OneBeacon Announces Cash Tender Offer for Its 5.875% Senior Notes Due 2013

HAMILTON, Bermuda, May 3 /PRNewswire-FirstCall/ -- OneBeacon Insurance Group, Ltd. (NYSE: OB) announced today that its indirect wholly-owned subsidiary, OneBeacon U.S. Holdings, Inc. ("OBH"), formerly known as Fund American Companies, Inc., has commenced a cash tender offer (the "Offer") for up to $200 million in aggregate principal amount (the "Maximum Tender Amount") of its 5.875% Senior Notes due 2013 (CUSIP 36077BAA5) (the "Notes").  The Notes are irrevocably and unconditionally guaranteed by White Mountains Insurance Group, Ltd. ("White Mountains").  The funds required to pay for all Notes accepted for purchase in the Offer and to pay related fees and expenses, estimated to be approximately $212 million if the Offer is fully subscribed, will be obtained from cash on hand or from sales of investments.

The Offer will expire at 11:59 p.m. Eastern Time ("E.T."), on May 28, 2010, (such date, as the same may be extended, the "Expiration Date").  Any such extension will be followed by a public announcement no later than 9:00 a.m. E.T., on the first business day after the previously scheduled Expiration Date.

Holders of Notes must validly tender and not validly withdraw their Notes before 5:00 p.m. E.T., on May 14, 2010 (such date and time, as the same may be extended, the "Early Tender Deadline") to receive the Total Consideration (set forth in the table below).  Holders of Notes that validly tender their Notes after the Early Tender Deadline and before 11:59 p.m. E.T., on the Expiration Date will be eligible to receive the Tender Consideration (set forth in the table below) which is equal to the Total Consideration minus an Early Tender Payment of $30 for each $1,000 principal amount of notes validly tendered by such holders that are accepted for purchase. Payment for Notes purchased will include accrued and unpaid interest from, and including, the last interest payment date for the Notes up to, but not including, the settlement date for the Offer.

As of May 3, 2010, $625,582,000 aggregate principal amount of Notes were outstanding.  Of this total, $49,318,000 aggregate principal amount of Notes are held by one of OBH's subsidiaries and will not be tendered in the Offer.  Holders that tender their Notes may withdraw such Notes at any time before 5:00 p.m. E.T., on May 14, 2010 (such date and time, as the same may be extended, the "Withdrawal Deadline").

OBH's obligation to accept for payment and to pay for the Notes in the Offer is subject to the satisfaction or waiver of a number of conditions.  OBH reserves the right to waive any one or more of the conditions at any time.  The Offer is not contingent upon the tender of any minimum principal amount of Notes.

The "Settlement Date" will occur promptly after the Expiration Date.  OBH anticipates that the Settlement Date will be one business day following the Expiration Date.

If the aggregate principal amount of Notes validly tendered exceeds the Maximum Tender Amount, the amount of Notes purchased will be prorated based on the aggregate principal amount of Notes tendered, rounded to the nearest integral multiple of $1,000.

OBH reserves the right to increase the Maximum Tender Amount subject to compliance with applicable law.

OBH has retained Barclays Capital Inc. to serve as lead dealer manager and BofA Merrill Lynch as co-dealer manager for the Offer.  Bondholder Communications Group, LLC has been retained to serve as the tender agent and information agent.  For additional information regarding the terms of the Offer, please contact Barclays Capital Inc. at (800) 438-3242 (toll-free) or (212) 528-7581 (collect).  Requests for documents and questions regarding the tender of the Notes may be directed to Olivia Banks of Bondholder Communications Group, LLC at (888) 385-2663 (toll-free) or (212) 809-2663.

The Offer is being made pursuant to an Offer to Purchase dated May 3, 2010, and a related Letter of Transmittal which set forth in more detail the terms and conditions of the Offer.  The Offer to Purchase and the related Letter of Transmittal are expected to be distributed to holders beginning today.  Copies of the Offer to Purchase and the Letter of Transmittal may also be obtained at www.bondcom.com/onebeacon.

None of OBH, White Mountains, their respective boards of directors, the tender agent and information agent, the dealer managers or the trustee with respect to the Notes makes any recommendation as to whether holders of the Notes should tender or refrain from tendering all or any portion of the principal amount of the Notes.

This announcement does not constitute an offer to buy or the solicitation of an offer to sell securities.  The Offer is being made solely by means of the Offer to Purchase and the related Letter of Transmittal.  In those jurisdictions where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer will be deemed to be made on behalf of OBH by the dealer managers or one or more registered brokers or dealers licensed under the laws of such jurisdiction.

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 insurance products sold through select independent agents, regional and national brokers, and wholesalers. The company's ongoing 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 while its personal lines business is concentrated in the Northeastern United States.

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.

Web site:   www.onebeacon.com

SOURCE OneBeacon Insurance Group, Ltd.