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

October 28, 2011 | About:

10qk

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White Mountains Insurance Group Ltd. (WTM) filed Quarterly Report for the period ended 2011-09-30.

White Mountains Insurance Group Ltd. has a market cap of $3.47 billion; its shares were traded at around $435.85 with a P/E ratio of 28.8 and P/S ratio of 0.9. The dividend yield of White Mountains Insurance Group Ltd. stocks is 0.2%.

Highlight of Business Operations:

White Mountains ended the third quarter of 2011 with an adjusted book value per share of $436, down 3% for the third quarter and 1% for the first nine months of 2011, including dividends. White Mountains reported adjusted comprehensive loss of $98 million and $58 million for the third quarter and first nine months of 2011 compared to adjusted comprehensive income $178 million and $60 million for the third quarter and first nine months of 2010. The decline in adjusted book value per share in the third quarter of 2011 was driven by equity investment losses and foreign currency translation losses from the strengthening U.S. dollar, somewhat offset by profitable underwriting results at OneBeacon and the Sirius Group and the benefit of shares repurchased below adjusted book value per share. White Mountains GAAP pre-tax total return on invested assets was -1.5% and 1.7% for the third quarter and first nine months of 2011, which included 1.2% and 0.2% of foreign currency losses, compared to 4.0% and 4.6% for the third quarter and first nine months of last year, which included 1.9% and 0.5% of foreign currency gains. Investment results for the third quarter of 2011 were driven by losses in the equity portfolio, as it was down 7.8%, compared to the S&P 500 index return of -13.9%. Adjusted book value per share decreased $6 and $1 in third quarter and first nine months of 2011 from foreign currency translation losses. In addition, share repurchases increased adjusted book value per share by $1 and $4 in the third quarter and first nine months of 2011.

White Mountains total net written premiums increased 12% to $511 million in the third quarter and decreased 5% to $1,590 million in the first nine months of 2011 compared to $456 million and $1,679 million in the third quarter and first nine months of 2010. Excluding the $107 million of net written premiums in the first nine months of 2010 related to the exited business at OneBeacon, White Mountains net written premiums increased $82 million, or 5% in the first nine months of 2011. OneBeacons specialty lines premiums increased 9% and 6% to $297 million and $822 million in the third quarter and first nine months of 2011. Sirius Groups net written premiums were $214 million and $768 million in the third quarter and first nine months of 2011, increases of 14% and 4% from the comparable 2010 periods, primarily due to increases in the accident and health and trade credit lines and to foreign exchange translation.

White Mountains total revenues decreased 9% to $501 million in the third quarter of 2011 compared to $551 million in the third quarter of 2010, primarily due to foreign currency translation, lower earned insurance and reinsurance premiums, lower net investment income and lower investments gains. Earned premiums were down 2% to $491 million in the third quarter of 2011 as a 12% decrease at OneBeacon, which was driven by the Commercial Lines Transaction, was partially offset by a 13% increase at Sirius Group. Excluding the $44 million of earned premiums in the third quarter of 2010 related to the exited businesses at OneBeacon, White Mountains earned premiums increased 8% in the third quarter of 2011. Net investment income was down 12% to $43 million in the third quarter of 2011, due primarily to lower fixed maturity yields and a reduction in invested assets from the Personal Lines Transaction, OBH Senior Notes repurchases at OneBeacon and the Companys share repurchase program. White Mountains reported net realized and unrealized investment gains of $2 million in the third quarter of 2011 compared to $12 million in the third quarter of 2010 (see Investment Returns on page 45). Other revenues decreased to a loss of $34 million in the third quarter of 2011 from a loss of $8 million in the third quarter of 2010, due primarily to increased foreign currency translation losses and higher mark-to-market losses on the Symetra warrants, partially offset by lower losses reported by WM Life Re. WM Life Re reported essentially break-even results in the third quarter of 2011 compared to $53 million of pre-tax losses in the third quarter of 2010.

White Mountains total revenues decreased 21% to $1,585 million in the first nine months of 2011 compared to $2,014 million in the first nine months of 2010, primarily due to lower earned insurance and reinsurance premiums, foreign currency translation, lower net investment income and lower investments gains, partially offset by lower losses at WM Life Re. Earned premiums were down 19% to $1,437 million in the first nine months of 2011 as a 34% decrease at OneBeacon, which was driven by the Personal Lines Transaction and the Commercial Lines Transaction, was partially offset by a 7% increase at Sirius Group. Excluding the $408 million of earned premiums in the first nine months of 2010 related to the exited businesses at OneBeacon, White Mountains earned premiums increased 4% in the first nine months of 2011. Net investment income was down 12% to $138 million in the first nine months of 2011, due primarily to lower fixed maturity yields and a reduction in invested assets from the Personal Lines Transaction, OBH Senior Notes repurchases at OneBeacon and share repurchases. White Mountains reported net realized and unrealized investment gains of $78 million in the first nine months of 2011 compared to $105 million in the first nine months of 2010. Both periods were significantly impacted by foreign currency translation on U.S. dollar-denominated investments at Sirius International, the effects of which are offset in other comprehensive income (see Investment Returns on page 45). Other revenues decreased to a loss of $69 million in the first nine months of 2011 from a loss of $21 million in the first nine months of 2010. Other revenues included $58 million in foreign currency translation losses in the first nine months of 2011 compared to $23 million in foreign currency translation gains in the first nine months of 2010. Other revenues also included a $1 million loss from WM Life Re in the first nine months of 2011 compared to a $52 million loss in the first nine months of 2010. Other revenues for the first nine months of 2010 also included a $13 million pre-tax gain from the acquisition of Central National by the Sirius Group.

White Mountains total expenses decreased 19% to $1,581 million in the first nine months of 2011 compared to $1,956 million in the first nine months of 2010. Losses and LAE expenses decreased $262 million, or 22%, insurance and reinsurance acquisition expenses decreased $75 million, or 20%, and other underwriting expenses decreased $34 million, or 14%, all due primarily to the Personal Lines Transaction and Commercial Lines Transaction. Excluding $464 million in expenses reported in the first nine months of 2010 related to the exited businesses at OneBeacon, White Mountains total expenses increased 5% in the first nine months of 2011, as losses and LAE expenses, insurance and reinsurance acquisition expenses and other underwriting expenses increased 4%, 5% and 10%. Other underwriting expenses at Sirius Group increased 15%, primarily due to foreign currency translation. Interest expense on debt decreased 12% to $39 million in the first nine months of 2011 compared to $44 million in the first nine months of 2010, primarily due to reductions of outstanding debt resulting from repurchases of OBH Senior Notes.

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