Buffett Sells White Mountains Stake For $836 Million

Bermuda-based White Mountains Insurance Group Ltd. announced today that Berkshire Hathaway has agreed to a sale of its 16.3 percent stake in White Mountains for cash and stock valued at $836 million.

A.M. Best said there would be no ratings change for White Mountains as a result.

Under the terms of the agreement, Berkshire Hathaway would exchange all or substantially all of its 1,724,200 common shares for 100 percent of a White Mountains subsidiary, which will hold Commercial Casualty Insurance Company, International American Group Inc. and $751 million in cash, subject to adjustment.

As of Dec. 31, 2007, CCIC and IAG had combined gross assets of approximately $435 million and adjusted shareholder's equity of $58 million.

Following the consummation of the transaction, expected during the third quarter of 2008, the outstanding common shares of White Mountains would be reduced to approximately 8.8 million shares, the company said.

Ray Barrette, chief executive officer of White Mountains, said the agreement would allow his company "to exit runoff businesses with potentially volatile reserves, to significantly reduce undeployed capital, and to redeem one-sixth of the company's shares at a small premium to GAAP book value."

The transaction, according to Mr. Barrette, will create "substantial value for White Mountains and our remaining shareholders."

He said Berkshire Hathaway's chairman and chief executive officer, Warren Buffett and his company were "key to the financing of our acquisition of CGU/OneBeacon in 2001, and all shareholders benefited handsomely from the relationship."

White Mountains noted that although Berkshire Hathaway has been an important investor in White Mountains since 2001, it has never had representation on the board of directors.

"White Mountains is now a larger, more diversified business, competing actively in many areas with Berkshire Hathaway. This is a graceful, value-enhancing way to go our separate ways," said Mr. Barrette.

White Mountains said neither it nor Berkshire Hathaway expects to realize a taxable gain as a result of the exchange. The number of White Mountains common shares to be exchanged and the amount of cash to be included are subject to tax-related adjustment.

The transaction has been unanimously approved by the board of directors of White Mountains.

White Mountains' insurance subsidiaries include:

o White Mountains Re Group Ltd., a global reinsurance outfit.

o Esurance, with personal auto insurance marketed and underwritten on the Internet.

o Folksamerica Reinsurance Company.

o Folksamerica Re Solutions Ltd., specializing in acquiring runoff insurance and reinsurance companies.

o Sirius International Insurance Corp., offering property and other short-tailed lines of reinsurance.

White Mountains has ownership interests in OneBeacon Insurance Group (a specialty and segmented personal and commercial and casualty primary insurer) and Symetra Financial Corp. (a provider of group insurance, retirement services, individual life, and income annuities).