<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K/A
(AMENDMENT NO. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
JUNE 17, 1999
Date of Report (Date of earliest event reported)
WHITE MOUNTAINS INSURANCE GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-8993 94-2708455
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) file number) Identification No.)
80 SOUTH MAIN STREET, HANOVER, NEW HAMPSHIRE 03755
(Address of principal executive offices)
(603) 643-1567
(Registrant's telephone number, including area code)
<PAGE>
This Amendment No. 1 amends and supplements the Form 8-K Current Report
originally filed on June 17, 1999, relating to the Company's sale (the "Sale")
of the following property and casualty insurance operations to Unitrin, Inc.:
(i) Valley Insurance Company, Valley Property & Casualty Insurance Company and
certain related non-insurance affiliates; (ii) Charter Indemnity Company and
certain related non-insurance subsidiaries; and (iii) White Mountains Insurance
Company.
The Stock Acquisition Agreement dated February 10, 1999, which provided for the
Sale was previously filed as Exhibit 10(n) to the Registrant's 1998 Form 10-K
dated March 26, 1999.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Item 7 is hereby amended by adding the following information:
(b) Pro Forma Financial Information.
Unaudited pro forma condensed combined financial statements of the
Registrant and its subsidiaries consisting of a pro forma balance sheet as
of March 31, 1999, a pro forma income statement for the six months ended
June 30, 1999, a pro forma income statement for the three months ended
March 31, 1999 and a pro forma income statement for the twelve months ended
December 31, 1998, together with the notes thereto, filed as Exhibit 99(c)
hereto.
(c) Exhibits. The following exhibits are filed herewith:
Exhibit No. Description
----------- -----------
99 (c) Unaudited pro forma condensed combined financial statements
of the Registrant and its subsidiaries consisting of a pro
forma balance sheet as of March 31, 1999, a pro forma income
statement for the six months ended June 30, 1999, a pro
forma income statement for the three months ended March 31,
1999 and a pro forma income statement for the twelve months
ended December 31, 1998, together with the notes thereto.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WHITE MOUNTAINS INSURANCE GROUP, INC.
Dated: August 17, 1999 By: /s/
-------------------------------
Michael S. Paquette
Senior Vice President and
Controller
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EXHIBIT INDEX
Exhibit No. Description
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99 (c) Unaudited pro forma condensed combined financial statements
of the Registrant and its subsidiaries consisting of a pro
forma balance sheet as of March 31, 1999, a pro forma income
statement for the six months ended June 30, 1999, a pro
forma income statement for the three months ended March 31,
1999 and a pro forma income statement for the twelve months
ended December 31, 1998, together with the notes thereto.
<PAGE>
Exhibit 99(c)
WHITE MOUNTAINS INSURANCE GROUP, INC.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information of White Mountains
Insurance Group, Inc. (formerly Fund American Enterprises Holdings, Inc.) and
its subsidiaries ("White Mountains") is being presented in connection with White
Mountains' sale, on June 17, 1999, of the following property and casualty
insurance operations to Unitrin, Inc. (the "Sale"): (i) Valley Insurance
Company, Valley Property & Casualty Insurance Company and certain related
non-insurance affiliates; (ii) Charter Indemnity Company and certain related
non-insurance subsidiaries; and (iii) White Mountains Insurance Company. Within
this filing, the companies sold to Unitrin, Inc. on June 17, 1999 are
collectively referred to as Valley Group, Inc. "VGI".
The accompanying unaudited pro forma condensed combined income statements of
White Mountains for the periods ended March 31, 1999, June 30, 1999 and December
31, 1998 present results for White Mountains as if the Sale and certain
transactions and adjustments related to the Sale had occurred as of January 1,
1999, January 1, 1999, and January 1, 1998, respectively. The accompanying
unaudited pro forma condensed combined balance sheet of White Mountains as of
March 31, 1999 presents White Mountains' financial position as if the Sale had
occurred as of March 31, 1999. The unaudited pro forma financial information
does not purport to represent what White Mountains' financial position or
results of operations actually would have been had the Sale in fact occurred as
of the dates indicated, or to project White Mountains' financial position or
results of operations for any future date or period. The pro forma adjustments
are based on available information and certain assumptions that White Mountains
currently believes are reasonable under the circumstances. The unaudited pro
forma financial information should be read in conjunction with: (i) White
Mountains' Annual Report on Form 10-K for the year ended December 31, 1998; (ii)
White Mountains' Quarterly Report on Form 10-Q for the three-month and six-month
periods ended June 30, 1999; and (iii) White Mountains' Quarterly Report on Form
10-Q for the three-month period ended March 31, 1999.
The pro forma adjustments and pro forma combined amounts are provided for
informational purposes only. White Mountains' financial statements will reflect
the actual effects of the Sale on the date such event occurred. Although the
actual Sale results will differ, the unaudited pro forma financial information
reflects management's best estimate based on currently available information.
The pro forma adjustments contained herein assume that the Federal tax rate is
35%, the maximum Federal statutory rate for corporations and that the applicable
state tax rate is approximately 6%.
<PAGE>
WHITE MOUNTAINS INSURANCE GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF MARCH 31, 1999
(in millions of dollars)
<TABLE>
<CAPTION>
White [2]
Mountains [1] Special Sale of
ASSETS Actual Collapse VGI Dividend VGI Pro Forma
--------- ------------ -------- --------- -----------
<S> <C> <C> <C> <C> <C>
Fixed maturities at market $ 893.9 $ (105.4) $ 1.0 $ 789.5
Equity securities at market 236.8 (60.1) 32.3 209.0
Other investments 76.5 (8.7) 8.6 76.4
Short term investments 76.8 (15.1) 20.4 122.1 [3] [4] 204.0
--------- -------- -------- ------- ---------
TOTAL INVESTMENTS 1,283.8 (189.3) 62.3 122.1 1,278.9
Cash 16.6 (7.3) 9.3
Investments in unconsolidated affilliates 333.8 -- 333.8
Insurance and reinsurance balances receivable 127.0 (53.8) 73.2
Reinsurances recoverable on paid and unpaid losses 135.4 (0.8) 134.6
Deferred acquisition costs 33.8 (13.9) 19.9
Investment income accrued 15.4 (1.9) 13.5
Other assets 44.1 (16.4) 27.7
Investment in VGI -- 108.4 (62.3) (46.1) [3] 0.0
Net assets of discontinued mortgage operations 109.5 109.5
--------- -------- -------- ------- ---------
TOTAL ASSETS $ 2,099.4 $ (175.0) $ -- $ 76.0 $ 2,000.4
--------- -------- -------- ------- ---------
--------- -------- -------- ------- ---------
LIABILITIES
Loss and loss adjustment expense reserves $ 796.3 $ (85.5) $ 709.8
Unearned insurance and reinsurance premiums 149.4 (75.1) 74.3
Short term debt 16.5 (1.5) 15.0
Long term debt 215.7 -- (15.0) [4] 200.7
Deferred credit 35.3 -- 35.3
Accounts payable and other liabilities 216.0 (12.9) 38.7 [3] 241.8
--------- -------- -------- ------- ---------
TOTAL LIABILITIES 1,428.2 (175.0) $ -- $ 23.7 $ 1,276.9
--------- -------- -------- ------- ---------
--------- -------- -------- ------- ---------
SHAREHOLDERS' EQUITY
Common stock and paid in surplus 384.7 384.7
Retained earnings 1,052.2 52.3 [3] 1,104.5
Common stock in treasury (869.8) (868.8)
Accumulated other comprehensive income after tax 104.1 104.1
--------- -------- -------- ------- ---------
TOTAL SHAREHOLDERS' EQUITY 671.2 -- -- 52.3 723.5
--------- -------- -------- ------- ---------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 2,099.4 $ (175.0) $ -- $ 76.0 $ 2,000.4
--------- -------- -------- ------- ---------
--------- -------- -------- ------- ---------
</TABLE>
SEE ACCOMPANYING NOTES TO UNAUDITED CONDENSED COMBINED PRO FORMA BALANCE SHEET
<PAGE>
WHITE MOUNTAINS INSURANCE GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(in millions of dollars, except per share data)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
-------------------------------
White
Mountains (1) Pro Forma
REVENUES Actual Eliminate VGI Combined
--------- ------------- ---------
<S> <C> <C> <C>
Earned property and casualty insurance premiums $166.3 (66.9) $ 99.4
Gain on sale of VGI 88.1 -- 88.1
Net investment income 29.2 (3.2) 26.0
Net realized investment gains 26.8 (9.7) 17.1
Earnings from unconsolidated insurance affiliates 9.0 -- 9.0
Other insurance operations revenue 3.3 (3.2) 0.1
Amortization of deferred credit 9.7 -- 3.7
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TOTAL REVENUES $326.4 $ (83.0) $ 243.4
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EXPENSES
Insurance losses and loss adjustment expenses $123.0 (52.8) 70.2
Insurance and reinsurance acquisition expenses 39.5 (8.8) 30.7
Compensation and benefits 25.1 (10.7) 14.4
Interest expense 8.2 (0.4) 7.8
General expense 9.2 (5.0) 4.2
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TOTAL EXPENSES 205.0 (77.7) 127.3
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PRETAX EARNINGS 121.4 (5.3) 116.1
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Income tax provision 46.8 (1.7) 45.1
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NET INCOME FROM CONTINUING OPERATIONS $ 74.6 $ (3.6) $ 71.0
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NET INCOME PER SHARE FROM CONTINUING OPERATIONS: (3)
BASIC $ 13.16 $ 12.52
DILUTED 11.74 11.17
SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT
</TABLE>
<PAGE>
WHITE MOUNTAINS INSURANCE GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(in millions of dollars, except per share data)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
-------------------------------
White
Mountains (1) (2) Pro Forma
REVENUES Actual Eliminate VGI Gain on Sale Combined
--------- ------------- ------------ ---------
<S> <C> <C> <C> <C>
Earned property and casualty insurance premiums $ 93.7 (39.7) $ 54.0
Gain on sale of VGI -- -- 88.1 88.1
Net investment income 15.8 (1.7) 14.1
Net realized investment gains 9.0 (0.6) 8.2
Earnings from unconsolidated insurance affiliates 4.2 -- 4.2
Other insurance operations revenue 2.4 (2.2) 0.2
Amortization of deferred credit 1.8 -- 1.8
--------- ------------- ------------ ---------
TOTAL REVENUES $ 126.9 $ (44.4) 88.1 $ 170.6
--------- ------------- ------------ ---------
--------- ------------- ------------ ---------
EXPENSES
Insurance losses and loss adjustment expenses $ 66.4 (27.9) $ 38.5
Insurance and reinsurance acquisition expenses 22.8 (7.2) 15.6
Compensation and benefits 12.8 (7.1) 5.7
Interest expense 4.2 (0.2) 4.0
General expense 4.1 (1.4) 2.7
--------- ------------- ------------ ---------
TOTAL EXPENSES 110.3 (43.8) -- 66.5
--------- ------------- ------------ ---------
--------- ------------- ------------ ---------
PRETAX EARNINGS 16.6 (0.6) 88.1 104.1
--------- ------------- ------------ ---------
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Income tax provision 5.8 -- 35.8 41.6
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NET INCOME FROM CONTINUING OPERATIONS $ 10.8 $ (0.6) $ 52.3 $ 62.5
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NET INCOME PER SHARE FROM CONTINUING OPERATIONS: (3)
BASIC $ 1.85 $ 10.72
DILUTED $ 1.65 $ 9.60
SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT
</TABLE>
<PAGE>
WHITE MOUNTAINS INSURANCE GROUP, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1998
(in millions of dollars, except per share data)
<TABLE>
<CAPTION>
Pro Forma Adjustments
---------------------
White
REVENUES Mountains (1) (2) Pro Forma
Actual Eliminate VGI Gain On Sale Combined
--------- ------------- ------------ ----------
<S> <C> <C> <C> <C>
Earned property and casualty insurance premiums $ 246.0 $ (159.7) $ 86.3
Gain on sale of VGI - 88.1 88.1
Net investment income 36.8 (7.7) 29.1
Net realized investment gains 71.0 (4.8) 66.2
Earnings from unconsolidated insurance affiliates 24.3 - 24.3
Other insurance operations revenue 9.5 (9.4) 0.1
Amortization of deferred credit 2.7 - 2.7
--------- ------------- ------------ ----------
TOTAL REVENUES $ 380.3 $ (161.6) $ 88.1 $ 296.8
--------- ------------- ------------ ----------
--------- ------------- ------------ ----------
EXPENSES
Insurance losses and loss adjustment expenses $ 174.8 $ (114.6) $ 60.2
Insurance and reinsurance acquisition expenses 54.8 (27.1) 27.7
Compensation and benefits 51.5 (24.4) 27.1
Interest expense 13.7 (1.1) 12.6
General expense 15.9 (8.0) 7.9
--------- ------------- ------------ ----------
TOTAL EXPENSES
310.7 (175.2) - 135.5
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PRETAX EARNINGS 79.6 (6.4) 88.1 161.3
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Income tax provision 28.5 (1.3) 35.8 63.0
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NET INCOME FROM CONTINUING OPERATIONS $ 51.1 $ (5.1) $ 52.3 $ 98.3
--------- ------------- ------------ ----------
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NET INCOME PER SHARE FROM CONTINUING OPERATIONS; [3]
BASIC $ 8.71 $ 16.76
DILUTED 7.75 14.97
SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT
</TABLE>
<PAGE>
WHITE MOUNTAINS INSURANCE GROUP, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
BALANCE SHEET
1. Adjustments to collapse the balance sheet accounts of VGI, net of its
investment in VNIC (which was retained by the Registrant pursuant to
the Sale) and its long-term debt, to one line entitled "Investment in
VGI".
2. Adjustments to show receipt of the cash and the investment securities
portion of the "Special Dividend" which occurred immediately prior to
the Sale.
3. Adjustments to record the cash proceeds from the Sale, net of related
expenses, and the resulting gain.
4. Repayment of $15.0 million VGI long-term indebtedness.
WHITE MOUNTAINS INSURANCE GROUP, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
INCOME STATEMENTS
1. Adjustments to eliminate the income statement activities of VGI, during
the period which assumes that the Sale occurred at the beginning of the
accounting period presented.
2. Adjustments to record the resulting gain on the Sale, net of related
expenses.
3. Basic earnings per share amounts are based on the weighted average
number of shares of the Registrant's common stock outstanding which
were 5,865,902 shares, 5,831,398 shares and 5,669,050 shares for the
periods ending December 31, 1998, March 31, 1999 and June 30, 1999,
respectively. Diluted earnings per share amounts are based on the
weighted average number of shares and the net effect of potential
dilutive shares outstanding (consisting of stock options and warrants
to acquire common stock) which were 6,535,181 shares, 6,500,699 shares
and 6,337,977 shares for the periods ending December 31,1998, March 31,
1999 and June 30, 1999, respectively.
