But in the same announcement, White Mountains revealed that it agreed to reimburse Olympus for up to $137 million of the ceded losses, which would otherwise destroy most of Olympus' capital base.

Mr. Byrne, who is chairman of White Mountains and one of the original investors in Olympus, began his remarks by saying that White Mountains had “a long history of treating [its] owners well.”

Asked directly how the board of the public company reached its decision to reimburse the sidecar, which he and other members of management once had an economic interest in (along with other private investors), he distinguished between “the first Olympus” and the newly recapitalized Olympus.

Mr. Byrne said he raised capital for “the first Olympus” in 2001 from “a collection of institutions and people,” including himself and White Mountains President and Chief Executive Officer Steve Fass–”all of those were friends of the company in one way or another.” The idea was to be able to participate in an exciting property market when Folksamerica didn't have enough capital to do so on its own.

“The theory is still sound, but it's been a sorry chapter in our life here,” he said.

In 2005, “we wiped out all of the original investors. None of the original investors have a pot to —- in here. They do not have a financial stake in anything going forward,” he said, counting his wife among those who lost significant investment dollars.

He continued, “When management decided to reimburse the new investors in Olympus, their decision process was 100 percent in the interests of the White Mountains shareholders.”

Mr. Byrne's reference to “new investors” refers to the fact that Olympus raised $156 million to recapitalize after an early round of loss estimates dealt the first serious blow to the sidecar.

“New investors came into Olympus based on year-end estimates that have proven to be inaccurate very quickly,” Mr. Fass said, adding that an impetus for reimbursing these investors was “protect and reinforce” White Mountains “reputation with co-investors.”

“We believe that taking this action now maintains financial strength and market position of Folksamerica,” Mr. Fass said, noting that the reputation with private investors has been “carefully nurtured over the years to the great benefit of [White Mountains'] owners, who have made a lot of money through [the] ability to quickly access capital.”

The executives began their review of recent events by explaining the revised loss estimates which set the reimbursement deal in motion, noting that new claims information on offshore energy exposures prompted management to reserve all energy contracts to full policy limits.

That action pushed A.M. Best to downgrade Folksamerica to “A-minus” last Friday, and to issue an announcement that included some biting remarks about “the timing of this most recent disclosure in relation to A.M. Best's most recent discussions with company management.”

The Oldwick, N.J.-based rating agency had clearly been blindsided, because just three days earlier it had affirmed its ratings on Folksamerica.