Wednesday, OneBeacon Insurance Group, Ltd. (OB) reported a swing to profit in fourth-quarter, mainly on the absence of an investment loss recorded in the prior-year quarter. OneBeacon shares are down more than 7%, reflecting the flat growth in earned premiums the company reported.
The Minnetonka, Minnesota-based company reported a fourth-quarter comprehensive net income of $83.7 million or $0.76 per share, compared to a loss of $198.2 million or $1.81 per share in the fourth quarter of 2008.
On average, seven analysts polled by Thomson Reuters estimated earnings of $0.44 per share for the quarter. Analysts' estimates typically exclude special items.
Revenues for the fourth quarter jumped to $559.8 million from $168.8 million in the prior year quarter. Analysts expected revenues of $499.10 million for the quarter. The company had net realized and unrealized investment gains of $9.5 million in the fourth quarter, compared to an investment loss of $349.7 million a year ago.
The company had a net income of $72.4 million in the fourth quarter, compared to a net loss of $171.9 million in the fourth quarter last year. Net income excludes effects of foreign currency translation and change in other comprehensive income and loss items. On a non-GAAP basis, operating income for the quarter increased to $66.2 million from $55.4 million in the comparable quarter of 2008.
For the Insurance Operations segment of OneBeacon, fourth-quarter net written premiums decreased to $435.5 million from $473.7 million in the fourth quarter of 2008. Earned premiums for the quarter was $488.7 million, flat with the prior-year quarter. Premium from Specialty Lines increased by 4% during the quarter, reflecting new business growth from most of the businesses, particularly Entertainment Brokers International Insurance Services, OneBeacon Energy, and OneBeacon Professional Insurance. Personal Lines' premiums decreased 21.8%, including the impact of premiums ceded under the homeowners quota share agreement, while Run-off premiums declined by 13.4%. Excluding the impact of the quota share, Personal Lines' premiums declined by 12.4% for the fourth quarter.
The fourth quarter GAAP combined ratio, a measure of profitability used by insurance companies, was 93.6% as compared to 86.2% for the fourth quarter of 2008, with 2009 results reflecting higher losses at AutoOne and higher expenses, including increased incentive compensation costs and severance and other costs associated with the renewal rights transaction.
OneBeacon's fourth-quarter total return on invested assets was 1.1%, compared to negative 8% for the fourth quarter of 2008. These results included net realized and unrealized investment gains of $10 million and net investment income of $33 million, compared to investment losses of $350 million and investment income of $27 million for the fourth quarter of 2008.
The company's book value per share for the quarter was $15.03, compared to $14.44 in the third quarter and $12.15 in the fourth quarter last year.
For fiscal 2009, the company's comprehensive net income was $360.8 million or $3.60 per share, compared to a net loss of $408.2 million or $3.99 per share in the similar period of 2008. Revenue for the period increased to $2.38 billion from $1.29 billion in the year-earlier period.
Commenting on the results, Mike Miller, chief executive officer of OneBeacon, said, "We finished the year with strong results, including 31% growth in book value and a 94% GAAP combined ratio for both the quarter and the full year. Investment returns were excellent, with a 1% return for the fourth quarter and 10% for the year. The sale of our non-specialty Commercial Lines business in early December and our more recently announced Personal Lines sale is a major step in our transition to a specialty company."
OB is losing $1 or 7.16%, and is currently trading at $12.96 on a volume of 81 thousand shares on the New York Stock Exchange.
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