8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

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

Date of Report (Date of earliest event reported): July 31, 2014

THE HANOVER INSURANCE GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware	1-13754	04-3263626
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

440 Lincoln Street, Worcester, Massachusetts 01653

(Address of principal executive offices) (Zip Code)

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

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

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

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

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

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

Item 2.02 Results of Operations and Financial Condition.

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

On July 31, 2014, The Hanover Insurance Group, Inc. (the Company) issued a press release announcing its financial results for the quarter ended June 30, 2014. The release is furnished as Exhibit 99.1 hereto. Additionally, on July 31, 2014, the Company made available on its website unaudited financial information contained in its Financial Supplement for the period ended June 30, 2014. The supplement is furnished as Exhibit 99.2 hereto.

Item 9.01 Financial Statements and Exhibits.

(a) Not applicable.

(b) Not applicable.

(c) Not applicable.

(d) Exhibits.

The following exhibits are furnished herewith.

Exhibit 99.1	Press Release, dated July 31, 2014, announcing the Company’s financial results for the quarter ended June 30, 2014.
Exhibit 99.2	The Hanover Insurance Group, Inc. Unaudited Financial Supplement for the period ended June 30, 2014.

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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 July 31, 2014	By:	/s/ David B. Greenfield
	David B. Greenfield
	Executive Vice President,
	Chief Financial Officer and
	Principal Accounting Officer

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Exhibit Index

Exhibit 99.1	Press Release, dated July 31, 2014, announcing the Company’s financial results for the quarter ended June 30, 2014.
Exhibit 99.2	The Hanover Insurance Group, Inc. Unaudited Financial Supplement for the period ended June 30, 2014.

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EX-99.1

Exhibit 99.1

The Hanover Reports Second Quarter Net Income of $1.84 per Diluted Share;

Operating Income⁽¹⁾ of $1.30 per Diluted Share;

Combined Ratio of 96.8%, including Catastrophe Impact of 4.7 points

WORCESTER, Mass., July 31, 2014 - The Hanover Insurance Group, Inc. (NYSE: THG) today reported net income of $82.6 million, or $1.84 per diluted share, for the second quarter of 2014, compared to net income of $53.4 million, or $1.19 per diluted share, in the prior-year quarter. Operating income was $58.4 million, or $1.30 per diluted share, in the second quarter of 2014, compared to $46.8 million, or $1.05 per diluted share, in the prior-year quarter.

Second Quarter Highlights

• Combined ratio of 96.8%

• Combined ratio, excluding catastrophes, of 92.1%⁽²⁾

• Operating income before taxes, excluding catastrophes, increased by 12% to $157.9 million⁽³⁾

• Net premiums written of $1.3 billion, up 2.7%, driven by growth in Chaucer and Commercial Lines

• Strong price increases in Commercial and Personal Lines continued in the second quarter

• Net investment income of $67.0 million

• Book value per share of $63.65, up 3.9% from March 31, 2014, and up 7.1% from December 31, 2013

In millions, except per share amounts	Three months ended June 30						Six months ended June 30
	2014			2013			2014			2013
Net premiums written	$	1,276.2		$	1,242.6		$	2,448.5		$	2,319.3
Operating income		58.4			46.8			105.4			106.7
per diluted share		1.30			1.05			2.35			2.37
Net income		82.6			53.4			137.2			119.6
per diluted share		1.84			1.19			3.06			2.66
Net investment income		67.0			67.9			134.0			135.2
Book value per share	$	63.65		$	57.41		$	63.65		$	57.41
Ending shares outstanding		43.9			43.5			43.9			43.5
Combined ratio		96.8	%		98.4	%		97.5	%		97.3	%
Combined ratio, excluding catastrophes		92.1	%		92.9	%		92.6	%		93.6	%

(1) See information about this and other footnotes throughout this press release on the final page of this document.

“We are very pleased with our second quarter results that produced an annualized operating ROE of 9.7%,” said Frederick H. Eppinger, president and chief executive officer at The Hanover. “The overall underlying combined ratio improved by 1 point, driven by solid underwriting improvement in domestic businesses, and continued strong results at Chaucer. Book value per share increased to $63.65, up over 7% year-to-date.

“We are encouraged by the positive momentum shift in Personal Lines, where net written premiums grew modestly as rate increases and new business acceleration outpaced the effect of continued exposure management actions. At the same time, we continued to achieve healthy growth in Commercial Lines, in light of exposure and underwriting initiatives in middle market business. As importantly, we achieved solid pricing increases with 7% in Core Commercial and 6% in Personal Lines with strong retention, reflecting the effectiveness of our distinctive value proposition and unique approach to independent agents and brokers.

“These financial trends further support our confidence in the effectiveness of our strategic initiatives and drive us closer to our ultimate goal of delivering top quartile performance,” Eppinger said.

Second Quarter Operating Highlights

Commercial Lines

Commercial Lines operating income before taxes was $44.2 million in the quarter, compared to $26.2 million in the second quarter of 2013. The Commercial Lines combined ratio was 98.4%, compared to 101.8% in the prior-year quarter. Catastrophe losses were $17.0 million, or 3.3 points of the combined ratio, compared to $15.1 million, or 3.1 points, in the prior-year quarter. Second quarter 2014 results also reflected net unfavorable prior-year reserve development of $1.8 million, or 0.3 points of the combined ratio, compared to net unfavorable reserve development of $0.5 million, or 0.1 points, in the second quarter of 2013.

Commercial Lines current accident year combined ratio, excluding catastrophe losses⁽⁴⁾, improved by almost 4 points to 94.8%, compared to 98.6% in the prior-year quarter. The improvement was attributed to more favorable loss experience due to rate and underwriting actions, as well as a lower expense ratio as a result of growth and improved efficiencies.

Net premiums written were $541.0 million in the quarter, up 3.7% from the prior-year quarter, driven by growth across all lines except the commercial auto line, which was essentially flat.

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The following table summarizes premiums and the components of the combined ratio for Commercial Lines:

$ in millions	Three months ended June 30						Six months ended June 30
	2014			2013			2014			2013
Net premiums written	$	541.0		$	521.5		$	1,080.3		$	1,005.1
Net premiums earned		517.6			485.8			1,030.3			962.4
Operating income before taxes		44.2			26.2			60.3			59.2
Loss and LAE ratio		61.8	%		64.2	%		64.5	%		63.3	%
Expense ratio(5)		36.6	%		37.6	%		36.7	%		37.8	%
Combined ratio		98.4	%		101.8	%		101.2	%		101.1	%
Combined ratio, excluding catastrophe losses		95.1	%		98.7	%		95.6	%		98.8	%
Current accident year combined ratio, excluding catastrophe losses		94.8	%		98.6	%		95.4	%		98.7	%

Personal Lines

Personal Lines operating income before taxes was $22.7 million in the quarter, compared to $19.9 million in the second quarter of 2013. The Personal Lines combined ratio was 98.3%, compared to 99.3% in the prior-year quarter. Catastrophe losses were $27.2 million, or 7.8 points of the combined ratio, compared to $32.2 million, or 8.8 points, in the prior-year quarter. Second quarter 2014 results also reflected net favorable prior-year reserve development of $2.2 million, or 0.6 points of the combined ratio, compared to net unfavorable reserve development of $2.8 million, or 0.8 points, in the second quarter of 2013.

Personal Lines current accident year combined ratio, excluding catastrophe losses, was 91.1%, compared to 89.7% in the prior-year quarter. The auto loss ratio improved by over 2 points, driven by rate and mix management initiatives, while the homeowners’ line reflected higher than expected losses related to first quarter non-catastrophe weather. Second quarter 2014 results were also impacted by a higher expense ratio partly due to the timing of performance-based expenses, as well as a lower earned premium base.

Net premiums written were $370.8 million in the quarter, up 0.1% compared to the prior-year quarter due to rate increases and higher new business levels, largely offset by exposure and mix management initiatives.

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The following table summarizes premiums and the components of the combined ratio in Personal Lines:

$ in millions	Three months ended June 30						Six months ended June 30
	2014			2013			2014			2013
Net premiums written	$	370.8		$	370.6		$	690.0		$	712.2
Net premiums earned		350.3			366.7			700.5			735.5
Operating income before taxes		22.7			19.9			44.3			50.4
Loss and LAE ratio		69.9	%		72.0	%		70.4	%		70.6	%
Expense ratio		28.4	%		27.3	%		28.1	%		27.3	%
Combined ratio		98.3	%		99.3	%		98.5	%		97.9	%
Combined ratio, excluding catastrophe losses		90.5	%		90.5	%		92.0	%		91.9	%
Current accident year combined ratio, excluding catastrophe losses		91.1	%		89.7	%		92.5	%		90.8	%

Chaucer

Chaucer’s operating income before taxes was $38.1 million in the quarter, compared to $36.9 million in the second quarter of 2013. Chaucer’s combined ratio was 92.1%, compared to 89.6% in the prior-year quarter. Catastrophe losses were $11.5 million, or 3.7 points of the combined ratio, compared to $12.5 million, or 5.2 points, in the prior-year quarter. Second quarter 2014 results also reflected net favorable prior-year reserve development of $29.2 million, or 9.5 points of the combined ratio, compared to $30.7 million, or 12.9 points, in the second quarter of 2013.

Chaucer’s current accident year combined ratio, excluding catastrophe losses, was 97.9%, compared to 97.3% in the prior-year quarter. A higher incidence of large losses, primarily in the Marine and Aviation line, drove the loss ratio increase over the prior-year quarter, while the expense ratio was lower than the prior-year period due to foreign exchange fluctuations.

Net premiums written were $364.4 million in the quarter, up 4.0% over the prior-year quarter, primarily driven by growth in the Casualty and Other line, following the expansion of our casualty underwriting team in late 2013, partially offset by lower Property premiums.

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The following table summarizes premiums and the components of the combined ratio in the Chaucer segment:

$ in millions	Three months ended June 30						Six months ended June 30
	2014			2013			2014			2013
Net premiums written	$	364.4		$	350.5		$	678.2		$	602.0
Net premiums earned		306.8			238.3			606.9			487.2
Operating income before taxes		38.1			36.9			87.3			77.8
Loss and LAE ratio		52.4	%		48.6	%		52.5	%		50.4	%
Expense ratio		39.7	%		41.0	%		37.5	%		37.8	%
Combined ratio		92.1	%		89.6	%		90.0	%		88.2	%
Combined ratio, excluding catastrophe losses		88.4	%		84.4	%		88.2	%		85.1	%
Current accident year combined ratio, excluding catastrophe losses		97.9	%		97.3	%		96.2	%		94.1	%

Investments

Net investment income was $67.0 million for the second quarter of 2014, compared to $67.9 million in the prior year period. The decrease is due primarily to the impact of lower new money yields, partially offset by the impact of investing higher operating cash flows. The average pre-tax earned yield on fixed maturities was 3.74% and 3.98% for the quarters ended June 30, 2014 and 2013, respectively.

Net realized investment gains were $22.2 million in the second quarter of 2014, compared to $13.7 million in the second quarter of 2013. Gains in 2014 primarily resulted from the sale of an equity investment acquired with Chaucer in 2011. Gains in 2013 were related to sales of both equities and fixed maturity securities.

The company held $8.4 billion in cash and invested assets at June 30, 2014.

Fixed maturities and cash represented 91% of the investment portfolio. Approximately 94% of the company’s fixed maturity portfolio is rated investment grade. Net unrealized investment gains increased $60.4 million during the second quarter of 2014, to $360.7 million at June 30, 2014, from $300.3 million at March 31, 2014. During the first six months of 2014, net unrealized investment gains increased $138.4 million. The increase in net unrealized investment gains for the quarter and the year resulted from the impact of lower prevailing interest rates and tightening of credit spreads.

Capitalization and Shareholders’ Equity

Book value per share was $63.65, up 7.1% from December 31, 2013, driven by earnings accretion and an increase in net unrealized gains on the investment portfolio.

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Earnings Conference Call

The Hanover will host a conference call to discuss its second quarter results on Friday, August 1, at 10:00 a.m. Eastern Time. A PowerPoint slide presentation will accompany the prepared remarks and has been posted on The Hanover 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, in the “About Us-Investors” section. Investors may access the conference call by dialing 877-546-5021; if calling internationally, please dial 857-244-7553; conference code: 41088650. 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.

Financial Supplement

The Hanover’s second quarter earnings news release and financial supplement are available in the “About Us-Investors” section of the company’s Web site at www.hanover.com.

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The Hanover Insurance Group, Inc.

Condensed Consolidated Balance Sheet

$ in millions	June 30, 2014		December 31, 2013
Assets
Total investments	$	7,827.5	$	7,593.3
Cash and cash equivalents		606.2		486.2
Premiums and accounts receivable, net		1,515.9		1,324.6
Reinsurance recoverable on paid and unpaid losses and unearned premiums		2,416.7		2,335.0
Other assets		1,598.5		1,639.6
Total assets	$	13,964.8	$	13,378.7
Liabilities
Loss and loss adjustment expense reserves	$	6,448.0	$	6,231.5
Unearned premiums		2,689.0		2,515.8
Debt		903.9		903.9
Other liabilities		1,128.8		1,133.0
Total liabilities	$	11,169.7	$	10,784.2
Total shareholders’ equity	$	2,795.1	$	2,594.5
Total liabilities and shareholders’ equity	$	13,964.8	$	13,378.7

Condensed Consolidated Income Statement

	Three months ended June 30				Six months ended June 30
$ in millions	2014		2013		2014		2013
Revenues
Premiums earned	$	1,174.7	$	1,090.8	$	2,337.7	$	2,185.1
Net investment income		67.0		67.9		134.0		135.2
Total net realized investment gains		22.2		13.7		26.6		21.8
Fees and other income		9.1		10.2		18.6		20.8
Total revenues		1,273.0		1,182.6		2,516.9		2,362.9
Losses and expenses
Losses and loss adjustment expenses		725.5		692.1		1,476.0		1,375.5
Amortization of deferred acquisition costs		259.6		232.7		513.3		475.2
Interest expense		16.3		17.4		32.6		32.1
Other operating expenses		163.9		174.5		315.2		325.3
Total losses and expenses		1,165.3		1,116.7		2,337.1		2,208.1
Income from continuing operations before income taxes		107.7		65.9		179.8		154.8
Income tax expense		25.2		12.8		42.6		35.3
Income from continuing operations		82.5		53.1		137.2		119.5
Discontinued operations		0.1		0.3		—		0.1
Net income	$	82.6	$	53.4	$	137.2	$	119.6

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The following is a reconciliation from operating income to net income⁽⁶⁾:

	Three months ended June 30												Six months ended June 30
In millions, except per share amounts	2014						2013						2014						2013
	$ Amount			Per Share Diluted			$ Amount			Per Share Diluted			$ Amount			Per Share Diluted			$ Amount			Per Share Diluted
Operating income (loss) before taxes
Commercial Lines	$	44.2					$	26.2					$	60.3					$	59.2
Personal Lines		22.7						19.9						44.3						50.4
Chaucer		38.1						36.9						87.3						77.8
Other		(2.8	)					(1.9	)					(4.7	)					(4.1	)
Total		102.2						81.1						187.2						183.3
Interest expense		(16.3	)					(17.4	)					(32.6	)					(32.1	)
Operating income before income taxes		85.9		$	1.91			63.7		$	1.42			154.6		$	3.45			151.2		$	3.36
Income tax expense on operating income		(27.5	)		(0.61	)		(16.9	)		(0.37	)		(49.2	)		(1.10	)		(44.5	)		(0.99	)
Operating income after taxes		58.4			1.30			46.8			1.05			105.4			2.35			106.7			2.37
Net realized investment gains		22.2			0.49			13.7			0.31			26.6			0.59			21.8			0.48
Non-operating items		1.9			0.05			(7.4	)		(0.17	)		5.2			0.12			(9.0	)		(0.20	)
Income from continuing operations, net of taxes		82.5			1.84			53.1			1.19			137.2			3.06			119.5			2.65
Other discontinued operations, net of taxes		0.1			—			0.3			—			—			—			0.1			0.01
Net income	$	82.6		$	1.84		$	53.4		$	1.19		$	137.2		$	3.06		$	119.6		$	2.66
Weighted average shares outstanding					44.9						44.8						44.8						45.0

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,” “forecast”, “outlook,” “should,” “could,” “confident,” “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 that involve significant judgment and that neither historical results and trends nor forward-looking statements are guarantees or necessarily indicative of future performance. Actual results could differ materially.

In particular, statements in this press release or in such conference call regarding underlying improvement in trends driven by rate and other underwriting or “mix” actions, exposure management actions, positive momentum shift in Personal Lines, pricing and retention trends, our ability to achieve our ultimate goals, and improve shareholder returns, and statements in the above-referenced conference call regarding expectation for operating income per share, combined ratio, net premiums written guidance for 2014, including with respect to expectations for future reserve development, the ability to deliver on strategic and financial goals to improve the combined ratio, and achieve growth and ROE targets, new business growth, optimizing our business mix,

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meaningful growth potential with best-performing agents, underwriting strength, retention, the ability to achieve rate increases in classes of business designated as small, middle or large, maintain or improve ex-catastrophe accident year loss and expense ratios, particularly due to our pricing initiatives and underwriting focus, our confidence in continuing re-underwriting efforts and rate actions, particularly in commercial auto, future rate and pricing levels (including whether they will exceed loss costs), the potential impact of capital actions and business investments, financial strength, the impact of product, account-based and geographic mix changes on future profitability, earnings consistency or volatility, margin improvement, expectations for our legacy surety business, maturation and organic growth in specialty lines and the impact growth could have on driving improvement and financial contributions in those lines, the impact of various agency and exposure management actions on net premiums written, expectations for premium levels, and future growth, including expected return to growth in Personal Lines and its impact on the Personal Lines expense ratio, remaining on track to achieve improvement in Commercial Lines expense ratio for 2014, catastrophes losses and exposure in certain geographic areas, effective tax rates, weighted shares outstanding, returns on equity, the ability to improve investment yields, the impact of foreign currency fluctuations, and statements regarding expected financial results, combined ratio, premium growth and profitability of Chaucer Holdings plc (“Chaucer”), the ability to manage market headwinds related to Chaucer’s business, are all forward-looking statements.

Investors should consider the risks and uncertainties in the company’s business that may affect such estimates and future performance, including (i) the inherent difficulties in arriving at such estimates, particularly with respect to current accident year results and loss reserve development or with respect to lines of business which are more volatile, or with respect to which historical losses are less predictive of future losses, or “longer tail” products, or, with respect to Chaucer, reported premium; (ii) the complexity of estimating losses from large catastrophe events or with respect to emerging issues where circumstances may delay reporting of the existence, nature or extent of losses or where “demand surge,” regulatory assessments, litigation, coverage and technical complexities or other factors may significantly impact the ultimate amount of such losses; (iii) the difficulties of estimating the impact of the current financial and economic environment on rates, investment income, foreign exchange rates, which affect Chaucer’s business and reported results, the investment portfolio and capital, product demand, losses and competitor actions; (iv) the uncertainties of future rating agency requirements, which could affect the company as well as the company’s investment portfolio; (v) inherent volatility with respect to certain businesses, as a result of man-made or natural catastrophes or otherwise; (vi) the impact of the evolving regulatory and legal environment (including the pending expiration of the federal terrorism reinsurance program); and (vii) the inherent uncertainties of predicting future loss and pricing trends.

Investors are directed to consider the risks and uncertainties in the company’s business that may affect future performance (which includes re-estimations of current or past 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 (“SEC”) and which are also available at www.hanover.com under “About Us - Investors.” These uncertainties include the possibility of adverse catastrophe experiences (including terrorism) and severe weather; the uncertainty in estimating weather-related losses, and property and casualty losses (particularly with respect to products with longer tails or involving emerging issues and with respect to losses incurred as the result of new lines of business or reinsurance contracts and reinsurance recoverables); litigation and the possibility of adverse judicial decisions, including those which expand policy coverage beyond

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its intended scope; the ability to increase or maintain certain property and casualty insurance rates; the impact of new product introductions and expansion in new geographic areas; the impact of future acquisitions; adverse loss and loss adjustment expense development from prior years and adverse trends in mortality and morbidity and medical costs; changes in frequency and loss trends; the ability to increase renewal rates and new property and casualty policy counts; investment impairments (which may be affected by, among other things, the company’s ability and willingness to hold investment assets until they recover in value) and currency, credit and interest rate risk; the impact of competition and consolidation in the industry and among agents and brokers; the economic environment; adverse state, federal and, with respect to Chaucer, international legislation or regulation or regulatory actions affecting Chaucer or the Society and Corporation of Lloyd’s; financial ratings actions; uncertainties in estimating indemnification liabilities recorded in conjunction with obligations undertaken in connection with the sale of various businesses; and uncertainties in general economic conditions (including inflation, particularly in various sectors such as healthcare) and in investment and financial markets, which, among other things, could result in increased impairments of fixed income investments, reductions in market values as the result of increases in interest rates, and the inability to collect from reinsurers and the performance of the discontinued and run-off voluntary pools.

Non-GAAP financial measures

As discussed on page 44 of the 2013 Annual Report, The Hanover uses non-GAAP financial measures as important measures of its operating performance, including operating income, operating income before interest expense and taxes, operating income per share, and measures of operating income and loss ratios excluding catastrophe losses and reserve development. Operating income and operating income per share are non-GAAP measures. They are defined as net income excluding the after-tax impact of net realized investment gains (losses) (including gains and losses on certain derivative instruments), gains and losses from the repayment of the company’s debt, other non-operating items, and results from discontinued operations, and, in the case of “operating income per share,” divided by the average number of diluted shares of common stock. The definition of other financial measures and terms can be found in the 2013 Annual Report on pages 81-83.

Net realized investment gains and losses (including gains or losses on certain derivative instruments) are excluded for purposes of presenting operating income since they are largely determined by interest rates, financial markets and the timing of sales. Operating 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. Operating income is the sum of the segment income from: Commercial Lines, Personal Lines, Chaucer and Other, after interest expense and taxes. Operating income may also be presented as “operating income before taxes”, which is operating income before interest expense and taxes. The Hanover believes that measures of operating income provide investors with a valuable measure of the performance of the company’s ongoing businesses because they highlight the portion of net income (losses) attributable to the core operations of the business.

The Hanover also provides measures of operating income and loss and combined 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

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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 and combined ratios.

Reserve development, which can be favorable or unfavorable, represents changes in the company’s estimate of the costs to resolve claims from prior years. The company believes that a discussion of loss and combined ratios excluding reserve development is helpful to investors since it provides insight into both its estimate of current year accident results and the accuracy of prior-year estimates. Calendar year loss ratios determined in accordance with GAAP, excluding reserve development, are sometimes referred to as “accident-year loss ratios”.

Income from continuing operations is the most directly comparable GAAP measure for operating income (and operating income before taxes) and measures of operating income that exclude the effects of catastrophe losses or reserve development. Operating income and measures of operating income that exclude the effects of catastrophe losses or reserve development should not be construed as substitutes for income from continuing operations or net income determined in accordance with GAAP. A reconciliation of operating income to income from continuing operations and net income for the three and six months ended June 30, 2014 and 2013 is set forth in the table on page 8 of this document and in the financial supplement.

Loss and combined ratios calculated in accordance with GAAP are the most directly comparable GAAP measures for loss and combined ratios calculated excluding the effects of catastrophe losses or reserve development. The presentation of loss and combined ratios calculated excluding the effects of catastrophe losses or reserve development should not be construed as a substitute for loss or combined ratios determined in accordance with GAAP.

Book value per share, excluding net unrealized gains and losses, is also a non-GAAP measure. It is calculated as total shareholders’ equity excluding the after-tax effect of unrealized investment gains and losses, divided by the number of common shares outstanding.

About The Hanover

The Hanover Insurance Group, Inc., based in Worcester, Mass., is a leading property and casualty insurer in the United States. For more than 160 years, The Hanover has provided a wide range of property and casualty products and services to businesses, individuals, and families. The Hanover distributes its products through a select group of agents and brokers. Through its international member company, Chaucer, The Hanover also underwrites business at Lloyd’s of London in several major insurance and reinsurance classes, including marine, property and energy. For more information, please visit hanover.com.

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Contact Information

Investors:	Media:
Oksana Lukasheva	Michael F. Buckley
E-mail: olukasheva@hanover.com	E-mail: mibuckley@hanover.com
1-508-855-2063	1-508-855-3099

Definition of Reported Segments

Continuing operations include four operating segments: Commercial Lines, Personal Lines, Chaucer, and Other. 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 specialty program business, inland marine, management and professional liability and surety. The Personal Lines segment markets automobile, homeowners and ancillary coverages to individuals and families. The Chaucer reporting segment represents THG’s international business written through Lloyd’s of London in several major insurance and reinsurance classes, including property, marine and aviation, energy, U.K. motor and casualty. The Other 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.

Footnotes

(1) Operating income (loss) and operating income (loss) per diluted share are non-GAAP measures. Operating income before taxes, as referenced in the results of our three business segments, is defined as, with respect to such segment, operating income before taxes and interest expense. These measures are used throughout this document. The reconciliation of operating income to the closest GAAP measures, income from continuing operations and income from continuing operations per diluted share, respectively, is provided on page 8 of this press release. See the disclosure on the use of non-GAAP measures under the heading “Forward-Looking Statements and Non-GAAP Financial Measures.”

(2) Combined ratio, excluding catastrophes, is a non-GAAP measure. This measure and measures excluding prior-year reserve development (“accident-year” ratios) are used throughout this document. The combined ratio (which includes catastrophe losses and prior-year loss reserve development) is the closest GAAP measure. See the disclosure on the use of non-GAAP measures under the heading “Forward-Looking Statements and Non-GAAP Financial Measures.”

(3) Operating income, before taxes, excluding catastrophes, is a non-GAAP measure. It is defined as operating income, before taxes and interest expense, excluding the impact of catastrophe losses. See the disclosure on the use of non-GAAP measures under the heading “Forward-Looking Statements and Non-GAAP Financial Measures.”

12

(4) This is a non-GAAP measure, which is equal to the combined ratio, excluding prior-year favorable reserve development and catastrophe losses. This measure also is used later in this document. See the disclosure on the use of non-GAAP measures under the heading “Forward-Looking Statements and Non-GAAP Financial Measures.”

(5) Here, and later in this document, the expense ratio is reduced by installment fee revenues for purposes of the ratio calculation.

(6) The separate financial information of each operating 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 operating segments without consideration of interest expense on debt and on a pre-tax basis. Operating income (loss) is determined by adjusting net income for net realized investment gains and losses, including certain gains or losses on derivative instruments. These gains and losses are excluded because they are determined by interest rates, financial markets and the timing of sales. Also, operating income excludes net gains and losses on disposals of businesses, discontinued operations, gains and losses from the repayment of debt, restructuring costs, extraordinary items, the cumulative effect of accounting changes and certain other items.

13

EX-99.2

Exhibit 99.2

FINANCIAL SUPPLEMENT

SECOND QUARTER 2014

THE HANOVER INSURANCE GROUP

FINANCIAL SUPPLEMENT

TABLE OF CONTENTS

Business Description	1
Financial Highlights	2
Consolidated Financial Statements
Income Statements	3
Balance Sheets	4
GAAP Underwriting Results
Consolidated	5-7
Commercial Lines	8-10
Personal Lines	11-13
Chaucer	14-16
Investments
Net Investment Income and Yields	17
Investment Portfolio	18
Credit Quality and Duration of Fixed Maturities	19
Top 10 Corporate and Municipal Fixed Maturity Holdings	20
Reconciliation of Operating Income (Loss) to Net Income (Loss)	21
Other Information
Non-GAAP Financial Measures	22
Corporate Information	23
Market and Dividend Information	23
Financial Strength and Debt Ratings	23

THE HANOVER INSURANCE GROUP

BASIS OF PRESENTATION

BUSINESS DESCRIPTIONS

COMMERCIAL LINES

Commercial multiple peril coverage insures businesses against third party liability from accidents occurring on their premises or arising out of their operations, such as injuries sustained from products sold. It also insures business property for damage, such as that caused by fire, wind, hail, water damage (except for flooding), theft and vandalism.

Commercial automobile coverage insures businesses against losses incurred from personal bodily injury, bodily injury to third parties, property damage to an insured’s vehicle, and property damage to other vehicles and property.

Workers’ compensation coverage insures employers against employee medical and indemnity claims resulting from injuries related to work. Workers’ compensation policies are often written in conjunction with other commercial policies.

Other Commercial Lines is comprised of inland marine, which insures businesses against physical losses to property, such as contractor’s equipment, builders’ risk and goods in transit. We also offer underwriting and managing of program business, including to under-served markets where there are specialty coverage or risk management needs. Other Commercial Lines also includes bonds, which provides businesses with contract surety coverage in the event of performance or payment claims, and commercial surety coverage related to fiduciary or regulatory obligations. Also included in Other Commercial Lines coverages are umbrella, general liability, fire, specialty property, and professional and management liability.

PERSONAL LINES

Personal automobile coverage insures individuals against losses incurred from personal bodily injury, bodily injury to third parties, property damage to an insured’s vehicle, and property damage to other vehicles and other property.

Homeowners coverage insures individuals for losses to their residences and personal property, such as those caused by fire, wind, hail, water damage (except for flooding), theft and vandalism, and against third party liability claims.

Other Personal Lines are comprised of personal inland marine (jewelry, art, etc.), umbrella, fire, personal watercraft, earthquake and other miscellaneous coverages.

CHAUCER

The Chaucer reporting segment represents THG’s international business written through Lloyd’s and includes international property, marine and aviation, energy, UK motor and international casualty and other coverages.

Property coverage, including direct, facultative and treaty property accounts, insures property, including commercial, auto, and industrial businesses, against physical loss or damage and business interruption. The property treaty account comprises mainly catastrophe and per risk excess contract acceptances, with a small amount of proportional treaty and reinsurance assumed business.

Marine and Aviation includes coverages that insure marine hull, excess of loss, liability, cargo and specie, in addition to political risk, war, and satellite business coverages. It also includes aviation coverages that insure airline hull and liability, general aviation and refuellers and products.

Energy coverage, encompassing exploration and production, construction, liabilities downstream and renewables, insures energy businesses against physical damage, business interruption, control of well, seepage and pollution and liabilities. Energy also includes Nuclear, which predominantly provides coverage relating to power generation at nuclear power stations.

UK Motor coverage insures the UK private car and fleet markets. In addition, it writes specialist classes including commercial vehicle, taxi, motorcycle, motor trade and classic/specialist vehicles, as well as other UK small commercial products.

Casualty and Other Lines includes coverages that insure financial institutions crime and professional indemnity, medical malpractice, workers’ compensation and professional, managerial and general liability, as well as syndicate participations.

OTHER

Included in Other are Opus, which provides investment advisory services to affiliates and also manages assets for unaffiliated institutions such as insurance companies, retirement plans and foundations; earnings on holding company assets; and voluntary pools business which is in run-off.

1

THE HANOVER INSURANCE GROUP

FINANCIAL HIGHLIGHTS

	Q2			Q3			Q4			Q1			Q2			Jun-YTD		Jun-YTD
(In millions, except earnings per share)	2013			2013			2013			2014			2014			2013		2014
PREMIUMS
Gross premiums written	$	1,394.4		$	1,313.8		$	1,175.4		$	1,408.1		$	1,423.6		$	2,712.5	$	2,831.7
Net premiums written		1,242.6			1,181.9			1,051.5			1,172.3			1,276.2			2,319.3		2,448.5
Net premiums earned		1,090.8			1,124.7			1,140.7			1,163.0			1,174.7			2,185.1		2,337.7
EARNINGS
Operating income before interest and taxes	$	81.1		$	107.2		$	102.9		$	85.0		$	102.2		$	183.3	$	187.2
Operating income after taxes		46.8			60.9			59.6			47.0			58.4			106.7		105.4
Income from continuing operations		53.1			61.3			64.9			54.7			82.5			119.5		137.2
Net income		53.4			61.3			70.1			54.6			82.6			119.6		137.2
PER SHARE DATA (DILUTED)
Operating income after taxes	$	1.05		$	1.36		$	1.33		$	1.05		$	1.30		$	2.37	$	2.35
Income from continuing operations		1.19			1.37			1.45			1.22			1.84			2.65		3.06
Net income		1.19			1.37			1.57			1.22			1.84			2.66		3.06
Weighted average shares outstanding		44.8			44.6			44.8			44.8			44.9			45.0		44.8
BALANCE SHEET
(In millions, except per share data)	June 30 2013			September 30 2013			December 31 2013			March 31 2014			June 30 2014
Total assets	$	13,306.4		$	13,463.3		$	13,378.7		$	13,643.0		$	13,964.8
Total loss and loss adjustment expense reserves		6,063.6			6,162.8			6,231.5			6,323.4			6,448.0
Total shareholders’ equity		2,495.7			2,544.2			2,594.5			2,681.1			2,795.1
U.S. Property and Casualty Companies
Statutory surplus	$	1,639.5		$	1,751.3		$	1,834.3		$	1,900.4		$	1,974.9
Premium to surplus ratio		2.08:1			1.95:1			1.87:1			1.83:1			1.77:1
Book value per share	$	57.41		$	58.43		$	59.43		$	61.24		$	63.65
Book value per share, excluding net unrealized investment gains and losses, net of tax	$	53.62		$	54.64		$	56.07		$	56.70		$	58.16
Tangible book value per share (total book value excluding goodwill and intangibles)	$	50.25		$	51.20		$	52.22		$	54.06		$	56.47
Shares outstanding		43.5			43.6			43.7			43.8			43.9
Total debt/equity		37.6	%		36.9	%		34.8	%		33.7	%		32.3	%
Total debt/total capital		27.3	%		27.0	%		25.8	%		25.2	%		24.4	%

2

THE HANOVER INSURANCE GROUP

CONSOLIDATED INCOME STATEMENTS

	Three Months ended June 30							Six Months ended June 30
(In millions)	2014		2013		% Change			2014		2013		% Change
REVENUES
Premiums earned	$	1,174.7	$	1,090.8		7.7		$	2,337.7	$	2,185.1		7.0
Net investment income		67.0		67.9		(1.3	)		134.0		135.2		(0.9	)
Net realized investment gains		22.2		13.7		62.0			26.6		21.8		22.0
Fees and other income		9.1		10.2		(10.8	)		18.6		20.8		(10.6	)
Total revenues		1,273.0		1,182.6		7.6			2,516.9		2,362.9		6.5
LOSSES AND EXPENSES
Losses and loss adjustment expenses		725.5		692.1		4.8			1,476.0		1,375.5		7.3
Amortization of deferred acquisition costs		259.6		232.7		11.6			513.3		475.2		8.0
Interest expense		16.3		17.4		(6.3	)		32.6		32.1		1.6
Other operating expenses		163.9		174.5		(6.1	)		315.2		325.3		(3.1	)
Total losses and expenses		1,165.3		1,116.7		4.4			2,337.1		2,208.1		5.8
Income from continuing operations before income taxes		107.7		65.9		63.4			179.8		154.8		16.1
Income tax expense		25.2		12.8		96.9			42.6		35.3		20.7
Income from continuing operations		82.5		53.1		55.4			137.2		119.5		14.8
Discontinued operations		0.1		0.3		N/M			—		0.1		N/M
Net income	$	82.6	$	53.4		54.7		$	137.2	$	119.6		14.7

3

THE HANOVER INSURANCE GROUP

CONSOLIDATED BALANCE SHEETS

	June 30			December 31
(In millions, except per share data)	2014			2013			% Change
ASSETS
Investments:
Fixed maturities, at fair value (amortized cost of $6,785.1 and $6,815.2)	$	7,058.5		$	6,970.6			1.3
Equity securities, at fair value (cost of $446.4 and $366.5)		530.5			430.2			23.3
Other investments		238.5			192.5			23.9
Total investments		7,827.5			7,593.3			3.1
Cash and cash equivalents		606.2			486.2			24.7
Accrued investment income		70.0			68.0			2.9
Premiums and accounts receivable, net		1,515.9			1,324.6			14.4
Reinsurance recoverable on paid and unpaid losses and unearned premiums		2,416.7			2,335.0			3.5
Deferred acquistion costs		540.6			506.0			6.8
Deferred income taxes		145.6			239.7			(39.3	)
Goodwill		185.2			184.9			0.2
Other assets		542.1			526.1			3.0
Assets of discontinued operations		115.0			114.9			0.1
Total assets	$	13,964.8		$	13,378.7			4.4
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Loss and loss adjustment expense reserves	$	6,448.0		$	6,231.5			3.5
Unearned premiums		2,689.0			2,515.8			6.9
Expenses and taxes payable		569.7			637.2			(10.6	)
Reinsurance premiums payable		443.2			374.7			18.3
Debt		903.9			903.9			—
Liabilities of discontinued operations		115.9			121.1			(4.3	)
Total liabilities		11,169.7			10,784.2			3.6
SHAREHOLDERS’ EQUITY
Preferred stock, par value $0.01 per share; 20.0 million shares authorized; none issued		—			—			—
Common stock, par value $0.01 per share; 300.0 million shares authorized; 60.5 million shares issued		0.6			0.6			—
Additional paid-in capital		1,824.5			1,830.1			(0.3	)
Accumulated other comprehensive income		267.1			177.6			50.4
Retained earnings		1,451.7			1,349.1			7.6
Treasury stock at cost (16.6 and 16.8 million shares)		(748.8	)		(762.9	)		(1.8	)
Total shareholders’ equity		2,795.1			2,594.5			7.7
Total liabilities and shareholders’ equity	$	13,964.8		$	13,378.7			4.4

4

THE HANOVER INSURANCE GROUP

GAAP UNDERWRITING AND OPERATING INCOME INFORMATION AND RATIOS

CONSOLIDATED

Three Months ended June 30

	2014															2013
	Commercial			Personal												Commercial			Personal
(In millions, except percentage data)	Lines			Lines			Chaucer			Other			Total			Lines			Lines			Chaucer			Other			Total
Gross premiums written	$	613.0		$	395.2		$	415.4		$	—		$	1,423.6		$	591.0		$	397.8		$	405.6		$	—		$	1,394.4
Net premiums written	$	541.0		$	370.8		$	364.4		$	—		$	1,276.2		$	521.5		$	370.6		$	350.5		$	—		$	1,242.6
Net premiums earned	$	517.6		$	350.3		$	306.8		$	—		$	1,174.7		$	485.8		$	366.7		$	238.3		$	—		$	1,090.8
Losses and LAE:
Current accident year, excluding catastrophe losses		300.8			219.8			178.4			—			699.0			296.0			229.1			134.1			—			659.2
Prior year unfavorable (favorable) reserve development		1.8			(2.2	)		(29.2	)		0.4			(29.2	)		0.5			2.8			(30.7	)		0.5			(26.9	)
Catastrophe losses		17.0			27.2			11.5			—			55.7			15.1			32.2			12.5			—			59.8
Total losses and LAE		319.6			244.8			160.7			0.4			725.5			311.6			264.1			115.9			0.5			692.1
Amortization of deferred acquisition costs and other underwriting expenses		190.7			101.9			121.8			0.5			414.9			183.7			102.9			97.7			0.5			384.8
GAAP underwriting profit (loss)		7.3			3.6			24.3			(0.9	)		34.3			(9.5	)		(0.3	)		24.7			(1.0	)		13.9
Net investment income		37.2			18.0			10.7			1.1			67.0			36.0			19.1			10.7			2.1			67.9
Other income		2.1			3.1			3.1			0.8			9.1			1.9			3.1			4.5			0.7			10.2
Other operating expenses		(2.4	)		(2.0	)		—			(3.8	)		(8.2	)		(2.2	)		(2.0	)		(3.0	)		(3.7	)		(10.9	)
Operating income (loss) before income taxes	$	44.2		$	22.7		$	38.1		$	(2.8	)	$	102.2		$	26.2		$	19.9		$	36.9		$	(1.9	)	$	81.1
Loss and LAE ratio:
Current accident year, excluding catastrophe losses		58.2	%		62.7	%		58.2	%		N/M			59.6	%		61.0	%		62.4	%		56.3	%		N/M			60.4	%
Prior year unfavorable (favorable) reserve development		0.3	%		(0.6	)%		(9.5	)%		N/M			(2.5	)%		0.1	%		0.8	%		(12.9	)%		N/M			(2.5	)%
Catastrophe losses		3.3	%		7.8	%		3.7	%		N/M			4.7	%		3.1	%		8.8	%		5.2	%		N/M			5.5	%
Total loss and LAE ratio		61.8	%		69.9	%		52.4	%		N/M			61.8	%		64.2	%		72.0	%		48.6	%		N/M			63.4	%
Expense ratio		36.6	%		28.4	%		39.7	%		N/M			35.0	%		37.6	%		27.3	%		41.0	%		N/M			35.0	%
Combined ratio		98.4	%		98.3	%		92.1	%		N/M			96.8	%		101.8	%		99.3	%		89.6	%		N/M			98.4	%

5

THE HANOVER INSURANCE GROUP

GAAP UNDERWRITING AND OPERATING INCOME INFORMATION AND RATIOS

CONSOLIDATED

Six Months ended June 30

	2014															2013
	Commercial			Personal												Commercial			Personal
(In millions, except percentage data)	Lines			Lines			Chaucer			Other			Total			Lines			Lines			Chaucer			Other			Total
Gross premiums written	$	1,210.8		$	738.5		$	882.4		$	—		$	2,831.7		$	1,152.4		$	765.0		$	795.1		$	—		$	2,712.5
Net premiums written	$	1,080.3		$	690.0		$	678.2		$	—		$	2,448.5		$	1,005.1		$	712.2		$	602.0		$	—		$	2,319.3
Net premiums earned	$	1,030.3		$	700.5		$	606.9		$	—		$	2,337.7		$	962.4		$	735.5		$	487.2		$	—		$	2,185.1
Losses and LAE:
Current accident year, excluding catastrophe losses		604.4			450.4			356.5			—			1,411.3			586.0			467.4			274.4			—			1,327.8
Prior year unfavorable (favorable) reserve development		2.4			(3.2	)		(48.8	)		0.7			(48.9	)		0.7			8.4			(44.0	)		1.1			(33.8	)
Catastrophe losses		57.2			45.6			10.8			—			113.6			22.5			43.9			15.1			—			81.5
Total losses and LAE		664.0			492.8			318.5			0.7			1,476.0			609.2			519.7			245.5			1.1			1,375.5
Amortization of deferred acquisition costs and other underwriting expenses		380.3			202.0			227.6			0.7			810.6			365.8			206.0			184.0			1.0			756.8
GAAP underwriting profit (loss)		(14.0	)		5.7			60.8			(1.4	)		51.1			(12.6	)		9.8			57.7			(2.1	)		52.8
Net investment income		74.5			35.9			21.2			2.4			134.0			72.1			38.1			21.2			3.8			135.2
Other income		4.1			6.0			7.0			1.5			18.6			3.9			6.4			9.0			1.5			20.8
Other operating expenses		(4.3	)		(3.3	)		(1.7	)		(7.2	)		(16.5	)		(4.2	)		(3.9	)		(10.1	)		(7.3	)		(25.5	)
Operating income (loss) before income taxes	$	60.3		$	44.3		$	87.3		$	(4.7	)	$	187.2		$	59.2		$	50.4		$	77.8		$	(4.1	)	$	183.3
Loss and LAE ratio:
Current accident year, excluding catastrophe losses		58.7	%		64.4	%		58.7	%		N/M			60.3	%		60.9	%		63.5	%		56.3	%		N/M			60.8	%
Prior year unfavorable (favorable) reserve development		0.2	%		(0.5	)%		(8.0	)%		N/M			(2.1	)%		0.1	%		1.1	%		(9.0	)%		N/M			(1.5	)%
Catastrophe losses		5.6	%		6.5	%		1.8	%		N/M			4.9	%		2.3	%		6.0	%		3.1	%		N/M			3.7	%
Total loss and LAE ratio		64.5	%		70.4	%		52.5	%		N/M			63.1	%		63.3	%		70.6	%		50.4	%		N/M			63.0	%
Expense ratio		36.7	%		28.1	%		37.5	%		N/M			34.4	%		37.8	%		27.3	%		37.8	%		N/M			34.3	%
Combined ratio		101.2	%		98.5	%		90.0	%		N/M			97.5	%		101.1	%		97.9	%		88.2	%		N/M			97.3	%

6

THE HANOVER INSURANCE GROUP

GAAP UNDERWRITING INFORMATION AND RELATED RATIOS

CONSOLIDATED

	Q2			Q3			Q4			Q1			Q2			Jun-YTD			Jun-YTD
(In millions, except percentage data)	2013			2013			2013			2014			2014			2013			2014
Gross premiums written	$	1,394.4		$	1,313.8		$	1,175.4		$	1,408.1		$	1,423.6		$	2,712.5		$	2,831.7
Net premiums written	$	1,242.6		$	1,181.9		$	1,051.5		$	1,172.3		$	1,276.2		$	2,319.3		$	2,448.5
Net premiums earned	$	1,090.8		$	1,124.7		$	1,140.7		$	1,163.0		$	1,174.7		$	2,185.1		$	2,337.7
Losses and LAE:
Current accident year, excluding catastrophe losses		659.2			688.9			680.7			712.3			699.0			1,327.8			1,411.3
Prior year favorable reserve development		(26.9	)		(23.6	)		(18.9	)		(19.7	)		(29.2	)		(33.8	)		(48.9	)
Catastrophe losses		59.8			30.6			27.9			57.9			55.7			81.5			113.6
Total losses and LAE		692.1			695.9			689.7			750.5			725.5			1,375.5			1,476.0
Amortization of deferred acquisition costs and other underwriting expenses		384.8			387.4			414.3			395.7			414.9			756.8			810.6
GAAP underwriting profit	$	13.9		$	41.4		$	36.7		$	16.8		$	34.3		$	52.8		$	51.1
Loss and LAE ratio:
Current accident year, excluding catastrophe losses		60.4	%		61.3	%		59.8	%		61.3	%		59.6	%		60.8	%		60.3	%
Prior year favorable reserve development		(2.5	)%		(2.1	)%		(1.7	)%		(1.7	)%		(2.5	)%		(1.5	)%		(2.1	)%
Catastrophe losses		5.5	%		2.7	%		2.4	%		5.0	%		4.7	%		3.7	%		4.9	%
Total loss and LAE ratio		63.4	%		61.9	%		60.5	%		64.6	%		61.8	%		63.0	%		63.1	%
Expense ratio		35.0	%		34.1	%		36.0	%		33.7	%		35.0	%		34.3	%		34.4	%
Combined ratio		98.4	%		96.0	%		96.5	%		98.3	%		96.8	%		97.3	%		97.5	%
Combined ratio, excluding catastrophe losses		92.9	%		93.3	%		94.1	%		93.3	%		92.1	%		93.6	%		92.6	%
Current accident year combined ratio, excluding catastrophe losses		95.4	%		95.4	%		95.8	%		95.0	%		94.6	%		95.1	%		94.7	%

7

THE HANOVER INSURANCE GROUP

GAAP UNDERWRITING AND OPERATING INCOME INFORMATION AND RATIOS

COMMERCIAL LINES

Three Months ended June 30

	2014															2013
	Multiple						Workers’									Multiple						Workers’
(In millions, except percentage data)	Peril			Auto			Comp			Other			Total			Peril			Auto			Comp			Other			Total
Net premiums written	$	171.7		$	76.4		$	58.6		$	234.3		$	541.0		$	163.2		$	76.8		$	57.1		$	224.4		$	521.5
Net premiums earned	$	169.8		$	75.8		$	59.4		$	212.6		$	517.6		$	157.9		$	70.5		$	54.8		$	202.6		$	485.8
Losses and LAE:
Current accident year, excluding catastrophe losses		86.6			54.7			42.2			117.3			300.8			87.4			50.7			38.4			119.5			296.0
Prior year unfavorable (favorable) reserve development		(4.1	)		4.1			(0.3	)		2.1			1.8			(3.9	)		3.6			(4.0	)		4.8			0.5
Catastrophe losses		12.6			0.2			—			4.2			17.0			11.1			0.1			—			3.9			15.1
Total losses and LAE		95.1			59.0			41.9			123.6			319.6			94.6			54.4			34.4			128.2			311.6
Amortization of deferred acquisition costs and other underwriting expenses														190.7															183.7
GAAP underwriting profit (loss)														7.3															(9.5	)
Net investment income														37.2															36.0
Other income														2.1															1.9
Other operating expenses														(2.4	)														(2.2	)
Operating income before income taxes													$	44.2														$	26.2
Loss and LAE ratio:
Current accident year, excluding catastrophe losses		51.0	%		72.2	%		71.1	%		55.1	%		58.2	%		55.4	%		71.9	%		70.1	%		59.0	%		61.0	%
Prior year unfavorable (favorable) reserve development		(2.4	)%		5.4	%		(0.5	)%		1.0	%		0.3	%		(2.5	)%		5.1	%		(7.3	)%		2.4	%		0.1	%
Catastrophe losses		7.4	%		0.3	%		—			2.0	%		3.3	%		7.0	%		0.1	%		—			1.9	%		3.1	%
Total loss and LAE ratio		56.0	%		77.9	%		70.6	%		58.1	%		61.8	%		59.9	%		77.1	%		62.8	%		63.3	%		64.2	%
Expense ratio														36.6	%														37.6	%
Combined ratio														98.4	%														101.8	%
Change in policies in force		3.6	%		5.1	%		8.5	%		1.8	%		3.7	%		2.1	%		6.8	%		14.1	%		6.0	%		5.8	%
Retention		85.2	%		78.2	%		75.3	%		N/M			82.1	%		83.5	%		78.7	%		78.3	%		N/M			81.4	%

8

THE HANOVER INSURANCE GROUP

GAAP UNDERWRITING AND OPERATING INCOME INFORMATION AND RATIOS

COMMERCIAL LINES

Six Months ended June 30

	2014															2013
	Multiple						Workers’									Multiple						Workers’
(In millions, except percentage data)	Peril			Auto			Comp			Other			Total			Peril			Auto			Comp			Other			Total
Net premiums written	$	344.6		$	152.6		$	129.9		$	453.2		$	1,080.3		$	317.2		$	149.6		$	119.3		$	419.0		$	1,005.1
Net premiums earned	$	337.3		$	151.3		$	118.2		$	423.5		$	1,030.3		$	310.5		$	140.0		$	107.8		$	404.1		$	962.4
Losses and LAE:
Current accident year, excluding catastrophe losses		178.9			109.1			83.7			232.7			604.4			174.3			99.6			75.5			236.6			586.0
Prior year unfavorable (favorable) reserve development		(4.8	)		7.5			(1.9	)		1.6			2.4			(4.0	)		5.4			(7.5	)		6.8			0.7
Catastrophe losses		44.7			0.2			—			12.3			57.2			16.3			0.2			—			6.0			22.5
Total losses and LAE		218.8			116.8			81.8			246.6			664.0			186.6			105.2			68.0			249.4			609.2
Amortization of deferred acquisition costs and other underwriting expenses														380.3															365.8
GAAP underwriting loss														(14.0	)														(12.6	)
Net investment income														74.5															72.1
Other income														4.1															3.9
Other operating expenses														(4.3	)														(4.2	)
Operating income before income taxes													$	60.3														$	59.2
Loss and LAE ratio:
Current accident year, excluding catastrophe losses		52.9	%		72.1	%		70.8	%		55.0	%		58.7	%		56.2	%		71.1	%		70.1	%		58.6	%		60.9	%
Prior year unfavorable (favorable) reserve development		(1.4	)%		5.0	%		(1.6	)%		0.4	%		0.2	%		(1.3	)%		3.9	%		(7.0	)%		1.7	%		0.1	%
Catastrophe losses		13.3	%		0.1	%		—			2.9	%		5.6	%		5.2	%		0.1	%		—			1.5	%		2.3	%
Total loss and LAE ratio		64.8	%		77.2	%		69.2	%		58.3	%		64.5	%		60.1	%		75.1	%		63.1	%		61.8	%		63.3	%
Expense ratio														36.7	%														37.8	%
Combined ratio														101.2	%														101.1	%
Change in policies in force		3.6	%		5.1	%		8.5	%		1.8	%		3.7	%		2.1	%		6.8	%		14.1	%		6.0	%		5.8	%
Retention		84.9	%		79.4	%		77.6	%		N/M			82.5	%		83.3	%		80.0	%		78.3	%		N/M			81.4	%

9

THE HANOVER INSURANCE GROUP

GAAP UNDERWRITING INFORMATION AND RELATED RATIOS

COMMERCIAL LINES

	Q2			Q3			Q4			Q1			Q2			Jun-YTD			Jun-YTD
(In millions, except percentage data)	2013			2013			2013			2014			2014			2013			2014
Gross premiums written	$	591.0		$	601.7		$	541.8		$	597.8		$	613.0		$	1,152.4		$	1,210.8
Net premiums written	$	521.5		$	530.5		$	471.6		$	539.3		$	541.0		$	1,005.1		$	1,080.3
Net premiums earned	$	485.8		$	492.7		$	503.3		$	512.7		$	517.6		$	962.4		$	1,030.3
Losses and LAE:
Current accident year, excluding catastrophe losses		296.0			293.7			300.2			303.6			300.8			586.0			604.4
Prior year unfavorable reserve development		0.5			2.3			0.3			0.6			1.8			0.7			2.4
Catastrophe losses		15.1			8.5			7.7			40.2			17.0			22.5			57.2
Total losses and LAE		311.6			304.5			308.2			344.4			319.6			609.2			664.0
Amortization of deferred acquisition costs and other underwriting expenses		183.7			185.4			196.3			189.6			190.7			365.8			380.3
GAAP underwriting profit (loss)	$	(9.5	)	$	2.8		$	(1.2	)	$	(21.3	)	$	7.3		$	(12.6	)	$	(14.0	)
Loss and LAE ratio:
Current accident year, excluding catastrophe losses		61.0	%		59.6	%		59.7	%		59.3	%		58.2	%		60.9	%		58.7	%
Prior year unfavorable reserve development		0.1	%		0.5	%		0.1	%		0.1	%		0.3	%		0.1	%		0.2	%
Catastrophe losses		3.1	%		1.7	%		1.5	%		7.8	%		3.3	%		2.3	%		5.6	%
Total loss and LAE ratio		64.2	%		61.8	%		61.3	%		67.2	%		61.8	%		63.3	%		64.5	%
Expense ratio		37.6	%		37.4	%		38.8	%		36.8	%		36.6	%		37.8	%		36.7	%
Combined ratio		101.8	%		99.2	%		100.1	%		104.0	%		98.4	%		101.1	%		101.2	%
Combined ratio, excluding catastrophe losses		98.7	%		97.5	%		98.6	%		96.2	%		95.1	%		98.8	%		95.6	%
Current accident year combined ratio, excluding catastrophe losses		98.6	%		97.0	%		98.5	%		96.1	%		94.8	%		98.7	%		95.4	%

10

THE HANOVER INSURANCE GROUP

GAAP UNDERWRITING AND OPERATING INCOME INFORMATION AND RATIOS

PERSONAL LINES

Three Months ended June 30

	2014												2013
(In millions, except percentage data)	Auto			Home			Other			Total			Auto			Home			Other			Total
Net premiums written	$	227.3		$	132.7		$	10.8		$	370.8		$	227.9		$	131.8		$	10.9		$	370.6
Net premiums earned	$	216.0		$	124.2		$	10.1		$	350.3		$	228.5		$	127.8		$	10.4		$	366.7
Losses and LAE:
Current accident year, excluding catastrophe losses		151.3			64.8			3.7			219.8			165.3			59.8			4.0			229.1
Prior year unfavorable (favorable) reserve development		(3.0	)		1.0			(0.2	)		(2.2	)		2.8			—			—			2.8
Catastrophe losses		1.2			25.7			0.3			27.2			2.4			28.9			0.9			32.2
Total losses and LAE		149.5			91.5			3.8			244.8			170.5			88.7			4.9			264.1
Amortization of deferred acquisition costs and other underwriting expenses											101.9												102.9
GAAP underwriting profit (loss)											3.6												(0.3	)
Net investment income											18.0												19.1
Other income											3.1												3.1
Other operating expenses											(2.0	)											(2.0	)
Operating income before income taxes										$	22.7											$	19.9
Loss and LAE ratio:
Current accident year, excluding catastrophe losses		70.0	%		52.1	%		36.6	%		62.7	%		72.3	%		46.8	%		38.4	%		62.4	%
Prior year unfavorable (favorable) reserve development		(1.4	)%		0.8	%		(2.0	)%		(0.6	)%		1.2	%		—			—			0.8	%
Catastrophe losses		0.6	%		20.7	%		3.0	%		7.8	%		1.1	%		22.6	%		8.7	%		8.8	%
Total loss and LAE ratio		69.2	%		73.6	%		37.6	%		69.9	%		74.6	%		69.4	%		47.1	%		72.0	%
Expense ratio											28.4	%											27.3	%
Combined ratio											98.3	%											99.3	%
Change in policies in force		(10.1	)%		(11.8	)%		(15.1	)%		(11.1	)%		(5.1	)%		(6.0	)%		(8.8	)%		(5.7	)%
Retention		74.5	%		74.5	%		N/M			74.7	%		76.9	%		79.1	%		N/M			78.3	%

11

THE HANOVER INSURANCE GROUP

GAAP UNDERWRITING AND OPERATING INCOME INFORMATION AND RATIOS

PERSONAL LINES

Six Months ended June 30

	2014												2013
(In millions, except percentage data)	Auto			Home			Other			Total			Auto			Home			Other			Total
Net premiums written	$	439.1		$	231.7		$	19.2		$	690.0		$	455.0		$	237.2		$	20.0		$	712.2
Net premiums earned	$	430.9		$	249.3		$	20.3		$	700.5		$	457.0		$	257.5		$	21.0		$	735.5
Losses and LAE:
Current accident year, excluding catastrophe losses		311.8			130.9			7.7			450.4			335.8			123.3			8.3			467.4
Prior year unfavorable (favorable) reserve development		(4.0	)		1.0			(0.2	)		(3.2	)		7.3			1.0			0.1			8.4
Catastrophe losses		1.3			43.6			0.7			45.6			2.1			40.3			1.5			43.9
Total losses and LAE		309.1			175.5			8.2			492.8			345.2			164.6			9.9			519.7
Amortization of deferred acquisition costs and other underwriting expenses											202.0												206.0
GAAP underwriting profit											5.7												9.8
Net investment income											35.9												38.1
Other income											6.0												6.4
Other operating expenses											(3.3	)											(3.9	)
Operating income before income taxes										$	44.3											$	50.4
Loss and LAE ratio:
Current accident year, excluding catastrophe losses		72.3	%		52.5	%		38.0	%		64.4	%		73.4	%		47.8	%		39.5	%		63.5	%
Prior year unfavorable (favorable) reserve development		(0.9	)%		0.4	%		(1.0	)%		(0.5	)%		1.6	%		0.4	%		0.5	%		1.1	%
Catastrophe losses		0.3	%		17.5	%		3.4	%		6.5	%		0.5	%		15.7	%		7.1	%		6.0	%
Total loss and LAE ratio		71.7	%		70.4	%		40.4	%		70.4	%		75.5	%		63.9	%		47.1	%		70.6	%
Expense ratio											28.1	%											27.3	%
Combined ratio											98.5	%											97.9	%
Change in policies in force		(10.1	)%		(11.8	)%		(15.1	)%		(11.1	)%		(5.1	)%		(6.0	)%		(8.8	)%		(5.7	)%
Retention		74.5	%		74.5	%		N/M			74.7	%		76.9	%		79.1	%		N/M			78.3	%

12

THE HANOVER INSURANCE GROUP

GAAP UNDERWRITING INFORMATION AND RELATED RATIOS

PERSONAL LINES

	Q2			Q3			Q4			Q1			Q2			Jun-YTD			Jun-YTD
(In millions, except percentage data)	2013			2013			2013			2014			2014			2013			2014
Gross premiums written	$	397.8		$	398.4		$	368.2		$	343.3		$	395.2		$	765.0		$	738.5
Net premiums written	$	370.6		$	372.9		$	342.9		$	319.2		$	370.8		$	712.2		$	690.0
Net premiums earned	$	366.7		$	363.4		$	355.3		$	350.2		$	350.3		$	735.5		$	700.5
Losses and LAE:
Current accident year, excluding catastrophe losses		229.1			230.5			221.2			230.6			219.8			39.9			450.4
Prior year unfavorable (favorable) reserve development		2.8			2.1			3.2			(1.0	)		(2.2	)		8.4			(3.2	)
Catastrophe losses		32.2			10.3			12.7			18.4			27.2			43.9			45.6
Total losses and LAE		264.1			242.9			237.1			248.0			244.8			92.2			492.8
Amortization of deferred acquisition costs and other underwriting expenses		102.9			102.5			108.4			100.1			101.9			206.0			202.0
GAAP underwriting profit (loss)	$	(0.3	)	$	18.0		$	9.8		$	2.1		$	3.6		$	437.3		$	5.7
Loss and LAE ratio:
Current accident year, excluding catastrophe losses		62.4	%		63.4	%		62.2	%		65.8	%		62.7	%		63.5	%		64.4	%
Prior year unfavorable (favorable) reserve development		0.8	%		0.6	%		0.9	%		(0.3	)%		(0.6	)%		1.1	%		(0.5	)%
Catastrophe losses		8.8	%		2.8	%		3.6	%		5.3	%		7.8	%		6.0	%		6.5	%
Total loss and LAE ratio		72.0	%		66.8	%		66.7	%		70.8	%		69.9	%		70.6	%		70.4	%
Expense ratio		27.3	%		27.5	%		29.8	%		27.9	%		28.4	%		27.3	%		28.1	%
Combined ratio		99.3	%		94.3	%		96.5	%		98.7	%		98.3	%		97.9	%		98.5	%
Combined ratio, excluding catastrophe losses		90.5	%		91.5	%		92.9	%		93.4	%		90.5	%		91.9	%		92.0	%
Current accident year combined ratio, excluding catastrophe losses		89.7	%		90.9	%		92.0	%		93.7	%		91.1	%		90.8	%		92.5	%

13

THE HANOVER INSURANCE GROUP

GAAP UNDERWRITING AND OPERATING INCOME INFORMATION AND RATIOS

CHAUCER

Three Months ended June 30

	2014													2013
(In millions, except percentage data)	Property		Marine & Aviation		Energy		UK Motor		Casualty & Other		Total			Property		Marine & Aviation		Energy		UK Motor		Casualty & Other		Total
Gross premiums written	$	68.1	$	82.4	$	80.7	$	95.2	$	89.0	$	415.4		$	93.7	$	83.9	$	85.4	$	86.5	$	56.1	$	405.6
Net premiums written	$	59.0	$	69.9	$	64.9	$	94.6	$	76.0	$	364.4		$	78.3	$	67.3	$	73.0	$	87.0	$	44.9	$	350.5
Net premiums earned	$	48.1	$	69.3	$	48.0	$	82.4	$	59.0	$	306.8		$	40.5	$	58.2	$	34.1	$	69.7	$	35.8	$	238.3
Losses and LAE:
Current accident year, excluding catastrophe losses												178.4													134.1
Prior year favorable reserve development												(29.2	)												(30.7	)
Catastrophe losses												11.5													12.5
Total losses and LAE												160.7													115.9
Amortization of deferred acquisition costs and other underwriting expenses												121.8													97.7
GAAP underwriting profit												24.3													24.7
Net investment income												10.7													10.7
Other income												3.1													4.5
Other operating expenses												—													(3.0	)
Operating income before income taxes											$	38.1												$	36.9
Loss and LAE ratio:
Current accident year, excluding catastrophe losses												58.2	%												56.3	%
Prior year favorable reserve development												(9.5	)%												(12.9	)%
Catastrophe losses												3.7	%												5.2	%
Total loss and LAE ratio												52.4	%												48.6	%
Expense ratio												39.7	%												41.0	%
Combined ratio												92.1	%												89.6	%

14

THE HANOVER INSURANCE GROUP

GAAP UNDERWRITING AND OPERATING INCOME INFORMATION AND RATIOS

CHAUCER

Six Months ended June 30

	2014													2013
(In millions, except percentage data)	Property		Marine & Aviation		Energy		UK Motor		Casualty & Other		Total			Property		Marine & Aviation		Energy		UK Motor		Casualty & Other		Total
Gross premiums written	$	174.9	$	210.7	$	140.2	$	173.0	$	183.6	$	882.4		$	185.9	$	192.2	$	137.2	$	166.2	$	113.6	$	795.1
Net premiums written	$	118.2	$	160.9	$	89.3	$	150.7	$	159.1	$	678.2		$	126.1	$	148.6	$	90.7	$	147.1	$	89.5	$	602.0
Net premiums earned	$	94.7	$	136.1	$	101.2	$	159.7	$	115.2	$	606.9		$	85.0	$	117.0	$	78.9	$	136.2	$	70.1	$	487.2
Losses and LAE:
Current accident year, excluding catastrophe losses												356.5													274.4
Prior year favorable reserve development												(48.8	)												(44.0	)
Catastrophe losses												10.8													15.1
Total losses and LAE												318.5													245.5
Amortization of deferred acquisition costs and other underwriting expenses												227.6													184.0
GAAP underwriting profit												60.8													57.7
Net investment income												21.2													21.2
Other income												7.0													9.0
Other operating expenses												(1.7	)												(10.1	)
Operating income before income taxes											$	87.3												$	77.8
Loss and LAE ratio:
Current accident year, excluding catastrophe losses												58.7	%												56.3	%
Prior year favorable reserve development												(8.0	)%												(9.0	)%
Catastrophe losses												1.8	%												3.1	%
Total loss and LAE ratio												52.5	%												50.4	%
Expense ratio												37.5	%												37.8	%
Combined ratio												90.0	%												88.2	%

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THE HANOVER INSURANCE GROUP

GAAP UNDERWRITING INFORMATION AND RELATED RATIOS

CHAUCER

	Q2			Q3			Q4			Q1			Q2			Jun-YTD			Jun-YTD
(In millions, except percentage data)	2013			2013			2013			2014			2014			2013			2014
Gross premiums written	$	405.6		$	313.7		$	265.4		$	467.0		$	415.4		$	795.1		$	882.4
Net premiums written	$	350.5		$	278.5		$	237.0		$	313.8		$	364.4		$	602.0		$	678.2
Net premiums earned	$	238.3		$	268.6		$	282.1		$	300.1		$	306.8		$	487.2		$	606.9
Losses and LAE:
Current accident year, excluding catastrophe losses		134.1			164.8			159.2			178.1			178.4			274.4			356.5
Prior year favorable reserve development		(30.7	)		(27.8	)		(22.8	)		(19.6	)		(29.2	)		(44.0	)		(48.8	)
Catastrophe losses		12.5			11.8			7.5			(0.7	)		11.5			15.1			10.8
Total losses and LAE		115.9			148.8			143.9			157.8			160.7			245.5			318.5
Amortization of deferred acquisition costs and other underwriting expenses		97.7			99.0			109.0			105.8			121.8			184.0			227.6
GAAP underwriting profit	$	24.7		$	20.8		$	29.2		$	36.5		$	24.3		$	57.7		$	60.8
Loss and LAE ratio:
Current accident year, excluding catastrophe losses		56.3	%		61.3	%		56.4	%		59.2	%		58.2	%		56.3	%		58.7	%
Prior year favorable reserve development		(12.9	)%		(10.3	)%		(8.1	)%		(6.5	)%		(9.5	)%		(9.0	)%		(8.0	)%
Catastrophe losses		5.2	%		4.4	%		2.7	%		(0.2	)%		3.7	%		3.1	%		1.8	%
Total loss and LAE ratio		48.6	%		55.4	%		51.0	%		52.5	%		52.4	%		50.4	%		52.5	%
Expense ratio		41.0	%		36.9	%		38.6	%		35.3	%		39.7	%		37.8	%		37.5	%
Combined ratio		89.6	%		92.3	%		89.6	%		87.8	%		92.1	%		88.2	%		90.0	%
Combined ratio, excluding catastrophe losses		84.4	%		87.9	%		86.9	%		88.0	%		88.4	%		85.1	%		88.2	%
Current accident year combined ratio, excluding catastrophe losses		97.3	%		98.2	%		95.0	%		94.5	%		97.9	%		94.1	%		96.2	%

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THE HANOVER INSURANCE GROUP

NET INVESTMENT INCOME AND YIELDS

																Q2			Q2
	Q2			Q3			Q4			Q1			Q2			YTD			YTD
(In millions, except yields)	2013			2013			2013			2014			2014			2013			2014
Net Investment Income
Fixed maturities	$	62.6		$	63.0		$	64.5		$	64.7		$	63.2		$	127.3		$	127.9
Equity securities		4.9			4.0			3.6			3.4			4.4			8.0			7.8
Other investments		2.8			1.3			2.5			1.5			2.1			5.0			3.6
Investment expenses		(2.4	)		(2.6	)		(2.5	)		(2.6	)		(2.7	)		(5.1	)		(5.3	)
Total	$	67.9		$	65.7		$	68.1		$	67.0		$	67.0		$	135.2		$	134.0
Pre-tax Yields
Fixed maturities		3.98	%		3.99	%		3.86	%		3.79	%		3.74	%		4.00	%		3.76	%
Total		3.71	%		3.61	%		3.59	%		3.47	%		3.42	%		3.68	%		3.45	%

Pre-tax yields are calculated as annualized net investment income divided by the average of investment balances, excluding unrealized capital gains and losses, at the end of each month during the period.

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THE HANOVER INSURANCE GROUP

INVESTMENT PORTFOLIO

June 30, 2014

(In millions)
												Change in			Change in
	Weighted								Net			Net			Net
	Average	Amortized		Fair		% of			Unrealized			Unrealized			Unrealized
Investment Type	Quality	Cost or Cost		Value		Total			Gain (Loss)			During Q2 2014			YTD
Fixed maturities:
U.S. Treasury and government agencies	AAA	$	403.5	$	403.2		4.8	%	$	(0.3	)	$	5.1		$	10.6
Foreign government	AAA		319.7		321.0		3.8	%		1.3			(0.5	)		0.8
Municipals:
Taxable	AA		938.5		988.1		11.7	%		49.6			14.8			31.7
Tax exempt	AA		141.9		145.4		1.7	%		3.5			0.4			3.1
Corporate:
NAIC 1	A		1,794.4		1,871.1		22.2	%		76.7			7.7			20.4
NAIC 2	BBB		1,536.9		1,626.6		19.3	%		89.7			16.4			28.9
NAIC 3 and below	B+		387.0		411.0		4.9	%		24.0			2.7			7.1
Total corporate	BBB+		3,718.3		3,908.7		46.4	%		190.4			26.8			56.4
Asset backed:
Residential mortgage-backed	AA		697.3		713.6		8.5	%		16.3			6.0			10.3
Commercial mortgage-backed	AA+		395.1		406.1		4.8	%		11.0			3.2			5.3
Asset-backed	AAA		170.8		172.4		2.0	%		1.6			(0.1	)		(0.2	)
Total fixed maturities	A+		6,785.1		7,058.5		83.7	%		273.4			55.7			118.0
Equity securities			446.4		530.5		6.3	%		84.1			4.8			20.4
Other investments			235.3		238.5		2.8	%		3.2			(0.1	)		—
Total investments			7,466.8		7,827.5		92.8	%		360.7			60.4			138.4
Cash and cash equivalents			606.2		606.2		7.2	%		—			—			—
Total		$	8,073.0	$	8,433.7		100.0	%	$	360.7		$	60.4		$	138.4

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THE HANOVER INSURANCE GROUP

CREDIT QUALITY AND DURATION OF FIXED MATURITIES

June 30, 2014

(In millions)
CREDIT QUALITY OF FIXED MATURITIES
	Rating Agency	Amortized		Fair		% of Total
NAIC Designation	Equivalent Designation	Cost		Value		Fair Value
1	Aaa/Aa/A	$	4,818.7	$	4,977.7		70.5	%
2	Baa		1,567.3		1,657.9		23.5	%
3	Ba		173.5		184.9		2.6	%
4	B		184.9		195.7		2.8	%
5	Caa and lower		40.2		41.6		0.6	%
6	In or near default		0.5		0.7		—	%
Total fixed maturities		$	6,785.1	$	7,058.5		100.0	%
DURATION OF FIXED MATURITIES
		Amortized Cost		Fair Value		% of Total Fair Value
0-2 years		$	1,556.7	$	1,599.4		22.7	%
2-4 years			1,786.0		1,872.5		26.5	%
4-6 years			1,744.3		1,841.1		26.1	%
6-8 years			1,337.6		1,377.8		19.5	%
8-10 years			292.7		296.4		4.2	%
10+ years			67.8		71.3		1.0	%
Total fixed maturities		$	6,785.1	$	7,058.5		100.0	%
Weighted Average Duration			4.14

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THE HANOVER INSURANCE GROUP

TOP 10 CORPORATE AND MUNICIPAL FIXED MATURITY HOLDINGS

June 30, 2014

(In millions, except percentage data)
Issuer	Amortized Cost		Fair Value		As a Percent of Invested Assets			S&P Ratings
Royal Bank of Scotland: (1)
Term deposits	$	82.0	$	82.8		0.98	%	A-
Notes		14.3		14.7		0.17	%	A
Lloyds Bank: (2)
Term deposits		48.7		48.2		0.57	%	A
Notes		5.0		5.4		0.07	%	BBB+
Citigroup		28.8		30.4		0.36	%	A-
American Express		28.6		29.7		0.35	%	A-
GE Capital		27.0		28.5		0.34	%	AA+
JP Morgan		26.1		26.9		0.32	%	A
Bank of America		26.0		27.8		0.33	%	BBB+
Wells Fargo		26.0		27.8		0.33	%	A+
CVS Caremark		22.6		24.6		0.29	%	BBB+
Toyota Motor Credit Corp		22.4		23.3		0.28	%	AA-
Top 10 Corporate and Municipal Fixed	$	357.5	$	370.1		4.39	%

(1) UK government owns 64% of bank equity

(2) UK government owns 25% of bank equity

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THE HANOVER INSURANCE GROUP

RECONCILIATION OF OPERATING INCOME TO NET INCOME

	Three Months ended June 30												Six Months ended June 30
	2014						2013						2014						2013
(In millions, except per share data)	$			Per Share (Diluted)			$			Per Share (Diluted)			$			Per Share (Diluted)			$			Per Share (Diluted)
OPERATING INCOME (LOSS)
Commercial Lines	$	44.2					$	26.2					$	60.3					$	59.2
Personal Lines		22.7						19.9						44.3						50.4
Chaucer		38.1						36.9						87.3						77.8
Other		(2.8	)					(1.9	)					(4.7	)					(4.1	)
Total		102.2						81.1						187.2						183.3
Interest expense		(16.3	)					(17.4	)					(32.6	)					(32.1	)
Operating income before income taxes		85.9		$	1.91			63.7		$	1.42			154.6		$	3.45			151.2		$	3.36
Income tax expense on operating income		(27.5	)		(0.61	)		(16.9	)		(0.37	)		(49.2	)		(1.10	)		(44.5	)		(0.99	)
Operating income after income taxes		58.4			1.30			46.8			1.05			105.4			2.35			106.7			2.37
Net realized investment gains		22.2			0.49			13.7			0.31			26.6			0.59			21.8			0.48
Loss from repayment of debt		—			—			(11.3	)		(0.25	)		—			—			(19.1	)		(0.42	)
Net benefit (costs) related to acquired businesses		(0.2	)		—			(0.2	)		(0.01	)		(1.1	)		(0.02	)		0.2			0.01
Net foreign exchange gains (losses)		(0.2	)		—			—			—			(0.3	)		(0.01	)		0.7			0.01
Income tax benefit (expense) on non-operating items		2.3			0.05			4.1			0.09			6.6			0.15			9.2			0.20
Income from continuing operations, net of taxes		82.5			1.84			53.1			1.19			137.2			3.06			119.5			2.65
Discontinued operations, net of taxes		0.1			—			0.3			—			—			—			0.1			0.01
NET INCOME	$	82.6		$	1.84		$	53.4		$	1.19		$	137.2		$	3.06		$	119.6		$	2.66

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Non-GAAP Financial Measures

The Hanover uses non-GAAP financial measures as important measures of the Company’s operating performance, which we believe provide investors with additional information regarding management’s evaluation of our results of operations and financial performance. The Company’s non-GAAP measures include operating income before interest expense and taxes, total operating income after taxes, total operating income after taxes per share, total book value per share, total book value per share excluding net unrealized gains and losses related to investments, net of tax, tangible book value per share and measures of operating income and loss ratios excluding catastrophe losses and reserve development. After-tax operating income EPS (sometimes referred to as “after-tax operating income per share”) is a non-GAAP measure. It is defined as net income (loss) excluding the after-tax impact of net realized investment gains (losses), as well as results from discontinued operations for a period divided by the average number of diluted shares of common stock.

Operating income before interest expense and taxes is net income, excluding interest expense on debt, income taxes and net realized investment gains and losses, because fluctuations in these gains and losses are determined by interest rates, financial markets and the timing of sales. Operating income before interest expense and taxes 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. Operating income before interest expense and taxes is the sum of the operating income from: Commercial Lines, Personal Lines, Chaucer, and Other. The Hanover believes that measures of operating income before interest expense and taxes 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.

Book value per share is total shareholders’ equity divided by the number of common shares outstanding. Book value per share excluding net unrealized gains and losses related to investments, net of tax is total shareholders’ equity excluding the after-tax effect of unrealized investment gains and losses divided by the number of common shares outstanding. Tangible book value per share is total shareholders’ equity, excluding goodwill, divided by the number of common shares outstanding.

The Hanover also provides measures of operating 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 providing certain financial metrics and trends excluding the effects of catastrophes is meaningful for investors to understand the variability of periodic earnings and loss ratios.

Prior year reserve development, which can be favorable or unfavorable, represents changes in our estimate of the costs to pay claims from prior years. We believe that a discussion of operating income excluding prior year reserve development is helpful to investors since it provides insight into both our estimate of current year accident results and changes to prior-year reserve estimates.

Operating income before and after interest expense and taxes and measures of operating income that exclude the effects of catastrophe losses or reserve development should not be construed as substitutes for net income determined in accordance with GAAP. A reconciliation of income from continuing operations to operating income before interest expense and taxes and income from continuing operations per share to operating income after taxes per share for the six months ended June 30, 2014 and 2013 is set forth on page 21 of this document. The presentation of loss ratios calculated excluding the effects of reserve development and/or catastrophe losses should not be construed as a substitute for loss ratios determined in accordance with GAAP.

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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

808 North Highlander Way

Howell, MI 48843

Chaucer Holdings PLC

Plantation Place

30 Fenchurch Street

London

EC3M 3AD

MARKET AND DIVIDEND INFORMATION

The following tables set forth the high and low closing sales prices of our common stock and cash dividends for the periods indicated:

Quarter Ended	2014
	Price Range				Dividends
	High		Low		Per Share
March 31	$	61.44	$	53.14	$	0.370
June 30	$	64.00	$	58.23	$	0.370
Quarter Ended	2013
	Price Range				Dividends
	High		Low		Per Share
March 31	$	49.68	$	39.19	$	0.330
June 30	$	51.66	$	46.73	$	0.330
September 30	$	56.06	$	48.67	$	0.330
December 31	$	60.99	$	54.83	$	0.370

INDUSTRY RATINGS AS OF JULY 31, 2014
Financial Strength Ratings	A.M. Best		Standard & Poor’s		Moody’s
The Hanover Insurance Company		A		A-		A3
Citizens Insurance Company of America		A		A-		—
Debt Ratings	A.M. Best		Standard & Poor’s		Moody’s
The Hanover Insurance Group, Inc. Senior Debt		bbb		BBB-		Baa3
Subordinated Debentures		bb+		BB		Ba1

TRANSFER AGENT

Computershare Investor Services

PO Box 30170

College Station, TX 77842-3170

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

Oksana Lukasheva

Vice President

Investor Relations

(508) 855-2063

olukasheva@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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