SCHEDULE II CONDENSED FINANCIAL INFORMATION OF REGISTRANT PARENT COMPANY ONLY

12 Months Ended

Dec. 31, 2018

Condensed Financial Information Of Parent Company Only Disclosure [Abstract]

SCHEDULE II CONDENSED FINANCIAL INFORMATION OF REGISTRANT PARENT COMPANY ONLY STATEMENTS OF INCOME

SCHEDULE II

THE HANOVER INSURANCE GROUP, INC.

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

PARENT COMPANY ONLY

STATEMENTS OF INCOME

YEARS ENDED DECEMBER 31	2018			2017			2016
(in millions)
Revenues
Net investment income	$	11.8		$	7.6		$	4.9
Net realized losses from sales and other		(0.5	)		(0.2	)		—
Interest income from loan to subsidiary		0.3			0.2			22.4
Other income		0.5			0.5			0.5
Total revenues		12.1			8.1			27.8
Expenses
Interest expense		37.8			38.1			46.1
Employee benefit related expenses		5.1			7.4			7.0
Interest expense on loan from subsidiary		6.8			7.0			6.3
Loss from repayment of debt		1.9			—			88.3
Other operating expenses		12.1			10.5			8.6
Total expenses		63.7			63.0			156.3
Net loss before income taxes and equity in income of subsidiaries		(51.6	)		(54.9	)		(128.5	)
Income tax benefit		21.4			44.4			75.6
Equity in income of subsidiaries		288.4			196.1			207.0
Income from continuing operations		258.2			185.6			154.1
Gain from sale of Chaucer business (net of income tax expense of $42.5 in 2018)		131.9		—			—
Income from discontinued life business (net of income tax (expense) benefit of $(0.2), $(0.1) and $1.7 in 2018, 2017 and 2016)		0.9			0.6			1.0
Net income		391.0			186.2			155.1
Other comprehensive (loss) income, net of tax		(122.4	)		44.8			8.9
Comprehensive income	$	268.6		$	231.0		$	164.0

The condensed financial information should be read in conjunction with the consolidated financial statements and notes thereto.

SCHEDULE II (CONTINUED)

THE HANOVER INSURANCE GROUP, INC.

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

PARENT COMPANY ONLY

BALANCE SHEETS

DECEMBER 31	2018			2017
(in millions, except per share data)
Assets
Fixed maturities - at fair value (amortized cost of $380.5 and $281.9)	$	374.3		$	280.9
Equity securities - at fair value		1.1			1.1
Cash and cash equivalents ⁽¹⁾		827.4			32.7
Investments in subsidiaries		2,800.1			3,455.4
Net receivable from subsidiaries		25.0			31.3
Other assets ⁽²⁾		34.6			2.6
Total assets	$	4,062.5		$	3,804.0
Liabilities
Expenses and state taxes payable ⁽³⁾	$	275.2		$	7.9
Current income tax payable		46.9			3.2
Interest payable		7.8			8.1
Debt		777.9			787.1
Total liabilities		1,107.8			806.3
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		1,871.8			1,857.0
Accumulated other comprehensive income (loss)		(116.5	)		107.6
Retained earnings		2,182.3			1,975.0
Treasury stock at cost (18.2 and 18.0 million shares)		(983.5	)		(942.5	)
Total shareholders' equity		2,954.7			2,997.7
Total liabilities and shareholders' equity	$	4,062.5		$	3,804.0

(1)	Included in 2018 were net cash proceeds of $762.0 million as a result of the sale of the Chaucer business to China Re on December 28, 2018.

(2)	In 2018, other assets include a $31.7 million receivable for estimated contingent consideration related to the sale of the Chaucer business.

(3)	Included in 2018 was a payable related to a special dividend of $193.4 million declared on December 30, 2018.

The condensed financial information should be read in conjunction with the consolidated financial statements and notes thereto.

SCHEDULE II (CONTINUED)

THE HANOVER INSURANCE GROUP, INC.

CONDENSED FINANCIAL INFORMATION OF REGISTRANT

PARENT COMPANY ONLY

STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31	2018			2017			2016
(in millions)
Cash flows from operating activities
Net income	$	391.0		$	186.2		$	155.1
Adjustments to reconcile net income to net cash provided by operating activities:
Gain from sale of Chaucer business		(131.9	)		—			—
Net realized investment losses		0.6			0.2			—
Loss from retirement of debt		1.9			—			88.3
Equity in net income of subsidiaries		(288.4	)		(196.1	)		(207.0	)
Dividends received from subsidiaries		86.4			55.1			228.1
Deferred income tax expense (benefit)		(5.3	)		18.9			(39.0	)
Change in expenses and taxes payable		59.7			(27.4	)		6.6
Change in net receivable from subsidiaries		8.9			9.0			50.5
Other, net		(0.4	)		(0.1	)		7.3
Net cash provided by operating activities		122.5			45.8			289.9
Cash flows from investing activities
Proceeds from disposals and maturities of fixed maturities		82.8			94.1			82.4
Purchase of fixed maturities		(4.0	)		—			—
Net cash received from sale of Chaucer business		762.0			—			—
Net cash used for business acquisitions		—			(12.3	)		(2.2	)
Net cash provided by investing activities		840.8			81.8			80.2
Cash flows from financing activities
Proceeds from debt borrowings		—			—			370.7
Proceeds from long-term intercompany borrowings		—			—			125.0
Net cash related to short-term intercompany borrowings		(19.8	)		—			(102.7	)
Repurchases of debt		(11.6	)		—			(571.9	)
Repurchase of common stock		(57.7	)		(37.2	)		(105.6	)
Dividends paid to shareholders		(94.3	)		(86.8	)		(80.4	)
Proceeds from exercise of employee stock options		14.8			23.1			16.2
Other financing activities		—			(4.1	)		(19.9	)
Net cash used in financing activities		(168.6	)		(105.0	)		(368.6	)
Net change in cash and cash equivalents		794.7			22.6			1.5
Cash and cash equivalents, beginning of year		32.7			10.1			8.6
Cash and cash equivalents, end of year	$	827.4		$	32.7		$	10.1

Included in other operating cash flows was the cash portion of dividends received from unconsolidated subsidiaries. Additionally, investment assets of $179.8 million, $261.6 million and $78.5 million were transferred to the parent company in 2018, 2017 and 2016, respectively, to settle dividend obligations and other intercompany borrowings and balances.

The condensed financial information should be read in conjunction with the consolidated financial statements and notes thereto.