Good morning, ladies and gentlemen, and welcome to the annual meeting of shareholders of The Hanover Insurance Group, Inc. My name is Kevin Condron. I'm the Chairman of the company's Board of Directors. With me is Jack Roche, President and Chief Executive Officer of the company. As Chairman, I will lead the formal part of this morning's meeting. After we have concluded the formal part of the meeting, Jack will provide a brief presentation. We are transmitting the audio portion of our meeting and disclosure slides through a website posted on our website for the benefit of interested listeners. At this time, I call the meeting to order. In addition to Jack and me, the other directors in attendance are Kevin Bradicich, Jane Carlin, Cynthia Egan, Wendell Knox, Michael Price, Joe Ramrath, and T. Taggart. I ask that the board members stand together to be recognized as a group.
The company's tabulation agent, Mediant, has delivered an affidavit of mailing establishing that notice of this meeting was duly given. A copy of the notice of the meeting and the affidavit of mailing will be filed with the minutes of this meeting. All shareholders of record at the close of business on March 19th, 2018, are entitled to vote at this meeting. A representative from Mediant is here today and has been appointed Inspector of Elections. The inspector has informed me that the company has received valid proxies representing a majority of the outstanding shares. Accordingly, a quorum is present. The board has proposed three items for consideration, discussion, and voting. They are as follows. First, election of directors. I have been nominated to serve a one-year term. Ms. Egan and T. Taggart and Mr. Bradicich have been nominated to serve for a three-year term.
Second, consideration of an advisory vote on executive compensation, the so-called Say on Pay vote. Third, the ratification of the appointment of PricewaterhouseCoopers, LLP as the independent registered public accounting firm of the company for 2018. At this time, I would like to ask for a motion with respect to each of these proposals. Representatives of PricewaterhouseCoopers are in attendance at today's meeting and will be available for questions during the discussion period. I'd like to now open the floor for discussion by shareholders of the proposals before the meeting. Following the discussion, we will distribute ballots to any shareholder who wishes to vote in person.
If you are a shareholder of record as of March 19th, 2018, and have a question regarding the proposals, and only the proposals, please raise your hand to be recognized, then please state your name and indicate whether you are a shareholder or proxy asking your question. If you have questions or comments about matters other than these three proposals, there will be time for question and discussion after the management presentation. If there's no discussion regarding the proposals, I declare that the polls are now open for receipt of vote by ballots.
Mr. Chairman, my name is David Menasian. I represent Carpenter Union Pension Funds that hold shares in Hanover Insurance Group. Collectively, Carpenter Union Pension Funds have $50 billion in assets, and they hold 32,000 shares of Hanover Insurance Group common stock. Mr. Chairman, as the advisory vote on executive compensation is taken, I'd like to ask two brief questions to the compensation committee chair, Ms. Egan. The first question relates to CEO pay ratio, and the second one relates to the recent Tax Act. My first question is, I'm curious if the experience of preparing the CEO pay ratio will impact in any way the future work of the compensation committee in setting executive compensation levels? Second, the recent Tax Act amended the Internal Revenue Code and eliminated Section 162(m)'s tax-favored treatment of performance-based compensation to senior executives, and it capped the deduction at $1 million.
My second question is, will that elimination of the tax-preferred status of performance-based compensation change the level of compensation awarded in both the annual and the long-term performance-based incentive plans?
Okay. Ms. Egan?
Sure. Thank you. Great. Thank you for your question. To answer your second question first, the 162(m) elimination will not change our fundamental approach to executive compensation. The reason for that is that we fundamentally believe in pay for performance, and pay for performance means also having very specific, quantifiable, and qualifiable metrics, goals, and measures that we can evaluate to ensure that our executive compensation is motivating the right behaviors around creating shareholder value and really creating value for all the constituencies, for our community, for our employees, for our rating agencies. We're really focused on performance-based compensation. We don't see that. 162(m) required that, and what's kind of disappointing is that we hope that some companies don't back away from pay for performance, which we don't think they will because it's now really the standard.
We've been committed to it, and we will continue to be committed to it. We also recognize that not only pay for performance, but it's very important for us to be competitive with our pay, that we want to be sure that we're attracting and retaining our really fantastic talent. We are always keeping an eye on what's going on in the industry and with our peers, and we work with a nationally recognized Cook & Company independent consultant who provides information to us as a committee and to the board as full around what's happening in the industry and making sure that we're remaining competitive while we're being fair and motivating the right behaviors.
The reason I wanted to answer the first question second is because Cook & Company have also really helped us in understanding the CEO pay ratio and how does ours look in comparison to the industry and to peers. I can say that we are very comfortable with where we are. We'll continue to look at it, but we are so comfortable with where we are that I can't imagine that it's going to change anything fundamental around our pay for performance approach to compensation. Yeah. Thank you very much for your question.
Thank you.
Just one more statement I'd like to make in relation to the auditing firm. The Carpenter Pension Funds believe that audit firm independence is absolutely critical to protecting the integrity of corporate financial reporting. To that end, I just want to extend a sincere appreciation to the company and the audit committee for recent proxy statement disclosures that we believe show that there are policies and practices that are in place that absolutely do ensure audit firm independence in the company. Please thank you again.
Thank you for the comments. I appreciate them very much. A lot of those things, as you know, for the audit committee, grew out of comments you have made in the past. Thank you. If there are no further discussions regarding the proposals, I would declare that the polls are now open for receipt of votes by ballot. If you want to change your vote or vote for the first time, please raise your hand and one of the ushers will provide you with a ballot. Seeing none then, there are no ballots requested by the audience, I declare the polls are closed for voting. I have been informed by the inspector that the nominees for election to the board of directors have been duly elected, the advisory proposal on Say on Pay has been approved, and the proposal regarding our independent auditors.
In each case, by more than 95% of the shares voting. Are there any other matters to be acted on at this part of the formal meeting? Before closing out the formal meeting, I'd like to take a minute to recognize two members of the board who are completing their service to Hanover today. First of all, Richard Booth. Richard has been on the board since 2013. He served on the audit committee for his initial term and then served last year on the nominating and corporate governance committee. Richard has brought years of experience and insurance knowledge to our board. We appreciate his service, and we wish him well, and we thank him for all that he's done for us. Secondly, we want to thank Michael Angelini, who has had 34 years of experience with our company. Michael became the chair of the board in 2002.
He took us through a very, very difficult period. He served as the chairman of the board until last year. Michael has served on every committee that this company has and some that they no longer have. He served on the audit committee, the compensation committee, the nominating corporate governance committee, the investment committee, the executive committee, and other search and special committees. Michael has done marvelous service, and we are very thankful to him, and we wish him all of the best in the future. Since there's no other business to come before the meeting, I'd like to now take a moment and introduce our CEO. In October of last year, the board was faced with a challenge when our then CEO took another position. We were extremely fortunate to have someone as talented and able and ready as Jack Roche.
Jack has stepped in and done a terrific job. Jack, on behalf of the board, I want to thank you for stepping in. I want to thank you for the great job you do, and we look forward to many years of working with you in the future. Jack Roche.
Appreciate it. Thank you, Kevin, and good morning and welcome everybody. I'd like to take a few minutes this morning to just walk through a brief presentation, and then we'll open up for questions thereafter. I'd like to put our company’s 2017 and first quarter 2018 performance in context, update you on the state of our company, our strategic focus, and our prospects for the future, and share some insight into our efforts to build on our reputation as an employer of choice and a responsible corporate citizen. As I offer my first perspective at my first annual meeting as the President and Chief Executive, I want you to know I am truly honored and privileged to be leading The Hanover, a company that has emerged as a strong performer and one that has tremendous potential.
As we advance our efforts to take our company to the next level, we are truly working from a position of strength. Our company is in excellent financial condition, has a distinctive business model, a clear strategic focus, deep partnerships with a select group of the best independent agents and brokers in the business. The talent and the drive needed to deliver significant value for our shareholders and our other key stakeholders. Our company made important progress in 2017, establishing more positive momentum and positioning the organization for an even brighter future. Our financial performance on the year reflected the inherent strength of our company and the effectiveness of our distinctive agency-centered strategy. While unusually high catastrophe losses adversely impacted our earnings in 2017, as they did for many of our peers, the underlying performance of our business was strong.
We continued to benefit during the year from our organizational focus, intense underwriting and pricing discipline, strategic exposure and portfolio management practices above industry average growth, and the positive impact of the expense improvement initiatives that we engaged in last year. We generated after-tax operating income of $204 million during the year, up from $184 million in the prior year. We also delivered a full-year normalized operating ROE of 11% as we improved our accident year ex-cat loss ratio by one point to 57.4%. Investors continued to recognize our success, as evidenced by our superior stock performance over the past one, three, five, and 10-year periods. Turning to first quarter 2018 results, we sustained strong positive momentum across our company during the first quarter. Our business performed well, delivering results consistent with our plan, in spite of higher than expected catastrophe losses in our domestic business.
We generated operating income of $84 million, a consolidated combined ratio of 96.9%, an ex-cat combined ratio of 91.3%, and an operating ROE of about 12%. We delivered strong top-line growth at 6.6% while maintaining solid underwriting loss ratios. Looking to Chaucer, we also announced during the quarter that we are exploring strategic alternatives. That process is moving forward as planned. We believe we have good and viable options, including the possible sale of Chaucer, or retaining this valuable business and managing it as part of our portfolio. We will update you at the appropriate time when we have more details to share. All in, we are very pleased with our performance in the quarter, which further strengthened the foundation of which we are building our company. With our organization stronger and better positioned than ever, we are intently focused on taking our company to the next level.
Building on what today is a highly regarded, unique and very special organization. Our goal is to be one of the premier property and casualty companies in the independent agency channel. A company that delivers value for its partners, customers, shareholders, employees, and the communities where our employees live and work. With that goal in mind, we continue to advance the three key tenets of our strategy. First, we are leveraging the strength of our agency-centered distribution strategy, providing our agent and distribution partners with a distinctive product offering and the high-quality insurance solutions that they need to serve their clients. Second, we are continuing to build out our specialized capabilities across our personal, commercial, and specialty lines businesses. Our efforts to further specialize our product offering enable our partners and our company to create and capitalize on more opportunities to grow their businesses.
Third, we will continue to invest in innovation to help our partners grow. We will maintain our commitment to drive innovation across our business with even more focus, identifying emerging customer segments, leveraging data and analytics, and creating business solutions that address our partners' and customers' needs. Helping them acquire and retain more digitally inclined customers. As we continue to strengthen our competitive position in the marketplace, we are also focused on building a company where talented and dedicated professionals want to work, and one that will make our employees and other key constituents proud. Our efforts have been recognized. "Forbes" magazine recently ranked our company among America's best employers for the fourth consecutive year. The Human Rights Campaign Foundation has recognized our company as one of its 2018 best places to work by virtue of our top rating on its Corporate Equality Index.
We also refreshed our company's core values during 2017 with the involvement of employees across our company. We brought new energy to fostering more inclusion and diversity throughout our organization. We believe inclusive and diverse organizations perform better financially and build important brand value. At the same time, we believe we delivered our promises to be socially responsible, protecting the environment, making a difference in our home communities, and governing our actions with integrity. As we look ahead, we fully expect a competitive environment and rapidly changing customer needs and preferences, and that will bring new challenges. More importantly, however, we see tremendous opportunity for our company as we continue to build on the foundation we have in place and focus the energy and enthusiasm of our talented and passionate team.
We look forward with excitement, confidence and optimism, expecting great things of our organization and for our shareholders and other stakeholders. Finally, I too would like to make some quick comments about our departing board members. I would like to recognize Mike Angelini and Richard Booth for their exceptional service as members of our board. Thank you to Michael. Thank you to Richard. We owe you both a debt of gratitude for your tremendous commitment and for your many contributions. With those comments, I would like to, on behalf of Kevin and myself and the rest of the board, open us up to questions.
If there are no questions, the meeting is adjourned. Thank you all very much for coming.