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Dividend Restrictions
12 Months Ended
Dec. 31, 2022
Disclosure of Restrictions on Dividends, Loans and Advances Disclosure [Abstract]  
Dividend Restrictions

11. DIVIDEND RESTRICTIONS

The individual law of all states, including New Hampshire and Michigan, where Hanover Insurance and Citizens are domiciled, respectively, restrict the payment of dividends to stockholders by insurers. These laws affect the dividend paying ability of Hanover Insurance and Citizens.

Pursuant to New Hampshire’s statute, the maximum dividends and other distributions that an insurer may pay in any twelve-month period, without prior approval of the New Hampshire Insurance Commissioner, is limited to the lesser of 10% of such insurer’s statutory policyholder surplus as of the preceding December 31, or statutory net income less net realized gains. Hanover Insurance declared and paid dividends to its parent totaling $100.0 million in 2022, $255.0 million in 2021 and $245.0 million in 2020. At January 1, 2023, the maximum dividend payable without prior approval was $168.3 million. In May 2023, the maximum dividend declared payable without prior approval will increase by $100.0 million to a total amount of $268.3 million.

Pursuant to Michigan’s statute, the maximum dividends and other distributions that an insurer may pay in any twelve-month period, without prior approval of the Michigan Insurance Commissioner, is limited to the greater of 10% of policyholders’ surplus as of December 31 of the immediately preceding year or the statutory net income less net realized gains, for the immediately preceding calendar year. Citizens declared and paid ordinary dividends to its parent, Hanover Insurance, totaling $72.0 million and $90.0 million in 2022 and 2021, respectively. In 2020, an extraordinary dividend of $82.0 million was declared and paid by Citizens. Accordingly, Citizens cannot declare a further dividend without prior approval until November 2023, at which time the maximum dividend declared payable without prior approval will be $68.9 million.

The statutes in both New Hampshire and Michigan require that prior notice to the respective Insurance Commissioner of any proposed dividend be provided and such Commissioner may, in certain circumstances, prohibit the payment of the proposed dividend.