Our Code of Ethics

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Our Code of Ethics

Introduction

An important part of "Caring in Everything We Do" is the maintenance of high standards of business and personal ethics for The Commerce Group, Inc. and its subsidiaries ("The Companies") and their personnel.

Policy

General Policy

The Commerce Group, Inc. is a well-respected leader in the property and casualty insurance industry. By living our motto, "Caring in everything we do," we have won the respect of the public, the business community, policyholders, agents, and regulatory authorities. An important part of "Caring in everything we do" is the maintenance of high standards of business and personal ethics for The Commerce Group, Inc. and its subsidiaries ("the Companies") and their personnel.

Individual Conduct

It is the responsibility of all directors, officers and employees of the Companies to carry out their assigned duties in compliance with all applicable legal requirements and Company policies. Beyond compliance with strictly legal aspects involved, all directors, officers and employees are expected to conduct themselves with honesty, integrity and professionalism in the discharge of their assigned responsibilities. Except as otherwise permitted by Company policies, all assets of the Companies shall be used for legitimate business purposes. All directors, officers, and employees shall protect the Companies" assets and ensure their efficient use.

Each director, officer and employee of the Companies must avoid any activities that could involve, or lead to involvement in any unlawful practice, as well as any actions that may jeopardize or impair the confidence or respect in which the Companies are held by their customers, regulators, and the general public. All directors, officers and employees must comply completely with all applicable laws, rules, and regulations. Willful and knowing disregard for the law may result in severe penalties to the Companies. Failure to comply with all applicable laws, rules, regulations, this Code of Ethics, and other policies of the Companies, will result in appropriate disciplinary action. Any waiver of this Code of Ethics for executive officers or directors may be granted only by the Board of Directors or a Board Committee. Any waiver of this Code of Ethics for other officers or employees may be granted by the General Counsel, in consultation with the Corporate Compliance Officer, and other representatives of management as appropriate.

Conflict of Interest

The Companies" policy statement regarding conflicts of interest requires all directors, officers and employees to avoid situations in which their personal interests conflict with the interests of the Companies. Prior to engaging in any conduct or activity that may result in a conflict of interest, the facts and circumstances of the proposed conduct or activity must be disclosed to your supervisor or manager and to the Chair of the Corporate Compliance Committee in accordance with the Conflict of Interest Policy. Please refer to that Policy for further information.

Corporate Opportunities

Directors, officers, and employees shall not take for themselves personal opportunities that are discovered through the use of the corporate property, information, or position; shall not use corporate property, information, or position for personal gain; and shall not compete with the Companies. All directors, officers, and employees owe a duty to the Companies to advance the legitimate business interests of the Companies.

Gifts

In accordance with law, nothing of any value may be, directly or indirectly, given, offered or promised by or on behalf of the Companies: (1) to any government employee or official, or any member of the judiciary, with intent to influence any official act or any act within the official responsibility of such employee, official, or member of the judiciary; or (2) to any person with intent to influence the testimony under oath of such person. Nothing of substantial value may be, directly or indirectly, given, offered or promised by or on behalf of the Companies to any present or former government official or employee, or member of the judiciary, for or because of any official act performed or to be performed by such official, employee or member of the judiciary. No compensation shall be given, offered or promised to any government official or employee by or on behalf of the Companies in relation to any particular matter in which the governmental entity has a direct and substantial interest.

Political Contributions

In accordance with law, the Companies shall not directly or indirectly give, pay, expend or contribute, or promise to give, pay, expend or contribute, any money or other valuable thing for the purpose of aiding, promoting or preventing the nomination or election of any person to public office, or aiding or promoting or antagonizing the interest of any political party. No director, officer, employee or other individual acting on behalf of the Companies may make or authorize any such contribution by the Companies. This prohibition applies only to the direct or indirect use of corporate funds, and is not intended in any way to discourage directors, officers or employees from making personal contributions to candidates or parties of their choice. However, no director, officer or employee may utilize their position with the Companies to pressure or coerce other directors, officers or employees to personally give, pay, expend or contribute, or promise to give, pay, expend or contribute, any money or other valuable thing for the purpose of aiding, promoting or preventing the nomination or election of any person to public office, or aiding or promoting or antagonizing the interest of any political party.

Antitrust

The Companies engage in vigorous, fair and ethical competition in the marketplace. Directors, officers, and employees of the Companies are expected to refrain from any conduct that may be a violation of antitrust laws. In accordance with law, certain discussions and/or agreements with competitors concerning pricing or other competitive policies and practices are prohibited.

Fair Dealing

Directors, officers, and employees shall endeavor to deal fairly with the Companies" customers, suppliers, competitors, and employees. No one should take unfair advantage through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other unfair dealing practice.

Confidential Information

Directors, officers, and employees frequently have access to confidential information concerning the Companies" business and the businesses of customers, agents, policyholders and other employees. Safeguarding confidential information is absolutely essential. Confidential information includes, but is not limited to, all non-public information that might be of use to competitors, or harmful to the Companies or its customers, if disclosed. Directors, officers, and employees shall not disclose confidential information except when disclosure is authorized or legally mandated. Directors, officers, and employees shall not access, or use, confidential information unless it is relevant to the performance of their job and they have proper authorization. Except for information routinely provided to industry bureaus and agencies, vendors or other representatives of the Companies, in accordance with the Companies" policies and procedures, no director, officer, or employee may disclose confidential information of any type to anyone, except persons within the Companies who have a clear business need to know. Any requests for information arising through legal process (e.g. a subpoena or court order) must first be referred to the General Counsel"s office before releasing any information. The General Counsel may exempt routine business matters from this requirement.

Integrity of Books and Records

Accuracy and reliability in the preparation and maintenance of all books and records is not only mandated by law, it is of critical importance to the Companies" decision making process and to the proper discharge of the Companies" legal, financial and reporting obligations. All business records, expense accounts, vouchers, bills, payroll and service records and other reports must be prepared with care and honesty, and maintained in accordance with law and Company policy. All corporate funds and assets are to be recorded in accordance with Company procedures and applicable laws, regulations and accounting principles. Complaints regarding accounting, internal accounting controls, or auditing matters, including concerns regarding questionable accounting or auditing matters, may be made on a confidential, anonymous basis and should be communicated by mail directly to the Director of Internal Audit, The Commerce Group, Inc., 211 Main Street, M2-01, Webster, Massachusetts 01570.

Personnel

The Companies are equal opportunity employers, and do not discriminate against employees or applicants for employment on the basis of race, color, religion, sex, sexual orientation, national origin, age, physical or mental disability, or status as a disabled veteran or veteran of the Vietnam era. The Companies comply with all applicable laws and regulations in the hiring, treatment and termination of all employees, and endeavor to maintain a working environment that is conducive to professional growth, accomplishment and satisfaction, and free from any type of hostility or harassment. Directors, officers or employees responsible for harassing conduct against other directors, officers, employees, agents, policyholders or vendors, will be appropriately disciplined.

In compliance with the Federal Violent Crime Control and Law Enforcement Act of 1994, the Companies may not willfully allow anyone who has been convicted of a federal or state felony involving dishonesty or breach of trust to engage in the business of insurance in the absence of written consent from the Insurance Commissioner(s) in all appropriate jurisdictions. All directors, officers and employees and applicants for employment are required to disclose to the Human Resources Department the existence of any such conviction.

Corporate Compliance Program

In order to assure compliance with legal requirements and high ethical standards of business conduct, the Companies have established a Corporate Compliance Program. This Program provides policies and procedures that will provide guidance in various areas of compliance, and works to protect the integrity of the Companies.

Resolution and Communication

Directors, officers, and employees of the Companies should resolve their questions, and promptly report the misconduct of other directors, officers or employees, through their supervisors and managers, and/or with personnel in the Human Resources Department. There will be no retaliation for reports made in good faith. There may be instances in which these contacts are not appropriate for the particular situation that a director, officer or employee is facing. In such cases, they may contact the Corporate Compliance Officer in confidence by mail at mail stop M1-03, The Commerce Group, Inc., 211 Main Street, Webster, Massachusetts 01570, or by calling the Corporate Compliance Helpline at 508-949-3300 or toll free at 866-446-3300.

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