White Mountains Insurance(WTM) - 2022 Q4 - Annual Report

Financial Performance - White Mountains ended 2022 with a book value per share of $1,457, reflecting a 24% increase, and an adjusted book value per share of $1,495, which increased by 26% including dividends [285]. - Comprehensive income attributable to common shareholders was $788 million in 2022, a significant recovery from a loss of $(273) million in 2021 [285]. - Net income attributable to White Mountains's common shareholders was $792.8 million in 2022, compared to a loss of $275.4 million in 2021 [310]. - Total revenues for 2022 reached $1,157.9 million, a significant increase from $614.4 million in 2021, marking an 88% rise [310]. - The company reported total expenses of $1,307.3 million in 2022, up from $888.0 million in 2021, an increase of 47% [310]. - The company reported a pre-tax loss of $135.0 million in the Financial Guarantee segment for 2022, worsening from a loss of $42.4 million in 2021 [310]. Insurance Operations - Ark reported gross written premiums of $1,452 million in 2022, up from $1,059 million in 2021, with a GAAP combined ratio improving to 82% from 87% [289]. - P&C Insurance and Reinsurance revenues rose to $1,009.5 million in 2022, up from $668.5 million in 2021, indicating a 51% increase [310]. - Ark's GAAP combined ratio improved to 82% in 2022 from 87% in 2021, with catastrophe losses contributing 13 points in 2022 compared to 10 points in 2021 [344]. - The adjusted combined ratio for Ark was 81% in 2022, down from 85% in 2021, reflecting similar underlying drivers as the GAAP combined ratio [345]. - Gross written premiums and MSC collected in the HG Global/BAM segment totaled $147 million in 2022, up from $118 million in 2021 [317]. Investment Performance - The total consolidated portfolio return on invested assets was -1.6% in 2022, including $93 million of net unrealized investment losses from MediaAlpha [293]. - White Mountains's investment in MediaAlpha was valued at $169 million as of December 31, 2022, down from $262 million in 2021 [292]. - The portfolio of common equity securities, including MediaAlpha, returned 2.3% in 2022, impacted by $93 million of net unrealized investment losses from MediaAlpha [374]. - Other long-term investments returned 10.5% in 2022, down from 20.7% in 2021, driven by net investment income and gains from Kudu's Participation Contracts [378]. - The total investment portfolio was valued at $5,170 million as of December 31, 2022, an increase from $4,265.3 million in 2021, with fixed maturity investments comprising 37.2% of the total [390]. Shareholder Returns - White Mountains repurchased 461,256 common shares for $616 million at an average price of $1,335.11, representing 92% of book value per share [287]. - Year-to-date dividends paid per share remained stable at $1.00 for both 2022 and 2021 [306]. - White Mountains declared and paid a $3 million cash dividend to common shareholders during 2022 [433]. - During 2022, Ark paid $21 million in dividends to shareholders, with $15 million paid to White Mountains [418]. - Kudu distributed $110 million to unitholders in 2022, with $100 million paid to White Mountains [419]. Debt and Capital Structure - Total debt from continuing operations increased to $575.2 million as of December 31, 2022, compared to $420.9 million in 2021 [421]. - The total adjusted capital of White Mountains as of December 31, 2022, was $4,742.9 million, with a total debt to total adjusted capital ratio of 12.1% [421]. - As of December 31, 2022, BAM's debt service model indicated that the BAM Surplus Notes would be fully repaid approximately six years prior to final maturity [325]. Transactions and Acquisitions - The net gain from the NSM Transaction contributed $876 million in Q3 2022, with $1.4 billion in net cash proceeds received at closing [286]. - The company recognized a net gain of $876 million from the NSM Transaction, which closed on August 1, 2022, with net cash proceeds of $1.4 billion [400]. - On December 20, 2022, White Mountains purchased 100% of the non-voting redeemable preference shares issued by WM Outrigger Re for $205 million [437]. Operational Performance - Kudu's total revenues were $119 million in 2022, with pre-tax income of $89 million, compared to $134 million and $108 million respectively in 2021 [291]. - Kudu's adjusted EBITDA increased to $42 million in 2022 from $33 million in 2021, demonstrating improved operational performance despite lower revenues [355]. - White Mountains's Other Operations reported a pre-tax loss of $198 million in 2022, an improvement from a loss of $392 million in 2021 [358]. Tax and Cash Flow - The effective tax rate for White Mountains was impacted by losses in jurisdictions with lower tax rates and a full valuation allowance on net deferred tax assets in certain U.S. operations [398]. - Cash flows from operations for 2022 were $326 million, a significant increase from $(4) million in 2021 [432]. - The company expects its cash balances and cash flows from operations to be adequate to meet expected cash requirements for the foreseeable future [408].