White Mountains Reports 2003 Results; Posts 13% Growth In Book Value

Bermuda-based White Mountains Insurance Group, Ltd. announced good results for 2003, ending the year by posting a 13 percent increase in its “fully converted tangible book value per share of $291,” up from $259 at the end of 2002.

The company also reported pre-tax income for 2003 of $372 million compared to $119 million in 2002, and fourth quarter pre-tax income of $64 million compared to $60 million in the prior year. The report indicated that fourth quarter 2003 acquisitions should add “significant value in 2004.”

It listed those acquisitions as follows:
— Renewal Rights to the Treaty Business of CNA Reinsurance;
— Atlantic Specialty, the Commercial Insurance Business of Atlantic Mutual;
— Sierra Insurance Group, a runoff insurance company, from Sierra Health Services;
— Sirius Insurance Group, an international reinsurance operation, from ABB Holdings, Ltd.

CEO Ray Barrette commented: “We had a solid year in 2003. We achieved terrific underwriting results in all of our ongoing businesses and earned nice returns on our investment portfolio. The drag from runoff operations shaved 2-3 percentage points from our book value growth, but this drag should essentially be over. In the fourth quarter, we were able to carefully capitalize on unique opportunities in each one of our businesses. All these transactions will add significant value for our shareholders and will be financed internally. In addition, Atlantic Specialty and Sirius International will clearly enhance our insurance and reinsurance operations, respectively.”

The company’s primary operating company, Boston-based OneBeacon, reported pre-tax income for 2003 of $420 million compared to $200 million in 2002, with a GAAP combined ratio of 98 percent for 2003 compared to 107 percent in 2002. It reported fourth quarter pre-tax income of $111 million with a GAAP combined ratio of 95 percent. For the comparable period of 2002, pre-tax income was $60 million with a GAAP combined ratio of 101 percent.

OneBeacon’s CEO John Cavoores noted: “We were operating on all cylinders in 2003. The GAAP combined ratio for core operations was 90 percent for the year. Core premiums are growing again and we are no longer writing non-core premiums. The addition of Atlantic Specialty, coupled with the introduction of new segmented personal insurance products and strong profit and growth in our specialty operations, gives OneBeacon terrific momentum going into 2004.”

Net written premiums on core operations for 2003 were $1.9 billion, compared to $2.0 billion in 2002. Net written premiums on core operations for the fourth quarter of 2003 were $453 million, up 9 percent compared to $414 million in the same period last year. Net written premiums for 2003 were $2.0 billion, down from $2.5 billion in 2002. Net written premiums for the fourth quarter of 2003 were $465 million, down from $485 million in the fourth quarter of 2002.