Hanover Insurance Group Inc

Good day and welcome to the Hanover Insurance Group's third quarter earnings conference call. My name is Ranjit Thomas and I'll be your operator for today's call. At this time, all participants will be in the listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, There will be an opportunity to ask questions. To ask a question, you may press star then 1 on your touchstone phone. To withdraw your question, please press star then 2. Please note, this event is being recorded. I would now like to turn the conference over to Oksana Lukasheva. Please go ahead.

Good morning and thank you for joining us for our quarterly conference call. We will begin today's call with prepared remarks from Jack Roach, our President and Chief Executive Officer, Dick Lavey, our CEO-elect, and Jeff Farber, our Chief Financial Officer. Additionally, Bryan Salvatore, President of Specialty Lines, will be available to answer your questions after our prepared remarks. Before I turn the call over to Jack, let me note that our earnings press release Financial Supplement and a complete light presentation for today's call are available in the investor section of our website at hanover.com. After the presentation, we will answer questions in the Q&A session. Our prepared remarks and responses to your questions today, other than statements of historical fact, include forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. These statements can relate to, among other things, our outlook, guidance, performance, profitability, growth, strategy, capital management, the implementation and use of new technologies, the impact of revised policy terms and conditions, and targeted property actions. Additionally, they can relate to factors that could impact the company's performance and or cause actual results to differ materially from those anticipated, including changes in the demand for our products Thank you for watching. and our filings with the SCC. Today's discussion will also reference certain non-GAAP financial measures, such as operating income and accident year loss in combined ratios, excluding catastrophes, among others. A reconciliation of these non-GAAP financial measures to the closest GAAP measure on a historical basis can be found in the press release Thank you Oksana and good morning everyone.

We're very pleased with our third quarter performance. Our results reflect continued momentum across the organization, strong execution in a dynamic market environment, and the strategic benefits of our diversified portfolio. Our portfolio is built around several structural advantages. Specialty lines with broad product profitability, a preferred personalized franchise concentrated in higher value accounts, and a distinctive core commercial book anchored to small size businesses, a segment in which we excel. This diversified business mix gives us multiple levers for profitable growth regardless of where the cycle turns. Importantly, Our commitment to investing and growing where returns are most attractive remains unchanged. Profitability is our top priority and the company will continue to make underwriting, growth, and capital allocation decisions through that lens. Turning to results, our third quarter operating EPS came in meaningfully ahead of our original expectations and improved from the prior year quarter. Operating ROE was robust. at approximately 19%. Net written premium growth was 3.1%. Across the portfolio, we remain disciplined and only rope business that meets our return thresholds. These are intentional choices and the underlying loss ratio performance reinforces our strategy. Turning to our segment results, specialty remains one of the strongest examples of the value created by our diversified business mix. The breadth of our portfolio allows us to navigate changing market conditions, maintain underwriting discipline, and pursue attractive opportunities across a wide range of products and markets. While conditions are competitive in certain property lines, we continue to see meaningful opportunities for profitable growth in an increasing number of our offerings. Excluding Hanover Specialty Industrial, which is most exposed to competition in the larger property market, and Hanover Programs, which we continue to tightly manage and limit expansion, we generated strong growth of 6.7%. We are seeing particularly strong growth momentum in the markets where conditions remain favorable and margins are attractive. Surety grew 8.8%, extending its strong track record. E&S growth accelerated from 6.5% in the second quarter to 11.7% in the third quarter, supported by our AI-enabled submission intake and triage capabilities. Management liability posted strong growth of 15.5%, and both marine and Hanover professional liability delivered accelerated growth compared to the second quarter. Retention for specialty remained very strong, improving sequentially to 83.2%. Renewal price change also improved slightly to 4.3%, while rate held relatively consistent from the second quarter, with liability rate continuing to accelerate. We enter the fourth quarter with strong momentum across many lines within our specialty book, and significant confidence in the segment's ability to deliver sustained, profitable growth. I couldn't be prouder of how the organization is performing or more optimistic about the path ahead. We have built a special culture, attracted outstanding talent, and developed a leadership team that will continue to drive our strategy and performance for years to come. I believe we are exceptionally well positioned to build on this momentum and deliver sustained success. As we've discussed, our leadership transition is well underway, and it's fitting that Dick take you through the performance for Personal Lines and Core Commercial and update you on our exciting technology initiatives. Dick? Thanks, Jack.