White Mountains reports $706m ’06 income
A whole year without disastrous hurricanes sure helps improve an insurance company’s bottom line.
White Mountains Insurance announced Friday that it earned more than $706 million last year in comprehensive net income (or $62.32 a diluted share), with half of that coming in the fourth quarter, as the losses of Katrina, Rita and Wilma faded and increased premiums came rolling in.
The company’s book value per share increased 21 percent over the year to $406 per share.
Not a bad start for Ray Barrette, the new Hanover-based chairman and CEO, who took over from his neighbor, White Mountains founder and insurance legend John Byrne, two weeks ago.
“I am now fully engaged in White Mountains’ affairs and am pleased with the good progress we are making on many fronts,” Barrette said.
Byrne, who gave Barrette voting rights to his shares, said in a farewell statement to shareholders that Barrette is the “right leader” because he will “be bold for us.”
Byrne added that the board approved his recommendation of a compensation plan for Barrette tied to performance. While the details have yet to be released, “essentially and under most circumstances, Ray should receive about 2.5 percent of the excess upside from here. That sounds about right to me. We should hope he gets rich.”
The results represent a tenfold increase over a lackluster 2005 performance. In the last quarter of 2006, the company made $357 million alone, compared to a loss of at least $11 million in the previous year.
The White Mountain Re subsidiary still suffered some of the lingering effects from the three hurricanes of 2005. Its pre-tax income was reduced by $223 million because of the triple hurricanes and reimbursement of Olympus, a catastrophic loss “sidecar” that was wiped out by the bad weather. Still, a strong fourth quarter enabled the subsidiary to pull in some $237 million of income last year.
In addition, the company made some $171 million on the sale of 27.6 percent of its interest in OneBeacon through an initial public offering, and another $21 million on the purchase of Mutual Service Casualty Insurance Company. – BOB SANDERS
