White Mountains Insurance Group has reported a $141 million comprehensive loss attributable to common shareholders during the fourth quarter. For the full year, the loss was $146 million.
That compares with comprehensive income of $23 million and $631 million for the fourth quarter and full year, respectively, in 2017. The 2017 full-year figure included a $557 million gain from the sale of the OneBeacon insurance company.
Bermudian-domiciled White Mountains reported book value per share of $896, and adjusted book value of $888 at the end of 2018. Book value for the fourth quarter was down 5 per cent, and for the full year was 4 per cent lower.
White Mountains said that the estimated gain of $55 per share as a result of a transaction announced this month by MediaAlpha, an advertising company in which it is a significant equity holder, would have resulted in its book value per share being $951.
Manning Rountree, chief executive officer, described the fourth quarter as “tough” and said the book value of shares was impacted by “the rout in the equity markets on our investment portfolio”.
He said: “BAM enjoyed a strong fourth quarter, ending the year at new highs for par in force, total premiums and claims paying resources and, in December, making a $23 million cash payment on the surplus notes. NSM posted mixed results across its existing business lines in the quarter, while closing two new bolt-on acquisitions. MediaAlpha had yet another strong quarter, ending the year at new highs for revenues and Ebitda [earnings before interest, taxes and amortisation].”
BAM is a mutual insurance company that is owned by its members. It insured municipal bonds with par value of $5.4 billion in the fourth quarter, compared with $3.3 billion in the final quarter of 2017. For the full year it insured municipal bonds with par value of $12 billion, up from $10.3 billion.
For the fourth quarter and full year BAM had pre-tax losses of $8 million and $61 million, respectively.
Seán McCarthy, CEO of BAM, said: “Total premiums grew 7 per cent in 2018 to a record high of $111 million, despite lower new-issue municipal bond volume. Solid investor demand for BAM’s guaranty, including increasing interest from large institutions, helped BAM’s secondary market activity grow 21 per cent. We also completed our first assumed reinsurance transaction, bringing total par in force to a new high of $52 billion.”
Meanwhile, NSM Insurance Group, which is a full-service MGU [managing general underwriter] and programme administrator for speciality property and casualty insurance, reported a pre-tax loss of $3 million for the fourth quarter.
MediaAlpha reported break-even results and pre-tax income of $9 million in the fourth quarter. It had advertising and commission revenues of $79 million ad $296 million for the fourth quarter and full year, respectively.
White Mountains announced this week that MediaAlpha has signed a definitive agreement to sell a significant minority stake to Insignia Capital Group in connection with a recapitalisation and cash distribution to shareholders.
White Mountains will receive an $85 million cash payment as a result of the deal, and will retain a 42 per cent ownership interest in MediaAlpha.
During the fourth quarter, White Mountains repurchased and retired 7,425 of its common shares for $6 million, at an average share price of $841. For the full year, the company repurchased and retired 592,458 of its common shares for $519 million, at an average price of $877.
White Mountains total return on invested assets declined 4.4 per cent in the fourth quarter, and 1.7 per cent for the year.
Mark Plourde, managing director of White Mountains Advisors, said: “These are disappointing results, driven by our asset allocation and the sharp decline in equity markets in the fourth quarter. The fixed income portfolio returned 1.2 per cent for the year, outperforming the BBIA Index return of 0.9 per cent.
“Common stocks and other long-term investments returned -3.6 per cent for the year, outperforming the S&P 500 return of -4.4 per cent. Our international equity portfolios underperformed, while our other long-term investments portfolio outperformed.”