HANOVER INSURANCE GROUP, INC.

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 earnings volatility.

During the six months ended June 30, 2026, our net income was $378.4 million, compared to $285.3 million for the six months ended June 30, 2025, an improvement of $93.1 million. This favorable change was primarily due to higher after-tax operating income.

Operating income before interest expense and income taxes (a non-GAAP financial measure; see also “Results of Operations – Consolidated – Non-GAAP Financial Measures”) was $502.1 million for the six months ended June 30, 2026, compared to $396.3 million for the six months ended June 30, 2025, an improvement of $105.8 million. This increase was primarily due to improvements in current accident year losses, principally in Personal Lines, higher net investment income, earned premium growth and lower catastrophe losses.

Pre-tax catastrophe losses were $190.7 million for the six months ended June 30, 2026, compared to $203.1 million during the same period of 2025, a decrease of $12.4 million. The catastrophe losses in the first six months of 2026 were primarily due to severe convective storms across multiple states. Included in pre-tax catastrophe losses were $61.7 million and $18.0 million for the six months ended June 30, 2026 and 2025, respectively, of favorable prior year catastrophe reserve development. The favorable development in the first six months of 2026 largely related to 2025 catastrophe events. Net favorable development on prior years’ non-catastrophe loss reserves was $46.5 million for the six months ended June 30, 2026, compared to $38.2 million for the six months ended June 30, 2025, an increase of $8.3 million.

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 core commercial (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 independent agents, enhancing franchise value through selective distribution, distinctive products and coverages, and through continued investment in products for additional industry segmentation.

Net premiums written increased 5.7% in the first six months of 2026, compared to the same period in 2025, primarily due to renewal price increases and, to a lesser extent, an increase in new business volume. Operating income before interest expense and income taxes increased in the first six months of 2026, compared to the same period in 2025, primarily due to higher net investment income, improvements in current accident year underwriting results and lower catastrophe 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, as appropriate.

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 – Marine and Industrial Property, Professional and Executive Lines, E&S and Alternative Markets, and Surety and Other. We believe that this diverse set of Specialty products, distributed primarily through independent agents, including wholesalers, 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 3.4% in the first six months of 2026, compared to the same period in 2025, primarily due to an increase in new business volume and, to a lesser extent, renewal price increases. Operating income before interest expense and income taxes increased in the first six months of 2026 compared to the same period in 2025, primarily due to lower catastrophe losses and higher net investment income. 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, as appropriate.

Personal Lines focuses on working with high quality, value-oriented agencies that deliver consultative selling to customers and stress the importance of total account solutions, 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 2.7% in the first six months of 2026, compared to the same period in 2025, primarily due to higher new business and, to a lesser extent, the impact of renewal price increases. Operating income before interest expense and income taxes increased in the first six months of 2026, compared to the same period in 2025, primarily due to improvement in current accident year underwriting results and higher favorable development on prior year reserves.