White Mountains Insurance Group Ltd (NYSE: WTM)

Sector: Financial Services Industry: Insurance - Property & Casualty CIK: 0000776867
Market Cap 5.77 Bn
P/B 1.21
P/E 41.12
P/S 2.32
ROIC (Qtr) 8.22
Div Yield % 0.04
Rev 1y % (Qtr) 2.99
Total Debt (Qtr) 765.80 Mn
Debt/Equity (Qtr) 0.16
Add ratio to table...

About

White Mountains Insurance Group, Ltd. (WTM) operates in the insurance industry, with its business primarily conducted through four reportable segments: HG Global/BAM, Ark/WM Outrigger, Kudu, and Other Operations. The company is a significant player in the insurance industry, with a strong presence in the municipal bond insurance market. The HG Global/BAM segment is engaged in the business of making opportunistic and value-oriented acquisitions of businesses and assets in the insurance, financial services, and related sectors. The segment's primary...

Read more

Investment thesis

Bull case

  • Strong operating cash flow of 560.70M provides robust 0.73x coverage of total debt 765.80M, indicating excellent debt servicing capability and financial flexibility.
  • Strong tangible asset base of 11.30B provides 14.75x coverage of total debt 765.80M, indicating robust asset backing and low credit risk.
  • Operating cash flow of 560.70M provides strong 30.98x coverage of stock compensation 18.10M, indicating sustainable incentive practices.
  • Tangible assets of 11.30B provide exceptional 6.44x coverage of deferred revenue 1.75B, showing strong service capability backing.
  • Strong free cash flow of 560.70M provides 1.06x coverage of SG&A expenses 530.80M, indicating efficient cost management.

Bear case

  • Operating cash flow of 560.70M barely covers its investment activities of (615.10M), with a coverage ratio of -0.91, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 560.70M provides thin coverage of dividend payments of (2.60M) with a -215.65 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 337.40M provide limited coverage of acquisition spending of (69.40M), which is -4.86x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 560.70M provides insufficient coverage of deferred revenue obligations of 1.75B, which is 0.32x, raising concerns about future service delivery capabilities.
  • Operating cash flow of 560.70M is outpaced by equity issuance of (9.70M) (-57.80 ratio), indicating concerning reliance on equity markets for funding operations.

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Insurance - Property & Casualty
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 PGR Progressive Corp/Oh/ 121.46 Bn 30.80 3.11 6.90 Bn
2 CB Chubb Ltd 109.27 Bn 36.88 5.64 21.01 Bn
3 ALL Allstate Corp 69.21 Bn 29.01 1.62 8.09 Bn
4 TRV Travelers Companies, Inc. 67.61 Bn 10.75 1.38 9.27 Bn
5 HIG Hartford Insurance Group, Inc. 61.19 Bn 37.09 3.27 4.37 Bn
6 WRB Berkley W R Corp 38.52 Bn 124.63 8.69 2.87 Bn
7 CINF Cincinnati Financial Corp 26.91 Bn 74.14 6.73 0.88 Bn
8 MKL Markel Group Inc. 26.46 Bn 13.00 1.68 4.28 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.50 0.50
EV to Cash from Ops. EV/CFO 10.92 -16.03
EV to Debt EV to Debt 7.99 11.42
EV to EBIT EV/EBIT 24.11 22.13
EV to EBITDA EV/EBITDA 11.83 17.53
EV to Free Cash Flow [EV/FCF] EV/FCF 10.92 68.07
EV to Market Cap EV to Market Cap 1.06 0.91
EV to Revenue EV/Rev 2.46 2.31
Price to Book Value [P/B] P/B 1.21 2.97
Price to Earnings [P/E] P/E 41.12 29.62
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 53.92 7.41
Dividend Payout Ratio % Div Payout % (Qtr) 1.80 19.66
Dividend per Basic Share Div per Share (Qtr) 1.00 1.49
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.46 37.69
Interest Coverage Int. cover (Qtr) 3.61 -9.19
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 0.00 -17.83
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -2.49 30.27
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 16.34
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -72.77 62.82
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -42.12 35.62
EBIT Growth (1y) % EBIT 1y % (Qtr) -64.03 56.25
EBT Growth (1y) % EBT 1y % (Qtr) -71.39 52.70
EPS Growth (1y) % EPS 1y % (Qtr) -78.52 48.20
FCF Growth (1y) % FCF 1y % (Qtr) 2.47 15.47
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -16.04 16.55
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.20 0.38
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.45
Cash Ratio Cash Ratio 0.00 0.02
Current Ratio Current Ratio 0.00 0.06
Debt to Equity Ratio Debt/Equity (Qtr) 0.16 0.23
Interest Cover Ratio Int Coverage (Qtr) 3.61 -9.19
Times Interest Earned Times Interest Earned (Qtr) 3.61 -9.19
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 10.30 14.01
EBIT Margin % EBIT Margin % (Qtr) 10.20 13.05
EBT Margin % EBT Margin % (Qtr) 7.37 12.25
Gross Margin % Gross Margin % (Qtr) 59.90 40.49
Net Profit Margin % Net Margin % (Qtr) 5.60 9.63