OneBeacon Insurance Group reported second quarter net income of $9 million, operating income of $18 million, a drop in written premiums reflecting the sale of its personal lines business and a jump in combined loss ratio due in part to catastrophe losses from Northeast storms.
Its specialty lines premium writings were up slightly.
The second quarter combined ratio was 97.0 percent, compared to 93.2 percent for the second quarter of 2009, and 104.9 percent through June 30, 2010 compared to 93.4 percent for the first six months of 2009. The company said the variance reflects higher current accident year catastrophe losses, primarily associated with the March storms in the Northeast, an increased frequency of catastrophe losses relative to the first six months of 2009, and a number of non-catastrophe current accident year large losses.
Second quarter net written premiums were $344 million compared to $498 million for the second quarter of 2009, reflecting the sale of the non-specialty commercial lines book of business beginning with January 1 renewal dates.
Specialty lines’ premiums were $238 million compared to $234 million in 2009, an increase of 2 percent for the quarter, with growth in the entertainment, sports and leisure business, OneBeacon Government Risks, and its newest startup, OneBeacon Energy Group.
For the six months ended June 30, 2010, net written premiums were $715 million compared to $967 million for the comparable period last year, again reflecting the sale of the non-specialty commercial business. Specialty lines’ net written premiums were $498 million compared to $463 million, an 8 percent increase over the prior year.
“Our results for the quarter were okay,” said Mike Miller, CEO of OneBeacon, said, “We experienced a higher than usual level of large property claims and catastrophe losses. Importantly, we completed the sale of our personal lines business on July 1, a significant step in our transformation to a specialty company. The market is competitive but we are excited about the prospects for our specialty businesses.”
On July 1, 2010, OneBeacon announced that it completed the sale of its traditional personal lines business to Tower Group, Inc. The transaction will be included in OneBeacon’s third quarter financial statements, reflecting the sale’s July 1 closing date. As consideration, OneBeacon received approximately $167 million. The purchase price is subject to post-closing adjustments. OneBeacon will record an after-tax gain on the sale of approximately $19 million in the third quarter of 2010.
OneBeacon Insurance Group, Ltd. is a Bermuda-domiciled holding company. The company’s 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.