Hanover Insurance Group Inc · NYSE:THG
Hanover Insurance — Merger or Acquisition (April 2011)
19 slides from Hanover Insurance's merger presentation, Apr 21, 2011
Slide 1: Chaucer: An Attractive Opportunity to Advance Our Journey
Exhibit 99.2 The Hanover Insurance Group, Inc. Chaucer: An Attractive Opportunity to Advance Our Journey April 20, 2011 To be used only in conjunction with the conference call to be held at 9:00 a.m. ET on April 20, 2011 Not for release, publication or distribution, in whole or in part, directly or
Slide 2: Forward-Looking Statements; Non-GAAP Financial Measures; and UK Responsibility Statement
Forward-Looking Statements; Non-GAAP Financial Measures; and UK Responsibility Statement Forward-Looking Statements/Non-Solicitation: This presentation (including the conference call which this presentation accompanies) relates to a proposed acquisition of Chaucer Holdings PLC (“Chaucer”) by The Han
Slide 3: Forward-Looking Statements; Non-GAAP Financial Measures and UK Responsibility Statement
Forward-Looking Statements; Non-GAAP Financial Measures and UK Responsibility Statement risks relating to the application and interpretation of insurance and reinsurance contracts, particularly with respect to a complex international event such as the unfolding problems at the Fukushima Dai-ichi nuc
Slide 4: Chaucer: An Attractive Opportunity to Advance Our Journey
Chaucer: An Attractive Opportunity to Advance Our Journey • Acquisition of Chaucer is an important step forward in our journey to build a world-class property and casualty company • Chaucer is an attractive acquisition opportunity which we regard as one of the best-run franchises at Lloyd’s: – Stron
Slide 5: Our Goal Remains The Same – Creating A World Class Property and Casualty Company
Our Goal Remains The Same – Creating A World Class Property and Casualty Company Strategic and Financial Priorities: • More balanced product and geographic mix World Class – Targeting one-third Personal Lines, one-third Property and Casualty core Commercial Lines and one-third Specialty Company busi
Slide 6: We Made Important Progress on All Critical Strategic Levers
We Made Important Progress on All Critical Strategic Levers Highest-ever book value per share (at December 31, 2010) Improved financial Industry-leading growth; ex-cat reported accident year loss ratios best in four years strength Strong balance sheet Significantly improved cost of capital Enhanced
Slide 7: Chaucer: a Leading Specialist Lloyd’s Insurance Group
Chaucer: a Leading Specialist Lloyd’s Insurance Group Business Overview • Specialist Lloyd’s based insurance company founded in 1922 and top ten managing agent at Lloyd’s • Core strategy is founded upon: – Underwriting excellence – International growth through access to local markets – Maintenance o
Slide 8: Dynamic Business with Proven Underwriting Record
Dynamic Business with Proven Underwriting Record Combined Ratio¹ Established Operating Performance 120.0 % • 5-year average combined ratio of 90.6% 97.0% 97.6% • Solid underwriting results despite elevated 100.0 % 90.8% catastrophe activity in recent years 85.0% 82.1% 29.4 % • 5-year average ROE of
Slide 9: Chaucer’s Management Has Extensive Underwriting Expertise
Chaucer’s Management Has Extensive Underwriting Expertise • Chaucer has a strong underwriting culture: – Track record of strong underwritingresults – 5-year average loss ratio of 61.3% – Conservative approach to risk retention and limits – Lead underwriter in attractive industry classes – Turn-key s
Slide 10: Chaucer Further Diversifies Our Business Mix and…
Chaucer Further Diversifies Our Business Mix and… ($ in millions) Hanover¹ Pro Forma Niches 4% Specialty 18% US Personal US Lines Reinsurance Commercial 52% 26% 5% UK Motor 6% 2010 NEP: $2,841 US US Commercial Personal 23% Lines Chaucer² 38% Specialty 28% UK Motor 24% 2010 NEP: $3,766 Specialty Rein
Slide 11: …Provides Greater Geographic Reach and Scale
…Provides Greater Geographic Reach and Scale ($ in millions) 2010 NPE 2010 Total Assets¹ Geographic Mix² Hanover Chaucer³ $12,244 Middle East, Africa & Asia Pacific 11% $0 $3,674 US Worldwide US 23% 38% $8,570 100% Europe 28% $3,766 $925 $2,841 $8,570 Pro Forma $2,841 US 81% Standalone Pro Forma Sta
Slide 12: Additive Product and Underwriting Capabilities for Our Agents and Brokers
Additive Product and Underwriting Capabilities for Our Agents and Brokers Business Class Examples Full spectrum of smaller energy exposures covering upstream, Energy midstream, downstream, services and renewables Property & liability in smaller private aviation / fleets and in aviation Aviation serv
Slide 13: Strategic Benefits of Lloyd’s
Strategic Benefits of Lloyd’s • Lloyd’s is a large, highly-diversified and well-regarded 2010 Lloyd’s Business Mix insurance marketplace Marine Aviation Motor – Leading specialist insurance market: 52 managing agents, 85 7% 3% 5% syndicates and ~£23 billion of premium in 2010 Energy Reinsurance 6% –
Slide 14: Attractive Financial Profile
Attractive Financial Profile • 100% cash consideration Price and • 56p per share, including the 2.7p per share dividend announced by Chaucer on March 7, 2011 Consideration 1 • Total cash consideration of £313 million ($510 million) As of Year-End 2010 2 As Reported Adjusted for Catastrophes Key Mult
Slide 15: Conservative and Liquid Investment Portfolio
Conservative and Liquid Investment Portfolio ($ in millions, as of December 31, 2010) Hanover Chaucer Pro Forma Equity and Other Cash & Equivalents 3% Cash& 5% Equivalents Govt./ 18% Agency 5% Equity and Other Corporate 2% Municipals Corporate Cash & 36% Govt./ Corporate 18% 47% Equivalents Agency 4
Slide 16: Robust Pro Forma Capitalization
Robust Pro Forma Capitalization • The consideration will be a mix of existing cash and new senior debt expected to be issued prior to closing • We have obtained a financing commitment in the form of a bridge loan, which together with escrowed assets, meet UK Takeover Code requirements of “Funds Cert
Slide 17: Strategically and Financially Attractive
Strategically and Financially Attractive Chaucer is an attractive acquisition opportunity, which we regard as one of the best-run franchises at Lloyd’s. It is expected to provide us with earnings diversification and give access to additional product capabilities Acquisition of Chaucer is an importan
Slide 18: APPENDIX
APPENDIX 18
Slide 19: Data Sources
Data Sources Slide # Graph title Source 6 Hanover Business Mix Evolution 2010 Hanover 2010 Annual Report, p. 6 and internal systems reporting 7 Syndicate Structure Chaucer 2010 Annual Report pgs. 23 and 118 Syndicate 1301 web site: http://www.broadgateinsurance.co.uk/about.htm Syndicate 4242 web sit
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