HAMILTON, Bermuda, Oct. 30 /PRNewswire-FirstCall/ -- OneBeacon Insurance Group, Ltd. today reported book value per share of $14.44, an increase of 8.4% for the third quarter and 24.0% through nine months, including dividends.
OneBeacon CEO Mike Miller said, "We are pleased with our third quarter results, which produced 8% growth in our book value per share. These results were driven by a solid 4% investment return and 97% combined ratio. We continued to profitably grow our Specialty Lines business, while persistent soft market conditions in commercial lines and a highly competitive personal auto market have led to continued premium declines in our Commercial and Personal Lines businesses. We remain focused on specialization, underwriting discipline and sound capital management."
Third quarter comprehensive net income and net income were both $109 million, and operating income was $32 million or $0.34 per share. For the nine months ended September 30, 2009, comprehensive net income was $277 million, net income was $270 million, and operating income was $114 million or $1.20 per share. Operating income is a non-GAAP financial measure which is explained later in this release.
Insurance Operations
The third quarter GAAP combined ratio was 97.2% as compared to 99.8% for the third quarter of 2008, and 94.7% through the first nine months of 2009 compared to 98.1% through the first nine months of 2008, reflecting lower catastrophe losses and continued favorable net loss reserve development in Specialty Lines and Commercial Lines.
Net written premiums were $504 million for the third quarter, compared to $534 million for the third quarter of 2008. Specialty Lines premiums increased by 11.4% for the quarter, reflecting new business growth from most of the businesses, particularly OneBeacon Government Risks, OneBeacon Professional Insurance, Specialty Accident and Health, and Entertainment Brokers International Insurance Services. Commercial Lines net written premiums declined by 9.3% during the third quarter and Personal Lines premiums were 21.5% lower, including the impact of premiums ceded under the new quota share agreement designed to reduce property catastrophe exposure from homeowners business. Excluding the impact of the quota share, Personal Lines premiums declined by 11.4% for the third quarter.
Through nine months, 2009 net written premiums were $1,471 million compared to $1,489 million for the first nine months of 2008. Specialty Lines net written premiums grew by 23.4% over the prior year, while Commercial Lines and Personal Lines decreased by 8.4% and 16.6%, respectively. Excluding the impact of the quota share, Personal Lines premiums declined by 6.8% for the first nine months of 2009.
Consolidated Investment Results
OneBeacon's third quarter total return on invested assets was 4.0%, compared to minus 7.1% for the third quarter of 2008. These results included net realized and unrealized investment gains of $118 million and net investment income of $34 million, compared to net realized and unrealized investment losses of $356 million and net investment income of $43 million for the third quarter of 2008.
Through September 30, 2009, total return on invested assets was 8.8%, compared to minus 5.7% through the first nine months of 2008. Investment results included net realized and unrealized investment gains of $239 million and net investment income of $92 million. This compared to net realized and unrealized investment losses of $414 million and net investment income of $138 million through September 30, 2008.
Company to Host Webcast
OneBeacon will host its third quarter 2009 Webcast for analysts and investors at 10:00 a.m. ET on Friday, October 30. A copy of the earnings release, the slide presentation to be referenced during the call and a financial supplement are available on the company's Web site: www.onebeacon.com. An audio playback of the teleconference will be available on the Web site shortly following the Webcast.
About OneBeacon: OneBeacon Insurance Group's underwriting companies offer a range of specialty and segmented commercial and personal insurance products sold through select independent agents, regional and national brokers, and wholesalers. As one of the oldest property and casualty insurers in the United States, OneBeacon traces its roots to 1831 and the Potomac Fire Insurance Company. Today, OneBeacon's specialty insurance businesses are national in scope, while commercial lines business is produced in select territories throughout the United States. Personal lines business is concentrated in the Northeastern United States.
OneBeacon's U.S. headquarters is in Canton, Massachusetts. The company is publicly traded on the New York Stock Exchange under the symbol "OB".
ONEBEACON INSURANCE GROUP, LTD.
CONSOLIDATED BALANCE SHEETS
($ in millions)
(Unaudited)
September December September
30, 31, 30,
2009 2008 2008
---- ---- ----
Assets
Investment securities, at fair
value:
Fixed maturity investments $2,795.7 $2,134.8 $2,300.0
Common equity securities 81.2 276.7 793.3
Convertible bonds 244.0 241.2 272.4
Short-term investments 730.6 962.2 531.7
Other investments 166.2 196.6 292.5
----- ----- -----
Total investments 4,017.7 3,811.5 4,189.9
Cash 53.0 53.0 45.6
Reinsurance recoverable on
unpaid losses 2,244.3 2,503.3 2,544.9
Reinsurance recoverable on paid
losses 17.3 21.7 19.4
Premiums receivable 505.8 527.6 580.7
Securities lending collateral(1) - 100.7 211.8
Deferred acquisition costs 228.8 225.5 233.4
Net deferred tax asset 101.7 252.7 172.1
Investment income accrued 26.0 25.7 26.7
Ceded unearned premiums 59.1 66.5 71.9
Accounts receivable on
unsettled investment sales 30.1 49.0 15.0
Other assets 290.7 303.6 301.0
----- ----- -----
Total assets $7,574.5 $7,940.8 $8,412.4
======== ======== ========
Liabilities
Loss and loss adjustment
expense reserves $4,029.6 $4,294.0 $4,408.0
Unearned premiums 1,081.2 1,088.2 1,108.4
Debt 620.4 731.9 731.9
Securities lending payable (2) 1.7 107.7 215.8
Ceded reinsurance payable 36.3 70.5 97.6
Accounts payable on unsettled
investment purchases 29.3 6.8 11.5
Other liabilities 383.6 469.4 444.6
----- ----- -----
Total liabilities 6,182.1 6,768.5 7,017.8
------- ------- -------
Shareholders' equity and
noncontrolling interests
OneBeacon's shareholders' equity:
Common shares and paid-in
surplus 1,017.9 1,016.7 1,016.8
Retained earnings 373.1 163.4 355.3
Accumulated other comprehensive
income / loss, after tax:
Net unrealized foreign
currency translation
losses (0.6) (0.6) -
Other comprehensive income
and loss items (16.9) (24.4) 1.3
----- ----- ---
Total OneBeacon's
shareholders' equity 1,373.5 1,155.1 1,373.4
Total noncontrolling interests 18.9 17.2 21.2
---- ---- ----
Total OneBeacon's
shareholders' equity and
noncontrolling interests 1,392.4 1,172.3 1,394.6
------- ------- -------
Total liabilities,
OneBeacon's shareholders'
equity and noncontrolling
interests $7,574.5 $7,940.8 $8,412.4
======== ======== ========
(1) In February 2009, the Company amended its securities lending
program, giving it more control over the assets held in the
securities lending collateral account. As a result, these assets
are now included within the Company's investments.
(2) In June 2009, the Company settled substantially all of the
outstanding payables under its securities lending program thereby
reducing this liability.
ONEBEACON INSURANCE GROUP, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(in millions, except per share amounts)
(Unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
-------------- -----------------
2009 2008 2009 2008
---- ---- ---- ----
Revenues:
Earned premiums $492.8 $471.2 $1,470.8 $1,390.3
Net investment income 34.4 43.1 92.4 137.8
Net realized and
unrealized investment
gains (losses) 117.6 (355.9) 239.1 (413.9)
Net other revenues (1) 5.7 4.4 16.2 10.6
--- --- ---- ----
Total revenues 650.5 162.8 1,818.5 1,124.8
----- ----- ------- -------
Expenses:
Loss and loss adjustment
expenses 298.2 303.4 861.9 878.7
Policy acquisition
expenses 101.4 92.6 294.3 261.6
Other underwriting
expenses 79.4 74.3 236.4 223.6
General and
administrative expenses 6.9 7.1 18.9 14.5
Accretion of fair value
adjustment to loss and
loss adjustment expense
reserves 1.4 3.0 4.1 9.0
Interest expense on debt 9.1 11.0 30.1 33.9
Interest expense -
dividends on preferred
stock subject to
mandatory redemption - - - 11.8
Interest expense -
accretion on preferred
stock subject to
mandatory redemption - - - 21.6
-- -- -- ----
Total expenses 496.4 491.4 1,445.7 1,454.7
----- ----- ------- -------
Pre-tax income (loss) 154.1 (328.6) 372.8 (329.9)
Income tax (expense)
benefit (44.8) 117.7 (101.3) 120.6
----- ----- ------ -----
Net income (loss) including
noncontrolling interests 109.3 (210.9) 271.5 (209.3)
Less: Net (income) loss
attributable to
noncontrolling interests (0.7) 0.6 (1.9) (1.5)
---- --- ---- ----
Net income (loss)
attributable to
OneBeacon's shareholders 108.6 (210.3) 269.6 (210.8)
Change in other
comprehensive income and
loss items (1) 0.2 0.8 7.5 0.8
--- --- --- ---
Comprehensive net income
(loss) attributable to
OneBeacon's shareholders $108.8 $(209.5) $277.1 $(210.0)
====== ======= ====== =======
Earnings (loss) per share
attributable to OneBeacon's
shareholders - basic and
diluted
Net income (loss)
attributable to
OneBeacon's shareholders $1.14 $(2.21) $2.83 $(2.19)
Weighted average number
of shares outstanding(2) 95.1 95.2 95.1 96.2
(1) The nine months ended September 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 for the nine months ended September 30, 2009
is a $4.8 million after tax ($7.4 million pre-tax) increase
resulting from the settlement of the interest rate swap.
(2) Includes the impact of repurchases of Class A common shares
made through the Company's share repurchase program which
commenced in the third quarter of 2007.
ONEBEACON INSURANCE GROUP, LTD.
SEGMENT STATEMENTS OF OPERATIONS
($ in millions)
(Unaudited)
For the Three Months Ended September 30, 2009
---------------------------------------------
Insurance
Operations Other Total
------------ ------- -------
Revenues:
Earned premiums $492.8 $- $492.8
Net investment income (expense) 35.6 (1.2) 34.4
Net realized and unrealized
investment gains (losses) 118.1 (0.5) 117.6
Net other revenues 5.1 0.6 5.7
----- ---- -----
Total revenues 651.6 (1.1) 650.5
----- ---- -----
Expenses:
Loss and loss adjustment
expenses 298.2 - 298.2
Policy acquisition expenses 101.4 - 101.4
Other underwriting expenses 79.4 - 79.4
General and administrative
expenses 4.2 2.7 6.9
Accretion of fair value
adjustment to loss and
LAE reserves - 1.4 1.4
Interest expense on debt 0.2 8.9 9.1
Interest expense - dividends
and accretion on preferred stock
subject to mandatory redemption - - -
----- ---- -----
Total expenses 483.4 13.0 496.4
----- ---- -----
Pre-tax income (loss) (1) $168.2 $(14.1) $154.1
====== ====== ======
For the Three Months Ended September 30, 2008
-----------------------------------------------
Insurance
Operations Other Total
------------ ------- -------
Revenues:
Earned premiums $471.2 $- $471.2
Net investment income 42.4 0.7 43.1
Net realized and unrealized
investment losses (355.7) (0.2) (355.9)
Net other revenues 2.9 1.5 4.4
----- --- -----
Total revenues 160.8 2.0 162.8
----- --- -----
Expenses:
Loss and loss adjustment
expenses 303.4 - 303.4
Policy acquisition expenses 92.6 - 92.6
Other underwriting expenses 74.3 - 74.3
General and administrative
expenses 4.7 2.4 7.1
Accretion of fair value
adjustment to loss and LAE
reserves - 3.0 3.0
Interest expense on debt 0.9 10.1 11.0
Interest expense - dividends and
accretion on preferred stock
subject to mandatory redemption - - -
----- ---- -----
Total expenses 475.9 15.5 491.4
----- ---- -----
Pre-tax loss (1) $(315.1) $(13.5) $(328.6)
======= ====== =======
(1) Includes income / loss from noncontrolling interests.
ONEBEACON INSURANCE GROUP, LTD.
SEGMENT STATEMENTS OF OPERATIONS
($ in millions)
(Unaudited)
For the Nine Months Ended September 30, 2009
--------------------------------------------
Insurance
Operations Other Total
------------ ------- -------
Revenues:
Earned premiums $1,470.8 $- $1,470.8
Net investment income
(expense) 93.5 (1.1) 92.4
Net realized and
unrealized
investment gains
(losses) 239.5 (0.4) 239.1
Net other revenues 12.1 4.1 16.2
------- --- -------
Total revenues 1,815.9 2.6 1,818.5
------- --- -------
Expenses:
Loss and loss
adjustment expenses 861.9 - 861.9
Policy acquisition
expenses 294.3 - 294.3
Other underwriting
expenses 236.4 - 236.4
General and
administrative
expenses 12.8 6.1 18.9
Accretion of fair
value adjustment
to loss and LAE
reserves - 4.1 4.1
Interest expense on
debt 1.4 28.7 30.1
Interest expense - dividends
and accretion on preferred
stock subject to mandatory
redemption - - -
------- ---- -------
Total expenses 1,406.8 38.9 1,445.7
------- ---- -------
Pre-tax income (loss) (1) $409.1 $(36.3) $372.8
====== ====== ======
For the Nine Months Ended September 30, 2008
----------------------------------------------
Insurance
Operations Other Total
------------ ------- -------
Revenues:
Earned premiums $1,390.3 $- $1,390.3
Net investment income 126.7 11.1 137.8
Net realized and
unrealized investment
losses (410.8) (3.1) (413.9)
Net other revenues 9.9 0.7 10.6
------- --- -------
Total revenues 1,116.1 8.7 1,124.8
------- --- -------
Expenses:
Loss and loss
adjustment expenses 878.7 - 878.7
Policy acquisition
expenses 261.6 - 261.6
Other underwriting
expenses 223.6 - 223.6
General and
administrative
expenses 7.5 7.0 14.5
Accretion of fair
value adjustment to
loss and LAE
reserves - 9.0 9.0
Interest expense on
debt 2.7 31.2 33.9
Interest expense - dividends
and accretion on preferred
stock subject to mandatory
redemption - 33.4 33.4
---- ---- ----
Total expenses 1,374.1 80.6 1,454.7
------- ---- -------
Pre-tax loss (1) $(258.0) $(71.9) $(329.9)
======= ====== =======
(1) Includes income from noncontrolling interests.
ONEBEACON INSURANCE GROUP, LTD.
SUMMARY OF RATIOS AND PREMIUMS
($ in millions)
(Unaudited)
--------------------
Three Months Ended Insurance Operations
September 30, 2009 --------------------
Specialty Commercial Personal Total (1)
--------- ---------- -------- ---------
Ratios
Loss and loss
adjustment expenses 51.0% 63.0% 68.9% 60.5%
Expense 39.4% 37.3% 32.5% 36.7%
---- ---- ---- ----
Total GAAP
combined 90.4% 100.3% 101.4% 97.2%
================== ==== ===== ===== ====
-------------------- ------ ------ ------ ------
Net written premiums $212.5 $163.2 $128.3 $503.9
Earned premiums $180.8 $171.4 $140.5 $492.8
-------------------- ------ ------ ------ ------
--------------------
Three Months Ended
September 30, 2008 Insurance Operations
--------------------
Specialty Commercial Personal Total (1)
--------- ---------- -------- ---------
Ratios
Loss and loss
adjustment expenses 62.8% 63.8% 64.8% 64.4%
Expense 37.3% 37.1% 32.0% 35.4%
---- ---- ---- ----
Total GAAP
combined 100.1% 100.9% 96.8% 99.8%
==================== ===== ===== ==== ====
-------------------- ------ ------ ------ ------
Net written premiums $190.7 $180.0 $163.4 $534.1
Earned premiums $129.5 $181.7 $160.0 $471.2
-------------------- ------ ------ ------ ------
--------------------
Nine Months Ended
September 30, 2009 Insurance Operations
--------------------
Specialty Commercial Personal Total (1)
--------- ---------- -------- ---------
Ratios
Loss and loss
adjustment expenses 43.8% 58.4% 75.2% 58.6%
Expense 39.3% 37.4% 30.9% 36.1%
---- ---- ---- ----
Total GAAP
combined 83.1% 95.8% 106.1% 94.7%
==================== ==== ==== ===== ====
-------------------- ------ ------ ------ --------
Net written premiums $567.9 $505.3 $397.9 $1,471.2
Earned premiums $515.0 $518.7 $436.8 $1,470.8
-------------------- ------ ------ ------ --------
-------------------
Nine Months Ended
September 30, 2008 Insurance Operations
--------------------
Specialty Commercial Personal Total (1)
--------- ---------- -------- ---------
Ratios
Loss and loss
adjustment expenses 56.1% 63.2% 64.7% 63.2%
Expense 35.4% 37.1% 32.0% 34.9%
---- ---- ---- ----
Total GAAP
combined 91.5% 100.3% 96.7% 98.1%
==================== ==== ===== ==== ====
-------------------- ------ ------ ------ --------
Net written premiums $460.2 $551.9 $477.0 $1,489.4
Earned premiums $359.3 $545.4 $485.3 $1,390.3
-------------------- ------ ------ ------ --------
(1) Includes results from run-off.
ONEBEACON INSURANCE GROUP, LTD.
BOOK VALUE PER SHARE
(in millions, except per share amounts)
(Unaudited)
September June December September
30, 30, 31, 30,
2009 2009 2008 2008
---- ---- ---- ----
Numerator
OneBeacon's shareholders'
equity $1,373.5 $1,284.4 $1,155.1 $1,373.4
Denominator
Common shares outstanding 95.1 95.1 95.1 95.1
---- ---- ---- ----
Book value per share $14.44 $13.51 $12.15 $14.44
====== ====== ====== ======
Change in book value per
share, including dividends,
in the quarter (1) 8.4%
Change in book value per
share, including dividends,
in the nine month period (2) 24.0%
Change in book value per
share, including dividends,
in the last twelve months (3) 5.8%
(1) Includes a quarterly dividend of $0.21 per share.
(2) Includes dividends of $0.63 per share (a quarterly dividend of $0.21
per share).
(3) Includes dividends of $0.84 per share (a quarterly dividend of $0.21
per share).
ONEBEACON INSURANCE GROUP, LTD.
COMPREHENSIVE NET INCOME (LOSS), NET INCOME (LOSS) AND OPERATING INCOME
(in millions, except per share amounts)
(Unaudited)
Twelve
Three Months Nine Months Months
Ended Ended Ended
Sept. 30, Sept. 30, Sept. 30,
-------------- ------------- --------
2009 2008 2009 2008 2009
---- ---- ---- ---- ----
Comprehensive net
income (loss)
attributable to
OneBeacon's
shareholders $108.8 $(209.5) $277.1 $(210.0) $78.9
Adjusting items (1) - - - 29.4 -
--- --- --- ---- ---
Adjusted
comprehensive net
income (loss) (2) $108.8 $(209.5) $277.1 $(180.6) $78.9
====== ======= ====== ======= =====
Net income (loss)
attributable to
OneBeacon's shareholders $108.6 $(210.3) $269.6 $(210.8) $97.7
Adjusting items (1) - - - 29.4 -
--- --- --- ---- ---
Adjusted net income
(loss) (2) $108.6 $(210.3) $269.6 $(181.4) $97.7
====== ======= ====== ======= =====
Weighted average
common shares
outstanding (3) 95.1 95.2 95.1 96.2 95.1
---- ---- ---- ---- ----
Net income (loss)
attributable to
OneBeacon's shareholders
per share $1.14 $(2.21) $2.83 $(2.19) $1.03
===== ====== ===== ====== =====
Adjusted net income
(loss) per share (2) $1.14 $(2.21) $2.83 $(1.89) $1.03
===== ====== ===== ====== =====
Net income (loss)
attributable to
OneBeacon's shareholders $108.6 $(210.3) $269.6 $(210.8) $97.7
Less:
Net realized and
unrealized
investment gains
and losses (117.6) 355.9 (239.1) 413.9 110.6
Tax effect on net
realized and
unrealized investment
gains and losses 41.2 (124.5) 83.7 (144.8) 38.7)
---- ------ ---- ------ -----
Operating income (2) $32.2 $21.1 $114.2 $58.3 $169.6
Adjusting items (1) - - - 29.4 -
--- --- --- ---- ---
Adjusted operating
income (2) $32.2 $21.1 $114.2 $87.7 $169.6
===== ===== ====== ===== ======
Weighted average
common shares
outstanding (3) 95.1 95.2 95.1 96.2 95.1
---- ---- ---- ---- ----
Operating income per
share (2) $0.34 $0.22 $1.20 $0.61 $1.78
===== ===== ===== ===== =====
Adjusted operating
income per share
(2) $0.34 $0.22 $1.20 $0.91 $1.78
===== ===== ===== ===== =====
(1) Adjusted to exclude the impact of economically defeasing the Company's
mandatorily redeemable preferred stock, which was redeemed in May
2008, as illustrated below.
Adjusting items:
Dividends on
preferred stock $- $- $- $11.8 $-
Accretion on
preferred stock - - - 21.6 -
Earnings on defeasance,
net of tax - - - (4.0) -
-- -- -- ---- --
Total adjusting items $- $- $- $29.4 $-
== == == ===== ==
(2) Represents a non-GAAP financial measure.
(3) Includes the impact of repurchases of common shares made through the
Company's share repurchase program which commenced in the third
quarter of 2007.
ONEBEACON INSURANCE GROUP, LTD.
COMPREHENSIVE AND OPERATING RETURNS ON AVERAGE EQUITY
($ in millions)
(Unaudited)
Twelve Months
Ended
Sept. 30, 2009
---------------
Numerator:
[A] Comprehensive net income $78.9
[B] Operating income (1) $169.6
As of As of
Sept. 30, Sept. 30,
2009 2008 Average
---------- --------- -------
Denominator:
[C] OneBeacon's
shareholders'
equity $1,373.5 $1,373.4 $1,373.5
Less:
AOCI at January 1, 2008 (181.1) (181.1)
Change in OCI/L and net
unrealized investment
gains and losses
recognized during the
year ended December
31, 2008, after tax (2) 314.6 -
Change in net unrealized
investment gains and
losses (3) (274.3) 354.7
Tax effect on change in
net unrealized investment
gains and losses 96.0 (124.1)
Change in OCI/L during the
period, after tax (7.5) (0.8)
---- ----
[D] Adjusted OneBeacon's
shareholders' equity
excluding change in
net unrealized investment
gains and losses, after
tax, and AOCI/L (1) $1,321.2 $1,422.1 $1,371.7
-------- --------
Returns:
Comprehensive return on
average OneBeacon's
shareholders' equity
[ A / C ] 5.7%
Operating return on average
adjusted OneBeacon's
shareholders' equity
excluding change in net
unrealized investment gains
and losses, after
tax, and AOCI/L [ B / D ] 12.4%
(1) Represents a non-GAAP financial measure.
(2) The components of the change in OCI/L and net unrealized investment
gains and losses recognized during the year ended December 31, 2008,
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 (3) (155.6)
Change in OCI/L during
the year ended December
31, 2008 excluding the
adjustment to adopt SFAS
159, after tax 25.5
----
$314.6
======
(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
(Loss).
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. In addition, certain of these non-GAAP financial measures have been adjusted to exclude the impact of economically defeasing the Company's mandatorily redeemable preferred stock. As described in more detail in the Company's Annual Report on Form 10-K for the year ended December 31, 2008, in connection with its initial public offering, the Company created two irrevocable grantor trusts and funded them with assets sufficient to make the remaining dividend and redemption payments for $20 million of preferred stock that was redeemed in June 2007 and $300 million of preferred stock that was redeemed in May 2008. The Company created and funded these trusts to appropriately capitalize and leverage the Company in preparation for and in connection with its initial public offering. Having completed these actions, OneBeacon believes that presentation of certain of the non-GAAP financial measures as described below, adjusted to exclude the impact of the economic defeasance of the preferred stock as of and for the respective periods, is a useful supplement to understanding the Company's earnings and profitability.
Adjusted comprehensive net income(loss) is derived by excluding the impact of economically defeasing the Company's mandatorily redeemable preferred stock from comprehensive net income (loss) attributable to OneBeacon's shareholders, the most closely comparable GAAP measure. As described above, OneBeacon believes that adjusted comprehensive net income (loss) is a useful supplement to understanding the Company's earnings and profitability.
Adjusted net income (loss) is derived by excluding the impact of economically defeasing the Company's mandatorily redeemable preferred stock from net income (loss) attributable to OneBeacon's shareholders, the most closely comparable GAAP measure. As described above, OneBeacon believes that adjusted net income (loss) is a useful supplement to understanding the Company's earnings and profitability.
Adjusted net income (loss) per share is calculated by dividing adjusted net income (loss) (a non-GAAP financial measure described above) by the weighted average number of common shares outstanding. OneBeacon believes that adjusted net income (loss) per share is a useful supplement to understanding the Company's earnings and profitability.
Operating income is a non-GAAP financial measure that excludes net realized and unrealized investment gains or losses and the related tax effects from net income (loss) attributable to OneBeacon's 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 (loss) attributable to OneBeacon's 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 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 operating income is a non-GAAP financial measure that excludes the impact of economically defeasing the Company's mandatorily redeemable preferred stock from operating income (a non-GAAP financial measure described above). OneBeacon believes that adjusted operating income is a useful supplement to understanding the Company's earnings and profitability.
Adjusted operating income per share is calculated by dividing adjusted operating income (a non-GAAP financial measure described above) by the weighted average number of common shares outstanding. OneBeacon believes that adjusted operating income per share is a useful supplement to understanding the Company's earnings and profitability. Net income (loss) attributable to OneBeacon's shareholders per share is the most directly comparable GAAP measure.
Adjusted OneBeacon's 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 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, 2008 filed February 27, 2009.
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.
OneBeacon Insurance Group, Ltd.
