8-K


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

    
FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

May 2, 2016

Date of Report (Date of earliest event reported)


WHITE MOUNTAINS INSURANCE GROUP, LTD.

(Exact name of registrant as specified in its charter)


Bermuda
 
(State or other jurisdiction of
 incorporation or organization)
1-8993
 
(Commission file number)
94-2708455
 
(I.R.S. Employer Identification No.)


80 South Main Street, Hanover, New Hampshire 03755
(Address of principal executive offices)

(603) 640-2200

(Registrant’s telephone number, including area code)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On May 2, 2016, White Mountains Insurance Group, Ltd. issued a press release announcing its results for the three months ended March 31, 2016. The press release furnished herewith is attached as Exhibit 99.1 to this Form 8-K. Certain information included in the press release constitutes non-GAAP financial measures (as defined in Regulation G of the Securities and Exchange Commission). Specifically, non-GAAP financial measures disclosed in the press release are adjusted comprehensive income and adjusted book value per share. White Mountains believes these measures to be more relevant than comparable GAAP measures in evaluating White Mountains’s financial performance.
Adjusted comprehensive income is a non-GAAP financial measure that, for periods that White Mountains accounted for its investment in Symetra under the equity method, excludes the change in equity in net unrealized gains and losses from Symetra’s fixed maturity portfolio, net of applicable taxes, from comprehensive income. White Mountains accounted for its investment in Symetra under the equity method until November 5, 2015, when it changed its accounting to fair value. In the calculation of comprehensive income under GAAP, fixed maturity investments are marked-to-market while the liabilities to which those assets are matched are not. Symetra attempts to earn a “spread” between what it earns on its investments and what it pays out on its products. In order to try to fix this spread, Symetra invests in a manner that tries to match the duration and cash flows of its investments with the required cash outflows associated with its life insurance and structured settlements products. As a result, Symetra typically earns the same spread on in-force business whether interest rates fall or rise. Further, at any given time, some of Symetra’s structured settlement obligations may extend 40 or 50 years into the future, which is further out than the longest maturing fixed maturity investments regularly available for purchase in the market (typically 30 years). For these long-dated products, Symetra is unable to fully match the obligation with assets until the remaining expected payout schedule comes within the duration of securities available in the market. If at that time, these fixed maturity investments have yields that are lower than the yields expected when the structured settlement product was originally priced, the spread for the product will shrink and Symetra will ultimately harvest lower returns for its shareholders. GAAP comprehensive income increases when rates decline, which would suggest an increase in the value of Symetra - the opposite of what is happening to the intrinsic value of the business. Therefore, White Mountains’s management and Board of Directors historically used adjusted comprehensive income when assessing Symetra’s quarterly financial performance. In addition, this measure is typically the predominant component of change in adjusted book value per share, which is used in calculation of White Mountains’s performance for both short-term (annual bonus) and long-term incentive plans. A schedule is included in Exhibit 99.1 to this Form 8-K that reconciles adjusted comprehensive income to GAAP comprehensive income.
Adjusted book value per share is a non-GAAP measure which is derived by expanding the GAAP calculation of book value per share to exclude equity in net unrealized gains and losses from Symetra’s fixed maturity portfolio, net of applicable taxes, for periods that White Mountains accounted for its investment in Symetra under the equity method. In addition, the number of common shares outstanding used in the calculation of adjusted book value per White Mountains common share are adjusted to exclude unearned restricted common shares, the compensation cost of which, at the date of calculation, has yet to be amortized. A schedule is included in Exhibit 99.1 to this Form 8-K that reconciles adjusted book value per share to GAAP book value per share.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits

99.1 Press Release of White Mountains Insurance Group, Ltd. dated May 2, 2016, furnished herewith.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 
 
WHITE MOUNTAINS INSURANCE GROUP, LTD.
 
DATED: May 2, 2016
 
By:
/s/   J. BRIAN PALMER    
       J. Brian Palmer
      Managing Director and
       Chief Accounting Officer
 


2
Exhibit
Exhibit 99.1
 
CONTACT: David Foy
(203) 458-5850

WHITE MOUNTAINS REPORTS ADJUSTED BOOK VALUE PER SHARE OF $704

HAMILTON, Bermuda (May 2, 2016) - White Mountains Insurance Group, Ltd. (NYSE: WTM) reported an adjusted book value per share of $704 at March 31, 2016, up 0.9% for the quarter, including dividends. Adding the estimated gain of $90 per share for the Sirius Group sale, which closed in April, adjusted book value per share is approximately $794.

Ray Barrette, Chairman and CEO, commented, “The year is off to a great start.  Both the Sirius Group and Symetra transactions have closed, OneBeacon reported a solid 95% combined ratio, investments were up, BAM/HG Global continues to grow, and most of our insurance services businesses are building value.  Including April, we have repurchased nearly 600,000 shares of White Mountains at good prices.  As of today, we have about $2 billion of capital that is undeployed.  Looking forward, we expect to gradually return capital to shareholders while exploring new investment opportunities.”

Adjusted comprehensive income was $50 million in the first quarter of 2016, compared to adjusted comprehensive loss of $3 million in the first quarter of last year. Net income attributable to common shareholders was $13 million in the first quarter of 2016, compared to $84 million in the first quarter of last year.

OneBeacon
 
OneBeacon’s book value per share increased 4.4% for the first quarter of 2016, including dividends. OneBeacon’s GAAP combined ratio was 95% for both the first quarter of 2016 and the first quarter of last year. In the first quarter of 2016, OneBeacon completed the termination of its qualified pension plan and fully eliminated the associated liabilities from its balance sheet, resulting in an after-tax loss of less than $1 million. The results for the first quarter of 2016 also included a $13 million tax benefit related to the settlement of the IRS examination for the tax years 2007-2009.

Mike Miller, CEO of OneBeacon, said, “The year is off to a good start, with 4.4% growth in book value and a 95% GAAP combined ratio. Premium growth has been challenging, particularly in our more mature businesses, as we maintain underwriting discipline in an increasingly competitive market.”

Net written premiums were $280 million in the first quarter of 2016, a decrease of 2% from the comparable period of last year. During 2015, OneBeacon exited its lawyers liability and crop businesses and non-renewed an affiliated reinsurance treaty, which resulted in reductions of net written premiums that totaled $9 million in the first quarter of 2015.  Excluding the impact of these exited businesses, net written premiums in the first quarter of 2016 decreased by 5% compared to the first quarter of last year.





HG Global/BAM

In the first quarter of 2016, BAM insured $2.2 billion of municipal bonds, $2.1 billion of which were in the primary market.  Including policies bound in the first quarter of 2016 for municipal bond deals that will close in the second quarter of 2016, BAM guaranteed $2.6 billion of municipal bonds. As of March 31, 2016, BAM’s total claims paying resources were $607 million on total par insured of $24.6 billion. Total claims paying resources increased $6 million from December 31, 2015.
 
Bob Cochran, Chairman of BAM, said, “Demand for municipal bond insurance was solid to start the year, as increasing demand from institutional buyers of municipal bonds offset the negative impact from a decline in interest rates. BAM insured more new-issue transactions than any other insurer during the first quarter, and guaranteed $2.6 billion of municipal bonds, up 3% from the same period a year ago even as total municipal bond volume fell 7%. The increased interest from institutional investors, who prefer larger, more liquid issues, helped drive BAM’s average transaction size up 8%. BAM Credit Profiles - the summaries we publish for every transaction we insure and update annually - continued to distinguish us in the market. The Credit Profiles drive investor demand for BAM-insured bonds and increase the value added for municipal issuer members. We have now published more than 2,700 Credit Profiles, and BAM’s web site recorded a 41% year-over-year increase in download activity.”

HG Global reported pre-tax income of $7 million in the first quarter of 2016, compared to pre-tax income of $6 million in the first quarter of last year. White Mountains reported $8 million of GAAP pre-tax loss related to BAM in the first quarter of 2016, compared to GAAP pre-tax loss of $9 million in the first quarter of last year. BAM’s affairs are managed on a statutory accounting basis, and it does not report stand-alone GAAP financial results. BAM’s statutory net loss was $8 million in both the first quarter of 2016 and the first quarter of last year. As a mutual insurance company that is owned by its members, BAM’s results do not affect White Mountains’s adjusted book value per share. However, White Mountains is required to consolidate BAM’s results in its GAAP financial statements and its results are attributed to non-controlling interests.  

Other Operations

White Mountains’s Other Operations segment reported pre-tax loss of $26 million in the first quarter of 2016, compared to $24 million in the first quarter of last year. The increase was driven by increased incentive compensation expenses and lower investment returns in the segment, mostly offset by lower pre-tax losses from insurance service businesses and WM Life Re. White Mountains’s Other Operations segment reported net realized and unrealized investment gains of $6 million in the first quarter of 2016, compared to $7 million in the first quarter of last year, which included an $7 million write-off of the investment in TaCerto. WM Life Re reported pre-tax loss of $1 million in the first quarter of 2016, compared to $5 million in the first quarter of last year. WM Life Re is in runoff, and all of its contracts will mature by June 30, 2016.

Share Repurchases

For the first quarter of 2016, White Mountains repurchased and retired 228,688 of its common shares for $173 million at an average share price of $755.36, or approximately 107% of White Mountains’s March 31, 2016 adjusted book value per share. The average share price paid was approximately 95% of White Mountains’s March 31, 2016 adjusted book value per share including the estimated gain from the Sirius Group transaction.

In April 2016, White Mountains repurchased and retired 356,423 of its common shares for $287 million at an average share price of $806.52, or approximately 114% of White Mountains’s March 31, 2016 adjusted book value per share. The average share price paid was approximately 102% of White Mountains’s March 31, 2016 adjusted book value per share including the estimated gain from the Sirius Group transaction.




2


Investment Activities

The GAAP total return on invested assets was 1.5% for the first quarter of 2016, which included 0.3% of currency gains, compared to a return of -0.1% for the first quarter of 2015, which included 1.0% of currency losses.

Reid Campbell, President of White Mountains Advisors, said, “The total portfolio was up 1.5% for the quarter, as returns were boosted by falling interest rates and currency gains from a general weakening in the U.S. dollar. In local currencies, the total portfolio was up 1.2%.  The fixed income portfolio was up 1.2%, which was behind the longer duration Barclays Intermediate Aggregate Index. Reflecting the addition of the proceeds from the sale of Symetra, fixed income duration dropped from 2.2 years at the beginning of the quarter to 2.0 years at quarter end.  The risk asset portfolio was up 1.3% for the quarter, which was in line with the S&P 500. Risk assets dropped from 23% of the total portfolio at the beginning of the quarter to 14% at quarter end, again reflecting the impact of the sale of Symetra.  We took advantage of the equity market pullback in January and February to begin averaging back into equities, adding roughly $80 million of broad market ETFs near the market lows. We sold a similar amount of ETFs later in March after equity markets had recovered.”

Sirius Group

On April 18, 2016, White Mountains completed the sale of Sirius International Insurance Group, Ltd., (“Sirius Group”) to CM International Holding Pte. Ltd., the Singapore-based investment arm of China Minsheng Investment Corp., Ltd. (“CMI”). The gross estimated purchase price paid at the closing was $2.6 billion. Approximately $160 million of this amount was used to purchase out of Sirius Group certain assets to be retained by White Mountains, including shares of OneBeacon. The transaction is estimated to result in a gain of approximately $90 to White Mountains’s adjusted book value per share in the second quarter of 2016. As a result of the transaction, Sirius Group’s results have been reported as discontinued operations within White Mountains’s GAAP financial statements. Sirius Group’s results inured to White Mountains through the closing date of the transaction.

Sirius Group’s GAAP combined ratio was 93% for the first quarter of 2016, compared to 81% for the first quarter last year. The increase in the combined ratio reflected a loss ratio that was 9 points higher than the first quarter of last year, driven by increased catastrophe and large loss activity.

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.

3



Regulation G

This earnings release includes two 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’s financial performance.

Adjusted book value per share is a non-GAAP financial measure which is derived by expanding the calculation of GAAP book value per share to exclude equity in net unrealized gains (losses) from Symetra’s fixed maturity portfolio, net of applicable taxes, for periods that White Mountains accounted for its investment in Symetra under the equity method. White Mountains accounted for its investment in Symetra under the equity method until November 5, 2015, when it changed its accounting to fair value. In addition, the number of common shares outstanding used in the calculation of adjusted book value per White Mountainss common share are adjusted to exclude unearned restricted common shares, the compensation cost of which, at the date of calculation, has yet to be amortized. The reconciliation of adjusted book value per share to GAAP book value per share is included on
page 7.

Adjusted comprehensive income (loss) is a non-GAAP financial measure that, for periods that White Mountains accounted for its investment in Symetra under the equity method, excludes the change in equity in net unrealized gains (losses) from Symetra’s fixed maturity portfolio, net of applicable taxes, from comprehensive income (loss) attributable to White Mountains’s common shareholders. The reconciliation of adjusted comprehensive income (loss) to GAAP comprehensive income (loss) attributable to White Mountains’s common shareholders is included on page 8.

4


Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This earnings release may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included or referenced in this release which address activities, events or developments which White Mountains expects or anticipates will or may occur in the future are forward-looking statements. The words “will”, “believe”, “intend”, “expect”, “anticipate”, “project”, “estimate”, “predict” and similar expressions are also intended to identify forward-looking statements. These forward-looking statements include, among others, statements with respect to White Mountains’s:

change in adjusted book value per share or return on equity;
business strategy;
financial and operating targets or plans;
incurred loss and loss adjustment expenses and the adequacy of its loss and loss adjustment expense reserves 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 its business and operations; and
future capital expenditures.

These statements are based on certain assumptions and analyses made by White Mountains in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors believed to be appropriate in the circumstances. However, whether actual results and developments will conform to its expectations and predictions is subject to a number of risks and uncertainties that could cause actual results to differ materially from expectations, including:

the risks that are described from time to time in White Mountains’s filings with the Securities and Exchange Commission, including but not limited to White Mountains’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 filed February 29, 2016;
claims arising from catastrophic events, such as hurricanes, earthquakes, floods, fires, terrorist attacks or severe winter weather;
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 customers;
an economic downturn or other economic conditions adversely affecting its financial position;
recorded loss reserves subsequently proving to have been inadequate;
actions taken by ratings agencies from time to time, such as financial strength or credit ratings downgrades or placing ratings on negative watch; and
other factors, most of which are beyond White Mountains’s control.

Consequently, all of the forward-looking statements made in this earnings release are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by White Mountains will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, White Mountains or its business or operations. White Mountains assumes no obligation to publicly update any such forward-looking statements, whether as a result of new information, future events or otherwise.


5


WHITE MOUNTAINS INSURANCE GROUP, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(millions)
(Unaudited)
 
 
March 31,
2016
 
December 31,
2015
 
March 31,
2015
Assets
 
 

 
 
 
 

Fixed maturity investments
 
$
2,613.2

 
$
2,639.7

 
$
2,448.2

Short-term investments
 
261.7

 
211.3

 
453.7

Common equity securities
 
443.0

 
1,113.9

 
597.5

Other long-term investments
 
321.8

 
315.8

 
329.6

Total investments
 
3,639.7

 
4,280.7

 
3,829.0

 
 
 
 
 
 
 
Cash
 
178.8

 
179.3

 
209.3

Reinsurance recoverable on paid and unpaid losses
 
167.5

 
194.0

 
160.0

Insurance premiums receivable
 
234.3

 
223.3

 
259.4

Investments in unconsolidated affiliates
 

 

 
450.8

Deferred acquisition costs
 
109.8

 
107.6

 
110.2

Deferred tax asset
 
133.6

 
112.8

 
112.5

Ceded unearned insurance premiums
 
36.3

 
29.5

 
19.3

Accounts receivable on unsettled investment sales
 
4.5

 
41.9

 
10.8

Goodwill and intangible assets
 
371.5

 
375.7

 
347.4

Other assets
 
300.3

 
330.8

 
311.7

Assets held for sale
 
5,215.5

 
4,407.0

 
4,685.3

Total assets
 
$
10,391.8

 
$
10,282.6

 
$
10,505.7

 
 
 
 
 
 
 
Liabilities
 
 

 
 
 
 
Loss and loss adjustment expense reserves
 
$
1,349.6

 
$
1,395.8

 
$
1,310.6

Unearned insurance premiums
 
626.5

 
612.6

 
624.3

Debt
 
532.6

 
440.5

 
344.3

Ceded reinsurance payable
 
31.8

 
30.5

 
39.4

Funds held under insurance contracts
 
134.9

 
137.8

 
92.9

Accounts payable on unsettled investment purchases
 
6.9

 

 
47.5

Other liabilities
 
351.1

 
413.4

 
342.2

Liabilities held for sale
 
3,121.1

 
2,884.0

 
3,164.7

Total liabilities
 
6,154.5

 
5,914.6

 
5,965.9

 
 
 
 
 
 
 
Equity
 
 

 
 
 
 
White Mountains’s common shareholders’ equity
 
 

 
 
 
 
White Mountains’s common shares and paid-in surplus
 
938.9

 
978.2

 
1,038.7

Retained earnings
 
2,959.6

 
3,084.9

 
3,080.8

Accumulated other comprehensive income (loss), after tax:
 
 

 
 
 
 
Equity in net unrealized gains from investments in Symetra common shares
 

 

 
63.8

Net unrealized foreign currency translation losses
 
(108.3
)
 
(145.6
)
 
(167.6
)
Pension liability and other
 
(4.3
)
 
(4.3
)
 
(4.4
)
Total White Mountains’s common shareholders’ equity
 
3,785.9

 
3,913.2

 
4,011.3

 
 
 
 
 
 
 
Non-controlling interests
 
 

 
 
 


Non-controlling interest - OneBeacon Ltd.
 
243.4

 
245.6

 
258.8

Non-controlling interest - SIG Preference Shares
 
250.0

 
250.0

 
250.0

Non-controlling interest - mutuals and reciprocals
 
(156.9
)
 
(156.0
)
 
(140.5
)
Non-controlling interest - other
 
114.9

 
115.2

 
160.2

Total non-controlling interests
 
451.4

 
454.8

 
528.5

Total equity
 
4,237.3

 
4,368.0

 
4,539.8

Total liabilities and equity
 
$
10,391.8

 
$
10,282.6

 
$
10,505.7


6


WHITE MOUNTAINS INSURANCE GROUP, LTD.
BOOK VALUE AND ADJUSTED BOOK VALUE PER SHARE
(Unaudited)
 
 
March 31,
2016
 
December 31,
2015
 
March 31,
2015
Book value per share numerators (in millions):
 
 
 
 
 
 
 
 
 
 
 
 
 
White Mountains’s common shareholders’ equity - book value per
     share numerator (1)
 
$
3,785.9

 
$
3,913.2

 
$
4,011.3

Equity in net unrealized losses from Symetra’s fixed
     maturity portfolio, net of applicable taxes
 

 

 
(63.8
)
Adjusted book value per share numerator (1)
 
$
3,785.9

 
$
3,913.2

 
$
3,947.5

 
 
 
 
 
 
 
Book value per share denominators (in thousands of shares):
 
 
 
 
 
 
 
 
 
 
 
 
 
Common shares outstanding - book value per share denominator (1)
 
5,415.5

 
5,623.7

 
5,991.6

Unearned restricted common shares
 
(41.1
)
 
(25.0
)
 
(43.4
)
Adjusted book value per share denominator (1)
 
5,374.4

 
5,598.7

 
5,948.2

 
 
 
 
 
 
 
Book value per share
 
$
699.10

 
$
695.84

 
$
669.48

Adjusted book value per share
 
$
704.45

 
$
698.95

 
$
663.64

 
 
 
 
 
 
 
(1) Excludes stock options, which are anti-dilutive to book value.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
March 31,
2016
 
December 31,
2015
 
March 31,
2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year-to-date growth in adjusted book value per share, including dividends:
 
0.9
%
 
5.3
%
 
%
 
 
 
 
 
 
 
Dividend per share
 
$
1.00

 
$
1.00

 
$
1.00

 
 
 
 
 
 
 
 
 
March 31,
2016
 
December 31,
2015
 
March 31,
2015
Summary of goodwill and intangible assets (in millions):
 
 
 
 
 
 
 
 
 
 
 
 
 
Goodwill:
 
 
 
 
 
 
Tranzact
 
$
163.8

 
$
163.8

 
$
145.1

MediaAlpha
 
18.3

 
18.3

 
18.3

Wobi
 
5.8

 
5.8

 
5.8

Total goodwill
 
187.9

 
187.9

 
169.2

 
 
 
 
 
 
 
Intangible assets:
 
 
 
 
 
 
Tranzact
 
151.1

 
156.1

 
138.5

MediaAlpha
 
25.8

 
24.4

 
30.5

Other
 
6.7

 
7.3

 
9.2

Total intangible assets
 
183.6

 
187.8

 
178.2

 
 
 
 
 
 
 
Total goodwill and intangible assets
 
371.5

 
375.7

 
347.4

 
 
 
 
 
 
 
Goodwill and intangible assets attributed to non-controlling interests
 
(134.4
)
 
(135.8
)
 
(128.7
)
 
 
 
 
 
 
 
Goodwill and intangible assets included in adjusted book value
 
$
237.1

 
$
239.9

 
$
218.7


7


WHITE MOUNTAINS INSURANCE GROUP, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(millions, except per share amounts)
(Unaudited)
 
 
Three Months Ended
 
 
March 31,
 
 
2016
 
2015
Revenues:
 
 
 
 
Earned insurance premiums
 
$
282.1

 
$
289.3

Net investment income
 
17.9

 
12.6

Net realized and unrealized investment gains
 
29.5

 
25.0

Other revenue
 
97.6

 
64.9

 
 
 
 
 
Total revenues
 
427.1

 
391.8

Expenses:
 
 

 
 

Loss and loss adjustment expenses
 
161.1

 
167.9

Insurance and reinsurance acquisition expenses
 
52.7

 
53.0

Other underwriting expenses
 
55.4

 
56.0

General and administrative expenses
 
132.4

 
103.2

Amortization of intangible assets
 
8.1

 
6.9

Interest expense
 
5.9

 
4.3

 
 
 
 
 
Total expenses
 
415.6

 
391.3

 
 
 
 
 
Pre-tax income (loss) from continuing operations
 
11.5

 
.5

 
 
 
 
 
Income tax benefit (expense)
 
8.7

 
(4.6
)
 
 
 
 
 
Net income (loss) from continuing operations
 
20.2

 
(4.1
)
 
 
 
 
 
Net (loss) income from discontinued operations, net of tax
 
(.9
)
 
73.8

 
 
 
 
 
Income before equity in earnings of unconsolidated affiliates
 
19.3

 
69.7

 
 
 
 
 
Equity in earnings of unconsolidated affiliates, net of tax
 

 
7.3

 
 
 
 
 
Net income
 
19.3

 
77.0

Net (income) loss attributable to non-controlling interests
 
(6.3
)
 
7.3

 
 
 
 
 
Net income attributable to White Mountains’s common shareholders
 
13.0

 
84.3

 
 
 
 
 
Comprehensive income, net of tax:
 
 
 
 
Change in equity in net unrealized gains from investments in Symetra common shares, net of tax
 

 
28.9

Change in foreign currency translation and pension liability
 
.1

 

Change in foreign currency translation and other items from discontinued operations
 
37.2

 
(87.6
)
 
 
 
 
 
Comprehensive income
 
50.3

 
25.6

Other comprehensive loss attributable to non-controlling interests
 

 

Comprehensive income attributable to White Mountains’s common shareholders
 
50.3

 
25.6

 
 
 
 
 
Change in equity in net unrealized gains from Symetra's fixed maturity portfolio, net of applicable taxes
 

 
(28.9
)
 
 
 
 
 
Adjusted comprehensive income (loss)
 
$
50.3

 
$
(3.3
)
 
 
 
 
 
Income (loss) per share attributable to White Mountains’s common shareholders
 
 
 
 
Basic income (loss) per share
 
 
 
 
Continuing operations
 
$
2.51

 
$
1.76

Discontinued operations
 
(.17
)
 
12.33

Total consolidated operations
 
$
2.34

 
$
14.09

 
 
 
 
 
Diluted income (loss) per share
 
 
 
 
Continuing operations
 
$
2.51

 
$
1.76

Discontinued operations
 
(.17
)
 
12.33

Total consolidated operations
 
$
2.34

 
$
14.09

 
 
 
 
 

8


WHITE MOUNTAINS INSURANCE GROUP, LTD.
YTD SEGMENT STATEMENTS OF PRE-TAX INCOME (LOSS)
(millions)
(Unaudited)

For the Three Ended March 31, 2016
 
 
HG Global/BAM
 
 
 
 
 
OneBeacon
 
HG Global
 
BAM
 
Other
 
Total
Revenues:
 
 
 
 
 
 
 
 
 
Earned insurance premiums
$
278.6

 
$
.9

 
$
.3

 
$
2.3

 
$
282.1

Net investment income
14.4

 
.5

 
1.6

 
1.4

 
17.9

Net investment income (loss) - surplus note interest

 
4.5

 
(4.5
)
 

 

Net realized and unrealized investment gains
16.6

 
2.1

 
4.9

 
5.9

 
29.5

Other revenue
.9

 

 
.1

 
96.6

 
97.6

 
 
 
 
 
 
 
 
 
 
Total revenues
310.5

 
8.0

 
2.4

 
106.2

 
427.1

Expenses:
 
 
 
 
 
 
 
 
 
Loss and loss adjustment expenses
158.8

 

 

 
2.3

 
161.1

Insurance and reinsurance acquisition expenses
51.0

 
.2

 
.7

 
.8

 
52.7

Other underwriting expenses
55.3

 

 
.1

 

 
55.4

General and administrative expenses
3.6

 
.5

 
9.2

 
119.1

 
132.4

Amortization of intangible assets
.3

 

 

 
7.8

 
8.1

Interest expense
3.3

 

 

 
2.6

 
5.9

 
 
 
 
 
 
 
 
 
 
Total expenses
272.3

 
.7

 
10.0

 
132.6

 
415.6

 
 
 
 
 
 
 
 
 
 
Pre-tax income (loss)
$
38.2

 
$
7.3

 
$
(7.6
)
 
$
(26.4
)
 
$
11.5

For the Three Months Ended March 31, 2015
 
 
 
HG Global/BAM
 
 
 
 
 
 
OneBeacon
 
HG Global
 
BAM
 
Other
 
Total
Revenues:
 
 
 
 
 
 
 
 
 
 
Earned insurance premiums
 
$
286.6

 
$
.5

 
$
.2

 
$
2.0

 
$
289.3

Net investment income
 
10.5

 
.4

 
1.0

 
.7

 
12.6

Net investment income (loss) - surplus note interest
 

 
4.0

 
(4.0
)
 

 

Net realized and unrealized investment gains
 
14.2

 
1.1

 
3.0

 
6.7

 
25.0

Other (loss) revenue
 
(3.1
)
 

 
.1

 
67.9

 
64.9

 
 
 
 
 
 
 
 
 
 
 
Total revenues
 
308.2

 
6.0

 
.3

 
77.3

 
391.8

Expenses:
 
 
 
 
 
 
 
 
 
 
Loss and loss adjustment expenses
 
165.9

 

 

 
2.0

 
167.9

Insurance and reinsurance acquisition expenses
 
51.0

 
.1

 
.8

 
1.1

 
53.0

Other underwriting expenses
 
55.9

 

 
.1

 

 
56.0

General and administrative expenses
 
3.8

 
.4

 
8.2

 
90.8

 
103.2

Amortization of intangible assets
 
.3

 

 

 
6.6

 
6.9

Interest expense
 
3.2

 

 

 
1.1

 
4.3

 
 
 
 
 
 
 
 
 
 
 
Total expenses
 
280.1

 
.5

 
9.1

 
101.6

 
391.3

 
 
 
 
 
 
 
 
 
 
 
Pre-tax income (loss)
 
$
28.1

 
$
5.5

 
$
(8.8
)
 
$
(24.3
)
 
$
.5



9


WHITE MOUNTAINS INSURANCE GROUP, LTD.
SELECTED FINANCIAL DATA
(Dollars in millions)
(Unaudited)
 
 
Three Months Ended March 31,
OneBeacon
 
2016
 
2015
GAAP Ratios
 
 
 
 
Loss and LAE
 
57
%
 
58
%
Expense
 
38
%
 
37
%
Combined
 
95
%
 
95
%
 
 
 
 
 
Net written premiums
 
$
280.1

 
$
287.1

Earned premiums
 
$
278.6

 
$
286.6


 
 
Three Months Ended March 31,
BAM
 
2016
 
2015
Gross par value of primary market policies priced
 
$
2,511.4

 
$
2,439.8

Gross par value of secondary market policies priced
 
93.1

 
85.7

Total gross par value of market policies priced
 
$
2,604.5

 
$
2,525.5

Gross par value of primary and
    secondary market policies issued
 
$
2,178.6

 
$
2,103.9

Gross written premiums
 
$
6.8

 
$
4.2

Member surplus contributions collected
 
$
6.7

 
$
4.6


 
 
As of
March 31, 2016
 
As of
December 31, 2015
Policyholders’ surplus
 
$
433.4

 
$
437.2

Contingency reserve
 
14.8

 
12.4

Qualified statutory capital
 
448.2

 
449.6

Net unearned premiums
 
14.0

 
12.5

Present value of future installment premiums
 
2.7

 
2.6

Collateral trusts
 
142.2

 
136.6

     Claims paying resources
 
$
607.1

 
$
601.3


 
 
Three Months Ended March 31,
HG Global
 
2016
 
2015
Net written premiums
 
$
5.1

 
$
3.2

Earned premiums
 
$
.9

 
$
.5


 
 
As of
March 31, 2016
 
As of
December 31, 2015
Unearned premiums
 
$
42.2

 
$
38.0

Deferred acquisition costs
 
$
8.7

 
$
7.9



10