White Mountains sees profits fall
White Mountains Insurance Group has reported that it made a profit of $3 million in the second quarter of 2018, down severely on the $14 million it made in the same period of 2017.
The quarter takes the company to a loss of $45 million for the first half of 2018, again a severe fall from the profit of $43 million that it made in the first six months of 2017.
Looking at the results from the different segments of the company chief executive officer (CEO) Manning Rountree said: “We had decent results in the quarter, with ABVPS up 1 percent. After a slow start to the year, BAM's results rebounded in the second quarter, with higher par insured volumes and good pricing. MediaAlpha maintained its momentum, with strong top and bottom line growth. Our investment portfolio produced a total return of 0.7 percent, driven largely by the rebound in equity markets. We made good progress on capital deployment during the quarter, closing the acquisition of NSM and in turn Fresh Insurance, as well as repurchasing 575,068 White Mountains shares for $505 million.”
White Mountains said that its BAM division insured municipal bonds with par value of $3.1 billion in the second quarter and $4.4 billion in the first six months of 2018, compared to $2.7 billion and $5.1 billion in the second quarter and first six months of 2017. Gross written premiums and member surplus contributions totalled $29 million and $40 million in the second quarter and first six months of 2018, compared to $20 million and $48 million in the second quarter and first six months of 2017.
Seán McCarthy, CEO of BAM, said, “In the second quarter, new-issue municipal bond volume recovered, and longer-term new-money transactions represented a larger share of the total market volume. These favourable trends allowed BAM to more than double its primary and secondary market volume, quarter over quarter, while maintaining attractive risk-adjusted pricing levels. Claims-paying resources finished the quarter at an all-time high, reflecting the close of the Fidus Re transaction, which added $100 million of reinsurance protection in the form of collateralised insurance-linked securities. On June 25th, S&P Global Ratings affirmed BAM's AA/Stable rating, citing BAM's market acceptance, proven track record of credit discipline and growth in par insured and premiums written.”
The company’s HG Global segment reported pre-tax income of $8 million and $12 million in the second quarter and first six months of 2018, compared to pre-tax income of $7 million and $13 million in the second quarter and first six months of 2017. White Mountains reported pre-tax loss related to BAM of $17 million and $36 million in the second quarter and first six months of 2018, compared to pre-tax loss of $12 million and $24 million in the second quarter and first six months of 2017. The changes at BAM were driven primarily by lower investment returns in 2018.
On May 11, 2018, White Mountains acquired 95 percent of NSM Insurance HoldCo, an insurance program administrator. White Mountains paid $274 million of cash consideration for its equity interest in NSM.
Subsequently, on May 18, 2018, NSM acquired 100 percent of Fresh Insurance Services Group, an insurance broker that specialises in non-standard personal lines, motor trade, van, and travel insurance in the United Kingdom. NSM paid £37 million of upfront cash consideration for its equity interest in Fresh Insurance.
NSM reported revenues of $24 million and pre-tax income of $3 million for the period from May 11, 2018 through June 30, 2018.
The MediaAlpha segment reported pre-tax income of $5 million and $4 million in the second quarter and first six months of 2018, compared to pre-tax loss of $2 million and $3 million in the second quarter and first six months of 2017. MediaAlpha's adjusted EBITDA was $8 million and $17 million in the second quarter and first six months of 2018, compared to $1 million and $3 million in the second quarter and first six months of 2017. MediaAlpha reported revenues of $72 million and $144 million in the second quarter and first six months of 2018, compared to $31 million and $63 million in the second quarter and first six months of 2017. The increases in pre-tax income, adjusted EBITDA and revenues for both periods were primarily driven by growth in the P&C vertical and the Health, Medicare and Life vertical, which includes the impact of the acquisition of assets from Healthplans.com in the fourth quarter of 2017.
Finally, White Mountains's other operations segment reported pre-tax loss of $11 million and $62 million in the second quarter and first six months of 2018, compared to pre-tax income of $4 million and $7 million in the second quarter and first six months of 2017.
