HAMILTON, Bermuda, Aug. 6,
2019 /PRNewswire/ -- White Mountains Insurance Group, Ltd. (NYSE:
WTM) reported book value per share of $987 and adjusted book value per share of
$986 as of June 30, 2019.
Book value per share and adjusted book value per share both
increased 1% in the second quarter of 2019. Book value per
share and adjusted book value per share increased 10% and 11% in
the first six months of 2019, including dividends. The
results for the first six months of 2019 include the impact of the
MediaAlpha transaction. Excluding the gain on the MediaAlpha
transaction, book value per share and adjusted book value per share
would have increased 4% and 5% in the first six months of 2019,
including dividends.(1)
Manning Rountree, CEO, commented, "We had a solid quarter.
ABVPS was up 1%, driven primarily by investment results. BAM
produced decent premium volumes despite challenging primary market
conditions. NSM produced good organic growth (top line and
bottom line) and closed the Embrace Pet Insurance acquisition
during the quarter. Kudu is performing well and produced a
profit in its first quarter as a new operating segment for White
Mountains. MediaAlpha grew revenues and profits to new highs
in the quarter. We closed the Elementum transaction in May,
and we ended the quarter with $1.1
billion of undeployed capital."
Comprehensive income attributable to common shareholders was
$18 million and $302 million in the second quarter and first six
months of 2019, compared to comprehensive income (loss)
attributable to common shareholders of $3
million and $(45) million in
the second quarter and first six months of 2018.
HG Global/BAM
BAM's gross written premiums and member surplus contributions
collected were $25 million and
$40 million in the second quarter and
first six months of 2019, compared to $29
million and $40 million in the
second quarter and first six months of 2018. BAM insured
municipal bonds with par value of $2.9
billion and $4.8 billion in
the second quarter and first six months of 2019, compared to
$3.1 billion and $4.4 billion in the second quarter and first six
months of 2018. Total pricing was 84 and 83 basis points in
the second quarter and first six months of 2019, compared to 101
and 100 basis points in the second quarter and first six months of
2018. BAM's total claims paying resources were $895 million at June 30,
2019, compared to $871 million
at December 31, 2018 and $827 million at June 30,
2018.
Seán McCarthy, CEO of BAM, said, "Municipal new-issue volume
declined in the quarter, while insured penetration increased.
BAM wrote healthy volumes in both the secondary market and the
GreenStar program. Lower interest rates and tighter credit
spreads impacted pricing, especially in the primary market.
In June, BAM became the first municipal bond insurer to join the
Federal Home Loan Bank of New
York; membership strengthens BAM's capital resources and
provides access to an additional source of contingent
liquidity. Also in June, S&P Global Ratings concluded its
annual review and affirmed BAM's "AA/stable" rating."
(1) See "Regulation G" on page 14.
HG Global reported pre-tax income of $15
million and $31 million in the
second quarter and first six months of 2019, compared to pre-tax
income of $8 million and $12 million in the second quarter and first six
months of 2018. White Mountains reported pre-tax loss related
to BAM of $7 million and $17 million in the second quarter and first six
months of 2019, compared to pre-tax loss of $17 million and $36
million in the second quarter and first six months of
2018. The period over period changes were driven primarily by
higher investment returns in the HG Global and BAM investment
portfolios.
BAM is a mutual insurance company that is owned by its members.
BAM's results are consolidated into White Mountains's GAAP
financial statements and attributed to non-controlling
interests.
NSM
In the second quarter of 2019, NSM reported pre-tax income of
$1 million, adjusted EBITDA of
$16 million, and commission and other
revenues of $66 million. In the
first six months of 2019, NSM reported pre-tax loss of $1 million, adjusted EBITDA of $26 million, and commission and other revenues of
$115 million. Results for the
second quarter and first six months of 2019 include the results of
Embrace Pet Insurance, a nationwide provider of pet health
insurance for dogs and cats, which NSM acquired on April 1, 2019.
Geof McKernan, CEO of NSM, said,
"NSM had a strong second quarter, growing trailing 12 months pro
forma controlled premiums to $864
million from $759 million and
pro forma adjusted EBITDA to $49
million from $40
million. These results reflect the contribution of the
Embrace Pet Insurance acquisition as well as continued organic
growth, principally in the specialty transportation and real estate
verticals. We continue to invest in technology and talent to
drive organic growth while also pursuing attractive acquisition
opportunities."
On June 28, 2019, NSM acquired the
renewal rights on its U.S. collector car business from an affiliate
of American International Group, Inc. for $82.5 million. The acquisition satisfied
the previously disclosed obligation of NSM to acquire the renewal
rights from AIG.
Kudu
On April 4, 2019, White Mountains
completed its acquisition of the ownership interests in Kudu held
by certain funds managed by Oaktree Capital Management, L.P.
In addition, White Mountains assumed all of Oaktree's unfunded
capital commitments to Kudu, increasing White Mountains's total
capital commitment to $250
million. As a result of the transaction, White
Mountains's ownership of Kudu increased from 49% to 99%, and White
Mountains began consolidating Kudu in its financial statements
during the second quarter of 2019.
In the twelve months ended June 30,
2019, Kudu deployed $145
million in five investment management firms with combined
assets under management of over $17
billion, spanning a range of asset classes, including real
estate, real assets, wealth management, hedge funds and alternative
credit strategies. In the second quarter of 2019, Kudu
reported total revenues of $4 million
and pre-tax income of $2 million.
Rob Jakacki, CEO of Kudu, said,
"Kudu has established a leadership position in its target
market. Our current portfolio of managers is performing well,
and good financial results are emerging. We closed five
transactions over the past year with an average cash yield at
inception of 9.5%. Kudu as an enterprise has turned cash flow
positive. In July, we closed a sixth transaction with First
Long Island Investors, and we have a strong deal pipeline of
quality managers. We are excited about our prospects."
Other Operations
White Mountains's Other Operations segment reported pre-tax
income of $5 million and $288 million in the second quarter and first six
months of 2019, compared to pre-tax loss of $11 million and $62
million in the second quarter and first six months of
2018. Pre-tax income for the first six months of 2019
included $182 million of realized and
unrealized gains from the MediaAlpha transaction. Excluding
the MediaAlpha transaction, net realized and unrealized investment
gains were $23 million and
$142 million in the second quarter
and first six months of 2019, compared to net realized and
unrealized investment gains (losses) of $13
million and $(33) million in
the second quarter and first six months of 2018.
On June 3, 2019, White Mountains
acquired a 30% limited partnership interest in Elementum Holdings
LP for $55 million. Elementum
manages portfolios of insurance linked securities—primarily
catastrophe bonds and collateralized reinsurance—across a range of
liquidity and risk/return profiles. As part of the
transaction, White Mountains also agreed to invest a total of
$50 million in funds managed by
Elementum.
Investments
The total return on invested assets was 2.0% in the second
quarter of 2019 compared to 0.7% in the second quarter of
2018. The total return on invested assets was 12.4% in the
first six months of 2019, which included $115 million of unrealized investment gains from
the MediaAlpha transaction. Excluding the MediaAlpha
transaction, the total return on invested assets was 7.9% in the
first six months of 2019 compared to -0.3% in the first six months
of 2018.
Mark Plourde, Managing Director
of White Mountains Advisors, said, "The total portfolio was up 2.0%
for the second quarter, a good absolute result that benefited from
the continued equity market rally and the decline in interest
rates. Common stocks and ETFs returned 3.7%, lagging the
S&P 500 Index return of 4.3%, due to relative underperformance
in our international common stock positions. Other long-term
investments were flat. Fixed income returned 2.0%, lagging
the BBIA Index return of 2.4%, due to shorter duration
positioning."
Additional Information
White Mountains is a Bermuda-domiciled financial services holding
company traded on the New York Stock Exchange and the Bermuda Stock
Exchange under the symbol WTM. Additional financial
information and other items of interest are available at the
company's website located at
www.whitemountains.com. White Mountains expects to file
its Form 10-Q today with the Securities and Exchange Commission and
urges shareholders to refer to that document for more complete
information concerning its financial results.
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(millions)
(Unaudited)
|
|
|
|
June 30,
2019
|
|
December
31,
2018
|
|
June 30,
2018
|
Assets
|
|
|
|
|
|
|
Financial Guarantee (HG Global/BAM)
|
|
|
|
|
|
|
Fixed maturity
investments
|
|
$
|
762.9
|
|
$
|
701.4
|
|
$
|
650.2
|
Short-term
investments
|
|
34.8
|
|
66.9
|
|
66.3
|
Total
investments
|
|
797.7
|
|
768.3
|
|
716.5
|
Cash
|
|
10.3
|
|
12.5
|
|
13.9
|
Insurance premiums
receivable
|
|
6.6
|
|
6.4
|
|
6.3
|
Deferred acquisition
costs
|
|
20.5
|
|
19.0
|
|
17.2
|
Accrued investment
income
|
|
5.3
|
|
4.9
|
|
4.2
|
Accounts receivable on
unsettled investment sales
|
|
8.0
|
|
—
|
|
—
|
Other
assets
|
|
16.1
|
|
5.1
|
|
4.4
|
Total Financial
Guarantee assets
|
|
864.5
|
|
816.2
|
|
762.5
|
Specialty
Insurance Distribution (NSM)
|
|
|
|
|
|
|
Short-term
investments
|
|
.2
|
|
1.7
|
|
—
|
Cash (restricted $88.8,
$50.0 and $57.3)
|
|
119.7
|
|
66.2
|
|
73.3
|
Premium and commission
receivable
|
|
57.6
|
|
44.0
|
|
32.8
|
Goodwill and other
intangible assets
|
|
636.8
|
|
486.2
|
|
436.2
|
Other assets
|
|
36.8
|
|
28.9
|
|
14.8
|
Total Specialty
Insurance Distribution assets
|
|
851.1
|
|
627.0
|
|
557.1
|
Global Asset and
Wealth Management (Kudu)
|
|
|
|
|
|
|
Other long-term
investments
|
|
142.2
|
|
—
|
|
—
|
Short-term
investments
|
|
.1
|
|
—
|
|
—
|
Cash
|
|
2.7
|
|
—
|
|
—
|
Accrued investment
income
|
|
2.7
|
|
—
|
|
—
|
Goodwill and other
intangible assets
|
|
9.8
|
|
—
|
|
—
|
Other
assets
|
|
2.9
|
|
—
|
|
—
|
Total Global Asset and
Wealth Management assets
|
|
160.4
|
|
—
|
|
—
|
Marketing Technology (MediaAlpha)
|
|
|
|
|
|
|
Cash
|
|
—
|
|
5.7
|
|
15.0
|
Goodwill and other
intangible assets
|
|
—
|
|
43.4
|
|
48.3
|
Accounts receivable from
publishers and advertisers
|
|
—
|
|
37.0
|
|
34.9
|
Other assets
|
|
—
|
|
2.3
|
|
1.5
|
Total Marketing
Technology assets
|
|
—
|
|
88.4
|
|
99.7
|
Other Operations
|
|
|
|
|
|
|
Fixed maturity
investments
|
|
346.5
|
|
376.1
|
|
458.5
|
Short-term
investments
|
|
152.0
|
|
145.6
|
|
255.4
|
Common equity
securities
|
|
709.2
|
|
925.6
|
|
911.2
|
Other long-term
investments
|
|
522.2
|
|
325.6
|
|
255.5
|
Total
investments
|
|
1,729.9
|
|
1,772.9
|
|
1,880.6
|
Cash
|
|
17.6
|
|
25.9
|
|
28.9
|
Accrued investment
income
|
|
5.4
|
|
5.5
|
|
6.3
|
Accounts receivable on
unsettled investment sales
|
|
72.8
|
|
—
|
|
3.5
|
Goodwill and other
intangible assets
|
|
21.0
|
|
7.9
|
|
8.3
|
Other assets
|
|
26.7
|
|
15.5
|
|
17.9
|
Assets held for
sale
|
|
2.8
|
|
3.3
|
|
3.3
|
Total Other
Operations assets
|
|
1,876.2
|
|
1,831.0
|
|
1,948.8
|
Total
assets
|
|
$
|
3,752.2
|
|
$
|
3,362.6
|
|
$
|
3,368.1
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
CONDENSED
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(millions)
(Unaudited)
|
|
|
|
June 30,
2019
|
|
December
31,
2018
|
|
June 30,
2018
|
Liabilities
|
|
|
|
|
|
|
Financial Guarantee (HG Global/BAM)
|
|
|
|
|
|
|
Unearned insurance premiums
|
|
$
|
187.8
|
|
$
|
176.0
|
|
$
|
155.5
|
Accrued incentive compensation
|
|
14.5
|
|
20.4
|
|
12.5
|
Accounts payable on unsettled investment purchases
|
|
—
|
|
2.2
|
|
11.7
|
Other liabilities
|
|
27.4
|
|
13.9
|
|
16.8
|
Total Financial Guarantee
liabilities
|
|
229.7
|
|
212.5
|
|
196.5
|
Specialty
Insurance Distribution (NSM)
|
|
|
|
|
|
|
Debt
|
|
219.7
|
|
178.5
|
|
149.8
|
Premiums
payable
|
|
118.7
|
|
77.2
|
|
72.2
|
Contingent consideration earnout
liabilities
|
|
30.9
|
|
20.2
|
|
17.5
|
Other liabilities
|
|
56.1
|
|
38.9
|
|
27.1
|
Total Specialty
Insurance Distribution liabilities
|
|
425.4
|
|
314.8
|
|
266.6
|
Global Asset and
Wealth Management (Kudu)
|
|
|
|
|
|
|
Other
liabilities
|
|
3.5
|
|
—
|
|
—
|
Total Global Asset and Wealth
Management liabilities
|
|
3.5
|
|
—
|
|
—
|
Marketing
Technology (MediaAlpha)
|
|
|
|
|
|
|
Debt
|
|
—
|
|
14.2
|
|
19.8
|
Amounts due to publishers and advertisers
|
|
—
|
|
27.0
|
|
38.3
|
Other liabilities
|
|
—
|
|
5.7
|
|
2.4
|
Total Marketing
Technology liabilities
|
|
—
|
|
46.9
|
|
60.5
|
Other
Operations
|
|
|
|
|
|
|
Debt
|
|
10.8
|
|
—
|
|
—
|
Accrued incentive
compensation
|
|
36.8
|
|
38.9
|
|
30.9
|
Accounts payable on
unsettled investment purchases
|
|
—
|
|
5.0
|
|
10.0
|
Other liabilities
|
|
38.1
|
|
26.3
|
|
6.1
|
Total Other Operations
liabilities
|
|
85.7
|
|
70.2
|
|
47.0
|
Total
liabilities
|
|
744.3
|
|
644.4
|
|
570.6
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
White Mountains's
common shareholder's equity
|
|
|
|
|
|
|
White Mountains's common shares and paid-in surplus
|
|
590.5
|
|
584.0
|
|
575.8
|
Retained earnings
|
|
2,562.8
|
|
2,264.9
|
|
2,366.5
|
Accumulated other comprehensive loss, after tax:
|
|
|
|
|
|
|
Net
unrealized foreign currency translation losses and interest rate
swap
|
|
(9.0)
|
|
(5.8)
|
|
(2.2)
|
Total White Mountains's
common shareholders' equity
|
|
3,144.3
|
|
2,843.1
|
|
2,940.1
|
Non-controlling
interests
|
|
(136.4)
|
|
(124.9)
|
|
(142.6)
|
Total
equity
|
|
3,007.9
|
|
2,718.2
|
|
2,797.5
|
Total liabilities
and equity
|
|
$
|
3,752.2
|
|
$
|
3,362.6
|
|
$
|
3,368.1
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
BOOK VALUE AND
ADJUSTED BOOK VALUE PER SHARE
(Unaudited)
|
|
|
|
June 30,
2019
|
|
March 31,
2019
|
|
December
31,
2018
|
|
June 30,
2018
|
|
Book value per
share numerators (in millions):
|
|
|
|
|
|
|
|
|
|
White Mountains's
common shareholders' equity - GAAP book value per share
numerator
|
|
$
|
3,144.3
|
|
$
|
3,122.0
|
|
$
|
2,843.1
|
|
$
|
2,940.1
|
|
Time value of money
discount on expected future payments on the BAM Surplus
Notes (1)
|
|
(135.7)
|
|
(138.6)
|
|
(141.2)
|
|
(150.1)
|
|
HG Global's unearned
premium reserve (1)
|
|
147.2
|
|
140.2
|
|
136.9
|
|
119.5
|
|
HG Global's net
deferred acquisition costs (1)
|
|
(37.9)
|
|
(35.7)
|
|
(34.6)
|
|
(29.1)
|
|
Adjusted book value
per share numerator
|
|
$
|
3,117.9
|
|
$
|
3,087.9
|
|
$
|
2,804.2
|
|
$
|
2,880.4
|
|
Book value per
share denominators (in thousands of shares):
|
|
|
|
|
|
|
|
|
|
Common shares
outstanding - GAAP book value per share denominator
|
|
3,185.4
|
|
3,181.2
|
|
3,173.1
|
|
3,180.4
|
|
Unearned restricted
common shares
|
|
(24.5)
|
|
(25.5)
|
|
(14.6)
|
|
(22.4)
|
|
Adjusted book value
per share denominator
|
|
3,160.9
|
|
3,155.7
|
|
3,158.5
|
|
3,158.0
|
|
GAAP book value
per share
|
|
$
|
987.12
|
|
$
|
981.39
|
|
$
|
896.00
|
|
$
|
924.46
|
|
Adjusted book
value per share
|
|
$
|
986.39
|
|
$
|
978.51
|
|
$
|
887.85
|
|
$
|
912.08
|
|
|
|
|
|
|
|
|
|
|
|
(1) Amount
reflects White Mountains's preferred share ownership in HG Global
of 96.9%.
|
|
|
|
June 30,
2019
|
|
March 31,
2019
|
|
December
31,
2018
|
|
June 30,
2018
|
|
|
|
|
|
|
|
|
|
|
|
Quarter-to-date
change in GAAP book value per share, including
dividends:
|
|
0.6
|
%
|
|
9.6
|
%
|
|
(4.5)
|
%
|
|
0.9
|
%
|
|
Quarter-to-date
change in adjusted book value per share, including
dividends:
|
|
0.8
|
%
|
|
10.3
|
%
|
|
(4.1)
|
%
|
|
1.0
|
%
|
|
Year-to-date
change in GAAP book value per share, including
dividends:
|
|
10.3
|
%
|
|
9.6
|
%
|
|
(3.7)
|
%
|
|
(0.6)
|
%
|
|
Year-to-date
change in adjusted book value per share, including
dividends:
|
|
11.2
|
%
|
|
10.3
|
%
|
|
(2.8)
|
%
|
|
(0.2)
|
%
|
|
Year-to-date
dividends per share
|
|
$
|
1.00
|
|
$
|
1.00
|
|
$
|
1.00
|
|
$
|
1.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2019
|
|
March 31,
2019
|
|
December
31,
2018
|
|
June 30,
2018
|
|
Summary of
goodwill and other intangible assets (in millions):
|
|
|
|
|
|
|
|
|
|
Goodwill:
|
|
|
|
|
|
|
|
|
|
NSM
|
|
$
|
398.4
|
(1)
|
$
|
328.8
|
|
$
|
354.3
|
(2)
|
$
|
436.2
|
(3)
|
Kudu
|
|
9.8
|
(1)
|
—
|
|
—
|
|
—
|
|
MediaAlpha
|
|
—
|
|
—
|
|
18.3
|
|
18.3
|
|
Other
Operations
|
|
20.4
|
|
20.9
|
|
7.3
|
|
7.6
|
|
Total
goodwill
|
|
428.6
|
|
349.7
|
|
379.9
|
|
462.1
|
|
|
|
|
|
|
|
|
|
|
|
Other intangible
assets:
|
|
|
|
|
|
|
|
|
|
NSM
|
|
238.4
|
|
159.9
|
|
131.9
|
|
—
|
|
MediaAlpha
|
|
—
|
|
—
|
|
25.1
|
|
30.0
|
|
Other
Operations
|
|
.6
|
|
.6
|
|
.6
|
|
.7
|
|
Total other
intangible assets
|
|
239.0
|
|
160.5
|
|
157.6
|
|
30.7
|
|
|
|
|
|
|
|
|
|
|
|
Total goodwill and
other intangible assets
|
|
667.6
|
|
510.2
|
|
537.5
|
|
492.8
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill and other
intangible assets attributed to
non-controlling interests
|
|
(25.4)
|
|
(24.1)
|
|
(40.6)
|
|
(41.7)
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill and other
intangible assets included in
White Mountains's common shareholders'
equity
|
|
$
|
642.2
|
|
$
|
486.1
|
|
$
|
496.9
|
|
$
|
451.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The relative fair
values of goodwill and of other intangible assets recognized in
connection with the acquisition of Embrace and the Kudu transaction
had not yet been finalized at June 30, 2019.
|
(2)
|
The relative fair
values of goodwill and of other intangible assets recognized in
connection with the acquisition of KBK had not yet been finalized
at December 31, 2018.
|
(3)
|
The relative fair
values of goodwill and of other intangible assets recognized in
connection with the acquisition of NSM had not yet been finalized
at June 30, 2018.
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
(millions)
(Unaudited)
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenues:
|
|
|
|
|
|
|
|
|
Financial Guarantee (HG Global/BAM)
|
|
|
|
|
|
|
|
|
Earned insurance
premiums
|
|
$
|
4.3
|
|
$
|
3.4
|
|
$
|
8.5
|
|
$
|
6.4
|
Net investment
income
|
|
5.4
|
|
4.0
|
|
10.7
|
|
7.7
|
Net realized and unrealized
investment gains (losses)
|
|
11.5
|
|
(2.4)
|
|
23.3
|
|
(10.3)
|
Other revenues
|
|
.4
|
|
.4
|
|
1.0
|
|
.6
|
Total Financial Guarantee
revenues
|
|
21.6
|
|
5.4
|
|
43.5
|
|
4.4
|
Specialty
Insurance Distribution (NSM)
|
|
|
|
|
|
|
|
|
Commission
revenues
|
|
54.9
|
|
22.6
|
|
98.2
|
|
22.6
|
Other
revenues
|
|
11.2
|
|
.9
|
|
17.2
|
|
.9
|
Total Specialty Insurance
Distribution revenues
|
|
66.1
|
|
23.5
|
|
115.4
|
|
23.5
|
Global Asset and
Wealth Management (Kudu)
|
|
|
|
|
|
|
|
|
Net investment
income
|
|
4.0
|
|
—
|
|
4.0
|
|
—
|
Net realized and
unrealized gains
|
|
.4
|
|
—
|
|
.4
|
|
—
|
Total Global Asset and
Wealth Management revenues
|
|
4.4
|
|
—
|
|
4.4
|
|
—
|
Marketing Technology (MediaAlpha)
|
|
|
|
|
|
|
|
|
Advertising and commission
revenues
|
|
—
|
|
71.8
|
|
48.8
|
|
141.9
|
Other revenues
|
|
—
|
|
—
|
|
—
|
|
1.6
|
Total Marketing Technology
revenues
|
|
—
|
|
71.8
|
|
48.8
|
|
143.5
|
Other Operations
|
|
|
|
|
|
|
|
|
Net investment
income
|
|
11.6
|
|
7.8
|
|
22.3
|
|
23.8
|
Net realized and unrealized
investment gains (losses)
|
|
23.3
|
|
12.9
|
|
142.4
|
|
(32.9)
|
Realized gain and unrealized investment gain from
the MediaAlpha
transaction
|
|
—
|
|
—
|
|
182.2
|
|
—
|
Advertising and commission
revenues
|
|
1.3
|
|
1.0
|
|
2.6
|
|
1.9
|
Other revenues
|
|
.7
|
|
(.1)
|
|
1.0
|
|
.2
|
Total Other Operations
revenues
|
|
36.9
|
|
21.6
|
|
350.5
|
|
(7.0)
|
Total revenues
|
|
$
|
129.0
|
|
$
|
122.3
|
|
$
|
562.6
|
|
$
|
164.4
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
(millions)
(Unaudited)
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Expenses:
|
|
|
|
|
|
|
|
|
Financial
Guarantee (HG Global/BAM)
|
|
|
|
|
|
|
|
|
Insurance acquisition
expenses
|
|
$
|
1.4
|
|
$
|
1.3
|
|
$
|
2.7
|
|
$
|
2.7
|
Other underwriting
expenses
|
|
.1
|
|
.1
|
|
.2
|
|
.2
|
General and
administrative expenses
|
|
12.3
|
|
13.4
|
|
26.6
|
|
25.2
|
Total Financial
Guarantee expenses
|
|
13.8
|
|
14.8
|
|
29.5
|
|
28.1
|
Specialty
Insurance Distribution (NSM)
|
|
|
|
|
|
|
|
|
General and
administrative expenses
|
|
32.7
|
|
12.1
|
|
57.8
|
|
12.1
|
Change in fair value
of contingent consideration earnout liabilities
|
|
6.3
|
|
—
|
|
7.6
|
|
—
|
Broker commission
expenses
|
|
18.2
|
|
6.6
|
|
33.9
|
|
6.6
|
Amortization of other
intangible assets
|
|
4.1
|
|
—
|
|
9.1
|
|
—
|
Interest
expense
|
|
4.1
|
|
1.6
|
|
7.8
|
|
1.6
|
Total Specialty
Insurance Distribution expenses
|
|
65.4
|
|
20.3
|
|
116.2
|
|
20.3
|
Global Asset and
Wealth Management (Kudu)
|
|
|
|
|
|
|
|
|
General and
administrative expenses
|
|
2.2
|
|
—
|
|
2.2
|
|
—
|
Total Global Asset and
Wealth Management expenses
|
|
2.2
|
|
—
|
|
2.2
|
|
—
|
Marketing
Technology (MediaAlpha)
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
—
|
|
59.9
|
|
40.6
|
|
117.3
|
General and
administrative expenses
|
|
—
|
|
4.6
|
|
12.5
|
|
15.8
|
Amortization of other
intangible assets
|
|
—
|
|
2.5
|
|
1.6
|
|
5.4
|
Interest
expense
|
|
—
|
|
.3
|
|
.2
|
|
.7
|
Total Marketing
Technology expenses
|
|
—
|
|
67.3
|
|
54.9
|
|
139.2
|
Other
Operations
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
1.6
|
|
1.1
|
|
2.7
|
|
1.8
|
General and
administrative expenses
|
|
30.1
|
|
31.0
|
|
59.5
|
|
53.0
|
Amortization of other
intangible assets
|
|
.1
|
|
.1
|
|
.1
|
|
.1
|
Interest
expense
|
|
—
|
|
.1
|
|
—
|
|
.3
|
Total Other Operations
expenses
|
|
31.8
|
|
32.3
|
|
62.3
|
|
55.2
|
Total
expenses
|
|
113.2
|
|
134.7
|
|
265.1
|
|
242.8
|
Pre-tax income
(loss) from continuing operations
|
|
15.8
|
|
(12.4)
|
|
297.5
|
|
(78.4)
|
Income tax benefit
(expense)
|
|
.1
|
|
(2.5)
|
|
(10.1)
|
|
(3.2)
|
Net income (loss)
from continuing operations
|
|
15.9
|
|
(14.9)
|
|
287.4
|
|
(81.6)
|
Net gain from sale of
discontinued operations, net of tax
|
|
—
|
|
—
|
|
.7
|
|
.1
|
Net income
(loss)
|
|
15.9
|
|
(14.9)
|
|
288.1
|
|
(81.5)
|
Net loss attributable
to non-controlling interests
|
|
4.6
|
|
18.4
|
|
16.8
|
|
37.0
|
Net income (loss)
attributable to White Mountains's
common shareholders
|
|
$
|
20.5
|
|
$
|
3.5
|
|
$
|
304.9
|
|
$
|
(44.5)
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(millions)
(Unaudited)
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net income (loss)
attributable to White Mountains's
common shareholders
|
|
$
|
20.5
|
|
$
|
3.5
|
|
$
|
304.9
|
|
$
|
(44.5)
|
Other comprehensive
loss, net of tax
|
|
(3.1)
|
|
(.9)
|
|
(3.4)
|
|
(.9)
|
Comprehensive
income (loss)
|
|
17.4
|
|
2.6
|
|
301.5
|
|
(45.4)
|
Other comprehensive
income (loss) attributable to non-controlling interests
|
|
.2
|
|
—
|
|
.2
|
|
—
|
Comprehensive
income (loss) attributable to White Mountains's
common shareholders
|
|
$
|
17.6
|
|
$
|
2.6
|
|
$
|
301.7
|
|
$
|
(45.4)
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
EARNINGS PER
SHARE
(Unaudited)
|
|
|
|
|
|
Income (loss) per
share attributable to White Mountains's common
shareholders
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Basic earnings
(loss) per share
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
6.44
|
|
$
|
1.02
|
|
$
|
95.71
|
|
$
|
(12.44)
|
Discontinued
operations
|
|
—
|
|
—
|
|
.22
|
|
.03
|
Total consolidated
operations
|
|
$
|
6.44
|
|
$
|
1.02
|
|
$
|
95.93
|
|
$
|
(12.41)
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
6.44
|
|
$
|
1.02
|
|
$
|
95.71
|
|
$
|
(12.44)
|
Discontinued
operations
|
|
—
|
|
—
|
|
.22
|
|
.03
|
Total consolidated
operations
|
|
$
|
6.44
|
|
$
|
1.02
|
|
$
|
95.93
|
|
$
|
(12.41)
|
Dividends declared
per White Mountains's common share
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1.00
|
|
$
|
1.00
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
QTD SEGMENT
STATEMENTS OF PRE-TAX INCOME (LOSS)
(millions)
(Unaudited)
|
|
For the Three
Months Ended June 30, 2019
|
|
HG
Global/BAM
|
|
|
|
|
|
|
|
|
|
|
HG
Global
|
|
BAM
|
|
NSM
|
|
Kudu
|
|
Other
Operations
|
|
Total
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned insurance
premiums
|
|
$
|
3.4
|
|
$
|
.9
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
4.3
|
Net investment
income
|
|
1.9
|
|
3.5
|
|
—
|
|
4.0
|
|
11.6
|
|
21.0
|
Net investment income
(loss) - BAM surplus note interest
|
|
6.8
|
|
(6.8)
|
|
—
|
|
—
|
|
—
|
|
—
|
Net realized and
unrealized investment gains
|
|
4.0
|
|
7.5
|
|
—
|
|
.4
|
|
23.3
|
|
35.2
|
Advertising and
commission revenues
|
|
—
|
|
—
|
|
54.9
|
|
—
|
|
1.3
|
|
56.2
|
Other
revenues
|
|
—
|
|
.4
|
|
11.2
|
|
—
|
|
.7
|
|
12.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
16.1
|
|
5.5
|
|
66.1
|
|
4.4
|
|
36.9
|
|
129.0
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance acquisition
expenses
|
|
.9
|
|
.5
|
|
—
|
|
—
|
|
—
|
|
1.4
|
Other underwriting
expenses
|
|
—
|
|
.1
|
|
—
|
|
—
|
|
—
|
|
.1
|
Cost of
sales
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1.6
|
|
1.6
|
General and
administrative expenses
|
|
.4
|
|
11.9
|
|
32.7
|
|
2.2
|
|
30.1
|
|
77.3
|
Change in fair value
of contingent consideration
earnout liabilities
|
|
—
|
|
—
|
|
6.3
|
|
—
|
|
—
|
|
6.3
|
Broker commission
expenses
|
|
—
|
|
—
|
|
18.2
|
|
—
|
|
—
|
|
18.2
|
Amortization of other
intangible assets
|
|
—
|
|
—
|
|
4.1
|
|
—
|
|
.1
|
|
4.2
|
Interest
expense
|
|
—
|
|
—
|
|
4.1
|
|
—
|
|
—
|
|
4.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
expenses
|
|
1.3
|
|
12.5
|
|
65.4
|
|
2.2
|
|
31.8
|
|
113.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income
(loss)
|
|
$
|
14.8
|
|
$
|
(7.0)
|
|
$
|
.7
|
|
$
|
2.2
|
|
$
|
5.1
|
|
$
|
15.8
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended June 30, 2018
|
|
HG
Global/BAM
|
|
|
|
|
|
|
|
|
|
|
HG
Global
|
|
BAM
|
|
NSM
(1)
|
|
MediaAlpha
|
|
Other
Operations
|
|
Total
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned insurance
premiums
|
|
$
|
2.7
|
|
$
|
.7
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
3.4
|
Net investment
income
|
|
1.3
|
|
2.7
|
|
—
|
|
—
|
|
7.8
|
|
11.8
|
Net investment income
(loss) - BAM surplus note interest
|
|
5.8
|
|
(5.8)
|
|
—
|
|
—
|
|
—
|
|
—
|
Net realized and
unrealized investment (losses) gains
|
|
(1.2)
|
|
(1.2)
|
|
—
|
|
—
|
|
12.9
|
|
10.5
|
Advertising and
commission revenues
|
|
—
|
|
—
|
|
22.6
|
|
71.8
|
|
1.0
|
|
95.4
|
Other
revenues
|
|
—
|
|
.4
|
|
.9
|
|
—
|
|
(.1)
|
|
1.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
8.6
|
|
(3.2)
|
|
23.5
|
|
71.8
|
|
21.6
|
|
122.3
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance acquisition
expenses
|
|
.7
|
|
.6
|
|
—
|
|
—
|
|
—
|
|
1.3
|
Other underwriting
expenses
|
|
—
|
|
.1
|
|
—
|
|
—
|
|
—
|
|
.1
|
Cost of
sales
|
|
—
|
|
—
|
|
—
|
|
59.9
|
|
1.1
|
|
61.0
|
General and
administrative expenses
|
|
.2
|
|
13.2
|
|
12.1
|
|
4.6
|
|
31.0
|
|
61.1
|
Broker commission
expenses
|
|
—
|
|
—
|
|
6.6
|
|
—
|
|
—
|
|
6.6
|
Amortization of other
intangible assets
|
|
—
|
|
—
|
|
—
|
|
2.5
|
|
.1
|
|
2.6
|
Interest
expense
|
|
—
|
|
—
|
|
1.6
|
|
.3
|
|
.1
|
|
2.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
expenses
|
|
.9
|
|
13.9
|
|
20.3
|
|
67.3
|
|
32.3
|
|
134.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income
(loss)
|
|
$
|
7.7
|
|
$
|
(17.1)
|
|
$
|
3.2
|
|
$
|
4.5
|
|
$
|
(10.7)
|
|
$
|
(12.4)
|
|
(1)
NSM's results are from May 11, 2018, the date of acquisition,
to the end of the second quarter.
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
YTD SEGMENT
STATEMENTS OF PRE-TAX INCOME (LOSS)
(millions)
(Unaudited)
|
|
For the Six Months
Ended June 30, 2019
|
|
HG
Global/BAM
|
|
|
|
|
|
|
|
|
|
|
|
|
HG
Global
|
|
BAM
|
|
NSM
|
|
Kudu
|
|
MediaAlpha
(1)
|
|
Other
Operations
|
|
Total
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned insurance
premiums
|
|
$
|
6.8
|
|
$
|
1.7
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
8.5
|
Net investment
income
|
|
3.8
|
|
6.9
|
|
—
|
|
4.0
|
|
—
|
|
22.3
|
|
37.0
|
Net investment income
(loss) -
BAM surplus note interest
|
|
13.7
|
|
(13.7)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Net realized and
unrealized
investment gains
|
|
9.1
|
|
14.2
|
|
—
|
|
.4
|
|
—
|
|
142.4
|
|
166.1
|
Realized and
unrealized gains from
MediaAlpha transaction
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
182.2
|
|
182.2
|
Advertising and
commission revenues
|
|
—
|
|
—
|
|
98.2
|
|
—
|
|
48.8
|
|
2.6
|
|
149.6
|
Other
revenue
|
|
—
|
|
1.0
|
|
17.2
|
|
—
|
|
—
|
|
1.0
|
|
19.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
33.4
|
|
10.1
|
|
115.4
|
|
4.4
|
|
48.8
|
|
350.5
|
|
562.6
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance acquisition
expenses
|
|
1.7
|
|
1.0
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2.7
|
Other underwriting
expenses
|
|
—
|
|
.2
|
|
—
|
|
—
|
|
—
|
|
—
|
|
.2
|
Cost of
sales
|
|
—
|
|
—
|
|
—
|
|
—
|
|
40.6
|
|
2.7
|
|
43.3
|
General and
administrative expenses
|
|
.9
|
|
25.7
|
|
57.8
|
|
2.2
|
|
5.7
|
|
59.5
|
|
151.8
|
General and
administrative expenses -
MediaAlpha transaction related costs
|
|
—
|
|
—
|
|
—
|
|
—
|
|
6.8
|
|
—
|
|
6.8
|
Change in fair value
of contingent
consideration earnout liabilities
|
|
—
|
|
—
|
|
7.6
|
|
—
|
|
—
|
|
—
|
|
7.6
|
Broker commission
expenses
|
|
—
|
|
—
|
|
33.9
|
|
—
|
|
—
|
|
—
|
|
33.9
|
Amortization of other
intangible assets
|
|
—
|
|
—
|
|
9.1
|
|
—
|
|
1.6
|
|
.1
|
|
10.8
|
Interest
expense
|
|
—
|
|
—
|
|
7.8
|
|
—
|
|
.2
|
|
—
|
|
8.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
expenses
|
|
2.6
|
|
26.9
|
|
116.2
|
|
2.2
|
|
54.9
|
|
62.3
|
|
265.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income
(loss)
|
|
$
|
30.8
|
|
$
|
(16.8)
|
|
$
|
(.8)
|
|
$
|
2.2
|
|
$
|
(6.1)
|
|
$
|
288.2
|
|
$
|
297.5
|
|
(1)
MediaAlpha's results are from January 1, 2019 to February 26,
2019, the date of the MediaAlpha transaction.
|
For the Six Months
Ended June 30, 2018
|
|
HG
Global/BAM
|
|
|
|
|
|
|
|
|
|
|
HG
Global
|
|
BAM
|
|
NSM
(1)
|
|
MediaAlpha
|
|
Other
Operations
|
|
Total
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned insurance
premiums
|
|
$
|
5.0
|
|
$
|
1.4
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
6.4
|
Net investment
income
|
|
2.5
|
|
5.2
|
|
—
|
|
—
|
|
23.8
|
|
31.5
|
Net investment income
(loss) - BAM surplus note interest
|
|
11.5
|
|
(11.5)
|
|
—
|
|
—
|
|
—
|
|
—
|
Net realized and
unrealized investment losses
|
|
(4.8)
|
|
(5.5)
|
|
—
|
|
—
|
|
(32.9)
|
|
(43.2)
|
Advertising and
commission revenues
|
|
—
|
|
—
|
|
22.6
|
|
141.9
|
|
1.9
|
|
166.4
|
Other
revenue
|
|
—
|
|
.6
|
|
.9
|
|
1.6
|
|
.2
|
|
3.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
14.2
|
|
(9.8)
|
|
23.5
|
|
143.5
|
|
(7.0)
|
|
164.4
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance acquisition
expenses
|
|
1.2
|
|
1.5
|
|
—
|
|
—
|
|
—
|
|
2.7
|
Other underwriting
expenses
|
|
—
|
|
.2
|
|
—
|
|
—
|
|
—
|
|
.2
|
Cost of
sales
|
|
—
|
|
—
|
|
—
|
|
117.3
|
|
1.8
|
|
119.1
|
General and
administrative expenses
|
|
.6
|
|
24.6
|
|
12.1
|
|
15.8
|
|
53.0
|
|
106.1
|
Broker commission
expenses
|
|
—
|
|
—
|
|
6.6
|
|
—
|
|
—
|
|
6.6
|
Amortization of other
intangible assets
|
|
—
|
|
—
|
|
—
|
|
5.4
|
|
.1
|
|
5.5
|
Interest
expense
|
|
—
|
|
—
|
|
1.6
|
|
.7
|
|
.3
|
|
2.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
expenses
|
|
1.8
|
|
26.3
|
|
20.3
|
|
139.2
|
|
55.2
|
|
242.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income
(loss)
|
|
$
|
12.4
|
|
$
|
(36.1)
|
|
$
|
3.2
|
|
$
|
4.3
|
|
$
|
(62.2)
|
|
$
|
(78.4)
|
|
(1)
NSM's results are from May 11, 2018, the date of acquisition,
to the end of the second quarter.
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
SELECTED FINANCIAL
DATA
(millions)
(Unaudited)
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
BAM
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Gross par value of
primary market policies issued
|
|
$
|
2,624.2
|
|
$
|
2,774.7
|
|
$
|
4,010.0
|
|
$
|
3,924.2
|
Gross par value of
secondary market policies issued
|
|
293.2
|
|
311.5
|
|
832.4
|
|
460.1
|
Total gross par value
of market policies issued
|
|
$
|
2,917.4
|
|
$
|
3,086.2
|
|
$
|
4,842.4
|
|
$
|
4,384.3
|
|
|
|
|
|
|
|
|
|
Gross written
premiums
|
|
$
|
12.5
|
|
$
|
18.6
|
|
$
|
20.4
|
|
$
|
25.0
|
Member surplus
contributions ("MSC") collected
|
|
12.0
|
|
9.9
|
|
19.9
|
|
14.8
|
Total gross written
premiums and MSC collected
|
|
$
|
24.5
|
|
$
|
28.5
|
|
$
|
40.3
|
|
$
|
39.8
|
Present value of
future installment MSC collections
|
|
—
|
|
1.6
|
|
.2
|
|
2.8
|
Gross written premium
adjustments on existing installment policies
|
|
—
|
|
1.1
|
|
(.1)
|
|
1.1
|
Gross written
premiums and MSC from new business
|
|
$
|
24.5
|
|
$
|
31.2
|
|
$
|
40.4
|
|
$
|
43.7
|
Total
pricing
|
|
84
bps
|
|
101 bps
|
|
83
bps
|
|
100 bps
|
|
|
As of
June 30, 2019
|
|
As of
December 31, 2018
|
Policyholders'
surplus
|
|
$
|
410.6
|
|
$
|
413.7
|
Contingency
reserve
|
|
57.9
|
|
50.3
|
Qualified statutory
capital
|
|
468.5
|
|
464.0
|
Statutory net
unearned premiums
|
|
38.3
|
|
36.2
|
Present value of
future installment premiums and MSC
|
|
13.4
|
|
12.9
|
HG Re, Ltd collateral
trusts at statutory value
|
|
274.4
|
|
258.3
|
Fidus Re, Ltd
collateral trust at statutory value
|
|
100.0
|
|
100.0
|
Claims paying
resources
|
|
$
|
894.6
|
|
$
|
871.4
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
HG
Global
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net written
premiums
|
|
$
|
10.7
|
|
$
|
15.8
|
|
$
|
17.4
|
|
$
|
21.1
|
Earned
premiums
|
|
$
|
3.4
|
|
$
|
2.7
|
|
$
|
6.8
|
|
$
|
5.0
|
|
|
As of
June 30, 2019
|
|
As of
December 31, 2018
|
Unearned
premiums
|
|
$
|
151.9
|
|
$
|
141.3
|
Deferred acquisition
costs
|
|
$
|
39.1
|
|
$
|
35.7
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
SELECTED FINANCIAL
DATA (CONTINUED)
(millions)
(Unaudited)
|
|
NSM
|
|
Three Months
Ended
June 30, 2019
|
|
Six Months
Ended
June 30, 2019
|
|
Twelve Months
Ended
July 1, 2018 to
June 30, 2019
|
Commission
revenues
|
|
$
|
54.9
|
|
$
|
98.2
|
|
$
|
170.3
|
Broker commission
expenses
|
|
18.2
|
|
33.9
|
|
56.2
|
Gross
profit
|
|
36.7
|
|
64.3
|
|
114.1
|
Other
revenues
|
|
11.2
|
|
17.2
|
|
23.2
|
General and
administrative expenses
|
|
32.7
|
|
57.8
|
|
104.6
|
Change in fair value
of contingent consideration earnout liabilities
|
|
6.3
|
|
7.6
|
|
10.3
|
Amortization of other
intangible assets
|
|
4.1
|
|
9.1
|
|
17.4
|
Interest
expense
|
|
4.1
|
|
7.8
|
|
14.2
|
GAAP pre-tax
income (loss)
|
|
.7
|
|
(.8)
|
|
(9.2)
|
Income tax expense
(benefit)
|
|
.3
|
|
—
|
|
(1.1)
|
GAAP net income
(loss)
|
|
.4
|
|
(.8)
|
|
(8.1)
|
|
|
|
|
|
|
|
Add back:
|
|
|
|
|
|
|
Interest
expense
|
|
4.1
|
|
7.8
|
|
14.2
|
Income tax expense
(benefit)
|
|
.3
|
|
—
|
|
(1.1)
|
General and
administrative expenses – depreciation
|
|
.7
|
|
1.2
|
|
2.5
|
Amortization of other
intangible assets
|
|
4.1
|
|
9.1
|
|
17.4
|
EBITDA
|
|
9.6
|
|
17.3
|
|
24.9
|
|
|
|
|
|
|
|
Add back:
|
|
|
|
|
|
|
Change in fair value
of contingent consideration earnout liabilities
|
|
6.3
|
|
7.6
|
|
10.3
|
Acquisition-related
transaction expenses
|
|
.6
|
|
1.1
|
|
1.6
|
Investments made in
the development of new business lines
|
|
(.1)
|
|
.1
|
|
1.8
|
Restructuring
expenses
|
|
—
|
|
.1
|
|
.2
|
Adjusted
EBITDA
|
|
$
|
16.4
|
|
$
|
26.2
|
|
$
|
38.8
|
|
|
|
|
|
|
|
Add:
|
|
|
|
|
|
|
KBK's adjusted EBITDA
from July 1, 2018 to December 3, 2018
|
|
|
|
|
|
4.0
|
Embrace's adjusted
EBITDA from July 1, 2018 to April 1, 2019
|
|
|
|
|
|
6.4
|
Pro forma adjusted
EBITDA for the twelve months ended June 30, 2019
|
|
|
|
$
|
49.2
|
Regulation G
This earnings release includes seven non-GAAP financial measures
that have been reconciled to 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 expected
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, was estimated to be $140
million, $143 million,
$146 million and $155 million less than the nominal GAAP carrying
values as of June 30, 2019,
March 31, 2019, December 31, 2018, and June 30, 2018, respectively. The value of
HG Global's unearned premium reserve, net of deferred acquisition
costs, was $113 million, $108 million, $106
million and $93 million as of
June 30, 2019, March 31, 2019, December
31, 2018, and June 30, 2018,
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 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
6.
- The growth in adjusted book value per share included on page 1
reflects the estimated gain from the MediaAlpha transaction as if
it had closed on December 31,
2018. A reconciliation from GAAP to the reported percentage
is as
follows:
|
|
As of
June 30, 2019
|
|
As of
December 31, 2018
|
|
Growth %
(1)
|
GAAP book value per
share
|
|
$
|
987.12
|
|
$
|
896.00
|
|
10.3
|
%
|
Estimated gain from
MediaAlpha transaction
as of December 31, 2018
|
|
—
|
|
55.07
|
|
|
GAAP book value per
share including the estimated gain
from the MediaAlpha transaction as of
December 31, 2018
|
|
987.12
|
|
951.07
|
|
3.9
|
%
|
Adjustments to book
value per share (see reconciliation
on page 6)
|
|
(0.73)
|
|
(8.15)
|
|
|
Adjusted book value
per share including the estimated
gain from the MediaAlpha transaction as of
December 31, 2018
|
|
$
|
986.39
|
|
$
|
942.92
|
|
4.7
|
%
|
|
|
|
|
|
|
|
|
|
|
(1)
Growth includes $1.00 per share dividend paid during the
first quarter of 2019.
|
|
|
|
|
|
|
|
|
|
- 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 12.
- 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 benefit (expense), depreciation and
amortization 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 earnout liabilities, (ii)
acquisition-related transaction expenses, (iii) investments made in
the development of new business lines and (iv) restructuring
expenses. A description of each follows:
-
- Change in fair value of contingent consideration earnout
liabilities - Earnout liabilities are 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, earnout liabilities are not
capitalized as part of the purchase price. Earnout
liabilities are recorded at fair value, with the periodic change in
the fair value of these liabilities recorded as income or an
expense.
- Acquisition-related transaction expenses -
Represents costs directly related to transactions to acquire
businesses, 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. For the periods presented, this adjustment
relates primarily to NSM's investment expenditures, net of revenues
generated, in the organic development of (i) its pet insurance line
and (ii) its MGA in the United Kingdom. NSM has recently
decided to cease investment in the organic development of its pet
insurance line and, instead, to acquire Embrace Pet Insurance,
which closed in April 2019.
- 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.
Pro forma adjusted EBITDA is a
non-GAAP financial measure that starts with adjusted EBITDA and
also includes the earnings of acquired businesses for the period of
time over the previous twelve months that the businesses were not
owned by White Mountains.
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 to
demonstrate the current earnings profile of NSM's business for a
full twelve month period. See page 13 for the reconciliation
of NSM's GAAP net income (loss) to EBITDA, adjusted EBITDA and pro
forma adjusted EBITDA.
- Total consolidated portfolio return excluding the MediaAlpha
transaction is a non-GAAP financial measure that removes the
$115 million pre-tax unrealized
investment gain resulting from the MediaAlpha transaction
recognized in the first quarter of 2019. White Mountains
believes this measure to be useful to management and investors by
making the return in the current period comparable to the prior
periods. A reconciliation from GAAP to the reported
percentage is as
follows:
|
|
For the six months
ended June 30, 2019
|
|
|
GAAP
return
|
|
Remove
MediaAlpha
|
|
Return -
excluding
MediaAlpha
|
|
|
|
|
|
|
|
Total consolidated
portfolio return
|
|
12.4
|
%
|
|
(4.5)
|
%
|
|
7.9
|
%
|
|
|
|
|
|
|
|
|
|
|
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;
- 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 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, 2018;
- business opportunities (or lack thereof) that may be presented
to it and pursued;
- actions taken by ratings agencies from time to time, such as
financial strength or credit ratings downgrades or placing ratings
on negative watch;
- the continued availability of capital and financing;
- general economic, market or business conditions;
- 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;
- an economic downturn or other economic conditions adversely
affecting its financial position; 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: Todd Pozefsky
(203) 458-5807
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content:http://www.prnewswire.com/news-releases/white-mountains-reports-second-quarter-results-300897025.html
SOURCE White Mountains Insurance Group, Ltd.