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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
MARCH 14, 2000
Date of Report (Date of earliest event reported)
WHITE MOUNTAINS INSURANCE GROUP, LTD.
(Exact name of registrant as specified in its charter)
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BERMUDA 1-8993 94-2708455
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) file number) Identification No.)
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80 SOUTH MAIN STREET, HANOVER, NEW HAMPSHIRE 03755
(Address of principal executive offices)
(603) 643-1567
(Registrant's telephone number, including area code)
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This Amendment No. 1 amends and supplements the Form 8-K Current Report
originally filed on March 17, 2000, relating to the Company's announcement that
it had entered into a Sale Agreement to sell its indirect, wholly-owned
subsidiary, White Mountains Holdings, Inc., which controls 8,020,807 common
shares and share equivalents of FSA as well as all its other holdings of FSA, to
Dexia. All other items remain unchanged. Unless otherwise specified, all defined
terms used herein shall have the meaning previously ascribed to them in the Form
8-K Current Report dated March 17, 2000.
The Stock Purchase and Indemnity Agreement, the related Voting Agreement and
the press release dated March 14, 2000 were previously filed as Exhibits 99.1,
99.2 and 99.3, respectively, and are incorporated by reference in their
entirety.
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 consolidated financial statements of the
Company consisting of a pro forma balance sheet as of December 31, 1999 and
a pro forma income statement for the year ended December 31, 1999, together
with the notes thereto, are filed herein as Exhibit 99.4.
(c) Exhibits. The following exhibits are filed herewith:
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EXHIBIT NO. DESCRIPTION
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99.1 Stock Purchase and Indemnity Agreement by and
among the Company, White Mountains Holdings
(Barbados) SRL and Dexia for all the outstanding
shares of White Mountains Holdings, Inc. and
indirectly for certain of the outstanding capital
stock of FSA dated March 14, 2000*
99.2 Voting Agreement, dated as of March 14, 2000, by and between
Dexia, the Company, White Mountains Services Corporation and
White Mountains Properties (Barbados) SRL*
99.3 Press Release of the Company dated March 14, 2000*
99.4 Unaudited pro forma condensed consolidated financial statements of
the Company consisting of a pro forma balance sheet as of
December 31, 1999 and a pro forma income statement for the year
ended December 31, 1999, together with the notes thereto.
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* previously filed
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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, LTD.
Dated: May 5, 2000 By: /s/ Michael S. Paquette
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Michael S. Paquette
Senior Vice President and
Controller
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EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION
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99.1 Stock Purchase and Indemnity Agreement by and
among the Company, White Mountains Holdings
(Barbados) SRL and Dexia for all the outstanding
shares of White Mountains Holdings, Inc. and
indirectly for certain of the outstanding capital
stock of FSA dated March 14, 2000*
99.2 Voting Agreement, dated as of March 14, 2000, by and between
Dexia, the Company, White Mountains Services Corporation and
White Mountains Properties (Barbados) SRL*
99.3 Press Release of the Company dated March 14, 2000*
99.4 Unaudited pro forma condensed consolidated financial statements of
the Company consisting of a pro forma balance sheet as of
December 31, 1999 and a pro forma income statement for the year
ended December 31, 1999, together with the notes thereto.
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* previously filed
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WHITE MOUNTAINS INSURANCE GROUP, LTD.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information of White Mountains
Insurance Group, Ltd. and its subsidiaries (the "Company") is being presented in
connection with the Company's announcement that it has reached a definitive
agreement dated March 14, 2000 (the "Sale Agreement") to sell White Mountains
Holdings, Inc. and all its other holdings (the "Sale") in Financial Security
Assurance Holdings Ltd. ("FSA") to Dexia S.A. (the "Dexia").
The accompanying unaudited pro forma condensed consolidated income statements of
the Company for the period ended December 31, 1999 presents results for the
Company as if the Sale and certain transactions and adjustments related to the
Sale had occurred as of January 1, 1999. The accompanying unaudited pro forma
condensed consolidated balance sheet of the Company as of December 31, 1999
presents the Company's financial position as if the Sale had occurred on
December 31, 1999. The unaudited pro forma financial information does not
purport to represent what the Company's financial position or results of
operations actually would have been had the Sale in fact occurred as of the
dates indicated, or to project the Company's 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 the Company currently
believes are reasonable under the circumstances. The unaudited pro forma
financial information should be read in conjunction with the Company's Annual
Report on Form 10-K for the year ended December 31, 1999.
The unaudited pro forma financial information is provided for informational
purposes only. The Company's financial statements will reflect the actual
effects of the Sale on the date it is consummated. Although the actual Sale
results will differ, the unaudited pro forma financial information reflects
management's best estimate based on currently available information.
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WHITE MOUNTAINS INSURANCE GROUP, LTD.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1999
(in millions of dollars, except per share data)
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White
Mountains Sale of
ASSETS Actual FSA Pro Forma
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Fixed maturities at market ................................ $ 924.5 $ 924.5
Equity securities at market ............................... 108.4 108.4
Other investments ......................................... 68.3 68.3
Short term investments .................................... 117.5 570.4 [1] 687.9
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TOTAL INVESTMENTS ..................................... 1,218.7 570.4 1,789.1
Cash ...................................................... 3.9 3.9
Investments in unconsolidated affiliates .................. 422.6 (303.3)[2] 119.3
Reinsurance recoverable on paid and unpaid losses ......... 193.7 193.7
Insurance and reinsurance balances receivable ............. 49.8 49.8
Deferred acquisition costs ................................ 22.2 22.2
Investment income accrued ................................. 15.0 15.0
Other assets .............................................. 106.9 50.0 [1] 156.9
Net assets of discontinued mortgage operations ............ 16.3 16.3
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TOTAL ASSETS .......................................... $ 2,049.1 $ 317.1 $ 2,366.2
========== ========= ==========
LIABILITIES
Loss and loss adjustment expense reserves ................. $ 851.0 851.0
Unearned insurance and reinsurance premiums ............... 92.1 92.1
Short term debt ........................................... 4.0 4.0
Long term debt ............................................ 202.8 202.8
Deferred credit ........................................... 100.6 (13.0)[3] 87.6
Accounts payable and other liabilities .................... 184.3 46.8 [4] 231.1
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TOTAL LIABILITIES ..................................... 1,434.8 33.8 1,468.6
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SHAREHOLDERS' EQUITY
Common stock and paid in surplus .......................... 72.9 72.9
Retained earnings ......................................... 534.2 302.5 836.7
Accumulated other comprehensive income, after tax ......... 7.2 (19.2)[5] (12.0)
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TOTAL SHAREHOLDERS' EQUITY ............................ 614.3 283.3 897.6
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ............ $ 2,049.1 $ 317.1 $ 2,366.2
=========== ========= ==========
BOOK VALUE PER SHARE [6] .................................. $ 103.32 $ 150.96
BOOK VALUE AND DEFERRED CREDIT PER SHARE [6] .............. $ 120.23 $ 165.69
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SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED BALANCE SHEET
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NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
1. Represents consideration to be received pursuant to the Sale Agreement.
Upon the close of the Sale, the Company will receive $570.4 million in
cash and will be entitled to a $50.0 million receivable (the "Holdback
Amount") payable to the Company over a period of eight and one half
years from the closing date. The Holdback Amount represents a portion
of the proceeds retained by Dexia to indemnify the Purchaser against
potential future unforseen liabilities arising as a result of the terms
to the Sale Agreement.
2. Represents the Company's carrying value of its investments in FSA
Common Stock and FSA Common Stock equivalents as of December 31, 1999.
3. Represents the unamortized deferred credit balance associated with the
Company's investment in FSA Common Stock as of December 31, 1999.
4. Represents the accrual of taxes associated with the Sale.
5. Represents the Company's unrealized gain on FSA Common Stock
equivalents and the Company's equity in net unrealized investment gains
and losses from FSA's investment portfolio as of December 31, 1999,
after tax.
6. Historical and pro forma book value per common share are each based on
5,945,593 shares outstanding at December 31, 1999.
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WHITE MOUNTAINS INSURANCE GROUP, LTD.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1999
(in millions of dollars, except per share data)
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Pro Forma Adjustments
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White
Mountains Pro Forma
REVENUES Actual Eliminate FSA Combined
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Earned property and casualty insurance premiums .......... $ 283.2 $ 283.2
Gain on sale of Valley Group ............................. 88.1 88.1
Gain on sale of FSA ...................................... -- 423.9 [2] 423.9
Net realized investment gains ............................ 85.4 85.4
Net investment income .................................... 61.9 (2.6) [1] 59.3
Earnings from unconsolidated insurance affiliates ........ 31.1 (19.5) [1] 11.6
Amortization of deferred credit .......................... 11.8 (1.2) [1] 10.6
Other insurance operations revenue ....................... 3.7 3.7
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TOTAL REVENUES ............................................. $ 565.2 $ 400.6 $ 965.8
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EXPENSES
Losses and loss adjustment expenses ...................... $ 228.3 228.3
Insurance and reinsurance acquisition expenses ........... 73.4 73.4
Compensation and benefits ................................ 67.8 67.8
General expense .......................................... 19.5 19.5
Interest expense ......................................... 14.7 14.7
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TOTAL EXPENSES ............................................. 403.7 -- 403.7
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PRETAX EARNINGS ............................................ 161.5 400.6 562.1
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Income tax provision ....................................... 53.1 142.3 [3] 195.4
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NET INCOME FROM CONTINUING OPERATIONS ...................... $ 108.4 $ 258.3 $ 366.7
========= ======= ========
NET INCOME PER SHARE FROM CONTINUING OPERATIONS: [4]
BASIC .................................................... $ 21.50 $ 65.13
DILUTED .................................................. $ 19.73 $ 60.10
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SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED INCOME STATEMENT
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NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
1. Adjustments to eliminate the income statement activities related to the
Company's investment in FSA during the period which assumes that the
Sale occurred at the beginning of the accounting period presented.
2. Adjustment to record the resulting gain on the Sale which assumes that
the Sale occurred at the beginning of the accounting period presented.
3. Adjustment to (1) record the tax effect of the gain on Sale as if the
Sale occurred at the beginning of the accounting period presented at an
assumed statutory Federal income tax rate of 35% and (2) to eliminate
the taxes associated with income statement activities related to the
Company's investment in FSA during the period.
4. Basic earnings per share is based on the weighted average number of
shares of the Company's common stock outstanding which was 5,630,020
shares for the period ending December 31, 1999. Diluted earnings per
share is 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 was 6,101,620
shares for the period ending December 31, 1999.
