Form 8-K

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KGf8DqWmTIR1HAI2B15bbq8gILZBSGusYBx00+3liRXkui8zFD44PzvYVbYtQU2m O8E9Hj2R2pHOEKIrvgTtkA== 0001193125-06-095465.txt : 20060502 0001193125-06-095465.hdr.sgml : 20060502 20060501181404 ACCESSION NUMBER: 0001193125-06-095465 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20060501 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060502 DATE AS OF CHANGE: 20060501 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HANOVER INSURANCE GROUP, INC. CENTRAL INDEX KEY: 0000944695 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 043263626 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13754 FILM NUMBER: 06796669 BUSINESS ADDRESS: STREET 1: 440 LINCOLN ST CITY: WORCESTER STATE: MA ZIP: 01653 BUSINESS PHONE: 5088551000 MAIL ADDRESS: STREET 1: 440 LINCOLN ST CITY: WORCESTER STATE: MA ZIP: 01653 FORMER COMPANY: FORMER CONFORMED NAME: ALLMERICA FINANCIAL CORP DATE OF NAME CHANGE: 19950501 8-K 1 d8k.htm FORM 8-K Form 8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 1, 2006

THE HANOVER INSURANCE GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware

1-13754

04-3263626

(State or other jurisdiction

of incorporation)

(Commission File Number)

(I.R.S. Employer

Identification No.)

440 Lincoln Street, Worcester, Massachusetts 01653

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (508) 855-1000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

The following information is being furnished under Item 2.02 – Results of Operations and Financial Condition. Such information, including the exhibits attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section.

On May 1, 2006, The Hanover Insurance Group, Inc. issued a press release announcing its financial results for the quarter ended March 31, 2006. The release is furnished as Exhibit 99.1 hereto. Additionally, on May 1, 2006, the Company made available on its website financial information contained in its Statistical Supplement for the period ended March 31, 2006. The supplement is furnished as Exhibit 99.2 hereto.

Item 9.01 Financial Statements and Exhibits.

(a)	Not applicable.

(b)	Not applicable.

(c)	Not applicable.

(d)

Exhibits.

The following exhibits are furnished herewith.


Exhibit 99.1		Press Release, dated May 1, 2006, announcing the Company’s financial results for the quarter ended March 31, 2006.

Exhibit 99.2		The Hanover Insurance Group, Inc. Statistical Supplement for the period ended March 31, 2006.

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 hereunto duly authorized.


	The Hanover Insurance Group, Inc. (Registrant)

Date: May 1, 2006	By:	/s/ Edward J. Parry III
		Edward J. Parry III
		Chief Financial Officer,
		Executive Vice President,
		Principal Accounting Officer and Director

Exhibit Index


Exhibit 99.1		Press Release, dated May 1, 2006, announcing the Company’s financial results for the quarter ended March 31, 2006.

Exhibit 99.2		The Hanover Insurance Group, Inc. Statistical Supplement for the period ended March 31, 2006.

EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

LOGO

THE HANOVER INSURANCE GROUP, INC. REPORTS FIRST QUARTER 2006 EARNINGS:

NET INCOME OF $0.75 PER SHARE COMPARED TO $0.86 PER SHARE LAST YEAR; NET INCOME FROM CONTINUING OPERATIONS OF $1.12 PER SHARE COMPARED TO $0.75 PER SHARE LAST YEAR

WORCESTER, Mass., May 1, 2006—The Hanover Insurance Group, Inc. (NYSE: THG) today reported net income for the first quarter of $40.5 million, or $0.75 per share, compared to $46.5 million, or $0.86 per share in the first quarter of last year. Net income from continuing operations was $60.0 million for the first quarter, or $1.12 per share, compared to $40.4 million, or $0.75 per share, in the first quarter of last year. The decline in net income was primarily due to an increase of $20.1 million, or $0.38 per share, to the previously recorded loss on the disposal of our variable life insurance and annuity business.

Total Property and Casualty pre-tax segment income was $91.7 million in the quarter, compared to $61.8 million in the first quarter of last year. The Personal Lines segment reported pre-tax segment earnings of $49.0 million in the first quarter of 2006, compared to $39.2 million in the first quarter of 2005, while the Commercial Lines segment reported pre-tax segment earnings of $39.0 million in the quarter, versus $20.5 million in 2005.

“I am very pleased with the continued strength of our Property and Casualty results,” said Frederick H. Eppinger, chief executive officer of The Hanover Insurance Group, Inc. “Our first quarter results reflect continued strong Property and Casualty earnings. Our new business growth is significant, driven by the success of our Connections^™ Auto product and continued momentum in our Commercial Lines business. At the same time our margins remain strong.”

Segment Results

The Hanover conducts its business in four operating segments. Property and casualty operations consist of three operating segments: Personal Lines, Commercial Lines, and Other Property and Casualty. The Personal Lines segment markets automobile, homeowners and ancillary coverages to individuals and families. The Commercial Lines segment offers a suite of products targeted at the small to mid-size business markets, which include commercial multiple peril, commercial automobile, workers’ compensation and other commercial coverages. The Other Property and Casualty segment includes a block of run-off voluntary pools business in which we have not actively participated since 1995; AMGRO, Inc., a premium financing business; Opus Investment Management, Inc., which provides investment management services to institutions, pension funds and other organizations; and earnings on holding company assets. The Life Companies, our fourth operating segment, include the run-off business of First Allmerica Financial Life Insurance Company (FAFLIC), principally consisting of traditional life insurance and retirement businesses.

LOGO

The following table shows pre-tax segment income. It is presented in a manner consistent with the way management evaluates results and is set forth in accordance with Statement of Financial Accounting Standards No. 131, “Disclosures About Segments of an Enterprise and Related Information”.


	Quarter ended March 31 (In millions)
	2006			2005
Property and Casualty:
Personal Lines⁽¹⁾	$	49.0		$	39.2
Commercial Lines⁽²⁾		39.0			20.5
Other Property and Casualty		3.7			2.1
Total Property & Casualty		91.7			61.8
Life Companies		(1.9	)		(9.3	)
Interest expense on corporate debt		(10.0	)		(10.0	)
Total pre-tax segment income		79.8			42.5
Federal income tax expense		23.6			9.8
Total segment income after taxes⁽³⁾	$	56.2		$	32.7

⁽¹⁾	Includes Personal Lines pre-tax catastrophe losses of $3.7 million and $6.8 million for the first quarter of 2006 and 2005, respectively.

⁽²⁾	Includes Commercial Lines pre-tax catastrophe losses of $3.6 million and $5.5 million for the first quarter of 2006 and 2005, respectively.

⁽³⁾	See reconciliation from segment income to net income at the end of this document.

Property and Casualty

Property and Casualty segment income was $91.7 million in the first quarter of 2006, up from $61.8 million in the first quarter of 2005. Earnings were higher in the quarter due primarily to favorable loss performance in both Personal Lines and Commercial Lines, partially offset by increased expenses.

Property and Casualty highlights:

•

Net premiums written were $574.0 million in the first quarter of 2006, compared to $548.4 million in the first quarter of 2005, up 4.7%.

•

Net premiums earned were $540.9 million in the first quarter of 2006, compared to $550.2 million in the first quarter of 2005.

•

New business net premiums written were $134.2 million in the first quarter of 2006, representing an increase of 75% over the $76.5 million in the first quarter of 2005.

•

Favorable development of prior-year reserves was $24.9 million in the first quarter of 2006, compared to favorable development of $13.7 million in the first quarter of 2005, driven primarily by our Personal Auto and Commercial-Multi Peril Lines.

The following tables summarize the components of the GAAP combined ratio for the Property and Casualty segment:


	Quarter ended March 31
	2006		2005
Personal Lines losses (excluding catastrophes)	53.5	%	58.6	%
Personal Lines catastrophe-related losses	1.1	%	1.9	%
Total Personal Lines losses	54.6	%	60.5	%
Commercial Lines losses (excluding catastrophes)	41.6	%	51.7	%
Commercial Lines catastrophe-related losses	1.8	%	2.9	%
Total Commercial Lines losses	43.4	%	54.6	%
Total P&C Losses	50.4	%	58.5	%
Loss adjustment expenses	10.1	%	8.9	%
Policy acquisition and other underwriting expenses	33.9	%	31.5	%
Combined Ratio	94.4	%	98.9	%

Personal Lines

Personal Lines pre-tax segment income was $49.0 million in the quarter compared to $39.2 million in the prior-year quarter. The improvement in earnings is primarily due to relatively favorable current accident year loss performance, as well as lower catastrophes, partially offset by an increase in expenses and slightly lower favorable development of prior-year reserves.

The loss ratio in the current quarter was 54.6% versus 60.5% in the prior-year quarter. The impact of catastrophes was favorable in the quarter, resulting in $3.7 million of pre-tax losses compared to $6.8 million of pre-tax losses in the first quarter of 2005. The loss ratio excluding the impact of catastrophes was 53.5% in the current quarter versus 58.6% in the prior-year quarter, an improvement of 5.1 points. The major factors driving the improvement in the loss ratio excluding catastrophes were lower personal automobile claims frequency and favorable frequency in our homeowners lines of business.

Underwriting and loss adjustment expenses were higher in the quarter due to several factors, including: the impact of the new accounting for stock-based compensation, investments in technology, claim and employee related expenses, and to a lesser extent an increase in the proportion of overhead expenses absorbed by the Property and Casualty segment.

Personal Lines highlights:

•

Net premiums written were $341.6 million in the first quarter of 2006, compared to $335.8 million in the first quarter of 2005, up 1.7%.

•

Net premiums earned were $339.8 million in the first quarter of 2006, compared to $360.5 million in the first quarter of 2005.

•

New business net premiums written were $60.0 million in the first quarter of 2006, representing an increase of 156% compared to $23.4 million in the first quarter of 2005.

•

The Personal Lines GAAP combined ratio was 94.6% in the first quarter, versus 96.7% in the prior-year quarter.

•

The pre-tax catastrophe losses were $3.7 million, or 1.1 points of the combined ratio for the first quarter of 2006 compared to $6.8 million or 1.9 points of the combined ratio for the first quarter of 2005.

•

Favorable development of prior-year reserves was $8.1 million in the current quarter, compared to favorable development of $9.5 million in the first quarter of 2005; improving the personal lines combined ratio by 2.4 points and 2.6 points, respectively.

Commercial Lines

Commercial Lines pre-tax segment income was $39.0 million in the quarter, compared to $20.5 million in the first quarter of 2005. The improvement in segment results in the quarter is primarily due to relatively favorable loss performance, partially offset by an increase in expenses.

The loss ratio in the current quarter was 43.4% versus 54.6% in the prior-year quarter. The impact of catastrophes was favorable in the quarter, resulting in $3.6 million of pre-tax losses in the current quarter compared to $5.5 million of pre-tax losses in the first quarter of 2005. The loss ratio excluding the impact of catastrophes was 41.6% in the current quarter versus 51.7% in the prior-year quarter, an improvement of 10.1 points. The improvement in the loss ratio excluding catastrophes was primarily due to favorable development of prior-year loss reserves, as well as improved current accident year loss performance. In the current quarter favorable development of prior year loss reserves was $14.0 million, or 7.0 points of the loss ratio, compared to $1.6 million, or 0.8 points of the loss ratio in the first quarter of 2005. The increase of $12.4 million was driven primarily by an increase in favorable development in commercial multi-peril. Additionally, the development of the prior year reserves in the workers’ compensation line was slightly favorable in the current quarter versus somewhat unfavorable in last year’s quarter. The improvement in the current accident year loss ratio was due to continued favorable frequency trends, improvement in the current year underwriting results related to certain involuntary pools, and the continued shift in product mix to lower loss ratio lines of business, particularly inland marine and bonds.

Underwriting and loss adjustment expenses were higher in the quarter due to several factors, including: the impact of the new accounting for stock-based compensation, investments in technology, other claim and employee related expenses, and to a lesser extent an increase in the proportion of overhead expenses absorbed by the Property and Casualty segment.

Commercial Lines highlights:

•

Net premiums written were $232.4 million in the first quarter of 2006, compared to $212.6 million in the first quarter of 2005, up 9.3%.

•

Net premiums earned were $201.1 million in the current quarter, compared to $189.7 million in the prior-year quarter.

•

New business net premiums written were $74.2 million in the first quarter of 2006, representing an increase of 39% compared to $53.2 million in the first quarter of 2005.

•

The Commercial Lines GAAP combined ratio was 94.1% in the first quarter, compared to 102.8% in the prior year quarter.

•

The pre-tax catastrophe losses were $3.6 million, or 1.8 points of the combined ratio for the first quarter of 2006 compared to $5.5 million or 2.9 points of the combined ratio for the first quarter of 2005.

•

Favorable development of prior-year reserves was $17.1 million in the current quarter, compared to favorable development of $4.9 million in the first quarter of 2005; improving the Commercial Lines combined ratio by 8.5 points and 2.6 points, respectively.

Other Property & Casualty

Other Property & Casualty pre-tax segment income was $3.7 million in the quarter, compared to $2.1 million in the prior year quarter. Other Property & Casualty includes our run-off voluntary pools, premium financing and investment management operations.

Life Companies

Continuing Operations:

The continuing operations of the Life Companies now include the FAFLIC retained business. The retained business primarily includes various blocks of traditional life insurance, group retirement business, guaranteed investment contract (GIC) businesses, and our discontinued group life and health business, including group life and health voluntary pools, which are all in run-off. The Life Companies continuing operations reported a segment loss of $1.9 million in the current quarter of 2006, compared to a loss of $9.3 million in the first quarter of 2005, primarily attributable to lower expenses and decreased losses from the GIC business.

Loss on Disposal of the Variable Life Insurance and Annuity Business:

For the current quarter, we recorded a loss on the sale of the variable life insurance and annuity business of $20.1 million, net of tax, primarily due to an addition of $15.0 million to the existing provision for our estimated potential liability for certain contractual indemnities to

Goldman Sachs relating to the pre-sale activities of the business sold recorded under FAS Interpretation No. 45 Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (“FIN 45”). This additional provision relates to preliminary estimated expenses, reimbursements, penalties and other costs of remediating certain pre-closing processing errors relating to tax reporting to certain policyholders and others for a subset of our former variable annuity business.

Investment Results

Net investment income was $80.3 million for the first quarter of 2006 and the first quarter of 2005. Net investment income in the Property and Casualty segment increased $5.7 million to $56.5 million primarily due to increased operating cash flows and higher holding company investment income from the proceeds of the sale of the variable life insurance and annuity business. This was offset by a decrease in the net investment income in the Life Companies of $5.8 million to $23.7 million, driven by lower average invested assets, primarily resulting from the maturities of long-term funding agreements.

First quarter 2006 pre-tax net realized investment gains were $5.6 million, compared to $12.0 million of pre-tax net realized investment gains in the same period of 2005. In the current quarter, pre-tax net realized gains on sales of fixed maturities of $10.4 million were partially offset by $4.8 million of capital losses resulting from impairments on certain fixed maturity securities and other invested assets. In the first quarter of 2005, pre-tax net realized gains on sales of fixed maturities of $14.1 million were partially offset by $2.1 million of capital losses resulting from impairments on certain fixed maturity securities.

Balance Sheet

Shareholders’ equity was $1.8 billion, or $35.35 per share at March 31, 2006, compared to $2.0 billion or $36.30 per share at December 31, 2005, primarily due to the share repurchase program. Excluding accumulated other comprehensive income book value was $37.77 per share at the close of the current quarter, compared to $37.33 per share at December 31, 2005.

Other Items

The company has effectively completed a share repurchase program of up to $200 million. As of April 27th, 2006, we have purchased 4,022,314 shares, at an average price of $49.65, for a total principal amount of $199.7 million.

Earnings Conference Call

The Hanover will host a conference call to discuss the company’s first quarter results on Tuesday, May 2nd at 10:00 a.m. Eastern Time. A PowerPoint slide presentation will accompany our prepared remarks and has been posted on our website. Interested investors and others can listen to the call and access the presentation through The Hanover’s web site, located at www.hanover.com. Web-cast participants should go to the web site 15 minutes early to register, download, and install any necessary audio software. A re-broadcast of the conference call will be available on this web site two hours after the call.

Statistical Supplement

The Hanover’s first quarter earnings press release and statistical supplement are also available in the Investors section at www.hanover.com.

Forward-Looking Statements

Certain statements in this release or in the above referenced conference call may be considered to be forward-looking statements as defined in the Private Securities Litigation

Reform Act of 1995. Use of the words “believes”, “anticipates”, “expects”, “projections”, “outlook”, “should”, “plan”, “guidance” and similar expressions is intended to identify forward-looking statements. The company cautions investors that any such forward-looking statements are not guarantees of future performance, and actual results could differ materially. Investors are directed to consider the risks and uncertainties in our business that may affect future performance and that are discussed in readily available documents, including the company’s annual report and other documents filed by The Hanover with the Securities and Exchange Commission and which are also available at www.hanover.com under “Investors”. These uncertainties include the possibility of adverse catastrophe experience (including terrorism) and severe weather, the uncertainties in estimating property and casualty losses (particularly with respect to products with longer tails and with respect to losses incurred as the result of Hurricanes Katrina and Rita), the ability to increase or maintain certain property and casualty insurance rates, the impact of new product introductions (such as the multi-variate private passenger auto product), adverse loss development and adverse trends in mortality and morbidity, change in the current favorable frequency and loss trends generally being experienced industry-wide, the ability to improve renewal rates and increase new property and casualty policy counts, investment impairments, heightened competition (including rate pressure), adverse state and federal legislation or regulation or regulatory actions, financial ratings actions, uncertainties in estimating the FIN 45 liability recorded in conjunction with certain indemnity obligations to Goldman Sachs in connection with the sale of the variable annuity business (including with respect to existing and potential litigation and regulatory actions and the remediation of certain processing errors in connection with tax reporting), and various other factors.

The Hanover uses non-GAAP financial measures as important measures of the company’s operating performance, including total segment income, property and casualty segment income, and measures of segment income and loss ratios excluding catastrophe losses.

Segment income is net income excluding federal income taxes and net realized investment gains and losses, including gains or losses on certain derivative instruments, because fluctuations in these gains and losses are determined by interest rates, financial markets and the timing of sales. Segment income also excludes net gains and losses on disposals of businesses, discontinued operations, restructuring costs, extraordinary items, the cumulative effect of accounting changes and certain other items. Property and Casualty segment income is the sum of the segment income of the three operating segments of The Hanover’s property and casualty operations: Personal Lines, Commercial Lines and Other Property and Casualty. The Hanover believes that measures of total segment income and Property and Casualty segment income provide investors with a valuable measure of the performance of the company’s ongoing businesses because they highlight net income attributable to the normal operations of the business.

The Hanover also provides measures of segment income and loss ratios that exclude the effects of catastrophe losses. A catastrophe is a severe loss, resulting from natural or manmade events, including risks such as fire, huricane, earthquake, windstorm, explosion, terrorism or other similar events. Each catastrophe has unique characteristics. Catastrophes are not predictable as to timing or loss amount in advance. The Hanover believes that a discussion of the effect of catastrophes is meaningful for investors to understand the variability of periodic earnings and loss ratios.

Net income is the most directly comparable GAAP measure for total segment income, Property and Casualty segment income and measures of segment income that exclude the effects of catastrophe losses. Segment income, Property and Casualty segment income and measures of segment income that exclude the effects of catastrophe losses should not be construed as a substitute for net income determined in accordance with GAAP. A reconciliation of net income to segment income and Property and Casualty segment income for the quarters ended March 31, 2006 and 2005 is set forth in the table at the end of this document and in the statistical supplement. Loss ratios calculated in accordance with GAAP are the most directly comparable GAAP measure for loss ratios calculated excluding the effects of catastrophe losses. The presentation of loss ratios calculated excluding the effects of catastrophe losses should not be construed as a substitute for loss ratios determined in accordance with GAAP.

The Hanover Insurance Group, Inc., based in Worcester, Mass., is the holding company for a group of insurers that includes The Hanover Insurance Company, also based in Worcester, Citizens Insurance Company of America, headquartered in Howell, Michigan, and their affiliates. The Hanover offers a wide range of property and casualty products and services to individuals, families and businesses through an extensive network of independent agents, and has been meeting its obligations to its agent partners and their customers for more than 150 years. Taken as a group, The Hanover ranks among the top 35 of more than 950 property and casualty insurers in the United States.

Contact Information


Investors:		Media:

Sujata Mutalik		Michael F. Buckley
E-mail: smutalik@hanover.com		E-mail: mibuckley@hanover.com
1-508-855-3457		1-508-855-3099

THE HANOVER INSURANCE GROUP, INC.

(In millions, except per share data)


	Quarter ended March 31
	2006		2005
Net income	$	40.5	$	46.5
Net income per share⁽¹⁾	$	0.75	$	0.86
Weighted average shares (diluted)		53.6		53.8

The following is a reconciliation from segment income to net income⁽²⁾:


PER SHARE DATA (DILUTED)⁽¹⁾	Quarter ended March 31
	2006						2005
	$			Per Share			$			Per Share
Property and Casualty
Personal Lines	$	49.0			—		$	39.2			—
Commercial Lines		39.0			—			20.5			—
Other Property & Casualty		3.7			—			2.1			—
Total Property and Casualty		91.7			—			61.8			—
Life Companies		(1.9	)		—			(9.3	)		—
Interest expense on corporate debt		(10.0	)		—			(10.0	)		—
Total segment income		79.8		$	1.49			42.5		$	0.79
Federal income tax expense on P&C segment income		(28.9	)		—			(17.4	)		—
Federal income tax benefit on other segment income		5.3			—			7.6			—
Federal income tax expense on segment income		(23.6	)		(0.44	)		(9.8	)		(0.18	)
Total segment income after federal income taxes		56.2			1.05			32.7			0.61
Net realized investment gains, net of amortization		5.8			0.11			11.3			0.20
Loss on derivatives		—			—			(0.2	)		—
Restructuring costs		(0.3	)		(0.01	)		(0.7	)		(0.01	)
Federal income tax expense on non-segment income		(1.7	)		(0.03	)		(2.7	)		(0.05	)
Income from continuing operations, net of taxes		60.0			1.12			40.4			0.75
Income from discontinued variable life and annuity business, net of taxes		—			—			6.1			0.11
Loss on disposal of variable life insurance and annuity business, net of taxes		(20.1	)		(0.38	)		—			—
Income before cumulative effect of accounting change		39.9			0.74			46.5			0.86
Cumulative effect of change in accounting principle, net of taxes		0.6			0.01			—			—
Net income	$	40.5		$	0.75		$	46.5		$	0.86

⁽¹⁾ Basic net income per share was $0.76 and $0.87 for the quarters ended March 31, 2006 and 2005, respectively.

(2)

In accordance with Statement of Financial Accounting Standards No. 131, Disclosure about Segments of an Enterprise and Related Information, the separate financial information of each segment 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.

Management evaluates the results of the aforementioned segments on a pre-tax basis. Segment income (loss) is determined by adjusting net income (loss) for net realized investment gains and losses including certain gains or losses on derivative instruments, because fluctuations in these gains and losses are determined by interest rates, financial markets and the timing of sales. Also, segment income (loss) excludes net gains and losses on disposals of businesses, discontinued operations, restructuring and reorganization costs, extraordinary items, the cumulative effect of accounting changes and certain other items.

Net income includes the following items by segment:


	Quarter ended March 31, 2006
	Personal Lines		Commercial Lines		Other Property & Casualty	Life Companies		Total
Net realized investment gains (losses)	2.2		2.2		5.2	(3.8	)	5.8
Restructuring costs	—		—		—	(0.3	)	(0.3	)
Loss on disposal of variable life insurance and annuity business, net of taxes	—		—		—	(20.1	)	(20.1	)
Cumulative effect of change in accounting principle, net of taxes	0.2		0.3		—	0.1		0.6

	Quarter ended March 31, 2005
	Personal Lines		Commercial Lines		Other Property & Casualty	Life Companies		Total
Net realized investment (losses) gains	(0.7	)	(0.7	)	—	12.7		11.3
Losses on derivative instruments	—		—		—	(0.2	)	(0.2	)
Restructuring costs	—		—		—	(0.7	)	(0.7	)
Income from discontinued variable life insurance and annuity business, net of taxes	—		—		—	6.1		6.1

All figures reported are unaudited.

EX-99.2 3 dex992.htm STATISTICAL SUPPLEMENT FOR THE PERIOD ENDED MARCH 31, 2006 Statistical Supplement for the period ended March 31, 2006

Exhibit 99.2

THE HANOVER INSURANCE GROUP

STATISTICAL SUPPLEMENT

TABLE OF CONTENTS


Financial Highlights		1-3
Consolidated Financial Statements
Income Statements		4-5
Balance Sheets		6
Property and Casualty
Condensed Income Statements		7
Property and Casualty Consolidated Balance Sheets		8
GAAP Underwriting Results		9-10
Life Companies
Condensed Income Statements		11
Life Companies Consolidated Balance Sheets		12
Future Policy Benefits and Account Balances		13
Investments
Net Investment Income		14
Net Realized Investment Gains (Losses)		15
Unrealized Losses		16
Credit Quality of Fixed Maturities		17
Property and Casualty Statutory Ratios		18
Historical Financial Highlights		19-20
Other Information		Inside back cover
Corporate Information
Market and Dividend Information
Industry Ratings

THE HANOVER INSURANCE GROUP

FINANCIAL HIGHLIGHTS


	Quarter ended March 31
(In millions)	2006			2005			% Change
SEGMENT INCOME
Property and Casualty
Personal Lines	$	49.0		$	39.2		25.0
Commercial Lines		39.0			20.5		90.2
Other		3.7			2.1		76.2

Total Property and Casualty		91.7			61.8		48.4

Life Companies		(1.9	)		(9.3	)	(79.6	)
Interest expense on corporate debt		(10.0	)		(10.0	)	—

Total segment income		79.8			42.5		87.8

Federal income tax expense on P&C segment income		(28.9	)		(17.4	)	66.1
Federal income tax benefit on other segment income		5.3			7.6		(30.3	)

Total federal income tax expense on segment income		(23.6	)		(9.8	)	N/M

Total segment income after taxes	$	56.2		$	32.7		71.9

RECONCILIATION FROM SEGMENT INCOME TO NET INCOME
Total segment income after taxes	$	56.2		$	32.7		71.9
Net realized investment gains, net of amortization		5.8			11.3		(48.7	)
Losses on derivative instruments		—			(0.2	)	N/M
Restructuring costs		(0.3	)		(0.7	)	(57.1	)
Federal income tax expense on non-segment income		(1.7	)		(2.7	)	(37.0	)

Income from continuing operations, net of taxes		60.0			40.4		48.5

Income from discontinued variable life insurance and annuity business, net of taxes		—			6.1		N/M
Loss on disposal of variable life insurance and annuity business, net of taxes		(20.1	)		—		N/M

Income before cumulative effect of accounting change		39.9			46.5		(14.2	)
Cumulative effect of change in accounting principle, net of taxes		0.6			—		N/M

Net income	$	40.5		$	46.5		(12.9	)

THE HANOVER INSURANCE GROUP

FINANCIAL HIGHLIGHTS


	Quarter ended March 31
	2006			2005			% Change
PER SHARE DATA (DILUTED)
Total segment income	$	1.49		$	0.79		88.6
Federal income tax expense on segment income		(0.44	)		(0.18	)	N/M

Total segment income after taxes		1.05			0.61		72.1
Net realized investment gains, net of amortization		0.11			0.20		(45.0	)
Losses on derivative instruments		—			—		N/M
Restructuring costs		(0.01	)		(0.01	)	—
Federal income tax expense on non-segment income		(0.03	)		(0.05	)	(40.0	)

Income from continuing operations, net of taxes		1.12			0.75		49.3

Income from discontinued variable life insurance and annuity business, net of taxes		—			0.11		N/M
Loss on disposal of variable life insurance and annuity business, net of taxes		(0.38	)		—		N/M

Income before cumulative effect of accounting change		0.74			0.86		(14.0	)

Cumulative effect of change in accounting principle, net of taxes		0.01			—		N/M

Net income	$	0.75		$	0.86		(12.8	)

THE HANOVER INSURANCE GROUP

FINANCIAL HIGHLIGHTS


(In millions, except per share data)	March 31 2006			December 31 2005			% Change
BALANCE SHEET
Shareholders’ equity
The Hanover Insurance Company (consolidated)	$	1,718.3		$	1,709.8		0.5
First Allmerica Financial Life Insurance Company (consolidated)		353.3			367.0		(3.7	)
THG Holding Company debt (1)		(499.5	)		(499.5	)	—
THG Holding Company and other		270.9			374.0		(27.6	)

Total shareholders’ equity	$	1,843.0		$	1,951.3		(5.6	)

Total adjusted statutory capital
The Hanover Insurance Company (consolidated)	$	1,257.4		$	1,204.6		4.4
First Allmerica Financial Life Insurance Company	$	193.3		$	195.2		(1.0	)

The Hanover Insurance Company (consolidated) premium to surplus ratio		1.7:1			1.8:1		N/M
First Allmerica Financial Life Insurance Company estimated risk based capital ratio		429	%		410	%	19.0
Book value per share
The Hanover Insurance Company (consolidated)	$	32.95		$	31.81		3.6
First Allmerica Financial Life Insurance Company (consolidated)		6.78			6.82		(0.6	)
THG Holding Company debt (1)		(9.58	)		(9.47	)	1.2
THG Holding Company and other		5.20			7.14		(27.2	)

Total book value per share	$	35.35		$	36.30		(2.6	)

THG book value per share, excluding accumulated other comprehensive income	$	37.77		$	37.33		1.2

The Hanover Insurance Company (consolidated) book value per share, excluding accumulated other comprehensive income	$	34.19		$	32.00		6.8

Shares outstanding (2)		52.1			53.7

Stock price	$	52.42		$	41.77		25.5
Price/book value per share		1.5	x		1.2	x	0.3	x
Debt/equity		27.6	%		26.1	%	1.5	pts
Debt/total capital		21.6	%		20.7	%	0.9	pts

(1)

Excludes $9.3 million of holding company debt related to its affiliate, AFC Capital Trust I.

(2)

Shares outstanding do not include common stock equivalents.

(3)

Excludes corporate assets related to AFC Holding Company.

THE HANOVER INSURANCE GROUP

CONSOLIDATED INCOME STATEMENTS


	Quarter ended March 31
(In millions, except per share data)	2006			2005		% Change
REVENUES
Premiums	$	559.4		$	569.3	(1.7	)
Fees and other income		19.3			20.2	(4.5	)
Net investment income		80.3			80.3	—
Net realized investment gains		5.6			12.0	(53.3	)

Total revenues		664.6			681.8	(2.5	)

BENEFITS, LOSSES AND EXPENSES
Policy benefits, claims, losses and loss adjustment expenses		359.8			408.7	(12.0	)
Policy acquisition expenses		113.6			116.3	(2.3	)
Losses on derivative instruments		0.6			0.4	50.0
Restructuring costs		0.3			0.7	(57.1	)
Other operating expenses		105.0			102.8	2.1

Total benefits, losses and expenses		579.3			628.9	(7.9	)

Income from continuing operations before federal income taxes		85.3			52.9	61.2
Federal income tax expense		25.3			12.5	N/M

Income from continuing operations		60.0			40.4	48.5

Income from discontinued variable life insurance and annuity business, net of taxes		—			6.1	N/M
Loss on disposal of variable life insurance and annuity business, net of taxes		(20.1	)		—	N/M

Income before cumulative effect of change in accounting principle		39.9			46.5	(14.2	)

Cumulative effect of change in accounting principle, net of taxes		0.6			—	N/M

Net income	$	40.5		$	46.5	(12.9	)

THE HANOVER INSURANCE GROUP

CONSOLIDATED INCOME STATEMENTS


	Quarter ended March 31
	2006			2005		% Change
PER SHARE DATA (DILUTED)
Income from continuing operations	$	1.12		$	0.75	49.3
Income from discontinued variable life insurance and annuity business		—			0.11	N/M
Loss on disposal of variable life insurance and annuity business		(0.38	)		—	N/M

Income before cumulative effect of change in accounting principle		0.74			0.86	(14.0	)
Cumulative effect of change in accounting principle, net of taxes		0.01			—	N/M

Net income (1)	$	0.75		$	0.86	(12.8	)

Weighted average shares outstanding		53.6			53.8

(1)

Basic income per share was $0.76 and $0.87 for the quarters ended March 31, 2006 and 2005, respectively.

THE HANOVER INSURANCE GROUP

CONSOLIDATED BALANCE SHEETS


(In millions, except per share data)	March 31 2006			December 31 2005			% Change
ASSETS
Investments:
Fixed maturities, at fair value (amortized cost of $5,618.3 and $5,685.9)	$	5,555.7		$	5,708.2		(2.7	)
Equity securities, at fair value (cost of $13.0)		18.2			18.0		1.1
Mortgage loans		90.4			99.6		(9.2	)
Policy loans		136.8			139.9		(2.2	)
Other long-term investments		40.7			42.6		(4.5	)

Total investments		5,841.8			6,008.3		(2.8	)

Cash and cash equivalents		550.2			701.5		(21.6	)
Accrued investment income		75.2			76.5		(1.7	)
Premiums, accounts and notes receivable, net		537.7			493.2		9.0
Reinsurance receivable on paid and unpaid losses, benefits and unearned premiums		1,450.9			1,617.3		(10.3	)
Deferred policy acquisition costs		216.3			209.0		3.5
Deferred federal income taxes		456.9			465.3		(1.8	)
Goodwill		128.2			128.2		—
Other assets		335.6			362.8		(7.5	)
Separate account assets		564.0			571.9		(1.4	)

Total assets	$	10,156.8		$	10,634.0		(4.5	)

LIABILITIES AND SHAREHOLDERS’ EQUITY

LIABILITIES
Policy liabilities and accruals:
Future policy benefits	$	1,324.3		$	1,336.1		(0.9	)
Outstanding claims, losses and loss adjustment expenses		3,328.3			3,551.6		(6.3	)
Unearned premiums		1,048.6			1,011.3		3.7
Contractholder deposit funds and other policy liabilities		199.3			254.7		(21.8	)

Total policy liabilities and accruals		5,900.5			6,153.7		(4.1	)

Expenses and taxes payable		993.1			1,062.0		(6.5	)
Reinsurance premiums payable		51.9			92.0		(43.6	)
Trust instruments supported by funding obligations		295.5			294.3		0.4
Long-term debt		508.8			508.8		—
Separate account liabilities		564.0			571.9		(1.4	)

Total liabilities		8,313.8			8,682.7		(4.2	)

SHAREHOLDERS’ EQUITY
Preferred stock, par value $.01 per share; authorized 20.0 million shares; issued none		—			—		—
Common stock, par value $.01 per share; authorized 300.0 million shares; issued 60.5 million shares		0.6			0.6		—
Additional paid-in capital		1,798.0			1,785.1		0.7
Accumulated other comprehensive loss		(126.2	)		(59.5	)	N/M
Retained earnings		605.0			589.8		2.6
Treasury stock at cost (8.3 and 6.8 million shares)		(434.4	)		(364.7	)	19.1

Total shareholders’ equity		1,843.0			1,951.3		(5.6	)

Total liabilities and shareholders’ equity	$	10,156.8		$	10,634.0		(4.5	)

PROPERTY & CASUALTY

THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY

CONDENSED INCOME STATEMENTS


	Quarter ended March 31
(In millions)	2006			2005		% Change
REVENUES
Net premiums written	$	574.0		$	548.4	4.7
Change in unearned premiums, net of prepaid reinsurance premiums		(33.1	)		1.8	N/M

Net premiums earned		540.9			550.2	(1.7	)
Net investment income		56.5			50.8	11.2
Other income		14.7			12.9	14.0

Total segment revenue		612.1			613.9	(0.3	)

LOSSES AND OPERATING EXPENSES
Policy benefits, claims, losses and loss adjustment expenses		327.8			371.5	(11.8	)
Policy acquisition expenses		113.4			114.1	(0.6	)
Other operating expenses		79.2			66.5	19.1

Total losses and operating expenses		520.4			552.1	(5.7	)

Segment income before federal income taxes	$	91.7		$	61.8	48.4

THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY

CONSOLIDATED BALANCE SHEETS (1)


(In millions, except per share data)	March 31 2006			December 31 2005			% Change
ASSETS
Investments:
Fixed maturities, at fair value (amortized cost of $3,790.4 and $3,810.7)	$	3,745.2		$	3,822.1		(2.0	)
Equity securities, at fair value (cost of $2.0 )		6.0			6.0		—
Mortgage loans		42.7			45.0		(5.1	)
Other long-term investments		0.3			0.3		—

Total investments		3,794.2			3,873.4		(2.0	)

Cash and cash equivalents		252.5			322.9		(21.8	)
Accrued investment income		48.7			48.1		1.2
Premiums, accounts, and notes receivable, net		535.6			489.2		9.5
Reinsurance receivable on paid and unpaid losses, benefits and unearned premiums		1,072.9			1,226.3		(12.5	)
Deferred policy acquisition costs		210.2			201.9		4.1
Deferred federal income tax asset		251.4			246.5		2.0
Goodwill		121.4			121.4		—
Other assets		180.2			181.5		(0.7	)

Total assets	$	6,467.1		$	6,711.2		(3.6	)

LIABILITIES AND SHAREHOLDER’S EQUITY

LIABILITIES
Policy liabilities and accruals:
Outstanding claims, losses and loss adjustment expenses	$	3,240.4		$	3,458.7		(6.3	)
Unearned premiums		1,047.0			1,009.7		3.7
Contractholder deposit funds and other policy liabilities		2.6			3.0		(13.3	)

Total policy liabilities and accruals		4,290.0			4,471.4		(4.1	)

Expenses and taxes payable		411.2			444.5		(7.5	)
Reinsurance premiums payable		47.6			85.5		(44.3	)

Total liabilities		4,748.8			5,001.4		(5.1	)

SHAREHOLDER’S EQUITY
Common stock, par value $1.00 per share; authorized 20.9 million shares; issued 5.0 million shares		5.0			5.0		—
Additional paid-in capital		169.1			169.2		(0.1	)
Accumulated other comprehensive loss		(64.2	)		(9.6	)	N/M
Retained earnings		1,608.4			1,545.2		4.1

Total shareholder’s equity		1,718.3			1,709.8		0.5

Total liabilities and shareholder’s equity	$	6,467.1		$	6,711.2		(3.6	)

(1)

Property and Casualty Companies includes The Hanover Insurance Company and Citizens Insurance Company of America, and their subsidiaries.

THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY

GAAP UNDERWRITING PROFIT (LOSS) RECONCILED TO SEGMENT INCOME (LOSS)


	Quarter ended March 31, 2006
	Personal Lines												Commercial Lines														Other Property and Casualty			Total Property and Casualty
(In millions)	Personal Automobile			Homeowners			Other Personal Lines			Total Personal Lines			Workers’ Compensation			Commercial Automobile		Commercial Multiple Peril			Other Commercial Lines			Total Commercial Lines			Other Property and Casualty			Total Property and Casualty
Net premiums written	$	252.0		$	81.2		$	8.4		$	341.6		$	35.5		$	52.0	$	92.9		$	52.0		$	232.4		$	—		$	574.0

Net premiums earned	$	232.0		$	98.0		$	9.8		$	339.8		$	28.3		$	47.7	$	83.2		$	41.9		$	201.1		$	—		$	540.9
Policy benefits, claims, losses excluding prior year reserve development and catastrophe losses		144.9			41.6			3.3			189.8			21.9			22.2		40.0			13.6			97.7			—			287.5
Prior year loss and LAE reserve development (favorable) unfavorable		(7.4	)		1.7			(2.4	)		(8.1	)		(2.4	)		0.2		(12.6	)		(2.3	)		(17.1	)		0.3			(24.9	)
Pre-tax catastrophe losses		0.1			3.6			—			3.7			—			0.3		1.2			2.1			3.6			—			7.3
Loss adjustment expenses excluding prior year reserve development		26.5			8.2			0.7			35.4			4.1			3.2		11.9			2.8			22.0			0.3			57.7
Policy acquisition expenses and other underwriting expenses											100.6														82.9			(0.3	)		183.2
Policyholders’ dividends											—														0.2			—			0.2

GAAP underwriting profit (loss)											18.4														11.8			(0.3	)		29.9
Net investment income											26.6														26.1			3.8			56.5
Other income											4.9														3.9			5.9			14.7
Other operating expenses											(0.9	)													(2.8	)		(5.7	)		(9.4	)

Segment income before federal income taxes										$	49.0													$	39.0		$	3.7		$	91.7


	Quarter ended March 31, 2005
	Personal Lines												Commercial Lines														Other Property and Casualty			Total Property and Casualty
	Personal Automobile			Homeowners			Other Personal Lines			Total Personal Lines			Workers’ Compensation			Commercial Automobile		Commercial Multiple Peril			Other Commercial Lines			Total Commercial Lines			Other Property and Casualty			Total Property and Casualty
Net premiums written	$	246.5		$	81.0		$	8.3		$	335.8		$	40.1		$	50.2	$	89.0		$	33.3		$	212.6		$	—		$	548.4

Net premiums earned	$	247.3		$	103.3		$	9.9		$	360.5		$	32.2		$	46.5	$	82.9		$	28.1		$	189.7		$	—		$	550.2
Policy benefits, claims, losses excluding prior year reserve development and catastrophe losses		167.7			48.7			3.8			220.2			23.7			24.4		39.7			11.8			99.6			—			319.8
Prior year loss and LAE reserve development (favorable) unfavorable		(3.5	)		(5.8	)		(0.2	)		(9.5	)		3.8			0.1		(4.7	)		(4.1	)		(4.9	)		0.7			(13.7	)
Pre-tax catastrophe losses		—			6.5			0.3			6.8			—			—		4.5			1.0			5.5			—			12.3
Loss adjustment expenses excluding prior year reserve development		25.7			5.4			0.5			31.6			5.2			3.8		9.9			2.2			21.1			0.1			52.8
Policy acquisition expenses and other underwriting expenses											99.6														73.3			(0.3	)		172.6
Policyholders’ dividends											—														0.3			—			0.3

GAAP underwriting profit (loss)											11.8														(5.2	)		(0.5	)		6.1
Net investment income											24.9														24.6			1.3			50.8
Other income											3.9														3.3			5.7			12.9
Other operating expenses											(1.4	)													(2.2	)		(4.4	)		(8.0	)

Segment income before federal income taxes										$	39.2													$	20.5		$	2.1		$	61.8

THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY

GAAP UNDERWRITING RATIOS


	Quarter ended March 31, 2006
	Personal Lines								Commercial Lines										Other Property and Casualty	Total Property and Casualty
	Personal Automobile		Homeowners		Other Personal Lines		Total Personal Lines		Workers’ Compensation		Commercial Automobile		Commercial Multiple Peril		Other Commercial Lines		Total Commercial Lines		Other Property and Casualty	Total Property and Casualty
Losses, excluding catastrophe losses and development	62.5	%	42.4	%	33.7	%	55.9	%	77.4	%	46.5	%	48.1	%	32.5	%	48.6	%	N/M	53.1	%
Catastrophe losses	—		3.7	%	—		1.1	%	—		0.6	%	1.4	%	5.0	%	1.8	%	N/M	1.3	%
Loss development	(3.3	)%	2.1	%	(24.5	)%	(2.4	)%	(5.7	)%	0.2	%	(12.3	)%	(5.5	)%	(7.0	)%	N/M	(4.0	)%

Total loss reserves	59.2	%	48.2	%	9.2	%	54.6	%	71.7	%	47.3	%	37.2	%	32.0	%	43.4	%	N/M	50.4	%
Loss adjustment expenses	11.6	%	8.0	%	7.1	%	10.4	%	11.7	%	6.9	%	11.4	%	6.7	%	9.4	%	N/M	10.1	%
Policy acquisition and other underwriting expenses							29.6	%									41.2	%	N/M	33.9	%
Policyholders’ dividends							—										0.1	%	N/M	—

Combined							94.6	%									94.1	%	N/M	94.4	%

Policies in force	(1.7	)%	(3.9	)%	(2.5	)%	(2.8	)%	(6.6	)%	(3.7	)%	(5.0	)%	2.7	%	(2.3	)%	—	(2.7	)%
Retention (1)	79.5	%	83.3	%	N/M		81.5	%	68.4	%	77.1	%	81.9	%	N/M		77.8	%

	Quarter ended March 31, 2005
	Personal Lines								Commercial Lines										Other Property and Casualty	Total Property and Casualty
	Personal Automobile		Homeowners		Other Personal Lines		Total Personal Lines		Workers’ Compensation		Commercial Automobile		Commercial Multiple Peril		Other Commercial Lines		Total Commercial Lines		Other Property and Casualty	Total Property and Casualty
Losses, excluding catastrophe losses and development	67.8	%	47.1	%	38.4	%	61.1	%	73.6	%	52.5	%	47.9	%	42.0	%	52.5	%	N/M	58.1	%
Catastrophe losses	—		6.3	%	3.0	%	1.9	%	—		—		5.4	%	3.6	%	2.9	%	N/M	2.2	%
Loss development	(1.5	)%	(4.9	)%	(1.0	)%	(2.5	)%	16.2	%	N/M		(3.3	)%	(14.6	)%	(0.8	)%	N/M	(1.8	)%

Total loss reserves	66.3	%	48.5	%	40.4	%	60.5	%	89.8	%	52.5	%	50.0	%	31.0	%	54.6	%	N/M	58.5	%
Loss adjustment expenses	10.5	%	4.5	%	4.0	%	8.6	%	11.8	%	8.4	%	9.5	%	7.8	%	9.4	%	N/M	8.9	%
Policy acquisition and other underwriting expenses							27.6	%									38.6	%	N/M	31.4	%
Policyholders’ dividends							—										0.2	%	N/M	0.1	%

Combined							96.7	%									102.8	%	N/M	98.9	%

Policies in force	(12.5	)%	(9.3	)%	(7.5	)%	(10.7	)%	(0.1	)%	0.6	%	(1.0	)%	1.7	%	0.3	%	—	(9.5	)%
Retention (1)	78.4	%	80.7	%	N/M		79.7	%	87.8	%	79.5	%	81.1	%	N/M		82.4	%

(1)

The retention rate for personal lines is a twelve month rolling average calculation based on policies in force; the retention rate for commercial lines is based on direct voluntary written premiums, based on processed policies in the current period versus the same period in the prior year. Additionally, the retention rates have been adjusted to exclude the effect of our strategic termination of specialty commercial programs which resulted from an extensive review during the fourth quarter of 2001.

LIFE COMPANIES

THE HANOVER INSURANCE GROUP

LIFE COMPANIES

CONDENSED INCOME STATEMENTS


	Quarter ended March 31
(In millions)	2006			2005			% Change
REVENUES
Premiums	$	18.5		$	19.1		(3.1	)
Fees and other income		6.0			9.4		(36.2	)
Net investment income		23.7			29.5		(19.7	)

Total segment revenue		48.2			58.0		(16.9	)

POLICY BENEFITS, CLAIMS AND OPERATING EXPENSES
Policy benefits, claims and losses		32.2			36.4		(11.5	)
Policy acquisition expenses		0.2			2.2		(90.9	)
Other operating expenses		17.7			28.7		(38.3	)

Total policy benefits, claims and operating expenses		50.1			67.3		(25.6	)

Segment loss before federal income taxes	$	(1.9	)	$	(9.3	)	(79.6	)

THE HANOVER INSURANCE GROUP

LIFE COMPANIES

CONSOLIDATED BALANCE SHEETS


(In millions, except per share data)	March 31 2006			December 31 2005			% Change
ASSETS
Investments:
Fixed maturities, at fair value (amortized cost of $1,677.4 and $1,789.8)	$	1,666.4		$	1,801.2		(7.5	)
Equity securities, at fair value (cost of $1.7 )		2.9			2.7		7.4
Mortgage loans		47.8			54.8		(12.8	)
Policy loans		136.8			139.9		(2.2	)
Other long-term investments		40.4			42.3		(4.5	)

Total investments		1,894.3			2,040.9		(7.2	)

Cash and cash equivalents		121.3			101.9		19.0
Accrued investment income		24.5			27.6		(11.2	)
Premiums, accounts, and notes receivable, net		2.1			4.0		(47.5	)
Reinsurance receivable on paid and unpaid losses, benefits and unearned premiums		378.0			391.0		(3.3	)
Deferred policy acquisition costs		6.1			7.1		(14.1	)
Deferred federal income tax asset		188.8			204.6		(7.7	)
Other assets		95.9			91.2		5.2
Separate account assets		564.0			571.9		(1.4	)

Total assets	$	3,275.0		$	3,440.2		(4.8	)

LIABILITIES AND SHAREHOLDER’S EQUITY

LIABILITIES
Policy liabilities and accruals:
Future policy benefits	$	1,324.3		$	1,336.1		(0.9	)
Outstanding claims, losses and loss adjustment expenses		87.9			92.9		(5.4	)
Unearned premiums		1.6			1.6		—
Contractholder deposit funds and other policy liabilities		196.7			251.7		(21.9	)

Total policy liabilities and accruals		1,610.5			1,682.3		(4.3	)

Expenses and taxes payable		447.4			518.2		(13.7	)
Reinsurance premiums payable		4.3			6.5		(33.8	)
Trust instruments supported by funding obligations		295.5			294.3		0.4
Separate account liabilities		564.0			571.9		(1.4	)

Total liabilities		2,921.7			3,073.2		(4.9	)

SHAREHOLDER’S EQUITY
Common stock, par value $10 per share; authorized 1 million shares; issued 500,000 shares		5.0			5.0		N/M
Additional paid-in capital		684.9			684.9		N/M
Accumulated other comprehensive loss		(33.7	)		(26.3	)	28.1
Retained deficit		(302.9	)		(296.6	)	2.1

		353.3			367.0		(3.7	)

Total liabilities and shareholder’s equity	$	3,275.0		$	3,440.2		(4.8	)

THE HANOVER INSURANCE GROUP

LIFE COMPANIES

FUTURE POLICY BENEFITS AND ACCOUNT BALANCES


	Gross						Net of Reinsurance Recoverables
(In millions)	March 31 2006		December 31 2005		% Change		March 31 2006		December 31 2005		% Change
Insurance
Traditional life	$	735.0	$	760.2	(3.3	)	$	734.8	$	760.0	(3.3	)
Universal life		1.0		1.0	N/M			—		—	—
Variable universal life		32.5		32.9	(1.2	)		—		—	—
Individual health		17.7		18.7	(5.3	)		0.4		0.4	N/M

Total insurance		786.2		812.8	(3.3	)		735.2		760.4	(3.3	)

Annuities
Individual annuities		107.5		113.5	(5.3	)		14.1		15.7	(10.2	)
Group annuities		391.4		400.7	(2.3	)		386.2		395.5	(2.4	)

Total annuities		498.9		514.2	(3.0	)		400.3		411.2	(2.7	)

Guaranteed investment contracts
Contractholder deposit funds and other policy liabilities		4.9		30.3	(83.8	)		4.9		30.3	(83.8	)

Total general account reserves	$	1,290.0	$	1,357.3	(5.0	)	$	1,140.4	$	1,201.9	(5.1	)

Trust instruments supported by funding obligations	$	295.5	$	294.3	0.4		$	295.5	$	294.3	0.4

SEPARATE ACCOUNT LIABILITIES
Variable universal life	$	69.0	$	67.6	2.1		$	69.0	$	67.6	2.1
Variable individual annuities		396.8		405.5	(2.1	)		396.8		405.5	(2.1	)

Total individual		465.8		473.1	(1.5	)		465.8		473.1	(1.5	)
Group variable universal life		2.3		2.6	(11.5	)		2.3		2.6	(11.5	)
Group annuities		95.9		96.2	(0.3	)		95.9		96.2	(0.3	)

Total group		98.2		98.8	(0.6	)		98.2		98.8	(0.6	)

Total separate account liabilities (1)	$	564.0	$	571.9	(1.4	)	$	564.0	$	571.9	(1.4	)

(1)

Includes separate account liabilities subject to a modified coinsurance agreement with AFLIAC of $460.2 million and $465.7 million as of March 31, 2006 and December 31, 2005, respectively.

INVESTMENTS

THE HANOVER INSURANCE GROUP

NET INVESTMENT INCOME


(In millions, except yields)	Quarter ended March 31, 2006
(In millions, except yields)	Property and Casualty (1)			Yield		Life Companies (2)			Yield		Total			Yield
Fixed maturities	$	53.2		5.56	%	$	23.0		5.72	%	$	76.2		5.61	%
Equity securities		0.6		—			—		—			0.6		—
Mortgages		0.9		8.55	%		1.0		7.76	%		1.9		8.14	%
All other		3.6		—			0.4		—			4.0		—
Investment expenses		(1.7	)	—			(0.7	)	—			(2.4	)	—

Total	$	56.6		5.33	%	$	23.7		4.98	%	$	80.3		5.23	%


	Quarter ended March 31, 2005
	Property and Casualty (1)			Yield		Life Companies (2)			Yield		Total			Yield
Fixed maturities	$	51.4		5.57	%	$	31.4		5.76	%	$	82.8		5.64	%
Equity securities		0.2		—			—		—			0.2		—
Mortgages		1.0		8.10	%		1.3		8.36	%		2.3		8.24	%
All other		(0.7	)	—			(1.9	)	—			(2.6	)	—
Investment expenses		(1.1	)	—			(1.3	)	—			(2.4	)	—

Total	$	50.8		5.36	%	$	29.5		4.60	%	$	80.3		5.06	%

(1)

Includes purchase accounting adjustments of $0.8 for the quarters ended March 31, 2006 and 2005. Also includes corporate eliminations of $0.1 million $0.2 for the quarters ended March 31, 2006 and 2005 respectively.

(2)

Excludes AFLIAC discontinued operations of $20.8 million for the quarter ended March 31, 2005.

THE HANOVER INSURANCE GROUP

COMPONENTS OF NET REALIZED INVESTMENT GAINS (LOSSES)


	Quarter ended March 31
(In millions)	2006									2005
	Net Realized Gains (Losses)									Net Realized Gains (Losses)
	Property and Casualty (1)			Life Companies			Total			Property and Casualty (1)			Life Companies (2)			Total
Net gains (losses) on securities transactions	$	11.8		$	(1.4	)	$	10.4		$	0.2		$	13.0		$	13.2
Other than temporary impairments		(2.2	)		(2.6	)		(4.8	)		(1.7	)		(0.4	)		(2.1	)
Other		—			—			—			0.1			0.8			0.9

Net realized investment gains (losses)	$	9.6		$	(4.0	)	$	5.6		$	(1.4	)	$	13.4		$	12.0

(1)

Includes corporate eliminations of $5.2 million for the quarter ended March 31, 2006. There were no corporate eliminations in the quarter ended March 31, 2005.

(2)

Excludes discontinued operations of $8.2 million for the quarter ended March 31, 2005.

THE HANOVER INSURANCE GROUP

AGING OF GROSS UNREALIZED LOSSES ON SECURITIES AVAILABLE FOR SALE


(In millions)	March 31, 2006
	Gross Unrealized Losses						Fair Value
	Property and Casualty		Life Companies		Total		Property and Casualty		Life Companies		Total
INVESTMENT GRADE FIXED MATURITIES:
12 months or less	$	53.3	$	27.7	$	81.0	$	2,186.3	$	821.3	$	3,007.6
Greater than 12 months		24.5		12.4		36.9		437.3		212.6		649.9

Total investment grade fixed maturities		77.8		40.1		117.9		2,623.6		1,033.9		3,657.5

BELOW INVESTMENT GRADE FIXED MATURITIES:
12 months or less		4.6		0.4		5.0		117.9		22.2		140.1
Greater than 12 months		—		—		—		1.7		0.3		2.0

Total below investment grade fixed maturities		4.6		0.4		5.0		119.6		22.5		142.1

Equity securities		—		—		—		—		1.3		1.3

Total fixed maturities and equity securities	$	82.4	$	40.5	$	122.9	$	2,743.2	$	1,057.7	$	3,800.9


	December 31, 2005
	Gross Unrealized Losses						Fair Value
	Property and Casualty		Life Companies		Total		Property and Casualty		Life Companies		Total
INVESTMENT GRADE FIXED MATURITIES:
12 months or less	$	24.5	$	14.2	$	38.7	$	1,571.7	$	764.0	$	2,335.7
Greater than 12 months		18.0		8.7		26.7		404.1		191.7		595.8

Total investment grade fixed maturities		42.5		22.9		65.4		1,975.8		955.7		2,931.5

BELOW INVESTMENT GRADE FIXED MATURITIES:
12 months or less		6.2		2.8		9.0		134.4		36.9		171.3
Greater than 12 months		—		—		—		—		—		—

Total below investment grade fixed maturities		6.2		2.8		9.0		134.4		36.9		171.3

Equity securities		—		0.1		0.1		—		1.4		1.4

Total fixed maturities and equity securities	$	48.7	$	25.8	$	74.5	$	2,110.2	$	994.0	$	3,104.2

THE HANOVER INSURANCE GROUP

CREDIT QUALITY OF FIXED MATURITIES


(In millions) NAIC Designation	Rating Agency Equivalent Designation	March 31, 2006
		Amortized Cost						Fair Value
		Property and Casualty		Life Companies		Total		Property and Casualty		Life Companies		Total
1	Aaa/Aa/A	$	2,837.4	$	1,055.2	$	3,892.6	$	2,800.4	$	1,034.8	$	3,835.2
2	Baa		846.8		528.5		1,375.3		830.5		531.3		1,361.8
3	Ba		116.3		53.9		170.2		114.1		54.8		168.9
4	B		95.5		29.7		125.2		97.4		31.7		129.1
5	Caa and lower		43.0		8.1		51.1		43.0		10.3		53.3
6	In or near default		1.9		2.0		3.9		3.9		3.5		7.4

Total fixed maturities		$	3,940.9	$	1,677.4	$	5,618.3	$	3,889.3	$	1,666.4	$	5,555.7


	Rating Agency Equivalent Designation	December 31, 2005
		Amortized Cost						Fair Value
NAIC Designation		Property and Casualty		Life Companies		Total		Property and Casualty		Life Companies		Total
1	Aaa/Aa/A	$	2,779.9	$	1,111.3	$	3,891.2	$	2,787.3	$	1,108.7	$	3,896.0
2	Baa		850.5		580.3		1,430.8		848.8		591.6		1,440.4
3	Ba		96.2		56.2		152.4		95.6		56.7		152.3
4	B		114.8		37.4		152.2		114.1		37.6		151.7
5	Caa and lower		47.9		7.6		55.5		53.4		9.4		62.8
6	In or near default		1.9		1.9		3.8		3.0		2.0		5.0

Total fixed maturities		$	3,891.2	$	1,794.7	$	5,685.9	$	3,902.2	$	1,806.0	$	5,708.2

PROPERTY & CASUALTY

STATUTORY RATIOS

THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY

STATUTORY UNDERWRITING RATIOS


	Quarter ended March 31, 2006
	Personal Lines								Commercial Lines										Other Property and Casualty	Total Property and Casualty
	Personal Automobile		Homeowners		Other Personal Lines		Total Personal Lines		Workers' Compensation		Commercial Automobile		Commercial Multiple Peril		Other Commercial Lines		Total Commercial Lines		Other Property and Casualty	Total Property and Casualty
Losses, excluding catastrophe losses and development	62.5	%	42.4	%	33.7	%	55.9	%	79.6	%	46.5	%	47.9	%	32.5	%	48.7	%	N/M	53.2	%
Catastrophe losses	—		3.7	%	—		1.1	%	—		0.6	%	1.4	%	5.0	%	1.8	%	N/M	1.4	%
Loss development	(3.3	)%	2.1	%	(24.5	)%	(2.4	)%	(5.8	)%	0.2	%	(12.3	)%	(5.5	)%	(7.0	)%	N/M	(4.0	)%

Total loss reserves	59.2	%	48.2	%	9.2	%	54.6	%	73.8	%	47.3	%	37.0	%	32.0	%	43.5	%	N/M	50.6	%
Loss adjustment expenses	11.6	%	8.0	%	7.1	%	10.4	%	12.0	%	6.9	%	11.4	%	6.7	%	9.4	%	N/M	10.1	%
Policy acquisition and other underwriting expenses							29.9	%									38.0	%	N/M	33.2	%
Policyholders’ dividends							—										0.2	%	N/M	—

Combined							94.9	%									91.1	%	N/M	93.9	%


	Quarter ended March 31, 2005
	Personal Lines								Commercial Lines										Other Property and Casualty	Total Property and Casualty
	Personal Automobile		Homeowners		Other Personal Lines		Total Personal Lines		Workers' Compensation		Commercial Automobile		Commercial Multiple Peril		Other Commercial Lines		Total Commercial Lines		Other Property and Casualty	Total Property and Casualty
Losses, excluding catastrophe losses and development	67.8	%	47.1	%	38.4	%	61.1	%	74.0	%	52.5	%	47.9	%	41.9	%	52.5	%	N/M	58.4	%
Catastrophe losses	—		6.3	%	3.0	%	1.9	%	—		—		5.4	%	3.6	%	2.9	%	N/M	2.2	%
Loss development	(1.5	)%	(4.9	)%	(1.0	)%	(2.5	)%	16.3	%	N/M		(3.3	)%	(14.5	)%	(0.8	)%	N/M	(1.8	)%

Total loss reserves	66.3	%	48.5	%	40.4	%	60.5	%	90.3	%	52.5	%	50.0	%	31.0	%	54.6	%	N/M	58.8	%
Loss adjustment expenses	10.6	%	4.6	%	3.0	%	8.7	%	11.9	%	8.2	%	9.5	%	8.2	%	9.4	%	N/M	8.9	%
Policy acquisition and other underwriting expenses							27.7	%									35.5	%	N/M	30.7	%
Policyholders’ dividends							—										0.1	%	N/M	—

Combined							96.9	%									99.6	%	N/M	98.4	%

Historical Highlights

THE HANOVER INSURANCE GROUP

HISTORICAL FINANCIAL HIGHLIGHTS


(In millions, except per share data)	Q1 06			2005			Q4 05			Q3 05			Q2 05			Q1 05
SEGMENT INCOME (1)
Property and Casualty
Personal Lines	$	49.0		$	143.2		$	74.4		$	(27.8	)	$	57.4		$	39.2
Commercial Lines		39.0			(35.0	)		14.5			(101.0	)		31.0			20.5
Other Property and Casualty		3.7			5.5			0.6			1.1			1.7			2.1

Total Property and Casualty		91.7			113.7			89.5			(127.7	)		90.1			61.8
Life Companies		(1.9	)		(18.7	)		(1.0	)		(0.9	)		(7.5	)		(9.3	)
Interest expense on corporate debt		(10.0	)		(39.9	)		(10.0	)		(10.0	)		(9.9	)		(10.0	)

Total segment income (loss) before federal income taxes	$	79.8		$	55.1		$	78.5		$	(138.6	)	$	72.7		$	42.5

Federal income tax (expense) benefit on segment income		(23.6	)		(1.0	)		(1.3	)		29.6			(19.5	)		(9.8	)

Total segment income (loss) after federal income taxes	$	56.2		$	54.1		$	77.2		$	(109.0	)	$	53.2		$	32.7

Change in prior years tax reserves		—			2.3			—			—			2.3			—
Federal income tax settlement		—			5.3			5.3			—			—			—
Net realized investment gains (losses), net of amortization		5.8			18.7			5.8			(0.7	)		2.3			11.3
(Losses) gains on derivative instruments		—			(0.3	)		—			0.2			(0.3	)		(0.2	)
Restructuring costs		(0.3	)		(2.1	)		(0.8	)		(0.4	)		(0.2	)		(0.7	)
Federal income tax (expense) benefit on non-segment income		(1.7	)		(5.7	)		(7.3	)		4.5			(0.2	)		(2.7	)

Income (loss) from continuing operations		60.0			72.3			80.2			(105.4	)		57.1			40.4
Income from discontinued variable life and annuity business, net of taxes		—			42.7			4.1			17.6			14.9			6.1
(Loss) income on disposal of variable life and annuity business, net of taxes		(20.1	)		(444.4	)		30.2			(474.6	)		—			—

Income (loss) before cumulative effect of accounting change		39.9			(329.4	)		114.5			(562.4	)		72.0			46.5
Cumulative effect of change in accounting principle, net of taxes		0.6			—			—			—			—			—

NET INCOME (LOSS)	$	40.5		$	(329.4	)	$	114.5		$	(562.4	)	$	72.0		$	46.5

PER SHARE DATA (DILUTED)
INCOME (LOSS) FROM CONTINUING OPERATIONS	$	1.12		$	1.34		$	1.48		$	(1.97	)	$	1.06		$	0.75
(LOSS) INCOME FROM DISCONTINUED OPERATIONS, NET OF TAXES	$	(0.38	)	$	(7.44	)	$	0.63		$	(8.54	)	$	0.28		$	0.11
NET INCOME (LOSS)	$	0.75		$	(6.10	)	$	2.11		$	(10.51	)	$	1.34		$	0.86

WEIGHTED AVERAGE SHARES OUTSTANDING (DILUTED) (2)		53.6			54.0			54.2			53.5			53.9			53.8

BALANCE SHEET
Total investments	$	5,841.8					$	6,008.3		$	7,535.0		$	7,678.4		$	7,663.9
Separate account assets	$	564.0					$	571.9		$	9,385.9		$	9,444.6		$	9,726.0
Total assets	$	10,156.8					$	10,507.9		$	21,647.1		$	21,846.6		$	22,167.8
Total shareholders’ equity	$	1,843.0					$	1,947.1		$	1,867.7		$	2,490.5		$	2,325.2
Book value per share	$	35.35					$	36.23		$	34.81		$	46.60		$	43.53
Book value per share, excluding accumulated other comprehensive income	$	37.77					$	37.33		$	35.47		$	46.01		$	44.67

(1)

Represents income or loss of the Company’s operating segments: Personal Lines, Commercial Lines, Other Property and Casualty, Life Companies and interest expense on corporate debt. In accordance with Statement of Financial Accounting Standards No.131, the separate financial information of each segment is presented consistent with the manner in which results are regularly evaluated by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

(2)

Weighted average shares outstanding for the quarter ending September 30, 2005 represents basic shares outstanding due to antidilution.

THE HANOVER INSURANCE GROUP

HISTORICAL FINANCIAL HIGHLIGHTS


(In millions, except per share data)	2004			Q4 04			Q3 04			Q2 04			Q1 04
SEGMENT INCOME (1)
Property and Casualty
Personal Lines	$	134.6		$	45.9		$	42.1		$	35.8		$	10.8
Commercial Lines		58.0			26.0			(7.1	)		12.6			26.5
Other Property and Casualty		5.4			1.7			1.7			0.7			1.3

Total Property and Casualty		198.0			73.6			36.7			49.1			38.6
Life Companies		(22.3	)		(8.7	)		(2.1	)		(6.9	)		(4.6	)
Interest expense on corporate debt		(39.9	)		(10.0	)		(10.0	)		(9.9	)		(10.0	)

Total segment income before federal income taxes	$	135.8		$	54.9		$	24.6		$	32.3		$	24.0

Federal income tax expense on segment income		(26.6	)		(12.6	)		(4.5	)		(6.3	)		(3.2	)

Total segment income after federal income taxes	$	109.2		$	42.3		$	20.1		$	26.0		$	20.8

Federal income tax settlement		30.4			0.1			—			0.2			30.1
Net realized investment gains (losses), net of amortization		16.1			3.7			(5.5	)		6.8			11.1
(Losses) gains from retirement of funding agreements and trust instruments supported by funding obligations		(0.2	)		0.1			2.9			—			(3.2	)
Gains on derivative instruments		1.3			0.9			0.1			0.3			—
Restructuring costs		(8.5	)		(2.7	)		(0.3	)		(2.2	)		(3.3	)
Federal income tax (expense) benefit on non-segment income		(3.0	)		(0.9	)		0.5			(1.9	)		(0.7	)

Income from continuing operations		145.3			43.5			17.8			29.2			54.8
Income (loss) from discontinued variable life and annuity business, net of taxes		37.2			19.6			(0.1	)		3.2			14.5

Income before cumulative effect of accounting change		182.5			63.1			17.7			32.4			69.3
Cumulative effect of change in accounting principle, net of taxes		(57.2	)		—			—			—			(57.2	)

NET INCOME	$	125.3		$	63.1		$	17.7		$	32.4		$	12.1

PER SHARE DATA (DILUTED)

INCOME FROM CONTINUING OPERATIONS	$	2.71		$	0.81		$	0.33		$	0.54		$	1.02
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAXES	$	0.69		$	0.37		$	—		$	0.06		$	0.27
NET INCOME	$	2.34		$	1.18		$	0.33		$	0.60		$	0.23

WEIGHTED AVERAGE SHARES OUTSTANDING (DILUTED)		53.7			53.7			53.6			53.7			53.7

BALANCE SHEET
Total investments				$	8,265.7		$	8,253.1		$	8,091.3		$	8,239.5
Separate account assets				$	10,455.0		$	10,086.0		$	10,740.3		$	11,304.9
Total assets				$	23,719.2		$	23,448.9		$	24,030.5		$	24,763.9
Total shareholders’ equity				$	2,339.5		$	2,294.2		$	2,207.2		$	2,289.3
Book value per share				$	43.91		$	43.09		$	41.48		$	43.04
Book value per share, excluding accumulated other comprehensive income				$	43.85		$	42.69		$	42.36		$	41.77

(1)

CORPORATE OFFICES AND PRINCIPAL SUBSIDIARIES

THE HANOVER INSURANCE GROUP, INC.

440	Lincoln Street

Worcester,

MA 01653

The Hanover Insurance Company

440	Lincoln Street

Worcester,

MA 01653

Citizens Insurance Company of America

645	West Grand River

Howell,

MI 48843

MARKET AND DIVIDEND INFORMATION

The	following information shows trading activity for the Company for the periods indicated:


Quarter Ended	2006
	Price Range				Dividends Per Share
	High		Low		Dividends Per Share
March 31	$	53.12	$	42.98	—
June 30
September 30
December 31

Quarter Ended	2005
	Price Range				Dividends Per Share
	High		Low		Dividends Per Share
March 31	$	36.50	$	30.27	—
June 30	$	37.29	$	32.85	—
September 30	$	42.11	$	37.13	—
December 31	$	42.03	$	37.20	0.25

INDUSTRY RATINGS AS OF April 28, 2006


Financial Strength Ratings	A.M. Best	Standard & Poor’s	Moody’s
Property and Casualty Insurance Companies:
The Hanover Insurance Company	A-	BBB+	Baa1
Citizens Insurance Company of America	A-	BBB+	—
Life Insurance Companies:
First Allmerica Financial Life Insurance Company	B+	BBB-	Ba1

Debt Ratings	A.M. Best	Standard & Poor’s	Moody’s
The Hanover Insurance Group, Inc.
Senior Debt	bbb-	BB+	Ba1
The Hanover Insurance Group, Inc.
Capital Securities	bb	B+	Ba2
The Hanover Insurance
Company Short Term Debt	—	—	NP

TRANSFER AGENT

Computershare Limited

PO Box 43076

Providence, RI 02940-3076

1-800-317-4454

COMMON STOCK

Common stock of The Hanover Insurance Group is traded on the New York Stock Exchange under the symbol “THG”.

INQUIRIES

Sujata Mutalik

Vice President, Investor Relations

(508) 855-3457

smutalik@Hanover.com

Kenneth Popeleski

Director, Investor Relations

(508) 855-4022

kpopeleski@Hanover.com

INVESTOR INFORMATION LINE

Dial 1-800-407-5222 to receive additional printed information, fax-on-demand services or other prerecorded messages.

Please visit our internet site at http:// www.Hanover.com

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