Good morning and thank you for joining us for our second quarter conference call. Participating in today's call are Fred Eppinger, our President and Chief Executive Officer; Marita Zuraitis, President of Property and Casualty Companies; and Steve Bensinger, our Executive Vice President and CFO. Before I turn the call over to Fred for a discussion of our results, let me note that our earnings press release, statistical supplement and a complete Slide presentation for today's call are available in the Investors 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 facts, include forward-looking statements. These include statements regarding expectations of after-tax operating earnings per share, segment earnings, pricing, accident year results, premiums, expenses, development of loss and LAE reserves, returns on equity and other projections for 2010 or beyond. 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, after-tax earnings per share, segment results excluding the impact of catastrophes and development, ex-CAT loss ratios 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, I will turn the call over to Fred.

Good morning, everybody, and thanks for joining us this morning. As usual, I will begin our discussion by providing some context for our second quarter results and update you on our progress towards meeting our long-term financial objectives and marketplace positioning. Then I'll turn the call over to Marita and Steve who will provide additional insight into our performance and relevant trends. A significant number of severe weather events during the second quarter were challenging for both our industry and our company. As we noted in our July 13 press release, we incurred $85 million of catastrophe losses, the highest second quarter level of catastrophe activity in our history. Even with the high level of catastrophe losses, however, we generated positive earnings in the quarter and further increased book value per share. Our book value per share grew 20% from the prior year period and 6% from the year end 2009. On an ex-CAT basis, the underlying trends we see across most areas of our business are continuing to show good progress as evidenced by a 2.8 point improvement in our ex-CAT current tax end year loss ratio. While this was a challenging quarter, we made excellent progress on the critical strategic initiatives that are positioning our company for strong long-term financial results. We continue to focus on a journey to create a world class property and casualty company, one that achieves attractive financial results with an 11% to 13% ROE through the cycle and deliver distinctive products to winning independent agents. Since we began our journey, we have significantly improved all our core capabilities in the financial strength of the company. As you know, in most recent quarters, we have made significant investments to enhance our product portfolio and competitive position. Particularly since our latest AM Best upgrade in…

Thanks, Fred. Good morning, everyone, and thanks for joining us today. This morning I'll review our operating results and provide some insight into the progress we've made in executing our strategy. Putting catastrophes aside, I feel very good about our overall performance in the quarter. In personal lines we're pleased with the continued improvement in our core underwriting margins, along with the growth that we've achieved in our target markets. In commercial lines we saw a continuation of our industry leading growth driven by our specialty business, strengthening of our partner agent relationships, and of course the success of our OneBeacon renewal rates transaction. As Fred noted, catastrophe losses had a significant effect on our results in the quarter and have been headline news in recent weeks, so I'll comment briefly on these losses before I move on to discuss the progress we've made in our underlying performance. The majority of the $85 million of catastrophe losses in the quarter were associated with hail and wind events in Oklahoma and Michigan as well as wind, hail and flooding in Tennessee, Ohio and Illinois. As you'd expect, more than two-thirds of these losses occurred in our personal lines segment, mostly in our homeowner's line, with the balance driven by commercial property losses. As you've heard from many of our competitors, the catastrophe activity this quarter was one of the most severe in recent history. For us it was a record high second quarter for catastrophe weather. Our focus on changing both our geographic mix and our business mix help us mitigate the impact from random catastrophic events. At the outset of our journey, our footprint was principally east of the Mississippi River with high concentrations of business in Michigan, Massachusetts, New York and New Jersey. Florida and Louisiana rounded out the…

Thanks, Marita, and good morning, everyone. Today I will be reviewing the company's financial results, referencing the Slide presentation starting with Slide 13. As Fred and Marita both noted, our solid underlying performance this quarter was overshadowed by a high level of catastrophes. On an ex-CAT accident year basis the combined ratio was 97.2% compared to 97.4% in the second quarter of 2009 and 98% in the first quarter of 2010. Our pre-tax P&C segment earnings included $23 million or 3.3 points of favorable loss reserve development compared to $37 million or 5.8 points in the second quarter of 2009 in line with our expectations. We continue to experience lower favorable loss development than we've seen in the past. Second quarter 2009 results also included approximately $8 million or one point of favorable LAE development related to a change in our reserving methodology. Turning to Slide 14 I'd like to briefly touch on our investment portfolio and yield. As of June 30 we hold $5.3 billion in cash and invested assets. The composition of our portfolio remains largely unchanged from the first quarter of 2010. Cash and fixed maturities represent 98% of our total invested assets. Roughly 93% of our fixed income securities are investment grade. The average duration of the portfolio is 4.2 years. In the second quarter net investment income was approximately $62 million compared to approximately $61 million in the prior year quarter. This increase is primarily due to the investment of cash into fixed maturities partially offset by the utilization of fixed maturities to fund certain corporate actions such as stocks and corporate debt repurchases and the January $100 million contribution to the company's pension plan. The earned yield on our fixed income portfolio this quarter was relatively stable, 5.5%, compared to 5.4% in the prior…

(Operator Instructions) Your first question comes from the line of Cliff Gallant - KBW.

A couple of questions, one, it looked like there was a small reserve addition in the other commercial lines. I believe it might have been related to Surety. I was wondering if we get more color on that. The second one was in terms of worker's comp. There was a California company that had some problems this quarter and they cited adverse loss trends. I was wondering if you're seeing anything in that area.

First on the Surety, Cliff, it was -- we decided to put some more up on the Surety reserve. That is what happened in that other category. I feel very good about our Surety business. We've done very well over the last three or four years. Obviously, the economy continues to be somewhat of a concern and I think it was the appropriate thing to do given the outlook. But I'm pretty positive about our overall book. We don't have a lot of big contractors or anything like that. It's a small amount but we thought it was prudent to do. On the comp side, obviously we have very little comp in California and I'll let Marita comment. Obviously we're being very conservative about our comp. Probably the significant companies in the industry, we probably have less comp than anybody, I guess 5% of our overall book. But we do believe that comp can be attractive at the small end as we round out our small account business. But in California, in particular, we're being quite conservative about where we use capacity and, to date obviously, it's a very small amount. But, Marita, I don't know if you want to give color.

Yes, I mean, as Fred said, with comp being less than 5% of our overall premium and certainly less than 10% of our commercial lines premium, we're not overconcentrated in the comp line. Previously we didn't have little or no worker's comp premium in California. With the OneBeacon renewal rights transaction we will write some worker's comp in California. What's interesting about that, it will not be material. It will be very small. It's associated with total accounts in the commercial line space, almost 100% small commercial where, as of lately, we have grown a little bit in the low-risk, low-size worker's comp arena where the rates are there and the exposures are light. We understand the worker's comp environment in California. Many of us have dealt with it in past lives. So we understand the risks associated with that marketplace and have no plans to expand beyond what writing is associated with our smaller accounts there.

Your next question comes from the line of Sam Hoffman - Lincoln Square Capital.

I just had two questions. Can you give some color on the programs, AIX including the lines of business, why season profitable business was set free by competitors and why they chose Hanover?

Again, our program business, as we had said from the beginning when we made the acquisition, most of our core partner agents have mature programs in their book that they have controlled a long time. What you typically get in our business often, though, is people that mostly deal with wholesalers or aggregators and the servicing of that business is quite weak. So when we bought AIX we put a lot of money in the servicing and the claims handling as well as the underwriting (inaudible) and we went to our partner agents and have been working that channel pretty hard. So if you look at the ski program we got from Wells -- I think Wells had it for 25 plus years and moved it to us. We've had Barney & Barney. We've moved some of their better programs to us. We've had a number of good programs with people like Leavitt and some of our other partners. So in my view, from the beginning it's been a target strategy of the company. We knew our partners had it. Often time they'd have it with -- it's the only thing they have with the other company. So it's kind of an aside. A lot of these companies are ratings challenged, if you will, because they tend to be smallish companies that are in small specialty companies or they are kind of on their own, independent institutions. So, to me, the quality -- what we bring is obviously a more significant balance sheet, better servicing, the whole franchise partnership and over time we will get a number of those programs to ship because of that. So I’m very encouraged by -- it's happening exactly the way we wanted it. That's what lines of business do. Historically, people have done lots of comp and lots of what they call heterogeneous programs, which is fake programs. We have none of that. So when we have -- we took these programs. These are account-oriented, industry-oriented programs, mostly casualty business for the most part and very, very nice margin business that the profit in most of these are shared with the agents. So it's controlled business that they also have a big piece of it themselves, so it's very well controlled as far as profitability. Now, we're not aggressively growing that business. We're not trying to get it to any significant size. We're trying to do it as those programs become available to us from our partners. But I couldn't be happier with it. It's done exactly what we wanted it to do.

Yes, one of the beauties of AIX was they were such a disciplined, strong underwriter in the way they approached programs and we saw that in our due diligence, but they were somewhat growth constrained. We borught them access to the same types of programs that they always wrote in a disciplined way but now to a broader range of distributors because of the Hanover partners that we brought to the table.

My other question is on the expense ratio. Based on the trends in the quarter, I think it's now evident that the expense ratio can easily get to 34% just by running in the premiums from OneBeacon over the next year or so. But at least the way we estimate it, this only gets the company to kind of a 10% to 11% ROE range once it turns in, assuming the cat assumptions that you make in various other kind of basic assumptions, which is still well below the 12% objective that you've laid out. So the question is, we think you really need to get back to the 33% expense ratio that you had in '07 and '08 in order to reach your objectives. So the question is, is that possible? It looks like you're benefiting from having $3 billion or so premiums versus $2.5 billion before. But on the other side of it, you have more commercial business, which has a higher expense ratio. Then if you reach your objectives you probably have higher comp. So you really almost need to keep your G&A expenses flat in order to get to that objective. So the question is, is that possible or desirable?

Yes, and I don't really actually think about it completely like that. Obviously it's about combined ratio not expense ratio and it has everything to do with the mix of business and the margin within the business. But to your point, why we're so different and why it's easy for us to talk about -- hard to do but easy to talk about -- how by the end of '11 we're have a run rate in the 11% to 13% range is because if you look at where we are you can see all the leverage pretty clearly. One, our mix of business is getting better every day. So what we have is much higher margin business that we're bringing on than what we had originally in small commercial and unsegmented middle market, whether it's Fidelity or Surety or -- if you look at the stuff we do on the segmented business or the AIX business, all of that stuff brings with it better margin. Two, expenses and it's not just OneBeacon. We bought five companies in the last six quarters and brought in 550 people that came with them, as well as this ICW renewal rights deal. So we have not just an earned issue. We had a lot of startup costs that had to do with the filings and some were temporary, which we've used our outsourcing partners to help us with. But we had a lot of upfront costs in all those transactions to file. We entered eight states. We did 1200 plus filings in the last 12 months. So what you see is there is obviously a lot of upfront costs in many of these businesses and of many we're subscale, if you will, because we took an expense risk like we did in EPL and…

Did you say 6% increase in homeowner's pricing or is it -- ?

It's everything

Oh, everything.

Homeowner's is better than that.

So, again, you'll hear people talk rating cases. They say where we file we have an average ex. When we talk about it, that's our average increase on our entire book is 6% plus. So that's strong. I mean, I don't know if there's anybody else that's out there that's doing that. It has everything to do with our ability to do account-based business and keep our attention with partner agents. The other thing -- most of our Personal Lines growth comes from book sense and book rolls. So it is very, very powerful.

Your next question comes from the line of Vincent DeAugustino - Stifel Nicolaus.

Just two questions for Fred; the first one, I’m just curious if you're seeing any increase in the number of weak carriers on the brink out there? I know you said before that you'd like to have a good measure of dry powder in terms of capital on hand to kind of capitalize on those weaknesses. I was wondering if more specifically, does that mean that you'd like to have capital on hand to compete in the market for those premiums as they get shed via rate increases of those carriers or is it something similar to doing renewal rate deals with those companies that are in a little bit of trouble?

I think -- I know, it's a great question. I think both things are true. If you go back -- we've been talking about this for two years. What we try to say is that if you look at the last four years in our business, share shift in the last couple of years of a soft market and the first year of the turn -- because what people do is they hit the wall as far as capital. They stretch, they stretch, some maybe they even play with their reserves a little bit but then they run out of gas and then during the real -- when the market turns they have to really shrink and re-underwrite their books because of their capital constraint. What you're seeing -- and, again, this market is unique because the soft market got almost a power boost from the AIG struggles because what you had was a lot of people that went to Bermuda and to new companies that are getting into new businesses. So it was almost like we extended the soft market, particularly at the high end and in the broker world where everybody tried to build these businesses. So what you've got is a little bit of a blood bath at the top. So a lot of these small specialty companies, and even the little regional guys, that tried to grow in a lot of these specialty businesses by going to the brokers or going to the high end are getting killed. I mean, the pricing there cannot be attractive. If you listen to the calls in some of these smaller companies you can feel the stress. Now, what we see is a lot more talk among a number of companies that are smallish and it's for a number of…

Then in terms of communicating the 11% to 13% ROE goal in the long run -- so, I mean, one of the ways that -- I think I've heard you say numerous times of getting there is the net room premium growth with still respectful underwriting margins. I'm just curious, with getting to that ROE goal, what your thoughts are in terms of net written premium to a statutory surplus ratio.

Again, the science of that is quite detailed because it has everything to do with the mix of business and concentration because a lot of the [BACA] ratios is about your geographic concentration. So when I talk about diversification, my marginal cost of capital in New England property is higher than my incremental cost of capital in some of these other businesses. So that translates into that ratio. So if you look at it from very simply -- we said we think that 1/6 is really strong but it's a very superficial way to look at it. You've got to look at the lines of business and that's why we do a lot of work on this and we talk about our marginal cost of capital by geography, by line of business, so that we don't fool ourselves into what the real cost of capital of this stuff is. Again, what I get excited about is that every time we have better business with better margins that diversify us away from a Personal Lines only company in four states, your cost of capital keeps going down. So you're going to see us -- that ratio will probably be similar but you've got to remember Personal Lines companies typically hold less capital than Commercial Lines companies. What makes us a little less complicated is because of our concentration, which created a need for additional capital and the fact that we weren't very good. So our margins were lower. As our margins get better and our performance gets better, both those things help our capital leverage in a significant way. So not only are we -- that's another lever that we're getting. Our cost of capital is getting better every day as we get better. So the ratio will stay the same but the complexity of our business -- if you just landed from Mars and you said what should happen, you should say, well, they must have to carry a different ratio because they're more commercial. Because of the diversification, because of the quality of the business it probably won't change that much at all. It might even improve some. So, again, I'm quite excited about it. By the way, we carry capital that are really a couple notches higher -- if you look at the criteria of the rating agencies, we're not carrying A-level capital. For the most part we're carrying two notches above that capital. So when I talk about excess I’m not trying to strip it down because I believe we're going to continue to get upgrades over time. It's part of our main objective, to be one of the most financially strong companies in the industry. So there's excess even on top of that is the way we think about it. I hope that's helpful.

This concludes our question-and-answer session today. I would like to turn the conference back over to Oksana Lukasheva for any closing remarks.