THG 2018 Annual Report

Incurred claim count information presented represents claim frequency by individual claimant and measures the frequency of direct claim settlements that have resulted in or are expected to result in claim payments. Claim count information is presented in a manner consistent with that used in the quarterly loss reserving process. A single claim event, particularly in automobile lines, may result in multiple individual claimants and, therefore, multiple claim counts. Incurred claim counts are comprised of outstanding claims and those that are closed with a loss payment and exclude those that are closed without a loss payment. A single claim event may result in multiple claims closed with a payment when a claim is subsequently reopened with further payment. In this case, a reopened claim payment is counted as an incremental claim settlement. Claim count information is not available for direct and assumed participations in various involuntary pools and residual market mechanisms, which represent approximately 5% or less of the total gross earned premium and gross incurred claims for the lines presented. Incurred claim counts are also not adjusted for the effect of claims ceded as part of reinsurance programs, although the incurred losses and cumulative paid losses presented in the following tables are presented net of reinsurance ceded. Commercial multiple peril (in millions) As of Incurred Losses and ALAE, Net of Reinsurance December 31, 2018 YEARS ENDED DECEMBER 31, Cumulative Incurred Accident 2012 2013 2014 2015 Claim Year Unaudited Unaudited Unaudited Unaudited 2016 2017 2018 IBNR Count 2012 $ 480.0 $ 462.8 $ 456.2 $ 459.7 $ 475.6 $ 474.9 $ 476.6 $ 8.8 16,983 2013 380.0 362.5 367.9 391.8 392.1 393.0 10.2 14,830 2014 443.9 439.6 464.8 459.4 449.1 22.6 15,922 2015 446.0 456.3 463.7 467.4 33.0 15,731 2016 447.1 449.6 448.7 55.5 15,981 2017 538.7 544.8 122.2 16,674 2018 578.2 228.3 16,716 Total $ 3,357.8 Cumulative Paid Losses and ALAE, Net of Reinsurance YEARS ENDED DECEMBER 31, Accident 2012 2013 2014 2015 Year Unaudited Unaudited Unaudited Unaudited 2016 2017 2018 2012 $ 175.8 $ 307.5 $ 350.8 $ 389.3 $ 424.2 $ 442.8 $ 454.9 2013 137.6 221.5 262.3 306.4 334.6 355.9 2014 171.7 267.8 316.0 363.4 395.2 2015 161.9 260.1 315.6 363.2 2016 140.3 237.9 290.2 2017 170.9 296.4 2018 178.8 Total $ 2,334.6 Total reserves for 2012 ± 2018 accident years (incurred - paid) 1,023.2 Total reserves for 2011 and prior accident years 53.2 Unallocated loss adjustment expense 19.3 Net reserves at December 31, 2018 $ 1,095.7 125 2018 ANNUAL REPORT | THE HANOVER INSURANCE GROUP