07148 Annual Report 2016

2016: The Hanover at a GlanceINSURANCE PRODUCT MIX 2016 FINANCIAL HIGHLIGHTS 2016 2015 12% 16% Year Ended December 31 $4,946 $5,034 $155 $332$ 4.7B20% ($ in millions, except per share amounts) $184 $280 16% $14,220 $13,781 Revenues $2,858 $2,844 18% 18% Net Income 2016 Net Premiums Operating Income1 Total Assets Written (NPW) Shareholders’ Equity Small Commercial Per Share Data $3.59 $7.40 • Middle Market Net Income Per Share — Diluted $4.27 $6.25 • U.S. Specialty Lines Operating Income Per Share — Diluted1 $67.40 $66.21 • Int’l. Specialty Lines Book Value Per Share • Personal Auto •• Homeowners 1 Operating income and operating income per diluted share are non-GAAP measures. The definition and 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, can be found on page 43 of the enclosed Annual Report on Form 10-K.ACCIDENT YEAR LOSS RATIO, EX-CAT2 DIVIDENDS PAID PER SHARE61.9% 60.6% 59.6% 59.4% $1.69 $1.88 58.4% $1.52 $1.23 $1.362012 2013 2014 2015 2016 2012 2013 2014 2015 2016 62.2% 61.3% 64.1%Total Loss Ratio270.2% 62.0%2 Current accident year loss ratio, excluding catastrophes, is a non-GAAP measure. The total loss ratio (which includes catastrophe losses and prior-year loss reserve development) is the most directly comparable GAAP measure.2 THE HANOVER INSURANCE GROUP 2016 ANNUAL REPORT

To Our Shareholders, our accident year loss ratios, as we revenues and book value have over the past several years. per share while producing2016 was a year of important progress Each of our businesses generated top-quartile returns on equityfor our company. Our businesses solid underlying results during 2016, over the next five years.performed well in the face of reflecting our inherent strengths With our organization financiallysignificant market challenges and and unique competitive position. stronger and better positioned thanwe advanced our mission to deliver ever, we look forward to providingvalue for our stakeholders. At the same time, we developed our partners and customers with our go-forward business strategy, exceptional insurance solutionsOur performance during the year Hanover 2021, committing to in a dynamic world and deliveringaffirmed the time is right to take build on our proven, agent-centric superior returns for our shareholders.our company to the next level. strategy, expand our industry-We reported operating income of leading domestic and international JOSEPH M. ZUBRETSKY$4.27 per share, which included specialty capabilities, and createa balance sheet strengthening in innovative, technology-based President andthe fourth quarter, ensuring that business models to help our agent Chief Executive Officerwe continue to build on a solid partners and our company grow.financial foundation. We delivered We are confident that the successfulsubstantially improved underlying implementation of this strategy willoperating income compared to generate significant increases in2015, excluding domestic balancesheet strengthening, and improved FIVE-YEAR TOTAL RETURN PERFORMANCE3 The Hanover S&P 500 Index S&P P&C Insurance Index300250200150100 2012 2013 2014 2015 2016 20113 The graph above compares the performance of the company’s common stock since December 31, 2011 with the performance of the S&P 500 Index and the S&P Property & Casualty Insurance Index. Assumes $100 invested on December 31, 2011 in The Hanover Insurance Group, Inc.’s common stock or applicable index, including reinvestment of dividends. Copyright © 2017, SNL Financial LC, Charlottesville, VA. All rights reserved. www.snl.com THE HANOVER INSURANCE GROUP 2016 ANNUAL REPORT 3

Executive Leadership TeamJOSEPH M. ZUBRETSKY JOHN FOWLE JOHN C. ROCHEPresident, Chief Executive Officer Chief Executive Officer and Executive Vice President, Chief Underwriting Officer, Chaucer President, Hanover Agency MarketsMARK L. BERTHIAUME J. KENDALL HUBER MARK J. WELZENBACHExecutive Vice President,Chief Administration Officer and Executive Vice President, Executive Vice President,Chief Technology Innovation Officer General Counsel and Assistant Secretary Chief Claims OfficerCHRISTINE BILOTTI-PETERSON MARK L. KEIM OTHER SENIOR OFFICERSExecutive Vice President, Executive Vice President, WARREN E. BARNESChief Human Resources Officer Corporate Development and Strategy Vice President,JEFFREY M. FARBER RICHARD W. LAVEY Principal Accounting OfficerExecutive Vice President, Executive Vice President, ANN K. TRIPPChief Financial Officer Chief Growth Innovation Officer and Chief Marketing Officer Senior Vice President, Chief Investment OfficerBoard of Directors(A) Audit Committee | (C) Compensation Committee | (N) Nominating and Corporate Governance CommitteeMICHAEL P. ANGELINI P. KEVIN CONDRON (C) WENDELL J. KNOX (C)Chairman of the Board Vice Chairman of the Board Retired President andThe Hanover Insurance Group, Inc. The Hanover Insurance Group, Inc. Chief Executive OfficerChairman and Partner Chairman and Chief Executive Officer Abt AssociatesBowditch & Dewey, LLP The Granite Group LLC JOSEPH R. RAMRATH (A)RICHARD H. BOOTH (A,N) CYNTHIA L. EGAN (N) Managing DirectorRetired Vice Chairman Retired President, Colchester Partners LLCGuy Carpenter & Company LLC Retirement Plan ServicesFormer Chairman and T. Rowe Price Group HARRIETT TEE TAGGART (N)Chief Executive OfficerHSB Group, Inc. KAREN C. FRANCIS (C) Retired Partner, Senior Vice President Wellington Management LLCJANE D. CARLIN Executive Chairman AcademixDirect, Inc. JOSEPH M. ZUBRETSKYRetired Managing Director andGlobal Head of Financial Holding DANIEL T. HENRY (A) President and Chief Executive OfficerCompany Governance and Assurance, The Hanover Insurance Group, Inc.Morgan Stanley Group, Inc. Retired Chief Financial Officer American Express Company4 THE HANOVER INSURANCE GROUP 2016 ANNUAL REPORT

10-K

REGISTRAR & STOCK TRANSFER AGENT FINANCIAL STRENGTH RATINGS A.M. Best Standard & Moody’s A Poor’s A3Computershare Investor Services The Hanover Insurance Company A A –P.O. Box 30170 Citizens Insurance Company of America ACollege Station, TX 77842-3170 Moody’s800-317-4454 Standard & Baa3 Poor’s Ba1INDEPENDENT ACCOUNTANTS DEBT RATINGS A.M. Best BBB bbb BB+PricewaterhouseCoopers LLP The Hanover Insurance Group bb+101 Seaport Boulevard Senior DebtSuite 500 Subordinated DebenturesBoston, MA 02210CORPORATE OFFICE INVESTOR INFORMATIONThe Hanover Insurance Group, Inc. Call our toll-free investor information line, 800-407-5222, to receive additional440 Lincoln Street printed information, including our Form 10-Ks and quarterly reports on Form 10-QsWorcester, MA 01653 filed with the Securities and Exchange Commission, and for access to fax-on- demand services, shareholder services, pre-recorded messages, and other services.PRINCIPAL SUBSIDIARIES In addition, our company’s filings with the Securities and Exchange Commission are available on our website at www.hanover.com under “Investors.” Alternatively,The Hanover Insurance Company investors may address questions to:440 Lincoln StreetWorcester, MA 01653 Oksana Lukasheva Vice President, Investor RelationsCitizens Insurance Company of America The Hanover Insurance Group, Inc.808 North Highlander Way 508-855-2063Howell, MI 48843 [email protected] Holdings LimitedPlantation Place, 30 Fenchurch StreetLondon, England EC3M 3ADTHE HANOVER INSURANCE GROUP 2016 ANNUAL REPORT

The Hanover Insurance Group, Inc., based in Worcester, Mass., is the holding COMMON STOCKcompany for several property and casualty insurance companies, which togetherconstitute one of the largest insurance businesses in the United States. For more The common stock of The Hanoverthan 160 years, The Hanover has provided a wide range of property and casualty Insurance Group, Inc. is traded onproducts and services to businesses, individuals, and families. The Hanover the New York Stock Exchange underdistributes its products through a select group of independent agents and brokers. the symbol “THG.” As of the closeTogether with its agents, the company offers standard and specialized coverages of business on February 17, 2017, thefor small and mid-sized businesses, as well as insurance protection for homes, company had approximately 18,543automobiles, and other personal items. Through its international member company, shareholders of record. On the sameChaucer, The Hanover also underwrites business at Lloyd’s of London in the date, the closing price of the company’smajor insurance and reinsurance classes, including marine, casualty, energy, common stock was $90.46 per share.and property. For more information, please visit www.hanover.com. COMMON STOCK PRICESANNUAL MEETING OF SHAREHOLDERS 2016 High LowThe management and Board of Directors of The Hanover Insurance Group, Inc. First Quarter $90.68 $76.90invite you to attend the company’s Annual Meeting of Shareholders. The meeting Second Quarter $91.15 $80.41will be held on Tuesday, May 16, 2017, at 9:00 a.m. local time at The Hanover, Third Quarter $84.58 $74.10440 Lincoln Street, Worcester, Massachusetts. Fourth Quarter $91.66 $74.88CORPORATE GOVERNANCE 2015 High Low First Quarter $73.47 $67.74Our Corporate Governance Guidelines, Board Committee Charters, Code of Second Quarter $74.90 $68.55Conduct, and other information are available on our website at www.hanover.com Third Quarter $83.28 $74.76under “About Us – Corporate Governance.” For a printed copy of any of these Fourth Quarter $87.42 $76.00documents, shareholders may contact the company’s secretary at ourcorporate offices.The company has filed its CEO and CFO Section 302 certifications as exhibits toits Annual Report on Form 10-K for the year ended December 31, 2016. In 2016,the company also has submitted its annual CEO certification to the New YorkStock Exchange, a copy of which is available on the company’s website atwww.hanover.com under “About Us – Corporate Governance – Certifications.”THE HANOVER INSURANCE GROUP 2016 ANNUAL REPORT

The Hanover Insurance Company hanover.com 440 Lincoln Street, Worcester, MA 0165307148 (3/17) ©2017 The Hanover Insurance Group, Inc.