10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-13754

THE HANOVER INSURANCE GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware	04-3263626
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

440 Lincoln Street, Worcester, Massachusetts 01653

(Address of principal executive offices) (Zip Code)

(508) 855-1000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No   ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbols	Name of each exchange on which registered
Common Stock, $.01 par value	THG	New York Stock Exchange
7 5/8% Senior Debentures due 2025	THG	New York Stock Exchange
6.35% Subordinated Debentures due 2053	THGA	New York Stock Exchange

The number of shares outstanding of the registrant’s common stock was 40,701,200 as of April 30, 2019.

TABLE OF CONTENTS

PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	2
	Consolidated Statements of Income	2
	Consolidated Statements of Comprehensive Income	3
	Consolidated Balance Sheets	4
	Consolidated Statements of Shareholders’ Equity	5
	Consolidated Statements of Cash Flows	6
	Notes to Interim Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 4.	Controls and Procedures	42
PART II.	OTHER INFORMATION	43
Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 5.	Other Information	45
Item 6.	Exhibits	47
SIGNATURES		48

PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

THE HANOVER INSURANCE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

	Three Months Ended
	March 31,
(In millions, except per share data)	2019			2018
Revenues
Premiums	$	1,095.1		$	1,042.5
Net investment income		70.2			66.0
Net realized and unrealized investment gains (losses):
Net realized gains (losses) from sales and other		(0.4	)		0.6
Net change in fair value of equity securities		48.6			(22.9	)
Net other–than–temporary impairment losses on investments    recognized in earnings		—			(0.6	)
Total net realized and unrealized investment gains (losses)		48.2			(22.9	)
Fees and other income		6.0			5.9
Total revenues		1,219.5			1,091.5
Losses and expenses
Losses and loss adjustment expenses		699.6			670.9
Amortization of deferred acquisition costs		229.5			218.7
Interest expense		9.4			11.3
Other operating expenses		132.4			131.5
Total losses and expenses		1,070.9			1,032.4
Income from continuing operations before income taxes		148.6			59.1
Income tax expense:
Current		12.2			(5.7	)
Deferred		13.8			14.3
Total income tax expense		26.0			8.6
Income from continuing operations		122.6			50.5
Discontinued operations:
Gain from sale of Chaucer business, net of taxes		0.9			—
Income (loss) from Chaucer business, net of taxes		(0.3	)		17.3
Net loss from discontinued life businesses, net of taxes		(0.8	)		(0.1	)
Net income	$	122.4		$	67.7
Earnings per common share:
Basic:
Income from continuing operations	$	3.02		$	1.19
Discontinued operations:
Gain from sale of Chaucer business, net of taxes		0.02			—
Income (loss) from Chaucer business		(0.01	)		0.40
Net loss from discontinued life businesses		(0.02	)		—
Net income per share	$	3.01		$	1.59
Weighted average shares outstanding		40.6			42.5
Diluted:
Income from continuing operations	$	2.98		$	1.17
Discontinued operations:
Gain from sale of Chaucer business, net of taxes		0.02			—
Income (loss) from Chaucer business, net of taxes		(0.01	)		0.40
Net loss from discontinued life businesses		(0.02	)		—
Net income per share	$	2.97		$	1.57
Weighted average shares outstanding		41.2			43.1

The accompanying notes are an integral part of these interim consolidated financial statements.

2

THE HANOVER INSURANCE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

	Three Months Ended
	March 31,
(In millions)	2019		2018
Net income	$	122.4	$	67.7
Other comprehensive income (loss), net of tax:
Available-for-sale securities:
Net appreciation (depreciation) during the period		115.0		(123.9	)
Change in other-than-temporary impairment losses    recognized in other comprehensive income		1.4		0.4
Total available-for-sale securities		116.4		(123.5	)
Pension and postretirement benefits:
Net change in net actuarial loss and prior service cost		2.3		(2.3	)
Cumulative foreign currency translation adjustment:
Amount recognized as cumulative foreign currency    translation during the period		0.1		(0.5	)
Total other comprehensive income (loss), net of tax		118.8		(126.3	)
Comprehensive income (loss)	$	241.2	$	(58.6	)

The accompanying notes are an integral part of these interim consolidated financial statements.

3

THE HANOVER INSURANCE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	March 31,			December 31,
(In millions, except share data)	2019			2018
Assets
Investments:
Fixed maturities, at fair value (amortized cost of $6,492.7 and $6,245.9)	$	6,559.4		$	6,161.5
Equity securities, at fair value		504.7			464.4
Other investments		680.4			661.5
Total investments		7,744.5			7,287.4
Cash and cash equivalents		168.5			1,020.7
Accrued investment income		54.0			53.2
Premiums and accounts receivable, net		1,179.4			1,176.7
Reinsurance recoverable on paid and unpaid losses and unearned premiums		1,663.2			1,648.6
Deferred acquisition costs		449.5			450.8
Deferred income taxes		0.9			50.6
Goodwill		178.8			178.8
Other assets		417.4			371.6
Assets held-for-sale		23.6			57.4
Assets of discontinued businesses		103.6			103.9
Total assets	$	11,983.4		$	12,399.7
Liabilities
Loss and loss adjustment expense reserves	$	5,381.6		$	5,304.1
Unearned premiums		2,287.8			2,277.8
Expenses and taxes payable		556.9			909.8
Reinsurance premiums payable		46.8			37.3
Debt		653.0			777.9
Liabilities held-for-sale		12.0			22.2
Liabilities of discontinued businesses		118.3			115.9
Total liabilities		9,056.4			9,445.0
Commitments and contingencies
Shareholders’ Equity
Preferred stock, par value $0.01 per share; 20.0 million shares authorized; none    issued		—			—
Common stock, par value $0.01 per share; 300.0 million shares authorized;    60.5 million shares issued		0.6			0.6
Additional paid-in capital		1,821.7			1,871.8
Accumulated other comprehensive income (loss)		3.8			(116.5	)
Retained earnings		2,278.7			2,182.3
Treasury stock at cost (19.8 million and 18.2 million shares)		(1,177.8	)		(983.5	)
Total shareholders’ equity		2,927.0			2,954.7
Total liabilities and shareholders’ equity	$	11,983.4		$	12,399.7

The accompanying notes are an integral part of these interim consolidated financial statements.

4

THE HANOVER INSURANCE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)

	Three Months Ended
	March 31,
(In millions)	2019			2018
Preferred Stock
Balance at beginning and end of period	$	—		$	—
Common Stock
Balance at beginning and end of period		0.6			0.6
Additional Paid-in Capital
Balance at beginning of period		1,871.8			1,857.0
Prepaid repurchase of common stock and other		(50.1	)		1.3
Balance at end of period		1,821.7			1,858.3
Accumulated Other Comprehensive Income (Loss), net of tax
Net Unrealized Appreciation (Depreciation) on Investments:
Balance at beginning of period		(27.2	)		205.4
Net appreciation (depreciation) on available-for-sale securities		116.4			(123.5	)
Adoption of Accounting Standards Updates (No. 2017-08 in 2019 and    No. 2016-01 and No. 2018-02 in 2018)		1.5			(81.6	)
Balance at end of period		90.7			0.3
Defined Benefit Pension and Postretirement Plans:
Balance at beginning of period		(88.6	)		(79.5	)
Net amount recognized as net periodic benefit (expense)		2.3			(2.3	)
Adoption of Accounting Standards Update No. 2018-02		—			(16.2	)
Balance at end of period		(86.3	)		(98.0	)
Cumulative Foreign Currency Translation Adjustment:
Balance at beginning of period		(0.7	)		(18.3	)
Amount recognized as cumulative foreign currency translation during the period		0.1			(0.5	)
Adoption of Accounting Standards Update No. 2018-02		—			(3.9	)
Balance at end of period		(0.6	)		(22.7	)
Total accumulated other comprehensive income (loss)		3.8			(120.4	)
Retained Earnings
Balance at beginning of period		2,182.3			1,975.0
Cumulative effect of accounting change, net of taxes		(1.5	)		104.3
Balance at beginning of period, as adjusted		2,180.8			2,079.3
Net income		122.4			67.7
Dividends to shareholders		(24.5	)		(22.9	)
Balance at end of period		2,278.7			2,124.1
Treasury Stock
Balance at beginning of period		(983.5	)		(942.5	)
Shares purchased at cost		(200.0	)		(13.6	)
Net shares reissued at cost under employee stock-based compensation plans		5.7			6.6
Balance at end of period		(1,177.8	)		(949.5	)
Total shareholders’ equity	$	2,927.0		$	2,913.1

The accompanying notes are an integral part of these interim consolidated financial statements.

5

THE HANOVER INSURANCE GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Three Months Ended
	March 31,
(In millions)	2019			2018
Cash Flows From Operating Activities
Net income	$	122.4		$	67.7
Adjustments to reconcile net income to net cash provided by operating activities:
Net realized and unrealized investment gains		(48.4	)		23.4
Gain on sale of Chaucer-related Irish entity		(0.9	)		—
Net amortization and depreciation		6.9			6.9
Stock-based compensation expense		4.2			3.0
Amortization of defined benefit plan costs		2.8			2.5
Deferred income tax (benefit) expense		13.8			(7.4	)
Change in deferred acquisition costs		2.7			(3.9	)
Change in premiums receivable, net of reinsurance premiums payable		(4.3	)		6.2
Change in loss, loss adjustment expense and unearned premium reserves		99.2			127.4
Change in reinsurance recoverable		(28.2	)		(86.4	)
Change in expenses and taxes payable		(88.0	)		(69.1	)
Other, net		(45.0	)		(38.9	)
Net cash provided by operating activities		37.2			31.4
Cash Flows From Investing Activities
Proceeds from disposals and maturities of fixed maturities		193.1			295.3
Proceeds from disposals of equity securities and other investments		28.1			21.8
Purchase of fixed maturities		(483.4	)		(418.2	)
Purchase of equity securities and other investments		(37.6	)		(39.8	)
Capital expenditures		(3.9	)		(3.5	)
Net cash proceeds from sale of Chaucer-related Irish entity, offset by cash    transferred		24.4			—
Net cash used in investing activities		(279.3	)		(144.4	)
Cash Flows From Financing Activities
Proceeds from exercise of employee stock options		5.0			6.3
Proceeds from debt borrowings, net		—			33.0
Change in cash collateral related to securities lending program		6.7			(8.2	)
Dividends paid to shareholders		(217.0	)		(22.9	)
Repurchases of common stock		(250.0	)		(13.6	)
Repayment of debt		(151.1	)		—
Other financing activities		(4.2	)		(2.2	)
Net cash used in financing activities		(610.6	)		(7.6	)
Effect of exchange rate changes on cash		—			2.2
Net change in cash and cash equivalents		(852.7	)		(118.4	)
Net change in cash related to discontinued operations		0.5			(44.1	)
Cash and cash equivalents, beginning of period		1,020.7			297.9
Cash and cash equivalents, end of period	$	168.5		$	135.4

The accompanying notes are an integral part of these interim consolidated financial statements.

6

THE HANOVER INSURANCE GROUP, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Basis of Presentation and Principles of Consolidation

The accompanying unaudited consolidated financial statements of The Hanover Insurance Group, Inc. and subsidiaries (“THG” or the “Company”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the requirements of Form 10-Q. Certain financial information that is provided in annual financial statements, but is not required in interim reports, has been omitted.

The interim consolidated financial statements of THG include the accounts of The Hanover Insurance Company (“Hanover Insurance”) and Citizens Insurance Company of America, THG’s principal property and casualty companies; and other insurance and non-insurance subsidiaries. These legal entities conduct their operations through several business segments discussed in Note 9 – “Segment Information”. The interim consolidated financial statements also include the Company’s discontinued operations consisting of Chaucer Holdings Limited (“Chaucer”), a United Kingdom (“U.K.”) domiciled specialist insurance underwriting group which operates through the Society and Corporation of Lloyd’s (“Lloyds”), and the international insurance and non-insurance subsidiaries, which collectively constituted the former Chaucer segment. On December 28, 2018, the Company completed the sale of Chaucer to China Reinsurance (Group) Corporation (“China Re”), and subsequently completed the sales of the Chaucer-related Irish and Australian entities on February 14, 2019 and April 10, 2019, respectively. Discontinued operations also include the Company’s accident and health and former life insurance businesses. All intercompany accounts and transactions have been eliminated.

The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

In the opinion of the Company’s management, the accompanying interim consolidated financial statements reflect all adjustments, consisting of normal recurring items, necessary for a fair presentation of the financial position and results of operations. The results of operations for the three months ended March 31, 2019 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 22, 2019.

2. New Accounting Pronouncements

Recently Implemented Standards

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) Update No. 2016-02, (Topic 842) Leases. This ASC update requires a lessee to recognize a right-of-use asset, which represents the lessee’s right to use a specified asset for the lease term, and a corresponding lease liability, which represents a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, for all leases that extend beyond 12 months. For finance or capital leases, interest on the lease liability will be recognized separately from amortization of the right-of-use asset in the statements of income and comprehensive income. In addition, the repayment of the principal portion of the lease liability will be classified as a financing activity while the interest component will be included in the operating section of the statement of cash flows. For operating leases, the asset and liability will be amortized as a single lease cost, such that the cost of the lease is allocated over the lease term, on a generally straight-line basis, with all cash flows included within operating activities in the statement of cash flows. ASC Update No. 2016-02 requires that implementation of this guidance be through a modified retrospective transition approach. In July 2018, the FASB issued ASC Update No. 2018-11, (Topic 842) Leases Targeted Improvements, which provides entities with an additional transition method to adopt ASC Update No. 2016-02. Under this optional transition method, an entity can initially apply the new guidance at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company implemented this guidance effective January 1, 2019 using the optional transition method provided in ASC Update No. 2018-11 and elected to utilize the practical expedient package available in ASC Update 2016-02. The Company has also elected to utilize the practical expedient which allows an entity not to separate lease and nonlease components for all of its asset classes. The effect of implementing this guidance increased total assets and total liabilities each by approximately $35 million on January 1, 2019 and did not have a material effect on the results of operations for the three months ended March 31, 2019.

In March 2019, the FASB issued ASC Update No. 2019-01, Leases (Topic 842) – Codification Improvements (“ASC Update No. 2019-01”). This ASC update modifies interim disclosure requirements related to the implementation of Topic 842. This ASC update explicitly provides an exception to certain disclosures required under Topic 250 Accounting Changes and Error Corrections. An entity should apply the amendments as of the date that it first applied Topic 842, using the same transition methodology. Consistent with the Company’s implementation of Topic 842 on January 1, 2019, the updated guidance is effective for interim and annual periods beginning after December 15, 2018. The Company implemented this guidance effective January 1, 2019 and it did not have an impact on the Company’s financial position or results of operations as the update is disclosure related.

7

In March 2017, the FASB issued ASC Update No. 2017-08, (Subtopic 310-20)Receivables – Nonrefundable Fees and Other Costs: Premium Amortization on Purchased Callable Debt Securities. This guidance shortens the amortization period of premiums on certain purchased callable debt securities to the earliest call date. The updated guidance is effective for annual and interim periods beginning after December 15, 2018, and should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company implemented this guidance effective January 1, 2019. The effect of implementing this guidance resulted in a cumulative effect adjustment reclassifying unrealized losses, net of tax, of $1.5 million from accumulated other comprehensive income to retained earnings.

Recently Issued Standards

In August 2018, the FASB issued ASC Update No. 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASC Update No. 2018-15”). This ASC update requires the capitalization of implementation costs incurred in a hosting arrangement that is a service contract consistent with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The guidance also requires an entity to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting agreement, and apply impairment guidance consistent with long-lived assets. ASC Update No. 2018-15 also provides specific guidelines related to the presentation of these capitalized implementation costs and related expenses in the financial statements. The updated guidance is effective for interim and annual periods beginning after December 15, 2019, and should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. Early adoption is permitted, including interim periods. The Company does not expect the adoption of ASC Update No. 2018-15 to have a material impact on its financial position or results of operations.

In August 2018, the FASB issued ASC Update No. 2018-14 (Topic 715-20) Compensation – Retirement Benefits – Defined Benefit Plans – General – Disclosure Framework – Changes to the Disclosure Requirements for the Defined Benefit Plans. This ASC update modifies disclosures related to defined benefit pension or other postretirement plans. This ASC update removes the disclosure of amounts in accumulated other comprehensive income expected to be recognized over the next fiscal year and the effects of a one percentage point change of health care cost trends on net periodic benefit costs and postretirement benefit obligations and clarifies the specific requirements of disclosures related to the project benefit obligation and accumulated benefit obligation. This ASC Update also adds disclosures related to weighted average crediting rates for cash balance plans and requires disclosure of an explanation of any significant gains and losses related to changes in benefit obligations for the period. The amendments in this ASC update are effective for fiscal years ending after December 15, 2020, and should be applied on a retrospective basis to all periods presented. Early adoption is permitted. Implementing this guidance is not expected to have an impact on the Company’s financial position or results of operations as the update is disclosure related.

In August 2018, the FASB issued ASC Update No. 2018-13 (Topic 820) Fair Value Measurement, Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The update removes the requirement for disclosure of the following: 1) the amount and reasons for transfers between level 1 and level 2 of the fair value hierarchy, 2) the policy for timing of transfers between levels, and 3) the valuation processes for level 3 fair value measurements. This update also added a requirement to disclose the changes in unrealized gains and losses for the period included in other comprehensive income for recurring level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop level 3 fair value measurements, in addition to other fair value disclosure modifications. The updated guidance is effective for interim and annual periods beginning after December 15, 2019, and should be applied prospectively for certain of the disclosure requirements and retrospectively to all periods presented upon the effective date for other disclosure requirements. An entity is permitted to early adopt any removed or modified disclosures upon issuance of the update and delay adoption of additional disclosures until periods beginning after December 15, 2019, the effective date of the standard. Implementing this guidance is not expected to have an impact on the Company’s financial position or results of operations as the update is disclosure related.

In January 2017, the FASB issued ASC Update No. 2017-04, (Topic 350) Intangibles – Goodwill and Other: Simplifying the Test for Goodwill Impairment. This guidance eliminates step 2 from the goodwill impairment test. Instead, an entity should perform its goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount, including any applicable income tax effects, and recognize an impairment for the amount by which the carrying amount exceeds the reporting unit’s fair value. However, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The updated guidance is effective for annual or interim goodwill impairment tests performed in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect the adoption of ASC Update No. 2017-04 to have a material impact on its financial position or results of operations.

In June 2016, the FASB issued ASC Update No. 2016-13, (Topic 326) Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments. This ASC update introduces new guidance for the accounting for credit losses on financial instruments within its scope. A new model, referred to as the current expected credit losses model, requires an entity to determine credit-related impairment losses for financial instruments held at amortized cost and to estimate these expected credit losses over the life of an exposure (or pool of exposures). The estimate of expected credit losses should consider both historical and current

8

information, reasonable and supportable forecasts, as well as estimates of prepayments. The estimated credit losses and subsequent adjustment to such loss estimates, will be recorded through an allowance account which is deducted from the amortized cost of the financial instrument, with the offset recorded in current earnings. ASC No. 2016-13 also modifies the impairment model for available-for-sale debt securities. The new model will require an estimate of expected credit losses only when the fair value is below the amortized cost of the asset, thus the length of time the fair value of an available-for-sale debt security has been below the amortized cost will no longer affect the determination of whether a credit loss exists. In addition, credit losses on available-for-sale debt securities will be limited to the difference between the security’s amortized cost basis and its fair value. In November 2018, the FASB issued ASC Update No. 2018-19, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, which explicitly states that receivables arising from operating leases are not within the scope of Subtopic 326-20. ASC Update 2016-13 and related guidance is effective for interim and annual periods beginning after December 15, 2019. Early adoption is permitted for periods beginning after December 15, 2018. The Company expects to adopt ASC Update No. 2016-13 on January 1, 2020 and is evaluating the impact on its financial position and results of operations, which it does not expect to be material.

3. Discontinued Operations – Chaucer Business

On December 28, 2018, the Company completed the sale of its former subsidiary, Chaucer, to China Re.  On February 14, 2019, the Company completed the sale of its Chaucer-related Irish entity for total proceeds of $28 million and on April 10, 2019, finalized the sale of the Australian entities for total proceeds of $13 million, completing the transfer of all Chaucer-related companies. Collectively, these entities constituted the Chaucer business in 2018 and prior, whereas just the Irish and Australian Chaucer-related entities comprised the Chaucer business reported in the Company’s results in 2019, until their respective sales to China Re.

Three months ended March 31, 2019

Revenues from the Chaucer business were $2.9 million during the first quarter of 2019 and operating losses in this business totaled $0.3 million during that period.  

Three months ended March 31, 2018

The following table summarizes the results of Chaucer’s operations for the three months ended March 31, 2018:

	Three Months Ended
	March 31,
(in millions)	2018
Revenues
Net premiums earned	$	221.1
Net investment income		16.4
Other income		1.9
		239.4
Losses and operating expenses
Losses and LAE		115.0
Amortization of deferred acquisition costs		69.3
Other expenses		32.2
		216.5
Income from Chaucer business before income taxes and other items    (previously presented as Chaucer's operating income)		22.9
Other items:
Interest expense		(1.1	)
Net realized and unrealized investment losses		(0.5	)
Other income		0.2
Income from Chaucer business before income taxes		21.5
Income tax expense		(4.2	)
Income from Chaucer business, net of income taxes	$	17.3

Total assets held-for-sale were $23.6 million at March 31, 2019 and $57.4 million at December 31, 2018. Total liabilities held-for-sale were $12.0 million at March 31, 2019 and $22.2 million at December 31, 2018. Assets and liabilities held-for-sale decreased in the quarter due to the aforementioned sale of the Chaucer-related Irish entity. These balances are reflected in the Consolidated Balance Sheets under the caption “Assets held-for-sale” and “Liabilities held-for-sale”, respectively.

9

The following table details the cash flows associated with the Chaucer business for the three months ended March 31, 2018:

	Three Months Ended
	March 31,
(in millions)	2018
Net cash used in operating activities	$	(5.9	)
Net cash provided by investing activities	$	47.7

4. Income Taxes

Income tax expense for the three months ended March 31, 2019 and 2018 has been computed using estimated annual effective tax rates. The prior year’s rate reflects the recomputed income to exclude the Chaucer business. These rates are revised, if necessary, at the end of each successive interim period to reflect current estimates of the annual effective tax rates.

The tax provision was comprised of U.S. federal income tax expense of $26.0 million and $8.6 million for the three months ended March 31, 2019 and 2018, respectively. The tax provision recorded in discontinued operations related to the Chaucer business for the three months ended March 31, 2018 was comprised of a $5.9 million U.S. federal income tax expense and a $1.7 million foreign income tax benefit.

The Company or its subsidiaries files income tax returns in the U.S. federal jurisdiction and various state jurisdictions, as well as foreign jurisdictions. The Company and its subsidiaries are subject to U.S. federal and state income tax examinations and foreign examinations for years after 2014.

5. Investments

A. Fixed maturities

The amortized cost and fair value of available-for-sale fixed maturities were as follows:

	March 31, 2019
			Gross		Gross				OTTI
	Amortized		Unrealized		Unrealized				Unrealized
(in millions)	Cost		Gains		Losses		Fair Value		Losses
U.S. Treasury and government agencies	$	404.5	$	4.7	$	2.5	$	406.7	$	—
Foreign government		7.3		0.1		—		7.4		—
Municipal		848.1		20.8		3.4		865.5		—
Corporate		3,635.7		66.3		27.4		3,674.6		4.8
Residential mortgage-backed		819.2		6.8		6.1		819.9		—
Commercial mortgage-backed		684.9		9.4		2.4		691.9		—
Asset-backed		93.0		0.6		0.2		93.4		—
Total fixed maturities	$	6,492.7	$	108.7	$	42.0	$	6,559.4	$	4.8

	December 31, 2018
			Gross		Gross				OTTI
	Amortized		Unrealized		Unrealized				Unrealized
(in millions)	Cost		Gains		Losses		Fair Value		Losses
U.S. Treasury and government agencies	$	414.7	$	2.4	$	7.2	$	409.9	$	—
Foreign government		7.3		0.1		—		7.4		—
Municipal		879.0		16.6		9.8		885.8		—
Corporate		3,476.6		26.1		92.0		3,410.7		6.6
Residential mortgage-backed		728.4		2.7		14.7		716.4		—
Commercial mortgage-backed		648.4		1.7		9.8		640.3		—
Asset-backed		91.5		0.2		0.7		91.0		—
Fixed maturities, excluding held-for-sale (Chaucer)		6,245.9		49.8		134.2		6,161.5		6.6
Fixed maturities, held-for-sale		24.9		—		0.4		24.5		—
Total fixed maturities	$	6,270.8	$	49.8	$	134.6	$	6,186.0	$	6.6

Other-than-temporary impairments (“OTTI”) unrealized losses in the tables above represent OTTI recognized in accumulated other comprehensive income (“AOCI”). This amount excludes net unrealized gains on impaired securities relating to changes in the value of such securities subsequent to the impairment measurement date of $7.4 million as of both March 31, 2019 and December 31, 2018.

10

The Company deposits funds with various state and governmental authorities. For a discussion of the Company’s deposits with state and governmental authorities, see also Note 3 – “Investments” of the Notes to Consolidated Financial Statements in the Company’s 2018 Annual Report on Form 10-K.

The amortized cost and fair value by maturity periods for fixed maturities are shown in the following table. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties, or the Company may have the right to put or sell the obligations back to the issuers.

	March 31, 2019
	Amortized		Fair
(in millions)	Cost		Value
Due in one year or less	$	249.2	$	250.9
Due after one year through five years		1,969.6		2,001.6
Due after five years through ten years		2,407.4		2,423.2
Due after ten years		269.4		278.5
		4,895.6		4,954.2
Mortgage-backed and asset-backed securities		1,597.1		1,605.2
Total fixed maturities	$	6,492.7	$	6,559.4

B. Fixed maturity securities in an unrealized loss position

The following tables provide information about the Company’s available-for-sale fixed maturity securities that were in an unrealized loss position at March 31, 2019 and December 31, 2018 including the length of time the securities have been in an unrealized loss position:

	March 31, 2019
	12 months or less				Greater than 12 months				Total
	Gross				Gross				Gross
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
(in millions)	Losses		Value		Losses		Value		Losses		Value
Investment grade:
U.S. Treasury and government agencies	$	—	$	—	$	2.5	$	158.4	$	2.5	$	158.4
Foreign governments		—		—		—		0.8		—		0.8
Municipal		—		9.7		3.4		192.3		3.4		202.0
Corporate		0.9		15.3		19.7		993.2		20.6		1,008.5
Residential mortgage-backed		—		2.1		6.1		352.6		6.1		354.7
Commercial mortgage-backed		—		0.3		2.4		226.7		2.4		227.0
Asset-backed		—		—		0.2		31.9		0.2		31.9
Total investment grade		0.9		27.4		34.3		1,955.9		35.2		1,983.3
Below investment grade:
Corporate		0.3		17.1		6.5		75.7		6.8		92.8
Total fixed maturities	$	1.2	$	44.5	$	40.8	$	2,031.6	$	42.0	$	2,076.1

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	December 31, 2018
	12 months or less				Greater than 12 months				Total
	Gross				Gross				Gross
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
(in millions)	Losses		Value		Losses		Value		Losses		Value
Investment grade:
U.S. Treasury and government agencies	$	1.1	$	66.0	$	6.1	$	210.9	$	7.2	$	276.9
Foreign governments		—		2.0		—		0.8		—		2.8
Municipal		0.8		110.0		9.0		248.0		9.8		358.0
Corporate		30.0		1,277.9		43.9		781.6		73.9		2,059.5
Residential mortgage-backed		2.6		201.2		12.1		323.7		14.7		524.9
Commercial mortgage-backed		3.4		293.0		6.4		175.5		9.8		468.5
Asset-backed		0.4		42.3		0.3		18.0		0.7		60.3
Total investment grade		38.3		1,992.4		77.8		1,758.5		116.1		3,750.9
Below investment grade:
Municipal		—		—		—		0.9		—		0.9
Corporate		8.1		185.6		10.0		54.0		18.1		239.6
Total below investment grade		8.1		185.6		10.0		54.9		18.1		240.5
Fixed maturities, excluding held-for-sale (Chaucer)		46.4		2,178.0		87.8		1,813.4		134.2		3,991.4
Fixed maturities, held-for-sale		0.1		4.0		0.3		18.0		0.4		22.0
Total fixed maturities	$	46.5	$	2,182.0	$	88.1	$	1,831.4	$	134.6	$	4,013.4

The Company views gross unrealized losses on fixed maturities as being temporary since it is its assessment that these securities will recover in the near term, allowing the Company to realize the anticipated long-term economic value. The Company employs a systematic methodology to evaluate declines in fair value below amortized cost for fixed maturity securities. In determining OTTI, 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 and asset quality; any specific events which may influence the operations of the issuer; the general outlook for market conditions in the industry or geographic region in which the issuer operates; and the length of time and the degree to which the fair value of an issuer’s securities remains below the Company’s amortized cost. The Company also considers any factors that might raise doubt about the issuer’s ability to make contractual payments as they come due and whether the Company expects to recover the entire amortized cost basis of the security.

C. Proceeds from sales

The proceeds from sales of available-for-sale securities and gross realized gains and gross realized losses on those sales were as follows:

	Three Months Ended March 31,
	2019						2018
	Proceeds from		Gross		Gross		Proceeds from		Gross		Gross
(in millions)	Sales		Gains		Losses		Sales		Gains		Losses
Fixed maturities, excluding held-for-sale (Chaucer)	$	60.1	$	1.0	$	1.5	$	57.1	$	0.2	$	1.7
Fixed maturities, held-for-sale		0.3		—		—		70.7		0.4		0.6
Total fixed maturities	$	60.4	$	1.0	$	1.5	$	127.8	$	0.6	$	2.3

D. Other-than-temporary impairments

For the three months ended March 31, 2019, the Company recognized no OTTI.    

For the three months ended March 31, 2018, total OTTI from continuing operations was $0.9 million, consisting primarily of fixed maturities.  Of this amount, $0.6 million was recognized in earnings and the remaining $0.3 million was recorded as unrealized losses in AOCI.

12

The methodology and significant inputs used to measure the amount of credit losses on fixed maturities in2018 were as follows:

Corporate bonds – the Company utilized a financial model that derives expected cash flows based on probability-of-default factors by credit rating and asset duration and loss-given-default factors based on security type. These factors are based on historical data provided by an independent third-party rating agency. In addition, other market data relevant to the realizability of contractual cash flows may be considered.

The following table provides rollforwards of the cumulative amounts related to the Company’s credit loss portion of the OTTI losses on fixed maturity securities from continuing operations for which the non-credit portion of the loss is included in other comprehensive income. 

	Three Months Ended March 31,
(in millions)	2019			2018
Credit losses as of the beginning of the period	$	3.8		$	3.6
Credit losses on securities for which an OTTI was not previously recognized		—			0.2
Reductions for securities sold, matured or called		(0.5	)		(0.7	)
Credit losses as of the end of the period	$	3.3		$	3.1

E. Equity securities

Equity securities are carried at fair value and all increases or decreases in fair value are reported in net realized and unrealized investment gains (losses) on the Consolidated Statements of Income. The following table provides pre-tax net realized and unrealized gains (losses) on equity securities from continuing operations:

	Three Months Ended March 31,
(in millions)		2019		2018
Net gains (losses) recognized during the period	$	48.6	$	(22.9	)
Less: net gains recognized on equity securities sold during the period		1.1		0.5
Net unrealized gains (losses) recognized during the period on equity securities still held	$	47.5	$	(23.4	)

6. Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability, i.e., exit price, in an orderly transaction between market participants. The Company emphasizes the use of observable market data whenever available in determining fair value. Fair values presented for certain financial instruments are estimates which, in many cases, may differ significantly from the amounts that could be realized upon immediate liquidation. A hierarchy of the three broad levels of fair value are as follows, with the highest priority given to Level 1 as these are the most observable, and the lowest priority given to Level 3:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 – Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data, including model-derived valuations.

Level 3 – Unobservable inputs that are supported by little or no market activity.

When more than one level of input is used to determine fair value, the financial instrument is classified as Level 2 or 3 according to the lowest level input that has a significant impact on the fair value measurement.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments and have not changed since last year.

Fixed Maturities

Level 1 securities generally include U.S. Treasury issues and other securities that are highly liquid and for which quoted market prices are available. Level 2 securities are valued using pricing for similar securities and pricing models that incorporate observable inputs including, but not limited to yield curves and issuer spreads. Level 3 securities include issues for which little observable data can be obtained, primarily due to the illiquid nature of the securities, and for which significant inputs used to determine fair value are based on the Company’s own assumptions.

13

The Company utilizes a third party pricing service for the valuation of the majority of its fixed maturity securities and receives one quote per security. When quoted market prices in an active market are available, they are provided by the pricing service as the fair value and such values are classified as Level 1. Since fixed maturities other than U.S. Treasury securities generally do not trade on a daily basis, the pricing service prepares estimates of fair value for those securities using pricing techniques based on a market approach. Inputs into the fair value pricing common to all asset classes include: benchmark U.S. Treasury security yield curves; reported trades of identical or similar fixed maturity securities; broker/dealer quotes of identical or similar fixed maturity securities and structural characteristics such as maturity date, coupon, mandatory principal payment dates, frequency of interest and principal payments, and optional redemption features. Inputs into the fair value applications that are unique by asset class include, but are not limited to:

• U.S. government agencies – determination of direct versus indirect government support and whether any contingencies exist with respect to the timely payment of principal and interest.

• Foreign government – estimates of appropriate market spread versus underlying related sovereign treasury curve(s) dependent on liquidity and direct or contingent support.

• Municipals – overall credit quality, including assessments of the level and variability of: sources of payment such as income, sales or property taxes, levies or user fees; credit support such as insurance; state or local economic and political base; natural resource availability; and susceptibility to natural or man-made catastrophic events such as hurricanes, earthquakes or acts of terrorism.

• Corporate fixed maturities – overall credit quality, including assessments of the level and variability of: economic sensitivity; liquidity; corporate financial policies; management quality; regulatory environment; competitive position; ownership; restrictive covenants; and security or collateral.

• Residential mortgage-backed securities – estimates of prepayment speeds based upon: historical prepayment rate trends; underlying collateral interest rates; geographic concentration; vintage year; borrower credit quality characteristics; interest rate and yield curve forecasts; government or monetary authority support programs; tax policies; delinquency/default trends; and, in the case of non-agency collateralized mortgage obligations, severity of loss upon default and length of time to recover proceeds following default.

• Commercial mortgage-backed securities – overall credit quality, including assessments of the value and supply/demand characteristics of: collateral type such as office, retail, residential, lodging, or other; geographic concentration by region, state, metropolitan statistical area and locale; vintage year; historical collateral performance including defeasance, delinquency, default and special servicer trends; and capital structure support features.

• Asset-backed securities – overall credit quality, including assessments of the underlying collateral type such as credit card receivables, auto loan receivables and equipment lease receivables; geographic diversification; vintage year; historical collateral performance including delinquency, default and casualty trends; economic conditions influencing use rates and resale values; and contract structural support features.

Generally, all prices provided by the pricing service, except actively traded securities with quoted market prices, are reported as Level 2.

The Company holds privately placed fixed maturity securities and certain other fixed maturity securities that do not have an active market and for which the pricing service cannot provide fair values. The Company determines fair values for these securities using either matrix pricing utilizing the market approach or broker quotes. The Company will use observable market data as inputs into the fair value techniques, as discussed in the determination of Level 2 fair values, to the extent it is available, but is also required to use a certain amount of unobservable judgment due to the illiquid nature of the securities involved. Unobservable judgment reflected in the Company’s matrix model accounts for estimates of additional spread required by market participants for factors such as issue size, structural complexity, high bond coupon or other unique features. These matrix-priced securities are reported as Level 2 or Level 3, depending on the significance of the impact of unobservable judgment on the security’s value. Additionally, the Company may obtain non-binding broker quotes which are reported as Level 3.

Equity Securities

Level 1 consists of publicly traded securities, including exchange traded funds, valued at quoted market prices. Level 2 includes securities that are valued using pricing for similar securities and pricing models that incorporate observable inputs. Level 3 consists of common or preferred stock of private companies for which observable inputs are not available.

14

The Company utilizes a third party pricing service for the valuation of the majority of its equity securities and receives one quote for each equity security. When quoted market prices in an active market are available, they are provided by the pricing service as the fair value and such values are classified as Level 1. The Company holds certain equity securities that have been issued by privately-held entities that do not have an active market and for which the pricing service cannot provide fair values. Generally, the Company estimates fair value for these securities based on the issuer’s book value and market multiples and reports them as Level 3. Additionally, the Company may obtain non-binding broker quotes which are reported as Level 3.

Other Investments

Other investments primarily include mortgage participations and limited partnerships not subject to the equity method of accounting. The fair values of limited partnerships not subject to the equity method of accounting are based on the net asset value provided by the general partner adjusted for recent financial information and are excluded from the fair value hierarchy.

The estimated fair value of the financial instruments were as follows:

	March 31, 2019				December 31, 2018
	Carrying		Fair		Carrying		Fair
(in millions)	Value		Value		Value		Value
Financial Assets carried at:
Fair Value through AOCI:
Fixed maturities	$	6,559.4	$	6,559.4	$	6,161.5	$	6,161.5
Fair Value through Net Income:
Equity securities		504.7		504.7		464.4		464.4
Other investments		180.3		180.3		175.0		175.0
Amortized Cost/Cost:
Other investments		421.5		425.7		414.4		418.9
Cash and cash equivalents		168.5		168.5		1,020.7		1,020.7
Total financial instruments, excluding held-for-sale		7,834.4		7,838.6		8,236.0		8,240.5
Financial instruments, held-for-sale (Chaucer)		2.8		2.8		27.8		27.8
Total financial instruments	$	7,837.2	$	7,841.4	$	8,263.8	$	8,268.3
Financial Liabilities carried at:
Amortized Cost:
Debt	$	653.0	$	694.2	$	777.9	$	825.0

The Company has processes designed to ensure that the values received from its third party pricing service are accurately recorded, that the data inputs and valuation approaches and techniques utilized are appropriate and consistently applied, and that the assumptions are reasonable and consistent with the objective of determining fair value. The Company performs a review of the fair value hierarchy classifications and of prices received from its pricing service on a quarterly basis. The Company reviews the pricing services’ policies describing its methodology, processes, practices and inputs, including various financial models used to value securities. Also, the Company reviews the portfolio pricing, including a process for which securities with changes in prices that exceed a defined threshold are verified to independent sources, if available. If upon review, the Company is not satisfied with the validity of a given price, a pricing challenge would be submitted to the pricing service along with supporting documentation for its review. The Company does not adjust quotes or prices obtained from the pricing service unless the pricing service agrees with the Company’s challenge. During 2019 and 2018, the Company did not adjust any prices received from its pricing service.

Changes in the observability of valuation inputs may result in a reclassification of certain financial assets or liabilities within the fair value hierarchy. As previously discussed, the Company utilizes a third-party pricing service for the valuation of the majority of its fixed maturities and equity securities. The pricing service has indicated that it will only produce an estimate of fair value if there is objectively verifiable information to produce a valuation. If the pricing service discontinues pricing an investment, the Company will use observable market data to the extent it is available, but may also be required to make assumptions for market based inputs that are unavailable due to market conditions.

15

The following tables provide, for each hierarchy level, the Company’s investment assets that were measured at fair value on a recurring basis.

	March 31, 2019
(in millions)	Total		Level 1		Level 2		Level 3
Fixed maturities:
U.S. Treasury and government agencies	$	406.7	$	159.3	$	247.4	$	—
Foreign government		7.4		—		7.4		—
Municipal		865.5		—		845.0		20.5
Corporate		3,674.6		—		3,673.9		0.7
Residential mortgage-backed, U.S. agency backed		817.2		—		817.2		—
Residential mortgage-backed, non-agency		2.7		—		2.7		—
Commercial mortgage-backed		691.9		—		679.1		12.8
Asset-backed		93.4		—		93.4		—
Total fixed maturities		6,559.4		159.3		6,366.1		34.0
Equity securities		504.7		503.6		—		1.1
Other investments		3.5		—		—		3.5
Total investment assets at fair value	$	7,067.6	$	662.9	$	6,366.1	$	38.6

	December 31, 2018
(in millions)	Total		Level 1		Level 2		Level 3
Fixed maturities:
U.S. Treasury and government agencies	$	409.9	$	154.9	$	255.0	$	—
Foreign government		7.4		—		7.4		—
Municipal		885.8		—		864.7		21.1
Corporate		3,410.7		—		3,409.9		0.8
Residential mortgage-backed, U.S. agency backed		713.7		—		713.7		—
Residential mortgage-backed, non-agency		2.7		—		2.7		—
Commercial mortgage-backed		640.3		—		627.2		13.1
Asset-backed		91.0		—		91.0		—
Total fixed maturities		6,161.5		154.9		5,971.6		35.0
Equity securities		464.4		463.3		—		1.1
Other investments		3.5		—		—		3.5
Total investment assets at fair value, excluding held-for-sale     (Chaucer)		6,629.4		618.2		5,971.6		39.6
Investment assets, held-for-sale		24.5		5.7		18.8		—
Total investment assets at fair value	$	6,653.9	$	623.9	$	5,990.4	$	39.6

Limited partnerships measured at fair value using NAV based on an ownership interest in partners’ capital have not been included in the hierarchy tables. At March 31, 2019 and December 31, 2018, the fair values of these investments were $176.8 million and $171.5 million, respectively, approximately 2% of total investment assets.

The following tables provide, for each hierarchy level, the Company’s estimated fair values of financial instruments that were not carried at fair value:

	March 31, 2019
(in millions)	Total		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	168.5	$	168.5	$	—	$	—
Other investments		425.7		—		1.8		423.9
Total financial instruments, excluding held-for-sale		594.2		168.5		1.8		423.9
Financial instruments, held-for-sale (Chaucer)		2.8		2.8		—		—
Total financial instruments	$	597.0	$	171.3	$	1.8	$	423.9
Liabilities:
Debt	$	694.2	$	—	$	694.2	$	—

16

	December 31, 2018
(in millions)	Total		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	1,020.7	$	1,020.7	$	—	$	—
Other investments		418.9		—		8.7		410.2
Total financial instruments, excluding held-for-sale		1,439.6		1,020.7		8.7		410.2
Financial instruments, held-for-sale (Chaucer)		3.3		3.3		—		—
Total financial instruments	$	1,442.9	$	1,024.0	$	8.7	$	410.2
Liabilities:
Debt	$	825.0	$	—	$	825.0	$	—

The table below provide a reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3).

	Fixed Maturities
(in millions)	Municipal			Corporate			Commercial mortgage- backed			Total			Equity and Other		Total Assets
Three Months Ended
March 31, 2019
Balance January 1, 2019	$	21.1		$	0.8		$	13.1		$	35.0		$	4.6	$	39.6
Total gains:
Included in total net realized and unrealized    investment gains		0.1			—			—			0.1			—		0.1
Included in other comprehensive income-net    appreciation on available-for-sale securities		0.2			—			0.2			0.4			—		0.4
Sales		(0.9	)		(0.1	)		(0.5	)		(1.5	)		—		(1.5	)
Balance March 31, 2019	$	20.5		$	0.7		$	12.8		$	34.0		$	4.6	$	38.6
Three Months Ended
March 31, 2018
Balance January 1, 2018, excluding held-for-sale (Chaucer)	$	24.6		$	0.9		$	14.2		$	39.7		$	4.7	$	44.4
Total gains (losses):
Included in total net realized and unrealized    investment gains		0.1			—			—			0.1			—		0.1
Included in other comprehensive income-net    depreciation on available-for-sale securities		(0.5	)		—			(0.2	)		(0.7	)		—		(0.7	)
Sales		(1.1	)		(0.1	)		(0.5	)		(1.7	)		—		(1.7	)
Balance March 31, 2018, excluding held-for-sale (Chaucer)	$	23.1		$	0.8		$	13.5		$	37.4		$	4.7	$	42.1

There were no transfers between Level 2 and Level 3, and there were no Level 3 liabilities held by the Company for the three months ended March 31, 2019 and 2018.

17

The following table provides quantitative information about the significant unobservable inputs used by the Company in the fair value measurements of Level 3 assets. Where discounted cash flows were used in the valuation of fixed maturities, the internally-developed discount rate was adjusted by the significant unobservable inputs shown in the table.

			March 31, 2019			December 31, 2018
	Valuation	Significant	Fair		Range	Fair		Range
(in millions)	Technique	Unobservable Inputs	Value		(Wtd Average)	Value		(Wtd Average)
Fixed maturities:
Municipal	Discounted cash flow	Discount for:    Small issue size    Credit stress    Above-market coupon	$	20.5	0.7 - 6.8% (3.3%) 1.3% (1.3%) 0.3 - 0.5% (0.5%)	$	21.1	0.7 - 6.8% (3.4%) 1.3% (1.3%) 0.3 - 0.5% (0.5%)
Corporate	Discounted cash flow	Discount for:    Small issue size    Above-market coupon	0.7		2.5% (2.5%) 0.3% (0.3%)	0.8		2.5% (2.5%) 0.3% (0.3%)
Commercial    mortgage-backed	Discounted cash flow	Discount for:    Small issue size    Above-market coupon    Lease structure	12.8		1.9 - 3.1% (2.7%) 0.5% (0.5%) 0.3% (0.3%)	13.1		1.9 - 3.1% (2.7%) 0.5% (0.5%) 0.3% (0.3%)
Equity securities	Market comparables	Net tangible asset    market multiples		1.1	1.0X (1.0X)		1.1	1.0X (1.0X)
Other	Discounted cash flow	Discount rate		3.5	18.0% (18.0%)		3.5	18.0% (18.0%)

Significant increases (decreases) in any of the above inputs in isolation would result in a significantly lower (higher) fair value measurement. There were no interrelationships between these inputs which might magnify or mitigate the effect of changes in unobservable inputs on the fair value measurement.

7. Pension and Other Postretirement Benefit Plans

The components of net periodic pension cost for defined benefit pension and other postretirement benefit plans included in the Company’s results of operations are as follows:

	Three Months Ended March 31,
	2019			2018			2019		2018
(in millions)	Pension Plans						Postretirement Plans
Service cost - benefits earned during the period	$	—		$	—		$	—	$	—
Interest cost		5.3			4.9			0.1		0.1
Expected return on plan assets		(5.8	)		(5.2	)		—		—
Recognized net actuarial loss		2.8			2.5			—		0.1
Amortization of prior service cost		—			—			—		(0.1	)
Net periodic pension cost	$	2.3		$	2.2		$	0.1	$	0.1

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8. Other Comprehensive Income

The following tables provide changes in other comprehensive income (loss).

	Three Months Ended March 31,
	2019								2018
			Tax									Tax
			Benefit			Net of						Benefit			Net of
(in millions)	Pre-Tax		(Expense)			Tax			Pre-Tax			(Expense)			Tax
Unrealized gains (losses) on available-for-sale    securities:
Unrealized gains (losses) arising during period	$	152.0	$	(32.0	)	$	120.0		$	(153.7	)	$	32.1		$	(121.6	)
Amount of realized gains (losses) from sales    and other		0.3		(3.9	)		(3.6	)		0.2			(2.5	)		(2.3	)
Portion of other-than-temporary impairment    losses recognized in earnings		—		—			—			0.5			(0.1	)		0.4
Net unrealized gains (losses)		152.3		(35.9	)		116.4			(153.0	)		29.5			(123.5	)
Pension and postretirement benefits:
Net change in net actuarial loss and prior    service cost		2.9		(0.6	)		2.3			(2.9	)		0.6			(2.3	)
Cumulative foreign currency translation adjustment:
Foreign currency translation recognized during    the period		0.1		—			0.1			(0.6	)		0.1			(0.5	)
Other comprehensive income (loss)	$	155.3	$	(36.5	)	$	118.8		$	(156.5	)	$	30.2		$	(126.3	)

Reclassifications out of accumulated other comprehensive income were as follows:

	Three Months Ended
	March 31,
(in millions)	2019			2018
	Amount Reclassified from
Details about Accumulated Other	Accumulated Other						Affected Line Item in the Statement
Comprehensive Income Components	Comprehensive Income						Where Net Income is Presented
Unrealized gains on available-for-sale    securities	$	(0.3	)	$	—		Net realized losses from sales and other
		—			(0.6	)	Net other-than-temporary impairment losses on    investments recognized in earnings
		(0.3	)		(0.6	)	Total before tax
		3.9			2.7		Tax benefit
		3.6			2.1		Continued operations; net of tax
		—			(0.2	)	Discontinued operations - Chaucer business
		3.6			1.9		Net of tax
Amortization of defined benefit    pension and postretirement plans		(2.9	)		(2.5	)	Loss adjustment expenses and other    operating expenses (1)
		0.6			0.5		Tax benefit
		(2.3	)		(2.0	)	Continued operations; net of tax
Total reclassifications for the period	$	1.3		$	(0.1	)	Benefit (expense) reflected in income, net of tax

(1) The amount reclassified from accumulated other comprehensive income for the pension and postretirement benefits was allocated approximately 40% to loss adjustment expenses and 60% to other operating expenses for the three months ended March 31, 2019 and 2018.

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9. Segment Information

The Company’s primary business operations include insurance products and services provided through three operating segments: Commercial Lines, Personal Lines and Other. Commercial Lines includes commercial multiple peril, commercial automobile, workers’ compensation, and other commercial coverages, such as inland marine, specialty program business, management and professional liability, surety and specialty property. Personal Lines includes personal automobile, homeowners and other personal coverages. Included in the Other segment are Opus Investment Management, Inc., which markets investment management services to institutions, pension funds and other organizations; earnings on holding company assets; holding company and other expenses, including certain costs associated with retirement benefits due to the Company’s former life insurance employees and agents; and, a run-off voluntary pools business. On December 28, 2018, the Company completed the sale of Chaucer, the major portion of its Lloyd’s international specialty business, to China Re. The sales of the Chaucer-related Irish and Australian entities were subsequently completed on February 14, 2019 and April 10, 2019, respectively. Accordingly, as of December 31, 2018, and for all prior periods, Chaucer’s results of operations have been classified as Discontinued Operations in the Consolidated Statements of Income and assets and liabilities related to the Chaucer business have been classified as held-for-sale in the Consolidated Balance Sheets (see Note 3 – “Discontinued Operations - Chaucer Business”). Certain ongoing expenses were also reclassified from Chaucer to the other three operating segments. The separate financial information is presented consistent with the way results are regularly evaluated by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

The Company reports interest expense related to debt separately from the earnings of its operating segments. This consists of interest on the Company’s senior and subordinated debentures.

Management evaluates the results of the aforementioned segments based on operating income before taxes, excluding interest expense on debt. Operating income before taxes excludes certain items which are included in net income, such as net realized and unrealized investment gains and losses. Such gains and losses are excluded since they are determined by interest rates, financial markets and the timing of sales. Also, operating income before taxes excludes net gains and losses on disposals of businesses, gains and losses related to the repayment of debt, discontinued operations, costs to acquire businesses, restructuring costs, the cumulative effect of accounting changes and certain other items. Although the items excluded from operating income before taxes may be important components in understanding and assessing the Company’s overall financial performance, management believes that the presentation of operating income before taxes enhances an investor’s understanding of the Company’s results of operations by highlighting net income attributable to the core operations of the business. However, operating income before taxes should not be construed as a substitute for income before income taxes and operating income should not be construed as a substitute for net income.

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Summarized below is financial information with respect to the Company’s business segments.

	Three Months Ended
	March 31,
(in millions)	2019			2018
Operating revenues:
Commercial Lines	$	698.7		$	676.6
Personal Lines		465.2			434.9
Other		7.4			2.9
Total		1,171.3			1,114.4
Net realized and unrealized investment gains (losses)		48.2			(22.9	)
Total revenues	$	1,219.5		$	1,091.5
Operating income (loss) before interest expense and income taxes:
Commercial Lines:
Underwriting income	$	36.7		$	16.3
Net investment income		44.3			45.3
Other expense		(0.8	)		(0.2	)
Commercial Lines operating income		80.2			61.4
Personal Lines:
Underwriting income		5.7			14.6
Net investment income		19.7			18.4
Other income		1.4			1.3
Personal Lines operating income		26.8			34.3
Other:
Underwriting loss		(0.3	)		(1.0	)
Net investment income		6.2			2.3
Other expense		(3.1	)		(3.7	)
Other operating income (loss)		2.8			(2.4	)
Operating income before interest expense and income taxes		109.8			93.3
Interest on debt		(9.4	)		(11.3	)
Operating income before income taxes		100.4			82.0
Non-operating income items:
Net realized and unrealized investment gains (losses)		48.2			(22.9	)
Income from continuing operations before income taxes	$	148.6		$	59.1

The following table provides identifiable assets for the Company’s business segments and discontinued operations:

	March 31, 2019		December 31, 2018
(in millions)	Identifiable Assets
U.S. Companies	$	11,856.2	$	12,238.4
Assets held-for-sale(1)		23.6		57.4
Assets of discontinued operations		103.6		103.9
Total	$	11,983.4	$	12,399.7

(1) See also Note 3 – “Discontinued Operations – Chaucer Business”.

The Company reviews the assets of its U.S. Companies collectively and does not allocate them between the Commercial Lines, Personal Lines and Other segments.

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10. Stock-based Compensation

As of March 31, 2019, there were 3,506,780 shares and 2,369,081 shares available for grant under The Hanover Insurance Group 2014 Long-Term Incentive Plan and The Hanover Insurance Group 2014 Employee Stock Purchase Plan, respectively.

Compensation cost for the Company’s stock-based awards and the related tax benefits were as follows:

	Three Months Ended March 31,
(in millions)	2019			2018
Stock-based compensation expense	$	4.2		$	2.5
Tax benefit		(0.9	)		(0.5	)
Stock-based compensation expense, net of taxes	$	3.3		$	2.0

Stock-based compensation expense for Chaucer, net of taxes, of $0.4 million for the three months ended March 31, 2018 is reported in discontinued operations and is excluded from the amounts disclosed above.

Stock Options

Information on the Company’s stock option activity for the three months ended March 31, 2019 and 2018 is summarized below.

	Three Months Ended March 31,
	2019					2018
(in whole shares and dollars)	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
Outstanding, beginning of period		1,099,076		$	85.75		1,062,177		$	75.53
Granted		232,568			95.05		291,390			110.58
Exercised		(64,017	)		75.98		(84,353	)		70.31
Forfeited or cancelled		(3,141	)		95.39		(50,491	)		88.48
Outstanding, end of period		1,264,486			87.93		1,218,723			83.73

Restricted Stock Units

The following tables summarize activity information about employee restricted stock units:

	Three Months Ended March 31,
	2019					2018
(in whole shares and dollars)	Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value
Time-based restricted stock units:
Outstanding, beginning of period		332,481		$	97.28		298,528		$	83.45
Granted		144,072			117.51		131,290			110.60
Vested		(99,855	)		83.25		(50,810	)		70.24
Forfeited		(8,687	)		97.14		(10,585	)		87.47
Outstanding, end of period		368,011			109.01		368,423			94.83
Performance-based and market-based restricted stock units:
Outstanding, beginning of period		69,838		$	95.58		102,586		$	81.21
Granted		42,119			117.68		29,715			116.82
Vested		(10,089	)		82.74		(14,032	)		70.24
Forfeited		—			—		(7,625	)		81.91
Outstanding, end of period		101,868			105.99		110,644			92.12

In the first three months of 2019 and 2018, the Company granted market-based awards totaling 23,924 and 29,715, respectively, to certain members of senior management, which are included in the table above as performance and market-based restricted stock activity. The vesting of these stock units is based on the relative total shareholder return (“TSR”) of the Company. This metric is generally based on relative TSR for a three-year period as compared to a pre-selected group of property and casualty companies. The fair value of market-based awards was estimated at the date of grant using a valuation model. These units have the potential to range from 0% to 150% of the shares disclosed. Included in the amount granted above in 2019 and 2018 are 5,820 shares and 3,115 shares, respectively, related to market-based awards that achieved a payout in excess of 100%. These awards vested in the first quarters of 2019 and 2018, respectively.

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The Company also granted performance-based restricted stock units in 2019 which are based upon the achievement of the performance metric at 100%. These units have the potential to range from 0% to 150% of the shares disclosed, which varies based on grant year and individual participation level. Increases above the 100% target level are reflected as granted in the period in which performance-based stock unit goals are achieved. Decreases below the 100% target level are reflected as forfeited. There were no performance-based awards that vested in 2019or 2018.

11. Earnings Per Share and Shareholders’ Equity Transactions

The following table provides weighted average share information used in the calculation of the Company’s basic and diluted earnings per share:

	Three Months Ended
	March 31,
(in millions, except per share data)	2019			2018
Basic shares used in the calculation of earnings per share		40.6			42.5
Dilutive effect of securities:
Employee stock options		0.3			0.3
Non-vested stock grants		0.3			0.3
Diluted shares used in the calculation of earnings per share		41.2			43.1
Per share effect of dilutive securities on income from    continuing operations and net income	$	(0.04	)	$	(0.02	)

Diluted earnings per share for the three months ended March 31, 2019 and 2018 excludes 0.2 million and 0.3 million, respectively, of common shares issuable under the Company’s stock compensation plans because their effect would be antidilutive.

On December 30, 2018, the Board of Directors authorized a new stock repurchase program which provides for aggregate repurchases of up to $600 million. Under the repurchase authorization, the Company may repurchase, from time to time, common shares in amounts, at prices and at such times as the Company deems appropriate, subject to market conditions and other considerations. Repurchases may be executed using open market purchases, privately negotiated transactions, accelerated repurchase programs or other transactions. The Company is not required to purchase any specific number of shares or to make purchases by any certain date under this program.  On January 2, 2019, pursuant to the terms of an accelerated share repurchase (“ASR”) agreement executed on December 30, 2018, the Company paid $250.0 million and received an initial delivery of approximately 1.8 million shares of common stock, which is approximately 80% of the total number of shares expected to be repurchased under this agreement. The final 20% of the total number of shares are expected to be delivered to the Company in the second quarter of 2019.

12. Liabilities for Outstanding Claims, Losses and Loss Adjustment Expenses

Reserve Rollforward and Prior Year Development

The Company regularly updates its reserve estimates as new information becomes available and further events occur which may impact the resolution of unsettled claims. Reserve adjustments are reflected in results of operations as adjustments to losses and loss adjustment expenses (“LAE”). Often these adjustments are recognized in periods subsequent to the period in which the underlying policy was written and loss event occurred. These types of subsequent adjustments are described as “prior years’ loss reserves”. Such development can be either favorable or unfavorable to the Company’s financial results and may vary by line of business. In this section, all amounts presented include catastrophe losses and LAE, unless otherwise indicated.

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The table below provides a reconciliation of the gross beginning and ending reserve for unpaid losses and loss adjustment expenses.

	Three Months Ended
	March 31,
(in millions)	2019			2018
Gross loss and LAE reserves, beginning of period	$	5,304.1		$	5,058.5
Reinsurance recoverable on unpaid losses		1,472.6			1,455.0
Net loss and LAE reserves, beginning of period		3,831.5			3,603.5
Net incurred losses and LAE in respect of losses occurring in:
Current year		712.8			677.4
Prior years		(13.2	)		(6.5	)
Total incurred losses and LAE		699.6			670.9
Net payments of losses and LAE in respect of losses    occurring in:
Current year		175.3			181.0
Prior years		459.1			425.5
Total payments		634.4			606.5
Net reserve for losses and LAE, end of period		3,896.7			3,667.9
Reinsurance recoverable on unpaid losses		1,484.9			1,420.0
Gross reserve for losses and LAE, end of period	$	5,381.6		$	5,087.9

As a result of continuing trends in the Company’s business, reserves including catastrophes have been re-estimated for all prior accident years and were decreased by $13.2 million in 2019 in comparison to a decrease of $6.5 million in 2018.

2019

For the three months ended March 31, 2019, net favorable loss and LAE development was $13.2 million, primarily as a result of favorable catastrophe development due to anticipated subrogation recoveries on the 2017 and 2018 California wildfires. Our current estimate of these subrogation recoveries was informed by the recent sale of our subrogation rights for certain of these events to a large financial institution. In addition, higher than expected losses in our personal and commercial automobile lines were substantially offset by lower than expected losses in our workers’ compensation and commercial multiple peril lines.   

2018

For the three months ended March 31, 2018, net favorable loss and LAE development was $6.5 million, primarily as a result of favorable catastrophe development related to the 2017 hurricanes and California wildfires.

13. Commitments and Contingencies

Legal Proceedings

Durand Litigation

On March 12, 2007, a putative class action suit captioned Jennifer A. Durand v. The Hanover Insurance Group, Inc., and The Allmerica Financial Cash Balance Pension Plan, was filed in the United States District Court for the Western District of Kentucky. The named plaintiff, a former employee of the Company’s former life insurance and annuity business who received a lump sum distribution from the Company’s Cash Balance Plan (the “Plan”) at or about the time of her separation from the Company, claims that she and others similarly situated did not receive the appropriate lump sum distribution because in computing the lump sum, the Company and the Plan understated the accrued benefit in the calculation. The plaintiff claims that the Plan underpaid her distributions and those of similarly situated participants by failing to pay an additional so-called “whipsaw” amount reflecting the present value of an estimate of future interest credits from the date of the lump sum distribution to each participant’s retirement age of 65 (“whipsaw claim”).

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The plaintiff filed an Amended Complaint adding two new named plaintiffs and additional claims on December 11, 2009.  Two of the three new claims set forth in the Amended Complaint were dismissed by the District Court, which action was upheld in November 2015 by the U.S. Court of Appeals, Sixth Circuit. The District Court, however, did allow to stand the new claim in the Amended Complaint for breach of fiduciary duty and failure to meet notice requirements arising under the Employee Retirement Income Security Act of 1974 (“ERISA”) from the various interest crediting and lump sum distribution matters of which plaintiffs complain, but only as to plaintiffs’ “whipsaw” claim that remained in the case. On December 17, 2013, the Court entered an order certifying a class to bring “whipsaw” and related breach of fiduciary duty claims consisting of all persons who received a lump sum distribution between March 1, 1997 and December 31, 2003.

On February 16, 2018, the Court entered an order limiting the claims of those participants who received lump sum distributions prior to March 13, 2002 to alleged violations of ERISA’s disclosure requirements and breaches of fiduciary duty. Subsequently, the parties entered into settlement discussions and reached a settlement. The Court approved the settlement and dismissed the case with prejudice on March 22, 2019. Effective April 24, 2019, such dismissal is no longer subject to appeal. The resulting settlement amount to be paid by the Company is not material to the Company’s financial position and will not have a material effect on its results of operations.

Other Matters

The Company has been named a defendant in various other legal proceedings arising in the normal course of business. In addition, the Company is involved, from time to time, in examinations, investigations and proceedings by governmental and self-regulatory agencies. The potential outcome of any such action or regulatory proceedings in which the Company has been named a defendant or the subject of an inquiry or investigation, and its ultimate liability, if any, from such action or regulatory proceedings, is difficult to predict at this time. The ultimate resolutions of such proceedings are not expected to have a material effect on its financial position, although they could have a material effect on the results of operations for a particular quarter or annual period.

Residual Markets

The Company is required to participate in residual markets in various states, which generally pertain to high risk insureds, disrupted markets or lines of business or geographic areas where rates are regarded as excessive. The results of the residual markets are not subject to the predictability associated with the Company’s own managed business, and are significant to both the personal and commercial automobile lines of business.

14. Other Items

On January 2, 2019, the Company repaid $125 million of its FHLB advances that were due 2029 and had an interest rate of 5.5%, along with related prepayment fees of $26 million; such fees were recognized in 2018.

15. Subsequent Events

On April 10, 2019, the Company completed the sale of its Chaucer-related Australian entities for proceeds of $13 million.

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PART I

ITEM 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

TABLE OF CONTENTS

Introduction	27
Executive Overview	27
Description of Operating Segments	28
Results of Operations - Consolidated	28
Results of Operations - Segments	30
Investments	34
Other Items	37
Discontinued Chaucer Business	37
Income Taxes	38
Critical Accounting Estimates	39
Statutory Surplus of U.S. Insurance Subsidiaries	39
Liquidity and Capital Resources	40
Off - Balance Sheet Arrangements	41
Contingencies and Regulatory Matters	41
Risks and Forward - Looking Statements	41

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Introduction

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to assist readers in understanding the interim consolidated results of operations and financial condition of The Hanover Insurance Group, Inc. and its subsidiaries (“THG”). Consolidated results of operations and financial condition are prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). This discussion should be read in conjunction with the interim consolidated financial statements and related footnotes included elsewhere in this Quarterly Report on Form 10-Q and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 22, 2019.

Results of operations include the accounts of The Hanover Insurance Company (“Hanover Insurance”) and Citizens Insurance Company of America (“Citizens”), our principal property and casualty companies; and certain other insurance and non-insurance subsidiaries. Our results of operations also include the results of our discontinued operations, consisting primarily of our former Chaucer international business, Chaucer Holdings Limited (“Chaucer”), a United Kingdom (“U.K.”) domiciled specialist insurance underwriting group which operates through the Society and Corporation of Lloyd’s (“Lloyd’s”), and the international insurance and non-insurance subsidiaries, which collectively constituted our former Chaucer segment. On December 28, 2018, we completed the sale of Chaucer Holdings Limited, the major portion of our Lloyd's international specialty business, to China Reinsurance (Group) Corporation (“China Re”). We subsequently completed the sales of the Chaucer-related Irish and Australian entities on February 14, 2019 and April 10, 2019, respectively. As of December 31, 2018 and for all prior periods presented, operations from Chaucer are presented as discontinued operations. Results of operations also include the discontinued operations of our accident and health and former life insurance businesses.

Executive Overview

Business operations consist of three operating segments: Commercial Lines, Personal Lines and Other.

Net income was $122.4 million during the three months ended March 31, 2019, compared to $67.7 million for the three months ended March 31, 2018, an increase of $54.7 million, primarily due to an increase in the net change in fair value of equity securities and from an increase in operating income, partially offset by a decrease in income from the former Chaucer segment due to its sale in 2018.

Operating income before interest expense and income taxes (a non-GAAP financial measure; see also “Results of Operations – Consolidated – Non-GAAP Financial Measures”) was $109.8 million for the three months ended March 31, 2019, compared to $93.3 million for the three months ended March 31, 2018, an increase of $16.5 million. This increase is primarily due to lower catastrophe losses, higher net investment income and earned premium growth, partially offset by higher non-catastrophe current accident year losses. Pre-tax catastrophe losses were $39.4 million for the three months ended March 31, 2019, compared to $65.5 million during the same period of 2018. Net development on prior years’ loss and loss adjustment expense (“LAE”) reserves (“prior years’ loss reserves”) was insignificant overall for both the three months ended March 31, 2019 and 2018.

As discussed further in “Discontinued Operations” below, on December 28, 2018, we completed the sale of Chaucer’s U.K. entities to China Re. We subsequently completed the sales of our Chaucer-related Irish entity on February 14, 2019 and our Australian entities on April 10, 2019, for which we received additional consideration of $28 million and $13 million, respectively.

Our strategy reinforces our commitment to our agency partners and is designed to generate profitable growth by leveraging the strengths of our distribution strategy, including expansion of our agency footprint in underpenetrated geographies as warranted. We also have increased our capabilities in specialty markets and investments designed to develop growth solutions for our agency distribution channel. Our goal is to grow responsibly in all of our businesses, while managing volatility.

Commercial Lines

Our account-focused approach to the small commercial market, distinctiveness in the middle market, and continued development of specialty lines provides us with a diversified portfolio of products and delivers significant value to agents and policyholders. Each of these businesses is expected to contribute to premium growth in Commercial Lines over the next several years as we continue to pursue our core strategy of developing strong partnerships with agents, enhanced franchise value through limited distribution, distinctive products and coverages, and continued investment in industry segmentation.

These efforts have driven improvement in our overall mix of business and our underwriting profitability. Commercial Lines net premiums written grew by 0.8% in the first three months of 2019, compared to the same period in 2018, due to growth in small commercial, professional and marine lines.

Underwriting results improved in the first three months of 2019, primarily due to lower catastrophe losses and higher favorable development on prior years’ loss reserves, partially offset by unusually high current accident year large loss activity in our specialty industrial property line. The competitive nature of the Commercial Lines market requires us to be highly disciplined in our underwriting process to ensure that we write business at acceptable margins, and we continue to seek rate increases across our lines of business.

27

Personal Lines

Personal Lines focuses on partnering with high quality, value-oriented agencies that deliver consultative selling and stress the importance of account rounding (the conversion of single policy customers to accounts with multiple policies and additional coverages, to address customers’ broader objectives). Approximately 84% of our policies in force are account business. We are focused on seeking profitable growth opportunities, building a distinctive position in the market, and diversifying geographically.

Net premiums written grew by 6.0% in the first three months of 2019, compared to the same period in 2018, primarily due to higher renewal premium driven by rate increases. Underwriting results declined in the first three months of 2019, primarily due to higher non-catastrophe current accident year losses and higher unfavorable development on prior years’ loss reserves, partially offset by earned premium growth. We continue to seek rate increases that meet or exceed underlying loss cost trends, subject to regulatory and competitive considerations.

Description of Operating Segments

Primary business operations include insurance products and services currently provided through three operating segments: Commercial Lines, Personal Lines, and Other. Commercial Lines includes commercial multiple peril, commercial automobile, workers’ compensation, and other commercial coverages, such as inland marine, specialty program business, management and professional liability, surety, and specialty property. Personal Lines includes personal automobile, homeowners, and other personal coverages, such as umbrella. Included in the “Other” segment are Opus Investment Management, Inc., which markets investment management services to institutions, pension funds, and other organizations; earnings on holding company assets; holding company and other expenses, including certain costs associated with retirement benefits due to our former life insurance employees and agents; and a run-off voluntary pools business. We present the separate financial information of each segment consistent with the manner in which our chief operating decision maker evaluates results in deciding how to allocate resources and in assessing performance.

We report interest expense on debt separately from the earnings of our operating segments. This consists of interest on our senior and subordinated debentures.

Results of Operations – Consolidated

Consolidated net income for the three months ended March 31, 2019 was $122.4 million, compared to $67.7 million for the three months ended March 31, 2018, an increase of $54.7 million. The year over year comparison of consolidated net income was primarily affected by an increase in net realized and unrealized investment gains of $71.1 million, principally related to the changes in fair value of equity securities. Additionally, operating income before interest expense and income taxes for the three months ended March 31, 2019 increased $16.5 million, primarily due to lower catastrophe losses, higher net investment income and earned premium growth, partially offset by higher non-catastrophe current accident year losses. These increases were partially offset by a $17.6 million decrease in income from our former Chaucer business. (See also the “Discontinued Operations” section below).

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The following table reflects operating income before interest expense and income taxes for each operating segment and a reconciliation to consolidated net income from operating income before interest expense and income taxes (a non-GAAP measure).

	Three Months Ended
	March 31,
(in millions)	2019			2018
Operating income (loss) before interest expense and income taxes:
Commercial Lines	$	80.2		$	61.4
Personal Lines		26.8			34.3
Other		2.8			(2.4	)
Operating income before interest expense and income taxes		109.8			93.3
Interest expense on debt		(9.4	)		(11.3	)
Operating income before income taxes		100.4			82.0
Income tax expense on operating income		(19.7	)		(15.9	)
Operating income		80.7			66.1
Non-operating items:
Net realized and unrealized investment gains (losses)		48.2			(22.9	)
Income tax benefit (expense) on non-operating items		(6.3	)		7.3
Income from continuing operations, net of taxes		122.6			50.5
Discontinued operations:
Gain from sale of Chaucer business, net of taxes		0.9			—
Income (loss) from Chaucer business, net of taxes		(0.3	)		17.3
Loss from discontinued life businesses, net of taxes		(0.8	)		(0.1	)
Net income	$	122.4		$	67.7

Non-GAAP Financial Measures

In addition to consolidated net income, discussed above, we assess our financial performance based upon pre-tax “operating income,” and we assess the operating performance of each of our three operating segments based upon the pre-tax operating income (loss) generated by each segment. As reflected in the table above, operating income before taxes excludes interest expense on debt and certain other items which we believe are not indicative of our core operations, such as net realized and unrealized investment gains and losses. Such gains and losses are excluded since they are determined by interest rates, financial markets and the timing of sales. Also, operating income before taxes excludes net gains and losses on disposals of businesses, gains and losses related to the repayment of debt, discontinued operations, costs to acquire businesses, restructuring costs, the cumulative effect of accounting changes and certain other items. Although the items excluded from operating income before taxes are important components in understanding and assessing our overall financial performance, we believe a discussion of operating income before taxes enhances an investor’s understanding of our results of operations by highlighting net income attributable to the core operations of the business. However, operating income before taxes, which is a non-GAAP measure, should not be construed as a substitute for income before income taxes, and operating income should not be construed as a substitute for net income.

Catastrophe losses and prior years’ reserve development are significant components in understanding and assessing the financial performance of our business. Management reviews and evaluates catastrophes and prior years’ reserve development separately from the other components of earnings. References to “current accident year underwriting results” exclude prior accident year reserve development, and may also be presented “excluding catastrophes”. Prior years’ reserve development and catastrophes are not predictable as to timing or the amount that will affect the results of our operations and have an effect on each year’s operating and net income. Management believes that providing certain financial metrics and trends excluding the effects of catastrophes and prior years’ reserve development helps investors to understand the variability in periodic earnings and to evaluate the underlying performance of our operations. Discussion of catastrophe losses in this Management’s Discussion and Analysis includes development on prior years’ catastrophe reserves and, unless otherwise indicated, such development is excluded from discussions of prior year loss and LAE reserve development.

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Results of Operations – Segments

The following is our discussion and analysis of the results of operations by business segment. The operating results are presented before interest expense, taxes and other items which management believes are not indicative of our core operations, including realized gains and losses and the results of discontinued operations.

The following table summarizes the results of operations for the periods indicated:

	Three Months Ended
	March 31,
(in millions)	2019		2018
Operating revenues
Net premiums written	$	1,098.0	$	1,068.7
Net premiums earned		1,095.1		1,042.5
Net investment income		70.2		66.0
Other income		6.0		5.9
Total operating revenues		1,171.3		1,114.4
Losses and operating expenses
Losses and LAE		699.6		670.9
Amortization of deferred acquisition costs		229.5		218.7
Other operating expenses		132.4		131.5
Total losses and operating expenses		1,061.5		1,021.1
Operating income before interest expense and income taxes	$	109.8	$	93.3

Three Months Ended March 31, 2019 Compared to Three Months Ended March 31, 2018  

Operating income before interest expense and income taxes was $109.8 million in the three months ended March 31, 2019, compared to $93.3 million for the three months ended March 31, 2018, an increase of $16.5 million. This increase was primarily due to lower catastrophe losses, higher net investment income, earned premium growth and lower expenses, partially offset by unusually high current accident year large loss activity in our specialty industrial property line. Our specialty industrial property line provides insurance to small and medium-sized chemical, paint, solvent and other industrial manufacturing and distribution companies.

Net premiums written increased by $29.3 million in the three months ended March 31, 2019, compared to the three months ended March 31, 2018, due to growth in both our Personal and Commercial Lines segments.

Production and Underwriting Results

The following tables summarize premiums written on a gross and net basis, net premiums earned and loss (including catastrophe losses), LAE, expense and combined ratios for the Commercial Lines and Personal Lines segments. Loss, LAE, catastrophe loss and combined ratios shown below include prior year reserve development. These items are not meaningful for our Other segment.  

	Three Months Ended March 31, 2019
(dollars in millions)	Gross Premiums Written		Net Premiums Written		Net Premiums Earned		Catastrophe Loss Ratios		Loss & LAE Ratios		Expense Ratios		Combined Ratios
Commercial Lines	$	779.5	$	677.4	$	652.4		1.6		59.3		34.9		94.2
Personal Lines		446.8		420.6		442.7		6.6		70.6		27.6		98.2
Total	$	1,226.3	$	1,098.0	$	1,095.1		3.6		63.9		31.9		95.8
	Three Months Ended March 31, 2018
(dollars in millions)	Gross Premiums Written		Net Premiums Written		Net Premiums Earned		Catastrophe Loss Ratios		Loss & LAE Ratios		Expense Ratios		Combined Ratios
Commercial Lines	$	759.0	$	671.9	$	629.0		6.0		61.9		35.3		97.2
Personal Lines		419.6		396.8		413.5		6.7		67.9		27.9		95.8
Total	$	1,178.6	$	1,068.7	$	1,042.5		6.2		64.2		32.4		96.6

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The following table summarizes net premiums written, and loss and LAE and catastrophe loss ratios by line of business for the Commercial Lines and Personal Lines segments. Loss and LAE and catastrophe loss ratios include prior year reserve development.

	Three Months Ended March 31,
	2019						2018
(dollars in millions)	Net Premiums Written		Loss & LAE Ratios		Catastrophe Loss Ratios		Net Premiums Written		Loss & LAE Ratios		Catastrophe Loss Ratios
Commercial Lines:
Commercial multiple peril	$	223.6		58.4		4.3	$	215.9		68.3		12.9
Commercial automobile		85.8		72.6		0.1		89.7		72.5		0.4
Workers’ compensation		93.1		54.0		—		93.1		57.5		—
Other commercial		274.9		57.4		0.3		273.2		54.9		4.2
Total Commercial Lines	$	677.4		59.3		1.6	$	671.9		61.9		6.0
Personal Lines:
Personal automobile	$	276.7		73.1		0.3	$	262.5		70.7		0.4
Homeowners		133.6		67.1		18.4		125.6		64.4		18.0
Other personal		10.3		54.6		1.9		8.7		46.9		6.1
Total Personal Lines	$	420.6		70.6		6.6	$	396.8		67.9		6.7

The following table summarizes GAAP underwriting results for the Commercial Lines, Personal Lines, and Other segments and reconciles them to operating income (loss) before interest expense and income taxes.  

	Three Months Ended March 31,
	2019												2018
(in millions)	Commercial Lines			Personal Lines			Other			Total			Commercial Lines			Personal Lines			Other			Total
Underwriting profit (loss),    excluding prior year reserve    development and catastrophes	$	39.6		$	42.2		$	—		$	81.8		$	52.7		$	43.7		$	(0.7	)	$	95.7
Prior year favorable (unfavorable)    loss and LAE reserve development    on non-catastrophe losses		7.5			(7.5	)		(0.3	)		(0.3	)		1.6			(1.6	)		(0.3	)		(0.3	)
Prior year favorable    catastrophe development		13.5			—			—			13.5			6.6			0.2			—			6.8
Current year catastrophe losses		(23.9	)		(29.0	)		—			(52.9	)		(44.6	)		(27.7	)		—			(72.3	)
Underwriting profit (loss)		36.7			5.7			(0.3	)		42.1			16.3			14.6			(1.0	)		29.9
Net investment income		44.3			19.7			6.2			70.2			45.3			18.4			2.3			66.0
Fees and other income		2.0			2.8			1.2			6.0			2.3			3.0			0.6			5.9
Other operating expenses		(2.8	)		(1.4	)		(4.3	)		(8.5	)		(2.5	)		(1.7	)		(4.3	)		(8.5	)
Operating income (loss) before    interest expense and income taxes	$	80.2		$	26.8		$	2.8		$	109.8		$	61.4		$	34.3		$	(2.4	)	$	93.3

Commercial Lines

Commercial Lines net premiums written were $677.4 million in the three months ended March 31, 2019, compared to $671.9 million in the three months ended March 31, 2018. This $5.5 million increase was primarily driven by pricing increases and strong retention, partially offset by specific underwriting actions in our commercial automobile and other commercial lines.

Commercial Lines underwriting profit for the three months ended March 31, 2019 was $36.7 million, compared to $16.3 million for the three months ended March 31, 2018, an increase of $20.4 million. Catastrophe-related losses for the three months ended March 31, 2019 were $10.4 million, compared to $38.0 million for the three months ended March 31, 2018, a decrease of $27.6 million. Favorable development on prior years’ loss reserves for the three months ended March 31, 2019 was $7.5 million, compared to $1.6 million for the three months ended March 31, 2018, an increase of $5.9 million.

Commercial Lines current accident year underwriting profit, excluding catastrophes, was $39.6 million for the three months ended March 31, 2019, compared to $52.7 million for the three months ended March 31, 2018. This $13.1 million decrease was primarily due to unusually high current accident year large loss activity in our specialty industrial property line, within our other commercial lines.

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We are continuing to manage underwriting performance through increased rates, pricing segmentation, specific underwriting actions and targeted new business growth. Our ability to achieve overall rate increases is affected by the current competitive pricing environment, particularly within our workers’ compensation line, as well as for larger middle market accounts, which may hamper our ability to grow in this portion of our business.

Personal Lines

Personal Lines net premiums written were $420.6 million in the three months ended March 31, 2019, compared to $396.8 million in the three months ended March 31, 2018, an increase of $23.8 million. This was primarily due to higher renewal premium driven by rate increases.

Net premiums written in the personal automobile line of business for the three months ended March 31, 2019 were $276.7 million, compared to $262.5 million for the three months ended March 31, 2018, an increase of $14.2 million. This was primarily due to rate increases and an increase in policies in force of 1.9%. Net premiums written in the homeowners line of business for the three months ended March 31, 2019 were $133.6 million, compared to $125.6 million for the three months ended March 31, 2018, an increase of $8.0 million. This is attributable to rate increases and an increase in policies in force of 2.6%.

Personal Lines underwriting profit for the three months ended March 31, 2019 was $5.7 million, compared to $14.6 million for the three months ended March 31, 2018, a decline of $8.9 million. Catastrophe losses for the three months ended March 31, 2019 were $29.0 million, compared to $27.5 million for the three months ended March 31, 2018, an increase of $1.5 million. Unfavorable development on prior years’ loss reserves for the three months ended March 31, 2019 was $7.5 million, compared to $1.6 for the three months ended March 31, 2018, an increase of $5.9 million.

Personal Lines current accident year underwriting profit, excluding catastrophes, was $42.2 million in the three months ended March 31, 2019, compared to $43.7 million for the three months ended March 31, 2018. This $1.5 million decline was primarily due to higher current accident year losses in our homeowners and automobile liability lines, partially offset by earned premium growth.

We have been able to obtain rate increases in our Personal Lines markets and believe that our ability to obtain these increases will continue. However, our ability to maintain Personal Lines net premiums written may be affected by price competition, and regulatory and legal developments. Additionally, these factors along with weather-related loss volatility may also affect our ability to maintain and improve underwriting results. We monitor these trends and consider them in our rate actions.

Other

Other operating income was $2.8 million for the three months ended March 31, 2019, compared to an operating loss of $2.4 million for the three months ended March 31, 2018, an improvement of $5.2 million, primarily due to higher net investment income which includes the investment of proceeds from our Chaucer sale transaction.

Reserve for Losses and Loss Adjustment Expenses

The table below provides a reconciliation of the gross beginning and ending reserve for unpaid losses and loss adjustment expenses.

	Three Months Ended
	March 31,
(in millions)	2019			2018
Gross loss and LAE reserves, beginning of period	$	5,304.1		$	5,058.5
Reinsurance recoverable on unpaid losses		1,472.6			1,455.0
Net loss and LAE reserves, beginning of period		3,831.5			3,603.5
Net incurred losses and LAE in respect of losses occurring in:
Current year		712.8			677.4
Prior year non-catastrophe loss development		0.3			0.3
Prior year catastrophe development		(13.5	)		(6.8	)
Total incurred losses and LAE		699.6			670.9
Net payments of losses and LAE in respect of losses occurring in:
Current year		175.3			181.0
Prior years		459.1			425.5
Total payments		634.4			606.5
Net reserve for losses and LAE, end of period		3,896.7			3,667.9
Reinsurance recoverable on unpaid losses		1,484.9			1,420.0
Gross reserve for losses and LAE, end of period	$	5,381.6		$	5,087.9

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The table below summarizes the gross reserve for losses and LAE by line of business.

	March 31,		December 31,
(in millions)	2019		2018
Commercial multiple peril	$	1,108.3	$	1,098.7
Workers’ compensation		658.7		649.3
Commercial automobile		400.6		399.6
Other commercial lines:
Hanover programs		485.5		492.0
Other		949.0		919.0
Total other commercial lines		1,434.5		1,411.0
Total Commercial Lines		3,602.1		3,558.6
Personal automobile		1,540.9		1,532.8
Homeowners and other personal		200.9		174.8
Total Personal		1,741.8		1,707.6
Total Other Segment		37.7		37.9
Total loss and LAE reserves	$	5,381.6	$	5,304.1

“Other commercial lines – Other” in the table above is primarily comprised of management and professional liability, marine, miscellaneous commercial property, healthcare, and fidelity lines. Loss and LAE reserves in our “Total Other Segment” relate to our run-off voluntary assumed reinsurance pools business. Also included in the above table are $56.6 million and $57.6 million of asbestos and environmental reserves as of March 31, 2019 and December 31, 2018, respectively.

The following table summarizes prior year unfavorable (favorable) development for the periods indicated:

	Three Months Ended March 31,
	2019									2018
(in millions)	Loss & LAE			Catastrophe			Total			Loss & LAE			Catastrophe			Total
Commercial Lines	$	(7.5	)	$	(13.5	)	$	(21.0	)	$	(1.6	)	$	(6.6	)	$	(8.2	)
Personal Lines		7.5			—			7.5			1.6			(0.2	)		1.4
Other Segment		0.3			—			0.3			0.3			—			0.3
Total prior year unfavorable (favorable) development	$	0.3		$	(13.5	)	$	(13.2	)	$	0.3		$	(6.8	)	$	(6.5	)

It is not possible to know whether the factors that affected loss reserves in the first three months of 2019 will also occur in future periods. We encourage you to read our 2018 Annual Report on Form 10-K for more information about our reserving process and the judgments, uncertainties and risks associated therewith.

Catastrophe Loss Development

In the three months ended March 31, 2019 and 2018, favorable catastrophe development was $13.5 million and $6.8 million, respectively. The favorable catastrophe development during the three months ended March 31, 2019 is primarily due to anticipated subrogation recoveries on the 2017 and 2018 California wildfires. Our current estimate of these subrogation recoveries was informed by the recent sale of our subrogation rights for certain of these events to a large financial institution. The favorable catastrophe development during the three months ended March 31, 2018 was driven by lower than expected losses related to the 2017 hurricanes and California wildfires.

2019 Loss and LAE Development, excluding catastrophes

For the three months ended March 31, 2019, net unfavorable loss and LAE development, excluding catastrophes, was $0.3 million. Higher than expected losses in the personal and commercial automobile lines were substantially offset by lower than expected losses in the workers’ compensation and commercial multiple peril lines. In addition, Other Segment unfavorable development of $0.3 million was due to adverse loss trends in our run-off voluntary pools business which includes asbestos and environmental reserves.

2018 Loss and LAE Development, excluding catastrophes

For the three months ended March 31, 2018, net unfavorable loss and LAE development, excluding catastrophes, was $0.3 million.  Higher than expected losses in the commercial automobile line, Hanover programs, and the personal automobile line were substantially offset by lower than expected losses in other commercial lines and the workers’ compensation line. In addition, Other Segment unfavorable development of $0.3 million was due to adverse loss trends in our run-off voluntary pools business.

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Investments

The investments discussion below excludes amounts relating to the operations of Chaucer.

Investment Results

Net investment income before income taxes was as follows:

	Three Months Ended March 31,
(dollars in millions)	2019			2018
Fixed maturities	$	58.0		$	52.7
Limited partnerships		4.5			7.3
Mortgage loans		3.9			3.3
Equity securities		3.6			3.9
Other investments		2.1			1.2
Investment expenses		(1.9	)		(2.4	)
Net investment income	$	70.2		$	66.0
Earned yield, fixed maturities		3.61	%		3.64	%
Earned yield, total portfolio		3.65	%		3.84	%

The increase in net investment income for the three months ended March 31, 2019 was primarily due to the continued investment of operational cash flows, the investment of proceeds from the sale of Chaucer, as well as higher commercial mortgage loan income.  These increases were partially offset by lower limited partnership income.

Investment Portfolio

We held cash and investment assets diversified across several asset classes, as follows:

	March 31, 2019					December 31, 2018
(dollars in millions)	Carrying Value		% of Total Carrying Value			Carrying Value		% of Total Carrying Value
Fixed maturities, at fair value	$	6,559.4		82.9	%	$	6,161.5		74.1	%
Equity securities, at fair value		504.7		6.4			464.4		5.6
Mortgage and other loans		419.7		5.3			405.7		4.9
Other investments		260.7		3.3			255.8		3.1
Cash and cash equivalents		168.5		2.1			1,020.7		12.3
Total cash and investments	$	7,913.0		100.0	%	$	8,308.1		100.0	%

Cash and Investments

Total cash and investments decreased $395.1 million, or 4.8%, for the three months ended March 31, 2019, primarily due to our accelerated share repurchase program, special dividend paid on January 25, 2019, and repayment of the Federal Home Loan Bank (“FHLB”) debt, partially offset by market value appreciation.

The following table provides information about the investment types of our fixed maturities portfolio:

	March 31, 2019
(in millions) Investment Type	Amortized Cost		Fair Value		Net Unrealized Gains		Change in Net Unrealized For the Year
U.S. Treasury and government agencies	$	404.5	$	406.7	$	2.2	$	7.0
Foreign government		7.3		7.4		0.1		—
Municipals:
Taxable		791.5		808.4		16.9		9.5
Tax-exempt		56.6		57.1		0.5		1.1
Corporate		3,635.7		3,674.6		38.9		104.8
Asset-backed:
Residential mortgage-backed		819.2		819.9		0.7		12.7
Commercial mortgage-backed		684.9		691.9		7.0		15.1
Asset-backed		93.0		93.4		0.4		0.9
Total fixed maturities	$	6,492.7	$	6,559.4	$	66.7	$	151.1

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The increase in net unrealized gains on fixed maturities was primarily due to lower prevailing interest rates and tighter credit spreads.

Amortized cost and fair value by rating category were as follows:

		March 31, 2019							December 31, 2018
(dollars in millions) NAIC Designation	Rating Agency Equivalent Designation	Amortized Cost		Fair Value		% of Total Fair Value			Amortized Cost		Fair Value		% of Total Fair Value
1	Aaa/Aa/A	$	4,476.8	$	4,526.3		69.0	%	$	4,297.7	$	4,258.8		69.1	%
2	Baa		1,722.8		1,734.5		26.4			1,636.7		1,601.0		26.0
3	Ba		170.3		175.4		2.7			176.4		173.2		2.8
4	B		115.5		115.7		1.8			120.0		113.8		1.9
5	Caa and lower		5.7		5.7		0.1			14.8		14.3		0.2
6	In or near default		1.6		1.8		—			0.3		0.4		—
Total fixed maturities		$	6,492.7	$	6,559.4		100.0	%	$	6,245.9	$	6,161.5		100.0	%

Based on ratings by the National Association of Insurance Commissioners (“NAIC”), approximately 95% of the fixed maturity portfolio consisted of investment grade securities at March 31, 2019 and December 31, 2018. The quality of our fixed maturity portfolio remains strong based on ratings, capital structure position, support through guarantees, underlying security, issuer diversification and yield curve position.

Our investment portfolio primarily consists of fixed maturity securities whose fair value is susceptible to market risk, including interest rate changes. See also “Quantitative and Qualitative Disclosures about Market Risk” included in Management’s Discussion and Analysis contained in our 2018 Annual Report on Form 10-K. Duration is a measurement used to quantify our inherent interest rate risk and analyze invested assets relative to our reserve liabilities.

The duration of our fixed maturity portfolio was as follows:

	March 31, 2019							December 31, 2018
(dollars in millions) Duration	Amortized Cost		Fair Value		% of Total Fair Value			Amortized Cost		Fair Value		% of Total Fair Value
0-2 years	$	1,313.5	$	1,330.2		20.3	%	$	1,092.3	$	1,101.5		17.9	%
2-4 years		1,554.9		1,575.5		24.0			1,427.3		1,420.4		23.0
4-6 years		1,851.4		1,872.8		28.5			1,831.2		1,801.4		29.2
6-8 years		1,613.4		1,615.5		24.6			1,768.6		1,710.3		27.8
8-10 years		98.4		102.3		1.6			57.5		59.7		1.0
10+ years		61.1		63.1		1.0			69.0		68.2		1.1
Total fixed maturities	$	6,492.7	$	6,559.4		100.0	%	$	6,245.9	$	6,161.5		100.0	%
Weighted average duration				4.3						4.5

Our fixed maturity and equity securities are carried at fair value. Financial instruments whose value was determined using significant management judgment or estimation constituted less than 1% of the total assets we measured at fair value. See also Note 6 – “Fair Value” in the Notes to Interim Consolidated Financial Statements.

Equity securities primarily consist of U.S. income-oriented large capitalization common stocks and developed market equity index exchange-traded funds.

Mortgage and other loans consist primarily of commercial mortgage loan participations which represent our interest in commercial mortgage loans originated by a third party. We share, on a pro-rata basis, in all related cash flows of the underlying mortgage loans, which are investment-grade quality and diversified by geographic area and property type.

Other investments consist primarily of our interest in corporate middle market and real estate limited partnerships. Corporate middle market limited partnerships may invest in senior or subordinated debt, preferred or common equity or a combination thereof, of middle market businesses. Real estate limited partnerships invest in debt and/or equity of real properties.

Although we expect to invest new funds primarily in investment grade fixed maturities, we have invested, and expect to continue to invest, a portion of funds in limited partnerships, common equity securities, below investment grade fixed maturities and other investment assets.

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Other-than-Temporary Impairments

For the three months ended March 31, 2019, we did not recognize any other-than-temporary impairments (“OTTI”) on our investment portfolio. For the three months ended March 31, 2018, we recognized in earnings from continuing operations $0.6 million of OTTI on corporate fixed maturities.

The carrying values of fixed maturity securities on non-accrual status at March 31, 2019 and December 31, 2018 were not material. The effects of non-accruals for the three months ended March 31, 2019 and 2018, compared with amounts that would have been recognized in accordance with the original terms of the fixed maturities, were also not material. Any defaults in the fixed maturities portfolio in future periods may negatively affect investment income.

Unrealized Losses

Gross unrealized losses on fixed maturities at March 31, 2019 were $42.0 million, a decrease of $92.2 million compared to December 31, 2018, primarily attributable to lower prevailing interest rates and tighter credit spreads. At March 31, 2019, gross unrealized losses consisted primarily of $27.4 million on corporate fixed maturities, $8.5 million on residential and commercial mortgage-backed securities, $3.4 million on municipal securities and $2.5 million on U.S. government securities. See Note 5 – “Investments” in the Notes to Interim Consolidated Financial Statements.

We view gross unrealized losses on fixed maturities as temporary since it is our assessment that these securities will recover in the near term, allowing us to realize their anticipated long-term economic value. Further, we do not intend to sell, nor is it more likely than not we will be required to sell, such debt securities before this expected recovery of amortized cost (See also “Liquidity and Capital Resources”). Inherent in our assessment are the risks that market factors may differ from our expectations; the global economy reverts to recessionary trends; we may decide to subsequently sell a security for unforeseen business needs; or changes in the credit assessment from our original assessment may lead us to determine that a sale at the current value would maximize recovery on such investments. To the extent that there are such adverse changes, an OTTI would be recognized as a realized loss. Although unrealized losses on fixed maturities are not reflected in the results of financial operations until they are realized or deemed “other-than-temporary,” the fair value of the underlying investment, which does reflect the unrealized loss, is reflected in our Consolidated Balance Sheets.

The following table sets forth gross unrealized losses for fixed maturities by maturity period at March 31, 2019 and December 31, 2018. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations, with or without call or prepayment penalties, or we may have the right to put or sell the obligations back to the issuers.

	March 31,		December 31,
(in millions)	2019		2018
Due in one year or less	$	0.3	$	0.3
Due after one year through five years		7.2		20.2
Due after five years through ten years		23.6		80.2
Due after ten years		2.2		8.3
		33.3		109.0
Mortgage-backed and asset-backed securities		8.7		25.2
Total fixed maturities	$	42.0	$	134.2

Our investment portfolio and shareholders’ equity can be significantly impacted by changes in market values of our securities. Market volatility could increase and defaults on fixed income securities could occur. As a result, we could incur additional realized and unrealized losses in future periods, which could have a material adverse impact on our results of operations and/or financial position.

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Monetary policies in developed economies have become more accommodative recently amid signs of limited inflationary pressures and slowing economic activity, reflecting a number of factors affecting major economies. Major central banks continue to closely monitor geo-political developments, conditions in global financial markets and the outlook for growth, and continue to demonstratean ability and willingness to adjust monetary policy as required to provide liquidity, support growth and achieve inflation targets. In the United States, the Federal Reserve (the “Fed”) maintained its federal funds target range at 2.25% to 2.50% during the first quarter of 2019.Even though economic activity has slowed recently, the Fed continues to view sustained expansion of economic activity, strong labor market conditions, and inflation near its 2% objective as the most likely outcomes. The Fed has communicated that it will be patient as it determines the timing and size of future adjustments to the federal funds rate, which will depend on realized and expected economic conditions relative to its objectives of maximum employment and 2% inflation. While the Fed believes near-term risks to the economic outlook appear roughly balanced, it continues to closely monitor inflation indicators and global economic and financial developments.  Two potentially significant developments being watched carefully are the trade/tariff negotiations between the United States and its various trade partners and the negotiations within the United Kingdom (“U.K.”) and between the U.K. and the European Union regarding Brexit.  Should these negotiations lead to a shift or break-down in global trade patterns, there could be negative implications for certain issuers, sectors, or the economy at large.  

Fundamental conditions in the corporate sector generally remain sound. While we may experience defaults on fixed income securities, particularly with respect to non-investment grade debt securities, it is difficult to foresee which issuers, industries or markets will be affected. As a result, the value of our fixed maturity portfolio could change rapidly in ways we cannot currently anticipate, and we could incur additional realized and unrealized losses in future periods.

Other Items

Net income also included the following items:

	Three Months Ended March 31,
(in millions)	Commercial Lines			Personal Lines			Other			Discontinued Operations			Total
2019
Net realized and unrealized investment gains (losses)	$	34.0		$	15.1		$	(0.9	)	$	—			$	48.2
Discontinued operations - Chaucer business, including gain     on sale, net of taxes		—			—			—			0.6				0.6
Discontinued life businesses		—			—			—			(0.8	)			(0.8	)
2018
Net realized and unrealized investment gains (losses)	$	(16.1	)	$	(6.4	)	$	(0.4	)	$	—			$	(22.9	)
Discontinued operations		—			—			—			17.3				17.3
Discontinued life businesses		—			—			—			(0.1	)			(0.1	)

We manage investment assets for our Commercial Lines, Personal Lines, and Other segments based on the requirements of our U.S. combined property and casualty companies. We allocate the investment income, expenses and realized gains and losses to our Commercial Lines, Personal Lines and Other segments based on actuarial information related to the underlying businesses. We managed investment assets separately for our former Chaucer business.

Net realized and unrealized investment gains (losses) on investments were $48.2 million for the three months ended March 31, 2019 compared to net realized and unrealized investment gains (losses) of $22.9 million for the three months ended March 31, 2018. Net realized and unrealized gains in 2019 and net realized and unrealized losses in 2018 were both primarily due to changes in the fair value of equity securities.

Discontinued operations primarily include our former Chaucer business and, to a lesser extent, our discontinued life businesses. In the first quarter of 2019, we recognized $0.9 million of gains in discontinued operations related to the sale of the Chaucer-related Irish entity. Losses of $0.8 million in the first quarter of 2019 in our discontinued life businesses reflect adverse loss trends related to the long-term care pool. In the first quarter of 2018, discontinued operations generated income of $17.3 million related to our former Chaucer segment. See also “Discontinued Chaucer Business” below and Note 3 – “Discontinued Operations - Chaucer Business” in the Notes to Interim Consolidated Financial Statements.

Discontinued Chaucer Business

On December 28, 2018, we completed the sale of our former subsidiary, Chaucer, to China Re. On February 14, 2019, we completed the sale of our Chaucer-related Irish entity for total proceeds of $28 million and on April 10, 2019, we finalized the sale of the Australian entities for total proceeds of $13 million, completing the transfer of all Chaucer-related companies.  Collectively, these entities constituted the Chaucer business in 2018 and prior, whereas just the Irish and Australian Chaucer-related entities comprised the Chaucer business reported in our results in 2019, until their respective sales to China Re.

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Three months ended March 31, 2019

Revenues from the Chaucer business were $2.9 million during the first quarter of 2019 and operating losses in this business totaled $0.3 million during that period.  

Three months ended March 31, 2018

The following table summarizes the results of operations for the former Chaucer business for the three months ended March 31, 2018:

	Three Months Ended
(in millions)		March 31, 2018 (1)
Revenues
Net premiums earned		$	221.1
Net investment income			16.4
Other income			1.9
			239.4
Losses and operating expenses
Losses and LAE			115.0
Amortization of deferred acquisition costs			69.3
Other expenses			32.2
			216.5
Income from Chaucer business before income taxes and other items    (previously presented as Chaucer's operating income)			22.9
Other items:
Interest expense			(1.1	)
Net realized and unrealized investment losses			(0.5	)
Other income			0.2
Income from Chaucer business before income taxes		$	21.5
Loss and LAE ratio:
Current accident year, excluding catastrophe losses			53.3		%
Prior accident year favorable reserve development, excluding catastrophe losses			(3.9	)	%
Current accident year catastrophe losses			3.8		%
Prior accident year favorable catastrophe loss development			(1.2	)	%
Total loss and LAE ratio			52.0		%
Expense ratio			45.2		%
Combined ratio			97.2		%

(1) 2019 information is omitted as it is not material.

Chaucer’s income before income taxes for the three months ended March 31, 2018 was $22.9 million. This included favorable development on prior years’ loss reserves of $8.7 million and catastrophe losses of $5.7 million. Net favorable loss and LAE development was primarily due to lower than expected losses in Chaucer’s specialty treaty, political, and energy lines, partially offset by higher than expected losses in the U.S. casualty business within the treaty line. Also contributing to Chaucer’s favorable development was the favorable impact of foreign exchange rate movements on prior years’ loss reserves.

Income Taxes

We are subject to the tax laws and regulations of the U.S. and foreign countries in which we operate. We file a consolidated U.S. federal income tax return that includes our holding company and its U.S. subsidiaries. Generally, taxes are accrued at the U.S. statutory tax rate of 21% for income from the U.S. operations. Our primary non-U.S. jurisdiction was the U.K. until the sale of our U.K. subsidiaries, completed December 28, 2018. The U.K. statutory tax rate ranged between 20% and 19% during the period 2017 through 2018.  We accrue taxes on certain non-U.S. income that is subject to U.S. tax at the enacted U.S. tax rate. Foreign tax credits, where available, are utilized to offset U.S. tax as permitted.

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The provision for income taxes from continuing operations was an expense of $26.0 million and $8.6 million for the three months ended March 31, 2019 and 2018, respectively. These provisions resulted in consolidated effective federal tax rates of 17.5% and 14.6% for the three months ended March 31, 2019 and 2018, respectively. These provisions reflect benefits related to tax planning strategies implemented in prior years of $3.8 million and $2.5 million for the three months ended March 31, 2019 and 2018, respectively. In addition, these provisions also included excess tax benefits related to stock-based compensation of $1.5million and $1.3 million for the three months ended March 31, 2019 and 2018, respectively. Absent these items, the provision for income taxes would have been an expense of $31.3 million, or 21.1%, and $12.4 million, or 21.0%, for the three months ended March 31, 2019 and 2018, respectively.

The income tax provision on operating income was an expense of $19.7 million and $15.9 million for the three months ended March 31, 2019 and 2018, respectively. These provisions resulted in effective tax rates for operating income of 19.6% and 19.4% for the three months ended March 31, 2019 and 2018, respectively. These provisions included excess tax benefits related to stock-based compensation of $1.5 million and $1.3 million for the three months ended March 31, 2019 and 2018, respectively. Absent this item, the provision for income taxes would have been an expense of $21.2 million, or 21.1%, and $17.2 million, or 21.0%, for the three months ended March 31, 2019 and 2018, respectively.   

The income tax provision on our former Chaucer business was an expense of $4.2 million for the three months ended March 31, 2018. This provision resulted in an effective tax rate of 19.5% for the three months ended March 31, 2018.

Critical Accounting Estimates

Interim consolidated financial statements have been prepared in conformity with U.S. GAAP and include certain accounting policies that we consider to be critical due to the amount of judgment and uncertainty inherent in the application of those policies. While we believe that the amounts included in our consolidated financial statements reflect our best judgment, the use of different assumptions could produce materially different accounting estimates. As disclosed in our 2018 Annual Report on Form 10-K, we believe the following accounting estimates are critical to our operations and require the most subjective and complex judgment:

• Reserve for losses and loss expenses

• Reinsurance recoverable balances

• Pension benefit obligations

• Other-than-temporary impairments on fixed maturity securities  

• Deferred tax assets

For a more detailed discussion of these critical accounting estimates, see our 2018 Annual Report on Form 10-K.

Statutory Surplus of U.S. Insurance Subsidiaries

The following table reflects statutory surplus for our insurance subsidiaries:

	March 31,		December 31,
(in millions)	2019		2018
Total Statutory Capital and Surplus	$	2,301.1	$	2,172.5

The statutory capital and surplus for our insurance subsidiaries increased $128.6 million during the first three months of 2019. This increase was primarily due to underwriting profits, and to a lesser extent, unrealized gains in 2019, primarily due to changes in the fair value of equity securities. These increases were partially offset by changes in deferred taxes.

The NAIC prescribes an annual calculation regarding risk based capital (“RBC”). RBC ratios for regulatory purposes are expressed as a percentage of the capital required to be above the Authorized Control Level (the “Regulatory Scale”); however, in the insurance industry, RBC ratios are widely expressed as a percentage of the Company Action Level. The following table reflects the Company Action Level, the Authorized Control Level and RBC ratios for Hanover Insurance (which includes Citizens and other insurance subsidiaries), as of March 31, 2019, expressed both on the Industry Scale (Total Adjusted Capital divided by the Company Action Level) and Regulatory Scale (Total Adjusted Capital divided by Authorized Control Level):

(dollars in millions)	Company Action Level		Authorized Control Level		RBC Ratio Industry Scale			RBC Ratio Regulatory Scale
The Hanover Insurance Company	$	1,036.1	$	515.8		222	%		444	%

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Liquidity and Capital Resources

Liquidity is a measure of our ability to generate sufficient cash flows to meet the cash requirements of business operations. As a holding company, our primary ongoing source of cash is dividends from our insurance subsidiaries. However, dividend payments to us by our insurance subsidiaries are subject to limitations imposed by regulators, such as prior notice periods and the requirement that dividends in excess of a specified percentage of statutory surplus or prior year’s statutory earnings receive prior approval (so called “extraordinary dividends”). During the first quarter of 2019, Hanover Insurance did not pay any dividends to the holding company.

Sources of cash for our insurance subsidiaries primarily consist of premiums collected, investment income and maturing investments. Primary cash outflows are paid claims, losses and loss adjustment expenses, policy and contract acquisition expenses, other underwriting expenses, and investment purchases. Cash outflows related to losses and loss adjustment expenses can be variable because of uncertainties surrounding settlement dates for liabilities for unpaid losses and because of the potential for large losses either individually or in the aggregate. We periodically adjust our investment policy to respond to changes in short-term and long-term cash requirements.

Net cash provided by operating activities was $37.2 million during the first three months of 2019, as compared to $31.4 million during the first three months of 2018. During 2019, the $5.8 million increase in cash provided was primarily the result of an increase in premiums collected, partially offset by higher loss payments.

Net cash used in investing activities was $279.3 million during the first three months of 2019, as compared to $144.4 million during the first three months of 2018. During 2019, cash used in investing activities primarily related to net purchases of fixed maturities, partially offset by net proceeds received from the sale of the Chaucer-related Irish entity. During 2018, cash used in investing activities primarily related to net purchases of fixed maturities.  

Net cash used in financing activities was $610.6 million during the first three months of 2019, as compared to $7.6 million during the first three months of 2018. During 2019, cash used in financing activities primarily resulted from repurchases of common stock through an accelerated share repurchase (“ASR”) agreement, the payments of a special dividend and quarterly dividends to shareholders and repayment of the FHLB advances. (See further discussion below for additional information regarding the special dividend, the ASR and the repayment of the FHLB advances). During 2018, cash used in financing activities primarily resulted from the payment of dividends to shareholders and repurchases of common stock, partially offset by cash inflows from short-term debt borrowings.  

Dividends to common shareholders are subject to quarterly board approval and declaration. During the first three months of 2019, as declared by the Board, we paid a quarterly dividend of $0.60 per share to our shareholders totaling $24.4 million. In the first quarter of 2019, we also paid a special dividend of $4.75 per share associated with the Chaucer sale that was declared on December 30, 2018, totaling $192.6 million. We believe that our holding company assets are sufficient to provide for future shareholder dividends should the Board of Directors declare them.

At March 31, 2019, THG, as a holding company, held approximately $668.1 million of fixed maturities and cash. We believe our holding company assets will be sufficient to meet our 2019 obligations, which we expect to consist primarily of quarterly dividends to our shareholders (as and to the extent declared), interest on our senior and subordinated debentures, certain costs associated with benefits due to our former life employees and agents, and, to the extent required, payments related to indemnification of liabilities associated with the sale of various subsidiaries. As discussed below, we have, and opportunistically may continue to, repurchase our common stock and debt. We do not expect that it will be necessary to dividend additional funds from our insurance subsidiaries in order to fund 2019 holding company obligations; however, we may decide to do so.

We expect to continue to generate sufficient positive operating cash to meet all short-term and long-term cash requirements relating to current operations, including the funding of our qualified defined benefit pension plan. The ultimate payment amounts for our benefit plan is based on several assumptions, including but not limited to, the rate of return on plan assets, the discount rate for benefit obligations, mortality experience, interest crediting rates, inflation and the ultimate valuation and determination of benefit obligations. Since differences between actual plan experience and our assumptions are almost certain, changes, both positive and negative, to our current funding status and ultimately our obligations in future periods are likely.

Our insurance subsidiaries maintain a high degree of liquidity within their respective investment portfolios in fixed maturity and short-term investments. We believe that the quality of the assets we hold will allow us to realize the long-term economic value of our portfolio, including securities that are currently in an unrealized loss position. We do not anticipate the need to sell these securities to meet our insurance subsidiaries’ cash requirements since we expect our insurance subsidiaries to generate sufficient operating cash to meet all short-term and long-term cash requirements relating to current operations. However, there can be no assurance that unforeseen business needs or other items will not occur causing us to have to sell those securities in a loss position before their values fully recover, thereby causing us to recognize impairment charges in that time period.

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On December 30, 2018, the Board of Directors authorized a new stock repurchase program which provides for aggregate repurchases of our common stock of up to $600 million. Under the repurchase authorization, the Company may repurchase, from time to time, common shares in amounts, at prices and at such times as the Company deems appropriate, subject to market conditions and other considerations. Repurchases may be executed using open market purchases, privately negotiated transactions, accelerated repurchase programs or other transactions. We are not required to purchase any specific number of shares or to make purchases by any certain date under this program. On January 2, 2019, pursuant to the terms of an ASR agreement, we paid $250.0 million and received an initial delivery of approximately 1.8 million shares of our common stock, which is approximately 80% of the total number of shares expected to be repurchased under this agreement. As of March 31, 2019, we have approximately $350 million available for repurchases under these repurchase authorizations.

From time to time, we may repurchase our debt on an opportunistic basis. On January 2, 2019, we repaid $125 million of our FHLB advances that were due 2029 and had an interest rate of 5.5%, along with related prepayment fees of $26 million which were recognized as a non-operating charge in 2018. We maintained our membership in FHLB which provides us with access to additional liquidity based on our stock holdings and pledged collateral. At March 31, 2019 we had borrowing capacity of $92.4 million. There were no borrowings outstanding under this short-term facility at March 31, 2019; however we have and may continue to borrow, from time to time, through this facility to provide short-term liquidity.

On April 30, 2019, the Company entered into a new credit agreement that provides for a five-year unsecured revolving credit facility not to exceed $200.0 million at any one time outstanding, with the option to increase the facility up to $300.0 million, (assuming no default and satisfaction of other specified conditions, including the receipt of additional lender commitments.) The agreement also includes an uncommitted subfacility of $50.0 million for standby letters of credit.  Borrowings, if any, under this new agreement are unsecured and generally incur interest at a rate per annum equal to the greater of, (a) the prime commercial lending rate of the administrative agent, (b) the NYFRB Rate plus half a percent, or (c) the one month Adjusted LIBOR plus one percent and any applicable margin. The agreement also contains certain financial covenants such as maintenance of specified levels of consolidated equity and leverage ratios, and requires that certain of our subsidiaries maintain minimum RBC ratios.  Concurrent with the Company’s entry into this agreement, the Company voluntarily terminated its existing $200.0 million credit agreement, dated November 12, 2013.  We currently have no borrowings under the new agreement and had no borrowings under the previous agreement during the first three months of 2019.  For additional information regarding our new credit agreement, please see Item 5.01 to this Quarterly Report on Form 10-Q.

At March 31, 2019, we were in compliance with the covenants of our debt and credit agreements.

Off-Balance Sheet Arrangements

We currently do not have any material off-balance sheet arrangements that are reasonably likely to have an effect on our financial position, revenues, expenses, results of operations, liquidity, capital expenditures, or capital resources.

Contingencies and Regulatory Matters

Information regarding litigation, legal contingencies and regulatory matters appears in Part I – Note 13 “Commitments and Contingencies” in the Notes to Interim Consolidated Financial Statements.

Risks and Forward-Looking Statements

Information regarding risk factors and forward-looking information appears in Part II – Item 1A of this Quarterly Report on Form 10-Q and in Part I – Item 1A of our 2018 Annual Report on Form 10-K. This Management’s Discussion and Analysis should be read and interpreted in light of such factors.

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ITEM 3

QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK

Our market risks, the ways we manage them, and sensitivity to changes in interest rates and equity price risk are summarized in Management’s Discussion and Analysis of Financial Condition and Results of Operations as of December 31, 2018 included in our 2018 Annual Report on Form 10-K. There have been no material changes in the first three months of 2019 to these risks or our management of them.

ITEM 4

CONTROLS AND PROCEDURES

Disclosure Controls and Procedures Evaluation

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Limitations on the Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls over financial reporting will prevent all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

Based on our controls evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this quarterly report, our disclosure controls and procedures were effective to provide reasonable assurance that (i) the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) material information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and the Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting, as required by Rule 13a-15(d) of the Exchange Act, to determine whether any changes occurred during the period covered by this quarterly report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that there were no such changes during the quarter ended March 31, 2019, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

The parties to the suit captioned Jennifer A. Durand v. The Hanover Insurance Group, Inc., and The Allmerica Financial Cash Balance Pension Plan   (U.S. District Court for the Western District of Kentucky) have entered into a settlement agreement resolving the dispute.   The court approved the settlement dismissing the case with prejudice on March 22, 2019 and, effective April 24, 2019, such dismissal is no longer subject to appeal.  The resulting settlement amount to be paid by the Company is not material to the Company’s financial position and will not have a material effect on its results of operations.

For additional information please refer to the litigation matter captioned “Durand Litigation” under “Commitments and Contingencies – Legal Proceedings” in Note 13 in the Notes to Interim Consolidated Financial Statements. 

ITEM 1A – RISK FACTORS

This document contains, and management may make, certain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, may be forward-looking statements. When used in our Management’s Discussion and Analysis, words such as: “believes,” “anticipates,” “expects,” “projections,” “outlook,” “should,” “could,” “plan,” “guidance,” “likely,” “on track to,” “potential,” “continue,” “targeted,” and similar expressions are intended to identify forward-looking statements. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. We caution readers that accuracy with respect to forward-looking projections is difficult and risks and uncertainties, in some cases, have affected, and in the future could affect, our actual results and could cause our actual results for the remainder of 2019 and beyond to differ materially from historical results and from those expressed in any of our forward-looking statements. We operate in a business environment that is continually changing, and as such, new risk factors may emerge over time. Additionally, our business is conducted in competitive markets and, therefore, involves a higher degree of risk. We cannot predict these new risk factors nor can we assess the impact, if any, that they may have on our business in the future. Some of the factors that could cause actual results to differ include, but are not limited to, the following:

• changes in the demand for our products;

• risks and uncertainties with respect to our ability to retain profitable policies in force and attract profitable policies and to increase rates commensurate with, or in excess of, loss trends;

• adverse claims experience or changes in our estimates of loss and loss adjustment expense reserves, including with respect to catastrophes, which may result in lower current year underwriting income or adverse loss development, and could impact our carried reserves;  

• uncertainties with respect to the long-term profitability of our products, including with respect to new products such as our Hanover Platinum Personal Lines, excess and surplus lines, or longer-tail products covering casualty losses;

• the loss or disruption of our independent agency channel, including the impact of competition and consolidation in the industry and among agents and brokers;

• changes in frequency and loss severity trends;

• changes in regulation, economic, market and political conditions, particularly with respect to regions where we have geographical concentrations;

• volatile and unpredictable developments, including severe weather and other natural physical events, catastrophes and terrorist actions, and the uncertainty in estimating the resulting losses;

• changes in weather patterns, whether as a result of global climate change, or otherwise, causing a higher level of losses from weather events to persist;

• the availability of sufficient information to accurately estimate a loss at a point in time and the limitations and assumptions used to model property and casualty losses in general;

• risks and uncertainties with respect to our ability to collect all amounts due from reinsurers and to maintain current levels of reinsurance in the future at commercially reasonable rates, or at all;

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• heightened volatility, fluctuations in interest rates (which have a significant impact on the market value of our investment portfolio and thus our book value), inflationary pressures, default rates and other factors that affect investment returns from our investment portfolio;

• risks and uncertainties associated with our participation in shared market mechanisms, mandatory reinsurance programs and mandatory and voluntary pooling arrangements, including as a result of legislative proposals in Michigan that, if enacted, could alter the current auto insurance no-fault and personal injury protection insurance (PIP) system in that state by changing, among other things, the mandated coverages to be offered by insurers and the mandatory reinsurance mechanism referred to as the Michigan Catastrophic Claims Association, and could also result in new mandatory rate reductions for policyholders;

• an increase in mandatory assessments by state guaranty funds;

• actions by our competitors, many of which are larger or have greater financial resources than we do;

• loss or retirement of key employees;

• operating difficulties and other unintended consequences from acquisitions and integration of acquired businesses, the introduction of new products and related technology changes and new operating models;

• changes in our claims-paying and financial strength ratings;

• negative changes in our level of statutory surplus;

• risks and uncertainties with respect to our growth or operating strategies, or with respect to our expense and strategic initiatives;

• our ability to declare and pay dividends;

• changes in accounting principles and related financial reporting requirements;

• errors or omissions in connection with the administration of any of our products;

• risks and uncertainties with technology, including cloud-based data information storage, data security, cyber-security attacks, and/or outsourcing relationships and third-party operations and data security that may negatively impact our ability to conduct business;

• risks and uncertainties associated with the realization of the contingent consideration associated with THG’s sale of Chaucer to China Re due to higher than expected Chaucer catastrophe losses occurring during 2018, which will require the reduction of the contingent consideration on a dollar-for-dollar basis;

• an inability to be compliant with recently implemented regulations or existing regulation such as those relating to Sarbanes-Oxley;

• unfavorable legislative developments, such as proposed legislation in Michigan referred to above, or litigation matters and the possibility of adverse judicial decisions, including those which expand policy coverage beyond its intended scope or award “bad faith” or other non-contractual damages; and

• other factors described in such forward-looking statements.

In addition, historical and future reported financial results include estimates with respect to premiums written and earned, reinsurance recoverables, current accident year “picks,” loss and loss adjustment reserves and development, fair values of certain investments, other assets and liabilities, tax, contingent and other liabilities, and other items. These estimates are subject to change as more information becomes available.

For a more detailed discussion of our risks and uncertainties, see also Item 1A – Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2018.

Readers should not place undue reliance on forward-looking statements, which speak only as of the date they are made. We do not undertake any responsibility to update or revise our forward-looking statements, except as required by law.

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ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

Shares purchased in the first quarter of 2019 are as follows:  

					Total Number of		Approximate Dollar Value of
					Shares Purchased as		Shares That May Yet
					Part of Publicly		be Purchased Under the
	Total Number of		Average Price		Announced Plans or		Plans or Programs
Period	Shares Purchased		Paid per Share		Programs (2)		(in millions)
January 1 - 31, 2019 (1)		1,790,878	$	111.68		1,790,831	$	350
February 1 - 28, 2019 (1)		35,279		118.02		—		350
March 1 - 31, 2019 (1)		261		117.37		—		350
Total		1,826,418	$	111.80		1,790,831	$	350

(1) Includes 47, 35,279 and 261 shares withheld to satisfy tax withholding amounts due from employees related to the receipt of stock which resulted from the exercise or vesting of equity awards for the months ended January 31, February 28 and March 31, 2019, respectively.

(2) As noted above, on December 30, 2018, the Board of Directors authorized a new stock repurchase program which provides for aggregate repurchases of up to $600 million. The shares were purchased pursuant to the terms of an accelerated repurchase agreement for $250.0 million, authorized by the Board of Directors in December 2018, and consisting of approximately 80% of the total number of shares expected to be repurchased under this agreement. The final 20% of the total number of shares are expected to be delivered to the Company in the second quarter of 2019.

ITEM 5 – OTHER INFORMATION

Item 5.01 Entry into a Material Definitive Agreement

The Hanover Insurance Group, Inc. Revolving Credit Facility

On April 30, 2019, The Hanover Insurance Group, Inc. (the “Company”), as Borrower, entered into a Credit Agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent, Wells Fargo Bank, National Association, PNC Bank, National Association and Branch Banking and Trust Company, as co-syndication agents, Goldman Sachs Bank USA and The Bank of Nova Scotia, as co-documentation agents, and various other lender parties. The Credit Agreement provides for a five-year unsecured revolving credit facility for the Company not to exceed $200,000,000 at any one time outstanding, with the option to increase the facility up to $300,000,000, in increments of $10,000,000 (assuming no default and satisfaction of other specified conditions, including the receipt of additional lender commitments). The Credit Agreement also includes an uncommitted subfacility of $50,000,000 for standby letters of credit. The Company may use the line of credit for general corporate purposes for itself and its subsidiaries. This Credit Agreement replaces the credit agreement dated November 12, 2013, among the Company, JPMorgan Chase Bank, N.A., as administrative agent, and various other lender parties, which credit agreement the Company voluntarily terminated concurrent with the execution of the Credit Agreement.

When a borrowing under the new credit facility is an ABR Loan, interest on such a loan is payable quarterly, at a rate per annum equal to the Alternative Base Rate (the highest of (a) the prime commercial lending rate of the administrative agent; (b) the NYFRB Rate plus 1∕2 of 1%; and (c) the Adjusted LIBO Rate for a one-month interest period plus 1%, in each case, subject to a 1% floor), plus the applicable margin, which ranges from 0.25% to 0.625%, depending on the Company’s debt rating. When a borrowing under the facility is a Eurodollar Loan, interest on such loan is payable in one, two or three-month intervals, at a rate per annum equal to the applicable Adjusted LIBO Rate for the applicable interest period plus the applicable margin, which ranges from 1.25% to 1.625%, depending on the Company’s debt rating. Fees on outstanding letters of credit are payable quarterly, and range from 1.25% to 1.625%, depending on the Company’s debt rating, of the average daily aggregate stated amount of such letters of credit.

The Credit Agreement contains financial covenants substantially similar to those in its prior credit agreement that require the Company and its subsidiaries to maintain a specified minimum net worth, restrict the Company and its subsidiaries from exceeding a specified leverage ratio and require certain of the Company’s subsidiaries to maintain a minimum Risk-Based Capital ratio. In addition, the Credit Agreement contains covenants that limit the Company’s and its subsidiaries’ ability, among other things, to incur or assume certain debt, grant liens on its property, merge or consolidate, dispose of assets, materially change the nature or conduct of its business and make restricted payments (except, in each case, as provided by certain exceptions). The Credit Agreement also

45

contains certain customary representations and warranties, affirmative covenants and events of default, including payment defaults, breach of representations and warranties, covenant defaults, cross defaults to certain indebtedness, certain events of bankruptcy, certain events under ERISA, material judgments, and change of control. If such an event of default occurs, the lenders under the Credit Agreement would be entitled to take various actions, including the acceleration of amounts due under the Credit Agreement. The credit facility expires on April 30, 2024, with an option, subject to approval of the lender parties, to extend for an additional year.

The above summary of the Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Credit Agreement. A copy of the Credit Agreement is included as Exhibit 10.2 to this Quarterly Report on Form 10-Q. As of May 2, 2019, there were no advances against this line of credit.

Item 5.02 Termination of a Material Definitive Agreement

The information provided in Item 5.01 of this Quarterly Report on Form 10-Q is hereby incorporated by reference into this Item 5.02.

Concurrent with the Company’s entry into the Credit Agreement, the Company voluntarily terminated its existing $200,000,000 credit agreement, previously filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 15, 2013, entered into by the Company, JPMorgan Chase Bank, N.A., as administrative agent, and various other lender parties.

Item 5.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

The information provided in Item 5.01 of this Quarterly Report on Form 10-Q is hereby incorporated by reference into this Item 5.03.

46

ITEM 6 – EXHIBITS

EX – 2.1	Second Supplemental Agreement by and between the Registrant and China Reinsurance (Group) Corporation, dated March 29, 2019 relating to the Agreement for the Sale and Purchase of Shares in the Capital of The Hanover Insurance International Holdings Limited, Chaucer Insurance Company Designated Activity Company and Hanover Australia HoldCo Pty Ltd., dated September 13, 2018, by and between the Registrant and China Reinsurance (Group) Corporation.
EX – +10.1	Form of Restricted Stock Unit Agreement under The Hanover Insurance Group 2014 Long-Term Incentive Plan for Chief Financial Officer.
EX – 10.2	Credit Agreement dated April 30, 2019, among the Registrant, as Borrower, JPMorgan Chase Bank, N.A., as administrative agent, and various other lender parties.
EX – 31.1	Certification of the Chief Executive Officer, pursuant to 15 U.S.C. 78m, 78o(d), as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002.
EX – 31.2	Certification of the Chief Financial Officer, pursuant to 15 U.S.C. 78m, 78o(d), as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002.
EX – 32.1	Certification of the Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
EX – 32.2	Certification of the Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
EX – 101	The following materials from The Hanover Insurance Group, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 formatted in eXtensible Business Reporting Language (“XBRL”): (i) Consolidated Statements of Income for the three months ended March 31, 2019 and 2018; (ii) Consolidated Statements of Comprehensive Income for the three months ended March 31, 2019 and 2018; (iii) Consolidated Balance Sheets at March 31, 2019 and December 31, 2018; (iv) Consolidated Statements of Shareholders’ Equity for the three months ended March 31, 2019 and 2018; (v) Consolidated Statements of Cash Flows for the three months ended March 31, 2019 and 2018, and (vi) related notes to these financial statements.

+ Management contract or compensatory plan or arrangement.

47

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	The Hanover Insurance Group, Inc.
	Registrant
May 2, 2019	/s/ John C. Roche
Date	John C. Roche
	President, Chief Executive Officer and Director
May 2, 2019	/s/ Jeffrey M. Farber
Date	Jeffrey M. Farber
	Executive Vice President and Chief Financial Officer

48

EX-2.1

Exhibit 2.1

Execution Version

DATED  27March2019

THE HANOVER INSURANCE GROUP, INC.

- AND -

CHINA REINSURANCE (GROUP) CORPORATION

SECOND SUPPLEMENTAL AGREEMENT

to the sale and purchase agreement

dated 13 September 2018, as amended by a first supplemental agreement dated 28 December 2018

Execution Version

THIS DEED is dated 27      March 2019 and made between:

(1) THE HANOVER INSURANCE GROUP, INC. a Delaware corporation with its headquartersat440LincolnStreet,Worcester,Massachusetts,UnitesStatesofAmerica ("THG");and

(2) CHINA REINSURANCE (GROUP) CORPORATION a joint stock limited company incorporated in the People's Republic of China whose registered office is at No.11 Jinrong Avenue, Xicheng District, Beijing, China (the"Buyer").

BACKGROUND:

(A) The parties entered into a sale and purchase agreement on 13 September 2018 (the "OriginalAgreement").

(B) The parties entered a supplemental agreement to the Original Agreement on 28 December 2018 (the "First Supplemental Agreement", and, the Original Agreement as amended by the First Supplement Agreement, the "SPA") so that the parties could proceedtocompletethesaleandpurchaseoftheHIIHShares,anddefercompletionof the sale and purchase of the CIC Shares and the HAHShares.

(C) The parties completed the sale and purchase of the HIIH Shares on 28 December 2018 and the CIC Shares on 14 February 2019. The parties have not yet completed the sale and purchase of the HAH Shares.

(D) Pursuanttoclause22.3andascontemplatedbyclause3.15oftheSPA,thepartieswish to amend the SPA on the terms of this Deed so that the parties may further defer completion of the HAHShares.

THIS DEED WITNESSES that:

1. DEFINITIONS

Unless the context requires otherwise, words and expressions used but not defined in this Deed shall have the meanings given to them in the SPA.

2. AMENDMENTS TO THESPA

2.1 Amendments

The SPA shall be amended as follows:

(a) the definition of Transaction Documents set out in clause 1.1 of the SPA shall be amended so that it shall include thisDeed;

2

(b) clause 3.1 of the SPA shall be amended so that the HAH Completion is subject to,andconditionaluponthesatisfactionorwaiver(inaccordancewiththeSPA) of, the Condition set out in clause 3.1.8 of the SPA only before 5 p.m. on 30 June 2019 or such later date as the parties may agree in writing, subject to any required regulatory approvals or extensions thereto, and, in any case, before 5p.m.on31December2019(orsuchotherdateastheBuyerandTHGmayagree in writing) (the parties hereby acknowledge and agree the postponement oftheInitial Longstop Date pursuant to this Clause 2.1(b) is in relation to the Condition set out in clause 3.1.8 of the SPA only). For the avoidance of doubt, the relevant provisions of clause 3 of the SPA shall continue to apply until the HAH Completion.

2.2 Extent ofamendments

Fortheavoidanceofdoubt,theprovisionsoftheSPAreferredtoinClause2.1shallbe amended only to the extent required to give effect to the amendments contemplated by Clause 2.1 and, unless expressly provided for in Clause 2.1, Clause 2.1 shall not have the effect of deleting or replacing such provisions of the SPA insofar as they relate to the sale and purchase of the HIIH Shares or the CIC Shares orotherwise.

2.3 Conflict with theSPA

The parties acknowledge that theamendments set out in Clause 2.1 are non-exhaustive and, in the event of any conflict or inconsistency between the provisions of this Deed andtheprovisionsoftheSPAthen,insofarassuchconflictorinconsistencyrelates:

(a) to the sale and purchase of the HAH Shares, this Deed shall prevail and the provisions of the SPA shall be deemed amended so as to accord with the provisions of this Deed; or

(a) to any other provision of the SPA, the SPA shall prevail.

2.4 When amendments takeeffect

The amendments to the SPA set out in Clause 2.1 to this Deed shall take effect immediately.

3. ALL OTHER TERMSUNCHANGED

Save as amended by this Deed, the terms of the SPA shall remain in full force and effect.

4. CLAUSESREPEATED

Save as amended by this Deed, clauses 1.2, 1.4, 1.10 and 13 to 28 of the SPA shall be deemedrepeatedinthisDeedandshallapplytothisDeedasifsetoutinfull,andwords andexpressionsusedinthoseclausesshallhavethemeaningsgiventothemintheSPA.

3

ThisDeed has been executed as a deed by the parties and is delivered on the date stated at the beginning of it.

EXECUTED as a deed on behalf of THE	)
HANOVERINSURANCEGROUP,	)
INC., a corporationincorporatedin	)
Delaware, by a person who, in accordance	)
with the laws of that jurisdiction, is acting	)
under the authority ofthecorporation:	)
		/s/ Jeffrey M. Farber
		Authorised signatory

EXECUTED as a deed onbehalfof	)
CIDNAREINSURANCE(GROUP)	)
CORPORATION,acorporation in	)
corporated in the People's Republic of	)
China, by a person who, in accordance	)
With the laws of that jurisdiction, is acting	)
under theauthorityofthecorporation:	)
		Authorised signatory

4

This Deed has been executed as a deed by the parties and is delivered on the date stated at the beginning of it.

EXECUTED as a deed on behalf THE	)
HANOVERINSURANCEGROUP,	)
INC, a corporationincorporatedin	)
Delaware, by a person who, in accordance	)
with the laws of that jurisdiction, is acting	)
under the authority ofthecorporation:
		Authorised signatory

EXECUTED as a deed onbehalfof	)
CHINAREINSURANCE (GROUP)	)
CORPORATION,acorporation	)
incorporated in the People's Republic of	)
China, by a person who,inaccordance	)
the laws of that jurisdiction, is acting under	)
the authority ofthecorporation:	)
		/s/ Yu Chun Ling                                   Authorised signatory

5

EX-10.1

Exhibit 10.1

THE HANOVER INSURANCE GROUP, INC.

RESTRICTED STOCK UNIT AGREEMENT

This Restricted Stock Unit Agreement (the “Agreement”) is effective as of <GRANT DATE> (the “Grant Date”) by and between The Hanover Insurance Group, Inc., a Delaware corporation (the “Company”), and Jeffrey M. Farber (“Participant” or “you”).  Capitalized terms used without definition herein shall have the meanings set forth in The Hanover Insurance Group 2014 Long-Term Incentive Plan (as it may be amended from time to time, the “Plan”).

PREAMBLE

WHEREAS, pursuant to the Plan and subject to the terms of this Agreement, the Administrator has agreed to grant to Participant an Award of Restricted Stock Units (the “RSUs”).

NOW, THEREFORE, for and in consideration of the foregoing and the mutual covenants and promises hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. RSUs. The Administrator hereby grants to Participant <NUMBER OF RSUS> RSUs, each RSU representing the right to receive one share of Stock upon and subject to the restrictions, terms and conditions set forth below.  The Stock issued upon vesting of the RSUs, if any, shall be referred to hereinafter as the “Shares”.

2. Vesting; Settlement.  The RSUs shall vest in full on the third anniversary of the Grant Date (the “Vesting Date”); provided Participant remains continuously an Employee of the Company or one of its Affiliates (the Company and its Affiliates hereinafter referred to as “THG”) throughout the period from the Grant Date until the Vesting Date.  

As soon as reasonably practicable following the vesting of the RSUs, but in no event later than 60 days following vesting, the Company shall deliver Shares in respect of vested RSUs and shall pay any amounts in respect of dividend equivalents credited under Section 9 of this Agreement to Participant (or, in the event of Participant’s death, to Participant’s estate or beneficiary).  In the event the Vesting Date falls on a non-business day (weekend or holiday on which banks are not generally open in the Commonwealth of Massachusetts), the Vesting Date shall be the next following business day.

3. Termination.  Except as provided in Sections 4, 5, 6 and 7 upon the termination of Participant's Employment for whatever reason, any then unvested RSUs shall be automatically cancelled and forfeited and shall be returned to the Company for no consideration.

4. Disability. If Participant is Disabled prior to the Vesting Date, the RSUs shall automatically vest on the date Participant is Disabled.  For purposes of this subsection, Participant shall be “Disabled” if he has been unable, for a period of twelve consecutive months, to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment and has been receiving income replacement benefits for a period of twelve consecutive months under the Company’s Long-Term Disability Program.  The date that Participant is Disabled for purposes of this Agreement is the twelve-month anniversary of the date Participant commences receiving such benefits under the Company’s Long-Term Disability Program.  

If Participant ceases to receive benefits under the Company’s Long-Term Disability Program prior to becoming Disabled and immediately returns to active Employment, the RSUs will continue to vest in accordance with Section 2 of this Agreement.

- 2 -

5. Death.  If Participant’s Employment is terminated due to his or her death prior to the Vesting Date, the RSUs shall automatically vest in full on the date the Participant dies.

6. Covered Transaction/Change in Control.  In the event of a Covered Transaction (other than a Change in Control, whether or not it is a Covered Transaction), the Administrator shall, with respect to the RSUs, take one of the actions set forth in Sections 7(a)(1), 7(a)(2) or 7(a)(3) of the Plan. Notwithstanding the terms of the Plan, in the event of a Change in Control (whether or not it is a Covered Transaction), the following rules shall apply:  

(a) Except as provided below in Section 6(b), to the extent the RSUs are outstanding immediately prior to the Change in Control, in the event of a Change in Control Participant shall automatically vest in 100% of the RSUs.

(b) Notwithstanding Section 6(a), no acceleration of vesting shall occur with respect to the RSUs if the Administrator reasonably determines in good faith prior to the occurrence of a Change in Control that this Award of RSUs shall be honored or assumed, or new rights substituted therefor (such honored, assumed or substituted award hereinafter called an “Alternative Award”), by Participant's employer (or the parent or a subsidiary of such employer) immediately following the Change in Control, provided that any such Alternative Award must:

(i) be based on stock which is traded, or will be traded upon consummation of the Change in Control, on an established securities market;

(ii) provide Participant (or each Participant in a class of Participants) with rights and entitlements substantially equivalent to or better than the rights, terms and conditions applicable under this Award, including, but not limited to, an identical or better vesting schedule and accelerated vesting provisions;

(iii) have substantially equivalent economic value to this Award (determined at the time of the Change in Control); and

(iv) have terms and conditions which provide that in the event that Participant's employment is involuntarily terminated (other than for Cause) or Participant terminates employment for “Good Reason” (as defined in Section 23) prior to the Vesting Date, Participant shall automatically vest in 100% of the Alternative Award and any conditions on a Participant's rights under, or any restrictions on transfer applicable to such Alternative Award shall be waived or shall lapse.  

(c) Notwithstanding Sections 6(a) and (b) above, in the event of a Change in Control, the Administrator may elect, in its sole discretion, exercised prior to the effective date of the Change in Control, to accelerate all of the RSUs.

7. Involuntary/Construction Termination.  In the event Participant’s Employment is involuntarily terminated (other than for Cause or as a result of or in connection with the events set forth in Sections 4, 5 or 6), or Participant terminates Employment for Good Reason, effective immediately prior to such termination, Participant will be given one additional year’s vesting credit for purposes of the vesting requirement under Section 2 (the “Vesting Credit”).  If, after application of the Vesting Credit, Participant shall be deemed to have satisfied the vesting requirement set forth in Section 2, the RSU, to the extent then outstanding and unvested, shall vest in full. To the extent, after application of the Vesting Credit, Participant is not deemed to have satisfied the vesting requirement set forth in Section 2, upon such termination the RSUs shall be automatically cancelled and forfeited and be returned to the Company for no consideration.  Any payment under this Section 7 is expressly conditioned on, and shall only be effective upon, Participant’s execution of the separation agreement required pursuant to Section 7 of that certain Offer Letter dated September 21, 2016, by and between the Company and Participant (the “Offer Letter”).

- 3 -

8. Notices.  Notices hereunder shall be in writing and, if to the Company, shall be delivered personally to the Human Resources Department or such other party as designated by the Company or mailed to its principal office and, if to Participant, shall be delivered personally or mailed to Participant at his or her address on the records of the Company.

9. Dividend Equivalents; Voting Rights. In the event that a cash dividend is paid with respect to shares of Stock prior to the Vesting Date (or such earlier date that the RSUs are settled hereunder), on the payment date of any such cash dividend the number of RSUs held by Participant shall be increased by that number of RSUs which is equal to (i) the number of outstanding RSUs then held by Participant on the record date of the cash dividend multiplied by (ii) the amount of the cash dividend divided by (iii) the fair market value of a share of Stock on the date the dividend is paid.  Any RSUs that are credited to Participant under this Section 9 shall be treated in the same manner as the RSUs granted under Section 1 of this Agreement and shall only vest and be settled to the extent they vest in accordance with this Agreement and otherwise satisfy the requirements under this Agreement. Upon vesting, any fractional Shares shall be rounded up such that only whole Shares are issued.  Notwithstanding any of the foregoing, this Award shall not be interpreted to bestow upon Participant any equity interest or ownership in the Company prior to the date on which the Company delivers Shares and Participant shall not be entitled to any dividends (or, except as provided above, dividend equivalency rights) in respect of the RSUs or have any voting rights until and to the extent the RSUs vest and Shares are delivered in settlement of the RSUs.

10. Non-Hire/Solicitation/Confidentiality/Code of Conduct.  As a condition of Participant’s eligibility to receive the RSUs and regardless of whether such RSUs vest, Participant agrees that he will (a) not, directly or indirectly, during the term of your Employment, and for a period of one year thereafter, hire, solicit, entice away or in any way interfere with THG’s relationship with, any of its officers or employees, or in any way attempt to do so or participate with, assist or encourage a third party to do so; (b) neither disclose any of THG’s confidential and proprietary information to any third party, nor use such information for any purpose other than for the benefit of THG and in accordance with THG’s policies; (c) not, during the term of Participant’s Employment, and for a period of one year thereafter, interfere with or seek to interfere with, THG’s relationships with any of its policyholders, customers, clients, agents or vendors; and (d) at all times comply with (i) THG’s Code of Conduct and other policies and procedures as in effect from time to time, and (ii) any non-competition, non-disclosure, non-solicitation or similar agreement he may have with the Company or its Affiliates.  The terms of this Section 10 shall survive the expiration or earlier termination of this Agreement.

11. Damages/Specific Performance.  

(a) Participant hereby acknowledges and agrees that in the event of any breach of Section 10 of this Agreement, the Company would be irreparably harmed and could not be made whole by monetary damages.  Participant accordingly agrees to waive the defense in any action for injunctive relief or specific performance that a remedy at law would be adequate and that the Company, in addition to any other remedy to which it may be entitled at law or in equity, shall be entitled to an injunction or to compel specific performance of Section 10.

(b) In addition to any other remedy to which the Company may be entitled at law or in equity (including the remedy provided in the preceding paragraph), Participant hereby acknowledges and agrees that in the event of any breach of Section 10 of this Agreement, Participant shall be required to refund to the Company the value received by Participant upon vesting of the RSUs; provided, however, that the Company makes any such claim, in writing, against Participant alleging a violation of Section 10 not later than two years following Participant’s termination of Employment.

- 4 -

12. Successors.  The provisions of this Agreement will benefit and will be binding upon the permitted assigns, successors in interest, personal representatives, estates, heirs and legatees of each of the parties hereto.  However, the RSUs and any dividend equivalents are non-assignable, except as may be permitted by the Plan.

13. Interpretation.  The terms of the RSUs are as set forth in this Agreement and in the Plan. The Plan is incorporated into this Agreement by reference, which means that this Agreement is limited by and subject to the express terms and provisions of the Plan. In the event of a conflict between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control.

14. Facsimile and Electronic Signature.  The parties may execute this Agreement by means of a facsimile or electronic signature.

15. Entire Agreement; Counterparts.  This Agreement, the Plan and the Offer Letter contain the entire understanding between the parties concerning the subject contained in this Agreement.  Except for the Agreement, the Plan and the Offer Letter, there are no representations, agreements, arrangements, or understandings, oral or written, between or among the parties hereto, relating to the subject matter of this Agreement, that are not fully expressed herein.  This Agreement may be signed in one or more counterparts, all of which shall be considered one and the same agreement.

16. Further Assurances.  Each party to this Agreement agrees to perform all further acts and to execute and deliver all further documents as may be reasonably necessary to carry out the intent of this Agreement.

17. Severability.  In the event that any of the provisions, or portions thereof, of this Agreement are held to be unenforceable or invalid by any court of competent jurisdiction, the validity and enforceability of the remaining provisions, or portions thereof, will not be affected, and such unenforceable provisions shall be automatically replaced by a provision as similar in terms as may be valid and enforceable.

18. Construction.  Whenever used in this Agreement, the singular number will include the plural, and the plural number will include the singular, and the masculine or neuter gender shall include the masculine, feminine, or neuter gender.  The headings of the Sections of this Agreement have been inserted for purposes of convenience and shall not be used for interpretive purposes.  The Administrator shall have full discretion to interpret and administer this Agreement.  Any actions or decisions by the Administrator in connection with this Agreement shall be conclusive and binding upon Participant.

19. No Effect on Employment.  Nothing contained in this Agreement shall be construed to limit or restrict the right of THG to terminate Participant’s Employment at any time, with or without cause, or to increase or decrease Participant’s compensation from the rate of compensation in existence at the time this Agreement is executed.

20. Taxes.  The vesting and settlement of the RSUs and the payment of dividend equivalents will give rise to “wages” subject to withholding.  Participant expressly acknowledges and agrees that Participant’s rights hereunder, including the right to be issued Shares in settlement of the RSUs and the right to receive any payment of dividend equivalent amounts, are subject to Participant promptly  remitting to the Company in cash (or by such other means as may be acceptable to the Administrator in its discretion) any amounts determined by the Company to be required to be withheld.  No Shares will be transferred, and no payment of dividend equivalent amounts will be made, pursuant to the settlement of the RSUs unless and until Participant has remitted to the Company an amount sufficient to satisfy any federal, state, or local withholding tax requirements, or has made other arrangements satisfactory to the Company with respect to such taxes.  Participant authorizes the Company to withhold such amount from any amounts otherwise owed to Participant. The Company may, at its option, withhold from the RSUs, or the Shares which such RSUs represent, a sufficient number of

- 5 -

RSUs/Shares to satisfy the minimum federal, state and local tax withholding due, if any, and remit the balance of the RSUs/Shares to Participant.

The Company makes no representations to Participant with respect to the tax treatment of any amount paid or payable pursuant to this Award.  While this Award is intended to be interpreted and operated to the extent possible so that any such amounts shall be exempt from the requirements of Section 409A, in no event shall the Company be liable to Participant for or with respect to any taxes, penalties and/or interest which may be imposed upon any such amounts pursuant to Section 409A or any other federal or state tax law.  To the extent that any such amount should be subject to Section 409A (or any other federal or state tax law), Participant shall bear the entire risk of any such taxes, penalties and or interest.

21. Waiver of Jury Trial.  By accepting this Award under the Plan, Participant waives any right to a trial by jury in any action, proceeding or counterclaim concerning any rights under (a) the Plan, (b) any Award, or (c) any amendment, waiver, consent, instrument, document or other agreement delivered or which in the future may be delivered in connection with any of the foregoing, and agrees that any such action, proceedings or counterclaim shall be tried before a court and not before a jury.

22. Additional Restrictions.  The Administrator may cancel, rescind, withhold or otherwise limit or restrict the RSUs (in whole or in part) at any time if Participant is not in compliance with all applicable provisions of this Agreement and the Plan, or if Participant breaches any agreement with THG, including with respect to the Code of Conduct or other policies of THG, or any non-competition, non-solicitation, confidentiality or other similar provisions.  Without limiting the generality of the foregoing, the Administrator may recover the RSUs and payments under or gain in respect thereto to the extent required to comply with Section 10D of the Securities Exchange Act of 1934, as amended, or any stock exchange or similar rule adopted under said Section.  In addition, rights, payments and benefits under this Award shall be subject to repayment to, or recoupment by, THG in accordance with clawback or recoupment policies and procedures that THG may adopt from time to time.

23. Definitions.  As used herein, the terms “Cause” and “Good Reason” shall have the meanings set forth in the Offer Letter.

24. Notice and Opportunity to Cure. In the event a Participant believes that a “Good Reason” event has been triggered, Participant must give the Company written notice within 30 days of the first occurrence of such triggering event and a proposed termination date which shall be not sooner than 60 days nor later than 90 days after the date of such notice.  Such notice shall specify Participant’s basis for determining that “Good Reason” has been triggered.  The Company (or Participant’s employer, if applicable) shall have the right to cure a purported “Good Reason” within 30 days of receipt of said notice and, if so cured, a termination of Participant’s Employment shall not be considered to be for “Good Reason” as a result of such event.  If the event triggering “Good Reason” is not cured by the Company (or Participant’s employer, if applicable) within 30 days of its receipt of such notice, Participant must terminate his/her Employment on the proposed termination date.

IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as of the Grant Date.

THE HANOVER INSURANCE GROUP, INC.
By:	/s/ Kathy deCastro
Name: Kathy deCastro
Title: EVP & CHRO
/s/ Jeffrey M. Farber
Jeffrey M. Farber

EX-10.2

Exhibit 10.2

EXECUTION COPY

CREDIT AGREEMENT

dated as of

April 30, 2019

among

THE HANOVER INSURANCE GROUP, INC.

The Lenders Party Hereto

JPMORGAN CHASE BANK, N.A.
as Administrative Agent

WELLS FARGO BANK, NATIONAL ASSOCIATION, PNC BANK, NATIONAL ASSOCIATION and BRANCH BANKING AND TRUST COMPANY
as Co-Syndication Agents

and

GOLDMAN SACHS BANK USA and THE BANK OF NOVA SCOTIA
as Co-Documentation Agents

_______________________________

JPMORGAN CHASE BANK, N.A., WELLS FARGO SECURITIES, LLC,

PNC CAPITAL MARKETS LLC and  BRANCH BANKING AND TRUST COMPANY
as Joint Bookrunners and Joint Lead Arrangers

US-DOCS\105978915.8

TABLE OF CONTENTS

		Page
Article I Definitions		1
SECTION 1.01	Defined Terms	1
SECTION 1.02	Classification of Loans and Borrowings	24
SECTION 1.03	Terms Generally	24
SECTION 1.04	Accounting Terms; GAAP; Pro Forma Calculations	25
SECTION 1.05	Interest Rates; LIBOR Notification	26
SECTION 1.06	Status of Obligations	26
Article II The Credits		26
SECTION 2.01	Commitments	26
SECTION 2.02	Loans and Borrowings	27
SECTION 2.03	Requests for Revolving Borrowings	27
SECTION 2.04	Intentionally Omitted	28
SECTION 2.05	Intentionally Omitted	28
SECTION 2.06	Letters of Credit	28
SECTION 2.07	Funding of Borrowings	34
SECTION 2.08	Interest Elections	35
SECTION 2.09	Termination and Reduction of Commitments	36
SECTION 2.10	Repayment of Loans; Evidence of Debt	36
SECTION 2.11	Prepayment of Loans	37
SECTION 2.12	Fees	37
SECTION 2.13	Interest	38
SECTION 2.14	Alternate Rate of Interest	39
SECTION 2.15	Increased Costs	40
SECTION 2.16	Break Funding Payments	41
SECTION 2.17	Taxes	41
SECTION 2.18	Payments Generally; Pro Rata Treatment; Sharing of Setoffs	45
SECTION 2.19	Mitigation Obligations; Replacement of Lenders	46
SECTION 2.20	Expansion Option	47
SECTION 2.21	Defaulting Lenders	48
SECTION 2.22	Extension of Maturity Date	50
Article III Representations and Warranties		52
SECTION 3.01	Representations and Warranties	52
Article IV Conditions		54
SECTION 4.01	Effective Date	54
SECTION 4.02	Each Credit Event	56
Article V Affirmative Covenants		56
SECTION 5.01	Reporting Requirements	56
SECTION 5.02	Payment of Taxes, Etc.	58
SECTION 5.03	Corporate Existence, Compliance with Laws, Etc.	58
SECTION 5.04	Maintenance of Properties, Etc.	59
SECTION 5.05	Keeping of Books	59
SECTION 5.06	Visitation Rights	59
SECTION 5.07	Use of Proceeds	59
Article VI Negative Covenants		60
SECTION 6.01	Financial Covenants	60
SECTION 6.02	Financial Debt	60
SECTION 6.03	Liens	61
SECTION 6.04	Mergers, Etc.	62

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SECTION 6.05	Disposition of Assets	62
SECTION 6.06	Transactions with Affiliates	62
SECTION 6.07	Line of Business	62
SECTION 6.08	Anti-Dividend-Block	62
SECTION 6.09	Restricted Payments	63
Article VII Events of Default		64
SECTION 7.01	Events of Default	64
SECTION 7.02	Remedies	65
Article VIII The Administrative Agent		65
SECTION 8.01	Authorization and Action	65
SECTION 8.02	Administrative Agent’s Reliance, Indemnification, Etc	68
SECTION 8.03	Posting of Communications	69
SECTION 8.04	The Administrative Agent Individually	70
SECTION 8.05	Successor Administrative Agent	70
SECTION 8.06	Acknowledgements of Lenders and LC Issuers	71
SECTION 8.07	Certain ERISA Matters	71
Article IX Miscellaneous		73
SECTION 9.01	Notices	73
SECTION 9.02	Waivers; Amendments	74
SECTION 9.03	Expenses; Indemnity; Damage Waiver	76
SECTION 9.04	Successors and Assigns	77
SECTION 9.05	Survival	81
SECTION 9.06	Counterparts; Integration; Effectiveness; Electronic Execution	81
SECTION 9.07	Severability	81
SECTION 9.08	Right of Setoff	82
SECTION 9.09	Governing Law; Jurisdiction; Consent to Service of Process	82
SECTION 9.10	WAIVER OF JURY TRIAL	83
SECTION 9.11	Headings	83
SECTION 9.12	Confidentiality	83
SECTION 9.13	USA PATRIOT Act	84
SECTION 9.14	Interest Rate Limitation	84
SECTION 9.15	No Fiduciary Duty, etc.	84
SECTION 9.16	Acknowledgement and Consent to Bail-In of EEA Financial Institutions	85

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Table of Contents

(continued)

Page

SCHEDULES:

Schedule 2.01 – Commitments

Schedule 3.01 – Subsidiaries

Schedule 6.02 – Existing Financial Debt; Existing Liens

Schedule 6.08 – Existing Burdensome Agreements

EXHIBITS:

Exhibit A – Form of Assignment and Assumption

Exhibit B – [Intentionally Omitted]

Exhibit C – Form of Increasing Lender Supplement

Exhibit D – Form of Augmenting Lender Supplement

Exhibit E – List of Closing Documents

Exhibit F – Form of Compliance Certificate

Exhibit G-1 – Form of U.S. Tax Certificate (Foreign Lenders That Are Not Partnerships)

Exhibit G-2 – Form of U.S. Tax Certificate (Foreign Participants That Are Not Partnerships)

Exhibit G-3 – Form of U.S. Tax Certificate (Foreign Participants That Are Partnerships)

Exhibit G-4 – Form of U.S. Tax Certificate (Foreign Lenders That Are Partnerships)

Exhibit H-1 – Form of Borrowing Request

Exhibit H-2 – Form of Interest Election Request

Exhibit I – Form of Note

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CREDIT AGREEMENT (this “Agreement”) dated as of April 30, 2019 among THE HANOVER INSURANCE GROUP, INC., the LENDERS from time to time party hereto, JPMORGAN CHASE BANK, N.A., as Administrative Agent, WELLS FARGO BANK, NATIONAL ASSOCIATION, PNC BANK, NATIONAL ASSOCIATION and BRANCH BANKING AND TRUST COMPANY, as Co-Syndication Agents and GOLDMAN SACHS BANK USA and THE BANK OF NOVA SCOTIA, as Co-Documentation Agents.

The parties hereto agree as follows:

Article I

Definitions

SECTION 1.01Defined Terms.  As used in this Agreement, the following terms have the meanings specified below:

“ABR” when used in reference to any Loan or Borrowing, refers to a Loan, or the Loans comprising such Borrowing, bearing interest at a rate determined by reference to the Alternate Base Rate.

“Acquisition” means any transaction, or any series of related transactions, by which the Borrower and/or any of its Subsidiaries directly or indirectly (i) acquires any ongoing business or all or substantially all of the assets of any Person or division thereof, whether through purchase of assets, merger or otherwise, (ii) acquires (in one transaction or as the most recent transaction in a series of transactions) Control of at least a majority in ordinary voting power of the securities of a Person which have ordinary voting power for the election of directors or (iii) otherwise acquires Control of a more than 50% ownership interest in any such Person.

“Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.

“Administrative Agent” means JPMorgan Chase Bank, N.A., in its capacity as administrative agent for the Lenders hereunder.

“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.  

“Aggregate Commitment” means the aggregate of the Commitments of all of the Lenders, as reduced or increased from time to time pursuant to the terms and conditions hereof.  As of the Effective Date, the Aggregate Commitment is $200,000,000.

“Agreement” has the meaning assigned to such term in the introductory paragraph.

“Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the NYFRB Rate in effect on such day plus ½ of 1% and (c) the Adjusted LIBO Rate for a one month Interest Period in Dollars on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1%, provided that, for the purpose of this

definition, the Adjusted LIBO Rate for any day shall be based on the LIBO Screen Rate (or if the LIBO Screen Rate is not available for such one month Interest Period, the Interpolated Rate) at approximately 11:00 a.m. London time on such day.  Any change in the Alternate Base Rate due to a change in the Prime Rate, the NYFRB Rate or the Adjusted LIBO Rate shall be effective from and including the effective date of such change in the Prime Rate, the NYFRB Rate or the Adjusted LIBO Rate, respectively.  If the Alternate Base Rate is being used as an alternate rate of interest pursuant to Section 2.14, then the Alternate Base Rate shall be the greater of clauses (a) and (b) above and shall be determined without reference to clause (c) above.  For the avoidance of doubt, if the Alternate Base Rate as determined pursuant to the foregoing would be less than 1.00%, such rate shall be deemed to be 1.00% for purposes of this Agreement.

“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to the Borrower or any of its Subsidiaries from time to time concerning or relating to bribery or corruption.

“Applicable Party” has the meaning assigned to such term in Section 8.03(c).

“Applicable Percentage” means, with respect to any Lender, the percentage of the Aggregate Commitment represented by such Lender’s Commitment; provided that, in the case of Section 2.21 when a Defaulting Lender shall exist, “Applicable Percentage” shall mean the percentage of the Aggregate Commitment (disregarding any Defaulting Lender’s Commitment) represented by such Lender’s Commitment.  If the Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Commitments most recently in effect, giving effect to any assignments and to any Lender’s status as a Defaulting Lender at the time of determination.

“Applicable Rate” means, for any day, with respect to any Eurodollar Loan or any ABR Loan or with respect to the commitment fees payable hereunder, as the case may be, the applicable rate per annum set forth below under the caption “Eurodollar Spread”, “ABR Spread” or “Commitment Fee Rate”, as the case may be, based upon the ratings by Moody’s and S&P, respectively, applicable on such date to the Index Debt:

	Index Debt Ratings (Moody’s/S&P)	Commitment Fee Rate	Eurodollar Spread	ABR Spread
Category 1:	Baa1/BBB+ or higher	0.175%	1.25%	0.25%
Category 2:	Baa2/BBB	0.20%	1.375%	0.375%
Category 3:	Baa3/BBB-	0.225%	1.50%	0.50%
Category 4:	Ba1/BB+ or lower	0.25%	1.625%	0.625%

For purposes of the foregoing, (i) if only one of Moody’s and S&P shall have in effect a rating for the Index Debt (other than by reason of the circumstances referred to in the last sentence of this definition), the Category then in effect shall be based on such rating, (ii) if neither Moody’s nor S&P shall have in effect a rating for the Index Debt (other than by reason of the circumstances referred to in the last sentence of this definition), then both such rating agencies shall be deemed to have established a rating in Category 4; (iii) if the ratings established or deemed to have been established by Moody’s and S&P for the Index Debt shall fall within different Categories, the Applicable Rate shall be based on the higher of the two ratings unless one of the two ratings is two or more Categories lower than the other, in which case

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the Category then in effect shall be determined by reference to the Category next below that of the higher of the two ratings; and (iv) if the ratings established or deemed to have been established by Moody’s and S&P for the Index Debt shall be changed (other than as a result of a change in the rating system of Moody’s or S&P), such change shall be effective as of the date on which it is first announced by the applicable rating agency, irrespective of when notice of such change shall have been furnished by the Borrower to the Administrative Agent and the Lenders pursuant to Section 5.01 or otherwise.  Each change in the Applicable Rate shall apply during the period commencing on the effective date of such change and ending on the date immediately preceding the effective date of the next such change.  If the rating system of Moody’s or S&P shall change, or if either such rating agency shall cease to be in the business of rating corporate debt obligations, the Borrower and the Lenders shall negotiate in good faith to amend this definition to reflect such changed rating system or the unavailability of ratings from such rating agency and, pending the effectiveness of any such amendment, the Applicable Rate shall be determined by reference to the rating most recently in effect prior to such change or cessation.

“Approved Electronic Platform” has the meaning assigned to such term in Section 8.03(a).

“Approved Fund” has the meaning assigned to such term in Section 9.04(b).

“Assignment and Assumption” means an assignment and assumption agreement entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 9.04), and accepted by the Administrative Agent, in the form of Exhibit A or any other form (including electronic records generated by the use of an electronic platform) approved by the Administrative Agent.

“Augmenting Lender” has the meaning assigned to such term in Section 2.20.

“Availability Period” means the period from and including the Effective Date to but excluding the earlier of the Maturity Date and the date of termination of the Commitments.

“Available Revolving Commitment” means, at any time with respect to any Lender, the Commitment of such Lender then in effect minus the Revolving Credit Exposure of such Lender at such time.

“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

“Bail-In Legislation” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

“Bankruptcy Event” means, with respect to any Person, such Person becomes the subject of a voluntary or involuntary bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment or has had any order for relief in such proceeding entered in respect thereof; provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person by a Governmental Authority or instrumentality thereof, provided, further, that such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such

3

Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person.

“Beneficial Ownership Certification” means a certification regarding beneficial ownership or control as required by the Beneficial Ownership Regulation.

“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.

“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in Section 3(3) of ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in Section 4975(e)(1) of the Code to which Section 4975 of the Code applies, or (c) any Person whose assets include (for purposes of the Plan Asset Regulations or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”.

“Board” means the Board of Governors of the Federal Reserve System of the United States of America.

“Borrower” means The Hanover Insurance Group, Inc., a Delaware corporation.

“Borrowing” means Revolving Loans of the same Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect.

“Borrowing Request” means a request by the Borrower for a Revolving Borrowing in accordance with Section 2.03, which shall be substantially in the form attached hereto as Exhibit H-1 or any other form approved by the Administrative Agent.

“Burdensome Agreement” has the meaning assigned to such term in Section 6.08.

“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; provided that, when used in connection with a Eurodollar Loan, the term “Business Day” shall also exclude any day on which banks are not open for dealings in Dollars in the London interbank market.

“Cash Collateralize” means to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the Administrative Agent or the applicable LC Issuer (as applicable) and the Lenders, as collateral for the LC Exposure or obligations of Lenders to fund participations in respect of either thereof (as the context may require), cash or deposit account balances or, if the LC Issuer benefiting from such collateral shall agree in its sole discretion, other credit support, in each case pursuant to documentation in form and substance reasonably satisfactory to (a) the Administrative Agent and (b) the applicable LC Issuer.  “Cash Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.

“Change in Control” means any of the following events:

(a) any “person” or “group” (as such terms are used for purposes of sections 13(d) and 14(d) of the Securities Exchange Act of 1934, whether or not applicable, except that for purposes of this paragraph (a) such person or group shall be deemed to have “beneficial ownership” of all shares that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), is or becomes the “beneficial owner” (as such term is used in Rule 13d-3 promulgated pursuant to said Act), directly or indirectly, of more than 35% of the Voting Shares of the Borrower; or

4

(b) during any period of 25 consecutive calendar months, a majority of the board of directors of the Borrower shall no longer be composed of individuals (i) who were members of said board on the first day of such period or (ii) whose election or nomination to said board was approved by a majority of the board of the directors of the Borrower, which members comprising such majority were either the individuals referred to in clause (i) or whose election or nomination was previously so approved.

“Change in Law” means the occurrence, after the date of this Agreement (or with respect to any Lender, if later, the date on which such Lender becomes a Lender), of any of the following:  (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority, or (c) the making or issuance of any request, rules, guideline, requirement or directive (whether or not having the force of law) by any Governmental Authority; provided however, that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines, requirements and directives thereunder, issued in connection therewith or in implementation thereof, and (ii) all requests, rules, guidelines, requirements and directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law” regardless of the date enacted, adopted, issued or implemented.

“Charges” has the meaning assigned to such term in Section 9.15.

“CIC” means Citizens Insurance Company of America, a property and casualty insurance company organized under the laws of Michigan as a corporation.

“CitySquare Project” means the CitySquare development in Worcester, Massachusetts as described in Form 10-K of The Hanover Insurance Group, Inc. for the fiscal year ended December 31, 2010.

“Class”, when used in reference to any Loan or Borrowing, refers to such Loan, or the Loans comprising such Borrowing, as being either Revolving Loans or Incremental Term Loans.

“Code” means the Internal Revenue Code of 1986, as amended.

“Co-Documentation Agent” means each of Goldman Sachs Bank USA and The Bank of Nova Scotia in its capacity as co-documentation agent for the credit facility evidenced by this Agreement.

“Commitment” means, with respect to each Lender, the amount set forth on Schedule 2.01 opposite such Lender’s name under the heading “Commitment”, or in the Assignment and Assumption or other documentation or record (as such term is defined in Section 9-102(a)(70) of the New York Uniform Commercial Code) contemplated hereby pursuant to which such Lender shall have assumed its Commitment, as applicable, and giving effect to (a) any reduction in such amount from time to time pursuant to Section 2.09, (b) any increase from time to time pursuant to Section 2.20 and (c) any reduction or increase in such amount from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04; provided that at no time shall the Revolving Credit Exposure of any Lender exceed its Commitment.

“Communications” means, collectively, any notice, demand, communication, information, document or other material provided by or on behalf of the Borrower pursuant to any Loan

5

Document or the transactions contemplated therein which is distributed by the Administrative Agent, any Lender or any LC Issuer by means of electronic communications pursuant to Section 8.03(c), including through an Approved Electronic Platform.

“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.

“conservator” has the meaning assigned to such term in Section 7.01(f).

“Consolidated” refers to the consolidation of accounts of the Borrower and its Subsidiaries in accordance with GAAP.

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise.  The terms “Controlling” and “Controlled” have meanings correlative thereto.

“Controlled Investment Affiliate” means, as to any future, present, or former employee, director, officer or consultant of the Borrower and its Subsidiaries, any other Person, which directly or indirectly is in Control of, is Controlled by, or is under common Control with such Person and is organized by such Person (or any Person Controlling such Person) primarily for making direct or indirect equity investments in the Borrower or its Subsidiaries.

“Co-Syndication Agent” means each of Wells Fargo Bank, National Association, PNC Bank, National Association and Branch Banking and Trust Company in its capacity as co-syndication agent for the credit facility evidenced by this Agreement.

“Credit Party” means the Administrative Agent, the Issuing Agent, any Fronting Bank or any other Lender.

“Debt” of any Person means, without duplication, (a) indebtedness of such Person for borrowed money, (b) obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) obligations of such Person to pay the deferred purchase price of Property or services (other than trade payables and accrued expenses incurred in the ordinary course of business and not overdue by more than 90 days), (d) obligations of such Person as lessee under leases which shall have been or should be, in accordance with GAAP, recorded as capital leases, (e) Debt of others secured by a Lien on the Property of such Person, whether or not the Debt so secured has been assumed by such Person, (f) obligations of such Person under Guaranties in respect of Debt of others (including any obligations constituting Limited Originator Recourse in respect of Debt of a Securitization Subsidiary), (g) without duplication, (A) obligations of such Person in respect of Hybrid Securities (disregarding clause (ii) of the definition thereof) and (B) in each case, Disqualified Equity Interests (disregarding clause (ii) of the definition thereof) and Preferred Securities (disregarding clause (ii) of the definition thereof) requiring repayments, prepayments, mandatory redemptions or repurchases prior to 91 days after the Maturity Date, with the amount of Debt represented by such Disqualified Equity Interest or Preferred Security being equal to the greater of its voluntary or involuntary liquidation amount and its maximum fixed repurchase price or redemption amount, (h) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to Property acquired by such Person, (i) the net termination obligations of such Person under any Hedge Agreements, calculated as of any date as if such agreement or arrangement were terminated as of such date and (j) the principal balance outstanding and owing by such Person under any synthetic lease, tax retention operating lease or similar off-balance sheet financing product.

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“Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

“Defaulting Lender” means any Lender that (a) has failed, within two (2) Business Days of the date required to be funded or paid, to (i) fund any portion of its Loans, (ii) fund any portion of its participations in Letters of Credit or (iii) pay over to any Credit Party any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender’s good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified the Borrower or any Credit Party in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender’s good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a Loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within three (3) Business Days after request by a Credit Party, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations) to fund prospective Loans and participations in then outstanding Letters of Credit under this Agreement, provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon such Credit Party’s receipt of such certification in form and substance satisfactory to it and the Administrative Agent, or (d) has become the subject of (i) a Bankruptcy Event or (ii) a Bail-In Action.

“Disqualified Equity Interest” means, with respect to any Person, any Equity Interest of such Person that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event or otherwise, (i) (a) matures or is mandatorily redeemable or subject to any mandatory repurchase requirement, pursuant to a sinking fund obligation or otherwise (except as a result of a change of control or asset sale so long as the rights of holder thereof upon the occurrence of a change of control or asset sale event shall be subject to (1) the prior repayment in full of the Loans and all other Obligations that are accrued and payable, (2) the termination of the Commitments and (3) the Cash Collateralization all Letters of Credit then outstanding (whether or not any beneficiary under any such Letter of Credit shall have drawn or be entitled at such time to draw thereunder) in an amount of cash equal to 103% of the aggregate Stated Amount thereof), (b) is redeemable or subject to any mandatory repurchase requirement at the sole option of the holder thereof, or (c) is convertible into or exchangeable for (whether at the option of the issuer or the holder thereof) (y) debt securities or (z) any Equity Interest referred to in (a) or (b) above, and (ii) requires no such repayments, prepayments, mandatory redemptions or repurchases, in each case in the foregoing clauses (a), (b) and (c), prior to 91 days after the Maturity Date; provided that (1) if such Equity Interests are issued pursuant to a plan for the benefit of employees of the Borrower or any of its Subsidiaries or by any such plan to such employees, such Equity Interests shall not constitute Disqualified Equity Interests solely because they may be required to be repurchased by the Borrower or its Subsidiaries in order to satisfy applicable statutory or regulatory obligations and (2) no such Equity Interests held by any future, present or former employee, director, officer or individual consultant (or their respective Controlled Investment Affiliates or Immediate Family Members) of the Borrower (or any of its Subsidiaries) shall be considered Disqualified Equity Interests because such Equity Interests are redeemable or subject to repurchase pursuant to any management equity subscription agreement, stock option, stock appreciation right or other stock award agreement, stock ownership plan, put agreement, stockholder agreement or similar agreement that may be in effect from time to time.

“Dollars” or “$” refers to lawful money of the United States of America.

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“EEA Financial Institution” means (a) any institution established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

“EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

“Effective Date” means the date on which the conditions specified in Section 4.01 are satisfied (or waived in accordance with Section 9.02).

“Electronic Signature” means an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a Person with the intent to sign, authenticate or accept such contract or record.

“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or to health and safety matters, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any of the foregoing.

“Equity Issuance” means any issuance or sale by the Borrower or any of its Subsidiaries after the Effective Date of Equity Interests, other than (a) any such issuance or sale by a Subsidiary of the Borrower to the Borrower or to a Wholly-Owned Subsidiary of the Borrower, (b) any capital contribution by the Borrower or a Wholly-Owned Subsidiary of the Borrower to any Subsidiary of the Borrower, (c) stocks, warrants, options or other rights to obtain Equity Interests issued to directors, officers, consultants and other employees of the Borroweror any of its Subsidiaries or (d) any sale or disposition of a non-Material Subsidiary.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer within the meaning of Section 414(b) or (c) of

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the Code or Section 4001(b)(1) of ERISA or, solely for purposes of section 302 of ERISA and section 412 of the Code, is treated as a single employer under section 414 of the Code.

“ERISA Event” means (a) any “reportable event”, as defined in section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) a determination that a Plan is, or is reasonably expected to be, in “at risk” status (as defined in section 303(i)(4) of ERISA); (c) the failure to timely make a contribution required to be made with respect to any Plan or any Multiemployer Plan; (d) a determination that a Multiemployer Plan is, or is expected to be, in “endangered status” or “critical status” (each as defined in section 305(b) of ERISA); (e) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (f) the receipt by the Borrower or any of its ERISA Affiliates from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (g) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (h) the receipt by the Borrower or any of its ERISA Affiliates of any notice, or the receipt by any Multiemployer Plan from the Borrower or any of its ERISA Affiliates of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA; or (i) the occurrence of a non-exempt prohibited transaction under section 406 of ERISA or section 4975 of the Code which could reasonably be expected to result in liability to the Borrower or any of its ERISA Affiliates.

“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.

“Eurodollar” when used in reference to any Loan or Borrowing, means that such Loan, or the Loans comprising such Borrowing, bears interest at a rate determined by reference to the Adjusted LIBO Rate.

“Event of Default” has the meaning assigned to such term in Section 7.01.

“Excluded Taxes” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan, Letter of Credit or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan, Letter of Credit or Commitment (other than pursuant to an assignment request by the Borrower under Section 2.19(b)) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 2.17, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender acquired the applicable interest in a Loan, Letter of Credit or Commitment or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with Section 2.17(f) and (d) any withholding Taxes imposed under FATCA.

“Existing Credit Agreement” means the Credit Agreement, dated as of November 12, 2013, by and among the Borrower, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, as amended, restated, supplemented or otherwise modified prior to the date hereof.

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially

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more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental Authorities and implementing such Sections of the Code.

“Federal Funds Effective Rate” means, for any day, the rate calculated by the NYFRB based on such day’s federal funds transactions by depositary institutions, as determined in such manner as the NYFRB shall set forth on its public website from time to time, and published on the next succeeding Business Day by the NYFRB as the effective federal funds rate; provided that if the Federal Funds Effective Rate as so determined would be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.

“Financial Debt” means, without duplication, Debt of the kinds set forth in clauses (a), (b), (d) or (g) of the definition of Debt, or of the kinds set forth in clauses (e) or (f) thereof to the extent relating to Debt of the type referred to in (a), (b), (d) and (g) of the definition thereof.

“Foreign Lender” means (a) if the Borrower is a U.S. Person, a Lender that is not a U.S. Person, and (b) if the Borrower is not a U.S. Person, a Lender that is resident or organized under the laws of a jurisdiction other than that in which the Borrower is resident for tax purposes.

“Fronted Letter of Credit” has the meaning assigned to such term in Section 2.06(b).

“Fronted Unpaid Drawing” means any unreimbursed LC Disbursement with respect to a Fronted Letter of Credit.

“Fronting Bank” means any Lender (or any Affiliate thereof) which is requested by the Borrower, and which agrees in writing in its sole discretion, to issue Fronted Letters of Credit hereunder pursuant to Section 2.06.

“Fronting Participant” has the meaning assigned to such term in Section 2.06(b).

“GAAP” means generally accepted accounting principles in the United States of America.

“Governmental Authority” means any federal, state, municipal, national or other government, governmental department, commission, board, bureau, court, agency or instrumentality or political subdivision thereof or any entity, officer or examiner exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to any government or any court, in each case whether associated with a state of the United States, the United States, or a foreign entity or government (including any supra-national bodies such as the European Union or the European Central Bank).

“Guaranty” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise,  of the guarantor guaranteeing or having the economic effect of guaranteeing any Debt of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or to advance or supply funds for the purchase or payment of) such Debt or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease Property or services for the purpose of assuring the owner of such Debt or other obligation of the payment thereof, or (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Debt or other obligation or as an account party in respect of any letter of credit or letter of guarantee issued to support such Debt; provided that the term “Guaranty” shall not include (i) endorsements for collection or deposit in the ordinary course of business or (ii) credit

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insurance or payment obligations under insurance policies or surety bonds issued by the Borrower and its Subsidiaries in the ordinary course of business.

“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or to health and safety matters.

“Hedge Agreement” means any interest or foreign currency rate swap, cap, collar, option, hedge, forward rate or other similar agreement or arrangement designed to protect against fluctuations in interest rates or currency exchange rates.

“HIC” means The Hanover Insurance Company, a property and casualty insurance company organized under the laws of New Hampshire as a corporation.

“Hybrid Securities” means securities (i) that afford equity benefit to the issuer thereof (under the procedures and guidelines of S&P) by having ongoing payment requirements that are more flexible than interest payments associated with conventional indebtedness for borrowed money and by being contractually subordinated to such indebtedness and (ii) that require no repayments or prepayments and no mandatory redemptions or repurchases, in each case, prior to 91 days after the Maturity Date.

“IBA” has the meaning assigned to such term in Section 1.05.

“Immediate Family Member” means with respect to any individual, such individual’s child, stepchild, grandchild or more remote descendant, parent, stepparent, grandparent, spouse, former spouse, qualified domestic partner, sibling, mother-in-law, father-in-law, son-in-law and daughter-in-law (including adoptive relationships) and any trust, partnership or other bona fide estate-planning vehicle the only beneficiaries of which are any of the foregoing individuals or any private foundation or fund that is controlled by any of the foregoing individuals or any donor-advised fund of which any such individual is the donor.

“Impacted Interest Period” has the meaning assigned to such term in the definition of “LIBO Rate”.

“Increasing Lender” has the meaning assigned to such term in Section 2.20.

“Incremental Term Loan” has the meaning assigned to such term in Section 2.20.

“Incremental Term Loan Amendment” has the meaning assigned to such term in Section 2.20.

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Borrower under any Loan Document and (b) to the extent not otherwise described in clause (a), Other Taxes.

“Indemnitee” has the meaning assigned to such term in Section 9.03(b).

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“Index Debt” means senior, unsecured, long-term indebtedness for borrowed money of the Borrower that is not guaranteed by any other person or entity or subject to any other credit enhancement.

“Ineligible Institution” has the meaning assigned to such term in Section 9.04(b).

“Information” has the meaning assigned to such term in Section 9.12.

“Insurance Regulatory Authority” means, for any Insurance Subsidiary, the insurance department or similar administrative authority or agency located in the state or other jurisdiction in which such Insurance Subsidiary is domiciled (including “commercially domiciled” as that term is defined under relevant state law).

“Insurance Subsidiary” means a Subsidiary of the Borrower that is licensed to do an insurance or reinsurance business.

“Interest Election Request” means a request by the Borrower to convert or continue a Borrowing in accordance with Section 2.08, which shall be substantially in the form attached hereto as Exhibit H-2 or any other form approved by the Administrative Agent.

“Interest Payment Date” means (a) with respect to any ABR Loan, the last day of each March, June, September and December and the Maturity Date and (b) with respect to any Eurodollar Loan, the last day of each Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period and the Maturity Date.

“Interest Period” means with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months thereafter, as the Borrower may elect; provided, that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) any Interest Period pertaining to a Eurodollar Borrowing that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period.  For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

“Interpolated Rate” means, at any time, for any Interest Period, the rate per annum (rounded to the same number of decimal places as the LIBO Screen Rate) determined by the Administrative Agent (which determination shall be conclusive and binding absent manifest error) to be equal to the rate that results from interpolating on a linear basis between: (a) the LIBO Screen Rate for the longest period (for which the LIBO Screen Rate is available for Dollars) that is shorter than the Impacted Interest Period; and (b) the LIBO Screen Rate for the shortest period (for which the LIBO Screen Rate is available for Dollars) that exceeds the Impacted Interest Period, in each case, at such time; provided that if any Interpolated Rate shall be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.

“IRS” means the United States Internal Revenue Service.

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“Issuing Agent” means JPMorgan Chase Bank, N.A., in its capacity as the issuing agent of Several Letters of Credit hereunder, and its successors in such capacity as provided in Section 2.06(h).  The Issuing Agent may, in its discretion, arrange for Affiliates of the Issuing Agent to act as the issuing agent of the Several Letters of Credit, in which case the term “Issuing Agent” shall include any such Affiliate with respect to Several Letters of Credit for which such Affiliate acts as Issuing Agent.

“Joint Bookrunner” means each of JPMorgan Chase Bank, N.A., Wells Fargo Securities, LLC, PNC Capital Markets LLC and Branch Banking and Trust Company in its capacity as a joint bookrunner and joint lead arranger for the credit facility evidenced by this Agreement.

“LC Collateral Account” has the meaning assigned to such term in Section 2.06(i).

“LC Disbursement” means a payment made by a Lender (in the case of a Several Letter of Credit) or a Fronting Bank (in the case of a Fronted Letter of Credit) pursuant to a Letter of Credit.

“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time.  The LC Exposure of any Lender at any time shall be its Applicable Percentage of the LC Exposure at such time.

“LC Issuer” means each of the Issuing Agent and each Fronting Bank.

“Lender Parent” means, with respect to any Lender, any Person as to which such Lender is, directly or indirectly, a subsidiary.

“Lenders” means the Persons listed on Schedule 2.01 and any other Person that shall have become a Lender hereunder pursuant to Section 2.20 or pursuant to an Assignment and Assumption or otherwise, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption or otherwise.  Unless the context otherwise requires, the term “Lenders” includes each LC Issuer.

“Letter of Credit Agreement” has the meaning assigned to such term in Section 2.06(c).

“Letters of Credit” means the Several Letters of Credit and the Fronted Letters of Credit.

“Leverage Ratio” means, at any time, the ratio of (i) Modified Total Debt to (ii) Total Capitalization.

“LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period, the LIBO Screen Rate at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period; provided that if the LIBO Screen Rate shall not be available at such time for such Interest Period (an “Impacted Interest Period”) then the LIBO Rate shall be the Interpolated Rate.

“LIBO Screen Rate” means, for any day and time, with respect to any Eurodollar Borrowing for any Interest Period, the London interbank offered rate as administered by ICE Benchmark Administration (or any other Person that takes over the administration of such rate) for Dollars for a period equal in length to such Interest Period as displayed on such day and time on pages LIBOR01 or LIBOR02 of the Reuters screen that displays such rate (or, in the event such rate does not appear on a Reuters page or screen, on any successor or substitute page on such screen that displays such rate, or on the appropriate page of such other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion); provided that if the LIBO Screen Rate

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as so determined would be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.

“Lien” means any lien, security interest or other charge or encumbrance of any kind, or any other type of preferential arrangement, including, without limitation, the lien or retained security title of a conditional vendor.

“Limited Originator Recourse” means a letter of credit, revolving loan commitment, cash collateral account or other such credit enhancement issued in connection with the incurrence of Financial Debt by a Securitization Subsidiary in connection with a Securitization Transaction; provided that, the aggregate amount of such letter of credit reimbursement obligations and the aggregate available amount of such revolving loan commitments, cash collateral accounts or other such credit enhancements of the Borrower and any of its Subsidiaries (other than any other Securitization Subsidiary) shall not exceed 10% of the principal amount of such Financial Debt at any time.

“Loan Documents” means this Agreement, any promissory notes issued pursuant to Section 2.10(e), any Letter of Credit applications, powers of attorney, Letter of Credit Agreements and all other written agreements whether heretofore, now or hereafter executed by or on behalf of the Borrower and delivered to the Administrative Agent or any Lender in connection with this Agreement or the transactions contemplated hereby.  Any reference in this Agreement or any other Loan Document to a Loan Document shall include all appendices, exhibits or schedules thereto, and all amendments, restatements, supplements or other modifications thereto, and shall refer to this Agreement or such Loan Document as the same may be in effect at any and all times such reference becomes operative.

“Loans” means the loans made by the Lenders to the Borrower pursuant to this Agreement.

“Margin Stock” means margin stock within the meaning of Regulations T, U and X, as applicable.

“Material Adverse Change” or “Material Adverse Effect” means a material adverse change in or effect on (i) the business, financial condition or results of operations of the Borrower and its Subsidiaries, taken as a whole, or (ii) the ability of the Borrower to perform its obligations under this Agreement, or (iii) the legality, validity or enforceability of this Agreement.  

“Material Debt” has the meaning assigned to such term in Section 7.01(d).

“Material Insurance Subsidiary” means any of CIC and HIC and any other Insurance Subsidiary that constitutes a Material Subsidiary.

“Material Subsidiary” means any Subsidiary of the Borrower, other than any Subsidiary the book value of whose assets do not constitute more than 5% of the book value (determined on a Consolidated basis) of the total assets of the Borrower and its Subsidiaries.

“Maturity Date” means April 30, 2024, subject to extension (in the case of each Lender consenting thereto) as provided in Section 2.22; provided, however, if such date is not a Business Day, the Maturity Date shall be the next preceding Business Day.

“Maximum Rate” has the meaning assigned to such term in Section 9.14.

“Modified Total Debt” means, at any time, the sum of the following:

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(a) Total Debt plus

(b) Without duplication, the amount (if any) by which (i) the aggregate outstanding amount of all Hybrid Securities that is attributed to Net Worth pursuant to clause (b) of the definition of “Net Worth” plus (ii) the portion of all Preferred Securities issued by the Borrower or any Subsidiary (other than any Securitization Subsidiary) that is deemed to constitute equity, as determined in accordance with S&P’s methodology at such time plus (iii) the portion of all Disqualified Equity Interests issued by the Borrower or any Subsidiary (other than any Securitization Subsidiary) that is deemed to constitute equity, as determined in accordance with S&P’s methodology at such time plus (iv) the portion of all Specified Convertible Debt Securities issued by the Borrower or any Subsidiary (other than any Securitization Subsidiary) that is deemed to constitute equity, as determined in accordance with S&P’s methodology at such time, exceeds 15% of Total Capitalization.

“Moody’s” means Moody’s Investors Service, Inc.

“Multiemployer Plan” means a multiemployer plan as defined in section 4001(a)(3) of ERISA and that is subject to Title IV of ERISA, to which the Borrower or any of its ERISA Affiliates makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

“NAIC” means the National Association of Insurance Commissioners or any successor thereto, or in lieu thereof, any other association, agency or other organization performing substantially similar advisory, coordination or other like functions among insurance departments, insurance commissions and similar governmental authorities of the various states of the United States of America toward the promotion of uniformity in the practices of such governmental authorities.

“Net Equity Proceeds” means, with respect to any Equity Issuance, the aggregate amount of all cash received by the Borrower and its Subsidiaries (other than any Securitization Subsidiaries) in respect of such Equity Issuance net of all reasonable fees and expenses incurred by the Borrower and its Subsidiaries in connection therewith.

“Net Worth” means, at any time, the sum of the following for the Borrower and its Subsidiaries (other than any Securitization Subsidiaries) (determined on a Consolidated basis without duplication in accordance with GAAP):

(a) total shareholders’ equity of the Borrower determined in accordance with GAAP; provided that the net unrealized appreciation and depreciation of securities that are classified as available for sale and are subject to ASC 320 shall be excluded, plus

(b) without duplication of clauses (c) and (d) hereof, solely for purposes of determining “Total Capitalization” the portion of all outstanding Hybrid Securities that is deemed to constitute equity, as determined in accordance with S&P’s methodology at such time, minus

(c) without duplication of clauses (b) and (d) hereof, solely for purposes of determining “Total Capitalization” the portion of all outstanding Preferred

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Securities that is deemed to constitute indebtedness, as determined in accordance with S&P’s methodology at such time, minus

(d) without duplication of clauses (b) and (c) hereof, solely for purposes of determining “Total Capitalization” the portion of all outstanding Disqualified Equity Interests that is deemed to constitute indebtedness, as determined in accordance with S&P’s methodology at such time.

“Non-Consenting Lender” has the meaning assigned to such term in Section 9.02(d).

“Non-Public Information” means information which has not been disseminated in a manner making it available to investors generally, within the meaning of Regulation FD.

“NYFRB” means the Federal Reserve Bank of New York.

“NYFRB Rate” means, for any day, the greater of (a) the Federal Funds Effective Rate in effect on such day and (b) the Overnight Bank Funding Rate in effect on such day (or for any day that is not a Business Day, for the immediately preceding Business Day); provided that if none of such rates are published for any day that is a Business Day, the term “NYFRB Rate” means the rate for a federal funds transaction quoted at 11:00 a.m., New York City time, on such day received by the Administrative Agent from a federal funds broker of recognized standing selected by it; provided, further, that if any of the aforesaid rates as so determined would be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.

“Obligations” means all unpaid principal of and accrued and unpaid interest on the Loans, all LC Exposure, all accrued and unpaid fees and all expenses, reimbursements, indemnities and other obligations and indebtedness (including interest and fees accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), obligations and liabilities of any of the Borrower and its Subsidiaries to any of the Lenders, the Administrative Agent, any LC Issuer or any indemnified party under this Agreement, individually or collectively, existing on the Effective Date or arising thereafter, direct or indirect, joint or several, absolute or contingent, matured or unmatured, liquidated or unliquidated, secured or unsecured, arising by contract, operation of law or otherwise, arising or incurred under this Agreement or any of the other Loan Documents or in respect of any of the Loans made or reimbursement or other obligations incurred or any of the Letters of Credit or other instruments at any time evidencing any thereof.

“OFAC” means the Office of Foreign Assets Control of the U.S. Department of the Treasury.

“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan, Letter of Credit or Loan Document).

“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes

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imposed with respect to an assignment, grant of a participation or other transfer (other than an assignment made pursuant to Section 2.19).

“Overnight Bank Funding Rate” means, for any day, the rate comprised of both overnight federal funds and overnight eurodollar borrowings by U.S.-managed banking offices of depository institutions, as such composite rate shall be determined by the NYFRB as set forth on its public website from time to time, and published on the next succeeding Business Day by the NYFRB as an overnight bank funding rate.

“Participant” has the meaning assigned to such term in Section 9.04(c).

“Participant Register” has the meaning assigned to such term in Section 9.04(c).

“Patriot Act” means the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

“Permitted Liens” means any of the following Liens:

(a) Liens imposed by any governmental authority for taxes, assessments or charges not yet due or that are being contested in good faith and by appropriate proceedings;

(b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, construction contractors’ or other like Liens arising in the ordinary course of business that are not overdue for a period of more than 60 days or that are being contested in good faith and by appropriate proceedings and Liens securing judgments or orders for the payment of money but only to the extent not resulting in an Event of Default under Section 7.01(g) hereof;

(c) pledges or deposits made (i) in connection with, or to secure payment of, worker’s compensation, unemployment insurance, old age pensions, other social security legislation and other statutory obligations and in each case in compliance therewith, (ii) to secure in the ordinary course of business the performance of bids, tenders, contracts or leases, (iii) to secure statutory obligations, surety and customs bonds, performance bonds and other obligations of a like nature (including those to secure health, safety and environmental obligations) in the ordinary course of business, (iv) to secure stay and appeal bonds, (v) to secure indemnity, performance or other similar bonds in the ordinary course of business, or (vi) in connection with contested amounts in the ordinary course of business;

(d) encumbrances in the nature of (i) easements, (ii) rights-of-way, (iii) zoning restrictions or similar laws or rights reserved to or vested in any Governmental Authority to control or regulate the use of any real property, (iv) leases and subleases (other than any capital leases or synthetic leases), and licenses and sublicenses, (v) encroachments, protrusions and other similar encumbrances and restrictions on the use of real property or minor imperfections in title thereto, (vi) landlords’ and lessors’ Liens on rented premises, and (vii) restrictions on transfers or assignment of leases, which in each case do not secure monetary

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obligations and do not in any case materially detract from the value of the property subject thereto or interfere with the ordinary conduct of the business of the Borrower or any of its Subsidiaries;

(e) Liens arising under escrows, trusts, custodianships, separate accounts, funds withheld procedures, and similar deposits, arrangements, or agreements established with respect to insurance or reinsurance policies, annuities, guaranteed investment contracts and similar products underwritten by, or Reinsurance Agreements entered into by, the Borrower or any Insurance Subsidiary in the ordinary course of business;

(f) deposits with Insurance Regulatory Authorities;

(g) Liens securing obligations under letters of credit issued for the benefit of Insurance Regulatory Authorities, including as permitted under Section 6.02(n);

(h) Liens granted by Securitization Subsidiaries in connection with Securitization Transactions;

(i) Liens on Property of any Person that becomes a Subsidiary of the Borrower after the date hereof, provided that such Liens are in existence at the time such Person becomes a Subsidiary of the Borrower and were not created in anticipation thereof;

(j) Liens upon real and/or tangible personal Property acquired after the date hereof (by purchase, construction or otherwise) by the Borrower or any of its Subsidiaries, each of which Liens either (A) existed on such Property before the time of its acquisition and was not created in anticipation thereof or (B) was created solely for the purpose of securing Debt representing, or incurred to finance, refinance or refund, the cost (including the cost of construction) of such Property, provided that no such Lien shall extend to or cover any Property of the Borrower or such Subsidiary other than the Property so acquired and improvements thereon;

(k) Liens on securities or financial instruments arising out of (i) repurchase (and reverse repurchase) agreements for liquidity or yield enhancement purposes and in no event outstanding for a period exceeding ninety (90) days in each case and (ii) other investment strategies with respect to securities and financial instruments, in each case entered into in the ordinary course of business and on ordinary business terms;

(l) the sale of delinquent accounts receivable for collection in the ordinary course of business;

(m) Liens in existence on the date hereof and set forth in Schedule 6.02 (and any extension, renewal or replacement thereof permitted under Section 6.02(o));

(n) Liens in favor of a Federal Home Loan Bank to secure borrowings from such Federal Home Loan Bank in the ordinary course of business and on ordinary business terms pursuant to a membership in such Federal Home Loan Bank;

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(o) Liens on deposits made in connection with the discharge, defeasance or redemption of Debt;

(p) Liens securing Debt permitted under Section 6.02(e);

(q) Liens (i) of a collection bank arising under Section 4-208 of the Uniform Commercial Code on the items in the course of collection and (ii) in favor of a banking or other financial institution arising as a matter of law or under customary contractual provisions encumbering deposits or other funds maintained with such banking or other financial institution (including the right of setoff and grants of security interests in deposits and/or securities held by such banking or other financial institution) and that are within the general parameters customary in the banking industry;

(r) Liens deemed to exist in connection with reasonable customary initial deposits, margin deposits and similar Liens attaching to brokerage accounts maintained in the ordinary course of business and not for speculative purposes;

(s) Liens arising from Uniform Commercial Code financing statements or similar filings that have not been authorized by the Borrower or a Subsidiary of the Borrower;

(t) Liens solely on any cash earnest money deposits made by the Borrower or any of its Subsidiaries in connection with any letter of intent or purchase agreement, provided that any such Lien is in existence for a period of no longer than one year;

(u) Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto;

(v) Customary rights of first refusal and tag, drag and similar rights relating to the sale of equity in joint venture agreements and franchise agreements entered into in the ordinary course of business;

(w) Liens on cash or securities to secure Hedge Agreements and obligations under other derivatives transactions entered into in the ordinary course of business and not for speculative purposes; provided that the amount of Debt secured by such Liens shall not exceed $150,000,000 at any time outstanding;

(x) Liens arising from the deposit of cash, securities or other property into collateral or reinsurance trusts for the benefit of ceding companies or Insurance Regulatory Authorities;

(y) Liens arising in connection with securities lending transactions entered into in the ordinary course of business for liquidity or yield enhancement purposes and in no event outstanding for a period exceeding two hundred and seventy (270) days in each case;

(z) Liens securing Debt in an aggregate principal amount at any time outstanding not to exceed $25,000,000; and

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(aa) Liens consisting of any agreement to dispose of any Property in a transaction permitted under Section 6.05 hereof.

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“Plan” means an “employee benefit plan” (as such term is defined in Section 3(3) of ERISA), other than a Multiemployer Plan, established or maintained by the Borrower or, with respect to any such plan that is covered by Title IV of ERISA, any ERISA Affiliate.

“Plan Asset Regulations” means 29 CFR § 2510.3-101 et seq., as modified by Section 3(42) of ERISA, as amended from time to time.

“Preferred Securities” of any Person shall mean any preferred Equity Interests (or capital stock) of such Person that (i) have preferential rights with respect to dividends or redemptions or upon liquidation or dissolution of such Person over shares of common Equity Interests (or capital stock) of any other class of such Person and (ii) that require no repayments or prepayments and no mandatory redemptions or repurchases, in each case, prior to 91 days after the Maturity Date.

“Prime Rate” means the rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the U.S. or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by the Administrative Agent) or any similar release by the Board (as determined by the Administrative Agent). Each change in the Prime Rate shall be effective from and including the date such change is publicly announced or quoted as being effective.

“Property” of any Person means any property or assets, or interest therein, of such Person.

“PTE” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.

“Public Lenders” means the Lenders that do not wish to receive material non-public information with respect to the Borrower, its Subsidiaries or their securities.

“RBC Ratio” of any Person means, at any time, the ratio of (i) “Total Adjusted Capital” of such Person to (ii) the amount equal to (x) “Authorized Control Level Risk-Based Capital” of such Person multiplied by (y) 2, as such terms are defined by the Insurance Regulatory Authority of the State in which such Person is incorporated, as amended from time to time.  Using the annual SAP Financial Statements form prescribed by the NAIC Risk-Based Capital (RBC) for Insurers Model Act for the year ended December 31, 2018 (the “Convention Blank”), the RBC Ratio as of December 31, 2018 is equal to the quotient of (a) the amount that appears on line 28 on page 17 of the Convention Blank divided by (b) the amount equal to (x) the amount that appears on line 29 on page 17 of the Convention Blank multiplied by (y) 2.

“Recipient” means (a) the Administrative Agent, (b) any Lender and (c) any LC Issuer, as applicable.

“Register” has the meaning assigned to such term in Section 9.04.

“Regulation D” means Regulation D issued by the Board, as from time to time amended, and all official rulings and interpretations thereunder or thereof.

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“Regulation FD” means Regulation FD as promulgated by the U.S. Securities and Exchange Commission under the Securities Act of 1933 and the Securities and Exchange Act of 1934 as in effect from time to time.

“Regulations T, U and X” means Regulations T, U and X issued by the Board, as from time to time amended, and all official rulings and interpretations thereunder or thereof.

“Reinsurance Agreement” means any agreement, contract, treaty or other arrangement whereby other insurers assume insurance from the Borrower or any Insurance Subsidiary.

“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, officers, employees, agents, advisors and representatives of such Person and such Person’s Affiliates.

“Required Lenders” means, subject to Section 2.21, at any time, Lenders having Revolving Credit Exposures and Unfunded Commitments representing more than 50% of the sum of the Total Revolving Credit Exposure and Unfunded Commitments at such time; provided that for purposes of declaring the Loans to be due and payable pursuant to Section 7.02, and for all purposes after the Loans become due and payable pursuant to Section 7.02 or the Commitments expire or terminate, then, as to each Lender, the Unfunded Commitment of each Lender shall be deemed to be zero.

“Responsible Officer” of the Borrower means the President, the Chief Executive Officer, the Chief Financial Officer, the Treasurer, any Executive Vice President, any Senior Vice President, or any Vice President of the Borrower.

“Restricted Payments” means (a) any cash dividend or other distribution in cash with respect to any Equity Interests in any Person, or any cash payment, including any sinking fund or similar cash deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interests in such Person or any option, warrant or other right to acquire any such Equity Interests in such Person and (b) any prepayment, redemption, purchase, defeasance or other satisfaction prior to the scheduled maturity thereof in any manner of any Subordinated Indebtedness of any Person (it being understood that payments of regularly scheduled principal and interest payments shall not constitute a Restricted Payment).

“Reuters” means Thomson Reuters Corp.

“Revolving Credit Exposure” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Revolving Loans and its LC Exposure at such time.

“Revolving Loan” means a Loan made pursuant to Section 2.01.

“S&P” means Standard & Poor’s Rating Services, a Standard & Poor’s Financial Services LLC business.

“Sanctioned Country” means, at any time, a country, region or territory which is itself the subject or target of any Sanctions (at the time of this Agreement, Crimea, Cuba, Iran, North Korea and Syria).

“Sanctioned Person” means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC, the U.S. Department of State, the United Nations Security Council, the European Union, any European Union member state, Her Majesty’s Treasury of the United Kingdom or other relevant sanctions authority, (b) any Person operating, organized or resident in a

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Sanctioned Country, (c) any Person owned or controlled by any such Person or Persons described in the foregoing clauses (a) or (b), or (d) any Person otherwise the subject of any Sanctions.

“Sanctions” means all economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by OFAC or the U.S. Department of State or (b) the United Nations Security Council, the European Union, any European Union member state, Her Majesty’s Treasury of the United Kingdom or other relevant sanctions authority.

“SAP” means the accounting procedures and practices prescribed or permitted by the applicable Insurance Regulatory Authority.

“SEC” means the United States Securities and Exchange Commission.

“Securitization Subsidiary” means a  Subsidiary which engages in no activities other than in connection with the financing of accounts receivable or portfolio investments of the Borrower or any other Subsidiary (a) no portion of the Debt or any other obligations (contingent or otherwise) of which (i) is guaranteed by the Borrower or any other Subsidiary (other than another Securitization Subsidiary) (excluding guarantees of obligations (other than the principal of, and interest on, Debt) pursuant to Standard Securitization Undertakings or Limited Originator Recourse), (ii) is recourse to or obligates the Borrower or any other Subsidiary (other than another Securitization Subsidiary) in any way (other than pursuant to Standard Securitization Undertakings or Limited Originator Recourse) or (iii) subjects any property or asset of the Borrower or any other Subsidiary (other than another Securitization Subsidiary), directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings or Limited Originator Recourse, (b) with which neither the Borrower nor any of its Subsidiaries (other than another Securitization Subsidiary) has any contract, agreement, arrangement or understanding (other than pursuant to the documentation entered into in connection with any Securitization Transaction (including with respect to fees payable in the ordinary course of business in connection with the servicing of accounts receivable and related assets)) on terms less favorable to the Borrower or such Subsidiary than those that might be obtained at the time from persons that are not Affiliates of the Borrower, and (c) to which neither the Borrower nor any other Subsidiary of the Borrower (other than another Securitization Subsidiary) has any obligation to maintain or preserve such entity’s financial condition or cause such entity to achieve certain levels of operating results (other than pursuant to Standard Securitization Undertakings or Limited Originator Recourse).  Any such designation shall be evidenced to the Administrative Agent by filing with the Administrative Agent an officer’s certificate of the Borrower certifying that, to the best of such officer’s knowledge and belief after consultation with counsel, such designation complied with the foregoing conditions.

“Securitization Transaction” means any transaction or series of transactions that may be entered into by the Borrower or any of its Subsidiaries pursuant to which the Borrower or such Subsidiary, as the case may be, may sell, convey or otherwise transfer assets to any special purpose, bankruptcy-remote Subsidiary in a true sale transaction and such special purpose Subsidiary incurs Financial Debt to finance the purchase of such assets, provided that there shall be no recourse under any such securitization to the Borrower or any of its other Subsidiaries other than pursuant to Standard Securitization Undertakings or Limited Originator Recourse.

“Several Letter of Credit” has the meaning assigned to such term in Section 2.06(a).

“Several Unpaid Drawing” means any unreimbursed LC Disbursement with respect to a Several Letter of Credit.

“Solvent” means, with respect to any Person at any time, that (a) the fair value of the Property of such Person is greater than the total amount of liabilities (including without limitation

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contingent liabilities) of such Person, (b) the present fair saleable value of the Property of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature, and (d) such Person is not engaged in a business and is not about to engage in a business for which such Person’s Property would constitute an unreasonably small capital.

“Specified Convertible Debt Securities” means any debt securities the terms of which provide for the conversion thereof into Equity Interests, cash or a combination of Equity Interests and cash and (i) that afford equity benefit to the issuer thereof (under the procedures and guidelines of S&P) by having ongoing payment requirements that are more flexible than interest payments associated with conventional indebtedness for borrowed money and by being contractually subordinated to such indebtedness and (ii) that require no repayments or prepayments and no mandatory redemptions or repurchases of principal payable in cash, in each case, prior to 91 days after the Maturity Date.

“Standard Securitization Undertakings” means representations, warranties, covenants and indemnities entered into by the Borrower or any Subsidiary in connection with any Securitization Transaction that are customary in comparable non-recourse securitization transactions.

“Stated Amount” means, with respect to any Letter of Credit at any time, the aggregate amount available to be drawn thereunder at such time (regardless of whether any conditions for drawing could then be met).

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which the Administrative Agent is subject for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board).  Such reserve percentages shall include those imposed pursuant to such Regulation D of the Board.  Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D of the Board or any comparable regulation.  The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

“Statutory Statement” means, as to any Material Insurance Subsidiary, a statement of the condition and affairs of such Material Insurance Subsidiary, prepared in accordance with SAP, and filed with the applicable Insurance Regulatory Authority.

“Subordinated Indebtedness” means any Debt of the Borrower or any Subsidiary the payment of which is contractually subordinated in right of payment of the obligations under the Loan Documents.

“subsidiary” means, with respect to any Person, any other Person of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other persons performing similar functions of such other Person (irrespective of whether or not at the time securities or other ownership interests of any other class or classes of such other Person shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or Controlled by such Person or one or more Subsidiaries of such first Person or by such first Person and one or more Subsidiaries of such first Person.  

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“Subsidiary” means any subsidiary of the Borrower.  

“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“Total Capitalization” means, at any time, the sum of (a) Total Debt plus (b) Net Worth.

“Total Debt” means, at any time, an amount equal to the aggregate outstanding principal amount of Debt of the Borrower and its Subsidiaries (other than any Securitization Subsidiary) of the kinds set forth in clauses (a) through (g) of the definition of Debt determined on a Consolidated basis without duplication in accordance with GAAP, but without giving effect to any election under the Statement of Financial Accounting Standards No. 159 (ASC 825) (or any similar accounting principle) permitting a Person to value its financial liabilities or indebtedness at the fair value thereof; provided, that solely for purposes of determining “Total Debt,” (i) without duplication of clauses (ii), (iii) and (iv) hereof, the outstanding principal amount of Debt attributed to any Hybrid Security shall be deemed equal to the portion of such Hybrid Security that is deemed to constitute indebtedness, as determined in accordance with S&P’s methodology at such time, (ii) without duplication of clauses (i), (iii) and (iv) hereof, the outstanding principal amount of Debt attributed to any Disqualified Equity Interest shall be deemed equal to the portion of such Disqualified Equity Interest that is deemed to constitute indebtedness, as determined in accordance with S&P’s methodology at such time, (iii) without duplication of clauses (i), (ii) and (iv) hereof, the outstanding principal amount of Debt attributed to any Preferred Security shall be deemed equal to the portion of such Preferred Security that is deemed to constitute indebtedness, as determined in accordance with S&P’s methodology at such time and (iv) without duplication of clauses (i), (ii) and (iii) hereof, the outstanding principal amount of Debt attributed to any Specified Convertible Debt Securities shall be deemed equal to the portion of such Specified Convertible Debt Securities that is deemed to constitute indebtedness, as determined in accordance with S&P’s methodology at such time.

“Total Revolving Credit Exposure” means, at any time, the sum of the outstanding principal amount of all Lenders’ Revolving Loans and their LC Exposure at such time.

“Transactions” means the execution, delivery and performance by the Borrower of this Agreement and the other Loan Documents, the borrowing of Loans and other credit extensions, the use of the proceeds thereof and the issuance of Letters of Credit hereunder.

“Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate Base Rate.

“Unfunded Commitment” means, with respect to each Lender, the Commitment of such Lender less its Revolving Credit Exposure.

“United States” or “U.S.” mean the United States of America.

“U.S. Person” means a “United States person” within the meaning of Section 7701(a)(30) of the Code.

“U.S. Tax Compliance Certificate” has the meaning assigned to such term in Section 2.17(f)(ii)(B)(3).

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“Voting Shares” means, with respect to any Person at any time, Equity Interests entitling the holder thereof to vote generally in an election of directors or other individuals performing similar functions.

“Wholly-Owned Subsidiary” means, with respect to any Person, any corporation, partnership, limited liability company or other entity of which all of the equity securities or other ownership interests (other than, in the case of a corporation, directors’ qualifying shares) are directly or indirectly owned or Controlled by such Person or one or more Wholly-Owned Subsidiaries of such Person or by such Person and one or more Wholly-Owned Subsidiaries of such Person.

“Withdrawal Liability” means the liability to a Multiemployer Plan as a result of a complete withdrawal (as described in Section 4203(a) of ERISA) or partial withdrawal (as described in Section 4205(a) of ERISA) from such Multiemployer Plan.

“Write-Down and Conversion Powers” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

SECTION 1.02 Classification of Loans and Borrowings.  For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a “Revolving Loan”) or by Type (e.g., a “Eurodollar Loan”) or by Class and Type (e.g., a “Eurodollar Revolving Loan”).  Borrowings also may be classified and referred to by Class (e.g., a “Revolving Borrowing”) or by Type (e.g., a “Eurodollar Borrowing”) or by Class and Type (e.g., a “Eurodollar Revolving Borrowing”).

SECTION 1.03 Terms Generally.  The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have the same meaning and effect as the word “shall”.  The word “law” shall be construed as referring to all statutes, rules, regulations, codes and other laws (including official rulings and interpretations thereunder having the force of law or with which affected Persons customarily comply), and all judgments, orders and decrees, of all Governmental Authorities.  Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, restated, supplemented or otherwise modified (subject to any restrictions on such amendments, restatements, supplements or modifications set forth herein), (b) any definition of or reference to any statute, rule or regulation shall be construed as referring thereto as from time to time amended, supplemented or otherwise modified (including by succession of comparable successor laws), (c) any reference herein to any Person shall be construed to include such Person’s successors and assigns (subject to any restrictions on assignment set forth herein) and, in the case of any Governmental Authority, any other Governmental Authority that shall have succeeded to any or all functions thereof, (d) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (e) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (f) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights and (g) any reference herein to a merger, consolidation, amalgamation, assignment, sale, disposition or transfer, or similar term, shall be deemed to apply to a division of or by a limited liability company, limited partnership or trust, or an allocation of assets, rights, obligations or liabilities to a series of a limited liability company, limited partnership or trust (or the

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unwinding of such a division or allocation), as if it were a merger, consolidation, amalgamation, assignment, sale, disposition or transfer, or similar term, as applicable, to, of or with a separate Person, and any division of a limited liability company, limited partnership or trust shall constitute a separate Person hereunder (and each division of any limited liability company, limited partnership or trust that is a Subsidiary, joint venture or any other like term shall also constitute such a Person or entity).

SECTION 1.04 Accounting Terms; GAAP; Pro Forma Calculations.  (a) Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision  amended in accordance herewith.  Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made (i) without giving effect to any election under Accounting Standards Codification 825-10-25 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any Debt or other liabilities of the Borrower or any Subsidiary at “fair value”, as defined therein and (ii) except as otherwise provided under the definition of “Modified Total Debt”, without giving effect to any treatment of Debt in respect of convertible debt instruments under Accounting Standards Codification 470-20 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Debt in a reduced or bifurcated manner as described therein, and such Debt shall at all times be valued at the full stated principal amount thereof.

(b) All pro forma computations required to be made hereunder giving effect to any acquisition or disposition, or issuance, incurrence or assumption of Debt, or other transaction shall in each case be calculated giving pro forma effect thereto (and, in the case of any pro forma computation made hereunder to determine whether such acquisition or disposition, or issuance, incurrence or assumption of Debt, or other transaction is permitted to be consummated hereunder, to any other such transaction consummated since the first day of the period covered by any component of such pro forma computation and on or prior to the date of such computation) as if such transaction had occurred on the first day of the period of four consecutive fiscal quarters ending with the most recent fiscal quarter for which financial statements shall have been delivered pursuant to Section 5.01(a) or 5.01(b) (or, prior to the delivery of any such financial statements, ending with the last fiscal quarter included in the financial statements referred to in Section 3.01(a)(ii)), and, to the extent applicable, to the historical earnings and cash flows associated with the assets acquired or disposed of (but without giving effect to any synergies or cost savings) and any related incurrence or reduction of Debt, all in accordance with Article 11 of Regulation S-X under the Securities Act of 1933.  If any Debt bears a floating rate of interest and is being given pro forma effect, the interest on such Debt shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Hedge Agreement applicable to such Debt).

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SECTION 1.05 Interest Rates; LIBOR Notification.  The interest rate on Eurodollar Loans is determined by reference to the LIBO Rate, which is derived from the London interbank offered rate.  The London interbank offered rate is intended to represent the rate at which contributing banks may obtain short-term borrowings from each other in the London interbank market.  In July 2017, the U.K. Financial Conduct Authority announced that, after the end of 2021, it would no longer persuade or compel contributing banks to make rate submissions to the ICE Benchmark Administration (together with any successor to the ICE Benchmark Administrator, the “IBA”) for purposes of the IBA setting the London interbank offered rate.  As a result, it is possible that commencing in 2022, the London interbank offered rate may no longer be available or may no longer be deemed an appropriate reference rate upon which to determine the interest rate on Eurodollar Loans.  In light of this eventuality, public and private sector industry initiatives are currently underway to identify new or alternative reference rates to be used in place of the London interbank offered rate.  In the event that the London interbank offered rate is no longer available or in certain other circumstances as set forth in Section 2.14(b) of this Agreement, such Section 2.14(b) provides a mechanism for determining an alternative rate of interest.  The Administrative Agent will notify the Borrower, pursuant to Section 2.14, in advance of any change to the reference rate upon which the interest rate on Eurodollar Loans is based.  However, the Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, the administration of, submission of or any other matter related to the London interbank offered rate or other rates referred to in the definition of “LIBO Screen Rate” or with respect to any alternative or successor rate to the London interbank offered rate, or replacement rate thereof, including without limitation, whether the composition or characteristics of any such alternative, successor or replacement reference rate, as it may or may not be adjusted pursuant to Section 2.14(b), will be similar to, or produce the same value or economic equivalence of, the LIBO Rate or have the same volume or liquidity as did the London interbank offered rate prior to its discontinuance or unavailability.

SECTION 1.06 Status of Obligations.  In the event that the Borrower shall at any time issue or have outstanding any Subordinated Indebtedness, the Borrower shall take all such actions as shall be necessary to cause the Obligations to constitute senior indebtedness (however denominated) in respect of such Subordinated Indebtedness and to enable the Administrative Agent and the Lenders to have and exercise any payment blockage or other remedies available or potentially available to holders of senior indebtedness under the terms of such Subordinated Indebtedness.  Without limiting the foregoing, the Obligations are hereby designated as “senior indebtedness” and as “designated senior indebtedness” and words of similar import under and in respect of any indenture or other agreement or instrument under which such Subordinated Indebtedness is outstanding and are further given all such other designations as shall be required under the terms of any such Subordinated Indebtedness in order that the Lenders may have and exercise any payment blockage or other remedies available or potentially available to holders of senior indebtedness under the terms of such Subordinated Indebtedness.

Article II

The Credits

SECTION 2.01 Commitments.  Subject to the terms and conditions set forth herein, each Lender (severally and not jointly) agrees to make Revolving Loans to the Borrower in Dollars from time to time during the Availability Period in an aggregate principal amount that will not result in (a) such Lender’s Revolving Credit Exposure exceeding such Lender’s Commitment or (b) the Total Revolving Credit Exposure exceeding the Aggregate Commitment.  Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Revolving Loans.

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SECTION 2.02 Loans and Borrowings.  (a) Each Revolving Loan shall be made as part of a Borrowing consisting of Revolving Loans made by the Lenders ratably in accordance with their respective Commitments.  The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required.

(b) Subject to Section 2.14, each Revolving Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request in accordance herewith.  Each Lender at its option may make any Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan (and in the case of an Affiliate, the provisions of Sections 2.14, 2.15, 2.16 and 2.17 shall apply to such Affiliate to the same extent as to such Lender); provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.

(c) At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $10,000,000.  At the time that each ABR Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $10,000,000; provided that an ABR Revolving Borrowing may be in an aggregate amount that is equal to the entire unused balance of the Aggregate Commitment or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.06(e).  Borrowings of more than one Type and Class may be outstanding at the same time; provided that there shall not at any time be more than a total of ten (10) Eurodollar Borrowings outstanding.

(d) Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date.

SECTION 2.03 Requests for Revolving Borrowings.  To request a Borrowing, the Borrower shall notify the Administrative Agent of such request by irrevocable written notice (via a written Borrowing Request signed by the Borrower, promptly followed by telephonic confirmation of such request) (a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three (3) Business Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 11:00 a.m., New York City time, on the date of the proposed Borrowing.  Each such Borrowing Request shall specify the following information in compliance with Section 2.02:

(i) the aggregate principal amount of the requested Borrowing;

(ii) the date of such Borrowing, which shall be a Business Day;

(iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;

(iv) in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”; and

(v) the location and number of the Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.07.

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If no election as to the Type of Revolving Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing.  If no Interest Period is specified with respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.  Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.

SECTION 2.04 Intentionally Omitted.

SECTION 2.05 Intentionally Omitted.

SECTION 2.06 Letters of Credit.

(a) Several Letters of Credit.

(i) Subject to and upon the terms and conditions set forth herein, the Borrower may request the Issuing Agent, at any time and from time to time during the Availability Period, to issue, on behalf of each Lender, for the account of the Borrower or any Subsidiary, to any other Person, and subject to and upon the terms and conditions herein set forth, the Issuing Agent may agree in its sole discretion, but shall have no obligation, to issue at any time and from time to time during the Availability Period, one or more irrevocable standby letters of credit denominated in Dollars and in such form as may be approved by the Issuing Agent (each such letter of credit, a “Several Letter of Credit” and, collectively, the “Several Letters of Credit”).  In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any Letter of Credit Agreement, the terms and conditions of this Agreement shall control.

(ii) Each Several Letter of Credit will be issued by the Issuing Agent on behalf of the Lenders and the obligations of each Lender under any Several Letter of Credit will be based on such Lender’s Applicable Percentage at the time such Several Letter of Credit is issued.  The obligations of each Lender under and in respect of each Several Letter of Credit are several, and the failure by any Lender to perform its obligations hereunder or under any Letter of Credit shall not affect the obligations of the Borrower toward any other party hereto nor shall any other such party be liable for the failure by such Lender to perform its obligations hereunder or under any Several Letter of Credit.

(iii) Each Several Letter of Credit shall be executed and delivered by the Issuing Agent in the name and on behalf of, and as attorney-in-fact for, each Lender and the Issuing Agent shall act under each Several Letter of Credit, and each Several Letter of Credit shall expressly provide that the Issuing Agent shall act, as the agent of each Lender, to (a) receive drafts, other demands for payment and other documents presented by the beneficiary under such Several Letter of Credit, (b) determine whether such drafts, demands and documents are in compliance with the terms and conditions of such Several Letter of Credit and (c) notify such Lender and the Borrower that a valid drawing has been made and the date that the related Several Unpaid Drawing is to be made; provided that, the Issuing Agent shall have no obligation or liability for any

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Several Unpaid Drawing under such Several Letter of Credit, and each Several Letter of Credit shall expressly so provide.  Each Lender hereby irrevocably appoints and designates the Issuing Agent as its attorney-in-fact, acting through any duly authorized officer of the Issuing Agent, to execute and deliver in the name and on behalf of such Lender each Several Letter of Credit to be issued by such Lender hereunder. Promptly upon the request of the Issuing Agent, each Lender will furnish to the Issuing Agent such powers of attorney or other evidence as any beneficiary of any Several Letter of Credit may reasonably request in order to demonstrate that the Issuing Agent has the power to act as attorney-in-fact for such Lender to execute and deliver such Several Letter of Credit.

(iv) Each Lender represents and warrants that each Several Letter of Credit constitutes a legal, valid and binding obligation of such Lender enforceable in accordance with its terms; provided that, the enforceability thereof is subject to general principles of equity and to bankruptcy, insolvency and similar laws affecting the enforcement of creditors’ rights generally.

(v) Upon the request of any Lender, each Issuing Agent shall furnish to such Lender copies of any Several Letters of Credit issued by it and such other related and reasonably available documentation as may be reasonably requested by such Lender.

(b) Fronted Letters of Credit.

(i) Subject to and upon the terms and conditions set forth herein, the Borrower may request any Fronting Bank, at any time and from time to time during the Availability Period, to issue, for the account of the Borrower or any Subsidiary, to any other Person, and subject to and upon the terms and conditions herein set forth, such Fronting Bank may agree in its sole discretion, but shall have no obligation, to issue at any time and from time to time during the Availability Period, one or more irrevocable standby letters of credit denominated in Dollars and in such form as may be approved by such Fronting Bank (each such letter of credit, a “Fronted Letter of Credit” and, collectively, the “Fronted Letters of Credit”).  In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any Letter of Credit Agreement, the terms and conditions of this Agreement shall control.

(ii) Immediately upon the issuance by any Fronting Bank of any Fronted Letter of Credit (or an amendment to a Fronted Letter of Credit increasing the amount thereof), such Fronting Bank shall be deemed to have sold and transferred to each Lender other than such Fronting Bank (each such Lender, in its capacity under this Section 2.06(b), a “Fronting Participant”), and each such Fronting Participant shall be deemed irrevocably and unconditionally to have purchased and received from such Fronting Bank, without recourse or warranty, an undivided interest and participation, to the extent of such Fronting Participant’s Applicable Percentage, in such Fronted Letter of Credit, each drawing made thereunder and the obligations of the Borrower under this Agreement

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with respect thereto, and any security therefor or guaranty pertaining thereto. Upon any change in the Commitments or Applicable Percentages of the Lenders pursuant to this Agreement (including pursuant to Section 2.20), it is hereby agreed that, with respect to all outstanding Fronted Letters of Credit and Fronted Unpaid Drawings, there shall be an automatic adjustment to the participations pursuant to this Section 2.06 to reflect the new Applicable Percentages of the assignor and assignee Lender or of all Lenders with Commitments, as the case may be.

(iii) In the event that any Fronting Bank makes any payment under any Fronted Letter of Credit and the Borrower shall not have reimbursed such amount in full to such Fronting Bank pursuant to Section 2.06(e), such Fronting Bank shall promptly notify the Administrative Agent, which shall promptly notify each Fronting Participant, of such failure, and each Fronting Participant shall promptly and unconditionally pay to such Fronting Bank the amount of such Fronting Participant’s Applicable Percentage of such unreimbursed payment in Dollars and in immediately available funds.  If, prior to 11:00 a.m., New York City time, on any Business Day, the Administrative Agent so notifies any Fronting Participant required to fund a payment under a Fronted Letter of Credit, such Fronting Participant shall make available to such Fronting Bank in Dollars and in immediately available funds such Fronting Participant’s Applicable Percentage of the amount of such payment on such Business Day (or, if notice is given after 11:00 a.m., New York City time, on any Business Day, on the next Business Day).  If and to the extent such Fronting Participant shall not have so made its Applicable Percentage of the amount of such payment available to such Fronting Bank, such Fronting Participant agrees to pay to such Fronting Bank, forthwith on demand, such amount, together with interest thereon, for each day from such date to but excluding the date such amount is paid to such Fronting Bank at the NYFRB Rate. The failure of any Fronting Participant to make available to such Fronting Bank its Applicable Percentage of any payment under any Fronted Letter of Credit shall not relieve any other Fronting Participant of its obligation hereunder to make available to such Fronting Bank its Applicable Percentage of any payment on the date required, as specified above.

(iv) Whenever any Fronting Bank receives any payment by the Borrower as to which it has also received payments from the Fronting Participants pursuant to paragraph (iii) above, such Fronting Bank shall forward such payment to the Administrative Agent, which in turn shall distribute to each Fronting Participant which has paid its Applicable Percentage thereof, in Dollars and in immediately available funds, an amount equal to such Fronting Participant’s share (based upon the amount funded by such Fronting Participant to the aggregate amount funded by all Fronting Participants and retained by such Fronting Bank) of the principal amount of such payment and interest thereon accruing after the purchase of the respective participations.

(v) The obligations of the Fronting Participants to make payments to each Fronting Bank with respect to Fronted Letters of Credit issued by it shall be irrevocable and not subject to any qualification or exception whatsoever and shall be made in accordance with the terms and

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conditions of this Agreement under all circumstances, including any of the following circumstances:

(A) any lack of validity or enforceability of this Agreement or any amendment, supplement or modification hereof;

(B) the existence of any claim, setoff, defense or other right which the Fronting Participant or any of its Affiliates may have at any time against a beneficiary named in a Fronted Letter of Credit, any transferee of any Fronted Letter of Credit (or any Person for whom any such transferee may be acting), the Administrative Agent, any Fronting Bank, any Fronting Participant, any Lender, or any other Person, whether in connection with this Agreement, any Fronted Letter of Credit, the transactions contemplated herein or any unrelated transactions (including any underlying transaction between the Borrower or any of its Affiliates and the beneficiary named in any such Fronted Letter of Credit);

(C) any draft, certificate or any other document presented under any Fronted Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;

(D) the surrender or impairment of any security for the performance or observance of any of the terms of this Agreement;

(E) the occurrence of any Default or Event of Default;

(F) any amendment, renewal or extension of any Fronted Letter of Credit or the reduction or termination of the Commitments; or

(G) any matter or event set forth in Section 2.06(f).

(vi) Upon the request of any Fronting Participant, each Fronting Bank shall furnish to such Fronting Participant copies of any Fronted Letter of Credit issued by it and such other documentation as may reasonably be requested by such Fronting Participant.

(c) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions.  To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the applicable LC Issuer) to the applicable LC Issuer and the Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension, but in any event no less than three (3) Business Days) a notice requesting the issuance of a Several Letter of Credit or Fronted Letter of Credit, as applicable, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (d) of this Section), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit.  In addition, as a condition to any

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such Letter of Credit issuance, the Borrower shall have entered into a continuing agreement (or other letter of credit agreement) for the issuance of letters of credit and/or shall submit a letter of credit application, in each case, as required by the applicable LC Issuer and using the applicable LC Issuer’s standard form (each, a “Letter of Credit Agreement”).  A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (i) the amount of the LC Exposure shall not exceed $50,000,000, (ii) the Total Revolving Credit Exposure shall not exceed the Aggregate Commitment and (iii) each Lender’s Revolving Credit Exposure shall not exceed such Lender’s Commitment.  No LC Issuer shall at any time be obligated to issue any Letter of Credit hereunder if such issuance would conflict with, or cause the Issuing Agent or any Fronting Participant to exceed any limits imposed by, any Governmental Authority.

(d) Expiration Date.  Each Letter of Credit shall expire (or be subject to termination by notice from the applicable LC Issuer to the beneficiary thereof) at or prior to the close of business on the earlier of (i) the date one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (ii) the date that is five (5) Business Days prior to the Maturity Date; provided that each such Letter of Credit may by its terms automatically renew annually for one additional year unless (a) such extension would cause such Letter of Credit to remain outstanding five (5) Business Days prior to the Maturity Date or (b) at least 30 days prior to the expiration date of such Letter of Credit, notice is given by the respective LC Issuer in accordance with the terms of the respective Letter of Credit (a “Notice of Non-Extension”) that the expiration date of such Letter of Credit will not be extended beyond its current expiration date.  The respective LC Issuer will give Notices of Non-Extension as to any or all outstanding Letters of Credit if requested to do so by the Required Lenders pursuant to Article VII.  The respective LC Issuer will give Notices of Non-Extension as to all outstanding Letters of Credit if the Maturity Date has occurred; provided, further, that if acceptable to the applicable Fronting Bank and the Administrative Agent, a Fronted Letter of Credit may have an expiration date no later than the date that occurs one (1) year after the Maturity Date so long as on the Maturity Date, such Fronted Letter of Credit is cash collateralized in a manner reasonably satisfactory to such Fronting Bank and the Administrative Agent or other arrangements as may be acceptable to such Fronting Bank and the Administrative Agent have been put in place.  The respective LC Issuer will send a copy of each Notice of Non-Extension to the Borrower concurrently with delivery thereof to the respective beneficiary, unless prohibited by law from doing so.

(e) Reimbursement.  If any Lender or any Fronting Bank shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement by paying to such Lender or such Fronting Bank, as applicable, in Dollars the amount equal to such LC Disbursement, calculated as of the date such LC Disbursement is made not later than 4:00 p.m., New York City time, on the date that such LC Disbursement is made, if the Borrower shall have received notice of such LC Disbursement prior to 10:00 a.m., New York City time, on such date, or, if such notice has not been received by the Borrower prior to such time on such date, then not later than 12:00 noon, New York City time, on the Business Day immediately following the day that the Borrower receives such

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notice; provided that the Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.03 (but without regard to the minimum and multiples specified in such Section) that such payment be financed with an ABR Revolving Borrowing in an equivalent amount of such LC Disbursement and, to the extent so financed, the Borrower’s obligation to make such payment shall be discharged and replaced by the resulting ABR Revolving Borrowing.

(f) Obligations Absolute.  The Borrower’s obligation to reimburse LC Disbursements as provided in paragraph (e) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit, any Letter of Credit Agreement or this Agreement, or any term or provision therein or herein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) any payment by any Lender or any Fronting Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower’s obligations hereunder.  Neither the Administrative Agent, the Lenders nor any LC Issuer, nor any of their respective Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the applicable LC Issuer; provided that the foregoing shall not be construed to excuse any LC Issuer from liability to the Borrower to the extent of any direct damages (as opposed to special, indirect, consequential or punitive damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by such LC Issuer’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof.  The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of any LC Issuer (as finally determined by a court of competent jurisdiction), such LC Issuer shall be deemed to have exercised care in each such determination.  In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the applicable LC Issuer may, in its sole discretion, either accept and make or request a Lender to make, as applicable, payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make or request a Lender to make, as applicable, payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

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(g) Interim Interest.  If any Lender or any Fronting Bank shall make any LC Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the reimbursement is due and payable, at the rate per annum then applicable to ABR Revolving Loans and such interest shall be due and payable on the date when such reimbursement is payable; provided that, if the Borrower fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of this Section, then Section 2.13(c) shall apply.  Interest accrued pursuant to this paragraph shall be for the account of (i) each Lender pro rata in accordance with its Applicable Percentage, in the case of Several Letters of Credit, or (ii) the applicable Fronting Bank, in the case of Fronted Letters of Credit, except that interest accrued on and after the date of payment by any Lender pursuant to paragraph (b)(iii) of this Section to reimburse the applicable Fronting Bank shall be for the account of such Lender to the extent of such payment.

(h) Replacement and Resignation of Issuing Agent.  (A) The Issuing Agent may be replaced at any time by written agreement among the Borrower, the Administrative Agent, the Lenders, the replaced Issuing Agent and the successor Issuing Agent.  At the time any such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Agent pursuant to Section 2.12(b).  From and after the effective date of any such replacement, (i) any successor Issuing Agent shall have all the rights and obligations of the Issuing Agent under this Agreement with respect to the applicable Letters of Credit to be issued thereafter and (ii) references herein to the term “LC Issuer” and “Issuing Agent” shall be deemed to refer to such successor or to any previous Issuing Agent, or to such successor and all previous Issuing Agents, as the context shall require.  After the replacement of the Issuing Agent hereunder, the replaced Issuing Agent shall remain a party hereto and shall continue to have all the rights and obligations of the Issuing Agent under this Agreement with respect to Letters of Credit then outstanding and issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit.

(B) Subject to the appointment and acceptance of a successor Issuing Agent, the Issuing Agent may resign as the Issuing Agent at any time upon thirty (30) days’ prior written notice to the Administrative Agent, the Borrower and the Lenders, in which case, the resigning Issuing Agent shall be replaced in accordance with Section 2.06(h)(A) above.  After the resignation of the Issuing Agent hereunder, the retiring Issuing Agent shall remain a party hereto and shall continue to have all the rights and obligations of the Issuing Agent under this Agreement and the other Loan Documents with respect to Letters of Credit then outstanding and issued by it prior to such resignation, but shall not be required to issue additional Letters of Credit or to extend, reinstate, renew or increase any existing Letter of Credit.

(i) Cash Collateralization.  If any Event of Default shall occur and be continuing, on the Business Day that the Borrower receives notice from the Administrative Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated, Lenders with LC Exposure representing greater than 50% of the total

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LC Exposure) demanding the deposit of Cash Collateral pursuant to this paragraph, the Borrower shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders (the “LC Collateral Account”), an amount in cash equal to 103% of the amount of the LC Exposure as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such Cash Collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to the Borrower described in Sections 7.01(e) or 7.01(f).  The Borrower shall also deposit Cash Collateral in accordance with and to the extent required by Section 2.11, Section 2.21(d) and Section 6.09.  Such deposit shall be held by the Administrative Agent as collateral for the payment and performance of the Obligations.  The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account.  Other than any interest earned on the investment of such deposits, which investments shall be made at the option of the Administrative Agent, with the consent of the Borrower, and at the Borrower’s risk and expense, such deposits shall not bear interest.  Interest or profits, if any, on such investments shall accumulate in such account.  Moneys in such account shall be applied by the Administrative Agent to reimburse the Lenders or the Fronting Banks, as applicable, for LC Disbursements which have not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for the LC Exposure at such time or, if the maturity of the Loans has been accelerated (but subject to the consent of Lenders with LC Exposure  representing greater than 50% of the total LC Exposure), be applied to satisfy other Obligations.  If the Borrower is required to provide an amount of Cash Collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to the Borrower within three (3) Business Days after all Events of Default have been cured or waived.

(j) Disbursement Procedures.  The applicable LC Issuer shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit.  The applicable LC Issuer shall promptly notify the Administrative Agent and the Borrower by telephone (confirmed by telecopy or electronic mail) of such demand for payment and whether such LC Issuer has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse such LC Issuer and the Lenders with respect to any such LC Disbursement.

(k) Letters of Credit Issued for Account of Subsidiaries.  Notwithstanding that a Letter of Credit issued or outstanding hereunder supports any obligations of, or is for the account of, a Subsidiary, or states that a Subsidiary is the “account party,” “applicant,” “customer,” “instructing party,” or the like of or for such Letter of Credit, and without derogating from any rights of the relevant LC Issuer (whether arising by contract, at law, in equity or otherwise) against such Subsidiary in respect of such Letter of Credit, the Borrower (i) shall reimburse, indemnify and compensate such LC Issuer hereunder for such Letter of Credit (including to reimburse any and all drawings thereunder) as if such Letter of Credit had been issued solely for the account of the Borrower and (ii) irrevocably waives any and all defenses that might otherwise be available to it as a guarantor or surety of any

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or all of the obligations of such Subsidiary in respect of such Letter of Credit.  The Borrower hereby acknowledges that the issuance of such Letters of Credit for its Subsidiaries inures to the benefit of the Borrower, and that the Borrower’s business derives substantial benefits from the businesses of such Subsidiaries.

(l) LC Issuer Agreements.  Each LC Issuer agrees that, unless otherwise requested by the Administrative Agent, such LC Issuer shall report in writing to the Administrative Agent (i) on the first Business Day of each week, the daily activity (set forth by day) during the immediately preceding week in respect of all Letters of Credit issued by such LC Issuer, including all issuances, extensions, amendments and renewals, all expirations and cancellations and all disbursements and reimbursements, (ii) on or prior to each Business Day on which such LC Issuer expects to issue, amend, renew or extend any Letter of Credit, the date of such issuance, amendment, renewal or extension, and the aggregate face amount of the Letters of Credit to be issued, amended, renewed or extended by it and outstanding after giving effect to such issuance, amendment, renewal or extension (and whether the amount thereof changed), it being understood that such LC Issuer shall not permit any issuance, renewal, extension or amendment resulting in an increase in the amount of any Letter of Credit to occur without first obtaining written confirmation from the Administrative Agent that it is then permitted under this Agreement, (iii) on each Business Day on which such LC Issuer makes any LC Disbursement, the date of such LC Disbursement and the amount of such LC Disbursement, (iv) on any Business Day on which the Borrower fails to reimburse an LC Disbursement required to be reimbursed to such LC Issuer (or any Lender, with respect to any Several Letter of Credit that such LC Issuer issued) on such day, the date of such failure and the amount and currency of such LC Disbursement and (v) on any other Business Day, such other information as the Administrative Agent shall reasonably request.

SECTION 2.07 Funding of Borrowings.

(a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof solely by wire transfer of immediately available funds by 2:00 p.m., New York City time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders.  Except in respect of the provisions of this Agreement covering the reimbursement of Letters of Credit, the Administrative Agent will make such Loans available to the Borrower by promptly crediting the funds so received in the aforesaid account of the Administrative Agent to an account of the Borrower designated by the Borrower in the applicable Borrowing Request; provided that ABR Revolving Loans made to finance the reimbursement of an LC Disbursement as provided in Section 2.06(e) shall be remitted by the Administrative Agent to the Lenders pro rata in accordance with their respective Applicable Percentage (in the case of Several Letters of Credit) or the applicable Fronting Bank (in the case of Fronted Letters of Credit).

(b) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing (or in the case of an ABR Borrowing, prior to 2:00 p.m., New York City time, on the date of such Borrowing) that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with this Section and may,

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in reliance upon such assumption, make available to the Borrower a corresponding amount.  In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the greater of the NYFRB Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation or (ii) in the case of the Borrower, the interest rate applicable to ABR Loans.  If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing.

SECTION 2.08 Interest Elections.  (a) Each Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request.  Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section.  The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing.

(b) To make an election pursuant to this Section, the Borrower shall notify the Administrative Agent of such election (by irrevocable written notice via an Interest Election Request signed by the Borrower) by the time that a Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election.  Notwithstanding any contrary provision herein, this Section shall not be construed to permit the Borrower to elect an Interest Period for Eurodollar Loans that does not comply with Section 2.02(d).

(c) Each Interest Election Request shall specify the following information in compliance with Section 2.02:

(i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);

(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and

(iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which Interest Period shall be a period contemplated by the definition of the term “Interest Period”.

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If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration.

(d) Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.

(e) If the Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing.  Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower, then, so long as an Event of Default is continuing (i) no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto.

SECTION 2.09 Termination and Reduction of Commitments.  (a) Unless previously terminated, the Commitments shall terminate on the Maturity Date.

(b) The Borrower may at any time terminate, or from time to time reduce, the Commitments; provided that (i) each reduction of the Commitments shall be in an amount that is an integral multiple of $1,000,000 and not less than $2,500,000 and (ii) the Borrower shall not terminate or reduce the Commitments if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 2.11, the Total Revolving Credit Exposure would exceed the Aggregate Commitment.

(c) The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Commitments under paragraph (b) of this Section at least three (3) Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof.  Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof.  Each notice delivered by the Borrower pursuant to this Section shall be irrevocable; provided that a notice of termination of the Commitments delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities or other transactions specified therein, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied.  Any termination or reduction of the Commitments shall be permanent.  Each reduction of the Commitments shall be made ratably among the Lenders in accordance with their respective Commitments.

SECTION 2.10 Repayment of Loans; Evidence of Debt.  (a) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Revolving Loan on the Maturity Date.

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(b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

(c) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Class and Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.

(d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall be primafacie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the Obligations.

(e) Any Lender may request that Loans made by it be evidenced by a promissory note.  In such event, the Borrower shall prepare, execute and deliver to such Lender a promissory note payable to such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in the form attached hereto as Exhibit I. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 9.04) be represented by one or more promissory notes in such form.

SECTION 2.11 Prepayment of Loans.  The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to prior notice in accordance with the provisions of this Section 2.11.  The Borrower shall notify the Administrative Agent by written notice of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Revolving Borrowing, not later than 11:00 a.m., New York City time, three (3) Business Days before the date of prepayment or (ii) in the case of prepayment of an ABR Revolving Borrowing, not later than 11:00 a.m., New York City time on the date of prepayment.  Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid; provided that, a notice of prepayment may state that such notice is conditioned upon the effectiveness of other credit facilities or other transactions specified therein, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied.  Promptly following receipt of any such notice relating to a Revolving Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof.  Each partial prepayment of any Revolving Borrowing shall be in an amount that would be permitted in the case of an advance of a Revolving Borrowing of the same Type as provided in Section 2.02.  Each prepayment of a Revolving Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing.  Prepayments shall be accompanied by (i) accrued interest to the extent required by Section 2.13 and (ii) any break funding payments required by Section 2.16.  If at any time the Total Revolving Credit Exposure exceeds the Aggregate Commitment, the Borrower shall immediately repay Borrowings or Cash Collateralize LC Exposure in an account with the Administrative Agent pursuant to Section 2.06(i), as applicable, in an aggregate principal amount sufficient to cause the aggregate principal amount of the Total Revolving Credit Exposure to be less than or equal to the Aggregate Commitment.

SECTION 2.12 Fees.  (a) The Borrower agrees to pay to the Administrative Agent for the account of each Lender a commitment fee, which shall accrue at the Applicable Rate on the average daily

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amount of the Available Revolving Commitment of such Lender during the period from and including the Effective Date to but excluding the date on which such Commitment terminates; provided that, no commitment fee shall accrue on the Available Revolving Commitment of a Defaulting Lender as provided in Section 2.21(a) below.  Commitment fees accrued through and including the last day of March, June, September and December of each year shall be payable in arrears on the fifteenth (15^th) day following such last day and on the date on which the Commitments terminate, commencing on the first such date to occur after the date hereof.  All commitment fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

(b) The Borrower agrees to pay (i) to the Administrative Agent for the account of each Lender a fee with respect to each Letter of Credit, which fee shall accrue at the same Applicable Rate used to determine the interest rate applicable to Eurodollar Revolving Loans on the average daily amount of such Lender’s LC Exposure (excluding any portion thereof attributable to Fronted Unpaid Drawings) during the period from and including the Effective Date to but excluding the later of (x) the date on which such Lender’s Commitment terminates and (y) the date on which such Lender ceases to have any LC Exposure, (ii) to the Issuing Agent, for its own account, its standard fees and commissions with respect to the issuance, amendment, cancellation, negotiation, transfer, presentment, renewal or extension of any Letter of Credit issued by the Issuing Agent or processing of drawings thereunder, and (iii) to each Fronting Bank, for its own account, a fronting fee, which shall accrue at a rate per annum separately agreed upon between the Borrower and such Fronting Bank on the average daily amount of the LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) attributable to Letters of Credit issued by such Fronting Bank during the period from and including the Effective Date to but excluding the later of (x) the date of termination of the Commitments and (y) the date on which there ceases to be any such LC Exposure, as well as such Fronting Bank’s standard fees and commissions with respect to the issuance, amendment, cancellation, negotiation, transfer, presentment, renewal or extension of any Letter of Credit or processing of drawings thereunder.  The foregoing fees accrued through and including the last day of March, June, September and December of each year shall be payable on the fifteenth (15^th) day following such last day, commencing on the first such date to occur after the Effective Date; provided that all such fees shall be payable on the date on which the Commitments terminate and any such fees accruing after the date on which the Commitments terminate shall be payable on demand.  Any other fees payable to any LC Issuer pursuant to this paragraph shall be payable within ten (10) days after demand.  The foregoing fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

(c) The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between the Borrower and the Administrative Agent.

(d) All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Administrative Agent (or to the LC Issuers, in the case of fees payable to them) for distribution, in the case of commitment fees and other fees payable to the Lenders, to the Lenders.  Fees paid shall not be refundable under any circumstances.

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SECTION 2.13 Interest.  (a) The Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate plus the Applicable Rate.

(b) The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate.

(c) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section or (ii) in the case of any other amount, 2% plus the rate applicable to ABR Loans as provided in paragraph (a) of this Section.

(d) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and upon termination of the Commitments; provided that (i) interest accrued pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan prior to the end of the Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.

(e) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day).  The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

SECTION 2.14 Alternate Rate of Interest.  

(a) If prior to the commencement of any Interest Period for a Eurodollar Borrowing:

(i) the Administrative Agent determines (which determination shall be conclusive and binding absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate, as applicable (including because the LIBO Screen Rate is not available or published on a current basis), for such Interest Period; or

(ii) the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period;

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then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone, telecopy or electronic mail as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective and any such Eurodollar Borrowing shall be converted into an ABR Borrowing on the last day of the then current Interest Period applicable theretoand (ii) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing.

(b) Notwithstanding the foregoing, if at any time the Administrative Agent determines (which determination shall be conclusive absent manifest error) that (i) the circumstances set forth in Section 2.14(a)(i) have arisen and such circumstances are unlikely to be temporary or (ii) the circumstances set forth in Section 2.14(a)(i) have not arisen but any of (w) the supervisor for the administrator of the LIBO Screen Rate has made a public statement that the administrator of the LIBO Screen Rate is insolvent (and there is no successor administrator that will continue publication of the LIBO Screen Rate), (x) the administrator of the LIBO Screen Rate has made a public statement identifying a specific date after which the LIBO Screen Rate will permanently or indefinitely cease to be published by it (and there is no successor administrator that will continue publication of the LIBO Screen Rate), (y) the supervisor for the administrator of the LIBO Screen Rate has made a public statement identifying a specific date after which the LIBO Screen Rate will permanently or indefinitely cease to be published or (z) the supervisor for the administrator of the LIBO Screen Rate or a Governmental Authority having jurisdiction over the Administrative Agent has made a public statement identifying a specific date after which the LIBO Screen Rate may no longer be used for determining interest rates for loans, then the Administrative Agent and the Borrower shall endeavor to establish an alternate rate of interest to the LIBO Rate that gives due consideration to the then prevailing market convention for determining a rate of interest for syndicated loans in the United States at such time, and shall enter into an amendment to this Agreement to reflect such alternate rate of interest and such other related changes to this Agreement as may be applicable (but for the avoidance of doubt, such related changes shall not include a reduction of the Applicable Rate); provided that, if such alternate rate of interest as so determined would be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.  Notwithstanding anything to the contrary in Section 9.02, such amendment shall become effective without any further action or consent of any other party to this Agreement so long as the Administrative Agent shall not have received, within five (5) Business Days of the date notice of such alternate rate of interest is provided to the Lenders, a written notice from the Required Lenders stating that such Required Lenders object to such amendment.  Until an alternate rate of interest shall be determined in accordance with this Section 2.14(b) (but, (A) in the case of the circumstances described in clause (ii)(w), clause (ii)(x) or clause (ii)(y) of the first sentence of this Section 2.14(b), only to the extent the LIBO Screen Rate for such Interest Period is not available or published at such time on a current basis and (B) in the case of the circumstances described in clause (ii)(z) of the first sentence of this Section 2.14(b), only to the extent the specific date referred to in such clause ‎has not occurred), (x) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any

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Borrowing as, a Eurodollar Borrowing shall be ineffective and any such Eurodollar Borrowing shall be converted into an ABR Borrowing on the last day of the then current Interest Period applicable thereto and (y) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing.

SECTION 2.15 Increased Costs.  (a) If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit, liquidity or similar requirement (including any compulsory loan requirement, insurance charge or other assessment) against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate) or any LC Issuer;

(ii) impose on any Lender or any LC Issuer or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or Loans made by such Lender or any Letter of Credit or participation therein; or

(iii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto;

and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, continuing, converting or maintaining any Loan or of maintaining its obligation to make any such Loan or to increase the cost to such Lender, such LC Issuer or such other Recipient of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender, such LC Issuer or such other Recipient hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Lender, such LC Issuer or such other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender, such LC Issuer or such other Recipient, as the case may be, for such additional costs incurred or reduction suffered.

(b) If any Lender or any LC Issuer determines that any Change in Law regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s or such LC Issuer’s capital or on the capital of such Lender’s or such LC Issuer’s holding company, if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by such LC Issuer, to a level below that which such Lender or such LC Issuer or such Lender’s or such LC Issuer’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or such LC Issuer’s policies and the policies of such Lender’s or such LC Issuer’s holding company with respect to capital adequacy and liquidity), then from time to time the Borrower will pay to such Lender or such LC Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or such LC Issuer or such Lender’s or such LC Issuer’s holding company for any such reduction suffered.

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(c) A certificate of a Lender or a LC Issuer setting forth the amount or amounts necessary to compensate such Lender or such LC Issuer or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall be conclusive absent manifest error.  The Borrower shall pay such Lender or such LC Issuer, as the case may be, the amount shown as due on any such certificate within ten (10) days after receipt thereof.

(d) Failure or delay on the part of any Lender or any LC Issuer to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or such LC Issuer’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender or a LC Issuer pursuant to this Section for any increased costs or reductions incurred more than 270 days prior to the date that such Lender or such LC Issuer, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or such LC Issuer’s intention to claim compensation therefor; providedfurther that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 270-day period referred to above shall be extended to include the period of retroactive effect thereof.

SECTION 2.16 Break Funding Payments.  In the event of (a) the payment of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default or as a result of any prepayment pursuant to Section 2.11), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Eurodollar Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.11 and is revoked in accordance therewith) or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.19 or 9.02(d), then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event.  Such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for deposits in Dollars of a comparable amount and period from other banks in the eurodollar market.  A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error.  The Borrower shall pay such Lender the amount shown as due on any such certificate within ten (10) days after receipt thereof.

SECTION 2.17 Taxes.  (a) Payments Free of Taxes.  Any and all payments by or on account of any obligation of the Borrower under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable law.  If any applicable law (as determined in the good faith discretion of an applicable withholding agent) requires the deduction or withholding of any Tax from any such payment by a withholding agent, then the applicable withholding agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by the Borrower shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 2.17) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.

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(b) Payment of Other Taxes by the Borrower.  Without duplication of other amounts payable by the Borrower under this Section, the Borrower shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of the Administrative Agent timely reimburse it for, Other Taxes.

(c) Evidence of Payments.  As soon as practicable after any payment of Taxes by the Borrower to a Governmental Authority pursuant to this Section 2.17, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(d) Indemnification by the Borrower.  The Borrower shall indemnify each Recipient, within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate setting forth in reasonable detail a description of such Indemnified Taxes and the amount of such payment or liability for such Indemnified Taxes delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

(e) Indemnification by the Lenders.  Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 9.04(c) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error.  Each Lender hereby authorizes the Administrative Agent to setoff and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this paragraph (e).

(f) Status of Lenders.  (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding.  In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent,

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shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.  Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 2.17(f)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender (it being understood that providing any information currently required by any U.S. federal income tax withholding form shall not be considered prejudicial to the position of a Lender).

(ii) Without limiting the generality of the foregoing, in the event that the Borrower is a U.S. Person:

(A) any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of IRS Form W-9 (or successor form) certifying that such Lender is exempt from U.S. federal backup withholding tax; provided, however, that if the Lender is a disregarded entity for U.S. federal income tax purposes, it shall provide the appropriate withholding form of its owner (together with appropriate supporting documentation);

(B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable:

(1) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E (or any successor form thereof) establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or IRS Form W-8BEN-E (or any successor form thereof) establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;

(2) executed copies of IRS Form W-8ECI (or any successor form thereof);

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(3) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit G-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN or IRS Form W-8BEN-E (or any successor form thereof); or

(4) to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN or IRS Form W-8BEN-E (or any successor form thereof), a U.S. Tax Compliance Certificate substantially in the form of Exhibit G-2 or Exhibit G-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit G-4 on behalf of each such direct and indirect partner;

(C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and

(D) if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount, if any, to deduct

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and withhold from such payment.  Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.

(g) Treatment of Certain Refunds.  If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.17 (including by the payment of additional amounts pursuant to this Section 2.17), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 2.17 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund).  Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (g) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority.  Notwithstanding anything to the contrary in this paragraph (g), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (g) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid.  This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

(h) Survival.  Each party’s obligations under this Section 2.17 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.

(i) Defined Terms.  For purposes of this Section 2.17, the term “Lender” includes the LC Issuers and the term “applicable law” includes FATCA.

SECTION 2.18 Payments Generally; Pro Rata Treatment; Sharing of Setoffs.  (a) Except as otherwise provided herein with respect to the reimbursement of LC Disbursements, the Borrower shall make each payment or prepayment required to be made by it hereunder (whether of principal, interest, fees or of amounts payable under Section 2.15, 2.16 or 2.17, or otherwise) prior to 12:00 noon, New York City time on the date when due or the date fixed for any prepayment hereunder, in immediately available funds, without setoff, recoupment or counterclaim.  Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon.  All such payments shall be made to the Administrative Agent at its offices at 10 South Dearborn Street, Chicago, Illinois 60603, except payments to be made directly to an LC Issuer as expressly provided herein and except that payments

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pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons entitled thereto.  The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof.  If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension.  All payments hereunder shall be made in Dollars.

(b) If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements then due to such parties.

(c) At the election of the Administrative Agent, all payments of principal, interest, LC Disbursements, fees, premiums, reimbursable expenses (including, without limitation, all reimbursement for fees and expenses pursuant to Section 9.03), and other sums payable under the Loan Documents that are not paid when due (after any applicable grace period) in accordance with the Loan Documents, subject to three (3) Business Days prior written notice to the Borrower, may be paid from the proceeds of Borrowings made hereunder whether made following a request by the Borrower pursuant to Section 2.03 or a deemed request as provided in this Section or may be deducted from any deposit account of the Borrower maintained with the Administrative Agent.  The Borrower hereby irrevocably authorizes, solely to the extent provided above, (i) the Administrative Agent to make a Borrowing for the purpose of paying each payment of principal, interest and fees as it becomes due hereunder or any other amount due under the Loan Documents and agrees that all such amounts charged shall constitute Loans and that all such Borrowings shall be deemed to have been requested pursuant to Section 2.03 and (ii) the Administrative Agent to charge any deposit account of the Borrower maintained with the Administrative Agent for each payment of principal, interest and fees as it becomes due hereunder or any other amount due under the Loan Documents.

(d) If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Revolving Loans or participations in LC Disbursements resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Revolving Loans and participations in LC Disbursements and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Revolving Loans and participations in LC Disbursements of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Revolving Loans and participations in LC Disbursements; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored

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to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply).  The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

(e) Unless the Administrative Agent shall have received, prior to any date on which any payment is due to the Administrative Agent for the account of the Lenders or any LC Issuer pursuant to the terms of this Agreement or any other Loan Document, notice from the Borrower that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the applicable LC Issuer, as the case may be, the amount due.  In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the applicable LC Issuer, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender such LC Issuer with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the NYFRB Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

(f) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.06(d) or (e), 2.07(b), 2.18(e) or 9.03(c), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), (i) apply any amounts thereafter received by the Administrative Agent for the account of such Lender and for the benefit of the Administrative Agent or the applicable LC Issuer to satisfy such Lender’s obligations to it under such Section until all such unsatisfied obligations are fully paid and/or (ii) hold any such amounts in a segregated account over which the Administrative Agent shall have exclusive control as Cash Collateral for, and application to, any future funding obligations of such Lender under any such Section; in the case of each of clauses (i) and (ii) above, in any order as determined by the Administrative Agent in its discretion.

SECTION 2.19 Mitigation Obligations; Replacement of Lenders.  (a) If any Lender or LC Issuer requests compensation under Section 2.15, or if the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or LC Issuer or any Governmental Authority for the account of any Lender or LC Issuer pursuant to Section 2.17, then such Lender or LC Issuer, as applicable, shall (at the request of the Borrower) use reasonable efforts to designate a different lending office for funding or booking its Loans, LC Disbursements or participations in LC Disbursements (as applicable) hereunder or to assign its rights and obligations hereunder to another of its offices, branches or Affiliates, if, in the judgment of such Lender or LC Issuer, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.17, as the case may be, in the future

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and (ii) would not subject such Lender or LC Issuer to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender or LC Issuer.  The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender or LC Issuer in connection with any such designation or assignment.

(b) If (i) any Lender or LC Issuer requests compensation under Section 2.15, (ii) the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or LC Issuer or any Governmental Authority for the account of any Lender or LC Issuer pursuant to Section 2.17 or (iii) any Lender or LC Issuer becomes a Defaulting Lender, then the Borrower may, at its sole expense and effort, upon notice to such Lender or LC Issuer and the Administrative Agent, require such Lender or LC Issuer to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights (other than its existing rights to payments pursuant to Section 2.15 or 2.17) and obligations under this Agreement and the other Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender or LC Issuer, if a Lender or LC Issuer accepts such assignment); provided that (i) the Borrower shall have received the prior written consent of the Administrative Agent (and if a Commitment is being assigned, each LC Issuer), which consent shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in LC Disbursements, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.15 or payments required to be made pursuant to Section 2.17, such assignment will result in a reduction in such compensation or payments.  A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.  Each party hereto agrees that (i) an assignment required pursuant to this paragraph may be effected pursuant to an Assignment and Assumption executed by the Borrower, the Administrative Agent and the assignee (or, to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to an Approved Electronic Platform as to which the Administrative Agent and such parties are participants), and (ii) the Lender required to make such assignment need not be a party thereto in order for such assignment to be effective and shall be deemed to have consented to and be bound by the terms thereof; provided that, following the effectiveness of any such assignment, the other parties to such assignment agree to execute and deliver such documents necessary to evidence such assignment as reasonably requested by the applicable Lender, provided that any such documents shall be without recourse to or warranty by the parties thereto.

SECTION 2.20 Expansion Option.  The Borrower may from time to time elect to increase the Commitments or enter into one or more tranches of term loans (each an “Incremental Term Loan”), in each case in minimum increments of $10,000,000 so long as, after giving effect thereto, the aggregate amount of such increases and all such Incremental Term Loans does not exceed $100,000,000.  The Borrower may arrange for any such increase or tranche to be provided by one or more Lenders (each Lender so agreeing to an increase in its Commitment, or to participate in such Incremental Term Loans,

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an “Increasing Lender”), or by one or more new banks, financial institutions or other entities (each such new bank, financial institution or other entity, an “Augmenting Lender”; provided that no Ineligible Institution may be an Augmenting Lender), which agree to increase their existing Commitments, or to participate in such Incremental Term Loans, or provide new Commitments, as the case may be; provided that (i) each Augmenting Lender shall be subject to the approval (not to be unreasonably withheld) of the Borrower and the Administrative Agent and (ii) (x) in the case of an Increasing Lender, the Borrower and such Increasing Lender execute an agreement substantially in the form of Exhibit C hereto, and (y) in the case of an Augmenting Lender, the Borrower and such Augmenting Lender execute an agreement substantially in the form of Exhibit D hereto.  No consent of any Lender (other than the Lenders participating in the increase or any Incremental Term Loan) shall be required for any increase in Commitments or Incremental Term Loan pursuant to this Section 2.20.  Increases and new Commitments and Incremental Term Loans created pursuant to this Section 2.20 shall become effective on the date agreed by the Borrower, the Administrative Agent and the relevant Increasing Lenders or Augmenting Lenders, and the Administrative Agent shall notify each Lender thereof.  Notwithstanding the foregoing, no increase in the Commitments (or in the Commitment of any Lender) or tranche of Incremental Term Loans shall become effective under this paragraph unless, (i) on the proposed date of the effectiveness of such increase or Incremental Term Loans, (A) the conditions set forth in paragraphs (a) and (b) of Section 4.02 shall be satisfied or waived by the Required Lenders and the Administrative Agent shall have received a certificate to that effect dated such date and executed by a Responsible Officer of the Borrower and (B) the Borrower shall be in compliance (on a pro forma basis) with the covenants contained in Section 6.01 and (ii) the Administrative Agent shall have received documents consistent with those delivered on the Effective Date as to the organizational power and authority of the Borrower to borrow hereunder after giving effect to such increase or Incremental Term Loan.  On the effective date of any increase in the Commitments or any Incremental Term Loans being made, (i) each relevant Increasing Lender and Augmenting Lender shall make available to the Administrative Agent such amounts in immediately available funds as are equal to its commitment (if any) for Incremental Term Loans or, in the case of an increase in the Commitments, as the Administrative Agent shall determine, for the benefit of the other Lenders, as being required in order to cause, after giving effect to such increase and the use of such amounts to make payments to such other Lenders, each Lender’s portion of the outstanding Revolving Loans of all the Lenders to equal its Applicable Percentage of such outstanding Revolving Loans, and (ii) except in the case of an increase in Commitments effected solely by an increase in the Commitments of Increasing Lenders in conformity with their Applicable Percentages prior to giving effect to such increase, the Borrower shall be deemed to have repaid and reborrowed all outstanding Revolving Loans as of the date of any increase in the Commitments (with such reborrowing to consist of the Types of Revolving Loans, with related Interest Periods if applicable, specified in a notice delivered by the Borrower, in accordance with the requirements of Section 2.03).  The deemed payments made pursuant to clause (ii) of the immediately preceding sentence shall be accompanied by payment of all accrued interest on the amount prepaid and, in respect of each Eurodollar Loan, shall be subject to indemnification (unless waived by any Lender in its sole discretion) by the Borrower pursuant to the provisions of Section 2.16 if the deemed payment occurs other than on the last day of the related Interest Periods.  The Incremental Term Loans (a) shall rank pari passu in right of payment with the Revolving Loans, (b) shall not mature earlier than the Maturity Date (but may have amortization prior to such date) and (c) shall be treated substantially the same as (and in any event no more favorably than) the Revolving Loans (as reasonably determined by the Borrower and the Administrative Agent) and provided that (i) the terms and conditions applicable to any tranche of Incremental Term Loans maturing after the Maturity Date may provide for material additional or different financial or other covenants applicable only during periods after the Maturity Date and (ii) the Incremental Term Loans may be priced differently, and have different fees and prepayment requirements, than the Revolving Loans.  Incremental Term Loans may be made hereunder pursuant to an amendment or restatement (an “Incremental Term Loan Amendment”) of this Agreement and, as appropriate, the other Loan Documents, executed by the Borrower, each Increasing Lender participating in such tranche, each Augmenting Lender participating in

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such tranche, if any, and the Administrative Agent.  The Incremental Term Loan Amendment may, without the consent of any other Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent, to effect the provisions of this Section 2.20.  This Section 2.20 shall supersede any provisions in Sections 2.18 or 9.02 to the contrary.  Nothing contained in this Section 2.20 shall constitute, or otherwise be deemed to be, a commitment on the part of any Lender to increase its Commitment hereunder, or provide Incremental Term Loans, at any time.

SECTION 2.21 Defaulting Lenders.  Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:

(a) fees shall cease to accrue on the unfunded portion of the Commitment of such Defaulting Lender pursuant to Section 2.12(a);

(b) the Commitment and Revolving Credit Exposure of such Defaulting Lender shall not be included in determining whether the Required Lenders have taken or may take any action hereunder (including any consent to any amendment, waiver or other modification pursuant to Section 9.02); provided, that, except as otherwise provided in Section 9.02, this clause (b) shall not apply to the vote of a Defaulting Lender in the case of an amendment, waiver or other modification requiring the consent of such Lender or each Lender directly affected thereby;

(c) if any LC Exposure with respect to Fronted Letters of Credit exists at the time such Lender becomes a Defaulting Lender then:

(i) all or any part of such LC Exposure of such Defaulting Lender shall be reallocated among the non-Defaulting Lenders in accordance with their respective Applicable Percentages  but only to the extent that (A) no Default has occurred and is continuing at the time of such reallocation, (B) the sum of all non-Defaulting Lenders’ Revolving Credit Exposures plus such LC Exposure of such Defaulting Lender’s does not exceed the total of all non-Defaulting Lenders’ Commitments and (C) each non-Defaulting Lender’s Revolving Credit Exposure does not exceed such non-Defaulting Lender’s Commitment;

(ii) if the reallocation described in clause (i) above cannot, or can only partially, be effected, the Borrower shall within one (1) Business Day following notice by the Administrative Agent Cash Collateralize the Borrower’s obligations corresponding to such LC Exposure of such Defaulting Lender (after giving effect to any partial reallocation pursuant to clause (i) above) in accordance with the procedures set forth in Section 2.06(i) for so long as such LC Exposure is outstanding;

(iii) if the Borrower Cash Collateralizes any portion of such LC Exposure of such Defaulting Lender pursuant to clause (ii) above, the Borrower shall not be required to pay any fees to such Defaulting Lender pursuant to Section 2.12(b) with respect to such LC Exposure of such Defaulting Lender during the period such LC Exposure of such Defaulting Lender is Cash Collateralized;

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(iv) if such LC Exposure of the non-Defaulting Lenders is reallocated pursuant to clause (i) above, then the fees payable to the Lenders pursuant to Section 2.12(a) and Section 2.12(b) shall be adjusted in accordance with such non-Defaulting Lenders’ Applicable Percentages; and

(v) if all or any portion of such LC Exposure of such Defaulting Lender is neither reallocated nor Cash Collateralized pursuant to clause (i) or (ii) above, then, without prejudice to any rights or remedies of any LC Issuer or any other Lender hereunder, all letter of credit fees payable under Section 2.12(b) with respect to such LC Exposure of such Defaulting Lender shall be payable to the Fronting Banks until and to the extent that such LC Exposure is reallocated and/or Cash Collateralized; and

(d) so long as such Lender is a Defaulting Lender, no Fronting Bank shall be required to issue, amend or increase any Fronted Letter of Credit, unless it is satisfied that the related exposure and the Defaulting Lender’s then outstanding LC Exposure will be 100% covered by the Commitments of the non-Defaulting Lenders and/or Cash Collateral will be provided by the Borrower in accordance with Section 2.21(c), and participating interests in any such newly issued or increased Letter of Credit shall be allocated among non-Defaulting Lenders in a manner consistent with Section 2.21(c)(i) (and such Defaulting Lender shall not participate therein).

If (i) a Bankruptcy Event or a Bail-In Action with respect to a Lender Parent shall occur following the date hereof and for so long as such event shall continue or (ii) any Fronting Bank has a good faith belief that any Lender has defaulted in fulfilling its obligations under one or more other agreements in which such Lender commits to extend credit, no Fronting Bank shall be required to issue, amend or increase any Letter of Credit, unless such Fronting Bank shall have entered into arrangements with the Borrower or such Lender, satisfactory to such Fronting Bank to defease any risk to it in respect of such Lender hereunder.

In the event that the Administrative Agent, the Borrower and each Fronting Bank each agrees that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then (i) the LC Exposure of the Lenders shall be readjusted to reflect the inclusion of such Lender’s Commitment, (ii) on such date such Lender shall purchase at par such of the Loans of the other Lenders as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance with its Applicable Percentage and (iii) if the Borrower has been required to Cash Collateralize all or a portion of such Lender’s LC Exposure as a result of such Lender having been a Defaulting Lender, the amount of Cash Collateral so provided (to the extent not previously applied by the Administrative Agent) shall be promptly returned to the Borrower.

SECTION 2.22 Extension of Maturity Date.

(a) Request for Extension.  The Borrower may, by notice to the Administrative Agent (who shall promptly notify the Lenders) not earlier than 120 days and not later than 90 days prior to each anniversary of the date of this Agreement (each such date, an “Extension Date”), request that each Lender extend such Lender’s Maturity Date to the date that is one year after the Maturity Date then in effect for such Lender (the “Existing Maturity Date”).

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(b) Lender Elections to Extend.  Each Lender, acting in its sole and individual discretion, shall, by notice to the Borrower and the Administrative Agent given not later than the date that is 15 days after the date on which the Administrative Agent received the Borrower’s extension request (the “Lender Notice Date”), advise the Borrower and the Administrative Agent whether or not such Lender agrees to such extension (each Lender that determines to so extend its Maturity Date, an “Extending Lender”).  Each Lender that determines not to so extend its Maturity Date (a “Non-Extending Lender”) shall notify the Borrower and the Administrative Agent of such fact promptly after such determination (but in any event no later than the Lender Notice Date), and any Lender that does not so advise the Borrower and the Administrative Agent on or before the Lender Notice Date shall be deemed to be a Non-Extending Lender.  The election of any Lender to agree to such extension shall not obligate any other Lender to so agree, and it is understood and agreed that no Lender shall have any obligation whatsoever to agree to any request made by the Borrower for extension of the Maturity Date.

(c) Intentionally Omitted.

(d) Additional Commitment Lenders.  The Borrower shall have the right, but shall not be obligated, on or before the applicable Maturity Date for any Non-Extending Lender to replace such Non-Extending Lender with, and add as “Lenders” under this Agreement in place thereof, one or more financial institutions (each, an “Additional Commitment Lender”) approved by the Administrative Agent (such approval not to be unreasonably withheld or delayed) in accordance with the procedures provided in Section 2.19(b), each of which Additional Commitment Lenders shall have entered into an Assignment and Assumption (in accordance with and subject to the restrictions contained in Section 9.04, with the Borrower or replacement Lender obligated to pay any applicable processing or recordation fee) with such Non-Extending Lender, pursuant to which such Additional Commitment Lenders shall, effective on or before the applicable Maturity Date for such Non-Extending Lender, assume a Commitment (and, if any such Additional Commitment Lender is already a Lender, its Commitment shall be in addition to such Lender’s Commitment hereunder on such date).  Prior to any Non-Extending Lender being replaced by one or more Additional Commitment Lenders pursuant hereto, such Non-Extending Lender may elect, in its sole discretion, by giving irrevocable notice thereof to the Administrative Agent and the Borrower (which notice shall set forth such Lender’s new Maturity Date), to become an Extending Lender.  The Administrative Agent may effect such amendments to this Agreement as are reasonably necessary to provide for any such extensions with the consent of the Borrower but without the consent of any other Lenders.

(e) Minimum Extension Requirement.  If (and only if) the total of the Commitments of the Lenders that have agreed to extend their Maturity Date and the new or increased Commitments of any Additional Commitment Lenders is more than 50% of the aggregate amount of the Commitments in effect immediately prior to the applicable Extension Date, then, effective as of the applicable Extension Date, the Maturity Date of each Extending Lender and of each Additional Commitment Lender shall be extended to the date that is one year after the Existing Maturity Date (except that, if such date is not a Business Day, such Maturity Date as so extended shall be the next preceding Business Day) and each Additional Commitment Lender shall thereupon become a “Lender” for all

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purposes of this Agreement and shall be bound by the provisions of this Agreement as a Lender hereunder and shall have the obligations of a Lender hereunder.

(f) Conditions to Effectiveness of Extension.  Notwithstanding the foregoing, (x) no more than one (1) extension of the Maturity Date shall be permitted hereunder and (y) any extension of any Maturity Date pursuant to this Section 2.22 shall not be effective with respect to any Extending Lender unless:

(i) no Default or Event of Default shall have occurred and be continuing on the applicable Extension Date and immediately after giving effect thereto;

(ii) the representations and warranties of the Borrower set forth in this Agreement are true and correct in all material respects (or, in the case of any representation or warranty qualified by materiality or Material Adverse Effect, in all respects) on and as of the applicable Extension Date and after giving effect thereto, as though made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date);

(iii) the Administrative Agent shall have received a certificate from the Borrower signed by a Responsible Officer of the Borrower certifying the accuracy of the foregoing clauses (i) and (ii); and

(iv) if there is a non-ratable increase in the Commitments, each outstanding Several Letter of Credit shall have been amended giving effect to the reallocation of the Commitments or, if required, returned by each respective beneficiary to the Administrative Agent and cancelled and/or exchanged for a new or amended Several Letter of Credit giving effect to the reallocated Commitments.

(g) Maturity Date for Non-Extending Lenders.  On the Maturity Date of each Non-Extending Lender, (i) the Commitment of each Non-Extending Lender shall automatically terminate and (ii) the Borrower shall repay such Non-Extending Lender in accordance with Section 2.10 (and shall pay to such Non-Extending Lender all of the other Obligations owing to it under this Agreement) and after giving effect thereto shall prepay any Revolving Loans outstanding on such date (and pay any additional amounts required pursuant to Section 2.16) to the extent necessary to keep outstanding Revolving Loans ratable with any revised Applicable Percentages of the respective Lenders effective as of such date, and the Administrative Agent shall administer any necessary reallocation of the Revolving Credit Exposures (without regard to any minimum borrowing, pro rata borrowing and/or pro rata payment requirements contained elsewhere in this Agreement).  On the Maturity Date, the participations in outstanding Fronted Letters of Credit shall be automatically adjusted to give effect to the revised Applicable Percentages of the respective Lenders.

(h) Conflicting Provisions.  This Section shall supersede any provisions in Section 2.18 or Section 9.02 to the contrary.

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Article III

Representations and Warranties

SECTION 3.01 Representations and Warranties.  The Borrower represents and warrants to the Lenders that:

(a)        (i) the Borrower has heretofore furnished to each of the Lenders (including by furnishing the Form 10-K of the Borrower filed with the SEC) its audited Consolidated balance sheet and Consolidated statements of income and cash flows as at and for the fiscal year ended December 31, 2018, and such financial statements fairly present, in all material respects, the Consolidated financial condition and results of operations of the Borrower and its Subsidiaries as at the date thereof and for such fiscal year, all in accordance with GAAP;

(ii) [intentionally omitted];

(iii) the Borrower has heretofore furnished to each of the Lenders the annual Statutory Statement of each Material Insurance Subsidiary as of the Effective Date for the fiscal year ended December 31, 2018, as filed with the applicable Insurance Regulatory Authority, and each such annual Statutory Statement presents fairly, in all material respects, the financial position and the results of operations of such Material Insurance Subsidiary as at and for the fiscal year ended December 31, 2018, in accordance with SAP; and

(iv) since December 31, 2018, there has been no Material Adverse Change.

(b) There is no action, proceeding or investigation pending, or to the knowledge of the Borrower, overtly threatened in writing against the Borrower or any of its Subsidiaries before any court, governmental agency or arbitrator which (i) is reasonably likely to have a Material Adverse Effect or (ii) purports to affect this Agreement or the Transactions.

(c) The Borrower and each of its Subsidiaries (i) is duly organized, validly existing and (to the extent applicable in respect of the relevant jurisdiction) in good standing under the laws of its jurisdiction of organization, (ii) is duly qualified and (to the extent applicable in respect of the relevant jurisdiction) in good standing as a foreign corporation in each other jurisdiction in which it owns or leases Property or in which the conduct of its business requires it to so qualify or be licensed and where, in each case, failure so to qualify and be in good standing would reasonably be expected to have a Material Adverse Effect and (iii) has all requisite corporate power and authority to own or lease and operate its Properties and to carry on its business as now conducted and as proposed to be conducted except as could not reasonably be expected to have a Material Adverse Effect.

(d) The Borrower and each of its Subsidiaries is in compliance with all federal, state and local laws and regulations (including, without limitation, all applicable environmental laws and ERISA) applicable to the Borrower, its Subsidiaries and their respective Properties, except to the extent failure to so comply would not

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(either individually or in the aggregate) reasonably be expected to have a Material Adverse Effect.

(e) All material consents, licenses, permits and governmental and third-party consents and approvals required for the due making and performance by the Borrower of this Agreement and the other Loan Documents to which it is a party have been obtained and remain in full force and effect.

(f) This Agreement is, and each of the other Loan Documents to which it is a party when duly executed and delivered will be, a legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting enforcement of creditors’ rights generally or general principles of equity.

(g) The making and performance by the Borrower of this Agreement and the other Loan Documents to which it is a party are within the Borrower’s corporate powers, have been duly authorized by all necessary corporate action, and (i) do not contravene the Borrower’s certificate of incorporation or by-laws or (ii) contravene, violate or breach any material contractual restriction binding on the Borrower or its Subsidiaries or any material law, rule or regulation (including Regulations T, U or X), or any material order, writ, judgment, injunction, decree, determination or award, except for any such contravention, violation or breach referred to in clause (ii) which could not reasonably be expected to have a Material Adverse Effect.

(h) Each of the Borrower and its Subsidiaries has good and marketable title to, valid leasehold interests in, or valid licenses to use, all Properties material to its business, and all such Properties are in good working order and condition, ordinary wear and tear excepted, in each case except as would not reasonably be expected to have a Material Adverse Effect.

(i) The Borrower and each of its Subsidiaries have paid and discharged all Taxes, assessments, claims and governmental charges or levies imposed upon it or upon its Property, except (i) any such Tax, assessment, claim or charge that is being contested in good faith and by proper proceedings and as to which appropriate reserves are being maintained in accordance with Section 5.02 or (ii) to the extent that any failure to do so could not reasonably be expected to have a Material Adverse Effect.

(j) The Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of buying or carrying Margin Stock, and no proceeds of any Loan or Letter of Credit will be used, whether directly or indirectly for any purpose, that entails violation of Regulations T, U or X.  At the time of each Borrowing or issuance of a Letter of Credit (other than the automatic renewal of a Letter of Credit in accordance with its terms) and after giving effect thereto, not more than 25 percent of the value of the assets (either of the Borrower or of the Borrower and its Subsidiaries on a Consolidated basis) that are subject to the restrictions in Section 6.03 and Section 6.05 consist of Margin Stock.

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(k) No ERISA Event has occurred or is reasonably expected to occur with respect to any Plan that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, has resulted or would reasonably be expected to result in a liability to the Borrower or its ERISA Affiliates in excess of $10,000,000.

(l) The Borrower is not an “investment company” as defined in the Investment Company Act of 1940, as amended.

(m) As of the date hereof, (i) Schedule 3.01 hereto is a complete list of the Subsidiaries of the Borrower, (ii) each such Subsidiary is duly organized and validly existing under the jurisdiction of its organization shown in said Schedule 3.01, and (iii) the percentage ownership by the Borrower of each such Subsidiary is as shown in said Schedule 3.01.

(n) The Borrower will use the proceeds of the Loans and the Letters of Credit only for the general corporate purposes of the Borrower and its Subsidiaries in the ordinary course of business (in compliance in all material respects with all applicable legal and regulatory requirements, including Anti-Corruption Laws and applicable Sanctions); provided that neither the Administrative Agent nor any Lender shall have any responsibility as to the use of any such proceeds.

(o) (i) The Borrower is, and immediately after giving effect to the making of each Borrowing and each issuance, amendment, renewal or extension of a Letter of Credit and the use of proceeds thereof, will be, Solvent and (ii) the Borrower and its Subsidiaries, on a consolidated basis and immediately after giving effect to the making of each Borrowing and each issuance, amendment, renewal or extension of a Letter of Credit hereunder and the use of proceeds thereof, will be, Solvent.

(p) All written information (other than information of a general economic or industry specific nature) that has been made available by the Borrower or any of its representatives to the Administrative Agent or any Lender in connection with the negotiation of this Agreement (including, for the avoidance of doubt, any such information in any materials provided in connection with the syndication of the Commitments), when taken as a whole, on or as of the dates on which such information was made available, did not contain any untrue statement of a material fact or omit to state a fact necessary to make the statements contained therein not misleading in light of the time and circumstances under which such statements were made (after giving effect to all supplements and updates thereto). As of the Effective Date, to the actual knowledge of the Borrower, the information included in the Beneficial Ownership Certification provided on or prior to the Effective Date to any Lender in connection with this Agreement is true and correct in all respects.

(q) The Borrower has implemented and maintains in effect policies and procedures designed to ensure compliance in all material respects by the Borrower, its Subsidiaries and, when acting on its or their behalf, their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions, and the Borrower, its Subsidiaries and their respective officers and directors and to the knowledge of the Borrower its employees and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects.  None of (a) the Borrower, any Subsidiary, or, to the knowledge of the Borrower or such Subsidiary, any of their respective directors, officers or employees, or (b) to the knowledge of the Borrower, any agent of the Borrower

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or any Subsidiary that will act on behalf of the Borrower or any Subsidiary in connection with or benefit from the credit facility established hereby, is a Sanctioned Person.  No Borrowing or Letter of Credit, use of proceeds or other Transactions will violate any Anti-Corruption Law or applicable Sanctions.

(r) The Borrower is not an EEA Financial Institution.

Article IV

Conditions

SECTION 4.01 Effective Date.  The obligations of the Lenders to make Loans and of any LC Issuer to issue Letters of Credit hereunder shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 9.02):

(a) The Administrative Agent (or its counsel) shall have received (i) from each party hereto either (A) a counterpart of this Agreement signed on behalf of such party or (B) written evidence reasonably satisfactory to the Administrative Agent (which may include telecopy or electronic transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement and (ii) duly executed copies of the Loan Documents and such other certificates, documents, instruments and agreements as the Administrative Agent shall reasonably request in connection with the Transactions, all in form and substance reasonably satisfactory to the Administrative Agent and its counsel and as further described in the list of closing documents attached as Exhibit E.

(b) The Administrative Agent shall have received a favorable written opinion (addressed to the Administrative Agent and the Lenders and dated the Effective Date) of Ropes & Gray LLP, counsel for the Borrower covering such matters relating to the Borrower, the Loan Documents or the Transactions as the Administrative Agent shall reasonably request.  The Borrower hereby requests such counsel to deliver such opinion.

(c) The Administrative Agent shall have received such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the organization, existence and good standing of the Borrower, the authorization of the Transactions and any other legal matters relating to the Borrower, the Loan Documents or the Transactions, all in form and substance reasonably satisfactory to the Administrative Agent and its counsel and as further described in the list of closing documents attached as Exhibit E.

(d) The Administrative Agent shall have received a certificate, dated the Effective Date and signed by a Responsible Officer of the Borrower, confirming compliance with the conditions set forth in paragraphs (a) and (b) of Section 4.02.

(e) The Administrative Agent shall have received evidence reasonably satisfactory to it that the commitments under the Existing Credit Agreement shall have been terminated and cancelled and all indebtedness and accrued interest and fees thereunder shall have been fully repaid (except to the extent being so repaid with the initial Revolving Loans).

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(f) (i) The Administrative Agent shall have received, at least five (5) days prior to the Effective Date, all documentation and other information regarding the Borrower requested in connection with applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act, to the extent requested in writing of the Borrower at least ten (10) days prior to the Effective Date and (ii) to the extent the Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, at least five (5) days prior to the Effective Date, any Lender that has requested, in a written notice to the Borrower at least ten (10) days prior to the Effective Date, a Beneficial Ownership Certification in relation to the Borrower shall have received such Beneficial Ownership Certification (provided that, upon the execution and delivery by such Lender of its signature page to this Agreement, the condition set forth in this clause (f) shall be deemed to be satisfied).

(g) The Administrative Agent shall have received all fees and other amounts due and payable to the Administrative Agent and the Lenders on or prior to the Effective Date, including, to the extent invoiced one (1) Business Day prior to the Effective Date, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower hereunder.

The Administrative Agent shall notify the Borrower and the Lenders of the Effective Date, and such notice shall be conclusive and binding.

SECTION 4.02 Each Credit Event.  The obligation of each Lender to make a Loan on the occasion of any Borrowing, and of any LC Issuer to issue, amend, renew or extend any Letter of Credit, is subject to the satisfaction of the following conditions:

(a) The representations and warranties of the Borrower set forth in this Agreement shall be true and correct in all material respects (or, in the case of any representation or warranty qualified by materiality or Material Adverse Effect, in all respects) on and as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date).

(b) At the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, no Default or Event of Default shall have occurred and be continuing.

Each Borrowing and each issuance, amendment, renewal or extension of a Letter of Credit shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in paragraphs (a) and (b) of this Section.

Article V

Affirmative Covenants

Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full and all Letters of Credit shall have expired or terminated or, in the case of Fronted Letters of Credit, have been cash collateralized or backstopped in a manner reasonably satisfactory to the applicable Fronting Banks and the Administrative

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Agent, in each case, without any pending draw, and all LC Disbursements shall have been reimbursed, the Borrower covenants and agrees with the Lenders that:

SECTION 5.01 Reporting Requirements.  The Borrower will furnish to the Administrative Agent for distribution to each Lender:

(a) as soon as available and in any event within 60 days after the end of each of the first three quarters of each fiscal year of the Borrower, the Consolidated balance sheet of the Borrower and its Subsidiaries as of the last day of such quarter and the related Consolidated statements of income and cash flows for such quarter, in each case setting forth in comparative form the corresponding figures from the corresponding quarter in the previous fiscal year, all prepared in conformity with GAAP and accompanied by a certificate of a senior financial officer of the Borrower, which certificate shall state that such financial statements present fairly, in all material respects, the Consolidated financial position of the Borrower and its Subsidiaries as of the date thereof and the Consolidated results of their operations for the period covered thereby in conformity with GAAP, consistently applied (subject to normal year-end audit adjustments and the absence of footnotes);

(b) as soon as available and in any event within 90 days after the end of each fiscal year of the Borrower, the Consolidated balance sheet of the Borrower and its Subsidiaries as of the last day of such fiscal year and the related Consolidated statements of income and cash flows for such fiscal year, setting forth in comparative form the corresponding figures from the previous fiscal year, all prepared in conformity with GAAP and accompanied by an unqualified report and opinion of independent certified public accountants of national standing and reputation, which shall state that such financial statements, in the opinion of such accountants, present fairly, in all material respects, the Consolidated financial position of the Borrower and its Subsidiaries as of the date thereof and the Consolidated results of their operations for such year in conformity with GAAP, consistently applied;

(c) as soon as possible and in any event within five Business Days after the Borrower obtains knowledge of the occurrence of any Event of Default or Default continuing on the date of such statement, a statement of a Responsible Officer setting forth details of such Event of Default or Default and the action which the Borrower has taken and proposes to take with respect thereto;

(d) within a reasonable time after filing thereof, copies of all registration statements (without exhibits) and all annual, quarterly and monthly reports (if any) filed by the Borrower with the SEC and promptly upon the mailing thereof to the shareholders of the Borrower generally, copies of all financial statements, reports and proxy statements so mailed;

(e) promptly after the Borrower or any ERISA Affiliate knows or should reasonably know that any ERISA Event has occurred with respect to which the liability or potential liability of the Borrower or any of its ERISA Affiliates has had or would reasonably be expected to have a Material Adverse Effect, a statement of a Responsible Officer describing such ERISA Event and the action, if any, which the Borrower or such ERISA Affiliate proposes to take with respect thereto;

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(f) promptly after receipt thereof by the Borrower or any ERISA Affiliate, copies of each notice from the PBGC stating its intention to terminate any Plan or to have a trustee appointed to administer any Plan where such action would have a Material Adverse Effect;  

(g) promptly after filing with the applicable Insurance Regulatory Authority and in any event within 60 days after the end of each of the first three quarterly fiscal periods of each fiscal year of each Material Insurance Subsidiary, the quarterly Statutory Statement of such Material Insurance Subsidiary for such quarterly fiscal period;

(h) promptly after filing with the applicable Insurance Regulatory Authority and in any event within 90 days after the end of each fiscal year of each Material Insurance Subsidiary, the annual Statutory Statement of such Material Insurance Subsidiary, including, without limitation, management’s discussion and analysis for such year;

(i) promptly upon the occurrence of any change in Moody’s rating of the Index Debt or S&P’s rating of the Index Debt, or any change in the A.M. Best Financial Strength Rating with respect to any Insurance Subsidiary, notice thereof (for the avoidance of doubt, a change in outlook shall not constitute a change in rating);

(j) promptly upon the commencement of, or any material adverse development in, any litigation, investigation or proceeding against the Borrower or any of its Subsidiaries that could reasonably be expected to have a Material Adverse Effect, notice thereof with a description thereof in reasonable detail;

(k) promptly after request therefor, (x) such other business and financial information respecting the condition or operations, financial or otherwise, of the Borrower or any of its Material Insurance Subsidiaries as the Administrative Agent or any Lender may from time to time reasonably request and (y) information and documentation reasonably requested by the Administrative Agent or any Lender for purposes of compliance with applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act and the Beneficial Ownership Regulation;

(l) promptly upon the occurrence of any change in the information provided in the Beneficial Ownership Certification delivered to such Lender that would result in a change to the list of beneficial owners identified in such certification, notice thereof; and

(m) together with each set of financial statements delivered pursuant to Section 5.01(a) or (b), a description of any Restricted Payment made during the most recent fiscal quarter of the Borrower (it being understood and agreed that the requirement to provide this information shall no longer be required under this Section 5.01(m) after the earlier of (i) the date of the delivery of the financial statements relating to the fiscal quarter of the Borrower ending June 30, 2021 and (ii) the date on which the aggregate amount of such Restricted Payments exceeds $400,000,000).

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Notwithstanding the foregoing, the obligations in clauses (a), (b) and (d) of this Section 5.01 shall be deemed satisfied with respect to financial information of the Borrower and its Subsidiaries by the furnishing the Form 10-K or 10-Q or any other document of the Borrower filed with the SEC, as applicable, on the date (i) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s website on the Internet at the website address provided to the Lenders; or (ii) on which such documents are posted on the Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that (A) the Borrower shall deliver paper copies of such documents to the Administrative Agent or any Lender that requests in writing (including by electronic mail) the Borrower to deliver such paper copies and (B) the Borrower shall notify the Administrative Agent (by telecopier or electronic mail) of the posting of any such documents satisfying the obligations in clauses (a), (b) and (d) of this Section 5.01.

The Borrower will furnish to the Lenders at the time it furnishes its financial statements pursuant to paragraphs (a) and (b) above, a certificate of a Responsible Officer, in the form of Exhibit F, setting forth reasonably detailed calculations demonstrating that the Borrower is in compliance with the covenants in Section 6.01.  The Borrower and each Lender acknowledge that certain of the Lenders may be Public Lenders and, if documents or notices required to be delivered pursuant to this Section 5.01 or otherwise are being distributed on an Approved Electronic Platform pursuant to Section 8.03, any document or notice that the Borrower has indicated contains Non-Public Information shall not be posted on that portion of the Approved Electronic Platform designated for such Public Lenders.  The Borrower agrees to clearly designate all information provided to the Administrative Agent by or on behalf the Borrower which is suitable to make available to Public Lenders.  If the Borrower has not indicated whether a document or notice delivered pursuant to this Section 5.01 contains Non-Public Information, the Administrative Agent reserves the right to post such document or notice solely on that portion of the Approved Electronic Platform designated for Lenders who wish to receive material nonpublic information with respect to the Borrower, its Subsidiaries and their securities.

SECTION 5.02 Payment of Taxes, Etc. The Borrower will pay and discharge, and cause each of its Subsidiaries to pay and discharge, before the same shall become delinquent, all Taxes, assessments, claims and governmental charges or levies imposed upon it or upon its Property, except to the extent that any failure to do so would not reasonably be expected to have a Material Adverse Effect; provided that neither the Borrower nor any of its Subsidiaries shall be required to pay or discharge any such Tax, assessment, claim or charge that is being contested in good faith and by proper proceedings and as to which appropriate reserves are being maintained.

SECTION 5.03 Corporate Existence, Compliance with Laws, Etc.  The Borrower will, and will cause each of its Material Subsidiaries to, (a) preserve and maintain all of its material rights, privileges, licenses and franchises, including all tradenames, patents and other intellectual property necessary for its business, except to the extent the failure to preserve and maintain the same would not reasonably be expected to have a Material Adverse Effect, and (b) preserve and maintain its legal existence, provided that nothing in this sentence shall prohibit any transaction not otherwise prohibited under Section 6.04.  The Borrower will comply, and will cause each of its Subsidiaries to comply, with all applicable laws, statutes, rules, regulations and orders, including, without limitation, ERISA, the Patriot Act, Anti-Corruption Laws and applicable Sanctions and all applicable environmental laws, except for any non-compliance which would not (either individually or in the aggregate) reasonably be expected to have a Material Adverse Effect.  The Borrower will maintain in effect and enforce policies and procedures designed to ensure compliance in all material respects by the Borrower, its Subsidiaries and, when acting on its or their behalf, their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions.

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SECTION 5.04 Maintenance of Properties, Etc.The Borrower will maintain and preserve, and will cause each of its Subsidiaries to maintain and preserve, all of its Properties that are used or useful in the conduct of its business in good working order and condition, ordinary wear and tear excepted, except where failure to do so would not reasonably be expected to have a Material Adverse Effect.  The Borrower will maintain, and cause each of its Subsidiaries to maintain, appropriate and adequate insurance with responsible and reputable insurance companies or associations or with self-insurance programs to the extent consistent with prudent practices of the Borrower and its Subsidiaries or otherwise customary in their respective industries in such amounts and covering such risks as is customary in the industries in which the Borrower or such Subsidiary operates.

SECTION 5.05 Keeping of Books.  The Borrower will, and will cause each of its Subsidiaries to, keep proper books of record and account as are necessary to prepare Consolidated financial statements in accordance with GAAP or SAP, as applicable, in which full and correct entries in all material respects shall be made of all financial transactions and the assets and business of the Borrower and each such Subsidiary in accordance with GAAP or SAP, as applicable.

SECTION 5.06 Visitation Rights.  The Borrower will, at any reasonable time during normal business hours and upon reasonable prior notice and from time to time, permit the Administrative Agent or any of the Lenders or any agents or representatives thereof (in each case at their own expense (except as described below) and subject to Section 9.12 hereof) to examine and make copies of and abstracts from the records and books of account of, and visit the Properties of, the Borrower and any of its Subsidiaries, and to discuss the affairs, finances and accounts of the Borrower and any of its Subsidiaries with any of their officers or directors; provided that, excluding any such examination or visit during the continuance of an Event of Default, the Administrative Agent and the Lenders shall not, collectively, exercise such rights more than once during any calendar year.  In addition, subject to customary access agreements, at any time when an Event of Default has occurred and is continuing, the Borrower will, and will cause its Subsidiaries to, permit the Administrative Agent or any of the Lenders or any agents or representatives thereof to discuss the affairs, finances and accounts of the Borrower and its Subsidiaries with their independent certified public accountants, and the Borrower will be responsible for the reasonable costs and expenses of the Administrative Agent and the Lenders and the agents and representatives thereof incurred in connection with this Section 5.06.

SECTION 5.07 Use of Proceeds.  The Borrower will use the proceeds of the Loans and Letters of Credit only for the general corporate purposes of the Borrower and its Subsidiaries in the ordinary course of business (in compliance in all material respects with all applicable legal and regulatory requirements); provided that (i) no such use of the proceeds will be, directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of buying or carrying any Margin Stock in violation of Regulations T, U or X and (ii) neither the Administrative Agent nor any Lender shall have any responsibility as to the use of any such proceeds. The Borrower will not request any Borrowing or Letter of Credit, and the Borrower shall not directly or knowingly indirectly use, and shall procure that its Subsidiaries shall not directly or knowingly indirectly use, the proceeds of any Borrowing or Letter of Credit (a) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws or (b) for the purpose of financing the activities of any Sanctioned Person, or in any Sanctioned Country except to the extent permissible for a Person required to comply with Sanctions.

Article VI

Negative Covenants

Until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees  payable hereunder have been paid in full and all Letters of Credit have expired or terminated or, in the case of Fronted Letters of Credit, have been cash collateralized or backstopped in a

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manner reasonably satisfactory to the applicable Fronting Banks and the Administrative Agent, in each case, without any pending draw, and all LC Disbursements shall have been reimbursed, the Borrower covenants and agrees with the Lenders that:

SECTION 6.01 Financial Covenants.  

(a) Minimum Net Worth.  The Borrower will not permit Net Worth as of the last day of any fiscal quarter of the Borrower to be less than the sum of (A) an amount equal to the product of (x) 70% and (y) (i) $2,836,292,783 minus (ii) the lesser of (1) the aggregate amount of Restricted Payments made by the Borrower from and after the Effective Date and prior to June 30, 2021 and (2) $400,000,000, plus (B) an amount equal to 50% of the Borrower’s Consolidated net income (if positive) for such fiscal quarter and for each prior fiscal quarter of the Borrower ending after the Effective Date plus (C) an amount equal to 50% of the aggregate Net Equity Proceeds of any Equity Issuances made after the Effective Date.

(b) RBC Ratio.  The Borrower will not permit the RBC Ratio of either HIC or CIC as of the last day of any fiscal quarter of the Borrower to be less than 150%.

(c) Leverage Ratio.  The Borrower will not permit the Leverage Ratio as of the last day of any fiscal quarter of the Borrower to be greater than 35%.

SECTION 6.02 Financial Debt.  The Borrower will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Financial Debt, except:

(a) Financial Debt created hereunder;

(b) Financial Debt and commitments to provide Financial Debt existing on the date hereof and set forth on Schedule 6.02;

(c) Financial Debt of the Borrower to any Subsidiary and of any Subsidiary to the Borrower or any other Subsidiary;

(d) Financial Debt incurred by Securitization Subsidiaries pursuant to Securitization Transactions;

(e) Financial Debt in respect of capitalized lease obligations, synthetic lease obligations or secured by purchase money security interests, provided that the aggregate principal amount of Financial Debt permitted by this clause (e) shall not exceed $100,000,000 at any time outstanding;

(f) Guaranties by the Borrower of Financial Debt incurred by its Subsidiaries otherwise permitted under this Section 6.02;

(g) Financial Debt in respect of Hybrid Securities, Disqualified Equity Interests and Preferred Securities issued by the Borrower or any trust or other special purpose entity formed by the Borrower as to which no Subsidiary (other than any such trust or other special purpose entity) of the Borrower has any obligation;  

(h) Financial Debt in respect of subordinated securities of the Borrower so long as (i) the obligations of the Borrower thereunder are unsecured and fully subordinated as to payment and performance in all respects to all of the Obligations of the Borrower under this Agreement, (ii) no Subsidiary of the Borrower has any

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obligations thereunder and (iii) such subordinated securities do not have any required amortization, maturity, mandatory put, redemption, repayment, or other similar provision or requirement, or any cash interest thereon, and in any event is not payable, falling due or capable of falling due, prior to at least 91 days after the Maturity Date, provided that the Borrower shall be permitted to make cash interest payments pursuant to the terms of such other subordinated securities so long as (A) no payment Default or Event of Default has occurred and is continuing and (B) the interest rate in respect thereof shall be based on prevailing market rates at the time of issuance of such other subordinated securities;

(i) Financial Debt in respect of borrowings from a Federal Home Loan Bank in the ordinary course of business and on ordinary business terms pursuant to a membership in such Federal Home Loan Bank;

(j) [Reserved];

(k) Financial Debt assumed in connection with any Acquisition, provided that such Financial Debt is not incurred in contemplation of such Acquisition and no other Subsidiary (other than the Subsidiary being acquired, if applicable) has any liability or obligations in respect of such Financial Debt;

(l) Financial Debt incurred by the Borrower in addition to the foregoing;

(m) Financial Debt incurred by the Subsidiaries of the Borrower, provided that the aggregate principal amount of Financial Debt permitted by this clause shall not exceed $75,000,000 at any time outstanding;

(n) Financial Debt in respect of letters of credit issued for the benefit of Insurance Regulatory Authorities (including any such Financial Debt set forth on Schedule 6.02); and

(o) Any extension, renewal or replacement of any of the foregoing Financial Debt that (i) does not include Financial Debt of an obligor that was not an obligor with respect to the Financial Debt being extended, renewed or replaced, (ii) does not increase the outstanding principal amount of the Financial Debt being extended, renewed or replaced except by an amount equal to unpaid accrued interest thereon, prepayment premiums not exceeding 5% of the outstanding principal amount of such Financial Debt, and fees and expenses incurred in connection with such extension, renewal or replacement, and by an amount equal to any existing commitments unutilized thereunder and (iii) in the case of Financial Debt that is subordinated in right of payment to the Obligations, is subordinated to at least the same extent as, and has a maturity not earlier than, and weighted average life to maturity not shorter than, the Financial Debt being renewed or replaced.

For purposes of determining compliance with this Section 6.02, the Borrower will be entitled to divide an item of Financial Debt that meets the criteria of one of the categories of Financial Debt described in clauses (a) through (o) above between such applicable clause and any other applicable clause.

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SECTION 6.03 Liens.  The Borrower will not, nor will it permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any of its Property, whether now owned or hereafter acquired, except Permitted Liens.

SECTION 6.04 Mergers, Etc.  The Borrower will not, and will not permit any of its Material Subsidiaries to, merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of, whether in one transaction or in a series of transactions, all or substantially all of the Property (whether now owned or hereafter acquired) of the Borrower or such Material Subsidiary to, any Person, or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Default shall have occurred and be continuing, (a) any Material Subsidiary may merge into (i) the Borrower in a transaction in which the Borrower is the surviving corporation or (ii) any other Subsidiary, (b) any Material Subsidiary may sell, transfer, lease or otherwise dispose of its assets to the Borrower or to another Subsidiary, (c) any Material Subsidiary may liquidate or dissolve if the Borrower determines in good faith that such liquidation or dissolution is in the best interests of the Borrower and is not materially disadvantageous to the Lenders, (d) any Subsidiary may merge into the Borrower in a transaction in which the Borrower is the surviving corporation and (e) the Borrower and any Material Subsidiary may engage in a disposition permitted by Section 6.05.

SECTION 6.05 Disposition of Assets.  The Borrower will not, and will not permit any of its Material Subsidiaries to, sell, lease, transfer or otherwise dispose of any substantial part of its Property, except (a) sales of inventory and investments in the ordinary course of its business, (b) sales of assets which are not material to the operation of the Borrower or such Material Subsidiaries or are no longer used or useful in connection with the operation of the Borrower or such Material Subsidiaries, (c) transfers of Property by the Borrower or any Material Subsidiary to the Borrower or any other Subsidiary, (d) dispositions pursuant to Securitization Transactions, (e) dispositions in connection with the CitySquare Project, (f) dispositions for fair market value of assets acquired after the Effective Date in connection with Acquisitions, to the extent that, at the time that the relevant Acquisition was consummated, the Borrower or such Material Subsidiary planned to sell, lease, transfer or otherwise dispose of such assets and (g) other dispositions, the net cash proceeds of which, when aggregated with the net cash proceeds of any other such dispositions consummated within the same fiscal year of the Borrower pursuant to this clause (g), shall not exceed in the aggregate 5% of the total assets of the Borrower and its Subsidiaries (determined on a Consolidated basis as of the end of the most recent fiscal quarter for which financial statements are available).

SECTION 6.06 Transactions with Affiliates.  The Borrower will not, and will not permit any of its Subsidiaries to, sell, lease or otherwise transfer any Property to, or purchase, lease or otherwise acquire any assets from, or otherwise engage in any transactions with, any of its Affiliates, except (a) at prices and on terms and conditions not less favorable to the Borrower or such Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties and (b) transactions between or among the Borrower and its Subsidiaries not involving any other Affiliate.

SECTION 6.07 Line of Business.  The Borrower will not, and will not permit any of its Material Subsidiaries to, make any material change in the nature or conduct of the business of the Borrower or such Material Subsidiary as conducted on the date hereof.

SECTION 6.08 Anti-Dividend-Block.  Except to the extent required by applicable law, statute, rule, regulation, order or agreement with regulators, the Borrower will not permit any of its Subsidiaries to agree to or have in effect any contractual restriction on the payment of dividends or the making of other distributions to the Borrower (each, a “Burdensome Agreement”) other than:

(a) Burdensome Agreements (i) in existence on the date hereof (to the extent not otherwise permitted by this Section 6.08) that are listed on Schedule 6.08 hereto and (ii) to the extent Burdensome Agreements permitted by clause (i) are

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contained in an agreement evidencing Financial Debt, any agreement evidencing any permitted modification, replacement, renewal, extension or refinancing of such Financial Debt so long as such modification, replacement, renewal, extension or refinancing does not expand the scope of such Burdensome Agreement or include any other Subsidiaries as parties thereto;

(b) Burdensome Agreements that are binding on a Subsidiary of the Borrower at the time such Person first becomes a Subsidiary of the Borrower, so long as such Burdensome Agreements were not entered into in contemplation of such Person becoming a Subsidiary of the Borrower;

(c) Burdensome Agreements that are customary restrictions on leases, subleases, licenses or asset sale agreements otherwise permitted hereby so long as such restrictions relate to the assets subject thereto;

(d) Burdensome Agreements that are customary provisions restricting subletting or assignment of any lease governing a leasehold interest of any Subsidiary of the Borrower;

(e) Burdensome Agreements that are customary provisions restricting assignment of any agreement entered into in the ordinary course of business;

(f) Burdensome Agreements that are restrictions on cash or other deposits imposed by customers under contracts entered into in the ordinary course of business;

(g) Burdensome Agreements to the extent set forth in an agreement evidencing Financial Debt of the Borrower permitted under Section 6.02; and

(h) Burdensome Agreements entered into by a Securitization Subsidiary in respect of assets financed by such Securitization Subsidiary, or Burdensome Agreements restricting a Securitization Subsidiary in connection with the incurrence of Financial Debt by such Securitization Subsidiary, in each case pursuant to a Securitization Transaction.

SECTION 6.09 Restricted Payments.  At any time after the occurrence and during the continuance of any Event of Default under Section 7.01(a), Section 7.01(c) (only if such Event of Default arises due to the Borrower’s failure to perform or observe any term, covenant or agreement contained in Section 5.01(a), Section 5.01(b) or Section 6.01), Section 7.01(d), Section 7.01(e), Section 7.01(f), or Section 7.01(j) , the Borrower shall not, directly or indirectly declare or make, or agree to make, directly or indirectly, any Restricted Payment other than Restricted Payments for the repurchase, retirement or other acquisition or retirement for value of Equity Interests of the Borrower by any future, present or former employee, director, officer, manager or consultant (or any Immediate Family Member thereof) of the Borrower or any of its Subsidiaries upon the death, disability, retirement or termination of employment of any such Person or otherwise pursuant to any employee or director equity plan, employee or director stock option plan or any other employee or director benefit plan or any agreement (including any stock subscription or shareholder agreement) with any future, present or former employee, director, officer, manager or consultant of the Borrower or any of its Subsidiaries (including, for the avoidance of doubt, any principal and interest payable on any notes issued by the Borrower (or of any direct or indirect parent of the Borrower) in connection with any such repurchase, retirement or other acquisition or retirement).  Notwithstanding the foregoing, the restrictions contained in this Section 6.09 shall not prohibit the Borrower from directly or indirectly declaring or making, or agreeing to make, directly or

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indirectly, any Restricted Payment at any time (i) there are no Loans outstanding under this Agreement and (ii) the Borrower has delivered to the Administrative Agent (and the Administrative Agent is in possession of) Cash Collateral in an amount equal to 103% of the aggregate Stated Amount of all Letters of Credit outstanding hereunder as contemplated by Section 2.06(i).

Article VII

Events of Default

SECTION 7.01 Events of Default.  Any of the following events shall be an “Event of Default” hereunder:

(a) The Borrower shall fail to pay any principal of any Loan or reimburse any LC Disbursement when the same becomes due and payable; or the Borrower shall fail to pay any interest on any Loan or in respect of any LC Disbursement, any fees pursuant to Section 2.12, or any other fee or Obligation payable hereunder or under any other Loan Document when due and such failure remains unremedied for three Business Days;

(b) Any representation or warranty made by the Borrower herein or in connection with this Agreement shall prove to have been incorrect in any material respect when made or deemed made;

(c) (i) The Borrower shall fail to perform or observe any term, covenant or agreement contained in Section 5.01(c), 5.03(b), 5.07, or Article VI; or (ii) the Borrower shall fail to perform or observe any other term, covenant or agreement contained in this Agreement or in any other Loan Document on its part to be performed or observed, and such failure remains unremedied for 30 days after notice thereof shall have been given to the Borrower by the Administrative Agent;

(d) The Borrower or any of its Subsidiaries (other than a Securitization Subsidiary solely in the event the applicable Debt of such Securitization Subsidiary does not provide for Limited Originator Recourse to or from the Borrower or any of its Subsidiaries (excluding any other Securitization Subsidiary)) shall fail to pay any principal of any Debt (other than Debt hereunder) having an aggregate outstanding principal amount of more than $50,000,000 or its equivalent in other currencies (such Debt, “Material Debt”), when the same becomes due and payable (whether at scheduled maturity, by required prepayment, acceleration, demand or otherwise); or any other event shall occur or condition shall exist under any agreement or instrument relating to any Material Debt (either individually or in the aggregate), if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of any Material Debt, or to require the same to be prepaid or defeased (other than by a regularly required payment);

(e) The Borrower or any of the Borrower’s Material Subsidiaries shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Borrower or any of the Borrower’s Material Subsidiaries seeking to adjudicate it a bankrupt or

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insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its Property and, in the case of any such proceeding instituted against the Borrower or any of the Borrower’s Material Subsidiaries, such proceeding shall remain undismissed or unstayed for a period of 60 days; or the Borrower or any of the Material Subsidiaries shall take any corporate action to authorize any of the actions set forth above in this clause (e);

(f) In connection with the actual or alleged insolvency of the Borrower or any Material Insurance Subsidiary, any Insurance Regulatory Authority shall appoint a rehabilitator, receiver, custodian, trustee, conservator or liquidator or the like (collectively, a “conservator”) for the Borrower or such Material Insurance Subsidiary, or cause possession of all or any substantial portion of the Property of the Borrower or such Material Insurance Subsidiary to be taken by any conservator;

(g) Any judgment or order for the payment of money in excess of $50,000,000 (to the extent not covered by an insurer having a minimum A.M. Best financial strength rating of A- that has not denied coverage) shall be rendered against the Borrower or any of its Subsidiaries and there shall be any period of 45 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect;

(h) An ERISA Event shall have occurred that when taken together with all other ERISA Events that have occurred, would reasonably be expected to have a Material Adverse Effect;

(i) There shall occur a Change in Control; or

(j) This Agreement shall at any time and for any reason be declared by a court of competent jurisdiction to be null and void, or a proceeding shall be commenced by the Borrower or any Subsidiary, seeking to establish the invalidity or unenforceability thereof (exclusive of questions of interpretation of any provision thereof), or the Borrower or any Subsidiary shall repudiate or deny in writing any portion of its liability or obligations hereunder, other than in each case due to the satisfaction in full of the Obligations and the termination of the Commitments hereunder.

SECTION 7.02 Remedies.  If any Event of Default shall occur and be continuing, then, and in every such event (other than an event with respect to the Borrower described in Section 7.01(e) or 7.01(f)), and at any time thereafter during the continuance of such event, the Administrative Agent may with the consent of the Required Lenders, and shall at the request of the Required Lenders, by notice to the Borrower, take any or all of the following actions, at the same or different times:  (a) terminate the Commitments, and thereupon the Commitments shall terminate immediately, (b) declare the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other Obligations of the Borrower accrued hereunder and under the other Loan Documents, shall become due

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and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower and (c) require that the Borrower provide Cash Collateral as required in Section 2.06(i); and in case of any event with respect to the Borrower described in Section 7.01(e) or 7.01(f), the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other Obligations accrued hereunder and under the other Loan Documents, shall automatically become due and payable and the obligations of the Borrower to cash collateralize the LC Exposure as provided in clause (c) above shall automatically become effective, in each case, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.  Upon the occurrence and during the continuance of an Event of Default, the Administrative Agent may, and at the request of the Required Lenders shall, exercise any rights and remedies provided to the Administrative Agent under the Loan Documents or at law or equity.

Article VIII

The Administrative Agent

SECTION 8.01 Authorization and Action.

(a) Each Lender and each LC Issuer hereby irrevocably appoints the entity named as Administrative Agent in the heading of this Agreement and its successors and assigns to serve as the administrative agent under the Loan Documents and each Lender and each LC Issuer authorizes the Administrative Agent to take such actions as agent on its behalf and to exercise such powers under this Agreement and the other Loan Documents as are delegated to the Administrative Agent under such agreements and to exercise such powers as are reasonably incidental thereto.  Without limiting the foregoing, each Lender and each LC Issuer hereby authorizes the Administrative Agent to execute and deliver, and to perform its obligations under, each of the Loan Documents to which the Administrative Agent is a party, and to exercise all rights, powers and remedies that the Administrative Agent may have under such Loan Documents.

(b) As to any matters not expressly provided for herein and in the other Loan Documents (including enforcement or collection), the Administrative Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the written instructions of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, pursuant to the terms in the Loan Documents), and, unless and until revoked in writing, such instructions shall be binding upon each Lender and each LC Issuer; provided, however, that the Administrative Agent shall not be required to take any action that (i) the Administrative Agent in good faith believes exposes it to liability unless the Administrative Agent receives an indemnification and is exculpated in a manner satisfactory to it from the Lenders and the LC Issuers with respect to such action or (ii) is contrary to this Agreement or any other Loan Document or applicable law, including any action that may be in violation of the automatic stay under any requirement of law relating to bankruptcy, insolvency or reorganization or relief of debtors or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any requirement of law relating to bankruptcy, insolvency or reorganization or relief of debtors; provided, further, that the Administrative Agent may seek clarification or direction from the Required Lenders prior to the exercise of any such instructed

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action and may refrain from acting until such clarification or direction has been provided. Except as expressly set forth in the Loan Documents, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower, any Subsidiary or any Affiliate of any of the foregoing that is communicated to or obtained by the Person serving as Administrative Agent or any of its Affiliates in any capacity. Nothing in this Agreement shall require the Administrative Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

(c) In performing its functions and duties hereunder and under the other Loan Documents, the Administrative Agent is acting solely on behalf of the Lenders and the LC Issuers (except in limited circumstances expressly provided for herein relating to the maintenance of the Register), and its duties are entirely mechanical and administrative in nature. Without limiting the generality of the foregoing:

(i) the Administrative Agent does not assume and shall not be deemed to have assumed any obligation or duty or any other relationship as the agent, fiduciary or trustee of or for any Lender, any LC Issuer or any other holder of Obligations other than as expressly set forth herein and in the other Loan Documents, regardless of whether a Default or an Event of Default has occurred and is continuing (and it is understood and agreed that the use of the term “agent” (or any similar term) herein or in any other Loan Document with reference to the Administrative Agent is not intended to connote any fiduciary duty or other implied (or express) obligations arising under agency doctrine of any applicable law, and that such term is used as a matter of market custom and is intended to create or reflect only an administrative relationship between contracting parties); additionally, each Lender agrees that it will not assert any claim against the Administrative Agent based on an alleged breach of fiduciary duty by the Administrative Agent in connection with this Agreement and/or the transactions contemplated hereby; and

(ii) nothing in this Agreement or any Loan Document shall require the Administrative Agent to account to any Lender for any sum or the profit element of any sum received by the Administrative Agent for its own account.

(d) The Administrative Agent may perform any of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any of their respective duties and exercise their respective rights and powers through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities pursuant to this Agreement. The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agent except to the extent that a court of competent jurisdiction determines in a final and nonappealable judgment that the

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Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agent.

(e) None of any Co-Syndication Agent, any Co-Documentation Agent or any Joint Bookrunner shall have obligations or duties whatsoever in such capacity under this Agreement or any other Loan Document and shall incur no liability hereunder or thereunder in such capacity, but all such persons shall have the benefit of the indemnities provided for hereunder.

(f) In case of the pendency of any proceeding with respect to the Borrower under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, the Administrative Agent (irrespective of whether the principal of any Loan or any reimbursement obligation in respect of any LC Disbursement shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise:

(i) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, LC Disbursements and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the LC Issuers and the Administrative Agent (including any claim under Sections 2.12, 2.13, 2.15, 2.17 and 9.03) allowed in such judicial proceeding; and

(ii) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such proceeding is hereby authorized by each Lender, each LC Issuer and each other holder of Obligations to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, the LC Issuers or the other holders of Obligations, to pay to the Administrative Agent any amount due to it, in its capacity as the Administrative Agent, under the Loan Documents (including under Section 9.03). Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or any LC Issuer any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or any LC Issuer or to authorize the Administrative Agent to vote in respect of the claim of any Lender or any LC Issuer in any such proceeding.

(g) The provisions of this Article VIII are solely for the benefit of the Administrative Agent, the Lenders and the LC Issuers, and, except solely to the extent of the Borrower’s rights to consent pursuant to and subject to the conditions set forth in this Article VIII, none of the Borrower or any Subsidiary, or any of their respective Affiliates, shall have any rights as a third party beneficiary under any such provisions.

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SECTION 8.02 Administrative Agent’s Reliance, Indemnification, Etc.

(a) Neither the Administrative Agent nor any of its Related Parties shall be (i) liable for any action taken or omitted to be taken by such party, the Administrative Agent or any of its Related Parties under or in connection with this Agreement or the other Loan Documents (x) with the consent of or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith to be necessary, under the circumstances as provided in the Loan Documents) or (y) in the absence of its own gross negligence or willful misconduct (such absence to be presumed unless otherwise determined by a court of competent jurisdiction by a final and non-appealable judgment) or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by the Borrower or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or for any failure of the Borrower to perform its obligations hereunder or thereunder.

(b) The Administrative Agent shall be deemed not to have knowledge of any Default unless and until written notice describing such Default is given to the Administrative Agent by the Borrower, a Lender or an LC Issuer, and the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered thereunder or in connection therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document or the occurrence of any Default, (iv) the sufficiency, validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article IV or elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent or satisfaction of any condition that expressly refers to the matters described therein being acceptable or satisfactory to the Administrative Agent.

(c) Without limiting the foregoing, the Administrative Agent (i) may treat the payee of any promissory note as its holder until such promissory note has been assigned in accordance with Section 9.04, (ii) may rely on the Register to the extent set forth in Section 9.04(b), (iii) may consult with legal counsel (including counsel to the Borrower), independent public accountants and other experts selected by it, and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts, (iv) makes no warranty or representation to any Lender or any LC Issuer and shall not be responsible to any Lender or any LC Issuer for any statements, warranties or representations made by or on behalf of the Borrower in connection with this Agreement or any other Loan Document, (v) in determining compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or an LC

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Issuer, may presume that such condition is satisfactory to such Lender or such LC Issuer unless the Administrative Agent shall have received notice to the contrary from such Lender or such LC Issuer sufficiently in advance of the making of such Loan or the issuance of such Letter of Credit and (vi) shall be entitled to rely on, and shall incur no liability under or in respect of this Agreement or any other Loan Document by acting upon, any notice, consent, certificate or other instrument or writing (which writing may be a fax, any electronic message, Internet or intranet website posting or other distribution) or any statement made to it orally or by telephone and believed by it in good faith to be genuine and signed or sent or otherwise authenticated by the proper Person.

SECTION 8.03 Posting of Communications.

(a) The Borrower agrees that the Administrative Agent may, but shall not be obligated to, make any Communications available to the Lenders and the LC Issuers by posting the Communications on IntraLinks™, DebtDomain, SyndTrak, ClearPar or any other electronic platform chosen by the Administrative Agent to be its electronic transmission system (the “Approved Electronic Platform”).

(b) Although the Approved Electronic Platform and its primary web portal are secured with generally-applicable security procedures and policies implemented or modified by the Administrative Agent from time to time (including, as of the Effective Date, a user ID/password authorization system) and the Approved Electronic Platform is secured through a per-deal authorization method whereby each user may access the Approved Electronic Platform only on a deal-by-deal basis, each of the Lenders, the LC Issuers and the Borrower acknowledges and agrees that the distribution of material through an electronic medium is not necessarily secure, that the Administrative Agent is not responsible for approving or vetting the representatives or contacts of any Lender that are added to the Approved Electronic Platform, and that there may be confidentiality and other risks associated with such distribution. Each of the Lenders, the LC Issuers and the Borrower hereby approves distribution of the Communications through the Approved Electronic Platform and understands and assumes the risks of such distribution.

(c) THE APPROVED ELECTRONIC PLATFORM AND THE COMMUNICATIONS ARE PROVIDED “AS IS” AND “AS AVAILABLE”. THE APPLICABLE PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS, OR THE ADEQUACY OF THE APPROVED ELECTRONIC PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE APPROVED ELECTRONIC PLATFORM AND THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE APPLICABLE PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE APPROVED ELECTRONIC PLATFORM. IN NO EVENT SHALL THE ADMINISTRATIVE AGENT, ANY JOINT BOOKRUNNER, ANY CO-

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SYNDICATION AGENT, ANY CO-DOCUMENTATION AGENT OR ANY OF THEIR RESPECTIVE RELATED PARTIES (COLLECTIVELY, “APPLICABLE PARTIES”) HAVE ANY LIABILITY TO THE BORROWER, ANY LENDER, ANY LC ISSUER OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF THE BORROWER’S OR THE ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE APPROVED ELECTRONIC PLATFORM, EXCEPT TO THE EXTENT OF DIRECT OR ACTUAL DAMAGES AS ARE DETERMINED BY A COURT OF COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH APPLICABLE PARTY OR RELATED PARTY THEREOF.

(d) Each Lender and each LC Issuer agrees that notice to it (as provided in the next sentence) specifying that Communications have been posted to the Approved Electronic Platform shall constitute effective delivery of the Communications to such Lender for purposes of the Loan Documents. Each Lender and each LC Issuer agrees (i) to notify the Administrative Agent in writing (which could be in the form of electronic communication) from time to time of such Lender’s or such LC Issuer’s (as applicable) email address to which the foregoing notice may be sent by electronic transmission and (ii) that the foregoing notice may be sent to such email address.

(e) Each of the Lenders, the LC Issuers and the Borrower agrees that the Administrative Agent may, but (except as may be required by applicable law) shall not be obligated to, store the Communications on the Approved Electronic Platform in accordance with the Administrative Agent’s generally applicable document retention procedures and policies.

(f) Nothing herein shall prejudice the right of the Administrative Agent, any Lender or any LC Issuer to give any notice or other communication pursuant to any Loan Document in any other manner specified in such Loan Document.

SECTION 8.04 The Administrative Agent Individually.  With respect to its Commitment, Loans and Letters of Credit, the Person serving as the Administrative Agent shall have and may exercise the same rights and powers hereunder and is subject to the same obligations and liabilities as and to the extent set forth herein for any other Lender or LC Issuer, as the case may be. The terms “LC Issuers”, “Lenders”, “Required Lenders” and any similar terms shall, unless the context clearly otherwise indicates, include the Administrative Agent in its individual capacity as a Lender, an LC Issuer or as one of the Required Lenders, as applicable. The Person serving as the Administrative Agent and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of banking, trust or other business with, the Borrower, any Subsidiary or any Affiliate of any of the foregoing as if such Person was not acting as the Administrative Agent and without any duty to account therefor to the Lenders or the LC Issuers.

SECTION 8.05 Successor Administrative Agent.

(a) The Administrative Agent may resign at any time by giving 30 days’ prior written notice thereof to the Lenders, the LC Issuers and the Borrower, whether

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or not a successor Administrative Agent has been appointed. Upon receipt of any such resignation, the Required Lenders shall have the right (subject to the prior written approval of the Borrower, which approval may not be unreasonably withheld and shall not be required while an Event of Default has occurred and is continuing) to appoint a successor Administrative Agent, which shall be a bank with an office in New York, New York or an Affiliate of any such bank. If no successor Administrative Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Administrative Agent’s giving of notice of resignation, then the retiring Administrative Agent may, on behalf of the Lenders and the LC Issuers, appoint a successor Administrative Agent, which shall be a bank with an office in New York, New York or an Affiliate of any such bank (subject to the prior written approval of the Borrower, which approval may not be unreasonably withheld and shall not be required while an Event of Default has occurred and is continuing). Upon the acceptance of any appointment as Administrative Agent by a successor Administrative Agent, such successor Administrative Agent shall succeed to, and become vested with, all the rights, powers, privileges and duties of the retiring Administrative Agent. Upon the acceptance of appointment as Administrative Agent by a successor Administrative Agent, the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement and the other Loan Documents. Prior to any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the retiring Administrative Agent shall take such action as may be reasonably necessary to assign to the successor Administrative Agent its rights as Administrative Agent under the Loan Documents.

(b) Notwithstanding paragraph (a) of this Section, in the event no successor Administrative Agent shall have been so appointed and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its intent to resign, the retiring Administrative Agent may give notice of the effectiveness of its resignation to the Lenders, the LC Issuers and the Borrower, whereupon, on the date of effectiveness of such resignation stated in such notice, (i) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents and (ii) the Required Lenders shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent; provided that (A) all payments required to be made hereunder or under any other Loan Document to the Administrative Agent for the account of any Person other than the Administrative Agent shall be made directly to such Person and (B) all notices and other communications required or contemplated to be given or made to the Administrative Agent shall directly be given or made to each Lender and each LC Issuer. Following the effectiveness of the Administrative Agent’s resignation from its capacity as such, the provisions of this Article VIII and Section 9.03, as well as any exculpatory, reimbursement and indemnification provisions set forth in any other Loan Document, shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent.

SECTION 8.06 Acknowledgements of Lenders and LC Issuers.

(a) Each Lender represents that it is engaged in making, acquiring or holding commercial loans in the ordinary course of its business and that it has,

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independently and without reliance upon the Administrative Agent, any Joint Bookrunner, any Co-Syndication Agent, any Co-Documentation Agent or any other Lender, or any of the Related Parties of any of the foregoing, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement as a Lender, and to make, acquire or hold Loans hereunder. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent, any Joint Bookrunner, any Co-Syndication Agent, any Co-Documentation Agent or any other Lender, or any of the Related Parties of any of the foregoing, and based on such documents and information (which may contain material, non-public information within the meaning of the United States securities laws concerning the Borrower and its Affiliates) as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.

(b) Each Lender, by delivering its signature page to this Agreement on the Effective Date, or delivering its signature page to an Assignment and Assumption or any other Loan Document pursuant to which it shall become a Lender hereunder, shall be deemed to have acknowledged receipt of, and consented to and approved, each Loan Document and each other document required to be delivered to, or be approved by or satisfactory to, the Administrative Agent or the Lenders on the Effective Date.

SECTION 8.07 Certain ERISA Matters.

(a) Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent, and the Joint Bookrunners and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower, that at least one of the following is and will be true:

(i) such Lender is not using “plan assets” (within the meaning of the Plan Asset Regulations) of one or more Benefit Plans in connection with the Loans, the Letters of Credit or the Commitments,

(ii) the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement,

(iii) (A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer

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and perform the Loans, the Letters of Credit, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement, or

(iv) such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender.

(b) In addition, unless sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender or such Lender has not provided another representation, warranty and covenant as provided in sub-clause (iv) in the immediately preceding clause (a), such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent, and the Joint Bookrunners, the Co-Syndication Agents, the Co-Documentation Agents or any of their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower, that none of the Administrative Agent, or the Joint Bookrunners, the Co-Syndication Agents, the Co-Documentation Agents or any of their respective Affiliates is a fiduciary with respect to the assets of such Lender (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Loan Document or any documents related hereto or thereto).

(c) The Administrative Agent and each Joint Bookrunner, Co-Syndication Agent and Co-Documentation Agent hereby informs the Lenders that each such Person is not undertaking to provide impartial investment advice, or to give advice in a fiduciary capacity, in connection with the transactions contemplated hereby, and that such Person has a financial interest in the transactions contemplated hereby in that such Person or an Affiliate thereof (i) may receive interest or other payments with respect to the Loans, the Letters of Credit, the Commitments, this Agreement and any other Loan Documents, (ii) may recognize a gain if it extended the Loans, the Letters of Credit or the Commitments for an amount less than the amount being paid for an interest in the Loans, the Letters of Credit or the Commitments by such Lender or (iii) may receive fees or other payments in connection with the transactions contemplated hereby, the Loan Documents or otherwise, including structuring fees, commitment fees, arrangement fees, facility fees, commitment fees, upfront fees, underwriting fees, ticking fees, agency fees, administrative agent fees or collateral agent fees, utilization fees, minimum usage fees, letter of credit fees, fronting fees, deal-away or alternate transaction fees, amendment fees, processing fees, term out premiums, banker’s acceptance fees, breakage or other early termination fees or fees similar to the foregoing.

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Article IX

Miscellaneous

SECTION 9.01 Notices.  

(a) Except in the case of notices and other communications expressly permitted to be given by telephone (and subject to paragraph (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy or e-mail, as follows:

(i) if to the Borrower, to it at 440 Lincoln Street, Worcester, Massachusetts 01653, Attention of Chief Financial Officer (Telecopy No. ; Telephone No. ; Email: ), with a copy (except in the case of invoices or other notices of a routine administrative nature) to General Counsel (Telecopy No.; Telephone No. ; Email: );

(ii) if to the Administrative Agent, to JPMorgan Chase Bank, N.A., 10 South Dearborn Street, Floor L-2, Chicago, Illinois 60603, Attention of Stephon Chambers (Telecopy No. ), with a copy to JPMorgan Chase Bank, N.A., 237 Park Avenue, 7th Floor, New York, New York, Attention of Hector Varona (Telecopy No. );

(iii) if to the Issuing Agent, to it at JPMorgan Chase Bank, N.A., Attention of Anju Vanvala (Email: ); and

(iv) if to any other Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire.

Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient).  Notices delivered through Approved Electronic Platforms, to the extent provided in paragraph (b) below, shall be effective as provided in said paragraph (b).

(b) Notices and other communications to the Lenders and the LC Issuers hereunder may be delivered or furnished by using Approved Electronic Platforms pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Article II unless otherwise agreed by the Administrative Agent and the applicable Lender.  The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

(c) Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other

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written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient, at its e-mail address as described in the foregoing clause (i), of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii) above, if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.

(d) Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto.  

(e) Any notice of Default or Event of Default may be provided by telephone if confirmed promptly thereafter by delivery of written notice thereof.

SECTION 9.02 Waivers; Amendments.  

(a) No failure or delay by the Administrative Agent, any LC Issuer or any Lender in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.  The rights and remedies of the Administrative Agent, the LC Issuers and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have.  No waiver of any provision of this Agreement or consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.  Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, any Lender or any LC Issuer may have had notice or knowledge of such Default at the time.

(b) Except as provided in (1) Section 2.20 with respect to an Incremental Term Loan Amendment, (2) Section 2.22 with respect to an extension of the Maturity Date or (3) Section 2.14(b), neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders or by the Borrower and the Administrative Agent with the consent of the Required Lenders; provided that no such agreement shall (i) increase  the Commitment of any Lender without the written consent of such Lender, (ii) reduce the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender directly affected thereby, (iii) postpone the scheduled date of payment of the principal amount of any Loan or LC Disbursement, or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender directly affected thereby, (iv) change

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Section 2.09(c) or 2.18(b) or (d), in each case in a manner that would alter the ratable reduction of Commitments or the pro rata sharing of payments required thereby, without the written consent of each Lender, (v) change the payment waterfall provisions of Section 2.21(b) without the written consent of each Lender or (vi) change any of the provisions of this Section or the definition of “Required Lenders” or “Applicable Percentage” or any other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the written consent of each Lender (it being understood that, (x) solely with the consent of the parties prescribed by Section 2.20 to be parties to an Incremental Term Loan Amendment, Incremental Term Loans may be included  in the definition of “Applicable Percentage” and the defined terms used therein and in the determination of Required Lenders on substantially the same basis as the Commitments and the Loans are included on the Effective Date and (y) this Section 9.02 may be amended to permit amendments, waivers or other modifications that directly affect only one Class of Loans with the consent solely of the Borrower and the Lenders having either (A) in the case of amendments, waivers or other modifications directly affecting  the Revolving Loans, Revolving Credit Exposures and unused Commitments representing more than 50% of the sum of the total Revolving Credit Exposures and unused Commitments at such time and (B) in the case of amendments, waivers or other modifications directly affecting the Incremental Term Loans, Incremental Term Loans representing more than 50% of the total Term Loans at such time); providedfurther that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent or any LC Issuer hereunder without the prior written consent of the Administrative Agent or such LC Issuer, as the case may be (it being understood that any change to Section 2.21 shall require the consent of the Administrative Agent and, except to the extent that such change relates solely to Incremental Term Loans, the LC Issuers).  Notwithstanding the foregoing, no consent with respect to any amendment, waiver or other modification of this Agreement shall be required of any Defaulting Lender, except with respect to any amendment, waiver or other modification referred to in clause (i), (ii) or (iii) of the first proviso of this paragraph and then only in the event such Defaulting Lender shall be directly affected by such amendment, waiver or other modification.

(c) Notwithstanding the foregoing, this Agreement and any other Loan Document may be amended (or amended and restated) with the written consent of the Required Lenders, the Administrative Agent and the Borrower (x) to add one or more credit facilities (in addition to the Incremental Term Loans pursuant to an Incremental Term Loan Amendment) to this Agreement and to permit extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof to share ratably in the benefits of this Agreement and the other Loan Documents with the Revolving Loans, Incremental Term Loans and the accrued interest and fees in respect thereof and (y) to include appropriately the Lenders holding such credit facilities in any determination of the Required Lenders and Lenders.

(d) If, in connection with any proposed amendment, waiver or consent  requiring the consent of “each Lender” or “each Lender directly affected thereby,” the consent of the Required Lenders is obtained, but the consent of other necessary Lenders

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is not obtained (any such Lender whose consent is necessary but not obtained being referred to herein as a “Non-Consenting Lender”), then the Borrower may elect to replace a Non-Consenting Lender as a Lender party to this Agreement, provided that, (i) concurrently with such replacement, (A) another bank or other entity which is reasonably satisfactory to the Borrower and the Administrative Agent shall agree, as of such date, to purchase for cash the Loans and other Obligations due to the Non-Consenting Lender pursuant to an Assignment and Assumption and to become a Lender for all purposes under this Agreement and to assume all obligations of the Non-Consenting Lender to be terminated as of such date and to comply with the requirements of clause (b) of Section 9.04, and (B) the Borrower shall pay to such Non-Consenting Lender in same day funds on the day of such replacement (1) all interest, fees and other amounts then accrued but unpaid to such Non-Consenting Lender by the Borrower hereunder to and including the date of termination, including without limitation payments due to such Non-Consenting Lender under Sections 2.15 and 2.17, and (2) an amount, if any, equal to the payment which would have been due to such Lender on the day of such replacement under Section 2.16 had the Loans of such Non-Consenting Lender been prepaid on such date rather than sold to the replacement Lender, (ii) no assignment pursuant to this Section 9.02(d) shall be effective until all of the then outstanding Several Letters of Credit are either amended giving effect to such assignment or, if required, returned by each beneficiary to the Issuing Agent and either cancelled or exchanged for new or amended Several Letters of Credit that give effect to such assignment (it being understood that to the extent the respective beneficiaries whose consent is required do not consent to such assignment, such assignment cannot occur) and (iii) such Non-Consenting Lender shall have received the outstanding principal amount of its Loans and participations in LC Disbursements.  Each party hereto agrees that (i) an assignment required pursuant to this paragraph may be effected pursuant to an Assignment and Assumption executed by the Borrower, the Administrative Agent and the assignee (or, to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to an Approved Electronic Platform as to which the Administrative Agent and such parties are participants), and (ii) the Lender required to make such assignment need not be a party thereto in order for such assignment to be effective and shall be deemed to have consented to and be bound by the terms thereof; provided that, following the effectiveness of any such assignment, the other parties to such assignment agree to execute and deliver such documents necessary to evidence such assignment as reasonably requested by the applicable Lender, provided that any such documents shall be without recourse to or warranty by the parties thereto.

(e) Notwithstanding anything to the contrary herein the Administrative Agent may, with the consent of the Borrower only, amend, modify or supplement this Agreement or any of the other Loan Documents to cure any ambiguity, omission, mistake, defect or inconsistency.

SECTION 9.03 Expenses; Indemnity; Damage Waiver.  

(a) The Borrower shall pay (i) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (which, in the case of counsel, shall be limited to the reasonable fees, charges and disbursements of one primary counsel, and, if necessary, one local counsel in any

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relevant material jurisdiction) in connection with the syndication and distribution (including, without limitation, via the internet or through a service such as Intralinks) of the credit facilities provided for herein, the preparation and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable and documented out-of-pocket expenses incurred by any LC Issuer in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent, any LC Issuer or any Lender (which, in the case of counsel, shall be limited to the reasonable fees, charges and disbursements of one primary counsel for the Administrative Agent and the Lenders, taken as a whole, and in the case of an actual or potential conflict of interest, one additional counsel for each group of affected parties similarly situated, taken as a whole, and, if necessary, one local counsel in any relevant material jurisdiction) in connection with the enforcement or protection of its rights in connection with this Agreement and any other Loan Document, including its rights under this Section, or in connection with the Loans made or Letters of Credit issued hereunder, including all such reasonable and documented out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.

(b) The Borrower shall indemnify the Administrative Agent, each Joint Bookrunner, each Co-Syndication Agent, each Co-Documentation Agent, each LC Issuer and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (which, in the case of counsel, shall be limited to the reasonable fees, charges and disbursements of one primary counsel for all Indemnitees, taken as a whole, and in the case of an actual or potential conflict of interest, one additional counsel for each group of affected Indemnitees similarly situated, taken as a whole, and, if necessary, one local counsel in any relevant material jurisdiction) incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of any Loan Document or any agreement or instrument contemplated thereby, the performance by the parties hereto of their respective obligations thereunder or the consummation of the Transactions or any other transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use of the proceeds therefrom (including any refusal by any LC Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation, arbitration or proceeding (including the preparation of any defense thereto) relating to any of the foregoing, whether or not such claim, litigation, investigation, arbitration or proceeding is brought by the Borrower or its equity holders, Affiliates, creditors or any other third Person and whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages,

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liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from (x) the gross negligence or willful misconduct of such Indemnitee or any Related Indemnified Party thereof, (y) the material breach by such Indemnitee or any Related Indemnified Party thereof of its express obligations under this Agreement pursuant to a claim initiated by the Borrower or (z) any dispute solely among Indemnitees (other than (A) claims against any of the Administrative Agent or the Lenders or any of their Affiliates in its capacity or in fulfilling its role as the Administrative Agent, Issuing Agent, a Fronting Bank, a lead arranger, a bookrunner or any similar role under this Agreement and (B) arising as a result of an act or omission by the Borrower or any of its Affiliates).  As used herein, any “Related Indemnified Party” of a Person means (1) any Controlling Person or Controlled Affiliate of such Indemnitee, (2) the respective directors, officers, or employees of such Indemnitee or any of its Controlling Persons or Controlled Affiliates and (3) the respective agents or representatives of such Indemnitee or any of its Controlling Persons or Controlled Affiliates, in the case of this clause (3), acting on behalf of or at the instructions of such Indemnitee, Controlling Person or such Controlled Affiliate; provided that each reference to a Controlled Affiliate in this sentence pertains to a Controlled Affiliate involved in the negotiation or syndication of this Agreement and the credit facility hereunder.  This Section 9.03(b) shall not apply with respect to Taxes other than any Taxes that represent losses, claims or damages arising from any non-Tax claim.

(c) To the extent that the Borrower fails to pay any amount required to be paid by it to the Administrative Agent or any LC Issuer under paragraph (a) or (b) of this Section (and without limiting its obligation to do so), each Lender severally agrees to pay to the Administrative Agent or such LC Issuer such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount (it being understood that the Borrower’s failure to pay any such amount shall not relieve the Borrower of any default in the payment thereof); provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent, or such LC Issuer in its capacity as such.

(d) To the extent permitted by applicable law, neither the Borrower nor any Indemnitee shall assert, and each of the Borrower, the Administrative Agent, each Lender and each LC Issuer hereby waives, on its own behalf and on behalf of its Related Parties, any claim against any Indemnitee (in the case of such waiver by the Borrower) or against the Borrower (in the case of such waiver by any Indemnitee) (i) for any damages arising from the use by others of information or other materials obtained through telecommunications, electronic or other information transmission systems (including the Internet) (except to the extent of direct or actual damages as are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee), or (ii) on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof; provided that nothing contained in this Section 9.03(d) shall limit the Borrower’s indemnification obligations set forth in Section 9.03(b).

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(e) All amounts due under this Section shall be payable not later than fifteen (15) days after written demand therefor.

SECTION 9.04 Successors and Assigns.  

(a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of any LC Issuer that issues any Letter of Credit), except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section.  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of any LC Issuer that issues any Letter of Credit),  Participants (to the extent provided in paragraph (c) of this Section) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the LC Issuers and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) (i)     Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more Persons (other than an Ineligible Institution) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment, participations in Letters of Credit and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld, conditioned or delayed) of:

(A) the Borrower (provided that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within ten (10) Business Days after having received notice thereof);  provided, further, that no consent of the Borrower shall be required for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund or, if an Event of Default has occurred and is continuing, any other assignee;

(B) the Administrative Agent;

(C) the Issuing Agent; and

(D) each Fronting Bank.

(ii) Assignments shall be subject to the following additional conditions:

(A) except in the case of an assignment to a Lender or an Affiliate of a Lender or an Approved Fund or an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans of any Class, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than $10,000,000 unless each of the Borrower and the Administrative Agent otherwise consent, provided

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that no such consent of the Borrower shall be required if an Event of Default has occurred and is continuing;

(B) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement, provided that this clause shall not be construed to prohibit the assignment of a proportionate part of all the assigning Lender’s rights and obligations in respect of one Class of Commitments or Loans;

(C) the parties to each assignment shall execute and deliver to the Administrative Agent (x) an Assignment and Assumption or (y) to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to an Approved Electronic Platform as to which the Administrative Agent and the parties to the Assignment and Assumption are participants, together with a processing and recordation fee of $3,500, such fee to be paid (except as otherwise provided herein) by either the assigning Lender or the assignee Lender or shared between such Lenders; and

(D) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire in which the assignee designates one or more credit contacts to whom all syndicate-level information (which may contain material non-public information about the Borrower and its Affiliates and their Related Parties or their respective securities) will be made available and who may receive such information in accordance with the assignee’s compliance procedures and applicable laws, including federal and state securities laws.

For the purposes of this Section 9.04(b), the term “Approved Fund” and “Ineligible Institution” have the following meanings:

“Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

“Ineligible Institution” means (a) a natural person, (b) a Defaulting Lender or its Lender Parent, (c) the Borrower, any of its Subsidiaries or any of its Affiliates, or (d) a company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural person or relative(s) thereof.

(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) of this Section, from and after the effective date specified in each Assignment and Assumption the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an

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Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.15, 2.16, 2.17 and 9.03); provided, however, that no Lender may assign any obligation under a Several Letter of Credit unless such Several Letter of Credit is either amended or returned by the beneficiary and reissued by the Issuing Agent, removing or amending, as the case may be, the assigning Lender’s percentage obligations and replacing or amending the same with the percentage obligations of the assignee.  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 9.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c) of this Section.

(iv) The Administrative Agent, acting for this purpose as a non-fiduciary agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount (and stated interest) of the Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent, the LC Issuers and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for inspection by the Borrower, any LC Issuer and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(v) Upon its receipt of (x) a duly completed Assignment and Assumption executed by an assigning Lender and an assignee or (y) to the extent applicable, an agreement incorporating an Assignment and Assumption by reference pursuant to an Approved Electronic Platform as to which the Administrative Agent and the parties to the Assignment and Assumption are participants, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register; provided that if either the assigning Lender or the assignee shall have failed to make any payment required to be made by it pursuant to Section 2.06(d) or (e), 2.07(b), 2.18(e) or 9.03(c), the Administrative Agent shall have no obligation to accept such Assignment and Assumption and record the information therein in the Register unless and until such payment shall have been made in full, together with all accrued interest thereon.  No assignment shall be

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effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

(c) Any Lender may, without the consent of, or notice to, the Borrower, the Administrative Agent or any LC Issuer, sell participations to one or more banks or other entities (a “Participant”), other than an Ineligible Institution, in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged; (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations; and (C) the Borrower, the Administrative Agent, the LC Issuers and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.  Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 9.02(b) that affects such Participant.  The Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17 (subject to the requirements and limitations therein, including the requirements under Section 2.17(f) (it being understood that the documentation required under Section 2.17(f) shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section; provided that such Participant (A) agrees to be subject to the provisions of Sections 2.18 and 2.19 as if it were an assignee under paragraph (b) of this Section; and (B) shall not be entitled to receive any greater payment under Section 2.15 or 2.17, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation.  Each Lender that sells a participation agrees, at the Borrower’s request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of Section 2.19(b) with respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.08 as though it were a Lender, provided that such Participant agrees to be subject to Section 2.18(d) as though it were a Lender.  Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any Commitments, Loans, Letters of Credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such Commitment, Loan, Letter of Credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations or Section 1.163-5(b) of the Proposed United States Treasury Regulations (or, in each case, any amended or successor version) (or

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such disclosure is otherwise required by applicable law).  The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.  For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.

(d) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including without limitation any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

SECTION 9.05 Survival.  All covenants, agreements, representations and warranties made by the Borrower in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent, any LC Issuer or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement or any other Loan Document is outstanding and unpaid (other than contingent indemnification obligations that are not yet due and payable) or any Letter of Credit is outstanding (unless, in the case of Fronted Letters of Credit, such Fronted Letters of Credit have been cash collateralized or backstopped in a manner reasonably satisfactory to the applicable Fronting Banks and the Administrative Agent) and so long as the Commitments have not expired or terminated. The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any other Loan Document or any provision hereof or thereof.

SECTION 9.06 Counterparts; Integration; Effectiveness; Electronic Execution.  This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  This Agreement, the other Loan Documents and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.  Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.  Delivery of an executed counterpart of a signature page of this Agreement by telecopy, e-mailed .pdf or any other electronic means that reproduces an image of the actual executed signature page shall be effective as delivery of a manually executed counterpart of this Agreement.  The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to any  document to be signed in connection with this Agreement and the transactions contemplated hereby shall be deemed to include Electronic Signatures, deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system,

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as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

SECTION 9.07 Severability.  Any provision of any Loan Document held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions thereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

SECTION 9.08 Right of Setoff.  If an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to setoff and apply any and all deposits (general or special, time or demand, provisional or final and in whatever currency denominated) at any time held and other obligations at any time owing by such Lender or Affiliate to or for the credit or the account of the Borrower against any of and all of the Obligations held by such Lender, irrespective of whether or not such Lender shall have made any demand under the Loan Documents and although such obligations may be unmatured.  The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender may have.  Each Lender and each LC Issuer agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application.

SECTION 9.09 Governing Law; Jurisdiction; Consent to Service of Process.  

(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN ANY SUCH OTHER LOAN DOCUMENT) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.

(b) Each of the Lenders and the Administrative Agent hereby irrevocably and unconditionally agrees that, notwithstanding the governing law provisions of any applicable Loan Document, any claims brought against the Administrative Agent by any Lender relating to this Agreement, any other Loan Document or the consummation or administration of the transactions contemplated hereby or thereby shall be construed in accordance with and governed by the law of the State of New York.

(c) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the United States District Court for the Southern District of New York sitting in the Borough of Manhattan (or if such court lacks subject matter jurisdiction, the Supreme Court of the State of New York sitting in the  Borough of Manhattan), and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any other Loan Document or the transactions relating hereto or thereto, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may (and any such claims, cross-claims or third party claims brought against the Administrative Agent or any of its Related Parties may only) be heard and determined in such Federal (to the extent permitted by law) or New York State court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing in this Agreement or any other Loan Document shall affect any right that the Administrative Agent, any LC Issuer or any Lender may

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otherwise have to bring any action or proceeding relating to this Agreement or in any other Loan Document against the Borrower or its properties (x) in the courts of the Commonwealth of Massachusetts or (y) any other forum in which jurisdiction can be established.

(d) Each of the parties hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in paragraph (c) of this Section.  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(e) Each of the parties hereto hereby irrevocably consents to service of process in the manner provided for notices in Section 9.01.  Nothing in this Agreement or any other Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

SECTION 9.10 WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

SECTION 9.11 Headings.  Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

SECTION 9.12 Confidentiality.  Each of the Administrative Agent, the LC Issuers and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any Governmental Authority (including any self-regulatory authority, such as the NAIC), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies under this Agreement or any other Loan Document or any suit, action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (1) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (2) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (g) on a confidential basis to (1) any rating agency in connection with rating the Borrower or its Subsidiaries or the credit facilities provided for herein or (2) the CUSIP Service Bureau or any similar agency in

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connection with the issuance and monitoring of identification numbers with respect to the credit facilities provided for herein, (h) with the consent of the Borrower or (i) to the extent such Information (1) becomes publicly available other than as a result of a breach of this Section or (2) becomes available to the Administrative Agent, any LC Issuer or any Lender on a nonconfidential basis from a source other than the Borrower.  For the purposes of this Section and Section 9.15, “Information” means all information received from the Borrower relating to the Borrower or its business, other than any such information that is available to the Administrative Agent, any LC Issuer or any Lender on a nonconfidential basis prior to disclosure by the Borrower and other than information pertaining to this Agreement routinely provided by arrangers to data service providers, including league table providers, that serve the lending industry; provided that, in the case of information received from the Borrower after the date hereof, such information is clearly identified at the time of delivery as confidential.  Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

SECTION 9.13 USA PATRIOT Act.  Each Lender that is subject to the requirements of the Patriot Act hereby notifies the Borrower that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender to identify the Borrower in accordance with the Patriot Act.

SECTION 9.14 Interest Rate Limitation.  Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the NYFRB Rate to the date of repayment, shall have been received by such Lender.

SECTION 9.15 No Fiduciary Duty, etc.

(a) The Borrower acknowledges and agrees, and acknowledges its Subsidiaries’ understanding, that no Credit Party will have any obligations except those obligations expressly set forth herein and in the other Loan Documents and each Credit Party is acting solely in the capacity of an arm’s length contractual counterparty to the Borrower with respect to the Loan Documents and the transactions contemplated herein and therein and not as a financial advisor or a fiduciary to, or an agent of, the Borrower, the Borrower’s equity holders or the Borrower’s and their respective Affiliates. The Borrower agrees that it will not assert any claim against any Credit Party based on an alleged breach of fiduciary duty by such Credit Party or any of its Affiliates in connection with this Agreement and the transactions contemplated hereby.  Additionally, the Borrower acknowledges and agrees that no Credit Party is advising the Borrower as to any legal, tax, investment, accounting, regulatory or any other matters in any jurisdiction.  The Borrower shall consult with its own advisors concerning

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such matters and shall be responsible for making its own independent investigation and appraisal of the transactions contemplated herein or in the other Loan Documents, and the Credit Parties shall have no responsibility or liability to the Borrower with respect thereto.

(b) The Borrower further acknowledges and agrees, and acknowledges its Subsidiaries’ understanding, that each Credit Party, together with its Affiliates, is a full service securities or banking firm engaged in securities trading and brokerage activities as well as providing investment banking and other financial services.  In the ordinary course of business, any Credit Party may provide investment banking and other financial services to, and/or acquire, hold or sell, for its own accounts and the accounts of customers, equity, debt and other securities and financial instruments (including bank loans and other obligations) of, the Borrower, its Subsidiaries and other companies with which the Borrower or any of its Subsidiaries may have commercial or other relationships.  With respect to any securities and/or financial instruments so held by any Credit Party or any of its customers, all rights in respect of such securities and financial instruments, including any voting rights, will be exercised by the holder of the rights, in its sole discretion.

(c) In addition, the Borrower acknowledges and agrees, and acknowledges its Subsidiaries’ understanding, that each Credit Party and its Affiliates may be providing debt financing, equity capital or other services (including financial advisory services) to other companies in respect of which the Borrower or any of its Subsidiaries may have conflicting interests regarding the transactions described herein and otherwise.  No Credit Party or its Affiliate will use confidential Information obtained from the Borrower by virtue of the transactions contemplated by the Loan Documents or its other relationships with the Borrower in connection with the performance by such Credit Party of services for other companies, and no Credit Party will furnish any such Information to other companies.  The Borrower also acknowledges that no Credit Party has any obligation to use in connection with the transactions contemplated by the Loan Documents, or to furnish to the Borrower or any of its Subsidiaries, confidential information obtained from other companies.

SECTION 9.16 Acknowledgement and Consent to Bail-In of EEA Financial Institutions.  Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Loan Document may be subject to the Write-Down and Conversion Powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

(a) the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and

(b) the effects of any Bail-In Action on any such liability, including, if applicable:

(i) a reduction in full or in part or cancellation of any such liability;

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(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or

(iii) the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of any EEA Resolution Authority.

SECTION 9.17 Termination of Commitments under Existing Credit Agreement.  Each of the signatories hereto that is also a party to the Existing Credit Agreement hereby agrees that, on and as of the Effective Date, all of the “Commitments” (as defined in the Existing Credit Agreement) will be terminated and cancelled automatically and any and all required notice periods in connection with such termination and any repayments or prepayments in connection therewith are hereby waived and of no further force and effect.

[Signature Pages Follow]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective authorized officers as of the day and year first above written.

THE HANOVER INSURANCE GROUP, INC.,

as the Borrower

By	/s/ Ann Tripp
Name:	Ann Tripp
Title:	EVP and Treasurer

Signature Page to Credit Agreement
The Hanover Insurance Group, Inc.

JPMORGAN CHASE BANK, N.A., individually as a Lender, as the Issuing Agent and as Administrative Agent

By	/s/ Hector J. Varona
Name:	Hector J. Varona
Title:	Executive Director

[OTHER AGENTS AND LENDERS]

Signature Page to Credit Agreement
The Hanover Insurance Group, Inc.

SCHEDULE 2.01

COMMITMENTS

LENDER	COMMITMENT
JPMORGAN CHASE BANK, N.A.	$35,000,000
WELLS FARGO BANK, NATIONAL ASSOCIATION	$35,000,000
PNC BANK, NATIONAL ASSOCIATION	$35,000,000
BRANCH BANKING AND TRUST COMPANY	$35,000,000
GOLDMAN SACHS BANK USA	$21,500,000
THE BANK OF NOVA SCOTIA	$21,500,000
MORGAN STANLEY BANK, N.A.	$17,000,000
AGGREGATE COMMITMENT	$200,000,000

EX-31.1

Exhibit 31.1

CERTIFICATION AS ADOPTED PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, John C. Roche, certify that:

1. I have reviewed this quarterly report on Form 10-Q of The Hanover Insurance Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and  

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 2, 2019

/s/ John C. Roche

John C. Roche

President, Chief Executive Officer and Director

EX-31.2

Exhibit 31.2

CERTIFICATION AS ADOPTED PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Jeffrey M. Farber, certify that:

1. I have reviewed this quarterly report on Form 10-Q of The Hanover Insurance Group, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and  

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 2, 2019

/s/ Jeffrey M. Farber

Jeffrey M. Farber

Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, as President, Chief Executive Officer and Director of The Hanover Insurance Group, Inc. (the “Company”), does hereby certify that to the undersigned’s knowledge:

1) the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2019 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2) the information contained in the Company’s Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ John C. Roche

John C. Roche

President, Chief Executive Officer and

Director

Dated: May 2, 2019

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, as Executive Vice President and Chief Financial Officer of The Hanover Insurance Group, Inc. (the “Company”), does hereby certify that to the undersigned’s knowledge:

1) the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2019 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2) the information contained in the Company’s Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Jeffrey M. Farber

Jeffrey M. Farber

Executive Vice President and

Chief Financial Officer

Dated: May 2, 2019

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Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	Apr. 30, 2019
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Trading Symbol	THG
Entity Registrant Name	HANOVER INSURANCE GROUP, INC.
Entity Central Index Key	0000944695
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Common Stock, Shares Outstanding		40,701,200

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Consolidated Statements of Income - USD ($) shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenues
Premiums	$ 1,095.1	$ 1,042.5
Net investment income	70.2	66.0
Net realized and unrealized investment gains (losses):
Net realized gains (losses) from sales and other	(0.4)	0.6
Net change in fair value of equity securities	48.6	(22.9)
Net other–than–temporary impairment losses on investments recognized in earnings		(0.6)
Total net realized and unrealized investment gains (losses)	48.2	(22.9)
Fees and other income	6.0	5.9
Total revenues	1,219.5	1,091.5
Losses and expenses
Losses and loss adjustment expenses	699.6	670.9
Amortization of deferred acquisition costs	229.5	218.7
Interest expense	9.4	11.3
Other operating expenses	132.4	131.5
Total losses and expenses	1,070.9	1,032.4
Income from continuing operations before income taxes	148.6	59.1
Income tax expense:
Current	12.2	(5.7)
Deferred	13.8	14.3
Total income tax expense	26.0	8.6
Income from continuing operations	122.6	50.5
Discontinued operations:
Net income	$ 122.4	$ 67.7
Basic:
Income from continuing operations	$ 3.02	$ 1.19
Net income per share	$ 3.01	$ 1.59
Weighted average shares outstanding	40.6	42.5
Diluted:
Income from continuing operations	$ 2.98	$ 1.17
Net income per share	$ 2.97	$ 1.57
Weighted average shares outstanding	41.2	43.1
Chaucer [Member]
Revenues
Premiums		$ 221.1
Net investment income		16.4
Net realized and unrealized investment gains (losses):
Total revenues	$ 2.9	239.4
Losses and expenses
Losses and loss adjustment expenses		115.0
Amortization of deferred acquisition costs		69.3
Interest expense		1.1
Other operating expenses		32.2
Total losses and expenses		216.5
Discontinued operations:
Gain from sale of business, net of taxes	0.9
Income (loss) from discontinued operations	$ (0.3)	$ 17.3
Basic:
Gain from sale of business, net of taxes	$ 0.02
Income (loss) from discontinued operations	(0.01)	$ 0.40
Diluted:
Gain from sale of business, net of taxes	0.02
Income (loss) from discontinued operations	$ (0.01)	$ 0.40
Life [Member]
Discontinued operations:
Income (loss) from discontinued operations	$ (0.8)	$ (0.1)
Basic:
Income (loss) from discontinued operations	$ (0.02)
Diluted:
Income (loss) from discontinued operations	$ (0.02)

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Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Statement Of Income And Comprehensive Income [Abstract]
Net income	$ 122.4	$ 67.7
Available-for-sale securities:
Net appreciation (depreciation) during the period	115.0	(123.9)
Change in other-than-temporary impairment losses recognized in other comprehensive income	1.4	0.4
Total available-for-sale securities	116.4	(123.5)
Pension and postretirement benefits:
Net change in net actuarial loss and prior service cost	2.3	(2.3)
Cumulative foreign currency translation adjustment:
Amount recognized as cumulative foreign currency translation during the period	0.1	(0.5)
Total other comprehensive income (loss), net of tax	118.8	(126.3)
Comprehensive income (loss)	$ 241.2	$ (58.6)

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Consolidated Balance Sheets - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Assets
Fixed maturities, at fair value (amortized cost of $6,492.7 and $6,245.9)	$ 6,559.4	$ 6,161.5
Equity securities, at fair value	504.7	464.4
Other investments	680.4	661.5
Total investments	7,744.5	7,287.4
Cash and cash equivalents	168.5	1,020.7
Accrued investment income	54.0	53.2
Premiums and accounts receivable, net	1,179.4	1,176.7
Reinsurance recoverable on paid and unpaid losses and unearned premiums	1,663.2	1,648.6
Deferred acquisition costs	449.5	450.8
Deferred income taxes	0.9	50.6
Goodwill	178.8	178.8
Other assets	417.4	371.6
Assets held-for-sale and discontinued businesses	103.6	103.9
Total assets	11,983.4	12,399.7
Liabilities
Loss and loss adjustment expense reserves	5,381.6	5,304.1
Unearned premiums	2,287.8	2,277.8
Expenses and taxes payable	556.9	909.8
Reinsurance premiums payable	46.8	37.3
Debt	653.0	777.9
Liabilities held-for-sale and discontinued businesses	118.3	115.9
Total liabilities	9,056.4	9,445.0
Commitments and contingencies
Shareholders’ Equity
Preferred stock, par value $0.01 per share; 20.0 million shares authorized; none issued
Common stock, par value $0.01 per share; 300.0 million shares authorized; 60.5 million shares issued	0.6	0.6
Additional paid-in capital	1,821.7	1,871.8
Accumulated other comprehensive income (loss)	3.8	(116.5)
Retained earnings	2,278.7	2,182.3
Treasury stock at cost (19.8 million and 18.2 million shares)	(1,177.8)	(983.5)
Total shareholders’ equity	2,927.0	2,954.7
Total liabilities and shareholders’ equity	11,983.4	12,399.7
Assets Held-for-Sale [Member]
Assets
Assets held-for-sale and discontinued businesses	23.6	57.4
Liabilities
Liabilities held-for-sale and discontinued businesses	$ 12.0	$ 22.2

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Statement Of Financial Position [Abstract]
Fixed maturities, amortized cost	$ 6,492.7	$ 6,245.9
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, issued	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares issued	60,500,000	60,500,000
Treasury stock, shares	19,800,000	18,200,000

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Consolidated Statements of Shareholders' Equity - USD ($) $ in Millions	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Net Unrealized Appreciation (Depreciation) on Investments [Member]	Defined Benefit Pension and Postretirement Plans [Member]	Cumulative Foreign Currency Translation Adjustment [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Accumulated Other Comprehensive Income (Loss), net of tax [Member]
Balance at beginning of period at Dec. 31, 2017		$ 0.6	$ 1,857.0	$ 205.4	$ (79.5)	$ (18.3)	$ 1,975.0
Balance at beginning of period at Dec. 31, 2017								$ (942.5)
Cumulative effect of accounting change, net of taxes at Dec. 31, 2017							104.3
Balance at beginning of period, as adjusted at Dec. 31, 2017							2,079.3
Net income	$ 67.7						67.7
Shares purchased at cost								(13.6)
Prepaid repurchase of common stock and other			1.3
Net appreciation (depreciation) on available-for-sale securities	(123.5)			(123.5)
Net amount recognized as net periodic benefit (expense)	(2.3)				(2.3)
Amount recognized as cumulative foreign currency translation during the period	(0.5)					(0.5)
Adoption of Accounting Standards Update | Accounting Standards Update No. 2017-08 and No. 2016-01 and No. 2018-02 [Member]				(81.6)
Adoption of Accounting Standards Update | Accounting Standards Update No. 2018-02 [Member]					(16.2)	(3.9)
Dividends to shareholders							(22.9)
Net shares reissued at cost under employee stock-based compensation plans								6.6
Balance at end of period at Mar. 31, 2018	2,913.1	0.6	1,858.3	0.3	(98.0)	(22.7)	2,124.1		$ (120.4)
Balance at end of period at Mar. 31, 2018								(949.5)
Balance at beginning of period at Dec. 31, 2018	2,954.7	0.6	1,871.8	(27.2)	(88.6)	(0.7)	2,182.3
Balance at beginning of period at Dec. 31, 2018	(983.5)							(983.5)
Cumulative effect of accounting change, net of taxes at Dec. 31, 2018							(1.5)
Balance at beginning of period, as adjusted at Dec. 31, 2018							2,180.8
Net income	122.4						122.4
Shares purchased at cost								(200.0)
Prepaid repurchase of common stock and other			(50.1)
Net appreciation (depreciation) on available-for-sale securities	116.4			116.4
Net amount recognized as net periodic benefit (expense)	2.3				2.3
Amount recognized as cumulative foreign currency translation during the period	0.1					0.1
Adoption of Accounting Standards Update | Accounting Standards Update No. 2017-08 and No. 2016-01 and No. 2018-02 [Member]				1.5
Dividends to shareholders							(24.5)
Net shares reissued at cost under employee stock-based compensation plans								5.7
Balance at end of period at Mar. 31, 2019	2,927.0	$ 0.6	$ 1,821.7	$ 90.7	$ (86.3)	$ (0.6)	$ 2,278.7		$ 3.8
Balance at end of period at Mar. 31, 2019	$ (1,177.8)							$ (1,177.8)

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Consolidated Statements of Cash Flows - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Cash Flows From Operating Activities
Net income	$ 122.4	$ 67.7
Adjustments to reconcile net income to net cash provided by operating activities:
Net realized and unrealized investment gains	(48.4)	23.4
Gain on sale of Chaucer-related Irish entity	(0.9)
Net amortization and depreciation	6.9	6.9
Stock-based compensation expense	4.2	3.0
Amortization of defined benefit plan costs	2.8	2.5
Deferred income tax (benefit) expense	13.8	(7.4)
Change in deferred acquisition costs	2.7	(3.9)
Change in premiums receivable, net of reinsurance premiums payable	(4.3)	6.2
Change in loss, loss adjustment expense and unearned premium reserves	99.2	127.4
Change in reinsurance recoverable	(28.2)	(86.4)
Change in expenses and taxes payable	(88.0)	(69.1)
Other, net	(45.0)	(38.9)
Net cash provided by operating activities	37.2	31.4
Cash Flows From Investing Activities
Proceeds from disposals and maturities of fixed maturities	193.1	295.3
Proceeds from disposals of equity securities and other investments	28.1	21.8
Purchase of fixed maturities	(483.4)	(418.2)
Purchase of equity securities and other investments	(37.6)	(39.8)
Capital expenditures	(3.9)	(3.5)
Net cash proceeds from sale of Chaucer-related Irish entity, offset by cash transferred	24.4
Net cash used in investing activities	(279.3)	(144.4)
Cash Flows From Financing Activities
Proceeds from exercise of employee stock options	5.0	6.3
Proceeds from debt borrowings, net		33.0
Change in cash collateral related to securities lending program	6.7	(8.2)
Dividends paid to shareholders	(217.0)	(22.9)
Repurchases of common stock	(250.0)	(13.6)
Repayment of debt	(151.1)
Other financing activities	(4.2)	(2.2)
Net cash used in financing activities	(610.6)	(7.6)
Effect of exchange rate changes on cash		2.2
Net change in cash and cash equivalents	(852.7)	(118.4)
Net change in cash related to discontinued operations	0.5	(44.1)
Cash and cash equivalents, beginning of period	1,020.7	297.9
Cash and cash equivalents, end of period	$ 168.5	$ 135.4

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Basis of Presentation and Principles of Consolidation

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Basis of Presentation and Principles of Consolidation

1. Basis of Presentation and Principles of Consolidation

The accompanying unaudited consolidated financial statements of The Hanover Insurance Group, Inc. and subsidiaries (“THG” or the “Company”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the requirements of Form 10-Q. Certain financial information that is provided in annual financial statements, but is not required in interim reports, has been omitted.

The interim consolidated financial statements of THG include the accounts of The Hanover Insurance Company (“Hanover Insurance”) and Citizens Insurance Company of America, THG’s principal property and casualty companies; and other insurance and non-insurance subsidiaries. These legal entities conduct their operations through several business segments discussed in Note 9 – “Segment Information”. The interim consolidated financial statements also include the Company’s discontinued operations consisting of Chaucer Holdings Limited (“Chaucer”), a United Kingdom (“U.K.”) domiciled specialist insurance underwriting group which operates through the Society and Corporation of Lloyd’s (“Lloyds”), and the international insurance and non-insurance subsidiaries, which collectively constituted the former Chaucer segment. On December 28, 2018, the Company completed the sale of Chaucer to China Reinsurance (Group) Corporation (“China Re”), and subsequently completed the sales of the Chaucer-related Irish and Australian entities on February 14, 2019 and April 10, 2019, respectively. Discontinued operations also include the Company’s accident and health and former life insurance businesses. All intercompany accounts and transactions have been eliminated.

The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

In the opinion of the Company’s management, the accompanying interim consolidated financial statements reflect all adjustments, consisting of normal recurring items, necessary for a fair presentation of the financial position and results of operations. The results of operations for the three months ended March 31, 2019 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 22, 2019.

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New Accounting Pronouncements

3 Months Ended

Mar. 31, 2019

Accounting Changes And Error Corrections [Abstract]

New Accounting Pronouncements

2. New Accounting Pronouncements

Recently Implemented Standards

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) Update No. 2016-02, (Topic 842) Leases. This ASC update requires a lessee to recognize a right-of-use asset, which represents the lessee’s right to use a specified asset for the lease term, and a corresponding lease liability, which represents a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, for all leases that extend beyond 12 months. For finance or capital leases, interest on the lease liability will be recognized separately from amortization of the right-of-use asset in the statements of income and comprehensive income. In addition, the repayment of the principal portion of the lease liability will be classified as a financing activity while the interest component will be included in the operating section of the statement of cash flows. For operating leases, the asset and liability will be amortized as a single lease cost, such that the cost of the lease is allocated over the lease term, on a generally straight-line basis, with all cash flows included within operating activities in the statement of cash flows. ASC Update No. 2016-02 requires that implementation of this guidance be through a modified retrospective transition approach. In July 2018, the FASB issued ASC Update No. 2018-11, (Topic 842) Leases Targeted Improvements, which provides entities with an additional transition method to adopt ASC Update No. 2016-02. Under this optional transition method, an entity can initially apply the new guidance at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company implemented this guidance effective January 1, 2019 using the optional transition method provided in ASC Update No. 2018-11 and elected to utilize the practical expedient package available in ASC Update 2016-02. The Company has also elected to utilize the practical expedient which allows an entity not to separate lease and nonlease components for all of its asset classes. The effect of implementing this guidance increased total assets and total liabilities each by approximately $35 million on January 1, 2019 and did not have a material effect on the results of operations for the three months ended March 31, 2019.

In March 2019, the FASB issued ASC Update No. 2019-01, Leases (Topic 842) – Codification Improvements (“ASC Update No. 2019-01”). This ASC update modifies interim disclosure requirements related to the implementation of Topic 842. This ASC update explicitly provides an exception to certain disclosures required under Topic 250 Accounting Changes and Error Corrections. An entity should apply the amendments as of the date that it first applied Topic 842, using the same transition methodology. Consistent with the Company’s implementation of Topic 842 on January 1, 2019, the updated guidance is effective for interim and annual periods beginning after December 15, 2018. The Company implemented this guidance effective January 1, 2019 and it did not have an impact on the Company’s financial position or results of operations as the update is disclosure related.

In March 2017, the FASB issued ASC Update No. 2017-08, (Subtopic 310-20) Receivables – Nonrefundable Fees and Other Costs: Premium Amortization on Purchased Callable Debt Securities. This guidance shortens the amortization period of premiums on certain purchased callable debt securities to the earliest call date. The updated guidance is effective for annual and interim periods beginning after December 15, 2018, and should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company implemented this guidance effective January 1, 2019. The effect of implementing this guidance resulted in a cumulative effect adjustment reclassifying unrealized losses, net of tax, of $1.5 million from accumulated other comprehensive income to retained earnings.

Recently Issued Standards

In August 2018, the FASB issued ASC Update No. 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASC Update No. 2018-15”). This ASC update requires the capitalization of implementation costs incurred in a hosting arrangement that is a service contract consistent with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The guidance also requires an entity to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting agreement, and apply impairment guidance consistent with long-lived assets. ASC Update No. 2018-15 also provides specific guidelines related to the presentation of these capitalized implementation costs and related expenses in the financial statements. The updated guidance is effective for interim and annual periods beginning after December 15, 2019, and should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. Early adoption is permitted, including interim periods. The Company does not expect the adoption of ASC Update No. 2018-15 to have a material impact on its financial position or results of operations.

In August 2018, the FASB issued ASC Update No. 2018-14 (Topic 715-20) Compensation – Retirement Benefits – Defined Benefit Plans – General – Disclosure Framework – Changes to the Disclosure Requirements for the Defined Benefit Plans. This ASC update modifies disclosures related to defined benefit pension or other postretirement plans. This ASC update removes the disclosure of amounts in accumulated other comprehensive income expected to be recognized over the next fiscal year and the effects of a one percentage point change of health care cost trends on net periodic benefit costs and postretirement benefit obligations and clarifies the specific requirements of disclosures related to the project benefit obligation and accumulated benefit obligation. This ASC Update also adds disclosures related to weighted average crediting rates for cash balance plans and requires disclosure of an explanation of any significant gains and losses related to changes in benefit obligations for the period. The amendments in this ASC update are effective for fiscal years ending after December 15, 2020, and should be applied on a retrospective basis to all periods presented. Early adoption is permitted. Implementing this guidance is not expected to have an impact on the Company’s financial position or results of operations as the update is disclosure related.

In August 2018, the FASB issued ASC Update No. 2018-13 (Topic 820) Fair Value Measurement, Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The update removes the requirement for disclosure of the following: 1) the amount and reasons for transfers between level 1 and level 2 of the fair value hierarchy, 2) the policy for timing of transfers between levels, and 3) the valuation processes for level 3 fair value measurements. This update also added a requirement to disclose the changes in unrealized gains and losses for the period included in other comprehensive income for recurring level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop level 3 fair value measurements, in addition to other fair value disclosure modifications. The updated guidance is effective for interim and annual periods beginning after December 15, 2019, and should be applied prospectively for certain of the disclosure requirements and retrospectively to all periods presented upon the effective date for other disclosure requirements. An entity is permitted to early adopt any removed or modified disclosures upon issuance of the update and delay adoption of additional disclosures until periods beginning after December 15, 2019, the effective date of the standard. Implementing this guidance is not expected to have an impact on the Company’s financial position or results of operations as the update is disclosure related.

In January 2017, the FASB issued ASC Update No. 2017-04, (Topic 350) Intangibles – Goodwill and Other: Simplifying the Test for Goodwill Impairment. This guidance eliminates step 2 from the goodwill impairment test. Instead, an entity should perform its goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount, including any applicable income tax effects, and recognize an impairment for the amount by which the carrying amount exceeds the reporting unit’s fair value. However, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The updated guidance is effective for annual or interim goodwill impairment tests performed in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect the adoption of ASC Update No. 2017-04 to have a material impact on its financial position or results of operations.

In June 2016, the FASB issued ASC Update No. 2016-13, (Topic 326) Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments. This ASC update introduces new guidance for the accounting for credit losses on financial instruments within its scope. A new model, referred to as the current expected credit losses model, requires an entity to determine credit-related impairment losses for financial instruments held at amortized cost and to estimate these expected credit losses over the life of an exposure (or pool of exposures). The estimate of expected credit losses should consider both historical and current information, reasonable and supportable forecasts, as well as estimates of prepayments. The estimated credit losses and subsequent adjustment to such loss estimates, will be recorded through an allowance account which is deducted from the amortized cost of the financial instrument, with the offset recorded in current earnings. ASC No. 2016-13 also modifies the impairment model for available-for-sale debt securities. The new model will require an estimate of expected credit losses only when the fair value is below the amortized cost of the asset, thus the length of time the fair value of an available-for-sale debt security has been below the amortized cost will no longer affect the determination of whether a credit loss exists. In addition, credit losses on available-for-sale debt securities will be limited to the difference between the security’s amortized cost basis and its fair value. In November 2018, the FASB issued ASC Update No. 2018-19, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, which explicitly states that receivables arising from operating leases are not within the scope of Subtopic 326-20. ASC Update 2016-13 and related guidance is effective for interim and annual periods beginning after December 15, 2019. Early adoption is permitted for periods beginning after December 15, 2018. The Company expects to adopt ASC Update No. 2016-13 on January 1, 2020 and is evaluating the impact on its financial position and results of operations, which it does not expect to be material.

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Discontinued Operations Chaucer Business

3 Months Ended

Mar. 31, 2019

Chaucer [Member]

Discontinued Operations Chaucer Business

3. Discontinued Operations – Chaucer Business

On December 28, 2018, the Company completed the sale of its former subsidiary, Chaucer, to China Re.  On February 14, 2019, the Company completed the sale of its Chaucer-related Irish entity for total proceeds of $28 million and on April 10, 2019, finalized the sale of the Australian entities for total proceeds of $13 million, completing the transfer of all Chaucer-related companies. Collectively, these entities constituted the Chaucer business in 2018 and prior, whereas just the Irish and Australian Chaucer-related entities comprised the Chaucer business reported in the Company’s results in 2019, until their respective sales to China Re.

Three months ended March 31, 2019

Revenues from the Chaucer business were $2.9 million during the first quarter of 2019 and operating losses in this business totaled $0.3 million during that period.  

Three months ended March 31, 2018

The following table summarizes the results of Chaucer’s operations for the three months ended March 31, 2018:

	Three Months Ended
	March 31,
(in millions)	2018
Revenues
Net premiums earned	$	221.1
Net investment income		16.4
Other income		1.9
		239.4
Losses and operating expenses
Losses and LAE		115.0
Amortization of deferred acquisition costs		69.3
Other expenses		32.2
		216.5
Income from Chaucer business before income taxes and other items    (previously presented as Chaucer's operating income)		22.9
Other items:
Interest expense		(1.1	)
Net realized and unrealized investment losses		(0.5	)
Other income		0.2
Income from Chaucer business before income taxes		21.5
Income tax expense		(4.2	)
Income from Chaucer business, net of income taxes	$	17.3

Total assets held-for-sale were $23.6 million at March 31, 2019 and $57.4 million at December 31, 2018. Total liabilities held-for-sale were $12.0 million at March 31, 2019 and $22.2 million at December 31, 2018. Assets and liabilities held-for-sale decreased in the quarter due to the aforementioned sale of the Chaucer-related Irish entity. These balances are reflected in the Consolidated Balance Sheets under the caption “Assets held-for-sale” and “Liabilities held-for-sale”, respectively.

The following table details the cash flows associated with the Chaucer business for the three months ended March 31, 2018:

	Three Months Ended
	March 31,
(in millions)	2018
Net cash used in operating activities	$	(5.9	)
Net cash provided by investing activities	$	47.7

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Income Taxes

3 Months Ended

Mar. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes

4. Income Taxes

Income tax expense for the three months ended March 31, 2019 and 2018 has been computed using estimated annual effective tax rates. The prior year’s rate reflects the recomputed income to exclude the Chaucer business. These rates are revised, if necessary, at the end of each successive interim period to reflect current estimates of the annual effective tax rates.

The tax provision was comprised of U.S. federal income tax expense of $26.0 million and $8.6 million for the three months ended March 31, 2019 and 2018, respectively. The tax provision recorded in discontinued operations related to the Chaucer business for the three months ended March 31, 2018 was comprised of a $5.9 million U.S. federal income tax expense and a $1.7 million foreign income tax benefit.

The Company or its subsidiaries files income tax returns in the U.S. federal jurisdiction and various state jurisdictions, as well as foreign jurisdictions. The Company and its subsidiaries are subject to U.S. federal and state income tax examinations and foreign examinations for years after 2014.

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Investments

3 Months Ended

Mar. 31, 2019

Investments Debt And Equity Securities [Abstract]

Investments

5. Investments

A. Fixed maturities

The amortized cost and fair value of available-for-sale fixed maturities were as follows:

	March 31, 2019
			Gross		Gross				OTTI
	Amortized		Unrealized		Unrealized				Unrealized
(in millions)	Cost		Gains		Losses		Fair Value		Losses
U.S. Treasury and government agencies	$	404.5	$	4.7	$	2.5	$	406.7	$	—
Foreign government		7.3		0.1		—		7.4		—
Municipal		848.1		20.8		3.4		865.5		—
Corporate		3,635.7		66.3		27.4		3,674.6		4.8
Residential mortgage-backed		819.2		6.8		6.1		819.9		—
Commercial mortgage-backed		684.9		9.4		2.4		691.9		—
Asset-backed		93.0		0.6		0.2		93.4		—
Total fixed maturities	$	6,492.7	$	108.7	$	42.0	$	6,559.4	$	4.8

	December 31, 2018
			Gross		Gross				OTTI
	Amortized		Unrealized		Unrealized				Unrealized
(in millions)	Cost		Gains		Losses		Fair Value		Losses
U.S. Treasury and government agencies	$	414.7	$	2.4	$	7.2	$	409.9	$	—
Foreign government		7.3		0.1		—		7.4		—
Municipal		879.0		16.6		9.8		885.8		—
Corporate		3,476.6		26.1		92.0		3,410.7		6.6
Residential mortgage-backed		728.4		2.7		14.7		716.4		—
Commercial mortgage-backed		648.4		1.7		9.8		640.3		—
Asset-backed		91.5		0.2		0.7		91.0		—
Fixed maturities, excluding held-for-sale (Chaucer)		6,245.9		49.8		134.2		6,161.5		6.6
Fixed maturities, held-for-sale		24.9		—		0.4		24.5		—
Total fixed maturities	$	6,270.8	$	49.8	$	134.6	$	6,186.0	$	6.6

Other-than-temporary impairments (“OTTI”) unrealized losses in the tables above represent OTTI recognized in accumulated other comprehensive income (“AOCI”). This amount excludes net unrealized gains on impaired securities relating to changes in the value of such securities subsequent to the impairment measurement date of $7.4 million as of both March 31, 2019 and December 31, 2018.

The Company deposits funds with various state and governmental authorities. For a discussion of the Company’s deposits with state and governmental authorities, see also Note 3 – “Investments” of the Notes to Consolidated Financial Statements in the Company’s 2018 Annual Report on Form 10-K.

The amortized cost and fair value by maturity periods for fixed maturities are shown in the following table. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties, or the Company may have the right to put or sell the obligations back to the issuers.

	March 31, 2019
	Amortized		Fair
(in millions)	Cost		Value
Due in one year or less	$	249.2	$	250.9
Due after one year through five years		1,969.6		2,001.6
Due after five years through ten years		2,407.4		2,423.2
Due after ten years		269.4		278.5
		4,895.6		4,954.2
Mortgage-backed and asset-backed securities		1,597.1		1,605.2
Total fixed maturities	$	6,492.7	$	6,559.4

B. Fixed maturity securities in an unrealized loss position

The following tables provide information about the Company’s available-for-sale fixed maturity securities that were in an unrealized loss position at March 31, 2019 and December 31, 2018 including the length of time the securities have been in an unrealized loss position:

	March 31, 2019
	12 months or less				Greater than 12 months				Total
	Gross				Gross				Gross
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
(in millions)	Losses		Value		Losses		Value		Losses		Value
Investment grade:
U.S. Treasury and government agencies	$	—	$	—	$	2.5	$	158.4	$	2.5	$	158.4
Foreign governments		—		—		—		0.8		—		0.8
Municipal		—		9.7		3.4		192.3		3.4		202.0
Corporate		0.9		15.3		19.7		993.2		20.6		1,008.5
Residential mortgage-backed		—		2.1		6.1		352.6		6.1		354.7
Commercial mortgage-backed		—		0.3		2.4		226.7		2.4		227.0
Asset-backed		—		—		0.2		31.9		0.2		31.9
Total investment grade		0.9		27.4		34.3		1,955.9		35.2		1,983.3
Below investment grade:
Corporate		0.3		17.1		6.5		75.7		6.8		92.8
Total fixed maturities	$	1.2	$	44.5	$	40.8	$	2,031.6	$	42.0	$	2,076.1

	December 31, 2018
	12 months or less				Greater than 12 months				Total
	Gross				Gross				Gross
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
(in millions)	Losses		Value		Losses		Value		Losses		Value
Investment grade:
U.S. Treasury and government agencies	$	1.1	$	66.0	$	6.1	$	210.9	$	7.2	$	276.9
Foreign governments		—		2.0		—		0.8		—		2.8
Municipal		0.8		110.0		9.0		248.0		9.8		358.0
Corporate		30.0		1,277.9		43.9		781.6		73.9		2,059.5
Residential mortgage-backed		2.6		201.2		12.1		323.7		14.7		524.9
Commercial mortgage-backed		3.4		293.0		6.4		175.5		9.8		468.5
Asset-backed		0.4		42.3		0.3		18.0		0.7		60.3
Total investment grade		38.3		1,992.4		77.8		1,758.5		116.1		3,750.9
Below investment grade:
Municipal		—		—		—		0.9		—		0.9
Corporate		8.1		185.6		10.0		54.0		18.1		239.6
Total below investment grade		8.1		185.6		10.0		54.9		18.1		240.5
Fixed maturities, excluding held-for-sale (Chaucer)		46.4		2,178.0		87.8		1,813.4		134.2		3,991.4
Fixed maturities, held-for-sale		0.1		4.0		0.3		18.0		0.4		22.0
Total fixed maturities	$	46.5	$	2,182.0	$	88.1	$	1,831.4	$	134.6	$	4,013.4

The Company views gross unrealized losses on fixed maturities as being temporary since it is its assessment that these securities will recover in the near term, allowing the Company to realize the anticipated long-term economic value. The Company employs a systematic methodology to evaluate declines in fair value below amortized cost for fixed maturity securities. In determining OTTI, 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 and asset quality; any specific events which may influence the operations of the issuer; the general outlook for market conditions in the industry or geographic region in which the issuer operates; and the length of time and the degree to which the fair value of an issuer’s securities remains below the Company’s amortized cost. The Company also considers any factors that might raise doubt about the issuer’s ability to make contractual payments as they come due and whether the Company expects to recover the entire amortized cost basis of the security.

C. Proceeds from sales

The proceeds from sales of available-for-sale securities and gross realized gains and gross realized losses on those sales were as follows:

	Three Months Ended March 31,
	2019						2018
	Proceeds from		Gross		Gross		Proceeds from		Gross		Gross
(in millions)	Sales		Gains		Losses		Sales		Gains		Losses
Fixed maturities, excluding held-for-sale (Chaucer)	$	60.1	$	1.0	$	1.5	$	57.1	$	0.2	$	1.7
Fixed maturities, held-for-sale		0.3		—		—		70.7		0.4		0.6
Total fixed maturities	$	60.4	$	1.0	$	1.5	$	127.8	$	0.6	$	2.3

D. Other-than-temporary impairments

For the three months ended March 31, 2019, the Company recognized no OTTI.    

For the three months ended March 31, 2018, total OTTI from continuing operations was $0.9 million, consisting primarily of fixed maturities.  Of this amount, $0.6 million was recognized in earnings and the remaining $0.3 million was recorded as unrealized losses in AOCI.

The methodology and significant inputs used to measure the amount of credit losses on fixed maturities in 2018 were as follows:

Corporate bonds – the Company utilized a financial model that derives expected cash flows based on probability-of-default factors by credit rating and asset duration and loss-given-default factors based on security type. These factors are based on historical data provided by an independent third-party rating agency. In addition, other market data relevant to the realizability of contractual cash flows may be considered.

The following table provides rollforwards of the cumulative amounts related to the Company’s credit loss portion of the OTTI losses on fixed maturity securities from continuing operations for which the non-credit portion of the loss is included in other comprehensive income. 

	Three Months Ended March 31,
(in millions)	2019			2018
Credit losses as of the beginning of the period	$	3.8		$	3.6
Credit losses on securities for which an OTTI was not previously recognized		—			0.2
Reductions for securities sold, matured or called		(0.5	)		(0.7	)
Credit losses as of the end of the period	$	3.3		$	3.1

E. Equity securities

Equity securities are carried at fair value and all increases or decreases in fair value are reported in net realized and unrealized investment gains (losses) on the Consolidated Statements of Income. The following table provides pre-tax net realized and unrealized gains (losses) on equity securities from continuing operations:

	Three Months Ended March 31,
(in millions)		2019		2018
Net gains (losses) recognized during the period	$	48.6	$	(22.9	)
Less: net gains recognized on equity securities sold during the period		1.1		0.5
Net unrealized gains (losses) recognized during the period on equity securities still held	$	47.5	$	(23.4	)

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Fair Value

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value

6. Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability, i.e., exit price, in an orderly transaction between market participants. The Company emphasizes the use of observable market data whenever available in determining fair value. Fair values presented for certain financial instruments are estimates which, in many cases, may differ significantly from the amounts that could be realized upon immediate liquidation. A hierarchy of the three broad levels of fair value are as follows, with the highest priority given to Level 1 as these are the most observable, and the lowest priority given to Level 3:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 – Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data, including model-derived valuations.

Level 3 – Unobservable inputs that are supported by little or no market activity.

When more than one level of input is used to determine fair value, the financial instrument is classified as Level 2 or 3 according to the lowest level input that has a significant impact on the fair value measurement.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments and have not changed since last year.

Fixed Maturities

Level 1 securities generally include U.S. Treasury issues and other securities that are highly liquid and for which quoted market prices are available. Level 2 securities are valued using pricing for similar securities and pricing models that incorporate observable inputs including, but not limited to yield curves and issuer spreads. Level 3 securities include issues for which little observable data can be obtained, primarily due to the illiquid nature of the securities, and for which significant inputs used to determine fair value are based on the Company’s own assumptions.

The Company utilizes a third party pricing service for the valuation of the majority of its fixed maturity securities and receives one quote per security. When quoted market prices in an active market are available, they are provided by the pricing service as the fair value and such values are classified as Level 1. Since fixed maturities other than U.S. Treasury securities generally do not trade on a daily basis, the pricing service prepares estimates of fair value for those securities using pricing techniques based on a market approach. Inputs into the fair value pricing common to all asset classes include: benchmark U.S. Treasury security yield curves; reported trades of identical or similar fixed maturity securities; broker/dealer quotes of identical or similar fixed maturity securities and structural characteristics such as maturity date, coupon, mandatory principal payment dates, frequency of interest and principal payments, and optional redemption features. Inputs into the fair value applications that are unique by asset class include, but are not limited to:

• U.S. government agencies – determination of direct versus indirect government support and whether any contingencies exist with respect to the timely payment of principal and interest.

• Foreign government – estimates of appropriate market spread versus underlying related sovereign treasury curve(s) dependent on liquidity and direct or contingent support.

• Municipals – overall credit quality, including assessments of the level and variability of: sources of payment such as income, sales or property taxes, levies or user fees; credit support such as insurance; state or local economic and political base; natural resource availability; and susceptibility to natural or man-made catastrophic events such as hurricanes, earthquakes or acts of terrorism.

• Corporate fixed maturities – overall credit quality, including assessments of the level and variability of: economic sensitivity; liquidity; corporate financial policies; management quality; regulatory environment; competitive position; ownership; restrictive covenants; and security or collateral.

• Residential mortgage-backed securities – estimates of prepayment speeds based upon: historical prepayment rate trends; underlying collateral interest rates; geographic concentration; vintage year; borrower credit quality characteristics; interest rate and yield curve forecasts; government or monetary authority support programs; tax policies; delinquency/default trends; and, in the case of non-agency collateralized mortgage obligations, severity of loss upon default and length of time to recover proceeds following default.

• Commercial mortgage-backed securities – overall credit quality, including assessments of the value and supply/demand characteristics of: collateral type such as office, retail, residential, lodging, or other; geographic concentration by region, state, metropolitan statistical area and locale; vintage year; historical collateral performance including defeasance, delinquency, default and special servicer trends; and capital structure support features.

• Asset-backed securities – overall credit quality, including assessments of the underlying collateral type such as credit card receivables, auto loan receivables and equipment lease receivables; geographic diversification; vintage year; historical collateral performance including delinquency, default and casualty trends; economic conditions influencing use rates and resale values; and contract structural support features.

Generally, all prices provided by the pricing service, except actively traded securities with quoted market prices, are reported as Level 2.

The Company holds privately placed fixed maturity securities and certain other fixed maturity securities that do not have an active market and for which the pricing service cannot provide fair values. The Company determines fair values for these securities using either matrix pricing utilizing the market approach or broker quotes. The Company will use observable market data as inputs into the fair value techniques, as discussed in the determination of Level 2 fair values, to the extent it is available, but is also required to use a certain amount of unobservable judgment due to the illiquid nature of the securities involved. Unobservable judgment reflected in the Company’s matrix model accounts for estimates of additional spread required by market participants for factors such as issue size, structural complexity, high bond coupon or other unique features. These matrix-priced securities are reported as Level 2 or Level 3, depending on the significance of the impact of unobservable judgment on the security’s value. Additionally, the Company may obtain non-binding broker quotes which are reported as Level 3.

Equity Securities

Level 1 consists of publicly traded securities, including exchange traded funds, valued at quoted market prices. Level 2 includes securities that are valued using pricing for similar securities and pricing models that incorporate observable inputs. Level 3 consists of common or preferred stock of private companies for which observable inputs are not available.

The Company utilizes a third party pricing service for the valuation of the majority of its equity securities and receives one quote for each equity security. When quoted market prices in an active market are available, they are provided by the pricing service as the fair value and such values are classified as Level 1. The Company holds certain equity securities that have been issued by privately-held entities that do not have an active market and for which the pricing service cannot provide fair values. Generally, the Company estimates fair value for these securities based on the issuer’s book value and market multiples and reports them as Level 3. Additionally, the Company may obtain non-binding broker quotes which are reported as Level 3.

Other Investments

Other investments primarily include mortgage participations and limited partnerships not subject to the equity method of accounting. The fair values of limited partnerships not subject to the equity method of accounting are based on the net asset value provided by the general partner adjusted for recent financial information and are excluded from the fair value hierarchy.

The estimated fair value of the financial instruments were as follows:

	March 31, 2019				December 31, 2018
	Carrying		Fair		Carrying		Fair
(in millions)	Value		Value		Value		Value
Financial Assets carried at:
Fair Value through AOCI:
Fixed maturities	$	6,559.4	$	6,559.4	$	6,161.5	$	6,161.5
Fair Value through Net Income:
Equity securities		504.7		504.7		464.4		464.4
Other investments		180.3		180.3		175.0		175.0
Amortized Cost/Cost:
Other investments		421.5		425.7		414.4		418.9
Cash and cash equivalents		168.5		168.5		1,020.7		1,020.7
Total financial instruments, excluding held-for-sale		7,834.4		7,838.6		8,236.0		8,240.5
Financial instruments, held-for-sale (Chaucer)		2.8		2.8		27.8		27.8
Total financial instruments	$	7,837.2	$	7,841.4	$	8,263.8	$	8,268.3
Financial Liabilities carried at:
Amortized Cost:
Debt	$	653.0	$	694.2	$	777.9	$	825.0

The Company has processes designed to ensure that the values received from its third party pricing service are accurately recorded, that the data inputs and valuation approaches and techniques utilized are appropriate and consistently applied, and that the assumptions are reasonable and consistent with the objective of determining fair value. The Company performs a review of the fair value hierarchy classifications and of prices received from its pricing service on a quarterly basis. The Company reviews the pricing services’ policies describing its methodology, processes, practices and inputs, including various financial models used to value securities. Also, the Company reviews the portfolio pricing, including a process for which securities with changes in prices that exceed a defined threshold are verified to independent sources, if available. If upon review, the Company is not satisfied with the validity of a given price, a pricing challenge would be submitted to the pricing service along with supporting documentation for its review. The Company does not adjust quotes or prices obtained from the pricing service unless the pricing service agrees with the Company’s challenge. During 2019 and 2018, the Company did not adjust any prices received from its pricing service.

Changes in the observability of valuation inputs may result in a reclassification of certain financial assets or liabilities within the fair value hierarchy. As previously discussed, the Company utilizes a third-party pricing service for the valuation of the majority of its fixed maturities and equity securities. The pricing service has indicated that it will only produce an estimate of fair value if there is objectively verifiable information to produce a valuation. If the pricing service discontinues pricing an investment, the Company will use observable market data to the extent it is available, but may also be required to make assumptions for market based inputs that are unavailable due to market conditions.

The following tables provide, for each hierarchy level, the Company’s investment assets that were measured at fair value on a recurring basis.

	March 31, 2019
(in millions)	Total		Level 1		Level 2		Level 3
Fixed maturities:
U.S. Treasury and government agencies	$	406.7	$	159.3	$	247.4	$	—
Foreign government		7.4		—		7.4		—
Municipal		865.5		—		845.0		20.5
Corporate		3,674.6		—		3,673.9		0.7
Residential mortgage-backed, U.S. agency backed		817.2		—		817.2		—
Residential mortgage-backed, non-agency		2.7		—		2.7		—
Commercial mortgage-backed		691.9		—		679.1		12.8
Asset-backed		93.4		—		93.4		—
Total fixed maturities		6,559.4		159.3		6,366.1		34.0
Equity securities		504.7		503.6		—		1.1
Other investments		3.5		—		—		3.5
Total investment assets at fair value	$	7,067.6	$	662.9	$	6,366.1	$	38.6

	December 31, 2018
(in millions)	Total		Level 1		Level 2		Level 3
Fixed maturities:
U.S. Treasury and government agencies	$	409.9	$	154.9	$	255.0	$	—
Foreign government		7.4		—		7.4		—
Municipal		885.8		—		864.7		21.1
Corporate		3,410.7		—		3,409.9		0.8
Residential mortgage-backed, U.S. agency backed		713.7		—		713.7		—
Residential mortgage-backed, non-agency		2.7		—		2.7		—
Commercial mortgage-backed		640.3		—		627.2		13.1
Asset-backed		91.0		—		91.0		—
Total fixed maturities		6,161.5		154.9		5,971.6		35.0
Equity securities		464.4		463.3		—		1.1
Other investments		3.5		—		—		3.5
Total investment assets at fair value, excluding held-for-sale     (Chaucer)		6,629.4		618.2		5,971.6		39.6
Investment assets, held-for-sale		24.5		5.7		18.8		—
Total investment assets at fair value	$	6,653.9	$	623.9	$	5,990.4	$	39.6

Limited partnerships measured at fair value using NAV based on an ownership interest in partners’ capital have not been included in the hierarchy tables. At March 31, 2019 and December 31, 2018, the fair values of these investments were $176.8 million and $171.5 million, respectively, approximately 2% of total investment assets.

The following tables provide, for each hierarchy level, the Company’s estimated fair values of financial instruments that were not carried at fair value:

	March 31, 2019
(in millions)	Total		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	168.5	$	168.5	$	—	$	—
Other investments		425.7		—		1.8		423.9
Total financial instruments, excluding held-for-sale		594.2		168.5		1.8		423.9
Financial instruments, held-for-sale (Chaucer)		2.8		2.8		—		—
Total financial instruments	$	597.0	$	171.3	$	1.8	$	423.9
Liabilities:
Debt	$	694.2	$	—	$	694.2	$	—

	December 31, 2018
(in millions)	Total		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	1,020.7	$	1,020.7	$	—	$	—
Other investments		418.9		—		8.7		410.2
Total financial instruments, excluding held-for-sale		1,439.6		1,020.7		8.7		410.2
Financial instruments, held-for-sale (Chaucer)		3.3		3.3		—		—
Total financial instruments	$	1,442.9	$	1,024.0	$	8.7	$	410.2
Liabilities:
Debt	$	825.0	$	—	$	825.0	$	—

The table below provide a reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3).

	Fixed Maturities
(in millions)	Municipal			Corporate			Commercial mortgage- backed			Total			Equity and Other		Total Assets
Three Months Ended
March 31, 2019
Balance January 1, 2019	$	21.1		$	0.8		$	13.1		$	35.0		$	4.6	$	39.6
Total gains:
Included in total net realized and unrealized    investment gains		0.1			—			—			0.1			—		0.1
Included in other comprehensive income-net    appreciation on available-for-sale securities		0.2			—			0.2			0.4			—		0.4
Sales		(0.9	)		(0.1	)		(0.5	)		(1.5	)		—		(1.5	)
Balance March 31, 2019	$	20.5		$	0.7		$	12.8		$	34.0		$	4.6	$	38.6
Three Months Ended
March 31, 2018
Balance January 1, 2018, excluding held-for-sale (Chaucer)	$	24.6		$	0.9		$	14.2		$	39.7		$	4.7	$	44.4
Total gains (losses):
Included in total net realized and unrealized    investment gains		0.1			—			—			0.1			—		0.1
Included in other comprehensive income-net    depreciation on available-for-sale securities		(0.5	)		—			(0.2	)		(0.7	)		—		(0.7	)
Sales		(1.1	)		(0.1	)		(0.5	)		(1.7	)		—		(1.7	)
Balance March 31, 2018, excluding held-for-sale (Chaucer)	$	23.1		$	0.8		$	13.5		$	37.4		$	4.7	$	42.1

There were no transfers between Level 2 and Level 3, and there were no Level 3 liabilities held by the Company for the three months ended March 31, 2019 and 2018.

The following table provides quantitative information about the significant unobservable inputs used by the Company in the fair value measurements of Level 3 assets. Where discounted cash flows were used in the valuation of fixed maturities, the internally-developed discount rate was adjusted by the significant unobservable inputs shown in the table.  

			March 31, 2019			December 31, 2018
	Valuation	Significant	Fair		Range	Fair		Range
(in millions)	Technique	Unobservable Inputs	Value		(Wtd Average)	Value		(Wtd Average)
Fixed maturities:
Municipal	Discounted cash flow	Discount for:    Small issue size    Credit stress    Above-market coupon	$	20.5	0.7 - 6.8% (3.3%) 1.3% (1.3%) 0.3 - 0.5% (0.5%)	$	21.1	0.7 - 6.8% (3.4%) 1.3% (1.3%) 0.3 - 0.5% (0.5%)
Corporate	Discounted cash flow	Discount for:    Small issue size    Above-market coupon	0.7		2.5% (2.5%) 0.3% (0.3%)	0.8		2.5% (2.5%) 0.3% (0.3%)
Commercial    mortgage-backed	Discounted cash flow	Discount for:    Small issue size    Above-market coupon    Lease structure	12.8		1.9 - 3.1% (2.7%) 0.5% (0.5%) 0.3% (0.3%)	13.1		1.9 - 3.1% (2.7%) 0.5% (0.5%) 0.3% (0.3%)
Equity securities	Market comparables	Net tangible asset    market multiples		1.1	1.0X (1.0X)		1.1	1.0X (1.0X)
Other	Discounted cash flow	Discount rate		3.5	18.0% (18.0%)		3.5	18.0% (18.0%)

Significant increases (decreases) in any of the above inputs in isolation would result in a significantly lower (higher) fair value measurement. There were no interrelationships between these inputs which might magnify or mitigate the effect of changes in unobservable inputs on the fair value measurement.

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Pension and Other Postretirement Benefit Plans

3 Months Ended

Mar. 31, 2019

Compensation And Retirement Disclosure [Abstract]

Pension and Other Postretirement Benefit Plans

7. Pension and Other Postretirement Benefit Plans

The components of net periodic pension cost for defined benefit pension and other postretirement benefit plans included in the Company’s results of operations are as follows:

	Three Months Ended March 31,
	2019			2018			2019		2018
(in millions)	Pension Plans						Postretirement Plans
Service cost - benefits earned during the period	$	—		$	—		$	—	$	—
Interest cost		5.3			4.9			0.1		0.1
Expected return on plan assets		(5.8	)		(5.2	)		—		—
Recognized net actuarial loss		2.8			2.5			—		0.1
Amortization of prior service cost		—			—			—		(0.1	)
Net periodic pension cost	$	2.3		$	2.2		$	0.1	$	0.1

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Other Comprehensive Income

3 Months Ended

Mar. 31, 2019

Equity [Abstract]

Other Comprehensive Income

8. Other Comprehensive Income

The following tables provide changes in other comprehensive income (loss).

	Three Months Ended March 31,
	2019								2018
			Tax									Tax
			Benefit			Net of						Benefit			Net of
(in millions)	Pre-Tax		(Expense)			Tax			Pre-Tax			(Expense)			Tax
Unrealized gains (losses) on available-for-sale    securities:
Unrealized gains (losses) arising during period	$	152.0	$	(32.0	)	$	120.0		$	(153.7	)	$	32.1		$	(121.6	)
Amount of realized gains (losses) from sales    and other		0.3		(3.9	)		(3.6	)		0.2			(2.5	)		(2.3	)
Portion of other-than-temporary impairment    losses recognized in earnings		—		—			—			0.5			(0.1	)		0.4
Net unrealized gains (losses)		152.3		(35.9	)		116.4			(153.0	)		29.5			(123.5	)
Pension and postretirement benefits:
Net change in net actuarial loss and prior    service cost		2.9		(0.6	)		2.3			(2.9	)		0.6			(2.3	)
Cumulative foreign currency translation adjustment:
Foreign currency translation recognized during    the period		0.1		—			0.1			(0.6	)		0.1			(0.5	)
Other comprehensive income (loss)	$	155.3	$	(36.5	)	$	118.8		$	(156.5	)	$	30.2		$	(126.3	)

Reclassifications out of accumulated other comprehensive income were as follows:

	Three Months Ended
	March 31,
(in millions)	2019			2018
	Amount Reclassified from
Details about Accumulated Other	Accumulated Other						Affected Line Item in the Statement
Comprehensive Income Components	Comprehensive Income						Where Net Income is Presented
Unrealized gains on available-for-sale    securities	$	(0.3	)	$	—		Net realized losses from sales and other
		—			(0.6	)	Net other-than-temporary impairment losses on    investments recognized in earnings
		(0.3	)		(0.6	)	Total before tax
		3.9			2.7		Tax benefit
		3.6			2.1		Continued operations; net of tax
		—			(0.2	)	Discontinued operations - Chaucer business
		3.6			1.9		Net of tax
Amortization of defined benefit    pension and postretirement plans		(2.9	)		(2.5	)	Loss adjustment expenses and other    operating expenses (1)
		0.6			0.5		Tax benefit
		(2.3	)		(2.0	)	Continued operations; net of tax
Total reclassifications for the period	$	1.3		$	(0.1	)	Benefit (expense) reflected in income, net of tax

(1) The amount reclassified from accumulated other comprehensive income for the pension and postretirement benefits was allocated approximately 40% to loss adjustment expenses and 60% to other operating expenses for the three months ended March 31, 2019 and 2018.

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Segment Information

3 Months Ended

Mar. 31, 2019

Segment Reporting [Abstract]

Segment Information

9. Segment Information

The Company’s primary business operations include insurance products and services provided through three operating segments: Commercial Lines, Personal Lines and Other. Commercial Lines includes commercial multiple peril, commercial automobile, workers’ compensation, and other commercial coverages, such as inland marine, specialty program business, management and professional liability, surety and specialty property. Personal Lines includes personal automobile, homeowners and other personal coverages. Included in the Other segment are Opus Investment Management, Inc., which markets investment management services to institutions, pension funds and other organizations; earnings on holding company assets; holding company and other expenses, including certain costs associated with retirement benefits due to the Company’s former life insurance employees and agents; and, a run-off voluntary pools business. On December 28, 2018, the Company completed the sale of Chaucer, the major portion of its Lloyd’s international specialty business, to China Re. The sales of the Chaucer-related Irish and Australian entities were subsequently completed on February 14, 2019 and April 10, 2019, respectively. Accordingly, as of December 31, 2018, and for all prior periods, Chaucer’s results of operations have been classified as Discontinued Operations in the Consolidated Statements of Income and assets and liabilities related to the Chaucer business have been classified as held-for-sale in the Consolidated Balance Sheets (see Note 3 – “Discontinued Operations - Chaucer Business”). Certain ongoing expenses were also reclassified from Chaucer to the other three operating segments. The separate financial information is presented consistent with the way results are regularly evaluated by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

The Company reports interest expense related to debt separately from the earnings of its operating segments. This consists of interest on the Company’s senior and subordinated debentures.

Management evaluates the results of the aforementioned segments based on operating income before taxes, excluding interest expense on debt. Operating income before taxes excludes certain items which are included in net income, such as net realized and unrealized investment gains and losses. Such gains and losses are excluded since they are determined by interest rates, financial markets and the timing of sales. Also, operating income before taxes excludes net gains and losses on disposals of businesses, gains and losses related to the repayment of debt, discontinued operations, costs to acquire businesses, restructuring costs, the cumulative effect of accounting changes and certain other items. Although the items excluded from operating income before taxes may be important components in understanding and assessing the Company’s overall financial performance, management believes that the presentation of operating income before taxes enhances an investor’s understanding of the Company’s results of operations by highlighting net income attributable to the core operations of the business. However, operating income before taxes should not be construed as a substitute for income before income taxes and operating income should not be construed as a substitute for net income.

Summarized below is financial information with respect to the Company’s business segments.

	Three Months Ended
	March 31,
(in millions)	2019			2018
Operating revenues:
Commercial Lines	$	698.7		$	676.6
Personal Lines		465.2			434.9
Other		7.4			2.9
Total		1,171.3			1,114.4
Net realized and unrealized investment gains (losses)		48.2			(22.9	)
Total revenues	$	1,219.5		$	1,091.5
Operating income (loss) before interest expense and income taxes:
Commercial Lines:
Underwriting income	$	36.7		$	16.3
Net investment income		44.3			45.3
Other expense		(0.8	)		(0.2	)
Commercial Lines operating income		80.2			61.4
Personal Lines:
Underwriting income		5.7			14.6
Net investment income		19.7			18.4
Other income		1.4			1.3
Personal Lines operating income		26.8			34.3
Other:
Underwriting loss		(0.3	)		(1.0	)
Net investment income		6.2			2.3
Other expense		(3.1	)		(3.7	)
Other operating income (loss)		2.8			(2.4	)
Operating income before interest expense and income taxes		109.8			93.3
Interest on debt		(9.4	)		(11.3	)
Operating income before income taxes		100.4			82.0
Non-operating income items:
Net realized and unrealized investment gains (losses)		48.2			(22.9	)
Income from continuing operations before income taxes	$	148.6		$	59.1

The following table provides identifiable assets for the Company’s business segments and discontinued operations:

	March 31, 2019		December 31, 2018
(in millions)	Identifiable Assets
U.S. Companies	$	11,856.2	$	12,238.4
Assets held-for-sale(1)		23.6		57.4
Assets of discontinued operations		103.6		103.9
Total	$	11,983.4	$	12,399.7

(1) See also Note 3 – “Discontinued Operations – Chaucer Business”.

The Company reviews the assets of its U.S. Companies collectively and does not allocate them between the Commercial Lines, Personal Lines and Other segments.

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Stock-based Compensation

3 Months Ended

Mar. 31, 2019

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-based Compensation

10. Stock-based Compensation

As of March 31, 2019, there were 3,506,780 shares and 2,369,081 shares available for grant under The Hanover Insurance Group 2014 Long-Term Incentive Plan and The Hanover Insurance Group 2014 Employee Stock Purchase Plan, respectively.

Compensation cost for the Company’s stock-based awards and the related tax benefits were as follows:

	Three Months Ended March 31,
(in millions)	2019			2018
Stock-based compensation expense	$	4.2		$	2.5
Tax benefit		(0.9	)		(0.5	)
Stock-based compensation expense, net of taxes	$	3.3		$	2.0

Stock-based compensation expense for Chaucer, net of taxes, of $0.4 million for the three months ended March 31, 2018 is reported in discontinued operations and is excluded from the amounts disclosed above.

Stock Options

Information on the Company’s stock option activity for the three months ended March 31, 2019 and 2018 is summarized below.

	Three Months Ended March 31,
	2019					2018
(in whole shares and dollars)	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
Outstanding, beginning of period		1,099,076		$	85.75		1,062,177		$	75.53
Granted		232,568			95.05		291,390			110.58
Exercised		(64,017	)		75.98		(84,353	)		70.31
Forfeited or cancelled		(3,141	)		95.39		(50,491	)		88.48
Outstanding, end of period		1,264,486			87.93		1,218,723			83.73

Restricted Stock Units

The following tables summarize activity information about employee restricted stock units:

	Three Months Ended March 31,
	2019					2018
(in whole shares and dollars)	Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value
Time-based restricted stock units:
Outstanding, beginning of period		332,481		$	97.28		298,528		$	83.45
Granted		144,072			117.51		131,290			110.60
Vested		(99,855	)		83.25		(50,810	)		70.24
Forfeited		(8,687	)		97.14		(10,585	)		87.47
Outstanding, end of period		368,011			109.01		368,423			94.83
Performance-based and market-based restricted stock units:
Outstanding, beginning of period		69,838		$	95.58		102,586		$	81.21
Granted		42,119			117.68		29,715			116.82
Vested		(10,089	)		82.74		(14,032	)		70.24
Forfeited		—			—		(7,625	)		81.91
Outstanding, end of period		101,868			105.99		110,644			92.12

In the first three months of 2019 and 2018, the Company granted market-based awards totaling 23,924 and 29,715, respectively, to certain members of senior management, which are included in the table above as performance and market-based restricted stock activity. The vesting of these stock units is based on the relative total shareholder return (“TSR”) of the Company. This metric is generally based on relative TSR for a three-year period as compared to a pre-selected group of property and casualty companies. The fair value of market-based awards was estimated at the date of grant using a valuation model. These units have the potential to range from 0% to 150% of the shares disclosed. Included in the amount granted above in 2019 and 2018 are 5,820 shares and 3,115 shares, respectively, related to market-based awards that achieved a payout in excess of 100%. These awards vested in the first quarters of 2019 and 2018, respectively.

The Company also granted performance-based restricted stock units in 2019 which are based upon the achievement of the performance metric at 100%. These units have the potential to range from 0% to 150% of the shares disclosed, which varies based on grant year and individual participation level. Increases above the 100% target level are reflected as granted in the period in which performance-based stock unit goals are achieved. Decreases below the 100% target level are reflected as forfeited. There were no performance-based awards that vested in 2019 or 2018.

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Earnings Per Share and Shareholders' Equity Transactions

3 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Earnings Per Share and Shareholders' Equity Transactions

11. Earnings Per Share and Shareholders’ Equity Transactions

The following table provides weighted average share information used in the calculation of the Company’s basic and diluted earnings per share:

	Three Months Ended
	March 31,
(in millions, except per share data)	2019			2018
Basic shares used in the calculation of earnings per share		40.6			42.5
Dilutive effect of securities:
Employee stock options		0.3			0.3
Non-vested stock grants		0.3			0.3
Diluted shares used in the calculation of earnings per share		41.2			43.1
Per share effect of dilutive securities on income from    continuing operations and net income	$	(0.04	)	$	(0.02	)

Diluted earnings per share for the three months ended March 31, 2019 and 2018 excludes 0.2 million and 0.3 million, respectively, of common shares issuable under the Company’s stock compensation plans because their effect would be antidilutive.

On December 30, 2018, the Board of Directors authorized a new stock repurchase program which provides for aggregate repurchases of up to $600 million. Under the repurchase authorization, the Company may repurchase, from time to time, common shares in amounts, at prices and at such times as the Company deems appropriate, subject to market conditions and other considerations. Repurchases may be executed using open market purchases, privately negotiated transactions, accelerated repurchase programs or other transactions. The Company is not required to purchase any specific number of shares or to make purchases by any certain date under this program.  On January 2, 2019, pursuant to the terms of an accelerated share repurchase (“ASR”) agreement executed on December 30, 2018, the Company paid $250.0 million and received an initial delivery of approximately 1.8 million shares of common stock, which is approximately 80% of the total number of shares expected to be repurchased under this agreement. The final 20% of the total number of shares are expected to be delivered to the Company in the second quarter of 2019.

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Liabilities For Outstanding Claims, Losses And Loss Adjustment Expenses

3 Months Ended

Mar. 31, 2019

Insurance [Abstract]

Liabilities For Outstanding Claims, Losses And Loss Adjustment Expenses

12. Liabilities for Outstanding Claims, Losses and Loss Adjustment Expenses

Reserve Rollforward and Prior Year Development

The Company regularly updates its reserve estimates as new information becomes available and further events occur which may impact the resolution of unsettled claims. Reserve adjustments are reflected in results of operations as adjustments to losses and loss adjustment expenses (“LAE”). Often these adjustments are recognized in periods subsequent to the period in which the underlying policy was written and loss event occurred. These types of subsequent adjustments are described as “prior years’ loss reserves”. Such development can be either favorable or unfavorable to the Company’s financial results and may vary by line of business. In this section, all amounts presented include catastrophe losses and LAE, unless otherwise indicated.

The table below provides a reconciliation of the gross beginning and ending reserve for unpaid losses and loss adjustment expenses.

	Three Months Ended
	March 31,
(in millions)	2019			2018
Gross loss and LAE reserves, beginning of period	$	5,304.1		$	5,058.5
Reinsurance recoverable on unpaid losses		1,472.6			1,455.0
Net loss and LAE reserves, beginning of period		3,831.5			3,603.5
Net incurred losses and LAE in respect of losses occurring in:
Current year		712.8			677.4
Prior years		(13.2	)		(6.5	)
Total incurred losses and LAE		699.6			670.9
Net payments of losses and LAE in respect of losses    occurring in:
Current year		175.3			181.0
Prior years		459.1			425.5
Total payments		634.4			606.5
Net reserve for losses and LAE, end of period		3,896.7			3,667.9
Reinsurance recoverable on unpaid losses		1,484.9			1,420.0
Gross reserve for losses and LAE, end of period	$	5,381.6		$	5,087.9

As a result of continuing trends in the Company’s business, reserves including catastrophes have been re-estimated for all prior accident years and were decreased by $13.2 million in 2019 in comparison to a decrease of $6.5 million in 2018.

2019

For the three months ended March 31, 2019, net favorable loss and LAE development was $13.2 million, primarily as a result of favorable catastrophe development due to anticipated subrogation recoveries on the 2017 and 2018 California wildfires. Our current estimate of these subrogation recoveries was informed by the recent sale of our subrogation rights for certain of these events to a large financial institution. In addition, higher than expected losses in our personal and commercial automobile lines were substantially offset by lower than expected losses in our workers’ compensation and commercial multiple peril lines.   

2018

For the three months ended March 31, 2018, net favorable loss and LAE development was $6.5 million, primarily as a result of favorable catastrophe development related to the 2017 hurricanes and California wildfires.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2019

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

13. Commitments and Contingencies

Legal Proceedings

Durand Litigation

On March 12, 2007, a putative class action suit captioned Jennifer A. Durand v. The Hanover Insurance Group, Inc., and The Allmerica Financial Cash Balance Pension Plan, was filed in the United States District Court for the Western District of Kentucky. The named plaintiff, a former employee of the Company’s former life insurance and annuity business who received a lump sum distribution from the Company’s Cash Balance Plan (the “Plan”) at or about the time of her separation from the Company, claims that she and others similarly situated did not receive the appropriate lump sum distribution because in computing the lump sum, the Company and the Plan understated the accrued benefit in the calculation. The plaintiff claims that the Plan underpaid her distributions and those of similarly situated participants by failing to pay an additional so-called “whipsaw” amount reflecting the present value of an estimate of future interest credits from the date of the lump sum distribution to each participant’s retirement age of 65 (“whipsaw claim”).

The plaintiff filed an Amended Complaint adding two new named plaintiffs and additional claims on December 11, 2009.  Two of the three new claims set forth in the Amended Complaint were dismissed by the District Court, which action was upheld in November 2015 by the U.S. Court of Appeals, Sixth Circuit. The District Court, however, did allow to stand the new claim in the Amended Complaint for breach of fiduciary duty and failure to meet notice requirements arising under the Employee Retirement Income Security Act of 1974 (“ERISA”) from the various interest crediting and lump sum distribution matters of which plaintiffs complain, but only as to plaintiffs’ “whipsaw” claim that remained in the case. On December 17, 2013, the Court entered an order certifying a class to bring “whipsaw” and related breach of fiduciary duty claims consisting of all persons who received a lump sum distribution between March 1, 1997 and December 31, 2003.

On February 16, 2018, the Court entered an order limiting the claims of those participants who received lump sum distributions prior to March 13, 2002 to alleged violations of ERISA’s disclosure requirements and breaches of fiduciary duty. Subsequently, the parties entered into settlement discussions and reached a settlement. The Court approved the settlement and dismissed the case with prejudice on March 22, 2019. Effective April 24, 2019, such dismissal is no longer subject to appeal. The resulting settlement amount to be paid by the Company is not material to the Company’s financial position and will not have a material effect on its results of operations.

Other Matters

The Company has been named a defendant in various other legal proceedings arising in the normal course of business. In addition, the Company is involved, from time to time, in examinations, investigations and proceedings by governmental and self-regulatory agencies. The potential outcome of any such action or regulatory proceedings in which the Company has been named a defendant or the subject of an inquiry or investigation, and its ultimate liability, if any, from such action or regulatory proceedings, is difficult to predict at this time. The ultimate resolutions of such proceedings are not expected to have a material effect on its financial position, although they could have a material effect on the results of operations for a particular quarter or annual period.

Residual Markets

The Company is required to participate in residual markets in various states, which generally pertain to high risk insureds, disrupted markets or lines of business or geographic areas where rates are regarded as excessive. The results of the residual markets are not subject to the predictability associated with the Company’s own managed business, and are significant to both the personal and commercial automobile lines of business.

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Other Items

3 Months Ended

Mar. 31, 2019

Federal Home Loan Banks [Abstract]

Other Items

14. Other Items

On January 2, 2019, the Company repaid $125 million of its FHLB advances that were due 2029 and had an interest rate of 5.5%, along with related prepayment fees of $26 million; such fees were recognized in 2018.

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Subsequent Events

3 Months Ended

Mar. 31, 2019

Subsequent Events [Abstract]

Subsequent Events

15. Subsequent Events

On April 10, 2019, the Company completed the sale of its Chaucer-related Australian entities for proceeds of $13 million.

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New Accounting Pronouncements (Policies)

3 Months Ended

Mar. 31, 2019

Accounting Changes And Error Corrections [Abstract]

New Accounting Pronouncements

New Accounting Pronouncements

Recently Implemented Standards

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) Update No. 2016-02, (Topic 842) Leases. This ASC update requires a lessee to recognize a right-of-use asset, which represents the lessee’s right to use a specified asset for the lease term, and a corresponding lease liability, which represents a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, for all leases that extend beyond 12 months. For finance or capital leases, interest on the lease liability will be recognized separately from amortization of the right-of-use asset in the statements of income and comprehensive income. In addition, the repayment of the principal portion of the lease liability will be classified as a financing activity while the interest component will be included in the operating section of the statement of cash flows. For operating leases, the asset and liability will be amortized as a single lease cost, such that the cost of the lease is allocated over the lease term, on a generally straight-line basis, with all cash flows included within operating activities in the statement of cash flows. ASC Update No. 2016-02 requires that implementation of this guidance be through a modified retrospective transition approach. In July 2018, the FASB issued ASC Update No. 2018-11, (Topic 842) Leases Targeted Improvements, which provides entities with an additional transition method to adopt ASC Update No. 2016-02. Under this optional transition method, an entity can initially apply the new guidance at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company implemented this guidance effective January 1, 2019 using the optional transition method provided in ASC Update No. 2018-11 and elected to utilize the practical expedient package available in ASC Update 2016-02. The Company has also elected to utilize the practical expedient which allows an entity not to separate lease and nonlease components for all of its asset classes. The effect of implementing this guidance increased total assets and total liabilities each by approximately $35 million on January 1, 2019 and did not have a material effect on the results of operations for the three months ended March 31, 2019.

In March 2019, the FASB issued ASC Update No. 2019-01, Leases (Topic 842) – Codification Improvements (“ASC Update No. 2019-01”). This ASC update modifies interim disclosure requirements related to the implementation of Topic 842. This ASC update explicitly provides an exception to certain disclosures required under Topic 250 Accounting Changes and Error Corrections. An entity should apply the amendments as of the date that it first applied Topic 842, using the same transition methodology. Consistent with the Company’s implementation of Topic 842 on January 1, 2019, the updated guidance is effective for interim and annual periods beginning after December 15, 2018. The Company implemented this guidance effective January 1, 2019 and it did not have an impact on the Company’s financial position or results of operations as the update is disclosure related.

In March 2017, the FASB issued ASC Update No. 2017-08, (Subtopic 310-20) Receivables – Nonrefundable Fees and Other Costs: Premium Amortization on Purchased Callable Debt Securities. This guidance shortens the amortization period of premiums on certain purchased callable debt securities to the earliest call date. The updated guidance is effective for annual and interim periods beginning after December 15, 2018, and should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company implemented this guidance effective January 1, 2019. The effect of implementing this guidance resulted in a cumulative effect adjustment reclassifying unrealized losses, net of tax, of $1.5 million from accumulated other comprehensive income to retained earnings.

Recently Issued Standards

In August 2018, the FASB issued ASC Update No. 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASC Update No. 2018-15”). This ASC update requires the capitalization of implementation costs incurred in a hosting arrangement that is a service contract consistent with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The guidance also requires an entity to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting agreement, and apply impairment guidance consistent with long-lived assets. ASC Update No. 2018-15 also provides specific guidelines related to the presentation of these capitalized implementation costs and related expenses in the financial statements. The updated guidance is effective for interim and annual periods beginning after December 15, 2019, and should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. Early adoption is permitted, including interim periods. The Company does not expect the adoption of ASC Update No. 2018-15 to have a material impact on its financial position or results of operations.

In August 2018, the FASB issued ASC Update No. 2018-14 (Topic 715-20) Compensation – Retirement Benefits – Defined Benefit Plans – General – Disclosure Framework – Changes to the Disclosure Requirements for the Defined Benefit Plans. This ASC update modifies disclosures related to defined benefit pension or other postretirement plans. This ASC update removes the disclosure of amounts in accumulated other comprehensive income expected to be recognized over the next fiscal year and the effects of a one percentage point change of health care cost trends on net periodic benefit costs and postretirement benefit obligations and clarifies the specific requirements of disclosures related to the project benefit obligation and accumulated benefit obligation. This ASC Update also adds disclosures related to weighted average crediting rates for cash balance plans and requires disclosure of an explanation of any significant gains and losses related to changes in benefit obligations for the period. The amendments in this ASC update are effective for fiscal years ending after December 15, 2020, and should be applied on a retrospective basis to all periods presented. Early adoption is permitted. Implementing this guidance is not expected to have an impact on the Company’s financial position or results of operations as the update is disclosure related.

In August 2018, the FASB issued ASC Update No. 2018-13 (Topic 820) Fair Value Measurement, Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The update removes the requirement for disclosure of the following: 1) the amount and reasons for transfers between level 1 and level 2 of the fair value hierarchy, 2) the policy for timing of transfers between levels, and 3) the valuation processes for level 3 fair value measurements. This update also added a requirement to disclose the changes in unrealized gains and losses for the period included in other comprehensive income for recurring level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop level 3 fair value measurements, in addition to other fair value disclosure modifications. The updated guidance is effective for interim and annual periods beginning after December 15, 2019, and should be applied prospectively for certain of the disclosure requirements and retrospectively to all periods presented upon the effective date for other disclosure requirements. An entity is permitted to early adopt any removed or modified disclosures upon issuance of the update and delay adoption of additional disclosures until periods beginning after December 15, 2019, the effective date of the standard. Implementing this guidance is not expected to have an impact on the Company’s financial position or results of operations as the update is disclosure related.

In January 2017, the FASB issued ASC Update No. 2017-04, (Topic 350) Intangibles – Goodwill and Other: Simplifying the Test for Goodwill Impairment. This guidance eliminates step 2 from the goodwill impairment test. Instead, an entity should perform its goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount, including any applicable income tax effects, and recognize an impairment for the amount by which the carrying amount exceeds the reporting unit’s fair value. However, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The updated guidance is effective for annual or interim goodwill impairment tests performed in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect the adoption of ASC Update No. 2017-04 to have a material impact on its financial position or results of operations.

In June 2016, the FASB issued ASC Update No. 2016-13, (Topic 326) Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments. This ASC update introduces new guidance for the accounting for credit losses on financial instruments within its scope. A new model, referred to as the current expected credit losses model, requires an entity to determine credit-related impairment losses for financial instruments held at amortized cost and to estimate these expected credit losses over the life of an exposure (or pool of exposures). The estimate of expected credit losses should consider both historical and current information, reasonable and supportable forecasts, as well as estimates of prepayments. The estimated credit losses and subsequent adjustment to such loss estimates, will be recorded through an allowance account which is deducted from the amortized cost of the financial instrument, with the offset recorded in current earnings. ASC No. 2016-13 also modifies the impairment model for available-for-sale debt securities. The new model will require an estimate of expected credit losses only when the fair value is below the amortized cost of the asset, thus the length of time the fair value of an available-for-sale debt security has been below the amortized cost will no longer affect the determination of whether a credit loss exists. In addition, credit losses on available-for-sale debt securities will be limited to the difference between the security’s amortized cost basis and its fair value. In November 2018, the FASB issued ASC Update No. 2018-19, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, which explicitly states that receivables arising from operating leases are not within the scope of Subtopic 326-20. ASC Update 2016-13 and related guidance is effective for interim and annual periods beginning after December 15, 2019. Early adoption is permitted for periods beginning after December 15, 2018. The Company expects to adopt ASC Update No. 2016-13 on January 1, 2020 and is evaluating the impact on its financial position and results of operations, which it does not expect to be material.

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Discontinued Operations Chaucer Business (Tables) - Chaucer [Member]

3 Months Ended

Mar. 31, 2019

Summary of Discontinued Chaucer Business

The following table summarizes the results of Chaucer’s operations for the three months ended March 31, 2018:

	Three Months Ended
	March 31,
(in millions)	2018
Revenues
Net premiums earned	$	221.1
Net investment income		16.4
Other income		1.9
		239.4
Losses and operating expenses
Losses and LAE		115.0
Amortization of deferred acquisition costs		69.3
Other expenses		32.2
		216.5
Income from Chaucer business before income taxes and other items    (previously presented as Chaucer's operating income)		22.9
Other items:
Interest expense		(1.1	)
Net realized and unrealized investment losses		(0.5	)
Other income		0.2
Income from Chaucer business before income taxes		21.5
Income tax expense		(4.2	)
Income from Chaucer business, net of income taxes	$	17.3

Summary of Cash Flows Associated with the Discontinued Chaucer Business

The following table details the cash flows associated with the Chaucer business for the three months ended March 31, 2018:

	Three Months Ended
	March 31,
(in millions)	2018
Net cash used in operating activities	$	(5.9	)
Net cash provided by investing activities	$	47.7

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Investments (Tables)

3 Months Ended

Mar. 31, 2019

Investments Debt And Equity Securities [Abstract]

Schedule of Available-for-sale Fixed Maturities Reconciliation

The amortized cost and fair value of available-for-sale fixed maturities were as follows:

	March 31, 2019
			Gross		Gross				OTTI
	Amortized		Unrealized		Unrealized				Unrealized
(in millions)	Cost		Gains		Losses		Fair Value		Losses
U.S. Treasury and government agencies	$	404.5	$	4.7	$	2.5	$	406.7	$	—
Foreign government		7.3		0.1		—		7.4		—
Municipal		848.1		20.8		3.4		865.5		—
Corporate		3,635.7		66.3		27.4		3,674.6		4.8
Residential mortgage-backed		819.2		6.8		6.1		819.9		—
Commercial mortgage-backed		684.9		9.4		2.4		691.9		—
Asset-backed		93.0		0.6		0.2		93.4		—
Total fixed maturities	$	6,492.7	$	108.7	$	42.0	$	6,559.4	$	4.8

	December 31, 2018
			Gross		Gross				OTTI
	Amortized		Unrealized		Unrealized				Unrealized
(in millions)	Cost		Gains		Losses		Fair Value		Losses
U.S. Treasury and government agencies	$	414.7	$	2.4	$	7.2	$	409.9	$	—
Foreign government		7.3		0.1		—		7.4		—
Municipal		879.0		16.6		9.8		885.8		—
Corporate		3,476.6		26.1		92.0		3,410.7		6.6
Residential mortgage-backed		728.4		2.7		14.7		716.4		—
Commercial mortgage-backed		648.4		1.7		9.8		640.3		—
Asset-backed		91.5		0.2		0.7		91.0		—
Fixed maturities, excluding held-for-sale (Chaucer)		6,245.9		49.8		134.2		6,161.5		6.6
Fixed maturities, held-for-sale		24.9		—		0.4		24.5		—
Total fixed maturities	$	6,270.8	$	49.8	$	134.6	$	6,186.0	$	6.6

Investments Classified by Contractual Maturity Date

The amortized cost and fair value by maturity periods for fixed maturities are shown in the following table. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties, or the Company may have the right to put or sell the obligations back to the issuers.

	March 31, 2019
	Amortized		Fair
(in millions)	Cost		Value
Due in one year or less	$	249.2	$	250.9
Due after one year through five years		1,969.6		2,001.6
Due after five years through ten years		2,407.4		2,423.2
Due after ten years		269.4		278.5
		4,895.6		4,954.2
Mortgage-backed and asset-backed securities		1,597.1		1,605.2
Total fixed maturities	$	6,492.7	$	6,559.4

Schedule of Unrealized Loss on Investments

The following tables provide information about the Company’s available-for-sale fixed maturity securities that were in an unrealized loss position at March 31, 2019 and December 31, 2018 including the length of time the securities have been in an unrealized loss position:

	March 31, 2019
	12 months or less				Greater than 12 months				Total
	Gross				Gross				Gross
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
(in millions)	Losses		Value		Losses		Value		Losses		Value
Investment grade:
U.S. Treasury and government agencies	$	—	$	—	$	2.5	$	158.4	$	2.5	$	158.4
Foreign governments		—		—		—		0.8		—		0.8
Municipal		—		9.7		3.4		192.3		3.4		202.0
Corporate		0.9		15.3		19.7		993.2		20.6		1,008.5
Residential mortgage-backed		—		2.1		6.1		352.6		6.1		354.7
Commercial mortgage-backed		—		0.3		2.4		226.7		2.4		227.0
Asset-backed		—		—		0.2		31.9		0.2		31.9
Total investment grade		0.9		27.4		34.3		1,955.9		35.2		1,983.3
Below investment grade:
Corporate		0.3		17.1		6.5		75.7		6.8		92.8
Total fixed maturities	$	1.2	$	44.5	$	40.8	$	2,031.6	$	42.0	$	2,076.1

	December 31, 2018
	12 months or less				Greater than 12 months				Total
	Gross				Gross				Gross
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
(in millions)	Losses		Value		Losses		Value		Losses		Value
Investment grade:
U.S. Treasury and government agencies	$	1.1	$	66.0	$	6.1	$	210.9	$	7.2	$	276.9
Foreign governments		—		2.0		—		0.8		—		2.8
Municipal		0.8		110.0		9.0		248.0		9.8		358.0
Corporate		30.0		1,277.9		43.9		781.6		73.9		2,059.5
Residential mortgage-backed		2.6		201.2		12.1		323.7		14.7		524.9
Commercial mortgage-backed		3.4		293.0		6.4		175.5		9.8		468.5
Asset-backed		0.4		42.3		0.3		18.0		0.7		60.3
Total investment grade		38.3		1,992.4		77.8		1,758.5		116.1		3,750.9
Below investment grade:
Municipal		—		—		—		0.9		—		0.9
Corporate		8.1		185.6		10.0		54.0		18.1		239.6
Total below investment grade		8.1		185.6		10.0		54.9		18.1		240.5
Fixed maturities, excluding held-for-sale (Chaucer)		46.4		2,178.0		87.8		1,813.4		134.2		3,991.4
Fixed maturities, held-for-sale		0.1		4.0		0.3		18.0		0.4		22.0
Total fixed maturities	$	46.5	$	2,182.0	$	88.1	$	1,831.4	$	134.6	$	4,013.4

Schedule of Realized Gain (Loss)

The proceeds from sales of available-for-sale securities and gross realized gains and gross realized losses on those sales were as follows:

	Three Months Ended March 31,
	2019						2018
	Proceeds from		Gross		Gross		Proceeds from		Gross		Gross
(in millions)	Sales		Gains		Losses		Sales		Gains		Losses
Fixed maturities, excluding held-for-sale (Chaucer)	$	60.1	$	1.0	$	1.5	$	57.1	$	0.2	$	1.7
Fixed maturities, held-for-sale		0.3		—		—		70.7		0.4		0.6
Total fixed maturities	$	60.4	$	1.0	$	1.5	$	127.8	$	0.6	$	2.3

Rollforward of Cumulative Amounts Related to Credit Loss Portion of OTTI Losses

The following table provides rollforwards of the cumulative amounts related to the Company’s credit loss portion of the OTTI losses on fixed maturity securities from continuing operations for which the non-credit portion of the loss is included in other comprehensive income. 

	Three Months Ended March 31,
(in millions)	2019			2018
Credit losses as of the beginning of the period	$	3.8		$	3.6
Credit losses on securities for which an OTTI was not previously recognized		—			0.2
Reductions for securities sold, matured or called		(0.5	)		(0.7	)
Credit losses as of the end of the period	$	3.3		$	3.1

Schedule of Pre-tax Realized and Unrealized Gains and Losses on Equity Securities From Continuing Operations

	Three Months Ended March 31,
(in millions)		2019		2018
Net gains (losses) recognized during the period	$	48.6	$	(22.9	)
Less: net gains recognized on equity securities sold during the period		1.1		0.5
Net unrealized gains (losses) recognized during the period on equity securities still held	$	47.5	$	(23.4	)

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Fair Value (Tables)

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

The estimated fair value of the financial instruments were as follows:

	March 31, 2019				December 31, 2018
	Carrying		Fair		Carrying		Fair
(in millions)	Value		Value		Value		Value
Financial Assets carried at:
Fair Value through AOCI:
Fixed maturities	$	6,559.4	$	6,559.4	$	6,161.5	$	6,161.5
Fair Value through Net Income:
Equity securities		504.7		504.7		464.4		464.4
Other investments		180.3		180.3		175.0		175.0
Amortized Cost/Cost:
Other investments		421.5		425.7		414.4		418.9
Cash and cash equivalents		168.5		168.5		1,020.7		1,020.7
Total financial instruments, excluding held-for-sale		7,834.4		7,838.6		8,236.0		8,240.5
Financial instruments, held-for-sale (Chaucer)		2.8		2.8		27.8		27.8
Total financial instruments	$	7,837.2	$	7,841.4	$	8,263.8	$	8,268.3
Financial Liabilities carried at:
Amortized Cost:
Debt	$	653.0	$	694.2	$	777.9	$	825.0

Fair Value, Investment Assets Measured on Recurring Basis

The following tables provide, for each hierarchy level, the Company’s investment assets that were measured at fair value on a recurring basis.

	March 31, 2019
(in millions)	Total		Level 1		Level 2		Level 3
Fixed maturities:
U.S. Treasury and government agencies	$	406.7	$	159.3	$	247.4	$	—
Foreign government		7.4		—		7.4		—
Municipal		865.5		—		845.0		20.5
Corporate		3,674.6		—		3,673.9		0.7
Residential mortgage-backed, U.S. agency backed		817.2		—		817.2		—
Residential mortgage-backed, non-agency		2.7		—		2.7		—
Commercial mortgage-backed		691.9		—		679.1		12.8
Asset-backed		93.4		—		93.4		—
Total fixed maturities		6,559.4		159.3		6,366.1		34.0
Equity securities		504.7		503.6		—		1.1
Other investments		3.5		—		—		3.5
Total investment assets at fair value	$	7,067.6	$	662.9	$	6,366.1	$	38.6

	December 31, 2018
(in millions)	Total		Level 1		Level 2		Level 3
Fixed maturities:
U.S. Treasury and government agencies	$	409.9	$	154.9	$	255.0	$	—
Foreign government		7.4		—		7.4		—
Municipal		885.8		—		864.7		21.1
Corporate		3,410.7		—		3,409.9		0.8
Residential mortgage-backed, U.S. agency backed		713.7		—		713.7		—
Residential mortgage-backed, non-agency		2.7		—		2.7		—
Commercial mortgage-backed		640.3		—		627.2		13.1
Asset-backed		91.0		—		91.0		—
Total fixed maturities		6,161.5		154.9		5,971.6		35.0
Equity securities		464.4		463.3		—		1.1
Other investments		3.5		—		—		3.5
Total investment assets at fair value, excluding held-for-sale     (Chaucer)		6,629.4		618.2		5,971.6		39.6
Investment assets, held-for-sale		24.5		5.7		18.8		—
Total investment assets at fair value	$	6,653.9	$	623.9	$	5,990.4	$	39.6

Estimated Fair Values of Financial Instruments Not Carried at Fair Value

The following tables provide, for each hierarchy level, the Company’s estimated fair values of financial instruments that were not carried at fair value:

	March 31, 2019
(in millions)	Total		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	168.5	$	168.5	$	—	$	—
Other investments		425.7		—		1.8		423.9
Total financial instruments, excluding held-for-sale		594.2		168.5		1.8		423.9
Financial instruments, held-for-sale (Chaucer)		2.8		2.8		—		—
Total financial instruments	$	597.0	$	171.3	$	1.8	$	423.9
Liabilities:
Debt	$	694.2	$	—	$	694.2	$	—

	December 31, 2018
(in millions)	Total		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	1,020.7	$	1,020.7	$	—	$	—
Other investments		418.9		—		8.7		410.2
Total financial instruments, excluding held-for-sale		1,439.6		1,020.7		8.7		410.2
Financial instruments, held-for-sale (Chaucer)		3.3		3.3		—		—
Total financial instruments	$	1,442.9	$	1,024.0	$	8.7	$	410.2
Liabilities:
Debt	$	825.0	$	—	$	825.0	$	—

Fair Value on Recurring Basis Using Significant Unobservable Inputs (Level 3)

The table below provide a reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3).

	Fixed Maturities
(in millions)	Municipal			Corporate			Commercial mortgage- backed			Total			Equity and Other		Total Assets
Three Months Ended
March 31, 2019
Balance January 1, 2019	$	21.1		$	0.8		$	13.1		$	35.0		$	4.6	$	39.6
Total gains:
Included in total net realized and unrealized    investment gains		0.1			—			—			0.1			—		0.1
Included in other comprehensive income-net    appreciation on available-for-sale securities		0.2			—			0.2			0.4			—		0.4
Sales		(0.9	)		(0.1	)		(0.5	)		(1.5	)		—		(1.5	)
Balance March 31, 2019	$	20.5		$	0.7		$	12.8		$	34.0		$	4.6	$	38.6
Three Months Ended
March 31, 2018
Balance January 1, 2018, excluding held-for-sale (Chaucer)	$	24.6		$	0.9		$	14.2		$	39.7		$	4.7	$	44.4
Total gains (losses):
Included in total net realized and unrealized    investment gains		0.1			—			—			0.1			—		0.1
Included in other comprehensive income-net    depreciation on available-for-sale securities		(0.5	)		—			(0.2	)		(0.7	)		—		(0.7	)
Sales		(1.1	)		(0.1	)		(0.5	)		(1.7	)		—		(1.7	)
Balance March 31, 2018, excluding held-for-sale (Chaucer)	$	23.1		$	0.8		$	13.5		$	37.4		$	4.7	$	42.1

Schedule of Additional Information About Significant Unobservable Inputs Used in Fair Valuations of Level 3 Assets

The following table provides quantitative information about the significant unobservable inputs used by the Company in the fair value measurements of Level 3 assets. Where discounted cash flows were used in the valuation of fixed maturities, the internally-developed discount rate was adjusted by the significant unobservable inputs shown in the table.  

			March 31, 2019			December 31, 2018
	Valuation	Significant	Fair		Range	Fair		Range
(in millions)	Technique	Unobservable Inputs	Value		(Wtd Average)	Value		(Wtd Average)
Fixed maturities:
Municipal	Discounted cash flow	Discount for:    Small issue size    Credit stress    Above-market coupon	$	20.5	0.7 - 6.8% (3.3%) 1.3% (1.3%) 0.3 - 0.5% (0.5%)	$	21.1	0.7 - 6.8% (3.4%) 1.3% (1.3%) 0.3 - 0.5% (0.5%)
Corporate	Discounted cash flow	Discount for:    Small issue size    Above-market coupon	0.7		2.5% (2.5%) 0.3% (0.3%)	0.8		2.5% (2.5%) 0.3% (0.3%)
Commercial    mortgage-backed	Discounted cash flow	Discount for:    Small issue size    Above-market coupon    Lease structure	12.8		1.9 - 3.1% (2.7%) 0.5% (0.5%) 0.3% (0.3%)	13.1		1.9 - 3.1% (2.7%) 0.5% (0.5%) 0.3% (0.3%)
Equity securities	Market comparables	Net tangible asset    market multiples		1.1	1.0X (1.0X)		1.1	1.0X (1.0X)
Other	Discounted cash flow	Discount rate		3.5	18.0% (18.0%)		3.5	18.0% (18.0%)

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Pension and Other Postretirement Benefit Plans (Tables)

3 Months Ended

Mar. 31, 2019

Compensation And Retirement Disclosure [Abstract]

Components of Net Periodic Pension Cost

The components of net periodic pension cost for defined benefit pension and other postretirement benefit plans included in the Company’s results of operations are as follows:

	Three Months Ended March 31,
	2019			2018			2019		2018
(in millions)	Pension Plans						Postretirement Plans
Service cost - benefits earned during the period	$	—		$	—		$	—	$	—
Interest cost		5.3			4.9			0.1		0.1
Expected return on plan assets		(5.8	)		(5.2	)		—		—
Recognized net actuarial loss		2.8			2.5			—		0.1
Amortization of prior service cost		—			—			—		(0.1	)
Net periodic pension cost	$	2.3		$	2.2		$	0.1	$	0.1

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Other Comprehensive Income (Tables)

3 Months Ended

Mar. 31, 2019

Equity [Abstract]

Changes in Other Comprehensive Income (Loss)

The following tables provide changes in other comprehensive income (loss).

	Three Months Ended March 31,
	2019								2018
			Tax									Tax
			Benefit			Net of						Benefit			Net of
(in millions)	Pre-Tax		(Expense)			Tax			Pre-Tax			(Expense)			Tax
Unrealized gains (losses) on available-for-sale    securities:
Unrealized gains (losses) arising during period	$	152.0	$	(32.0	)	$	120.0		$	(153.7	)	$	32.1		$	(121.6	)
Amount of realized gains (losses) from sales    and other		0.3		(3.9	)		(3.6	)		0.2			(2.5	)		(2.3	)
Portion of other-than-temporary impairment    losses recognized in earnings		—		—			—			0.5			(0.1	)		0.4
Net unrealized gains (losses)		152.3		(35.9	)		116.4			(153.0	)		29.5			(123.5	)
Pension and postretirement benefits:
Net change in net actuarial loss and prior    service cost		2.9		(0.6	)		2.3			(2.9	)		0.6			(2.3	)
Cumulative foreign currency translation adjustment:
Foreign currency translation recognized during    the period		0.1		—			0.1			(0.6	)		0.1			(0.5	)
Other comprehensive income (loss)	$	155.3	$	(36.5	)	$	118.8		$	(156.5	)	$	30.2		$	(126.3	)

Reclassifications Out of Accumulated Other Comprehensive Income

Reclassifications out of accumulated other comprehensive income were as follows:

	Three Months Ended
	March 31,
(in millions)	2019			2018
	Amount Reclassified from
Details about Accumulated Other	Accumulated Other						Affected Line Item in the Statement
Comprehensive Income Components	Comprehensive Income						Where Net Income is Presented
Unrealized gains on available-for-sale    securities	$	(0.3	)	$	—		Net realized losses from sales and other
		—			(0.6	)	Net other-than-temporary impairment losses on    investments recognized in earnings
		(0.3	)		(0.6	)	Total before tax
		3.9			2.7		Tax benefit
		3.6			2.1		Continued operations; net of tax
		—			(0.2	)	Discontinued operations - Chaucer business
		3.6			1.9		Net of tax
Amortization of defined benefit    pension and postretirement plans		(2.9	)		(2.5	)	Loss adjustment expenses and other    operating expenses (1)
		0.6			0.5		Tax benefit
		(2.3	)		(2.0	)	Continued operations; net of tax
Total reclassifications for the period	$	1.3		$	(0.1	)	Benefit (expense) reflected in income, net of tax

(1) The amount reclassified from accumulated other comprehensive income for the pension and postretirement benefits was allocated approximately 40% to loss adjustment expenses and 60% to other operating expenses for the three months ended March 31, 2019 and 2018.

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2019

Segment Reporting [Abstract]

Financial Information with Respect to Business Segments

Summarized below is financial information with respect to the Company’s business segments.

	Three Months Ended
	March 31,
(in millions)	2019			2018
Operating revenues:
Commercial Lines	$	698.7		$	676.6
Personal Lines		465.2			434.9
Other		7.4			2.9
Total		1,171.3			1,114.4
Net realized and unrealized investment gains (losses)		48.2			(22.9	)
Total revenues	$	1,219.5		$	1,091.5
Operating income (loss) before interest expense and income taxes:
Commercial Lines:
Underwriting income	$	36.7		$	16.3
Net investment income		44.3			45.3
Other expense		(0.8	)		(0.2	)
Commercial Lines operating income		80.2			61.4
Personal Lines:
Underwriting income		5.7			14.6
Net investment income		19.7			18.4
Other income		1.4			1.3
Personal Lines operating income		26.8			34.3
Other:
Underwriting loss		(0.3	)		(1.0	)
Net investment income		6.2			2.3
Other expense		(3.1	)		(3.7	)
Other operating income (loss)		2.8			(2.4	)
Operating income before interest expense and income taxes		109.8			93.3
Interest on debt		(9.4	)		(11.3	)
Operating income before income taxes		100.4			82.0
Non-operating income items:
Net realized and unrealized investment gains (losses)		48.2			(22.9	)
Income from continuing operations before income taxes	$	148.6		$	59.1

Identifiable Assets by Business Segment

The following table provides identifiable assets for the Company’s business segments and discontinued operations:

	March 31, 2019		December 31, 2018
(in millions)	Identifiable Assets
U.S. Companies	$	11,856.2	$	12,238.4
Assets held-for-sale(1)		23.6		57.4
Assets of discontinued operations		103.6		103.9
Total	$	11,983.4	$	12,399.7

(1) See also Note 3 – “Discontinued Operations – Chaucer Business”.

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Stock-based Compensation (Tables)

3 Months Ended

Mar. 31, 2019

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Compensation Cost and Related Tax Benefits

Compensation cost for the Company’s stock-based awards and the related tax benefits were as follows:

	Three Months Ended March 31,
(in millions)	2019			2018
Stock-based compensation expense	$	4.2		$	2.5
Tax benefit		(0.9	)		(0.5	)
Stock-based compensation expense, net of taxes	$	3.3		$	2.0

Summary of Stock Option Plan Activity

Information on the Company’s stock option activity for the three months ended March 31, 2019 and 2018 is summarized below.

	Three Months Ended March 31,
	2019					2018
(in whole shares and dollars)	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
Outstanding, beginning of period		1,099,076		$	85.75		1,062,177		$	75.53
Granted		232,568			95.05		291,390			110.58
Exercised		(64,017	)		75.98		(84,353	)		70.31
Forfeited or cancelled		(3,141	)		95.39		(50,491	)		88.48
Outstanding, end of period		1,264,486			87.93		1,218,723			83.73

Summary of Restricted Stock Activity

The following tables summarize activity information about employee restricted stock units:

	Three Months Ended March 31,
	2019					2018
(in whole shares and dollars)	Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value
Time-based restricted stock units:
Outstanding, beginning of period		332,481		$	97.28		298,528		$	83.45
Granted		144,072			117.51		131,290			110.60
Vested		(99,855	)		83.25		(50,810	)		70.24
Forfeited		(8,687	)		97.14		(10,585	)		87.47
Outstanding, end of period		368,011			109.01		368,423			94.83
Performance-based and market-based restricted stock units:
Outstanding, beginning of period		69,838		$	95.58		102,586		$	81.21
Granted		42,119			117.68		29,715			116.82
Vested		(10,089	)		82.74		(14,032	)		70.24
Forfeited		—			—		(7,625	)		81.91
Outstanding, end of period		101,868			105.99		110,644			92.12

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Earnings Per Share and Shareholders' Equity Transactions (Tables)

3 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Information Regarding Basic and Diluted Earnings Per Share

The following table provides weighted average share information used in the calculation of the Company’s basic and diluted earnings per share:

	Three Months Ended
	March 31,
(in millions, except per share data)	2019			2018
Basic shares used in the calculation of earnings per share		40.6			42.5
Dilutive effect of securities:
Employee stock options		0.3			0.3
Non-vested stock grants		0.3			0.3
Diluted shares used in the calculation of earnings per share		41.2			43.1
Per share effect of dilutive securities on income from    continuing operations and net income	$	(0.04	)	$	(0.02	)

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Liabilities For Outstanding Claims, Losses And Loss Adjustment Expenses (Tables)

3 Months Ended

Mar. 31, 2019

Insurance [Abstract]

Schedule of Liability for Unpaid Losses and Loss Adjustment Expenses

The table below provides a reconciliation of the gross beginning and ending reserve for unpaid losses and loss adjustment expenses.

	Three Months Ended
	March 31,
(in millions)	2019			2018
Gross loss and LAE reserves, beginning of period	$	5,304.1		$	5,058.5
Reinsurance recoverable on unpaid losses		1,472.6			1,455.0
Net loss and LAE reserves, beginning of period		3,831.5			3,603.5
Net incurred losses and LAE in respect of losses occurring in:
Current year		712.8			677.4
Prior years		(13.2	)		(6.5	)
Total incurred losses and LAE		699.6			670.9
Net payments of losses and LAE in respect of losses    occurring in:
Current year		175.3			181.0
Prior years		459.1			425.5
Total payments		634.4			606.5
Net reserve for losses and LAE, end of period		3,896.7			3,667.9
Reinsurance recoverable on unpaid losses		1,484.9			1,420.0
Gross reserve for losses and LAE, end of period	$	5,381.6		$	5,087.9

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New Accounting Pronouncements (Narrative) (Details) $ in Millions	Jan. 01, 2019 USD ($)
Accounting Standards Update No. 2018-02 [Member]
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Cumulative effect to increase assets and liabilities	$ 35.0
Accounting Standards Update 2017-08 [Member]
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Cumulative effect on retained earnings, net of tax	$ 1.5

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Discontinued Operations Chaucer Business (Narrative) (Details) - USD ($) $ in Millions			3 Months Ended
	Apr. 10, 2019	Feb. 14, 2019	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Revenues from the Chaucer business			$ 1,219.5	$ 1,091.5
Operating losses			109.8	93.3
Assets held-for-sale			103.6		$ 103.9
Liabilities held-for-sale			118.3		115.9
Assets Held-for-Sale [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Assets held-for-sale			23.6		57.4
Liabilities held-for-sale			12.0		$ 22.2
Chaucer Irish Entity[Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Proceeds from sale of businesses segment		$ 28.0
Australian Entities [Member] | Subsequent Event [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Cash proceeds to be received	$ 13.0
Chaucer [Member]
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Revenues from the Chaucer business			2.9	$ 239.4
Operating losses			$ 0.3

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Discontinued Operations Chaucer Business (Summary of Discontinued Chaucer Business) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenues
Premiums	$ 1,095.1	$ 1,042.5
Net investment income	70.2	66.0
Total revenues	1,219.5	1,091.5
Losses and operating expenses
Losses and loss adjustment expenses	699.6	670.9
Amortization of deferred acquisition costs	229.5	218.7
Other operating expenses	132.4	131.5
Total losses and expenses	1,070.9	1,032.4
Other items:
Interest expense	(9.4)	(11.3)
Net realized and unrealized investment losses	48.4	(23.4)
Chaucer [Member]
Revenues
Premiums		221.1
Net investment income		16.4
Other income		1.9
Total revenues	2.9	239.4
Losses and operating expenses
Losses and loss adjustment expenses		115.0
Amortization of deferred acquisition costs		69.3
Other operating expenses		32.2
Total losses and expenses		216.5
Income from Chaucer business before income taxes and other items (previously presented as Chaucer's operating income)		22.9
Other items:
Interest expense		(1.1)
Net realized and unrealized investment losses		(0.5)
Other income		0.2
Income from Chaucer business before income taxes		21.5
Income tax expense		(4.2)
Income from Chaucer business, net of income taxes	$ (0.3)	$ 17.3

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Discontinued Operations Chaucer Business (Summary of Cash Flows Associated with the Discontinued Chaucer Business) (Details) - Chaucer [Member] $ in Millions	3 Months Ended
	Mar. 31, 2018 USD ($)
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Net cash used in operating activities	$ (5.9)
Net cash provided by investing activities	$ 47.7

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Income Taxes (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Income Taxes [Line Items]
Federal income tax expense	$ 26.0	$ 8.6
Chaucer [Member]
Income Taxes [Line Items]
Income tax expense (benefit), discontinued operations		4.2
Chaucer [Member] | Federal [Member]
Income Taxes [Line Items]
Income tax expense (benefit), discontinued operations		5.9
Chaucer [Member] | Foreign [Member]
Income Taxes [Line Items]
Income tax expense (benefit), discontinued operations		$ (1.7)

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Investments (Schedule of Available-for-sale Fixed Maturities Reconciliation) (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 6,492.7	$ 6,245.9
Fair Value	6,559.4	6,161.5
Municipal [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	848.1	879.0
Gross Unrealized Gains	20.8	16.6
Gross Unrealized Loss	3.4	9.8
Fair Value	865.5	885.8
Fixed Maturities Excluding Held-For-Sale Chaucer [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		6,245.9
Gross Unrealized Gains		49.8
Gross Unrealized Loss		134.2
Fair Value		6,161.5
OTTI Unrealized Losses		6.6
Fixed Maturities Held-For-Sale [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		24.9
Gross Unrealized Loss		0.4
Fair Value		24.5
Fixed Maturities Including Held For Sale [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	6,492.7	6,270.8
Gross Unrealized Gains	108.7	49.8
Gross Unrealized Loss	42.0	134.6
Fair Value	6,559.4	6,186.0
OTTI Unrealized Losses	4.8	6.6
US Treasury and Government Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	404.5	414.7
Gross Unrealized Gains	4.7	2.4
Gross Unrealized Loss	2.5	7.2
Fair Value	406.7	409.9
Foreign Government [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	7.3	7.3
Gross Unrealized Gains	0.1	0.1
Fair Value	7.4	7.4
Corporate [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	3,635.7	3,476.6
Gross Unrealized Gains	66.3	26.1
Gross Unrealized Loss	27.4	92.0
Fair Value	3,674.6	3,410.7
OTTI Unrealized Losses	4.8	6.6
Residential Mortgage Backed [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	819.2	728.4
Gross Unrealized Gains	6.8	2.7
Gross Unrealized Loss	6.1	14.7
Fair Value	819.9	716.4
Commercial Mortgage Backed [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	684.9	648.4
Gross Unrealized Gains	9.4	1.7
Gross Unrealized Loss	2.4	9.8
Fair Value	691.9	640.3
Asset-backed [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	93.0	91.5
Gross Unrealized Gains	0.6	0.2
Gross Unrealized Loss	0.2	0.7
Fair Value	$ 93.4	$ 91.0

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Investments (Narrative) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Investments Debt And Equity Securities [Abstract]
Net unrealized gains on impaired securities	$ 7,400,000		$ 7,400,000
Other-than-temporary impairments on fixed maturities	$ 0	$ 900,000
Other-than-temporary impairments on fixed maturities recorded as unrealized losses in AOCI		300,000
Other-than-temporary impairments on fixed maturities recognized in earnings		$ 600,000

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Investments (Investments Classified by Contractual Maturity Date) (Details) $ in Millions	Mar. 31, 2019 USD ($)
Available-for-sale Securities, Debt Maturities [Abstract]
Due in one year or less, Amortized Cost	$ 249.2
Due after one year through five years, Amortized Cost	1,969.6
Due after five years through ten years, Amortized Cost	2,407.4
Due after ten years, Amortized Cost	269.4
Gross fixed maturities, Amortized Cost	4,895.6
Mortgage-backed and asset-backed securities, Amortized Cost	1,597.1
Total fixed maturities, Amortized Cost	6,492.7
Due in one year or less, Fair Value	250.9
Due after one year through five years, Fair Value	2,001.6
Due after five years through ten years, Fair Value	2,423.2
Due after ten years, Fair Value	278.5
Gross fixed maturities, Fair Value	4,954.2
Mortgage-backed and asset-backed securities, Fair Value	1,605.2
Total fixed maturities, Fair Value	$ 6,559.4

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Investments (Schedule of Unrealized Loss on Investments) (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Schedule of Available-for-sale Securities [Line Items]
12 months or less, Gross Unrealized Losses	$ 1.2
12 months or less, Fair Value	44.5
Greater than 12 months, Gross Unrealized Losses	40.8
Greater than 12 months, Fair Value	2,031.6
Total, Gross Unrealized Losses	42.0
Total, Fair Value	2,076.1
Investment grade [Member]
Schedule of Available-for-sale Securities [Line Items]
12 months or less, Gross Unrealized Losses	0.9	$ 38.3
12 months or less, Fair Value	27.4	1,992.4
Greater than 12 months, Gross Unrealized Losses	34.3	77.8
Greater than 12 months, Fair Value	1,955.9	1,758.5
Total, Gross Unrealized Losses	35.2	116.1
Total, Fair Value	1,983.3	3,750.9
Below Investment Grade [Member]
Schedule of Available-for-sale Securities [Line Items]
12 months or less, Gross Unrealized Losses		8.1
12 months or less, Fair Value		185.6
Greater than 12 months, Gross Unrealized Losses		10.0
Greater than 12 months, Fair Value		54.9
Total, Gross Unrealized Losses		18.1
Total, Fair Value		240.5
Fixed Maturities Excluding Held-For-Sale Chaucer [Member]
Schedule of Available-for-sale Securities [Line Items]
12 months or less, Gross Unrealized Losses		46.4
12 months or less, Fair Value		2,178.0
Greater than 12 months, Gross Unrealized Losses		87.8
Greater than 12 months, Fair Value		1,813.4
Total, Gross Unrealized Losses		134.2
Total, Fair Value		3,991.4
Fixed Maturities Held-For-Sale [Member]
Schedule of Available-for-sale Securities [Line Items]
12 months or less, Gross Unrealized Losses		0.1
12 months or less, Fair Value		4.0
Greater than 12 months, Gross Unrealized Losses		0.3
Greater than 12 months, Fair Value		18.0
Total, Gross Unrealized Losses		0.4
Total, Fair Value		22.0
Fixed Maturities Including Held For Sale [Member]
Schedule of Available-for-sale Securities [Line Items]
12 months or less, Gross Unrealized Losses		46.5
12 months or less, Fair Value		2,182.0
Greater than 12 months, Gross Unrealized Losses		88.1
Greater than 12 months, Fair Value		1,831.4
Total, Gross Unrealized Losses		134.6
Total, Fair Value		4,013.4
US Treasury and Government Agencies [Member] | Investment grade [Member]
Schedule of Available-for-sale Securities [Line Items]
12 months or less, Gross Unrealized Losses		1.1
12 months or less, Fair Value		66.0
Greater than 12 months, Gross Unrealized Losses	2.5	6.1
Greater than 12 months, Fair Value	158.4	210.9
Total, Gross Unrealized Losses	2.5	7.2
Total, Fair Value	158.4	276.9
Foreign Government [Member] | Investment grade [Member]
Schedule of Available-for-sale Securities [Line Items]
12 months or less, Fair Value		2.0
Greater than 12 months, Fair Value	0.8	0.8
Total, Fair Value	0.8	2.8
Municipal [Member] | Investment grade [Member]
Schedule of Available-for-sale Securities [Line Items]
12 months or less, Gross Unrealized Losses		0.8
12 months or less, Fair Value	9.7	110.0
Greater than 12 months, Gross Unrealized Losses	3.4	9.0
Greater than 12 months, Fair Value	192.3	248.0
Total, Gross Unrealized Losses	3.4	9.8
Total, Fair Value	202.0	358.0
Municipal [Member] | Below Investment Grade [Member]
Schedule of Available-for-sale Securities [Line Items]
Greater than 12 months, Fair Value		0.9
Total, Fair Value		0.9
Corporate [Member] | Investment grade [Member]
Schedule of Available-for-sale Securities [Line Items]
12 months or less, Gross Unrealized Losses	0.9	30.0
12 months or less, Fair Value	15.3	1,277.9
Greater than 12 months, Gross Unrealized Losses	19.7	43.9
Greater than 12 months, Fair Value	993.2	781.6
Total, Gross Unrealized Losses	20.6	73.9
Total, Fair Value	1,008.5	2,059.5
Corporate [Member] | Below Investment Grade [Member]
Schedule of Available-for-sale Securities [Line Items]
12 months or less, Gross Unrealized Losses	0.3	8.1
12 months or less, Fair Value	17.1	185.6
Greater than 12 months, Gross Unrealized Losses	6.5	10.0
Greater than 12 months, Fair Value	75.7	54.0
Total, Gross Unrealized Losses	6.8	18.1
Total, Fair Value	92.8	239.6
Residential Mortgage Backed [Member] | Investment grade [Member]
Schedule of Available-for-sale Securities [Line Items]
12 months or less, Gross Unrealized Losses		2.6
12 months or less, Fair Value	2.1	201.2
Greater than 12 months, Gross Unrealized Losses	6.1	12.1
Greater than 12 months, Fair Value	352.6	323.7
Total, Gross Unrealized Losses	6.1	14.7
Total, Fair Value	354.7	524.9
Commercial Mortgage Backed [Member] | Investment grade [Member]
Schedule of Available-for-sale Securities [Line Items]
12 months or less, Gross Unrealized Losses		3.4
12 months or less, Fair Value	0.3	293.0
Greater than 12 months, Gross Unrealized Losses	2.4	6.4
Greater than 12 months, Fair Value	226.7	175.5
Total, Gross Unrealized Losses	2.4	9.8
Total, Fair Value	227.0	468.5
Asset-backed [Member] | Investment grade [Member]
Schedule of Available-for-sale Securities [Line Items]
12 months or less, Gross Unrealized Losses		0.4
12 months or less, Fair Value		42.3
Greater than 12 months, Gross Unrealized Losses	0.2	0.3
Greater than 12 months, Fair Value	31.9	18.0
Total, Gross Unrealized Losses	0.2	0.7
Total, Fair Value	$ 31.9	$ 60.3

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Investments (Schedule of Realized Gain (Loss)) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Fixed Maturities Excluding Held-For-Sale Chaucer [Member]
Gain (Loss) on Investments [Line Items]
Proceeds from Sales	$ 60.1	$ 57.1
Gross Gains	1.0	0.2
Gross Losses	1.5	1.7
Fixed Maturities Held-For-Sale [Member]
Gain (Loss) on Investments [Line Items]
Proceeds from Sales	0.3	70.7
Gross Gains		0.4
Gross Losses		0.6
Fixed Maturities Including Held For Sale [Member]
Gain (Loss) on Investments [Line Items]
Proceeds from Sales	60.4	127.8
Gross Gains	1.0	0.6
Gross Losses	$ 1.5	$ 2.3

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Investments (Rollforward of Cumulative Amounts Related to Credit Loss Portion of OTTI Losses) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward]
Credit losses as of the beginning of the period	$ 3.8	$ 3.6
Credit losses on securities for which an OTTI was not previously recognized		0.2
Reductions for securities sold, matured or called	(0.5)	(0.7)
Credit losses as of the end of the period	$ 3.3	$ 3.1

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Investments (Schedule of Pre-tax Realized and Unrealized Gains and Losses on Equity Securities From Continuing Operations) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Investments Debt And Equity Securities [Abstract]
Net gains (losses) recognized during the period	$ 48.6	$ (22.9)
Less: net gains recognized on equity securities sold during the period	1.1	0.5
Net unrealized gains (losses) recognized during the period on equity securities still held	$ 47.5	$ (23.4)

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Fair Value (Fair Value of Financial Instruments) (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Carrying Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	$ 168.5	$ 1,020.7
Total financial instruments, excluding held-for-sale	7,834.4	8,236.0
Total financial instruments	7,837.2	8,263.8
Carrying Value [Member] | Chaucer [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial instruments, held-for-sale (Chaucer)	2.8	27.8
Estimated Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	168.5	1,020.7
Total financial instruments, excluding held-for-sale	7,838.6	8,240.5
Total financial instruments	7,841.4	8,268.3
Debt	694.2	825.0
Estimated Fair Value [Member] | Chaucer [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial instruments, held-for-sale (Chaucer)	2.8	27.8
Income Approach Valuation Technique [Member] | Carrying Value [Member] | Fair Value Through AOCI [Member] | Debt Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of investments	6,559.4	6,161.5
Income Approach Valuation Technique [Member] | Carrying Value [Member] | Fair Value Through Net Income [Member] | Other Investments [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of investments	180.3	175.0
Income Approach Valuation Technique [Member] | Carrying Value [Member] | Fair Value Through Net Income [Member] | Equity Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of investments	504.7	464.4
Income Approach Valuation Technique [Member] | Estimated Fair Value [Member] | Fair Value Through AOCI [Member] | Debt Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of investments	6,559.4	6,161.5
Income Approach Valuation Technique [Member] | Estimated Fair Value [Member] | Fair Value Through Net Income [Member] | Other Investments [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of investments	180.3	175.0
Income Approach Valuation Technique [Member] | Estimated Fair Value [Member] | Fair Value Through Net Income [Member] | Equity Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of investments	504.7	464.4
Cost Approach Valuation Technique [Member] | Carrying Value [Member] | Amortized Cost/Cost [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	168.5	1,020.7
Debt	653.0	777.9
Cost Approach Valuation Technique [Member] | Carrying Value [Member] | Amortized Cost/Cost [Member] | Other Investments [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of investments	421.5	414.4
Cost Approach Valuation Technique [Member] | Estimated Fair Value [Member] | Amortized Cost/Cost [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	168.5	1,020.7
Debt	694.2	825.0
Cost Approach Valuation Technique [Member] | Estimated Fair Value [Member] | Amortized Cost/Cost [Member] | Other Investments [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of investments	$ 425.7	$ 418.9

XML

Fair Value (Fair Value,Investment Assets Measured on Recurring Basis) (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	$ 6,559.4	$ 6,161.5
Equity securities	504.7	464.4
Other investments	680.4	661.5
Municipal [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	865.5	885.8
Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity securities	1.1	1.1
Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	6,559.4	6,161.5
Equity securities	504.7	464.4
Other investments	3.5	3.5
Total investment assets at fair value, excluding held-for-sale	7,067.6	6,653.9
Investment assets, held-for-sale		24.5
Fair Value, Measurements, Recurring [Member] | Chaucer [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investment assets at fair value, excluding held-for-sale (Chaucer)		6,629.4
Fair Value, Measurements, Recurring [Member] | U.S. Treasury And Government Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	406.7	409.9
Fair Value, Measurements, Recurring [Member] | Foreign Government [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	7.4	7.4
Fair Value, Measurements, Recurring [Member] | Municipal [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	865.5	885.8
Fair Value, Measurements, Recurring [Member] | Corporate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	3,674.6	3,410.7
Fair Value, Measurements, Recurring [Member] | Residential Mortgage Backed Securities U S Agency Backed [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	817.2	713.7
Fair Value, Measurements, Recurring [Member] | Residential Mortgage Backed [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	2.7	2.7
Fair Value, Measurements, Recurring [Member] | Commercial Mortgage Backed [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	691.9	640.3
Fair Value, Measurements, Recurring [Member] | Asset-backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	93.4	91.0
Fair Value, Measurements, Recurring [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	159.3	154.9
Equity securities	503.6	463.3
Total investment assets at fair value, excluding held-for-sale	662.9	623.9
Investment assets, held-for-sale		5.7
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | Chaucer [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investment assets at fair value, excluding held-for-sale (Chaucer)		618.2
Fair Value, Measurements, Recurring [Member] | Level 1 [Member] | U.S. Treasury And Government Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	159.3	154.9
Fair Value, Measurements, Recurring [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	6,366.1	5,971.6
Total investment assets at fair value, excluding held-for-sale	6,366.1	5,990.4
Investment assets, held-for-sale		18.8
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Chaucer [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investment assets at fair value, excluding held-for-sale (Chaucer)		5,971.6
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | U.S. Treasury And Government Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	247.4	255.0
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Foreign Government [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	7.4	7.4
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Municipal [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	845.0	864.7
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Corporate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	3,673.9	3,409.9
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Residential Mortgage Backed Securities U S Agency Backed [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	817.2	713.7
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Residential Mortgage Backed [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	2.7	2.7
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Commercial Mortgage Backed [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	679.1	627.2
Fair Value, Measurements, Recurring [Member] | Level 2 [Member] | Asset-backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	93.4	91.0
Fair Value, Measurements, Recurring [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	34.0	35.0
Equity securities	1.1	1.1
Other investments	3.5	3.5
Total investment assets at fair value, excluding held-for-sale	38.6	39.6
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | Chaucer [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total investment assets at fair value, excluding held-for-sale (Chaucer)		39.6
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | Municipal [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	20.5	21.1
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | Corporate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	0.7	0.8
Fair Value, Measurements, Recurring [Member] | Level 3 [Member] | Commercial Mortgage Backed [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed maturities	$ 12.8	$ 13.1

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Fair Value (Narrative) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Fair Value Measurements [Line Items]
Investments measured at net asset value based on an ownership interest in partners'	2.00%		2.00%
Transfer between Level 2 and Level 3	$ 0	$ 0
Fair Value Measured Using NAV [Member] | Limited Partnerships Interest [Member]
Fair Value Measurements [Line Items]
Investments measured at fair value using net asset value	176,800,000		$ 171,500,000
Level 3 [Member]
Fair Value Measurements [Line Items]
Investments measured at fair value using net asset value	3,500,000		$ 3,500,000
Liabilities held	$ 0	$ 0

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Fair Value (Estimated Fair Values of Financial Instruments Not Carried at Fair Value) (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Equity securities	$ 504.7	$ 464.4
Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Equity securities	1.1	1.1
Other investments	3.5	3.5
Carrying Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	168.5	1,020.7
Estimated Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	168.5	1,020.7
Total financial instruments, excluding held-for-sale	594.2	1,439.6
Total financial instruments	597.0	1,442.9
Other investments	425.7	418.9
Debt	694.2	825.0
Estimated Fair Value [Member] | Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	168.5	1,020.7
Total financial instruments, excluding held-for-sale	168.5	1,020.7
Total financial instruments	171.3	1,024.0
Estimated Fair Value [Member] | Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total financial instruments, excluding held-for-sale	1.8	8.7
Total financial instruments	1.8	8.7
Other investments	1.8	8.7
Debt	694.2	825.0
Estimated Fair Value [Member] | Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total financial instruments, excluding held-for-sale	423.9	410.2
Total financial instruments	423.9	410.2
Other investments	423.9	410.2
Estimated Fair Value [Member] | Chaucer [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial instruments, held-for-sale (Chaucer)	2.8	3.3
Estimated Fair Value [Member] | Chaucer [Member] | Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial instruments, held-for-sale (Chaucer)	$ 2.8	$ 3.3

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Fair Value (Fair Value on Recurring Basis Using Significant Unobservable Inputs (Level 3)) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning Balance	$ 39.6
Included in total net realized and unrealized investment gains	0.1	$ 0.1
Included in other comprehensive income-net appreciation on available-for-sale securities	0.4	(0.7)
Sales	(1.5)	(1.7)
Ending Balance	38.6	42.1
Chaucer [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning Balance		44.4
Municipal [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning Balance	21.1
Included in total net realized and unrealized investment gains	0.1	0.1
Included in other comprehensive income-net appreciation on available-for-sale securities	0.2	(0.5)
Sales	(0.9)	(1.1)
Ending Balance	20.5	23.1
Municipal [Member] | Chaucer [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning Balance		24.6
Corporate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning Balance	0.8
Sales	(0.1)	(0.1)
Ending Balance	0.7	0.8
Corporate [Member] | Chaucer [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning Balance		0.9
Commercial Mortgage Backed [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning Balance	13.1
Included in other comprehensive income-net appreciation on available-for-sale securities	0.2	(0.2)
Sales	(0.5)	(0.5)
Ending Balance	12.8	13.5
Commercial Mortgage Backed [Member] | Chaucer [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning Balance		14.2
Fixed Maturities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning Balance	35.0
Included in total net realized and unrealized investment gains	0.1	0.1
Included in other comprehensive income-net appreciation on available-for-sale securities	0.4	(0.7)
Sales	(1.5)	(1.7)
Ending Balance	34.0	37.4
Fixed Maturities [Member] | Chaucer [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning Balance		39.7
Equity Securities and Other Investments [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning Balance	4.6
Ending Balance	$ 4.6	4.7
Equity Securities and Other Investments [Member] | Chaucer [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Beginning Balance		$ 4.7

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Fair Value (Schedule of Additional Information About Significant Unobservable Inputs Used in Fair Valuations of Level 3 Assets) (Details) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Fair Value [Line Items]
Fair Value	$ 6,559.4	$ 6,161.5
Equity securities, at fair value	504.7	464.4
Level 3 [Member]
Fair Value [Line Items]
Equity securities, at fair value	$ 1.1	$ 1.1
Equity Securities, FV-NI, Valuation Technique [Extensible List]	us-gaap:MarketApproachValuationTechniqueMember	us-gaap:MarketApproachValuationTechniqueMember
Equity Securities, FV-NI, Measurement Input [Extensible List]	thg:MeasurementInputNetTangibleAssetMarketMultipleMember	thg:MeasurementInputNetTangibleAssetMarketMultipleMember
Other investments	$ 3.5	$ 3.5
Alternative Investment, Valuation Technique [Extensible List]	us-gaap:ValuationTechniqueDiscountedCashFlowMember	us-gaap:ValuationTechniqueDiscountedCashFlowMember
Alternative Investment, Measurement Input [Extensible List]	us-gaap:MeasurementInputDiscountRateMember	us-gaap:MeasurementInputDiscountRateMember
Fair value measurement market multiples	1.0	1.0
Range	0.180	0.180
Level 3 [Member] | Weighted Average [Member]
Fair Value [Line Items]
Fair value measurement market multiples	1.0	1.0
Range	0.180	0.180
Municipal [Member]
Fair Value [Line Items]
Fair Value	$ 865.5	$ 885.8
Municipal [Member] | Discounted cash flow [Member] | Level 3 [Member]
Fair Value [Line Items]
Fair Value	$ 20.5	$ 21.1
Municipal [Member] | Discounted cash flow [Member] | Level 3 [Member] | Measurement Input Discount For Credit Stress [Member]
Fair Value [Line Items]
Small issue size	1.30%	1.30%
Municipal [Member] | Discounted cash flow [Member] | Level 3 [Member] | Minimum [Member] | Measurement Input, Discount for Small Issue Size [Member]
Fair Value [Line Items]
Small issue size	0.70%	0.70%
Municipal [Member] | Discounted cash flow [Member] | Level 3 [Member] | Minimum [Member] | Measurement Input, Discount For Above-market coupon [Member]
Fair Value [Line Items]
Small issue size	0.30%	0.30%
Municipal [Member] | Discounted cash flow [Member] | Level 3 [Member] | Maximum [Member] | Measurement Input, Discount for Small Issue Size [Member]
Fair Value [Line Items]
Small issue size	6.80%	6.80%
Municipal [Member] | Discounted cash flow [Member] | Level 3 [Member] | Maximum [Member] | Measurement Input, Discount For Above-market coupon [Member]
Fair Value [Line Items]
Small issue size	0.50%	0.50%
Municipal [Member] | Discounted cash flow [Member] | Level 3 [Member] | Weighted Average [Member] | Measurement Input, Discount for Small Issue Size [Member]
Fair Value [Line Items]
Small issue size	3.30%	3.40%
Municipal [Member] | Discounted cash flow [Member] | Level 3 [Member] | Weighted Average [Member] | Measurement Input Discount For Credit Stress [Member]
Fair Value [Line Items]
Small issue size	1.30%	1.30%
Municipal [Member] | Discounted cash flow [Member] | Level 3 [Member] | Weighted Average [Member] | Measurement Input, Discount For Above-market coupon [Member]
Fair Value [Line Items]
Small issue size	0.50%	0.50%
Corporate [Member] | Discounted cash flow [Member] | Level 3 [Member]
Fair Value [Line Items]
Fair Value	$ 0.7	$ 0.8
Corporate [Member] | Discounted cash flow [Member] | Level 3 [Member] | Measurement Input, Discount Rate [Member]
Fair Value [Line Items]
Small issue size	2.50%	2.50%
Above-market coupon	0.30%	0.30%
Corporate [Member] | Discounted cash flow [Member] | Level 3 [Member] | Weighted Average [Member] | Measurement Input, Discount Rate [Member]
Fair Value [Line Items]
Small issue size	2.50%	2.50%
Above-market coupon	0.30%	0.30%
Commercial Mortgage Backed [Member] | Discounted cash flow [Member] | Level 3 [Member]
Fair Value [Line Items]
Fair Value	$ 12.8	$ 13.1
Commercial Mortgage Backed [Member] | Discounted cash flow [Member] | Level 3 [Member] | Measurement Input, Discount For Above-market coupon [Member]
Fair Value [Line Items]
Small issue size	0.50%	0.50%
Commercial Mortgage Backed [Member] | Discounted cash flow [Member] | Level 3 [Member] | Measurement Input, Discount For Lease Structure [Member]
Fair Value [Line Items]
Small issue size	0.30%	0.30%
Commercial Mortgage Backed [Member] | Discounted cash flow [Member] | Level 3 [Member] | Minimum [Member] | Measurement Input, Discount for Small Issue Size [Member]
Fair Value [Line Items]
Small issue size	1.90%	1.90%
Commercial Mortgage Backed [Member] | Discounted cash flow [Member] | Level 3 [Member] | Maximum [Member] | Measurement Input, Discount for Small Issue Size [Member]
Fair Value [Line Items]
Small issue size	3.10%	3.10%
Commercial Mortgage Backed [Member] | Discounted cash flow [Member] | Level 3 [Member] | Weighted Average [Member] | Measurement Input, Discount for Small Issue Size [Member]
Fair Value [Line Items]
Small issue size	2.70%	2.70%
Commercial Mortgage Backed [Member] | Discounted cash flow [Member] | Level 3 [Member] | Weighted Average [Member] | Measurement Input, Discount For Above-market coupon [Member]
Fair Value [Line Items]
Small issue size	0.50%	0.50%
Commercial Mortgage Backed [Member] | Discounted cash flow [Member] | Level 3 [Member] | Weighted Average [Member] | Measurement Input, Discount For Lease Structure [Member]
Fair Value [Line Items]
Small issue size	0.30%	0.30%

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Pension and Other Postretirement Benefit Plans (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Pension Plans [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Interest cost	$ 5.3	$ 4.9
Expected return on plan assets	(5.8)	(5.2)
Recognized net actuarial loss	2.8	2.5
Net periodic pension cost	2.3	2.2
Postretirement Plans [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Interest cost	0.1	0.1
Recognized net actuarial loss		0.1
Amortization of prior service cost		(0.1)
Net periodic pension cost	$ 0.1	$ 0.1

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Other Comprehensive Income (Changes in Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Equity [Abstract]
Unrealized gains (losses) arising during period, Pre-Tax	$ 152.0	$ (153.7)
Amount of realized gains (losses) from sales and other, Pre-Tax	0.3	0.2
Portion of other-than-temporary impairment losses recognized in earnings, Pre-Tax		0.5
Net unrealized gains (losses), Pre-Tax	152.3	(153.0)
Net change in net actuarial loss and prior service cost, Pre-Tax	2.9	(2.9)
Foreign currency translation recognized during the period, Pre-Tax	0.1	(0.6)
Other comprehensive (loss) income, Pre-Tax	155.3	(156.5)
Unrealized gains (losses) arising during period, Tax Benefit (Expense)	(32.0)	32.1
Amount of realized gains (losses) from sales and other, Tax Benefit (Expense)	(3.9)	(2.5)
Portion of other-than-temporary impairment losses recognized in earnings, Tax Benefit (Expense)		(0.1)
Net unrealized gains, Tax Benefit (Expense)	(35.9)	29.5
Net change in net actuarial loss and prior service cost, Tax Benefit (Expense)	(0.6)	0.6
Foreign currency translation recognized during the period, Tax Benefit (Expense)		0.1
Other comprehensive (loss) income, Tax Benefit (Expense)	(36.5)	30.2
Unrealized gains (losses) arising during period, Net of Tax	120.0	(121.6)
Amount of realized gains (losses) from sales and other, Net of Tax	(3.6)	(2.3)
Portion of other-than-temporary impairment losses recognized in earnings, Net of Tax		0.4
Total available-for-sale securities	116.4	(123.5)
Net change in net actuarial loss and prior service cost, Net of Tax	2.3	(2.3)
Foreign currency translation recognized during the period, Net of Tax	0.1	(0.5)
Total other comprehensive income (loss), net of tax	$ 118.8	$ (126.3)

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Other Comprehensive Income (Reclassifications out of Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net realized gains (losses) from sales and other	$ (0.4)	$ 0.6
Net other–than–temporary impairment losses on investments recognized in earnings		(0.6)
Income from continuing operations before income taxes	148.6	59.1
Loss adjustment expenses and other operating expenses	(1,070.9)	(1,032.4)
Tax benefit	(26.0)	(8.6)
Continued operations; net of tax	122.6	50.5
Net of tax	122.4	67.7
Chaucer [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Loss adjustment expenses and other operating expenses		(216.5)
Discontinued operations - Chaucer business	(0.3)	17.3
Reclassification out of Accumulated Other Comprehensive Income [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net of tax	1.3	(0.1)
Reclassification out of Accumulated Other Comprehensive Income [Member] | Net Unrealized Appreciation (Depreciation) on Investments [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net realized gains (losses) from sales and other	(0.3)
Net other–than–temporary impairment losses on investments recognized in earnings		(0.6)
Income from continuing operations before income taxes	(0.3)	(0.6)
Tax benefit	3.9	2.7
Continued operations; net of tax	3.6	2.1
Net of tax	3.6	1.9
Reclassification out of Accumulated Other Comprehensive Income [Member] | Net Unrealized Appreciation (Depreciation) on Investments [Member] | Chaucer [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Discontinued operations - Chaucer business		(0.2)
Reclassification out of Accumulated Other Comprehensive Income [Member] | Defined Benefit Pension and Postretirement Plans [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Loss adjustment expenses and other operating expenses	(2.9)	(2.5)
Tax benefit	0.6	0.5
Continued operations; net of tax	$ (2.3)	$ (2.0)

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Other Comprehensive Income (Reclassifications out of Accumulated Other Comprehensive Income) (Parenthetical) (Details) - Defined Benefit Pension and Postretirement Plans [Member]	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Comprehensive Income (Loss) [Line Items]
Loss Adjustment Expense	40.00%	40.00%
Percentage Of Other Operating Expenses	60.00%	60.00%

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Segment Information (Narrative) (Details)	3 Months Ended
	Mar. 31, 2019 segment
Segment Reporting [Abstract]
Operating segments	3

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Segment Information (Financial Information with Respect to Business Segments) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Segment Reporting Information [Line Items]
Operating revenues	$ 1,171.3	$ 1,114.4
Net realized and unrealized investment gains (losses)	48.2	(22.9)
Total revenues	1,219.5	1,091.5
Net investment income	70.2	66.0
Operating income (loss) before interest expense and income taxes	109.8	93.3
Interest on debt	(9.4)	(11.3)
Operating income before income taxes	100.4	82.0
Income from continuing operations before income taxes	148.6	59.1
Commercial Lines [Member]
Segment Reporting Information [Line Items]
Operating revenues	698.7	676.6
Underwriting income (loss)	36.7	16.3
Net investment income	44.3	45.3
Other income (expense)	(0.8)	(0.2)
Operating income (loss) before interest expense and income taxes	80.2	61.4
Personal Lines [Member]
Segment Reporting Information [Line Items]
Operating revenues	465.2	434.9
Underwriting income (loss)	5.7	14.6
Net investment income	19.7	18.4
Other income (expense)	1.4	1.3
Operating income (loss) before interest expense and income taxes	26.8	34.3
Other (including eliminations) [Member]
Segment Reporting Information [Line Items]
Operating revenues	7.4	2.9
Underwriting income (loss)	(0.3)	(1.0)
Net investment income	6.2	2.3
Other expense	(3.1)	(3.7)
Operating income (loss) before interest expense and income taxes	$ 2.8	$ (2.4)

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Segment Information (Identifiable Assets by Business Segment) (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Segment Reporting Information [Line Items]
Identifiable assets	$ 11,983.4	$ 12,399.7
Identifiable assets	103.6	103.9
Assets Held-for-Sale [Member]
Segment Reporting Information [Line Items]
Identifiable assets	23.6	57.4
Assets of Discontinued Operations [Member]
Segment Reporting Information [Line Items]
Identifiable assets	103.6	103.9
U.S. Companies [Member]
Segment Reporting Information [Line Items]
Identifiable assets	$ 11,856.2	$ 12,238.4

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Stock-based Compensation (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense, net of taxes	$ 3.3	$ 2.0
Market-based awards [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Granted, Shares	23,924	29,715
Vesting period	3 years
Performance And Market-Based Restricted Stock Units [Member] | Minimum [Member] | Senior management [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Performance metric, potential range	0.00%
Performance And Market-Based Restricted Stock Units [Member] | Maximum [Member] | Senior management [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Performance metric, potential range	150.00%
Market-Based Restricted Stock Units [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Granted, Shares	5,820	3,115
Increase as grant in period, percentage	100.00%
Performance-based restricted stock units [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Granted, Shares	0	0
Performance metric achieved	100.00%
Performance-based restricted stock units [Member] | Minimum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Performance metric, potential range	0.00%
Performance-based restricted stock units [Member] | Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Performance metric, potential range	150.00%
Chaucer [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation expense, net of taxes		$ 0.4
2014 Stock Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares available for grant	3,506,780
ESPP Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares available for grant	2,369,081

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Stock-based Compensation (Compensation Cost and Related Tax Benefits) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Stock-based compensation expense	$ 4.2	$ 2.5
Tax benefit	(0.9)	(0.5)
Stock-based compensation expense, net of taxes	$ 3.3	$ 2.0

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Stock-based Compensation (Summary of Stock Option Activity) (Details) - $ / shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Shares
Outstanding, beginning of period, Shares	1,099,076	1,062,177
Granted, Shares	232,568	291,390
Exercised, Shares	(64,017)	(84,353)
Forfeited or cancelled, Shares	(3,141)	(50,491)
Outstanding, end of period, Shares	1,264,486	1,218,723
Weighted Average Exercise Price
Outstanding, beginning of period, Weighted Average Exercise Price	$ 85.75	$ 75.53
Granted, Weighted Average Exercise Price	95.05	110.58
Exercised, Weighted Average Exercise Price	75.98	70.31
Forfeited or cancelled, Weighted Average Exercise Price	95.39	88.48
Outstanding, end of period, Weighted Average Exercise Price	$ 87.93	$ 83.73

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Stock-based Compensation (Summary of Restricted Stock Activity) (Details) - $ / shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Time-Based Restricted Stock Units [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Outstanding, beginning of period, Shares	332,481	298,528
Granted, Shares	144,072	131,290
Vested, Shares	(99,855)	(50,810)
Forfeited, Shares	(8,687)	(10,585)
Outstanding, end of period, Shares	368,011	368,423
Outstanding, beginning of period, Weighted Average Grant Date Fair Value	$ 97.28	$ 83.45
Granted, Weighted Average Grant Date Fair Value	117.51	110.60
Vested, Weighted Average Grant Date Fair Value	83.25	70.24
Forfeited, Weighted Average Grant Date Fair Value	97.14	87.47
Outstanding, end of period, Weighted Average Grant Date Fair Value	$ 109.01	$ 94.83
Performance-Based and Market-Based Restricted Stock Units [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Outstanding, beginning of period, Shares	69,838	102,586
Granted, Shares	42,119	29,715
Vested, Shares	(10,089)	(14,032)
Forfeited, Shares		(7,625)
Outstanding, end of period, Shares	101,868	110,644
Outstanding, beginning of period, Weighted Average Grant Date Fair Value	$ 95.58	$ 81.21
Granted, Weighted Average Grant Date Fair Value	117.68	116.82
Vested, Weighted Average Grant Date Fair Value	82.74	70.24
Forfeited, Weighted Average Grant Date Fair Value		81.91
Outstanding, end of period, Weighted Average Grant Date Fair Value	$ 105.99	$ 92.12

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Earnings Per Share and Shareholders' Equity Transactions (Information Regarding Basic and Diluted Earnings Per Share) (Details) - $ / shares shares in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Basic shares used in the calculation of earnings per share	40.6	42.5
Diluted shares used in the calculation of earnings per share	41.2	43.1
Per share effect of dilutive securities on income from continuing operations and net income	$ (0.04)	$ (0.02)
Employee Stock Option [Member]
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Dilutive effect of securities	0.3	0.3
Non-Vested Stock Grants [Member]
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Dilutive effect of securities	0.3	0.3

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Earnings Per Share and Shareholders' Equity Transactions (Narrative) (Details) - USD ($) shares in Millions		3 Months Ended
	Jan. 02, 2019	Jun. 30, 2019	Mar. 31, 2019	Mar. 31, 2018	Dec. 30, 2018
Class Of Stock [Line Items]
Antidilutive securities excluded from calculation of earnings per share			0.2	0.3
Amount paid by company	$ 250,000,000
Initial delivery of shares of common stock received	1.8
Accelerated Share Repurchase Agreement [Member]
Class Of Stock [Line Items]
Shares repurchased under repurchase agreement, percentage	80.00%
Accelerated Share Repurchase Agreement [Member] | Scenario Forecast[Member]
Class Of Stock [Line Items]
Shares repurchased under repurchase agreement, percentage		20.00%
Maximum [Member] | Accelerated Share Repurchase Agreement [Member]
Class Of Stock [Line Items]
Repurchases common stock, authorized					$ 600,000,000

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Liabilities For Outstanding Claims, Losses And Loss Adjustment Expenses (Schedule of Liability for Unpaid Losses and Loss Adjustment Expenses) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Insurance [Abstract]
Gross loss and LAE reserves, beginning of period	$ 5,304.1	$ 5,058.5
Reinsurance recoverable on unpaid losses, beginning of period	1,472.6	1,455.0
Net loss and LAE reserves, beginning of period	3,831.5	3,603.5
Net incurred losses and LAE in respect of losses occurring in current year	712.8	677.4
Net incurred losses and LAE in respect of losses occurring in prior years	(13.2)	(6.5)
Total incurred losses and LAE	699.6	670.9
Net payments of losses and LAE in respect of losses occurring in Current year	175.3	181.0
Net payments of losses and LAE in respect of losses occurring in Prior years	459.1	425.5
Total payments	634.4	606.5
Net reserve for losses and LAE, end of period	3,896.7	3,667.9
Reinsurance recoverable on unpaid losses, end of Period	1,484.9	1,420.0
Gross reserve for losses and LAE, end of period	$ 5,381.6	$ 5,087.9

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Liabilities For Outstanding Claims, Losses And Loss Adjustment Expenses (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Insurance [Abstract]
(Favorable) unfavorable loss and LAE development	$ (13.2)	$ (6.5)

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Commitments and Contingencies (Narrative) (Details)		1 Months Ended	3 Months Ended
	Dec. 11, 2009 plaintiff claim	Nov. 30, 2015 claim	Mar. 31, 2019
Commitments And Contingencies Disclosure [Abstract]
Participant's retirement age			65 years
Number of plaintiffs | plaintiff	2
New claims	2	3
Claims Dismissed		2

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Other Items - Additional Information (Details) $ in Millions	Jan. 02, 2019 USD ($)
Federal Home Loan Banks [Abstract]
Prepayment fees	$ 26
FHLB Interest rate	5.50%
Repayment of FHLB advance	$ 125
FHLB due date	2029

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Subsequent Events (Narrative) (Details) $ in Millions	Apr. 10, 2019 USD ($)
Australian Entities [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Cash proceeds to be received	$ 13