GSR was formed in 1979 as a London Market Coverholder (a Managing General Agency for Lloyd’s and London Companies.) Over the years GSR has been at the forefront of creating new products specifically developed to fit the needs of energy and marine clients. The agency offers a broad range of exclusive, innovative products for this market niche including well control, comprehensive general liability, excess liability, contractor’s equipment, professional liability, business interruption, cargo, maritime employer’s liability and more.

RSG Chairman and CEO, Patrick G. Ryan notes “We are thrilled with the acquisition of Global Special Risks. GSR has a long tradition of innovation in the energy and marine areas. It brings a unique perspective to our specialty insurance offerings, providing our clients with an efficient underwriting platform and product distribution network of highquality front-end services for energy and marine clients.”

Willis Chairman and CEO Joe Plumeri adds, “We believe that joining GSR with the specialty underwriting companies of RSG is a good move for its team and energy clients.”

For more information on this release, contact Chelsey Krull, (312) 784-6043,
ckrull@ryansg.com.

About Ryan Specialty Group, LLC (RSG)

Ryan Specialty Group, LLC is a global holding company which includes a select group of highly-specialized underwriting companies, a Lloyd’s insurer and other specialty services designed specifically for agents, brokers and insurers www.ryansg.com

About Willis

Willis Group Holdings plc is a leading global insurance broker. Through its subsidiaries, Willis develops and delivers professional insurance, reinsurance, risk management, financial and human resource consulting and actuarial services to corporations, public entities and institutions around the world. Willis has more than 400 offices in nearly 120 countries, with a global team of approximately 17,000 employees serving clients in virtually every part of the world. Additional information on Willis may be found at www.willis.com.

CHAUCER JOINS THE HANOVER INSURANCE GROUP, INC.

Chaucer is pleased to announce that it has today joined U.S. based, The Hanover
Insurance Group, Inc., following the successful completion of all legal and regulatory
requirements.
The Hanover Insurance Group, Inc., which trades on the New York Stock Exchange,
writes U.S. Property and Casualty business, with Commercial Lines (of which
approximately one-third is Specialty) comprising over half of the portfolio and the
balance being in Personal Lines.
Chaucer’s Senior Management Team will continue to lead the business under the
Chaucer brand for the underwriting activities of Syndicates 1084 and 1176, in Lloyd’s
and through its international network.
The Hanover announced its intention to acquire Chaucer in April following the
unanimous recommendation of the Chaucer Board of Directors and the transaction
was overwhelmingly approved by the Company’s shareholders earlier this month.
Bob Stuchbery, Chief Executive Officer, Chaucer commented:
“Our affiliation with The Hanover enables us to continue delivering upon our
corporate strategy, whilst benefitting from the financial strength and stability that
comes with being part of a business with an annual premium income of
approximately US$4bn and total assets of approximately US$12bn.”
“All Chaucer employees remain fully committed to delivering a first class underwriting
service to our clients, which we believe will be enhanced by the capabilities and
strengths provided through our relationship with The Hanover.”
Fred Eppinger, President and CEO, The Hanover added:
“We are impressed with Chaucer’s management and staff, its rich history, and
commitment to disciplined underwriting and risk management. We believe there is a
great cultural fit with The Hanover, and are very pleased to have the Chaucer team
join our organization.”
“The combination of our two companies will strengthen our business operations, as
we benefit from greater scale, market presence and earnings diversification. Moving
forward as an even stronger organization, we remain committed to the delivery of
outstanding service to our partners and their clients.”
Enquiries
Chaucer contacts
Bob Stuchbery, Chief Executive Officer
Chaucer
T 020 7397 9700
Jessica Stephenson, Marketing and Communications Manager
Chaucer
T: 020 7105 8258
E: jessica.stephenson@chaucerplc.com
Justin Griffiths / Kate Lehane
Citigate Dewe Rogerson
T: 020 7638 9571
E: chaucerpr@citigatedr.co.uk
Hanover contacts
Investors: Media:
Oksana Lukasheva Michael F. Buckley
T: (508) 855-2063 T: (508) 855-3099
E: olukasheva@hanover.com E: mibuckley@hanover.com
Media:
Amy Banek
T: (508) 855-4486
E: abanek@hanover.com
Note to editors
About Chaucer
Chaucer is a specialist insurance business, underwriting risks at Lloyd’s, the world’s
leading insurance and reinsurance market.
Chaucer deploys specialist underwriters in all major insurance and reinsurance
classes, balancing global marine, energy, non-marine and aviation with UK motor
and nuclear.
Headquartered in London, Chaucer has international operations in Buenos Aires,
Copenhagen, Houston and Singapore.
For more information, please visit www.chaucerplc.com
About The Hanover
The Hanover Insurance Group, Inc. (NYSE: THG), based in Worcester, Mass., is the
holding company for a group of insurers that includes The Hanover Insurance
Company, also based in Worcester, Citizens Insurance Company of America,
headquartered in Howell, Michigan, and their affiliates.
The Hanover offers a wide range of property and casualty products and services to
businesses, individuals, and families through a select group of independent agents.
The company is ranked among the top 25 property and casualty insurers in the
United States and has been meeting its obligations to its agent partners and their
customers for nearly 160 years. The Hanover maintains excellent ratings from A.M.
Best, Standard & Poor’s and Moody’s. For more information, please visit
www.hanover.com.

Date published: 20/04/11

RECOMMENDED CASH ACQUISITION

OF

CHAUCER HOLDINGS PLC

BY

440 TESSERA LIMITED

A WHOLLY-OWNED SUBSIDIARY OF THE HANOVER INSURANCE GROUP, INC.

(to be implemented by way of a scheme of arrangement
under Part 26 of the Companies Act 2006)

Summary

· The boards of The Hanover and Chaucer are pleased to announce that they have reached agreement on the terms of a recommended cash acquisition of the entire issued and to be issued ordinary share capital of Chaucer by 440 Tessera Limited (“BidCo”), a wholly-owned subsidiary of The Hanover (the “Acquisition”).

· Under the terms of the Acquisition, Chaucer Shareholders will be entitled to receive:

- 53.3 pence in cash for each Chaucer Share (the “Acquisition Price”); and

- 2.7 pence in cash for each Chaucer Share as a final dividend (the “Final Dividend”) in relation to the year ended 31 December 2010, which was announced by Chaucer on 7 March 2011.

· In aggregate, the Acquisition Price and Final Dividend value Chaucer’s fully diluted share capital at approximately £313 million (or approximately US$510 million), and together represent the following multiples:

- 1.09x Chaucer’s reported net tangible assets as at 31 December 2010; and

- 1.26x Chaucer’s pro forma net tangible assets as at 31 December 2010, adjusted for the effects of catastrophe losses announced by Chaucer in 2011. The pro forma multiple of 1.26x does not account for other trading during the period since 31 December 2010.

The Hanover has received irrevocable undertakings from Aberdeen Asset Managers Limited, Aberforth Partners LLP, Artemis Investment Management LLP, BlackRock Investment Management (UK) Limited, Henderson, J O Hambro Capital Management Limited, Moore · Capital Management LP and Toscafund Asset Management LLP to vote in favour of the Scheme at the Court Meeting and the Chaucer General Meeting Resolutions at the Chaucer General Meeting in respect of, in aggregate, 116,629,886 Chaucer Shares, representing approximately 21.28 per cent. of the existing issued share capital of Chaucer.

· In addition, The Hanover has received a letter of intent from Aberdeen Asset Managers Limited to vote in favour of the Scheme at the Court Meeting and the Chaucer General Meeting Resolutions at the Chaucer General Meeting in respect of 4,996,109 Chaucer Shares, representing approximately 0.91 per cent. of the existing issued share capital of Chaucer.

· The Chaucer Directors, who have been so advised by Kinmont and Willis Capital Markets & Advisory, consider the terms of the Acquisition to be fair and reasonable. In providing their advice, Kinmont and Willis Capital Markets & Advisory have taken into account the commercial assessment of the Chaucer Directors.

Accordingly, the Chaucer Directors will unanimously recommend to Chaucer Shareholders to vote in favour of the Scheme at the Court Meeting and the Chaucer General Meeting Resolutions at the Chaucer General Meeting as they have irrevocably undertaken to do in respect of their own Chaucer Shares, which in aggregate amount to 7,684,699 Chaucer Shares, representing 1.40 per cent. of the existing issued share capital of Chaucer.

· In total, therefore, The Hanover has received irrevocable undertakings and a letter of intent to vote in favour of the Scheme at the Court Meeting and the Chaucer General Meeting Resolutions at the Chaucer General Meeting in respect of 129,310,694 Chaucer Shares representing approximately 23.59 per cent. of Chaucer’s existing issued share capital.

· The Hanover is a holding company for a group of property and casualty insurance companies that offers a wide range of commercial, specialty and personal insurance products and services through an extensive network of independent agents. Headquartered in Worcester, Massachusetts (United States) and listed on the New York Stock Exchange, The Hanover ranks among the top 25 property and casualty insurers in the United States and, as at 19 April 2011, had a market capitalisation of approximately US$2.0 billion. The Hanover had net written premiums in excess of US$3.0 billion in the year ended 31 December 2010.

· Chaucer is a specialist insurance group listed on the London Stock Exchange, and underwrites business at Lloyd’s, the world’s leading insurance and reinsurance market. Chaucer deploys specialist underwriters in all major insurance and reinsurance classes, encompassing global marine, energy, non-marine, aviation, and a UK motor business and nuclear insurance. Headquartered in London, Chaucer has regional operations in Whitstable, England and international operations in Houston, Singapore, Buenos Aires and Copenhagen.

· Commenting on the Acquisition, Frederick H. Eppinger, President and Chief Executive Officer of The Hanover, said:

“Chaucer would represent a significant step forward in The Hanover’s journey to build a world-class property and casualty company. The combined organisation would provide both companies with the benefits of greater scale, earnings diversification, and expanded market presence. Chaucer would enable us to further advance our specialty strategy, given its recognised expertise in underwriting energy, marine and aviation risks. We are excited to welcome Chaucer’s management and associates to our organisation.”

· Commenting on the Acquisition, Martin Gilbert, Chairman of Chaucer, said:

“We are very pleased to announce that we have agreed terms with The Hanover for an Acquisition of Chaucer. The Board of Directors of Chaucer believes that the Acquisition represents a compelling proposition. The Acquisition Price in cash is attractive for shareholders, a significant proportion of whom are explicitly supporting the transaction. In addition, Chaucer’s clients, staff and other stakeholders are expected to benefit from the combination’s greater scale, diversity and capital resources.”

· Commenting on the Acquisition, Bob Stuchbery, Chief Executive of Chaucer, said:

“We are very excited about the prospects of joining The Hanover. As part of The Hanover we will remain fully focused on delivering our Foundation Flex Flagship corporate strategy with the aim of further positioning us as the Lloyd’s specialist insurer of choice in our areas of expertise. Furthermore, under the ownership of The Hanover, we expect that we will be able to build on The Hanover’s market position, and access attractive specialty business through its strong US retail distribution. Overall, this is a great cultural fit that brings together two businesses with the same ambition and complementary strengths, and will create an excellent platform for future profitable growth.”

This summary should be read in conjunction with, and is subject to, the full text of the following announcement and the Appendices.

Recommended cash acquisition of Chaucer Holdings PLC (185k)

The firm has also signed up to a £90mn letter-of-credit (LoC) facility to support its 2011-2012 underwriting, with credit from a group of banks led by Lloyds Banking Group. Chaucer will collateralise £40mn of the facility in November 2011.

The firm said it is also agreeing reinsurance quota share requirements, after recently renewing its whole account reinsurance quota share with Bermudian Flagstone Re, for its Lloyd’s syndicates 1084 and 1176. But its economic interests in the syndicates next year should be similar to its £659mn share in 2010, the firm said.

Chaucer has set several key targets from its review – a return on equity above 12 percent, a 2 percent cut to its combined ratio, and a target Lloyd’s underwriting capacity of £1.2bn by 2014.

This is almost 50 percent more than the £800mn-plus income planned for 2011, although Chaucer said it would also retain its focus on profitability and cycle management as it attempts to achieve this growth.

Under the strategic review Chaucer will organise its business in three strands. The first is “Foundation”, which includes the specialist insurance written from London and the UK division; the second is “Flex”, comprising the treaty and retro business the firm said would provide high return opportunities; and the third is the new “Global Energy Practice” which will incorporate the firm’s Lloyd’s nuclear Syndicate 1176.

The energy business will be a flagship product line for Chaucer’s underwriting and the firm hopes to grow income to £300mn “at the peak of the current energy cycle”.

That is more than double the £144mn made this year, while 2011 income is forecast at £180mn. Chaucer will invest £1.9mn in 2011 and a further £1mn in 2012 to add 20 staff to the team.

The firm said its focus on the energy sector is a response to “the continued buoyancy and growth of the energy industry, the increasing technical sophistication of client requirements, the complementary structure of many energy brokers and the current capabilities of our market leading energy division,” the firm said.

Within its core “Foundation” portfolio, Chaucer says it will balance its exposure to volatile catastrophe business with “the more consistent returns from our non-correlated and less volatile classes, notably UK motor”.

It will invest £2.3mn in 2011 to build a team to manage direct sales in the motor market, with a target of achieving £21mn sales through the direct aggregator channel next year.

At present Chaucer distributes its motor business through 1,200 intermediaries.

Chaucer also said it remained committed to developing its turnkey services in managing business for new Lloyd’s entrants, but added that its current plans were “modest” due to the caution at Lloyd’s over admitting new participants.

In its “Flex” business, Chaucer has previously announced it will withdraw from US direct and facultative business, where its capacity was £36.1mn this year. It will increase capacity for North American property catastrophe treaty business in its Syndicate 1084 from £27.2mn to £34.5mn for 2011.

Chaucer has boosted its board in recent months as it prepares to implement these plans, appointing Catlin Group’s former CFO Chris Stooke, former Prudential CEO Mark Wood, and ex-Swiss Re and GE executive Tim Carroll.

The firm also appointed former Willis executive David Mead to the new role of chief operating officer.

Separately, in its nine-month update Chaucer reported that gross written premium income for the first nine months of 2010 was up 4.1 percent year on year to £676.9mn.

This is forecast to include an overall 2.7 percent rate increase for this year, down from previous guidance of 2.8 percent. The increase is led by rising rates in the UK division, offset by flat pricing in the US and international property markets and declining specialist rates.

It forecast a similar trend for 2011 with overall premium rate increases of 2.2 percent, led by UK and energy rate growth, while property rates are expected to continue to fall.

The firm did not release details of underwriting results, but CEO Bob Stuchbery said both underwriting and investment returns made positive contributions to the quarterly result, which benefitted from low catastrophe activity.

Chaucer expects a $5-$12.5mn loss from the New Zealand earthquake.

Reserve releases totalled £1.6mn in the quarter.

Chaucer’s underwriting income from Syndicate 1084 will rise 10 percent to £785.8mn in 2011 on UK motor and energy growth.

The capacity of nuclear Syndicate 1176 remains at £32mn and Chaucer will not participate in the ICAT Syndicate 4242 (for which it is turnkey provider) in 2011 after providing £13.1mn capacity this year.

Numis analyst Nick Johnson said he was encouraged by the “increased focus” of Chaucer’s new underwriting strategy, which would put more weight on the best performing segments of the portfolio.

Chaucer shares responded well to the news, rising 2.48 percent to 51.75 pence in early trading on the London Stock Exchange.

Global Special Risks can place a broad range of cargo risks, including marine transits, inland transits, war and strikes risks (in conjunction with Marine risks), storage, stock throughputs, political risks, and consequential loss (in conjunction with Marine risks), transits to and from the former USSR, and tow risks. This facility can cover machinery, fabrics and clothing, food products (including fruit, meat, and fish), ores, coal, metals, construction materials, oil, LPG, LNG, and more. Global Special Risks has an in-house underwriter, enabling us to provide a 24-hour quotation turnaround on most classes of business.

Limits: Up to $15,000,000
Minimum Premium: $2,500
Security: Lloyd’s, London / Insurance Companies

The following GSR contacts can provide you with more information about this product…
John Michel, New Orleans - michel_jj@globalspecialrisks.com
Jonathan Smyth, New Orleans - smyth_jo@globalspecialrisks.com

Global Special Risks offers the E&P industry a multi-line product providing coverage for control of well, general liabilities, umbrella and property damage. The program targets operations based primarily on land, but can provide coverage for Area II wet locations. GSR has in house rating and binding authority for this program.

Limits: $35,000,000 OEE / $1,000,000 Primary GL / $10,000,000
Minimum Premium: $10,000 OEE / $7,500 GL
Security: Chaucer Syndicate 1084 (Lloyds, London)
The following GSR contacts can provide you with more information about this product…
Rick Burns, Houston - burnsr@globalspecialrisks.com
Jonathan Smyth, New Orleans - smyth_jo@globalspecialrisks.com
Debbie Maddox, Dallas - dmaddox@globalspecialrisks.com

A Risk Management approach to Well Control Insurance

WELLSURE is an innovative, preventative energy risk solution to insurance, which is offered exclusively by Global Special Risks. In 1998, Global Special Risks formed an alliance with Boots & Coots Services, the premier worldwide well control specialists, to offer a bundled product, which includes well control insurance in conjunction with prevention services. This program includes a single solution package of integrated emergency response services, general contracting in the event of a loss, and enhanced cash flow.

• Rig Audit
• Flowback Audit

List of Countries:

Limits: Up to $50,000,000
Minimum Premium: Varies with Exposure
Security: Lloyd’s, London
The following GSR contacts can provide you with more information about this product…
Rick Burns, Houston - burnsr@globalspecialrisks.com
Jonathan Smyth, New Orleans - smyth_jo@globalspecialrisks.com
Debbie Maddox, Dallas - dmaddox@globalspecialrisks.com

Global Special Risks offers a broad coverage contractors equipment program geared to energy contractors which can include underwater equipment.

Limits: up to $100,000,000
Minimum Premium: $12,500
Security: Lloyd’s, London

John Michel, New Orleans - michel_jj@globalspecialrisks.com
Jonathan Smyth, New Orleans - smyth_jo@globalspecialrisks.com