White Mountains Insurance Group Ltd. bounced back in with a $54.6 million profit in its third quarter in 2002 after reporting a $31.2 million loss in the same period a year ago.

The result came as a result of improved underwriting results and solid investment returns, the company said.

For the nine months to September 30, 2002, the Bermuda-based insurer recorded a profit of $703 million compared to a loss of $123.7 million in the same period in 2001.

White Mountains chairman Jack Byrne said he was pleased with the results: "Our book value per share is growing nicely again, our balance sheet is solid, our underwriting results are well ahead of plan and we are making money on our investments. Our investment portfolio is a mountain of dry powder. I am excited about several actions that we have taken in the last few weeks that are allowing us to continue to improve the strength of our balance sheet."

White Mountains raised $225 million in a private placement of convertible preferred and common shares that will be used to repay $260 million in debt, he said. In addition, White Mountains subsidiary Montpelier Re, formed in the wake of the September 11 terrorist attacks a year ago, "had a successful IPO demonstrating the lovely value in the business created less than a year ago". "In addition, we are continuing with our equity registration and, once the SEC has approved the registration statement, we will determine whether to pursue the public offering based on our needs and opportunities then,," he said. "There is great disorder under Heaven, and the situation is excellent."

White Mountains reported comprehensive net income of $889 million for the nine months ended September 30, 2002, as compared to a comprehensive net loss of $133 million for the nine months ended September 30, 2001. Comprehensive net income for the first nine months of 2002 includes $667 million of net deferred credits, which were primarily recognised during the first quarter in connection with the adoption of new accounting standards. For the quarter ended September 30, 2002, White Mountains reported comprehensive net income of $133 million, versus comprehensive net income of $8 million for the third quarter of 2001.

After tax operating income for the quarter was $11 million at its insurance and reinsurance subsidiaries versus an after tax operating loss of $128 million for the comparable period in 2001. Net after tax investment gains were $168 million for the quarter as compared to gains of $113 million for the comparable 2001 period.