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): February 5, 2009

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 February 5, 2009, The Hanover Insurance Group, Inc. issued a press release announcing its financial results for the quarter ended December 31, 2008. The release is furnished as Exhibit 99.1 hereto. Additionally, on February 5, 2009, the Company made available on its website financial information contained in its Statistical Supplement for the period ended December 31, 2008. 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 February 5, 2009, announcing the Company’s financial results for the quarter ended December 31, 2008.
Exhibit 99.2	The Hanover Insurance Group, Inc. Statistical Supplement for the period ended December 31, 2008.

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SIGNATURES

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

	The Hanover Insurance Group, Inc.
	(Registrant)
Date February 5, 2009
		By:	/s/ Eugene M. Bullis
			Eugene M. Bullis
			Executive Vice President,
			Chief Financial Officer and
			Principal Accounting Officer

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Exhibit Index

Exhibit 99.1	Press Release, dated February 5, 2009, announcing the Company’s financial results for the quarter ended December 31, 2008.
Exhibit 99.2	The Hanover Insurance Group, Inc. Statistical Supplement for the period ended December 31, 2008.

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EX-99.1

Exhibit 99.1

WORCESTER, Mass., February 5, 2009 –

The Hanover Insurance Group Reports

Fourth Quarter Results

Fourth Quarter 2008 Financial Highlights

• Segment income after tax of $59.6 million, or $1.16 per share, compared to $60.8 million, or $1.16 per share, in the prior-year quarter ⁽¹⁾.

• Net income of $34.1 million, or $0.66 per share, which included $28.5 million of net realized losses on investments, or $0.55 per share, compared to net income of $75.8 million, or $1.44 per share, in the prior-year quarter.

• Net premiums written of $597.3 million, compared to $561.6 million in the prior-year quarter, an increase of 6.4%.

Full Year 2008 Financial Highlights

• Segment income after tax of $176.0 million, or $3.40 per share, compared to $228.7 million, or $4.36 per share, in the prior-year ⁽¹⁾, which included the after-tax net impact of catastrophes of $110.3 million, or $2.13 per share, in 2008, and $42.4 million after tax, or $0.81 per share, in 2007.

• Net income of $20.6 million, or $0.40 per share, included $97.8 million of net realized losses on investments, or $1.89 per share, and a loss related to FAFLIC discontinued operations of $84.8 million, or $1.64 per share, compared to net income of $253.1 million, or $4.83 per share, in the prior year.

• Net premiums written of $2,518.0 million, compared to $2,415.3 million in the prior year, an increase of 4.3%.

• Book value per share of $37.08 at December 31, 2008, compared to $40.09 per share at September 30, 2008 and $44.37 per share at December 31, 2007. The quarterly and year-to-date change in book value per share primarily reflects changes in Accumulated Other Comprehensive Income (Loss), realized losses on investments and the loss from discontinued FAFLIC operations.

• Book value per share, excluding Accumulated Other Comprehensive Income (Loss), of $44.64 at December 31, 2008, compared to $44.37 per share at September 30, 2008 and $44.77 per share at December 31, 2007⁽¹⁾.

⁽¹⁾ Segment income after tax and segment income after tax per share are non-GAAP measures. The reconciliation of these measures to the closest GAAP measure, net income, is provided on page 14 of this press release. Book value per share excluding Accumulated Other Comprehensive Income (Loss) is a non-GAAP measure; the closest GAAP measure is book value per share including Accumulated Other Comprehensive Income (Loss).

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Financial Highlights

$ in millions, except per share amounts	Quarter ended December 31						Year ended December 31
	2008			2007			2008			2007
Total Segment Income after taxes(1)	$	59.6		$	60.8		$	176.0		$	228.7
Federal income tax settlement		—			—			6.4			—
Net realized investment losses and other		(37.2	)		(0.6	)		(97.9	)		(0.9	)
Income tax benefit on non-segment income		0.4			0.1			—			0.5
Income from Continuing Operations		22.8			60.3			84.5			228.3
Gain (loss) on Discontinued Operations		11.3			15.5			(63.9	)		24.8
Net Income	$	34.1		$	75.8		$	20.6		$	253.1
Net Income per share (Diluted)	$	0.66		$	1.44		$	0.40		$	4.83

⁽¹⁾ Segment income after tax and segment income after tax per share are non-GAAP measures. The reconciliation of these measures to the closest GAAP measure, net income, is provided on page 14 of this press release.

The Hanover Insurance Group, Inc. (NYSE: THG) today reported net income for the fourth quarter of 2008 of $34.1 million, or $0.66 per share, compared to $75.8 million, or $1.44 per share, in the fourth quarter of the prior year. Net income for the fourth quarter of 2008 was impacted by net realized investment losses included in continuing operations of $37.1 million, or $0.73 per share, compared to a $0.6 million loss or $0.01 per share in the prior-year quarter.

Net income for the full year of 2008 was $20.6 million, or $0.40 per share, compared to net income of $253.1 million, or $4.83 per share in 2007. Net income for the full year 2008 was impacted by net realized investment losses included in continuing operations of $97.8 million, or $1.89 per share, a loss of $84.8 million, or $1.64 per share, from discontinued FAFLIC business, as well as substantially higher catastrophe losses in our Property and Casualty operations compared to the prior year.

Total Property and Casualty pre-tax segment income was $97.5 million in the fourth quarter of 2008, compared to $98.0 million in the fourth quarter of the prior year. The pre-tax net impact of catastrophes was $14.1 million in the fourth quarter of 2008, compared to $11.3 million in the fourth quarter of 2007. The fourth quarter of 2007 also included a one time benefit of $11.8 million from a litigation settlement, partially offset by a pension related expense adjustment of $7.4 million in the same period. Excluding the pre-tax net impact of catastrophes, the litigation benefit and the pension expense, Property and Casualty pre-tax segment income would have been $111.6 million in the fourth quarter of 2008, compared to $104.9 million in the fourth quarter of 2007.

Total Property and Casualty pre-tax segment income was $302.2 million for the full year of 2008, compared to $382.3 million in the prior year. The pre-tax segment income in 2008 included significantly higher catastrophe losses of $169.7 million pre-tax, compared to $65.2 million pre-tax in 2007. Excluding the pre-tax net impact of catastrophes, the aforementioned litigation settlement in the fourth quarter of 2007 and a pension related expense adjustment of $6.0 million for the full year, Property and Casualty pre-tax segment income would have been $471.9 million in 2008, $30.2 million higher than the comparable $441.7 million in 2007.

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“I am pleased that in a year of very significant weather, including catastrophe and non-catastrophe activity, we generated solid pre-tax segment income,” said Frederick H. Eppinger, chief executive officer at The Hanover. “Excluding the impact of catastrophes, we showed meaningful growth in pre-tax segment income, which is evidence of the increasing earnings power of our business. While our 2008 premium growth of 4% continued to outpace the industry, we remain focused on underwriting discipline, as evidenced by improvements in our ex-catastrophe accident year loss ratios for both the quarter and the year.”

Mr. Eppinger continued, “While our investment portfolio and related book value absorbed increases in unrealized losses and impairments in the quarter and the full year, the portfolio is high quality, and our overall capitalization and liquidity position remain very strong. With over 98% of our investment portfolio in fixed maturities and cash, we expect to experience recoveries in market value in future periods and the result will be substantial book value growth.”

“Given all of these factors,” Mr. Eppinger concluded, “we are extremely well positioned for continued success in 2009 and beyond.”

The following table details pre-tax segment income.

$ in millions, except per share amounts	Quarter ended December 31						Year-to-date December 31
	2008			2007(1)			2008			2007(1)
Personal Lines	$	39.7		$	57.8		$	123.5		$	208.2
Commercial Lines		55.6			42.6			169.7			169.3
Other Property and Casualty		2.2			(2.4	)		9.0			4.8
Total Property & Casualty		97.5			98.0			302.2			382.3
Interest expense on corporate debt		(10.0	)		(10.0	)		(39.9	)		(39.9	)
Total pre-tax segment income		87.5			88.0			262.3			342.4
Federal income tax expense		(27.9	)		(27.2	)		(86.3	)		(113.7	)
Total segment income after taxes(2)	$	59.6		$	60.8		$	176.0		$	228.7
Per share(2)	$	1.16		$	1.16		$	3.40		$	4.36

⁽¹⁾ Restated to reflect certain additional expenses that were previously reported in the now discontinued traditional life business.

⁽²⁾ See reconciliation from segment income to net income at the end of this document.

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The following table summarizes the components of the GAAP combined ratio for the Property and Casualty segment:

	Quarter ended December 31		Year-to-date December 31
	2008	2007(1)	2008	2007(1)
Personal Lines losses (excluding catastrophes)	55.0%	52.9%	54.6%	52.9%
Personal Lines catastrophe-related losses	2.8%	1.4%	5.8%	1.7%
Total Personal Lines losses	57.8%	54.3%	60.4%	54.6%
Commercial Lines losses (excluding catastrophes)	40.2%	39.9%	38.6%	40.1%
Commercial Lines catastrophe-related losses	1.5%	2.6%	8.3%	3.5%
Total Commercial Lines losses	41.7%	42.5%	46.9%	43.6%
Total P&C Losses	50.9%	50.0%	54.9%	50.5%
Loss adjustment expenses	10.5%	10.8%	10.5%	10.9%
Policy acquisition and other underwriting expenses	34.1%	33.3%	33.3%	33.2%
Combined Ratio	95.5%	94.1%	98.7%	94.6%
Combined Ratio (excluding catastrophes)	93.3%	92.2%	91.9%	91.9%

⁽¹⁾ Restated to reflect certain additional expenses that were previously reported in the now discontinued traditional life business.

Personal Lines

Personal Lines pre-tax segment income was $39.7 million in the fourth quarter of 2008, compared to $57.8 million in the prior-year quarter. The pre-tax net impact of catastrophes was $10.1 million in the fourth quarter of 2008, compared to $5.2 million in the fourth quarter of 2007. The fourth quarter of 2007 also included a one time benefit of $11.8 million from a litigation settlement. Excluding the pre-tax net impact of catastrophes and the benefit of the litigation settlement, Personal Lines pre-tax segment income would have been $49.8 million in the fourth quarter of 2008, compared to $51.2 million in the prior-year quarter.

Losses were higher in the current quarter, driven by lower favorable development of prior-year loss reserves and higher current accident year losses, due to higher frequency in our personal auto line, which we attribute to more severe non-catastrophe weather during the fourth quarter of 2008.

For the full year, Personal Lines segment income was $123.5 million in 2008, compared to $208.2 million in 2007. The pre-tax net impact of catastrophes was $85.4 million for the full year 2008, compared to $26.8 million in 2007. Excluding this pre-tax net impact of catastrophes and the aforementioned litigation benefit in the fourth quarter of 2007, Personal Lines segment income would have been $208.9 million for 2008, compared to $223.2 million in the prior year. This decrease in Personal Lines pre-tax segment income is primarily due to lower favorable development of prior-year loss reserves and higher ex-catastrophe current accident year losses due primarily to higher weather related losses.

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Personal Lines highlights:

• Net premiums written were $361.3 million in the fourth quarter of 2008, compared to $350.8 million in the fourth quarter of 2007, an increase of 3.0%. Net premiums written for the full year were $1,484.0 million in 2008, consistent with $1,480.8 million in 2007.

• The Personal Lines GAAP combined ratio was 98.5% in the fourth quarter of 2008, compared to 93.4% in the prior-year quarter. Catastrophe related losses were $10.1 million, or 2.8 points of the fourth quarter combined ratio in 2008, compared to $5.2 million, or 1.4 points in the prior-year quarter. The GAAP combined ratio for the full year of 2008 was 100.5%, compared to 94.8% in 2007. Catastrophe related losses contributed 5.8 points to the combined ratio in 2008, compared to 1.7 points in 2007.

• Favorable development of prior-year loss reserves was $11.1 million in the fourth quarter of 2008, compared to $15.3 million in the fourth quarter of 2007, improving the Personal Lines combined ratio by 3.1 points and 4.2 points, respectively. The full year favorable development of prior-year reserves was $61.5 million in 2008, compared to $72.2 million in 2007, improving the combined ratio by 4.2 points and 4.9 points, respectively.

Commercial Lines

Commercial Lines pre-tax segment income was $55.6 million in the fourth quarter of 2008, compared to $42.6 million in the fourth quarter of 2007. The pre-tax net impact of catastrophes was $4.0 million in the fourth quarter of 2008, compared to $6.1 million in the fourth quarter of 2007. Excluding the pre-tax net impact of catastrophes, Commercial Lines pre-tax segment income would have been $59.6 million in the fourth quarter of 2008, compared to $48.7 million in the prior-year quarter.

For the full year, Commercial Lines segment income was $169.7 million, compared to $169.3 million in 2007. The pre-tax net impact of catastrophes in the full year 2008 was $84.3 million, compared to $38.4 million in the full year 2007. The Commercial Lines segment income for the full year 2008, excluding the impact of catastrophes, would have been $254.0 million, compared to $207.7 million in 2007, up $46.3 million for the year.

Ex-catastrophe Commercial Lines segment income for the fourth quarter and full year 2008 was higher, primarily driven by growth in our specialty lines and improved ex-catastrophe accident year performance across most lines.

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Commercial Lines highlights:

• Net premiums written were $235.9 million in the fourth quarter of 2008, compared to $210.8 million in the fourth quarter of 2007, representing an increase of 11.9%. Net premiums written for the full year 2008 were $1,033.7 million, compared to $934.2 million in 2007, up 10.7% year over year. The increase in net premiums written for both the quarter and the year was in part due to acquisitions.

• The Commercial Lines GAAP combined ratio was 91.7% in the fourth quarter of 2008, compared to 94.4% in the prior-year quarter. Catastrophe related losses were $4.0 million, or 1.5 points of the fourth quarter combined ratio in 2008, compared to $6.1 million, or 2.6 points in the prior-year quarter. The GAAP combined ratio for the full year of 2008 was 96.1%, compared to 94.0% in 2007. On an ex-catastrophe basis, the combined ratio in 2008 was 87.8%, or 2.7 points better, compared to the ratio of 90.5% in 2007.

• Favorable development of prior-year loss reserves was $13.9 million in the fourth quarter of 2008, compared to favorable development of $19.8 million in the fourth quarter of 2007, improving the Commercial Lines combined ratio by 5.4 points and 8.4 points, respectively. The full year favorable development of prior-year reserves was $91.0 million in 2008, compared to $83.5 million in 2007, improving the combined ratio by 9.0 points and 9.2 points, respectively.

Other Property & Casualty

Other Property & Casualty’s pre-tax segment income was $2.2 million in the fourth quarter of 2008, compared to a segment loss of $2.4 million in the prior-year quarter. Other Property & Casualty’s pre-tax segment income for the full year 2008 was $9.0 million, compared to $4.8 million in the prior year. The increase in Other Property & Casualty’s pre-tax segment income in the fourth quarter and full year 2008 compared to prior periods is primarily driven by a pension adjustment in 2007 related to census data issues.

Completion of FAFLIC Sale

As was previously announced, on January 2, 2009, The Hanover Insurance Group completed the sale of its remaining life insurance subsidiary, First Allmerica Financial Life Insurance Company (FAFLIC), to Commonwealth Annuity and Life Insurance Company, a subsidiary of The Goldman Sachs Group, Inc.

The loss on discontinued FAFLIC operations for the full year 2008 of $84.8 million is comprised of a net loss on the sale of $77.3 million, net income on business operations of $6.9 million and loss on invested assets of $14.4 million.

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Discontinued Operations

Discontinued Operations include several exited businesses, as well as results of FAFLIC.

Net income in the fourth quarter of 2008 included a gain related to the discontinued FAFLIC business of $8.1 million, primarily driven by the exchange of invested assets between Hanover Insurance and FAFLIC discussed in the Investment Results section of this press release. The fourth quarter of 2008 also included an after-tax gain of $3.2 million related to previously disposed businesses.

Net income in the full year 2008 included a loss related to the discontinued FAFLIC business of $84.8 million, partially offset by a net gain of $20.9 million on previously disposed businesses. Net income in 2007 included income related to the discontinued FAFLIC business of $10.9 million, and a gain related to other previously disposed businesses of $13.9 million.

Investment Results

Net investment income from continuing operations increased by $1.5 million, to $64.8 million for the fourth quarter of 2008, compared to $63.3 million in the same period of 2007. For the full year of 2008, net investment income from continuing operations increased by $11.7 million, to $258.7 million, compared to $247.0 million in 2007. This increase was primarily the result of an inter-company transfer of pension related assets effective January 1, 2008.

Pre-tax net realized investment losses included in continuing operations were $37.1 million in the fourth quarter of 2008, compared to $0.6 million in the same period of 2007. In the fourth quarter 2008, the company recognized impairments of $46.4 million on certain fixed maturity and equity securities, which were partially offset by pre-tax net investment gains of $9.3 million, primarily from the sale of fixed maturity securities. Included in fourth quarter impairments were $8.7 million of losses that were recorded in discontinued operations during prior quarters of 2008, and were reclassified to continuing operations to align investment results with the transfer of assets relating to the sale of FAFLIC.

Full year 2008 pre-tax net realized investment losses included in continuing operations were $97.8 million, compared to $0.9 million of pre-tax net realized investment losses in 2007. In 2008, the company realized pre-tax net investment losses of $113.1 million resulting from impairments on certain fixed maturity and equity securities, partially offset by gains of $15.3 million, primarily from sales of fixed maturity securities. In 2007, the company realized pre-tax net investment losses of $3.6 million from impairments on certain fixed maturity securities, partially offset by $2.7 million of capital gains resulting from the sale of fixed maturities. The increase in impairments for the full year 2008 primarily reflects investment losses in corporate bonds, particularly in the financial sector and in certain higher yielding below investment grade fixed maturities.

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Realized gains/(losses)

$ in millions	Quarter ended December 31, 2008			Year ended December 31, 2008
Net gains on sales of securities	$	9.3		$	15.3
Net impairments:
Investment grade(1)		(9.5	)		(54.7	)
Below investment grade		(28.8	)		(50.2	)
Equities and other		(8.1	)		(8.2	)
Total realized losses	$	(37.1	)	$	(97.8	)

⁽¹⁾ Impairments on investment grade securities include Washington Mutual of $17.3 million and Lehman Brothers of $13.4 million recognized in the third quarter of 2008.

Investment Portfolio

The Company held $4.8 billion in cash and investment assets at December 31, 2008, excluding $1.1 billion of assets sold on January 2nd as part of our discontinued FAFLIC business.

Investment Portfolio – Continuing Operations

Fixed maturities and cash represented 98% of our investment portfolio with a carrying value of $4.7 billion. Approximately 94% of our fixed maturity portfolio is rated investment grade. The following table provides information about the company’s fixed maturity portfolio as of December 31, 2008:

Investment Type	Amortized Cost		Fair Value		Net Unrealized gain (loss)			Change in Net Unrealized
								Q4			YTD
Corporates(1)
NAIC 1	$	962.8	$	902.9	$	(59.9	)	$	20.4		$	(57.0	)
NAIC 2		922.5		850.3		(72.2	)		(29.1	)		(61.9	)
NAIC 3 or below		286.3		229.8		(56.5	)		(33.8	)		(53.7	)
Total Corporates		2,171.6		1,983.0		(188.6	)		(42.5	)		(172.6	)
MBS/CMBS/ABS
MBS		971.3		970.0		(1.3	)		7.6			(2.7	)
CMBS		288.9		258.0		(30.9	)		(17.1	)		(31.8	)
ABS		19.2		11.9		(7.3	)		(4.9	)		(6.4	)
Municipals
Taxable		507.1		492.0		(15.1	)		(11.8	)		(19.0	)
Tax Exempt		241.2		224.7		(16.5	)		(13.1	)		(25.1	)
U.S. Government		277.2		281.9		4.7			1.2			(0.4	)
Redeemable Preferred		46.8		33.3		(13.5	)		(3.9	)		(9.3	)
Total	$	4,523.3	$	4,254.8	$	(268.5	)	$	(84.5	)	$	(267.3	)

⁽¹⁾ NAIC 1 is generally equivalent to an investment grade rating agency designation of ‘A’ or above, NAIC 2 is generally equivalent to an investment grade rating agency designation of ‘BBB’ and NAIC 3 or below is generally equivalent to a non-investment grade rating agency designation of ‘BB’ or below.

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While market valuations continued to deteriorate in the fourth quarter due to unprecedented events in the financial markets, the company believes the unrealized losses are temporary. Management believes that recent and ongoing government actions, and the company’s ability and intent to hold such securities until recovery, will allow the company to realize the securities’ anticipated long-term economic value.

The Hanover continues to have no direct exposure to investments in sub-prime mortgages or sub-prime mortgage-backed securities, nor does it currently own any collateralized debt or loan obligations or invest in credit derivatives. Residential mortgage-backed securities constitute $1.0 billion of its invested assets with approximately 84% agency or agency backed securities. The remaining 16% are non-agency prime securities, substantially all of which are rated AAA. Commercial mortgage backed securities constitute $258.0 million of the company’s invested assets, of which approximately 21% is defeased. Approximately 89% of its CMBS holdings were pre-2005 vintages, with 6% from the 2007 vintage, 4% from the 2006 vintage and 1% from the 2005 vintage. The entire CMBS portfolio, of which approximately 80% was AAA rated, has a weighted average loan-to-value ratio of 66.2%. As of December 31, 2008, the Hanover holds $716.7 million of municipal bonds with an overall rating of AA-. Financial guarantor insurance enhanced municipal bonds represent $334.6 million, or approximately 47% of the municipal portfolio. The overall credit rating of the Hanover’s insured municipal bond portfolio, giving no effect to the insurance enhancement, was A-.

Please see exhibits at the end of this document for more disclosures on the investment portfolio.

Book Value

The following exhibit provides a roll forward of book value for 2008:

	Amounts						$ per share
$ in millions, except per share	Quarter Ended December 31, 2008			Year Ended December 31, 2008			Quarter Ended December 31, 2008			Year Ended December 31, 2008
Beginning of Period Book Value	$	2,040.1		$	2,299.0		$	40.09		$	44.37
Net Income
Continuing Operations		22.8			84.5			0.45			1.66
Discontinued Operations – FAFLIC		8.1			(84.8	)		0.16			(1.67	)
Other Discontinued Operations		3.2			20.9			0.06			0.41
Change in AOCI, net of tax
Change in Pension and Postretirement Related Benefits		(80.5	)		(82.8	)		(1.58	)		(1.62	)
Change in Net Unrealized Investment Losses		(86.4	)		(281.6	)		(1.70	)		(5.53	)
Dividend		(23.0	)		(23.0	)		(0.45	)		(0.45	)
Common Stock Net Activity		2.9			(45.0	)		0.05			(0.09	)
Ending of Period Book Value	$	1,887.2		$	1,887.2		$	37.08		$	37.08

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Earnings Conference Call

The Hanover will host a conference call to discuss the company’s fourth quarter results on Friday, February 6, at 11:00 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 approximately two hours after the call.

Statistical Supplement

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

Forward-Looking Statements and Non-GAAP Financial Measures

Forward-looking statements

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,” “on track to” and similar expressions is intended to identify forward-looking statements. The company cautions investors that any such forward-looking statements are estimates or projections which involve significant judgment and not guarantees of future performance, and actual results could differ materially. In particular, statements in the above referenced conference call regarding expectations for 2009, including with respect to net written premium growth, accident year loss ratios, prior year reserve development, segment income and effective tax rate are forward-looking statements. Investors should consider the risks and uncertainties in our business and under current financial market conditions that may affect such estimates and future performance, including (i) the inherent difficulties in arriving at such estimates; (ii) the complexity of estimating losses from large catastrophe events where circumstances may delay reporting of the existence, nature or extent of losses or where “demand surge,” regulatory assessments or other factors may significantly impact the ultimate amount of such losses; (iii) the difficulties of estimating the impact of the current financial turmoil on the value of our investment portfolio and future investment income, including the amount of realized losses and impairments which will be recognized in future financial reports and our ability and intent to hold such investments until recovery; (iv) the uncertainties in current circumstances of future rating agency requirements, which could affect the company as well as the company’s investment portfolio; (v) the impact on our capital and liquidity of the current financial turmoil; (vi) variations in our current estimates that may change as the company finalizes future financial results; and (vii) the impact of recent federal government intervention into the financial sector.

10

Investors are directed to consider the risks and uncertainties in the company’s 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 Gustav, Ike, Katrina and Rita), the possibility of adverse judicial decisions, including those which expand policy coverage beyond its intended scope, the ability to increase or maintain certain property and casualty insurance rates, the impact of new product introductions and expansion in geographic areas, the impact of the company’s acquisitions of Professionals Direct, Inc., Verlan Holdings, Inc. and AIX Holdings, Inc., adverse loss development and adverse trends in mortality and morbidity and medical costs, changes in frequency and loss trends, 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), the continued deterioration of the economic environment, particularly in the state of Michigan, where the company has a significant portion of its business, adverse state and federal legislation or regulation or regulatory actions (including in the state of Michigan where the Governor announced efforts to freeze automobile rates and to initiate actions to reduce automobile insurance rates and to make them “affordable…fair…and equitable”), financial ratings actions, uncertainties in estimating FIN 45 liabilities recorded in conjunction with indemnity obligations undertaken in connection with the sale of various businesses and increased uncertainties in general economic conditions and in investment and financial markets, which, among other things, could result in increased impairments of fixed income investments or the inability to collect from reinsurers, the performance of the discontinued voluntary pools and accident and health business that was transferred to The Hanover Insurance Company from FAFLIC in connection with the sale of FAFLIC, and various other factors.

Finally, with respect to the proceeds from the sale of our life insurance business, FAFLIC, and the loss on sale of this business, which is included in discontinued operations, there are certain factors that could cause actual results to differ materially from those estimated in this press release, slide presentation and statements made. These include: (1) the final reported statutory results of operations of FAFLIC as of December 31, 2008, which may impact the statutory surplus of FAFLIC and consequently the ultimate dividend, purchase price, proceeds from the transaction and net after-tax loss; (2) the uncertainties as to the gross or net proceeds to be received by THG, including the uncertainty as to the effects of the various purchase price adjustments and expenses incurred by THG; (3) the ability to realize post-closing earnings for the property-casualty segment that are taxable and make certain retained tax attributes valuable; and (4) the impact of contingent liabilities, including litigation and regulatory matters, assumed by the holding company in connection with the transaction.

Non-GAAP financial measures

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

11

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 December 31, 2008 and 2007 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:	Media:
Robert P. Myron E-mail: rmyron@hanover.com 1-508-855-3457	Michael F. Buckley E-mail: mibuckley@hanover.com 1-508-855-3099

12

Definition of Reported Segments

Our continuing operations include three Property and Casualty 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, such as fidelity and surety bonds, and inland marine. The Other Property and Casualty segment includes Opus Investment Management, Inc., which provides investment management services to institutions, pension funds and other organizations, the operations of the holding company, as well as a block of run-off voluntary pools business, in which we have not actively participated since 1995.

THE HANOVER INSURANCE GROUP, INC.

in millions, except per share amounts	Quarter ended December 31				Year ended December 31
	2008		2007		2008		2007
Net income	$	34.1	$	75.8	$	20.6	$	253.1
Net income per share (diluted)	$	0.66	$	1.44	$	0.40	$	4.83
Weighted average shares		51.4		52.6		51.7		52.4

13

The following is a reconciliation from segment income to net income⁽¹⁾:

	Quarter ended December 31												Year ended December 31
$ in millions except per share	2008						2007						2008						2007
	$			Per Share(2)			$			Per Share(2)			$			Per Share(2)			$			Per Share(2)
Property and Casualty
Personal Lines	$	39.7					$	57.8					$	123.5					$	208.2
Commercial Lines		55.6						42.6						169.7						169.3
Other Property & Casualty		2.2						(2.4	)					9.0						4.8
Total Property and Casualty		97.5						98.0						302.2						382.3
Interest expense on corporate debt		(10.0	)					(10.0	)					(39.9	)					(39.9	)
Total segment income		87.5		$	1.70			88.0		$	1.67			262.3		$	5.07			342.4		$	6.53
Federal income tax expense on segment income		(27.9	)		(0.54	)		(27.2	)		(0.51	)		(86.3	)		(1.67	)		(113.7	)		(2.17	)
Total segment income after taxes		59.6			1.16			60.8			1.16			176.0			3.40			228.7			4.36
Federal income tax settlement		—			—			—			—			6.4			0.12			—			—
Net realized investment losses		(37.1	)		(0.73	)		(0.6	)		(0.01	)		(97.8	)		(1.89	)		(0.9	)		(0.01	)
Loss on derivative instruments		(0.1	)		—			—			—			(0.1	)		—			—			—
Federal income tax benefit on non-segment income		0.4			0.01			0.1			—			—			—			0.5			0.01
Income from continuing operations		22.8			0.44			60.3			1.15			84.5			1.63			228.3			4.36
Discontinued operations (net of taxes):
Income (loss) from operations of discontinued FAFLIC businesses (including loss on assets held-for-sale of $5.1, or $0.10 per share and $77.3, or $1.49 per share in 2008)		8.1			0.16			2.6			0.05			(84.8	)		(1.64	)		10.9			0.21
Income from operations of AMGRO (including gain on disposal of $11.1, or $0.21 per share in 2008)		—			—			—			—			10.1			0.20			—			—
Income from operations of discontinued variable life and annuity business (including gain on disposal of $3.2, or $0.06 per share and $11.3, or $0.22 per share in 2008 and $7.7 or $0.14 per share and $7.9, or $0.15 per share in 2007)		3.2			0.06			12.9			0.24			11.3			0.22			13.1			0.25
Other		—			—			—			—			(0.5	)		(0.01	)		0.8			0.01
Net income	$	34.1		$	0.66		$	75.8		$	1.44		$	20.6		$	0.40		$	253.1		$	4.83

⁽¹⁾ 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.

⁽²⁾ Per share data is per diluted share of common stock.

14

The table below includes our top twenty-five financial sector fixed maturity holdings as of December 31, 2008 and related financial ratings. The table excludes securities transferred on January 2, 2009 in connection with the sale of FAFLIC.

Continuing Operations – Top 25 Financial Holdings

(In millions, except percentage data)

Issuer	TARP(1)	Amortized Cost		Fair Value		% of Inv. Assets	S&P Ratings
Bank of America	Y	$	59.0	$	53.1	1.11%	A
PNC Bank	Y		31.6		29.3	0.61%	A+
Wells Fargo	Y		30.1		28.8	0.60%	AA
JP Morgan	Y		27.1		26.4	0.55%	A+
Goldman Sachs	Y		26.3		23.4	0.49%	A
GE Capital Corp.	N		25.1		24.7	0.52%	AAA
Morgan Stanley	Y		21.9		18.8	0.39%	A
Capital One	Y		17.4		16.4	0.34%	A–
Aetna	N		16.3		15.1	0.32%	A–
American Express	Y		16.2		14.6	0.31%	A
CIT Group	Y		15.2		20.3	0.42%	BBB+
Fifth Third Bancorp	Y		15.0		12.3	0.26%	A
Wellpoint	N		14.8		13.8	0.29%	A–
HSBC Bank	N		14.4		14.3	0.30%	AA–
Genworth Global Funding	N		13.2		5.6	0.12%	A–
Manufacturers & Traders Bank	Y		13.1		9.0	0.19%	A–
Royal Bank of Scotland	N		12.9		12.7	0.27%	A+
Charter One	N		12.1		11.8	0.25%	A–
Bank of New York	Y		11.4		11.6	0.24%	AA–
Credit Suisse First Boston	N		11.6		11.0	0.23%	A+
Union Bank of California	N		11.5		9.2	0.19%	A
Student Loan Market	N		11.1		12.3	0.26%	BBB–
Regions Bank	Y		8.2		5.6	0.12%	BBB+
FMR	N		7.2		6.5	0.14%	AA–
Cigna	N		6.1		5.3	0.11%	BBB+
Top 25 Financial			448.8		411.9
Other Financial			214.0		182.3
Total Financial			662.8		594.2

⁽¹⁾ “Y” indicates that the issuer is a participant in the Troubled Asset Relief Program established under the Emergency Economic Stabilization Act of 2008. “N” indicates that the issuer is not a participant in such program.

15

The table below includes our top twenty-five non-financial sector corporate fixed maturity holdings as of December 31, 2008 and related financial ratings. The table excludes securities transferred on January 2, 2009 in connection with the sale of FAFLIC.

Continuing Operations – Top 25 Non-financial Holdings

(In millions, except percentage data)

Issuer	Amortized Cost		Fair Value		% of Inv. Assets	S&P Ratings
AT&T	$	33.9	$	34.0	0.71%	A
CVS		25.5		24.0	0.50%	BBB+
Valero Energy		24.7		23.3	0.49%	BBB
Dominion Resources		23.2		22.1	0.46%	A–
Kroger		20.6		20.4	0.43%	BBB–
Union Pacific		19.0		19.1	0.40%	BBB
Vodafone		18.3		17.7	0.37%	A–
Encana		17.6		16.7	0.35%	A–
Safeway		17.5		17.1	0.36%	BBB
Textron		17.0		13.6	0.28%	BBB
Home Depot		16.9		15.2	0.32%	BBB+
Sempra Energy		16.9		16.4	0.34%	BBB+
Burlington Northern		16.6		15.8	0.33%	BBB
Miller Brewing		16.4		15.2	0.32%	BBB+
Consolidated Edison		15.9		15.8	0.33%	A–
Comcast		15.8		15.7	0.33%	BBB+
Pacific Gas & Electric		15.8		16.2	0.34%	BBB+
Schering-Plough		15.4		14.8	0.31%	A–
Verizon		15.0		13.9	0.29%	A
Enterprise Products		13.9		11.3	0.24%	BBB–
Lowe’s		13.6		13.2	0.28%	BBB+
Canadian Natural Resources		12.4		11.2	0.23%	BBB
British Telecom		12.4		12.0	0.25%	BBB+
McKesson		12.0		12.1	0.25%	BBB+
Telefonica Europe		11.9		11.4	0.24%	A–
Top 25 Non-Financial		438.2		418.2
Other Non-Financial		1,071.4		970.6
Total Non-Financial	$	1,509.6	$	1,388.8

16

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
Investments
Net Investment Income	13
Net Realized Investment Gains (Losses)	14
Unrealized Losses	15
Credit Quality of Fixed Maturities	16
Property and Casualty Statutory Ratios	17-18
Historical Financial Highlights	19
Other Information	20
Corporate Information
Market and Dividend Information
Industry Ratings

THE HANOVER INSURANCE GROUP

FINANCIAL HIGHLIGHTS

	Quarter ended December 31								Year ended December 31
(In millions)	2008			2007			% Change		2008			2007			% Change
SEGMENT INCOME
Property and Casualty
Personal Lines	$	39.7		$	57.8		(31.3	)	$	123.5		$	208.2		(40.7	)
Commercial Lines		55.6			42.6		30.5			169.7			169.3		0.2
Other		2.2			(2.4	)	N/M			9.0			4.8		87.5
Total Property and Casualty		97.5			98.0		(0.5	)		302.2			382.3		(21.0	)
Interest expense on corporate debt		(10.0	)		(10.0	)	—			(39.9	)		(39.9	)	—
Total segment income		87.5			88.0		(0.6	)		262.3			342.4		(23.4	)
Federal income tax expense on P&C segment income		(31.4	)		(30.7	)	2.3			(100.3	)		(127.7	)	(21.5	)
Federal income tax benefit on other segment income		3.5			3.5		—			14.0			14.0		—
Total federal income tax expense on segment income		(27.9	)		(27.2	)	2.6			(86.3	)		(113.7	)	(24.1	)
Total segment income after taxes	$	59.6		$	60.8		(2.0	)	$	176.0		$	228.7		(23.0	)
RECONCILIATION FROM SEGMENT INCOME TO NET INCOME
Total segment income after taxes	$	59.6		$	60.8		(2.0	)	$	176.0		$	228.7		(23.0	)
Federal income tax settlement		—			—		—			6.4			—		N/M
Net realized investment losses		(37.1	)		(0.6	)	N/M			(97.8	)		(0.9	)	N/M
Loss on derivative instruments		(0.1	)		—		N/M			(0.1	)		—		N/M
Federal income tax benefit on non-segment income		0.4			0.1		N/M			—			0.5		N/M
Income from continuing operations		22.8			60.3		(62.2	)		84.5			228.3		(63.0	)
Discontinued operations (net of taxes):
Income (loss) from operations of discontinued FAFLIC business (Including loss on assets held-for-sale of $5.1 and $77.3 in 2008)		8.1			2.6		N/M			(84.8	)		10.9		N/M
Income from operations of discontinued variable life and annuity business (Including gain on disposal of $3.2 and $11.3 in 2008 and $7.7 and $7.9 in 2007)		3.2			12.9		(75.2	)		11.3			13.1		(13.7	)
Income from operations of AMGRO (Including gain on disposal of $11.1 in 2008)		—			—		—			10.1			—		N/M
Other		—			—		—			(0.5	)		0.8		N/M
Net income	$	34.1		$	75.8		(55.0	)	$	20.6		$	253.1		(91.9	)

1

THE HANOVER INSURANCE GROUP

FINANCIAL HIGHLIGHTS

	Quarter ended December 31								Year ended December 31
	2008			2007			% Change		2008			2007			% Change
PER SHARE DATA (DILUTED) (1)
Total segment income	$	1.70		$	1.67		1.8		$	5.07		$	6.53		(22.4	)
Federal income tax expense on segment income		(0.54	)		(0.51	)	5.9			(1.67	)		(2.17	)	(23.0	)
Total segment income after taxes		1.16			1.16		—			3.40			4.36		(22.0	)
Federal income tax settlement		—			—		—			0.12			—		N/M
Net realized investment losses		(0.73	)		(0.01	)	N/M			(1.89	)		(0.01	)	N/M
Federal income tax benefit on non-segment income		0.01			—		N/M			—			0.01		N/M
Income from continuing operations		0.44			1.15		(61.7	)		1.63			4.36		(62.6	)
Discontinued operations (net of taxes):
Income (loss) from operations of discontinued FAFLIC business (Including loss on assets held-for-sale of $0.10 and $1.49 in 2008)		0.16			0.05		N/M			(1.64	)		0.21		N/M
Income from operations of discontinued variable life and annuity business (Including gain on disposal of $0.06 and $0.22 in 2008 and $0.14 and $0.15 in 2007)		0.06			0.24		(75.0	)		0.22			0.25		(12.0	)
Income from operations of AMGRO (Including gain on disposal of $0.21 in 2008)		—			—		—			0.20			—		N/M
Other		—			—		—			(0.01	)		0.01		N/M
Net income	$	0.66		$	1.44		(54.2	)	$	0.40		$	4.83		(91.7	)

2

THE HANOVER INSURANCE GROUP

FINANCIAL HIGHLIGHTS

(In millions, except per share data)	December 31 2008			December 31 2007			% Change
BALANCE SHEET
Shareholders’ equity
Property and Casualty Segment	$	1,995.5		$	2,194.6		(9.1	)
First Allmerica Financial Life Insurance Company (consolidated) (1)		78.1			328.3		(76.2	)
THG Holding Company debt (2)		(499.5	)		(499.5	)	—
THG Holding Company		313.1			275.6		13.6
Total shareholders’ equity	$	1,887.2		$	2,299.0		(17.9	)
Property and Casualty Companies (3)
Total adjusted statutory capital	$	1,596.8		$	1,666.4		(4.2	)
Premium to surplus ratio		1.6:1			1.4:1		—
Book value per share
Property and Casualty Segment	$	39.20		$	42.36		(7.5	)
First Allmerica Financial Life Insurance Company (consolidated)		1.53			6.34		(75.9	)
THG Holding Company debt (2)		(9.81	)		(9.64	)	1.8
THG Holding Company		6.16			5.31		16.0
Total book value per share	$	37.08		$	44.37		(16.4	)
THG book value per share, excluding accumulated other comprehensive loss	$	44.64		$	44.77		(0.3	)
Shares outstanding (4)		50.9			51.8
Stock price	$	42.97		$	45.80		(6.2	)
Price/book value per share		1.2 x			1.0 x		0.2 x
Debt/equity		28.1	%		22.3	%	5.8 pts
Debt/total capital		22.0	%		18.2	%	3.8 pts

(1) Reflects dividend to THG Holding Company of $136.3 million on December 31, 2008.

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

(3) Property and Casualty Companies includes The Hanover Insurance Company, Citizens Insurance Company of America, Citizens Insurance Company of Illinois, Nova Casualty Company, and their insurance subsidiaries.

(4) Shares outstanding do not include common stock equivalents.

3

THE HANOVER INSURANCE GROUP

CONSOLIDATED INCOME STATEMENTS

	Quarter ended December 31								Year ended December 31
(In millions, except per share data)	2008			2007			% Change		2008			2007			% Change
REVENUES
Premiums	$	626.8		$	601.7		4.2		$	2,484.9		$	2,372.0		4.8
Net investment income		64.8			63.3		2.4			258.7			247.0		4.7
Net realized investment losses		(37.1	)		(0.6	)	N/M			(97.8	)		(0.9	)	N/M
Fees and other income		8.9			14.3		(37.8	)		34.6			56.0		(38.2	)
Total revenues		663.4			678.7		(2.3	)		2,680.4			2,674.1		0.2
BENEFITS, LOSSES AND EXPENSES
Policy benefits, claims, losses and loss adjustment expenses		386.5			366.1		5.6			1,626.2			1,457.4		11.6
Policy acquisition expenses		140.1			134.1		4.5			556.2			523.6		6.2
Other operating expenses		86.5			91.1		(5.0	)		333.6			351.6		(5.1	)
Total benefits, losses and expenses		613.1			591.3		3.7			2,516.0			2,332.6		7.9
Income from continuing operations before federal income taxes		50.3			87.4		(42.4	)		164.4			341.5		(51.9	)
Federal income tax expense		27.5			27.1		1.5			79.9			113.2		(29.4	)
Income from continuing operations		22.8			60.3		(62.2	)		84.5			228.3		(63.0	)
Discontinued operations (net of taxes):
Income (loss) from operations of discontinued FAFLIC business (Including loss on assets held-for-sale of $5.1 and $77.3 in 2008)		8.1			2.6		N/M			(84.8	)		10.9		N/M
Income from operations of discontinued variable life and annuity business (Including gain on disposal of $3.2 and $11.3 in 2008 and $7.7 and $7.9 in 2007)		3.2			12.9		(75.2	)		11.3			13.1		(13.7	)
Income from operations of AMGRO (Including gain on disposal of $11.1 in 2008)		—			—		—			10.1			—		N/M
Other		—			—		—			(0.5	)		0.8		N/M
Net income	$	34.1		$	75.8		(55.0	)	$	20.6		$	253.1		(91.9	)

4

THE HANOVER INSURANCE GROUP

CONSOLIDATED INCOME STATEMENTS

	Quarter ended December 31						Year ended December 31
	2008		2007		% Change		2008			2007		% Change
PER SHARE DATA (DILUTED)
Income from continuing operations	$	0.44	$	1.15	(61.7	)	$	1.63		$	4.36	(62.6	)
Discontinued operations (net of taxes):
Income (loss) from operations of discontinued FAFLIC business (Including loss on assets held-for-sale of $0.10 and $1.49 in 2008)		0.16		0.05	N/M			(1.64	)		0.21	N/M
Income from operations of discontinued variable life and annuity business (Including gain on disposal of $0.06 and $0.22 in 2008 and $0.14 and $0.15 in 2007)		0.06		0.24	(75.0	)		0.22			0.25	(12.0	)
Income from operations of AMGRO (Including gain on disposal of $0.21 in 2008)		—		—	—			0.20			—	N/M
Other		—		—	—			(0.01	)		0.01	N/M
Net income	$	0.66	$	1.44	(54.2	)	$	0.40		$	4.83	(91.7	)
Weighted average shares outstanding		51.4		52.6				51.7			52.4

5

THE HANOVER INSURANCE GROUP

CONSOLIDATED BALANCE SHEETS

(In millions, except per share data)	December 31 2008			December 31 2007			% Change
ASSETS
Investments:
Fixed maturities, at fair value (amortized cost of $4,468.0 and $4,585.7)	$	4,205.8		$	4,584.8		(8.3	)
Equity securities, at fair value (cost of $55.7 and $37.5)		47.7			44.6		7.0
Mortgage loans		31.1			41.2		(24.5	)
Other long-term investments		18.4			30.7		(40.1	)
Total investments		4,303.0			4,701.3		(8.5	)
Cash and cash equivalents		416.9			210.6		98.0
Accrued investment income		53.0			53.3		(0.6	)
Premiums, accounts and notes receivable, net		578.5			626.7		(7.7	)
Reinsurance receivable on paid and unpaid losses, benefits and unearned premiums		1,130.3			1,067.3		5.9
Deferred policy acquisition costs		266.7			246.8		8.1
Deferred federal income taxes		285.8			300.8		(5.0	)
Goodwill		169.9			126.0		34.8
Other assets		315.7			309.6		2.0
Assets held for sale		1,710.4			2,173.2		(21.3	)
Total assets	$	9,230.2		$	9,815.6		(6.0	)
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Policy liabilities and accruals:
Outstanding claims, losses and loss adjustment expenses	$	3,243.8		$	3,165.9		2.5
Unearned premiums		1,246.3			1,155.9		7.8
Contractholder deposit funds and other policy liabilities		1.8			1.9		(5.3	)
Total policy liabilities and accruals		4,491.9			4,323.7		3.9
Expenses and taxes payable		630.8			633.6		(0.4	)
Reinsurance premiums payable		61.3			44.9		36.5
Long-term debt		531.4			511.9		3.8
Liabilities held for sale		1,627.6			2,002.5		(18.7	)
Total liabilities		7,343.0			7,516.6		(2.3	)
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		1,803.8			1,822.6		(1.0	)
Accumulated other comprehensive loss		(384.8	)		(20.4	)	N/M
Retained earnings		949.8			946.9		0.3
Treasury stock at cost (9.6 and 8.7 million shares)		(482.2	)		(450.7	)	7.0
Total shareholders’ equity		1,887.2			2,299.0		(17.9	)
Total liabilities and shareholders’ equity	$	9,230.2		$	9,815.6		(6.0	)

6

PROPERTY & CASUALTY

THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY

CONDENSED INCOME STATEMENTS

	Quarter ended December 31						Year ended December 31
(In millions)	2008		2007		% Change		2008			2007			% Change
REVENUES
Net premiums written	$	597.3	$	561.6	6.4		$	2,518.0		$	2,415.3		4.3
Change in unearned premiums, net of prepaid reinsurance premiums		29.5		40.1	(26.4	)		(33.1	)		(43.3	)	(23.6	)
Net premiums earned		626.8		601.7	4.2			2,484.9			2,372.0		4.8
Net investment income		64.7		63.2	2.4			258.0			246.3		4.8
Other income		9.9		16.6	(40.4	)		40.9			64.9		(37.0	)
Total segment revenue		701.4		681.5	2.9			2,783.8			2,683.2		3.7
LOSSES AND OPERATING EXPENSES
Policy benefits, claims, losses and loss adjustment expenses		386.5		366.1	5.6			1,626.2			1,457.4		11.6
Policy acquisition expenses		140.1		134.1	4.5			556.2			523.6		6.2
Other operating expenses		77.3		83.3	(7.2	)		299.2			319.9		(6.5	)
Total losses and operating expenses		603.9		583.5	3.5			2,481.6			2,300.9		7.9
Segment income before federal income taxes	$	97.5	$	98.0	(0.5	)	$	302.2		$	382.3		(21.0	)

7

THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY

SEGMENT BALANCE SHEETS (1)

(In millions, except per share data)	December 31 2008			December 31 2007		% Change
ASSETS
Investments:
Fixed maturities, at fair value (amortized cost of $4,196.8 and $4,201.4)	$	3,940.6		$	4,197.6	(6.1	)
Equity securities, at fair value (cost of $46.4 and $29.9)		38.4			35.3	8.8
Mortgage loans		32.7			10.9	N/M
Other long-term investments		13.5			5.8	N/M
Total investments		4,025.2			4,249.6	(5.3	)
Cash and cash equivalents		377.8			182.8	N/M
Accrued investment income		48.6			49.5	(1.8	)
Premiums, accounts, and notes receivable, net		579.2			626.7	(7.6	)
Reinsurance receivable on paid and unpaid losses, benefits and unearned premiums		1,129.6			1,067.3	5.8
Deferred policy acquistion costs		264.8			246.8	7.3
Deferred federal income tax asset		220.8			195.6	12.9
Goodwill		169.9			126.0	34.8
Other assets		309.3			211.8	46.0
Total assets	$	7,125.2		$	6,956.1	2.4
LIABILITIES AND SHAREHOLDER’S EQUITY
LIABILITIES
Policy liabilities and accruals:
Outstanding claims, losses and loss adjustment expenses	$	3,201.3		$	3,165.8	1.1
Unearned premiums		1,246.3			1,155.9	7.8
Contractholder deposit funds and other policy liabilities		1.8			1.9	(5.3	)
Total policy liabilities and accruals		4,449.4			4,323.6	2.9
Expenses and taxes payable		596.4			389.8	53.0
Reinsurance premiums payable		61.3			45.0	36.2
Long-term debt		22.6			3.1	N/M
Total liabilities		5,129.7			4,761.5	7.7
SHAREHOLDER’S EQUITY
Common stock, par value $1.00 per share; authorized 20.9 million shares; issued 5.0 million shares		—			—	—
Additional paid-in capital		893.2			656.2	36.1
Accumulated other comprehensive (loss) income		(350.1	)		10.7	N/M
Retained earnings		1,452.4			1,527.7	(4.9	)
Total shareholder’s equity		1,995.5			2,194.6	(9.1	)
Total liabilities and shareholder’s equity	$	7,125.2		$	6,956.1	2.4

(1) Property and Casualty segment includes The Hanover Insurance Company, Citizens Insurance Company of America, and AIX, Inc. and their subsidiaries, Verlan Fire Insurance Company, OPUS Investments, Inc. and other insurance and non-insurance subsidiaries.

8

THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY

GAAP UNDERWRITING PROFIT (LOSS) RECONCILED TO SEGMENT INCOME

	Quarter ended December 31, 2008
	Personal Lines												Commercial Lines
(In millions)	Auto			Home			Other			Total			Workers’ Comp			Auto			Multiple Peril			Other			Total			Other P&C			Total P&C
Net premiums written	$	238.9		$	113.0		$	9.4		$	361.3		$	28.8		$	40.2		$	82.8		$	84.1		$	235.9		$	0.1		$	597.3
Net premiums earned	$	248.3		$	107.1		$	9.7		$	365.1		$	33.6		$	48.1		$	92.9		$	87.1		$	261.7		$	—		$	626.8
Policy benefits, claims, losses excluding prior year loss reserve development and catastrophe losses		162.5			47.1			2.7			212.3			21.0			27.0			41.0			30.3			119.3			—			331.6
Prior year loss reserve (favorable) unfavorable development		(7.1	)		(4.7	)		0.7			(11.1	)		(5.3	)		1.5			(7.1	)		(3.0	)		(13.9	)		(1.2	)		(26.2	)
Pre-tax catastrophe losses (recoveries)		—			9.6			0.5			10.1			—			—			(5.8	)		9.8			4.0			—			14.1
Pre-tax catastrophe LAE		—			—			—			—			—			—			—			—			—			—			—
Loss adjustment expenses		29.9			10.2			0.4			40.5			3.4			3.1			11.0			7.4			24.9			0.4			65.8
Policy acquisition expenses and other underwriting expenses											108.0															104.5			(0.1	)		212.4
Policyholders’ dividends											—															1.2			—			1.2
GAAP underwriting profit											5.3															21.7			0.9			27.9
Net investment income											29.8															31.5			3.4			64.7
Other income											3.8															4.5			1.6			9.9
Other operating income (expenses)											0.8															(2.1	)		(3.7	)		(5.0	)
Segment income before federal income taxes										$	39.7														$	55.6		$	2.2		$	97.5
	Quarter ended December 31, 2007
	Personal Lines												Commercial Lines
	Auto			Home			Other			Total			Workers’ Comp			Auto			Multiple Peril			Other			Total			Other P&C			Total P&C
Net premiums written	$	235.2		$	106.7		$	8.9		$	350.8		$	22.1		$	39.7		$	75.9		$	73.1		$	210.8		$	—		$	561.6
Net premiums earned	$	252.0		$	105.6		$	9.7		$	367.3		$	27.1		$	48.0		$	86.2		$	73.1		$	234.4		$	—		$	601.7
Policy benefits, claims, losses excluding prior year loss reserve development and catastrophe losses		163.0			44.2			2.5			209.7			18.0			29.9			35.5			29.9			113.3			—			323.0
Prior year loss reserve (favorable) unfavorable development		(9.4	)		(7.6	)		1.7			(15.3	)		(5.7	)		(3.2	)		(5.0	)		(5.9	)		(19.8	)		1.8			(33.3	)
Pre-tax catastrophe losses (recoveries)		0.1			5.4			(0.3	)		5.2			—			—			5.5			0.6			6.1			—			11.3
Pre-tax catastrophe LAE		—			—			—			—			—			—			—			—			—			—			—
Loss adjustment expenses		32.4			7.7			0.6			40.7			3.2			4.1			10.1			6.7			24.1			0.2			65.0
Policy acquisition expenses and other underwriting expenses											102.6															97.5			(0.1	)		200.0
Policyholders’ dividends											—															0.1			—			0.1
GAAP underwriting profit (loss)											24.4															13.1			(1.9	)		35.6
Net investment income											30.3															28.5			4.4			63.2
Other income											4.9															4.3			7.4			16.6
Other operating expenses											(1.8	)														(3.3	)		(12.3	)		(17.4	)
Segment income (loss) before federal income taxes										$	57.8														$	42.6		$	(2.4	)	$	98.0

9

THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY

GAAP UNDERWRITING PROFIT (LOSS) RECONCILED TO SEGMENT INCOME

	Year ended December 31, 2008
	Personal Lines												Commercial Lines															Other P&C			Total P&C
(In millions)	Auto			Home			Other			Total			Workers’ Comp			Auto			Multiple Peril			Other			Total
Net premiums written	$	1,011.3		$	432.5		$	40.2		$	1,484.0		$	127.2		$	192.8		$	368.5		$	345.2		$	1,033.7		$	0.3		$	2,518.0
Net premiums earned	$	1,003.9		$	429.4		$	39.2		$	1,472.5		$	125.1		$	196.7		$	364.3		$	326.0		$	1,012.1		$	0.3		$	2,484.9
Policy benefits, claims, losses excluding prior year loss reserve development and catastrophe losses		649.6			203.5			12.8			865.9			81.1			105.2			174.4			121.0			481.7			—			1,347.6
Prior year loss reserve favorable development		(54.6	)		(5.7	)		(1.2	)		(61.5	)		(27.6	)		(9.3	)		(36.1	)		(18.0	)		(91.0	)		(1.9	)		(154.4	)
Pre-tax catastrophe losses		3.5			79.0			2.9			85.4			—			0.6			59.0			24.7			84.3			—			169.7
Pre-tax catastrophe LAE		—			—			—			—			—			—			—			—			—			—			—
Loss adjustment expenses		125.2			36.3			1.7			163.2			13.7			15.9			40.7			26.8			97.1			1.4			261.7
Policy acquisition expenses and other underwriting expenses											427.2															398.6			(0.4	)		825.4
Policyholders’ dividends											—															1.6			—			1.6
GAAP underwriting (loss) profit											(7.7)															39.8			1.2			33.3
Net investment income											118.9															124.4			14.7			258.0
Other income											16.0															18.3			6.6			40.9
Other operating expenses											(3.7	)														(12.8	)		(13.5	)		(30.0	)
Segment income before federal income taxes										$	123.5														$	169.7		$	9.0		$	302.2
	Year ended December 31, 2007
	Personal Lines												Commercial Lines															Other P&C			Total P&C
	Auto			Home			Other			Total			Workers’ Comp			Auto			Multiple Peril			Other			Total
Net premiums written	$	1,018.6		$	423.6		$	38.6		$	1,480.8		$	110.8		$	194.8		$	349.1		$	279.5		$	934.2		$	0.3		$	2,415.3
Net premiums earned	$	1,006.2		$	414.5		$	39.0		$	1,459.7		$	108.4		$	194.3		$	349.4		$	259.9		$	912.0		$	0.3		$	2,372.0
Policy benefits, claims, losses excluding prior year loss reserve development and catastrophe losses		641.4			190.9			12.1			844.4			71.0			107.3			168.7			102.3			449.3			—			1,293.7
Prior year loss reserve (favorable) unfavorable development		(66.6	)		(7.0	)		1.4			(72.2	)		(24.1	)		(11.8	)		(25.1	)		(22.5	)		(83.5	)		3.0			(152.7	)
Pre-tax catastrophe losses (recoveries)		2.6			22.0			0.8			25.4			—			(0.1	)		27.1			5.1			32.1			—			57.5
Pre-tax catastrophe LAE		0.1			1.3			—			1.4			—			—			5.1			1.2			6.3			—			7.7
Loss adjustment expenses		126.7			31.0			1.9			159.6			14.0			16.8			39.8			20.0			90.6			0.5			250.7
Policy acquisition expenses and other underwriting expenses											424.6															362.3			(0.3	)		786.6
Policyholders’ dividends											—															0.5			—			0.5
GAAP underwriting profit (loss)											76.5															54.4			(2.9	)		128.0
Net investment income											118.8															110.3			17.2			246.3
Other income											18.8															16.1			30.0			64.9
Other operating expenses											(5.9	)														(11.5	)		(39.5	)		(56.9	)
Segment income before federal income taxes										$	208.2														$	169.3		$	4.8		$	382.3

10

THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY

GAAP UNDERWRITING RATIOS

	Quarter ended December 31, 2008
	Personal Lines								Commercial Lines										Other P&C	Total P&C
	Auto		Home		Other		Total		Workers’ Comp		Auto		Multiple Peril		Other		Total
Losses, excluding catastrophe losses and development	65.5	%	44.0	%	27.8	%	58.1	%	62.5	%	56.1	%	44.1	%	34.8	%	45.6	%	N/M	52.9	%
Catastrophe losses	—		9.0	%	5.2	%	2.8	%	—		—		(6.2	)%	11.3	%	1.5	%	N/M	2.2	%
Loss development	(2.8	)%	(4.4	)%	7.2	%	(3.1	)%	(15.8	)%	3.2	%	(7.6	)%	(3.5	)%	(5.4	)%	N/M	(4.2	)%
Total losses	62.7	%	48.6	%	40.2	%	57.8	%	46.7	%	59.3	%	30.3	%	42.6	%	41.7	%	N/M	50.9	%
Loss adjustment expenses	12.0	%	9.5	%	4.1	%	11.1	%	10.1	%	6.4	%	11.8	%	8.5	%	9.5	%	N/M	10.5	%
Pre-tax catastrophe LAE	—		—		—		—		—		—		—		—		—		N/M	—
Policy acquisition and other underwriting expenses							29.6	%									40.0	%	N/M	33.9	%
Policyholders’ dividends							—										0.5	%	N/M	0.2	%
Combined							98.5	%									91.7	%	N/M	95.5	%
Policies in force (1)	(1.7	)%	(0.2	)%	(5.8	)%	(1.3	)%	0.3	%	4.0	%	0.1	%	2.1	%	1.4	%	—	(0.9	)%
Retention (1), (2)	73.6	%	80.8	%	N/M		77.3	%	88.8	%	80.8	%	84.0	%	80.9	%	83.5	%
	Quarter ended December 31, 2007
	Personal Lines								Commercial Lines										Other P&C	Total P&C
	Auto		Home		Other		Total		Workers’ Comp		Auto		Multiple Peril		Other		Total
Losses, excluding catastrophe losses and development	64.7	%	41.9	%	25.8	%	57.1	%	66.4	%	62.3	%	41.2	%	40.9	%	48.3	%	N/M	53.7	%
Catastrophe losses	—		5.1	%	(3.1	)%	1.4	%	—		—		6.4	%	0.8	%	2.6	%	N/M	1.9	%
Loss development	(3.7	)%	(7.2	)%	17.5	%	(4.2	)%	(21.0	)%	(6.7	)%	(5.8	)%	(8.1	)%	(8.4	)%	N/M	(5.6	)%
Total losses	61.0	%	39.8	%	40.2	%	54.3	%	45.4	%	55.6	%	41.8	%	33.6	%	42.5	%	N/M	50.0	%
Loss adjustment expenses	12.9	%	7.3	%	6.2	%	11.1	%	11.8	%	8.5	%	11.7	%	9.2	%	10.3	%	N/M	10.8	%
Pre-tax catastrophe LAE	—		—		—		—		—		—		—		—		—		N/M	—
Policy acquisition and other underwriting expenses							28.0	%									41.6	%	N/M	33.3	%
Policyholders’ dividends							—										—		N/M	—
Combined							93.4	%									94.4	%	N/M	94.1	%
Policies in force	2.9	%	(2.4	)%	(3.7	)%	0.2	%	1.6	%	2.1	%	(2.0	)%	7.1	%	2.3	%	—	0.4	%
Retention (2)	73.1	%	82.6	%	N/M		77.9	%	78.9	%	78.6	%	77.8	%	82.1	%	78.2	%

(1) 2008 policies in force and retention rates do not include recent acquisitions of Professionals Direct, Inc., Verlan Fire Insurance Company, and AIX, Inc.

(2) 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

	Year ended December 31, 2008
	Personal Lines								Commercial Lines										Other P&C	Total P&C
	Auto		Home		Other		Total		Workers’ Comp		Auto		Multiple Peril		Other		Total
Losses, excluding catastrophe losses and development	64.7	%	47.4	%	32.7	%	58.8	%	64.8	%	53.5	%	47.9	%	37.1	%	47.6	%	N/M	54.2	%
Catastrophe losses	0.3	%	18.4	%	7.4	%	5.8	%	—		0.3	%	16.2	%	7.6	%	8.3	%	N/M	6.8	%
Loss development	(5.5	)%	(1.4	)%	(3.1	)%	(4.2	)%	(22.1	)%	(4.8	)%	(10.0	)%	(5.5	)%	(9.0	)%	N/M	(6.1	)%
Total losses	59.5	%	64.4	%	37.0	%	60.4	%	42.7	%	49.0	%	54.1	%	39.2	%	46.9	%	N/M	54.9	%
Loss adjustment expenses	12.5	%	8.5	%	4.3	%	11.1	%	11.0	%	8.1	%	11.2	%	8.2	%	9.6	%	N/M	10.5	%
Pre-tax catastrophe LAE	—		—		—		—		—		—		—		—		—		N/M	—
Policy acquisition and other underwriting expenses							29.0	%									39.4	%	N/M	33.2	%
Policyholders’ dividends							—										0.2	%	N/M	0.1	%
Combined							100.5	%									96.1	%	N/M	98.7	%
Policies in force (1)	(1.7	)%	(0.2	)%	(5.8	)%	(1.3	)%	0.3	%	4.0	%	0.1	%	2.1	%	1.4	%	—	(0.9	)%
Retention (1), (2)	73.6	%	80.8	%	N/M		77.3	%	81.1	%	80.3	%	82.5	%	76.7	%	81.3	%
	Year ended December 31, 2007
	Personal Lines								Commercial Lines										Other P&C	Total P&C
	Auto		Home		Other		Total		Workers’ Comp		Auto		Multiple Peril		Other		Total
Losses, excluding catastrophe losses and development	63.7	%	46.1	%	31.0	%	57.8	%	65.5	%	55.2	%	48.3	%	39.4	%	49.3	%	N/M	54.5	%
Catastrophe losses	0.3	%	5.3	%	2.1	%	1.7	%	—		(0.1	)%	7.8	%	2.0	%	3.5	%	N/M	2.4	%
Loss development	(6.6	)%	(1.7	)%	3.6	%	(4.9	)%	(22.2	)%	(6.0	)%	(7.2	)%	(8.7	)%	(9.2	)%	N/M	(6.4	)%
Total losses	57.4	%	49.7	%	36.7	%	54.6	%	43.3	%	49.1	%	48.9	%	32.7	%	43.6	%	N/M	50.5	%
Loss adjustment expenses	12.6	%	7.5	%	4.9	%	11.0	%	12.9	%	8.6	%	11.3	%	7.7	%	9.9	%	N/M	10.6	%
Pre-tax catastrophe LAE			0.3	%	—		0.1	%	—		—		1.5	%	0.5	%	0.7	%	N/M	0.3	%
Policy acquisition and other underwriting expenses							29.1	%									39.7	%	N/M	33.2	%
Policyholders’ dividends							—										0.1	%	N/M	—
Combined							94.8	%									94.0	%	N/M	94.6	%
Policies in force	2.9	%	(2.4	)%	(3.7	)%	0.2	%	1.6	%	2.1	%	(2.0	)%	7.1	%	2.3	%	—	0.4	%
Retention (2)	73.1	%	82.6	%	N/M		77.9	%	76.9	%	79.1	%	78.0	%	84.4	%	78.3	%

(1) 2008 policies in force and retention rates do not include recent acquisitions of Professionals Direct, Inc., Verlan Fire Insurance Company, and AIX, Inc.

(2) 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

INVESTMENTS

THE HANOVER INSURANCE GROUP

NET INVESTMENT INCOME

	Continuing Operations
	Year ended December 31
(In millions, except yields)	2008					2007
				Yield					Yield
Fixed maturities (1)	$	254.0		5.66	%	$	242.6		5.62	%
Equity securities		2.0		—			1.8		—
Mortgages (2)		0.9		8.37	%		2.1		13.04	%
All other		6.7		—			5.7		—
Investment expenses		(4.9	)	—			(5.2	)	—
Total	$	258.7		5.45	%	$	247.0		5.49	%
	Discontinued Operations
	Year ended December 31
(In millions, except yields)	2008					2007
				Yield					Yield
Fixed maturities (1)	$	54.9		5.58	%	$	65.2		5.55	%
Equity securities		2.4		9.37	%		2.8		8.76	%
Mortgages (2)		8.3		—			7.5		—
All other		1.9		—			3.2		—
Investment expenses		(1.3	)	—			(1.7	)	—
Total	$	66.2		5.63	%	$	77.0		5.52	%

(1) Includes purchase accounting adjustments of ($3.4) million and ($3.1) million for the years ended December 31, 2008 and 2007, respectively.

(2) Excludes mortgage prepayment fees of $0.2 million and $0.8 million for the years ended December 31, 2008 and 2007, respectively. Mortgage yields are 7.01% and 7.96% for the years ended December 31, 2008 and 2007, respectively.

13

THE HANOVER INSURANCE GROUP

COMPONENTS OF NET REALIZED INVESTMENT GAINS (LOSSES)

	Continuing Operations
	Quarter ended December 31						Year ended December 31
(In millions)	2008			2007			2008			2007
	Net Realized Gains (Losses)						Net Realized Gains (Losses)
Net gains on securities transactions	$	7.4		$	1.7		$	13.1		$	2.3
Other than temporary impairments (1)		(46.4	)		(2.5	)		(113.1	)		(3.6	)
Other		1.9			0.2			2.2			0.4
Net realized investment losses	$	(37.1	)	$	(0.6	)	$	(97.8	)	$	(0.9	)
	Discontinued Operations
	Quarter ended December 31						Year ended December 31
(In millions)	2008			2007			2008			2007
	Net Realized Gains						Net Realized (Losses) Gains
Net gains (losses) on securities transactions	$	1.1		$	0.2		$	(3.0	)	$	2.6
Other than temporary impairments (1)		5.8			—			(13.0	)		(0.1	)
Other		1.7			—			1.6			(0.1	)
Net realized investment gains (losses)	$	8.6		$	0.2		$	(14.4	)	$	2.4

(1) In the fourth quarter of 2008, $8.7 million of impairments that were recorded previously in 2008 were reclassified from discontinued operations to continuing operations.

14

THE HANOVER INSURANCE GROUP

AGING OF GROSS UNREALIZED LOSSES ON SECURITIES AVAILABLE FOR SALE

(In millions)	December 31, 2008
	Gross Unrealized Losses						Fair Value
	Property and Casualty (1)		Holdings to be Transferred to FAFLIC Buyer		Total		Property and Casualty (1)		Holdings to be Transferred to FAFLIC Buyer		Total
INVESTMENT GRADE FIXED MATURITIES:
12 months or less	$	152.0	$	33.1	$	185.1	$	1,732.3	$	382.2	$	2,114.5
Greater than 12 months		106.0		27.3		133.3		490.1		184.9		675.0
Total investment grade fixed maturities		258.0		60.4		318.4		2,222.4		567.1		2,789.5
BELOW INVESTMENT GRADE FIXED MATURITIES:
12 months or less		64.2		0.3		64.5		152.5		1.6		154.1
Greater than 12 months		—		—		—		—		—		—
Total below investment grade fixed maturities		64.2		0.3		64.5		152.5		1.6		154.1
Equity securities		11.4		—		11.4		32.3		—		32.3
Total fixed maturities and equity securities	$	333.6	$	60.7	$	394.3	$	2,407.2	$	568.7	$	2,975.9
	December 31, 2007
	Gross Unrealized Losses						Fair Value
	Property and Casualty (1)		Holdings to be Transferred to FAFLIC Buyer		Total		Property and Casualty (1)		Holdings to be Transferred to FAFLIC Buyer		Total
INVESTMENT GRADE FIXED MATURITIES:
12 months or less	$	21.2	$	5.9	$	27.1	$	576.0	$	164.0	$	740.0
Greater than 12 months		25.6		8.7		34.3		963.4		251.3		1,214.7
Total investment grade fixed maturities		46.8		14.6		61.4		1,539.4		415.3		1,954.7
BELOW INVESTMENT GRADE FIXED MATURITIES:
12 months or less		8.2		0.1		8.3		170.1		0.9		171.0
Greater than 12 months		—		—		—		—		—		—
Total below investment grade fixed maturities		8.2		0.1		8.3		170.1		0.9		171.0
Equity securities		0.5		—		0.5		17.8		—		17.8
Total fixed maturities and equity securities	$	55.5	$	14.7	$	70.2	$	1,727.3	$	416.2	$	2,143.5

(1) Property & Casualty includes discontinued group life and health pools of $15.7 million in gross unrealized losses with $52.3 million in fair value at December 31, 2008 and $2.5 million in gross unrealized losses with $58.2 million in fair value at December 31, 2007.

15

THE HANOVER INSURANCE GROUP

CREDIT QUALITY OF FIXED MATURITIES

(In millions)		December 31, 2008
		Amortized Cost						Fair Value
NAIC Designation	Rating Agency Equivalent Designation	Property and Casualty (1)		Holdings to be Transferred to FAFLIC Buyer		Total		Property and Casualty (1)		Holdings to be Transferred to FAFLIC Buyer		Total
1	Aaa/Aa/A	$	3,125.9	$	661.3		3,787.2		3,015.6	$	641.8	$	3,657.4
2	Baa		1,088.9		284.5		1,373.4		992.2		255.7		1,247.9
3	Ba		151.5		4.0		155.5		133.2		3.8		137.0
4	B		111.0		—		111.0		83.8		—		83.8
5	Caa and lower		37.1		—		37.1		24.5		—		24.5
6	In or near default		8.8		0.1		8.9		5.5		0.1		5.6
Total fixed maturities		$	4,523.2	$	949.9		5,473.1		4,254.8	$	901.4	$	5,156.2
		December 31, 2007
		Amortized Cost						Fair Value
NAIC Designation	Rating Agency Equivalent Designation	Property and Casualty (1)		Holdings to be Transferred to FAFLIC Buyer		Total		Property and Casualty (1)		Holdings to be Transferred to FAFLIC Buyer		Total
1	Aaa/Aa/A	$	3,445.1	$	704.4	$	4,149.5	$	3,457.7	$	706.4	$	4,164.1
2	Baa		962.4		295.2		1,257.6		950.9		293.3		1,244.2
3	Ba		120.1		10.6		130.7		118.4		11.2		129.6
4	B		147.7		4.2		151.9		146.8		4.3		151.1
5	Caa and lower		32.4		—		32.4		30.6		—		30.6
6	In or near default		0.9		0.1		1.0		2.3		0.1		2.4
Total fixed maturities		$	4,708.6	$	1,014.5	$	5,723.1	$	4,706.7	$	1,015.3	$	5,722.0

(1) Property & Casualty includes discontinued group life and health pools of $99.3 million in amortized cost and $85.4 million in fair value at December 31, 2008 and $122.9 million in amortized cost and $121.9 million in fair value at December 31, 2007.

16

PROPERTY & CASUALTY

STATUTORY RATIOS

THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY

STATUTORY UNDERWRITING RATIOS

	Quarter ended December 31, 2008
	Personal Lines								Commercial Lines										Other P&C	Total P&C
	Auto		Home		Other		Total		Workers’ Comp		Auto		Multiple Peril		Other		Total
Losses, excluding catastrophe losses and development	65.5	%	43.9	%	28.1	%	58.2	%	66.0	%	56.1	%	44.5	%	35.0	%	46.1	%	N/M	53.2	%
Catastrophe losses	—		8.9	%	5.2	%	2.7	%	—		—		(6.2	)%	11.2	%	1.5	%	N/M	2.2	%
Loss development	(2.9	)%	(4.4	)%	7.3	%	(3.0	)%	(16.7	)%	3.1	%	(7.7	)%	(3.5	)%	(5.4	)%	N/M	(4.2	)%
Total losses	62.6	%	48.4	%	40.6	%	57.9	%	49.3	%	59.2	%	30.6	%	42.7	%	42.2	%	N/M	51.2	%
Loss adjustment expenses	12.0	%	9.6	%	3.1	%	11.1	%	10.4	%	6.4	%	11.8	%	8.4	%	9.5	%	N/M	10.5	%
Pre-tax catastrophe LAE	—		—		—		—		—		—		—		—		—		N/M	—
Policy acquisition and other underwriting expenses							29.6	%									43.0	%	N/M	34.8	%
Policyholders’ dividends							—										0.4	%	N/M	0.2	%
Combined							98.6	%									95.1	%	N/M	96.7	%
	Quarter ended December 31, 2007
	Personal Lines								Commercial Lines										Other P&C	Total P&C
	Auto		Home		Other		Total		Workers’ Comp		Auto		Multiple Peril		Other		Total
Losses, excluding catastrophe losses and development	64.7	%	42.0	%	25.8	%	57.1	%	65.6	%	62.3	%	40.6	%	41.5	%	48.2	%	N/M	53.7	%
Catastrophe losses	—		5.1	%	(3.1	)%	1.4	%	—		—		6.2	%	1.0	%	2.6	%	N/M	1.9	%
Loss development	(3.7	)%	(7.2	)%	17.5	%	(4.2	)%	(20.9	)%	(6.7	)%	(5.8	)%	(8.1	)%	(8.4	)%	N/M	(5.6	)%
Total losses	61.0	%	39.9	%	40.2	%	54.3	%	44.7	%	55.6	%	41.0	%	34.4	%	42.4	%	N/M	50.0	%
Loss adjustment expenses	12.1	%	6.9	%	6.2	%	10.5	%	11.4	%	8.1	%	11.4	%	9.2	%	10.1	%	N/M	10.3	%
Pre-tax catastrophe LAE	—		—		—		—		—		—		—		—		—		N/M	—
Policy acquisition and other underwriting expenses							31.6	%									44.3	%	N/M	36.3	%
Policyholders’ dividends							—										—		N/M	—
Combined							96.4	%									96.8	%	N/M	96.6	%

17

THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY

STATUTORY UNDERWRITING RATIOS

	Year ended December 31, 2008
	Personal Lines								Commercial Lines										Other P&C	Total P&C
	Auto		Home		Other		Total		Workers’ Comp		Auto		Multiple Peril		Other		Total
Losses, excluding catastrophe losses and development	64.7	%	47.4	%	32.7	%	58.8	%	65.5	%	53.5	%	48.1	%	37.4	%	47.8	%	N/M	54.3	%
Catastrophe losses	0.4	%	18.4	%	7.4	%	5.8	%	—		0.3	%	16.1	%	7.2	%	8.2	%	N/M	6.8	%
Loss development	(5.4	)%	(1.3	)%	(3.1	)%	(4.2	)%	(22.3	)%	(4.7	)%	(9.9	)%	(5.5	)%	(9.0	)%	N/M	(6.2	)%
Total losses	59.7	%	64.5	%	37.0	%	60.4	%	43.2	%	49.1	%	54.3	%	39.1	%	47.0	%	N/M	54.9	%
Loss adjustment expenses	12.4	%	8.5	%	4.3	%	11.0	%	11.0	%	8.1	%	11.2	%	8.2	%	9.6	%	N/M	10.5	%
Pre-tax catastrophe LAE	—		—		—		—		—		—		—		—		—		N/M	—
Policy acquisition and other underwriting expenses							28.7	%									39.4	%	N/M	33.1	%
Policyholders’ dividends							—										0.2	%	N/M	0.1	%
Combined							100.1	%									96.2	%	N/M	98.6	%
	Year ended December 31, 2007
	Personal Lines								Commercial Lines										Other P&C	Total P&C
	Auto		Home		Other		Total		Workers’ Comp		Auto		Multiple Peril		Other		Total
Losses, excluding catastrophe losses and development	63.7	%	46.1	%	31.1	%	57.9	%	64.9	%	55.3	%	48.2	%	39.6	%	49.2	%	N/M	54.5	%
Catastrophe losses	0.3	%	5.7	%	2.3	%	1.9	%	—		—		7.9	%	2.0	%	3.6	%	N/M	2.5	%
Loss development	(6.6	)%	(1.7	)%	3.6	%	(4.9	)%	(22.0	)%	(6.1	)%	(7.2	)%	(8.7	)%	(9.1	)%	N/M	(6.4	)%
Total losses	57.4	%	50.1	%	37.0	%	54.9	%	42.9	%	49.2	%	48.9	%	32.9	%	43.7	%	N/M	50.6	%
Loss adjustment expenses	12.4	%	7.4	%	4.9	%	10.8	%	12.6	%	8.5	%	11.3	%	7.7	%	9.8	%	N/M	10.5	%
Pre-tax catastrophe LAE	—		0.3	%	—		0.1	%	—		—		1.5	%	0.5	%	0.7	%	N/M	0.3	%
Policy acquisition and other underwriting expenses							29.7	%									39.5	%	N/M	33.5	%
Policyholders’ dividends							—										0.1	%	N/M	—
Combined							95.5	%									93.8	%	N/M	94.9	%

18

Historical Highlights

THE HANOVER INSURANCE GROUP

HISTORICAL FINANCIAL HIGHLIGHTS

(In millions, except per share data)	2008			Q4 08			Q3 08			Q2 08			Q1 08			2007			Q4 07			Q3 07			Q2 07			Q1 07
SEGMENT INCOME (1)
Property and Casualty
Personal Lines	$	123.5		$	39.7		$	18.1		$	38.6		$	27.1		$	208.2		$	57.8		$	48.8		$	55.0		$	46.6
Commercial Lines		169.7			55.6			(6.6	)		52.7			68.0			169.3			42.6			39.2			38.9			48.6
Other Property and Casualty		9.0			2.2			2.3			2.9			1.3			4.8			(2.4	)		0.3			2.5			4.4
Total Property and Casualty		302.2			97.5			13.8			94.2			96.4			382.3			98.0			88.3			96.4			99.6
Interest expense on corporate debt		(39.9	)		(10.0	)		(10.0	)		(9.9	)		(10.0	)		(39.9	)		(10.0	)		(10.0	)		(9.9	)		(10.0	)
Total segment income before federal income taxes	$	262.3		$	87.5		$	3.8		$	84.3		$	86.4		$	342.4		$	88.0		$	78.3		$	86.5		$	89.6
Federal income tax expense on segment income		(86.3	)		(27.9	)		(0.5	)		(28.8	)		(29.1	)		(113.7	)		(27.2	)		(26.6	)		(29.8	)		(30.1	)
Total segment income after federal income taxes	$	176.0		$	59.6		$	3.3		$	55.5		$	57.3		$	228.7		$	60.8		$	51.7		$	56.7		$	59.5
Federal income tax settlement		6.4			—			6.4			—			—			—			—			—			—			—
Net realized investment (losses) gains		(97.8	)		(37.1	)		(52.8	)		(7.6	)		(0.3	)		(0.9	)		(0.6	)		(0.8	)		0.2			0.3
Losses on derivative instruments		(0.1	)		(0.1	)		—			—			—			—			—			—			—			—
Federal income tax benefit (expense) on non-segment income		—			0.4			(0.4	)		—			—			0.5			0.1			0.6			(0.1	)		(0.1	)
Income (loss) from continuing operations		84.5			22.8			(43.5	)		47.9			57.0			228.3			60.3			51.5			56.8			59.7
Discontinued operations (net of taxes):
(Loss) income from operations of discontinued FAFLIC business (Including loss on assets held-for-sale of $77.3 in 2008, and $5.1, $6.1 and $66.1 in the fourth, third and second quarters of 2008)		(84.8	)		8.1			(21.7	)		(67.7	)		(3.5	)		10.9			2.6			1.5			2.7			4.1
Income (loss) from operations of discontinued variable life and annuity business (Including gain (loss) on disposal of $11.3 in 2008, and $3.2, $2.7, ($0.8) and $6.2 in the fourth, third, second and first quarters of 2008)		11.3			3.2			2.7			(0.8	)		6.2			13.1			12.9			0.1			0.3			(0.2	)
Gain from operations of AMGRO (Including gain on disposal of $11.1 in 2008)		10.1			—			—			10.4			—			—			—			—			—			—
Other		(0.5	)		—			0.7			—			(1.2	)		0.8			—			0.8			—			—
NET INCOME (LOSS)	$	20.6		$	34.1		$	(61.8	)	$	(10.2	)	$	58.5		$	253.1		$	75.8		$	53.9		$	59.8		$	63.6
PER SHARE DATA (DILUTED)
INCOME (LOSS) FROM CONTINUING OPERATIONS	$	1.63		$	0.44		$	(0.85	)	$	0.92		$	1.09		$	4.36		$	1.15		$	0.98		$	1.09		$	1.15
(LOSS) INCOME FROM DISCONTINUED OPERATIONS	$	(1.23	)	$	0.22		$	(0.36	)	$	(1.12	)	$	0.03		$	0.47		$	0.29		$	0.05		$	0.05		$	0.07
NET INCOME (LOSS)	$	0.40		$	0.66		$	(1.21	)	$	(0.20	)	$	1.12		$	4.83		$	1.44		$	1.03		$	1.14		$	1.22
WEIGHTED AVERAGE SHARES OUTSTANDING (DILUTED) (2)		51.7			51.4			51.0			51.8			52.3			52.4			52.6			52.5			52.3			51.9
BALANCE SHEET
Total assets				$	9,230.2		$	9,254.8		$	9,463.8		$	9,700.6					$	9,815.6		$	9,845.2		$	9,805.7		$	9,776.2
Total shareholders’ equity				$	1,887.2		$	2,040.1		$	2,212.7		$	2,320.7					$	2,299.0		$	2,192.6		$	2,099.4		$	2,100.7
Book value per share				$	37.08		$	40.09		$	43.57		$	45.23					$	44.37		$	42.34		$	40.55		$	40.92
Book value per share, excluding accumulated other comprehensive (loss) income				$	44.64		$	44.37		$	45.55		$	45.70					$	44.77		$	43.62		$	42.51		$	41.33

(1) Represents income or loss of the Company’s operating segments: Personal Lines, Commercial Lines, Other Property and Casualty 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 ended September 30, 2008 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	2008
	Price Range				Dividends Per Share
	High		Low
March 31	$	47.17	$	40.14		—
June 30	$	46.83	$	41.71		—
September 30	$	51.00	$	38.01		—
December 31	$	45.00	$	31.92	$	0.45
Quarter Ended	2007
	Price Range				Dividends Per Share
	High		Low
March 31	$	49.11	$	44.70		—
June 30	$	49.73	$	44.46		—
September 30	$	49.76	$	41.14		—
December 31	$	46.21	$	42.23	$	0.40

INDUSTRY RATINGS AS OF FEBRUARY 5, 2009

Financial Strength Ratings	A.M. Best	Standard & Poor’s	Moody’s
Property and Casualty Insurance Companies:
The Hanover Insurance Company	A-	A-	A3
Citizens Insurance Company of America	A-	A-	A3
Debt Ratings	A.M. Best	Standard & Poor’s	Moody’s
The Hanover Insurance Group, Inc. Senior Debt	bbb-	BBB-	Baa3
The Hanover Insurance Group, Inc. Capital Securities	bb	BB-	Ba1
The Hanover Insurance Company Short Term Debt	—	—	Prime-3

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

Robert Myron

Vice President, Corporate Finance and Treasurer

(508) 855-3457

rmyron@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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