The Hanover Insurance Group, Inc. Statistical Supplement

EX-99.2 3 dex992.htm THE HANOVER INSURANCE GROUP, INC. STATISTICAL SUPPLEMENT The Hanover Insurance Group, Inc. Statistical Supplement

Exhibit 99.2

THE HANOVER INSURANCE GROUP

STATISTICAL SUPPLEMENT

TABLE OF CONTENTS


Financial Highlights		1-3
Consolidated Financial Statements
Income Statements		4-5
Balance Sheets		6
Property and Casualty
Condensed Income Statements		7
Property and Casualty Consolidated Balance Sheets		8
GAAP Underwriting Results		9-10
Investments
Net Investment Income		11
Net Realized Investment Gains (Losses)		12
Unrealized Losses		13
Credit Quality of Fixed Maturities		14
Top 25 Financial Holdings		15
Top 25 Non-Financial Holdings		16
Property and Casualty Statutory Ratios		17
Historical Financial Highlights		18-19
Other Information		20
Corporate Information
Market and Dividend Information
Industry Ratings

THE HANOVER INSURANCE GROUP

FINANCIAL HIGHLIGHTS


	Quarter ended March 31
(In millions)	2009			2008			% Change
SEGMENT INCOME
Property and Casualty
Personal Lines	$	3.1		$	27.1		(88.6	)
Commercial Lines		47.2			68.0		(30.6	)
Other		(0.8	)		1.3		N/M

Total Property and Casualty		49.5			96.4		(48.7	)


Interest expense on corporate debt		(10.0	)		(10.0	)	—

Total segment income		39.5			86.4		(54.3	)

Federal income tax expense on P&C segment income		(16.6	)		(32.6	)	(49.1	)
Federal income tax benefit on other segment income		3.5			3.5		—

Total federal income tax expense on segment income		(13.1	)		(29.1	)	(55.0	)

Total segment income after taxes	$	26.4		$	57.3		(53.9	)


RECONCILIATION FROM SEGMENT INCOME TO NET INCOME
Total segment income after taxes	$	26.4		$	57.3		(53.9	)
Net realized investment losses		(6.1	)		(0.3	)	N/M
Other non-segment items		(0.1	)		—		N/M

Income from continuing operations		20.2			57.0		(64.6	)
Discontinued operations (net of taxes):
Gain (loss) from discontinued FAFLIC business		5.0			(3.5	)	N/M
Loss from discontinued accident and health business		(3.3	)		—		N/M
Gain on disposal of variable life and annuity business		3.9			6.2		(37.1	)
Other		—			(1.2	)	N/M

Net income	$	25.8		$	58.5		(55.9	)

THE HANOVER INSURANCE GROUP

FINANCIAL HIGHLIGHTS


	Quarter ended March 31
	2009			2008			% Change
PER SHARE DATA (DILUTED)
Total segment income	$	0.77		$	1.65		(53.3	)
Federal income tax expense on segment income		(0.26	)		(0.55	)	(52.7	)

Total segment income after taxes		0.51			1.10		(53.6	)
Net realized investment losses		(0.12	)		(0.01	)	N/M

Income from continuing operations		0.39			1.09		(64.2	)

Discontinued operations (net of taxes):
Gain (loss) from discontinued FAFLIC business		0.10			(0.07	)	N/M
Loss from discontinued accident and health business		(0.06	)		—		N/M
Gain on disposal of variable life and annuity business		0.07			0.12		(41.7	)
Other		—			(0.02	)	N/M

Net income	$	0.50		$	1.12		(55.4	)

THE HANOVER INSURANCE GROUP

FINANCIAL HIGHLIGHTS


(In millions, except per share data)	March 31 2009			December 31 2008			% Change
BALANCE SHEET
Shareholders’ equity
Property and Casualty Group	$	2,070.8		$	1,995.5		3.8
First Allmerica Financial Life Insurance Company (consolidated) (1)		—			78.1		N/M
THG Holding Company debt (2)		(499.5	)		(499.5	)	—
THG Holding Company		396.3			313.1		26.6

Total shareholders’ equity	$	1,967.6		$	1,887.2		4.3


Property and Casualty Companies (3)
Total adjusted statutory capital	$	1,610.2		$	1,600.7		0.6
Premium to surplus ratio		1.6:1			1.6:1		—

Book value per share
Property and Casualty Group	$	40.65		$	39.20		3.7
First Allmerica Financial Life Insurance Company (consolidated)		—			1.53		N/M
THG Holding Company debt (2)		(9.81	)		(9.81	)	—
THG Holding Company		7.78			6.16		26.3

Total book value per share	$	38.62		$	37.08		4.2


THG book value per share, excluding accumulated other comprehensive loss	$	45.16		$	44.64		1.2


Shares outstanding (4)		50.9			50.9

Stock price	$	28.82		$	42.97		(32.9	)
Price/book value per share		0.7	x		1.2	x	(0.5	) x
Debt/equity		27.0	%		28.1	%	(1.1	) pts
Debt/total capital		21.2	%		22.0	%	(0.8	) pts

(1)

FAFLIC was sold to Commonwealth Annuity and Life Insurance Company effective January 2, 2009. December 31, 2008 reflects a dividend to THG Holding Company of $136.3 million.

(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, and all other insurance subsidiaries.

(4)

Shares outstanding do not include common stock equivalents.

THE HANOVER INSURANCE GROUP

CONSOLIDATED INCOME STATEMENTS


	Quarter ended March 31
(In millions)	2009			2008			% Change
REVENUES
Premiums	$	632.0		$	617.7		2.3
Net investment income		64.9			64.6		0.5
Net realized investment losses		(6.1	)		(0.3	)	N/M
Fees and other income		8.1			13.3		(39.1	)

Total revenues		698.9			695.3		0.5


LOSSES AND EXPENSES

Losses and loss adjustment expenses		428.3			380.1		12.7
Policy acquisition expenses		143.1			137.4		4.1
Other operating expenses		94.2			91.7		2.7

Total losses and expenses		665.6			609.2		9.3


Income from continuing operations before federal income taxes		33.3			86.1		(61.3	)
Federal income tax expense		13.1			29.1		(55.0	)

Income from continuing operations		20.2			57.0		(64.6	)

Discontinued operations (net of taxes):

Gain (loss) from discontinued FAFLIC business		5.0			(3.5	)	N/M
Loss from discontinued accident and health business		(3.3	)		—		N/M
Gain on disposal of variable life and annuity business		3.9			6.2		(37.1	)
Other		—			(1.2	)	N/M

Net income	$	25.8		$	58.5		(55.9	)

THE HANOVER INSURANCE GROUP

CONSOLIDATED INCOME STATEMENTS


	Quarter ended March 31
	2009			2008			% Change
PER SHARE DATA (DILUTED)
Income from continuing operations	$	0.39		$	1.09		(64.2	)

Discontinued operations (net of taxes):

Gain (loss) from discontinued FAFLIC business		0.10			(0.07	)	N/M

Loss from discontinued accident and health business		(0.06	)		—		N/M

Gain on disposal of variable life and annuity business		0.07			0.12		(41.7	)

Other		—			(0.02	)	N/M


Net income (1)	$	0.50		$	1.12		(55.4	)


Weighted average shares outstanding		51.4			52.3

(1)

Basic income per share was $0.51 and $1.13 for the quarters ended March 31, 2009 and 2008, respectively.

THE HANOVER INSURANCE GROUP

CONSOLIDATED BALANCE SHEETS


(In millions, except per share data)	March 31 2009			December 31 2008			% Change
ASSETS
Investments:
Fixed maturities, at fair value (amortized cost of $4,517.1 and $4,382.0)	$	4,317.8		$	4,140.9		4.3
Equity securities, at fair value (cost of $97.7 and $97.6)		77.2			76.2		1.3
Mortgage loans		30.7			31.1		(1.3	)
Other long-term investments		18.1			18.4		(1.6	)

Total investments		4,443.8			4,266.6		4.2

Cash and cash equivalents		345.8			397.7		(13.1	)
Accrued investment income		53.8			52.3		2.9
Premiums, accounts and notes receivable, net		584.9			578.5		1.1
Reinsurance receivable on paid and unpaid losses, benefits and unearned premiums		1,114.8			1,129.6		(1.3	)
Deferred policy acquisition costs		264.2			264.8		(0.2	)
Deferred federal income taxes		269.3			285.6		(5.7	)
Goodwill		169.6			169.9		(0.2	)
Other assets		320.6			315.7		1.6
Assets of discontinued operations		131.3			1,769.5		(92.6	)

Total assets	$	7,698.1		$	9,230.2		(16.6	)


LIABILITIES AND SHAREHOLDERS’ EQUITY

LIABILITIES
Policy liabilities and accruals:
Losses and loss adjustment expenses	$	3,156.5		$	3,201.3		(1.4	)
Unearned premiums		1,237.5			1,246.3		(0.7	)
Contractholder deposit funds and other policy liabilities		1.8			1.8		—

Total policy liabilities and accruals		4,395.8			4,449.4		(1.2	)

Expenses and taxes payable		614.9			622.3		(1.2	)
Reinsurance premiums payable		54.2			61.3		(11.6	)
Long-term debt		530.5			531.4		(0.2	)
Liabilities of discontinued operations		135.1			1,678.6		(92.0	)

Total liabilities		5,730.5			7,343.0		(22.0	)


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		1,802.8			1,803.8		(0.1	)
Accumulated other comprehensive loss		(333.1	)		(384.8	)	(13.4	)
Retained earnings		976.3			949.8		2.8
Treasury stock at cost (9.6 million shares)		(479.0	)		(482.2	)	(0.7	)

Total shareholders’ equity		1,967.6			1,887.2		4.3

Total liabilities and shareholders’ equity	$	7,698.1		$	9,230.2		(16.6	)

PROPERTY & CASUALTY

THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY

CONDENSED INCOME STATEMENTS


	Quarter ended March 31
(In millions)	2009		2008			% Change
REVENUES
Net premiums written	$	629.9	$	628.5		0.2
Change in unearned premiums, net of prepaid reinsurance premiums		2.1		(10.8	)	N/M

Net premiums earned		632.0		617.7		2.3
Net investment income		64.7		64.4		0.5
Other income		9.3		15.6		(40.4	)

Total segment revenue		706.0		697.7		1.2


LOSSES AND OPERATING EXPENSES
Losses and loss adjustment expenses		428.3		380.1		12.7
Policy acquisition expenses		143.1		137.4		4.1
Other operating expenses		85.1		83.8		1.6

Total losses and operating expenses		656.5		601.3		9.2


Segment income before federal income taxes	$	49.5	$	96.4		(48.7	)

THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY GROUP (1)

SELECT BALANCE SHEET INFORMATION


(In millions, except per share data)	March 31 2009		December 31 2008		% Change
ASSETS
Investments:
Fixed maturities, at fair value (amortized cost of $4,092.3 and $4,154.9)	$	3,917.3	$	3,912.1	0.1
Equity securities, at fair value (cost of $89.9 and $88.3)		67.9		66.9	1.5
Mortgage loans		32.1		32.7	(1.8	)
Other long-term investments		13.1		13.5	(3.0	)

Total investments		4,030.4		4,025.2	0.1

Cash and cash equivalents		341.1		377.8	(9.7	)
Accrued investment income		50.0		48.6	2.9
Premiums, accounts, and notes receivable, net		584.9		579.2	1.0
Reinsurance receivable on paid and unpaid losses, benefits and unearned premiums		1,114.8		1,129.6	(1.3	)
Deferred policy acquisition costs		264.2		264.8	(0.2	)
Deferred federal income tax asset		257.5		220.8	16.6
Goodwill		169.6		169.9	(0.2	)
Other assets		328.1		309.3	6.1
Assets of discontinued operations		131.3		—	N/M

Total assets	$	7,271.9	$	7,125.2	2.1


LIABILITIES
Policy liabilities and accruals:
Losses and loss adjustment expenses	$	3,156.5	$	3,201.3	(1.4	)
Unearned premiums		1,237.5		1,246.3	(0.7	)
Contractholder deposit funds and other policy liabilities		1.8		1.8	—

Total policy liabilities and accruals		4,395.8		4,449.4	(1.2	)

Expenses and taxes payable		594.3		596.4	(0.4	)
Reinsurance premiums payable		54.2		61.3	(11.6	)
Long-term debt		21.7		22.6	(4.0	)
Liabilities of discontinued operations		135.1		—	N/M

Total liabilities	$	5,201.1	$	5,129.7	1.4

(1)

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

THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY

GAAP UNDERWRITING PROFIT (LOSS) RECONCILED TO SEGMENT INCOME


	Quarter ended March 31, 2009
	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	$	249.2		$	89.7	$	8.3		$	347.2		$	33.5		$	48.0		$	93.1		$	108.1		$	282.7		$	—		$	629.9

Net premiums earned	$	246.0		$	107.8	$	9.9		$	363.7		$	30.2		$	46.4		$	90.1		$	101.6		$	268.3		$	—		$	632.0
Losses excluding prior year loss reserve development and catastrophe losses		164.6			57.5		3.2			225.3			20.0			24.9			50.2			41.2			136.3			—			361.6
Prior year loss reserve (favorable) unfavorable development		(14.0	)		5.8		(0.2	)		(8.4	)		(6.9	)		(2.9	)		(2.5	)		(10.9	)		(23.2	)		—			(31.6	)
Pre-tax catastrophe losses		1.1			24.7		0.2			26.0			—			0.2			10.1			1.1			11.4			—			37.4
Loss adjustment expenses (1)		31.2			10.3		0.4			41.9			(1.4	)		4.0			6.4			9.6			18.6			0.2			60.7
Policy acquisition expenses and other underwriting expenses										105.4															109.7			(0.2	)		214.9
Policyholders’ dividends										—															0.2			—			0.2

GAAP underwriting (loss) income										(26.5	)														15.3			—			(11.2	)
Net investment income										27.6															31.6			5.5			64.7
Other income										3.5															4.4			1.4			9.3
Other operating expenses										(1.5	)														(4.1	)		(7.7	)		(13.3	)

Segment income (loss) before federal income taxes									$	3.1														$	47.2		$	(0.8	)	$	49.5


	Quarter ended March 31, 2008
	Personal Lines											Commercial Lines
	Auto			Home		Other			Total			Workers’ Comp			Auto			Multiple Peril			Other			Total			Other P&C			Total P&C
Net premiums written	$	259.3		$	83.3	$	9.1		$	351.7		$	38.2		$	53.5		$	94.6		$	90.5		$	276.8		$	—		$	628.5

Net premiums earned	$	251.4		$	108.1	$	9.8		$	369.3		$	31.4		$	50.8		$	88.7		$	77.5		$	248.4		$	—		$	617.7
Losses excluding prior year loss reserve development and catastrophe losses		166.0			57.1		3.0			226.1			21.6			27.2			42.7			30.8			122.3			—			348.4
Prior year loss reserve (favorable) unfavorable development		(16.2	)		4.1		(0.5	)		(12.6	)		(9.6	)		(5.9	)		(16.7	)		(9.5	)		(41.7	)		1.0			(53.3	)
Pre-tax catastrophe losses		0.5			9.8		0.7			11.0			—			—			6.7			1.6			8.3			—			19.3
Loss adjustment expenses		33.1			7.9		0.4			41.4			3.5			4.8			8.8			6.7			23.8			0.3			65.5
Policy acquisition expenses and other underwriting expenses										108.6															99.4			(0.3	)		207.7
Policyholders’ dividends										—															0.2			—			0.2

GAAP underwriting (loss) profit										(5.2	)														36.1			(1.0	)		29.9
Net investment income										29.7															30.9			3.8			64.4
Other income										4.2															4.3			7.1			15.6
Other operating expenses										(1.6	)														(3.3	)		(8.6	)		(13.5	)

Segment income before federal income taxes									$	27.1														$	68.0		$	1.3		$	96.4

(1)

Loss adjustment expenses includes unfavorable development of $0.3 million in Personal Lines and favorable development of $9.9 million in Commercial Lines. Favorable development of $9.6 million is included in Total P&C.

THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY

GAAP UNDERWRITING RATIOS


	Quarter ended March 31, 2009
	Personal Lines								Commercial Lines
	Auto		Home		Other		Total		Workers’ Comp		Auto		Multiple Peril		Other		Total		Other P&C	Total P&C
Losses, excluding catastrophe losses and development	66.9	%	53.3	%	32.3	%	61.9	%	66.2	%	53.7	%	55.7	%	40.6	%	50.8	%	N/M	57.2	%
Catastrophe losses	0.4	%	22.9	%	2.0	%	7.1	%	—		0.4	%	11.2	%	1.1	%	4.2	%	N/M	5.9	%
Loss development	(5.6	)%	5.4	%	(2.0	)%	(2.2	)%	(22.9	)%	(6.3	)%	(2.7	)%	(10.8	)%	(8.6	)%	N/M	(4.9	)%

Total losses	61.7	%	81.6	%	32.3	%	66.8	%	43.3	%	47.8	%	64.2	%	30.9	%	46.4	%	N/M	58.2	%
Loss adjustment expenses (1)	12.7	%	9.6	%	4.0	%	11.5	%	(4.6	)%	8.6	%	7.1	%	9.4	%	6.9	%	N/M	9.6	%
Policy acquisition and other underwriting expenses (2)							28.1	%									40.7	%	N/M	33.4	%
Policyholders’ dividends							—										0.1	%	N/M	—

Combined							106.4	%									94.1	%	N/M	101.2	%


Policies in force (3)	(1.0	)%	1.6	%	(5.1	)%	(0.1	)%	(0.4	)%	2.3	%	(0.1	)%	1.5	%	0.9	%	—	—
Retention (3), (4)	74.1	%	81.3	%	N/M		77.8	%	72.6	%	75.1	%	79.7	%	77.5	%	77.2	%

	Quarter ended March 31, 2008
	Personal Lines								Commercial Lines
	Auto		Home		Other		Total		Workers’ Comp		Auto		Multiple Peril		Other		Total		Other P&C	Total P&C
Losses, excluding catastrophe losses and development	66.0	%	52.8	%	30.6	%	61.2	%	68.8	%	53.5	%	48.1	%	39.7	%	49.2	%	N/M	56.5	%
Catastrophe losses	0.2	%	9.1	%	7.1	%	3.0	%	—		—		7.6	%	2.1	%	3.3	%	N/M	3.1	%
Loss development	(6.4	)%	3.8	%	(5.1	)%	(3.4	)%	(30.6	)%	(11.6	)%	(18.8	)%	(12.2	)%	(16.7	)%	N/M	(8.6	)%

Total losses	59.8	%	65.7	%	32.6	%	60.8	%	38.2	%	41.9	%	36.9	%	29.6	%	35.8	%	N/M	51.0	%
Loss adjustment expenses	13.2	%	7.3	%	4.1	%	11.2	%	11.1	%	9.4	%	9.9	%	8.6	%	9.6	%	N/M	10.6	%
Policy acquisition and other underwriting expenses (2)							28.5	%									39.7	%	N/M	32.9	%
Policyholders’ dividends							—										0.1	%	N/M	—

Combined							100.5	%									85.2	%	N/M	94.5	%


Policies in force (3)	0.2	%	(2.5	)%	(4.4	)%	(1.3	)%	1.2	%	3.1	%	(2.1	)%	6.2	%	2.1	%	—	(0.9	)%
Retention (3), (4)	72.9	%	82.0	%	N/M		77.6	%	82.3	%	81.3	%	82.6	%	79.0	%	81.8	%

(1)

(2)

Policy acquisition and other underwriting expenses are reduced by installment fee revenues for purposes of the ratio calculation.

(3)

Policies in force and retention rates do not include recent acquisitions of Professionals Direct, Inc., Verlan Fire Insurance Company, and AIX, Inc.

(4)

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.

INVESTMENTS

THE HANOVER INSURANCE GROUP

NET INVESTMENT INCOME


	Quarter ended March 31
(In millions, except yields)	2009					2008
(In millions, except yields)				Yield					Yield
Fixed maturities (1)	$	64.4		5.81	%	$	62.9		5.65	%
Equity securities		1.0		—			1.0		—
Mortgages (2)		0.6		8.40	%		0.3		10.56	%
All other		0.7		—			1.7		—
Investment expenses		(1.8	)	—			(1.3	)	—

Total (3)	$	64.9		5.30	%	$	64.6		5.48	%

(1)

Includes purchase accounting adjustments of $(0.7) million and $(0.8) million for the quarters ended March 31, 2009 and 2008, respectively.

(2)

There were no mortgage prepayment fees for the quarter ended March 31, 2009. Excluding mortgage prepayment fees of $0.1 million for the quarter ended March 31, 2008, mortgage yields were 8.34%.

(3)

Excludes discontinued operations of $1.4 million and $16.1 million for the quarters ended March 31, 2009 and 2008, respectively.

THE HANOVER INSURANCE GROUP

COMPONENTS OF NET REALIZED INVESTMENT GAINS (LOSSES)


	Quarter ended March 31
(In millions)	2009			2008
Net gains on securities transactions	$	10.6		$	4.8
Other than temporary impairments		(16.5	)		(5.3	)
Other		(0.2	)		0.2


Net realized investment losses (1)	$	(6.1	)	$	(0.3	)

(1)

Excludes discontinued operations of $(3.2) million and $(4.7) million for the quarters ended March 31, 2009 and 2008, respectively.

THE HANOVER INSURANCE GROUP

AGING OF GROSS UNREALIZED LOSSES ON SECURITIES AVAILABLE FOR SALE


	March 31, 2009				December 31, 2008
(In millions)	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value
INVESTMENT GRADE FIXED MATURITIES:
12 months or less	$	99.7	$	1,198.9	$	150.2	$	1,724.1
Greater than 12 months		138.3		723.4		94.4		469.8

Total investment grade fixed maturities		238.0		1,922.3		244.6		2,193.9

BELOW INVESTMENT GRADE FIXED MATURITIES:
12 months or less		41.8		144.0		64.2		152.5
Greater than 12 months		7.3		12.1		—		—

Total below investment grade fixed maturities		49.1		156.1		64.2		152.5

PERPETUAL PREFERRED SECURITIES:
12 months or less		—		—		—		—
Greater than 12 months		8.5		22.1		13.4		28.5

Total perpetual preferred securities		8.5		22.1		13.4		28.5

COMMON EQUITY SECURITIES:
12 months or less		14.8		40.1		11.4		32.3
Greater than 12 months		—		—		—		—

Total common equity securities		14.8		40.1		11.4		32.3


Total (1)	$	310.4	$	2,140.6	$	333.6	$	2,407.2

(1)

Includes discontinued accident and health business of $11.4 million in gross unrealized losses with $45.2 million in fair value at March 31, 2009 and $15.7 million in gross unrealized losses with $52.3 million in fair value at December 31, 2008.

THE HANOVER INSURANCE GROUP

CREDIT QUALITY OF FIXED MATURITIES


(In millions)		March 31, 2009				December 31, 2008
NAIC Designation	Rating Agency Equivalent Designation	Amortized Cost		Fair Value		Amortized Cost		Fair Value
1	Aaa/Aa/A	$	3,147.8	$	3,070.9	$	3,098.1	$	2,997.8
2	Baa		1,162.9		1,075.8		1,074.8		981.5
3	Ba		143.7		139.1		151.5		133.2
4	B		107.6		85.8		111.0		83.8
5	Caa and lower		44.7		29.7		37.1		24.5
6	In or near default		11.7		8.5		8.8		5.5

Total fixed maturities (1)		$	4,618.4	$	4,409.8	$	4,481.3	$	4,226.3

(1)

Includes discontinued accident and health business of $101.3 million in amortized cost and $92.0 million in fair value at March 31, 2009 and $99.3 million in amortized cost and $85.4 million in fair value at December 31, 2008.

THE HANOVER INSURANCE GROUP

TOP 25 FINANCIAL FIXED MATURITY HOLDINGS


(In millions, except percentage data) Issuer	As of March 31, 2009
(In millions, except percentage data) Issuer	Amortized Cost		Fair Value		% of Inv. Assets		S&P Ratings
Bank of America	$	52.2	$	38.6	0.79	%	A-
Goldman Sachs		26.3		23.1	0.47	%	A
Wells Fargo		25.6		20.1	0.41	%	AA
Morgan Stanley		25.3		23.8	0.49	%	A
GE Capital		25.0		24.0	0.49	%	AA+
PNC Bank		23.7		21.4	0.44	%	A
JP Morgan		19.3		17.6	0.36	%	A+
Capital One		17.4		16.4	0.34	%	BBB+
Aetna		16.3		15.8	0.32	%	A-
American Express		16.2		13.6	0.28	%	A
CIT Group		16.0		17.9	0.37	%	BBB
Fifth Third Bancorp		15.0		11.2	0.23	%	BBB+
Wellpoint		14.8		14.4	0.29	%	A-
HSBC Bank		14.4		13.2	0.27	%	A
Genworth Global Funding		13.3		5.5	0.11	%	BBB
Manufacturers & Traders Bank		13.1		9.3	0.19	%	A-
Regions Bank		12.9		8.5	0.17	%	BBB
Bank of Scotland		12.9		12.1	0.25	%	A
Charter One		12.1		9.7	0.20	%	BBB+
Credit Suisse First Boston		11.6		10.9	0.22	%	A+
Union Bank of California		11.5		8.2	0.17	%	A
Bank of New York		11.4		11.6	0.24	%	AA-
Student Loan Market		11.4		9.5	0.20	%	BBB-
Lincoln National		10.7		2.1	0.04	%	BBB
Branch Bank & Trust		10.5		10.0	0.21	%	A+

Top 25 Financial		438.9		368.5	7.55	%
Other Financial		209.6		183.5	3.76	%

Total Financial	$	648.5	$	552.0	11.31	%

THE HANOVER INSURANCE GROUP

TOP 25 NON-FINANCIAL FIXED MATURITY HOLDINGS


(In millions, except percentage data) Issuer	As of March 31, 2009
(In millions, except percentage data) Issuer	Amortized Cost		Fair Value		% of Inv. Assets		S&P Ratings
CVS	$	25.5	$	24.8	0.51	%	BBB+
Valero Energy		24.7		23.4	0.48	%	BBB
Dominion Resources		23.2		22.8	0.47	%	A-
Kroger		20.5		21.0	0.43	%	BBB-
AT&T		19.8		20.3	0.41	%	A
Union Pacific		19.0		19.9	0.41	%	BBB
Encana		17.6		17.1	0.35	%	A-
Safeway		17.5		17.9	0.37	%	BBB
Textron		17.1		12.4	0.25	%	BB+
BP Capital Markets		16.9		17.0	0.35	%	AA
Sempra Energy		16.9		17.0	0.35	%	BBB+
Home Depot		16.9		15.3	0.31	%	BBB+
Miller Brewing		16.4		15.7	0.32	%	BBB+
Canadian National Railways		16.1		16.7	0.34	%	A-
Consolidated Edison		15.8		15.8	0.32	%	A-
Comcast		15.8		16.0	0.33	%	BBB+
Schering-Plough		15.4		15.5	0.32	%	A-
Pacific Gas & Electric		15.2		15.7	0.32	%	BBB+
Verizon		15.0		14.6	0.30	%	A
Shell		15.0		15.2	0.31	%	AA+
Atmos Energy		14.9		14.0	0.29	%	BBB+
Plains All-America Pipeline		14.8		13.1	0.27	%	BBB-
Enterprise Products		14.0		12.4	0.25	%	BBB-
PSEG Energy		13.9		13.1	0.27	%	BB-
Lowe’s		13.6		13.7	0.28	%	A+

Top 25 Non-Financial		431.5		420.4	8.61	%
Other Non-Financial		1,194.0		1,133.2	23.21	%

Total Non-Financial	$	1,625.5	$	1,553.6	31.82	%

PROPERTY & CASUALTY

STATUTORY RATIOS

THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY

STATUTORY UNDERWRITING RATIOS


	Quarter ended March 31, 2009
	Personal Lines								Commercial Lines										Other P&C	Total P&C
	Auto		Home		Other		Total		Workers’ Comp		Auto		Multiple Peril		Other		Total		Other P&C	Total P&C
Losses, excluding catastrophe losses and development	66.9	%	53.3	%	32.0	%	61.9	%	65.5	%	53.8	%	55.8	%	41.3	%	51.1	%	N/M	57.6	%
Catastrophe losses	0.4	%	22.9	%	2.0	%	7.1	%	—		0.4	%	11.2	%	1.1	%	4.2	%	N/M	5.9	%
Loss development	(5.7	)%	5.4	%	(2.0	)%	(2.3	)%	(22.7	)%	(6.2	)%	(2.8	)%	(10.7	)%	(8.6	)%	N/M	(5.0	)%

Total losses	61.6	%	81.6	%	32.0	%	66.7	%	42.8	%	48.0	%	64.2	%	31.7	%	46.7	%	N/M	58.5	%
Loss adjustment expenses (1)	12.7	%	9.6	%	4.0	%	11.6	%	(4.3	)%	8.4	%	7.1	%	9.4	%	6.9	%	N/M	9.6	%
Policy acquisition and other underwriting expenses							29.4	%									39.9	%	N/M	34.0	%
Policyholders’ dividends							—										0.1	%	N/M	—

Combined							107.7	%									93.6	%	N/M	102.1	%


	Quarter ended March 31, 2008
	Personal Lines								Commercial Lines										Other P&C	Total P&C
	Auto		Home		Other		Total		Workers’ Comp		Auto		Multiple Peril		Other		Total		Other P&C	Total P&C
Losses, excluding catastrophe losses and development	66.0	%	52.7	%	30.3	%	61.2	%	68.1	%	53.5	%	48.3	%	40.9	%	49.6	%	N/M	56.5	%
Catastrophe losses	0.2	%	9.2	%	7.1	%	3.0	%	—		—		7.6	%	1.9	%	3.3	%	N/M	3.1	%
Loss development	(6.4	)%	3.8	%	(5.1	)%	(3.4	)%	(30.3	)%	(11.6	)%	(18.9	)%	(12.2	)%	(16.8	)%	N/M	(8.6	)%

Total losses	59.8	%	65.7	%	32.3	%	60.8	%	37.8	%	41.9	%	37.0	%	30.6	%	36.1	%	N/M	51.0	%
Loss adjustment expenses	13.1	%	7.2	%	4.0	%	11.1	%	11.4	%	9.3	%	9.8	%	8.6	%	9.5	%	N/M	10.5	%
Policy acquisition and other underwriting expenses							29.8	%									38.5	%	N/M	33.6	%
Policyholders’ dividends							—										—		N/M	—

Combined							101.7	%									84.1	%	N/M	95.1	%

(1)

Historical Highlights

THE HANOVER INSURANCE GROUP

HISTORICAL FINANCIAL HIGHLIGHTS


(In millions, except per share data)	Q1 09			2008			Q4 08			Q3 08			Q2 08			Q1 08
SEGMENT INCOME (1)
Property and Casualty
Personal Lines	$	3.1		$	123.5		$	39.7		$	18.1		$	38.6		$	27.1
Commercial Lines		47.2			169.7			55.6			(6.6	)		52.7			68.0
Other Property and Casualty		(0.8	)		9.0			2.2			2.3			2.9			1.3

Total Property and Casualty		49.5			302.2			97.5			13.8			94.2			96.4
Interest expense on corporate debt		(10.0	)		(39.9	)		(10.0	)		(10.0	)		(9.9	)		(10.0	)


Total segment income before federal income taxes	$	39.5		$	262.3		$	87.5		$	3.8		$	84.3		$	86.4


Federal income tax expense on segment income		(13.1	)		(86.3	)		(27.9	)		(0.5	)		(28.8	)		(29.1	)


Total segment income after federal income taxes	$	26.4		$	176.0		$	59.6		$	3.3		$	55.5		$	57.3

Federal income tax settlement		—			6.4			—			6.4			—			—
Net realized investment losses		(6.1	)		(97.8	)		(37.1	)		(52.8	)		(7.6	)		(0.3	)
Other non-segment items		(0.1	)		(0.1	)		(0.1	)		—			—			—
Federal income tax benefit (expense) on non-segment income		—			—			0.4			(0.4	)		—			—

Income (loss) from continuing operations		20.2			84.5			22.8			(43.5	)		47.9			57.0

Discontinued operations (net of taxes):
Gain (loss) from discontinued FAFLIC business		5.0			(84.8	)		8.1			(21.7	)		(67.7	)		(3.5	)
Loss from discontinued accident and health business		(3.3	)		—			—			—			—			—
Gain on disposal of discontinued variable life and annuity business		3.9			11.3			3.2			2.7			(0.8	)		6.2
Gain from operations of AMGRO		—			10.1			—			—			10.4			—
Other		—			(0.5	)		—			0.7			—			(1.2	)


NET INCOME (LOSS)	$	25.8		$	20.6		$	34.1		$	(61.8	)	$	(10.2	)	$	58.5


PER SHARE DATA (DILUTED)

INCOME (LOSS) FROM CONTINUING OPERATIONS	$	0.39		$	1.63		$	0.44		$	(0.85	)	$	0.92		$	1.09

(LOSS) INCOME FROM DISCONTINUED OPERATIONS	$	0.11		$	(1.23	)	$	0.22		$	(0.36	)	$	(1.12	)	$	0.03
NET INCOME (LOSS)	$	0.50		$	0.40		$	0.66		$	(1.21	)	$	(0.20	)	$	1.12

WEIGHTED AVERAGE SHARES OUTSTANDING (DILUTED) (2)		51.4			51.7			51.4			51.0			51.8			52.3

BALANCE SHEET
Total assets	$	7,698.1					$	9,230.2		$	9,254.8		$	9,463.8		$	9,700.6
Total shareholders’ equity	$	1,967.6					$	1,887.2		$	2,040.1		$	2,212.7		$	2,320.7
Book value per share	$	38.62					$	37.08		$	40.09		$	43.57		$	45.23
Book value per share, excluding accumulated other comprehensive (loss) income	$	45.16					$	44.64		$	44.37		$	45.55		$	45.70

(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.

THE HANOVER INSURANCE GROUP

HISTORICAL FINANCIAL HIGHLIGHTS


(In millions, except per share data)	2007			Q4 07			Q3 07			Q2 07			Q1 07
SEGMENT INCOME (1)
Property and Casualty
Personal Lines	$	208.2		$	57.8		$	48.8		$	55.0		$	46.6
Commercial Lines		169.3			42.6			39.2			38.9			48.6
Other Property and Casualty		4.8			(2.4	)		0.3			2.5			4.4

Total Property and Casualty		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	)


Total segment income before federal income taxes	$	342.4		$	88.0		$	78.3		$	86.5		$	89.6


Federal income tax expense on segment income		(113.7	)		(27.2	)		(26.6	)		(29.8	)		(30.1	)


Total segment income after federal income taxes	$	228.7		$	60.8		$	51.7		$	56.7		$	59.5

Net realized investment (losses) gains		(0.9	)		(0.6	)		(0.8	)		0.2			0.3
Federal income tax benefit (expense) on non-segment income		0.5			0.1			0.6			(0.1	)		(0.1	)

Income from continuing operations		228.3			60.3			51.5			56.8			59.7

Discontinued operations (net of taxes):
Income from discontinued FAFLIC business		10.9			2.6			1.5			2.7			4.1
Gain (loss) on disposal of discontinued variable life and annuity business		13.1			12.9			0.1			0.3			(0.2	)
Other		0.8			—			0.8			—			—


NET INCOME	$	253.1		$	75.8		$	53.9		$	59.8		$	63.6


PER SHARE DATA (DILUTED)

INCOME FROM CONTINUING OPERATIONS	$	4.36		$	1.15		$	0.98		$	1.09		$	1.15

INCOME FROM DISCONTINUED OPERATIONS	$	0.47		$	0.29		$	0.05		$	0.05		$	0.07
NET INCOME	$	4.83		$	1.44		$	1.03		$	1.14		$	1.22

WEIGHTED AVERAGE SHARES
OUTSTANDING (DILUTED)		52.4			52.6			52.5			52.3			51.9

BALANCE SHEET
Total assets				$	9,815.6		$	9,845.2		$	9,805.7		$	9,776.2
Total shareholders' equity				$	2,299.0		$	2,192.6		$	2,099.4		$	2,100.7
Book value per share				$	44.37		$	42.34		$	40.55		$	40.92
Book value per share, excluding accumulated other comprehensive (loss) income				$	44.77		$	43.62		$	42.51		$	41.33

(1)

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:


	2009
	Price Range				Dividends Per Share
Quarter Ended	High		Low		Dividends Per Share
March 31	$	43.37	$	28.49	—
June 30
September 30
December 31


	2008
	Price Range				Dividends Per Share
Quarter Ended	High		Low		Dividends Per Share
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

INDUSTRY RATINGS AS OF MAY 6, 2009


Financial Strength Ratings	A.M. Best	Standard & Poor’s	Moody’s	Fitch
Property and Casualty Insurance Companies:
The Hanover Insurance Company	A-	A-	A3	A-
Citizens Insurance Company of America	A-	A-	A3	A-


Debt Ratings	A.M. Best	Standard & Poor’s	Moody’s	Fitch
The Hanover Insurance Group, Inc. Senior Debt	bbb-	BBB-	Baa3	BBB-
The Hanover Insurance Group, Inc. Capital Securities	bb	BB-	Ba1	BB+
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