Bermuda-based White Mountains Insurance Group Ltd. swung to profit and increased its book value by seven percent in the third quarter, despite falling premium revenues.

The group, which includes insurance operations OneBeacon and Esurance, as well as the reinsurers White Mountains Re and Life Re, announced net income of $160 million for the July through September period.

This compared to a net loss of $277 million in the same period in 2008, while net income was $370 million in the first nine months of 2009, compared to a net loss of $343 million last year.

Adjusted book value per share was $406 at September 30, 2009, an increase of 15 percent for the first nine months of 2009, including dividends.

The group's total return on invested assets for the third quarter was 4.3 percent, and 8.7 percent for the year to date through September 30.

White Mountains chairman and CEO Ray Barrette said: "We had another strong quarter. Investment gains led the way with a four percent total return.

"OneBeacon grew book value per share by eight percent and had an improved combined ratio. White Mountains Re had excellent underwriting results, helped by continued low catastrophe claims.

"Esurance was profitable and made good progress in improving new business production.

"The Life Re business had a stable quarter. We have regained our financial flexibility and continue to maintain a strong balance sheet and strong capital position. I expect continued improvement as we remain disciplined in generally soft market conditions."

Combined ratio - the percentage of premium dollars spent on claims and expenses - improved dramatically at White Mountains Re, to 79 percent from 127 percent last year, on a reduction in catastrophe claims.

The quarter included 10 points of catastrophe losses, net of reinsurance and reinstatements, primarily from windstorm and flood losses in Europe, compared to 44 points in the third quarter of 2008, primarily from hurricane Ike and European hailstorms.

Effective September 1, 2009, White Mountains Insurance Group reorganised its reinsurance business by converting its Bermuda reinsurance operations into a branch of White Mountains Re Sirius. Sirius is a Swedish reinsurer, based in Stockholm.

Gross written premiums declined six percent for the quarter and eight percent for the nine months.

Allan Waters, CEO of White Mountains Re, said: "Our results are satisfying and benefited from the absence of hurricane losses this year. All of our underwriting centres are executing well in mostly soft market conditions.

"We continue to see a strong flow of submissions in all lines of business. Fundamentals are improving significantly in the aviation and credit lines. We are maintaining our pricing and risk selection discipline in the face of softening conditions in the casualty line.

"We successfully reorganised our Bermuda platform as a branch of Sirius and in the process contributed an additional $200 million of capital to Sirius. Our balance sheet is strong and we are well-positioned to react to new business opportunities as they emerge."

OneBeacon achieved a combined ratio of 97 percent, an improvement of three percentage points from the the third quarter of last year. Its book value climbed eight percent in the quarter and soared 24 percent during the first nine months of the year.

Fierce competition led to declining premiums in commercial and personal lines, OneBeacon CEO Mike Miller said, but the company successfully grew specialty lines business.

Esurance, the online auto insurance provider, which runs distinctive animated TV commercials, saw its gross premiums written fall four percent compared to the third quarter of last year, to $206 million. Combined ratio was unchanged at 102 percent.

Esurance CEO Gary Tolman said: "Overall, the third quarter was satisfactory. We had another profitable quarter and Esurance's loss ratio remains on target despite an uptick in claim frequency. Esurance's new policy sales increased 20 percent compared to the third quarter of last year due to a higher percentage of shoppers buying policies."