Safe Harbor Statement
|Forward-Looking Statements and Non-GAAP Financial Measures|
Certain statements, documents and presentations on this website contain or may contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Use of thewords “believes”, “anticipates”, “expects”, “projections”, “outlook”, “should”, “plan”, “guidance,” “on track to,” “promise,” “targeted,” “aspire” and similar expressions is intended to identify forward-looking statements. In particular, these documents include or may include forward-looking statements with respect to net written premium growth, prior year reserve development, expense and loss ratios, pre-tax segment income and effective tax rate, return on equity, anticipated price changes in our property and casualty business, policies in-force levels, retention, expense management, underwriting conditions, business mix change, the adequacy of reserves (including reserves established with respect to catastrophes), the impact of anticipated regulatory changes, the impact of any recent, pending or future acquisitions, new product availability and impact, capital levels, ratings, investment impairments, refinancing rates and discontinued operations.
The company cautions investors that forward-looking statements are not guarantees of future performance, and actual results could differ materially. Investors are directed to consider the risks and uncertainties in our business that may affect future performance and that are discussed in readily available documents, including the company’s earnings press release, Annual Report and other documents filed by The Hanover with the Securities and Exchange Commission, which are available at www.hanover.com under “Investors.”
These uncertainties include the current disruptions in the financial markets, the uncertain economic environment, the possibility of adverse catastrophe experience (including terrorism) and severe weather, the uncertainties in estimating non-catastrophe weather-related losses, the uncertainties in estimating property and casualty losses, the ability to increase or maintain certain property and casualty insurance rates, the impact of new product introductions, adverse loss development and adverse trends in mortality and morbidity, changes in frequency and loss trends, the ability to improve renewal rates and increase new property and casualty policy counts, adverse selection in underwriting activities, investment impairments, heightened competition (including rate pressure), adverse and evolving state and federal legislation or regulation, efforts by the Governor of Michigan to freeze automobile rates and amend the regulation of such rates, adverse regulatory or litigation actions, financial ratings actions, and various other factors.
The discussion in this presentation of The Hanover’s financial performance includes reference to certain financial measures that are not derived from generally accepted accounting principles, or GAAP, such as property and casualty segment income, property and casualty segment income excluding catastrophes, book value per share excluding accumulated other comprehensive income, loss and combined ratios excluding catastrophes, direct written premium including AIX on an annualized basis, net written premium adjusted for change in reinsurance related items.
Income from continuing operations is the most directly comparable GAAP measure for total segment income and measures of segment income that exclude the effects of catastrophe losses or reserve development. Segment income and measures of segment income that exclude the effects of catastrophe losses or reserve development should not be construed as a substitute for income from continuing operations or net income determined in accordance with GAAP. A reconciliation of income from continuing operations to total segment income for the quarters ended March 31, 2009 and 2008 are included in our February 7, 2009 earnings press release and related statistical supplement, which are available on our website. A reconciliation of income from continuing operations to total segment income for the years 2003 and 2008 is included in the respective 10-K's.
Loss ratios calculated in accordance with GAAP are the most directly comparable GAAP measures for loss ratios calculated excluding the effects of catastrophe losses. The presentation of loss ratios calculated excluding the effects of catastrophe losses should not be construed as a substitute for loss ratios determined in accordance with GAAP. A reconciliation of loss ratios calculated excluding catastrophes to loss ratios for the years 2003 and 2008 is included in the respective 10-K's.
Combined ratios calculated in accordance with GAAP are the most directly comparable GAAP measure for combined ratios calculated excluding the effects of catastrophe losses or based on “normalized losses”. The presentation of combined ratios calculated excluding the effects of catastrophe losses or using normalized losses should not be construed as a substitute for combined ratios determined in accordance with GAAP. A reconciliation of combined ratios calculated excluding catastrophes (or based on normalized losses) to combined ratios for the years 2008 and 2007 are included in the appendix to this presentation. A reconciliation of combined ratios calculated based on ex-Katrina, or normalized losses to GAAP combined ratios for the years 2005 and 2008, is included in the respective 10-K's.
Book value excluding AOCI is a non-GAAP measure. Book value is the most directly comparable GAAP measure for book value excluding AOCI, which measures book value that excludes the effects of other comprehensive gains and losses. A reconciliation of book value to book value excluding AOCI for the years ended 2008, 2007 and 2006 is included in the respective 10-K's.
Direct written premium is a non-GAAP measure. Net written premium is the most directly comparable GAAP measure for direct written premium.