HANOVER INSURANCE GROUP INC

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 June 30, 2024 Compared to Three Months Ended June 30, 2023

The provision for income taxes from continuing operations was an expense of $10.9 million compared to a benefit of $20.7 million for the three months ended June 30, 2024 and 2023, respectively. These amounts resulted in consolidated effective tax rates of 21.2% on pre-tax income for the three months ended June 30, 2024 and 22.8% on the pre-tax loss for the three months ended June 30, 2023. The provision for 2024 includes excess tax benefits related to stock-based compensation and benefits related to tax planning strategies implemented in prior years of $0.1 million and $0.2 million, respectively. Absent these items, the provision for income taxes would have been an expense of $11.2 million, or 21.8%, for the three months ended June 30, 2024.

The income tax provision on operating results was an expense of $18.7 million compared to a benefit of $19.7 million for the three months ended June 30, 2024 and 2023, respectively. These provisions resulted in an effective tax rate on operating income of 21.5% for the three months ended June 30, 2024 and 22.4% on operating losses for the three months ended June 30, 2023. The 2024 provision reflects the aforementioned excess tax benefits related to stock-based compensation of $0.1 million. Absent this item, the provision for income taxes would have been an expense of $18.8 million, or 21.7%, for the three months ended June 30, 2024.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

The provision for income taxes from continuing operations was an expense of $40.7 million compared to a benefit of $26.2 million for the six months ended June 30, 2024 and 2023, respectively. These provisions resulted in consolidated effective federal tax rates of 20.7% on pre-tax income for the six months ended June 30, 2024 and 24.2% on the pre-tax loss for the six months ended June 30, 2023. These provisions include excess tax benefits related to stock-based compensation of $1.2 million and $1.0 million for the six months ended June 30, 2024 and 2023, respectively. In addition, these provisions reflect benefits related to tax planning strategies implemented in prior years of $0.6 million and $0.8 million for the six months ended June 30, 2024 and 2023, respectively. Absent these items, the provision for income taxes would have been an expense of $42.5 million, or 21.6%, and a benefit of $24.4 million, or 22.6%, for the six months ended June 30, 2024 and 2023, respectively.

The income tax provision on operating results was an expense of $48.0 million compared to a benefit of $19.6 million for the six months ended June 30, 2024 and 2023, respectively. These provisions resulted in an effective tax rate on operating income of 21.1% for the six months ended June 30, 2024 and 23.5% on operating losses for the six months ended June 30, 2023. These provisions include excess tax benefits related to stock-based compensation of $1.2 million and $1.0 million for the six months ended June 30, 2024 and 2023, respectively. Absent this item, the provisions for income taxes would have been an expense of $49.2 million, or 21.6%, and a benefit of $18.6 million, or 22.3%, for the six months ended June 30, 2024 and 2023, respectively.