White Mountains Reports Third Quarter Results
White Mountains Insurance Group, Ltd. (NYSE: WTM) reported a 9% decrease in book value per share ($1,162) and adjusted book value per share ($1,176) for Q3 2021. Year-to-date, these metrics fell 8% and 7%, respectively. The decline was largely attributed to losses from MediaAlpha, which saw its share price drop significantly. Despite this, BAM reported $28 million in premiums, and Ark's gross written premiums rose 79% year-over-year. Comprehensive loss for the quarter was $(373) million, driven by a $397 million loss related to MediaAlpha. Share repurchases totaled $87 million in Q3.
- BAM produced $28 million in total premiums.
- Ark increased gross written premiums by 79% year-over-year.
- NSM experienced record levels of both pro forma controlled premium and pro forma adjusted EBITDA.
- Kudu reported strong growth in adjusted EBITDA and $19 million of unrealized gains.
- Book value per share decreased by 9% in Q3 2021.
- Comprehensive loss attributable to common shareholders was $(373) million.
- Net realized and unrealized investment losses from MediaAlpha were $397 million.
- MediaAlpha's share price declined from $42.10 to $18.68, significantly impacting book value.
HAMILTON, Bermuda, Nov. 8, 2021 /PRNewswire/ -- White Mountains Insurance Group, Ltd. (NYSE: WTM) reported book value per share of
Manning Rountree, CEO, commented, "ABVPS was down
Comprehensive (loss) income attributable to common shareholders was
MediaAlpha
White Mountains owns 16.9 million shares of MediaAlpha, representing a
HG Global/BAM
BAM's gross written premiums and member surplus contributions (MSC) collected were
Seán McCarthy, CEO of BAM, said, "BAM had a good third quarter, driven by strong institutional investor demand for insurance on new issues. Market-wide insured penetration remained above
The COVID-19 pandemic is negatively impacting the finances of municipalities to varying degrees, and, over time, financial stress could emerge. To date, BAM's portfolio continues to perform as expected. All BAM-insured bond payments due through November 1, 2021 have been made by insureds, and there are no credits on BAM's watchlist. BAM continues to monitor the finances of its members and to work proactively with its members to prepare for any pandemic-related revenue challenges.
HG Global reported pre-tax income of
White Mountains reported pre-tax loss related to BAM of
BAM is a mutual insurance company that is owned by its members. BAM's results are consolidated into White Mountains's GAAP financial statements and attributed to non-controlling interests.
Ark
Ark's GAAP combined ratio was
Ark reported gross written premiums of
Ian Beaton, CEO of Ark, said, "Ark had a good third quarter notwithstanding global catastrophe activity. The adjusted combined ratio was
NSM
NSM reported pre-tax loss of
NSM reported pre-tax loss of
Geof McKernan, CEO of NSM, said, "NSM had a good third quarter. Trailing 12 months pro forma controlled premiums increased to a record
Kudu
Kudu reported pre-tax income of
Kudu reported pre-tax income of
As of September 30, 2021, Kudu had deployed
Rob Jakacki, CEO of Kudu, said, "Kudu had a strong third quarter. Quarter over quarter, trailing 12 months revenues from participation contracts increased
Other Operations
White Mountains's Other Operations segment reported pre-tax (loss) income of
Excluding MediaAlpha, net realized and unrealized investment gains were
White Mountains's Other Operations segment reported general and administrative expenses of
Share Repurchases
In the third quarter of 2021, White Mountains repurchased and retired 79,294 of its common shares for
In the first nine months of 2020, White Mountains repurchased and retired 99,087 of its common shares for
Investments
The total consolidated portfolio return was -
The total consolidated portfolio return was -
Mark Plourde, Managing Director of White Mountains Advisors, said, "Excluding MediaAlpha, the total portfolio was up
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) | ||||||||||||
September 30, | December 31, | September 30, | ||||||||||
Assets | ||||||||||||
Financial Guarantee (HG Global/BAM) | ||||||||||||
Fixed maturity investments | $ | 898.4 | $ | 859.5 | $ | 831.8 | ||||||
Short-term investments | 50.3 | 60.4 | 56.1 | |||||||||
Total investments | 948.7 | 919.9 | 887.9 | |||||||||
Cash | 21.8 | 42.8 | 49.9 | |||||||||
Insurance premiums receivable | 6.9 | 6.9 | 7.2 | |||||||||
Deferred acquisition costs | 31.7 | 27.8 | 26.1 | |||||||||
Other assets | 18.7 | 20.4 | 20.2 | |||||||||
Total Financial Guarantee assets | 1,027.8 | 1,017.8 | 991.3 | |||||||||
P&C Insurance and Reinsurance (Ark) | ||||||||||||
Fixed maturity investments | 618.1 | — | — | |||||||||
Common equity securities | 159.6 | — | — | |||||||||
Short-term investments | 396.5 | — | — | |||||||||
Other long-term investments | 320.6 | — | — | |||||||||
Total investments | 1,494.8 | — | — | |||||||||
Cash | 116.5 | — | — | |||||||||
Reinsurance recoverables | 465.6 | — | — | |||||||||
Insurance premiums receivable | 482.3 | — | — | |||||||||
Ceded unearned premiums | 92.1 | — | — | |||||||||
Deferred acquisition costs and value of in-force business acquired | 127.8 | — | — | |||||||||
Goodwill and other intangible assets | 292.5 | — | — | |||||||||
Other assets | 61.3 | — | — | |||||||||
Total P&C Insurance and Reinsurance assets | 3,132.9 | — | — | |||||||||
Specialty Insurance Distribution (NSM) | ||||||||||||
Cash (restricted | 126.5 | 126.5 | 125.0 | |||||||||
Premium and commission receivable | 78.8 | 76.7 | 67.7 | |||||||||
Goodwill and other intangible assets | 734.8 | 736.8 | 730.3 | |||||||||
Other assets | 56.4 | 59.6 | 57.2 | |||||||||
Total Specialty Insurance Distribution assets | 996.5 | 999.6 | 980.2 | |||||||||
Asset Management (Kudu) | ||||||||||||
Short-term investments | .1 | .1 | .1 | |||||||||
Other long-term investments | 604.7 | 400.6 | 325.5 | |||||||||
Total investments | 604.8 | 400.7 | 325.6 | |||||||||
Cash (restricted | 14.8 | 7.8 | 8.4 | |||||||||
Accrued investment income | 9.0 | 9.8 | 6.2 | |||||||||
Goodwill and other intangible assets | 9.0 | 9.2 | 9.3 | |||||||||
Other assets | 8.4 | 2.7 | 2.4 | |||||||||
Total Asset Management assets | 646.0 | 430.2 | 351.9 | |||||||||
Other Operations | ||||||||||||
Fixed maturity investments | 316.4 | 347.7 | 389.7 | |||||||||
Short-term investments | 162.6 | 82.4 | 515.6 | |||||||||
Common equity securities | — | — | 140.7 | |||||||||
Investment in MediaAlpha | 316.4 | 802.2 | — | |||||||||
Other long-term investments | 360.2 | 386.2 | 845.7 | |||||||||
Total investments | 1,155.6 | 1,618.5 | 1,891.7 | |||||||||
Cash | 31.1 | 34.1 | 31.5 | |||||||||
Cash pre-funded/placed in escrow for Ark transaction | — | 646.3 | — | |||||||||
Goodwill and other intangible assets | 48.7 | 36.4 | 36.7 | |||||||||
Other assets | 75.0 | 48.5 | 100.1 | |||||||||
Total Other Operations assets | 1,310.4 | 2,383.8 | 2,060.0 | |||||||||
Total assets | $ | 7,113.6 | $ | 4,831.4 | $ | 4,383.4 | ||||||
WHITE MOUNTAINS INSURANCE GROUP, LTD. | ||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED) | ||||||||||||
(millions) | ||||||||||||
(Unaudited) | ||||||||||||
September 30, | December 31, | September 30, | ||||||||||
Liabilities | ||||||||||||
Financial Guarantee (HG Global/BAM) | ||||||||||||
Unearned insurance premiums | $ | 257.0 | $ | 237.5 | $ | 226.9 | ||||||
Accrued incentive compensation | 21.0 | 25.7 | 19.4 | |||||||||
Other liabilities | 32.5 | 28.3 | 34.2 | |||||||||
Total Financial Guarantee liabilities | 310.5 | 291.5 | 280.5 | |||||||||
P&C Insurance and Reinsurance (Ark) | ||||||||||||
Loss and loss adjustment expense reserves | 890.9 | — | — | |||||||||
Unearned insurance premiums | 596.6 | — | — | |||||||||
Debt | 200.7 | — | — | |||||||||
Reinsurance payable | 481.4 | — | — | |||||||||
Contingent consideration | 24.0 | — | — | |||||||||
Other liabilities | 87.4 | — | — | |||||||||
Total P&C Insurance and Reinsurance liabilities | 2,281.0 | — | — | |||||||||
Specialty Insurance Distribution (NSM) | ||||||||||||
Debt | 295.0 | 272.6 | 270.2 | |||||||||
Premiums payable | 132.5 | 113.4 | 116.9 | |||||||||
Contingent consideration | 6.7 | 14.6 | 11.8 | |||||||||
Other liabilities | 84.2 | 91.2 | 77.5 | |||||||||
Total Specialty Insurance Distribution liabilities | 518.4 | 491.8 | 476.4 | |||||||||
Asset Management (Kudu) | ||||||||||||
Debt | 195.6 | 86.3 | 71.0 | |||||||||
Other liabilities | 40.2 | 10.0 | 10.2 | |||||||||
Total Asset Management liabilities | 235.8 | 96.3 | 81.2 | |||||||||
Other Operations | ||||||||||||
Debt | 19.1 | 17.5 | 18.2 | |||||||||
Accrued incentive compensation | 44.7 | 70.1 | 41.9 | |||||||||
Other liabilities | 49.8 | 46.3 | 176.0 | |||||||||
Total Other Operations liabilities | 113.6 | 133.9 | 236.1 | |||||||||
Total liabilities | 3,459.3 | 1,013.5 | 1,074.2 | |||||||||
Equity | ||||||||||||
White Mountains's common shareholder's equity | ||||||||||||
White Mountains's common shares and paid-in surplus | 586.2 | 595.2 | 592.1 | |||||||||
Retained earnings | 2,935.3 | 3,311.2 | 2,822.1 | |||||||||
Accumulated other comprehensive income (loss), after tax: | ||||||||||||
Net unrealized gains (losses) from foreign currency translation and interest rate swap | .2 | (.4) | (6.5) | |||||||||
Total White Mountains's common shareholders' equity | 3,521.7 | 3,906.0 | 3,407.7 | |||||||||
Non-controlling interests | 132.6 | (88.1) | (98.5) | |||||||||
Total equity | 3,654.3 | 3,817.9 | 3,309.2 | |||||||||
Total liabilities and equity | $ | 7,113.6 | $ | 4,831.4 | $ | 4,383.4 | ||||||
WHITE MOUNTAINS INSURANCE GROUP, LTD. | |||||||||||||||||
BOOK VALUE AND ADJUSTED BOOK VALUE PER SHARE | |||||||||||||||||
(Unaudited) | |||||||||||||||||
September 30, | June 30, | December 31, | September 30, | ||||||||||||||
Book value per share numerators (in millions): | |||||||||||||||||
White Mountains's common shareholders' equity - GAAP book value per share numerator | $ | 3,521.7 | $ | 3,978.2 | $ | 3,906.0 | $ | 3,407.7 | |||||||||
Time value of money discount on expected future payments on the BAM Surplus Notes (1) | (128.0) | (132.8) | (142.5) | (144.3) | |||||||||||||
HG Global's unearned premium reserve (1) | 206.8 | 201.5 | 190.0 | 181.0 | |||||||||||||
HG Global's net deferred acquisition costs (1) | (58.1) | (56.3) | (52.4) | (49.5) | |||||||||||||
Adjusted book value per share numerator | $ | 3,542.4 | $ | 3,990.6 | $ | 3,901.1 | $ | 3,394.9 | |||||||||
Book value per share denominators (in thousands of shares): | |||||||||||||||||
Common shares outstanding - GAAP book value per share denominator | 3,029.6 | 3,109.2 | 3,102.0 | 3,102.0 | |||||||||||||
Unearned restricted common shares | (17.0) | (20.6) | (14.8) | (19.3) | |||||||||||||
Adjusted book value per share denominator | 3,012.6 | 3,088.6 | 3,087.2 | 3,082.7 | |||||||||||||
GAAP book value per share | $ | 1,162.44 | $ | 1,279.49 | $ | 1,259.18 | $ | 1,098.56 | |||||||||
Adjusted book value per share | $ | 1,175.86 | $ | 1,292.03 | $ | 1,263.64 | $ | 1,101.28 | |||||||||
(1) Amount reflects White Mountains's preferred share ownership in HG Global of | |||||||||||||||||
September 30, | June 30, | December 31, | September 30, | ||||||||||||||
Quarter-to-date change in GAAP book value per share, including dividends: | (9.1) | % | 3.9 | % | 14.6 | % | 7.6 | % | |||||||||
Quarter-to-date change in adjusted book value per share, including dividends: | (9.0) | % | 4.1 | % | 14.7 | % | 7.8 | % | |||||||||
Year-to-date change in GAAP book value per share, including dividends: | (7.6) | % | 1.7 | % | 23.1 | % | 7.4 | % | |||||||||
Year-to-date change in adjusted book value per share, including dividends: | (6.9) | % | 2.3 | % | 24.2 | % | 8.2 | % | |||||||||
Year-to-date dividends per share | $ | 1.00 | $ | 1.00 | $ | 1.00 | $ | 1.00 | |||||||||
WHITE MOUNTAINS INSURANCE GROUP, LTD. | |||||||||||||||||
GOODWILL AND OTHER INTANGIBLE ASSETS | |||||||||||||||||
(Unaudited) | |||||||||||||||||
September 30, | June 30, | December 31, | September 30, | ||||||||||||||
Summary of goodwill and other intangible assets (in millions): | |||||||||||||||||
Goodwill: | |||||||||||||||||
Ark | $ | 116.8 | $ | 116.8 | $ | — | $ | — | |||||||||
NSM | 529.6 | (1) | 477.9 | 506.4 | 511.8 | (3) | |||||||||||
Kudu | 7.6 | 7.6 | 7.6 | 7.6 | |||||||||||||
Other Operations | 17.4 | 27.1 | (2) | 11.5 | 20.7 | (3) | |||||||||||
Total goodwill | 671.4 | 629.4 | 525.5 | 540.1 | |||||||||||||
Other intangible assets: | |||||||||||||||||
Ark | 175.7 | 175.7 | — | — | |||||||||||||
NSM | 205.2 | 213.7 | 230.4 | 218.5 | |||||||||||||
Kudu | 1.4 | 1.5 | 1.6 | 1.7 | |||||||||||||
Other Operations | 31.3 | 23.9 | 24.9 | 16.0 | |||||||||||||
Total other intangible assets | 413.6 | 414.8 | 256.9 | 236.2 | |||||||||||||
Total goodwill and other intangible assets | 1,085.0 | 1,044.2 | 782.4 | 776.3 | |||||||||||||
Goodwill and other intangible assets attributed to non-controlling interests | (118.0) | (115.9) | (28.1) | (27.1) | |||||||||||||
Goodwill and other intangible assets included in White Mountains's common shareholders' equity | $ | 967.0 | $ | 928.3 | $ | 754.3 | $ | 749.2 | |||||||||
(1) | The relative fair values of goodwill and of other intangible assets recognized in connection with the acquisition of JC Taylor had not yet been finalized at September 30, 2021. |
(2) | The relative fair values of goodwill and of other intangible assets recognized in connection with an acquisition within Other Operations had not yet been finalized at June 30, 2021. |
(3) | The relative fair values of goodwill and of other intangible assets recognized in connection with the acquisition of Kingsbridge and an acquisition within Other Operations had not yet been finalized at September 30, 2020. |
WHITE MOUNTAINS INSURANCE GROUP, LTD. | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(millions) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Revenues: | ||||||||||||||||
Financial Guarantee (HG Global/BAM) | ||||||||||||||||
Earned insurance premiums | $ | 6.7 | $ | 6.2 | $ | 19.6 | $ | 17.2 | ||||||||
Net investment income | 4.4 | 4.7 | 13.2 | 15.1 | ||||||||||||
Net realized and unrealized investment (losses) gains | (4.0) | 3.2 | (15.6) | 23.7 | ||||||||||||
Other revenues | .3 | .4 | .9 | 2.1 | ||||||||||||
Total Financial Guarantee revenues | 7.4 | 14.5 | 18.1 | 58.1 | ||||||||||||
P&C Insurance and Reinsurance (Ark) | ||||||||||||||||
Earned insurance premiums | 213.4 | — | 435.8 | — | ||||||||||||
Net investment income | .6 | — | 1.8 | — | ||||||||||||
Net realized and unrealized investment gains | .3 | — | 10.3 | — | ||||||||||||
Other revenues | 3.4 | — | 9.4 | — | ||||||||||||
Total P&C Insurance and Reinsurance revenues | 217.7 | — | 457.3 | — | ||||||||||||
Specialty Insurance Distribution (NSM) | ||||||||||||||||
Commission revenues | 67.0 | 58.2 | 194.6 | 174.2 | ||||||||||||
Other revenues | 15.3 | 12.5 | 46.8 | 37.6 | ||||||||||||
Total Specialty Insurance Distribution revenues | 82.3 | 70.7 | 241.4 | 211.8 | ||||||||||||
Asset Management (Kudu) | ||||||||||||||||
Net investment income | 9.5 | 6.4 | 26.1 | 19.3 | ||||||||||||
Net realized and unrealized investment gains | 18.9 | 9.8 | 62.5 | 1.5 | ||||||||||||
Other revenues | .1 | .1 | .2 | .2 | ||||||||||||
Total Asset Management revenues | 28.5 | 16.3 | 88.8 | 21.0 | ||||||||||||
Other Operations | ||||||||||||||||
Net investment income | 5.0 | 60.1 | 16.1 | 79.3 | ||||||||||||
Net realized and unrealized investment gains (losses) | 15.3 | 43.6 | 34.0 | (17.4) | ||||||||||||
Net realized and unrealized investment (losses) gains from | (396.8) | 250.0 | (325.5) | 295.0 | ||||||||||||
Commission revenues | 2.4 | 2.1 | 7.0 | 6.1 | ||||||||||||
Other revenues | 28.1 | 2.2 | 57.6 | 6.0 | ||||||||||||
Total Other Operations revenues | (346.0) | 358.0 | (210.8) | 369.0 | ||||||||||||
Total revenues | $ | (10.1) | $ | 459.5 | $ | 594.8 | $ | 659.9 | ||||||||
WHITE MOUNTAINS INSURANCE GROUP, LTD. | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED) | ||||||||||||||||
(millions) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Expenses: | ||||||||||||||||
Financial Guarantee (HG Global/BAM) | ||||||||||||||||
Insurance acquisition expenses | $ | 3.0 | $ | 1.6 | $ | 6.5 | $ | 5.4 | ||||||||
General and administrative expenses | 12.4 | 14.0 | 42.7 | 41.4 | ||||||||||||
Total Financial Guarantee expenses | 15.4 | 15.6 | 49.2 | 46.8 | ||||||||||||
P&C Insurance and Reinsurance (Ark) | ||||||||||||||||
Loss and loss adjustment expenses | 129.2 | — | 247.8 | — | ||||||||||||
Insurance and reinsurance acquisition expenses | 53.7 | — | 124.4 | — | ||||||||||||
General and administrative expenses | 21.8 | — | 84.4 | — | ||||||||||||
Interest expense | 2.1 | — | 4.5 | — | ||||||||||||
Total P&C Insurance and Reinsurance expenses | 206.8 | — | 461.1 | — | ||||||||||||
Specialty Insurance Distribution (NSM) | ||||||||||||||||
General and administrative expenses | 48.8 | 42.9 | 142.1 | 131.0 | ||||||||||||
Broker commission expenses | 20.4 | 17.1 | 60.9 | 56.4 | ||||||||||||
Change in fair value of contingent consideration | .6 | .7 | .8 | (1.6) | ||||||||||||
Amortization of other intangible assets | 8.2 | 5.1 | 25.0 | 16.2 | ||||||||||||
Loss on assets held for sale | — | — | 28.7 | — | ||||||||||||
Interest expense | 5.9 | 6.1 | 17.7 | 16.1 | ||||||||||||
Total Specialty Insurance Distribution expenses | 83.9 | 71.9 | 275.2 | 218.1 | ||||||||||||
Asset Management (Kudu) | ||||||||||||||||
General and administrative expenses | 3.3 | 2.2 | 9.0 | 7.5 | ||||||||||||
Amortization of other intangible assets | — | .1 | .2 | .3 | ||||||||||||
Interest expense | 1.9 | 1.4 | 9.2 | 4.3 | ||||||||||||
Total Asset Management expenses | 5.2 | 3.7 | 18.4 | 12.1 | ||||||||||||
Other Operations | ||||||||||||||||
Cost of sales | 24.0 | 2.3 | 45.9 | 6.5 | ||||||||||||
General and administrative expenses | 14.5 | 44.3 | 79.7 | 87.1 | ||||||||||||
Amortization of other intangible assets | 2.0 | .2 | 2.9 | .6 | ||||||||||||
Interest expense | .4 | .3 | 1.1 | .8 | ||||||||||||
Total Other Operations expenses | 40.9 | 47.1 | 129.6 | 95.0 | ||||||||||||
Total expenses | 352.2 | 138.3 | 933.5 | 372.0 | ||||||||||||
Pre-tax (loss) income from continuing operations | (362.3) | 321.2 | (338.7) | 287.9 | ||||||||||||
Income tax expense | (21.6) | (98.5) | (41.9) | (97.1) | ||||||||||||
Net (loss) income from continuing operations | (383.9) | 222.7 | (380.6) | 190.8 | ||||||||||||
Net (loss) gain from sale of discontinued operations, net of | — | (.7) | 18.7 | (.8) | ||||||||||||
Net (loss) income | (383.9) | 222.0 | (361.9) | 190.0 | ||||||||||||
Net loss attributable to non-controlling interests | 12.5 | 10.9 | 53.7 | 29.5 | ||||||||||||
Net (loss) income attributable to White Mountains's common shareholders | $ | (371.4) | $ | 232.9 | $ | (308.2) | $ | 219.5 | ||||||||
WHITE MOUNTAINS INSURANCE GROUP, LTD. | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||||||||||
(millions) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Net (loss) income attributable to White Mountains's common shareholders | $ | (371.4) | $ | 232.9 | $ | (308.2) | $ | 219.5 | ||||||||
Other comprehensive (loss) income, net of tax | (2.2) | 3.9 | .6 | 1.0 | ||||||||||||
Comprehensive (loss) income | (373.6) | 236.8 | (307.6) | 220.5 | ||||||||||||
Other comprehensive loss (gain) attributable to non-controlling interests | .2 | (.1) | — | (.3) | ||||||||||||
Comprehensive (loss) income attributable to White Mountains's common shareholders | $ | (373.4) | $ | 236.7 | $ | (307.6) | $ | 220.2 | ||||||||
WHITE MOUNTAINS INSURANCE GROUP, LTD. | ||||||||||||||||
EARNINGS PER SHARE | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Income (loss) per share attributable to White Mountains's common shareholders | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Basic (loss) earnings per share | ||||||||||||||||
Continuing operations | $ | (120.18) | $ | 75.32 | $ | (105.48) | $ | 70.40 | ||||||||
Discontinued operations | — | (.23) | 6.03 | (.26) | ||||||||||||
Total consolidated operations | $ | (120.18) | $ | 75.09 | $ | (99.45) | $ | 70.14 | ||||||||
Diluted (loss) earnings per share | ||||||||||||||||
Continuing operations | $ | (120.18) | $ | 75.32 | $ | (105.48) | $ | 70.40 | ||||||||
Discontinued operations | — | (.23) | 6.03 | (.26) | ||||||||||||
Total consolidated operations | $ | (120.18) | $ | 75.09 | $ | (99.45) | $ | 70.14 | ||||||||
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 September 30, 2021 | HG Global/BAM | |||||||||||||||||||||||||||
HG | BAM | Ark | NSM | Kudu | Other | Total | ||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||
Earned insurance premiums | $ | 5.5 | $ | 1.2 | $ | 213.4 | $ | — | $ | — | $ | — | $ | 220.1 | ||||||||||||||
Net investment income | 1.9 | 2.5 | .6 | — | 9.5 | 5.0 | 19.5 | |||||||||||||||||||||
Net investment income (expense) - | 3.1 | (3.1) | — | — | — | — | — | |||||||||||||||||||||
Net realized and unrealized investment (losses) gains | (2.0) | (2.0) | .3 | — | 18.9 | 15.3 | 30.5 | |||||||||||||||||||||
Net realized and unrealized investment losses from | — | — | — | — | — | (396.8) | (396.8) | |||||||||||||||||||||
Commission revenues | — | — | — | 67.0 | — | 2.4 | 69.4 | |||||||||||||||||||||
Other revenues | .1 | .2 | 3.4 | 15.3 | .1 | 28.1 | 47.2 | |||||||||||||||||||||
Total revenues | 8.6 | (1.2) | 217.7 | 82.3 | 28.5 | (346.0) | (10.1) | |||||||||||||||||||||
Expenses: | ||||||||||||||||||||||||||||
Loss and loss adjustment expenses | — | — | 129.2 | — | — | — | 129.2 | |||||||||||||||||||||
Insurance acquisition expenses | 1.5 | 1.5 | 53.7 | — | — | — | 56.7 | |||||||||||||||||||||
Cost of sales | — | — | — | — | — | 24.0 | 24.0 | |||||||||||||||||||||
General and administrative expenses | .2 | 12.2 | 21.8 | 48.8 | 3.3 | 14.5 | 100.8 | |||||||||||||||||||||
Broker commission expenses | — | — | — | 20.4 | — | — | 20.4 | |||||||||||||||||||||
Change in fair value of contingent consideration | — | — | — | .6 | — | — | .6 | |||||||||||||||||||||
Amortization of other intangible assets | — | — | — | 8.2 | — | 2.0 | 10.2 | |||||||||||||||||||||
Interest expense | — | — | 2.1 | 5.9 | 1.9 | .4 | 10.3 | |||||||||||||||||||||
Total expenses | 1.7 | 13.7 | 206.8 | 83.9 | 5.2 | 40.9 | 352.2 | |||||||||||||||||||||
Pre-tax income (loss) | $ | 6.9 | $ | (14.9) | $ | 10.9 | $ | (1.6) | $ | 23.3 | $ | (386.9) | $ | (362.3) | ||||||||||||||
WHITE MOUNTAINS INSURANCE GROUP, LTD. | ||||||||||||||||||||||||
QTD SEGMENT STATEMENTS OF PRE-TAX INCOME (LOSS) (CONTINUED) | ||||||||||||||||||||||||
(millions) | ||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
For the Three Months Ended September 30, 2020 | HG Global/BAM | |||||||||||||||||||||||
HG Global | BAM | NSM | Kudu | Other Operations | Total | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Earned insurance premiums | $ | 5.1 | $ | 1.1 | $ | — | $ | — | $ | — | $ | 6.2 | ||||||||||||
Net investment income | 1.8 | 2.9 | — | 6.4 | 60.1 | 71.2 | ||||||||||||||||||
Net investment income (expense) - | 4.6 | (4.6) | — | — | — | — | ||||||||||||||||||
Net realized and unrealized investment gains | — | 3.2 | — | 9.8 | 43.6 | 56.6 | ||||||||||||||||||
Net unrealized investment gains from | — | — | — | — | 250.0 | 250.0 | ||||||||||||||||||
Commission revenues | — | — | 58.2 | — | 2.1 | 60.3 | ||||||||||||||||||
Other revenues | .2 | .2 | 12.5 | .1 | 2.2 | 15.2 | ||||||||||||||||||
Total revenues | 11.7 | 2.8 | 70.7 | 16.3 | 358.0 | 459.5 | ||||||||||||||||||
Expenses: | ||||||||||||||||||||||||
Insurance acquisition expenses | 1.1 | .5 | — | — | — | 1.6 | ||||||||||||||||||
Cost of sales | — | — | — | — | 2.3 | 2.3 | ||||||||||||||||||
General and administrative expenses | .6 | 13.4 | 42.9 | 2.2 | 44.3 | 103.4 | ||||||||||||||||||
Broker commission expenses | — | — | 17.1 | — | — | 17.1 | ||||||||||||||||||
Change in fair value of contingent consideration | — | — | .7 | — | — | .7 | ||||||||||||||||||
Amortization of other intangible assets | — | — | 5.1 | .1 | .2 | 5.4 | ||||||||||||||||||
Interest expense | — | — | 6.1 | 1.4 | .3 | 7.8 | ||||||||||||||||||
Total expenses | 1.7 | 13.9 | 71.9 | 3.7 | 47.1 | 138.3 | ||||||||||||||||||
Pre-tax income (loss) | $ | 10.0 | $ | (11.1) | $ | (1.2) | $ | 12.6 | $ | 310.9 | $ | 321.2 | ||||||||||||
WHITE MOUNTAINS INSURANCE GROUP, LTD. | ||||||||||||||||||||||||||||
YTD SEGMENT STATEMENTS OF PRE-TAX (LOSS) INCOME | ||||||||||||||||||||||||||||
(millions) | ||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||
For the Nine Months Ended September 30, 2021 | HG Global/BAM | |||||||||||||||||||||||||||
HG Global | BAM | Ark | NSM | Kudu | Other Operations | Total | ||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||
Earned insurance premiums | $ | 16.1 | $ | 3.5 | $ | 435.8 | $ | — | $ | — | $ | — | $ | 455.4 | ||||||||||||||
Net investment income | 5.4 | 7.8 | 1.8 | — | 26.1 | 16.1 | 57.2 | |||||||||||||||||||||
Net investment income (expense) - | 9.1 | (9.1) | — | — | — | — | — | |||||||||||||||||||||
Net realized and unrealized investment (losses) gains | (9.5) | (6.1) | 10.3 | — | 62.5 | 34.0 | 91.2 | |||||||||||||||||||||
Net realized and unrealized investment losses from | — | — | — | — | — | (325.5) | (325.5) | |||||||||||||||||||||
Commission revenues | — | — | — | 194.6 | — | 7.0 | 201.6 | |||||||||||||||||||||
Other revenue | .3 | .6 | 9.4 | 46.8 | .2 | 57.6 | 114.9 | |||||||||||||||||||||
Total revenues | 21.4 | (3.3) | 457.3 | 241.4 | 88.8 | (210.8) | 594.8 | |||||||||||||||||||||
Expenses: | ||||||||||||||||||||||||||||
Loss and loss adjustment expenses | — | — | 247.8 | — | — | — | 247.8 | |||||||||||||||||||||
Insurance acquisition expenses | 4.3 | 2.2 | 124.4 | — | — | — | 130.9 | |||||||||||||||||||||
Cost of sales | — | — | — | — | — | 45.9 | 45.9 | |||||||||||||||||||||
General and administrative expenses | 1.3 | 41.4 | 84.4 | 142.1 | 9.0 | 79.7 | 357.9 | |||||||||||||||||||||
Broker commission expenses | — | — | — | 60.9 | — | — | 60.9 | |||||||||||||||||||||
Change in fair value of contingent consideration | — | — | — | .8 | — | — | .8 | |||||||||||||||||||||
Amortization of other intangible assets | — | — | — | 25.0 | .2 | 2.9 | 28.1 | |||||||||||||||||||||
Loss on assets held for sale | — | — | — | 28.7 | — | — | 28.7 | |||||||||||||||||||||
Interest expense | — | — | 4.5 | 17.7 | 9.2 | 1.1 | 32.5 | |||||||||||||||||||||
Total expenses | 5.6 | 43.6 | 461.1 | 275.2 | 18.4 | 129.6 | 933.5 | |||||||||||||||||||||
Pre-tax income (loss) | $ | 15.8 | $ | (46.9) | $ | (3.8) | $ | (33.8) | $ | 70.4 | $ | (340.4) | $ | (338.7) | ||||||||||||||
WHITE MOUNTAINS INSURANCE GROUP, LTD. | ||||||||||||||||||||||||
YTD SEGMENT STATEMENTS OF PRE-TAX INCOME (LOSS) (CONTINUED) | ||||||||||||||||||||||||
(millions) | ||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||
For the Nine Months Ended September 30, 2020 | HG Global/BAM | |||||||||||||||||||||||
HG Global | BAM | NSM | Kudu | Other Operations | Total | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Earned insurance premiums | $ | 14.1 | $ | 3.1 | $ | — | $ | — | $ | — | $ | 17.2 | ||||||||||||
Net investment income | 6.1 | 9.0 | — | 19.3 | 79.3 | 113.7 | ||||||||||||||||||
Net investment income (expense) - | 14.1 | (14.1) | — | — | — | — | ||||||||||||||||||
Net realized and unrealized investment gains (losses) | 12.1 | 11.6 | — | 1.5 | (17.4) | 7.8 | ||||||||||||||||||
Net unrealized investment gains from | — | — | — | — | 295.0 | 295.0 | ||||||||||||||||||
Commission revenues | — | — | 174.2 | — | 6.1 | 180.3 | ||||||||||||||||||
Other revenue | .3 | 1.8 | 37.6 | .2 | 6.0 | 45.9 | ||||||||||||||||||
Total revenues | 46.7 | 11.4 | 211.8 | 21.0 | 369.0 | 659.9 | ||||||||||||||||||
Expenses: | ||||||||||||||||||||||||
Insurance acquisition expenses | 3.3 | 2.1 | — | — | — | 5.4 | ||||||||||||||||||
Cost of sales | — | — | — | — | 6.5 | 6.5 | ||||||||||||||||||
General and administrative expenses | 1.6 | 39.8 | 131.0 | 7.5 | 87.1 | 267.0 | ||||||||||||||||||
Broker commission expenses | — | — | 56.4 | — | — | 56.4 | ||||||||||||||||||
Change in fair value of contingent consideration | — | — | (1.6) | — | — | (1.6) | ||||||||||||||||||
Amortization of other intangible assets | — | — | 16.2 | .3 | .6 | 17.1 | ||||||||||||||||||
Interest expense | — | — | 16.1 | 4.3 | .8 | 21.2 | ||||||||||||||||||
Total expenses | 4.9 | 41.9 | 218.1 | 12.1 | 95.0 | 372.0 | ||||||||||||||||||
Pre-tax income (loss) | $ | 41.8 | $ | (30.5) | $ | (6.3) | $ | 8.9 | $ | 274.0 | $ | 287.9 | ||||||||||||
WHITE MOUNTAINS INSURANCE GROUP, LTD. | ||||||||||||||||
SELECTED FINANCIAL DATA | ||||||||||||||||
($ in millions) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
BAM | 2021 | 2020 | 2021 | 2020 | ||||||||||||
Gross par value of primary market policies issued | $ | 3,813.7 | $ | 4,420.8 | $ | 11,171.2 | $ | 10,125.0 | ||||||||
Gross par value of secondary market policies issued | 157.4 | 318.7 | 646.6 | 1,665.7 | ||||||||||||
Gross par value of assumed reinsurance | — | — | 805.5 | 36.9 | ||||||||||||
Total gross par value of market policies issued | $ | 3,971.1 | $ | 4,739.5 | $ | 12,623.3 | $ | 11,827.6 | ||||||||
Gross written premiums | $ | 12.8 | $ | 14.4 | $ | 39.0 | $ | 45.6 | ||||||||
MSC collected | 14.7 | 15.4 | 44.8 | 46.9 | ||||||||||||
Total gross written premiums and MSC collected | 27.5 | 29.8 | 83.8 | 92.5 | ||||||||||||
Present value of future installment MSC collections | — | — | — | .3 | ||||||||||||
Gross written premium adjustments on existing | .1 | .1 | .1 | .1 | ||||||||||||
Gross written premiums and MSC from | $ | 27.6 | $ | 29.9 | $ | 83.9 | $ | 92.9 | ||||||||
Total pricing | 69 bps | 63 bps | 66 bps | 79 bps | ||||||||||||
As of | As of | As of | ||||||||||
Policyholders' surplus | $ | 322.8 | $ | 324.7 | $ | 347.2 | ||||||
Contingency reserve | 102.7 | 86.4 | 81.6 | |||||||||
Qualified statutory capital | 425.5 | 411.1 | 428.8 | |||||||||
Statutory net unearned premiums | 48.3 | 45.2 | 43.6 | |||||||||
Present value of future installment premiums | 13.9 | 14.0 | 14.4 | |||||||||
HG Re, Ltd collateral trusts at statutory value | 442.8 | 417.0 | 381.0 | |||||||||
Fidus Re, Ltd collateral trust at statutory value | 250.0 | 100.0 | 100.0 | |||||||||
Claims paying resources | $ | 1,180.5 | $ | 987.3 | $ | 967.8 | ||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
HG Global | 2021 | 2020 | 2021 | 2020 | ||||||||||||
Net written premiums | $ | 10.9 | $ | 12.5 | $ | 33.4 | $ | 39.1 | ||||||||
Earned premiums | $ | 5.5 | $ | 5.1 | $ | 16.1 | $ | 14.1 | ||||||||
As of | As of | As of | ||||||||||
Unearned premiums | $ | 213.4 | $ | 196.1 | $ | 186.8 | ||||||
Deferred acquisition costs | $ | 59.9 | $ | 54.1 | $ | 51.1 | ||||||
WHITE MOUNTAINS INSURANCE GROUP, LTD. | ||||||||||||
SELECTED FINANCIAL DATA (CONTINUED) | ||||||||||||
($ in millions) | ||||||||||||
(Unaudited) | ||||||||||||
Ark | For the Three Months Ended September 30, 2021 | |||||||||||
GAAP | Third-Party | Adjusted | ||||||||||
Insurance premiums: | ||||||||||||
Gross written premiums | $ | 162.4 | $ | — | $ | 162.4 | ||||||
Net written premiums | $ | 120.9 | $ | 2.0 | $ | 122.9 | ||||||
Net earned premiums | $ | 213.4 | $ | 18.2 | $ | 231.6 | ||||||
Insurance expenses: | ||||||||||||
Loss and loss adjustment expenses | $ | 129.2 | $ | 9.0 | $ | 138.2 | ||||||
Insurance acquisition expenses | 53.7 | — | 53.7 | |||||||||
Other underwriting expenses (1) | 13.3 | .4 | 13.7 | |||||||||
Total insurance expenses | $ | 196.2 | $ | 9.4 | $ | 205.6 | ||||||
Ratios: | ||||||||||||
Loss and loss adjustment expense | 60.5 | % | 59.7 | % | ||||||||
Insurance acquisition expense | 25.2 | % | 23.2 | % | ||||||||
Other underwriting expense | 6.2 | % | 5.9 | % | ||||||||
Combined Ratio | 91.9 | % | 88.8 | % | ||||||||
(1) Included within general and administrative expenses. | ||||||||||||
For the Nine Months Ended September 30, 2021 | ||||||||||||
GAAP | Third-Party | Adjusted | ||||||||||
Insurance premiums: | ||||||||||||
Gross written premiums | $ | 895.0 | $ | — | $ | 895.0 | ||||||
Net written premiums | $ | 725.5 | $ | (5.9) | $ | 719.6 | ||||||
Net earned premiums | $ | 435.8 | $ | 65.0 | $ | 500.8 | ||||||
Insurance expenses: | ||||||||||||
Loss and loss adjustment expenses | $ | 247.8 | $ | 47.2 | $ | 295.0 | ||||||
Insurance acquisition expenses | 124.4 | — | 124.4 | |||||||||
Other underwriting expenses (1) | 43.6 | 1.6 | 45.2 | |||||||||
Total insurance expenses | $ | 415.8 | $ | 48.8 | $ | 464.6 | ||||||
Ratios: | ||||||||||||
Loss and loss adjustment expense | 56.9 | % | 58.9 | % | ||||||||
Insurance acquisition expense | 28.5 | % | 24.8 | % | ||||||||
Other underwriting expense | 10.0 | % | 9.0 | % | ||||||||
Combined Ratio | 95.4 | % | 92.7 | % | ||||||||
(1) Included within general and administrative expenses. | ||||||||||||
WHITE MOUNTAINS INSURANCE GROUP, LTD. | ||||||||||||||||||||
SELECTED FINANCIAL DATA (CONTINUED) | ||||||||||||||||||||
(millions) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
NSM | Three Months | Three Months | Nine Months | Nine Months | Twelve Months | |||||||||||||||
Commission revenues | $ | 58.2 | $ | 67.0 | $ | 174.2 | $ | 194.6 | $ | 252.9 | ||||||||||
Broker commission expenses | 17.1 | 20.4 | 56.4 | 60.9 | 79.8 | |||||||||||||||
Gross profit | 41.1 | 46.6 | 117.8 | 133.7 | 173.1 | |||||||||||||||
Other revenues | 12.5 | 15.3 | 37.6 | 46.8 | 61.8 | |||||||||||||||
General and administrative expenses | 42.9 | 48.8 | 131.0 | 142.1 | 188.0 | |||||||||||||||
Change in fair value of contingent consideration | .7 | .6 | (1.6) | .8 | (.9) | |||||||||||||||
Amortization of other intangible assets | 5.1 | 8.2 | 16.2 | 25.0 | 35.5 | |||||||||||||||
Loss on assets held for sale | — | — | — | 28.7 | 28.7 | |||||||||||||||
Interest expense | 6.1 | 5.9 | 16.1 | 17.7 | 23.7 | |||||||||||||||
GAAP pre-tax loss | (1.2) | (1.6) | (6.3) | (33.8) | (40.1) | |||||||||||||||
Income tax expense (benefit) | .1 | (.8) | (2.8) | (7.6) | (10.5) | |||||||||||||||
GAAP net loss | (1.3) | (.8) | (3.5) | (26.2) | (29.6) | |||||||||||||||
Add back: | ||||||||||||||||||||
Interest expense | 6.1 | 5.9 | 16.1 | 17.7 | 23.7 | |||||||||||||||
Income tax expense (benefit) | .1 | (.8) | (2.8) | (7.6) | (10.5) | |||||||||||||||
General and administrative expenses – depreciation | 1.2 | 1.4 | 2.9 | 3.7 | 5.3 | |||||||||||||||
Amortization of other intangible assets | 5.1 | 8.2 | 16.2 | 25.0 | 35.5 | |||||||||||||||
EBITDA | 11.2 | 13.9 | 28.9 | 12.6 | 24.4 | |||||||||||||||
Exclude: | ||||||||||||||||||||
Change in fair value of contingent consideration | .7 | .6 | (1.6) | .8 | (.9) | |||||||||||||||
Non-cash equity-based compensation expense | 1.0 | .2 | 1.0 | 1.3 | 2.7 | |||||||||||||||
Impairments of intangible assets | — | — | 6.2 | — | — | |||||||||||||||
Loss on assets held for sale | — | — | — | 28.7 | 28.7 | |||||||||||||||
Acquisition-related transaction expenses | .6 | 3.4 | 5.6 | 3.6 | 5.2 | |||||||||||||||
Investments made in the development of new business lines | .2 | .3 | .6 | .4 | .7 | |||||||||||||||
Restructuring expenses | 1.7 | .7 | 3.2 | 5.1 | 6.7 | |||||||||||||||
Adjusted EBITDA | $ | 15.4 | $ | 19.1 | $ | 43.9 | $ | 52.5 | 67.5 | |||||||||||
Remove Fresh Insurance motor business's adjusted EBITDA from October 1, 2020 | 1.6 | |||||||||||||||||||
Include J.C. Taylor's adjusted EBITDA from October 1, 2020 to August 6, 2021 | 5.6 | |||||||||||||||||||
Pro forma adjusted EBITDA | $ | 74.7 | ||||||||||||||||||
WHITE MOUNTAINS INSURANCE GROUP, LTD. | ||||||||||||||||||||
SELECTED FINANCIAL DATA (CONTINUED) | ||||||||||||||||||||
(millions) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Kudu | Three Months | Three Months | Nine Months | Nine Months | Twelve Months September 30, | |||||||||||||||
Net investment income | $ | 6.4 | 9.5 | $ | 19.3 | $ | 26.1 | $ | 36.3 | |||||||||||
Net unrealized investment gains | 9.8 | 18.9 | 1.5 | 62.5 | 76.9 | |||||||||||||||
Other revenues | .1 | .1 | .2 | .2 | .3 | |||||||||||||||
Total revenues | 16.3 | 28.5 | 21.0 | 88.8 | 113.5 | |||||||||||||||
General and administrative expenses | 2.2 | 3.3 | 7.5 | 9.0 | 13.3 | |||||||||||||||
Amortization of other intangible assets | .1 | — | .3 | .2 | .2 | |||||||||||||||
Interest expense | 1.4 | 1.9 | 4.3 | 9.2 | 10.9 | |||||||||||||||
Total expenses | 3.7 | 5.2 | 12.1 | 18.4 | 24.4 | |||||||||||||||
GAAP pre-tax income | 12.6 | 23.3 | 8.9 | 70.4 | 89.1 | |||||||||||||||
Income tax expense | 3.8 | 7.9 | 3.2 | 25.4 | 29.2 | |||||||||||||||
GAAP net income | 8.8 | 15.4 | 5.7 | 45.0 | 59.9 | |||||||||||||||
Add back: | ||||||||||||||||||||
Interest expense | 1.4 | 1.9 | 4.3 | 9.2 | 10.9 | |||||||||||||||
Income tax expense | 3.8 | 7.9 | 3.2 | 25.4 | 29.2 | |||||||||||||||
Amortization of other intangible assets | .1 | — | .3 | .2 | .2 | |||||||||||||||
EBITDA | 14.1 | 25.2 | 13.5 | 79.8 | 100.2 | |||||||||||||||
Exclude: | ||||||||||||||||||||
Net unrealized investment gains | (9.8) | (18.9) | (1.5) | (62.5) | (76.9) | |||||||||||||||
Non-cash equity-based compensation expense | .1 | .2 | .1 | .4 | .7 | |||||||||||||||
Acquisition-related transaction expenses | .1 | .9 | 1.6 | .9 | 3.0 | |||||||||||||||
Adjusted EBITDA | $ | 4.5 | $ | 7.4 | $ | 13.7 | $ | 18.6 | 27.0 | |||||||||||
Adjustment to annualize partial year revenues | 13.7 | |||||||||||||||||||
Annualized adjusted EBITDA | $ | 40.7 | ||||||||||||||||||
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 and using an8% discount rate, was estimated to be$132 million ,$137 million ,$147 million and$149 million less than the nominal GAAP carrying values as of September 30, 2021, June 30, 2021, December 31, 2020 and September 30, 2020, respectively.
The value of HG Global's unearned premium reserve, net of deferred acquisition costs, was$154 million ,$150 million ,$142 million and$136 million as of September 30, 2021, June 30, 2021, December 31, 2020 and September 30, 2020, respectively.
White Mountains believes these adjustments are useful to management and investors in analyzing the intrinsic value of HG Global, including the value of the BAM surplus notes and the value of the in-force business at HG Re, HG Global's reinsurance subsidiary.
The denominator used in the calculation of adjusted book value per share equals the number of common shares outstanding adjusted to exclude unearned restricted common shares, the compensation cost of which, at the date of calculation, has yet to be amortized. Restricted common shares are earned on a straight-line basis over their vesting periods. The reconciliation of GAAP book value per share to adjusted book value per share is included on page 8.
- BAM's gross written premiums and MSC from new business is a non-GAAP financial measure, which is derived by adjusting gross written premiums and MSC collected (i) to include the present value of future installment MSC not yet collected and (ii) to exclude the impact of gross written premium adjustments related to policies closed in prior periods. White Mountains believes these adjustments are useful to management and investors in evaluating the volume and pricing of new business closed during the period. The reconciliation from GAAP gross written premiums to gross written premiums and MSC from new business is included on page 17.
- Ark's adjusted loss and loss adjustment expense ratio, adjusted insurance acquisition expense ratio, adjusted other underwriting expense ratio and adjusted combined ratio are non-GAAP financial measures, which are derived by adjusting the GAAP ratios to add back the impact of whole-account quota-share reinsurance arrangements related to third-party capital providers for Ark's Lloyd's syndicates. The impact of these reinsurance arrangements relates to years of account prior to White Mountains's transaction with Ark. White Mountains believes these adjustments are useful to management and investors in evaluating Ark's results on a fully aligned basis. The reconciliation from the GAAP ratios to the adjusted ratios is included on page 18.
- NSM's EBITDA, adjusted EBITDA and pro forma adjusted EBITDA are non-GAAP financial measures.
EBITDA is a non-GAAP financial measure that excludes interest expense on debt, income tax expense (benefit), depreciation and amortization of other intangible assets from GAAP net income (loss).
Adjusted EBITDA is a non-GAAP financial measure that excludes certain other items in GAAP net income (loss) in addition to those excluded from EBITDA. The adjustments relate to (i) change in fair value of contingent consideration liabilities, (ii) non-cash equity-based compensation expense, (iii) impairments of intangible assets, (iv) loss on assets held for sale, (v) acquisition-related transaction expenses, (vi) investments made in the development of new business lines and (vii) restructuring expenses. A description of each follows:
- Change in fair value of contingent consideration liabilities - Contingent consideration 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, contingent consideration 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.
- Non-cash equity-based compensation expense - Represents non-cash expenses related to NSM's management compensation emanating from the grants of equity units.
- Impairments of intangible assets - Represents expense related to NSM's write-off of intangible assets. For the periods presented, the impairments related primarily to NSM's write-off of intangible assets in its U.K. vertical. The impairments related to lower premium volumes, including due to the impact of the COVID-19 pandemic, and certain reorganization initiatives in the U.K. vertical.
- Loss on assets held for sale - Represents the loss on the net assets held for sale related to the sale of the Fresh Insurance motor business.
- 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.
- Investments made in the development of new business lines - Represents the net loss related to the start-up of newly established lines of business, which NSM views as investments.
- Restructuring expenses - Represents expenses associated with eliminating redundant work force and facilities that often arise as a result of NSM's post-acquisition integration strategies. For the periods presented, this adjustment relates primarily to NSM's expenses incurred in certain reorganization initiatives in the U.K. vertical.
Pro forma adjusted EBITDA is a non-GAAP financial measure that starts with adjusted EBITDA and also (i) includes the earnings of acquired businesses for the period of time over the previous 12 months that the businesses were not owned by White Mountains and (ii) removes the earnings (losses) for the previous 12 months related to businesses sold 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 19 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 20 for the reconciliation of Kudu's GAAP net income (loss) to EBITDA, adjusted EBITDA and annualized adjusted EBITDA.
- Total consolidated portfolio return excluding MediaAlpha and total equity portfolio return excluding MediaAlpha are non-GAAP financial measures that remove the net investment income and net realized and unrealized investment gains (losses) from White Mountains's investment in MediaAlpha. White Mountains believes these measures to be useful to management and investors by showing the underlying performance of White Mountains's investment portfolio and equity portfolio without regard to White Mountains's investment in MediaAlpha. The following tables present reconciliations from GAAP to the reported percentages:
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||
Total consolidated portfolio return | (8.0) | % | 13.5 | % | (3.7) | % | 15.4 | % | ||||
Remove MediaAlpha | 9.4 | % | (10.7) | % | 8.3 | % | (12.6) | % | ||||
Total consolidated portfolio return | 1.4 | % | 2.8 | % | 4.6 | % | 2.8 | % | ||||
Three Months Ended September 30, 2021 | ||
Total equity portfolio return | (17.2)% | |
Remove MediaAlpha | ||
Total equity portfolio return excluding MediaAlpha |
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This earnings release may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included or referenced in this release which address activities, events or developments which White Mountains expects or anticipates will or may occur in the future are forward-looking statements. The words "could", "will", "believe", "intend", "expect", "anticipate", "project", "estimate", "predict" and similar expressions are also intended to identify forward-looking statements. These forward-looking statements include, among others, statements with respect to White Mountains's:
- change in book value per share or adjusted book value per share or return on equity;
- business strategy;
- financial and operating targets or plans;
- incurred loss and loss adjustment expenses and the adequacy of its loss and loss adjustment expense reserves and related reinsurance;
- projections of revenues, income (or loss), earnings (or loss) per share, EBITDA, adjusted EBITDA, dividends, market share or other financial forecasts of White Mountains or its businesses;
- expansion and growth of its business and operations; and
- future capital expenditures.
These statements are based on certain assumptions and analyses made by White Mountains in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors believed to be appropriate in the circumstances. However, whether actual results and developments will conform to its expectations and predictions is subject to risks and uncertainties that could cause actual results to differ materially from expectations, including:
- the risks that are described from time to time in White Mountains's filings with the Securities and Exchange Commission, including but not limited to White Mountains's Annual Report on Form 10-K for the fiscal year ended December 31, 2020;
- claims arising from catastrophic events, such as hurricanes, earthquakes, floods, fires, terrorist attacks or severe winter weather;
- recorded loss reserves subsequently proving to have been inadequate;
- the market value of White Mountains's investment in MediaAlpha;
- the trends and uncertainties from the COVID-19 pandemic, including judicial interpretations on the extent of insurance coverage provided by insurers for COVID-19 pandemic related claims;
- business opportunities (or lack thereof) that may be presented to it and pursued;
- actions taken by ratings agencies, such as financial strength or credit ratings downgrades or placing ratings on negative watch;
- the continued availability of capital and financing;
- deterioration of general economic, market or business conditions, including due to outbreaks of contagious disease (including the COVID-19 pandemic) and corresponding mitigation efforts;
- competitive forces, including the conduct of other insurers;
- changes in domestic or foreign laws or regulations, or their interpretation, applicable to White Mountains, its competitors or its customers; and
- other factors, most of which are beyond White Mountains's control.
Consequently, all of the forward-looking statements made in this earnings release are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by White Mountains will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, White Mountains or its business or operations. White Mountains assumes no obligation to publicly update any such forward-looking statements, whether as a result of new information, future events or otherwise.
CONTACT: Todd Pozefsky
(203) 458-5807
View original content:https://www.prnewswire.com/news-releases/white-mountains-reports-third-quarter-results-301418217.html
SOURCE White Mountains Insurance Group, Ltd.
FAQ
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