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White Mountains Reports Second Quarter Results

August 6, 2019 at 8:00 AM EDT

HAMILTON, Bermuda, Aug. 6, 2019 /PRNewswire/ -- White Mountains Insurance Group, Ltd. (NYSE: WTM) reported book value per share of $987 and adjusted book value per share of $986 as of June 30, 2019.  Book value per share and adjusted book value per share both increased 1% in the second quarter of 2019.  Book value per share and adjusted book value per share increased 10% and 11% in the first six months of 2019, including dividends.  The results for the first six months of 2019 include the impact of the MediaAlpha transaction.  Excluding the gain on the MediaAlpha transaction, book value per share and adjusted book value per share would have increased 4% and 5% in the first six months of 2019, including dividends.(1)

Manning Rountree, CEO, commented, "We had a solid quarter.  ABVPS was up 1%, driven primarily by investment results.  BAM produced decent premium volumes despite challenging primary market conditions.  NSM produced good organic growth (top line and bottom line) and closed the Embrace Pet Insurance acquisition during the quarter.  Kudu is performing well and produced a profit in its first quarter as a new operating segment for White Mountains.  MediaAlpha grew revenues and profits to new highs in the quarter.  We closed the Elementum transaction in May, and we ended the quarter with $1.1 billion of undeployed capital."

Comprehensive income attributable to common shareholders was $18 million and $302 million in the second quarter and first six months of 2019, compared to comprehensive income (loss) attributable to common shareholders of $3 million and $(45) million in the second quarter and first six months of 2018. 

HG Global/BAM

BAM's gross written premiums and member surplus contributions collected were $25 million and $40 million in the second quarter and first six months of 2019, compared to $29 million and $40 million in the second quarter and first six months of 2018.  BAM insured municipal bonds with par value of $2.9 billion and $4.8 billion in the second quarter and first six months of 2019, compared to $3.1 billion and $4.4 billion in the second quarter and first six months of 2018.  Total pricing was 84 and 83 basis points in the second quarter and first six months of 2019, compared to 101 and 100 basis points in the second quarter and first six months of 2018.  BAM's total claims paying resources were $895 million at June 30, 2019, compared to $871 million at December 31, 2018 and $827 million at June 30, 2018.

Seán McCarthy, CEO of BAM, said, "Municipal new-issue volume declined in the quarter, while insured penetration increased.  BAM wrote healthy volumes in both the secondary market and the GreenStar program.  Lower interest rates and tighter credit spreads impacted pricing, especially in the primary market.  In June, BAM became the first municipal bond insurer to join the Federal Home Loan Bank of New York; membership strengthens BAM's capital resources and provides access to an additional source of contingent liquidity.  Also in June, S&P Global Ratings concluded its annual review and affirmed BAM's "AA/stable" rating."

(1) See "Regulation G" on page 14.

HG Global reported pre-tax income of $15 million and $31 million in the second quarter and first six months of 2019, compared to pre-tax income of $8 million and $12 million in the second quarter and first six months of 2018.  White Mountains reported pre-tax loss related to BAM of $7 million and $17 million in the second quarter and first six months of 2019, compared to pre-tax loss of $17 million and $36 million in the second quarter and first six months of 2018.  The period over period changes were driven primarily by higher investment returns in the HG Global and BAM investment portfolios.

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

In the second quarter of 2019, NSM reported pre-tax income of $1 million, adjusted EBITDA of $16 million, and commission and other revenues of $66 million.  In the first six months of 2019, NSM reported pre-tax loss of $1 million, adjusted EBITDA of $26 million, and commission and other revenues of $115 million.  Results for the second quarter and first six months of 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.

Geof McKernan, CEO of NSM, said, "NSM had a strong second quarter, growing trailing 12 months pro forma controlled premiums to $864 million from $759 million and pro forma adjusted EBITDA to $49 million from $40 million.  These results reflect the contribution of the Embrace Pet Insurance acquisition as well as continued organic growth, principally in the specialty transportation and real estate verticals.  We continue to invest in technology and talent to drive organic growth while also pursuing attractive acquisition opportunities."

On June 28, 2019, NSM acquired the renewal rights on its U.S. collector car business from an affiliate of American International Group, Inc. for $82.5 million.  The acquisition satisfied the previously disclosed obligation of NSM to acquire the renewal rights from AIG. 

Kudu

On April 4, 2019, White Mountains completed its acquisition of the ownership interests in Kudu held by certain funds managed by Oaktree Capital Management, L.P.  In addition, White Mountains assumed all of Oaktree's unfunded capital commitments to Kudu, increasing White Mountains's total capital commitment to $250 million.  As a result of the transaction, White Mountains's ownership of Kudu increased from 49% to 99%, and White Mountains began consolidating Kudu in its financial statements during the second quarter of 2019. 

In the twelve months ended June 30, 2019, Kudu deployed $145 million in five investment management firms with combined assets under management of over $17 billion, spanning a range of asset classes, including real estate, real assets, wealth management, hedge funds and alternative credit strategies.  In the second quarter of 2019, Kudu reported total revenues of $4 million and pre-tax income of $2 million.

Rob Jakacki, CEO of Kudu, said, "Kudu has established a leadership position in its target market.  Our current portfolio of managers is performing well, and good financial results are emerging.  We closed five transactions over the past year with an average cash yield at inception of 9.5%.  Kudu as an enterprise has turned cash flow positive.  In July, we closed a sixth transaction with First Long Island Investors, and we have a strong deal pipeline of quality managers.  We are excited about our prospects."

Other Operations

White Mountains's Other Operations segment reported pre-tax income of $5 million and $288 million in the second quarter and first six months of 2019, compared to pre-tax loss of $11 million and $62 million in the second quarter and first six months of 2018.  Pre-tax income for the first six months of 2019 included $182 million of realized and unrealized gains from the MediaAlpha transaction.  Excluding the MediaAlpha transaction, net realized and unrealized investment gains were $23 million and $142 million in the second quarter and first six months of 2019, compared to net realized and unrealized investment gains (losses) of $13 million and $(33) million in the second quarter and first six months of 2018.

On June 3, 2019, White Mountains acquired a 30% limited partnership interest in Elementum Holdings LP for $55 million.  Elementum manages portfolios of insurance linked securities—primarily catastrophe bonds and collateralized reinsurance—across a range of liquidity and risk/return profiles.  As part of the transaction, White Mountains also agreed to invest a total of $50 million in funds managed by Elementum.

Investments

The total return on invested assets was 2.0% in the second quarter of 2019 compared to 0.7% in the second quarter of 2018.  The total return on invested assets was 12.4% in the first six months of 2019, which included $115 million of unrealized investment gains from the MediaAlpha transaction.  Excluding the MediaAlpha transaction, the total return on invested assets was 7.9% in the first six months of 2019 compared to -0.3% in the first six months of 2018.

Mark Plourde, Managing Director of White Mountains Advisors, said, "The total portfolio was up 2.0% for the second quarter, a good absolute result that benefited from the continued equity market rally and the decline in interest rates.  Common stocks and ETFs returned 3.7%, lagging the S&P 500 Index return of 4.3%, due to relative underperformance in our international common stock positions.  Other long-term investments were flat.  Fixed income returned 2.0%, lagging the BBIA Index return of 2.4%, due to shorter duration positioning."

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-Q today 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)

 
   

June 30,
2019

 

December 31,
2018

 

June 30,
2018

Assets

           

   Financial Guarantee (HG Global/BAM)

           

     Fixed maturity investments

 

$

762.9

 

$

701.4

 

$

650.2

     Short-term investments

 

34.8

 

66.9

 

66.3

      Total investments

 

797.7

 

768.3

 

716.5

     Cash

 

10.3

 

12.5

 

13.9

     Insurance premiums receivable

 

6.6

 

6.4

 

6.3

     Deferred acquisition costs

 

20.5

 

19.0

 

17.2

     Accrued investment income

 

5.3

 

4.9

 

4.2

     Accounts receivable on unsettled investment sales

 

8.0

 

 

     Other assets   

 

16.1

 

5.1

 

4.4

      Total Financial Guarantee assets

 

864.5

 

816.2

 

762.5

Specialty Insurance Distribution (NSM)

           

     Short-term investments

 

.2

 

1.7

 

     Cash (restricted $88.8, $50.0 and $57.3)

 

119.7

 

66.2

 

73.3

   Premium and commission receivable

 

57.6

 

44.0

 

32.8

     Goodwill and other intangible assets

 

636.8

 

486.2

 

436.2

     Other assets

 

36.8

 

28.9

 

14.8

      Total Specialty Insurance Distribution assets

 

851.1

 

627.0

 

557.1

Global Asset and Wealth Management (Kudu)

           

Other long-term investments

 

142.2

 

 

Short-term investments

 

.1

 

 

Cash

 

2.7

 

 

Accrued investment income

 

2.7

 

 

Goodwill and other intangible assets

 

9.8

 

 

Other assets

 

2.9

 

 

Total Global Asset and Wealth Management assets

 

160.4

 

 

   Marketing Technology (MediaAlpha)

           

     Cash

 

 

5.7

 

15.0

     Goodwill and other intangible assets

 

 

43.4

 

48.3

     Accounts receivable from publishers and advertisers

 

 

37.0

 

34.9

     Other assets

 

 

2.3

 

1.5

      Total Marketing Technology assets

 

 

88.4

 

99.7

   Other Operations

           

     Fixed maturity investments

 

346.5

 

376.1

 

458.5

     Short-term investments

 

152.0

 

145.6

 

255.4

     Common equity securities

 

709.2

 

925.6

 

911.2

     Other long-term investments

 

522.2

 

325.6

 

255.5

      Total investments

 

1,729.9

 

1,772.9

 

1,880.6

     Cash

 

17.6

 

25.9

 

28.9

     Accrued investment income

 

5.4

 

5.5

 

6.3

     Accounts receivable on unsettled investment sales

 

72.8

 

 

3.5

     Goodwill and other intangible assets

 

21.0

 

7.9

 

8.3

     Other assets

 

26.7

 

15.5

 

17.9

     Assets held for sale

 

2.8

 

3.3

 

3.3

      Total Other Operations assets

 

1,876.2

 

1,831.0

 

1,948.8

      Total assets

 

$

3,752.2

 

$

3,362.6

 

$

3,368.1

 

 

WHITE MOUNTAINS INSURANCE GROUP, LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

(millions)

(Unaudited)

 
   

June 30,
2019

 

December 31,
2018

 

June 30,
2018

Liabilities

           

  Financial Guarantee (HG Global/BAM)

           

    Unearned insurance premiums

 

$

187.8

 

$

176.0

 

$

155.5

    Accrued incentive compensation

 

14.5

 

20.4

 

12.5

    Accounts payable on unsettled investment purchases

 

 

2.2

 

11.7

    Other liabilities

 

27.4

 

13.9

 

16.8

   Total Financial Guarantee liabilities

 

229.7

 

212.5

 

196.5

Specialty Insurance Distribution (NSM)

           

  Debt

 

219.7

 

178.5

 

149.8

  Premiums payable

 

118.7

 

77.2

 

72.2

  Contingent consideration earnout liabilities

 

30.9

 

20.2

 

17.5

    Other liabilities

 

56.1

 

38.9

 

27.1

     Total Specialty Insurance Distribution liabilities

 

425.4

 

314.8

 

266.6

Global Asset and Wealth Management (Kudu)

           

  Other liabilities

 

3.5

 

 

   Total Global Asset and Wealth Management liabilities

 

3.5

 

 

Marketing Technology (MediaAlpha)

           

     Debt

 

 

14.2

 

19.8

     Amounts due to publishers and advertisers

 

 

27.0

 

38.3

     Other liabilities

 

 

5.7

 

2.4

     Total Marketing Technology liabilities

 

 

46.9

 

60.5

Other Operations

           

     Debt

 

10.8

 

 

     Accrued incentive compensation

 

36.8

 

38.9

 

30.9

     Accounts payable on unsettled investment purchases

 

 

5.0

 

10.0

     Other liabilities

 

38.1

 

26.3

 

6.1

     Total Other Operations liabilities

 

85.7

 

70.2

 

47.0

     Total liabilities

 

744.3

 

644.4

 

570.6

             

Equity

           

White Mountains's common shareholder's equity

           

    White Mountains's common shares and paid-in surplus

 

590.5

 

584.0

 

575.8

    Retained earnings

 

2,562.8

 

2,264.9

 

2,366.5

    Accumulated other comprehensive loss, after tax:

           

  Net unrealized foreign currency translation losses and interest rate swap

 

(9.0)

 

(5.8)

 

(2.2)

    Total White Mountains's common shareholders' equity

 

3,144.3

 

2,843.1

 

2,940.1

Non-controlling interests

 

(136.4)

 

(124.9)

 

(142.6)

Total equity

 

3,007.9

 

2,718.2

 

2,797.5

Total liabilities and equity

 

$

3,752.2

 

$

3,362.6

 

$

3,368.1

 

 

 

WHITE MOUNTAINS INSURANCE GROUP, LTD.

BOOK VALUE AND ADJUSTED BOOK VALUE PER SHARE

(Unaudited)

 
   

June 30,
2019

 

March 31,
2019

 

December 31,
2018

 

June 30,
2018

 

Book value per share numerators (in millions):

                 

White Mountains's common shareholders' equity - GAAP book value per share
numerator

 

$

3,144.3

 

$

3,122.0

 

$

2,843.1

 

$

2,940.1

 

Time value of money discount on expected future payments on the BAM Surplus
Notes (1)

 

(135.7)

 

(138.6)

 

(141.2)

 

(150.1)

 

HG Global's unearned premium reserve (1)

 

147.2

 

140.2

 

136.9

 

119.5

 

HG Global's net deferred acquisition costs (1)

 

(37.9)

 

(35.7)

 

(34.6)

 

(29.1)

 

Adjusted book value per share numerator

 

$

3,117.9

 

$

3,087.9

 

$

2,804.2

 

$

2,880.4

 

Book value per share denominators (in thousands of shares):

                 

Common shares outstanding - GAAP book value per share denominator

 

3,185.4

 

3,181.2

 

3,173.1

 

3,180.4

 

Unearned restricted common shares

 

(24.5)

 

(25.5)

 

(14.6)

 

(22.4)

 

Adjusted book value per share denominator

 

3,160.9

 

3,155.7

 

3,158.5

 

3,158.0

 

GAAP book value per share

 

$

987.12

 

$

981.39

 

$

896.00

 

$

924.46

 

Adjusted book value per share

 

$

986.39

 

$

978.51

 

$

887.85

 

$

912.08

 
                   

(1) Amount reflects White Mountains's preferred share ownership in HG Global of 96.9%.

 
   

June 30,
2019

 

March 31,
2019

 

December 31,
2018

 

June 30,
2018

 
                   

Quarter-to-date change in GAAP book value per share, including
dividends:

 

0.6

%

 

9.6

%

 

(4.5)

%

 

0.9

%

 

Quarter-to-date change in adjusted book value per share, including
dividends:

 

0.8

%

 

10.3

%

 

(4.1)

%

 

1.0

%

 

Year-to-date change in GAAP book value per share, including dividends:

 

10.3

%

 

9.6

%

 

(3.7)

%

 

(0.6)

%

 

Year-to-date change in adjusted book value per share, including dividends:

 

11.2

%

 

10.3

%

 

(2.8)

%

 

(0.2)

%

 

Year-to-date dividends per share

 

$

1.00

 

$

1.00

 

$

1.00

 

$

1.00

 
                   
   

June 30,
2019

 

March 31,
2019

 

December 31,
2018

 

June 30,
2018

 

Summary of goodwill and other intangible assets (in millions):

                 

Goodwill:

                 

NSM

 

$

398.4

(1)

$

328.8

 

$

354.3

(2)

$

436.2

(3)

Kudu

 

9.8

(1)

 

 

 

MediaAlpha

 

 

 

18.3

 

18.3

 

Other Operations

 

20.4

 

20.9

 

7.3

 

7.6

 

Total goodwill

 

428.6

 

349.7

 

379.9

 

462.1

 
                   

Other intangible assets:

                 

NSM

 

238.4

 

159.9

 

131.9

 

 

MediaAlpha

 

 

 

25.1

 

30.0

 

Other Operations

 

.6

 

.6

 

.6

 

.7

 

Total other intangible assets

 

239.0

 

160.5

 

157.6

 

30.7

 
                   

Total goodwill and other intangible assets

 

667.6

 

510.2

 

537.5

 

492.8

 
                   

Goodwill and other intangible assets attributed to
   non-controlling interests

 

(25.4)

 

(24.1)

 

(40.6)

 

(41.7)

 
                   

Goodwill and other intangible assets included in
   White Mountains's common shareholders' equity

 

$

642.2

 

$

486.1

 

$

496.9

 

$

451.1

 
                                   

(1) 

The relative fair values of goodwill and of other intangible assets recognized in connection with the acquisition of Embrace and the Kudu transaction had not yet been finalized at June 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.

(3) 

The relative fair values of goodwill and of other intangible assets recognized in connection with the acquisition of NSM had not yet been finalized at June 30, 2018.

 

 

 

WHITE MOUNTAINS INSURANCE GROUP, LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)

(millions)

(Unaudited)

 
   

Three Months Ended June 30,

 

Six Months Ended June 30,

   

2019

 

2018

 

2019

 

2018

Revenues:

               

   Financial Guarantee (HG Global/BAM)

               

     Earned insurance premiums

 

$

4.3

 

$

3.4

 

$

8.5

 

$

6.4

     Net investment income

 

5.4

 

4.0

 

10.7

 

7.7

     Net realized and unrealized investment gains (losses)

 

11.5

 

(2.4)

 

23.3

 

(10.3)

     Other revenues

 

.4

 

.4

 

1.0

 

.6

   Total Financial Guarantee revenues

 

21.6

 

5.4

 

43.5

 

4.4

Specialty Insurance Distribution (NSM)

               

Commission revenues

 

54.9

 

22.6

 

98.2

 

22.6

Other revenues

 

11.2

 

.9

 

17.2

 

.9

   Total Specialty Insurance Distribution revenues

 

66.1

 

23.5

 

115.4

 

23.5

Global Asset and Wealth Management (Kudu)

               

Net investment income

 

4.0

 

 

4.0

 

Net realized and unrealized gains

 

.4

 

 

.4

 

Total Global Asset and Wealth Management revenues

 

4.4

 

 

4.4

 

   Marketing Technology (MediaAlpha)

               

     Advertising and commission revenues

 

 

71.8

 

48.8

 

141.9

     Other revenues

 

 

 

 

1.6

   Total Marketing Technology revenues

 

 

71.8

 

48.8

 

143.5

   Other Operations

               

     Net investment income

 

11.6

 

7.8

 

22.3

 

23.8

     Net realized and unrealized investment gains (losses)

 

23.3

 

12.9

 

142.4

 

(32.9)

    Realized gain and unrealized investment gain from
       the MediaAlpha transaction

 

 

 

182.2

 

     Advertising and commission revenues

 

1.3

 

1.0

 

2.6

 

1.9

     Other revenues

 

.7

 

(.1)

 

1.0

 

.2

Total Other Operations revenues

 

36.9

 

21.6

 

350.5

 

(7.0)

     Total revenues

 

$

129.0

 

$

122.3

 

$

562.6

 

$

164.4

 

 

WHITE MOUNTAINS INSURANCE GROUP, LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)

(millions)

(Unaudited)

 
   

Three Months Ended June 30,

 

Six Months Ended June 30,

   

2019

 

2018

 

2019

 

2018

Expenses:

               

Financial Guarantee (HG Global/BAM)

               

Insurance acquisition expenses

 

$

1.4

 

$

1.3

 

$

2.7

 

$

2.7

    Other underwriting expenses

 

.1

 

.1

 

.2

 

.2

General and administrative expenses

 

12.3

 

13.4

 

26.6

 

25.2

Total Financial Guarantee expenses

 

13.8

 

14.8

 

29.5

 

28.1

Specialty Insurance Distribution (NSM)

               

General and administrative expenses

 

32.7

 

12.1

 

57.8

 

12.1

Change in fair value of contingent consideration earnout liabilities

 

6.3

 

 

7.6

 

Broker commission expenses

 

18.2

 

6.6

 

33.9

 

6.6

Amortization of other intangible assets

 

4.1

 

 

9.1

 

Interest expense

 

4.1

 

1.6

 

7.8

 

1.6

Total Specialty Insurance Distribution expenses

 

65.4

 

20.3

 

116.2

 

20.3

Global Asset and Wealth Management (Kudu)

               

General and administrative expenses

 

2.2

 

 

2.2

 

Total Global Asset and Wealth Management expenses

 

2.2

 

 

2.2

 

Marketing Technology (MediaAlpha)

               

Cost of sales

 

 

59.9

 

40.6

 

117.3

General and administrative expenses

 

 

4.6

 

12.5

 

15.8

Amortization of other intangible assets

 

 

2.5

 

1.6

 

5.4

Interest expense

 

 

.3

 

.2

 

.7

Total Marketing Technology expenses

 

 

67.3

 

54.9

 

139.2

Other Operations

               

Cost of sales

 

1.6

 

1.1

 

2.7

 

1.8

General and administrative expenses

 

30.1

 

31.0

 

59.5

 

53.0

Amortization of other intangible assets

 

.1

 

.1

 

.1

 

.1

Interest expense

 

 

.1

 

 

.3

Total Other Operations expenses

 

31.8

 

32.3

 

62.3

 

55.2

Total expenses

 

113.2

 

134.7

 

265.1

 

242.8

Pre-tax income (loss) from continuing operations

 

15.8

 

(12.4)

 

297.5

 

(78.4)

Income tax benefit (expense)

 

.1

 

(2.5)

 

(10.1)

 

(3.2)

Net income (loss) from continuing operations

 

15.9

 

(14.9)

 

287.4

 

(81.6)

Net gain from sale of discontinued operations, net of tax

 

 

 

.7

 

.1

Net income (loss)

 

15.9

 

(14.9)

 

288.1

 

(81.5)

Net loss attributable to non-controlling interests

 

4.6

 

18.4

 

16.8

 

37.0

Net income (loss) attributable to White Mountains's
   common shareholders

 

$

20.5

 

$

3.5

 

$

304.9

 

$

(44.5)

 

 

WHITE MOUNTAINS INSURANCE GROUP, LTD.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(millions)

(Unaudited)

 
   

Three Months Ended June 30,

 

Six Months Ended June 30,

   

2019

 

2018

 

2019

 

2018

Net income (loss) attributable to White Mountains's
   common shareholders

 

$

20.5

 

$

3.5

 

$

304.9

 

$

(44.5)

Other comprehensive loss, net of tax

 

(3.1)

 

(.9)

 

(3.4)

 

(.9)

Comprehensive income (loss)

 

17.4

 

2.6

 

301.5

 

(45.4)

Other comprehensive income (loss) attributable to non-controlling interests

 

.2

 

 

.2

 

Comprehensive income (loss) attributable to White Mountains's
   common shareholders

 

$

17.6

 

$

2.6

 

$

301.7

 

$

(45.4)

 

 

WHITE MOUNTAINS INSURANCE GROUP, LTD.

EARNINGS PER SHARE

(Unaudited)

         

Income (loss) per share attributable to White Mountains's common shareholders

 

Three Months Ended June 30,

 

Six Months Ended June 30,

   

2019

 

2018

 

2019

 

2018

Basic earnings (loss) per share

               

Continuing operations

 

$

6.44

 

$

1.02

 

$

95.71

 

$

(12.44)

Discontinued operations

 

 

 

.22

 

.03

Total consolidated operations

 

$

6.44

 

$

1.02

 

$

95.93

 

$

(12.41)

                 

Diluted earnings (loss) per share

               

Continuing operations

 

$

6.44

 

$

1.02

 

$

95.71

 

$

(12.44)

Discontinued operations

 

 

 

.22

 

.03

Total consolidated operations

 

$

6.44

 

$

1.02

 

$

95.93

 

$

(12.41)

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 June 30, 2019

 

HG Global/BAM

               
   

HG Global

 

BAM

 

NSM

 

Kudu

 

Other Operations

 

Total

Revenues:

                       

Earned insurance premiums

 

$

3.4

 

$

.9

 

$

 

$

 

$

 

$

4.3

Net investment income

 

1.9

 

3.5

 

 

4.0

 

11.6

 

21.0

Net investment income (loss) - BAM surplus note interest

 

6.8

 

(6.8)

 

 

 

 

Net realized and unrealized investment gains

 

4.0

 

7.5

 

 

.4

 

23.3

 

35.2

Advertising and commission revenues

 

 

 

54.9

 

 

1.3

 

56.2

Other revenues

 

 

.4

 

11.2

 

 

.7

 

12.3

                         

Total revenues

 

16.1

 

5.5

 

66.1

 

4.4

 

36.9

 

129.0

Expenses:

                       

Insurance acquisition expenses

 

.9

 

.5

 

 

 

 

1.4

Other underwriting expenses

 

 

.1

 

 

 

 

.1

Cost of sales

 

 

 

 

 

1.6

 

1.6

General and administrative expenses

 

.4

 

11.9

 

32.7

 

2.2

 

30.1

 

77.3

Change in fair value of contingent consideration
   earnout liabilities

 

 

 

6.3

 

 

 

6.3

Broker commission expenses

 

 

 

18.2

 

 

 

18.2

Amortization of other intangible assets

 

 

 

4.1

 

 

.1

 

4.2

Interest expense

 

 

 

4.1

 

 

 

4.1

                         

Total expenses

 

1.3

 

12.5

 

65.4

 

2.2

 

31.8

 

113.2

                         

Pre-tax income (loss)

 

$

14.8

 

$

(7.0)

 

$

.7

 

$

2.2

 

$

5.1

 

$

15.8

                     

For the Three Months Ended June 30, 2018

 

HG Global/BAM

               
   

HG Global

 

BAM

 

NSM (1)

 

MediaAlpha

 

Other Operations

 

Total

Revenues:

                       

Earned insurance premiums

 

$

2.7

 

$

.7

 

$

 

$

 

$

 

$

3.4

Net investment income

 

1.3

 

2.7

 

 

 

7.8

 

11.8

Net investment income (loss) - BAM surplus note interest

 

5.8

 

(5.8)

 

 

 

 

Net realized and unrealized investment (losses) gains

 

(1.2)

 

(1.2)

 

 

 

12.9

 

10.5

Advertising and commission revenues

 

 

 

22.6

 

71.8

 

1.0

 

95.4

Other revenues

 

 

.4

 

.9

 

 

(.1)

 

1.2

                         

Total revenues

 

8.6

 

(3.2)

 

23.5

 

71.8

 

21.6

 

122.3

Expenses:

                       

Insurance acquisition expenses

 

.7

 

.6

 

 

 

 

1.3

Other underwriting expenses

 

 

.1

 

 

 

 

.1

Cost of sales

 

 

 

 

59.9

 

1.1

 

61.0

General and administrative expenses

 

.2

 

13.2

 

12.1

 

4.6

 

31.0

 

61.1

Broker commission expenses

 

 

 

6.6

 

 

 

6.6

Amortization of other intangible assets

 

 

 

 

2.5

 

.1

 

2.6

Interest expense

 

 

 

1.6

 

.3

 

.1

 

2.0

                         

Total expenses

 

.9

 

13.9

 

20.3

 

67.3

 

32.3

 

134.7

                         

Pre-tax income (loss)

 

$

7.7

 

$

(17.1)

 

$

3.2

 

$

4.5

 

$

(10.7)

 

$

(12.4)

 

(1)  NSM's results are from May 11, 2018, the date of acquisition, to the end of the second quarter.

 

 

 

WHITE MOUNTAINS INSURANCE GROUP, LTD.

YTD SEGMENT STATEMENTS OF PRE-TAX INCOME (LOSS)

(millions)

(Unaudited)

 

For the Six Months Ended June 30, 2019

 

HG Global/BAM

                   
   

HG Global

 

BAM

 

NSM

 

Kudu

 

MediaAlpha (1)

 

Other Operations

 

Total

Revenues:

                           

Earned insurance premiums

 

$

6.8

 

$

1.7

 

$

 

$

 

$

 

$

 

$

8.5

Net investment income

 

3.8

 

6.9

 

 

4.0

 

 

22.3

 

37.0

Net investment income (loss) -
   BAM surplus note interest

 

13.7

 

(13.7)

 

 

 

 

 

Net realized and unrealized
   investment gains

 

9.1

 

14.2

 

 

.4

 

 

142.4

 

166.1

Realized and unrealized gains from
   MediaAlpha transaction

 

 

 

 

 

 

182.2

 

182.2

Advertising and commission revenues

 

 

 

98.2

 

 

48.8

 

2.6

 

149.6

Other revenue

 

 

1.0

 

17.2

 

 

 

1.0

 

19.2

                             

Total revenues

 

33.4

 

10.1

 

115.4

 

4.4

 

48.8

 

350.5

 

562.6

Expenses:

                           

Insurance acquisition expenses

 

1.7

 

1.0

 

 

 

 

 

2.7

Other underwriting expenses

 

 

.2

 

 

 

 

 

.2

Cost of sales

 

 

 

 

 

40.6

 

2.7

 

43.3

General and administrative expenses

 

.9

 

25.7

 

57.8

 

2.2

 

5.7

 

59.5

 

151.8

General and administrative expenses -
   MediaAlpha transaction related costs

 

 

 

 

 

6.8

 

 

6.8

Change in fair value of contingent
   consideration earnout liabilities

 

 

 

7.6

 

 

 

 

7.6

Broker commission expenses

 

 

 

33.9

 

 

 

 

33.9

Amortization of other intangible assets

 

 

 

9.1

 

 

1.6

 

.1

 

10.8

Interest expense

 

 

 

7.8

 

 

.2

 

 

8.0

                             

Total expenses

 

2.6

 

26.9

 

116.2

 

2.2

 

54.9

 

62.3

 

265.1

                             

Pre-tax income (loss)

 

$

30.8

 

$

(16.8)

 

$

(.8)

 

$

2.2

 

$

(6.1)

 

$

288.2

 

$

297.5

 

(1)   MediaAlpha's results are from January 1, 2019 to February 26, 2019, the date of the MediaAlpha transaction.

 

For the Six Months Ended June 30, 2018

 

HG Global/BAM

               
   

HG Global

 

BAM

 

NSM (1)

 

MediaAlpha

 

Other Operations

 

Total

Revenues:

                       

Earned insurance premiums

 

$

5.0

 

$

1.4

 

$

 

$

 

$

 

$

6.4

Net investment income

 

2.5

 

5.2

 

 

 

23.8

 

31.5

Net investment income (loss) - BAM surplus note interest

 

11.5

 

(11.5)

 

 

 

 

Net realized and unrealized investment losses

 

(4.8)

 

(5.5)

 

 

 

(32.9)

 

(43.2)

Advertising and commission revenues

 

 

 

22.6

 

141.9

 

1.9

 

166.4

Other revenue

 

 

.6

 

.9

 

1.6

 

.2

 

3.3

                         

Total revenues

 

14.2

 

(9.8)

 

23.5

 

143.5

 

(7.0)

 

164.4

Expenses:

                       

Insurance acquisition expenses

 

1.2

 

1.5

 

 

 

 

2.7

Other underwriting expenses

 

 

.2

 

 

 

 

.2

Cost of sales

 

 

 

 

117.3

 

1.8

 

119.1

General and administrative expenses

 

.6

 

24.6

 

12.1

 

15.8

 

53.0

 

106.1

Broker commission expenses

 

 

 

6.6

 

 

 

6.6

Amortization of other intangible assets

 

 

 

 

5.4

 

.1

 

5.5

Interest expense

 

 

 

1.6

 

.7

 

.3

 

2.6

                         

Total expenses

 

1.8

 

26.3

 

20.3

 

139.2

 

55.2

 

242.8

                         

Pre-tax income (loss)

 

$

12.4

 

$

(36.1)

 

$

3.2

 

$

4.3

 

$

(62.2)

 

$

(78.4)

 

(1)  NSM's results are from May 11, 2018, the date of acquisition, to the end of the second quarter.

 

 

 

WHITE MOUNTAINS INSURANCE GROUP, LTD.

SELECTED FINANCIAL DATA

(millions)

(Unaudited)

 
   

Three Months Ended June 30,

 

Six Months Ended June 30,

BAM

 

2019

 

2018

 

2019

 

2018

Gross par value of primary market policies issued

 

$

2,624.2

 

$

2,774.7

 

$

4,010.0

 

$

3,924.2

Gross par value of secondary market policies issued

 

293.2

 

311.5

 

832.4

 

460.1

Total gross par value of market policies issued

 

$

2,917.4

 

$

3,086.2

 

$

4,842.4

 

$

4,384.3

                 

Gross written premiums

 

$

12.5

 

$

18.6

 

$

20.4

 

$

25.0

Member surplus contributions ("MSC") collected

 

12.0

 

9.9

 

19.9

 

14.8

Total gross written premiums and MSC collected

 

$

24.5

 

$

28.5

 

$

40.3

 

$

39.8

Present value of future installment MSC collections

 

 

1.6

 

.2

 

2.8

Gross written premium adjustments on existing installment policies

 

 

1.1

 

(.1)

 

1.1

Gross written premiums and MSC from new business

 

$

24.5

 

$

31.2

 

$

40.4

 

$

43.7

Total pricing

 

84 bps

 

101 bps

 

83 bps

 

100 bps

 

   

As of
June 30, 2019

 

As of
December 31, 2018

Policyholders' surplus

 

$

410.6

 

$

413.7

Contingency reserve

 

57.9

 

50.3

Qualified statutory capital

 

468.5

 

464.0

Statutory net unearned premiums

 

38.3

 

36.2

Present value of future installment premiums and MSC

 

13.4

 

12.9

HG Re, Ltd collateral trusts at statutory value

 

274.4

 

258.3

Fidus Re, Ltd collateral trust at statutory value

 

100.0

 

100.0

     Claims paying resources

 

$

894.6

 

$

871.4

                                                              

   

Three Months Ended June 30,

 

Six Months Ended June 30,

HG Global

 

2019

 

2018

 

2019

 

2018

Net written premiums

 

$

10.7

 

$

15.8

 

$

17.4

 

$

21.1

Earned premiums

 

$

3.4

 

$

2.7

 

$

6.8

 

$

5.0

 

   

As of
June 30, 2019

 

As of
December 31, 2018

Unearned premiums

 

$

151.9

 

$

141.3

Deferred acquisition costs

 

$

39.1

 

$

35.7

 

 

WHITE MOUNTAINS INSURANCE GROUP, LTD.

SELECTED FINANCIAL DATA (CONTINUED)

(millions)

(Unaudited)

 

NSM

 

Three Months Ended
June 30, 2019

 

Six Months Ended
June 30, 2019

 

Twelve Months Ended
July 1, 2018 to
June 30, 2019

Commission revenues

 

$

54.9

 

$

98.2

 

$

170.3

Broker commission expenses

 

18.2

 

33.9

 

56.2

Gross profit

 

36.7

 

64.3

 

114.1

Other revenues

 

11.2

 

17.2

 

23.2

General and administrative expenses

 

32.7

 

57.8

 

104.6

Change in fair value of contingent consideration earnout liabilities

 

6.3

 

7.6

 

10.3

Amortization of other intangible assets

 

4.1

 

9.1

 

17.4

Interest expense

 

4.1

 

7.8

 

14.2

GAAP pre-tax income (loss)

 

.7

 

(.8)

 

(9.2)

Income tax expense (benefit)

 

.3

 

 

(1.1)

GAAP net income (loss)

 

.4

 

(.8)

 

(8.1)