Exhibit 10.4.6
ONEBEACON’S 2008
MANAGEMENT INCENTIVE PLAN
Purpose
The Management Incentive Plan (MIP) is an
integral part of the total compensation program for managers and
certain senior key individual contributors. Its primary purpose is
to focus attention on 2008 profitability goals and to reward
eligible participants for the achievement of those
goals.
Eligibility
The Plan is limited to home office
and field office senior staff who have a significant impact on
OneBeacon’s operating results.
Target Awards
Target awards for all participants
are expressed as a percent of salary.
Performance
Measures
The Corporate MIP pool will be established
based upon achievement of a 96% GAAP combined ratio for total
OneBeacon operations and the following additional non-combined
ratio objectives:
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Achieve Net Written Premium Growth of 9% or
better while maintaining underwriting discipline and ensuring
pricing adequacy.
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Address current over-capitalization. In
particular, 1) improve capital structure of run-off business; 2)
pay a special dividend of up to $200 million; and 3) continue to
opportunistically repurchase shares; while 4) maintaining debt to
total capitalization of 30% or less; and 5) maintaining sufficient
capital to absorb certain shocks, such as a severe cat loss or
significant underperformance vs. plan in our investment
portfolio.
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Complete transactions / acquisitions that build
long-term economic value for OneBeacon.
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Continue to manage aggregate catastrophic
exposures for wind, earthquake, flood and terrorism and ensure
adherence to our strategy of being a low to moderate risk
company.
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The measurement against these goals
will be used to establish a pool of money to be allocated to
business units and Home Office departments. At a corporate combined
ratio of 96%, the plan will fund an amount equal the sum of each of
the plan’s participant’s potential award at their
target bonus percentage. The OneBeacon Insurance Group, Ltd.
Compensation Committee (the “Compensation Committee”)
may adjust the size of the pool based on under or over achievement
of the company’s target combined ratio and other objectives
at its sole discretion.
Individual Awards
Each business unit will be judged against a
number of metrics including, where appropriate, a combined
ratio target, agreed to in advance with the President of
OneBeacon. Generally these targets will relate to the
aggregate financial plan rolled up by branch and line of business,
but the targets will not always match the plan (in many cases, the
targets are more aggressive). If the
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