White Mountains Insurance Group Ltd Aktie

Good morning. I'm Weston Hicks, the Chair of White Mountains Insurance Group, and I'd like to welcome all of our guests in the room, of course, members of management as well and those participating via the Internet on the webcast. I'd like to recognize the Board members who are in attendance today, Reid Campbell, if you'd just raise your hand; Pete Carlson; Mary Choksi; our newest Director, John Chu; Margie Dillon; Philip Gelston and David Tanner, who is also our Deputy Chairman. And with us in spirit, but unable to attend is Suzanne Shank, who is a terrific director and our expert, among other things, in municipal finance.

So with that as an introduction, I'd like to turn it over to Liam Caffrey, our CEO, who will get the program started. Thank you.

Thank you, Weston. Welcome. Before we get going, I'd like to recognize a few members of our management team who are here today and maybe ask them to again raise their hands. So joining me on stage and picking up some of the presentation will be our CFO, Mike Papamichael; and in a little bit, our CIO, Jonathan Cramer. In the audience, Giles Harrison, our President; Rob Seelig, General Counsel and Investor Relations, also manning the webcast and the man with the questions from the Ether. Michaela Hildreth, our Chief Accounting Officer; Andrea Barrow, our General Auditor; Jason Lichtenstein, Deputy General Counsel; Dave Staples, Head of Tax; Mark Plourde, CEO of White Mountains Advisors; Chris Delehanty, Head of Corporate Development and M&A; and with us in spirit, Jen Moyer, our Chief Administrative Officer and Corporate Secretary as well as many other members of our senior team.

I would like to continue to note that each member of our senior team is a significant shareholder of White Mountains, in many cases, holding many multiples of their compensation in the form of shares. True to Jack's mantra, we all truly think like owners. And then I'm joined on stage by the leaders of our various operating companies who I'll introduce as we go through the presentation. For format this morning, we'll do it as we've done in previous years. Mike and myself will do a little bit of an overview and state of the union, if you will. We'll then walk through each of our operating companies.

We'll set the stage a little bit from the White Mountains' perspective, and then we'll ask each leader of the operating companies to come up and share a few thoughts on their state of their business and what they're looking at. We'll do Q&A for each operating company as we go. So once each leader is done, we'll pass around the mic. If you've got a question, raise your hand. Please just wait for the mic before you ask your question so that the folks on the webcast can hear the question as well. And then we'll -- after we drain each operating company, we'll move on to the next one. And then I'll finish up with some closing thoughts and any big picture questions you've got regarding the company.

I'd be remiss if I didn't recognize one person who's not here in person, which is Manning Rountree, our former CEO, who retired at the end of the year. Jack, after he retired, used to sometimes dial in to these things, and he'd pose questions as a retired pensioner from New Hampshire. So Manning might try the same thing if there's a Kirby Smart123 on the webcast that could be Manning. But -- and I mentioned this in the annual report, but in this forum, I wanted to take one last moment to reflect on Manning's leadership. Manning joined White Mountains in 2004. He was hired by Jack. Over the ensuing years, he really did almost every job in the shop, including CEO and Board member for the last 9 years.

When he stepped into the CEO seat in 2017, it was really an interesting time and an inflection point for White Mountains. At the time, we were fresh off the sales of Sirius Group, Symetra, OneBeacon, and Tranzact. $3 billion of our $4 billion in capital was undeployed. And I think there was a real debate on what is the future of White Mountains. And do we just return all the capital? And as Jack used to joke, ease the car back into the garage. Manning, together with the senior team took it upon himself to really reinvent and redeploy White Mountains for the next generation. And what you see here is the track record of that success.

Over the ensuing 9 years, he deployed $3.5 billion of capital. We returned $2.3 billion to shareholders. We grew book value per share by 13% per year and market value per share by 12% per year. It's truly an amazing track record. At the same time, he was a valued mentor and colleague and thought partner to all of us. We learned all kinds of colorful metaphors, euphemisms, colloquialisms from Manning. For example, if someone asked you if a one-legged duck swims in a circle, the answer is apparently yes.

But we really benefited from his wisdom over time. He'll remain with us as an adviser, a senior adviser for the next couple of years. And that means he'll continue to sit on the boards of a few of our operating companies and be a thought partner to myself and the senior team. We settled on senior adviser over his preferred title, which was war-time consigliere. We thought senior adviser sounded a little bit better. But we really do thank Manning. He also remains a significant shareholder, which he reminds me of frequently and tells me whatever you do, just don't screw up. So we'll endeavor not to do that.

So having talked about what's different, let me talk a little bit about what hopefully isn't changing, which is how we work and how we do business. The page on the right is one that we usually have in our annual report, which lists out our operating principles, what we care about. One of our shareholders said, "This is the most important page you ever share. And if you stop sharing it, I'm going to sell the stock." So Ross, I did you one better. I not only kept the slide in there, I moved it up to the front.

But truly, I mean, we celebrated our 40th anniversary as a public company last fall. We believe that we have -- our objective remains the same, which is to compound per share values over long periods of time. How we do that, our business model, our operating principles aren't changing. Underwriting comes first, maintain a disciplined balance sheet, invest for total return and think like owners. So none of that is changing. Having said that, it's a competitive world and things change. And so there's always capital inflows and outflows. And so it will come down to strong execution and the decisions that matter on what deals do we want to do and which deals don't we want to do.

I was having dinner with Ian a few weeks ago and he said White Mountains is a little bit like Theseus ship. I had to look that up. I'm an engineer, but I looked it up. And I think that's actually true. I mean, the core of White Mountains remains the same, but there will be changes. We're going to change out floor boards and things here and there, personnel and elements of the portfolio. But I think you've got a senior team that has the right mix of appreciation for continuity as well as a fresh perspective. And at this point, we're all hard at work to execute on your behalf.

With that, let me turn a little bit to the year-end review 2025, and then we'll dive into the operating company. So 2025 was a great year for White Mountains, one of our best on record. We grew book value per share by 25% to $2,188 per share. Key highlights were obviously the majority sale of Bamboo. But beyond that, we also had very good operating results across most of our companies, Ark, Kudu, HGG, for example. We had solid investment returns, although we lagged our total return benchmarks a bit. Jonathan will talk through some of the specific reasons for that.

We had an active deployment year, and we've had an active start to 2026. We deployed $430 million into new deployments last year, which included Distinguished Programs, BroadStreet Partners and White Mountains Partners. And we returned $200 million to shareholders through our tender offer at the end of the year and open market repurchases. So if you're going to have a first year, you got to describe this is a pretty good one.

In context, again, 25% growth in book value per share. That was well in excess of our target return, which is the 10-year treasury plus 700, which was 11% to 12% last year and in line with Dowling's Composite for the broader insurance industry. Had a slower start to the year. We were down slightly in the first quarter. Again, we don't really fuss over quarter-to-quarter performance. This was largely mark-to-market performance in the investment portfolio. I think underlying performance in the businesses remains good, and we're focused on driving results for the year and for the long term.

In terms of market value, it didn't grow as much as book value per share last year. Again, there's a little bit of that, that we don't really -- and I don't mean to sound dismissive, but we don't really overly fixate on our stock price at a given point in time. Our view is what we can control is growing book value per share and, in fact, intrinsic value per share. And history would say if we can do that, the stock will track over time. And if it doesn't track in lockstep, that creates a buyback opportunity for us, which has proven to be highly accretive over time.

As Weston alluded to, the sale of Bamboo is really the second salute I'd like to make today to John and his Bamboo team. In December, we closed the majority sale of Bamboo to CVC Capital. The transaction valued Bamboo at $1.75 billion. Weston is selling you short, John. It crystallized substantial value for us in a short period of time with continuing upside. It's really one of those deals where you can crystallize 100% of your upside and roll over your book value to continue to play for the ups. It's generally not a deal that you turn down.

We returned about $1 billion of cash versus an initial equity invested of $0.3 billion. We retained a 15% stake in Bamboo, which we valued at $250 million at closing. The book value per share net gain on the sale was roughly $320, and it was a MOIC of over 4x and an IRR of 113%. Frankly, that's the best combination of those metrics we've ever had on a deal. There's one deal that had a higher MOIC and the trivia question, I will reveal it before the end of the day, get your bets in early. But to have the combination of that, it was truly outstanding.

This is a page we've shared over time just on our philosophy and a little bit on our playbook, which is how we think about capital and deployments and distributions over time. So we've split this into 3 chapters. The first chapter is when Manning joined back in or when he took over as CEO in 2017. Again, at that point, we had $3 out of our $4 billion of capital, which was undeployed. And what we did over the ensuing years was a mix of redeployments.

We deployed $1.8 billion into NSM, Ark, Kudu and other businesses, and we returned $1.5 billion back to shareholders, mainly through a series of tender offers to the point where after the Ark deal in early kind of 2021, late or early '22, we were sort of fully deployed even though we never consider ourselves fully, fully deployed. But we had worked that down through that playbook. We then had the sale of NSM in 2022, and so undeployed capital is back up to $1.6 billion. So what did we do? A similar playbook. We returned $0.6 billion to shareholders through a series of tender offers and open market repurchase, and we redeployed $1.4 billion into follow-on into Kudu, Bamboo, Outrigger, BroadStreet, Distinguished, many of the names you see up here today.

And then with the sale of Bamboo late last year, we found ourselves back up with $1.1 billion of undeployed capital. So what have we done? A similar playbook, which is we had the tender offer in December and open market repurchases, which to date has been $0.2 billion, and we've deployed $0.3 billion so far. So the main message is we have a playbook we think works, which is to manage our capital through a combination of redeployments and accretive stock buyback, hopefully. But also that where we find ourselves today with our undeployed capital is really no different than where we found ourselves over the past 9 years.

In fact, our undeployed capital is smaller than we had in those. So what you should expect from us is hopefully a similar playbook going forward, and we're quite comfortable with where we are in our ability to execute that in this market. This just gives a highlight on some of the recent deployments. Again, it's been -- it was an active 2025 and an active start to 2026. We've deployed about $700 million across that period of time. Last year, it was BroadStreet Partners, Distinguished Programs and our first acquisition within White Mountains Partners, each of which we'll speak about in turn.

And then this year, a quick start to the year with Bishop Street underwriting, a structured investment there as well as 2 more follow-on investments in White Mountains Partners. Now I get a lot of questions on, okay, how are you thinking about deployment going forward? It's been an active, again, '25 and start to '26. We're seeing good deal flow, but it's a challenging environment in our core insurance and reinsurance space. The market is softening, organic growth is slowing. Public multiples have come down, but I'd say private multiples are still pretty aspirational in certain situations.

There's still is, I think, a bid-ask spread on a lot of businesses out there. So we're looking at a lot of things. We've got a lot of at bats, but we're going to be patient in terms of taking a swing. I think one of the benefits we have and that you afford us is that we can afford to be patient in terms of how we think through things. We understand market cycles and there are times to invest and double down and there are times to maybe sit on dry powder. So we're looking hard, but we're going to be patient and circumstances change quickly, and it only takes one to get a deal done.

Where have we had success? I'd say, again, what we look for is differentiated platforms with partners and management teams that we know and trust. Every one of those insurance deals we discussed, we had relationships going back with management and sponsors that helped us get those conversations going. It's largely been proprietary transactions versus auctions, at least in our core insurance space. We're really seeking sellers who are looking for the right fit in a capital partner.

If someone is trying to maximize every nickel of a sales price in the moment, it's generally not something we're going to win. And we'll talk about as we go through the businesses. Generally, we're looking for management teams that are playing for the future and see value in us as a value-added partner given our experience in the space. And we think we're playing more for the next round versus trying to maximize a moment in time. As a result, we've paid what I'd say full but fair entry prices for high-quality businesses. It doesn't mean we don't look at deep value deals. That's our history as White Mountains.

But more recently, we've looked for things where they were strong platforms that we felt we could help them get to the next level, and you're going to pay a full price for that, but it's all about the growth on top of that. And again, our hallmark is we try to be flexible and opportunistic. BroadStreet and Bishop Street specifically are minority deals for us, which is rare. It's more the exception. For a variety of reasons, our strong preference is control deals.

But if there's an opportunity where maybe a control deal isn't on the table, and we can do something that's really good financially or make strategic sense, we're going to look at that. And so we can -- we'll talk about BroadStreet and Bishop Street, but those are examples where we, as we say, rose above our principles to try to make some money and get something done.

And then as John will talk about later, we're executing on an active pipeline within White Mountains Partners. We're using the same principles and approach that we have on capital deployment in our core insurance space, but we think we can apply that to certain sectors outside insurance. It's a measured bet. And again, it goes back to there are times in the insurance cycle when there's really nothing good to buy.

So this allows us to, in a measured way, put capital to work in those times when there may not be ducks flying in the insurance sector. So we'll talk again more about that with John later. But that's a little bit just on where we've been, and we can circle back at that at the end of the day. So with that, let me turn it over to Mike to talk through our capital and financial position overview, and then we'll jump into the opcos.

Okay. Thank you, Liam. Before we jump into the exciting stuff with our subsidiaries, I have a couple more White Mountains slides to round this out. The first is -- here we are. Okay. An update of our financial position at 1Q '26. Our total capitalization reached $7 billion, of which roughly $5.4 billion is in White Mountains common shareholders' equity. We have no financial leverage at the parent company. We did execute a $250 million revolver in 2025 for liquidity purposes. It remains undrawn to date.

We do employ a conservative amount of financial leverage at our operating businesses. At 1Q, our total debt was roughly $840 million, resulting in a debt-to-capital ratio of 12%. When you factor in the recent refinancing at HGG, which we'll talk about later in the presentation, that ratio inches up closer to 13%. And as Liam mentioned, our UDC is roughly $800 million, and that represents 14% of our common equity.

Turning to the next slide. This chart shows how much of our book value per share is represented by our operating companies, if you own a single share of White Mountains. Ark and Outrigger remains the largest position at 24%, followed by Kudu and HGG at 16% and 14%, respectively. If you factor in Distinguished and White Mountains Partners, our consolidated operating businesses represent roughly 60% of that pie. Our nonconsolidated operating businesses, which are mostly in the bottom left, namely Bamboo, BroadStreet, PassportCard, MAX and Bishop Street represents another 16%. Aside from working down our UDC position into new deployments, we feel pretty comfortable with this mix, and I believe we're well positioned moving forward.

Okay. Turning to this next slide, we have a double-click on our ownership structure. And I think there's 3 key themes that I'd like to highlight here. The first is the vast majority of our capital remains invested in insurance and related financial services businesses. Number two, we prefer control positions. Really, the only 2 that are on here that didn't start out as control or co-control were Bishop Street and BroadStreet. And those were just deals that were very attractive for us that didn't have a path towards control.

So we're willing to rise above our principles for a good transaction. And then lastly, as Liam mentioned earlier, this states goes back to the founding principles from Jack is thinking like owners. That's not only true at the White Mountains level, where, again, the vast majority of our compensation is in equity, but also our managers remain very large shareholders in their respective businesses. We think that alignment is very important for long-term value creation and risk management practices.

Okay. With that, we're going to dive into our operating businesses, starting with Ark. I'll do a quick intro before asking Ian to come up. Here we are. As you know, Ark is a specialty P&C insurance and reinsurance business. It was founded by Ian Beaton and Nick Bonnar in 2007, so celebrating their 20th anniversary in this upcoming year. White Mountains invested in a controlling stake in 2021. Ark underwrites 5 major lines of business: property, specialty, marine and energy, A&H and casualty in that order based upon GPW size.

They operate through 2 different platforms, 2 syndicates at Lloyd's along with an incidental syndicate and their Bermuda-based reinsurance company, Group Ark Insurance Limited, which has an A rating from -- financial strength rating from AM Best. Ark has been a consistent top quartile performer through both hard and soft markets, which is one of the very attractive elements of this business. This is a nice visual of the performance since our initial investment in Ark. As you can see, Ark has delivered consistent low 80s combined ratios. They've grown their top line premium over 4x.

So it's really been a remarkable run by the Ark team and a flawless execution of their business plan. Turning to their recent results. 2025 was more of the same. They had an excellent year. The combined ratio was 83%. They grew tangible book value by 28%. Again, if you look back since our acquisition, they've compounded tangible book value by 24% over that time period. GPW reached $2.6 billion, which was up 16% year-on-year. And they had a good start to the first quarter as well. They delivered 91% combined. GPW reached $1.1 billion.

That said, blended risk-adjusted rate change on the renewed portfolio was down 6 points. Ian will talk a bit more about the cycle and where we are. Obviously, most of that is driven by property insurance and reinsurance classes where there's been heavy pressure on rates. Again, for us, what attracted us most to the Ark team is their ability to execute and deliver solid ROEs and top quartile results in both hard and soft markets.

Before I turn it over to Ian, a very quick update on Outrigger. If you recall, we helped set up a sidecar to Ark Bermuda's property cat XOL book in support of the hardening market. This was launched in 2023. It's renewed annually. It's generated significant franchise value for Ark, allowing it to grow its gross footprint in Bermuda and generate significant fee income. The results to date have been excellent. For our share of participation in the '23 to '25 cycles, they've generated over $160 million of net income to White Mountains, which is effectively an over 30% return on deployed capital.

So thank you, Ian and Nick and team. We did not participate in the 2026 underwriting year cycle. As you can see in this chart here, Ark downsized the sidecar from $230 million to $70 million. This was largely driven by a shift towards more traditional Kudu share reinsurance partners on the balance sheet, which is a decision that we support and applaud in light of market conditions. There was high demand for the remaining portion of the sidecar and Outrigger. Our slice of that would have just been too small to move the needle, so we opted out for this cycle.

With that, I'll turn it over to Ian to give a bit more color on the market and what lies ahead.

Good morning. Just a quick show of hands. Who's heard of Anne of Cleves? You've heard of Anne of Cleves. Fantastic. Okay. And who hasn't heard of Anne of Cleves? Thank you. And who's not going to operate their hand at all today? Okay. All right. So this slide here is my Anne of Cleves oil painting. And it makes us look good.

I'll remind everybody what it actually does, which is if you're along the row -- if you look towards the right, the further right you are, the more profitable you are. These are syndicates at Lloyd's. This is the profitability over the last 5 years since our involvement with White Mountains. The further right you go, the more profitable we are, the better combined ratios you've got. And the further up you go, the less volatile you are. So this is a volatility of combined ratio, ranking of all the Lloyd's syndicates versus their profitability. So green is good.

And I'm not sure what that color is on your screen is, but the bottom left-hand corner, it sort of purple or pink is poor. So green is good, pink is poor. And we show this every year, and we only show it because it makes us look good. Now those that know Anne of Cleves will know that Henry VIII married Anne of Cleves, fourth wife. So what could possibly go wrong, some might say. And so he -- in those days, even then they didn't have the Internet. 1540 you'd rely on an oil painting.

Holbein the Younger does a great oil painting. Anne of Cleves, up it goes, yes, I'll marry that one. Fantastic, fantastic. Henry VIII thinks. I don't know why I'm talking about Henry VIII, but I've decided to talk about him anyway. And she shows up and she's no oil painting. And so that's where I come in.

So when you think about Ark about what I'm about to say, remember the oil painting and let's think about the past and the oil painting rather than the cycle. So that's it. Just every slide refer back to this one. I'm your Anne. So that's the past. We've had a good run in the hard cycle. It's been fantastic, but now things are changing. It's fundamentally different out there. Our 5 largest lines of business, as we call them, the biggest one is property. Insurance and reinsurance is about 50-50 within about 46% of our business is property related.

And rates are softening fast, very fast. Rate change year-to-date is down about 11% in D&F and about 14% in property treaty. So these are sad times for us. We've had a good run. Now that said, we think this year, profitability is still more than adequate. We think at those degrees of rate change, next year will be adequate. And we think the following year, I'll just be putting up that oil painting and allowing Mike to carry on and do the whole presentation about Ark, and we'll see how it's going.

The other class of business, the other 50% are not nearly so sort of dire in terms of the rate of change of the market, especially in Marine and Energy are both about 3 or 4 or 2 points down depending on which subsegment you're in. They went up a lot less. They're going down a lot less fast. So there is a balanced portfolio, but it is predominantly property, as I said. And some of that is, as we look forward, is going to be quite peculiar when it comes to sort of wars. I mean, obviously, we've got things going in the Middle East. Terrorism rates are up between 50 and 100x. We're not selling an awful lot of terrorism and war on land in the Middle East, but we are open for business, and we are selling it, but not huge volumes of the business. People don't tend to like the rates we're charging out there.

And obviously, we've had the Baltimore bridge, which is the sort of the Dari come through. That has now been agreed as a $2.8 billion loss in quite a small market. And that will have impact on reinsurance rates when it comes around to 1/1 next year. That's a heavy 1/1 book. So we expect whilst that has been softening, it might well harden now. And then casualty -- as you know, casualty and A&H between the 2 of them make up 10% of our book. So it's quite small.

And casualty continues to go up by mid-single digits, and A&H always seems to just do its thing, which is just flat, sort of ignores everybody else just carries on doing a flat thing. So quite nuanced, quite different. It's not all good and it's not all bad. Clearly, a lot of uncertainty about what I've just told you as a forward-looking statement. So just ignore what I said, remember the oil painting.

But wars are important, and they can -- things that might happen in the future, we obviously have to track aggregates for these things, but things such as the China-Taiwan situation, people have to watch aggregates for not just things that are happening but might happen. Another driver of our profitability is obviously our investment income. We have the best part of $4 billion of float. We make about 5% on it and interest rates heavily impact our fixed income.

Are rates going to go up? Are they down? Are they sideways? We don't know. We're very short duration as a hedge against making a bet on that one. But it is about half our profitability. And there's always the uncertainty around cats, what's going to happen in this wind season. And somebody came up to me the other day and said, it's great news because El Nino is active. Everybody knows what El Nino is, and it often makes wind seasons, North American wind seasons less active. But do remember that Hurricane Andrew was in an El Nino year as was Betsy.

So it's not all bets are off. It just takes one in the wrong place, and it's going to hurt. So I wouldn't take that as a sign of it's going to be a better year. It's just going to be probably a less active year. And then another uncertainty is whilst casualty continues to push up, there seems to be a wall of capital that's interested in particular on casualty ILS, and that might mitigate against this continuing rate push upwards. There seems to be a lot of money interested in that sector.

Not a huge sector for us, but it is nonetheless important for our industry. So going forward, will we go x growth? We think we'll grow a bit this year. We haven't done the business plan for next year. So I can't tell you that one. And even if I knew, I probably wouldn't tell you because I'd be told not to tell you. But the growth rate that we've had, the 4x growth over the last 5 years, that is not going to be the case going forward. It's about being cautious, about being sensible. It's about the ROEs.

The return actually is the most important thing to us. We've been here before. The market is softening. It is not yet soft. Next year will not yet be soft in our view. The following year might be, and then you have to pull other levers to maintain profitability and some of that might well be shrinking. We also think there are not just on top of the cyclical change, we think there's also secular change. I'm not going to spend a lot of time talking about AI unless somebody asks me a question about it.

But both dynamics, the consolidation, the MGA growth and consolidation dynamics do impact us as old industrial balance sheets, and we need to be thoughtful about how we get to the front end and put our marker on that front end when we don't control it. And then finally, there are always new opportunities, always new opportunities. Some recent ones as we have -- and these are smaller ones. We have a yacht book. I never thought I would ever say that we're going to enter a yacht. I've never met a team that's made money in yacht. And here I am, I've met them [indiscernible].

So anyway, let's hope that statement is factually correct in a few years' time. Fine art & specie. We already had a fine art & specie team where we had another fine art & specie team join us, and there's always things in the pipeline. So we do have opportunities out there. They're just not the macro bets with the tailwind. There are headwinds, but there are selective growth opportunities. Is that my last slide? It is my last slide. This is where you put your hand up and ask me questions or I slide back to my seat.

Two years ago, I asked that question -- two years ago, I asked that question, and you answered it in terms of the cycle that it was hard and we should have a couple of good years. You just shared that that's no longer the case. What do you think in aggregate losses should be in the industry for the hardened cycle to come back?

Okay. Well, we don't know. So that's a poisoned question, and I would thank you for it, but I don't think I'm going to thank you for that one. I think there's a couple of factors, one of which is the lag on earnings versus the rate has another couple of years to play out just in terms of the way that's going to come out. So what's going to happen in the next couple of years may be different from, say, 2 years after that in terms of that loss quantum because, of course, as those earnings come through, they can wash against the catastrophe -- of catastrophes.

But at that stage, obviously, we need negative cash flow. We need a large cat or series of cats, and we need the perception of risk to change. So if we said in 2 years' time, what might that loss be, if you get to above $100 billion or so for a U.S. windstorm and potentially quite a bit smaller than that for U.S. quake, you could have that catalyst to sustain, maybe not turn rates if rates haven't dropped that much, but perhaps bring it back up to the sort of, I'll call it, the '02 star levels, which we're at now because '03 was exceptional with Hurricane Ian bumping up. It was like a double bump on the hard market.

So maybe 100 plus. But what you really need to do is see it go through the insurance market -- through the reinsurance market and into the retro market where you have a concentration of a funneling effect. If the capital pulls out of that, the leverage impact down to the treaty and then direct markets is very, very different. A different way of handling it is obviously the frequency of severity where you wipe sideways on it.

And really you're talking about a traditional reinsurer where you'll buy a tower, then you'll buy 1 at 100 is if you get the third loss, you're then really impacting the balance sheet. So you need to think about what's the sort of multiplicity of events necessarily. So it will either be sort of a sideways pushing that into a loss situation on primary balance sheet or you're sort of hitting the retro market.

Yes, you spoke about the pressure of the rates. What about terms and conditions? How is that changing?

So people will talk about a reset. And I'm now going to talk about the treaty side of things. So on the Cat X sales, which is predominantly our treaties in property, and there was a big reset and the resets were really about the secondary perils and exposures moving from that service of an all-perils basis to an all-natural peril to named perils. And also the return period attachment points. So the return period attachment points have drifted down and down and down.

So what was happening was that a lot of those losses were playing into the reinsurance market when there are really perhaps P&L impacts for the primary market. And so the reinsurers were picking up perhaps an unfair, maybe been agreed, but a disproportionate amount of the loss. And those return period attachment points have drifted a little bit, but by and large, they're pretty good and the T&Cs, by and large, held too. So this really so far has been a story of price and rate thus far.

So if we were to take away that there is at least 24 months before any major change in the industry were to start to take place. Is that about right?

I'm not good at predicting the future. But if I were to predict the future, then I'd probably have a cap and a little glass ball and snowballs and stuff like that inside it and not be in this industry. I'd play the lottery or something like that. Nick? Come up and join us.

I'll just sort of throw something additionally out there as well. So if you recall when White Mountains joined the Outrigger in 2023, that was driven by the hard market that temporarily happened in 2022, and that was driven by not the risk side of the balance sheet as such, but the asset side of the balance sheet. So I think what Ian has correctly described is the sort of the liability side, the asset side with the bond repricing as a result of the Ukraine invasion. So I think that's the other thing that you could take into account in a sort of softening or hardening market is both sides of it, not just one of them.

Any other questions?

A question from a viewer. Which specialty lines are most attractive? And then a second part to that, given some of the recent losses, the Baltimore bridge, other things that you've talked about, are there certain specialty markets that you see firming?

Starting with the second one first. We would expect that the marine and energy XL markets would firm next 1/1. It's predominantly a 1/1 market because of the losses. Dali, as I said, was a big loss. The Middle East has been a surprise. And obviously, there was, I think called the Butcher ruling with regard to the aviation losses in Russia because of the Ukraine war. And what really happened last year was that people thought the war was the trigger event, what was deemed actually the loss for aviation was the confiscation by the Russian government of the planes.

And so that effectively created a second event in that. And all between -- those all -- that has a double whammy effect. Claims are now being paid, cash flow is going negative. And so we expect those areas to either harden or repillar. So back to this property treaty talking about terms and conditions, often the marine and energy market will be marine and energy, and then it will throw in things we're calling to a composite program within marine and energy, there are very non-marine and very nonenergy things in that market, and we expect that to be split out again. So we expect that area to be hardening substantially. In terms of specialty markets that we like but are quite small, we tend to like war and terror. Those are highly volatile markets. They are not for everyone, but they are small, and we see opportunity there.

Just on the previous slide, can you just...

Previous slide.

Just the worrying signs on the prop cat reinsurance. Can you just tell us a little bit more what those worrying signs are? And then unrelated, the casualty, the rates up 5% to 10%, does that cover -- is that ahead of loss costs? And do you think it will continue to be above or at or above loss cost?

So on the second point, yes, that's rate adjusted as we see it. Remember, we have a very small casualty book. We -- sort of 5% of our entire book is casualty. Most of it is excess casualty in Bermuda, and those are average attachments above $150 million with sort of small lines. So we see that as above loss cost, but it's not really about underlying ground-up loss costs. We're a severity casualty book. So it's slightly different for us the way it feeds through.

So often, that's about how we attach, but we see that. So those single digits is taking account fully social inflation as we see it rather than just it's going up with inflation that's genuine rate. The worrying signs on the property reinsurance and insurance, I think I've spoken mostly about the rate of change.

And what I say are worrying signs is really if you're sort of down 15 points, you've probably given back in a year what you might have otherwise given back in 2 years. So I'm worried about the continued rate of change within that in the Cat XL market rather than worrying signs within Ts and Cs or attachment points thus far. And then on the D&F side, because we have -- half our book is insurance as well. Again, the rate of change is quite fast. And so that's disappointing.

Just as a follow-up, but the market is still sufficiently hard to attract that $70 million of third-party capital into Outrigger, right? So like these sources of capital, how are they thinking about?

So there's a direction of travel and that's the rate to change and then there's underlying margin or profitability. And we still see this year as above our total returns in terms of profitability. Now remember, it's not like the market is profitable, bang, it hits a wall and then it's unprofitable. There is a distribution of adequacy within your portfolio as individual programs or treaties or risks and as a portfolio.

So you can change a couple of things in terms of the shape of your portfolio and what you are writing and what you aren't writing, but things are sliding towards less profitable across the portfolio. But we still see it as more inadequate this year, and we would expect it to be adequate next year. So if investors share our return thresholds, we'd expect some of those to still find that an attractive place to be.

But coming back to the point that was made earlier is what White Mountains very usefully did in helping set up Outrigger was inject effectively 200 part of 250 into supporting our Bermuda property cat book after rates that jumped massively like 30 points post Hurricane Ian. So it was already hard, jumped another 30 points. We couldn't take that on balance sheet possibly because we didn't want to take any more money from White Mountains because we own 40% of the company, far too dilutive, far too.

And only now when I found about some minority positions and nobody tells me anything [indiscernible]. So we didn't want to take that. So we had a problem with our BCAR score. And the way of doing that was moving it on to a separate balance sheet and managing our BCAR score because that's the primary driver of our sort of capital requirements. And then over time, what's happened is that fast capital, that Outrigger capital, we were intending to wind down whilst building up our Kudu share support from traditional markets, which is much stickier, longer term.

And so that's what we've done. We probably will keep Outrigger going if investors are interested because as a vehicle with a track record, when it turns again, it gives us optionality to hit the accelerator fast. That's what we'd like to do. We'll see if that happens, but that's what we'd like to do. That's sort of standing up. It looks like I've overstated my welcome, but if there's...

One more question. This one is really more for Liam. Could you explain the contingent consideration liability on White Mountains's books related to Ark?

Yes. So we get a lot of questions on this one. Let me explain sort of what it is, how it's accounted for and as an investor, how you should think about it. So when we did the deal with Ian and Nick back in 2020, there was a bid-ask spread on valuation. And what we did to bridge the bid-ask spread was we created a class of shares that had that bid-ask spread and would be earned over time if and only if White Mountains earn certain MOIC thresholds on our investment.

So we have different tranches and different thresholds. But the key stat I'd say is these shares will be fully earned if White Mountains earns a 3x return on our investment. That's cash in hand, net of the additional expense of paying out these shares. So the way that's accounted for is because the shares don't really exist until the threshold is triggered. They don't count as noncontrolling interest. They're treated as a contingent liability. So from the day of the transaction, what we have to do is every quarter value this contingent liability.

So we have a financial model, which looks at theoretical liquidation values for Ark and time and all these things and you plug it in there and we come up with an estimate for what we think this is worth. So that's gone from 0 in 2021 to, I think, the latest quarter was about $340 million. So how do you think about that? How you should think about that is Ark has grown so much, and we are on track to generate fantastic returns on this investment. So we are tracking towards a 3x return on this, if and under the condition when we would crystallize that.

So that's a very good thing as an investor. If that was 0, that would be a problem. That would mean that we hadn't hit any thresholds on this. So our view on it, pick your cliche, we're happy to pay every penny of this. This has been well earned, and this is a great problem to have that this keeps growing. Maybe a couple of notes on it, though, for the accounting nerd. So it's a contingent liability.

The way to think about that is this is not -- this doesn't affect the enterprise value of Ark. This isn't a contingent liability of Ark to a third party. This is essentially a left pocket, right pocket transaction between Ark shareholders. So Ark would be worth this much. And in the case of these triggers being -- or these thresholds being triggered, we would then have a transfer from White Mountains to the founding shareholders in terms of valuation.

So as we calculate the book value of Ark or the tangible book value of Ark on a 100% enterprise basis, you should ignore the value of this liability. It's just left pocket, right pocket. And we do that walk within our financial statements, but that's why we do it. The second maybe trick to understand the accounting on it is from the date we did this, what we disclosed was that if fully earned, these shares would represent at the time, it was, I think, 12.5% of shares outstanding. It's now about 12.3% of shares outstanding.

So we published 72% basic ownership, 62% fully diluted. The 62% does not take into account these shares. You have to then layer in the impact of these shares. But it's a little bit of a geography issue on the balance sheet. In other words, the way I think about it is, today, we own 62% of an asset, but we have a liability we would owe. If these shares were fully earned, our ownership would go down to 53%. We've disclosed that in the annual report, but the value of this liability goes to 0.

If we value the liability properly at that point in time, it's a wash. It's just contingent liability into noncontrolling interest. So that's how you should think about it. It's not sort of extra dilution that's out there. It's just a geography of today, it's a contingent liability. And if and when earned, it would show up as noncontrolling interest.

So it's the mercantile fallacy, right, which is you own a smaller portion of a bigger pie. I'll demonstrate it as such.

Left pocket, right pocket.

There we go. I guess, unless there's another question, I just had one further comment on Anne of Cleves actually. I was just reflecting as you were talking about accounting, my mind drifted just for a moment. Just -- I'm sorry. I wasn't paying any attention. And Anne of Cleves -- as you know, Henry VIII had 6 wives. And was divorced, beheaded, died -- divorced, beheaded and survived. If you learned nothing about Ark, you'll at least learn a little bit about Henry VIII. And Anne of Cleves was the fourth wife. So that's divorced. So when it does happen, it's the door, not the [indiscernible]. Thank you.

All right. Thank you. If nothing else for Ark, we're going to turn it over to Kudu. So Mike will do the introduction, and then we'll turn it over to Rob to share some thoughts.

Okay. Okay. So Kudu is now our second largest segment. White Mountains invested in Kudu in 2018. Kudu is a provider of capital solutions and strategic advisory services to asset and wealth managers, generally in the middle market for generational transfers, liquidity, growth capital. Deals are typically structured as revenue shares, although there are a handful of situations where Kudu does some bottom line contracts. And the deals often accompany with an equity participation right.

Kudu prices cash yields at inception to roughly 9%. This cash yield then grows over time as assets under managers grow. If you factor in the growth in their participation contracts since 2020, Kudu has generated an average ROE of 13% that compares to the White Mountains target, which is our 10-year plus 700 of 10% over that same period. So it's been a very nice result. To date, they've deployed over $1.2 billion of capital into 31 different asset managers. They've generated a handful of nice returns from some exits.

And finally, Kudu has reached an important milestone recently that we characterize as capital self-sufficiency. It just means that Kudu is generating enough free cash flow within their system, along with incremental debt capacity to deploy into new deals without the needs for additional White Mountains equity checks. We thought it would be worthwhile to spend a minute and remind our investors how we think about the Kudu business and economics. We tend to publish a handful of metrics and thought it would be useful to touch upon them.

The first view would be a traditional fee-generating GP stakes type business where Kudu is generating a steady stream of cash flows and earnings from their participation contracts with a management team that's able to deploy and harvest capital. If you think about the business this way, the key metrics for us are annualized adjusted EBITDA and levered return, which effectively translates into a running cash yield on our investment.

In a vacuum, this ultimately understates the value of the full Kudu economics because it excludes their participation rights. And importantly, it excludes the appreciation of the fair value of their participation contracts, which are recorded through realized and unrealized gains. The second view would be a compounding portfolio of participation contracts that have a portfolio that's full equity-like return. It's a diversified cash flow with a beta less than 1. And naturally here, the focus is GAAP ROE, and that most closely aligns with growth in White Mountain's book value per share.

In either approach, and importantly, in that second view, it includes all the economics of both the carry and the movements in the participation contracts over time. In either approach, we think that Kudu is a very attractive business to hold indefinitely. If you turn quickly to results before I ask Rob to come up, 2025 year was a very good year. They had a 13% GAAP ROE. They grew their participation contracts by 8% on a same-store basis. An annualized adjusted EBITDA reached $70 million, translating to a 9% levered return, which is the cash yield I referenced earlier.

They closed 3 new deals and deployed roughly $200 million of capital. They had a solid start to 2026 as well. GAAP -- TTM GAAP ROE was 12%. Annualized adjusted EBITDA was $69 million, which is down slightly, but this was largely driven by an idiosyncratic timing of a realization event and the reshuffling of a certain contract. We do expect that to grow in future quarters and the leverage return remained at 9%. So far, they closed one new deal in the first quarter for $21 million, and they're working on an active pipeline.

With that, I'll turn it over to Rob to give a little bit more of an update on the strategic priorities and what lies ahead.

Thank you, Mike. Good morning, everybody. I thought I'd start -- sorry, I thought I'd start with this illustration here on the slide. And I'll start by apologizing for my color blindness, which is exacerbated probably by different shades on the monitor as well as the projections. So what I see may not be what you see. But this picture really paints a nice visual of the flywheel effect that Mike portrayed a minute ago of us being self-sustaining from an equity standpoint. The dark blue line at the bottom reflects our net equity position over time.

And as you can see over the past few periods, we have stabilized that net equity. So new deals have been funded with a mixture of free cash flow that we've recycled plus incremental debt capital. Debt outstandings are represented in the gray bar in the middle. We do expect that to rise proportionately with the growth of our portfolio, as you see here. But the most exciting part about -- the column part of this chart is the light blue part at this top. This captures our net gain, our appreciation in the portfolio, compounded by the recycling of free cash flow and sale events.

This is what we think is going to really drive enhanced equity value. We're starting to see the inflection point here, and we think that's an exciting -- points to an exciting slope going forward. The red line above, this captures our annualized earnings. And the way I would characterize this is just a continuously upward sloping improvement in our earnings over time with periods of spiked gains from realized carry and incentive fees as we saw in 2023.

I'd also add the deal that we closed in Q1 occurred on the last day of Q1, so we don't get to capture any of the pro forma economics from that deal, but that would add a couple of million to the earnings on an annualized basis, which we'll see in subsequent periods. And then this chart captures our performance metrics that Mike alluded to earlier, the GAAP ROE and the levered return. The blue line above is our GAAP ROE which -- at 12%, we're happy with and we think has room to grow, but it's a solid number and in line with past periods.

This line does capture realized and unrealized gains as well as our estimate for future carry on the horizon. So it does move around a little bit. There's a little more volatility to it, but it's in a good place, and we're happy with it with room to grow. And then the red line captures our levered return. This is a picture of our cash yield expressed over net equity. It's been hovering around the 9% level for the past few periods. We'd like that to get to double digits, which we think we're poised to do through the capture of near-term carry as well as the recycling of cash flow and some sale events, which we think are likely in the future -- near-term future.

And we thought we'd do an additional slide this year to touch on the private credit portion of our portfolio. A lot of headlines recently for private credit as an asset class. And we've done a lot of examination, as you would hope us to, to make sure that we -- our book in this regard is in good health. And the conclusion, and we're very pleased with the performance of our private credit managers.

I think it's a testament to our focus on highly specialized, best-in-class managers with strong tailwinds behind them that have a strong focus on credit underwriting and the collateral that supports many of those strategies. So the portfolio is in good shape. But it's worthwhile to examine kind of what the exposure looks like. And we've done that with [indiscernible] series of 4 pie charts, which we probably have broken some rule about the maximum number of pie charts you should include on any page. So I apologize for that.

But we'll start on the top left, which kind of looks at the portfolio across what we call our 4 investment quadrants. They're not equal, and that's by design. A lot of our attention has been and continues to be in the private capital arena, private capital defined by private equity, private credit, real estate, real assets as well as secondaries and infrastructure. That's where we continue to see the most attractive opportunities in our marketplace, both in the U.S. and abroad.

And if we break that private capital bucket, which is a little less than half of our overall today into its component asset classes, you see private credit as 20% of the total portfolio. So a very healthy level and one we, quite frankly, can see growing. We continue to see attractive opportunities with managers that have the characteristics that I just described. But at 20%, we think it's very manageable.

And if you think about private credit as an overall asset class, you can't paint it with a single brush. There's many different substrategies and nuance to it, and we're very focused on where we think those underlying segments will find traction and have appropriate tailwinds. And as we break that down into sectors, one of the areas that has been getting a lot of attention has been in the tech space. The disruption that AI has caused software companies and a lot of firms that have gotten into some trouble out there with exposure -- overly exposed to tech and technology in their underlying book of loans is one that we are fairly well insulated against.

As you can see, as we do on a look-through basis into the sector breakdown, tech represents just 8% of our private credit portfolio, so less than 2% of the overall portfolio. So very, very modest. So very comfortable there. And then the last thing I would point out as we move continued counterclockwise to the upper right is the breakdown of our private credit managers by distribution channel. Overwhelming majority of those strategies are distributed through institutional channels. These are primarily through closed-end drawdown vehicles.

So there's stickiness of the capital without the redemption pressure that is exhibited elsewhere and they continue to have strong appetite for our institutional investors for private credit strategies with top-performing managers. So we're very happy with that being the majority of underlying clients supporting our managers. We do have exposure to an interval fund. And for those that don't know, an interval fund is -- falls under the SEC's 40 Act umbrella, an investment vehicle that offers periodic liquidity, mostly are typically quarterly to allow investors to redeem on that basis up to a prescribed level of typically managed at around 5%.

Some strategies have across the industry or managers have experienced redemption pressure in these vehicles. Our manager is not immune to those pressures. We're seeing those pressures consistent with the industry. But we're comforted by our managers' strength and the strong performance they've exhibited and the quality of their loan book for those characteristics are what we think are going to -- will drive the success of managers who offer these types of vehicles and in our opinion, add validity to them as an effective distribution channel.

So what's next? So we will keep doing what we're doing, just bigger and better and stronger, maintain a laser focus on finding specialized managers in the asset and wealth management spaces that we focus on with strong tailwinds and momentum behind them to drive near-term growth and performance. We'll use AI and data tools as we have been in recent periods to help us source and evaluate those opportunities as well as continue to invest in our client engagement function. That's been an increased focus of ours to enhance our relationship platform and our ecosystem of managers.

And also, it's important and incumbent on us to stay abreast of an evolving marketplace. The buyer universe for minority interest in asset and wealth management firms has evolved beyond the typical GP staking peers of ours. There's a variety of different buyer types now. And as we think about strategic opportunities going forward, it behooves us to explore possible relationships with domain experts or strategic capital partners who can really open doors or enhance investment opportunities for us.

So we'll continue to build out our network of those relationships. And lastly, we will continue to maintain and build upon the flywheel. The recycling of free cash flow and sale proceeds, will continue to drive equity returns. As I pointed out in the first slide, we think we're at that inflection point. So I'll open it up to questions.

If you go back to the portfolio composition, before I ask a question, what is the definition of liquid alternatives? What is that exactly?

Right. So this is going to be an alternative investment strategy that is typically offered up in more liquid vehicles, whether that's an open-ended structure like you would see with a hedge fund or an investment product that has more regular liquidity offered to its investors.

So basically, there is no lockup.

Typically not -- there might be a 2- or 3-year lockup for certain strategies when an investor enters. But once that rolls off, typically, there's quarterly redemption

Would you share your vision and understanding of the cycle of wealth transfer in the United States and how you're positioning yourself to benefit from this? Where are we in that cycle?

I mean, the wealth transfer is monumental that we're in the middle of. The -- how we're positioned to benefit from it, we think the movement toward independent financial advice will continue. We -- our strategy and our structure is well positioned to help firms as a capital provider in those situations.

So I think as practitioners of wealth advice and management, there's a direct way that we'll participate, but also increasingly on the asset management side, the recognition of that wealth transfer and the migration of boutique asset management from primarily an institutional opportunity for institutional investors to one with different retail opportunities is one that's well underway and well documented. Now there are challenges as we've seen with some of these vehicles, but in terms of liquidity offerings. But we think that there's -- that evolution will continue and well-positioned asset managers will be able to take advantage of that.

I have 2 more. One is a quick one. Liquidity of the private credit or private equity, what are your thoughts? At least what I've seen is that the last 5, 6 years, liquidity has kind of disappeared and it is starting to come back. What are your thoughts about the outlook?

I see the same thing. We do -- it has been challenging for some of these, particularly in the private equity side, which aren't self-amortizing the way the private credit is to generate that yield. Starting with COVID and the dislocation from '22 and the rising rate environment, it has had a lingering effect on liquidity for private equity across the board.

We have seen some opening up over the past year or so, some improvements, some green shoots in takeouts, M&A activity, IPO markets maybe a little slower to come back, but we have seen those up. And then, of course, capital solutions, whether it's in continuation vehicles or other things that can be a source of liquidity to manage through maybe a dry period. So I think those are all beneficial to the industry to have mechanisms and sources of liquidity that can ride through when, say, the M&A market has its dry spells.

The last one is just how are you thinking about this enormous concentration in indexes as it continues, and I'm largely referring to the public equities, both the concentration in terms of how much the U.S. represents as a percentage of MSCI and then also the S&P 500 top 10 is 45%. How is it affecting your business or your thinking about what it is that you do?

Yes. We're well below the radar of that. But as it goes to the geo macro trends, probably above my pay grade. But our business, I think, is fairly well insulated from that.

I also did want to call out the presence of Ben Ruffle on the stage here from Kudu. We are across the parent in all of our businesses, we're people businesses, human capital businesses. It's a key priority for us to be attracting, developing and promoting the next generation. So Ben is a great example of that, and Chris Shin, who is the Co-CIO at Kudu along with Rob is a great example of that. So it's important for us that we begin to highlight some new faces and bring that next generation along. It's a key priority for us and all of our companies that we work on every day. So thank you for joining us, Ben.

All right. Let me jump over to HG Global and BAM. So again, to set the stage, we're joined today by Kevin Pearson, who is the President of HG Global; and in the audience, Sean McCarthy, who's the CEO of Build America Mutual. To set the context, BAM is a mutual company that ensures essential public purpose municipal bonds. This is when a state or a local municipality is issuing a bond to build a sewer or highway or something like that. BAM is providing a AA financial wrapper to that issuance. It is mutually owned by the policyholders that -- whose policies -- who are -- it issues policies to.

There's 2 segments to the market. There's the primary segment, which is financial guarantee on new issuances and then the secondary market, which is really a segment that BAM created, which was how do they provide a financial guarantee to institutional investors hold existing bonds out there for various purposes, credit enhancement, liquidity, tax planning. HG Global is a stock company based in Bermuda that's owned by White Mountains.

It provides 15% of loss, first loss reinsurance to BAM and it provided the start-up capital to BAM back in 2012 in the form of surplus notes. So as you think about HG Global, it has 2 sources of economics, has the reinsurance business economics from supporting BAM, underwriting profit and investment returns and then has the repayment of principal and interest on the BAM surplus notes.

With that, let me turn it over to Kevin, who will share the recent results, including a very important debt refinancing that we did recently.

Great. Thank you, Liam, and good morning, everyone. 2025 was a record year for BAM when they collected total premium of $160 million, which was up 18% year-over-year and up 10% from the prior record set in 2022. What was particularly notable about the performance last year was the very strong results that we saw in both operating segments, with the primary segment having a record year, while the secondary segment had its second best year ever.

Normally, we see those 2 segments as -- in a complementary -- acting in a complementary way. However, the convergence in 2025, I think, was driven really by unique circumstances within the market. On the primary side, issuers faced very significant funding needs while also a lot of uncertainty at the federal level, including the existential question of whether there was even going to -- the tax exemption would even survive.

On the secondary side, periodic bouts of volatility as well as reduced federal support for municipals drove very strong demand from secondary market investors. Importantly, BAM maintained its underwriting discipline last year while achieving these record results. To date, BAM has insured more than $800 million -- $800 billion par over 14 years with no net losses. As a result of their performance last year, BAM paid $35 million in cash payments on the surplus notes, the second highest regular annual payment since inception.

Since 2017, BAM has now paid $317 million on the surplus notes. For HG Global, 2025 was a bit of a mixed year. Most importantly, the core operating segments performed very well with solid underwriting and investment results. However, there were 2 factors that impacted book value. The first was a decrease in the fair market value of the surplus notes, which was really driven by model recalibration as well as a higher discount rate due to changes in market interest rates.

The second was a reversal of a deferred tax asset that we put on our books in 2022 as a result of Pillar 2 legislation or -- legislation, I should say, relating to Pillar 2 in Bermuda. That was unwound at the end of last year following additional Pillar 2 legislation that was passed in Luxembourg. When you adjust for those 2 factors, our normalized book value growth rate increased to 8% from 7% in 2024. 2026 is off to a pretty good start. HG Global's gross written premiums are up 24% year-over-year, and that's really been driven by the primary market, where we continue to see very high issuance.

In fact, issuance continues at a record pace, even higher than last year's. So the most important initiative we've undertaken so far this year was the refinancing of the existing debt facility that we had entered into in 2022. We decided to approach the traditional U.S. private placement market where we found very strong demand for our notes, which were basically 2x -- more than 2x oversubscribed. As a result, we were able to increase the deal offering from $150 million to $200 million, which was ultimately placed with a group of 6 blue-chip credit investors.

Most importantly, we were able to achieve some significant improvements in the terms of our new refinancing versus the existing debt facility, including a fixed rate just below 7.4% versus a variable rate of around 10% on the existing facility, a 10-year bullet structure versus a partially amortizing structure and a 1-year interest reserve account rather than a 2-year interest reserve account.

As a result of the refinancing, we were able to achieve 2 significant tangible benefits. The first was the ability to pay a significant dividend at the end of May, and we ended up paying White Mountains $90 million on May 26 in the form of a preferred cash dividend. The second tangible benefit was an improvement in our book value return on a go-forward basis. We estimate that we should see an additional increment of around 100 basis points as a result of the debt refinancing.

So the issuance in the municipal bond market was achieved a second consecutive record year in 2025 with total issuance increasing to 572 billion. We've seen that continue into 2026 as well. And our outlook, quite frankly, for the medium term at the very least, is that, that high growth in issuance will continue. I think issuers are faced with the reality of inadequate maintenance on existing infrastructure that will need to be funded during the next several years as well as strong demand for new infrastructure.

At the same time, they're facing higher costs as a result of higher inflation as well as less federal support. We're confident that the higher issuance will lead to higher par insured on the -- for the bond insurers. However, the big question, big unknown that remains is municipal bond spreads. They've remained extremely low by historical standards as a result of high ratings as well as strong investor demand.

But we see that with higher leverage over the next several years, we would expect to see some upward pressure on those municipal bond spreads, which would obviously increase BAM's pricing power significantly. Our growth in book value over the past several years has shown some volatility. That volatility has really been driven by 3 factors. The first is the deferred tax asset, which is obviously driven by tax policy. The second is changes in fair market value of the surplus notes, which is driven by model recalibration as well as changes in market interest rates.

And third, our unrealized gains and losses on the investment portfolio, which again is driven by changes in market interest rates. When you adjust for those 3 factors, our normalized growth rate has been consistently in the high single digits. And we think that's a fair representation of our performance as we are a true buy-and-hold investor. We don't have realized losses in our investment portfolio nor have we or do we expect to have any realized losses on the BAM surplus notes.

Our #1 priority, obviously, remains maximizing the growth rate in our book value. We have 2 direct levers we can do to achieve that. The first is our corporate structure and which is why we obviously refinanced our existing senior debt facility and increased to upsize it as a result of the improved terms we were able to get. As I mentioned earlier, we expect that to result in a 100 basis point improvement in our growth rate on book value.

The second direct lever we have is our investment portfolio and our return in particular. We obviously work throughout the year, particularly with White Mountains' advisers to find ways to enhance that investment yield, working within, obviously, the regulatory and rating agency constraints that we face.

The third indirect lever is based on our relationship with BAM. We obviously work with BAM on a continuous basis to try and expand their footprint within the approved sectors without increasing the risk profile of our partnership. Finally, we work with BAM where we can to help maximize the paydown of the surplus notes. Payments have steadily increased since 2023. And over the past 3 years, they're paying $92 million on those surplus notes. Happy to take any questions. As is Sean, by the way.

You just described how you were working with White Mountains advisers to improve -- to enhance investment returns on your portfolio. Just wondering if you could provide some more details on some of the strategies or things you're doing to drive that?

Sure. We -- so last year, for example, we did broaden the asset classes that we're able to invest in, including ABS, for example. And it's really a matter of -- we obviously don't change our overall credit approach in terms of our minimum rating. We are still held to the same standards that we always have been. So minimum A category rating. But we're constantly looking at ways, for example, we have -- we start to see a bit of an increasing rate environment, then we'll look at some floating rate securities, those kinds of things. I mean we still are very constrained. But the main goal is we really -- we do everything we can to sort of preserve capital and that's what we're doing. And then within that preservation of capital is maximize the return that we're able to achieve.

My second question is just you had a slide showing market share of transactions, which has been kind of slowly trickling down over the past couple of years. Is there -- I think the market share of par insured has been steady or trending upwards. Just wondering what the dynamics there are, what's happening or if that's just...

Well, so the -- on the transaction side, I mean, I think -- I'll let Sean take the question as well, actually. But certainly, from our perspective, I would say that market share is actually -- BAM has been growing their market share in terms of the par insured, particularly over the last year and this first, sort of, 5 months of this year. It's not something that we keep an eye on it, but I don't think our concern is a minimum, sort of, market share for BAM. Our concern is much more are they maximizing the business that they can write based on the capital that they have.

Yes, I would agree with what Kevin said. We -- actually, our market share in the first quarter was 50%. And I don't think that's the good news. We -- that's just a result of our implementing our disciplined pricing and credit strategy. So right now, we're at about 46% of the market. But really, our focus is 2 things: credit discipline and price discipline. So the economic value that we generate in the transactions that we do is superior. And the reason that is, larger transactions because we're not focused on overall par and be #1 in that, that's a meaningless statistic. The fact of the matter is our rate on line is better. And so when you see somebody bid a 25% bid to cover on a $100 million transaction, they can have that. That doesn't matter to me.

It's more important to deploy capital, be credit discipline more than anything else. What I see happening in the markets is an expansion overall of our footprint. So if you think about a couple of things that are happening, the increase in primary market new money issuance is up 30% in the last 4 years on a CAGR basis. If you look at that and look at what the embedded inflationary costs are for building and repairing essential infrastructure, there's a variety of firms that would predict in the next 10 years, the market will grow to $1 trillion.

So the key is to continue to focus on what we're doing, but to expand our footprint without increasing our credit appetite. And the way we do that is, first, be more efficient. We're 60% of the secondary market. And that's something that we've invented. We have a lot of tools that we offer to the investors -- institutional investors where they can -- one of them, we sort of call the idea generator. We'll take their portfolio, sift through and show them trade ideas where they can actually make money. That works out extremely well for us.

We don't have to share the savings like we do in the primary market or look at a competitor. The strength of your idea and the execution is what wins the day. So all of these things, you'll see us incrementally grow in a way without trying to expand into another business. I think the key is we've been in 14 years, as Kevin alluded, with the support of White Mountains for initial capital. And our key is to not take losses, to be disciplined to align ourselves with the municipalities that are taking our guarantee and lowering their cost of funding.

And that's -- I'd say we're having a third year that's a solid year. Last year was a record year. The year before that was a record year. So I think we're -- no, there's no home runs here, but we block and tackle pretty well.

Could you expand a bit on new business conditions, for example, the impact of continuing high interest rates, talk a bit about credit mix, demand from AA, AAA credits, demand in the secondary market. Are there any newer asset classes you're looking at?

No new asset classes. I'll start with that. We really are focused on essential public purpose infrastructure where your interests are completely aligned with the issuers. That's important. The only place we've looked for business, we mentioned it a couple of years ago and are very slowly building an expertise there is in Australia and in New Zealand. They have very good rule of law, long-dated appetite, essential infrastructure that looks virtually identical to the United States.

And we have a number of people within BAM that have had 30 years of experience in that market. I opened that market for FSA in the late '80s. We hired the head of -- former Head of Standard & Poor's in Australia to develop our underwriting standards. So we feel, again, that's sort of an incremental way, but not to take credit risk or get into another business. We also -- when we're looking at the overall market environment right now, higher interest rates are kind of good for us. There's greater credit differentiation. There's less federal support.

Offsetting that to a certain degree is the fact that the municipal market itself is diversifying, not as affected by the global volatility that's going on politically. And so inflows last week, inflows were at a record. They've never been higher. There are $2.6 billion of monies coming into the municipal bond complex. So that puts a little pressure on the demand, but record volumes in the primary market right now. We're up about 4.3% from last year, which was a record year as well. So what we see happening right now is I'm not very good at predicting the future either. But if interest rates continue at this -- what I would say is longer -- higher for longer, there are going to be opportunities that come up in the secondary where people are trying to reposition their portfolios.

We see that not impeding the overall market volume. 20% of our business year-to-date is in the AA category. And so we see that as institutional investors using our guarantee to manage single risk, get better valuations on the portfolio strength. And so we see that trend continuing forward. We're not taking -- I think what somebody -- one of the bigger institutional investors I met with a couple of weeks ago said, we are -- when we set the company up, we stick to our knitting. We haven't increased our appetite. We don't change our direction. We're ultimately transparent about every credit that we look at. And as a result, we've taken no losses. It's not that we won't eventually, but we are very conservative and very careful about what the economic equation is when we add value.

All right. Now on to the newest member of the White Mountains family, Distinguished Programs. Distinguished Programs is a full-service MGA and program manager with a 30-plus year operating track record. We're joined today by Bill Malloy, CEO; and up on stage, Jason Rotman, President and CFO; and Steve Sitterly, COO. Distinguished operates by 2 distinct verticals, ScaleCo and GrowthCo, and you can tell that we're insurance people, not marketing people with those names.

ScaleCo is kind of the legacy hub of Distinguished. It is established programs, going back in many cases, decades with historical focus on excess casualty, real estate and then the hospitality sectors. And then GrowthCo is a new vertical, which the new team has really launched since 2023, where the objective, as Jason will describe, is to bring in new underwriting teams and incubate new programs, which will generate losses for a few years as you get them up to scale that then can grow over time. And so again, we track those separately and the mission over time is to incubate things in GrowthCo and have them graduate to ScaleCo.

The economic model is a commission-based model with no insurance risk retention. They work with a number of insurance carrier partners that bear the ultimate insurance risk. But Jason will talk about how they align interests through profit commissions and in some cases, equity co-ownership to make sure that the focus is on partnering with insurance carriers to write good business. The new management team joined in 2022 and has a long track record in the industry.

We acquired control in September of last year with 56% basic ownership of the company. It was a bilateral deal. Jason will talk a little bit about kind of how that came to bear. There was significant rollover from management and existing shareholders. And then because with the existing shareholder base, there's one private equity firm as well as the founding family that do not have indefinite liquidity unlike White Mountains. We have a put call option where they can put their interest back to us, which is about 31% stake in the business. They can put that back to us at the initial transaction price in 3 years or we can call that and buy their interest out at the same deadline for a 35% premium over the price, which implies a 10.5% annualized growth rate.

Similar to NSM, it's a platform business where we feel like what's attractive to us is the opportunity to not only have the initial investment, but work with the team on new organic and inorganic growth levers over time. That -- those platform businesses are something that we love and have had great success with over time. Solid results in 2025. Managed premiums were up 6%. ScaleCo adjusted EBITDA was up 7%. We focus on ScaleCo adjusted EBITDA because, as I said, GrowthCo is generating funded losses at the moment.

It's on the J-curve. EBITDA would be a meaningless number until they achieve profitability. So we really focus on ScaleCo to give you a sense of the legacy traditional business. Continued positive momentum at GrowthCo. They launched 3 new programs last year, and we did one small accretive sale of a noncore program. It's been a flattish start to 2026, largely driven by dynamics in the excess casualty program, which Jason can touch on. This is another one as with all of our businesses, we're focused on the long term. These businesses will go up and down a little bit on a quarter-to-quarter basis. We're not fussed about it.

We're really focused on are we generating long-term value creation here, which will be heavily influenced by GrowthCo. So I wouldn't focus too much on the first quarter versus where we're heading long term. So with that, I'll turn it over to Jason to share some thoughts.

Thank you, Liam. Thrilled to be here. And as one of the new faces in the room, with the other guys, I hope I could take 2 minutes to give a little bit of background and the proverbial how do we wind up in the room today. Bill, Steve and I have -- we've known each other a long time. Actually, we all had jobs at a private equity fund that focused on financial services.

Bill was the consummate CEO type that ran a couple of our portfolios -- portfolio companies. He actually was there at the beginning when Ark got launched 20 years ago. So I was trying to think that makes you the first wife, Bill. And I don't remember what divorce. Okay. That's good. I wasn't sure if it was divorced or kill, but I was a little nervous. #2 was bad, very good. So, yes, #2 was bad. That's fun point.

Steve was Chief Operating Officer of one of our portfolio companies and was, frankly, the best nuts and bolts operator we had in the portfolio. And I'm the private equity guy that -- or the former private equity guy that never had a proper operating job, but really wanted one, frankly. So we came together about 4 years ago. We were all gainfully employed, but itching to do something entrepreneurial. And more importantly, fundamentally believe that the MGA market, which has had an amazing run and this room has participated in, was set to continue to grow. And if we could build a business that was specifically focused on recruiting talent from underwriters, we could build a lane and make some money and have some fun.

And so we were very lucky. Our private equity fund liked the idea. They bought us Distinguished Programs, which is a long-standing platform, a little bit scratch and dent that we have to clean up in the way we want. When we started, 3 main tenets. One, we really wanted an integrated business, single back-office function, sharing of data, single culture. And so we spent a bunch of time and money building the chassis so that we can hang more programs on because there's a lot of expansive MGAs right now that, frankly, are pretty boxed parts, and we really don't want to become that type of company. Two, an MGA is only as good as your carriers. It's just a fact. And we spent -- the carriers were a little stale when we got there, we spent a bunch of time bringing in friends of ours that know us, wanted to support us and wanted to grow with us.

And three, we went out to create a process, institutional process, like a private equity fund creates an institutional process to recruit, underwrite and stand up new teams. And while this isn't the most novel idea and it's been done before, I don't think there's anyone out there over the last 4 years that have spent as much time on this as us, made as many mistakes as us maybe, but had as much progress. So we've been really, really growing that. Last year, at about this time, we had made enough progress that we were starting to think about our next chapter. And frankly, had a lot of private equity funds circling.

And I say that not to make us look good. I actually say that to make the room look good because we really wanted the White Mountains team to be our partner for this chapter, and we were very pleased that they wanted it as well, and we were able to orchestrate a bilateral conversation. And we wanted that for a whole host of reasons. But if I could just pick 3. One, we really wanted someone who knew insurance and could legitimately help us. And that's not a long list in what we do. Two, we didn't want to be at the -- it was a private equity fund that was up to the whims of their fundraising schedule. And their capital, your capital, frankly, is truly differentiated in the market. And those who understand it, which I assure you, we do, really value the nature of the capital so we can do the right things for the business at the right time and not for some other reasons.

And third, most importantly, of course, capitalism, but with a heart, right? We know our job is to grow book value in this room. We take that very seriously. We're going to do that. But life is also too short not to get into battle with people you like, people who you know, people who are trustworthy, people who are going to do the right things when it matters. And so we were, again, very thrilled that White Mountains wanted to support us. It's been 2 quarters and no regrets. We're not an easy business to describe, and Liam stole my jokes about being bad namers. But we do have 2 sections. We have ScaleCo, which are mature businesses and frankly, all the benefits of mature businesses and the growth prospects of mature businesses.

And GrowthCo, which is where we spend a lot of time. And GrowthCo is our incubation business. We try to grow them. We start with seeds a couple of people, maybe 5, 6, maybe 10, we water those seeds. We provide sunshine to those seeds, and we nurture them up so that at some point, they can graduate, like a lot of our kids are doing this week actually, can graduate from GrowthCo into ScaleCo. And that usually takes about 3 years if we're doing it right to get them there. We started with 5 programs.

As Liam said, we sold 1 because it didn't fit, and we have launched 11 programs in the last kind of 3 years, give or take. So we have 16 and all. In the 4 years that we've been in charge of the business, we've doubled premium. As Liam said, we have flattened out a little bit in the last couple of quarters, and this is basically exclusively because of one program. Our largest program is an excess casualty book, which is performing very well. But that market has gone from very, very hard recently to what our carrier thinks is hard to where it really is, is just absolutely adequately priced, and we should be -- we should have a pricing to write much more right now. So we're working with the carrier very closely to figure out our pricing strategy as the market turns. They're being a little bit slower than we'd like them to be is not uncommon with an MGA, but we're going to work through that.

They're very supportive and want to stay with us. It is unfortunate because that loss of -- that low retention rate on that book, not low, but less retention rate is masking quite a bit of growth on the rest of the portfolio, which you'll see to emerge. It's too early in our journey to talk about where we want to go to, to be clear, but I think it's important to know we have built our platforms to handle at least 25 programs. And when we have that little product sheet that everybody has in our jobs, we have much more white space in front of us than actual products. So I think we have a lot of room to grow.

So what do we like to do? Acqui-hire strategy. We are pretty product agnostic when we go about this. I know that might be strange for people in the room. We really much more care about the attributes of the team that we're recruiting and the book of business that they hope to build. We like meaningful books. We're a big business, with institutional shareholders. So we want teams that think that they can move over $50 million, $75 million, in some cases, $100 million of premium when at scale 4 or 5 years down the road. We are very focused on loss ratio. Business with poor loss ratios are just not worth anything. And so we underwrite that very hard with the market.

And if it has something that we don't believe is going to do a low to mid-50s loss ratio over the cycle, we're just -- we're not going to support it. We have to have good loss ratios. Our average team leader is in his or her early 50s, late 40s. They're mature enough to recruit and manage a team of underwriters. They're serious enough that distribution will follow them because they have to -- you have to make sure that happens. And frankly, we take care of the rest. So that's what we need. We have been entering markets that have not historically been in the MGA market. So when you think of MGAs historically, Personal lines is very common. Nonstandard auto, some very -- E&S business. That's typically what the MGA market has been historically.

But there's no reason that other lines can't use the technology of an MGA. And I'm talking more about the legal box technology, the IT technology, too, to stand up in MGA. So we've recently done two launches in surety. One recent one was an excess property reinsurance book, not cat, but buildings like this, like big losses on buildings like this. As Liam said, we have positioned ourselves to be friendly to the carriers. I think it is fair to say the MGA market is heated. I think it's fair to say, Liam, that some MGAs have been maybe a little -- not greedy, but maybe a little bit more about how they had their bottom lines and not creating long-term partnerships with your carriers that are set up in ways when people win, everybody wins and when people lose, everybody loses because that's the way to build a business for the long term.

And so we're actually very proud that of our last 4 programs or 5 programs -- excuse me, 4 have been in conjunction with the carrier from the beginning. And what do I mean by that? So the property reinsurance, excess property reinsurance we went to -- we just did -- there was a guy, Frank. Frank had a book of business, has a book of business, about $60 million, $70 million of premium, is at a carrier for 15 years. His loss ratio for that 15 years was below 25%. That's not auditable, but just let's say, it's a very profitable book of business.

His carrier got sold. He was unsettled. That's what happens when carriers get sold. One of his reinsurers, his biggest reinsurers wanted to hire them and keep him in the fold because they like the book of business. They knew it. They've been on it for 10 years, right? That reinsurer had no U.S. operation, had complexities bringing in a new team. So they called us. And they said, "Hey, why don't you set it up as an MGA, you take care of all the operations, you manage them, you do all that stuff. We'll be the paper and figure it out."

And that's what we did. We got that call in the fourth quarter last year. It took us about 4 or 5 months to set that up, which is what it normally takes, and we bound our first policy last month, and we think this one is going to do great. Our goal is to do 3 or 4 of these a year, maybe $150 million to $200 million of latent premium at scale. Each one probably requires $3 million, $5 million, $6 million of burn capital until you get to breakeven. But if we do it right and we get that business to $50 million of premium or $75 million premium, there is no reason that, that won't contribute something like 1x premium enterprise value in our organization. So you can do the math.

If you can do it, it's very financially accretive. We have other ways to grow, too. We do have acquisitions. We will do acquisitions. We plan to do acquisitions. It is a little frothy right now. That's not the -- we're not spending as much time on that. We think the Acqui-hire is much more attractive at the moment. We've done carve-outs from insurance companies. We've looked at renewal rights deals. There's a whole set of ways for us to grow the business profitably and effectively grow book value for you, which is what we're all here to do. So with that, I guess, any questions?

Okay. Two unrelated questions. The first one is the Acqui-hire approach, you're basically -- I mean, you're poaching teams from carriers basically, you're giving them a reason to leave. Does that create conflict with carriers? Is that -- I mean, doesn't that create tension? How do you manage your carrier relationships given that you're out there taking their best underwriters a lot of the time? And then unrelated, who would you compare distinguished to in the public markets? Is there a company -- is there an MGA, a publicly traded MGA or a piece of a publicly traded company that looks like Distinguished that we might be able to comp you against?

I'll take the second one first, and Chris or Liam, please jump in. The MGA is a -- the MGA model is rife in the private equity world. There's lots of them and there's other MGAs that are going to go public at some point. But -- there's nothing like that out there. I mean I think Ryan Specialty, obviously, would be the one you point to, but they're obviously a much, much bigger business and a big chunk of their business is wholesale. So I wouldn't think of them as totally comparable to what we're doing. Obviously, Marsh and Aon have an MGA component, but that's not how people think of those businesses. But I think these types of businesses haven't quite made it to the public markets yet, I'd say, unless you disagree.

Yes. What you'll see is they're a division within a larger broker wholesaler. And quite frankly, typically a little bit unloved in there and ignored. I mean these are businesses that need marketing dollars and technology spend. And I lived this when I was in my prior life, I had a business that was awesome, and I fought to get funding dollars because it didn't look like a retail brokerage business or a reinsurance business. But Brown & Brown, Aon, Marsh has everybody's got one of these divisions. And again, you've seen the wholesalers, Aon, CRC, Ryan build up these divisions over the past few years as well.

To your first question, which is very astute, I think you're right. I mean I think when we recruit -- we would never recruit from Aon. And we'd love to because he's got incredible teams, and these are exactly the type of people that we would frankly love to. But we're not going to because we know if we did that, we would be wife #8 or something or #2 in that scenario. So the people that we work with closely, we have an absolutely no-hire policy. And otherwise, we're not -- look, we're not taking books of business that are like $400 million that are massive.

These are $50 million books. These are teams of 3s and 5s and it happens all the time in the insurance industry, frankly. People are moving all around. And yes, they get a little bit mad and then 6 months later, everything is fine. So we haven't blown up any relationships. We obviously very thoughtful about when people come in on who we take it from. And people that are our markets and we're partners with, we would never ever. We wouldn't even consider it.

Just maybe, just a bit on the proverbial front door of the environmental [indiscernible]?

Yes. I mean, I mean -- so one of the other ways that we've grown is, frankly, insurance companies have books of business that, for some reason, does not fit in their portfolio. And frankly, maybe they can't do the IT for it. Maybe it's too big, maybe it's too small.

Maybe they have HR issues for whatever reason, but insurance companies have these books of business, but they don't want to lose it. Like they like the business, they don't want to lose it. And so we have a lot -- we've got a couple of these done. You go to the insurance carrier and say, "Hey, give us that book of business. We'll stand it up as an MGA. You can be the paper. You can be the paper, have it as much as you want. You can take your limits down, et cetera, et cetera." It actually unlocks a lot of capital when they go below 50% for the insurance company because their books of business have no capital against it.

And so we have a lot of those -- they're hard to pull off, but we like to get 1 or 2 of those done every 2 years. But -- so the main point is on that question is we are -- we try to be very friendly to the insurance companies. And so we have lots of conversations with them where we're talking about ideas, talking about lines of business, and we're doing it in conjunction with carriers that we're close with, and we would not hire from them.

One more. There's a lot of capital chasing a lot of MGAs. Your own thoughts as it relates to consolidation and is that one of the areas that you're thinking hard about? Or is this internal growth where teams join you is the primary focus of the company?

There is a lot of capital chasing MGAs right now. The White Mountains team has a lot of experience and frankly, has made a lot of money doing that. The team here has had historical experience in doing what a kind of a more traditional roll-up for lack of a better word, the simplified word. And it's certainly in the toolkit that we would like to put in play. But the fact of the matter is in the market today, this is a business model that is very attractive to a lot of people, and there's a lot of capital chasing. And while it has a different risk profile because you're starting with seeds, right, as opposed to something that's sturdy, when you look at the returns that you can get right now from doing the Acqui-hire, again, maybe it's $4 million, $5 million to get 4 years out, $50 million, $75 million, please don't, but directionally and sometimes more, frankly. We think at the moment, that's a better way to build our machine and focus. But we certainly hope that at some point, the market changes and people stub their toe and we have an opportunity to do stuff. I think we source them. We have a great partner to help us source it, and we hope to get it done.

And how do you think this cycle, insurance cycle is going to be affecting your part of the industry?

It's softening. We're feeling it, too. But ultimately, for us, and when it softens, it gets harder. There are MGAs out there doing what we're starting to see some silly stuff, I would say. And we try very hard. I'm sure in hindsight, we're going to do some stuff that will look silly. But we certainly don't try to. We have not -- it's nothing against the front industry. If people are involved in that, we've not used a front. We really want to find partners that know the books of business that we're writing, know the people often personally and really be very careful. But it is getting softer. We are -- in some lines, you're seeing that.

But ultimately, for us, it's a talent game. I mean, ultimately, what our business plan is, is saying that the talent is going to wind up in the MGA market, not completely, capital rules the world. I mean it's not -- no one has any illusions of anything. But for $1 billion of premium, $1.5 billion of premium, if you can attract the talent that can attract other people in the business, there's real value in that. And frankly, that trend is not -- and the soft market is going to make that even stronger. So we're seeing -- I hate to say we're seeing an uptick of people who want to go do this. We're seeing an uptick of carriers that want to go do this with us because they want to grow. And we're trying to be very careful and make sure that everything we do is in hindsight doesn't look stupid.

So there's all this growth in teams leaving carriers to MGAs. What's your one little trick to make sure those teams don't leave?

For us?

Yes.

This is the easy -- this is -- so when we bring -- we've never lost a person like literally since we started, and it's really easy. The people we're getting are adults. They really want something entrepreneurial. And so it's emotional that they sort of feel like they own it. But more importantly, when we bring them on, they get a stake in the MGA that we create, which is meaningful to their personal economics. And so they only get that if they stay. We're very thoughtful about how we -- and this creates complications in the accounting, which I'm sure Liam probably has to work with you guys every quarter. But all the people that we bring in are as locked in emotionally and financially as they could be.

Can you get into that a little more? Or is that proprietary like new structure?

No, I'll do it at a high level, that's okay. So let's say we take a terrorism team from Aon group, a team there. And who, by the way, supported our -- one of our launches was terrorism and you did support us, by the way. So we are working. We take that team over, and we will set up a separate LLC, which we will own the majority, but that team will own 20%, 25%, 30%. Sometimes the carrier that we're working with will get a stake in that LLC to kind of create kind of alignment of interest across the whole thing. And that team will then get bought out and reloaded 5 years, 6 years down the road. And so they only get that money if they stay. Obviously, if it's not working, maybe we don't have the retention tool, but I think that's probably a good thing. But if it is working, they are retained because they will own a stake of the MGA that we will create and then we will buy them out over time.

And buy them out [indiscernible]?

We have all the bells and whistles to make sure the alignment is right. We do not want to create systems where they're just writing business. A lot of our economics come through profit commission. So if we write good business, we make more. If we write bad business, we write -- we make less. They know it. They know that if they're writing bad business, their equity is worth nothing. And so we've created a structure that creates the right alignment across all the parties and everybody is sort of bought in, so.

Right. Move on to Bamboo. I'll share a few highlights and then turn it over to John to share the latest. As we've discussed, Bamboo is a homeowners insurance MGA, founded and led by John Chu, strategically launched in California and Texas. We expect to expand that to other markets over time. We believe it's a differentiated model, commission-based MGA with blue-chip distribution and reinsurance partners, an underwriting advantage through tailored risk management and selection capabilities, modern scalable infrastructure as well as incremental AI capabilities. We sold the majority stake to CVC Capital in December.

As we discussed, we retained a 15% stake. And so therefore, going forward, it's an unconsolidated business, which we hold at fair value on a quarterly basis. We valued it at $260 million as of the end of the first quarter. An excellent 2025. Again, it was a bit of an existential event with the California wildfires in January of '25, but the business performed well, both on behalf of policyholders and capital providers. All of the quota share reinsurers made a profit despite that on the 2024 underwriting year. Managed premiums were up 58% in the year.

MGA adjusted EBITDA was up 2x in the year. And off to a great start in '26, continued strong growth in both premiums and EBITDA and the successful renewal of the 4/1 reinsurance programs. This is a chart I refer to as the one big beautiful chart. You do not see this chart in nature all that often. It just shows, again, the trajectory since we bought Bamboo in 2023 on both premium and EBITDA up significantly. Again, do not get used to seeing this chart in every business, but enjoy it while we can.

So with that, let me turn it over to John to talk through the latest.

Thanks, Liam. Yes. It's been a really good year, I would say, since last time I was up on the podium. I just want to give a few highlights that have transpired with Bamboo from an operational standpoint and strategically, the things that we've been working on over the last year. I think last time I was up, we talked a lot about some of the things we're doing from a system standpoint and diversification and growth standpoint.

Well, I'm proud to say we finished the launch of our policy and billing systems in September. That coincided with our entrance into the Texas market, which was our first state out of California in a meaningful way. I would say that Texas is off to a great start. It's tracking very close to what we had projected when we wanted to enter that market. Obviously, knock on wood, weather has been very good in Texas since we launched. But on -- since we're generally a non-cat player, we're focused more on the attritional side, and we've been able to achieve our attritional rate targets.

I would say, additionally, some of the other things we've been working on is really continue to build out our California footprint with some new products. We've launched condo. We've launched an HO-5 higher-end homeowner product. We've added what we call an HO2DIC wrapper product. And what that really means is every time we add a new product or a new channel or a new state, it is important to us because it continues to expand our TAM as well as the attractiveness of the market in terms of what we can target.

The third thing from an expansion standpoint is we also launched our first digital quote-to-bind platform. It's an AI-driven platform that allows us to have a very meaningful relationship with our point-of-sale kind of partners in the real estate ecosystem. And then the last 2 things I would say is Liam mentioned our 4/1 renewal, which was really great. I would say, since last year, at this time, we have basically doubled all of our capacity.

We've gone from 3 to 7 fronting papers. We've gone from 36 to almost 90 reinsurance relationships, and we've tripled the amount of equity capital in our sidecar investments, which is really important, obviously, as we want to continue the growth profile and Liam, I want to continue adding to that chart. The best way and only way you can do that is have the headspace to grow. And so one of the most strategic things we tried to do over the last year was create the headspace for us to achieve that growth. And then the last thing is we were very, very early adopters of AI.

We started that in 2019, basically 6 months after I started the company. We're at close to 15 AI instances across our value chain, and we think there is tremendous opportunities now that we're approaching the $1 billion mark where we're going to start to realize and see tremendous scale benefits from our AI investments across the system. So we're very excited on that front. So it's been a great year. We're very excited with the transaction, obviously, with CVC. We can't thank the White Mountains family enough for supporting our business and really legitimizing us at a critical juncture of our evolution. And we're equally excited now as we're embarking in terms of new states, new channels and new products. So with that, any questions?

Move on to Broad Street Partners, a second one of the newer members of our White Mountains family. Joining us today is CEO, Mike O'Connor; and in the audience, CFO, Matt House.

So Broad Street Partners is a leading insurance brokerage platform across the U.S. and Canada. I think in the U.S., it's about the #12 broker depending on the league table you look at. It's a diversified broker, diversified across geography, product line and client segments with a commission and fee-based economic model. It's another business with a strong track record, 25-year operating history and a proven M&A strategy, which Mike will talk on in a bit.

And again, a top-tier newer management team that's been brought on alongside the existing management team led by Mike and Matt and others. In the third quarter of last year, we co-led a group alongside Ethos Capital and British Columbia Investments to take a co-control stake in Broad Street Partners, Ontario Teachers, which was the prior control investor, maintains a co-control stake. For us, it was an opportunistic deployment. We feel like it's got a strong risk-adjusted return profile with more upside than downside along partners that we know and trust. Again, this was another one where everybody was rolling.

This was less about maximizing at a certain point in time versus bringing in what they felt were capital partners that could help them get to the next level and would be good long-term partners over time. We invested $150 million at the time. That's less than a 5% stake in Broad Street. But for us, that's still a meaningful deployment in a core part of the insurance sector. So for us, co-control was not -- or control is not an option. But for us to be able to put meaningful capital to work in a meaningful part of the sector with a leading firm was really an opportunistic deal that we wanted to do. And it's an unconsolidated business for us. Again, we mark that to fair value each quarter. We had it at $170 million as of the end of the first quarter of '26. So with that, let me introduce Mike and ask him to share a few thoughts.

Thanks, Liam. On behalf of Matt, myself and the rest of the team, we're very happy to be part of the White Mountains family. So I figure I'd spend a couple of minutes here just to give you a little bit more color on our model because that I think is very unique.

So as Jason said in his business, they think about alignment of interest. Our unique co-ownership model is all about alignment of interest. So we are out looking for independent firms that are looking for support to grow. And when we find one of those and we think they're a fit, we buy a majority stake of that firm, call it, 70%, 75% we'll flex depending on what the firm is looking for. But then we'll leave a minority stake with the local ownership.

And the whole idea is to have owners locally who are going to drive value and continue to grow that firm aligned with us. The equity they own is the equity we own. And the way Matt and I and the team think about it is we sit across the table from our partners, and we're there to help them grow. And you couldn't have more alignment of interest in the fact that your success is our success. And our success can't happen without you being successful. And from my experience, when I saw this model, it is unique. We are the firm at scale with this type of model.

And I think, again, in this industry, it's a great way to actually grow together with your partners. Now beyond that, there's a few basic things we focus on. The first is organic growth. In these businesses, the value over time is purely driven organic, organic, organic, top 3 priorities. We see a lot of opportunities to help our partners grow organically. Continue to show up together in front of our carrier partners. We place $16 billion of premium into the market every year across the family. So together, that's meaningful.

The second is to continue to build capabilities around sales force effectiveness and tools and data and analytics to help our partners grow. The second area we support our partners around M&A. And we think of our M&A strategy as a dual path process.

One is the BroadStreet team is always out looking for new, what we call core partners, new platform agencies that could join the family. And our team is focused on building long-term proprietary bilateral relationships with these firms to see if they'd be a good fit for us. In parallel to that, we run another process, we are very focused on supporting our 31 partners to continue to grow their firms inorganically. So we have 31 teams, 30 in the United States, 1 in Canada, who are out there looking to build relationships and thinking about finding content and capability that they can bring into their firm. And then we support them. We run all the deals through our team, which is with lawyers, accountants, everything comes through us, but we want our -- all of our partners out looking to try to grow inorganically. The third area is building operating capabilities. This is really around driving productivity in the business as well as risk reduction. And there's a whole host of capabilities we try to bring both to embrace and support our partners in doing that, also sharing best practices across the family.

The last part, which is not on this page that we focus on with our partners is succession. Part of the reason why people get excited about joining the BroadStreet family is they see an opportunity to grow and perpetuate their firm. So part of our responsibility as owners and partners to them is to work with them to continue to broaden and deepen their bench of leadership will help them grow as well as build succession. We want smooth growth in these firms over time, and we want people in the business who are excited about doubling the value of their firm, leading those firms. That's our focus beyond that.

If you look at 2025, a solid year, we finished around $2.5 billion of revenue, had a very good year in terms of M&A tuck-ins. And one of the things we highlighted is we did, for the first time, allow some of our CEOs, all of our CEOs actually to swap some of their local equity because the way our model works is they own equity in their firm, not at BroadStreet level. First time ever, we had all the partners swap a little bit of their equity into BroadStreet equity. And the reason why is because they're all working together with us to get the benefits of scale. And they said, hey, if we're actually doing that day-to-day and our day job, maybe it makes sense to align interest together economically. If you look at 2026, we're off to a very good start in terms of organic growth. We're basically trending where the industry is. And on an M&A front, we've had a very active year, and we see a very active pipeline. So very excited about the year as it continues to develop. So that's a little bit of an introduction at BroadStreet. And again, very happy to be part of the White Mountains family. Now if there are any questions?

We're wearing them down. All right.

Because there is an ongoing consolidation in the industry among the brokers and because of major investors that you have, what are your thoughts? Are you thinking about the next stage? Are you happy with where you are? And then in terms of terms and conditions, if there is an event, what type of rights does White Mountain have?

Yes, I can talk about our position. I mean I think if you look at the firm today, we're stronger today than we were yesterday, stronger today than we were a year ago. We're in a great position. If you look at the North American environment, it's a very conducive environment for long-term growth. Generally speaking, we have very strong partners, very capable to continue to grow both organically and inorganically, both in the United States and in Canada. And if you look at the industry structure, although there's been consolidation, you can look at the details in the industry. It's been at the top. It is still a highly fragmented industry with a lot of independent firms that are looking for homes. So that gives us an opportunity both for organic additions of talent and capability, but also inorganic. So we're very excited about the environment and continue to do what we do.

Yes. And in terms of structure, so again, the SPV, which has a multitude of investors, Ethos, ourselves and BCI is in a co-control position with Ontario Teachers. I think part of the attraction of certainly Ontario, BCI and ourselves is we do have indefinite capital. Ethos is a private equity firm. So there are liquidity rights down the road that the SPV has. They're not really a focus for us right now. Our view is we're trying to grow this. We've got runway. The way it account -- we account for it as an unconsolidated business, it will grow in value as it generates value and generates a higher NAV. If there's an event down the line, a sale, an IPO, something like that, we've got participation rights. So we'll make a decision on do we want to sell, do we want to roll. But we've got standard protections around that.

Next to PassportCard. PassportCard, as you know, is an MGA that offers travel and expat medical insurance, delivers its coverage and services in 180 countries around the world via a real-time paperless insurance solution delivered by a debit card. Superior customer service, premium pricing and high reactivation rates, really a leader in its space. Originally launched in Israel and now with select international expansion across Europe and Australia. And again, it's an MGA model. So it's a commission-based model base and profit commissions with no net risk retention. White Mountains owns 52% of PassportCard/DavidShield on a fully diluted basis. We're in a co-controlled position with Alon Ketzef, who's the CEO and Founder, who joins us today. And again, it's an unconsolidated business, which we fair value each quarter. It's most recently valued at $170 million at the end of the first quarter. So with that, let me turn it over to Alon to talk through the latest.

Thank you, Liam. 170 million. I don't feel comfortable with this number, Liam. And I must say that every year, you put me in that position. Next to Bamboo. The year before, it was next to MediaAlpha. And I believe 3 years ago, it was next to NSM. So I got the message. I got the message, and I take on the challenge. So I'm not going to talk about war. I think we all understand the situation, and we all know that in the last 7 years, we didn't have even 1 single year of 4 quarters. So with that in mind, we need to learn a new trick and the new trick is not to stick to [indiscernible]. We invented the 12 months year, but rather plan for 12 months, but execute in 9 because that's what we will have in a given year in order to execute. So with a lousy start given the current situation, we still plan to have a record year in 2026. And I must admit that the team is working around the clock in order to be able to execute on that and to harvest what seems to be the pent-up demand that is only limited at this point of time by the number of seats that are available to go overseas, namely the carriers that are flying in and out from Israel. Same situation goes in Australia. We have to take into consideration that the Dubai hub is the main gate for Australians going to Europe. So it influences us there as well. The German operation, 1/3 of the demand comes from Germans who repatriate to the GCC countries. So that also took a hit. Nonetheless, we intend to break the record this year. But it may sound impressive, but it's not really impressive. When you look at the engines that we are building and you look at the results and if I just take during 2022 and 2023, we were lucky enough to have 4 quarters in a sequence. So we know that our baseline at the time was, was it $35 million, if I remember correctly. $35 million in EBITDA. Since then, the market grew by 20%. Since then, we added a few growth engines that I would like to share with you today. So I think that maybe one day, Bamboo will speak after me. So just to share with you 3 important engines that we are building now and that I'm sure will make all of us proud.

The first engine is the fact that we are going to be the first financial institution to replace its core systems with an A to Z AI-driven core capabilities. That means that we are shooting for 80% automation of all processes within the organization. We are making the first steps towards this direction. We are already cutting the costs considerably, and we intend to cut the costs of operation by roughly $18 million by the end of 2027. This is a substantial number, but it's not only about efficiencies because I do hope that I won't have to cut even a single dollar, but rather have this system to allow us to scale in a speedy way.

And when I talk about scale, I have to share with you another engine that is being built and deployed successfully these days in Australia, which is embedded insurance. For those of you who are not familiar with the concept of embedded insurance, think about a funnel of an airliner where they sell airfare tickets or a funnel of an OTA or an employee platform where we embed our solution in those funnels, and we become the ticket-box product that they buy as travel insurance. It sounds easy, but it is very, very complicated behind the scene. Just think about premium money that could not be mixed with other monies, different tax regimes for different types of transactions, everything goes into the platform, bank account. So you can only imagine the kind of complexities that you have to manage when you go through the embedded insurance channels. We deployed it successfully last month, our first platform, managed to push the side the market leader in Australia. And this is only the beginning. We do believe that we are going to see a lot of those instances. And hopefully, it won't take long before we will be an embedded solution with one of the biggest platforms in the world. We have a short list of candidates. And maybe you will help me in the U.S. one day to implement it here. One has to understand that when we talk about embedded insurance, we are talking about multinational players, okay? So if we embedded, say, with Lufthansa in Germany, they would want to have the same solution in the U.K. for their travelers and the same solution in Australia, in the U.S. and elsewhere. So when we go with the big guys, we need to take into consideration that we will need to have a solution in multiple territories, geographies in order to serve them well. So this is the second engine.

The third engine, if you recall, last year, I was standing here talking about launching a new payment card, that is a kind of convergence between the insurance card and payment facility for people going overseas. If you remember, I told you that if it will be a success, I'll come and share the success with you. And if not, I will not arrive. So here I am. Happy to say that we are seeing an overwhelming success. Hundreds of thousands of new members. We believe that by the end of the year, we will be anywhere between 350,000 to 400,000 subscribers with $0.5 billion of turnover. It won't take long, maybe a couple of more years before we get to 1 million subscribers and 1.5 billion in turnover. That will -- should leave us with a 2% margin on the volume. And more so, it will be a very, very strong stickiness point for our customers to stay with us and to buy again and again and again. So if you add it up all together, then we are talking about PassportCard pay as a contributor to the bottom line. We are talking about AI as a contributor to either scale or to the bottom line as efficiency factor. And we are talking about embedded insurance, which might turn out to be a huge, huge engine of growth. And we need to achieve that in 3 quarters every year. So Liam.

So any questions?

I'm up to the challenge.

We appreciate it. Questions? All right. Thank you, Alon. All right. I'll cover MediaAlpha quickly. Again, most of you, I think, know what MediaAlpha is from prior presentations, an online customer acquisition technology company, publicly traded with it's ticker, MAX. Industry-leading marketplaces for real-time transactions across multiple verticals, P&C, particularly personal auto as well as health and life. It's a fee-based economic model where they take a percentage of marketplace transactions. We own 28% of MAX, which is about 18 million shares. We no longer sit on the Board over the past 18 months, we've transitioned our Board seats there. So along with you, we are just public company investors in MAX at this point. It's an unconsolidated business, which we marked at fair value, which is just the stock price of MAX at the end of each quarter, which was $166 million as of the end of the first quarter. I'll come back to my MOIC trivia question, which is the highest MOIC in the history of White Mountains is actually MediaAlpha. You think about it in two ways. We had the original investment of $46 million, which we made in 2014, we've made 9x our money in cash, and we have our continuing shares represent another 3.5x. And then if you'll recall, we did a follow-on tender offer where we bought about 5.8 million shares back in 2023 and we sold those about a year later, and that generated a 1.5x MOIC with a little bit of continuing upside. So the real story here is in the fullness of time, this has been a home run investment for us. It's all upside from here. In terms of recent results, it was a mixed year for MediaAlpha, mixed again in a sense that their operations were at all-time highs, but the stock price really didn't track that. So revenue was $1.1 billion, up 29% year-over-year. Adjusted EBITDA was up 18% year-on-year. They settled the FTC matter concerning their under 65 health business. They launched a $50 million share buyback program, which they recently upsized to $100 million. But the share price was only up from $11 and change to about $13. So it was up about 15% despite those results.

They've had another strong first quarter in terms of results. TTM adjusted EBITDA is up 4% to $116 million, and they continue to have positive momentum in their P&C vertical as key auto carriers continue to turn on their ad spend. But the share price has declined from again $13 at the end of the quarter -- or sorry, $13 at the end of the year, down to about $9 at the end of the quarter and it's sort of stuck in that range. What's really happened is you've seen sector-wide multiples compress here, in some cases, cut by half over the past few years. How do we think about that? I'd sort of say 4 points. Number one, it's been a home run for us. It's all continuing upside. Number two, we continue to be believers in the business. We think they have a leading position in their market, and we see continued growth and they continue to drive strong performance. Having said that, our direction of travel here is to exit over time. I mean we're generally not big minority investors and public companies. It's not our model. So in the fullness of time, this is a position we will sell down. But as I stand here today, we don't need the liquidity, and I'm not a seller at $9. So we're going to be patient about this and do it in a disciplined way. So I'm happy to take any questions on our position. Any questions on the business, I'll have to punt over to the MediaAlpha team. But in terms of our position, happy to field any questions.

All right. Bishop Street, this is one I'll cover. Again, I mentioned we did a minority structured investment in the Bishop Street underwriting in the first quarter. It's a diversified MGA platform with about $650 million of managed premiums, majority owned by Redbird Capital. It was another bilateral deal. Bishop Street was founded by 2 gentlemen, affectionately known as the Chad, Chad Levine, who is ex Aon executive, who led their MGA group; and then Chad Weber, who's ex Guy Carp and has a reinsurance background. So I have relationships going back with them for years as well as Chris, and we know Redbird Capital pretty well. So this is one where it was an opportunistic deployment. We had a chance to do a structured investment, which has an attractive mid- to high teens target return. It's a business and subsector that we know well, where we think we can add value. It's not a control deal. But again, it's a kind of investment where we'll be flexible for the right opportunity. It's an unconsolidated business held at fair value, and so we valued it just at cost at the end of the first quarter, which is $125 million. I get the question a lot is, is this competitive with distinguished programs? Not really. I mean, first off, as a philosophy, we're not [ Noah's Ark ]. We don't have a problem having multiple businesses in the same sector. But if you look at the MGA sector, it's a huge sector. And just because you have 2 MGAs, I mean Bamboo and distinguished and never the 2 shall meet. You really have to get a layer down to say, well, what are the programs in there? And the reality is there's a little bit of a couple of programs that might overlap here, but not really. It's also a very relationship-driven business between carriers and distribution partners. So practically speaking, there's really no overlap between Bishop Street and distinguished. And so we think we can add value to both teams along the way. Happy to take any questions.

All right. We're picking up the pace. White Mountains Partners. Last but certainly not least, I'll do an intro and then ask John to share a few words. We launched White Mountains Partners at the end of 2023, led by CEO and Managing Partner, John Daly, who's built up his team since then. The goal is to provide first institutional capital to family founder and entrepreneur-owned businesses in 3 sectors: essential services; light industrial; and specialty consumer. We view this as it's an extension of our core capital deployment philosophy and principles at White Mountains, but an opportunity to apply those principles into a new sector that's not insurance related. And again, as we've discussed, there are times in the insurance cycle when there's really not much to do in insurance, and this gives us a way in a measured way to put capital to work in other sectors that are completely noncorrelated with insurance and diversify. Our intent is to deploy up to $500 million of equity capital over time. As John will discuss, we've done about $200 million to date. So I think a good pace there. Historically, we've reported this in other operations. But beginning this year, we will break this out into its own reporting segment, so you can see how the business is progressing and its own metrics and performance associated with it. So with that intro, let me ask John to come up and share a few words.

Thank you, Liam. Hello, everybody. It's actually my third Investor Day, which come to think of it came very quickly. I remember my first Investor Day was actually sitting right there where Weston and Jason are sitting and Jonathan are sitting, and I got to stand up and wave and I was introduced. And Manny said, this is John Daly. He just launched White Mountains Partners. And if he doesn't deploy any capital, he won't be invited back next year. So luckily, I was invited back next year, and we were able to close our debut platform, acquisition of a business called Enterprise Solutions, an electrical contractor based in Nashville, Tennessee. I actually got to be on the dice, standing next to my friend, Alon. And then I was told, if you don't deploy more capital, you won't be able to come back the following year. So now it is the following year, and let me say it's good to see everyone again. Very happy to say, it's been a strong start to the year for the White Mountain Partners team. As Liam mentioned, we've been able to deploy capital in 2 new deals, a platform acquisition called BaseSix, and a bolt-on acquisition to Enterprise Solutions called Hawkeye Electric. And I'd love to go through those 2 transactions for you. BaseSix was founded in 2018 and it's based in Marietta, Georgia. And the business provides low-voltage systems integration for commercial and institutional customers. What they do is they install, program, commission, maintain and repair essentially 4 key building systems: Fire and life safety; security and access control; audiovisual; and network and wireless. BaseSix truly provides an essential service. As these system disciplines absolutely not only have to be installed correctly, but they must be able to communicate with each other, especially in an emergency. In terms of sourcing, this was an investment banking-led auction process. And with any platform investment thesis, we always like to think about things from a macroeconomic industry and company view.

From a macroeconomic standpoint, we believe BaseSix will benefit from the long-term secular tailwind of the increasing complexity of building systems. And this will be buoyed by enhanced digitization, electrification, regulatory requirements and security needs. From an industry standpoint, it is a large, fragmented and growing industry over a $100 billion TAM in the United States. There's over 9,000 systems integration providers, and the industry is forecasted to grow at about a 6% CAGR over the next 5 years. The company itself is a fast-growing business that was at an inflection point, seeking a strategic thought and capital partner to help them manage what they call the managed chaos of a rapidly scaling business that had a strategic vision to grow from a Southeast player to eventually a national platform, and we truly believe they can get there. It's an incredibly strong management team, led by the co-founders, Robb Borden, who's the CEO; and Chris Atwell, who is the EVP. And they are supported by a strong senior team responsible for day-to-day operations, led by Stuart Gurr, the President; and Krista McKinney, the CFO. We believe BaseSix has a massive sustainable competitive advantage being a one-stop multidisciplinary shop for its customers. Further, they have top-tier OEM relationships with the best-in-class technology providers to provide their customers the best in key systems. Going forward, we see multiple value creation and growth opportunities, whether it's entering new disciplines, expanding into new geographies and accretive bolt-on M&A in a highly fragmented industry.

Moving to Hawkeye. As mentioned, Hawkeye is a bolt-on to Enterprise Solutions. The business was founded in 1999 and it's based in Chandler, Arizona.

Hawkeye provides commercial electrical contracting services for a diverse array of industries. They design, install, remodel and maintain the electrical infrastructure for commercial, institutional and industrial facilities. This was actually a proprietary acquisition sourced by the Enterprise Solutions team, proprietary deals being, of course, our favorite ones. And we think there's an incredible investment thesis with regards to the strategic rationale of 1 plus 1 equaling 3 via the combination of Enterprise and Hawkeye.

The transaction improves Enterprise's position across its key customers, competitors and suppliers. It opens up enterprise not only to several new customers, but as well as strengthening their position across commonly held customers between Enterprise and Hawkeye. It also moves Enterprise into a new geography of the Phoenix metro area. And that has been a tremendous area for electrical contracting, buoyed by significant activity with data centers, semiconductor facilities and other mission-critical opportunities.

Finally, and perhaps most of key, this increases Enterprise field force -- field labor force from 660 employees to nearly 1,000. And whether it's electrical contracting or really any of the key skilled trades, the access to skilled labor has been one of the biggest impediments to growth. So we are happy to have significantly increased enterprise's field force to take on more work. We think there are several tangible synergy opportunities, whether it's bringing Enterprise's expertise in prefabrication to Hawkeye. And as a reminder, prefabrication is incredibly important to electrical contracting industry because what it does is it takes work that used to be done in field and it brings it in-house within a controlled environment so that projects can be done on a much quicker and more operationally efficient manner. We also believe Hawkeye will benefit from enterprise's technology environment, which will lead to enhanced reporting, estimating and procurement opportunities. And the two businesses have several like-for-like material procurement opportunities, which should result in lower costs for sourcing. As we shift to the deal pipeline, we started the year more focused on deal execution, but we have since risen our heads and put a refocus on business development. And as we've done that, we've seen our deal flow increase month-over-month sequentially. So we feel really good about our pipeline. Current pipeline has about 13 opportunities. 5 platforms and 8 bolt-ons, and we're excited for the further momentum ahead. And maybe you guys will see me again next year. Happy to answer any questions.

You clearly understand that there is an enormous opportunity in the rebuilding of the grid and what is taking place electric-wise and electronic-wise across the country. This is the first time in 45 years plus that the real money is going into fixing the grid. Help us understand what is the position of these investments? How big could they get?

So how big they can get is a tough question. Maybe I'll take a step back in terms of electrical contracting that Enterprise Solutions does, that's inside contracting. So it's first facilities. Outside utility opportunities are, of course, also massive. One of the big secular themes for an outside utility contractor is obviously the energy transition. We will need a completely refurbished transition and distribution structure in this industry to be able to capitalize on renewable energy transition and, of course, additional opportunities. But regardless, despite the fact that neither enterprise nor BaseSix view outside utility contracting, there is still a massive opportunity for our current portfolio of companies due to the data center build-out, ship fab build-outs. And again, that increasing electrification of everything. But we do have utility services on our list of potential investment opportunities.

All right. Thank you, John. All right. Jonathan is going to round us through investments, and then we'll wrap up.

Thanks, Liam. So White Mountains has maintained a consistent approach to investing for many years. Our objective is to maximize long-term total returns after tax while taking prudent levels of risk. Policyholder funds tend to be invested more conservatively, generally in high-grade fixed income, while shareholder funds tend to be invested more aggressively, typically with a meaningful allocation to equities and alternative assets. When you roll it all up and look at the total portfolio relative to our insurance peers, our fixed income duration has generally been shorter while our equity exposure has generally been higher. It's important to note that we do not make investment decisions in a vacuum. Our overall capital position and broader capital needs are all taken into account when constructing and managing our investment portfolio. It's also worth noting that our investment performance has been a key contributor to White Mountain's overall performance in recent years.

Our total investment portfolio was valued at $5.8 billion as of the first quarter, $2.7 billion of policyholder funds and $3.1 billion of shareholder funds. The next slide is a snapshot of our portfolio positioning as of March 31 on a management basis. This excludes Kudu's participation contracts and our unconsolidated entities such as Bamboo, MediaAlpha and PassportCard/DavidShield.

Today, we have 3 distinct portfolios managed very differently. The first and largest is the Ark portfolio, which had a value of $3.8 billion as of the first quarter. The objective here is to provide sufficient liquidity to meet insurance obligations while managing for total return. We currently have a large fixed income portfolio with a short duration and an average credit quality of A+, and about 15% of the portfolio is invested in equities and alternative assets with relatively low beta.

The second mandate is the HG Global portfolio, which had a value of roughly $0.8 billion as of the first quarter. The objective here is to preserve claims paying resources in support of our reinsurance arrangements with BAM. We have only high-grade short- and medium-duration fixed income instruments in support of our reinsurance arrangements with BAM. We cannot invest this portfolio in equities.

And the third mandate is the parent portfolio, which had a value of roughly $1.2 billion as of the first quarter. The objective here is to safeguard amounts backing our known capital commitments while investing in the remainder, including our undeployed capital for total return. We currently have roughly 35% of this portfolio invested in equities and alternatives with the balance in short duration, high-quality fixed income.

When adding it all up, we have about $4.7 billion in short duration, generally high-quality fixed income and about $1 billion in equities and alternative assets at Ark and the parent. It's also important to highlight on the far right that our investment leverage is 1.1x. We view this as relatively low relative to our peers, largely driven by our capital invested in noninvestment-bearing operating businesses. Here's our management basis investment returns over the last 3-plus years. As you can see on the far right, absolute returns have been strong, while relative returns have been mixed over this period. Our total portfolio and fixed income results were ahead of benchmarks. However, while our equity returns were solid, we lagged the S&P 500 over this period. Our fixed income portfolio outperformance over this period was driven primarily by our short duration and exposure to floating rate assets as interest rates rose over this period. And as a reminder, our equity exposure is primarily comprised of liquid ETFs, which track the S&P 500 and alternative instruments, which include market neutral funds and private equity investments. Over this particular period, there were 2 primary factors that impacted our equity results. First, our market-neutral portfolio largely held at Ark and our private equity investments failed to keep up with the S&P 500 strong returns. And second, the timing of our ETF trading activity in support of parent capital deployments also weighed on Ark results. Said a different way, we had to sell equity market -- equities at a time when the S&P was rising, and we didn't participate in the fullness of that.

In terms of recent performance, 2025 was a solid year on an absolute basis, but trailed our benchmarks. Our shorter duration resulted in fixed income underperformance.

On the equity side, our equity portfolio underperformed due to relative returns from our market neutral and private equity investments failing to keep up with the strong returns of the ETF -- sorry, with the S&P 500 and the sale of ETFs in the first half in support of our capital deployments throughout the year. So far in 2026, the portfolio is down 10 basis points, a poor absolute and mixed relative result. Our fixed income results have benefited from our shorter duration positioning while better relative results from our market neutral and private equity investments have benefited our equity results.

Overall, we're generally pleased with the performance over the last 3-plus years and remain focused on maximizing long-term risk-adjusted returns going forward. Happy to take any questions.

All right. I'll quickly wrap us up. What to expect going forward. This should look familiar, hopefully, more of the same in terms of results. We remain focused on growing per share values over long periods of time. It's not going to be a smooth line. We're comfortable with a lumpy profile. I'd rather take a lumpy 14 than a smooth 11. We'll adhere to our core operating principles. Again, we've talked about the talent base. We're a people business. It's all about human capital, so continuing to recruit, develop, retain the best people and being thoughtful around how we deploy and distribute capital patiently and intelligently.

We've discussed in this market, I think patience will be a virtue, and we appreciate the trust that you place in us in that regard.

Our returns over time, we feel proud of what we've been able to generate on both a near, medium and long-term basis. And then again, the focus is to keep this moving up and to the right. What we can control is book value per share and intrinsic value per share. And our experience is market value per share will track to that over time. And if it doesn't track in lockstep, that creates a capital management opportunity for us to buy back shares, which has been accretive for us over time. So that remains the focus.

With that, I know it's been a long day, so I appreciate the patience, but happy to take any other questions before we leave. Going once, going twice. Anybody? Eddie, Rob?

One question for you. Could you elaborate a bit on structural market changes in insurance with brokers, MGAs, AI?

I mean I'll give a perspective and maybe ask Jason, Mike. I mean there's been a lot of talk on AI in the industry and is everything going to get disintermediated. I think at the end of the day, what matters in insurance is do you have real privileged relationships on the distribution side. And at the end of the day, it still is a people business. And as much as we think AI is going to replace everybody, people, these are important products for people, and they still want to talk to a human and then there's licensing and regulatory things.

So I think that if you have real privileged relationships on the underwriting side, if you've real privileged data and expertise on underwriting, that's not going to get disintermediated by AI. Now I think what will happen is you may find within the broker channel or the MGA channel, those that can harness AI to get better at what they do will advance and those who are stuck in the 1970s and '80s will go down. So you may see a different tiering in segments develop and different people rise and different people fall. But I think those entities still exist. It's just a matter of how do they harness AI to get better at what they do, both on productivity and on growth as opposed to get disintermediated. Now on the flip side, I'd say if I owned a claims business right now, I'd be terrified. If your business model is based on just outsourced labor arm, I think that is a real danger. And they have to leapfrog to make that more AI-driven. But in terms of if you've got real privileged relationships on the distribution side or you've got real specialty skill on the underwriting side, I think that's sustainable. I don't know if anybody else wants to...

I think the other thing I would say is we sort of sit next to each other, and I think it's 2 parts of the insurance spectrum. I think the commoditized parts and not commoditized, of course, but the smaller pace personal lines are going to win by people who use a lot of AI with a lot of technology and do it most efficiently and some of the more complex areas of insurance, which is really where we're going towards. We're certainly using it a lot. We have a lot of things we're working on, but it's never going to get -- I don't think that's a never, but as long as we're going to be in the seats, we're [indiscernible].

I think maybe the only thing I would add is, it's Matt House from BroadStreet. Mike had to step out. But I mean, Liam, to your point, I think people that are -- the whole disintermediation hypothesis is one that people will just stop choosing to have choices and that people are just going to go direct all of a sudden. People have been able to go direct for decades, but they've chosen to stay. The people that are in a market where they're using an independent agent or broker have chosen to have a choice, and they're going to continue to do that is our view. Now will AI create potentially a resorting within the distribution space? Will people be able to unlock productivity opportunities? Will they be able to serve customers better? Absolutely. But it's -- we do not view the disintermediation hypothesis is one that really has a lot to it at the moment.

Anything else? Late breaking, Rob? All right. Well, we appreciate it again. This is the one time a year that we do this. So we're happy to stay as long as needed to answer all your questions. We know it's a long day, though, but we appreciate your trust and your joining us, and we'll keep working hard on your behalf.