HAMILTON, Bermuda, Feb. 5, 2020 /PRNewswire/ -- White Mountains
Insurance Group, Ltd. (NYSE: WTM) reported book value per share of
$1,024 and adjusted book value per
share of $1,018 as of
December 31, 2019. Book value per share and adjusted
book value per share increased 2% and 1% in the fourth quarter of
2019. Book value per share and adjusted book value per share
increased 14% and 15% in the year ended December 31, 2019, including dividends. The
results for the year ended December 31,
2019 include the gain from MediaAlpha's sale of a
significant minority stake to Insignia Capital Group on
February 26, 2019 (the "MediaAlpha
Transaction"). Excluding the gain on the MediaAlpha
Transaction, book value per share and adjusted book value per share
both would have increased 8% in the year ended December 31, 2019, including
dividends.(1)
Manning Rountree, CEO, commented, "We had a solid 4th quarter to
cap off a satisfying year. Our investment portfolio was up 4%
in the quarter, a strong result that included a $30 million increase in the fair value of our
investment in MediaAlpha, which continues to produce outstanding
results. In the quarter, BAM produced $23 million of premiums and member surplus
contributions on good volume but lower pricing. In December
and January, BAM made cash payments of surplus note principal and
interest totaling $97 million.
Quarter over quarter, NSM produced solid top line growth and a flat
bottom line result, reflecting continuing investment in the
business. In the quarter, Kudu continued to grow revenues and
profits and closed two new investments, marking the full deployment
of our initial $250 million
commitment. In December, Kudu raised another $225 million of capital, comprised of a new
$125 million committed bank facility
and an incremental $100 million
equity capital commitment from White Mountains. We ended the
year with $1.0 billion of undeployed
capital."
Comprehensive income attributable to common shareholders was
$65 million and $413 million in the fourth quarter and year ended
December 31, 2019, compared to
comprehensive loss attributable to common shareholders of
$141 million and $146 million in the fourth quarter and year ended
December 31, 2018.
HG Global/BAM
BAM's gross written premiums and member surplus contributions
(MSC) collected were $23 million and
$107 million in the fourth quarter
and year ended December 31, 2019,
compared to $51 million and
$107 million in the fourth quarter
and year ended December 31,
2018. BAM insured municipal bonds with par value of
$3.9 billion and $12.8 billion in the fourth quarter and year
ended December 31, 2019, compared to
$5.4 billion and $12.0 billion in the fourth quarter and year
ended December 31, 2018. In the
third quarter of 2019, BAM completed assumed reinsurance
transactions to insure municipal bonds with a par value of
$1.1 billion. In the fourth
quarter of 2018, BAM completed assumed reinsurance transactions to
insure municipal bonds with a par value of $2.2 billion. Total pricing was 58 and 83
basis points in the fourth quarter and year ended December 31, 2019, compared to 94 and 93 basis
points in the fourth quarter and year ended December 31, 2018. BAM's total claims
paying resources were $938 million at
December 31, 2019, compared to
$930 million at September 30, 2019 and $871 million at December
31, 2018.
(1) See "Regulation G" on page 16.
Seán McCarthy, CEO of BAM, said, "BAM completed a successful
year, posting record par insured in both the primary and secondary
markets, albeit at lower pricing levels given the lower interest
rate environment. In the primary market, BAM's par insured
was up 19% versus 2018, as the low interest rate environment
created significant opportunities for municipal bond issuers to
save money by refinancing existing debt. In the secondary
market, institutional investor demand drove par insured to
$1.3 billion, a 37% increase from
2018. In November, S&P Global Ratings affirmed BAM's
rating and outlook at "AA/Stable" after applying its new global
insurance ratings criteria to the financial guaranty industry."
HG Global reported pre-tax income of $10
million and $54 million in the
fourth quarter and year ended December 31,
2019, compared to pre-tax income of $11 million and $32
million in the fourth quarter and year ended December 31, 2018. White Mountains reported
pre-tax loss related to BAM of $18
million and $44 million in the
fourth quarter and year ended December 31,
2019, compared to pre-tax loss of $8
million and $61 million in the
fourth quarter and year ended December
31, 2018. The period over period changes were
driven primarily by investment results in the HG Global and BAM
investment portfolios.
In December 2019, BAM made a
$32 million cash payment of surplus
note principal and interest. In January 2020, BAM made an additional $65 million special cash payment of surplus note
principal and interest. Previously, BAM made cash payments of
surplus note principal and interest of $23
million in 2018 and $5 million
in 2017.
During the fourth quarter of 2019, White Mountains updated its
debt service model for the BAM surplus notes to reflect (i) the
cash payments of surplus note principal and interest made in
December 2019 and January 2020, (ii) certain amendments made to the
terms of the surplus notes in January
2020, including an extension of the variable interest rate
period and (iii) in light of the current interest rate environment,
a more conservative forecast of future operating results for
BAM. This has resulted in slower modeled future payments on
the surplus notes and, in turn, a $20
million increase to the time value of money discount on the
surplus notes as reflected in adjusted book value per share.
BAM is a mutual insurance company that is owned by its members.
BAM's results are consolidated into White Mountains's GAAP
financial statements and attributed to non-controlling
interests.
NSM
NSM reported pre-tax loss of $6
million, adjusted EBITDA of $9
million, and commission and other revenues of $58 million in the fourth quarter of 2019.
NSM reported pre-tax loss of $2
million, adjusted EBITDA of $48
million, and commission and other revenues of $233 million in the year ended December 31, 2019. Results for the fourth
quarter and year ended December 31,
2019 include the results of Embrace Pet Insurance, a
nationwide provider of pet health insurance for dogs and cats,
which NSM acquired on April 1, 2019,
and KBK Insurance Group, a specialized MGU focused on the towing
and transportation space, which NSM acquired on December 3, 2018.
Geof McKernan, CEO of NSM, said,
"NSM had a solid quarter to finish a good year. For the
quarter, trailing 12 months pro forma controlled premiums were up
4% to a new high of $919 million,
driven by strong growth in the pet and social services
verticals. Pro forma adjusted EBITDA was flat at $50 million, as we made significant investments
in people and technology that will position us well for continued
growth in 2020 and beyond."
Kudu
In the fourth quarter of 2019, Kudu reported total revenues of
$9 million and pre-tax income of
$6 million. For the period from
April 4, 2019 through December 31, 2019, Kudu reported total revenues
of $21 million and pre-tax income of
$11 million.
In the fourth quarter of 2019, Kudu deployed $44 million, comprised of a $20 million investment in Pennybacker Capital
Management, a real estate private equity firm, and a $24 million follow-on investment in TIG Advisors,
an existing portfolio company. Kudu has now deployed a total
of $266 million in nine investment
management firms with combined assets under management of over
$33 billion, spanning a range of
asset classes, including real estate, real assets, wealth
management, hedge funds and alternative credit strategies.
Rob Jakacki, CEO of Kudu, said,
"Kudu had an active end to the year, closing two transactions in
the fourth quarter and seven transactions in 2019 overall. We
have now deployed $266 million across
nine firms with an average cash yield to Kudu at inception of
10.6%. The fourth quarter saw profitability more than double
from the third quarter, with higher revenues driven by strong
organic growth in assets under management across the existing
portfolio, the impact of year-end incentive fees and the addition
of the new transactions. We enter 2020 with $225 million of fresh capital commitments and a
robust pipeline."
Other Operations
White Mountains's Other Operations segment reported pre-tax
income of $65 million and
$393 million in the fourth quarter
and year ended December 31, 2019,
compared to pre-tax loss of $144
million and $153 million in
the fourth quarter and year ended December, 2018. Pre-tax
income in the year ended December 31,
2019 included $182 million of
realized and unrealized gains from the MediaAlpha
Transaction. Excluding the MediaAlpha Transaction, net
realized and unrealized investment gains were $86 million and $285
million in the fourth quarter and year ended December 31, 2019, compared to net realized and
unrealized investment losses of $138
million and $101 million in
the fourth quarter and year ended December
31, 2018.
Investments
The total return on invested assets was 3.9% in the fourth
quarter of 2019 compared to -4.4% in the fourth quarter of
2018. The total return on invested assets was 20.4% for the
year ended December 31, 2019, which
included $115 million of unrealized
investment gains from the MediaAlpha Transaction. Excluding
the MediaAlpha Transaction, the total return on invested assets was
15.5% for the year ended December 31,
2019 compared to -1.7% for the year ended December 31, 2018.
Mark Plourde, Managing Director
of White Mountains Advisors, said, "The total portfolio was up 3.9%
for the quarter and 15.5% for the year, a strong result, driven
primarily by our asset allocation to equities and our ongoing
investment in MediaAlpha. Our fixed income portfolio returned
0.4% for the quarter and 6.1% for the year, lagging the BBIA Index
returns of 0.5% and 6.7%, respectively, primarily due to our short
duration positioning. Our portfolio of common stocks and ETFs
returned 9.1% for the quarter, in line with the S&P 500 return,
and 29.1% for the year, lagging the S&P 500 return of 31.5%,
primarily due to our international stock positions. Other
long-term investments returned 5.8% for the quarter and 15.2% for
the year, including the impact of increases in the fair value of
our ongoing investment in MediaAlpha of $30
million in the quarter and $65
million from the date of the MediaAlpha Transaction through
the end of the year."
Additional Information
White Mountains is a Bermuda-domiciled financial services holding
company traded on the New York Stock Exchange and the Bermuda Stock
Exchange under the symbol WTM. Additional financial
information and other items of interest are available at the
company's website located at www.whitemountains.com. White
Mountains expects to file its Form 10-K on or before March 2, 2020 with the Securities and Exchange
Commission and urges shareholders to refer to that document for
more complete information concerning its financial results.
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(millions)
|
(Unaudited)
|
|
|
|
December
31,
2019
|
|
September
30,
2019
|
|
December
31,
2018
|
Assets
|
|
|
|
|
|
|
Financial Guarantee (HG Global/BAM)
|
|
|
|
|
|
|
Fixed maturity
investments
|
|
$
|
799.3
|
|
|
$
|
794.5
|
|
|
$
|
701.4
|
|
Short-term
investments
|
|
46.3
|
|
|
57.1
|
|
|
66.9
|
|
Total
investments
|
|
845.6
|
|
|
851.6
|
|
|
768.3
|
|
Cash
|
|
24.2
|
|
|
11.3
|
|
|
12.5
|
|
Insurance premiums
receivable
|
|
6.7
|
|
|
6.7
|
|
|
6.4
|
|
Deferred acquisition
costs
|
|
22.1
|
|
|
21.4
|
|
|
19.0
|
|
Accrued investment
income
|
|
5.4
|
|
|
5.5
|
|
|
4.9
|
|
Other
assets
|
|
20.0
|
|
|
16.4
|
|
|
5.1
|
|
Total Financial
Guarantee assets
|
|
924.0
|
|
|
912.9
|
|
|
816.2
|
|
Specialty
Insurance Distribution (NSM)
|
|
|
|
|
|
|
Cash (restricted $56.3,
$67.0 and $50.0)
|
|
89.7
|
|
|
105.7
|
|
|
66.2
|
|
Premium and commission
receivable
|
|
70.8
|
|
|
53.6
|
|
|
44.0
|
|
Goodwill and other
intangible assets
|
|
623.0
|
|
|
630.6
|
|
|
486.2
|
|
Other assets
|
|
41.7
|
|
|
35.1
|
|
|
27.2
|
|
Total Specialty
Insurance Distribution assets
|
|
825.2
|
|
|
825.0
|
|
|
623.6
|
|
Global Asset and
Wealth Management (Kudu)
|
|
|
|
|
|
|
Short-term
investments
|
|
.1
|
|
|
.1
|
|
|
—
|
|
Other long-term
investments
|
|
266.5
|
|
|
219.3
|
|
|
—
|
|
Total
investments
|
|
266.6
|
|
|
219.4
|
|
|
—
|
|
Cash
|
|
5.8
|
|
|
4.9
|
|
|
—
|
|
Accrued investment
income
|
|
5.8
|
|
|
4.7
|
|
|
—
|
|
Goodwill and other
intangible assets
|
|
9.6
|
|
|
9.6
|
|
|
—
|
|
Other
assets
|
|
2.7
|
|
|
3.7
|
|
|
—
|
|
Total Global Asset and
Wealth Management assets
|
|
290.5
|
|
|
242.3
|
|
|
—
|
|
Marketing Technology (MediaAlpha)
|
|
|
|
|
|
|
Cash
|
|
—
|
|
|
—
|
|
|
5.7
|
|
Goodwill and other
intangible assets
|
|
—
|
|
|
—
|
|
|
43.4
|
|
Accounts receivable from
publishers and advertisers
|
|
—
|
|
|
—
|
|
|
37.0
|
|
Other assets
|
|
—
|
|
|
—
|
|
|
2.3
|
|
Total Marketing
Technology assets
|
|
—
|
|
|
—
|
|
|
88.4
|
|
Other Operations
|
|
|
|
|
|
|
Fixed maturity
investments
|
|
406.5
|
|
|
371.5
|
|
|
376.1
|
|
Short-term
investments
|
|
154.8
|
|
|
215.3
|
|
|
147.3
|
|
Common equity
securities
|
|
683.9
|
|
|
629.7
|
|
|
925.6
|
|
Other long-term investments
|
|
589.8
|
|
|
554.4
|
|
|
325.6
|
|
Total
investments
|
|
1,835.0
|
|
|
1,770.9
|
|
|
1,774.6
|
|
Cash
|
|
41.3
|
|
|
27.3
|
|
|
25.9
|
|
Accrued investment
income
|
|
5.7
|
|
|
5.1
|
|
|
5.5
|
|
Goodwill and other
intangible assets
|
|
22.1
|
|
|
20.7
|
|
|
7.9
|
|
Other assets
|
|
36.4
|
|
|
29.3
|
|
|
17.2
|
|
Assets held for
sale
|
|
3.0
|
|
|
2.8
|
|
|
3.3
|
|
Total Other Operations
assets
|
|
1,943.5
|
|
|
1,856.1
|
|
|
1,834.4
|
|
Total
assets
|
|
$
|
3,983.2
|
|
|
$
|
3,836.3
|
|
|
$
|
3,362.6
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS (CONTINUED)
|
(millions)
|
(Unaudited)
|
|
|
|
December
31,
2019
|
|
September
30,
2019
|
|
December
31,
2018
|
Liabilities
|
|
|
|
|
|
|
Financial Guarantee (HG Global/BAM)
|
|
|
|
|
|
|
Unearned insurance
premiums
|
|
$
|
198.4
|
|
|
$
|
203.5
|
|
|
$
|
176.0
|
|
Accrued incentive
compensation
|
|
21.7
|
|
|
19.0
|
|
|
20.4
|
|
Other liabilities
|
|
26.7
|
|
|
31.0
|
|
|
16.1
|
|
Total Financial
Guarantee liabilities
|
|
246.8
|
|
|
253.5
|
|
|
212.5
|
|
Specialty
Insurance Distribution (NSM)
|
|
|
|
|
|
|
Debt
|
|
219.2
|
|
|
219.4
|
|
|
178.5
|
|
Premiums
payable
|
|
102.3
|
|
|
92.6
|
|
|
77.2
|
|
Contingent
consideration earnout liabilities
|
|
20.6
|
|
|
28.7
|
|
|
20.2
|
|
Other liabilities
|
|
59.0
|
|
|
60.1
|
|
|
38.9
|
|
Total Specialty
Insurance Distribution liabilities
|
|
401.1
|
|
|
400.8
|
|
|
314.8
|
|
Global Asset and
Wealth Management (Kudu)
|
|
|
|
|
|
|
Debt
|
|
53.6
|
|
|
—
|
|
|
—
|
|
Other
liabilities
|
|
3.4
|
|
|
5.3
|
|
|
—
|
|
Total Global Asset and
Wealth Management liabilities
|
|
57.0
|
|
|
5.3
|
|
|
—
|
|
Marketing Technology (MediaAlpha)
|
|
|
|
|
|
|
Debt
|
|
—
|
|
|
—
|
|
|
14.2
|
|
Amounts due to publishers
and advertisers
|
|
—
|
|
|
—
|
|
|
27.0
|
|
Other liabilities
|
|
—
|
|
|
—
|
|
|
5.7
|
|
Total Marketing
Technology liabilities
|
|
—
|
|
|
—
|
|
|
46.9
|
|
Other Operations
|
|
|
|
|
|
|
Debt
|
|
10.7
|
|
|
10.8
|
|
|
—
|
|
Accrued incentive
compensation
|
|
55.1
|
|
|
44.9
|
|
|
38.9
|
|
Other liabilities
|
|
67.8
|
|
|
50.1
|
|
|
31.3
|
|
Total Other Operations
liabilities
|
|
133.6
|
|
|
105.8
|
|
|
70.2
|
|
Total
liabilities
|
|
838.5
|
|
|
765.4
|
|
|
644.4
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
White Mountains's
common shareholder's equity
|
|
|
|
|
|
|
White Mountains's common shares and paid-in
surplus
|
|
596.3
|
|
|
593.2
|
|
|
584.0
|
|
Retained earnings
|
|
2,672.4
|
|
|
2,611.5
|
|
|
2,264.9
|
|
Accumulated other
comprehensive loss, after tax:
|
|
|
|
|
|
|
Net unrealized
foreign currency translation losses and interest rate
swap
|
|
(7.2)
|
|
|
(11.3)
|
|
|
(5.8)
|
|
Total White
Mountains's common shareholders' equity
|
|
3,261.5
|
|
|
3,193.4
|
|
|
2,843.1
|
|
Non-controlling
interests
|
|
(116.8)
|
|
|
(122.5)
|
|
|
(124.9)
|
|
Total
equity
|
|
3,144.7
|
|
|
3,070.9
|
|
|
2,718.2
|
|
Total liabilities
and equity
|
|
$
|
3,983.2
|
|
|
$
|
3,836.3
|
|
|
$
|
3,362.6
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
|
BOOK VALUE AND
ADJUSTED BOOK VALUE PER SHARE
|
(Unaudited)
|
|
|
|
December
31,
2019
|
|
September
30,
2019
|
|
December
31,
2018
|
|
September
30,
2018
|
Book value per
share numerators (in millions):
|
|
|
|
|
|
|
|
|
White Mountains's
common shareholders' equity -
GAAP book value per share numerator
|
|
$
|
3,261.5
|
|
|
$
|
3,193.4
|
|
|
$
|
2,843.1
|
|
|
$
|
2,984.0
|
|
Time value of money
discount on expected future payments on the
BAM Surplus Notes (1)
|
|
(151.6)
|
|
|
(132.8)
|
|
|
(141.2)
|
|
|
(146.3)
|
|
HG Global's unearned
premium reserve (1)
|
|
156.7
|
|
|
160.4
|
|
|
136.9
|
|
|
120.2
|
|
HG Global's net
deferred acquisition costs (1)
|
|
(41.5)
|
|
|
(42.0)
|
|
|
(34.6)
|
|
|
(29.4)
|
|
Adjusted book value
per share numerator
|
|
$
|
3,225.1
|
|
|
$
|
3,179.0
|
|
|
$
|
2,804.2
|
|
|
$
|
2,928.5
|
|
Book value per
share denominators (in thousands of shares):
|
|
|
|
|
|
|
|
|
Common shares
outstanding - GAAP book value per share
denominator
|
|
3,185.4
|
|
|
3,185.4
|
|
|
3,173.1
|
|
|
3,180.5
|
|
Unearned restricted
common shares
|
|
(18.5)
|
|
|
(21.5)
|
|
|
(14.6)
|
|
|
(18.5)
|
|
Adjusted book value
per share denominator
|
|
3,166.9
|
|
|
3,163.9
|
|
|
3,158.5
|
|
|
3,162.0
|
|
GAAP book value
per share
|
|
$
|
1,023.91
|
|
|
$
|
1,002.53
|
|
|
$
|
896.00
|
|
|
$
|
938.19
|
|
Adjusted book
value per share
|
|
$
|
1,018.41
|
|
|
$
|
1,004.76
|
|
|
$
|
887.85
|
|
|
$
|
926.14
|
|
(1) Amount
reflects White Mountains's preferred share ownership in HG Global
of 96.9%.
|
|
|
December
31,
2019
|
|
September
30,
2019
|
|
December
31,
2018
|
|
September
30,
2018
|
Quarter-to-date
change in GAAP book value per share,
including dividends:
|
|
|
2.1
|
%
|
|
|
1.6
|
%
|
|
(4.5)
|
%
|
|
|
1.5
|
%
|
Quarter-to-date
change in adjusted book value per share,
including dividends:
|
|
|
1.4
|
%
|
|
|
1.9
|
%
|
|
(4.1)
|
%
|
|
|
1.5
|
%
|
Year-to-date
change in GAAP book value per share,
including dividends:
|
|
|
14.4
|
%
|
|
|
12.0
|
%
|
|
(3.7)
|
%
|
|
|
0.8
|
%
|
Year-to-date
change in adjusted book value per share,
including dividends:
|
|
|
14.8
|
%
|
|
|
13.3
|
%
|
|
(2.8)
|
%
|
|
|
1.4
|
%
|
Year-to-date
dividends per share
|
|
$
|
1.00
|
|
|
$
|
1.00
|
|
|
$
|
1.00
|
|
|
$
|
1.00
|
|
|
|
December
31,
2019
|
|
September
30,
2019
|
|
December
31,
2018
|
|
September
30,
2018
|
Summary of
goodwill and other intangible assets (in millions):
|
|
|
|
|
|
|
|
|
Goodwill:
|
|
|
|
|
|
|
|
|
NSM
|
|
$
|
381.6
|
|
|
$
|
397.0
|
|
(1)
|
$
|
354.3
|
|
(2)
|
$
|
295.5
|
|
Kudu
|
|
7.6
|
|
|
7.6
|
|
|
—
|
|
|
—
|
|
MediaAlpha
|
|
—
|
|
|
—
|
|
|
18.3
|
|
|
18.3
|
|
Other
Operations
|
|
5.5
|
|
|
20.2
|
|
(1)
|
7.3
|
|
|
7.6
|
|
Total
goodwill
|
|
394.7
|
|
|
424.8
|
|
|
379.9
|
|
|
321.4
|
|
Other intangible
assets:
|
|
|
|
|
|
|
|
|
NSM
|
|
241.4
|
|
|
233.6
|
|
(1)
|
131.9
|
|
(2)
|
135.5
|
|
Kudu
|
|
2.0
|
|
|
2.0
|
|
|
—
|
|
|
—
|
|
MediaAlpha
|
|
—
|
|
|
—
|
|
|
25.1
|
|
|
27.6
|
|
Other
Operations
|
|
16.6
|
|
|
.5
|
|
(1)
|
.6
|
|
|
.7
|
|
Total other
intangible assets
|
|
260.0
|
|
|
236.1
|
|
|
157.6
|
|
|
163.8
|
|
Total goodwill and
other intangible assets
|
|
654.7
|
|
|
660.9
|
|
|
537.5
|
|
|
485.2
|
|
Goodwill and other
intangible assets attributed to
non-controlling interests
|
|
(23.4)
|
|
|
(25.0)
|
|
|
(40.6)
|
|
|
(40.6)
|
|
Goodwill and other
intangible assets included in
White Mountains's common shareholders'
equity
|
|
$
|
631.3
|
|
|
$
|
635.9
|
|
|
$
|
496.9
|
|
|
$
|
444.6
|
|
|
(1) The relative fair values
of goodwill and of other intangible assets recognized in connection
with the acquisition of Embrace and Other Operations had not yet
been finalized at September 30, 2019.
|
(2)
The relative fair values of goodwill and of other intangible assets
recognized in connection with the acquisition of KBK had not yet
been finalized at December 31, 2018.
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(millions)
|
(Unaudited)
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenues:
|
|
|
|
|
|
|
|
|
Financial Guarantee (HG Global/BAM)
|
|
|
|
|
|
|
|
|
Earned insurance
premiums
|
|
$
|
2.6
|
|
|
$
|
4.2
|
|
|
$
|
16.3
|
|
|
$
|
13.9
|
|
Net investment
income
|
|
5.5
|
|
|
4.2
|
|
|
21.6
|
|
|
16.7
|
|
Net realized and unrealized
investment (losses) gains
|
|
(3.3)
|
|
|
6.9
|
|
|
27.1
|
|
|
(7.5)
|
|
Other revenues
|
|
.3
|
|
|
.4
|
|
|
1.6
|
|
|
1.2
|
|
Total Financial
Guarantee revenues
|
|
5.1
|
|
|
15.7
|
|
|
66.6
|
|
|
24.3
|
|
Specialty
Insurance Distribution (NSM)
|
|
|
|
|
|
|
|
|
Commission
revenues
|
|
45.8
|
|
|
33.2
|
|
|
193.4
|
|
|
89.6
|
|
Other
revenues
|
|
12.0
|
|
|
5.2
|
|
|
39.7
|
|
|
12.0
|
|
Total Specialty
Insurance Distribution revenues
|
|
57.8
|
|
|
38.4
|
|
|
233.1
|
|
|
101.6
|
|
Global Asset and
Wealth Management (Kudu)
|
|
|
|
|
|
|
|
|
Net investment
income
|
|
6.1
|
|
|
—
|
|
|
14.7
|
|
|
—
|
|
Net realized and
unrealized investment gains
|
|
3.2
|
|
|
—
|
|
|
6.3
|
|
|
—
|
|
Other
revenues
|
|
—
|
|
|
—
|
|
|
.2
|
|
|
—
|
|
Total Global Asset and
Wealth Management revenues
|
|
9.3
|
|
|
—
|
|
|
21.2
|
|
|
—
|
|
Marketing Technology (MediaAlpha)
|
|
|
|
|
|
|
|
|
Advertising and commission
revenues
|
|
—
|
|
|
79.1
|
|
|
48.8
|
|
|
295.5
|
|
Other revenues
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.6
|
|
Total Marketing
Technology revenues
|
|
—
|
|
|
79.1
|
|
|
48.8
|
|
|
297.1
|
|
Other Operations
|
|
|
|
|
|
|
|
|
Net investment
income
|
|
12.7
|
|
|
9.9
|
|
|
43.4
|
|
|
42.3
|
|
Net realized and unrealized
investment gains (losses)
|
|
85.5
|
|
|
(138.1)
|
|
|
285.1
|
|
|
(100.8)
|
|
Realized gain
and unrealized investment gain from the
MediaAlpha
Transaction
|
|
—
|
|
|
—
|
|
|
182.2
|
|
|
—
|
|
Advertising and commission
revenues
|
|
2.4
|
|
|
1.1
|
|
|
6.9
|
|
|
4.1
|
|
Other revenues
|
|
2.5
|
|
|
(.1)
|
|
|
6.1
|
|
|
.5
|
|
Total Other Operations
revenues
|
|
103.1
|
|
|
(127.2)
|
|
|
523.7
|
|
|
(53.9)
|
|
Total
revenues
|
|
$
|
175.3
|
|
|
$
|
6.0
|
|
|
$
|
893.4
|
|
|
$
|
369.1
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
|
(millions)
|
(Unaudited)
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Expenses:
|
|
|
|
|
|
|
|
|
Financial
Guarantee (HG Global/BAM)
|
|
|
|
|
|
|
|
|
Insurance acquisition
expenses
|
|
$
|
1.6
|
|
|
$
|
1.4
|
|
|
$
|
5.7
|
|
|
$
|
5.3
|
|
Other
underwriting expenses
|
|
.1
|
|
|
.1
|
|
|
.4
|
|
|
.4
|
|
General and
administrative expenses
|
|
11.4
|
|
|
11.5
|
|
|
50.5
|
|
|
48.0
|
|
Total Financial
Guarantee expenses
|
|
13.1
|
|
|
13.0
|
|
|
56.6
|
|
|
53.7
|
|
Specialty
Insurance Distribution (NSM)
|
|
|
|
|
|
|
|
|
General and
administrative expenses
|
|
40.8
|
|
|
23.7
|
|
|
132.2
|
|
|
59.4
|
|
Broker commission
expenses
|
|
15.9
|
|
|
11.3
|
|
|
64.8
|
|
|
28.4
|
|
Change in fair value
of contingent consideration earnout liabilities
|
|
(3.5)
|
|
|
.1
|
|
|
2.1
|
|
|
2.7
|
|
Amortization of other
intangible assets
|
|
5.9
|
|
|
3.3
|
|
|
19.4
|
|
|
8.3
|
|
Interest
expense
|
|
4.5
|
|
|
3.2
|
|
|
16.7
|
|
|
8.0
|
|
Total Specialty
Insurance Distribution expenses
|
|
63.6
|
|
|
41.6
|
|
|
235.2
|
|
|
106.8
|
|
Global Asset and
Wealth Management (Kudu)
|
|
|
|
|
|
|
|
|
General and
administrative expenses
|
|
3.4
|
|
|
—
|
|
|
10.1
|
|
|
—
|
|
Amortization of other
intangible assets
|
|
—
|
|
|
—
|
|
|
.2
|
|
|
—
|
|
Interest
expense
|
|
.1
|
|
|
—
|
|
|
.1
|
|
|
—
|
|
Total Global Asset and
Wealth Management expenses
|
|
3.5
|
|
|
—
|
|
|
10.4
|
|
|
—
|
|
Marketing
Technology (MediaAlpha)
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
—
|
|
|
65.9
|
|
|
40.6
|
|
|
245.0
|
|
General and
administrative expenses
|
|
—
|
|
|
10.5
|
|
|
12.5
|
|
|
31.7
|
|
Amortization of other
intangible assets
|
|
—
|
|
|
2.5
|
|
|
1.6
|
|
|
10.3
|
|
Interest
expense
|
|
—
|
|
|
.3
|
|
|
.2
|
|
|
1.2
|
|
Total Marketing
Technology expenses
|
|
—
|
|
|
79.2
|
|
|
54.9
|
|
|
288.2
|
|
Other
Operations
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
2.5
|
|
|
.8
|
|
|
7.5
|
|
|
3.7
|
|
General and
administrative expenses
|
|
35.3
|
|
|
15.4
|
|
|
122.5
|
|
|
94.4
|
|
Amortization of other
intangible assets
|
|
.5
|
|
|
.1
|
|
|
.6
|
|
|
.2
|
|
Interest
expense
|
|
.3
|
|
|
—
|
|
|
.6
|
|
|
.3
|
|
Total Other Operations
expenses
|
|
38.6
|
|
|
16.3
|
|
|
131.2
|
|
|
98.6
|
|
Total
expenses
|
|
118.8
|
|
|
150.1
|
|
|
488.3
|
|
|
547.3
|
|
Pre-tax income
(loss) from continuing operations
|
|
56.5
|
|
|
(144.1)
|
|
|
405.1
|
|
|
(178.2)
|
|
Income tax (expense)
benefit
|
|
(10.4)
|
|
|
3.6
|
|
|
(29.3)
|
|
|
4.0
|
|
Net income (loss)
from continuing operations
|
|
46.1
|
|
|
(140.5)
|
|
|
375.8
|
|
|
(174.2)
|
|
Net (loss) gain from
sale of discontinued operations, net of tax
|
|
(.8)
|
|
|
—
|
|
|
.8
|
|
|
(17.2)
|
|
Net income
(loss)
|
|
45.3
|
|
|
(140.5)
|
|
|
376.6
|
|
|
(191.4)
|
|
Net loss attributable
to non-controlling interests
|
|
15.6
|
|
|
3.0
|
|
|
37.9
|
|
|
50.2
|
|
Net income (loss)
attributable to White Mountains's
common shareholders
|
|
$
|
60.9
|
|
|
$
|
(137.5)
|
|
|
$
|
414.5
|
|
|
$
|
(141.2)
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
|
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
(millions)
|
(Unaudited)
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net income (loss)
attributable to White Mountains's
common shareholders
|
|
$
|
60.9
|
|
|
$
|
(137.5)
|
|
|
$
|
414.5
|
|
|
$
|
(141.2)
|
|
Other comprehensive
income (loss), net of tax
|
|
4.4
|
|
|
(3.1)
|
|
|
(1.4)
|
|
|
(4.8)
|
|
Comprehensive
income (loss)
|
|
65.3
|
|
|
(140.6)
|
|
|
413.1
|
|
|
(146.0)
|
|
Other comprehensive
(income) loss attributable to non-controlling interests
|
|
(.3)
|
|
|
.1
|
|
|
—
|
|
|
.3
|
|
Comprehensive
income (loss) attributable to White Mountains's
common shareholders
|
|
$
|
65.0
|
|
|
$
|
(140.5)
|
|
|
$
|
413.1
|
|
|
$
|
(145.7)
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
|
EARNINGS PER
SHARE
|
(Unaudited)
|
|
Income (loss) per
share attributable to White Mountains's common
shareholders
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Basic earnings
(loss) per share
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
19.37
|
|
|
$
|
(43.24)
|
|
|
$
|
130.02
|
|
|
$
|
(36.67)
|
|
Discontinued
operations
|
|
(.25)
|
|
|
—
|
|
|
.25
|
|
|
(5.09)
|
|
Total consolidated
operations
|
|
$
|
19.12
|
|
|
$
|
(43.24)
|
|
|
$
|
130.27
|
|
|
$
|
(41.76)
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
19.37
|
|
|
$
|
(43.24)
|
|
|
$
|
130.02
|
|
|
$
|
(36.67)
|
|
Discontinued
operations
|
|
(.25)
|
|
|
—
|
|
|
.25
|
|
|
(5.09)
|
|
Total consolidated
operations
|
|
$
|
19.12
|
|
|
$
|
(43.24)
|
|
|
$
|
130.27
|
|
|
$
|
(41.76)
|
|
Dividends declared
per White Mountains's common share
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1.00
|
|
|
$
|
1.00
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
|
QTD SEGMENT
STATEMENTS OF PRE-TAX INCOME (LOSS)
|
(millions)
|
(Unaudited)
|
|
For the Three
Months Ended December 31, 2019
|
|
HG
Global/BAM
|
|
|
|
|
|
|
|
|
|
|
HG
Global
|
|
BAM
|
|
NSM
|
|
Kudu
|
|
Other
Operations
|
|
Total
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned insurance
premiums
|
|
$
|
2.1
|
|
|
$
|
.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2.6
|
|
Net investment
income
|
|
1.9
|
|
|
3.6
|
|
|
—
|
|
|
6.1
|
|
|
12.7
|
|
|
24.3
|
|
Net investment income
(expense) -
BAM surplus note interest
|
|
6.8
|
|
|
(6.8)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net realized and
unrealized investment (loss) gains
|
|
(.1)
|
|
|
(3.2)
|
|
|
—
|
|
|
3.2
|
|
|
85.5
|
|
|
85.4
|
|
Advertising and
commission revenues
|
|
—
|
|
|
—
|
|
|
45.8
|
|
|
—
|
|
|
2.4
|
|
|
48.2
|
|
Other
revenues
|
|
—
|
|
|
.3
|
|
|
12.0
|
|
|
—
|
|
|
2.5
|
|
|
14.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
10.7
|
|
|
(5.6)
|
|
|
57.8
|
|
|
9.3
|
|
|
103.1
|
|
|
175.3
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance acquisition
expenses
|
|
.5
|
|
|
1.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.6
|
|
Other underwriting
expenses
|
|
—
|
|
|
.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
.1
|
|
Cost of
sales
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.5
|
|
|
2.5
|
|
General and
administrative expenses
|
|
.4
|
|
|
11.0
|
|
|
40.8
|
|
|
3.4
|
|
|
35.3
|
|
|
90.9
|
|
Broker commission
expenses
|
|
—
|
|
|
—
|
|
|
15.9
|
|
|
—
|
|
|
—
|
|
|
15.9
|
|
Change in fair value
of contingent consideration
earnout liabilities
|
|
—
|
|
|
—
|
|
|
(3.5)
|
|
|
—
|
|
|
—
|
|
|
(3.5)
|
|
Amortization of other
intangible assets
|
|
—
|
|
|
—
|
|
|
5.9
|
|
|
—
|
|
|
.5
|
|
|
6.4
|
|
Interest
expense
|
|
—
|
|
|
—
|
|
|
4.5
|
|
|
.1
|
|
|
.3
|
|
|
4.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
expenses
|
|
.9
|
|
|
12.2
|
|
|
63.6
|
|
|
3.5
|
|
|
38.6
|
|
|
118.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income
(loss)
|
|
$
|
9.8
|
|
|
$
|
(17.8)
|
|
|
$
|
(5.8)
|
|
|
$
|
5.8
|
|
|
$
|
64.5
|
|
|
$
|
56.5
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
|
QTD SEGMENT
STATEMENTS OF PRE-TAX INCOME (LOSS) (CONTINUED)
|
(millions)
|
(Unaudited)
|
|
For the Three
Months Ended December 31, 2018
|
|
HG
Global/BAM
|
|
|
|
|
|
|
|
|
|
|
HG
Global
|
|
BAM
|
|
NSM
|
|
MediaAlpha
|
|
Other
Operations
|
|
Total
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned insurance
premiums
|
|
$
|
3.4
|
|
|
.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4.2
|
|
Net investment
income
|
|
1.6
|
|
|
2.6
|
|
|
—
|
|
|
—
|
|
|
9.9
|
|
|
14.1
|
|
Net investment income
(expense) -
BAM surplus note interest
|
|
5.7
|
|
|
(5.7)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net realized and
unrealized investment gains (losses)
|
|
1.4
|
|
|
5.5
|
|
|
—
|
|
|
—
|
|
|
(138.1)
|
|
|
(131.2)
|
|
Advertising and
commission revenues
|
|
—
|
|
|
—
|
|
|
33.2
|
|
|
79.1
|
|
|
1.1
|
|
|
113.4
|
|
Other
revenues
|
|
—
|
|
|
.4
|
|
|
5.2
|
|
—
|
|
|
(.1)
|
|
|
5.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
12.1
|
|
|
3.6
|
|
|
38.4
|
|
|
79.1
|
|
|
(127.2)
|
|
|
6.0
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance acquisition
expenses
|
|
.9
|
|
|
.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.4
|
|
Other underwriting
expenses
|
|
—
|
|
|
.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
.1
|
|
Cost of
sales
|
|
—
|
|
|
—
|
|
|
—
|
|
|
65.9
|
|
|
.8
|
|
|
66.7
|
|
General and
administrative expenses
|
|
.3
|
|
|
11.2
|
|
|
23.7
|
|
|
10.5
|
|
|
15.4
|
|
|
61.1
|
|
Broker commission
expenses
|
|
—
|
|
|
—
|
|
|
11.3
|
|
|
—
|
|
|
—
|
|
|
11.3
|
|
Change in fair value
of contingent consideration
earnout liabilities
|
|
—
|
|
|
—
|
|
|
.1
|
|
|
—
|
|
|
—
|
|
|
.1
|
|
Amortization of other
intangible assets
|
|
—
|
|
|
—
|
|
|
3.3
|
|
|
2.5
|
|
|
.1
|
|
|
5.9
|
|
Interest
expense
|
|
—
|
|
|
—
|
|
|
3.2
|
|
|
.3
|
|
|
—
|
|
|
3.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
expenses
|
|
1.2
|
|
|
11.8
|
|
|
41.6
|
|
|
79.2
|
|
|
16.3
|
|
|
150.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income
(loss)
|
|
$
|
10.9
|
|
|
$
|
(8.2)
|
|
|
$
|
(3.2)
|
|
|
$
|
(.1)
|
|
|
$
|
(143.5)
|
|
|
$
|
(144.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
|
YTD SEGMENT
STATEMENTS OF PRE-TAX INCOME (LOSS)
|
(millions)
|
(Unaudited)
|
|
For the Twelve
Months Ended December 31, 2019
|
|
HG
Global/BAM
|
|
|
|
|
|
|
|
|
|
|
|
|
HG
Global
|
|
BAM
|
|
NSM
|
|
Kudu
(1)
|
|
MediaAlpha
(2)
|
|
Other
Operations
|
|
Total
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned insurance
premiums
|
|
$
|
13.1
|
|
|
$
|
3.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
16.3
|
|
Net investment
income
|
|
7.5
|
|
|
14.1
|
|
|
—
|
|
|
14.7
|
|
|
—
|
|
|
43.4
|
|
|
79.7
|
|
Net investment income
(expense) -
BAM surplus note interest
|
|
27.4
|
|
|
(27.4)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net realized and
unrealized
investment gains
|
|
11.0
|
|
|
16.1
|
|
|
—
|
|
|
6.3
|
|
|
—
|
|
|
285.1
|
|
|
318.5
|
|
Realized and
unrealized gains from
MediaAlpha Transaction
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
182.2
|
|
|
182.2
|
|
Advertising and
commission revenues
|
|
—
|
|
|
—
|
|
|
193.4
|
|
|
—
|
|
|
48.8
|
|
|
6.9
|
|
|
249.1
|
|
Other
revenue
|
|
—
|
|
|
1.6
|
|
|
39.7
|
|
|
.2
|
|
|
—
|
|
|
6.1
|
|
|
47.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
59.0
|
|
|
7.6
|
|
|
233.1
|
|
|
21.2
|
|
|
48.8
|
|
|
523.7
|
|
|
893.4
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance acquisition
expenses
|
|
3.3
|
|
|
2.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.7
|
|
Other underwriting
expenses
|
|
—
|
|
|
.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
.4
|
|
Cost of
sales
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40.6
|
|
|
7.5
|
|
|
48.1
|
|
General and
administrative expenses
|
|
1.6
|
|
|
48.9
|
|
|
132.2
|
|
|
10.1
|
|
|
5.7
|
|
|
122.5
|
|
|
321.0
|
|
General and
administrative expenses -
MediaAlpha Transaction related costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.8
|
|
|
—
|
|
|
6.8
|
|
Broker commission
expenses
|
|
—
|
|
|
—
|
|
|
64.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
64.8
|
|
Change in fair value
of contingent
consideration earnout liabilities
|
|
—
|
|
|
—
|
|
|
2.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.1
|
|
Amortization of other
intangible assets
|
|
—
|
|
|
—
|
|
|
19.4
|
|
|
.2
|
|
|
1.6
|
|
|
.6
|
|
|
21.8
|
|
Interest
expense
|
|
—
|
|
|
—
|
|
|
16.7
|
|
|
.1
|
|
|
.2
|
|
|
.6
|
|
|
17.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
expenses
|
|
4.9
|
|
|
51.7
|
|
|
235.2
|
|
|
10.4
|
|
|
54.9
|
|
|
131.2
|
|
|
488.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income
(loss)
|
|
$
|
54.1
|
|
|
$
|
(44.1)
|
|
|
$
|
(2.1)
|
|
|
$
|
10.8
|
|
|
$
|
(6.1)
|
|
|
$
|
392.5
|
|
|
$
|
405.1
|
|
|
(1)
Kudu's results are from April 4, 2019, the date White
Mountains began consolidating Kudu, to December 31,
2019.
|
(2)
MediaAlpha's results are from January 1, 2019 to February 26,
2019, the date of the MediaAlpha Transaction.
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
|
YTD SEGMENT
STATEMENTS OF PRE-TAX INCOME (LOSS) (CONTINUED)
|
(millions)
|
(Unaudited)
|
|
For the Twelve
Months Ended December 31, 2018
|
|
HG
Global/BAM
|
|
|
|
|
|
|
|
|
|
|
HG
Global
|
|
BAM
|
|
NSM
(1)
|
|
MediaAlpha
|
|
Other
Operations
|
|
Total
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned insurance
premiums
|
|
$
|
11.0
|
|
|
$
|
2.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13.9
|
|
Net investment
income
|
|
5.7
|
|
|
11.0
|
|
|
—
|
|
|
—
|
|
|
42.3
|
|
|
59.0
|
|
Net investment income
(expense) -
BAM surplus note interest
|
|
22.9
|
|
|
(22.9)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net realized and
unrealized investment
losses
|
|
(4.1)
|
|
|
(3.4)
|
|
|
—
|
|
|
—
|
|
|
(100.8)
|
|
|
(108.3)
|
|
Advertising and
commission revenues
|
|
—
|
|
|
—
|
|
|
89.6
|
|
|
295.5
|
|
|
4.1
|
|
|
389.2
|
|
Other
revenue
|
|
—
|
|
|
1.2
|
|
|
12.0
|
|
|
1.6
|
|
|
.5
|
|
|
15.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
35.5
|
|
|
(11.2)
|
|
|
101.6
|
|
|
297.1
|
|
|
(53.9)
|
|
|
369.1
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance acquisition
expenses
|
|
2.7
|
|
|
2.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.3
|
|
Other underwriting
expenses
|
|
—
|
|
|
.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
.4
|
|
Cost of
sales
|
|
—
|
|
|
—
|
|
|
—
|
|
|
245.0
|
|
|
3.7
|
|
|
248.7
|
|
General and
administrative expenses
|
|
1.1
|
|
|
46.9
|
|
|
59.4
|
|
|
31.7
|
|
|
94.4
|
|
|
233.5
|
|
Broker commission
expense
|
|
—
|
|
|
—
|
|
|
28.4
|
|
|
—
|
|
|
—
|
|
|
28.4
|
|
Change in fair value
of contingent
consideration earnout liabilities
|
|
—
|
|
|
—
|
|
|
2.7
|
|
|
—
|
|
|
—
|
|
|
2.7
|
|
Amortization of other
intangible assets
|
|
—
|
|
|
—
|
|
|
8.3
|
|
|
10.3
|
|
|
.2
|
|
|
18.8
|
|
Interest
expense
|
|
—
|
|
|
—
|
|
|
8.0
|
|
|
1.2
|
|
|
.3
|
|
|
9.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
expenses
|
|
3.8
|
|
|
49.9
|
|
|
106.8
|
|
|
288.2
|
|
|
98.6
|
|
|
547.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income
(loss)
|
|
$
|
31.7
|
|
|
$
|
(61.1)
|
|
|
$
|
(5.2)
|
|
|
$
|
8.9
|
|
|
$
|
(152.5)
|
|
|
$
|
(178.2)
|
|
|
(1)
NSM's results are from May 11, 2018, the date of the
acquisition of NSM, to December 31, 2018.
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
|
SELECTED FINANCIAL
DATA
|
(millions)
|
(Unaudited)
|
|
|
|
Three Months Ended
December 31,
|
|
Twelve Months
Ended December 31,
|
BAM
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Gross par value of
primary market policies issued
|
|
$
|
3,732.4
|
|
|
$
|
2,826.3
|
|
|
$
|
10,405.1
|
|
|
$
|
8,779.9
|
|
Gross par value of
assumed reinsurance
|
|
—
|
|
|
2,235.8
|
|
|
1,130.7
|
|
|
2,235.8
|
|
Gross par value of
secondary market policies issued
|
|
190.8
|
|
|
354.6
|
|
|
1,311.8
|
|
|
959.6
|
|
Total gross par value
of market policies issued
|
|
$
|
3,923.2
|
|
|
$
|
5,416.7
|
|
|
$
|
12,847.6
|
|
|
$
|
11,975.3
|
|
|
|
|
|
|
|
|
|
|
Gross written
premiums
|
|
$
|
(2.5)
|
|
(1)
|
$
|
24.0
|
|
|
$
|
38.7
|
|
(1)
|
$
|
52.9
|
|
Member surplus
contributions ("MSC") collected
|
|
25.1
|
|
(1)
|
26.9
|
|
|
68.0
|
|
(1)
|
53.8
|
|
Total gross written
premiums and MSC collected
|
|
$
|
22.6
|
|
|
$
|
50.9
|
|
|
$
|
106.7
|
|
|
$
|
106.7
|
|
Present value of future
installment MSC collections
|
|
—
|
|
|
.1
|
|
|
.3
|
|
|
3.1
|
|
Gross written premium
adjustments on existing
installment policies
|
|
—
|
|
|
—
|
|
|
(.1)
|
|
|
1.1
|
|
Gross written premiums
and MSC from
new business
|
|
$
|
22.6
|
|
|
$
|
51.0
|
|
|
$
|
106.9
|
|
|
$
|
110.9
|
|
Total
pricing
|
|
58
bps
|
|
|
94 bps
|
|
|
83
bps
|
|
|
93 bps
|
|
|
|
As of
December 31, 2019
|
|
As of
September 30, 2019
|
|
As of
December 31, 2018
|
Policyholders'
surplus
|
|
$
|
402.4
|
|
|
$
|
422.1
|
|
|
$
|
413.7
|
|
Contingency
reserve
|
|
68.2
|
|
|
64.3
|
|
|
50.3
|
|
Qualified statutory
capital
|
|
470.6
|
|
|
486.4
|
|
|
464.0
|
|
Statutory net unearned
premiums
|
|
39.3
|
|
|
40.5
|
|
|
36.2
|
|
Present value of future
installment premiums
and MSC
|
|
13.7
|
|
|
13.7
|
|
|
12.9
|
|
HG Re, Ltd collateral
trusts at statutory value
|
|
314.0
|
|
|
289.2
|
|
|
258.3
|
|
Fidus Re, Ltd
collateral trust at statutory value
|
|
100.0
|
|
|
100.0
|
|
|
100.0
|
|
Claims paying
resources
|
|
$
|
937.6
|
|
|
$
|
929.8
|
|
|
$
|
871.4
|
|
|
|
Three Months Ended
December 31,
|
|
Twelve Months
Ended December 31,
|
HG
Global
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net written
premiums
|
|
$
|
(1.6)
|
|
(1)
|
$
|
20.5
|
|
|
$
|
33.6
|
|
(1)
|
$
|
45.0
|
|
Earned
premiums
|
|
$
|
2.1
|
|
|
$
|
3.4
|
|
|
$
|
13.1
|
|
|
$
|
11.0
|
|
|
|
As of
December 31, 2019
|
|
As
of
September 30, 2019
|
|
As of
December 31, 2018
|
Unearned
premiums
|
|
$
|
161.7
|
|
(1)
|
$
|
165.5
|
|
|
$
|
141.3
|
|
Deferred acquisition
costs
|
|
$
|
42.8
|
|
(1)
|
$
|
43.4
|
|
|
$
|
35.7
|
|
|
(1)
During the fourth quarter of 2019, BAM issued policy endorsements
for certain policies issued in periods prior to the second quarter
of 2018. The impact of the policy endorsements for the three months
and twelve months ended December 31, 2019 was a decrease to BAM's
gross written premiums of $13.4 and an increase of $13.4 to MSC
collected. As a result, for the three months and twelve
months ended December 31, 2019, written premiums ceded to HG Global
were reduced by $11.0. Additionally, as of December 31,
2019, unearned premiums ceded to HG Global were reduced by
$9.7 and deferred acquisition costs ceded to HG Global were reduced
by $2.5.
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
|
SELECTED FINANCIAL
DATA (CONTINUED)
|
(millions)
|
(Unaudited)
|
|
NSM
|
|
Three Months
Ended
December 31, 2018
|
|
Three Months
Ended
December 31, 2019
|
|
Twelve Months
Ended
December 31, 2019
|
Commission
revenues
|
|
$
|
33.2
|
|
|
$
|
45.8
|
|
|
$
|
193.4
|
|
Broker commission
expenses
|
|
11.3
|
|
|
15.9
|
|
|
64.8
|
|
Gross
profit
|
|
21.9
|
|
|
29.9
|
|
|
128.6
|
|
Other
revenues
|
|
5.2
|
|
|
12.0
|
|
|
39.7
|
|
General and
administrative expenses
|
|
23.7
|
|
|
40.8
|
|
|
132.2
|
|
Change in fair value
of contingent consideration
earnout liabilities
|
|
.1
|
|
|
(3.5)
|
|
|
2.1
|
|
Amortization of other
intangible assets
|
|
3.3
|
|
|
5.9
|
|
|
19.4
|
|
Interest
expense
|
|
3.2
|
|
|
4.5
|
|
|
16.7
|
|
GAAP pre-tax (loss)
income
|
|
(3.2)
|
|
|
(5.8)
|
|
|
(2.1)
|
|
Income tax expense
(benefit)
|
|
.5
|
|
|
(2.3)
|
|
|
(.6)
|
|
GAAP net
loss
|
|
(3.7)
|
|
|
(3.5)
|
|
|
(1.5)
|
|
|
|
|
|
|
|
|
Add back:
|
|
|
|
|
|
|
Interest
expense
|
|
3.2
|
|
|
4.5
|
|
|
16.7
|
|
Income tax expense
(benefit)
|
|
.5
|
|
|
(2.3)
|
|
|
(.6)
|
|
General and
administrative expenses – depreciation
|
|
.7
|
|
|
.8
|
|
|
2.8
|
|
Amortization of other
intangible assets
|
|
3.3
|
|
|
5.9
|
|
|
19.4
|
|
EBITDA
|
|
4.0
|
|
|
5.4
|
|
|
36.8
|
|
|
|
|
|
|
|
|
Add back:
|
|
|
|
|
|
|
Change in fair value
of contingent consideration
earnout liabilities
|
|
.1
|
|
|
(3.5)
|
|
|
2.1
|
|
Acquisition-related
transaction expenses
|
|
.4
|
|
|
4.2
|
|
|
5.6
|
|
Fair value purchase
accounting adjustment for deferred revenue
|
|
—
|
|
|
.9
|
|
|
.9
|
|
Investments made in
the development of new business lines
|
|
.9
|
|
|
—
|
|
|
.3
|
|
Restructuring
expenses
|
|
.1
|
|
|
1.9
|
|
|
2.3
|
|
Adjusted
EBITDA
|
|
$
|
5.5
|
|
|
$
|
8.9
|
|
|
$
|
48.0
|
|
|
|
|
|
|
|
|
Add:
|
|
|
|
|
|
|
Embrace's adjusted
EBITDA from January 1, 2019 to April 1, 2019
|
|
2.0
|
|
Pro forma adjusted
EBITDA for the twelve months ended December 31, 2019
|
|
$
|
50.0
|
|
Regulation G
This earnings release includes eight non-GAAP financial measures
that have been reconciled to their most comparable GAAP financial
measures.
- Adjusted book value per share is a non-GAAP financial measure
which is derived by adjusting (i) the GAAP book value per share
numerator and (ii) the common shares outstanding denominator, as
described below.
The GAAP book value per share
numerator is adjusted (i) to include a discount for the time value
of money arising from the modeled timing of cash payments of
principal and interest on the BAM surplus notes and (ii) to add
back the unearned premium reserve, net of deferred acquisition
costs, at HG Global.
Under GAAP, White Mountains is required to carry the BAM surplus
notes, including accrued interest, at nominal value with no
consideration for time value of money. Based on a debt
service model that forecasts operating results for BAM through
maturity of the surplus notes, the present value of the BAM surplus
notes, including accrued interest, was estimated to be $157 million, $137
million, $146 million and
$151 million less than the nominal
GAAP carrying values as of December 31,
2019, September 30, 2019,
December 31, 2018, and September 30, 2018, respectively.
The value of HG Global's unearned premium reserve, net of deferred
acquisition costs, was $119 million,
$122 million, $106 million and $94
million as of December 31,
2019, September 30, 2019,
December 31, 2018, and September 30, 2018, respectively.
White Mountains believes these adjustments are useful to management
and investors in analyzing the intrinsic value of HG Global,
including the value of the surplus notes and the value of the
in-force business at HG Re, HG Global's reinsurance
subsidiary.
The denominator used in the calculation of adjusted book value per
share equals the number of common shares outstanding adjusted to
exclude unearned restricted common shares, the compensation cost of
which, at the date of calculation, has yet to be amortized.
Restricted common shares are earned on a straight-line basis over
their vesting periods. The reconciliation of GAAP book value
per share to adjusted book value per share is included on page
6.
- The growth in adjusted book value per share included on page 1
reflects the estimated gain from the MediaAlpha Transaction as if
it had closed on December 31, 2018. A
reconciliation from GAAP to the reported percentage is as
follows:
|
|
As of
December 31, 2019
|
|
As of
December 31, 2018
|
|
Growth %
(1)
|
GAAP book value per
share
|
|
$
|
1,023.91
|
|
|
$
|
896.00
|
|
|
14.4
|
%
|
Estimated gain from
MediaAlpha Transaction
as of December 31, 2018
|
|
—
|
|
|
55.07
|
|
|
|
GAAP book value per
share including the estimated gain
from the MediaAlpha Transaction as of
December 31, 2018
|
|
1,023.91
|
|
|
951.07
|
|
|
7.8
|
%
|
Adjustments to book
value per share (see reconciliation
on page 6)
|
|
(5.50)
|
|
|
(8.15)
|
|
|
|
Adjusted book value
per share including the estimated gain
from the MediaAlpha Transaction as of December 31, 2018
|
|
$
|
1,018.41
|
|
|
$
|
942.92
|
|
|
8.1
|
%
|
|
(1) Growth
includes $1.00 per share dividend paid during the first quarter of
2019.
|
- Gross written premiums and MSC from new business is a non-GAAP
financial measure, which is derived by adjusting gross written
premiums and MSC collected (i) to include the present value of
future installment MSC not yet collected and (ii) to exclude the
impact of gross written premium adjustments related to policies
closed in prior periods. White Mountains believes these adjustments
are useful to management and investors in evaluating the volume and
pricing of new business closed during the period. The
reconciliation from GAAP gross written premiums to gross written
premiums and MSC from new business is included on page 14.
- NSM's EBITDA, adjusted EBITDA and pro forma adjusted EBITDA are
non-GAAP financial measures.
EBITDA is a non-GAAP financial
measure that excludes interest expense on debt, income tax benefit
(expense), depreciation and amortization from GAAP net income
(loss).
Adjusted EBITDA is a non-GAAP financial measure that excludes
certain other items in GAAP net income (loss) in addition to those
excluded from EBITDA. The adjustments relate to (i) change in
fair value of contingent consideration earnout liabilities, (ii)
acquisition-related transaction expenses, (iii) fair value purchase
accounting adjustment for deferred revenue, (iv) investments made
in the development of new business lines and (v) restructuring
expenses. A description of each follows:
- Change in fair value of contingent consideration earnout
liabilities - Earnout liabilities are amounts payable to the
sellers of businesses purchased by NSM that are contingent on the
earnings of such businesses in periods subsequent to their
acquisition. Under GAAP, earnout liabilities are not capitalized as
part of the purchase price. Earnout liabilities are recorded at
fair value, with the periodic change in the fair value of these
liabilities recorded as income or an expense.
- Acquisition-related transaction expenses - Represents
costs directly related to NSM's transactions to acquire businesses,
such as transaction-related compensation, impairments of intangible
assets, banking, accounting and external lawyer fees, which are not
capitalized and are expensed under GAAP.
- Fair value purchase accounting adjustment for deferred
revenue - Represents the amount of deferred revenue that had
already been collected but subsequently written down in connection
with establishing the fair value of deferred revenue as part of
NSM's purchase accounting for Embrace Pet Insurance.
- Investments made in the development of new business
lines - Represents the net loss related to the start-up of
newly established lines of business, which NSM views as
investments. For the periods presented, this adjustment relates
primarily to NSM's investment expenditures, net of revenues
generated, in the organic development of (i) its pet insurance line
and (ii) its MGA in the United
Kingdom. NSM has recently decided to cease investment in the
organic development of its pet insurance line and, instead, to
acquire Embrace Pet Insurance, which closed in April 2019.
- Restructuring expenses - Represents expenses associated
with eliminating redundant work force and facilities that often
arise as a result of NSM's post-acquisition integration
strategies.
Pro forma adjusted EBITDA is a
non-GAAP financial measure that starts with adjusted EBITDA and
also includes the earnings of acquired businesses for the period of
time over the previous twelve months that the businesses were not
owned by White Mountains.
White Mountains believes that these non-GAAP financial measures are
useful to management and investors in evaluating NSM's
performance. White Mountains also believes that pro forma
adjusted EBITDA is useful to management and investors to
demonstrate the current earnings profile of NSM's business for a
full twelve-month period. See page 15 for the reconciliation
of NSM's GAAP net income (loss) to EBITDA, adjusted EBITDA and pro
forma adjusted EBITDA.
- Total consolidated portfolio return excluding the MediaAlpha
Transaction and other long-term investments return excluding the
MediaAlpha Transaction are non-GAAP financial measures that remove
the $115 million pre-tax unrealized
investment gain resulting from the MediaAlpha Transaction
recognized in the first quarter of 2019. White Mountains believes
this measure to be useful to management and investors by making the
return in the current period comparable to the prior periods. A
reconciliation from GAAP to the reported percentages is as
follows:
|
|
For the twelve
months ended December 31, 2019
|
|
|
GAAP
returns
|
|
Remove
MediaAlpha
Transaction
|
|
Returns -
excluding
MediaAlpha
Transaction
|
|
|
|
|
|
|
|
Total consolidated
portfolio returns
|
|
20.4
|
%
|
|
(4.9)
|
%
|
|
15.5
|
%
|
Other long-term
investments returns
|
|
52.4
|
%
|
|
(37.2)
|
%
|
|
15.2
|
%
|
Safe Harbor Statement under the Private
Securities Litigation Reform Act of 1995
This earnings release may contain "forward-looking statements"
within the meaning of Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of
1934. All statements, other than statements of historical
facts, included or referenced in this release which address
activities, events or developments which White Mountains expects or
anticipates will or may occur in the future are forward-looking
statements. The words "will", "believe", "intend", "expect",
"anticipate", "project", "estimate", "predict" and similar
expressions are also intended to identify forward-looking
statements. These forward-looking statements include, among
others, statements with respect to White Mountains's:
- change in adjusted book value per share or return on
equity;
- business strategy;
- financial and operating targets or plans;
- incurred loss and loss adjustment expenses and the adequacy of
its loss and loss adjustment expense reserves;
- projections of revenues, income (or loss), earnings (or loss)
per share, dividends, market share or other financial
forecasts;
- expansion and growth of its business and operations; and
- future capital expenditures.
These statements are based on certain assumptions and analyses
made by White Mountains in light of its experience and perception
of historical trends, current conditions and expected future
developments, as well as other factors believed to be appropriate
in the circumstances. However, whether actual results and
developments will conform to its expectations and predictions is
subject to risks and uncertainties that could cause actual results
to differ materially from expectations, including:
- the risks that are described from time to time in White
Mountains's filings with the Securities and Exchange Commission,
including but not limited to White Mountains's Annual Report on
Form 10-K for the fiscal year ended December
31, 2018 and White Mountains's June
30, 2019 Quarterly Report on Form 10-Q;
- business opportunities (or lack thereof) that may be presented
to it and pursued;
- actions taken by ratings agencies from time to time, such as
financial strength or credit ratings downgrades or placing ratings
on negative watch;
- the continued availability of capital and financing;
- general economic, market or business conditions;
- competitive forces, including the conduct of other
insurers;
- changes in domestic or foreign laws or regulations, or their
interpretation, applicable to White Mountains, its competitors or
its customers;
- an economic downturn or other economic conditions adversely
affecting its financial position; and
- other factors, most of which are beyond White Mountains's
control.
Consequently, all of the forward-looking statements made in this
earnings release are qualified by these cautionary statements, and
there can be no assurance that the actual results or developments
anticipated by White Mountains will be realized or, even if
substantially realized, that they will have the expected
consequences to, or effects on, White Mountains or its business or
operations. White Mountains assumes no obligation to publicly
update any such forward-looking statements, whether as a result of
new information, future events or otherwise.
CONTACT: Todd Pozefsky
(203) 458-5807
View original
content:http://www.prnewswire.com/news-releases/white-mountains-reports-fourth-quarter-results-300999223.html
SOURCE White Mountains Insurance Group, Ltd.