White Mountains sees profits up for 2017

White Mountains Insurance Group made a profit of $23 million in the fourth quarter of 2017, taking the company to a profit of $631 million for 2017.

The results showed a marked improvement from the previous year, when White Mountains made a loss of $39 million in the fourth quarter of 2016, although it did make a profit of $547 million over full year 2016.

Net income was $23 million in the fourth quarter and $627 million for the year ended December 31, 2017 respectively. Net income the previous year showed a loss of $39 million for the same quarter and a profit of $402 million for 2016.

Chief executive officer Manning Rountree said that the company had seen satisfying results: “BAM finished the year with strong volume and good pricing in the 4th quarter. Uncertainty over tax reform pulled forward issuance volume into the quarter, and we expect a slower start to 2018 for BAM as a result. In December, BAM made its first cash payment of principal and interest on its surplus notes. MediaAlpha took a big step forward in the quarter, with robust organic growth and a nice tuck-in acquisition.  The investment portfolio returned 1.4 percent in the quarter, a good result and the primary driver of ABVPS growth.  Tax reform had no impact on our ABVPS.  For the year, we returned $724 million in capital to shareholders through share repurchases, retiring 18 percent of the shares outstanding in the process.  We ended 2017 with $2.1 billion in undeployed capital.   We continue to pursue new opportunities with energy, rigor and discipline."

Looking at White Mountain’s subsidiaries, BAM insured municipal bonds with par value of $3.3 billion and $10.4 billion in the fourth quarter and year ended December 31, 2017, compared to $2.8 billion and $11.3 billion in the fourth quarter and year ended December 31, 2016.  Gross written premiums and member surplus contributions totalled $33 million and $101 million in the fourth quarter and year ended December 31, 2017, compared to $24 million and $77 million in the fourth quarter and year ended December 31, 2016.

"BAM had a strong quarter to close out a solid year," said Seán McCarthy, chief executive officer. "Claims-paying resources grew in every quarter of 2017, driven by increases in total premiums, improvements in risk-adjusted pricing, and larger average transaction size.  Volatile market conditions in the fourth quarter highlighted the value of our guaranty to a wide range of retail and institutional investors.  During the quarter, BAM paid $5 million of principal and interest in cash on the surplus notes held by HG Global."

HG Global reported pre-tax income of $5 million and $26 million in the fourth quarter and year ended December 31, 2017, compared to pre-tax income of $4 million and $22 million in the fourth quarter and the year ended December 31, 2016.  White Mountains reported GAAP pre-tax loss related to BAM of $14 million and $50 million in the fourth quarter and year ended December 31, 2017, compared to GAAP pre-tax loss of $19 million and $49 million in the fourth quarter and year ended December 31, 2016.

MediaAlpha reported pre-tax income of $3 million in the fourth quarter and break-even results in the year ended December 31, 2017, compared to pre-tax loss of $2 million and $4 million in the fourth quarter and year ended December 31, 2016.  MediaAlpha reported revenues of $62 million and $163 million in the fourth quarter and year ended December 31, 2017, compared to $28 million and $117 million in the fourth quarter and year ended December 31, 2016.

MediaAlpha's earnings before interest, taxes, depreciation and amortization (EBITDA) was $7 million and $11 million in the fourth quarter and year ended December 31, 2017, compared to $1 million and $7 million in the fourth quarter and the year ended December 31, 2016.  The increases in pre-tax income, revenues and EBITDA for both periods were primarily driven by growth in the Health, Medicare and Life and the P&C verticals.

In October 5, 2017, MediaAlpha acquired certain assets associated with the Health, Medicare and Life insurance business of Healthplans.com.  The acquired assets include domain names, advertiser and publisher relationships, traffic acquisition accounts, and owned and operated websites.  During the fourth quarter of 2017, which includes the annual open enrollment period for Health and Medicare coverages, business from the acquired assets contributed $15 million of revenues and $2 million of both pre-tax income and EBITDA.

White Mountains' other operations segment reported pre-tax income of $11 million and $32 million in the fourth quarter and year ended December 31, 2017, compared to pre-tax loss of $58 million and $117 million in the fourth quarter and year ended December 31, 2016.  According to the company the improved results were driven primarily by strong equity returns in the 2017 periods.  Net realised and unrealised gains were $33 million and $133 million in the fourth quarter and year ended December 31, 2017, compared to net realised and unrealised losses of $47 million and $28 million in the fourth quarter and year ended December 31, 2016.