HANOVER INSURANCE GROUP, INC.

Previous wording

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.

Current wording

During the six months ended June 30, 2025, our net income was $285.3 million, compared to $156.0 million for the six months ended June 30, 2024, an improvement of $129.3 million. This favorable change was primarily due to higher after-tax operating income.

Previous wording

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.

Current wording

Operating income before interest expense and income taxes (a non-GAAP financial measure; see also “Results of Operations – Consolidated – Non-GAAP Financial Measures”) was $396.3 million for the six months ended June 30, 2025, compared to $245.1 million for the six months ended June 30, 2024, an improvement of $151.2 million. This increase was primarily due to improvements in current accident year underwriting results, primarily in Personal Lines, as well as lower catastrophe losses, higher net investment income, and earned premium growth. These improvements were partially offset by higher current accident year losses in our Core Commercial segment. The improved Personal Lines current accident year underwriting results 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.

Previous wording

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.

Current wording

Pre-tax catastrophe losses were $203.1 million for the six months ended June 30, 2025, compared to $244.0 million during the same period of 2024, a decrease of $40.9 million. Catastrophe losses in the first six months of 2025 were primarily due to severe convective storms in the Midwest and, to a lesser extent, the California Palisades and Eaton wildfires. Net favorable development on prior years’ loss reserves was $38.2 million for the six months ended June 30, 2025, compared to $27.8 million for the six months ended June 30, 2024, an increase of $10.4 million.

Previous wording

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.

Current wording

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.

Previous wording

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.

Current wording

Net premiums written increased 4.1% in the first six months of 2025, compared to the same period in 2024, primarily due to renewal price increases and improved retention. Operating income before interest expense and income taxes decreased in the first six months of 2025, compared to the same period in 2024, primarily due to higher catastrophe losses and higher current accident year losses, partially offset by higher net investment income. 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.

Previous wording

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.

Current wording

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 independent 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.

Previous wording

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.

Current wording

Net premiums written increased 5.0% in the first six 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 six months of 2025 compared to the same period in 2024, primarily due to higher net favorable development on prior year loss reserves, higher net investment income and improvements in 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.

Previous wording

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.

Current wording

Net premiums written increased 3.4% in the first six 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 six months of 2025, compared to the same period in 2024, primarily due to lower catastrophe losses and improvements in current accident year underwriting results.

Previous wording

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.

Current wording

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 core 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.

Previous wording

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.

Current wording

Consolidated net income for the three months ended June 30, 2025 was $157.1 million, compared to $40.5 million for the three months ended June 30, 2024, an improvement of $116.6 million. This increase was due to higher after-tax operating income of $90.6 million, and, to a lesser extent, by an $25.1 million favorable change in after-tax net realized and unrealized investment results. Operating income before interest expense and income taxes was $209.9 million for the three months ended June 30, 2025, compared to $95.4 million for the three months ended June 30, 2024, an increase of $114.5 million. This increase was primarily due to lower catastrophe losses, improvements in current accident year underwriting results in our Personal Lines and Specialty segments and higher net investment income.

Previous wording

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).

Current wording

The following table reflects operating income (loss) 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).

Previous wording

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.

Current wording

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 (loss) 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.

Previous wording

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.

Current wording

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 are also 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 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.

Previous wording

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.

Current wording

Net premiums written increased $62.7 million for the three months ended June 30, 2025, compared to the three months ended June 30, 2024. The increase in net premiums written was due to renewal price increases and an increase in new business.

Previous wording

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.

Current wording

Core Commercial net premiums written were $536.0 million for the three months ended June 30, 2025, compared to $513.4 million for the three months ended June 30, 2024. The $22.6 million increase in net premiums written was primarily driven by renewal price increases.

Previous wording

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.

Current wording

Net premiums written in the personal automobile line of business were $389.3 million for the three months ended June 30, 2025, compared to $382.8 million for the three months ended June 30, 2024, an increase of $6.5 million. Personal automobile PIF decreased by 3.6% since June 30, 2024. Net premiums written in the homeowners and other lines of business for the three months ended June 30, 2025 were $290.3 million, compared to $272.8 million for the three months ended June 30, 2024, an increase of $17.5 million. Homeowners PIF decreased by 2.7% since June 30, 2024.

Previous wording

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.

Current wording

Personal Lines underwriting profit for the three months ended June 30, 2025 was $25.2 million, compared to an underwriting loss of $58.6 million for the three months ended June 30, 2024, an improvement in underwriting results of $83.8 million. Catastrophe losses for the three months ended June 30, 2025 were $70.2 million, compared to $118.6 million for the three months ended June 30, 2024, a decrease of $48.4 million. Net favorable development on prior years’ loss reserves for the three months ended June 30, 2025 was $2.6 million, compared to $4.0 million for the three months ended June 30, 2024, a decrease of $1.4 million.

Previous wording

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.

Current wording

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 16% in our homeowners line and approximately 10% in our personal automobile line during the second quarter of 2025 and believe that our ability to obtain pricing increases will continue. Consistent with our expectations, PIF declined in the first six 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 through the third quarter of 2025, 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.

Previous wording

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.

Current wording

Our Other segment had operating loss of $2.6 million for the three months ended June 30, 2025, compared to de minimis for the three months ended June 30, 2024, an unfavorable change of $2.6 million.

Previous wording

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.

Current wording

Core Commercial current accident year underwriting profit, excluding catastrophes, was $81.6 million for the six months ended June 30, 2025, compared to $99.5 million for the six months ended June 30, 2024. The $17.9 million decrease in underwriting results was primarily driven by higher current accident year losses in our commercial automobile line of business and, to a lesser extent, in our other core commercial line.

Previous wording

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.

Current wording

Personal Lines net premiums written were $1,227.5 million for the six months ended June 30, 2025, compared to $1,187.4 million for the six months ended June 30, 2024. The $40.1 million increase in net premiums written was primarily due to increased new business and renewal price increases.

Previous wording

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.

Current wording

Personal Lines current accident year underwriting profit, excluding catastrophes, was $186.6 million for the six months ended June 30, 2025, compared to $106.0 million for the six months ended June 30, 2024. The $80.6 million increase in underwriting results was primarily due to lower current accident year losses in our personal automobile and homeowners lines. The improved Personal Lines current accident year underwriting results were primarily due to the benefit of earned pricing outpacing loss trends in both personal automobile and homeowners lines, and moderated loss trends, particularly in automobile collision coverages.

Previous wording

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.

Current wording

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 direct asbestos and environmental, and product liability businesses, and, to a lesser extent, our run-off voluntary assumed property and casualty reinsurance pools business.

Previous wording

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.

Current wording

It is not possible to know whether the factors that affected loss reserves in the first six 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.

Previous wording

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.

Current wording

For the six months ended June 30, 2025, favorable catastrophe loss development was $18.0 million, primarily due to lower than expected losses related to events from accident years 2023 through 2024, including several convective storms across multiple states, and Winter Storm Elliot. For the six months ended June 30, 2024, favorable catastrophe development was $27.0 million, primarily due to lower than expected losses related to events from accident years 2021 through 2023, including several convective storms across multiple states, Winter Storm Elliot, hurricane Ian, and hurricane Ida.

Previous wording

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.

Current wording

For the six months ended June 30, 2025, net favorable loss and LAE development, excluding catastrophes, was $38.2 million. Specialty favorable loss and LAE development of $28.4 million was primarily due to lower than expected losses in our Professional and Executive Lines division, driven by our general liability-claims made coverage, and in our Marine division. Core Commercial favorable loss and LAE development of $4.3 million was primarily due to favorable development in the workers’ compensation and commercial multiple peril lines, partially offset by unfavorable development in the commercial automobile line. Within Personal Lines, lower than expected losses of $5.4 million were driven primarily by homeowners.

Previous wording

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.

Current wording

For the six months ended June 30, 2024, net favorable loss and LAE development, excluding catastrophes, was $27.8 million. Core Commercial favorable loss and LAE development was $11.3 million, with favorability in each of the main product lines: commercial multiple peril, commercial automobile, workers’ compensation and other commercial lines. Lower than expected property losses of $23.3 million were partially offset by higher than expected losses in certain liability lines of $12.0 million. Specialty favorable loss and LAE development of $12.4 million was primarily due to lower than expected losses in our Professional and Executive Lines division general liability-claims made coverage and, to a lesser extent, lower than expected losses in our surety line. Personal Lines favorable development was primarily due to lower than expected losses of $4.1 million, primarily in our personal automobile line, partially offset by higher than expected losses in other personal lines coverages.

Previous wording

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.

Current wording

Reinsurance recoverables were $1,978.8 million and $1,994.5 million at June 30, 2025 and December 31, 2024, respectively, of which $59.9 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 $32.4 million and $39.3 million at June 30, 2025 and December 31, 2024, respectively, and billable non-MCCA reinsurance recoverables totaled $27.5 million and $34.9 million at June 30, 2025 and December 31, 2024, respectively. At June 30, 2025 there were $0.2 million of billed balances outstanding greater than 90 days. At December 31, 2024, there were $0.8 million of billed balances outstanding greater than 90 days.

Previous wording

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.

Current wording

The increase in net investment income for both the three and six months ended June 30, 2025 was primarily due to the impact of reinvesting at higher interest rates and the continued investment of operational cashflows, partially offset by lower income from other short-term investments.

Previous wording

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.

Current wording

Total cash and investments increased $340.1 million, or 3.5%, for the six months ended June 30, 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 payments.

Previous wording

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

Current wording

The improvement in net unrealized losses on fixed maturities was primarily due to lower interest rates and, to a lesser extent, changes in credit spreads.

Previous wording

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.

Current wording

Our fixed maturity and equity securities are carried at fair value. Financial instruments, whose values were 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.

Previous wording

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.

Current wording

At June 30, 2025 and December 31, 2024, the allowance for credit losses on mortgage loans was $8.0 million and $5.7 million, respectively, and the allowance for credit losses on available-for-sale debt securities was $0.4 million and $0.6 million, respectively.

Previous wording

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.

Current wording

The carrying value of fixed maturity securities on non-accrual status was not material, and there were no mortgage loans on non-accrual status, at June 30, 2025. We held no fixed maturity securities or mortgage loans on non-accrual status at December 31, 2024. The carrying value of fixed maturity securities on non-accrual status at June 30, 2024 was $14.8 million. At June 30, 2024, a mortgage loan with a carrying value of $5.5 million was also on non-accrual status. The effects on income of non-accruals for fixed maturity securities and mortgage loans for the six months ended June 30, 2025 and June 30, 2024, compared with amounts that would have been recognized in accordance with the original terms of the fixed maturities and mortgage loans, were not material. Any defaults in the fixed maturities or mortgage loan portfolios in future periods may negatively affect investment income.

Previous wording

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.

Current wording

Gross unrealized losses on fixed maturities at June 30, 2025 were $370.8 million, an improvement of $160.3 million compared to December 31, 2024. This improvement was primarily due to lower interest rates and, to a lesser extent, changes in credit spreads. At June 30, 2025, gross unrealized losses consisted primarily of $122.6 million on residential mortgage-backed securities, $88.9 million on corporate fixed maturities, $85.1 million on municipals and $44.7 million on U.S. government securities. See Note 3 – “Investments” in the Notes to Interim Consolidated Financial Statements.

Previous wording

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.

Current wording

The U.S. economy continued to expand at a solid pace during the second quarter of 2025, reflecting a stable labor market and moderating inflation. However, heightened geopolitical risks, including those driven by tariffs, continue to impact 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 a rigorous credit analysis of our fixed income investments is performed, 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.

Previous wording

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.

Current wording

Net realized and unrealized investment losses were $2.5 million for the three months ended June 30, 2025, compared to net realized and unrealized investment losses of $34.5 million for the three months ended June 30, 2024. For the three months ended June 30, 2025, net realized and unrealized investment losses were primarily due to $4.6 million of net realized losses from sales of investments, primarily lower-yield fixed maturities, in consideration of expiring tax gains from 2022, and, to a lesser extent, from impairment losses on investments, partially offset by changes in the fair value of equity securities. For the three months ended June 30, 2024, net realized and unrealized investment losses were primarily due to $30.4 million of net realized losses from sales of investments, and to a lesser extent, from impairment losses on investments, partially offset by changes in the fair value of equity securities.

Previous wording

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.

Current wording

The provision for income taxes from continuing operations was an expense of $41.9 million and $10.9 million for the three months ended June 30, 2025 and 2024, respectively. These amounts resulted in consolidated effective tax rates of 21.1% and 21.2% on pre-tax income for the three months ended June 30, 2025 and 2024, respectively. These provisions include excess tax benefits, primarily related to stock-based compensation, of $0.7 million and $0.2 million for the three months ended June 30, 2025 and 2024, respectively. Absent excess tax benefits, the provision for income taxes would have been an expense of $42.6 million, or 21.4%, and $11.1 million, or 21.6%, for the three months ended June 30, 2025 and 2024, respectively.

Previous wording

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.

Current wording

The income tax provision on operating results was an expense of $42.6 million and $18.7 million for the three months ended June 30, 2025 and 2024, respectively. These provisions resulted in effective tax rates on operating income of 21.2% and 21.5% for the three months ended June 30, 2025 and 2024, respectively. These provisions reflect excess tax benefits primarily related to stock-based compensation. Absent these items, the provision for income taxes would have been an expense of $43.1 million, or 21.4%, and $18.8 million, or 21.7%, for the three months ended June 30, 2025 and 2024, respectively.

Previous wording

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.

Current wording

The statutory capital and surplus for our insurance subsidiaries increased $125.3 million during the first six months of 2025. This increase was primarily due to operating profits, partially offset by the payment of a $150.0 million dividend to its parent company and, to a lesser extent, net realized and unrealized investment losses.