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Good day, and welcome to the Hanover Insurance Group's Third Quarter Earnings Conference Call. My name is Alan, and I'll be your operator for today's call. [Operator Instructions] Please note this event is being recorded. And I would now like to turn the conference over to Oksana Lukasheva. Please go ahead.

Thank you, Jack, and good morning, everyone. We are very pleased with our strong results in the quarter, marked by several third quarter records, including operating earnings per share of $5.09 and a combined ratio of 91.1%. This excellent performance reflects our continued momentum and underscores the strength of our positioning as we head toward finishing the year and look forward to continued success in 2026. Our combined ratio, excluding CATs, improved 0.2 points from the prior year quarter, primarily driven by improvement in Personal Lines. Catastrophe losses of 3 points came in 3.8 points below our third quarter assumption and lower than historical averages. Benign weather played an important role, and our property management actions have also contributed positively to our CAT and ex-CAT results. Our expense ratio of 31.3% was slightly above expectations, driven primarily by higher variable agency compensation, reflecting better-than-expected year-to-date results, including much lower catastrophe losses. We remain focused on managing expenses carefully while investing strategically in initiatives that drive our long-term success. Third quarter favorable ex-CAT prior year reserve development of $12.1 million included modest favorability across each segment. In Specialty, favorable development was $10 million or 2.8 points with widespread favorability, most notably in professional and executive lines claims made business. In Personal Lines, favorable prior year reserve development was $0.9 million driven by home. And in Core Commercial, favorable prior year reserve development was $1.2 million. Favorability across a few coverages was partially offset by increased reserves in commercial auto as we respond to increased severity. Now I'll further discuss each segment's current accident year results, starting with Personal Lines. This business posted an outstanding third quarter current accident year ex-CAT combined ratio of 85.8%, improving 3.4 points from the prior year period, primarily driven by strong improvement in our homeowners line. Our personal auto ex-CAT current accident year loss ratio was 69.1%, an improvement of 0.7 points compared to the prior year quarter, driven by the benefit of earned pricing and continued favorable loss frequency across multiple coverages, most notably in collision. Turning to homeowners. Our ex-CAT current accident year loss ratio of 47.2% was an 8.5 point improvement from the prior year period and favorable relative to our expectations, driven by strong earned pricing and lower attritional loss frequency, which, as previously mentioned, we partially attribute to more benign weather. Personal Lines grew 3.6%, with new business momentum continuing to accelerate. Growth is especially strong in our target diversifying states. We achieved renewal price of 10.5% in the quarter with auto pricing up 8% and home pricing up 13.9%. While price increases were lower sequentially, they remain above our long-term loss trend. Umbrella pricing remains strong, holding above 20% and consistent with the second quarter. We are satisfied with our current Personal Lines rate levels in light of the strong overall profitability we've achieved. Now turning to our Core Commercial segment. We posted a current accident year ex-CAT combined ratio of 94.3%, 2.5 points above the prior year period driven by the loss ratio. We continue to prudently increase picks in commercial auto in response to increased severity, and we also experienced a couple of larger claims in workers' comp in the quarter. Core Commercial net written premium grew 3.5%, fueled by strong momentum in small commercial, where top line expansion accelerated on the back of double-digit new business growth and healthy retention. Overall retention in Core continues to be robust at 84.4%, underscoring the quality and stability of the book. Core pricing moderated slightly, reflecting lower exposures from the slowing economy, while underlying rate increases remained stable and continued to outpace loss trends. Moving on to Specialty. The business performed exceptionally well, posting a current accident year combined ratio ex-CAT of 86% and a current accident year loss ratio ex-CAT of 48.8%, slightly above the prior year quarter, but better than our long-term expectation of low 50s for this business. Property performance continued to be favorable and liability coverages remained within expectations. Specialty renewal pricing was 8.3%, up slightly from 2Q, while at the same time, retention improved sequentially to 83.2%, underscoring the continued appetite for our offerings. Pricing remains strong and above loss trend. We are very pleased with the consistent execution in our specialty book, including an accelerating top line and remain confident in our positioning to further capture attractive growth opportunities in our markets. Moving on to a discussion of our investment portfolio, which continues to provide higher returns and remains a key source of our earnings power. Net investment income was exceptionally strong, increasing 27.5% from the prior year quarter to $117 million, reflecting growth in our asset base from underwriting and investment activity, improved partnership results, the benefit of higher reinvestment yields and the success of our portfolio repositioning efforts. During the quarter, the realization of certain tax carrybacks enabled us to further reposition the portfolio. Third quarter NII also included a benefit of approximately $2 million from the investment of funds from our recent $500 million debt issuance. We expect a benefit in the fourth quarter of approximately $4 million. However, this benefit is offset by higher interest expense on our debt. The debt level is temporarily elevated following our issuance as we have $375 million of senior notes maturing in April 2026, callable in January at par. Our fixed maturity portfolio continues to carry a weighted average rating of A+ with 95% of holdings investment grade. Portfolio duration, excluding cash, remained stable at approximately 4.4 years, consistent with our long-term asset liability alignment approach. We also maintained limited exposure to variable rate instruments, providing stability in our investment income and reducing reinvestment risk as short-term rates decline. Moving on to our equity and capital position. Our book value increased approximately 7% sequentially and 21% year-to-date. We were active in share repurchases in Q3, demonstrating our ongoing commitment to returning capital to shareholders as a key component of our capital management strategy. From the beginning of July through October 27, the company repurchased approximately 323,000 shares of common stock, totaling $55 million, of which approximately 213,000 shares were purchased during the third quarter of 2025 for approximately $36 million, with the remaining balance purchased through a 10b5-1 plan during October. We have approximately $210 million of remaining capacity under our existing share repurchase program. We're entering the final quarter of the year from a position of real strength, delivering a 19.1% operating return on equity, a 92.6% combined ratio and operating income per diluted share of $13.31 year-to-date. These results underscore the power of our diversified earnings engine and disciplined execution across the enterprise. Each quarter of this year, we've been slowly ramping up our top line growth. Looking ahead, we expect premium growth to continue to accelerate given our smaller-sized account focus in Commercial Lines and the momentum we are building in Personal Lines diversification states. Our fourth quarter CAT load is expected to be 5.2%. With a strong foundation, resilient portfolio and exceptional team, we are well positioned to sustain this performance and to continue creating meaningful value for shareholders. With that, we are ready to open the line for questions. Operator?

[Operator Instructions] Our first question today comes from Michael Phillips of Oppenheimer.

Yes. I don't have too much to add to that, Jack. I mean I'd say it's -- we take each account one by one, and we look at what we believe to be our -- the technical pricing on those accounts. And we look at the full account, obviously. So we think about pricing property in the context of the other lines as well. So it's hard to say if the floor is here, but we're certainly going to remain disciplined, and we've been really disciplined about our ITVs and making sure those are in good order. So we'll continue to fight the fight account by account.

Okay. I guess turning to the Core Commercial and the accident year loss ratio. You said pretty clearly the 2.4 points was the large workers' comp and then the addition to commercial auto. But I guess given comments recently from you guys on pricing and loss trends there, I guess, ex that 2 things, your core loss ratio, it sounds like it was probably flat. Should we have expected some improvement there? And I guess what's your confidence that we might get some margin expansion in Core Commercial in 2026?

Mike, it's Jeff. We'll give our guidance on our loss ratio and the combined ratio when we get to January. But I think overall, we're very confident and optimistic about the price increases that we've been getting relative to loss trend. And it's hard to talk about individual lines, but I am optimistic about the firm overall, given the 9.9 points of price we're getting in Core Commercial. And I think that bodes well when some of the things that showed themselves in this quarter start to normalize.

Our next question comes from Matt Carletti of Citizens.

Our next question comes from Mike

I'm switching to Personal Lines. On the home insurance side, and I appreciate the comments about the percent that's bundled now, definitely higher than historical. Just so we can maybe better appreciate the durability of the current profit margins. Would you be willing to share how much lower the frequency levels are that you expect kind of under the new kind of terms and conditions and deductibles, et cetera, versus kind of the old portfolio?

Mike, that's really hard to say. The -- at present, the frequency benefit is substantial. We haven't really shared that, and I don't think we're prepared to do that. But both in terms of auto, particularly around collision and in homeowners, we're seeing it. And as most have talked about, it's really hard to tell in auto, whether it relates to safer driving because of technology, safer driving because people are concerned about premiums going up or just general concern where they don't -- they've actually had a claim and they don't want to make a claim for fear their premium would go up or all of the above. Going forward, we're trying to assess right now whether we think that frequency benefit is going to continue in both home and auto as we plan and ultimately as we give our guidance for next year. So stay tuned. When we come back to you in late January, early February on the call, we will do our best to give you that readout.

Okay. Great. Pivoting to the Core Commercial segment, the underlying loss ratio, you called out what might be some onetime on work comp, but then commercial auto, I think we'll assume that just given the state of commercial auto for a long time that maybe that's more run ratable, the impact it's having. So I'm assuming the -- in the past, I think you've talked about a 57% to 58% accident year loss ratio target in that overall segment. Is it fair to say that we should be thinking a bit higher?

That's hard to say. This year, as you know, it's 60%. A year ago, it was in the 58% range, and I think that's a reasonable target. I'm still optimistic about that. Even though we've raised our picks in commercial auto, the team is actively working that book and assessing and trying to obtain some price increases there. So still optimistic that that's the appropriate level going forward.

Yes, sure. And I would say, Jack, to start, our play in that small and middle market segment, we see the competitive pressure, but it's definitely not as pronounced as we're seeing in other areas. And I think the work that we've done on our operating model to what I believe really solves a need for our agents, especially the larger agents, the consolidating agents and they're streamlining their placement platforms. And so our ability to turn the submissions around same day in a lot of instances and really help their economics in this space, it doesn't -- to your point, it doesn't create a moat around the business, but it absolutely provides us the benefit of their appreciation for the work that we do with them. And frankly, also just delivering a breadth of products that are healthy, so we can solve a range of their needs in a really efficient way.

The strong growth this quarter, the high retention and also the high price increase that we're getting, I think, is good evidence that Bryan's strategy is clearly working.

[Operator Instructions] Our next question comes from Paul Newsome of Piper Sandler.

I was hoping you could maybe give us some thoughts -- updated thoughts on the expense ratio goals. At one point, you're kind of looking for about 20 basis points of improvement per year, but that kind of got derailed by some other issues and some mix changes. As we look at '25, are we at kind of a place where you can think about returning to that goal? Or is that something that you just have to revisit entirely?

Over the long run, we are committed to that goal of 20 basis points per annum improvement, and that was built into our guide of 30.5%, and we'll address that end of January, early February when we do our fourth quarter call. What I've said from time to time on these calls when asked about it, when we have years or periods where the loss ratio is below what we had guided to in the combined ratio and also when CATs are below our guide, there are scenarios where the expense ratio has to increase a bit, but that would be a small offset to the overall decline in the combined ratio. So even if you think about CATs, when we have lower CATs, there are slightly higher agency profit share that has to be paid. So it's a little harder to deal with the expense ratio in and of itself. But overall, Paul, we are committed to that long-term objective.

Our next question comes from Meyer Shields of KBW.

The other color I'd add to that, Meyer, it isn't just about the technology on the way in the front door, your technology, your system, your operating model needs to wrap around that customer throughout the year through your renewals that persist. How are you at handling endorsements and certificates and calls on billing, right? So it's a collection of services that brings forward a terrific experience. So the customer is happy with the carrier, happy with the agent. And as you know, particularly in the small commercial, the retentions are quite high. We have some of the highest retentions in that market segment in the industry. So we've been at this for years to obviously have a forward-facing ease of quoting so that comes to us preferentially. But then the stickiness of that business is dependent upon all the other components that you have in your operating model. So I would argue that it sustains the growth model.

Yes. And if I could -- this is Bryan. If I could just add one more thing. We've also worked really diligently in the small space on making the renewal process very low touch on those small simple policies. So I would definitely say it's not just on the new business, but it goes through the process.

This concludes the question-and-answer session. I would like to turn the conference back over to Oksana Lukasheva for any closing remarks.

Thank you very much, everybody, for your participation today. We are looking forward to talking to you next quarter.