Hanover Ins. mostly completes sale of Chaucer

Jan. 01--WORCESTER -- Hanover Insurance Group Inc. has completed the sale of most of its Chaucer business and is planning to use more than half of the proceeds for dividends and share buybacks.

The property and casualty insurer said it closed the sale of Chaucer Holdings Ltd. to China Reinsurance Group Corp. on Dec. 28. The remaining portions of the deal are expected to close in 2019.

The total deal could be worth $930 million to $940 million. Hanover said Sunday that after taxes, transaction costs and other expenses, it expects to receive $840 million to $860 million.

About $450 million of that will go to shareholders in the form of stock buybacks and dividends. Hanover directors have authorized an accelerated $250 million share buyback program and about $200 million for a special dividend. The dividend of $4.75 per share of common stock will be paid Jan. 25.

The rest of the proceeds could go to business investments, share buybacks and other options, according to a statement from Jeffrey M. Farber, Hanover chief financial officer.

"We fully anticipate deploying this capital in the best interest of our shareholders and in a very reasonable time frame," he said.

Hanover is a property and casualty insurer that previously announced plans to sell London-based Chaucer, a specialty insurer. Hanover bought Chaucer in 2011 for $474 million.

China Re, as the buyer is known, is a large reinsurance business owned by the Chinese government and a Chinese sovereign fund.

Proceeds from the deal include an initial cash payment to Hanover of $779 million. Hanover said it expects the sale of Irish and Australian entities related to Chaucer to close during the first three months of 2019, bringing in another $41 million in cash. The company expects an additional $25 million to $35 million in payments by June 30, depending on Chaucer's financial results. The deal also includes an $85 million Chaucer dividend paid to Hanover before the sale.

Hanover directors authorized the accelerated buyback program as part of a new $600 million share buyback plan. The new plan replaces a previous share buyback plan.

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