The Company maintains two small professional offices in Hamilton, Bermuda which serve as its headquarters and registered office. In addition, the Company and certain of its subsidiaries lease 8,600 square feet of office space at 80 South Main Street, Hanover, New Hampshire, under a lease expiring in 2006, which serves as its principal executive office. Folksamerica leases 40,000 square feet of office space in New York, New York, under a lease expiring 2004, which serves as its principal office. PIC owns its principal offices in Salisbury, Maryland. ACIC and BICC lease 15,200 square feet of office space in Wilmington, Delaware, under a lease which expires in December 2000, which serves as their principal office. White Mountains leases several other office facilities and operating equipment under cancelable and noncancelable agreements.
FSA and White Mountains' related investment in MediaOne preferred stock (which was redeemed on September 2, 1999) contributed $15.7 million to net income during the year ended December 31, 1999 versus $9.3 million for 1998 and $7.8 million for 1997. The significant increase in FSA-related net income during 1999 resulted from the additional purchase of $50.0 million of FSA Common Stock and the exercise of FSA Options, each occurring during 1999.
MSA contributed $9.8 million to net income during the year ended December 31, 1999 versus $3.2 million for 1998 and $2.5 million for 1997. The significant increase in MSA-related net income during 1999 resulted principally from significant realized gains on sales of investments recorded by MSA during the year.
In 1991, the Company sold Fireman's Fund Insurance Company ("Fireman's Fund") to Allianz of America, Inc. The $1.3 billion gain from the sale as reported in 1991 included a $75.0 million tax benefit related to the Company's estimated tax loss from the sale. Since 1991 the Company has carried an estimated reserve related to tax matters affecting the amount of the deductible tax loss from the sale and other tax matters. The amount of tax benefit from the sale of Fireman's Fund ultimately realized by the Company may be significantly more or less than the Company's current estimate due to possible changes in or new interpretations of tax rules, possible amendments to White Mountains' 1991 or prior years' income tax returns, the results of further IRS audits and other matters affecting the amount of the deductible tax loss from the sale.
During 1999 Folksamerica acquired USF Re for total consideration of $92.5 million. The purchase consideration included the issuance of a $20.8 million, five-year note by Folksamerica (which has been reduced to $6.8 million at year-end 1999 due to adverse loss development at USF Re post acquisition) with the balance paid in cash. Folksamerica did not record a significant amount of goodwill in connection with its acquisition of USF Re.
On December 30, 1999, Folksamerica announced that it had signed a definitive agreement to purchase PCA Property & Casualty Insurance Company ("PCA"), a Florida-domiciled insurance company specializing in workers' compensation, from Humana Inc. The transaction, for $125.0 million in cash, is subject to regulatory approvals.