8-K: White Mountains Reports Slight Increase in Book Value Per Share for Q1 2025, Impacted by MediaAlpha Decline

White Mountains Insurance Group reported a slight increase in book value per share to $1,752 for Q1 2025, with solid operating results offset by a decline in MediaAlpha's share price.

Summary

• White Mountains Insurance Group, Ltd. reported its Q1 2025 results, with a book value per share of $1,752 as of March 31, 2025.
• Comprehensive income attributable to common shareholders was $35 million, compared to $236 million in Q1 2024.
• The company experienced a $37 million unrealized investment loss from its investment in MediaAlpha, contrasting with a $211 million gain in the same period last year.
• Excluding MediaAlpha, the investment portfolio returned 2.3%, with gains in both equities and fixed income.
• Undeployed capital stands at roughly $550 million, inclusive of new deployments into BroadStreet Partners and Enterprise Solutions.
• White Mountains will no longer report adjusted book value per share beginning in 2025 due to changes related to the deconsolidation of BAM.
• Ark posted a 94% combined ratio and wrote $1.1 billion of gross written premiums, up 27% year-over-year.
• HG Global generated $7 million of gross written premiums and grew equity by 3% in the quarter.
• Kudu's trailing 12 months EBITDA increased, and the fair value of the portfolio grew 4% on a same store basis.
• Bamboo delivered strong results, doubling managed premiums and tripling MGA adjusted EBITDA year-over-year.
• Bamboo estimates $160 million in losses from the January 2025 California wildfires, with the bulk absorbed by reinsurance partners.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While there are some positive aspects like growth in certain segments (Ark, Bamboo, Kudu), the negative impact of MediaAlpha's share price decline and the overall decrease in comprehensive income temper the positive outlook.

Positives

• Ark's gross written premiums increased 27% year-over-year.
• HG Global reported pre-tax income of $25 million in Q1 2025 compared to $6 million in Q1 2024.
• Kudu's portfolio delivered strong results, with return on equity increasing to 13% on a trailing 12 months basis.
• Bamboo's commission and fee revenues increased to $44 million in Q1 2025 from $22 million in Q1 2024.
• Bamboo successfully renewed its largest reinsurance program on favorable terms.
• WM Outrigger Re generated pre-tax income of $29 million from the 2024 underwriting year.

Negatives

• MediaAlpha's share price declined 18% in Q1 2025, resulting in a $37 million mark-to-market loss for White Mountains.
• WM Outrigger Re's combined ratio was 166% in Q1 2025, compared to 32% in Q1 2024, due to catastrophe losses.
• HG Global's gross written premiums decreased by 25% year over year.
• White Mountainss Other Operations reported pre-tax loss of $8 million related to the Bamboo CRV, including $12 million of the losses related to the California wildfires.

Risks

• Catastrophe losses, such as the California wildfires, can significantly impact underwriting results.
• The market value of White Mountains' investment in MediaAlpha is subject to volatility and can impact book value.
• Deterioration of general economic, market, or business conditions could negatively affect performance.
• Competitive forces and changes in laws or regulations could impact White Mountains and its businesses.

Future Outlook

Kudu expects to remain active in deploying capital throughout 2025, seeing a robust pipeline of opportunities. Bamboo is well-positioned to drive continued profitable growth.

Management Comments

• Manning Rountree, CEO, commented, 'Book value per share ended the quarter at $1,752, up slightly. We had solid operating results and good investment returns, partially offset by the share price decline at MediaAlpha.'
• Ian Beaton, CEO of Ark, said, 'We are off to a good start in 2025, with a combined ratio of 94%. Gross written premiums increased 27% over 2024, aided by the addition of new underwriting teams and lines of business. Market conditions remain attractive, despite rate declines in several lines of business.'
• Kevin Pearson, President of HG Global, said, 'HG Global had a slow first quarter. Gross written premiums decreased by 25% year over year, driven primarily by lower primary market activity. However, secondary market volume increased year over year driven by increased credit market volatility, making a nice contribution to total pricing and gross written premiums.'
• Rob Jakacki, CEO of Kudu, said, 'Kudus portfolio delivered strong results this quarter. On a trailing 12 months basis, return on equity increased to 13% and annualized adjusted EBITDA increased by 7% to $65 million. We are pleased to have completed our investment in Homestead, a California-based farmland equity and debt manager, which further diversifies our portfolio. Looking ahead, we continue to see a robust pipeline of opportunities and expect to remain active in deploying capital throughout 2025.'
• John Chu, CEO of Bamboo, said, 'We are off to a strong start in 2025. Trailing 12 months managed premiums increased to $542 million, up 96% year-over-year, while trailing 12 months MGA adjusted EBITDA increased to $66 million, up over 3 times year-over-year. We are proud of how we delivered for policyholders amidst the California wildfires. Our programs incurred losses, but these remain well within our reinsurance covers. Our relative loss performance was excellent, and, as a result, we completed our April 1st treaty year renewal on favorable terms with strong demand from our reinsurance partners. We are well-positioned to drive continued profitable growth.'
• Mark Plourde, President of White Mountains Advisors, said, 'Excluding MediaAlpha, the total portfolio was up 2.3%, a good absolute result but mixed versus benchmarks. The fixed income portfolio returned 1.7%, lagging the longer-duration Bloomberg Intermediate Aggregate Index return of 2.6% as interest rates declined in the quarter. The equity portfolio, excluding MediaAlpha, returned 3.1%, well ahead of the S&P 500 Index return of -4.3%.'

Industry Context

The report reflects the ongoing challenges and opportunities in the insurance and reinsurance industry, including the impact of catastrophe events, investment market volatility, and the evolving landscape of MGA and asset management businesses. The results highlight the importance of diversification and effective risk management in navigating these dynamics.

Comparison to Industry Standards

• Ark's 94% combined ratio is generally considered a strong underwriting performance, although the 25 points of catastrophe losses are a significant factor.
• The performance of White Mountains' investment portfolio, excluding MediaAlpha, is mixed compared to benchmarks, with fixed income lagging and equities outperforming.
• Bamboo's growth in managed premiums and MGA adjusted EBITDA is notable compared to industry averages for MGA businesses.
• The impact of the California wildfires highlights the importance of reinsurance coverage, similar to how companies like RenaissanceRe and Everest Re manage catastrophe exposure.

Stakeholder Impact

• Shareholders are impacted by the slight increase in book value per share and the decline in MediaAlpha's share price.
• Employees are affected by the performance of the company and its various segments.
• Policyholders are impacted by the company's ability to manage and pay claims, particularly in the event of catastrophe losses.
• Reinsurance partners are affected by the losses incurred by Bamboo due to the California wildfires.

Next Steps

• White Mountains expects to file its Form 10-Q with the Securities and Exchange Commission.
• Kudu expects to remain active in deploying capital throughout 2025.
• Bamboo is focused on driving continued profitable growth.

Key Dates

Keywords

White Mountains, Insurance, Reinsurance, Book Value, MediaAlpha, Ark, HG Global, Kudu, Bamboo, Financial Results, Earnings, Premiums, EBITDA, Investments