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White Mountains off to a 'slow start' with $74m loss

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Bermudian-based White Mountains Insurance Group Ltd has reported a comprehensive loss attributable to common shareholders of $74 million in the first quarter.

That compares to a loss of $132 million a year ago.

White Mountains Insurance Group includes the companies Ark, Build America Mutual, NSM Insurance Group, Kudu Investment Management, MediaAlpha, David Shield Group, and Elementum.

White Mountains said results in the first quarter were driven primarily by $42 million of net realised and unrealised investment losses from its investment in MediaAlpha – as MediaAlpha’s share price declined from $39.07 at December 31 to $35.43 at March 31 – and a loss of $29 million related to NSM's sale of its Fresh Insurance motor business.

The company said results in the first quarter of 2020 were driven primarily by negative investment returns as equity markets declined in reaction to the Covid-19 pandemic.

The company reported book value per share of $1,231 and adjusted book value per share of $1,242 as of March 31.

Manning Rountree, chief executive officer of White Mountains, said: “We are off to a bit of a slow start in 2021, with ABVPS down 2 per cent in the first quarter. The decline was largely driven by two items – a mark-to-market decline in our MediaAlpha position (which has since rebounded); and a loss triggered by NSM's sale of the Fresh Insurance motor business.”

He added: “Our underlying operating results were sound. BAM enjoyed its strongest first quarter on record, driven by primary market penetration and another significant assumed reinsurance transaction.

“Ark wrote $405 million of gross written premiums in the quarter, up more than two-times year-over-year, with renewal pricing up more than 10 per cent. Ark's adjusted combined ratio was 108 per cent in the quarter, impacted by heavy cat losses, chiefly related to Winter Storm Uri.

“NSM posted solid growth in both pro forma controlled premiums and pro forma adjusted EBITDA.

“Kudu posted solid growth in revenues from participation contracts and adjusted EBITDA.

“Excluding MediaAlpha, our investment portfolio was up 0.7 per cent in the quarter. Reflecting $160 million of net proceeds from the MediaAlpha secondary offering in March, we finished the quarter with roughly $300 million in undeployed capital."

The company said MediaAlpha completed a secondary offering of 8.05 million shares at $46 per share, or $44.62 per share net of underwriting fees, on March 23.

In the secondary offering, White Mountains said it sold 3.6 million shares for net proceeds of $160 million. Following the completion of the offering, White Mountains owns 16.9 million shares, representing a 29 per cent basic ownership interest, or 26 per cent on a fully-diluted/fully-converted basis.

At the March 31 closing price of $35.43 per share, the value of White Mountains' remaining stake in MediaAlpha was $600 million, the company said.

Subsequent to the secondary offering, each $1 per share increase or decrease in the market price of MediaAlpha will result in an approximate $5.50 per share increase or decrease in White Mountains' book value per share and adjusted book value per share, the company said.

Manning Rountree, CEO of White Mountains Insurance Group (File photograph)
White Mountains Insurance Group: reports a comprehensive loss attributable to common shareholders of $74 million in the first quarter

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Published May 12, 2021 at 7:55 am (Updated May 12, 2021 at 7:55 am)

White Mountains off to a 'slow start' with $74m loss

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