THG 2018 Annual Report

ITEM 7 ±0$1$*(0(17¶6 ',6&866,21 $1' $1$/<6,6 2) ),1$1&,$/ &21',7,21 $1' 5(68/76 2) OPERATIONS TABLE OF CONTENTS Introduction............................................................................................................................................................................ 38 Executive Overview............................................................................................................................................................... 38 Description of Operating Segments ....................................................................................................................................... 39 Results of Operations - Consolidated..................................................................................................................................... 39 Results of Operations - Segments ......................................................................................................................................... 41 Investments ............................................................................................................................................................................ 55 Quantitative and Qualitative Disclosures about Market Risk ................................................................................................ 59 Other Items ............................................................................................................................................................................ 60 Discontinued Operations ± Chaucer Business ....................................................................................................................... 61 Income Taxes......................................................................................................................................................................... 64 Critical Accounting Estimates ............................................................................................................................................... 66 Statutory Surplus of U.S. Insurance Subsidiaries .................................................................................................................. 69 Liquidity and Capital Resources ............................................................................................................................................ 69 Off-Balance Sheet Arrangements ......................................................................................................................................... 71 Contingencies and Regulatory Matters .................................................................................................................................. 72 Rating Agencies ..................................................................................................................................................................... 72 Risks and Forward-Looking Statements ............................................................................................................................... 72 Glossary of Selected Insurance Terms ................................................................................................................................... 72 37 2018 ANNUAL REPORT | THE HANOVER INSURANCE GROUP