White Mtn Ins has a market cap of $3.43 billion; its shares were traded at around $522.67 with a P/E ratio of 31.7 and P/S ratio of 1.6. The dividend yield of White Mtn Ins stocks is 0.2%.
Highlight of Business Operations:White Mountains total revenues increased 19% to $631 million in the first quarter of 2012 compared to $530 million in the first quarter of 2011, primarily due to higher investment gains, earned insurance and reinsurance premiums and mark-to-market gains on the Symetra warrants. Earned premiums were up 7% to $499 million in the first quarter of 2012 from increases at both OneBeacon and Sirius Group. Net investment income was down 16% to $42 million in the first quarter of 2012, primarily from lower fixed maturity yields and the gradual shift in White Mountains investment portfolio to common equity securities. White Mountains reported net realized and unrealized investment gains of $59 million in the first quarter of 2012 compared to $9 million of losses in the first quarter of 2011 (see Investment Returns on page 42). Other revenues increased to $31 million in the first quarter of 2012 from $22 million in the first quarter of 2011, due primarily to higher mark-to-market gains on the Symetra warrants.
Sirius Groups other revenues consisted of $18 million of foreign currency translation gains recorded in the first quarter of 2012 compared to $25 million of foreign currency translation gains in the first quarter of 2011. (See Foreign Currency Translation on page 43).
White Mountains recorded a GAAP other-than-temporary impairment write-down on its investment in Symetra common shares during the fourth quarter of 2011. As a result, White Mountains carried its investment in Symetra common shares at $15 per share at December 31, 2011, the estimate of its GAAP fair value. During the first quarter of 2012, White Mountains recorded $10 million in equity in earnings from its investment in Symetras common shares, which increased the value of the investment in Symetras common shares used in the calculation of White Mountains adjusted book value per share to $15.56 per Symetra common share at March 31, 2012, compared to Symetras quoted stock price of $11.53 and Symetras book value per share excluding net unrealized gains and losses from its fixed maturity investment portfolio of $18.09.
As of March 31, 2012, approximately 94% of the investment portfolio recorded at fair value was priced based upon quoted market prices or other observable inputs. Investments valued using Level 1 inputs include fixed maturities, primarily investments in U.S. Treasuries, common equities and short-term investments, which include U.S. Treasury Bills. Investments valued using Level 2 inputs comprise fixed maturities including corporate debt, state and other governmental debt, convertible fixed maturity securities and mortgage and asset-backed securities. Fair value estimates for investments that trade infrequently and have few or no observable market prices are classified as Level 3 measurements. Level 3 fair value estimates based upon unobservable inputs include White Mountains investments in hedge funds and private equity funds, as well as investments in certain debt securities, including asset-backed securities, where quoted market prices are unavailable. White Mountains uses brokers and outside pricing services to assist in determining fair values. For investments in active markets, White Mountains uses the quoted market prices provided by outside pricing services to determine fair value. The outside pricing services used by White Mountains have indicated that if no observable inputs are available for a security, they will not provide a price. In those circumstances, White Mountains estimates the fair value using industry standard pricing models and observable inputs such as benchmark interest rates, matrix pricing, market comparables, broker quotes, issuer spreads, bids, offers, credit rating prepayment speeds and other relevant inputs. White Mountains performs procedures to validate the market prices obtained from the outside pricing sources. Such procedures, which cover substantially all of its fixed maturity investments include, but are not limited to, evaluation of model pricing methodologies and review of the pricing services quality control processes and procedures on at least an annual basis, comparison of market prices to prices obtained from a different independent pricing vendors on at least a semi-annual basis, monthly analytical reviews of certain prices, and review of assumptions utilized by the pricing service for selected measurements on an ad hoc basis throughout the year. White Mountains also performs back-testing of selected sales activity to determine whether there are any significant differences between the market price used to value the security prior to sale and the actual sale price on an ad-hoc basis throughout the year. Prices provided by the pricing services that vary by more than 5% and $1 million from the expected price based on these procedures are considered outliers. In circumstances where the results of White Mountains review process do not appear to support the market price provided by the pricing services, White Mountains challenges the price. The fair values of such securities are considered to be Level 3 measurements.
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