WTM » Topics » Investment Returns-Nine months ended September 30, 2006 versus nine months ended September 30, 2005

This excerpt taken from the WTM 10-Q filed Nov 2, 2006.

Investment Returns—Nine months ended September 30, 2006 versus nine months ended September 30, 2005

White Mountains' total pre-tax investment result was $524 million, a return of 5.4% for the first nine months of 2006 versus $258 million, a return of 2.6%, for the first nine months of 2005. White Mountains' fixed income portfolio returned 4.2% during the nine months ended September 30, 2006 versus 1.8% during the nine months ended September 30, 2005.  The higher return in the first nine months of 2006 was primarily due to a smaller increase in market interest rates compared to first nine months of 2005.  In addition, the weakening of the U.S. dollar during 2006 reversed a trend from 2005 and produced unrealized currency exchange gains in White Mountains' foreign denominated fixed maturity securities portfolio.  White Mountains' equity portfolio returned 12.2% during the nine months ended September 30, 2006 versus 7.1% during the nine months ended September 30, 2005.  The equity return in the first nine months of 2005 was adversely impacted by 7.6 percentage points due to the decline in the Montpelier Re investment.

Net investment income of $312 million during the first nine months of 2006 decreased 20% from $389 million during the same period of 2005, principally due to the receipt of a $74 million special dividend on the Montpelier investment during the 2005 period. Net realized investment gains of $203 million during the first nine months of 2006 increased by 70% from $119 million during the same period of 2005, primarily due to an $85 million increase in realized gains from the Montpelier Re investment (a $9 million realized gain in the 2006 period versus a $76 million realized loss in the 2005 period).  Net unrealized gains on investments of $9 million during the first nine months of 2006 improved from pre-tax unrealized losses of $251 million during the 2005, primarily due to the effect of interest rate movements, as described above. In addition, the 2005 period included an $83 million pre-tax unrealized loss from the Montpelier Re common stock investment.

This excerpt taken from the WTM 8-K filed Oct 20, 2006.

Investment Returns—Nine months ended September 30, 2006 versus nine months ended September 30, 2005

        Our total pre-tax investment result was $243.9 million, a return of 5.1%, for the nine months ended September 30, 2006 versus $141.1 million, a return of 2.8%, for the nine months ended September 30, 2005. Net investment income of $148.4 million during the first nine months of 2006 decreased 21% from $187.3 million during the same period of 2005 due to the receipt of a $34.7 million special dividend on the Montpelier investment during the 2005 period. Net realized investment gains of $105.0 million during the first nine months of 2006 decreased 29% from $147.8 million during the same period of 2005, partially reflecting decreased sales activity compared to 2005, when we decreased our positions in certain successful equity holdings. Net unrealized losses on investments of $9.5 million during the first nine months of 2006 decreased 95% from $194.0 million during 2005 due to an upturn in the U.S. bond market during the third quarter of 2006 combined with foreign currency gains on our foreign denominated fixed maturities which were driven by the weakening of the U.S. dollar versus the British pound and Australian dollar.

EXCERPTS ON THIS PAGE:

10-Q
Nov 2, 2006
8-K
Oct 20, 2006
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