THG 2019 Proxy Statement

THE HANOVER INSURANCE GROUP 2019 PROXY STATEMENT 19 ITEM III RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent, external audit firm retained to audit the Company’s financial statements. 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 2019. PwC has been retained as the Company’s independent, external auditor since 1995 and, for a predecessor company, beginning in 1991 . 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. In order to assure continuing auditor independence, the Audit Committee periodically considers whether the Company should change its independent, external audit firm. Additionally, in conjunction with the mandated rotation of PwC’s lead engagement partner, the Audit Committee and its chairperson are directly involved in the selection of PwC’s new lead engagement partner. The members of the Audit Committee and the Board believe that the continued retention of PwC to serve as the Company’s independent external auditor is in the best interests of the Company and its investors. For a discussion of the factors that the Audit Committee considered in retaining PwC for 2019, see the “Audit Committee” section beginning on page 11. The Board is submitting the appointment of PwC as the Company’s independent, registered public accounting firm for 2019 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 vote FOR the approval of this proposal. Fees Incurred from PricewaterhouseCoopers LLP The table below shows the fees paid or accrued for the audit and other services provided by PwC for 2018 and 2017. Non- recurring fees related to the Chaucer Sale account for the increase in fees in 2018 as compared to the prior year. 2018 2017 Audit Fees (1) $ 4,460,048 $ 4,230,596 Audit-Related Fees (2) 419,467 118,000 Tax Fees (3) 630,000 243,845 All Other Fees (4) 77,542 32,279 (1) Audit fees represent fees for professional services provided in connection with the audit of our financial statements, including the audit of the internal controls over financial reporting, the review of our quarterly financial statements, review of the Chaucer Sale ($200,000), and audit services provided in connection with statutory or other regulatory filings. (2) Audit-related fees consisted primarily of actuarial review related to the Chaucer Sale ($365,000), attestation services, services provided in connection with reviews by state insurance departments, and other consulting services. (3) Tax fees consisted of tax services and consulting related to the Chaucer Sale ($600,000) and for legal entity restructuring undertaken by the Company. (4) Other services included miscellaneous consulting services, purchased software and miscellaneous data analytics. Fees and Pre-Approval Policy The Audit Committee is responsible for overseeing and approving the audit fee negotiations associated with the Company’s retention of PwC. In addition, 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 $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 2018, the Audit Committee reviewed and pre-approved all services performed by the independent auditor, including non-audit services and services in connection with the Chaucer Sale, in accordance with the policy set forth above. The Audit Committee reviews and considers aggregate fees and other factors for all audit-related and non-audit services compared to the overall audit fee in assessing the independence of PwC.