White Mountain Sees 66% Drop In Net Income

Bermuda-based insurer White Mountain reported 2007 fourth-quarter net income fell 66 percent, with drops in income in both its reinsurance and personal line auto divisions.

The company reported that consolidated net income in the fourth quarter compared to the same period in 2006 was down by $198 million to $101 million. Earnings per share dropped $18.15 a share to $9.55. Revenues were down 11 percent in the quarter, falling by $148 million to $1.2 billion.

For the year, net income fell 39 percent compared to 2006, down by $266 million to $407 million. Earnings per share dropped $24.43 to $37.89 a share. Revenues for the year were off more than 1 percent, or $60 million, to $4.7 billion.

In its insurance segments, only OneBeacon showed gains with net income at $83 million, up by $18 million in the fourth quarter compared to the same period for 2006. For the year, the insurer reported pre-tax income grew to $399 million, up $87 million, with its combined ratio at 93, a three-point improvement.

White Mountain Re and Esurance did not fare as well.

White Mountain Re pre-tax income fell to $80 million, down by $26 million in the quarter, reporting a combined ratio of 92 for the quarter, a seven-point deterioration.

Esurance reported a pre-tax loss of $27 million compared to a loss of $8 million in 2006. Its combined ratio ballooned to 120 from 109 in the fourth quarter of 2006. For the year, pre-tax loss was $73 million compared to a loss of $8 million in 2006. The combined ratio was 116, up 8 points.

White Mountain Re was hit by $76 million in losses from catastrophe losses from winter storms Kyrill and Hanno and flooding in the United Kingdom.

Esurance was squeezed by intense competition in the personal lines auto market along with increased loss frequency. The company said it is addressing this issue with increases in several states.

In a statement, Ray Barrette, chairman and chief executive officer of Hamilton, Bermuda-based White Mountain, said the company "had a good year" by avoiding the "subprime mess" and continuing to generate solid returns on its investment portfolio.

Despite is losses, he said, the company remains confident about Esurance, its online auto insurance company, calling it "a superior business."

"We are leaving no stone unturned in our search to add value in these volatile markets," he said.