Exhibit 10.25


ONEBEACON INSURANCE GROUP, LTD.


NON-QUALIFIED STOCK OPTION AGREEMENT


AGREEMENT made as of this 18th day of October, 2006, by and
between OneBeacon Insurance Group, Ltd. (“the Company”), a Bermuda company
limited by shares (“the Company”), and T. Michael Miller
(“the Optionee”).


W I T N E S S E T H :


WHEREAS, the Optionee is now employed by the Company or a
subsidiary of the Company and the Company desires to promote the interests of
the Company and its subsidiaries by providing the Optionee with incentives to
continue and increase his or her efforts with respect to, and remain in the
employ of, the Company and its subsidiaries and, as an inducement thereto, the
Company has determined to grant to the Optionee an option pursuant to the
OneBeacon Long-Term Incentive Plan (the “Plan”).


NOW, THEREFORE, it is agreed between the parties as follows:


i)  Grant of Option.  Subject to the terms and conditions hereof,
the Company hereby grants to the Optionee the right and option to purchase from
the Company up to, but not exceeding in the aggregate, 277,826
shares of the Company’s Common Shares, $­­­0.01 par value (the “Common Shares”),
at an exercise price of $30.00 per share (the “Option”).  The Option is not intended to be an incentive
stock option within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the “Code”).


ii)  Vesting of Right to Exercise Option.  The Optionee may purchase from the Company
the following aggregate number of shares covered by the Option on and after each
of the following dates during the term of the Option:


 




	
  Date

  	
   

  	
  Number of Shares Available

  On a Cumulative Basis

  
	
   

  	
   

  	
   

  
	
  Third
  anniversary of the date the 

  Company consummates the initial public 

  offering of its Common Shares

  	
   

  	
  One-third of all option shares, rounded

  down to the nearest whole number of 

  shares

  
	
   

  	
   

  	
   

  
	
  Fourth
  anniversary of the date the 

  Company consummates the initial public 

  offering of its Common Shares

  	
   

  	
  Two-thirds of all option shares, rounded 

  down to the nearest whole number of 

  shares

  
	
   

  	
   

  	
   

  
	
  Fifth
  anniversary of the date the Company consummates the initial public offering
  of its Common Shares

  	
   

  	
  100% of all option shares

  






 











The Option, to the extent vested, shall be exercisable in
whole at any time or in part from time to time during the term of the
Option.  The term of the Option shall be
five (5) years and six (6) months from the date the Company consummates the
initial public offering of its Common Shares or such shorter period as is
prescribed in paragraph 3. 
Notwithstanding anything in this Agreement or the Plan to the contrary,
this Option shall not be exercisable unless, on or before the sixtieth day
after the date of this award agreement, the Company consummates the initial
public offering of its Common Shares.


3.  Termination of Employment.  If at any time the Optionee’s employment with
the Company or any subsidiary shall be terminated for any reason other than
death or Disability (as described below), the Optionee shall have the right to exercise
this Option to the extent of the shares with respect to which the Option could
have been exercised by the Optionee as of the date of his or her termination of
employment in accordance with its terms but in no event beyond the earlier of
(i) three months after the date of termination of employment or
(ii) the scheduled expiration of such Option.  If the Optionee shall voluntarily terminate
his or her employment with the Company (including retirement), the Board may
determine that the Optionee may exercise his or her Option with respect to some
or all of the shares subject to the Option as to which it would not otherwise
be exercisable on the date of his or her voluntary termination; provided,
however, that in no event may the Option be exercised after the
scheduled expiration of the Option.


If an Optionee shall become Disabled, he may, at any time
within three years of the date he becomes disabled (but in no event after the
scheduled expiration date of the Option) exercise the Option with respect to (i) any
shares as to which he could have exercised the Option on the date he became
Disabled and (ii) if the Option is not fully exercisable on the date he
becomes Disabled, the number of additional shares as to which the Option would
have become exercisable had he remained an employee through the next date on
which additional shares were scheduled to become exercisable under the Option.


If an Optionee
shall die while holding an Option, his executors, administrators, heirs or
distributees, as the case may be, at any time within one year after the date of
such death (but in no event after the scheduled expiration of Option), may
exercise the Option with respect to (i) any shares as to which the
decedent could have exercised the Option at the time of his death, and
(ii) if the Option is not fully exercisable on the date of his death, the
number of additional shares as to which the Option would have become
exercisable had he remained an employee through the next date on which
additional shares were scheduled to become exercisable under the Option; provided,












however,
that if death occurs during the three-year period following a Disability, the
three-year period following a retirement or any period following a voluntary
termination in respect of which the Board has exercised its discretion to grant
continuing exercise rights, the Option shall not become exercisable as to any
shares in addition to those as to which the decedent could have exercised the
Option at the time of his death.


If an Optionee ceases to be employed by the Company or one of
its subsidiaries by reason of Related Employment, he shall not be considered to
have incurred a termination of employment for purposes of this Agreement.


4.  Exercise of Option.  The Optionee, from time to time during the
period when the Option hereby granted may by its terms be exercised, may
exercise the Option by delivering to the Company a written notice signed by the
Optionee stating the number of shares that the Optionee has elected to purchase
and the manner of payment for such shares. 
The notice shall be accompanied by payment in full by (a) cash or
check, or, (b) delivery of shares of Common Shares, duly endorsed for
transfer (or with duly executed stock powers attached), (c) Optionee’s written
request that the Company withhold a number of the Common Shares being acquired
by Optionee having a fair market value equal to the cash exercise price
thereof, such fair market value to be determined in such reasonable manner as
may be provided from time to time by the Committee or as may be required in
order to comply with or to conform to the requirements of any applicable or
relevant laws or regulations or (d) any combination of the foregoing, for an
amount equal to the purchase price of the shares then to be purchased (including
any withholding taxes as determined by the Committee).  Common Shares surrendered as payment for
shares purchased pursuant to the exercise of this Option will be valued, for
such purposes, at fair market value (as determined by the Committee) on the date
of such Option exercise.  As soon as
practicable after receipt of the foregoing, the Company shall issue the shares
in the name of the Optionee and deliver the certificates therefor to the
Optionee.


Anything to the contrary herein notwithstanding, the Company’s
obligation to sell and deliver Common Shares under this Option is subject to
such compliance with Federal and state laws, rules and regulations applying to
the authorization, issuance or sale of securities as the Company deems
necessary or advisable.  The Company
shall not be required to sell and deliver stock pursuant hereto unless and
until it receives satisfactory proof that the provisions of the Securities Act
of 1933 or the Securities Exchange Act of 1934 or the rules and regulations of
the Securities and Exchange Commission promulgated thereunder or the provisions
of any state law governing the sale of securities, or that there has been
compliance with the provisions of such acts, rules, regulations and state laws.


5.  Non-Assignability.  The Option shall not be transferable by the
Optionee other than by will or the laws of descent and distribution and may be
exercised during the Optionee’s lifetime only by the Optionee or by his or her
guardian or legal representative.  Any
transferee of the Option shall be subject to the terms and conditions of this
Agreement.  No such transfer of the
Option shall be effective to bind the Company 











unless the Company shall
have been furnished with written notice thereof and a copy of the will and/or
such other evidence as the Company may deem necessary to establish the validity
of the transfer and the acceptance by the transferee or transferees of the
terms and conditions of this Agreement. 
No assignment or transfer of this Option, or of the rights represented
thereby, whether voluntary or involuntary, by operation of law or otherwise
except a transfer by the Optionee by will or by the laws of descent and
distribution, shall vest in the purported assignee or transferee any interest
or right herein whatsoever.


6.  Disputes.  As a condition of the granting of the Option,
the Optionee and the Optionee’s successors and assigns agree that any dispute
or disagreement which shall arise under or as a result of this Agreement shall
be determined by the Committee in its sole discretion and judgment and that any
such determination and any interpretation by such Committee of the terms of
this Agreement shall be final and shall be binding and conclusive for all
purposes.


7. Dilution and
Other Adjustments.  In the event of
any change in the Outstanding Shares of the Company by reason of any stock
split, stock dividend, recapitalization, merger, consolidation, reorganization,
combination or exchange of shares or other similar event, and if the Committee
shall determine, in its sole discretion, that such change equitably requires an
adjustment in the number of shares subject to, or the Option price per share
under, any outstanding Option, which has been awarded to any participant
Optionee, then such adjustment shall be made by the Committee and shall be
conclusive and binding for all purposes of the Plan.


8.  Rights as Shareholder.  The Optionee shall have no rights as a
shareholder of the Company with respect to any of the unexercised shares until
the issuance of a stock certificate or certificates upon the exercise of the
Option in full or in part, and then only with respect to the shares represented
by such certificate or certificates.


9.  Notices.  Every notice relating to this Agree­ment
shall be in writing and if given by mail shall be given by registered or
certified mail with return receipt request­ed. 
All notices to the Company shall be delivered to the Committee or
addressed to the Compensation Committee of the Company at its offices at One
Beacon Street, Boston, Massachusetts 02108. 
All notices by the Company to the Optionee shall be delivered to the
Optionee personally or addressed to the Optionee at the Optionee’s last address
as then contained in the records of the Company or such other address as the
Optionee may designate.  Either party by
notice to the other may designate a different address to which notices shall be
addressed.  Any notice given by the
Company to the Optionee at the Optionee’s last designated address shall be
effective to bind any other person who shall acquire rights hereunder.


10.  Provisions of Plan Controlling.  The provisions hereof are subject to the
terms and conditions of the Plan.  In the
event of any conflict between the provisions of this Option and the provisions
of the Plan, the provisions of the Plan shall control.  All 











capitalized concerning
this Agreement shall have the same meaning, as in the Plan unless otherwise
defined in this Agreement.


*     *    
*     *     *


IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.


	
  

  	
   

  	
  ONEBEACON INSURANCE GROUP, LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: /s/ T. Michael Miller

  
	
   

  	
   

  	
  Name: T. Michael Miller

  
	
   

  	
   

  	
  Its: President & CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  OPTIONEE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  T. Michael Miller

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Award Information

  	
   

  	
   

  
	
  Grant Date: October 18, 2006

  	
   

  	
   

  
	
  Options awarded: 277,826