White Mountains posts Q2 net loss of $174m

10-08-2022

White Mountains posts Q2 net loss of $174m

shutterstock/Andrii Yalanskyi

White Mountains Insurance Group has reported a net loss attributable to common shareholders of $174 million and of $143 million in the first three and first six months of 2022, respectively. Those losses compare with profits of $139 million and $66 million in same periods of 2021.

The losses to 30 June 2022 include $114 million and $95 million of unrealised investment losses from White Mountains's investment in MediaAlpha.

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

Manning Rountree, White Mountains chief executive officer (CEO), said that the adjusted book value per common share (ABVPS) was down 4% in the second quarter, and that the main drivers were mark-to-market losses in the company’s fixed income portfolios and the decline in MediaAlpha's share price.

On the other hand, White Mountains’ operating businesses produced good results, he said.

“BAM produced record levels of par insured. Ark produced an 87% combined ratio while growing premiums 23% year-over-year. The fair value of Kudu's existing participation contracts declined 2.5% in the quarter, holding up well in a tough quarter for investment markets. Kudu grew adjusted EBITDA year-over-year and closed one new transaction. During the quarter, we signed and announced an agreement to sell NSM, and that transaction subsequently closed on August 1.  This deal adds roughly $300 to ABVPS.”

BAM's gross written premiums and member surplus contributions collected were $41 million and $63 million in the second quarter and first six months of 2022 compared to $30 million and $56 million in the same periods of 2021. BAM insured municipal bonds with par value of $5.9 billion and $9.3 billion in the second quarter and first six months of 2022 compared to $5.1 billion and $8.7 billion in the prior year. Total pricing was 70 and 67 basis points in the second quarter and first six months of 2022 compared to 59 and 65 basis points in the same periods of 2021. BAM's total claims paying resources were $1,228 million at 30 June, 2022 compared to $1,192 million at 31 December, 2021 and $1,165 million at 30 June, 2021.

Seán McCarthy, CEO of BAM, said: "BAM completed a record first half for direct par insured and premiums. Volatile market conditions and rising interest rates helped drive strong investor demand for insurance, including on larger and higher-rated transactions. During the quarter, BAM insured its largest transaction to date: $667 million for the New York State Dormitory Authority's school revenue bond financing programme. Pricing improved quarter over quarter and year over year. In mid-June, S&P Global Ratings completed its annual review and affirmed BAM's AA rating and Stable outlook."

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