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White Mountains Reports Second Quarter Results

August 8, 2022 at 8:00 AM EDT

HAMILTON, Bermuda, Aug. 8, 2022 /PRNewswire/ -- White Mountains Insurance Group, Ltd. (NYSE: WTM) reported book value per share of $1,129 and adjusted book value per share of $1,152 as of June 30, 2022.  Book value per share and adjusted book value per share decreased 5% and 4% in the second quarter of 2022 and 4% and 3% in the first six months of 2022, including dividends. 

On August 1, 2022, White Mountains closed the previously announced sale of 100% of its equity interest in NSM for cash to an affiliate of The Carlyle Group, Inc. (the "NSM Transaction").  Including the estimated net gain of $300 per share from the NSM Transaction, book value per share would be approximately $1,429 and adjusted book value per share would be approximately $1,452 as of June 30, 2022.  NSM's results have been presented as discontinued operations beginning in the second quarter of 2022.

Manning Rountree, CEO, commented, "ABVPS was down 4% in the quarter.  The main drivers were mark-to-market losses in our fixed income portfolios and the decline in MediaAlpha's share price.  On the other hand, our operating businesses produced good results.  BAM produced record levels of par insured.  Ark produced an 87% combined ratio while growing premiums 23% year-over-year.  The fair value of Kudu's existing participation contracts declined 2.5% in the quarter, holding up well in a tough quarter for investment markets.  Kudu grew adjusted EBITDA year-over-year and closed one new transaction.  During the quarter, we signed and announced an agreement to sell NSM, and that transaction subsequently closed on August 1.  This deal adds roughly $300 to ABVPS.  During the quarter, we repurchased $63 million of shares.  Including the proceeds from the NSM Transaction, undeployed capital now stands at roughly $1.6 billion."

Comprehensive income (loss) attributable to common shareholders was $(174) million and $(143) million in the second quarter and first six months of 2022 compared to $139 million and $66 million in the second quarter and first six months of 2021.  Results in the second quarter and first six months of 2022 included $114 million and $95 million of unrealized investment losses from White Mountains's investment in MediaAlpha.  Results in the second quarter and first six months of 2021 included $113 million and $71 million of net realized and unrealized investment gains from White Mountains's investment in MediaAlpha. 

HG Global/BAM

BAM's gross written premiums and member surplus contributions (MSC) collected were $41 million and $63 million in the second quarter and first six months of 2022 compared to $30 million and $56 million in the second quarter and first six months of 2021.  BAM insured municipal bonds with par value of $5.9 billion and $9.3 billion in the second quarter and first six months of 2022 compared to $5.1 billion and $8.7 billion in the second quarter and first six months of 2021.  Total pricing was 70 and 67 basis points in the second quarter and first six months of 2022 compared to 59 and 65 basis points in the second quarter and first six months of 2021.  BAM's total claims paying resources were $1,228 million at June 30, 2022 compared to $1,192 million at December 31, 2021 and $1,165 million at June 30, 2021

Seán McCarthy, CEO of BAM, said, "BAM completed a record first half for direct par insured and premiums.  Volatile market conditions and rising interest rates helped drive strong investor demand for insurance, including on larger and higher-rated transactions.  During the quarter, BAM insured its largest transaction to date: $667 million for the New York State Dormitory Authority's school revenue bond financing program.  Pricing improved quarter over quarter and year over year.  In mid-June, S&P Global Ratings completed its annual review and affirmed BAM's AA rating and Stable outlook."

All BAM-insured bond payments due through August 1, 2022 have been made by insureds, and there are no credits on BAM's watchlist.

HG Global reported pre-tax income (loss) of $(8) and $(23) million in the second quarter and first six months of 2022 compared to $11 million and $9 million in the second quarter and first six months of 2021.  The increase in HG Global's pre-tax income (loss) in the second quarter and first six months of 2022 compared to the second quarter and first six months of 2021 was driven primarily by net unrealized investment losses on the HG Global fixed income portfolio.

On April 29, 2022, HG Global received the proceeds of its new $150 million, 10-year term loan credit facility.  In turn, HG Global paid a $120 million cash dividend to shareholders, of which $116 million was paid to White Mountains.

White Mountains reported pre-tax loss related to BAM of $31 and $66 million in the second quarter and first six months of 2022 compared to $9 million and $32 million in the second quarter and first six months of 2021.  The increase in pre-tax loss related to BAM in the second quarter and first six months of 2022 compared to the second quarter and first six months of 2021 was driven primarily by net unrealized investment losses on the BAM fixed income portfolio.

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.

Ark

Ark's GAAP combined ratio was 87% and 93% in the second quarter and first six months of 2022 compared to 90% and 99% in the second quarter and first six months of 2021.  Ark's adjusted combined ratio, which adds back amounts attributable to third-party capital providers, was 86% and 93% in the second quarter and first six months of 2022 compared to 84% and 96% in the second quarter and first six months of 2021.  The adjusted combined ratio for the second quarter and first six months of 2022 included 11 points and 14 points of catastrophe losses compared to six points and 12 points in the second quarter and first six months of 2021.  Catastrophe losses for the second quarter and first six months of 2022 included an estimate of incurred losses emanating from the conflict in Ukraine of seven points and nine points.  The adjusted combined ratio in the second quarter and first six months of 2022 also included 12 points and seven points of favorable prior year development compared to 10 points and five points in the second quarter and first six months of 2021. 

Ark reported gross written premiums of $404 million and $1,037 million, net written premiums of $270 million and $814 million and net earned premiums of $217 million and $412 million in the second quarter and first six months of 2022 compared to gross written premiums of $328 million and $733 million, net written premiums of $262 million and $605 million and net earned premiums of $118 million and $222 million and in the second quarter and first six months of 2021.  Ark reported pre-tax income (loss) of $(21) million and $(45) million in the second quarter and first six months of 2022 compared to $18 million and $(15) million in second quarter and first six months of 2021.   Ark's results included net realized and unrealized investment gains (losses) of $(45) million and $(62) million in the second quarter and first six months of 2022 compared to $9 million and $10 million in the second quarter and first six months of 2021.  Ark's pre-tax loss for the first six months of 2021 also included $25 million of transaction expenses related to White Mountains's transaction with Ark.

Ian Beaton, CEO of Ark, said, "Ark had a solid second quarter.  The adjusted combined ratio was 86% in the quarter, reflecting 12 points of favorable prior year development and seven points for incurred losses tied to Ukraine.  Driven by strong April and June renewals, gross written premiums were $404 million in the quarter, up 23% from 2021 levels, with risk-adjusted rate change up 9%.  Looking forward, market conditions remain attractive, and we are optimistic about continued profitable growth in the book."

NSM

NSM reported commission and other revenues of $103 million, pre-tax income of $13 million and adjusted EBITDA of $29 million in the second quarter of 2022 compared to commission and other revenues of $84 million, pre-tax income of $1 million and adjusted EBITDA of $19 million in the second quarter of 2021.  NSM reported commission and other revenues of $191 million, pre-tax loss of $16 million and adjusted EBITDA of $47 million in the first six months of 2022, compared to commission and other revenues of $159 million, pre-tax loss of $32 million, adjusted EBITDA of $33 million in the first six months of 2021. 

Geof McKernan, CEO of NSM, said, "NSM delivered a strong quarter, achieving new highs for premiums and profitability.  Trailing 12 months pro forma controlled premiums grew 3% quarter over quarter to $1,281 million, while pro forma adjusted EBITDA increased 7% quarter over quarter to a record $85 million.  In partnership with the White Mountains team over the past four years, NSM achieved strong organic growth, completed six strategic acquisitions, added high-quality talent and built an industry-leading specialized insurance distribution platform.  We are looking forward to our next phase of growth with Carlyle."

Kudu

Kudu reported total revenues of $(4) million, pre-tax loss of $10 million and adjusted EBITDA of $11 million in the second quarter of 2022 compared to total revenues of $36 million, pre-tax income of $31 million and adjusted EBITDA of $5 million in the second quarter of 2021.  Total revenues and pre-tax income in the second quarter of 2022 included $18 million of net unrealized investment losses on Kudu's participation contracts compared to $28 million of net unrealized investment gains on Kudu's participation contracts in the second quarter of 2021. 

Kudu reported total revenues of $31 million, pre-tax income of $19 million and adjusted EBITDA of $21 million in the first six months of 2022 compared to total revenues of $60 million, pre-tax income of $47 million and adjusted EBITDA of $11 million in the first six months of 2021.  Total revenues and pre-tax income in the first six months of 2022 included $5 million of unrealized gains on Kudu's participation contracts, compared to $44 million in the first six months of 2021.

Rob Jakacki, CEO of Kudu, said, "The fair value of Kudu's existing participation contracts was down 2.5% in the quarter, impacted by declines in equity, fixed income and foreign currency markets.  However, this result compares favorably to broader market indices, reflecting Kudu's portfolio construction and diversification.  Trailing 12 months revenues from participation contracts increased 11% quarter over quarter to $54 million, while adjusted EBITDA increased 15% quarter over quarter to $43 million.  Annualized revenues finished the quarter at $60 million, implying a cash revenue yield of 10%, while annualized adjusted EBITDA reached $48 million.  We were pleased to close our investment in Gramercy, a leading emerging markets investment firm.  We continue to seek out specialized and high-quality asset managers worldwide, and we expect further capital deployments throughout the year."

MediaAlpha

White Mountains owns 16.9 million shares of MediaAlpha, representing a 28% basic ownership interest (25% on a fully-diluted/fully-converted basis).  As of June 30, 2022, the closing price was $9.85 per share, which decreased from $16.55 per share at March 31, 2022.  As of June 30, 2022, the value of White Mountains's investment in MediaAlpha was $167 million, which decreased from $280 million at March 31, 2022.  At our current level of ownership, each $1.00 per share increase or decrease in the share price of MediaAlpha will result in an approximate $5.80 per share increase or decrease in White Mountains's book value per share and adjusted book value per share.  Our focus remains on MediaAlpha's intrinsic value, not on fluctuations in its share price.  We encourage you to read MediaAlpha's second quarter earnings release and related shareholder letter, which is available on MediaAlpha's investor relations website at www.investors.mediaalpha.com.

Other Operations

White Mountains's Other Operations reported pre-tax income (loss) of $(162) million and $(133) million in the second quarter and first six months of 2022 compared to $110 million and $47 million in the second quarter and first six months of 2021.  Results for Other Operations in the second quarter and first six months of 2022 and 2021 were driven primarily by net realized and unrealized investment gains (losses) from White Mountains's investment in MediaAlpha.  Unrealized investment losses from White Mountains's investment in MediaAlpha were $114 million and $95 million in the second quarter and first six months of 2022 compared to net realized and unrealized investment gains from White Mountains's investment in MediaAlpha of $113 million and $71 million in the second quarter and first six months of 2021. 

Excluding MediaAlpha, net realized and unrealized investment gains (losses) were $(12) million and $20 million in the second quarter and first six months of 2022 compared to $17 million and $19 million in the second quarter and first six months of 2021.  Net investment income was $3 million and $5 million in the second quarter and first six months of 2022 compared to $4 million and $11 million in the second quarter and first six months of 2021. 

White Mountains's Other Operations reported general and administrative expenses of $50 million and $79 million in the second quarter and first six months of 2022 compared to $29 million and $65 million in the second quarter and first six months of 2021.  The increases in general and administrative expenses in the second quarter and first six months of 2022 compared to the second quarter and first six months of 2021 were driven by higher incentive compensation costs, primarily in connection with the NSM Transaction.

Share Repurchases

In the second quarter of 2022, White Mountains repurchased and retired 53,100 of its common shares for $63 million at an average share price of $1,179.96.  In the first six months of 2022, White Mountains repurchased and retired 90,535 of its common shares for $102 million at an average share price of $1,121.60.

In the first six months of 2021, White Mountains repurchased and retired 7,161 of its common shares for $7 million at an average share price of $1,038.96.  White Mountains did not repurchase any of its common shares in the second quarter of 2021.

Investments

The total consolidated portfolio return was -4.7% in the second quarter of 2022.  Excluding MediaAlpha, the total consolidated portfolio return was -2.1% in the second quarter of 2022.  The total consolidated portfolio return was 5.0% in the second quarter of 2021.  Excluding MediaAlpha, the total consolidated portfolio return was 2.4% in the second quarter of 2021.

The total consolidated portfolio return was -4.0% in the first six months of 2022. Excluding MediaAlpha, the total consolidated portfolio return was -1.9% in the first six months of 2022. The total consolidated portfolio return was 4.7% in the first six months of 2021. Excluding MediaAlpha, the total consolidated portfolio return was 3.1% in the first six months of 2021.

Mark Plourde, President of White Mountains Advisors, said, "Excluding MediaAlpha, the total portfolio was down -2.1% in the quarter, driven primarily by the impact of rising interest rates.  The fixed income portfolio returned -2.4%, outperforming the longer duration BBIA Index return of -2.9%.  The equity portfolio, excluding MediaAlpha, returned -1.8%, well ahead of the S&P 500 Index return of -16.1%."

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,

2022

 

December 31,

2021

 

June 30,

2021

Assets

           

Financial Guarantee (HG Global/BAM)

           

Fixed maturity investments

 

$                         884.4

 

$                         934.1

 

$                         884.6

Short-term investments

 

55.3

 

32.4

 

44.9

Total investments

 

939.7

 

966.5

 

929.5

Cash

 

21.6

 

19.8

 

20.6

Insurance premiums receivable

 

6.9

 

6.9

 

6.9

Deferred acquisition costs

 

33.9

 

33.1

 

30.5

Other assets

 

19.7

 

18.5

 

19.0

Total Financial Guarantee assets

 

1,021.8

 

1,044.8

 

1,006.5

P&C Insurance and Reinsurance (Ark)

           

Fixed maturity investments

 

739.3

 

688.6

 

519.8

Common equity securities

 

278.6

 

251.1

 

142.0

Short-term investments

 

101.2

 

296.2

 

251.0

Other long-term investments

 

330.0

 

326.2

 

257.5

Total investments

 

1,449.1

 

1,562.1

 

1,170.3

Cash

 

214.6

 

67.8

 

110.6

Reinsurance recoverables

 

398.7

 

448.4

 

431.3

Insurance premiums receivable

 

894.8

 

416.0

 

589.0

Ceded unearned premiums

 

105.4

 

67.1

 

116.1

Deferred acquisition costs and value of in-force business acquired

 

192.4

 

108.2

 

150.6

Goodwill and other intangible assets

 

292.5

 

292.5

 

292.5

Other assets

 

67.9

 

64.9

 

113.9

Total P&C Insurance and Reinsurance assets

 

3,615.4

 

3,027.0

 

2,974.3

Asset Management (Kudu)

           

 Other long-term investments

 

727.0

 

669.5

 

455.6

 Cash (restricted $7.3, $4.5, $4.0)

 

124.1

 

21.4

 

13.5

 Accrued investment income

 

11.2

 

16.9

 

7.6

 Goodwill and other intangible assets

 

8.7

 

8.9

 

9.1

 Other assets

 

10.4

 

10.4

 

8.5

Total Asset Management assets

 

881.4

 

727.1

 

494.3

   Other Operations

           

 Fixed maturity investments

 

243.0

 

286.2

 

352.9

 Short-term investments

 

88.6

 

129.5

 

232.6

 Investment in MediaAlpha

 

166.9

 

261.6

 

713.2

 Other long-term investments

 

411.7

 

382.1

 

368.4

Total investments

 

910.2

 

1,059.4

 

1,667.1

 Cash

 

23.1

 

38.7

 

27.2

 Goodwill and other intangible assets

 

96.8

 

39.1

 

51.0

 Other assets

 

114.4

 

59.5

 

64.6

 Assets held for sale - NSM Group

 

997.8

 

989.0

 

994.9

 Assets held for sale

 

 

16.1

 

Total Other Operations assets

 

2,142.3

 

2,201.8

 

2,804.8

Total assets

 

$                      7,660.9

 

$                      7,000.7

 

$                      7,279.9

 

WHITE MOUNTAINS INSURANCE GROUP, LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

(millions)

(Unaudited)

 
   

June 30,

2022

 

December 31,

2021

 

June 30,

2021

Liabilities

           

Financial Guarantee (HG Global/BAM)

           

Unearned insurance premiums

 

$                         274.0

 

$                         266.3

 

$                         250.9

Debt

 

146.3

 

 

Accrued incentive compensation

 

16.5

 

24.7

 

16.1

Other liabilities

 

32.7

 

30.9

 

28.5

Total Financial Guarantee liabilities

 

469.5

 

321.9

 

295.5

P&C Insurance and Reinsurance (Ark)

           

Loss and loss adjustment expense reserves

 

1,022.1

 

894.7

 

760.0

Unearned insurance premiums

 

1,020.6

 

495.9

 

718.7

Debt

 

183.5

 

185.9

 

44.2

Reinsurance payable

 

418.8

 

424.1

 

512.8

Contingent consideration

 

30.2

 

28.0

 

22.5

Other liabilities

 

105.1

 

93.8

 

74.9

Total P&C Insurance and Reinsurance liabilities

 

2,780.3

 

2,122.4

 

2,133.1

Asset Management (Kudu)

           

Debt

 

253.3

 

218.2

 

94.5

Other liabilities

 

45.3

 

42.8

 

31.1

Total Asset Management liabilities

 

298.6

 

261.0

 

125.6

   Other Operations

           

Debt

 

35.0

 

16.8

 

19.4

Accrued incentive compensation

 

51.1

 

48.5

 

50.1

Other liabilities

 

30.0

 

30.1

 

42.6

     Liabilities held for sale -  NSM Group

 

504.4

 

495.3

 

505.6

Total Other Operations liabilities

 

620.5

 

590.7

 

617.7

Total liabilities

 

4,168.9

 

3,296.0

 

3,171.9

             

Equity

           

White Mountains's common shareholder's equity

           

     White Mountains's common shares and paid-in surplus

 

603.2

 

588.9

 

597.2

     Retained earnings

 

2,725.1

 

2,957.5

 

3,378.6

 Accumulated other comprehensive income (loss), after tax:

           

 Net unrealized gains (losses) from foreign currency translation and

    interest rate swap

 

(5.0)

 

1.7

 

2.4

Total White Mountains's common shareholders' equity

 

3,323.3

 

3,548.1

 

3,978.2

Non-controlling interests

 

168.7

 

156.6

 

129.8

Total equity

 

3,492.0

 

3,704.7

 

4,108.0

Total liabilities and equity

 

$                      7,660.9

 

$                      7,000.7

 

$                      7,279.9

 

WHITE MOUNTAINS INSURANCE GROUP, LTD.

BOOK VALUE AND ADJUSTED BOOK VALUE PER SHARE

(Unaudited)

 
   

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

June 30,

2021

Book value per share numerators (in millions):

               

White Mountains's common shareholders' equity -

  GAAP book value per share numerator

 

$           3,323.3

 

$        3,542.1

 

$           3,548.1

 

$           3,978.2

Time value of money discount on expected future payments on the

   BAM Surplus Notes (1)

 

(115.9)

 

(120.9)

 

(125.9)

 

(132.8)

HG Global's unearned premium reserve (1)

 

221.6

 

215.8

 

214.6

 

201.5

HG Global's net deferred acquisition costs (1)

 

(62.6)

 

(60.6)

 

(60.8)

 

(56.3)

Adjusted book value per share numerator

 

$           3,366.4

 

$        3,576.4

 

$           3,576.0

 

$           3,990.6

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

               

Common shares outstanding - GAAP book value per share denominator

 

2,942.9

 

2,994.2

 

3,017.8

 

3,109.2

Unearned restricted common shares

 

(20.9)

 

(24.2)

 

(13.7)

 

(20.6)

Adjusted book value per share denominator

 

2,922.0

 

2,970.0

 

3,004.1

 

3,088.6

GAAP book value per share

 

$         1,129.27

 

1,183.00

 

$         1,175.73

 

$         1,279.49

Adjusted book value per share

 

$         1,152.12

 

1,204.17

 

$         1,190.39

 

$         1,292.03

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

                 
   

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

June 30,

2021

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

   including dividends:

 

(4.5) %

 

0.7 %

 

1.1 %

 

3.9 %

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

   including dividends:

 

(4.3) %

 

1.2 %

 

1.2 %

 

4.1 %

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

   including dividends:

 

(3.9) %

 

0.7 %

 

(6.5) %

 

1.7 %

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

   including dividends:

 

(3.1) %

 

1.2 %

 

(5.7) %

 

2.3 %

Year-to-date dividends per share

 

$               1.00

 

$            1.00

 

$               1.00

 

$               1.00

 

WHITE MOUNTAINS INSURANCE GROUP, LTD.

GOODWILL AND OTHER INTANGIBLE ASSETS

(Unaudited)

 
   

June 30,

2022

 

March 31,

2022

 

December 31,

2021

 

June 30,

2021

 

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

                 

Goodwill:

                 

Ark

 

$               116.8

 

$               116.8

 

$               116.8

 

$               116.8

 

Kudu

 

7.6

 

7.6

 

7.6

 

7.6

 

Other Operations

 

77.4

(1)

17.9

 

17.9

 

27.1

(2)

Total goodwill

 

201.8

 

142.3

 

142.3

 

151.5

 

Other intangible assets:

                 

Ark

 

175.7

 

175.7

 

175.7

 

175.7

 

Kudu

 

1.1

 

1.3

 

1.3

 

1.5

 

Other Operations

 

19.4

 

20.2

 

21.2

 

23.9

 

Total other intangible assets

 

196.2

 

197.2

 

198.2

 

201.1

 

Total goodwill and other intangible assets

 

398.0

 

339.5

 

340.5

 

352.6

 

Goodwill and other intangible assets attributed to

   non-controlling interests

 

(103.4)

 

(91.8)

 

(91.8)

 

(92.4)

 

Goodwill and other intangible assets included in

   White Mountains's common shareholders' equity

 

$               294.6

 

$               247.7

 

$               248.7

 

$               260.2

 
   

1)

The relative fair values of goodwill and of other intangible assets recognized in connection with recent acquisitions within Other Operations had not yet been finalized June 30, 2022.

2)

The relative fair values of goodwill and of other intangible assets recognized in connection with an acquisition within Other Operations had not yet been finalized June 30, 2021.

 

WHITE MOUNTAINS INSURANCE GROUP, LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(millions)

(Unaudited)

 
   

Three Months Ended June 30,

 

Six Months Ended June 30,

   

2022

 

2021

 

2022

 

2021

Revenues:

               

Financial Guarantee (HG Global/BAM)

               

Earned insurance premiums

 

$                  10.5

 

$                    6.5

 

$                  18.9

 

$                  12.9

Net investment income

 

4.8

 

4.3

 

9.4

 

8.8

Net realized and unrealized investment gains (losses)

 

(30.1)

 

6.3

 

(75.2)

 

(11.6)

Other revenues

 

1.6

 

.3

 

2.4

 

.6

Total Financial Guarantee revenues

 

(13.2)

 

17.4

 

(44.5)

 

10.7

P&C Insurance and Reinsurance (Ark)

               

Earned insurance premiums

 

217.3

 

117.8

 

411.7

 

222.4

Net investment income

 

3.2

 

.4

 

4.8

 

1.2

Net realized and unrealized investment gains (losses)

 

(44.6)

 

8.9

 

(62.1)

 

10.0

Other revenues

 

6.3

 

3.4

 

3.5

 

6.0

Total P&C Insurance and Reinsurance revenues

 

182.2

 

130.5

 

357.9

 

239.6

Asset Management (Kudu)

               

Net investment income

 

13.8

 

8.4

 

26.4

 

16.6

Net realized and unrealized investment gains (losses)

 

(17.6)

 

27.8

 

4.7

 

43.6

Other revenues

 

 

 

 

.1

Total Asset Management revenues

 

(3.8)

 

36.2

 

31.1

 

60.3

Other Operations

               

Net investment income

 

3.3

 

4.0

 

5.1

 

11.1

Net realized and unrealized investment gains (losses)

 

(11.8)

 

16.6

 

20.1

 

18.7

Net realized and unrealized investment gains (losses)

   from investment in MediaAlpha 

 

(113.5)

 

113.0

 

(94.7)

 

71.3

Commission revenues

 

2.6

 

2.3

 

5.5

 

4.6

Other revenues

 

30.9

 

22.4

 

56.6

 

29.5

Total Other Operations revenues

 

(88.5)

 

158.3

 

(7.4)

 

135.2

Total revenues

 

$                  76.7

 

$                342.4

 

$                337.1

 

$                445.8

 

WHITE MOUNTAINS INSURANCE GROUP, LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)

(millions)

(Unaudited)

 
   

Three Months Ended June 30,

 

Six Months Ended June 30,

   

2022

 

2021

 

2022

 

2021

Expenses:

               

Financial Guarantee (HG Global/BAM)

               

Insurance acquisition expenses

 

$                    4.8

 

$                    1.6

 

$                    7.8

 

$                    3.5

General and administrative expenses

 

17.4

 

13.9

 

33.7

 

30.3

Interest expense

 

3.4

 

 

3.4

 

Total Financial Guarantee expenses

 

25.6

 

15.5

 

44.9

 

33.8

P&C Insurance and Reinsurance (Ark)

               

Loss and loss adjustment expenses

 

120.5

 

52.6

 

242.5

 

118.6

Insurance and reinsurance acquisition expenses

 

50.2

 

34.0

 

100.1

 

70.7

General and administrative expenses

 

29.8

 

24.8

 

52.9

 

62.6

Interest expense

 

3.1

 

1.3

 

6.9

 

2.4

Total P&C Insurance and Reinsurance expenses

 

203.6

 

112.7

 

402.4

 

254.3

Asset Management (Kudu)

               

General and administrative expenses

 

3.0

 

3.2

 

5.7

 

5.7

Amortization of other intangible assets

 

.1

 

.1

 

.2

 

.2

Interest expense

 

3.3

 

1.5

 

6.1

 

7.3

Total Asset Management expenses

 

6.4

 

4.8

 

12.0

 

13.2

Other Operations

               

Cost of sales

 

22.4

 

17.9

 

43.8

 

21.9

General and administrative expenses

 

50.1

 

29.3

 

79.0

 

65.0

Amortization of other intangible assets

 

.9

 

.4

 

1.8

 

.9

Interest expense

 

.3

 

.4

 

.6

 

.7

Total Other Operations expenses

 

73.7

 

48.0

 

125.2

 

88.5

Total expenses

 

309.3

 

181.0

 

584.5

 

389.8

Pre-tax income (loss) from continuing operations

 

(232.6)

 

161.4

 

(247.4)

 

56.0

 Income tax (expense) benefit

 

16.0

 

(30.0)

 

18.7

 

(23.6)

Net income (loss) from continuing operations

 

(216.6)

 

131.4

 

(228.7)

 

32.4

 Net gain (losses) from sale of discontinued operations,

   net of tax - Sirius

 

 

 

 

18.7

Net income (losses) from NSM Group discontinued

   operations, net of tax

 

6.4

 

1.1

 

10.1

 

(29.1)

Net income (loss)

 

(210.2)

 

132.5

 

(218.6)

 

22.0

 Net (income) loss attributable to non-controlling interests

 

41.0

 

6.0

 

82.8

 

41.2

Net income (loss) attributable to White Mountains's

   common shareholders

 

$               (169.2)

 

$                138.5

 

$               (135.8)

 

$                  63.2

 

WHITE MOUNTAINS INSURANCE GROUP, LTD.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(millions)

(Unaudited)

 
   

Three Months Ended June 30,

 

Six Months Ended June 30,

   

2022

 

2021

 

2022

 

2021

Net income (loss) attributable to White Mountains's

   common shareholders

 

$               (169.2)

 

$                138.5

 

$               (135.8)

 

$                  63.2

Other comprehensive income (loss), net of tax

 

(1.1)

 

.5

 

(1.5)

 

.2

Other comprehensive income (loss) from NSM Group

    discontinued operations, net of tax

 

(4.0)

 

.5

 

(5.9)

 

2.6

Comprehensive income (loss)

 

(174.3)

 

139.5

 

(143.2)

 

66.0

Other comprehensive (income) loss attributable to

   non-controlling interests

 

.5

 

(.1)

 

.7

 

(.2)

Comprehensive income (loss) attributable to

   White Mountains's common shareholders

 

$               (173.8)

 

$                139.4

 

$               (142.5)

 

$                  65.8

 

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,

   

2022

 

2021

 

2022

 

2021

Basic earnings (loss) per share

               

Continuing operations

 

$               (58.78)

 

$                44.21

 

$               (48.57)

 

$                23.35

Discontinued operations

 

1.98

 

.35

 

3.17

 

(3.00)

Total consolidated operations

 

$               (56.80)

 

$                44.56

 

$               (45.40)

 

$                20.35

                 

Diluted earnings (loss) per share

               

Continuing operations

 

$               (58.78)

 

$                44.21

 

$               (48.57)

 

$                23.35

Discontinued operations

 

1.98

 

.35

 

3.17

 

(3.00)

Total consolidated operations

 

$               (56.80)

 

$                44.56

 

$               (45.40)

 

$                20.35

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, 2022

 

HG Global/BAM

               
   

HG
Global

 

BAM

 

Ark

 

Kudu

 

Other
Operations

 

Total

Revenues:

                       

Earned insurance premiums

 

$       8.7

 

$       1.8

 

$  217.3

 

$          —

 

$            —

 

$     227.8

Net investment income

 

2.2

 

2.6

 

3.2

 

13.8

 

3.3

 

25.1

Net investment income (expense) -

BAM surplus note interest

 

3.0

 

(3.0)

 

 

 

 

Net realized and unrealized investment gains (losses)

 

(14.7)

 

(15.4)

 

(44.6)

 

(17.6)

 

(11.8)

 

(104.1)

Net realized and unrealized investment gains (losses)

   from investment in MediaAlpha

 

 

 

 

 

(113.5)

 

(113.5)

Commission revenues

 

 

 

 

 

2.6

 

2.6

Other revenues

 

.1

 

1.5

 

6.3

 

 

30.9

 

38.8

                         

Total revenues

 

(0.7)

 

(12.5)

 

182.2

 

(3.8)

 

(88.5)

 

76.7

Expenses:

                       

Loss and loss adjustment expenses

 

 

 

120.5

 

 

 

120.5

Insurance acquisition expenses

 

3.4

 

1.4

 

50.2

 

 

 

55.0

Cost of sales

 

 

 

 

 

22.4

 

22.4

General and administrative expenses

 

.8

 

16.6

 

29.8

 

3.0

 

50.1

 

100.3

Amortization of other intangible assets

 

 

 

 

.1

 

.9

 

1.0

Interest expense

 

3.4

 

 

3.1

 

3.3

 

.3

 

10.1

Total expenses

 

7.6

 

18.0

 

203.6

 

6.4

 

73.7

 

309.3

                         

Pre-tax income (loss)

 

$      (8.3)

 

$    (30.5)

 

$   (21.4)

 

$     (10.2)

 

$     (162.2)

 

$   (232.6)

 

WHITE MOUNTAINS INSURANCE GROUP, LTD. 

QTD SEGMENT STATEMENTS OF PRE-TAX INCOME (LOSS) (CONTINUED) 

(millions) 

(Unaudited) 

 

For the Three Months Ended June 30, 2021

 

HG Global/BAM

               
   

HG
Global

 

BAM

 

Ark

 

Kudu

 

Other
Operations

 

Total

Revenues:

                       

Earned insurance premiums

 

$       5.3

 

$       1.2

 

$   117.8

 

$       —

 

$             —

 

$  124.3

Net investment income

 

1.7

 

2.6

 

.4

 

8.4

 

4.0

 

17.1

Net investment income (expense) -

 BAM surplus note interest

 

3.0

 

(3.0)

 

 

 

 

Net realized and unrealized investment gains (losses)

 

2.4

 

3.9

 

8.9

 

27.8

 

16.6

 

59.6

   Net unrealized investment gains (losses) from

 investment in MediaAlpha 

 

 

 

 

 

113.0

 

113.0

Commission revenues

 

 

 

 

 

2.3

 

2.3

Other revenues

 

.1

 

.2

 

3.4

 

 

22.4

 

26.1

                         

Total revenues

 

12.5

 

4.9

 

130.5

 

36.2

 

158.3

 

342.4

Expenses:

                       

Insurance acquisition expenses

 

1.3

 

.3

 

52.6

 

 

 

54.2

Cost of sales

 

 

 

34.0

 

 

17.9

 

51.9

General and administrative expenses

 

.5

 

13.4

 

24.8

 

3.2

 

29.3

 

71.2

Amortization of other intangible assets

 

 

 

 

.1

 

.4

 

.5

Interest expense

 

 

 

1.3

 

1.5

 

.4

 

3.2

                         

Total expenses

 

1.8

 

13.7

 

112.7

 

4.8

 

48.0

 

181.0

                         

Pre-tax income (loss)

 

$     10.7

 

$      (8.8)

 

$     17.8

 

$    31.4

 

$        110.3

 

$  161.4

 

WHITE MOUNTAINS INSURANCE GROUP, LTD. 

YTD SEGMENT STATEMENTS OF PRE-TAX (LOSS) INCOME 

(millions) 

(Unaudited) 

 

For the Six Months Ended June 30, 2022

 

HG Global/BAM

               
   

HG
Global

 

BAM

 

Ark

 

Kudu

 

Other
Operations

 

Total

Revenues:

                       

Earned insurance premiums

 

$       15.6

 

$         3.3

 

$     411.7

 

$          —

 

$            —

 

$      430.6

Net investment income

 

4.3

 

5.1

 

4.8

 

26.4

 

5.1

 

45.7

Net investment income (expense) -

 BAM surplus note interest

 

5.9

 

(5.9)

 

 

 

 

Net realized and unrealized investment gains (losses)

 

(38.2)

 

(37.0)

 

(62.1)

 

4.7

 

20.1

 

(112.5)

   Net realized and unrealized investment gains (losses)

      from investment in MediaAlpha 

 

 

 

 

 

(94.7)

 

(94.7)

Commission revenues

 

 

 

 

 

5.5

 

5.5

Other revenues

 

.2

 

2.2

 

3.5

 

 

56.6

 

62.5

                         

Total revenues

 

(12.2)

 

(32.3)

 

357.9

 

31.1

 

(7.4)

 

337.1

Expenses:

                       

Loss and loss adjustment expenses

 

 

 

242.5

 

 

 

242.5

Insurance and reinsurance acquisition expenses

 

6.0

 

1.8

 

100.1

 

 

 

107.9

Cost of sales

 

 

 

 

 

43.8

 

43.8

General and administrative expenses

 

1.5

 

32.2

 

52.9

 

5.7

 

79.0

 

171.3

Amortization of other intangible assets

 

 

 

 

.2

 

1.8

 

2.0

Interest expense

 

3.4

 

 

6.9

 

6.1

 

.6

 

17.0

Total expenses

 

10.9

 

34.0

 

402.4

 

12.0

 

125.2

 

584.5

                         

Pre-tax income (loss)

 

$     (23.1)

 

$     (66.3)

 

$     (44.5)

 

$       19.1

 

$     (132.6)

 

$     (247.4)

 

WHITE MOUNTAINS INSURANCE GROUP, LTD. 

YTD SEGMENT STATEMENTS OF PRE-TAX INCOME (LOSS) (CONTINUED) 

(millions) 

(Unaudited) 

 

For the Six Months Ended June 30, 2021

 

HG Global/BAM

               
   

HG
Global

 

BAM

 

Ark

 

Kudu

 

Other
Operations

 

Total

Revenues:

                       

Earned insurance premiums

 

$       10.6

 

$         2.3

 

$     222.4

 

$          —

 

$               —

 

$     235.3

Net investment income

 

3.5

 

5.3

 

1.2

 

16.6

 

11.1

 

37.7

Net investment income (expense) -

 BAM surplus note interest

 

6.0

 

(6.0)

 

 

 

 

Net realized and unrealized investment gains (losses)

 

(7.5)

 

(4.1)

 

10.0

 

43.6

 

18.7

 

60.7

Net unrealized investment gains (losses) from

 investment in MediaAlpha 

 

 

 

 

 

71.3

 

71.3

Commission revenues

 

 

 

 

 

4.6

 

4.6

Other revenues

 

.2

 

.4

 

6.0

 

.1

 

29.5

 

36.2

                         

Total revenues

 

12.8

 

(2.1)

 

239.6

 

60.3

 

135.2

 

445.8

Expenses:

                       

Loss and loss adjustment expenses

 

 

 

118.6

 

 

 

118.6

Insurance and reinsurance acquisition expenses

 

2.8

 

.7

 

70.7

 

 

 

74.2

Cost of sales

 

 

 

 

 

21.9

 

21.9

General and administrative expenses

 

1.1

 

29.2

 

62.6

 

5.7

 

65.0

 

163.6

Amortization of other intangible assets

 

 

 

 

.2

 

.9

 

1.1

Interest expense

 

 

 

2.4

 

7.3

 

.7

 

10.4

Total expenses

 

3.9

 

29.9

 

254.3

 

13.2

 

88.5

 

389.8

                         

Pre-tax income (loss)

 

$         8.9

 

$     (32.0)

 

$     (14.7)

 

$       47.1

 

$            46.7

 

$       56.0

 

WHITE MOUNTAINS INSURANCE GROUP, LTD.

SELECTED FINANCIAL DATA

($ in millions)

(Unaudited)

 
   

Three Months Ended June 30,

 

Six Months Ended June 30,

BAM

 

2022

 

2021

 

2022

 

2021

Gross par value of primary market policies issued

 

$              4,123.7

 

$              4,815.5

 

$              6,878.8

 

$              7,357.5

Gross par value of secondary market policies issued

 

1,743.8

 

312.1

 

2,442.9

 

489.2

Gross par value of assumed reinsurance

 

 

 

 

805.5

Total gross par value of market policies issued

 

$              5,867.5

 

$              5,127.6

 

$              9,321.7

 

$              8,652.2

Gross written premiums

 

$                   17.1

 

$                   13.7

 

$                   26.5

 

$                   26.2

MSC collected

 

24.0

 

16.3

 

36.3

 

30.1

Total gross written premiums and MSC collected

 

41.1

 

30.0

 

62.8

 

56.3

Present value of future installment MSC collections

 

 

 

 

Gross written premium adjustments on existing

   installment policies

 

 

.1

 

 

.1

Gross written premiums and MSC from

   new business

 

$                   41.1

 

$                   30.1

 

$                   62.8

 

$                   56.4

Total pricing

 

70 bps

 

59 bps

 

67 bps

 

65 bps

 

   

As of

June 30, 2022

 

As of

December 31, 2021

 

As of

June 30, 2021

Policyholders' surplus

 

$                   303.4

 

298.1

 

$                   323.1

Contingency reserve

 

109.8

 

101.8

 

97.4

Qualified statutory capital

 

413.2

 

399.9

 

420.5

Statutory net unearned premiums

 

51.1

 

49.5

 

47.4

Present value of future installment premiums and MSC

 

13.9

 

13.8