White Mountains Insurance Group, Ltd., reported net income fell 93 percent in the fourth quarter based on the combination of hurricane losses, decrease in investment and reserve increase.
The Hamilton, Bermuda-based company reported fourth-quarter net income fell $152.6 million, from $164.8 million, or $15.31 a share, to $12.2 million, or 86 cents a share. Revenues were off 18 percent, or $222.5 million, from $1.25 billion to $1.03 billion.
"Due to hurricane losses, primarily at White Mountains Re, which totaled $228 million after-tax for the year, and the $104 million after-tax decrease in the value of our Montpelier Re holdings for the year, our return in 2005 was well below our target," said Steve Fass, the company's chief executive officer, in a statement.
Mr. Fass added, "These losses mask the very strong underwriting results produced by OneBeacon and Esurance's good year with premium growth of 75 percent."
Hurricane losses were pegged at $91 million, and the company took a net reserve charge of $36 million for OneBeacon. Its investment value in Montpelier Re reportedly decreased $52 million, but there was a $35 million gain from a settlement of OneBeacon's retiree benefit plan.
"As we look to 2006, the hurricanes have already had a significant impact on reinsurance pricing and capacity," he continued. "Property rates in cat-exposed areas have increased substantially and rates in other locales are also rising, though less dramatically. We are well positioned to capitalize on these trends due to our strong financial condition, large capacity and broad reinsurance platform."
For the year, White Mountain reported net income dropped 36 percent, or $149.7 million, going from $418.7 million, or $39.92 a share, to $269 million, or $24.60 a share. Revenues increase 1 percent, or $46.4 million, from $4.55 billion to $4.60 billion.
For 2005, the company reported a combined ratio of 98 for OneBeacon, down 1 percent from 2004; 118 for White Mountain Re, an increase of 14 percent from 2004; and 109 percent for Esurance, an increase of 7 percent.
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