HANOVER INSURANCE GROUP, INC.

Previous wording

The following discussion contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this discussion and analysis, words such as: “believes,” “anticipates,” “expects,” “projections,” “outlook,” “should,” “could,” “plan,” “guidance,” “likely,” “on track to,” “potential,” “continue,” “targeted,” “designed,” and similar expressions are intended to identify forward-looking statements. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. We caution readers that accuracy with respect to forward-looking projections is difficult and subject to risks and uncertainties. Those risks and uncertainties, in some cases, have affected, and in the future could affect, our actual results and could cause our actual results to differ materially from historical results and from those expressed in any of our forward-looking statements. For important factors that could cause actual results to differ materially from those contained in forward-looking statements, see “Risk Factors” in Part II – Item 1A of this Quarterly Report on Form 10-Q and in Part I – Item 1A of our 2024 Annual Report on Form 10-K.

Current wording

The following discussion contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may address, among other things, our growth strategy; expected developments in our business, including losses and loss reserves; the impact of our routine reserve reviews; our expectations regarding our investment activities or results; our proposed actions in response to trends in our business; as well as our expectations, intentions and other statements that are not historical facts. Words such as: “believes,” “anticipates,” “expects,” “projections,” “outlook,” “should,” “could,” “plan,” “guidance,” “likely,” “on track to,” “potential,” “continue,” “targeted,” “designed,” and similar expressions are intended to identify forward-looking statements. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. We caution readers that accuracy with respect to forward-looking projections is difficult and subject to risks and uncertainties. Those risks and uncertainties, in some cases, have affected, and in the future could affect, our actual results and could cause our actual results to differ materially from historical results and from those expressed in any of our forward-looking statements. In addition to some of the factors in the discussion below, other important factors that could cause actual results to differ materially from those contained in forward-looking statements, are set forth in “Risk Factors” in Part II – Item 1A of this Quarterly Report on Form 10-Q and in Part I – Item 1A of our 2025 Annual Report on Form 10-K.

Previous 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.

Current wording

During the three months ended March 31, 2026, our net income was $186.8 million, compared to $128.2 million for the three months ended March 31, 2025, an improvement of $58.6 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 $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.

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 $250.2 million for the three months ended March 31, 2026, compared to $186.4 million for the three months ended March 31, 2025, an improvement of $63.8 million. This increase was primarily due to improvements in current accident year underwriting results and higher net investment income.

Previous 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.

Current wording

Pre-tax catastrophe losses were $98.9 million for the three months ended March 31, 2026, compared to $95.6 million during the same period of 2025, an increase of $3.3 million. The catastrophe losses in the first three months of 2026 were primarily due to severe convective storms and severe winter storms across multiple states. Included in pre-tax catastrophe losses were $48.8 million and $12.0 million for the three months ended March 31, 2026 and 2025, respectively, of favorable prior year catastrophe reserve development. The favorable development in the first quarter of 2026 largely related to 2025 catastrophe events. Net favorable development on prior years’ non-catastrophe loss reserves was $25.0 million for the three months ended March 31, 2026, compared to $20.0 million for the three months ended March 31, 2025, an increase of $5.0 million.

Previous 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.

Current wording

Net premiums written increased 4.3% in the first three months of 2026, compared to the same period in 2025, primarily due to renewal price increases. Operating income before interest expense and income taxes increased in the first three months of 2026, compared to the same period in 2025, primarily due to lower current accident year losses, lower catastrophe losses and 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, as appropriate.

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, 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.

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 – Marine and Industrial Property, Professional and Executive Lines, E&S and Alternative Markets, and Surety and Other. We believe that this diverse set of Specialty products, distributed primarily through independent agents, including wholesalers, helps to enhance our overall agent value and increase growth opportunities by providing agents easier access to placement solutions for Specialty needs, including those that complement Core Commercial accounts.

Previous 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.

Current wording

Net premiums written increased 2.3% in the first three months of 2026, compared to the same period in 2025, primarily due to renewal price increases and, to a lesser extent, an increase in new business. Operating income before interest expense and income taxes increased in the first three months of 2026 compared to the same period in 2025, primarily due to lower current accident year losses, lower catastrophe losses and higher net investment income. The competitive nature of the Specialty market requires us to be highly disciplined in our underwriting process to ensure that we write business at acceptable margins, and we continue to seek rate increases across many lines of business, as appropriate.

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 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.

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 commercial lines coverages provided to small and mid-sized businesses. Specialty includes four divisions of business: Marine and Industrial Property, Professional and Executive Lines, E&S and Alternative Markets, and Surety and Other. E&S and Alternative Markets includes coverages such as excess and surplus lines, program business (providing commercial insurance to markets with specialized coverage or risk management need related to groups of similar businesses) 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 related to employees and agents of the Company’s former life insurance subsidiaries; and our run-off direct asbestos and environmental business, run-off voluntary assumed property and casualty pools, and run-off product liability business.

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 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.

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 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 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

The following table summarizes the results of operations for the periods indicated:

Current wording

The following table summarizes the results of operations for our combined reporting segments for the periods indicated:

Previous 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.

Current wording

Net premiums written increased $48.9 million for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. The increase in net premiums written was due to renewal price increases and an increase in new business volume.

Previous 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.

Current wording

Core Commercial net premiums written were $630.4 million for the three months ended March 31, 2026, compared to $604.6 million for the three months ended March 31, 2025. The $25.8 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 $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.

Current wording

Net premiums written in the personal automobile line of business were $327.2 million for the three months ended March 31, 2026, compared to $323.8 million for the three months ended March 31, 2025, an increase of $3.4 million. Personal automobile PIF decreased by 2.2% since March 31, 2025. Net premiums written in the homeowners and other lines of business for the three months ended March 31, 2026 were $235.4 million, compared to $224.1 million for the three months ended March 31, 2025, an increase of $11.3 million. Homeowners PIF decreased by 2.2% since March 31, 2025.

Previous 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.

Current wording

We obtained pricing increases of approximately 11% in our homeowners line and approximately 7% in our personal automobile line during the first quarter of 2026 and believe that our ability to obtain a similar level of pricing increases will continue. Consistent with our expectations, PIF was largely unchanged compared to the end of 2025, but declined as compared to the first three months of 2025, driven by lower policies available to renew year over year from prior margin recapture actions taken. Additionally, our Personal Lines net premiums written may be affected by price competition and the regulatory and overall macroeconomic environment. These factors may also affect our ability to maintain and improve underwriting results.

Previous 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.

Current wording

Our Other segment had operating profit of $2.2 million for the three months ended March 31, 2026, compared to $0.8 million for the three months ended March 31, 2025, an increase of $1.4 million, due to higher net investment income.

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

Current wording

Loss and LAE reserves in our “Other core commercial” lines include monoline general liability, commercial umbrella, and monoline property. “Marine and Industrial Property” division includes marine and specialty industrial and commercial property coverages. “Professional and Executive Lines” division includes management liability, fidelity and crime, professional liability and other property and liability lines for healthcare firms. “E&S and Alternative Markets” division includes excess and surplus lines, program business, and specialty general liability coverages. “Surety and Other” includes contract and commercial surety coverages. Loss and LAE reserves in our “Total Other” segment relate to run-off direct asbestos and environmental, run-off voluntary assumed property and casualty reinsurance pools, and run-off product liability business.

Previous wording

The following table summarizes prior year favorable development for the periods indicated:

Current wording

The following table summarizes prior year (favorable) unfavorable development by segment:

Previous 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.

Current wording

It is not possible to know whether the factors that affected loss reserves in the first three months of 2026 will also occur in future periods. We encourage you to read our 2025 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 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.

Current wording

For the three months ended March 31, 2026, favorable catastrophe loss development was $48.8 million, primarily due to lower than expected losses related to several convective storms across multiple states from accident years 2025 and 2024, including lower than expected large commercial multiple peril losses in Core Commercial and lower than expected homeowners severity in Personal Lines. In 2025, favorable catastrophe 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 though 2023, including several convective storms across multiple states, and Winter Storm Elliot.

Previous 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.

Current wording

For the three months ended March 31, 2026, net favorable loss and LAE development, excluding catastrophes, was $25.0 million. Specialty favorable loss and LAE development of $14.2 million was primarily due to lower than expected losses in our Marine and Industrial Property division, driven by our inland marine coverage, our E&S and Alternative Markets division, and, to a lesser extent, our Surety and Other division. Within Personal Lines, lower than expected losses of $9.2 million were driven primarily by homeowners property coverages.

Previous 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.

Current 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 and Industrial Property 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.

Previous 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.

Current wording

As of March 31, 2026, we had $9.8 million of net asbestos and environmental reserves, comprised of $8.1 million of direct reserves and $1.7 million of assumed reinsurance pool reserves. This compares to net reserves of $10.5 million at December 31, 2025, comprised of $8.3 million of direct reserves and $2.2 million of assumed reinsurance pool reserves. 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.

Previous 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.

Current wording

Reinsurance recoverables were $2,051.7 million and $2,011.1 million at March 31, 2026 and December 31, 2025, respectively, of which $65.1 million and $62.6 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 $34.4 million and $30.5 million at March 31, 2026 and December 31, 2025, respectively, and billable non-MCCA reinsurance recoverables totaled $30.7 million and $32.1 million at March 31, 2026 and December 31, 2025, respectively. Billed balances outstanding greater than 90 days at March 31, 2026 and December 31, 2025 were not material.

Previous 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.

Current wording

The increase in net investment income for the three months ended March 31, 2026 was primarily due to the continued investment of operational cashflows, the impact of reinvesting at higher interest rates, and higher partnership income. Income from partnerships can vary significantly from period to period based on the performance in the underlying portfolios.

Previous 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.

Current wording

Total cash and investments decreased $460.2 million, or 4.0%, for the three months ended March 31, 2026 as compared to December 31, 2025. The decrease in total cash and investments was primarily due to the funding of financing activities, including our debt retirement and common stock repurchases, and, to a lesser extent, net market value depreciation. These decreases were partially offset by the continued investment of cashflows from operations.

Previous wording

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

Current wording

The change in net unrealized losses on fixed maturities was primarily driven by higher interest rates and, to a lesser extent, changes in credit spreads.

Previous 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.

Current wording

For the three months ended March 31, 2026, we recognized impairment losses of $2.0 million, consisting of $1.5 million on mortgage loans and $0.5 million on fixed maturities. For the three months ended March 31, 2025, impairment losses were not significant.

Previous 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.

Current wording

At March 31, 2026 and December 31, 2025, the allowance for credit losses on mortgage loans was $8.5 million and $8.1 million, respectively. At March 31, 2026 and December 31, 2025, 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 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.

Current wording

At March 31, 2026, fixed maturity securities on non-accrual status were not material and we held no fixed maturities on non-accrual status at December 31, 2025. 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 were not material for the periods ended March 31, 2026 and December 31, 2025. 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 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.

Current wording

Gross unrealized losses on fixed maturities at March 31, 2026 were $298.5 million, an increase of $31.3 million compared to December 31, 2025. This increase was primarily due to higher interest rates and, to a lesser extent, changes in credit spreads. At March 31, 2026, gross unrealized losses consisted primarily of $85.6 million on residential mortgage-backed securities, $74.9 million on corporate fixed maturities, $68.5 million on municipals, and $40.4 million on U.S. government securities. See Note 3 – “Investments” in the Notes to Interim Consolidated Financial Statements.

Previous wording

The U.S. economy remained resilient in the third quarter of 2025, reflecting strong consumer spending despite increased concerns regarding labor markets and inflation. In September, the Federal Reserve announced its first rate cut in 2025, reducing the federal funds target to a range of 4.00% to 4.25%. Heightened geopolitical risks 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 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 first quarter of 2026, reflecting a stable labor market despite continued, elevated inflation. The Federal Reserve maintained the federal funds target at a range of 3.50% to 3.75%. Heightened geopolitical risks 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 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 $9.0 million for the three months ended September 30, 2025, compared to net realized and unrealized investment losses of $12.4 million for the three months ended September 30, 2024. For the three months ended September 30, 2025, net realized and unrealized investment losses were primarily due to $20.3 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 September 30, 2024, net realized and unrealized investment losses were primarily due to $23.5 million of net realized losses from sales of investments, primarily fixed maturities. These realized losses were partially offset by changes in the fair value of equity securities of $11.7 million.

Current wording

Net realized and unrealized investment losses were $2.3 million for the three months ended March 31, 2026, compared to $17.8 million for the three months ended March 31, 2025. For the three months ended March 31, 2026, net realized and unrealized investment losses were primarily due to $5.6 million of net realized investment losses from sales of fixed maturities and, to a lesser extent, $2.0 million related to impairment losses. These net realized investment losses were partially offset by net realized and unrealized investment gains of $5.2 million due to changes in the fair value of equity securities. 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.

Previous wording

The provision for income taxes from continuing operations was an expense of $48.5 million and $27.6 million for the three months ended September 30, 2025 and 2024, respectively. These amounts resulted in consolidated effective tax rates of 21.4% and 21.3% on pre-tax income for the three months ended September 30, 2025 and 2024, respectively. These provisions include excess tax benefits, primarily related to tax planning strategies implemented in prior years and stock-based compensation, of $0.3 million and $0.5 million for the three months ended September 30, 2025 and 2024, respectively. Absent excess tax benefits, the provision for income taxes would have been an expense of $48.8 million, or 21.5%, and $28.1 million, or 21.7%, for the three months ended September 30, 2025 and 2024, respectively.

Current wording

The provision for income taxes from continuing operations was an expense of $50.3 million and $31.9 million for the three months ended March 31, 2026 and 2025, respectively. These amounts resulted in consolidated effective tax rates of 21.2% and 19.9% on pre-tax income for the three months ended March 31, 2026 and 2025, respectively. These provisions include excess tax benefits, primarily related to stock-based compensation, of $1.9 million and $2.1 million for the three months ended March 31, 2026 and 2025, respectively. Absent excess tax benefits, the provision for income taxes would have been an expense of $52.3 million, or 22.1%, and $34.4 million, or 21.5%, for the three months ended March 31, 2026 and 2025, respectively. The increase in the effective tax rate for the three months ended March 31, 2026 is primarily due to state income taxes.

Previous wording

The income tax provision on operating results was an expense of $129.2 million and $78.8 million for the nine months ended September 30, 2025 and 2024, respectively. These provisions resulted in effective tax rates on operating income of 21.0% and 21.3% for the nine months ended September 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 $131.9 million, or 21.4%, and $80.0 million, or 21.6%, for the nine months ended September 30, 2025 and 2024, respectively.

Current wording

The income tax provision on operating results was an expense of $50.9 million and $36.1 million for the three months ended March 31, 2026 and 2025, respectively. These provisions resulted in effective tax rates on operating income of 21.3% and 20.3% for the three months ended March 31, 2026 and 2025, 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 $52.8 million, or 22.1%, and $38.2 million, or 21.5%, for the three months ended March 31, 2026 and 2025, respectively. The increase in the effective tax rate for the three months ended March 31, 2026 is primarily due to state income taxes.

Previous wording

The statutory capital and surplus for our insurance subsidiaries increased $301.4 million during the first nine 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.

Current wording

The statutory capital and surplus for our insurance subsidiaries increased $197.2 million during the first three months of 2026. This increase was primarily due to operating profits.

Previous wording

Liquidity is a measure of our ability to generate sufficient cash flows to meet the cash requirements of business operations. As a holding company, our primary ongoing source of cash is dividends from our insurance subsidiaries. However, dividend payments to us by our insurance subsidiaries are subject to limitations imposed by regulators, such as prior notice periods and the requirement that dividends in excess of a specified percentage of statutory surplus or prior years’ statutory earnings receive prior approval (so called “extraordinary dividends”). During the first nine months of 2025, Hanover Insurance paid $150.0 million in dividends, which were provided to the holding company.

Current wording

Liquidity is a measure of our ability to generate sufficient cash flows to meet the cash requirements of the business operations. As a holding company, our primary ongoing source of cash is dividends from our insurance subsidiaries. However, dividend payments to us by our insurance subsidiaries are subject to limitations imposed by regulators, such as prior notice periods and the requirement that dividends in excess of a specified percentage of statutory surplus or prior year’s statutory earnings receive prior approval (so called “extraordinary dividends”). During the first three months of 2026, Hanover Insurance did not provide dividends to the holding company.

Previous wording

Net cash provided by operating activities was $799.9 million during the first nine months of 2025, as compared to $592.9 million during the first nine months of 2024, an increase of $207.0 million. The increase in cash provided was due to an increase in premiums received during the first nine months of 2025 compared to the same period in 2024, and lower loss and LAE payments. These increases were partially offset by higher federal income tax payments.

Current wording

Net cash provided by operating activities was $118.8 million during the first three months of 2026, as compared to $38.9 million during the first three months of 2025. The $79.9 million increase in cash provided was primarily due to an increase in premiums received and lower loss and LAE payments during the first three months of 2026 compared to the same period in 2025.

Previous wording

Net cash used in investing activities was $642.6 million during the first nine months of 2025, as compared to $390.8 million during the first nine months of 2024. During the first nine months of both 2025 and 2024, cash used in investing activities primarily related to net purchases of fixed maturities.

Current wording

Net cash used in investing activities was $493.8 million during the first three months of 2026, as compared to $112.3 million during the first three months of 2025. During the first three months of both 2026 and 2025, cash used in investing activities primarily related to net purchases of fixed maturities.

Previous wording

Net cash provided by financing activities was $324.8 million during the first nine months of 2025, as compared to net cash used in financing activities of $90.7 million during the first nine months of 2024. During the first nine months of 2025, cash provided by financing activities primarily resulted from the issuance of $500.0 million aggregate principal amount of 5.50% senior unsecured debentures. Net proceeds of the debt issuance were $495.0 million, which is partially offset by three quarterly dividend payments to our shareholders and repurchases of common stock through the open market. During the first nine months of 2024, cash used in financing activities primarily resulted from three quarterly dividend payments to our shareholders.

Current wording

Net cash used in financing activities was $504.6 million during the first three months of 2026, as compared to $47.5 million during the first three months of 2025. During the first three months of 2026, cash used by financing activities primarily resulted from the redemption of $375.0 million aggregate principal amount of 4.50% senior unsecured debentures and, to a lesser extent, repurchases of common stock through the open market and a quarterly dividend payment to our shareholders. During the first three months of 2025, cash used in financing activities primarily resulted from a quarterly dividend payment to our shareholders and, to a lesser extent, from repurchases of common stock through the open market.

Previous wording

Dividends to common shareholders are subject to quarterly board approval and declaration. During the first nine months of 2025, as declared by the Board, we paid three quarterly dividends to shareholders, each for $0.90 per share and totaling $96.9 million. We believe that our holding company assets are sufficient to provide for future shareholder dividends should the Board of Directors declare them.

Current wording

Dividends to common shareholders are subject to quarterly board approval and declaration. During the first three months of 2026, we paid a quarterly dividend of $0.95 per share totaling $33.5 million. We believe that our holding company assets are sufficient to provide for future shareholder dividends should the Board of Directors declare them.