A final figure for the deal has not been determined, but both parties said that the overall gross written premium for the book totals approximately $450 million.

"This transaction will allow Atlantic Mutual to go forward as a well-capitalized writer of affluent personal lines with a premium-to-surplus ratio lower than one-to-one," said Klaus Dorfi, chairman and chief executive officer of Atlantic Mutual in a statement.

"At the same time," he said, "our commercial business represents a very complementary fit for OneBeacon. Our commercial insurance division employees, producers and policyholders should experience a smooth transition."

This is the second sale of Atlantic Mutual's commercial line business in recent months. In October, New York City-based Atlantic Mutual sold the renewal rights for its commercial lines inland marine and ocean cargo businesses to Hartford, Conn.-based Travelers. The deal, at the time, totaled $110 million in net written premium.

Fitch Ratings and Standard & Poor's, both headquartered in New York City, have placed the remaining Atlantic Mutual Companies on rating watch with negative implications.

A.M. Best said its "B-double plus" (Very Good) rating remains unaffected by the sale. However, it intends to place the business acquisition "under review with positive implications," after a definitive agreement has been signed. Best added that the deal can be terminated if the book does not reach 65 percent of retention.

Donald F. Thorpe, an analyst with Fitch, said the sell-off of the commercial lines reflects a decline in Atlantic Mutual's ratings picture over the last 18 months. He speculated that the trigger for this move may have come in October when Best lowered the carrier's rating from "A-negative" (Excellent) to its current rating. The rating move came after the Travelers deal was announced.

At the time, Atlantic Mutual expressed "disappointment" over Best's decision in the face of the carrier's efforts to improve its bottom line.

Mr. Thorpe noted that the primary cause for the series of rating agencies downgrades stemmed from Atlantic Mutual's reliance on finite risk reinsurance and $44 million in pre-tax 9/11 losses, which Fitch reported in April of this year.

Peter G. Scott, a spokesman for Atlantic Mutual, said the company's moves would ultimately allow it to "strengthen its bottom line."

He said an outside actuary's analysis showed the company has little exposure in the areas of asbestos and environmental liability?a point made by Best, that the carrier was insufficiently reserved in these areas.

He estimated the company will have exited about 80 percent of its business, leaving it with about half of its total 2002 premium of $1.1 billion.

Mr. Scott said the carrier is looking forward to meeting with the rating agencies to demonstrate that these are positive moves it is making.

"We hope the rating agencies will come around if we can meet and talk more to them," he said.