Fitch Assigns 'A' Rating to OneBeacon's New Operating Companies

CHICAGO--()--Fitch Ratings has assigned an 'A' Insurer Financial Strength (IFS) rating to OneBeacon Insurance Group, Ltd.'s (OneBeacon; 75% ownership by White Mountains) new operating company insurance subsidiaries, OBI National Insurance Company (OBIN) and Homeland Insurance Company of Delaware (HODE). The Rating Outlook is Stable. All other ratings of OneBeacon and its subsidiaries are not affected by this action. A full rating list is shown below.

Fitch's rating action reflects the assignment of OneBeacon's group IFS rating to OBIN and HODE as core insurance affiliates. These recently established insurance entities were formed to write OneBeacon's ongoing business and will cede 100% to Atlantic Specialty Insurance Company, the group's primary ongoing insurance entity, through a quota share reinsurance agreement. This restructuring of business entities is being completed as part of the expected sale of OneBeacon's runoff business companies to Armour Group Holdings Limited (Armour).

See the Fitch Rating Action Commentaries dated Oct. 18, 2012 and Aug. 7, 2012 for a summary of areas of sensitivity and triggers that could result in a future upgrade or downgrade of OneBeacon's ratings; they are available at www.fitchratings.com.

Fitch assigns the following ratings:

OBI National Insurance Company

Homeland Insurance Company of Delaware

--IFS 'A'.

Fitch currently rates OneBeacon and its subsidiaries as follows:

OneBeacon U.S. Holdings, Inc.

--IDR 'BBB+';

--$270 million 5.875% due May 15, 2013 'BBB';

--$275 million 4.6% due Nov. 9, 2022 'BBB'.

Atlantic Specialty Insurance Company

Essentia Insurance Company

Homeland Insurance Company of New York

--IFS 'A'; Stable Outlook.

OneBeacon Insurance Company

Camden Fire Insurance Association (The)

Employers' Fire Insurance Company (The)

Northern Assurance Company of America (The)

OneBeacon America Insurance Company

OneBeacon Midwest Insurance Company

Traders & General Insurance Company

--IFS 'A'; Rating Watch Negative.

Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--Insurance Rating Methodology (Oct. 18, 2012);

--Fitch Rates OneBeacon's Senior Debt Offering 'BBB' (Nov. 7, 2012);

--Fitch Places OneBeacon Runoff Entities on Rating Watch Negative; Affirms Ongoing Subsidiaries (Oct. 18, 2012);

--Fitch Affirms White Mountains' Ratings (Aug. 7, 2012).

Applicable Criteria and Related Research:

Insurance Rating Methodology ¬タヤ Amended

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=692293

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Contacts

Fitch Ratings
Primary Analyst, +1 312-606-2321
Brian C. Schneider, CPA, CPCU, ARe
Senior Director
Fitch, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Secondary Analyst
Gretchen K. Roetzer, +1 312-606-2327
Director
Committee Chairperson
or
R. Andrew Davidson, CFA, +1 312-368-3144
Senior Director
or
Brian Bertsch, +1 212-908-0549 (New York)
Media Relations
brian.bertsch@fitchratings.com

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Contacts

Fitch Ratings
Primary Analyst, +1 312-606-2321
Brian C. Schneider, CPA, CPCU, ARe
Senior Director
Fitch, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Secondary Analyst
Gretchen K. Roetzer, +1 312-606-2327
Director
Committee Chairperson
or
R. Andrew Davidson, CFA, +1 312-368-3144
Senior Director
or
Brian Bertsch, +1 212-908-0549 (New York)
Media Relations
brian.bertsch@fitchratings.com