The Hanover Insurance Group, Inc. Investor Day 2026

Good morning everyone, and welcome to The Hanover's 2026 Investor Update. I am Oksana Lukasheva. Thank you for joining us. The Hanover's strategic ambition and our progress have been consistent. Today, we will focus on what comes next, what is changing in our approach as the industry evolves, where we see the greatest opportunities to create value, what we expect will drive sustainable earnings and returns, and the financial framework against which you can assess our progress. In a moment, you will hear from our CEO, Jack Roche, and CEO-Elect, Dick Lavey, followed by Bryan J. Salvatore, President of Specialty Lines. We will then turn to a business leader panel on operating model transformation and AI, moderated by our Chief Information and Innovation Officer, Will Lee. Next, Chief Claims Officer Dave Lovely will discuss our claims transformation. CFO Jeff Farber will close the presentations by introducing our new long-term financial targets.

We will conclude the event with a 30-minute Q&A session. Before we begin, a brief reminder that today's discussion will include forward-looking statements which are subject to risks and uncertainties, and actual results may differ materially from those discussed. Please refer to the forward-looking statement disclosures in today's presentation and our filings with the SEC for additional information. We will also refer to certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP measures are included in the presentation materials, which will be posted on our website. With that, it is my pleasure to welcome our President and Chief Executive Officer, Jack Roche.

Thank you, Oksana. Thanks to all of you for participating in our Investor Day. We very much value the ongoing dialogue we have with the investment community, and we appreciate the opportunity to give you an updated and deeper view of Hanover's strategy and our future prospects. Our 2021 Investor Day was designed to carry us through 2026. As we approach that horizon and a thoughtful CEO succession, this is a perfect time to reflect on our progress and to lay out the next chapter. Let us take a couple of minutes to review our accomplishments. As a management team, we are quite proud of the performance against the five-year aspirational goals we put forth in 2021. We generated approximately 20% operating ROE for the last 12 and 18 months versus our target of 14% by 2026.

We also outperformed our operating EPS target while being relatively in line with our book value and premium growth targets. Importantly, we achieved these targets while navigating a highly complex environment, including post-COVID uncertainty and significant spike in inflation. In fact, these environmental challenges served as a stimulus to accelerate our portfolio management actions and further advance the diversification of our earnings stream. As a result, we sit here today with the best financial and strategic position we have ever been, generating robust and diversified earnings across all three business segments, and significantly better spread of risk across our geographic footprint. Today, we are a true national player in commercial lines and a top super-regional in personal lines. At the same time, we executed major improvements in our portfolio and property aggregation management, greatly reducing our earnings volatility.

Our thoughtful and consistent growth are enabling even more relevance with the top distributors and allowing us to improve our scale and expense position. If you ask me what I am most proud of during my tenure, it is not any individual result or metric. It is the leadership team and the culture I will leave behind. This highly competent team has embraced this most dynamic environment and truly collaborates as one. Our business unit and corporate leaders share insights on loss trends, market shifts, and strategic direction. They are students of the industry, not just their function. Every leader here is expected to understand the complexities of the P&C business well beyond their own functional area. Our leaders are agile and effective. Business leaders are more than underwriting experts. They evolve their operating models and drive their own technology agendas.

In this most transformational time in our business, we have the strongest team in the history of the company, and they are very excited to elevate to the next level. My confidence in the company extends well beyond the senior leadership group to the broader Hanover organization, a team that has proven it can execute through significant change and is ready to keep evolving for the future. At the heart of our success is a very special culture. It is built on our care values and exceptional leadership standards we hold everyone accountable to. Our various outside recognitions are gratifying, but the feedback I value the most is from our 5,000 employees who give us some of the highest participation and engagement scores in the industry.

I truly believe that our talent and culture are major contributors to our financial success and lead to the sustainability of our performance going forward. It is the most durable asset I can leave to my partner and successor, Dick Lavey. As I get ready to pass the baton to Dick, I couldn't be more confident in his ability to lead this unique company forward. His deep experience in the property casualty business, complemented by significant expertise in the technology landscape, position him very well in this dynamic environment. Dick is one of the most tech-savvy P&C executives in the business today, and he has a world-class team around him that is truly excited about the future ahead. With that, I will turn the floor over to our CEO-elect, Dick Lavey.

All right. Okay. Thank you, Jack. I am so honored to follow in your footsteps and continue this amazing journey. Having been at The Hanover for over 22 years, I feel so connected to our people, our culture, and our strategy, and I am beyond proud to lead this team forward. I will begin with a summary or an overview of our next chapter, which we characterize as scaling with resiliency and durability. There is one conviction I want to start with today. I believe The Hanover occupies an increasingly distinctive position in the market. National caliber, A-plus capabilities and talent, local agency intimacy, and a diversified and broadly profitable portfolio built around customers who value advice.

We have created a competitive advantage that delivers real and measurable durability in our earnings power, and that is a very powerful position from which to grow. The opportunity ahead is to scale that advantage without losing what makes us distinctive. Importantly, underlying our path to a diversified portfolio is a strategic and intentional go-to-market approach, where we have laser-like focus about where we compete and which customer segments we target, and how we have built our operating models to perform in these markets. Specifically, we have a disciplined focus on a small to mid-size customer profile in small commercial, middle market, and Specialty, with an emphasis on the full account. This segmentation is critical to us and will continue. In Personal Lines, we have been purposeful in writing full accounts and moving upmarket, writing more complex PL customers with multiple homes, cars, and ancillary needs.

This is the segment that seeks insurance advice and is comfortably positioned in the IA channel. This is a key driver, we believe, of our go-forward resilience and durability as we scale the company. Looking out the next 5 to 7 years, the industry forces will continue to challenge the environment, no doubt, but also create opportunities. We firmly believe that our approach allows us to smartly navigate these trends. There is volatility and complexity rising across many liability lines. The independent agency channel will continue to consolidate and reorganize. Agent and customer expectations will continue to demand speed and clarity. The Generative AI technology is enabling many new possibilities. AI is incredibly exciting for our company and for the industry.

This represents a paradigm shift in how our industry operates, streamlining how we do business, and resolving many of the longstanding challenges that have frustrated agents, carriers, and customers alike. It will help reduce friction in how we exchange data and interact with customers and agents, bringing both efficiencies to how we execute and enabling better insights and decisioning in underwriting claims and service. When you combine these opportunities with Hanover's innate agility and our tech business partnership, I couldn't be more optimistic about what we can accomplish as we scale this company. The strategy, the diversification, and the transformation approach all contribute to a very strong earnings architecture.

In fact, our recent improved performance is not just a function of a favorable cycle, but rather a reflection of a resilient portfolio profile, reimagined operating models for claims and underwriting, a differentiated agency strategy, and a financial management approach designed to compound value through the cycles. Our company is backed by a fortress strength balance sheet with strong reserves, a high-performing investment portfolio, and strategic capital deployment. As I step into the CEO role, The Hanover is embarking on its next chapter, not as a better-performing version of our prior model, but as a structurally different company, more technology-enabled, more specialized, and with greater scale, all of which enables us to deliver value. My goal is to march our company forward towards $10 billion in premium and $1 billion in earnings.

On that journey, we have aspirational goals to deliver 7% net written premium compounded growth and a mid to high teens ROE in the next 5 years. As a backdrop, it is worth some brief comments on where we believe the industry is headed with these 4 trends that are well understood. Risks are definitely getting more complex. There is weather volatility, casualty inflation, and evolving loss trends that require sharper underwriting execution and a claims operation designed for severity management. As a result, specialization is definitely required. Agency models continue to evolve. Many are consolidating, concentrating business among a number of large distributors, and commoditizing certain markets. Personal lines auto and micro/small commercial as examples. This requires independent agent carriers to focus on products and sectors that are sustainably embedded in the value-added consultative IA channel. Customer and agency preferences are evolving.

They place business where quoting is fast, workflows are easy, and carriers can respond with clarity. This is no longer a differentiator. It is table stakes in our industry. The technology environment is changing rapidly as generative AI enables new technologies or new capabilities, excuse me, at faster speed to market. Carriers that embed AI in the flow of work will outpace those that struggle to integrate the technology into their operating models. We believe this future environment rewards carriers like The Hanover that combine advice-led distribution, underwriting precision, technology-enabled speed, claims discipline, and volatility management. I am excited now to turn to our ambitious strategy, and I will begin with this new visual. This compass is an excellent framework to represent how we will chart our course forward and navigate the challenges ahead. Our winning position is based on a trifecta of 3 competitive advantages.