HANOVER INSURANCE GROUP INC

We file a consolidated U.S. federal income tax return that includes our holding company and its domestic subsidiaries (including non-insurance operations).

The provision for income taxes from continuing operations was an expense of $112.5 million and $7.6 million in 2024 and 2023, respectively. These amounts resulted in consolidated effective tax rates of 20.9% and 18.5% on pre-tax income for 2024 and 2023, respectively. The provisions in 2024 and 2023 reflect benefits related to tax planning strategies implemented in prior years of $1.2 million and $1.3 million, respectively. The provisions in 2024 and 2023 also included excess tax benefits related to stock-based compensation of $1.9 million and $1.1 million, respectively. In addition, the provisions for 2024 and 2023 included benefits related to the release of prior years’ uncertain tax position of $1.0 million and $0.9 million, respectively. Absent these items, the provisions for income taxes for 2024 and 2023 would have been expenses of $116.6 million, or 21.7%, and $10.9 million, or 26.5%, respectively. The lower effective federal tax rate in 2024 was primarily due to higher underwriting income in the current year.

The income tax provision on operating income was an expense of $130.1 million and $15.3 million for 2024 and 2023, respectively. These provisions resulted in effective tax rates on operating income of 21.1% and 21.4%, respectively. The provisions for 2024 and 2023 reflect the aforementioned excess tax benefits related to stock-based compensation and the benefits related to the release of prior years’ uncertain tax position. Absent these items, the provisions for income taxes for 2024 and 2023 would have been expenses of $133.0 million, or 21.6%, and $17.3 million, or 24.2%, respectively. The lower effective federal tax rate in 2024 was primarily due to higher underwriting income in the current year.

During 2024 and 2023, we recorded decreases in reserves related to uncertain tax positions, due to the expiration of certain statutes of limitations. The reserve release of $1.0 million and $0.9 million in 2024 and 2023, respectively, were recorded as benefits in continuing operations. We are subject to U.S. federal and state examinations and foreign examinations for years after 2020.