WHITE MOUNTAINS REPORTS THIRD QUARTER RESULTS
HAMILTON, Bermuda, Nov. 6, 2024 /PRNewswire/ -- White Mountains Insurance Group, Ltd. (NYSE:WTM) reported book value per share of $1,795 and adjusted book value per share of $1,883 as of September 30, 2024. Book value per share and adjusted book value per share increased 4% and 6% in the third quarter of 2024 and 9% and 11% in the first nine months of 2024, including dividends.
As of July 1, 2024, White Mountains no longer consolidates BAM. As of September 30, 2024, the BAM surplus notes were fair valued in accordance with GAAP at $411 million, which resulted in a pre-tax unrealized loss to book value of $99 million in the third quarter. As of June 30, 2024, for adjusted book value purposes, the BAM surplus notes were valued at $415 million, including an $87 million time value discount.
Manning Rountree, CEO, commented, "ABVPS was up 6% in the quarter and 11% year-to-date, driven by solid results at our operating companies and good investment returns. Ark produced a 79% combined ratio and $374 million of gross written premiums in the quarter, up 49% year-over-year. HG Global generated $14 million of gross written premiums in the quarter, driven by strong primary market volume at BAM. At Kudu, trailing 12 months adjusted EBITDA increased, while the fair value of the continuing portfolio grew 3%. Bamboo had another strong quarter, doubling managed premiums and growing adjusted EBITDA significantly. MediaAlpha's share price increased 38% in the quarter, producing an $88 million unrealized gain. Undeployed capital remains at roughly $650 million."
Comprehensive income attributable to common shareholders was $180 million and $361 million in the third quarter and first nine months of 2024 compared to $23 million and $224 million in the third quarter and first nine months of 2023. Results in the third quarter and first nine months of 2024 included $88 million and $160 million of net realized and unrealized investment gains from White Mountains's investment in MediaAlpha compared to $47 million and $39 million of unrealized investment losses in the third quarter and first nine months of 2023.
Ark/WM Outrigger
The Ark/WM Outrigger segment's combined ratio was 77% and 84% in the third quarter and first nine months of 2024 compared to 77% and 83% in the third quarter and first nine months of 2023. Ark/WM Outrigger reported gross written premiums of $374 million and $1,943 million, net written premiums of $339 million and $1,440 million and net earned premiums of $552 million and $1,173 million in the third quarter and first nine months of 2024 compared to gross written premiums of $251 million and $1,667 million, net written premiums of $231 million and $1,306 million and net earned premiums of $499 million and $1,047 million in the third quarter and first nine months of 2023.
Ark's combined ratio was 79% and 85% in the third quarter and first nine months of 2024 compared to 81% and 87% in the third quarter and first nine months of 2023. Ark's combined ratio included 17 points and eight points of catastrophe losses in the third quarter and first nine months of 2024, driven primarily by Hurricanes Helene, Debby and Beryl as well as Calgary hailstorms, compared to 11 points and seven points of catastrophe losses in the third quarter and first nine months of 2023, driven primarily by Hurricane Idalia, the Maui wildfires and various smaller events. Ark's combined ratio in the third quarter and first nine months of 2024 included five points and three points of net favorable prior year development, primarily from property lines of business, compared to less than one point of net favorable prior year development and two points of net unfavorable prior year development in the third quarter and first nine months of 2023.
Ark reported gross written premiums of $374 million and $1,943 million, net written premiums of $331 million and $1,358 million and net earned premiums of $507 million and $1,111 million in the third quarter and first nine months of 2024 compared to gross written premiums of $251 million and $1,667 million, net written premiums of $225 million and $1,198 million and net earned premiums of $438 million and $972 million in the third quarter and first nine months of 2023.
Ark reported pre-tax income of $119 million and $202 million in the third quarter and first nine months of 2024 compared to $62 million and $140 million in the third quarter and first nine months of 2023. Ark's results included net realized and unrealized investment gains (losses) of $53 million and $84 million in the third quarter and first nine months of 2024 compared to $(7) million and $36 million in the third quarter and first nine months of 2023.
Ian Beaton, CEO of Ark, said, "Ark had a good third quarter. The combined ratio was 79% in the quarter, an improvement of two points year-over-year. Gross written premiums were $374 million in the quarter and $1,943 million year-to-date, up 49% and 17%, respectively, from 2023 levels despite generally flat rate change. We continue to experience good growth across several lines of business, aided by new underwriters and product classes."
WM Outrigger Re's combined ratio was 58% and 50% in the third quarter and first nine months of 2024 compared to 44% and 40% in the third quarter and first nine months of 2023. Catastrophe losses in 2024 included Hurricanes Helene, Debby and Beryl as well as Calgary hailstorms. Major catastrophe losses affecting WM Outrigger Re in 2023 were minimal. WM Outrigger Re reported gross and net written premiums of $9 million and $82 million and net earned premiums of $45 million and $63 million in the third quarter and first nine months of 2024 compared to gross and net written premiums of $6 million and $108 million and net earned premiums of $61 million and $75 million in the third quarter and first nine months of 2023. Net earned premiums in the first nine months of 2024 decreased due to White Mountains's lower capital commitment to WM Outrigger Re in 2024 compared to 2023. WM Outrigger Re reported pre-tax income of $22 million and $40 million in the third quarter and first nine months of 2024 compared to $37 million and $53 million in the third quarter and first nine months of 2023.
Hurricane Milton represents a significant industry loss event in the fourth quarter. Industry estimates are preliminary and range widely. Ark does not currently expect that Milton losses will cause full year 2024 actual catastrophe losses for Ark/WM Outrigger to diverge materially from full year 2024 planned catastrophe losses.
HG Global
Effective July 1, 2024, White Mountains no longer consolidates BAM. Upon deconsolidation, the BAM surplus notes were fair valued in accordance with GAAP at $387 million, which resulted in an unrealized loss on deconsolidation of $115 million. As of September 30, 2024, the BAM surplus notes were fair valued at $411 million, which included accrued interest of $8 million and an increase in fair value of $16 million, driven by lower interest rates, during the third quarter of 2024. As of June 30, 2024, for adjusted book value purposes, the BAM surplus notes were valued at $415 million, including an $87 million time value discount.
HG Global reported gross written premiums of $14 million and $35 million and earned premiums of $8 million and $22 million in the third quarter and first nine months of 2024 compared to gross written premiums of $14 million and $32 million and earned premiums of $7 million and $19 million in the third quarter and first nine months of 2023. HG Global reported gross written premiums net of ceding commission paid of $10 million and $24 million in the third quarter and first nine months of 2024 compared to $10 million and $22 million in the third quarter and first nine months of 2023. HG Global's total par value of policies assumed, which represents its first-loss exposure on policies assumed from BAM, was $688 million and $2,012 million in the third quarter and first nine months of 2024 compared to $644 million and $1,594 million in the third quarter and first nine months of 2023. HG Global's total gross pricing was 203 and 171 basis points in the third quarter and first nine months of 2024 compared to 220 and 200 basis points in the third quarter and first nine months of 2023.
HG Global reported pre-tax income (loss) of $(63) million and $(46) million in the third quarter and first nine months of 2024 compared to $(2) million and $22 million in the third quarter and first nine months of 2023. HG Global's results included net realized and unrealized investment gains (losses) of $23 million and $13 million in the third quarter and first nine months of 2024 compared to $(14) million and $(11) million in the third quarter and first nine months of 2023, driven by the movement of interest rates. HG Global's results in the third quarter and first nine months of 2024 also included the loss on deconsolidation of $115 million, partially offset by an increase in fair value of the BAM surplus notes of $16 million during the quarter.
Kevin Pearson, President of HG Global, said, "HG Global had a solid quarter with gross written premiums of $14 million. HG Global benefited from continued high demand for BAM's bond insurance, particularly in the primary market. Par value of primary market policies assumed grew 5% to $582 million, while primary market gross written premiums grew 14% to $10 million."
We encourage you to read BAM's third quarter statutory financial statements and operating supplement, which are available on BAM's website at https://bambonds.com/about-bam/credit-rating-and-finanical-information/.
Kudu
Kudu reported total revenues of $47 million, pre-tax income of $38 million and adjusted EBITDA of $14 million in the third quarter of 2024 compared to total revenues of $26 million, pre-tax income of $16 million and adjusted EBITDA of $12 million in the third quarter of 2023. Total revenues, pre-tax income and adjusted EBITDA included $17 million of net investment income in the third quarter of 2024 compared to $15 million in the third quarter of 2023. Total revenues and pre-tax income also included $30 million of net realized and unrealized investment gains in the third quarter of 2024 compared to $11 million in the third quarter of 2023.
Kudu reported total revenues of $128 million, pre-tax income of $101 million and adjusted EBITDA of $41 million in the first nine months of 2024 compared to total revenues of $89 million, pre-tax income of $62 million and adjusted EBITDA of $34 million in the first nine months of 2023. Total revenues, pre-tax income and adjusted EBITDA included $50 million of net investment income in the first nine months of 2024 compared to $44 million in the first nine months of 2023. Total revenues and pre-tax income also included $78 million of net realized and unrealized investment gains in the first nine months of 2024 compared to $45 million in the first nine months of 2023.
Rob Jakacki, CEO of Kudu, said, "We enjoyed another strong quarter. Trailing 12 months net investment income increased 3% to $77 million, while annualized adjusted EBITDA increased 2% to $63 million. The fair value of Kudu's continuing portfolio increased 3%. Kudu's pipeline remains highly active. We are pleased to have closed our capital deployment in Revelation early in the fourth quarter, and we expect to deploy additional capital before the end of the year."
Bamboo
Bamboo reported commission and fee revenues of $43 million and $97 million and pre-tax income of $16 million and $23 million for the third quarter and first nine months of 2024. Bamboo reported MGA pre-tax income of $14 million and $21 million and MGA adjusted EBITDA of $19 million and $37 million for the third quarter and first nine months of 2024.
Managed premiums, which represent the total premiums placed by Bamboo, were $148 million and $358 million for the third quarter and first nine months of 2024 compared to $71 million and $140 million for the third quarter and first nine months of 2023. The increase in managed premiums was driven primarily by growth in new business volume as well as a growing renewal book.
John Chu, CEO of Bamboo, said, "Bamboo had another strong quarter. Managed premiums doubled year-over-year to $148 million, and MGA Adjusted EBITDA increased to a record $19 million. Growth remains robust given high demand for our services from new and renewing policyholders."
MediaAlpha
As of September 30, 2024, White Mountains owned 17.9 million shares of MediaAlpha, representing a 27% basic ownership interest (25% on a fully-diluted/fully-converted basis). As of September 30, 2024, MediaAlpha's share price was $18.11 per share, which increased from $13.17 per share as of June 30, 2024. The carrying value of White Mountains's investment in MediaAlpha was $323 million as of September 30, 2024 compared to $235 million at June 30, 2024. At our current level of ownership, each $1.00 per share increase or decrease in the share price of MediaAlpha will result in an approximate $7.00 per share increase or decrease in White Mountains's book value per share and adjusted book value per share.
We encourage you to read MediaAlpha's third quarter earnings release and related shareholder letter, which is available on MediaAlpha's investor relations website at www.investors.mediaalpha.com.
Other Operations
White Mountains's Other Operations reported pre-tax income (loss) of $108 million and $157 million in the third quarter and first nine months of 2024 compared to $(63) million and $19 million in the third quarter and first nine months of 2023. Net realized and unrealized investment gains (losses) from White Mountains's investment in MediaAlpha were $88 million and $160 million in the third quarter and first nine months of 2024 compared to $(47) million and $(39) million in the third quarter and first nine months of 2023. Excluding MediaAlpha, net realized and unrealized investment gains were $30 million and $60 million in the third quarter and first nine months of 2024 compared to $8 million and $126 million in the third quarter and first nine months of 2023. Net investment income was $10 million and $28 million in the third quarter and first nine months of 2024 compared to $8 million and $22 million in the third quarter and first nine months of 2023. White Mountains's Other Operations reported general and administrative expenses of $33 million and $126 million in the third quarter and first nine months of 2024 compared to $42 million and $131 million in the third quarter and first nine months of 2023.
Investments
The total consolidated portfolio return was 4.6% in the third quarter of 2024. Excluding MediaAlpha, the total consolidated portfolio return was 3.3% in the third quarter of 2024. The total consolidated portfolio return was -0.2% in the third quarter of 2023. Excluding MediaAlpha, the total consolidated portfolio return was 0.6% in the third quarter of 2023
The total consolidated portfolio return was 9.4% in the first nine months of 2024. Excluding MediaAlpha, the total consolidated portfolio return was 6.9% in the first nine months of 2024. The total consolidated portfolio return was 5.3% in the first nine months of 2023. Excluding MediaAlpha, the total consolidated portfolio return was 6.3% in the first nine months of 2023.
Mark Plourde, President of White Mountains Advisors, said, "Excluding MediaAlpha, the total portfolio was up 3.3% in the quarter, a good absolute result but lagging benchmarks. The fixed income portfolio returned 2.9%, behind the longer duration BBIA Index return of 4.6% as interest rates declined in the quarter. The equity portfolio excluding MediaAlpha returned 3.8%, behind the S&P 500 Index return of 5.9%. Equity results were driven by lower relative returns from our international common equities and certain other long-term investments."
Additional Information
White Mountains is a Bermuda-domiciled financial services holding company traded on the New York Stock Exchange under the symbol WTM and the Bermuda Stock Exchange under the symbol WTM.BH. 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: Rob Seelig(603) 640-2212
WHITE MOUNTAINS INSURANCE GROUP, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(millions)
(Unaudited)
September 30, 2024
December 31, 2023
September 30, 2023
Assets
P&C Insurance and Reinsurance (Ark/WM Outrigger)
Fixed maturity investments
$ 1,461.2
$ 866.8
$ 775.0
Common equity securities
435.6
400.6
384.9
Short-term investments
579.1
962.8
850.0
Other long-term investments
544.8
440.9
416.6
Total investments
3,020.7
2,671.1
2,426.5
Cash (restricted $3.3, $0.7, $0.3)
148.8
90.5
129.6
Reinsurance recoverables
748.0
442.0
538.4
Insurance premiums receivable
993.0
612.2
781.6
Deferred acquisition costs
199.7
145.3
178.7
Goodwill and other intangible assets
292.5
292.5
292.5
Other assets
175.8
125.0
66.9
Total P&C Insurance and Reinsurance assets
5,578.5
4,378.6
4,414.2
Financial Guarantee (HG Global)
Fixed maturity investments
636.1
1,012.3
932.2
Short-term investments
34.6
70.6
80.1
Total investments
670.7
1,082.9
1,012.3
Cash
1.2
6.7
4.9
BAM surplus notes, at fair value
411.1
—
—
Insurance premiums receivable
7.9
5.5
5.5
Deferred acquisition costs
83.2
40.1
38.5
Other assets
27.8
36.8
22.2
Total Financial Guarantee assets
1,201.9
1,172.0
1,083.4
Asset Management (Kudu)
Short-term investments
20.3
29.3
17.3
Other long-term investments
936.8
896.3
780.7
Total investments
957.1
925.6
798.0
Cash
76.7
1.4
5.4
Accrued investment income
15.7
17.6
15.8
Goodwill and other intangible assets
8.0
8.3
8.4
Other assets
36.6
6.5
8.3
Total Asset Management assets
1,094.1
959.4
835.9
P&C Insurance Distribution (Bamboo)
Fixed maturity investments
38.9
—
—
Short-term investments
14.6
—
—
Total investments
53.5
—
—
Cash (restricted $67.7, $0.0, $0.0)
91.1
—
—
Premiums, commissions and fees receivable
72.7
—
—
Goodwill and other intangible assets
359.0
—
—
Other assets
23.3
—
—
Total P&C Insurance Distribution assets
599.6
—
—
Other Operations
Fixed maturity investments
286.1
230.2
270.7
Common equity securities
219.8
137.8
252.1
Investment in MediaAlpha
323.4
254.9
188.8
Short-term investments
241.7
425.2
215.5
Other long-term investments
589.5
661.0
698.5
Total investments
1,660.5
1,709.1
1,625.6
Cash
28.2
23.8
22.9
Insurance premiums receivable
34.3
—
—
Goodwill and other intangible assets
66.2
69.8
71.2
Other assets
74.2
73.2
89.6
Total Other Operations assets
1,863.4
1,875.9
1,809.3
Total assets
$ 10,337.5
$ 8,385.9
$ 8,142.8
WHITE MOUNTAINS INSURANCE GROUP, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(millions)
(Unaudited)
September 30, 2024
December 31, 2023
September 30, 2023
Liabilities
P&C Insurance and Reinsurance (Ark/WM Outrigger)
Loss and loss adjustment expense reserves
$ 2,133.0
$ 1,605.1
$ 1,571.8
Unearned insurance premiums
1,149.8
743.6
984.6
Debt
156.8
185.5
184.6
Reinsurance payable
230.2
81.1
146.3
Contingent consideration
141.5
94.0
62.1
Other liabilities
188.9
166.8
132.0
Total P&C Insurance and Reinsurance liabilities
4,000.2
2,876.1
3,081.4
Financial Guarantee (HG Global)
Unearned insurance premiums
287.0
325.8
312.3
Debt
147.3
146.9
146.8
Other liabilities
19.6
59.0
59.9
Total Financial Guarantee liabilities
453.9
531.7
519.0
Asset Management (Kudu)
Debt
218.5
203.8
203.7
Other liabilities
75.9
71.6
53.6
Total Asset Management liabilities
294.4
275.4
257.3
P&C Insurance Distribution (Bamboo)
Loss and loss adjustment expense reserves
17.7
—
—
Unearned insurance premiums
29.9
—
—
Premiums and commissions payable
93.7
—
—
Other liabilities
30.7
—
—
Total P&C Insurance Distribution liabilities
172.0
—
—
Other Operations
Loss and loss adjustment expense reserves
8.1
—
—
Unearned insurance premiums
28.5
—
—
Debt
22.3
28.4
29.6
Accrued incentive compensation
64.5
87.7
64.0
Other liabilities
33.8
25.0
27.3
Total Other Operations liabilities
157.2
141.1
120.9
Total liabilities
5,077.7
3,824.3
3,978.6
Equity
White Mountains's common shareholder's equity
White Mountains's common shares and paid-in surplus
563.3
551.3
547.5
Retained earnings
4,048.3
3,690.8
3,404.3
Accumulated other comprehensive income (loss), after tax:
Net unrealized gains (losses) from foreign currency translation
(1.0)
(1.6)
(2.7)
Total White Mountains's common shareholders' equity
4,610.6
4,240.5
3,949.1
Noncontrolling interests
649.2
321.1
215.1
Total equity
5,259.8
4,561.6
4,164.2
Total liabilities and equity
$ 10,337.5
$ 8,385.9
$ 8,142.8
WHITE MOUNTAINS INSURANCE GROUP, LTD.
BOOK VALUE AND ADJUSTED BOOK VALUE PER SHARE
(Unaudited)
September 30, 2024
June 30, 2024
December 31, 2023
September 30, 2023
Book value per share numerators (in millions):
White Mountains's common shareholders' equity -
GAAP book value per share numerator
$ 4,610.6
$ 4,422.6
$ 4,240.5
$ 3,949.1
HG Global's unearned premium reserve (1)
278.1
271.7
265.4
254.2
HG Global's net deferred acquisition costs (1)
(80.6)
(78.5)
(76.5)
(73.1)
Time value of money discount on expected future payments on the
BAM surplus notes (1) (2)
—
(84.7)
(87.9)
(90.2)
Adjusted book value per share numerator
$ 4,808.1
$ 4,531.1
$ 4,341.5
$ 4,040.0
Book value per share denominators (in thousands of shares):
Common shares outstanding - GAAP book value per share
denominator
2,568.1
2,568.3
2,560.5
2,560.5
Unearned restricted common shares
(15.0)
(18.3)
(12.4)
(15.7)
Adjusted book value per share denominator
2,553.1
2,550.0
2,548.1
2,544.8
GAAP book value per share
$ 1,795.31
$ 1,722.02
$ 1,656.14
$ 1,542.36
Adjusted book value per share
$ 1,883.24
$ 1,776.89
$ 1,703.82
$ 1,587.59
(1) Amount reflects White Mountains's preferred share ownership in HG Global of 96.9%.
(2) For periods subsequent to July 1, 2024, White Mountains carries the BAM surplus notes under GAAP at fair value, which incorporates time value into its estimate.
September 30, 2024
June 30, 2024
December 31, 2023
September 30, 2023
Quarter-to-date change in GAAP book value per share,
including dividends:
4.3 %
(1.2) %
7.4 %
0.7 %
Quarter-to-date change in adjusted book value per share,
including dividends:
6.0 %
(1.1) %
7.3 %
0.7 %
Year-to-date change in GAAP book value per share,
including dividends:
8.5 %
4.0 %
13.8 %
5.9 %
Year-to-date change in adjusted book value per share,
including dividends:
10.6 %
4.3 %
14.0 %
6.2 %
Year-to-date dividends per share
$ 1.00
$ 1.00
$ 1.00
$ 1.00
WHITE MOUNTAINS INSURANCE GROUP, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(millions)
(Unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
Revenues:
P&C Insurance and Reinsurance (Ark/WM Outrigger)
Earned insurance premiums
$ 552.2
$ 498.9
$ 1,173.3
$ 1,047.3
Net investment income
24.3
16.9
66.5
41.2
Net realized and unrealized investment gains (losses)
53.2
(6.6)
84.1
35.9
Other revenues
3.7
3.6
9.6
(1.1)
Total P&C Insurance and Reinsurance revenues
633.4
512.8
1,333.5
1,123.3
Financial Guarantee (HG Global)
Earned insurance premiums
7.5
7.9
24.3
23.3
Net investment income
6.0
8.1
26.1
22.9
Net realized and unrealized investment gains (losses)
22.5
(24.1)
8.1
(17.0)
Interest income from BAM surplus notes
7.9
—
7.9
—
Change in fair value of BAM surplus notes
15.8
—
15.8
—
Unrealized loss on deconsolidation of BAM
(114.5)
—
(114.5)
—
Other revenues
—
.7
1.1
2.0
Total Financial Guarantee revenues
(54.8)
(7.4)
(31.2)
31.2
Asset Management (Kudu)
Net investment income
17.2
15.1
50.1
44.0
Net realized and unrealized investment gains (losses)
29.5
11.2
77.5
45.4
Other revenues
.5
—
.5
—
Total Asset Management revenues
47.2
26.3
128.1
89.4
P&C Insurance Distribution (Bamboo)
Commission and fee revenues
42.7
—
97.3
—
Earned insurance premiums
10.6
—
27.0
—
Other revenues
2.4
—
4.5
—
Total P&C Insurance Distribution revenues
55.7
—
128.8
—
Other Operations
Earned insurance premiums
11.2
—
19.8
—
Net investment income
9.6
8.0
27.9
22.0
Net realized and unrealized investment gains (losses)
29.7
8.0
60.4
125.8
Net realized and unrealized investment gains (losses) from
investment in MediaAlpha
88.2
(46.8)
159.7
(38.9)
Commission and fee revenues
4.1
3.5
11.1
10.0
Other revenues
14.8
15.2
43.7
67.1
Total Other Operations revenues
157.6
(12.1)
322.6
