White Mountains Insurance Group, Ltd. · NYSE:WTM
White Mountains Insurance — Investor Presentation (April 2007)
21 slides from White Mountains Insurance's investor presentation, Apr 12, 2007
Slide 1: White Mountains Insurance Group, Ltd. April 2007
White Mountains Insurance Group, Ltd. April 2007
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain information and statements included in this presentation are not historical facts but are forward-looking statements. In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we provide the following cautionary remark
Slide 3: 2006 Overview
2006 Overview 21% growth in fully converted tangible bvps, incl. div 102% combined ratio at WMRe 84% on accident year basis 9.1% pretax total return* on investment portfolio IPO of OneBeacon; sold 28% 96% combined ratio at OneBeacon $600 million of NPW at Esurance 70+% growth in each of last 3 years
Slide 4: Our Track Record
Our Track Record White Mountains Returns From IPO in 1985 Market Value Per Share: 17% annualized, including dividends Fully Converted TBV Per Share: * 17% annualized, including dividends Spin-off of White River Corporation As of March 30, 2007 (1) $566 $406 $22 $26 (2) $0 $100 $200 $300 $400 $500 $6
Slide 5: Businesses, Insurance, Reinsurance and Investments Overview
OneBeacon ($2.0 billion of capital) Specialty Regional Reciprocals Esurance ($0.3 billion of capital, two-thirds of which is in WMRe) Online personal auto Referral fees Galileo Weather WMRe ($2.6 billion of capital, including the deferred tax on safety reserve) Folksamerica Sirius International Whit
Slide 6: The WTM Advantage
The WTM Advantage Bermuda/Non-U.S. Holding Companies Capital Flexibility Tax Efficiency Non U.S. operations Talented Management Team with Broad Skill Set Merchant Banking Due Diligence, Deal Structuring, Company Restructuring Operating Skills: turnaround, ongoing, start-up Investment Management Tax
Slide 7: The WTM Advantage: OneBeacon
The WTM Advantage: OneBeacon Acquired from offshore for $2.1 billion in 2001 CR% from 120% in 2000 to 96% now Small runoff with A&E cover Transformation to specialty company Dividends/share buybacks of $1.8 billion, 2001-2006 Freed-up capital invested in reinsurance business post 9/11 23% U.S. tax r
Slide 8: White Mountains Re
White Mountains Re Global reinsurer $1.6 billion of annual gross written premiums $2.6 billion of capital including the deferred tax on safety reserve White Mountains Re [Bermuda] formed 1980; 100% owned since 1998 $1.0 billion in GWP during 2006 capital of $1.2 billion formed 1945; acquired 2004 $6
Slide 9: The WTM Advantage: WMRe
The WTM Advantage: WMRe Diversified book – geographically and by LOB Bermuda platform U.S. regional & specialty markets European business Fee-based sidecars Reduced cat exposures Strong financial position Allan Waters & Chuck Chokel Opportunities: Leverage Bermuda platform, better integration, bette
Slide 10: The WTM Advantage: Esurance
The WTM Advantage: Esurance Acquired in 2000 Premiums grew 70+% in each of last 3 years Increasing advertising spend: 2004 - $19 million 2005 - $60 million 2006 - $87 million Expect to write > $900 million in premiums in 2007 Economic combined ratio* under 100% since 2004 $300 acquisition cost per p
Slide 11: The WTM Advantage: Esurance Combined Ratios
The WTM Advantage: Esurance GAAP Combined Ratio Economic Combined Ratio* 120% 102% 109% 108% Loss + LAE Other Underwriting Acquisition Loss + LAE Other Underwriting Acquisition 113% 95% 95% 97% 149% 169% 90% 81% 69% 67% 73% 52% 20% 16% 12% 9% 27% 19% 17% 30% 26% 0% 20% 40% 60% 80% 100% 120% 140% 160
Slide 12: The WTM Advantage: New Businesses
The WTM Advantage: New Businesses Galileo Weather Risk Management Tailored risk management products related to weather Bermuda based with offices in New York, London 100 contracts since inception WM Life Re Reinsures variable annuities outside U.S. Bermuda based with offices in New York, Hartford La
Slide 13: Consolidated Financial Highlights
Consolidated Financial Highlights 2.3% 95% 118% 98% 2% $343 $68 2005 11.4% 149% 102% 107% 15% $259 $950 2002 9.1% 7.3% 8.4% Investments – pretax total return* 97% 95% 113% Esurance – economic combined ratio* 104% 99% 18% $343 $539 2004 96% 98% 13% $291 $360 2003 $406 fully converted TBV per share* $
Slide 14: Consolidated Capitalization
Consolidated Capitalization 491 0 0 0 0 minority interest – OneBeacon 21% 16% $ 4,798 3,785 234 $ 779 $19,418 2005 18% 16% 19% 22% debt to total tangible capital 18% 21% 24% 27% debt & pref. to tot. tangible cap (1)(2) $ 3,601 2,627 181 $ 793 $17,266 2002 $ 4,802 3,807 212 $ 783 $19,015 2004 $ 3,896
Slide 15: OneBeacon IPO - Benefits
OneBeacon IPO - Benefits To White Mountains: Successful IPO – Sold 28% of outstanding shares for $690 million Provided additional capital in Bermuda to further support our other operations and strengthen our financial position and flexibility We maintain the lion’s share of the financial upside of O
Slide 16: Capital
Capital Existing undeployed capital in Bermuda In conjunction with the OneBeacon IPO: Refinanced existing $400 million WTM/FAC credit facility into: $500 million WTM/WMRe credit facility $75 million FAC credit facility Defeased the Berkshire and Zenith preferred stock Recently issued $400 senior not
Slide 17: Consolidated Float
Consolidated Float $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0 2000 2001 2002 2003 2004 2005 2006 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 float multiple of tangible capital
Slide 18: Symetra
Symetra formerly Safeco Life & Investments acquisition closed on August 2, 2004 WTM & BRK each with 24% fully converted ownership 14% annualized growth in book value per share since closing Paid $100 million special dividend in 2006 $136.10 $1,449 $20,115 12/31/06 Before Div 12/31/06 Post Div 12/31/
Slide 19: Consolidated Investments
Consolidated Investments Investments – Pretax Total Return * 6.3% 4.3% 10.9% 7.3% 13.3% 23.2% 18.4% 1.0% 5.1% 2004 4.5% 2.4% 4.9% 2.3% 13.8% 0.9% 8.3% 2.6% 0.6% 2005 3.5% 4.3% 15.8% 9.1% 16.7% 14.5% 20.1% 5.0% 6.5% 2006 6.4% 5.0% 6.2% 7.6% 13.6% 17.6% 22.0% 2.3% 5.9% Cumulative Annualized 1.6% 16.5%
Slide 20: What to Expect
What to Expect growth in tangible book value per share commitment to our operating principles underwriting comes first maintain a disciplined balance sheet invest for total return think like owners prudent capital deployment and active capital management opportunistic approach to the business
Slide 21: Wise Words
Wise Words Benjamin Graham “In the short run the market is a voting machine; in the long run it is a weighing machine.”
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