OneBeacon Files $1 Billion Shelf Registration; S&P Assigns Ratings

July 3, 2008

The Bermuda-based OneBeacon Insurance Group announced that it has filed a shelf registration statement on Form S-3 with the Securities and Exchange Commission (SEC).

Standard & Poor’s announced that it “has assigned its preliminary ‘BBB’ senior debt, ‘BBB-‘ subordinated debt, and ‘BB+’ preferred stock ratings to the universal shelf filing of $1 billion for issuance today by OneBeacon and OneBeacon U.S. Holdings, Inc. (OneBeacon U.S., formerly known as Fund American Cos. Inc.).”

“When declared effective by the SEC, the registration statement will permit the company and certain of its subsidiaries, from time to time, to offer and sell up to $1 billion of common shares, preferred shares, depositary shares, debt securities and other specified securities,” said the bulletin.

“The terms of any offering by the company under the registration statement will be established at the time of the offering and will be described in a prospectus supplement. The registration statement is intended to provide the company with additional flexibility to access capital markets for general corporate purposes, subject to market conditions and the company’s capital needs. OneBeacon has no intention to offer or sell any of its OneBeacon Class A common shares at this time.”

The announcement also specified that “the registration statement will permit the resale of up to 71,754,738 of OneBeacon Class B common shares owned by White Mountains Insurance Group, Ltd. [OneBeacon’s parent company] and its subsidiaries. The Class B common shares will automatically convert into OneBeacon Class A common shares upon resale.

“OneBeacon will not receive any of the proceeds from the sale of any Class B common shares by White Mountains. White Mountains has informed OneBeacon that it has no intention to offer or sell any of its OneBeacon Class A common shares at this time.”

In addition to the ratings on the shelf registration, S&P also assigned its ‘BBB’ counterparty credit rating to OneBeacon Insurance Group Ltd. The outlook for both of the ratings is stable.

S&P explained: “Currently there is $700 million of senior debt at OneBeacon U.S., an intermediate holding company under OneBeacon, which is irrevocably and unconditionally guaranteed by White Mountains Insurance Group Ltd. The senior notes issued by OneBeacon U.S. are not due until 2013.”

S&P credit analyst Siddhartha Ghosh added: “The unallocated universal shelf is registered to offer in the aggregate up to $1 billion of senior debt securities, junior debt securities, preferred securities, and common shares. The company intends to use the proceeds from this issuance for general corporate purposes.

He also indicated that S&P “expects that any future drawdown from the shelf by the company will maintain its financial leverage at less than 35 percent. In addition, we expect OneBeacon’s GAAP interest coverage and fixed-charge coverages to be 3x-5x, excluding realized capital gains/losses and adjusting for the economic defeasance of its preferred stock.”

Source: OneBeacon – and Standard & Poor’s –

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