White Mountains Insurance Group, Ltd. · NYSE:WTM

White Mountains Insurance — Investor Day (June 2015)

56 slides from White Mountains Insurance's investor day presentation, Jun 12, 2015

  1. Slide 1: Annual Investor Meeting June 12, 2015

    White Mountains Insurance Group, Ltd. Annual Investor Meeting June 12, 2015 Exhibit 99.1

  2. Slide 2: Forward-Looking Statements

    2 Forward-Looking Statements This presentation contains, and management may make, certain statements that are not historical facts but that are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All state

  3. Slide 3: WTM – Annual Investor Meeting

    WTM – Annual Investor Meeting Ray Barrette:  Introduction and Highlights  Allocation of Capital  HG Global/BAM Allan Waters:  Sirius Group Michael Miller:  OneBeacon Rob Seelig:  Insurance Services Reid Campbell / David Linker:  Investments David Foy:  Symetra  Capital Ray Barrette:  Final

  4. Slide 4: WTM – 2014 and 1Q15 Performance

    WTM – 2014 and 1Q15 Performance 4 2014 1Q15 White Mountains Growth in ABVPS, reported 3.6% 0.0% Growth in ABVPS, excluding fx 5.9% 1.2% Investments Total Return 2.4% 0.0% Investments Total Return, excluding fx 4.4% 1.1% Sirius Group Growth in ABV, reported 7.8% -0.8% Growth in ABV, excluding fx 13.1

  5. Slide 5: WTM – 2014 and 1Q15 Performance

     Closed the sale of the OneBeacon runoff business  Transition from Prospector Partners / David Linker - CIO  HG Global/BAM continues to execute well in a tough environment  Insurance Services Businesses: − Low capital, high potential insurance marketing/technology investments around the world −

  6. Slide 6: WTM – Allocation of Equity Capital

    WTM – Allocation of Equity Capital ($ in billions) 6 Sirius Group 1.7$ OneBeacon 0.8 HG Global/BAM 0.7 Symetra 0.4 Insurance Services 0.3 Parent/Other 0.6 Elimination (0.6) 3.9$

  7. Slide 7: WTM – Our Track Record

    WTM – Our Track Record Since (growth including dividends) 1-year 5-year 10-year 15-year WTM IPO White Mountains - ABVPS 3.6% 10.0% 7.7% 12.8% 14.1% S&P 500 13.7% 15.3% 7.6% 4.2% 10.8% Berkshire Hathaway - BVPS 8.3% 11.6% 10.1% 9.4% 16.8% Return Period Ended December 31, 2014 7

  8. Slide 8: HG Global/BAM

    HG Global/BAM 8

  9. Slide 9: HG Global/BAM – Great Execution in a Tough Environment

    HG Global/BAM – Great Execution in a Tough Environment  BAM is the leader in its target market: − Strong team, systems and risk management − Licensed in all 50 states and D.C. − Significant market position with broad range of dealers/issuers (1,200+ members) − Strong trading value/broad market acce

  10. Slide 10: Market Environment – Interest Rates

    Market Environment – Interest Rates  Interest rates and credit spreads remain challenging:  Competition is limiting the credit spread capture at approximately 25% vs. long-term historical average of 50-60% − Expect credit spread capture to improve as both interest rates increase and credit spreads

  11. Slide 11: HG Global/BAM - The Capital Advantage

    PRIVATE CAPITAL MUTUAL CAPITAL Time HG Global/BAM - The Capital Advantage 4-6% RoC WTM economics derived from: − Interest on surplus notes − Repayment of surplus notes − Reinsurance premiums and float − Long-term franchise value 2-4% RoC 10-15% RoC Surplus Note Repayment 11

  12. Slide 12: HG Global/BAM – Built to Last

    HG Global/BAM – BUILT TO LAST  Current environment: − Credit quality is on target − Market share is high − Issuance volume and insured penetration growing − Pricing is below target (low rates/spreads – competition)  Drivers of further success are: − Higher interest rates/spread − Pricing disciplin

  13. Slide 13: Sirius Group

    Sirius Group 13

  14. Slide 14: Sirius Group – Strong Current Results

    Sirius Group – Strong Current Results 2014:  ABV grew 8%, including dividends (13% excluding fx)  76% combined ratio: − $59 million (7 pts) of catastrophe losses  2% growth in gross written premiums to $1.1 billion: − 15% increase in A&H premiums to $312 million 1Q15:  ABV fell 1% (but grew 2% e

  15. Slide 15: Sirius Group – Long-Term Improvement

    Sirius Group – Long-Term Improvement 15

  16. Slide 16: Sirius Group – The Advantage

    Unique global (re)insurance franchise  Highly diversified portfolio carefully assembled over 70 years  Written from 11 global offices run by local managers with deep experience  Core book focused on local & regional relationships – over 1,700 clients in 145 countries  ≈ 10,000 treaties and accou

  17. Slide 17: Sirius International – Long-Term Outperformance

    Sirius International – Long-Term Outperformance Reported Combined Ratio Note: Sirius International excludes reinsurance with affiliates. Includes Sirius America from 2012 and forward. Industry results are from S&P Global reinsurance highlights 1993-2013. 2014 Industry CR is a preliminary estimate fr

  18. Slide 18: Sirius Group - 2015 Outlook

    Sirius Group - 2015 Outlook  (Re)insurance industry excess capital & capacity continue - Pressing rates, terms & conditions - But this isn’t 1999 (or 1984)  M&A activity is accelerating - Is bigger always better?  Is a bottom at hand? June Insurance Insider headlines: - “June 1st US property cat

  19. Slide 19: OneBeacon

    OneBeacon 19

  20. Slide 20: OneBeacon – A Pure Specialty Company

    OneBeacon – A Pure Specialty Company  Completed transition to pure specialty carrier in 4Q14 − Disposed of low-margin Commercial Lines (2009), Personal Lines (2010), and Runoff (2014) businesses  Profitable portfolio of 15 business units − Diversified by segment, geography, and producer source  N

  21. Slide 21: 2014: A Pivot Point

    2014: A Pivot Point  Reserve charge masked strong results across most of our business units − Handful produced sub-90s combined ratios, despite an increasingly competitive marketplace  Exited Lawyers Liability market through renewal rights sale  Streamlined management oversight of underwriting op

  22. Slide 22: Strength in Underwriting

    0% 10% 20% 30% 40% 50% 60% 70% 2010 2011 2012 2013 2014 Strength in Underwriting  Strong, consistent underlying accident years  60.2% five-year average loss and LAE ratio 22 59.5% 61.2% 58.4%60.4% 61.6% Accident year loss and LAE ratios calculated using reported loss data and development to ultima

  23. Slide 23: Diverse Book of Business

    Diverse Book of Business $1.2 Billion IMU Healthcare Technology Accident Govt. Risks Excludes $16 million of premiums assumed under a quota share agreement with Star & Shield Insurance Exchange, which expired on December 31, 2014. 23 Established Businesses International Marine Underwriters $ 193 Hea

  24. Slide 24: Growing Book Value Per Share

    Growing Book Value Per Share  6.6% annualized growth in book value per share since IPO while executing transformation to pure specialty carrier − 8.1% annualized rate excluding losses from discontinued operations − 7.5% S&P 500 return over same period Book value through Dec-07 is adjusted to reflec

  25. Slide 25: Looking Forward – A Strong Future

    Looking Forward – A Strong Future 25  Built a Specialty Company over the last 10 years − Successfully added teams while exiting Personal Lines, Commercial Lines, and Runoff  Produced solid results during the transformation  No legacy liabilities − 97% of net reserves from last 6 accident years 

  26. Slide 26: Insurance Services

    Insurance Services 26

  27. Slide 27: Insurance Services – A Growing Focus

    Insurance Services – A Growing Focus  Alternative to “traditional” insurance balance sheet transactions − Lower capital / strong free cash flows − High potential  Thematic investments: − Insurance marketing / technology − Price comparison − Specialization  Current portfolio: − 10 investments arou

  28. Slide 28: Insurance Services – Current Portfolio

    Insurance Services – Current Portfolio 28 Capital Domicile Committed Ownership ($ in millions) Insurance Marketing / Technology Tranzact U.S. 133$ 63% MediaAlpha U.S. 36 58% PassportCard Israel/Intl 21 50% Valen U.S. 2 10% Price Comparison Compare.com U.S. 20 21% Wobi Israel 29 91% durchblicker Aust

  29. Slide 29: Tranzact – Best of Class Direct to Consumer Distribution

    Tranzact – Best of Class Direct to Consumer Distribution  Leading DTC marketing and sales partner for major insurance brands − Provides end-to-end solutions through unique, full-service distribution platform − Proprietary technology and marketing assets − Focused on health, life and auto insurance

  30. Slide 30: MediaAlpha – A Growth Story

    MediaAlpha – A Growth Story  MediaAlpha Exchange => superior platform for buying & selling insurance leads  Now holds the leading position in auto insurance − Launched new verticals for health, life, home, motorcycle and renter insurance  110 publishers and 100 advertisers actively participating

  31. Slide 31: Wobi – A Local Market Breakthrough

    Wobi – A Local Market Breakthrough  Leading price comparison business in Israel − Small but attractive market − Auto and other p&c insurance verticals: launched in 2013 − Pension vertical: launched in March 2015 − Health insurance vertical: will launch later in 2015  Significant growth since our i

  32. Slide 32: Investments

    Investments 32

  33. Slide 33: WTM Approach to Investments

    WTM Approach to Investments  Invest for total return  Policyholder funds invested conservatively: − Fixed income portfolio is short, safe and sound  Shareholder funds invested more aggressively: − Generally value-oriented − Includes common stocks, convertibles, alternatives, affiliates − Risk Ass

  34. Slide 34: Good Long-Term Track Record

    Good Long-Term Track Record 34 1Q15 1-year 5-year 14-year fixed income, ex currency 0.9% 2.6% 2.7% 4.5% risk assets, ex currency 1.9% 9.3% 9.4% 9.1% total, ex currency 1.1% 4.4% 4.4% 5.3% currency -1.1% -2.0% -0.3% -0.1% total portfolio 0.0% 2.4% 4.1% 5.2% benchmarks: B barclays U.S. intermediate ag

  35. Slide 35: Risk Asset Exposure at Comfortable Levels

    Risk Asset Exposure at Comfortable Levels 35 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2011 2012 2013 2014 1Q15 Risk Asset Exposure and Mix ($ in billions, percent) Affiliated risk asset investments Alternative investments Convertible bonds & preferred stocks Common stocks, reits & high yield Risk

  36. Slide 36: Non-USD Exposure Managed Down to Minimum Levels

    Non-USD Exposure Managed Down to Minimum Levels 36 [1] proforma for the $100 million currency sw ap executed in 2Q15 0% 5% 10% 15% 20% 25% 30% $0.0 $0.2 $0.4 $0.6 $0.8 $1.0 2013 2014 1Q15 1Q15PF White Mountains Net Currency Exposure ($ in billions, percent) SEK EUR GBP CAD Other Net currency exposur

  37. Slide 37: Risk Asset Playbook for 2015

    Risk Asset Playbook for 2015  Equity valuations are elevated − Global QE encouraging purchases of risk assets − Equity markets have roughly doubled in past five years  Equity valuations appear reasonable relative to fixed income − Corporate balance sheets in good shape − Low rates on bonds; negati

  38. Slide 38: Fixed Income Playbook for 2015

    Fixed Income Playbook for 2015  We face an asymmetric market landscape: − Low rates as the Fed prepares to normalize − Tight spreads − More downside than upside  We are positioned for this market: − Short duration (2.0 – 2.5 years) − Ample liquidity − Dollar cost average on rising rates (entry poi

  39. Slide 39: Symetra

    Symetra 39

  40. Slide 40: Symetra

    Symetra  WTM invested $195 million as lead investor in August 2004 acquisition  Symetra went public in January 2010  Total current carrying value of WTM’s investment = $514 million ($605 million at market) − Includes $135 million of cumulative dividends received  Inception to date returns on WTM

  41. Slide 41: Capital

    Capital 41

  42. Slide 42: Consolidated Capitalization

    Consolidated Capitalization ($ in millions) 2013 2014 1Q15 Debt 676$ 747$ 750$ Non-controlling interest - SIG preference shares 250 250 250 Non-controlling interest - OneBeacon 274 258 259 Non-controlling interest - Other, excluding mutuals/reciprocals 66 169 160 Adjusted shareholders' equity 3,946

  43. Slide 43: What to Expect

    What to Expect  Growth in adjusted book value per share  Commitment to our operating principles: − Underwriting comes first − Maintain a disciplined balance sheet − Invest for total return − Think like owners  Capital management  Opportunistic approach to the business 43

  44. Slide 44: Wise Words...

    Wise Words... Benjamin Graham “In the short run, the market is a voting machine, but in the long run it is a weighing machine.” Benjamin Graham 44

  45. Slide 45: Q&A

    Q&A 45

  46. Slide 46: Appendix

    Appendix 46

  47. Slide 47: Reconciliation of GAAP book value per share to adjusted book value per share

    Appendix i White Mountains Insurance Group, Ltd. Reconciliation of GAAP book value per share to adjusted book value per share ($ in millions, except per share amounts; shares in thousands) Numerator 2013 2014 1Q15 GAAP common shareholders' equity (GAAP book value per share numerator) $ 3,906 $ 3,996

  48. Slide 48: Reconciliation of GAAP investment returns - 2014

    Appendix ii White Mountains Insurance Group, Ltd. Reconciliation of GAAP investment returns to total return, fixed income total return and risk assets total return Investment Return Reconciliation - 2014 GAAP Adjusting Return Return Items Return ex currency fixed income 0.5% -0.3% [1] 0.2% 2.6% risk

  49. Slide 49: Reconciliation of GAAP investment returns - 1Q15

    Appendix iii White Mountains Insurance Group, Ltd. Reconciliation of GAAP investment returns to total return, fixed income total return and risk assets total return Investment Return Reconciliation - 1Q15 GAAP Adjusting Return Return Items Return ex currency fixed income -0.4% -0.1% [1] -0.5% 0.9% r

  50. Slide 50: Reconciliation of GAAP investment returns over 5-year and 14-year periods

    Appendix iv White Mountains Insurance Group, Ltd. Reconciliation of GAAP investment returns over 5-year and 14-year periods to total return, fixed income total return and risk assets total return GAAP Adjusting Total Return Total Return Items [1] ex Currency 5-year 3.8% 0.6% 4.4% 14-year 4.8% 0.5% 5

  51. Slide 51: Reconciliation of Sirius Group's GAAP book value to adjusted book value

    Appendix v White Mountains Insurance Group, Ltd. Reconciliation of Sirius Group's GAAP book value to adjusted book value (ABV) ($ in millions) 2013 2014 1Q15 GAAP common shareholder's equity $ 1,627 $ 1,763 $ 1,777 equity in net unrealized (gains) losses from Symetra's fixed maturity portfolio, net

  52. Slide 52: Reconciliation of Symetra's GAAP ROE to operating ROE

    Appendix vi White Mountains Insurance Group, Ltd. Reconciliation of Symetra's GAAP ROE to operating ROE ($ in millions) 2014 Numerator GAAP net income $ 254 less: certain net realized gains (27) adjusted operating income $ 227 Denominator GAAP average common shareholders' equity $ 3,260 less: averag

  53. Slide 53: Reconciliation of GAAP carrying value and returns on Symetra investment

    Appendix vii White Mountains Insurance Group, Ltd. Reconciliation of GAAP carrying value and inception to date returns on White Mountains's investment in Symetra to an adjusted basis which excludes White Mountains's share of unrealized gains/losses from Symetra's fixed maturity portfolio. Impact of

  54. Slide 54: Reconciliation of OneBeacon's loss ratios to accident year ratios

    Appendix viii White Mountains Insurance Group, Ltd. Reconciliation of OneBeacon's reported loss and loss adjustment expenses to accident year loss and loss adjustment expense ratios ($ in millions) 2010 2011 2012 2013 2014 Numerator [1]: Reported loss and loss adjustment expenses $ 540 $ 548 $ 650 $

  55. Slide 55: Reconciliation of OneBeacon's book value to adjusted book value

    Appendix ix White Mountains Insurance Group, Ltd. Reconciliation of OneBeacon's reported book value and book value per share to adjusted book value and adjusted book value per share. ($ in millions, except per share amounts) 2006 2007 Numerator: Reported book value $ 1,777 $ 1,907 Less: remaining ad

  56. Slide 56: Reconciliation of GAAP equity investments to risk assets

    Appendix x White Mountains Insurance Group, Ltd. Reconciliation of GAAP equity investments to risk assets ($ in millions) 2011 2012 2013 2014 1Q15 GAAP common, convertible and alternative investments $ 1,200 $ 1,451 $ 1,526 $ 1,230 $ 1,205 GAAP investments in unconsolidated affiliates 275 388 321 41

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