HAMILTON, Bermuda, Feb. 7, 2024 /PRNewswire/ — White Mountains Insurance Group, Ltd. (NYSE:WTM) reported book value per share of $1,656 and adjusted book value per share of $1,704 as of December 31, 2023. Book value per share and adjusted book value per share both increased 7% in the fourth quarter of 2023 and 14% in the year ended December 31, 2023, including dividends.
Manning Rountree, CEO, commented, “We had a strong fourth quarter to cap off a good year. ABVPS was up 7% in the quarter and 14% for the full year. In the quarter, we had good results from our operating companies and excellent returns in our investment portfolio. BAM produced $48 million of gross written premiums and member surplus contributions in the quarter. Ark produced good underwriting results in both the quarter and the full year, while growing full-year gross written premiums by 31%. Kudu grew the fair value of its continuing portfolio and closed two new deployments in the quarter. Our investment portfolio was up 6% in the quarter and 11% for the year. The value of our MediaAlpha position grew $66 million in the quarter and $27 million for the year. We redeployed $130 million into Outrigger Re for the coming year and closed on our acquisition of Bamboo in early January. Undeployed capital stands at roughly $500 million.”
Comprehensive income attributable to common shareholders was $288 million and $511 million in the fourth quarter and year ended December 31, 2023 compared to $40 million and $788 million in the fourth quarter and year ended December 31, 2022. Results in the fourth quarter and year ended December 31, 2023 included $66 million and $27 million of unrealized investment gains (losses) from White Mountains’s investment in MediaAlpha compared to $20 million and $(93) million in the fourth quarter and year ended December 31, 2022. Results in the year ended December 31, 2022 also included the net gain from the sale of NSM of $876 million.
On December 27, 2023, Bermuda enacted a 15% corporate income tax that will generally become effective on January 1, 2025. White Mountains expects to meet the requirements to be exempt from the Bermuda corporate income tax and the Pillar Two worldwide minimum tax until January 1, 2030. The Bermuda legislation also provides for an economic transition adjustment that will reduce future years’ taxable income. Under U.S. GAAP, this economic transition adjustment was required to be recognized in 2023 and led to the recording of a deferred tax asset as of December 31, 2023. Accordingly, White Mountains’s results in the fourth quarter and year ended December 31, 2023 included a net deferred tax benefit of $68 million related to the economic transition adjustment, of which $51 million was recorded at Ark and $17 million was recorded at HG Global. This tax benefit increased both book value per share and adjusted book value per share by approximately $14, net of noncontrolling interest and the impact on the fair value of Ark’s contingent consideration.
HG Global/BAM
BAM’s gross written premiums and member surplus contributions (MSC) collected were $48 million and $131 million in the fourth quarter and year ended December 31, 2023 compared to $38 million and $147 million in the fourth quarter and year ended December 31, 2022. BAM insured municipal bonds with par value of $5.1 billion and $15.6 billion in the fourth quarter and year ended December 31, 2023 compared to $2.6 billion and $16.0 billion in the fourth quarter and year ended December 31, 2022. Total pricing was 93 and 84 basis points in the fourth quarter and year ended December 31, 2023 compared to 148 and 91 basis points in the fourth quarter and year ended December 31, 2022. BAM’s total claims paying resources were $1,501 million as of December 31, 2023 compared to $1,474 million as of September 30, 2023 and $1,423 million as of December 31, 2022.
Seán McCarthy, CEO of BAM, said, “BAM recorded its strongest quarter of the year for par insured, total premiums, and pricing. Total claims-paying resources exceeded $1.5 billion for the first time. New issuance of municipal bonds increased as interest rates declined from recent highs. Investor demand for insured bonds remained robust, with insured penetration in the primary market reaching a new post-Great Recession high.”
HG Global reported pre-tax income (loss) of $34 million and $56 million in the fourth quarter and year ended December 31, 2023 compared to $12 million and $(23) million in the fourth quarter and year ended December 31, 2022. HG Global’s results included net realized and unrealized investment gains (losses) of $25 million and $14 million in the fourth quarter and year ended December 31, 2023 compared to $5 million and $(53) million in the fourth quarter and year ended December 31, 2022, driven by the movement of interest rates.
White Mountains reported pre-tax loss related to BAM of $0.4 million and $58 million in the fourth quarter and year ended December 31, 2023 compared to $14 million and $112 million in the fourth quarter and year ended December 31, 2022. BAM’s results included net realized and unrealized investment gains (losses) of $19 million and $13 million in the fourth quarter and year ended December 31, 2023 compared to $3 million and $(53) million in the fourth quarter and year ended December 31, 2022, driven by the movement of interest rates.
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 noncontrolling interests.
Ark/WM Outrigger
The Ark/WM Outrigger segment’s combined ratio was 69% and 80% in the fourth quarter and year ended December 31, 2023. Ark/WM Outrigger reported gross written premiums of $232 million and $1,898 million, net written premiums of $215 million and $1,521 million and net earned premiums of $362 million and $1,410 million in the fourth quarter and year ended December 31, 2023. Ark/WM Outrigger reported pre-tax income of $125 million and $318 million in the fourth quarter and year ended December 31, 2023.
Ark’s combined ratio was 70% and 82% in the fourth quarter and year ended December 31, 2023 compared to 59% and 82% in the fourth quarter and year ended December 31, 2022. Ark’s combined ratio in the year ended December 31, 2023 included two points of catastrophe losses, which included losses from Hurricane Idalia, the Maui wildfires, Hurricane Otis and various smaller events, compared to 13 points of catastrophe losses in the year ended December 31, 2022, driven primarily by losses from Hurricane Ian and the conflict in Ukraine. Ark’s combined ratio in the fourth quarter and year ended December 31, 2023 both included two points of net unfavorable prior year development compared to 11 points and six points of net favorable prior year development in the fourth quarter and year ended December 31, 2022. Net unfavorable development for the year ended December 31, 2023 was driven primarily by Winter Storm Elliott, Hurricane Ian and three large claims in the property and marine & energy lines of business.
Ark reported gross written premiums of $232 million and $1,898 million, net written premiums of $213 million and $1,411 million and net earned premiums of $334 million and $1,305 million in the fourth quarter and year ended December 31, 2023 compared to gross written premiums of $200 million and $1,452 million, net written premiums of $189 million and $1,195 million and net earned premiums of $286 million and $1,043 million in the fourth quarter and year ended December 31, 2022.
Ark reported pre-tax income of $109 million and $249 million in the fourth quarter and year ended December 31, 2023 compared to $116 million and $95 million in the fourth quarter and year ended December 31, 2022. Ark’s results included net realized and unrealized investment gains (losses) of $50 million and $86 million in the fourth quarter and year ended December 31, 2023 compared to $21 million and $(55) million in the fourth quarter and year ended December 31, 2022.
Ian Beaton, CEO of Ark, said, “Ark had a good quarter and full year, producing combined ratios of 70% and 82%, respectively. Premiums grew 31% year over year, including risk adjusted rate change of 15%. Growth was particularly strong in the property line of business, aided by the rate environment and capacity from Outrigger Re. In December, AM Best affirmed Ark’s ‘A/stable’ rating. We look forward to continued profitable growth in the business in 2024.”
WM Outrigger Re’s combined ratio was 55% and 44% in the fourth quarter and year ended December 31, 2023. WM Outrigger Re reported gross and net written premiums of $2 million and $110 million and net earned premiums of $29 million and $104 million in the fourth quarter and year ended December 31, 2023. WM Outrigger Re reported pre-tax income of $16 million and $69 million in the fourth quarter and year ended December 31, 2023.
Kudu
Kudu reported total revenues of $88 million, pre-tax income of $75 million and adjusted EBITDA of $22 million in the fourth quarter of 2023 compared to total revenues of $32 million, pre-tax income of $23 million and adjusted EBITDA of $9 million in the fourth quarter of 2022. Total revenues, pre-tax income and adjusted EBITDA included $27 million of net investment income in the fourth quarter of 2023 compared to $13 million in the fourth quarter of 2022. Total revenues and pre-tax income also included $61 million of net realized and unrealized investment gains in the fourth quarter of 2023 compared to $18 million in the fourth quarter of 2022.
Kudu reported total revenues of $177 million, pre-tax income of $137 million and adjusted EBITDA of $57 million in the year ended December 31, 2023 compared to total revenues of $119 million, pre-tax income of $89 million and adjusted EBITDA of $42 million in the year ended December 31, 2022. Total revenues, pre-tax income and adjusted EBITDA included $71 million of net investment income in the year ended December 31, 2023 compared to $54 million in the year ended December 31, 2022. Total revenues and pre-tax income also included $106 million of net realized and unrealized investment gains in the year ended December 31, 2023 compared to $64 million in the year ended December 31, 2022.
Rob Jakacki, CEO of Kudu, said, “Kudu had a strong quarter, growing the fair value of our continuing portfolio by 8% and closing our investment in Sage Advisory Services, an Austin-based independent asset manager. Kudu had a good full year, growing our business and improving our key financial metrics. We increased net investment income to $71 million, up 31% year over year, and adjusted EBITDA to $57 million, up 35% year-over-year. Our portfolio is performing well, and our pipeline of new deployment opportunities remains robust.”
MediaAlpha
As of December 31, 2023, White Mountains owned 22.9 million shares of MediaAlpha, representing a 35% basic ownership interest (33% on a fully-diluted/fully-converted basis). As of December 31, 2023, MediaAlpha’s closing price was $11.15 per share, which increased from $8.26 per share as of September 30, 2023. The carrying value of White Mountains’s investment in MediaAlpha was $255 million as of December 31, 2023, which increased from $189 million as of September 30, 2023. 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 $9.00 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 fourth quarter earnings release and related shareholder letter scheduled for February 20, 2024, which will be 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 $94 million and $113 million in the fourth quarter and year ended December 31, 2023 compared to $(8) million and $(198) million in the fourth quarter and year ended December 31, 2022. Unrealized investment gains (losses) from White Mountains’s investment in MediaAlpha were $66 million and $27 million in the fourth quarter and year ended December 31, 2023 compared to $20 million and $(93) million in the fourth quarter and year ended December 31, 2022. Excluding MediaAlpha, net realized and unrealized investment gains (losses) were $63 million and $189 million in the fourth quarter and year ended December 31, 2023 compared to $(4) million and $(2) million in the fourth quarter and year ended December 31, 2022. Net investment income was $8 million and $30 million in the fourth quarter and year ended December 31, 2023 compared to $19 million and $32 million in the fourth quarter and year ended December 31, 2022. White Mountains’s Other Operations reported general and administrative expenses of $52 million and $182 million in the fourth quarter and year ended December 31, 2023 compared to $52 million and $174 million in the fourth quarter and year ended December 31, 2022.
Share Repurchases
White Mountains did not repurchase any of its common shares in the fourth quarter of 2023. In the year ended December 31, 2023, White Mountains repurchased and retired 24,165 of its common shares for $33 million at an average share price of $1,354.88, or 80% of White Mountains’s adjusted book value per share as of December 31, 2023.
In the fourth quarter of 2022, White Mountains repurchased and retired 4,076 of its common shares for $5 million at an average share price of $1,298.11, or 87% of White Mountains’s adjusted book value per share as of December 31, 2022. In the year ended December 31, 2022, White Mountains repurchased and retired 461,256 of its common shares for $616 million at an average share price of $1,335.11, or 89% of White Mountains’s adjusted book value per share as of December 31, 2022.
Investments
The total consolidated portfolio return was 5.8% in the fourth quarter of 2023. Excluding MediaAlpha, the total consolidated portfolio return was 4.8% in the fourth quarter of 2023. The total consolidated portfolio return was 2.1% in the fourth quarter of 2022. Excluding MediaAlpha, the total consolidated portfolio return was 1.7% in the fourth quarter of 2022.
The total consolidated portfolio return, both including and excluding MediaAlpha, was 11.4% for the year ended December 31, 2023. The total consolidated portfolio return was -1.6% for the year ended December 31, 2022. Excluding MediaAlpha, the total consolidated portfolio return was 0.3% for the year ended December 31, 2022.
Mark Plourde, President of White Mountains Advisors, said, “Excluding MediaAlpha, the total portfolio returned 4.8% in the quarter and 11.4% for the year. Absolute results were strong across our fixed income and equity portfolios in both periods. The fixed income portfolio returned 3.2% for the quarter and 5.8% for the year, compared to the BBIA Index returns of 5.5% and 5.2%. The equity portfolio, excluding MediaAlpha, returned 7.1% in the quarter and 19.0% for the year, compared to the S&P 500 Index returns of 11.7% and 26.3%.”
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-K on or before February 29, 2024 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)
December 31, 2023
September 30, 2023
December 31, 2022
Assets
Financial Guarantee (HG Global/BAM)
Fixed maturity investments
$ 1,012.3
$ 932.2
$ 909.9
Short-term investments
70.6
80.1
65.9
Total investments
1,082.9
1,012.3
975.8
Cash
6.7
4.9
18.2
Insurance premiums receivable
5.5
5.5
6.6
Deferred acquisition costs
40.1
38.5
36.0
Other assets
36.8
22.2
21.9
Total Financial Guarantee assets
1,172.0
1,083.4
1,058.5
P&C Insurance and Reinsurance (Ark/WM Outrigger)
Fixed maturity investments
866.8
775.0
772.8
Common equity securities
400.6
384.9
334.6
Short-term investments
962.8
850.0
484.6
Other long-term investments
440.9
416.6
373.6
Total investments
2,671.1
2,426.5
1,965.6
Cash
90.5
129.6
101.5
Reinsurance recoverables
442.0
538.4
595.3
Insurance premiums receivable
612.2
781.6
544.1
Deferred acquisition costs
145.3
178.7
127.2
Goodwill and other intangible assets
292.5
292.5
292.5
Other assets
125.0
66.9
65.2
Total P&C Insurance and Reinsurance assets
4,378.6
4,414.2
3,691.4
Asset Management (Kudu)
Short-term investments
29.3
17.3
—
Other long-term investments
896.3
780.7
695.9
Total investments
925.6
798.0
695.9
Cash
1.4
5.4
101.4
Accrued investment income
17.6
15.8
12.4
Goodwill and other intangible assets
8.3
8.4
8.6
Other assets
6.5
8.3
7.6
Total Asset Management assets
959.4
835.9
825.9
Other Operations
Fixed maturity investments
230.2
270.7
238.2
Common equity securities
137.8
252.1
333.8
Investment in MediaAlpha
254.9
188.8
168.6
Short-term investments
425.2
215.5
373.6
Other long-term investments
661.0
698.5
418.5
Total investments
1,709.1
1,625.6
1,532.7
Cash
23.8
22.9
33.9
Goodwill and other intangible assets
69.8
71.2
91.3
Other assets
73.2
89.6
155.6
Total Other Operations assets
1,875.9
1,809.3
1,813.5
Total assets
$ 8,385.9
$ 8,142.8
$ 7,389.3
WHITE MOUNTAINS INSURANCE GROUP, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(millions)
(Unaudited)
December 31, 2023
September 30, 2023
December 31, 2022
Liabilities
Financial Guarantee (HG Global/BAM)
Unearned insurance premiums
$ 325.8
$ 312.3
$ 298.3
Debt
146.9
146.8
146.5
Accrued incentive compensation
27.2
19.9
28.0
Other liabilities
31.8
40.0
29.0
Total Financial Guarantee liabilities
531.7
519.0
501.8
P&C Insurance and Reinsurance (Ark/WM Outrigger)
Loss and loss adjustment expense reserves
1,605.1
1,571.8
1,296.5
Unearned insurance premiums
743.6
984.6
623.2
Debt
185.5
184.6
183.7
Reinsurance payable
81.1
146.3
251.1
Contingent consideration
94.0
62.1
45.3
Other liabilities
166.8
132.0
122.3
Total P&C Insurance and Reinsurance liabilities
2,876.1
3,081.4
2,522.1
Asset Management (Kudu)
Debt
203.8
203.7
208.3
Other liabilities
71.6
53.6
65.0
Total Asset Management liabilities
275.4
257.3
273.3
Other Operations
Debt
28.4
29.6
36.7
Accrued incentive compensation
87.7
64.0
86.1
Other liabilities
25.0
27.3
34.3
Total Other Operations liabilities
141.1
120.9
157.1
Total liabilities
3,824.3
3,978.6
3,454.3
Equity
White Mountains’s common shareholder’s equity
White Mountains’s common shares and paid-in surplus
551.3
547.5
538.6
Retained earnings
3,690.8
3,404.3
3,211.8
Accumulated other comprehensive income (loss), after tax:
Net unrealized gains (losses) from foreign currency translation and interest rate swap
(1.6)
(2.7)
(3.5)
Total White Mountains’s common shareholders’ equity
4,240.5
3,949.1
3,746.9
Noncontrolling interests
321.1
215.1
188.1
Total equity
4,561.6
4,164.2
3,935.0
Total liabilities and equity
$ 8,385.9
$ 8,142.8
$ 7,389.3
WHITE MOUNTAINS INSURANCE GROUP, LTD.
BOOK VALUE AND ADJUSTED BOOK VALUE PER SHARE
(Unaudited)
December 31,
2023
September 30,
2023
December 31,
2022
September 30,
2022
Book value per share numerators (in millions):
White Mountains’s common shareholders’ equity –
GAAP book value per share numerator
$ 4,240.5
$ 3,949.1
$ 3,746.9
$ 3,708.0
HG Global’s unearned premium reserve (1)
265.4
254.2
242.1
232.2
HG Global’s net deferred acquisition costs (1)
(76.5)
(73.1)
(69.0)
(65.9)
Time value of money discount on expected future payments on the
BAM surplus notes (1)
(87.9)
(90.2)
(95.1)
(110.8)
Adjusted book value per share numerator
$ 4,341.5
$ 4,040.0
$ 3,824.9
$ 3,763.5
Book value per share denominators (in thousands of shares):
Common shares outstanding – GAAP book value per share denominator
2,560.5
2,560.5
2,572.1
2,576.2
Unearned restricted common shares
(12.4)
(15.7)
(14.1)
(17.5)
Adjusted book value per share denominator
2,548.1
2,544.8
2,558.0
2,558.7
GAAP book value per share
$ 1,656.14
$ 1,542.36
$ 1,456.74
$ 1,439.31
Adjusted book value per share
$ 1,703.82
$ 1,587.59
$ 1,495.28
$ 1,470.84
(1) Amount reflects White Mountains’s preferred share ownership in HG Global of 96.9%.
December 31,
2023
September 30,
2023
December 31,
2022
September 30,
2022
Quarter-to-date change in GAAP book value per share,
including dividends:
7.4 %
0.7 %
1.2 %
27.5 %
Quarter-to-date change in adjusted book value per share,
including dividends:
7.3 %
0.7 %
1.7 %
27.7 %
Year-to-date change in GAAP book value per share,
including dividends:
13.8 %
5.9 %
24.0 %
22.5 %
Year-to-date change in adjusted book value per share,
including dividends:
14.0 %
6.2 %
25.7 %
23.6 %
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 December 31,
Year Ended December 31,
2023
2022
2023
2022
Revenues:
Financial Guarantee (HG Global/BAM)
Earned insurance premiums
$ 7.9
$ 7.3
$ 31.2
$ 33.3
Net investment income
8.8
6.4
31.7
21.5
Net realized and unrealized investment gains (losses)
43.6
8.2
26.6
(105.8)
Other revenues
.9
.9
2.9
4.6
Total Financial Guarantee revenues
61.2
22.8
92.4
(46.4)
P&C Insurance and Reinsurance (Ark/WM Outrigger)
Earned insurance premiums
362.4
285.6
1,409.7
1,043.4
Net investment income
20.2
6.6
61.4
16.3
Net realized and unrealized investment gains (losses)
50.0
21.3
85.9
(55.2)
Other revenues
1.9
(5.1)
.8
5.0
Total P&C Insurance and Reinsurance revenues
434.5
308.4
1,557.8
1,009.5
Asset Management (Kudu)
Net investment income
27.0
13.2
71.0
54.4
Net realized and unrealized investment gains (losses)
60.7
18.3
106.1
64.1
Total Asset Management revenues
87.7
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