Good morning, ladies and gentlemen, my name is Michelle and I will be your conference operator today. At this time I would like to welcome everyone to The Hanover Insurance Group Quarter 1 2009 Earnings Conference Call. (Operator Instructions) As a reminder this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today’s call Mr. Bob Myron. Please proceed.

Good morning and thank you for joining us for our first quarter conference call. Participating in today’s call are Fred Eppinger our President and Chief Executive Officer; Gene Bullis our Executive Vice President and Chief Financial Officer; and Marita Zuraitis, President of Property & Casualty Companies. Before I turn the call over to Fred for a discussion of our results, let me note that our earnings press release and a current report on Form 8-K were issued last night. Our press release, statistical supplement and a complete slide presentation for today’s call are available in the Investor’s section of our website at www.hanover.com. After the presentation we will answer questions in the Q&A session. Our prepared remarks and responses to your questions today, other than statements of historical fact, include forward-looking statements. These include statements regarding expectations of earnings, pricing, accident year results, premiums, expenses, and other projections for 2009. There are certain factors that could cause actual results to differ materially from those anticipated by this press release, slide presentation, and conference call. We caution you with respect to reliance on forward-looking statements and in this respect refer you to the forward-looking statement section in our press release, Slide 2 of the presentation deck, and our filings with the SEC. Today’s discussion will also reference certain non-GAAP financial measures such as total segment income, segment results excluding the impact of catastrophes, loss ratios, book value excluding accumulated other comprehensive income, and accident year loss ratios among others. A reconciliation of these non-GAAP financial measures to the closest GAAP measure on a historical basis can be found in the press release or the statistical supplement, which are posted on our website as I mentioned earlier. With those comments, let me now turn the call over to Fred.

Good morning everybody and thank you for joining us today. Although severe weather and to a lesser extend the economic environment have affected our results I am pleased with our results for the quarter and feel very good about our prospects for the year. Gene and Marita will review the details around the quarter’s results in their remarks and I will use my time this morning to talk briefly about our approach to the market in light of the accelerating disruption and to put our first quarter results in the context of our strategy. Obviously the economy and the turmoil in the financial markets has put pressure on everybody in our industry, but for our company the dislocation and disruption creates tremendous opportunity if we stay focused on our strategy of writing high quality business with winning agents. I believe our momentum in the marketplace was confirmed and enhanced this morning by A.M. Best upgrade. We continue to believe our investments and expanding our product and underwriting capabilities to achieve preferred shelf space with winning agents is not only prudent in this uncertain market, it will create tremendous shareholder value. In addition, our selectivity in the business we write as well as the price that we write it at will maintain the financial strength that is required to win through out the economic and underwriting cycle. Our first quarter results show our commitment to building long-term shareholder value by demonstrating conviction and competence in our vision, our strategic priorities, and our ability to execute in a difficult market. In particular, our results once again reflect our commitment to disciplined underwriting, and profitable growth. Property and Casualty pre-tax segment earnings of $49 million were solid, taking into the account the impact of unusually high catastrophe and other severe winter related weather.…

Thanks, Fred. Good morning everyone and thanks for joining the call. As you heard Fred say this quarter is a reflection on how we have remained true to our vision and how we have executed our strategy that we articulated at the beginning of our journey. Once again we did exactly what we said we would do. Despite the weak commercial pricing environment and putting aside the adverse impact of weather, we produced core underwriting results that were consistent with our objective of growing profitably. We resisted the temptation to write lower quality business and maintained margins at desirable levels. This discipline has been key to our success over the past several years and it will be critical going forward as well. With that as context, I would like to review our underwriting operations starting with a discussion of overall P&C results on Slide 5. For the first quarter of the year our P&C business generated $49 million in pre-tax income. This is down from $96 million in the prior year quarter primarily due to higher catastrophe losses in the first quarter of 2009. The comparison was also impacted by non-catastrophe winter weather, predominantly in the Midwest and in New England and by lower favorable development in the current quarter when compared to the first quarter of 2008. Excluding the impact of catastrophe and non-catastrophe weather our underlying accident year loss ratios remained relatively flat which we consider a very good result for this stage in the pricing cycle and in context of the current economic climate. I would like to discuss the drivers underlying these results in more detail starting with personal lines. Turning to Slide 6, our Personal Lines segment reported pre-tax earnings worth $3 million in the current quarter compared to $27 million in the prior year…

Thank you, Marita, and good morning everyone. Please turn to Slide 11 which presents our consolidated results for the quarter. In the first quarter of 2009 we reported net income of $26 million or $0.50 per share compared to $59 million or $1.12 per share in the prior year. Net income in the current quarter reflects lower segment income and net realized losses on investments from our continuing and discontinuing operations of $9 million or $0.18 per share compared to negligible amounts of realized losses in the prior year quarter. Net income in the quarter also includes income from discontinued operations principally arising from an after tax adjustment of $7.9 million to certain estimated indemnification obligations related to businesses previously sold. Now turn to Slide 12 for a quick review of our segment results. Segment income after tax was $26 million for the quarter compared to $57 million in the prior year quarter. Property and Casualty pre-tax segment earnings were $49 million in the first quarter of 2009 compared to $96 million in the prior year quarter. Our lower insurance operating results for the quarter were primarily driven by catastrophe and non-catastrophe weather related losses and lower favorable prior year reserve development. Given the number of moving pieces to this analysis, I would like to discuss them in more detail. I will use Slide 13 showing our underwriting ratios for the quarter as a context. As you know, on March 20th we issued a press release stating that we expected higher catastrophe and non-catastrophe weather losses to impact our first quarter results by a range of $30 to $35 million. In aggregate this weather impact ended up being $36 million and was evenly split between catastrophe and non-catastrophe loss lines. As you can see on the slide, winter weather events…

Thank you, Gene. Operator, that concludes our prepared remarks. Could you please open the line to questions.

(Operator Instructions) Your first question comes from Michael Phillips of Stifel Nicolaus.

Part of your strategy that you talk about is we are going to approach agents with something like the following pitch, give us your niche business, the stuff that you are kind of growing now obviously the schools, the public institutions and the churches and social services. Give us that and obviously we will get around the wholesale and therefore can pay you more. In return can you give us a chunk of the flow business? That is the basic deal, the way I understand it. I don’t see who would say no to that and so I am missing something. What kind of bumps on the road do you have with agents when you go through those talks and why would somebody say no to that?

I think it is something that for people that know us and have decided to commit to us, I think it is a very compelling story and particularly with the disruption. Because, what we are seeing today with these companies that are troubled, they have to be very careful that they don’t give too much of their business to the two or three significant companies you can think of that are taking advantage of this disruption. So they are looking for more markets to build a deeper relationship with that have a strong financial position. They are very receptive to it. With the upgrade today, as you can imagine, one of the biggest issues you’ve got is when they think about giving us an “unfair advantage” that they want to make sure that we are here for the long haul. So this upgrade is going to be an enormous help for a lot of the agents that were maybe giving us preferred treatment, but hadn’t really committed to a full partnership. So, I am very confident this is going to work. Now, why do you see the numbers, why personal and the small commercial doesn’t grow regardless of the cycle at significant levels: remember we still have a bunch of that business and traditional agent relationships and in states that are not completely in the partnership realm. So they are legacy positions that we have with folks. They are good agents, but they are small agents with less upside and particularly in our core states. So, what you are seeing is a mix change in our company from non-partner and partner business to more and more and more partner business and that is why we are so confident that you are going to see greater momentum as we get through the year, as those kind of partnership relationships take off. Again, I am very confident in those. One thing you are seeing us do, as I mentioned in the February call, one of the things we needed to invest more in is continuing to make it easier to do the book thinning and book shifting to us and so we are spending quite a bit of money in what we call doing business, but download capability etc… to make that easier for people to do. So, I feel very good that that book will work and that we’ll see greater momentum in the growth of the partner strategy.

We are seeing solid signs of that shift and not only is it and will it help the growth momentum, but it also has some nice margin ramifications as well as these winning agents have very good books of business and we have solid partnerships with them as well. So it is not only a growth strategy, but clearly articulates to the bottom line and good margin lift as well.

If we go back a couple of years, Fred, you talked a lot about the expense ratio and getting some points out of that and clearly those times have changed. There have been some opportunities to make some investments which you have done. How do you think about that now? You are sitting on probably some excess capital, you are not using share repurchase, so what do we do with and maybe more PDIs of the world or where is that [interposing].

That is a great question because as you know we took about 1 ½ point last year and I felt that we could continue to take, since the beginning I was saying, almost a point again out this year. What changed obviously is the dramatic disruption that we saw that has made us focus pretty aggressively at expansion particularly in some of the casualty lines. You have seen it with social services and this liability, EPL, our ability to acquire teens and get up and running in those businesses quickly. I also have more transparency to my confidence in the rating upgrades that we got from Moody’s and S&P and Best over the last 15 months which have come in rapid fire. Which make us a much more competitive market in some of those, so we clearly have invested additionally on the expense side. Now, as I said, what is nice about the disruption is I think the payback will be right very quick. This is in the three-year paybacks, I mean I think we will see some shifting of business that will make this much safer than maybe a large acquisition. Now your question on capital which is also a good one there continues to be a lot of activity, a lot of discussions we are having with lots of smaller companies and specialty companies to enhance our capability. We talked to probably over 50 in the last couple of quarters. We are being very prudent about that. Because what I want is I want something that can be very quickly, if not instantly accretive. I want something that adds to our value proposition quickly that fits our strategy of small, kind of average policy sizes and I want to make sure it is done at a price that…

Yes, no, that was everything. I have a numbers question. Gene, you mentioned $12 million. Your prior period reserves would have only been $12 million, so was that personalized that $12 million?

Yes, that is substantially all personalized.

Okay, thank you guys.

Your next question comes from Jay Gelb of Barclays Capital.

On the ROE goal for 12%, is that just on P&C segment income or is that all in? [Interposing]

Jay, obviously we have thought about it up to this point separately, because I had this life company that we did the NPV and we talked about the valuation of life company as dividends of cash flow out of that and taking advantage of tax attributes. We are now one company, right. So, the way I think about it is through the cycle I have to return that for all of our capital, so we don’t have what I call captive capital anymore. Now you can’t turn a switch and do that over night and you have to be prudent on how you do it, but make no mistake about it, that is where we are going. We have to go there. That is adequate. You can assume 11 to 13 two points a cycle, but it is again, what I believe is that the best companies can earn that 12. Now our goal is to be a little bit more of a boring company. You won’t see us grow property cad of the other volatile stuff that jumps around and I think we are very capable of getting to that kind of range for the whole company, but as you know, historically I did divide it, but simply I divided it because I had to because I had that captive capital in the life company that we were evaluating based on tax attributes and the NTD of the cash flow of dividends. But that now is gone, right, so again, we are just one company so that we have to think about our overall capital position the way you just articulated.

I see and should I include the corporate?

Absolutely and again, you know obviously in today’s world you should hold some liquidity at the corporate. But, what I believe is, is that that should be incorporated in the way you think about your cost of capital, so we should be looking for a portfolio that enables us to earn enough to cover that tax, if you will, and I think that is what we should be focused on. That is why, by the way, you are seeing our portfolio, I continually look for a mix that gives us better margins in our business overall. Again, I would tell you it is going to take a little bit of time. You can’t take $300 million or $400 million and bang, redeploy it. So, we are going to be very thoughtful about it and, as I said, we will talk about it more at Investor Day, but my goal is to start talking about our returns and improving. You know we are probably at around nine in total and I have to get that where it belongs right? So, now that we have freed up this excess capital.

That is helpful. Can you talk a little bit about what type of opportunities you are seeing, as there are some larger stressed competitors out there? What the agents are saying?

Yes, again it comes in two flavors and obviously there are some people, the bigger companies that are more suited to the long tail casualty lines. You are seeing their share shift happening quicker. I mean, DNO world and the biggie in estimate world is moving quicker for obvious reasons, because of a couple of the large companies that are stressed. I would also say that some of the specialty businesses, because they are so rating sensitive, you are seeing that movement occur faster, say bond, some of the real estate businesses, etc… So, we are and to a lesser extent capitalizing on that. We are not in the large business, but there are some of our specialty businesses that clearly are seeing things more now than they were six months ago because of all that stress. So that is one category. I would say after today’s announcement we are going to see a lot more of that in some of our businesses, although again, we are not in the large accounts, but in our casualty lines and in some of our specialty businesses we will see that. The second part of the opportunity though, to me is even more profound. Which is, people are worried about the number of companies that can grow. If you look at the number of companies that have been downgraded by one of the three or four rating agencies in the last 12 months it is overwhelming. If you look at the mutuals, the percentage of mutuals that have lost over 15% of their surplus, it is also daunting. So, what they see is they see a market turning, and market pricing firming, but a lot of their companies have to shrink to retain their ratings, so we’re getting a lot of conversations with…

That is helpful, thanks Fred.

Your next question comes from Dan Farrell of Fox-Pitt Kelton.

Can you talk about how getting the A benefits you as an acquirer both of the small companies and also teams? Does that help you look at stuff that you might not have looked at, other lines of business that you can get into now that you may have not been able to before?

That is a great question. It is three levels and I think it is more profound than people understand. The notion of being an A today is so much more important than it was 12 months ago for a couple of reasons. One, even consumers who would have never asked about the rating of their personal line carriers are starting to ask. So, I would argue that in almost all lines some portion of the customer base is thinking about it. Because traditionally it was mostly the long tail casualty driven by the ENL exposures of agents and frankly the debt holders. So, I would argue that rating in general is more important. The other thing that you have seen is the compression of rate. So, before there was a huge difference in very credible companies between the guys with AAA or AA and A-. A is it now right, so you are seeing a lot of the higher rated companies down to the A and so A has become, in my view, kind of the threshold for the high quality institutions. That compression means that A is kind of what you need to be, in my view, you don’t need to be above it, but being below it is going to be harder. So just in general it is important. But, the specific question you asked, I would say it is profound in like three ways. One, in bond business, in casualty business, in a lot of the interesting long tail businesses that we have pieces in, it opens up so many areas of opportunity with agents we already have great relationships with. They love us, but they had alternatives, that were higher rated, which makes all the sense in the world, for them, to place it with. While…

That is all very helpful, thank you.

That concludes the question and answer session. I will now turn it back to Bob for closing remarks.

Thanks everyone. As a final point, I want to remind you that our Investor Day is scheduled for May 28 at the Roosevelt Hotel in New York City. If you would like more information about our Investor Day please feel free to call me on our Investor Relations line at 508-855-3457 or look at the Investor Relations section of our website at www.hanover.com. Otherwise thanks for your participation today and we look forward to speaking to you again next quarter.

Ladies and gentlemen thank you for your participation in today’s conference. This concludes the presentation (Operator Instructions) Have a great day.