The Hanover Insurance Group, Inc. (THG) 8-K Results of Operations and Financial Condition

EXHIBIT 99.2

THE HANOVER INSURANCE GROUP

STATISTICAL SUPPLEMENT

TABLE OF CONTENTS

Financial Highlights	1-3
Consolidated Financial Statements
Income Statements	4-5
Balance Sheets	6
Property and Casualty
Condensed Income Statements	7
Property and Casualty Consolidated Balance Sheets	8
GAAP Underwriting Results	9-13
Life Companies
Condensed Income Statements	14
Life Companies Consolidated Balance Sheets	15
Future Policy Benefits and Account Balances	16
Investments
Net Investment Income	17
Net Realized Investment Gains (Losses)	18
Unrealized Losses	19
Credit Quality of Fixed Maturities	20
Property and Casualty Statutory Ratios	21-23
Historical Financial Highlights	24
Other Information	Inside back cover
Corporate Information
Market and Dividend Information
Industry Ratings

THE HANOVER INSURANCE GROUP

FINANCIAL HIGHLIGHTS

	Quarter ended December 31								Year ended December 31
(In millions)	2005			2004			% Change		2005			2004			% Change
SEGMENT INCOME
Property and Casualty
Personal Lines	$	74.4		$	45.9		62.1		$	143.2		$	134.6		6.4
Commercial Lines		14.5			26.0		(44.2	)		(35.0	)		58.0		N/M
Other		0.6			1.7		(64.7	)		5.5			5.4		1.9
Total Property and Casualty		89.5			73.6		21.6			113.7			198.0		(42.6	)
Life Companies		(1.0	)		(8.7	)	(88.5	)		(18.7	)		(22.3	)	(16.1	)
Interest expense on corporate debt		(10.0	)		(10.0	)	—			(39.9	)		(39.9	)	—
Total segment income		78.5			54.9		43.0			55.1			135.8		(59.4	)
Federal income tax expense on segment income		(1.3	)		(12.6	)	(89.7	)		(1.0	)		(26.6	)	(96.2	)
Total segment income after taxes	$	77.2		$	42.3		82.5		$	54.1		$	109.2		(50.5	)
RECONCILIATION FROM SEGMENT INCOME TO NET INCOME (LOSS)
Total segment income after taxes	$	77.2		$	42.3		82.5		$	54.1		$	109.2		(50.5	)
Change in prior years tax reserves		—			—		N/M			2.3			—		N/M
Federal income tax settlement		5.3			0.1		N/M			5.3			30.4		(82.6	)
Net realized investment gains, net of amortization		5.8			3.7		56.8			18.7			16.1		16.1
Gains (losses) on derivative instruments		—			0.9		N/M			(0.3	)		1.3		N/M
Gains (losses) from retirement of funding agreements and trust instruments supported by funding obligations		—			0.1		N/M			—			(0.2	)	N/M
Restructuring costs		(0.8	)		(2.7	)	(70.4	)		(2.1	)		(8.5	)	(75.3	)
Federal income tax expense on non-segment income		(7.3	)		(0.9	)	N/M			(5.7	)		(3.0	)	90.0
Income from continuing operations, net of taxes		80.2			43.5		84.4			72.3			145.3		(50.2	)
Income from discontinued variable life and annuity business, net of taxes		4.1			19.6		(79.1	)		42.7			37.2		14.8
Loss on disposal of variable life and annuity business, net of taxes		30.2			—		N/M			(444.4	)		—		N/M
Income (loss) before cumulative effect of accounting change		114.5			63.1		81.5			(329.4	)		182.5		N/M
Cumulative effect of change in accounting principle, net of taxes		—			—		N/M			—			(57.2	)	N/M
Net income (loss)	$	114.5		$	63.1		81.5		$	(329.4	)	$	125.3		N/M

1

THE HANOVER INSURANCE GROUP

FINANCIAL HIGHLIGHTS

		Quarter ended December 31								Year ended December 31
		2005			2004			% Change		2005			2004			% Change
PER SHARE DATA (DILUTED)
Total segment income		$	1.44		$	1.02		41.2		$	1.02		$	2.53		(59.7	)
Federal income tax expense on segment income			(0.02	)		(0.23	)	(91.3	)		(0.02	)		(0.50	)	(96.0	)
Total segment income after taxes			1.42			0.79		79.7			1.00			2.03		(50.7	)
Change in prior years tax reserves			—			—		N/M			0.04			—		N/M
Federal income tax settlement			0.10			—		N/M			0.10			0.57		(82.5	)
Net realized investment gains, net of amortization			0.11			0.07		57.1			0.35			0.30		16.7
Gains (losses) on derivative instruments			—			0.02		N/M			—			0.02		N/M
Gains (losses) from retirement of funding agreements and trust instruments supported by funding obligations			—			—		N/M			—			—		N/M
Restructuring costs			(0.02	)		(0.05	)	(60.0	)		(0.04	)		(0.16	)	(75.0	)
Federal income tax expense on non-segment income			(0.13	)		(0.02	)	N/M			(0.11	)		(0.05	)	N/M
Income from continuing operations, net of taxes			1.48			0.81		82.7			1.34			2.71		(50.6	)
Income from discontinued variable life and annuity business, net of taxes			0.08			0.37		(78.4	)		0.79			0.69		14.5
Loss on disposal of variable life and annuity business, net of taxes			0.55			—		N/M			(8.23	)		—		N/M
Income (loss) before cumulative effect of accounting change			2.11			1.18		78.8			(6.10	)		3.40		N/M
Cumulative effect of change in accounting principle, net of taxes			—			—		N/M			—			(1.06	)	N/M
Net income (loss)		$	2.11		$	1.18		78.8		$	(6.10	)	$	2.34		N/M
	��

2

THE HANOVER INSURANCE GROUP

FINANCIAL HIGHLIGHTS

(In millions, except per share data)	December 31 2005			December 31 2004			% Change
BALANCE SHEET
Shareholders’ equity
The Hanover Insurance Company (consolidated)	$	1,709.8		$	1,680.2		1.8
First Allmerica Financial Life Insurance Company (consolidated) (1)		362.8			1,112.1		(67.4	)
THG Holding Company debt		(508.8	)		(508.8	)	—
THG Holding Company and other		383.3			56.0		N/M
Total shareholders’ equity	$	1,947.1		$	2,339.5		(16.8	)
Total adjusted statutory capital
The Hanover Insurance Company (consolidated)	$	1,204.6		$	1,098.8		9.6
First Allmerica Financial Life Insurance Company	$	188.8		$	207.7		(9.1	)
The Hanover Insurance Company (consolidated) premium to surplus ratio		1.8:1			2.0:1		N/M
First Allmerica Financial Life Insurance Company estimated risk based capital ratio		406	%		339	%	67.0
Book value per share
The Hanover Insurance Company (consolidated)	$	31.81		$	31.53		0.9
First Allmerica Financial Life Insurance Company (consolidated)		6.75			20.87		(67.7	)
THG Holding Company debt		(9.47	)		(9.56	)	(0.9	)
THG Holding Company and other		7.14			1.07		N/M
Total book value per share	$	36.23		$	43.91		(17.5	)
Book value per share, excluding accumulated other comprehensive income	$	37.33		$	43.85		(14.9	)
Shares outstanding (2)		53.7			53.2
Stock price	$	41.77		$	32.83		27.2
Price/book value per share		1.2 x			0.7 x		0.5 x
Debt/equity		26.1	%		21.7	%	4.4 pts
Debt/total capital		20.7	%		17.9	%	2.8 pts

(1) Shareholders’ equity represents Allmerica Financial Life Insurance and Annuity Company on a consolidated basis in 2004.

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

3

THE HANOVER INSURANCE GROUP

CONSOLIDATED INCOME STATEMENTS

	Quarter ended December 31							Year ended December 31
(In millions, except per share data)	2005		2004			% Change		2005			2004			% Change
REVENUES
Premiums	$	547.9	$	569.9		(3.9	)	$	2,198.2		$	2,288.6		(4.0	)
Fees and other income		20.1		20.7		(2.9	)		80.9			83.1		(2.6	)
Net investment income		83.4		78.1		6.8			321.4			329.3		(2.4	)
Net realized investment gains		5.7		3.4		67.6			23.8			16.1		47.8
Total revenues		657.1		672.1		(2.2	)		2,624.3			2,717.1		(3.4	)
BENEFITS, LOSSES AND EXPENSES
Policy benefits, claims, losses and loss adjustment expenses		362.2		379.0		(4.4	)		1,703.1			1,646.7		3.4
Policy acquisition expenses		117.3		118.2		(0.8	)		465.2			477.0		(2.5	)
(Gains) losses from retirement of funding agreements and trust instruments supported by funding obligations		—		(0.1	)	N/M			—			0.2		N/M
Losses on derivative instruments		0.7		0.2		N/M			2.3			0.6		N/M
Restructuring costs		0.8		2.7		(70.4	)		2.1			8.5		(75.3	)
Other operating expenses		92.7		115.3		(19.6	)		380.3			439.6		(13.5	)
Total benefits, losses and expenses		573.7		615.3		(6.8	)		2,553.0			2,572.6		(0.8	)
Income from continuing operations before federal income taxes		83.4		56.8		46.8			71.3			144.5		(50.7	)
Federal income tax expense (benefit)		3.2		13.3		(75.9	)		(1.0	)		(0.8	)	25.0
Income from continuing operations		80.2		43.5		84.4			72.3			145.3		(50.2	)
Income from discontinued variable life and annuity business, net of taxes		4.1		19.6		(79.1	)		42.7			37.2		14.8
Loss on disposal of variable life and annuity business, net of taxes		30.2		—		N/M			(444.4	)		—		N/M
Income (loss) before cumulative effect of change in accounting principle		114.5		63.1		81.5			(329.4	)		182.5		N/M
Cumulative effect of change in accounting principle		—		—		—			—			(57.2	)	N/M
Net income (loss)	$	114.5	$	63.1		81.5		$	(329.4	)	$	125.3		N/M

4

THE HANOVER INSURANCE GROUP

CONSOLIDATED INCOME STATEMENTS

	Quarter ended December 31						Year ended December 31
	2005		2004		% Change		2005			2004			% Change
PER SHARE DATA (DILUTED)
Income from continuing operations	$	1.48	$	0.81	82.7		$	1.34		$	2.71		(50.6	)
Income from discontinued variable life and annuity business		0.08		0.37	(78.4	)		0.79			0.69		14.5
Loss on disposal of variable life and annuity business		0.55		—	N/M			(8.23	)		—		N/M
Income (loss) before cumulative effect of change in accounting principle		2.11		1.18	78.8			(6.10	)		3.40		N/M
Cumulative effect of change in accounting principle		—		—	N/M			—			(1.06	)	N/M
Net income (loss) (1)	$	2.11	$	1.18	78.8		$	(6.10	)	$	2.34		N/M
Weighted average shares outstanding		54.2		53.7				54.0			53.7

(1) Basic income per share was $2.13 and $1.19 for the quarters ended December 31, 2005 and 2004, respectively and $(6.16) and $2.36 for the years ended December 31, 2005 and 2004, respectively.

5

THE HANOVER INSURANCE GROUP

CONSOLIDATED BALANCE SHEETS

(In millions, except per share data)	December 31 2005			December 31 2004			% Change
ASSETS
Investments:
Fixed maturities, at fair value (amortized cost of $5,685.9 and $7,553.4)	$	5,708.2		$	7,822.2		(27.0	)
Equity securities, at fair value (cost of $13.0 and $13.7)		18.0			17.0		5.9
Mortgage loans		99.6			114.8		(13.2	)
Policy loans		139.9			256.4		(45.4	)
Other long-term investments		42.6			55.3		(23.0	)
Total investments		6,008.3			8,265.7		(27.3	)
Cash and cash equivalents		701.5			486.5		44.2
Accrued investment income		76.5			118.2		(35.3	)
Premiums, accounts and notes receivable, net		493.2			485.4		1.6
Reinsurance receivable on paid and unpaid losses, benefits and unearned premiums		1,489.0			2,026.4		(26.5	)
Deferred policy acquistion costs		209.0			905.5		(76.9	)
Deferred federal income taxes		467.5			415.1		12.6
Goodwill		128.2			128.2		—
Other assets		362.8			433.2		(16.3	)
Separate account assets		571.9			10,455.0		(94.5	)
Total assets	$	10,507.9		$	23,719.2		(55.7	)
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Policy liabilities and accruals:
Future policy benefits	$	1,207.8		$	3,462.3		(65.1	)
Outstanding claims, losses and loss adjustment expenses		3,551.6			3,179.0		11.7
Unearned premiums		1,011.3			1,029.8		(1.8	)
Contractholder deposit funds and other policy liabilities		254.7			379.5		(32.9	)
Total policy liabilities and accruals		6,025.4			8,050.6		(25.2	)
Expenses and taxes payable		1,068.4			1,152.8		(7.3	)
Reinsurance premiums payable		92.0			86.5		6.4
Trust instruments supported by funding obligations		294.3			1,126.0		(73.9	)
Long-term debt		508.8			508.8		—
Separate account liabilities		571.9			10,455.0		(94.5	)
Total liabilities		8,560.8			21,379.7		(60.0	)
SHAREHOLDERS’ EQUITY
Preferred stock, par value $.01 per share; authorized 20.0 million shares; issued none		—			—		—
Common stock, par value $.01 per share; authorized 300.0 million shares; issued 60.5 and 60.4 million shares		0.6			0.6		—
Additional paid-in capital		1,785.1			1,782.1		0.2
Accumulated other comprehensive (loss) income		(59.5	)		3.0		N/M
Retained earnings		585.6			943.4		(37.9	)
Treasury stock at cost (6.8 and 7.2 million shares)		(364.7	)		(389.6	)	(6.4	)
Total shareholders’ equity		1,947.1			2,339.5		(16.8	)
Total liabilities and shareholders’ equity	$	10,507.9		$	23,719.2		(55.7	)

6

PROPERTY AND CASUALTY

THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY

CONDENSED INCOME STATEMENTS

	Quarter ended December 31						Year ended December 31
(In millions)	2005		2004		% Change		2005		2004		% Change
REVENUES
Net premiums written	$	502.5	$	513.2	(2.1	)	$	2,150.4	$	2,236.2	(3.8	)
Change in unearned premiums, net of prepaid reinsurance premiums		39.1		49.7	(21.3	)		10.9		12.9	(15.5	)
Net premiums earned		541.6		562.9	(3.8	)		2,161.3		2,249.1	(3.9	)
Net investment income		54.7		50.9	7.5			209.1		196.9	6.2
Other income		12.8		13.3	(3.8	)		51.9		52.7	(1.5	)
Total segment revenue		609.1		627.1	(2.9	)		2,422.3		2,498.7	(3.1	)
LOSSES AND OPERATING EXPENSES
Policy benefits, claims, losses and loss adjustment expenses		340.4		363.4	(6.3	)		1,596.9		1,552.0	2.9
Policy acquisition expenses		115.8		117.0	(1.0	)		458.5		470.1	(2.5	)
Other operating expenses		63.4		73.1	(13.3	)		253.2		278.6	(9.1	)
Total losses and operating expenses		519.6		553.5	(6.1	)		2,308.6		2,300.7	0.3
Segment income before federal income taxes	$	89.5	$	73.6	21.6		$	113.7	$	198.0	(42.6	)

7

THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY

CONSOLIDATED BALANCE SHEETS (1)

(In millions, except per share data)	December 31 2005			December 31 2004		% Change
ASSETS
Investments:
Fixed maturities, at fair value (amortized cost of $3,810.7 and $3,677.5)	$	3,822.1		$	3,792.0	0.8
Equity securities, at fair value (cost of $2.0 and $1.0)		6.0			2.1	—
Mortgage loans		45.0			51.3	(12.3	)
Other long-term investments		0.3			0.6	(50.0	)
Total investments		3,873.4			3,846.0	0.7
Cash and cash equivalents		322.9			190.4	69.6
Accrued investment income		48.1			50.1	(4.0	)
Premiums, accounts, and notes receivable, net		489.2			481.2	1.7
Reinsurance receivable on paid and unpaid losses, benefits and unearned premiums		1,226.3			1,039.8	17.9
Deferred policy acquistion costs		201.9			211.4	(4.5	)
Deferred federal income tax asset		246.5			206.8	19.2
Goodwill		121.4			121.4	—
Other assets		181.5			174.2	4.2
Total assets	$	6,711.2		$	6,321.3	6.2
LIABILITIES AND SHAREHOLDER’S EQUITY
LIABILITIES
Policy liabilities and accruals:
Outstanding claims, losses and loss adjustment expenses	$	3,458.7		$	3,068.6	12.7
Unearned premiums		1,009.7			1,026.5	(1.6	)
Contractholder deposit funds and other policy liabilities		3.0			4.8	(37.5	)
Total policy liabilities and accruals		4,471.4			4,099.9	9.1
Expenses and taxes payable		444.5			467.0	(4.8	)
Reinsurance premiums payable		85.5			74.2	15.2
Total liabilities		5,001.4			4,641.1	7.8
SHAREHOLDER’S EQUITY
Common stock, par value $1.00 per share; authorized 20.9 million shares; issued 5.0 million shares		5.0			5.0	—
Additional paid-in capital		169.2			169.2	—
Accumulated other comprehensive income		(9.6	)		48.0	N/M
Retained earnings		1,545.2			1,458.0	6.0
Total shareholder’s equity		1,709.8			1,680.2	1.8
Total liabilities and shareholder’s equity	$	6,711.2		$	6,321.3	6.2

(1) Property and Casualty Companies includes The Hanover Insurance Company and Citizens Insurance Company of America, and their subsidiaries.

8

THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY

GAAP UNDERWRITING PROFIT (LOSS) RECONCILED TO SEGMENT INCOME (LOSS)

	Quarter ended December 31, 2005
	Personal Lines												Commercial Lines															Other Property and Casualty			Total Property and Casualty
(In millions)	Personal Automobile			Homeowners			Other Personal Lines			Total Personal Lines			Workers’ Compensation			Commercial Automobile			Commercial Multiple Peril			Other Commercial Lines			Total Commercial Lines
Net premiums written	$	218.4		$	99.0		$	8.6		$	326.0		$	22.7		$	41.2		$	72.8		$	39.8		$	176.5		$	—		$	502.5
Net premiums earned	$	231.2		$	100.7		$	9.6		$	341.5		$	30.8		$	47.9		$	83.9		$	37.5		$	200.1		$	—		$	541.6
Policy benefits, claims, losses excluding prior year reserve development and catastrophe losses		136.0			36.0			3.7			175.7			24.8			24.3			33.5			12.9			95.5			—			271.2
Prior year reserve development (favorable) unfavorable		(2.4	)		(7.0	)		(0.5	)		(9.9	)		(3.4	)		(6.9	)		(9.4	)		1.4			(18.3	)		1.7			(26.5	)
Pre-tax catastrophe losses		(0.9	)		(7.4	)		4.3			(4.0	)		—			1.0			6.9			32.9			40.8			—			36.8
Loss adjustment expenses excluding prior year reserve development		23.2			10.4			0.9			34.5			5.2			4.8			12.9			3.1			26.0			0.1			60.6
Policy acquisition expenses and other underwriting expenses											99.7															71.0			(0.3	)		170.4
Policyholders’ dividends											—															(1.7	)		—			(1.7	)
GAAP underwriting profit (loss)											45.5															(13.2	)		(1.5	)		30.8
Net investment income											26.9															26.6			1.2			54.7
Other income											3.1															3.6			6.1			12.8
Other operating expenses											(1.1	)														(2.5	)		(5.2	)		(8.8	)
Segment income before federal income taxes										$	74.4														$	14.5		$	0.6		$	89.5
	Quarter ended December 31, 2004
	Personal Lines												Commercial Lines															Other Property and Casualty			Total Property and Casualty
	Personal Automobile			Homeowners			Other Personal Lines			Total Personal Lines			Workers’ Compensation			Commercial Automobile			Commercial Multiple Peril			Other Commercial Lines			Total Commercial Lines
Net premiums written	$	231.0		$	101.6		$	8.8		$	341.4		$	25.9		$	41.3		$	76.1		$	28.5		$	171.8		$	—		$	513.2
Net premiums earned	$	262.2		$	104.0		$	10.1		$	376.3		$	30.7		$	46.0		$	83.5		$	26.4		$	186.6		$	—		$	562.9
Policy benefits, claims, losses excluding prior year reserve development and catastrophe losses		160.2			43.5			5.3			209.0			22.1			24.5			40.7			9.7			97.0			—			306.0
Prior year reserve development unfavorable (favorable)		7.5			(1.9	)		—			5.6			0.2			(3.3	)		4.0			(1.4	)		(0.5	)		0.6			5.7
Pre-tax catastrophe losses		—			(1.2	)		0.5			(0.7	)		—			—			1.7			0.4			2.1			—			1.4
Loss adjustment expenses excluding prior year reserve development		24.9			6.1			0.4			31.4			6.0			4.2			10.3			1.1			21.6			0.2			53.2
Policy acquisition expenses and other underwriting expenses											113.3															69.1			(0.1	)		182.3
Policyholders’ dividends											—															(2.9	)		—			(2.9	)
GAAP underwriting profit (loss)											17.7															0.2			(0.7	)		17.2
Net investment income											25.1															25.2			0.6			50.9
Other income											4.5															2.7			6.1			13.3
Other operating expenses											(1.4	)														(2.1	)		(4.3	)		(7.8	)
Segment income before federal income taxes										$	45.9														$	26.0		$	1.7		$	73.6

9

THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY

GAAP UNDERWRITING PROFIT (LOSS) RECONCILED TO SEGMENT INCOME (LOSS)

	Year ended December 31, 2005
	Personal Lines													Commercial Lines															Other Property and Casualty			Total Property and Casualty
(In millions)	Personal Automobile			Homeowners			Other Personal Lines			Total Personal Lines				Workers’ Compensation			Commercial Automobile			Commercial Multiple Peril			Other Commercial Lines			Total Commercial Lines
Net premiums written	$	937.4		$	387.6		$	38.0		$	1,363.0			$	119.6		$	193.1		$	323.8		$	150.7		$	787.2		$	0.2		$	2,150.4
Net premiums earned	$	954.1		$	394.2		$	38.4		$	1,386.7			$	126.4		$	190.9		$	329.3		$	127.8		$	774.4		$	0.2		$	2,161.3
Policy benefits, claims, losses excluding prior year reserve development and catastrophe losses		600.4			168.9			13.7			783.0				99.0			98.6			151.7			48.2			397.5			—			1,180.5
Prior year reserve development (favorable) unfavorable		(27.0	)		(14.8	)		(0.6	)		(42.4	)			(3.6	)		(9.6	)		(24.5	)		(3.5	)		(41.2	)		4.1			(79.5	)
Pre-tax catastrophe losses		3.6			80.3			5.6			89.5				—			1.2			142.2			38.1			181.5			—			271.0
Loss adjustment expenses excluding prior year reserve development		99.3			32.2			2.0			133.5				20.1			17.1			45.2			9.7			92.1			0.4			226.0
Policy acquisition expenses and other underwriting expenses											393.0																286.5			(0.8	)		678.7
Policyholders’ dividends											—																(1.1	)		—			(1.1	)
													��
GAAP underwriting profit (loss)											30.1																(140.9	)		(3.5	)		(114.3	)
Net investment income											102.6																101.4			5.1			209.1
Other income											15.5																13.0			23.4			51.9
Other operating expenses											(5.0	)															(8.5	)		(19.5	)		(33.0	)
Segment income (loss) before federal income taxes										$	143.2															$	(35.0	)	$	5.5		$	113.7
	Year ended December 31, 2004
	Personal Lines													Commercial Lines
	Personal Automobile			Homeowners			Other Personal Lines			Total Personal Lines				Workers’ Compensation			Commercial Automobile			Commercial Multiple Peril			Other Commercial Lines			Total Commercial Lines			Other Property and Casualty			Total Property and Casualty
Net premiums written	$	1,033.2		$	413.6		$	40.5		$	1,487.3			$	124.9		$	186.3		$	332.2		$	105.3		$	748.7		$	0.2		$	2,236.2
Net premiums earned	$	1,070.2		$	408.8		$	42.1		$	1,521.1			$	125.1		$	180.7		$	325.7		$	96.3		$	727.8		$	0.2		$	2,249.1
Policy benefits, claims, losses excluding prior year reserve development and catastrophe losses		685.2			180.9			23.0			889.1				88.2			92.1			151.8			31.5			363.6			—			1,252.7
Prior year reserve development (favorable) unfavorable		(2.9	)		(6.8	)		(0.7	)		(10.4	)			6.6			(7.9	)		(14.8	)		8.4			(7.7	)		3.6			(14.5	)
Pre-tax catastrophe losses		1.9			46.0			1.9			49.8				—			0.2			48.3			1.0			49.5			—			99.3
Loss adjustment expenses excluding prior year reserve development		99.4			29.8			2.0			131.2				20.3			14.9			44.8			5.6			85.6			0.6			217.4
Policy acquisition expenses and other underwriting expenses											434.7																282.8			(0.3	)		717.2
Policyholders’ dividends											—																(2.9	)		—			(2.9	)
GAAP underwriting profit (loss)											26.7																(43.1	)		(3.7	)		(20.1	)
Net investment income											97.1																97.6			2.2			196.9
Other income											16.1																12.1			24.5			52.7
Other operating expenses											(5.3	)															(8.6	)		(17.6	)		(31.5	)
Segment income before federal income taxes										$	134.6															$	58.0		$	5.4		$	198.0

10

THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY

GAAP UNDERWRITING RATIOS

	Quarter ended December 31, 2005
	Personal Lines								Commercial Lines										Other Property and Casualty	Total Property and Casualty
	Personal Automobile		Homeowners		Other Personal Lines		Total Personal Lines		Workers’ Compensation		Commercial Automobile		Commercial Multiple Peril		Other Commercial Lines		Total Commercial Lines
Losses, excluding catastrophe losses	57.0	%	29.1	%	37.5	%	48.2	%	79.9	%	38.4	%	30.8	%	37.9	%	41.5	%	N/M	46.0	%
Catastrophe losses	(0.4	)%	(7.3	)%	44.8	%	(1.2	)%	—		2.1	%	8.2	%	87.7	%	20.4	%	N/M	6.8	%
Loss adjustment expenses	10.9	%	10.0	%	5.2	%	10.5	%	6.5	%	7.9	%	13.3	%	8.5	%	10.1	%	N/M	10.3	%
Policy acquisition and other underwriting expenses							29.2	%									35.5	%	N/M	31.5	%
Policyholders’ dividends							—										(0.9	)%	N/M	(0.3	)%
Combined							86.7	%									106.6	%	N/M	94.3	%
Policies in force	(6.0	)%	(5.3	)%	(4.0	)%	(5.5	)%	(4.5	)%	(3.4	)%	(4.4	)%	2.9	%	(1.7	)%	—	(5.1	)%
Retention (1)	80.0	%	82.9	%	N/M		81.5	%	66.1	%	81.6	%	79.5	%	N/M		77.9	%
	Quarter ended December 31, 2004
	Personal Lines								Commercial Lines										Other Property and Casualty	Total Property and Casualty
	Personal Automobile		Homeowners		Other Personal Lines		Total Personal Lines		Workers’ Compensation		Commercial Automobile		Commercial Multiple Peril		Other Commercial Lines		Total Commercial Lines
Losses, excluding catastrophe losses	63.8	%	39.9	%	52.5	%	56.9	%	81.4	%	48.5	%	54.1	%	30.3	%	53.9	%	N/M	55.9	%
Catastrophe losses	—		(1.2	)%	5.0	%	(0.2	)%	—		—		2.0	%	1.5	%	1.1	%	N/M	0.2	%
Loss adjustment expenses	9.7	%	6.0	%	4.0	%	8.5	%	11.1	%	6.7	%	11.7	%	5.3	%	9.5	%	N/M	8.9	%
Policy acquisition and other underwriting expenses							30.1	%									37.0	%	N/M	32.4	%
Policyholders’ dividends							—										(1.6	)%	N/M	(0.5	)%
Combined							95.3	%									99.9	%	N/M	96.9	%
Policies in force	(11.9	)%	(8.7	)%	(7.3	)%	(10.2	)%	(0.7	)%	0.6	%	(0.8	)%	1.2	%	0.1	%	—	(9.1	)%
Retention (1)	78.3	%	80.9	%	N/M		79.7	%	80.3	%	76.0	%	79.4	%	N/M		78.6	%

(1) The retention rate for personal lines is a twelve month rolling average calculation based on policies in force; the retention rate for commercial lines is based on direct voluntary written premiums, based on processed policies in the current period versus the same period in the prior year. Additionally, the retention rates have been adjusted to exclude the effect of our strategic termination of specialty commercial programs which resulted from an extensive review during the fourth quarter of 2001.

11

THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY

GAAP UNDERWRITING RATIOS

	Year ended December 31, 2005
	Personal Lines								Commercial Lines										Other Property and Casualty	Total Property and Casualty
	Personal Automobile		Homeowners		Other Personal Lines		Total Personal Lines		Workers’ Compensation		Commercial Automobile		Commercial Multiple Peril		Other Commercial Lines		Total Commercial Lines
Losses, excluding catastrophe losses	59.8	%	39.5	%	35.7	%	53.4	%	81.5	%	47.2	%	40.5	%	34.5	%	47.9	%	N/M	51.6	%
Catastrophe losses	0.4	%	20.4	%	14.6	%	6.5	%	—		0.6	%	43.2	%	29.8	%	23.4	%	N/M	12.5	%
Loss adjustment expenses	10.7	%	7.7	%	3.6	%	9.7	%	9.9	%	8.4	%	11.8	%	8.1	%	10.0	%	N/M	9.8	%
Policy acquisition and other underwriting expenses							28.3	%									37.0	%	N/M	31.4	%
Policyholders’ dividends							—										(0.1	)%	N/M	(0.1	)%
Combined							97.9	%									118.2	%	N/M	105.2	%
Policies in force	(6.0	)%	(5.3	)%	(4.0	)%	(5.5	)%	(4.5	)%	(3.4	)%	(4.4	)%	2.9	%	(1.7	)%	—	(5.1	)%
Retention (1)	80.0	%	82.9	%	N/M		81.5	%	74.2	%	80.9	%	80.6	%	N/M		79.9	%
	Year ended December 31, 2004
	Personal Lines								Commercial Lines										Other Property and Casualty	Total Property and Casualty
	Personal Automobile		Homeowners		Other Personal Lines		Total Personal Lines		Workers’ Compensation		Commercial Automobile		Commercial Multiple Peril		Other Commercial Lines		Total Commercial Lines
Losses, excluding catastrophe losses	63.7	%	43.1	%	53.0	%	57.9	%	80.0	%	48.4	%	44.1	%	40.6	%	50.8	%	N/M	55.7	%
Catastrophe losses	0.2	%	11.3	%	4.5	%	3.3	%	—		0.1	%	14.8	%	1.0	%	6.8	%	N/M	4.4	%
Loss adjustment expenses	9.3	%	6.8	%	4.8	%	8.5	%	12.1	%	6.5	%	11.8	%	6.6	%	9.8	%	N/M	9.0	%
Policy acquisition and other underwriting expenses							28.6	%									38.9	%	N/M	31.9	%
Policyholders’ dividends							—										(0.4	)%	N/M	(0.1	)%
Combined							98.3	%									105.9	%	N/M	100.9	%
Policies in force	(11.9	)%	(8.7	)%	(7.3	)%	(10.2	)%	(0.7	)%	(0.6	)%	(0.8	)%	1.2	%	0.1	%	—	(9.1	)%
Retention (1)	78.3	%	80.9	%	N/M		79.7	%	76.0	%	77.8	%	79.0	%	N/M		78.0	%

(1) The retention rate for personal lines is a twelve month rolling average calculation based on policies in force; the retention rate for commercial lines is based on direct voluntary written premiums, based on processed policies in the current period versus the same period in the prior year. Additionally, the retention rates have been adjusted to exclude the effect of our strategic termination of specialty commercial programs which resulted from an extensive review during the fourth quarter of 2001.

12

R A T I O S   E X C L U D E   R E I N S T A T E M E N T   P R E M I U M

THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY

GAAP UNDERWRITING RATIOS EXCLUDING REINSTATEMENT PREMIUM

	Year ended December 31, 2005
	Personal Lines								Commercial Lines										Other Property and Casualty	Total Property and Casualty
	Personal Automobile		Homeowners		Other Personal Lines		Total Personal Lines		Workers’ Compensation		Commercial Automobile		Commercial Multiple Peril		Other Commercial Lines		Total Commercial Lines
Losses, excluding catastrophe losses	59.6	%	38.2	%	34.7	%	52.7	%	81.5	%	47.1	%	39.7	%	34.0	%	47.3	%	N/M	50.9	%
Catastrophe losses	0.4	%	19.7	%	14.2	%	6.4	%	—		0.6	%	42.3	%	29.4	%	23.2	%	N/M	12.4	%
Loss adjustment expenses	10.7	%	7.5	%	3.5	%	9.5	%	9.9	%	8.4	%	11.6	%	7.9	%	9.9	%	N/M	9.7	%
Policy acquisition and other underwriting expenses							28.0	%									36.6	%	N/M	31.0	%
Policyholders’ dividends							—										(0.1	)%	N/M	(0.1	)%
Combined							96.6	%									116.9	%	N/M	103.9	%
Policies in force	(6.0	)%	(5.3	)%	(4.0	)%	(5.5	)%	(4.5	)%	(3.4	)%	(4.4	)%	2.9	%	(1.7	)%	-	(5.1	)%
Retention (1)	80.0	%	82.9	%	N/M		81.5	%	74.2	%	80.9	%	80.6	%	N/M		79.9	%
	Year ended December 31, 2004
	Personal Lines								Commercial Lines										Other Property and Casualty	Total Property and Casualty
	Personal Automobile		Homeowners		Other Personal Lines		Total Personal Lines		Workers’ Compensation		Commercial Automobile		Commercial Multiple Peril		Other Commercial Lines		Total Commercial Lines
Losses, excluding catastrophe losses	63.7	%	43.1	%	53.0	%	57.9	%	80.0	%	48.4	%	44.1	%	40.6	%	50.8	%	N/M	55.7	%
Catastrophe losses	0.2	%	11.3	%	4.5	%	3.3	%	—		0.1	%	14.8	%	1.0	%	6.8	%	N/M	4.4	%
Loss adjustment expenses	9.3	%	6.8	%	4.8	%	8.5	%	12.1	%	6.5	%	11.8	%	6.6	%	9.8	%	N/M	9.0	%
Policy acquisition and other underwriting expenses							28.6	%									38.9	%	N/M	31.9	%
Policyholders’ dividends							—										(0.4	)%	N/M	(0.1	)%
Combined							98.3	%									105.9	%	N/M	100.9	%
Policies in force	(11.9	)%	(8.7	)%	(7.3	)%	(10.2	)%	(0.7	)%	(0.6	)%	(0.8	)%	1.2	%	0.1	%	—	(9.1	)%
Retention (1)	78.3	%	80.9	%	N/M		79.7	%	76.0	%	77.8	%	79.0	%	N/M		78.0	%

(1) The retention rate for personal lines is a twelve month rolling average calculation based on policies in force; the retention rate for commercial lines is based on direct voluntary written premiums, based on processed policies in the current period versus the same period in the prior year. Additionally, the retention rates have been adjusted to exclude the effect of our strategic termination of specialty commercial programs which resulted from an extensive review during the fourth quarter of 2001.

13

LIFE COMPANIES

THE HANOVER INSURANCE GROUP

LIFE COMPANIES

CONDENSED INCOME STATEMENTS (1)

	Quarter ended December 31								Year ended December 31
(In millions)	2005			2004			% Change		2005			2004			% Change
REVENUES
Premiums	$	6.3		$	7.0		(10.0	)	$	36.9		$	39.5		(6.6	)
Fees and other income		9.0			8.9		1.1			36.3			38.8		(6.4	)
Net investment income		28.7			27.2		5.5			112.1			132.2		(15.2	)
Total segment revenue		44.0			43.1		2.1			185.3			210.5		(12.0	)
POLICY BENEFITS, CLAIMS AND OPERATING EXPENSES
Policy benefits, claims and losses		21.8			15.9		37.1			101.0			94.7		6.7
Policy acquisition expenses		1.5			1.2		25.0			6.7			6.9		(2.9	)
Other operating expenses		21.7			34.7		(37.5	)		96.3			131.2		(26.6	)
Total policy benefits, claims and operating expenses		45.0			51.8		(13.1	)		204.0			232.8		(12.4	)
Segment loss before federal income taxes	$	(1.0	)	$	(8.7	)	(88.5	)	$	(18.7	)	$	(22.3	)	(16.1	)

(1) As a result of the sale of the variable life and annuity business, segment results have been restated to reflect the variable life and annuity business as a discontinued operation. Segment income now includes results from our traditional life business, our group retirement business and our GIC business. Prior to the sale, the Life Companies segment included the results of the variable life and annuity business as well.

14

THE HANOVER INSURANCE GROUP

LIFE COMPANIES

CONSOLIDATED BALANCE SHEETS (1)

(In millions, except per share data)	December 31 2005			December 31 2004			% Change
ASSETS
Investments:
Fixed maturities, at fair value (amortized cost of $1,789.8 and $3,826.6)	$	1,801.2		$	3,976.1		(54.7	)
Equity securities, at fair value (cost of $1.7 and $3.4 )		2.7			5.6		(51.8	)
Mortgage loans		54.8			64.1		(14.5	)
Policy loans		139.9			256.4		(45.4	)
Other long-term investments		42.3			54.7		(22.7	)
Total investments		2,040.9			4,356.9		(53.2	)
Cash and cash equivalents		101.9			280.9		(63.7	)
Accrued investment income		27.6			67.4		(59.1	)
Premiums, accounts, and notes receivable, net		4.0			4.2		(4.8	)
Reinsurance receivable on paid and unpaid losses, benefits and unearned premiums		262.7			986.6		(73.4	)
Deferred policy acquistion costs		7.1			694.1		(99.0	)
Deferred federal income tax asset		206.8			207.9		(0.5	)
Other assets		91.2			248.5		(63.3	)
Separate account assets		571.9			10,455.0		(94.5	)
Total assets	$	3,314.1		$	17,301.5		(80.8	)
LIABILITIES AND SHAREHOLDER’S EQUITY
LIABILITIES
Policy liabilities and accruals:
Future policy benefits	$	1,207.8		$	3,462.3		(65.1	)
Outstanding claims, losses and loss adjustment expenses		92.9			110.4		(15.9	)
Unearned premiums		1.6			3.3		(51.5	)
Contractholder deposit funds and other policy liabilities		251.7			374.7		(32.8	)
Total policy liabilities and accruals		1,554.0			3,950.7		(60.7	)
Expenses and taxes payable		524.6			645.4		(18.7	)
Reinsurance premiums payable		6.5			12.3		(47.2	)
Trust instruments supported by funding obligations		294.3			1,126.0		(73.9	)
Separate account liabilities		571.9			10,455.0		(94.5	)
Total liabilities		2,951.3			16,189.4		(81.8	)
SHAREHOLDER’S EQUITY
Common stock, par value $10 per share; authorized 1 million shares; issued 500,000 shares (2)		5.0			2.5		N/M
Additional paid-in capital		825.4			1,000.0		N/M
Accumulated other comprehensive loss		(26.3	)		(21.1	)	24.6
Retained (deficit) earnings		(441.3	)		130.7		N/M
		362.8			1,112.1		(67.4	)
Total liabilities and shareholder’s equity	$	3,314.1		$	17,301.5		(80.8	)

(1) The Life Companies at December 31, 2005 include First Allmerica Financial Life Insurance Company (FAFLIC), and its subsidiaries. FAFLIC includes amounts related to our discontinued operations (Group Life & Health). At December 31, 2004, Life Companies included Allmerica Financial Life Insurance and Annuity Company (AFLIAC) and its subsidiaries, including FAFLIC. AFLIAC was sold on December 30, 2005.

(2) Common Stock for AFLIAC at December 31, 2004 included 10,000 authorized shares at $1,000 per share par value; issued shares totalled 2,526 shares.

15

THE HANOVER INSURANCE GROUP

LIFE COMPANIES

FUTURE POLICY BENEFITS AND ACCOUNT BALANCES

	Gross						Net of Reinsurance Recoverables
(In millions)	December 31 2005		December 31 2004		% Change		December 31 2005		December 31 2004		% Change
Insurance
Traditional life	$	760.2	$	821.2	(7.4	)	$	760.0	$	812.8	(6.5	)
Universal life		1.0		579.8	(99.8	)		—		0.4	N/M
Variable universal life (1)		32.9		242.9	(86.5	)		—		231.5	N/M
Individual health		18.7		257.9	(92.7	)		0.4		0.6	(33.3	)
Total insurance		812.8		1,901.8	(57.3	)		760.4		1,045.3	(27.3	)
Annuities
Individual annuities (1)		113.5		1,378.0	(91.8	)		15.7		1,367.5	(98.9	)
Group annuities		400.7		428.7	(6.5	)		395.5		423.4	(6.6	)
Total annuities		514.2		1,806.7	(71.5	)		411.2		1,790.9	(77.0	)
Guaranteed investment contracts
Contractholder deposit funds and other policy liabilities		30.3		30.0	1.0			30.3		30.0	1.0
Total general account reserves	$	1,357.3	$	3,738.5	(63.7	)	$	1,201.9	$	2,866.2	(58.1	)
Trust instruments supported by funding obligations	$	294.3	$	1,126.0	(73.9	)	$	294.3	$	1,126.0	(73.9	)
SEPARATE ACCOUNT LIABILITIES
Variable universal life	$	67.6	$	1,025.3	(93.4	)	$	67.6	$	1,025.3	(93.4	)
Variable individual annuities		405.5		9,315.1	(95.6	)		405.5		9,315.1	(95.6	)
Total individual		473.1		10,340.4	(95.4	)		473.1		10,340.4	(95.4	)
Group variable universal life		2.6		28.3	(90.8	)		2.6		28.3	(90.8	)
Group annuities		96.2		86.3	11.5			96.2		86.3	11.5
Total group		98.8		114.6	(13.8	)		98.8		114.6	(13.8	)
Total separate account liabilities (2)	$	571.9	$	10,455.0	(94.5	)	$	571.9	$	10,455.0	(94.5	)

(1) Effective December 30,2005, variable universal life and individual annuity reserves totalling $124.6 million were ceded to AFLIAC from FAFLIC in conjuction with a coinsurance agreement.

(2) Effective December 30, 2005, separate account liabilities of $465.7 million are subject to a modified coinsurance agreement with AFLIAC.

16

INVESTMENTS

THE HANOVER INSURANCE GROUP

NET INVESTMENT INCOME

	Year ended December 31, 2005
(In millions, except yields)	Property and Casualty (1)			Yield		Life Companies (2)			Yield		Total			Yield
Fixed maturities	$	208.9		5.57	%	$	107.8		5.70	%	$	316.7		5.62	%
Equity securities		0.9		—			0.1		—			1.0		—
Mortgages (3)		4.2		8.84	%		5.5		9.48	%		9.7		9.19	%
All other		(0.3	)	—			3.4		—			3.1		—
Investment expenses		(4.4	)	—			(4.7	)	—			(9.1	)	—
Total	$	209.3		5.36	%	$	112.1		5.06	%	$	321.4		5.25	%
	Year ended December 31, 2004
	Property and Casualty (1)			Yield		Life Companies (2)			Yield		Total			Yield
Fixed maturities	$	199.7		5.68	%	$	139.9		5.90	%	$	339.6		5.77	%
Equity securities		2.0		—			0.1		—			2.1		—
Mortgages (3)		4.2		8.19	%		8.0		8.42	%		12.2		8.34	%
All other		(4.7	)	—			(9.6	)	—			(14.3	)	—
Investment expenses		(4.1	)	—			(6.2	)	—			(10.3	)	—
Total	$	197.1		5.42	%	$	132.2		4.67	%	$	329.3		5.10	%

(1) Includes purchase accounting adjustments of $3.2 for the years ended December 31, 2005 and 2004. Also includes corporate eliminations of $0.6 million for the years ended December 31, 2005 and 2004.

(2) Excludes AFLIAC discontinued operations of $80.5 million and $85.2 million for the years ended December 31, 2005 and 2004, respectively.

(3) Excluding mortgage prepayment fees totalling $1.2 million, mortgage yields are 8.18%, 7.98% and 8.37% for Property and Casualty, Life Companies and in total, respectively, for the year ended December 31, 2005. For the year ended December 31, 2004, excluding mortgage prepayment fees totalling $0.6 million, mortgage yield is 8.19%, 7.83% and 7.96% for Property and Casualty, Life Companies and in total, respectively.

17

THE HANOVER INSURANCE GROUP

COMPONENTS OF NET REALIZED INVESTMENT GAINS (LOSSES)

	Quarter ended December 31
	2005									2004
	Net Realized Gains (Losses)									Net Realized Gains (Losses)
(In millions)	Property and Casualty (1)			Life Companies (2)			Total			Property and Casualty (1)			Life Companies (2)			Total
Net gains (losses) on securities transactions	$	9.6		$	(1.5	)	$	8.1		$	3.4		$	0.4		$	3.8
Other than temporary impairments		(0.9	)		(0.1	)		(1.0	)		—			(0.5	)		(0.5	)
Other		0.1			(1.5	)		(1.4	)		—			0.1			0.1
Net realized investment gains (losses)	$	8.8		$	(3.1	)	$	5.7		$	3.4		$	—		$	3.4
	Year ended December 31
	2005									2004
	Net Realized Gains (Losses)									Net Realized Gains (Losses)
	Property and Casualty (1)			Life Companies (2)			Total			Property and Casualty (1)			Life Companies (2)			Total
Net gains on securities transactions	$	16.2		$	17.6		$	33.8		$	22.7		$	9.6		$	32.3
Other than temporary impairments		(7.8	)		(1.5	)		(9.3	)		(1.9	)		(4.4	)		(6.3	)
Other		(0.6	)		(0.1	)		(0.7	)		(0.7	)		(9.2	)		(9.9	)
Net realized investment gains (losses)	$	7.8		$	16.0		$	23.8		$	20.1		$	(4.0	)	$	16.1

(1) Includes corporate eliminations of $2.9 million and $0.5 million for the quarters ended December 31, 2005 and 2004, respectively and corporate eliminations of $3.7 million and $4.7 million for the year ended December 31, 2005 and 2004, respectively.

(2) Excludes AFLIAC discontinued operations of $0.7 million and $7.0 million for the quarters ended December 31, 2005 and 2004, respectively and AFLIAC discontinued operations of $6.8 million and $12.6 million for the years ended December 31, 2005 and 2004, respectively.

18

THE HANOVER INSURANCE GROUP

AGING OF GROSS UNREALIZED LOSSES ON SECURITIES AVAILABLE FOR SALE

(In millions)	December 31, 2005
	Gross Unrealized Losses						Fair Value
	Property and Casualty		Life Companies		Total		Property and Casualty		Life Companies		Total
INVESTMENT GRADE FIXED MATURITIES:
0 - 6 months	$	21.5	$	11.9	$	33.4	$	1,465.6	$	685.9	$	2,151.5
7 - 12 months		3.0		2.3		5.3		106.1		78.1		184.2
Greater than 12 months		18.0		8.7		26.7		404.1		191.7		595.8
Total investment grade fixed maturities		42.5		22.9		65.4		1,975.8		955.7		2,931.5
BELOW INVESTMENT GRADE FIXED MATURITIES:
0 - 6 months		4.0		2.2		6.2		111.1		30.3		141.4
7 - 12 months		2.2		0.6		2.8		23.3		6.6		29.9
Greater than 12 months		—		—		—		—		—		—
Total below investment grade fixed maturities		6.2		2.8		9.0		134.4		36.9		171.3
Equity securities		—		0.1		0.1		—		1.4		1.4
Total fixed maturities and equity securities	$	48.7	$	25.8	$	74.5	$	2,110.2	$	994.0	$	3,104.2
	December 31, 2004
	Gross Unrealized Losses						Fair Value
	Property and Casualty		Life Companies		Total		Property and Casualty		Life Companies		Total
INVESTMENT GRADE FIXED MATURITIES:
0 - 6 months	$	1.9	$	2.3	$	4.2	$	285.4	$	367.3	$	652.7
7 - 12 months		3.0		3.1		6.1		156.5		175.5		332.0
Greater than 12 months		8.1		7.4		15.5		229.4		196.0		425.4
Total investment grade fixed maturities		13.0		12.8		25.8		671.3		738.8		1,410.1
BELOW INVESTMENT GRADE FIXED MATURITIES:
0 - 6 months		0.3		0.1		0.4		31.6		5.3		36.9
7 - 12 months		1.4		0.5		1.9		16.9		3.4		20.3
Greater than 12 months		—		—		—		—		1.0		1.0
Total below investment grade fixed maturities		1.7		0.6		2.3		48.5		9.7		58.2
Equity securities		0.1		—		0.1		0.7		—		0.7
Total fixed maturities and equity securities	$	14.8	$	13.4	$	28.2	$	720.5	$	748.5	$	1,469.0

19

THE HANOVER INSURANCE GROUP

CREDIT QUALITY OF FIXED MATURITIES

(In millions) NAIC Designation		December 31, 2005
		Amortized Cost						Fair Value
	Rating Agency Equivalent Designation	Property and Casualty		Life Companies		Total		Property and Casualty		Life Companies		Total
1	Aaa/Aa/A	$	2,779.9	$	1,111.3	$	3,891.2	$	2,787.3	$	1,108.7	$	3,896.0
2	Baa		850.5		580.3		1,430.8		848.8		591.6		1,440.4
3	Ba		96.2		56.2		152.4		95.6		56.7		152.3
4	B		114.8		37.4		152.2		114.1		37.6		151.7
5	Caa and lower		47.9		7.6		55.5		53.4		9.4		62.8
6	In or near default		1.9		1.9		3.8		3.0		2.0		5.0
Total fixed maturities		$	3,891.2	$	1,794.7	$	5,685.9	$	3,902.2	$	1,806.0	$	5,708.2
		December 31, 2004
		Amortized Cost						Fair Value
NAIC Designation	Rating Agency Equivalent Designation	Property and Casualty		Life Companies		Total		Property and Casualty		Life Companies		Total
1	Aaa/Aa/A	$	2,601.9	$	2,374.4	$	4,976.3	$	2,676.9	$	2,436.9	$	5,113.8
2	Baa		908.8		1,258.7		2,167.5		937.3		1,320.3		2,257.6
3	Ba		89.5		130.6		220.1		94.8		138.9		233.7
4	B		92.2		40.6		132.8		96.7		45.9		142.6
5	Caa and lower		31.1		13.7		44.8		36.7		19.6		56.3
6	In or near default		3.3		8.6		11.9		3.7		14.5		18.2
Total fixed maturities		$	3,726.8	$	3,826.6	$	7,553.4	$	3,846.1	$	3,976.1	$	7,822.2

20

PROPERTY & CASUALTY

STATUTORY RATIOS

THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY

STATUTORY UNDERWRITING RATIOS

	Quarter ended December 31, 2005
	Personal Lines								Commercial Lines										Other Property and Casualty	Total Property and Casualty
	Personal Automobile		Homeowners		Other Personal Lines		Total Personal Lines		Workers’ Compensation		Commercial Automobile		Commercial Multiple Peril		Other Commercial Lines		Total Commercial Lines
Losses, excluding catastrophe losses	57.0	%	29.6	%	36.2	%	48.3	%	78.9	%	38.2	%	31.3	%	37.9	%	41.6	%	N/M	46.1	%
Catastrophe losses	(0.4	)%	(10.6	)%	44.7	%	(2.2	)%	—		1.9	%	5.3	%	86.4	%	18.8	%	N/M	5.6	%
Loss adjustment expenses	10.9	%	10.0	%	5.3	%	10.5	%	6.4	%	7.9	%	13.4	%	8.3	%	10.0	%	N/M	10.4	%
Policy acquisition and other underwriting expenses							28.8	%									38.1	%	N/M	32.1	%
Policyholders’ dividends							—										—		N/M	—
Combined							85.4	%									108.5	%	N/M	94.2	%
	Quarter ended December 31, 2004
	Personal Lines								Commercial Lines										Other Property and Casualty	Total Property and Casualty
	Personal Automobile		Homeowners		Other Personal Lines		Total Personal Lines		Workers’ Compensation		Commercial Automobile		Commercial Multiple Peril		Other Commercial Lines		Total Commercial Lines
Losses, excluding catastrophe losses	63.8	%	39.9	%	52.5	%	56.9	%	81.0	%	48.5	%	54.1	%	30.3	%	53.8	%	N/M	56.0	%
Catastrophe losses	N/M		(1.2	)%	5.0	%	(0.2	)%	N/M		N/M		2.0	%	1.5	%	1.1	%	N/M	0.2	%
Loss adjustment expenses	10.0	%	6.2	%	4.0	%	8.7	%	11.4	%	7.0	%	11.7	%	5.7	%	9.6	%	N/M	9.1	%
Policy acquisition and other underwriting expenses							31.7	%									39.3	%	N/M	34.3	%
Policyholders’ dividends							—										(0.8	)%	N/M	(0.3	)%
Combined							97.1	%									103.0	%	N/M	99.3	%

21

THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY

STATUTORY UNDERWRITING RATIOS

	Year ended December 31, 2005
	Personal Lines								Commercial Lines										Other Property and Casualty	Total Property and Casualty
	Personal Automobile		Homeowners		Other Personal Lines		Total Personal Lines		Workers’ Compensation		Commercial Automobile		Commercial Multiple Peril		Other Commercial Lines		Total Commercial Lines
Losses, excluding catastrophe losses	59.8	%	39.6	%	35.7	%	53.4	%	81.2	%	47.2	%	40.6	%	34.7	%	47.9	%	N/M	51.6	%
Catastrophe losses	0.4	%	19.5	%	14.1	%	6.2	%	N/M		0.6	%	42.5	%	29.3	%	23.0	%	N/M	12.2	%
Loss adjustment expenses	10.8	%	7.8	%	3.6	%	9.7	%	9.9	%	8.3	%	11.8	%	8.0	%	10.0	%	N/M	9.8	%
Policy acquisition and other underwriting expenses							27.9	%									36.8	%	N/M	31.1	%
Policyholders’ dividends							—										0.1	%	N/M	—
Combined							97.2	%									117.8	%	N/M	104.7	%
	Year ended December 31, 2004
	Personal Lines								Commercial Lines										Other Property and Casualty	Total Property and Casualty
	Personal Automobile		Homeowners		Other Personal Lines		Total Personal Lines		Workers’ Compensation		Commercial Automobile		Commercial Multiple Peril		Other Commercial Lines		Total Commercial Lines
Losses, excluding catastrophe losses	63.7	%	43.1	%	53.0	%	57.9	%	79.6	%	48.4	%	44.1	%	41.4	%	50.9	%	N/M	55.8	%
Catastrophe losses	0.2	%	11.3	%	4.5	%	3.3	%	N/M		0.1	%	14.8	%	1.0	%	6.8	%	N/M	4.4	%
Loss adjustment expenses	9.4	%	6.8	%	4.8	%	8.6	%	12.0	%	6.5	%	11.8	%	6.6	%	9.8	%	N/M	9.0	%
Policy acquisition and other underwriting expenses							28.8	%									37.8	%	N/M	31.8	%
Policyholders’ dividends							—										(0.2	)%	N/M	(0.1	)%
Combined							98.6	%									105.1	%	N/M	100.9	%

22

R A T I O S   E X C L U D E   R E I N S T A T E M E N T   P R E M I U M

THE HANOVER INSURANCE GROUP

PROPERTY AND CASUALTY

STATUTORY UNDERWRITING RATIOS EXCLUDING REINSTATEMENT PREMIUM

	Year ended December 31, 2005
	Personal Lines								Commercial Lines										Other Property and Casualty	Total Property and Casualty
	Personal Automobile		Homeowners		Other Personal Lines		Total Personal Lines		Workers’ Compensation		Commercial Automobile		Commercial Multiple Peril		Other Commercial Lines		Total Commercial Lines
Losses, excluding catastrophe losses	59.6	%	38.3	%	34.7	%	52.7	%	81.2	%	47.2	%	39.8	%	34.2	%	47.3	%	N/M	51.0	%
Catastrophe losses	0.4	%	18.9	%	13.7	%	6.1	%	N/M		0.6	%	41.5	%	28.8	%	22.7	%	N/M	12.1	%
Loss adjustment expenses	10.7	%	7.5	%	3.5	%	9.6	%	9.9	%	8.3	%	11.5	%	7.9	%	9.9	%	N/M	9.7	%
Policy acquisition and other underwriting expenses							27.5	%									36.4	%	N/M	30.8	%
Policyholders’ dividends							—										0.1	%	N/M	—
Combined							95.9	%									116.4	%	N/M	103.6	%
	Year ended December 31, 2004
	Personal Lines								Commercial Lines										Other Property and Casualty	Total Property and Casualty
	Personal Automobile		Homeowners		Other Personal Lines		Total Personal Lines		Workers’ Compensation		Commercial Automobile		Commercial Multiple Peril		Other Commercial Lines		Total Commercial Lines
Losses, excluding catastrophe losses	63.7	%	43.1	%	53.0	%	57.9	%	79.6	%	48.4	%	44.1	%	41.4	%	50.9	%	N/M	55.8	%
Catastrophe losses	0.2	%	11.3	%	4.5	%	3.3	%	N/M		0.1	%	14.8	%	1.0	%	6.8	%	N/M	4.4	%
Loss adjustment expenses	9.4	%	6.8	%	4.8	%	8.6	%	12.0	%	6.5	%	11.8	%	6.6	%	9.8	%	N/M	9.0	%
Policy acquisition and other underwriting expenses							28.8	%									37.8	%	N/M	31.8	%
Policyholders’ dividends							—										(0.2	)%	N/M	(0.1	)%
Combined							98.6	%									105.1	%	N/M	100.9	%

23

Historical Highlights

THE HANOVER INSURANCE GROUP

HISTORICAL FINANCIAL HIGHLIGHTS

(In millions, except per share data)	2005			Q4 05			Q3 05			Q2 05			Q1 05			2004			Q4 04			Q3 04			Q2 04			Q1 04
SEGMENT INCOME (1)
Property and Casualty
Personal Lines	$	143.2		$	74.4		$	(27.8	)	$	57.4		$	39.2		$	134.6		$	45.9		$	42.1		$	35.8		$	10.8
Commercial Lines		(35.0	)		14.5			(101.0	)		31.0			20.5			58.0			26.0			(7.1	)		12.6			26.5
Other Property and Casualty		5.5			0.6			1.1			1.7			2.1			5.4			1.7			1.7			0.7			1.3
Total Property and Casualty		113.7			89.5			(127.7	)		90.1			61.8			198.0			73.6			36.7			49.1			38.6
Life Companies		(18.7	)		(1.0	)		(0.9	)		(7.5	)		(9.3	)		(22.3	)		(8.7	)		(2.1	)		(6.9	)		(4.6	)
Interest expense on corporate debt		(39.9	)		(10.0	)		(10.0	)		(9.9	)		(10.0	)		(39.9	)		(10.0	)		(10.0	)		(9.9	)		(10.0	)
Total segment income (loss) before federal income taxes	$	55.1		$	78.5		$	(138.6	)	$	72.7		$	42.5		$	135.8		$	54.9		$	24.6		$	32.3		$	24.0
Federal income tax (expense) benefit on segment income		(1.0	)		(1.3	)		29.6			(19.5	)		(9.8	)		(26.6	)		(12.6	)		(4.5	)		(6.3	)		(3.2	)
Total segment income (loss) after federal income taxes	$	54.1		$	77.2		$	(109.0	)	$	53.2		$	32.7		$	109.2		$	42.3		$	20.1		$	26.0		$	20.8
Change in prior years tax reserves		2.3			—			—			2.3			—			—			—			—			—			—
Federal income tax settlement		5.3			5.3			—			—			—			30.4			0.1			—			0.2			30.1
Net realized investment gains (losses), net of amortization		18.7			5.8			(0.7	)		2.3			11.3			16.1			3.7			(5.5	)		6.8			11.1
(Losses) gains from retirement of funding agreements and trust instruments supported by funding obligations		—			—			—			—			—			(0.2	)		0.1			2.9			—			(3.2	)
(Losses) gains on derivative instruments		(0.3	)		—			0.2			(0.3	)		(0.2	)		1.3			0.9			0.1			0.3			—
Restructuring costs		(2.1	)		(0.8	)		(0.4	)		(0.2	)		(0.7	)		(8.5	)		(2.7	)		(0.3	)		(2.2	)		(3.3	)
Federal income tax (expense) benefit on non-segment income		(5.7	)		(7.3	)		4.5			(0.2	)		(2.7	)		(3.0	)		(0.9	)		0.5			(1.9	)		(0.7	)
Income (loss) from continuing operations		72.3			80.2			(105.4	)		57.1			40.4			145.3			43.5			17.8			29.2			54.8
Income (loss) from discontinued variable life and annuity business, net of taxes		42.7			4.1			17.6			14.9			6.1			37.2			19.6			(0.1	)		3.2			14.5
Loss on disposal of variable life and annuity business, net of taxes		(494.4	)		30.2			(474.6	)		—			—			—			—			—			—			—
(Loss) income before cumulative effect of accounting change		(329.4	)		114.5			(562.4	)		72.0			46.5			182.5			63.1			17.7			32.4			69.3
Cumulative effect of change in accounting principle, net of taxes		—			—			—			—			—			(57.2	)		—			—			—			(57.2	)
NET (LOSS) INCOME	$	(329.4	)	$	114.5		$	(562.4	)	$	72.0		$	46.5		$	125.3		$	63.1		$	17.7		$	32.4		$	12.1
PER SHARE DATA (DILUTED)
INCOME (LOSS) FROM CONTINUING OPERATIONS	$	1.34		$	1.48		$	(1.97	)	$	1.06		$	0.75		$	2.71		$	0.81		$	0.33		$	0.54		$	1.02
(LOSS) INCOME FROM DISCONTINUED OPERATIONS, NET OF TAXES	$	(7.44	)	$	0.63		$	(8.54	)	$	0.28		$	0.11		$	0.69		$	0.37		$	—		$	0.06		$	0.27
NET (LOSS) INCOME	$	(6.10	)	$	2.11		$	(10.51	)	$	1.34		$	0.86		$	2.34		$	1.18		$	0.33		$	0.60		$	0.23
WEIGHTED AVERAGE SHARES OUTSTANDING (DILUTED) (2)		54.0			54.2			53.5			53.9			53.8			53.7			53.7			53.6			53.7			53.7
BALANCE SHEET
Total investments				$	6,008.3		$	7,535.0		$	7,678.4		$	7,663.9					$	8,265.7		$	8,253.1		$	8,091.3		$	8,239.5
Separate account assets				$	571.9		$	9,385.9		$	9,444.6		$	9,726.0					$	10,455.0		$	10,086.0		$	10,740.3		$	11,304.9
Total assets				$	10,507.9		$	21,647.1		$	21,846.6		$	22,167.8					$	23,719.2		$	23,448.9		$	24,030.5		$	24,763.9
Total shareholders’ equity				$	1,947.1		$	1,867.7		$	2,490.5		$	2,325.2					$	2,339.5		$	2,294.2		$	2,207.2		$	2,289.3
Book value per share				$	36.23		$	34.81		$	46.60		$	43.53					$	43.91		$	43.09		$	41.48		$	43.04
Book value per share, excluding accumulated other comprehensive income				$	37.33		$	35.47		$	46.01		$	44.67					$	43.85		$	42.69		$	42.36		$	41.77

(1) Represents income or loss of the Company’s operating segments: Personal Lines, Commercial Lines, Other Property and Casualty, Life Companies and interest expense on corporate debt. In accordance with Statement of Financial Accounting Standards No.131, the separate financial information of each segment is presented consistent with the manner in which results are regularly evaluated by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

(2) Weighted average shares outstanding for the quarter ending September 30, 2005 represents basic shares outstanding due to antidilution.

24

CORPORATE OFFICES AND

PRINCIPAL SUBSIDIARIES

THE HANOVER INSURANCE GROUP, INC.

440 Lincoln Street

Worcester, MA 01653

The Hanover Insurance Company

440 Lincoln Street

Worcester, MA 01653

Citizens Insurance Company of America

645 West Grand River

Howell, MI 48843

MARKET AND DIVIDEND INFORMATION

The following information shows trading activity for the Company for the periods indicated:

	2005
	Price Range				Dividends Per Share
Quarter Ended	High		Low
March 31	$	36.50	$	30.27	—
June 30	$	37.29	$	32.85	—
September 30	$	42.11	$	37.13	—
December 31	$	42.03	$	37.20	0.25
	2004
	Price Range				Dividends Per Share
Quarter Ended	High		Low
March 31	$	38.25	$	30.84	—
June 30	$	36.10	$	30.71	—
September 30	$	34.61	$	26.05	—
December 31	$	33.00	$	25.45	—

INDUSTRY RATINGS AS OF January 27, 2006

Financial Strength Ratings	A.M. Best	Standard & Poor’s	Moody’s
Property and Casualty Insurance Companies:
The Hanover Insurance Company	A-	BBB+	Baa1
Citizens Insurance Company of America	A-	BBB+	—
Life Insurance Companies:
Allmerica Financial Life Insurance and Annuity Company	B+	BBB	Ba1
First Allmerica Financial Life Insurance Company	B+	BBB-	Ba1
Debt Ratings	A.M. Best	Standard & Poor’s	Moody’s
Allmerica Financial Corporation Senior Debt	bbb-	BB+	Ba1
Allmerica Financial Corporation Capital Securities	bb	B+	Ba2
Allmerica Financial Corporation Short Term Debt	—	—	NP
First Allmerica Financial Life Insurance Company Short Term Insurance Financial Strength Rating	—	—	NP

TRANSFER AGENT

Computershare Limited

PO Box 43076

Providence, RI 02940-3076

1-800-317-4454

COMMON STOCK

Common stock of The Hanover Insurance Group is traded on the New York Stock Exchange under the symbol “THG”.

INQUIRIES

Sujata Mutalik

Vice President, Investor Relations

(508) 855-3457

smutalik@Hanover.com

Debra Casey, CPA

Director, Investor Relations

(508) 855-6658

dcasey@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