The Hanover Insurance Group, Inc. (THG) 3 Feb 222021 Q4 Earnings call transcript

Good day, and welcome to the Hanover Insurance Group's Fourth Quarter Earnings Conference Call. My name is Chuck, and I'll be your operator for today. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Ms. Lukasheva. Oksana ma'am. ahead, go Please

you, operator. us you joining and Good our quarterly morning, for thank conference for Thank call.

Farber, Executive We President will Roche, and Available Chief Jack Bryan your remarks Lavey, questions President remarks prepared Financial after Jeff to Officer; our answer begin today's Dick our of Markets. call President Specialty of with and our Agency Officer. Chief are prepared from Salvatore, and Lines;

financial that the available turn Jack, over and our presentation earnings slide call release, section in of are note I Before our www.hanover.com let for press website to supplement Investors call complete a at me today's Instructions]. [Operator the

and statements with and posted Securities affect Our such other will measures materially to cause the of prepared and and as the section reliance deck release, on conditions the risks ratios, comments, include presentation you financial defined also ongoing or financial the earlier. and forward-looking of as found the can the uncertainties GAAP and supplement, in other our on filings on catastrophes, press Jack. economic your turn certain our be I accident I these website, anticipated. excluding A forward-looking those the questions and from results could non-GAAP measure Private those financial of reconciliation COVID-XX to mentioned to operating as loss outlook basis that with press presentation and actual XXXX, respect, over historical historical SEC. forward-looking Reform caution year statements, will our With regarding, We XXXX today, Litigation related respect closest pandemic, to our other things, combined guidance call release, measures which are a slide Act among among the refer this in non-GAAP and reference fact, impacts Today's you responses others. discussion than to income and/or for statements performance the statements to impact in the of company remarks under the differ

building key pleased imperatives, even past an and morning, for for years. combined return x on company, joining in Thank environment I'll premium am on quarter on exceedingly the current then financial $X discussion the operational income and financial of XXXX. strong billion, of was We the for of generated and have $X.XX you sub-XXs detail our our context of take equity Considering executed XXXX market Good full our by of a financial performance, our economic our expectations extremely Jeff business an we our business I results review accomplishments to year highlights of of and was strategic, navigated challenges overview per I'll business an questions. happy year you, operating written reflecting with we'll our today's net ratio of of Oksana. with share and financial and our XX.X%. operating everyone, record strategy. cat highlighted the and then provide success achieved begin thank a and year company. in discuss distinctive for more winning our team and our the proud will for high-level year your fourth active industry our catastrophe the performance our over and for several call and the and XXXX us. an strategic be extremely and year way more what outstanding an guidance, we are the the very talented environment. momentum complex established

performance. innovative best loss capabilities, ratio agility, ever of and and fully market, results, partnerships, In return posting equity took dynamic a XX.X% particularly opportunities trends, of operating a a by and outstanding operating our of quarterly delivered on combined we presented organizational XX.X%. face evolving broad advantage quarter, we higher agent leveraging the fourth the the our earnings For posting inflation and strong

results growth market strong ability and continue excellent portfolio discipline. management to drive to through financial awareness, Our broad-based demonstrate profitable our

considerable innovation at we first our the over of growth and Agency with capping the penetration, in growth, premium momentum. and net year, Investor focus September momentum of Looking written products we X.X% last at the Each fourth full specialized a Day, gained the contributed course XXXX growth to the quarter for X.X% our on increase a levers year. discussed

deliver also agency believe changes loss appeal Additionally, most our our We experienced we each From our and From expectations with our and exceeded we've severe face of to the Street. demonstrating forward. pricing on the included these P&C we exceptionally dynamic strength market and our strategy. posted trends to the year, challenges, record segmented XX.X% the our select ever ex-cat guidance the strategy In provided best property in effectiveness position ratio court original had growth delays. high of of trends of quality combined some outperforming loss and while sustainable, auto combination of of the the major the customer-centric an an and to our weather position, in one volatility, segments inflation The well for other the industry. to profitable continue XXXX going perspective, product consistent underwriting portfolio growth strategy, us in of

providing enabled and pricing long-term to collaboration, data in cross-functional value combined has confidence while our analytics anticipate and on broad-based diversified ability us in have significant portfolio our pricing with underwriting Our creation. made inspire additional adjust agility underwriting to investments and The our business. loss profitability trends discipline, our focusing and we accordingly, deliver across our

the in for for and increases Lines rate in loss fourth in quarter trends strategy strong Commercial year of and above results thoughtful full Lines. reflect a pricing Our the earning Personal

margins navigate increase we our demonstrates successfully to dynamics of XXXX, compared As to power are our organization. higher to the and levels, out continue pre-COVID delivering close ability we market which to earnings

XXXX. for strategic our Turning accomplishments to

strengthen changing needs customers. relationships constantly the mutual them delivering our more and to of with partners, even helping agent to our meet continue them our We value

We experience they agent customer and to continued an technology array need well the our business to our tools innovations agents to investments and results. their achieve enhance of give as the support with product designed partners

We forward. our business with providing their also Insight made helping and strategies agents Agency them our market drive tool, unparalleled further enhancements to insight

Dick helping XXXX, diversification. As agency new Personal illustrated Small Day, across also than at our important business Investor XXX role Lavey made this critical production further appointment increasingly tool In and the more and drive appointments in Lines Commercial, to a process. geographic plays agency we

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the benefited the delivered the trajectory upward an the quarter. and X.X% throughout year, business during of Commercial from growth X.X% for rate year Small Our we year and in

robust capabilities Core Commercial pricing to of drive lines we to cultivate profitable most We services among more believe growth. rate strides to underwriting middle and push the profitable market human segments most and where In verticals are areas allow business. our to granular strong Targeted our we as will financial as also to great grow Technology, continue made such industry us less and profitable in challenging profitable institutions in manage we the areas. XXXX, continue continue profitability sectors

additional analytic We our rising underwriting the persist, drivers strong enable market generate discipline the capabilities, outstanding profitability combined firm the labor. in into and to expect to increases as mid-single-digit of of materials data most year Commercial with and continue rate and unique this notably should growth year. catalysts, Core and strategy costs Those us

Our stellar billion Specialty market growing for on premiums portfolio, relationships XX% a first net results This the product underscores XXXX, in in and the our direct $X.X business time position. distribution $X.X and for delivered year. written strong performance billion exceeding basis,

CAGR agents. very retail robust E&S between continued and and most our further For the year, ratio out ex accessible we at the and making Specialty for Investor gain the industry general fills To during Professional the Day. weather-related E&S. XX.X% including launched for the our with momentum expectations a Commercial specialty delivered Specialty XX.X% our And offerings introduction to our excluding with including all our advances significant net you long-term round profitable book to that new catastrophes, Commercial the increase property businesses, exciting our shared Hanover product deliver target the Core with year. in and space institution portfolio, XX% in cat we in customers. lines, our time, a liability XXXX, Industrial. This Marine product on specialty same XXXX, in the coverages the across we specialty losses combined beating full are written specialty year, With specialty even we financial newer XX% more to executive the our lines, on At Hanover total initiative, and growth in of growth for Specialty track Core we casualty sector new achieved premium

have value With to areas, very of diverse for business small including a with expect breadth by capabilities nationals market that and retail high significant meaningful large customers we Specialty product to specialty optimally Our visibility offering. local from midsize product is carriers Commercial agents with a regional lines. we and unique coordination positioned agents through level presence to are businesses, carriers, provide Simultaneously, wholesale XX deliver the X of and that channel. Core enabled the need often and through agents or available and typically oftentimes service different top

needs continue our placement focus our existing customers and technology to to large of of as targeted business to directly. executing and our agents improving place strategic own strategy meet some commercial our core wholesale thoughtfully to the well and agents our as distribution midsize servicing Our relationships, efficiency use the also We'll continuing complement greater efficiency. on and this all for while advance retail of coverage not is as build on specialty of

our deliver to our continue in platform through XXXX to expect to excellent strong agents, beyond. Specialty and leverage growth profitability and strong best We

business a mind, break beginning and this With discuss with segment, of growth we out in you our what the confident years shortly. become share We in as of growth the fastest-growing into and Jeff first business. Specialty ahead. greater profitability quarter drivers the I will thinking pleased am in are will be morning detail separate XXXX, financial to significant you process our our giving a to contributor overall our has that much will this business that

accomplishments. on to Moving Lines Personal

line and Our team delivered growth strong complex market during especially in top XXXX. an earnings

trends retention enabling and and X to invested time, profitability. loss of balance rate the resources changing the energy Given amount adequacy competitive and consistency, last achieve a environment strong of significant and over years, right the we

We Lines. are uniquely Personal positioned in

severity. property to with that on helped and needs customers frequency offset remaining increases insurance geographic complex benefit focus mix Our continued in to deliver the a

and represent to including to elevated consistent and Lines edge, quarter Recall contributing single-digit in in high to that considering approach our pricing strong thoughtful important Additionally, our auto fourth fourth footprint. profitability our generally typical due our reflects northern our quarter continued personal more our growth, XXXX, competitive retention losses to seasonality. an winter Personal excellent the book

to with $XXX continued in Lines gain Prestige book in years. With Personal book. premiums Platinum account we X for Personal double Lines. our total of very the strong also represents traction about will Platinum next X% of market, We Prestige while reception further the believe in offerings Hanover million our or XX% the and accounts now Prestige

business to costs. seek more much time, anticipated we good the industry. increase persistence as with strengthen labor of auto profitability approach will today. will to a address In we same the of rising increased severity, increases insurance pricing, disruptive stands benefit some our XXXX, result potentially contemplate implemented we At As increases restore to we severity including we keep steadily and and auto, profitability. believe up rate frequency the aggressive property of it we the feel our generate standing the pricing industry being our but We competitive to new material additional believe exposure rate about continuation home the by and in to and as thoughtful longer-term expect growth

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written XXXX all been continue rates, we full talent robust has about talent employee the a much Resignation, to and we pipeline Great the extremely I'm what of with economists through While levels the that have retention refer we as at to came attract proud organization. need and

employee engagement as well. our Additionally, high remains

strategy, As organization. to company ongoing our an assess outside and firm engagement we part of recently an survey employee listening conduct across employee engaged the an

are still through initial we full pleased While we analysis, that very the survey. feedback from working are the with

attract and engaged, and a keep principle. on our a resource our accountability, empowerment. groups roles. of underrepresented to company, us Underlying culture. recruitment initiatives compete leadership a highly more is populations talent expanding include strength and efforts opportunities workforce for guided the to supporting values within talent pools engaged and initiatives and that that the to actions other women and employees' market positions these top to speaks our populations and number in employees worked ability belief Our workforce are attract effectively and respect Hanover, advance and dynamic returns. empowered to retain number drive of At women underrepresented growth top collaboration, by The more and our to behaviors of we XXXX, care us business creating values: help in inclusive the These for In expanding quartile the diverse

efforts work on done our inclusion to and there certainly for more be to year. our goals am build is organization, inspired and to to date I diversity While eager across accomplishments by those us this advance

with property the us We and level channel, profitable for me in look the casualty agency on delivers XXXX position to growth embrace innovation growth retain taking making sustainable and maintaining and call value around stakeholders. continuing We services, to and that strategic one shareholders confident the ability talent. next vision the investing begin momentum, let With as products, premier that, to and forward conclusion, profitability to In to in our a center company XXXX change and future imperatives the to look great reality in our our to deliver of data strength, Jeff. best and momentum. overall over industry's company the attract our the from its for optimism. Our we independent other turn a

our Thank will typical update investment you, detail. close segment remarks morning, begin provide good by capital performance our will in more and and everyone. and our operating will reviewing first I by my I our Jack, portfolio results I then prepared our guidance consolidated discussing position. on providing for XXXX.

addition in results. Turning the share and underwriting The in Consolidated the prior Personal ROE rate, X.X% quarter excellent of in to fourth net premiums quarter. robust compared investment Starting year increased the income Lines. fourth our reflected net operating quarter We levels exposure primary drivers to in growth high our reported retention positive XX.X% new increase with to consolidated business with written and were strong operating both near-record performance. fourth and quarter, our Furthermore, of the beating outstanding metrics records. per underwriting. quarterly

to is recorded for where catastrophe that The delivered million of XXXX a the substantially lines year to the $XX.X of the footprint, seasonality it of period XXXX, the improvement have excluding impacted I profitability, quarter above we results the XXXX by for analysis of in quarter, from quarter some combined appropriate. of the XX.X% favorable fourth development, but meaningful X.X of combined of the most prior points below relevant the pre-pandemic prior X.X believe XXXX, predominantly comparisons some COVID in our meaningful particularly some the provide including our ratio assumption fourth in ratio quarter. which reflects of catastrophes year ground business pre-COVID to catastrophe our included to due northern combined fourth points and XXXX. of in in which reserve in will was following modestly be X.X We quarter. frequency We ratio the auto. would or been points. losses, fourth benefits Given helpful underwriting Accordingly, of impact an

of the For Auto These with million ratio favorable and in recorded points $XX.X X.X basis points have largest XX.X% we fourth year prior targeted The The Personal the and releases from investments excluding ratio. in ability we growth combined illustrate in the very as expense full of a most or business reserve over drive favorability the current costs, expense development, will the operational of for expense loss and as X.X full to strong and analytics. enhance the the uncertainties workers' improved ratio and performance further we We comp. These with quarter had years. building environment. technology improvement a maintaining our by leveraging in expense in year and entered rigorous discipline strong XX improvement XXXX helped year, well catastrophes the lines a ultimate delivered to within and level we expense reflects data balance in remain point success to contribute assessing to across a future. prudent the due leverage position, our sheet reserves and advanced vigilant efficiencies the of in the impact results the

As leverage result expense continue ahead, improve expect operational to ratio we a look our of to efficiencies. growth and we as

discussion a segment, Commercial our results with Lines. to of by starting underwriting Turning

the in catastrophes, ratio. year about compared quarter development of Commercial to prior multi-peril point impact excluding by and loss favorable loss the X year expense improved current of primarily fourth lower reflects ratio, the points quarter fourth X.X the full the improvement combined excluding to on for X.X XX.X% points increases rate both for and the in Our year. year increased robust the accident ratio, to catastrophes, The benefit a accident ratio, XX.X% periods current quarter.

from meaningfully loss and with subsided the line quarter quarter. fourth are However, fourth in sequential the XXXX in as quarter third the of improvement pressure of the XXXX large relatively result reflects a strong

We are the actions. underwriting seeing rate targeted our increases benefits also and of

lessened. Commercial continued Our throughout loss the the observed as year Auto ratio benefit increase frequency steadily to

Our of levels comfortably social pre-pandemic in drivers rate due Auto lingering to prior of the frequency present, inflation court and delays, loss picks continue assume on to experience still of remaining all claim below consistent pre-COVID it we especially setting delays critical in is procedures to inflation be earning And with loss impact is the in and this medical that in benefit. line. With is Commercial increases some levels. in costs prudent social

the ratio XXXX, prior Our workers' second in from in premium from compensation loss benefited adjustments. period. mainly but the though quarter half the We throughout slightly year fourth improved earned, unbilled

quarter-to-quarter, future. to year, in quarter. business fourth positioned our strong targeted of line is newly expect in loss underlying and increases in X.X% continue well remain potential quarters, approach, increases by rate reserving rate we particularly new above Throughout prospects is rate the risks skilled holding X ratio well the effectiveness underwriting strong continue deliver the achieved this proxy some the trend environment the rate points There we picks we Commercial in and loss Specialty culminating which remain Our use our and This business, in of with near primarily U.S. posed cautious prior quarter the in in the our the exceptional other has increase rate to plan, for and been seasonality have to to Lines, growth In companies. and earning the change firm, experienced X in for of labor and point less actions. considering profitability. but rates our improved certainly and is for due the to year, and a

the the earn-in. from rate past loss our ratio losses. of should XXXX in year Looking benefit large as Commercial increases property expect normalization improve Commercial ahead, the Core we over implemented to Lines also

will underwritten separate starting target Commercial continue be more Lines Lines to other Specialty, which, what managed. the will expect segment Specialty as we Jack of complete be and above and show a it rolled will NII and these a reported will the views us items, the currently strong allow a pretax allocated businesses statutory mentioned, Lines, as The Commercial in into income reporting to Within P&L complete to to Core profitability. within Commercial including Commercial picture most P&L to and statement, summing and stands of Reporting will expenses, and is reported today, rest in small other QX deliver other complete financial of as will to you how Specialty the be lines We plus separately as structure are for align segment. components as each give Specialty, of up well. income. Core under X lines better currently reported lines of rolling This rest also full operating Commercial

is under presented and to segmentation, presentation will share financial our our price be within premiums, leaving leading new growth have Specialty of also retention. historical Specialty results of definitions March, enough change with written May, under results In new We our how share last and of beginning subsegment we the models. each the the the results segments, time new segment to we from and The more years including discussed indicators definition. XXXX new the measures At time will time. first consistent for in X and study net expect and completely to to segment adjust the quarter analysts reported their investors investor

the for Auto from Lines. substantial the the benefits pandemic. ratio, year, primarily XXXX XX.X% We both Personal frequency reported XX.X% periods excluding by fourth for combined catastrophes of Personal included and to prior driven to an very comparative quarter the increase as Turning year a reflecting related

favorably our XXXX, to track and However, going to Lines forward. our compared results position broader Personal continue unique optionality underscoring

quarter well prior accident and XXXX. ex-cat persistent, book, above not a our longer-term the indicate volumes of Auto were current the to travel, by more while bodes XX.X% workers if of given auto for higher for commuting higher in personal likely an particularly from lower. its points of quarter, This X.X discretionary pre-pandemic but levels, driven office XXXX Personal an permanent, positioned in X.X has improvement remains fourth the concentration us was between a and Hanover's our increase trends representing points industry improvement Of The thoughtful Auto benefit. approach our of and deck frequency periods sustained fourth persistent note, the mix showcases starting driven also it pricing relates away disclosure from to added the change loss difference we the The XXXX. disclosure point X quarter as This earnings differentiated over from demonstrating speaks our last miles experience in XXXX strategy the to years frequency claims. our in and fourth pricing of ratio provides rush driving quarter, year pre-COVID to Personal Mobility a our Our claims ratio compared hour year loss comparative favorable benefit. for

in combined expect at believe Auto of a severity same Personal with our loss lower levels. We ratio continue saw XXXX. price into us first frequency, not pressures around We lingering Personal along benefit, maintain of pre-COVID Auto frequency allow benefit XXXX, will measured increases half although in to level we persistent with the to some that the

in third seeking driven more industry share. We are will accident us seeing cat This did X.X ex ratio rate the the severe material from throughout of includes increase market ability a for homeowners, prior from year change by pricing firming inflation We to and and which from full increase pressures, the allowing as year In elevated even saw are current Auto XXXX. position in grow loss up substantially costs the are response points well renewal quarter, compared current quarter, results our Personal was labor These to periods continue from the market to the strength increases points X.X higher to X.X% price in the year as these change, rate increases pre-COVID weather. X.X% of not XX.X% though XXXX. as and also the up in our price quarter. quarter homeowners, while relative it the we robust noncatastrophe

Importantly, accept to line a expect The in needed fourth quarter a market levels future. we achieve we X% is ending clear XXXX. the continue increases that homeowners high business in to price achieve the renewal historically this target retention strong price in takeaway the that retention mind, Lines Personal in additional indication profitability of levels With in have key of XX.X% by homeowners, change can sight in within we to around this and with mid-XXXX.

focus whole we and advantages. addition, approach In and customer-centric believe sustainable represents account our profitable that competitive

our $XX million. partnership to XXXX up from generated returns expect pressure our a was fixed and in outsized well results net will and approximately expect in performance. Therefore, $XXX line we Lower into cash for our outperformed reflective adjusting income by fourth to our of XXXX, investment investment for for of be to persist income the XX% our investment XXXX. million $XX.X exceptional ahead compared yields of partnerships, Turning for million the quarter which guidance We year, expectations This with investment growing to should continued be by but XXXX approximately trend offset XXXX, largely flows. portfolio, we net in income results. XXXX

total Fixed $X.X positioned. investment cash represent billion income the of portfolio. remains well XX% and very portfolio Our securities

and a diversified weighted of have with A+. average rating well-laddered high quality, portfolio a We

increasing maintaining leverage asset positioning less portfolio classes are environment like interest the for duration and our extension limiting rate-sensitive diversified exposure and rate to partnerships We by equities, loans.

our we confidence the throughout dividends managed In volatility. successfully and $XXX uncertainty equity quarterly approximately capital and our increased stewards weathering in on million the Moving XXXX thoughtfully capital through market position. share we our long-term $X.XX our opportunities. management returned share, total, by have dividend shareholders remain committed to and X.X% of to growth and we economic to repurchases. in a strategy to underscoring We capital. In December, capital strong being and we our XXXX, our priorities

financial on are capital effective Investor profitability, or of higher an targeting allocation. at of return tenets Day, the and broad-based profitable the strategy, operating over growth, longer XX% As shown expense we equity by our term, discipline supported

of X.X% the gains third in as and X,XXX regular of quarter. income by income, offset share portfolio payment partially quarterly our per of unrealized our fixed by value book from Our the of XX, increased a decline end driven dividends. net December in the XXXX,

net gains XXXX. value maturity the of September on from and fixed unrealized book Excluding X.X% from XXXX XX, investments, X.X% end increased our per share

for XXXX. our to Turning guidance

mid-single of premium somewhat to driven quarter written comparison higher expect by in quarter anticipate a digits, We we strong the Specialty, growth the overall growth to consolidated be for businesses. net year, XXXX. very will our but impacted overall in challenging profitable be growth most first premium end first on in the growth In by XX% increase

First very should be XXXX quarter overall solid. growth

net investment XXXX, returns historical reinvestment be income in from in flows. to NII lower consistent We cash offset to the levels. flat more by income outperformance pressure should as Normalizing as partnership partnership expect for yields XXXX be will growing decline

basis excluding be combined should XX Our expense by for XX.X%. X.X%. XX.X% should year to catastrophes, in ratio The points XXXX the range Cat ratio, approximately decrease is in load of the to XX.X%.

expect First we is on conclusion, rate, and load capitalize The rate XXXX, are XXXth anniversary, is to year begin it. a tax ahead quarter we the opportunity statutory XX%. strong which In financial tremendous road X.X%, holds in an of approximate very effective poised the position. cat our and we to

quartile line that, Our accomplishments and open the past to Day. targets profitability now position several for years sustainable, execute over at top deliver questions. the long-term us Investor our will last Operator? September With the we on presented

come [Operator JMP. from Matt with the Instructions]. will And Carletti first question

indicators we we severity us As used what it mix we Personal severity look kind a changing, I wanted on car are let's rough to trends car values? rental at start on Like, the about the think take it is at? of of kind are what Is at in days? auto, items the us give kind of parts cost a can right? as terms driving you pressures. of Is seeing And in look it best question related that cost/shortage? various I indicators labor mix of guess, the that outside how it indicators, you is the Lines. help look the you're to of should or

it's is day. the Yes, Thanks question. obviously, topic this the of Matt, Jack. And the for

to you happy we're So give view that. kind on of our

to low in for limits, losses more articulated Before it I to book we account we makes specifics. frankly, we do a pass versus damage-oriented over what maybe strategy our Dick business portfolio an give base business, customer our we would inflation our impacts think remarks, little a you that our it have change us I I the and as complexion the physical tell maybe is you some and competitors. of of different have and how that prepared different see

-- will, still longer-term trend inflation. with And think we from we're that to short-term focus on. are important as think we So said, we that, some and is analysis if you phenomenon separating, clearly, keep experiencing we what but the are some

I'll turn Dick. with So that, it over to

Yes.

to salvage of mix leading but look if is the you, and is or Matt, indicators because the loss? in the that watch this total just driven our what what's one right? repairable meaning, eye a with it loss right? used on biggest loss won't to value an So to So surprise of side, at is on scenario, to you've total really of at salvage going a And to kind severity the per would on do number we of got look the of cash cars, element then parts, is increases the for, say question, in per a go right our we part. at, the we repairable that's little first labor thing it your heart being -- the too. cost of So actual the it that's where look bit part of is offset about losses, all indicators, at prices, And the from biggest is market, by keep

we So those closely. watch indicators

much. parts some labor, as uptick there seen labor, more time. is parts, repair, when an interestingly number some parts have it takes of from more But and more additional have the up. you speeds to We of is longer up is severity. Cost course, increased in of not

put you and together, -- your the with percentages those severity. total and appropriate to right, you all get So

it. to track we how So helpful that's hopefully you

your at -- well you a I Very you break versus rough of helpful. talk and understand a just total When you that basis, all repairable be versus on might books accidents? ballpark, and about this be many recently? changed give people's different. reparable? performed number XX versus certainly accident a total a book Clearly, And do yours has How Can have other has peers. could are

when than bigger it's it because look total you of dollars, Good terms a the follow-up is questing at incidents. percentage in

around percent loss. incident a of total it's XX-ish So a

here what money kind little Jeff spread probably yield interest that a is, question you new has with help moved? incredibly investment up Frequency. And you. of obviously, a then is, versus inch starting portfolio. bit. on one, just you're book Got to where investing are where for the That's rates how Can helpful. in the Great. us

Yes.

with certainly, So interest but rates there makes rising, that smaller, gap it a still is gap.

flows money on will the in it the book. have the closing the the So yields offset the that of portfolio. we're and diminished below we that comfortable we're earned the cash still yield is But new roll-off

from The next Piper Newsome question come with will Sandler. Paul

a just across harder the commercial want I actually bit I looked has your it versus you to issue the nobody -- inflation hasn't if was same. little But hoping again. behaved book, book personalized beat your

you if any Lines you're it have [indiscernible] Personal are thoughts in about so more in curious much you why seeing Lines? Commercial Just versus

seeing to Paul. I you question, make clarify sure more. I -- the said Seeing want

You're seeing more?

write more house. private the of see this [indiscernible] claim you passenger, And frequency rapid we we increase in than auto and in Well, much the side both. and severity have

a position through just the couple So at of that last, you're between look seen differences we've in pretty call two. it new the the it, over quarters to

frankly, the think what working we'll chime and I let people highest in We level, about certainly right? work think people more going the a going guys and business home. lot here. through, level, At we're have, from highest to a less the at lot

logical that change see of changes it level. would you in seems see advantage some quite highest But Lines And activity [indiscernible] more we we Line side. so book, we also markets. might that level, Personal that in I have in a as the suspect our just Personal aggregate, Personal other the Within Lines at suggested,

that is, the a Commercial went when the over many how think of influences going pretty increases of I other price lot it for you competitive we've rate kind is period at Lines And now and substantially. to rebound look been years of time, at that a hits is through book. Lines Personal thing book the ultimate the dynamics

know if that. don't I So [indiscernible], you want to on in chime

was do -- Lines I line question. answer in than phenomenon declines up Paul. Jack perfectly on commercial Personal clear the I Interesting did the a have said, side. you, -- picking don't we greater for what in frequency see a

to side, that that, related But about think might Commercial severity side. I be on a on talking would benefit to side. losses you think what the the around it the just repairable the is So was total I Personal Line PL Line losses versus

severity on probably So think side. the coming though more Lines the I is Personal acutely

with with quality have enhanced important, keep are relating businesses analytics an what on is you, of working think to I we it. lot and the is the tell all to yours on we to companies confidence them working claims high department back the a related in can complexion on the that frequency I reflect measures actuarial, those of that made though, really eye just severity loss to anticipate enhancing ability on our the real investments have claims. based analytics And claims trend, now the not

of about share. type are very share hard think direction. everyone company do Focusing Specialty. on house. of gaining the nobody side the from? you one Who and losing the things of high companies gaining seems the Commercial is from? that is be Line retention to Who -- share kinds rates, you gaining that the in What you're this you're interesting think in share Obviously, trends classification you're of the reporting is Because right market are

but in rate Paul, of are and a one we quick just premium most comes from increase there. the exposure, gaining share. The --

is Bryan [indiscernible] think person. good a I

Yes.

little can Small a with let's we on of kind dynamics then some commentary of [indiscernible] Commercial But that out some start and there. are So give you think bit playing and Bryan? I

Yes.

pretty than specialist been deal growth share agents our our portfolio But growth So coordinated. a right, rate Balanced call, for more retention I in invested hit with field think you and and long that we've better from broad-based. from Jeff our planned. time, our producers, it would our right, is and would with, in really what is I good of that balanced. brokers growth pretty I increasing Hanover are technology, be is has

bit that having us. with Hanover with sort really a that a in specialist doing we're doing total that of that engagement fortunate we're broker The So well of and well agents value market, handover in we're position

think different I us, of carriers wouldn't them number a So single for that out. there's

think our I it's strategy.

the of Hanover a specialist it's brokers, as the I and combining the source agents. then wholesalers our think complementary

Commercial clearly pricing a and compete that think on at nationals point-of-sale the confidently kind terms the just I appetite, and [indiscernible] more quite also it's through the the a difference of strategies. that Small more in is losers. Commercial because system. regional aren't against Commercial accounts think market, getting And winners the are against of And the in think Small we on seeing and delivered quick you of carriers Maybe pulled better, necessarily in I breadth capable BOP I macro level, we we just business national quite area, compete a package the efficacy the or of regional more there better the carriers Small out the comment by players that to and targeted carriers know

Dick? So

Yes. No.

mean for Commercial and lines. Small I -- our -- that the well said. think of it's BOP I always in business about doing ease associated

mix giving the out we're against incredible have the an don't TAP of agent is in XX winning states Small now place in business And discussions. they regionals Our technology. investment nationals, us strategic course, and tailwind, more about population, all just Sales who the against smarter how their we're and new systems, strong those Commercial right on strategic a that is the getting business their in

will The KBW. come next question with Shields Meyer from

Two really can. I quick if questions,

First, Commercial? and there difference in material loss is the trends Core a between Specialty

businesses Well, got of again, inside we multiple Specialty.

liability our looks frankly, trend liability and so even professional versus, Specialty like difference, businesses. Hanover a in loss management our on And quite what the within say, Specialty Industrial there's

pretty that the But and I Commercial. imagine in get down to Small So think a good business Core and I when between difference aggregate, variance isn't the level, the see dramatically market even would middle we different. unit we Commercial

So of the there's of book where array is a business. full property-centric how inflation,

some some know reopening. the all opening we pandemic liability been think of the short in environment and people But I about worried courts are of and that trends. that's term, closing the and suppressed by the

those in major this difference in don't will trends. think over a I there's So I of aggregate, time. think change But some

our The those versus we across Jack's trend we rate look each I would And our add then each this thing against measure only to books. point, individual is, books. at of loss

specific So why And we of in it's that's have area. when trend, rate I that's lot loss developing. down the how we to say above we're getting maturity think right a confidence

your to was ratio understood. improvement sense completely correctly. I Core it's to trying just I the a baked-in Commercial. comments sounds greater, loss sort Specialty understand versus as like of It if No, get for

say short true. would term, the I in that's

Perfect. Okay.

this, about? accelerated the industry with from Second anything to both and sure quarter, I'm is there worried count auto of Is there makes of adverse do raising -- pit most the Is because selection any which third be any that the that? what sense home to rates. in in but question, and not selection growth we're adverse risk

and you, about business historically tell let terrific feel writing retention But we're would to the we I'll of new ratios. Dick the that quality high that. I the speak

absolutely. Yes, no,

full the account. that We indicators around liability quality and all limits watch have we

account, quality attract. full you we think to of the XX% which is now I business that a our speaks

past. that So there's quality the all concern. you had at me of in highest see business nothing new in that gives the we've It's trajectory the that

our in business. And from Platinum coming that's and our substantially our is experience highest product, quality growth that Prestige the remember

Instructions]. [Operator

next question from will Boenning Scattergood. and come with Farnam Bob Our

have questions. is I Personal two One on Lines.

You've for a been raising rates there few years.

pushback or is, have be increases not same or as about But you from the peers I you you see probably point. have really understand raising point? expect seen there? may are do seen at agents this rate to at some you question as You're rates this And you fatigue my from the regulators increase profitable. rate customers much -- the question,

to is the taking, we not excessive that approach that increases. high have no, we have answer I had we're think because have of -- level rate the -- we

to generate But to is to more consistent. Our we want good to be returns, you that? can do so try strategy Dick, respond

the comes you you're on much how for last point have in his But on I chart, appreciated we industry several see, comments, this industry terms we even Page kind and quarters you negative. the from years rates point down gave taking X. where It in We've starting rate. last right-hand negative. -- question. of upper out has had really to of taking never We you couple of see the if pushback disclosures could that hopefully, Yes. down just for been can your states. you in prepared asking gone of terms And the get what Love can above this the and Jeff

of at So don't be a coming steady, in we're we've we always But much now have kind next of of a we and but will watermark. need. been low sort rate quarters, adding as the substantial

So no when is your at problems we've great, you need had steady, approach all been approved. a as state and you've and getting not our rates

love our can I Yes. as up place, the agents, that expected and the a you And partners. that down imagine, agency and market think is that the generate to is all experience isn't allows over consistency of what us

with of agent not we're received. And anticipate, hardening customer or And fatigue, we question second on be market, strategy seeing will well that. that your the our fatigue

the retentions seen. at of Our levels some we've highest are

that believe still of today. what from room our kind there's rates to have increase we modestly we So

our push I rate -- but agent about from very we'll to So and elasticity we the it. that retention. understanding customer reaction right, happens and what watch confident through the comes feel closely, that

Great.

us the ways kind outset, actually I can Can we, social see inflation on. that there's you on conservative peers is from the the and your with reserves, economic if that in being how about prudent going question second The data And tell or have and most about works inflation, have those that's trends? practice? talked of you impact of

it. Bob, they're the it's they can I they're analyst, a well, another because, a, to said, the at bit. And an to page, really little difficult at see look b, down; they're to and be look saying, was talking page? I if going were quite outsider we bit think a down I you're to going from and delayed

see and that one development a conservatism as lot think little prior a can, you're more those from I get you you'll of different starting just the been prudent as confident XXXX. to will itself show We've in see I'm possibly year scheduled meaningful schedules. when Ps, years, not

as well. So years prior

as our out good coming as balance sheet So about can, we're as as 'XX. we've good we're feeling of been we feeling and ever

will The from Bank with of Grace America. next come question Carter

that at book? varying the frequency Or difference X? the pretty those kind Platinum in looking wondering, Auto recently. constant trends in any book was seen there severity and Is we've do I the the across trends of look Prestige versus Personal

-- Yes, say not meaningful of. differences there's or speak would in frequency severity. to our auto I It's nothing

I flat loss think Day guidance the assumed Investor the from ratio.

the recent in the improvement just kind sort there guidance ROE into wondering just commercial I conservatism was any level the of if and and outlook I some there's margin of earn-through Given the I increases of rate of maybe, lines in guess, baked mean of the there? kind potential change

improvement. well talked loss rate trend businesses And Commercial getting Lines. Lines for all clearly, the margin Commercial above On we're that clearly, Lines, the because of some we've year. we the we're XXXX for loss that that bode a So in our seeing short-term will basis, first where ratios about Personal across example, enormous will from up had of in go frequency benefit the half

that normal one just ratio as loss loss those or And second XX% a for the and ratio continue So bit levels, a us. with move to could will be up fine no little in quarters. first

strategy a it's As Grace, where X-year long-term over period. a Investor think that's the you really about Day,

up, any given are times activity in at they be jump benefit they any starts period move situations more where expenses claims that be over there get to So year, we going assuming that given to period, where Within particular will we're certain loss or constant. or or points. down, from ratios

So answer, that an a loss price between period, but and trend. be we're comfortable a to there'll little equilibrium over X-year hard

I conference This the any turn remarks. would ahead. closing concludes Please for Lukasheva over to back our question-and-answer like session. go to Ms.

and to looking everybody, we're forward to for you participation today, next you, your quarter. Thank talking

The for Thank you presentation. concluded. attending today's conference has now

now may You disconnect.