Liberty Mutual, One Beacon Reach Definitive Agreement

November 5, 2001

Liberty Mutual Group and OneBeacon, a wholly owned subsidiary of White Mountains Insurance Group Ltd., reached a definitive agreement regarding a previously announced partnership transfering business and operations in 42 states and the District of Columbia from OneBeacon to Liberty Mutual’s Regional Agency Markets business unit.

Beginning Nov. 1, Liberty Mutual assumed new and renewal commercial and personal lines business produced by OneBeacon agents within the 42 states and the District of Columbia. OneBeacon will continue to participate in the future results of this business for up to five years through reinsurance agreements. Service agreements have been put in place to ensure a smooth transition. Specialty operations, including agribusiness and ocean marine that is produced by OneBeacon agents within those 42 states and the District of Columbia are not transferring to Liberty Mutual.

OneBeacon and Liberty Mutual Group announced an agreement in principle on September 5. Since that time, transition teams from both organizations have been preparing for the transfer of business and operations.

The partnership is expected to add $1.5 billion of personal lines business produced by OneBeacon agents within the 42 states and the District of Columbia. OneBeacon will continue to participate in the future results of this business for up to five years through reinsurance agreements. Service agreements have been put in place to ensure a smooth transition. Specialty operations, including agribusiness and ocean marine that is produced by OneBeacon agents within those 42 states and the District of Columbia are not transferring to Liberty Mutual.

OneBeacon and Liberty Mutual Group announced an agreement in principle on September 5. Since that time, transition teams from both organizations have been preparing for the transfer of business and operations.

The partnership is expected to add $1.5 billion of personal and commercial lines business to Liberty Mutual’s Regional Agency Markets business unit. The vast majority of OneBeacon staff in the affected territories will receive offers of employment from the local Regional Agency Markets companies. Business and operations in the northwest are being transferred to Liberty Northwest, a separate subsidiary of the Liberty Mutual Group. Liberty Northwest has been a specialty workers compensation provider in the Pacific Northwest since 1984.

Liberty Mutual has been building a national organization of regional property and casualty companies that distribute insurance products solely through independent agents.

Those companies currently have in total direct written premiums of approximately $2.1 billion.

Northeast – Peerless Insurance

Midwest – Indiana Insurance

Mountain – Colorado Casualty Insurance Co.

California – Golden Eagle Insurance Corp.

Southeast – Montgomery Insurance Companies

Specialty – Summit Holdings Southeast and GoAmerica Auto Insurance

As a result of this partnership, two new companies will be formed — America First for the four-state Gulf operation and Hawkeye-Security, a OneBeacon legacy brand, for the eight Central states.

Going forward, OneBeacon is focused on building upon its strengths in the Northeast and emerging as the super-regional company for independent agents in that territory. OneBeacon also operates in select specialty businesses, like Folksamerica Re and International Marine Underwriters.

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