WHITE MOUNTAINS REPORTS Q4 2013 RESULTS (Excerpt)

Hamilton, Bermuda – 07 February, 2014 – White Mountains Insurance Group, Ltd., (the “Company“; Tickers: NYSE: WTM; Bermuda: WTM.BH), reported an adjusted book value per share of $642 at December 31, 2013, up 3.3% for the quarter and 9.5% for the year, including dividends.

Ray Barrette, Chairman and CEO, commented, “We had a good year.  All parts of our company performed well. We grew ABVPS by 9.5% while heavy with dry powder. Total return on investments for the year was 4.1%. OneBeacon grew its book value by 17.3% for the year, driven by a 92% GAAP combined ratio.  We expect the runoff sale to close later this year.  Sirius Group reported a GAAP combined ratio of 82% for the year, another great year aided by low catastrophes.  Sirius had a successful 1/1/14 renewal season, thanks to broad and deep client relationships around the globe. BAM is off to a good start in a challenging environment. It insured $4.7 billion of par value in its first full year of operation and is now past the $5 billion mark.  It is the clear leader in its target market. We made good progress in developing opportunities to invest in less capital intensive but high potential insurance services and technology businesses, many outside the U.S.”

Adjusted comprehensive income was $128 million in the fourth quarter of 2013 and $340 million in the year, compared to $72 million in the fourth quarter of 2012 and $245 million last year. Net income attributable to common shareholders was $118 million in the fourth quarter of 2013 and $322 million in the year, compared to $68 million in the fourth quarter of 2012 and $207 million last year.

OneBeacon

OneBeacon’s book value per share increased 5.9% for the fourth quarter of 2013 and 17.3% for the year, including dividends. OneBeacon’s GAAP combined ratio was 91% for the quarter and 92% for the year, compared to 112% for the fourth quarter of 2012 and 98% for last year. The combined ratios for both the quarter and the year reflect lower loss and expense ratios than in the 2012 periods. Catastrophe losses were negligible in 2013 while contributing 15 points to the combined ratio for the fourth quarter of 2012 and 5 points to the 2012 combined ratio.

Mike Miller, CEO of OneBeacon, said, “We are very pleased to report 17.3% growth in book value per share for the year, driven by excellent results on all fronts. At a 92%, our 2013 combined ratio is a testament to our disciplined underwriting and specialty focus. Our ongoing businesses continue to grow at a healthy pace in a competitive but reasonable environment. The deep focus on runoff reserves as part of the regulatory review of the sale transaction led to a meaningful reserve increase that was fully offset by reducing the loss on sale incurred in 2012. We remain focused on closing the sale later this year.”

Net written premiums were $263 million in the fourth quarter of 2013, an increase of 6% from the fourth quarter of last year, while net written premiums were $1.1 billion in 2013, a decrease of 8% from last year. Excluding premiums related to exited businesses, net written premiums increased 25% in the quarter and 12% in the year.

During the fourth quarter of 2013, OneBeacon completed a comprehensive actuarial analysis of its runoff loss reserves. As a result of its analysis, OneBeacon increased its runoff loss reserves by $72 million ($47 million after tax), which was offset by an equal reduction of the estimated loss on sale, both reported within discontinued operations.  The sale of the runoff business is pending the completion of regulatory review and is anticipated to close in mid-2014.

Sirius Group

Sirius Group’s GAAP combined ratio was 80% for the fourth quarter and 82% for 2013. This compares to 107% for the fourth quarter of last year and 90% for last year. Both 2013 periods reflect lower catastrophe losses and higher favorable loss reserve development when compared to the 2012 periods. The combined ratio for the fourth quarter of 2013 includes 8 points ($17 million) of catastrophe losses, including $8 million from typhoon Fitow in China and $4 million from windstorm Simone in northern Europe, compared to 44 points ($103 million) of catastrophe losses in the fourth quarter of last year, $98 million of which was from hurricane Sandy. The combined ratio for 2013 includes 10 points ($85 million) of catastrophe losses compared to 13 points ($117 million) last year. Favorable loss reserve development was 10 points ($23 million) in the fourth quarter of 2013, primarily due to reductions in property loss reserves from recent underwriting years, compared to 9 points in the fourth quarter of last year. Favorable loss reserve development was 6 points ($48 million) in 2013 compared to 4 points last year. The combined ratio for 2012 also includes 3 points from agricultural losses, primarily as a result of the drought in the Midwestern United States.

Allan Waters, CEO of Sirius Group, said, “Our 82% combined ratio for 2013 reflects a well-diversified global portfolio and a relatively benign year for catastrophe losses. Sirius Group’s adjusted book value per share grew 11% during 2013, including dividends. White Mountains Solutions booked $8 million of acquisition gains in the fourth quarter, bringing the total to $15 million for the year. We experienced pressure on rates in most lines of business, but our long standing market relationships generated a 5% increase in January 1, 2014 renewal premiums. Bucking industry trends, part of this increase came from our U.S. property catastrophe business, thanks to larger shares of a few major programs.”

Gross written premiums decreased 6% to $173 million and net written premiums decreased 5% to $141 million in the fourth quarter of 2013, while gross written premiums decreased 5% to $1.1 billion and net written premiums decreased 8% to $877 million in 2013, mainly due to a decline in the accident and health line, partially offset by increases in property lines.

HG Global/BAM

For the fourth quarter and full year 2013, HG Global reported pre-tax income of $10 million and $38 million, mostly from interest income on the BAM surplus notes, while BAM reported GAAP pre-tax losses of $18 million and $79 million, driven by interest expense on its surplus notes, unrealized investment losses from higher interest rates, and operating expenses.  BAM manages its affairs on a statutory accounting basis. BAM’s statutory surplus includes surplus notes and is not reduced by accruals of interest expense on the surplus notes. BAM’s statutory surplus is reduced only after a payment of principal or interest has been approved by the New York Department of Financial Services.

BAM does not report stand-alone GAAP financial results but White Mountains is required to consolidate BAM’s results in its GAAP financial statements. Since BAM is a mutual insurance company that is owned by its members, BAM’s results do not affect White Mountains’ adjusted book value per share and are attributed to non-controlling interests. 

Seán W. McCarthy, CEO of BAM, said, “In our first full year of operation, BAM established a strong foothold in the U.S. municipal market. Our market share of the total par value of new insured municipal bonds grew from 20% in January to 38% for all of 2013. BAM guaranteed a majority — 53% — of the primary-market transactions that were insured, reflecting our consistent focus on our target market of small- to mid-sized issuers. We also made inroads in the secondary municipal bond market, and in December began to offer our insurance for real-time electronic execution over the TMC Bonds trading platform. We are optimistic about our business prospects going forward. Having achieved full nationwide licensing in December, we now have the opportunity to broaden our geographic reach and play a larger role in the market in the years ahead.”

Other Operations

White Mountains’ Other Operations segment reported pre-tax income of $6 million and $15 million in the fourth quarter and year ended December 31, 2013, compared to $5 million of pre-tax losses and $8 million of pre-tax income in the fourth quarter and year ended December 31, 2012.  The results for White Mountains’ Other Operations segment for all periods were driven by the results of investment assets contained within the segment.

White Mountains’ Other Operations segment reported net realized and unrealized investment gains of $36 million and $97 million in the fourth quarter and year ended December 31, 2013 compared to $4 million and $45 million in the comparable periods last year. Net investment income decreased to $4 million and $15 million in fourth quarter and year ended December 31, 2013 from $6 million and $33 million in the comparable periods last year. The decrease in net investment income for the full year is primarily due a lower average investment base and a shift in the Other Operations segment portfolio from fixed maturities towards common equity securities. WM Life Re reported losses of $1 million and $17 million in the fourth quarter and year ended December 31, 2013 compared to $5 million and $19 million in the fourth quarter and year ended December 31, 2012.

Investment in Symetra Common Shares

During the second quarter of 2013, White Mountains executed a cashless exercise of its Symetra warrants. The cashless exercise resulted in the issuance of 2,648,879 additional common shares of Symetra in exchange for the warrants to purchase 9,487,872 Symetra common shares. The value of White Mountains’ investment in Symetra warrants increased $11 million in the first six months of 2013 prior to the exercise. The value of the Symetra warrants increased $4 million in the fourth quarter of 2012 and $18 million last year.

During the fourth quarter and year ended December 31, 2013, White Mountains recorded $11 million and $35 million in equity in earnings from its investment in Symetra’s common shares, which increased the value of the investment in Symetra’s common shares used in the calculation of White Mountains’ adjusted book value per share to $18.00 per Symetra common share at December 31, 2013. This compares to Symetra’s quoted stock price of $18.96 and Symetra’s book value per common share excluding unrealized gains and losses from its fixed maturity investment portfolio of $19.95.

Investment Activities

The GAAP total return on invested assets was 1.6% and 4.1% for the fourth quarter and year ended December 31, 2013. Currency translation did not meaningfully impact investment returns in either period. This compared to a GAAP total return of 0.7% and 4.9% for the fourth quarter and year ended December 31, 2012. Currency translation did not impact the fourth quarter of 2012, while 2012 included 0.5% of currency gains.

Manning Rountree, President of White Mountains Advisors, said, “The total portfolio was up 1.6% in the quarter and 4.1% for the year; satisfying results over both periods.  Absolute returns from bonds were modest in 2013, but relative bond performance was excellent.  In local currencies, the fixed income portfolio was up 0.4% in the quarter and 0.5% for the year, outperforming the Barclay’s Intermediate Aggregate Index over both periods. Absolute returns from equities were strong in 2013, but relative equity performance was poor.  The total equity portfolio was up 6.4% for the quarter and 18.9% for the year, lagging the S&P 500 over both periods.  Our two largest separate accounts, Prospector and Lateef, returned 23.2% and 30.5% for the year, respectively. Currency was a non-factor, impacting total returns by less than 0.1% for the year.”

Additional Information

White Mountains is a Bermuda-domiciled financial services holding company traded on the New York Stock Exchange and the Bermuda Stock Exchange under the symbol WTM. Additional financial information and other items of interest are available at the company’s website located at www.whitemountains.com. White Mountains expects to file its Form 10-K with the Securities and Exchange Commission on or before March 3, 2014 and urges shareholders to refer to that document for more complete information concerning its financial results.

The full text of this release and additional information can be found on the Company's web-site: http://www.whitemountains.com

CONTACT: David Foy (203) 458-5850