29 April 2014 Insurance

Sirius helps White Mountains to solid Q1 results

Boosted by a good performance by reinsurer Sirius, White Mountains Insurance Group, the parent of Sirius, posted solid first quarter results. Despite what it described as competitive reinsurance conditions, Sirius enjoyed improved profits compared with the same period the year before.

White Mountains as a whole saw its earned insurance and reinsurance premiums shrink slightly to $493.6 million compared with $495.4 million in the first quarter of 2013. Its pre-tax income from continuing operations also fell to $112.1 million, a 26 percent decline on the same period a year earlier when it made $151.8 million.

Reinsurer Sirius, however, saw its premiums earned grow to $215.5 million compared with $208.9 million a year earlier. Its first quarter 2014 gross and net written premiums, at $453 million and $333 million, respectively, were essentially flat compared to the first quarter of last year, as increases in the accident and health line offset decreases in the property and trade credit lines.

Its pre-tax profits also improved to $74 million compared with $61.1 million the year before. Its combined ratio was 73 percent for the first quarter compared with 81 percent for the first quarter of last year.

The company said this improvement in its combined ratio was driven by better loss reserve development. Catastrophe losses did not meaningfully impact the combined ratio in either period.

“Our 73 percent combined ratio for the first quarter was a strong start to 2014. While the (re)insurance industry continues to experience substantial competition, Sirius Group's long track record of consistently disciplined underwriting and superior client service differentiate us in the marketplace,” said Allan Waters, CEO of Sirius Group who also noted that a smooth transition had occurred at Sirius International with Monica Cramer-Manhem assuming the helm from Goran Thorstensson.

Insurer OneBeacon posted slightly declined earned premiums for the quarter of $276.5 million compared with $286.5 million the year before although its net written premiums were $311 million in the first quarter of 2014, an increase of 17 percent from the first quarter of last year. It said the increase reflects strong contributions from its newer units including OneBeacon Program Group, OneBeacon Surety Group and OneBeacon Crop Insurance.

Its pre-tax profits for the quarter were $54.4 million compared with $88.1 in the first quarter of 2013. Its combined ratio was 89 percent for the first quarter of 2014 compared to 88 percent for the first quarter of last year.

Mike Miller, CEO of OneBeacon, said: “We are pleased with our strong start to the year, reporting 4.2 percent growth in book value, driven by solid results in both underwriting and investments. Premiums were up a healthy 17 percent, reflecting new business momentum and nice contributions from our newer business units. We remain focused on closing the sale of our runoff business in the second half of the year and are well-positioned to continue building our specialty platform.”

White Mountains’ results also included figures for its bond insurer Build America Mutual Assurance Company, which was formed in 2012. In the first quarter of 2014, BAM guaranteed more than $1.5 billion of municipal bonds, $1.3 billion of which were in the primary market, up more than 50% from the first quarter of last year. As of March 31, 2014, BAM's total claims paying resources were approximately $583 million on total insured par outstanding (including policies priced but not yet closed) of $6.2 billion.

Commenting on the results as a whole, Ray Barrette, chairman and CEO, said: “It was a good start to the year. Our investment portfolio gained 1.1 percent with steady results from our short, safe fixed income portfolio and a nice outperformance on the equity side.

“OneBeacon grew book value by 4 percent with a combined ratio of 89 percent and net written premium growth of 17 percent. Sirius Group reported a combined ratio of 73 percent and had a successful 1/1/14 renewal season. BAM continues its advance, guaranteeing $1.5 billion of par in the quarter, well above last year's first quarter.”

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