Exhibit 10.2


 


OneBeacon Insurance Group, Ltd.


Long-Term Incentive Plan


2010-2012 Performance Unit Grant


 


THIS
GRANT (this “Grant”) is made, effective as of February 23, 2010, 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, 2010
through December 31, 2012.


 


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 7 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:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  2010 — 2012 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)         all other
income and other expense except:


(i)                         parent company
G&A expenses;


(ii)                      items
explicitly related to capital and investments; and


(iii)                   tax adjustments
explicitly related to parent G&A expenses and capital and investments.


 


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 0.02%, times (b) actual net earned premium, plus


iii)                                   one-half of
actual CAT losses, subject to


iv)                                  an overall
maximum of 5.0% of actual net earned premium


 


For
2010, plan CAT losses are 2.4% of plan earned premium.  Consequently, for 2010, the CAT charge
calculation will equal 1.2% 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, 2010. 2011and 2012,
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.