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): July 30, 2007

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 (17 CFR 240.14a-12)

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

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 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 July 30, 2007, The Hanover Insurance Group, Inc. issued a press release announcing its financial results for the quarter ended June 30, 2007. The release is furnished as Exhibit 99.1 hereto. Additionally, on July 30, 2007, the Company made available on its website financial information contained in its Statistical Supplement for the period ended June 30, 2007. 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 July 30, 2007, announcing the Company’s financial results for the quarter ended June 30, 2007.
Exhibit 99.2	The Hanover Insurance Group, Inc. Statistical Supplement for the period ended June 30, 2007.

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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 hereunto duly authorized.

	The Hanover Insurance Group, Inc
	(Registrant)
Date July 30, 2007	By:	/s/ Edward J. Parry, III
		Edward J. Parry, III
		Chief Financial Officer,
		Executive Vice President and
		Principal Accounting Officer

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Exhibit Index

Exhibit 99.1	Press Release, dated July 30, 2007, announcing the Company’s financial results for the quarter ended June 30, 2007.
Exhibit 99.2	The Hanover Insurance Group, Inc. Statistical Supplement for the period ended June 30, 2007.

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EX-99.1

THE HANOVER INSURANCE GROUP, INC. REPORTS 2007 SECOND QUARTER EARNINGS:

NET INCOME OF $1.14 PER SHARE COMPARED TO $0.99 PER SHARE LAST YEAR; INCOME FROM CONTINUING OPERATIONS OF $1.14 PER SHARE COMPARED TO $1.04 PER SHARE LAST YEAR

WORCESTER, Mass., July 30, 2007—The Hanover Insurance Group, Inc. (NYSE: THG) today reported net income for the second quarter of $59.8 million, or $1.14 per share, compared to $50.9 million, or $0.99 per share in the second quarter of last year. Income from continuing operations was $59.5 million for the second quarter, or $1.14 per share, compared to $53.7 million, or $1.04 per share, in the second quarter of last year.

Total Property and Casualty pre-tax segment income was $98.1 million in the quarter, compared to $86.2 million in the second quarter of last year. The Personal Lines segment reported pretax segment earnings of $55.7 million in the second quarter of 2007 compared to $53.7 million in the second quarter of 2006, while the Commercial Lines segment reported pre-tax segment earnings of $39.3 million in the quarter, versus $30.2 million in the second quarter of 2006.

“Our companies continue to deliver strong results and generate earnings growth even under challenging market conditions.” said Frederick H. Eppinger, chief executive officer of The Hanover Insurance Group, Inc. “We continue to grow and maintain positive momentum in both our Commercial and Personal Lines of business, making progress towards another good year.”

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.

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 June 30 (In millions)
	2007			2006
Property and Casualty:
Personal Lines(1)	$	55.7		$	53.7
Commercial Lines(2)		39.3			30.2
Other Property and Casualty		3.1			2.3
Total Property & Casualty		98.1			86.2
Life Companies		0.8			(1.0	)
Interest expense on corporate debt		(9.9	)		(9.9	)
Total pre-tax segment income		89.0			75.3
Federal income tax expense		(29.8	)		(23.6	)
Total segment income after taxes (3)	$	59.2		$	51.7

⁽¹⁾ Includes Personal Lines pre-tax net impact of catastrophes of $9.2 million and $7.4 million for the second quarter of 2007 and 2006, respectively.

⁽²⁾ Includes Commercial Lines pre-tax net impact of catastrophes of $5.3 million and $12.1 million for the second quarter of 2007 and 2006, respectively.

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

Property and Casualty

Property and Casualty pre-tax segment income was $98.1 million in the second quarter of 2007, up from $86.2 million in the second quarter of 2006. The pre-tax net impact of catastrophes was $14.5 million in the quarter compared to $19.5 million in the second quarter of 2006. Excluding catastrophes, Property and Casualty pre-tax segment income would have been $112.6 million in the current quarter compared to $105.7 million in the prior year quarter, an increase of $6.9 million. Underlying this increase were higher underwriting losses that were more than offset by several factors. Higher underwriting losses in the quarter resulted from higher current accident year losses that were partially offset by higher favorable development of prior-year loss and loss adjustment reserves. The several factors that contributed to improved earnings in the quarter were lower loss adjustment expenses, higher investment income and favorable results from involuntary pools.

Property and Casualty highlights:

• Net premiums written were $619.9 million in the second quarter of 2007, compared to $598.4 million in the second quarter of 2006, up 3.6%.

• Net premiums earned were $590.7 million in the second quarter of 2007, compared to $549.4 million in the second quarter of 2006.

• New business net premiums written were $151.8 million in the second quarter of 2007, compared to $151.8 million written in the second quarter of 2006.

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• Favorable development of prior-year loss and loss adjustment reserves was $34.8 million in the second quarter of 2007, compared to favorable development of $25.6 million in the second quarter of 2006, driven primarily by Personal Auto and Commercial Multiple Peril.

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

	Quarter ended June 30
	2007		2006
Personal Lines losses (excluding catastrophes)	51.7	%	49.3	%
Personal Lines catastrophe-related losses	2.5	%	2.6	%
Total Personal Lines losses	54.2	%	51.9	%
Commercial Lines losses (excluding catastrophes)	44.2	%	41.2	%
Commercial Lines catastrophe-related losses	2.3	%	5.2	%
Total Commercial Lines losses	46.5	%	46.4	%
Total P&C Losses	51.5	%	49.9	%
Loss adjustment expenses	10.0	%	11.2	%
Policy acquisition and other underwriting expenses	32.7	%	33.8	%
Combined Ratio	94.2	%	94.9	%

Personal Lines

Personal Lines pre-tax segment income was $55.7 million in the quarter compared to $53.7 million in the prior-year quarter. The pre-tax net impact of catastrophes was $9.2 million in the current quarter compared to $7.4 million in the second quarter of 2006. Excluding catastrophes, personal lines pre-tax segment income would have been $64.9 million in the current quarter compared to $61.1 million in the prior-year quarter, an increase of $3.8 million. Underlying this increase were higher underwriting losses that were more than offset by several factors. Higher underwriting losses in the quarter resulted from higher current accident year losses that were partially offset by higher favorable development of prior-year loss and loss adjustment reserves. The several factors that contributed to earnings improvement in the quarter were lower loss adjustment expenses, higher net investment income and favorable results from involuntary pools.

Current accident year losses were higher in the second quarter of 2007 compared to the prior-year quarter. The increase in current accident year losses is driven by large property losses in the Homeowners’ line, as well as an increase in current accident year losses in personal auto.

Prior-year loss and loss adjustment reserves developed favorably and were $22.5 million in the second quarter of 2007, compared to $17.3 million in the second quarter of 2006. This increase was driven by personal auto liability and relates primarily to the most recent prior accident year.

Loss adjustment expenses excluding catastrophes were $4.8 million lower in the quarter, compared to the prior-year quarter resulting primarily from lower technology expenses and lower independent adjusters’ expenses.

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Net investment income was $2.0 million higher in the quarter due primarily to higher operating cash flows.

Earnings were also higher by $1.9 million in the current quarter compared to the second quarter of 2006 due primarily to the more favorable results from the Massachusetts Commonwealth of Automobile Reinsurers (Mass CAR) pool.

Personal Lines highlights:

• Net premiums written were $370.8 million in the second quarter of 2007, compared to $360.7 million in the second quarter of 2006, up 2.8%.

• Net premiums earned were $364.4 million in the second quarter of 2007, compared to $344.5 million in the second quarter of 2006.

• New business net premiums written were $67.8 million in the second quarter of 2007, representing a decrease of 4.4% compared to $71.0 million in the second quarter of 2006.

• The Personal Lines GAAP combined ratio was 93.7% in the second quarter, versus 92.9% in the prior-year quarter.

• The pre-tax net impact of catastrophes was $9.2 million, or 2.5 points of the combined ratio for the second quarter of 2007, compared to $7.4 million, or 2.2 points of the combined ratio for the second quarter of 2006.

• Favorable development of prior-year loss and loss adjustment reserves was $22.5 million in the current quarter, compared to favorable development of $17.3 million in the second quarter of 2006 decreasing the personal lines combined ratio by 6.2 points and 5.0 points, respectively.

Commercial Lines

Commercial Lines pre-tax segment income was $39.3 million in the quarter, compared to $30.2 million in the second quarter of 2006. The pre-tax net impact of catastrophes was $5.3 million in the current quarter, compared to $12.1 million in the second quarter of 2006. Excluding catastrophes, commercial lines pre-tax segment income would have been $44.6 million in the current quarter, compared to $42.3 million in the prior-year quarter, an increase of $2.3 million. Underlying this increase were higher underwriting losses that were more than offset by lower loss adjustment and underwriting expenses. Higher underwriting losses in the quarter resulted from higher current accident year losses that were partially offset by higher favorable development of prior-year loss and loss adjustment reserves.

Current accident year losses were higher in the second quarter of 2007 compared to the second quarter of 2006, driven by Commercial Multiple Peril. There are two factors driving the increase in current accident year losses in Commercial Multiple Peril as compared to the second quarter of 2006. First, current accident year losses in the second quarter of 2007 were adversely impacted by large property losses. Second, current accident year losses were unusually low in the second quarter of 2006.

Prior-year loss and loss adjustment reserve development was $13.3 million favorable in the second quarter of 2007 compared to $9.3 million favorable in the second quarter of 2006. Reserves developed favorably across most lines, with the largest improvement seen in Commercial Multiple Peril.

Loss adjustment expenses excluding catastrophes were $4.0 million lower in the quarter compared to the prior-year quarter, resulting primarily from lower legal expenses and reserves.

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Commercial Lines highlights:

• Net premiums written were $248.8 million in the second quarter of 2007, compared to $237.4 million in the second quarter of 2006, up 4.8%.

• Net premiums earned were $226.0 million in the current quarter, compared to $204.7 million in the prior-year quarter.

• New business net premiums written were $84.0 million in the second quarter of 2007, representing an increase of 3.9% compared to $80.8 million in the second quarter of 2006.

• The Commercial Lines GAAP combined ratio was 94.6% in the second quarter, compared to 98.4% in the prior- year quarter.

• The pre-tax net impact of catastrophes was $5.3 million or 2.3 points of the combined ratio for the second quarter of 2007, compared to $12.1 million, or 5.9 points of the combined ratio for the second quarter of 2006.

• Favorable development of prior-year loss and loss adjustment reserves was $13.3 million in the current quarter, compared to favorable development of $9.3 million in the second quarter of 2006; decreasing the Commercial Lines combined ratio by 5.9 points and 4.5 points, respectively.

Other Property & Casualty

Other Property & Casualty pre-tax segment income was $3.1 million in the quarter, compared to $2.3 million in the prior-year quarter. Other Property & Casualty includes the company’s premium financing business, investment management operations, earnings on holding company assets, as well as run-off voluntary pools.

Life Companies

Continuing Operations:

The continuing operations of the Life Companies include the run-off FAFLIC business. This business primarily includes the closed block of traditional life insurance, group retirement business, guaranteed investment contract (GIC) businesses, and the company’s discontinued group life and health business, including group life and health voluntary pools.

The Life Companies continuing operations reported a segment profit of $0.8 million in the current quarter of 2007, compared to a loss of $1.0 million in the second quarter of 2006, primarily attributable to lower pension and other expenses.

Investment Results

Net investment income was $80.3 million for the second quarter of 2007, compared to $79.2 million in the same period of 2006. Net investment income for the property and casualty segment increased by $3.6 million, to $59.6 million for the second quarter of 2007, compared to the second quarter of 2006. This increase in property and casualty segment net investment income for the quarter was driven primarily by increased operating cash flows. Offsetting the increase in property and casualty net

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investment income was a decrease in net investment income in the Life Companies’ of $2.5 million to $20.5 million. The decrease in Life Companies net investment income was driven by lower average invested assets, resulting from continued cash outflows from the run off of the life operations and maturities of long-term funding agreements.

Second quarter 2007 pre-tax net realized investment gains were $0.8 million, compared to $2.9 million in the same period of 2006. In the second quarter of 2007, pre-tax net realized gains on sales of fixed maturities of $1.1 million were partially offset by $0.3 million of capital losses, resulting from impairments on certain fixed maturity securities. In the second quarter of 2006, pre-tax net realized investment gains of $4.8 million were primarily from sales of investments. These gains were partially offset by $1.9 million of capital losses resulting from impairments on certain fixed maturity securities.

Balance Sheet

Shareholders' equity was $2.1 billion, or $40.55 per share at June 30, 2007, compared to $2.0 billion or $39.10 per share at December 31, 2006. Excluding accumulated other comprehensive income, book value per share was $42.51 per share at the close of the current quarter, compared to $39.88 per share at December 31, 2006.

Earnings Conference Call

The Hanover will host a conference call to discuss the company's second quarter results on Tuesday, July 31st at 10:00 a.m. Eastern Time. A PowerPoint slide presentation will accompany our prepared remarks and has been posted on our web site. 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 second quarter earnings press release and statistical supplement are also available in the Investors section at www.hanover.com.

Forward-Looking Statements and Non-GAAP Financial Measures

Certain statements in this release or in the above referenced conference call may 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 its 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 experiences (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 possibility of adverse judicial decisions including those which expand policy coverage beyond its intended scope (such as recent decisions in Louisiana involving the so-called “flood” exclusions and so-called “Valued Policy Law”), the ability to increase or maintain certain property and casualty insurance rates, the impact of new product introductions (such as the multivariate personal auto product and the homeowners tiered product), adverse loss development and adverse trends in mortality and morbidity and medical costs, changes in the 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 increasing rate pressure, particularly in Commercial lines), adverse state and federal legislation or regulation or regulatory actions (such as recent mandated decrease in rates for Massachusetts personal

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automobile insurance and Florida homeowners policies), 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 life insurance and 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 or reserve development.

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 core 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, hurricane, 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 or reserve development. Segment income, Property and Casualty segment income and measures of segment income that exclude the effects of catastrophe losses or reserve development 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 June 30, 2007 and 2006 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 40 property and casualty insurers in the United States.

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

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THE HANOVER INSURANCE GROUP, INC.

(In millions, except per share data)

	Quarter ended June 30
	2007		2006
Net income	$	59.8	$	50.9
Net income per share(1)	$	1.14	$	0.99
Weighted average shares (diluted)		52.3		51.6

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

PER SHARE DATA (DILUTED) (1)	Quarter ended June 30
	2007						2006
Segment Income	$			Per Share			$			Per Share
Property and Casualty
Personal Lines	$	55.7			—		$	53.7			—
Commercial Lines		39.3			—			30.2			—
Other Property & Casualty		3.1			—			2.3			—
Total Property and Casualty		98.1			—			86.2			—
Life Companies		0.8			—			(1.0	)		—
Interest expense on corporate debt		(9.9	)		—			(9.9	)		—
Total segment income		89.0		$	1.70			75.3		$	1.46
Federal income tax expense on P&C segment income		(33.8	)		—			(30.3	)		—
Federal income tax benefit on other segment income		4.0			—			6.7			—
Total federal income tax expense on segment income		(29.8	)		(0.57	)		(23.6	)		(0.46	)
Total segment income after federal income taxes		59.2			1.13			51.7			1.00
Net realized investment gains, net of amortization		0.2			0.01			3.6			0.07
Gain on derivative instruments		0.1			—			0.1			—
Restructuring benefit (cost)		0.2			—			(0.6	)		(0.01	)
Federal income tax expense on non-segment income		(0.2	)		—			(1.1	)		(0.02	)
Income from continuing operations, net of taxes		59.5			1.14			53.7			1.04
Gain (loss) on disposal of variable life insurance and annuity business, net of taxes		0.3			—			(2.8	)		(0.05	)
Net income	$	59.8		$	1.14		$	50.9		$	0.99

(1) Basic net income per share was $1.16 and $1.00 for the quarters ended June 30, 2007 and 2006, respectively.

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(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 is determined by adjusting net income 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 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.

Net income includes the following items by segment:

	Quarter ended June 30, 2007
	Personal Lines		Commercial Lines		Other Property & Casualty			Life Companies			Total
Net realized investment gains (losses)	$	0.4	$	0.3	$	(0.5	)		--		$	0.2
Gains on derivative instruments		--		--		--			0.1			0.1
Restructuring benefit		--		--		--			0.2			0.2
Gain on disposal of variable life insurance and annuity business, net of taxes		--		--		--			0.3			0.3
	Quarter ended June 30, 2006
	Personal Lines		Commercial Lines		Other Property & Casualty			Life Companies			Total
Net realized investment gains (losses)	$	2.5	$	2.5	$	(1.5	)	$	0.1		$	3.6
Gain on derivative instruments		—		—		—			0.1			0.1
Restructuring costs		—		—		—			(0.6	)		(0.6	)
Gain on disposal of variable life insurance and annuity business, net of taxes		—		—		—			(2.8	)		(2.8	)

All figures reported are unaudited.

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EX-99.2

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	9-12
Life Companies
Condensed Income Statements	13
Life Companies Consolidated Balance Sheets	14
Future Policy Benefits and Account Balances	15
Investments
Net Investment Income	16
Net Realized Investment Gains (Losses)	17
Unrealized Losses	18
Credit Quality of Fixed Maturities	19
Property and Casualty Statutory Ratios	20-21
Historical Financial Highlights	22-23
Other Information	24
Corporate Information	24
Market and Dividend Information	24
Industry Ratings	24

THE HANOVER INSURANCE GROUP

FINANCIAL HIGHLIGHTS

	Quarter ended June 30								Six Months ended June 30
(In millions)	2007			2006			% Change		2007			2006			% Change
SEGMENT INCOME
Property and Casualty
Personal Lines	$	55.7		$	53.7		3.7		$	103.1		$	102.7		0.4
Commercial Lines		39.3			30.2		30.1			88.3			69.2		27.6
Other		3.1			2.3		34.8			7.6			6.0		26.7
Total Property and Casualty		98.1			86.2		13.8			199.0			177.9		11.9
Life Companies		0.8			(1.0	)	N/M			(0.1	)		(2.9	)	(96.6	)
Interest expense on corporate debt		(9.9	)		(9.9	)	—			(19.9	)		(19.9	)	—
Total segment income		89.0			75.3		18.2			179.0			155.1		15.4
Federal income tax expense on P&C segment income		(33.8	)		(30.3	)	11.6			(67.9	)		(59.2	)	14.7
Federal income tax benefit on other segment income		4.0			6.7		(40.3	)		8.3			12.0		(30.8	)
Total federal income tax expense on segment income		(29.8	)		(23.6	)	26.3			(59.6	)		(47.2	)	26.3
Total segment income after taxes	$	59.2		$	51.7		14.5		$	119.4		$	107.9		10.7
RECONCILIATION FROM SEGMENT
INCOME TO NET INCOME
Total segment income after taxes	$	59.2		$	51.7		14.5		$	119.4		$	107.9		10.7
Federal income tax settlement		—			—		—			2.4			—		N/M
Net realized investment gains, net of amortization		0.2			3.6		(94.4	)		2.1			9.4		(77.7	)
Gains on derivative instruments		0.1			0.1		—			0.1			0.1		—
Restructuring benefit (cost)		0.2			(0.6	)	N/M			0.2			(0.9	)	N/M
Federal income tax expense on non-segment income		(0.2	)		(1.1	)	(81.8	)		(0.9	)		(2.8	)	(67.9	)
Income from continuing operations		59.5			53.7		10.8			123.3			113.7		8.4
Gain (loss) on disposal of variable life insurance and annuity business, net of taxes		0.3			(2.8	)	N/M			0.1			(22.9	)	N/M
Income before cumulative effect of accounting change		59.8			50.9		17.5			123.4			90.8		35.9
Cumulative effect of change in accounting principle, net of taxes		—			—		—			—			0.6		N/M
Net income	$	59.8		$	50.9		17.5		$	123.4		$	91.4		35.0

1

THE HANOVER INSURANCE GROUP

FINANCIAL HIGHLIGHTS

	Quarter ended June 30								Six Months ended June 30
	2007			2006			% Change		2007			2006			% Change
PER SHARE DATA (DILUTED)
Total segment income	$	1.70		$	1.46		16.4		$	3.43		$	2.95		16.3
Federal income tax expense on segment income		(0.57	)		(0.46	)	23.9			(1.14	)		(0.90	)	26.7
Total segment income after taxes		1.13			1.00		13.0			2.29			2.05		11.7
Federal income tax settlement		—			—		—			0.05			—		N/M
Net realized investment gains, net of amortization		0.01			0.07		(85.7	)		0.04			0.18		(77.8	)
Restructuring costs		—			(0.01	)	N/M			—			(0.02	)	N/M
Federal income tax expense on non-segment income		—			(0.02	)	N/M			(0.01	)		(0.05	)	(80.0	)
Income from continuing operations		1.14			1.04		9.6			2.37			2.16		9.7
(Loss) gain on disposal of variable life insurance and annuity business, net of taxes		—			(0.05	)	N/M			—			(0.43	)	N/M
Income before cumulative effect of accounting change		1.14			0.99		15.2			2.37			1.73		37.0
Cumulative effect of change in accounting principle, net of taxes		—			—		—			—			0.01		N/M
Net income	$	1.14		$	0.99		15.2		$	2.37		$	1.74		36.2

2

THE HANOVER INSURANCE GROUP

FINANCIAL HIGHLIGHTS

(In millions, except per share data)	June 30 2007			December 31 2006			% Change
BALANCE SHEET
Shareholders’ equity
The Hanover Insurance Company (consolidated)	$	2,003.8		$	1,929.7		3.8
First Allmerica Financial Life Insurance Company (consolidated)		312.6			318.0		(1.7	)
THG Holding Company debt (1)		(499.5	)		(499.5	)	—
THG Holding Company and other		282.5			251.0		12.5
Total shareholders’ equity	$	2,099.4		$	1,999.2		5.0
Total adjusted statutory capital
The Hanover Insurance Company (consolidated)	$	1,561.8		$	1,463.6		6.7
First Allmerica Financial Life Insurance Company	$	192.1		$	179.9		6.8
The Hanover Insurance Company (consolidated) premium to surplus ratio		1.5:1			1.6:1		N/M
First Allmerica Financial Life Insurance Company estimated risk based capital ratio		484	%		431	%	53.0
Book value per share
The Hanover Insurance Company (consolidated)	$	38.70		$	37.74		2.5
First Allmerica Financial Life Insurance Company (consolidated)		6.04			6.22		(2.9	)
THG Holding Company debt (1)		(9.65	)		(9.77	)	(1.2	)
THG Holding Company and other		5.46			4.91		11.2
Total book value per share	$	40.55		$	39.10		3.7
THG book value per share, excluding accumulated other comprehensive income	$	42.51		$	39.88		6.6
The Hanover Insurance Company (consolidated) book value per share, excluding accumulated other comprehensive income	$	39.54		$	37.59		5.2
Shares outstanding (2)		51.8			51.1
Stock price	$	48.79		$	48.80		—
Price/book value per share		1.2	x		1.2	x	—	x
Debt/equity		24.2	%		25.5	%	(1.3	) pts
Debt/total capital		19.5	%		20.3	%	(0.8	) 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

THE HANOVER INSURANCE GROUP

CONSOLIDATED INCOME STATEMENTS

	Quarter ended June 30							Six Months ended June 30
(In millions, except per share data)	2007		2006			% Change		2007		2006			% Change
REVENUES
Premiums	$	595.5	$	554.8		7.3		$	1,197.7	$	1,114.2		7.5
Net investment income		80.3		79.2		1.4			160.5		159.5		0.6
Net realized investment gains		0.8		2.9		(72.4	)		3.1		8.5		(63.5	)
Fees and other income		14.8		16.9		(12.4	)		28.2		36.2		(22.1	)
Total revenues		691.4		653.8		5.8			1,389.5		1,318.4		5.4
BENEFITS, LOSSES AND EXPENSES
Policy benefits, claims, losses and loss adjustment expenses		382.2		355.5		7.5			767.7		715.3		7.3
Policy acquisition expenses		130.2		117.5		10.8			257.4		231.1		11.4
Other operating expenses		89.5		102.4		(12.6	)		183.0		208.3		(12.1	)
Total benefits, losses and expenses		601.9		575.4		4.6			1,208.1		1,154.7		4.6
Income from continuing operations before federal income taxes		89.5		78.4		14.2			181.4		163.7		10.8
Federal income tax expense		30.0		24.7		21.5			58.1		50.0		16.2
Income from continuing operations		59.5		53.7		10.8			123.3		113.7		8.4
Gain (loss) on disposal of variable life insurance and annuity business, net of taxes		0.3		(2.8	)	N/M			0.1		(22.9	)	N/M
Income before cumulative effect of change in accounting principle		59.8		50.9		17.5			123.4		90.8		35.9
Cumulative effect of change in accounting principle, net of taxes		—		—		—			—		0.6		N/M
Net income	$	59.8	$	50.9		17.5		$	123.4	$	91.4		35.0

4

THE HANOVER INSURANCE GROUP

CONSOLIDATED INCOME STATEMENTS

	Quarter ended June 30						Six Months ended June 30
	2007		2006			% Change	2007		2006			% Change
PER SHARE DATA (DILUTED)
Income from continuing operations	$	1.14	$	1.04		9.6	$	2.37	$	2.16		9.7
(Loss) gain on disposal of variable life insurance and annuity business, net of taxes		—		(0.05	)	N/M		—		(0.43	)	N/M
Income before cumulative effect of change in accounting principle		1.14		0.99		15.2		2.37		1.73		37.0
Cumulative effect of change in accounting principle, net of taxes		—		—		—		—		0.01		N/M
Net income (1)	$	1.14	$	0.99		15.2	$	2.37	$	1.74		36.2
Weighted average shares outstanding		52.3		51.6				52.1		52.6

(1) Basic income per share was $1.16 and $1.00 for the quarters ended June 30, 2007 and 2006, respectively and $2.40 and $1.76 for the six months ended June 30, 2007 and 2006, respectively.

5

THE HANOVER INSURANCE GROUP

CONSOLIDATED BALANCE SHEETS

(In millions, except per share data)	June 30 2007			December 31 2006			% Change
ASSETS
Investments:
Fixed maturities, at fair value (amortized cost of $5,685.6 and $5,643.2)	$	5,600.8		$	5,629.0		(0.5	)
Equity securities, at fair value (cost of $17.8 and $11.6)		25.5			17.2		48.3
Mortgage loans		46.7			57.1		(18.2	)
Policy loans		120.8			125.7		(3.9	)
Other long-term investments		33.3			35.4		(5.9	)
Total investments		5,827.1			5,864.4		(0.6	)
Cash and cash equivalents		301.0			372.7		(19.2	)
Accrued investment income		72.6			72.3		0.4
Premiums, accounts and notes receivable, net		647.7			584.7		10.8
Reinsurance receivable on paid and unpaid losses, benefits and unearned premiums		1,337.0			1,350.5		(1.0	)
Deferred policy acquisition costs		248.2			233.5		6.3
Deferred federal income taxes		410.7			385.0		6.7
Goodwill		121.4			121.4		—
Other assets		321.0			328.5		(2.3	)
Separate account assets		519.0			543.6		(4.5	)
Total assets	$	9,805.7		$	9,856.6		(0.5	)
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Policy liabilities and accruals:
Future policy benefits	$	1,213.1		$	1,242.3		(2.4	)
Outstanding claims, losses and loss adjustment expenses		3,213.9			3,247.2		(1.0	)
Unearned premiums		1,164.4			1,101.4		5.7
Contractholder deposit funds and other policy liabilities		169.6			194.9		(13.0	)
Total policy liabilities and accruals		5,761.0			5,785.8		(0.4	)
Expenses and taxes payable		817.7			928.0		(11.9	)
Reinsurance premiums payable		60.4			52.7		14.6
Trust instruments supported by funding obligations		39.4			38.5		2.3
Long-term debt		508.8			508.8		—
Separate account liabilities		519.0			543.6		(4.5	)
Total liabilities		7,706.3			7,857.4		(1.9	)
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		1,814.8			1,814.3		N/M
Accumulated other comprehensive loss		(101.6	)		(39.9	)	N/M
Retained earnings		839.1			712.0		17.9
Treasury stock at cost (8.7 and 9.4 million shares)		(453.5	)		(487.8	)	(7.0	)
Total shareholders’ equity		2,099.4			1,999.2		5.0
Total liabilities and shareholders’ equity	$	9,805.7		$	9,856.6		(0.5	)

6

PROPERTY & CASUALTY

THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY

CONDENSED INCOME STATEMENTS

	Quarter ended June 30								Six Months ended June 30
(In millions)	2007			2006			% Change		2007			2006			% Change
REVENUES
Net premiums written	$	619.9		$	598.4		3.6		$	1,231.9		$	1,172.4		5.1
Change in unearned premiums, net of prepaid reinsurance premiums		(29.2	)		(49.0	)	(40.4	)		(56.8	)		(82.1	)	(30.8	)
Net premiums earned		590.7			549.4		7.5			1,175.1			1,090.3		7.8
Net investment income		59.6			56.0		6.4			120.3			112.5		6.9
Other income		16.4			13.1		25.2			31.4			27.8		12.9
Total segment revenue		666.7			618.5		7.8			1,326.8			1,230.6		7.8
LOSSES AND OPERATING EXPENSES
Policy benefits, claims, losses and loss adjustment expenses		363.3			336.6		7.9			716.4			664.4		7.8
Policy acquisition expenses		130.0			117.2		10.9			257.0			230.6		11.4
Other operating expenses		75.3			78.5		(4.1	)		154.4			157.7		(2.1	)
Total losses and operating expenses		568.6			532.3		6.8			1,127.8			1,052.7		7.1
Segment income before federal income taxes	$	98.1		$	86.2		13.8		$	199.0		$	177.9		11.9

7

THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY

CONSOLIDATED BALANCE SHEETS (1)

(In millions, except per share data)	June 30 2007			December 31 2006		% Change
ASSETS
Investments:
Fixed maturities, at fair value (amortized cost of $4,119.0 and $3,999.1)	$	4,058.6		$	3,989.0	1.7
Equity securities, at fair value (cost of $10.1 and $3.9)		15.5			7.3	N/M
Mortgage loans		14.1			23.7	(40.5	)
Other long-term investments		8.8			10.2	(13.7	)
Total investments		4,097.0			4,030.2	1.7
Cash and cash equivalents		172.3			230.5	(25.2	)
Accrued investment income		49.2			48.0	2.5
Premiums, accounts, and notes receivable, net		646.4			581.8	11.1
Reinsurance receivable on paid and unpaid losses, benefits and unearned premiums		1,007.3			1,012.2	(0.5	)
Deferred policy acquisition costs		243.6			228.4	6.7
Deferred federal income tax asset		247.6			206.2	20.1
Goodwill		121.4			121.4	—
Other assets		203.5			194.9	4.4
Total assets	$	6,788.3		$	6,653.6	2.0
LIABILITIES AND SHAREHOLDER’S EQUITY
LIABILITIES
Policy liabilities and accruals:
Outstanding claims, losses and loss adjustment expenses	$	3,134.3		$	3,163.9	(0.9	)
Unearned premiums		1,162.8			1,099.9	5.7
Contractholder deposit funds and other policy liabilities		2.0			2.1	(4.8	)
Total policy liabilities and accruals		4,299.1			4,265.9	0.8
Expenses and taxes payable		427.6			408.8	4.6
Reinsurance premiums payable		57.8			49.2	17.5
Total liabilities		4,784.5			4,723.9	1.3
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		169.2			169.2	—
Accumulated other comprehensive income		(43.0	)		7.3	N/M
Retained earnings		1,872.6			1,748.2	7.1
Total shareholder’s equity		2,003.8			1,929.7	3.8
Total liabilities and shareholder’s equity	$	6,788.3		$	6,653.6	2.0

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

8

THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY

GAAP UNDERWRITING PROFIT (LOSS) RECONCILED TO SEGMENT INCOME

	Quarter ended June 30, 2007
	Personal Lines												Commercial Lines
(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	$	249.6		$	110.4		$	10.8		$	370.8		$	26.1		$	54.8		$	95.5		$	72.4		$	248.8		$	0.3		$	619.9
Net premiums earned	$	251.6		$	103.0		$	9.8		$	364.4		$	26.5		$	49.1		$	87.8		$	62.6		$	226.0		$	0.3		$	590.7
Policy benefits, claims, losses excluding prior year reserve development and catastrophe losses		161.0			48.9			2.8			212.7			18.9			26.2			45.5			22.7			113.3			—			326.0
Prior year loss and LAE reserve development (favorable) unfavorable		(21.4	)		(0.2	)		(0.9	)		(22.5	)		(2.8	)		(2.8	)		(6.0	)		(1.7	)		(13.3	)		1.0			(34.8	)
Pre-tax catastrophe losses		2.3			6.6			0.3			9.2			—			0.2			3.7			1.4			5.3			—			14.5
Pre-tax catastrophe LAE		—			—			—			—			—			—			—			—			—			—			—
Loss adjustment expenses excluding prior year reserve development		29.0			7.3			0.2			36.5			2.1			3.6			10.8			4.4			20.9			0.1			57.5
Policy acquisition expenses and other underwriting expenses											105.6															87.6			0.1			193.3
Policyholders’ dividends											—															0.1			—			0.1
GAAP underwriting profit (loss)											22.9															12.1			(0.9	)		34.1
Net investment income											28.8															26.6			4.2			59.6
Other income											5.2															3.5			7.7			16.4
Other operating expenses											(1.2	)														(2.9	)		(7.9	)		(12.0	)
Segment income before federal income taxes										$	55.7														$	39.3		$	3.1		$	98.1
	Quarter ended June 30, 2006
	Personal Lines												Commercial Lines
	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	$	244.0		$	105.6		$	11.1		$	360.7		$	27.8		$	53.6		$	96.3		$	59.7		$	237.4		$	0.3		$	598.4
Net premiums earned	$	237.2		$	97.7		$	9.6		$	344.5		$	27.4		$	48.2		$	84.1		$	45.0		$	204.7		$	0.2		$	549.4
Policy benefits, claims, losses excluding prior year reserve development and catastrophe losses		139.6			43.5			3.1			186.2			20.5			23.9			33.4			13.7			91.5			—			277.7
Prior year loss and LAE reserve development (favorable) unfavorable		(13.7	)		(3.7	)		0.1			(17.3	)		(7.3	)		(2.4	)		0.4			—			(9.3	)		1.0			(25.6	)
Pre-tax catastrophe losses		1.3			7.2			0.4			8.9			—			0.9			4.3			5.4			10.6			—			19.5
Pre-tax catastrophe LAE		(0.8	)		(0.7	)		—			(1.5	)		—			—			1.5			—			1.5			—			—
Loss adjustment expenses excluding prior year reserve development		30.0			10.4			0.6			41.0			3.9			4.2			12.5			3.2			23.8			0.1			64.9
Policy acquisition expenses and other underwriting expenses											102.5															83.3			—			185.8
Policyholders’ dividends											—															0.1			—			0.1
GAAP underwriting profit (loss)											24.7															3.2			(0.9	)		27.0
Net investment income											26.8															26.2			3.0			56.0
Other income											3.3															4.1			5.7			13.1
Other operating expenses											(1.1	)														(3.3	)		(5.5	)		(9.9	)
Segment income before federal income taxes										$	53.7														$	30.2		$	2.3		$	86.2

9

THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY

GAAP UNDERWRITING PROFIT (LOSS) RECONCILED TO SEGMENT INCOME

	Six Months ended June 30, 2007
	Personal Lines												Commercial Lines
(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	$	523.1		$	194.9		$	19.1		$	737.1		$	60.6		$	106.4		$	187.3		$	140.2		$	494.5		$	0.3		$	1,231.9
Net premiums earned	$	499.4		$	205.7		$	19.6		$	724.7		$	53.9		$	97.3		$	175.0		$	123.9		$	450.1		$	0.3		$	1,175.1
Policy benefits, claims, losses excluding prior year reserve development and catastrophe losses		326.5			94.8			5.1			426.4			37.9			51.8			88.2			47.7			225.6			—			652.0
Prior year loss and LAE reserve development (favorable) unfavorable		(45.1	)		1.1			—			(44.0	)		(13.8	)		(7.2	)		(14.5	)		(8.3	)		(43.8	)		1.0			(86.8	)
Pre-tax catastrophe losses		2.6			12.0			0.7			15.3			—			0.2			8.6			2.0			10.8			—			26.1
Pre-tax catastrophe LAE		—			1.1			—			1.1			—			—			0.8			0.8			1.6			—			2.7
Loss adjustment expenses excluding prior year reserve development		59.9			15.2			0.8			75.9			7.1			7.6			22.6			8.8			46.1			0.1			122.1
Policy acquisition expenses and other underwriting expenses											212.2															176.5			(0.2	)		388.5
Policyholders’ dividends											—															0.3			—			0.3
GAAP underwriting profit (loss)											37.8															33.0			(0.6	)		70.2
Net investment income											58.3															53.9			8.1			120.3
Other income											9.0															7.6			14.8			31.4
Other operating expenses											(2.0	)														(6.2	)		(14.7	)		(22.9	)
Segment income before federal income taxes										$	103.1														$	88.3		$	7.6		$	199.0
	Six Months ended June 30, 2006
	Personal Lines												Commercial Lines
	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	$	496.0		$	186.8		$	19.5		$	702.3		$	63.3		$	105.6		$	189.2		$	111.7		$	469.8		$	0.3		$	1,172.4
Net premiums earned	$	469.2		$	195.7		$	19.4		$	684.3		$	55.7		$	95.9		$	167.3		$	86.9		$	405.8		$	0.2		$	1,090.3
Policy benefits, claims, losses excluding prior year reserve development and catastrophe losses		284.5			85.1			5.6			375.2			42.4			47.7			73.4			28.1			191.6			—			566.8
Prior year loss and LAE reserve development (favorable) unfavorable		(21.1	)		(2.0	)		(1.5	)		(24.6	)		(9.7	)		(3.8	)		(12.2	)		(3.1	)		(28.8	)		1.3			(52.1	)
Pre-tax catastrophe losses		1.4			10.8			0.4			12.6			—			1.2			5.5			7.5			14.2			—			26.8
Pre-tax catastrophe LAE		(0.8	)		(0.7	)		—			(1.5	)		—			—			1.5			—			1.5			—			—
Loss adjustment expenses excluding prior year reserve development		56.5			18.6			1.3			76.4			8.0			7.4			24.4			6.0			45.8			0.4			122.6
Policy acquisition expenses and other underwriting expenses											203.1															166.2			(0.3	)		369.0
Policyholders’ dividends											—															0.3			—			0.3
GAAP underwriting profit (loss)											43.1															15.0			(1.2	)		56.9
Net investment income											53.4															52.3			6.8			112.5
Other income											8.2															8.0			11.6			27.8
Other operating expenses											(2.0	)														(6.1	)		(11.2	)		(19.3	)
Segment income before federal income taxes										$	102.7														$	69.2		$	6.0		$	177.9

10

THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY

GAAP UNDERWRITING RATIOS

	Quarter ended June 30, 2007
	Personal Lines								Commercial Lines
	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	64.0	%	47.5	%	28.6	%	58.4	%	71.3	%	53.4	%	51.8	%	36.3	%	50.1	%	N/M	55.2	%
Catastrophe losses	0.9	%	6.4	%	3.1	%	2.5	%	—		0.4	%	4.2	%	2.2	%	2.3	%	N/M	2.5	%
Loss development	(8.9	)%	(0.7	)%	(12.3	)%	(6.7	)%	(13.9	)%	(6.1	)%	(5.9	)%	(2.4	)%	(5.9	)%	N/M	(6.2	)%
Total losses	56.0	%	53.2	%	19.4	%	54.2	%	57.4	%	47.7	%	50.1	%	36.1	%	46.5	%	N/M	51.5	%
Loss adjustment expenses	11.9	%	7.6	%	5.1	%	10.5	%	11.3	%	7.7	%	11.4	%	6.7	%	9.3	%	N/M	10.0	%
Pre-tax catastrophe LAE	—		—		—		—		—		—		—		—		—		N/M	—
Policy acquisition and other underwriting expenses							29.0	%									38.8	%	N/M	32.7	%
Policyholders’ dividends							—										—		N/M	—
Combined							93.7	%									94.6	%	N/M	94.2	%
Policies in force	6.5	%	(2.1	)%	(1.2	)%	2.2	%	0.3	%	2.1	%	(1.0	)%	5.9	%	2.1	%	—	2.2	%
Retention (1)	73.8	%	83.2	%	N/M		78.6	%	78.6	%	79.8	%	80.0	%	79.9	%	80.2	%
	Quarter ended June 30, 2006
	Personal Lines								Commercial Lines
	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	58.9	%	44.5	%	32.3	%	54.0	%	74.8	%	49.6	%	39.7	%	30.4	%	44.7	%	N/M	50.5	%
Catastrophe losses	0.5	%	7.4	%	4.2	%	2.6	%	—		1.9	%	5.1	%	12.0	%	5.2	%	N/M	3.5	%
Loss development	(6.2	)%	(1.9	)%	2.1	%	(4.7	)%	(23.4	)%	(5.2	)%	3.1	%	(1.8	)%	(3.5	)%	N/M	(4.1	)%
Total losses	53.2	%	50.0	%	38.6	%	51.9	%	51.4	%	46.3	%	47.9	%	40.6	%	46.4	%	N/M	49.9	%
Loss adjustment expenses	13.0	%	8.8	%	5.2	%	11.6	%	10.9	%	8.9	%	12.2	%	8.9	%	10.6	%	N/M	11.2	%
Pre-tax catastrophe LAE	(0.3	)%	(0.7	)%	—		(0.4	)%	—		—		1.8	%	—		0.7	%	N/M	—
Policy acquisition and other underwriting expenses							29.8	%									40.7	%	N/M	33.8	%
Policyholders’ dividends							—										—		N/M	—
Combined							92.9	%									98.4	%	N/M	94.9	%
Policies in force	2.5	%	(3.0	)%	(1.2	)%	(0.3	)%	(6.3	)%	(3.3	)%	(4.4	)%	3.5	%	(1.6	)%	—	(0.5	)%
Retention (1)	78.6	%	83.5	%	N/M		81.2	%	78.3	%	78.7	%	83.6	%	85.2	%	82.1	%

(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.

11

THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY

GAAP UNDERWRITING RATIOS

	Six Months ended June 30, 2007
	Personal Lines								Commercial Lines
	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	65.4	%	46.1	%	26.0	%	58.8	%	70.3	%	53.2	%	50.4	%	38.5	%	50.1	%	N/M	55.5	%
Catastrophe losses	0.5	%	5.8	%	3.6	%	2.1	%	—		0.2	%	4.9	%	1.6	%	2.4	%	N/M	2.2	%
Loss development	(9.6	)%	0.4	%	N/M		(6.5	)%	(25.4	)%	(7.7	)%	(6.6	)%	(6.9	)%	(9.2	)%	N/M	(7.5	)%
Total losses	56.3	%	52.3	%	29.6	%	54.4	%	44.9	%	45.7	%	48.7	%	33.2	%	43.3	%	N/M	50.2	%
Loss adjustment expenses	12.6	%	7.6	%	4.1	%	10.9	%	13.0	%	8.1	%	11.2	%	7.3	%	9.6	%	N/M	10.5	%
Pre-tax catastrophe LAE	—		0.5	%	—		0.2	%	—		—		0.5	%	0.6	%	0.4	%	N/M	0.2	%
Policy acquisition and other underwriting expenses							29.3	%									39.2	%	N/M	33.1	%
Policyholders’ dividends							—										0.1	%	N/M	—
Combined							94.8	%									92.6	%	N/M	94.0	%
Policies in force	6.5	%	(2.1	)%	(1.2	)%	2.2	%	0.3	%	2.1	%	(1.0	)%	5.9	%	2.1	%	—	2.2	%
Retention (1)	73.8	%	83.2	%	N/M		78.6	%	78.9	%	80.8	%	80.0	%	79.9	%	80.3	%
	Six Months ended June 30, 2006
	Personal Lines								Commercial Lines
	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	60.6	%	43.5	%	28.9	%	54.8	%	76.1	%	49.7	%	43.9	%	32.3	%	47.2	%	N/M	52.0	%
Catastrophe losses	0.3	%	5.5	%	2.1	%	1.8	%	—		1.3	%	3.3	%	8.6	%	3.5	%	N/M	2.5	%
Loss development	(4.8	)%	0.1	%	(7.2	)%	(3.5	)%	(14.4	)%	(4.2	)%	(4.5	)%	(4.5	)%	(5.8	)%	N/M	(4.2	)%
Total losses	56.1	%	49.1	%	23.8	%	53.1	%	61.7	%	46.8	%	42.7	%	36.4	%	44.9	%	N/M	50.3	%
Loss adjustment expenses	12.3	%	8.4	%	6.2	%	11.0	%	11.3	%	7.9	%	11.8	%	7.8	%	9.9	%	N/M	10.7	%
Pre-tax catastrophe LAE	(0.2	)%	(0.4	)%	—		(0.2	)%	—		—		0.9	%	—		0.4	%	N/M	—
Policy acquisition and other underwriting expenses							29.7	%									41.0	%	N/M	33.8	%
Policyholders’ dividends							—										0.1	%	N/M	—
Combined							93.6	%									96.3	%	N/M	94.8	%
Policies in force	2.5	%	(3.0	)%	(1.2	)%	(0.3	)%	(6.3	)%	(3.3	)%	(4.4	)%	3.5	%	(1.6	)%	—	(0.5	)%
Retention (1)	78.6	%	83.5	%	N/M		81.2	%	73.5	%	77.6	%	82.7	%	82.5	%	80.2	%

(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.

12

LIFE COMPANIES

THE HANOVER INSURANCE GROUP

LIFE COMPANIES

CONDENSED INCOME STATEMENTS

	Quarter ended June 30							Six Months ended June 30
(In millions)	2007		2006			% Change		2007			2006			% Change
REVENUES
Premiums	$	4.8	$	5.4		(11.1	)	$	22.6		$	23.9		(5.4	)
Fees and other income		0.4		5.7		(93.0	)		0.8			11.7		(93.2	)
Net investment income		20.5		23.0		(10.9	)		39.8			46.7		(14.8	)
Total segment revenue		25.7		34.1		(24.6	)		63.2			82.3		(23.2	)
POLICY BENEFITS, CLAIMS AND
OPERATING EXPENSES
Policy benefits, claims and losses		18.2		19.6		(7.1	)		50.2			51.8		(3.1	)
Policy acquisition expenses		0.2		0.3		(33.3	)		0.4			0.5		(20.0	)
Other operating expenses		6.5		15.2		(57.2	)		12.7			32.9		(61.4	)
Total policy benefits, claims and operating expenses		24.9		35.1		(29.1	)		63.3			85.2		(25.7	)
Segment income (loss) before federal income taxes	$	0.8	$	(1.0	)	N/M		$	(0.1	)	$	(2.9	)	(96.6	)

13

THE HANOVER INSURANCE GROUP

LIFE COMPANIES

CONSOLIDATED BALANCE SHEETS

(In millions, except per share data)	June 30 2007			December 31 2006			% Change
ASSETS
Investments:
Fixed maturities, at fair value (amortized cost of $1,253.7 and $1,381.7)	$	1,231.0		$	1,377.8		(10.7	)
Equity securities, at fair value (cost of $0.1)		0.7			0.6		16.7
Mortgage loans		32.3			33.4		(3.3	)
Policy loans		120.8			125.7		(3.9	)
Other long-term investments		24.5			25.2		(2.8	)
Total investments		1,409.3			1,562.7		(9.8	)
Cash and cash equivalents		88.3			104.2		(15.3	)
Accrued investment income		20.0			21.5		(7.0	)
Premiums, accounts, and notes receivable, net		1.3			2.9		(55.2	)
Reinsurance receivable on paid and unpaid losses, benefits and unearned premiums		329.7			338.3		(2.5	)
Deferred policy acquistion costs		4.6			5.1		(9.8	)
Deferred federal income tax asset		156.9			174.3		(10.0	)
Other assets		82.2			98.7		(16.7	)
Separate account assets		519.0			543.6		(4.5	)
Total assets	$	2,611.3		$	2,851.3		(8.4	)
LIABILITIES AND SHAREHOLDER’S EQUITY
LIABILITIES
Policy liabilities and accruals:
Future policy benefits	$	1,213.1		$	1,242.3		(2.4	)
Outstanding claims, losses and loss adjustment expenses		79.6			83.3		(4.4	)
Unearned premiums		1.6			1.5		6.7
Contractholder deposit funds and other policy liabilities		167.6			192.8		(13.1	)
Total policy liabilities and accruals		1,461.9			1,519.9		(3.8	)
Expenses and taxes payable		275.8			427.8		(35.5	)
Reinsurance premiums payable		2.6			3.5		(25.7	)
Trust instruments supported by funding obligations		39.4			38.5		2.3
Separate account liabilities		519.0			543.6		(4.5	)
Total liabilities		2,298.7			2,533.3		(9.3	)
SHAREHOLDER’S EQUITY
Common stock, par value $10 per share; authorized 1 million shares; issued 500,000 shares		5.0			5.0		—
Additional paid-in capital		685.0			684.9		—
Accumulated other comprehensive loss		(36.1	)		(25.7	)	40.5
Retained deficit		(341.3	)		(346.2	)	(1.4	)
Total shareholder’s equity		312.6			318.0		(1.7	)
Total liabilities and shareholder’s equity	$	2,611.3		$	2,851.3		(8.4	)

14

THE HANOVER INSURANCE GROUP

LIFE COMPANIES

FUTURE POLICY BENEFITS AND ACCOUNT BALANCES

	Gross						Net of Reinsurance Recoverables
(In millions)	June 30 2007		December 31 2006		% Change		June 30 2007		December 31 2006		% Change
Insurance
Traditional life	$	704.2	$	723.8	(2.7	)	$	703.9	$	723.7	(2.7	)
Group life and health		278.3		287.3	(3.1	)		71.0		77.5	(8.4	)
Other life and health		31.1		34.1	(8.8	)		1.1		1.2	(8.3	)
Total insurance		1,013.6		1,045.2	(3.0	)		776.0		802.4	(3.3	)
Annuities
Individual annuities		91.6		97.6	(6.1	)		4.6		7.2	(36.1	)
Group annuities		354.4		374.7	(5.4	)		349.2		369.5	(5.5	)
Total annuities		446.0		472.3	(5.6	)		353.8		376.7	(6.1	)
Total general account reserves	$	1,459.6	$	1,517.5	(3.8	)	$	1,129.8	$	1,179.1	(4.2	)
Trust instruments supported by funding obligations	$	39.4	$	38.5	2.3		$	39.4	$	38.5	2.3
SEPARATE ACCOUNT LIABILITIES
Insurance—Variable universal life	$	86.5	$	85.3	1.4		$	86.5	$	85.3	1.4
Annuities
Variable individual annuities		340.5		362.0	(5.9	)		340.5		362.0	(5.9	)
Group annuities		92.0		96.3	(4.5	)		92.0		96.3	(4.5	)
Total annuities		432.5		458.3	(5.6	)		432.5		458.3	(5.6	)
Total separate account liabilities (1)	$	519.0	$	543.6	(4.5	)	$	519.0	$	543.6	(4.5	)

(1) Includes separate account liabilities subject to a modified coinsurance agreement with a former subsidiary, AFLIAC, of $423.0 million and $437.3 million as of June 30, 2007 and December 31, 2006, respectively.

15

INVESTMENTS

THE HANOVER INSURANCE GROUP

NET INVESTMENT INCOME

(In millions, except yields)	Six Months ended June 30, 2007
	Property and Casualty (1)			Yield		Life Companies			Yield		Total			Yield
Fixed maturities	$	119.7		5.64	%	$	33.3		5.58	%	$	153.0		5.63	%
Equity securities		0.4		—			—		—			0.4		—
Mortgages (2)		1.5		15.77	%		1.5		9.01	%		3.0		11.54	%
All other		1.9		—			5.9		—			7.8		—
Investment expenses		(2.8	)	—			(0.9	)	—			(3.7	)	—
Total	$	120.7		5.45	%	$	39.8		5.61	%	$	160.5		5.49	%
	Six Months ended June 30, 2006
	Property and Casualty (1)			Yield		Life Companies			Yield		Total			Yield
Fixed maturities	$	107.2		5.53	%	$	42.2		5.69	%	$	149.4		5.58	%
Equity securities		0.8		—			—		—			0.8		—
Mortgages (2)		2.0		10.18	%		1.9		7.95	%		3.9		8.95	%
All other		5.8		—			4.0		—			9.8		—
Investment expenses		(3.0	)	—			(1.4	)	—			(4.4	)	—
Total	$	112.8		5.35	%	$	46.7		5.20	%	$	159.5		5.31	%

(1) Includes purchase accounting adjustments of $1.6 million for the six months ended June 30, 2007 and 2006. Also includes corporate eliminations of $0.1 million for the six months ended June 30, 2006. There were no corporate eliminations for the six months ended June 30, 2007.

(2) Excluding Property and Casualty mortgage prepayment fees totalling $0.7 million and $0.4 million for the six months ended June 30, 2007 and 2006, respectively, mortgage yields are 8.07% for Property and Casualty and 8.70% in Total for the six months ended June 30, 2007 and 8.36% for Property and Casualty and 8.13% in Total for the six months ended June 30, 2006.

16

THE HANOVER INSURANCE GROUP

COMPONENTS OF NET REALIZED INVESTMENT GAINS (LOSSES)

	Quarter ended June 30
(In millions)	2007									2006
	Net Realized Gains (Losses)									Net Realized Gains (Losses)
	Property and Casualty (1)			Life Companies			Total			Property and Casualty (1)			Life Companies			Total
Net gains on securities transactions	$	0.4		$	0.7		$	1.1		$	4.0		$	1.0		$	5.0
Other than temporary impairments		(0.3	)		—			(0.3	)		(0.4	)		(1.5	)		(1.9	)
Other		0.1			(0.1	)		—			(0.1	)		(0.1	)		(0.2	)
Net realized investment gains (losses)	$	0.2		$	0.6		$	0.8		$	3.5		$	(0.6	)	$	2.9
	Six Months ended June 30
	2007									2006
	Net Realized Gains (Losses)									Net Realized Gains (Losses)
	Property and Casualty (1)			Life Companies			Total			Property and Casualty (1)			Life Companies			Total
Net gains (losses) on securities transactions	$	1.2		$	2.7		$	3.9		$	15.8		$	(0.4	)	$	15.4
Other than temporary impairments		(0.8	)		—			(0.8	)		(2.6	)		(4.1	)		(6.7	)
Other		0.1			(0.1	)		—			(0.1	)		(0.1	)		(0.2	)
Net realized investment gains (losses)	$	0.5		$	2.6		$	3.1		$	13.1		$	(4.6	)	$	8.5

(1) Includes corporate eliminations of $(0.3) million and $(1.6) million for the quarters ended June 30, 2007 and 2006, respectively and corporate eliminations of $0.7 and $3.6 million for the six months ended June 30, 2007 and 2006, respectively.

17

THE HANOVER INSURANCE GROUP

AGING OF GROSS UNREALIZED LOSSES ON SECURITIES AVAILABLE FOR SALE

(In millions)	June 30, 2007
	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	$	33.0	$	6.7	$	39.7	$	1,886.8	$	238.9	$	2,125.7
Greater than 12 months		45.9		27.8		73.7		1,330.0		636.0		1,966.0
Total investment grade fixed maturities		78.9		34.5		113.4		3,216.8		874.9		4,091.7
BELOW INVESTMENT GRADE FIXED MATURITIES:
12 months or less		2.4		0.4		2.8		124.9		20.2		145.1
Greater than 12 months		—		—		—		—		—		—
Total below investment grade fixed maturities		2.4		0.4		2.8		124.9		20.2		145.1
Equity securities		—		—		—		3.2		—		3.2
Total fixed maturities	$	81.3	$	34.9	$	116.2	$	3,344.9	$	895.1	$	4,240.0
	December 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	$	11.1	$	2.1	$	13.2	$	1,163.2	$	158.9	$	1,322.1
Greater than 12 months		32.2		23.2		55.4		1,342.4		747.1		2,089.5
Total investment grade fixed maturities		43.3		25.3		68.6		2,505.6		906.0		3,411.6
BELOW INVESTMENT GRADE FIXED MATURITIES:
12 months or less		1.1		0.2		1.3		60.8		7.5		68.3
Greater than 12 months		—		—		—		—		—		—
Total below investment grade fixed maturities		1.1		0.2		1.3		60.8		7.5		68.3
Equity securities		—		—		—		—		—		—
Total fixed maturities	$	44.4	$	25.5	$	69.9	$	2,566.4	$	913.5	$	3,479.9

18

THE HANOVER INSURANCE GROUP

CREDIT QUALITY OF FIXED MATURITIES

(In millions)	June 30, 2007
		Amortized Cost						Fair Value
NAIC Designation	Rating Agency Equivalent Designation	Property and Casualty		Life Companies		Total		Property and Casualty		Life Companies		Total
1	Aaa/Aa/A	$	3,264.2	$	842.3	$	4,106.5	$	3,212.3	$	822.6	$	4,034.9
2	Baa		880.2		345.5		1,225.7		866.2		339.5		1,205.7
3	Ba		116.0		21.9		137.9		115.8		22.0		137.8
4	B		134.9		36.6		171.5		137.2		37.5		174.7
5	Caa and lower		36.6		6.2		42.8		38.3		6.5		44.8
6	In or near default		—		1.2		1.2		—		2.9		2.9
Total fixed maturities		$	4,431.9	$	1,253.7	$	5,685.6	$	4,369.8	$	1,231.0	$	5,600.8
	December 31, 2006
		Amortized Cost						Fair Value
	Rating Agency	Property and		Life				Property and		Life
NAIC Designation	Equivalent Designation	Casualty		Companies		Total		Casualty		Companies		Total
1	Aaa/Aa/A	$	3,165.6	$	930.1	$	4,095.7	$	3,153.6	$	920.0	$	4,073.6
2	Baa		839.5		381.5		1,221.0		833.6		382.4		1,216.0
3	Ba		101.1		25.9		127.0		102.5		27.1		129.6
4	B		118.0		36.6		154.6		122.9		39.0		161.9
5	Caa and lower		37.3		6.4		43.7		38.5		6.5		45.0
6	In or near default		—		1.2		1.2		—		2.9		2.9
Total fixed maturities		$	4,261.5	$	1,381.7	$	5,643.2	$	4,251.1	$	1,377.9	$	5,629.0

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PROPERTY & CASUALTY

STATUTORY RATIOS

THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY

STATUTORY UNDERWRITING RATIOS

	Quarter ended June 30, 2007
	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
Losses, excluding catastrophe losses and development	64.0	%	47.3	%	27.6	%	58.3	%	70.5	%	53.6	%	51.7	%	36.3	%	50.1	%	N/M	55.1	%
Catastrophe losses	0.9	%	7.0	%	4.1	%	2.7	%	—		0.2	%	4.4	%	2.4	%	2.4	%	N/M	2.6	%
Loss development	(8.9	)%	(0.6	)%	(12.3	)%	(6.6	)%	(13.9	)%	(6.0	)%	(5.9	)%	(2.4	)%	(5.9	)%	N/M	(6.1	)%
Total losses	56.0	%	53.7	%	19.4	%	54.4	%	56.6	%	47.8	%	50.2	%	36.3	%	46.6	%	N/M	51.6	%
Loss adjustment expenses	12.0	%	7.6	%	5.1	%	10.5	%	11.2	%	7.9	%	11.5	%	6.7	%	9.4	%	N/M	10.1	%
Pre-tax catastrophe LAE	—		—		—		—		—		—		—		—		—		N/M	—
Policy acquisition and other underwriting expenses							29.1	%									37.7	%	N/M	32.6	%
Policyholders’ dividends							—										0.1	%	N/M	—
Combined							94.0	%									93.8	%	N/M	94.3	%
	Quarter ended June 30, 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
Losses, excluding catastrophe losses and development	58.9	%	44.6	%	32.0	%	54.1	%	76.2	%	49.5	%	39.8	%	30.4	%	44.8	%	N/M	50.6	%
Catastrophe losses	0.5	%	7.7	%	4.1	%	2.7	%	—		1.9	%	5.2	%	12.2	%	5.3	%	N/M	3.6	%
Loss development	(6.2	)%	(1.9	)%	2.1	%	(4.7	)%	(23.8	)%	(5.2	)%	3.1	%	(1.8	)%	(3.5	)%	N/M	(4.1	)%
Total losses	53.2	%	50.4	%	38.2	%	52.1	%	52.4	%	46.2	%	48.1	%	40.8	%	46.6	%	N/M	50.1	%
Loss adjustment expenses	13.0	%	8.9	%	5.2	%	11.6	%	11.2	%	8.9	%	12.2	%	8.7	%	10.6	%	N/M	11.3	%
Pre-tax catastrophe LAE	(0.3	)%	(0.7	)%	—		(0.4	)%	—		—		1.8	%	—		0.7	%	N/M	—
Policy acquisition and other underwriting expenses							29.3	%									37.9	%	N/M	32.7	%
Policyholders’ dividends							—										0.3	%	N/M	0.1	%
Combined							92.6	%									96.1	%	N/M	94.2	%

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THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY

STATUTORY UNDERWRITING RATIOS

	Six Months ended June 30, 2007
	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
Losses, excluding catastrophe losses and development	65.4	%	46.1	%	26.0	%	58.8	%	69.5	%	53.2	%	50.4	%	38.5	%	50.1	%	N/M	55.5	%
Catastrophe losses	0.5	%	6.6	%	4.1	%	2.3	%	—		0.2	%	5.2	%	1.8	%	2.6	%	N/M	2.4	%
Loss development	(9.6	)%	0.4	%	N/M		(6.5	)%	(25.1	)%	(7.7	)%	(6.6	)%	(6.9	)%	(9.1	)%	N/M	(7.4	)%
Total losses	56.3	%	53.1	%	30.1	%	54.6	%	44.4	%	45.7	%	49.0	%	33.4	%	43.6	%	N/M	50.5	%
Loss adjustment expenses	12.6	%	7.6	%	4.1	%	10.9	%	12.8	%	8.1	%	11.3	%	7.3	%	9.6	%	N/M	10.6	%
Pre-tax catastrophe LAE	—		0.5	%	—		0.2	%	—		—		0.5	%	0.6	%	0.4	%	N/M	0.2	%
Policy acquisition and other underwriting expenses							29.1	%									37.8	%	N/M	32.6	%
Policyholders’ dividends							—										0.1	%	N/M	—
Combined							94.8	%									91.5	%	N/M	93.9	%
	Six Months ended June 30, 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
Losses, excluding catastrophe losses and development	60.6	%	43.5	%	28.7	%	54.8	%	77.9	%	49.7	%	43.8	%	32.3	%	47.3	%	N/M	52.0	%
Catastrophe losses	0.3	%	5.7	%	2.1	%	1.9	%	—		1.3	%	3.3	%	8.7	%	3.6	%	N/M	2.5	%
Loss development	(4.8	)%	—		(7.2	)%	(3.4	)%	(14.7	)%	(4.2	)%	(4.5	)%	(4.5	)%	(5.8	)%	N/M	(4.2	)%
Total losses	56.1	%	49.2	%	23.6	%	53.3	%	63.2	%	46.8	%	42.6	%	36.5	%	45.1	%	N/M	50.3	%
Loss adjustment expenses	12.4	%	8.4	%	6.2	%	11.0	%	11.6	%	7.9	%	11.8	%	7.7	%	10.0	%	N/M	10.7	%
Pre-tax catastrophe LAE	(0.2	)%	(0.4	)%	—		(0.2	)%	—		—		0.9	%	—		0.4	%	N/M	—
Policy acquisition and other underwriting expenses							29.6	%									38.0	%	N/M	33.0	%
Policyholders’ dividends							—										0.3	%	N/M	0.1	%
Combined							93.7	%									93.8	%	N/M	94.1	%

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Historical Highlights

THE HANOVER INSURANCE GROUP

HISTORICAL FINANCIAL HIGHLIGHTS

(In millions, except per share data)	Q2 07			Q1 07			2006			Q4 06			Q3 06			Q2 06			Q1 06
SEGMENT INCOME (1)
Property and Casualty
Personal Lines	$	55.7		$	47.4		$	186.7		$	49.0		$	35.0		$	53.7		$	49.0
Commercial Lines		39.3			49.0			120.3			43.4			7.7			30.2			39.0
Other Property and Casualty		3.1			4.5			21.1			5.0			10.1			2.3			3.7
Total Property and Casualty		98.1			100.9			328.1			97.4			52.8			86.2			91.7
Life Companies		0.8			(0.9	)		(3.9	)		0.1			(1.1	)		(1.0	)		(1.9	)
Interest expense on corporate debt		(9.9	)		(10.0	)		(39.9	)		(10.0	)		(10.0	)		(9.9	)		(10.0	)
Total segment income before federal income taxes	$	89.0		$	90.0		$	284.3		$	87.5		$	41.7		$	75.3		$	79.8
Federal income tax expense on segment income		(29.8	)		(29.8	)		(88.2	)		(26.9	)		(14.1	)		(23.6	)		(23.6	)
Total segment income after federal income taxes	$	59.2		$	60.2		$	196.1		$	60.6		$	27.6		$	51.7		$	56.2
Change in prior years tax reserves		—			—			3.3			3.3			—			—			—
Federal income tax settlement		—			2.4			—			—			—			—			—
Net realized investment gains (losses), net of amortization		0.2			1.9			(3.5	)		(14.9	)		2.0			3.6			5.8
Gains on derivative instruments		0.1			—			0.2			—			0.1			0.1			—
Restructuring costs		0.2			—			(1.6	)		(0.2	)		(0.5	)		(0.6	)		(0.3	)
Federal income tax (expense) benefit on non-segment income		(0.2	)		(0.7	)		(2.8	)		0.7			(0.7	)		(1.1	)		(1.7	)
Income from continuing operations		59.5			63.8			191.7			49.5			28.5			53.7			60.0
(Gain) loss on disposal of variable life insurance and annuity business, net of taxes		0.3			(0.2	)		(29.8	)		(4.0	)		(2.9	)		(2.8	)		(20.1	)
Gain on sale of Financial Profiles Inc., net of taxes		—			—			7.8			—			7.8			—			—
Income before cumulative effect of accounting change		59.8			63.6			169.7			45.5			33.4			50.9			39.9
Cumulative effect of change in accounting principle, net of taxes		—			—			0.6			—			—			—			0.6
NET INCOME	$	59.8		$	63.6		$	170.3		$	45.5		$	33.4		$	50.9		$	40.5
PER SHARE DATA (DILUTED)
INCOME FROM CONTINUING OPERATIONS	$	1.14		$	1.23		$	3.68		$	0.96		$	0.56		$	1.04		$	1.12
(LOSS) INCOME FROM DISCONTINUED OPERATIONS, NET OF TAXES	$	—		$	(0.01	)	$	(0.42	)	$	(0.08	)	$	0.09		$	(0.05	)	$	(0.38	)
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE, NET OF TAXES	$	—		$	—		$	0.01		$	—		$	—		$	—		$	0.01
NET INCOME	$	1.14		$	1.22		$	3.27		$	0.88		$	0.65		$	0.99		$	0.75
WEIGHTED AVERAGE SHARES OUTSTANDING (DILUTED)		52.3			51.9			52.2			51.7			51.3			51.6			53.6
BALANCE SHEET
Total investments	$	5,827.1		$	5,901.6					$	5,864.4		$	5,719.3		$	5,601.4		$	5,841.8
Separate account assets	$	519.0		$	517.4					$	543.6		$	524.2		$	528.4		$	564.0
Total assets	$	9,805.7		$	9,776.2					$	9,856.6		$	9,844.0		$	9,689.1		$	10,156.8
Total shareholders' equity	$	2,099.4		$	2,100.7					$	1,999.2		$	1,909.3		$	1,770.0		$	1,843.0
Book value per share	$	40.55		$	40.92					$	39.10		$	37.49		$	34.77		$	35.35
Book value per share, excluding accumulated other comprehensive income	$	42.51		$	41.33					$	39.88		$	39.20		$	38.46		$	37.77

(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.

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THE HANOVER INSURANCE GROUP

HISTORICAL FINANCIAL HIGHLIGHTS

(In millions, except per share data)	2005			Q4 05			Q3 05			Q2 05			Q1 05
SEGMENT INCOME (1)
Property and Casualty
Personal Lines	$	143.2		$	74.4		$	(27.8	)	$	57.4		$	39.2
Commercial Lines		(35.0	)		14.5			(101.0	)		31.0			20.5
Other Property and Casualty		5.5			0.6			1.1			1.7			2.1
Total Property and Casualty		113.7			89.5			(127.7	)		90.1			61.8
Life Companies		(18.7	)		(1.0	)		(0.9	)		(7.5	)		(9.3	)
Interest expense on corporate debt		(39.9	)		(10.0	)		(10.0	)		(9.9	)		(10.0	)
Total segment income (loss) before federal income taxes	$	55.1		$	78.5		$	(138.6	)	$	72.7		$	42.5
Federal income tax (expense) benefit on segment income		(1.0	)		(1.3	)		29.6			(19.5	)		(9.8	)
Total segment income (loss) after federal income taxes	$	54.1		$	77.2		$	(109.0	)	$	53.2		$	32.7
Change in prior years tax reserves		2.3			—			—			2.3			—
Federal income tax settlement		9.5			9.5			—			—			—
Net realized investment gains (losses), net of amortization		18.6			5.7			(2.0	)		3.6			11.3
(Losses) gains on derivative instruments		(0.3	)		—			0.2			(0.3	)		(0.2	)
Restructuring costs		(2.1	)		(0.8	)		(0.4	)		(0.2	)		(0.7	)
Federal income tax (expense) benefit on non-segment income		(5.6	)		(7.2	)		5.8			(1.5	)		(2.7	)
Income (loss) from continuing operations		76.5			84.4			(105.4	)		57.1			40.4
Income from discontinued variable life insurance and annuity business, net of taxes		42.7			4.1			17.6			14.9			6.1
(Loss) income on disposal of variable life insurance and annuity business, net of taxes		(444.4	)		30.2			(474.6	)		—			—
NET (LOSS) INCOME	$	(325.2	)	$	118.7		$	(562.4	)	$	72.0		$	46.5
PER SHARE DATA (DILUTED)
INCOME (LOSS) FROM CONTINUING OPERATIONS	$	1.42		$	1.56		$	(1.97	)	$	1.06		$	0.75
(LOSS) INCOME FROM DISCONTINUED OPERATIONS, NET OF TAXES	$	(7.44	)	$	0.63		$	(8.54	)	$	0.28		$	0.11
NET (LOSS) INCOME	$	(6.02	)	$	2.19		$	(10.51	)	$	1.34		$	0.86
WEIGHTED AVERAGE SHARES OUTSTANDING (DILUTED) (2)		54.0			54.2			53.5			53.9			53.8
BALANCE SHEET
Total investments				$	6,008.3		$	7,535.0		$	7,678.4		$	7,663.9
Separate account assets				$	571.9		$	9,385.9		$	9,444.6		$	9,726.0
Total assets				$	10,634.0		$	21,647.1		$	21,846.6		$	22,167.8
Total shareholders' equity				$	1,951.3		$	1,867.7		$	2,490.5		$	2,325.2
Book value per share				$	36.30		$	34.81		$	46.60		$	43.53
Book value per share, excluding accumulated other comprehensive income				$	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.

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Other Information

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	2007
	Price Range				Dividends Per Share
	High		Low
March 31	$	49.11	$	44.70		—
June 30	$	49.73	$	44.46		—
September 30
December 31
Quarter Ended	2006
	Price Range				Dividends Per Share
	High		Low
March 31	$	53.12	$	42.98		—
June 30	$	54.11	$	43.17		—
September 30	$	48.49	$	41.17		—
December 31	$	50.25	$	43.95	$	0.30

INDUSTRY RATINGS AS OF July 30, 2007

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+	Baa1
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

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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