(Adds analysts' comments, details, updates share movement)

By Supantha Mukherjee

BANGALORE, July 31 (Reuters) - Hanover Insurance Group Inc (THG.N: Quote, Profile, Research) said it agreed to sell its remaining life insurance business to a unit of Goldman Sachs Group Inc (GS.N: Quote, Profile, Research) to increase capital flexibility and focus on its property and casualty business.

"It's a positive," said analyst Clifford Gallant of Keefe, Bruyette & Woods, adding that the company sold the business at a better-than-expected price.

Hanover sees total proceeds of about $220 million and expects a loss of $66 million in the second quarter related to the sale.

The loss translates to about $1.27 a share, based on the 52 million shares outstanding as of April 28.

The sale cleans up Hanover's balance sheet and will improve the company's return on equity over time, said Gallant, who expects a second-quarter loss at Hanover.

The company has sold it at a discount to the book but the division was a run-off, which was incurring a small loss for a while and was expected to be sold at a loss, said analyst Michael Phillips of Stifel Nicolaus.

"The company was putting different chunks of its life insurance business in the run-off since 2002," Phillips added.