HAMILTON, Bermuda, May 6,
2019 /PRNewswire/ -- White Mountains Insurance Group, Ltd.
(NYSE: WTM) reported book value per share of $981 and adjusted book value per share of
$979 as of March 31, 2019. Book value per share and
adjusted book value per share were each up 10% for the quarter,
including dividends.
On February 26, 2019, MediaAlpha
completed the sale of a significant minority stake to Insignia
Capital Group in connection with a recapitalization and cash
distribution to existing equityholders. As of December 31, 2018, including the then estimated
net gain of $55 per share from the
MediaAlpha transaction, book value per share would have been
approximately $951 and adjusted book
value per share would have been approximately $943.
Manning Rountree, CEO, commented, "We are off to a good start in
2019. In the first quarter, underlying growth in ABVPS,
excluding the MediaAlpha transaction, was 4%(1), driven
by strong investment results. We closed the MediaAlpha
transaction in February and are excited about the next stage of
value creation at the company. BAM's par insured volume was
up year over year, in both the primary and secondary markets,
although primary market pricing dipped. NSM grew organically
during the quarter and, in April, closed its acquisition of Embrace
Pet Insurance. Also in April, we closed our previously
announced acquisition of Oaktree Capital Management's interests in
Kudu, bringing our total capital commitment to Kudu to $250 million. We ended the quarter with
$1.2 billion of undeployed
capital."
Comprehensive income attributable to common shareholders was
$284 million in the first quarter of
2019, compared to comprehensive loss attributable to common
shareholders of $48 million in the
first quarter of 2018.
HG Global/BAM
BAM's gross written premiums and member surplus contributions
collected were $16 million in the
first quarter of 2019, compared to $11
million in the first quarter of 2018. BAM insured
municipal bonds with par value of $1.9
billion in the first quarter of 2019, compared to
$1.3 billion in the first quarter of
2018, which was unusually low, as many issuers pulled forward
planned first quarter 2018 issuance volume into late 2017 given the
uncertainty around tax reform. Total pricing was 83 basis
points in the first quarter of 2019, compared to 96 basis points in
the first quarter of 2018. BAM's total claims paying
resources were $878 million at
March 31, 2019, compared to $871
million at December 31, 2018
and $709 million at March 31,
2018.
Seán McCarthy, CEO of BAM, said, "Although fundamental market
conditions were challenging, given the lower interest rates and
tighter credit spreads, BAM's par insured volume in the primary
market was up 21% year over year, in line with growth in the
municipal new-issue market. There was strong investor demand
for BAM's guaranty in the secondary market, where total activity
more than tripled year over year. Pricing dipped in the
quarter, especially in the primary market, but risk adjusted
pricing remained healthy. The BAM GreenStar assessment
program is gaining traction. In the quarter, we closed 12
municipal transactions identified as "green bonds," totaling
$138 million of par, more than any
other third-party verifier. We expect that volumes will
continue to grow as issuers highlight for investors those bonds
that finance projects with environmental benefits."
(1) See "Regulation G" on page 12.
HG Global reported pre-tax income of $16
million in the first quarter of 2019, compared to pre-tax
income of $5 million in the first
quarter of 2018. White Mountains reported pre-tax loss
related to BAM of $10 million in the
first quarter of 2019, compared to pre-tax loss of $19 million in the first quarter 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
NSM reported pre-tax loss of $2
million, adjusted EBITDA of $10
million and commission revenues of $43 million in the first quarter of 2019.
NSM's pre-tax loss in the first quarter of 2019 included
$5 million of amortization of other
intangible assets, $4 million of
interest expense and $1 million of
general and administrative expenses related to the change in the
fair value of NSM's contingent consideration earnout
liabilities.
Geof McKernan, CEO of NSM, said,
"We are pleased with NSM's first quarter results. We achieved
quarter over quarter organic growth on both the top line and bottom
line, led by the specialty transportation businesses.
Trailing twelve months pro forma commission and other revenues grew
to $194 million while pro forma
adjusted EBITDA topped $40
million. On April 1, we
closed our acquisition of Embrace Pet Insurance. We remain
acquisitive, with a strong appetite for profitable specialty
insurance businesses, and we continue to invest in technology and
talent to drive growth."
MediaAlpha
On February 26, 2019, MediaAlpha
completed the sale of a significant minority stake to Insignia
Capital Group in connection with a recapitalization and cash
distribution to existing equityholders. The transaction
valued MediaAlpha at approximately $350
million. White Mountains retained a 48% basic
ownership interest in MediaAlpha (42% on a fully diluted, fully
converted basis). White Mountains received net cash proceeds
of $88 million and recognized
$67 million of realized gains from
the transaction. As a result of the transaction, White
Mountains no longer consolidates MediaAlpha in its financial
statements and marked its retained interest in MediaAlpha to the
transaction closing date fair value, recognizing an additional
$115 million of unrealized investment
gains.
Other Operations
White Mountains's Other Operations segment reported pre-tax
income of $283 million in the first
quarter of 2019, compared to pre-tax loss of $52 million in the first quarter of 2018, driven
primarily by $182 million of realized
and unrealized gains from the MediaAlpha transaction and higher
investment returns. Excluding the MediaAlpha transaction, net
realized and unrealized investment gains were $119 million in the first quarter of 2019,
compared to net realized and unrealized investment losses of
$46 million in the first quarter of
2018.
Investments
The total return on invested assets was 10.1% for the first
quarter of 2019. These returns included $115
million in unrealized investment gains from the MediaAlpha
transaction. Excluding the MediaAlpha transaction, the total
return on invested assets was 5.7% for the first quarter of 2019
compared to a return of -1.0% for the first quarter of 2018.
Mark Plourde, Managing Director
of White Mountains Advisors, said, "Excluding the MediaAlpha
transaction, the total portfolio was up 5.7%; a strong result,
driven by the snapback in equity markets. Our portfolio of
common stocks and ETFs was up 13.0%, just behind the S&P 500
return of 13.6%. Other long-term investments were relatively
flat. Fixed income was up 2.3%, in-line with the BBIA Index
return."
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,
2019
|
|
December 31,
2018
|
|
March 31,
2018
|
Assets
|
|
|
|
|
|
|
Financial Guarantee (HG Global/BAM)
|
|
|
|
|
|
|
Fixed maturity
investments
|
|
$
|
737.6
|
|
|
$
|
701.4
|
|
|
$
|
622.1
|
|
Short-term
investments
|
|
31.8
|
|
|
66.9
|
|
|
88.0
|
|
Total
investments
|
|
769.4
|
|
|
768.3
|
|
|
710.1
|
|
Cash
|
|
10.4
|
|
|
12.5
|
|
|
9.4
|
|
Insurance premiums
receivable
|
|
6.5
|
|
|
6.4
|
|
|
5.2
|
|
Deferred acquisition
costs
|
|
19.6
|
|
|
19.0
|
|
|
15.9
|
|
Accrued investment
income
|
|
5.4
|
|
|
4.9
|
|
|
4.4
|
|
Accounts receivable on
unsettled investment sales
|
|
6.1
|
|
|
—
|
|
|
—
|
|
Other assets
|
|
17.1
|
|
|
5.1
|
|
|
5.1
|
|
Total Financial
Guarantee assets
|
|
834.5
|
|
|
816.2
|
|
|
750.1
|
|
|
|
|
|
|
|
|
Specialty
Insurance Distribution (NSM)
|
|
|
|
|
|
|
Short-term
investments
|
|
—
|
|
|
1.7
|
|
|
—
|
|
Cash (restricted $60.8 and
$50.0)
|
|
84.5
|
|
|
66.2
|
|
|
—
|
|
Premium
and commission receivable
|
|
51.9
|
|
|
44.0
|
|
|
—
|
|
Goodwill and other
intangible assets
|
|
488.7
|
|
|
486.2
|
|
|
—
|
|
Other assets
|
|
36.0
|
|
|
28.9
|
|
|
—
|
|
Total Specialty
Insurance Distribution assets
|
|
661.1
|
|
|
627.0
|
|
|
—
|
|
|
|
|
|
|
|
|
Marketing Technology (MediaAlpha)
|
|
|
|
|
|
|
Cash
|
|
—
|
|
|
5.7
|
|
|
15.9
|
|
Goodwill and other
intangible assets
|
|
—
|
|
|
43.4
|
|
|
50.8
|
|
Accounts receivable from
publishers and advertisers
|
|
—
|
|
|
37.0
|
|
|
35.4
|
|
Other assets
|
|
—
|
|
|
2.3
|
|
|
1.6
|
|
Total Marketing
Technology assets
|
|
—
|
|
|
88.4
|
|
|
103.7
|
|
|
|
|
|
|
|
|
Other Operations
|
|
|
|
|
|
|
Fixed maturity
investments
|
|
394.4
|
|
|
376.1
|
|
|
711.7
|
|
Short-term
investments
|
|
238.0
|
|
|
145.6
|
|
|
675.0
|
|
Common equity
securities
|
|
905.0
|
|
|
925.6
|
|
|
945.6
|
|
Other long-term
investments
|
|
497.6
|
|
|
325.6
|
|
|
253.1
|
|
Total
investments
|
|
2,035.0
|
|
|
1,772.9
|
|
|
2,585.4
|
|
Cash
|
|
37.3
|
|
|
25.9
|
|
|
94.9
|
|
Accrued investment
income
|
|
5.9
|
|
|
5.5
|
|
|
10.7
|
|
Accounts receivable on
unsettled investment sales
|
|
2.1
|
|
|
—
|
|
|
14.0
|
|
Goodwill and other
intangible assets
|
|
21.5
|
|
|
7.9
|
|
|
8.4
|
|
Other assets
|
|
29.0
|
|
|
15.5
|
|
|
16.5
|
|
Assets held for
sale
|
|
3.3
|
|
|
3.3
|
|
|
3.3
|
|
Total Other Operations
assets
|
|
2,134.1
|
|
|
1,831.0
|
|
|
2,733.2
|
|
Total
assets
|
|
$
|
3,629.7
|
|
|
$
|
3,362.6
|
|
|
$
|
3,587.0
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS (CONTINUED)
|
(millions)
|
(Unaudited)
|
|
|
|
March 31,
2019
|
|
December 31,
2018
|
|
March 31,
2018
|
Liabilities
|
|
|
|
|
|
|
Financial Guarantee (HG Global/BAM)
|
|
|
|
|
|
|
Unearned insurance
premiums
|
|
$
|
179.6
|
|
|
$
|
176.0
|
|
|
$
|
140.2
|
|
Accrued incentive
compensation
|
|
10.1
|
|
|
20.4
|
|
|
8.4
|
|
Accounts payable on
unsettled investment purchases
|
|
1.6
|
|
|
2.2
|
|
|
18.8
|
|
Other liabilities
|
|
28.1
|
|
|
13.9
|
|
|
12.2
|
|
Total Financial
Guarantee liabilities
|
|
219.4
|
|
|
212.5
|
|
|
179.6
|
|
|
|
|
|
|
|
|
Specialty
Insurance Distribution (NSM)
|
|
|
|
|
|
|
Debt
|
|
184.5
|
|
|
178.5
|
|
|
—
|
|
Premiums
payable
|
|
93.4
|
|
|
77.2
|
|
|
—
|
|
Contingent
consideration earnout liabilities
|
|
27.5
|
|
|
20.2
|
|
|
—
|
|
Other liabilities
|
|
46.1
|
|
|
38.9
|
|
|
—
|
|
Total Specialty
Insurance Distribution liabilities
|
|
351.5
|
|
|
314.8
|
|
|
—
|
|
|
|
|
|
|
|
|
Marketing Technology (MediaAlpha)
|
|
|
|
|
|
|
Debt
|
|
—
|
|
|
14.2
|
|
|
21.5
|
|
Amounts due to publishers
and advertisers
|
|
—
|
|
|
27.0
|
|
|
37.4
|
|
Accrued incentive
compensation
|
|
—
|
|
|
—
|
|
|
.9
|
|
Other liabilities
|
|
—
|
|
|
5.7
|
|
|
.9
|
|
Total Marketing
Technology liabilities
|
|
—
|
|
|
46.9
|
|
|
60.7
|
|
|
|
|
|
|
|
|
Other Operations
|
|
|
|
|
|
|
Debt
|
|
10.9
|
|
|
—
|
|
|
—
|
|
Accrued incentive
compensation
|
|
26.1
|
|
|
38.9
|
|
|
23.7
|
|
Accounts payable on
unsettled investment purchases
|
|
4.0
|
|
|
5.0
|
|
|
17.7
|
|
Other liabilities
|
|
39.5
|
|
|
26.3
|
|
|
9.5
|
|
Total Other Operations
liabilities
|
|
80.5
|
|
|
70.2
|
|
|
50.9
|
|
Total
liabilities
|
|
651.4
|
|
|
644.4
|
|
|
291.2
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
White Mountains's
common shareholder's equity
|
|
|
|
|
|
|
White Mountains's common
shares and paid-in surplus
|
|
585.8
|
|
|
584.0
|
|
|
675.3
|
|
Retained earnings
|
|
2,542.3
|
|
|
2,264.9
|
|
|
2,765.0
|
|
Accumulated other comprehensive loss, after tax:
|
|
|
|
|
|
|
Net
unrealized foreign currency translation losses and interest rate
swap
|
|
(6.1)
|
|
|
(5.8)
|
|
|
(1.3)
|
|
Total White
Mountains's common shareholders' equity
|
|
3,122.0
|
|
|
2,843.1
|
|
|
3,439.0
|
|
Non-controlling
interests
|
|
(143.7)
|
|
|
(124.9)
|
|
|
(143.2)
|
|
Total
equity
|
|
2,978.3
|
|
|
2,718.2
|
|
|
3,295.8
|
|
Total liabilities
and equity
|
|
$
|
3,629.7
|
|
|
$
|
3,362.6
|
|
|
$
|
3,587.0
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
|
BOOK VALUE AND
ADJUSTED BOOK VALUE PER SHARE
|
(Unaudited)
|
|
|
|
March 31,
2019
|
|
December 31,
2018
|
|
March 31,
2018
|
Book value per
share numerators (in millions):
|
|
|
|
|
|
|
White Mountains's
common shareholders' equity - GAAP book value per share
numerator
|
|
$
|
3,122.0
|
|
|
$
|
2,843.1
|
|
|
$
|
3,439.0
|
|
Time value of money
discount on expected future payments on the BAM Surplus Notes
(1)
|
|
(138.6)
|
|
|
(141.2)
|
|
|
(154.1)
|
|
HG Global's unearned
premium reserve (1)
|
|
140.2
|
|
|
136.9
|
|
|
106.8
|
|
HG Global's net
deferred acquisition costs (1)
|
|
(35.7)
|
|
|
(34.6)
|
|
|
(25.2)
|
|
Adjusted book value
per share numerator
|
|
$
|
3,087.9
|
|
|
$
|
2,804.2
|
|
|
$
|
3,366.5
|
|
Book value per
share denominators (in thousands of shares):
|
|
|
|
|
|
|
Common shares
outstanding - GAAP book value per share denominator
|
|
3,181.2
|
|
|
3,173.1
|
|
|
3,753.4
|
|
Unearned restricted
common shares
|
|
(25.5)
|
|
|
(14.6)
|
|
|
(26.2)
|
|
Adjusted book value
per share denominator
|
|
3,155.7
|
|
|
3,158.5
|
|
|
3,727.2
|
|
GAAP book value
per share
|
|
$
|
981.39
|
|
|
$
|
896.00
|
|
|
$
|
916.24
|
|
Adjusted book
value per share
|
|
$
|
978.51
|
|
|
$
|
887.85
|
|
|
$
|
903.22
|
|
|
|
|
|
|
|
|
(1) Amount
reflects White Mountains's preferred share ownership in HG Global
of 96.9%.
|
|
|
March 31,
2019
|
|
December 31,
2018
|
|
March
31,
2018
|
|
|
|
|
|
|
|
Quarter-to-date
change in GAAP book value per share, including
dividends:
|
|
9.6
|
%
|
|
(4.5)
|
%
|
|
(1.5)
|
%
|
Quarter-to-date
change in adjusted book value per share, including
dividends:
|
|
10.3
|
%
|
|
(4.1)
|
%
|
|
(1.2)
|
%
|
Year-to-date
change in GAAP book value per share, including
dividends:
|
|
9.6
|
%
|
|
(3.7)
|
%
|
|
(1.5)
|
%
|
Year-to-date
change in adjusted book value per share, including
dividends:
|
|
10.3
|
%
|
|
(2.8)
|
%
|
|
(1.2)
|
%
|
Year-to-date
dividends per share
|
|
$
|
1.00
|
|
|
$
|
1.00
|
|
|
$
|
1.00
|
|
|
|
|
|
|
|
|
|
|
March 31,
2019
|
|
December 31,
2018
|
|
March
31,
2018
|
Summary of
goodwill and other intangible assets (in millions):
|
|
|
|
|
|
|
Goodwill:
|
|
|
|
|
|
|
NSM
|
|
$
|
328.8
|
|
|
$
|
354.3
|
|
(1)
|
$
|
—
|
|
MediaAlpha
|
|
—
|
|
|
18.3
|
|
|
18.3
|
|
Other
Operations
|
|
20.9
|
|
|
7.3
|
|
|
7.6
|
|
Total
goodwill
|
|
349.7
|
|
|
379.9
|
|
|
25.9
|
|
|
|
|
|
|
|
|
Other intangible
assets:
|
|
|
|
|
|
|
NSM
|
|
159.9
|
|
|
131.9
|
|
|
—
|
|
MediaAlpha
|
|
—
|
|
|
25.1
|
|
|
32.5
|
|
Other
Operations
|
|
.6
|
|
|
.6
|
|
|
.8
|
|
Total other
intangible assets
|
|
160.5
|
|
|
157.6
|
|
|
33.3
|
|
|
|
|
|
|
|
|
Total goodwill and
other intangible assets
|
|
510.2
|
|
|
537.5
|
|
|
59.2
|
|
|
|
|
|
|
|
|
Goodwill and other
intangible assets attributed to non-controlling
interests
|
|
(24.1)
|
|
|
(40.6)
|
|
|
(21.1)
|
|
|
|
|
|
|
|
|
Goodwill and other
intangible assets included in White Mountains's
common shareholders' equity
|
|
$
|
486.1
|
|
|
$
|
496.9
|
|
|
$
|
38.1
|
|
|
(1)
The relative fair values of goodwill and of other intangible assets
recognized in connection with the acquisition of KBK had not yet
been determined at December 31, 2018.
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(millions)
|
(Unaudited)
|
|
|
|
Three Months Ended
March 31,
|
|
|
2019
|
|
2018
|
Revenues:
|
|
|
|
|
Financial Guarantee (HG Global/BAM)
|
|
|
|
|
Earned insurance
premiums
|
|
$
|
4.2
|
|
|
$
|
3.0
|
|
Net investment
income
|
|
5.3
|
|
|
3.7
|
|
Net realized and unrealized
investment gains (losses)
|
|
11.8
|
|
|
(7.9)
|
|
Other revenues
|
|
.6
|
|
|
.2
|
|
Total Financial
Guarantee revenues
|
|
21.9
|
|
|
(1.0)
|
|
Specialty
Insurance Distribution (NSM)
|
|
|
|
|
Commission
revenues
|
|
43.3
|
|
|
—
|
|
Other
revenues
|
|
6.0
|
|
|
—
|
|
Total Specialty
Insurance Distribution revenues
|
|
49.3
|
|
|
—
|
|
Marketing Technology (MediaAlpha)
|
|
|
|
|
Advertising and commission
revenues
|
|
48.8
|
|
|
70.1
|
|
Other revenues
|
|
—
|
|
|
1.6
|
|
Total Marketing
Technology revenues
|
|
48.8
|
|
(1)
|
71.7
|
|
Other Operations
|
|
|
|
|
Net investment
income
|
|
10.7
|
|
|
16.0
|
|
Net realized and unrealized
investment gains (losses)
|
|
119.1
|
|
|
(45.8)
|
|
Realized and
unrealized gains from MediaAlpha transaction
|
|
182.2
|
|
|
—
|
|
Advertising and commission
revenues
|
|
1.3
|
|
|
.9
|
|
Other revenues
|
|
.3
|
|
|
.3
|
|
Total Other Operations
revenues
|
|
313.6
|
|
|
(28.6)
|
|
Total
revenues
|
|
433.6
|
|
|
42.1
|
|
Expenses:
|
|
|
|
|
Financial Guarantee (HG Global/BAM)
|
|
|
|
|
Insurance acquisition
expenses
|
|
1.3
|
|
|
1.4
|
|
General and administrative
expenses
|
|
14.4
|
|
|
11.9
|
|
Total Financial
Guarantee expenses
|
|
15.7
|
|
|
13.3
|
|
Specialty
Insurance Distribution (NSM)
|
|
|
|
|
General and administrative
expenses
|
|
25.1
|
|
|
—
|
|
Broker commission
expenses
|
|
15.7
|
|
|
—
|
|
Change in fair value of
contingent consideration earnout liabilities
|
|
1.3
|
|
|
—
|
|
Amortization of other
intangible assets
|
|
5.0
|
|
|
—
|
|
Interest expense
|
|
3.7
|
|
|
—
|
|
Total Specialty
Insurance Distribution expenses
|
|
50.8
|
|
|
—
|
|
Marketing Technology (MediaAlpha)
|
|
|
|
|
Cost of sales
|
|
40.6
|
|
|
57.4
|
|
General and administrative
expenses
|
|
12.5
|
|
|
11.2
|
|
Amortization of other
intangible assets
|
|
1.6
|
|
|
2.9
|
|
Interest expense
|
|
.2
|
|
|
.4
|
|
Total Marketing
Technology expenses
|
|
54.9
|
|
(1)
|
71.9
|
|
Other Operations
|
|
|
|
|
Cost of sales
|
|
1.1
|
|
|
.7
|
|
General and administrative
expenses
|
|
29.4
|
|
|
22.0
|
|
Interest expense
|
|
—
|
|
|
.2
|
|
Total Other Operations
expenses
|
|
30.5
|
|
|
22.9
|
|
Total
expenses
|
|
151.9
|
|
|
108.1
|
|
Pre-tax income
(loss) from continuing operations
|
|
281.7
|
|
|
(66.0)
|
|
Income tax
expense
|
|
(10.2)
|
|
|
(.7)
|
|
Net income (loss)
from continuing operations
|
|
271.5
|
|
|
(66.7)
|
|
Net gain from sale of
discontinued operations, net of tax
|
|
.7
|
|
|
.1
|
|
Net income
(loss)
|
|
272.2
|
|
|
(66.6)
|
|
Net loss attributable
to non-controlling interests
|
|
12.2
|
|
|
18.6
|
|
Net income (loss)
attributable to White Mountains's common
shareholders
|
|
$
|
284.4
|
|
|
$
|
(48.0)
|
|
|
(1)
MediaAlpha's results are from January 1, 2019 to February 26,
2019, the date of the MediaAlpha transaction.
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
|
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
(millions)
|
(Unaudited)
|
|
|
|
Three Months Ended
March 31,
|
|
|
2019
|
|
2018
|
Net income (loss)
attributable to White Mountains's common
shareholders
|
|
$
|
284.4
|
|
|
$
|
(48.0)
|
|
Other comprehensive
loss, net of tax
|
|
(.3)
|
|
|
—
|
|
Comprehensive
income (loss)
|
|
284.1
|
|
|
(48.0)
|
|
Other comprehensive
income (loss) attributable to non-controlling interests
|
|
—
|
|
|
—
|
|
Comprehensive
income (loss) attributable to White Mountains's
common shareholders
|
|
$
|
284.1
|
|
|
$
|
(48.0)
|
|
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,
|
|
|
2019
|
|
2018
|
Basic earnings
(loss) per share
|
|
|
|
|
Continuing
operations
|
|
$
|
89.42
|
|
|
$
|
(12.85)
|
|
Discontinued
operations
|
|
.22
|
|
|
.03
|
|
Total consolidated
operations
|
|
$
|
89.64
|
|
|
$
|
(12.82)
|
|
|
|
|
|
|
Diluted earnings
(loss) per share
|
|
|
|
|
Continuing
operations
|
|
$
|
89.42
|
|
|
$
|
(12.85)
|
|
Discontinued
operations
|
|
.22
|
|
|
.03
|
|
Total consolidated
operations
|
|
$
|
89.64
|
|
|
$
|
(12.82)
|
|
Dividends declared
per White Mountains's common share
|
|
$
|
1.00
|
|
|
$
|
1.00
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
|
YTD SEGMENT
STATEMENTS OF PRE-TAX INCOME (LOSS)
|
(millions)
|
(Unaudited)
|
|
For the Three
Months Ended March 31, 2019
|
|
HG
Global/BAM
|
|
|
|
|
|
|
|
|
|
|
HG
Global
|
|
BAM
|
|
NSM
|
|
MediaAlpha
(1)
|
|
Other
Operations
|
|
Total
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned insurance
premiums
|
|
$
|
3.4
|
|
|
$
|
.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4.2
|
|
Net investment
income
|
|
1.9
|
|
|
3.4
|
|
|
—
|
|
|
—
|
|
|
10.7
|
|
|
16.0
|
|
Net investment income
(loss) - BAM surplus note interest
|
|
6.9
|
|
|
(6.9)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net realized and
unrealized investment gains
|
|
5.1
|
|
|
6.7
|
|
|
—
|
|
|
—
|
|
|
119.1
|
|
|
130.9
|
|
Realized and
unrealized gains from MediaAlpha
transaction
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
182.2
|
|
|
182.2
|
|
Advertising and
commission revenues
|
|
—
|
|
|
—
|
|
|
43.3
|
|
|
48.8
|
|
|
1.3
|
|
|
93.4
|
|
Other
revenue
|
|
—
|
|
|
.6
|
|
|
6.0
|
|
|
—
|
|
|
.3
|
|
|
6.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
17.3
|
|
|
4.6
|
|
|
49.3
|
|
|
48.8
|
|
|
313.6
|
|
|
433.6
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance acquisition
expenses
|
|
.8
|
|
|
.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.3
|
|
Cost of
sales
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40.6
|
|
|
1.1
|
|
|
41.7
|
|
General and
administrative expenses
|
|
.5
|
|
|
13.9
|
|
|
25.1
|
|
|
5.7
|
|
|
29.4
|
|
|
74.6
|
|
General and
administrative expenses -
MediaAlpha transaction related costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.8
|
|
|
—
|
|
|
6.8
|
|
Change in fair value
of contingent consideration
earnout
liabilities
|
|
—
|
|
|
—
|
|
|
1.3
|
|
|
—
|
|
|
—
|
|
|
1.3
|
|
Broker commission
expenses
|
|
—
|
|
|
—
|
|
|
15.7
|
|
|
—
|
|
|
—
|
|
|
15.7
|
|
Amortization of other
intangible assets
|
|
—
|
|
|
—
|
|
|
5.0
|
|
|
1.6
|
|
|
—
|
|
|
6.6
|
|
Interest
expense
|
|
—
|
|
|
—
|
|
|
3.7
|
|
|
.2
|
|
|
—
|
|
|
3.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
expenses
|
|
1.3
|
|
|
14.4
|
|
|
50.8
|
|
|
54.9
|
|
|
30.5
|
|
|
151.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income
(loss)
|
|
$
|
16.0
|
|
|
$
|
(9.8)
|
|
|
$
|
(1.5)
|
|
|
$
|
(6.1)
|
|
|
$
|
283.1
|
|
|
$
|
281.7
|
|
|
(1)
MediaAlpha's results are from January 1, 2019 to February 26,
2019, the date of the MediaAlpha transaction.
|
|
For the Three
Months Ended March 31, 2018
|
|
HG
Global/BAM
|
|
|
|
|
|
|
|
|
HG
Global
|
|
BAM
|
|
MediaAlpha
|
|
Other
Operations
|
|
Total
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Earned insurance
premiums
|
|
$
|
2.3
|
|
|
$
|
.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3.0
|
|
Net investment
income
|
|
1.2
|
|
|
2.5
|
|
|
—
|
|
|
16.0
|
|
|
19.7
|
|
Net investment income
(loss) - BAM surplus note interest
|
|
5.7
|
|
|
(5.7)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net realized and
unrealized investment losses
|
|
(3.6)
|
|
|
(4.3)
|
|
|
—
|
|
|
(45.8)
|
|
|
(53.7)
|
|
Advertising and
commission revenues
|
|
—
|
|
|
—
|
|
|
70.1
|
|
|
.9
|
|
|
71.0
|
|
Other
revenue
|
|
—
|
|
|
.2
|
|
|
1.6
|
|
|
.3
|
|
|
2.1
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
5.6
|
|
|
(6.6)
|
|
|
71.7
|
|
|
(28.6)
|
|
|
42.1
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
Insurance acquisition
expenses
|
|
.5
|
|
|
.9
|
|
|
—
|
|
|
—
|
|
|
1.4
|
|
Cost of
sales
|
|
—
|
|
|
—
|
|
|
57.4
|
|
|
.7
|
|
|
58.1
|
|
General and
administrative expenses
|
|
.4
|
|
|
11.5
|
|
|
11.2
|
|
|
22.0
|
|
|
45.1
|
|
Amortization of other
intangible assets
|
|
—
|
|
|
—
|
|
|
2.9
|
|
|
—
|
|
|
2.9
|
|
Interest
expense
|
|
—
|
|
|
—
|
|
|
.4
|
|
|
.2
|
|
|
.6
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
expenses
|
|
.9
|
|
|
12.4
|
|
|
71.9
|
|
|
22.9
|
|
|
108.1
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income
(loss)
|
|
$
|
4.7
|
|
|
$
|
(19.0)
|
|
|
$
|
(.2)
|
|
|
$
|
(51.5)
|
|
|
$
|
(66.0)
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
|
SELECTED FINANCIAL
DATA
|
(millions)
|
(Unaudited)
|
|
|
|
Three Months Ended
March 31,
|
BAM
|
|
2019
|
|
2018
|
Gross par value
of primary market policies issued
|
|
$
|
1,385.8
|
|
|
$
|
1,149.5
|
|
Gross par value
of secondary market policies issued
|
|
539.2
|
|
|
148.6
|
|
Total gross par
value of market policies issued
|
|
$
|
1,925.0
|
|
|
$
|
1,298.1
|
|
|
|
|
|
|
Gross written
premiums
|
|
$
|
7.9
|
|
|
$
|
6.4
|
|
Member surplus
contributions ("MSC") collected
|
|
7.9
|
|
|
4.9
|
|
Total gross
written premiums and MSC collected
|
|
$
|
15.8
|
|
|
$
|
11.3
|
|
Present value
of future installment MSC collections
|
|
.2
|
|
|
1.2
|
|
Gross written
premium adjustments on existing installment policies
|
|
(.1)
|
|
|
—
|
|
Gross written
premiums and MSC from new business
|
|
$
|
15.9
|
|
|
$
|
12.5
|
|
Total
pricing
|
|
83
bps
|
|
|
96 bps
|
|
|
|
|
As
of
March 31,
2019
|
|
As
of
December 31,
2018
|
Policyholders'
surplus
|
|
$
|
408.9
|
|
|
$
|
413.7
|
|
Contingency
reserve
|
|
54.1
|
|
|
50.3
|
|
Qualified
statutory capital
|
|
463.0
|
|
|
464.0
|
|
Statutory net
unearned premiums
|
|
36.9
|
|
|
36.2
|
|
Present value of
future installment premiums and MSC
|
|
13.3
|
|
|
12.9
|
|
HG Re, Ltd collateral
trusts at statutory value
|
|
264.8
|
|
|
258.3
|
|
Fidus Re, Ltd
collateral trusts at statutory value
|
|
100.0
|
|
|
100.0
|
|
Claims paying
resources
|
|
$
|
878.0
|
|
|
$
|
871.4
|
|
|
|
|
Three Months Ended
March 31,
|
HG
Global
|
|
2019
|
|
2018
|
Net written
premiums
|
|
$
|
6.7
|
|
|
$
|
5.3
|
|
Earned
premiums
|
|
$
|
3.4
|
|
|
$
|
2.3
|
|
|
|
|
As
of
March 31,
2019
|
|
As
of
December 31,
2018
|
Unearned
premiums
|
|
$
|
144.6
|
|
|
$
|
141.3
|
|
Deferred acquisition
costs
|
|
$
|
36.8
|
|
|
$
|
35.7
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
|
SELECTED FINANCIAL
DATA (continued)
|
(millions)
|
(Unaudited)
|
|
NSM
|
|
Three Months
Ended
March 31,
2019
|
|
Period results
from
May 11, 2018
to
March 31,
2019
|
Commission
revenues
|
|
$
|
43.3
|
|
|
$
|
138.0
|
|
Broker commission
expenses
|
|
15.7
|
|
|
44.6
|
|
Gross
profit
|
|
27.6
|
|
|
93.4
|
|
Other
revenues
|
|
6.0
|
|
|
12.9
|
|
General and
administrative expenses
|
|
25.1
|
|
|
84.0
|
|
Change in fair value
of contingent consideration earnout liabilities
|
|
1.3
|
|
|
4.0
|
|
Amortization of other
intangible assets
|
|
5.0
|
|
|
13.3
|
|
Interest
expense
|
|
3.7
|
|
|
11.7
|
|
GAAP pre-tax
loss
|
|
(1.5)
|
|
|
(6.7)
|
|
Income tax
benefit
|
|
(.3)
|
|
|
(.3)
|
|
GAAP net
loss
|
|
(1.2)
|
|
|
(6.4)
|
|
|
|
|
|
|
Add back:
|
|
|
|
|
Interest
expense
|
|
3.7
|
|
|
11.7
|
|
Income tax
benefit
|
|
(.3)
|
|
|
(.3)
|
|
General and
administrative expenses – depreciation
|
|
.5
|
|
|
2.2
|
|
Amortization of other
intangible assets
|
|
5.0
|
|
|
13.3
|
|
EBITDA
|
|
7.7
|
|
|
20.5
|
|
|
|
|
|
|
Add back:
|
|
|
|
|
Change in fair value
of contingent consideration earnout liabilities
|
|
1.3
|
|
|
4.0
|
|
Acquisition-related
transaction expenses
|
|
.5
|
|
|
1.5
|
|
Investments made in
the development of new business lines
|
|
.2
|
|
|
2.0
|
|
Restructuring
expenses
|
|
.1
|
|
|
.2
|
|
Adjusted
EBITDA
|
|
$
|
9.8
|
|
|
$
|
28.2
|
|
|
|
|
|
|
Add:
|
|
|
|
|
NSM's adjusted EBITDA
from April 1, 2018 to May 11, 2018
|
|
|
|
5.2
|
|
Fresh Insurance's
adjusted EBITDA from April 1, 2018 to May 18, 2018
|
|
|
|
.7
|
|
KBK's adjusted EBITDA
from April 1, 2018 to December 3, 2018
|
|
|
|
6.2
|
|
Pro forma adjusted
EBITDA for the twelve months ended March 31, 2019
|
|
|
|
$
|
40.3
|
|
Regulation G
This earnings release includes nine 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 $143
million, $146 million and
$159 million less than the nominal
GAAP carrying values as of March 31,
2019, December 31, 2018, and
March 31, 2018, respectively.
The value of HG Global's unearned premium reserve, net of deferred
acquisition costs, was $108 million,
$106 million and $84 million as of March
31, 2019, December 31, 2018,
and March 31, 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 underlying growth in adjusted book value per share included
in Mr. Rountree's quote 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
March 31,
2019
|
|
As
of
December 31,
2018
|
|
Growth %
(1)
|
GAAP book value per
share
|
|
$
|
981.39
|
|
|
$
|
896.00
|
|
|
9.6
|
%
|
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
|
|
981.39
|
|
|
951.07
|
|
|
3.3
|
%
|
Adjustments to book
value per share (see reconciliation
on page 6)
|
|
(2.88)
|
|
|
(8.15)
|
|
|
|
Adjusted book value
per share including the estimated
gain from the MediaAlpha
transaction as of December 31, 2018
|
|
$
|
978.51
|
|
|
$
|
942.92
|
|
|
3.9
|
%
|
(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 10.
- 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 primarily
relates to NSM's investment expenditures in the organic development
of its pet insurance line and its MGA in the United Kingdom, net of revenues generated. NSM
recently decided to discontinue its organic investment in the
development of its pet insurance line and instead to invest in the
pet insurance line through its acquisition of Embrace Pet
Insurance, which closed in April
2019.
- Restructuring expenses - Represents expenses associated
with eliminating redundant work force and facilities that typically
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 11 for the
reconciliation of NSM's GAAP net income (loss) to EBITDA, adjusted
EBITDA and pro forma adjusted EBITDA.
- NSM's pro forma commission and other revenues is non-GAAP
financial measure that starts with GAAP commission and other
revenues and also includes the commission and other revenues 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 pro forma commission and other revenues is
useful to management and investors to demonstrate the current
revenue profile of NSM's business for a full twelve month period. A
reconciliation from GAAP to the reported amount is as follows:
|
|
Millions
|
|
Period results
from
May 11, 2018
to
March 31,
2019
|
GAAP commission
revenues
|
|
$
|
138
|
|
|
GAAP other
revenues
|
|
13
|
|
|
GAAP commission and
other revenues
|
|
151
|
|
|
Commission and other
revenues of acquired businesses for the period
of time
over the previous twelve months that the businesses were
not
owned by
White Mountains
|
|
43
|
|
|
Pro forma commission
and other revenues for the twelve months ended
March
31, 2019
|
|
$
|
194
|
|
|
- Total consolidated portfolio returns excluding the MediaAlpha
transaction and other long-term investments returns excluding the
MediaAlpha transaction are non-GAAP financial measures that remove
the $115 million pre-tax unrealized
gain resulting from the MediaAlpha transaction recognized in the
first quarter of 2019. White Mountains believes these
measures to be useful to management and investors by making the
returns in the current period comparable to the prior
periods. A reconciliation from GAAP to the reported
percentages is as
follows:
|
|
|
|
For the three
months ended March 31, 2019
|
|
|
GAAP
returns
|
|
Remove
MediaAlpha
|
|
Returns -
excluding
MediaAlpha
|
|
|
|
|
|
|
|
Total consolidated
portfolio returns
|
|
10.1
|
%
|
|
(4.4)
|
%
|
|
5.7
|
%
|
Other long-term
investments returns
|
|
32.6
|
%
|
|
(32.4)
|
%
|
|
.2
|
%
|
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
View original
content:http://www.prnewswire.com/news-releases/white-mountains-reports-first-quarter-results-300844032.html
SOURCE White Mountains Insurance Group, Ltd.