HANOVER INSURANCE GROUP, INC.

Previous wording

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

Current wording

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.

Previous 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.

Current wording

During the nine months ended September 30, 2025, our net income was $464.0 million, compared to $258.1 million for the nine months ended September 30, 2024, an improvement of $205.9 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 $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.

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 $644.0 million for the nine months ended September 30, 2025, compared to $395.7 million for the nine months ended September 30, 2024, an improvement of $248.3 million. This increase was primarily due to lower catastrophe losses, improvements in current accident year underwriting results, primarily in Personal Lines, as well as 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 homeowners and personal automobile lines, and moderated frequency trends, particularly in homeowners property coverages and automobile collision.

Previous 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.

Current wording

Pre-tax catastrophe losses were $249.3 million for the nine months ended September 30, 2025, compared to $349.9 million during the same period of 2024, a decrease of $100.6 million. Catastrophe losses in the first nine 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 $50.3 million for the nine months ended September 30, 2025, compared to $41.8 million for the nine months ended September 30, 2024, an increase of $8.5 million.

Previous 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.

Current wording

Net premiums written increased 3.9% in the first nine months of 2025, compared to the same period in 2024, primarily due to renewal price increases and an increase in new business. Operating income before interest expense and income taxes decreased in the first nine months of 2025, compared to the same period in 2024, primarily due to higher current accident year losses and higher catastrophe 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 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.

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, 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.

Previous 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.

Current wording

Net premiums written increased 6.1% in the first nine months of 2025, compared to the same period in 2024, primarily due to renewal price increases and an increase in new business. Operating income before interest expense and income taxes increased in the first nine 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 earned premium growth. 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

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

Current wording

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.

Previous 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.

Current wording

Net premiums written increased 3.4% in the first nine months of 2025, compared to the same period in 2024, primarily due to renewal price increases and increased new business. Operating income before interest expense and income taxes improved in the first nine 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

Consolidated net income for the six months ended June 30, 2025 was $285.3 million, compared to $156.0 million for the six months ended June 30, 2024, an improvement of $129.3 million. This increase was due to higher after-tax operating income of $120.5 million. Operating income before interest expense and income taxes 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 increase 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.

Current wording

Consolidated net income for the nine months ended September 30, 2025 was $464.0 million, compared to $258.1 million for the nine months ended September 30, 2024, an improvement of $205.9 million. This increase was due to higher after-tax operating income of $194.8 million. Operating income before interest expense and income taxes was $644.0 million for the nine months ended September 30, 2025, compared to $395.7 million for the nine months ended September 30, 2024, an increase of $248.3 million. This increase was primarily due to lower catastrophe losses, improvements in current accident year underwriting results primarily in our Personal Lines segment, as well as higher net investment income and earned premium growth. These improvements were partially offset by higher current accident year losses in our Core Commercial segment.

Previous 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).

Current 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).

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 (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.

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 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

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.

Current wording

Net premiums written increased $75.5 million for the three months ended September 30, 2025, compared to the three months ended September 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 $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.

Current wording

Core Commercial net premiums written were $620.3 million for the three months ended September 30, 2025, compared to $599.2 million for the three months ended September 30, 2024. The $21.1 million increase in net premiums written was primarily driven by renewal price increases and an increase in new business.

Previous wording

Specialty underwriting profit for the six months ended June 30, 2025 was $89.0 million, compared to $60.9 million for the six months ended June 30, 2024, an increase of $28.1 million. Catastrophe losses for the six months ended June 30, 2025 were $29.3 million, compared to $29.1 million for the six months ended June 30, 2024, an increase of $0.2 million. Net favorable development on prior years’ loss reserves for the six months ended June 30, 2025 was $28.4 million, compared to $12.4 million for the six months ended June 30, 2024, an increase of $16.0 million.

Current wording

Specialty underwriting profit for the three months ended September 30, 2025 was $52.8 million, compared to $52.6 million for the three months ended September 30, 2024, an increase of $0.2 million. Catastrophe losses for the three months ended September 30, 2025 were $6.0 million, compared to $4.4 million for the three months ended September 30, 2024, an increase of $1.6 million.

Previous 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.

Current wording

Net premiums written in the personal automobile line of business were $416.5 million for the three months ended September 30, 2025, compared to $411.1 million for the three months ended September 30, 2024, an increase of $5.4 million. Personal automobile PIF decreased by 3.2% since September 30, 2024. Net premiums written in the homeowners and other lines of business for the three months ended September 30, 2025 were $322.9 million, compared to $302.9 million for the three months ended September 30, 2024, an increase of $20.0 million. Homeowners PIF decreased by 2.5% since September 30, 2024.

Previous wording

Personal Lines underwriting profit for the six months ended June 30, 2025 was $86.9 million, compared to an underwriting loss of $67.7 million for the six months ended June 30, 2024, an improvement in underwriting results of $154.6 million. Catastrophe losses for the six months ended June 30, 2025 were $105.1 million, compared to $177.8 million for the six months ended June 30, 2024, a decrease of $72.7 million.

Current wording

Personal Lines underwriting profit for the three months ended September 30, 2025 was $66.3 million, compared to an underwriting loss of $6.7 million for the three months ended September 30, 2024, an improvement in underwriting results of $73.0 million. Catastrophe losses for the three months ended September 30, 2025 were $22.4 million, compared to $69.8 million for the three months ended September 30, 2024, a decrease of $47.4 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 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.

Current wording

We obtained pricing increases of approximately 14% in our homeowners line and approximately 8% in our personal automobile line during the third quarter of 2025 and believe that our ability to obtain pricing increases, although moderating, will continue. Consistent with our expectations, PIF declined in the first nine months of 2025, as a result of the actions we took in recent years to be more selective on new business quoting. 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 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.

Current wording

Our Other segment had operating profit of $3.3 million for the three months ended September 30, 2025, compared to de minimis for the three months ended September 30, 2024, a favorable change of $3.3 million, due primarily to an increase in investment income.

Previous wording

Operating income before interest expense and income taxes 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. 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. The catastrophe losses in the first six months of 2025 were due to severe convective storms in the Midwest and, to a lesser extent, the California Palisades and Eaton wildfires.

Current wording

Operating income before interest expense and income taxes was $644.0 million for the nine months ended September 30, 2025, compared to $395.7 million for the nine months ended September 30, 2024, an improvement of $248.3 million. This increase was primarily due to lower catastrophe losses, improvements in current accident year underwriting results, primarily in Personal Lines, as well as, higher net investment income, and earned premium growth. These improvements were partially offset by higher current accident year losses in our Core Commercial segment. Pre-tax catastrophe losses were $249.3 million for the nine months ended September 30, 2025 compared to $349.9 million during the same period of 2024, a decrease of $100.6 million. The catastrophe losses in the first nine months of 2025 were due to severe convective storms in the Midwest and, to a lesser extent, the California Palisades and Eaton wildfires.

Previous wording

Core Commercial net premiums written were $1,140.6 million for the six months ended June 30, 2025 compared to $1,095.8 million for the six months ended June 30, 2024. The $44.8 million increase in net premiums written was primarily driven by renewal price increases.

Current wording

Core Commercial net premiums written were $1,760.9 million for the nine months ended September 30, 2025 compared to $1,695.0 million for the nine months ended September 30, 2024. The $65.9 million increase in net premiums written was primarily driven by renewal price increases and an increase in new business.

Previous 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.

Current wording

Core Commercial current accident year underwriting profit, excluding catastrophes, was $112.4 million for the nine months ended September 30, 2025, compared to $142.2 million for the nine months ended September 30, 2024. The $29.8 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 workers’ compensation line.

Previous wording

Personal Lines net premiums written were $679.6 million for the three months ended June 30, 2025, compared to $655.6 million for the three months ended June 30, 2024. The $24.0 million increase in net premiums written was primarily due to renewal price increases, improving retention, and increased new business, partially offset by fewer policies available to renew year over year from margin recapture actions taken.

Current wording

Personal Lines net premiums written were $1,966.9 million for the nine months ended September 30, 2025, compared to $1,901.4 million for the nine months ended September 30, 2024. The $65.5 million increase in net premiums written was primarily due to renewal price increases, increased new business and higher retention, partially offset by fewer policies available to renew year over year from margin recapture actions taken.

Previous 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.

Current wording

Personal Lines underwriting profit for the nine months ended September 30, 2025 was $153.2 million, compared to an underwriting loss of $74.4 million for the nine months ended September 30, 2024, an improvement in underwriting results of $227.6 million. Catastrophe losses for the nine months ended September 30, 2025 were $127.5 million, compared to $247.6 million for the nine months ended September 30, 2024, a decrease of $120.1 million.

Previous 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.

Current wording

Personal Lines current accident year underwriting profit, excluding catastrophes, was $274.4 million for the nine months ended September 30, 2025, compared to $168.9 million for the nine months ended September 30, 2024. The $105.5 million increase in underwriting results was primarily due to lower current accident year losses in our homeowners and personal automobile lines. The improved Personal Lines current accident year underwriting results were primarily due to the benefit of earned pricing outpacing loss trends in both homeowners and personal automobile lines, and moderated loss trends, particularly in homeowners property and automobile collision coverages.

Previous wording

Our Other segment had operating loss of $1.8 million for the six months ended June 30, 2025, compared to operating profit of $0.5 million for the six months ended June 30, 2024, an unfavorable change of $2.3 million.

Current wording

Our Other segment had operating profit of $1.5 million for the nine months ended September 30, 2025, compared to operating profit of $0.5 million for the nine months ended September 30, 2024, an increase of $1.0 million.

Previous 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.

Current wording

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

Current wording

For the nine months ended September 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 nine months ended September 30, 2024, favorable catastrophe development was $37.0 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 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.

Current wording

For the nine months ended September 30, 2025, net favorable loss and LAE development, excluding catastrophes, was $50.3 million. Specialty favorable loss and LAE development of $38.4 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 and Specialty Property & Casualty divisions. Within Personal Lines, lower than expected losses of $6.3 million were driven primarily by homeowners. Core Commercial favorable loss and LAE development of $5.5 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.

Previous 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.

Current wording

For the nine months ended September 30, 2024, net favorable loss and LAE development, excluding catastrophes, was $41.8 million. Specialty favorable loss and LAE development of $22.6 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, to a lesser extent, lower than expected losses in our surety line. Core Commercial favorable loss and LAE development was $14.9 million, with favorability in each of the main product lines: commercial multiple peril, commercial automobile, workers’ compensation and other commercial lines. Within Personal Lines, lower than expected losses were $4.3 million, primarily driven by our personal automobile line, partially offset by higher than expected losses in the other personal lines.

Previous wording

As of June 30, 2025, we had $11.7 million of net asbestos and environmental reserves, comprised of $9.4 million of direct reserves and $2.3 million of assumed reinsurance pool reserves. This compares to net reserves of $10.9 million at December 31, 2024, comprised of $8.7 million of direct reserves and $2.2 million of assumed reinsurance pool reserves.

Current wording

As of September 30, 2025, we had $10.2 million of net asbestos and environmental reserves, comprised of $8.0 million of direct reserves and $2.2 million of assumed reinsurance pool reserves. This compares to net reserves of $10.9 million at December 31, 2024, comprised of $8.7 million of direct reserves and $2.2 million of assumed reinsurance pool reserves.

Previous wording

As of June 30, 2025, we had $2.3 million of gross loss and LAE reserves for our assumed reinsurance pool business compared to $29.9 million in December 31, 2024. These assumed reinsurance pool reserves relate to pools in which we have terminated our participation, however, we continue to be subject to claims related to years in which we were a participant. Results of operations from these pools are included in our Other segment. A significant part of our gross pool reserves was related to our participation in the Excess and Casualty Reinsurance Association (“ECRA”) voluntary pool for our ECRA claim liability participations, which were written during the period 1950 to 1982. In 1982, the pool was dissolved and since that time, the business has been in run-off. In 2021, we entered into a 100% reinsurance agreement with a third-party reinsurer for our ECRA claim liability participations. During the three months ended June 30, 2025, we completed an insurance business transfer of our ECRA liabilities to a third-party insurer pursuant to Oklahoma law, which novation has fully relieved us of our obligations to ECRA policyholders. This transaction had no significant impact on our results of operations for the six months ended June 30, 2025.

Current wording

As of September 30, 2025, we had $2.2 million of gross loss and LAE reserves for our assumed reinsurance pool business compared to $29.9 million in December 31, 2024. These assumed reinsurance pool reserves relate to pools in which we have terminated our participation, however, we continue to be subject to claims related to years in which we were a participant. Results of operations from these pools are included in our Other segment. A significant part of our gross pool reserves was related to our participation in the Excess and Casualty Reinsurance Association (“ECRA”) voluntary pool for our ECRA claim liability participations, which were written during the period 1950 to 1982. In 1982, the pool was dissolved and since that time, the business has been in run-off. In 2021, we entered into a 100% reinsurance agreement with a third-party reinsurer for our ECRA claim liability participations. During the second quarter of 2025, we completed an insurance business transfer of our ECRA liabilities to a third-party insurer pursuant to Oklahoma law, which novation has fully relieved us of our obligations to ECRA policyholders. This transaction had no significant impact on our results of operations for the nine months ended September 30, 2025.

Previous 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.

Current wording

Reinsurance recoverables were $1,974.8 million and $1,994.5 million at September 30, 2025 and December 31, 2024, respectively, of which $56.3 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 $35.3 million and $39.3 million at September 30, 2025 and December 31, 2024, respectively, and billable non-MCCA reinsurance recoverables totaled $21.0 million and $34.9 million at September 30, 2025 and December 31, 2024, respectively. At September 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 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.

Current wording

The increase in net investment income for both the three and nine months ended September 30, 2025 was primarily due to the impact of reinvesting at higher interest rates and the continued investment of operational cashflows.

Previous 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.

Current wording

Total cash and investments increased $1,437.8 million, or 14.6%, for the nine months ended September 30, 2025 as compared to December 31, 2024. The increase in total cash and investments was primarily due to continued investment of cashflows from operations, the net proceeds from our senior debt issuance in August 2025, and net market value appreciation. These increases were partially offset by the funding of financing activities, including our dividend payments and common stock repurchases.

Previous 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.

Current wording

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

Previous wording

For both the three and six months ended June 30, 2025, we recognized net impairments of $2.9 million, consisting primarily of $2.6 million and $2.7 million on mortgage loans, respectively. For the three and six months ended June 30, 2024, we recognized net impairments of $5.2 million and $4.9 million, respectively, both consisting primarily of $3.6 million on mortgage loans and $1.7 million on intent to sell fixed maturities.

Current wording

For the three months ended September 30, 2025 and 2024, impairments were not material. For the nine months ended September 30, 2025, we recognized net impairment losses of $3.0 million, primarily related to mortgage loans. For the nine months ended September 30, 2024, we recognized net impairment losses of $5.5 million, consisting of $4.0 million on mortgage loans and $1.5 million on fixed maturities.

Previous 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.

Current wording

At September 30, 2025 and December 31, 2024, the allowance for credit losses on mortgage loans was $8.2 million and $5.7 million, respectively, and the allowance for credit losses on available-for-sale debt securities was not material.

Previous 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.

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 September 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 September 30, 2024 was $14.4 million. At September 30, 2024, a mortgage loan with a carrying value of $5.3 million was also on non-accrual status. The effects on income of non-accruals for fixed maturity securities and mortgage loans for the nine months ended September 30, 2025 and 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 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.

Current wording

Gross unrealized losses on fixed maturities at September 30, 2025 were $300.6 million, an improvement of $230.5 million compared to December 31, 2024. This improvement was primarily due to lower interest rates and changes in credit spreads. At September 30, 2025, gross unrealized losses consisted primarily of $98.7 million on residential mortgage-backed securities, $72.2 million on municipals, $65.1 million on corporate fixed maturities, and $41.0 million on U.S. government securities. See Note 3 – “Investments” in the Notes to Interim Consolidated Financial Statements.