Exhibit 10.2


 


OneBeacon
Insurance Group, Ltd.


Long-Term
Incentive Plan


Form of
2009-2011 Performance Unit Grant


 


THIS GRANT (this “Grant”) is
made, effective as of February 24, 2009, between OneBeacon Insurance
Group, Ltd., a Bermuda company (the “Company”) and <First
NAME> <Last NAME> (the “Participant”).


 


RECITALS:


 


WHEREAS, the Company has
adopted the Long-Term Incentive Plan (“Plan”), which Plan is incorporated
herein by reference and made part of this Grant; and


 


WHEREAS, the Board has
determined that it would be in the best interest of the Company and its owners
to grant the award provided for herein to the Participant pursuant to the Plan
and the terms set forth herein.


 


NOW THEREFORE, for good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:


 


1.             Grant: 
Subject to the terms and conditions of the Plan and the additional terms
and conditions set forth in this Grant, the Company hereby grants to the
Participant a Performance Unit Award of <# Of
UNITS> units.  The value of
one Unit shall be fixed at $100.00 (the “Unit Value”) for all purposes under
this Grant.


 


2.             Award
Period:  The Award Period shall be January 1,
2009 through December 31, 2011.


 


3.             Performance Objective:  The Performance Objective applicable to this
Award shall be an adjusted economic combined ratio for the Company and its
subsidiaries (the “Adjusted Economic Combined Ratio”) of 95% for the Award
Period as a whole.  The Adjusted Economic
Combined Ratio for the Award Period as a whole will be the average (mean) of
the Adjusted Economic Combined Ratio for each of the three Performance Periods
as determined by the Board in its sole discretion.


 


4.             Performance Percentage.  The Performance Percentage applicable to the Units
shall be dependent upon the extent to which the Performance Objective is
attained and shall be determined as follows:


 


	
  Adjusted Economic

  Combined Ratio for the

  Award Period

  	
   

  	
  Performance

  Percentage

  
	
  99% or higher

  	
   

  	
  0%

  
	
  98%

  	
   

  	
  35%

  
	
  97%

  	
   

  	
  65%

  
	
  96%

  	
   

  	
  85%

  
	
  95%

  	
   

  	
  100%

  
	
  94%

  	
   

  	
  115%

  
	
  93%

  	
   

  	
  135%

  
	
  92%

  	
   

  	
  165%

  
	
  91% or lower

  	
   

  	
  200%

  



 

















 


 


The Adjusted Economic Combined Ratio for the
Award Period is calculated to the nearest one-tenth of one percent.  In the event that the Adjusted Economic
Combined Ratio for the Award Period is not a whole percentage value, the
Performance Percentage shall be determined by straight-line interpolation
between the two successive whole Adjusted Economic Combined Ratio values from
the table above.


 


5.             Award
Payment:  Subject to all terms and conditions of the
Plan, the Participant’s actual value at the end of the Award Period will be
settled in cash, in the Company’s Class A common stock (“Shares”), or
partly in cash and partly in Shares, as determined by the Committee.


 


If settled entirely or partially in cash, the
cash value will be:


(a) the number of Performance Units
granted, times


(b) the Performance Percentage, times


(c) the Unit Value, times


(d) the percentage of the Award settled
in cash.


 


If settled entirely or partially in Shares,
the number of Shares issued will be:


(a) the number of Performance Units
granted, times


(b) the Performance Percentage, times


(c) the Unit Value divided by the fair
market value of one Share on the date that the Board certifies the Performance
Percentage, times


d) the percentage of the Award settled
in shares.


 


6.             Termination
of Employment:  Except as provided in Section 6 of the
Plan, this Award shall be canceled, and no payment shall be payable hereunder,
if the Participant’s continuous employment or Related Employment with the
Company shall terminate for any reason prior to the end of the Award Period.


 


7.             Successors
and Assigns:  This Grant shall inure to the benefit of and
be binding upon the Company and its successors and assigns.  The Company shall request any purchaser of a
business unit in which the Participant is employed (a “Purchaser”), to fully
assume the obligations of the Company under this Grant.  If a Purchaser declines to assume such
obligations, the Company shall remain obligated under the terms of this Grant.


 


8.             Definitions:  All
terms not otherwise defined herein shall have the same meaning as in the Plan.


 


9.             Withholding:  The
Participant agrees to make appropriate arrangements with the 


 

















 


Company for satisfaction of any applicable
income tax withholding requirements, including the payment to the Company, at
the termination of the Award Period (or such earlier or later date as may be
applicable under the Code), of all such taxes and other amounts, and the
Company shall be authorized to take such action as may be necessary, in the
opinion of the Company’s counsel (including, without limitation, withholding
amounts from any compensation or other amount owing from the Company to the
Participant), to satisfy all obligations for the payment of such taxes and
other amounts.


 


10.           Reduction
of the Award:  Notwithstanding anything to the contrary
herein, the Board, in its sole discretion (but subject to applicable law), may
reduce any amounts payable to the Participant in order to satisfy any
liabilities owed to the Company by the Participant.


 


11.           No
Right to Continued Employment:  Neither the Plan nor this Grant shall be
construed as giving the Participant the right to be retained in the employ of,
or in any consulting relationship to, the Company or any of its
subsidiaries.  Further, the Company may
at any time dismiss the Participant or discontinue any consulting relationship,
free from any liability or any claim under the Plan or this Grant, except as
otherwise expressly provided in the Plan and in this Grant.  In addition, nothing herein shall obligate
the Company to make future Grants to the Participant.


 


12.           Award
Subject to Plan:  By entering in this Grant the Participant
agrees and acknowledges that the Participant has received and read a copy of the
Plan, understands the terms of the Plan and this Award and that this Award is
subject to all of the terms and provisions set forth in the Plan and in this
Grant and accepts this Performance Unit Award subject to all such terms and
conditions which are incorporated herein by reference, including, but not
limited to, the eligibility requirement to execute a Confidentiality and
Nonsolicitation Agreement.  In the event
of a conflict between any term or provision contained in this Grant and a terms
or provision of the Plan, the applicable terms and provisions of the Plan will
govern and prevail.


 


13.           Designation
of Beneficiary by Participant:  A Participant may name a beneficiary to
receive any payment to which he/she may be entitled in respect of this Award in
the event of his/her death, by notifying the Company.  A Participant may change his/her beneficiary
from time to time in the same manner.  If
the Participant has not designated a beneficiary or if no designated
beneficiary is living on the date on which any amount becomes payable to a
Participant’s beneficiary, that amount shall be paid to the Participant’s
estate.


 


14.           No Rights as Shareholder: You will not be considered a shareholder of
the Company for any purpose with respect to this Award unless and until Shares
are issued to you in settlement of this Award.


 


15.           Restrictions on Transfer of Units: 
Units may not be sold, transferred, pledged, exchanged, hypothecated or
disposed of by you and shall not be subject to execution, attachment or similar
process.


 


16.           Compliance
with Section 409A of the Internal Revenue Code: 
Notwithstanding anything in this Agreement to the contrary, to the
extent that this Agreement constitutes a nonqualified 


 

















 


deferred compensation plan to which Internal
Revenue Code Section 409A applies, the administration of this Award
(including time and manner of payments under it) shall comply with Section 409A.


 


17.           Notices:  Any
notice necessary under this Grant shall be addressed to the Company and to the
Participant at the address appearing in the personnel records of the Company
for such Participant or to either party at such other address as such party
hereto may hereafter designate in writing to the other. Any such notice shall
be deemed effective upon receipt thereof by the addressee.


 


18.           Governing
Law:  This Agreement shall be governed by and
construed in accordance with the laws of Bermuda.


 


19.           Entire
Agreement:  This Agreement, the Plan, and the rules and
procedures adopted by the Compensation Committee, contain all of the provisions
applicable to the Grant and no other statements, documents or practices may
modify, waive or alter such provisions unless expressly set forth in writing,
signed by an authorized officer of the Company and delivered to you.


 


20.           Signature
in Counterparts:  This Grant may be signed in counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.


 


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


 


	
  PARTICIPANT

  	
   

  	
  ONEBEACON INSURANCE GROUP,
  LTD.

  
	
   

  	
   

  	
   

  
	
  By: 

  	
   

  	
   

  	
  By:  

  	
  

  
	
  <First
  Name> <Last Name>

  	
   

  	
  Name: Mike
  Miller

  
	
   

  	
   

  	
  Title: President &
  CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Award Details:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
					



2009 – 2011 Performance Unit Plan


<# Units> Units Granted


 

















 


Annex


 


Key
Definitions


 


Terms used in this Grant shall have the
following meanings:


 


Adjusted Economic Combined Ratio shall mean:


 


Reported GAAP Combined Ratio adjusted to
include:


 


(a)   a charge to cover catastrophic events (CAT
Charge) and


 


(b)   the impact of certain items of non
underwriting income, specifically:


 


	
   

  	
  (i)

  	
  OneBeacon’s interest in
  management or other fees earned by non insurance companies;

  
	
   

  	
  (ii)

  	
  Pre tax gain or loss on
  sale of any business or entity;

  
	
   

  	
  (iii)

  	
  Pre tax gain or loss
  associated with repurchase of OneBeacon’s senior debt;

  
	
   

  	
  (iv)

  	
  Tax reserve adjustment
  associated with completion of tax examinations and audits; and

  
	
   

  	
  (v)

  	
  Other items of pre tax net
  income / expense in OneBeacon’s Primary Insurance Operations segment (i.e.
  OneBeacon Group LLC and its subsidiaries) provided such items are not
  associated with investment activities.

  



 


Other than as noted above,
economic combined ratio adjustments shall not include the pre tax net income /
expense associated with OneBeacon’s “Other Operations” segment.


 


The adjustment to GAAP combined ratio shall
be calculated as the pre tax impact of items above divided by GAAP earned
premium.


 


Board shall mean:


 


The Board of Directors of the Company, or the
Compensation Committee of the Board or such other committee or subcommittee
that is authorized to determine performance under the Long-Term Incentive Plan.


 


CAT Charge shall mean:


 


	
   

  	
  i)

  	
  (a) one-half of the
  annual plan CAT losses represented as a percentage of plan net earned premium,
  times (b) actual net earned premium, plus

  
	
   

  	
  ii)

  	
  (a) an insurance
  charge of 0.08%, times (b) actual net earned premium, plus

  
	
   

  	
  iii)

  	
  one-half of actual CAT
  losses, subject to

  
	
   

  	
  iv)

  	
  an overall maximum of 5.9%
  of actual net earned premium

  



 


For 2009, plan CAT losses
are 2.6% of plan earned premium. 
Consequently, for 2009, the CAT charge calculation will equal 1.4% of
actual net earned premium, plus one half of actual CAT losses.


 


Performance Percentage shall mean:


 


a percentage of no less than 0% and no more
than 200%, as determined by the Board in its sole discretion and as outlined in
paragraph four (4) of this Performance Unit Grant.


 

















 


Performance Period shall mean:


 


Each of the fiscal years of the Company
ending December 31, 2009. 2010 and 2011, respectively.


 


Performance Unit shall mean:


 


a performance unit granted to participant
under the Company’s Long-Term Incentive Plan having a value of $100.00 per unit
for all purposes under the Grant, conditioned upon the attainment of a
specified Performance Objective(s) over a specified Award Period.