8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 3, 2017

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))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Item 2.02 Results of Operations and Financial Condition.

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

On May 3, 2017, The Hanover Insurance Group, Inc. (the Company) issued a press release announcing its financial results for the quarter ended March 31, 2017. The release is furnished as Exhibit 99.1 hereto. Additionally, on May 3, 2017, the Company made available on its website unaudited financial information contained in its Financial Supplement for the period ended March 31, 2017. The supplement is furnished as Exhibit 99.2 hereto.

Item 9.01 Financial Statements and Exhibits.

(a) Not applicable.

(b) Not applicable.

(c) Not applicable.

(d) Exhibits.

The following exhibits are furnished herewith.

Exhibit 99.1	Press Release, dated May 3, 2017, announcing the Company’s financial results for the quarter ended March 31, 2017.
Exhibit 99.2	The Hanover Insurance Group, Inc. Unaudited Financial Supplement for the period ended March 31, 2017.

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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 May 3, 2017	By:	/s/ Jeffrey M. Farber
		Jeffrey M. Farber
		Executive Vice President and Chief Financial Officer

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Exhibit Index

Exhibit 99.1	Press Release, dated May 3, 2017, announcing the Company’s financial results for the quarter ended March 31, 2017.
Exhibit 99.2	The Hanover Insurance Group, Inc. Unaudited Financial Supplement for the period ended March 31, 2017.

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EX-99.1

Exhibit 99.1

The Hanover Reports Results:

First Quarter Net Income of $1.05 per Diluted Share; Operating Income⁽¹⁾ of $0.95 per Diluted Share;

First Quarter Combined Ratio of 99.5%, including Catastrophe Impact of 7.1 points

WORCESTER, Mass., May 3, 2017—The Hanover Insurance Group, Inc. (NYSE: THG) today reported net income of $45.2 million, or $1.05 per diluted share, for the first quarter of 2017, compared to $78.2 million, or $1.80 per diluted share, in the prior-year quarter. Operating income was $40.8 million, or $0.95 per diluted share, for the first quarter of 2017, compared to $71.5 million, or $1.64 per diluted share, in the prior-year quarter.

First Quarter Highlights

• Catastrophe losses of $84.1 million before taxes, or 7.1% of earned premiums, primarily from domestic catastrophe events in the Midwest; this compared to $31.2 million, or 2.7%, in the prior-year quarter

• Combined ratio, excluding catastrophes⁽²⁾ of 92.4%, in line with the first quarter of 2016

• No domestic prior-year loss reserve development

• Net premiums written up 3.7%, driven by growth in domestic businesses

• Continued price increases in Personal and Commercial Lines

• Net investment income of $71.1 million in the first quarter, up 4.1% compared to the prior-year period

• Book value per share of $68.44, up 1.5% from December 31, 2016; book value per share excluding net unrealized gains on investments⁽³⁾ of $63.62, up 1.0%

	Three months ended March 31
(In millions, except per share data)	2017			2016
Net premiums written	$	1,186.8		$	1,144.3
Operating income		40.8			71.5
per diluted share		0.95			1.64
Net income		45.2			78.2
per diluted share		1.05			1.80
Net investment income		71.1			68.3
Book value per share	$	68.44		$	69.30
Ending shares outstanding		42.6			42.7
Combined ratio		99.5	%		95.0	%
Prior year development ratio		(0.2	)%		(0.9	)%
Catastrophe ratio		7.1	%		2.7	%
Combined ratio, excluding catastrophes(2)		92.4	%		92.3	%
Current accident year combined ratio, excluding catastrophes(4)		92.6	%		93.2	%

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

“We are pleased with our solid operating earnings in the face of higher-than-expected catastrophe losses in our domestic business, said Joseph M. Zubretsky, president and chief executive officer at The Hanover. “Underlying trends were stable across each of our business segments and in line with our expectations, which reflect our disciplined approach to pricing and risk selection. We are also pleased with our responsible top-line growth of 3.7%, driven by continued strong momentum in Personal Lines, pricing and retention strategies in Commercial Lines, and thoughtful management of our international specialty business. Given our position with our agency partners and sustained strong results, we are well prepared to deliver on the 2017 business performance we presented at our Investor Day in February, subject to the uncertainty of catastrophe losses.”

“We are excited about our current book of business and our continued momentum,” said Jeffrey M. Farber, executive vice president and chief financial officer. “Domestic results, excluding catastrophes, were in line with our expectations, which incorporate normal first quarter seasonality. Chaucer delivered a strong combined ratio, at 93.5%, with low current year large loss experience offset by increased estimates in a number of prior-year large claims. We remain confident in the strength of Chaucer’s underwriting expertise and business fundamentals. Our businesses are well positioned to capitalize on profitable growth opportunities, strengthen our competitive position and deliver value to our shareholders.”

First Quarter Operating Highlights

Commercial Lines

Commercial Lines operating income before taxes was $37.4 million, compared to operating income before taxes of $42.7 million in the first quarter of 2016. The Commercial Lines combined ratio was 100.2%, compared to 99.2% in the prior-year quarter. Catastrophe losses were $36.4 million, or 6.2 points of the combined ratio, compared to $18.9 million, or 3.3 points, in the prior-year quarter. First quarter 2017 results included no impact from prior-year loss reserve development, compared to net unfavorable prior-year loss reserve development of $20.1 million, or 3.5 points of the combined ratio, in the first quarter of 2016.

Commercial Lines current accident year combined ratio, excluding catastrophe losses⁽⁴⁾, increased by 1.6 points to 94.0%, compared to 92.4% in the prior-year quarter. The difference reflects the unusually low level of first quarter 2016 property large losses and non-catastrophe weather related losses in the Commercial Multiple Peril line (“CMP”). Also contributing to the unfavorable comparison in CMP is the higher casualty loss ratio, which is consistent with historical performance, but above the reported first quarter 2016 ratio. This increase in CMP was partially offset by improvement in all other lines, as a result of continued pricing and underwriting initiatives.

Net premiums written were $625.3 million in the quarter, up 3.5% from the prior-year quarter, driven by continued pricing increases, strong retention and targeted new business expansion. Core commercial⁽⁵⁾ business pricing increases averaged 3.2% for the first quarter, consistent with the fourth quarter of 2016.

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

	Three months ended March 31
$ in millions	2017			2016
Net premiums written	$	625.3		$	604.3
Net premiums earned		588.3			571.4
Operating income before taxes		37.4			42.7
Loss and LAE ratio		63.8	%		63.0	%
Expense ratio(6)		36.4	%		36.2	%
Combined ratio		100.2	%		99.2	%
Prior year development ratio		—			3.5	%
Catastrophe ratio		6.2	%		3.3	%
Combined ratio, excluding catastrophes(2)		94.0	%		95.9	%
Current accident year combined ratio, excluding catastrophes(4)		94.0	%		92.4	%

Personal Lines

Personal Lines operating income before taxes was $9.9 million in the quarter, compared to $47.1 million in the first quarter of 2016. The Personal Lines combined ratio was 101.6%, compared to 91.4% in the prior-year quarter. Catastrophe losses were $40.4 million, or 10.6 points of the combined ratio, compared to $11.8 million, or 3.3 points, in the prior-year quarter. First quarter 2017 results included no impact from prior-year loss reserve development, compared to net favorable prior-year reserve development of $0.7 million, or 0.2 points of the combined ratio, in the first quarter of 2016.

Personal Lines current accident year combined ratio, excluding catastrophe losses, increased by 2.7 points to 91.0%, compared to 88.3% in the prior-year quarter, primarily due to unusually low level of large losses and non-catastrophe weather-related losses in the first quarter of 2016.

Net premiums written were $362.1 million in the quarter, up 7.4% from the prior-year quarter, due to rate increases, new business growth and improved retention. Personal Lines average rate increases in the first quarter 2017 were approximately 4.1%, consistent with the fourth quarter 2016.

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

	Three months ended March 31
$ in millions	2017			2016
Net premiums written	$	362.1		$	337.0
Net premiums earned		381.8			358.6
Operating income before taxes		9.9			47.1
Loss and LAE ratio		72.8	%		63.3	%
Expense ratio(6)		28.8	%		28.1	%
Combined ratio		101.6	%		91.4	%
Prior year development ratio		—			(0.2	)%
Catastrophe ratio		10.6	%		3.3	%
Combined ratio, excluding catastrophes(2)		91.0	%		88.1	%
Current accident year combined ratio, excluding catastrophes(4)		91.0	%		88.3	%

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Chaucer

Chaucer’s operating income before taxes was $24.9 million in the quarter, compared to $33.7 million in the first quarter of 2016. Chaucer’s combined ratio was 93.5%, compared to 89.8% in the prior-year quarter. Catastrophe losses were $7.3 million, or 3.5 points of the combined ratio, compared to $0.5 million, or 0.2 points, in the prior-year quarter.

Chaucer’s combined ratio, excluding catastrophe losses, was 90.0% in the first quarter of 2017, compared to 89.6% in the prior-year quarter. The current quarter accident year loss ratio, excluding catastrophe losses, was 51.0%, compared to 64.1% in the first quarter of 2016, driven by a very low incidence of large losses in the current quarter.

First quarter 2017 results also reflected net favorable prior-year reserve development on non-catastrophe losses of $2.3 million, or 1.1 points of the combined ratio, compared to $29.7 million, or 13.4 points, in the first quarter of 2016. Favorable reserve development from attritional and other losses in the first quarter of 2017 was largely offset by an increase in loss provision for uncorrelated large prior-year claims.

Net premiums written were $199.4 million in the quarter, down 1.8% as the prior year benefitted from the reinsurance-to-close⁽⁷⁾ (“RITC”) transaction in 2016. Excluding RITC, net premiums written increased 7.6% due to execution of strategic initiatives, partially offset by a planned increase in ceded reinsurance premiums.

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

	Three months ended March 31
$ in millions	2017			2016
Net premiums written	$	199.4		$	203.0
Net premiums earned		211.2			221.3
Operating income before taxes		24.9			33.7
Loss and LAE ratio		53.4	%		50.9	%
Expense ratio(6)		40.1	%		38.9	%
Combined ratio		93.5	%		89.8	%
Prior year development ratio		(1.1	)%		(13.4	)%
Catastrophe ratio		3.5	%		0.2	%
Combined ratio, excluding catastrophes(2)		90.0	%		89.6	%
Current accident year combined ratio, excluding catastrophes(4)		91.1	%		103.0	%

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Investments

Net investment income was $71.1 million for the first quarter of 2017, compared to $68.3 million in the prior-year period. The increase was primarily due to investing higher operating cash flows, and additional income from commercial mortgage loan participations and private equity partnerships. Net investment income also benefitted from income on certain reinsurance contracts subject to deposit accounting. These increases were partially offset by the cumulative impact of lower new money yields. The average pre-tax earned yield on fixed maturities was 3.38% and 3.54% for the quarters ended March 31, 2017 and 2016, respectively. Total pre-tax earned yield on the investment portfolio for the quarter ended March 31, 2017 was 3.29%, down from the prior-year quarter yield of 3.40%.

Net realized investment gains were $1.9 million in the first quarter of 2017, including $1.4 million of impairment charges. In the first quarter of 2016, net realized investment gains were $1.5 million, including $20.9 million of impairment charges.

The company held $8.8 billion in cash and invested assets on March 31, 2017. Fixed maturities and cash represented approximately 87% of the investment portfolio. Approximately 94% of the company’s fixed maturity portfolio is rated investment grade. Net unrealized investment gains increased $33.5 million during the first quarter of 2017 to $219.6 million at March 31, 2017, from $186.1 million at December 31, 2016, primarily due to narrowing credit spreads.

Capitalization, Shareholders’ Equity and Other Items

Book value per share was $68.44, up 1.5% from December 31, 2016, primarily driven by earnings accretion.

During the quarter, the company repurchased approximately 51 thousand shares of common stock for $4.6 million, at an average price of $90.11 per share.

Earnings Conference Call

The Hanover will host a conference call to discuss its first quarter results on Thursday, May 4, at 10:00 a.m. Eastern Time. A PowerPoint slide presentation will accompany the prepared remarks and has been posted on The Hanover website. Interested investors and others can listen to the call and access the presentation through The Hanover’s website, located at www.hanover.com, in the “Investors” section. Investors may access the conference call by dialing 1-888-771-4371; if calling internationally, please dial 1-847-585-4405; conference code: 44576787. Web-cast participants should go to the website 15 minutes early to register, download, and install any necessary audio software. A re-broadcast of the conference call will be available on this website approximately two hours after the call.

Financial Supplement

The Hanover’s first quarter earnings news release and financial supplement are available in the “Investors” section of the company’s website at www.hanover.com.

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The Hanover Insurance Group, Inc.

Condensed Consolidated Balance Sheet

$ in millions	March 31 2017		December 31 2016
Assets
Total investments	$	8,530.1	$	8,449.5
Cash and cash equivalents		257.0		282.6
Premiums and accounts receivable, net		1,522.2		1,438.1
Reinsurance recoverable on paid and unpaid losses and unearned premiums		2,726.1		2,611.8
Other assets		1,455.4		1,438.4
Total assets		14,490.8		14,220.4
Liabilities
Loss and loss adjustment expense reserves		7,103.0		6,949.4
Unearned premiums		2,657.4		2,561.0
Debt		786.6		786.4
Other liabilities		1,030.3		1,066.1
Total liabilities		11,577.3		11,362.9
Total shareholders’ equity		2,913.5		2,857.5
Total liabilities and shareholders’ equity	$	14,490.8	$	14,220.4

The Hanover Insurance Group, Inc.

Condensed Consolidated Income Statement

	Three months ended March 31
$ in millions	2017		2016
REVENUES
Premiums earned	$	1,181.3	$	1,151.3
Net investment income		71.1		68.3
Net realized investment gains		1.9		1.5
Fees and other income		6.6		6.5
Total revenues		1,260.9		1,227.6
LOSSES AND EXPENSES
Losses and loss adjustment expenses		766.5		699.6
Amortization of deferred acquisition costs		266.4		259.1
Interest expense		12.0		14.7
Other operating expenses		157.0		146.1
Total losses and expenses		1,201.9		1,119.5
Income from continuing operations before income taxes		59.0		108.1
Income tax expense		13.8		30.0
Income from continuing operations		45.2		78.1
Discontinued operations		—		0.1
Net income	$	45.2	$	78.2

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The following is a reconciliation from operating income to net income⁽⁸⁾:

The Hanover Insurance Group, Inc.

	Three months ended March 31
	2017						2016
(In millions, except per share data)	$ Amount			Per Share (Diluted)			$ Amount			Per Share (Diluted)
OPERATING INCOME
Commercial Lines	$	37.4					$	42.7
Personal Lines		9.9						47.1
Chaucer		24.9						33.7
Other		(3.1	)					(3.1	)
Total		69.1						120.4
Interest expense		(12.0	)					(14.7	)
Operating income before income taxes		57.1		$	1.33			105.7		$	2.43
Income tax expense on operating income		(16.3	)		(0.38	)		(34.2	)		(0.79	)
Operating income after income taxes		40.8			0.95			71.5			1.64
Other non-operating items:
Net realized investment gains		1.9			0.04			1.5			0.04
Other		—			—			0.7			0.01
Income tax benefit on other non-operating items		2.5			0.06			4.4			0.10
Income from continuing operations, net of taxes		45.2			1.05			78.1			1.79
Discontinued operations, net of taxes		—			—			0.1			0.01
Net income	$	45.2		$	1.05		$	78.2		$	1.80
Weighted average shares outstanding					42.9						43.5

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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, “forward-looking statements” include statements in this press release or in such conference call regarding our ability to deliver on “Hanover 2021” strategy; confidence in the ability to deliver acceptable profit levels in commercial auto; focus on maintaining solid margins and growing commercial lines in competitive market environment; ability to create opportunities to write high quality business at stable margins; the strength of reserves and the balance sheet, and the adequacy of current and prior-year reserve actions, following the actuarial reserving review in the fourth quarter 2016, the relative likelihood of favorable or unfavorable reserve development in domestic lines and expectations for Chaucer reserve development to contribute to earnings; our ability to achieve financial goals and generate strong earnings; ability to leverage our agency distribution network to expand shelf space with existing agents and generate growth; pricing compared to long-term loss trends and ability to produce a stable loss ratio; Specialty growth opportunities; future trends of commercial multi-peril liability claims; frequency and severity trends in personal and commercial auto; success of technology and service platform investments, and state and product expansion in Personal Lines; performance of Personal Lines expense ratio to come down modestly in 2017 from prior-year growth leverage; ability to capture the emerging-affluent market; pricing and retention trends; impact of bodily injury and collision severity trends on auto rates; the potential impact of capital actions and business investments; effects and volatility of pound sterling and other currencies on earnings; success of the proposed non-Lloyd’s platform in Dublin; the ability to manage the cyclical nature of Chaucer’s business, risk complexity, and challenging market conditions; future performance of Chaucer’s current and prior-year development and large loss activity; share repurchases; increased income from expected “higher yielding assets;” volatility in unrealized gains; and ability to achieve components of the 2017 guidance, 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 and prior 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 such as commercial liability, or, with respect to Chaucer, reported premium and the impact of currency fluctuations; (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, economic and political environment on rates, investment income, foreign exchange rates which affect Chaucer’s business and reported results, the

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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 uncertainties around Brexit; and (vii) the inherent uncertainties of predicting future loss and pricing trends. Investors are further cautioned 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 the company’s annual report, Form 10-K and other documents filed by The Hanover Insurance Group, Inc. (“The Hanover”) with the Securities and Exchange Commission (“SEC”) and which are also available at www.hanover.com under “Investors.” These uncertainties include the possibility of adverse catastrophe experiences (including terrorism) and severe weather; the 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 its intended scope or award “bad faith” or other non-contractual damages; 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 (including the impact of Brexit); financial ratings actions; operational and technology risks, including the risk of cyber-security breaches; 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 voluntary pools business.

Non-GAAP financial measures

As discussed on page 43 of the Company’s Annual Report for the year ended December 31, 2016, 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), gains and losses from the repurchases 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

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common stock. The definition of other financial measures and terms can be found in the 2016 Annual Report on pages 77-80.

Net realized investment gains and losses 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, 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 both 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 (loss) 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 (catastrophe losses as discussed here and in all other measures include catastrophe loss development). A catastrophe is a severe loss, resulting from natural and manmade events, including, among others, hurricanes, tornadoes and other windstorms, earthquakes, hail, severe winter weather, fire, explosions, and terrorism. Each catastrophe has unique characteristics. Catastrophes are not predictable as to timing or loss amount in advance. The Hanover believes that a discussion of the effect of catastrophes is meaningful for investors to understand the variability of periodic earnings and loss 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 accident year 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 months ended March 31, 2017 and 2016 is set forth in the table on page 7 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.

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About The Hanover

The Hanover Insurance Group, Inc. is the holding company for several property and casualty insurance companies, which together constitute one of the largest insurance businesses in the United States. The company provides exceptional insurance solutions in a dynamic world. The Hanover distributes its products through a select group of independent agents and brokers. Together with its agents, The Hanover offers standard and specialized insurance protection for small and mid-sized businesses, as well as for homes, automobiles, and other personal items. 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.

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 The Hanover’s international business written through Lloyd’s of London in several major insurance and reinsurance classes, including marine and aviation, casualty, energy, property, and treaty. 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 voluntary pools business in which we have not actively participated since 1995.

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End notes

(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 the 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 and operating income per diluted share to the most directly comparable GAAP measures, income from continuing operations and income from continuing operations per diluted share, respectively, is provided on page 7 of this press release. See the disclosure on the use of this and all other non-GAAP measures under the heading “Forward-Looking Statements and Non-GAAP Financial Measures.”

(2) Combined ratio, excluding catastrophes, is a non-GAAP measure, which is equal to the combined ratio, excluding catastrophe losses. This measure and measures excluding prior-year reserve development (“current accident-year” ratios) are used throughout this document. The combined ratio (which includes catastrophe losses and prior-year loss reserve development) is the most directly comparable GAAP measure. The following is a reconciliation of Combined ratio, excluding catastrophes:

	Three months ended
	March 31, 2017
	Commercial Lines			Personal Lines			Total Domestic			Chaucer			Consolidated
Total combined ratio		100.2	%		101.6	%		100.9	%		93.5	%		99.5	%
Less: Catastrophe ratio		6.2	%		10.6	%		7.9	%		3.5	%		7.1	%
Combined ratio, excluding catastrophe losses		94.0	%		91.0	%		93.0	%		90.0	%		92.4	%
	Three months ended
	March 31, 2016
	Commercial Lines			Personal Lines			Total Domestic			Chaucer			Consolidated
Total combined ratio		99.2	%		91.4	%		96.2	%		89.8	%		95.0	%
Less: Catastrophe ratio		3.3	%		3.3	%		3.3	%		0.2	%		2.7	%
Combined ratio, excluding catastrophe losses		95.9	%		88.1	%		92.9	%		89.6	%		92.3	%
(3)    The following is a reconciliation of book value per share, excluding net unrealized gains on investments:
	Period ended
	March 31 2016			June 30 2016			September 30 2016			December 31 2016			March 31 2017
Book value per share	$	69.30		$	70.58		$	72.08		$	67.40		$	68.44
Less: Net unrealized gains on investments		5.78			7.59			7.60			4.39			4.82
Book value per share, excluding net unrealized gains on investments	$	63.52		$	62.99		$	64.48		$	63.01		$	63.62

12

(4) Current accident year combined ratio, excluding catastrophe losses, is a non-GAAP measure, which is equal to the combined ratio, excluding prior-year reserve development and catastrophe losses. The combined ratio (which includes catastrophe losses and prior-year loss reserve development) is the most directly comparable GAAP measure. The following is a reconciliation of Current accident year combined ratio, excluding catastrophe losses:

	Three months ended
	March 31, 2017
	Commercial Lines			Personal Lines			Total Domestic			Chaucer			Consolidated
Total combined ratio		100.2	%		101.6	%		100.9	%		93.5	%		99.5	%
Less:
Prior year development ratio		—			—			—			(1.1	)%		(0.2	)%
Catastrophe ratio		6.2	%		10.6	%		7.9	%		3.5	%		7.1	%
Current accident year combined ratio, excluding catastrophe losses		94.0	%		91.0	%		93.0	%		91.1	%		92.6	%
	Three months ended
	March 31, 2016
	Commercial Lines			Personal Lines			Total Domestic			Chaucer			Consolidated
Total combined Ratio		99.2	%		91.4	%		96.2	%		89.8	%		95.0	%
Less:
Prior year development ratio		3.5	%		(0.2	)%		2.1	%		(13.4	)%		(0.9	)%
Catastrophe ratio		3.3	%		3.3	%		3.3	%		0.2	%		2.7	%
Current accident year combined ratio, excluding catastrophe losses		92.4	%		88.3	%		90.8	%		103.0	%		93.2	%

(5) Core Commercial business provides commercial property and casualty coverages to small and mid-sized businesses in the U.S., generally with annual premiums per policy up to $250,000, primarily through the commercial multiple peril, commercial auto and workers’ compensation lines of business, as reported on page 7 of the First Quarter 2017 Financial Supplement.

	Three months ended						Three months ended
	March 31, 2017						March 31, 2016
($ in millions)	Core Commercial		Other Commercial		Total		Core Commercial		Other Commercial		Total
Net premiums written	$	375.2	$	250.1	$	625.3	$	359.3	$	245.0	$	604.3
Net premiums earned	$	348.0	$	240.3	$	588.3	$	330.8	$	240.6	$	571.4

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

(7) Reinsurance-to-close (“RITC”) transaction referenced on page 4 represents the increase in Chaucer’s retained share of its 2013 year of account of 98% that was closed and reinsured into its 2014 year of account, which was increased to a 100% share. In the first quarter of 2016, Chaucer recorded $17.7 million of additional assumed premium and an equal amount of loss and LAE reserves related to the RITC transaction that had no meaningful effect on the combined ratio and operating earnings. However, the transaction increased the loss and loss adjustment expense ratio by approximately 4 points and reduced the expense ratio by a similar amount.

13

(8) 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. 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, the cumulative effect of accounting changes and certain other items.

14

EX-99.2

Exhibit 99.2

FINANCIAL SUPPLEMENT

FIRST QUARTER 2017

THE HANOVER INSURANCE GROUP

FINANCIAL SUPPLEMENT

TABLE OF CONTENTS

Business Descriptions	1
Financial Highlights	2
Consolidated Financial Statements
Income Statements	3
Balance Sheets	4
GAAP Underwriting Results
Consolidated	5-6
Commercial Lines	7-8
Personal Lines	9-10
Chaucer	11-12
Investments
Net Investment Income and Yields	13
Investment Portfolio	14
Credit Quality and Duration of Fixed Maturities	15
Top 10 Corporate and Municipal Fixed Maturity Holdings	16
Reconciliation of Operating Income to Net Income	17
Other Information
Non-GAAP Financial Measures	18
Corporate Information	19
Market and Dividend Information	19
Financial Strength and Debt Ratings	19

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 marine, aviation and political, casualty, energy, property and treaty business.

Marine, Aviation & Political includes marine coverages that insure marine hull, liability, cargo and specie, fine art, and ports and terminals and political coverages that insure political violence (war, terrorism, aviation war), political risk and trade credit. It also includes aviation coverages that insure airline hull and liability, general aviation, refuellers, aviation products and satellite.

Casualty provides liability coverage worldwide for professional and commercial risks, credit and bond, crime and professional liability coverage for financial institutions, medical malpractice, excess workers’ compensation and accident and health, as well as syndicate participations.

Energy coverage, encompassing exploration and production, construction, downstream, operational power 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.

Property coverage insures property, including commercial and industrial businesses, against physical loss or damage and business interruption.

Treaty encompasses a broad range of casualty, property and marine exposures worldwide. International casualty treaties cover motor, employer public, professional, pecuniary and miscellaneous liabilities. North American casualty comprises mainly excess of loss, written on an occurrence and claims made basis, and with a focus on medical malpractice supported by workers compensation clash business. Casualty also includes accident & health, a largely catastrophe exposed account, written for a range of perils. Property comprises mainly catastrophe and risk excess of loss for personal, commercial, excess and surplus lines carriers. Marine treaties, written on a whole account, specific or combined basis, focus on a broad range of assets and associated perils and liabilities.

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 a discontinued voluntary pools business.

1

THE HANOVER INSURANCE GROUP

FINANCIAL HIGHLIGHTS

	Q1			Q2			Q3			Q4			Q1
(In millions, except earnings per share)	2016			2016			2016			2016			2017
PREMIUMS
Gross premiums written	$	1,375.0		$	1,402.0		$	1,402.2		$	1,218.2		$	1,454.7
Net premiums written		1,144.3			1,221.6			1,250.9			1,082.0			1,186.8
Net premiums earned		1,151.3			1,145.5			1,160.9			1,170.4			1,181.3
EARNINGS
Operating income (loss) before interest and taxes	$	120.4		$	94.7		$	129.8		$	(22.1	)	$	69.1
Operating income (loss) after taxes		71.5			54.0			78.6			(19.7	)		40.8
Income (loss) from continuing operations		78.1			1.9			88.3			(12.2	)		45.2
Net income (loss)		78.2			2.0			88.4			(13.5	)		45.2
PER SHARE DATA (DILUTED)
Operating income (loss) after taxes	$	1.64		$	1.24		$	1.83		$	(0.46	)	$	0.95
Income (loss) from continuing operations		1.79			0.04			2.06			(0.29	)		1.05
Net income (loss)		1.80			0.05			2.06			(0.32	)		1.05
Weighted average shares outstanding (1)		43.5			43.4			43.0			42.5			42.9
BALANCE SHEET
	March 31			June 30			September 30			December 31			March 31
(In millions, except per share data)	2016			2016			2016			2016			2017
Total assets	$	14,027.7		$	14,163.6		$	14,363.7		$	14,220.4		$	14,490.8
Total loss and loss adjustment expense reserves		6,722.3			6,778.0			6,802.3			6,949.4			7,103.0
Total shareholders’ equity		2,957.0			3,009.7			3,045.7			2,857.5			2,913.5
Total shareholders’ equity, excluding net unrealized appreciation depreciation on investments, net of tax		2,710.6			2,686.2			2,724.3			2,671.5			2,708.5
U.S. Property and Casualty Companies
Statutory surplus	$	2,276.7		$	2,152.6		$	2,218.5		$	2,173.4		$	2,229.5
Premium to surplus ratio		1.65:1			1.76:1			1.73:1			1.79:1			1.76:1
Book value per share	$	69.30		$	70.58		$	72.08		$	67.40		$	68.44
Book value per share, excluding net unrealized appreciation depreciation on investments, net of tax	$	63.52		$	62.99		$	64.48		$	63.01		$	63.62
Tangible book value per share (total book value excluding goodwill and intangibles)	$	62.70		$	64.11		$	65.74		$	61.17		$	62.20
Shares outstanding		42.7			42.7			42.3			42.4			42.6
Total debt/equity		27.2	%		26.5	%		26.2	%		27.5	%		27.0	%
Total debt/total capital		21.4	%		21.0	%		20.8	%		21.6	%		21.3	%

⁽¹⁾ Weighted average shares outstanding and per diluted share amounts in the fourth quarter of 2016 exclude common stock equivalents, as the impact of these instruments was anti-dilutive.

2

THE HANOVER INSURANCE GROUP

CONSOLIDATED INCOME STATEMENTS

	Three Months ended March 31
(In millions)	2017		2016		% Change
REVENUES
Premiums earned	$	1,181.3	$	1,151.3		2.6
Net investment income		71.1		68.3		4.1
Net realized investment gains		1.9		1.5		26.7
Fees and other income		6.6		6.5		1.5
Total revenues		1,260.9		1,227.6		2.7
LOSSES AND EXPENSES
Losses and loss adjustment expenses		766.5		699.6		9.6
Amortization of deferred acquisition costs		266.4		259.1		2.8
Interest expense		12.0		14.7		(18.4	)
Other operating expenses		157.0		146.1		7.5
Total losses and expenses		1,201.9		1,119.5		7.4
Income from continuing operations before income taxes		59.0		108.1		(45.4	)
Income tax expense		13.8		30.0		(54.0	)
Income from continuing operations		45.2		78.1		(42.1	)
Discontinued operations		—		0.1		N/M
Net income	$	45.2	$	78.2		(42.2	)

3

THE HANOVER INSURANCE GROUP

CONSOLIDATED BALANCE SHEETS

(In millions, except per share data)	March 31 2017			December 31 2016			% Change
ASSETS
Investments:
Fixed maturities, at fair value (amortized cost of $7,232.6 and $7,235.1)	$	7,340.8		$	7,331.3			0.1
Equity securities, at fair value (cost of $493.0 and $498.4)		600.5			584.4			2.8
Other investments		588.8			533.8			10.3
Total investments		8,530.1			8,449.5			1.0
Cash and cash equivalents		257.0			282.6			(9.1	)
Accrued investment income		62.2			61.7			0.8
Premiums and accounts receivable, net		1,522.2			1,438.1			5.8
Reinsurance recoverable on paid and unpaid losses and unearned premiums		2,726.1			2,611.8			4.4
Deferred acquisition costs		525.9			517.5			1.6
Deferred income taxes		116.3			115.1			1.0
Goodwill		184.9			184.8			0.1
Other assets		485.9			479.8			1.3
Assets of discontinued operations		80.2			79.5			0.9
Total assets	$	14,490.8		$	14,220.4			1.9
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Loss and loss adjustment expense reserves	$	7,103.0		$	6,949.4			2.2
Unearned premiums		2,657.4			2,561.0			3.8
Expenses and taxes payable		599.1			728.0			(17.7	)
Reinsurance premiums payable		341.8			251.9			35.7
Debt		786.6			786.4			—
Liabilities of discontinued operations		89.4			86.2			3.7
Total liabilities		11,577.3			11,362.9			1.9
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		1,847.2			1,846.7			—
Accumulated other comprehensive income		89.2			62.8			42.0
Retained earnings		1,899.4			1,875.6			1.3
Treasury stock at cost (17.9 and 18.1 million shares)		(922.9	)		(928.2	)		(0.6	)
Total shareholders’ equity		2,913.5			2,857.5			2.0
Total liabilities and shareholders’ equity	$	14,490.8		$	14,220.4			1.9

4

THE HANOVER INSURANCE GROUP

GAAP UNDERWRITING AND OPERATING INCOME INFORMATION AND RATIOS

CONSOLIDATED

Three Months ended March 31

	2017															2016
(In millions, except percentage data)	Commercial Lines			Personal Lines			Chaucer			Other			Total			Commercial Lines			Personal Lines			Chaucer			Other			Total
Gross premiums written	$	718.0		$	383.2		$	353.5		$	—		$	1,454.7		$	680.1		$	356.8		$	338.1		$	—		$	1,375.0
Net premiums written	$	625.3		$	362.1		$	199.4		$	—		$	1,186.8		$	604.3		$	337.0		$	203.0		$	—		$	1,144.3
Net premiums earned	$	588.3		$	381.8		$	211.2		$	—		$	1,181.3		$	571.4		$	358.6		$	221.3		$	—		$	1,151.3
Losses and LAE:
Current accident year, excluding catastrophe losses		339.3			237.4			107.7			—			684.4			320.8			215.7			141.9			—			678.4
Prior accident year unfavorable (favorable) reserve development, excluding catastrophe losses		(0.1	)		0.1			(2.3	)		0.3			(2.0	)		20.1			(0.7	)		(29.7	)		0.3			(10.0	)
Current accident year catastrophe losses		36.4			40.4			12.7			—			89.5			19.2			10.5			10.2			—			39.9
Prior accident year unfavorable (favorable) catastrophe loss development		—			—			(5.4	)		—			(5.4	)		(0.3	)		1.3			(9.7	)		—			(8.7	)
Total losses and LAE		375.6			277.9			112.7			0.3			766.5			359.8			226.8			112.7			0.3			699.6
Amortization of deferred acquisition costs and other underwriting expenses		215.4			112.3			84.7			0.6			413.0			207.9			103.2			86.1			0.4			397.6
GAAP underwriting profit (loss)		(2.7	)		(8.4	)		13.8			(0.9	)		1.8			3.7			28.6			22.5			(0.7	)		54.1
Net investment income		40.3			17.1			12.4			1.3			71.1			39.4			17.4			10.7			0.8			68.3
Other income		1.9			2.9			1.1			0.7			6.6			1.9			2.8			1.1			0.7			6.5
Other operating expenses		(2.1	)		(1.7	)		(2.4	)		(4.2	)		(10.4	)		(2.3	)		(1.7	)		(0.6	)		(3.9	)		(8.5	)
Operating income (loss) before income taxes	$	37.4		$	9.9		$	24.9		$	(3.1	)	$	69.1		$	42.7		$	47.1		$	33.7		$	(3.1	)	$	120.4
Loss and LAE ratio:
Current accident year, excluding catastrophe losses		57.6	%		62.2	%		51.0	%		N/M			57.9	%		56.2	%		60.2	%		64.1	%		N/M			59.0	%
Prior accident year unfavorable (favorable) reserve development, excluding catastrophe losses		—			—			(1.1	)%		N/M			(0.2	)%		3.5	%		(0.2	)%		(13.4	)%		N/M			(0.9	)%
Current accident year catastrophe losses		6.2	%		10.6	%		6.1	%		N/M			7.6	%		3.4	%		2.9	%		4.6	%		N/M			3.5	%
Prior accident year unfavorable (favorable) catastrophe loss development		—			—			(2.6	)%		N/M			(0.5	)%		(0.1	)%		0.4	%		(4.4	)%		N/M			(0.8	)%
Total loss and LAE ratio		63.8	%		72.8	%		53.4	%		N/M			64.8	%		63.0	%		63.3	%		50.9	%		N/M			60.8	%
Expense ratio		36.4	%		28.8	%		40.1	%		N/M			34.7	%		36.2	%		28.1	%		38.9	%		N/M			34.2	%
Combined ratio		100.2	%		101.6	%		93.5	%		N/M			99.5	%		99.2	%		91.4	%		89.8	%		N/M			95.0	%

5

THE HANOVER INSURANCE GROUP

GAAP UNDERWRITING INFORMATION AND RELATED RATIOS

CONSOLIDATED

(In millions, except percentage data)	Q1 2016			Q2 2016			Q3 2016			Q4 2016			Q1 2017
Gross premiums written	$	1,375.0		$	1,402.0		$	1,402.2		$	1,218.2		$	1,454.7
Net premiums written	$	1,144.3		$	1,221.6		$	1,250.9		$	1,082.0		$	1,186.8
Net premiums earned	$	1,151.3		$	1,145.5		$	1,160.9		$	1,170.4		$	1,181.3
Losses and LAE:
Current accident year, excluding catastrophe losses		678.4			663.7			673.2			684.0			684.4
Prior accident year unfavorable (favorable) reserve development, excluding catastrophe losses		(10.0	)		15.0			(8.1	)		143.4			(2.0	)
Current accident year catastrophe losses		39.9			62.3			27.6			30.2			89.5
Prior accident year favorable catastrophe loss development		(8.7	)		(11.3	)		(0.7	)		(14.2	)		(5.4	)
Total losses and LAE		699.6			729.7			692.0			843.4			766.5
Amortization of deferred acquisition costs and other underwriting expenses		397.6			388.5			405.0			421.0			413.0
GAAP underwriting profit (loss)	$	54.1		$	27.3		$	63.9		$	(94.0	)	$	1.8
Loss and LAE ratio:
Current accident year, excluding catastrophe losses		59.0	%		57.9	%		58.0	%		58.3	%		57.9	%
Prior accident year unfavorable (favorable) reserve development, excluding catastrophe losses		(0.9	)%		1.3	%		(0.7	)%		12.3	%		(0.2	)%
Current accident year catastrophe losses		3.5	%		5.5	%		2.4	%		2.6	%		7.6	%
Prior accident year favorable catastrophe loss development		(0.8	)%		(1.0	)%		(0.1	)%		(1.2	)%		(0.5	)%
Total loss and LAE ratio		60.8	%		63.7	%		59.6	%		72.0	%		64.8	%
Expense ratio		34.2	%		33.6	%		34.6	%		35.7	%		34.7	%
Combined ratio		95.0	%		97.3	%		94.2	%		107.7	%		99.5	%
Combined ratio, excluding catastrophe losses		92.3	%		92.8	%		91.9	%		106.3	%		92.4	%
Current accident year combined ratio, excluding catastrophe losses		93.2	%		91.5	%		92.6	%		94.0	%		92.6	%

6

THE HANOVER INSURANCE GROUP

GAAP UNDERWRITING AND OPERATING INCOME INFORMATION AND RATIOS

COMMERCIAL LINES

Three Months ended March 31

	2017															2016
(In millions, except percentage data)	Multiple Peril			Auto			Workers’ Comp			Other			Total			Multiple Peril			Auto			Workers’ Comp			Other			Total
Net premiums written	$	203.0		$	83.0		$	89.2		$	250.1		$	625.3		$	198.0		$	79.2		$	82.1		$	245.0		$	604.3
Net premiums earned	$	197.9		$	77.3		$	72.8		$	240.3		$	588.3		$	188.0		$	76.2		$	66.6		$	240.6		$	571.4
Losses and LAE:
Current accident year, excluding catastrophe losses		113.4			53.7			46.1			126.1			339.3			94.2			53.8			44.2			128.6			320.8
Prior accident year unfavorable (favorable) reserve development, excluding catastrophe losses		—			—			—			(0.1	)		(0.1	)		7.5			3.0			(4.4	)		14.0			20.1
Current accident year catastrophe losses		21.5			0.6			—			14.3			36.4			13.8			0.5			—			4.9			19.2
Prior accident year unfavorable (favorable) catastrophe loss development		1.2			(0.1	)		—			(1.1	)		—			(1.8	)		—			—			1.5			(0.3	)
Total losses and LAE		136.1			54.2			46.1			139.2			375.6			113.7			57.3			39.8			149.0			359.8
Amortization of deferred acquisition costs and other underwriting expenses														215.4															207.9
GAAP underwriting profit														(2.7	)														3.7
Net investment income														40.3															39.4
Other income														1.9															1.9
Other operating expenses														(2.1	)														(2.3	)
Operating income before income taxes													$	37.4														$	42.7
Loss and LAE ratio:
Current accident year, excluding catastrophe losses		57.3	%		69.5	%		63.3	%		52.4	%		57.6	%		50.1	%		70.6	%		66.4	%		53.5	%		56.2	%
Prior accident year unfavorable (favorable) reserve development, excluding catastrophe losses		—			—			—			—			—			4.0	%		3.9	%		(6.6	)%		5.8	%		3.5	%
Current accident year catastrophe losses		10.9	%		0.7	%		—			6.0	%		6.2	%		7.4	%		0.7	%		—			2.1	%		3.4	%
Prior accident year unfavorable (favorable) catastrophe loss development		0.6	%		(0.1	)%		—			(0.5	)%		—			(1.0	)%		—			—			0.6	%		(0.1	)%
Total loss and LAE ratio		68.8	%		70.1	%		63.3	%		57.9	%		63.8	%		60.5	%		75.2	%		59.8	%		62.0	%		63.0	%
Expense ratio														36.4	%														36.2	%
Combined ratio														100.2	%														99.2	%
Change in policies in force		5.6	%		(1.7	)%		10.5	%		5.8	%		5.4	%		5.7	%		(3.2	)%		(9.7	)%		3.8	%		1.7	%
Retention		86.8	%		81.6	%		81.9	%		N/M			84.7	%		85.9	%		79.8	%		76.7	%		N/M			82.7	%

7

THE HANOVER INSURANCE GROUP

GAAP UNDERWRITING INFORMATION AND RELATED RATIOS

COMMERCIAL LINES

	Q1			Q2			Q3			Q4			Q1
(In millions, except percentage data)	2016			2016			2016			2016			2017
Gross premiums written	$	680.1		$	662.9		$	730.0		$	613.2		$	718.0
Net premiums written	$	604.3		$	579.9		$	647.3		$	530.0		$	625.3
Net premiums earned	$	571.4		$	574.7		$	587.2		$	584.7		$	588.3
Losses and LAE:
Current accident year, excluding catastrophe losses		320.8			312.9			336.0			338.4			339.3
Prior accident year unfavorable (favorable) reserve development, excluding catastrophe losses		20.1			22.1			19.3			161.5			(0.1	)
Current accident year catastrophe losses		19.2			26.6			16.4			11.6			36.4
Prior accident year unfavorable (favorable) catastrophe loss development		(0.3	)		(0.7	)		1.3			(4.0	)		—
Total losses and LAE		359.8			360.9			373.0			507.5			375.6
Amortization of deferred acquisition costs and other underwriting expenses		207.9			208.7			210.6			211.6			215.4
GAAP underwriting profit (loss)	$	3.7		$	5.1		$	3.6		$	(134.4	)	$	(2.7	)
Loss and LAE ratio:
Current accident year, excluding catastrophe losses		56.2	%		54.5	%		57.2	%		57.9	%		57.6	%
Prior accident year unfavorable (favorable) reserve development, excluding catastrophe losses		3.5	%		3.8	%		3.3	%		27.6	%		—
Current accident year catastrophe losses		3.4	%		4.6	%		2.8	%		2.0	%		6.2	%
Prior accident year unfavorable (favorable) catastrophe loss development		(0.1	)%		(0.1	)%		0.2	%		(0.7	)%		—
Total loss and LAE ratio		63.0	%		62.8	%		63.5	%		86.8	%		63.8	%
Expense ratio		36.2	%		36.1	%		35.7	%		36.0	%		36.4	%
Combined ratio		99.2	%		98.9	%		99.2	%		122.8	%		100.2	%
Combined ratio, excluding catastrophe losses		95.9	%		94.4	%		96.2	%		121.5	%		94.0	%
Current accident year combined ratio, excluding catastrophe losses		92.4	%		90.6	%		92.9	%		93.9	%		94.0	%

8

THE HANOVER INSURANCE GROUP

GAAP UNDERWRITING AND OPERATING INCOME INFORMATION AND RATIOS

PERSONAL LINES

Three Months ended March 31

	2017												2016
(In millions, except percentage data)	Auto			Home			Other			Total			Auto			Home			Other			Total
Net premiums written	$	239.6		$	114.4		$	8.1		$	362.1		$	222.5		$	106.4		$	8.1		$	337.0
Net premiums earned	$	238.6		$	133.8		$	9.4		$	381.8		$	221.8		$	127.3		$	9.5		$	358.6
Losses and LAE:
Current accident year, excluding catastrophe losses		168.5			65.5			3.4			237.4			159.4			52.4			3.9			215.7
Prior accident year unfavorable (favorable) reserve development, excluding catastrophe losses		—			—			0.1			0.1			(0.8	)		—			0.1			(0.7	)
Current accident year catastrophe losses		1.7			38.6			0.1			40.4			0.5			9.9			0.1			10.5
Prior accident year unfavorable (favorable) catastrophe loss development		(0.2	)		0.2			—			—			0.1			1.2			—			1.3
Total losses and LAE		170.0			104.3			3.6			277.9			159.2			63.5			4.1			226.8
Amortization of deferred acquisition costs and other underwriting expenses											112.3												103.2
GAAP underwriting profit (loss)											(8.4	)											28.6
Net investment income											17.1												17.4
Other income											2.9												2.8
Other operating expenses											(1.7	)											(1.7	)
Operating income before income taxes										$	9.9											$	47.1
Loss and LAE ratio:
Current accident year, excluding catastrophe losses		70.6	%		49.0	%		36.1	%		62.2	%		71.9	%		41.2	%		41.0	%		60.2	%
Prior accident year unfavorable (favorable) reserve development, excluding catastrophe losses		—			—			1.1	%		—			(0.4	)%		—			1.1	%		(0.2	)%
Current accident year catastrophe losses		0.7	%		28.9	%		1.1	%		10.6	%		0.3	%		7.8	%		1.1	%		2.9	%
Prior accident year unfavorable (favorable) catastrophe loss development		(0.1	)%		0.1	%		—			—			—			0.9	%		—			0.4	%
Total loss and LAE ratio		71.2	%		78.0	%		38.3	%		72.8	%		71.8	%		49.9	%		43.2	%		63.3	%
Expense ratio											28.8	%											28.1	%
Combined ratio											101.6	%											91.4	%
Change in policies in force		2.5	%		2.6	%		(11.4	)%		2.1	%		(3.2	)%		(1.7	)%		(12.7	)%		(2.8	)%
Retention		85.9	%		83.3	%		N/M			84.8	%		84.4	%		81.2	%		N/M			83.1	%

9

THE HANOVER INSURANCE GROUP

GAAP UNDERWRITING INFORMATION AND RELATED RATIOS

PERSONAL LINES

(In millions, except percentage data)	Q1 2016			Q2 2016			Q3 2016			Q4 2016			Q1 2017
Gross premiums written	$	356.8		$	416.6		$	428.7		$	402.5		$	383.2
Net premiums written	$	337.0		$	395.3		$	407.5		$	381.4		$	362.1
Net premiums earned	$	358.6		$	364.7		$	371.5		$	376.7		$	381.8
Losses and LAE:
Current accident year, excluding catastrophe losses		215.7			221.2			226.7			220.9			237.4
Prior accident year unfavorable (favorable) reserve development, excluding catastrophe losses		(0.7	)		0.9			(1.1	)		5.2			0.1
Current accident year catastrophe losses		10.5			9.7			10.8			9.7			40.4
Prior accident year unfavorable catastrophe loss development		1.3			1.5			1.5			2.0			—
Total losses and LAE		226.8			233.3			237.9			237.8			277.9
Amortization of deferred acquisition costs and other underwriting expenses		103.2			102.1			110.3			116.3			112.3
GAAP underwriting profit (loss)	$	28.6		$	29.3		$	23.3		$	22.6		$	(8.4	)
Loss and LAE ratio:
Current accident year, excluding catastrophe losses		60.2	%		60.7	%		61.1	%		58.7	%		62.2	%
Prior accident year unfavorable (favorable) reserve development, excluding catastrophe losses		(0.2	)%		0.2	%		(0.3	)%		1.4	%		—
Current accident year catastrophe losses		2.9	%		2.7	%		2.9	%		2.6	%		10.6	%
Prior accident year unfavorable catastrophe loss development		0.4	%		0.4	%		0.4	%		0.5	%		—
Total loss and LAE ratio		63.3	%		64.0	%		64.1	%		63.2	%		72.8	%
Expense ratio		28.1	%		27.3	%		29.0	%		30.2	%		28.8	%
Combined ratio		91.4	%		91.3	%		93.1	%		93.4	%		101.6	%
Combined ratio, excluding catastrophe losses		88.1	%		88.2	%		89.8	%		90.3	%		91.0	%
Current accident year combined ratio, excluding catastrophe losses		88.3	%		88.0	%		90.1	%		88.9	%		91.0	%

10

THE HANOVER INSURANCE GROUP

GAAP UNDERWRITING AND OPERATING INCOME INFORMATION AND RATIOS

CHAUCER

Three Months ended March 31

	2017													2016
(In millions, except percentage data)	Marine, Aviation & Political		Casualty		Energy		Property		Treaty		Total			Marine, Aviation & Political		Casualty		Energy		Property		Treaty		Total
Gross premiums written	$	85.1	$	53.4	$	41.6	$	23.2	$	150.2	$	353.5		$	92.1	$	55.4	$	39.8	$	12.8	$	138.0	$	338.1
Net premiums written	$	54.1	$	39.5	$	11.9	$	11.2	$	82.7	$	199.4		$	58.4	$	46.7	$	12.3	$	5.9	$	79.7	$	203.0
Net premiums earned	$	60.2	$	44.6	$	34.0	$	12.6	$	59.8	$	211.2		$	57.9	$	50.5	$	45.0	$	11.2	$	56.7	$	221.3
Losses and LAE:
Current accident year, excluding catastrophe losses												107.7													141.9
Prior accident year favorable reserve development, excluding catastrophe losses												(2.3	)												(29.7	)
Current accident year catastrophe losses												12.7													10.2
Prior accident year favorable catastrophe loss development												(5.4	)												(9.7	)
Total losses and LAE												112.7													112.7
Amortization of deferred acquisition costs and other underwriting expenses												84.7													86.1
GAAP underwriting profit												13.8													22.5
Net investment income												12.4													10.7
Other income												1.1													1.1
Other operating expenses												(2.4	)												(0.6	)
Operating income before income taxes											$	24.9												$	33.7
Loss and LAE ratio:
Current accident year, excluding catastrophe losses												51.0	%												64.1	%
Prior accident year favorable reserve development, excluding catastrophe losses												(1.1	)%												(13.4	)%
Current accident year catastrophe losses												6.1	%												4.6	%
Prior accident year favorable catastrophe loss development												(2.6	)%												(4.4	)%
Total loss and LAE ratio												53.4	%												50.9	%
Expense ratio												40.1	%												38.9	%
Combined ratio												93.5	%												89.8	%

11

THE HANOVER INSURANCE GROUP

GAAP UNDERWRITING INFORMATION AND RELATED RATIOS

CHAUCER

	Q1			Q2			Q3			Q4			Q1
(In millions, except percentage data)	2016			2016			2016			2016			2017
Gross premiums written	$	338.1		$	322.5		$	243.5		$	202.5		$	353.5
Net premiums written	$	203.0		$	246.4		$	196.1		$	170.6		$	199.4
Net premiums earned	$	221.3		$	206.1		$	202.2		$	209.0		$	211.2
Losses and LAE:
Current accident year, excluding catastrophe losses		141.9			129.6			110.4			124.7			107.7
Prior accident year favorable reserve development, excluding catastrophe losses		(29.7	)		(8.3	)		(26.6	)		(30.7	)		(2.3	)
Current accident year catastrophe losses		10.2			26.0			0.4			8.9			12.7
Prior accident year favorable catastrophe loss development		(9.7	)		(12.1	)		(3.5	)		(12.2	)		(5.4	)
Total losses and LAE		112.7			135.2			80.7			90.7			112.7
Amortization of deferred acquisition costs and other underwriting expenses		86.1			77.4			83.7			91.8			84.7
GAAP underwriting profit (loss)	$	22.5		$	(6.5	)	$	37.8		$	26.5		$	13.8
Loss and LAE ratio:
Current accident year, excluding catastrophe losses		64.1	%		62.9	%		54.6	%		59.7	%		51.0	%
Prior accident year favorable reserve development, excluding catastrophe losses		(13.4	)%		(4.0	)%		(13.2	)%		(14.7	)%		(1.1	)%
Current accident year catastrophe losses		4.6	%		12.6	%		0.2	%		4.2	%		6.1	%
Prior accident year favorable catastrophe loss development		(4.4	)%		(5.9	)%		(1.7	)%		(5.8	)%		(2.6	)%
Total loss and LAE ratio		50.9	%		65.6	%		39.9	%		43.4	%		53.4	%
Expense ratio		38.9	%		37.6	%		41.4	%		43.9	%		40.1	%
Combined ratio		89.8	%		103.2	%		81.3	%		87.3	%		93.5	%
Combined ratio, excluding catastrophe losses		89.6	%		96.5	%		82.8	%		88.9	%		90.0	%
Current accident year combined ratio, excluding catastrophe losses		103.0	%		100.5	%		96.0	%		103.6	%		91.1	%

12

THE HANOVER INSURANCE GROUP

NET INVESTMENT INCOME AND YIELDS

(In millions, except yields)	Q1 2016			Q2 2016			Q3 2016			Q4 2016			Q1 2017
Net Investment Income
Fixed maturities	$	61.1		$	61.3		$	59.8		$	62.9		$	60.9
Equity securities		4.3			4.8			4.4			5.1			4.3
Other investments		5.6			5.7			6.4			9.0			8.6
Investment expenses		(2.7	)		(2.7	)		(2.8	)		(2.8	)		(2.7	)
Total	$	68.3		$	69.1		$	67.8		$	74.2		$	71.1
Pre-tax Yields
Fixed maturities		3.54	%		3.56	%		3.43	%		3.44	%		3.38	%
Total		3.40	%		3.39	%		3.31	%		3.40	%		3.29	%

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.

13

THE HANOVER INSURANCE GROUP

INVESTMENT PORTFOLIO

March 31, 2017

(In millions)
Investment Type	Weighted Average Quality	Amortized Cost or Cost		Fair Value		% of Total			Net Unrealized Gain (Loss)			Change in Net Unrealized YTD
Fixed maturities:
U.S. Treasury and government agencies	AAA	$	338.9	$	338.1		3.8	%	$	(0.8	)	$	0.6
Foreign government	AA+		242.9		248.0		2.8	%		5.1			0.2
Municipals:
Taxable	AA		955.6		986.2		11.2	%		30.6			1.0
Tax-exempt	AA		92.8		93.5		1.1	%		0.7			0.7
Corporate:
NAIC 1	A		1,655.5		1,685.3		19.2	%		29.8			2.7
NAIC 2	BBB		1,964.8		1,991.2		22.7	%		26.4			5.3
NAIC 3 and below	B+		399.5		417.6		4.7	%		18.1			2.3
Total corporate	BBB+		4,019.8		4,094.1		46.6	%		74.3			10.3
Asset backed:
Residential mortgage-backed	AAA		967.5		963.4		11.0	%		(4.1	)		(0.1	)
Commercial mortgage-backed	AAA		556.6		558.9		6.4	%		2.3			(1.4	)
Asset-backed	AAA		58.5		58.6		0.7	%		0.1			0.7
Total fixed maturities	A+		7,232.6		7,340.8		83.6	%		108.2			12.0
Equity securities			493.0		600.5		6.8	%		107.5			21.5
Other investments			584.9		588.8		6.7	%		3.9			—
Total investments			8,310.5		8,530.1		97.1	%		219.6			33.5
Cash and cash equivalents			257.0		257.0		2.9	%		—			—
Total		$	8,567.5	$	8,787.1		100.0	%	$	219.6		$	33.5

14

THE HANOVER INSURANCE GROUP

CREDIT QUALITY AND DURATION OF FIXED MATURITIES

March 31, 2017

(In millions)
CREDIT QUALITY OF FIXED MATURITIES
NAIC Designation	Rating Agency Equivalent Designation	Amortized Cost		Fair Value		% of Total Fair Value
1	Aaa/Aa/A	$	4,836.3	$	4,900.4		66.8	%
2	Baa		1,990.6		2,016.5		27.4	%
3	Ba		215.0		225.3		3.1	%
4	B		179.4		186.5		2.5	%
5	Caa and lower		11.0		11.7		0.2	%
6	In or near default		0.3		0.4		—
Total fixed maturities		$	7,232.6	$	7,340.8		100.0	%
DURATION OF FIXED MATURITIES
		Amortized Cost		Fair Value		% of Total Fair Value
0-2 Years		$	1,192.1	$	1,216.2		16.6	%
2-4 Years			2,109.2		2,177.0		29.6	%
4-6 Years			1,941.2		1,971.5		26.9	%
6-8 Years			1,559.5		1,550.3		21.1	%
8-10 Years			367.0		361.1		4.9	%
10+ Years			63.6		64.7		0.9	%
Total fixed maturities		$	7,232.6	$	7,340.8		100.0	%
Weighted Average Duration			4.4

15

THE HANOVER INSURANCE GROUP

TOP 10 CORPORATE AND MUNICIPAL FIXED MATURITY HOLDINGS

March 31, 2017

(In millions, except percentage data)
Issuer	Amortized Cost		Fair Value		As a Percent of Invested Assets			S&P Ratings
US Bancorp	$	27.3	$	27.5		0.31	%		A
Wells Fargo		26.6		26.7		0.30	%		A
Verizon		26.3		27.0		0.31	%		BBB+
Enterprise Holdings		26.1		25.6		0.29	%		BBB+
Goldman Sachs		26.0		27.1		0.31	%		BBB
Anheuser-Busch InBev		25.6		25.9		0.30	%		A-
Morgan Stanley		25.0		25.0		0.29	%		BBB+
Key Bank		24.6		24.7		0.28	%		BBB+
AvalonBay Communities		24.5		24.1		0.27	%		A-
Oracle		23.9		24.0		0.27	%		AA-
Top 10 Corporate and Municipal Fixed	$	255.9	$	257.6		2.93	%

16

THE HANOVER INSURANCE GROUP

RECONCILIATION OF OPERATING INCOME TO NET INCOME

	Three Months ended March 31
	2017						2016
(In millions, except per share data)	$			Per Share (Diluted)			$			Per Share (Diluted)
OPERATING INCOME
Commercial Lines	$	37.4					$	42.7
Personal Lines		9.9						47.1
Chaucer		24.9						33.7
Other		(3.1	)					(3.1	)
Total		69.1						120.4
Interest expense		(12.0	)					(14.7	)
Operating income before income taxes		57.1		$	1.33			105.7		$	2.43
Income tax expense on operating income		(16.3	)		(0.38	)		(34.2	)		(0.79	)
Operating income after income taxes		40.8			0.95			71.5			1.64
Other non-operating items:
Net realized investment gains		1.9			0.04			1.5			0.04
Other		—			—			0.7			0.01
Income tax benefit on other non-operating items		2.5			0.06			4.4			0.10
Income from continuing operations, net of taxes		45.2			1.05			78.1			1.79
Discontinued operations, net of taxes		—			—			0.1			0.01
NET INCOME	$	45.2		$	1.05		$	78.2		$	1.80

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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 and combined ratios excluding catastrophe losses (catastrophe losses as discussed here and in all other measures include catastrophe loss development) 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 and intangible assets, 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 three months ended March 31, 2017 and 2016 is set forth on page 17 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 Limited

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	2017
	Price Range				Dividends
	High		Low		Per Share
March 31	$	91.58	$	83.09	$	0.500
Quarter Ended	2016
	Price Range				Dividends
	High		Low		Per Share
March 31	$	90.68	$	76.90	$	0.460
June 30	$	91.15	$	80.41	$	0.460
September 30	$	84.58	$	74.10	$	0.460
December 31	$	91.66	$	74.88	$	0.500

INDUSTRY RATINGS AS OF MAY 2, 2017

	A.M.		Standard
Financial Strength Ratings	Best		& Poor’s		Moody’s
The Hanover Insurance Company		A		A		A3
Citizens Insurance Company of America		A		A		—
	A.M.		Standard
Debt Ratings	Best		& 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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