White Mountains Insurance Group, Ltd.

White Mountains Insurance Group, Ltd.
2001 Management Report
Table of Contents
Letter from Jack Byrne, Chairman and CEO
1
Letter from Tom Kemp, President
2
White Mountains Insurance Group, Ltd.
Business Description
3
Parent Company “Look Through”
Balance Sheets & Income Statements
6
Letter from Ray Barrette, Chairman and CEO
OneBeacon
8
Letter from Steve Fass, President and CEO
Folksamerica
11
Letter from John Gillespie, Managing Director
Investments & Capital
14
Insurance Operations
Summary Financial Information
16
White Mountains’ Operating Principles
19
A Tribute to Jack Byrne
20
Corporate Information
21
Our 2001 Management Report on White Mountains is presented to you on the following pages. Our more formal
Annual Report on Form 10-K holds a wealth of important information about our operations. That document,
along with those incorporated by reference therein, comprise our annual report in its entirety. Producing this
management report separately offers us more flexibility to discuss our business philosophies and expectations
with our owners.
We hope both documents help us to fulfill our fiduciary duty to give our owners an unemotional, straight-up
report of current facts and prudent vision of where we are headed.
As We See Changes On The Horizon...
We’re Charting The Course.
Dear Fellow Shareholders,
The year 2001 has produced a sea change,
in ourselves, in our country, and in our
industry. Our own colleagues at
Folksamerica teetered on the precipice
of ground zero when their headquarters
at One Liberty Plaza was in danger of
collapse and had to be evacuated.
Our clients, customers, friends and
co-workers lost loved-ones, and we each
lost our innocence.
As our country has, the insurance
industry will emerge stronger from the
ordeal. We had a lot to learn, and by
many indications, we have learned it.
By all accounts our industry has honored
its obligations, even when the true exposures were inadequately understood.
I am proud that our products and
services provide the confidence for our
modern world to function—to accept
risk that would otherwise undermine
our economy’s potential for prosperity.
Return on Equity
(three-year rolling)
(percent)
45
45
40
36%
35
40
Once again, our simple operating principles have been underscored by these
challenges; once again, we feel fortunate
we have lived by them. You can probably recite them by memory, but they
have never been more important:
underwriting, the bedrock skill of our enterprise,
must come first; we must keep a disciplined balance
sheet; we must invest for total return; and the last,
which says the most, we must think like owners.
The book value, economic value and
market value of your enterprise all grew
in 2001, in spite of the year-long restructuring at OneBeacon and the unimaginable catastrophe that enveloped our
country at year-end. Our balance sheet
starts 2002 in good condition. We will
be reworking the size and shape of
our debt. Ray Barrette and his team at
OneBeacon and Steve Fass and his team
at Folksamerica have put our lead
companies in a strong position to fully
support our customers in their time of
need. We have created two new Bermuda
enterprises—Montpelier Re and Fund
American Re and have added another
fine executive to our stable of talent:
Tony Taylor, the “King of Lloyds.”
Jack Byrne
Chairman and Chief Executive Officer
Insurance Leader of the Year
“Ex Agendo Aestimemur”
After 50 years in the insurance business,
not much surprises me anymore. At a
time when our industry may be the most
important source of stability for our
nation and economy, it is a comfort that
our principles and our talented family of
executives have stood up to the tests of
2001. I expect the next two years to be
satisfying ones for our enterprise.
Thank you for being our partners.
Respectfully submitted,
35
30
26%
25
30
25
Market Value
20
20
15
15
10
10
Book Value
5
5
0
0
1995
1996
1997
1998
1999
2000
2001
I am pleased with the results of John
Gillespie’s strategic moves on our assets.
We ducked important bullets in the equity
markets and made real money from our
bond portfolio. Hatches are battened
down for now.
1
Jack Byrne
White Mountains Insurance Group, Ltd.
Dear Fellow Shareholders,
Your Company closed the year with a
tangible book value of $225.81, up 20%
from last year, thanks to the OneBeacon
acquisition.
Results from insurance operations for
2001 however, were disappointing—
OneBeacon and Folksamerica, each with
combined ratios in excess of 120%, fell
short of targeted results. As Ray and
Steve point out later, 2001 was a year of
intense restructuring and reorganization
at OneBeacon and one of incredible
challenge at Folksamerica.
Tangible Book Value Per Share*
(millions)
250
250
$226
200
200
150
150
100
100
50
50
0
Tom Kemp
President
international reinsurance advisory and
risk evaluation business. All three companies are poised to take advantage of
opportunities developing in tightening
global reinsurance markets. I am particularly excited about the prospects for
Fund American Re as this company
will serve as the foundation for our
expansion in Europe and Asia.
0
1995
1996
1997
1998
1999
2000
2001
*adjusted for deferred credits and goodwill
As Jack and Ray have often said, there
is much work to be done but, as they
also point out, substantial progress is
being made.
In addition to the OneBeacon acquisition, the Company’s big event for the
year, 2001 gave witness to a number of
smaller but important initiatives into the
global reinsurance market. The Company
helped create Montpelier Re. Fund
American Re, our Bermuda reinsurance
subsidiary, acquired an operation in
Stockholm and Singapore. White
Mountains Underwriting, our Irish
subsidiary, became active in the
As Jack notes in his letter, 2001 produced
a sea change for the insurance industry.
Nevertheless, management’s primary
goal remains the same—to chart a course
for your Company that, over time, builds
economic value for you, our Owners,
all the while stubbornly fixated on our
operating principles.
We trust you will look at the events of
2001 and judge that we acted wisely.
The course is set—we are pleased you
have chosen to join us.
Respectfully submitted,
Tom Kemp
2
White Mountains Insurance Group, Ltd.
Business Description
ONEBEACON
White Mountains Insurance Group, Ltd.
(White Mountains or the Company) was
originally formed as a Delaware corporation in 1980 and became a Bermuda
company in October 1999. The Company’s
corporate headquarters and its registered
office are located in Hamilton, Bermuda
and its principal executive office is located
in White River Junction, Vermont. White
Mountains is a publicly held company
and is listed on the New York Stock
Exchange under the symbol ‘WTM’.
Market capitalization at December 31,
2001, assuming the exercise of outstanding
warrants to acquire Common Shares of the
Company, was approximately $3.5 billion.
White Mountains is an insurance holding
company with business interests in insurance operations through its consolidated
and unconsolidated affiliates in property
and casualty insurance and reinsurance as
further described below. At December 31,
2001, White Mountains reported total
assets of $16.5 billion. Tangible shareholders’ equity, which takes into account
the full conversion of warrants and other
convertible securities into White Mountains’
Common Shares and unamortized
deferred credits (net of goodwill),
totaled approximately $2.3 billion,
$225.81 per share.
Investment of Owners' Capital*
(millions)
3500
3500
$3,372
3000
3000
2500
2500
2000
2000
1500
1500
1000
1000
500
500
0
1995
1996
Other
Operations
1997
1998
Mortgage
Operations
1999
2000
0
2001
Insurance
Operations
* common and preferred equity plus debt (excluding debt of mortgage operations)
OneBeacon Insurance Group (OneBeacon,
formerly CGU Corp.), and its U.S. property
and casualty insurance operations were
acquired by White Mountains from
London-based CGNU plc. on June 1, 2001
for $2.1 billion.
Headquartered in Boston, Massachusetts,
OneBeacon, whose roots date back 170
years, is committed to being a premier
independent agency property/casualty
insurance group in the Northeast and for
certain national specialty businesses.
OneBeacon offers a wide range of personal, commercial and specialty products
and services, sold exclusively through
select property/casualty independent
agents. OneBeacon, with a current
A. M. Best rating of A (excellent), reported
GAAP equity of $3.0 billion at December
31, 2001 and net written premiums in 2001
of $3.5 billion. Approximately $1.2 billion
of OneBeacon’s equity is dedicated to
Folksamerica, Peninsula, MSA and
Montpelier Re, discussed below, and $1.8
billion to support its own operations.
On November 1, 2001, OneBeacon
entered into a partnership with Liberty
Mutual Insurance Group (Liberty Mutual)
pursuant to which Liberty Mutual will
assume control of the infrastructure,
employees and underwriting responsibility
for OneBeacon’s personal and commercial lines business written by OneBeacon
in 42 states and the District of Columbia.
Going forward, OneBeacon will operate
as a super-regional company, focusing
exclusively on New England, New Jersey,
New York and selected specialty businesses.
Effective with the close of the OneBeacon/
Liberty Mutual transaction, Liberty Mutual
assumed responsibility for both operational and underwriting decisions on an
estimated $1.5 billion of commercial and
personal lines premium written in the
affected regions. OneBeacon retained
3
all of the existing balance sheet related
liabilities, including loss and unearned
premium reserves. In connection with the
transfer of the renewal rights, OneBeacon
and Liberty Mutual entered into a quota
share reinsurance agreement pursuant to
which Liberty Mutual will cede two-thirds
of the premium and net liabilities generated
by renewals underwritten by Liberty
Mutual in the first year, reducing to onethird in the second year of the partnership
and finally to zero in the third year.
FOLKSAMERICA
Folksamerica Reinsurance Company
(Folksamerica), a multi-line broker-market
reinsurer, is White Mountains’ largest
reinsurance subsidiary and provides
property, casualty and marine reinsurance
in the United States and throughout the
world. White Mountains made its initial
investment in Folksamerica in June of
1996 when it acquired a 50% ownership
interest. It became a wholly-owned subsidiary in August of 1998. In 2001,
Folksamerica received additional support
from its parent company, OneBeacon,
which boosted its GAAP equity to the
$900 million level. This contribution nearly doubled the size of the company and
greatly enhances Folksamerica’s strong
position in a rapidly changing reinsurance
marketplace. Folksamerica, with a current
A.M. Best rating of A- (excellent), had net
written premiums in 2001 of $459 million.
Folksamerica has experienced significant
acquisition activity in recent years,
primarily through acquisitions including
Christiania Re in 1996, Great Lakes
American Re in 1997, USF Re in 1999,
Risk Capital Reinsurance Company and
PCA Property and Casualty Reinsurance
Company in 2000 and C-F Insurance
Company in 2001.
White Mountains Insurance Group, Ltd.
Folksamerica owns The Peninsula
Insurance Company as well as American
Centennial Insurance Company (ACIC)
and British Insurance Company of Cayman
(BICC), both of which are in run-off. At
December 31, 2001, ACIC and BICC reported
combined assets and equity of $88.5 million
and $41.4 million, respectively.
Fund American Re’s portfolio is a geographically well-diversified property/casualty book of reinsurance business with an
emphasis on property lines. Premiums for
2001 amounted to approximately $95 million. The Stockholm branch accounted for
approximately 90% of this business.
PENINSULA
FUND AMERICAN RE
Fund American Reinsurance Company,
Ltd., (Fund American Re) is a reinsurance
company organized under the laws of
Bermuda and a wholly-owned subsidiary
of White Mountains. Headquartered in
Bermuda, Fund American Re maintains
underwriting offices in Stockholm,
Sweden and Singapore. Fund American Re
reported total assets of $126.3 million at
December 31, 2001. White Mountains
initial investment in Fund American Re
was approximately $65 million.
On December 20, 2001, Fund American Re
acquired a substantial portion of the
international reinsurance operations of
Folksam International Insurance Company
(Folksam). The Stockholm and Singapore
staff of Folksam have joined Fund American
Re and will continue to serve its clients.
The Peninsula Insurance Company
(Peninsula) is a Mid-Atlantic region,
commercial and personal underwriter.
Peninsula, with a current A.M. Best rating
of A (excellent), reported GAAP equity of
$22.4 million at December 31, 2001 and
net written premiums in 2001 of $28.3
million. Peninsula specializes in private
passenger automobile and other small
commercial and personal lines.
WHITE MOUNTAINS UNDERWRITING
White Mountains Underwriting Limited
(White Mountains Underwriting) was
formed in December 2001 as a new,
wholly-owned subsidiary of White
Mountains. Set up in Dublin, Ireland,
White Mountains Underwriting provides
international reinsurance advisory and
risk evaluation services to members of the
White Mountains’ group and third parties.
White Mountains Insurance Group Organizational Chart
White Mountains
Insurance Group
Foreign
U.S.
OneBeacon
100% ownership
Folksamerica
100% ownership
Peninsula
100% ownership
Bermuda
Main Street America
50% ownership
Fund American Re
100% ownership
4
Montpelier Re
20% ownership
Ireland
White Mountains
Underwriting
100% ownership
White Mountains Insurance Group, Ltd.
Mark Stockton, formerly Chief Underwriting
Officer of LaSalle Re Limited, heads the
Dublin organization as President and
CEO. He is supported by an experienced
team of industry professionals who
undertake in-depth underwriting analysis
of both marine and non-marine reinsurance offers on behalf of its clients with
a focus on excess of loss business. The
Company’s remuneration consists of an
overriding commission (a percentage of
gross premiums) and profit-related
incentives that are based on results of
business recommended and subsequently
underwritten by their principals.
Last year, your Company proudly
joined the growing list of Bermuda
companies that actively support the
Bermuda Foundation For Insurance
Studies, an organization committed
to training tomorrow’s insurance
professionals.
Securing the future: Mark Lima,
BFIS President, receives the first pledge
of $10,000 from Gordon Macklin, Deputy
Chairman and Tom Kemp, President.
Photo courtesy of The Bermuda Sun.
MONTPELIER RE
Montpelier Reinsurance Ltd. (Montpelier
Re) was formed in December 2001 as a
reinsurance company organized under
the laws of Bermuda. Montpelier Re was
formed to capitalize on the attractive market opportunity in the global insurance
and reinsurance market and to satisfy the
underserved segments of the market due
to the impact of the World Trade Center
disaster and other pressures that were
already pervasive in the industry. Montpelier
Re will focus on property reinsurance
business through the broker market.
Montpelier Re was initially capitalized
with $874 million of private equity and
$150 million of debt. OneBeacon invested
$180 million for a 21% interest in the
venture. Tony Taylor, formerly Deputy
Chairman of Wellington Underwriting plc,
is running the operation.
As a founding shareholder, White
Mountains assisted in Montpelier Re’s
formation and is overseeing its corporate
governance structure. Jack Byrne was
elected Chairman and two other White
Mountains representatives also serve on
the board. For its efforts in founding the
company, White Mountains received
warrants to purchase approximately
800,000 common shares of the company.
The warrants, which expire in January
2012, are immediately exercisable at a
price of $100 per share. Upon exercise,
White Mountains’ consolidated ownership
interest will increase to 25% of the company, on a fully-diluted basis, assuming
the exercise of all warrants and options.
MAIN STREET AMERICA
Main Street America Holdings, Inc. (MSA)
is a subsidiary of National Grange
Mutual Insurance Company (NGM),
a New Hampshire domiciled property
and casualty insurance company. White
Mountains and NGM each hold a 50%
interest in MSA.
NGM’s principal lines of business are
personal automobile, homeowners,
commercial multi-peril and commercial
automobile. Its business is focused
primarily in New York, Massachusetts,
Connecticut, Pennsylvania, New
Hampshire, Virginia and Florida. MSA and
NGM are participants in a pooling agreement pursuant to which NGM cedes 60%
of its property and casualty business to
5
MSA. MSA, with a current A.M. Best rating
of A (excellent), reported GAAP equity
of $262.3 million at December 31, 2001
and total written premiums in 2001 of
$306.8 million.
P ARENT C OMPANY “L OOK T HROUGH ” B ALANCE S HEE TS
(Unaudited)
In millions of U.S. dollars, except per share data
2001
Assets
Common equity securities and other investments
Short-term investments
Total investments
Investment in OneBeacon [a]
Investment in Folksamerica
Investment in Montpelier Re
Investment in Main Street America
Investment in Fund American Re
Investment in Peninsula
Other assets
$
Total assets
Liabilities and Shareholders’ Equity
Debt
Convertible subordinated debt
Deferred credits
Other liabilities
Total liabilities
Preferred equity
Common equity
Total liabilities and shareholders’ equity
As of December 31,
2000
59.7
184.8
244.5
1,755.8
836.9
177.4
133.7
63.9
22.4
172.1
$
105.5
399.6
505.1
0.0
479.8
0.0
130.6
0.0
23.7
114.1
$ 3,406.7
$
1,253.3
$
825.0
260.0
641.4
65.4
1,791.8
170.3
1,444.6
$
96.0
0.0
37.0
73.8
206.8
0.0
1,046.5
$ 3,406.7
$
1,253.3
Common shares outstanding (000’s)
Common and equivalent shares outstanding (000’s)
8,265 sh
10,048 sh
5,880 sh
5,961 sh
Fully converted book value per common and equivalent share
Unamortized deferred credits less goodwill per common and equivalent share
$
160.36
65.45
$
177.07
10.58
Fully converted tangible book value per common and equivalent share
$
225.81
$
187.65
[a]
Excludes investment in Folksamerica, Montpelier Re, MSA, and Peninsula.
6
P ARENT C OMPANY “L OOK T HROUGH ” I NCOME S TATEMENTS
Year Ended December 31,
2001
2000
(Unaudited)
In millions of U.S. dollars
After tax comprehensive net income (loss) of affiliates (see Note):
Financial Security Assurance [a]
OneBeacon [b]
Folksamerica
Main Street America
Peninsula
Deferred credit amortization
Other [c]
Total after tax comprehensive net income (loss) of affiliates
$
Parent company activities:
Net investment income
Realized and unrealized investment gains (losses)
Other revenues
Total revenues
0.0
(203.7)
(25.6)
3.1
(0.6)
77.5
(38.4)
(187.7)
$
13.6
(0.7)
4.7
17.6
318.6
0.0
28.7
7.2
1.9
20.7
90.4
467.5
20.0
21.9
0.4
42.3
Operating expenses
Series B warrant expense
Interest expense and other
Total expenses
5.4
58.8
50.1
114.3
42.0
0.0
7.9
49.9
Pretax parent company comprehensive net loss
Parent company income tax provision (benefit)
Parent company comprehensive net loss
(96.7)
(5.9)
(90.8)
(7.6)
12.3
(19.9)
Comprehensive net income (loss) before subsidiary preferred stock items
Dividends and accretion on subsidiary preferred stock
Comprehensive net income (loss)
(278.5)
(23.3)
$ (301.8)
Note: Represents White Mountains’ share of each of our affiliates’ comprehensive net income (loss) after certain White Mountains’
tax accruals and accounting adjustments. See pages 16 through 18 for each affiliates’ stand alone results.
[a]
[b]
[c]
Sold to Dexia S.A. in July 2000.
Excludes Folksamerica, Monteplier Re, MSA and Peninsula results.
2000 includes $95.0 million tax benefit from the sale of Fireman’s Fund Insurance Company.
7
$
447.6
0.0
447.6
OneBeacon
Dear Fellow Shareholders,
The year 2001 has come and gone, but it
will long be remembered. We closed the
CGU acquisition on June 1st and relaunched the company as OneBeacon
Insurance. In early September, we
announced a partnership with Liberty
Mutual that transfers 40% of our renewal
book to their Regional Agency Markets
group effective November 1st. In the
meantime, the sobering events of
September 11th altered the face of reinsurance business. Late in the year, we
moved quickly to put significant amounts
of capital to work in the reinsurance
business to take advantage of the hardening market. We allocated an additional
$400 million to Folksamerica and invested
$180 million in Montpelier Re, a start-up
we helped launch. Significant changes
that add up to a major repositioning of
your company. I am optimistic that they
will lead to positive operating returns
going forward.
Our first move as new owners of
OneBeacon was to fix the balance sheet.
In fact, it required more than $3 billion
worth of fixing between December 2000
and June 2001. We purchased a full risktransfer cover for our old claims, mostly
8
Ray Barrette
Chairman and Chief Executive Officer
asbestos and environmental, from
National Indemnity, an AAA rated
company. The $2.5 billion limit on the
cover should take care of all likely
claim scenarios. Overall, our assets and
liabilities are now stated at realistic values.
What we have going forward is an
operating challenge.
The 2001 operating numbers are not
pretty. The “natural trade” ratio is 120%
on $3.9 billion of earned premiums.
“Natural” refers to the accounts of the
company excluding the purchase
accounting adjustments and retroactive
reinsurance transactions completed at
acquisition. The natural accounts reflect
our best estimate of the current profitability
of the acquired book. “Trade” ratio is a
modified combined ratio that divides
general operating expenses by earned
OneBeacon
premiums, rather than by written premiums as is usually the practice; we think
of it as a quick GAAP adjustment and a
better measure of results. Our goal is to
get our “core”—or ongoing—operations
to a 100% trade ratio or better by 2003,
and to keep it below 102% going forward
on our total book.
Can we get there? We think so.
Thanks in good measure to John Gillespie
and our investment staff, we have emerged
from the September 11th events in good
financial health and in an environment
where most underwriters are more disciplined. We do not know how long this is
going to last, but it’s a good time to be
fixing our business.
For the ongoing or “core” operations, the
2001 accident year trade ratio was around
113% including the WTC claims and 108%
excluding them. Our total focus on
pricing, re-underwriting and better claims
management since June 2001 should
contribute significant improvements to
those results in 2002 and beyond.
The rest of the book will run-off quickly.
The quota share taken back on the
renewals transferred to Liberty RAM will
expire on October 31, 2003 and those
premiums will be fully earned by
year-end 2004. Almost all of the other
businesses being shut down, such as
National Accounts and Programs,
will also be gone by year-end 2003.
So the book will be quite a bit smaller.
How small will depend on the market
conditions over the next 12-18 months.
But that’s just fine. We’d rather be small
and profitable, than large and sub-par.
All of our actions are directed at emerging
in 2003 as a profitable underwriting
company in the Northeast and in selected
national specialty markets. Our regions
are focused on medium and small commercial accounts produced by professional
independent agencies that are true
partners. We differentiate ourselves
through our closeness to our agents and
markets, enabled by our strong local
staff; our superior claim service; and our
resolute focus on results. In personal
lines, our book is weighted toward
auto in New Jersey, Massachusetts and
New York, three states with difficult
regulatory environments. In each state,
we are putting in place a dedicated
management team that is very focused
on protecting our profitability. In the
specialty markets, OneBeacon has
nurtured several superior businesses,
such as International Marine Underwriters
in the ocean marine business and A.W.G.
Dewar in the tuition reimbursement
business. And we are building more niche
businesses as we find strong management
teams in need of good owners. This,
however, will not divert our attention
from the primary goal of fixing our
standard property and casualty business.
One specialty business we entered into
late in the year was the New York Limited
Assignment Distribution (LAD) business.
This may be a strange label, but essentially
it’s a business where other insurance
carriers pay us significant fees to assume
their portion of the compulsory personal
auto business that is assigned to them
9
OneBeacon 2001 Premiums
Ongoing vs. Discontinued Operations
(millions)
2250
2250
$1,989
2000
1750
2000
1750
1500
1500
$1,355
1250
1250
1000
1000
750
750
500
250
500
250
$123
0
0
specialty
run-off
liberty mutual
run-off
ongoing
Ongoing 2001 Trade Ratios
Ongoing vs. Discontinued Operations
(percent)
180
180
167%
160
160
140
140
122%
120
113%
120%
117%
100
108%
120
100
80
80
60
60
40
40
20
20
0
0
specialty
run-off
liberty mutual
run-off
excludes World Trade
Center losses
ongoing
total
World Trade
Center losses
OneBeacon
2001 Ongoing Premiums
specialty
18%
personal
43%
commercial
39%
OneBeacon
based on their voluntary market share.
Since last year, that business has been
exploding due to the collapse of New
York’s non-standard auto market resulting
from uncontrolled claims fraud and
inadequate rates. In turn, there’s a dearth
of reputable companies willing to build
the underwriting and claims infrastructure
necessary to assume this kind of business.
We recruited two old friends, Al Kaltman
and Carey Benson, and together they set
up shop in just a few
weeks. Operating
under the trade name
AutoOne, they are
putting together a
great team of professionals that will deliver
superior results for OneBeacon.
And speaking of a great team, it’s happening everywhere at OneBeacon. John
Cavoores was named President and COO
in December. He is playing a key role
in making sure that we don't miss the
hard market. Working with John and me
are a few old friends, several excellent
new partners and a core team of former
CGU managers who eagerly responded to
the White Mountains call to action to fix
the business as fast as possible. We now
have stronger teams in essentially all areas
of the company.
10
After the Liberty transfer, our active staff
count is down to 4,200 compared to 7,300
a year ago. Our cost structure remains
high but we are focused on fixing our loss
ratio first. In time, expenses will be in
line. In the meantime, we need to fix our
information systems and update our
infrastructure. The message to our staff
and agents is that this company will
spend money to save money. OneBeacon
will have plenty of opportunities for good
people who can make
good things happen.
This is certain to be
another exciting year
for your company. We
should begin to realize
the benefits of some of our many actions.
We will continue to look for opportunities
to improve our current businesses and
capitalize on new ones. And like our lighthouse logo, all of us at OneBeacon are on
course toward a brighter tomorrow.
Respectfully submitted,
Ray Barrette
Folksamerica
Steve Fass
President and Chief Executive Officer
Dear Fellow Shareholders,
The year 2001 was a year we will never
forget. The momentum for favorable
changes in reinsurance fundamentals that
began to show up in late 2000 continued
through the mid-year renewals. Most reinsurers began to recognize the depths to
which pricing had fallen—as we did a
year ago—and the effects started to show
in their earnings releases. Many reported
reserve charges and elevated combined
ratios. Fundamentals were gradually on
the mend, until the unthinkable events of
September 11th. We will be ever thankful
that although most of our New York
employees were in the office at One
Liberty Plaza and were eyewitnesses to the
tragedy, all escaped without physical harm.
Our CFO, Mike Tyburski, accurately
describes our company’s readiness for
this situation. “We were about as well
prepared as we could be for an event for
which you could never be prepared.”
Our disaster recovery procedures ran like
clockwork. Our remote back-up computer
facility in Orange County, New York was
activated and our MIS staff had our
systems up and running within days. We
moved to temporary space in several
locations, including space in OneBeacon’s
New York branch, and restored “normal”
operations in a week. Our staff demonstrated their skill, spirit and resilience.
I am extremely proud of this dedicated
group of professionals. I am happy to
report that we regained full access to our
home office space in early December.
Most of our New York employees moved
back just after the New Year and are
happy to be back in familiar surroundings although those surroundings are a
solemn reminder of the tragedy.
Since September 11th, the insurance and
reinsurance markets have been in a state
of turmoil. Many companies suffered
losses many times the size of those
brought by Hurricane Andrew, formerly
the largest industry loss. Fortunately, our
conservative portfolio management
approach and
prudent reinsurance purchases
helped contain our net loss to $25 million; although a meaningful sum it will
not significantly impact our strong financial foundation. As in any time of chaos,
there are usually ample opportunities for
the strong and nimble; the last four
months have been just that.
Uncertainty as to availability of reinsurance capacity, and concerns about
coverage for future terrorist acts, drove
the expectation of increasingly favorable
terms and conditions as we headed into
the January renewals. The prospect of a
suddenly “hard” reinsurance market,
particularly for large commercial property
exposures, attracted significant amounts
of new capital. Folksamerica is a beneficiary of this capital raising in a big way.
11
(millions)
Investment Assets and Capital
2000
2000
$1,826
1800
1800
1600
1600
1400
1400
1200
1200
1000
$945
1000
800
800
600
600
400
400
200
0
200
1995
1996
GAAP equity
1997
1998
1999
total indebtedness
0
2000
2001
total investment assets
In December, we forged an important
partnership with Olympus Re, a new
property excess reinsurance company
domiciled in Bermuda. Olympus Re, with
a unique, focused business plan, attracted
over $500 million of fresh capital.
Olympus Re’s appetite for excess property
risks will be fed by several sources, the
most significant being a 75% quota share
of Folksamerica’s property writings.
Recognizing the rapidly changing market
and the
opportunities
it presented,
White
Mountains
contributed $400 million to Folksamerica
in December. Coupled with the expanded capacity provided by the quota share
partnership with Olympus Re,
Folksamerica’s underwriters were fully
equipped to participate in the opportunities created by the market turmoil during
the January renewal. Unlike some of the
other new off-shore vehicles, Folksamerica
was able to leverage existing relationships and continuity of service to create
an advantage — cedents and intermediaries know Folksamerica’s name, people
and parentage — we were clearly a
familiar and trusted port in the storm.
In addition, in December we entered
into an agreement with White Mountains’
newest affiliate, White Mountains
Folksamerica
Folksamerica employees and their families gathered at Steve Fass’ home on September 23rd for
a group hug. Folksamerica’s offices were damaged by the tragic events of September 11th, but
thankfully all employees were safely evacuated. They were relocated to various temporary offices
while repairs were completed and then reunited early in 2002.
Underwriting which will concentrate on
non-U.S. based ceding companies and
will become an important contributor to
Folksamerica’s future earnings.
The capital contribution mentioned
above brought Folksamerica’s total
capitalization to approximately $900
million including statutory surplus in
excess of $800 million; a long way from
the $120 million the company had when
White Mountains made its initial investment in 1996. We have reached a goal:
to be one of the top-ten reinsurers before
there are only ten left. Our company is
the 8th largest domestic reinsurer and
4th largest market for broker business.
The new balance sheet weight and
Folksamerica’s quality reputation as a
financially secure and responsible market
served us well across all lines of business. We have always performed at our
best during turbulent times and we are
excited by the opportunities we see.
To help capitalize on these opportunities,
Michael Maloney, a long-time and highly
respected friend, joined our senior
management team in December. We have
known Mike for most of his 25-year
career, much of it with the Zurich organization. Mike joined in time to make a
meaningful contribution to our January 1
renewal efforts.
Chairman Jack Byrne participates in the
facepainting activities at Steve Fass’
September 23rd employee gathering.
12
Folksamerica
On the surface, Folksamerica’s results for
2001 were disappointing by most performance yardsticks—a decline in tangible
book value of 12% on a comprehensive
loss of $26 million and a combined ratio
of 125%. However, considering the WTC
loss and the number of other meaningful
property catastrophe losses, our performance was respectable.
In 2001, Folksamerica Re Solutions,
(Solutions), our “exit visa” boutique
established last year, closed its first
transaction. Solutions covers the middle
market, and opportunities for smaller
transactions have been plentiful. John
Liberator, Solutions’ President and his
team put together a wonderful transaction which closed in the third quarter.
The California Insurance Department was
faced with a dilemma. A small cooperative insurer, California Farm Bureau
Insurance Company (C/F) was put into
supervision in the mid-1980’s, as they
were believed to be insolvent. Aside
from providing light farm owners
coverage, C/F became involved in
providing financial guarantees—nothing
like sticking to what you know best. The
financial guarantee business was the
major culprit. However, over the last 16
years, the Insurance Department was
able to effectively settle virtually all
claims and the build up of investment
income created quite a nice pot of
investment assets and almost $65 million
in surplus! Where’s the problem, you
say? The Insurance Department was not
inclined to return C/F and its surplus to
the original co-operative owners, as they
lacked the capability to run an insurance
company. Enter Folksamerica with a
Solution. John and his team did extensive claims and legal due diligence to
substantiate the remoteness of additional
claim activity and negotiated an excellent
transaction for all parties. In a series of
simultaneous transactions, the former
cooperative owners regained control of
C/F and sold the company to Folksamerica
for two-thirds of book value—half the
purchase consideration coming in the
form of an adjustable purchase note
providing a significant indemnity
against adverse development. Clearly, a
WIN-WIN-WIN transaction. The regulatory
dilemma was solved, a significant
amount of cash was returned to the
former owners and Folksamerica took on
a small reserve portfolio with significant
downside protection at a price that yields
a $20 million pre-tax economic windfall!
This is exactly the type of transaction our
Solutions team is looking for. Stay tuned,
there are a few more in the pipeline.
Although performance for the last three
years has been dramatically impacted by
the prolonged soft market and significant
property catastrophe activity, our team
has navigated the extended poor market
conditions in a way which has preserved
the quality investments in our portfolio
and broadened our skill-base and
product offerings through well structured
transactions. We go into 2002 with a strong
balance sheet and capital position.
Considering the significant improvements in pricing, terms and conditions
we are looking to make some serious
hay in the near term.
Respectfully submitted,
Steve Fass
13
Folksamerica Written Premiums
(millions)
700
700
$643
600
600
500
$459
500
400
400
300
300
200
200
100
100
0
0
1995
1996
1997
1998
gross
(percent)
1999
2000
2001
net
Folksamerica Combined Ratio
140
140
125%
120
120
100
100
80
80
60
60
40
40
20
20
0
0
1995
1996
1997
1998
loss and lae
1999
2000
commission
Folksamerica Premiums
Marine
7%
A&H
4%
Property
30%
Casualty
59%
2001
expense
White Mountains Insurance Group, Ltd.
Dear Fellow Owners,
Investment Management Activities
The White Mountains investment program
seeks to maximize risk adjusted total
return. Capital preservation is paramount.
Reported investment income is a secondary consideration. Our investment
posture has changed little in the past year.
We have a small equity exposure, a high
quality fixed income portfolio with an
intermediate duration, and a significant
cash cushion.
Despite the largest bankruptcies imaginable—Argentina and Enron; despite the
unspeakable tragedy of 9-11; despite the
continuing collapse of the technology and
telecom stocks; the big story of 2001 for
financial markets was the Federal Reserve
and its eleven consecutive discount rate
reductions.
We finished the year at 1.25%, a discount
rate last seen in 1948. Long-term bonds
benefited from the lower interest rates,
although much of the positive impact was
mitigated by a steepening yield curve.
Quality spreads widened with yields
declining more for higher rated bonds.
Investors continue to sacrifice yield for
lower risk.
Equities were down for the second consecutive year. The last time this happened
was 1974, and by the way the S&P 500
has never fallen three years in a row
during its 60-year history. While it is often
difficult to single out the “true” reason for
stock price declines, disappointing earnings, extended valuations, and investors’
justified fears over aggressive accounting
seem more than enough.
14
John D. Gillespie
Managing Director, Investments & Capital
The asset allocation remains ultra conservative. We have about 96% in bonds and
cash. This conservative portfolio has not
cost us financially over the past year. In
a period when it has been easy to lose
money, we have made some.
Consolidated Investment Portfolio
as of December 31, 2001
(In millions of U.S. dollars)
Short-term investment
$2,546 28%
Fixed income securities 6,128 68%
Common stocks
174
2%
Other investments
158
2%
Total
$9,006 100%
Our fixed income securities are typically A
rated or better, non-callable and have an
approximately 5 year duration. They are
spread out along the maturity spectrum.
More than half of this fixed income
White Mountains Insurance Group, Ltd.
portfolio is in creditworthy, liquid corporate bonds. We also have a significant
position in Treasury Inflation Protected
(TIP) securities at longer maturities. Given
our perception of unattractive investment
opportunities, the operational challenges
facing OneBeacon, and the necessary
asset disposals related to the Liberty
Mutual transaction, we expect to continue
our emphasis on a high quality, lower risk
portfolio. We expect interest rates to rise
over the course of 2002, making it very
difficult to earn the stated coupon on long
bonds. As a result, we will keep the
maturities (and duration) of the fixed
income portfolio reasonably short.
If anything, the outlook for equities is
worse than for bonds. Market valuations
are stretched, and the earnings recovery
we anticipate is of uncertain timing. (An
“Enron Effect” seems certain to tighten
heretofore very loose accounting standards and hurt reported results.) That
said, we are gradually accumulating reasonable “value” stocks at what we think
are attractive prices—so far we are up to
2% of invested assets.
Despite our pessimism concerning financial markets, we generally believe in a
classic economic recovery. Yes, we have
severe problems, including a frightening
current account deficit; yes, the typical
rebounds of housing and autos will probably be muted; but inventories are awfully
low and there is plenty of credit available.
The extraordinary expansion of the last
decade is over. Inflation and interest rates
are low. Corporate profits are in recession. Stocks and bonds appear fully
priced against this mixed backdrop. We
are poised to react to any fat pitches that
present themselves. In the meantime our
positioning is appropriately conservative.
We hold firmly in mind the two cardinal
rules of investing:
1. Do not lose your money.
2. Always remember rule number 1.
Capital Management Activities
On the capital management front, 2001
was an eventful year. After a decade of
returning capital to stakeholders, we
reversed course in the first part of 2001
and raised over $1.5 billion in new capital
in conjunction with the acquisition of
OneBeacon. This included $300 million
in new equity capital (preferred stock and
warrants) from our associates at Berkshire
Hathaway. On a fully converted basis the
warrants make Berkshire our largest
stakeholder—Jack reluctantly agreed to
cede this proud position to Warren. In
addition, another $441 million in new
equity capital was raised from a group
of private investors whom we fondly refer
to as our “friends and family”. Lehman
Brothers did a great job of arranging an
$875 million credit facility on our behalf;
$825 million of this facility was drawn at
the closing of the acquisition.
We think in terms of a 20% debt to total
capital ratio as being the right amount of
leverage for our business over the long
term. We will look to reduce our financial
leverage to this level over the next couple
of years.
In response to the favorable conditions in
the reinsurance marketplace resulting
from the tragic events of September 11,
we played a lead role with our associates
at Benfield Group and Bank of America in
raising $1 billion in capital for Montpelier
Re, a Bermuda based reinsurance start up.
Montpelier is capably led by Tony Taylor,
a legendary underwriter and one of the
“Three Kings” at Lloyds. OneBeacon
invested 21% of the equity capital, $180
15
million, and White Mountains, as a whole,
received 25% of the economic ownership,
including our founder’s warrants.
Last but not least, OneBeacon contributed
$400 million to Folksamerica just prior
to year end. With over $800 million in
statutory surplus in Steve Fass’ capable
hands, the team at Folksamerica was able
to fully participate in the January 2002
renewal season.
Respectfully submitted,
John Gillespie
INSURANCE OPERATIONS - SUMMARY FINANCIAL INFORMATION
ONEBEACON [a] [b]
(Unaudited)
In millions of U.S. dollars
2001
Balance sheet data:
Total investments
Total assets
Loss and loss adjustment reserves
Unearned premium reserve
Shareholder’s equity
$ 6,858.4
13,009.7
8,425.2
1,612.0
1,755.8
Income statement data: [c]
Net written premium
Earned premium
Net investment income
Net loss
Comprehensive net loss
$ 1,875.4
2,208.2
228.4
(152.8)
(203.7)
2001 trade ratios:
Loss and loss adjustment expense
Underwriting expense
Combined
White Mountains data:
Investment in OneBeacon [b]
Net loss recorded
Comprehensive net loss recorded
88.0%
32.1%
120.1%
$ 1,755.8
(152.8)
(203.7)
[a] Acquired on June 1, 2001.
[b] Excludes $1.2 billion investment in Folksamerica, Peninsula, Montpelier Re and MSA.
[c] Income statement data is for the seven months ended December 31, 2001.
(Unaudited)
In millions of U.S. dollars
FOLKSAMERICA
2001
2000
Balance sheet data:
Total investments
Total assets
Loss and loss adjustment reserves
Unearned premium reserve
Deferred credit
Shareholder’s equity [a]
$ 1,718.8
3,040.5
1,584.8
158.8
41.1
836.9
$
Income statement data:
Net written premium
Earned premium
Net investment income
Net loss
Comprehensive net income (loss)
$
$
Statutory ratios:
Loss and loss adjustment expense
Underwriting expense
Combined
White Mountains data:
Investment in Folksamerica
Net loss recorded
Comprehensive net income (loss) recorded
458.7
421.5
45.5
(12.8)
(25.6)
92.0%
33.4%
125.4%
[a] Includes $400 million capital contribution in 2001.
[b] Includes a $195.0 million inter-company note between White Mountains and Folksamerica.
16
$
836.9 [a]
(12.8)
(25.6)
1,490.6
2,683.7
1,500.7
171.9
55.2
284.8
332.6
312.5
57.5
(5.5)
28.7
88.3%
38.0%
126.3%
$
479.8 [b]
(5.5)
28.7
INSURANCE OPERATIONS - SUMMARY FINANCIAL INFORMATION
(Unaudited)
In millions of U.S. dollars
FUND AMERICAN RE
2001
Balance sheet data:
Total investments
Total assets
Loss and loss adjustment reserves
Unearned premium reserve
Shareholder’s equity
$
88.3
126.3
25.8
31.7
63.9
Income statement data: [a]
Net written premium
Earned premium
Net investment income
Net income
Comprehensive net income
$
0.5
2.9 [b]
2.4 [b]
White Mountains data:
Investment in Fund American Re
Net income recorded
Comprehensive net income recorded
$
63.9
2.9 [b]
2.4 [b]
[a] Fund American Re acquired the renewal rights of certain of Folksam International Insurance Company’s business on December 20,
2001 and began renewing the Folksam book on January 1, 2002. No premium or insurance operating results were recorded in 2001.
[b] Includes $3.0 million gain from the bargain purchase of net assets acquired from Folksam.
(Unaudited)
In millions of U.S. dollars
PENINSULA
2001
2000
Balance sheet data:
Total investments
Total assets
Loss and loss adjustment reserves
Unearned premium reserve
Shareholder’s equity
$
40.2
55.1
18.4
12.0
22.4
$
42.2
56.3
19.9
9.9
23.7
Income statement data:
Net written premium
Earned premium
Net investment income
Net income (loss)
Comprehensive net income (loss)
$
28.3
26.4
2.2
(0.6)
(0.6)
$
22.7
21.5
3.2
1.0
1.9
Statutory ratios:
Loss and loss adjustment expense
Underwriting expense
Combined
White Mountains data:
Investment in Peninsula
Net income (loss) recorded
Comprehensive net income (loss) recorded
82.9%
27.0%
109.9%
17
$
22.4
(0.6)
(0.6)
72.4%
30.9%
103.3%
$
23.7
1.0
1.9
INSURANCE OPERATIONS - SUMMARY FINANCIAL INFORMATION
(Unaudited)
In millions of U.S. dollars
MAIN STREET AMERICA
2001
2000
Balance sheet data:
Total investments
Total assets
Loss and loss adjustment reserves
Unearned premium reserve
Shareholders’ equity
$ 412.3
653.8
209.8
149.9
262.3
$
449.0
608.7
202.1
129.6
253.8
Income statement data:
Net written premium
Earned premium
Net investment income
Net income
Comprehensive net income
$ 306.8
286.6
22.3
6.8
8.5
$
265.4
254.1
23.5
3.8
16.4
Statutory ratios:
Loss and loss adjustment expense
Underwriting expense
Combined
White Mountains data:
Investment in Main Street America [a]
Net income recorded [b]
Comprehensive net income recorded [b]
65.2%
34.5%
99.7%
$ 133.7
2.2
3.1
[a] Includes related goodwill of $2.5 million and $3.7 million at December 31, 2001 and 2000, respectively.
[b] Recorded net of related goodwill amortization.
MONTPELIER RE
(Unaudited)
In millions of U.S. dollars
2001
Balance sheet data:
Total investments
Total assets
Loss and loss adjustment reserves
Unearned premium reserve
Shareholders’ equity
$
991.0
1,021.8
0.0
0.2
860.7
Income statement data:
Net written premium [a]
Earned premium [a]
Net investment income
Net loss [b]
Comprehensive net loss [b]
$
0.2
0.0
1.1
(61.6)
(59.7)
White Mountains data:
Investment in Montpelier
Net loss recorded
Comprehensive net loss recorded
$
177.4
(3.0)
(2.6)
[a] Montpelier Re commenced operations in December 2001 with the majority of its business effective January 1, 2002.
Premiums recorded for 2001 are immaterial.
[b] Includes a $61.3 million adjustment for the fair value of warrants issued as consideration for capital raising services.
18
69.8%
33.5%
103.3%
$
130.6
1.0
7.2
White Mountains’ Operating Principles
WE CARE MOST ABOUT...
Underwriting Comes First
An insurance enterprise must respect the
fundamentals of insurance. There must be
a realistic expectation of underwriting
profit on all business written, and demonstrated fulfillment of that expectation over
time, with focused attention to the loss
ratio and to all the professional insurance
disciplines of pricing, underwriting, and
claims management.
Maintain a Disciplined Balance Sheet
The first concern here is that insurance
liabilities must always be fully recognized.
Loss reserves and expense reserves must
be solid before any other aspect of the
business can be solid. Pricing, marketing,
and underwriting all depend on informed
judgement of ultimate loss costs and that
can be managed effectively only with a
disciplined balance sheet.
Invest for Total Return
Historical insurance accounting has tended to hide unrealized gains and losses in
the investment portfolio and over reward
reported investment income (interest and
dividends). Regardless of the accounting,
the group must invest for the best growth
in value over time. In addition to investing our bond portfolios for total after tax
return, that will mean prudent investment
in equities consistent with leverage and
insurance risk considerations.
Think Like Owners
Strategic Purchases
Thinking like owners has a value all its
own. There are other stakeholders in a
business enterprise and doing good work
requires more than this quarter’s profit.
But thinking like an owner embraces all
that without losing the touchstone of a
capitalist enterprise.
We have never made a strategic purchase...
maybe we will someday. We often sell to
strategic buyers. Our problem is we really
don’t have much of a strategy other than
to increase intrinsic business value per
share.
WE DO NOT CARE MUCH ABOUT...
Reported Operating Earnings According
to Generally Accepted Accounting Principles
Trying to produce a regular stream of
quarterly operating earnings often produces disaster. Trying to manage your
company according to generally accepted
accounting principles can often be silly.
As our friend says, we would rather
produce a lumpy 99 than a regular 103.
We prefer to measure ourselves as we
would hope owners measure us by growth
in intrinsic business value per share.
PUTTING OUR CAPITAL TO WORK...
Intellectually we really don’t care much
about leaving our capital lying fallow for
years at a time. Better to leave it
fallow and to wait for the occasional high
return opportunity. Frankly, sometimes
shareholders would be better off if we just
all went to play golf.
Overall, we should be students of capital
and business. Adam Smith had it right:
“Capital will flow according to its own
nature; the invisible hand.” If we do not
earn and deserve our owners’ capital, we
will not long have it.
Growth In Revenues
We applaud owners who reward executives on premium growth. This often
provides fine opportunities for us later.
Market Share
Often introduced by business consultants.
In our personal experience chasing
market share has produced the biggest
disasters in our business. Often we have
profited later from that excitement.
19
We also admire Benjamin Graham who
said: “In the short run the market is a
voting machine; in the long run it is a
weighing machine.”
A Tribute To Jack Byrne, Insurance Leader of the Year
Jack hired a Latin translator who tells us that
“Ex Agendo Aestimemur” means “long overdue.”
The true scholars among us know that it means
“Let us be judged by our deeds.”
Either way—a fitting tribute
to a long and illustrious career.
“Atta Boy, Jack!”
20
Corporate Information
CORPORATE HEADQUARTERS
White Mountains Insurance Group, Ltd.
Crawford House
23 Church Street
Hamilton HM 11
Bermuda
Tel: (441) 296-6011
Fax: (441) 296-9904
MAILING ADDRESS
White Mountains Insurance Group, Ltd.
12 Church Street
Suite 322
Hamilton HM 11
Bermuda
PRINCIPAL EXECUTIVE OFFICE
White Mountains Insurance Group, Ltd.
28 Gates Street
White River Junction, Vermont 05001
Tel: (802) 295-4500
Fax: (802) 295-4550
REGISTERED OFFICE
White Mountains Insurance Group, Ltd.
Clarendon House
2 Church Street
Hamilton HM 11
Bermuda
FORM 10-K
For comprehensive audited financial statements, please refer to the “Annual Report
on Form 10-K” to be filed with the
Securities and Exchange Commission no
later than April 1, 2002. Copies of the
Form 10-K are available without charge
upon written request to the Corporate
Secretary’s office at the White River
Junction, Vermont address.
STOCK EXCHANGE INFORMATION
The Company’s Common Shares (symbol
WTM) are listed on the New York Stock
Exchange.
TRANSFER AGENT AND REGISTRAR FOR
COMMON SHARES
EquiServe Trust Company, N.A.
P.O. Box 2500
Jersey City, New Jersey 07303
Shareholders may obtain information
about transfer requirements, replacement
dividend checks, duplicate 1099 forms
and changes of address by calling the
Transfer Agent’s Telephone Response
Center at (201) 324-1644 or visiting their
web site at www.equiserve.com. Please
be prepared to provide your tax identification or social security number, description of securities and address of record.
Other inquiries concerning your shareholder account should be addressed in
writing to the Transfer Agent and
Registrar.
WWW.WHITEMOUNTAINS.COM
All reports, including press releases, SEC
filings and other information for the
Company, its subsidiaries and its affiliates
are available for viewing or download at
our website. Please visit us.
BOARD
OF
DIRECTORS
John J. Byrne, Chairman and CEO
White Mountains
Raymond Barrette, Chairman and CEO
OneBeacon
Mark J. Byrne, President and CEO
West End Capital Management Limited
Patrick M. Byrne, Chairman and CEO
Overstock.com
Howard L. Clark, Jr., Vice Chairman
Lehman Brothers, Inc.
ANNUAL MEETING
The date of the 2002 Annual General
Meeting of Members, will be held on
Monday, May 20, 2002, at The Princess
Hotel, Hamilton, Bermuda and will
commence at 9:00 a.m. Atlantic time
(8:00 a.m. Eastern time).
ANALYST MEETING
The Company will hold its annual analyst
meeting on Thursday, May 23, 2002.
Please refer to the Company’s Notice of
2002 Annual General Meeting of Members
and Proxy Statement or its website for
further details.
SHAREHOLDER INQUIRIES
Written shareholder inquiries should be
sent to the Corporate Secretary at the
White River Junction, Vermont address.
Written inquiries from the investment
community should be directed to the
Investor Relations Department at the
White River Junction, Vermont address.
Robert P. Cochran, Chairman and CEO
Financial Security Assurance Holdings Ltd.
Steven E. Fass, President and CEO
Folksamerica
George J. Gillespie, III, Partner
Cravath, Swaine & Moore
John D. Gillespie, Managing Director
OneBeacon
K. Thomas Kemp, President
White Mountains
Gordon S. Macklin, Deputy Chairman
White Mountains
Frank A. Olson, Chairman
The Hertz Corporation
Joseph S. Steinberg, President
Leucadia National Corporation
Arthur Zankel, Sr. Managing Member
High Rise Capital Management, LP
21
12 Church Street, Suite 322
Hamilton, HM 11, Bermuda
Phone 441-296-6011
www.whitemountains.com
Fax 441-296-9904