Discontinued Operations (Tables)

9 Months Ended

Sep. 30, 2012

Discontinued Operations

Schedule of discontinued operations balance sheet

	September 30, 2012		December 31, 2011
	($ in millions)
Investments	$	377.3	$	111.8
Cash	—		5.5
Reinsurance recoverable on unpaid losses (1)	1,956.6		0.0
Reinsurance recoverable on paid losses	17.6		0.0
Premiums receivable	13.6		8.8
Deferred acquisition costs	—		2.2
Net deferred tax asset	6.1		1.9
Other assets	17.0		2.4
Total assets held for sale	$	2,388.2	$	132.6
Loss and LAE reserves (1)	$	2,212.9	64.7
Unearned premiums	0.6		34.1
Ceded reinsurance payable	19.5		0.0
Other liabilities (2)	155.2		8.8
Total liabilities held for sale	$	2, 388.2	$	107.6
Net assets held for sale	$	—	$	25.0

(1)

The September 30, 2012 balances include the remaining purchase accounting fair value adjustments of $153.4 million relating to the OneBeacon Acquisition. Gross of the purchase accounting adjustments, reinsurance recoverable on unpaid losses and LAE reserves were $2,110.0 million and $2,366.3 million, respectively. The September 30, 2012 balances also include $36.7 million of loss and LAE reserves relating to Runoff Business that will be ceded by ASIC to OBIC pursuant to the reinsurance described in Note 2.

(2)

Other liabilities for September 30, 2012 includes the accrual related to the pre-tax loss on sale of the Runoff Business of $140.7 million.

Schedule of discontinued operations income statement

	Three months ended						Nine months ended
	September 30,						September 30,
	2012			2011			2012			2011
	($ in millions)
Net written premiums	$	(1.2	)	$	12.7		$	0.6		$	47.2
Revenues
Earned premiums	$	(0.4	)	$	15.7		$	10.0		$	55.3
Net other revenues	—			0.1			—			1.6
Total revenues	(0.4		)	15.8			10.0			56.9
Expenses
Loss and LAE	27.7			12.9			48.4			37.7
Policy acquisition expenses	(0.8		)	1.9			(1.3		)	5.4
Other underwriting expenses	(1.1		)	5.2			1.1			16.6
Total expenses	25.8			20.0			48.2			59.7
Pre-tax loss	(26.2		)	(4.2		)	(38.2		)	(2.8		)
Income tax benefit	10.4			1.7			13.4			1.3
Loss from discontinued operations, net of tax	(15.8		)	(2.5		)	(24.8		)	(1.5		)
Loss from sale of discontinued operations, net of tax	(91.0		)	(18.2		)	(91.0		)	(18.2		)
Net loss from discontinued operations, net of tax	$	(106.8	)	$	(20.7	)	$	(115.8	)	$	(19.7	)

Schedule of Reinsurance Recoverables Reported as Held for Sale and AMBest Rating

	Balance at				A.M. Best
($ in millions)	September 30, 2012		% of total		Rating (1)
National Indemnity Company and General Reinsurance Corporation (2)	$	1,449.2	68	%	A	++
Hanover Insurance Company	62.4		3	%	A
Tokio Marine and Nichido Fire (3)	54.7		3	%	A	++
Munich Reinsurance America	23.2		1	%	A	+
Tower Insurance Company	24.7		1	%	A	-

(1)A.M. Best ratings as detailed above are: “A++” (Superior, which is the highest of fifteen financial strength ratings), “A+” (Superior, which is the second highest of fifteen financial strength ratings), “A” (Excellent, which is the third highest of fifteen financial strength ratings) and “A-” (Excellent, which is the fourth highest of fifteen financial strength ratings).

(2)Includes $198.3 million of Third Party Recoverables (as defined below), which NICO (as defined below) would pay under the terms of the NICO Cover (as defined below) if they are unable to collect from third party reinsurers.

(3)Includes $28.7 million of reinsurance recoverables from the various reinsurers that are guaranteed by Tokio Marine and Nichido Fire under the terms of a 100% quota share reinsurance agreement between Houston General Insurance Company and Tokio Marine and Nichido Fire.

Discontinued operations, computation of earnings per share

	Three months ended						Nine months ended
	September 30,						September 30,
	2012			2011			2012			2011
Loss attributable to OneBeacon’s common shareholders — basic and diluted (in millions):
Net loss attributable to OneBeacon’s common shareholders	$	(106.8	)	$	(20.7	)	$	(115.8	)	$	(19.7	)
Allocation of loss for participating unvested restricted common shares	1.0			0.1			1.0			0.1
Net loss attributable to OneBeacon’s common shareholders, net of restricted common share amounts	$	(105.8	)	$	(20.6	)	$	(114.8	)	$	(19.6	)
Loss per share denominator — basic and diluted (in millions):
Total weighted average common shares outstanding	95.4			95.1			95.3			94.7
Weighted average unvested restricted common shares(1)	(0.9		)	(0.6		)	(0.9		)	(0.3		)
Basic earnings per share denominator(2)	94.5			94.5			94.4			94.4
Loss per share attributable to OneBeacon’s common shareholders — basic and diluted (in dollars):
Net loss attributable to OneBeacon’s common shareholders per share	$	(1.12	)	$	(0.22	)	$	(1.22	)	$	(0.21	)

(1)Restricted shares outstanding vest in equal installments upon a stated date or upon the occurrence of a specified event (see Note 9).

(2)Common shares issuable upon exercise of the options (see Note 9) were not included as their inclusion would be anti-dilutive for the periods presented. During the three and nine months ended September 30, 2012, the remaining outstanding options were unexercised and expired (see Note 9).