Cliff Gallant – Keefe Bruyette & Woods, Inc. Dan Farrell – Stern Agee Mariza Costa – Stifel Nicolaus

Welcome to The Hanover Insurance Group’s third quarter 2011 earnings conference call and webcast. Please also note that today’s event is being recorded. I would now like to turn your conference call over to Oksana Lukasheva.

Thank you for joining us for our third quarter conference call. Participating in today’s call are Fred Eppinger, our President and Chief Executive Officer and David Greenfield, our Executive Vice President and CFO. Also with us today is Bob Stuchbery, President of Chaucer. Before I turn the call over to Fred, let me note that our earnings press release, statistical supplements 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 response to your questions today, other than statements of historical fact include forward-looking statements such as segment income per share for 2012 and for the fourth quarter 2011. 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 relaying on forward-looking statements and in this respect refer you to the forward-looking statements section in our press release Slide Two 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 net impact of catastrophes and development, ex cap loss ratio, and accident year loss ratios among others. A reconciliation of these non-GAAP financial measures to the closest GAAP measures 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.

Welcome everyone to our third quarter earnings call. For the third quarter of 2011 we reported a net loss of $9.7 million or $0.21 per diluted share. Our book value was $54.98 per share, slightly above our year end 2010 and last year’s results. Obviously, the quarter was disappointing based on the continued adverse weather we have seen, but we see positive trends in continued strategic momentum in our business which I will discuss on this call. As you recall, we completed the acquisition of Chaucer on July 1st so our results for the quarter include the benefit of Chaucer’s earnings. I will begin the call by providing an overview of our operations and trends and offering thoughts on the outlook of our US and Lloyds businesses for next year. David will then spend some time reviewing our operating results and certain balance sheet items. Unfortunately, Marita is unable to join us on the call at this time because of a death in her family and our thoughts are with her and her family. David and I will handle any questions about our domestic P&C business and underwriting performance during the Q&A portion of the call. We are pleased to have Bob Stuchberry, the President of Chaucer with us today. He will be available to answer questions you might have about Chaucer operations during the Q&A portion of the call. Before getting into our performance for the quarter, I did want to mention that our first four months or so together with Bob and his team have gone extremely well. We could not be more pleased with the quality of the business and the capabilities that the team brings. Bob, would you like to say a couple of words of introduction?

I’m pleased to join you all for our first earnings call together and I’m very excited about Chaucer future as part of The Hanover. The first three months have been dominated by efforts to integrate Chaucer into The Hanover and good progress has been made to date. We’ve retained our key team members so you can see how being part of The Hanover gives a firm base on which to develop our business further. Our brokers have also responded well to the transaction, recognizing the added strength that being part of a larger group brings to them, and looking further head I remain confident that the specialty capabilities that Chaucer makes available will help The Hanover to be even more relevant to their US agency distribution in the future. I’ve always believed that both Chaucer and The Hanover will benefit from the geographic, and earnings diversification, and increased [style] we have together. This will support our continued growth and success. I look forward to taking any questions you might have later in the call and to meeting you all in person at our investor day.

Let me go forward here. The earnings power of combining Hanover and Chaucer was overshadowed this quarter by unprecedented weather losses in our US business. However, we already had begun to realize the benefits of the acquisitions as evidenced by the contribution of Chaucer to our business mix and earnings. Obviously, our focus over the last five years has been to better diversify our business and create a more attractive and distinctive product portfolio that positions us to get preferred shelf space with the best agents and brokers and achieve higher financial returns through the cycle. While we did not fully anticipate the last three years of more severe weather we are pleased we entered this more difficult environment with our new mix that is more focused on higher margin lines and more balanced between property and casualty. And with the current business mix of roughly a third specialty, a third core commercial, and a third personal lines that is more differentiated and positions us well for more attractive returns over the long term. We continue to make progress on all our strategic priorities but as I said in my opening remarks, our bottom line was disappointing this quarter driven by continued above normal weather related losses as well as an addition to reserves and surety. Before I go further I’d like to comment on these two areas. The industry has been plagued by unprecedented CAT losses across the United States this year and the world for that matter, with our experience being only a bit more favorable than most in our industry. Since 2005, along with a significant portfolio change we’ve made good progress on managing our compensations and reducing coastal exposures and particularly as we exited the Florida homeowner’s business and as we reduced property exposures in Louisiana,…

Before I get into the results, I want to mention a couple of items relating to Chaucer. We closed the acquisition on July 1st and you’ll notice we now have a new reporting segment for Chaucer. Chaucer is included in our results for this quarter but not for any period or as of any date prior to July 1st 2011. This makes analysis a bit more challenging when looking at the current quarter and year-to-date figures as compared to prior periods. We have endeavored to provide some help with this in our disclosures and commentary. In particular, we separately posted a pro forma supplement that provides additional Chaucer information for the first half of 2011 and the year ended December 31, 2010 consistent with the figures we provided in an 8K in September. We hope this will be helpful to you as you analyze Chaucer’s contributions to our overall results. As Fred mentioned, the third quarter of 2011 was impacted by catastrophe losses, non-CAT weather related losses and a surety reserve addition. Otherwise, our business continued to show performance gains during the quarter with improving underlying profitability in most businesses. The net result however, was a loss of $9.7 million or $0.21 per diluted share for the quarter compared with net income of $52 million or $1.15 per share in the prior year quarter. On a segment income basis, the net loss was $18.5 million or $0.41 per diluted share this quarter compared to segment income of $44.7 million or $0.98 per diluted share in the prior year. Turning to the top line, for the quarter, net premiums written surpassed $1 billion as we achieved growth in commercial lines of 5.6% and added $222 million related to Chaucer. This compares with $804 million in net premiums written n the third…

Your first question comes from Cliff Gallant – Keefe Bruyette & Woods, Inc. Cliff Gallant – Keefe Bruyette & Woods, Inc.: A couple of number questions but then I wanted to ask Bob a couple of questions. The numbers were one, in terms of the tax rate what you would be thinking going forward? Then two, I wanted to ask about the growth in commercial lines and the 5% to 6% and how much of that was [PIF versus price?

On the tax rate Cliff, this year with the size of losses and some of the international impacts we have a rate that’s roughly around 30%. We use a slightly higher rate in our planning on a go forward basis. We tend to use 34% and obviously that’s going to be refined as we get into planning for next year and factor in some of the intricacies of the international tax code. But I think for purposes we’re using 34% at this point.

In the specialty business, that growth is [PIF and we’re getting some rate as well but it’s more of a [PIF oriented. In BI or the core lines, business insurance, we grew about 4% and we had rates of about 3.3% to 3.5%. So we had a good rate and what you see is it’s a tale of two cities. We had tremendous momentum with our partner agents but we did some thinning. As I mentioned, what I’ve been trying to do, the marginal cost of capacity given the change in yields I think in some of our concentrated areas around property is such that we started being relatively aggressive about thinning some of the non-partner agent business in some geographies in the property stuff. I see really good about what you are seeing. You’re seeing really nice both unit growth and rate growth with our partner agents. So that’s kind of the story there. Cliff Gallant – Keefe Bruyette & Woods, Inc.: I wanted to ask you one quick question, what do you expect exposure to the Thai floods would be? But then more as a larger question, can you just comment on what you’re seeing in terms of the benefit of the Chaucer operations to be with Hanover and its distribution here in the US?

First of all on the Thai floods. Yes, we do have exposure to the floods in Thailand and we’d expect to get a loss from these events but it is very, very early days to put any number on that loss. As you’d expect, we have a budget for CATs in the quarter and we’ll just monitor as we go through. It’s an event that’s happening at this moment so it’s very difficult to put numbers on it. The benefits, turning to that obviously, we see benefits longer term. The [crux] of this first quarter has been really about our integrating into the group. We’re already quite advanced on our 2012 planning and Hanover had input to that. What we would see now over a period of time is that extending into some of the benefits we can get group wise and that’s really a 2012 issue for us leading probably more into the 2013 business planning. But there will definitely be benefits.

Your next question comes from Dan Farrell – Stern Agee. Dan Farrell – Stern Agee: I was wondering if you could comment on your view of accident year ex CAT loss ratio trends for the various segments within the scope of your overall guidance? And then in particular, there’s a lot of things that I think, mix changes and others that could be having a benefit, but there’s also the issue of non-CAT weather that creeps in there as well.

I would tell you, the non-CAT weather quarter-over-quarter for us is probably a three point impact this quarter so it was very significant Midwest, Northeast actions. Our accident years, I actually feel very good across the board on accident. We’ve been getting rate almost in all of our businesses now, including Bob’s and ours, the vast majority of all our businesses we’re now getting rate in excess of what I would see as loss cause. A little bit of healthcare, obviously trends, which is why I’m so cautious about comp and being a little tougher on comp, particularly anything that’s outside of the small category. The one exception to that has been what I said, which is on property. What we see is I feel very good about the rate we’re achieving right now but we have to do some reunderwriting and thinning in some areas. The reason I believe that is that our marginal cost of capacity in some of the places where we have high concentration given the model changes and our perspective on the weather, that our marginal cost in that capacity is higher than our competitors. And so we’re not going to get that adequate rate to get the 12% that we want and so we’re shedding some of that. But again, it’s a little easier for us because of our partner strategy. I can take some legacy partners and eliminate them, or legacy agents. I feel pretty darn good about our accidents. One of the differences between us and almost the vast majority of our competitors, a lot of people had a lot of their earnings based on 2003, 2004, 2005 releases. The fact of the matter, we weren’t very good back then so we haven’t had much releases. Almost all of our releases are…

Looking at the casualty and other, we took on a new team of people writing international casualty business less than a year ago now and really what we’re seeing in the numbers, particularly in 2011, and we’ll see this continue into 2012 is that that business actually migrates with them. So in effect, the first few months of their operation we were just getting that business on board and during the course of this year we’ve seen that grow just as they’ve moved over some of those opportunities. So it’s a new team, it’s a complimentary team to the other casualty lines that we wrote. We expect to see that develop, albeit not too strongly though in 2013. That market still isn’t good so we’re really just taking advantage of known relationships these guys have and bringing them to us. The marine and aviation, yes the marine was patchy in areas where we’ve seen some of the losses, particularly on our marine excel account we saw some increases this year. Aviation is just really taking opportunities where we see it. We’re not in the airline business so it tends to be more general aviation where we’re seeing a little bit more of a better marketplace.

And one of the things I mentioned, what we’ve done is Bob had talked about their strategy and we’ll talk more about it in the next couple of weeks about the areas of distinctiveness. What we’ve done is look through the whole portfolio and said where should we be more focused, where should we back off a little bit? And our expectation in energy we changed a little bit and we took a little less and we expect a little less growth there and we made some marginal changes in the portfolio. But we feel very good where we are. We put in the package for you where we saw rates so in casualty, as Bob said, we’re very cautious there and very thoughtful because while casualty in the US is starting to turn, mostly comp, etc., in other parts of the world it hasn’t so we believe that’s an area that we’re very thoughtful, and cautious, and will be going forward.

Your next question comes from Mariza Costa – Stifel Nicolaus. Mariza Costa – Stifel Nicolaus: Actually, all my questions are for Chaucer. My first question is about the creep from New Zealand and Japan. I think if I remember correctly, New Zealand was about $30 million and Japan was about $45 million back then. Should we expect any creep up from there given all the increase in estimates that are coming out from those regions?

Just to talk a little bit about this and how it runs through our numbers, we anticipated a lot of things in our purchase accounting exercise. We had a view on those events as late as August as we were going through the actuarial analysis. So much of the impact of the creep, as you referred to it, I would say was built into kind of our opening balance sheet. There was some pluses and minuses that ran through this quarter. I chose not to really get into it because it’s actually around $1 million, maybe less than $1 million across a number of different pre acquisitions events like New Zealand, Japan, etc. I think going forward, obviously any impact of changes in estimates and things like that will affect us on those. I think we’re very well reserved for them. It’s really a practice that Chaucer has. When you look at their estimates historically you’ll find that they very rarely have negative movement on reserving and most likely have positive movement. Although some of these storms were difficult storms to estimate. But I think you should take away from that is we’re very well reserved for those events but to the extent there are things that come up it will affect our results going forward but we think they’ll be pretty minor or mitigated by the reserving practices.

And also mitigated by reinsurance purchases. A number of these major events are now into reinsurance recoverable position and the impact on us will be negligible because it’s really just a reinstatement premiums that we pay when we make recoveries. But the major events you mentioned, they should be marginal. Mariza Costa – Stifel Nicolaus: Looking in the numbers you guys gave us last night, it looks like expense ratio in 2010 for Chaucer was about 33% and this quarter was about 39%. How should we think about it going forward?

I think, as I said in my comments Mariza, we were 39.1% this quarter with Chaucer. There are some differences in the years. There are integration type costs and other things that are kind of coming through now. What I tried to say is we think the 39 is a good number to use for the next several quarters but I would expect over a longer period of time that rate will start to come down but 33 might be too far down. There might be some things in those numbers last year that offset some of their expenses which we didn’t obviously put in there for disclosure. But I think on a longer term basis I think you’ll see that ratio down a couple of points at least. Mariza Costa – Stifel Nicolaus: I’m sorry I missed that, you did say for a couple of quarters at least keep the 39?

I would stick with the 39 for now and I think a few quarters out, I don’t want to give you a number of quarters, but a few quarters out some of the integration things will roll off, some of the project related things that are ongoing will start to roll off and we’ll start to see that ratio come down a little bit. Mariza Costa – Stifel Nicolaus: Then my last question, on the fx side, obviously now you have that impact too. But it looks like it’s being kept out of operating, is that correct?

Yes, there are some impacts of fx and obviously, we’re going through that. It’s not that significant in the quarter and the way in which we’re looking at the underlying business and the currencies, we’re fairly well matched so there wasn’t enough to come out and talk about it in detail but we’ll try and look at that in terms of disclosure going forward to help you with that for understanding but obviously, we want to make sure that doesn’t cause wild swings in operating results. But this quarter I don’t think you should pay too much attention to fx.

We are showing no additional questions. I’d like to turn the conference call back over to management for any closing remarks.

Thank you very much for participating on the call with us and we are looking forward to meeting with you again at our investor day on November 17th.

Ladies and gentlemen that concludes today’s conference call. We thank you for attending. You may now disconnect your telephone lines.