SPY391.77+4.27 1.10%
DIA319.53+4.14 1.31%
IXIC13,597.97+132.77 0.99%

Press Release: White Mountains Reports Fourth -2-

· 02/05/2021 08:00
CONTACT: Todd Pozefsky (203) 458-5807 WHITE MOUNTAINS INSURANCE GROUP, LTD. CONDENSED CONSOLIDATED BALANCE SHEETS (millions) (Unaudited) December 31, September December 31, 2020 30, 2020 2019 Assets Financial Guarantee (HG Global/BAM) Fixed maturity investments $ 859.5 $ 831.8 $ 799.3 Short-term investments 60.4 56.1 46.3 Total investments 919.9 887.9 845.6 Cash 42.8 49.9 24.2 Insurance premiums receivable 6.9 7.2 6.7 Deferred acquisition costs 27.8 26.1 22.1 Accrued investment income 5.0 5.2 5.4 Accounts receivable on unsettled investment sales -- -- 3.9 Other assets 15.4 15.0 16.1 Total Financial Guarantee assets 1,017.8 991.3 924.0 Specialty Insurance Distribution (NSM) Cash (restricted $80.6, $82.9 and $56.3) 126.5 125.0 89.7 Premium and commission receivable 76.7 67.7 70.8 Goodwill and other intangible assets 736.8 730.3 623.0 Other assets 59.6 57.2 41.7 Total Specialty Insurance Distribution assets 999.6 980.2 825.2 Asset Management (Kudu) Short-term investments .1 .1 .1 Other long-term investments 400.6 325.5 266.5 Total investments 400.7 325.6 266.6 Cash 7.8 8.4 5.8 Accrued investment income 9.8 6.2 5.8 Goodwill and other intangible assets 9.2 9.3 9.6 Other assets 2.7 2.4 2.7 Total Asset Management assets 430.2 351.9 290.5 Other Operations Fixed maturity investments 347.7 389.7 406.5 Short-term investments 82.4 515.6 154.8 Common equity securities -- 140.7 683.9 Investment in MediaAlpha 802.2 475.0 180.0 Other long-term investments 386.2 370.7 409.8 Total investments 1,618.5 1,891.7 1,835.0 Cash 34.1 31.5 41.3 Cash pre-funded/placed in escrow for Ark transaction 646.3 -- -- Accrued investment income 2.4 2.8 5.7 Accounts receivable on unsettled investment sales 3.4 54.7 5.1 Goodwill and other intangible assets 36.4 36.7 22.1 Other assets 40.4 41.9 31.3 Assets held for sale 2.3 .7 3.0 Total Other Operations assets 2,383.8 2,060.0 1,943.5 Total assets $ 4,831.4 $ 4,383.4 $ 3,983.2 WHITE MOUNTAINS INSURANCE GROUP, LTD. CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED) (millions) (Unaudited) December 31, September 30, December 31, 2020 2020 2019 Liabilities Financial Guarantee (HG Global/BAM) Unearned insurance premiums $ 237.5 $ 226.9 $ 198.4 Accrued incentive compensation 25.7 19.4 21.7 Accounts payable on unsettled investment purchases -- 6.4 -- Other liabilities 28.3 27.8 26.7 Total Financial Guarantee liabilities 291.5 280.5 246.8 Specialty Insurance Distribution (NSM) Debt 272.6 270.2 219.2 Premiums payable 113.4 116.9 102.3 Contingent consideration earnout liabilities 14.6 11.8 20.6 Other liabilities 91.2 77.5 59.0 Total Specialty Insurance Distribution liabilities 491.8 476.4 401.1 Asset Management (Kudu)

White Mountains's Other Operations segment reported pre-tax income of $352 million and $626 million in the fourth quarter and year ended December 31, 2020, compared to pre-tax income of $65 million and $393 million in the fourth quarter and year ended December 31, 2019. The increase in pre-tax income for the fourth quarter and year ended December 31, 2020 was driven primarily by the increase in the fair value of White Mountains's investment in MediaAlpha. Net investment income was $3 million and $82 million in the fourth quarter and year ended December 31, 2020, compared to $13 million and $43 million in the fourth quarter and year ended December 31, 2019. The increase in net investment income in the year ended December 31, 2020 compared to the year ended December 31, 2019 was driven primarily by $55 million of net proceeds received in the third quarter of 2020 from a dividend recapitalization at MediaAlpha. Net realized and unrealized investment gains from White Mountains's investment in MediaAlpha were $391 million and $686 million in the fourth quarter and year ended December 31, 2020 compared to $30 million and $180 million in the fourth quarter and year ended December 31, 2019. Excluding MediaAlpha, net realized and unrealized investment gains (losses) were $9 million and $(9) million in the fourth quarter and year ended December 31, 2020 compared to $56 million and $220 million in the fourth quarter and year ended December 31, 2019. Pre-tax income for the year ended December 31, 2019 also included $68 million of realized gain from the MediaAlpha transaction with Insignia.

General and administrative expenses were $55 million and $142 million in the fourth quarter and year ended December 31, 2020, compared to $35 million and $123 million in the fourth quarter and year ended December 31, 2019. The increase in general and administrative expenses in the fourth quarter and year ended December 31, 2020 compared to the fourth quarter and year ended December 31, 2019 was driven primarily by higher incentive compensation costs.

Ark

On October 1, 2020, White Mountains entered into a subscription and purchase agreement (SPA) with Ark Insurance Holdings Limited and certain selling shareholders providing for the acquisition by White Mountains of a controlling interest in Ark. In accordance with the SPA, in the fourth quarter of 2020 White Mountains pre-funded/placed in escrow a total of $646 million in preparation for closing the transaction, which is reflected on the balance sheet as of December 31, 2020. On January 1, 2021, White Mountains closed the transaction in accordance with the terms of the SPA.

Share Repurchases

In the year ended December 31, 2020, White Mountains repurchased and retired 99,087 of its common shares for $85 million at an average share price of $858.81, or 68% of White Mountains's December 31, 2020 adjusted book value per share. White Mountains did not repurchase any of its common shares in the fourth quarter of 2020.

Investments

The total return on invested assets was 14.3% in the fourth quarter of 2020. This return included $391 million of net realized and unrealized investment gains from White Mountains's investment in MediaAlpha. Excluding MediaAlpha, the total return on invested assets was 1.7% in the fourth quarter of 2020.

The total return on invested assets was 3.9% in the fourth quarter of 2019. This return included $33 million of net investment income and net unrealized investment gains from MediaAlpha. Excluding MediaAlpha, the total return on invested assets was 2.9% in the fourth quarter of 2019.

The total return on invested assets was 31.9% for the year ended December 31, 2020. This return included $746 million of net investment income and net realized and unrealized investment gains from MediaAlpha. Excluding MediaAlpha, the total return on invested assets was 4.6% for the year ended December 31, 2020.

The total return on invested assets was 20.4% for the year ended December 31, 2019. This return included $188 million of net investment income and net unrealized investment gains from MediaAlpha. Excluding MediaAlpha, the total return on invested assets was 13.0% for the year ended December 31, 2019.

Mark Plourde, Managing Director of White Mountains Advisors, said, "Excluding MediaAlpha, the total portfolio was up 1.7% in the quarter and 4.6% for the year. Absolute results were good, but relative results were weak in a year that brought significant changes to our portfolio. In the quarter, we sold the balance of our common stocks and maintained an overweight position in short U.S. Treasuries in preparation of funding the Ark transaction. Our equity portfolio, now consisting solely of long-term investments, returned 4.0% in the quarter and 4.9% for the year, lagging the S&P 500 Index returns of 12.1% and 18.4%, respectively. Fixed income returned 0.5% in the quarter and 4.9% for the year, compared to the BBIA Index returns of 0.4% and 5.6%, respectively."

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-K on or before March 1, 2021 with the Securities and Exchange Commission and urges shareholders to refer to that document for more complete information concerning its financial results.

(MORE TO FOLLOW) Dow Jones Newswires

February 05, 2021 08:00 ET (13:00 GMT)