HAMILTON, Bermuda, May 6, 2022 /PRNewswire/ -- White Mountains
Insurance Group, Ltd. (NYSE: WTM) reported book value per share of
$1,183 and adjusted book value per
share of $1,204 as of March 31,
2022. Book value per share and adjusted book value per share
both increased 1% in the first quarter of 2022.
Manning Rountree, CEO, commented, "We had a good first quarter,
with ABVPS up 1%. Rising interest rates were a headwind in
our fixed income portfolio. This was more than offset by
positive results from our operating companies and positive returns
in our equity portfolio. BAM produced $22 million of total premiums and member surplus
contributions in the quarter, driven by strong secondary market
activity. Ark produced break-even underwriting results in the
quarter, reflecting the impact of estimated losses emanating from
the conflict in Ukraine. Ark wrote $633 million of gross written premiums in the
quarter, up 57% year over year, with risk adjusted rate change up
9% year over year. NSM produced healthy growth in both pro
forma controlled premiums and pro forma adjusted EBITDA. Kudu
posted growth in adjusted EBITDA and recognized $22 million of mark-to-market gains in the fair
value of its portfolio of participation contracts.
MediaAlpha's share price was up 7% in the quarter, producing a
$19 million mark-to-market
gain. Excluding MediaAlpha, the investment portfolio returned
0.3% in the quarter, as gains in equities more than offset
mark-to-market losses in fixed income. We completed
$39 million of share repurchases in
the quarter. Including the dividend received from HG Global
in May, undeployed capital now stands at roughly $400 million."
Comprehensive income (loss) attributable to common shareholders
was $31 million in the first quarter
of 2022 compared to $(74) million in
the first quarter of 2021. Results in the first quarter of
2022 included $19 million of
unrealized investment gains from White Mountains's investment in
MediaAlpha. Results in the first quarter of 2021 included
$42 million of net realized and
unrealized investment losses from White Mountains's investment in
MediaAlpha and a loss of $29 million related to NSM's sale of
its Fresh Insurance motor business.
HG Global/BAM
BAM's gross written premiums and member surplus contributions
(MSC) collected were $22 million in
the first quarter of 2022 compared to $26
million in the first quarter of 2021. BAM insured
municipal bonds with par value of $3.5
billion in the first quarter of 2022 compared to
$3.5 billion in the first quarter of
2021, which included $806 million
from an assumed reinsurance transaction. Total pricing was 63
basis points in the first quarter of 2022 compared to 74 basis
points in the first quarter of 2021. BAM's total claims
paying resources were $1,201 million
at March 31, 2022 compared to $1,192
million at December 31, 2021
and $1,144 million at March 31,
2021.
Seán McCarthy, CEO of BAM, said, "BAM insured primary and
secondary market volume reached a new record high for first-quarter
activity, up 27% year over year. Pricing was in line with
full-year 2021 levels. Interest rates were higher and more
volatile during the quarter, supporting increased investor demand
for insured bonds."
Through the COVID-19 pandemic, BAM's portfolio has performed
well. All BAM-insured bond payments due through May 1, 2022 have been made by insureds, and there
are no credits on BAM's watchlist.
HG Global reported pre-tax loss of $15 million in the first
quarter of 2022 compared to $2
million in the first quarter of 2021. The increase in
HG Global's pre-tax loss in the first quarter of 2022 compared to
the first quarter of 2021 was driven primarily by lower investment
returns 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
$36 million in the first quarter of
2022 compared to $23 million in the
first quarter of 2021. The increase in pre-tax loss related
to BAM in the first quarter of 2022 compared to the first quarter
of 2021 was driven primarily by lower investment returns 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 100% in the first quarter of 2022
compared to 109% in the first quarter of 2021. Ark's adjusted
combined ratio, which adds back amounts attributable to third-party
capital providers, was 101% in the first quarter of 2022 compared
to 108% in the first quarter of 2021. The adjusted combined
ratio for the first quarter of 2022 included 16 points of
catastrophe losses compared to 17 points in the first quarter of
2021. Catastrophe losses for the first quarter of 2022
included an estimate of incurred losses emanating from the conflict
in Ukraine. Losses could increase as the conflict
continues.
Ark reported gross written premiums of $633 million, net written premiums of
$544 million and net earned premiums
of $194 million in the first quarter
of 2022 compared to gross written premiums of $405 million, net written premiums of
$342 million and net earned premiums
of $105 million in the first quarter
of 2021. Ark reported pre-tax loss of $23 million in the first quarter of 2022 compared
to $33 million in first quarter of 2021. Ark's pre-tax
loss for the first quarter of 2022 included $18 million of net unrealized investment losses,
driven primarily by mark-to-market losses on fixed income
securities in its investment portfolio. Ark's pre-tax loss
for the first quarter of 2021 reflected $25
million of transaction expenses related to White Mountains's
transaction with Ark.
Ian Beaton, CEO of Ark, said,
"Despite the tragic events in Ukraine, we are off to a solid start in
2022. The strong rate environment experienced in 2021 has
carried through to 2022. Driven by solid January renewals, gross
written premiums were up 57% from 2021, 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 $89 million, pre-tax income of $3 million and adjusted EBITDA of $18 million in the first quarter of 2022 compared
to commission and other revenues of $75
million, pre-tax loss of $33
million and adjusted EBITDA of $14
million in the first quarter of 2021. Results in the
first quarter of 2022 include the results of J.C. Taylor, an MGA
offering classic and antique collector car insurance, which was
acquired on August 6, 2021.
Results in the first quarter of 2021 include a loss of $29 million related to the sale of NSM's Fresh
Insurance motor business, which was sold on April 12, 2021.
Geof McKernan, CEO of NSM, said,
"NSM delivered a strong quarter, achieving new highs for premiums
and profits. We saw healthy organic growth across the
board. Trailing 12 months pro forma controlled premiums grew
3% quarter over quarter to $1,243
million, while pro forma adjusted EBITDA increased 4%
quarter over quarter to $79
million."
Kudu
Kudu reported total revenues of $35
million, pre-tax income of $29
million and adjusted EBITDA of $10
million in the first quarter of 2022 compared to total
revenues of $24 million, pre-tax
income of $16 million and adjusted
EBITDA of $6 million in the first
quarter of 2021. Total revenues and pre-tax income in the
first quarter of 2022 included $22
million of net unrealized investment gains on Kudu's
participation contracts compared to $16
million of net unrealized investment gains on Kudu's
participation contracts in the first quarter of 2021.
Rob Jakacki, CEO of Kudu, said,
"The Kudu portfolio performed well despite the volatile quarter for
markets generally. Trailing 12 months revenues from
participation contracts increased 10% quarter over quarter to
$48 million, while adjusted EBITDA
increased 13% to $37 million.
Annualized revenues finished the quarter at $57 million, implying a cash revenue yield of
10%, while annualized adjusted EBITDA reached $46 million. We are continuing to see
strong opportunities and 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 March 31, 2022, the closing price was
$16.55 per share, which increased
from $15.44 per share at December 31, 2021. As of March 31, 2022, the value of White Mountains's
investment in MediaAlpha was $280
million, which increased from $262
million at December 31,
2021. 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 $5.65 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 first 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 segment reported pre-tax
income (loss) of $30 million in the
first quarter of 2022 compared to $(64)
million in the first quarter of 2021. The Other
Operations segment results in the first quarter of 2022 and 2021
were driven primarily by net realized and unrealized investment
gains (losses) from White Mountains's investment in
MediaAlpha. Unrealized investment gains from White
Mountains's investment in MediaAlpha were $19 million in the first quarter of 2022 compared
to net realized and unrealized investment losses from White
Mountains's investment in MediaAlpha of $42
million in the first quarter of 2021.
Excluding MediaAlpha, net realized and unrealized investment
gains were $32 million in the first
quarter of 2022 compared to net realized and unrealized investment
gains of $2 million in the first
quarter of 2021. Net investment income was $2 million in the first quarter of 2022 compared
to $7 million in the first quarter of
2021.
White Mountains's Other Operations segment reported general and
administrative expenses of $29
million in the first quarter of 2022 compared to
$36 million in the first quarter of
2021. The decreases in general and administrative expenses in
the first quarter of 2022 compared to the first quarter of 2021
were driven primarily by lower incentive compensation costs.
Share Repurchases
In the first quarter of 2022, White Mountains repurchased and
retired 37,435 of its common shares for $39
million at an average share price of $1,038.82, or 86% of White Mountains's
March 31, 2022 adjusted book value
per share.
In the first quarter 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, or 84% of White Mountains's
March 31, 2021 adjusted book value
per share.
Investments
The total consolidated portfolio return was 0.8% in the first
quarter of 2022. Excluding MediaAlpha, the total consolidated
portfolio return was 0.3% in the first quarter of 2022. The
total consolidated portfolio return was -0.3% in the first quarter
of 2021. Excluding MediaAlpha, the total consolidated
portfolio return was 0.7% in the first quarter of 2021.
Mark Plourde, President of White
Mountains Advisors, said, "Excluding MediaAlpha, the total
portfolio was up 0.3%. Strong returns in the equity portfolio
more than offset mark-to-market losses in the fixed income
portfolio driven by rising interest rates. Our short duration
fixed income portfolio returned -3.2%, ahead of the BBIA Index
return of -4.7%. The equity portfolio, excluding MediaAlpha,
returned 5.0%, well ahead of the S&P 500 return of -4.6%,
driven primarily by gains from private equity funds and Kudu's
participation contracts."
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)
|
|
|
|
March 31,
2022
|
|
December
31,
2021
|
|
March 31,
2021
|
|
Assets
|
|
|
|
|
|
|
|
Financial
Guarantee (HG Global/BAM)
|
|
|
|
|
|
|
|
Fixed maturity
investments
|
|
$
873.8
|
|
$
934.1
|
|
$
857.0
|
|
Short-term
investments
|
|
36.5
|
|
32.4
|
|
45.3
|
|
Total
investments
|
|
910.3
|
|
966.5
|
|
902.3
|
|
Cash
|
|
22.3
|
|
19.8
|
|
18.9
|
|
Insurance premiums
receivable
|
|
6.9
|
|
6.9
|
|
6.9
|
|
Deferred acquisition
costs
|
|
33.1
|
|
33.1
|
|
28.7
|
|
Other
assets
|
|
18.4
|
|
18.5
|
|
20.0
|
|
Total Financial
Guarantee assets
|
|
991.0
|
|
1,044.8
|
|
976.8
|
|
P&C Insurance
and Reinsurance (Ark)
|
|
|
|
|
|
|
|
Fixed maturity
investments
|
|
692.4
|
|
688.6
|
|
305.8
|
|
Common equity
securities
|
|
290.1
|
|
251.1
|
|
118.6
|
|
Short-term
investments
|
|
198.0
|
|
296.2
|
|
328.6
|
|
Other long-term
investments
|
|
334.5
|
|
326.2
|
|
234.7
|
|
Total
investments
|
|
1,515.0
|
|
1,562.1
|
|
987.7
|
|
Cash
|
|
115.5
|
|
67.8
|
|
308.8
|
|
Reinsurance
recoverables
|
|
412.7
|
|
448.4
|
|
449.0
|
|
Insurance premiums
receivable
|
|
759.6
|
|
416.0
|
|
435.4
|
|
Ceded unearned
premiums
|
|
86.8
|
|
67.1
|
|
145.5
|
|
Deferred acquisition
costs and value of in-force business acquired
|
|
179.8
|
|
108.2
|
|
122.1
|
|
Goodwill and other
intangible assets
|
|
292.5
|
|
292.5
|
|
292.5
|
|
Other
assets
|
|
73.3
|
|
64.9
|
|
99.2
|
|
Total P&C
Insurance and Reinsurance assets
|
|
3,435.2
|
|
3,027.0
|
|
2,840.2
|
|
Specialty
Insurance Distribution (NSM)
|
|
|
|
|
|
|
|
Cash (restricted
$90.2, $89.2 and $79.3)
|
|
113.5
|
|
111.5
|
|
121.0
|
|
Premium and commission
receivable
|
|
97.6
|
|
85.0
|
|
77.0
|
|
Goodwill and
other intangible assets
|
|
712.0
|
|
725.4
|
|
699.7
|
|
Other
assets
|
|
53.0
|
|
55.4
|
|
65.0
|
|
Total Specialty
Insurance Distribution assets
|
|
976.1
|
|
977.3
|
|
962.7
|
|
Asset Management
(Kudu)
|
|
|
|
|
|
|
|
Other long-term
investments
|
|
691.8
|
|
669.5
|
|
427.4
|
|
Cash (restricted
$4.5, $4.5, $3.9)
|
|
25.4
|
|
21.4
|
|
10.9
|
|
Accrued
investment income
|
|
11.8
|
|
16.9
|
|
7.5
|
|
Goodwill and
other intangible assets
|
|
8.9
|
|
8.9
|
|
9.1
|
|
Other
assets
|
|
9.6
|
|
10.4
|
|
2.8
|
|
Total Asset Management
assets
|
|
747.5
|
|
727.1
|
|
457.7
|
|
Other Operations
|
|
|
|
|
|
|
|
Fixed maturity
investments
|
|
249.3
|
|
286.2
|
|
318.8
|
|
Short-term
investments
|
|
87.0
|
|
137.3
|
|
251.8
|
|
Investment in
MediaAlpha
|
|
280.4
|
|
261.6
|
|
600.2
|
|
Other long-term
investments
|
|
402.2
|
|
382.1
|
|
370.1
|
|
Total
investments
|
|
1,018.9
|
|
1,067.2
|
|
1,540.9
|
|
Cash
|
|
50.4
|
|
38.8
|
|
28.9
|
|
Goodwill and
other intangible assets
|
|
38.1
|
|
39.1
|
|
35.7
|
|
Other
assets
|
|
83.6
|
|
63.3
|
|
57.1
|
|
Assets held for
sale
|
|
15.9
|
|
16.1
|
|
.7
|
|
Total Other Operations
assets
|
|
1,206.9
|
|
1,224.5
|
|
1,663.3
|
|
Total
assets
|
|
$
7,356.7
|
|
$
7,000.7
|
|
$
6,900.7
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
CONDENSED
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(millions)
(Unaudited)
|
|
|
|
March 31,
2022
|
|
December
31,
2021
|
|
March 31,
2021
|
|
Liabilities
|
|
|
|
|
|
|
|
Financial
Guarantee (HG Global/BAM)
|
|
|
|
|
|
|
|
Unearned insurance
premiums
|
|
$
267.3
|
|
$
266.3
|
|
$
243.7
|
|
Accrued incentive
compensation
|
|
11.2
|
|
24.7
|
|
11.0
|
|
Other
liabilities
|
|
28.3
|
|
30.9
|
|
28.6
|
|
Total Financial
Guarantee liabilities
|
|
306.8
|
|
321.9
|
|
283.3
|
|
P&C Insurance
and Reinsurance (Ark)
|
|
|
|
|
|
|
|
Loss and loss
adjustment expense reserves
|
|
999.6
|
|
894.7
|
|
751.9
|
|
Unearned insurance
premiums
|
|
883.1
|
|
495.9
|
|
565.4
|
|
Debt
|
|
184.8
|
|
185.9
|
|
44.1
|
|
Reinsurance
payable
|
|
348.9
|
|
424.1
|
|
487.5
|
|
Contingent
consideration
|
|
30.1
|
|
28.0
|
|
22.5
|
|
Other
liabilities
|
|
108.4
|
|
93.8
|
|
135.4
|
|
Total P&C
Insurance and Reinsurance liabilities
|
|
2,554.9
|
|
2,122.4
|
|
2,006.8
|
|
Specialty
Insurance Distribution (NSM)
|
|
|
|
|
|
|
|
Debt
|
|
270.6
|
|
272.1
|
|
272.7
|
|
Premiums
payable
|
|
146.0
|
|
135.9
|
|
116.0
|
|
Contingent
consideration
|
|
—
|
|
6.8
|
|
7.9
|
|
Other
liabilities
|
|
77.4
|
|
80.5
|
|
83.5
|
|
Total Specialty
Insurance Distribution liabilities
|
|
494.0
|
|
495.3
|
|
480.1
|
|
Asset Management
(Kudu)
|
|
|
|
|
|
|
|
Debt
|
|
218.2
|
|
218.2
|
|
95.9
|
|
Other
liabilities
|
|
42.3
|
|
42.8
|
|
15.4
|
|
Total Asset Management
liabilities
|
|
260.5
|
|
261.0
|
|
111.3
|
|
Other Operations
|
|
|
|
|
|
|
|
Debt
|
|
17.3
|
|
16.8
|
|
17.0
|
|
Accrued incentive
compensation
|
|
25.3
|
|
48.5
|
|
40.4
|
|
Other
liabilities
|
|
28.6
|
|
30.1
|
|
25.9
|
|
Total Other Operations
liabilities
|
|
71.2
|
|
95.4
|
|
83.3
|
|
Total
liabilities
|
|
3,687.4
|
|
3,296.0
|
|
2,964.8
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
White Mountains's
common shareholder's equity
|
|
|
|
|
|
|
|
White Mountains's common
shares and paid-in surplus
|
|
586.3
|
|
588.9
|
|
597.9
|
|
Retained earnings
|
|
2,956.2
|
|
2,957.5
|
|
3,226.7
|
|
Accumulated
other comprehensive income (loss), after tax:
|
|
|
|
|
|
|
|
Net unrealized
gains (losses) from foreign currency translation and
interest rate swap
|
|
(.4)
|
|
1.7
|
|
1.3
|
|
Total White
Mountains's common shareholders' equity
|
|
3,542.1
|
|
3,548.1
|
|
3,825.9
|
|
Non-controlling
interests
|
|
127.2
|
|
156.6
|
|
110.0
|
|
Total
equity
|
|
3,669.3
|
|
3,704.7
|
|
3,935.9
|
|
Total liabilities
and equity
|
|
$
7,356.7
|
|
$
7,000.7
|
|
$
6,900.7
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
BOOK VALUE AND
ADJUSTED BOOK VALUE PER SHARE
(Unaudited)
|
|
|
|
March 31,
2022
|
|
December
31,
2021
|
|
March 31,
2021
|
|
Book value per
share numerators (in millions):
|
|
|
|
|
|
|
|
White Mountains's
common shareholders' equity -
GAAP book
value per share numerator
|
|
$
3,542.1
|
|
$
3,548.1
|
|
$
3,825.9
|
|
Time value of money
discount on expected future payments on the
BAM
Surplus Notes (1)
|
|
(120.9)
|
|
(125.9)
|
|
(137.7)
|
|
HG Global's unearned
premium reserve (1)
|
|
215.8
|
|
214.6
|
|
195.3
|
|
HG Global's net
deferred acquisition costs (1)
|
|
(60.6)
|
|
(60.8)
|
|
(54.2)
|
|
Adjusted book value
per share numerator
|
|
$
3,576.4
|
|
$
3,576.0
|
|
$
3,829.3
|
|
Book value per
share denominators (in thousands of shares):
|
|
|
|
|
|
|
|
Common shares
outstanding - GAAP book value per share denominator
|
|
2,994.2
|
|
3,017.8
|
|
3,107.3
|
|
Unearned restricted
common shares
|
|
(24.2)
|
|
(13.7)
|
|
(23.4)
|
|
Adjusted book value
per share denominator
|
|
2,970.0
|
|
3,004.1
|
|
3,083.9
|
|
GAAP book value
per share
|
|
$
1,183.00
|
|
$
1,175.73
|
|
$
1,231.27
|
|
Adjusted book
value per share
|
|
$
1,204.17
|
|
$
1,190.39
|
|
$
1,241.71
|
|
(1) Amount
reflects White Mountains's preferred share ownership in HG Global
of 96.9%.
|
|
|
|
|
|
|
|
|
|
March 31,
2022
|
|
December
31,
2021
|
|
March 31,
2021
|
|
Quarter-to-date
change in GAAP book value per share,
including dividends:
|
|
0.7
%
|
|
1.1 %
|
|
(2.1) %
|
|
Quarter-to-date
change in adjusted book value per share,
including dividends:
|
|
1.2
%
|
|
1.2 %
|
|
(1.7) %
|
|
Year-to-date
change in GAAP book value per share,
including dividends:
|
|
0.7
%
|
|
(6.5) %
|
|
(2.1) %
|
|
Year-to-date
change in adjusted book value per share,
including dividends:
|
|
1.2
%
|
|
(5.7) %
|
|
(1.7) %
|
|
Year-to-date
dividends per share
|
|
$
1.00
|
|
$
1.00
|
|
$
1.00
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
GOODWILL AND OTHER
INTANGIBLE ASSETS
(Unaudited)
|
|
|
|
March 31,
2022
|
|
December
31,
2021
|
|
March 31,
2021
|
|
Summary of
goodwill and other intangible assets (in millions):
|
|
|
|
|
|
|
|
Goodwill:
|
|
|
|
|
|
|
|
Ark
|
|
$
116.8
|
|
$
116.8
|
|
$
116.8
|
|
NSM
|
|
499.1
|
|
503.2
|
|
477.7
|
|
Kudu
|
|
7.6
|
|
7.6
|
|
7.6
|
|
Other
Operations
|
|
17.9
|
|
17.9
|
|
11.3
|
|
Total
goodwill
|
|
641.4
|
|
645.5
|
|
613.4
|
|
Other intangible
assets:
|
|
|
|
|
|
|
|
Ark
|
|
175.7
|
|
175.7
|
|
175.7
|
|
NSM
|
|
212.9
|
|
222.2
|
|
222.0
|
|
Kudu
|
|
1.3
|
|
1.3
|
|
1.5
|
|
Other
Operations
|
|
20.2
|
|
21.2
|
|
24.4
|
|
Total other
intangible assets
|
|
410.1
|
|
420.4
|
|
423.6
|
|
Total goodwill and
other intangible assets
|
|
1,051.5
|
|
1,065.9
|
|
1,037.0
|
|
Goodwill and other
intangible assets attributed to
non-controlling interests
|
|
(117.1)
|
|
(117.6)
|
|
(108.4)
|
|
Goodwill and other
intangible assets included in
White
Mountains's common shareholders' equity
|
|
$
934.4
|
|
$
948.3
|
|
$
928.6
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(millions)
(Unaudited)
|
|
|
|
Three Months Ended
March 31,
|
|
|
2022
|
|
2021
|
|
Revenues:
|
|
|
|
|
|
Financial
Guarantee (HG Global/BAM)
|
|
|
|
|
|
Earned insurance
premiums
|
|
$
8.4
|
|
$
6.4
|
|
Net investment
income
|
|
4.6
|
|
4.5
|
|
Net realized and
unrealized investment gains (losses)
|
|
(45.1)
|
|
(17.9)
|
|
Other
revenues
|
|
.8
|
|
.3
|
|
Total Financial
Guarantee revenues
|
|
(31.3)
|
|
(6.7)
|
|
P&C
Insurance and Reinsurance (Ark)
|
|
|
|
|
|
Earned insurance
premiums
|
|
194.4
|
|
104.6
|
|
Net investment
income
|
|
1.6
|
|
.8
|
|
Net realized and
unrealized investment gains (losses)
|
|
(17.5)
|
|
1.1
|
|
Other
revenues
|
|
(2.8)
|
|
2.6
|
|
Total P&C
Insurance and Reinsurance revenues
|
|
175.7
|
|
109.1
|
|
Specialty
Insurance Distribution (NSM)
|
|
|
|
|
|
Commission
revenues
|
|
70.1
|
|
59.6
|
|
Other
revenues
|
|
18.4
|
|
15.2
|
|
Total Specialty
Insurance Distribution revenues
|
|
88.5
|
|
74.8
|
|
Asset
Management (Kudu)
|
|
|
|
|
|
Net investment
income
|
|
12.6
|
|
8.2
|
|
Net realized and
unrealized investment gains (losses)
|
|
22.3
|
|
15.8
|
|
Other
revenues
|
|
—
|
|
.1
|
|
Total Asset Management
revenues
|
|
34.9
|
|
24.1
|
|
Other
Operations
|
|
|
|
|
|
Net investment
income
|
|
1.8
|
|
7.1
|
|
Net realized and
unrealized investment gains (losses)
|
|
31.9
|
|
2.1
|
|
Net realized and
unrealized investment gains (losses) from investment in
MediaAlpha
|
|
18.8
|
|
(41.7)
|
|
Commission
revenues
|
|
2.9
|
|
2.3
|
|
Other
revenues
|
|
25.7
|
|
7.1
|
|
Total Other Operations
revenues
|
|
81.1
|
|
(23.1)
|
|
Total
revenues
|
|
$
348.9
|
|
$
178.2
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
(millions)
(Unaudited)
|
|
|
|
Three Months Ended
March 31,
|
|
|
2022
|
|
2021
|
|
Expenses:
|
|
|
|
|
|
Financial
Guarantee (HG Global/BAM)
|
|
|
|
|
|
Insurance acquisition
expenses
|
|
$
3.0
|
|
$
1.9
|
|
General and
administrative expenses
|
|
16.3
|
|
16.4
|
|
Total Financial
Guarantee expenses
|
|
19.3
|
|
18.3
|
|
P&C
Insurance and Reinsurance (Ark)
|
|
|
|
|
|
Loss and loss
adjustment expenses
|
|
122.0
|
|
66.0
|
|
Insurance and
reinsurance acquisition expenses
|
|
49.9
|
|
36.7
|
|
General and
administrative expenses
|
|
23.1
|
|
37.8
|
|
Interest
expense
|
|
3.8
|
|
1.1
|
|
Total P&C
Insurance and Reinsurance expenses
|
|
198.8
|
|
141.6
|
|
Specialty
Insurance Distribution (NSM)
|
|
|
|
|
|
General and
administrative expenses
|
|
54.0
|
|
46.0
|
|
Broker commission
expenses
|
|
20.6
|
|
18.9
|
|
Change in fair value of
contingent consideration
|
|
.1
|
|
—
|
|
Amortization of other
intangible assets
|
|
9.1
|
|
8.6
|
|
Loss on assets held for
sale
|
|
—
|
|
28.7
|
|
Interest
expense
|
|
2.1
|
|
5.9
|
|
Total Specialty
Insurance Distribution expenses
|
|
85.9
|
|
108.1
|
|
Asset
Management (Kudu)
|
|
|
|
|
|
General and
administrative expenses
|
|
2.7
|
|
2.5
|
|
Amortization of other
intangible assets
|
|
.1
|
|
.1
|
|
Interest
expense
|
|
2.8
|
|
5.8
|
|
Total Asset Management
expenses
|
|
5.6
|
|
8.4
|
|
Other
Operations
|
|
|
|
|
|
Cost of
sales
|
|
21.4
|
|
4.0
|
|
General and
administrative expenses
|
|
28.9
|
|
35.7
|
|
Amortization of other
intangible assets
|
|
.9
|
|
.5
|
|
Interest
expense
|
|
.3
|
|
.3
|
|
Total Other Operations
expenses
|
|
51.5
|
|
40.5
|
|
Total
expenses
|
|
361.1
|
|
316.9
|
|
Pre-tax income
(loss) from continuing operations
|
|
(12.2)
|
|
(138.7)
|
|
Income tax
(expense) benefit
|
|
3.8
|
|
9.5
|
|
Net income (loss)
from continuing operations
|
|
(8.4)
|
|
(129.2)
|
|
Net gain (losses)
from sale of discontinued operations, net of tax
|
|
—
|
|
18.7
|
|
Net income
(loss)
|
|
(8.4)
|
|
(110.5)
|
|
Net (income) loss
attributable to non-controlling interests
|
|
41.8
|
|
35.2
|
|
Net income (loss)
attributable to White Mountains's common
shareholders
|
|
$
33.4
|
|
$
(75.3)
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(millions)
(Unaudited)
|
|
|
Three Months Ended
March 31,
|
|
|
2022
|
|
2021
|
|
Net income (loss)
attributable to White Mountains's common
shareholders
|
|
$
33.4
|
|
$
(75.3)
|
|
Other comprehensive
income (loss), net of tax
|
|
(2.3)
|
|
1.8
|
|
Comprehensive
income (loss)
|
|
31.1
|
|
(73.5)
|
|
Other comprehensive
(income) loss attributable to non-controlling interests
|
|
.2
|
|
(.1)
|
|
Comprehensive
income (loss) attributable to White Mountains's common
shareholders
|
|
$
31.3
|
|
$
(73.6)
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
EARNINGS PER
SHARE
(Unaudited)
|
|
|
Income (loss) per
share attributable to White Mountains's common
shareholders
|
|
Three Months Ended
March 31,
|
|
|
2022
|
|
2021
|
|
Basic earnings
(loss) per share
|
|
|
|
|
|
Continuing
operations
|
|
$
11.10
|
|
$
(30.33)
|
|
Discontinued
operations
|
|
—
|
|
6.03
|
|
Total consolidated
operations
|
|
$
11.10
|
|
$
(24.30)
|
|
|
|
|
|
|
Diluted earnings
(loss) per share
|
|
|
|
|
|
Continuing
operations
|
|
$
11.10
|
|
$
(30.33)
|
|
Discontinued
operations
|
|
—
|
|
6.03
|
|
Total consolidated
operations
|
|
$
11.10
|
|
$
(24.30)
|
|
Dividends declared
per White Mountains's common share
|
|
$
1.00
|
|
$
1.00
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
YTD SEGMENT
STATEMENTS OF PRE-TAX (LOSS) INCOME
(millions)
(Unaudited)
|
|
|
For the Three
Months Ended March 31, 2022
|
|
HG
Global/BAM
|
|
|
|
|
|
|
|
|
|
|
|
|
HG
Global
|
|
BAM
|
|
Ark
|
|
NSM
|
|
Kudu
|
|
Other
Operations
|
|
Total
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned insurance
premiums
|
|
$
6.9
|
|
$
1.5
|
|
$
194.4
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
202.8
|
|
Net investment
income
|
|
2.1
|
|
2.5
|
|
1.6
|
|
—
|
|
12.6
|
|
1.8
|
|
20.6
|
|
Net investment income
(expense) -
BAM
surplus note interest
|
|
2.9
|
|
(2.9)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Net realized and
unrealized investment gains (losses)
|
|
(23.5)
|
|
(21.6)
|
|
(17.5)
|
|
—
|
|
22.3
|
|
31.9
|
|
(8.4)
|
|
Net
realized and unrealized investment gains (losses)
from
investment in MediaAlpha
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
18.8
|
|
18.8
|
|
Commission
revenues
|
|
—
|
|
—
|
|
—
|
|
70.1
|
|
—
|
|
2.9
|
|
73.0
|
|
Other
revenues
|
|
.1
|
|
.7
|
|
(2.8)
|
|
18.4
|
|
—
|
|
25.7
|
|
42.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
(11.5)
|
|
(19.8)
|
|
175.7
|
|
88.5
|
|
34.9
|
|
81.1
|
|
348.9
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss and loss
adjustment expenses
|
|
—
|
|
—
|
|
122.0
|
|
—
|
|
—
|
|
—
|
|
122.0
|
|
Insurance and
reinsurance acquisition expenses
|
|
2.6
|
|
.4
|
|
49.9
|
|
—
|
|
—
|
|
—
|
|
52.9
|
|
Cost of
sales
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
21.4
|
|
21.4
|
|
General and
administrative expenses
|
|
.7
|
|
15.6
|
|
23.1
|
|
54.0
|
|
2.7
|
|
28.9
|
|
125.0
|
|
Broker commission
expenses
|
|
—
|
|
—
|
|
—
|
|
20.6
|
|
—
|
|
—
|
|
20.6
|
|
Change in fair value
of contingent consideration
|
|
—
|
|
—
|
|
—
|
|
.1
|
|
—
|
|
—
|
|
.1
|
|
Amortization of other
intangible assets
|
|
—
|
|
—
|
|
—
|
|
9.1
|
|
.1
|
|
.9
|
|
10.1
|
|
Interest
expense
|
|
—
|
|
—
|
|
3.8
|
|
2.1
|
|
2.8
|
|
.3
|
|
9.0
|
|
Total
expenses
|
|
3.3
|
|
16.0
|
|
198.8
|
|
85.9
|
|
5.6
|
|
51.5
|
|
361.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income
(loss)
|
|
$
(14.8)
|
|
$
(35.8)
|
|
$
(23.1)
|
|
$
2.6
|
|
$
29.3
|
|
$
29.6
|
|
$
(12.2)
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
YTD SEGMENT
STATEMENTS OF PRE-TAX INCOME (LOSS) (CONTINUED)
(millions)
(Unaudited)
|
|
|
For the Three
Months Ended March 31, 2021
|
|
HG
Global/BAM
|
|
|
|
|
|
|
|
|
|
|
|
|
HG
Global
|
|
BAM
|
|
Ark
|
|
NSM
|
|
Kudu
|
|
Other
Operations
|
|
Total
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned insurance
premiums
|
|
$
5.3
|
|
$
1.1
|
|
$
104.6
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
111.0
|
|
Net investment
income
|
|
1.8
|
|
2.7
|
|
.8
|
|
—
|
|
8.2
|
|
7.1
|
|
20.6
|
|
Net investment income
(expense) -
BAM
surplus note interest
|
|
3.0
|
|
(3.0)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Net realized and
unrealized investment gains (losses)
|
|
(9.9)
|
|
(8.0)
|
|
1.1
|
|
—
|
|
15.8
|
|
2.1
|
|
1.1
|
|
Net unrealized
investment gains (losses) from
investment in MediaAlpha
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(41.7)
|
|
(41.7)
|
|
Commission
revenues
|
|
—
|
|
—
|
|
—
|
|
59.6
|
|
—
|
|
2.3
|
|
61.9
|
|
Other
revenues
|
|
.1
|
|
.2
|
|
2.6
|
|
15.2
|
|
.1
|
|
7.1
|
|
25.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
.3
|
|
(7.0)
|
|
109.1
|
|
74.8
|
|
24.1
|
|
(23.1)
|
|
178.2
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss and loss
adjustment expenses
|
|
—
|
|
—
|
|
66.0
|
|
—
|
|
—
|
|
—
|
|
66.0
|
|
Insurance and
reinsurance acquisition expenses
|
|
1.5
|
|
.4
|
|
36.7
|
|
—
|
|
—
|
|
—
|
|
38.6
|
|
Cost of
sales
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
4.0
|
|
4.0
|
|
General and
administrative expenses
|
|
.6
|
|
15.8
|
|
37.8
|
|
46.0
|
|
2.5
|
|
35.7
|
|
138.4
|
|
Broker commission
expenses
|
|
—
|
|
—
|
|
—
|
|
18.9
|
|
—
|
|
—
|
|
18.9
|
|
Amortization of other
intangible assets
|
|
—
|
|
—
|
|
—
|
|
8.6
|
|
.1
|
|
.5
|
|
9.2
|
|
Loss on assets held
for sale
|
|
—
|
|
—
|
|
—
|
|
28.7
|
|
—
|
|
—
|
|
28.7
|
|
Interest
expense
|
|
—
|
|
—
|
|
1.1
|
|
5.9
|
|
5.8
|
|
.3
|
|
13.1
|
|
Total
expenses
|
|
2.1
|
|
16.2
|
|
141.6
|
|
108.1
|
|
8.4
|
|
40.5
|
|
316.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income
(loss)
|
|
$
(1.8)
|
|
$
(23.2)
|
|
$
(32.5)
|
|
$
(33.3)
|
|
$
15.7
|
|
$
(63.6)
|
|
$
(138.7)
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
SELECTED FINANCIAL
DATA
($ in
millions)
(Unaudited)
|
|
|
|
Three Months Ended
March 31,
|
|
BAM
|
|
2022
|
|
2021
|
|
Gross par value of
primary market policies issued
|
|
$
2,755.1
|
|
$
2,542.0
|
|
Gross par value of
secondary market policies issued
|
|
699.1
|
|
177.1
|
|
Gross par value of
assumed reinsurance
|
|
—
|
|
805.5
|
|
Total gross par value
of market policies issued
|
|
$
3,454.2
|
|
$
3,524.6
|
|
Gross written
premiums
|
|
$
9.4
|
|
$
12.5
|
|
MSC
collected
|
|
12.3
|
|
13.8
|
|
Total gross written
premiums and MSC collected
|
|
21.7
|
|
26.3
|
|
Present value of future
installment MSC collections
|
|
—
|
|
—
|
|
Gross written premium
adjustments on existing installment policies
|
|
—
|
|
—
|
|
Gross written
premiums and MSC from new business
|
|
$
21.7
|
|
$
26.3
|
|
Total
pricing
|
|
63
bps
|
|
74 bps
|
|
|
As of
March 31, 2022
|
|
As of
December 31, 2021
|
|
As of
March 31, 2021
|
|
Policyholders'
surplus
|
|
$
294.7
|
|
298.1
|
|
$
321.3
|
|
Contingency
reserve
|
|
105.7
|
|
101.8
|
|
92.2
|
|
Qualified statutory
capital
|
|
400.4
|
|
399.9
|
|
413.5
|
|
Statutory net unearned
premiums
|
|
49.8
|
|
49.5
|
|
46.2
|
|
Present value of future
installment premiums and MSC
|
|
13.8
|
|
13.8
|
|
13.9
|
|
HG Re, Ltd collateral
trusts at statutory value
|
|
486.7
|
|
478.9
|
|
420.7
|
|
Fidus Re, Ltd
collateral trust at statutory value
|
|
250.0
|
|
250.0
|
|
250.0
|
|
Claims paying
resources
|
|
$
1,200.7
|
|
$
1,192.1
|
|
$
1,144.3
|
|
|
Three Months Ended
March 31,
|
|
HG
Global
|
|
2022
|
|
2021
|
|
Net written
premiums
|
|
$
8.1
|
|
$
10.7
|
|
Earned
premiums
|
|
$
6.9
|
|
$
5.3
|
|
|
As of
March 31, 2022
|
|
As of
December 31, 2021
|
As of
March 31, 2021
|
|
Unearned
premiums
|
|
$
222.6
|
|
$
221.5
|
$
201.5
|
|
Deferred acquisition
costs
|
|
$
62.6
|
|
$
62.7
|
$
55.9
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
SELECTED FINANCIAL
DATA (CONTINUED)
($ in
millions)
(Unaudited)
|
|
|
Ark
|
|
For the Three
Months Ended March 31, 2022
|
|
|
GAAP
|
|
Third-Party
Capital Share
|
|
Adjusted
|
|
Insurance
premiums:
|
|
|
|
|
|
|
|
Gross written
premiums
|
|
$
633.1
|
|
$
—
|
|
$
633.1
|
|
Net written
premiums
|
|
$
543.8
|
|
$
1.8
|
|
$
545.6
|
|
Net earned
premiums
|
|
$
194.4
|
|
$
4.8
|
|
$
199.2
|
|
|
|
|
|
|
|
|
Insurance
expenses:
|
|
|
|
|
|
|
|
Loss and loss
adjustment expenses
|
|
$
122.0
|
|
$
5.7
|
|
$
127.7
|
|
Insurance and
reinsurance acquisition expenses
|
|
49.9
|
|
—
|
|
49.9
|
|
Other underwriting
expenses (1)
|
|
22.1
|
|
1.0
|
|
23.1
|
|
Total insurance
expenses
|
|
$
194.0
|
|
$
6.7
|
|
$
200.7
|
|
|
|
|
|
|
|
|
Ratios:
|
|
|
|
|
|
|
|
Loss and loss
adjustment expense
|
|
62.7
%
|
|
|
|
64.1
%
|
|
Insurance and
reinsurance acquisition expense
|
|
25.7
|
|
|
|
25.1
|
|
Other underwriting
expense
|
|
11.4
|
|
|
|
11.6
|
|
Combined
Ratio
|
|
99.8
%
|
|
|
|
100.8
%
|
|
|
(1) Included within general and
administrative expenses.
|
|
|
For the Three
Months Ended March 31, 2021
|
|
|
GAAP
|
|
Third-Party
Capital Share
|
|
Adjusted
|
|
Insurance
premiums:
|
|
|
|
|
|
|
|
Gross written
premiums
|
|
$
404.5
|
|
$
—
|
|
$
404.5
|
|
Net written
premiums
|
|
$
342.4
|
|
$
(5.0)
|
|
$
337.4
|
|
Net earned
premiums
|
|
$
104.6
|
|
$
31.2
|
|
$
135.8
|
|
|
|
|
|
|
|
|
Insurance
expenses:
|
|
|
|
|
|
|
|
Loss and loss
adjustment expenses
|
|
$
66.0
|
|
$
31.6
|
|
$
97.6
|
|
Insurance and
reinsurance acquisition expenses
|
|
36.7
|
|
—
|
|
36.7
|
|
Other underwriting
expenses (1)
|
|
11.2
|
|
1.3
|
|
12.5
|
|
Total insurance
expenses
|
|
$
113.9
|
|
$
32.9
|
|
$
146.8
|
|
|
|
|
|
|
|
|
Ratios:
|
|
|
|
|
|
|
|
Loss and loss
adjustment expense
|
|
63.1 %
|
|
|
|
71.9 %
|
|
Insurance and
reinsurance acquisition expense
|
|
35.1
|
|
|
|
27.0
|
|
Other underwriting
expense
|
|
10.7
|
|
|
|
9.2
|
|
Combined
Ratio
|
|
108.9 %
|
|
|
|
108.1 %
|
|
|
(1) Included within general and
administrative expenses.
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
SELECTED FINANCIAL
DATA (CONTINUED)
(millions)
(Unaudited)
|
|
|
NSM
|
|
Three Months
Ended
March 31, 2021
|
|
Three Months
Ended
March 31, 2022
|
|
Twelve Months
Ended
March 31,
2022
|
|
Commission
revenues
|
|
$
59.6
|
|
$
70.1
|
|
$
268.5
|
|
Broker commission
expenses
|
|
18.9
|
|
20.6
|
|
81.9
|
|
Gross
profit
|
|
40.7
|
|
49.5
|
|
186.6
|
|
Other
revenues
|
|
15.2
|
|
18.4
|
|
75.6
|
|
General and
administrative expenses
|
|
46.0
|
|
54.0
|
|
198.1
|
|
Change in fair value
of contingent
consideration
|
|
—
|
|
.1
|
|
1.1
|
|
Amortization of other
intangible assets
|
|
8.6
|
|
9.1
|
|
35.7
|
|
Loss on assets held
for sale
|
|
28.7
|
|
—
|
|
—
|
|
Interest
expense
|
|
5.9
|
|
2.1
|
|
19.5
|
|
GAAP pre-tax income
(loss)
|
|
(33.3)
|
|
2.6
|
|
7.8
|
|
Income tax (expense)
benefit
|
|
8.0
|
|
.4
|
|
(2.0)
|
|
GAAP net income
(loss)
|
|
(25.3)
|
|
3.0
|
|
5.8
|
|
|
|
|
|
|
|
|
Add back:
|
|
|
|
|
|
|
|
Interest
expense
|
|
5.9
|
|
2.1
|
|
19.5
|
|
Income tax expense
(benefit)
|
|
(8.0)
|
|
(.4)
|
|
2.0
|
|
General and
administrative expenses –
depreciation
|
|
1.1
|
|
1.2
|
|
5.5
|
|
Amortization of other
intangible assets
|
|
8.6
|
|
9.1
|
|
35.7
|
|
EBITDA
|
|
(17.7)
|
|
15.0
|
|
68.5
|
|
|
|
|
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
Change in fair value
of contingent
consideration
|
|
—
|
|
.1
|
|
1.1
|
|
Non-cash
equity-based
compensation expense
|
|
.6
|
|
.8
|
|
2.2
|
|
Impairments of
intangible assets
|
|
—
|
|
—
|
|
—
|
|
Loss on assets held
for sale
|
|
28.7
|
|
—
|
|
—
|
|
Transaction
expenses
|
|
—
|
|
1.3
|
|
6.1
|
|
Investments made in
the development
of new
business lines
|
|
—
|
|
.3
|
|
1.1
|
|
Restructuring
expenses
|
|
2.8
|
|
.6
|
|
3.2
|
|
Legal
settlements
|
|
—
|
|
—
|
|
(7.6)
|
|
Adjusted
EBITDA
|
|
$
14.4
|
|
$
18.1
|
|
74.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment to remove
Fresh Insurance motor business's adjusted EBITDA from
April 1,
2021
|
1.2
|
|
Adjustment to include
J.C. Taylor's adjusted EBITDA from April 1, 2021 to August 6,
2021
|
3.4
|
|
Pro forma adjusted
EBITDA
|
|
|
|
$
79.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
SELECTED FINANCIAL
DATA (CONTINUED)
(millions)
(Unaudited)
|
|
|
Kudu
|
|
Three Months
Ended
March 31, 2021
|
|
Three Months
Ended
March 31, 2022
|
|
Twelve Months
Ended
March 31,
2022
|
|
Net investment
income
|
|
$
8.2
|
|
$
12.6
|
|
$
48.3
|
|
Net realized and
unrealized investment gains (losses)
|
|
15.8
|
|
22.3
|
|
96.4
|
|
Other
revenues
|
|
.1
|
|
—
|
|
.1
|
|
Total
revenues
|
|
24.1
|
|
34.9
|
|
144.8
|
|
General and
administrative expenses
|
|
2.5
|
|
2.7
|
|
14.7
|
|
Amortization of other
intangible assets
|
|
.1
|
|
.1
|
|
.3
|
|
Interest
expense
|
|
5.8
|
|
2.8
|
|
8.7
|
|
Total
expenses
|
|
8.4
|
|
5.6
|
|
23.7
|
|
GAAP pre-tax income
(loss)
|
|
15.7
|
|
29.3
|
|
121.1
|
|
Income tax (expense)
benefit
|
|
(7.8)
|
|
(6.1)
|
|
(27.8)
|
|
GAAP net income
(loss)
|
|
7.9
|
|
23.2
|
|
93.3
|
|
|
|
|
|
|
|
|
Add back:
|
|
|
|
|
|
|
|
Interest
expense
|
|
5.8
|
|
2.8
|
|
8.7
|
|
Income tax expense
(benefit)
|
|
7.8
|
|
6.1
|
|
27.8
|
|
General and
administrative expenses – depreciation
|
|
—
|
|
—
|
|
—
|
|
Amortization of other
intangible assets
|
|
.1
|
|
.1
|
|
.3
|
|
EBITDA
|
|
21.6
|
|
32.2
|
|
130.1
|
|
|
|
|
|
|
|
|
Exclude:
|
|
|
|
|
|
|
|
Net realized and
unrealized investment (gains) losses
|
|
(15.8)
|
|
(22.3)
|
|
(96.4)
|
|
Non-cash equity-based
compensation
expense
|
|
.1
|
|
.1
|
|
1.2
|
|
Transaction
expenses
|
|
—
|
|
—
|
|
2.0
|
|
Adjusted
EBITDA
|
|
$
5.9
|
|
$
10.0
|
|
36.9
|
|
|
|
|
|
|
|
|
Adjustment to
annualize partial year revenues for participation contracts
acquired
|
10.5
|
|
Adjustment to remove
partial year revenues for participation contracts sold
|
(1.6)
|
|
Annualized adjusted
EBITDA
|
|
|
|
|
|
$
45.8
|
|
|
|
|
|
|
|
|
GAAP net investment
income revenue
|
|
|
|
|
|
$
48.3
|
|
Adjustment to
annualize partial year revenues for participation contracts
acquired
|
10.5
|
|
Adjustment to remove
partial year revenues for participation contracts sold
|
(1.6)
|
|
Annualized
revenue
|
|
|
|
|
|
$
57.2
|
|
|
|
|
|
|
|
|
Total net capital
drawn (1)
|
|
|
|
|
|
$
570.8
|
|
|
|
|
|
|
|
|
Cash revenue
yield
|
|
|
|
|
|
10.0
%
|
|
|
(1)
Total net capital drawn represents equity and debt capital drawn
less cumulative distributions.
|
Regulation G
This earnings release includes non-GAAP financial measures that
have been reconciled from their most comparable GAAP financial
measures.
- Adjusted book value per share is a non-GAAP financial measure
which is derived by adjusting (i) the GAAP book value per share
numerator and (ii) the common shares outstanding denominator, as
described below.
The GAAP book value per share
numerator is adjusted (i) to include a discount for the time value
of money arising from the modeled timing of cash payments of
principal and interest on the BAM surplus notes and (ii) to add
back the unearned premium reserve, net of deferred acquisition
costs, at HG Global.
Under GAAP, White Mountains is
required to carry the BAM surplus notes, including accrued
interest, at nominal value with no consideration for time value of
money. Based on a debt service model that forecasts operating
results for BAM through maturity of the surplus notes, the present
value of the BAM surplus notes, including accrued interest and
using an 8% discount rate, was estimated to be $125 million, $130
million and $142 million less
than the nominal GAAP carrying values as of March 31, 2022, December
31, 2021 and March 31, 2021,
respectively.
The value of HG Global's unearned
premium reserve, net of deferred acquisition costs, was
$160 million, $159 million and $146
million as of March 31, 2022,
December 31, 2021 and March 31, 2021, respectively.
White Mountains believes these
adjustments are useful to management and investors in analyzing the
intrinsic value of HG Global, including the value of the BAM
surplus notes and the value of the in-force business at HG Re, HG
Global's reinsurance subsidiary.
The denominator used in the
calculation of adjusted book value per share equals the number of
common shares outstanding adjusted to exclude unearned restricted
common shares, the compensation cost of which, at the date of
calculation, has yet to be amortized. Restricted common
shares are earned on a straight-line basis over their vesting
periods. The reconciliation of GAAP book value per share to
adjusted book value per share is included on page 7.
- BAM's gross written premiums and MSC from new business is a
non-GAAP financial measure, which is derived by adjusting gross
written premiums and MSC collected (i) to include the present value
of future installment MSC not yet collected and (ii) to exclude the
impact of gross written premium adjustments related to policies
closed in prior periods. White Mountains believes these adjustments
are useful to management and investors in evaluating the volume and
pricing of new business closed during the period. The
reconciliation from GAAP gross written premiums to gross written
premiums and MSC from new business is included on page 14.
- Ark's adjusted loss and loss adjustment expense ratio, adjusted
insurance acquisition expense ratio, adjusted other underwriting
expense ratio and adjusted combined ratio are non-GAAP financial
measures, which are derived by adjusting the GAAP ratios to add
back the impact of whole-account quota-share reinsurance
arrangements attributable to third-party capital providers for
Ark's Lloyd's syndicates. The impact of these reinsurance
arrangements relates to years of account prior to White Mountains's
transaction with Ark. White Mountains believes these adjustments
are useful to management and investors in evaluating Ark's results
on a fully aligned basis (i.e., 100% of the syndicates' results).
The reconciliation from the GAAP ratios to the adjusted ratios is
included on page 15.
- NSM's EBITDA, adjusted EBITDA and pro forma adjusted EBITDA are
non-GAAP financial measures.
EBITDA is a non-GAAP financial
measure that excludes interest expense on debt, income tax
(expense) benefit, depreciation and amortization of other
intangible assets from GAAP net income (loss).
Adjusted EBITDA is a non-GAAP
financial measure that excludes certain other items in GAAP net
income (loss) in addition to those excluded from EBITDA. The
adjustments relate to (i) change in fair value of contingent
consideration, (ii) non-cash equity-based compensation expense,
(iii) impairments of intangible assets, (iv) loss on assets held
for sale, (v) transaction expenses, (vi) investments made in the
development of new business lines, (vii) restructuring expenses and
(viii) legal settlements. A description of each follows:
- Change in fair value of contingent consideration -
Contingent consideration consists of amounts payable to the sellers
of businesses purchased by NSM that are contingent on the earnings
of such businesses in periods subsequent to their acquisition.
Under GAAP, contingent consideration amounts are initially recorded
as liabilities at fair value as part of purchase accounting, with
the periodic change in the fair value of these liabilities recorded
as income or an expense.
- Non-cash equity-based compensation expense - Represents
non-cash expenses related to NSM's management compensation
emanating from the grants of equity units.
- Impairments of intangible assets - Represents expense
related to NSM's write-off of intangible assets. For the periods
presented, the impairments related primarily to NSM's write-off of
intangible assets in its U.K. vertical. The impairments related to
lower premium volumes, including due to the impact of the COVID-19
pandemic, and certain reorganization initiatives in the U.K.
vertical.
- Loss on assets held for sale - Represents the loss on
net assets held for sale related to the Fresh Insurance motor
business.
- Transaction expenses - Represents costs directly related
to NSM's mergers and acquisitions activity, such as
transaction-related compensation, banking, accounting and external
lawyer fees, which are not capitalized and are expensed under
GAAP.
- Investments made in the development of new business
lines - Represents the net loss related to the start-up of
newly established lines of business, which NSM views as
investments.
- Restructuring expenses - Represents expenses associated
with eliminating redundant work force and facilities that often
arise as a result of NSM's post-acquisition integration strategies.
For the periods presented, this adjustment relates primarily to
NSM's expenses incurred in certain reorganization initiatives in
the U.K. vertical.
- Legal settlements - Represents amounts recognized from
legal settlements.
Pro forma adjusted EBITDA is a
non-GAAP financial measure that starts with adjusted EBITDA and
also (i) includes the earnings (losses) of acquired businesses for
the period of time over the previous 12 months that the businesses
were not owned by NSM and (ii) removes the earnings (losses) for
the previous 12 months related to businesses sold by NSM.
White Mountains believes that
these non-GAAP financial measures are useful to management and
investors in evaluating NSM's performance. White Mountains
also believes that pro forma adjusted EBITDA is useful to
management and investors in understanding the full earnings profile
of NSM's business as of the end of any 12-month period. See
page 16 for the reconciliation of NSM's GAAP net income (loss) to
EBITDA, adjusted EBITDA and pro forma adjusted EBITDA.
- Kudu's EBITDA, adjusted EBITDA, annualized adjusted EBITDA and
annualized revenue are non-GAAP financial measures.
EBITDA is a non-GAAP financial
measure that excludes interest expense on debt, income tax
(expense) benefit, depreciation and amortization of other
intangible assets from GAAP net income (loss).
Adjusted EBITDA is a non-GAAP
financial measure that excludes certain other items in GAAP net
income (loss) in addition to those excluded from EBITDA. The
adjustments relate to (i) net realized and unrealized investment
gains (losses) on Kudu's revenue and earnings participation
contracts, (ii) non-cash equity-based compensation expense and
(iii) transaction expenses. A description of each adjustment
follows:
- Net realized and unrealized investment gains (losses) -
Represents net unrealized investment gains and losses recorded on
Kudu's revenue and earnings participation contracts, which are
recorded at fair value under GAAP, and realized investment gains
and losses from participation contracts sold during the
period.
- Non-cash equity-based compensation expense - Represents
non-cash expenses related to Kudu's management compensation that
are settled with equity units in Kudu.
- Transaction expenses - Represents costs directly related
to Kudu's mergers and acquisitions activity, such as external
lawyer, banker, consulting and placement agent fees, which are not
capitalized and are expensed under GAAP.
Annualized adjusted EBITDA is a
non-GAAP financial measure that (i) annualizes partial year
revenues related to Kudu's revenue and earnings participation
contracts acquired during the previous 12-month period and (ii)
removes revenues related to revenue and earnings participation
contracts sold during the previous 12-month period.
Annualized revenue is a non-GAAP
financial measure that adds the adjustments for annualized adjusted
EBITDA to GAAP net investment income revenue.
White Mountains believes that these non-GAAP financial measures
are useful to management and investors in evaluating Kudu's
performance. White Mountains also believes that annualized
adjusted EBITDA is useful to management and investors in
understanding the full earnings profile of Kudu's business as of
the end of any 12-month period. See page 17 for the
reconciliation of Kudu's GAAP net income (loss) to EBITDA, adjusted
EBITDA and annualized adjusted EBITDA.
- Total consolidated portfolio return excluding MediaAlpha and
total equity portfolio return excluding MediaAlpha are non-GAAP
financial measures that remove the net investment income and net
realized and unrealized investment gains (losses) from White
Mountains's investment in MediaAlpha. White Mountains
believes these measures to be useful to management and investors by
showing the underlying performance of White Mountains's investment
portfolio and equity portfolio without regard to White Mountains's
investment in MediaAlpha. The following tables present
reconciliations from GAAP to the reported
percentages:
|
|
Three Months Ended
March 31,
|
|
|
2022
|
|
2021
|
|
Total consolidated
portfolio return
|
|
0.8
%
|
|
(0.3)
%
|
|
Remove
MediaAlpha
|
|
(0.5)
%
|
|
1.0
%
|
|
Total consolidated
portfolio return
excluding
MediaAlpha
|
|
0.3
%
|
|
0.7
%
|
|
|
Three Months Ended
March 31, 2022
|
|
Total equity portfolio
return
|
|
5.3%
|
|
Remove
MediaAlpha
|
|
(0.3)%
|
|
Total equity portfolio
return
excluding MediaAlpha
|
|
5.0%
|
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 "could", "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 book value per share, 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, EBITDA, adjusted EBITDA, dividends, market share or
other financial forecasts of White Mountains or its
businesses;
- expansion and growth of its business and operations; and
- future capital expenditures.
These statements are based on certain assumptions and analyses
made by White Mountains in light of its experience and perception
of historical trends, current conditions and expected future
developments, as well as other factors believed to be appropriate
in the circumstances. However, whether actual results and
developments will conform to its expectations and predictions is
subject to risks and uncertainties that could cause actual results
to differ materially from expectations, including:
- the risks that are described from time to time in White
Mountains's filings with the Securities and Exchange Commission,
including but not limited to White Mountains's Annual Report on
Form 10-K for the fiscal year ended December
31, 2021;
- claims arising from catastrophic events, such as hurricanes,
earthquakes, floods, fires, severe winter weather, public health
crises, terrorist attacks, explosions, infrastructure failures,
cyber-attacks or armed conflicts;
- recorded loss reserves subsequently proving to have been
inadequate;
- the market value of White Mountains's investment in
MediaAlpha;
- the trends and uncertainties from the COVID-19 pandemic,
including judicial interpretations on the extent of insurance
coverage provided by insurers for COVID-19 pandemic related
claims;
- business opportunities (or lack thereof) that may be presented
to it and pursued;
- actions taken by ratings agencies, such as financial strength
or credit ratings downgrades or placing ratings on negative
watch;
- the continued availability of capital and financing;
- deterioration of general economic, market or business
conditions, including due to outbreaks of contagious disease
(including the COVID-19 pandemic) and corresponding mitigation
efforts;
- competitive forces, including the conduct of other
insurers;
- changes in domestic or foreign laws or regulations, or their
interpretation, applicable to White Mountains, its competitors or
its customers; and
- other factors, most of which are beyond White Mountains's
control.
Consequently, all of the forward-looking statements made in this
earnings release are qualified by these cautionary statements, and
there can be no assurance that the actual results or developments
anticipated by White Mountains will be realized or, even if
substantially realized, that they will have the expected
consequences to, or effects on, White Mountains or its business or
operations. White Mountains assumes no obligation to publicly
update any such forward-looking statements, whether as a result of
new information, future events or otherwise.
CONTACT: Rob Seelig
(603) 640-2212
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content:https://www.prnewswire.com/news-releases/white-mountains-reports-first-quarter-results-301541520.html
SOURCE White Mountains Insurance Group, Ltd.