WHITE MOUNTAINS INSURANCE GROUP LTD [WTM] Filings

10-Q 1 wtm-20220930.htm 10-Q wtm-20220930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the period ended September 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-8993

WHITE MOUNTAINS INSURANCE GROUP, LTD.

(Exact name of Registrant as specified in its charter)


Bermuda
(State or other jurisdiction of incorporation or organization)						94-2708455
23 South Main Street, Suite 3B						(I.R.S. Employer Identification No.)
Hanover,						03755-2053
New Hampshire						(Zip Code)
(Address of principal executive offices)

Registrant’s telephone number, including area code: (603) 640-2200

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Shares, par value $1.00

WTM

New York Stock Exchange

per share

Bermuda Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ý No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý

As of November 3, 2022, 2,576,232 common shares with a par value of $1.00 per share were outstanding (which includes 38,350 restricted common shares that were not vested at such date).

WHITE MOUNTAINS INSURANCE GROUP, LTD.

Table of Contents


		Page No.

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Consolidated Balance Sheets, September 30, 2022 and December 31, 2021	1

	Consolidated Statements of Operations and Comprehensive Income,
	Three and Nine Months Ended September 30, 2022 and 2021	3

	Consolidated Statements of Changes in Equity,	6
	Three and Nine Months Ended September 30, 2022 and 2021

	Consolidated Statements of Cash Flows, Nine Months Ended September 30, 2022 and 2021	8

	Notes to Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	48

	Results of Operations for the Three and Nine Months Ended September 30, 2022 and 2021	48

	Liquidity and Capital Resources	70

	Non-GAAP Financial Measures	74

	Critical Accounting Estimates	75

	Forward-Looking Statements	76

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	77

Item 4.	Controls and Procedures	77

PART II.	OTHER INFORMATION	77

Items 1 through 6.		77

SIGNATURES		78

Part I.FINANCIAL INFORMATION.

Item 1.Financial Statements

WHITE MOUNTAINS INSURANCE GROUP, LTD.

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	September 30, 2022		December 31, 2021
Millions, except share and per share amounts
Assets
Financial Guarantee (HG Global/BAM)
Fixed maturity investments, at fair value	$	874.4	$	934.1
Short-term investments, at fair value	62.3		32.4
Total investments	936.7		966.5
Cash	17.3		19.8
Insurance premiums receivable	6.6		6.9
Deferred acquisition costs	34.9		33.1


Other assets	22.3		18.5
Total Financial Guarantee assets	1,017.8		1,044.8
P&C Insurance and Reinsurance (Ark)
Fixed maturity investments, at fair value	741.8		688.6
Common equity securities, at fair value	286.4		251.1
Short-term investments, at fair value	309.4		296.2
Other long-term investments	329.7		326.2
Total investments	1,667.3		1,562.1
Cash	123.4		67.8
Reinsurance recoverables	550.9		448.4
Insurance premiums receivable	698.6		416.0
Ceded unearned premiums	59.7		67.1
Deferred acquisition costs and value of in-force business acquired	151.4		108.2

Goodwill and other intangible assets	292.5		292.5
Other assets	62.9		64.9
Total P&C Insurance and Reinsurance assets	3,606.7		3,027.0
Asset Management (Kudu)

Other long-term investments	813.2		669.5

Cash (restricted $8.9 and $4.5)	76.6		21.4
Accrued investment income	12.5		16.9
Goodwill and other intangible assets	8.7		8.9
Other assets	9.7		10.4
Total Asset Management assets	920.7		727.1







Other Operations
Fixed maturity investments, at fair value	238.1		286.2
Short-term investments, at fair value	824.7		129.5
Common equity securities, at fair value	46.4		—
Investment in MediaAlpha, at fair value	148.2		261.6
Other long-term investments	479.8		382.1
Total investments	1,737.2		1,059.4
Cash	28.4		38.7



Goodwill and other intangible assets	92.0		39.1
Other assets	142.2		59.5
Assets held for sale - NSM Group	—		989.0
Assets held for sale - Other	—		16.1
Total Other Operations assets	1,999.8		2,201.8
Total assets	$	7,545.0	$	7,000.7

See Notes to Consolidated Financial Statements

CONSOLIDATED BALANCE SHEETS (CONTINUED)

(Unaudited)


	September 30, 2022		December 31, 2021
Millions, except share and per share amounts
Liabilities
Financial Guarantee (HG Global/BAM)
Unearned insurance premiums	$	286.7	$	266.3
Debt	146.4		—
Accrued incentive compensation	21.6		24.7

Other liabilities	29.5		30.9
Total Financial Guarantee liabilities	484.2		321.9
P&C Insurance and Reinsurance (Ark)
Loss and loss adjustment expense reserves	1,329.4		894.7
Unearned insurance premiums	781.3		495.9
Debt	180.0		185.9
Reinsurance payable	312.7		424.1
Contingent consideration	32.9		28.0

Other liabilities	107.6		93.8
Total P&C Insurance and Reinsurance liabilities	2,743.9		2,122.4









Asset Management (Kudu)


Debt	253.5		218.2

Other liabilities	59.7		42.8
Total Asset Management liabilities	313.2		261.0







Other Operations
Debt	35.6		16.8

Accrued incentive compensation	67.2		48.5

Other liabilities	34.6		30.1

Liabilities held for sale - NSM Group	—		495.3
Total Other Operations liabilities	137.4		590.7
Total liabilities	3,678.7		3,296.0
Equity
White Mountains’s common shareholders’ equity
White Mountains’s common shares at $1 par value per share—authorized 50,000,000 shares; issued and outstanding 2,576,232 and 3,017,772 shares	2.6		3.0
Paid-in surplus	532.7		585.9
Retained earnings	3,175.9		2,957.5
Accumulated other comprehensive income (loss), after-tax:
Net unrealized gains (losses) from foreign currency translation and interest rate swap	(3.2)		1.7

Total White Mountains’s common shareholders’ equity	3,708.0		3,548.1
Non-controlling interests	158.3		156.6
Total equity	3,866.3		3,704.7
Total liabilities and equity	$	7,545.0	$	7,000.7

See Notes to Consolidated Financial Statements

WHITE MOUNTAINS INSURANCE GROUP, LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
Millions	2022		2021		2022		2021
Revenues:
Financial Guarantee (HG Global/BAM)
Earned insurance premiums	$	7.1	$	6.7	$	26.0	$	19.6
Net investment income	5.7		4.4		15.1		13.2
Net realized and unrealized investment gains (losses)	(38.8)		(4.0)		(114.0)		(15.6)
Other revenues	1.3		.3		3.7		.9
Total Financial Guarantee revenues	(24.7)		7.4		(69.2)		18.1

P&C Insurance and Reinsurance (Ark)
Earned insurance premiums	346.1		213.4		757.8		435.8
Net investment income	4.9		.6		9.7		1.8
Net realized and unrealized investment gains (losses)	(14.4)		.3		(76.5)		10.3
Other revenues	6.6		3.4		10.1		9.4
Total P&C Insurance and Reinsurance revenues	343.2		217.7		701.1		457.3







Asset Management (Kudu)
Net investment income	14.8		9.5		41.2		26.1
Net realized and unrealized investment gains (losses)	41.1		18.9		45.8		62.5
Other revenues	—		.1		—		.2
Total Asset Management revenues	55.9		28.5		87.0		88.8






Other Operations

Net investment income	8.5		5.0		13.6		16.1
Net realized and unrealized investment gains (losses)	(17.3)		15.3		2.8		34.0
Net realized and unrealized investment gains (losses) from investment in MediaAlpha	(18.6)		(396.8)		(113.3)		(325.5)
Commission revenues	3.2		2.4		8.7		7.0
Other revenues	33.0		28.1		89.6		57.6
Total Other Operations revenues	8.8		(346.0)		1.4		(210.8)
Total revenues	$	383.2	$	(92.4)	$	720.3	$	353.4

See Notes to Consolidated Financial Statements

CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
Millions	2022		2021		2022		2021
Expenses:
Financial Guarantee (HG Global/BAM)
Insurance acquisition expenses	$	1.7	$	3.0	$	9.5	$	6.5

General and administrative expenses	15.8		12.4		49.5		42.7
Interest expense	2.0		—		5.4		—
Total Financial Guarantee expenses	19.5		15.4		64.4		49.2

P&C Insurance and Reinsurance (Ark)
Loss and loss adjustment expenses	213.7		129.2		456.2		247.8
Insurance and reinsurance acquisition expenses	74.8		53.7		174.9		124.4

General and administrative expenses	26.9		21.8		79.8		84.4
Interest expense	3.7		2.1		10.6		4.5
Total P&C Insurance and Reinsurance expenses	319.1		206.8		721.5		461.1










Asset Management (Kudu)
General and administrative expenses	4.5		3.3		10.2		9.0
Amortization of other intangible assets	—		—		.2		.2
Interest expense	4.2		1.9		10.3		9.2
Total Asset Management expenses	8.7		5.2		20.7		18.4








Other Operations



Cost of sales	25.0		24.0		68.8		45.9
General and administrative expenses	39.9		14.4		118.9		79.4
Amortization of other intangible assets	1.4		2.0		3.2		2.9
Interest expense	.6		.4		1.2		1.1
Total Other Operations expenses	66.9		40.8		192.1		129.3
Total expenses	414.2		268.2		998.7		658.0
Pre-tax income (loss) from continuing operations	(31.0)		(360.6)		(278.4)		(304.6)
Income tax (expense) benefit	7.4		(28.6)		26.1		(52.2)
Net income (loss) from continuing operations	(23.6)		(389.2)		(252.3)		(356.8)
Net income (loss) from discontinued operations, net of tax - NSM Group	6.3		5.3		16.4		(23.8)
Net gain (loss) from sale of discontinued operations, net of tax - NSM Group	886.8		—		886.8		—



Net gain (loss) from sale of discontinued operations, net of tax - Sirius Group	—		—		—		18.7
Net income (loss)	869.5		(383.9)		650.9		(361.9)
Net (income) loss attributable to non-controlling interests	18.7		12.5		101.5		53.7
Net income (loss) attributable to White Mountains’s common shareholders	$	888.2	$	(371.4)	$	752.4	$	(308.2)

See Notes to Consolidated Financial Statements

WHITE MOUNTAINS INSURANCE GROUP, LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
Millions	2022		2021		2022		2021
Net income (loss) attributable to White Mountains’s common shareholders	$	888.2	$	(371.4)	$	752.4	$	(308.2)

Other comprehensive income (loss), net of tax	(1.4)		—		(3.0)		(.3)

Other comprehensive income (loss) from discontinued operations, net of tax - NSM Group	.7		(2.2)		(5.2)		.9
Net gain (loss) from foreign currency translation from sale of discontinued operations, net of tax - NSM Group	2.9		—		2.9		—
Comprehensive income (loss)	890.4		(373.6)		747.1		(307.6)
Other comprehensive (income) loss attributable to non-controlling interests	(.3)		.2		.4		—
Comprehensive income (loss) attributable to White Mountains’s common shareholders	$	890.1	$	(373.4)	$	747.5	$	(307.6)

WHITE MOUNTAINS INSURANCE GROUP LTD [WTM] Filings
10-Q	[2022-11-07]
10-Q	[2022-08-08]
10-Q	[2022-05-06]
10-K	[2022-02-28]
10-Q	[2021-11-08]
10-Q	[2021-08-06]
10-Q	[2021-05-10]
10-K	[2021-02-26]
10-Q	[2020-11-06]
10-Q	[2020-08-07]
10-Q	[2020-05-08]
10-K	[2020-03-02]
10-Q	[2019-11-06]
10-Q	[2019-08-06]
10-Q	[2019-05-06]
10-K	[2019-02-27]
10-Q	[2018-11-05]
10-Q	[2018-08-07]
10-Q	[2018-05-02]
10-K	[2018-02-28]
10-Q	[2017-11-08]
10-Q	[2017-08-04]
10-Q	[2017-05-02]
10-K	[2017-02-27]
10-Q	[2016-11-02]
10-Q	[2016-08-03]
10-Q	[2016-05-02]
10-K	[2016-02-29]
10-Q	[2015-11-02]
10-Q	[2015-08-03]
10-Q	[2015-05-04]
10-K	[2015-02-27]
10-Q	[2014-10-29]
10-Q	[2014-07-29]
10-Q	[2014-04-28]
10-K	[2014-02-28]
10-Q	[2013-10-28]
10-Q	[2013-07-30]
10-Q	[2013-04-29]
10-K	[2013-03-01]
10-Q	[2012-10-30]
10-Q	[2012-07-27]
10-Q	[2012-04-27]
10-K	[2012-02-28]