White Mountains’ Underwriting Margins Drive 1Q Book Value Increase

Gilead Sciences GILD NASDAQ:GILD

A benign catastrophe season and continued improvement in underwriting margins at majority-owned OneBeacon OB led to a 3% sequential increase in adjusted book value to $606 per share at White Mountains Insurance Group WTM . In comparison with last year’s first quarter, the combined ratio (expense divided by earned premiums) fell to 81% from 84% at Sirius Group, White Mountains’ reinsurance subsidiary, while OneBeacon also reported a small decrease to 88% from 89% last year. Net investment income fell due to lower interest rates offset by an increase in net realized and unrealized investment gains. White Mountains reported that BAM, its new entrant into municipal bond insurance, insured $867 million of primary municipal bond issues in the first quarter. First-quarter results were markedly ahead of our estimates, but we will stick with our fair value estimate of $570 per share, as the risk from catastrophe events heightens later in the year. Our no-moat rating is also unchanged.

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