THG 2018 Annual Report

WR WKH SUHGLFWDELOLW\ DVVRFLDWHG ZLWK WKH &RPSDQ\¶V RZQ PDQDJHG EXVLQHVV DQG DUH VLJQLILFDQW WR ERWK WKH SHUVRQDO DQG FRPPHU cial automobile lines of business. 19. STATUTORY FINANCIAL INFORMATION 7KH &RPSDQ\¶V LQVXUDQFH VXEVLGLDULHV DUH U equired to file annual statements with state regulatory authorities prepared on an accounting basis prescribed or permitted by such authorities (statutory basis), as codified by the National Association of Insurance Commissioners ³1$,&´ 3HUPLWWHG VWDWXW ory accounting practices encompass all accounting practices that are not prescribed; such practices differ IURP VWDWH WR VWDWH PD\ GLIIHU IURP FRPSDQ\ WR FRPSDQ\ ZLWKLQ D VWDWH DQG PD\ FKDQJH LQ WKH IXWXUH 7KH &RPSDQ\¶V 8 6 LQVX rance subsidiaries did not have any permitted practices as of or for the years ended December 31, 2018, 2017, and 2016. 6WDWXWRU\ FDSLWDO DQG VXUSOXV GLIIHUV IURP VKDUHKROGHUV¶ HTXLW\ UHSRUWHG LQ DFFRUGDQFH ZLWK 8 6 *$$3 SULPDULO\ EHFDXVH XQGHU the statutory basis of accounting, deferred acquisition costs are expensed when incurred and the recognition of deferred tax assets is based on different recoverability assumptions. The following table provides statutory net income for the years ended December 31 and statutory capital and surplus as of December 31 for the periods indicated: (in millions) 2018 2017 2016 Statutory Net Income U.S. Insurance Subsidiaries $ 296.1 $ 254.5 $ 158.0 Statutory Capital and Surplus U.S. Insurance Subsidiaries 2,172.5 2,077.1 2,173.4 The minimum statutory capital and surplus QHFHVVDU\ WR VDWLVI\ WKH &RPSDQ\¶V UHJXODWRU\ UHTXLUHPHQWV ZDV PLOOLRQ million and $460.1 million, which equals the Authorized Control Level at December 31, 2018, 2017, and 2016, respectively. Beginning in 2017, the NAIC modified the RBC formula to require the inclusion of catastrophe risk. Accordingly, the Authorized Control Level for 2016 has been restated to reflect this change. 20. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) The quarterly results of operations for 2018 and 2017 are summarized below. THREE MONTHS ENDED (in millions, except per share data) 2018 March 31 June 30 Sept. 30 Dec. 31 Total revenues $ 1,091.5 $ 1,133.4 $ 1,166.6 $ 1,102.8 Income from continuing operations $ 50.5 $ 82.4 $ 104.0 $ 2.1 Net income $ 67.7 $ 99.3 $ 100.4 $ 123.6 Income from continuing operations per share: Basic $ 1.19 $ 1.94 $ 2.45 $ 0.05 Diluted $ 1.17 $ 1.91 $ 2.41 $ 0.05 Net income per share: Basic $ 1.59 $ 2.34 $ 2.36 $ 2.92 Diluted $ 1.57 $ 2.31 $ 2.33 $ 2.88 Dividends declared per share (1) $ 0.54 $ 0.54 $ 0.54 $ 5.35 132 THE HANOVER INSURANCE GROUP | 2018 ANNUAL REPORT