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OneBeacon Insurance Group (NYSE:OB)

Q4 FY07 Earnings Call

February 04, 2008, 10:00 AM ET

Executives

Todd Mills - Treasurer and VP, IR

T. Michael Miller - President and CEO

Paul H. McDonough - CFO

Kevin J. Rehnberg - Sr. VP

Dana Hendershott - Chief Administrative Officer

Brian D. Poole - Chief Actuary

Analysts

Robert Glasspiegel - Langen McAlenney

Jay Gelb - Lehman Brothers

Gary Ransom - Fox-Pitt & Kelton

Rohan Pai - Banc of America Securities

Ross Haberman - Haberman Funds

James Bradshaw - Bears Capital Market

Operator

Good morning and welcome to the OneBeacon Insurance Group's Fourth Quarter and Full Year 2007 Financial Results Webcast. This call is being recorded at 10 AM Eastern Standard Time, Monday, February 4, 2008. All participants are in a listen-only mode. At the conclusion of the prepared remarks, we will be hosting a question-and-answer session.

For opening remarks and introductions, I would like to turn the call over to Todd Mills, OneBeacon's Treasurer and Vice President of Investor Relations. Please go ahead, sir.

Todd Mills - Treasurer and Vice President, Investor Relations

Thank you and good morning. On the behalf of OneBeacon management team, welcome and thank your for joining us, as we review our fourth quarter and full year 2007 financial results.

Today's call is being hosted by Mike Miller, our Chief Executive Officer; and Paul McDonough, our Chief Financial Officer. They will be joined during the Q&A by other members of senior management.

Our fourth quarter full year 2007 results were released earlier this morning. A copy of our press release is available on the Investor Relations section of our website www.onebeacon.com along with today's slide presentation and a copy of our financial supplement. An audio replay of today's webcast will be available on our site falling this call.

Turning to slide two. Let me remind you that any statements we make on today's call that are not historical fact constitute forward-looking statements. These statements are based on certain assumptions and analyses made by OneBeacon in light of our experience and perception of historical trends, current conditions, and expected future developments as well as other factors. However, actual results may differ materially from expectations.

Please refer to the summary of risk factors at the end of our earnings release as well as a detailed list of risk factors contained in our Annual Report filed on Form 10-K for the fiscal year ending December 31, 2006 filed on February 28, 2007.

In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date.

Turning to slide three, during this call, we will refer to non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures accompanies the press release financial statements and is provided in the financial supplement posted on our website.

Now, let me turn the call over to Mike.

T. Michael Miller - President and Chief Executive Officer

Thank you, Todd and good morning.

Let’s turn to slide four to review on fourth quarter and full year 2007 financial highlights. I am very pleased with our overall results, which were outstanding, particularly as they were achieved during the highly competitive year.

Our December 31, adjusted book value per share was $19.14, which represent a 2.6% increase for the fourth quarter and an impressive 16.2% through 12 months, including dividends. Our GAAP combined ratio was an excellent 92.8% for both the fourth quarter and the full year driven by strong results from all of our ongoing operations. Our total return on investments was 1.6% for the fourth quarter and 7.5% through 12 months, representing solid returns as compared to the major indices.

Before we turn to slide five, let me mention that earlier today, we announced the special dividend of $200 million or $2.03 per share. This action reflects our exceptional 2007 results and our longstanding emphasis on capital management. After the dividend, our capital position will continue to support our business needs and remaining share repurchase activities as well as our ongoing search for new specialized business opportunities.

Now, let’s turn to slide five for a closer look at our underwriting results. On the current accident year basis, the fourth non-GAAP loss was a solid 57.5% and 59.9 for the full year. We saw no significant changes in either frequency or severity. Frequency remains flat with mid single digit increases in severity. Our results were also aided by relatively quiet CAT.

Consistent with prior quarters, we experienced some favorable non-CAT prior accident year development, which represented 2.5 points on the combined ratio through year-end. Underneath those results, with the reallocation of ongoing reserves to our run-off reserves during the quarter. This resulted in lower combined ratios for each of our business segments as you will see in the next few slides. However, there was no net impact to OneBeacon’s overall results. Overall, our lost reserves remain strong. And lastly, our run rate for expenses at year-end was approximately 35%.

Turning now to slide six. Let’s review our written premium results. Our fourth quarter and full year premiums declined by 1%, which is a reasonable result given the competitiveness of the current marketplace. Specialty continues to use strong double digit growth, with premiums up 17% for the quarter and 28% for the full year. This is nothing short of outstanding and reflects the excellent response to our custom products by the marketplace.

Commercial lines grew by 1% in both the fourth quarter and through 12 months, driven by double digit growth in small and a slight reduction in middle market premiums reflected with the market conditions. Personalized premiums are comprised of traditional personal lines and are assigned risks AutoOne business. Overall, these premiums were down by 11% for the fourth quarter and 14% for full year 2007, primarily driven by the smaller New York and New Jersey assigned risk pools. The traditional business continues to be impacted by the Massachusetts state mandated rate reductions as well.

Let’s turn to slide seven for a closer look at each of our primary business segments. Our specialty aligns business is continues to achieve excellent results by any measure. The adjusted combined ratio was a strong 92.5% for the fourth quarter and 88.5% for 2007, illustrating excellent results delivered by these businesses. The fourth quarter specialty results were reflected… returned to expected accident year of loss ratio for IMU after unusually good results in the fourth quarter 2006. The expense ratio improved over 7 points in the quarter and 3.5 points from the year, primarily due to increased long-term incentive charges for our OneBeacon Professional Partner Group in 2006.

Now on slide eight, let’s look at some of the further details. As I previously mentioned specialty grew by 17% for the quarter and 20% for the full year, driven by OneBeacon professional partners and IMU. OneBeacon Professional Partners pricing was down 12% paralleling our experience during the third quarter. Pricing for large professional liability, media professional liability, long-term care, provider access, and DNO defined in the high single digits, while hospital professional liability and managed care E&O declined in double digits. However, pricing remains adequate across all of these lines. Retention results were consistent with our expectations trending in a low 80s through the fourth quarter. New business was strong for the quarter, primarily driven by long-term care, provider access, and lawyers’ professional liability.

Our IMU business, marine rich were flat for the fourth quarter. Here again, we write small to midsized accounts, so we experience less volatility as regard to our pricing. IMU’s retention rates were good and new business continues to perform well, reflecting a strong flow of whole business.

In November, we announced the appointment of Southern Marine Aviation as a managing general agency that will write primary cargo business. And lastly, our Accident and Health and Government risk solutions groups are beginning to produce a steady flow of new business.

Let’s turn to slide seven to review our Commercial Lines results. Commercial Lines delivered exceptional results for both the quarter and the year, a noteworthy accomplishment given the competitive conditions today. The current accident year non-CAT results for the quarter was an excellent 46.8% and 53.3% for the year. The combined ratio result was an outstanding 85.3% for the fourth quarter and 88% for the full year.

Turning to slide 10 to review to review underlying trends. Within middle market pricing held steady during the fourth quarter with renewal pricing down 1% and pure rate flat as compared to the prior quarter. Given prevailing market conditions, we were pleased to have seen no further deterioration in our pricing. Retention remains solid at 83% for both the quarter and the year as we continue our emphasis on retaining our best business.

We recently fortified our technology segment by adding a new team of specialists to write medical technology business. And as anticipated investments that were made in early 2007 in the Midwest and United States territories are delivering the strongest growth rates. Our small commercial pricing continues to trend favorably, consistent with the limited impact of today’s environment on this segment. Renewal pricing was up 3% and pure rate was flat, with retention levels remaining in the mid 80s. We entered two new states in the fourth quarter and continue to successfully attract new group business. Lastly, our double digit growth rate reflects the contributions from all of our territories indicative of the opportunities available to us in the marketplace

Now, let’s turn to slide 11 to discuss Personal Lines. Personal Lines had good results for the first quarter and the full year, with current accident year non-CAT loss ratios remaining in the low to mid 60s and a favorable development for prior accident year non-CAT losses. The combined ratio for the quarter and the full year were a solid 94% in a competitive marketplace.

Moving to slide 12. Traditional personal lines renewal pricing increased by 2% for auto and 9% for homeowners similar to prior quarters. Retention levels held steady for both classes. Policy in-force counts and new business fell slightly, indicative of intensifying market conditions in private pass-through auto.

Now, let me turns things over to Paul.

Paul H. McDonough - Chief Financial Officer

Thank you Mike and good morning everyone.

Turning to investments as Mike mentioned, the total return in the portfolio for the quarter was 1.6% and for the full year was an outstanding 7.5%. On the fixed income side as illustrated on slide 13, our portfolio under performed the Lehman index, primarily as a result of being under weighted in treasuries and being shorter in duration. But the real story here is that our fixed income investment managers avoided any exposure to subprime mortgage securities and also to CDOs. That puts them in a fairly select group and as a testament to the quality of their credit analysis and risk selection.

Turning to slide 14. On the equity side, our portfolio managers and prospective partners outperformed the S&P by over 400 basis points for 2007, including notably a positive return of 1.2% in the fourth quarter when the S&P was down over 3%. I could use a number of superlatives to describe those results. But I think, they actually speak best for themselves.

Turning to slide 15. There has been no material change in the asset allocation of our portfolio, which continues to reflect our focus on maximizing risk adjusted total return as opposed to just maximizing that investment income. For your reference, we are now breaking out convertible bonds separately, which we think off and managed as part of our equity portfolio. The fixed income portfolio continues to be high-end in credit quality and short in duration.

Finally, on then slide 16 with respect to capital management, our 2007 year-end debt to total capital ratio at 28.4% was 150 basis points lower than year-end 2006. A special dividend we announced this morning will push that number higher or is has been not above an acceptable level. With respect to share repurchase, from inception of the current program in August of 2007 for year-end ’07, we repurchased approximately 1.6 million shares at an average price of $21.26 per share for a total of $34.6 million. As Mike mentioned the special dividend is now alter our remaining share repurchase authorization.

And with that, I will turn the call back to Mike.

T. Michael Miller - President and Chief Executive Officer

Thank you, Paul. Our focus on our core principles, underwriting comes first, maintaining a discipline balance sheet, investing for total return, and thinking like an owner are the foundation of an excellent year, and once again, withstood the challenge of a changing market.

We grew our book value per share by 16% for the full year. We reported our best full year combined ratio since the formation of one week in a 93%. Our accident year loss ratios remain strong. Our current metrics on risk selection, terms and conditions, price and renewal retention are evidence of our continued focus on underwriting discipline. Our loss reserves are strong, and we continue to set accident year loss reserves with the same methodology put in place in 2001, which has led the favorable development over time. We took significant expense actions during the year, which will position the Company to be more competitive in our selective markets as we go forward.

Our total return philosophy once again produced an outstanding full year return of 7.5%, and more importantly as Paul noted, we have completely avoided any material exposure, the subprime mortgages including CDOs. Our strong full year underwriting results, sound capital management, and under writing discipline positioned us to return $200 million in a special dividend to our owners. As we said when we went public, we withstood their capital wisely and were comfortable returning it down when appropriate. We remain well positioned to invest a new specialized opportunities, if and when they are available. We are well grounded in our core principals, which are more critical than ever in a soft market. We know who we are and have a clear direction for our future. We will be disciplined while remaining opportunistic with a constant focus on growing our book value.

Thanks for joining us this morning and now I’ll turn it over to the operator to take your questions.

Question and Answer

Operator

[Operator Instructions].

Your first question comes from the line of Bob Glasspiegal with Langen McAlenney. Please proceed.

Robert Glasspiegel - Langen McAlenney

Almost got it right there. Good morning everyone. I was wondering if you could give a little bit more color like on the growth in Specialty Lines. You mentioned some of the product areas where you achieving growth. But is it more just new people coming on board or is it existing customers buying more due to the attractive prices that you have up there and other features?

T. Michael Miller - President and Chief Executive Officer

Good morning Bob. Thanks for the question. I’ll make a couple of comments and ask Kevin to give us some additional color as well. I think it’s really a combination of what you alluded to Bob, we have invested over the last couple of years inside of this specialty segments and creating some new business segments. Those are beginning to, as we mentioned, attract new customers, which is a part of the growth and is well inside of some of our ongoing operations and OBPP and IMU as well. We are in the marketplaces we have been in continuing to draw new customers as well. Kevin would you add something there.

Kevin J. Rehnberg - Senior Vice President

Yes. Sure. Good morning Bob.

Robert Glasspiegel - Langen McAlenney

Good morning.

Kevin J. Rehnberg - Senior Vice President

It’s Kevin Rehnberg and I think, it’s a combination as Mike said of both new opportunities that we've been investing in and putting mew products into the market as well as continuation of offering products in the existing areas broadening some of them out both geographically as well as through different markets that we're offering so, it’s across the board within Specialty and just pleased about what the results have been.

Robert Glasspiegel - Langen McAlenney

Okay. What is the growth of long-term care coming from?

Kevin J. Rehnberg - Senior Vice President

It’s just been from the fact that we've decided to concentrate on it, in the last couple of years it’s a large emerging market, as everyone is aware. We started to actively get into it a couple of years ago and start to focus our underwriting and marketing intention on the business in the last couple of years with some good results.

Robert Glasspiegel - Langen McAlenney

Is it group or individual or--?

Kevin J. Rehnberg - Senior Vice President

It’s actually long-term care facilities.

Robert Glasspiegel - Langen McAlenney

Okay.

Kevin J. Rehnberg - Senior Vice President

So it’s…

Robert Glasspiegel - Langen McAlenney

I got you.

Kevin J. Rehnberg - Senior Vice President

Some…

Robert Glasspiegel - Langen McAlenney

Insuring long term care facilities for… against law suits or against…

Kevin J. Rehnberg - Senior Vice President

It’s both professional liability and general liability that we offer to OBPP, but supported by the package business in the Commercial Lines area, so the initial growth was… the Company was on the E&O and GL, but… and that continues showing up in OBPP’s growth, but we have partnered with commercial and package side and that’s been successful through the course of this year, too.

Robert Glasspiegel - Langen McAlenney

Okay. Got you. And last question, could you expand on the reserve increase for run off? What general areas… what was the motivation or what drove the increase?

T. Michael Miller - President and Chief Executive Officer

Hello Bob. It’s Mike again. Total reserves to reinforce remains strong. There’s nothing significant underlying in the run off that is driving the reaction to it that is causing us unusual concern. Overall we felt we were less conservative than we would like to be on run off.

Robert Glasspiegel - Langen McAlenney

In which general area? Which products?

T. Michael Miller - President and Chief Executive Officer

I am sorry. Say it again.

Robert Glasspiegel - Langen McAlenney

Which product line did you increase reserves?

T. Michael Miller - President and Chief Executive Officer

Principally in the workers compensation area and some in construction defect.

Robert Glasspiegel - Langen McAlenney

Okay. In which actually years?

T. Michael Miller - President and Chief Executive Officer

2000 and prior, Bob.

Robert Glasspiegel - Langen McAlenney

Okay. Thank you very much.

T. Michael Miller - President and Chief Executive Officer

You are welcome.

Operator

Your next question comes from the line of Jay Gelb with Lehman Brothers. Please proceed.

Jay Gelb - Lehman Brothers

Thanks. Good morning. Could you give us a bit of an update on where you stand with the changes in the Massachusetts auto market and whether OneBeacon will look to expand it’s presence in the state?

T. Michael Miller - President and Chief Executive Officer

Good morning, Jay. Where we stand and I’ll ask Dana Hendershott to make a few comments on it for us. Where we stand is we have filed in conjunction with the regulatory requirements. Our rates… we continue to be active in the marketplace. There’s obviously still a lot of detail to be worked out over the coming months and years regarding the full transition of the marketplace with more open, competitive market. We applied the Commissioner for her actions and her decisions on the way and we will continue to be engaged in the market and monitor opportunities that might present themselves for expansion, if they make sense.

Dana Hendershott - Chief Administrative Officer

Good morning, Jay. It’s Dana Hendershott. We took about a 7.1% rate decreased as of April 1, probably middle of the pack of all of our competitors and plan to stay in the marketplace with the same type of agency plan that we've had previously. One thing is unique about the marketplace now is that we can re-file every 30 day. So, you will probably be seeing some ups and downs as we go forward from both operating [ph] competitors.

Jay Gelb - Lehman Brothers

Okay. And then separately on Personal Lines, could you update us on the reciprocal results in terms of production and also AutoOne where will we see a bottoming there?

Dana Hendershott - Chief Administrative Officer

I’ll take AutoOne question first. The bottoming probably is occurring as we speak. The marketplace for the involuntary, the pool AIP is probably down to about $150 million, $160 million. We think that’s probably heading towards the bottom and look for 2008 to remain steady and as you have seen some pricing actions in the marketplace by some of the bigger players that might indicate that the market for AIP will come back. I don’t… do not it will ever come back to where it was, where it was $900 million marketplace several years ago.

On the reciprocals, we have… we are into AIE fully transformed into Adirondack for New York. Results there have been good. We have New Jersey Skylands, which also is going to… fourth year and Houston General has seen some okay growth. We are pleased with what we’ve seen so far in the volume in the losses. And as you can imagine we need to always obviously make sure that we have our expense picture inline.

Jay Gelb - Lehman Brothers

Right. And the finally, on the share buyback. I don’t know if you mentioned how much you bought back in the fourth quarter or when your plans are to complete that authorization?

Paul H. McDonough - Chief Financial Officer

Hi, Jay. It’s Paul. Inception today through year-end, we spent roughly $35 million. As you know, the total authorization was $200 million and in terms of what we do going forward, I would expect us to continue to buyback shares opportunistically.

Jay Gelb - Lehman Brothers

Okay. And then last one. I promise. Could you give us a cash flow from operations for the full year ’07 versus ’06 if you have it?

Paul H. McDonough - Chief Financial Officer

Yes. Full year ’07 was about $18 million and ’06 I don’t have in front me or off the top of my head. It was also positive.

Jay Gelb - Lehman Brothers

Okay. Thanks.

T. Michael Miller - Chief Executive Officer, President

Go ahead.

Jay Gelb - Lehman Brothers

Okay. Thank you. I can pull it off. Thanks again.

T. Michael Miller - Chief Executive Officer, President

Thanks, Jay.

Operator

Your next question comes from the line of Gary Ransom with Fox-Pitt and Kelton. Please proceed.

Gary Ransom - Fox-Pitt & Kelton

Good morning. I was wondering if you could update us on your expense… or the… how the expenses you have brought in so far, how that will flow in over ’08 and what we should expect over the next couple of years. And I guess especially in the context of your original goal that you laid out at the IPO?

Paul H. McDonough - Chief Financial Officer

Hi, Gary. It’s Paul. We continue to be focused on managing expenses appropriately. We can certainly represent that we will do that going forward. I do not want to give you any specific projections. And in terms of the ’07 results as Mike mentioned, the normalized expense ratios for the year was around 35%.

T. Michael Miller - President and Chief Executive Officer

Gary, just to follow-up on that, as you know, in October, we took some significant expense actions inline with the direction that we had mentioned that you had alluded to in the IPO of controlling our direct cost, we mentioned that part of the expense pickups would be driven by costs we can manage as well as expectations of a marketplace supported growth. And we will continue to manage the expenses that we control appropriately, and we are continuing to do that and we will continue to operate in the marketplace which obviously is more competitive today than it was at the time of the IPO.

Gary Ransom - Fox-Pitt & Kelton

All right. Another one on the… your frequency severity comments, Mike, I think you said frequencies roughly flat and severities up mid single digits. I think that was across the Board sort or statement. Is there any places or any parts of the business where it’s diverging from that, either way in a material degree?

T. Michael Miller - President and Chief Executive Officer

Gary, not really in any material way.

Gary Ransom - Fox-Pitt & Kelton

Okay. So, the whole book is going that way. And one last little accounting question. The $0.09 of tax related to withholding taxes.

T. Michael Miller - President and Chief Executive Officer

Yes.

Gary Ransom - Fox-Pitt & Kelton

What is the accounting on that or how… does that unwind at some point in the future.

Paul H. McDonough - Chief Financial Officer

Gary, it’s Paul. We… under U.S. GAAP, we accrue a withholding tax of 5% on dividend that we intend to pay from our U.S. companies who are offshore parent.

Gary Ransom - Fox-Pitt & Kelton

So, this is the dividend going upstream to the Bermuda Company? Okay.

Paul H. McDonough - Chief Financial Officer

That’s right.

Gary Ransom - Fox-Pitt & Kelton

I understand that. Okay.

T. Michael Miller - President and Chief Executive Officer

You are welcome.

Operator

Your next question comes from the line of Rohan Pai with Banc of America. Please proceed.

Rohan Pai - Banc of America Securities

Hey, good morning. Congrats on the results on the special dividend. I guess the first question would be… if you can just remind us, did the JRC cover come into play or with respect to the reserve reallocation to the run off or was that exhausted?

T. Michael Miller - President and Chief Executive Officer

Yes. No, it didn’t come into play, and yes it has been exhausted. So, no impact.

Rohan Pai – Banc of America Securities

Okay. and then also on the specialty, lines, could you tell us which lines the reserve releases came from and also maybe an estimate of what percent of the specialty reserves were released, overall.

T. Michael Miller - President and Chief Executive Officer

Yes. I will ask Brian Poole, our Chief Actuary to give you a little color on that.

Brian D. Poole - Chief Actuary

Yes. Most of the favorable development in specialty came from our professional liability lines in our professional partners segment, although there was favorable development in most of our other specialty segments as well, but most of it coming from professional liability. As to the percentage… off the top of my head, I have to say 10% to 15% range.

Rohan Pai - Banc of America Securities

Okay. It… those were the two questions I had. Thank you very much.

Brian D. Poole - Chief Actuary

Thank you.

Operator

[Operator Instructions].

Your next question comes from the line of Ross Haberman with Haberman Fund. Please proceed.

Ross Haberman - Haberman Funds

Good morning gentleman. How are you?

T. Michael Miller - President and Chief Executive Officer

Good morning.

Ross Haberman - Haberman Funds

A quick question. I was wondering if you could sort of give us your rationale for the special dividend as opposed to be more aggressive on the buyback or buying back a chunk, from I guess it was… what was it right now, directly, as another way of utilizing that monies. Could you just sort of give us your, thoughts about that?

Paul H. McDonough - Chief Financial Officer

Hey, Ross, it’s Paul. We determine that it was appropriate to do some of those frankly. As you know, as I have mentioned a couple of times, in ’07 from August through the end of the year, we spent roughly $35 million on share repurchase, and we will continue to… we expect we would continue to be opportunistic in that regard. And we thought it was optimal to, in addition to that, due some amount of special dividend and we thought $200 million would be appropriate enough.

Ross Haberman - Haberman Funds

Okay. And one other I guess question related to that, I know on prior call you were talking about, trying to expand your specialty lines and I guess saving your capital of that if you found some great lines of probable business. Can you give us a sense of what you’re seeing in that light and to the extent that your dividend and giving us back money, should we interpret that as that you’re not finding much?

Paul H. McDonough - Chief Financial Officer

I wouldn’t say that Ross, I would just say that from a total capital position as I mentioned in my opening comments. We remain active in the marketplace looking for new specialized segments. And we feel that we have adequate capital to obviously cover the special dividend, continue on the repurchase, as well as invest in opportunities that come along. So, we’re still very much active and we will see how the markets supports those opportunities.

Ross Haberman - Haberman Funds

Okay. Guys, best of luck and I must commend your equity guys at Prospector, they did a fabulous job the last quarter or two.

Paul H. McDonough - Chief Financial Officer

We agree.

Ross Haberman - Haberman Funds

Thanks again.

Operator

Your next question comes from the line of Jim Bradshaw with Bears Capital Market. Please proceed.

James Bradshaw - Bears Capital Market

Thanks. Congratulations on a nice year, fellows.

T. Michael Miller - President and Chief Executive Officer

Thank you.

James Bradshaw - Bears Capital Market

I was wondering if you could speak just briefly about your investment portfolio, specifically before CA change in allocations, given the recent change in rates and heavy equity performance of late and then also just how you are thinking about it in general for 2008.

Paul H. McDonough - Chief Financial Officer

Hi Jim, it’s Paul.

James Bradshaw - Bears Capital Market

Hi Paul.

Paul H. McDonough - Chief Financial Officer

With regard to the asset allocation, I wouldn’t expect any very dramatic change, although, we may do some optimization around the edges.

James Bradshaw - Bears Capital Market

Okay. And then just in general for ’08, you got to see things as you say just kind of staying the same.

Paul H. McDonough - Chief Financial Officer

I don’t think my crystal ball is probably any better than yours but we would continue to do what we have always done which is to manage the portfolio to maximize the total risk adjusted returns.

James Bradshaw - Bears Capital Market

Okay. And the duration of your fixed portfolio, do you see kind of staying the same short-term?

Paul H. McDonough - Chief Financial Officer

Yes. We continue to have a biased towards shorter duration and fixed income.

James Bradshaw - Bears Capital Market

Okay. Thanks for your time.

Paul H. McDonough - Chief Financial Officer

Thank you.

Operator

With no more further questions in the queue, I would now like to turn the presentation back over to Mr. Mike Miller for closing remarks.

T. Michael Miller - President and Chief Executive Officer

And thank you operator. Once again, thank you for joining us this morning. We conclude an excellent year in 2007 and obviously are well underway into 2008. We will look forward to talk to you at the end of the first quarter. Thank you very much.

Operator

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect, and have a good day.

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Source: OneBeacon Insurance Group Ltd. Q4 2007 Earnings Call Transcript
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