10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2016

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-13754

THE HANOVER INSURANCE GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware	04-3263626
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

440 Lincoln Street, Worcester, Massachusetts 01653

(Address of principal executive offices) (Zip Code)

(508) 855-1000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐  (Do not check if a smaller reporting company)	Smaller reporting company	☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No   ☒

The number of shares outstanding of the registrant’s common stock was 42,743,708 as of July27, 2016.  

	TABLE OF CONTENTS
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Statements of Income	2
	Consolidated Statements of Comprehensive Income	3
	Consolidated Balance Sheets	4
	Consolidated Statements of Shareholders’ Equity	5
	Consolidated Statements of Cash Flows	6
	Notes to Interim Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	52
Item 4.	Controls and Procedures	53
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	54
Item 1A.	Risk Factors	55
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	57
Item 6.	Exhibits	58
SIGNATURES		59

PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
THE HANOVER INSURANCE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In millions, except per share data)		2016		2015		2016		2015
Revenues
Premiums	$	1,145.5	$	1,205.8	$	2,296.8	$	2,416.8
Net investment income		69.1		70.7		137.4		140.8
Net realized investment gains (losses):
Net realized gains from sales and other		4.3		14.5		26.7		26.6
Net other–than–temporary impairment losses on investments
recognized in earnings		(5.0)		(1.9)		(25.9)		(4.6)
Total net realized investment (losses) gains		(0.7)		12.6		0.8		22.0
Fees and other income		8.1		8.0		14.6		16.2
Total revenues		1,222.0		1,297.1		2,449.6		2,595.8
Losses and expenses
Losses and loss adjustment expenses		729.7		744.9		1,429.3		1,518.0
Amortization of deferred acquisition costs		254.4		262.0		513.5		522.6
Interest expense		15.6		15.0		30.3		31.1
Gain on disposal of U.K. motor business		(0.4)		(37.7)		(1.2)		(37.7)
Net loss from repayment of debt		86.1		1.8		86.1		18.5
Other operating expenses		143.7		158.5		290.6		313.7
Total losses and expenses		1,229.1		1,144.5		2,348.6		2,366.2
Income (loss) before income taxes		(7.1)		152.6		101.0		229.6
Income tax expense (benefit):
Current		6.5		5.7		39.9		34.9
Deferred		(15.5)		26.0		(18.9)		18.9
Total income tax (benefit) expense		(9.0)		31.7		21.0		53.8
Income from continuing operations		1.9		120.9		80.0		175.8
Net gain (loss) from discontinued operations (net of tax benefit of
$1.7 and $0.1 for the three months ended June 30, 2016 and June 30, 2015 and $2.2 and $0.2 for the six months ended June 30, 2016 and June 30, 2015, respectively)		0.1		(0.2)		0.2		(0.2)
Net income	$	2.0	$	120.7	$	80.2	$	175.6
Earnings per common share:
Basic:
Income from continuing operations	$	0.04	$	2.74	$	1.86	$	3.98
Net gain (loss) from discontinued operations		0.01		(0.01)		0.01		-
Net income per share	$	0.05	$	2.73	$	1.87	$	3.98
Weighted average shares outstanding		43.0		44.2		43.0		44.2
Diluted:
Income from continuing operations	$	0.04	$	2.69	$	1.84	$	3.90
Net gain (loss) from discontinued operations		0.01		(0.01)		-		-
Net income per share	$	0.05	$	2.68	$	1.84	$	3.90
Weighted average shares outstanding		43.4		45.0		43.5		45.1
The accompanying notes are an integral part of these interim consolidated financial statements.

2

THE HANOVER INSURANCE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In millions)		2016		2015		2016		2015
Net income	$	2.0	$	120.7	$	80.2	$	175.6
Other comprehensive income (loss), net of tax:
Available-for-sale securities:
Net appreciation (depreciation) during the period		74.2		(92.6)		167.8		(63.5)
Change in other-than-temporary impairment losses
recognized in other comprehensive income		2.8		(2.1)		5.7		(4.4)
Total available-for-sale securities		77.0		(94.7)		173.5		(67.9)
Pension and postretirement benefits:
Net actuarial losses and prior service costs arising
in the period		-		(3.3)		-		(1.4)
Amortization recognized as net periodic benefit and
postretirement cost		1.7		3.4		3.3		5.1
Total pension and postretirement benefits		1.7		0.1		3.3		3.7
Cumulative foreign currency translation adjustment:
Amount recognized as cumulative foreign currency
translation during the period		(0.7)		7.7		(1.3)		(2.2)
Total other comprehensive income (loss), net of tax		78.0		(86.9)		175.5		(66.4)
Comprehensive income	$	80.0	$	33.8	$	255.7	$	109.2
The accompanying notes are an integral part of these interim consolidated financial statements.

3

THE HANOVER INSURANCE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
	June 30,		December 31,
(In millions, except share data)	2016		2015
Assets
Investments:
Fixed maturities, at fair value (amortized cost of $6,842.8 and $6,934.0)	$	7,142.0	$	6,983.4
Equity securities, at fair value (cost of $507.8 and $528.5)		582.7		576.6
Other investments		454.8		393.4
Total investments		8,179.5		7,953.4
Cash and cash equivalents		361.6		338.8
Accrued investment income		60.6		62.9
Premiums and accounts receivable, net		1,509.8		1,391.7
Reinsurance recoverable on paid and unpaid losses and unearned premiums		2,688.1		2,635.0
Deferred acquisition costs		522.5		508.8
Deferred income taxes		50.4		137.9
Goodwill		185.2		186.0
Other assets		525.7		483.7
Assets of discontinued operations		80.2		83.0
Total assets	$	14,163.6	$	13,781.2
Liabilities
Loss and loss adjustment expense reserves	$	6,778.0	$	6,574.4
Unearned premiums		2,620.5		2,540.8
Expenses and taxes payable		594.0		724.9
Reinsurance premiums payable		274.7		205.2
Debt		797.8		803.1
Liabilities of discontinued operations		88.9		88.4
Total liabilities		11,153.9		10,936.8
Commitments and contingencies
Shareholders’ Equity
Preferred stock, par value $0.01 per share; 20.0 million shares authorized; none issued		-		-
Common stock, par value $0.01 per share; 300.0 million shares authorized; 60.5 million
shares issued		0.6		0.6
Additional paid-in capital		1,835.2		1,833.5
Accumulated other comprehensive income		229.4		53.9
Retained earnings		1,841.5		1,803.5
Treasury stock at cost (17.8 and 17.5 million shares)		(897.0)		(847.1)
Total shareholders’ equity		3,009.7		2,844.4
Total liabilities and shareholders’ equity	$	14,163.6	$	13,781.2
The accompanying notes are an integral part of these interim consolidated financial statements.

4

THE HANOVER INSURANCE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)
	Six Months Ended
	June 30,
(In millions)	2016		2015
Preferred Stock
Balance at beginning and end of period	$	-	$	-
Common Stock
Balance at beginning and end of period		0.6		0.6
Additional Paid-in Capital
Balance at beginning of period		1,833.5		1,830.7
Employee and director stock-based awards and other		1.7		(0.4)
Balance at end of period		1,835.2		1,830.3
Accumulated Other Comprehensive Income (Loss), net of tax
Net Unrealized Appreciation (Depreciation) on Investments:
Balance at beginning of period		149.9		300.9
Net appreciation (depreciation) on available-for-sale securities		173.5		(67.9)
Balance at end of period		323.4		233.0
Defined Benefit Pension and Postretirement Plans:
Balance at beginning of period		(78.6)		(84.3)
Net amount arising in the period		-		(1.4)
Net amount recognized as net periodic benefit cost		3.3		5.1
Balance at end of period		(75.3)		(80.6)
Cumulative Foreign Currency Translation Adjustment:
Balance at beginning of period		(17.4)		(10.2)
Amount recognized as cumulative foreign currency translation during the period		(1.3)		(2.2)
Balance at end of period		(18.7)		(12.4)
Total accumulated other comprehensive income		229.4		140.0
Retained Earnings
Balance at beginning of period		1,803.5		1,558.7
Net income		80.2		175.6
Dividends to shareholders		(39.6)		(36.3)
Stock-based compensation		(2.6)		(7.9)
Balance at end of period		1,841.5		1,690.1
Treasury Stock
Balance at beginning of period		(847.1)		(752.4)
Shares purchased at cost		(67.5)		(23.5)
Net shares reissued at cost under employee stock-based compensation plans		17.6		23.4
Balance at end of period		(897.0)		(752.5)
Total shareholders’ equity	$	3,009.7	$	2,908.5
The accompanying notes are an integral part of these interim consolidated financial statements.

5

THE HANOVER INSURANCE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
	Six Months Ended
	June 30,
(In millions)	2016		2015
Cash Flows From Operating Activities
Net income	$	80.2	$	175.6
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on disposal of U.K. motor business		(1.2)		(37.7)
Net loss from repayment of debt		86.1		18.5
Net realized investment gains		(0.8)		(21.6)
Net amortization and depreciation		16.2		16.8
Stock-based compensation expense		5.5		7.5
Amortization of defined benefit plan costs		5.0		7.2
Deferred income tax (benefit) expense		(18.0)		18.8
Change in deferred acquisition costs		(13.5)		(21.4)
Change in premiums receivable, net of reinsurance premiums payable		(48.6)		(98.9)
Change in loss, loss adjustment expense and unearned premium reserves		332.2		329.2
Change in reinsurance recoverable		(58.8)		(191.2)
Change in expenses and taxes payable		(96.1)		(60.3)
Other, net		(56.6)		(39.8)
Net cash provided by operating activities		231.6		102.7
Cash Flows From Investing Activities
Proceeds from disposals and maturities of fixed maturities		801.5		881.7
Proceeds from disposals of equity securities and other investments		198.1		230.0
Purchase of fixed maturities		(771.0)		(668.8)
Purchase of equity securities and other investments		(211.1)		(236.0)
Cash received from disposal of U.K. motor business, net of cash transferred		-		44.3
Capital expenditures		(8.5)		(8.1)
Net cash provided by investing activities		9.0		243.1
Cash Flows From Financing Activities
Proceeds from exercise of employee stock options		11.3		9.3
Proceeds from debt borrowings, net		370.5		-
Change in cash collateral related to securities lending program		(21.8)		2.1
Dividends paid to shareholders		(39.6)		(36.3)
Repayment of debt		(461.3)		(86.5)
Repurchases of common stock		(67.5)		(23.5)
Other financing activities		(9.3)		(2.3)
Net cash used in financing activities		(217.7)		(137.2)
Effect of exchange rate changes on cash		(0.1)		1.8
Net change in cash and cash equivalents		22.8		210.4
Cash and cash equivalents, beginning of period		338.8		373.3
Cash and cash equivalents, end of period	$	361.6	$	583.7
The accompanying notes are an integral part of these interim consolidated financial statements.

6

THE HANOVER INSURANCE GROUP, INC. AND SUBSIDIARIES

NOTESTO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Basis of Presentation and Principles of Consolidation

The accompanying unaudited consolidated financial statements of The Hanover Insurance Group, Inc. and subsidiaries (“THG” or the “Company”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the requirements of Form 10-Q. Certain financial information that is provided in annual financial statements, but is not required in interim reports, has been omitted.

The interim consolidated financial statements of THG include the accounts of The Hanover Insurance Company (“Hanover Insurance”) and Citizens Insurance Company of America, THG’s principal U.S. domiciled property and casualty companies; Chaucer Holdings Limited (“Chaucer”), a specialist insurance underwriting group which operates through the Society and Corporation of Lloyd’s (“Lloyd’s”) and certain other insurance and non-insurance subsidiaries. These legal entities conduct their operations through several business segments discussed in Note 9 – “Segment Information”. Additionally, the interim consolidated financial statements include the Company’s discontinued operations, consisting primarily of the Company’s former life insurance businesses and its accident and health business. All intercompany accounts and transactions have been eliminated.

The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

In the opinion of the Company’s management, the accompanying interim consolidated financial statements reflect all adjustments, consisting of normal recurring items, necessary for a fair presentation of the financial position and results of operations. The results of operations for the three and six months ended June 30, 2016 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the Company’s 2015 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 25, 2016.

2. New Accounting Pronouncements

Recently Implemented Standards

In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) Update No. 2015-03, (Subtopic 835-30) Interest-Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs. This ASC update requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of a debt liability, consistent with debt discounts or premiums, and amortization of debt issuance cost shall be reported as interest expense. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASC update. The updated guidance is to be applied on a retrospective basis and early adoption is permitted. The update is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Company implemented this guidance effective January 1, 2016. The effect of implementing this guidance was not material to the Company’s financial position or results of operations.

Recently Issued Standards

In June 2016, the FASB issued ASC Update No. 2016-13, (Topic 326) Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments.  This ASC update introduces new guidance for the accounting for credit losses on financial instruments within its scope. A new model, referred to as the current expected credit losses model, requires an entity to determine credit-related impairment losses for financial instruments held at amortized cost and to estimate these expected credit losses over the life of an exposure (or pool of exposures). The estimate of expected credit losses should consider both historical and current information, reasonable and supportable forecasts, as well as estimates of prepayments. The estimated credit losses and subsequent adjustment to such loss estimates, will be recorded through an allowance account which is deducted from the amortized cost of the financial instrument, with the offset recorded in current earnings. ASC No. 2016-13 also modifies the impairment model for available-for-sale debt securities. The new model will require an estimate of expected credit losses only when the fair value is below the amortized cost of the asset, thus the length of time the fair value of an available-for-sale debt security has been below the amortized cost will no longer affect the determination of whether a credit loss exists. In addition, credit losses on available-for-sale debt securities will be limited to the difference between the security’s amortized cost basis and its fair value. The updated guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for periods beginning after December 15, 2018. The Company is evaluating the impact of the adoption of ASC Update No. 2016-13 on its financial position and results of operations.

7

In March 2016, the FASB issued ASC Update No. 2016-09, (Topic 718) Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting. This ASC update requires all excess tax benefits and tax deficiencies to be recognized as income tax expense or benefit in the income statement, and be treated as discreet items in the reporting period in which they occur. Additionally, excess tax benefits will be classified with other income tax cash flows as an operating activity and cash paid by an employer when directly withholding shares for tax withholding purposes will be classified as a financing activity. Awards that are used to settle employee tax liabilities will be allowed to qualify for equity classification for withholdings up to the maximum statutory tax rates in applicable jurisdictions. Regarding forfeitures, a company can make an entity-wide accounting policy election to either continue estimating the number of awards that are expected to vest or account for forfeitures when they occur. The updated guidance is effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods. Early adoption is permitted. The Company is evaluating the impact of the adoption of ASC update 2016-09 on its financial position and results of operations.

In February 2016, the FASB issued ASC Update No. 2016-02, (Topic 842) Leases. This ASC update requires a lessee to recognize a right-of-use asset, which represents the lessee’s right to use a specified asset for the lease term, and a corresponding lease liability, which represents a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, for all leases that extend beyond 12 months. For finance or capital leases, interest on the lease liability will be recognized separately from amortization of the right-of-use asset in the statements of income and comprehensive income. In addition, the repayment of the principal portion of the lease liability will be classified as a financing activity while the interest component will be included in the operating section of the statement of cash flows. For operating leases, the asset and liability will be amortized as a single lease cost, such that the cost of the lease is allocated over the lease term, on a generally straight-line basis, with all cash flows included within operating activities in the statement of cash flows. The updated guidance is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years, and is required to be implemented by applying a modified retrospective transition approach. The Company is evaluating the impact of the adoption of ASC update 2016-02 on its financial position and results of operations.

In January 2016, the FASB issued ASC Update No. 2016-01, (Subtopic 825-10) Financial Instruments- Overall:Recognition and Measurement of Financial Assets and Financial Liabilities. This ASC update requires unconsolidated equity investments to be measured at fair value with changes in the fair value recognized in net income, except for those accounted for under the equity method. This update eliminates the cost method for equity investments without readily determinable fair values and replaces with other methods, including the use of Net Asset Value. Additionally, when a public entity is required to measure fair value for disclosure purposes and holds financial instruments measured at amortized cost, the updated guidance requires these instruments to be measured using exit price. It also requires financial assets and financial liabilities to be presented separately in the notes to the financial statements, grouped by measurement category and form of financial asset. The updated guidance is effective for annual periods beginning after December 15, 2017. The Company is evaluating the impact of the adoption of ASC update 2016-01 on its financial position and results of operations.

In May 2015, the FASB issued ASC Update No. 2015-09, (Topic 944) Financial Services- Insurance:Disclosures about Short-Duration Contracts. This ASC update requires several additional disclosures regarding short-duration insurance contracts, including; disaggregated incurred and paid claims development information, quantitative and qualitative information about claim frequency and duration, and the sum of incurred but not reported liabilities plus expected development on reported claims included in the liability for unpaid claims and claim adjustment expenses along with a description of reserving methodologies. This information is required to be presented by accident year, for the number of years for which claims typically remain outstanding, but need not exceed 10 years. A reconciliation of the claims development disclosures to the aggregate carrying amount of the liability for unpaid claims and claim adjustment expenses, including a separate disclosure for reinsurance recoverables is also required for each period presented in the statement of financial position. In addition, this ASC requires insurance entities to disclose information about significant changes in methodologies and assumptions used to calculate the liability for unpaid claims and claim adjustment expenses, including reasons for the change and the effects on the financial statements.  The updated guidance is effective for annual periods beginning after December 15, 2015, and interim periods within annual periods beginning after December 15, 2016. Early adoption is permitted. The Company does not expect the adoption of ASC Update 2015-09 to have a material impact on its financial position or results of operations, as the update is disclosure related.

In May 2014, the FASB issued ASC Update No. 2014-09, (Topic 606) Revenue from Contracts with Customers. This ASC was issued to clarify the principles for recognizing revenue. Insurance contracts and financial instrument transactions are not within the scope of this updated guidance, and; therefore, only an insignificant amount of the Company’s revenue is subject to this updated guidance. In August 2015, the FASB issued ASC Update No. 2015-14, (Topic 606) Revenue from Contracts with Customers, which deferred the effective date of ASC Update No. 2014-09 by one year. Accordingly, the updated guidance is effective for periods beginning after December 15, 2017 and is not expected to have a material effect on the Company’s financial position or results of operations. 

In August 2014, the FASB issued ASC update No. 2014-15, (Subtopic 205-40) Presentation of Financial Statement- Going Concern. This ASC update provides guidance on determining when and how to disclose going concern uncertainties in the financial statements, and requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. The updated guidance is effective for annual periods ending after December 15, 2016 and interim periods thereafter. Early adoption is permitted. The Company does not expect the adoption of ASC update 2014-15 to have a material impact on its financial position or results of operations.

8

3. Income Taxes

Income tax expense for the six months ended June 30, 2016 and 2015 has been computed using estimated annual effective tax rates. These rates are revised, if necessary, at the end of each successive interim period to reflect current estimates of the annual effective tax rates.

For the six months ended June 30, 2016, the tax provision is comprised of a $3.9 million U.S. federal income tax expense and a $17.1 million foreign income tax expense. For the six months ended June 30, 2015, the tax provision was comprised of a $37.4 million U.S. federal income tax expense and a $16.4 million foreign income tax expense.

Although most of the Company’s non–U.S. income is subject to U.S. federal income tax, certain of its non–U.S. income is not subject to U.S. federal income tax until repatriated. Foreign taxes on this non–U.S. income are accrued at the local foreign tax rate, as opposed to the higher U.S. statutory rate, since these earnings currently are expected to be indefinitely reinvested overseas. This assumption could change as a result of a sale of the subsidiaries, the receipt of dividends from the subsidiaries, a change in management’s intentions, or as a result of various other events. The Company has not made a provision for U.S. taxes on $10.6 million and $63.0 million of non-U.S. income for the six months ended June 30, 2016 and 2015, respectively. However, in the future, if such earnings were distributed to the Company, taxes of $49.1 million would be payable on the accumulated undistributed earnings and would be reflected in the tax provision for the year in which these earnings are no longer intended to be indefinitely reinvested overseas, assuming all foreign tax credits are realized.

The Company or its subsidiaries files income tax returns in the U.S. federal jurisdiction and various state jurisdictions, as well as foreign jurisdictions. The Company and its subsidiaries are subject to U.S. federal income tax examinations by tax authorities for years after 2011, U.S. state income tax examinations for years after 2011 and foreign examinations for years after 2011.

4. Debt

Debt consists of the following:

(in millions)		June 30, 2016		December 31, 2015
Senior debentures maturing April 15, 2026	$	375.0	$	-
Senior debentures maturing June 15, 2021		-		300.0
Senior debentures maturing March 1, 2020		-		80.0
Senior debentures maturing October 15, 2025		74.6		74.6
Subordinated debentures maturing March 30, 2053		175.0		175.0
Subordinated debentures maturing February 3, 2027		59.7		59.7
FHLBB borrowings (secured)		125.0		125.0
Total principal debt	$	809.3	$	814.3
Unamortized debt issuance costs		(11.5)		(11.2)
Total	$	797.8	$	803.1

On April 8, 2016 the Company issued $375 million aggregate principal amount of 4.50% senior unsecured debentures due April 15, 2026. The senior debentures are subject to certain restrictive covenants, including limitations on the issuance or disposition of stock of restricted subsidiaries and limitations on liens. These debentures pay interest semi-annually.

Net proceeds from the issuance of the aforementioned debentures were $370.5 million. On May 21, 2016, the proceeds, together with cash on hand, were used to redeem the outstanding 7.50% notes due March 1, 2020 and 6.375% notes due June 15, 2021. The redemption of these notes resulted in a pre-tax loss of $86.1 million.

At June 30, 2016, the Company was in compliance with the covenants associated with its debt indentures and credit arrangements.

9

5. Investments

A. Fixed maturities and equity securities

The amortized cost and fair value of available-for-sale fixed maturities and the cost and fair value of equity securities were as follows:

	June 30, 2016
	Amortized		Gross		Gross				OTTI
	Cost or		Unrealized		Unrealized				Unrealized
(in millions)	Cost		Gains		Losses		Fair Value		Losses
Fixed maturities:
U.S. Treasury and government agencies	$	364.9	$	11.6	$	-	$	376.5	$	-
Foreign government		229.4		7.2		-		236.6		-
Municipal		1,084.6		76.2		0.9		1,159.9		-
Corporate		3,728.8		182.7		28.8		3,882.7		18.6
Residential mortgage-backed		849.0		26.1		0.9		874.2		0.3
Commercial mortgage-backed		507.5		25.5		0.1		532.9		-
Asset-backed		78.6		0.9		0.3		79.2		-
Total fixed maturities	$	6,842.8	$	330.2	$	31.0	$	7,142.0	$	18.9
Equity securities	$	507.8	$	76.8	$	1.9	$	582.7	$	-

	December 31, 2015
	Amortized		Gross		Gross				OTTI
	Cost or		Unrealized		Unrealized				Unrealized
(in millions)	Cost		Gains		Losses		Fair Value		Losses
Fixed maturities:
U.S. Treasury and government agencies	$	447.1	$	5.5	$	3.5	$	449.1	$	-
Foreign government		244.7		2.6		1.5		245.8		-
Municipal		1,074.5		50.0		4.2		1,120.3		-
Corporate		3,699.9		86.8		95.7		3,691.0		27.5
Residential mortgage-backed		887.6		13.4		4.9		896.1		0.3
Commercial mortgage-backed		499.6		5.8		4.3		501.1		-
Asset-backed		80.6		0.2		0.8		80.0		-
Total fixed maturities	$	6,934.0	$	164.3	$	114.9	$	6,983.4	$	27.8
Equity securities	$	528.5	$	55.7	$	7.6	$	576.6	$	-

Other-than-temporary impairments (“OTTI”) unrealized losses in the tables above represent OTTI recognized in accumulated other comprehensive income. This amount excludes net unrealized gains on impaired securities relating to changes in the value of such securities subsequent to the impairment measurement date of $18.9 million and $1.1 million as of June 30, 2016 and December 31, 2015, respectively.

The amortized cost and fair value by maturity periods for fixed maturities are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties, or the Company may have the right to put or sell the obligations back to the issuers.

	June 30, 2016
	Amortized		Fair
(in millions)	Cost		Value
Due in one year or less	$	433.1	$	437.9
Due after one year through five years		2,499.2		2,607.8
Due after five years through ten years		2,026.6		2,123.4
Due after ten years		448.8		486.6
		5,407.7		5,655.7
Mortgage-backed and asset-backed securities		1,435.1		1,486.3
Total fixed maturities	$	6,842.8	$	7,142.0

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B. Securities in an unrealized loss position

The following tables provide information about the Company’s fixed maturities and equity securities that were in an unrealized loss position at June 30, 2016 and December 31, 2015 including the length of time the securities have been in an unrealized loss position:

	June 30, 2016
	12 months or less				Greater than 12 months				Total
	Gross				Gross				Gross
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
(in millions)	Losses		Value		Losses		Value		Losses		Value
Fixed maturities:
Investment grade:
U.S. Treasury and government agencies	$	-	$	5.0	$	-	$	-	$	-	$	5.0
Foreign governments		-		4.1		-		1.2		-		5.3
Municipal		0.2		12.8		0.7		33.0		0.9		45.8
Corporate		1.4		51.6		6.2		113.9		7.6		165.5
Residential mortgage-backed		0.2		25.1		0.7		35.6		0.9		60.7
Commercial mortgage-backed		-		8.1		0.1		9.3		0.1		17.4
Asset-backed		0.2		5.8		0.1		4.3		0.3		10.1
Total investment grade		2.0		112.5		7.8		197.3		9.8		309.8
Below investment grade:
Corporate		5.0		81.3		16.2		98.1		21.2		179.4
Total fixed maturities		7.0		193.8		24.0		295.4		31.0		489.2
Equity securities		1.9		76.2		-		-		1.9		76.2
Total	$	8.9	$	270.0	$	24.0	$	295.4	$	32.9	$	565.4

	December 31, 2015
	12 months or less				Greater than 12 months				Total
	Gross				Gross				Gross
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
(in millions)	Losses		Value		Losses		Value		Losses		Value
Fixed maturities:
Investment grade:
U.S. Treasury and government agencies	$	1.5	$	139.0	$	2.0	$	77.2	$	3.5	$	216.2
Foreign governments		0.8		63.6		0.7		8.4		1.5		72.0
Municipal		2.3		143.0		1.9		57.4		4.2		200.4
Corporate		30.7		1,138.3		18.9		122.3		49.6		1,260.6
Residential mortgage-backed		3.0		334.5		1.9		47.0		4.9		381.5
Commercial mortgage-backed		4.2		293.8		0.1		9.7		4.3		303.5
Asset-backed		0.8		56.6		-		1.4		0.8		58.0
Total investment grade		43.3		2,168.8		25.5		323.4		68.8		2,492.2
Below investment grade:
Corporate		19.6		165.5		26.5		63.2		46.1		228.7
Total fixed maturities		62.9		2,334.3		52.0		386.6		114.9		2,720.9
Equity securities		7.6		166.8		-		-		7.6		166.8
Total	$	70.5	$	2,501.1	$	52.0	$	386.6	$	122.5	$	2,887.7

The Company views gross unrealized losses on fixed maturities and equity securities as being temporary since it is its assessment that these securities will recover in the near term, allowing the Company to realize the anticipated long-term economic value. The Company employs a systematic methodology to evaluate declines in fair value below amortized cost for fixed maturity securities or cost for equity securities. In determining OTTI of fixed maturity and equity securities, the Company evaluates several factors and circumstances, including the issuer’s overall financial condition; the issuer’s credit and financial strength ratings; the issuer’s financial performance, including earnings trends, dividend payments and asset quality; any specific events which may influence the operations of the issuer; the general outlook for market conditions in the industry or geographic region in which the issuer operates; and the length of time and the degree to which the fair value of an issuer’s securities remains below the Company’s cost. With respect to fixed maturity investments, the Company considers any factors that might raise doubt about the issuer’s ability to make contractual payments as they come due and whether the Company expects to recover the entire amortized cost basis of the security. With respect to equity securities, the Company considers its ability and intent to hold the investment for a period of time to allow for a recovery in value.

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C. Other investments

In accordance with Lloyd’s operating guidelines, the Company deposits funds at Lloyd’s to support underwriting operations. These funds are available only to fund claim obligations. These assets consisted of approximately $503 million of fixed maturities and $12 million of cash and cash equivalents as of June 30, 2016. The Company also deposits funds with various state and governmental authorities in the U.S. For a discussion of the Company’s deposits with state and governmental authorities, see also Note 3 – “Investments” of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2015.

D. Proceeds from sales

The proceeds from sales of available-for-sale securities and gross realized gains and losses on those sales, were as follows:

	Three Months Ended June 30,
	2016						2015
	Proceeds from		Gross		Gross		Proceeds from		Gross		Gross
(in millions)	Sales		Gains		Losses		Sales		Gains		Losses
Fixed maturities	$	145.4	$	3.5	$	0.9	$	594.4	$	10.6	$	1.4
Equity securities	$	84.5	$	1.7	$	0.8	$	83.1	$	7.7	$	-

	Six Months Ended June 30,
	2016						2015
	Proceeds from		Gross		Gross		Proceeds from		Gross		Gross
(in millions)	Sales		Gains		Losses		Sales		Gains		Losses
Fixed maturities	$	307.9	$	5.9	$	4.2	$	824.7	$	12.9	$	4.7
Equity securities	$	173.4	$	26.4	$	1.7	$	167.8	$	20.1	$	-

E. Other-than-temporary impairments

For the three months ended June 30, 2016, total OTTI was $2.8 million, consisting primarily of equity securities.  Of this amount, $5.0 million was recognized in earnings, including $2.2 million which was transferred from unrealized losses in accumulated other comprehensive income (“AOCI”). For the six months ended June 30, 2016, total OTTI was $19.2 million, consisting primarily of fixed maturities and,to a lesser extent, equity securities. Of this amount, $25.9 million was recognized in earnings,including$6.7 million which was transferred from unrealized losses in AOCI.

For the three months ended June 30, 2015, total OTTI of fixed maturities was $5.1 million.  Of this amount, $1.9 million was recognized in earnings and the remaining $3.2 million was recorded as unrealized losses in AOCI. For the six months ended June 30, 2015, total OTTI of fixed maturities and equity securities was $11.4 million. Of this amount, $4.6 million was recognized in earnings and the remaining $6.8 million was recorded as unrealized losses in AOCI.

The methodology and significant inputs used to measure the amount of credit losses on fixed maturities in 2016 and 2015 were as follows:

Corporate bonds – the Company utilized a financial model that derives expected cash flows based on probability-of-default factors by credit rating, loss-given-default factors based on security type and position in the capital structure and asset duration.  These factors are based on historical data provided by an independent third-party rating agency.

The following table provides rollforwards of the cumulative amounts related to the Company’s credit loss portion of the OTTI losses on fixed maturity securities for which the non-credit portion of the loss is included in other comprehensive income.

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2016		2015		2016		2015
Credit losses at beginning of period	$	13.4	$	4.5	$	18.0	$	4.2
Credit losses for which an OTTI was not previously recognized		0.7		1.7		5.2		2.7
Additional credit losses on securities for which an
OTTI was previously recognized		0.4		-		2.1		-
Reductions for securities sold, matured or called		(1.6)		(0.1)		(1.6)		(0.8)
Reductions for securities reclassified as intended to sell		(1.2)		-		(12.0)		-
Credit losses at end of period	$	11.7	$	6.1	$	11.7	$	6.1

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6. Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability, i.e., exit price, in an orderly transaction between market participants. The Company emphasizes the use of observable market data whenever available in determining fair value. Fair values presented for certain financial instruments are estimates which, in many cases, may differ significantly from the amounts that could be realized upon immediate liquidation. A hierarchy of the three broad levels of fair value are as follows, with the highest priority given to Level 1 as these are the most observable, and the lowest priority given to Level 3:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 – Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data, including model-derived valuations.

Level 3 – Unobservable inputs that are supported by little or no market activity.

When more than one level of input is used to determine fair value, the financial instrument is classified as Level 2 or 3 according to the lowest level input that has a significant impact on the fair value measurement.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments and have not changed since last year.

Cash and Cash Equivalents

The carrying amount approximates fair value. Cash equivalents primarily consist of money market instruments, which are generally valued using unadjusted quoted prices in active markets that are accessible for identical assets and are classified as Level 1.

Fixed Maturities

Level 1 securities generally include U.S. Treasury issues and other securities that are highly liquid and for which quoted market prices are available. Level 2 securities are valued using pricing for similar securities and pricing models that incorporate observable inputs including, but not limited to yield curves and issuer spreads. Level 3 securities include issues for which little observable data can be obtained, primarily due to the illiquid nature of the securities, and for which significant inputs used to determine fair value are based on the Company’s own assumptions. Non-binding broker quotes are also included in Level 3.

The Company utilizes a third party pricing service for the valuation of the majority of its fixed maturity securities and receives one quote per security. When quoted market prices in an active market are available, they are provided by the pricing service as the fair value and such values are classified as Level 1. Since fixed maturities other than U.S. Treasury securities generally do not trade on a daily basis, the pricing service prepares estimates of fair value for those securities using pricing applications based on a market approach. Inputs into the fair value pricing common to all asset classes include: benchmark U.S. Treasury security yield curves; reported trades of identical or similar fixed maturity securities; broker/dealer quotes of identical or similar fixed maturity securities and structural characteristics such as maturity date, coupon, mandatory principal payment dates, frequency of interest and principal payments, and optional redemption features. Inputs into the fair value applications that are unique by asset class include, but are not limited to:

· U.S. government agencies – determination of direct versus indirect government support and whether any contingencies exist with respect to the timely payment of principal and interest.

· Foreign government – estimates of appropriate market spread versus underlying related sovereign treasury curve(s) dependent on liquidity and direct or contingent support.

· Municipals – overall credit quality, including assessments of the level and variability of: sources of payment such as income, sales or property taxes, levies or user fees; credit support such as insurance; state or local economic and political base; natural resource availability; and susceptibility to natural or man-made catastrophic events such as hurricanes, earthquakes or acts of terrorism.

· Corporate fixed maturities – overall credit quality, including assessments of the level and variability of: economic sensitivity; liquidity; corporate financial policies; management quality; regulatory environment; competitive position; ownership; restrictive covenants; and security or collateral.

· Residential mortgage-backed securities – estimates of prepayment speeds based upon: historical prepayment rate trends; underlying collateral interest rates; geographic concentration; vintage year; borrower credit quality characteristics; interest rate and yield curve forecasts; government or monetary authority support programs; tax policies; delinquency/default trends; and, in the case of non-agency collateralized mortgage obligations, severity of loss upon default and length of time to recover proceeds following default.

· Commercial mortgage-backed securities – overall credit quality, including assessments of the value and supply/demand characteristics of: collateral type such as office, retail, residential, lodging, or other; geographic concentration by region, state, metropolitan statistical area and locale; vintage year; historical collateral performance including defeasance, delinquency, default and special servicer trends; and capital structure support features.

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· Asset-backed securities – overall credit quality, including assessments of the underlying collateral type such as credit card receivables, auto loan receivables and equipment lease receivables; geographic diversification; vintage year; historical collateral performance including delinquency, default and casualty trends; economic conditions influencing use rates and resale values; and contract structural support features.

Generally, all prices provided by the pricing service, except actively traded securities with quoted market prices, are reported as Level 2.

The Company holds privately placed fixed maturity securities and certain other fixed maturity securities that do not have an active market and for which the pricing service cannot provide fair values. The Company determines fair values for these securities using either matrix pricing utilizing the market approach or broker quotes. The Company will use observable market data as inputs into the fair value applications, as discussed in the determination of Level 2 fair values, to the extent it is available, but is also required to use a certain amount of unobservable judgment due to the illiquid nature of the securities involved. Unobservable judgment reflected in the Company’s matrix model accounts for estimates of additional spread required by market participants for factors such as issue size, structural complexity, high bond coupon or other unique features. These matrix-priced securities are reported as Level 2 or Level 3, depending on the significance of the impact of unobservable judgment on the security’s value. Additionally, the Company may obtain non-binding broker quotes which are reported as Level 3.

Equity Securities

Level 1 consists of publicly traded securities, including exchange traded funds, valued at quoted market prices. Level 2 includes securities that are valued using pricing for similar securities and pricing models that incorporate observable inputs. Level 3 consists of common or preferred stock of private companies for which observable inputs are not available.

The Company utilizes a third party pricing service for the valuation of the majority of its equity securities and receives one quote for each equity security. When quoted market prices in an active market are available, they are provided by the pricing service as the fair value and such values are classified as Level 1. The Company holds certain equity securities that have been issued by privately-held entities that do not have an active market and for which the pricing service cannot provide fair values. Generally, the Company estimates fair value for these securities based on the issuer’s book value and market multiples. These securities are reported as Level 2 or Level 3 depending on the significance of the impact of unobservable judgment on the security’s value. Additionally, the Company may obtain non-binding broker quotes which are reported as Level 3.

Other Investments

Other investments primarily include mortgage participations, overseas trust funds required in connection with our Lloyd’s business and cost basis limited partnerships. Fair values of mortgage participations and other mortgage loans are estimated by discounting the contractual cash flows using the rates at which similar loans would be made to borrowers with comparable credit ratings and are reported as Level 3. Fair values of overseas trust funds are provided by the investment manager based on quoted prices for similar instruments in active markets and are reported as Level 2. The fair values of cost basis limited partnerships are based on the net asset value provided by the general partner and recent financial information and are excluded from the fair value hierarchy.

Debt

The fair value of debt is estimated based on quoted market prices for identical or similar issuances. If a quoted market price is not available, fair values are estimated using discounted cash flows that are based on current interest rates and yield curves for debt issuances with maturities and credit risks consistent with the debt being valued. Debt is reported as Level 2.

The estimated fair value of the financial instruments were as follows:

	June 30, 2016				December 31, 2015
	Carrying		Fair		Carrying		Fair
(in millions)	Value		Value		Value		Value
Financial Assets
Cash and cash equivalents	$	361.6	$	361.6	$	338.8	$	338.8
Fixed maturities		7,142.0		7,142.0		6,983.4		6,983.4
Equity securities		582.7		582.7		576.6		576.6
Other investments		423.0		430.5		365.4		367.9
Total financial assets	$	8,509.3	$	8,516.8	$	8,264.2	$	8,266.7
Financial Liabilities
Debt	$	797.8	$	893.9	$	803.1	$	927.8

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The Company has processes designed to ensure that the values received from its third party pricing service are accurately recorded, that the data inputs and valuation techniques utilized are appropriate and consistently applied, and that the assumptions are reasonable and consistent with the objective of determining fair value. The Company performs a review of the fair value hierarchy classifications and of prices received from its pricing service on a quarterly basis. The Company reviews the pricing services’ policies describing its methodology, processes, practices and inputs, including various financial models used to value securities. Also, the Company reviews the portfolio pricing, including a process for which securities with changes in prices that exceed a defined threshold are verified to independent sources, if available. If upon review, the Company is not satisfied with the validity of a given price, a pricing challenge would be submitted to the pricing service along with supporting documentation for its review. The Company does not adjust quotes or prices obtained from the pricing service unless the pricing service agrees with the Company’s challenge. During 2016 and 2015, the Company did not adjust any prices received from brokers or its pricing service.

Changes in the observability of valuation inputs may result in a reclassification of certain financial assets or liabilities within the fair value hierarchy. Reclassifications between levels of the fair value hierarchy are reported as of the beginning of the period in which the reclassification occurs. As previously discussed, the Company utilizes a third party pricing service for the valuation of the majority of its fixed maturities and equity securities. The pricing service has indicated that it will only produce an estimate of fair value if there is objectively verifiable information to produce a valuation. If the pricing service discontinues pricing an investment, the Company will use observable market data to the extent it is available, but may also be required to make assumptions for market based inputs that are unavailable due to market conditions.

The following tables provide, for each hierarchy level, the Company’s assets that were measured at fair value on a recurring basis.

	June 30, 2016
(in millions)		Total		Level 1		Level 2		Level 3
Fixed maturities:
U.S. Treasury and government agencies	$	376.5	$	178.8	$	197.7	$	-
Foreign government		236.6		47.5		189.1		-
Municipal		1,159.9		-		1,125.5		34.4
Corporate		3,882.7		-		3,878.3		4.4
Residential mortgage-backed, U.S. agency backed		815.1		-		815.1		-
Residential mortgage-backed, non-agency		59.1		-		59.1		-
Commercial mortgage-backed		532.9		-		516.2		16.7
Asset-backed		79.2		-		78.8		0.4
Total fixed maturities		7,142.0		226.3		6,859.8		55.9
Equity securities		574.0		572.7		-		1.3
Other investments		94.1		-		90.5		3.6
Total investment assets at fair value	$	7,810.1	$	799.0	$	6,950.3	$	60.8

	December 31, 2015
(in millions)		Total		Level 1		Level 2		Level 3
Fixed maturities:
U.S. Treasury and government agencies	$	449.1	$	193.6	$	255.5	$	-
Foreign government		245.8		52.5		193.3		-
Municipal		1,120.3		-		1,085.9		34.4
Corporate		3,691.0		-		3,687.3		3.7
Residential mortgage-backed, U.S. agency backed		824.5		-		824.5		-
Residential mortgage-backed, non-agency		71.6		-		71.6		-
Commercial mortgage-backed		501.1		-		484.1		17.0
Asset-backed		80.0		-		79.5		0.5
Total fixed maturities		6,983.4		246.1		6,681.7		55.6
Equity securities		567.7		566.4		-		1.3
Other investments		104.5		-		100.9		3.6
Total investment assets at fair value	$	7,655.6	$	812.5	$	6,782.6	$	60.5

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The following tables provide, for each hierarchy level, the Company’s estimated fair values of financial instruments that were not carried at fair value:

		June 30, 2016
(in millions)		Total		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	361.6	$	361.6	$	-	$	-
Equity securities		8.7		-		8.7		-
Other investments		269.3		-		-		269.3
Liabilities:
Debt	$	893.9	$	-	$	893.9	$	-
		December 31, 2015
(in millions)		Total		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	338.8	$	338.8	$	-	$	-
Equity securities		8.9		-		8.9		-
Other investments		203.5		-		-		203.5
Liabilities:
Debt	$	927.8	$	-	$	927.8	$	-

Investments measured at fair value using net asset value based on an ownership interest in partners’ capital have not been included in the table above. The fair values of these investments were $67.1 million and $59.9 million as of June 30, 2016 and December 31, 2015, respectively, which are less than 1% of total investment assets.

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The tables below provide a reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3).

		Fixed Maturities
(in millions)	Municipal		Corporate		Commercial mortgage-backed		Asset-backed		Total		Equity and Other		Total Assets
Three Months Ended
June 30, 2016
Balance April 1, 2016	$	34.7	$	3.8	$	16.8	$	0.5	$	55.8	$	4.9	$	60.7
Total gains:
Included in other comprehensive
income - net appreciation
on available-for-sale securities		0.6		0.7		0.2		-		1.5		-		1.5
Sales		(0.9)		(0.1)		(0.3)		(0.1)		(1.4)		-		(1.4)
Balance June 30, 2016	$	34.4	$	4.4	$	16.7	$	0.4	$	55.9	$	4.9	$	60.8
Three Months Ended
June 30, 2015
Balance April 1, 2015	$	27.2	$	9.5	$	20.9	$	0.8	$	58.4	$	5.1	$	63.5
Transfers into Level 3		-		-		-		0.5		0.5		-		0.5
Total gains (losses):
Included in earnings		-		0.1		-		-		0.1		-		0.1
Included in other comprehensive
income - net depreciation
on available-for-sale securities		(1.2)		(0.1)		(0.9)		-		(2.2)		-		(2.2)
Purchases and sales:
Purchases		1.4		-		-		-		1.4		-		1.4
Sales		(0.4)		(0.1)		(2.0)		-		(2.5)		-		(2.5)
Balance June 30, 2015	$	27.0	$	9.4	$	18.0	$	1.3	$	55.7	$	5.1	$	60.8

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	Fixed Maturities
(in millions)	Municipal		Corporate		Commercial mortgage-backed		Asset-backed		Total		Equity and Other		Total Assets
Six Months Ended
June 30, 2016
Balance January 1, 2016	$	34.4	$	3.7	$	17.0	$	0.5	$	55.6	$	4.9	$	60.5
Total gains (losses):
Included in earnings		0.1		(0.2)		-		-		(0.1)		-		(0.1)
Included in other comprehensive    income-net appreciation    on available-for-sale securities		1.6		0.7		0.7		-		3.0		-		3.0
Purchases and sales:
Purchases		-		0.3		-		-		0.3		-		0.3
Sales		(1.7)		(0.1)		(1.0)		(0.1)		(2.9)		-		(2.9)
Balance June 30, 2016	$	34.4	$	4.4	$	16.7	$	0.4	$	55.9	$	4.9	$	60.8
Six Months Ended
June 30, 2015
Balance January 1, 2015	$	25.7	$	9.6	$	21.4	$	-	$	56.7	$	5.0	$	61.7
Transfers into Level 3		-		-		-		1.3		1.3		-		1.3
Total gains (losses):
Included in earnings		-		0.1		-		-		0.1		-		0.1
Included in other comprehensive    income-net (depreciation) appreciation on    available-for-sale securities		(0.8)		(0.2)		(0.6)		-		(1.6)		0.1		(1.5)
Purchases and sales:
Purchases		3.1		-		-		-		3.1		-		3.1
Sales		(1.0)		(0.1)		(2.8)		-		(3.9)		-		(3.9)
Balance June 30, 2015	$	27.0	$	9.4	$	18.0	$	1.3	$	55.7	$	5.1	$	60.8

During the three and six months ended June 30, 2016, the Company did not transfer assets between Level 2 and Level 3. During the three and six months ended June 30, 2015, the Company transferred fixed maturities between Level 2 and Level 3 primarily as a result of assessing the significance of unobservable inputs on the fair value measurement. There were no transfers between Level 1 and Level 2 during the three months or six months ended June 30, 2016 or 2015. There were no Level 3 liabilities held by the Company for the six months ended June 30, 2016 and 2015.

The following table summarizes gains and losses due to changes in fair value that were recorded in net income for Level 3 assets:

	Three Months Ended June 30,								Six Months Ended June 30,
	2016				2015				2016				2015
	Net realized		Other than		Net realized		Other than		Net realized		Other than		Net realized		Other than
	investment		temporary		investment		temporary		investment		temporary		investment		temporary
(in millions)	gains		impairments		gains		impairments		gains		impairments		gains		impairments
Level 3 Assets:
Fixed maturities:
Corporate	$	-	$	-	$	0.1	$	-	$	-	$	(0.2)	$	0.1	$	-
Municipal		-		-		-		-		0.1		-		-		-
Total fixed maturities	$	-	$	-	$	0.1	$	-	$	0.1	$	(0.2)	$	0.1	$	-

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The following table provides quantitative information about the significant unobservable inputs used by the Company in the fair value measurements of Level 3 assets. Where discounted cash flows were used in the valuation of fixed maturities, the internally-developed discount rate was adjusted by the significant unobservable inputs shown in the table. Valuations for securities based on broker quotes for which there was a lack of transparency as to inputs used to develop the valuations of $0.4 million have been excluded.

			June 30, 2016			December 31, 2015
	Valuation	Significant		Fair	Range		Fair	Range
(in millions)	Technique	Unobservable Inputs		Value	(Wtd Average)		Value	(Wtd Average)
Fixed maturities:
Municipal	Discounted	Discount for:	$	34.4		$	34.4
	cash flow	Small issue size Credit stress Above-market coupon			0.6 - 6.8%  (3.2%)   0.9 - 1.5%  (1.2%) 0.3 - 1.0%  (0.4%)			0.6 - 6.8%  (3.2%)   0.9 - 1.5%  (1.2%) 0.3 - 1.0%  (0.4%)
Corporate	Discounted	Discount for:		4.2			3.7
	cash flow	Small issue size Above-market coupon Credit stress			2.3 - 2.5%  (2.4%) 0.3 - 0.8%  (0.6%) 0.4%  (0.4%)			1.0%  (1.0%) 0.3 - 0.8%  (0.6%) 10.0%  (10.0%)
Commercial mortgage-backed	Discounted	Discount for:		16.7			17.0
	cash flow	Small issue size Above-market coupon Lease structure			1.5 - 3.1%  (2.6%) 0.5%  (0.5%) 0.3%  (0.3%)			0.5 - 1.0%  (0.5%) 0.5%  (0.5%) 0.3%  (0.3%)
Asset-backed	Discounted	Discount for:		0.4			0.5
	cash flow	Small issue size			0.7%  (0.7%)			0.7%  (0.7%)
Equity securities	Market	Net tangible asset		1.1			1.1
	comparables	market multiples			1.0X  (1.0X)			1.0X  (1.0X)
Other	Discounted	Discount rate		3.6	18.0%  (18.0%)		3.6	18.0%  (18.0%)
	cash flow

Significant increases (decreases) in any of the above inputs in isolation would result in a significantly lower (higher) fair value measurement. There were no interrelationships between these inputs which might magnify or mitigate the effect of changes in unobservable inputs on the fair value measurement.

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7. Pension and Other Postretirement Benefit Plans

The components of net periodic pension cost for defined benefit pension and other postretirement benefit plans included in the Company’s results of operations are as follows:

	Three Months Ended June 30,
	2016		2015		2016		2015
(in millions)	Pension Plans				Postretirement Plans
Service cost - benefits earned during the period	$	0.2	$	0.4	$	-	$	-
Interest cost		7.4		7.3		0.1		0.1
Expected return on plan assets		(7.5)		(7.9)		-		-
Recognized net actuarial loss		2.8		4.8		-		0.1
Amortization of prior service cost		-		-		(0.3)		(0.3)
Curtailment gain		-		(1.8)		-		-
Net periodic pension cost (benefit)	$	2.9	$	2.8	$	(0.2)	$	(0.1)
	Six Months Ended June 30,
	2016		2015		2016		2015
(in millions)	Pension Plans				Postretirement Plans
Service cost - benefits earned during the period	$	0.4	$	0.7	$	-	$	-
Interest cost		14.8		14.6		0.2		0.3
Expected return on plan assets		(15.0)		(15.7)		-		-
Recognized net actuarial loss		5.6		7.8		0.1		0.1
Amortization of prior service cost		-		-		(0.7)		(0.7)
Curtailment gain		-		(1.8)		-		-
Net periodic pension cost (benefit)	$	5.8	$	5.6	$	(0.4)	$	(0.3)

In the second quarter of 2015, the Company recognized a $1.8 million curtailment gain due to the disposal of the U.K. motor business.  Included in the table above in recognized net actuarial loss was an equal and offsetting expense.

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8. Other Comprehensive Income

The following table provides changes in other comprehensive income.

	Three Months Ended June 30,
	2016						2015
			Tax						Tax
			Benefit		Net of				Benefit		Net of
(in millions)	Pre-Tax		(Expense)		Tax		Pre-Tax		(Expense)		Tax
Unrealized gains (losses) on available-for-sale securities:
Unrealized gains (losses) arising during period	$	124.1	$	(43.3)	$	80.8	$	(128.2)	$	44.8	$	(83.4)
Amount of realized gains from sales and other		(4.5)		(2.5)		(7.0)		(14.4)		1.9		(12.5)
Portion of other-than-temporary impairment losses
recognized in earnings		5.0		(1.8)		3.2		1.9		(0.7)		1.2
Net unrealized gains (losses)		124.6		(47.6)		77.0		(140.7)		46.0		(94.7)
Pension and postretirement benefits:
Net actuarial losses and prior service cost
arising in the period		-		-		-		(4.2)		0.9		(3.3)
Amortization of net actuarial loss and prior service
cost recognized as net periodic benefit cost		2.5		(0.8)		1.7		4.7		(1.3)		3.4
Net pension and postretirement benefits		2.5		(0.8)		1.7		0.5		(0.4)		0.1
Cumulative foreign currency translation adjustment:
Foreign currency translation recognized during
the period		(1.1)		0.4		(0.7)		11.9		(4.2)		7.7
Other comprehensive income (loss)	$	126.0	$	(48.0)	$	78.0	$	(128.3)	$	41.4	$	(86.9)
	Six Months Ended June 30,
	2016						2015
			Tax						Tax
			Benefit		Net of				Benefit		Net of
(in millions)	Pre-Tax		(Expense)		Tax		Pre-Tax		(Expense)		Tax
Unrealized gains (losses) on available-for-sale securities:
Unrealized gains (losses) arising during period	$	282.0	$	(98.6)	$	183.4	$	(73.5)	$	25.7	$	(47.8)
Amount of realized gains from sales and other		(27.3)		0.6		(26.7)		(26.4)		3.3		(23.1)
Portion of other-than-temporary impairment losses
recognized in earnings		25.9		(9.1)		16.8		4.6		(1.6)		3.0
Net unrealized gains (losses)		280.6		(107.1)		173.5		(95.3)		27.4		(67.9)
Pension and postretirement benefits:
Net actuarial losses and prior service cost
arising in the period		-		-		-		(1.2)		(0.2)		(1.4)
Amortization of net actuarial loss and prior service
cost recognized as net periodic benefit cost		5.0		(1.7)		3.3		7.3		(2.2)		5.1
Net pension and postretirement benefits		5.0		(1.7)		3.3		6.1		(2.4)		3.7
Cumulative foreign currency translation adjustment:
Foreign currency translation recognized during
the period		(2.0)		0.7		(1.3)		(3.4)		1.2		(2.2)
Other comprehensive income (loss)	$	283.6	$	(108.1)	$	175.5	$	(92.6)	$	26.2	$	(66.4)

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Reclassifications out of accumulated other comprehensive income were as follows:

	Three Months Ended				Six Months Ended
		June 30,			June 30,
(in millions)		2016	2015		2016		2015
	Amount Reclassified from
Details about Accumulated Other	Accumulated Other								Affected Line Item in the Statement
Comprehensive Income Components	Comprehensive Income								Where Net Income is Presented
Unrealized gains on available-for-sale
securities	$	4.5	$	14.4	$	27.3	$	26.4	Net realized gains from sales and other
									Net other-than-temporary impairment
		(5.0)		(1.9)		(25.9)		(4.6)	losses on investments recognized  in earnings
		(0.5)		12.5		1.4		21.8	Total before tax
		4.3		(1.2)		8.5		(1.7)	Tax benefit (expense)
		3.8		11.3		9.9		20.1	Net of tax
Amortization of defined benefit pension									Loss adjustment expenses and other
and postretirement plans		(2.5)		(4.7)		(5.0)		(7.3)	operating expenses
		0.8		1.3		1.7		2.2	Tax benefit
		(1.7)		(3.4)		(3.3)		(5.1)	Net of tax
Total reclassifications for the period	$	2.1	$	7.9	$	6.6	$	15.0	Benefit to income, net of tax

The amount reclassified from accumulated other comprehensive income for the pension and postretirement benefits was allocated approximately 40% to loss adjustment expenses and 60% to other operating expenses for the six months ended June 30, 2016 and 2015.

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9. Segment Information

The Company’s primary business operations include insurance products and services provided through four operating segments. The domestic operating segments are Commercial Lines, Personal Lines and Other, and the Company’s international operating segment is Chaucer. Commercial Lines includes commercial multiple peril, commercial automobile, workers’ compensation, and other commercial coverages, such as inland marine, specialty program business, management and professional liability and surety. Personal Lines includes personal automobile, homeowners and other personal coverages. Chaucer includes marine and aviation, property, energy, casualty and othercoverages (which includes international liability, specialist coverages, and syndicate participations), and U.K. motor. Effective June 30, 2015, the Company transferred its U.K. motor business to an unaffiliated party. Accordingly, results from the Chaucer segment no longer include this business subsequent to June 30, 2015. Included in Other are Opus Investment Management, Inc., which markets investment management services to institutions, pension funds and other organizations; earnings on holding company assets; and, a discontinued voluntary pools business. The separate financial information is presented consistent with the way results are regularly evaluated by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

The Company reports interest expense related to debt separately from the earnings of its operating segments. This consists of interest on the Company’s senior debentures, subordinated debentures, collateralized borrowings with the Federal Home Loan Bank of Boston, and letter of credit facility. Management evaluates the results of the aforementioned segments based on operating income before taxes, which also excludes interest expense on debt. Operating income before taxes excludes certain items which are included in net income, such as net realized investment gains and losses. Such gains and losses are excluded since they are determined by interest rates, financial markets and the timing of sales. Also, operating income before taxes excludes net gains and losses on disposals of business assets, gains and losses related to the repayment of debt, discontinued operations, costs to acquire businesses, restructuring costs, the cumulative effect of accounting changes and certain other items. Although the items excluded from operating income before taxes may be important components in understanding and assessing the Company’s overall financial performance, management believes that the presentation of operating income before taxes enhances an investor’s understanding of the Company’s results of operations by highlighting net income attributable to the core operations of the business. However, operating income before taxes should not be construed as a substitute for income before income taxes and operating income should not be construed as a substitute for net income.

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Summarized below is financial information with respect to the Company’s business segments.

		Three Months Ended				Six Months Ended
		June 30,				June 30,
(in millions)		2016		2015		2016		2015
Operating revenues:
Commercial Lines	$	616.1	$	598.8	$	1,228.8	$	1,185.5
Personal Lines		384.5		377.7		763.3		751.7
Chaucer		219.8		306.3		452.9		632.8
Other		2.3		1.7		3.8		3.8
Total		1,222.7		1,284.5		2,448.8		2,573.8
Net realized investment gains		(0.7)		12.6		0.8		22.0
Total revenues	$	1,222.0	$	1,297.1	$	2,449.6	$	2,595.8
Operating income (loss) before interest expense and income taxes:
Commercial Lines:
Underwriting income	$	5.1	$	8.5	$	8.8	$	2.6
Net investment income		39.1		39.4		78.5		78.0
Other (expenses) income		(0.2)		0.3		(0.6)		(1.2)
Commercial Lines operating income		44.0		48.2		86.7		79.4
Personal Lines:
Underwriting income		29.3		13.0		57.9		16.4
Net investment income		17.1		18.3		34.5		36.2
Other income		1.0		0.8		2.1		1.8
Personal Lines operating income		47.4		32.1		94.5		54.4
Chaucer:
Underwriting (loss) income		(6.5)		27.5		16.0		63.1
Net investment income		11.3		12.0		22.0		24.3
Other income		0.7		2.5		1.2		3.8
Chaucer operating income		5.5		42.0		39.2		91.2
Other:
Underwriting loss		(0.6)		(0.7)		(1.3)		(1.4)
Net investment income		1.6		1.0		2.4		2.3
Other net expenses		(3.2)		(3.1)		(6.4)		(6.0)
Other operating loss		(2.2)		(2.8)		(5.3)		(5.1)
Operating income before interest expense and income taxes		94.7		119.5		215.1		219.9
Interest on debt		(15.6)		(15.0)		(30.3)		(31.1)
Operating income before income taxes		79.1		104.5		184.8		188.8
Non-operating income items:
Net realized investment (losses) gains		(0.7)		12.6		0.8		22.0
Net gain on disposal of U.K. motor business		0.4		37.7		1.2		37.7
Net loss from repayment of debt		(86.1)		(1.8)		(86.1)		(18.5)
Other non-operating items		0.2		(0.4)		0.3		(0.4)
Income (loss) before income taxes	$	(7.1)	$	152.6	$	101.0	$	229.6

The Company recognized approximately $9 million in net foreign currency transaction losses and approximately $11 million in net foreign currency transaction gains in the Statements of Income during the three months ended June 30, 2016 and 2015, respectively. The Company recognized approximately $21 million in net foreign currency transaction losses and approximately $15 million in net foreign currency transaction gains in the Statements of Income during the six months ended June 30, 2016 and 2015, respectively.

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The following table provides identifiable assets for the Company’s business segments and discontinued operations:

	June 30, 2016		December 31, 2015
(in millions)	Identifiable Assets
U.S. Companies	$	9,907.6	$	9,616.0
Chaucer		4,175.8		4,082.2
Discontinued operations		80.2		83.0
Total	$	14,163.6	$	13,781.2

The Company reviews the assets of its U.S. Companies collectively and does not allocate them between the Commercial Lines, Personal Lines and Other segments.

10. Stock-based Compensation

As of June 30, 2016, there were 4,934,810 shares, 2,420,768 shares and 705,382 shares available for grant under The Hanover Insurance Group 2014 Long-Term Incentive Plan, The Hanover Insurance Group 2014 Employee Stock Purchase Plan and the Chaucer Share Incentive Plan, respectively.

Compensation cost for the Company’s stock-based awards and the related tax benefits were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2016		2015		2016		2015
Stock-based compensation expense	$	2.7	$	4.2	$	5.5	$	7.5
Tax benefit		(0.9)		(1.4)		(1.9)		(2.6)
Stock-based compensation expense, net of taxes	$	1.8	$	2.8	$	3.6	$	4.9

Stock Options

Information on the Company’s stock option plans is summarized below.

	Six Months Ended June 30,
	2016			2015
(in whole shares and dollars)	Shares		Weighted Average Exercise Price	Shares		Weighted Average Exercise Price
Outstanding, beginning of period	1,619,948	$	56.57	2,236,620	$	46.61
Granted	524,940		82.74	659,850		70.28
Exercised	(495,242)		48.57	(204,444)		44.29
Forfeited or cancelled	(161,207)		66.80	(90,137)		51.52
Outstanding, end of period	1,488,439		67.36	2,601,889		52.63

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Restricted Stock Units

The following tables summarize activity information about employee restricted stock units:

	Six Months Ended June 30,
	2016			2015
(in whole shares and dollars)	Shares		Weighted Average Grant Date Fair Value	Shares		Weighted Average Grant Date Fair Value
Time-based restricted stock units:
Outstanding, beginning of period	301,897	$	54.54	384,923	$	45.63
Granted	141,949		83.47	92,409		70.61
Vested	(135,863)		42.44	(95,787)		41.56
Forfeited	(18,831)		67.15	(20,988)		48.90
Outstanding, end of period	289,152		73.61	360,557		52.93
Performance-based and market-based restricted stock units:
Outstanding, beginning of period	196,142	$	47.89	218,338	$	44.24
Granted	118,736		73.14	82,025		48.55
Vested	(144,141)		41.11	(77,854)		38.82
Forfeited	(56,500)		63.52	(14,451)		44.68
Outstanding, end of period	114,237		74.97	208,058		47.93

In the first six months of 2016 and 2015, the Company granted market-based awards totaling 79,153 and 80,738, respectively, to certain members of senior management, which are included in the table above as performance and market-based restricted stock activity. The vesting of these stock units is based on the relative total shareholder return (“TSR”) of the Company. This metric is generally based on relative TSR for a three-year period as compared to a pre-selected group of property and casualty companies. The fair value of market-based awards was estimated at the date of grant using a valuation model. These units have the potential to range from 0% to 150% of the shares disclosed. Included in the amount granted above in 2016 are30,453 shares related to market-based awards that achieved a payout in excess of 100%. These awards vested in the first sixmonths of 2016.

Performance-based restricted stock units are based upon the achievement of the performance metric at 100%. These units have the potential to range from 0% to 200% of the shares disclosed, which varies based on grant year and individual participation level. Increases above the 100% target level are reflected as granted in the period in which performance-based stock unit goals are achieved. Decreases below the 100% target level are reflected as forfeited. Included in the amounts granted above for the performance-based restricted stock units are1,949 shares related to awards that a performance metric in excess of 100% was achieved. These awards vested in the first six months of 2016.

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11. Earnings Per Share and Shareholders’ Equity Transactions

The following table provides weighted average share information used in the calculation of the Company’s basic and diluted earnings per share:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions, except per share data)		2016		2015		2016		2015
Basic shares used in the calculation of earnings per share		43.0		44.2		43.0		44.2
Dilutive effect of securities:
Employee stock options		0.3		0.5		0.3		0.5
Non-vested stock grants		0.1		0.3		0.2		0.4
Diluted shares used in the calculation of earnings per share		43.4		45.0		43.5		45.1
Per share effect of dilutive securities on income from continuing operations	$	-	$	(0.05)	$	(0.02)	$	(0.08)
Per share effect of dilutive securities on net income	$	-	$	(0.05)	$	(0.03)	$	(0.08)

Diluted earnings per share for the three and six months ended June 30, 2016 and 2015 excludes 0.2 million and 0.7 million, respectively, of common shares issuable under the Company’s stock compensation plans because their effect would be antidilutive.

The Company’s Board of Directors has authorized aggregate repurchases of the Company’s common stock of up to $900 million. Under the repurchase authorizations, the Company may repurchase, from time to time, common shares in amounts, at prices and at such times as the Company deems appropriate, subject to market conditions and other considerations. Repurchases may be executed using open market purchases, privately negotiated transactions, accelerated repurchase programs or other transactions. The Company is not required to purchase any specific number of shares or to make purchases by any certain date under this program. During the first six months of 2016, the Company purchased 0.8 million shares of the Company’s common stock at a cost of $67.5 million.

12. Commitments and Contingencies

Legal Proceedings

Durand Litigation

On March 12, 2007, a putative class action suit captioned Jennifer A. Durand v. The Hanover Insurance Group, Inc., and The Allmerica Financial Cash Balance Pension Plan, was filed in the United States District Court for the Western District of Kentucky. The named plaintiff, a former employee of our former life insurance and annuity business who received a lump sum distribution from the Company’s Cash Balance Plan (the “Plan”) at or about the time of her separation from the company, claims that she and others similarly situated did not receive the appropriate lump sum distribution because in computing the lump sum, the Company and the Plan understated the accrued benefit in the calculation. The plaintiff claims that the Plan underpaid her distributions and those of similarly situated participants by failing to pay an additional so-called “whipsaw” amount reflecting the present value of an estimate of future interest credits from the date of the lump sum distribution to each participant’s retirement age of 65 (“whipsaw claim”).

The plaintiff filed an Amended Complaint adding two new named plaintiffs and additional claims on December 11, 2009.  Two of the three new claims set forth in the Amended Complaint were dismissed by the District Court, which action was upheld in November 2015 by the U.S. Court of Appeals, Sixth Circuit.  The District Court, however, did allow to stand the portion of the Amended Complaint which set forth claims against the Company for breach of fiduciary duty and failure to meet notice requirements arising under the Employee Retirement Income Security Act of 1974 (“ERISA”) from the various interest crediting and lump sum distribution matters of which plaintiffs complain, but only as to plaintiffs’ “whipsaw” claim that remained in the case. On December 17, 2013, the Court entered an order certifying a class to bring “whipsaw” and related breach of fiduciary duty claims consisting of all persons who received a lump sum distribution between March 1, 1997 and December 31, 2003. The Company filed a summary judgment motion, prior to the decision on the appeal, that was based on the statute of limitations and seeks to dismiss the subclass of plaintiffs who received lump sum distributions prior to March 13, 2002.  This summary judgment motion has been stayed pending additional discovery.

At this time, the Company is unable to provide a reasonable estimate of the potential range of ultimate liability if the outcome of the suit is unfavorable. The statute of limitations applicable to the sub-class consisting of all persons who received lump sum distributions between March 1, 1997 and March 12, 2002 has not yet been finally determined, and the extent of potential liability, if any, will depend on this determination. In addition, assuming for these purposes that the plaintiffs prevail with respect to claims that benefits accrued or payable under the Plan were understated, then there are numerous possible theories and other variables upon which any revised calculation of benefits as requested under plaintiffs’ claims could be based. Any adverse judgment in this case against the Plan would be expected to create a liability for the Plan, with resulting effects on the Plan’s assets available to pay benefits. The Company’s future required funding of the Plan could also be impacted by such a liability.

27

Other Matters

The Company has been named a defendant in various other legal proceedings arising in the normal course of business. In addition, the Company is involved, from time to time, in examinations, investigations and proceedings by governmental and self-regulatory agencies. The potential outcome of any such action or regulatory proceedings in which the Company has been named a defendant or the subject of an inquiry or investigation, and its ultimate liability, if any, from such action or regulatory proceedings, is difficult to predict at this time. The ultimate resolutions of such proceedings are not expected to have a material effect on its financial position, although they could have a material effect on the results of operations for a particular quarter or annual period.

Residual Markets

The Company is required to participate in residual markets in various states, which generally pertain to high risk insureds, disrupted markets or lines of business or geographic areas where rates are regarded as excessive. The results of the residual markets are not subject to the predictability associated with the Company’s own managed business, and are significant to both the personal and commercial automobile lines of business and the workers’ compensation line of business.

13. Subsequent Events

There were no subsequent events requiring adjustment to the financial statements and no additional disclosures required in the notes to the interim consolidated financial statements.

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PART I

ITEM 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

TABLE OF CONTENTS

Introduction	30
Executive Overview	30
Description of Operating Segments	31
Results of Operations - Consolidated	32
Results of Operations - Segments	33
Investments	42
Other Items	46
Income Taxes	47
Critical Accounting Estimates	48
Statutory Surplus of U.S. Insurance Subsidiaries	48
Lloyd’s Capital Requirement	48
Liquidity and Capital Resources	49
Off - Balance Sheet Arrangements	51
Contingencies and Regulatory Matters	51
Risks and Forward - Looking Statements	51

29

Introduction

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to assist readers in understanding the interim consolidated results of operations and financial condition of The Hanover Insurance Group, Inc. and its subsidiaries (“THG”). Consolidated results of operations and financial condition are prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). This discussion should be read in conjunction with the interim consolidated financial statements and related footnotes included elsewhere in this Quarterly Report on Form 10-Q and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our 2015 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 25, 2016.

Results of operations include the accounts of The Hanover Insurance Company (“Hanover Insurance”) and Citizens Insurance Company of America (“Citizens”), our principal U.S. domiciled property and casualty companies; Chaucer Holdings Limited (“Chaucer”), our United Kingdom (“U.K.”) domiciled specialist insurance underwriting group which operates through the Society and Corporation of Lloyd’s (“Lloyd’s”); and certain other insurance and non-insurance subsidiaries. Results of operations include our discontinued operations, consisting primarily of our former life insurance businesses and our accident and health business.

Executive Overview

Business operations consist of four operating segments: Commercial Lines, Personal Lines, Chaucer and Other.

Net income for the six month period ended June 30, 2016 was $80.2 million. Net income was adversely affected by prepayment charges of $56.0 million, net of tax, which we paid in the second quarter in connection with the redemption of $380.0 million in higher coupon debt following our successful issuance of a $375 million 4.50% senior note offering.

Operating income before interest expense and income taxes was $215.1 million for the six months ended June 30, 2016, compared to $219.9 million in the same period in 2015, a decrease of $4.8 million. This decrease is primarily due to a change in development on prior years’ loss and loss adjustment expense (“LAE”) reserves (“prior years’ loss reserves”). Unfavorable development on prior years’ loss reserves was $5.0 million for the six months ended June 30, 2016, compared to favorable development of $53.8 million during the same period of 2015. As explained later in this document, a portion of this change is attributable to the effect of foreign exchange fluctuations. Partially offsetting this decrease were lower catastrophe and current accident year losses. Pre-tax catastrophe losses were $82.2 million for the six months ended June 30, 2016, compared to $108.8 million during the same period of 2015.

Pricing in our Commercial and Personal Lines remains positive as we continue to respond to reduced investment income as a result of low interest rates, and other factors. We are continuing efforts to improve our underwriting results in both our Commercial and Personal Lines segments, through rate increases and improvements to our mix of business. At Chaucer, we continue to experience significant competitive pressure on rates. In response to these challenging market conditions, we continue to actively manage Chaucer’s underwriting portfolio, using our expertise, distinctive underwriting capabilities and market knowledge to target specific attractive underwriting opportunities.

Commercial Lines

We believe our unique approach to the small commercial market, distinctiveness in the middle market, and continued development of specialty lines provides us with a diversified portfolio of products and delivers significant value to agents and policyholders. The small commercial and middle market businesses are expected to contribute to premium growth in Commercial Lines over the next several years as we continue to pursue our core strategy of developing strong partnerships with agents, distinctive products, franchise value through limited distribution, and industry segmentation. Growth in our specialty lines continues to be an important part of our strategy.

We believe these efforts have driven, and will continue to drive, improvement in our overall mix of business and our underwriting profitability. Commercial Lines net premiums written grew by 2.9% in the first six months of 2016, driven by both our core commercial and specialty businesses. This growth is primarily due to rate and exposure increases, strong retention and targeted new business expansion.

Underwriting results improved in the first six months of 2016, as compared to the same period in 2015, due to improved current accident year loss performance, and lower catastrophe losses, partially offset by higher unfavorable prior year development. The competitive nature of the Commercial Lines market requires us to be highly disciplined in our underwriting process to ensure that we write business at acceptable margins, and we continue to seek rate increases across our lines of business.

Personal Lines

Personal Lines focuses on partnering with high quality, value-oriented agencies that deliver consultative selling and stress the importance of account rounding (the conversion of single policy customers to accounts with multiple policies and additional coverages). Approximately 81% of our policies in force are account business. We are focused on making investments that help maintain profitability, build a distinctive position in the market, diversify us geographically from our largest historical core states of Michigan, Massachusetts and New York, and provide us with profitable growth opportunities.

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Net premiums written grew by 3.9% in the first six months of 2016, primarily due to increased rates in both the homeowners and personal automobile lines, as well as improved retention and new business trends. Underwriting results also improved in the first six months of 2016, as compared to the same period in 2015, primarily due to lower catastrophe losses and improved current accident year loss performance. We continue to seek rate increases in excess of underlying loss cost trends, subject to regulatory and competitive considerations.

Chaucer

Chaucer deploys specialist underwriters in over 30 major insurance and reinsurance classes, including marine and aviation, property,energy, casualty and other coverages. We obtain business through Lloyd’s, the leading international insurance and reinsurance market, which provides us with access to specialist business in over 200 countries and territories worldwide through its international licenses, brand reputation and strong security rating. Our underwriting strength, diverse portfolio and Lloyd’s membership underpin our ability to actively manage the scale, composition and profitable development of this business.

Underwriting results declined in the first six months of 2016, as compared to the same period in 2015, primarily due to higher large losses in the political risk line, as well as in trade credit coverages related to poor market conditions and underlying commodity price-sensitive accounts. Additionally, underwriting results declined due to lower favorable development on prior years’ loss reserves, including the effect of foreign exchange fluctuations, and higher catastrophe losses. Excluding the U.K. motor business, which was transferred effective June 30, 2015, Chaucer’s gross premiums written declined by 5.8% in the first six months of 2016, primarily due to lower premium volumes in our energy line, where underwriting conditions deteriorated further as a result of the continued low oil prices. On a net basis, written premiums for the first six months of 2016 declined 12.8% in comparison to the first six months of 2015, primarily due to a planned increase in ceded reinsurance premiums as we continue to manage our overall underwriting risk given the challenging market conditions.

Description of Operating Segments

Primary business operations include insurance products and services currently provided through four operating segments. Our domestic operating segments are Commercial Lines, Personal Lines, and Other. Our international operating segment is Chaucer. Commercial Lines includes commercial multiple peril, commercial automobile, workers’ compensation and other commercial coverages, such as specialty program business, inland marine, management and professional liability and surety. Personal Lines includes personal automobile, homeowners and other personal coverages. Chaucer includes marine and aviation, property, energy, casualty and othercoverages (which includes international liability, specialist coverages, and syndicate participations), and U.K. motor. Effective June 30, 2015, we transferred our U.K. motor business to an unaffiliated U.K.-based insurance provider. Accordingly, results of the Chaucer segment no longer include this business subsequent to June 30, 2015. Included in the “Other” segment are Opus Investment Management, Inc., which markets investment management services to institutions, pension funds and other organizations; earnings on holding company assets; and, a discontinued voluntary pools business. We present the separate financial information of each segment consistent with the manner in which our chief operating decision maker evaluates results in deciding how to allocate resources and in assessing performance.

We report interest expense on debt separately from the earnings of our operating segments. This consists of interest on our senior debentures, subordinated debentures, collateralized borrowings with the Federal Home Loan Bank of Boston (“FHLBB”), and letter of credit facility.

31

Results of Operations – Consolidated

Consolidated net income for the three months ended June 30, 2016 was $2.0 million, compared to $120.7 million for the three months ended June 30, 2015. The decrease of $118.7 million is primarily due to two large non-operating items, totaling $96.3 million. First, we recognized a loss from the repayment of debt of $56.0 million, net of tax, in the three months ended June 30, 2016. Second, consolidated net income for the three months ended June 30, 2015 included a $40.3 million net gain on the 2015 disposal of our U.K. motor business. Also contributing to the decrease in consolidated net income was a change in net realized investment results during the quarter, from a $12.6 million gain in 2015 to a loss of $0.7 million in 2016. Operating income for the three months ended June 30, 2016 was $54.0 million, compared to $70.4 million for the three months ended June 30, 2015. This decrease is primarily due to an unfavorable change in development on prior years’ loss reserves, as well as higher catastrophe losses and other large losses at Chaucer. This was partially offset by improved current accident year loss performance, primarily in our domestic segments.

Consolidated net income for the six months ended June 30, 2016 was $80.2 million, compared to $175.6 million for the six months ended June 30, 2015. The decrease of $95.4 million is primarily due to the aforementioned two large non-operating items. Also contributing to the decrease in consolidated net income was a decrease in net realized investment gains of $21.2 million, primarily due to increased impairments in 2016. Operating income for the six months ended June 30, 2016 was $125.5 million, compared to $127.5 million for the six months ended June 30, 2015.

The following table reflects operating income, a non-GAAP measure, for each operating segment and a reconciliation of operating income to consolidated net income.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions)		2016		2015		2016		2015
Operating income (loss) before interest expense and income taxes:
Commercial Lines	$	44.0	$	48.2	$	86.7	$	79.4
Personal Lines		47.4		32.1		94.5		54.4
Chaucer		5.5		42.0		39.2		91.2
Other		(2.2)		(2.8)		(5.3)		(5.1)
Operating income before interest expense and income taxes		94.7		119.5		215.1		219.9
Interest expense on debt		(15.6)		(15.0)		(30.3)		(31.1)
Operating income before income taxes		79.1		104.5		184.8		188.8
Income tax expense on operating income		(25.1)		(34.1)		(59.3)		(61.3)
Operating income		54.0		70.4		125.5		127.5
Gain on disposal of U.K. motor business, net of tax		0.3		40.3		0.9		40.3
Other non-operating items:
Net realized investment (losses) gains		(0.7)		12.6		0.8		22.0
Net loss from repayment of debt		(86.1)		(1.8)		(86.1)		(18.5)
Other		0.2		(0.4)		0.3		(0.4)
Income tax benefit (expense) on non-operating items		34.2		(0.2)		38.6		4.9
Income from continuing operations, net of taxes		1.9		120.9		80.0		175.8
Net gain (loss) from discontinued operations, net of taxes		0.1		(0.2)		0.2		(0.2)
Net income	$	2.0	$	120.7	$	80.2	$	175.6

Non-GAAP Financial Measures

In addition to consolidated net income, discussed above, we assess our financial performance based upon pre-tax “operating income,” and we assess the operating performance of each of our four operating segments based upon the pre-tax operating income (loss) generated by each segment. As reflected in the table above, operating income before taxes excludes interest expense on debt and certain other items which we believe are not indicative of our core operations, such as net realized investment gains and losses. Such gains and losses are excluded since they are determined by interest rates, financial markets and the timing of sales. Also, operating income before taxes excludes net gains and losses on disposals of businesses, gains and losses related to the repayment of debt, discontinued operations, costs to acquire businesses, restructuring costs, the cumulative effect of accounting changes and certain other items. Although the items excluded from operating income before taxes may be important components in understanding and assessing our overall financial performance, we believe a discussion of operating income before taxes enhances an investor’s understanding of our results of operations by highlighting net income attributable to the core operations of the business. However, operating income before taxes, which is a non-GAAP measure, should not be construed as a substitute for income before income taxes and operating income should not be construed as a substitute for net income.

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Catastrophe losses and prior years’ reserve development are significant components in understanding and assessing the financial performance of our business. Management reviews and evaluates catastrophes and prior years’ reserve development separately from the other components of earnings. Catastrophes and prior years’ reserve development are not predictable as to timing or the amount that will affect the results of our operations and have affected our results in past years. Management believes that providing certain financial metrics and trends excluding the effects of catastrophes and prior years’ reserve development helps investors to understand the variability in periodic earnings and to evaluate the underlying performance of our operations. Discussion of catastrophe losses in this Management’s Discussion and Analysis of Financial Condition and Results of Operations includes development on prior years’ catastrophe reserves and, unless otherwise indicated, such development is excluded from discussions of prior year loss and LAE reserve development.

Results of Operations – Segments

The following is our discussion and analysis of the results of operations by business segment. The operating results are presented before interest expense, taxes and other items which management believes are not indicative of our core operations, including realized gains and losses.

The following table summarizes the results of operations for the periods indicated:

		Three Months Ended				Six Months Ended
		June 30,				June 30,
(in millions)		2016		2015		2016		2015
Operating revenues
Net premiums written	$	1,221.6	$	1,156.0	$	2,365.9	$	2,371.1
Net premiums earned		1,145.5		1,205.8		2,296.8		2,416.8
Net investment income		69.1		70.7		137.4		140.8
Other income		8.1		8.0		14.6		16.2
Total operating revenues		1,222.7		1,284.5		2,448.8		2,573.8
Losses and operating expenses
Losses and LAE		729.7		744.9		1,429.3		1,518.0
Amortization of deferred acquisition costs		254.4		262.0		513.5		522.6
Other operating expenses		143.9		158.1		290.9		313.3
Total losses and operating expenses		1,128.0		1,165.0		2,233.7		2,353.9
Operating income before interest expense and income taxes	$	94.7	$	119.5	$	215.1	$	219.9

Three Months Ended June 30, 2016 Compared to Three Months Ended June 30, 2015

Operating income before interest expense and income taxes was $94.7 million in the three months ended June 30, 2016, compared to $119.5 million for the three months ended June 30, 2015, a decrease of $24.8 million. This decrease is primarily due to a change in development on prior years’ loss reserves. Unfavorable development on prior years’ loss reserves was $15.0 million in the quarter, compared to favorable development of $28.6 million in the same period in 2015, an unfavorable change of $43.6 million, including the effect of foreign exchange fluctuations. Additionally, we experienced unfavorable current accident year loss performance and higher catastrophe losses at Chaucer. Overall catastrophe related activity in the quarter was $51.0 million, compared to $46.5 million in the same period of 2015, an increase of $4.5 million. These decreases in operating income were partially offset by improved current accident year loss performance in domestic property coverages, principally in our commercial multiple peril and inland marine lines.

Net premiums written increased by $65.6 million in the three months ended June 30, 2016 compared to the three months ended June 30, 2015. Pursuant to the U.K. motor transaction on June 30, 2015, Chaucer transferred $137.4 million of premiums written, resulting in an overall negative $60.7 million of net premium written for the U.K. motor line for the three months ended June 30, 2015. Excluding the effect of the U.K. motor business, net premiums written increased by $4.9 million, primarily due to growth in our domestic lines, partially offset by an increase in ceded reinsurance premiums for Chaucer.

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Production and Underwriting Results

The following table summarizes premiums written on a gross and net basis, net premiums earned and loss, LAE, expense and combined ratios for the Commercial Lines, Personal Lines and Chaucer segments. Loss, LAE, catastrophe loss and combined ratios shown below include prior year reserve development. These items are not meaningful for our Other segment.

		Three Months Ended June 30, 2016
(dollars in millions)		Gross Premiums Written		Net  Premiums Written		Net Premiums Earned	Catastrophe Loss Ratios	Loss & LAE Ratios	Expense Ratios	Combined Ratios
Commercial Lines	$	662.9	$	579.9	$	574.7	4.5	62.8	36.1	98.9
Personal Lines		416.6		395.3		364.7	3.1	64.0	27.3	91.3
Chaucer		322.5		246.4		206.1	6.7	65.6	37.6	103.2
Total	$	1,402.0	$	1,221.6	$	1,145.5	4.5	63.7	33.6	97.3
		Three Months Ended June 30, 2015
(dollars in millions)		Gross Premiums Written		Net  Premiums Written		Net Premiums Earned	Catastrophe Loss Ratios	Loss & LAE Ratios	Expense Ratios	Combined Ratios
Commercial Lines	$	642.7	$	569.1	$	557.0	4.2	62.2	36.1	98.3
Personal Lines		401.8		378.3		356.7	5.9	67.8	27.9	95.7
Chaucer		390.0		208.6		292.1	0.8	53.5	37.1	90.6
Total	$	1,434.5	$	1,156.0	$	1,205.8	3.9	61.8	33.9	95.7

The following table summarizes net premiums written, and loss and LAE and catastrophe loss ratios by line of business for the Commercial Lines and Personal Lines segments. Loss and LAE and catastrophe loss ratios include prior year reserve development.

	Three Months Ended June 30,
	2016				2015
(dollars in millions)		Net  Premiums Written	Loss & LAE Ratios	Catastrophe Loss Ratios		Net  Premiums Written	Loss & LAE Ratios	Catastrophe Loss Ratios
Commercial Lines:
Commercial multiple peril	$	191.6	63.3	9.1	$	182.7	57.7	6.5
Commercial automobile		78.0	75.1	0.5		76.8	74.1	1.2
Workers’ compensation		66.7	59.0	-		62.1	65.9	-
Other commercial		243.6	59.6	3.3		247.5	60.7	4.5
Total Commercial Lines	$	579.9	62.8	4.5	$	569.1	62.2	4.2
Personal Lines:
Personal automobile	$	245.1	69.5	0.4	$	232.9	69.1	0.5
Homeowners		140.1	54.6	7.9		135.1	67.8	15.6
Other personal		10.1	58.7	2.1		10.3	37.7	2.0
Total Personal Lines	$	395.3	64.0	3.1	$	378.3	67.8	5.9

The following table summarizes premiums written on a gross and net basis and net premiums earned by line of business for the Chaucer segment.

	Three Months Ended June 30,
	2016							2015
(in millions)		Gross Premiums Written		Net  Premiums Written		Net Premiums Earned		Gross Premiums Written		Net  Premiums Written		Net Premiums Earned
Chaucer:
Marine and aviation		$	85.8	$	66.4	$	62.7	$	81.8	$	69.4	$	69.9
U.K. motor			-		-		-		65.9		(60.7)		65.2
Property			91.4		61.5		36.6		88.3		67.7		43.0
Energy			63.1		45.1		30.6		68.0		54.8		43.1
Casualty and other			82.2		73.4		76.2		86.0		77.4		70.9
Total Chaucer		$	322.5	$	246.4	$	206.1	$	390.0	$	208.6	$	292.1

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The following table summarizes underwriting results for the Commercial Lines, Personal Lines, Chaucer and Other segments and reconciles it to operating income.

	Three Months Ended June 30,
	2016										2015
(in millions)	Commercial Lines		Personal Lines		Chaucer		Other			Total	Commercial Lines		Personal Lines		Chaucer		Other		Total
Underwriting profit (loss),    excluding prior year reserve    development and catastrophes	$	53.1	$	41.4	$	(0.9)	$	(0.3)	$	93.3	$	37.7	$	32.0	$	(3.1)	$	(0.4)	$	66.2
Prior year favorable (unfavorable)    loss and LAE reserve    development on    non-catastrophe losses		(22.1)		(0.9)		8.3		(0.3)		(15.0)		(6.0)		1.9		33.0		(0.3)		28.6
Prior year favorable (unfavorable)    catastrophe development		0.7		(1.5)		12.1		-		11.3		0.6		(4.5)		4.6		-		0.7
Current year catastrophe losses		(26.6)		(9.7)		(26.0)		-		(62.3)		(23.8)		(16.4)		(7.0)		-		(47.2)
Underwriting profit (loss)		5.1		29.3		(6.5)		(0.6)		27.3		8.5		13.0		27.5		(0.7)		48.3
Net investment income		39.1		17.1		11.3		1.6		69.1		39.4		18.3		12.0		1.0		70.7
Fees and other income		2.3		2.7		2.4		0.7		8.1		2.4		2.7		2.2		0.7		8.0
Other operating (expenses) income		(2.5)		(1.7)		(1.7)		(3.9)		(9.8)		(2.1)		(1.9)		0.3		(3.8)		(7.5)
Operating income (loss) before    interest expense and income taxes	$	44.0	$	47.4	$	5.5	$	(2.2)	$	94.7	$	48.2	$	32.1	$	42.0	$	(2.8)	$	119.5

Commercial Lines

Commercial Lines net premiums written were $579.9 million in the three months ended June 30, 2016, compared to $569.1 million in the three months ended June 30, 2015. This $10.8 million increase was primarily driven by pricing increases, strong retention, and targeted new business expansion.

Commercial Lines underwriting profit for the three months ended June 30, 2016 was $5.1 million, compared to $8.5 million for the three months ended June 30, 2015, a decrease of $3.4 million. Catastrophe-related losses for the three months ended June 30, 2016 were $25.9 million, compared to $23.2 million for the three months ended June 30, 2015, an increase of $2.7 million. Unfavorable development on prior years’ loss reserves for the three months ended June 30, 2016 was $22.1 million, compared to $6.0 million for the three months ended June 30, 2015, an increase of $16.1 million, primarily in our commercial multiple peril liability coverages.  

Commercial Lines current accident year underwriting profit, excluding catastrophes, was $53.1 million for the three months ended June 30, 2016, compared to $37.7 million for the three months ended June 30, 2015. This $15.4 million increase was primarily due to an improvement in current accident year loss performance, primarily due to property coverages in our commercial multiple peril and inland marine lines.

The Company has continued to achieve price increases in the Commercial Lines segment, particularly in its small commercial and various specialty business areas.  However, the pricing environment has become more competitive.  Our ability to achieve rate increases in the future, particularly in the middle market where competition for business is currently most intense, will be affected by the pricing environment, the overall economic environment and other factors.  Subject to these factors, as a normal function of the underwriting process, we are continuing efforts to improve our results through the combination of pricing increases, changes to our mix of business, optimizing our franchise agency distribution model and other underwriting actions.

Personal Lines

Personal Lines net premiums written were $395.3 million in the three months ended June 30, 2016, compared to $378.3 million in the three months ended June 30, 2015, an increase of $17.0 million. This was primarily due to increased rates in both our personal automobile and homeowners lines of business, as well as improved retention and new business trends.

Net premiums written in the personal automobile line of business for the three months ended June 30, 2016 were $245.1 million compared to $232.9 million for the three months ended June 30, 2015, an increase of $12.2 million. This was primarily due to rate increases, which offset a decline in policies in force of 2.3%. Net premiums written in the homeowners line of business for the three months ended June 30, 2016 were $140.1 million compared to $135.1 million for the three months ended June 30, 2015, an increase of $5.0 million. This is attributable to rate increases, which offset a decline in policies in force of 1.0%. Since December 31, 2015, policies in force have remained relatively consistent in both the homeowners and personal automobile lines.

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Personal Lines underwriting profit for the three months ended June 30, 2016 was $29.3 million, compared to $13.0 million for the three months ended June 30, 2015, an improvement of $16.3 million. Catastrophe losses for the three months ended June 30, 2016 were $11.2 million, compared to $20.9 million for the three months ended June 30, 2015, a decrease of $9.7 million.  Unfavorable development on prior years’ loss reserves for the three months ended June 30, 2016 was $0.9 million, compared to favorable development of $1.9 million for the three months ended June 30,  2015, a change of $2.8 million.

Personal Lines current accident year underwriting profit, excluding catastrophes, was $41.4 million in the three months ended June 30, 2016, compared to $32.0 million for the three months ended June 30, 2015. This $9.4 million improvement was primarily a result of lower weather-relatedproperty losses, primarily in our homeowners line, as well as rate increases.

Although we have been able to obtain rate increases in our Personal Lines markets and believe that our ability to obtain these increases will continue, our ability to maintain Personal Lines net premiums written and to maintain and improve underwriting results may be affected by price competition, and regulatory and legal developments, as well as by future exposure and portfolio management actions. We monitor these trends and consider them in our rate actions.

Chaucer

Chaucer’s gross premiums written were $322.5 million for the three months ended June 30, 2016, compared to $390.0 million for the three months ended June 30, 2015. Excluding the U.K. motor business, Chaucer’s gross premiums written declined by 0.5% in the three months ended June 30, 2016. Chaucer’s net premiums written were $246.4 million for the three months ended June 30, 2016, compared to $208.6 million for the three months ended June 30, 2015. Excluding the U.K. motor business, net premiums written declined by $22.9 million or 8.5%, primarily due to an increase in ceded reinsurance premiums as we continue to manage our overall underwriting risk given the challenging market conditions.

Chaucer’s underwriting loss for the three months ended June 30, 2016 was $6.5 million, compared to an underwriting profit of $27.5 million for the three months ended June 30, 2015, a decrease of $34.0 million. This decrease is primarily due to lower favorable development on prior year loss reserves and higher catastrophe losses. Favorable development on prior years’ loss reserves for the three months ended June 30, 2016 was $8.3 million, compared to favorable development of $33.0 million for the three months ended June 30, 2015, a decrease of $24.7 million, including the effect of foreign exchange fluctuations (See “Foreign Exchange” section below for further discussion). Catastrophe losses for the three months ended June 30, 2016 were $13.9 million, compared to $2.4 million for the three months ended June 30, 2015, an increase of $11.5 million.

Chaucer’s current accident year underwriting loss, excluding catastrophes, was $0.9 million in the three months ended June 30, 2016, compared to $3.1 million for the three months ended June 30, 2015. This $2.2 million improvement was primarily due to lower expenses principally driven by the effect of foreign exchange fluctuations (See “Foreign Exchange” section below for further discussion), partially offset by higher current accident year losses. The increase in current accident year losses was due to large losses in the political risk line, as well as in trade credit coverages related to poor market conditions and underlying commodity price-sensitive accounts in our marine line of business, partially offset by lower large losses in our energy line.

The international insurance industry continues to experience significant competition. High industry capacity and a continued reduced frequency of major losses are adversely affecting pricing and underwriting conditions in many of our markets. There can be no assurance that we will be able to maintain adequate rates in light of economic and regulatory conditions in our markets. Additionally, because of the inherently volatile nature of losses in many of our product lines, as evidenced by the recent trend of elevated losses in our marine line, particularly in the political risk and trade credit coverages, we may continue to experience large losses or an elevated level of losses from these or other product lines.

Other

Other operating loss was $2.2 million for the three months ended June 30, 2016, compared to $2.8 million for the three months ended June 30, 2015, a change of $0.6 million.

Six Months Ended June 30, 2016 Compared to Six Months Ended June 30, 2015

Operating income before interest expense and income taxes was $215.1 million in the six months ended June 30, 2016, compared to $219.9 million for the six months ended June 30, 2015, a decrease of $4.8 million. This decrease is primarily due to a change in development on prior years’ loss reserves. Unfavorable development on prior years’ loss reserves was $5.0 million in the six months ended June 30, 2016, compared to favorable development of $53.8 million in the same period in 2015, an unfavorable change of $58.8 million, including the effect of foreign exchange fluctuations. This was partially offset by a decrease in catastrophe losses. Catastrophe related activity in the six months ended June 30, 2016 was $82.2 million, compared to $108.8 million in the same period of 2015, a decrease of $26.6 million. Additionally, we experienced lower current accident year losses in our Commercial Lines and Personal Lines segments.

Net premiums written declined by $5.2 million in the six months ended June 30, 2016 compared to the same period in 2015. This decline was primarily a result of an increase in ceded reinsurance premiums in the Chaucer business and to lower premium volumes in Chaucer’s energy lines, partially offset by growth in our domestic lines.

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Production and Underwriting Results

The following table summarizes premiums written on a gross and net basis, net premiums earned and loss, LAE, expense and combined ratios for the Commercial Lines, Personal Lines and Chaucer segments. Loss, LAE, catastrophe loss and combined ratios shown below include prior year reserve development. These items are not meaningful for our Other segment.

		Six Months Ended June 30, 2016
(dollars in millions)		Gross Premiums Written		Net  Premiums Written		Net Premiums Earned	Catastrophe Loss Ratios	Loss & LAE Ratios	Expense Ratios	Combined Ratios
Commercial Lines	$	1,343.0	$	1,184.2	$	1,146.1	3.9	62.8	36.2	99.0
Personal Lines		773.4		732.3		723.3	3.2	63.6	27.7	91.3
Chaucer		660.6		449.4		427.4	3.4	58.0	38.3	96.3
Total	$	2,777.0	$	2,365.9	$	2,296.8	3.6	62.3	33.9	96.2
		Six Months Ended June 30, 2015
(dollars in millions)		Gross Premiums Written		Net  Premiums Written		Net Premiums Earned	Catastrophe Loss Ratios	Loss & LAE Ratios	Expense Ratios	Combined Ratios
Commercial Lines	$	1,298.9	$	1,151.0	$	1,103.2	5.2	63.4	36.2	99.6
Personal Lines		750.9		704.7		709.6	6.5	69.2	27.8	97.0
Chaucer		840.7		515.4		604.0	0.9	54.1	35.5	89.6
Total	$	2,890.5	$	2,371.1	$	2,416.8	4.5	62.8	33.6	96.4

The following table summarizes net premiums written, and loss and LAE and catastrophe loss ratios by line of business for the Commercial Lines and Personal Lines segments. Loss and LAE and catastrophe loss ratios include prior year reserve development.

	Six Months Ended June 30,
	2016				2015
(dollars in millions)		Net  Premiums Written	Loss & LAE Ratios	Catastrophe Loss Ratios		Net  Premiums Written	Loss & LAE Ratios	Catastrophe Loss Ratios
Commercial Lines:
Commercial multiple peril	$	389.6	61.9	7.8	$	368.5	62.4	10.1
Commercial automobile		157.2	75.2	0.6		155.9	75.0	0.5
Workers’ compensation		148.8	59.3	-		141.5	63.5	-
Other commercial		488.6	60.7	3.0		485.1	60.5	4.3
Total Commercial Lines	$	1,184.2	62.8	3.9	$	1,151.0	63.4	5.2
Personal Lines:
Personal automobile	$	467.6	70.6	0.3	$	449.2	71.1	0.3
Homeowners		246.5	52.2	8.3		237.1	68.3	17.9
Other personal		18.2	51.0	1.6		18.4	39.1	2.0
Total Personal Lines	$	732.3	63.6	3.2	$	704.7	69.2	6.5

The following table summarizes premiums written on a gross and net basis and net premiums earned by line of business for the Chaucer segment.

	Six Months Ended June 30,
	2016							2015
(in millions)		Gross Premiums Written		Net  Premiums Written		Net Premiums Earned		Gross Premiums Written		Net  Premiums Written		Net Premiums Earned
Chaucer:
Marine and aviation		$	196.2	$	138.2	$	128.2	$	196.1	$	153.8	$	142.8
U.K. motor			-		-		-		139.6		(8.3)		135.4
Property			175.1		93.1		71.1		180.3		113.7		83.2
Energy			102.9		57.4		75.6		133.8		85.7		98.9
Casualty and other			186.4		160.7		152.5		190.9		170.5		143.7
Total Chaucer		$	660.6	$	449.4	$	427.4	$	840.7	$	515.4	$	604.0

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The following table summarizes underwriting results for the Commercial Lines, Personal Lines, Chaucer and Other segments and reconciles it to operating income.

		Six Months Ended June 30,
		2016										2015
(in millions)	Commercial Lines		Personal Lines		Chaucer		Other		Total		Commercial Lines		Personal Lines		Chaucer		Other		Total
Underwriting profit (loss),    excluding prior year reserve    development and catastrophes	$	95.8	$	81.1	$	(7.6)	$	(0.7)	$	168.6	$	66.6	$	58.7	$	11.2	$	(0.8)	$	135.7
Prior year favorable (unfavorable)    loss and LAE reserve    development on    non-catastrophe losses		(42.2)		(0.2)		38.0		(0.6)		(5.0)		(6.9)		4.1		57.2		(0.6)		53.8
Prior year favorable (unfavorable)    catastrophe development		1.0		(2.8)		21.8		-		20.0		6.1		(7.1)		4.9		-		3.9
Current year catastrophe losses		(45.8)		(20.2)		(36.2)		-		(102.2)		(63.2)		(39.3)		(10.2)		-		(112.7)
Underwriting profit (loss)		8.8		57.9		16.0		(1.3)		81.4		2.6		16.4		63.1		(1.4)		80.7
Net investment income		78.5		34.5		22.0		2.4		137.4		78.0		36.2		24.3		2.3		140.8
Fees and other income		4.2		5.5		3.5		1.4		14.6		4.3		5.9		4.5		1.5		16.2
Other operating (expenses) income		(4.8)		(3.4)		(2.3)		(7.8)		(18.3)		(5.5)		(4.1)		(0.7)		(7.5)		(17.8)
Operating income (loss) before    interest expense and income taxes	$	86.7	$	94.5	$	39.2	$	(5.3)	$	215.1	$	79.4	$	54.4	$	91.2	$	(5.1)	$	219.9

Commercial Lines

Commercial Lines net premiums written were $1,184.2 million in the six months ended June 30, 2016, compared to $1,151.0 million in the six months ended June 30, 2015. This $33.2 million increase was primarily driven by pricing increases, strong retention, and targeted new business expansion.  

Commercial Lines underwriting profit for the six months ended June 30, 2016 was $8.8 million, compared to $2.6 million for the six months ended June 30, 2015, an increase of $6.2 million. Catastrophe-related losses for the six months ended June 30, 2016 were $44.8 million, compared to $57.1 million for the six months ended June 30, 2015, a decrease of $12.3 million. Unfavorable development on prior years’ loss reserves for the six months ended June 30, 2016 was $42.2 million, compared to $6.9 million for the six months ended June 30, 2015, an increase of $35.3 million, primarily in our commercial multiple peril liability coverages.  

Commercial Lines current accident year underwriting profit, excluding catastrophes, was $95.8 million for the six months ended June 30, 2016, compared to $66.6million for the six months ended June 30, 2015. This $29.2 million increase was primarily due to improved current accident year loss performance, primarily due to property coverages in our commercial multiple peril and inland marine lines.

Personal Lines

Personal Lines net premiums written were $732.3 million in the six months ended June 30, 2016, compared to $704.7 million in the six months ended June 30, 2015, an increase of $27.6 million. This was primarily due to increased rates in both our personal automobile and homeowners lines of business, as well as improved retention and new business trends.

Net premiums written in the personal automobile line of business for the six months ended June 30, 2016 were $467.6 million compared to $449.2 million for the six months ended June 30, 2015, an increase of $18.4 million. This was primarily due to rate increases, which offset a decline in policies in force of 2.3%. Net premiums written in the homeowners line of business for the six months ended June 30, 2016 were $246.5 million compared to $237.1 million for the six months ended June 30, 2015, an increase of $9.4 million. This is attributable to rate increases, which offset a decline in policies in force of 1.0%. Since December 31, 2015, policies in force have remained relatively consistent in both the homeowners and personal automobile lines.

Personal Lines underwriting profit for the six months ended June 30, 2016 was $57.9 million, compared to $16.4 million for the six months ended June 30, 2015, an improvement of $41.5 million. Catastrophe losses for the six months ended June 30, 2016 were $23.0 million, compared to $46.4 million for the six months ended June 30, 2015, a decrease of $23.4 million.  Unfavorable development on prior years’ loss reserves for the six months ended June 30, 2016 was $0.2 million, compared to favorable development of $4.1 million for the six months ended June 30,  2015, a change of $4.3 million.

Personal Lines current accident year underwriting profit, excluding catastrophes, was $81.1 million in the six months ended June 30, 2016, compared to $58.7 million for the six months ended June 30, 2015. This $22.4 million increase was primarily a result of lower weather-relatedproperty losses, primarily in our homeowners line, as well as rate increases.

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Chaucer

Chaucer’s gross premiums written were $660.6 million for the six months ended June 30, 2016, compared to $840.7 million for the six months ended June 30, 2015. Excluding the U.K. motor business, Chaucer’s gross premiums written declined by 5.8% in the six months ended June 30, 2016, primarily due to lower premium volumes in our energy line, where underwriting conditions deteriorated further as a result of continued low oil prices. Chaucer’s net premiums written were $449.4 million for the six months ended June 30, 2016, compared to $515.4 million for the six months ended June 30, 2015. This decline of $66.0 million or 12.8% is primarily due to an increase in ceded reinsurance premiums as we continue to manage our overall underwriting risk given the challenging market conditions, as well as from the aforementioned lower premium volumes in the energy line.

Chaucer’s underwriting profit for the six months ended June 30, 2016 was $16.0 million, compared to $63.1 million for the six months ended June 30, 2015, a decrease of $47.1 million. This decrease is primarily due to higher large losses in our marine line of business and tolower favorable development of prior year reserves. Favorable development on prior years’ loss reserves for the six months ended June 30, 2016 was $38.0 million, compared to $57.2 million for the six months ended June 30, 2015, a decrease of $19.2 million, including the effect of foreign exchange fluctuations (see “Foreign Exchange” section below for further discussion). Catastrophe losses for the six months ended June 30, 2016 were $14.4 million, compared to $5.3 million for the six months ended June 30, 2015, an increase of $9.1 million.

Chaucer’s current accident year underwriting loss, excluding catastrophes, was $7.6 million in the six months ended June 30, 2016, compared to an underwriting profit of $11.2 million for the six months ended June 30, 2015. This $18.8 million decline was primarily due to higher large losses in the political risk line, as well as in trade credit coverages related to poor market conditions and underlying commodity price-sensitive accounts in our marine line of business, partially offset by lower large losses in our energy line.

Foreign Exchange

Most of Chaucer’s transactions are denominated in the currencies that we use to settle transactions with Lloyd’s, specifically the U.S. Dollar, the U.K. Pound Sterling (“GBP”) and the Canadian Dollar. These are Chaucer’s functional currencies under U.S. GAAP. A portion of Chaucer’s transactions and its assets and liabilities are denominated in other currencies, such as the Euro, the Swiss Franc, the Australian Dollar and the Japanese Yen. Changes in the value of these currencies versus the functional currencies, particularly versus the GBP, cause transactional gains and losses during each reporting period. During the three and six months ended June 30, 2016, the GBP weakened meaningfully against most currencies. We believe that this was due, in large part, to the U.K’s referendum vote to discontinue its membership in the European Union (“Brexit Referendum”).  In contrast, during the three and six months ended June 30, 2015, the GBP strengthened against most currencies. The following table summarizes the total effect of Chaucer’s foreign exchange transactional gains and losses on comprehensive income:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
		2016		2015		2016		2015
in millions
Effect of revaluing loss and LAE reserves	$	(15.1)	$	13.5	$	(33.2)	$	19.0
Effect of revaluing overseas deposits and cash		3.9		(2.7)		9.7		(1.0)
Effect of revaluing premium receivables		2.2		0.4		2.8		(0.2)
Total FX effect on segment income	$	(9.0)	$	11.2	$	(20.7)	$	17.8
FX losses reflected in realized gains/losses		(0.2)		-		(0.7)		(3.2)
Total FX effect on pre-tax income	$	(9.2)	$	11.2	$	(21.4)	$	14.6
Unrealized FX gains (losses) from investment securities		2.8		(1.3)		7.5		(3.7)
Total pre-tax effect of transactional FX gains (losses) on
comprehensive income	$	(6.4)	$	9.9	$	(13.9)	$	10.9
Tax benefit (expense)		2.2		(3.5)		4.9		(3.8)
Total effect of transactional FX gains (losses) on
comprehensive income	$	(4.2)	$	6.4	$	(9.0)	$	7.1

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During the three and six months ended June 30, 2016, foreign exchange losses reduced pre-tax segment income by approximately $9.0 million and $20.7 million, respectively, compared to foreign exchange gains in pre-tax segment income of approximately $11.2 million and $17.8 million, respectively, for the three and six months ended June 30, 2015. These items result primarily from the revaluation of loss and LAE reserves in various currencies, particularly the Euro, the Australian Dollar and the Japanese Yen, partially offset by the revaluation of investments in overseas deposits and cash.  During the three and six months ended June 30, 2016, pre-tax unrealized foreign exchange gains from Euro-denominated investment securities were $2.8 million and $7.5 million, respectively,which were reflected as an increase to accumulated other comprehensive income. During the three and six months ended June 30, 2015 pre-tax unrealized foreign exchange losses from Euro-denominated investment securities were  $1.3 million and $3.7 million, respectively.

Although we endeavor to balance assets and liabilities for our foreign currencies, a certain level of net exposure to exchange rate fluctuations persists. We monitor and seek to limit the extent of this exposure. Although these transactional foreign exchange gains and losses are unlikely to be material to our financial position, they may be more significant to our financial results of operations in any one period.

Other

Other operating loss was $5.3 million for the six months ended June 30, 2016, compared to $5.1 million for the six months ended June 30, 2015, a change of $0.2 million.

Reserve for Losses and Loss Adjustment Expenses

The table below provides a reconciliation of the gross beginning and ending reserve for unpaid losses and loss adjustment expenses.

	Six Months Ended
	June 30,
(in millions)	2016		2015
Gross loss and LAE reserves, beginning of period	$	6,574.4	$	6,391.7
Reinsurance recoverable on unpaid losses		2,280.8		1,983.0
Net loss and LAE reserves, beginning of period		4,293.6		4,408.7
Net incurred losses and LAE in respect of losses occurring in:
Current year		1,444.3		1,575.7
Prior year non-catastrophe loss development		5.0		(53.8)
Prior year catastrophe development		(20.0)		(3.9)
Total incurred losses and LAE		1,429.3		1,518.0
Net payments of losses and LAE in respect of losses occurring in:
Current year		438.2		522.0
Prior years		789.9		844.1
Total payments		1,228.1		1,366.1
Disposition of U.K. motor business		-		(300.6)
Effect of foreign exchange rate fluctuations		(42.4)		1.2
Net reserve for losses and LAE, end of period		4,452.4		4,261.2
Reinsurance recoverable on unpaid losses		2,325.6		2,330.1
Gross reserve for losses and LAE, end of period	$	6,778.0	$	6,591.3

The table below summarizes the gross reserve for losses and LAE by line of business.

		June 30,		December 31,
(in millions)		2016		2015
Commercial multiple peril	$	768.8	$	725.1
Workers’ compensation		627.4		615.2
Commercial automobile		347.4		336.2
AIX		396.0		398.6
Other		678.4		599.1
Total Commercial and Other		2,818.0		2,674.2
Personal automobile		1,401.6		1,407.5
Homeowners and other		134.7		120.2
Total Personal		1,536.3		1,527.7
Total Chaucer		2,423.7		2,372.5
Total loss and LAE reserves	$	6,778.0	$	6,574.4

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Other lines are primarily comprised of our general liability, professional and management liability, umbrella, marine, surety, voluntary pools, and healthcare lines. Included in the above table, primarily in other lines, are $56.3 million and $57.7 million of asbestos and environmental reserves as of June 30, 2016 and December 31, 2015, respectively. Included in the Chaucer segment in the above table are $144.7  million and $166.0 million of reserves as of June 30, 2016 and December 31, 2015, respectively, related to Chaucer’s financial and professional liability lines written in 2008 and prior periods.

Prior Year Development

Loss and LAE reserves for claims, including catastrophe losses, occurring in prior years developed favorably by $15.0 million for the six months ended June 30, 2016, compared to favorable development of $57.7 million for the six months ended June 30, 2015.

The primary drivers of reserve development for the six months ended June 30,  2016 were as follows:

· Lower than expected losses of $59.8 million within Chaucer’s business as follows:

· property line, primarily in the 2013 through 2015 accident years;

· marine and aviation lines, primarily in the 2014 and 2015 accident years for aviation and the 2008, 2009, 2014 and 2015 accident years for marine;

· energy line, primarily in the 2015 accident year; and

· within casualty and other lines, specialist and international liability lines, primarily in the 2013 through 2015 accident years.

· This favorable development discussed above was partially offset by the unfavorable effect of foreign exchange fluctuations of $30.6 million (see “Foreign Exchange” section above for further discussion).

· Lower than expected losses within our workers’ compensation line of $10.9 million, primarily related to accident years 2013 through 2015.

Partially offsetting the favorable development discussed above was:

· Higher than expected losses in the following lines of business:  

· Other commercial lines of $25.4 million, primarily in the AIX program business in accident years 2013 and prior, principally driven by programs and other business classes which have since been terminated;

· Commercial multiple peril lines of $19.5 million, primarily in liability coverages in accident years 2012 through 2014, driven in part by an elevated number of litigated cases associated with slip and fall claims, particularly in major metropolitan areas; and

· Commercial automobile line, primarily related to liability coverages related to accident years 2012 through 2014.

The primary drivers of reserve development for the six months ended June 30, 2015 were as follows:

· Lower than expected losses of $62.1 million within Chaucer’s business as follows:

· favorable effect of foreign exchange fluctuations on prior years’ loss reserves of $17.6 million (see “Foreign Exchange” section above for further discussion);

· energy line, primarily related to the 2012 through 2014 accident years;

· within casualty and other lines, specialist and international liability lines, primarily in the 2012 and 2013 accident years; and

· property line, primarily in the 2013 and 2014 accident years.

· Lower than expected losses of $11.8 million within our other commercial lines, primarily related to our marine, healthcare and umbrella lines in accident years 2010 through 2014.

· Lower than expected losses withinour workers’ compensation line, primarily related to accident years 2010 through 2014.

Partially offsetting the favorable development discussed above was the following:

· Higher than expected losses of $21.0 million within our other commercial lines, primarily related to our AIX program business in accident years 2011 through 2013.

41

It is not possible to know whether the factors that affected loss reserves in the first six months of 2016 will also occur in future periods. As discussed in detail in our Form 10-K for the year ended December 31, 2015, there are inherent uncertainties in estimating reserves for losses and loss adjustment expenses. We encourage you to read our Form 10-K for more information about our reserving process and the judgments, uncertainties and risks associated therewith.

Investments

Investment Results

Net investment income before taxes decreased $1.6 million, or 2.3%, to $69.1 million for the three months ended June 30, 2016 and $3.4 million, or 2.4%, to $137.4 million for the six months ended June 30, 2016. The decrease in both periods was primarily due tothe effect of lower investment assets resulting from the transfer of the U.K. motor business in 2015, to ourrepurchases of stock and repayment of debt, and to the impact of lower new money yields. These decreases were partially offset by the investment of higher operational cash flows and additional income from our growing asset classes such as commercial mortgage loan participations and equities. Average pre-tax earned yields on fixed maturities were 3.56% and 3.60% for the three months ended June 30, 2016 and 2015, respectively, and 3.55% and 3.61% for the six months ended June 30, 2016 and 2015, respectively. We expect average fixed maturity investment yields to continue to decline as new money rates remain lower than embedded book yields. Total pre-tax earned yields were 3.39% and 3.48% for the three months ended June 30, 2016 and 2015, respectively, and 3.38% and 3.43% for the six months ended June 30, 2016 and 2015, respectively.

Investment Portfolio

We held cash and investment assets diversified across several asset classes, as follows:

	June 30, 2016				December 31, 2015
(dollars in millions)	Carrying Value		% of Total  Carrying Value		Carrying Value		% of Total Carrying Value
Fixed maturities, at fair value	$	7,142.0	83.6	%	$	6,983.4	84.2	%
Equity securities, at fair value		582.7	6.8			576.6	7.0
Other investments		454.8	5.4			393.4	4.7
Cash and cash equivalents		361.6	4.2			338.8	4.1
Total cash and investments	$	8,541.1	100.0	%	$	8,292.2	100.0	%

Cash and Investments

Total cash and investments increased $248.9 million, or 3.0%, for the six months ended June 30, 2016, primarily due to market value appreciation and operational cashflows, partially offset by the funding of financing activities including debt repayment and stock repurchases.

The following table provides information about the investment types of our fixed maturities portfolio:

	June 30, 2016
(in millions) Investment Type	Amortized Cost		Fair Value		Net Unrealized Gain		Change in Net Unrealized During 2016
U.S. Treasury and government agencies	$	364.9	$	376.5	$	11.6	$	9.6
Foreign government		229.4		236.6		7.2		6.1
Municipals:
Taxable		972.2		1,042.6		70.4		27.5
Tax exempt		112.4		117.3		4.9		2.0
Corporate		3,728.8		3,882.7		153.9		162.8
Asset-backed:
Residential mortgage-backed		849.0		874.2		25.2		16.7
Commercial mortgage-backed		507.5		532.9		25.4		23.9
Asset-backed		78.6		79.2		0.6		1.2
Total fixed maturities	$	6,842.8	$	7,142.0	$	299.2	$	249.8

The increase in net unrealized gains on fixed maturities was primarily due to lower prevailing interest rates, and to a lesser extent, narrower credit spreads.

42

Amortized cost and fair value by rating category were as follows:

		June 30, 2016						December 31, 2015
(dollars in millions) NAIC Designation	Rating Agency Equivalent Designation	Amortized Cost			Fair  Value	% of Total Fair Value		Amortized Cost			Fair  Value	% of Total Fair Value
1	Aaa/Aa/A	$	4,703.0	$	4,926.4	69.0	%	$	4,849.3	$	4,939.9	70.7	%
2	Baa		1,708.6		1,780.1	24.9			1,648.3		1,646.0	23.6
3	Ba		216.9		220.5	3.1			219.4		206.4	3.0
4	B		195.8		193.5	2.7			185.0		172.3	2.5
5	Caa and lower		12.8		13.6	0.2			26.6		15.6	0.2
6	In or near default		5.7		7.9	0.1			5.4		3.2	-
Total fixed maturities		$	6,842.8	$	7,142.0	100.0	%	$	6,934.0	$	6,983.4	100.0	%

Based on ratings by the National Association of Insurance Commissioners (“NAIC”), approximately 94% of the fixed maturity portfolio consisted of investment grade securities at June 30, 2016 and December 31, 2015. The quality of our fixed maturity portfolio remains strong based on ratings, capital structure position, support through guarantees, underlying security, issuer diversification and yield curve position.

Our fixed maturity and equity securities are classified as available-for-sale and are carried at fair value. Financial instruments whose value was determined using significant management judgment or estimation constituted less than 1% of the total assets we measured at fair value. (See also Note 6 – “Fair Value” in the Notes to Interim Consolidated Financial Statements).

Equity securities primarily consist of income-oriented large capitalization common stocks and developed market equity index exchange traded funds.

Other investments consisted of participations in commercial mortgage loan obligations,investments in limited partnerships and overseas deposits. Commercial mortgage loan participations represent our interest in commercial mortgage loans originated by a third party. We share, on a pro-rata basis, in all related cash flows of the underlying mortgage loans, which are investment-grade quality and diversified by geographic area and property type. Overseas deposits are foreign and U.S. dollar-denominated investments maintained in overseas funds and managed exclusively by Lloyd’s. These funds are required in order to protect policyholders in overseas markets and enable Chaucer to operate in those markets. Access to those funds is restricted, and we have no control over the investment strategy.

Although we expect to invest new funds primarily in investment grade fixed maturities, we have invested, and expect to continue to invest, a portion of funds in common equity securities, below investment grade fixed maturities and other investment assets.

Other-than-Temporary Impairments

For the three and six months ended June 30, 2016, we recognized in earnings $5.0 million and $25.9 million, respectively, of other-than-temporary impairments (“OTTI”), primarily on fixed maturities and equity securities. For the three months ended June 30, 2016, OTTI on equities was $2.7 million and fixed maturities was $2.0 million, of which $1.1 million related to estimated credit losses and $0.9 million related to securities that we intended to sell.For the six months ended June 30, 2016, OTTI on fixed maturities was $22.9 million,primarily in the energy sector, and was comprised of $15.6 million of bonds that we intended to sell and $7.3 million related to estimated credit losses. Additionally, we recognized $2.7 million of OTTI on equity securities.  For the three months ended June 30, 2015, we recognized in earnings $1.9 of OTTI on fixed maturities and for the six months ended June 30, 2015, we recognized in earnings $4.6 million of OTTI on fixed maturities and equity securities, largely in the energy sector.

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Unrealized Losses

The following table provides information about our fixed maturities and equity securities that were in an unrealized loss position including the length of time the securities have been in an unrealized loss position. (See also Note 5 – ‘‘Investments’’ in the Notes to Interim Consolidated Financial Statements.)

	June 30, 2016				December 31, 2015
	Gross				Gross
	Unrealized		Fair		Unrealized		Fair
(in millions)	Losses		Value		Losses		Value
Fixed maturities:
Investment grade:
12 months or less	$	2.0	$	112.5	$	43.3	$	2,168.8
Greater than 12 months		7.8		197.3		25.5		323.4
Total investment grade fixed maturities		9.8		309.8		68.8		2,492.2
Below investment grade:
12 months or less		5.0		81.3		19.6		165.5
Greater than 12 months		16.2		98.1		26.5		63.2
Total below investment grade fixed maturities		21.2		179.4		46.1		228.7
Equity securities:
12 months or less		1.9		76.2		7.6		166.8
Total	$	32.9	$	565.4	$	122.5	$	2,887.7

Gross unrealized losses at June 30, 2016 decreased $89.6 million compared to December 31, 2015, primarily attributable to lower prevailing interest rates, and to a lesser extent, narrower credit spreads. Interest rates and safe haven assets, such as U.S. Treasury securities, rallied strongly following the Brexit Referendum and the resulting expectation of ongoing support from central banks. At June 30, 2016, gross unrealized losses consisted primarily of $28.8 million of corporate fixed maturities and $1.9 million of equity securities.

Market values of securities in the energy sector have recovered somewhat from their multi-year lows but may continue to experience volatility until underlying supply and demand dynamics normalize. The amortized cost and market values of our total energy holdings at June 30, 2016 were $440.3 million and $451.2 million, respectively, or 5.3% of our total cash and investments. Within our energy holdings, certain subsectors will benefit from lower crude oil prices while others will be negatively impacted. Our holdings in subsectors, which may be negatively impacted such as independents and oil field services, total 1.8% of total cash and investments.  The majority of these holdings are investment grade; however, certain issuers and investments may come under duress.

We view gross unrealized losses on fixed maturities and equity securities as temporary since it is our assessment that these securities will recover in the near term, allowing us to realize their anticipated long-term economic value. With respect to gross unrealized losses on fixed maturities, we do not intend to sell, nor is it more likely than not we will be required to sell, such debt securities before this expected recovery of amortized cost (See also “Liquidity and Capital Resources” in Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-Q). With respect to equity securities, we have the intent and ability to retain such investments for the period of time anticipated to allow for this expected recovery in fair value. Inherent in our assessment are the risks that, subsequent to the balance sheet date, market factors may differ from our expectations; the global economic recovery is less robust than we expect or reverts to recessionary trends; stress in the commodities sectors, including oil and gas and metals and mining, may persist for an extended period of time; we may decide to subsequently sell a security for unforeseen business needs; or changes in the credit assessment or equity characteristics from our original assessment may lead us to determine that a sale at the current value would maximize recovery on such investments. To the extent that there are such adverse changes, an OTTI would be recognized as a realized loss. Although unrealized losses are not reflected in the results of financial operations until they are realized or deemed “other-than-temporary,” the fair value of the underlying investment, which does reflect the unrealized loss, is reflected in our Consolidated Balance Sheets.

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The following table sets forth gross unrealized losses for fixed maturities by maturity period and for equity securities at June 30, 2016 and December 31, 2015. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations, with or without call or prepayment penalties, or we may have the right to put or sell the obligations back to the issuers.

	June 30,		December 31,
(in millions)	2016		2015
Due in one year or less	$	0.2	$	1.5
Due after one year through five years		7.3		26.5
Due after five years through ten years		15.8		66.1
Due after ten years		6.4		10.8
		29.7		104.9
Mortgage-backed and asset-backed securities		1.3		10.0
Total fixed maturities		31.0		114.9
Equity securities		1.9		7.6
Total fixed maturities and equity securities	$	32.9	$	122.5

The carrying values of fixed maturity securities on non-accrual status at June 30, 2016 and December 31, 2015 were not material. The effects of non-accruals, compared with amounts that would have been recognized in accordance with the original terms of the fixed maturities, were reductions in net investment income of $0.7 million and $0.4 million for the six months ended June 30, 2016 and 2015, respectively. Any defaults in the fixed maturities portfolio in future periods may negatively affect investment income.

Our investment portfolio and shareholders’ equity can be significantly impacted by changes in the market values of our securities. Market volatility could increase and defaults on fixed income securities could occur. As a result, we could incur additional realized and unrealized losses in future periods, which could have a material adverse impact on our results of operations and/or financial position.

Monetary policies in the developed economies, particularly in the United States, Europe and Japan, are supportive of moderate economic growth, while fiscal policies are more divergent and subject to change. Following the Brexit Referendum, major central banks are closely monitoring developments in global financial markets and the outlook for growth and are committed to adjust monetary policy as required to provide liquidity funding and support growth, achieve inflation targets and minimize volatility.  In the United States, the Federal Reserve (the “Fed”) maintains its target for the federal funds rate at 0.25% to 0.50% and is expected to continue to provide forward guidance to keep rates relatively stable even as the economy strengthens. The Fed has communicated that the timing of interest rate increases will depend on progress toward its goals of maximum employment and 2 percent inflation, which are expected over the medium term as the labor market improves, and a  better understanding of how the Brexit Referendum might affect the U.S. outlook. Geopolitical risks and equity market volatility can also impact the movement of U.S. Treasury interest rates. 

While the United States has reduced its extraordinary measures as the economy continues to grow at a moderate pace with low inflation, central banks in Europe and Asia have increased accommodative monetary policies as they seek higher growth and confront inflation and inflation expectations running below target. The removal, modification or suggestion of changes in these policies could have an adverse effect on prevailing market interest rates and on issuers’ level of business activity or liquidity, increasing the probability of future defaults. Fundamental conditions in the corporate sector generally remain sound with the exception of the energy and metals and mining industries. Although commodity prices have recovered somewhat from their multi-year lows, fundamentals in these two sectors are expected to remain under pressure until underlying supply and demand dynamics normalize. While we may experience defaults on fixed income securities, particularly with respect to non-investment grade debt securities, it is difficult to foresee which issuers, industries or markets, other than those previously cited, will be affected. As a result, the value of our fixed maturity portfolio could change rapidly in ways we cannot currently anticipate, and we could incur additional realized and unrealized losses in future periods.  

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Other Items

Net income also included the following items:

	Three Months Ended June 30,
(in millions)	Commercial Lines		Personal Lines		Chaucer		Other		Discontinued Operations		Total
2016
Gain on disposal of U.K. motor business, net of tax	$	-	$	-	$	0.3	$	-	$	-	$	0.3
Net realized investment gains (losses)		0.3		0.1		0.5		(1.6)		-		(0.7)
Net loss from repayment of debt		-		-		-		(86.1)		-		(86.1)
Other non-operating items		-		-		0.2		-		-		0.2
Discontinued operations, net of taxes		-		-		-		-		0.1		0.1
2015
Gain on disposal of U.K. motor business, net of tax	$	-	$	-	$	40.3	$	-	$	-	$	40.3
Net realized investment gains (losses)		6.6		2.8		3.4		(0.2)		-		12.6
Net loss from repayment of debt		-		-		-		(1.8)		-		(1.8)
Other non-operating items		0.1		(0.1)		(0.4)		-		-		(0.4)
Discontinued operations, net of taxes		-		-		-		-		(0.2)		(0.2)

	Six Months Ended June 30,
(in millions)	Commercial Lines		Personal Lines		Chaucer		Other		Discontinued Operations		Total
2016
Gain on disposal of U.K. motor business, net of tax	$	-	$	-	$	0.9	$	-	$	-	$	0.9
Net realized investment gains (losses)		2.6		1.1		(1.3)		(1.6)		-		0.8
Net loss from repayment of debt		-		-		-		(86.1)		-		(86.1)
Other non-operating items		-		-		0.3		-		-		0.3
Discontinued operations, net of taxes		-		-		-		-		0.2		0.2
2015
Gain on disposal of U.K. motor business, net of tax	$	-	$	-	$	40.3	$	-	$	-	$	40.3
Net realized investment gains		14.2		6.3		1.2		0.3		-		22.0
Net loss from repayment of debt		-		-		-		(18.5)		-		(18.5)
Other non-operating items		(0.2)		(0.1)		(0.1)		-		-		(0.4)
Discontinued operations, net of taxes		-		-		-		-		(0.2)		(0.2)

We manage investment assets for our Commercial Lines, Personal Lines, and Other segments based on the requirements of our U.S. combined property and casualty companies. We allocate the investment income, expenses and realized gains and losses to our Commercial Lines, Personal Lines and Other segments based on actuarial information related to the underlying businesses. We manage investment assets separately for our Chaucer segment.

Net realized losses on investments were $0.7 million for the three months ended June 30, 2016 compared to net realized gains on investments of $12.6 million for the three months ended June 30,  2015. Net realized losses in 2016 were primarily due to $5.0 million of OTTI losses, partially offset by $4.5 million net gains recognized from the sale of securities, primarily fixed maturities.Net realized gains in 2015 were primarily due to $14.4 million of gains recognized from the sale of securities, partially offset by $1.9 million of OTTI losses. 

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Net realized gains on investments were $0.8 million for the six months ended June 30, 2016 compared to $22.0 million for the six months ended June 30,  2015. Net realized gains in 2016 were primarily due to $27.3 million of net gains recognized from the sale of securities, primarily equities, partially offset by $25.9 million of OTTI losses. Net realized gains in 2015 were primarily due to $26.4 million of gains recognized from the sale of securities, principally equities, partially offset by $4.6 million of OTTI losses.

Additionally, during the second quarter of 2016, we redeemed senior debentures with a carrying value of $375.2 million at a cost of $461.3 million, resulting in a loss of $86.1 million. During the first half of 2015, we repaid senior debentures with a carrying value of $68.0 million at a cost of $86.5 million, resulting in a loss of $18.5 million; $1.8 million was recognized in the second quarter.

Effective June 30, 2015, we transferred our U.K. motor business to an unaffiliated U.K.-based insurance provider which resulted in the recognition of a $40.3 million gain, net of tax, during the second quarter of 2015.

Income Taxes

We are subject to the tax laws and regulations of the U.S. and foreign countries in which we operate. We file a consolidated U.S. federal income tax return that includes the holding company and its U.S. subsidiaries. Generally, taxes are accrued at the U.S. statutory tax rate of 35% for income from the U.S. operations. Our primary non-U.S. jurisdiction is the U.K. In July 2013, the U.K. statutory rate decreased from 23% to 21% effective April 1, 2014 and from 21% to 20% effective April 1, 2015. Further decreases were enacted in November 2015 to reduce the U.K. statutory tax rate from 20% to 19% effective April 1, 2017 and from 19% to 18% effective April 1, 2020. We accrue taxes on certain non-U.S. income that is subject to U.S. tax at the U.S. tax rate. Foreign tax credits, where available, are utilized to offset U.S. tax as permitted. Certain of our non-U.S. income is not subject to U.S. tax until repatriated. Foreign taxes on this non-U.S. income are accrued at the local foreign rate and do not have an accrual for U.S. deferred taxes since these earnings are intended to be indefinitely reinvested overseas.

Three Months Ended June 30, 2016 Compared to Three Months Ended June 30, 2015

The provision for income taxes from continuing operations was a benefit of $9.0 million in the three months ended June 30, 2016, compared to an expense of $31.7 million during the same period in 2015. These provisions resulted in consolidated effective federal tax rates of 126.8% and 20.8% for the three months ended June 30, 2016 and 2015, respectively. The 2016 provision reflects a tax benefit of $30.1 million on the loss from repayment of borrowings as a discrete tax adjustment calculated at the statutory rate during the three months ended June 30, 2016. In addition, these provisions reflect benefits related to tax planning strategies implemented in prior years of $4.0 million and $3.2 million during the three months ended June 30, 2016 and 2015, respectively and a $2.6 million benefit on the gain on disposal of the U.K. motor business for the three months ended June 30, 2015. Absent these items, the provision for income taxes would have been an expense of $25.1 million or 31.9% and $37.5 million or 32.6% for the three months ended June 30, 2016 and 2015, respectively.

The income tax provision on operating income was an expense of $25.1 million during the three months ended June 30, 2016, compared to $34.1 million during the same period in 2015. These provisions resulted in relatively consistent effective tax rates for operating income of 31.7% and 32.6% in 2016 and 2015, respectively. 

Six Months Ended June 30, 2016 Compared to Six Months Ended June 30, 2015

The provision for income taxes from continuing operations was an expense of $21.0 million in the six months ended June 30, 2016, compared to an expense of $53.8 million during the same period in 2015. These provisions resulted in consolidated effective federal tax rates of 20.8% and 23.4% for the six months ended June 30, 2016 and 2015, respectively. The 2016 provision reflects a tax benefit of $30.1 million on the loss from repayment of borrowings as a discrete tax adjustment calculated at the statutory rate for the six months ended June 30, 2016. In addition, these provisions reflect benefits related to tax planning strategies implemented in prior years of $8.9 million and $6.0 million during the six months ended June 30, 2016 and 2015, respectively and a $2.6 million benefit on the gain on disposal of the U.K. motor business for the six months ended June 30, 2015. Absent these items, the provision for income taxes would have been $60.0 million or 32.3% and $62.4 million or 32.5% for the six months ended June 30, 2016 and 2015, respectively.

The income tax provision on operating income was an expense of $59.3 million during the six months ended June 30, 2016, compared to $61.3 million during the same period in 2015. These provisions resulted in relatively consistent effective tax rates for operating income of 32.1% and 32.5% in 2016 and 2015, respectively.

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Critical Accounting Estimates

Interim consolidated financial statements have been prepared in conformity with U.S. GAAP and include certain accounting policies that we consider to be critical due to the amount of judgment and uncertainty inherent in the application of those policies. While we believe that the amounts included in our consolidated financial statements reflect our best judgment, the use of different assumptions could produce materially different accounting estimates. As disclosed in our Annual Report on Form 10-K for the year ended December 31, 2015, we believe the following accounting estimates are critical to our operations and require the most subjective and complex judgment:

· Reserve for losses and loss expenses

· Reinsurance recoverable balances

· Pension benefit obligations

· Other-than-temporary impairments 

· Deferred tax assets

For a more detailed discussion of these critical accounting estimates, see our Annual Report on Form 10-K for the year ended December 31, 2015.

Statutory Surplus of U.S. Insurance Subsidiaries

The following table reflects statutory surplus for our U.S. insurance subsidiaries:

	June 30,		December 31,
(in millions)	2016		2015
Total Statutory Capital and Surplus–U.S. Insurance Subsidiaries	$	2,152.6	$	2,192.8

The statutory capital and surplus for our U.S. insurance subsidiaries decreased $40.2 million during the first six months of 2016. This decrease was due to a $218.8 million dividend paid by Hanover Insurance to THG, partially offset byoperating results and an increase in unrealized gains on investments.

The NAIC prescribes an annual calculation regarding risk based capital (“RBC”). RBC ratios for regulatory purposes are expressed as a percentage of the capital required to be above the Authorized Control Level (the “Regulatory Scale”); however, in the insurance industry, RBC ratios are widely expressed as a percentage of the Company Action Level. The following table reflects the Company Action Level, the Authorized Control Level and RBC ratios for Hanover Insurance (which includes Citizens and other U.S. insurance subsidiaries), as of June 30, 2016, expressed both on the Industry Scale (Total Adjusted Capital divided by the Company Action Level) and Regulatory Scale (Total Adjusted Capital divided by Authorized Control Level):

(dollars in millions)		Company Action Level		Authorized Control Level	RBC Ratio Industry Scale	RBC Ratio Regulatory Scale
The Hanover Insurance Company	$	761.6	$	380.8	282%	563%

Lloyd’s Capital Requirement

Chaucer corporate members operate in the Lloyd’s market, which requires that these members deposit funds, referred to as “Funds at Lloyd’s”, to support their underwriting interests. Lloyd’s sets required capital annually for all participating syndicates based on each syndicate’s business plans, the rating and reserving environment, and discussions with regulatory and rating agencies. Although the minimum capital levels are set by Lloyd’s, it is the responsibility of Chaucer to continually monitor the risk profiles of its managed syndicates to ensure that the level of funding remains appropriate. Such capital is comprised of investments, undrawn letters of credit provided by various banks, and cash and cash equivalents.

We have the following securities, letters of credit and cash and cash equivalents pledged to Lloyd’s to satisfy these capital requirements at June 30, 2016. In 2015, we entered into a new letter of credit facility which enables a higher level of these assets to be used to satisfy these capital requirements (see also “Liquidity and Capital Resources” below). At June 30, 2016, we are in compliance with the capital requirements and expect to be able to meet these capital requirements in the future.

(in millions)
Fixed maturities, at fair value	$	502.6
Letters of credit		226.6
Cash and cash equivalents		11.6
Total pledged to Lloyd’s	$	740.8

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Liquidity and Capital Resources

Liquidity is a measure of our ability to generate sufficient cash flows to meet the cash requirements of business operations. As a holding company, our primary ongoing source of cash is dividends from our insurance subsidiaries. However, dividend payments to us by our U.S. insurance subsidiaries are subject to limitations imposed by regulators, such as prior notice periods and the requirement that dividends in excess of a specified percentage of statutory surplus or prior year’s statutory earnings receive prior approval (so called “extraordinary dividends”). Dividends of $218.8 million were paid to the holding company by Hanover Insurance during the second quarter of 2016.  

Dividend payments to the holding company by Chaucer are regulated by U.K. law. Dividends from Chaucer are dependent on dividends from its subsidiaries. Annual dividend payments from Chaucer are limited to retained earnings that are not restricted by capital and other requirements for business at Lloyd’s. Also, Chaucer must provide advance notice to the U.K.’s Prudential Regulation Authority (“PRA”), of certain proposed dividends or other payments from PRA regulated entities. Dividends of $64.5 million were paid to the holding company by Chaucer during the second quarter of 2016.  

In connection with an intercompany borrowing arrangement between Chaucer and the holding company, interest on a $300 million note is paid by Chaucer on a quarterly basis to the holding company. This interest may be deferred at the election of the holding company. If deferred, the interest is added to the principal. For each of the six month periods ended June 30,  2016 and 2015, Chaucer paid $11.2 million of interest to the holding company.

At June 30,  2016, THG, as a holding company, held $169.3 million of fixed maturities and cash. We believe our holding company assets will be sufficient to meet our current year obligations, which consist primarily of dividends to our shareholders (as and to the extent declared), the interest on our senior and subordinated debentures, certain costs associated with benefits due to our former life employees and agents, and, to the extent required, payments related to indemnification of liabilities associated with the sale of various subsidiaries.We do not expect that it will be necessary to dividend additional funds from our insurance subsidiaries in order to fund 2016 holding company obligations; however, we may decide to do so.

Sources of cash for our insurance subsidiaries primarily consist of premiums collected, investment income and maturing investments. Primary cash outflows are paid claims, losses and loss adjustment expenses, policy and contract acquisition expenses, other underwriting expenses and investment purchases. Cash outflows related to losses and loss adjustment expenses can be variable because of uncertainties surrounding settlement dates for liabilities for unpaid losses and because of the potential for large losses either individually or in the aggregate. We periodically adjust our investment policy to respond to changes in short-term and long-term cash requirements.

Net cash provided by operating activities was $231.6 million during the first six months of 2016, as compared to $102.7 million during the first six months of 2015. The $128.9 million increase in cash provided was primarily the result of lower loss payments during the first six months of 2016.

Net cash provided by investing activities was $9.0 million during the first six months of 2016, as compared to $243.1 million during the first six months of 2015.  During 2016, cash provided by investing activities primarily related to net disposals of fixed maturities, partially offset by net purchases of equity securities and other investments.  In 2016, our reinvestments nearly matched proceeds from securities that were sold or matured.  In 2015, cash provided by investing activities primarily related to net disposals of fixed maturities, due in part to our liquidation of certain U.S. dollar denominated holdings at Chaucer in anticipation of the disposition of the U.K. motor business.  Additionally, in 2015, net cash proceeds of $44.3 million were received from the disposition of our U.K. motor business.

Net cash used in financing activities was $217.7 million during the first six months of 2016, as compared to $137.2 million during the first six months of 2015. During 2016, cash used in financing activities primarily resulted from the repayment of debt, repurchases of common stock, payment of dividends to shareholders and cash outflows related to the security lending program. These cash outflows were partially offset by cash inflows related to the issuance, on April 8, 2016, of $375 million of senior unsecured debentures, and option exercises. During 2015, cash used in financing activities primarily resulted from the repayment of debt, payment of dividends to shareholders and repurchases of common stock. These cash outflows were partially offset by cash inflows related to option exercises. 

Dividends to shareholders are subject to quarterly board approval and declaration. During the first six months of 2016, as declared by the Board, we paid two quarterly dividends, each for $0.46 per share to our shareholders totaling $39.6 million. We believe that our holding company assets are sufficient to provide for future shareholder dividends should the Board of Directors declare them.

We expect to continue to generate sufficient positive operating cash to meet all short-term and long-term cash requirements relating to current operations, including the funding of our qualified defined benefit pension plan and the Chaucer pension plan. The ultimate payment amounts for our benefit plans are based on several assumptions, including but not limited to, the rate of return on plan assets, the discount rate for benefit obligations, mortality experience, interest crediting rates, inflation and the ultimate valuation and determination of benefit obligations. Since differences between actual plan experience and our assumptions are almost certain, changes both positive and negative to our current funding status and ultimately our obligations in future periods are likely.

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Our insurance subsidiaries maintain a high degree of liquidity within their respective investment portfolios in fixed maturity and short-term investments. We believe that the quality of the assets we hold will allow us to realize the long-term economic value of our portfolio, including securities that are currently in an unrealized loss position. We do not anticipate the need to sell these securities to meet our insurance subsidiaries’ cash requirements since we expect our insurance subsidiaries to generate sufficient operating cash to meet all short-term and long-term cash requirements. However, there can be no assurance that unforeseen business needs or other items will not occur causing us to have to sell those securities in a loss position before their values fully recover, thereby causing us to recognize impairment charges in that time period.

Our Board of Directors has authorized aggregate repurchases of our common stock of up to $900 million. Under the repurchase authorizations, the Company may repurchase, from time to time, common shares in amounts, at prices and at such times as the Company deems appropriate, subject to market conditions and other considerations. Repurchases may be executed using open market purchases, privately negotiated transactions, accelerated repurchase programs or other transactions. We are not required to purchase any specific number of shares or to make purchases by any certain date under this program. During the first six months of 2016, we repurchased approximately 0.8 million shares of our common stock at a cost of $67.5 million. As of June 30, 2016, we have approximately $222 million available for repurchases under these repurchase authorizations.

On April 8, 2016 we issued $375 million aggregate principal amount of 4.50% senior unsecured debentures due April 15, 2026. Net proceeds of the debt issuance were $370.5 million. The net proceeds were used, together with cash on hand, to redeem outstanding 7.50% notes due March 1, 2020 and 6.375% notes due June 15, 2021, resulting in a pre-tax loss of $86.1 million, related primarily to the required “make-whole” provision in these issuances.

We have a $200.0 million credit agreement which expires in November 2018, with an option to increase the facility to $300.0 million assuming no default and satisfaction of certain other conditions. The agreement also includes a $50 million sub-facility for standby letters of credit that can be used for general corporate purposes. The agreement contains financial covenants including, but not limited to, maintaining at least a certain level of consolidated equity, maximum consolidated leverage ratios and requires certain of our subsidiaries to maintain a minimum RBC ratio. We had no borrowings under this agreement during the first six months of 2016.  

Membership in FHLBB provides us with access to additional liquidity based on our stock holdings and pledged collateral at the date of borrowing. At June 30,  2016, we had additional borrowing capacity of $13.1 million. There were no borrowings outstanding under this short-term facility at June 30,  2016; however, we have and may continue, from time to time, to borrow through this facility to provide short term liquidity.

On October 15, 2015, we entered into a Standby Letter of Credit Facility Agreement (the “Facility Agreement”) not to exceed £170.0 million (or $226.6 million) outstanding at any one time, with the option to increase the amount available for issuances of letters of credit to £235.0 million (or $313.2 million) in the aggregate on one occasion only during the term of the Facility Agreement (subject to the consent of all lenders and assuming no default and satisfaction of other specified conditions). The Facility Agreement replaces a Standby Letter of Credit Facility Agreement entered into on November 15, 2013. The Facility Agreement provides certain covenants including, but not limited to, the syndicates’ financial condition.  The Facility Agreement provides regulatory capital supporting Chaucer’s underwriting activities for the 2016 and 2017 years of account and each prior open year of account. The Facility Agreement is generally renewed biennially to support new underwriting years. 

The Facility agreement is subject to a letter of credit commission fee on outstanding letters of credit, which is payable quarterly.  Chaucer is also required to pay customary agency fees. We paid $1.9  million and $1.8 million in interest costs during the first six months of 2016 and 2015, respectively.

Simultaneous with the Facility Agreement, we entered into a Guaranty Agreement (the “Guaranty Agreement”) with Lloyds Bank plc, as Facility Agent and Security Agent, pursuant to which we unconditionally guarantee the obligations of Chaucer under the Facility Agreement. The Guaranty Agreement contains certain financial covenants that require us to maintain a minimum net worth, a minimum risk-based capital ratio at our primary U.S. domiciled property and casualty companies and a maximum leverage ratio, and certain negative covenants that limit our ability, among other things, to incur or assume certain debt, grant liens on our property, merge or consolidate, dispose of assets, materially change the nature or conduct of our business and make restricted payments (except, in each case, as provided by certain exceptions). The Guaranty Agreement also contains certain customary representations and warranties. 

For a more detailed discussion of our credit agreements, see also “Liquidity and Capital Resources” in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2015.  

At June 30,  2016, we were in compliance with the covenants of our debt and credit agreements.

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Off-Balance Sheet Arrangements

We currently do not have any material off-balance sheet arrangements that are reasonably likely to have an effect on our financial position, revenues, expenses, results of operations, liquidity, capital expenditures, or capital resources.

Contingencies and Regulatory Matters

Information regarding contingencies and regulatory matters appears in Part I – Note 12 “Commitments and Contingencies” in the Notes to Interim Consolidated Financial Statements.

Risks and Forward-Looking Statements

Information regarding risk factors and forward-looking information appears in Part II – Item 1A of this Quarterly Report on Form 10-Q and in Part I – Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2015. This Management’s Discussion and Analysis should be read and interpreted in light of such factors.

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ITEM 3

QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK

Our market risks, the ways we manage them, and sensitivity to changes in interest rates, equity price risk, and foreign currency exchange risk are summarized in Management’s Discussion and Analysis of Financial Condition and Results of Operations as of December 31, 2015, included in our Annual Report on Form 10-K for the year ended December 31, 2015. There have been no material changes in the first six months of 2016 to these risks or our management of them.

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ITEM 4

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures Evaluation

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Limitations on the Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls over financial reporting will prevent all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

Based on our controls evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of the end of the period covered by this quarterly report, our disclosure controls and procedures were effective to provide reasonable assurance that (i) the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) material information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and the Chief Financial Officer, we conducted an evaluation of the internal control over financial reporting, as required by Rule 13a-15(d) of the Exchange Act, to determine whether any changes occurred during the period covered by this quarterly report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that there were no such changes during the quarter ended June 30, 2016, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

Reference is made to the litigation matter captioned “Durand Litigation” under “Commitments and Contingencies – Legal Proceedings” in Note 12 in the Notes to Interim Consolidated Financial Statements.

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ITEM 1A – RISK FACTORS

This document contains, and management may make, certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, may be forward-looking statements. When used in our Management’s Discussion and Analysis, the words: “believes”, “anticipates”, “expects”, “projections”, “outlook”, “should”, “could”, “plan”, “guidance”, “likely”, “on track to”, “targeted” and similar expressions are intended to identify forward-looking statements. We wish to caution readers that accuracy with respect to forward-looking projections is difficult and risks and uncertainties, in some cases, have affected, and in the future could affect, our actual results and could cause our actual results for the remainder of 2016 and beyond to differ materially from historical results and from those expressed in any of our forward-looking statements. We operate in a business environment that is continually changing, and as such, new risk factors may emerge over time. Additionally, our business is conducted in competitive markets and therefore involves a higher degree of risk. We cannot predict these new risk factors nor can we assess the impact, if any, that they may have on our business in the future. Some of the factors that could cause actual results to differ include, but are not limited to, the following:

• changes in the demand for our products;

• risks and uncertainties with respect to our ability to retain profitable policies in force and attract profitable policies and to increase rates commensurate with, or in excess of, loss trends;

• changes in our estimates of loss and loss adjustment expense reserves and accident year “picks”, resulting in lower current year underwriting income or adverse loss development; 

• uncertainties with respect to the long-term profitability of our products, including with respect to new products such as our Platinum Personal Lines product or excess and surplus lines, or longer-tail products covering casualty losses;

• changes in frequency and loss trends;

• changes in regulation, economic, market and political conditions, particularly with respect to regions where we have geographical concentrations or with respect to Lloyd’s;

• the effect of the Brexit Referendum and related consequences on (i) Chaucer’s licensing permissions in European Union member states if Lloyd’s does not obtain alternative licensing permissions; (ii) market conditions in the U.K. and the European market; and (iii) foreign exchange volatility;

• volatile and unpredictable developments, including severe weather and other natural physical events, catastrophes and terrorist actions;

• changes in weather patterns, whether as a result of global climate change, or otherwise, causing a higher level of losses from weather events to persist;

• the availability of sufficient information to accurately estimate a loss at a point in time;

• risks and uncertainties with respect to our ability to collect all amounts due from reinsurers and to maintain current levels of reinsurance in the future at commercially reasonable rates, or at all;

• heightened volatility, fluctuations in interest rates (which have a significant impact on the market value of our investment portfolio and thus our book value), inflationary pressures, default rates and other factors that affect investment returns from our investment portfolio;

• fluctuations in currencies which affect the values of financial information converted from an originating currency to our reporting currency;

• risks and uncertainties associated with our participation in shared market mechanisms, mandatory reinsurance programs and mandatory and voluntary pooling arrangements;

• an increase in mandatory assessments by state guaranty funds or by Lloyd’s Central Fund;

• actions by our competitors, many of which are larger or have greater financial resources than we do;

• potential disruptions associated with or during the transition to a new CEO and CFO;

• loss or retirement of key employees;

• operating difficulties and other unintended consequences from acquisitions and integration of acquired businesses, the introduction of new products and related technology changes and new operating models;

• changes in our claims-paying and financial strength ratings;

• negative changes in our level of statutory surplus;

• risks and uncertainties with respect to our growth strategies;

• our ability to declare and pay dividends;

• changes in accounting principles and related financial reporting requirements;

• errors or omissions in connection with the administration of any of our products;

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• risks and uncertainties with technology, data security and/or outsourcing relationships that may negatively impact our ability to conduct business;

• an inability to be compliant with recently implemented regulations such as Solvency II or existing regulation such as those relating to sanctions and Sarbanes-Oxley;

• unfavorable judicial or legislative developments; and

• other factors described in such forward-looking statements.

In addition, historical and future reported financial results include estimates with respect to premiums written and earned, reinsurance recoverables, current accident year “picks”, loss and loss adjustment reserves and development, fair values of certain investments, other assets and liabilities, tax, contingent and other liabilities, and other items. These estimates are subject to change as more information becomes available.

For a more detailed discussion of our risks and uncertainties, see also Item 1A – Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2015.

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ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

Shares purchased in the second quarter of 2016 are as follows:

				Total Number of		Approximate Dollar Value of
				Shares Purchased as		Shares That May Yet
				Part of Publicly		be Purchased Under the
	Total Number of		Average Price	Announced Plans or		Plans or Programs
Period	Shares Purchased		Paid per Share	Programs		(in millions)(1)
April 1 - 30, 2016	9,008	$	85.79	9,008	$	240
May 1 - 31, 2016 (2)	56,336		85.64	17,583		239
June 1 - 30,  2016 (3)	206,601		82.86	203,085		222
Total	271,945	$	83.53	229,676	$	222

(1)Since the announcement of our share repurchase program on October 29, 2007, the Board has authorized us to repurchase up to $900 million in shares of our common stock using open market purchases, privately negotiated transactions, accelerated repurchase programs or other transactions.

(2)Includes 38,753 shares withheld to satisfy tax withholding amounts due from employees related to the receipt of stock which resulted from the exercise or vesting of equity awards.

(3)Includes 3,516 shares withheld to satisfy tax withholding amounts due from employees related to the receipt of stock which resulted from the exercise or vesting of equity awards.

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ITEM 6 – EXHIBITS

EX – 10.1+	Offer Letter dated May 15, 2016 by and between Joseph M. Zubretsky and the Registrant, previously filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on May 16, 2016 and incorporated herein by reference.
EX – 10.2+	Transition Letter dated May 24, 2016 by and between Frederick H. Eppinger and the Registrant, previously filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on May 24, 2016 and incorporated herein by reference.
EX – 10.3+	Form of Non-Qualified Stock Option Agreement under The Hanover Insurance Group 2014 Long-Term Incentive Plan for Chief Executive Officer.
EX – 10.4+	Form of Performance-Based Restricted Stock Unit Agreement under The Hanover Insurance Group 2014 Long-Term Incentive Plan for Chief Executive Officer.
EX – 10.5+	Description of 2016-2017 Non-Employee Director Compensation.
EX – 10.6+	Form of Side Letter Agreement for New Participants in The Hanover Insurance Group Amended and Restated Employment Continuity Plan waiving right to IRC §280G “Gross-Up” Payments.
EX – 31.1	Certification of the Chief Executive Officer, pursuant to 15 U.S.C. 78m, 78o(d), as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002.
EX – 31.2	Certification of the Chief Financial Officer, pursuant to 15 U.S.C. 78m, 78o(d), as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002.
EX – 32.1	Certification of the Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
EX – 32.2	Certification of the Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
EX – 101	The following materials from The Hanover Insurance Group, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 formatted in eXtensible Business Reporting Language (“XBRL”): (i) Consolidated Statements of Income for the three and six months ended June 30, 2016 and 2015; (ii) Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2016 and 2015; (iii) Consolidated Balance Sheets at June 30, 2016 and December 31, 2015; (iv) Consolidated Statements of Shareholders’ Equity for the six months ended June 30, 2016 and 2015; (v) Consolidated Statements of Cash Flows for the six months ended June 30, 2016 and 2015, and (vi) related notes to these financial statements.

+  Management contract or compensatory plan or arrangement.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	The Hanover Insurance Group, Inc.
	Registrant
July 29, 2016	/s/ Joseph M. Zubretsky
Date	Joseph M. Zubretsky
	President, Chief Executive Officer and Director
July 29, 2016	/s/ Eugene M. Bullis
Date	Eugene M. Bullis
	Executive Vice President and Interim Chief Financial Officer

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EX-10.3

Exhibit 10.3

THE HANOVER INSURANCE GROUP, INC.

NON-QUALIFIED STOCK OPTION AGREEMENT

This Non-Qualified Stock Option Agreement (the “Agreement”) is effective as of <GRANT DATE> (the “Grant Date”), by and between The Hanover Insurance Group, Inc., a Delaware corporation (the “Company”), and Joseph M. Zubretsky  (“Participant” or “you”).  Capitalized terms used without definition herein shall have the meanings set forth in The Hanover Insurance Group 2014 Long-Term Incentive Plan (as it may be amended from time to time, the “Plan”).

PREAMBLE

WHEREAS, the Company considers it desirable and in the best interests of the Company that Participant be given an opportunity to acquire a proprietary interest in the Company in the form of options to purchase shares of Stock.

NOW, THEREFORE, for and in consideration of the foregoing and the mutual covenants and promises hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Grant of Option.  The Administrator hereby grants to Participant a non-statutory stock option (the “Stock Option”) to purchase <NUMBER OF OPTIONS> shares of Stock (the “Shares”), for a price of <GRANT PRICE> per share (the “Option Price”), which is not less than the per-Share fair market value on the Grant Date.  The Stock Option is intended to be, and is hereby designated, a non-statutory option that does not qualify as an incentive stock option as defined in Section 422.

2. Expiration of Option.  To the extent not earlier terminated, forfeited or expired, the Stock Option shall automatically terminate and cease being exercisable on the tenth anniversary of the Grant Date (the “Expiration Date”). 

3. Vesting.  Subject to the terms of this Agreement and the Plan, and provided Participant remains continuously an Employee of the Company or one of its Affiliates (the Company and its Affiliates hereinafter referred to as “THG”) through the applicable vesting date, the Stock Option shall vest and become exercisable in the following cumulative installments:

· As to one third  (33.33%) of the total number of Shares, on the first anniversary of the Grant Date;

· As to an additionalone third (33.33%) of the total number of Shares, on the second anniversary of the Grant Date;  and

· As to the remaining Shares, on the third anniversary of the Grant Date. 

On the first two vesting dates set forth above, to the extent the Stock Option would otherwise become exercisable with respect to a fractional Share, such Share shall be rounded down so that the Stock Option is only exercisable with respect to a whole number of Shares.

4. Termination of Employment and Other Events. 

(a)Termination for Cause.  If Participant's Employment is terminated for  “Cause”(as defined inSection 20)  or occurs in circumstances thatwould have constituted grounds for Participant’s Employment to be terminated for Cause, effective immediately prior to such termination, the Stock Option, whether or not vested, shall be automatically cancelled and forfeited and be returned to the Company for no consideration.

(b)Voluntary Termination. If Participant voluntarily terminates his/her Employment (other than for “Good Reason”(as defined in Section 20)), effective immediately prior to such termination, any portion of the Stock Option that is not then vested shall be automatically cancelled and

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forfeited and be returned to the Company for no consideration, and, except in the case of Retirement, such portion of the Stock Option that is then vested shall remain exercisable until the earlier of (i) three (3) months following the date of termination, or (ii) the Expiration Date.

(c)Disability.  Subject to the remainder of this Section 4(c), if Participant is Disabled prior to the date this Stock Option becomes fully vested and exercisable pursuant to Section 3, (i) a prorated portion of this Stock Option shall automatically vest on the date Participant is Disabled, and (ii) the remainingunvested portion of this Stock Option shall be automatically canceled and forfeited and returned to the Company for no consideration. To the extent all or any portion of this Stock Option is outstanding and exercisable on the date Participant is Disabled, the vested portion of the Stock Option shall remain exercisable until the earlier of (x) one (1) year following the date Participant is Disabled, or (y) the Expiration Date. For purposes of this subsection, the pro-ration of the Stock Option that vests on the date Participant is Disabled shall be determined by dividing the number of days since the Grant Date by 1,096 and applying this percentage to the Stock Option.  In the event the Participant hadalready vested in a portion of theStock Option prior to becoming Disabled, the number of Stock Options thatvest upon becoming Disabled shall be determined by calculating the pro-rata number of Stock Options that Participant is otherwise entitled to, determined as set forth above, and deducting from this amount the number of Stock Options that had already vested. Any fractional Stock Option shall be rounded down such that only whole Stock Options are vested.  For purposes of this subsection, Participant shall be “Disabled” if he or she has been unable, for a period of twelve consecutive months, to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment and has been receiving income replacement benefits for a period of twelve consecutive months under the Company’s Long-Term Disability Program.  The date that Participant is Disabled for purposes of this Agreement is the twelve-month anniversary of the date Participant commences receiving such benefits under the Company’s Long-Term Disability Program. 

If Participant ceases to receive benefits under the Company’s Long-Term Disability Program prior to becoming Disabled and immediately returns to active Employment, the Stock Option will continue to vest in accordance with Section 3 of this Agreement.

(d)Death.  If Participant’s Employment is terminated due to his or her death prior to the date this Stock Option becomes fully vested and exercisable pursuant to Section 3, (i) a prorated portion of the Stock Option shall automatically vest on the date Participant dies, and (ii) the remaining unvested portion of the Stock Option shall be automatically canceled and forfeited and returned to the Company for no consideration.To the extent all or any portion of the Stock Option is outstanding and exercisable on the date Participant dies, the vestedportion of the Stock Option shall remain exercisable until the earlier of (x) one (1) year following the date Participant dies, or (y) the Expiration Date.  For purposes of this subsection, the pro-ration of the Stock Option that vests on the date Participant dies shall be determined by dividing the number of days since the Grant Date by 1,096 and applying this percentage to the Stock Option.In the event the Participant hadalready vested in a portion of theStock Option prior to his or her death, the number of Stock Options that shall vest upon deathshall be determined by calculating the pro-rata number of Stock Options that Participant is otherwise entitled to, determined as set forth above, and deducting from this amount the number of Stock Options that had already vested. Any fractional Stock Option shall be rounded down such that only whole Stock Options are vested. 

(e)Covered Transaction/Change in Control. Subject to Section 4(e)(iv), in the event of a Covered Transaction (other than a Change in Control, whether or not it is a Covered Transaction), the Administrator shall, with respect to the Stock Options,take one of the actions set forth in Sections 7(a)(1), 7(a)(2) or 7(a)(3) of the Plan. Notwithstanding the terms of the Plan, but subject to Section 4(e)(iv), in the event of a Change in Control (whether or not it is a Covered Transaction), the following rules shall apply: 

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(i) Except as provided below in Sections 4(e)(ii) or 4(e)(iv), in the event of a Change in Control, to the extent the Stock Options are outstanding immediately prior to the Change in Control, Participant shall automatically vest in 100% of the Stock Options.

(ii) Notwithstanding Section 4(e)(i), no acceleration of vesting shall occur with respect to the Stock Options if the Administrator reasonably determines in good faith prior to the occurrence of a Change in Control that this Award shall be honored or assumed, or new rights substituted therefor (such honored, assumed or substituted award hereinafter called an “Alternative Award”), by Participant's employer (or the parent or a subsidiary of such employer) immediately following the Change in Control, provided that any such Alternative Award must:

(A) be based on stock which is traded, or will be traded upon consummation of the Change in Control, on an established securities market;

(B) provide such Participant (or each Participant in a class of Participants) with rights and entitlements substantially equivalent to or better than the rights, terms and conditions applicable under this Award, including, but not limited to, an identical or better vesting schedule;

(C) have substantially equivalent economic value to this Award (determined at the time of the Change in Control); and

(D) have terms and conditions which provide that in the event that Participant's employment is involuntarily terminated (other than for Cause) or Participant terminates employment for Good Reason prior to the third anniversary of the Grant Date, Participant shall automatically vest in 100% of the Alternative Award and any conditions on a Participant's rights under, or any restrictions on transfer or exercisability applicable to, the vested portion of such Alternative Award shall be waived or shall lapse. 

(iii) Notwithstanding Sections 4(e)(i) and 4(e)(ii) above, in the event of a Change in Control, the Administrator may elect, in its sole discretion at any time prior to the effective date of the Change in Control,to accelerate all of the Stock Options

(iv) Notwithstanding any language contained herein to the contrary, the foregoing provisions contained in this Section 4(e) shall not apply with respect to any Stock Options granted to Participant on or prior to June 20, 2017 (the “First Year Option Awards”).  Accordingly, unless the Administrator affirmatively elects, in writing, to apply the provisions of Section 4(e)(i), (ii) or (iii) to such First Year Option Awards, upon a Change in Control and/or Covered Transaction, any portion of the Stock Option that is not then vested shall be automatically cancelled and forfeited and be returned to the Company for no consideration.

(f)Retirement.  If Participant’s Employment terminates as a result ofhis/her Retirement, effective immediately prior to the effective date of Participant’s Retirement, any portion of the Stock Option that is not then vested shall be automatically cancelled and forfeited and be returned to the Company for no consideration, and such portion of the Stock Option that is then vested shall remain exercisable until the earlier of (i) three  (3) years following the effective date of Participant’s Retirement, or (ii) the Expiration Date.

For the purpose of this Agreement, “Retirement”  shall be deemed to occur if (i) Participant’s Employment voluntarily terminates (other than as a result of the events set forth in this Section 4), and (ii) he or she is 65 years of age or older, as of such termination date.  

(g)Involuntary/Constructive Termination. In the event Participant’s Employment is terminated by the Company (other than as a result of,or in connection with, the events set forth above in this

4

Section 4), or Participant terminates Employment for Good Reason, effective immediately prior to such termination, subject to the last sentence of this Section 4(g), the portion of the Stock Option that would have vested under Section 3 had Participant remained employed during the twelve (12)-month period following the date of such termination of Employment shall automatically vest as of the date of such termination of Employment (such accelerated vesting, the “Vesting Credit”), and after the application of such Vesting Credit, any portion of the Stock Option that is not then vested shall be automatically cancelled and forfeited and be returned to the Company for no consideration, and such portion of the Stock Option that is then vested (including any such additional Stock Options that vest as a result of the Vesting Credit) shall remain exercisable until the earlier of (i) three (3) months following the date of termination, or (ii) the Expiration Date. Any entitlement to the Vesting Credit is expressly conditioned on, and shall only be effective upon, Participant’s execution of the separation agreement required pursuant to Section 6 of that certain Offer Letter dated May 15, 2016, by and between the Company and Participant (the “Offer Letter”).

5. Notice of Exercise and Payment for Shares.  This Stock Option may be exercised by Participant or, if appropriate, Participant’s legal representative, by giving written notice to the Administrator stating the number of Shares to be purchased.  Such notice must be accompanied by payment in full of the Option Price for the Shares to be purchased.

Exercise notices hereunder shall be in such form as is acceptable to the Administrator, including by electronic notice with electronic signature.  If notice is provided by a person other than Participant, this Stock Option will not be deemed to have been exercised until the Administrator has received such evidence as it may require that the person exercising the Stock Option has the right to do so.

For all other notices, such notices must be in writing and, if to the Company, shall be delivered personally to the Human Resources Department or such other party as designated by the Company or mailed to its principal office and, if to the Participant, shall be delivered personally or mailed to the Participant at his or her address on the records of the Company.

Payment may be made in (a) shares of Stock (including through a “net exercise” (as set forth in subsection (b)), (b) by a “net exercise” arrangement pursuant to which the Company will reduce the number of shares of Stock that would otherwise be issued upon exercise of the Stock Option by a number of whole shares having a fair market value equal to the aggregate Option Price of the Stock Option, (c) cash or a combination of shares of Stock and cash for the number of Shares specified, or (d) through a broker-assisted exercise program acceptable to the Administrator. 

To the extent that the Option Price of this Stock Option is less than the fair market value of a share of Stockby $0.50 or more on the date described below (determined by using the closing price of a share of Stock on such date, or if the Stock is not traded on such date, the most recent date on which the Stock was traded), this Stock Option, to the extent then outstanding and vested, will be automatically exercised, without any action required on behalf of Participant, by a “net exercise” as described in clause (b) of the paragraph above, on (x) the Expiration Date, if Participant has remained continuously Employed from the Grant Date through the Expiration Date, or (y) on the last day of the post-termination exercise period of this Stock Option as set forth in Section 4 above, in the case the Employment of Participant was involuntarily terminated by the Company for reasons other than for Cause, was terminated by reason of death,being Disabledor Retirement, or voluntarily terminated by Participant.

6. Delivery of Shares.  Upon receipt of notice and payment as provided hereunder, the Company shall make delivery of such Shares within a reasonable period, but in no event later than 30 days.

7. Non-Hire/Solicitation/Confidentiality/Code of Conduct.  As a condition of Participant’s eligibility to receive this Stock Option and regardless of whether such Stock Option vests or is exercised, Participant agrees that he or she will (a) not, directly or indirectly, during the term of Participant’s Employment, and for a period of one year thereafter, hire, solicit, entice away or in any way interfere with THG’s relationship with, any of its officers or employees, or in any way attempt to do so or

5

participate with, assist or encourage a third party to do so,  (b) neither disclose any of THG’s confidential and proprietary information to any third party, nor use such information for any purpose other than for the benefit of THG and in accordance with THG policy; (c) not, during the term of Participant’s Employment, and for a period of one year thereafter, interfere with or seek to interfere with, THG’s relationships with any of its policyholders, customers, clients, agents or vendors; and (d) at all times comply with (i) THG’s Code of Conduct and other policies and procedures as in effect from time to time, and (ii) any non-competition, non-disclosure, non-solicitation or similar agreement he or she may have with the Company or its Affiliates.  The terms of this Section 7 shall survive the expiration or earlier termination of this Agreement.

8. Specific Performance/Damages.  

(a) Participant hereby acknowledges and agrees that in the event of any breach of Section 7 of this Agreement, the Company would be irreparably harmed and could not be made whole by monetary damages.  Participant accordingly agrees to waive the defense in any action for injunctive relief or specific performance that a remedy at law would be adequate and that the Company, in addition to any other remedy to which it may be entitled at law or in equity, shall be entitled to an injunction or to compel specific performance of Section 7.

(b) In addition to any other remedy to which the Company may be entitled at law or in equity (including the remedy provided in the preceding paragraph), Participant hereby acknowledges and agrees that in the event of any breach of Section 7 of this Agreement, Participant shall be required to refund to the Company the value received by Participant upon exercise of the Stock Options measured by the amount that the "Stock Value" exceeds the Option Price; provided, however, that the Company makes any such claim, in writing, against Participant alleging a violation of Section 7 not later than two years following Participant’s termination of Employment.  The Stock Value shall be the sale price of the Shares issued upon exercise of the Stock Option, if and to the extent such Shares were sold on the date of such exercise; otherwise, the Stock Value shall be the closing price of Shares as reported on the New York Stock Exchange (or such other exchange or facility as is determined by the Administrator if the Shares are not then traded on the New York Stock Exchange) on the date of the exercise of the Stock Option.

9. Successors.  The provisions of this Agreement will benefit and will be binding upon the permitted assigns, successors in interest, personal representatives, estates, heirs and legatees of each of the parties hereto. However, the Stock Option is non-assignable, except as may be permitted by the Plan.

10. Interpretation.  The terms of the Stock Option are as set forth in this Agreement and in the Plan. The Plan is

incorporated into this Agreement by reference, which means that this Agreement is limited by and subject to the express terms and provisions of the Plan. In the event of a conflict between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control.

11. Facsimile or Electronic Signature.  The parties may execute this Agreement by means of a facsimile or electronic signature.

12. Entire Agreement; Counterparts.  This Agreement, the Plan and the Offer Letter contain the entire understanding between the parties concerning the subject contained in this Agreement.  Except for the Agreement, the Plan and the Offer Letter, there are no representations, agreements, arrangements, or understandings, oral or written, between or among the parties hereto, relating to the subject matter of this Agreement, that are not fully expressed herein.  This Agreement may be signed in one or more counterparts, all of which shall be considered one and the same agreement.

13. Further Assurances.  Each party to this Agreement agrees to perform all further acts and to execute and deliver all further documents as may be reasonably necessary to carry out the intent of this Agreement.

14. Severability.  In the event that any of the provisions, or portions thereof, of this Agreement are held to be unenforceable or invalid by any court of competent jurisdiction, the validity and enforceability of the

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remaining provisions, or portions thereof, will not be affected, and such unenforceable provisions shall be automatically replaced by a provision as similar in terms as may be valid and enforceable.

15. Construction.  Whenever used in this Agreement, the singular number will include the plural, and the plural number will include the singular, and the masculine or neuter gender shall include the masculine, feminine, or neuter gender.  The headings of the Sections of this Agreement have been inserted for purposes of convenience and shall not be used for interpretive purposes.  The Administrator shall have full discretion to interpret and administer this Agreement.  Any actions or decisions by the Administrator in connection with this Agreement shall be conclusive and binding upon Participant.

16. No Effect on Employment.  Nothing contained in this Agreement shall be construed to limit or restrict the right of THG to terminate Participant’s Employment at any time, with or without cause, or to increase or decrease Participant’s compensation from the rate of compensation in existence at the time thisAgreement is executed.

17. Taxes.  The exercise of this Stock Option will give rise to “wages” subject to withholding.  Participant expressly acknowledges and agrees that Participant’s rights hereunder, including the right to be issued Shares upon exercise, are subject to Participant promptly remitting to the Company in cash (or by such other means as may be acceptable to the Administrator in its discretion) any amounts determined by the Company to be required to be withheld. No Shares will be transferred pursuant to the exercise of this Stock Option unless and until the person exercising this Stock Option has remitted to the Company an amount sufficient to satisfy any federal, state, or local withholding tax requirements, or has made other arrangements satisfactory to the Company with respect to such taxes.  Participant authorizes the Company to withhold such amount from any amounts otherwise owed to Participant. The Company may, at its option,withhold a sufficient number of Shares to satisfy the minimum federal, state and local tax withholding due (or such greater amount as would not result in adverse accounting consequences to the Company, as determined by, and in the sole discretion of, the Company) and remit the balance of the Shares to Participant.  If this Stock Option is automatically exercised as provided in the last paragraph of Section 5 aboveor if Participant pays the Option Price through a “net exercise” of this Stock Option as provided by Section 5 above, the minimum federal, state and local tax withholding due in connection with the exercise of this Stock Option shall be satisfied by the Company withholding a sufficient number of Shares to satisfy with minimum federal, state and local tax withholding due(or such greater amount as would not result in adverse accounting consequences to the Company, as determined by, and in the sole discretion of, the Company).The Company makes no representations to Participant with respect to the tax treatment of any amount paid or payable pursuant to this Award.

18. Waiver of Jury Trial.By accepting this Award under the Plan, Participant waives any right to a trial by jury in any action, proceeding or counterclaim concerning any rights under (a) the Plan, (b) any Award, or (c) any amendment, waiver, consent, instrument, document or other agreement delivered or which in the future may be delivered in connection with any of the foregoing, and agrees that any such action, proceedings or counterclaim shall be tried before a court and not before a jury.

19. Additional Restrictions.  The Administrator may cancel, rescind, withhold or otherwise limit or restrict the Stock Options (in whole or in part) at any time if Participant is not in compliance with all applicable provisions of this Agreement and the Plan, or if Participant breaches any agreement with THG, including with respect to the Code of Conduct or other policies of THG, or any non-competition, non-solicitation, confidentiality or other similar provisions.  Without limiting the generality of the foregoing, the Administrator may recover the Stock Options and payments under or gain in respect thereto to the extent required to comply with Section 10D of the Securities Exchange Act of 1934, as amended, or any stock exchange or similar rule adopted under said Section.  In addition, rights, payments and benefits under this Award shall be subject to repayment to, or recoupment by, THG in accordance with any clawback or recoupment policies and procedures that THG may adopt from time to time.

20. Definitions.  As used herein, the terms “Cause” and “Good Reason” shall have the meanings set forth in the Offer Letter.

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21. Notice and Opportunity to Cure. 

(a) Good Reason Event.  In the event Participant believes a Good Reason event has been triggered, Participant must give the Board written notice of the purported Good Reason event within ten (10) business days of the first occurrence of such triggering event.  The Company shall have the right to cure such purported Good Reason eventwithin thirty (30) days of receipt of said notice.  To the extent that the Company does not cure such event within this thirty (30) day period, Participant shall be required to terminate his  Employment within thirty (30) days thereafter in order to have his termination of Employment treated as a Good Reason termination hereunder. 

(b) Termination for Cause.  In the event that the Company believes that it has the right to terminate Participant’s Employment for Cause, the Company must give Participant written notice of the purported Cause. The Company shall provide Participant with notice of such purported Cause within ten (10) business days after the Board has become aware that Cause has been triggered (except that failure to provide notice timely shall be without prejudice to the Company’s right to terminate Participant with Cause unless such delay materially impaired Participant’s ability to cure such matter within the time-period hereinafter provided). If such matter is susceptible to cure, then Participant shall have the right to do so within thirty (30) days of receipt of said notice. To the extent that suchmatter is not susceptible to cure, or Participant does not cure such event within this thirty (30) day period,the Company shall be required to terminate Participant’s Employment within thirty (30) days thereafter inorder for Participant’s termination of Employment treated as a Cause termination.

IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of the Grant Date.

THE HANOVER INSURANCE GROUP, INC.

By:

Name: Christine Bilotti-Peterson

Title: Senior Vice President & CHRO

Joseph M. Zubretsky

EX-10.4

Exhibit 10.4

THE HANOVER INSURANCE GROUP, INC.

PERFORMANCE-BASED RESTRICTED STOCK UNIT AGREEMENT

This Performance-Based Restricted Stock Unit Agreement (the “Agreement”) is effective as of <GRANT DATE> (the “Grant Date”) by and between The Hanover Insurance Group, Inc., a Delaware corporation (the “Company”), andJoseph M. Zubretsky(“Participant” or “you”). Capitalized terms used without definition herein shall have the meanings set forth in The Hanover Insurance Group 2014Long-Term Incentive Plan (as it may be amended from time to time, the “Plan”).

P R E A M B L E

WHEREAS, pursuant to the terms of the Plan and this Agreement, the Administrator has agreed to grant to Participant atarget numberof performance-based Restricted Stock Units (the “PBRSUs”); and

WHEREAS, the PBRSUswill be subject to certain restrictions, the attainment of certain performance criteria and other terms and conditions as set forth in this Agreement.

NOW, THEREFORE, for and in consideration of the foregoing and the mutual covenants and promises hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. PBRSUs.  The Administrator hereby grants to Participant <NUMBER OF PBRSUs> PBRSUs, each PBRSU representing the right to receive one share of Stock upon and subject to the restrictions, terms and conditions set forth below. The Stock issued upon vesting of the PBRSUs, if any, shall be referred to hereinafter as the “Shares”. The actual number of PBRSUs granted herein, if any, shall be subject to adjustment as set forth on Schedule A.

2. Vesting; Settlement.  The PBRSUsshall vest as set forth below.

The PBRSUswill vest on the third anniversary of the Grant Date  (the “Vesting Date”); provided:

i)The Companyachieves the corporate goals set forth on Schedule A (the “Corporate Goals”) by the date set forth on Schedule A (the “Goal Completion Date”).  The actual number of PBRSUs that shall be earned and that shall vest, if any,shall be determined in accordance with the terms set forth on  Schedule A; and

ii)           Participant is continuously an Employee of the Company or any of its  Affiliates(the Company and its  Affiliates hereinafter referred to as “THG”)throughout the period from the Grant Date to theVesting Date. 

The determination of (i) whether and to the extent the Corporate Goals set forth on Schedule A have been achieved, and (ii) any adjustment to the actual number of PBRSUsthat are earned and vested, shall be in the sole and absolute discretion of the Administrator.  All decisions by the Administrator shall be final and binding upon Participant.  To the extent the PBRSUs are intended to qualify for the performance-based compensation exception under Section 162(m), the Agreement shall be construed and administered in accordance with Section 162(m). 

As soon as reasonably practicable following the date the PBRSUs are earned and vest hereunder,  but in no event later than 60days following such vesting (and in no event later than March 15th of the year following the year in which such vesting date occurs), the Company shall issue the Shares to Participant.Any fractional share shall be rounded down such that only whole shares are issued.  In the event the Vesting Date falls on a non-business day (weekend or holiday on which banks are not generally open in the Commonwealth of Massachusetts), theVesting Date shall be the next following business day.

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3. Termination of Employment.  Except as provided in Sections 4 through  8, upon the termination of Participant's Employment prior to the Vesting Date for whatever reason,  any non-vestedPBRSUs shall be automatically cancelled and forfeited and be returned to the Company for no consideration.

4. Disability.  In the event Participant is Disabled prior to the Vesting Date,Participant shall immediately vest in a pro-rata portion of the PBRSUs as determined below and the remaining unvested PBRSUs shall be automatically forfeited and returned to the Company for no consideration.  For purposes of this subsection, the pro-rata portion of the PBRSUs  that will vest shall be determined by dividing the number of days since the Grant Datethrough the date Participant is Disabled by 1,096 and applying this percentage to the number of PBRSUs earned, if any, as determined in accordance with Schedule A.  Any fractional Shares shall be rounded down such that only whole Shares are issued.  For purposes of this subsection, Participant shall be “Disabled” if he or she has been unable, for a period of twelve consecutive months, to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment and has been receiving income replacement benefits for a period of twelve consecutive months under the Company’s Long-Term Disability Program.  The date that Participant is Disabled for purposes of this Agreement is the twelve-month anniversary of the date Participant commences receiving such benefits under the Company’s Long-Term Disability Program.

If Participant ceases to receive benefits under the Company’s Long-Term Disability Program prior to becoming Disabled and immediately returns to active Employment, the PBRSUs will continue to vest in accordance with Section 2 of this Agreement.

5. Death.  In the event Participant’s Employment terminates due to his or her death prior to the Vesting Date,Participant shall immediately vest in a pro-rata portion of the PBRSUs and the remaining unvested PBRSUs shall be automatically forfeited and returned to the Company for no consideration. For purposes of this subsection, the pro-rata portion of thePBRSUs  that will vestshall be determined by dividing the number of days that Participant was an Employeesince the Grant Datethrough the date of his or her death by 1,096and applying this percentage to the number of PBRSUsearned, if any, as determined in accordance with Schedule A. Any fractional Shares shall be rounded down such that only whole Shares are issued.

6. Covered Transaction/Change in Control.  Subject to Section 6(e), in the event of a Covered Transaction (other than a Change in Control, whether or not it is a Covered Transaction), the Administrator shall, with respect to the PBRSUs, to the extent then outstanding, take one of the actions set forth in Sections 7(a)(1), 7(a)(2) or 7(a)(3) of the Plan.  Notwithstanding the terms of the Plan, but subject to Section 6(e), in the event of a Change in Control (whether or not it is a Covered Transaction), the following rules shall apply: 

(a)  Except as provided below in Sections 6(c) or 6(e), upon consummation of a Change in Control, to the extent the PBRSUs are outstanding immediately prior to the Change in Control,Participant shall automatically vest in such number of PBRSUs as determined in Section 6(b).

(b)The number of PBRSUs that shall vestpursuant to Section 6(a), if any,shall be determined in accordance with the level of achievement of the Corporate Goals as set forth onSchedule A.

(c)Notwithstanding Section 6(a), no acceleration of vesting shall occur with respect to the PBRSUs if the Administrator reasonably determines in good faith prior to the occurrence of a Change in Control that this Award of PBRSUs shall be honored or assumed, or new rights substituted therefor (such honored, assumed or substituted award hereinafter called an “Alternative Award”), by Participant's employer (or the parent or a subsidiary of such employer) immediately following the Change in Control, provided that the Alternative

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Award shall be a time-based restricted stock unit awardthat is no longer subject to any performance-based vesting requirement, and shallalso:

(i) be based on stock which is traded, or will be traded upon consummation of the Change in Control, on an established securities market;

(ii) provide such Participant (or each Participant in a class of Participants) with rights and entitlements substantially equivalent to or better than the rights, terms and conditions applicable under this Award, including, but not limited to, an identical or better time-based vesting schedule;

(iii) have substantially equivalent economic value to this Award (determined at the time of the Change in Control and based upon the number of Shares Participant would have received had the Award been accelerated pursuant to Section 6(a) above); and

(iv) have terms and conditions which provide that in the event that Participant's employment is involuntarily terminated (other than for Cause) or Participantterminates employment for “Good Reason”(as defined in Section 25)prior to the Vesting Date, Participant shall automatically vest in 100% of the Alternative Award and any conditions on a Participant's rights under, or any restrictions on transfer or exercisability applicable to, the vested portion of such Alternative Award shall be waived or shall lapse. 

(d)  Notwithstanding Sections 6(a) and 6(c) above,in the event of a Change in Control, the Administrator may elect, in its sole discretion, exercised prior to the effective date of the Change in Control,to accelerate all of the PBRSUs,  to the extent then outstanding.

(e)Notwithstanding any language contained herein to the contrary, the foregoing provisions contained in this Section 6 shall not apply with respect to any Awards of PBRSUs granted to Participant on or prior to June 20, 2017 (the “First Year PBRSU Awards”).  Accordingly, unless the Administrator affirmatively elects, in writing, to apply the foregoing provisions of Section 6 to such First Year PBRSU Awards, upon a Change in Control and/or Covered Transaction, any portion of the PBRSUs that are not then vested shall be automatically cancelled and forfeited and be returned to the Company for no consideration

(f)  Upon vesting under Section 6 any remaining unvested PBRSUs shall be automatically cancelled and forfeited and returned to the Company for no consideration.

7. Retirement.  If Participant’s Employment terminates as a result of his/her Retirementprior to the Vesting Date, Participant shall be eligible to vest in a pro-rata portion of the PBRSUs, which shall remain outstanding and be eligible to be earned in accordance with Schedule A, as provided below and, upon such termination, the remaining unvested PBRSUs shall be automatically forfeited and returned to the Company for no consideration. For purposes of this subsection, the pro-rata portion of the PBRSUs that will be eligible to vest shall be determined by dividing the number of days that Participant was an Employee since the Grant Date through the date of his or her Retirement by 1,096 and applying this percentage to the number of PBRSUs earned, if any, as determined in accordance with Schedule A. Any fractional Shares shall be rounded down such that only whole Shares are issued.  If Participant’s Employment is terminated under the circumstances provided for in this Section 7 following the end of the Performance Period, with respect to any PBRSUs earned in accordance with Schedule A, the Company will issue the Shares to the Participant not later than March 15 of the year immediately following the end of the Performance Period.

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For the purpose of this Agreement, “Retirement” shall be deemed to occur if (i) Participant’s Employment voluntarily terminates (other than for Cause or as a result of the events set forth Sections 4,5,6 or  8), and (ii) he or she is 65 years of age or older, as of such termination date.

8. Involuntary/Construction Termination.  In the event Participant’s Employment is terminated (other than for Cause or as a result of or in connection with the events set forth in Sections 4, 5,  6 or 7), or Participant terminates Employment for Good Reason, effective immediately prior to such termination,Participant will be given one additional year’s vesting credit for purposes of the time-based vesting requirement under Section 2(ii) (the “Vesting Credit”).  If, after application of the Vesting Credit, Participant shall be deemed to have satisfiedthe vesting requirement set forth in Section 2(ii), the PBRSUs shall remain outstanding and shall be earned, if at all, as determined in accordance with Schedule A.  Any fractional Shares shall be rounded down such that only whole Shares are issued.To the extent, after application of the Vesting Credit, Participant is not deemed to have satisfied the vesting requirement set forth in Section 2(ii), upon such termination the PBRSUs shall be automatically cancelled and forfeited and be returned to the Company for no consideration.  Any payment under this Section 8 is expressly conditioned on, and shall only be effective upon, Participant’s execution of the separation agreement required pursuant to Section 6 of that certain Offer Letter dated May 15, 2016, by and between the Company and Participant (the “Offer Letter”).  If Participant’s Employment is terminated under the circumstances provided for in this Section 8 following the end of the Performance Period, with respect to any PBRSUs earned in accordance with Schedule A, the Company shall issue the Shares to Participant not later than March 15 of the year immediately following the end of the Performance Period.

9. Termination of Agreement.  Except as otherwise expressly set forth herein, if the Corporate Goals are not satisfied in accordance with the terms set forth on Schedule  A by the Goal Completion Date, this Agreement shall automatically terminate and Participant shall be deemed to have forfeited all rights to the PBRSUs.

10. Notices.  Notices hereunder shall be in writing and, if to the Company, shall be delivered personally to the Human Resources Department or such other party as designated by the Company or mailed to its principal office and, if to Participant, shall be delivered personally or mailed to Participant at his or her address on the records of the Company.

11. Dividend and Voting Rights.  Participant will not be entitled to any dividends (or dividend equivalency rights) upon the PBRSUs or have any voting rights until and to the extent the PBRSUs vest and Shares are delivered in settlement of the PBRSUs. 

12. Non-Hire/Solicitation/Confidentiality/Code of Conduct.  As a condition of Participant’s eligibility to receive these PBRSUs and regardless of whether such PBRSUs vest, Participant agrees that he or she will (a)  not, directly or indirectly, during the term of his or herEmployment, and for a period of one year thereafter, hire,  solicit, entice away or in any way interfere with THG’s relationship with, any of its officers or employees, or in any way attempt to do so or participate with, assist or encourage a third party to do so; (b) neither disclose any of THG’s confidential and proprietary information to any third party, nor use such information for any purpose other than for the benefit of THG and in accordance with THG policy;  (c) not, during the term of Participant’s Employment, and for a period of oneyear thereafter, interfere with or seek to interfere with, THG’s relationships with any of itspolicyholders, customers, clients, agents or vendors; and (d) at all times comply with (i)THG’s Code of Conduct and other policies and procedures as in effect from time to time,and (ii) any non-competition, non-disclosure, non-solicitation or similar agreement he or she may have with the Company or its Affiliates.  The terms of this Section 12 shall survive the expiration or earlier termination of this Agreement.

13. Damages/Specific Performance. 

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(a)          Participant hereby acknowledges and agrees that in the event of any breach of Section 12 of this Agreement, the Company would be irreparably harmed and could not be made whole by monetary damages.  Participant accordingly agrees to waive the defense in any action for injunctive relief or specific performance that a remedy at law would be adequate and that the Company, in addition to any other remedy to which it may be entitled at law or in equity, shall be entitled to an injunction or to compel specific performance of Section 12.

(b)          In addition to any other remedy to which the Company may be entitled at law or in equity (including the remedy provided in the preceding paragraph), Participant hereby acknowledges and agrees that in the event of any breach of Section 12 of this Agreement, Participant shall be required to refund to the Company the value received by Participant upon vesting of the PBRSUs; provided, however, that the Company makes any such claim, in writing, against Participant alleging a violation of Section 12 not later than two years following Participant’s termination of Employment.

14. Successors.  The provisions of this Agreement will benefit and will be binding upon the permitted assigns, successors in interest, personal representatives, estates, heirs and legatees of each of the parties hereto. However, the PBRSUs are non-assignable, except as may be permitted by the Plan.

15. Interpretation.The terms of the PBRSUs are as set forth in this Agreement and in the Plan. The Plan is incorporated into this Agreement by reference, which means that this Agreement is limited by and subject to the express terms and provisions of the Plan. In the event of a conflict between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control.

16. Facsimile and Electronic Signature.  The parties may execute this Agreement by means of a facsimile or electronic signature.

17. Entire Agreement; Counterparts.  This Agreement, the Plan and the Offer Lettercontain the entire understanding between the parties concerning the subject contained in this Agreement.  Except for the Agreement, the Plan and the Offer Letter there are no representations, agreements, arrangements, or understandings, oral or written, between or among the parties hereto, relating to the subject matter of this Agreement, that are not fully expressed herein.  This Agreement may be signed in one or more counterparts, all of which shall be considered one and the same agreement.

18. Further Assurances.  Each party to this Agreement agrees to perform all further acts and to execute and deliver all further documents as may be reasonably necessary to carry out the intent of this Agreement.

19. Severability.  In the event that any of the provisions, or portions thereof, of this Agreement are held to be unenforceable or invalid by any court of competent jurisdiction, the validity and enforceability of the remaining provisions, or portions thereof, will not be affected, and such unenforceable provisions shall be automatically replaced by a provision as similar in terms as may be valid and enforceable.

20. Construction.  Whenever used in this Agreement, the singular number will include the plural, and the plural number will include the singular, and the masculine or neuter gender shall include the masculine, feminine, or neuter gender.  The headings of the Sections of this Agreement have been inserted for purposes of convenience and shall not be used for interpretive purposes.  The Administrator shall have full discretion to interpret and administer this Agreement.  Any actions ordecisions by the Administrator in connection with this Agreement shall be conclusive and binding upon Participant.

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21. No Effect on Employment.  Nothing contained in this Agreement shall be construed to limit or restrict the right of THG to terminate Participant’s Employment at any time, with or without cause, or to increase or decrease Participant’s compensation from the rate of compensation in existence at the time this Agreement is executed.

22. Taxes.  The vesting and settlement of the PBRSUs will give rise to “wages” subject to withholding.  Participant expressly acknowledges and agrees that Participant’s rights hereunder, including the right to be issued Shares in settlement of the PBRSUs, are subject to Participant promptly  remitting to the Company in cash (or by such other means as may be acceptable to the Administrator in its discretion) any amounts determined by the Company to be required to be withheld.  No Shares will be transferred pursuant to the settlement of the PBRSUs unless and until Participant has remitted to the Company an amount sufficient to satisfy any federal, state, or local withholding tax requirements, or has made other arrangements satisfactory to the Company with respect to such taxes.  Participant authorizes the Company to withhold such amount from any amounts otherwise owed to Participant. The Company may, at its option, withhold from the PBRSUs, or the Shares which such PBRSUs represent, a sufficient number of PBRSUs/Shares to satisfy the minimum federal, state and local tax withholding due (or such greater amount which would not result in adverse accounting consequences to the Company, as determined by, and in the sole discretion of, the Company, it being understood that any Shares withheld in excess of the statutory minimum amount shall not again be available for issuance under the Plan, to the extent required to satisfy applicable stock exchange listing standards), if any, and remit the balance of the PBRSUs/Shares to Participant.The Company makes no representations to Participant with respect to the tax treatment of any amount paid or payable pursuant to this Award.

23. Waiver of Jury Trial.  By accepting this Award under the Plan, Participant waives any right to a trial by jury in any action, proceeding or counterclaim concerning any rights under (a) the Plan, (b) any Award, or (c) any amendment, waiver, consent, instrument, document or other agreement delivered or which in the future may be delivered in connection with any of the foregoing, and agrees that any such action, proceedings or counterclaim shall be tried before a court and not before a jury.

24. Additional Restrictions.  The Administrator may cancel, rescind, withhold or otherwise limit or restrict this Award (in whole or in part) at any time if Participant is not in compliance with all applicable provisions of this Agreement and the Plan, or if Participant breaches any agreement with THG, including with respect to the Code of Conduct or other policies of THG, or any non-competition, non-solicitation, confidentiality or other similar provisions.  Without limiting the generality of the foregoing, the Administrator may recover the PBRSUs and payments under or gain in respect thereto to the extent required to comply with Section 10D of the Securities Exchange Act of 1934, as amended, or any stock exchange or similar rule adopted under said Section.  In addition, rights, payments and benefits under this Award shall be subject to repayment to, or recoupment by, THG in accordance with any clawback or recoupment policies and procedures that THG may adopt from time to time.

25. Definitions.  As used herein, the terms “Cause” and “Good Reason” shall have the meanings set forth in the Offer Letter.

26. Notice and Opportunity to Cure. 

(a) Good Reason Event.In the event Participant believes a Good Reason event has been triggered, Participant must give the Board written notice of the purported Good Reason event within ten (10) business days of the first occurrence of such triggering event.  The Company shall have the right to cure such purported Good Reason event within thirty (30) days of receipt of said notice.  To the extent that the Company does not cure such event within this thirty (30) day period, Participant shall be required to terminate his  Employment within thirty (30) days thereafter in order to have his termination of

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Employment treated as a Good Reason termination hereunder. 

(b) Termination for Cause.  In the event that the Company believes that it has the right to terminate Participant’s Employment for Cause, the Company must give Participant written notice of the purported Cause. The Company shall provide Participant with notice of such purported Cause within ten (10) business days after the Board has become aware that Cause has been triggered (except that failure to provide notice timely shall be without prejudice to the Company’s right to terminate Participant with Cause unless such delay materially impaired Participant’s ability to cure such matter within the time-period hereinafter provided). If such matter is susceptible to cure, then Participant shall have the right to do so within thirty (30) days of receipt of said notice. To the extent that such matter is not susceptible to cure, or Participant does not cure such event within this thirty (30) day period, the Company shall be required to terminate Participant’s Employment within thirty (30) days thereafter in order for Participant’s termination of Employment treated as a Cause termination.

IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of the Grant Date.

THE HANOVER INSURANCE GROUP, INC.

By:

Name: Christine Bilotti-Peterson

Title: Senior Vice President & Chief Human Resources Officer

Joseph M. Zubretsky

EX-10.5

Exhibit 10.5

The Hanover Insurance Group, Inc.

2016-2017 Compensation of Non-Employee Directors

— For the annual service period beginning on May 24, 2016, the date of the 2016 Annual Meeting of Shareholders—

Standard Fees	Description
Annual Director Retainer
- Stock Component	-$125,000 valuation
	-Granted on May 24, 2016. Issued pursuant to Company’s 2014 Long-Term Incentive Plan (the “2014 Plan”)
- Cash Component	-$85,000
	-Payable on or after May 24, 2016
Committee Chairperson Annual Retainer (payable in addition to Committee Annual Retainer)	-$10,000 for the chairperson of the Nominating and Corporate Governance Committee, payable on or after May 24, 2016
	-$14,000 for the chairperson of the Compensation Committee, payable on or after May 24, 2016
	-$24,000 for the chairperson of the Audit Committee, payable on or after May 24, 2016
Chairman of the Board Retainer	-$125,000 -Payable on or after May 24, 2016
Committee Annual Retainer	-$5,000 for each member of the Nominating and Corporate Governance Committee, payable on or after May 24, 2016
	-$7,000 for each member of the Compensation Committee, payable on or after May 24, 2016
	-$12,000 for each member of the Audit Committee, payable on or after May 24, 2016
Other
Special Chief Executive Officer Search Committee Fee	-$10,000 for each Committee Member, payable on or after May 24, 2016 -$20,000 for the Committee Chair, payable on or after May 24, 2016

Deferred Compensation Plan	-Directors may defer receipt of their cash and stock compensation (including any cash compensation that is converted to into stock under the Conversion Program). Deferred cash amounts are accrued in a memorandum account that is credited with interest derived from the so-called General Agreement on Tariffs and Trade (GATT) Rate (3.03% in 2016). All deferrals are pursuant to The Hanover Insurance Group, Inc. Non-Employee Director Deferral Plan.
Conversion Program	-At the election of each director, cash retainers may be converted into Common Stock of the Company with such stock issued pursuant to the 2014 Plan
Reimbursable Expenses	-Travel and related expenses incurred in connection with service on the Board of Directors and its Committees.  The Company also reimburses Mr. Angelini’s employer, Bowditch & Dewey, for estimated expenses for administrative support related to his duties as Chairman of the Board.
Matching Charitable Contributions	-Company will provide matching contributions to qualified charitable organizations up to $5,000 per director per year

EX-10.6

Exhibit 10.6

_________________, 20XX

XX

Re:The Hanover Insurance Group, Inc. Amended and Restated Employment Continuity Plan (the “Plan”)

Dear XX:

Subject to your acceptance of the terms contained in this letter, the Compensation Committee has designated you a XX Tier Participant in the Plan with an XX Multiplier.  Except as set forth below, your participation in the Plan shall be governed by the terms and conditions of the Plan, as the same may be amended from time to time by the Board or the Compensation Committee.

You hereby acknowledge and agree that Sections 6.2, 6.3 and 6.4 of the Plan shall not apply with respect to your participation in the Plan and that the following language shall be substituted in lieu thereof:

6.2Best Net Payment Adjustment. Payments under this Plan shall be made without regard to whether the deductibility of such payments (or any other payments or benefits to or for the benefit of Participant) would be limited or precluded by Section 280G of the Code (“Section 280G”) and without regard to whether such payments (or any other payments or benefits) would subject Participant to the federal excise tax levied on certain “excess parachute payments” under Section 4999 of the Code (the “Excise Tax”); provided, that if the total of all payments to or for the benefit of Participant, after reduction for all federal taxes (including the Excise Tax) with respect to such payments (“Participant’s total after-tax payments”), would be increased by the limitation or elimination of any payment under this Plan, amounts payable under this Plan shall be reduced to the extent, and only to the extent, necessary to maximize Participant’s total after-tax payments.  Any reduction in payments required by the preceding sentence shall be applied, first, against any benefits payable under Section 5.4 of the Plan,  starting with those coverages, if any, that constitute “non-qualified deferred compensation” subject to Section 409A of the Code, and only if additional reductions are necessary, against the lump sum benefit described in Section 5.3. The determination as to whether Participant’s payments and benefits include “excess parachute payments” and, if so, the amount and ordering of any reductions in payment required by the provisions of this Section shall be made at the Company’s expense by the Company’s independent registered public accounting firm immediately prior to a Change in Control, or by such other certified public accounting firm as the Committee may designate prior to a Change of Control (the “accounting firm”).  In the event of any underpayment or overpayment hereunder, as determined by the accounting firm, the amount of such underpayment or overpayment shall forthwith and in all events within thirty (30) days of such determination,be paid to Participant or refunded to the Company, as the case may be, with interest at the applicable Federal rate provided for in Section 7872(f)(2) of the Code.

6.3 Reserved

6.4Claim by Internal Revenue Service:  As soon as practicable, a Participant shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would result in the imposition of the Excise Tax.   If the Company notifies the Participant in writing that it desires to contest such claim, the Participant shall cooperate in all reasonable ways with the Company in such contest and the Company shall be entitled to participate in all proceedings relating to such claim; provided,  however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Participant harmless, on an after-tax basis, for any excise tax or income tax (including interest and penalties with respect thereto) imposed as a result of such payment of costs and expenses.  Without limitation on the foregoing, the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in

respect of such claim.  Participant agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided,  however, that if the Participant is required to extend the statute of limitations to enable the Company to contest such claim, the Participant may limit this extension solely to such contested amount.  The Company's control of the contest shall be limited to issues with respect to the imposition of the Excise Tax and the Participant shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

Please indicate your agreement to be bound by the terms hereof by executing this letter in the space indicated below and returning a fully executed copy to my attention.  Your consent and acknowledgment are a condition to your participation in the Plan.

The Hanover Insurance Group, Inc.

By:___________________________

[XX]

Consented to and acknowledged:

___________________________

[XX]

EX-31.1

Exhibit 31.1

CERTIFICATION AS ADOPTED PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Joseph M. Zubretsky, certify that:

1.I have reviewed this quarterly report on Form 10-Q of The Hanover Insurance Group, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 29, 2016

/s/ Joseph M. Zubretsky

Joseph M. Zubretsky

President, Chief Executive Officer and Director

EX-31.2

Exhibit 31.2

CERTIFICATION AS ADOPTED PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Eugene M. Bullis, certify that:

1.I have reviewed this quarterly report on Form 10-Q of The Hanover Insurance Group, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 29, 2016

/s/ Eugene M. Bullis

Eugene M. Bullis

Executive Vice President and

Interim Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, as President, Chief Executive Officer and Director of The Hanover Insurance Group, Inc. (the “Company”), does hereby certify that to the undersigned’s knowledge:

1)the Company’s Quarterly Report on Form 10-Q for the period ended June  30, 2016 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2)the information contained in the Company’s Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Joseph M. Zubretsky

Joseph M. Zubretsky

President, Chief Executive Officer and Director

Dated: July 29, 2016

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, as Executive Vice President and Interim Chief Financial Officer of The Hanover Insurance Group, Inc. (the “Company”), does hereby certify that to the undersigned’s knowledge:

1)the Company’s Quarterly Report on Form 10-Q for the period ended June  30, 2016 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2)the information contained in the Company’s Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Eugene M. Bullis

Eugene M. Bullis

Executive Vice President and

Interim Chief Financial Officer

Dated: July 29, 2016

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Jul. 27, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2
Entity Registrant Name	HANOVER INSURANCE GROUP, INC.
Entity Central Index Key	0000944695
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		42,743,708

XML

Consolidated Statements of Income - USD ($) shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Revenues
Premiums	$ 1,145.5	$ 1,205.8	$ 2,296.8	$ 2,416.8
Net investment income	69.1	70.7	137.4	140.8
Net realized investment gains (losses):
Net realized gains from sales and other	4.3	14.5	26.7	26.6
Net other-than-temporary impairment losses on investments recognized in earnings	(5.0)	(1.9)	(25.9)	(4.6)
Total net realized investment (losses) gains	(0.7)	12.6	0.8	22.0
Fees and other income	8.1	8.0	14.6	16.2
Total revenues	1,222.0	1,297.1	2,449.6	2,595.8
Losses and expenses
Losses and loss adjustment expenses	729.7	744.9	1,429.3	1,518.0
Amortization of deferred acquisition costs	254.4	262.0	513.5	522.6
Interest expense	15.6	15.0	30.3	31.1
Gain on disposal of U.K. motor business	(0.4)	(37.7)	(1.2)	(37.7)
Net loss from repayment of debt	86.1	1.8	86.1	18.5
Other operating expenses	143.7	158.5	290.6	313.7
Total losses and expenses	1,229.1	1,144.5	2,348.6	2,366.2
Income (loss) before income taxes	(7.1)	152.6	101.0	229.6
Income tax expense (benefit):
Current	6.5	5.7	39.9	34.9
Deferred	(15.5)	26.0	(18.9)	18.9
Total income tax (benefit) expense	(9.0)	31.7	21.0	53.8
Income from continuing operations	1.9	120.9	80.0	175.8
Net gain (loss) from discontinued operations (net of tax benefit of $1.7 and $0.1 for the three months ended June 30, 2016 and June 30, 2015 and $2.2 and $0.2 for the six months ended June 30, 2016 and June 30, 2015, respectively)	0.1	(0.2)	0.2	(0.2)
Net income	$ 2.0	$ 120.7	$ 80.2	$ 175.6
Basic:
Income from continuing operations	$ 0.04	$ 2.74	$ 1.86	$ 3.98
Net gain (loss) from discontinued operations	0.01	(0.01)	0.01
Net income per share	$ 0.05	$ 2.73	$ 1.87	$ 3.98
Weighted average shares outstanding	43.0	44.2	43.0	44.2
Diluted:
Income from continuing operations	$ 0.04	$ 2.69	$ 1.84	$ 3.90
Net gain (loss) from discontinued operations	0.01	(0.01)
Net income per share	$ 0.05	$ 2.68	$ 1.84	$ 3.90
Weighted average shares outstanding	43.4	45.0	43.5	45.1

XML

Consolidated Statements of Income (Parenthetical) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Statement [Abstract]
Net gain from discontinued operations, income tax benefit (expense)	$ 1.7	$ 0.1	$ 2.2	$ 0.2

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Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Statement Of Income And Comprehensive Income [Abstract]
Net income	$ 2.0	$ 120.7	$ 80.2	$ 175.6
Available-for-sale securities:
Net appreciation (depreciation) during the period	74.2	(92.6)	167.8	(63.5)
Change in other-than-temporary impairment losses recognized in other comprehensive income	2.8	(2.1)	5.7	(4.4)
Total available-for-sale securities	77.0	(94.7)	173.5	(67.9)
Pension and postretirement benefits:
Net actuarial losses and prior service cost arising in the period, Net of Tax		(3.3)		(1.4)
Amortization recognized as net periodic benefit and postretirement cost	1.7	3.4	3.3	5.1
Total pension and postretirement benefits	1.7	0.1	3.3	3.7
Cumulative foreign currency translation adjustment:
Amount recognized as cumulative foreign currency translation during the period	(0.7)	7.7	(1.3)	(2.2)
Total other comprehensive income (loss), net of tax	78.0	(86.9)	175.5	(66.4)
Comprehensive income	$ 80.0	$ 33.8	$ 255.7	$ 109.2

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Consolidated Balance Sheets - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Assets
Fixed maturities, at fair value (amortized cost of $6,842.8 and $6,934.0)	$ 7,142.0	$ 6,983.4
Equity securities, at fair value (cost of $507.8 and $528.5)	582.7	576.6
Other investments	454.8	393.4
Total investments	8,179.5	7,953.4
Cash and cash equivalents	361.6	338.8
Accrued investment income	60.6	62.9
Premiums and accounts receivable, net	1,509.8	1,391.7
Reinsurance recoverable on paid and unpaid losses and unearned premiums	2,688.1	2,635.0
Deferred acquisition costs	522.5	508.8
Deferred income taxes	50.4	137.9
Goodwill	185.2	186.0
Other assets	525.7	483.7
Assets of discontinued operations	80.2	83.0
Total assets	14,163.6	13,781.2
Liabilities
Loss and loss adjustment expense reserves	6,778.0	6,574.4
Unearned premiums	2,620.5	2,540.8
Expenses and taxes payable	594.0	724.9
Reinsurance premiums payable	274.7	205.2
Debt	797.8	803.1
Liabilities of discontinued operations	88.9	88.4
Total liabilities	11,153.9	10,936.8
Commitments and contingencies
Shareholders' Equity
Preferred stock, par value $0.01 per share; 20.0 million shares authorized; none issued
Common stock, par value $0.01 per share; 300.0 million shares authorized; 60.5 million shares issued	0.6	0.6
Additional paid-in capital	1,835.2	1,833.5
Accumulated other comprehensive income	229.4	53.9
Retained earnings	1,841.5	1,803.5
Treasury stock at cost (17.8 and 17.5 million shares)	(897.0)	(847.1)
Total shareholders' equity	3,009.7	2,844.4
Total liabilities and shareholders' equity	$ 14,163.6	$ 13,781.2

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Statement Of Financial Position [Abstract]
Fixed maturities, amortized cost	$ 6,842.8	$ 6,934.0
Equity securities, cost	$ 507.8	$ 528.5
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, issued	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares issued	60,500,000	60,500,000
Treasury stock, shares	17,800,000	17,500,000

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Consolidated Statements of Shareholders' Equity - USD ($) $ in Millions	Preferred Stock [Member]	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss), net of tax	Net Unrealized Appreciation (Depreciation) on Investments:	Defined Benefit Pension and Postretirement Plans:	Cumulative Foreign Currency Translation Adjustment:	Retained Earnings	Treasury Stock	Total
Balance at beginning of period at Dec. 31, 2014		$ 0.6	$ 1,830.7		$ 300.9	$ (84.3)	$ (10.2)	$ 1,558.7	$ (752.4)
Net income								175.6		$ 175.6
Shares purchased at cost									(23.5)
Employee and director stock-based awards and other			(0.4)
Net appreciation (depreciation) on available-for-sale securities					(67.9)					(67.9)
Net amount arising in the period						(1.4)				(1.4)
Net amount recognized as net periodic benefit cost						5.1				3.7
Amount recognized as cumulative foreign currency translation during the period							(2.2)			(2.2)
Dividends to shareholders								(36.3)
Total accumulated other comprehensive income										(66.4)
Net shares reissued at cost under employee stock-based compensation plans									23.4
Stock-based compensation								(7.9)
Balance at end of period at Jun. 30, 2015		0.6	1,830.3	$ 140.0	233.0	(80.6)	(12.4)	1,690.1	(752.5)	2,908.5
Balance at beginning of period at Dec. 31, 2015		0.6	1,833.5		149.9	(78.6)	(17.4)	1,803.5	(847.1)	2,844.4
Net income								80.2		80.2
Shares purchased at cost									(67.5)
Employee and director stock-based awards and other			1.7
Net appreciation (depreciation) on available-for-sale securities					173.5					173.5
Net amount arising in the period
Net amount recognized as net periodic benefit cost						3.3				3.3
Amount recognized as cumulative foreign currency translation during the period							(1.3)			(1.3)
Dividends to shareholders								(39.6)
Total accumulated other comprehensive income										175.5
Net shares reissued at cost under employee stock-based compensation plans									17.6
Stock-based compensation								(2.6)
Balance at end of period at Jun. 30, 2016		$ 0.6	$ 1,835.2	$ 229.4	$ 323.4	$ (75.3)	$ (18.7)	$ 1,841.5	$ (897.0)	$ 3,009.7

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Consolidated Statements of Cash Flows - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash Flows From Operating Activities
Net income	$ 80.2	$ 175.6
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on disposal of U.K. motor business	(1.2)	(37.7)
Net loss from repayment of debt	86.1	18.5
Net realized investment gains	(0.8)	(21.6)
Net amortization and depreciation	16.2	16.8
Stock-based compensation expense	5.5	7.5
Amortization of defined benefit plan costs	5.0	7.2
Deferred income tax (benefit) expense	(18.0)	18.8
Change in deferred acquisition costs	(13.5)	(21.4)
Change in premiums receivable, net of reinsurance premiums payable	(48.6)	(98.9)
Change in loss, loss adjustment expense and unearned premium reserves	332.2	329.2
Change in reinsurance recoverable	(58.8)	(191.2)
Change in expenses and taxes payable	(96.1)	(60.3)
Other, net	(56.6)	(39.8)
Net cash provided by operating activities	231.6	102.7
Cash Flows From Investing Activities
Proceeds from disposals and maturities of fixed maturities	801.5	881.7
Proceeds from disposals of equity securities and other investments	198.1	230.0
Purchase of fixed maturities	(771.0)	(668.8)
Purchase of equity securities and other investments	(211.1)	(236.0)
Cash received from disposal of U.K. motor business, net of cash transferred		44.3
Capital expenditures	(8.5)	(8.1)
Net cash provided by investing activities	9.0	243.1
Cash Flows From Financing Activities
Proceeds from exercise of employee stock options	11.3	9.3
Proceeds from debt borrowings, net	370.5
Change in cash collateral related to securities lending program	(21.8)	2.1
Dividends paid to shareholders	(39.6)	(36.3)
Repayment of debt	(461.3)	(86.5)
Repurchases of common stock	(67.5)	(23.5)
Other financing activities	(9.3)	(2.3)
Net cash used in financing activities	(217.7)	(137.2)
Effect of exchange rate changes on cash	(0.1)	1.8
Net change in cash and cash equivalents	22.8	210.4
Cash and cash equivalents, beginning of period	338.8	373.3
Cash and cash equivalents, end of period	$ 361.6	$ 583.7

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Basis of Presentation and Principles of Consolidation

6 Months Ended

Jun. 30, 2016

Basis of Presentation and Principles of Consolidation [Abstract]

Basis of Presentation and Principles of Consolidation

1. Basis of Presentation and Principles of Consolidation

The accompanying unaudited consolidated financial statements of The Hanover Insurance Group, Inc. and subsidiaries (“THG” or the “Company”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the requirements of Form 10-Q. Certain financial information that is provided in annual financial statements, but is not required in interim reports, has been omitted.

The interim consolidated financial statements of THG include the accounts of The Hanover Insurance Company (“Hanover Insurance”) and Citizens Insurance Company of America, THG’s principal U.S. domiciled property and casualty companies; Chaucer Holdings Limited (“Chaucer”), a specialist insurance underwriting group which operates through the Society and Corporation of Lloyd’s (“Lloyd’s”) and certain other insurance and non-insurance subsidiaries. These legal entities conduct their operations through several business segments discussed in Note 9 – “Segment Information”. Additionally, the interim consolidated financial statements include the Company’s discontinued operations, consisting primarily of the Company’s former life insurance businesses and its accident and health business. All intercompany accounts and transactions have been eliminated.

The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

In the opinion of the Company’s management, the accompanying interim consolidated financial statements reflect all adjustments, consisting of normal recurring items, necessary for a fair presentation of the financial position and results of operations. The results of operations for the three and six months ended June 30, 2016 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the Company’s 2015 Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 25, 2016.

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New Accounting Pronouncements

6 Months Ended

Jun. 30, 2016

New Accounting Pronouncements [Abstract]

New Accounting Pronouncements

2. New Accounting Pronouncements

Recently Implemented Standards

In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) Update No. 2015-03, (Subtopic 835-30) Interest-Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs. This ASC update requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of a debt liability, consistent with debt discounts or premiums, and amortization of debt issuance cost shall be reported as interest expense. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASC update. The updated guidance is to be applied on a retrospective basis and early adoption is permitted. The update is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Company implemented this guidance effective January 1, 2016. The effect of implementing this guidance was not material to the Company’s financial position or results of operations.

Recently Issued Standards

In June 2016, the FASB issued ASC Update No. 2016-13, (Topic 326) Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments.  This ASC update introduces new guidance for the accounting for credit losses on financial instruments within its scope. A new model, referred to as the current expected credit losses model, requires an entity to determine credit-related impairment losses for financial instruments held at amortized cost and to estimate these expected credit losses over the life of an exposure (or pool of exposures). The estimate of expected credit losses should consider both historical and current information, reasonable and supportable forecasts, as well as estimates of prepayments. The estimated credit losses and subsequent adjustment to such loss estimates, will be recorded through an allowance account which is deducted from the amortized cost of the financial instrument, with the offset recorded in current earnings. ASC No. 2016-13 also modifies the impairment model for available-for-sale debt securities. The new model will require an estimate of expected credit losses only when the fair value is below the amortized cost of the asset, thus the length of time the fair value of an available-for-sale debt security has been below the amortized cost will no longer affect the determination of whether a credit loss exists. In addition, credit losses on available-for-sale debt securities will be limited to the difference between the security’s amortized cost basis and its fair value. The updated guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for periods beginning after December 15, 2018. The Company is evaluating the impact of the adoption of ASC Update No. 2016-13 on its financial position and results of operations.

In March 2016, the FASB issued ASC Update No. 2016-09, (Topic 718) Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting. This ASC update requires all excess tax benefits and tax deficiencies to be recognized as income tax expense or benefit in the income statement, and be treated as discreet items in the reporting period in which they occur. Additionally, excess tax benefits will be classified with other income tax cash flows as an operating activity and cash paid by an employer when directly withholding shares for tax withholding purposes will be classified as a financing activity. Awards that are used to settle employee tax liabilities will be allowed to qualify for equity classification for withholdings up to the maximum statutory tax rates in applicable jurisdictions. Regarding forfeitures, a company can make an entity-wide accounting policy election to either continue estimating the number of awards that are expected to vest or account for forfeitures when they occur. The updated guidance is effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods. Early adoption is permitted. The Company is evaluating the impact of the adoption of ASC update 2016-09 on its financial position and results of operations.

In February 2016, the FASB issued ASC Update No. 2016-02, (Topic 842) Leases. This ASC update requires a lessee to recognize a right-of-use asset, which represents the lessee’s right to use a specified asset for the lease term, and a corresponding lease liability, which represents a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, for all leases that extend beyond 12 months. For finance or capital leases, interest on the lease liability will be recognized separately from amortization of the right-of-use asset in the statements of income and comprehensive income. In addition, the repayment of the principal portion of the lease liability will be classified as a financing activity while the interest component will be included in the operating section of the statement of cash flows. For operating leases, the asset and liability will be amortized as a single lease cost, such that the cost of the lease is allocated over the lease term, on a generally straight-line basis, with all cash flows included within operating activities in the statement of cash flows. The updated guidance is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years, and is required to be implemented by applying a modified retrospective transition approach. The Company is evaluating the impact of the adoption of ASC update 2016-02 on its financial position and results of operations.

In January 2016, the FASB issued ASC Update No. 2016-01, (Subtopic 825-10) Financial Instruments- Overall:Recognition and Measurement of Financial Assets and Financial Liabilities. This ASC update requires unconsolidated equity investments to be measured at fair value with changes in the fair value recognized in net income, except for those accounted for under the equity method. This update eliminates the cost method for equity investments without readily determinable fair values and replaces with other methods, including the use of Net Asset Value. Additionally, when a public entity is required to measure fair value for disclosure purposes and holds financial instruments measured at amortized cost, the updated guidance requires these instruments to be measured using exit price. It also requires financial assets and financial liabilities to be presented separately in the notes to the financial statements, grouped by measurement category and form of financial asset. The updated guidance is effective for annual periods beginning after December 15, 2017. The Company is evaluating the impact of the adoption of ASC update 2016-01 on its financial position and results of operations.

In May 2015, the FASB issued ASC Update No. 2015-09, (Topic 944) Financial Services- Insurance:Disclosures about Short-Duration Contracts. This ASC update requires several additional disclosures regarding short-duration insurance contracts, including; disaggregated incurred and paid claims development information, quantitative and qualitative information about claim frequency and duration, and the sum of incurred but not reported liabilities plus expected development on reported claims included in the liability for unpaid claims and claim adjustment expenses along with a description of reserving methodologies. This information is required to be presented by accident year, for the number of years for which claims typically remain outstanding, but need not exceed 10 years. A reconciliation of the claims development disclosures to the aggregate carrying amount of the liability for unpaid claims and claim adjustment expenses, including a separate disclosure for reinsurance recoverables is also required for each period presented in the statement of financial position. In addition, this ASC requires insurance entities to disclose information about significant changes in methodologies and assumptions used to calculate the liability for unpaid claims and claim adjustment expenses, including reasons for the change and the effects on the financial statements.  The updated guidance is effective for annual periods beginning after December 15, 2015, and interim periods within annual periods beginning after December 15, 2016. Early adoption is permitted. The Company does not expect the adoption of ASC Update 2015-09 to have a material impact on its financial position or results of operations, as the update is disclosure related.

In May 2014, the FASB issued ASC Update No. 2014-09, (Topic 606) Revenue from Contracts with Customers. This ASC was issued to clarify the principles for recognizing revenue. Insurance contracts and financial instrument transactions are not within the scope of this updated guidance, and; therefore, only an insignificant amount of the Company’s revenue is subject to this updated guidance. In August 2015, the FASB issued ASC Update No. 2015-14, (Topic 606) Revenue from Contracts with Customers, which deferred the effective date of ASC Update No. 2014-09 by one year. Accordingly, the updated guidance is effective for periods beginning after December 15, 2017 and is not expected to have a material effect on the Company’s financial position or results of operations. 

In August 2014, the FASB issued ASC update No. 2014-15, (Subtopic 205-40) Presentation of Financial Statement- Going Concern. This ASC update provides guidance on determining when and how to disclose going concern uncertainties in the financial statements, and requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. The updated guidance is effective for annual periods ending after December 15, 2016 and interim periods thereafter. Early adoption is permitted. The Company does not expect the adoption of ASC update 2014-15 to have a material impact on its financial position or results of operations.

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Income Taxes

6 Months Ended

Jun. 30, 2016

Income Taxes [Abstract]

Income Taxes

3. Income Taxes

Income tax expense for the six months ended June 30, 2016 and 2015 has been computed using estimated annual effective tax rates. These rates are revised, if necessary, at the end of each successive interim period to reflect current estimates of the annual effective tax rates.

For the six months ended June 30, 2016, the tax provision is comprised of a $3.9 million U.S. federal income tax expense and a $17.1 million foreign income tax expense. For the six months ended June 30, 2015, the tax provision was comprised of a $37.4 million U.S. federal income tax expense and a $16.4 million foreign income tax expense.

Although most of the Company’s non–U.S. income is subject to U.S. federal income tax, certain of its non–U.S. income is not subject to U.S. federal income tax until repatriated. Foreign taxes on this non–U.S. income are accrued at the local foreign tax rate, as opposed to the higher U.S. statutory rate, since these earnings currently are expected to be indefinitely reinvested overseas. This assumption could change as a result of a sale of the subsidiaries, the receipt of dividends from the subsidiaries, a change in management’s intentions, or as a result of various other events. The Company has not made a provision for U.S. taxes on $10.6 million and $63.0 million of non-U.S. income for the six months ended June 30, 2016 and 2015, respectively. However, in the future, if such earnings were distributed to the Company, taxes of $49.1 million would be payable on the accumulated undistributed earnings and would be reflected in the tax provision for the year in which these earnings are no longer intended to be indefinitely reinvested overseas, assuming all foreign tax credits are realized.

The Company or its subsidiaries files income tax returns in the U.S. federal jurisdiction and various state jurisdictions, as well as foreign jurisdictions. The Company and its subsidiaries are subject to U.S. federal income tax examinations by tax authorities for years after 2011, U.S. state income tax examinations for years after 2011 and foreign examinations for years after 2011.

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Debt

6 Months Ended

Jun. 30, 2016

Debt [Abstract]

Debt

4. Debt

Debt consists of the following:

(in millions)		June 30, 2016		December 31, 2015
Senior debentures maturing April 15, 2026	$	375.0	$	-
Senior debentures maturing June 15, 2021		-		300.0
Senior debentures maturing March 1, 2020		-		80.0
Senior debentures maturing October 15, 2025		74.6		74.6
Subordinated debentures maturing March 30, 2053		175.0		175.0
Subordinated debentures maturing February 3, 2027		59.7		59.7
FHLBB borrowings (secured)		125.0		125.0
Total principal debt	$	809.3	$	814.3
Unamortized debt issuance costs		(11.5)		(11.2)
Total	$	797.8	$	803.1

On April 8, 2016 the Company issued $375 million aggregate principal amount of 4.50% senior unsecured debentures due April 15, 2026. The senior debentures are subject to certain restrictive covenants, including limitations on the issuance or disposition of stock of restricted subsidiaries and limitations on liens. These debentures pay interest semi-annually.

Net proceeds from the issuance of the aforementioned debentures were $370.5 million. On May 21, 2016, the proceeds, together with cash on hand, were used to redeem the outstanding 7.50% notes due March 1, 2020 and 6.375% notes due June 15, 2021. The redemption of these notes resulted in a pre-tax loss of $86.1 million.

At June 30, 2016, the Company was in compliance with the covenants associated with its debt indentures and credit arrangements.

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Investments

6 Months Ended

Jun. 30, 2016

Investments [Abstract]

Investments

5. Investments

A. Fixed maturities and equity securities

The amortized cost and fair value of available-for-sale fixed maturities and the cost and fair value of equity securities were as follows:

	June 30, 2016
	Amortized		Gross		Gross				OTTI
	Cost or		Unrealized		Unrealized				Unrealized
(in millions)	Cost		Gains		Losses		Fair Value		Losses
Fixed maturities:
U.S. Treasury and government agencies	$	364.9	$	11.6	$	-	$	376.5	$	-
Foreign government		229.4		7.2		-		236.6		-
Municipal		1,084.6		76.2		0.9		1,159.9		-
Corporate		3,728.8		182.7		28.8		3,882.7		18.6
Residential mortgage-backed		849.0		26.1		0.9		874.2		0.3
Commercial mortgage-backed		507.5		25.5		0.1		532.9		-
Asset-backed		78.6		0.9		0.3		79.2		-
Total fixed maturities	$	6,842.8	$	330.2	$	31.0	$	7,142.0	$	18.9
Equity securities	$	507.8	$	76.8	$	1.9	$	582.7	$	-

	December 31, 2015
	Amortized		Gross		Gross				OTTI
	Cost or		Unrealized		Unrealized				Unrealized
(in millions)	Cost		Gains		Losses		Fair Value		Losses
Fixed maturities:
U.S. Treasury and government agencies	$	447.1	$	5.5	$	3.5	$	449.1	$	-
Foreign government		244.7		2.6		1.5		245.8		-
Municipal		1,074.5		50.0		4.2		1,120.3		-
Corporate		3,699.9		86.8		95.7		3,691.0		27.5
Residential mortgage-backed		887.6		13.4		4.9		896.1		0.3
Commercial mortgage-backed		499.6		5.8		4.3		501.1		-
Asset-backed		80.6		0.2		0.8		80.0		-
Total fixed maturities	$	6,934.0	$	164.3	$	114.9	$	6,983.4	$	27.8
Equity securities	$	528.5	$	55.7	$	7.6	$	576.6	$	-

Other-than-temporary impairments (“OTTI”) unrealized losses in the tables above represent OTTI recognized in accumulated other comprehensive income. This amount excludes net unrealized gains on impaired securities relating to changes in the value of such securities subsequent to the impairment measurement date of $18.9 million and $1.1 million as of June 30, 2016 and December 31, 2015, respectively.

The amortized cost and fair value by maturity periods for fixed maturities are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties, or the Company may have the right to put or sell the obligations back to the issuers.

	June 30, 2016
	Amortized		Fair
(in millions)	Cost		Value
Due in one year or less	$	433.1	$	437.9
Due after one year through five years		2,499.2		2,607.8
Due after five years through ten years		2,026.6		2,123.4
Due after ten years		448.8		486.6
		5,407.7		5,655.7
Mortgage-backed and asset-backed securities		1,435.1		1,486.3
Total fixed maturities	$	6,842.8	$	7,142.0

B. Securities in an unrealized loss position

The following tables provide information about the Company’s fixed maturities and equity securities that were in an unrealized loss position at June 30, 2016 and December 31, 2015 including the length of time the securities have been in an unrealized loss position:

	June 30, 2016
	12 months or less				Greater than 12 months				Total
	Gross				Gross				Gross
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
(in millions)	Losses		Value		Losses		Value		Losses		Value
Fixed maturities:
Investment grade:
U.S. Treasury and government agencies	$	-	$	5.0	$	-	$	-	$	-	$	5.0
Foreign governments		-		4.1		-		1.2		-		5.3
Municipal		0.2		12.8		0.7		33.0		0.9		45.8
Corporate		1.4		51.6		6.2		113.9		7.6		165.5
Residential mortgage-backed		0.2		25.1		0.7		35.6		0.9		60.7
Commercial mortgage-backed		-		8.1		0.1		9.3		0.1		17.4
Asset-backed		0.2		5.8		0.1		4.3		0.3		10.1
Total investment grade		2.0		112.5		7.8		197.3		9.8		309.8
Below investment grade:
Corporate		5.0		81.3		16.2		98.1		21.2		179.4
Total fixed maturities		7.0		193.8		24.0		295.4		31.0		489.2
Equity securities		1.9		76.2		-		-		1.9		76.2
Total	$	8.9	$	270.0	$	24.0	$	295.4	$	32.9	$	565.4

	December 31, 2015
	12 months or less				Greater than 12 months				Total
	Gross				Gross				Gross
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
(in millions)	Losses		Value		Losses		Value		Losses		Value
Fixed maturities:
Investment grade:
U.S. Treasury and government agencies	$	1.5	$	139.0	$	2.0	$	77.2	$	3.5	$	216.2
Foreign governments		0.8		63.6		0.7		8.4		1.5		72.0
Municipal		2.3		143.0		1.9		57.4		4.2		200.4
Corporate		30.7		1,138.3		18.9		122.3		49.6		1,260.6
Residential mortgage-backed		3.0		334.5		1.9		47.0		4.9		381.5
Commercial mortgage-backed		4.2		293.8		0.1		9.7		4.3		303.5
Asset-backed		0.8		56.6		-		1.4		0.8		58.0
Total investment grade		43.3		2,168.8		25.5		323.4		68.8		2,492.2
Below investment grade:
Corporate		19.6		165.5		26.5		63.2		46.1		228.7
Total fixed maturities		62.9		2,334.3		52.0		386.6		114.9		2,720.9
Equity securities		7.6		166.8		-		-		7.6		166.8
Total	$	70.5	$	2,501.1	$	52.0	$	386.6	$	122.5	$	2,887.7

The Company views gross unrealized losses on fixed maturities and equity securities as being temporary since it is its assessment that these securities will recover in the near term, allowing the Company to realize the anticipated long-term economic value. The Company employs a systematic methodology to evaluate declines in fair value below amortized cost for fixed maturity securities or cost for equity securities. In determining OTTI of fixed maturity and equity securities, the Company evaluates several factors and circumstances, including the issuer’s overall financial condition; the issuer’s credit and financial strength ratings; the issuer’s financial performance, including earnings trends, dividend payments and asset quality; any specific events which may influence the operations of the issuer; the general outlook for market conditions in the industry or geographic region in which the issuer operates; and the length of time and the degree to which the fair value of an issuer’s securities remains below the Company’s cost. With respect to fixed maturity investments, the Company considers any factors that might raise doubt about the issuer’s ability to make contractual payments as they come due and whether the Company expects to recover the entire amortized cost basis of the security. With respect to equity securities, the Company considers its ability and intent to hold the investment for a period of time to allow for a recovery in value.

C. Other investments

In accordance with Lloyd’s operating guidelines, the Company deposits funds at Lloyd’s to support underwriting operations. These funds are available only to fund claim obligations. These assets consisted of approximately $503 million of fixed maturities and $12 million of cash and cash equivalents as of June 30, 2016. The Company also deposits funds with various state and governmental authorities in the U.S. For a discussion of the Company’s deposits with state and governmental authorities, see also Note 3 – “Investments” of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2015.

D. Proceeds from sales

The proceeds from sales of available-for-sale securities and gross realized gains and losses on those sales, were as follows:

	Three Months Ended June 30,
	2016						2015
	Proceeds from		Gross		Gross		Proceeds from		Gross		Gross
(in millions)	Sales		Gains		Losses		Sales		Gains		Losses
Fixed maturities	$	145.4	$	3.5	$	0.9	$	594.4	$	10.6	$	1.4
Equity securities	$	84.5	$	1.7	$	0.8	$	83.1	$	7.7	$	-

	Six Months Ended June 30,
	2016						2015
	Proceeds from		Gross		Gross		Proceeds from		Gross		Gross
(in millions)	Sales		Gains		Losses		Sales		Gains		Losses
Fixed maturities	$	307.9	$	5.9	$	4.2	$	824.7	$	12.9	$	4.7
Equity securities	$	173.4	$	26.4	$	1.7	$	167.8	$	20.1	$	-

E. Other-than-temporary impairments

For the three months ended June 30, 2016, total OTTI was $2.8 million, consisting primarily of equity securities.  Of this amount, $5.0 million was recognized in earnings, including $2.2 million which was transferred from unrealized losses in accumulated other comprehensive income (“AOCI”). For the six months ended June 30, 2016, total OTTI was $19.2 million, consisting primarily of fixed maturities and,to a lesser extent, equity securities. Of this amount, $25.9 million was recognized in earnings,including$6.7 million which was transferred from unrealized losses in AOCI.

For the three months ended June 30, 2015, total OTTI of fixed maturities was $5.1 million.  Of this amount, $1.9 million was recognized in earnings and the remaining $3.2 million was recorded as unrealized losses in AOCI. For the six months ended June 30, 2015, total OTTI of fixed maturities and equity securities was $11.4 million. Of this amount, $4.6 million was recognized in earnings and the remaining $6.8 million was recorded as unrealized losses in AOCI.

The methodology and significant inputs used to measure the amount of credit losses on fixed maturities in 2016 and 2015 were as follows:

Corporate bonds – the Company utilized a financial model that derives expected cash flows based on probability-of-default factors by credit rating, loss-given-default factors based on security type and position in the capital structure and asset duration.  These factors are based on historical data provided by an independent third-party rating agency.

The following table provides rollforwards of the cumulative amounts related to the Company’s credit loss portion of the OTTI losses on fixed maturity securities for which the non-credit portion of the loss is included in other comprehensive income.

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2016		2015		2016		2015
Credit losses at beginning of period	$	13.4	$	4.5	$	18.0	$	4.2
Credit losses for which an OTTI was not previously recognized		0.7		1.7		5.2		2.7
Additional credit losses on securities for which an
OTTI was previously recognized		0.4		-		2.1		-
Reductions for securities sold, matured or called		(1.6)		(0.1)		(1.6)		(0.8)
Reductions for securities reclassified as intended to sell		(1.2)		-		(12.0)		-
Credit losses at end of period	$	11.7	$	6.1	$	11.7	$	6.1

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Fair Value

6 Months Ended

Jun. 30, 2016

Fair Value [Abstract]

Fair Value

6. Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability, i.e., exit price, in an orderly transaction between market participants. The Company emphasizes the use of observable market data whenever available in determining fair value. Fair values presented for certain financial instruments are estimates which, in many cases, may differ significantly from the amounts that could be realized upon immediate liquidation. A hierarchy of the three broad levels of fair value are as follows, with the highest priority given to Level 1 as these are the most observable, and the lowest priority given to Level 3:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 – Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data, including model-derived valuations.

Level 3 – Unobservable inputs that are supported by little or no market activity.

When more than one level of input is used to determine fair value, the financial instrument is classified as Level 2 or 3 according to the lowest level input that has a significant impact on the fair value measurement.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments and have not changed since last year.

Cash and Cash Equivalents

The carrying amount approximates fair value. Cash equivalents primarily consist of money market instruments, which are generally valued using unadjusted quoted prices in active markets that are accessible for identical assets and are classified as Level 1.

Fixed Maturities

Level 1 securities generally include U.S. Treasury issues and other securities that are highly liquid and for which quoted market prices are available. Level 2 securities are valued using pricing for similar securities and pricing models that incorporate observable inputs including, but not limited to yield curves and issuer spreads. Level 3 securities include issues for which little observable data can be obtained, primarily due to the illiquid nature of the securities, and for which significant inputs used to determine fair value are based on the Company’s own assumptions. Non-binding broker quotes are also included in Level 3.

The Company utilizes a third party pricing service for the valuation of the majority of its fixed maturity securities and receives one quote per security. When quoted market prices in an active market are available, they are provided by the pricing service as the fair value and such values are classified as Level 1. Since fixed maturities other than U.S. Treasury securities generally do not trade on a daily basis, the pricing service prepares estimates of fair value for those securities using pricing applications based on a market approach. Inputs into the fair value pricing common to all asset classes include: benchmark U.S. Treasury security yield curves; reported trades of identical or similar fixed maturity securities; broker/dealer quotes of identical or similar fixed maturity securities and structural characteristics such as maturity date, coupon, mandatory principal payment dates, frequency of interest and principal payments, and optional redemption features. Inputs into the fair value applications that are unique by asset class include, but are not limited to:

· U.S. government agencies – determination of direct versus indirect government support and whether any contingencies exist with respect to the timely payment of principal and interest.

· Foreign government – estimates of appropriate market spread versus underlying related sovereign treasury curve(s) dependent on liquidity and direct or contingent support.

· Municipals – overall credit quality, including assessments of the level and variability of: sources of payment such as income, sales or property taxes, levies or user fees; credit support such as insurance; state or local economic and political base; natural resource availability; and susceptibility to natural or man-made catastrophic events such as hurricanes, earthquakes or acts of terrorism.

· Corporate fixed maturities – overall credit quality, including assessments of the level and variability of: economic sensitivity; liquidity; corporate financial policies; management quality; regulatory environment; competitive position; ownership; restrictive covenants; and security or collateral.

· Residential mortgage-backed securities – estimates of prepayment speeds based upon: historical prepayment rate trends; underlying collateral interest rates; geographic concentration; vintage year; borrower credit quality characteristics; interest rate and yield curve forecasts; government or monetary authority support programs; tax policies; delinquency/default trends; and, in the case of non-agency collateralized mortgage obligations, severity of loss upon default and length of time to recover proceeds following default.

· Commercial mortgage-backed securities – overall credit quality, including assessments of the value and supply/demand characteristics of: collateral type such as office, retail, residential, lodging, or other; geographic concentration by region, state, metropolitan statistical area and locale; vintage year; historical collateral performance including defeasance, delinquency, default and special servicer trends; and capital structure support features.

· Asset-backed securities – overall credit quality, including assessments of the underlying collateral type such as credit card receivables, auto loan receivables and equipment lease receivables; geographic diversification; vintage year; historical collateral performance including delinquency, default and casualty trends; economic conditions influencing use rates and resale values; and contract structural support features.

Generally, all prices provided by the pricing service, except actively traded securities with quoted market prices, are reported as Level 2.

The Company holds privately placed fixed maturity securities and certain other fixed maturity securities that do not have an active market and for which the pricing service cannot provide fair values. The Company determines fair values for these securities using either matrix pricing utilizing the market approach or broker quotes. The Company will use observable market data as inputs into the fair value applications, as discussed in the determination of Level 2 fair values, to the extent it is available, but is also required to use a certain amount of unobservable judgment due to the illiquid nature of the securities involved. Unobservable judgment reflected in the Company’s matrix model accounts for estimates of additional spread required by market participants for factors such as issue size, structural complexity, high bond coupon or other unique features. These matrix-priced securities are reported as Level 2 or Level 3, depending on the significance of the impact of unobservable judgment on the security’s value. Additionally, the Company may obtain non-binding broker quotes which are reported as Level 3.

Equity Securities

Level 1 consists of publicly traded securities, including exchange traded funds, valued at quoted market prices. Level 2 includes securities that are valued using pricing for similar securities and pricing models that incorporate observable inputs. Level 3 consists of common or preferred stock of private companies for which observable inputs are not available.

The Company utilizes a third party pricing service for the valuation of the majority of its equity securities and receives one quote for each equity security. When quoted market prices in an active market are available, they are provided by the pricing service as the fair value and such values are classified as Level 1. The Company holds certain equity securities that have been issued by privately-held entities that do not have an active market and for which the pricing service cannot provide fair values. Generally, the Company estimates fair value for these securities based on the issuer’s book value and market multiples. These securities are reported as Level 2 or Level 3 depending on the significance of the impact of unobservable judgment on the security’s value. Additionally, the Company may obtain non-binding broker quotes which are reported as Level 3.

Other Investments

Other investments primarily include mortgage participations, overseas trust funds required in connection with our Lloyd’s business and cost basis limited partnerships. Fair values of mortgage participations and other mortgage loans are estimated by discounting the contractual cash flows using the rates at which similar loans would be made to borrowers with comparable credit ratings and are reported as Level 3. Fair values of overseas trust funds are provided by the investment manager based on quoted prices for similar instruments in active markets and are reported as Level 2. The fair values of cost basis limited partnerships are based on the net asset value provided by the general partner and recent financial information and are excluded from the fair value hierarchy.

Debt

The fair value of debt is estimated based on quoted market prices for identical or similar issuances. If a quoted market price is not available, fair values are estimated using discounted cash flows that are based on current interest rates and yield curves for debt issuances with maturities and credit risks consistent with the debt being valued. Debt is reported as Level 2.

The estimated fair value of the financial instruments were as follows:

	June 30, 2016				December 31, 2015
	Carrying		Fair		Carrying		Fair
(in millions)	Value		Value		Value		Value
Financial Assets
Cash and cash equivalents	$	361.6	$	361.6	$	338.8	$	338.8
Fixed maturities		7,142.0		7,142.0		6,983.4		6,983.4
Equity securities		582.7		582.7		576.6		576.6
Other investments		423.0		430.5		365.4		367.9
Total financial assets	$	8,509.3	$	8,516.8	$	8,264.2	$	8,266.7
Financial Liabilities
Debt	$	797.8	$	893.9	$	803.1	$	927.8

The Company has processes designed to ensure that the values received from its third party pricing service are accurately recorded, that the data inputs and valuation techniques utilized are appropriate and consistently applied, and that the assumptions are reasonable and consistent with the objective of determining fair value. The Company performs a review of the fair value hierarchy classifications and of prices received from its pricing service on a quarterly basis. The Company reviews the pricing services’ policies describing its methodology, processes, practices and inputs, including various financial models used to value securities. Also, the Company reviews the portfolio pricing, including a process for which securities with changes in prices that exceed a defined threshold are verified to independent sources, if available. If upon review, the Company is not satisfied with the validity of a given price, a pricing challenge would be submitted to the pricing service along with supporting documentation for its review. The Company does not adjust quotes or prices obtained from the pricing service unless the pricing service agrees with the Company’s challenge. During 2016 and 2015, the Company did not adjust any prices received from brokers or its pricing service.

Changes in the observability of valuation inputs may result in a reclassification of certain financial assets or liabilities within the fair value hierarchy. Reclassifications between levels of the fair value hierarchy are reported as of the beginning of the period in which the reclassification occurs. As previously discussed, the Company utilizes a third party pricing service for the valuation of the majority of its fixed maturities and equity securities. The pricing service has indicated that it will only produce an estimate of fair value if there is objectively verifiable information to produce a valuation. If the pricing service discontinues pricing an investment, the Company will use observable market data to the extent it is available, but may also be required to make assumptions for market based inputs that are unavailable due to market conditions.

The following tables provide, for each hierarchy level, the Company’s assets that were measured at fair value on a recurring basis.

	June 30, 2016
(in millions)		Total		Level 1		Level 2		Level 3
Fixed maturities:
U.S. Treasury and government agencies	$	376.5	$	178.8	$	197.7	$	-
Foreign government		236.6		47.5		189.1		-
Municipal		1,159.9		-		1,125.5		34.4
Corporate		3,882.7		-		3,878.3		4.4
Residential mortgage-backed, U.S. agency backed		815.1		-		815.1		-
Residential mortgage-backed, non-agency		59.1		-		59.1		-
Commercial mortgage-backed		532.9		-		516.2		16.7
Asset-backed		79.2		-		78.8		0.4
Total fixed maturities		7,142.0		226.3		6,859.8		55.9
Equity securities		574.0		572.7		-		1.3
Other investments		94.1		-		90.5		3.6
Total investment assets at fair value	$	7,810.1	$	799.0	$	6,950.3	$	60.8

	December 31, 2015
(in millions)		Total		Level 1		Level 2		Level 3
Fixed maturities:
U.S. Treasury and government agencies	$	449.1	$	193.6	$	255.5	$	-
Foreign government		245.8		52.5		193.3		-
Municipal		1,120.3		-		1,085.9		34.4
Corporate		3,691.0		-		3,687.3		3.7
Residential mortgage-backed, U.S. agency backed		824.5		-		824.5		-
Residential mortgage-backed, non-agency		71.6		-		71.6		-
Commercial mortgage-backed		501.1		-		484.1		17.0
Asset-backed		80.0		-		79.5		0.5
Total fixed maturities		6,983.4		246.1		6,681.7		55.6
Equity securities		567.7		566.4		-		1.3
Other investments		104.5		-		100.9		3.6
Total investment assets at fair value	$	7,655.6	$	812.5	$	6,782.6	$	60.5

The following tables provide, for each hierarchy level, the Company’s estimated fair values of financial instruments that were not carried at fair value:

		June 30, 2016
(in millions)		Total		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	361.6	$	361.6	$	-	$	-
Equity securities		8.7		-		8.7		-
Other investments		269.3		-		-		269.3
Liabilities:
Debt	$	893.9	$	-	$	893.9	$	-
		December 31, 2015
(in millions)		Total		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	338.8	$	338.8	$	-	$	-
Equity securities		8.9		-		8.9		-
Other investments		203.5		-		-		203.5
Liabilities:
Debt	$	927.8	$	-	$	927.8	$	-

Investments measured at fair value using net asset value based on an ownership interest in partners’ capital have not been included in the table above. The fair values of these investments were $67.1 million and $59.9 million as of June 30, 2016 and December 31, 2015, respectively, which are less than 1% of total investment assets.

The tables below provide a reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3).

		Fixed Maturities
(in millions)	Municipal		Corporate		Commercial mortgage-backed		Asset-backed		Total		Equity and Other		Total Assets
Three Months Ended
June 30, 2016
Balance April 1, 2016	$	34.7	$	3.8	$	16.8	$	0.5	$	55.8	$	4.9	$	60.7
Total gains:
Included in other comprehensive
income - net appreciation
on available-for-sale securities		0.6		0.7		0.2		-		1.5		-		1.5
Sales		(0.9)		(0.1)		(0.3)		(0.1)		(1.4)		-		(1.4)
Balance June 30, 2016	$	34.4	$	4.4	$	16.7	$	0.4	$	55.9	$	4.9	$	60.8
Three Months Ended
June 30, 2015
Balance April 1, 2015	$	27.2	$	9.5	$	20.9	$	0.8	$	58.4	$	5.1	$	63.5
Transfers into Level 3		-		-		-		0.5		0.5		-		0.5
Total gains (losses):
Included in earnings		-		0.1		-		-		0.1		-		0.1
Included in other comprehensive
income - net depreciation
on available-for-sale securities		(1.2)		(0.1)		(0.9)		-		(2.2)		-		(2.2)
Purchases and sales:
Purchases		1.4		-		-		-		1.4		-		1.4
Sales		(0.4)		(0.1)		(2.0)		-		(2.5)		-		(2.5)
Balance June 30, 2015	$	27.0	$	9.4	$	18.0	$	1.3	$	55.7	$	5.1	$	60.8

	Fixed Maturities
(in millions)	Municipal		Corporate		Commercial mortgage-backed		Asset-backed		Total		Equity and Other		Total Assets
Six Months Ended
June 30, 2016
Balance January 1, 2016	$	34.4	$	3.7	$	17.0	$	0.5	$	55.6	$	4.9	$	60.5
Total gains (losses):
Included in earnings		0.1		(0.2)		-		-		(0.1)		-		(0.1)
Included in other comprehensive    income-net appreciation    on available-for-sale securities		1.6		0.7		0.7		-		3.0		-		3.0
Purchases and sales:
Purchases		-		0.3		-		-		0.3		-		0.3
Sales		(1.7)		(0.1)		(1.0)		(0.1)		(2.9)		-		(2.9)
Balance June 30, 2016	$	34.4	$	4.4	$	16.7	$	0.4	$	55.9	$	4.9	$	60.8
Six Months Ended
June 30, 2015
Balance January 1, 2015	$	25.7	$	9.6	$	21.4	$	-	$	56.7	$	5.0	$	61.7
Transfers into Level 3		-		-		-		1.3		1.3		-		1.3
Total gains (losses):
Included in earnings		-		0.1		-		-		0.1		-		0.1
Included in other comprehensive    income-net (depreciation) appreciation on    available-for-sale securities		(0.8)		(0.2)		(0.6)		-		(1.6)		0.1		(1.5)
Purchases and sales:
Purchases		3.1		-		-		-		3.1		-		3.1
Sales		(1.0)		(0.1)		(2.8)		-		(3.9)		-		(3.9)
Balance June 30, 2015	$	27.0	$	9.4	$	18.0	$	1.3	$	55.7	$	5.1	$	60.8

During the three and six months ended June 30, 2016, the Company did not transfer assets between Level 2 and Level 3. During the three and six months ended June 30, 2015, the Company transferred fixed maturities between Level 2 and Level 3 primarily as a result of assessing the significance of unobservable inputs on the fair value measurement. There were no transfers between Level 1 and Level 2 during the three months or six months ended June 30, 2016 or 2015. There were no Level 3 liabilities held by the Company for the six months ended June 30, 2016 and 2015.

The following table summarizes gains and losses due to changes in fair value that were recorded in net income for Level 3 assets:

	Three Months Ended June 30,								Six Months Ended June 30,
	2016				2015				2016				2015
	Net realized		Other than		Net realized		Other than		Net realized		Other than		Net realized		Other than
	investment		temporary		investment		temporary		investment		temporary		investment		temporary
(in millions)	gains		impairments		gains		impairments		gains		impairments		gains		impairments
Level 3 Assets:
Fixed maturities:
Corporate	$	-	$	-	$	0.1	$	-	$	-	$	(0.2)	$	0.1	$	-
Municipal		-		-		-		-		0.1		-		-		-
Total fixed maturities	$	-	$	-	$	0.1	$	-	$	0.1	$	(0.2)	$	0.1	$	-

The following table provides quantitative information about the significant unobservable inputs used by the Company in the fair value measurements of Level 3 assets. Where discounted cash flows were used in the valuation of fixed maturities, the internally-developed discount rate was adjusted by the significant unobservable inputs shown in the table. Valuations for securities based on broker quotes for which there was a lack of transparency as to inputs used to develop the valuations of $0.4 million have been excluded.

			June 30, 2016			December 31, 2015
	Valuation	Significant		Fair	Range		Fair	Range
(in millions)	Technique	Unobservable Inputs		Value	(Wtd Average)		Value	(Wtd Average)
Fixed maturities:
Municipal	Discounted	Discount for:	$	34.4		$	34.4
	cash flow	Small issue size Credit stress Above-market coupon			0.6 - 6.8%  (3.2%)   0.9 - 1.5%  (1.2%) 0.3 - 1.0%  (0.4%)			0.6 - 6.8%  (3.2%)   0.9 - 1.5%  (1.2%) 0.3 - 1.0%  (0.4%)
Corporate	Discounted	Discount for:		4.2			3.7
	cash flow	Small issue size Above-market coupon Credit stress			2.3 - 2.5%  (2.4%) 0.3 - 0.8%  (0.6%) 0.4%  (0.4%)			1.0%  (1.0%) 0.3 - 0.8%  (0.6%) 10.0%  (10.0%)
Commercial mortgage-backed	Discounted	Discount for:		16.7			17.0
	cash flow	Small issue size Above-market coupon Lease structure			1.5 - 3.1%  (2.6%) 0.5%  (0.5%) 0.3%  (0.3%)			0.5 - 1.0%  (0.5%) 0.5%  (0.5%) 0.3%  (0.3%)
Asset-backed	Discounted	Discount for:		0.4			0.5
	cash flow	Small issue size			0.7%  (0.7%)			0.7%  (0.7%)
Equity securities	Market	Net tangible asset		1.1			1.1
	comparables	market multiples			1.0X  (1.0X)			1.0X  (1.0X)
Other	Discounted	Discount rate		3.6	18.0%  (18.0%)		3.6	18.0%  (18.0%)
	cash flow

Significant increases (decreases) in any of the above inputs in isolation would result in a significantly lower (higher) fair value measurement. There were no interrelationships between these inputs which might magnify or mitigate the effect of changes in unobservable inputs on the fair value measurement.

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Pension and Other Postretirement Benefit Plans

6 Months Ended

Jun. 30, 2016

Pension and Other Postretirement Benefit Plans [Abstract]

Pension and Other Postretirement Benefit Plans

7. Pension and Other Postretirement Benefit Plans

The components of net periodic pension cost for defined benefit pension and other postretirement benefit plans included in the Company’s results of operations are as follows:

	Three Months Ended June 30,
	2016		2015		2016		2015
(in millions)	Pension Plans				Postretirement Plans
Service cost - benefits earned during the period	$	0.2	$	0.4	$	-	$	-
Interest cost		7.4		7.3		0.1		0.1
Expected return on plan assets		(7.5)		(7.9)		-		-
Recognized net actuarial loss		2.8		4.8		-		0.1
Amortization of prior service cost		-		-		(0.3)		(0.3)
Curtailment gain		-		(1.8)		-		-
Net periodic pension cost (benefit)	$	2.9	$	2.8	$	(0.2)	$	(0.1)
	Six Months Ended June 30,
	2016		2015		2016		2015
(in millions)	Pension Plans				Postretirement Plans
Service cost - benefits earned during the period	$	0.4	$	0.7	$	-	$	-
Interest cost		14.8		14.6		0.2		0.3
Expected return on plan assets		(15.0)		(15.7)		-		-
Recognized net actuarial loss		5.6		7.8		0.1		0.1
Amortization of prior service cost		-		-		(0.7)		(0.7)
Curtailment gain		-		(1.8)		-		-
Net periodic pension cost (benefit)	$	5.8	$	5.6	$	(0.4)	$	(0.3)

In the second quarter of 2015, the Company recognized a $1.8 million curtailment gain due to the disposal of the U.K. motor business.  Included in the table above in recognized net actuarial loss was an equal and offsetting expense.

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Other Comprehensive Income

6 Months Ended

Jun. 30, 2016

Other Comprehensive Income [Abstract]

Other Comprehensive Income

8. Other Comprehensive Income

The following table provides changes in other comprehensive income.

	Three Months Ended June 30,
	2016						2015
			Tax						Tax
			Benefit		Net of				Benefit		Net of
(in millions)	Pre-Tax		(Expense)		Tax		Pre-Tax		(Expense)		Tax
Unrealized gains (losses) on available-for-sale securities:
Unrealized gains (losses) arising during period	$	124.1	$	(43.3)	$	80.8	$	(128.2)	$	44.8	$	(83.4)
Amount of realized gains from sales and other		(4.5)		(2.5)		(7.0)		(14.4)		1.9		(12.5)
Portion of other-than-temporary impairment losses
recognized in earnings		5.0		(1.8)		3.2		1.9		(0.7)		1.2
Net unrealized gains (losses)		124.6		(47.6)		77.0		(140.7)		46.0		(94.7)
Pension and postretirement benefits:
Net actuarial losses and prior service cost
arising in the period		-		-		-		(4.2)		0.9		(3.3)
Amortization of net actuarial loss and prior service
cost recognized as net periodic benefit cost		2.5		(0.8)		1.7		4.7		(1.3)		3.4
Net pension and postretirement benefits		2.5		(0.8)		1.7		0.5		(0.4)		0.1
Cumulative foreign currency translation adjustment:
Foreign currency translation recognized during
the period		(1.1)		0.4		(0.7)		11.9		(4.2)		7.7
Other comprehensive income (loss)	$	126.0	$	(48.0)	$	78.0	$	(128.3)	$	41.4	$	(86.9)
	Six Months Ended June 30,
	2016						2015
			Tax						Tax
			Benefit		Net of				Benefit		Net of
(in millions)	Pre-Tax		(Expense)		Tax		Pre-Tax		(Expense)		Tax
Unrealized gains (losses) on available-for-sale securities:
Unrealized gains (losses) arising during period	$	282.0	$	(98.6)	$	183.4	$	(73.5)	$	25.7	$	(47.8)
Amount of realized gains from sales and other		(27.3)		0.6		(26.7)		(26.4)		3.3		(23.1)
Portion of other-than-temporary impairment losses
recognized in earnings		25.9		(9.1)		16.8		4.6		(1.6)		3.0
Net unrealized gains (losses)		280.6		(107.1)		173.5		(95.3)		27.4		(67.9)
Pension and postretirement benefits:
Net actuarial losses and prior service cost
arising in the period		-		-		-		(1.2)		(0.2)		(1.4)
Amortization of net actuarial loss and prior service
cost recognized as net periodic benefit cost		5.0		(1.7)		3.3		7.3		(2.2)		5.1
Net pension and postretirement benefits		5.0		(1.7)		3.3		6.1		(2.4)		3.7
Cumulative foreign currency translation adjustment:
Foreign currency translation recognized during
the period		(2.0)		0.7		(1.3)		(3.4)		1.2		(2.2)
Other comprehensive income (loss)	$	283.6	$	(108.1)	$	175.5	$	(92.6)	$	26.2	$	(66.4)

Reclassifications out of accumulated other comprehensive income were as follows:

	Three Months Ended				Six Months Ended
		June 30,			June 30,
(in millions)		2016	2015		2016		2015
	Amount Reclassified from
Details about Accumulated Other	Accumulated Other								Affected Line Item in the Statement
Comprehensive Income Components	Comprehensive Income								Where Net Income is Presented
Unrealized gains on available-for-sale
securities	$	4.5	$	14.4	$	27.3	$	26.4	Net realized gains from sales and other
									Net other-than-temporary impairment
		(5.0)		(1.9)		(25.9)		(4.6)	losses on investments recognized  in earnings
		(0.5)		12.5		1.4		21.8	Total before tax
		4.3		(1.2)		8.5		(1.7)	Tax benefit (expense)
		3.8		11.3		9.9		20.1	Net of tax
Amortization of defined benefit pension									Loss adjustment expenses and other
and postretirement plans		(2.5)		(4.7)		(5.0)		(7.3)	operating expenses
		0.8		1.3		1.7		2.2	Tax benefit
		(1.7)		(3.4)		(3.3)		(5.1)	Net of tax
Total reclassifications for the period	$	2.1	$	7.9	$	6.6	$	15.0	Benefit to income, net of tax

The amount reclassified from accumulated other comprehensive income for the pension and postretirement benefits was allocated approximately 40% to loss adjustment expenses and 60% to other operating expenses for the six months ended June 30, 2016 and 2015.

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Segment Information

6 Months Ended

Jun. 30, 2016

Segment Information [Abstract]

Segment Information

9. Segment Information

The Company’s primary business operations include insurance products and services provided through four operating segments. The domestic operating segments are Commercial Lines, Personal Lines and Other, and the Company’s international operating segment is Chaucer. Commercial Lines includes commercial multiple peril, commercial automobile, workers’ compensation, and other commercial coverages, such as inland marine, specialty program business, management and professional liability and surety. Personal Lines includes personal automobile, homeowners and other personal coverages. Chaucer includes marine and aviation, property, energy, casualty and othercoverages (which includes international liability, specialist coverages, and syndicate participations), and U.K. motor. Effective June 30, 2015, the Company transferred its U.K. motor business to an unaffiliated party. Accordingly, results from the Chaucer segment no longer include this business subsequent to June 30, 2015. Included in Other are Opus Investment Management, Inc., which markets investment management services to institutions, pension funds and other organizations; earnings on holding company assets; and, a discontinued voluntary pools business. The separate financial information is presented consistent with the way results are regularly evaluated by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

The Company reports interest expense related to debt separately from the earnings of its operating segments. This consists of interest on the Company’s senior debentures, subordinated debentures, collateralized borrowings with the Federal Home Loan Bank of Boston, and letter of credit facility. Management evaluates the results of the aforementioned segments based on operating income before taxes, which also excludes interest expense on debt. Operating income before taxes excludes certain items which are included in net income, such as net realized investment gains and losses. Such gains and losses are excluded since they are determined by interest rates, financial markets and the timing of sales. Also, operating income before taxes excludes net gains and losses on disposals of business assets, gains and losses related to the repayment of debt, discontinued operations, costs to acquire businesses, restructuring costs, the cumulative effect of accounting changes and certain other items. Although the items excluded from operating income before taxes may be important components in understanding and assessing the Company’s overall financial performance, management believes that the presentation of operating income before taxes enhances an investor’s understanding of the Company’s results of operations by highlighting net income attributable to the core operations of the business. However, operating income before taxes should not be construed as a substitute for income before income taxes and operating income should not be construed as a substitute for net income.

Summarized below is financial information with respect to the Company’s business segments.

		Three Months Ended				Six Months Ended
		June 30,				June 30,
(in millions)		2016		2015		2016		2015
Operating revenues:
Commercial Lines	$	616.1	$	598.8	$	1,228.8	$	1,185.5
Personal Lines		384.5		377.7		763.3		751.7
Chaucer		219.8		306.3		452.9		632.8
Other		2.3		1.7		3.8		3.8
Total		1,222.7		1,284.5		2,448.8		2,573.8
Net realized investment gains		(0.7)		12.6		0.8		22.0
Total revenues	$	1,222.0	$	1,297.1	$	2,449.6	$	2,595.8
Operating income (loss) before interest expense and income taxes:
Commercial Lines:
Underwriting income	$	5.1	$	8.5	$	8.8	$	2.6
Net investment income		39.1		39.4		78.5		78.0
Other (expenses) income		(0.2)		0.3		(0.6)		(1.2)
Commercial Lines operating income		44.0		48.2		86.7		79.4
Personal Lines:
Underwriting income		29.3		13.0		57.9		16.4
Net investment income		17.1		18.3		34.5		36.2
Other income		1.0		0.8		2.1		1.8
Personal Lines operating income		47.4		32.1		94.5		54.4
Chaucer:
Underwriting (loss) income		(6.5)		27.5		16.0		63.1
Net investment income		11.3		12.0		22.0		24.3
Other income		0.7		2.5		1.2		3.8
Chaucer operating income		5.5		42.0		39.2		91.2
Other:
Underwriting loss		(0.6)		(0.7)		(1.3)		(1.4)
Net investment income		1.6		1.0		2.4		2.3
Other net expenses		(3.2)		(3.1)		(6.4)		(6.0)
Other operating loss		(2.2)		(2.8)		(5.3)		(5.1)
Operating income before interest expense and income taxes		94.7		119.5		215.1		219.9
Interest on debt		(15.6)		(15.0)		(30.3)		(31.1)
Operating income before income taxes		79.1		104.5		184.8		188.8
Non-operating income items:
Net realized investment (losses) gains		(0.7)		12.6		0.8		22.0
Net gain on disposal of U.K. motor business		0.4		37.7		1.2		37.7
Net loss from repayment of debt		(86.1)		(1.8)		(86.1)		(18.5)
Other non-operating items		0.2		(0.4)		0.3		(0.4)
Income (loss) before income taxes	$	(7.1)	$	152.6	$	101.0	$	229.6

The Company recognized approximately $9 million in net foreign currency transaction losses and approximately $11 million in net foreign currency transaction gains in the Statements of Income during the three months ended June 30, 2016 and 2015, respectively. The Company recognized approximately $21 million in net foreign currency transaction losses and approximately $15 million in net foreign currency transaction gains in the Statements of Income during the six months ended June 30, 2016 and 2015, respectively.

The following table provides identifiable assets for the Company’s business segments and discontinued operations:

	June 30, 2016		December 31, 2015
(in millions)	Identifiable Assets
U.S. Companies	$	9,907.6	$	9,616.0
Chaucer		4,175.8		4,082.2
Discontinued operations		80.2		83.0
Total	$	14,163.6	$	13,781.2

The Company reviews the assets of its U.S. Companies collectively and does not allocate them between the Commercial Lines, Personal Lines and Other segments.

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Stock-based Compensation

6 Months Ended

Jun. 30, 2016

Stock-based Compensation [Abstract]

Stock-based Compensation

10. Stock-based Compensation

As of June 30, 2016, there were 4,934,810 shares, 2,420,768 shares and 705,382 shares available for grant under The Hanover Insurance Group 2014 Long-Term Incentive Plan, The Hanover Insurance Group 2014 Employee Stock Purchase Plan and the Chaucer Share Incentive Plan, respectively.

Compensation cost for the Company’s stock-based awards and the related tax benefits were as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2016		2015		2016		2015
Stock-based compensation expense	$	2.7	$	4.2	$	5.5	$	7.5
Tax benefit		(0.9)		(1.4)		(1.9)		(2.6)
Stock-based compensation expense, net of taxes	$	1.8	$	2.8	$	3.6	$	4.9

Stock Options

Information on the Company’s stock option plans is summarized below.

	Six Months Ended June 30,
	2016			2015
(in whole shares and dollars)	Shares		Weighted Average Exercise Price	Shares		Weighted Average Exercise Price
Outstanding, beginning of period	1,619,948	$	56.57	2,236,620	$	46.61
Granted	524,940		82.74	659,850		70.28
Exercised	(495,242)		48.57	(204,444)		44.29
Forfeited or cancelled	(161,207)		66.80	(90,137)		51.52
Outstanding, end of period	1,488,439		67.36	2,601,889		52.63

Restricted Stock Units

The following tables summarize activity information about employee restricted stock units:

	Six Months Ended June 30,
	2016			2015
(in whole shares and dollars)	Shares		Weighted Average Grant Date Fair Value	Shares		Weighted Average Grant Date Fair Value
Time-based restricted stock units:
Outstanding, beginning of period	301,897	$	54.54	384,923	$	45.63
Granted	141,949		83.47	92,409		70.61
Vested	(135,863)		42.44	(95,787)		41.56
Forfeited	(18,831)		67.15	(20,988)		48.90
Outstanding, end of period	289,152		73.61	360,557		52.93
Performance-based and market-based restricted stock units:
Outstanding, beginning of period	196,142	$	47.89	218,338	$	44.24
Granted	118,736		73.14	82,025		48.55
Vested	(144,141)		41.11	(77,854)		38.82
Forfeited	(56,500)		63.52	(14,451)		44.68
Outstanding, end of period	114,237		74.97	208,058		47.93

In the first six months of 2016 and 2015, the Company granted market-based awards totaling 79,153 and 80,738, respectively, to certain members of senior management, which are included in the table above as performance and market-based restricted stock activity. The vesting of these stock units is based on the relative total shareholder return (“TSR”) of the Company. This metric is generally based on relative TSR for a three-year period as compared to a pre-selected group of property and casualty companies. The fair value of market-based awards was estimated at the date of grant using a valuation model. These units have the potential to range from 0% to 150% of the shares disclosed. Included in the amount granted above in 2016 are30,453 shares related to market-based awards that achieved a payout in excess of 100%. These awards vested in the first sixmonths of 2016.

Performance-based restricted stock units are based upon the achievement of the performance metric at 100%. These units have the potential to range from 0% to 200% of the shares disclosed, which varies based on grant year and individual participation level. Increases above the 100% target level are reflected as granted in the period in which performance-based stock unit goals are achieved. Decreases below the 100% target level are reflected as forfeited. Included in the amounts granted above for the performance-based restricted stock units are1,949 shares related to awards that a performance metric in excess of 100% was achieved. These awards vested in the first six months of 2016.

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Earnings Per Share and Shareholders' Equity Transactions

6 Months Ended

Jun. 30, 2016

Earnings Per Share and Shareholders’ Equity Transactions [Abstract]

Earnings Per Share and Shareholders' Equity Transactions

11. Earnings Per Share and Shareholders’ Equity Transactions

The following table provides weighted average share information used in the calculation of the Company’s basic and diluted earnings per share:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions, except per share data)		2016		2015		2016		2015
Basic shares used in the calculation of earnings per share		43.0		44.2		43.0		44.2
Dilutive effect of securities:
Employee stock options		0.3		0.5		0.3		0.5
Non-vested stock grants		0.1		0.3		0.2		0.4
Diluted shares used in the calculation of earnings per share		43.4		45.0		43.5		45.1
Per share effect of dilutive securities on income from continuing operations	$	-	$	(0.05)	$	(0.02)	$	(0.08)
Per share effect of dilutive securities on net income	$	-	$	(0.05)	$	(0.03)	$	(0.08)

Diluted earnings per share for the three and six months ended June 30, 2016 and 2015 excludes 0.2 million and 0.7 million, respectively, of common shares issuable under the Company’s stock compensation plans because their effect would be antidilutive.

The Company’s Board of Directors has authorized aggregate repurchases of the Company’s common stock of up to $900 million. Under the repurchase authorizations, the Company may repurchase, from time to time, common shares in amounts, at prices and at such times as the Company deems appropriate, subject to market conditions and other considerations. Repurchases may be executed using open market purchases, privately negotiated transactions, accelerated repurchase programs or other transactions. The Company is not required to purchase any specific number of shares or to make purchases by any certain date under this program. During the first six months of 2016, the Company purchased 0.8 million shares of the Company’s common stock at a cost of $67.5 million.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2016

Commitments and Contingencies [Abstract]

Commitments and Contingencies

12. Commitments and Contingencies

Legal Proceedings

Durand Litigation

On March 12, 2007, a putative class action suit captioned Jennifer A. Durand v. The Hanover Insurance Group, Inc., and The Allmerica Financial Cash Balance Pension Plan, was filed in the United States District Court for the Western District of Kentucky. The named plaintiff, a former employee of our former life insurance and annuity business who received a lump sum distribution from the Company’s Cash Balance Plan (the “Plan”) at or about the time of her separation from the company, claims that she and others similarly situated did not receive the appropriate lump sum distribution because in computing the lump sum, the Company and the Plan understated the accrued benefit in the calculation. The plaintiff claims that the Plan underpaid her distributions and those of similarly situated participants by failing to pay an additional so-called “whipsaw” amount reflecting the present value of an estimate of future interest credits from the date of the lump sum distribution to each participant’s retirement age of 65 (“whipsaw claim”).

The plaintiff filed an Amended Complaint adding two new named plaintiffs and additional claims on December 11, 2009.  Two of the three new claims set forth in the Amended Complaint were dismissed by the District Court, which action was upheld in November 2015 by the U.S. Court of Appeals, Sixth Circuit.  The District Court, however, did allow to stand the portion of the Amended Complaint which set forth claims against the Company for breach of fiduciary duty and failure to meet notice requirements arising under the Employee Retirement Income Security Act of 1974 (“ERISA”) from the various interest crediting and lump sum distribution matters of which plaintiffs complain, but only as to plaintiffs’ “whipsaw” claim that remained in the case. On December 17, 2013, the Court entered an order certifying a class to bring “whipsaw” and related breach of fiduciary duty claims consisting of all persons who received a lump sum distribution between March 1, 1997 and December 31, 2003. The Company filed a summary judgment motion, prior to the decision on the appeal, that was based on the statute of limitations and seeks to dismiss the subclass of plaintiffs who received lump sum distributions prior to March 13, 2002.  This summary judgment motion has been stayed pending additional discovery.

At this time, the Company is unable to provide a reasonable estimate of the potential range of ultimate liability if the outcome of the suit is unfavorable. The statute of limitations applicable to the sub-class consisting of all persons who received lump sum distributions between March 1, 1997 and March 12, 2002 has not yet been finally determined, and the extent of potential liability, if any, will depend on this determination. In addition, assuming for these purposes that the plaintiffs prevail with respect to claims that benefits accrued or payable under the Plan were understated, then there are numerous possible theories and other variables upon which any revised calculation of benefits as requested under plaintiffs’ claims could be based. Any adverse judgment in this case against the Plan would be expected to create a liability for the Plan, with resulting effects on the Plan’s assets available to pay benefits. The Company’s future required funding of the Plan could also be impacted by such a liability.

Other Matters

The Company has been named a defendant in various other legal proceedings arising in the normal course of business. In addition, the Company is involved, from time to time, in examinations, investigations and proceedings by governmental and self-regulatory agencies. The potential outcome of any such action or regulatory proceedings in which the Company has been named a defendant or the subject of an inquiry or investigation, and its ultimate liability, if any, from such action or regulatory proceedings, is difficult to predict at this time. The ultimate resolutions of such proceedings are not expected to have a material effect on its financial position, although they could have a material effect on the results of operations for a particular quarter or annual period.

Residual Markets

The Company is required to participate in residual markets in various states, which generally pertain to high risk insureds, disrupted markets or lines of business or geographic areas where rates are regarded as excessive. The results of the residual markets are not subject to the predictability associated with the Company’s own managed business, and are significant to both the personal and commercial automobile lines of business and the workers’ compensation line of business.

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Subsequent Events

6 Months Ended

Jun. 30, 2016

Subsequent Events [Abstract]

Subsequent Events

13. Subsequent Events

There were no subsequent events requiring adjustment to the financial statements and no additional disclosures required in the notes to the interim consolidated financial statements.

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Debt (Tables)

6 Months Ended

Jun. 30, 2016

Debt [Abstract]

Schedule of Long-Term Debt

(in millions)		June 30, 2016		December 31, 2015
Senior debentures maturing April 15, 2026	$	375.0	$	-
Senior debentures maturing June 15, 2021		-		300.0
Senior debentures maturing March 1, 2020		-		80.0
Senior debentures maturing October 15, 2025		74.6		74.6
Subordinated debentures maturing March 30, 2053		175.0		175.0
Subordinated debentures maturing February 3, 2027		59.7		59.7
FHLBB borrowings (secured)		125.0		125.0
Total principal debt	$	809.3	$	814.3
Unamortized debt issuance costs		(11.5)		(11.2)
Total	$	797.8	$	803.1

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Investments (Tables)

6 Months Ended

Jun. 30, 2016

Investments [Abstract]

Schedule of Available-for-sale Securities Reconciliation

	June 30, 2016
	Amortized		Gross		Gross				OTTI
	Cost or		Unrealized		Unrealized				Unrealized
(in millions)	Cost		Gains		Losses		Fair Value		Losses
Fixed maturities:
U.S. Treasury and government agencies	$	364.9	$	11.6	$	-	$	376.5	$	-
Foreign government		229.4		7.2		-		236.6		-
Municipal		1,084.6		76.2		0.9		1,159.9		-
Corporate		3,728.8		182.7		28.8		3,882.7		18.6
Residential mortgage-backed		849.0		26.1		0.9		874.2		0.3
Commercial mortgage-backed		507.5		25.5		0.1		532.9		-
Asset-backed		78.6		0.9		0.3		79.2		-
Total fixed maturities	$	6,842.8	$	330.2	$	31.0	$	7,142.0	$	18.9
Equity securities	$	507.8	$	76.8	$	1.9	$	582.7	$	-

	December 31, 2015
	Amortized		Gross		Gross				OTTI
	Cost or		Unrealized		Unrealized				Unrealized
(in millions)	Cost		Gains		Losses		Fair Value		Losses
Fixed maturities:
U.S. Treasury and government agencies	$	447.1	$	5.5	$	3.5	$	449.1	$	-
Foreign government		244.7		2.6		1.5		245.8		-
Municipal		1,074.5		50.0		4.2		1,120.3		-
Corporate		3,699.9		86.8		95.7		3,691.0		27.5
Residential mortgage-backed		887.6		13.4		4.9		896.1		0.3
Commercial mortgage-backed		499.6		5.8		4.3		501.1		-
Asset-backed		80.6		0.2		0.8		80.0		-
Total fixed maturities	$	6,934.0	$	164.3	$	114.9	$	6,983.4	$	27.8
Equity securities	$	528.5	$	55.7	$	7.6	$	576.6	$	-

Investments Classified by Contractual Maturity Date

	June 30, 2016
	Amortized		Fair
(in millions)	Cost		Value
Due in one year or less	$	433.1	$	437.9
Due after one year through five years		2,499.2		2,607.8
Due after five years through ten years		2,026.6		2,123.4
Due after ten years		448.8		486.6
		5,407.7		5,655.7
Mortgage-backed and asset-backed securities		1,435.1		1,486.3
Total fixed maturities	$	6,842.8	$	7,142.0

Schedule of Unrealized Loss on Investments

	June 30, 2016
	12 months or less				Greater than 12 months				Total
	Gross				Gross				Gross
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
(in millions)	Losses		Value		Losses		Value		Losses		Value
Fixed maturities:
Investment grade:
U.S. Treasury and government agencies	$	-	$	5.0	$	-	$	-	$	-	$	5.0
Foreign governments		-		4.1		-		1.2		-		5.3
Municipal		0.2		12.8		0.7		33.0		0.9		45.8
Corporate		1.4		51.6		6.2		113.9		7.6		165.5
Residential mortgage-backed		0.2		25.1		0.7		35.6		0.9		60.7
Commercial mortgage-backed		-		8.1		0.1		9.3		0.1		17.4
Asset-backed		0.2		5.8		0.1		4.3		0.3		10.1
Total investment grade		2.0		112.5		7.8		197.3		9.8		309.8
Below investment grade:
Corporate		5.0		81.3		16.2		98.1		21.2		179.4
Total fixed maturities		7.0		193.8		24.0		295.4		31.0		489.2
Equity securities		1.9		76.2		-		-		1.9		76.2
Total	$	8.9	$	270.0	$	24.0	$	295.4	$	32.9	$	565.4

	December 31, 2015
	12 months or less				Greater than 12 months				Total
	Gross				Gross				Gross
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
(in millions)	Losses		Value		Losses		Value		Losses		Value
Fixed maturities:
Investment grade:
U.S. Treasury and government agencies	$	1.5	$	139.0	$	2.0	$	77.2	$	3.5	$	216.2
Foreign governments		0.8		63.6		0.7		8.4		1.5		72.0
Municipal		2.3		143.0		1.9		57.4		4.2		200.4
Corporate		30.7		1,138.3		18.9		122.3		49.6		1,260.6
Residential mortgage-backed		3.0		334.5		1.9		47.0		4.9		381.5
Commercial mortgage-backed		4.2		293.8		0.1		9.7		4.3		303.5
Asset-backed		0.8		56.6		-		1.4		0.8		58.0
Total investment grade		43.3		2,168.8		25.5		323.4		68.8		2,492.2
Below investment grade:
Corporate		19.6		165.5		26.5		63.2		46.1		228.7
Total fixed maturities		62.9		2,334.3		52.0		386.6		114.9		2,720.9
Equity securities		7.6		166.8		-		-		7.6		166.8
Total	$	70.5	$	2,501.1	$	52.0	$	386.6	$	122.5	$	2,887.7

Schedule of Realized Gain (Loss)

	Three Months Ended June 30,
	2016						2015
	Proceeds from		Gross		Gross		Proceeds from		Gross		Gross
(in millions)	Sales		Gains		Losses		Sales		Gains		Losses
Fixed maturities	$	145.4	$	3.5	$	0.9	$	594.4	$	10.6	$	1.4
Equity securities	$	84.5	$	1.7	$	0.8	$	83.1	$	7.7	$	-

	Six Months Ended June 30,
	2016						2015
	Proceeds from		Gross		Gross		Proceeds from		Gross		Gross
(in millions)	Sales		Gains		Losses		Sales		Gains		Losses
Fixed maturities	$	307.9	$	5.9	$	4.2	$	824.7	$	12.9	$	4.7
Equity securities	$	173.4	$	26.4	$	1.7	$	167.8	$	20.1	$	-

Rollforward of Cumulative Amounts Related to Credit Loss Portion of OTTI Losses

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2016		2015		2016		2015
Credit losses at beginning of period	$	13.4	$	4.5	$	18.0	$	4.2
Credit losses for which an OTTI was not previously recognized		0.7		1.7		5.2		2.7
Additional credit losses on securities for which an
OTTI was previously recognized		0.4		-		2.1		-
Reductions for securities sold, matured or called		(1.6)		(0.1)		(1.6)		(0.8)
Reductions for securities reclassified as intended to sell		(1.2)		-		(12.0)		-
Credit losses at end of period	$	11.7	$	6.1	$	11.7	$	6.1

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Fair Value (Tables)

6 Months Ended

Jun. 30, 2016

Fair Value [Abstract]

Fair Value of Financial Instruments

	June 30, 2016				December 31, 2015
	Carrying		Fair		Carrying		Fair
(in millions)	Value		Value		Value		Value
Financial Assets
Cash and cash equivalents	$	361.6	$	361.6	$	338.8	$	338.8
Fixed maturities		7,142.0		7,142.0		6,983.4		6,983.4
Equity securities		582.7		582.7		576.6		576.6
Other investments		423.0		430.5		365.4		367.9
Total financial assets	$	8,509.3	$	8,516.8	$	8,264.2	$	8,266.7
Financial Liabilities
Debt	$	797.8	$	893.9	$	803.1	$	927.8

Fair Value, Assets Measured on Recurring Basis

	June 30, 2016
(in millions)		Total		Level 1		Level 2		Level 3
Fixed maturities:
U.S. Treasury and government agencies	$	376.5	$	178.8	$	197.7	$	-
Foreign government		236.6		47.5		189.1		-
Municipal		1,159.9		-		1,125.5		34.4
Corporate		3,882.7		-		3,878.3		4.4
Residential mortgage-backed, U.S. agency backed		815.1		-		815.1		-
Residential mortgage-backed, non-agency		59.1		-		59.1		-
Commercial mortgage-backed		532.9		-		516.2		16.7
Asset-backed		79.2		-		78.8		0.4
Total fixed maturities		7,142.0		226.3		6,859.8		55.9
Equity securities		574.0		572.7		-		1.3
Other investments		94.1		-		90.5		3.6
Total investment assets at fair value	$	7,810.1	$	799.0	$	6,950.3	$	60.8

	December 31, 2015
(in millions)		Total		Level 1		Level 2		Level 3
Fixed maturities:
U.S. Treasury and government agencies	$	449.1	$	193.6	$	255.5	$	-
Foreign government		245.8		52.5		193.3		-
Municipal		1,120.3		-		1,085.9		34.4
Corporate		3,691.0		-		3,687.3		3.7
Residential mortgage-backed, U.S. agency backed		824.5		-		824.5		-
Residential mortgage-backed, non-agency		71.6		-		71.6		-
Commercial mortgage-backed		501.1		-		484.1		17.0
Asset-backed		80.0		-		79.5		0.5
Total fixed maturities		6,983.4		246.1		6,681.7		55.6
Equity securities		567.7		566.4		-		1.3
Other investments		104.5		-		100.9		3.6
Total investment assets at fair value	$	7,655.6	$	812.5	$	6,782.6	$	60.5

Estimated Fair Values of Financial Instruments Not Carried at Fair Value

		June 30, 2016
(in millions)		Total		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	361.6	$	361.6	$	-	$	-
Equity securities		8.7		-		8.7		-
Other investments		269.3		-		-		269.3
Liabilities:
Debt	$	893.9	$	-	$	893.9	$	-
		December 31, 2015
(in millions)		Total		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	338.8	$	338.8	$	-	$	-
Equity securities		8.9		-		8.9		-
Other investments		203.5		-		-		203.5
Liabilities:
Debt	$	927.8	$	-	$	927.8	$	-

Fair Value on Recurring Basis Using Significant Unobservable Inputs (Level 3)

		Fixed Maturities
(in millions)	Municipal		Corporate		Commercial mortgage-backed		Asset-backed		Total		Equity and Other		Total Assets
Three Months Ended
June 30, 2016
Balance April 1, 2016	$	34.7	$	3.8	$	16.8	$	0.5	$	55.8	$	4.9	$	60.7
Total gains:
Included in other comprehensive
income - net appreciation
on available-for-sale securities		0.6		0.7		0.2		-		1.5		-		1.5
Sales		(0.9)		(0.1)		(0.3)		(0.1)		(1.4)		-		(1.4)
Balance June 30, 2016	$	34.4	$	4.4	$	16.7	$	0.4	$	55.9	$	4.9	$	60.8
Three Months Ended
June 30, 2015
Balance April 1, 2015	$	27.2	$	9.5	$	20.9	$	0.8	$	58.4	$	5.1	$	63.5
Transfers into Level 3		-		-		-		0.5		0.5		-		0.5
Total gains (losses):
Included in earnings		-		0.1		-		-		0.1		-		0.1
Included in other comprehensive
income - net depreciation
on available-for-sale securities		(1.2)		(0.1)		(0.9)		-		(2.2)		-		(2.2)
Purchases and sales:
Purchases		1.4		-		-		-		1.4		-		1.4
Sales		(0.4)		(0.1)		(2.0)		-		(2.5)		-		(2.5)
Balance June 30, 2015	$	27.0	$	9.4	$	18.0	$	1.3	$	55.7	$	5.1	$	60.8

	Fixed Maturities
(in millions)	Municipal		Corporate		Commercial mortgage-backed		Asset-backed		Total		Equity and Other		Total Assets
Six Months Ended
June 30, 2016
Balance January 1, 2016	$	34.4	$	3.7	$	17.0	$	0.5	$	55.6	$	4.9	$	60.5
Total gains (losses):
Included in earnings		0.1		(0.2)		-		-		(0.1)		-		(0.1)
Included in other comprehensive    income-net appreciation    on available-for-sale securities		1.6		0.7		0.7		-		3.0		-		3.0
Purchases and sales:
Purchases		-		0.3		-		-		0.3		-		0.3
Sales		(1.7)		(0.1)		(1.0)		(0.1)		(2.9)		-		(2.9)
Balance June 30, 2016	$	34.4	$	4.4	$	16.7	$	0.4	$	55.9	$	4.9	$	60.8
Six Months Ended
June 30, 2015
Balance January 1, 2015	$	25.7	$	9.6	$	21.4	$	-	$	56.7	$	5.0	$	61.7
Transfers into Level 3		-		-		-		1.3		1.3		-		1.3
Total gains (losses):
Included in earnings		-		0.1		-		-		0.1		-		0.1
Included in other comprehensive    income-net (depreciation) appreciation on    available-for-sale securities		(0.8)		(0.2)		(0.6)		-		(1.6)		0.1		(1.5)
Purchases and sales:
Purchases		3.1		-		-		-		3.1		-		3.1
Sales		(1.0)		(0.1)		(2.8)		-		(3.9)		-		(3.9)
Balance June 30, 2015	$	27.0	$	9.4	$	18.0	$	1.3	$	55.7	$	5.1	$	60.8

Summary Gains and Losses due to Changes in Fair Value Recorded in Income for Level Three Assets

	Three Months Ended June 30,								Six Months Ended June 30,
	2016				2015				2016				2015
	Net realized		Other than		Net realized		Other than		Net realized		Other than		Net realized		Other than
	investment		temporary		investment		temporary		investment		temporary		investment		temporary
(in millions)	gains		impairments		gains		impairments		gains		impairments		gains		impairments
Level 3 Assets:
Fixed maturities:
Corporate	$	-	$	-	$	0.1	$	-	$	-	$	(0.2)	$	0.1	$	-
Municipal		-		-		-		-		0.1		-		-		-
Total fixed maturities	$	-	$	-	$	0.1	$	-	$	0.1	$	(0.2)	$	0.1	$	-

Schedule of Additional Information About Significant Unobservable Inputs Used in Fair Valuations of Level 3

			June 30, 2016			December 31, 2015
	Valuation	Significant		Fair	Range		Fair	Range
(in millions)	Technique	Unobservable Inputs		Value	(Wtd Average)		Value	(Wtd Average)
Fixed maturities:
Municipal	Discounted	Discount for:	$	34.4		$	34.4
	cash flow	Small issue size Credit stress Above-market coupon			0.6 - 6.8%  (3.2%)   0.9 - 1.5%  (1.2%) 0.3 - 1.0%  (0.4%)			0.6 - 6.8%  (3.2%)   0.9 - 1.5%  (1.2%) 0.3 - 1.0%  (0.4%)
Corporate	Discounted	Discount for:		4.2			3.7
	cash flow	Small issue size Above-market coupon Credit stress			2.3 - 2.5%  (2.4%) 0.3 - 0.8%  (0.6%) 0.4%  (0.4%)			1.0%  (1.0%) 0.3 - 0.8%  (0.6%) 10.0%  (10.0%)
Commercial mortgage-backed	Discounted	Discount for:		16.7			17.0
	cash flow	Small issue size Above-market coupon Lease structure			1.5 - 3.1%  (2.6%) 0.5%  (0.5%) 0.3%  (0.3%)			0.5 - 1.0%  (0.5%) 0.5%  (0.5%) 0.3%  (0.3%)
Asset-backed	Discounted	Discount for:		0.4			0.5
	cash flow	Small issue size			0.7%  (0.7%)			0.7%  (0.7%)
Equity securities	Market	Net tangible asset		1.1			1.1
	comparables	market multiples			1.0X  (1.0X)			1.0X  (1.0X)
Other	Discounted	Discount rate		3.6	18.0%  (18.0%)		3.6	18.0%  (18.0%)
	cash flow

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Pension and Other Postretirement Benefit Plans (Tables)

6 Months Ended

Jun. 30, 2016

Pension and Other Postretirement Benefit Plans [Abstract]

Components of Net Periodic Pension Cost

	Three Months Ended June 30,
	2016		2015		2016		2015
(in millions)	Pension Plans				Postretirement Plans
Service cost - benefits earned during the period	$	0.2	$	0.4	$	-	$	-
Interest cost		7.4		7.3		0.1		0.1
Expected return on plan assets		(7.5)		(7.9)		-		-
Recognized net actuarial loss		2.8		4.8		-		0.1
Amortization of prior service cost		-		-		(0.3)		(0.3)
Curtailment gain		-		(1.8)		-		-
Net periodic pension cost (benefit)	$	2.9	$	2.8	$	(0.2)	$	(0.1)
	Six Months Ended June 30,
	2016		2015		2016		2015
(in millions)	Pension Plans				Postretirement Plans
Service cost - benefits earned during the period	$	0.4	$	0.7	$	-	$	-
Interest cost		14.8		14.6		0.2		0.3
Expected return on plan assets		(15.0)		(15.7)		-		-
Recognized net actuarial loss		5.6		7.8		0.1		0.1
Amortization of prior service cost		-		-		(0.7)		(0.7)
Curtailment gain		-		(1.8)		-		-
Net periodic pension cost (benefit)	$	5.8	$	5.6	$	(0.4)	$	(0.3)

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Other Comprehensive Income (Tables)

6 Months Ended

Jun. 30, 2016

Other Comprehensive Income [Abstract]

Changes in Other Comprehensive Income

	Three Months Ended June 30,
	2016						2015
			Tax						Tax
			Benefit		Net of				Benefit		Net of
(in millions)	Pre-Tax		(Expense)		Tax		Pre-Tax		(Expense)		Tax
Unrealized gains (losses) on available-for-sale securities:
Unrealized gains (losses) arising during period	$	124.1	$	(43.3)	$	80.8	$	(128.2)	$	44.8	$	(83.4)
Amount of realized gains from sales and other		(4.5)		(2.5)		(7.0)		(14.4)		1.9		(12.5)
Portion of other-than-temporary impairment losses
recognized in earnings		5.0		(1.8)		3.2		1.9		(0.7)		1.2
Net unrealized gains (losses)		124.6		(47.6)		77.0		(140.7)		46.0		(94.7)
Pension and postretirement benefits:
Net actuarial losses and prior service cost
arising in the period		-		-		-		(4.2)		0.9		(3.3)
Amortization of net actuarial loss and prior service
cost recognized as net periodic benefit cost		2.5		(0.8)		1.7		4.7		(1.3)		3.4
Net pension and postretirement benefits		2.5		(0.8)		1.7		0.5		(0.4)		0.1
Cumulative foreign currency translation adjustment:
Foreign currency translation recognized during
the period		(1.1)		0.4		(0.7)		11.9		(4.2)		7.7
Other comprehensive income (loss)	$	126.0	$	(48.0)	$	78.0	$	(128.3)	$	41.4	$	(86.9)
	Six Months Ended June 30,
	2016						2015
			Tax						Tax
			Benefit		Net of				Benefit		Net of
(in millions)	Pre-Tax		(Expense)		Tax		Pre-Tax		(Expense)		Tax
Unrealized gains (losses) on available-for-sale securities:
Unrealized gains (losses) arising during period	$	282.0	$	(98.6)	$	183.4	$	(73.5)	$	25.7	$	(47.8)
Amount of realized gains from sales and other		(27.3)		0.6		(26.7)		(26.4)		3.3		(23.1)
Portion of other-than-temporary impairment losses
recognized in earnings		25.9		(9.1)		16.8		4.6		(1.6)		3.0
Net unrealized gains (losses)		280.6		(107.1)		173.5		(95.3)		27.4		(67.9)
Pension and postretirement benefits:
Net actuarial losses and prior service cost
arising in the period		-		-		-		(1.2)		(0.2)		(1.4)
Amortization of net actuarial loss and prior service
cost recognized as net periodic benefit cost		5.0		(1.7)		3.3		7.3		(2.2)		5.1
Net pension and postretirement benefits		5.0		(1.7)		3.3		6.1		(2.4)		3.7
Cumulative foreign currency translation adjustment:
Foreign currency translation recognized during
the period		(2.0)		0.7		(1.3)		(3.4)		1.2		(2.2)
Other comprehensive income (loss)	$	283.6	$	(108.1)	$	175.5	$	(92.6)	$	26.2	$	(66.4)

Reclassifications Out of Accumulated Other Comprehensive Income

	Three Months Ended				Six Months Ended
		June 30,			June 30,
(in millions)		2016	2015		2016		2015
	Amount Reclassified from
Details about Accumulated Other	Accumulated Other								Affected Line Item in the Statement
Comprehensive Income Components	Comprehensive Income								Where Net Income is Presented
Unrealized gains on available-for-sale
securities	$	4.5	$	14.4	$	27.3	$	26.4	Net realized gains from sales and other
									Net other-than-temporary impairment
		(5.0)		(1.9)		(25.9)		(4.6)	losses on investments recognized  in earnings
		(0.5)		12.5		1.4		21.8	Total before tax
		4.3		(1.2)		8.5		(1.7)	Tax benefit (expense)
		3.8		11.3		9.9		20.1	Net of tax
Amortization of defined benefit pension									Loss adjustment expenses and other
and postretirement plans		(2.5)		(4.7)		(5.0)		(7.3)	operating expenses
		0.8		1.3		1.7		2.2	Tax benefit
		(1.7)		(3.4)		(3.3)		(5.1)	Net of tax
Total reclassifications for the period	$	2.1	$	7.9	$	6.6	$	15.0	Benefit to income, net of tax

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2016

Segment Information [Abstract]

Financial Information with Respect to Business Segments

		Three Months Ended				Six Months Ended
		June 30,				June 30,
(in millions)		2016		2015		2016		2015
Operating revenues:
Commercial Lines	$	616.1	$	598.8	$	1,228.8	$	1,185.5
Personal Lines		384.5		377.7		763.3		751.7
Chaucer		219.8		306.3		452.9		632.8
Other		2.3		1.7		3.8		3.8
Total		1,222.7		1,284.5		2,448.8		2,573.8
Net realized investment gains		(0.7)		12.6		0.8		22.0
Total revenues	$	1,222.0	$	1,297.1	$	2,449.6	$	2,595.8
Operating income (loss) before interest expense and income taxes:
Commercial Lines:
Underwriting income	$	5.1	$	8.5	$	8.8	$	2.6
Net investment income		39.1		39.4		78.5		78.0
Other (expenses) income		(0.2)		0.3		(0.6)		(1.2)
Commercial Lines operating income		44.0		48.2		86.7		79.4
Personal Lines:
Underwriting income		29.3		13.0		57.9		16.4
Net investment income		17.1		18.3		34.5		36.2
Other income		1.0		0.8		2.1		1.8
Personal Lines operating income		47.4		32.1		94.5		54.4
Chaucer:
Underwriting (loss) income		(6.5)		27.5		16.0		63.1
Net investment income		11.3		12.0		22.0		24.3
Other income		0.7		2.5		1.2		3.8
Chaucer operating income		5.5		42.0		39.2		91.2
Other:
Underwriting loss		(0.6)		(0.7)		(1.3)		(1.4)
Net investment income		1.6		1.0		2.4		2.3
Other net expenses		(3.2)		(3.1)		(6.4)		(6.0)
Other operating loss		(2.2)		(2.8)		(5.3)		(5.1)
Operating income before interest expense and income taxes		94.7		119.5		215.1		219.9
Interest on debt		(15.6)		(15.0)		(30.3)		(31.1)
Operating income before income taxes		79.1		104.5		184.8		188.8
Non-operating income items:
Net realized investment (losses) gains		(0.7)		12.6		0.8		22.0
Net gain on disposal of U.K. motor business		0.4		37.7		1.2		37.7
Net loss from repayment of debt		(86.1)		(1.8)		(86.1)		(18.5)
Other non-operating items		0.2		(0.4)		0.3		(0.4)
Income (loss) before income taxes	$	(7.1)	$	152.6	$	101.0	$	229.6

Identifiable Assets by Business Segment

	June 30, 2016		December 31, 2015
(in millions)	Identifiable Assets
U.S. Companies	$	9,907.6	$	9,616.0
Chaucer		4,175.8		4,082.2
Discontinued operations		80.2		83.0
Total	$	14,163.6	$	13,781.2

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Stock-based Compensation (Tables)

6 Months Ended

Jun. 30, 2016

Stock-based Compensation [Abstract]

Compensation Cost and Related Tax Benefits

	Three Months Ended June 30,				Six Months Ended June 30,
(in millions)	2016		2015		2016		2015
Stock-based compensation expense	$	2.7	$	4.2	$	5.5	$	7.5
Tax benefit		(0.9)		(1.4)		(1.9)		(2.6)
Stock-based compensation expense, net of taxes	$	1.8	$	2.8	$	3.6	$	4.9

Summary of Stock Option Plan Activity

	Six Months Ended June 30,
	2016			2015
(in whole shares and dollars)	Shares		Weighted Average Exercise Price	Shares		Weighted Average Exercise Price
Outstanding, beginning of period	1,619,948	$	56.57	2,236,620	$	46.61
Granted	524,940		82.74	659,850		70.28
Exercised	(495,242)		48.57	(204,444)		44.29
Forfeited or cancelled	(161,207)		66.80	(90,137)		51.52
Outstanding, end of period	1,488,439		67.36	2,601,889		52.63

Summary of Restricted Stock Activity

	Six Months Ended June 30,
	2016			2015
(in whole shares and dollars)	Shares		Weighted Average Grant Date Fair Value	Shares		Weighted Average Grant Date Fair Value
Time-based restricted stock units:
Outstanding, beginning of period	301,897	$	54.54	384,923	$	45.63
Granted	141,949		83.47	92,409		70.61
Vested	(135,863)		42.44	(95,787)		41.56
Forfeited	(18,831)		67.15	(20,988)		48.90
Outstanding, end of period	289,152		73.61	360,557		52.93
Performance-based and market-based restricted stock units:
Outstanding, beginning of period	196,142	$	47.89	218,338	$	44.24
Granted	118,736		73.14	82,025		48.55
Vested	(144,141)		41.11	(77,854)		38.82
Forfeited	(56,500)		63.52	(14,451)		44.68
Outstanding, end of period	114,237		74.97	208,058		47.93

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Earnings Per Share and Shareholders' Equity Transactions (Tables)

6 Months Ended

Jun. 30, 2016

Earnings Per Share and Shareholders’ Equity Transactions [Abstract]

Information Regarding Basic and Diluted Earnings Per Share

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in millions, except per share data)		2016		2015		2016		2015
Basic shares used in the calculation of earnings per share		43.0		44.2		43.0		44.2
Dilutive effect of securities:
Employee stock options		0.3		0.5		0.3		0.5
Non-vested stock grants		0.1		0.3		0.2		0.4
Diluted shares used in the calculation of earnings per share		43.4		45.0		43.5		45.1
Per share effect of dilutive securities on income from continuing operations	$	-	$	(0.05)	$	(0.02)	$	(0.08)
Per share effect of dilutive securities on net income	$	-	$	(0.05)	$	(0.03)	$	(0.08)

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Income Taxes (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Income Taxes [Abstract]
Federal income tax expense	$ 3.9	$ 37.4
Foreign income tax expense	17.1	16.4
Foreign income permanently reinvested	10.6	$ 63.0
Estimated taxes payable on undistributed earnings	$ 49.1

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Debt (Narrative) (Details) - USD ($)			3 Months Ended		6 Months Ended
	May 21, 2016	Apr. 08, 2016	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Debt Instrument [Line Items]
Gain (loss) on the redemption of debt	$ (86,100,000)		$ (86,100,000)	$ (1,800,000)	$ (86,100,000)	$ (18,500,000)
Senior debentures maturing April 15, 2026 [Member]
Debt Instrument [Line Items]
Aggregate principal amount		$ 375,000,000
Debt instrument interest rate		4.50%
Proceeds from Issuance of Debt		$ 370,500,000
Senior debentures maturing March 1, 2020 [Member]
Debt Instrument [Line Items]
Debt instrument interest rate	7.50%
Senior debentures maturing June 15, 2021 [Member]
Debt Instrument [Line Items]
Debt instrument interest rate	6.375%

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Debt (Schedule of Long-Term Debt) (Details) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Total principal debt	$ 809.3	$ 814.3
Unamortized debt issuance costs	(11.5)	(11.2)
Total	797.8	803.1
Federal Home Loan Bank of Boston [Member]
Debt Instrument [Line Items]
Total principal debt	125.0	125.0
Senior debentures maturing April 15, 2026 [Member]
Debt Instrument [Line Items]
Total principal debt	375.0
Senior debentures maturing June 15, 2021 [Member]
Debt Instrument [Line Items]
Total principal debt		300.0
Senior debentures maturing March 1, 2020 [Member]
Debt Instrument [Line Items]
Total principal debt		80.0
Senior debentures maturing October 15, 2025 [Member]
Debt Instrument [Line Items]
Total principal debt	74.6	74.6
Subordinated debentures maturing March 30, 2053 [Member]
Debt Instrument [Line Items]
Total principal debt	175.0	175.0
Subordinated debentures maturing February 3, 2027 [Member]
Debt Instrument [Line Items]
Total principal debt	$ 59.7	$ 59.7

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Investments (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Investments [Line Items]
Net unrealized gains on impaired securities	$ 18.9		$ 18.9		$ 1.1
Restricted assets, fixed maturities	503.0		503.0
Restricted assets, cash and cash equivalents	12.0		12.0
Other-than-temporary impairments recognized in earnings	5.0	$ 1.9	25.9	$ 4.6
Fixed Maturities And Equity Securities [Member]
Investments [Line Items]
Other-than-temporary impairments	2.8		19.2	11.4
Other-than-temporary impairments recognized in earnings	5.0		25.9	4.6
Other-than-temporary impairments recorded in accumulated other comprehensive income	$ 2.2		$ 6.7
Other-than-temporary impairments recorded as unrealized losses in AOCI				$ 6.8
Fixed Maturities [Member]
Investments [Line Items]
Other-than-temporary impairments		5.1
Other-than-temporary impairments recognized in earnings		1.9
Other-than-temporary impairments recorded as unrealized losses in AOCI		$ 3.2

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Investments (Schedule of Available-for-sale Securities Reconciliation) (Details) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost or Cost	$ 6,842.8	$ 6,934.0
Gross Unrealized Gains	330.2	164.3
Gross Unrealized Loss	31.0	114.9
Fair Value	7,142.0	6,983.4
OTTI Unrealized Losses	18.9	27.8
US Treasury and Government Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost or Cost	364.9	447.1
Gross Unrealized Gains	11.6	5.5
Gross Unrealized Loss		3.5
Fair Value	376.5	449.1
Foreign Government [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost or Cost	229.4	244.7
Gross Unrealized Gains	7.2	2.6
Gross Unrealized Loss		1.5
Fair Value	236.6	245.8
Municipal [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost or Cost	1,084.6	1,074.5
Gross Unrealized Gains	76.2	50.0
Gross Unrealized Loss	0.9	4.2
Fair Value	1,159.9	1,120.3
Corporate [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost or Cost	3,728.8	3,699.9
Gross Unrealized Gains	182.7	86.8
Gross Unrealized Loss	28.8	95.7
Fair Value	3,882.7	3,691.0
OTTI Unrealized Losses	18.6	27.5
Residential Mortgage Backed [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost or Cost	849.0	887.6
Gross Unrealized Gains	26.1	13.4
Gross Unrealized Loss	0.9	4.9
Fair Value	874.2	896.1
OTTI Unrealized Losses	0.3	0.3
Commercial Mortgage Backed [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost or Cost	507.5	499.6
Gross Unrealized Gains	25.5	5.8
Gross Unrealized Loss	0.1	4.3
Fair Value	532.9	501.1
Asset-backed [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost or Cost	78.6	80.6
Gross Unrealized Gains	0.9	0.2
Gross Unrealized Loss	0.3	0.8
Fair Value	79.2	80.0
Equity Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost or Cost	507.8	528.5
Gross Unrealized Gains	76.8	55.7
Gross Unrealized Loss	1.9	7.6
Fair Value	$ 582.7	$ 576.6

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Investments (Investments Classified by Contractual Maturity Date) (Details) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Investments [Abstract]
Due in one year or less, Amortized Cost	$ 433.1
Due after one year through five years, Amortized Cost	2,499.2
Due after five years through ten years, Amortized Cost	2,026.6
Due after ten years, Amortized Cost	448.8
Gross fixed maturities, Amortized Cost	5,407.7
Mortgage-backed and asset-backed securities, Amortized Cost	1,435.1
Total fixed maturities, Amortized Cost	6,842.8	$ 6,934.0
Due in one year or less, Fair Value	437.9
Due after one year through five years, Fair Value	2,607.8
Due after five years through ten years, Fair Value	2,123.4
Due after ten years, Fair Value	486.6
Gross fixed maturities, Fair Value	5,655.7
Mortgage-backed and asset-backed securities, Fair Value	1,486.3
Fixed maturities, Fair Value	$ 7,142.0	$ 6,983.4

XML

Investments (Schedule of Unrealized Loss on Investments) (Details) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
12 months or less, Gross Unrealized Losses	$ 8.9	$ 70.5
12 months or less, Fair Value	270.0	2,501.1
Greater than 12 months, Gross Unrealized Losses	24.0	52.0
Greater than 12 months, Fair Value	295.4	386.6
Total, Gross Unrealized Losses	32.9	122.5
Total, Fair Value	565.4	2,887.7
Investment grade [Member]
Schedule of Available-for-sale Securities [Line Items]
12 months or less, Gross Unrealized Losses	2.0	43.3
12 months or less, Fair Value	112.5	2,168.8
Greater than 12 months, Gross Unrealized Losses	7.8	25.5
Greater than 12 months, Fair Value	197.3	323.4
Total, Gross Unrealized Losses	9.8	68.8
Total, Fair Value	309.8	2,492.2
Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
12 months or less, Gross Unrealized Losses	7.0	62.9
12 months or less, Fair Value	193.8	2,334.3
Greater than 12 months, Gross Unrealized Losses	24.0	52.0
Greater than 12 months, Fair Value	295.4	386.6
Total, Gross Unrealized Losses	31.0	114.9
Total, Fair Value	489.2	2,720.9
US Treasury and Government Agencies [Member] | Investment grade [Member]
Schedule of Available-for-sale Securities [Line Items]
12 months or less, Gross Unrealized Losses		1.5
12 months or less, Fair Value	5.0	139.0
Greater than 12 months, Gross Unrealized Losses		2.0
Greater than 12 months, Fair Value		77.2
Total, Gross Unrealized Losses		3.5
Total, Fair Value	5.0	216.2
Foreign Government [Member] | Investment grade [Member]
Schedule of Available-for-sale Securities [Line Items]
12 months or less, Gross Unrealized Losses		0.8
12 months or less, Fair Value	4.1	63.6
Greater than 12 months, Gross Unrealized Losses		0.7
Greater than 12 months, Fair Value	1.2	8.4
Total, Gross Unrealized Losses		1.5
Total, Fair Value	5.3	72.0
Municipal [Member] | Investment grade [Member]
Schedule of Available-for-sale Securities [Line Items]
12 months or less, Gross Unrealized Losses	0.2	2.3
12 months or less, Fair Value	12.8	143.0
Greater than 12 months, Gross Unrealized Losses	0.7	1.9
Greater than 12 months, Fair Value	33.0	57.4
Total, Gross Unrealized Losses	0.9	4.2
Total, Fair Value	45.8	200.4
Corporate [Member] | Investment grade [Member]
Schedule of Available-for-sale Securities [Line Items]
12 months or less, Gross Unrealized Losses	1.4	30.7
12 months or less, Fair Value	51.6	1,138.3
Greater than 12 months, Gross Unrealized Losses	6.2	18.9
Greater than 12 months, Fair Value	113.9	122.3
Total, Gross Unrealized Losses	7.6	49.6
Total, Fair Value	165.5	1,260.6
Corporate [Member] | Below Investment Grade [Member]
Schedule of Available-for-sale Securities [Line Items]
12 months or less, Gross Unrealized Losses	5.0	19.6
12 months or less, Fair Value	81.3	165.5
Greater than 12 months, Gross Unrealized Losses	16.2	26.5
Greater than 12 months, Fair Value	98.1	63.2
Total, Gross Unrealized Losses	21.2	46.1
Total, Fair Value	179.4	228.7
Residential Mortgage Backed [Member] | Investment grade [Member]
Schedule of Available-for-sale Securities [Line Items]
12 months or less, Gross Unrealized Losses	0.2	3.0
12 months or less, Fair Value	25.1	334.5
Greater than 12 months, Gross Unrealized Losses	0.7	1.9
Greater than 12 months, Fair Value	35.6	47.0
Total, Gross Unrealized Losses	0.9	4.9
Total, Fair Value	60.7	381.5
Commercial Mortgage Backed [Member] | Investment grade [Member]
Schedule of Available-for-sale Securities [Line Items]
12 months or less, Gross Unrealized Losses		4.2
12 months or less, Fair Value	8.1	293.8
Greater than 12 months, Gross Unrealized Losses	0.1	0.1
Greater than 12 months, Fair Value	9.3	9.7
Total, Gross Unrealized Losses	0.1	4.3
Total, Fair Value	17.4	303.5
Asset-backed [Member] | Investment grade [Member]
Schedule of Available-for-sale Securities [Line Items]
12 months or less, Gross Unrealized Losses	0.2	0.8
12 months or less, Fair Value	5.8	56.6
Greater than 12 months, Gross Unrealized Losses	0.1
Greater than 12 months, Fair Value	4.3	1.4
Total, Gross Unrealized Losses	0.3	0.8
Total, Fair Value	10.1	58.0
Equity Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
12 months or less, Gross Unrealized Losses	1.9	7.6
12 months or less, Fair Value	76.2	166.8
Total, Gross Unrealized Losses	1.9	7.6
Total, Fair Value	$ 76.2	$ 166.8

XML

Investments (Schedule of Realized Gain (Loss)) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Fixed Maturities [Member]
Gain (Loss) on Investments [Line Items]
Proceeds from Sales	$ 145.4	$ 594.4	$ 307.9	$ 824.7
Gross Gains	3.5	10.6	5.9	12.9
Gross Losses	0.9	1.4	4.2	4.7
Equity Securities [Member]
Gain (Loss) on Investments [Line Items]
Proceeds from Sales	84.5	83.1	173.4	167.8
Gross Gains	1.7	$ 7.7	26.4	$ 20.1
Gross Losses	$ 0.8		$ 1.7

XML

Investments (Rollforward of Cumulative Amounts Related to Credit Loss Portion of OTTI Losses) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Investments [Abstract]
Credit losses at beginning of period	$ 13.4	$ 4.5	$ 18.0	$ 4.2
Credit losses for which an OTTI was not previously recognized	0.7	1.7	5.2	2.7
Additional credit losses on securities for which an OTTI was previously recognized	0.4		2.1
Reductions for securities sold, matured or called	(1.6)	(0.1)	(1.6)	(0.8)
Reductions for securities reclassified as intended to sell	(1.2)		(12.0)
Credit losses at end of period	$ 11.7	$ 6.1	$ 11.7	$ 6.1

XML

Fair Value (Narrative) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Fair Value Measurements [Line Items]
Transfer between Level 2 and Level 3	$ 0		$ 0
Transfer between Level 1 and Level 2	0	$ 0	0	$ 0
Level 3
Fair Value Measurements [Line Items]
Liabilities held	0	$ 0	0	$ 0
Securities excluded due to lack of transparency	$ 400,000		$ 400,000

XML

Fair Value (Fair Value of Financial Instruments) (Details) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	$ 361.6	$ 338.8
Fixed maturities	7,142.0	6,983.4
Equity securities	582.7	576.6
Debt	797.8	803.1
Carrying Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	361.6	338.8
Fixed maturities	7,142.0	6,983.4
Equity securities	582.7	576.6
Other investments	423.0	365.4
Total financial assets	8,509.3	8,264.2
Debt	797.8	803.1
Estimated Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	361.6	338.8
Fixed maturities	7,142.0	6,983.4
Equity securities	582.7	576.6
Other investments	430.5	367.9
Total financial assets	8,516.8	8,266.7
Debt	$ 893.9	$ 927.8

XML

Fair Value (Assets and Liabilities Measured at Fair Value on Recurring Basis) (Details) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	$ 7,142.0	$ 6,983.4
Equity securities	582.7	576.6
Other investments	454.8	393.4
Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	7,142.0	6,983.4
Equity securities	574.0	567.7
Other investments	94.1	104.5
Total investment assets at fair value	7,810.1	7,655.6
Fair Value, Measurements, Recurring | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	226.3	246.1
Equity securities	572.7	566.4
Total investment assets at fair value	799.0	812.5
Fair Value, Measurements, Recurring | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	6,859.8	6,681.7
Other investments	90.5	100.9
Total investment assets at fair value	6,950.3	6,782.6
Fair Value, Measurements, Recurring | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	55.9	55.6
Equity securities	1.3	1.3
Other investments	3.6	3.6
Total investment assets at fair value	60.8	60.5
Fair Value, Measurements, Recurring | U.S. Treasury And Government Agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	376.5	449.1
Fair Value, Measurements, Recurring | U.S. Treasury And Government Agencies | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	178.8	193.6
Fair Value, Measurements, Recurring | U.S. Treasury And Government Agencies | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	197.7	255.5
Fair Value, Measurements, Recurring | Foreign Government [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	236.6	245.8
Fair Value, Measurements, Recurring | Foreign Government [Member] | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	47.5	52.5
Fair Value, Measurements, Recurring | Foreign Government [Member] | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	189.1	193.3
Fair Value, Measurements, Recurring | Municipal [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	1,159.9	1,120.3
Fair Value, Measurements, Recurring | Municipal [Member] | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	1,125.5	1,085.9
Fair Value, Measurements, Recurring | Municipal [Member] | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	34.4	34.4
Fair Value, Measurements, Recurring | Corporate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	3,882.7	3,691.0
Fair Value, Measurements, Recurring | Corporate [Member] | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	3,878.3	3,687.3
Fair Value, Measurements, Recurring | Corporate [Member] | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	4.4	3.7
Fair Value, Measurements, Recurring | Residential Mortgage Backed Securities U S Agency Backed
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	815.1	824.5
Fair Value, Measurements, Recurring | Residential Mortgage Backed Securities U S Agency Backed | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	815.1	824.5
Fair Value, Measurements, Recurring | Residential Mortgage Backed [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	59.1	71.6
Fair Value, Measurements, Recurring | Residential Mortgage Backed [Member] | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	59.1	71.6
Fair Value, Measurements, Recurring | Commercial Mortgage Backed [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	532.9	501.1
Fair Value, Measurements, Recurring | Commercial Mortgage Backed [Member] | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	516.2	484.1
Fair Value, Measurements, Recurring | Commercial Mortgage Backed [Member] | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	16.7	17.0
Fair Value, Measurements, Recurring | Asset-backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	79.2	80.0
Fair Value, Measurements, Recurring | Asset-backed Securities [Member] | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	78.8	79.5
Fair Value, Measurements, Recurring | Asset-backed Securities [Member] | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	$ 0.4	$ 0.5

XML

Fair Value (Estimated Fair Values of Financial Instruments Not Carried at Fair Value) (Details) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	$ 361.6	$ 338.8
Equity securities	8.7	8.9
Other investments	269.3	203.5
Debt	893.9	927.8
Net Asset Value Based On An Ownership Interest In Partners’ Capital [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of investments	$ 67.1	$ 59.9
Investments measured at net asset value based on an ownership interest in partners’	1.00%	1.00%
Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	$ 361.6	$ 338.8
Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Equity securities	8.7	8.9
Debt	893.9	927.8
Level 3
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Other investments	269.3	203.5
Carrying Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	361.6	338.8
Estimated Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	$ 361.6	$ 338.8

XML

Fair Value (Fair Value on Recurring Basis Using Significant Unobservable Inputs (Level 3)) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning Balance	$ 60.7	$ 63.5	$ 60.5	$ 61.7
Transfers into Level 3		0.5		1.3
Included in earnings		0.1	(0.1)	0.1
Included in other comprehensive income - net appreciation (depreciation) on available-for-sale securities	1.5	(2.2)	3.0	(1.5)
Purchases		1.4	0.3	3.1
Sales	(1.4)	(2.5)	(2.9)	(3.9)
Ending Balance	60.8	60.8	60.8	60.8
Fixed Maturities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning Balance	55.8	58.4	55.6	56.7
Transfers into Level 3		0.5		1.3
Included in earnings		0.1	(0.1)	0.1
Included in other comprehensive income - net appreciation (depreciation) on available-for-sale securities	1.5	(2.2)	3.0	(1.6)
Purchases		1.4	0.3	3.1
Sales	(1.4)	(2.5)	(2.9)	(3.9)
Ending Balance	55.9	55.7	55.9	55.7
Fixed Maturities [Member] | Municipal [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning Balance	34.7	27.2	34.4	25.7
Included in earnings			0.1
Included in other comprehensive income - net appreciation (depreciation) on available-for-sale securities	0.6	(1.2)	1.6	(0.8)
Purchases		1.4		3.1
Sales	(0.9)	(0.4)	(1.7)	(1.0)
Ending Balance	34.4	27.0	34.4	27.0
Fixed Maturities [Member] | Corporate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning Balance	3.8	9.5	3.7	9.6
Included in earnings		0.1	(0.2)	0.1
Included in other comprehensive income - net appreciation (depreciation) on available-for-sale securities	0.7	(0.1)	0.7	(0.2)
Purchases			0.3
Sales	(0.1)	(0.1)	(0.1)	(0.1)
Ending Balance	4.4	9.4	4.4	9.4
Fixed Maturities [Member] | Commercial Mortgage Backed [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning Balance	16.8	20.9	17.0	21.4
Included in other comprehensive income - net appreciation (depreciation) on available-for-sale securities	0.2	(0.9)	0.7	(0.6)
Sales	(0.3)	(2.0)	(1.0)	(2.8)
Ending Balance	16.7	18.0	16.7	18.0
Fixed Maturities [Member] | Asset-backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning Balance	0.5	0.8	0.5
Transfers into Level 3		0.5		1.3
Sales	(0.1)		(0.1)
Ending Balance	0.4	1.3	0.4	1.3
Equity Securities and Other Investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning Balance	4.9	5.1	4.9	5.0
Included in other comprehensive income - net appreciation (depreciation) on available-for-sale securities				0.1
Ending Balance	$ 4.9	$ 5.1	$ 4.9	$ 5.1

XML

Fair Value (Summary Gains and Losses due to Changes in Fair Value Recorded in Income) (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Fair Value [Line Items]
Net realized investment gains (losses)	$ 0.1	$ (0.1)	$ 0.1
Level 3 | Net Realized Investment Gains [Member]
Fair Value [Line Items]
Net realized investment gains (losses)	0.1	0.1	0.1
Level 3 | Other Than Temporary Impairments [Member]
Fair Value [Line Items]
Net realized investment gains (losses)		(0.2)
Level 3 | Corporate [Member] | Net Realized Investment Gains [Member]
Fair Value [Line Items]
Net realized investment gains (losses)	$ 0.1		$ 0.1
Level 3 | Corporate [Member] | Other Than Temporary Impairments [Member]
Fair Value [Line Items]
Net realized investment gains (losses)		(0.2)
Level 3 | Municipal [Member] | Net Realized Investment Gains [Member]
Fair Value [Line Items]
Net realized investment gains (losses)		$ 0.1

XML

Fair Value (Schedule of Additional Information About Significant Unobservable Inputs Used in Fair Valuations of Level 3) (Details) $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2016 USD ($)	Dec. 31, 2015 USD ($)	Mar. 31, 2016 USD ($)	Jun. 30, 2015 USD ($)	Mar. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)
Fair Value [Line Items]
Fair Value	$ 60.8	$ 60.5	$ 60.7	$ 60.8	$ 63.5	$ 61.7
Municipal [Member] | Discounted cash flow [Member] | Level 3
Fair Value [Line Items]
Fair Value	$ 34.4	$ 34.4
Municipal [Member] | Discount For Small Issue Size | Discounted cash flow [Member] | Level 3 | Minimum
Fair Value [Line Items]
Range	0.60%	0.60%
Municipal [Member] | Discount For Small Issue Size | Discounted cash flow [Member] | Level 3 | Maximum
Fair Value [Line Items]
Range	6.80%	6.80%
Municipal [Member] | Discount For Small Issue Size | Discounted cash flow [Member] | Level 3 | Weighted Average
Fair Value [Line Items]
Range	3.20%	3.20%
Municipal [Member] | Discount For Above Market Coupon | Discounted cash flow [Member] | Level 3 | Minimum
Fair Value [Line Items]
Range	0.30%	0.30%
Municipal [Member] | Discount For Above Market Coupon | Discounted cash flow [Member] | Level 3 | Maximum
Fair Value [Line Items]
Range	1.00%	1.00%
Municipal [Member] | Discount For Above Market Coupon | Discounted cash flow [Member] | Level 3 | Weighted Average
Fair Value [Line Items]
Range	0.40%	0.40%
Municipal [Member] | Discount For Credit Stress | Discounted cash flow [Member] | Level 3 | Minimum
Fair Value [Line Items]
Range	0.90%	0.90%
Municipal [Member] | Discount For Credit Stress | Discounted cash flow [Member] | Level 3 | Maximum
Fair Value [Line Items]
Range	1.50%	1.50%
Municipal [Member] | Discount For Credit Stress | Discounted cash flow [Member] | Level 3 | Weighted Average
Fair Value [Line Items]
Range	1.20%	1.20%
Corporate [Member] | Discounted cash flow [Member] | Level 3
Fair Value [Line Items]
Fair Value	$ 4.2	$ 3.7
Corporate [Member] | Discount For Small Issue Size | Discounted cash flow [Member] | Level 3
Fair Value [Line Items]
Range		1.00%
Corporate [Member] | Discount For Small Issue Size | Discounted cash flow [Member] | Level 3 | Minimum
Fair Value [Line Items]
Range	2.30%
Corporate [Member] | Discount For Small Issue Size | Discounted cash flow [Member] | Level 3 | Maximum
Fair Value [Line Items]
Range	2.50%
Corporate [Member] | Discount For Small Issue Size | Discounted cash flow [Member] | Level 3 | Weighted Average
Fair Value [Line Items]
Range	2.40%	1.00%
Corporate [Member] | Discount For Above Market Coupon | Discounted cash flow [Member] | Level 3 | Minimum
Fair Value [Line Items]
Range	0.30%	0.30%
Corporate [Member] | Discount For Above Market Coupon | Discounted cash flow [Member] | Level 3 | Maximum
Fair Value [Line Items]
Range	0.80%	0.80%
Corporate [Member] | Discount For Above Market Coupon | Discounted cash flow [Member] | Level 3 | Weighted Average
Fair Value [Line Items]
Range	0.60%	0.60%
Corporate [Member] | Discount For Credit Stress | Discounted cash flow [Member] | Level 3
Fair Value [Line Items]
Range	0.40%	10.00%
Corporate [Member] | Discount For Credit Stress | Discounted cash flow [Member] | Level 3 | Weighted Average
Fair Value [Line Items]
Range	0.40%	10.00%
Commercial Mortgage Backed [Member] | Discounted cash flow [Member] | Level 3
Fair Value [Line Items]
Fair Value	$ 16.7	$ 17.0
Commercial Mortgage Backed [Member] | Discount For Small Issue Size | Discounted cash flow [Member] | Level 3 | Minimum
Fair Value [Line Items]
Range	1.50%	0.50%
Commercial Mortgage Backed [Member] | Discount For Small Issue Size | Discounted cash flow [Member] | Level 3 | Maximum
Fair Value [Line Items]
Range	3.10%	1.00%
Commercial Mortgage Backed [Member] | Discount For Small Issue Size | Discounted cash flow [Member] | Level 3 | Weighted Average
Fair Value [Line Items]
Range	2.60%	0.50%
Commercial Mortgage Backed [Member] | Discount For Above Market Coupon | Discounted cash flow [Member] | Level 3
Fair Value [Line Items]
Range	0.50%	0.50%
Commercial Mortgage Backed [Member] | Discount For Above Market Coupon | Discounted cash flow [Member] | Level 3 | Weighted Average
Fair Value [Line Items]
Range	0.50%	0.50%
Commercial Mortgage Backed [Member] | Discount For Lease Structure | Discounted cash flow [Member] | Level 3
Fair Value [Line Items]
Range	0.30%	0.30%
Commercial Mortgage Backed [Member] | Discount For Lease Structure | Discounted cash flow [Member] | Level 3 | Weighted Average
Fair Value [Line Items]
Range	0.30%	0.30%
Asset-backed Securities [Member] | Discounted cash flow [Member] | Level 3
Fair Value [Line Items]
Fair Value	$ 0.4	$ 0.5
Asset-backed Securities [Member] | Discount For Small Issue Size | Discounted cash flow [Member] | Level 3
Fair Value [Line Items]
Range	0.70%	0.70%
Asset-backed Securities [Member] | Discount For Small Issue Size | Discounted cash flow [Member] | Level 3 | Weighted Average
Fair Value [Line Items]
Range	0.70%	0.70%
Equity Securities [Member] | Market comparables [Member] | Level 3
Fair Value [Line Items]
Fair Value	$ 1.1	$ 1.1
Equity Securities [Member] | Net Tangible Asset Market Multiples | Market comparables [Member] | Level 3
Fair Value [Line Items]
Fair value measurement market multiples	1.0	1.0
Equity Securities [Member] | Net Tangible Asset Market Multiples | Market comparables [Member] | Level 3 | Weighted Average
Fair Value [Line Items]
Fair value measurement market multiples	1.0	1.0
Other securities | Discounted cash flow [Member] | Level 3
Fair Value [Line Items]
Fair Value	$ 3.6	$ 3.6
Other securities | Discount Rate [Member] | Discounted cash flow [Member] | Level 3
Fair Value [Line Items]
Range	18.00%	18.00%
Other securities | Discount Rate [Member] | Discounted cash flow [Member] | Level 3 | Weighted Average
Fair Value [Line Items]
Range	18.00%	18.00%

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Pension and Other Postretirement Benefit Plans (Narrative) (Details) $ in Millions	3 Months Ended
	Jun. 30, 2015 USD ($)
Pension and Other Postretirement Benefit Plans [Abstract]
Benefit due to the disposal of U.K. motor business	$ 1.8

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Pension and Other Postretirement Benefit Plans (Components of Net Periodic Benefit Cost) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Curtailment gain		$ (1.8)
Pension Plans
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Service cost - benefits earned during the period	$ 0.2	0.4	$ 0.4	$ 0.7
Interest cost	7.4	7.3	14.8	14.6
Expected return on plan assets	(7.5)	(7.9)	(15.0)	(15.7)
Recognized net actuarial loss	2.8	4.8	5.6	7.8
Curtailment gain		(1.8)		(1.8)
Net periodic pension cost (benefit)	2.9	2.8	5.8	5.6
Postretirement Plans
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Interest cost	0.1	0.1	0.2	0.3
Recognized net actuarial loss		0.1	0.1	0.1
Amortization of prior service cost	(0.3)	(0.3)	(0.7)	(0.7)
Net periodic pension cost (benefit)	$ (0.2)	$ (0.1)	$ (0.4)	$ (0.3)

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Other Comprehensive Income (Narrative) (Details) - Defined Benefit Pension and Postretirement Plans:	6 Months Ended
	Jun. 30, 2016
Comprehensive Income (Loss) [Line Items]
Loss Adjustment Expense	40.00%
Percentage Of Other Operating Expenses	60.00%

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Other Comprehensive Income (Changes in Other Comprehensive Income) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Other Comprehensive Income [Abstract]
Unrealized gains (losses) arising during period , Pre-Tax	$ 124.1	$ (128.2)	$ 282.0	$ (73.5)
Amount of realized gains from sales and other, Pre-tax	(4.5)	(14.4)	(27.3)	(26.4)
Portion of other-than-temporary impairment losses recognized in earnings, Pre-tax	5.0	1.9	25.9	4.6
Net unrealized gains (losses), Pre-tax	124.6	(140.7)	280.6	(95.3)
Net actuarial losses and prior service cost arising in the period, Pre-tax		(4.2)		(1.2)
Amortization of net actuarial loss and prior service cost recognized as net periodic benefit cost, Pre-tax	2.5	4.7	5.0	7.3
Net pension and postretirement benefits, Pre-tax	2.5	0.5	5.0	6.1
Foreign currency translation recognized during the period, Pre-tax	(1.1)	11.9	(2.0)	(3.4)
Other comprehensive income (loss), Pre-tax	126.0	(128.3)	283.6	(92.6)
Unrealized gains (losses) arising during period , Tax Benefit (Expense)	(43.3)	44.8	(98.6)	25.7
Amount of realized gains from sales and other, Tax Benefit (Expense)	(2.5)	1.9	0.6	3.3
Portion of other-than-temporary impairment losses recognized in earnings, Tax Benefit (Expense)	(1.8)	(0.7)	(9.1)	(1.6)
Net unrealized gains (losses), Tax Benefit (Expense)	(47.6)	46.0	(107.1)	27.4
Net actuarial losses and prior service cost arising in the period, Tax Benefit (Expense)		0.9		(0.2)
Amortization of net actuarial loss and prior service cost recognized as net periodic benefit cost, Tax Benefit (Expense)	(0.8)	(1.3)	(1.7)	(2.2)
Net pension and postretirement benefits, Tax	(0.8)	(0.4)	(1.7)	(2.4)
Foreign currency translation recognized during the period, Tax Benefit (Expense)	0.4	(4.2)	0.7	1.2
Other comprehensive income (loss), Tax Benefit (Expense)	(48.0)	41.4	(108.1)	26.2
Unrealized gains (losses) arising during period , Net of Tax	80.8	(83.4)	183.4	(47.8)
Amount of realized gains from sales and other, Net of Tax	(7.0)	(12.5)	(26.7)	(23.1)
Portion of other-than-temporary impairment losses recognized in earnings, Net of Tax	3.2	1.2	16.8	3.0
Net unrealized gains (losses), Net of Tax	77.0	(94.7)	173.5	(67.9)
Net actuarial losses and prior service cost arising in the period, Net of Tax		(3.3)		(1.4)
Amortization of net actuarial loss and prior service cost recognized as net periodic benefit cost, Net of Tax	1.7	3.4	3.3	5.1
Net pension and postretirement benefits, Net of Tax	1.7	0.1	3.3	3.7
Foreign currency translation recognized during the period, Net of Tax	(0.7)	7.7	(1.3)	(2.2)
Other comprehensive income (loss), Net of Tax	$ 78.0	$ (86.9)	$ 175.5	$ (66.4)

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Other Comprehensive Income (Reclassifications out of Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net realized gains from sales and other	$ 4.3	$ 14.5	$ 26.7	$ 26.6
Loss adjustment expenses and other operating expenses	(1,229.1)	(1,144.5)	(2,348.6)	(2,366.2)
Net other-than-temporary impairment losses on investments recognized in earnings	(5.0)	(1.9)	(25.9)	(4.6)
Total before tax	(7.1)	152.6	101.0	229.6
Tax benefit (expense)	9.0	(31.7)	(21.0)	(53.8)
Net of tax	2.0	120.7	80.2	175.6
Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net of tax	2.1	7.9	6.6	15.0
Reclassification out of Accumulated Other Comprehensive Income [Member] | Net Unrealized Appreciation (Depreciation) on Investments:
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net realized gains from sales and other	4.5	14.4	27.3	26.4
Net other-than-temporary impairment losses on investments recognized in earnings	(5.0)	(1.9)	(25.9)	(4.6)
Total before tax	(0.5)	12.5	1.4	21.8
Tax benefit (expense)	4.3	(1.2)	8.5	(1.7)
Net of tax	3.8	11.3	9.9	20.1
Reclassification out of Accumulated Other Comprehensive Income [Member] | Defined Benefit Pension and Postretirement Plans:
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Loss adjustment expenses and other operating expenses	(2.5)	(4.7)	(5.0)	(7.3)
Tax benefit (expense)	0.8	1.3	1.7	2.2
Net of tax	$ (1.7)	$ (3.4)	$ (3.3)	$ (5.1)

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Segment Information (Narrative) (Details) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($) segment	Jun. 30, 2015 USD ($)
Segment Information [Abstract]
Operating segments | segment			4
Net foreign currency transaction losses	$ 9.0		$ 21.0
Net foreign currency transaction gains		$ 11.0		$ 15.0

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Segment Information (Financial Information with Respect to Business Segments) (Details) - USD ($) $ in Millions		3 Months Ended		6 Months Ended
	May 21, 2016	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Segment Reporting Information [Line Items]
Operating revenues		$ 1,222.7	$ 1,284.5	$ 2,448.8	$ 2,573.8
Net investment income		69.1	70.7	137.4	140.8
Total revenues		1,222.0	1,297.1	2,449.6	2,595.8
Operating income (loss) before interest expense and income taxes		94.7	119.5	215.1	219.9
Interest on debt		(15.6)	(15.0)	(30.3)	(31.1)
Operating income before income taxes		79.1	104.5	184.8	188.8
Net realized investment (losses) gains		(0.7)	12.6	0.8	22.0
Net gain on disposal of U.K. motor business		0.4	37.7	1.2	37.7
Net loss from repayment of debt	$ (86.1)	(86.1)	(1.8)	(86.1)	(18.5)
Other non-operating items		0.2	(0.4)	0.3	(0.4)
Income (loss) before income taxes		(7.1)	152.6	101.0	229.6
Commercial Lines
Segment Reporting Information [Line Items]
Operating revenues		616.1	598.8	1,228.8	1,185.5
Underwriting (loss) income		5.1	8.5	8.8	2.6
Net investment income		39.1	39.4	78.5	78.0
Other (expense) income		(0.2)	0.3	(0.6)	(1.2)
Operating income (loss) before interest expense and income taxes		44.0	48.2	86.7	79.4
Personal Lines
Segment Reporting Information [Line Items]
Operating revenues		384.5	377.7	763.3	751.7
Underwriting (loss) income		29.3	13.0	57.9	16.4
Other (expense) income		1.0	0.8	2.1	1.8
Operating income (loss) before interest expense and income taxes		47.4	32.1	94.5	54.4
Net realized investment (losses) gains		17.1	18.3	34.5	36.2
Chaucer
Segment Reporting Information [Line Items]
Operating revenues		219.8	306.3	452.9	632.8
Underwriting (loss) income		(6.5)	27.5	16.0	63.1
Net investment income		11.3	12.0	22.0	24.3
Other (expense) income		0.7	2.5	1.2	3.8
Operating income (loss) before interest expense and income taxes		5.5	42.0	39.2	91.2
Other (including eliminations)
Segment Reporting Information [Line Items]
Operating revenues		2.3	1.7	3.8	3.8
Underwriting (loss) income		(0.6)	(0.7)	(1.3)	(1.4)
Net investment income		1.6	1.0	2.4	2.3
Other net expenses		(3.2)	(3.1)	(6.4)	(6.0)
Operating income (loss) before interest expense and income taxes		$ (2.2)	$ (2.8)	$ (5.3)	$ (5.1)

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Segment Information (Identifiable Assets by Business Segment) (Details) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Segment Reporting Information [Line Items]
Discontinued operations	$ 80.2	$ 83.0
Identifiable assets	14,163.6	13,781.2
U.S. Companies
Segment Reporting Information [Line Items]
Identifiable assets	9,907.6	9,616.0
Chaucer
Segment Reporting Information [Line Items]
Identifiable assets	$ 4,175.8	$ 4,082.2

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Stock Based Compensation (Narrative) (Details) - shares	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance metric for performance based restricted stock units	100.00%
Performance metric for performance based restricted stock units minimum potential range	0.00%
Performance metric for performance based restricted stock units maximum potential range	200.00%
2014 Stock Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available for grant	4,934,810
ESPP Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available for grant	2,420,768
SIP Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares available for grant	705,382
Performance-based restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted, Shares	1,949
Performance And Market-Based Restricted Stock Units | Senior management
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance metric, minimum	0.00%
Performance metric, maximum	150.00%
Market-based awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted, Shares	79,153	80,738
Average period based on relative TSR	3 years
Market-based awards | Payout in excess of 100% [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted, Shares	30,453
Market-based awards | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance metric achieved	100.00%

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Stock-based Compensation (Compensation Cost and Related Tax Benefits) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Stock-based Compensation [Abstract]
Stock-based compensation expense	$ 2.7	$ 4.2	$ 5.5	$ 7.5
Tax benefit	(0.9)	(1.4)	(1.9)	(2.6)
Stock-based compensation expense, net of taxes	$ 1.8	$ 2.8	$ 3.6	$ 4.9

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Stock-based Compensation (Summary of Stock Option Plan Activity) (Details) - $ / shares	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Stock-based Compensation [Abstract]
Outstanding, beginning of period, Shares	1,619,948	2,236,620
Granted, Shares	524,940	659,850
Exercised, Shares	(495,242)	(204,444)
Forfeited or cancelled, Shares	(161,207)	(90,137)
Outstanding, end of period, Shares	1,488,439	2,601,889
Outstanding, beginning of period, Weighted Average Exercise Price	$ 56.57	$ 46.61
Granted, Weighted Average Exercise Price	82.74	70.28
Exercised, Weighted Average Exercise Price	48.57	44.29
Forfeited or cancelled, Weighted Average Exercise Price	66.80	51.52
Outstanding, end of period, Weighted Average Exercise Price	$ 67.36	$ 52.63

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Stock-based Compensation (Summary of Restricted Stock Activity) (Details) - $ / shares	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Restricted Stock Units (RSUs) [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Outstanding, beginning of period, Shares	301,897	384,923
Granted, Shares	141,949	92,409
Vested, Shares	(135,863)	(95,787)
Forfeited, Shares	(18,831)	(20,988)
Outstanding, end of period, Shares	289,152	360,557
Outstanding, beginning of period, Weighted Average Grant Date Fair Value	$ 54.54	$ 45.63
Granted, Weighted Average Grant Date Fair Value	83.47	70.61
Vested, Weighted Average Grant Date Fair Value	42.44	41.56
Forfeited, Weighted Average Grant Date Fair Value	67.15	48.90
Outstanding, end of period, Weighted Average Grant Date Fair Value	$ 73.61	$ 52.93
Performance Shares [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Outstanding, beginning of period, Shares	196,142	218,338
Granted, Shares	118,736	82,025
Vested, Shares	(144,141)	(77,854)
Forfeited, Shares	(56,500)	(14,451)
Outstanding, end of period, Shares	114,237	208,058
Outstanding, beginning of period, Weighted Average Grant Date Fair Value	$ 47.89	$ 44.24
Granted, Weighted Average Grant Date Fair Value	73.14	48.55
Vested, Weighted Average Grant Date Fair Value	41.11	38.82
Forfeited, Weighted Average Grant Date Fair Value	63.52	44.68
Outstanding, end of period, Weighted Average Grant Date Fair Value	$ 74.97	$ 47.93

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Earnings Per Share and Shareholders Equity Transactions (Narrative) (Details) - USD ($) shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Earnings Per Share and Shareholders’ Equity Transactions [Abstract]
Antidilutive securities excluded from calculation of earnings per share	0.2	0.7	0.2	0.7
Repurchases common stock, authorized	$ 900.0		$ 900.0
Repurchases common stock, shares			0.8
Repurchases common stock, value			$ 67.5

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Earnings Per Share and Shareholders’ Equity Transactions (Information Regarding Basic and Diluted Earnings Per Share) (Details) - $ / shares shares in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Basic shares used in the calculation of earnings per share	43.0	44.2	43.0	44.2
Diluted shares used in the calculation of earnings per share	43.4	45.0	43.5	45.1
Per share effect of dilutive securities on income from continuing operations		$ (0.05)	$ (0.02)	$ (0.08)
Per share effect of dilutive securities on net income		$ (0.05)	$ (0.03)	$ (0.08)
Employee Stock Option
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Dilutive effect of securities	0.3	0.5	0.3	0.5
Non-Vested Stock Grants
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Dilutive effect of securities	0.1	0.3	0.2	0.4

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Commitments and Contingencies (Narrative) (Details)		1 Months Ended	6 Months Ended
	Dec. 11, 2009 plaintiff claim	Nov. 30, 2015 claim	Jun. 30, 2016
Commitments and Contingencies [Abstract]
Participant's retirement age			65 years
Number of plantiffs | plaintiff	2
New claims	2	3
Claims Dismissed		2