White Mountains Insurance Group Ltd. on Friday said it made $147 million in second quarter net income, as policy sales continued to turn a profit and investment income improved despite currency losses.

White Mountains? second quarter net income declined 13 percent from the $169 million in earnings the group posted a year ago, chief executive Ray Barrette said in an earnings statement, pointing out that the year-ago period had benefited from an $111 million gain from the company?s acquisition of reinsurance unit, Sirius.

Unrealised currency losses penalised both the quarterly and six month results, the company said. Quarterly earnings from policy sales were $1.46 billion compared to $1.55 billion during the second quarter, 2004.

White Mountains, which redomiciled its headquarters to Bermuda from Delaware in 1999, said an audit of the company?s tax filings with the US Internal Revenue Service from 1997 to 2000 had been approved by the Joint Committee on Taxation, and no significant adjustments were expected for the four-year period.

The company said its largest US unit, OneBeacon, increased its estimate for anticipated asbestos and environmental claims by $353 million to $2.1 billion after completing an internal study of its A&E exposures.

White Mountains 2Q 2005 Report Card:

? Net income: White Mountains reported earnings of $147 million, or $13.64 a share* in the second quarter compared to $169 million, or $16.45 a share*, in the second quarter of 2004.

? Net premiums written:$1.46 billion in net policy sales, a drop of 11.5 percent from the $1.65 billion White Mountains recorded during the second quarter, 2004.

? Net investment income: $105 million in the second quarter, a 12 percent improvement from the $93 million in investment income during the same quarter a year ago.

For the six month period, investment income rose 70 percent to $278.5 million compared to $164.2 million in the year-ago period primarily because of a $74 million pretax special dividend White Mountains received from Montpelier Reinsurance Holdings Ltd.

White Mountains is a founding shareholder of Montpelier, a Bermuda reinsurer it continues to hold a 19 percent stake in.

Combined ratio**: White Mountains reports combined ratio by unit: OneBeacon recorded a second quarter combined ratio in the mid-90 percentile, White Mountains Re, an 88 percent combined ratio and Esurance?s combined ratio for the quarter was 104 percent.