The Hanover Insurance Group is an all-around property/casualty insurance holding company. Through its Hanover Insurance Company, it provides personal and commercial automobile, homeowners, workers' compensation, and commercial multiple-peril insurance and professional liability coverage. The group sells its products through a network of 2,000 independent agents throughout the US, but Michigan, Massachusetts, and New York account for more than 40% of its business. In Michigan, it operates as Citizens Insurance Company. Hanover's Opus Investment Management subsidiary provides institutional investment management services and it operates internationally through its UK subsidiary, Chaucer Holdings.
Michigan is Hanover's largest market, accounting for nearly a quarter of all commercial and personal lines. Massachusetts and New York account for 10% and 9%, respectively, while California and New Jersey contribute an additional 6% each. About a quarter of international operations are concentrated in the UK, with the Asia-Pacific and Americas regions accounting for about 9% each.
Hanover saw revenue jump nearly 25% in 2011 to $3.9 billion as net premiums earned grew by more than $750 million. The majority of that growth is attributable to the mid-year acquisition of UK insurance firm Chaucer, which added international operations to Hanover's business.
Expenses related to the Chaucer purchase, as well as an increase in catastrophe losses and non-catastrophe weather-related activity, pushed net income down to $37 million, a decline of 76% from the prior year.
Hanover's written premiums are split more or less evenly between its personal and commercial products, but competition is fierce in personal insurance, so the company has placed more emphasis on expanding its commercial offerings.
Wriggling into a niche is one method of expanding and Hanover has moved into several areas of specialty insurance in recent years. It created Hanover Architects & Engineers Advantage product line out of its 2010 acquisition of Benchmark Professional Insurance Services (insurance for the design industry, including architects and engineers). Another 2010 acquisition -- Campania Group -- brought in liability coverage for the health care industry.
In 2011 the company went international when it acquired UK-based Chaucer Holdings for $510 million. Chaucer operates two Lloyd's of London syndicates, which manage and underwrite global property/casualty policies. The purchase also put Hanover into the reinsurance business, and added specialty coverage in areas such as marine, aviation, and nuclear energy.
Hanover has also expanded its less specialized commercial offerings. It secured the rights to a block of small and middle-market non-specialty commercial business worth $400 million from OneBeacon in 2009, which helped it build up its business in that area just as it was also expanding geographically with new offices opening in the western US. To support its growth in the area, Hanover created a Pacific Region territory in 2012 with branch offices in Washington, Oregon, and California. – less