THG 2018 Annual Report

The following table provides our top Commercial and Personal Lines geographical markets based on total net premiums written in the state in 2018. YEAR ENDED DECEMBER 31, 2018 Commercial Lines Personal Lines Total Commercial and Personal Lines (in millions, except ratios) Net Premiums Written % of Total Net Premiums Written % of Total Net Premiums Written % of Total Michigan $ 133.7 5.1% $ 766.5 43.2% $ 900.2 20.5% Massachusetts 186.6 7.1 234.8 13.2 421.4 9.6 New York 229.9 8.8 128.1 7.2 358.0 8.2 California 317.2 12.1 ² ² 317.2 7.2 Illinois 119.1 4.6 96.3 5.4 215.4 4.9 Texas 207.0 7.9 ² ² 207.0 4.7 New Jersey 138.1 5.3 57.1 3.2 195.2 4.5 Connecticut 58.8 2.3 89.8 5.1 148.6 3.4 Georgia 80.7 3.1 54.1 3.0 134.8 3.1 Maine 63.4 2.4 49.3 2.8 112.7 2.6 Virginia 74.4 2.8 36.2 2.0 110.6 2.5 Indiana 51.7 2.0 36.5 2.1 88.2 2.0 Florida 86.6 3.3 (0.1) ² 86.5 2.0 Tennessee 50.1 1.9 35.0 2.0 85.1 1.9 Wisconsin 48.3 1.9 35.5 2.0 83.8 1.9 New Hampshire 42.2 1.6 33.8 1.9 76.0 1.7 Louisiana 39.3 1.5 35.6 2.0 74.9 1.7 North Carolina 66.4 2.5 2.8 0.2 69.2 1.6 Minnesota 68.7 2.6 ² ² 68.7 1.6 Pennsylvania 60.0 2.3 8.7 0.5 68.7 1.6 Other 488.5 18.9 74.1 4.2 562.6 12.8 Total $ 2,610.7 100.0% $ 1,774.1 100.0% $ 4,384.8 100.0% We manage our Commercial Lines portfolio, which includes our core and specialty businesses, with a focus on growth from the most profitable industry segments within our underwriting expertise. Our core business is generally comprised of several coordinated commercial lines of business, including small and middle market accounts, which include targeted industry segments. Such business is split between small accounts, generally having less than $50,000 in premium, and middle market accounts, those with premium over $50,000, with most middle market accounts having less than $250,000 of premium. Additionally, we have multiple specialty lines of business, which include inland marine, management and professional liability, AIX program business, surety and specialty property. 7KH &RPPHUFLDO /LQHV VHJPHQW VHHNV WR PDLQWDLQ VWURQJ DJHQF\ UHODWLRQVKLSV DV DQ DSSURDFK WR VHFXUH DQG UHWDLQ RXU DJHQWV¶ EH st business. We monitor quality of business written through ongoing quality reviews, accountability for which is shared at the local, regional and corporate levels. We manage Personal Lines business with a focus on acquiring and retaining preferred accounts. Currently, approximately 84% of our policies in force are account business. Approximately 56% of our Personal Lines net premium written is generated in the combined states of Michigan and Massachusetts. In Michigan, based upon direct premiums written for 2018, we underwrite approximately 6% of WKH VWDWH¶V WRWDO PDUNHW Approximately 68% of our Michigan Personal Lines business is in the personal automobile line and 31% is in the homeowners line. Michigan business represents approximately 46% of our total personal automobile net premiums written and approximately 39% of our total homeowners net premiums written. In Michigan, we are a principal market for many of our appointed agencies, with approximately $2.0 million of total direct premiums written per agency in 2018. Approximately 69% of our Massachusetts Personal Lines business is in the personal automobile line and 29% is in the homeowners line. Massachusetts business represents approximately 14% of our total personal automobile net premiums written and approximately 11% of our total homeowners net premiums written. We sponsor local and national agent advisory counci OV WR JDLQ WKH EHQHILW RI RXU DJHQWV¶ LQVLJKW DQG HQKDQFH RXU UHODWLRQVKLSV 7KHVH councils provide feedback, input on the development of products and services, guidance on marketing efforts, support for our strategies, and assist us in enhancing our local market presence. 7 2018 ANNUAL REPORT | THE HANOVER INSURANCE GROUP