WHITE MOUNTAINS INSURANCE GROUP, LTD. (NYSE:WTM) Files An 8-K Results of Operations and Financial Condition
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On February6, 2019, White Mountains Insurance Group, Ltd. issued a press release announcing its results for the three months and year ended December31, 2018. The press release furnished herewith is attached as Exhibit 99.1 to this Form 8-K. Certain information included in the press release constitutes non-GAAP financial measures (as defined in RegulationG of the Securities and Exchange Commission). Specifically, the three non-GAAP financial measures disclosed in the press release include (i) adjusted book value per share (ii) gross written premiums and member surplus contributions (“MSC”) from new business and (iii) adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”). These non-GAAP financial measures have been reconciled to their most comparable GAAP financial measures.
Adjusted book value per share is a non-GAAP financial measure which is derived by adjusting (i) the GAAP book value per share numerator and (ii) the common shares outstanding denominator, as described below. The GAAP book value per share numerator is adjusted (i) to include a discount for the time value of money arising from the expected timing of cash payments of principal and interest on the BAM surplus notes and (ii) to add back the unearned premium reserve, net of deferred acquisition costs, at HG Global. Under GAAP, White Mountains is required to carry the BAM surplus notes, including accrued interest, at nominal value with no consideration for time value of money. Based on a debt service model that forecasts operating results for BAM through maturity of the surplus notes, the present value of the BAM surplus notes, including accrued interest, was estimated to be $146 million, $151 million, $162 million and $167 million less than the nominal GAAP carrying values as of December 31, 2018, September 30, 2018, December 31, 2017, and September 30, 2017, respectively. The value of HG Global’s unearned premium reserve, net of deferred acquisition costs, was $106 million, $94 million, $82 million and $71 million as of December 31, 2018, September 30, 2018, December 31, 2017, and September 30, 2017, respectively. White Mountains believes these adjustments are useful to management and investors in analyzing the intrinsic value of HG Global, including the value of the surplus notes and the value of the in-force business at HG Re, HG Global’s reinsurance subsidiary. The denominator used in the calculation of adjusted book value per share equals the number of common shares outstanding adjusted to exclude unearned restricted common shares, the compensation cost of which, at the date of calculation, has yet to be amortized. The reconciliation of GAAP book value per share to adjusted book value per share is included on page 7 of Exhibit99.1 to this Form8-K.
Gross written premiums and MSC from new business is a non-GAAP financial measure, which is derived by adjusting gross written premiums (i) to add MSC, (ii) to include the present value of future installment MSC not yet collected and (iii) to exclude the impact of gross written premium adjustments related to policies closed in prior periods. White Mountains believes these adjustments are useful to investors in evaluating the volume and pricing of new business closed during the period. The reconciliation of GAAP gross written premiums to gross written premiums and MSC from new business is included on page 12 of Exhibit 99.1 to this Form 8-K.
Adjusted EBITDA is a non-GAAP financial measure, which is defined as net income (loss) excluding interest expense on debt, income tax benefit (expense), depreciation and amortization, and certain adjustments at NSM and MediaAlpha. In the case of NSM, adjusted EBITDA also excludes the change in the fair value of NSM’s contingent earnout liability related to prior transactions. In the case of MediaAlpha, adjusted EBITDA also excludes non-cash equity-based compensation expense. White Mountains believes that adjusted EBITDA is useful to management and investors in analyzing NSM’s and MediaAlpha’s fundamental economic performance. White Mountains believes that investors commonly use adjusted EBITDA as a supplemental measurement to evaluate the overall operating performance of companies within the same industry. A schedule is included on page 13 of Exhibit99.1 to this Form8-K that reconciles NSM’s and MediaAlpha’s GAAP net income (loss) to adjusted EBITDA.
ITEM 9.01.FINANCIAL STATEMENTS AND EXHIBITS.
(d)Exhibits
WHITE MOUNTAINS INSURANCE GROUP LTD Exhibit
EX-99.1 2 wtm4q18earningsrelease.htm EXHIBIT 99.1 Exhibit Exhibit 99.1 CONTACT: Todd Pozefsky(203) 458-5807WHITE MOUNTAINS REPORTS FOURTH QUARTER RESULTSHAMILTON,…
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About WHITE MOUNTAINS INSURANCE GROUP, LTD. (NYSE:WTM)
White Mountains Insurance Group, Ltd. is an insurance holding company. The Company’s segments include OneBeacon, HG Global/BAM and Other Operations. Its principal businesses are conducted through its insurance, reinsurance and insurance services subsidiaries and affiliates. Its OneBeacon segment consists of OneBeacon Insurance Group, Ltd., which owns a family of property and casualty insurance companies (collectively, OneBeacon). OneBeacon is a specialty property and casualty insurance writer that offers a range of insurance products in the United States primarily through independent agencies, regional and national brokers, wholesalers and managing general agencies. The HG Global/BAM segment consists of HG Global Ltd. (HG Global) and Build America Mutual Assurance Company (BAM). BAM provides insurance on municipal bonds issued to support the United States public purposes, such as schools. Its Other Operations segment consists of the Company and its intermediate holding companies.
