THG 2018 Annual Report

The following table provides 2018 target allocations and actual invested asset allocations for 2018 and 2017. DECEMBER 31 2018 TARGET LEVELS 2018 2017 Fixed income securities: Fixed maturities 83% 85% 83% Money market funds 2% 2% 1% Total fixed income securities 85% 87% 84% Equity securities: Domestic 12% 10% 12% International 3% 3% 4% Total equity securities 15% 13% 16% Total plan assets 100% 100% 100% 7KH IROORZLQJ WDEOHV SUHVHQW IRU HDFK KLHUDUFK\ OHYHO WKH 8 6 TXDOLILHG GHILQHG EHQHILW SODQ¶V LQYHVWPHQW DVVHWV WKDW DUH measured at fair value at December 31, 2018 and 2017. Refer to Note 5 ± ³)DLU 9DOXH´ IRU D GHVFULSWLRQ of the different levels in the Fair Value Hierarchy. DECEMBER 31 2018 2017 (in millions) Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Fixed income securities: Fixed maturities $ 35.1 $ 9.3 $ ² $ 25.8 $ 38.8 $ 13.1 $ ² $ 25.7 Money market mutual funds 9.1 9.1 ² ² 5.3 5.3 ² ² Mutual funds 36.3 36.3 ² ² 42.6 42.6 ² ² Total investments at fair value $ 80.5 $ 54.7 $ ² $ 25.8 $ 86.7 $ 61.0 $ ² $ 25.7 Fixed Income Securities and Mutual Funds Securities classified as Level 1 at December 31, 2018 and 2017 include actively traded mutual funds and publicly traded securities, which are valued at quoted market prices. Securities classified as Level 3 at December 31, 2018 and 2017 include assets held in a fixed account of an insurance company. The fair value of the investment is estimated using a comparable public market financial institution derived fair value curve that uses non-observable inputs for market liquidity and unique credit characteristics of its underlying securities. The Plan also holds investments measured at fair value using NAV based on the value of the underlying investments, which is determined independently by the investment manager and have not been included in the table above. These include investments in commingled pools and investment-grade fixed income securities held in a custom fund, and other commingled pools that primarily invest in publicly traded common stocks and international equity securities. The daily NAV, which is not published as a quoted market price for these investments, is used as the basis for transactions. Redemption of these funds is not subject to restriction. The fair values of these investments are as follows: DECEMBER 31 2018 2017 Fixed maturities $ 346.4 $ 343.5 Domestic 9.3 12.6 International 14.6 17.3 Total equity 23.9 29.9 Total investments carried at NAV $ 370.3 $ 373.4 107 2018 ANNUAL REPORT | THE HANOVER INSURANCE GROUP