White Mountains Insurance Group Ltd. and its property/casualty insurance subsidiaries, including OneBeacon Insurance Group Ltd.'s subsidiaries and White Mountains Re Group Ltd. have had their ratings outlook revised to stable from negative by Fitch Ratings.

Fitch affirmed all Issuer Default Ratings, debt and Insurer Financial Strength ratings for the companies.

The outlook revision reflects the company's improvement in capitalisation and earnings, reduced financial leverage and lower investment risk. Fitch's ratings continue to mirror White Mountains' disciplined underwriting and operating strategy, solid management team and recent favourable loss reserve development.

Weighted against these positives are sizable levels of run-off reserves and asbestos and environmental exposure and poor underwriting results in the first quarter of 2010, said the ratings agency.

White Mountains' capital position improved with common shareholders' equity up 24 percent since year-end 2008 to $3.6 billion at March 31, 2010, following the significant 38 percent decline in 2008. The improvement was driven by $470 million of net income in 2009, compared to a net loss of $555 million in 2008, as credit and investment markets recovered in 2009.

Unfavourably, White Mountains posted a net loss of $40 million in the first quarter of 2010, due to higher catastrophe losses in White Mountains Re from the Chilean earthquake and in OneBeacon from Northeastern US storms.

Favourably, Fitch said that the majority of OneBeacon's catastrophe losses are related to either run-off non-specialty commercial lines business or personal lines business subsequently sold.