We have Hanover Group. We're very happy again, really to have Fred Eppinger, CEO. This may be his last presentation as the CEO of Hanover. Fred, as you know, announced his retirement last September. We were really happy that he could come this year, because he joined the company in 2003. This company looks nothing. It is an entirely different company than it was. Really, that is because of Fred and his vision and the execution of that vision. People are different, products are different, geography is different. The name is the same, but that's about it. We're happy to have Fred here. Maybe you can reflect a little bit about some of the stuff you've accomplished over that time, but more talk about the company as it is today and where it's going. Fred?
Thanks, Jay. Appreciate it. Welcome, everybody. Good afternoon. What I thought I'd do is quickly give a quick overview of the company, talk a little bit about where we are and what our priorities are, and a little bit about the future and really sitting back and say, why are we a great investment? Why are we a company that really has a lot of momentum? It's pretty unique in the space, because we're one of the very few companies that is projecting earnings growth next year, double-digit ex-cat earnings growth next year because of our momentum. Let me go through, for those of you that don't know much about us, we're five and a half billion dollars. We're pretty much evenly split between international specialty, US specialty, Personal Lines, and Core Commercial, and a nice diverse book of business.
Interesting, we're the 40th or so oldest company on the New York Stock Exchange. We're 163 years old, one of the oldest companies in America. We think of ourselves as one of the most entrepreneurial P&C companies in the space. As Jay said, a lot has changed to the company in the last decade as we've been growing and building the business. The mix, there's about 4,400 employees, a little over $4 billion domestically, and a very distributed workforce, close to the agents embedded. We probably have 1,800 of that 4,400 distributed embedded close to our distribution. We have about 400 and a little over $1 billion internationally, mostly through Lloyd's, through our Lloyd's syndicate, Chaucer, which is mostly global business, specialty global business. That is the footprint.
The messages I want to leave with you today is that we are a very unique institution. We have a very distinct portfolio, very balanced portfolio, which is really around value-added products and product areas. We also have embedded ourselves and partnered with the best agents in the country. We have fewer agents per premium dollar than really any other major company. We've aligned ourselves with some of the consolidators and winners. Because of that insight and leverage, we are positioned to continue to both grow earnings and grow share. If you look at our. We talk about the leverage that we have in front of us.
You've seen in the last few quarters over the last three years that our pricing's a little bit better than the market, our retention's a little bit better than the market, our growth's a little bit better than the market, because of our mix of business, our position, and the way our platform matches up with our partners. In our view, we have a lot of momentum right now and some continued momentum left for this year coming. One of the things Jay referred to, we built the company with a view of the market. We think the way we built the company sets us up to sustain top quartile performance through the cycle. That's been always the goal, to be one of the best companies. What's interesting about our industry is that the industry typically destroys shareholder value.
About 25% of the companies make all the money. The best companies sustain that because they're differentiated in some way. We would set out to build a company that could position itself for that sustained return. That's the hard work we've done. What we see is an environment, as you all know, with a lot of excess capacity. In places that it's easy to come in and out, the high end of the business, the reinsurance business, it is very hard to sustain returns. If you look at, though, underneath that, there are some areas that are a lot stickier. They're harder to get in and out, particularly where there's operational challenges, like small account business or niche business. They're very different. It's almost bifurcated how the market works.
If you look at the distribution environment, what's fascinating is that the have and have-nots are dramatically changing. You're seeing the consolidators grow at 2 times the market, and really are bringing discipline, if you will, to the distribution. The distribution is acting very different between the top brokers and then the agents themselves that actually play the game a little bit differently as they focus on niches and areas where they can add value. We look at those trends, and a lot of what we've done with our strategy about differentiated product offerings that are geared to the independent agency channel and the winners and how you can actually have lead and preferred shelf space, that came out of this view of the marketplace. Because we knew in total that the marketplace wasn't going to lift all boats, right?
There's excess capacity, and in total, the returns weren't going to be there. The question is, how do you position yourself to be differentiated? That's why our strategy is built the way it is. People that have followed us for the last few years know what we did. When I first started the company, actually, the name was different. It was Allmerica, and it was mostly guaranteed minimum death benefit as well as P&C, but it was a very underperforming business. At the beginning of the decade, we were one of the three worst-performing insurance companies in the space. A lot of the beginning work was actually survival and getting to a stable profitability and balance sheet. 2010-2013 was this notion of a portfolio that was balanced and sustainable. You could sustain returns through the cycle.
You were in distinctive parts of the market. You had a position that was distinctive. We made about nine acquisitions. We did about five divestitures over this time frame and really got our portfolio solidified. At the same time, we built operating platforms to be able to match up with the best agents in the country. So that we had the capabilities to be valued by the best agents. What's happened in the last few years is really a leveraging of that position, getting to scale, having those businesses mature, leveraging our position to both grow and leverage earnings increases. That's what you see, right? That's kind of where we find ourselves today, in that ability to kind of increase earnings, increase share because of the portfolio and the place we are. You see it in any way.
If you follow the numbers, we've more than doubled earnings, and we've doubled the company. It's a little deceiving because the two and a half billion we had in 2004, we got rid of half of it. This has been a tripling of the portfolio over this time frame as well as the earnings. A very different mix. We were 70% Personal Lines, 70% in four states. We're now very balanced and, as I say, distinctive. If you look at each of the businesses, and this is one of the most important points, in every one of the businesses, we've positioned ourselves to be a value-added important player, not a commodity player. In Personal Lines, we have the most account-oriented book of business of anybody in the space.
It's 85% of our new business, 80% of our total business is complete accounts, and it's about a value-added approach and a full-service offering approach, which helps us with pricing and retention. If you look at International, our business is very much about specialties, global specialties, very little follow-on business. We lead just about everything we do. We tend to have distinctiveness in whether it's political risk or violence or what we do in the energy space, like in nuclear. Each of the places is kind of a distinctive portfolio specialty. What we do, and especially in the U.S., is I think we're the only significant specialty player that goes direct to retail only. We work with agents that have built skills in their profession and lines and the ML lines that can go direct.
We cut out the wholesaler, and we're able to provide that value. We tend to be smaller face value in things where we have to service it, but it's a very distinctive offering that for those that want to retain more margin in their specialty business. Then in both the Small Commercial and Middle Market, what you've seen is again, a tailored approach. In Small Commercial, unlike most of our competitors that are skewed towards the BOP oriented end of the business or maybe the regional guys that are just a CPP, we handle the Small Commercial, the whole range. We're the only ones in their service center that can handle the whole range, BOP oriented and CPP oriented accounts, so that we can actually help them consolidate their Small Commercial with one market.
In middle market, it is about 80% of that business is industry or niche related, so it's solving problems and solutions, whether it's tech companies or it's manufacturing or what we do with private schools or a number of other places that we provided kind of holistic solutions. What we have is a broad spectrum of the industry where we can do a lot for an agent. We can write 20% of their business in total over time. We've picked areas where we believe we can add value and be distinctive. The other thing that cuts across all these things, it's damn hard for somebody to do this. It's very expensive. These are highly serviced businesses where we do a lot of the servicing. We tailor a lot of the products. None of this is easy in and out business.
This is stuff that would cost somebody lots of money to replicate the operating model. If you look at the other part of our magic is this notion of partnering with agents. We have 2,200 agents with about 2,800 planning locations. What that means is that we actually plan our business and what we do together at that location. If you look at that, we've gone from, with our top 1,000 trading partners, we've gone from, in the last six or seven years, $400 million of business to $4 billion worth of business. In other words, we are important to each other. The alignment of incentives, the profit sharing, what that does is it helps you know that as you grow together, that the incentives will be aligned. When you make a mistake, you get it fixed.
You have insight more than most anybody that competes with them on where they're growing, where they're shrinking, what they're good at, what they're not good at, so we can match up our capabilities with them in a much more transparent way. We probably have more information and data on the independent agent system than any other company in the world. That's because of these partnerships and this access to the information that they have, that together we attack the market. Again, it's a different way to think about our business than just having 20,000 agents and provide a line of business. What that has translated into as we built it and been able to leverage it, is an earnings growth that is pretty good.
It's pretty steady, and we've been able to, in a market that's somewhat turbulent, continue to leverage our position, improve our loss ratios and our ex-cat earnings year in and year out. Particularly the last three years, it's been pretty steady. If you look at some of the drivers of that, if you look at what we've been able to achieve with price and retention, it's a little bit above the market and a little bit more consistent. That's because we have our average size policies are a little smaller. We do a little bit more value added. We do a little less commodity. You can imagine being able to sustain a little bit better price consistently with retention and have a little bit better lifetime value in the policies that we write because of it.
It has enhanced our margin and our earnings as a company. The other part about this is that because we have a great deal of insight about our partners. There's a lot going on in that business. If you follow the independent agency business, as I said, there's a tremendous amount of consolidation. Because pricing has come down and economic growth is limited, agency economics are tough. It's tougher than it's been. A lot of these folks that have consolidated a lot of agencies are trying to really think about ways to improve their economics. A lot of that means fewer core partners. More close-knit partners, more profit sharing, less wholesale revenue, more revenue direct from retail. All of those things, we partner with our agents to enhance their performance and our performance, and it's led to some nice growth as well as improvement.
Again, this is why we think we have some momentum continued in the business because that trend is not stopping. Those consolidation of those agents, the way they're thinking about their economics, the way they need better partners that actually can serve their clients' need. We do a lot of servicing for them, which is a trend for them as they improve their economics as well. Again, that position and our promise has really translated into some nice growth. You've heard me talk about this notion of top quartile ROE from the beginning. If you look at the last 20 years, typically the top quartile ROE was about 12%. The last five years, because of low yields, that's been about 10%. It's still the same. The people that are consistently in that top quartile over a period of time are the same people.
Our goal has been get there and sustain it. What you've seen in the last 15 months or so is in that range, and now the ability to sustain it. We are working on that improvement and continuing to push on it. If you look at what we're focused on, we believe given all the levers that we have in front of us, we still are getting pricing. Our mix and the quality of our new business is getting better and better. We're able to grow a little bit above the industry average. That leverages all of these investments nicely. Together, we believe, and as we said at our earnings call last week, our outlook is to grow top line half, mid to low single digits, but our earnings about twice that, ex-cat.
Our ability to continue to grow earnings, as we leverage this position in the marketplace. With all of that, is a promise, the way we manage our balance sheet and our returns to our shareholders. We've been able to do a lot of growth. We've been able to do a lot of acquisitions. We've never had to go and get equity from our shareholders. We've done that all from internal financing and all from improved performance. In the last 10 years, we've returned since 2005, $1.3 billion to shareholders, increased our dividend every year for the last 10 years. We did it again here in December, you've seen us generate more excess capital because, again, our commitment is to have enough capital to grow, and we focus on that first, good profitable growth.
We also care deeply about this top quartile return. We're thoughtful about returning capital, and you've seen us in the last couple of quarters return more, as we've generated more excess capital because of our position. That'll continue. As long as we keep hitting our goals, that should continue. It's just been part of our philosophy from the beginning. This didn't just start. It's been this thoughtfulness about making sure that we're thoughtful about excess capital. If you look at our balance sheet, we are very proud. We just got upgraded again by S&P last year, and our commitment as a world-class company is to have a world-class balance sheet, and we've worked hard at that and continued to build both the capital, but also kind of the stability of that capital.
You've seen from kind of all our debt ratios and what we've done with total capital, that it's never been stronger. That's, again, part of our commitment to be one of the better companies in the space. Why invest in this company? Well, there are some very good companies in our industry. We're in an environment right now of low economic growth, and there will be. There's no real sign that it's going to be easy. It's going to be quite difficult. What growth's going to come from is consolidation. It's going to come from share shift. In our business, more people have made mistakes at that than been successful at that.
What I think we've got is a track record of being thoughtful about focusing on top quartile returns, creating a portfolio that not only has the ability to earn nice returns, the ability to sustain returns. What you've seen every single quarter for the last three years is this improvement in earnings, this leverage of what we do, and this ability to create opportunity with these partners that are going through some change and some transformation. That all leads to a company with a number of levers that they can play to continue to increase earnings and grow their business. That's who we are. I think one of the nice things about underlying all of this, we all know how much turmoil is going on in the industry. Lots of announcements. Lots of big companies having issues.
Through all of this momentum, we've also become a magnet for great talent, and my view is that is part of what's going to fuel our future. You're seeing it in our Chaucer facility as we've added some teams in the last six months, and you'll see it locally in some of our specialty businesses as well because people are attracted to the momentum that we currently have, which will sustain Some of this as we go forward. With that, I am happy to answer any questions anybody has for me about the future of the company. With that, I'll open it up.
I've got a couple questions that I'll kick off with. You're obviously assuming you're going to continue to take share. Where is the share coming from? Is it more the national companies you can outmaneuver, or the smaller companies where they don't have the scale or the resources you have?
Yeah. It's both a little bit. What's happening, as I said, a pretty significant percentage of our new business doesn't come from business that hits the market. It comes from our proactive work with our agents to either consolidate their business or what we call pipeline their upcoming business. That portfolio where we get stuff from is kind of the who's who in the business. There is this trend, like in small commercial, where the average mid-size agent will have up to 70-90 markets for small commercial. They probably need 20. This is from many acquisitions, history, and we have dozens of agents that we're working with on consolidating that to fewer, and it'd be us and maybe one national guy helping them do that.
That would have some of the regional folks that are not as good or aren't as capable. A lot of our pipelining will come from the national players. What you see in Personal Lines, which is fascinating, we have a Personal Lines offering that's really about value-added accounts. For those of you, the independent agency business in Personal Lines is $90 billion. $76 billion of that is value-added account-oriented business. Two-thirds of that $76 billion is with little regional companies that don't have service centers, they don't have self-service capability. They have very limited resource. Again, you can think about agents saying, "I want to consolidate. I want to have more 24-hour service capability." They have to consolidate to people like us that have those capabilities.
In Personal Lines, a lot of the stuff we're taking are the small regional companies that don't have the capability. The other place I think that's unique to me is the whole what we call the CPP-oriented small commercial. Over time, more and more of the big national competitors, small commercial, has gravitated to more commodity-like, kind of BOP-oriented flow business. 50% of small commercial is not that, and a lot of it is the CPP-oriented account. They have left that business, which is good business, but expensive to manage.
You might want to explain what CPP is. Not everyone-
It's basically your property-oriented lines that aren't kind of structured like BOP, right? It has a liability and a property aspect to it, but it's really the larger tends to be the larger small commercial business that has a kind of tailored, somewhat tailored coverages to it. What's interesting is because these other folks have left this for the regional companies, what you have is this is business that is being done by regional companies that have very limited product features, very limited tailoring features. That whole area, we've been able to create industry solutions and bring technology and servicing center capabilities that the regional companies could never.
That was kind of an underserved part of the market, and people would say, "Well, that's expensive to do." It is to get, but the retention value and the margin on that business is some of the best because you can automate renewals, you can service it in a cost-effective way, so the lifetime value is great. That's a long-winded answer, but there are pockets of this business, in our view, that are underserved by the regional guys, that we could do a better job. There's also parts of the business that the national folks have not really responded in a way that meets the needs of the agents as they kind of consolidate their books.
It's, again, it's a very interesting time because during the recession, and when the period of the market really cut a lot of resources, a lot of our competitors became very centralized, very automated, very commoditized. Today's world with technology, you have the ability to tailor and be responsive and actually serve their needs. A lot of folks aren't geared up to do that, and that's part of the trends that are unfolding if you have the operating model that we do. It's just an interesting approach in the business.
The other question I had is in the Personal Lines side, you're doing more of a packaged product.
Yeah.
I think of it as a little bit higher up the scale within Personal Lines. Does the ACE Chubb combination free up any business for you, or is that too high up?
We're not really in the target of the real affluent Personal Lines business, but 25%, particularly of the Chubb book, is not really that type of customer. It is a more, it's a near affluent call. Very much what's happening with agents is all of a sudden, 85% of their business is with one market because you just had three of them come together to form one. That's an unsettling feeling, particularly when you're going after some of your best Personal Lines customers when you only have one market. Our view is that at that near affluent, that segment, there will be opportunity as they think about spreading that business out to others. I would tell you that the value proposition that we're providing is much more cost-effective.
My view is there's a lot of people in that segment that would be just as well served in our model. It's just that the middle market business has been so underserved historically that people would give them to Chubb just because of that. There are a lot of customers that are with companies because they don't have self-service capability or service centers that after 5:00 P.M., you get an answering machine and that's it. Right? That's crazy, but that's the way a lot of this business still is. By taking that business and having a better holistic response to serving it, we are meeting most of people's needs. Most people don't have art restoration needs and stuff like that. A lot of people have gone up when they don't really need some of the value proposition of the high end.
We're hopeful that our products will both meet and expand that market.
Last question from me, and if there are other questions, we still have some time, but commercial pricing. You're one of the few companies that is talking about continuing to get some increase.
Yeah.
I know your distribution model is different, that's allowed you to do that. You're planning for 2016. Are you assuming that that continues?
Yeah. What we've said, we're not immune to the market. Like everybody else, we think there's some chance that that'll come down. What we believe is that we'll be able to do a little bit better than others. We've been able to do over loss cost pretty comfortably. We think we can continue to do at or above loss cost going forward here for the time being. The reason being, part of this today is our mix is a lot smaller, right? Our average policy size, what we target in a lot of our businesses is we try to provide a little bit more value added to the smaller face value. It's very different getting a 5% rate increase from a $3,000 policy and doing that for a $300,000 policy.
The other thing I would tell you is that our view, and people have heard us say this before, our business is not price sensitive. People think it is. Our business is a lot less price sensitive than people believe. The customer is not the reason why we have price sensitivity. It's that we have excess capacity and so few people shop every year. When they go to the market and 22 companies jump on top of them to give in bids, and when you have excess capacity and you don't know your cost of goods sold for three years, a lot of bad stuff happens. What we try to do is keep most of our business out of the market. We don't believe in kind of 0-0-0-2-0, so we like 5-5-5-5-5.
We believe if you have more steady pricing in the kind of flow business we have, you can maintain your retention. It's a fair approach to the marketplace and to those customers. What we have seen, as we said in our last call, the upper middle market continues to be a little softer and it's coming down and you have to be thoughtful about that business and how you decide to go forward. Again, I don't want to say we're immune, but I would say the whole thing we did is to set ourselves up to sustain business and be able to have a little bit more consistency in pricing and retention. That's why we do what we do. So far, it's worked pretty well for us as we go forward.
Any other questions for Fred? Fred, always a pleasure to hear from you.
Thank you very much.
Thanks so much.
Appreciate it.