As it pushes into specialty market, White Mountains posts 2Q net income of $26m

The company posted quarterly income of $26 million for the second quarter of 2013, the same as it was during the second quarter of last year

White Mountains Insurance Group has been exiting the consumer insurance business, and entering the specialty market, most recently insuring municipal bond issues and getting involved with crop insurance. But the moves didn’t pay off last quarter.

The company – based in Bermuda but mostly run out of Hanover, N.H. – posted quarterly income of $26 million ($4.26 a diluted share) for the second quarter of 2013, the same as it was during the second quarter of last year.  That’s a nice payout for most companies but small change for this conglomerate, which has assets of $12.3 billion, including nearly $350 million in cash.  

That brings net income for the year to $147 million, up from $120 million for the first half of 2012.

Revenue was down for the quarter by more than $50 million – to $489 million, partly due to leaving several consumer lines – starting with the October Sale of Esurance and Answer Financial companies to Allstate in the fall of 2011, and its AutoOne Insurance in February 2012. In October, the subsidiary OneBeacon got rid of its runoff business and in January, it completed the sale of Essentia Insurance – which wrote insurance for collector car and boats.      

But White Mountains pumped $600 million to capitalize HG Global Ltd and start up Build American Mutual Assurance Company (BAM), which insures municipal bond issues. White Mountains owns almost all of HG, but none of BAM, which is a mutual insurance company owned by its members. However, accounting regulations require that White Mountains put BAM on the books, and although it passed the $2 billion of insured for the quarter, it posted a pretax loss of $27 million.

OneBeacon also lost $3 million (pretax) this quarter, though the subsidiary’s CEO, Mike Miller, used the earnings report to announce a long-term partnership with The Climate Corporation, a firm that specializes in the crop business. Miller said that OneBeacon recently received approval to participate the federal crop insurance program and will start writing business in the fall. Further details of the deal were not released.

Sirius Group, White Mountains’ other subsidiary, however, made $35.6 million pretax in net income, despite catastrophic losses of $28 million due to Central European flooding and $5 million in tornado losses in the Midwest.