White Mts. sees rise in earnings, pre-Sandy

White Mountains Insurance has been making money this year, so far, partly because the reinsurer did not have to pay the kind of catastrophic losses it paid last year.

But Tuesday's earnings report — the day after superstorm Sandy smacked into the Eastern Seaboard – could not include the effect that storm could have on the company going forward.

By the most widely used measure, the insurance conglomerate – run out of Hanover but officially based in Bermuda for tax purposes — posted a slight net loss of $11.8 million for the quarter, though that still leaves it with a $137 million profit so far this year.

But both those figures include the balance sheets of companies in which White Mountains has a non-controlling interest, like a newly formed mutual bond insurer, Build America Mutual Assurance Company (BAM), that the conglomerate indirectly capitalized with $600 million. BAM is actually owned by its members, not White Mountains, so while the startup's first-year losses are included in White Mountains' bottom line, it is not attributed to its shareholders.

If you just look at the results that affect shareholders, White Mountains made $91 million ($2.90 a share) in the third quarter, compared to losing $42.5 million for the same quarter last year. That brings year-to-date profit to $232 million, or $20.19 a share. Last year at this point, shareholders were down $4.06 cents a share.

In terms of book value per share – White Mountains' preferred measure of progress – the gain is more modest. The company estimates its book value at $574, up 1.6 percent for the quarter and 6 percent over the first nine months of 2012.The conglomerate took in $697.4 million for the quarter, compared to a $500 million in the third quarter of 2011, bringing year-to-date revenue to $1.87 billion — nearly $300 million ahead of 2011.Some $346 million of the company's quarterly revenue is from its OneBeacon subsidiary and $299 million is from Sirius group. The rest is from smaller insurers and the company's investments.

Of course, the 2012 figures don't include Hurricane Sandy, which was still doing damage when the earnings report was released. A spokesperson for White Mountains said that the storm will have some impact on the company, but it was too early to estimate the extent of the losses.