WHITE MOUNTAINS INSURANCE GROUP, LTD. HAMILTON, Bermuda, May 2, 2016 /PRNewswire/ -- White Mountains Insurance Group, Ltd. (NYSE: WTM) reported an adjusted book value per share of $704 at March 31, 2016, up 0.9% for the quarter, including dividends. Adding the estimated gain of $90 per share for the Sirius Group sale, which closed in April, adjusted book value per share is approximately $794.
Ray Barrette, Chairman and CEO, commented, "The year is off to a great start. Both the Sirius Group and Symetra transactions have closed, OneBeacon reported a solid 95% combined ratio, investments were up, BAM/HG Global continues to grow, and most of our insurance services businesses are building value. Including April, we have repurchased nearly 600,000 shares of White Mountains at good prices. As of today, we have about $2 billion of capital that is undeployed. Looking forward, we expect to gradually return capital to shareholders while exploring new investment opportunities."
Adjusted comprehensive income was $50 million in the first quarter of 2016, compared to adjusted comprehensive loss of $3 million in the first quarter of last year. Net income attributable to common shareholders was $13 million in the first quarter of 2016, compared to $84 million in the first quarter of last year.
OneBeacon
OneBeacon's book value per share increased 4.4% for the first quarter of 2016, including dividends. OneBeacon's GAAP combined ratio was 95% for both the first quarter of 2016 and the first quarter of last year. In the first quarter of 2016, OneBeacon completed the termination of its qualified pension plan and fully eliminated the associated liabilities from its balance sheet, resulting in an after-tax loss of less than $1 million. The results for the first quarter of 2016 also included a $13 million tax benefit related to the settlement of the IRS examination for the tax years 2007-2009.
Mike Miller, CEO of OneBeacon, said, "The year is off to a good start, with 4.4% growth in book value and a 95% GAAP combined ratio. Premium growth has been challenging, particularly in our more mature businesses, as we maintain underwriting discipline in an increasingly competitive market."
Net written premiums were $280 million in the first quarter of 2016, a decrease of 2% from the comparable period of last year. During 2015, OneBeacon exited its lawyers liability and crop businesses and non-renewed an affiliated reinsurance treaty, which resulted in reductions of net written premiums that totaled $9 million in the first quarter of 2015. Excluding the impact of these exited businesses, net written premiums in the first quarter of 2016 decreased by 5% compared to the first quarter of last year.
HG Global/BAM
In the first quarter of 2016, BAM insured $2.2 billion of municipal bonds, $2.1 billion of which were in the primary market. Including policies bound in the first quarter of 2016 for municipal bond deals that will close in the second quarter of 2016, BAM guaranteed $2.6 billion of municipal bonds. As of March 31, 2016, BAM's total claims paying resources were $607 million on total par insured of $24.6 billion. Total claims paying resources increased $6 million from December 31, 2015.
Bob Cochran, Chairman of BAM, said, "Demand for municipal bond insurance was solid to start the year, as increasing demand from institutional buyers of municipal bonds offset the negative impact from a decline in interest rates. BAM insured more new-issue transactions than any other insurer during the first quarter, and guaranteed $2.6 billion of municipal bonds, up 3% from the same period a year ago even as total municipal bond volume fell 7%. The increased interest from institutional investors, who prefer larger, more liquid issues, helped drive BAM's average transaction size up 8%. BAM Credit Profiles - the summaries we publish for every transaction we insure and update annually - continued to distinguish us in the market. The Credit Profiles drive investor demand for BAM-insured bonds and increase the value added for municipal issuer members. We have now published more than 2,700 Credit Profiles, and BAM's web site recorded a 41% year-over-year increase in download activity."
HG Global reported pre-tax income of $7 million in the first quarter of 2016, compared to pre-tax income of $6 million in the first quarter of last year. White Mountains reported $8 million of GAAP pre-tax loss related to BAM in the first quarter of 2016, compared to GAAP pre-tax loss of $9 million in the first quarter of last year. BAM's affairs are managed on a statutory accounting basis, and it does not report stand-alone GAAP financial results. BAM's statutory net loss was $8 million in both the first quarter of 2016 and the first quarter of last year. As a mutual insurance company that is owned by its members, BAM's results do not affect White Mountains's adjusted book value per share. However, White Mountains is required to consolidate BAM's results in its GAAP financial statements and its results are attributed to non-controlling interests.
Other Operations
White Mountains's Other Operations segment reported pre-tax loss of $26 million in the first quarter of 2016, compared to $24 million in the first quarter of last year. The increase was driven by increased incentive compensation expenses and lower investment returns in the segment, mostly offset by lower pre-tax losses from insurance service businesses and WM Life Re. White Mountains's Other Operations segment reported net realized and unrealized investment gains of $6 million in the first quarter of 2016, compared to $7 million in the first quarter of last year, which included an $7 million write-off of the investment in TaCerto. WM Life Re reported pre-tax loss of $1 million in the first quarter of 2016, compared to $5 million in the first quarter of last year. WM Life Re is in runoff, and all of its contracts will mature by June 30, 2016.
Share Repurchases
For the first quarter of 2016, White Mountains repurchased and retired 228,688 of its common shares for $173 million at an average share price of $755.36, or approximately 107% of White Mountains's March 31, 2016 adjusted book value per share. The average share price paid was approximately 95% of White Mountains's March 31, 2016 adjusted book value per share including the estimated gain from the Sirius Group transaction.
In April 2016, White Mountains repurchased and retired 356,423 of its common shares for $287 million at an average share price of $806.52, or approximately 114% of White Mountains's March 31, 2016 adjusted book value per share. The average share price paid was approximately 102% of White Mountains's March 31, 2016 adjusted book value per share including the estimated gain from the Sirius Group transaction.
Investment Activities
The GAAP total return on invested assets was 1.5% for the first quarter of 2016, which included 0.3% of currency gains, compared to a return of -0.1% for the first quarter of 2015, which included 1.0% of currency losses.
Reid Campbell, President of White Mountains Advisors, said, "The total portfolio was up 1.5% for the quarter, as returns were boosted by falling interest rates and currency gains from a general weakening in the U.S. dollar. In local currencies, the total portfolio was up 1.2%. The fixed income portfolio was up 1.2%, which was behind the longer duration Barclays Intermediate Aggregate Index. Reflecting the addition of the proceeds from the sale of Symetra, fixed income duration dropped from 2.2 years at the beginning of the quarter to 2.0 years at quarter end. The risk asset portfolio was up 1.3% for the quarter, which was in line with the S&P 500. Risk assets dropped from 23% of the total portfolio at the beginning of the quarter to 14% at quarter end, again reflecting the impact of the sale of Symetra. We took advantage of the equity market pullback in January and February to begin averaging back into equities, adding roughly $80 million of broad market ETFs near the market lows. We sold a similar amount of ETFs later in March after equity markets had recovered."
Sirius Group
On April 18, 2016, White Mountains completed the sale of Sirius International Insurance Group, Ltd., ("Sirius Group") to CM International Holding Pte. Ltd., the Singapore-based investment arm of China Minsheng Investment Corp., Ltd. ("CMI"). The gross estimated purchase price paid at the closing was $2.6 billion. Approximately $160 million of this amount was used to purchase out of Sirius Group certain assets to be retained by White Mountains, including shares of OneBeacon. The transaction is estimated to result in a gain of approximately $90 to White Mountains's adjusted book value per share in the second quarter of 2016. As a result of the transaction, Sirius Group's results have been reported as discontinued operations within White Mountains's GAAP financial statements. Sirius Group's results inured to White Mountains through the closing date of the transaction.
Sirius Group's GAAP combined ratio was 93% for the first quarter of 2016, compared to 81% for the first quarter last year. The increase in the combined ratio reflected a loss ratio that was 9 points higher than the first quarter of last year, driven by increased catastrophe and large loss activity.
Additional Information
White Mountains is a Bermuda-domiciled financial services holding company traded on the New York Stock Exchange and the Bermuda Stock Exchange under the symbol WTM. Additional financial information and other items of interest are available at the company's website located at www.whitemountains.com. White Mountains expects to file its Form 10-Q today with the Securities and Exchange Commission and urges shareholders to refer to that document for more complete information concerning its financial results.
Regulation G
This earnings release includes two non-GAAP financial measures that have been reconciled to their most comparable GAAP financial measures. White Mountains believes these measures to be more relevant than comparable GAAP measures in evaluating White Mountains's financial performance.
Adjusted book value per share is a non-GAAP financial measure which is derived by expanding the calculation of GAAP book value per share to exclude equity in net unrealized gains (losses) from Symetra's fixed maturity portfolio, net of applicable taxes, for periods that White Mountains accounted for its investment in Symetra under the equity method. White Mountains accounted for its investment in Symetra under the equity method until November 5, 2015, when it changed its accounting to fair value. In addition, the number of common shares outstanding used in the calculation of adjusted book value per White Mountains's common share are adjusted to exclude unearned restricted common shares, the compensation cost of which, at the date of calculation, has yet to be amortized. The reconciliation of adjusted book value per share to GAAP book value per share is included on page 7.
Adjusted comprehensive income (loss) is a non-GAAP financial measure that, for periods that White Mountains accounted for its investment in Symetra under the equity method, excludes the change in equity in net unrealized gains (losses) from Symetra's fixed maturity portfolio, net of applicable taxes, from comprehensive income (loss) attributable to White Mountains's common shareholders. The reconciliation of adjusted comprehensive income (loss) to GAAP comprehensive income (loss) attributable to White Mountains's common shareholders is included on page 8.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This earnings release may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included or referenced in this release which address activities, events or developments which White Mountains expects or anticipates will or may occur in the future are forward-looking statements. The words "will", "believe", "intend", "expect", "anticipate", "project", "estimate", "predict" and similar expressions are also intended to identify forward-looking statements. These forward-looking statements include, among others, statements with respect to White Mountains's:
-- change in adjusted book value per share or return on equity;
-- business strategy;
-- financial and operating targets or plans;
-- incurred loss and loss adjustment expenses and the adequacy of its loss
and loss adjustment expense reserves and related reinsurance;
-- projections of revenues, income (or loss), earnings (or loss) per share,
dividends, market share or other financial forecasts;
-- expansion and growth of its business and operations; and
-- future capital expenditures.
These statements are based on certain assumptions and analyses made by White Mountains in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors believed to be appropriate in the circumstances. However, whether actual results and developments will conform to its expectations and predictions is subject to a number of risks and uncertainties that could cause actual results to differ materially from expectations, including:
-- the risks that are described from time to time in White Mountains's
filings with the Securities and Exchange Commission, including but not
limited to White Mountains's Annual Report on Form 10-K for the fiscal
year ended December 31, 2015 filed February 29, 2016;
-- claims arising from catastrophic events, such as hurricanes,
earthquakes, floods, fires, terrorist attacks or severe winter weather;
-- the continued availability of capital and financing;
-- general economic, market or business conditions;
-- business opportunities (or lack thereof) that may be presented to it and
pursued;
-- competitive forces, including the conduct of other property and casualty
insurers and reinsurers;
-- changes in domestic or foreign laws or regulations, or their
interpretation, applicable to White Mountains, its competitors or its
customers;
-- an economic downturn or other economic conditions adversely affecting
its financial position;
-- recorded loss reserves subsequently proving to have been inadequate;
-- actions taken by ratings agencies from time to time, such as financial
strength or credit ratings downgrades or placing ratings on negative
watch; and
-- other factors, most of which are beyond White Mountains's control.
Consequently, all of the forward-looking statements made in this earnings release are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by White Mountains will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, White Mountains or its business or operations. White Mountains assumes no obligation to publicly update any such forward-looking statements, whether as a result of new information, future events or otherwise.
CONTACT: David Foy
(203) 458-5850
WHITE MOUNTAINS INSURANCE GROUP, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(millions)
(Unaudited)
March 31, December 31, March 31,
2016 2015 2015
---- ---- ----
Assets
Fixed maturity investments $2,613.2 $2,639.7 $2,448.2
Short-term investments 261.7 211.3 453.7
Common equity securities 443.0 1,113.9 597.5
Other long-term investments 321.8 315.8 329.6
----- ----- -----
Total investments 3,639.7 4,280.7 3,829.0
Cash 178.8 179.3 209.3
Reinsurance recoverable on paid
and unpaid losses 167.5 194.0 160.0
Insurance premiums receivable 234.3 223.3 259.4
Investments in unconsolidated
affiliates - - 450.8
Deferred acquisition costs 109.8 107.6 110.2
Deferred tax asset 133.6 112.8 112.5
Ceded unearned insurance
premiums 36.3 29.5 19.3
Accounts receivable on unsettled
investment sales 4.5 41.9 10.8
Goodwill and intangible assets 371.5 375.7 347.4
Other assets 300.3 330.8 311.7
Assets held for sale 5,215.5 4,407.0 4,685.3
------- ------- -------
Total assets $10,391.8 $10,282.6 $10,505.7
========= ========= =========
Liabilities
Loss and loss adjustment expense
reserves $1,349.6 $1,395.8 $1,310.6
Unearned insurance premiums 626.5 612.6 624.3
Debt 532.6 440.5 344.3
Ceded reinsurance payable 31.8 30.5 39.4
Funds held under insurance
contracts 134.9 137.8 92.9
Accounts payable on unsettled
investment purchases 6.9 - 47.5
Other liabilities 351.1 413.4 342.2
Liabilities held for sale 3,121.1 2,884.0 3,164.7
------- ------- -------
Total liabilities 6,154.5 5,914.6 5,965.9
------- ------- -------
Equity
White Mountains's common
shareholders' equity
White Mountains's common shares
and paid-in surplus 938.9 978.2 1,038.7
Retained earnings 2,959.6 3,084.9 3,080.8
Accumulated other comprehensive
income (loss), after tax:
Equity in net unrealized gains
from investments in Symetra
common shares - - 63.8
Net unrealized foreign currency
translation losses (108.3) (145.6) (167.6)
Pension liability and other (4.3) (4.3) (4.4)
---- ---- ----
Total White Mountains's common
shareholders' equity 3,785.9 3,913.2 4,011.3
------- ------- -------
Non-controlling interests
Non-controlling interest -
OneBeacon Ltd. 243.4 245.6 258.8
Non-controlling interest - SIG
Preference Shares 250.0 250.0 250.0
Non-controlling interest -
mutuals and reciprocals (156.9) (156.0) (140.5)
Non-controlling interest - other 114.9 115.2 160.2
----- ----- -----
Total non-controlling interests 451.4 454.8 528.5
----- ----- -----
Total equity 4,237.3 4,368.0 4,539.8
------- ------- -------
Total liabilities and equity $10,391.8 $10,282.6 $10,505.7
========= ========= =========
WHITE MOUNTAINS INSURANCE GROUP, LTD.
BOOK VALUE AND ADJUSTED BOOK VALUE PER SHARE
(Unaudited)
March 31, December 31, March 31,
2016 2015 2015
---- ---- ----
Book value per share
numerators (in
millions):
White Mountains's
common shareholders'
equity -book value
per share numerator
(1) $3,785.9 $3,913.2 $4,011.3
Equity in net
unrealized losses
from Symetra's fixed
maturity portfolio,
net of applicable
taxes - - (63.8)
-----
Adjusted book value
per share numerator
(1) $3,785.9 $3,913.2 $3,947.5
======== ======== ========
Book value per share
denominators (in
thousands of
shares):
Common shares
outstanding -book
value per share
denominator (1) 5,415.5 5,623.7 5,991.6
Unearned restricted
common shares (41.1) (25.0) (43.4)
----- ----- -----
Adjusted book value
per share
denominator (1) 5,374.4 5,598.7 5,948.2
======= ======= =======
Book value per share $699.10 $695.84 $669.48
Adjusted book value
per share $704.45 $698.95 $663.64
======= ======= =======
(1) Excludes stock
options, which are
anti-dilutive to
book value.
March 31, December 31, March 31,
2016 2015 2015
---- ---- ----
Year-to-date growth
in adjusted book
value per share,
including dividends: 0.9% 5.3% - %
=== === === ===
Dividend per share $1.00 $1.00 $1.00
===== ===== =====
March 31, December 31, March 31,
2016 2015 2015
---- ---- ----
Summary of goodwill
and intangible
assets (in
millions):
Goodwill:
Tranzact $163.8 $163.8 $145.1
MediaAlpha 18.3 18.3 18.3
Wobi 5.8 5.8 5.8
Total goodwill 187.9 187.9 169.2
----- ----- -----
Intangible assets:
Tranzact 151.1 156.1 138.5
MediaAlpha 25.8 24.4 30.5
Other 6.7 7.3 9.2
Total intangible
assets 183.6 187.8 178.2
----- ----- -----
Total goodwill and
intangible assets 371.5 375.7 347.4
Goodwill and
intangible assets
attributed to non-
controlling
interests (134.4) (135.8) (128.7)
Goodwill and
intangible assets
included in adjusted
book value $237.1 $239.9 $218.7
====== ====== ======
WHITE MOUNTAINS INSURANCE GROUP, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(millions,
except per share amounts)
(Unaudited)
Three Months Ended
March 31,
---------
2016 2015
---- ----
Revenues:
Earned insurance premiums $282.1 $289.3
Net investment income 17.9 12.6
Net realized and unrealized
investment gains 29.5 25.0
Other revenue 97.6 64.9
---- ----
Total revenues 427.1 391.8
----- -----
Expenses:
Loss and loss adjustment
expenses 161.1 167.9
Insurance and reinsurance
acquisition expenses 52.7 53.0
Other underwriting expenses 55.4 56.0
General and administrative
expenses 132.4 103.2
Amortization of intangible
assets 8.1 6.9
Interest expense 5.9 4.3
--- ---
Total expenses 415.6 391.3
----- -----
Pre-tax income (loss) from
continuing operations 11.5 .5
Income tax benefit (expense) 8.7 (4.6)
--- ----
Net income (loss) from
continuing operations 20.2 (4.1)
Net (loss) income from
discontinued operations, net
of tax (.9) 73.8
--- ----
Income before equity in
earnings of unconsolidated
affiliates 19.3 69.7
Equity in earnings of
unconsolidated affiliates,
net of tax - 7.3
--- ---
Net income 19.3 77.0
Net (income) loss attributable
to non-controlling interests (6.3) 7.3
---- ---
Net income attributable to
White Mountains's common
shareholders 13.0 84.3
Comprehensive income, net of
tax:
Change in equity in net
unrealized gains from
investments in Symetra common
shares, net of tax - 28.9
Change in foreign currency
translation and pension
liability .1 -
Change in foreign currency
translation and other items
from discontinued operations 37.2 (87.6)
---- -----
Comprehensive income 50.3 25.6
Other comprehensive loss
attributable to non-
controlling interests - -
--- ---
Comprehensive income
attributable to White
Mountains's common
shareholders 50.3 25.6
Change in equity in net
unrealized gains from
Symetra's fixed maturity
portfolio, net of applicable
taxes - (28.9)
--- -----
Adjusted comprehensive income
(loss) $50.3 $(3.3)
===== =====
Income (loss) per share
attributable to White
Mountains's common
shareholders
Basic income (loss) per share
Continuing operations $2.51 $1.76
Discontinued operations (.17) 12.33
---- -----
Total consolidated operations $2.34 $14.09
----- ------
Diluted income (loss) per
share
Continuing operations $2.51 $1.76
Discontinued operations (.17) 12.33
---- -----
Total consolidated operations $2.34 $14.09
----- ------
WHITE MOUNTAINS INSURANCE GROUP, LTD.
YTD SEGMENT STATEMENTS OF PRE-TAX INCOME (LOSS)
(millions)
(Unaudited)
For the Three Ended March 31, 2016 HG Global/BAM
-------------
OneBeacon HG Global BAM Other Total
--------- --------- --- ----- -----
Revenues:
Earned insurance premiums $278.6 $.9 $.3 $2.3 $282.1
Net investment income 14.4 .5 1.6 1.4 17.9
Net investment income (loss) - surplus note interest - 4.5 (4.5) - -
Net realized and unrealized investment gains 16.6 2.1 4.9 5.9 29.5
Other revenue .9 - .1 96.6 97.6
--- --- --- ---- ----
Total revenues 310.5 8.0 2.4 106.2 427.1
----- --- --- ----- -----
Expenses:
Loss and loss adjustment expenses 158.8 - - 2.3 161.1
Insurance and reinsurance acquisition expenses 51.0 .2 .7 .8 52.7
Other underwriting expenses 55.3 - .1 - 55.4
General and administrative expenses 3.6 .5 9.2 119.1 132.4
Amortization of intangible assets .3 - - 7.8 8.1
Interest expense 3.3 - - 2.6 5.9
--- --- --- --- ---
Total expenses 272.3 .7 10.0 132.6 415.6
----- --- ---- ----- -----
Pre-tax income (loss) $38.2 $7.3 $(7.6) $(26.4) $11.5
===== ==== ===== ====== =====
For the Three Months Ended March 31, 2015 HG Global/BAM
-------------
OneBeacon HG Global BAM Other Total
--------- --------- --- ----- -----
Revenues:
Earned insurance premiums $286.6 $.5 $.2 $2.0 $289.3
Net investment income 10.5 .4 1.0 .7 12.6
Net investment income (loss) - surplus note interest - 4.0 (4.0) - -
Net realized and unrealized investment gains 14.2 1.1 3.0 6.7 25.0
Other (loss) revenue (3.1) - .1 67.9 64.9
---- --- --- ---- ----
Total revenues 308.2 6.0 .3 77.3 391.8
----- --- --- ---- -----
Expenses:
Loss and loss adjustment expenses 165.9 - - 2.0 167.9
Insurance and reinsurance acquisition expenses 51.0 .1 .8 1.1 53.0
Other underwriting expenses 55.9 - .1 - 56.0
General and administrative expenses 3.8 .4 8.2 90.8 103.2
Amortization of intangible assets .3 - - 6.6 6.9
Interest expense 3.2 - - 1.1 4.3
--- --- --- --- ---
Total expenses 280.1 .5 9.1 101.6 391.3
----- --- --- ----- -----
Pre-tax income (loss) $28.1 $5.5 $(8.8) $(24.3) $.5
===== ==== ===== ====== ===
WHITE MOUNTAINS INSURANCE GROUP, LTD.
SELECTED FINANCIAL DATA
(Dollars in millions)
(Unaudited)
Three Months Ended March 31,
----------------------------
OneBeacon 2016 2015
--------- ---- ----
GAAP Ratios
Loss and LAE 57% 58%
Expense 38% 37%
--- ---
Combined 95% 95%
=== ===
Net written premiums $280.1 $287.1
Earned premiums $278.6 $286.6
Three Months Ended March 31,
----------------------------
BAM 2016 2015
--- ---- ----
Gross par value of
primary market
policies priced $2,511.4 $2,439.8
Gross par value of
secondary market
policies priced 93.1 85.7
---- ----
Total gross par value
of market policies
priced $2,604.5 $2,525.5
-------- --------
Gross par value of
primary and $2,178.6 $2,103.9
secondary market
policies issued
Gross written premiums $6.8 $4.2
Member surplus
contributions
collected $6.7 $4.6
As of As of
March 31, 2016 December 31, 2015
-------------- -----------------
Policyholders' surplus $433.4 $437.2
Contingency reserve 14.8 12.4
Qualified statutory
capital 448.2 449.6
Net unearned premiums 14.0 12.5
Present value of
future installment
premiums 2.7 2.6
Collateral trusts 142.2 136.6
Claims paying
resources $607.1 $601.3
====== ======
Three Months Ended March 31,
----------------------------
HG Global 2016 2015
--------- ---- ----
Net written premiums $5.1 $3.2
Earned premiums $.9 $.5
As of As of
March 31, 2016 December 31, 2015
-------------- -----------------
Unearned premiums $42.2 $38.0
Deferred acquisition
costs $8.7 $7.9
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/white-mountains-reports-adjusted-book-value-per-share-of-704-300260623.html
SOURCE White Mountains Insurance Group, Ltd.
