Bermuda-based insurer White Mountains Insurance Group has said that its new reinsurance venture, Bermuda-based Montpelier, shows signs of turning out to be a "wonderful investment" for the company, according its 2002 first quarter report.

And White Mountains, a Bermuda-domiciled financial services holding company traded on the New York Stock Exchange under the symbol WTM, revealed that it has seen its operating results improve significantly in all its insurance and reinsurance segments for the first quarter of 2002, the company reported yesterday.

And while net income stayed fairly static year on year, its subsidiary OneBeacon's financial status is improving.

Chairman Jack Byrne said: "I am pleased with the turn-around at OneBeacon. We may well beat our schedule here. Folksamerica also has much improved results compared to last year. Montpelier shows signs that it will turn out to be a wonderful investment for us."

And Mr. Byrne told shareholders they should not be worried by the $80 per share in income during the quarter as the real picture was that the businesses were "splendid".

He said: "You should ignore the $80 per share in income this quarter we are required to write back in the deferred credits we wrote out last year. Below all the noise, the fundamentals in our two businesses are splendid. I am as optimistic as ever that the next few years will be fruitful ones for our shareholders."

White Mountains ended the first quarter of 2002 with a fully converted tangible book value per share of $222, a $4 decrease from December 31, 2001 including the $1 per share annual dividend paid in March 2002.

The company said that the decrease resulted primarily from unrealised losses in White Mountains' fixed income portfolios, but operating results improved significantly for all insurance and reinsurance segments compared to 2001.

White Mountains reported comprehensive net income of $620 million for the quarter ended March 31, 2002. Comprehensive net income was break even for the comparable 2001 period.

Comprehensive net income for the first quarter of 2002 includes the recognition of $660 million of deferred credits (net of goodwill) as a result of the adoption of new accounting standards.

Excluding this amount, which does not affect tangible book value, White Mountains had a comprehensive net loss of $40 million, including a $25 million loss at OneBeacon, an $8 million profit at Folksamerica and $34 million in financing charges and purchase accounting adjustments related to the acquisition of OneBeacon.

Ray Barrette, CEO of OneBeacon, said: "Our core results are clearly showing the effects of the significant pricing, underwriting, agency management and claims actions taken since the acquisition. Overall, first quarter results were in line with expectations."

Steve Fass, CEO of Folksamerica, said: "Folksamerica's results are improving on plan. The Folksamerica and Olympus Re team are a significant force in the world reinsurance markets."

Montpelier Re reported that it wrote $200 million in annual premiums in the first quarter of 2002 and $400 million including April business.

Montpelier's combined ratio was 79 percent on earned premiums of $37 million and no significant claims have been reported to the company.

Equity in Montpelier's earnings of $2 million (after tax) was offset by the share of unrealised investment losses. White Mountains has a 26 percent interest in Montpelier.

The company's other subsidiaries, White Mountains Underwriting, Ltd. and Fund America Reinsurance Co Ltd., generated respectively, approximately $9 million in revenue resulting in $7 million of comprehensive net income and $14 million in written premiums and provided $.4 million in comprehensive net income during the first quarter of 2002.

Tom Kemp, President of White Mountains, said: "Through Montpelier, WMU and FA Re, White Mountains has expanded its presence in the global reinsurance marketplace. We are excited by the prospects."

For more information go to www.whitemountains.com.