 1-508-855-2063 1-508-855-3099 Definition of
Reported Segments Our continuing operations include three Property
and Casualty operating segments: Personal Lines, Commercial Lines,
and Other Property and Casualty. The Personal Lines segment markets
automobile, homeowners and ancillary coverages to individuals and
families. The Commercial Lines segment offers a suite of products
targeted at the small to mid-size business markets, which include
commercial multiple peril, commercial automobile, workers'
compensation and other commercial coverages, such as fidelity and
surety bonds, and inland marine. The Other Property and Casualty
segment includes Opus Investment Management, Inc., which provides
investment management services to institutions, pension funds and
other organizations, as well as a block of run-off voluntary pools
business, in which we have not actively participated since 1995.
THE HANOVER INSURANCE GROUP, INC. $in millions, except per share
amounts Quarter ended --------------------------------------
September 30 ------------- 2009 2008 ---- ---- Net income (loss)
$49.7 $(61.8) Net income (loss) per share (diluted)(1) $0.97
$(1.21) Weighted average shares(2) 51.2 51.0
================================ ==== ==== (1) Per share data for
the quarter ended September 30, 2008 represents basic loss per
share due to anti-dilution. (2) Weighted average shares outstanding
for the quarter ended September 30, 2008 represents basic shares
outstanding due to anti-dilution. The following is a reconciliation
from segment income to net income (loss) (1): Quarter ended
September 30 $in millions, except per share 2009 2008
---------------------------------- ------------------------- Per
Per $ Share(3) $ Share(2) Property and Casualty Personal Lines
$27.4 $-- $18.1 $-- Commercial Lines 38.7 -- (6.6) -- Other
Property & Casualty 7.5 -- 2.3 -- --- --- Total Property and
Casualty 73.6 -- 13.8 -- Interest expense on corporate debt (6.3)
-- (10.0) -- ----- --- ----- --- Total segment income 67.3 1.32 3.8
0.08 Federal income tax expense on segment income (22.0) (0.43)
(0.5) (0.01) ----- ----- ----- ----- Total segment income after
federal income taxes 45.3 0.89 3.3 0.07 Federal income tax
settlement -- -- 6.4 0.13 Net realized investment losses -- --
(52.8) (1.04) Gain on retirement of corporate debt 0.2 -- -- --
Federal income tax benefit (expense) on non-segment income 3.1 0.06
(0.4) (0.01) --- ---- ----- ----- Income (loss) from continuing
operations, net of taxes 48.6 0.95 (43.5) (0.85) Gain (loss) from
discontinued FAFLIC businesses (including loss on assets
held-for-sale of $6.1 and $72.2 in 2008) 0.4 0.01 (21.7) (0.42)
Gain (loss) from discontinued accident and health business 0.7 0.01
-- -- Income from operations of AMGRO (including gain on disposal
of $11.1 in 2008) -- -- -- -- Gain on disposal of variable life and
annuity business -- -- 2.7 0.05 Other -- -- 0.7 0.01 --- --- ---
---- Net income (loss)(4) $49.7 $0.97 $(61.8) $(1.21)
==================== ===== ===== ====== ====== Nine months ended
September 30 $in millions, except per share 2009 2008
---------------------------------- ------------------------- Per
Per $ Share(3) $ Share(2) Property and Casualty Personal Lines
$56.1 $-- $83.8 -- Commercial Lines 137.2 -- 114.1 -- Other
Property & Casualty 6.5 -- 6.8 -- --- --- Total Property and
Casualty 199.8 -- 204.7 -- Interest expense on corporate debt
(27.2) -- (29.9) -- ------ --- ------ --- Total segment income
172.6 3.36 174.8 3.37 Federal income tax expense on segment income
(56.9) (1.11) (58.4) (1.12) ------ ------ ------ ----- Total
segment income after federal income taxes 115.7 2.25 116.4 2.25
Federal income tax settlement -- -- 6.4 0.12 Net realized
investment losses (9.7) (0.19) (60.7) (1.17) Gain on retirement of
corporate debt 34.5 0.67 -- -- Federal income tax benefit (expense)
on non-segment income (8.6) (0.16) (0.4) (0.01) ----- ------ -----
----- Income (loss) from continuing operations, net of taxes 131.9
2.57 61.7 1.19 Gain (loss) from discontinued FAFLIC businesses
(including loss on assets held-for-sale of $6.1 and $72.2 in 2008)
6.3 0.12 (92.9) (1.80) Gain (loss) from discontinued accident and
health business (2.4) (0.05) Income from operations of AMGRO
(including gain on disposal of $11.1 in 2008) -- -- 10.1 0.20 Gain
on disposal of variable life and annuity business 4.1 0.08 8.1 0.16
Other -- -- (0.5) (0.01) --- --- ----- ----- Net income (loss)(4)
$139.9 $2.72 $(13.5) $(0.26) ==================== ====== =====
======= ====== (1) In accordance with generally accepted accounting
principles, the separate financial information of each segment is
presented consistent with the way results are regularly evaluated
by the chief operating decision maker in deciding how to allocate
resources and in assessing performance. Management evaluates the
results of the aforementioned segments on a pre-tax basis. Segment
income is determined by adjusting net income for net realized
investment gains and losses because fluctuations in these gains and
losses are determined by interest rates, financial markets and the
timing of sales. Also, segment income excludes net gains and losses
on disposals of businesses, discontinued operations, restructuring
costs, extraordinary items, the cumulative effect of accounting
changes and certain other items. (2) Per share data represents
basic loss per share due to anti-dilution. (3) Per share data is
per diluted share of common stock. (4) Per share data from the
quarter ended September 30, 2008 represents basic loss per share
due to anti-dilution. Basic income (loss) per share was $0.98 for
quarter ended September 30, 2009, and $2.75 and $(0.26) for the
nine months, 2009 and 2008, respectively.
http://www.newscom.com/cgi-bin/prnh/20051031/NEM023LOGO
http://photoarchive.ap.org/ DATASOURCE: The Hanover Insurance
Group, Inc. CONTACT: Investors, Oksana Lukasheva, +1-508-855-2063,
, or Media, Michael F. Buckley, +1-508-855-3099, , both of The
Hanover Insurance Group Web Site: http://www.hanover.com/
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