HAMILTON, Bermuda, July 30 /PRNewswire-FirstCall/ -- OneBeacon Insurance Group, Ltd. (NYSE: OB) today reported book value per share of $14.71, an increase of 0.7% for both the second quarter and through six months, including dividends.

Mike Miller, CEO of OneBeacon, said, "Our results for the quarter were okay. We experienced a higher than usual level of large property claims and catastrophe losses. Importantly, we completed the sale of our Personal Lines business on July 1, a significant step in our transformation to a specialty company. The market is competitive but we are excited about the prospects for our specialty businesses."

Second quarter comprehensive net income and net income were both $9 million and operating income was $18 million or $0.19 per share. For the six months ended June 30, 2010, comprehensive net income and net income were both $9 million and operating loss was $10 million, or $0.10 per share. Operating income (loss) is a non-GAAP financial measure which is explained later in this release.

During the quarter, OneBeacon repurchased $175 million aggregate principal amount of senior notes, including $156 million as a result of a cash tender offer, and recognized a loss of $10 million on these repurchases. OneBeacon also completed share repurchases of approximately $6 million on 0.4 million shares during the second quarter, which leaves $92 million remaining under its share repurchase authorization.

On July 1, 2010, OneBeacon announced that it completed the sale of its traditional personal lines business to Tower Group, Inc. The transaction will be included in OneBeacon's third quarter financial statements, reflecting the sale's July 1 closing date. As consideration, OneBeacon received approximately $167 million. The purchase price is subject to post-closing adjustments. OneBeacon will record an after-tax gain on the sale of approximately $19 million in the third quarter of 2010. Additionally, in the second quarter of 2010, OneBeacon recorded a $6 million tax benefit related to the difference between the tax basis of the traditional personal lines companies included in the sale and the net asset value of those entities under GAAP.

Insurance Operations

The second quarter GAAP combined ratio was 97.0% as compared to 93.2% for the second quarter of 2009, and 104.9% through June 30, 2010 compared to 93.4% for the first six months of 2009. The variance reflects higher current accident year catastrophe losses, primarily associated with the March Northeast U.S. storms, an increased frequency of catastrophe losses relative to the first six months of 2009, and a number of non-catastrophe current accident year large losses.

Second quarter net written premiums were $344 million compared to $498 million for the second quarter of 2009, reflecting the sale of the nonspecialty commercial lines book of business beginning with January 1 renewal dates. Specialty lines' premiums were $238 million compared to $234 million in 2009, an increase of 2% for the quarter, with particularly strong growth in our entertainment, sports and leisure business, OneBeacon Government Risks, and our newest startup, OneBeacon Energy Group.

For the six months ended June 30, 2010, net written premiums were $715 million compared to $967 million for the comparable period last year, again reflecting the sale of the nonspecialty commercial business. Specialty lines' net written premiums were $498 million compared to $463 million, an 8% increase over the prior year.

Consolidated Investment Results

OneBeacon's second quarter total return on invested assets was 0.3%, compared to 4.4% for the second quarter of 2009. These results included net realized and unrealized investment losses of $14 million and net investment income of $25 million, compared to net realized and unrealized investment gains of $127 million and net investment income of $36 million for the second quarter of 2009.

Through the first six months of 2010, total return on invested assets was 2.2% compared to 4.9% through June 30, 2009. These results included net realized and unrealized investment gains of $28 million and net investment income of $53 million, compared to net realized and unrealized investment gains of $122 million and net investment income of $58 million for the second quarter of 2009.

Company to Host Webcast: OneBeacon will host its second quarter 2010 webcast for analysts and investors at 10:00 a.m. ET on Friday, July 30. A copy of the earnings release, the slide presentation to be referenced during the call and a financial supplement are available on the company's website: www.onebeacon.com. An audio playback of the teleconference will be available on the website shortly following the webcast.

About OneBeacon: OneBeacon Insurance Group, Ltd. is a Bermuda-domiciled holding company that is publicly traded on the New York Stock Exchange under the symbol "OB." OneBeacon Insurance Group's underwriting companies offer a range of specialty insurance products sold through select independent agents, regional and national brokers, and wholesalers. The company's businesses include OneBeacon Professional Insurance, International Marine Underwriters, Entertainment Brokers International Insurance Services, Specialty Accident and Health, OneBeacon Government Risks, OneBeacon Energy Group, A.W.G. Dewar (tuition refund), collector cars and boats written through Hagerty Insurance Agency, OneBeacon Technology Group, OneBeacon Financial Services, OneBeacon Specialty Property, Property and Inland Marine, and AutoOne.

As one of the oldest property and casualty insurers in the United States, OneBeacon traces its roots to 1831 and the Potomac Fire Insurance Company. Today, OneBeacon's specialty insurance businesses are national in scope.

                                    ONEBEACON INSURANCE GROUP, LTD.
                                      CONSOLIDATED BALANCE SHEETS
                                            ($ in millions)
                                               Unaudited

                                                December
                                   June 30,              31,       June 30,
                                        2010      2009       2009
                                        ----      ----       ----
    Assets
    Investment securities:
      Fixed maturity investments    $2,174.8  $2,994.3   $2,745.2
      Short-term investments
       (includes $105.9 held in
       escrow as of June 30,
       2010)                           606.1     544.4      553.0
      Common equity securities         235.2     187.6       58.0
      Convertible bonds                133.4     170.2      225.5
      Other investments                179.1     146.3      189.4
                                       -----     -----      -----

        Total investments            3,328.6   4,042.8    3,771.1
    Cash                                48.0      44.8       50.0
    Reinsurance recoverable on
     unpaid losses                   2,100.7   2,192.9    2,301.2
    Reinsurance recoverable on
     paid losses                        19.2      15.9       22.0
    Premiums receivable                376.0     469.1      552.2
    Deferred acquisition costs         131.2     215.0      222.8
    Net deferred tax asset             157.1     161.1      136.2
    Investment income accrued           19.8      29.4       30.7
    Ceded unearned premiums            144.2      49.9       65.2
    Accounts receivable on
     unsettled investment sales          1.5      24.2        4.0
    Other assets                       286.7     286.9      339.0
    Assets held for sale (1)           655.6         -          -
                                       -----       ---        ---

        Total assets                $7,268.6  $7,532.0   $7,494.4
                                    ========  ========   ========

    Liabilities
    Loss and loss adjustment
     expense reserves               $3,609.2  $3,934.8   $4,060.5
    Unearned premiums                  743.4   1,018.3    1,076.1
    Debt                               419.5     620.5      641.3
    Ceded reinsurance payable          154.6      24.7       52.6
    Accounts payable on
     unsettled investment
     purchases                          29.3       7.6        1.1
    Other liabilities                  398.3     478.0      357.4
    Liabilities held for sale
     (1)                               502.3         -          -
                                       -----       ---        ---

        Total liabilities            5,856.6   6,083.9    6,189.0
                                     -------   -------    -------

    OneBeacon's common
     shareholders' equity and
     noncontrolling interests

    OneBeacon's common
     shareholders' equity:
      Common shares and paid-in
       surplus                       1,004.7   1,009.7    1,017.6
      Retained earnings                394.2     425.5      284.5
      Accumulated other
       comprehensive loss, after
       tax:
        Net unrealized foreign
         currency translation
         losses                         (0.7)     (0.7)      (0.6)
        Other comprehensive income
         and loss items                 (5.3)     (5.5)     (17.1)
                                        ----      ----      -----

          Total OneBeacon's common
           shareholders' equity      1,392.9   1,429.0    1,284.4

          Total noncontrolling
           interests                    19.1      19.1       21.0
                                        ----      ----       ----
    Total OneBeacon's common
     shareholders' equity and
     noncontrolling interests        1,412.0   1,448.1    1,305.4
                                     -------   -------    -------

    Total liabilities,
     OneBeacon's common
     shareholders' equity and
     noncontrolling interests       $7,268.6  $7,532.0   $7,494.4
                                    ========  ========   ========

    (1)  Represents assets and liabilities being sold as part of the
    Personal Lines Transaction required to be presented separately in
    the June 30, 2010 consolidated balance sheet.

                    ONEBEACON INSURANCE GROUP, LTD.
     CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
                (in millions, except per share amounts)
                              (Unaudited)

                                 Three Months Ended       Six Months Ended
                                      June 30,                June 30,
                                 ------------------    ----------------
                                 2010          2009    2010          2009
                                 ----          ----    ----          ----
    Revenues:
      Earned premiums          $428.3        $490.2  $881.5        $978.0
      Net investment income      25.0          36.1    53.3          58.0
      Net realized and
       unrealized investment
       (losses) gains           (14.4)        127.4    28.0         121.5
      Net other (expenses)
       revenues (1)              (2.3)          1.1     4.2          10.5
                                 ----           ---     ---          ----

          Total revenues        436.6         654.8   967.0       1,168.0
                                -----         -----   -----       -------
    Expenses:
      Loss and loss adjustment
       expenses                 261.9         275.7   595.6         563.7
      Policy acquisition
       expenses                  95.2          97.0   196.6         192.9
      Other underwriting
       expenses                  58.5          84.3   132.7         157.0
      General and
       administrative expenses    6.8           6.5    14.5          12.0
      Accretion of fair value
       adjustment to loss and
       loss adjustment expense
       reserves                     -           1.3       -           2.7
      Interest expense on debt    7.9          10.1    17.0          21.0
                                  ---          ----    ----          ----

          Total expenses        430.3         474.9   956.4         949.3
                                -----         -----   -----         -----

    Pre-tax income                6.3         179.9    10.6         218.7

      Income tax benefit
       (expense)                  2.8         (51.0)   (1.2)        (56.5)
                                  ---         -----    ----         -----

    Net income including
     noncontrolling
     interests                    9.1         128.9     9.4         162.2

      Less:  Net income
       attributable to
       noncontrolling
       interests                 (0.5)         (0.7)   (0.8)         (1.2)
                                 ----          ----    ----          ----

    Net income attributable
     to OneBeacon's common
     shareholders                 8.6         128.2     8.6         161.0

      Change in other
       comprehensive income
       and loss items (1)           -           6.2     0.2           7.3
                                  ---           ---     ---           ---

    Comprehensive net income
     attributable to
     OneBeacon's common
     shareholders                $8.6        $134.4    $8.8        $168.3
                                 ====        ======    ====        ======

    Earnings per share
     attributable to
     OneBeacon's common
     shareholders -basic
     and diluted
      Net income attributable
       to OneBeacon's common
       shareholders             $0.09         $1.35   $0.09         $1.69
      Weighted average number
       of common shares
       outstanding (2)           95.0          95.1    95.1          95.1

    (1)  The three and six months ended June 30, 2009 include $7.4
    million pre-tax expense within net other revenues resulting from
    the settlement of the Company's interest rate swap related to the
    mortgage note. Included in change in other comprehensive income and
    loss items is a $4.7 million after tax ($7.4 million pre-tax)
    increase resulting from the settlement of the interest rate swap.
    (2)  Includes the impact of repurchases of Class A common shares made
    through the Company's share repurchase program.

                         ONEBEACON INSURANCE GROUP, LTD.
                         SEGMENT STATEMENTS OF OPERATIONS
                                 ($ in millions)
                                   (Unaudited)

     For the Three Months Ended June
      30, 2010
     -------------------------------
                                             Insurance
                                             Operations   Other    Total
                                             ----------   -----    -----
       Revenues:
         Earned premiums                         $428.3        $-  $428.3
         Net investment income (expense)           25.6      (0.6)   25.0
         Net realized and unrealized
          investment losses                       (13.8)     (0.6)  (14.4)
         Net other revenues (expenses)              8.4     (10.7)   (2.3)

           Total revenues                         448.5     (11.9)  436.6
                                                  -----     -----   -----

       Expenses:
         Loss and loss adjustment expenses        261.9         -   261.9
         Policy acquisition expenses               95.2         -    95.2
         Other underwriting expenses               58.5         -    58.5
         General and administrative
          expenses                                  4.7       2.1     6.8
         Interest expense on debt                     -       7.9     7.9
                                                    ---       ---     ---

           Total expenses                         420.3      10.0   430.3
                                                  -----      ----   -----

       Pre-tax income (loss)                      $28.2    $(21.9)   $6.3
                                                  =====    ======    ====

    For the Three Months Ended June
     30, 2009
    -------------------------------
                                            Insurance
                                            Operations   Other     Total
                                            ----------   -----     -----
       Revenues:
         Earned premiums                         $490.2        $-  $490.2
         Net investment income (expense)           36.3      (0.2)   36.1
         Net realized and unrealized
          investment gains                        127.3       0.1   127.4
         Net other (expenses) revenues             (0.3)      1.4     1.1

           Total revenues                         653.5       1.3   654.8
                                                  -----       ---   -----

       Expenses:
         Loss and loss adjustment expenses        275.7         -   275.7
         Policy acquisition expenses               97.0         -    97.0
         Other underwriting expenses               84.3         -    84.3
         General and administrative
          expenses                                  4.6       1.9     6.5
         Accretion of fair value adjustment
          to loss and LAE reserves                    -       1.3     1.3
         Interest expense on debt                   0.4       9.7    10.1
                                                    ---       ---    ----

           Total expenses                         462.0      12.9   474.9
                                                  -----      ----   -----

       Pre-tax income (loss)                     $191.5    $(11.6) $179.9
                                                 ======    ======  ======

                      ONEBEACON INSURANCE GROUP, LTD.
                     SEGMENT STATEMENTS OF OPERATIONS
                              ($ in millions)
                                (Unaudited)

    For the Six Months Ended June 30, 2010
    --------------------------------------
                                                 Insurance
                                                 Operations Other    Total
                                                 ---------- -----    -----
       Revenues:
         Earned premiums                             $881.5     $-   $881.5
         Net investment income (expense)               54.6   (1.3)    53.3
         Net realized and unrealized investment
          gains (losses)                               29.6   (1.6)    28.0
         Net other revenues (expenses)                 15.8  (11.6)     4.2

           Total revenues                             981.5  (14.5)   967.0
                                                      -----  -----    -----

       Expenses:
         Loss and loss adjustment expenses            595.6      -    595.6
         Policy acquisition expenses                  196.6      -    196.6
         Other underwriting expenses                  132.7      -    132.7
         General and administrative expenses            9.4    5.1     14.5
         Interest expense on debt                       0.1   16.9     17.0


           Total expenses                             934.4   22.0    956.4
                                                      -----   ----    -----

       Pre-tax income (loss)                          $47.1 $(36.5)   $10.6
                                                      ===== ======    =====


     For the Six Months Ended June 30, 2009
     --------------------------------------
                                                 Insurance
                                                Operations  Other    Total
                                                ----------  -----    -----
       Revenues:
         Earned premiums                             $978.0     $-   $978.0
         Net investment income                         57.9    0.1     58.0
         Net realized and unrealized investment
          gains                                       121.4    0.1    121.5
         Net other revenues                             7.0    3.5     10.5

           Total revenues                           1,164.3    3.7  1,168.0
                                                    -------    ---  -------

       Expenses:
         Loss and loss adjustment expenses            563.7      -    563.7
         Policy acquisition expenses                  192.9      -    192.9
         Other underwriting expenses                  157.0      -    157.0
         General and administrative expenses            8.6    3.4     12.0
         Accretion of fair value adjustment to
          loss and LAE reserves                           -    2.7      2.7
         Interest expense on debt                       1.2   19.8     21.0


           Total expenses                             923.4   25.9    949.3
                                                      -----   ----    -----

       Pre-tax income (loss)                         $240.9 $(22.2)  $218.7
                                                     ====== ======   ======

                         ONEBEACON INSURANCE GROUP, LTD.
                          SUMMARY OF RATIOS AND PREMIUMS
                                 ($ in millions)
                                   (Unaudited)

    Three Months Ended
     June 30, 2010                         Insurance Operations
                                           --------------------
                           Specialty                      Run-off
                                (1)       Personal           (2)    Total
                          ----------      --------       --------   -----
    Ratios
         Loss and loss
          adjustment
          expenses               59.5%        66.9%           56.7%   61.1%
         Expense                 37.2%        30.2%           41.0%   35.9%
                                 ----         ----            ----    ----
            GAAP combined        96.7%        97.1%           97.7%   97.0%
                                 ====         ====            ====    ====


    Net written
     premiums                  $237.8       $113.5           $(7.4) $343.9
    Earned premiums            $241.2       $118.4           $68.7  $428.3
    ---------------            ------       ------           -----  ------



    Three Months Ended
     June 30, 2009                     Insurance Operations
                                       --------------------
                           Specialty                      Run-off
                                (1)       Personal           (2)    Total
                          ----------      --------       --------   -----
    Ratios
        Loss and loss
         adjustment
         expenses                45.6%        66.6%           63.7%   56.2%
        Expense                  38.9%        32.5%           38.8%   37.0%
                                 ----         ----            ----    ----
            GAAP combined        84.5%        99.1%          102.5%   93.2%
                                 ====         ====           =====    ====


    Net written
     premiums                  $233.6       $137.9          $126.4  $497.9
    Earned premiums            $224.3       $146.1          $119.8  $490.2
    ---------------            ------       ------          ------  ------



    Six Months Ended
     June 30, 2010                     Insurance Operations
                                       --------------------
                           Specialty                      Run-off
                                (1)       Personal           (2)    Total
                          ----------      --------       --------   -----
    Ratios
         Loss and loss
          adjustment
          expenses               58.5%        76.2%           81.2%   67.6%
         Expense                 38.4%        32.8%           41.1%   37.3%
                                 ----         ----            ----    ----
            GAAP combined        96.9%       109.0%          122.3%  104.9%
                                 ====        =====           =====   =====


    Net written
     premiums                  $498.1       $225.0           $(7.7) $715.4
    Earned premiums            $477.1       $241.2          $163.2  $881.5
    ---------------            ------       ------          ------  ------



    Six Months Ended
     June 30, 2009                     Insurance Operations
                                       --------------------
                           Specialty                      Run-off
                                (1)       Personal           (2)    Total
                          ----------      --------       --------   -----
    Ratios
        Loss and loss
         adjustment
         expenses                39.0%        78.0%           66.2%   57.6%
        Expense                  38.7%        30.2%           37.5%   35.8%
                                 ----         ----            ----    ----
            GAAP combined        77.7%       108.2%          103.7%   93.4%
                                 ====        =====           =====    ====


    Net written
     premiums                  $463.1       $269.6          $234.6  $967.3
    Earned premiums            $440.0       $296.3          $241.7  $978.0
    ---------------            ------       ------          ------  ------

    (1)  Specialty lines now includes Technology, Financial Services,
    OneBeacon Specialty Property and Property and Inland Marine
    segmented commercial businesses which were formerly reported in
    commercial lines. The prior periods have been reclassified to
    conform to the current presentation.
    (2)  Run-off now includes non-specialty commercial lines business
    subject to the commercial lines transaction with The Hanover
    Insurance Group and other run-off business. The prior periods have
    been reclassified to conform to the current presentation.

                           ONEBEACON INSURANCE GROUP, LTD.
                                 BOOK VALUE PER SHARE
                       (in millions, except per share amounts)
                                     (Unaudited)

                                              December
                           June 30,     March 31,            31, June 30,
                                 2010      2010     2009     2009
                                 ----      ----     ----     ----
    Numerator
    OneBeacon's common
     shareholders' equity    $1,392.9  $1,409.6 $1,429.0 $1,284.4

    Denominator
    Common shares
     outstanding (1)             94.7      95.1     95.1     95.1
                                 ----      ----     ----     ----

    Book value per share       $14.71    $14.82   $15.03   $13.51
                               ======    ======   ======   ======

    Change in book value
     per share, including
     dividends, in the
     quarter (2)                  0.7%

    Change in book value
     per share, including
     dividends, in the six
     month period (3)             0.7%

    Change in book value
     per share, including
     dividends, in the
     last twelve months
     (4)                     15.1%

    (1) Includes the impact of repurchases of Class A common shares made
    through the Company's share repurchase program.

    (2) Includes a quarterly dividend of $0.21 per share.

    (3) Includes dividends of $0.42 per share (a quarterly dividend of
    $0.21 per share).

    (4) Includes dividends of $0.84 per share (a quarterly dividend of
    $0.21 per share).

                     ONEBEACON INSURANCE GROUP, LTD.
    COMPREHENSIVE NET INCOME, NET INCOME AND OPERATING INCOME (LOSS)
                 (in millions, except per share amounts)
                               (Unaudited)

                                                            Twelve
                       Three Months        Six Months       Months
                        Ended June         Ended June       Ended
                           30,                     30,             June 30,
                        ------------      ----------   --------
                      2010     2009    2010     2009       2010
    Comprehensive
     net income
     attributable
     to
     OneBeacon's
     common
     shareholders     $8.6   $134.4    $8.8   $168.3     $201.3
                      ====   ======    ====   ======     ======


    Net income
     attributable
     to
     OneBeacon's
     common
     shareholders     $8.6   $128.2    $8.6   $161.0     $189.6

    Weighted
     average
     common shares
     outstanding
     (1)              95.0     95.1    95.1     95.1       95.1
                      ----     ----    ----     ----       ----

    Net income
     attributable
     to
     OneBeacon's
     common
     shareholders
     per share       $0.09    $1.35   $0.09    $1.69      $1.99
                     =====    =====   =====    =====      =====


    Net income
     attributable
     to
     OneBeacon's
     common
     shareholders     $8.6   $128.2    $8.6   $161.0     $189.6
    Less:
    Net realized
     and
     unrealized
     investment
     gains and
     losses           14.4  (127.4)   (28.0) (121.5)     (155.1)
    Tax effect on
     net realized
     and
     unrealized
     investment
     gains and
     losses           (5.0)    44.6     9.8     42.5       54.3
                      ----     ----     ---     ----       ----
      Operating
       income (loss)
       (2)           $18.0    $45.4   $(9.6)   $82.0      $88.8
                     =====    =====   =====    =====      =====

    Weighted
     average
     common shares
     outstanding
     (1)              95.0     95.1    95.1     95.1       95.1
                      ----     ----    ----     ----       ----

    Operating
     income (loss)
     per share (2)   $0.19    $0.48  $(0.10)   $0.86      $0.93
                     =====    =====  ======    =====      =====

    (1) Includes the impact of repurchases of common shares made through
    the Company's share repurchase program.
    (2) Represents a non-GAAP financial measure. See discussion of Non-
    GAAP financial measures.

                     ONEBEACON INSURANCE GROUP, LTD.
          COMPREHENSIVE AND OPERATING RETURNS ON AVERAGE EQUITY
                             ($ in millions)
                               (Unaudited)

                                                                      Twelve
                                                                      Months
                                                                       Ended
                                                                      June 30,
                                                                        2010
                                                                        ----
    Numerator:
    [A] Comprehensive net income attributable to 
          OneBeacon's common shareholders                               $201.3

    [B] Operating income (1)                                             $88.8

                                                  As of      As of
                                                 June 30,   June 30, 
                                                   2010       2009     Average
                                                   ----       ----     -------
    Denominator:
    [C] OneBeacon's common shareholders'
         equity                                 $1,392.9   $1,284.4   $1,338.7
        Less:
         AOCI at January 1, 2008 
          (date of ASC 825 fair 
          value election)                         (181.1)    (181.1)
         Change in OCI/L and net unrealized
          investment gains and losses recognized
          subsequent to fair value election
          through December 31, after tax (2)       120.9      314.6
         Change in net unrealized investment
          gains and losses during the period (3)    11.2     (186.4)
         Tax effect on change in net unrealized
          investment gains and losses during the
          period                                   (3.9)       65.2
         Change in OCI/L during the period,
          after tax                                (0.2)       (7.3)
                                                   ----        ----

    [D] Adjusted OneBeacon's common shareholders'
         equity excluding change in net
         unrealized investment gains and 
         losses, after tax, and AOCI/L (1)     $1,339.8    $1,289.4   $1,314.6
                                               --------    --------   --------

    --------------------------------------------------------------------------
    Returns:
        Comprehensive return on average OneBeacon's common
         shareholders' equity  [A/C]                                     15.0%

        Operating return on average adjusted OneBeacon's common
         shareholders' equity excluding change in net unrealized
         investment gains and losses, after tax, and AOCI/L [B/D]         6.8%

    (1) Represents a non-GAAP financial measure. See discussion of Non-GAAP
         financial measures.
    (2) The components of the change in OCI/L and net unrealized investment
         gains and losses recognized during the years ended December 31, after
         tax, are as illustrated below:

        Change in net unrealized investment gains
         and losses during the year ended
         December 31, 2008 (3)                               $444.7
        Tax effect on change in net unrealized
         investment gains and losses                         (155.6)
        Change in OCI/L during the year ended
         December 31, 2008, excluding the adjustment
         to adopt ASC 825 fair value election, after tax       25.5
                                                               ----
        Change through December 31, 2008                      314.6
                                                              -----
        Change in net unrealized investment gains
         and losses during the year ended
         December 31, 2009 (3)                               (269.1)
        Tax effect on change in net unrealized
         investment gains and losses                           94.2
        Change in OCI/L during the year ended
         December 31, 2009, after tax                         (18.8)
        Change through December 31, 2009                      $120.9
                                                              ======

    (3) Change in net unrealized investment gains and losses is a component of
        net realized and unrealized investment gains (losses) as presented in
        the Company's Statements of Operations and Comprehensive Income.    

Discussion of Non-GAAP Financial Measures

This earnings release includes non-GAAP financial measures that have been reconciled to their most comparable GAAP financial measures. OneBeacon believes these measures to be useful supplements to the comparable GAAP measures in evaluating OneBeacon's financial performance.

Operating income (loss) is a non-GAAP financial measure that excludes net realized and unrealized investment gains or losses and the related tax effects from net income attributable to OneBeacon's common shareholders. OneBeacon believes that this non-GAAP financial measure provides a useful alternative picture of the underlying operating activities of the Company to the GAAP measure of net income attributable to OneBeacon's common shareholders, as it removes variability in the timing of investment gains and losses which may be heavily influenced by investment market conditions. Although key to the Company's overall financial performance, OneBeacon believes that net realized and unrealized investment gains or losses are largely independent of the underwriting decision-making process as well as the activities of its other operations segment.

Adjusted OneBeacon's common shareholders' equity excluding change in net unrealized investment gains and losses, after-tax, and accumulated other comprehensive income/loss (AOCI/L), the average of which is used in calculating operating returns, is derived by excluding the impacts of net unrealized investment gains and losses recognized during the respective periods and accumulated other comprehensive income or loss and changes in other comprehensive income or loss (OCI/L), collectively AOCI/L, from OneBeacon's common shareholders' equity. For the reasons described above, OneBeacon believes that it is appropriate to remove the variability in the timing of unrealized investment gains and losses and other comprehensive income and loss items when analyzing certain performance measures.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This press release may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included or referenced in this release which address activities, events or developments which we expect or anticipate will or may occur in the future are forward-looking statements. The words "will," "believe," "intend," "expect," "anticipate," "project," "estimate," "predict" and similar expressions are also intended to identify forward-looking statements. These forward-looking statements include, among others, statements with respect to OneBeacon's:

• change in book value per share or return on equity;
• business strategy;
• financial and operating targets or plans;
• incurred loss and loss adjustment expenses and the adequacy of its loss and loss adjustment expense reserves and related reinsurance;
• projections of revenues, income (or loss), earnings (or loss) per share, dividends, market share or other financial forecasts;
• expansion and growth of our business and operations; and
• future capital expenditures.

These statements are based on certain assumptions and analyses made by OneBeacon in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors believed to be appropriate in the circumstances. However, whether actual results and developments will conform to our expectations and predictions is subject to a number of risks and uncertainties that could cause actual results to differ materially from expectations, including:

• claims arising from catastrophic events, such as hurricanes, windstorms, earthquakes, floods, fires, explosions, terrorist attacks or severe winter weather;
• recorded loss and loss adjustment expense reserves subsequently proving to have been inadequate;
• the continued availability and cost of reinsurance coverage;
• the continued availability of capital and financing;
• general economic, market or business conditions;
• business opportunities (or lack thereof) that may be presented to it and pursued;
• competitive forces, including the conduct of other property and casualty insurers and agents;
• changes in domestic or foreign laws or regulations, or their interpretation, applicable to OneBeacon, its competitors, its agents or its customers;
• an economic downturn or other economic conditions adversely affecting its financial position including stock market volatility;
• actions taken by ratings agencies from time to time, such as financial strength or credit ratings downgrades or placing ratings on negative watch;
• the risks that are described from time to time in OneBeacon's filings with the Securities and Exchange Commission, including but not limited to OneBeacon's Annual Report on the Form 10-K for the fiscal year ended December 31, 2009 filed February 26, 2010.

Consequently, all of the forward-looking statements made in this press release are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by OneBeacon will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, OneBeacon or its business or operations. OneBeacon assumes no obligation to update publicly any such forward-looking statements, whether as a result of new information, future events or otherwise.

SOURCE OneBeacon Insurance Group, Ltd.