White Mountains quarterly profit soars to $286.4m

Bermuda-based White Mountains Insurance’s fourth quarter profit increased seven-fold  to $286.4 million as strong results from insurance subsidiary Ark/WM Outrigger  and improved investment income propelled its performance.

For the year, the group recorded a profit of $509 million compared to $792 million. The decline was due largely to the one-time sale of subsidiary NSM in 2022.

Ark reported total income of $434 million for the fourth quarter, up from $308 million in the same quarter in 2022, while expenses were $309.7 million compared to $192 million in 2022.

Manning Rountree, CEO, said: "We had a strong fourth quarter to cap off a good year.  Average book value per share was up 7% in the quarter and 14% for the full year.  In the quarter, we had good results from our operating companies and excellent returns in our investment portfolio.

“BAM produced $48 million of gross written premiums and member surplus contributions in the quarter.  Ark produced good underwriting results in both the quarter and the full year, while growing full-year gross written premiums by 31%.

“Kudu grew the fair value of its continuing portfolio and closed two new deployments in the quarter.  Our investment portfolio was up 6% in the quarter and 11% for the year.  The value of our MediaAlpha position grew $66 million in the quarter and $27 million for the year.

“We redeployed $130 million into Outrigger Re for the coming year and closed on our acquisition of Bamboo in early January.  Undeployed capital stands at roughly $500 million."

Ark/WM Outrigger combined ratio was 69% and 80% in the fourth quarter and year ended December 31, 2023. The division had gross written premiums of $232 million and $1,898 million, net written premiums of $215 million and $1,521 million and net earned premiums of $362 million and $1,410 million in the fourth quarter and year ended December 31, 2023. Ark/WM Outrigger reported pre-tax income of $125 million and $318 million in the fourth quarter and year ended December 31, 2023.

Ark's combined ratio was 70% and 82% in the fourth quarter and year ended December 31, 2023 compared to 59% and 82% in the fourth quarter and year ended December 31, 2022. Ark's combined ratio in the year ended December 31, 2023 included two points of catastrophe losses, which included losses from Hurricane Idalia, the Maui wildfires, Hurricane Otis and various smaller events, compared to 13 points of catastrophe losses in the year ended December 31, 2022, driven primarily by losses from Hurricane Ian and the conflict in Ukraine.

The group was affected by net unfavourable development which added two points of net unfavourable prior year development compared to 11 points and six points of net favourable prior year development in the fourth quarter and year ended December 31, 2022.

Loss and loss expenses for the fourth quarter rose to $145.7 million compared to $80.2 million in the same period in 2022. For the year, they were $726.8 million from $536.4 million.  The increases were  driven by Winter Storm Elliott, Hurricane Ian and three large claims in the property and marine & energy lines of business.”

Ark reported gross written premiums of $232 million and $1,898 million, net written premiums of $213 million and $1,411 million and net earned premiums of $334 million and $1,305 million in the fourth quarter and year ended December 31, 2023 compared to gross written premiums of $200 million and $1,452 million, net written premiums of $189 million and $1,195 million and net earned premiums of $286 million and $1,043 million in the fourth quarter and year ended December 31, 2022.

Ark reported pre-tax income of $109 million and $249 million in the fourth quarter and year ended December 31, 2023 compared to $116 million and $95 million in the fourth quarter and year ended December 31, 2022. Ark's results included net realized and unrealized investment gains (losses) of $50 million and $86 million in the fourth quarter and year ended December 31, 2023 compared to $21 million and $(55) million in the fourth quarter and year ended December 31, 2022.

Ian Beaton, CEO of Ark, said: "Ark had a good quarter and full year, producing combined ratios of 70% and 82%, respectively. Premiums grew 31% year over year, including risk adjusted rate change of 15%. Growth was particularly strong in the property line of business, aided by the rate environment and capacity from Outrigger Re. In December, AM Best affirmed Ark's 'A/stable' rating. We look forward to continued profitable growth in the business in 2024."

WM Outrigger Re's combined ratio was 55% and 44% in the fourth quarter and year ended December 31, 2023. WM Outrigger Re reported gross and net written premiums of $2 million and $110 million and net earned premiums of $29 million and $104 million in the fourth quarter and year ended December 31, 2023. WM Outrigger Re reported pre-tax income of $16 million and $69 million in the fourth quarter and year ended December 31, 2023.