Exhibit 10.11


PROSPECTOR PARTNERS, LLC


INVESTMENT MANAGEMENT AGREEMENT


PROSPECTOR
PARTNERS, LLC, a Delaware limited liability company (the “ Adviser “),
having an address at 370 Church Street, Guilford, Connecticut 06437, and
OneBeacon Insurance Group, Ltd., a Bermuda Corporation (“OneBeacon”), having an
address at Bank of Butterfield Building, 42 Reid Street, Hamilton HM 12,
Bermuda, hereby enter into this Investment Management Agreement, dated as of
November 14, 2006 (this “ Agreement “), and hereby agree that the
Adviser shall act as discretionary adviser with respect to the specified assets
of each subsidiary of OneBeacon identified on Schedule A (each, a “Client”) to
this Agreement as such schedule may be amended from time to time to add new
subsidiaries as Clients on the following terms and conditions:


1.       Investment
Accounts  The investment account of each of the entities identified in
Schedule A to this Agreement (each an “Investment Account”) shall consist of
cash and securities in an amount equal to at least $30,000,000 (the “Minimum
Account Amount”), or such other amount as may be agreed to by the Adviser,
initially furnished by the Client for investment pursuant to this Agreement, as
well as all other assets which become part of each Investment Account as a
result of trading therein or additions thereto, except for amounts withdrawn
there from and paid to the Client. Each Client may make additions to the
Investment Account in amounts exceeding $100,000, or in such other amount as
may be agreed to by the Adviser, provided that the Adviser shall have received
prompt written notice of such additions. Each Client may make withdrawals from
its’ Investment Account in such amounts as it shall determine upon not less
than 30 days prior written notice thereof to the Adviser and provided that the
withdrawal shall not cause the assets in the Investment Account to fall below
the Minimum Account Amount, unless otherwise agreed to by the Adviser.


2.       Services of
Adviser  By execution of this Agreement the Adviser accepts
appointment as adviser for each Investment Account with full discretion and
agrees to supervise and direct the investments of each Investment Account in
accordance with the investment objective, policies and restrictions described
in the investment guidelines attached hereto as Schedule B (the “Investment
Guidelines”). In the performance of its services, the Adviser will not be
liable for any error in judgment or any acts or omissions to act except those
resulting from the Adviser’s gross negligence, willful misconduct or
malfeasance. Nothing herein shall in any way constitute a waiver or limitation
of any right of any person under the federal securities laws. The Adviser shall
have no responsibility whatsoever for the management of any assets of the
entities identified in Schedule A to this Agreement other than such entities’
Investment Account.


3.       Discretionary
Authority  Subject to the Investment Guidelines, the Adviser shall
have full discretion and authority, without obtaining any prior approval, as
the Client’s agent and attorney-in-fact: (a) to make all investment
decisions in respect of each Investment Account on the Client’s behalf and at
the sole risk of the Client; (b) to buy, sell, exchange, convert,
liquidate or otherwise trade in any stock, bond and other securities or
financial instruments in respect of each Investment Account; (c) to place
orders with respect to, and to arrange for, any of the foregoing; and
(d) in furtherance of the foregoing, to do anything which the Adviser
shall deem requisite, appropriate or advisable in connection therewith,
including, without limitation, the selection of such brokers, dealers, and
others as the Adviser shall determine in its absolute discretion.


4.       Custody
The assets of each Investment Account shall be held in one or more separately
identified accounts in the custody of one or more banks, trust companies,
brokerage firms or other entities designated by the Client and acceptable to
the Adviser. The Adviser will communicate its investment purchase, sale and
delivery instructions directly with the party identified by the Client or other
qualified depositories. The Client shall be responsible for all custodial
arrangements and the payment of all custodial charges and fees, and the Adviser
shall have no responsibility or liability with respect to custody arrangements
or the acts, omissions or other conduct of the custodians.


5.       Brokerage
When placing orders for the execution of transactions for an Investment













Account, the Adviser may allocate
all transactions to such brokers or dealers, for execution on such markets, at
such prices and commission rates, as are selected by the Adviser in its sole
discretion. In selecting brokers or dealers to execute transactions, the
Adviser need not solicit competitive bids and does not have an obligation to
seek the lowest available commission cost. It is not the Adviser’s practice to
negotiate “execution only” commission rates, and, in negotiating commission
rates, the Adviser shall take into account the financial stability and
reputation of brokerage firms and brokerage and research services provided by
such brokers. An Investment Account may be deemed to be paying for research
provided or paid for by the broker which is included in the commission rate
although the Investment Account may not, in any particular instance, be the
direct or indirect beneficiary of the research services provided. Research
furnished by brokers may include, but is not limited to, written information
and analyses concerning specific securities, companies or sectors; market,
finance and economic studies and forecasts; financial publications; statistics
and pricing services; discussions with research personnel; and software and
data bases utilized in the investment management process. OneBeacon
acknowledges on behalf of each Client that since commission rates are generally
negotiable, selecting brokers on the basis of considerations which are not
limited to applicable commission rates may at times result in higher
transaction costs than would otherwise be obtainable. The Adviser is hereby
authorized to, and OneBeacon acknowledges on behalf of each Client that the
Adviser may aggregate orders on behalf of each Investment Account with orders
on behalf of other clients of the Adviser. In such event, allocation of the
securities purchased or sold, as well as expenses incurred in the transaction,
shall be made in a manner which the Adviser considers to be the most fair and
equitable to all of its clients, including the Clients.


6.       Representations
and Warranties


(a)    OneBeacon represents,
warrants and agrees that:


(i)            
it has full legal power and authority to enter into this Agreement; and


(ii)           
the appointment of the Adviser hereunder is permitted by each Client’s
governing documents and any investment management agreement between OneBeacon
and the Clients to this Agreement and has been duly authorized by all necessary
corporate or other action;


(iii)          
it will indemnify the Adviser and hold it harmless against any and all losses,
costs, claims and liabilities which the Adviser may suffer or incur arising out
of any material breach of these representations and warranties of OneBeacon.


(b)    The Adviser represents,
warrants and agrees that:


(i)            
it has full legal power and authority to enter into this Agreement;


(ii)           
it is registered as an investment adviser with the Securities and Exchange
Commission pursuant to the Investment Advisers Act of 1940, as amended (the “Advisers
Act”); and


(iii)          
entering into this Agreement has been duly authorized by all necessary action.


(iv)          
it will indemnify OneBeacon and hold it harmless against any and all losses,
costs, claims and liabilities which OneBeacon may suffer or the Client may
suffer or incur arising out of any material breach of any representations and
warranties of the Adviser.



 2
 









7.       Reports
 The Adviser shall provide OneBeacon with reports containing the status of
the Investment Account at least monthly (i.e. “Flash Report”), and will provide
written advisory report letters on a quarterly basis. All records maintained
pursuant to this Agreement shall be subject to examination by OneBeacon and by
persons authorized by it, or by appropriate governmental authorities, at all
times upon reasonable notice. The Adviser shall provide copies of trade
tickets, custodial reports and other records OneBeacon reasonably requires for
accounting or tax purposes.


8.       Management
Fee and Expenses The Adviser will be paid a quarterly management fee (the “Management
Fee”) for its investment advisory services provided hereunder, determined in
accordance with Schedule C to this Agreement. During the term of this
Agreement, the Management Fee shall be billed and payable in arrears on a quarterly
basis within 10 days after the last day of each calendar quarter based upon the
value of the Investment Accounts as of the last day of the immediately
preceding calendar quarter. The Management Fee shall be pro-rated for any
partial quarter. It is understood that, in the event that the Management Fee is
to be paid by the custodian out of the Investment Accounts, OneBeacon or the
Clients will provide written authorization to the custodian to pay the
Management Fee directly from the Investment Accounts.


(a)    Each Investment Account
shall be responsible for all expenses incurred directly in connection with
transactions effected on behalf of the Investment Account pursuant to this
Agreement and shall include: custodial fees; PAM accounting service fees,
investment expenses such as commissions; and other expenses reasonably related
to the purchase, sale or transmittal of Investment Account assets (other than
research fees and expenses with respect to the Investment Account).


9.       Confidential
Relationship All information and advice furnished by either party to the
other party pursuant to this Agreement shall be treated by the receiving party
as confidential and shall not be disclosed to third parties except as required
by law; provided, however, that the OneBeacon consents to the disclosure by the
Adviser that OneBeacon (and each of the Clients) is a client of the Adviser and
to the inclusion of OneBeacon on a list of representative clients of the
Adviser or in other marketing materials. OneBeacon acknowledges that the
Adviser shall own and be permitted to use its investment track record with
respect to the Investment Accounts, and shall be permitted to retain copies of
all documentation necessary under the Advisers Act to support the track record
or otherwise required to be retained under the Advisers Act and related rules.
The Adviser acknowledges that OneBeacon shall be permitted to report the
investment track record (on a stand-alone basis, as part of its total portfolio
return or otherwise) with respect to the Investment Accounts in any internal or
external reports of it or its affiliates.


10.     Non-Assignability
No “assignment”, as that term is defined in the Advisers Act, of this Agreement
shall be made by the Adviser or OneBeacon without the written consent of the
other party.


11.     Directions to the
Adviser All directions by OneBeacon by or on behalf of the Clients to the
Adviser shall be in writing signed by or on behalf of OneBeacon. The Adviser
shall be fully protected in relying upon any such writing which the Adviser
believes to be genuine and signed or presented by the proper person or persons,
shall be under no duty to make any investigation or inquiry as to any statement
contained therein and may accept the same as conclusive evidence of the truth
and accuracy of the statements therein contained.


12.     Consultation with
Counsel The Adviser may consult with legal counsel (who may be counsel to
OneBeacon) concerning any question that may arise with reference to its duties
under this Agreement, and the opinion of such counsel shall be full and
complete protection in respect of any action taken or omitted by the Adviser
hereunder in good faith and in accordance with such opinion.


13.     Services to Other
Clients It is understood that the Adviser acts as investment adviser to
other clients and may give advice and take action with respect to such clients
that differs from the



 3
 









advice given or the
action taken with respect to the Investment Accounts. Nothing in this Agreement
shall restrict the right of the Adviser, its members, managers, officers,
employees or affiliates to perform investment management or advisory services
for any other person or entity, and the performance of such service for others
shall not be deemed to violate or give rise to any duty or obligation to the
Client.


14.     Investment by the
Adviser for Its Own Account Nothing in this Agreement shall limit or
restrict the Adviser or any of its members, managers, officers, employees or
affiliates from buying, selling or trading any securities for its or their own
account or accounts. OneBeacon on behalf of each Client acknowledges that the
Adviser and its members, managers, officers, employees, affiliates and other
clients may at any time have, acquire, increase, decrease or dispose of
securities which are at or about the same time acquired or disposed of for the
account of a Client. The Adviser shall have no obligation to purchase or sell
for the Investment Accounts or to recommend for purchase or sale by the
Investment Accounts any security that the Adviser or its members, managers,
officers, employees or affiliates may purchase or sell for itself or themselves
or for any other client.


15.     Proxies Subject to
any other written instructions of OneBeacon, the Adviser is hereby appointed
OneBeacon’s agent and attorney-in-fact in its discretion to vote, convert or
tender in an exchange or tender offer any securities in the Investment
Accounts, to execute proxies, waivers, consents and other instruments with
respect to such securities, to endorse, transfer or deliver such securities and
to participate in or consent to any plan of reorganization, merger,
combination, consolidation, liquidation or similar plan with reference to such
securities.


16.     Notices All notices
and instructions with respect to securities transactions or any other matters
contemplated by this Agreement shall be deemed duly given when delivered in
writing or deposited by first-class mail to the following addresses: (a) if to
the Adviser, at its address set forth above, Attention: Peter N Perugini, CFO,
or (b) if to OneBeacon, at its address set forth above, Attention Paul
McDonough, CFO. The Adviser or the Client may change its address or specify a
different manner of addressing itself by giving notice of such change in
writing to the other party.


17.     Entire Agreement;
Amendment This Agreement sets forth the entire agreement of the parties
with respect to management of the Investment Account and shall not be amended
except by an instrument in writing signed by the parties hereto.


18.     Termination This
Agreement shall continue in force from the date hereof for an initial term
until the third anniversary of the date hereof and then may be renewed by
OneBeacon for up to two additional one-year terms, in each case by
providing written notice of its intention to renew the Agreement not
less than 30 days prior to the relevant anniversary
date.    Notwithstanding the foregoing, this Agreement
shall be terminable by OneBeacon upon written notice to the Adviser at least thirty
(30) days prior to the date upon which such termination is to become effective
(i) for cause (including material non-performance by the Adviser), (ii) if
either John Gillespie or Richard Howard are no-longer affiliated with the
Adviser, (iii) if there is a change in control of the Adviser (change in
control in this case shall mean a more than 50% change in the voting interest
of the Adviser), or (iv) if White Mountains’ voting interest in OneBeacon falls
below 50%.  Each Client shall honor any trades executed but not
settled before the date of any termination under this Agreement. The fee for
the calendar quarter during which any termination of this Agreement shall occur
shall be paid as of the date of termination and prorated if the effective date
does not coincide with the end of the quarter.


19.     Governing Law To
the extent that the interpretation or effect of this Agreement shall depend on
state law, this Agreement shall be governed by and construed in accordance with
the laws of the State of New York.


20.     Effective Date This
Agreement shall become effective on the date first written above.


21.     Receipt of Disclosure
Statement OneBeacon acknowledges receipt of a copy of Part II of the
Adviser’s Form ADV in compliance with Rule 204-3(b) under the Advisers Act more
than 48 hours prior to the date of execution of this Agreement. The Adviser
shall annually and without charge,



 4
 









upon request by
OneBeacon, deliver to OneBeacon the current version of such form or a written
document containing at least the information then required to be contained in
such form.


22.     Counterparts This
Agreement may be executed in two counterparts, each one of which shall be
deemed to be an original.


IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective duly authorized representatives as of the date first
written above.


	
  ADVISER:

  	
   

  	
  ONEBEACON:

  
	
   

  	
   

  	
   

  
	
  PROSPECTOR
  PARTNERS, LLC

  	
   

  	
  ONEBEACON INSURANCE GROUP, LTD.

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
							



 



 5
 









SCHEDULE A


SUBSIDIARIES OF ONEBEACON INSURANCE
GROUP, LTD. SUBJECT TO THIS INVESTMENT MANAGEMENT AGREEMENT


Fund American Companies,
Inc.


The Employers’ Fire
Insurance Company


Homeland Insurance
Company of New York


The Northern Assurance
Company of America


OneBeacon America
Insurance Company


OneBeacon Insurance
Company


Pennsylvania General
Insurance Company



 6
 









SCHEDULE B


INVESTMENT GUIDELINES


Investment
Objective


The Adviser’s objective
is to achieve consistent positive returns and to maximize long-term total
returns within prudent levels of risk through capital appreciation on a
diversified portfolio of equity investments.


Performance
Objectives


The Adviser will report
to OneBeacon Insurance Group, Ltd. on a quarterly basis to review the Adviser’s
total investment performance. It is understood that there are likely to be
short-term periods during which performance deviates from market indices.
During such times, greater emphasis shall be placed on performance comparisons
with investment managers employing similar styles. The overall performance of
the Adviser’s Investment Accounts will be measured by referencing broad equity
market indices over a 3-year rolling period.


Guidelines


The Adviser must remain a
registered adviser under the Investment Advisors Act of 1940. Wherever these
guidelines contain a limitation expressed as a percentage of the portfolio
assets, that percentage shall be measured solely with reference to the assets
that are under the Adviser’s control. Subject to these guidelines, the Adviser
shall have full discretion to manage the Investment Account’s assets.


·                  The Adviser may not purchase
securities on margin, sell short, or enter into derivative transactions in the
Investment Account without the written consent of OneBeacon Insurance Group,
Ltd.


·                  The Adviser may purchase Rule 144A
securities provided such securities are judged by the Adviser to be liquid and
do not in the aggregate exceed 20% of the market value of the Account. The
Adviser shall also be able to purchase securities if such securities are
convertible into publicly traded securities.


·                  At least 95% of the Investment
Account will consist of securities of companies having a market capitalization
of $100 million or greater.


·                  The Investment Account may include
domestic and non-domestic securities (common stocks, securities that are
convertible into common stocks, preferred stocks, warrants and rights to
subscribe to common stocks) that are listed on registered exchanges or actively
traded in the over-the-counter market.


·                  Issuers of securities located in
countries other than the United States, including emerging market countries,
shall not exceed 40% of the market value of the Investment Account.


·                  In terms of diversification,
investments shall be allocated with the intent to minimize the risk of large
losses to the Investment Account. The maximum total investment of any one
equity shall be limited to 10% of the Investment Account at the time of
purchase, and 25% of the market value of the Investment Account.


·                  If the aggregate investment in the equity
securities in the Investment Account of any one company exceeds 5% of that
company’s outstanding shares of all classes of stock of that issuer, the
Adviser will notify OneBeacon Insurance Group, Ltd.


·                  Notwithstanding the foregoing, in no
event shall the Adviser acquire securities of White Mountains Insurance Group,
Ltd. or any of its affiliated companies.



 7
 









Exceptions


Any exceptions taken to
this Investment Guideline Statement must be submitted in writing to OneBeacon
Insurance Group, Ltd.



 8
 









SCHEDULE C


FEE SCHEDULE TO THE INVESTMENT
MANAGEMENT AGREEMENT, DATED November 14, 2006 , BETWEEN PROSPECTOR PARTNERS,
L.L.C. AND ONEBEACON INSURANCE GROUP, LTD.


Each
term used in this Schedule C but not defined herein shall have the meaning
assigned to that term in the Investment Management Agreement, dated November 14,
2006 (the “Agreement”), between OneBeacon Insurance Group, Ltd. and Prospector
Partners, L.L.C., the adviser (the “Adviser”).


1.      The Adviser
shall be paid a Management Fee (pro rated for periods less than a full calendar
quarter) computed in accordance with the table below based on the value of the
aggregate net assets (including cash and cash equivalents) of each Investment
Account and the net assets of each other client of the Adviser identified on
Schedule D to this Agreement (such collective aggregate net assets shall be
referred to as the “Aggregate Net Assets”), determined in accordance with
paragraph Section 2 below. Each entity identified in Schedule A and each
other client of the Adviser identified in Schedule D will bear its
proportionate share of the Management Fee.


	
  Aggregate Net
  Assets

  	
   

  	
  Annual Fee

  	
   

  	
  Quarterly Fee

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Up to $200
  million

  	
   

  	
  100 basis points 

  (1.00% or 0.0100)

  	
   

  	
  25 basis points 

  (0.25% or 0.00250)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Next $200 million
  

  (From $200 million to $400 million)

  	
   

  	
  50 basis points

  	
   

  	
  12.50 basis points

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Amounts over
  $400 million

  	
   

  	
  25 basis points

  	
   

  	
  6.25 basis points

  



 


2.      For all
purposes under the Agreement, including the determination of the Management
Fee, the market value of securities shall be as follows: securities that are
listed on a national securities exchange shall be valued at their last sales
price on the date of determination and securities that are not so listed shall
be valued at their last sales price on the date of determination, or if no
sales of such securities occurred on the date of determination, such securities
shall be valued at the last “bid” price at the close of business on such day
(or if sold short at the last “asked” price at the close of business on such
day) quoted by the National Association of Securities Dealers, Inc.’s Automatic
Quotation System or, if not quoted on such system, by one of the principal
market makers in such securities selected by the Adviser. Notwithstanding the
foregoing, if the securities to be valued constitute a block which, in the
judgment of the Adviser, could not be liquidated in a reasonable time without
depressing the market, such block shall then be valued by the Adviser but not
at a unit value in excess of the quoted market price for such security. All
other assets of the Investment Accounts shall be assigned such value as the
Adviser may reasonably determine.



 9
 









SCHEDULE D


CLIENTS OF PROSPECTOR PARTNERS, LLC
SUBJECT TO FEE SCHEDULE SET FORTH IN SCHEDULE C


Fund American Companies,
Inc.


The Employers’ Fire
Insurance Company


Homeland Insurance
Company of New York


The Northern Assurance
Company of America


OneBeacon America
Insurance Company


OneBeacon Insurance
Company


Pennsylvania General
Insurance Company


OneBeacon Insurance
Pension Plan


OneBeacon Insurance
Savings Plan- Equity 401k


OneBeacon Insurance
Savings Plan- Fully Managed



 10