ASSETS STATEMENT AS OF SEPTEMBER 30, 2017 OF THE HANOVER INSURANCE COMPANY. Current Statement Date 4 2. December 31. Assets

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2 STATEMENT AS OF SEPTEMBER 0, 017 OF THE HANOVER INSURANCE COMPANY ASSETS 1 Assets Current Statement Date 4 December 1 Net Admitted Assets Prior Year Net Nonadmitted Assets (Cols. 1 - ) Admitted Assets 1. Bonds,874,10,669 0,874,10,669,791,846,7. Stocks:.1 Preferred stocks 4,0,1 0 4,0,1 4,0,1. Common stocks 1,67,67,59 904,11 1,67,6,480 1,594,167,075. Mortgage loans on real estate:.1 First liens 45, ,085 58,67. Other than first liens Real estate: 4.1 Properties occupied by the company (less $ 0 encumbrances) 40,050, ,050,96 4,, Properties held for the production of income (less $ 0 encumbrances) Properties held for sale (less $ 0 encumbrances) Cash ($ (45,7,006) ), cash equivalents ($ 0 ) and short-term investments ($,059,876 ) (4,67,10) 0 (4,67,10) (5,480,) 6. Contract loans (including $ 0 premium notes) Derivatives Other invested assets 454,595, ,595,1 94,148, Receivables for securities 15,17, ,17, , Securities lending reinvested collateral assets 0,471, ,471,485 8,699, Aggregate write-ins for invested assets Subtotals, cash and invested assets (Lines 1 to 11) 6,08,407, ,11 6,07,50,855 5,850,4,6 1. Title plants less $ 0 charged off (for Title insurers only) Investment income due and accrued 4,784, ,784, ,015, Premiums and considerations: 15.1 Uncollected premiums and agents' balances in the course of collection 16,76,97 1,540,478 11,,459 95,699, Deferred premiums, agents' balances and installments booked but deferred and not yet due (including $ 0 earned but unbilled premiums) 900,065, ,065, ,7, Accrued retrospective premiums ($ 0 ) and 16. Reinsurance: contracts subject to redetermination ($ 0 ) Amounts recoverable from reinsurers 4,84, ,84,067,518, Funds held by or deposited with reinsured companies 4,08,75 0 4,08,75 4,76, Other amounts receivable under reinsurance contracts Amounts receivable relating to uninsured plans Current federal and foreign income tax recoverable and interest thereon 8,87,15 0 8,87,15 7,10, Net deferred tax asset 45,486,77 19,69,500 6,117,7 40,716, Guaranty funds receivable or on deposit 88, ,514 1,067, Electronic data processing equipment and software 68,17,584 61,465,671 6,661,91 6,97,7 1. Furniture and equipment, including health care delivery assets ($ 0 ) 9,016,0 9,016, Net adjustment in assets and liabilities due to foreign exchange rates Receivables from parent, subsidiaries and affiliates 195,654, ,654,75 01,74,05 4. Health care ($ 0 ) and other amounts receivable Aggregate write-ins for other than invested assets 95,44,1,109,40 6,4,818 58,085,01 6. Total assets excluding Separate Accounts, Segregated Accounts and Protected Cell Accounts (Lines 1 to 5) 7,76,58,119 16,405,196 7,66,1,9 7,409,76, From Separate Accounts, Segregated Accounts and Protected Cell Accounts Total (Lines 6 and 7) 7,76,58,119 16,405,196 7,66,1,9 7,409,76, DETAILS OF WRITE-INS Summary of remaining write-ins for Line 11 from overflow page Totals (Lines 1101 through 110 plus 1198)(Line 11 above) Equity in Pools & Associations 4,480, ,480,980,684, State Tax Credits 4,8,70 0 4,8,70 6,009, Miscellaneous Assets 4,70, ,70,118 19,90, Summary of remaining write-ins for Line 5 from overflow page,109,40,109, Totals (Lines 501 through 50 plus 598)(Line 5 above) 95,44,1,109,40 6,4,818 58,085,01

3 STATEMENT AS OF SEPTEMBER 0, 017 OF THE HANOVER INSURANCE COMPANY LIABILITIES, SURPLUS AND OTHER FUNDS 1 Current Statement Date December 1, Prior Year 1. Losses (current accident year $ 789,748,000 ),61,81,06,44,469,766. Reinsurance payable on paid losses and loss adjustment expenses 4, ,615. Loss adjustment expenses 61,797, ,175,9 4. Commissions payable, contingent commissions and other similar charges 108,61,59 11,91, Other expenses (excluding taxes, licenses and fees) 00,750,161 1,871, Taxes, licenses and fees (excluding federal and foreign income taxes) 17,660,009 1,71, Current federal and foreign income taxes (including $ 0 on realized capital gains (losses)) Net deferred tax liability Borrowed money $ 15,000,000 and interest thereon $ 57,917 15,57,917 15,57, Unearned premiums (after deducting unearned premiums for ceded reinsurance of $ 77,5,60 and including warranty reserves of $ 0 and accrued accident and health experience rating refunds including $ 0 for medical loss ratio rebate per the Public Health Service Act) 1,715,89,116 1,566,64, Advance premium 10,75,691 1,04, Dividends declared and unpaid: 11.1 Stockholders Policyholders,515,000,515, Ceded reinsurance premiums payable (net of ceding commissions) 45,611,515 7,708, Funds held by company under reinsurance treaties 1,756,57,4, Amounts withheld or retained by company for account of others,167,586,01, Remittances and items not allocated 7,68,54,465,7 16. Provision for reinsurance (including $ 0 certified) 10,74 10, Net adjustments in assets and liabilities due to foreign exchange rates Drafts outstanding Payable to parent, subsidiaries and affiliates 68,448 19,400, Derivatives Payable for securities 15,17,455,69,491. Payable for securities lending 0,471,485 8,699,96. Liability for amounts held under uninsured plans Capital notes $ 0 and interest thereon $ Aggregate write-ins for liabilities 8,74,40 50,55,77 6. Total liabilities excluding protected cell liabilities (Lines 1 through 5) 5,569,591,186 5,41,116,07 7. Protected cell liabilities Total liabilities (Lines 6 and 7) 5,569,591,186 5,41,116,07 9. Aggregate write-ins for special surplus funds Common capital stock 5,000,000 5,000, Preferred capital stock 0 0. Aggregate write-ins for other than special surplus funds 0 0. Surplus notes Gross paid in and contributed surplus 146,0, ,0, Unassigned funds (surplus) 1,905,10,867,016,99,41 6. Less treasury stock, at cost: shares common (value included in Line 0 $ 0 ) shares preferred (value included in Line 1 $ 0 ) Surplus as regards policyholders (Lines 9 to 5, less 6),056,541,77,168,160,11 8. Totals (Page, Line 8, Col. ) 7,66,1,9 7,409,76,518 DETAILS OF WRITE-INS 501. Collateral Held 9,70,710,715, Miscellaneous Liabilities 9,71,69 16,819, Summary of remaining write-ins for Line 5 from overflow page Totals (Lines 501 through 50 plus 598)(Line 5 above) 8,74,40 50,55, Summary of remaining write-ins for Line 9 from overflow page Totals (Lines 901 through 90 plus 998)(Line 9 above) Summary of remaining write-ins for Line from overflow page Totals (Lines 01 through 0 plus 98)(Line above) 0 0

4 STATEMENT AS OF SEPTEMBER 0, 017 OF THE HANOVER INSURANCE COMPANY STATEMENT OF INCOME 1 Current Year to Date Prior Year to Date Prior Year Ended December 1 UNDERWRITING INCOME 1. Premiums earned: 1.1 Direct (written $ 940,448,810 ) 898,06, ,871,15 1,170,148, Assumed (written $ 1,900,765,816 ) 1,784,017,411 1,679,960,86,58,515,58 1. Ceded (written $ 90,17,06 ) 80,68,118 7,86,981,8, Net (written $,550,897,600 ),401,711,470,18,545,197,104,80,665 DEDUCTIONS:. Losses incurred (current accident year $ 1,68,97,000 ):.1 Direct 459,999, ,1,19 556,008,571. Assumed 94,76, ,557,145 1,69,55,101. Ceded 156,810,776 11,909, ,77,67.4 Net 1,46,915,144 1,184,781,41 1,654,84,05. Loss adjustment expenses incurred 44,877,81 05,897,65 501,914,17 4. Other underwriting expenses incurred 865,987,60 88,80,765 1,107,8, Aggregate write-ins for underwriting deductions Total underwriting deductions (Lines through 5),457,780,559,9,499,80,6,480,61 7. Net income of protected cells Net underwriting gain or (loss) (Line 1 minus Line 6 + Line 7) (56,069,089) (10,954,606) (158,649,947) INVESTMENT INCOME 9. Net investment income earned 141,574,558 18,15,15 41,4, Net realized capital gains (losses) less capital gains tax of $,6,989 19,88,01 11,685,611 15,75, Net investment gain (loss) (Lines ) 161,457,571 19,80,746 56,700,064 OTHER INCOME 1. Net gain or (loss) from agents or premium balances charged off (amount recovered $,75,90 amount charged off $ 7,951,7 ) (4,675,71) (4,558,594) (6,9,969) 1. Finance and service charges not included in premiums 8,9,96 8,05,656 11,019, Aggregate write-ins for miscellaneous income 16,66,58 1,4,09 14,878, Total other income (Lines 1 through 14) 0,00,8 15,871,154 19,505, Net income before dividends to policyholders, after capital gains tax and before all other federal and foreign income taxes (Lines ) 15,408, ,77,94 117,555, Dividends to policyholders 1,74,10,060,97,855, Net income, after dividends to policyholders, after capital gains tax and before all other federal and foreign income taxes (Line 16 minus Line 17) 1,684,555 14,676, 114,699, Federal and foreign income taxes incurred 14,81,551 4,574,011 (,446,8) 0. Net income (Line 18 minus Line 19)(to Line ) 108,87, ,10,11 117,146,55 CAPITAL AND SURPLUS ACCOUNT 1. Surplus as regards policyholders, December 1 prior year,168,160,11,188,041,01,188,041,01. Net income (from Line 0) 108,87, ,10,11 117,146,55. Net transfers (to) from Protected Cell accounts Change in net unrealized capital gains (losses) less capital gains tax of $ 10,816,88 77,7, ,878,95 75,8,68 5. Change in net unrealized foreign exchange capital gain (loss) Change in net deferred income tax (19,799,49) (1,540,968) (10,800,86) 7. Change in nonadmitted assets 14,88,514 7,56,95 7,688,48 8. Change in provision for reinsurance ,94 9. Change in surplus notes Surplus (contributed to) withdrawn from protected cells Cumulative effect of changes in accounting principles Capital changes:.1 Paid in Transferred from surplus (Stock Dividend) Transferred to surplus Surplus adjustments:.1 Paid in Transferred to capital (Stock Dividend) Transferred from capital Net remittances from or (to) Home Office Dividends to stockholders (96,800,000) (18,800,000) (18,800,000) 6. Change in treasury stock Aggregate write-ins for gains and losses in surplus 4,447,87,518,1 (10,655,1) 8. Change in surplus as regards policyholders (Lines through 7) (111,618,474) 5,70,886 (19,880,80) 9. Surplus as regards policyholders, as of statement date (Lines 1 plus 8),056,541,77,1,761,899,168,160,11 DETAILS OF WRITE-INS Summary of remaining write-ins for Line 5 from overflow page Totals (Lines 0501 through 050 plus 0598)(Line 5 above) Miscellaneous Income 70,94 444, , Interest on Intercompany Notes Receivable 7,79,50 6,101,496 8,51, Gains on State Tax Credits 8,615,795 5,678,446 5,678, Summary of remaining write-ins for Line 14 from overflow page Totals (Lines 1401 through 140 plus 1498)(Line 14 above) 16,66,58 1,4,09 14,878, Pensions, net of tax 4,447,87,518,1 (10,655,1) Summary of remaining write-ins for Line 7 from overflow page Totals (Lines 701 through 70 plus 798)(Line 7 above) 4,447,87,518,1 (10,655,1) 4

5 STATEMENT AS OF SEPTEMBER 0, 017 OF THE HANOVER INSURANCE COMPANY Cash from Operations CASH FLOW 1 Current Year To Date Prior Year To Date Prior Year Ended December 1 1. Premiums collected net of reinsurance,40,688,48,4,8,8,114,69,910. Net investment income 145,045,89 15,55, ,66,598. Miscellaneous income 18,48,17 15,179,988 17,754,50 4. Total (Lines 1 to ),594,17,04,49,818,451,1,085, Benefit and loss related payments 1,071,760,187 1,054,50,77 1,70,417, Net transfers to Separate Accounts, Segregated Accounts and Protected Cell Accounts Commissions, expenses paid and aggregate write-ins for deductions 1,19,68,91 1,150,040,01 1,448,86, Dividends paid to policyholders 1,74,10,060,97,768, Federal and foreign income taxes paid (recovered) net of $,6,989 tax on capital gains (losses) (99,000) 6,915,891,50, Total (Lines 5 through 9),65,759,788,1,57,656,844,99,8 11. Net cash from operations (Line 4 minus Line 10) 8,457,516 80,80, ,785,78 Cash from Investments 1. Proceeds from investments sold, matured or repaid: 1.1 Bonds 56,45,510 69,111, ,49, Stocks 90,77, ,15,66 09,669, Mortgage loans 11,86 88,740 88, Real estate 0 8,7 8,7 1.5 Other invested assets,97,76 16,660,669 0,51, Net gains or (losses) on cash, cash equivalents and short-term investments Miscellaneous proceeds Total investment proceeds (Lines 1.1 to 1.7) 471,05, ,45,567 1,110,157, Cost of investments acquired (long-term only): 1.1 Bonds 650,57,06 641,750,89 995,694, Stocks 4,69, ,056, ,086, Mortgage loans Real estate 1,08, ,8,019, Other invested assets 81,005,80 10,97,6 14,115, Miscellaneous applications,00,718 7,85,109 14,096, Total investments acquired (Lines 1.1 to 1.6) 778,500,74 89,461,65 1,1,011, Net increase (or decrease) in contract loans and premium notes Net cash from investments (Line 1.8 minus Line 1.7 and Line 14) (07,448,084) (14,05,798) (01,854,14) 16. Cash provided (applied): Cash from Financing and Miscellaneous Sources 16.1 Surplus notes, capital notes Capital and paid in surplus, less treasury stock Borrowed funds Net deposits on deposit-type contracts and other insurance liabilities Dividends to stockholders,058,40 18,800,000 18,800, Other cash provided (applied) (6,14,88) (5,680,598) (70,491,057) 17. Net cash from financing and miscellaneous sources (Line 16.1 through Line 16.4 minus Line 16.5 plus Line 16.6) (59,0,0) (7,480,598) (89,91,057) RECONCILIATION OF CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS 18. Net change in cash, cash equivalents and short-term investments (Line 11, plus Lines 15 and 17) (8,19,798) (6,5,601) (,59,417) 19. Cash, cash equivalents and short-term investments: 19.1 Beginning of year (5,480,) 17,879,085 17,879, End of period (Line 18 plus Line 19.1) (4,67,10) 11,64,48 (5,480,) Note: Supplemental disclosures of cash flow information for non-cash transactions: Bonds sold to subsidiaries in settlement of capital contributions (8,68,465) (44,589,10) (44,589,10) Bonds acquired in settlement of stockholder dividends receivable 71,054,8 65,18,786 65,18, Accrued interest income on bonds acquired (sold) for capital transactions (1,81,11) 06,84 06, Bonds sold to parent in settlement of stockholder dividend payable (61,566,41) Bonds acquired in connection with affiliated Common Stock transactions 0 6,959,01 6,959,01 5

6 STATEMENT AS OF SEPTEMBER 0, 017 OF THE HANOVER INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies and Going Concern A. Accounting Practices The financial statements of The Hanover Insurance Company ( the Company ) are presented on the basis of accounting practices prescribed or permitted by the State of New Hampshire Insurance Department. The State of New Hampshire Insurance Department recognizes only statutory accounting practices prescribed or permitted by the State of New Hampshire for determining and reporting the financial condition and results of operations of an insurance company, for determining its solvency under the New Hampshire Insurance Law. The National Association of Insurance Commissioners ( NAIC ) Accounting Practices and Procedures Manual ( NAIC SAP ) has been adopted as a component of prescribed or permitted practices by the state of New Hampshire. The state has not adopted any prescribed accounting practices that differ from those found in NAIC SAP. A reconciliation of the Company s net income and capital and surplus between NAIC SAP and practices prescribed and permitted by the State of New Hampshire is shown below: SSAP# F/S Page F/S Line# 09/0/017 1/1/016 Net Income (1) State basis (Page 4, Line 0, Columns 1 & ) XXX XXX XXX $ 108,87,004 $ 117,146,55 () State Prescribed Practices that increase/(decrease) NAIC SAP 0 0 () State Permitted Practices that increase/(decrease) NAIC SAP 0 0 (4) NAIC SAP (1--=4) XXX XXX XXX $ 108,87,004 $ 117,146,55 Surplus (5) State basis (Page, Line 7, Columns 1 & ) XXX XXX XXX $,056,541,77 $,168,160,11 (6) State Prescribed Practices that increase/(decrease) NAIC SAP 0 0 (7) State Permitted Practices that increase/(decrease) NAIC SAP 0 0 (8) NAIC SAP (5-6-7=8) XXX XXX XXX $,056,541,77 $,168,160,11 B. Use of Estimates in the Preparation of the Financial Statements The preparation of financial statements in conformity with Statutory Accounting Principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities. It also requires disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates. C. Accounting Policies 1. Short-term investments are stated at amortized cost.. Bonds not backed by loans are stated at either amortized cost or fair value, using the scientific interest method, in accordance with the NAIC Purposes and Procedures of the Securities Valuation Office ( SVO ).. & 4. Preferred stocks that are subject to a 100% mandatory sinking fund are carried at amortized cost. All other preferred stocks and common stocks are carried at fair value, except investments in stocks of unconsolidated subsidiaries and affiliates in which the Company has an interest of 10% or more are carried using the equity method. 5. Mortgage loans on real estate are stated at unpaid principal balances, net of unamortized discounts, premiums, and other adjustments. Mortgage loans are reduced for losses expected by management to be realized on transfers of mortgage loans to real estate (upon foreclosure), on the disposition or settlement of mortgage loans and on mortgage loans which the Company believes may not be collectible in full. In determining the amount of loss, management considers, among other things, the estimated fair value of the underlying collateral. 6. Loan-backed securities are stated at either amortized cost or fair value, in accordance with the NAIC Purposes and Procedures of the SVO. 7. The Company owns 100% of the common stock of Allmerica Financial Alliance Insurance Company ( AFAIC ), Allmerica Financial Benefit Insurance Company ( AFBIC ), The Hanover American Insurance Company ( American ), The Hanover Atlantic Insurance Company Ltd. ( Atlantic ), Chaucer Ins. Co. Designated Activity Co. ( Chaucer DAC ), Hanover Lloyd s Insurance Company ( Lloyd s ), Hanover Texas Insurance Management Co., Massachusetts Bay Insurance Company ( Mass Bay ), Citizens Insurance Company of America ( CICA ), Citizens Insurance Company of the Midwest ( CICM ), Citizens Insurance Company of Ohio ( CICO ), The Hanover New Jersey Insurance Company ( New Jersey ), Verlan Fire Insurance Company ( Verlan ), The Hanover National Insurance Company ( National ), and Campmed Casualty and Indemnity Company, Inc. ( Campmed ), all of which are insurance subsidiaries. The Company owns 100% of the common stock of Professionals Direct Inc. ( PDI ), AIX Holdings, Inc. ( AIX ), and Allmerica Plus Insurance Agency ( APIA ), which are non-insurance subsidiaries. All subsidiaries are carried using the equity method. 8. Other invested assets, including investments in trusts, are recorded using the equity method in accordance with the Statement of Statutory Accounting Principles ( SSAP ) 48, Joint Ventures, Partnerships and Limited Liability Companies. Investments in affiliated entities are recorded based on its underlying audited GAAP equity balances in accordance with the SSAP 97, Investments in Subsidiary, Controlled, and Affiliated Entities, A Replacement of SSAP 88. Commercial mortgage loan participations are recorded at outstanding principal balance of the loan per SSAP 1, Other Admitted Assets. 9. The Company has not entered into derivative contracts. 10. The Company does utilize anticipated investment income as a factor in the premium deficiency calculation. 6

7 STATEMENT AS OF SEPTEMBER 0, 017 OF THE HANOVER INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS 11. Unpaid losses and loss adjustment expenses include an amount determined from individual case estimates and loss reports and an amount, based on past experience, for losses incurred but not reported ( IBNR ). Such liabilities are necessarily based on assumptions and estimates and while management believes the amount is adequate, the ultimate liability may be in excess of or less than the amount provided. The methods for making such estimates and for establishing the resulting liability are continually reviewed and any adjustments are reflected in the period determined. 1. The Company has not modified its capitalization policy from the prior year. 1. as the Company does not write major medical insurance with prescription drug coverage. D. Going Concern. Accounting Changes and Corrections of Errors. Business Combinations and Goodwill The Company purchased 100% of AIX and its subsidiaries on September 0, 009 from The Hanover Insurance Group, Inc. ( THG ). AIX owns two insurance subsidiaries, NOVA Casualty Company ( NOVA ) and AIX Specialty Insurance Company ( ASIC ). NOVA is licensed in 50 states and the District of Columbia and offers commercial insurance products. ASIC is licensed in its state of domicile and is eligible in 49 states and the District of Columbia as an excess and surplus lines company, offering commercial insurance products. The transaction was accounted for as a statutory purchase. The cost was $19.4 million resulting in goodwill in the amount of $56,585,6. Goodwill amortization relating to the purchase of AIX was $4,4,9 for the current reporting period. The Company purchased 100% of Campmed on March 1, 010 from THG. Campmed is licensed in 50 states and the District of Columbia and offers professional liability products. The transaction was accounted for as a statutory purchase. The original cost was $17.5 million resulting in an original goodwill amount of $6,198,999. Between 01 and 015, the Company s investment cost increased by $8. million due to the Stock Purchase agreement, resulting in adjusted goodwill in the amount of $14,481,871. Goodwill amortization relating to the purchase of Campmed was $1,086,140 for the current reporting period. 4. Discontinued Operations 5. Investments A. Mortgage Loans, including Mezzanine Real Estate Loans 1. The Company did not purchase any new mortgage loans as of the end of the reporting period.. Mortgage loans are collateralized by the related properties and are generally no more than 75% of the property value at the time the original loan is made, exclusive of insured or guaranteed or purchase money mortgages.. There were no taxes, assessments or any amounts advanced and not included in the mortgage loan total at the end of the reporting period The Company did not have impaired loans as of the end of the reporting period. B. Restructured Debt The Company did not have any restructured debt as of the end of the reporting period. C. Reverse Mortgages The Company does not own any reverse mortgages as of the end of the reporting period. D. Loan-backed Securities 1. Prepayment assumptions for loan-backed and structured securities were obtained from prepayment models that are sensitive to refinancing, turnover, equity take-out and other relevant factors. These assumptions are consistent with the current interest rate and economic environment... The Company had no securities with a recognized other-than-temporary impairment during the current reporting period. 4. All impaired securities (fair value is less than cost or amortized cost) for which an other-than-temporary impairment has not been recognized in earnings as a realized loss (including securities with a recognized other-than-temporary impairment for non-interest related declines when a non-recognized interest related impairment remains): a. The aggregate amount of unrealized losses: 1. Less than 1 Months $,11, Months or longer $,689,766 b. The aggregate related fair value of securities with unrealized losses: 1. Less than 1 Months $ 9,167, Months or longer $ 65,57,

8 STATEMENT AS OF SEPTEMBER 0, 017 OF THE HANOVER INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS 5. The Company employs a systematic methodology to determine if a decline in market value below book/adjusted carrying value is other-than-temporary. In determining whether a decline in fair value below book/adjusted carrying value is other-than-temporary, the Company evaluates several factors and circumstances, including the issuer s overall financial condition; the issuer s credit and financial strength ratings; the issuer s financial performance, including earnings trends, dividend payments, and asset quality; any specific events which may influence the operations of the issuer including governmental actions; a weakening of the general market conditions in the industry or geographic region in which the issuer operates; the length of time and degree to which the fair value of an issuer s securities remains below cost; the Company s intent and ability to hold the security until such time to allow for the expected recovery in value; and with respect to fixed maturity investments, any factors that might raise doubt about the issuer s ability to pay all amounts due according to the contractual terms. These factors are applied to all securities. E. Repurchase Agreements and/or Securities Lending Transactions 1. The Company does not own any repurchase agreements.. The Company has not pledged any of its assets as collateral.. Collateral Received - 4. The Company does not have any securities lending transactions administered by an affiliated agent in which one-line reporting of the reinvested collateral is optional. 5. Collateral Reinvestment a. Aggregate Amount Cash Collateral Reinvested 1. Repurchase Agreement Not Applicable. Securities Lending Amortized Cost Fair Value (a) Open $ 0 $ 0 (b) 0 Days or Less 0,471,485 0,471,485 (c) 1 to 60 Days 0 0 (d) 61 to 90 Days 0 0 (e) 91 to 10 Days 0 0 (f) 11 to 180 Days 0 0 (g) 181 to 65 Days 0 0 (h) 1 to years 0 0 (i) years 0 0 (j) Greater than years 0 0 (k) Subtotal $ 0,471,485 $ 0,471,485 (l) Securities Received 0 0 (m) Total Collateral Reinvested $ 0,471,485 $ 0,471,485. Dollar Repurchase Agreement b. As part of the Company s securities lending arrangement, collateral in the amount of $0,471,485 was accepted in a special bank account with the lending agent for reinvestment into the Goldman Sachs Financial Square Government Fund. The fair value of this collateral is $0,471, The Company has not accepted collateral that is not permitted by state contract or custom to sell or repledge. 7. The Company has no collateral for transactions that extend beyond one year from the reporting date. F. Real Estate G. Low income Housing Tax Credits 6.

9 Restricted Asset Category STATEMENT AS OF SEPTEMBER 0, 017 OF THE HANOVER INSURANCE COMPANY H. Restricted Assets 1. Restricted Assets (Including Pledged) Total General Account (G/A) NOTES TO FINANCIAL STATEMENTS Gross (Admitted & Nonadmitted) Restricted Current Year Percentage Gross (Admitted G/A Total Protected & Nonadmitted) Supporting Protected Cell Account Protected Cell Assets Increase/ Total Restricted Cell Account Supporting Total (Decrease) Total Nonadmitted Admitted to Total Account Restricted G/A Activity Total From Restricted Assets Activity (a) Assets (b) (1 plus ) Prior Year (5 minus 6) Restricted (5 minus 8) (c) Admitted Restricted to Total Admitted Assets (d) (a) Subject to contractual obligation for which liability is not shown $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 0.0% 0.0% (b) Collateral held under security lending agreements 0,471, ,471,485 8,699,96 (8,8,441) 0 0,471,485 0.% 0.% (c) Subject to repurchase agreements % 0.0% (d) Subject to reverse repurchase agreements % 0.0% (e) Subject to dollar repurchase agreements % 0.0% (f) Subject to dollar reverse repurchase agreements % 0.0% (g) Placed under option contracts % 0.0% (h) Letter stock or securities restricted as to sale % 0.0% (i) FHLB Capital Stock 7,85, ,85,500 9,8,00 (1,49,800) 0 7,85, % 0.1% (j) On deposit with states 04,88, ,88,960 18,16,64,70, ,88,960.6%.7% (k) On deposit with other regulatory bodies 69, ,819 69, , % 0.0% (l) Pledged collateral to FHLB (including assets backing funding agreements) 04,17, ,17, ,75,154 19,464, ,17,669.6%.7% (m) Pledged as collateral not captured in other categories % 0.0% (n) Other restricted assets 6,966, ,966,419 6,978,665 (1,46) 0 6,966, % 0.1% (o) Total Restricted Assets $ 444,406,85 $ 0 $ 0 $ 0 $ 444,406,85 $ 411,910,461 $,496,91 $ 0 $ 444,406,85 5.7% 5.8% (a) Subset of column 1 (b) Subset of column (c) Column 5 divided by Asset Page, Column 1, Line 8 (d) Column 9 divided by Asset Page, Column, Line 8. Detail of Assets Pledged as Collateral Not Captured in Other Categories. Detail of Other Restricted Assets Total General Account (G/A) Gross (Admitted & Nonadmitted) Restricted Current Year Percentage Protected Gross G/A Cell (Admitted Supporting Total Account & Non- Protected Protected Assets Increase/ Total admitted) Cell Cell Account Supporting Total (Decrease) Current Year Restricted Account Restricted G/A Total From Admitted to Total Activity (a) Assets Activity (b) (1 plus ) Prior Year (5 minus 6) Restricted Assets Admitted Restricted to Total Admitted Assets Description of Assets Held in Trust for Group Accident & Health Business $ 6,966,419 $ 0 $ 0 $ 0 $ 6,966,419 $ 6,978,665 $ (1,46) $ 6,966, % 0.1% Total (c) $ 6,966,419 $ 0 $ 0 $ 0 $ 6,966,419 $ 6,978,665 $ (1,46) $ 6,966, % 0.1% (a) Subset of column 1 (b) Subset of column (c) Total line for Column 1 through 7 should equal 5H(1)n Columns 1 through 7 respectively and Total Line for Columns 8 through 10 should equal 5H(1)n Columns 9 through 11 respectively. 6.

10 STATEMENT AS OF SEPTEMBER 0, 017 OF THE HANOVER INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS 4. Collateral Received and Reflected as Assets Within the Reporting Entity s Financial Statements 1 4 % of BACV to Total Assets (Admitted and Fair Value Nonadmitted*) Book/Adjusted Carrying Value (BACV) % of BACV to Total Admitted Assets ** Collateral Assets a. Cash $ 0 $ % 0.00 % b. Schedule D, Part c. Schedule D, Part, Section d. Schedule D, Part, Section e. Schedule B f. Schedule A g. Schedule BA, Part h. Schedule DL. Part 1 0,471,485 0,471, i. Other Total Collateral Assets j. (a+b+c+d+e+f+g+h+i) $ 0,471,485 $ 0,471, % 0.7 % * Column 1 divided by Asset Page, Line 6 *(Column 1) ** Column 1 divided by Asset Page, Line 6 (Column ) 1 % of Liability to Amount Total Liabilities* k. Recognized Obligation to Return Collateral Asset $ 0,471, % * Column 1 divided by Liability Page, Line 6 (Column 1) I. Working Capital Finance Investments J. Offsetting and Netting of Assets and Liabilities K. Structured Notes L. 5* Securities M. Short Sales N. Prepayment Penalties and Acceleration Fees Not required 6. Joint Ventures, Partnerships and Limited Liability Companies A. The Company has no investments in joint ventures, partnerships or limited liability companies that exceed 10% of total admitted assets as of the end of the reporting period. B. The Company recognizes impairments when it is probable that the reporting entity will be unable to recover the carrying amount of the investment or there is evidence indicating inability of the investee to sustain earnings which would justify the carrying value of the investment. The Company did not recognize any impairments in joint ventures, partnerships or limited liability companies during the current reporting period. 7. Investment Income The Company did not have any due and accrued amounts over 90 days past due to exclude from surplus. 8. Derivative Instruments 6.4

11 9. Income Taxes STATEMENT AS OF SEPTEMBER 0, 017 OF THE HANOVER INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS A. The components of the net deferred tax asset/(liability) at the end of the reporting period are as follows: 1. 09/0/017 1/1/016 Change Ordinary Capital Total Ordinary Capital Total Ordinary Capital Total (a) Gross Deferred Tax Assets $ 96,419,16 $ 0 $ 96,419,16 $ 19,67,45 $ 0 $ 19,67,45 $ (,18,09) $ 0 $ (,18,09) (b) Statutory Valuation Allowance Adjustment (c) Adjusted Gross Deferred Tax Assets 96,419, ,419,16 19,67, ,67,45 (,18,09) 0 (,18,09) (d) Deferred Tax Assets Nonadmitted 19,69, ,69,500 7,780, ,780,981 (18,411,481) 0 (18,411,481) (e) Subtotal Net Admitted Deferred Tax Asset 77,049, ,049,716 81,856, ,856,444 (4,806,78) 0 (4,806,78) (f) Deferred Tax Liabilities 18,788,09,144,180 50,9,489 18,17,5,966,40 41,19,86 614,787 9,177,840 9,79,67 (g) Net Admitted Deferred Tax Asset/ (Net Deferred Tax Liability) $ 58,61,407 $ (,144,180) $ 6,117,7 $ 6,68,9 $ (,966,40) $ 40,716,58 $ (5,41,515) $ (9,177,840) $ (14,599,55). 09/0/017 1/1/016 Change Ordinary Capital Total Ordinary Capital Total Ordinary Capital Total Admission Calculation Components SSAP No. 101 (a) Federal Income Taxes Paid In Prior Years Recoverable Through Loss carrybacks (b) Adjusted Gross Deferred Tax Assets Expected To Be Realized (Excluding The Amount Of Deferred Tax Assets From (a) above) After Application of the Threshold Limitation. (The Lesser of $ 8,074,61 $ 0 $ 8,074,61 $ 5,77,177 $ 0 $ 5,77,177 $,01,084 $ 0 $,01,084 (b)1 and (b) Below) $ 18,04,966 $ 0 $ 18,04,966 $ 4,94,406 $ 0 $ 4,94,406 $ (16,900,440) $ 0 $ (16,900,440) 1. Adjusted Gross Deferred Tax Assets Expected to be Realized Following the Balance Sheet Date $ 18,04,966 $ 0 $ 18,04,966 $ 4,94,406 $ 0 $ 4,94,406 $ (16,900,440) $ 0 $ (16,900,440). Adjusted Gross Deferred Tax Assets Allowed per Limitation Threshold XXX XXX $ 7,564,90 XXX XXX $ 88,070,59 XXX XXX $ (14,506,149) (c) Adjusted Gross Deferred Tax Assets (Excluding The Amount Of Deferred Tax Assets From (a) and (b) above) Offset by Gross Deferred Tax Liabilities $ 18,788,09 $,144,180 $ 50,9,489 $ 18,17,51 $,966,40 $ 41,19,861 $ 614,788 $ 9,177,840 $ 9,79,68 (d) Deferred Tax Assets Admitted as the result of application of SSAP 101. Total ((a) + (b) + (c)) $ 44,905,56 $,144,180 $ 77,049,716 $ 58,890,104 $,966,40 $ 81,856,444 $ (1,984,568) $ 9,177,840 $ (4,806,78). 09/0/017 1/1/016 a. Ratio Percentage Used To Determine Recovery Period And Threshold Limitation Amount 41% 45% b. Amount Of Adjusted Capital And Surplus Used To Determine Recovery Period And Threshold Limitation In (b) Above $ 1,87,14,510 $ 1,9,918, /0/017 1/1/016 Change Impact of Tax Planning Strategies: Ordinary Capital Ordinary Capital Ordinary Capital a. Determination of adjusted gross deferred tax assets and net admitted deferred tax assets, by tax character as a percentage. 1. Adjusted Gross DTAs amount from Note 9A1(c) $ 96,419,16 $ 0 $ 19,67,45 $ 0 $ (,18,09) $ 0. Percentage of adjusted gross DTAs by tax character attributable to the impact of tax planning strategies 0% 0% 0% 0% 0% 0%. Net Admitted Adjusted Gross DTAs amount from Note 9A1(e) $ 77,049,716 $ 0 $ 81,856,444 $ 0 $ (4,806,78) $ 0 4. Percentage of net admitted adjusted gross DTAs by tax character admitted because of the impact of tax planning strategies 0% 0% 0% 0% 0% 0% b. Do the Company's tax-planning strategies include the use of reinsurance? Yes [ ] No [ X ] B. The Company does not have any deferred tax liabilities that are not recognized for amounts described in Accounting Standards Codification 740, Income Tax. 6.5

12 STATEMENT AS OF SEPTEMBER 0, 017 OF THE HANOVER INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS C. Current income taxes incurred consist of the following major components: 1. Current Income Tax 09/0/017 1/1/016 Change (a) Federal $ 14,81,551 $ (,446,8) $ 17,58,84 (b) Foreign (c) Subtotal $ 14,81,551 $ (,446,8) $ 17,58,84 (d) Federal income tax on net capital gains,6,989,655,908 (1,0,919) (e) Utilization of capital loss carry-forwards (f) Other (g) Federal and foreign income taxes incurred $ 17,445,540 $ 1,09,65 $ 16,5,915. Deferred Tax Assets: (a) Ordinary: (1) Discounting of unpaid losses 4,51,800 4,875,650 (1,61,850) () Unearned premium reserve 10,860,44 110,505,789 10,54,654 () Policyholder reserve (4) Investments,7,45 9,818,58 (7,481,158) (5) Deferred acquisition costs (6) Policyholder dividends accrual (7) Fixed Assets 0,84,851 9,44, ,947 (8) Compensation and benefits accrual 15,98,01 15,01,916 95,85 (9) Pension accrual 5,18,01 6,605,956 (1,4,95) (10) Receivables nonadmitted 15,869,790 15,1,57 656,4 (11) Net operating loss carry-forward (1) Tax credit carry-forward 8,898,96 51,55,008 (,654,71) (1) Other (including items <5% of total ordinary tax assets) 14,44,89 17,67,6 (,19,87) (99) Subtotal $ 96,419,16 $ 19,67,45 $ (,18,09) (b) Statutory valuation allowance adjustment (c) Nonadmitted 19,69,500 7,780,981 (18,411,481) (d) Admitted ordinary deferred tax assets (a99 b c) (e) Capital: $ 77,049,716 $ 81,856,444 $ (4,806,78) (1) Investments () Net capital loss carry-forward () Real estate (4) Other (including items <5% of total ordinary tax assets) (99) Subtotal $ 0 $ 0 $ 0 (f) Statutory valuation allowance adjustment (g) Nonadmitted (h) Admitted capital deferred tax assets (e99 f g) $ 0 $ 0 $ 0 (i) Admitted deferred tax assets (d + h) $ 77,049,716 $ 81,856,444 $ (4,806,78). Deferred Tax Liabilities: (a) Ordinary: (1) Investments () Fixed assets 18,788,09 18,17,5 614,787 () Deferred and uncollected premium (4) Policyholder reserves (5) Other (including items <5% of total ordinary tax assets) (99) Subtotal $ 18,788,09 $ 18,17,5 $ 614,787 (b) Capital: (1) Investments,144,180,966,40 9,177,840 () Real estate () Other (including items <5% of total ordinary tax assets) (99) Subtotal $,144,180 $,966,40 $ 9,177,840 (c) Deferred tax liabilities (a99 + b99) $ 50,9,489 $ 41,19,86 $ 9,79,67 4. Net deferred tax assets/liabilities (i c) $ 6,117,7 $ 40,716,58 $ (14,599,55) The change in net deferred income taxes is comprised of the following, exclusive of non-admitted assets: 09/0/017 1/1/016 Change Adjusted gross deferred tax assets $ 96,419,16 $ 19,67,45 $ (,18,09) Total deferred tax liabilities 50,9,489 41,19,86 9,79,67 Net deferred tax assets (liabilities) $ 45,486,77 $ 78,497,56 $ (,010,86) Tax effect of unrealized gains (losses) 10,816,88 Tax effect of pension liability,95,009 Change in net deferred income tax $ (19,799,49) 6.6

13 STATEMENT AS OF SEPTEMBER 0, 017 OF THE HANOVER INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS D. Reconciliation of Federal Income Tax Rate to Actual Effective Rate The significant items causing difference between the statutory federal income tax rate and the Company s effective income tax rate are as follows: 09/0/017 Tax Rate Provision computed at statutory rate $ 44,11, % Intercompany dividends (4,75,000) -.5% Dividends received deduction (1,71,48) -1.4% Tax exempt income deduction (16,864) -0.% Non-deductible expenses 488,11 0.4% Non-admitted assets (1,68,8) -1.1% Other 18,74 0.% Total $ 7,44, % 09/0/017 Tax Rate Federal income taxes incurred $ 14,81, % Realized capital gains tax,6,989.1% Change in net deferred income taxes 19,799, % Total statutory income taxes $ 7,44, % E. Operating Loss and Tax Credit Carryforwards 1. At the end of the current reporting period, the Company has no net operating loss carryforwards, no capital loss carryforwards and $8,898,96 of alternative minimum tax credits, which have no expiration date.. The Company has the following federal income taxes which are available for recoupment in the event of future losses: For the tax year 016: $ 0 For the tax year 017: $ 8,074,61. At the end of the current reporting period, the Company has no deposits under section 660 of the Internal Revenue Service Code. F. Consolidated Federal Income Tax Return 1. The Company s Federal Income Tax Return is consolidated with the following affiliated companies: 440 Lincoln Street Holding Company LLC Hanover Specialty Insurance Brokers, Inc. AIX Holdings, Inc. Hanover Texas Insurance Management Company, Inc. AIX, Inc. Massachusetts Bay Insurance Company AIX Insurance Services of California, Inc. NOVA American Group, Inc. AIX Specialty Insurance Company NOVA Casualty Company Allmerica Financial Alliance Insurance Company Opus Investment Management, Inc. Allmerica Financial Benefit Insurance Company Professionals Direct, Inc. Allmerica Plus Insurance Agency, Inc. Professionals Direct Insurance Services, Inc. Campania Holding Company, Inc. The Hanover American Insurance Company Campmed Casualty & Indemnity Co. Inc. The Hanover Atlantic Insurance Company Ltd. Citizens Insurance Company of America The Hanover Insurance Group, Inc. Citizens Insurance Company of Illinois The Hanover National Insurance Company Citizens Insurance Company of Ohio The Hanover New Jersey Insurance Company Citizens Insurance Company of the Midwest VeraVest Investments, Inc. Educators Insurance Agency, Inc. Verlan Fire Insurance Company Hanover Lloyd s Insurance Company Verlan Holdings, Inc.. The Board of Directors has delegated to Company Management, the development and maintenance of appropriate Federal Income Tax allocation policies and procedures, which are subject to written agreement between the companies. The Federal Income tax for all subsidiaries in the consolidated return of THG is calculated on a separate return basis. Any current tax liability is paid to THG. Tax benefits resulting from taxable operating losses or credits of THG s subsidiaries are reimbursed to the subsidiary when such losses or credits can be utilized on a consolidated return basis. G. The Company has no federal or foreign income tax loss contingencies, for which it is reasonably possible that the total liability will significantly increase within 1 months of the reporting date. 10. Information Concerning Parent, Subsidiaries and Affiliates A. Nature of Relationships The Company is a wholly-owned subsidiary of Opus Investment Management, Inc. ( Opus ) which, in turn, is a wholly-owned noninsurance subsidiary of THG, a publicly traded company incorporated in Delaware. The Company has intercompany reinsurance agreements with AFAIC, AFBIC, American, Atlantic, Lloyd s, Mass Bay, New Jersey, Citizens Insurance Company of Illinois, Verlan, ASIC, NOVA, and Campmed whereby the Company assumes 100% of the affiliates insurance and reinsurance obligations. The Company also has an intercompany reinsurance agreement with CICA, whereby the Company assumes 100% of CICA s insurance and reinsurance obligations related to business written in all states except Michigan, Indiana, and Ohio. Effective in 017, the Company has an intercompany reinsurance agreement with Chaucer DAC, whereby the Company assumes 90% of Chaucer DAC s net insurance and reinsurance obligations. 6.7

14 STATEMENT AS OF SEPTEMBER 0, 017 OF THE HANOVER INSURANCE COMPANY B. Detail of Transactions Greater than ½% of Admitted Assets NOTES TO FINANCIAL STATEMENTS On November 14, 01, the Company entered into an intercompany loan agreement with Chaucer Holdings PLC and issued a loan with a maximum principal amount of up to $65,000,000. This note was disbursed in two installments and matures on December 15, 06. Interest is calculated at a month London interbank offered interest rate ( LIBOR ) plus.0% per annum. At the end of the reporting period, the outstanding balance including accrued interest was $65,1,07. On October 0, 015, the Company entered into an intercompany loan agreement with THG and issued a loan with a maximum principal amount of up to $15,000,000. This note was disbursed in installments during 016 and matures on September 5, 09. Interest is calculated at the annual rate of 5.5%, and is payable on the first month following each quarter, pursuant to the agreement. At the end of the reporting period, the outstanding balance including accrued interest was $16,756,944. The Company has an intercompany line of credit agreement between itself, THG, and CICA. Interest is calculated at the -month LIBOR rate and principal and interest are due within 90 days of the date of the loan. The following transactions occurred in 017: Cash Received/(Paid) Cash Received/(Paid) Origination Date Affiliate Origination Repayment Outstanding Balance January 5, 017 THG $ 5,900,000 $ (5,900,000) $ 0 January 0, 017 THG $ (1,500,000) $ 1,500,000 $ 0 February 14, 017 THG $ (,000,000) $,000,000 $ 0 March 1, 017 THG $ 1,500,000 $ (1,500,000) $ 0 March 14, 017 CICA $ (5,000,000) $ 5,000,000 $ 0 March 7, 017 CICA $ (15,000,000) $ 15,000,000 $ 0 March 9, 017 THG $ (,100,000) $,100,000 $ 0 March 0, 017 CICA $ (,000,000) $,000,000 $ 0 March 1, 017 CICA $ (,000,000) $,000,000 $ 0 April, 017 THG $ (5,000,000) $ 5,000,000 $ 0 May 17, 017 THG $ (5,000,000) $ 5,000,000 $ 0 June, 017 CICA $ (5,000,000) $ 5,000,000 $ 0 June 7, 017 CICA $ (5,000,000) $ 5,000,000 $ 0 June 8, 017 THG $ (7,000,000) $ 7,000,000 $ 0 July 1, 017 THG $ 5,700,000 $ (5,700,000) $ 0 July 5, 017 CICA $ (4,000,000) $ 4,000,000 $ 0 August 7, 017 THG $,400,000 $ (,400,000) $ 0 August 11, 017 CICA $ (4,400,000) $ 4,400,000 $ 0 August 14, 017 CICA $ (,000,000) $,000,000 $ 0 August, 017 CICA $ (,000,000) $ 0 $,000,000 September 6, 017 CICA $ (,000,000) $ 0 $,000,000 September 7, 017 THG $ 4,000,000 $ (4,000,000) $ 0 September 14, 017 THG $ 14,0,000 $ (10,000,000) $ (4,0,000) September 15, 017 THG $,500,000 $ 0 $ (,500,000) September 19, 017 CICA $ (10,000,000) $ 0 $ 10,000,000 September 0, 017 CICA $ (16,800,000) $ 0 $ 16,800,000 September 1, 017 THG $ 1,00,000 $ 0 $ (1,00,000) September 5, 017 CICA $ (,500,000) $ 0 $,500,000 September 6, 017 CICA $ (4,400,000) $ 0 $ 4,400,000 September 8, 017 CICA $ (5,700,000) $ 0 $ 5,700,000 The Company declared an extraordinary common stock dividend of $98,600,000 to Opus on May 10, 017. The dividend was settled on May 5, 017 by transferring bonds at fair value of $61,566,41, accrued interest of $,175,57, and cash of $,058,40 to Opus. The Company recognized $,457,90 of realized gains on these transactions. The Company received the following ordinary common stock dividends from subsidiaries during the current reporting period: Subsidiary Dividend Amount Declaration Date Settlement Date Bonds at Fair Value Accrued Interest on Bonds Realized Gains Deferred Cash January 10, 017, February 6, 017 $68,4,41 $560,0 $1,115,456 $779,986 CICA $70,000,000 December 14, 016 Campmed $ 1,100,000 May 17, 017 June 5, 017 $ 71,704 $ 5,898 $ 80,98 $ 1,76 CICO $ 1,500,000 May 17, 017 June 5, 017 $ 0 $ 0 $1,500,000 $ 0 National $ 700,000 May 17, 017 June 5, 017 $ 610,978 $,55 $ 86,487 $ 10,98 New Jersey $,100,000 May 17, 017 June 5, 017 $ 1,656,881 $ 19,457 $ 4,66 $ 6,5 Verlan $ 1,700,000 May 17, 017 June 5, 017 $ 1,056,186 $,157 $ 641,657 $ 9,087 AIX $ 5,400,000 June 16, 017 June 19, 017 $ 0 $ 0 $5,400,000 $ 0 The Company made the following capital contributions during the current reporting period: Accrued Interest on Bonds Realized Gains Recognized Subsidiary Contribution Amount Transaction Date Bonds at Fair Value Cash Chaucer DAC $5,000,000 January 19, 017 $0,758,46 $164,171 $4,077,67 $54,947 Atlantic $,000,000 February, 017 $ 1,969,780 $ 8,190 $,00 $,57 Chaucer DAC $ 6,000,000 May 4, 017 $ 5,900, $ 5,84 $ 45,95 $148,49 C. Change in Terms of Intercompany Arrangements 6.8

15 STATEMENT AS OF SEPTEMBER 0, 017 OF THE HANOVER INSURANCE COMPANY D. Amounts Due to or from Related Parties NOTES TO FINANCIAL STATEMENTS At the end of the reporting period the Company reported $68,448 as amounts due to subsidiary, controlled and affiliated companies and $195,654,75 due from subsidiary, controlled and affiliated companies. These affiliated receivables include $5,96,4 in notes receivable from affiliated companies and are subject to intercompany loan terms discussed in footnote 10B above. Intercompany servicing arrangements require that intercompany balances be settled within 0 days. E. Guarantees or Contingencies for Related Parties F. Management, Service Contracts, Cost Sharing Arrangements The Company and its affiliates have entered into an intercompany consolidated service agreement. Under the agreement, legal entities will be charged the cost of the service provided or expenses paid by the entity providing the service or paying the expense. In addition, these entities will be charged a portion of the costs associated with activities that are performed for the good of THG legal entities. Investment related services are provided by Opus pursuant to an intercompany Advisory Agreement. G. Nature of Relationships that Could Affect Operations All outstanding shares of the Company are owned by the Parent Company. H. Amount Deducted for Investment in Upstream Company I. Detail of Investments in Affiliates Greater that 10% of Admitted Assets J. Write-down for Impairment of Investments in Subsidiary, Controlled or Affiliated Companies K. Foreign Insurance Subsidiary Valued Using CARVM L. Detail of Investments in Downstream Noninsurance Holding Companies M. All SCA Investments No change N. Investment in Insurance SCAs 11. Debt A. See disclosure below related to Federal Home Loan Bank of Boston (FHLBB) Agreements. B. FHLB (Federal Home Loan Bank) Agreements 1. In 009, the Company received a $15,000,000 FHLBB advance through the Company s membership in FHLBB. This collateralized advance bears interest at a fixed rate of $5.5% per annum over a twenty-year term. It was part of the Company s strategy to utilize these funds to acquire AIX and its subsidiaries. The Company periodically receives additional short-term advances through its membership in FHLBB. During the current reporting period, the Company received and repaid advances to meet short-term liquidity needs. As collateral to FHLBB, the Company has pledged government agency securities with a fair value of $04,7,79 for the aggregate borrowings of $15,000,000 as of the end of the reporting period. The fair value of the collateral pledged must be maintained at certain specified levels (equal to 100% to 11% of loan) of the borrowed amount, which can vary depending on the type of assets pledged. If the fair value of this collateral declines below these specified levels, the Company would be required to pledge additional collateral or repay outstanding borrowings. The company is permitted to voluntarily repay the outstanding borrowings at any time, subject to a repayment fee. As a requirement of membership in the FHLBB, the Company maintains a certain level of investment in FHLBB stock. Total holdings of FHLBB stock were $7,85,500 at the end of the reporting period. The Company calculates the maximum borrowing capacity amount based on long-term advances of $15,000,000 at the 4.0% requirement rate, with the remainder based on the 4.0% requirement rate on short-term advances, maturing within 90 days. There are no reserves related to the FHLBB funding agreements at the end of the reporting period. 6.9