HAMILTON, Bermuda, Aug. 7, 2020 /PRNewswire/ -- White Mountains
Insurance Group, Ltd. (NYSE: WTM) reported book value per share of
$1,021 and adjusted book value per
share of $1,022 as of June 30,
2020. Book value per share and adjusted book value per share
both increased approximately 4% in the second quarter of
2020. Book value per share decreased 0.2% and adjusted book
value per share increased 0.4% in the first six months of 2020,
including dividends.
Manning Rountree, CEO, commented, "We had a good second
quarter. ABVPS increased 4% to $1,022, driven primarily by a 6.5% return on our
investment portfolio. BAM wrote $43
million of direct premiums and member surplus contributions,
its biggest quarter ever, driven by robust demand for insurance and
higher pricing. NSM saw 2% organic growth in controlled
premiums, quarter over quarter, and closed the Kingsbridge
acquisition in April. Kudu enjoyed a strong quarter,
benefiting from the rebound in investment markets and closing the
Sequoia transaction in June. MediaAlpha had another excellent
quarter, driven by strong performance in its insurance
verticals. At PassportCard/DavidShield, the global slowdown
in travel activity has caused a significant decline in premiums and
revenues; in May we invested $15
million to support operations and to continue global
expansion. During the quarter, we repurchased $31 million of shares at an average price of
$887. We ended the quarter with
$0.8 billion of undeployed capital
and ample liquidity."
Comprehensive income (loss) attributable to common shareholders
was $116 million and $(17) million in the second quarter and first six
months of 2020, compared to comprehensive income attributable to
common shareholders of $18 million
and $302 million in the second
quarter and first six months of 2019. The results in the
first six months of 2019 include $182
million of realized and unrealized gains from MediaAlpha's
sale of a significant minority stake to Insignia Capital Group on
February 26, 2019 (the "MediaAlpha
Transaction").
HG Global/BAM
BAM's gross written premiums and member surplus contributions
(MSC) collected were $43 million and
$63 million in the second quarter and
first six months of 2020, compared to $25
million and $40 million in the
second quarter and first six months of 2019. BAM insured
municipal bonds with par value of $4.1
billion and $7.1 billion in
the second quarter and first six months of 2020, compared to
$2.9 billion and $4.8 billion in the second quarter and first six
months of 2019. Total pricing was 105 and 89 basis points in
the second quarter and first six months of 2020, compared to 84 and
83 basis points in the second quarter and first six months of
2019. BAM's total claims paying resources were $957 million at June 30,
2020, compared to $938 million
at December 31, 2019 and $895 million at June 30,
2019.
Seán McCarthy, CEO of BAM, said, "BAM had a strong
quarter. Institutional and retail investor concerns about
credit volatility drove robust demand for insurance and expanded
our opportunities to insure higher-quality bonds. This was
evident in both the primary market, which reopened in April and
experienced increased insured penetration, and the secondary
market, which was highly active. The COVID-19 pandemic is
negatively impacting the finances of municipalities to varying
degrees, and, over time, financial stress could emerge. We
continue to monitor the finances of our member issuers and are
working proactively to make sure they are prepared for any
pandemic-related revenue losses. BAM's existing credit
portfolio is of high quality and structured to be resilient during
economic slowdowns; all BAM-insured bond payments due through
August 1 have been made by
insureds. Also, in late June, S&P Global Ratings affirmed
BAM's "AA/stable" rating."
HG Global reported pre-tax income of $20
million and $32 million in the
second quarter and first six months of 2020, compared to pre-tax
income of $15 million and
$31 million and in the second quarter
and first six months of 2019. The increases were driven
primarily by higher investment returns. White Mountains
reported pre-tax loss related to BAM of $9
million and $19 million in the
second quarter and first six months of 2020, compared to pre-tax
loss related to BAM of $7 million and
$17 million in the second quarter and
first six months of 2019.
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 $4
million, adjusted EBITDA of $18
million, and commission and other revenues of $76 million in the second quarter of 2020,
compared to pre-tax income of $1
million, adjusted EBITDA of $16
million, and commission and other revenues of $66 million in the second quarter of 2019.
Results for the second quarter of 2020 include the results of
Kingsbridge Group Limited, a leading provider of commercial lines
insurance and consulting services to the contingent workforce in
the U.K. Kingsbridge was acquired on April 7, 2020. NSM reported pre-tax loss of
$5 million, adjusted EBITDA of $29
million, and commission and other revenues of $141 million in the first six months of 2020,
compared to pre-tax loss of $1
million, adjusted EBITDA of $26
million, and commission and other revenues of $115 million in the first six months of
2019.
Geof McKernan, CEO of NSM, said,
"NSM had a sound second quarter despite the challenging
environment. Trailing 12 months pro forma controlled premiums
crossed the $1.0 billion threshold
for the first time ever, reflecting both the Kingsbridge
acquisition and 2% organic growth in our existing verticals.
Pro forma adjusted EBITDA was $57
million, reflecting both the Kingsbridge acquisition and
flat results in our existing verticals, as we continue to invest
for growth. We saw significant growth in certain U.S.
verticals, including pet and real estate, offset by a decline in
the U.K. vertical."
Kudu
Kudu reported pre-tax income of $18
million and adjusted EBITDA of $4
million in the second quarter of 2020, compared to pre-tax
income of $2 million and adjusted
EBITDA of $3 million in the second
quarter of 2019. Pre-tax income in the second quarter of 2020
included a $17 million unrealized
gain on Kudu's participation contracts, reflecting the impact of
the market rebound on Kudu's underlying asset management
businesses. Kudu reported pre-tax loss of $4 million and adjusted EBITDA of $9 million in the first six months of 2020.
Pre-tax loss in the first six months of 2020 included an
$8 million unrealized loss on Kudu's
participation contracts, reflecting the impact of the market
dislocation from the COVID-19 pandemic in the first quarter of 2020
on Kudu's underlying asset management businesses.
In the second quarter of 2020, Kudu deployed $37 million in Sequoia Financial Group, LLC, a
registered investment advisor with $4.7
billion in client assets. As of June 30, 2020, Kudu has deployed a total of
$324 million in 11 asset management
firms with combined assets under management of approximately
$38 billion, spanning a range of
asset classes, including real estate, real assets, wealth
management, hedge funds, private equity and alternative credit
strategies.
Rob Jakacki, CEO of Kudu, said,
"Kudu's diversified portfolio has proven resilient through a period
of uncertainty in global markets. We were pleased to close
our investment in Sequoia, a wealth manager with an impressive
platform, and we are excited to partner with the firm to support
its growth. We have now deployed $324
million across 11 firms with an average cash yield to Kudu
at inception of 10.2%. Our model of providing tailored
permanent capital solutions to asset and wealth managers has broad
appeal, and our pipeline is strong."
Other Operations
White Mountains's Other Operations segment reported pre-tax
income (loss) of $107 million and
$(37) million in the second quarter
and first six months of 2020, compared to pre-tax income of
$5 million and $288 million in the second quarter first six
months of 2019. Net realized and unrealized investment gains
(losses) were $122 million and
$(16) million in the second quarter
and first six months of 2020, compared to net realized and
unrealized investment gains of $23
million and $142 million in
the second quarter and first six months of 2019. Pre-tax
income for the first six months of 2019 also included $182 million of gains from the MediaAlpha
Transaction, which consisted of $67
million of realized gains and $115
million of unrealized investment gains. General and
administrative expenses were $25
million and $43 million in the
second quarter and first six months of 2020, compared to
$30 million and $60 million in the second quarter and first six
months of 2019. The decreases were driven primarily by lower
incentive compensation costs.
Share Repurchases
In the second quarter of 2020, White Mountains repurchased and
retired 34,684 of its common shares for $31
million at an average share price of $886.70, or 87% of White Mountains's June 30, 2020 adjusted book value per
share. In the first six months of 2020, White Mountains
repurchased and retired 99,087 of its common shares for
$85 million at an average share price
of $858.81, or 84% of White
Mountains's June 30, 2020 adjusted
book value per share.
Investments
The total return on invested assets was 6.5% in the second
quarter of 2020 compared to 2.0% in the second quarter of
2019. The total return on invested assets was 1.7% in the
first six months of 2020 compared to 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.
Mark Plourde, Managing Director
of White Mountains Advisors, said, "The total portfolio was up
6.5%; a strong result, driven by the rebound in equity markets
during the quarter. Our portfolio of common stocks and ETFs
returned 19.2%, just behind the S&P 500 return of 20.5%.
Other long-term investments returned 4.0%, which included a
$17 million increase in the fair
value of Kudu's participation contracts and a $15 million increase in the fair value of our
investment in MediaAlpha. Fixed income returned 2.8%, ahead
of the BBIA Index return of 2.1%."
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.
CONTACT: Todd Pozefsky
(203) 458-5807
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(millions)
|
(Unaudited)
|
|
|
June
30,
2020
|
|
December
31,
2019
|
|
June
30,
2019
|
Assets
|
|
|
|
|
|
Financial Guarantee (HG Global/BAM)
|
|
|
|
|
|
Fixed maturity
investments
|
$
|
821.7
|
|
|
$
|
799.3
|
|
|
$
|
762.9
|
|
Short-term
investments
|
54.7
|
|
|
46.3
|
|
|
34.8
|
|
Total
investments
|
876.4
|
|
|
845.6
|
|
|
797.7
|
|
Cash
|
32.0
|
|
|
24.2
|
|
|
10.3
|
|
Insurance premiums
receivable
|
7.3
|
|
|
6.7
|
|
|
6.6
|
|
Deferred acquisition
costs
|
25.0
|
|
|
22.1
|
|
|
20.5
|
|
Accrued investment
income
|
5.2
|
|
|
5.4
|
|
|
5.3
|
|
Accounts receivable on
unsettled investment sales
|
—
|
|
|
3.9
|
|
|
8.0
|
|
Other
assets
|
14.6
|
|
|
16.1
|
|
|
16.1
|
|
Total Financial
Guarantee assets
|
960.5
|
|
|
924.0
|
|
|
864.5
|
|
Specialty
Insurance Distribution (NSM)
|
|
|
|
|
|
Short-term
investments
|
—
|
|
|
—
|
|
|
.2
|
|
Cash (restricted $96.3,
$56.3 and $88.8)
|
140.5
|
|
|
89.7
|
|
|
119.7
|
|
Premium and commission
receivable
|
76.7
|
|
|
70.8
|
|
|
57.6
|
|
Goodwill and other
intangible assets
|
728.6
|
|
|
623.0
|
|
|
636.8
|
|
Other assets
|
55.1
|
|
|
41.7
|
|
|
36.8
|
|
Total Specialty
Insurance Distribution assets
|
1,000.9
|
|
|
825.2
|
|
|
851.1
|
|
Asset Management
(Kudu)
|
|
|
|
|
|
Short-term
investments
|
.1
|
|
|
.1
|
|
|
.1
|
|
Other long-term
investments
|
315.6
|
|
|
266.5
|
|
|
142.2
|
|
Total
investments
|
315.7
|
|
|
266.6
|
|
|
142.3
|
|
Cash
|
5.9
|
|
|
5.8
|
|
|
2.7
|
|
Accrued investment
income
|
5.6
|
|
|
5.8
|
|
|
2.7
|
|
Goodwill and other
intangible assets
|
9.4
|
|
|
9.6
|
|
|
9.8
|
|
Other
assets
|
2.7
|
|
|
2.7
|
|
|
2.9
|
|
Total Asset Management
assets
|
339.3
|
|
|
290.5
|
|
|
160.4
|
|
Other Operations
|
|
|
|
|
|
Fixed maturity
investments
|
369.9
|
|
|
406.5
|
|
|
346.5
|
|
Short-term
investments
|
62.8
|
|
|
154.8
|
|
|
152.0
|
|
Common equity
securities
|
567.2
|
|
|
683.9
|
|
|
709.2
|
|
Other long-term
investments
|
582.5
|
|
|
589.8
|
|
|
522.2
|
|
Total
investments
|
1,582.4
|
|
|
1,835.0
|
|
|
1,729.9
|
|
Cash
|
32.9
|
|
|
41.3
|
|
|
17.6
|
|
Accrued investment
income
|
4.0
|
|
|
5.7
|
|
|
5.4
|
|
Accounts receivable on
unsettled investment sales
|
23.4
|
|
|
5.1
|
|
|
72.8
|
|
Goodwill and other
intangible assets
|
21.9
|
|
|
22.1
|
|
|
21.0
|
|
Other assets
|
32.0
|
|
|
31.3
|
|
|
26.7
|
|
Assets held for
sale
|
3.0
|
|
|
3.0
|
|
|
2.8
|
|
Total Other Operations
assets
|
1,699.6
|
|
|
1,943.5
|
|
|
1,876.2
|
|
Total
assets
|
$
|
4,000.3
|
|
|
$
|
3,983.2
|
|
|
$
|
3,752.2
|
|
|
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS (CONTINUED)
|
(millions)
|
(Unaudited)
|
|
|
June
30,
2020
|
|
December
31,
2019
|
|
June
30,
2019
|
Liabilities
|
|
|
|
|
|
Financial Guarantee (HG Global/BAM)
|
|
|
|
|
|
Unearned insurance
premiums
|
$
|
218.6
|
|
|
$
|
198.4
|
|
|
$
|
187.8
|
|
Accrued incentive
compensation
|
14.1
|
|
|
21.7
|
|
|
14.5
|
|
Accounts payable on
unsettled investment purchases
|
3.0
|
|
|
—
|
|
|
—
|
|
Other liabilities
|
27.3
|
|
|
26.7
|
|
|
27.4
|
|
Total Financial
Guarantee liabilities
|
263.0
|
|
|
246.8
|
|
|
229.7
|
|
Specialty
Insurance Distribution (NSM)
|
|
|
|
|
|
Debt
|
268.4
|
|
|
219.2
|
|
|
219.7
|
|
Premiums
payable
|
139.7
|
|
|
102.3
|
|
|
118.7
|
|
Contingent
consideration earnout liabilities
|
11.7
|
|
|
20.6
|
|
|
30.9
|
|
Other liabilities
|
81.1
|
|
|
59.0
|
|
|
56.1
|
|
Total Specialty
Insurance Distribution liabilities
|
500.9
|
|
|
401.1
|
|
|
425.4
|
|
Asset Management
(Kudu)
|
|
|
|
|
|
Debt
|
70.8
|
|
|
53.6
|
|
|
—
|
|
Other
liabilities
|
6.5
|
|
|
3.4
|
|
|
3.5
|
|
Total Asset Management
liabilities
|
77.3
|
|
|
57.0
|
|
|
3.5
|
|
Other Operations
|
|
|
|
|
|
Debt
|
10.6
|
|
|
10.7
|
|
|
10.8
|
|
Accrued incentive
compensation
|
18.9
|
|
|
55.1
|
|
|
36.8
|
|
Other
liabilities
|
66.3
|
|
|
67.8
|
|
|
38.1
|
|
Total Other Operations
liabilities
|
95.8
|
|
|
133.6
|
|
|
85.7
|
|
Total
liabilities
|
937.0
|
|
|
838.5
|
|
|
744.3
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
White Mountains's
common shareholder's equity
|
|
|
|
|
|
White Mountains's common
shares and paid-in surplus
|
587.0
|
|
|
596.3
|
|
|
590.5
|
|
Retained earnings
|
2,589.3
|
|
|
2,672.4
|
|
|
2,562.8
|
|
Accumulated other
comprehensive loss, after tax:
|
|
|
|
|
|
Net unrealized
foreign currency translation losses and interest rate
swap
|
(10.3)
|
|
|
(7.2)
|
|
|
(9.0)
|
|
Total White
Mountains's common shareholders' equity
|
3,166.0
|
|
|
3,261.5
|
|
|
3,144.3
|
|
Non-controlling
interests
|
(102.7)
|
|
|
(116.8)
|
|
|
(136.4)
|
|
Total
equity
|
3,063.3
|
|
|
3,144.7
|
|
|
3,007.9
|
|
Total liabilities
and equity
|
$
|
4,000.3
|
|
|
$
|
3,983.2
|
|
|
$
|
3,752.2
|
|
|
|
|
|
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
|
|
BOOK VALUE AND
ADJUSTED BOOK VALUE PER SHARE
|
|
(Unaudited)
|
|
|
|
|
June
30,
2020
|
|
March
31,
2020
|
|
December
31,
2019
|
|
June
30,
2019
|
|
Book value per
share numerators (in millions):
|
|
|
|
|
|
|
|
|
White Mountains's
common shareholders' equity - GAAP
book value per share numerator
|
$
|
3,166.0
|
|
|
$
|
3,076.7
|
|
|
$
|
3,261.5
|
|
|
$
|
3,144.3
|
|
|
Time value of money
discount on expected future payments on the BAM Surplus Notes (1)
|
(146.7)
|
|
|
(149.2)
|
|
|
(151.6)
|
|
|
(135.7)
|
|
|
HG Global's unearned
premium reserve (1)
|
173.8
|
|
|
160.5
|
|
|
156.7
|
|
|
147.2
|
|
|
HG Global's net
deferred acquisition costs (1)
|
(47.0)
|
|
|
(42.9)
|
|
|
(41.5)
|
|
|
(37.9)
|
|
|
Adjusted book value
per share numerator
|
$
|
3,146.1
|
|
|
$
|
3,045.1
|
|
|
$
|
3,225.1
|
|
|
$
|
3,117.9
|
|
|
Book value per
share denominators (in thousands of shares):
|
|
|
|
|
|
|
|
|
Common shares
outstanding - GAAP book value per share denominator
|
3,101.8
|
|
|
3,135.0
|
|
|
3,185.4
|
|
|
3,185.4
|
|
|
Unearned restricted
common shares
|
(23.1)
|
|
|
(26.9)
|
|
|
(18.5)
|
|
|
(24.5)
|
|
|
Adjusted book value
per share denominator
|
3,078.7
|
|
|
3,108.1
|
|
|
3,166.9
|
|
|
3,160.9
|
|
|
GAAP book value
per share
|
$
|
1,020.71
|
|
|
$
|
981.39
|
|
|
$
|
1,023.91
|
|
|
$
|
987.12
|
|
|
Adjusted book
value per share
|
$
|
1,021.91
|
|
|
$
|
979.74
|
|
|
$
|
1,018.41
|
|
|
$
|
986.39
|
|
|
|
|
(1) Amount
reflects White Mountains's preferred share ownership in HG Global
of 96.9%.
|
|
|
|
|
June
30,
2020
|
|
March
31,
2020
|
|
December
31,
2019
|
|
June
30,
2019
|
|
Quarter-to-date
change in GAAP book value per share, including dividends:
|
4.0
|
%
|
|
(4.1)
|
%
|
|
2.1
|
%
|
|
0.6
|
%
|
|
Quarter-to-date
change in adjusted book value per share, including dividends:
|
4.3
|
%
|
|
(3.7)
|
%
|
|
1.4
|
%
|
|
0.8
|
%
|
|
Year-to-date
change in GAAP book value per share, including dividends:
|
(0.2)
|
%
|
|
(4.1)
|
%
|
|
14.4
|
%
|
|
10.3
|
%
|
|
Year-to-date
change in adjusted book value per share, including dividends:
|
0.4
|
%
|
|
(3.7)
|
%
|
|
14.8
|
%
|
|
11.2
|
%
|
|
Year-to-date
dividends per share
|
$
|
1.00
|
|
|
$
|
1.00
|
|
|
$
|
1.00
|
|
|
$
|
1.00
|
|
|
|
|
June
30,
2020
|
|
March
31,
2020
|
|
December
31,
2019
|
|
June
30,
2019
|
|
Summary of
goodwill and other intangible assets (in millions):
|
|
|
|
|
|
|
|
|
Goodwill:
|
|
|
|
|
|
|
|
|
NSM
|
$
|
504.9
|
|
(1)
|
$
|
379.1
|
|
|
$
|
381.6
|
|
|
$
|
398.4
|
|
(2)
|
Kudu
|
7.6
|
|
|
7.6
|
|
|
7.6
|
|
|
9.8
|
|
(2)
|
Other
Operations
|
5.7
|
|
|
5.7
|
|
|
5.5
|
|
|
20.4
|
|
|
Total
goodwill
|
518.2
|
|
|
392.4
|
|
|
394.7
|
|
|
428.6
|
|
|
Other intangible
assets:
|
|
|
|
|
|
|
|
|
NSM
|
223.7
|
|
|
236.1
|
|
|
241.4
|
|
|
238.4
|
|
|
Kudu
|
1.8
|
|
|
1.9
|
|
|
2.0
|
|
|
—
|
|
|
Other
Operations
|
16.2
|
|
|
16.4
|
|
|
16.6
|
|
|
.6
|
|
|
Total other
intangible assets
|
241.7
|
|
|
254.4
|
|
|
260.0
|
|
|
239.0
|
|
|
Total goodwill and
other intangible assets
|
759.9
|
|
|
646.8
|
|
|
654.7
|
|
|
667.6
|
|
|
Goodwill and other
intangible assets attributed to non-controlling interests
|
(25.9)
|
|
|
(23.5)
|
|
|
(23.4)
|
|
|
(25.4)
|
|
|
Goodwill and other
intangible assets included in White Mountains's common shareholders'
equity
|
$
|
734.0
|
|
|
$
|
623.3
|
|
|
$
|
631.3
|
|
|
$
|
642.2
|
|
|
|
|
(1)
|
The relative fair
values of goodwill and of other intangible assets recognized in
connection with the acquisition of Kingsbridge had not yet been
finalized at June 30, 2020.
|
(2)
|
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.
|
|
|
|
|
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(millions)
|
|
(Unaudited)
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Financial Guarantee (HG Global/BAM)
|
|
|
|
|
|
|
|
|
Earned insurance
premiums
|
$
|
5.6
|
|
|
$
|
4.3
|
|
|
$
|
11.0
|
|
|
$
|
8.5
|
|
|
Net investment
income
|
4.9
|
|
|
5.4
|
|
|
10.4
|
|
|
10.7
|
|
|
Net realized and unrealized
investment gains
|
14.4
|
|
|
11.5
|
|
|
20.5
|
|
|
23.3
|
|
|
Other revenues
|
1.2
|
|
|
.4
|
|
|
1.7
|
|
|
1.0
|
|
|
Total Financial
Guarantee revenues
|
26.1
|
|
|
21.6
|
|
|
43.6
|
|
|
43.5
|
|
|
Specialty
Insurance Distribution (NSM)
|
|
|
|
|
|
|
|
|
Commission
revenues
|
63.0
|
|
|
54.9
|
|
|
116.0
|
|
|
98.2
|
|
|
Other
revenues
|
13.1
|
|
|
11.2
|
|
|
25.1
|
|
|
17.2
|
|
|
Total Specialty
Insurance Distribution revenues
|
76.1
|
|
|
66.1
|
|
|
141.1
|
|
|
115.4
|
|
|
Asset Management
(Kudu)
|
|
|
|
|
|
|
|
|
Net investment
income
|
5.6
|
|
|
4.0
|
|
|
12.9
|
|
|
4.0
|
|
|
Net realized and
unrealized investment gains (losses)
|
16.5
|
|
|
.4
|
|
|
(8.3)
|
|
|
.4
|
|
|
Other
revenues
|
—
|
|
|
—
|
|
|
.1
|
|
|
—
|
|
|
Total Asset Management
revenues
|
22.1
|
|
|
4.4
|
|
|
4.7
|
|
|
4.4
|
|
(1)
|
Marketing Technology (MediaAlpha)
|
|
|
|
|
|
|
|
|
Advertising and commission
revenues
|
—
|
|
|
—
|
|
|
—
|
|
|
48.8
|
|
|
Total Marketing
Technology revenues
|
—
|
|
|
—
|
|
|
—
|
|
|
48.8
|
|
(2)
|
Other Operations
|
|
|
|
|
|
|
|
|
Net investment
income
|
9.1
|
|
|
11.6
|
|
|
19.2
|
|
|
22.3
|
|
|
Net realized and unrealized
investment gains (losses)
|
122.0
|
|
|
23.3
|
|
|
(16.0)
|
|
|
142.4
|
|
|
Realized gain
and unrealized investment gain from the MediaAlpha
Transaction
|
—
|
|
|
—
|
|
|
—
|
|
|
182.2
|
|
|
Advertising and commission
revenues
|
1.9
|
|
|
1.3
|
|
|
4.0
|
|
|
2.6
|
|
|
Other revenues
|
2.3
|
|
|
.7
|
|
|
3.8
|
|
|
1.0
|
|
|
Total Other Operations
revenues
|
135.3
|
|
|
36.9
|
|
|
11.0
|
|
|
350.5
|
|
|
Total
revenues
|
$
|
259.6
|
|
|
$
|
129.0
|
|
|
$
|
200.4
|
|
|
$
|
562.6
|
|
|
|
|
(1)
|
Kudu's results are
from April 4, 2019, the date White Mountains began consolidating
Kudu, to June 30, 2019.
|
(2)
|
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 OPERATIONS (CONTINUED)
|
(millions)
|
(Unaudited)
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Financial
Guarantee (HG Global/BAM)
|
|
|
|
|
|
|
|
|
Insurance acquisition
expenses
|
$
|
2.1
|
|
|
$
|
1.4
|
|
|
$
|
3.8
|
|
|
$
|
2.7
|
|
|
Other
underwriting expenses
|
.2
|
|
|
.1
|
|
|
.2
|
|
|
.2
|
|
|
General and
administrative expenses
|
12.5
|
|
|
12.3
|
|
|
27.2
|
|
|
26.6
|
|
|
Total Financial
Guarantee expenses
|
14.8
|
|
|
13.8
|
|
|
31.2
|
|
|
29.5
|
|
|
Specialty
Insurance Distribution (NSM)
|
|
|
|
|
|
|
|
|
General and
administrative expenses
|
48.5
|
|
|
32.8
|
|
|
88.1
|
|
|
58.1
|
|
|
Broker commission
expenses
|
21.0
|
|
|
18.1
|
|
|
39.3
|
|
|
33.6
|
|
|
Change in fair value
of contingent consideration earnout liabilities
|
(1.7)
|
|
|
6.3
|
|
|
(2.3)
|
|
|
7.6
|
|
|
Amortization of other
intangible assets
|
6.3
|
|
|
4.1
|
|
|
11.1
|
|
|
9.1
|
|
|
Interest
expense
|
5.7
|
|
|
4.1
|
|
|
10.0
|
|
|
7.8
|
|
|
Total Specialty
Insurance Distribution expenses
|
79.8
|
|
|
65.4
|
|
|
146.2
|
|
|
116.2
|
|
|
Asset Management
(Kudu)
|
|
|
|
|
|
|
|
|
General and
administrative expenses
|
2.8
|
|
|
2.2
|
|
|
5.3
|
|
|
2.2
|
|
|
Amortization of other
intangible assets
|
.1
|
|
|
—
|
|
|
.2
|
|
|
—
|
|
|
Interest
expense
|
1.5
|
|
|
—
|
|
|
2.9
|
|
|
—
|
|
|
Total Asset Management
expenses
|
4.4
|
|
|
2.2
|
|
|
8.4
|
|
|
2.2
|
|
(1)
|
Marketing
Technology (MediaAlpha)
|
|
|
|
|
|
|
|
|
Cost of
sales
|
—
|
|
|
—
|
|
|
—
|
|
|
40.6
|
|
|
General and
administrative expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
12.5
|
|
|
Amortization of other
intangible assets
|
—
|
|
|
—
|
|
|
—
|
|
|
1.6
|
|
|
Interest
expense
|
—
|
|
|
—
|
|
|
—
|
|
|
.2
|
|
|
Total Marketing
Technology expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
54.9
|
|
(2)
|
Other
Operations
|
|
|
|
|
|
|
|
|
Cost of
sales
|
2.2
|
|
|
1.6
|
|
|
4.2
|
|
|
2.7
|
|
|
General and
administrative expenses
|
25.3
|
|
|
30.1
|
|
|
42.8
|
|
|
59.5
|
|
|
Amortization of other
intangible assets
|
.2
|
|
|
.1
|
|
|
.4
|
|
|
.1
|
|
|
Interest
expense
|
.2
|
|
|
—
|
|
|
.5
|
|
|
—
|
|
|
Total Other Operations
expenses
|
27.9
|
|
|
31.8
|
|
|
47.9
|
|
|
62.3
|
|
|
Total
expenses
|
126.9
|
|
|
113.2
|
|
|
233.7
|
|
|
265.1
|
|
|
Pre-tax income
(loss) from continuing operations
|
132.7
|
|
|
15.8
|
|
|
(33.3)
|
|
|
297.5
|
|
|
Income tax (expense)
benefit
|
(24.1)
|
|
|
.1
|
|
|
1.4
|
|
|
(10.1)
|
|
|
Net income
(loss) from continuing operations
|
108.6
|
|
|
15.9
|
|
|
(31.9)
|
|
|
287.4
|
|
|
Net (loss) income from
sale of discontinued operations, net of tax
|
(1.0)
|
|
|
—
|
|
|
(.1)
|
|
|
.7
|
|
|
Net income
(loss)
|
107.6
|
|
|
15.9
|
|
|
(32.0)
|
|
|
288.1
|
|
|
Net loss attributable
to non-controlling interests
|
7.8
|
|
|
4.6
|
|
|
18.6
|
|
|
16.8
|
|
|
Net income (loss)
attributable to White
Mountains's common shareholders
|
$
|
115.4
|
|
|
$
|
20.5
|
|
|
$
|
(13.4)
|
|
|
$
|
304.9
|
|
|
|
|
(1)
|
Kudu's results are
from April 4, 2019, the date White Mountains began consolidating
Kudu, to June 30, 2019.
|
(2)
|
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
June 30,
|
|
Six Months Ended
June 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net income (loss)
attributable to White
Mountains's common shareholders
|
$
|
115.4
|
|
|
$
|
20.5
|
|
|
$
|
(13.4)
|
|
|
$
|
304.9
|
|
Other comprehensive
income (loss), net of tax
|
.5
|
|
|
(3.1)
|
|
|
(2.9)
|
|
|
(3.4)
|
|
Comprehensive
income (loss)
|
115.9
|
|
|
17.4
|
|
|
(16.3)
|
|
|
301.5
|
|
Other comprehensive
(income) loss attributable to non-controlling interests
|
(.2)
|
|
|
.2
|
|
|
(.2)
|
|
|
.2
|
|
Comprehensive
income (loss) attributable to White Mountains's
common shareholders
|
$
|
115.7
|
|
|
$
|
17.6
|
|
|
$
|
(16.5)
|
|
|
$
|
301.7
|
|
|
|
|
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,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Basic earnings
(loss) per share
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
37.46
|
|
|
$
|
6.44
|
|
|
$
|
(4.25)
|
|
|
$
|
95.71
|
|
Discontinued
operations
|
(.32)
|
|
|
—
|
|
|
(.03)
|
|
|
.22
|
|
Total consolidated
operations
|
$
|
37.14
|
|
|
$
|
6.44
|
|
|
$
|
(4.28)
|
|
|
$
|
95.93
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share
|
|
|
|
|
|
|
|
Continuing
operations
|
$
|
37.46
|
|
|
$
|
6.44
|
|
|
$
|
(4.25)
|
|
|
$
|
95.71
|
|
Discontinued
operations
|
(.32)
|
|
|
—
|
|
|
(.03)
|
|
|
.22
|
|
Total consolidated
operations
|
$
|
37.14
|
|
|
$
|
6.44
|
|
|
$
|
(4.28)
|
|
|
$
|
95.93
|
|
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, 2020
|
HG
Global/BAM
|
|
|
|
|
|
|
|
|
|
HG
Global
|
|
BAM
|
|
NSM
|
|
Kudu
|
|
Other
Operations
|
|
Total
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
Earned insurance
premiums
|
$
|
4.6
|
|
|
$
|
1.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5.6
|
|
Net investment
income
|
2.0
|
|
|
2.9
|
|
|
—
|
|
|
5.6
|
|
|
9.1
|
|
|
19.6
|
|
Net investment income
(expense) - BAM surplus note interest
|
4.7
|
|
|
(4.7)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net realized and
unrealized investment gains
|
10.7
|
|
|
3.7
|
|
|
—
|
|
|
16.5
|
|
|
122.0
|
|
|
152.9
|
|
Advertising and
commission revenues
|
—
|
|
|
—
|
|
|
63.0
|
|
|
—
|
|
|
1.9
|
|
|
64.9
|
|
Other
revenues
|
.1
|
|
|
1.1
|
|
|
13.1
|
|
|
—
|
|
|
2.3
|
|
|
16.6
|
|
Total
revenues
|
22.1
|
|
|
4.0
|
|
|
76.1
|
|
|
22.1
|
|
|
135.3
|
|
|
259.6
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Insurance acquisition
expenses
|
1.2
|
|
|
.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.1
|
|
Other underwriting
expenses
|
—
|
|
|
.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
.2
|
|
Cost of
sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.2
|
|
|
2.2
|
|
General and
administrative expenses
|
.5
|
|
|
12.0
|
|
|
48.5
|
|
|
2.8
|
|
|
25.3
|
|
|
89.1
|
|
Broker commission
expenses
|
—
|
|
|
—
|
|
|
21.0
|
|
|
—
|
|
|
—
|
|
|
21.0
|
|
Change in fair value
of contingent consideration earnout liabilities
|
—
|
|
|
—
|
|
|
(1.7)
|
|
|
—
|
|
|
—
|
|
|
(1.7)
|
|
Amortization of other
intangible assets
|
—
|
|
|
—
|
|
|
6.3
|
|
|
.1
|
|
|
.2
|
|
|
6.6
|
|
Interest
expense
|
—
|
|
|
—
|
|
|
5.7
|
|
|
1.5
|
|
|
.2
|
|
|
7.4
|
|
Total
expenses
|
1.7
|
|
|
13.1
|
|
|
79.8
|
|
|
4.4
|
|
|
27.9
|
|
|
126.9
|
|
Pre-tax income
(loss)
|
$
|
20.4
|
|
|
$
|
(9.1)
|
|
|
$
|
(3.7)
|
|
|
$
|
17.7
|
|
|
$
|
107.4
|
|
|
$
|
132.7
|
|
|
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
|
QTD SEGMENT
STATEMENTS OF PRE-TAX INCOME (LOSS) (CONTINUED)
|
(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
(expense) - 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
|
|
|
32.8
|
|
|
2.2
|
|
|
30.1
|
|
|
77.4
|
|
Broker commission
expenses
|
—
|
|
|
—
|
|
|
18.1
|
|
|
—
|
|
|
—
|
|
|
18.1
|
|
Change in fair value
of contingent consideration earnout liabilities
|
—
|
|
|
—
|
|
|
6.3
|
|
|
—
|
|
|
—
|
|
|
6.3
|
|
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
|
|
|
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
|
YTD SEGMENT
STATEMENTS OF PRE-TAX INCOME (LOSS)
|
(millions)
|
(Unaudited)
|
|
For the Six Months
Ended June 30, 2020
|
HG
Global/BAM
|
|
|
|
|
|
|
|
|
|
HG
Global
|
|
BAM
|
|
NSM
|
|
Kudu
|
|
Other
Operations
|
|
Total
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
Earned insurance
premiums
|
$
|
9.0
|
|
|
$
|
2.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11.0
|
|
Net investment
income
|
4.3
|
|
|
6.1
|
|
|
—
|
|
|
12.9
|
|
|
19.2
|
|
|
42.5
|
|
Net investment income
(expense) - BAM surplus note interest
|
9.5
|
|
|
(9.5)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net realized and
unrealized investment gains (loss)
|
12.1
|
|
|
8.4
|
|
|
—
|
|
|
(8.3)
|
|
|
(16.0)
|
|
|
(3.8)
|
|
Advertising and
commission revenues
|
—
|
|
|
—
|
|
|
116.0
|
|
|
—
|
|
|
4.0
|
|
|
120.0
|
|
Other
revenue
|
.1
|
|
|
1.6
|
|
|
25.1
|
|
|
.1
|
|
|
3.8
|
|
|
30.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
35.0
|
|
|
8.6
|
|
|
141.1
|
|
|
4.7
|
|
|
11.0
|
|
|
200.4
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Insurance acquisition
expenses
|
2.2
|
|
|
1.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.8
|
|
Other underwriting
expenses
|
—
|
|
|
.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
.2
|
|
Cost of
sales
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.2
|
|
|
4.2
|
|
General and
administrative expenses
|
1.0
|
|
|
26.2
|
|
|
88.1
|
|
|
5.3
|
|
|
42.8
|
|
|
163.4
|
|
Broker commission
expenses
|
—
|
|
|
—
|
|
|
39.3
|
|
|
—
|
|
|
—
|
|
|
39.3
|
|
Change in fair value
of contingent consideration earnout liabilities
|
—
|
|
|
—
|
|
|
(2.3)
|
|
|
—
|
|
|
—
|
|
|
(2.3)
|
|
Amortization of other
intangible assets
|
—
|
|
|
—
|
|
|
11.1
|
|
|
.2
|
|
|
.4
|
|
|
11.7
|
|
Interest
expense
|
—
|
|
|
—
|
|
|
10.0
|
|
|
2.9
|
|
|
.5
|
|
|
13.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
expenses
|
3.2
|
|
|
28.0
|
|
|
146.2
|
|
|
8.4
|
|
|
47.9
|
|
|
233.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pre-tax income
(loss)
|
$
|
31.8
|
|
|
$
|
(19.4)
|
|
|
$
|
(5.1)
|
|
|
$
|
(3.7)
|
|
|
$
|
(36.9)
|
|
|
$
|
(33.3)
|
|
|
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
|
YTD SEGMENT
STATEMENTS OF PRE-TAX INCOME (LOSS) (CONTINUED)
|
(millions)
|
(Unaudited)
|
|
For the Six Months
Ended June 30, 2019
|
HG
Global/BAM
|
|
|
|
|
|
|
|
|
|
|
|
HG
Global
|
|
BAM
|
|
NSM
|
|
Kudu
(1)
|
|
MediaAlpha
(2)
|
|
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
(expense) - BAM surplus note interest
|
13.7
|
|
|
(13.7)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net realized and
unrealized investment gains
|
9.1
|
|
|
14.2
|
|
|
—
|
|
|
.4
|
|
|
—
|
|
|
142.4
|
|
|
166.1
|
|
Realized gain and
unrealized investment gain from the
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
|
|
|
58.1
|
|
|
2.2
|
|
|
5.7
|
|
|
59.5
|
|
|
152.1
|
|
General and
administrative expenses - MediaAlpha transaction
related
costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.8
|
|
|
—
|
|
|
6.8
|
|
Broker commission
expense
|
—
|
|
|
—
|
|
|
33.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33.6
|
|
Change in fair value
of contingent consideration earnout liabilities
|
—
|
|
|
—
|
|
|
7.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7.6
|
|
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)
|
Kudu's results are
from April 4, 2019, the date White Mountains began consolidating
Kudu, to June 30, 2019.
|
(2)
|
MediaAlpha's results
are from January 1, 2019 to February 26, 2019, the date of the
MediaAlpha Transaction.
|
|
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
|
SELECTED FINANCIAL
DATA
|
(millions)
|
(Unaudited)
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
BAM
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Gross par value of
primary market policies issued
|
$
|
3,196.1
|
|
|
$
|
2,624.2
|
|
|
$
|
5,704.2
|
|
|
$
|
4,010.0
|
|
Gross par value of
secondary market policies issued
|
878.5
|
|
|
293.2
|
|
|
1,347.0
|
|
|
832.4
|
|
Gross par value of
assumed reinsurance
|
36.9
|
|
|
—
|
|
|
36.9
|
|
|
—
|
|
Total gross par value
of market policies issued
|
$
|
4,111.5
|
|
|
$
|
2,917.4
|
|
|
$
|
7,088.1
|
|
|
$
|
4,842.4
|
|
|
|
|
|
|
|
|
|
Gross written
premiums
|
$
|
21.5
|
|
|
$
|
12.5
|
|
|
$
|
31.2
|
|
|
$
|
20.4
|
|
MSC
collected
|
21.5
|
|
|
12.0
|
|
|
31.5
|
|
|
19.9
|
|
Total gross written
premiums and MSC collected
|
$
|
43.0
|
|
|
$
|
24.5
|
|
|
$
|
62.7
|
|
|
$
|
40.3
|
|
Present value of future
installment MSC collections
|
.3
|
|
|
—
|
|
|
.3
|
|
|
.2
|
|
Gross written premium
adjustments on existing installment policies
|
—
|
|
|
—
|
|
|
—
|
|
|
(.1)
|
|
Gross written premiums
and MSC from new business
|
$
|
43.3
|
|
|
$
|
24.5
|
|
|
$
|
63.0
|
|
|
$
|
40.4
|
|
Total
pricing
|
105
bps
|
|
|
84 bps
|
|
|
89
bps
|
|
|
83 bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
of
June 30,
2020
|
|
As
of
December 31,
2019
|
Policyholders'
surplus
|
|
$
|
345.1
|
|
|
$
|
402.4
|
|
Contingency
reserve
|
|
76.9
|
|
|
68.2
|
|
Qualified statutory
capital
|
|
422.0
|
|
|
470.6
|
|
Statutory net unearned
premiums
|
|
42.4
|
|
|
39.3
|
|
Present value of future
installment premiums and MSC
|
|
14.6
|
|
|
13.7
|
|
HG Re, Ltd collateral
trusts at statutory value
|
|
378.1
|
|
|
314.0
|
|
Fidus Re, Ltd
collateral trust at statutory value
|
|
100.0
|
|
|
100.0
|
|
Claims paying
resources
|
|
$
|
957.1
|
|
|
$
|
937.6
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
HG
Global
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net written
premiums
|
$
|
18.3
|
|
|
$
|
10.7
|
|
|
$
|
26.6
|
|
|
$
|
17.4
|
|
Earned
premiums
|
$
|
4.6
|
|
|
$
|
3.4
|
|
|
$
|
9.0
|
|
|
$
|
6.8
|
|
|
|
|
|
|
|
|
|
|
As
of
June 30,
2020
|
|
As
of
December 31,
2019
|
Unearned
premiums
|
$
|
179.4
|
|
|
$
|
161.7
|
|
Deferred acquisition
costs
|
$
|
48.5
|
|
|
$
|
42.8
|
|
|
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
|
SELECTED FINANCIAL
DATA (CONTINUED)
|
(millions)
|
(Unaudited)
|
|
NSM
|
|
Three Months
Ended
June 30,
2019
|
|
Three Months
Ended
June 30,
2020
|
|
Six Months
Ended
June 30,
2019
|
|
Six Months
Ended
June 30,
2020
|
|
Twelve Months
Ended
July 1, 2019
to
June 30,
2020
|
Commission
revenues
|
|
$
|
54.9
|
|
|
$
|
63.0
|
|
|
$
|
98.2
|
|
|
$
|
116.0
|
|
|
$
|
211.2
|
|
Broker commission
expenses
|
|
18.1
|
|
|
21.0
|
|
|
33.6
|
|
|
39.3
|
|
|
70.5
|
|
Gross
profit
|
|
36.8
|
|
|
42.0
|
|
|
64.6
|
|
|
76.7
|
|
|
140.7
|
|
Other
revenues
|
|
11.2
|
|
|
13.1
|
|
|
17.2
|
|
|
25.1
|
|
|
47.6
|
|
General and
administrative expenses
|
|
32.8
|
|
|
48.5
|
|
|
58.1
|
|
|
88.1
|
|
|
162.2
|
|
Change in fair value
of contingent
consideration earnout
liabilities
|
|
6.3
|
|
|
(1.7)
|
|
|
7.6
|
|
|
(2.3)
|
|
|
(7.8)
|
|
Amortization of other
intangible assets
|
|
4.1
|
|
|
6.3
|
|
|
9.1
|
|
|
11.1
|
|
|
21.4
|
|
Interest
expense
|
|
4.1
|
|
|
5.7
|
|
|
7.8
|
|
|
10.0
|
|
|
18.9
|
|
GAAP pre-tax income
(loss)
|
|
.7
|
|
|
(3.7)
|
|
|
(.8)
|
|
|
(5.1)
|
|
|
(6.4)
|
|
Income tax expense
(benefit)
|
|
.3
|
|
|
(2.2)
|
|
|
—
|
|
|
(2.9)
|
|
|
(3.5)
|
|
GAAP net income
(loss)
|
|
.4
|
|
|
(1.5)
|
|
|
(.8)
|
|
|
(2.2)
|
|
|
(2.9)
|
|
|
|
|
|
|
|
|
|
|
|
|
Add back:
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
4.1
|
|
|
5.7
|
|
|
7.8
|
|
|
10.0
|
|
|
18.9
|
|
Income tax expense
(benefit)
|
|
.3
|
|
|
(2.2)
|
|
|
—
|
|
|
(2.9)
|
|
|
(3.5)
|
|
General and
administrative expenses –
depreciation
|
|
.7
|
|
|
.8
|
|
|
1.2
|
|
|
1.7
|
|
|
3.3
|
|
Amortization of other
intangible assets
|
|
4.1
|
|
|
6.3
|
|
|
9.1
|
|
|
11.1
|
|
|
21.4
|
|
EBITDA
|
|
9.6
|
|
|
9.1
|
|
|
17.3
|
|
|
17.7
|
|
|
37.2
|
|
|
|
|
|
|
|
|
|
|
|
|
Add back:
|
|
|
|
|
|
|
|
|
|
|
Change in fair value
of contingent
consideration earnout
liabilities
|
|
6.3
|
|
|
(1.7)
|
|
|
7.6
|
|
|
(2.3)
|
|
|
(7.8)
|
|
Impairments of
intangible assets
|
|
—
|
|
|
6.2
|
|
|
—
|
|
|
6.2
|
|
|
8.6
|
|
Acquisition-related
transaction expenses
|
|
.6
|
|
|
3.3
|
|
|
1.1
|
|
|
5.0
|
|
|
7.1
|
|
Fair value purchase
accounting adjustment
for
deferred revenue
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
.9
|
|
Investments made in
the development of new business lines
|
|
(.1)
|
|
|
.4
|
|
|
.1
|
|
|
.4
|
|
|
.5
|
|
Restructuring
expenses
|
|
—
|
|
|
.7
|
|
|
.1
|
|
|
1.5
|
|
|
3.7
|
|
Adjusted
EBITDA
|
|
$
|
16.4
|
|
|
$
|
18.0
|
|
|
$
|
26.2
|
|
|
$
|
28.5
|
|
|
50.2
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
Kingsbridge's
Adjusted EBITDA from July 1, 2019 to April 7, 2020
|
|
6.6
|
|
Pro forma adjusted
EBITDA
|
|
$
|
56.8
|
|
|
|
|
WHITE MOUNTAINS
INSURANCE GROUP, LTD.
|
SELECTED FINANCIAL
DATA (CONTINUED)
|
(millions)
|
(Unaudited)
|
|
Kudu
|
Three Months
Ended
June 30, 2019
(1)
|
|
Three Months
Ended
June 30,
2020
|
|
Six Months
Ended
June 30,
2020
|
|
Twelve Months
Ended
July 1, 2019
to
June 30,
2020
|
GAAP pre-tax income
(loss)
|
$
2.2
|
|
|
$
|
17.7
|
|
|
$
|
(3.7)
|
|
|
$
|
4.9
|
|
Income tax expense
(benefit)
|
.6
|
|
|
4.8
|
|
|
(.6)
|
|
|
1.9
|
|
GAAP net income
(loss)
|
1.6
|
|
|
12.9
|
|
|
(3.1)
|
|
|
3.0
|
|
|
|
|
|
|
|
|
|
Add back:
|
|
|
|
|
|
|
|
Interest
expense
|
—
|
|
|
1.5
|
|
|
2.9
|
|
|
3.0
|
|
Income tax expense
(benefit)
|
.6
|
|
|
4.8
|
|
|
(.6)
|
|
|
1.9
|
|
Amortization of other
intangible assets
|
—
|
|
|
.1
|
|
|
.2
|
|
|
.4
|
|
EBITDA
|
2.2
|
|
|
19.3
|
|
|
(.6)
|
|
|
8.3
|
|
|
|
|
|
|
|
|
|
Add back:
|
|
|
|
|
|
|
|
Net unrealized
investment (gains) losses
|
(.4)
|
|
|
(16.5)
|
|
|
8.3
|
|
|
2.4
|
|
Non-cash equity-based
compensation expense
|
.4
|
|
|
—
|
|
|
—
|
|
|
.9
|
|
Acquisition-related
transaction expenses
|
.3
|
|
|
.9
|
|
|
1.5
|
|
|
4.1
|
|
Adjusted
EBITDA
|
$
|
2.5
|
|
|
$
|
3.7
|
|
|
$
|
9.2
|
|
|
15.7
|
|
Adjust to annualize
partial year revenues
|
|
|
|
|
|
|
3.1
|
|
Annualized Adjusted
EBITDA
|
|
$
|
18.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Kudu's results are
from April 4, 2019, the date White Mountains began consolidating
Kudu, to June 30, 2019.
|
Regulation G
This earnings release includes 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 modeled
timing of cash payments of principal and interest on the BAM
surplus notes and (ii) to add back the unearned premium reserve,
net of deferred acquisition costs, at HG Global.
Under GAAP, White Mountains is required to carry the BAM surplus
notes, including accrued interest, at nominal value with no
consideration for time value of money. Based on a debt
service model that forecasts operating results for BAM through
maturity of the surplus notes, the present value of the BAM surplus
notes, including accrued interest, was estimated to be $151 million, $154
million, $157 million and
$140 million less than the nominal
GAAP carrying values as of June 30,
2020, March 31, 2020,
December 31, 2019 and June 30, 2019, respectively.
The value of HG Global's unearned premium reserve, net of deferred
acquisition costs, was $131 million,
$121 million, $119 million and $113
million as of June 30, 2020,
March 31, 2020, December 31, 2019 and June
30, 2019 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.
- Gross written premiums and MSC from new business is a non-GAAP
financial measure, which is derived by adjusting gross written
premiums and MSC collected (i) to include the present value of
future installment MSC not yet collected and (ii) to exclude the
impact of gross written premium adjustments related to policies
closed in prior periods. White Mountains believes these
adjustments are useful to management and investors in evaluating
the volume and pricing of new business closed during the
period. The reconciliation from GAAP gross written premiums
to gross written premiums and MSC from new business is included on
page 14.
- NSM's EBITDA, adjusted EBITDA and pro forma adjusted EBITDA are
non-GAAP financial measures.
EBITDA is a non-GAAP financial measure that excludes interest
expense on debt, income tax expense (benefit), depreciation and
amortization 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)
impairments of intangible assets, (iii) acquisition-related
transaction expenses, (iv) fair value purchase accounting
adjustment for deferred revenue, (v) investments made in the
development of new business lines and (vi) 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 initially
recorded at fair value as part of purchase accounting, with the
periodic change in the fair value of these liabilities recorded as
income or an expense.
- Impairments of intangible assets - Represents
expense related to NSM's write-off of intangible assets. For
the periods presented, the impairments related primarily to NSM's
write-off of intangible assets in its U.K. vertical. The
impairments related to lower premium volumes, including due to the
impact of the COVID-19 pandemic, and certain reorganization
initiatives in the U.K. vertical.
- Acquisition-related transaction expenses -
Represents costs directly related to NSM's transactions to acquire
businesses, such as transaction-related compensation, banking,
accounting and external lawyer fees, which are not capitalized and
are expensed under GAAP.
- Fair value purchase accounting adjustment for deferred
revenue - Represents the amount of deferred revenue that had
already been collected but subsequently written down in connection
with establishing the fair value of deferred revenue as part of
NSM's purchase accounting for Embrace Pet Insurance.
- 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. In 2019, NSM decided
to cease investment in the organic development of its pet insurance
line and, instead, to acquire Embrace Pet Insurance.
- 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 earnings profile of NSM's business as of the end of
the period for a full 12 month period. See page 15 for the
reconciliation of NSM's GAAP net income (loss) to EBITDA, adjusted
EBITDA and pro forma adjusted EBITDA.
- Kudu's EBITDA, adjusted EBITDA and annualized adjusted EBITDA
are non-GAAP financial measures.
EBITDA is a non-GAAP financial measure that excludes interest
expense on debt, income tax expense (benefit), depreciation and
amortization of other intangible assets from GAAP net income
(loss).
Adjusted EBITDA is a non-GAAP financial measure that excludes
certain other items in GAAP net income (loss) in addition to those
excluded from EBITDA. The adjustments relate to (i) net
unrealized investment (gains) losses on Kudu's revenue and earnings
participation contracts, (ii) non-cash equity-based compensation
expense and (iii) acquisition-related transaction expenses. A
description of each adjustment follows:
-
- Net unrealized investment (gains) losses -
Represents net unrealized investment gains and losses recorded on
Kudu's revenue and earnings participation contracts, which are
recorded at fair value under GAAP.
- Non-cash equity-based compensation expense -
Represents non-cash expenses related to Kudu's management
compensation that are settled with equity units in Kudu.
- Acquisition-related transaction expenses -
Represents costs directly related to Kudu's transactions to acquire
revenue and earnings participation contracts, such as external
lawyer, banker, consulting and placement agent fees, which are not
capitalized and are expensed under GAAP.
Annualized adjusted EBITDA is a
non-GAAP financial measure that annualizes revenues related to
Kudu's earnings and revenue participation contracts that were in
place as of the end of the 12 month period but were not in effect
for the full 12 month period. The amount added was calculated on a
contract-by-contract basis by annualizing the revenues received for
the partial 12 month period. For example, if a participation
contract was in effect for four months, the amount added equals
twice that amount.
White Mountains believes that these non-GAAP financial measures are
useful to management and investors in evaluating Kudu's
performance. White Mountains also believes that annualized
adjusted EBITDA is useful to management and investors to
demonstrate the earnings profile of Kudu's business as of the end
of the period for a full 12 month period. See page 16 for the
reconciliation of Kudu's GAAP net income (loss) to EBITDA, adjusted
EBITDA and annualized 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 six months of 2019. White Mountains
believes this measure to be useful to management and investors by
making the return in the prior period comparable to the current
period. A reconciliation from GAAP to the reported percentage
is as
follows:
|
|
For the Six Months
Ended June 30, 2019
|
|
|
GAAP
Return
|
|
Remove
MediaAlpha
Transaction
|
|
Return -
Excluding
MediaAlpha
Transaction
|
|
|
|
|
|
|
|
Total consolidated
portfolio returns
|
|
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 "could", "will", "believe", "intend",
"expect", "anticipate", "project", "estimate", "predict" and
similar expressions are also intended to identify forward-looking
statements. These forward-looking statements include, among
others, statements with respect to White Mountains's:
- change in adjusted book value per share or return on
equity;
- business strategy;
- financial and operating targets or plans;
- 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, 2019;
- the trends and uncertainties from COVID-19;
- 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;
- deterioration of general economic, market or business
conditions, including due to outbreaks of contagious disease
(including COVID-19) and corresponding mitigation efforts;
- competitive forces, including the conduct of other
insurers;
- changes in domestic or foreign laws or regulations, or their
interpretation, applicable to White Mountains, its competitors or
its customers;
- 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.
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content:http://www.prnewswire.com/news-releases/white-mountains-reports-second-quarter-results-301108317.html
SOURCE White Mountains Insurance Group, Ltd.