White Mountains CEO bemoans 'tough fourth quarter' as profits dip

Bermuda-based White Mountains Insurance Group reported a "tough fourth quarter" with $141 million comprehensive loss attributable to common shareholders across its portfolio of businesses. This compares with a profit of $23 million for the same period in 2017.

For the full year 2018, White Mountains made a loss of $146 million, compared with a profit of $631 million in 2017. The 2017 figure included the $557 million gain from the sale of OneBeacon.

Manning Rountree, chief executive officer of White Mountains, described the fourth quarter as “tough”, stating that the "result was driven largely by the impact of the rout in the equity markets on our investment portfolio".

"We had a tough fourth quarter, with ABVPS down 4 percent," said Rountree, adding that "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."

The company's mutual insurance company subsidiary Build America Mutual's (BAM's) gross written premiums totaled $51 million and $107 million in the fourth quarter and year ended December 31, 2018, compared to $33 million and $101 million in the fourth quarter and year ended December 31, 2017.

Seán McCarthy, CEO of BAM, said: "Total premiums grew 7 percent 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 percent."

White Mountains still reported a pre-tax loss related to BAM of $8 million and $61 million in the fourth quarter and year ended December 31, 2018, compared to pre-tax loss of $14 million and $50 million in the fourth quarter and year ended December 31, 2017.

The group's other insurance subsidiary NSM, a managing general agent and programme administrator for specialty property and casualty insurance, also reported a pre-tax loss of $3 million and $5 million in the fourth quarter of 2018 and the period from May 11, 2018 through December 31, 2018.

"NSM posted mixed results across its existing business lines in the quarter, while closing two new bolt-on acquisitions," Rountree said.

Geof McKernan, CEO of NSM, added: "We had mixed results in the quarter, with growth in the transportation and real estate verticals offset by shrink in the social services vertical. During the quarter, we closed our acquisitions of both US-based KBK Insurance Group and UK-based MGA start-up First Specialty. We remain acquisitive, with a strong appetite for profitable specialty insurance businesses, and we continue to invest in technology and talent to drive organic growth."

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