White Mountains Reports Adjusted Book Value per Share of $405
HAMILTON, Bermuda, Oct. 31 /PRNewswire-FirstCall/ -- White Mountains Insurance Group, Ltd. (NYSE: WTM) reported an adjusted book value per share of $405 at September 30, 2008, a decrease of 9% for the quarter and 6% for the past twelve months, including dividends.
Ray Barrette, Chairman and CEO, commented, "As I stated in our October 13, 2008 pre-announcement, this was a difficult quarter. Our investment performance was the driving factor in our book value decline, with a -5% total return on invested assets, including a 15% drop in our equity and convertible security investments. Underwriting results in the quarter were mixed. OneBeacon's combined ratio was acceptable at 100%, including six points of catastrophe losses. White Mountains Re's combined ratio of 127%, including 44 points of catastrophe losses, was in line with our expectations given the level of cat activity around the world. Esurance showed much improvement with a 102% combined ratio, including one point of catastrophe losses."
Adjusted comprehensive net loss for the third quarter of 2008 was $409 million, compared to $161 million of adjusted comprehensive net income in the third quarter of last year. Adjusted comprehensive net loss for the first nine months of 2008 was $426 million, compared to $354 million of adjusted comprehensive net income in the first nine months of last year.
Net loss for the third quarter was $277 million, compared to net income of $111 million. Net loss for the first nine months of 2008 was $343 million, compared to net income of $306 million.
Recent Developments
Earlier this week, the Company received the requested private letter ruling from the IRS relating to the proposed exchange with Berkshire Hathaway. As a result, the Company expects to close the transaction later today. The Company's adjusted book value per share at September 30, 2008, pro-forma for the Berkshire Exchange, is approximately $392.
In October, equity markets have continued to decline, credit spreads on fixed income securities have further widened, and the U.S. dollar has strengthened against the Swedish Krona and the Euro. These factors have led to continued losses in the Company's investment portfolio, which have had a negative impact on the Company's book value since the end of the third quarter.
OneBeacon
OneBeacon's adjusted book value per share decreased by 13% in the quarter and 8% in the past twelve months, including dividends. The GAAP combined ratio for the third quarter of 2008 was 100% compared to 84%, while the GAAP combined ratio for the first nine months of 2008 was 98% compared to 93%. During the quarter, OneBeacon completed a study of its asbestos and environmental (A&E) exposures. Based on the results of the study, OneBeacon increased its best estimate of incurred losses ceded to National Indemnity Company (NICO) by $83 million to $2.2 billion. This best estimate is within the $2.5 billion limit provided by the NICO cover. Due to the NICO Cover, there was no impact to income or equity from the change in estimates.
Mike Miller, CEO of OneBeacon said, "Clearly, this was a challenging quarter driven primarily by our investment results. The impact is evident in the adverse change to our adjusted book value. On the underwriting side, our GAAP combined ratio was 100% for the quarter and 98% through nine months, reflecting $28 million of catastrophe losses in the third quarter primarily from hurricanes Ike and Gustav. These losses added six points to the combined ratio for the quarter and two points through nine months. Early in the fourth quarter, the investment climate remains challenging which reaffirms the need for continued underwriting discipline, as well as careful capital and expense management."
Miller continued, "On the A&E front, we are pleased with the conclusion of the ground-up study that under all reasonably likely scenarios the ultimate loss from our A&E exposures will not exceed the limit of the NICO cover."
Net written premiums were $534 million for the third quarter and $1,489 million for the first nine months, an increase of 4% from each of the comparable periods of 2007. Specialty Lines premiums increased by 41% and 35%, largely driven by the new collector car and boat business, while Commercial Lines premiums decreased by 7% and 2%, and Personal Lines premiums decreased by 10% and 11% in the third quarter and the first nine months of 2008 versus the comparable periods of 2007.
White Mountains Re
White Mountains Re's GAAP combined ratio for the third quarter of 2008 was 127% compared to 94%, while the GAAP combined ratio for the first nine months of 2008 was 111% compared to 94%. The increase in the combined ratio for the quarter was primarily due to higher catastrophe losses. In the third quarter of 2008, White Mountains Re recorded $112 million (44 points) of catastrophe losses, net of reinsurance and reinstatements, which include $87 million from hurricane Ike and $22 million from European hailstorms. White Mountains Re's estimate for Ike is based on an $18 to $21 billion industry loss scenario. In the third quarter of last year, catastrophe losses were $22 million (8 points). For the first nine months 2008, White Mountains Re recorded $145 million (19 points) of catastrophe losses, net of reinsurance and reinstatements, which include losses from the aforementioned storms and from the China earthquake, Midwest U.S. floods and European windstorm Emma earlier this year. For the first nine months of last year, catastrophe losses were $82 million (9 points). Adverse loss reserve development was negligible in the third quarter of 2008 and the third quarter of 2007. For the first nine months of 2008, White Mountains Re recognized net unfavorable loss reserve development of $88 million that was recorded mainly as a result of a comprehensive review of loss reserves completed in the second quarter. For the first nine months of last year, unfavorable loss reserve development was $5 million.
Allan Waters, CEO of White Mountains Re, said, "While we are never happy to incur catastrophe losses, they are a part of our business. The manageable size of our Ike loss relative to White Mountains Re's capital base reflects the substantial repositioning of our North American property book over the past two years. Despite the financial markets' turmoil, our balance sheet remains strong. Perhaps the tumult will trigger some improvement in upcoming renewal rates."
Gross written premiums were down 14% for the quarter and 15% for the nine months, while net written premiums were down 6% for the quarter and 13% for the nine months. The largest decline was in the casualty line of business.
Esurance
Esurance's GAAP combined ratio for the third quarter of 2008 was 102% compared to 118%, while the GAAP combined ratio for the first nine months of 2008 was 107% compared to 114%. Esurance's loss ratio was 73% and 77% for the third quarter and first nine months of 2008 compared to 84% and 80% for the comparable periods in 2007. Selective rate increases and lower claims frequency have offset rising severity costs in 2008. In addition, the third quarter and first nine months of 2008 did not include any adverse loss reserve development, while loss results for the third quarter and first nine months of 2007 included 9 points and 3 points, respectively. The expense ratio decreased to 29% and 30% for the quarter and the first nine months of 2008, compared to 34% for both of the comparable prior year periods, driven by lower acquisition costs. The acquisition expense ratio decreased to 20% for the quarter and 21% for the first nine months of 2008, 9 points and 6 points lower than the comparable prior year periods. The decline in the acquisition ratio was partially offset by an increase in the operating expense ratio, due primarily to higher incentive compensation accruals than in 2007.
Gary Tolman, CEO of Esurance, stated, "I am pleased with the significant improvement in our underwriting results compared to last year. We have achieved a meaningful decline in both our loss and expense ratios. However, our top line growth continues to slow due to a decline in shopping for personal auto insurance. As a result, we have reduced our marketing spend. We are making good progress in leveraging our Answer Financial relationship, leading to increases in total revenues and a better shopping experience for our customers."
Total revenues for the first nine months of 2008, which include revenues from Answer Financial, were $653 million, an 11% increase from the first nine months of last year. Gross written premiums were $213 million for the third quarter and $643 million for the first nine months, an increase of 2% and 6% from the comparable periods of 2007. Controlled premiums, which include premiums paid by Answer Financial customers, were approximately $1.2 billion for the twelve months ended September 30, 2008. The Esurance segment now has approximately 780,000 policies in force, including almost 300,000 policyholders at Answer Financial.
Other Operations
White Mountains' Other Operations segment's pre-tax loss for the third quarter of 2008 was $16 million, compared to pre-tax income of $7 million. For the first nine months of 2008, pre-tax loss was $40 million, compared to pre- tax income of $13 million. For both periods in 2008, the value of the Company's investment in Symetra warrants decreased due to a decline in the valuation of stocks in the life insurance sector. For the third quarter of 2008, the value of Symetra warrants decreased by $13 million compared to an increase in value of $1 million in last year's third quarter, while the value of Symetra warrants decreased by $25 million over the first nine months of 2008 compared to an increase in value of $9 million in the first nine months of last year. The third quarter and first nine months of 2008 also included $14 million and $24 million in pre-tax losses from the Life Re business as a result of the mark-to-market valuation of Life Re's assets and liabilities, while the three and nine months ended September 30, 2007 both included $5 million of pre-tax losses from the Life Re business.
During the quarter, the Company completed share repurchases of approximately $48 million at an average price of $430 per share.
Investment Activities
The GAAP total return on invested assets for the third quarter and the first nine months of 2008 was -5% and -4% compared to 2% and 6% in the comparable periods of 2007. The GAAP total return on fixed maturity investments, including mortgage-backed and asset-backed securities, was -2% for the quarter and break even for the first nine months of 2008, compared to 2% and 5% in the comparable periods of 2007. The GAAP total return on equity and convertible securities was -15% for the quarter and -17% for the first nine months of 2008, compared to 1% and 10% in the comparable periods of 2007.
Mark Dorcus, President of White Mountains Advisors, said, "The third quarter was difficult for investments. Our total investment portfolio fell 5% during the quarter. Our equities and convertibles lost 15% for the quarter, yet were still ahead of the market in the first nine months of the year. Bonds were down for the quarter and are slightly down for the first nine months. With minimal exposure to adverse credit events to date our corporate bonds have held up reasonably well through the first nine months. Our high quality, short duration mortgage-backed and asset-backed securities have also performed relatively well in difficult markets. The strengthening of the U.S. dollar adversely impacted our overall performance."
Effective January 1, 2008, the Company adopted FAS 159 and elected to record the changes in unrealized gains and losses from nearly all of its investment portfolio in net income. In prior periods, these changes have been included in other comprehensive income rather than in net income. Accordingly, net income (loss) and pre-tax income (loss) for 2008 periods are not directly comparable to such measures for 2007 periods. White Mountains' pre-tax loss for the quarter included $301 million of net unrealized investment losses and $129 million of net realized investment losses, compared to $30 million of net realized investment gains in the third quarter of last year. White Mountains' pre-tax loss for the first nine months included $480 million of net unrealized investment losses and $147 million of net realized investment losses, compared to $193 million of net realized investment gains in the first nine months of last 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. The Company expects to file its Form 10-Q with the Securities and Exchange Commission on or before November 10, 2008 and urges shareholders to refer to that document for more complete information concerning White Mountains' financial results.
Regulation G
This earnings release includes three non-GAAP financial measures that have been reconciled to their most comparable GAAP financial measures. White Mountains believes these measures to be more relevant than comparable GAAP measures in evaluating White Mountains' financial performance.
Adjusted comprehensive net income is a non-GAAP financial measure that excludes the change in net unrealized gains/(losses) from Symetra's fixed maturity portfolio from comprehensive net income. The reconciliation of adjusted comprehensive net income to comprehensive net income is included on page 9.
Adjusted book value per share is a non-GAAP measure which is derived by expanding the GAAP book value per share calculation to exclude net unrealized gains/(losses) from Symetra's fixed maturity portfolio. In addition, the number of common shares outstanding used in the calculation of adjusted book value per share are adjusted to exclude unearned shares of restricted stock representative of the proportion of unamortized compensation cost at the date of the calculation to the value of the restricted stock on the date of issuance. The reconciliation of adjusted book value per share to book value per share is included on page 8.
During the second quarter of 2008, White Mountains changed its principal financial reporting measure from "fully diluted tangible book value per share" to "adjusted book value per share". Fully diluted tangible book value per share is a non-GAAP measure that differs from adjusted book value per share by excluding goodwill and other intangible assets. The change from fully diluted tangible book value per share to adjusted book value per share has been presented retroactively for all periods. As a result of the change, goodwill and other intangible assets are included in the calculation for all periods presented. For periods ended March 31, 2008 and prior, the Company had not recorded any significant intangible assets other than goodwill. The goodwill, which primarily relates to the FIN 46 consolidation of the Company's investment in the Tuckerman Funds, was $26.6 million, $34.4 million, $30.4 million and $28.7 million as of September 30, 2008, June 30, 2008, December 31, 2007 and September 30, 2007, respectively. The inclusion of goodwill in adjusted book value per share did not have a significant effect on the calculation of growth per share for any periods presented.
Adjusted book value per common share at OneBeacon is a non-GAAP financial
measure which is derived by excluding the impact of economically defeasing
OneBeacon's mandatorily redeemable preferred stock from book value per common
share, the most closely comparable GAAP measure. Management believes that
adjusted book value per common share is a useful supplement to understanding
OneBeacon's earnings and profitability. A reconciliation of OneBeacon's book
value per common share to OneBeacon's adjusted book value per common share
follows:
(millions, except Sept. 30, June 30, Dec. 31, Sept. 30,
per share amounts) 2008 2008 2007 2007
OneBeacon book value
per share numerators:
OneBeacon common
shareholders' equity $1,373.4 $1,609.1 $1,906.5 $1,910.9
Remaining accretion
of subsidiary
preferred stock
to face value --- --- (21.6) (31.5)
Adjusted OneBeacon
common shareholders'
equity $1,373.4 $1,609.1 $1,884.9 $1,879.4
OneBeacon common
shares outstanding 95.1 95.5 98.5 99.7
OneBeacon book value
per common share $14.44 $16.85 $19.36 $19.17
OneBeacon adjusted book
value per common share $14.44 $16.85 $19.14 $18.85
Change in adjusted book
value per common share
in the quarter (1) -13.1%
Change in adjusted book
value per common share
for the last twelve
months (1) -8.2%
(1) Includes $.21 dividend per common share paid quarterly beginning in March 2007 and a special dividend of $2.03 per common share paid in March 2008.
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 we expect or anticipate 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':
-- changes in adjusted book value per share or return on equity;
-- business strategy;
-- financial and operating targets or plans;
-- incurred losses and the adequacy of its loss and loss adjustment expense reserves and related reinsurance;
-- projections of revenues, income (or loss), earnings (or loss) per share, dividends, market share or other financial forecasts;
-- expansion and growth of our 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 our expectations and predictions is subject to a number of risks and uncertainties that could cause actual results to differ materially from expectations, including:
-- the risks associated with Item 1A of White Mountains' 2007 Annual Report on Form 10-K;
-- claims arising from catastrophic events, such as hurricanes, earthquakes, floods or terrorist attacks;
-- the continued availability of capital and financing;
-- general economic, market or business conditions;
-- business opportunities (or lack thereof) that may be presented to it and pursued;
-- competitive forces, including the conduct of other property and casualty insurers and reinsurers;
-- changes in domestic or foreign laws or regulations, or their interpretation, applicable to White Mountains, its competitors or its clients;
-- an economic downturn or other economic conditions adversely affecting its financial position;
-- recorded loss reserves subsequently proving to have been inadequate;
-- other factors, most of which are beyond White Mountains' 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: David Foy
(203) 458-5850
WHITE MOUNTAINS INSURANCE GROUP, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(millions, except share amounts)
(Unaudited)
Sept. 30, Dec. 31, Sept. 30,
2008 2007 2007
Assets
Fixed maturity investments $6,160.1 $7,371.5 $7,436.7
Common equity securities 1,393.4 1,550.7 1,471.3
Short-term investments 2,256.6 1,327.3 1,614.8
Other investments 583.9 603.3 549.3
Convertible fixed maturity
investments 353.0 490.6 529.5
Investments held in trust - 305.6 308.7
Total investments 10,747.0 11,649.0 11,910.3
Reinsurance recoverable on unpaid
losses 3,265.4 3,467.9 3,581.9
Reinsurance recoverable on paid
losses 50.8 59.5 58.1
Funds held by ceding companies 203.0 231.1 352.3
Insurance and reinsurance premiums
receivable 929.0 877.0 971.1
Securities lending collateral 341.2 661.6 824.6
Investments in unconsolidated
affiliates 195.0 406.3 404.4
Deferred acquisition costs 350.4 326.0 358.6
Deferred tax asset 484.9 236.6 238.7
Ceded unearned premiums 134.3 123.1 129.2
Value of acquired business in force
- AFI 56.2 - -
Accounts receivable on unsettled
investment sales 27.0 201.1 21.7
Goodwill 26.6 30.4 28.7
Other assets 953.6 836.0 839.1
Total assets $17,764.4 $19,105.6 $19,718.7
Liabilities
Loss and loss adjustment expense
reserves $7,936.8 $8,062.1 $8,249.3
Unearned insurance and reinsurance
premiums 1,743.6 1,605.2 1,743.2
Debt 1,367.1 1,192.9 1,192.8
Securities lending payable 349.6 661.6 824.6
Deferred tax liability 369.2 353.2 327.2
Preferred stock subject to
mandatory redemption - 278.4 268.5
Ceded reinsurance payable 100.4 124.8 124.0
Funds held under reinsurance
treaties 75.1 103.0 99.5
Accounts payable on unsettled
investment purchases 17.4 46.4 85.4
Other liabilities 1,064.8 1,097.2 1,182.8
Total liabilities 13,024.0 13,524.8 14,097.3
Minority interest - OneBeacon
Insurance Group, Ltd. 337.1 517.2 536.3
Minority interest - White
Mountains Re Group, Ltd.
Preference Shares 250.0 250.0 250.0
Minority interest - consolidated
limited partnerships 91.4 100.2 102.5
Total minority interest 678.5 867.4 888.8
Common Shareholders' Equity
Common shares and paid-in surplus 1,687.1 1,691.2 1,734.7
Retained earnings 2,495.4 2,718.5 2,737.3
Accumulated other comprehensive
income (loss), after tax:
Net unrealized gains on
investments - 208.9 226.0
Equity in unrealized (losses)
gains from investments in
unconsolidated affiliates (.5) 3.7 (18.8)
Equity in net unrealized losses
from Symetra's fixed maturity
portfolio (146.7) (5.6) (22.9)
Net unrealized foreign currency
translation gains and other 26.6 96.7 76.3
Total common shareholders' equity 4,061.9 4,713.4 4,732.6
Total liabilities, minority
interest and common shareholders'
equity $17,764.4 $19,105.6 $19,718.7
Common shares outstanding (000's) 10,442 10,554 10,843
Common and equivalent shares
outstanding (000's) 10,405 10,517 10,809
WHITE MOUNTAINS INSURANCE GROUP, LTD.
ADJUSTED BOOK VALUE PER COMMON AND EQUIVALENT SHARE
(Unaudited)
Sept. 30, June 30, Dec. 31, Sept. 30,
2008 2008 2007 2007
Book value per share
numerators (in
millions):
Common shareholders'
equity $4,061.9 $4,597.3 $4,713.4 $ 4,732.6
Benefits to be received
from share obligations
under employee benefit
plans 1.3 1.5 1.7 2.4
Remaining adjustment of
preferred stock subj.
to mandatory redemption
to face value - - (15.8)(1) (22.7)(1)
Book value per share
numerator 4,063.2 4,598.8 4,699.3 4,712.3
Equity in net unrealized
losses from Symetra's
fixed maturity
portfolio 146.7 65.3 5.6 22.9
Adjusted book value per
common and equivalent
share numerator $4,209.9 $4,664.1 $4,704.9 $ 4,735.2
Book value per share
denominators (in
thousands of shares):
Common Shares
outstanding 10,442.0 10,552.4 10,553.6 10,842.6
Share obligations
under employee
benefits plans 7.8 8.7 9.9 14.4
Book value per share
denominator 10,449.8 10,561.1 10,563.5 10,857.0
Unearned restricted
shares (45.3) (47.8) (46.5) (48.5)
Adjusted book value
per common and
equivalent share
denominator 10,404.5 10,513.3 10,517.0 10,808.5
Book value per common
and equivalent share $388.84 $ 435.45 $ 444.86 $434.03
Adjusted book value
per common and
equivalent share $404.62 $ 443.64 $ 447.36 $438.10
(1) Remaining adjustment of subsidiary preferred stock to face value, which is representative of White Mountains' ownership interest in OneBeacon Insurance Group, Ltd. of 72.9% as of December 31, 2007 and 71.9% as of September 30, 2007.
WHITE MOUNTAINS INSURANCE GROUP, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(millions, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
Revenues:
Earned insurance and
reinsurance premiums $935.7 $936.3 $2,786.5 $2,835.0
Net investment income 105.7 128.9 334.2 373.6
Net realized investment
(losses) gains (129.0) 29.9 (146.9) 192.9
Net unrealized investment loss (300.7) - (480.1) -
Other revenue 6.3 60.3 101.4 130.6
Total revenues 618.0 1,155.4 2,595.1 3,532.1
Expenses:
Loss and loss adjustment
expenses 697.6 591.9 1,969.0 1,797.3
Insurance and reinsurance
acquisition expenses 190.5 183.9 556.0 580.1
Other underwriting expenses 120.4 103.6 364.6 377.5
General and administrative
expenses 65.3 43.0 181.3 158.3
Accretion of fair value
adjustment to loss and loss
adjustment expense reserves 4.3 5.4 12.6 16.0
Interest expense on debt 20.4 19.8 61.5 54.9
Interest expense - dividends
on preferred stock subject to
mandatory redemption - 7.1 11.8 22.2
Interest expense - accretion
on preferred stock subject to
mandatory redemption - 9.2 21.6 26.2
Total expenses 1,098.5 963.9 3,178.4 3,032.5
Pre-tax (loss) income (480.5) 191.5 (583.3) 499.6
Income tax benefit (provision) 150.8 (64.3) 187.1 (151.3)
(Loss) income before equity in
earnings of unconsolidated
affiliates, extraordinary item,
and minority interest (329.7) 127.2 (396.2) 348.3
Equity in earnings of
unconsolidated affiliates .8 8.2 7.2 27.3
Excess of fair value of
acquired assets over cost - - 4.2 -
Minority interest 52.2 (24.0) 42.1 (69.4)
Net (loss) income (276.7) 111.4 (342.7) 306.2
Change in net unrealized gains
on investments - 26.0 - 9.4
Change in equity in net
unrealized (losses) gains
from investments in
unconsolidated affiliates (80.8) 14.3 (141.8) (19.1)
Change in foreign currency
translation and other (133.2) 24.4 (83.0) 38.5
Comprehensive net (loss) income (490.7) 176.1 (567.5) 335.0
Change in net unrealized
losses (gains) from Symetra's
fixed maturity portfolio 81.4 (15.6) 141.1 18.8
Adjusted comprehensive net
(loss) income $(409.3) $160.5 $(426.4) $353.8
Basic (loss) earnings per share $(26.55) $10.33 $(32.69) $28.40
Diluted (loss) earnings per
share $(26.55) $10.32 $(32.69) $28.35
Dividends declared and paid per
common share $- $2.00 $4.00 $6.00
WHITE MOUNTAINS INSURANCE GROUP, LTD.
YTD SEGMENT INCOME STATEMENTS
(in millions)
(Unaudited)
For the Nine Months Ended September 30, 2008
OneBeacon WMRe Esurance Other Total
Revenues:
Earned insurance and
reinsurance premiums $1,390.3 $769.0 $627.2 $- $2,786.5
Net investment income 137.8 141.9 25.1 29.4 334.2
Net realized
investment losses (59.2) (57.4) (4.6) (25.7) (146.9)
Net unrealized
investment losses (354.7) (96.0) (23.4) (6.0) (480.1)
Other revenue -
foreign currency
translation loss - (29.8) - - (29.8)
Other revenue 10.6 16.0 28.3 76.3 131.2
Total revenues 1,124.8 743.7 652.6 74.0 2,595.1
Expenses:
Loss and loss
adjustment expenses 878.7 611.4 479.5 (.6) 1,969.0
Insurance and
reinsurance
acquisition expenses 261.6 163.7 130.7 - 556.0
Other underwriting
expenses 223.6 80.6 58.5 1.9 364.6
General and
administrative
expenses 16.0 25.8 22.4 106.5 170.7
Amortization of Answer
Financial purchase
accounting
adjustments - - 10.6 - 10.6
Accretion of fair
value adjustment to
loss and lae reserves 9.0 3.6 - - 12.6
Interest expense on
debt 33.9 20.8 .5 6.3 61.5
Interest expense -
dividends on
preferred stock 11.8 - - - 11.8
Interest expense -
accretion on
preferred stock 21.6 - - - 21.6
Total expenses 1,456.2 905.9 702.2 114.1 3,178.4
Pre-tax loss $(331.4) $(162.2) $(49.6) $(40.1) $(583.3)
For the Nine Months Ended
September 30, 2007
OneBeacon WMRe Esurance Other Total
Revenues:
Earned insurance and
reinsurance premiums $1,407.5 $870.9 $556.6 $- $2,835.0
Net investment income 156.7 155.7 21.5 39.7 373.6
Net realized
investment gains 142.7 44.9 2.8 2.5 192.9
Other revenue -
foreign currency
translation gains - 3.9 - - 3.9
Other revenue 16.3 5.6 9.1 95.7 126.7
Total revenues 1,723.2 1,081.0 590.0 137.9 3,532.1
Expenses:
Loss and loss
adjustment expenses 827.1 537.7 443.2 (10.7) 1,797.3
Insurance and
reinsurance
acquisition expenses 231.5 197.9 150.7 - 580.1
Other underwriting
expenses 246.9 86.4 41.9 2.3 377.5
General and
administrative
expenses 7.5 21.7 .2 128.9 158.3
Accretion of fair
value adjustment to
loss and lae reserves 12.0 4.0 - - 16.0
Interest expense on
debt 34.1 16.2 - 4.6 54.9
Interest expense -
dividends on
preferred stock 22.2 - - - 22.2
Interest expense -
accretion on
preferred stock 26.2 - - - 26.2
Total expenses 1,407.5 863.9 636.0 125.1 3,032.5
Pre-tax income (loss) $315.7 $217.1 $(46.0) $12.8 $499.6
WHITE MOUNTAINS INSURANCE GROUP, LTD.
QTD SEGMENT INCOME STATEMENTS
(in millions)
(Unaudited)
For the Three Months Ended September 30, 2008
OneBeacon WMRe Esurance Other Total
Revenues:
Earned insurance and
reinsurance premiums $471.2 $255.3 $209.2 $- $935.7
Net investment income 43.1 44.0 8.7 9.9 105.7
Net realized investment
losses (61.2) (48.3) (2.7) (16.8) (129.0)
Net unrealized
investment (losses)
gains (294.7) 6.1 (13.0) .9 (300.7)
Other revenue - foreign
currency translation
loss - (43.9) - - (43.9)
Other revenue 4.4 15.3 12.5 18.0 50.2
Total revenues 162.8 228.5 214.7 12.0 618.0
Expenses:
Loss and loss
adjustment expenses 303.4 241.7 152.4 .1 697.6
Insurance and
reinsurance
acquisition expenses 92.6 56.9 41.0 - 190.5
Other underwriting
expenses 74.3 24.6 20.9 .6 120.4
General and
administrative
expenses 5.7 16.8 11.7 25.2 59.4
Amortization of Answer
Financial purchase
accounting adjustments - - 5.9 - 5.9
Accretion of fair value
adjustment to loss and
lae reserves 3.0 1.3 - - 4.3
Interest expense on
debt 11.0 6.9 .1 2.4 20.4
Interest expense -
dividends on preferred
stock - - - - -
Interest expense -
accretion on preferred
stock - - - - -
Total expenses 490.0 348.2 232.0 28.3 1,098.5
Pre-tax loss $(327.2) $(119.7) $(17.3) $(16.3) $(480.5)
For the Three Months Ended
September 30, 2007
OneBeacon WMRe Esurance Other Total
Revenues:
Earned insurance and
reinsurance premiums $473.6 $265.8 $196.9 $- $936.3
Net investment income 51.5 54.6 7.9 14.9 128.9
Net realized investment
gains (losses) 30.7 2.8 .3 (3.9) 29.9
Other revenue - foreign
currency translation
gain - 13.1 - - 13.1
Other revenue 10.8 1.9 3.0 31.5 47.2
Total revenues 566.6 338.2 208.1 42.5 1,155.4
Expenses:
Loss and loss
adjustment expenses 255.8 170.3 165.8 - 591.9
Insurance and
reinsurance
acquisition expenses 74.9 53.3 55.7 - 183.9
Other underwriting
expenses 66.4 25.2 11.3 .7 103.6
General and
administrative
expenses 2.4 5.5 - 35.1 43.0
Accretion of fair value
adjustment to loss and
lae reserves 4.0 1.4 - - 5.4
Interest expense on
debt 11.4 8.2 - .2 19.8
Interest expense -
dividends on preferred
stock 7.1 - - - 7.1
Interest expense -
accretion on preferred
stock 9.2 - - - 9.2
Total expenses 431.2 263.9 232.8 36.0 963.9
Pre-tax income (loss) $135.4 $74.3 $(24.7) $6.5 $191.5
WHITE MOUNTAINS INSURANCE GROUP, LTD.
SUMMARY OF GAAP RATIOS AND PREMIUMS
(Unaudited)
OneBeacon
Three Months Ended September 30,
2008
Specialty Commercial Personal Total(1)
GAAP Ratios
Loss and LAE 63% 64% 65% 64%
Expense 37% 37% 32% 36%
Total GAAP Combined 100% 101% 97% 100%
Dollars in millions
Net written premiums $190.7 $180.0 $163.4 $534.1
Earned premiums $129.5 $181.7 $160.0 $471.2
OneBeacon Three Months Ended September 30,
2007
Specialty Commercial Personal Total(1)
GAAP Ratios
Loss and LAE 56% 49% 53% 54%
Expense 28% 35% 27% 30%
Total Combined 84% 84% 80% 84%
Dollars in millions
Net written premiums $135.6 $193.8 $182.5 $511.9
Earned premiums $108.2 $183.5 $181.8 $473.6
OneBeacon
Nine Months Ended September 30,
2008
Specialty Commercial Personal Total(1)
GAAP Ratios
Loss and LAE 56% 63% 65% 63%
Expense 36% 37% 32% 35%
Total GAAP Combined 92% 100% 97% 98%
Dollars in millions
Net written premiums $460.2 $551.9 $477.0 $1,489.4
Earned premiums $359.3 $545.4 $485.3 $1,390.3
OneBeacon Nine Months Ended September 30,
2007
Specialty Commercial Personal Total(1)
GAAP Ratios
Loss and LAE 57% 54% 61% 59%
Expense 30% 36% 33% 34%
Total Combined 87% 90% 94% 93%
Dollars in millions
Net written premiums $340.7 $560.4 $535.7 $1,437.0
Earned premiums $322.1 $533.2 $552.1 $1,407.5
White Mountains Re Esurance
Three Months Ended Three Months Ended
September 30, September 30,
2008 2007 2008 2007
GAAP Ratios
Loss and LAE 95% 64% 73% 84%
Expense 32% 30% 29% 34%
Total Combined 127% 94% 102% 118%
Dollars in millions
Gross written premiums $224.0 $261.5 $213.4 $209.0
Net written premiums $208.4 $222.3 $212.6 $208.0
Earned premiums $255.3 $265.8 $209.2 $196.9
(1) Includes results from runoff operations.
White Mountains Re Esurance
Nine Months
Nine Months Ended Ended
September 30, September 30,
2008 2007 2008 2007
GAAP Ratios
Loss and LAE 79% 62% 77% 80%
Expense 32% 32% 30% 34%
Total Combined 111% 94% 107% 114%
Dollars in millions
Gross written premiums $912.3 $1,073.3 $643.1 $604.6
Net written premiums $783.4 $905.3 $640.6 $601.4
Earned premiums $769.0 $870.9 $627.2 $556.6
(1) Includes results from runoff operations.
SOURCE White Mountains Insurance Group, Ltd.
CONTACT: David Foy, +1-203-458-5850/