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White Mountains Insurance Group Ltd. Reports Operating Results (10-Q)

April 29, 2011 | About:
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10qk

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White Mountains Insurance Group Ltd. (WTM) filed Quarterly Report for the period ended 2011-03-31.

White Mountains Insurance Group Ltd. has a market cap of $2.89 billion; its shares were traded at around $359.99 with a P/E ratio of 27.6 and P/S ratio of 0.8. The dividend yield of White Mountains Insurance Group Ltd. stocks is 0.3%.

Highlight of Business Operations:

White Mountains ended the first quarter of 2011 with an adjusted book value per share of $447, an increase of 1.6% for the three months ended March 31, 2011, including dividends. White Mountains reported adjusted comprehensive income of $34 million for the first quarter of 2011 compared to adjusted comprehensive loss of $51 million for the first quarter of 2010. The increase in adjusted book value per share during the first quarter of 2011 was primarily driven by solid investment returns, foreign currency gains from the weakening U.S. dollar and share repurchases, partially offset by $96 million of after-tax catastrophe losses, principally from the Japanese earthquake and tsunami and the February 2011 New Zealand earthquake.

White Mountains GAAP pre-tax total return on invested assets was 2.0% for the first quarter of 2011, which included 0.8% of foreign currency gains, compared to 1.4% for the first quarter of last year, which included 0.3% of foreign currency losses. Adjusted book value per share increased $5 in the first quarter of 2011 from foreign currency translation gains, due primarily to the weakening U.S. dollar, compared to a decrease of $2 from foreign currency translation losses in the first quarter of 2010.

During the first quarter of 2011, White Mountains repurchased and retired 246,284 of its common shares for $86 million under its share repurchase program at an average share price of $349, which was approximately 78% of White Mountains March 31, 2011 adjusted book value per share. Share repurchases increased adjusted book value per share by $3 in the first quarter of 2011 and $1 in the first quarter of 2010.

Total net written premiums decreased 9% to $861 million in the first quarter of 2011 compared to $945 million in the first quarter of 2010. OneBeacons net written premiums decreased 25% to $278 million in the first quarter of 2011, reflecting the Personal Lines Transaction. OneBeacons specialty lines premiums decreased 1% for the first quarter of 2011 compared to the first quarter of 2010. Excluding the $88 million of net written premiums in the first quarter of 2010 related to the exited business at OneBeacon, White Mountains net written premiums increased by $4 million in the first quarter of 2011. White Mountains Res net written premiums were $337 million in the first quarter of 2011, a decrease of 1% from the first quarter of 2010, primarily from property lines. Esurances net written premiums were $246 million in the first quarter, an increase of 6% from the first quarter of 2010, primarily due to higher new business sales.

White Mountains total revenues decreased 25% to $782 million in the first quarter of 2011 compared to $1,037 million in the first quarter of 2010, primarily due to lower earned insurance and reinsurance premiums and lower net investment gains. Earned premiums were down 20% to $696 million in the first quarter of 2011 as increases at White Mountains Re and Esurance were more than offset by the decrease at OneBeacon resulting from the Commercial Lines Transaction and the Personal Lines Transaction. Excluding the $196 million of earned premiums in the first quarter of 2010 related to the exited businesses at OneBeacon, White Mountains earned premiums increased 4% in the first quarter of 2011. White Mountains reported net realized and unrealized investment gains of $23 million in the first quarter of 2011, which were significantly impacted by foreign currency translation on U.S. dollar-denominated investments at WMRe Sirius, the effects of which are offset in other comprehensive income (see Investment Returns on page 40), compared to $87 million of net realized and unrealized investment gains in the first quarter of 2010. Net investment income was down 12% to $54 million in the first quarter of 2011, due primarily to lower fixed maturity yields and a reduction in invested assets from the Personal Lines Transaction, OBH Senior Note repurchases (primarily the $156 million repurchased through a debt tender in June 2010) at OneBeacon and the Companys share repurchase program. Other revenues decreased to $11 million in the first quarter of 2011 from $25 million in the first quarter of 2010. The first quarter of 2010 included a $13 million pre-tax gain reported in other revenues by White Mountains Re from its acquisition of Central National.

White Mountains total expenses decreased 23% to $815 million in the first quarter of 2011 compared to $1,064 million in the first quarter of 2010. Losses and LAE expenses decreased $177 million, or 25%, insurance and reinsurance acquisition expenses decreased $41 million, or 23%, and other underwriting expenses decreased $21 million, or 18%, all due primarily to the Personal Lines Transaction. General and administrative expenses decreased 15% to $32 million in the first quarter of 2011, compared to $37 million in the first quarter of 2010, primarily due to decreased incentive compensation expenses. Interest expense on debt decreased 20% to $13 million in the first quarter of 2011 compared to $16 million in the first quarter of 2010, primarily due to reductions of outstanding debt resulting from repurchases of OBH Senior Notes.

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