One Beacon says it expects an after-tax charge of $101 millionin the third quarter related to a deal to send its runoff businessto an affiliate of Armour Group Holdings.

“The sale of our runoff business is the final step in ourtransformation to a pure specialty company,” says Mike Miller,OneBeacon's chief executive officer, in a statement. He says thesale will free up more than $100 million of capital.

Under the terms of the agreement with Armour—a Bermuda-basedcompany that focuses on runoffs and other opportunities in theinsurance and reinsurance industries—OneBeacon will transfer toArmour certain legal entities within the OneBeacon Group, whichwill contain assets, liabilities and capital supporting the runoffbusiness.

The deal includes some staff and office space, OneBeaconsays.

In addition to the $101 million third-quarter charge related tothe transaction, the Minnetonnka, Minn.-based insurer says itexpects to record about $107 million in losses related to itsrunoff business, which includes non-specialty commercial lines andother business.

Selling Essentia Insurance to Markel

OneBeacon says it has also entered an agreement to sell itsEssentia Insurance subsidiary to Markel Corp.

Essentia provides collector car and boat insurance throughHagerty Insurance Agency.

OneBeacon is terminating its 5-year exclusive underwritingarrangement with Hagerty, the company says. OneBeacon and Hagertywere “unable to reach mutually acceptable terms to extend therelationship,” Miller explains. “We believe the economicsassociated with the termination of the Hagerty agreement andthe related sale of Essentia fairly compensate OneBeacon, markingthe end to what has been a profitable venture.”

OneBeacon says it expects to book a $23 million pretax gain onthe sale of Essentia after the close of the deal, which is expectedduring the first quarter 2013. The loss reserves and unearnedpremium reserves prior to the sale of Essentia will stay withOneBeacon to be runoff, the company says.