THG 2018 Annual Report

The following tables provide a reconciliation for all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3). YEAR ENDED DECEMBER 31, 2018 Fixed Maturities (in millions) Municipal Corporate Commercial mortgage- backed Total Equity and Other Total Assets Balance at beginning of year, excluding held- for-sale (Chaucer) $ 24.6 $ 0.9 $ 14.2 $ 39.7 $ 4.7 $ 44.4 Transfers out of Level 3 (0.5) ² ² (0.5) ² (0.5) Total gains (losses): Included in total net realized and unrealized investment gains (losses) 0.1 ² ² 0.1 (0.1) ² Included in other comprehensive income - net depreciation on available-for-sale securities (0.2) ² (0.3) (0.5) ² (0.5) 6DOHV (2.9) (0.1) (0.8) (3.8) ² (3.8) Balance at end of year (1) $ 21.1 $ 0.8 $ 13.1 $ 35.0 $ 4.6 $ 39.6 (1) There were no Level 3 held-for-sale securities (Chaucer) at December 31, 2018. YEAR ENDED DECEMBER 31, 2017 Fixed Maturities (in millions) Municipal Corporate Commercial mortgage- backed Total Equity and Other Total Assets Balance at beginning of year, excluding held-for-sale (Chaucer) $ 28.8 $ 4.0 $ 15.0 $ 47.8 $ 5.2 $ 53.0 Transfers out of Level 3 (1.9) ² ² (1.9) ² (1.9) Total gains (losses): Included in total net realized and unrealized investment gains ² 0.3 ² 0.3 ² 0.3 Included in other comprehensive income - net depreciation on available-for-sale securities (0.2) (0.2) ² (0.4) (0.5) (0.9) 6DOHV (2.1) (3.2) (0.8) (6.1) ² (6.1) Balance at end of year, excluding held-for-sale 24.6 0.9 14.2 39.7 4.7 44.4 Balance at end of year, held-for-sale (Chaucer) 2.2 ² ² 2.2 ² 2.2 Balance at end of year, including held-for-sale $ 26.8 $ 0.9 $ 14.2 $ 41.9 $ 4.7 $ 46.6 During the years ended December 31, 2018 and 2017, the Company transferred fixed maturities between Level 2 and Level 3 primarily as a result of assessing the significance of unobservable inputs on the fair value measurement. There were no transfers between Level 1 and Level 2 during 2018 or 2017. There were no Level 3 liabilities held by the Company for years ended December 31, 2018 and 2017. The following table provides quantitative information about the significant unobservable inputs used by the Company in the fair value measurements of Level 3 assets, excluding amounts relating to the Chaucer business held-for-sale. Where discounted cash flows were 101 2018 ANNUAL REPORT | THE HANOVER INSURANCE GROUP