White Mountains Insurance Group, Ltd. · NYSE:WTM
White Mountains Insurance — Investor Presentation (May 2017)
28 slides from White Mountains Insurance's investor presentation, May 8, 2017
Slide 1: White Mountains Insurance Group Investor Presentation – May 2017
White Mountains Insurance Group, Ltd. Investor Presentation – May 2017 Exhibit 99.1
Slide 2: Forward-Looking Statements
1 Forward-Looking Statements Forward-Looking Statements This presentation may contain, and management may make, “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 statements, other than statements o
Slide 3: Non-GAAP Financial Measures
2 Non-GAAP Financial Measures Figures designated as “pro forma” or “PF” are adjusted as if the OneBeacon transaction occurred on 3/31/17. Non-GAAP Financial Measures Management believes the non-GAAP measures included in this presentation to be useful in evaluating the Company’s financial position an
Slide 4: Two Years of Transformative Activity
Two Years of Transformative Activity
Slide 5: OneBeacon Transaction
4 OneBeacon Transaction Announced all-cash transaction with Intact Financial on May 2; expected to close by year-end Purchase price of $18.10 per share, or $1.7 billion in total consideration 1.65x price-to-tangible book multiple; $0.7 billion premium over 3/31/17 tangible book value Econo
Slide 6: Operating Asset Sales
5 Operating Asset Sales Closing Date Price /TBV WTM Gain (per share) WTM Proceeds ($ billions) IRR Symetra 1Q16 1.6x [1] $43 $0.7 15% Sirius Group 2Q16 1.3x $90 $2.6 11% Tranzact 3Q16 n/a $16 $0.2 35% OneBeacon PF exp 4Q17 1.7x $107 $1.3 14% Total $256 $4.2 [2] [1] Reflects deal multiple on Symetra’
Slide 7: Capital Management
6 Capital Management Returned $887 million to shareholders through share repurchases in 2016 Repurchased 1.1 million shares, roughly 20% of the company, at an average price of $802 Share repurchases slowed since 4Q16 as our share price steadily climbed Share repurchase activity since 2010: s
Slide 8: Management Team Changes
7 Management Team Changes Chairman: Morgan Davis (31 years with White Mountains) CEO: Manning Rountree (13 years with White Mountains) CFO: Reid Campbell (23 years with White Mountains)
Slide 9: A Picture Says 1,000 Words
8 A Picture Says 1,000 Words 9/30/2015 (Actual) 3/31/17 (PF for OB Transaction) Operating Assets ABVPS $655 $906 Run Rate GABVPS mid/high single digits low single digits Undeployed Capital $0.6 billion $3.1 billion CAPITAL C PITAL
Slide 10: White Mountains after OneBeacon
White Mountains after OneBeacon
Slide 11: WTM Pro Forma for OneBeacon Transaction
10 WTM Pro Forma for OneBeacon Transaction Total capital of $4.2 billion, substantially all in common shareholders’ equity Parent undeployed capital of roughly $3.1 billion, or 75% of total capital No parent company financial leverage Two principal operating assets: HG Global / BAM WMC p
Slide 12: WTM Pro Forma Financial Position
11 WTM Pro Forma Financial Position 3/31/17 ($ millions, except where noted otherwise) Actual OneBeacon Transaction Pro Forma Common equity $ 3,625 $ 486 $ 4,111 Non-controlling interest – OneBeacon 251 (251) 0 Non-controlling interest – Other (excluding BAM) 35 (4) 31 Total debt (at subsidiaries) 2
Slide 13: WTM Pro Forma Allocation of Capital
12 WTM Pro Forma Allocation of Capital ($ billions, except per share) carrying value abvps onebeacon 0.8$ 173$ hgg / bam 0.7 156 white mountains capital 0.2 34 parent udc / other 2.0 437 total 3.6$ 800$ 3/31/17 (Actual) ($ billions, except per share) carrying value abvps onebeacon -$ -$ hgg / bam 0.
Slide 14: Where Do We Go From Here?
Where Do We Go From Here?
Slide 15: Challenging Market Environment Persists
14 Challenging Market Environment Persists Soft insurance markets Pressure on accident year pricing / reserve releases slowing to a trickle Carriers sowing the seeds for future distress, but will take years to blossom Over-abundant supply of (low hurdle-rate) capital / no obvious catalyst fo
Slide 16: What to Expect from Us?
15 What to Expect from Us? We expect to shrink, likely significantly, before we grow again We have been here before (following 1991 sale of Fireman’s Fund) Reflects willingness to “walk the walk” on capital rotation and shareholder value creation We envision resizing as a $2.0 - $2.5B compan
Slide 17: Capital Redeployment Approach
16 Capital Redeployment Approach Fundamental philosophy and approach is unchanged Will remain focused on economics and shareholder value creation (not accounting or empire building) Will stick to our knitting: primarily insurance, broader financial services, and adjacent sectors Will remain
Slide 18: Update on Current Businesses
Update on Current Businesses
Slide 19: HG Global / BAM Update
18 Launched into a very challenging environment Low interest rates and compressed credit spreads Aggressive price competition and low capture rates at the outset Insured penetration has improved somewhat; substantial room for further improvement Given the environment, BAM’s execution has b
Slide 20: HG Global / BAM Structure
19 Build America Mutual (New York) $500 million capital (Series A & B Surplus Notes) HG Global Ltd. (Bermuda) $200 million Series A Surplus Notes WTM & Management States and Municipalities (Bond Issuers) HG Re Ltd. (Bermuda) Reg. 114 Trust (New York) Supplemental Trust (New York) $300 million Series
Slide 21: BAM Key Metrics
20 BAM Key Metrics 2013A 2014A 2015A 2016A 1Q16A 1Q17A par insured (closed) 4,708$ 7,830$ 10,606$ 11,303$ 2,179$ 2,379$ total premiums (%) 0.65% 0.43% 0.52% 0.68% 0.62% 1.19% total premiums ($) 31$ 33$ 56$ 77$ 14$ 28$ gross expenses (BAM & HG Re) 36$ 40$ 41$ 45$ 11$ 13$ s&p RAP 3.21% 2.26% 2.35% 3.5
Slide 22: White Mountains Capital Update
21 Pivot from “traditional” insurance balance sheet transactions in late 2012 Frustrated by the M&A market in core sector; deals not available at attractive prices Sought alternative ways to leverage our unique capabilities; typically looking for an “insurance angle” Different type of invest
Slide 23: WMC Portfolio Overview
22 WMC Portfolio Overview current wtm value ($ millions) - 3/31/17 operating ownership, gross invested net invested carrying location fd/fc capital, a/t capital, a/t value A. cashflow businesses mediaalpha US 56% 36$ 22$ 17$ wobi Israel 94% 46 46 19 passportcard Israel/Intl 50% 21 21 21 B. venture b
Slide 24: Appendices
Appendices 1. Track Record vs S&P 500 (p.24) 2. Non-GAAP Financial Measures (p. 25-27)
Slide 25: Track Record vs. S&P
24 Track Record vs. S&P 500 Return Period Ended 3/31/17 (growth including dividends) 1-year 5-year 10-year 15-year Since WTM IPO (1985) White Mountains – ABVPS PF 28.8% 10.0% 8.5% 10.5% 14.2% S&P 500 17.0% 13.2% 7.5% 7.0% 10.6%
Slide 26: Adjusted Book Value, ABVPS Denominator and Adjusted Book Value Per Share
25 Adjusted Book Value, ABVPS Denominator and Adjusted Book Value Per Share Adjusted Book Value, ABVPS Denominator and Adjusted Book Value Per Share Adjusted Book Value is a non-GAAP financial measure that is derived by excluding from GAAP shareholders' equity the equity in unrealized gains from Sym
Slide 27: Growth in Adjusted Book Value Per Share
26 Growth in Adjusted Book Value Per Share Growth in Adjusted Book Value Per Share The Company calculates its annual growth in values per share on an IRR basis, which includes the value per share at the beginning of the year, the dividends received each year and the value per share at the end of the
Slide 28: Adjusted Book Value Per Share - Allocation of Capital
27 Adjusted Book Value Per Share - Allocation of Capital Adjusted Book Value Per Share - Allocation of Capital Adjusted Book Value Per Share (ABVPS) is the result of dividing Adjusted Book Value by ABVPS Denominator. ABVPS Denominator excludes from GAAP common shares outstanding unearned shares of r
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