UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.    )

Filed by the Registrant  x

Filed by a Party other than the Registrant  ¨

Check the appropriate box:

The Hanover Insurance Group, Inc.

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

THE HANOVER INSURANCE GROUP, INC.

Notice of Annual Meeting

and Proxy Statement

Annual Meeting

of Shareholders

to be held

May 19, 201524, 2016

Corporate Headquarters

440 Lincoln Street

Worcester, Massachusetts 01653

THE HANOVER INSURANCE GROUP, INC.

440 Lincoln Street

Worcester, Massachusetts 01653

		Letter to our Shareholders from Frederick H. Eppinger, our President and Chief Executive Officer

April 2, 20157, 2016

TO OUR SHAREHOLDERS:

You are cordially invited to attend the Annual Meeting of Shareholders of The Hanover Insurance Group, Inc. to be held on Tuesday, May 19, 2015,24, 2016, at 9:00 a.m. local time, at the Company’s headquarters in Worcester, Massachusetts.

We have chosen to furnish proxy materials to our shareholders via the Internet. We believe that doing so provides our shareholders with the information they need, while lowering the costs of printing and delivery and reducing the environmental impact of our Annual Meeting.

The accompanying Notice and Proxy Statement describe in detail the matters to be acted on at the Annual Meeting. Your vote is important. Whether or not you plan to attend the Annual Meeting, we hope that you will vote as soon as possible. Please review the instructions concerning each of your voting options described in the accompanying Proxy Statement. Your cooperation will assure that your shares are voted and will also greatly assist us in preparing for the Annual Meeting.

Sincerely,

Frederick H. Eppinger

President and Chief Executive Officer

THE HANOVER INSURANCE GROUP, INC.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON MAY 19, 201524, 2016

To the Shareholders of The Hanover Insurance Group, Inc.:

Below please find the details regarding the 20152016 Annual Meeting of Shareholders of The Hanover Insurance Group, Inc.:

By Order of the Board of Directors,

CHARLES F. CRONIN

Vice President and Secretary

Worcester, Massachusetts

April 2, 20157, 2016

Your vote is important. Whether or not you plan to attend the Annual Meeting, you are requested to vote

your shares. Please follow the voting instructions set forth in the Proxy Statement. If you attend the

Annual Meeting and desire to withdraw your proxy and vote in person, you may do so.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be held on May 19, 2015:24, 2016: The Proxy Statement and Annual Report to Shareholders are available atwww.envisionreports.com/thg.

20152016 ANNUAL MEETING OF SHAREHOLDERS

PROXY STATEMENT

TABLE OF CONTENTS

The Hanover Insurance Group, Inc. 2015 Proxy Statement

The Hanover Insurance Group, Inc. 20152016 Proxy Statement

PROXY STATEMENT SUMMARY

This summary provides highlights of the important information contained elsewhere in our proxy statement.Proxy Statement. It does not contain all of the information you should consider. We encourage you to read the entire proxy statementProxy Statement before voting.

THE HANOVER INSURANCE GROUP, INC.

440 Lincoln Street

Worcester, Massachusetts 01653

PROXY STATEMENT

We have made these proxy materials available to you on or about April 2, 20157, 2016 via the Internet or, at your request, have forwarded you paper copies of these proxy materials by mail, in connection with the solicitation of proxies by the Board of Directors (the “Board”) of The Hanover Insurance Group, Inc. (“THG” or the “Company”) for use at our Annual Meeting of Shareholders to be held on May 19, 201524, 2016 (the “Annual Meeting” or “Meeting”). In accordance with rules and regulations adopted by the Securities and Exchange Commission (the “SEC”), we have provided access to our proxy materials over the Internet. If you received a Notice of Internet Availability of Proxy Materials (the “Notice”) by mail, you will not receive a paper copy of the proxy materials unless you request one. The Notice instructs you on how to access the proxy materials via the Internet. The Notice also instructs you on how to vote your shares via the Internet. If you received a Notice by mail and would like to receive a paper copy of our proxy materials, please follow the instructions included in the Notice.

QUESTIONS AND ANSWERS ABOUT PROXY MATERIALS AND THE ANNUAL MEETING

What is included in these proxy materials?

These proxy materials include our Proxy Statement for the Annual Meeting and our Annual Report to Shareholders for the fiscal year ended December 31, 20142015 (the “Annual Report”), including our financial statements and the report of PricewaterhouseCoopers LLP (“PwC”) thereon. The Annual Report is neither a part of this Proxy Statement nor incorporated herein by reference. If you requested a paper copy of these materials by mail, these materials also include the proxy card for submitting your vote prior to the Annual Meeting.

What is the purpose of the Annual Meeting?

At the Annual Meeting, shareholders will act on the following matters:

Any other business that properly comes before the Annual Meeting will also be considered. In addition, management will report on the performance of the Company and respond to questions from shareholders.

Who is entitled to vote at the Annual Meeting?

Only shareholders of record at the close of business on March  24, 201528, 2016 (the “Record Date”) are entitled to vote at the Meeting.

What are the voting rights of the holders of the Company’s common stock?

Each share of THG’s common stock, par value $0.01 per share (the “Common Stock”), entitles its holder to one vote.

Who is soliciting my vote?

The Board is soliciting your vote at the Annual Meeting. We have retained Georgeson Inc.LLC of Jersey City, N.J., to help us solicit proxies personally or by mail, phone or Internet. We anticipate the costs of this service will be approximately $8,500,$9,500, plus reasonable expenses. Proxies may also be solicited on the Board’s behalf by directors, officers or employees of the Company, in person or by telephone, mail, electronic transmission or facsimile transmission. The Company will pay the cost of soliciting proxies, including reimbursing banks, brokerage firms and others for the reasonable expenses incurred by them for forwarding proxy material on behalf of the Board to beneficial owners of Common Stock.

How does the Board recommend that I vote?

Our Board recommends that you vote your shares “FOR” the election of each nominee to the Board, and “FOR” each of the other proposals specifically identified in this Proxy Statement for action at the Annual Meeting.

How many shares are entitled to vote at the Annual Meeting?

As of the Record Date, 44,318,46642,940,661 shares of Common Stock were issued, outstanding and entitled to be voted.

How many shares must be present to hold the Annual Meeting?

A quorum (a majority of the issued and outstanding shares of Common Stock entitled to vote at the Annual Meeting) must be present either in person or by proxy. Abstentions will be treated as present at the Annual Meeting for the purpose of determining a quorum and, because brokers have the discretionary authority to vote on one proposal (the ratification of auditors), broker non-votes will also be treated as present at the Annual Meeting for the purpose of determining a quorum. A “broker non-vote” occurs when a broker holding shares for a beneficial owner returns a proxy, but does not vote on a particular proposal because the broker does not have discretionary voting power for that particular item and has not received voting instructions from the beneficial owner. Banks and brokers that have not received voting instructions from their clients cannot vote on their clients’ behalf on any matter specifically identified for action at the Annual Meeting other than the ratification of the appointment of PwC to serve as the Company’s independent, registered accounting firm.

What vote is required to approve each item, and how are abstentions and broker non-votes treated?

What happens if a director nominee is not elected at the Annual Meeting?

If a nominee who is currently serving as a director is not re-elected at the Annual Meeting, then under Delaware law, the director would continue to serve on the Board as a “holdover director.” However, under our by-laws, any director who is nominated but fails to be re-elected is required to promptly tender his or her resignation to the Board, effective at the end of his or her current term. The Nominating and Corporate Governance Committee (the “NCGC”) will make a recommendation to the Board on whether to accept or reject the resignation, or whether other action should be taken. In making their determinations, the NCGC and the Board may consider any factors deemed relevant. The Board will act on the NCGC’s recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date of the certification of the election results. The director who tenders his or

her resignation will not vote on the NCGC’s recommendation or the Board’s decision. Since Mr. Condron is a nomineeBooth and Mr. Ramrath are nominees whose current term doesterms do not otherwise expire at the upcoming Annual Meeting, histheir tendered resignationresignations would not be effective until the end of their current terms in 2017 and 2018, respectively.

On September 15, 2015, Mr. Eppinger announced his current term in 2016.plans to retire from the Company and resign as president and chief executive officer and as a director, effective on the date his duties are assumed by his successor. As of the date of this Proxy Statement, the Board has not named Mr. Eppinger’s successor. If Ms. Egan isa successor director has not elected atbeen appointed prior to the date of the Annual Meeting, then under Delaware law, then she would not become a director and would notMr. Eppinger will continue to serve on the Board as a “holdover director.holdover director under Delaware corporate law until his successor is elected and qualified. The Board anticipates electing Mr. Eppinger’s successor to the class of directors whose term expires at the 2019 annual meeting. Such election would be made by the Board pursuant to authority provided to it in the Company’s charter and by-laws and with the intention of balancing out the director classes as required by the charter and the rules of the New York Stock Exchange (“NYSE”). Mr. Eppinger’s service as a director would terminate concomitant with this action.

How do I vote?

You may either vote in person at the Annual Meeting or by proxy without attending the Meeting.

How do I vote by proxy?

If your shares are held in a brokerage account or by another nominee, you are considered the beneficial owner of shares held in “street name,” and such brokerage firm or nominee will forward the Notice and/or a printed copy of the proxy materials to you, together with voting instructions. As the beneficial owner, you have the right to direct your broker, trustee or nominee how to vote.

If you are a registered shareholder (that is, if you hold stock certificates directly in your name), you may vote via the Internet in accordance with the instructions set forth in the Notice. If you have requested a paper copy of the proxy materials, you may vote by mail, via the Internet, or via the toll-free number in accordance with the instructions set forth on the proxy card. The shares of Common Stock represented by your proxy will be voted as directed by you, or, if the proxy card is signed, dated and returned without instructions, in accordance with the Board’s recommendations as set forth in this Proxy Statement.

The proxy also confers discretionary authority with respect to any other proposals that may properly be brought before the Annual Meeting. As of the date of this Proxy Statement, management is not aware of any other matters to be presented for action at the Annual Meeting. However, if any other matters properly come before the Annual Meeting, then the proxies solicited hereby will be voted in accordance with the recommendations of the Board.

Can I change my vote after I submit my proxy?

Yes. Any registered shareholder giving a proxy may revoke it at any time before it is exercised by delivering written notice thereof to the Company’s Corporate Secretary, The Hanover Insurance Group, Inc., 440 Lincoln Street, Worcester, MA 01653. If you are a beneficial owner of shares held in street name, you may revoke or change your voting instructions prior to the Meeting by timely instructing your broker, trustee or nominee. Any shareholder of record attending the Annual Meeting may vote in person whether or not the shareholder has previously filed a proxy. Shares held beneficially in street name may be voted in person only if you obtain and bring to the Meeting a legal proxy from the broker, trustee or nominee that holds your shares giving you the right to vote the shares. Presence at the Annual Meeting by a shareholder who has submitted a proxy, however, does not in itself revoke a submitted proxy.

How do participants in The Hanover Employee Stock Purchase Plan and The Chaucer Share Incentive Plan vote their shares?

Participants in The Hanover Insurance Group Employee Stock Purchase Plan (the“ESPP”) who retain shares that have been issued to them at the end of an offer period are considered to hold such shares in “street name” in a brokerage account. Such shares may be voted like other “street name” holders. The

brokerage firm or nominee will forward ESPP participants who hold shares of THGCommon Stock the Notice and/or a printed copy of the proxy materials, together with voting instructions.

If you are a participant in The Chaucer Share Incentive Plan (the “Chaucer SIP”) and you have shares of Common Stock allocated to your account, then you may provide voting instructions to the trustee under the plan in accordance with the instructions provided by the trustee. The trustee will vote the shares allocated to your account in accordance with your instructions. If you do not instruct the trustee how to vote, then the trustee will not vote your shares. Your

ESPP and Chaucer SIP participants’ voting instructions will beare kept confidential by the trustee.administrator of the ESPP and the trustee of the Chaucer SIP, respectively.

Who can attend the Annual Meeting?

The Meeting is open to all THG shareholders and to invited guests of the Board. Individuals who hold shares in “street name” may be required to provide a brokerage account statement or some other proof of their share ownership as of the Record Date.

COMPANY STOCK OWNERSHIP

How much stock doStock Ownership by the Company’s directorsDirectors and executive officers own?Executive Officers

The following table sets forth information regarding the number of shares of Common Stock beneficially owned as of March 16, 201515, 2016 by (i) each director (and director nominee) of THG, (ii) the named executive officers (the “NEOs”) in the Summary Compensation Table appearing later in this Proxy Statement, (the “NEOs”),with the exception of Mr. Greenfield, who passed away since the beginning of the Company’s last fiscal year, and (iii) all

current directors and executive officers of THG, as a group. This information has been furnished by the persons listed in the table.

What are the Company’s Stock Ownership Guidelines for named executive officersNamed Executive Officers and directors?Directors

Named Executive Officers

Within 18 months of becoming subject to the policy,our stock ownership guidelines, each NEO should achieve an ownership level in our Common Stock with a value equal to one times his or her base salary. Within three years of becoming subject to these guidelines, each NEO should achieve and maintain an ownership level with a value equal to two to four times his or her base salary (four to six times base salary for the CEO). The guidelines credit shares held outright, unvested restricted stock, restricted stock units, performance-based restricted stock units (measured at target) and any shares that have been earned but the payment of which has been deferred. UnexercisedShares subject to unexercised stock options, whether or not vested, are not counted when determining ownership under the guidelines. For these purposes, shares are valued based upon the then currentthen-current market value, or if higher, the value on the date of acquisition.

Each of our current NEOs is in compliance with the policy.guidelines, or is expected to become compliant within the prescribed time after becoming subject to the guidelines, other than Mr. Bullis, who is serving in a temporary capacity, and Mr. Stuchbery, who is retiring from the Company in May 2016. Set forth below is a table that indicates, as of March 16, 2015,15, 2016, each current NEO’s share ownership as a multiple of his current annualized base salary. Such figures are calculated in accordance with the shareour stock ownership guidelines, and the multiple has been determined assuming a current market value of $70.83$85.33 per share (the closing price of our Common Stock on March 16, 2015)15, 2016).

Board of Directors

Within four years from the date of first being elected to the Board, each non-employee director should achieve an ownership level in our Common Stock with a value equal to four times the value of the regular annual stock retainer paid to directors for service on ourthe Board. This requirement can be satisfied by purchases in the

open market or by holding grants received from the Company (including share grants that the director has elected to defer under Company-sponsored deferred compensation programs). For these purposes, shares are valued based upon the then currentthen-current market value, or if higher, the value on the date of acquisition.

Each of our non-employee directors is in compliance with theour stock ownership guidelines, or is expected to become compliant within the prescribed time following his or her initial election to the Board. Set forth below is a table that indicates, as of March 16, 2015,15, 2016, each director’s share ownership as a multiple of the value of the current annual stock retainer ($115,000)125,000). Such figures are calculated in accordance with the shareour stock ownership guidelines, and the multiple has been determined assuming a current market value of $70.83$85.33 per share (the closing price of our Common Stock on March 16, 2015)15, 2016).

Who are the largest ownersLargest Owners of the Company’s stock?Stock

The following table lists the only persons who, to the best of the Company’s knowledge, are “beneficial owners” (as defined by SEC regulations) of more than five percent of the issued and outstanding shares of Common Stock as of March 16, 2015.15, 2016.

CORPORATE GOVERNANCE

The Board has adopted Corporate Governance Guidelines, which can be found on the Company’s website atwww.hanover.com under “About Us-Corporate Governance.” For a printed copy of the Guidelines,guidelines, shareholders should contact the Company’s Corporate Secretary, The Hanover Insurance Group, Inc., 440 Lincoln Street, Worcester, MA 01653.

There are fivefour nominees for election to ourthe Board this year. Each of the nominees other than Ms. Egan, who is a director nominee, has served as a director since the last Annual Meeting. A third-party recruiting firm hired by the Nominating and Corporate Governance Committee (the “NCGC”) identified Ms. Egan as a potential nominee. Mr. Henry, who was elected to the Board in November and whose term expires in 2017, was also identified by a third-party search firm. Such third-party search firms were retained by the NCGC to (i) identify director candidates that meet the Company’s Director Qualifications set forth below, (ii) coordinate and facilitate interviews with qualified candidates, and (iii) conduct reference checks.

In order to comply with our director retirement policy and maintain appropriate balance in the size of each of our director classes, Mr. Finnegan isAngelini and Ms. Francis are each being nominated to serve for a one-year term expiring in 20162017, and Ms. Egan, Dr. TaggartMr. Booth and Messrs. Condron andMr. Ramrath are each being nominated to serve for a three-year term expiring in 2018.

2019. Information regarding the business experience and qualifications of each nominee and each continuing director is provided below.

Pursuant to the Company’s director retirement policy, Mr. MurrayFinnegan is retiring, effective May 19, 2015.24, 2016. On September 15, 2015, Mr. Eppinger announced his plans to retire from the Company and resign as president and chief executive officer and as a director, effective on the date his duties are assumed by his successor. As of the date of this Proxy Statement, the Board has not named Mr. Eppinger’s successor. If a successor director has not been appointed prior to the date of the Annual Meeting, then Mr. Eppinger will continue to serve on the Board as a holdover director under Delaware corporate law until his successor is elected and qualified. The Board anticipates electing Mr. Eppinger’s successor to the class of directors whose term expires at the 2019 annual meeting. Such election would be made by the Board pursuant to authority provided to it in the Company’s charter and by-laws and with the intention of balancing out the director classes as required by the charter and the rules of the NYSE. Mr. Eppinger’s service as a director would terminate concomitant with this action.

Who are the nominees for director?Director Nominees

Directors Continuing in Office

Who are the directors continuing in office?

Who are the Company’s independent directors, and how does the Board determine which directors are considered independent?Director Independence

Under New York Stock Exchange (“NYSE”) rules, a member of ourthe Board only qualifies as “independent” if ourthe Board affirmatively determines that the director has no material relationship with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company). The Company’s Corporate Governance Guidelines include standards to assist the Board in determining whether a director has a material relationship with the Company. The standards conform to the standards established by the NYSE. The portion of our Corporate Governance Guidelines addressing director independence is attached to this Proxy Statement asAppendix A.

OurThe Board has determined that every director and nominee for director is independent under the applicable standards with the exception of Mr. Eppinger, who is the Chief Executive Officer of the Company.

There are no family relationships among any of the directors, director nominees or executive officers of the Company.

What is the Company’s procedure for approving related-person transactions?Related-Person Transactions

The Board has established a written procedure for the review, approval and/or ratification of “transactions with related persons” (as such term is defined by the SEC, provided that the dollar threshold for review and approval in our policy is $100,000, which is more stringent than the $120,000 threshold established by the SEC). Pursuant to such policy, any related-person transaction will be reviewed, approved and/or ratified by the Audit Committee, except that, in the event management determines that it is impractical to convene an Audit Committee meeting to consummate a particular transaction, the Chair of the Audit Committee (or the Independent Presiding Director, in the event the Chair or any of his or her immediate family members is the “related person”) has the authority to approve the transaction. The Chair of the Committee, or Independent Presiding Director, as applicable, shall report to the Audit Committee at its next meeting any approval under this policy pursuant to this delegated authority. No member of the Audit Committee may participate in any approval or ratification of a transaction with respect to which such member or any of his or her immediate family members is the related person. In preparing the Company’s SEC filings and in determining whether a transaction is subject to this policy, the Company’s General Counsel is entitled to make the determination of whether a particular relationship constitutes a material interest by a related person. In evaluating a transaction with a related person, the Audit Committee (or its Chair), shall consider all relevant facts and circumstances available to it and shall approve or ratify only those transactions that are in, or not inconsistent with, the best interests of the Company and its shareholders, as it determines in good faith. The Company and the Board are unaware of any transactions that required approval under this policy in 2014.2015.

The Related Person Transaction Policy can be found on the Company’s website atwww.hanover.com under “About Us-Corporate Governance—Company Policies.” For a printed copy of the policy, shareholders should contact the Company’s Corporate Secretary.

What is the Board’s leadership structure, and who presides at executive sessions of the Board?Board Leadership Structure

We separate the roles of CEO and Chairman of the Board in recognition of the differences between the two positions.

Additionally, we believe that separating the roles and having an independent Chairman of the Board or a designated lead director is consistent with corporate governance best practices and better supports effective management oversight and risk management. While we believe that these goals can be achieved without necessarily separating the CEO and Chairman of the Board designations, we also take into consideration Mr. Angelini’s demonstrated skill in leading our Board and counseling management.

In accordance with the Company’s Corporate Governance Guidelines, each year the Board elects from among its independent members either a non-executive Chairman of the Board or a lead director to serve as the “Independent Presiding Director.” The duties of the Independent Presiding Director are determined by the Board, and include presiding over board and shareholder meetings and over executive sessions of non-management directors (including the Committee of Independent Directors). Mr. Angelini, the Chairman of the Board, is the Independent Presiding Director. The Board generally convenes in executive session in connection with regularly scheduled Board meetings and at other times as deemed appropriate.

How often did the Board meet during 2014?Meetings and Attendance

During 2014,2015, there were fiveseven meetings of the full Board of Directors. All of the incumbent directors attended at least 75% of the Board and committee meetings in 20142015 held while they were members. In addition, all directors are expected to attend the Annual Meeting. All the directors serving at the time were present at last year’s annual meeting.

What committees has the Board established?Committees

The standing committees of the Board consist of the Committee of Independent Directors (the “CID”), the Audit Committee, the Compensation Committee, and the NCGC.Nominating and Corporate Governance Committee (the “NCGC”). Each committee is composed solely of directors determined by the Board to be independent. The current responsibilities of each of the committees are set forth in their charters, which are available on the Company’s website,www.hanover.com, under “About Us-Corporate Governance-Committee Charters.” For a printed copy of any committee charter, shareholders should contact the Company’s Corporate Secretary.

The current members of the committees of the Board are:

Committee of Independent Directors

The CID, consisting of all the independent members of the Board, discharges such responsibilities as are referred to it from time to time by the Board or one of its committees. In particular, the committee is responsible for reviewing and approving the recommendations of the Compensation Committee and the NCGC, as appropriate, with respect to establishing performance criteria (goals and objectives) of our CEO, evaluating the CEO’s performance and approving CEO compensation. In addition to meeting the independence requirements under the NYSE regulations, each committee member participating in approving the CEO’s compensation must also meet the independence requirements under Section 162(m) (“Section 162(m)”) of the Internal Revenue Code (the “Code”) and generally must meet the independence requirements under Section 16 (“Section 16”) of the Securities Exchange Act of 1934 (the “Exchange Act”). While theThe independent members of the Board typically meet in executive session at every scheduled Board meeting and from time-to-time meet informally or by telephonic committee meetings. In 2015, the CID acting as such, had five designated committee meetingsmet several times in 2014.connection with Mr. Eppinger’s planned retirement from the Company, the search for his successor, and other matters.

Audit Committee

The Board has made a determination that the members of the Audit Committee satisfy the requirements of the NYSE as to independence, financial literacy and experience and satisfy the independence requirements of the Sarbanes-Oxley Act of 2002. The Board has determined that Mr. Ramrath is an Audit Committee financial expert, as defined by SEC regulations. The Audit Committee is, among other things, responsible for the selection and engagement, compensation, retention, oversight and, when deemed appropriate, termination of the Company’s independent, registered public accounting firm. The committee also has oversight responsibility for the Company’s General Auditor and must approve matters related to the General Auditor’s employment and compensation. The Audit Committee regularlygenerally meets in executive session separately with representatives of

PwC, the Company’s independent registered public accounting firm, the Chief Financial Officer, and the General Auditor, following each in-person, regularly scheduled committee meeting.

Among its other responsibilities, as set forth in its charter, the Audit Committee reviews the arrangements for and the results of the auditor’s examination of the Company’s books and records, auditors’ compensation, internal accounting control procedures, and activities and recommendations of the Company’s internal auditors, as well as any reports relating to the integrity of our financial statements, internal financial controls or auditing matters that are reported on our anonymous alert line.Alertline. It also reviews the Company’s accounting policies, control systems and compliance with legal and regulatory requirements, as well as the resources of PwC dedicated to or otherwise supporting the Company’s audit. As noted elsewhere, the committee is also responsible for reviewing related-person transactions and assessing the Company’s risk management policies and procedures. The Audit Committee annually reviews and reassesses the adequacy of its charter. The committee held nine meetings during 2014, including five in-person meetings.

Compensation Committee

The Compensation Committee has oversight responsibility with respect to compensation matters involving directors and executive officers of THG. It also provides general oversight of the Company’s compensation structure, including compensation plans and benefits programs. In addition to meeting the independence requirements under the NYSE regulations, each committee member must meet the independence requirements under Section 16 and Section 162(m). The Board has made a determination thatEach of the members of the Compensation Committee satisfysatisfies the independence requirements of the NYSE rules and applicable SEC and Internal Revenue Code requirements. The committee met four times in 2014.

Use of Independent Outside Compensation Consultant

In executing its compensation responsibilities, the Compensation Committee engaged Frederic W. Cook & Co., Inc. (“F.W. Cook”), to assist it in making compensation decisions and provide related information and advice.

During 2014,2015, F.W. Cook:

F.W. Cook was selected by, and reports to, the Compensation Committee. F.W. Cook is not engaged by the Company for any other purpose, and the Compensation Committee reviews all compensation payable to this firm.

Pursuant to its charter, the Compensation Committee may select its outside compensation consultant only after taking into consideration factors relevant to that consultant’s independence, including such factors required to be considered under the listing standards of the NYSE. The Compensation Committee reviewed such factors as it deemed appropriate, including all such factors required by the NYSE listing standards, and is satisfied as to F.W. Cook’s independence from the Company and its management.

Compensation Committee Interlocks and Insider Participation

During 2014,Mr. Bullis, our Compensation Committee consisted of Messrs. Condron, Knox and Murray. None of our executive officers serve, or during 2014 did serve,Interim Chief Financial Officer, serves as a memberthe Chairman of the boardcompensation committee of directors oranother public company that also retained F.W. Cook to assist it in making compensation decisions. Similar to

the Company, F.W. Cook was engaged directly by that company’s compensation committee. F.W. Cook was not involved in advising the Company with respect to form or amount of any of Mr. Bullis’s compensation, and the Company has determined that there is no conflict of interest with respect to this relationship. Mr. Bullis’s term as a director of that company expires in May 2016, and he has decided not to seek re-election.

Compensation Committee Interlocks and Insider Participation

During 2015, our Compensation Committee consisted of Ms. Francis and Messrs. Condron and Knox. In addition, Robert J. Murray served on the Compensation Committee until his retirement from the Board on May 19, 2015. None of our executive officers serve, or during 2015 did serve, as a member of the board of directors or compensation committee of any company that has one of its executive officers serving as a member of our Board or Compensation Committee.

Nominating and Corporate Governance Committee

The NCGC advises and makes recommendations to the Board on all matters concerning directorship and corporate governance practices and the selection of candidates as nominees for election as directors. The committee recommended this year’s candidates for election and recommends Board member committee assignments to the full Board. The committee met five times in 2014.

What is the process for considerationConsideration of director nominees?Director Nominees

The NCGC may identify candidates for nomination to the Board through several sources, including recommendations of non-management directors, shareholders, the CEO, other executive officers, an outside search firm or other resources. Committee members review the backgrounds of candidates in light of the current needs of the Board, interview qualified candidates, conduct inquiries with references and review available information pertaining to the candidate’s qualifications and background.

Director Qualifications

Members of the Board and nominees for election should possess high personal and professional ethics, integrity and values, and be committed to representing the long-term interests of our shareholders. To maintain a majority of independent directors on the Board, as required by our Corporate Governance Guidelines, the NCGC and the Board have a strong preference that nominees meet our independence standards. Board members and nominees should demonstrate initiative, be participatory and contribute a perspective based on practical experience and mature judgment. The Board seeks members who represent a broad array of experiences and expertise in the context of the evolving needs of the Board. While we do not have a formal policy in this regard, when evaluating a candidate for Board membership, the NCGC and the Board may also take into consideration factors such as diversity, age and availability to serve. In addition, without the approval of the NCGC, nominees who are CEOs (or others with similar responsibilities) should serve on no more than two other public company boards, and other nominees should serve on no more than three other public company boards. All directors and nominees for election are in compliance with this policy.

Shareholder Nominees

The NCGC will consider qualified director candidates recommended in writing by shareholders. Shareholders who wish to suggest qualified candidates for consideration by the committee may do so by writing to the Company’s Corporate Secretary, giving the candidate’s name, biographical data, qualifications and confirmation that the candidate has agreed to serve if nominated and elected. All such submissions will be forwarded to the committee chairman. To allow the committee sufficient time to consider a candidate in advance

of an annual meeting, shareholdersa shareholder should submit recommendations to the Company’s Corporate Secretary by no later than December 31 of the year prior to the annual meeting. Shareholder-proposed candidates who meet the committee’s minimum qualification standards, discussed in the preceding paragraph, will be evaluated in the same manner as other candidates considered by the committee for Board nomination.

Pursuant to the Company’s by-laws, shareholders seeking to nominate a candidate for election to the Board without approval of the NCGCBoard must deliver written notice of such nomination to the Company’s Corporate Secretary not less than 60 days noror more than 90 days prior to the Annual Meeting. The notice must set forth the name, address and number of shares of THG stock held by the shareholder submitting the nomination, as well as

information concerning the nominee that is required to be disclosed pursuant to the Exchange Act in a proxy statement soliciting proxies for the election of such nominee as a director, including a signed consent of the nominee to be named in a proxy statement and to serve as a director, if elected. In addition, the notice must be accompanied by a petition signed by at least 100 record holders of THG Common Stock representing in the aggregate at least one percent of the outstanding shares entitled to vote on the election of directors.

How can shareholders and other interested parties communicateCommunicating with the Board?Board

Shareholders and other interested parties can communicate with the Board, including the non-management directors and the Independent Presiding Director, by writing to The Hanover Insurance Group, Inc., Board of Directors, Attn: Corporate Secretary, 440 Lincoln Street, Worcester, Massachusetts 01653, through the websitewww.listenupreports.com or by calling 1-800-533-2547. An independent third-party service retrieves all submissions to the website and answers all calls to the toll-free telephone number, and passes the information on to our General Counsel, our General Auditor and the Chairman of the Audit Committee, who in turn transmit the information to the appropriate member of the Board. Communications may be anonymous or confidential. Complaints relating to the Company’s accounting, internal accounting controls or auditing matters will be referred to the Chairman of the Audit Committee. Other concerns will be referred to the Chairman of the Board. All shareholder-related complaints and concerns will be received, processed and acknowledged by the Board. Further information regarding communications with the Board may be found at the Company’s website,www.hanover.com, under “About Us-Corporate Governance—Contact the Board.”

Are directors expected to attend the Annual Meeting?

Yes, all directors are expected to attend the Annual Meeting. All directors serving at the time were present at last year’s annual meeting.

How are the directors compensated?Director Compensation

The Compensation Committee (the “Committee”) is responsible for reviewing and advising the Board with respect to the Company’s director compensation practices and policies.programs. In executing such responsibilities, the Committee reviews relevant market data provided by F.W. Cook to assist it in developing compensation recommendations. The market data considered includes analysis of the Comparative Proxy Data Companies (for more information on these companies, please see page 34), general industry survey data from the National Association of Corporate Directors, and a review of recent trends and developments in director pay. The Committee presents its recommendations to the full Board, which, usually at its May meeting, makes its compensation decision for the succeeding year (which begins immediately following the Annual Meeting of Shareholders and runs until the next Annual Meeting of Shareholders (the “Annual Compensation Cycle”)).In setting director compensation, the Board considers competitive pay levels in light of the amount of time that directors expend in fulfilling their duties to the Company, as well as the level of skill and expertise the Company requires of its Board. Additionally, awards to directors under the 2014 Long-Term Incentive Plan must comply with the annual limits provided for under the plan.

For the 2015/2016 Annual Compensation Cycle, the Committee engaged in a review of director compensation, including a review of the market data described above, and based on information provided by

TheF.W. Cook and the recommendation of the Committee, the Board adjusted its compensation, as detailed in the table below sets forthbelow. In order to better align total compensation with pay levels at Comparative Proxy Data Companies, compensate current Board members for their time and efforts and improve our ability to attract new Board members, the annual compensation for our Board forretainer was increased $20,000 (consisting of a $10,000 increase in the 2014/2015 Annual Compensation Cycle. Therecash component and a $10,000 increase in the stock component), and modest increases were no adjustmentsalso made to Boardmember retainers and to the additional retainers paid to committee chairs. Prior to making these changes, the Board’s compensation from the prior Annual Compensation Cycle.had not been adjusted since 2013.

The Company reimburses Mr. Angelini’s employer, Bowditch & Dewey, for estimated expenses for administrative support related to his duties as Chairman of the Board. Additionally, the Company’s charitable foundation provides matching contributions to gifts made by directors to qualified charities, up to $5,000 per director per calendar year.

At the election of each director, (i) cash retainers may be converted to Common Stock, and (ii) cash and stock compensation may be deferred.deferred pursuant to our non-employee director deferral plan. Deferred cash amounts are accrued in a bookkeeping account that is credited with notional interest based on the so-called General Agreement on Tariffs and Trade (“GATT”) rate (3.80%(3.04% for 2014,2015, as determined using the November 20132014 published rates).

Mr. Eppinger, as an employee of the Company, receives no additional compensation for his service as a member of the Board.

Director Compensation Table

The following table sets forth the total compensation for our non-employee directors for calendar year 2014.2015.

Ms. Francis and Messrs. Angelini,Mr. Finnegan, and Knox, because they elected to convert (and in some cases defer) certain cash retainers to Common Stock, received additional stock awards during 2014.2015. Such awards were in the amounts, and with a grant date fair value, as set forth in the table below. In order to avoid duplicative reporting, since all awards listed in the table below represent converted cash fees (the amount of which has been included in the Fees Earned in Cash column), such amounts are not also included in the Stock Awards column.

None of our non-employee directors held any outstanding stock options or other unvested stock-based awards as of December 31, 2014.2015. For information on the share holdings for our directors, please see “How much stock do“Stock Ownership by the Company’s directorsDirectors and executive officers own?”Executive Officers” on pages 4-6.5-6.

What is the Board’s roleRole in risk oversight?Risk Oversight

The Board of Directors is responsible for assessing major risks facing the Company and reviewing options for their mitigation. Management presentations, business updates and strategic planning discussions with the

Board and its committees regularly incorporate a discussion of risks and plans for mitigating or managing such risks. The Board, directly or through its standing committees, periodically receives reports and presentations from management, andincluding the Company’s Chief Risk Officer, on various matters which, in its view, merit special attention from a risk management perspective, such as with respect to counterparty risks, reserves, insured exposure aggregation levels, reinsurance levels and creditworthiness of our reinsurers, the investment portfolio, litigation and regulatory matters, technology and information security, capital considerations, acquisitions, growth plans and matters relating to leadership and succession.

In order to assist the Board in its responsibility to assess major risks, the Audit Committee is responsible for reviewing with management certain financial and business risk exposures and the steps management has taken to monitor and control such risk exposures, including the Company’s enterprise risk assessment and risk management policies and procedures. Throughout the year, the Audit Committee receives periodic reports from the Company’s Chief Risk Officer. The Audit Committee reports to the Board its assessment of the Company’s risk management policies and procedures.

Additionally, with respect to examining risks associated with the Company’s compensation plans and policies,programs, each year a committee comprised of a cross-section of officers of the Company conducts a review and risk assessment of the Company’s material incentive compensation plans. The results of this assessment are presented to the Compensation Committee in connection with the committee’s approval of the Company’s

executive compensation plans for the upcoming year and isare also reviewed by the committee’s independent compensation consultant. The results of the committee’s risk assessment are also provided to the other members of the Board. For additional information, see “Risk Management and Compensation” in the Compensation Discussion and Analysis section on pages 45-46.48-49.

The NCGC is charged with, among other things, assessing with the Board risks associated with succession planning.

What is the director retirement policy?Director Retirement Policy

It is the policy of the Board that a director submit his or her resignation and retire at the Annual Meeting of Shareholders following his or her attainment of age 72. Notwithstanding the foregoing, by a vote of the Board after completion of an individual director review and assessment process administered by the NCGC, the Board may decline to accept such resignation and (i) with respect to a director who has not served for ten complete annual meeting cycles at the time he or she would otherwise have first been required to retire, such retirement may be deferred for the longer of (X) five additional annual election cycles or (Y) such number of additional terms such that, including terms previously served, the director will not have served in excess of ten complete annual election cycles; and (ii) with respect to a director whose service is not eligible for an extension under clause (i) above, such director’s retirement may be deferred on an annual basis up to the date of the Annual Meeting of Shareholders following his or her attainment of age 75. Any director whose retirement has been deferred in accordance with the foregoing shall again submit his or her resignation, effective at the end of such director’s term, for the Board’s consideration.

In accordance with the director retirement policy, the NCGC has deferred Mr. Angelini’s resignation. If he is re-elected, Mr. Angelini’s resignation untilwill be effective at the end of his new term, which expireswould expire in 2016, and nominated2017; he would then be eligible for no more than one additional annual extension, which would expire in 2018. Mr. Finnegan for an additional one-year term expiring in 2016. Mr. Murray is retiring from the Board, effective May 19, 2015,24, 2016, in accordance with the director retirement policy.

Where can I find the Company’s Code of Conduct?Conduct

The Company has adopted a Code of Conduct, which is applicable to all directors, officers and employees of the Company, including our Chief Executive Officer, Chief Financial Officer and Controller. The Code of Conduct is available on the Company’s website atwww.hanover.com under “About Us-Corporate Governance—Company Policies.” For a printed copy of the Code of Conduct, shareholders should contact the Company’s Corporate Secretary. The Company will disclose any future amendments to, or waivers of, provisions of the Code of Conduct for directors and executive officers on its website within four business days following the date of such amendment or waiver.

ITEM I

ELECTION OF DIRECTORS

The Board currently has eleven members and consists of three classes whose terms end in successive years. There are fivefour nominees for election at the Annual Meeting. In order to comply with our director retirement policy and maintain appropriate balance in the size of each of our director classes, Mr. Finnegan isAngelini and Ms. Francis are each being nominated to serve for a one-year term expiring in 20162017 and Ms. Egan, Dr. TaggartMr. Booth and Messrs. Condron andMr. Ramrath are each being nominated to serve for a three-year term expiring in 2018.2019. Pursuant to our director retirement policy, Mr. MurrayFinnegan is retiring from our Board, effective on May 19, 2015.24, 2016.

Directors serve until the expiration of their stated term and until their successor has been duly elected and qualified or until their earlier death, resignation, removal or disqualification.

All of the nominees have indicated their willingness to serve and, unless otherwise directed, it is intended that proxies received in response to this solicitation will be voted in favor of the election of each of the nominees.

The affirmative vote of the majority of the votes properly cast (in person or by proxy) is required to elect director nominees. For purposes of electing directors, a majority of the votes cast means that the number of shares voted “for” a director must exceed the number of votes cast “against” that director. Broker non-votes and abstentions, because they are not votes cast, are not counted for this proposal and will have no effect on the outcome.

If a nominee who is currently serving as a director is not re-elected at the Annual Meeting, then under Delaware law, the director would continue to serve on the Board as a “holdover director.” However, under our by-laws, any director who is nominated but fails to be re-elected is required to promptly tender his or her resignation to the Board, effective at the end of his or her current term. The NCGC will make a recommendation to the Board on whether to accept or reject the resignation, or whether other action should be taken. In making their determinations, the NCGC and the Board may consider any factors deemed relevant. The Board will act on the NCGC’s recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date of the certification of the election results. The director who tenders his or her resignation will not vote on the NCGC’s recommendation or the Board’s decision. Since Mr. Condron is a nomineeBooth and Mr. Ramrath are nominees whose current term doesterms do not otherwise expire at the upcoming Annual Meeting, histheir tendered resignationresignations would not be effective until the end of their current terms in 2017 and 2018, respectively.

On September 15, 2015, Mr. Eppinger announced his current term in 2016.plans to retire from the Company and resign as president and chief executive officer and as a director, effective on the date his duties are assumed by his successor. As of the date of this Proxy Statement, the Board has not named Mr. Eppinger’s successor. If Ms. Egan isa successor director has not elected atbeen appointed prior to the date of the Annual Meeting, then under Delaware law, then she would not become a director and would notMr. Eppinger will continue to serve on the Board as a “holdover director.”holdover director under Delaware corporate law until his successor is elected and qualified. The Board anticipates electing Mr. Eppinger’s successor to the class of directors whose term expires at the 2019 annual meeting. Such election would be made by the Board pursuant to authority provided to it in the Company’s charter and by-laws and with the intention of balancing out the director classes as required by the charter and the rules of the NYSE. Mr. Eppinger’s service as a director would terminate concomitant with this action.

In the event that any of the nominees should be unavailable to serve as a director, it is intended that the proxies will be voted for the election of such substitute nominees, if any, as shall be designated by the Board. Management has no reason to believe that any of the nominees will be unavailable to serve.

Information as to each nominee and as to directors continuing in office can be found under the section of this Proxy Statement entitled “Corporate Governance.”

The Board recommends a voteFOR each of the director nominees.

ITEM II

ADVISORY APPROVAL OF THE COMPANY’S EXECUTIVE COMPENSATION

Each year since our annual meeting in 2011, we have provided our shareholders with the opportunity to cast an advisory vote regarding the compensation of our named executive officers. At each meeting, our shareholders overwhelmingly approved the proposal, with more than 95% of the votes cast voting in favor of each proposal. As required by Section 14A of the Exchange Act, we are again seeking advisory shareholder approval of the compensation of our named executive officers, as disclosed in the section of this Proxy Statement entitled “Executive Compensation.” Shareholders are being asked to vote on the following advisory vote:

A substantial percentage of our named executive officers’ compensation is directly tied to stock performance and the attainment of financial and other performance measures that the Board believes promote long-term shareholder value and position us for long-term success. As described more fully in the Compensation Discussion and Analysis, the mix of fixed and performance-based compensation, the terms of our short- and long-term incentive compensation programs, and the weighting of variable compensation more heavily toward equity awards, are all designed to enable us to attract and retain top talent and align the interests of our executive officers with those of our shareholders, while balancing risk and reward. The Compensation Committee and the Board believe that the design of the programs, and the compensation awarded to the named executive officers under the current programs, fulfills these objectives.

Shareholders are urged to read the Compensation Discussion and Analysis section beginning on page 28,29, which discusses in detail how our compensation policies and proceduresprograms support our compensation philosophy.

Although the vote is non-binding, the Board and the Compensation Committee will consider the voting results in connection with their ongoing evaluation of the Company’s compensation programs. We currently intend to hold advisory votes on executive compensation annually. Accordingly, the next such vote will be held at the Company’s 20162017 Annual Meeting of Shareholders.

The affirmative vote of a majority of the votes properly cast (in person or by proxy) is required for approval of this proposal. Abstentions and broker non-votes, because they are not votes cast, are not counted for this proposal and will have no effect on the outcome.

The Board recommends a voteFOR the approval of this proposal.

ITEM III

RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The firm of PricewaterhouseCoopers LLP (“PwC”) has been appointed by the Audit Committee of the Board to serve as the Company’s independent, registered public accounting firm for 2015.2016. Representatives of PwC will be present at the Annual Meeting, will have the opportunity to make a statement if they desire to do so, and will be available to respond to appropriate questions from shareholders.

The Board is submitting the appointment of PwC as the Company’s independent registered public accounting firm for 20152016 to the shareholders for their ratification. The Audit Committee bears the ultimate responsibility for selecting the firm and will make the selection it deems best for the Company and its shareholders. Should the shareholders fail to ratify the appointment of PwC, the Audit Committee will reconsider the appointment and may retain PwC or another accounting firm without resubmitting the matter to shareholders. Similarly, ratification of the selection of PwC as the independent, registered public accounting firm does not limit the Audit Committee’s ability to change this selection in the future.

The affirmative vote of a majority of the votes properly cast (in person or by proxy) is required for approval of this proposal. Abstentions, because they are not votes cast, are not counted for this proposal and will have no effect on the outcome.

The Board recommends a voteFOR the approval of this proposal.

Fees Incurred from PricewaterhouseCoopers LLP

The following table shows the fees paid or accrued for the audit and other services provided by PwC for 20142015 and 2013:2014:

Pre-Approval Policy

The Audit Committee is required to pre-approve all services performed by the independent auditor. At the beginning of each annual audit cycle, the Audit Committee pre-approves certain categories of audit, audit-related and other services, but such projects within these categories with fees greater than or equal to or greater than $250,000 must be specifically approved.

The Chair of the Audit Committee (or, in his absence, any other member of the Audit Committee) has the authority to pre-approve other audit-related and non-audit services to be performed by the independent auditors and associated fees, provided that such services are not otherwise prohibited and any decisions to pre-approve such services and fees are reported to the full Audit Committee at its next regular meeting. During 2014,2015, the Audit Committee pre-approved all services performed by the independent auditor, including non-audit services, in accordance with the policy set forth above. The Audit Committee reviews and considers aggregate fees for all audit-related and non-audit services compared to the overall audit fee in assessing the independence of PwC.

Audit Committee Report

Review of Audited Financial Statements with Management

The Audit Committee reviewed and discussed with management the audited financial statements of the Company.

Review of Financial Statements and Other Matters with Independent Auditors

An integral part of the audit process is to ensure that the Audit Committee receives information regarding the scope and results of the audit. Various communication requirements pertaining to the conduct of an audit exist to enhance the information flow and to assist the Audit Committee in discharging its oversight responsibility. In this regard, the Audit Committee discussed with the Company’s independent, registered public accounting firm, PricewaterhouseCoopers LLP, the matters required to be discussed by Auditing Standards No. 16, Communication with Audit Committees, issued by the Public Company Accounting Oversight Board (“PCAOB”). The Audit Committee also received written disclosures and a letter from PricewaterhouseCoopers LLP regarding its communications with the Audit Committee concerning independence from the Company, pursuant to applicable requirements of the PCAOB, and has discussed with PricewaterhouseCoopers LLP its independence from the Company. The Audit Committee has considered whether the provision of the non-audit professional services to the Company in 20142015 is compatible with maintaining PricewaterhouseCoopers LLP’s independence from the Company.

Responsibility and Oversight

Management is responsible for the Company’s financial statements, the overall reporting process and the system of internal control over financial reporting. PricewaterhouseCoopers LLP, as our independent, registered public accounting firm, is responsible for conducting annual audits and quarterly reviews of the Company’s financial statements and expressing an opinion as to the conformity, in all material respects, of the annual financial statements with generally accepted accounting principles in the United States and expressing an opinion on the effectiveness of our internal control over financial reporting as of the end of the fiscal year. In performing their oversight responsibility, the members of the Audit Committee rely, without independent verification of the information provided to them, on the representations made by management and PricewaterhouseCoopers LLP.

Recommendation that Financial Statements be Included in the Annual Report

Based on the reviews and discussions referred to above and relying thereon, on February 23, 201519, 2016, the Audit Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 20142015 for filing with the SEC.

Other Matters

The Audit Committee satisfied its responsibilities under its Charter for the year 2014.2015.

In accordance with the rules of the SEC, this report is not to be deemed “soliciting material,” or deemed to be “filed” with the SEC or subject to the SEC’s Regulation 14A, other than as provided in Item 407 of Regulation S-K, or to the liabilities of Section 18 of the Exchange Act, except to the extent the Company specifically requests that the information be treated as soliciting material or specifically incorporates it by reference in documents otherwise filed.

February 26, 201519, 2016

AUDIT COMMITTEE

Joseph R. Ramrath, Chair

Richard H. Booth

Karen C. Francis

Daniel T. Henry

The Audit Committee Report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that THG specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis (“CD&A”)

The Compensation Committee (the “Committee”), in consultation with the Board’s Committee of Independent Directors (the “CID”), is responsible for reviewing and establishing our executive compensation practices and policies.programs. More specifically, the Committee is responsible for approving the compensation for our executive officers, including those identified in the Summary Compensation Table on page 49 (“52 (our “named executive officers,”, or “NEOs”), subject, in the case of theour CEO, to ratification by the CID. Although this discussion and analysis refers principally to compensation of our NEOs, the same general compensation principles and practices apply to all of our executive officers.

Executive Summary and Overview

Fiscal 20142015 Highlights

Building on the momentum we established during 2013, 2014the past several years, 2015 proved to be another excellent year for the Company with strong contributions from virtually every component of our business. Highlights include:

20142015 Pay Decisions

During 2014,2015, we maintained our commitment to “pay for performance”, continuing to emphasize variable performance-based compensation over fixed pay, and further aligning our compensation programs with evolving best practices. To that end, during 2014:2015:

Additionally, our compensation decisions reflect, in part, the overwhelming support our shareholders have expressed by approving our “say on pay” proposals. In each year since we began holding an annual “say on pay” vote, more than 95% of the shares cast on these proposals werehave been voted in favor of our executive pay programs and practices.

20142015 NEO Pay Mix

The following charts represent the 20142015 pay mix (assuming achievement at target levels) for our NEOs, expressed as a percentage of total target compensation opportunity for the year (for comparison purposes, these amounts exclude year-over-year change in pension values and payments to Mr. Stuchbery under his 2011 Retention Agreement (see “Stuchbery Retention and Services Agreements” on page 45 for additional information))values). Amounts have been calculated using the same methodology as in the Summary Compensation Table on page 49.Table.

Relationship Between Pay and Performance

One of the primary objectives in the design and implementation of our executive compensation program is to ensure that a meaningful relationship exists between the compensation earned by our executives and the overall success of our organization. This objective, however, must also be weighed against other important

considerations, such as the importance of rewarding individual achievement, recognizing the longer-term value of achieving certain strategic and operating objectives, attracting and retaining key executives and maintaining stability in our organization. The Committee also gives consideration to events or circumstances that we have limited ability to manage, such as unusual weather-related losses and catastrophes. In an effort to achieve these objectives, we design our executive compensation program to include what we believe is an appropriate mix of fixed versus variable compensation elements.

Over the past three years, variable compensation opportunities (long-and short-term incentive target awards) have comprised approximatelynearly three-quarters of our NEOs’ total target annual compensation opportunity, approximatelynearly two-thirds of which has been in the form of long-term equity awards tied to stock price performance. We believe tying such a large portion of our NEOs’ target compensation opportunity to variable compensation, while providing competitive levels of base salary, strikes an appropriate balance and has resulted in a meaningful relationship between our performance over the period and pay actually earned and realized by our executives.

To demonstrate the relationship between pay and performance, various compensation consultants and proxy advisory firms have promoted the use of various “realized”,“realized,” “realizable” or “earned” pay formula analyses. We believe such an analysis is useful and may serve as a valuable tool to measure the effectiveness of our compensation program design, but recognize that no standard definition of “realized”,“realized,” “realizable” or “earned” pay has emerged, and each variation utilized by consultants and proxy advisory firms has significant flaws or

limitations. Accordingly, rather than devise and illustrate alternative formulaic measures, we believe an examination of salary levels and variable compensation earnings over the past three years sufficiently demonstrates the connection between our overall performance and the amounts earned by our NEOs.

During 2012, we made great progressBy many measures, the past three years have represented the most successful three-year period in our journey to become a world-class property and casualty carrier. We grew net premiums written by 21.6%Company’s history. During this period, we achieved three consecutive years of record operating income, our stock price appreciated 110%, diversified our geographic footprint and product offerings, improved our mix of business, increased book valueannual dividends paid per share by 5.2%increased over 24% ($1.36 per share in 2013 to $1.69 per share in 2015), and strengthened our balance sheet. Additionally, we returned $75.1over $427.1 million to our shareholders in the form of dividendsstock buy-backs and stock repurchases. During the same period, however, in large part duedividend payments. Moreover, we significantly strengthened our balance sheet and continued to the unprecedented level of weather-related losses, low investment yield driven by historically low interest ratesdiversify our business across product lines and a soft pricing market, our earnings did not meet our expectations, and our stock performance suffered.

In 2013 and 2014, however, as weather and pricing improved and we began to recognize meaningful benefits from the many strategic initiatives made during the past several years, including the Chaucer acquisition, our earnings equaled or exceeded our internal projections, and our stock price appreciated by 84%.geographies. We believe in part as demonstrated below, that our compensation programs over this period appropriately rewardrewarded our executives when we perform andfor the exceptional value generated for our shareholders benefit, while adequately balancing the need to recognize accomplishments and retain our executives in years when our overall financial performance does not meet expectations.shareholders.

*Excludes compensation data with respect to Mr. Stuchbery because as President and CEO of Chaucer, his compensation is more directly linked to the performance of the Chaucer business unit.

Other Significant Compensation Practices

In summary, Mr. Eppinger’s compensation and that of our other NEOs generally has been significantly affected by actions taken by the Committee, our performance and, with respect to long-term awards, our stock price. The Committee continues to granttargetcompensation at levels which it believes are appropriate in light of current circumstances, butactual compensation is, and is expected to continue to be, highly dependent on our financial performance and stock price appreciation.

Executive Compensation Policy and Objectives

The overall objectives of our executive compensation programs are to:

Each component of compensation is intended to achieve particular objectives, and the entire compensation package is designed to align with our business strategy and be reasonably competitive from a marketplace perspective.in the marketplace. Although we do not have a policy for a fixed allocation between either cash and non-cash or short-term and long-term incentive compensation, we design our NEO compensation packages with greater emphasis on variable compensation tied to performance rather than base salary, and a significant portion of total targeted compensation is in the form of long-term, equity-based awards, which are subject to substantial vesting requirements and the value of which are dependent on our stock performance. This approach is intended to balance short- and long-term performance goals and promote shareholder value.

Setting Executive Compensation

Use of Compensation Consultants and Comparative Data

In evaluating our executive compensation programs, the Committee is advised by its independent compensation consultant, F.W. Cook, as explained in greater detail in the Corporate Governance section

beginning on page 9. F.W. Cook provides information as to compensation levels for comparable positions at other companies that compete with us for executive talent. For 2014,2015, this data was prepared based upon the publicly disclosed proxy materials of the group of property and casualty insurance companies describedlisted below (the“Comparative Proxy Data”) and market pay data collected from the Mercer U.S. Property & Casualty Insurance Company Survey (data collected from 5154 property and casualty insurance companies having a median direct premiums written of $2.7$2.6 billion) (the“Comparative Market Data”). The companies included in the group providing the Comparative Proxy Data were determined by the Committee based upon the recommendation of F.W. Cook and remain unchanged from the group used in 2013.2014, with the exception of the removal of Tower Group International, Ltd, which was acquired in 2014.

Comparative Proxy Data Companies

The Committee reviews the Comparative Proxy Data and the Comparative Market Data, including information on base pay levels, target and actual total cash levels, long-term incentive opportunities and target and actual total compensation levels, as well as comparative financial metrics such as revenue,direct premium written, market capitalization, and net income. While the Committee believes the Comparative Proxy Data and the Comparative Market Data are useful, such data is intended solely to serve as one of several reference points to assist the Committee in its compensation discussions and deliberation.deliberations. Accordingly, rather than relying on or setting benchmarks for our executive compensation against such data, the Committee instead relies on the general knowledge, experience and judgment of its members, both with regard to competitive compensation levels and the relative success that we have achieved.achieved in recruiting and retaining personnel.

Role of Executive Officers in Compensation Decisions and CEO Performance Review

Committee meetings are regularly attended by our CEO, General Counsel, Chief Human Resources Officer and our Chairman of the Board (who is an independent director, but not a Committee member)., in addition to a representative of F.W. Cook. Each generally participates in suchthese meetings and provides counsel and advice at the Committee’s request. Other independent directors also attend meetings from time to time. In addition, the Committee regularly meets in executive sessions without members of management present. An executive is not permitted to be present while the Committee conducts its deliberations on that executive’s compensation.

At the request ofFollowing a process that was established by the Nominating and Corporate Governance Committee (the “NCGC”), and following a process approved by ourthe Board, our independent Chairman of the Board leads an annual performance review of the CEO. This review includeshas historically included personal interviews with members of management and independent directors, and a review of the CEO’s self-assessment and our performance. The results of this performance evaluation are reviewed and discussed by the CID. Preliminary or final results of this review process help form the basis for establishing the CEO’s annual compensation package.package, although the process was less formal at 2015 year-end in light of Mr. Eppinger’s pending resignation. The CID has final authority to ratify the compensation of our CEO.

For compensation decisions regarding NEOs (other than the CEO), the Committee primarily considers the recommendations of our CEO, as well as its own observations regarding each executive and information provided by its compensation consultant.F.W. Cook.

Principal Components of Executive Compensation

Annual Base Salary

Annual salary is designed to provide a fixed level of compensation to our NEOs based on their roles, skills, qualifications and market data,competitive pay levels, as well as to retain their services. Base salary, however, is only one of several different components of an executive’s total compensation package and makes up a significantly smaller portion of total target compensation than the short- and long-term incentive opportunities described below.

20142015 Base Salary

*Mr. Stuchbery’s base salary was increased from £370,000 to £376,500 for each of 2013 and 2014. Any increase2015 (1.8%). The decrease in values shownvalue indicated in the Summary Compensation Table on page 4952 is the result of changes in foreign exchange rates. Please see the note regarding currency exchange rates preceding the compensation tables for additional information.on page 52.

In each case, the 20142015 base salary adjustments were deemed warranted in light of the expertise and experience of the NEO, and the breadth of his responsibilities.responsibilities and competitive compensation trends.

Short-Term Incentive Compensation

Our short-term incentive compensation programs are annual performance-based bonus programs intended to provide cash compensation opportunities for our NEOs. Opportunities are targeted at a percentage of annual salary, as set forth in the table below, based on each NEO’s role and overall pay package. Specifically, these programs are designed to motivate and reward:

For 2014,2015, we maintained two separate short-term incentive plans for our NEOs: the 20142015 Executive Short-Term Incentive Compensation Program (“20142015 Executive STIP”) for our NEOs other than Mr. Stuchbery, and the 20142015 Chaucer Annual Bonus Scheme (the “20142015 Chaucer STIP”) for Mr. Stuchbery.

20142015 Short-Term Incentive Compensation Target Awards

Potential awards for our NEOs ranged from 0% to a maximum of 200% of target based upon the attainment of certain pre-determined goals and the considerations set forth in greater detail below. In light of Mr. Eppinger’s performance and the fact that his base salary and target bonus had not been increased for over three years, the Committee increased Mr. Eppinger’s target award from 120% of base salary to 140% of base salary for 2015.

20142015 Executive STIP

The 20142015 Executive STIP is intended to comply with the “qualified performance-based compensation” requirements of Section 162(m) of the Internal Revenue Code and thereby, to the extent it so qualifies, enable bonuses paid to our NEOs under it to be treated as tax deductible by the Company. The 20142015 Executive STIP was established by the Committee pursuant to the shareholder-approved 20092014 Executive Short-Term Incentive Compensation Plan. Under the 20142015 Executive STIP, a maximum funding pool for annual awards (“Maximum Funding Pool”) is determined in accordance with the level of achievement of a pre-determined performance metric. For 2014,2015, the Maximum Funding Pool for awards to our NEOs was set at 2% of 20142015 pre-tax operating income (adjusted to exclude interest expense and the impact of catastrophes) (“ex-CATex-Cat Operating Income”) and the maximum award payable under the 20142015 Executive STIP to each NEO was as follows:

The Committee has discretion, subject to the maximum amounts described above, to determine the individual bonus amount to be paid to each NEO. The Committee does not intend for the Maximum Funding Pool to represent an expectation as to the amounts to be paid to the NEO. Rather, an individual NEO’s actual award under the 20142015 Executive STIP is determined with respect to:

For 2014,2015, the Maximum Funding Poolmaximum funding available for NEOs under the plan was $4.8$5.2 million. Because the Maximum Funding Poolmaximum funding level under the plan produced a larger funding pool than was necessary for awarding bonuses consistent with the Committee’s objectives, the Committee awarded less than the maximum amount available to be awarded under the program.plan.

In determining the individual awards for our NEOs, for 2014,2015, the Committee primarily considered:

Each of these areis described below.

The funding level achieved under the Annual Bonus Plan. The Annual Bonus Plan is a performance-based bonus program that provides incentive cash compensation opportunities to key domestic officers and employees, excluding the NEOs (and Chaucer employees).our NEOs. For 2014,2015, potential funding under the Annual Bonus Plan ranged from 0% to a maximum of 200% of target based on the following three performance components: (i) as-reported operating income (pre-tax and excluding interest on debt) (“Operating Income”); (ii) ex-Cat Operating Income; and (iii) the strategic objectives discussed below. The Committee chose this combination of performance metrics because these are the primary measures by which the Board evaluates our financial and operating performance. Achievement of these performance metrics is expected to enhance our stock value and shareholder returns in both the short- and long-run. Notwithstanding the foregoing,However, the Committee retains the discretion to increase or decrease the funding pool and individual awards based upon any factor it deems appropriate. Set forth below are the Operating Income and ex-Cat Operating Income levels required to obtain threshold, target and maximum funding levels for the plan:

The minimum levellevels of Operating Income and ex-Cat Operating Income required to achieve target funding levels were increased by $80$55.0 million (26%(14.1%) and $95$55.0 million (18%(8.8%), respectively, compared toover the prior year. This was to reflect the Company’s increased earnings power, favorable pricing trends and our desire to set goals, that while reasonably obtainable, represent a legitimate and meaningful challenge to the organization.

During 2014,2015, Operating Income was $406.2$465.6 million $12.8($59.4 million more than in the prior year,year), and ex-Cat Operating Income was $629.2$646.9 million $96($17.7 million or 18% abovemore than in the prior year, resulting inyear). Accordingly, these two funding levels applicable to senior officerscomponents of the Companyprogram were achieved at 100% and 95% of target.target, respectively.

In addition to the financial metrics discussed above, for 2014,2015, the following strategic objectives were considered: