UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
x☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934
 
For the period ended September 30, 2017March 31, 2023
 
OR
 
o☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934
 
For the transition period from          to         
Commission file number 1-8993


WHITE MOUNTAINS INSURANCE GROUP, LTD.
(Exact name of Registrant as specified in its charter)
Bermuda94-2708455
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)94-2708455
8023 South Main Street, Suite 3B03755-2053(I.R.S. Employer Identification No.)
Hanover,03755-2053
New Hampshire(Zip Code)
(Address of principal executive offices)
 
Registrant’s telephone number, including area code: (603) 640-2200
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Shares, par value $1.00 per shareWTMNew York Stock Exchange
WTM.BHBermuda Stock Exchange
Indicate by check mark whether the Registrant:Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   ý   No   o☐
 
Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months.months (or for such shorter period that the Registrant was required to submit such files). Yes ý  No   o☐
 
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerý
ý
Accelerated filero
☐
Non-accelerated filero☐
Smaller reporting companyo
☐
Emerging growth companyo☐


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  o
 
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  o☐   No  ý


As of November 7, 2017, 3,749,971May 5, 2023, 2,563,384 common shares with a par value of $1.00$1.00 per share were outstanding (which includes 53,55437,595 restricted common shares that were not vested at such date).




WHITE MOUNTAINS INSURANCE GROUP, LTD.


Table of Contents
 
Page No.
Item 1.
Consolidated Balance Sheets, September 30, 2017March 31, 2023 and December 31, 20162022
1
     Three and Nine Months Ended September 30, 2017March 31, 2023 and 20162022
23
6
     Three Months Ended September 30, 2017March 31, 2023 and 20162022
3
Consolidated Statements of Cash Flows, NineThree Months Ended September 30, 2017March 31, 2023 and 20162022
47
58
Item 2.
5143
Results of Operations for the Three and Nine Months Ended September 30, 2017March 31, 2023 and 20162022
5143
6959
74
Non-GAAP Financial Measures
7663
7764
7865
Item 3.
7866
Item 4.
7966
7966
Items 1 through 6.
7966
8067






Part I.FINANCIAL INFORMATION.
Item 1.Financial Statements
Item 1.Financial Statements
WHITE MOUNTAINS INSURANCE GROUP, LTD.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, 2023December 31, 2022
Millions, except share and per share amounts
Assets
Financial Guarantee (HG Global/BAM)
Fixed maturity investments, at fair value$924.8 $909.9 
Short-term investments, at fair value65.9 65.9 
Total investments990.7 975.8 
Cash4.8 18.2 
Insurance premiums receivable6.3 6.6 
Deferred acquisition costs36.9 36.0 
Other assets21.6 21.9 
Total Financial Guarantee assets1,060.3 1,058.5 
P&C Insurance and Reinsurance (Ark/WM Outrigger)
Fixed maturity investments, at fair value765.0 772.8 
Common equity securities, at fair value340.4 334.6 
Short-term investments, at fair value553.7 484.6 
Other long-term investments393.9 373.6 
Total investments2,053.0 1,965.6 
Cash132.6 101.5 
Reinsurance recoverables570.6 595.3 
Insurance premiums receivable909.7 544.1 
Deferred acquisition costs208.5 127.2 
Goodwill and other intangible assets292.5 292.5 
Other assets71.5 65.2 
Total P&C Insurance and Reinsurance assets4,238.4 3,691.4 
Asset Management (Kudu)
     Other long-term investments683.2 695.9 
     Cash (restricted $13.0 and $12.2)36.6 101.4 
     Accrued investment income19.1 12.4 
     Goodwill and other intangible assets8.5 8.6 
     Other assets20.6 7.6 
Total Asset Management assets768.0 825.9 
Other Operations
     Fixed maturity investments, at fair value266.1 238.2 
     Short-term investments, at fair value264.6 373.6 
     Common equity securities, at fair value357.4 333.8 
Investment in MediaAlpha, at fair value253.8 168.6 
     Other long-term investments565.9 418.5 
     Total investments1,707.8 1,532.7 
     Cash28.7 33.9 
     Goodwill and other intangible assets75.2 91.3 
     Other assets80.7 155.6 
     Total Other Operations assets1,892.4 1,813.5 
Total assets$7,959.1 $7,389.3 
See Notes to Consolidated Financial Statements
1

(Millions, except��share amounts) September 30,
2017		 December 31,
2016
Assets (Unaudited)  
Fixed maturity investments, at fair value $1,490.0
 $2,081.1
Short-term investments, at amortized cost (which approximates fair value) 786.5
 174.9
Common equity securities, at fair value 774.4
 285.6
Other long-term investments 229.6
 172.8
Total investments 3,280.5
 2,714.4
Cash 48.6
 80.2
Insurance premiums receivable 4.5
 1.6
Deferred acquisition costs 14.1
 10.6
Accrued investment income 15.4
 14.8
Accounts receivable on unsettled investment sales 190.1
 4.8
Goodwill and other intangible assets 37.8
 45.2
Other assets 46.1
 49.1
Assets held for sale —
 3,599.5
Total assets $3,637.1
 $6,520.2
Liabilities  
  
Unearned insurance premiums $118.5
 $82.9
Debt 9.4
 12.7
Accrued incentive compensation 76.9
 95.7
Accounts payable on unsettled investment purchases 49.7
 —
Other liabilities 45.4
 43.6
Liabilities held for sale —
 2,569.3
Total liabilities 299.9
 2,804.2
Equity  
  
White Mountains’s common shareholders’ equity  
  
White Mountains’s common shares at $1 par value per share - authorized 50,000,000 shares;  
  
    issued and outstanding 3,749,971 and 4,563,814 shares 3.7
 4.6
Paid-in surplus 665.6
 806.1
Retained earnings 2,800.8
 2,776.6
Accumulated other comprehensive loss, after tax:    
Net unrealized foreign currency translation losses (1.3) (1.4)
Accumulated other comprehensive loss from net change
     in benefit plan assets and obligations
 —
 (3.2)
Total White Mountains’s common shareholders’ equity 3,468.8
 3,582.7
Non-controlling interests (131.6) 133.3
Total equity 3,337.2
 3,716.0
Total liabilities and equity $3,637.1
 $6,520.2



CONSOLIDATED BALANCE SHEETS (CONTINUED)
(Unaudited)
March 31, 2023December 31, 2022
Millions, except share and per share amounts
Liabilities
Financial Guarantee (HG Global/BAM)
Unearned insurance premiums$299.8 $298.3 
Debt146.6 146.5 
Accrued incentive compensation12.1 28.0 
Other liabilities30.1 29.0 
Total Financial Guarantee liabilities488.6 501.8 
P&C Insurance and Reinsurance (Ark/WM Outrigger)
Loss and loss adjustment expense reserves1,345.6 1,296.5 
Unearned insurance premiums1,123.5 623.2 
Debt184.5 183.7 
Reinsurance payable193.0 251.1 
Contingent consideration42.9 45.3 
Other liabilities143.8 122.3 
Total P&C Insurance and Reinsurance liabilities3,033.3 2,522.1 
Asset Management (Kudu)
Debt191.6 208.3 
     Other liabilities54.8 65.0 
     Total Asset Management liabilities246.4 273.3 
Other Operations
Debt33.6 36.7 
Accrued incentive compensation40.0 86.1 
Other liabilities24.4 34.3 
Total Other Operations liabilities98.0 157.1 
Total liabilities3,866.3 3,454.3 
Equity
White Mountains’s common shareholders’ equity
White Mountains’s common shares at $1 par value per share—authorized 50,000,000
   shares; issued and outstanding 2,564,484 and 2,572,156 shares
2.6 2.6 
Paid-in surplus535.2536.0
Retained earnings3,367.3 3,211.8 
Accumulated other comprehensive income (loss), after-tax:
Net unrealized gains (losses) from foreign currency translation and
    interest rate swap		(2.7)(3.5)
Total White Mountains’s common shareholders’ equity3,902.4 3,746.9 
Noncontrolling interests190.4 188.1 
Total equity4,092.8 3,935.0 
Total liabilities and equity$7,959.1 $7,389.3 
See Notes to Consolidated Financial Statements

2

WHITE MOUNTAINS INSURANCE GROUP, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
  Three Months Ended Nine Months Ended
  September 30, September 30,
(Millions, except per share amounts) 2017 2016 2017 2016
Revenues:        
Earned insurance premiums $2.4
 $3.4
 $7.6
 $10.2
Net investment income 12.2
 9.6
 39.7

18.2
Net realized and unrealized investment gains 32.5
 10.9
 102.5

27.2
Advertising and commission revenues 38.8
 28.2
 103.9
 89.6
Other revenue 1.6
 4.7
 6.1
 18.0
Total revenues 87.5
 56.8
 259.8
 163.2
Expenses:      
  
Loss and loss adjustment expenses —
 2.2
 1.1
 6.8
Insurance acquisition expenses .9
 1.3
 3.1
 4.4
Other underwriting expenses .1
 .2
 .3
 .4
Cost of sales 33.1
 24.0
 88.7
 76.9
General and administrative expenses 44.1
 42.4
 162.2
 144.9
Interest expense .9
 .5
 1.8
 2.6
Total expenses 79.1
 70.6
 257.2
 236.0
Pre-tax income (loss) from continuing operations 8.4
 (13.8) 2.6
 (72.8)
Income tax benefit 4.0
 17.1
 5.3
 22.7
Net income (loss) from continuing operations 12.4
 3.3
 7.9
 (50.1)
Gain from sale of other discontinued operations, net of tax 554.3
 47.9
 552.7
 414.5
Net (loss) income from discontinued operations, net of tax (15.2) 36.5
 20.5
 100.9
         
Net income 551.5
 87.7
 581.1
 465.3
Net loss (income) attributable to non-controlling interests 10.6
 3.1
 23.6
 (24.6)
Net income attributable to White Mountains’s common shareholders 562.1
 90.8
 604.7
 440.7
Comprehensive income, net of tax:      
  
Change in foreign currency translation, net of tax —
 .2
 .2
 (.4)
Comprehensive income from discontinued operations, net of tax 3.0
 (.3) 3.2
 145.8
Comprehensive income 565.1
 90.7
 608.1
 586.1
Other comprehensive income attributable to non-controlling interests —
 .1
 (.1) .1
Comprehensive income attributable to White Mountains’s
common shareholders		 $565.1
 $90.8
 $608.0
 $586.2
Income per share attributable to White Mountains’s common shareholders      
  
Basic income (loss) per share        
Continuing operations $5.36
 $1.31
 $7.03
 $(14.47)
Discontinued operations 125.45
 17.34
 128.03
 99.75
Total consolidated operations $130.81
 $18.65
 $135.06
 $85.28
Diluted income (loss) per share      
  
Continuing operations $5.36
 $1.31
 $7.03
 $(14.47)
Discontinued operations 125.45
 17.30
 128.03
 99.60
Total consolidated operations $130.81
 $18.61
 $135.06
 $85.13
Dividends declared per White Mountains’s common share $—
 $—
 $1.00
 $1.00


Three Months Ended March 31,
Millions20232022
Revenues:
Financial Guarantee (HG Global/BAM)
Earned insurance premiums$7.7 $8.4 
Net investment income7.2 4.6 
Net realized and unrealized investment gains (losses)17.0 (45.1)
Other revenues.8 .8 
Total Financial Guarantee revenues32.7 (31.3)
P&C Insurance and Reinsurance (Ark/WM Outrigger)
Earned insurance premiums255.1 194.4 
Net investment income10.6 1.6 
Net realized and unrealized investment gains (losses)24.5 (17.5)
Other revenues(2.7)(2.8)
Total P&C Insurance and Reinsurance revenues287.5 175.7 
Asset Management (Kudu)
Net investment income14.2 12.6 
Net realized and unrealized investment gains (losses)29.6 22.3 
Total Asset Management revenues43.8 34.9 
Other Operations
   Net investment income7.0 1.8 
   Net realized and unrealized investment gains (losses)41.8 31.9 
   Net realized and unrealized investment gains (losses) from
      investment in MediaAlpha		85.2 18.8 
   Commission revenues3.3 2.9 
   Other revenues30.6 25.7 
Total Other Operations revenues167.9 81.1 
Total revenues$531.9 $260.4 
See Notes to Consolidated Financial Statements

3

CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
(Unaudited)

Three Months Ended March 31,
Millions20232022
Expenses:
Financial Guarantee (HG Global/BAM)
Acquisition expenses$2.7 $3.0 
General and administrative expenses17.3 16.3 
Interest expense4.5 — 
Total Financial Guarantee expenses24.5 19.3 
P&C Insurance and Reinsurance (Ark/WM Outrigger)
Loss and loss adjustment expenses147.8 122.0 
Acquisition expenses59.8 49.9 
General and administrative expenses35.2 21.0 
Change in fair value of contingent consideration(2.4)2.1 
Interest expense5.0 3.8 
Total P&C Insurance and Reinsurance expenses245.4 198.8 
Asset Management (Kudu)
General and administrative expenses3.8 2.8 
Interest expense4.7 2.8 
Total Asset Management expenses8.5 5.6 
Other Operations
   Cost of sales13.9 21.4 
   General and administrative expenses39.7 29.8 
   Interest expense.8 .3 
Total Other Operations expenses54.4 51.5 
Total expenses332.8 275.2 
Pre-tax income (loss) from continuing operations199.1 (14.8)
   Income tax (expense) benefit(11.9)2.7 
Net income (loss) from continuing operations187.2 (12.1)
Net income (loss) from discontinued operations, net of tax -
   NSM Group		— 3.7 
Net income (loss)187.2 (8.4)
   Net (income) loss attributable to noncontrolling interests(7.7)41.8 
Net income (loss) attributable to White Mountains’s
   common shareholders		$179.5 $33.4 
See Notes to Consolidated Financial Statements
4

WHITE MOUNTAINS INSURANCE GROUP, LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITYCOMPREHENSIVE INCOME
(Unaudited)
  White Mountains’s Common Shareholders’ Equity    
(Millions) Common shares and paid-in surplus Retained earnings AOCI, after tax Total Non-controlling interest Total Equity
Balance at January 1, 2017 $810.7
 $2,776.6
 $(4.6) $3,582.7
 $133.3
 $3,716.0
Net income —
 604.7
 —
 604.7
 (23.6) 581.1
Net change in foreign currency translation and
   benefit plan assets and obligations
 —
 —
 .4
 .4
 .1
 .5
Recognition of benefit plan assets and obligations
   from the sale of OneBeacon
 —
 —
 2.9
 2.9
 —
 2.9
Total comprehensive income —
 604.7
 3.3
 608.0
 (23.5) 584.5
Dividends declared on common shares —
 (4.6) —
 (4.6) —
 (4.6)
Dividends to non-controlling interests —
 —
 —
 —
 (17.7) (17.7)
Repurchases and retirements of common shares (147.9) (575.9) —
 (723.8) (5.2) (729.0)
Issuances of common shares 1.7
 —
 —
 1.7
 —
 1.7
Deconsolidation of non-controlling interests
   associated with the sale of Star & Shield
 —
 —
 —
 —
 (4.4) (4.4)
Deconsolidation of non-controlling interests
associated with the sale of OneBeacon		 —
 —
 —
 —
 (238.3) (238.3)
Issuance of shares to non-controlling interests (4.1) —
 —
 (4.1) 4.7
 .6
Net contributions from non-controlling interests (1.7) —
 —
 (1.7) 18.7
 17.0
Amortization of restricted share awards 10.6
 —
 —
 10.6
 .8
 11.4
Balance at September 30, 2017 $669.3
 $2,800.8
 $(1.3) $3,468.8
 $(131.6) $3,337.2
             
  White Mountains’s Common Shareholders’ Equity    
(Millions) Common shares and paid-in surplus Retained earnings AOCI, after tax Total Non-controlling interest Total Equity
Balance at January 1, 2016 $978.2
 $3,075.0
 $(149.9) $3,903.3
 $454.3
 $4,357.6
Net income —
 440.7
 —
 440.7
 24.6
 465.3
Net change in foreign currency translation and
   benefit plan assets and obligations
 —
 —
 32.1
 32.1
 .1
 32.2
Recognition of foreign currency translation and
   other accumulated comprehensive items from
   the sale of Sirius Group
 —
 —
 113.3
 113.3
 —
 113.3
Total comprehensive income —
 440.7
 145.4
 586.1
 24.7
 610.8
Dividends declared on common shares —
 (5.4) —
 (5.4) —
 (5.4)
Dividends to non-controlling interests —
 —
 —
 —
 (17.4) (17.4)
Repurchases and retirements of common shares (188.1) (678.6) —
 (866.7) —
 (866.7)
Issuance of common shares 9.1
 —
 —
 9.1
 —
 9.1
Deconsolidation of non-controlling interests
   associated with the sale of Sirius Group
 —
 —
 —
 —
 (250.0) (250.0)
Deconsolidation of non-controlling interests
   associated with the sale of Tranzact
 —
 —
 —
 —
 (78.4) (78.4)
Acquisition of subsidiary —
 —
 —
 —
 3.4
 3.4
Acquisition from non-controlling interests -
   OneBeacon
 (2.7) —
 —
 (2.7) (8.8) (11.5)
Issuances of shares to non-controlling interests —
 —
 —
 —
 .3
 .3
Net contributions from non-controlling interests —
 —
 —
 —
 20.1
 20.1
Amortization of restricted share awards 13.3
 —
 —
 13.3
 .5
 13.8
Balance at September 30, 2016 $809.8
 $2,831.7
 $(4.5) $3,637.0
 $148.7
 $3,785.7


Three Months Ended March 31,
Millions20232022
Net income (loss) attributable to White Mountains’s
   common shareholders		$179.5 $33.4 
Other comprehensive income (loss), net of tax1.2 (.4)
Other comprehensive income (loss) from discontinued operations,
   net of tax - NSM Group		— (1.9)
Comprehensive income (loss)180.7 31.1 
Other comprehensive (income) loss attributable to
   noncontrolling interests		(.4).2 
Comprehensive income (loss) attributable to
   White Mountains’s common shareholders		$180.3 $31.3 

Earnings (loss) per share attributable to White Mountains’s common shareholders:
Basic earnings (loss) per share
Continuing operations$69.83 $9.90 
Discontinued operations— 1.20 
Total consolidated operations$69.83 $11.10 
Diluted earnings (loss) per share
Continuing operations$69.83 $9.90 
Discontinued operations— 1.20 
Total consolidated operations$69.83 $11.10 
Dividends declared and paid per White Mountains’s
   common share		$1.00 $1.00 
See Notes to Consolidated Financial StatementsStatements.


5

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)

 White Mountains’s Common Shareholders’ Equity 
MillionsCommon shares and paid-in surplusRetained earningsAOCI, after taxTotalNon-controlling interestTotal Equity
Balance at January 1, 2023$538.6 $3,211.8 $(3.5)$3,746.9 $188.1 $3,935.0 
Net income (loss)— 179.5 — 179.5 7.7 187.2 
Other comprehensive income (loss), net of tax— — .8 .8 .4 1.2 
Total comprehensive income (loss)— 179.5 .8 180.3 8.1 188.4 
Dividends declared on common shares— (2.6)— (2.6)— (2.6)
Dividends to noncontrolling interests— — — — (7.2)(7.2)
Issuances of common shares.1 — — .1 — .1 
Repurchases and retirements of common shares(3.9)(21.4)— (25.3)— (25.3)
BAM member surplus contributions, net of tax— — — — 11.8 11.8 
Amortization of restricted share awards3.1 — — 3.1 — 3.1 
Recognition of equity-based compensation expense
   of subsidiaries		.4 — — .4 .2 .6 
Net contributions (distributions) and dilution from
   other noncontrolling interests		(.5)— — (.5)(1.2)(1.7)
Disposition of noncontrolling interests— — — — (9.4)(9.4)
Balance at March 31, 2023$537.8 $3,367.3 $(2.7)$3,902.4 $190.4 $4,092.8 

 White Mountains’s Common Shareholders’ Equity 
MillionsCommon shares and paid-in surplusRetained earningsAOCI, after taxTotalNon-controlling interestTotal Equity
Balance at January 1, 2022$588.9 $2,957.5 $1.7 $3,548.1 $156.6 $3,704.7 
Net income (loss)— 33.4 — 33.4 (41.8)(8.4)
Other comprehensive income (loss), net of tax— — (.2)(.2)(.2)(.4)
Net gain (loss) from foreign currency translation from
   sale of discontinued operations, net of tax - NSM
   Group		— — (1.9)(1.9)— (1.9)
Total comprehensive income (loss)— 33.4 (2.1)31.3 (42.0)(10.7)
Dividends declared on common shares— (3.0)— (3.0)— (3.0)
Dividends to noncontrolling interests— — — — (.6)(.6)
Issuances of common shares.8 — — .8 — .8 
Repurchases and retirements of common shares(7.3)(31.7)— (39.0)— (39.0)
BAM member surplus contributions, net of tax— — — — 12.3 12.3 
Amortization of restricted share awards2.9 — — 2.9 — 2.9 
Recognition of equity-based compensation expense
   of subsidiaries		1.2 — — 1.2 .2 1.4 
Net contributions and dilution from other
   noncontrolling interests		(.2)— — (.2).7 .5 
Balance at March 31, 2022$586.3 $2,956.2 $(.4)$3,542.1 $127.2 $3,669.3 
See Notes to Consolidated Financial Statements.
6


WHITE MOUNTAINS INSURANCE GROUP, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
  Nine Months Ended September 30,
(Millions) 2017 2016
Cash flows from operations:    
Net income $581.1
 $465.3
Charges (credits) to reconcile net income to net cash used for operations:  
  
Net realized and unrealized investment gains (102.5) (27.2)
Deferred income benefit (6.9) (16.2)
Net income from discontinued operations (20.5) (100.9)
Net gain from sale of discontinued operations, net of tax (552.7) (414.5)
Amortization and depreciation 25.9
 13.3
Other operating items:    
Net change in unearned insurance premiums 36.2
 20.1
Net change in deferred acquisition costs (3.5) (2.8)
Net change in restricted cash —
 5.8
Net change in other assets and liabilities, net (21.5) (117.6)
Net cash used for operations - continuing operations (64.4) (174.7)
Net cash provided from operations - discontinued operations 157.0
 38.1
Net cash provided from (used for) operations 92.6
 (136.6)
Cash flows from investing activities:  
  
Net change in short-term investments (612.2) (82.3)
Sales of fixed maturity and convertible investments 1,631.2
 2,009.4
Maturities, calls and paydowns of fixed maturity and convertible investments 178.6
 184.4
Sales of common equity securities 407.8
 683.0
Distributions, settlements and redemptions of other long-term investments 1.3
 10.1
Sales of unconsolidated affiliates and consolidated subsidiaries, net of cash sold 1,131.0
 2,657.2
Proceeds paid to non-controlling common shareholders from the sale of consolidated subsidiaries —
 (141.6)
Net settlement of investment cash flows and contributions with discontinued operations 167.7
 (396.6)
Purchases of other long-term investments (67.7) (36.6)
Purchases of common equity securities (818.6) (94.7)
Purchases of fixed maturity and convertible investments (1,189.8) (3,591.5)
Purchases of unconsolidated affiliates and consolidated subsidiaries, net of cash acquired —
 (13.7)
Net change in unsettled investment purchases and sales (135.6) (113.7)
Net acquisitions of property and equipment 1.0
 (.9)
Net cash provided from investing activities - continuing operations 694.7
 1,072.5
Net cash provided from investing activities - discontinued operations 3.0
 269.7
Net cash provided from investing activities 697.7
 1,342.2
Cash flows from financing activities:  
  
Draw down of debt and revolving line of credit 361.0
 352.5
Repayment of debt and revolving line of credit (364.6) (401.8)
Proceeds from issuances of common shares —
 3.7
Cash dividends paid to the Company’s common shareholders (4.6) (5.4)
Common shares repurchased (714.6) (860.9)
Distribution to non-controlling interest shareholders (.9) (.9)
Contributions from discontinued operations 45.2
 42.2
Payments of contingent consideration related to purchases of consolidated subsidiaries —
 (7.8)
Capital contributions from BAM members 25.7
 28.2
Acquisition of additional subsidiary shares from non-controlling interest (.7) —
Other financing activities, net (9.3) (5.8)
Net cash used for financing activities - continuing operations (662.8) (856.0)
Net cash used for financing activities - discontinued operations (61.9) (72.7)
Net cash used for financing activities (724.7) (928.7)
Net change in cash during the period - continuing operations (32.5) 41.8
Cash balances at beginning of period (excludes restricted cash balances of $0.0 and $5.8 and discontinued operations cash balances of $70.5 and $245.4) 80.2
 72.0
Add: cash held for sale, excluding discontinued operations, at the beginning of period .9
 1.2
Less: cash held for sale, excluding discontinued operations, at the end of period —
 3.8
Cash balances at end of period (excludes restricted cash balances of $0.0 and $0.0 and discontinued operations cash balances of $0.0 and $137.3) $48.6
 $111.2
Supplemental cash flows information:  
 

Interest paid $(.5) $(.7)
Net income tax refund from national governments $—
 $—

Three Months Ended March 31,
Millions20232022
Cash flows from operations:
Net income (loss)$187.2 $(8.4)
Adjustments to reconcile net income to net cash provided from (used for) operations:  
Net realized and unrealized investment (gains) losses(112.9)8.4 
Net realized and unrealized investment (gains) losses from investment in MediaAlpha(85.2)(18.8)
Deferred income tax expense (benefit)(3.6)5.7 
Amortization of restricted share awards3.1 2.9 
Amortization (accretion) and depreciation(2.4)4.3 
Net (income) loss from discontinued operation, net of tax - NSM Group— (3.7)
Other operating items: 
Net change in reinsurance recoverables24.7 16.0 
Net change in insurance premiums receivable(365.3)(343.6)
Net change in deferred acquisition costs(82.2)(71.6)
Net change in loss and loss adjustment expense reserves49.1 104.9 
Net change in unearned insurance premiums501.8 388.2 
Net change in reinsurance payable(58.1)(75.2)
Net change in restricted cash.8 — 
Proceeds from Kudu’s Participation Contracts sold62.9 — 
Contributions to Kudu’s Participation Contracts(30.9)— 
Net change in other assets and liabilities(3.4)(55.0)
Net cash provided from (used for) operations - continuing operations85.6 (45.9)
Net cash provided from (used for) operations - NSM Group discontinued operations (Note 19)
— 4.4 
Net cash provided from (used for) operations85.6 (41.5)
Cash flows from investing activities:  
Net change in short-term investments47.6 136.7 
Sales of fixed maturity investments54.6 86.5 
Maturities, calls and paydowns of fixed maturity investments66.8 39.0 
Distributions and redemptions of other long-term investments2.0 39.8 
Proceeds from the sale of Other Businesses, net of cash sold of $0.8 and $0.017.3 — 
Purchases of fixed maturity investments(127.6)(115.0)
Purchases of common equity securities— (38.0)
Purchases of other long-term investments(146.1)(21.4)
Net other investing activities(11.2)4.9 
Net cash provided from (used for) investing activities - continuing operations(96.6)132.5 
Net cash provided from (used for) investing activities - NSM Group discontinued operations (Note 19)
— 7.3 
Net cash provided from (used for) investing activities(96.6)139.8 
Cash flows from financing activities:  
Draw down of debt and revolving line of credit— 2.0 
Repayment of debt and revolving line of credit(20.0)(1.3)
Cash dividends paid to common shareholders(2.6)(3.0)
Common shares repurchased(25.3)(39.0)
Net contributions from (distributions to) other noncontrolling interests(1.7).4 
Net (contributions to) distributions from discontinued operations— 9.7 
BAM member surplus contributions11.8 12.3 
Fidus Re premium payments(3.5)(1.9)
Net cash provided from (used for) financing activities - continuing operations(41.3)(20.8)
Net cash provided from (used for) financing activities - NSM Group discontinued operations (Note 19)
— (10.3)
Net cash provided from (used for) financing activities(41.3)(31.1)
Net change in cash during the period - continuing operations(52.3)65.8 
Cash balances at beginning of period (includes restricted cash balances of $12.2 and $4.5 and excludes
   discontinued operations cash balances of $0.0 and $111.6)
255.0 147.7 
Cash balances at end of period (includes restricted cash balances of $13.0 and $4.5 and excludes discontinued
   operations cash balances of $0.0 and $113.6)
$202.7 $213.5 
Supplemental cash flows information: 
Interest paid$(5.8)$(5.5)
Net income tax payments$(17.8)$(.3)
See Notes to Consolidated Financial Statements

7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


Note 1. SummaryBasis of Presentation and Significant Accounting Policies

Basis of Presentation
These interim
White Mountains Insurance Group, Ltd. (the “Company” or the “Registrant”) is an exempted Bermuda limited liability company whose principal businesses are conducted through its subsidiaries and other affiliates. The Company’s headquarters is located at 26 Reid Street, Hamilton, Bermuda HM 11, its principal executive office is located at 23 South Main Street, Suite 3B, Hanover, New Hampshire 03755-2053 and its registered office is located at Clarendon House, 2 Church Street, Hamilton, Bermuda HM 11. The Company’s website is www.whitemountains.com. The information contained on White Mountains’s website is not incorporated by reference into, and is not a part of, this report.
The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and include the accounts of White Mountains Insurance Group, Ltd. (the “Company” or the “Registrant”),Company, its subsidiaries (collectively with the Company, “White Mountains”) and other entities required to be consolidated under GAAP. The Company is an exempted Bermuda limited liability company whose principal businesses are conducted through its insurance subsidiaries and other affiliates. The Company’s headquarters is located at 26 Reid Street, Hamilton, Bermuda HM 11, its principal executive office is located at 80 South Main Street, Hanover, New Hampshire 03755-2053 and its registered office is located at Clarendon House, 2 Church Street, Hamilton, Bermuda HM 11. White Mountains’s reportable segments are HG Global/BAM, MediaAlpha and Other Operations. 
The HG Global/BAM segment consists of HG Global Ltd. and its wholly-owned subsidiaries (“HG Global”) and the consolidated results of Build America Mutual Assurance Company (“BAM”). BAM is the first and only mutual bond insurance company in the United States. By insuring the timely payment of principal and interest, BAM provides market access to, and lowers interest expense for, issuers of municipal bonds used to finance essential public purposes such as schools, utilities and transportation facilities. BAM is owned by and operated for the benefit of its members, the municipalities that purchase BAM’s insurance for their debt issuances. HG Global was established to fund the startup of BAM and, through its wholly-owned subsidiary, HG Re Ltd. (“HG Re”), to provide 15%-of-par, first loss reinsurance protection for policies underwritten by BAM. HG Global, together with its subsidiaries, provided the initial capitalization of BAM through the purchase of $503.0 million of surplus notes issued by BAM (the “BAM Surplus Notes”). As of September 30, 2017 and December 31, 2016, White Mountains owned 96.9% of HG Global’s preferred equity and 88.4% of its common equity. White Mountains does not have an ownership interest in BAM. However, GAAP requires White Mountains to consolidate BAM’s results in its financial statements. BAM’s results are attributed to non-controlling interests.
The MediaAlpha segment consists of QL Holdings LLC and its wholly-owned subsidiary QuoteLab, LLC (collectively “MediaAlpha”). MediaAlpha is an advertising technology company that develops transparent and efficient platforms for the buying and selling of insurance and other vertical-specific performance media (i.e., clicks, calls and leads). MediaAlpha’s exchange technology, machine learning and analytical tools facilitate transparent, real-time transactions between advertisers (buyers of advertising inventory) and publishers (sellers of advertising inventory). MediaAlpha works with 330 advertisers and 280 publishers across a number of insurance (auto, motorcycle, home, renter, health and life) and non-insurance (travel, education, personal finance and home services) verticals.
White Mountains’s Other Operations segment consists of the Company and its intermediate holding companies, its wholly-owned investment management subsidiary, White Mountains Advisors LLC (“WM Advisors”) and certain consolidated and unconsolidated private capital investments. The consolidated private capital investments consist of Wobi Insurance Agency Ltd. (“Wobi”) and Removal Stars Ltd. (“Buzzmove”). During the third quarter of 2017, White Mountains revised certain of its previously issued financial statements for amounts relating to Wobi. See Note 16 — “Financial Statement Revisions”. White Mountains’s Other Operations segment also includes its variable annuity reinsurance business, White Mountains Life Reinsurance (Bermuda) Ltd. (“Life Re Bermuda”), which completed its runoff with all of its contracts fully matured on June 30, 2016 and which was liquidated in the third quarter of 2017, and its U.S.-based service provider, White Mountains Financial Services LLC, which was liquidated in the second quarter of 2017 (collectively, “WM Life Re”).
On September 28, 2017, Intact Financial Corporation completed its previously announced acquisition of OneBeacon in an all-cash transaction for $18.10 per share (the “OneBeacon Transaction”). OneBeacon Ltd., an exempted Bermuda limited liability company that owns a family of property and casualty insurance companies (collectively, “OneBeacon”), offers a wide range of insurance products in the United States through independent agencies, regional and national brokers, wholesalers and managing general agencies. On July 21, 2016, White Mountains completed its sale of Tranzact Holdings, LLC (“Tranzact”) to an affiliate of Clayton, Dubilier & Rice, LLC. On April 18, 2016, White Mountains completed its sale of Sirius International Insurance Group, Ltd., and its subsidiaries (collectively, “Sirius Group”) to CM International Holding PTE Ltd. (“CMI”), the Singapore-based investment arm of China Minsheng Investment Corp., Ltd. White Mountains has presented the results of OneBeacon, Tranzact and Sirius Group as discontinued operations in the statement of operations and comprehensive income for all periods prior to each transaction’s completion date. White Mountains has presented OneBeacon’s assets and liabilities as held for sale as of December 31, 2016. On March 7, 2017, White Mountains completed the sale of Star & Shield Services LLC, Star & Shield Risk Management LLC, and Star & Shield Claims Services LLC (collectively “Star & Shield”) and its investment in Star & Shield Insurance Exchange (“SSIE”) surplus notes to K2 Insurance Services, LLC. Star & Shield provides management services for a fee to SSIE, a reciprocal that is owned by its members, who are policyholders. White Mountains was required to consolidate SSIE in its GAAP financial statements until White Mountains completed the sale. White Mountains has presented Star & Shield’s and SSIE’s assets and liabilities as held for sale as of December 31, 2016. See Note 15 — “Held for Sale and Discontinued Operations”.

All significant intercompanyIntercompany transactions have been eliminated in consolidation. Certain amounts in the prior period financial statements have been reclassified to conform to the current presentation. These interim financial statements include all adjustments considered necessary by management to fairly state the financial position, results of operations and cash flows of White Mountains. These interim financial statements may not be indicative of financial results for the full year and should be read in conjunction with the Company’s 2016 Annual Report on Form 10-K.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
These interim financial statements include all adjustments considered necessary by management to fairly state the financial position, results of operations and cash flows of White Mountains. These interim financial statements may not be indicative of financial results for the full year and should be read in conjunction with the Company’s 2022 Annual Report on Form 10-K.

Reportable Segments
As of March 31, 2023, White Mountains conducted its operations through three reportable segments: (1) HG Global/BAM, (2) Ark/WM Outrigger, and (3) Kudu, with our remaining operating businesses, holding companies and other assets included in Other Operations. White Mountains has made its segment determination based on consideration of the following criteria: (i) the nature of the business activities of each of the Company’s subsidiaries and affiliates; (ii) the manner in which the Company’s subsidiaries and affiliates are organized; (iii) the existence of primary managers responsible for specific subsidiaries and affiliates; and (iv) the organization of information provided to the Company’s chief operating decision makers and its Board of Directors. See Note 14 — “Segment Information.”
The HG Global/BAM segment consists of HG Global Ltd. and its wholly-owned subsidiaries (collectively, “HG Global”) and the consolidated results of Build America Mutual Assurance Company (“BAM”) (collectively with HG Global, “HG Global/BAM”). BAM is the first and only mutual municipal bond insurance company in the United States. By insuring the timely payment of principal and interest, BAM provides market access to, and lowers interest expense for, issuers of municipal bonds used to finance essential public purpose projects, such as schools, utilities and transportation facilities. BAM is owned by and operated for the benefit of its members, the municipalities that purchase BAM’s insurance for their debt issuances. HG Global was established to fund the startup of BAM and, through its reinsurance subsidiary, HG Re Ltd. (“HG Re”), to provide up to 15%-of-par, first loss reinsurance protection for policies underwritten by BAM. HG Global, together with its subsidiaries, funded the initial capitalization of BAM through the purchase of $503.0 million of surplus notes issued by BAM (the “BAM Surplus Notes”). As of March 31, 2023 and December 31, 2022, White Mountains owned 96.9% of HG Global’s preferred equity and 88.4% of its common equity. White Mountains does not have an ownership interest in BAM. However, White Mountains is required to consolidate BAM’s results in its financial statements because BAM is a variable interest entity (“VIE”) for which White Mountains is the primary beneficiary. BAM’s results are all attributed to noncontrolling interests.
8

The Ark/WM Outrigger segment consists of Ark Insurance Holdings Limited and its subsidiaries (collectively, “Ark”) and Outrigger Re Ltd. Segregated Account 2023-1 (“WM Outrigger Re”) (collectively with Ark, “Ark/WM Outrigger”). Ark is a specialty property and casualty insurance and reinsurance company that offers a wide range of niche insurance and reinsurance products, including property, specialty, marine & energy, casualty and accident & health. Ark underwrites select coverages through Lloyd’s Syndicates 4020 and 3902 (the “Syndicates”) and its wholly-owned subsidiary Group Ark Insurance Limited (“GAIL”). White Mountains acquired a controlling ownership interest in Ark on January 1, 2021 (the “Ark Transaction”). As of March 31, 2023 and December 31, 2022, White Mountains owned 72.0% of Ark on a basic shares outstanding basis (63.0% after taking account of management’s equity incentives). The remaining shares are owned by current and former employees. In the future, management rollover shareholders could earn additional shares in Ark if and to the extent that White Mountains achieves certain multiple of invested capital return thresholds. If fully earned, these additional shares would represent 12.5% of the shares outstanding at closing. For the years of account prior to the Ark Transaction, a significant proportion of the Syndicates’ underwriting capital was provided by third-party insurance and reinsurance groups (“TPC Providers”) using whole account reinsurance contracts with Ark’s corporate member. For the years of account subsequent to the Ark Transaction, Ark is no longer using TPC Providers to provide underwriting capital for the Syndicates. Captions within results of operations and other comprehensive income for the three months ended March 31, 2022 are shown net of amounts relating to the TPC Providers’ share of the Syndicates’ results, including investment results. During the fourth quarter of 2022, Ark sponsored the formation of Outrigger Re Ltd., a Bermuda company registered as a special purpose insurer and segregated accounts company, to provide collateralized reinsurance protection on Ark’s Bermuda global property catastrophe excess of loss portfolio written in calendar year 2023. Outrigger Re Ltd. issued non-voting redeemable preference shares on behalf of four segregated accounts to White Mountains and unrelated third party investors. White Mountains consolidates the results of its segregated account, WM Outrigger Re, in its financial statements. See Note 2 — “Significant Transactions.” As of March 31, 2023 and December 31, 2022, White Mountains owned 100.0% of WM Outrigger Re’s preferred equity.
The Kudu segment consists of Kudu Investment Management, LLC and its subsidiaries (collectively “Kudu”). Kudu provides capital solutions for boutique asset and wealth managers for a variety of purposes including generational ownership transfers, management buyouts, acquisition and growth finance and legacy partner liquidity. Kudu also provides strategic assistance to investees from time to time. Kudu’s capital solutions generally are structured as minority preferred equity stakes with distribution rights, typically tied to gross revenues and designed to generate immediate cash yields. As of March 31, 2023 and December 31, 2022, White Mountains owned 89.2% and 89.3% of Kudu’s basic units outstanding (76.1% and 76.1% on a fully diluted, fully converted basis).
White Mountains’s Other Operations consists of the Company and its wholly-owned subsidiary, White Mountains Capital, LLC (“WM Capital”), its other intermediate holding companies, its wholly-owned investment management subsidiary, White Mountains Advisors LLC (“WM Advisors”), investment assets managed by WM Advisors, its interests in MediaAlpha, Inc. (“MediaAlpha”), PassportCard Limited (“PassportCard”) and DavidShield Life Insurance Agency (2000) Ltd. (“DavidShield”) (collectively, “PassportCard/ DavidShield”), Elementum Holdings LP (“Elementum”), certain other consolidated and unconsolidated entities (“Other Operating Businesses”) and certain other assets.

Discontinued Operations
On August 1, 2022, White Mountains Holdings (Luxembourg) S.à r.l. (“WTM Holdings Seller”), an indirect wholly owned subsidiary of White Mountains, completed the sale of White Mountains Catskill Holdings, Inc. and NSM Insurance HoldCo, LLC (“NSM” and, collectively with White Mountains Catskill Holdings, Inc., the “NSM Group”) to Riser Merger Sub, Inc., an affiliate of The Carlyle Group Inc. (the “NSM Transaction”), pursuant to the terms of the securities purchase agreement dated as of May 9, 2022. See Note 2 — “Significant Transactions.” NSM is a full-service managing general agent (“MGA”) and program administrator with delegated binding authorities for specialty property and casualty insurance.
As a result of the NSM Transaction, the assets and liabilities of NSM Group have been presented in the balance sheet as held for sale for periods prior to the closing of the transaction, and the results of operations for NSM Group have been classified as discontinued operations in the statements of operations and comprehensive income through the closing of the transaction. Prior period amounts have been reclassified to conform to the current period’s presentation. See Note 19 — “Held for Sale and Discontinued Operations.”

Significant Accounting Policies

Refer to the Company’s 20162022 Annual Report on Form 10-K for a complete discussion regarding White Mountains’s significant accounting policies.


Recently Adopted Changes in Accounting Principles
9

Stock Compensation

Effective January 1, 2017, White Mountains adopted ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (ASC 718) which simplifies certain aspects of the accounting for share-based compensation. The new guidance provides an accounting policy election to account for forfeitures by either applying an assumption, as required under existing guidance, or by recognizing forfeitures when they actually occur. At adoption, White Mountains did not change its accounting policy for forfeitures, which is to apply an assumed forfeiture rate. The new guidance has also changed the threshold for partial cash settlement to settle statutory withholding requirements for equity classified awards, increasing the threshold up to the maximum statutory tax rate. As a result of adoption, White Mountains reported $9.3 million and $5.8 million of statutory withholding tax payments made in connection with the settlement of restricted shares as financing cash flows for the nine-month periods ended September 30, 2017 and 2016. Such payments were classified as operating cash flows prior to adoption.
In addition, the new guidance changed the treatment for excess tax benefits which arise from the difference between the deduction for tax purposes and the compensation costs recognized for financial reporting. Under the new guidance, a reporting entity will recognize excess tax benefits or expense in current period earnings, regardless of whether it is in a taxes payable position.

Business Combinations - Measurement Period Adjustments
Effective January 1, 2016, White Mountains adopted ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments, which requires adjustments to provisional amounts recorded in connection with a business combination that are identified during the measurement period to be recorded in the reporting period in which the adjustment amounts are determined, rather than as retroactive adjustments to prior periods. White Mountains has not recognized any adjustments to estimated purchase accounting amounts for the year to date period ended September 30, 2017 and accordingly, there was no effect to White Mountains’s financial statements upon adoption.

Amendments to Consolidation Analysis
On January 1, 2016, White Mountains adopted ASU 2015-02, Amendments to the Consolidation Analysis (ASC 810) which amends the guidance for determining whether an entity is a variable interest entity (“VIE”). ASU 2015-02 eliminates the separate consolidation guidance for limited partnerships and, with it, the presumption that a general partner should consolidate a limited partnership. In addition, ASU 2015-02 changes the guidance for determining if fee arrangements qualify as variable interests and the effect fee arrangements have on the determination of the primary beneficiary. Adoption of ASU 2015-02 did not affect the consolidation analysis for any of White Mountains’s investments.

Share-Based Compensation Awards
On January 1, 2016, White Mountains adopted ASU 2014-12, Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (ASC 718). The new guidance requires that a performance target that affects vesting and that can be achieved after the requisite service period be treated as a performance condition. Compensation cost is to be recognized in the period when it becomes probable the performance target will be achieved in an amount equal to the compensation cost attributable to the periods for which service has been rendered. Adoption did not have any effect on White Mountains’s financial position, results of operations, cash flows, presentation or disclosures.


Debt Issuance Costs
On January 1, 2016, White Mountains adopted ASU 2015-03, Imputation of Interest (ASC 835), which requires debt issuance costs to be presented as a deduction from the carrying amount of the related debt, consistent with the treatment required for debt discounts. The new guidance requires amortization of debt issuance costs to be classified within interest expense and also requires disclosure to the debt’s effective interest rate. As of September 30, 2017, there was an insignificant amount of unamortized debt issuance costs included in debt.

Recently Issued Accounting Pronouncements

Stock Compensation
In May 2017, the FASB issued ASU 2017-09, Stock Compensation: Scope of Modification Accounting (ASC 718), which narrows the scope of transactions subject to modification accounting to changes in terms of an award that result in a change in the award’s fair value, vesting conditions or classification. The new guidance becomes effective for fiscal years beginning after December 15, 2017. White Mountains does not expect a material impact from implementation of this guidance.

Cash Flow Statement
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (ASC 230), which addresses the classification and presentation of certain items, including debt prepayment and extinguishment costs, contingent consideration payments made after a business combination and distributions received from equity method investees, for which there was diversity in practice.
In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows: Restricted Cash (ASC 230). Under current guidance, restricted amounts of cash or cash equivalents are excluded from the cash flow statement. The new guidance requires restricted cash and restricted cash equivalents to be included in the reconciliation of beginning and end-of-period amounts presented on the statement of cash flows. In addition, the new guidance requires a description of the nature of the changes in restricted cash and cash equivalents during the periods presented.
The updated guidance in ASU 2016-15 and ASU 2016-18 are both effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted. White Mountains does not expect a material impact from implementation of this guidance.

Credit Losses
In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (ASC 326), which establishes new guidance for the recognition of credit losses for financial assets measured at amortized cost. The new ASU requires reporting entities to estimate the credit losses expected over the life of a credit exposure using historical information, current information and reasonable and supportable forecasts that affect the collectability of the financial asset. This differs from current U.S. GAAP, which delays recognition until it is probable a loss has been incurred. The new guidance is expected to accelerate recognition of credit losses. The types of assets within the scope of the new guidance include premium receivables, reinsurance recoverables and loans. ASU 2016-13 is effective for annual periods beginning after January 1, 2020, including interim periods. White Mountains is evaluating the expected impact of this guidance.

Leases
In February 2016, the FASB issued ASU 2016-02, Leases (ASC 842). The new guidance requires lessees to recognize lease assets and liabilities on the balance sheet for both operating and financing leases, with the exception of leases with an original term of 12 months or less. Under existing guidance recognition of lease assets and liabilities is not required for operating leases. The lease assets and liabilities to be recognized are both measured initially based on the present value of the lease payments. Under the new guidance, a sale-leaseback transaction must meet the recognition criteria under ASC 606, Revenues, in order to be accounted for as sale. The new guidance is effective for White Mountains for years beginning after December 15, 2018, including interim periods therein. White Mountains is evaluating the expected impact of this guidance and available adoption methods.


Financial Instruments - Recognition and Measurement
In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (ASC 825-10). The new ASU modifies the guidance for financial instruments, including investments in equity securities. Under the new guidance, all equity securities with readily determinable fair values are required to be measured at fair value with changes therein recognized through current period earnings. In addition, the new ASU requires a qualitative assessment for equity securities without readily determinable fair values to identify impairment, and for impaired equity securities to be measured at fair value. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, with early adoption permitted. White Mountains measures its portfolio of investment securities at fair value with changes therein recognized through current period earnings and accordingly, does not expect the adoption of ASU 2016-01 to have a significant impact on its financial statements.

Revenue Recognition
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (ASC 606), which modifies the guidance for revenue recognition. Under ASU 2014-09, revenue is to be recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for goods or services transferred to customers. The new guidance sets forth the steps to be followed to recognize revenue: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue when (or as) the entity satisfies a performance obligation. Subsequently, the FASB issued additional ASUs clarifying the guidance in and providing implementation guidance for ASU 2014-09.
In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers, which delays the effective date of ASU 2014-09 and all related ASUs to annual and interim reporting periods beginning after December 15, 2017. Revenue from insurance contracts, investment income and investments gains and losses are excluded from the scope of 2014-09. The new guidance is applicable to some of White Mountains’s revenue streams, including certain fee arrangements as well as commissions and other non-insurance revenues. White Mountains does not expect ASU 2014-09 to have a significant effect on recognition of White Mountains’s revenues from customers.

Note 2. Significant Transactions


OneBeaconNSM
On August 1, 2022, the NSM Transaction
On September 28, 2017, closed. White Mountains received $1.3$1.4 billion in net cash proceeds at closing and recognized a net transaction gain of $875.7 million, which was comprised of $886.8 million of net gain from sale of discontinued operations and $2.9 million of comprehensive income related to the recognition of foreign currency translation gains (losses) from the sale, partially offset by $14.0 million of compensation and other costs related to the transaction recorded in Other Operations.

WM Outrigger Re
During the fourth quarter of 2022, Ark sponsored the formation of Outrigger Re Ltd., a Bermuda company registered as a special purpose insurer and segregated accounts company, to provide reinsurance capacity to Ark. On December 20, 2022, Outrigger Re Ltd. issued $250.0 million of non-voting redeemable preference shares on behalf of four segregated accounts to White Mountains and unrelated third party investors. Upon issuance of the preference shares, Outrigger Re Ltd. entered into collateralized quota share agreements with GAIL to provide reinsurance protection on Ark’s Bermuda global property catastrophe excess of loss portfolio written in calendar year 2023. The proceeds from the OneBeacon Transactionissuance of the preference shares were deposited into collateral trust accounts to fund any potential obligations under the reinsurance agreements with GAIL. Outrigger Re Ltd.’s obligations under the reinsurance agreements with GAIL are subject to an aggregate limit equal to the assets in the collateral trusts at any point in time. The terms of the reinsurance agreements are renewable upon the mutual agreement of Ark and recordedthe applicable preference shareholder.
White Mountains purchased 100% of the preference shares issued by its segregated account, WM Outrigger Re, for $205.0 million. White Mountains consolidates WM Outrigger Re’s results in its financial statements. WM Outrigger Re’s quota share reinsurance agreement with GAIL eliminates in White Mountains’s consolidated financial statements.

Kudu
On May 26, 2022, Kudu raised $114.5 million of equity capital (the “Kudu Transaction”) from Massachusetts Mutual Life Insurance Company (“Mass Mutual”), White Mountains and Kudu management. Mass Mutual, White Mountains and Kudu management contributed $64.1 million, $50.0 million and $0.4 million at a gainpre-money valuation of $554.61.3x, or $114.0 million netabove the December 31, 2021 equity value of transaction costs.Kudu’s go-forward portfolio of revenue and earnings participation contracts (“Participation Contracts”). The go-forward portfolio of Kudu’s Participation Contracts excluded $54.3 million of enterprise value as of December 31, 2021 relating to two portfolio companies that had announced sale transactions prior to the capital raise. As a result of the OneBeaconKudu Transaction, OneBeacon’s results have been reported as discontinued operations within White Mountains’s GAAP financial statements. See Note 15 — “Held for Sale and Discontinued Operations”.

Salebasic ownership of Star & Shield
On March 7, 2017, White Mountains completed its sale of Star & Shield and its investment in SSIE surplus notesKudu decreased from 99.1% to K2 Insurances LLC. White Mountains did not recognize any gain or loss on the sale. Through December 31, 2016, Star & Shield’s assets and liabilities are reported as held for sale within White Mountains’s GAAP financial statements. See Note 15 — “Held for Sale and Discontinued Operations”.

Acquisition of Buzzmove
On August 4, 2016, White Mountains acquired a 70.9% ownership share in Buzzmove for a purchase price of GBP 6.1 million (approximately $8.1 million based upon the foreign exchange spot rate at the date of acquisition). White Mountains recognized total assets acquired related to Buzzmove of $11.5 million, including $7.6 million of goodwill and $1.1 million of intangible assets, and total liabilities assumed of $0.1 million, reflecting acquisition date fair values.
On August 1, 2017, White Mountains purchased 37,409 newly-issued preferred shares of Buzzmove for GBP 4.0 million (approximately $5.0 million based upon the foreign exchange spot rate at the date of acquisition) and 5,808 common shares from the company founders for GBP $0.5 million (approximately $0.7 million based upon the spot rate at the date of acquisition). White Mountains ownership share in Buzzmove as of September 30, 2017 was 77.1%89.3%.



Sale of Tranzact
On July 21, 2016, White Mountains completed the sale of Tranzact to Clayton, Dubilier & Rice, LLC and received net proceeds of $221.3 million. In connection with the sale of Tranzact, the purchaser directly repaid $56.3 million for the portion of Tranzact’s debt attributable to White Mountains’s common shareholders. On October 5, 2016, White Mountains received additional proceeds of $1.2 million following the release of the post-closing purchase price adjustment escrow.
White Mountains recorded a $51.9 million gain from the sale of Tranzact in discontinued operations, which included a $30.2 million tax expense for the reversal of a tax valuation allowance that is offset by a tax benefit recorded in continuing operations. See Note 6 — “Income Taxes”. The increase to White Mountains’s book value from the sale of Tranzact was $82.1 million. A reconciliation of the gain reported in discontinued operations to the impact to White Mountains’s book value is as follows:
10
Gain from sale of Tranzact reported in discontinued operations $51.9
Add back reclassification from continuing operations for the release of a tax valuation allowance 30.2
Increase to White Mountains’s book value from sale of Tranzact $82.1


In the first quarter of 2017, White Mountains recorded a $1.0 million reduction to the gain from sale of Tranzact in discontinued operations as a result of state tax expense.
Through July 21, 2016, Tranzact’s results of operations are reported as discontinued operations and assets and liabilities held for sale within White Mountains’s GAAP financial statements. See Note 15 — “Held for Sale and Discontinued Operations”.

Sale of Sirius Group
On April 18, 2016, White Mountains completed the sale of Sirius Group to CMI for approximately $2.6 billion. $161.8 million of this amount was used to purchase certain assets to be retained by White Mountains out of Sirius Group, including shares of OneBeacon. The amount paid at closing was based on an estimate of Sirius Group’s closing date tangible common shareholder’s equity. During the third quarter of 2016, there was a final true-up to Sirius Group’s tangible common shareholder’s equity that resulted in a $4.0 million reduction to the gain. During 2016, White Mountains recorded $363.2 million of gain from sale of Sirius Group in discontinued operations and $113.3 million in other comprehensive income from discontinued operations from Sirius Group.
During the third quarter of 2017, White Mountains recorded a $0.8 million reduction to the gain from sale of Sirius Group as a result of a change to the valuation of the accrued incentive compensation payable to Sirius Group employees.
Through April 18, 2016, Sirius Group’s results are reported as discontinued operations and assets and liabilities held for sale within White Mountains’s GAAP financial statements.
The transactions to purchase the investments in OneBeacon and the other investments held by Sirius Group prior to the closing are presented in the statement of cash flows as net settlement of investment cash flows within discontinued operations. See Note 15 — “Held for Sale and Discontinued Operations”.

Sale of Symetra
On February 1, 2016, Symetra Financial Corporation (“Symetra”) closed its merger agreement with Sumitomo Life Insurance Company (“Sumitomo Life”) and White Mountains received proceeds of $658.0 million, or $32.00 per common share. White Mountains also received a special dividend of $0.50 per share as part of the transaction that was paid in the third quarter of 2015. See Note 12 — “Investment in Symetra”.


Note 3.  InvestmentsInvestment Securities


White Mountains’s portfolio of investment securities held for general investment purposes consists of fixed maturity investments, short-term investments, common equity securities, its investment in MediaAlpha and other-long termother long-term investments, which are all classified as trading securities. Trading securities are reported at fair value as of the balance sheet date.  Net realized and unrealized investment gains (losses) on trading securities are reported in pre-tax revenues.
White Mountains’s fixed maturity investments are generally valued using industry standard pricing methodologies. Key inputs include benchmark yields, benchmark securities, reported trades, issuer spreads, bids, offers, credit ratings and prepayment speeds. Income on mortgage and asset-backed securities is recognized using an effective yield based on anticipated prepayments and the estimated economic life of the securities. When actual prepayments differ significantly from anticipated prepayments, the estimated economic life is recalculated and the remaining unamortized premium or discount is amortized prospectively over the remaining economic life.
Realized investment gains (losses) resulting from sales of investment securities are accounted for using the specific identification method. Premiums and discounts on all fixed maturity investments are amortized or accreted to income over the anticipated life of the investment. Short-term investments consist of interest-bearing money market funds, certificates of deposit and other securities, which at the time of purchase, mature or become available for use within one year.  Short-term investments are carried at amortized or accreted cost,fair value, which approximated fair valueamortized cost, as of September 30, 2017March 31, 2023 and December 31, 2016.2022.
Other long-term investments consist primarily of hedge funds,unconsolidated entities, including Kudu’s Participation Contracts, private equity funds unconsolidatedand hedge funds, a bank loan fund, Lloyd’s trust deposits, insurance-linked securities (“ILS”) funds and private capital investments and foreign currency forward contracts.debt instruments.

Net Investment Income

White Mountains’s net investment income is comprised primarily of interest income associated with White Mountains’s fixed maturity investments and short-term investments, and dividend income from its common equity securities, distributions from its investment in MediaAlpha and distributions from other long- termlong-term investments.
Pre-taxThe following table presents pre-tax net investment income for the three and nine months ended September 30, 2017 March 31, 2023 and 2016 consisted of the following:2022:
Three Months Ended March 31,
Millions20232022
Fixed maturity investments$14.5 $8.2 
Short-term investments9.7 .1 
Common equity securities1.3 — 
Other long-term investments14.1 13.2 
Amount attributable to TPC Providers— (.5)
Total investment income39.6 21.0 
Third-party investment expenses(.6)(.4)
Net investment income, pre-tax$39.0 $20.6 

11
  Three Months Ended Nine Months Ended
  September 30, September 30,
Millions 2017 2016 2017 2016
Investment income:        
Fixed maturity investments $9.8
 $9.3
 $32.9
 $17.4
Short-term investments .3
 .2
 .6
 .7
Common equity securities 2.7
 .5
 7.7
 1.0
Other long-term investments .1
 —
 .5
 .4
Total investment income 12.9
 10.0
 41.7
 19.5
Third-party investment expenses (.7) (.4) (2.0) (1.3)
Net investment income, pre-tax $12.2
 $9.6
 $39.7
 $18.2



Net Realized and Unrealized Investment Gains (Losses)
NetThe following table presents net realized and unrealized investment gains (losses) for the three and nine months ended September 30, 2017March 31, 2023 and 2016 consisted2022:
Three Months Ended March 31,
Millions20232022
Realized investment gains (losses)
Fixed maturity investments$(.1)$(1.1)
Short-term investments(.4)(.2)
Other long-term investments47.2 18.7 
Net realized investment gains (losses)46.7 17.4 
Unrealized investment gains (losses)
Fixed maturity investments29.7 (79.5)
Short-term investments1.2 .2 
Common equity securities29.4 1.0 
Investment in MediaAlpha85.2 18.8 
Other long-term investments5.9 50.4 
Net unrealized investment gains (losses)151.4 (9.1)
Net realized and unrealized investment gains (losses), before
   amount attributable to TPC providers(1)
198.1 8.3 
Amount attributable to TPC Providers— 2.1 
Net realized and unrealized investment gains (losses)
$198.1 $10.4 
Fixed maturity and short-term investments
   Net realized and unrealized investment gains (losses)$30.4 $(80.6)
Less: net realized and unrealized gains (losses) on investment
   securities sold during the period		1.8 (1.0)
Net unrealized investment gains (losses) recognized during the period on
   investment securities held at the end of the period		$28.6 $(79.6)
Common equity securities and investment in MediaAlpha
Net realized and unrealized investment gains (losses) on common
   equity securities		$29.4 $1.0 
Net realized and unrealized investment gains (losses) from
    investment in MediaAlpha		85.2 18.8 
Total net realized and unrealized investment gains (losses)114.6 19.8 
Less: net realized and unrealized gains (losses) on investment
   securities sold during the period		— — 
Net unrealized investment gains (losses) recognized during the period on
   investment securities held at the end of the period		$114.6 $19.8 
(1) For the three months ended March 31, 2023 and 2022, includes $5.4 and $2.6 of the following:
  Three Months Ended Nine Months Ended
  September 30, September 30,
Millions 2017 2016 2017 2016
Net realized investment gains, pre-tax $6.8
 $.7
 $20.8
 $265.0
Net unrealized investment gains (losses), pre-tax 25.7
 10.2
 81.7
 (237.8)
Net realized and unrealized investment gains, pre-tax 32.5
 10.9
 102.5
 27.2
Income tax expense attributable to net realized and
     unrealized investment gains
 (3.9) —
 (9.5) (4.0)
Net realized and unrealized investment gains, after tax $28.6
 $10.9
 $93.0
 $23.2

Net Realized Investment Gains (Losses)
Net realized investment gains (losses) for the three and nine months endedSeptember 30, 2017 and 2016 consisted of the following:
  Three Months Ended Three Months Ended
  September 30, 2017 September 30, 2016
Millions Net
realized gains (losses)		 Net
foreign
currency gains (losses)		 Total net realized
gains (losses)
reflected in
earnings		 Net
realized gains		 Net
foreign
currency gains (losses)		 Total net realized
gains
reflected in
earnings
Fixed maturity investments $.6
 $1.2
 $1.8
 $.3
 $—
 $.3
Short-term investments (.1) —
 (.1) .2
 —
 .2
Common equity securities 4.9
 5.4
 10.3
 .2
 —
 .2
Other long-term investments 2.0
 (7.2) (5.2) —
 —
 —
Net realized investment gains (losses),
   pre-tax
 7.4
 (.6) 6.8
 .7
 —
 .7
Income tax expense attributable to
   net realized investment gains
 (.6) —
 (.6) (.1) —
 (.1)
Net realized investment
   gains (losses), after tax
 $6.8
 $(.6) $6.2
 $.6
 $—
 $.6
  Nine Months Ended Nine Months Ended
  September 30, 2017 September 30, 2016
Millions Net
realized (losses)
gains		 Net
foreign
currency gains (losses)		 Total net realized
gains (losses)
reflected in
earnings		 Net
realized gains		 Net
foreign
currency gains (losses)		 Total net realized
gains
reflected in
earnings
Fixed maturity investments $(.4) $2.7
 $2.3
 $2.0
 $—
 $2.0
Short-term investments (.1) —
 (.1) .4
 —
 .4
Common equity securities 18.5
 6.0
 24.5
 262.6
 —
 262.6
Other long-term investments 3.0
 (8.9) (5.9) —
 —
 —
Net realized investment gains (losses), pre-tax 21.0
 (.2) 20.8
 265.0
 —
 265.0
Income tax expense attributable to
   net realized investment gains
 (3.6) —
 (3.6) (45.1) —
 (45.1)
Net realized investment
   gains (losses), after tax
 $17.4
 $(.2) $17.2
 $219.9
 $—
 $219.9


Net Unrealized Investment Gains (Losses)
Net unrealized investment gains (losses) and changes in the carrying value of investments measured at fair value for the three and nine months ended September 30, 2017 and 2016 consisted of the following:related to foreign currency exchange.

  Three Months Ended Three Months Ended
  September 30, 2017 September 30, 2016
Millions 
Net
unrealized
 gains (losses)
 
Net
foreign
currency
gains (losses)
 
Total net unrealized gains (losses)
reflected in
earnings
 
Net
unrealized (losses) gains
 Net
foreign
currency gains		 
Total net unrealized (losses) gains
reflected in
earnings
Fixed maturity investments $2.0
 $5.1
 $7.1
 $(2.0) $—
 $(2.0)
Common equity securities 26.6
 (3.1) 23.5
 8.5
 .2
 8.7
Other long-term investments (2.5) (2.4) (4.9) 3.4
 .1
 3.5
Net unrealized investment gains (losses), pre-tax 26.1
 (.4) 25.7
 9.9
 .3
 10.2
Income tax (expense) benefit
   attributable to net unrealized
   investment gains (losses)
 (3.3) —
 (3.3) .1
 —
 .1
Net unrealized investment
   gains (losses), after tax
 $22.8
 $(.4) $22.4
 $10.0
 $.3
 $10.3

  Nine Months Ended Nine Months Ended
  September 30, 2017 September 30, 2016
Millions 
Net
unrealized
 gains
 
Net
foreign
currency
gains (losses)
 
Total net unrealized gains (losses)
reflected in
earnings
 
Net
unrealized gains (losses)
 Net
foreign
currency gains		 
Total net unrealized
gains (losses)
reflected in
earnings
Fixed maturity investments $19.4
 $12.6
 $32.0
 $13.3
 $—
 $13.3
Common equity securities 53.5
 —
 53.5
 (256.1) 2.6
 (253.5)
Other long-term investments 9.2
 (13.0) (3.8) 2.1
 .3
 2.4
Net unrealized investment gains (losses), pre-tax 82.1
 (.4) 81.7
 (240.7) 2.9
 (237.8)
Income tax (expense) benefit
  attributable to net unrealized
  investment gains (losses)
 (5.9) —
 (5.9) 41.1
 —
 41.1
Net unrealized investment
   gains (losses), after tax
 $76.2
 $(.4) $75.8
 $(199.6) $2.9
 $(196.7)

TotalThe following table presents total net unrealized gains (losses) included in earnings attributable to unrealized investment gains (losses) for Level 3 investments for the three and nine months ended September 30, 2017 March 31, 2023 and 2016 consisted2022 for investments still held at the end of the following:period:
Three Months Ended March 31,
Millions20232022
Total net unrealized investment gains on other long-term investments held at the
   end of the period, pre-tax		$37.0 $27.2 

12
  Three Months Ended Nine Months Ended
  September 30, September 30,
Millions 2017 2016 2017 2016
Fixed maturity investments $—
 $—
 $—
 $.1
Other long-term investments (.7) (.9) (2.2) .7
Total unrealized investment (losses) gains, pre-tax - Level 3 investments $(.7) $(.9) $(2.2) $.8



Investment Holdings

The following tables present the cost or amortized cost, gross unrealized investment gains (losses), net foreign currency gains (losses) and carrying values of White Mountains’s fixed maturity investments as of March 31, 2023 and December 31, 2022:
 March 31, 2023
MillionsCost or
Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Net Foreign
Currency Gains (Losses)		Carrying
Value
U.S. Government and agency obligations$245.7 $.1 $(8.0)$— $237.8 
Debt securities issued by corporations1,073.9 1.3 (63.1)(1.7)1,010.4 
Municipal obligations280.0 — (17.0)— 263.0 
Mortgage and asset-backed securities289.5 — (30.7)— 258.8 
Collateralized loan obligations192.1 .1 (5.2)(1.1)185.9 
Total fixed maturity investments$2,081.2 $1.5 $(124.0)$(2.8)$1,955.9 

 December 31, 2022
MillionsCost or
Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Net Foreign
Currency
Gains (Losses)		Carrying
Value
U.S. Government and agency obligations$216.6 $— $(10.2)$— $206.4 
Debt securities issued by corporations1,098.3 .6 (78.3)(1.8)1,018.8 
Municipal obligations281.6 .4 (23.4)— 258.6 
Mortgage and asset-backed securities288.7 — (34.5)— 254.2 
Collateralized loan obligations190.8 .1 (6.0)(2.0)182.9 
Total fixed maturity investments$2,076.0 $1.1 $(152.4)$(3.8)$1,920.9 

The following table presents the cost or amortized cost and carrying values of White Mountains’s fixed maturity investments by contractual maturity as of March 31, 2023. Actual maturities could differ from contractual maturities because borrowers may have the right to call or prepay certain obligations with or without call or prepayment penalties.
March 31, 2023
MillionsCost or Amortized CostCarrying Value
Due in one year or less$223.8 $219.2 
Due after one year through five years943.6 891.9 
Due after five years through ten years338.8 314.2 
Due after ten years93.4 85.9 
Mortgage and asset-backed securities and collateralized loan obligations481.6 444.7 
Total fixed maturity investments$2,081.2 $1,955.9 


13

The following tables present the cost or amortized cost, gross unrealized investment gains (losses), net foreign currency gains (losses), and carrying values of White Mountains’s fixed maturity investments as of September 30, 2017 and December 31, 2016 were as follows: 
  September 30, 2017
Millions 
Cost or
amortized
cost
 
Gross
unrealized
gains
 
Gross
unrealized
losses
 
Net foreign
currency
gains
 
Carrying
value
U.S. Government and agency obligations $218.1
 $.1
 $(.4) $—
 $217.8
Debt securities issued by corporations 608.3
 3.2
 (1.0) 14.5
 625.0
Mortgage and asset-backed securities 389.1
 1.2
 (2.4) —
 387.9
Municipal obligations 252.1
 3.1
 (.5) —
 254.7
Foreign government, agency and provincial obligations 4.5
 —
 (.1) .2
 4.6
   Total fixed maturity investments $1,472.1
 $7.6
 $(4.4) $14.7
 $1,490.0

  December 31, 2016
Millions 
Cost or
amortized
cost
 
Gross
unrealized
gains
 
Gross
unrealized
losses
 
Net foreign
currency
gains
 
Carrying
value
U.S. Government and agency obligations $112.1
 $—
 $(1.1) $—
 $111.0
Debt securities issued by corporations 752.0
 2.3
 (10.1) 2.1
 746.3
Mortgage and asset-backed securities 986.9
 .8
 (7.9) —
 979.8
Municipal obligations 238.7
 1.1
 (1.3) —
 238.5
Foreign government, agency and provincial obligations 12.0
 .1
 —
 —
 12.1
Total fixed maturity investments $2,101.7
 $4.3
 $(20.4) $2.1
 $2,087.7
Less: fixed maturity investments reclassified to assets
    held for sale related to SSIE
         (6.6)
Total fixed maturity investments         $2,081.1

The cost or amortized cost, gross unrealized investment gains (losses), net foreign currency gains (losses), and carrying values of White Mountains’s common equity securities, White Mountains’s investment in MediaAlpha and other long-term investments as of September 30, 2017March 31, 2023 and December 31, 2016 were as follows:2022:
 March 31, 2023
MillionsCost or
Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Net Foreign
Currency Gains (Losses)		Carrying
Value
Common equity securities$660.6 $48.0 $(2.8)$(8.0)$697.8 
Investment in MediaAlpha$— $253.8 $— $— $253.8 
Other long-term investments$1,489.7 $264.3 $(96.2)$(14.8)$1,643.0 
 September 30, 2017 December 31, 2022
Millions 
Cost or
amortized
cost
 
Gross
unrealized
gains
 
Gross
unrealized
losses
 Net foreign
currency
losses		 
Carrying
value
MillionsCost or
Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Net Foreign
Currency
Gains (Losses)		Carrying
Value
Common equity securities $693.8
 $82.6
 $(2.0) $—
 $774.4
Common equity securities$660.6 $26.7 $(8.4)$(10.5)$668.4 
Investment in MediaAlphaInvestment in MediaAlpha$— $168.6 $— $— $168.6 
Other long-term investments $254.5
 $13.1
 $(21.2) $(16.8) $229.6
Other long-term investments$1,340.8 $271.1 $(107.1)$(16.8)$1,488.0 

  December 31, 2016
Millions Cost or
amortized
cost		 Gross
unrealized
gains		 Gross
unrealized
losses		 Net foreign
currency
losses		 
Carrying
value
Common equity securities $258.6
 $29.0
 $(2.0) $—
 $285.6
Other long-term investments $194.0
 $7.9
 $(25.2) $(3.9) $172.8


Other Long-term Investments
Other long-term investments as of September 30, 2017 and December 31, 2016 were as follows:
  Carrying Value at
Millions September 30, 2017 December 31, 2016
Hedge funds and private equity funds, at fair value $154.9
 $82.6
Private equity securities and limited liability companies, at fair value (1)(2)
 59.1
 57.6
Private convertible preferred securities, at fair value (1)
 27.2
 30.6
Forward Contracts (15.4) (1.2)
Other 3.8
 3.2
Total other-long term investments $229.6
 $172.8
(1) See Fair Value Measurements by Level table.
(2) White Mountains holds a 20% ownership interest in OneTitle Holdings LLC (“OTH”) and has provided a $10.0 million surplus note facility under which OTH’s wholly-owned insurance subsidiary, OneTitle National Guaranty Company, Inc. may, under certain circumstances, draw funds. At September 30, 2017, no funds had been drawn on the surplus note facility.

Hedge Funds and Private Equity Funds
White Mountains holds investments in hedge funds and private equity funds, which are included in other long-term investments. The fair value of these investments is generally estimated using the net asset value (“NAV”) of the funds. As of September 30, 2017, White Mountains held investments in two hedge funds and ten private equity funds.  The largest investment in a single fund was $54.7 million as of September 30, 2017 and $21.5 million as of December 31, 2016. The following table summarizes investments in hedge funds and private equity funds by investment objective and sector as of September 30, 2017 and December 31, 2016:
  September 30, 2017 December 31, 2016
Millions Fair Value 
Unfunded
Commitments
 Fair Value 
Unfunded
Commitments
Hedge funds  
  
  
  
Long/short banks and financials $54.7
 $—
 $21.5
 $—
Long/short equity REIT 19.1
 —
 19.9
 —
Total hedge funds 73.8
 —
 41.4
 —
         
Private equity funds  
  
  
  
Manufacturing/Industrial 42.7
 12.1
 19.4
 22.9
Aerospace/Defense/Government 28.7
 15.6
 19.4
 25.9
Direct lending 6.7
 23.3
 1.4
 28.6
Financial Services 3.0
 13.0
 1.0
 5.0
Insurance —
 41.2
 —
 41.2
Total private equity funds 81.1
 105.2
 41.2
 123.6
Total hedge funds and private equity funds
    included in other long-term investments
 $154.9
 $105.2
 $82.6
 $123.6

Redemption of investments in certain hedge funds is subject to restrictions including lock-up periods where no redemptions or withdrawals are allowed, restrictions on redemption frequency and advance notice periods for redemptions.  Amounts requested for redemptions remain subject to market fluctuations until the redemption effective date, which generally falls at the end of the defined redemption period. As of September 30, 2017, one hedge fund with a fair value of $54.7 million was subject to a lock-up period that expires on September 1, 2018.
The following table summarizes the fair value of hedge funds subject to restrictions on redemption frequency and advance notice period requirements for investments in active hedge funds as of September 30, 2017:
  Notice Period
Millions
Redemption frequency
 
30-59 days
notice
 
60-89 days
notice
 Total
Semi-annual $54.7
 $19.1
 $73.8

White Mountains has submitted a redemption request for its investment in a long/short equity REIT hedge fund. As of September 30, 2017, the redemption of $19.1 million is outstanding and is subject to market fluctuation. The bulk of the redemption proceeds are expected to be received in the first quarter of 2018 with the balance expected in the second quarter of 2018.
Investments in private equity funds are generally subject to a lock-up period during which investors may not request a redemption. Distributions prior to the expected termination date of the fund may be limited to dividends or proceeds arising from the liquidation of the fund’s underlying investments. In addition, certain private equity funds provide an option to extend the lock-up period at either, the sole discretion of the fund manager or upon agreement between the fund and the investors.
The following table summarizes investments in private equity funds that were subject to lock-up periods as of September 30, 2017:
Millions 1-3 years 3 – 5 years 5 – 10 years >10 years Total
Private Equity Funds — expected lock-up period remaining $4.0 $18.2 $33.5 $25.4 $81.1


Fair Value Measurements as of September 30, 2017
Fair value measurements are categorized into a hierarchy that distinguishes between inputs based on market data from independent sources (“observable inputs”)(observable inputs) and a reporting entity’s internal assumptions based upon the best information available when external market data is limited or unavailable (“unobservable inputs”)(unobservable inputs). Quoted prices in active markets for identical assets or liabilities have the highest priority (“Level 1”)(Level 1), followed by observable inputs other than quoted prices, including prices for similar but not identical assets or liabilities (“Level 2”)(Level 2) and unobservable inputs, including the reporting entity’s estimates of the assumptions that market participants would use, having the lowest priority (“Level 3”)(Level 3). See Note 17 — “Fair Value of Financial Instruments.”
As of September 30, 2017March 31, 2023 and December 31, 2016,2022, White Mountains used quoted market prices or other observable inputs to determine fair value for approximately 93%70% and 94% of its investment portfolio. Investments valued using Level 1 inputs include fixed maturity investments, primarily investments in U.S. Treasuries, short-term investments, which include U.S. Treasury Bills and common equity securities. Investments valued using Level 2 inputs include fixed maturity investments, which have been disaggregated into classes, including debt securities issued by corporations, mortgage and asset-backed securities, municipal obligations, and foreign government, agency and provincial obligations. Investments valued using Level 2 inputs also include certain passive exchange traded funds (“ETFs”) that track U.S. stock indices such as the S&P 500 but are traded on foreign exchanges, which management values using the fund manager’s published NAV to account for the difference in market close times. Fair value estimates for investments that trade infrequently and have few or no observable market prices are classified as Level 3 measurements. Investments valued using Level 3 fair value estimates are based upon unobservable inputs and include investments in certain fixed maturity investments, equity securities and other long-term investments where quoted market prices are unavailable or are not considered reasonable. Transfers between levels are based on investments held as72% of the beginning of the period.investment portfolio.
White Mountains uses brokers and outside pricing services to assist in determining fair values. For investments in active markets, White Mountains uses the quoted market prices provided by outside pricing services to determine fair value. The outside pricing services White Mountains uses have indicated that they will only provide prices where observable inputs are available. In circumstances where quoted market prices are unavailable or are not considered reasonable, White Mountains estimates the fair value using industry standard pricing methodologies and observable inputs such as benchmark yields, reported trades, broker-dealer quotes, issuer spreads, benchmark securities, bids, offers, credit ratings, prepayment speeds, reference data including research publications and other relevant inputs. Given that many fixed maturity investments do not trade on a daily basis, the outside pricing services evaluate a wide range of fixed maturity investments by regularly drawing parallels from recent trades and quotes of comparable securities with similar features. The characteristics used to identify comparable fixed maturity investments vary by asset type and take into account market convention.
White Mountains’s process to assess the reasonableness of the market prices obtained from the outside pricing sources
covers substantially all of its fixed maturity investments and includes, but is not limited to, the evaluation of pricing methodologies and a review of the pricing services’ quality control procedures on at least an annual basis, a comparison of its invested asset prices obtained from alternate independent pricing vendors on at least a semi-annual basis, monthly analytical reviews of certain prices and a review of the underlying assumptions utilized by the pricing services for select measurements on an ad hoc basis throughout the year. White Mountains also performs back-testing of selected sales activity to determine whether there are any significant differences between the market price used to value the security prior to sale and the actual sale price on an ad-hoc basis throughout the year. Prices provided by the pricing services that vary by more than 5% and $1.0 million from the expected price based on these assessment procedures are considered outliers. Also considered outliers are prices that have not changed from period to period and prices that have trended unusually compared to market conditions. In circumstances where the results of White Mountains’s review process does not appear to support the market price provided by the pricing services, White Mountains challenges the vendor provided price. If White Mountains cannot gain satisfactory evidence to support the challenged price, it relies upon its own pricing methodologies to estimate the fair value of the security in question.
The valuation process described above is generally applicable to all of White Mountains’s fixed maturity investments. The techniques and inputs specific to asset classes within White Mountains’s fixed maturity investments for Level 2 securities that use observable inputs are as follows:

Debt securities issued by corporations:The fair value of debt securities issued by corporations is determined from a pricing evaluation technique that uses information from market sources and integrates relative credit information, observed market movements, and sector news. Key inputs include benchmark yields, reported trades, broker-dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including sector, coupon, credit quality ratings, duration, credit enhancements, early redemption features and market research publications.


Mortgage and asset-backed securities: The fair value of mortgage and asset-backed securities is determined from a pricing evaluation technique that uses information from market sources and leveraging similar securities. Key inputs include benchmark yields, reported trades, underlying tranche cash flow data, collateral performance, plus new issue data, as well as broker-dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including issuer, vintage, loan type, collateral attributes, prepayment speeds, default rates, recovery rates, cash flow stress testing, credit quality ratings and market research publications.

Municipal obligations: The fair value of municipal obligations is determined from a pricing evaluation technique that uses information from market makers, brokers-dealers, buy-side firms, and analysts along with general market information. Key inputs include benchmark yields, reported trades, issuer financial statements, material event notices and new issue data, as well as broker-dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including type, coupon, credit quality ratings, duration, credit enhancements, geographic location and market research publications.

Foreign government, agency and provincial obligations:The fair value of foreign government, agency and provincial obligations is determined from a pricing evaluation technique that uses feeds from data sources in each respective country, including active market makers and inter-dealer brokers. Key inputs include benchmark yields, reported trades, broker-dealer quotes, two-sided markets, benchmark securities, bids, offers, local exchange prices, foreign exchange rates and reference data including coupon, credit quality ratings, duration and market research publications.

Level 3 valuations are generated from techniques that use assumptions not observable in the market. These unobservable assumptions reflect White Mountains’s assumptions that market participants would use in valuing the investment. Generally, certain securities may start out as Level 3 when they are originally issued but as observable inputs become available in the market, they may be reclassified to Level 2.
White Mountains employs a number of procedures to assess the reasonableness of the fair value measurements for its other long-term investments, including obtaining and reviewing periodic and audited annual financial statements of hedge funds and private equity funds and discussing each fund’s pricing with the fund manager throughout the year. However, since the fund managers do not provide sufficient information to evaluate the pricing inputs and methods for each underlying investment, the inputs are considered to be unobservable. The fair value of White Mountains’s investments in hedge funds and private equity funds has generally been determined using the fund manager’s NAV. In the event White Mountains believes that its estimate of NAV of a hedge fund or private equity fund differs from that reported by the fund manager due to illiquidity or other factors, White Mountains will adjust the reported NAV to more appropriately represent the fair value of its investment in the hedge fund or private equity fund. As of September 30, 2017 and December 31, 2016, White Mountains did not have any adjustments to the reported NAV of its investments in hedge funds and private equity funds.



Fair Value Measurements by Level

The following tables summarizepresent White Mountains’s fair value measurements for investments as of September 30, 2017March 31, 2023 and December 31, 20162022 by level. The major security types were based on the legal form of the securities. White Mountains has disaggregated its fixed maturity investments based on the issuing entity type, which impacts credit quality, with debt securities issued by U.S. government entities carrying minimal credit risk, while the credit and other risks associated with other issuers, such as corporations, foreign governments, municipalities or entities issuing mortgage and asset-backed securities vary depending on the nature of the issuing entity type. White Mountains further disaggregates debt securities issued by corporations and common equity securities by industry sector because investors often reference commonly used benchmarks and their subsectors to monitor risk and performance. Accordingly, White Mountains has further disaggregated thesethis asset classesclass into subclasses based on the similar sectors and industry classifications it uses to evaluate investment risk and performance against commonly used benchmarks, such as the Bloomberg Barclays U.S. Intermediate Aggregate and S&P 500 indices. The fair value measurements for derivative assets associated with White Mountains’s variable annuity business are presented in Note 7.Aggregate.
14

 September 30, 2017 March 31, 2023
Millions Fair Value Level 1 Level 2 Level 3MillionsFair ValueLevel 1Level 2Level 3
Fixed maturity investments:  
  
  
  
Fixed maturity investments:    
U.S. Government and agency obligations $217.8
 $217.8
 $—
 $—
U.S. Government and agency obligations$237.8 $237.8 $— $— 
        
Debt securities issued by corporations:  
      Debt securities issued by corporations: 
FinancialsFinancials281.9 — 281.9 — 
Consumer 121.9
 —
 121.9
 —
Consumer194.9 — 194.9 — 
Utilities 109.3
 —
 109.3
 —
Health Care 85.6
 —
 85.6
 —
Communications 81.7
 —
 81.7
 —
Materials 68.6
 —
 68.6
 —
Financials 55.6
 —
 50.0
 5.6
HealthcareHealthcare124.8 — 124.8 — 
Technology 52.0
 —
 52.0
 —
Technology123.3 — 123.3 — 
Industrial 38.3
 —
 38.3
 —
Industrial119.8 — 119.8 — 
UtilitiesUtilities64.0 — 64.0 — 
CommunicationsCommunications45.2 — 45.2 — 
Energy 12.0
 —
 12.0
 —
Energy36.4 — 36.4 — 
MaterialsMaterials20.1 — 20.1 — 
Total debt securities issued by corporations 625.0
 —
 619.4
 5.6
Total debt securities issued by corporations1,010.4 — 1,010.4 — 
Municipal obligationsMunicipal obligations263.0 — 263.0 — 
Mortgage and asset-backed securitiesMortgage and asset-backed securities258.8 — 258.8 — 
        
Mortgage and asset-backed securities 387.9
 —
 387.9
 —
Municipal obligations 254.7
 —
 254.7
 —
Foreign government, agency and provincial obligations 4.6
 —
 4.6
 —
Collateralized loan obligationsCollateralized loan obligations185.9 — 185.9 — 
Total fixed maturity investments 1,490.0
 217.8
 1,266.6
 5.6
Total fixed maturity investments1,955.9 237.8 1,718.1 — 
Short-term investmentsShort-term investments884.2 878.4 5.8 — 
Common equity securities:Common equity securities:
Exchange-traded fundsExchange-traded funds357.4 357.4 — — 
Other (1)
Other (1)
340.4 — 340.4 — 
Total common equity securitiesTotal common equity securities697.8 357.4 340.4 — 
Investment in MediaAlphaInvestment in MediaAlpha253.8 253.8 — — 
        
Short-term investments(1)
 786.5
 764.5
 22.0
 —
        
Common equity securities:  
  
  
  
Exchange traded funds (2)
 492.5
 434.6
 57.9
 —
Health Care 17.1
 17.1
 —
 —
Financials 14.9
 14.9
 —
 —
Consumer 13.0
 13.0
 —
 —
Technology 11.7
 11.7
 —
 —
Communications 10.3
 10.3
 —
 —
Industrial 10.2
 10.2
 —
 —
Energy 4.0
 4.0
 —
 —
Other(3)
 200.7
 —
 200.7
 —
Total common equity securities 774.4
 515.8
 258.6
 —
        
Other long-term investments (4)(5)
 90.1
 —
 —
 90.1
Other long-term investmentsOther long-term investments970.2 — 15.5 954.7 
Other long-term investments — NAV (2)
Other long-term investments — NAV (2)
672.8 — — — 
Total other long-term investmentsTotal other long-term investments1,643.0 — 15.5 954.7 
Total investments $3,141.0
 $1,498.1
 $1,547.2
 $95.7
Total investments$5,434.7 $1,727.4 $2,079.8 $954.7 
(1)Short-term investments are measured at amortized cost, which approximates fair value.
(2) ETFs traded on foreign exchanges are priced using the fund's published NAV to account for the difference in market close times and are therefore designated a level 2 measurement.
(3) Consists of two investments in unit trustslisted funds that primarilypredominantly invest in international equities.
(4) Excludes carrying value(2) Consists of $(15.4) related to foreign currency forward contracts.
(5) Excludes carrying value of $154.9 associated withprivate equity funds and hedge funds, a bank loan fund, Lloyd’s trust deposits and private equityILS funds for which fair value is measured using NAV as a practical expedient. Investments for which fair value is measured at NAV usingare not classified within the practical expedient.fair value hierarchy.




15

 December 31, 2016 December 31, 2022
Millions Fair Value Level 1 Level 2 Level 3MillionsFair ValueLevel 1Level 2Level 3
Fixed maturity investments:  
  
  
  
Fixed maturity investments:    
U.S. Government and agency obligations $111.0
 $101.5
 $9.5
 $—
U.S. Government and agency obligations$206.4 $206.4 $— $— 
        
Debt securities issued by corporations:  
  
  
  
Debt securities issued by corporations:    
FinancialsFinancials291.2 — 291.2 — 
Consumer 190.8
 —
 190.8
 —
Consumer191.9 — 191.9 — 
Utilities 140.8
 —
 140.8
 —
Health Care 114.9
 —
 114.9
 —
Financials 79.7
 —
 79.7
 —
Communications 72.0
 —
 72.0
 —
Materials 65.0
 —
 65.0
 —
HealthcareHealthcare121.3 — 121.3 — 
Technology 48.8
 —
 48.8
 —
Technology123.7 — 123.7 — 
Industrial 28.2
 —
 28.2
 —
Industrial115.4 — 115.4 — 
Energy 6.1
 —
 6.1
 —
Total debt securities issued by corporations 746.3
 —
 746.3
 —
        
Mortgage and asset-backed securities 979.8
 —
 979.8
 —
Municipal obligations 238.5
 —
 238.5
 —
Foreign government, agency and provincial obligations 12.1
 —
 12.1
 —
Total fixed maturity investments(1)
 2,087.7
 101.5
 1,986.2
 —
        
Short-term investments(1)(2)
 175.0
 162.3
 12.7
 —
        
Common equity securities:  
  
  
  
Exchange traded funds(3)
 157.2
 129.4
 27.8
 —
Health Care 13.9
 13.9
 —
 —
Consumer 8.6
 8.6
 —
 —
Financials 7.7
 7.7
 —
 —
Technology 7.3
 7.3
 —
 —
UtilitiesUtilities73.8 — 73.8 — 
Communications 7.0
 7.0
 —
 —
Communications47.9 — 47.9 — 
Energy 2.5
 2.5
 —
 —
Energy33.9 — 33.9 — 
Industrial 1.5
 1.5
 —
 —
Other(4)
 79.9
 —
 79.9
 —
MaterialsMaterials19.7 — 19.7 — 
Total debt securities issued by corporationsTotal debt securities issued by corporations1,018.8 — 1,018.8 — 
Municipal obligationsMunicipal obligations258.6 — 258.6 — 
Mortgage and asset-backed securitiesMortgage and asset-backed securities254.2 — 254.2 — 
Collateralized loan obligationsCollateralized loan obligations182.9 — 182.9 — 
Total fixed maturity investmentsTotal fixed maturity investments1,920.9 206.4 1,714.5 — 
Short-term investmentsShort-term investments924.1 924.1 — — 
Common equity securities:Common equity securities:
Exchange-traded fundsExchange-traded funds333.8 333.8 — — 
Other (1)
Other (1)
334.6 — 334.6 — 
Total common equity securities 285.6
 177.9
 107.7
 —
Total common equity securities668.4 333.8 334.6 — 
Investment in MediaAlphaInvestment in MediaAlpha168.6 168.6 — — 
        
Other long-term investments (5)(6)
 91.4
 —
 —
 91.4
Total investments(1)
 $2,639.7
 $441.7
 $2,106.6
 $91.4
Other long-term investmentsOther long-term investments926.4 — 14.8 911.6 
Other long-term investments — NAV (2)
Other long-term investments — NAV (2)
561.6 — — — 
Total other long-term investmentsTotal other long-term investments1,488.0 — 14.8 911.6 
Total investmentsTotal investments$5,170.0 $1,632.9 $2,063.9 $911.6 
(1)Includes carrying value of $6.6 in fixed maturity investments and $0.1 in short-term investments that are classified as assets held for sale related to SSIE.
(2) Short-term investments are measured at amortized cost, which approximates fair value.
(3) ETFs traded on foreign exchanges are priced using the fund’s published NAV to account for the difference in market close times and are therefore designated a level 2 measurement.
(3) Consists of one investmentinvestments in a unit trustlisted funds that primarily investspredominantly invest in international equities.
(5) Excludes carrying value(2) Consists of $(1.2) related to foreign currency forward contracts.
(6) Excludes carrying value of $82.6 associated withprivate equity funds and hedge funds, a bank loan fund, Lloyd’s trust deposits and private equityILS funds for which fair value is measured using NAV as a practical expedient. Investments for which fair value is measured at NAV usingare not classified within the practical expedient.fair value hierarchy.



Investments Held on Deposit or as Collateral



As of March 31, 2023 and December 31, 2022, investments of $517.5 million and $500.5 million were held in trusts required to be maintained in relation to HG Global’s reinsurance agreements with BAM.

HG Global is required to maintain an interest reserve account in connection with its senior notes issued in 2022. As of March 31, 2023 and December 31, 2022, the fair value of the interest reserve account, which was included in short-term investments, was $31.6 million and $31.2 million. See Note 7 - “Debt.”

BAM is required to maintain deposits with certain insurance regulatory agencies in order to maintain its insurance licenses. The fair value of such deposits, which represent state deposits and are included within the investment portfolio, totaled $4.6 million as of both March 31, 2023 and December 31, 2022.
Lloyd’s trust deposits are generally required of Lloyd's syndicates to protect policyholders in non-U.K. markets and are pledged into Lloyd’s trust accounts to provide a portion of the capital needed to support obligations at Lloyd’s. As of March 31, 2023 and December 31, 2022, Ark held Lloyd’s trust deposits with a fair value of $148.7 million and $137.4 million.

16

The underwriting capacity of a member of Lloyd’s must be supported by providing a deposit (“Funds at Lloyd’s”) in the form of cash, securities or letters of credit in an amount determined by Lloyd’s. The amount of such deposit is calculated for each member through the completion of an annual capital adequacy exercise. These requirements allow Lloyd’s to evaluate whether each member has sufficient assets to meet its underwriting liabilities plus a required solvency margin. As of March 31, 2023 and December 31, 2022, the fair value of Ark’s Funds at Lloyd’s investment deposits totaled $326.3 million and $319.2 million.
As of March 31, 2023 and December 31, 2022, Ark held additional investments on deposit or as collateral for insurance regulators and reinsurance counterparties of $263.3 million and $257.0 million.
As of March 31, 2023 and December 31, 2022, Ark had $144.1 million and $90.3 million of short-term investments pledged as collateral under uncommitted standby letters of credit. See Note 7 — “Debt.”
As of March 31, 2023 and December 31, 2022, short-term investments of $206.0 million and $203.7 million were held in a collateral trust account required to be maintained in relation to WM Outrigger Re’s reinsurance agreement with GAIL.

Debt Securities Issued by Corporations

The following table summarizespresents the credit ratings of debt securities issued by corporations held in White Mountains’s investment portfolio as of September 30, 2017March 31, 2023 and December 31, 2016:2022:
Fair Value at
MillionsMarch 31, 2023December 31, 2022
AAA$11.4 $11.3 
AA95.9 96.0 
A558.8 567.9 
BBB338.0 337.7 
Other6.3 5.9 
Debt securities issued by corporations (1)
$1,010.4 $1,018.8 
  Fair Value at
Millions September 30, 2017 December 31, 2016
AA $26.7
 $37.3
A 119.4
 212.8
BBB 291.9
 335.6
BB 165.4
 143.2
B 21.6
 17.4
Debt securities issued by corporations(1)(2)
 $625.0
 $746.3
(1)    Credit ratings are assigned based on the following hierarchy: (1)upon issuer credit ratings provided by Standard & Poor’s Financial Services LLC ("(“Standard & Poor's"Poor’s”) and (2) Moody's, or if unrated by Standard & Poor’s, long-term obligation ratings provided by Moody’s Investor Service, Inc. ("Moody’s").
(2)
Includes carrying value of $4.2 of fixed maturity investments at December 31, 2016 that is classified as assets held for sale related to SSIE.


Mortgage and Asset-backed Securities and Collateralized Loan Obligations
White Mountains purchases commercial mortgage-backed securities (“CMBS”) and residential mortgage-backed securities (“RMBS”) with the goal of maximizing risk adjusted returns in the context of a diversified portfolio. White Mountains considers sub-prime mortgage-backed securities as those that have underlying loan pools that exhibit weak credit characteristics, or those that are issued from dedicated sub-prime shelves or dedicated second-lien shelf registrations (i.e., White Mountains considers investments backed primarily by second-liens to be sub-prime risks regardless of credit scores or other metrics). White Mountains did not hold any RMBS categorized as sub-prime as of September 30, 2017.
White Mountains categorizes mortgage-backed securities as “non-prime” (also called “Alt A” or “A-”) if they are backed by collateral that has overall credit quality between prime and sub-prime based on White Mountains’s review of the characteristics of their underlying mortgage loan pools, such as credit scores and financial ratios. As of September 30, 2017, White Mountains did not hold any RMBS classified as non-prime. White Mountains’s non-agency RMBS portfolio is generally moderate-term and structurally senior. White Mountains does not own any collateralized loan obligations or any collateralized debt obligations.
The following table summarizespresents the carryingfair value of White Mountains’s mortgage and asset-backed securities and collateralized loan obligations as of September 30, 2017March 31, 2023 and December 31, 2016:2022:
 March 31, 2023December 31, 2022
MillionsFair ValueLevel 2Level 3Fair ValueLevel 2Level 3
Mortgage-backed securities:      
Agency:      
FNMA$129.7 $129.7 $— $124.5 $124.5 $— 
FHLMC81.2 81.2 — 78.8 78.8 — 
GNMA33.0 33.0 — 28.3 28.3 — 
   Total agency (1)
243.9 243.9 — 231.6 231.6 — 
Non-agency: Residential.3 .3 — .3 .3 — 
   Total non-agency.3 .3 — .3 .3 — 
   Total mortgage-backed securities244.2 244.2 — 231.9 231.9 — 
Other asset-backed securities:  
Credit card receivables4.4 4.4 — 11.9 11.9 — 
Vehicle receivables10.2 10.2 — 10.4 10.4 — 
Total other asset-backed securities14.6 14.6 — 22.3 22.3 — 
Total mortgage and asset-backed securities258.8258.8— 254.2254.2— 
Collateralized loan obligations185.9 185.9 — 182.9 182.9 — 
Total mortgage and asset-backed securities
   and collateralized loan obligations		$444.7 $444.7 $— $437.1 $437.1 $— 
  September 30, 2017 December 31, 2016
Millions Fair Value Level 2 Level 3 Fair Value Level 2 Level 3
Mortgage-backed securities:  
  
  
  
  
  
Agency:  
  
  
  
  
  
GNMA $51.0
 $51.0
 $—
 $70.3
 $70.3
 $—
FNMA 88.9
 88.9
 —
 235.5
 235.5
 —
FHLMC 59.7
 59.7
 —
 59.5
 59.5
 —
Total Agency(1)
 199.6
 199.6
 —
 365.3
 365.3
 —
Non-agency:  
  
  
  
  
  
Residential 70.1
 70.1
 —
 70.3
 70.3
 —
Commercial 39.0
 39.0
 —
 3.9
 3.9
 —
Total Non-agency 109.1
 109.1
 —
 74.2
 74.2
 —
             
Total mortgage-backed securities 308.7
 308.7
 —
 439.5
 439.5
 —
Other asset-backed securities:  
      
    
Credit card receivables 40.5
 40.5
 —
 214.2
 214.2
 —
Vehicle receivables 22.7
 22.7
 —
 205.9
 205.9
 —
Other 16.0
 16.0
 —
 120.2
 120.2
 —
Total other asset-backed securities 79.2
 79.2
 —
 540.3
 540.3
 —
Total mortgage and asset-backed securities $387.9
 $387.9
 $—
 $979.8
 $979.8
 $—
(1)    Represents publicly traded mortgage-backed securities which carry the full faith and credit guaranty of the U.S. governmentGovernment (i.e., GNMA) or are guaranteed
by a government sponsored entity (i.e., FNMA, FHLMC).



17

Non-agency Mortgage-backed SecuritiesAs of March 31, 2023, White Mountains’s investment portfolio included $185.9 million of collateralized loan obligations that are within the senior tranches of their respective fund securitization structures. All of White Mountains’s collateral loan obligations were rated AAA or AA as of March 31, 2023.

Investment in MediaAlpha

In 2020, MediaAlpha completed an initial public offering (the “MediaAlpha IPO”). Following the MediaAlpha IPO, White Mountains’s investment in MediaAlpha is accounted for at fair value based on the publicly traded share price of MediaAlpha’s common stock and is presented as a separate line item on the balance sheet.
As of March 31, 2023, White Mountains owned 16.9 million shares, representing a 26.8% basic ownership interest (24.3% on a fully diluted, fully converted basis). See Note 16 — “Equity Method Eligible Investments.” At this current level of ownership, each $1.00 per share increase or decrease in the share price of MediaAlpha will result in an approximate $6.60 per share increase or decrease in White Mountains’s book value per share. At the March 31, 2023 closing price of $14.98 per share, the fair value of White Mountains’s investment in MediaAlpha was $253.8 million.

Other Long-Term Investments

The following table summarizespresents the security issuance yearscarrying values of White Mountains’s investments in non-agency RMBS and non-agency CMBS securities as of September 30, 2017:
      Security Issuance Year      
Millions Fair Value 2004  2013 2014 2015 2016 2017
Non-agency RMBS $70.1
 $.3
  $1.3
 $20.6
 $47.9
 $—
 $—
Non-agency CMBS 39.0
 —
  —
 —
 —
 3.7
 35.3
Total $109.1
 $.3
  $1.3
 $20.6
 $47.9
 $3.7
 $35.3
Non-agency Residential Mortgage-backed Securities
The following table summarizes the classification of the underlying collateral quality and the tranche levels of White Mountains’s non-agency RMBS securities as of September 30, 2017:
Millions Fair Value 
Super Senior (1)
 
Senior (2)
 
Subordinate (3)
Prime $70.1
 $58.4
 $11.7
 $—
Non-prime —
 —
 —
 —
Sub-prime —
 —
 —
 —
Total $70.1
 $58.4
 $11.7
 $—
(1) At issuance, Super Senior, or in the case of resecuritization, the underlying securities, were rated “AAA” by Standard & Poor’s, “Aaa” by Moody’s or “AAA” by Fitch Ratings, Inc. (“Fitch”) and were senior to other “AAA” or “Aaa” bonds.
(2) At issuance, Senior, or in the case of resecuritization, the underlying securities, were rated “AAA” by Standard & Poor’s, “Aaa” by Moody’s or “AAA” by Fitch and were senior to non-“AAA” or non-“Aaa” bonds.
(3) At issuance, Subordinate were not rated “AAA” by Standard & Poor’s, “Aaa” by Moody’s or “AAA” by Fitch and were junior to “AAA” or “Aaa” bonds. 

Non-agency Commercial Mortgage-backed Securities
White Mountains’s non-agency CMBS portfolio is generally moderate-term and structurally senior, with more than 30 points of subordination on average for both fixed rate and floating rate as of September 30, 2017. In general, subordination represents the percentage principal loss on the underlying collateral that would have to be absorbed by other securities lower in the capital structure before the more senior security incurs a loss.  As of September 30, 2017, none of the underlying loans of the non-agency CMBS held by White Mountains were reported as non-performing.
The following table summarizes the amount of fixed and floating rate securities and their tranche levels of White Mountains’s non-agency CMBS securities as of September 30, 2017:
Millions Fair Value 
Super Senior (1)
 
Senior (2)
 
Subordinate (3)
Fixed rate CMBS $17.8
 $—
 $16.2
 $1.6
Floating rate CMBS 21.2
 —
 —
 21.2
Total $39.0
 $—
 $16.2
 $22.8
(1)  At issuance, Super Senior, or in the case of resecuritization, the underlying securities, were rated “AAA” by Standard & Poor’s, “Aaa” by Moody’s or “AAA” by Fitch and were senior to other “AAA” or “Aaa” bonds.
(2) At issuance, Senior, or in the case of resecuritization, the underlying securities, were rated “AAA” by Standard & Poor’s, “Aaa” by Moody’s or “AAA” by Fitch and were senior to non-“AAA” or non-“Aaa” bonds.
(3) At issuance, Subordinate were not rated “AAA” by Standard & Poor’s, “Aaa” by Moody’s or “AAA” by Fitch and were junior to “AAA” or “Aaa” bonds. 


Rollforward of Fair Value Measurements by Level
 White Mountains uses quoted market prices where available as the inputs to estimate fair value for its investments in active markets. Such measurements are considered to be either Level 1 or Level 2 measurements, depending on whether the quoted market price inputs are for identical securities (Level 1) or similar securities (Level 2). Level 3 measurements for fixed maturity investments, common equity securities, and other long-term investments as of SeptemberMarch 31, 2023 and December 31, 2022:
Fair Value at
MillionsMarch 31, 2023December 31, 2022
Kudu’s Participation Contracts$683.2 $695.9 
PassportCard/DavidShield
140.0 135.0 
Elementum Holdings, L.P.30.0 30.0 
Other unconsolidated entities (1)
87.5 37.2 
Total unconsolidated entities940.7 898.1 
Private equity funds and hedge funds218.5 197.8 
Bank loan fund179.5 174.8 
Lloyd’s trust deposits148.7 137.4 
ILS funds123.6 49.3 
Private debt instruments10.1 9.6 
Other21.9 21.0 
Total other long-term investments$1,643.0 $1,488.0 
(1) Includes White Mountains’s noncontrolling equity interests in certain private common equity securities, preferred securities, limited liability company units and Simple Agreement for Future Equity (“SAFE”) investments.

Private Equity Funds and Hedge Funds
White Mountains invests in private equity funds and hedge funds, which are included in other long-term investments. The fair value of these investments is generally estimated using the NAV of the funds. As of March 31, 2023, White Mountains held investments in seventeen private equity funds and two hedge funds. The largest investment in a single private equity fund or hedge fund was $49.9 million as of March 31, 2023 and $49.0 million and December 31, 2022.
18

The following table presents the fair value of investments and unfunded commitments in private equity funds and hedge funds by investment objective and sector as of March 31, 2023 and December 31, 2022:
 March 31, 2023December 31, 2022
MillionsFair ValueUnfunded
Commitments		Fair ValueUnfunded
Commitments
Private equity funds    
Aerospace/Defense/Government$78.0 $37.5 $59.4 $37.5 
Financial services77.3 52.6 77.1 54.3 
Real estate4.1 2.5 4.1 2.5 
Total private equity funds159.4 92.6 140.6 94.3 
Hedge funds    
Long/short equity financials and business services49.8 — 49.0 — 
European small/mid cap9.3 — 8.2 — 
Total hedge funds59.1 — 57.2 — 
Total private equity funds and hedge funds included
      in other long-term investments
$218.5 $92.6 $197.8 $94.3 
Investments in private equity funds are generally subject to a lock-up period during which investors may not request a redemption. Distributions prior to the expected termination date of the fund may be limited to dividends or proceeds arising from the liquidation of the fund’s underlying investments. In addition, certain private equity funds have the option to extend the lock-up period.
The following table presents investments in private equity funds that were subject to lock-up periods as of March 31, 2023:
Millions1 – 3 years3 – 5 years5 – 10 years>10 yearsTotal
Private equity funds — expected lock-up period remaining$4.1$18.6$132.3$4.4$159.4

Investors in private equity funds are generally subject to indemnification obligations outside of the capital commitment period and prior to the winding up of the fund. As of March 31, 2023 and December 31, 2022, White Mountains is not aware of any indemnification claims relating to its investments in private equity funds. 
Redemption of investments in most hedge funds is subject to restrictions, including lock-up periods where no redemptions or withdrawals are allowed, restrictions on redemption frequency and advance notice periods for redemptions. Amounts requested for redemptions remain subject to market fluctuations until the redemption effective date, which generally falls at the end of the defined redemption period. Advance notice requirements for redemptions from White Mountains’s hedge fund investments range from 45 to 90 days. One of White Mountains’s hedge fund investments also limits redemptions to every second anniversary following the date of the initial investment.

Bank Loan Fund
White Mountains’s other long-term investments include a bank loan fund with a fair value of $179.5 million and $174.8 million as of March 31, 2023 and December 31, 2022. The fair value of this investment is estimated using the NAV of the fund. The bank loan fund’s investment objective is to provide, on an unleveraged basis, high current income consistent with preservation of capital and low duration. The bank loan fund primarily invests in a broad portfolio of U.S. dollar-denominated, non-investment grade, floating-rate senior secured loans and may invest in other financial instruments, such as secured and unsecured corporate debt, credit default swaps, reverse repurchase agreements, synthetic indices and cash and cash equivalents.
The investment in the bank loan fund is subject to restrictions on redemption frequency and advance notice periods for redemptions. Amounts requested for redemptions remain subject to market fluctuations until the redemption effective date, which generally falls at the end of the defined redemption period. White Mountains may redeem all or a portion of its bank loan fund investment as of any calendar month-end upon 15 calendar days advanced written notice.
19

Lloyd’s Trust Deposits
White Mountains’s other long-term investments include Lloyd’s trust deposits, which consist of non-U.K. deposits and Canadian comingled pooled funds. The Lloyd’s trust deposits invest primarily in short-term government securities, agency securities and corporate bonds held in trusts that are managed by Lloyd's of London. These investments are generally required of Lloyd's syndicates to protect policyholders in non-U.K. markets and are pledged into Lloyd’s trust accounts to provide a portion of the capital needed to support obligations at Lloyd’s. The fair value of the Lloyd’s trust deposits is generally estimated using the NAV of the funds. As of March 31, 2023 and December 31, 2022, White Mountains held Lloyd’s trust deposits with a fair value of $148.7 million and $137.4 million.

Insurance-Linked Securities Funds
White Mountains’s other long-term investments include ILS fund investments. The fair value of these investments is generally estimated using the NAV of the funds. As of March 31, 2023 and December 31, 2022, White Mountains held investments in ILS funds with a fair value of $123.6 million and $49.3 million.
Investments in ILS funds are generally subject to restrictions, including lock-up periods where no redemptions or withdrawals are allowed, non-renewal clauses, restrictions on redemption frequency and advance notice periods for redemptions. From time to time, natural catastrophe, liquidity, market or other events will occur that make the determination of fair value for underlying investments in ILS funds less certain due to the potential for loss development. In such circumstances, the impacted investments may be subject to additional lock-up provisions.
ILS funds are typically subject to monthly and annual restrictions on redemptions and advance redemption notice period requirements that range between 30 2017 and 201690 days. Amounts requested for redemption remain subject to market fluctuations until the redemption effective date, which generally falls at the end of the defined redemption period, or until the underlying investment has fully matured or been commuted.

Rollforward of Level 3 Investments

Level 3 measurements as of March 31, 2023 and 2022 consist of securities for which the estimated fair value has not been determined based upon quoted market price inputs for identical or similar securities.
The following tables summarizetable presents the changes in White Mountains’s fair value measurements by levelfor Level 3 investments for the ninethree months ended September 30, 2017March 31, 2023 and 2016:2022:
Level 3 Investments
MillionsOther Long-term
Investments		Other Long-term
Investments
Balance at December 31, 2022$911.6 Balance at December 31, 2021$890.6 
Net realized and unrealized gains35.1 Net realized and unrealized gains26.8 
Amortization/accretion— Amortization/accretion— 
Purchases and contributions117.0 Purchases and contributions— 
Sales and distributions(109.0)Sales and distributions(31.7)
Transfers in— Transfers in— 
Transfers out— Transfers out— 
Balance at March 31, 2023$954.7 Balance at March 31, 2022$885.7 
   Level 3 Investments 
MillionsLevel 1 investments
Level 2 
investments
Fixed
maturity investments
Other long-term
investments
Hedge Funds and Private Equity Funds measured at NAV(3)
 Total 
Balance at January 1, 2017$279.5
$2,093.8
$—
$91.4
$82.6
 $2,547.3
(1)(2)(4) 
Net realized and unrealized gains (losses)52.4
59.8
—
(2.2)15.6
 125.6
 
Amortization/Accretion—
(6.6)—
—
—
 (6.6) 
Purchases940.7
1,038.5
31.2
2.9
64.9
 2,078.2
 
Sales(539.0)(1,668.2)(12.5)(2.0)(8.2) (2,229.9) 
Deconsolidation of SSIE—
(5.2)—
—
—
 (5.2) 
Transfers in—
13.1
—
—
—
 13.1
  
Transfers out—
—
(13.1)—
—
 (13.1)
  
Balance at September 30, 2017$733.6
$1,525.2
$5.6
$90.1
$154.9
 $2,509.4
(1)(2) 

(1)  Excludes carrying value of $(1.2) and $(15.4) as of January 1, 2017 and September 30, 2017 associated with foreign currency forward contracts.
(2)  Excludes carrying value of $175.0 and $786.5 at January 1, 2017 and September 30, 2017 associated with short-term investments, of which $0.1 is classified as held for sale at January 1, 2017.
(3) Investments for which fair value is measured at NAV using the practical expedient are no longer classified within the fair value hierarchy. See Note 1 — “Summary of Significant Accounting Policies”.
(4)  Includes carrying value of $6.6 of fixed maturity investments at January 1, 2017 that is classified as assets held for sale related to SSIE.

   Level 3 Investments   
MillionsLevel 1 investments
Level 2 
investments
Fixed
maturity investments
Other long-term
investments
Hedge Funds and Private Equity Funds measured at NAV(2)
Total 
Balance at January 1, 2016$789.0
$585.6
$—
$103.6
$65.3
$1,543.5
(1)(3) 
Net realized and unrealized gains7.2
17.4
.1
.8
1.7
27.2
 
Amortization/Accretion.1
(3.8)—
—
—
(3.7) 
Purchases1,387.8
2,228.5
70.0
2.2
38.4
3,726.9
 
Sales(1,992.7)(884.1)—
(.1)(10.1)(2,887.0) 
Transfers in—
68.0
—
—
—
68.0
 
Transfers out—
—
(68.0)—
—
(68.0) 
Balance at September 30, 2016$191.4
$2,011.6
$2.1
$106.5
$95.3
$2,406.9
(1)(3) 
(1) Excludes carrying value of $142.0 and $230.0 at January 1, 2016 and September 30, 2016 associated with short-term investments of which $0.1 and $0.1 is classified as held for sale at January 1, 2016 and September 30, 2016.
(2)Investments for which fair value is measured at NAV using the practical expedient are no longer classified within the fair value hierarchy. See Note 1 — “Summary of Significant Accounting Policies”.
(3)  Includes carrying value of $9.5 and $8.3 of fixed maturity investments at January 1, 2016 and September 30, 2016 that is classified as assets held for sale related to SSIE.

Fair Value Measurements — Transfers Between Levels - Nine-month PeriodThree months ended September 30, 2017March 31, 2023 and 20162022
Transfers between levels are recorded using the fair value measurement as of the end of the quarterly period in which the event or change in circumstance giving rise to the transfer occurred.
During the first ninethree months of 2017, twoended March 31, 2023 and 2022, there were no fixed maturity investments classified as Level 3 measurement in the prior period were transferred to Level 2 measurement because quoted market prices for similar securities that were considered reliable and could be validated against an alternative source were available at September 30, 2017. These measurements comprise “Transfers out” of Level 3 and “Transfers in” to Level 2 of $13.1 million for the period ended September 30, 2017.
During the first nine months of 2016, there were two fixed maturityor other long-term investments classified as Level 3 measurements in the prior period that were transferred to Level 2 measurements. These
During the three months ended March 31, 2023 and 2022, there were no fixed maturity investments compriseor other long-term investments classified as Level 2 measurements in the “Transfers out” ofprior period that were transferred to Level 3 and “Transfers in” to Level 2 of $68.0 million for the period ended September 30, 2016.measurements.



20

Significant Unobservable Inputs

The following table summarizestables present significant unobservable inputs used in estimating the fair value of investment securities,White Mountains’s other than hedge funds and private equity funds,long-term investments, classified within Level 3 as of September 30, 2017March 31, 2023 and December 31, 2016.2022. The tables below exclude $91.8 million and $41.1 million of Level 3 other long-term investments generally valued based on recent or expected transaction prices. The fair value of investments in private equity funds and hedge funds, bank loan funds, Lloyd’s trust deposits and private equityILS funds are generally estimated using the NAV of the funds.


Description September 30, 2017
$ in millions, except share price 
Rating(2)
 Valuation Technique(s) 
Fair 
Value(3)
 Unobservable Input
Debt securities issued
   by corporations (1)
 BBB Broker pricing $5.6 Broker quote-133.792
Private equity security NR Share price of most recent transaction $21.0 Share price-$1.00
Private equity security NR Discounted cash flow $22.1 Discount rate-25.0%
Private equity security NR Share price of most recent transaction $3.6 Share price-$2.52
Private convertible preferred security NR Multiple of EBITDA $0.2 EBITDA multiple-6.00
Private convertible preferred security NR Share price of most recent transaction $27.0 Share price-$3.83
Private equity security NR 
Discounted cash flow/
Option pricing method
 $10.4 Discount rate-21.0%
        Time until expiration-4 years
      Volatility/Standard deviation-50.0%
      Risk free rate-1.00%
$ in MillionsMarch 31, 2023
Description
Valuation Technique(s) (1)
Fair Value (2)
Unobservable Inputs
Discount Rate (5)
Terminal Cash Flow Exit Multiple (x) or Terminal Revenue Growth Rate (%) (5)
Kudu’s Participation Contracts (3)(4)
Discounted cash flow
$683.218% - 25%7x - 22x
PassportCard/DavidShieldDiscounted cash flow$140.023%4%
Elementum Holdings, L.P.Discounted cash flow$30.020%4%
Private debt instrumentsDiscounted cash flow$9.711%N/A
(1)As Key inputs to the discounted cash flow analysis generally include projections of September 30, 2017, asset type consists of one security.future revenue and earnings, discount rates and terminal exit multiples or growth rates.
(2)Credit ratings are assigned based on the following hierarchy: 1) Standard and Poor's and 2) Moody’s.
(3) Includes the net unrealized investment gains (losses) associated with foreign currency; foreign currency effects based on observable inputs.

(3)Since Kudu’s Participation Contracts are not subject to corporate taxes within Kudu Investment Management, LLC, pre-tax discount rates are applied to pre-tax cash flows in determining fair values. The weighted average discount rate and weighted average terminal cash flow exit multiple applied to Kudu’s Participation Contracts is 21% and 12.7x.
(4)In 2023, Kudu deployed a total of $30.9 into new and existing Participation Contracts.
Description December 31, 2016
$ in millions, except share price Valuation Technique(s) 
Fair Value (1)
 Unobservable Input
Private equity security Share price of most recent transaction $21.0 Share price-$1.00
Private equity security Discounted cash flow $22.1 Discount rate-25.0%
Private equity security Share price of most recent transaction $3.2 Share price-$2.52
Private convertible preferred security Multiple of EBITDA $3.6 EBITDA multiple-6.00
Private convertible preferred security Share price of most recent transaction $27.0 Share price-$3.83
Private equity security Discounted cash flow/
Option pricing method		 $9.3 Discount rate-21.0%
      Time until expiration-4 years
    Volatility/Standard deviation-50.0%
    Risk free rate-1.00%
(5) Increases (decreases) to the discount rates in isolation would result in lower (higher) fair value measurements, while increases (decreases) to the terminal cash flow exit multiples or terminal revenue growth rates in isolation would result in higher (lower) fair value measurements.

$ in MillionsDecember 31, 2022
Description
Valuation Technique(s) (1)
Fair Value (2)
Unobservable Inputs
Discount Rate (6)
Terminal Cash Flow Exit Multiple (x) or Terminal Revenue Growth Rate (%) (6)
Kudu’s Participation Contracts (3)(4)(5)
Discounted cash flow
$695.918% - 25%7x - 16x
PassportCard/DavidShieldDiscounted cash flow$135.024%4%
Elementum Holdings, L.P.Discounted cash flow$30.021%4%
Private debt instrumentsDiscounted cash flow$9.611%N/A
(1) Key inputs to the discounted cash flow analysis generally include projections of future revenue and earnings, discount rates and terminal exit multiples or growth rates.
(2)Includes the net unrealized investment gains (losses) associated with foreign currency; foreign currency effects based on observable inputs.

(3)Since Kudu’s Participation Contracts are not subject to corporate taxes within Kudu Investment Management, LLC, pre-tax discount rates are applied to pre-tax cash flows in determining fair values. The weighted average discount rate and weighted average terminal cash flow exit multiple applied to Kudu’s Participation Contracts is 21% and 11.8x.

(4) In 2022, Kudu deployed a total of $99.8 into new and existing Participation Contracts.

(5) As of December 31, 2022, two of Kudu’s Participation Contracts with a total fair value of $189.0 were valued using a probability weighted expected return method, which takes into account factors such as a discounted cash flow analysis, the expected value to be received in a pending sale transaction and the likelihood that a sales transaction will take place.

(6) Increases (decreases) to the discount rates in isolation would result in lower (higher) fair value measurements, while increases (decreases) to the terminal cash flow exit multiples or terminal revenue growth rates in isolation would result in higher (lower) fair value measurements.




21

Note 4. Goodwill and Other Intangible Assets


White Mountains hasaccounts for business combinations using the acquisition method. Under the acquisition method, White Mountains recognizes and measures the assets acquired, liabilities assumed and any noncontrolling interest in the acquired entities at their acquisition date fair values. Goodwill represents the excess of the amount paid to acquire businesses over the fair value of identifiable net assets at the date of acquisition. The estimated acquisition date fair values, generally consisting of intangible assets and liabilities for contingent consideration, may be recorded at provisional amounts in circumstances where the information necessary to complete the acquisition accounting is not available at the reporting date. Any such provisional amounts are finalized as measurement period adjustments within one year of the acquisition date.
The following table presents the economic lives, acquisition date fair values, accumulated amortization and net carrying values for other intangible assets and goodwill as of March 31, 2023 and December 31, 2022:
$ in MillionsWeighted Average Economic
 Life
(in years)		March 31, 2023December 31, 2022
Acquisition Date Fair ValueAccumulated AmortizationNet Carrying ValueAcquisition Date Fair ValueAccumulated AmortizationNet Carrying Value
Goodwill:
ArkN/A$116.8 $— $116.8 $116.8 $— $116.8 
KuduN/A7.6 — 7.6 7.6 7.6 
Other OperationsN/A44.4 — 44.4 52.1 — 52.1 
Total goodwill168.8 — 168.8 176.5 — 176.5 
Other intangible assets:
Ark
Underwriting capacityN/A175.7 — 175.7 175.7 — 175.7 
Kudu
Trade names72.2 1.3 .9 2.2 1.2 1.0 
Other Operations
Trade names13.313.3 2.6 10.7 17.9 3.0 14.9 
Customer relationships11.024.8 7.0 17.8 29.5 7.5 22.0 
Other12.12.8 .5 2.3 2.8 .5 2.3 
Subtotal40.9 10.1 30.8 50.2 11.0 39.2 
Total other intangible assets218.8 11.4 207.4 228.1 12.2 215.9 
Total goodwill and other intangible assets
$387.6 $11.4 376.2 $404.6 $12.2 392.4 


22

Intangible Assets Valuation Methods

The goodwill recognized for the entities shown above is attributed to expected future cash flows. The acquisition date fair values of other intangible assets with finite lives are estimated using income approach techniques, which use future expected cash flows to develop a discounted present value amount.
The multi-period-excess-earnings method estimates fair value using the present value of the incremental after-tax cash flows attributable solely to the other intangible asset over its remaining life. This approach was used to estimate the fair value of other intangible assets associated with the underwriting capacity and customer relationships.
The relief-from-royalty method was used to estimate fair value for other intangible assets that relate to rights that could be obtained via a license from a third-party owner. Under this method, the fair value is estimated using the present value of license fees avoided by owning rather than leasing the asset. This technique was used to estimate the fair value of trade names and other intangible assets.
The with-or-without method estimates the fair value of other intangible assets that provide an incremental benefit. Under this method, the fair value of the other intangible asset is calculated by comparing the value of the entity with and without the other intangible asset. This approach was used to estimate the fair value of favorable lease terms.
On at least an annual basis beginning no later than the interim period included in the one-year anniversary of an acquisition, White Mountains evaluates goodwill and other intangible assets atfor potential impairment. Between annual evaluations, White Mountains considers changes in circumstances or events subsequent to the acquisition date fair values in connection with its purchases of subsidiaries.most recent evaluation that may indicate that an impairment may exist and, if necessary will perform an interim review for potential impairment.
On January 15, 2016, MediaAlpha acquired certain assets from Oversee.net for a purchase price of $3.9 million. The majority of assets acquired, which are included inDuring the three months ended March 31, 2023 and 2022, White Mountains did not recognize any impairments to goodwill and other intangible assets, consistsassets.

Rollforward of customer relationships, a customer contract, a non-compete agreement from the seller, domain namesGoodwill and technology.Other Intangible Assets
On August 4, 2016, White Mountains acquired a 70.9% ownership share in Buzzmove for a purchase price of GBP 6.1 million (approximately $8.1 million based upon the foreign exchange spot rate at the date of acquisition). White Mountains recognized total assets acquired related to Buzzmove of $11.5 million, including $7.6 million of goodwill and $1.1 million of intangible assets, and total liabilities assumed of $0.1 million, reflecting acquisition date fair values.
The following table showspresents the change in goodwill and other intangible assets:assets for the three months ended March 31, 2023 and 2022:
Three Months Ended March 31,
20232022
MillionsGoodwillOther Intangible AssetsTotal Goodwill and Other Intangible AssetsGoodwillOther Intangible AssetsTotal Goodwill and Other Intangible Assets
Beginning balance$176.5 $215.9 $392.4 $142.3 $198.2 $340.5 
Dispositions (1)
(6.7)(6.9)(13.6)— — — 
Measurement period adjustments (2)
(1.0)— (1.0)— — — 
Amortization— (1.6)(1.6)— (1.0)(1.0)
Ending balance$168.8 $207.4 $376.2 $142.3 $197.2 $339.5 
  Three Months Ended September 30,
  2017 2016
Millions Goodwill Other intangible assets Total Goodwill Other intangible assets Total
Beginning balance $25.9
 $14.4
 $40.3
 $18.3
 $23.3
 $41.6
Acquisition of businesses —
 —
 —
 7.6
 1.1
 8.7
Amortization, including foreign currency translation —
 (2.5) (2.5) —
 (2.6) (2.6)
Ending balance $25.9
 $11.9
 $37.8
 $25.9
 $21.8
 $47.7
(1)Relates to a disposition within Other Operations.
  Nine Months Ended September 30,
  2017 2016
Millions Goodwill Other intangible assets Total Goodwill Other intangible assets Total
Beginning balance $25.9
 $19.3
 $45.2
 $18.6
 $26.9
 $45.5
Add: Amounts held for sale at
         beginning of the period (1)
 —
 —
 —
 —
 .4
 .4
Acquisition of businesses 
 
 —
 7.6
 5.0
 12.6
Wobi write off —
 —
 —
 (.3) (2.5) (2.8)
Amortization, including foreign currency translation —
 (7.4) (7.4) —
 (8.0) (8.0)
Ending balance $25.9
 $11.9
 $37.8
 $25.9
 $21.8
 $47.7
(1) See Note 15 — “Held for Sale(2) Measurement period adjustments relate to updated information about acquisition date fair values of assets acquired and Discontinued Operations”.

liabilities assumed. During the three months ended March 31, 2023 adjustments relate to an acquisition within Other Operations. The following table is a summaryrelative fair values of goodwill and other intangible assets recognized in connection with this acquisition during 2022 had not yet been finalized as of September 30, 2017, December 31, 2016, and September 30, 2016:the end of the period.

23
Millions September 30, 2017 December 31, 2016
Goodwill    
MediaAlpha $18.3
 $18.3
Buzzmove 7.6
 7.6
Total goodwill 25.9
 25.9
Other intangible assets    
MediaAlpha 11.0
 18.3
Buzzmove .9
 1.0
Total other intangible assets 11.9
 19.3
Total goodwill and other intangible assets 37.8
 45.2
Goodwill and other intangible assets held for sale —
 1.2
Goodwill and other intangible assets attributed to non-controlling interests (13.7) (17.1)
Goodwill and other intangible assets included in White Mountains's
common shareholders' equity		 $24.1
 $29.3



Note 5.  Loss and Loss Adjustment Expense Reserves

P&C Insurance and Reinsurance

The following table summarizes the loss and loss adjustment expense (“LAE”) reserve activity of the Ark/WM Outrigger segmentfor the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,
Millions20232022
Gross beginning balance$1,296.5 $894.7 
Less: beginning reinsurance recoverable on unpaid losses (1)
(505.0)(428.9)
Net loss and LAE reserves791.5 465.8 
Loss and LAE incurred relating to:
Current year losses139.2 125.7 
Prior year losses8.6 (3.7)
Net incurred losses and LAE147.8 122.0 
Loss and LAE paid relating to:
Current year losses(4.0)(.6)
Prior year losses(87.7)(39.4)
Net paid loss and LAE(91.7)(40.0)
Change in TPC Providers’ participation (2)
145.4 57.5 
Foreign currency translation and other adjustments to loss and LAE
   reserves		3.7 (1.7)
Net ending balance996.7 603.6 
Plus: ending reinsurance recoverable on unpaid losses (3)
348.9 396.0 
Gross ending balance$1,345.6 $999.6 
(1) The beginning reinsurance recoverable on unpaid losses includes amounts attributable to TPC Providers of $145.4 and $276.8 as of December 31, 2022 and 2021.
(2) Amount represents the impact to net loss and LAE reserves due to a change in the TPC Providers’ participation related to the annual reinsurance to close process.
(3) The ending reinsurance recoverable on unpaid losses includes amounts attributable to TPC Providers of $0.0 and $207.3 as of March 31, 2023 and 2022.

For the three months ended March 31, 2023, the Ark/WM Outrigger segment recognized $8.6 million of net unfavorable prior year loss reserve development at Ark, driven primarily by Winter Storm Elliot. For the three months ended March 31, 2022, the Ark/WM Outrigger segment recognized $3.7 million of net favorable prior year loss reserve development at Ark, driven primarily by the property line of business.
24

Impact of Third-Party Capital
For the years of account prior to the Ark Transaction, a significant proportion of the Syndicates’ underwriting capital was provided by TPC Providers using whole account reinsurance contracts with Ark’s corporate member. For the years of account subsequent to the Ark Transaction, Ark is no longer using TPC Providers to provide underwriting capital for the Syndicates.
A reinsurance to close (“RITC”) agreement is generally put in place after the third year of operations for a year of account such that the outstanding loss and LAE reserves, including future development thereon, are reinsured into the next year of account. As a result, and in combination with the changing participation provided by TPC Providers, Ark’s participation on outstanding loss and LAE reserves reinsured into the next year of account may change, perhaps significantly. During the first quarter of 2023, an RITC agreement was executed such that the outstanding loss and LAE reserves for claims arising out of the 2020 year of account, for which the TPC Providers’ participation in the total net results of the Syndicates was 42.8%, were reinsured into the 2021 year of account, for which the TPC Providers’ participation in the total net results of the Syndicates was 0.0%. During the first quarter of 2022, an RITC agreement was executed such that the outstanding loss and LAE reserves for claims arising out of the 2019 year of account, for which the TPC Providers’ participation in the total net results of the Syndicates was 58.3%, were reinsured into the 2020 year of account, for which the TPC Providers’ participation in the total net results of the Syndicates was 42.8%.

Municipal Bond Guarantee Insurance

HG Re and BAM do not have any outstanding loss and LAE reserves related to BAM’s municipal bond guarantee insurance business.

Note 6.  Third-Party Reinsurance

P&C Insurance and Reinsurance

In the normal course of business, Ark may seek to limit losses that may arise from catastrophes or other events by reinsuring certain risks with third-party reinsurers. Ark remains liable for risks reinsured in the event that the reinsurer does not honor its obligations under reinsurance contracts.
The following table summarizes the effects of reinsurance on written and earned premiums and on losses and LAE for the Ark/WM Outrigger segment for the three months ended March 31, 2023 and 2022:
Three Months Ended March 31,
Millions20232022
Written premiums:
Direct$246.2 $230.9 
Assumed563.2 402.2 
Gross written premiums809.4 633.1 
Ceded(195.2)(1)(89.3)
Net written premiums$614.2 $543.8 
Earned premiums:
Direct$150.4 $138.7 
Assumed162.1 106.6 
Gross earned premiums312.5 245.3 
Ceded(57.4)(2)(50.9)
Net earned premiums$255.1 $194.4 
Losses and LAE:
Gross$162.4 $183.1 
Ceded(14.6)(3)(61.1)
Net losses and LAE$147.8 $122.0 
(1) The ceded written premiums exclude $44.1 ceded by Ark to WM Outrigger Re for the three months ended March 31, 2023, which eliminate in White Mountains’s consolidated financial statements.
(2) The ceded earned premiums exclude $5.2 ceded by Ark to WM Outrigger Re for the three months ended March 31, 2023, which eliminate in White Mountains’s consolidated financial statements.
(3) The ceded loss and LAE exclude $0.2 ceded by Ark to WM Outrigger Re for the three months ended March 31, 2023, which eliminate in White Mountains’s consolidated financial statements.

25

The following table presents the Ark/WM Outrigger segment’s reinsurance recoverables as of March 31, 2023 and December 31, 2022:
MillionsMarch 31, 2023December 31, 2022
Reinsurance recoverables on unpaid losses$348.9 (1)$505.0 (3)
Reinsurance recoverables on paid losses23.1 31.1 
Ceded unearned premiums198.6 (2)59.2 
Reinsurance recoverables$570.6 $595.3 
(1) The reinsurance recoverables on unpaid losses exclude $0.2 ceded by Ark to WM Outrigger Re as of March 31, 2023, which eliminate in White Mountains’s consolidated financial statements.
(2) The ceded unearned premiums exclude $38.9 ceded by Ark to WM Outrigger Re as of March 31, 2023, which eliminate in White Mountains’s consolidated financial statements.
(3) The reinsurance recoverables on unpaid losses include $145.4 attributable to TPC Providers as of December 31, 2022, which are collateralized.

As reinsurance contracts do not relieve Ark of its obligation to its policyholders, Ark seeks to reduce the credit risk associated with reinsurance balances by avoiding over-reliance on specific reinsurers through the application of concentration limits and thresholds. Ark is selective with its reinsurers, placing reinsurance with only those reinsurers having a strong financial condition. Ark monitors the financial strength of its reinsurers on an ongoing basis.
The following table presents the Ark/WM Outrigger segment’s gross and net reinsurance recoverables by the reinsurer’s A.M. Best Company, Inc (“A.M. Best”) ratings as of March 31, 2023:
$ in MillionsAs of March 31, 2023
A.M. Best Rating(1)
GrossCollateralNet% of Total
A+ or better$173.8 $— $173.8 64.7 %
A- to A77.9— 77.929.0 
B++ or lower and not rated120.3103.217.1 6.3 
Total$372.0 $103.2 $268.8 100.0 %
(1) A.M. Best ratings as detailed above are: “A+ or better” (Superior) “A- to A” (Excellent), “B++” (Good).

Reinsurance Contracts Accounted for as Deposits
Ark has an aggregate excess of loss contract with SiriusPoint Ltd. (“SiriusPoint”), which is accounted for using the deposit method and recorded within other assets. Ark earns an annual crediting rate of 3.0%, which is recorded within other revenue. As of March 31, 2023, the carrying value of Ark’s deposit in SiriusPoint, including accrued interest, was $20.6 million.

Municipal Bond Guarantee Insurance

See Note 10 — “Municipal Bond Guarantee Insurance” for third-party reinsurance balances and reinsurance contracts accounted for as deposits related to White Mountains’s financial guarantee business.

26

Note 7.  Debt
 
The following table presents White Mountains’s debt outstanding as of September 30, 2017March 31, 2023 and December 31, 2016 consisted of the following:2022:
$ in MillionsMarch 31, 2023Effective
  Rate		 (1)December 31, 2022Effective
  Rate		 (1)
HG Global Senior Notes$150.0 11.0%$150.0 8.9%
Unamortized discount and issuance cost(3.4)(3.5)
HG Global Senior Notes, carrying value146.6 146.5 
Ark 2007 Subordinated Notes, carrying value30.0 30.0 
Ark 2021 Subordinated Notes Tranche 142.0 41.3 
Ark 2021 Subordinated Notes Tranche 247.0 47.0 
Ark 2021 Subordinated Notes Tranche 370.0 70.0 
Unamortized issuance cost(4.5)(4.6)
Ark 2021 Subordinated Notes, carrying value154.5 153.7 
    Total Ark Subordinated Notes, carrying value184.5 10.3%183.7 7.6%
Kudu Credit Facility198.3 8.7%215.2 6.1%
Unamortized issuance cost(6.7)(6.9)
Kudu Credit Facility, carrying value191.6 208.3 
Other Operations debt34.3 8.5%37.4 6.6%
Unamortized issuance cost(.7)(.7)
Other Operations debt, carrying value33.6 36.7 
Total debt$556.3 $575.2 
Millions September 30,
2017		 
Effective
  Rate (1)
 December 31,
2016		 
Effective
  Rate (1)
WTM Bank Facility $—
 N/A $—
 N/A
Unamortized issue costs —
   —
  
WTM Bank Facility, carrying value —
   —
  
MediaAlpha Bank Facility 9.4
 5.5% —
 N/A
Unamortized issuance cost —
   —
  
MediaAlpha Bank Facility, carrying value 9.4
   —
  
Previous MediaAlpha Bank Facility —
 N/A 12.9
 5.7%
Unamortized issuance cost —
   (.2)  
Previous MediaAlpha Bank Facility, carrying value —
   12.7
  
Total debt $9.4
   $12.7
  
 (1) Effective rate considersincludes the effect of the amortization of debt issuance costs.costs and, where applicable, the original issue discount.


WTM Bank FacilityHG Global Senior Notes

On August 14, 2013, White Mountains entered into a revolving credit facility with a syndicate of lenders administered by Wells Fargo Bank, N.A., which has a total commitment of $425.0 million and has a maturity date of August 14, 2018 (the “WTM Bank Facility”). During the third quarter of 2017, White Mountains borrowed $350.0 million under the WTM Bank Facility to partially fund a tender offer and subsequently repaid the $350 million after receivingApril 29, 2022, HG Global received the proceeds from the OneBeacon Transaction.issuance of its $150.0 million face value floating rate secured senior notes (the “HG Global Senior Notes”). The HG Global Senior Notes, which mature in April 2032, accrue interest at a floating rate equal to the three-month Secured Overnight Financing Rate (“SOFR”) plus 6.3% per annum. Subsequent to the five-year anniversary of the funding date, absent the occurrence of an early amortization trigger event, HG Global will be required to make payments of principal on a quarterly basis totaling $15.0 million annually. Upon the occurrence of an early amortization trigger event, HG Global is required to use all available cash flow to repay the notes. Early amortization trigger events include scenarios in which HG Re is effectively in runoff. HG Global has the option to redeem, in whole or in part, the HG Global Senior Notes after the five-year anniversary of the funding date at the outstanding principal amount plus accrued interest.
On June 16, 2022, HG entered into an interest rate cap agreement, effective on July 25, 2022, to limit its exposure to the risk of interest rate increases on the HG Global Senior Notes. The notional amount of the interest rate cap is $150.0 million and the termination date is July 25, 2025. See Note 9— “Derivatives.”
The HG Global Senior Notes require HG Global to maintain an interest reserve account of eight times the interest accrued for the most recent quarterly interest period. As of September 30, 2017,March 31, 2023, the WTM Bank Facility was undrawn.fair value of the interest reserve account, which is included in short-term investments, is $31.6 million.
The WTM Bank Facility containsHG Global Senior Notes are secured by the capital stock and other equity interests of HG Global’s subsidiaries, the interest reserve account, and all cash and non-cash proceeds from such collateral. The HG Global Senior Notes contain various affirmative negative and financial covenants which White Mountains considers to be customary for such borrowings, including certain minimum net worth and maximum debt to capitalization standards.

MediaAlpha Bank Facility
On May 12, 2017, MediaAlpha entered into a secured credit facility (the “MediaAlpha Bank Facility”) with Western Alliance Bank, which has a total commitment of $20.0 million and has a maturity date of May 12, 2020.  The MediaAlpha Bank Facility replaced MediaAlpha’s previous credit facility (the “Previous MediaAlpha Bank Facility”), which had a total commitment of $20.0 million. The MediaAlpha Bank Facility carries a variable interest rate that is based on the Prime Rate, as published by the Wall Street Journal, plus a spread of 1.5% on the term loan facility and 0.25% on the revolving credit facility as of September 30, 2017.
The MediaAlpha Bank Facility consists of a $5.0 million term loan facility, which has an outstanding balance of $3.4 million as of September 30, 2017, and a revolving loan facility for $15.0 million, which has an outstanding balance of $6.0 million as of September 30, 2017. During the nine months ended September 30, 2017, MediaAlpha borrowed $5.0 million on the term loan and $6.0 million on the revolving loan under the MediaAlpha Bank Facility. During the nine months ended September 30, 2017, MediaAlpha repaid $12.9 million under the Previous MediaAlpha Bank Facility and $1.6 million on the term loan under the MediaAlpha Bank Facility.
The MediaAlpha Bank Facility is secured by intellectual property and the common stock of MediaAlpha’s subsidiaries, and contains various affirmative, negative and financial covenants that White Mountains considers to be customary for such borrowings, includingborrowings.
If the payment of principal and interest under the HG Global Senior Notes becomes subject to tax withholding on behalf of a fixed charge coveragerelevant governmental authority for certain indemnified taxes, the HG Global Senior Notes require the payment of additional amounts such that the amount received by the noteholders is the same as would have been received absent the tax withholding being imposed. The HG Global Senior Notes require the payment of additional interest of 1.0% per annum if the HG Global Senior Notes receive a non-investment grade rating or are no longer rated. As of March 31, 2023, the HG Global Senior Notes had an investment grade rating.
As of March 31, 2023, the HG Global Senior Notes had an outstanding balance of $150.0 million.

27

Ark Subordinated Notes

In March 2007, GAIL issued $30.0 million face value of floating rate unsecured junior subordinated deferrable interest notes to Alesco Preferred Funding XII Ltd., Alesco Preferred Funding XIII Ltd. and Alesco Preferred Funding XIV Ltd (the “Ark 2007 Subordinated Notes”). The Ark 2007 Subordinated Notes, which mature in June 2037, accrue interest at a floating rate equal to the three-month U.S. London Inter-Bank Offered Rate (“LIBOR”) plus 4.6% per annum. As of March 31, 2023, the Ark 2007 Subordinated Notes had an outstanding balance of $30.0 million.
In the third quarter of 2021, GAIL issued $163.3 million face value floating rate unsecured subordinated notes at par in three separate transactions for proceeds of $157.8 million, net of debt issuance costs (collectively, the “Ark 2021 Subordinated Notes”). The Ark 2021 Subordinated Notes were issued in private placement offerings that were exempt from the registration requirements of the Securities Act of 1933. On July 13, 2021, Ark issued €39.1 million ($46.3 million based upon the foreign exchange spot rate as of the date of the transaction) face value floating rate unsecured subordinated notes (“Ark 2021 Subordinated Notes Tranche 1”). The Ark 2021 Subordinated Notes Tranche 1, which mature in July 2041, accrue interest at a floating rate equal to the three-month Euro Interbank Offered Rate (“EURIBOR”) plus 5.75% per annum. On August 11, 2021, Ark issued $47.0 million face value floating rate unsecured subordinated notes (“Ark 2021 Subordinated Notes Tranche 2”). The Ark 2021 Subordinated Notes Tranche 2, which mature in August 2041, accrue interest at a floating rate equal to the three-month U.S. LIBOR plus 5.75% per annum. On September 8, 2021, Ark issued $70.0 million face value floating rate unsecured subordinated notes (“Ark 2021 Subordinated Notes Tranche 3”). The Ark 2021 Subordinated Notes Tranche 3, which mature in September 2041, accrue interest at a floating rate equal to the three-month U.S. LIBOR plus 6.1% per annum. On the ten-year anniversary of the issue dates, the interest rate for the Ark 2021 Subordinated Notes will increase by 1.0% per annum. Ark has the option to redeem, in whole or in part, the Ark 2021 Subordinated Notes ahead of contractual maturity at the outstanding principal amounts plus accrued interest at the ten-year anniversary or any subsequent interest payment date.
All payments of principal and interest under the Ark 2021 Subordinated Notes are conditional upon GAIL’s solvency and compliance with the enhanced capital requirements of the Bermuda Monetary Authority (“BMA”). The deferral of payments of principal and interest under these conditions does not constitute a default by Ark and does not give the noteholders any rights to accelerate repayment of the Ark 2021 Subordinated Notes or take any enforcement action under the Ark 2021 Subordinated Notes.
If the payments of principal and interest under the Ark 2021 Subordinated Notes become subject to tax withholding on behalf of Bermuda or any political subdivision there, the Ark 2021 Subordinated Notes require the payment of additional amounts such that the amount received by the noteholders is the same as would have been received absent the tax withholding being imposed. The Ark 2021 Subordinated Notes Tranche 3 require the payment of additional interest of 1.0% per annum upon the occurrence of a premium load event until such event is remedied. Premium load events include the failure to meet payment obligations of the Ark 2021 Subordinated Notes Tranche 3 when due, failure of GAIL to maintain an investment grade credit rating, failure to maintain 120% of GAIL’s Bermuda solvency capital requirement, failure of GAIL to maintain a debt to capital ratio below 40%, late filing of GAIL’s or Ark’s financial information, and making a restricted payment or distribution on GAIL’s common stock or other securities that rank junior or pari passu with the Ark 2021 Subordinated Notes Tranche 3 when a different premium load event exists or will be caused by the restricted payment. As of March 31, 2023, there were no premium load events.
As of March 31, 2023, the Ark 2021 Subordinated Notes Tranche 1 had an asset coverage ratio.outstanding balance of €39.1 million ($42.0 million based upon the foreign exchange spot rate as of March 31, 2023), the Ark 2021 Subordinated Notes Tranche 2 had an outstanding balance of $47.0 million, and the Ark 2021 Subordinated Notes Tranche 3 had an outstanding balance of $70.0 million.

The Ark Subordinated Notes contain various affirmative and negative covenants that White Mountains considers to be customary for such borrowings.

Ark Standby Letter of Credit Facilities

In December 2021, Ark entered into two uncommitted secured standby letter of credit facility agreements to support the continued growth and expansion of its GAIL insurance and reinsurance operations. The standby letter of credit facility agreements were executed with ING Bank N.V., London Branch (the “ING LOC Facility”) with capacity of $50.0 million on an uncollateralized basis and with Citibank Europe Plc (the “Citibank LOC Facility”) with capacity of $100.0 million on a collateralized basis. In September 2022, Ark entered into an additional uncommitted standby letter of credit facility agreement with Lloyds Bank Corporate Markets PLC (the “Lloyds LOC Facility”) with capacity of $50.0 million on a collateralized basis.
As of March 31, 2023, the ING LOC Facility was undrawn. As of March 31, 2023, the Citibank LOC Facility had an outstanding balance of $92.3 million and short-term investments pledged as collateral of $106.3 million. As of March 31, 2023, the Lloyds LOC Facility had an outstanding balance of $35.0 million and short-term investments pledged as collateral of $37.8 million. Ark’s uncommitted secured standby letter of credit facility agreements contain various representations, warranties and covenants that White Mountains considers to be customary for such borrowings.
28

Kudu Credit Facility

On March 23, 2021, Kudu entered into a secured revolving credit facility (the “Kudu Credit Facility”) with Mass Mutual to repay its prior credit facility and to fund new investments and related transaction expenses. The maximum borrowing capacity of the Kudu Credit Facility is $300.0 million. The Kudu Credit Facility matures on March 23, 2036.
Interest on the Kudu Credit Facility accrues at a floating interest rate equal to the greater of the three month LIBOR or 0.25% plus, in each case, 4.30%. The Kudu Credit Facility requires Kudu to maintain an interest reserve account, which is included in restricted cash. As of March 31, 2023, the interest reserve account had a balance of $13.0 million. The Kudu Credit Facility requires Kudu to maintain a ratio of the outstanding balance to the sum of the fair market value of Kudu’s Participation Contracts and cash held in certain accounts (the “LTV Percentage”) of less than 50% in years 0-3, 40% in years 4-6, 25% in years 7-8, 15% in years 9-10, and 0% thereafter. As of March 31, 2023, Kudu had a 28.8% LTV Percentage.
Kudu may borrow undrawn balances within the initial three-year availability period, subject to customary terms and conditions, to the extent the amount borrowed under the Kudu Credit Facility does not exceed the borrowing base, which is equal to 35% of the fair value of Kudu’s qualifying Participation Contracts. When considering the fair value of Kudu’s qualifying Participation Contracts as of March 31, 2023, the available undrawn balance was $47.4 million.

The following table presents the change in debt under the Kudu Credit Facility for the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,
Millions20232022
Kudu Credit Facility
Beginning balance$215.2 $225.4 
Term loans
Borrowings— — 
Repayments(16.9)— 
Ending balance$198.3 $225.4 

The Kudu Credit Facility is secured by all property of the loan parties and contains various affirmative and negative covenants that White Mountains considers to be customary for such borrowings.

Other Operations Debt

As of March 31, 2023, White Mountains’s Other Operations had debt with an outstanding balance of $34.3 million, which consisted of four secured credit facilities (collectively, “Other Operations debt”).

Compliance

At September 30, 2017,March 31, 2023, White Mountains was in compliance, in all material respects, with all of the covenants under all of its debt instruments.



29

Note 6.8.  Income Taxes
 
The Company and its Bermuda domiciled subsidiaries are not subject to Bermuda income tax under current Bermuda law. In the event there is a change in the current law such that taxes are imposed, the Bermuda Exempted Undertakings Tax Protection Act of 1966 states that the Company and its Bermuda domiciled subsidiaries would be exempt from such tax until March 31, 2035, pursuant to the Bermuda Exempted Undertakings Tax Protection Act of 1966.2035. The Company has subsidiaries and branches that operate in various other jurisdictions around the world thatand are subject to tax in the jurisdictions in which they operate.  TheAs of March 31, 2023, the primary jurisdictions in which the Company’s subsidiaries and branches arewere subject to tax are Barbados, Gibraltar,include Ireland, Israel, Luxembourg, the Netherlands, the United Kingdom and the United States.
White Mountains’s income tax benefitexpense related to pre-tax income from continuing operations for the three and nine months ended September 30, 2017March 31, 2023 represented an effective tax ratesrate of (47.6)% and (203.9)%6.0%. The effective tax rates wererate was different from the U.S. statutory rate of 35%21.0%, driven primarily due to aby full valuation allowance on all U.S. operations, ayear forecasted income in jurisdictions with lower tax benefit recorded at BAM and consolidated pre-tax income being near break-even.  Forrates than the three and nine months ended September 30, 2017, BAM had amounts recorded in shareholders’ equity related to member surplus contributions that were available to partially offset its loss from continuing operations.  As a result, for the three and nine months ended September 30, 2017, BAM recorded a tax benefit of $2.1 million and $6.9 million in net income from continuing operations, with an offsetting amount recorded in shareholders’ equity.United States.
White Mountains’s income tax benefit related to pre-tax loss from continuing operations for the three and nine months ended September 30, 2016March 31, 2022 represented an effective tax ratesrate of (123.9)% and (31.2)%18.2%. The effective tax rates wererate was different from the U.S. statutory rate of 35%21.0%, driven primarily due toby income in jurisdictions with lower tax rates than the United States and a decrease in the full valuation allowance on net deferred tax benefit recordedassets in certain U.S. operations within Other Operations, partially offset by an increase in the full valuation allowance at BAM and a $14.0 millionstate income taxes.
On April 1, 2023, the U.K. corporate tax benefit recognized in continuing operations relatedrate increased from 19.0% to 25.0%.
On August 16, 2022, the U.S. enacted the Inflation Reduction Act (the “IRA”). White Mountains has evaluated the tax provisions of the IRA, the most significant of which relate to the reversal of a valuation allowance that resulted from income that was recognized within discontinued operations. ASC 740 includes an exception to the general principle of intra-periodcorporate alternative minimum tax allocations that requires a company with a current period loss from continuing operations to consider income recorded in other categories, including discontinued operations, in determiningand the tax benefit that is allocatedon share repurchases, and does not expect the legislation to continuinghave a material impact on the results of its operations. The valuation allowance reversal relates to a consolidated tax group within White Mountains that has a current period loss within continuing operations. Accordingly, the tax benefit resulting from the valuation allowance reversal was recorded in continuing operations with an offsetting tax expense for the same amount in discontinued operations. For the three and nine months ended September 30, 2016, BAM had amounts recorded in shareholders’ equity related to member surplus contributions that were available to partially offset its loss from continuing operations. As a result, for the three and nine months ended September 30, 2016, BAM recorded a tax benefit of $3.3 million and $8.2 million in net income from continuing operations, with an offsetting amount recorded in shareholders’ equity.
In arriving at the effective tax rate for the three and nine months ended September 30, 2017March 31, 2023 and 2016,2022, White Mountains forecasted all income and expense items including the change in unrealized investment gains (losses) and realized investment gains (losses) for the years ending December 31, 20172023 and 2016.2022.
White Mountains records a valuation allowance against deferred tax assets if it becomes more likely than not that all or a portion of a deferred tax asset will not be realized. Changes in valuation allowances from period to period are included in income tax expense in the period of change. In determining whether or not a valuation allowance, or change therein, is warranted, White Mountains considers factors such as prior earnings history, expected future earnings, carryback and carryforward periods and strategies that if executed would result in the realization of a deferred tax asset.
In the second quarter of 2016, White Mountains recorded an increase in deferred tax assets of $0.6 million and a corresponding increase in valuation allowance of $0.6 million related to the settlement of the IRS audit of Guilford Holdings, Inc. and subsidiaries for tax year 2012.
With few exceptions, White Mountains is no longer subject to U.S. federal, state, or non-U.S. income tax examinations by tax authorities for years before 2013.2017.



Note 7.9. Derivatives


Variable Annuity ReinsuranceHG Global Interest Rate Cap
White Mountains
On June 16, 2022, HG entered into agreementsan interest rate cap agreement, effective on July 25, 2022, to reinsure death and living benefit guarantees associated with certain variable annuities in Japan. Duringlimit its exposure to the third quarter of 2015, the variable annuity contracts reinsured by WM Life Re began to mature and were fully runoff by September 30, 2016. The reinsurance agreement was commuted in December 2016. WM Life Re was liquidated in the third quarter of 2017.
The following table summarizes the pre-tax operating results of WM Life Re for the three and nine months ended September 30, 2016.
  Three Months Ended Nine Months Ended
Millions September 30, 2016 September 30, 2016
Fees, included in other revenue $—
 $1.2
Change in fair value of variable annuity liability, included in other revenue —
 (.3)
Change in fair value of derivatives, included in other revenue —
 (2.0)
Foreign exchange, included in other revenue —
 1.4
Total revenue —
 .3
Death benefit claims paid, included in general and administrative expenses —
 (.3)
General and administrative expenses (.5) (2.4)
Pre-tax loss $(.5) $(2.4)
The following summarizes realized and unrealized derivative gains (losses) recognized in other revenue for the three and nine months ended September 30, 2016 and the carrying values, included in other assets, as of December 31, 2016 by type of instrument:
  Gains (losses) Carrying Value
  Three Months Ended Nine Months Ended As of
Millions September 30, 2016 September 30, 2016 December 31, 2016
Fixed income/interest rate $—
 $1.8
 $—
Foreign exchange —
 (4.8) —
Equity —
 1.0
 —
Total $—
 $(2.0) $—

The following tables summarize the changes in White Mountains’s variable annuity reinsurance liabilities and derivative instruments for the nine months ended September 30, 2016.
  Nine Months Ended September 30, 2016
  
Variable Annuity
Liabilities
 Derivative Instruments
Millions Level 3 
Level 3 (1)
 
Level 2 (1)(2)
 
Level 1 (3)
 Total
Beginning of period $.3
 $2.7
 $16.5
 $.9
 $20.1
Purchases —
 —
 —
 —
 —
Realized and unrealized (losses) gains (.3) 2.9
 (.7) (4.2) (2.0)
Transfers in —
 —
 —
 —
 —
Sales/settlements —
 (5.6) (15.8) 3.3
 (18.1)
End of period $—
 $—
 $—
 $—
 $—
(1) Consists of over-the-counter instruments.
(2) Consistsrisk of interest rate swaps, total return swaps, foreign currency forward contracts, and bond forwards. Fair value measurement based upon bid/ask pricing quotes for similar instruments that are actively traded, where available.  Swaps for which an active market does not exist have been priced using observable inputs includingincreases on the swap curveHG Global Senior Notes. The notional amount of the interest rate cap is $150.0 million and the underlying bond index.termination date is July 25, 2025.
(3) ConsistsHG paid initial premiums of exchange traded equity index, foreign currency and$3.3 million for the interest rate futures. Fair value measurementscap. Under the terms of the interest rate cap agreement, if the current three-month SOFR rate at the measurement date exceeds 3.5%, HG will receive payments from the counterparty equal to the difference between the three-month SOFR rate on the determination date and 3.5%, multiplied by the notional amount of the cap based upon quoted priceson the number of days in the quarter. As of March 31, 2023, the three-month SOFR rate was 4.9%.
HG accounts for identical instruments that are actively traded.

All of White Mountains’s variable annuity reinsurance liabilities were classifiedthe interest rate cap as Level 3 measurements. Thea derivative at fair value, with changes in fair value recognized in current period earnings within interest expense. For the three months ended March 31, 2023, White Mountains recognized a loss of White Mountains’s variable annuity reinsurance liabilities were estimated using actuarial and capital market assumptions$0.7 million related to the projected discounted cash flows overchange in fair value on the terminterest rate cap within interest expense. For the three months ended March 31, 2023, White Mountains received a payment of $0.2 million related to the periodic settlement of the reinsurance agreement. Actuarial assumptions regarding future policyholder behavior, including surrenderinterest rate cap. As of March 31, 2023 and lapse rates, were generally unobservable inputs and significantly impactedDecember 31, 2022, the fair value estimates. Generally, the liabilities associated with these guarantees increased with declines in the equity markets, interest rates and currencies against the Japanese yen, as well as with increases in market volatilities. White Mountains used derivative instruments to mitigate the risks associated with changes in theestimated fair value of the reinsured variable annuity guarantees. The types of inputs used to estimate the fair value of these derivative instruments, with the exception of actuarial assumptions regarding policyholder behaviorinterest rate cap recorded in other assets was $3.4 million and risk margins, were generally the same as those used to estimate the fair value of variable annuity liabilities.

Forward Contracts
White Mountains’s investment portfolio includes certain investment grade fixed maturity investments denominated in British Pound Sterling (GBP) and common equity securities denominated in Japanese Yen (JPY), Euro (EUR), GBP and other foreign currencies.$4.1 million. White Mountains has entered into foreign currency forward contracts to manage its foreign currency exposure related to these investments. The contracts do not meetclassifies the criteria to be accounted forinterest rate cap as a hedge. White Mountains actively manages its net foreign currency exposure and adjusts its foreign currency positions within ranges established by senior management. Mismatches between currency driven movements in foreign denominated investments and foreign currency forward contracts may result in net foreign currency positions being outside pre-defined ranges and/or may result in net foreign currency gains/(losses). At September 30, 2017, White Mountains held $261.8 million (GBP 160.7 million, EUR 18.9 million and JPY 2,646.4 million) gross notional value of foreign currency forward contracts.
White Mountains’s foreign currency forward contracts are traded over-the-counter. The fair value of the contracts has been estimated using OTC quotes for similar instruments and accordingly, the measurements have been classified as Level 2 measurements as of September 30, 2017.measurement.
The net realized derivative loss recognized in net realized and unrealized investment gains (losses) for the three and nine months ended September 30, 2017 was $7.2 million and $8.9 million. The net unrealized derivative loss recognized in net realized and unrealized investment gains (losses) for the three and nine months ended September 30, 2017 was $2.8 million and $14.2 million. White Mountains’s forward contracts are subject to master netting agreements. As of September 30, 2017 and December 31, 2016, there were no offsets to the gross liability amount under the master netting agreement and the resulting net amount recognized in other long-term investments was $15.4 million and $1.2 million.
White Mountains does not hold or provide any collateral under its forward contracts.  The following table summarizes the gross notional amount associated with the forward currency contracts as of September 30, 2017:
30
  September 30, 2017
Millions Notional Amount Carrying Value 
Standard & Poor's Rating (1)
Barclays Bank PLC $201.3
 $(14.1) A-
JP Morgan Chase Bank N.A. 60.5
 (1.3) A+
Total $261.8
 $(15.4)  
(1) Standard & Poor’s ratings as detailed above are: “A+” (Strong, which is the fifth highest of twenty-three creditworthiness ratings) and “A-” (Strong, which is the seventh highest of twenty-three creditworthiness ratings).



Note 8.10. Municipal Bond Guarantee Insurance


In 2012, HG Global was capitalized with $594.5 million from White Mountains and $14.5 million from non-controlling interestsestablished to fund the startup of BAM, a newly formed mutual municipal bond insurer. As of September 30, 2017, White Mountains owned 96.9% of HG Global’s preferred equity and 88.4% of its common equity. HG Global, together with its subsidiaries, provided the initial capitalization of BAM through the purchase of $503.0$503.0 million of the BAM Surplus Notes. Through

Reinsurance Treaties

FLRT
BAM is a party to a first loss reinsurance treaty (“FLRT”) with HG Re under which HG GlobalRe provides first loss reinsurance protection for policies underwritten by BAM of up to 15% of par-of-par outstanding on each municipal bond insured by BAM. For capital appreciation bonds, par is adjusted to the estimated equivalent par value for current interest paying bonds. In return, BAM cedes approximately 60% of the risk premium charged for insuring the municipal bond, which is net of a per policy basis.ceding commission. The FLRT is a perpetual agreement with terms that can be renegotiated after a specified period of time. During 2021, BAM and HG Re agreed that the terms may be renegotiated at the end of 2024, and each subsequent five-year period thereafter.

Fidus Re
BAM is party to a collateralized financial guarantee excess of loss reinsurance agreement that serves to increase BAM’s claims paying resources and is provided by Fidus Re Ltd. (“Fidus Re”).
In 2018, Fidus Re was initially capitalized by the issuance of $100.0 million of insurance-linked securities (the “Fidus Re 2018 Agreement”), which have an initial term of 12 years and are callable five years after the date of issuance. The proceeds from issuance were placed in a collateral trust supporting Fidus Re’s obligations to BAM. Under the Fidus Re 2018 Agreement, Fidus Re reinsures 90% of aggregate losses exceeding $165.0 million on a portion of BAM’s financial guarantee portfolio (the “2018 Covered Portfolio”) up to a total reimbursement of $100.0 million. The Fidus Re 2018 Agreement does not provide coverage for losses in excess of $276.1 million. The 2018 Covered Portfolio consists of approximately 26% of BAM’s gross par outstanding as of March 31, 2023.
In 2021, Fidus Re issued an additional $150.0 million of insurance-linked securities (the “Fidus Re 2021 Agreement”), which have an initial term of 12 years and are callable five years after the date of issuance. The proceeds from issuance were placed in a collateral trust supporting Fidus Re’s obligations to BAM. Under the Fidus Re 2021 Agreement, Fidus Re reinsures 90% of aggregate losses exceeding $135.0 million on a portion of BAM’s financial guarantee portfolio (the “2021 Covered Portfolio”) up to a total reimbursement of $150.0 million. The Fidus Re 2021 Agreement does not provide coverage for losses in excess of $301.7 million. The 2021 Covered Portfolio consists of approximately 31% of BAM’s gross par outstanding as of March 31, 2023.
In 2022, Fidus Re issued an additional $150.0 million of insurance linked securities (the “Fidus Re 2022 Agreement”), which have an initial term of 12 years and are callable seven years after the date of issuance. The proceeds from issuance were placed in a collateral trust supporting Fidus Re’s obligations to BAM. Under the Fidus Re 2022 Agreement, Fidus Re reinsures 90% of aggregate losses exceeding $110.0 million on a portion of BAM’s financial guarantee portfolio (the “2022 Covered Portfolio”) up to a total reimbursement of $150.0 million. The Fidus Re 2022 Agreement does not provide coverage for losses in excess of $276.7 million. The 2022 Covered Portfolio consists of approximately 32% of BAM’s gross par outstanding as of March 31, 2023.
The Fidus Re agreements are accounted for using deposit accounting and any related financing expenses are recorded in general and administrative expenses as they do not meet the risk transfer requirements necessary to be accounted for as reinsurance.

XOLT
In January 2020, BAM are collateralizedentered into an excess of loss reinsurance agreement (the “XOLT”) with HG Re. Under the XOLT, HG Re provides last dollar protection for exposures on municipal bonds insured by BAM in trusts, and thereexcess of the New York State Department of Financial Services (“NYDFS”) single issuer limits. As of March 31, 2023, the XOLT is subject to an aggregate loss limit that is equal to the totallesser of $125.0 million or the assets held in the supplemental collateral truststrust (the “Supplemental Trust”) at any point in time. The agreement is accounted for using deposit accounting and any related financing expenses are recorded in general and administrative expenses as the agreement does not meet the risk transfer requirements necessary to be accounted for as reinsurance.
For
31

Collateral Trusts

HG Re’s obligations under the threeFLRT are subject to an aggregate limit equal to the assets in two collateral trusts, the Supplemental Trust and nine months ended September 30, 2017the Regulation 114 Trust (together, the “Collateral Trusts”), at any point in time.
On a monthly basis, BAM deposits cash equal to ceded premiums, net of ceding commissions, due to HG Global had pre-tax incomeRe under the FLRT directly into the Regulation 114 Trust. The Regulation 114 Trust target balance is equal to HG Re’s unearned premiums and unpaid loss and LAE reserves, if any. If, at the end of $7.0any quarter, the Regulation 114 Trust balance is below the target balance, funds will be withdrawn from the Supplemental Trust and deposited into the Regulation 114 Trust in an amount equal to the shortfall. If, at the end of any quarter, the Regulation 114 Trust balance is above 102% of the target balance, funds will be withdrawn from the Regulation 114 Trust and deposited into the Supplemental Trust. The Regulation 114 Trust balance as of March 31, 2023 and December 31, 2022 was $300.8 million and $20.3$288.6 million.
The Supplemental Trust target balance is $603.0 million, which included $4.8 millionless the amount of cash and $14.3 millionsecurities in the Regulation 114 Trust in excess of its target balance (the “Supplemental Trust Target Balance”). If, at the end of any quarter, the Supplemental Trust balance exceeds the Supplemental Trust Target Balance, such excess may be distributed to HG Re. The distribution will be made first as an assignment of accrued interest income on the BAM Surplus Notes. ForNotes and second in cash and/or fixed income securities.
As the threeBAM Surplus Notes are repaid over time, the BAM Surplus Notes will be replaced in the Supplemental Trust by cash and nine months ended September 30, 2016, HG Global had pre-taxfixed income securities. The Supplemental Trust balance as of $5.2March 31, 2023 and December 31, 2022 was $579.9 million and $18.4$568.3 million.
As of March 31, 2023 and December 31, 2022, the Collateral Trusts held assets of $880.7 million and $856.9 million, which included $4.5$520.6 million and $13.4$503.3 million of cash and investments, $340.0 million and $340.0 million of BAM Surplus Notes and $20.1 million and $13.6 million of interest incomereceivable on the BAM Surplus Notes.
For the three and nine months ended September 30, 2017, White Mountains reported pre-tax losses of $11.9 million and $35.6 million on BAM that were recorded in net loss attributable to non-controlling interests, which included $4.8 million and $14.3 million of interest expense on the
BAM Surplus Notes. For the three and nine months ended September 30, 2016, White Mountains reported pre-tax losses of $13.7 million and $30.3 million on BAM that were recorded in net loss attributable to non-controlling interests, which included $4.5 million and $13.4 million of interest expense on the BAM Surplus Notes.Notes
Effective January 1, 2014, HG Global and BAM agreed to change
Through 2024, the interest rate on the BAM Surplus Notes for the five years ending December 31, 2018 from a fixed rate of 8.0% tois a variable rate equal to the one-year U.S. treasuryTreasury rate plus 300 basis points, set annually, whichannually. During 2023, the interest rate on the BAM Surplus Notes is 3.54% and 3.78% for 2016 and 2017. Prior to the end of 2018, BAM has the option to extend the variable rate period for an additional three years.  At the end of the variable rate period,7.7%. Beginning in 2025, the interest rate will be fixed at the higher of the then current variable rate or 8.0%. Under its agreements with HG Global, BAM is required to seek regulatory approval to pay principal and interest on the BAM Surplus Notes only to the extent that its remaining qualified statutory capital and other capital resources continue to support its outstanding obligations, its business plan and its “AA/stable” rating from Standard & Poor’s. No payment of interestprincipal or principalinterest on the BAM Surplus Notes may be made without the approval of the New York State DepartmentNYDFS.
In December 2022, BAM made a $36.0 million cash payment of Financial Services. BAM has stated its intention to seek regulatory approval to payprincipal and interest and principal on its surplus notes only to the extent that (1) its remaining qualified statutory capital (“QSC”) exceeds $500 million and (2) its remaining QSC and other capital resources continue to support its outstanding obligations, business plan and its AA stable rating from S&P.
During the second quarter of 2017, in order to further support BAM’s long-term capital position and business prospects, HG Global agreed to contribute the $203.0 million Series A BAM Surplus Notes (“Series A Notes”) into the supplemental collateral trust (the “Supplemental Trust”) atheld by HG Re, HG Global’s wholly owned reinsurance subsidiary. The Supplemental Trust already holds the $300.0Global. Of this payment, $24.6 million Series B BAM Surplus Notes (“Series B Notes” and, collectively with the Series A Notes, the “BAM Surplus Notes”). Assetswas a repayment of principal held in the Supplemental Trust, serve to collateralize HG Re’s obligations to BAM under the first loss reinsurance treaty between BAM and HG Re. HG Global and BAM also agreed to change the$1.0 million was a payment terms of the Series B Notes, so that payments will reduce principal and accrued interest onheld in the Supplemental Trust and $10.4 million was a pro rata basis, consistent with the payment terms on the Series A Notes. The terms of the Series B Notes had previously stipulated that payments would first reduce interest owed, then reduce principal owed once all accrued interest had been paid. The New York Department of Financial Services approvedheld outside the change during the third quarter of 2017.Supplemental Trust.
During the second quarter of 2017, HG Globalthree months ended March 31, 2023 and 2022, BAM also made certain changes to the ceding commission arrangements under the reinsurance treaty between HG Re and BAM. These changes will accelerate growth in BAM’s statutory capital but will not impact the net risk premium ceded from BAM to HG Re. 

Under GAAP, if the terms of a debt instrument are amended, unless there is a greater than 10% change in the expected discounted future cash flows of such instrument, a change in the instrument’s carrying value is not permitted. White Mountains has determined that the impact of the changes made in the second quarter of 2017 to the termsno repayments of the BAM Surplus Notes or accrued interest.
As of March 31, 2023 and December 31, 2022, the principal balance on the expected discounted future cash flows is not greater than 10%.
All of the contracts issued by BAM are accountedSurplus Notes was $340.0 million for as insurance contracts under ASC 944-605, Financial Guarantee Insurance Contracts. Premiums are received upfrontboth periods and an unearned premium revenue liability, equal to the amount of the cash received, is established at contract inception. Premium revenues are recognized in revenue over the period of the contracts in proportion to the amount of insurance protection provided using a constant rate. The constant rate is calculated basedtotal interest receivable on the relationship between the par outstanding in a given reporting period compared with the sum of each of the par amounts outstanding for all periods.BAM Surplus Notes was $164.5 million and $157.9 million.

Insured Obligations and Premiums

The following table providespresents a schedule of BAM’s insured obligations:obligations as of March 31, 2023 and December 31, 2022:
March 31, 2023December 31, 2022
Contracts outstanding13,607 13,382 
Remaining weighted average contract period (in years)10.810.8
Contractual debt service outstanding (in millions):
Principal$101,785.7 $99,996.9 
Interest49,801.9 48,880.6 
Total debt service outstanding$151,587.6 $148,877.5 
Gross unearned insurance premiums (in millions)$299.8 $298.3 

32
  September 30, 2017 December 31, 2016
Contracts outstanding 5,907
 4,807
Remaining weighted average contract period outstanding (in years) 10.9
 10.8
Contractual debt service outstanding (in millions):    
  Principal $39,207.5
 $33,057.3
  Interest 19,681.0
 16,396.6
  Total debt service outstanding $58,888.5
 $49,453.9
     
Gross unearned insurance premiums $118.5
 $82.9


The following table ispresents a schedule of BAM’s future premium revenues as of September 30, 2017:March 31, 2023:
MillionsMarch 31, 2023
April 1, 2023 - December 31, 2023$20.9 
January 1, 2024 - March 31, 20246.8 
April 1, 2024 - June 30, 20246.7 
July 1, 2024 - September 30, 20246.5 
October 1, 2024 - December 31, 20246.4 
Total 202426.4 
202524.7 
202623.1 
202721.5 
202819.8 
2029 and thereafter163.4 
Total gross unearned insurance premiums$299.8 

The following table presents a schedule of written premiums and earned premiums included in the HG Global/BAM segment for the three months ended March 31, 2023 and 2022:
Three Months Ended March 31,
Millions20232022
Written premiums:
Direct$9.2 $9.4 
Assumed— — 
Gross written premiums (1)
$9.2 $9.4 
Earned premiums:
Direct$7.0 $7.6 
Assumed.7 .8 
Gross earned premiums (1)
$7.7 $8.4 
(1)There are no ceded premium amounts in the periods presented, and gross earned premiums are equivalent to net written premiums and net earned premiums.



33
Millions September 30, 2017
October 1, 2017 - December 31, 2017 $2.5
   
January 1, 2018 - March 31, 2018 2.5
April 1, 2018 - June 30, 2018 2.5
July 1, 2018 - September 30, 2018 2.5
October 1, 2018 - December 31, 2018 2.4
  9.9
   
2019 9.5
2020 9.2
2021 8.7
2022 and thereafter 78.7
Total gross unearned insurance premiums $118.5



Note 9.11. Earnings Per Share
 
White Mountains calculates earnings per share using the two-class method, which allocates earnings between common shares and unvested restricted common shares. Both classes of shares participate equally in dividends and earnings on a per share basis. Basic earnings per share amounts are based on the weighted average number of common shares outstanding adjusted for unvested restricted common shares. Diluted earnings per share amounts are also impacted by the net effect of potentially dilutive common shares outstanding.
The following table outlinespresents the Company’s computation of earnings per share from continuing operations for the three and nine months ended September 30, 2017March 31, 2023 and 2016.2022. See Note 1519 — “Held for Sale and Discontinued Operations”.Operations.”
Three Months Ended March 31,
 20232022
Basic and diluted earnings per share numerators (in millions): 
Net income (loss) attributable to White Mountains’s common shareholders$179.5 $33.4 
Less: total income (loss) from discontinued operations, net of tax (1)
— 3.7 
Less: net (income) loss from discontinued operations attributable
   to noncontrolling interests		— (.1)
Net income (loss) from continuing operations attributable to
   White Mountains’s common shareholders		179.5 29.8 
Allocation of (earnings) losses to participating restricted common shares (2)
(2.2)(.3)
Basic and diluted earnings (losses) per share numerators$177.3 $29.5 
Basic earnings per share denominators (in thousands):
Total average common shares outstanding during the period2,569.9 3,006.2 
Average unvested restricted common shares (3)
(31.1)(29.6)
Basic earnings (losses) per share denominator2,538.8 2,976.6 
Diluted earnings per share denominator (in thousands):
Total average common shares outstanding during the period2,569.9 3,006.2 
Average unvested restricted common shares (3)
(31.1)(29.6)
Diluted earnings (losses) per share denominator2,538.8 2,976.6 
Basic and diluted earnings per share (in dollars) - continuing operations:
Distributed earnings - dividends declared and paid$1.00 $1.00 
Undistributed earnings (losses)68.83 8.90 
Basic and diluted earnings (losses) per share$69.83 $9.90 
  Three Months Ended Nine Months Ended
  September 30, September 30,
  2017 2016 2017 2016
Basic and diluted earnings per share numerators (in millions):      
  
Net income attributable to White Mountains’s common shareholders $562.1
 $90.8
 $604.7
 $440.7
    Less: total income from discontinued operations, net of tax (539.1) (84.4) (573.2) (515.4)
Net income (loss) from continuing operations attributable to
White Mountains’s common shareholders
 $23.0
 $6.4
 $31.5
 $(74.7)
Allocation of earnings to participating restricted common shares(1)
 (.3) (.1) (.4) .8
Basic and diluted earnings per share numerators $22.7
 $6.3
 $31.1
 $(73.9)
Basic earnings per share denominators (in thousands):        
Total average common shares outstanding during the period 4,297.2
 4,867.4
 4,477.0
 5,166.6
Average unvested restricted common shares(2)
 (53.7) (68.1) (54.5) (62.9)
Basic earnings per share denominator 4,243.5
 4,799.3
 4,422.5
 5,103.7
Diluted earnings per share denominator (in thousands):        
Total average common shares outstanding during the period(3)
 4,297.2
 4,879.4
 4,477.0
 5,174.8
Average unvested restricted common shares(2)
 (53.7) (68.1) (54.5) (62.9)
Diluted earnings per share denominator(3)
 4,243.5
 4,811.3
 4,422.5
 5,111.9
Basic earnings per share (in dollars) - continuing operations:        
Net income (loss) attributable to White Mountains’s common shareholders $5.36
 $1.31
 $7.03
 $(14.47)
Dividends declared and paid —
 —
 (1.00) (1.00)
Undistributed earnings (loss) $5.36
 $1.31
 $6.03
 $(15.47)
Diluted earnings per share (in dollars) - continuing operations:        
Net income (loss) attributable to White Mountains’s common shareholders $5.36
 $1.31
 $7.03
 $(14.47)
Dividends declared and paid —
 —
 (1.00) (1.00)
Undistributed earnings (loss) $5.36
 $1.31
 $6.03
 $(15.47)
(1) Includes net income (loss) from discontinued operations, net of tax - NSM Group. See Note 19 — “Held for Sale and Discontinued Operations.”
(1)(2) Restricted shares issued by White Mountains receive dividends, and therefore, are considered participating securities.
(2) (3) Restricted shares outstanding vest either in equal annual installments or upon a stated date. See Note 1312 — “Employee Share-Based Incentive Compensation Plans”.Plans.”
(3) The diluted earnings per share denominator for the three and nine months ended September 30, 2016 includes the impact of 120,000 common shares issuable upon exercise of the non-qualified options outstanding, which resulted in 11,943 and 8,208 incremental shares outstanding over the period.










The following table summarizespresents the undistributed net earnings (loss)(losses) from continuing operations for the three and nine months ended September 30, 2017March 31, 2023 and 2016.2022. See Note 1519 — “Held for Sale and Discontinued Operations”.Operations.”

Three Months Ended March 31,
Millions20232022
Undistributed net earnings - continuing operations:
Net income (loss) attributable to White Mountains’s common
   shareholders, net of restricted common share amounts		$177.3 $29.5 
Dividends declared, net of restricted common share amounts (1)
(2.5)(3.0)
Total undistributed net earnings (losses), net of restricted common share amounts$174.8 $26.5 
  Three Months Ended Nine Months Ended
  September 30, September 30,
Millions 2017 2016 2017 2016
Undistributed net earnings - continuing operations:        
Net income (loss) attributable to White Mountains’s common shareholders,
     net of restricted common share amounts
 $22.7
 $6.3
 $31.1
 $(73.9)
Dividends declared net of restricted common share amounts (1)
 —
 —
 (4.5) (5.9)
Total undistributed net earnings (loss), net of restricted common
     share amounts
 $22.7
 $6.3
 $26.6
 $(79.8)
(1) Restricted shares issued by White Mountains receive dividends, and therefore, are considered participating securities.


34

Note 10. Non-controlling Interests12. Employee Share-Based Incentive Compensation Plans

White Mountains’s share-based incentive compensation plans are designed to incentivize key employees to maximize shareholder value over long periods of time. White Mountains believes that this is best pursued by utilizing a pay-for-performance program that closely aligns the financial interests of management with those of its shareholders while rewarding appropriate risk taking. White Mountains accomplishes this by emphasizing variable long-term compensation that is contingent on performance over a number of years rather than fixed entitlements. White Mountains expenses all its share-based compensation. As a result, White Mountains’s calculation of its owners’ returns includes the expense of all outstanding share-based compensation awards.
White Mountains’s Long-Term Incentive Plan (the “WTM Incentive Plan”) provides for grants of various types of share-based and non-share-based incentive awards to key employees and directors of White Mountains. As of March 31, 2023 and 2022, White Mountains’s share-based incentive compensation awards consist of performance shares and restricted shares.

Performance Shares

Performance shares are designed to reward employees for meeting company-wide performance targets. Performance shares are conditional grants of a specified maximum number of common shares or an equivalent amount of cash. Awards generally vest at the end of a three-year service period, are subject to the attainment of pre-specified performance goals, and are valued based on the market value of common shares at the time awards are paid. Performance shares earned under the WTM Incentive Plan are typically paid in cash but may be paid in common shares. Compensation expense is recognized for the vested portion of the awards over the related service periods. The level of payout ranges from zero to two times the number of shares initially granted, depending on White Mountains’s financial performance. Performance shares become payable at the conclusion of a performance cycle (typically three years) if pre-defined financial targets are met. The performance measures used for determining performance share payouts are growth in White Mountains’s adjusted book value per share and intrinsic value per share. Intrinsic value per share is generally calculated by adjusting adjusted book value per share for differences between the adjusted book value of certain assets and liabilities and White Mountains’s estimate of their underlying intrinsic values.
The following table detailspresents the balanceperformance share activity for the three months ended March 31, 2023 and 2022 for performance shares granted under the WTM Incentive Plan:
 Three Months Ended March 31,
 20232022
$ in MillionsTarget Performance
Shares Outstanding		Accrued
Expense		Target Performance
Shares Outstanding		Accrued
Expense
Beginning of period39,449 $67.5 40,828 $42.2 
Shares paid (1)
(13,350)(40.8)(14,625)(26.4)
New grants10,895 — 13,075 — 
Forfeitures and cancellations (2)
37 .4 24 .3 
Expense recognized— 9.3 — 5.8 
End of period37,031 $36.4 39,302 $21.9 
(1) WTM performance share payments in 2023 for the 2020-2022 performance cycle, which were paid in March 2023 at 200% of non-controlling interests includedtarget.
WTM performance share payments in 2022 for the 2019-2021 performance cycle, which were paid in March 2022 at 172% of target. 
(2) Amounts include changes in assumed forfeitures, as required under GAAP.

During the three months ended March 31, 2023, White Mountains’sMountains granted 10,895 performance shares for the 2023-2025 performance cycle. During the three months ended March 31, 2022, White Mountains granted 13,075 performance shares for the 2022-2024 performance cycle.
For the 2020-2022 performance cycle, all performance shares earned were settled in cash. For the 2019-2021 performance cycle, the Company issued common shares for 750 performance shares earned, and all other performance shares earned were settled in cash. If the outstanding performance shares had vested on March 31, 2023, the total equity and the related percentage of each consolidated entity’s total equity owned by non-controlling shareholdersadditional compensation cost to be recognized would have been $44.6 million, based on accrual factors as of September 30, 2017March 31, 2023 (common share price and Decemberpayout assumptions).

35

The following table presents performance shares outstanding and accrued expense for performance shares awarded under the WTM Incentive Plan as of March 31, 2016:2023 for each performance cycle:
March 31, 2023
$ in MillionsTarget Performance
Shares Outstanding		Accrued
Expense
Performance cycle:  
2021 – 202313,475 $22.6 
2022 – 202413,225 14.0 
2023 – 202510,895 .4 
Sub-total37,595 37.0 
Assumed forfeitures(564)(.6)
Total37,031 $36.4 

Restricted Shares

Restricted shares are grants of a specified number of common shares that generally vest at the end of a 34-month service period. The following table presents the unrecognized compensation cost associated with the outstanding restricted share awards under the WTM Incentive Plan for the three months ended March 31, 2023 and 2022:

 Three Months Ended March 31,
 20232022
$ in MillionsRestricted
Shares		Unamortized Issue Date
Fair Value		Restricted
Shares		Unamortized Issue Date
Fair Value
Non-vested,    
Beginning of period38,350 $15.5 37,850 $15.9 
Issued10,895 16.0 13,075 13.6 
Vested(11,650)— (12,725)— 
Forfeited— — — — 
Expense recognized— (3.2)— (3.0)
End of period37,595 $28.3 38,200 $26.5 

During the three months ended March 31, 2023, White Mountains issued 10,895 restricted shares that vest on January 1, 2026. During the three months ended March 31, 2022, White Mountains issued 13,075 restricted shares that vest on January 1, 2025. The unamortized issue date fair value as of March 31, 2023 is expected to be recognized ratably over the remaining vesting periods. 

36
  September 30, 2017 December 31, 2016
$ in millions Non-controlling Percentage Non-controlling Equity Non-controlling Percentage Non-controlling Equity
OneBeacon Ltd. —% $—
 23.9% $244.6
  

 

 

 

Other, excluding mutuals and reciprocals        
HG Global 3.1
 16.1
 3.1
 16.6
MediaAlpha 40.0
 9.5
 40.0
 11.7
Buzzmove 22.9
 3.0
 29.1
 2.9
Wobi 5.0
 —
 5.0
 .1
Dewar (1)
 —
 —
 18.8
 3.9
Total other, excluding mutuals and reciprocals   28.6
   35.2
Mutuals and reciprocals        
BAM 100.0
 (160.2) 100.0
 (150.9)
SSIE —
 —
 100.0
 4.4
Total mutuals and reciprocals   (160.2)   (146.5)
Total non-controlling interests 

 $(131.6)   $133.3

(1) Dewar is a subsidiary of OneBeacon.


Note 11.13. Noncontrolling Interests

Noncontrolling interests consist of the ownership interests of noncontrolling shareholders in consolidated entities and are presented separately on the balance sheet.
The following table presents the balance of noncontrolling interests included in White Mountains’s total equity and the related percentage of each consolidated entity’s total equity owned by noncontrolling shareholders as of March 31, 2023 and December 31, 2022:
 March 31, 2023December 31, 2022
$ in Millions
Noncontrolling Percentage (1)
Noncontrolling Equity
Noncontrolling Percentage (1)
Noncontrolling Equity
Noncontrolling interests, excluding BAM
HG Global3.1 %$(.3)3.1 %$(.6)
Ark28.0 %251.3 28.0 %247.9 
Kudu10.8 %81.3 10.8 %75.1 
Othervarious10.3 various20.4 
Total, excluding BAM342.6 342.8 
BAM100.0 %(152.2)100.0 %(154.7)
Total noncontrolling interests$190.4 $188.1 
(1) The noncontrolling percentage represents the basic ownership interests held by noncontrolling shareholders with the exception of HG Global, for which the noncontrolling percentage represents the preferred share ownership held by noncontrolling shareholders.

Note 14. Segment Information
 
As of March 31, 2023, White Mountains has determined thatconducted its operations through three reportable segments aresegments: (1) HG Global/BAM, MediaAlpha(2) Ark/WM Outrigger, and (3) Kudu, with our remaining operating businesses, holding companies and other assets included in Other Operations. As a result of the Sirius Group and Tranzact sales and the OneBeacon Transaction, the results of operations for Sirius Group and OneBeacon, previously reported in their own respective segments, and Tranzact, previously reported in the Other Operations segment, have been classified as discontinued operations and are now presented, net of related income taxes, as such in the statement of operations and comprehensive income. Beginning in the second quarter of 2017, MediaAlpha’s results have been presented as a separate segment within White Mountains’s consolidated financial statements. Prior year amounts have been reclassified to conform to the current period’s presentation. See Note 15 — “Held for Sale and Discontinued Operations”.
White Mountains has made its segment determination based on consideration of the following criteria: (i) the nature of the business activities of each of the Company’s subsidiaries and affiliates; (ii) the manner in which the Company’s subsidiaries and affiliates are organized; (iii) the existence of primary managers responsible for specific subsidiaries and affiliates; and (iv) the organization of information provided to the chief operating decision makers and the Board of Directors.
Significant intercompany transactions among White Mountains’s segments have been eliminated herein. Financial
During the fourth quarter of 2022, Ark sponsored the formation of Outrigger Re Ltd. to provide reinsurance protection on Ark’s Bermuda global property catastrophe excess of loss portfolio written in calendar year 2023. White Mountains consolidates its segregated account of Outrigger Re Ltd., WM Outrigger Re, in its financial statements. WM Outrigger Re’s quota share reinsurance agreement with GAIL eliminates in White Mountains’s consolidated financial statements. WM Outrigger Re exclusively provides reinsurance protection to Ark. As a result, WM Outrigger Re was aggregated with Ark within the Ark/WM Outrigger segment starting in 2023. See Note 2 — “Significant Transactions.” As a result of the NSM Transaction, the results of operations for NSM, previously reported as a segment, have been classified as discontinued operations in the statements of operations and comprehensive income through the closing of the transaction. See Note 19 — “Held for Sale and Discontinued Operations.” Prior period amounts have been reclassified to conform to the current period’s presentation.

37

The following tables present the financial information for White Mountains’s segments follows:for the three months ended March 31, 2023 and 2022:
MillionsHG Global/BAMArk/WM Outrigger
HG Global
BAM (1)
ArkWM Outrigger Re
Kudu
Other OperationsTotal
Three Months Ended March 31, 2023
Earned insurance premiums$6.4 $1.3 $249.9 $5.2 $— $— $262.8 
Net investment income4.0 3.2 8.4 2.2 14.2 7.0 39.0 
Net investment income (expense) -
  BAM Surplus Note interest		6.6 (6.6)— — — — — 
Net realized and unrealized investment
   gains (losses)		7.9 9.1 24.5 — 29.6 41.8 112.9 
Net realized and unrealized investment gains
   (losses) from investment in MediaAlpha		— — — — — 85.2 85.2 
Commission revenues— — — — — 3.3 3.3 
Other revenues— .8 (2.7)— — 30.6 28.7 
     Total revenues24.9 7.8 280.1 7.4 43.8 167.9 531.9 
Loss and loss adjustment expenses— — 147.6 .2 — — 147.8 
Acquisition expenses1.8 .9 58.9 .9 — — 62.5 
Cost of sales— — — — — 13.9 13.9 
General and administrative expenses1.1 16.2 35.1 .1 3.8 39.7 96.0 
Change in fair value of contingent
   consideration		— — (2.4)— — — (2.4)
Interest expense4.5 — 5.0 — 4.7 .8 15.0 
     Total expenses7.4 17.1 244.2 1.2 8.5 54.4 332.8 
Pre-tax income (loss) from continuing operations$17.5 $(9.3)$35.9 $6.2 $35.3 $113.5 $199.1 
  HG Global/BAM      
Millions HG Global 
BAM(1)
 MediaAlpha Other Operations Total
Three Months Ended September 30, 2017          
Earned insurance premiums $1.8
 $.6
 $—
 $—
 $2.4
Net investment income 1.0
 2.3
 —
 8.9
 12.2
Net investment income (loss) - BAM Surplus Note interest 4.8
 (4.8) —
 —
 —
Net realized and unrealized investment gains .1
 .7
 —
 31.7
 32.5
Advertising and commission revenues —
 —
 37.9
 .9
 38.8
Other revenue —
 .2
 —
 1.4

1.6
     Total revenues 7.7
 (1.0) 37.9
 42.9
 87.5
Insurance acquisition expenses .4
 .5
 —
 —
 .9
Other underwriting expenses —
 .1
 —
 —
 .1
Cost of sales —
 —
 32.2
 .9
 33.1
General and administrative expenses .3
 10.3
 6.1
 27.4

44.1
Interest expense —
 —
 .1
 .8
 .9
     Total expenses .7
 10.9
 38.4
 29.1
 79.1
Pre-tax income (loss) $7.0
 $(11.9) $(.5) $13.8
 $8.4
(1)BAM manages its affairs on a statutory accounting basis. BAM’s statutory surplus includes surplus notesthe BAM Surplus Notes and is not reduced by accruals of interest expense on the surplus notes.BAM Surplus Notes. BAM’s statutory surplus is reduced only after a payment of principal or interest has been approved by the New York Department of Financial Services.NYDFS.

MillionsHG Global/BAMArk/WM OutriggerOther Operations
HG Global
BAM (1)
Ark
Kudu
Total
Three Months Ended March 31, 2022
Earned insurance premiums$6.9 $1.5 $194.4 $— $— $202.8 
Net investment income2.1 2.5 1.6 12.6 1.8 20.6 
Net investment income (expense) -
   BAM Surplus Note interest		2.9 (2.9)— — — — 
Net realized and unrealized investment gains (losses)(23.5)(21.6)(17.5)22.3 31.9 (8.4)
Net realized and unrealized investment gains
   (losses) from investment in MediaAlpha		— — — — 18.8 18.8 
Commission revenues— — — — 2.9 2.9 
Other revenues.1 .7 (2.8)— 25.7 23.7 
     Total revenues(11.5)(19.8)175.7 34.9 81.1 260.4 
Losses and loss adjustment expenses— — 122.0 — — 122.0 
Acquisition expenses2.6 .4 49.9 — — 52.9 
Cost of sales— — — — 21.4 21.4 
General and administrative expenses.7 15.6 21.0 2.8 29.8 69.9 
Change in fair value of contingent consideration— — 2.1 — — 2.1 
Interest expense— — 3.8 2.8 .3 6.9 
     Total expenses3.3 16.0 198.8 5.6 51.5 275.2 
Pre-tax income (loss) from continuing operations$(14.8)$(35.8)$(23.1)$29.3 $29.6 $(14.8)
  HG Global/BAM      
Millions HG Global 
BAM(1)
 MediaAlpha Other Operations Total
Nine Months Ended September 30, 2017          
Earned insurance premiums $5.0
 $1.6
 $—
 $1.0
 $7.6
Net investment income 2.4
 6.5
 —
 30.8
 39.7
Net investment income (loss) - BAM Surplus Note interest 14.3
 (14.3) —
 —
 —
Net realized and unrealized investment gains .4
 2.8
 —
 99.3
 102.5
Advertising and commission revenues —
 —
 101.2
 2.7
 103.9
Other revenue —
 .8
 —
 5.3
 6.1
     Total revenues 22.1
 (2.6) 101.2
 139.1
 259.8
Losses and loss adjustment expenses —
 —
 —
 1.1
 1.1
Insurance acquisition expenses 1.0
 2.0
 —
 .1
 3.1
Other underwriting expenses —
 .3
 —
 —
 .3
Cost of sales —
 —
 86.0
 2.7
 88.7
General and administrative expenses .8
 30.7
 17.9
 112.8
 162.2
Interest expense —
 —
 .6
 1.2
 1.8
     Total expenses 1.8
 33.0
 104.5
 117.9
 257.2
Pre-tax income (loss) $20.3
 $(35.6) $(3.3) $21.2
 $2.6
(1) BAM manages its affairs on a statutory accounting basis. BAM’s statutory surplus includes surplus notesthe BAM Surplus Notes and is not reduced by accruals of interest expense on the surplus notes.BAM Surplus Notes. BAM’s statutory surplus is reduced only after a payment of principal or interest has been approved by the New York DepartmentNYDFS.

38

Note 15. Variable Interest Entities

BAM

BAM is owned by and operated for the benefit of Financial Services.its members, the municipalities that purchase BAM’s insurance for their debt issuances. However, the equity at risk funded by BAM’s members is not sufficient to fund its operations without the additional financial support provided by the BAM Surplus Notes and accordingly, White Mountains has determined that BAM is a VIE.
  HG Global/BAM      
Millions HG Global 
BAM(1)
 MediaAlpha Other Operations Total
Three Months Ended September 30, 2016          
Earned insurance premiums $1.2
 $.3
 $—
 $1.9
 $3.4
Net investment income .6
 1.7
 —
 7.3
 9.6
Net investment income (loss) - BAM Surplus Note interest 4.5
 (4.5) —
 —
 —
Net realized and unrealized investment (losses) gains (.3) (1.6) —
 12.8
 10.9
Advertising and commission revenues —
 —
 27.6
 .6
 28.2
Other revenue —
 .4
 —
 4.3
 4.7
     Total revenues 6.0
 (3.7) 27.6
 26.9
 56.8
Losses and loss adjustment expenses —
 —
 —
 2.2
 2.2
Insurance acquisition expenses .2
 .6
 —
 .5
 1.3
Other underwriting expenses —
 .1
 —
 .1
 .2
Cost of sales —
 —
 23.0
 1.0
 24.0
General and administrative expenses .6
 9.3
 5.7
 26.8
 42.4
Interest expense —
 —
 .2
 .3
 .5
     Total expenses .8
 10.0
 28.9
 30.9
 70.6
Pre-tax income (loss) $5.2
 $(13.7) $(1.3) $(4.0) $(13.8)
(1) BAM manages its affairs onPursuant to the FLRT, BAM’s underwriting guidelines may only be amended with the consent of HG Re. In addition, HG Holdings Ltd, a statutory accounting basis.subsidiary of HG Global, has the right to designate two directors for election to BAM’s statutory surplus includes surplus notesBoard of Directors. As a result, we have determined that White Mountains is the primary beneficiary and is not reducedrequired to consolidate BAM’s results in its financial statements. Since BAM is owned by accrualsits members, its equity and results of interest expense onoperations are included in noncontrolling interests.
HG Re’s obligations under the surplus notes. BAM’s statutory surplus is reduced only after a payment of principal or interestFLRT are subject to an aggregate limit equal to the assets in the Collateral Trusts at any point in time.

WM Outrigger Re

White Mountains has been approved by the New York Department of Financial Services.


  HG Global/BAM      
Millions HG Global 
BAM(1)
 MediaAlpha Other Operations Total
Nine Months Ended September 30, 2016      
    
Earned insurance premiums $3.1
 $1.0
 $—
 $6.1
 $10.2
Net investment income 1.6
 5.1
 —
 11.5
 18.2
Net investment income (loss) - BAM Surplus Note interest 13.4
 (13.4) —
 —
 —
Net realized and unrealized investment gains 2.3
 6.5
 —
 18.4
 27.2
Advertising and commission revenues —
 —
 88.4
 1.2
 89.6
Other revenue —
 .8
 —
 17.2
 18.0
     Total revenues 20.4
 —
 88.4
 54.4
 163.2
Losses and loss adjustment expenses —
 —
 —
 6.8
 6.8
Insurance acquisition expenses .6
 1.9
 —
 1.9
 4.4
Other underwriting expenses —
 .3
 —
 .1
 .4
Cost of sales —
 —
 74.0
 2.9
 76.9
General and administrative expenses 1.4
 28.1
 16.3
 99.1
 144.9
Interest expense —
 —
 .7
 1.9
 2.6
      Total expenses 2.0
 30.3
 91.0
 112.7
 236.0
Pre-tax income (loss) $18.4
 $(30.3) $(2.6) $(58.3) $(72.8)
(1) BAM manages its affairs on a statutory accounting basis. BAM’s statutory surplus includes surplus notesdetermined that Outrigger Re Ltd. and WM Outrigger Re are VIEs. White Mountains is not reduced by accrualsthe primary beneficiary of interest expense onOutrigger Re Ltd. or the surplus notes. BAM’s statutory surplus is reduced only after a payment of principal or interest has been approved by the New York Department of Financial Services.

Note 12. Investment in Symetra
White Mountains’s investment in Symetra represented an investment in whichother segregated accounts. White Mountains had ais the primary beneficiary of WM Outrigger Re, as it has both the power to direct the activities that most significantly impact WM Outrigger Re’s economic performance and the obligation to absorb losses, or the right to receive returns, that could potentially be significant voting and economic interest but did not control the entity.
In August 2015, Symetra announced it had entered into a definitive merger agreement with Sumitomo Life pursuant to which Sumitomo Life would acquire all of the outstanding shares of Symetra. Following the announcement and Symetra shareholders’ November 5, 2015 meeting to approve the transaction, White Mountains relinquished its representation on Symetra’s board of directors.WM Outrigger Re. As a result, White Mountains changedconsolidates WM Outrigger Re’s results in its accountingfinancial statements. The assets of WM Outrigger Re can only be used to settle the liabilities of WM Outrigger Re, and there is no recourse to the Company for Symetra common shares fromany creditors of WM Outrigger Re.

PassportCard/DavidShield

As of March 31, 2023, White Mountains’s ownership interest in PassportCard/DavidShield was 53.8%. White Mountains has determined that both PassportCard and DavidShield are VIEs but that White Mountains is not the primary beneficiary and therefore does not consolidate either PassportCard or DavidShield. The governance structures for both PassportCard and DavidShield were designed to give White Mountains and its co-investor equal power to make the decisions that most significantly impact operations. White Mountains does not have the unilateral power to direct the operations of PassportCard or DavidShield and does not hold a controlling financial interest. White Mountains’s ownership interest gives White Mountains the ability to exert significant influence over the significant financial and operating activities of PassportCard/DavidShield. Accordingly, White Mountains’s investment in PassportCard/DavidShield meets the criteria to be accounted for under the equity method tomethod. White Mountains has taken the fair value asoption for its investment in PassportCard/DavidShield. Changes in the fair value of December 31, 2015. During the fourth quarter of 2015, White Mountains recognized $258.8 million ($241.1 million after tax) ofPassportCard/DavidShield are recorded in net realized and unrealized investment gains through(losses). As of March 31, 2023, White Mountains’s maximum exposure to loss on its equity investment in PassportCard/DavidShield and the non-interest-bearing loan to its partner is the total carrying value of $149.7 million.

Elementum

As of March 31, 2023, White Mountains’s ownership interest in Elementum was 26.6%. White Mountains has determined that Elementum is a VIE but that White Mountains is not the primary beneficiary and therefore does not consolidate Elementum. White Mountains’s ownership interest gives White Mountains the ability to exert significant influence over the significant financial and operating activities of Elementum. Accordingly, Elementum meets the criteria to be accounted for under the equity method. White Mountains has taken the fair value option for its investment in Elementum. Changes in the fair value of Elementum are recorded in net income, representing the difference betweenrealized and unrealized investment gains (losses). As of March 31, 2023, White Mountains’s maximum exposure to loss on its limited partnership interest in Elementum is the carrying value of Symetra common shares under$30.0 million.

39

Limited Partnerships

White Mountains’s investments in limited partnerships are generally considered VIEs because the equity method atlimited partnership interests do not have substantive kick-out rights or participating rights. White Mountains does not have the dateunilateral power to direct the operations of changethese limited partnerships, and therefore White Mountains is not the primary beneficiary and does not consolidate the limited partnerships. White Mountains has taken the fair value option for its investments in limited partnerships, which are generally measured at DecemberNAV as a practical expedient. As of March 31, 2015.2023, White Mountains also received a special dividendMountains’s maximum exposure to loss on its investments in limited partnerships is the carrying value of $0.50 per share as part of the transaction that was paid in the third quarter of 2015. On February 1, 2016, Symetra closed its definitive merger agreement with Sumitomo Life, and White Mountains received proceeds of $658.0 million, or $32.00 per common share. White Mountains recognized $4.7 million in pre-tax net investment gains associated with Symetra in the first quarter of 2016.$159.4 million.



Note 13. Employee Share-Based Incentive Compensation Plans16. Equity Method Eligible Investments
 
White Mountains’s Long-Term Incentive Plan (the “WTM Incentive Plan”) provides for grants of various types of share-based and non share-based incentive awards to key employees of White Mountains. As of September 30, 2017,equity method eligible investments include Kudu’s Participation Contracts, White Mountains’s share-based compensation incentive awards consist of performance sharesinvestment in MediaAlpha, PassportCard/DavidShield, Elementum Holdings, L.P. and restricted shares.

Share-Based Compensation Based oncertain other unconsolidated entities, private equity funds and hedge funds in which White Mountains Common Shareshas the ability to exert significant influence over the investee’s operating and financial policies.
WTM Performance Shares
Performance shares are conditional grants of a specified maximum number of common shares or an equivalent amount of cash. Awards generally vest at the end of a three-year period, are subject to the attainment of pre-specified performance goals, and are valued based on the market value of common shares at the time awards are approved for payment.  The following table summarizes performance share activity forpresents the threeownership interests and ninecarrying values of White Mountains’s equity method eligible investments as of March 31, 2023 and December 31, 2022:
March 31, 2023December 31, 2022
$ in Millions
Ownership Interest (1)
Carrying Value
Ownership Interest (1)
Carrying Value
Kudu’s Participation Contracts (1)
4.1% - 30.0%$683.2 4.1% - 30.0%$695.9 
Investment in MediaAlpha26.8%253.8 27.1%168.6 
PassportCard/DavidShield53.8%140.0 53.8%135.0 
Elementum Holdings, L.P.26.6%30.0 29.7%30.0 
Other equity method eligible investments, at fair valueUnder 50.0%180.8 Under 50.0%84.4 
Other equity method eligible investments, at fair value50.0% and over10.5 50.0% and over— 
(1) Ownership interest generally references basic ownership interest with the exception of Kudu’s Participation Contracts, which are noncontrolling equity interests in the form of revenue and earnings participation contracts.

For the three months endedSeptember 30, 2017 March 31, 2023 and 2016 for performance shares granted under the WTM Incentive Plan:
  Three Months Ended September 30, Nine Months Ended September 30,
  2017 2016 2017 2016
Millions, except share amounts Target Performance
Shares Outstanding		 
Accrued
Expense
 Target Performance
Shares Outstanding		 
Accrued
Expense
 
Target
Performance
Shares
Outstanding
 
Accrued
Expense
 
Target
Performance
Shares
Outstanding
 
Accrued
Expense
Beginning of period 50,575
 $31.2
 73,297
 $32.5
 80,353
 $42.4
 93,654
 $57.7
Shares paid (1)
 —
 —
 —
 —
 (30,838) (21.6) (36,294) (41.0)
New grants —
 —
 6,400
 —
 17,510
 —
 22,615
 —
Forfeitures and cancellations(2)
 (256) (.4) (160) (.1) (16,706) (9.4) (438) .2
Expense recognized —
 7.0
 —
 5.0
 —
 26.4
 —
 20.5
End of period(3)
 50,319
 $37.8
 79,537
 $37.4
 50,319
 $37.8
 79,537
 $37.4
(1) WTM performance share payments in 2017 for the 2014-2016 performance cycle,2022, White Mountains received dividend and income distributions from equity method eligible investments of $7.7 million and $13.1 million, which were paid in March 2017, ranged from 34% to 76% of target.  WTM performance share payments in 2016 for the 2013-2015 performance cycle, which were paid in April 2016, ranged from 140% to 142% of target. 
(2) Amounts include changes in assumed forfeitures, as required under GAAP.
(3) Outstanding performance share awards as of September 30, 2017 and 2016 exclude 2,195 and 7,315 performance share awards granted to employees of Sirius Group.

For performance shares earnedrecorded within net investment income in the 2014-2016 performance cycle, all performance shares earned were settled in cash. For the performance shares earned in the 2013-2015 performance cycle, the Company issued 5,000 common shares and settled the remainder in cash. If all the outstanding WTM performance shares had vested on September 30, 2017, the total additional compensation cost to be recognized would have been $28.7 million, based on accrual factors (common share price and payout assumptions) at September 30, 2017.consolidated statements of operations.

Performance Shares Granted Under the WTM Incentive Plan
The following table summarizes performance shares outstanding and accrued expense for performance shares awarded under the WTM Incentive Plan at September 30, 2017 for each performance cycle:
Millions, except share amounts 
Target Performance
Shares Outstanding
 
Accrued
Expense
Performance cycle:  
  
2015 – 2017 18,370
 $20.6
2016 – 2018 16,235
 12.1
2017 – 2019 16,480
 5.7
Sub-total 51,085
 38.4
Assumed forfeitures (766) (.6)
September 30, 2017 50,319
 $37.8


Restricted Shares Granted Under the WTM Incentive Plan
The following table summarizes the unrecognized compensation cost associated with the outstanding restricted share awards for the three and nine months endedSeptember 30, 2017 and 2016:
  Three Months Ended September 30, Nine Months Ended September 30,
  2017 2016 2017 2016
Millions, except share amounts Restricted
Shares		 Unamortized
Issue Date Fair Value		 Restricted
Shares		 Unamortized
Issue Date Fair Value		 
Restricted
Shares
 
Unamortized
Issue Date
Fair Value
 
Restricted
Shares
 
Unamortized
Issue Date
Fair Value
Non-vested,          
  
  
  
Beginning of period 53,815
 $23.5
 66,470
 $24.2
 70,620
 $19.7
 70,675
 $15.7
Issued —
 —
 4,150
 3.4
 17,785
 16.7
 25,365
 19.7
Vested (260) —
 —
 —
 (28,846) —
 (24,620) —
Forfeited —
 —
 —
 —
 (6,004) (3.5) (800) .2
Expense recognized —
 (3.8) —
 (3.8) —
 (13.2) —
 (11.8)
End of period (1)
 53,555
 $19.7
 70,620
 $23.8
 53,555
 $19.7
 70,620
 $23.8
(1) Restricted share awards outstanding as of September 30, 2017 and 2016 include 2,195 and 5,235 restricted shares issued to employees of Sirius Group, which was accounted for as discontinued operations.

During the second quarter of 2017, White Mountains issued 550 restricted shares that vest on January 1, 2020, 250 restricted shares that vest on January 1, 2019 and 250 restricted shares that vest on January 1, 2018. During the first quarter of 2017, White Mountains issued 16,735 restricted shares that vest on January 1, 2020. During the first nine months of 2016, White Mountains issued 24,615 restricted shares that vest on January 1, 2019 and 750 restricted shares that vest on January 1, 2018. The unamortized issue date fair value at September 30, 2017 is expected to be recognized ratably over the remaining vesting periods. 
Stock Options
Non-Qualified Options
As January 20, 2017, the 125,000 Non-Qualified options issued to the Company’s former Chairman and CEO had been exercised. During the first quarter of 2017, 40,000 Non-Qualified Options, with an intrinsic value of $4.4 million, were exercised in exchange for 5,142 common shares with an equal total market value. During 2016, 5,000 Non-Qualified Options, with an intrinsic value of $0.4 million, were exercised at $742 per common share and 80,000 Non-Qualified Options, with an intrinsic value of $8.4 million, were exercised in exchange for 9,930 common shares with an equal total market value. Intrinsic value represents the difference between the market price of the Company’s common shares at the date of exercise and the fixed strike price of $742 per common share. The Non-Qualified Options were fully amortized as of 2011.

Note 14.17. Fair Value of Financial Instruments

White Mountains accounts forrecords its financial instruments at fair value with the exception of the WTM Bank Facility,debt obligations, which was undrawn at September 30, 2017 and December 31, 2016, the MediaAlpha Bank Facility and the Previous MediaAlpha Bank Facility, which isare recorded as debt at face value less unamortized original issue discount. See Note 7 — “Debt.”
The following table summarizespresents the fair value and carrying value of these financial instruments as of September 30, 2017March 31, 2023 and December 31, 2016:2022:
 March 31, 2023December 31, 2022
MillionsFair ValueCarrying ValueFair ValueCarrying Value
HG Global Senior Notes$158.8 $146.6 $155.7 $146.5 
Ark 2007 Subordinated Notes$29.2 $30.0 $28.4 $30.0 
Ark 2021 Subordinated Notes$165.5 $154.5 $163.1 $153.7 
Kudu Credit Facility$208.2 $191.6 $223.9 $208.3 
Other Operations debt$35.4 $33.6 $38.2 $36.7 
  September 30, 2017 December 31, 2016
Millions 
Fair
Value
 
Carrying
Value
 
Fair
Value
 
Carrying
Value
MediaAlpha Bank Facility $9.4
 $9.4
 $—
 $—
Previous MediaAlpha Bank Facility —
 —
 13.0
 12.7


The fair value estimateestimates for the MediaAlpha BankHG Global Senior Notes, Ark 2007 Subordinated Notes, Ark 2021 Subordinated Notes, Kudu Credit Facility and the Previous MediaAlpha Bank Facility hasOther Operations debt have been determined based on a discounted cash flowsflow approach and isare considered to be a Level 3 measurement.measurements.

For the fair value level measurements associated with White Mountains’s investment securities. See Note 3 — “Investment Securities.” For the fair value level measurements associated with White Mountains’s derivative instruments. See Note 9 — “Derivatives.”

40

Note 18. Commitments and Contingencies

Legal Contingencies

White Mountains, and the insurance industry in general, is routinely subject to claims related litigation and arbitration in the normal course of business, as well as litigation and arbitration that do not arise from, nor are directly related to, claims activity. White Mountains’s estimates of the costs of settling matters routinely encountered in claims activity are reflected in the reserves for unpaid loss and LAE. See Note 5 — “Losses and Loss Adjustment Expense Reserves.”
White Mountains considers the requirements of ASC 450 when evaluating its exposure to non-claims related litigation and arbitration. ASC 450 requires that accruals be established for litigation and arbitration if it is probable that a loss has been incurred and it can be reasonably estimated. ASC 450 also requires that litigation and arbitration be disclosed if it is probable that a loss has been incurred or if there is a reasonable possibility that a loss may have been incurred. White Mountains does not have any current non-claims related litigation that may have a material adverse effect on White Mountains’s financial condition, results of operations or cash flows.

Note 15.19. Held for Sale and Discontinued Operations


OneBeaconNSM

On September 28, 2017, Intact Financial Corporation completed its previously announced acquisition of OneBeacon in an all-cash transaction for $18.10 per share.August 1, 2022, White Mountains received total proceeds of $1.3 billion and recordedclosed the NSM Transaction. See Note 2 — “Significant Transactions.” As a gain of $554.6 million, net of transaction costs. Net income (loss) from discontinued operations related to OneBeacon was $20.5 million and $(15.2) million though the closing dateresult of the nine and three months ended and September 30, 2017. Net income from discontinued operations related to OneBeacon was $93.8 million and $22.5 million forNSM Transaction, the nine and three months ended September 30, 2016.

Star & Shield
On March 7, 2017, White Mountains completed the sale of Star & Shield and its investment in SSIE surplus notes to K2 Insurances LLC. White Mountains did not recognize any gain or loss on the sale. Through December 31, 2016, Star & Shield’s assets and liabilities are reportedof NSM Group have been presented in the balance sheet as held for sale within White Mountains's GAAP financial statements.

Tranzact
On July 21, 2016, White Mountains completedfor periods prior to the sale of Tranzact to Clayton, Dubilier & Rice, LLC and received net proceeds of $221.3 million at closing. On October 5, 2016, White Mountains received additional proceeds of $1.2 million following the releaseclosing of the post-closing purchase price adjustment escrow. During 2016, White Mountains recorded a $51.9 million gain fromtransaction, and the sale of Tranzact in discontinued operations, which included a $30.2 million tax expense for the reversal of a tax valuation allowance that is offset by a tax benefit recorded in continuing operations.
Through July 21, 2016, Tranzact’s results of operations are reportedfor NSM Group have been classified as discontinued operations and assets and liabilities held for sale within White Mountains’s GAAP financial statements. Net loss from discontinued operations related to
Tranzact, prior to the tax benefit described below, was $2.1 million and $2.6 million for the three and nine months ended September 30, 2016.
During the third quarter of 2016, White Mountains recognized a $14.0 million tax benefit in continuing operations related to the reversal of a valuation allowance that resulted from the gain on the sale of Tranzact recognized within discontinued operations. This tax benefit was recorded in continuing operations with an offsetting amount of net tax expense recorded in discontinued operations; $30.2 million of tax expense was recorded to gain from sale of Tranzact in discontinued operations and a $16.1 million tax benefit was recorded to net income from discontinued operations.
In the nine months ended September 30, 2017, White Mountains recorded a $1.0 million reduction to the gain from sale of Tranzact in discontinued operations as a result of 2016 state tax payments.

Sirius Group
On April 18, 2016, White Mountains completed the sale of Sirius Group to CMI for approximately $2.6 billion. $161.8 million of this amount was used to purchase certain assets to be retained by White Mountains out of Sirius Group, including shares of OneBeacon. The amount paid at closing was based on an estimate of Sirius Group’s closing date tangible common shareholder’s equity. During 2016, White Mountains recorded $363.2 million of gain from sale of Sirius Group in discontinued operations in the statementstatements of operations and $113.3 million in other comprehensive income from discontinued operations.
Through April 18, 2016, Sirius Group’s results are reported as discontinued operations and assets and liabilities held for sale within White Mountains’s GAAP financial statements. Assets held for sale did not include White Mountains’s investment in OneBeacon and certain other investments that are inthrough the Sirius Group legal entities. Asclosing of December 31, 2015, the value of these investments, net of related tax effects, was $686.2 million, of which $528.6 million related to Symetra. Net loss from discontinued operations does not include White Mountains’s net investment income and realized and unrealized investment gains and losses associated with these investments. For the three months and six ended June 30, 2016, $0.4 million and $3.7 million of net investment income and realized and unrealized investment gains and losses, net of related tax effects, that are included in the Sirius Group legal entitiestransaction. Prior period amounts have been excluded from net loss from discontinued operations. White Mountains recorded $(4.0) million and $356.2 million of total income from discontinued operations for the three and nine months ended September 30, 2016 and $145.3 million of other comprehensive income for the nine months ended September 30, 2016.
During the third quarter of 2017, White Mountains recorded a $0.8 million reductionreclassified to conform to the gain from sale of Sirius Group as a result of a change to the valuation of the accrued incentive compensation payable to Sirius Group employees.

current period’s presentation.
Net Assets Held for Sale
The following table summarizes the assets and liabilities associated with businesses classified as held for sale. Amounts presented relate to OneBeacon, Star & Shield and SSIE.
Millions December 31, 2016
Assets held for sale  
Fixed maturity investments, at fair value $2,175.7
Short-term investments, at amortized cost (which approximates fair value) 112.3
Common equity securities, at fair value 188.7
Other long-term investments 150.5
  Total investments 2,627.2
Cash 70.5
Reinsurance recoverable on unpaid and paid losses 179.8
Insurance and reinsurance premiums receivable 229.8
Deferred acquisition costs 96.3
Deferred tax asset 126.7
Ceded unearned insurance and reinsurance premiums 44.2
Accounts receivable on unsettled investment sales 1.4
Goodwill and other intangible assets 1.2
Accrued investment income 11.3
Other assets 211.1
Total assets held for sale $3,599.5
Liabilities held for sale 
Loss and loss adjustment expense reserves $1,370.6
Unearned insurance and reinsurance premiums 576.3
Debt 273.2
Accrued incentive compensation 44.3
Funds held under reinsurance treaties 153.0
Other liabilities 151.9
Total liabilities held for sale 2,569.3
Net assets held for sale $1,030.2

Net Income (Loss) from Discontinued Operations

The following table summarizes the results of operations, including related income taxes associated with the businessbusinesses classified as discontinued operations. Foroperations for the three and nine months ended September 30, 2017, the amounts presented relate to OneBeacon and Sirius Group. For the three and nine months ended September 30, 2016, the amounts presented relate to OneBeacon, Sirius Group and Tranzact. The results of discontinued operations from Sirius Group and Tranzact up to the closing date of the transaction inured to White Mountains. Given the fixed price nature of the OneBeacon Transaction, OneBeacon’s results were economically transferred to the buyer at signing.March 31, 2022:
MillionsThree Months Ended
March 31, 2022
Revenues
Commission revenues$70.1 
Other revenues18.4 
Total revenues88.5 
Expenses
General and administrative expenses54.0 
Broker commission expenses20.6 
Change in fair value of contingent consideration.1 
Amortization of other intangible assets9.1 
Interest expense2.1 
Total expenses85.9 
Pre-tax income (loss) from discontinued operations2.6 
Income tax (expense) benefit1.1 
Net income (loss) from discontinued operations, net of tax3.7 
Net (income) loss from discontinued operations attributable to noncontrolling interests(.1)
Total income (loss) from discontinued operations attributable to White
   Mountains’s common shareholders		3.6 
Other comprehensive income (loss) from discontinued operations, net of tax(1.9)
Comprehensive income (loss) from discontinued operations1.7 
Other comprehensive income (loss) from discontinued operations attributable to
   noncontrolling interests		.1 
Comprehensive income (loss) from discontinued operations attributable to
   White Mountains’s common shareholders		$1.8 
41
  Three Months Ended Three Months Ended
  September 30, 2017 September 30, 2016
Millions OneBeacon Sirius Group Total OneBeacon Sirius Group Tranzact Total
Revenues              
Earned insurance premiums $268.4
 $—
 $268.4
 $277.9
 $—
 $—
 $277.9
Net investment income 13.0
 —
 13.0
 11.8
 —
 —
 11.8
Net realized and unrealized gains 11.5
 —
 11.5
 15.5
 —
 —
 15.5
Other revenue 2.2
 —
 2.2
 1.8
 —
 14.8
 16.6
Total revenues 295.1
 —
 295.1
 307.0
 —
 14.8
 321.8
Expenses              
Loss and loss adjustment expenses 206.8
 —
 206.8
 162.8
 —
 —
 162.8
Insurance and reinsurance acquisition expenses 51.9
 —
 51.9
 55.1
 —
 —
 55.1
Other underwriting expenses 44.9
 —
 44.9
 49.4
 —
 —
 49.4
General and administrative expenses 7.4
 —
 7.4
 3.5
 —
 16.2
 19.7
Interest expense 3.4
 —
 3.4
 3.3
 —
 .5
 3.8
Total expenses 314.4
 —
 314.4
 274.1
 —
 16.7
 290.8
Pre-tax (loss) income (19.3) —
 (19.3) 32.9
 —
 (1.9) 31.0
Income tax benefit (expense) 4.1
 —
 4.1
 (10.4) —
 15.9
 5.5
Net (loss) income from discontinued operations (15.2) —
 (15.2) 22.5
 —
 14.0
 36.5
Net gain (loss) from sale of discontinued
   operations
 554.5
 (.2) 554.3
 —
 (4.0) 51.9
 47.9
Total income (loss) from discontinued
   operations
 539.3
 (.2) 539.1
 22.5
 (4.0) 65.9
 84.4
Change in foreign currency translation and other
   from discontinued operations
 .1
 —
 .1
 (.3) —
 —
 (.3)
Recognition of benefit plan assets and obligations
from the sale of OneBeacon, net of tax		 2.9
 —
 2.9
 —
 —
 —
 —
Comprehensive income (loss)
   from discontinued operations
 $542.3
 $(.2) $542.1
 $22.2
 $(4.0) $65.9
 $84.1



  Nine Months Ended Nine Months Ended
  September 30, 2017 September 30, 2016
Millions OneBeacon Sirius Group Tranzact Total OneBeacon Sirius Group Tranzact Total
Revenues                
Earned insurance premiums $807.6
 $—
 $—
 $807.6
 $827.9
 $240.1
 $—
 $1,068.0
Net investment income 39.7
 —
 —
 39.7
 38.3
 14.4
 —
 52.7
Net realized and unrealized gains
   (losses)
 38.8
 —
 —
 38.8
 56.8
 (1.5) —
 55.3
Other revenue 7.7
 —
 —
 7.7
 3.5
 .6
 119.6
 123.7
Total revenues 893.8
 —
 —
 893.8
 926.5
 253.6
 119.6
 1,299.7
Expenses                
Loss and loss adjustment expenses 546.0
 —
 —
 546.0
 501.3
 154.9
 —
 656.2
Insurance and reinsurance
   acquisition expenses
 145.6
 —
 —
 145.6
 154.8
 59.0
 —
 213.8
Other underwriting expenses 156.2
 —
 —
 156.2
 155.6
 30.9
 —
 186.5
General and administrative expenses 21.2
 —
 —
 21.2
 10.9
 10.4
 116.7
 138.0
Interest expense 10.0
 —
 —
 10.0
 9.8
 7.9
 3.2
 20.9
Total expenses 879.0
 —
 —
 879.0
 832.4
 263.1
 119.9
 1,215.4
Pre-tax income (loss) 14.8
 —
 —
 14.8
 94.1
 (9.5) (.3) 84.3
Income tax benefit (expense) 5.7
 —
 —
 5.7
 (.3) 3.1
 13.8
 16.6
Net income (loss) from
   discontinued operations
 20.5
 —
 —
 20.5
 93.8
 (6.4) 13.5
 100.9
Net gain (loss) from sale of
   discontinued operations
 554.5
 (.8) (1.0) 552.7
 —
 362.6
 51.9
 414.5
Total income (loss) from discontinued
   operations
 575.0
 (.8) (1.0) 573.2
 93.8
 356.2
 65.4
 515.4
Change in foreign currency translation
   and other from discontinued
   operations
 .3
 —
 —
 .3
 .5
 32.0
 —
 32.5
Recognition of foreign currency
   translation and other from sale of
   Sirius Group, net of tax
 —
 —
 —
 —
 —
 113.3
   113.3
Recognition of benefit plan assets
   and obligations from the sale of
   OneBeacon, net of tax
 2.9
 —
 —
 2.9
 —
 —
 —
 —
Comprehensive income (loss)
   from discontinued operations
 $578.2
 $(.8) $(1.0) $576.4
 $94.3
 $501.5
 $65.4
 $661.2

Net Change in Cash from Discontinued Operations

The following table summarizes the net change in cash including income tax payment to national governments and interest paid associated with the businessbusinesses classified as discontinued operations:operations for the three months ended March 31, 2022:
MillionsThree Months Ended
March 31, 2022
Net cash provided from (used for) operations$4.4 
Net cash provided from (used for) investing activities7.3 
Net cash used from (used for) financing activities(10.3)
Effect of exchange rate changes on cash.6 
Net change in cash during the period2.0 
Cash balances at beginning of period (includes restricted cash of $89.2)111.6 
Cash balances at end of period (includes restricted cash of $90.2 )113.6 
Supplemental cash flows information:
Interest paid$(2.9)
Net income tax payments$— 
  Nine Months Ended
  September 30,
Millions 2017 2016
Net cash provided from operations $157.0
 $38.1
Net cash provided from investing activities 3.0
 269.7
Net cash used for financing activities (61.9) (72.7)
Net change in cash during the period 98.1
 235.1
Cash balances at beginning of period 70.5
 245.4
Net change in cash held for sale, excluding discontinued operations (.9) 2.6
Cash sold as part of sale of consolidated subsidiaries 167.7
 345.8
Cash balances at end of period $—
 $137.3
Supplemental cash flows information:    
Interest paid $—
 $(7.7)
Net income tax payment to national governments $—
 $(18.3)


Earnings Per Share from Discontinued Operations

White Mountains calculates earnings per share using the two-class method, which allocates earnings between common and unvested restricted common shares. Both classes of shares participate equally in earnings on a per share basis. Basic earnings per share amounts are based on the weighted average number of common shares outstanding adjusted for unvested restricted common shares. Diluted earnings per share amounts are also impacted by the net effect of potentially dilutive common shares outstanding. The following table outlinespresents the Company’s computation of earnings per share for discontinued operations for the three and nine months ended September 30, 2017 and 2016:March 31, 2022:
Three Months Ended
March 31, 2022
Basic and diluted earnings per share numerators (in millions):
Net income (loss) attributable to White Mountains’s common shareholders$33.4 
Less: net income (loss) from continuing operations(12.1)
Less: net (income) loss from continuing operations attributable to noncontrolling
   interests		41.9 
Total gain (loss) from discontinued operations attributable to White Mountains’s
   common shareholders (1)
3.6 
Allocation of earnings to participating restricted common shares (2)
— 
Basic and diluted earnings per share numerators (3)
$3.6 
Basic earnings per share denominators (in thousands):
Total average common shares outstanding during the period3,006.2 
Average unvested restricted common shares (4)
(29.6)
Basic earnings per share denominator2,976.6 
Diluted earnings per share denominator (in thousands):
Total average common shares outstanding during the period3,006.2 
Average unvested restricted common shares (4)
(29.6)
Diluted earnings per share denominator2,976.6 
Basic and diluted earnings (losses) per share (in dollars) - discontinued operations:$1.20 
  Three Months Ended Nine Months Ended
  September 30, September 30,
  2017 2016 2017 2016
Basic and diluted earnings per share numerators (in millions):        
Net income attributable to White Mountains’s common shareholders $562.1
 $90.8
 $604.7
 $440.7
    Less: total income from continuing operations, net of tax (23.0) (6.4) (31.5) 74.7
Net income (loss) from discontinued operations attributable to
White Mountains’s common shareholders
 $539.1
 $84.4
 $573.2
 $515.4
   Allocation of earnings to participating restricted common shares (1)
 (6.7) (1.2) (7.0) (6.3)
Basic and diluted earnings per share numerators $532.4
 $83.2
 $566.2
 $509.1
Basic earnings per share denominators (in thousands):        
Total average common shares outstanding during the period 4,297.2
 4,867.4
 4,477.0
 5,166.6
Average unvested restricted common shares (3)
 (53.7) (68.1) (54.5) (62.9)
Basic earnings per share denominator 4,243.5
 4,799.3
 4,422.5
 5,103.7
Diluted earnings per share denominator (in thousands):        
Total average common shares outstanding during the period (4)
 4,297.2
 4,879.4
 4,477.0
 5,174.8
Average unvested restricted common shares (3)
 (53.7) (68.1) (54.5) (62.9)
Diluted earnings per share denominator(4)
 4,243.5
 4,811.3
 4,422.5
 5,111.9
Basic earnings per share (in dollars) - discontinued operations: $125.45
 $17.34
 $128.03
 $99.75
Diluted earnings per share (in dollars) - discontinued operations: $125.45
 $17.30
 $128.03
 $99.60
(1) Includes net income (loss) from discontinued operations, net of tax - NSM Group
(1) (2) Restricted shares issued by White Mountains contain dividend participation features,receive dividends, and therefore, are considered participating securities.
(2) (3) Net earnings attributable to White Mountains’s common shareholders, net of restricted share amounts, is equal to undistributed earnings for the three and nine months ended September 30, 2017 and 2016.March 31, 2022.
(3)(4) Restricted common shares outstanding vest either in equal annual installments or upon a stated date. See Note 1312 — “Employee Share-Based Incentive Compensation Plans”.Plans.”
(4) The diluted earnings per share denominator for the three and nine months ended September 30, 2016 includes the impact of 120,000 common shares issuable upon exercise of the non-qualified options outstanding, which resulted in 11,943 and 8,208 incremental shares outstanding over the period.

Fair Value of Financial Instruments in Liabilities Held for Sale
The OBH Senior Notes are recorded as debt at face value less unamortized original issue discount. The following table summarizes the fair value and carrying value of this financial instrument as of December 31, 2016:
42
  December 31, 2016
Millions 
Fair
Value
 
Carrying
Value
OBH Senior Notes $274.2
 $273.2

The fair value estimate for the OBH Senior Notes has been determined using quoted market prices. The OBH Senior Notes are considered a Level 2 measurement.


OneBeacon Surplus Notes in Assets Held for Sale
In the fourth quarter of 2014, in conjunction with OneBeacon’s sale of its runoff business to an affiliate of Armour Group Holdings Limited (the “OneBeacon Runoff Transaction”), OneBeacon provided financing in the form of surplus notes (the “OneBeacon Surplus Notes”) with a par value of $101.0 million which had a fair value of $71.9 million as of December 31, 2016. The OneBeacon Surplus Notes, issued by one of the transferred entities, Bedivere Insurance Company (the “Issuer”) were in the form of both seller priority and pari passu notes.
Subsequent to closing, the OneBeacon Surplus Notes are included in OneBeacon’s investment portfolio, classified within other long-term investments. The internal valuation model used to estimate the fair value of the OneBeacon Surplus Notes is based on discounted expected cash flows using information as of the measurement date.
Below is a table illustrating the valuation adjustments taken to arrive at estimated fair value of the OneBeacon Surplus Notes as of December 31, 2016:

Millions Total as of December 31, 2016
Par Value $101.0
Fair value adjustments to reflect:  
Current market rates on public debt and contract-based repayments (1)
 5.1
Regulatory approval (2)
 (15.6)
Liquidity adjustment (3)
 (18.6)
Total adjustments (29.1)
Fair value $71.9
(1)
Represents the value of the surplus notes, at current market yields on comparable publicly traded debt, and assuming issuer is allowed to make principal and interest payments when its financial capacity is available, as measured by statutory capital in excess of a 250% RBC score under the National Association of Insurance Commissioners’ risk-based capital standards for property and casualty companies. The favorable year-to-date change in impact is due principally to the narrowing of non-investment grade credit spreads as well as the time value of money benefit from moving three months closer to modeled cash receipts.
(2)
Represents anticipated delay in securing regulatory approvals of interest and principal payments to reflect graduated changes in Issuer's statutory surplus. The monetary impact of the anticipated delay is measured based on credit spreads of public securities with roughly equivalent percentages of discounted payments missed. The favorable year-to-date change in impact is driven primarily by the narrowing of non-investment grade credit spreads, which causes negative valuation impact from the anticipated delay in securing regulatory approval to be lower.
(3) Represents impact of liquidity spread to account for OneBeacon's sole ownership of the notes, lack of a trading market, and unique nature of the ongoing regulatory approval process.

Note 16. Financial Statement Revisions

In October 2017, White Mountains discovered that the former CEO of Wobi, one of its overseas portfolio companies, had been reporting overstated commission revenues and related receivables to White Mountains. As a result, White Mountains has revised certain of its previously issued financial statements. The revisions resulted in reductions to commission revenues (included in advertising and commission revenues) and commissions receivable (included in other assets). In addition, the overstatements led White Mountains to write down the goodwill and other intangible assets related to Wobi to zero. This write down is recorded in general and administrative expenses in the years ended December 31, 2016 and 2015.
White Mountains evaluated the impact of the misstatements resulting from the overstatements at Wobi on prior periods’ financial statements in accordance with SEC Staff Accounting Bulletin (“SAB”) Topic 1.M, Materiality, and concluded the misstatements were not material to any previously reported financial statements. However, while not material to any previously reported annual or quarterly period, the aggregate amount of prior period misstatements could be material to White Mountains's results for the full fiscal year ended December 31, 2017. White Mountains has therefore revised all periods impacted including its consolidated balance sheet as of June 30, 2017 and December 31, 2016 and 2015; and its consolidated statements of operations and comprehensive income, consolidated statements of changes in equity, cash flows and earnings per share for the years ended December 31, 2016, 2015 and 2014, the six month period ended June 30, 2017, and the three and nine month periods ended September 30, 2016. The revisions also reflect a previously recorded out of period adjustment in 2015 and 2014. The impact of these revisions to each of the previously reported consolidated statements are disclosed below. Amounts previously reported reflect the reclassification of OneBeacon, Sirius Group and Tranzact to discontinued operations for all applicable periods presented.


CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited)

  Three months ended Nine months ended
  September 30, 2016
Millions, except for per share amounts As previously reported Adjustments As revised As previously reported Adjustments As revised
Revenues:            
Earned insurance premiums $3.4
 $—
 3.4
 $10.2
 $—
 $10.2
Net investment income 9.6
 —
 9.6
 18.2
 —
 18.2
Net realized and unrealized investment gains 10.9
 —
 10.9
 27.2
 —
 27.2
Advertising and commission revenues 29.4
 (1.2) 28.2
 92.4
 (2.8) 89.6
Other revenue 4.7
 —
 4.7
 18.0
 —
 18.0
Total revenues 58.0
 (1.2) 56.8
 166.0
 (2.8) 163.2
Expenses:            
Loss and loss adjustment expenses 2.2
 —
 2.2
 6.8
 —
 6.8
Insurance and acquisition expenses 1.3
 —
 1.3
 4.4
 —
 4.4
Other underwriting expenses .2
 —
 .2
 .4
 —
 .4
Cost of sales 24.0
 —
 24.0
 76.9
 —
 76.9
General and administrative expenses 42.7
 (.3) 42.4
 142.6
 2.3
 144.9
Interest expense on debt .5
 —
 .5
 2.6
 —
 2.6
Total expenses 70.9
 (.3) 70.6
 233.7
 2.3
 236.0
Pre-tax loss (12.9) (.9) (13.8) (67.7) (5.1) (72.8)
Income tax benefit 17.1
 —
 17.1
 22.7
 —
 22.7
Net income (loss) from continuing operations 4.2
 (.9) 3.3
 (45.0) (5.1) (50.1)
Gain on sale of discontinued operations 47.9
 —
 47.9
 414.5
 —
 414.5
Net income from discontinued operations 36.5
 —
 36.5
 100.9
 —
 100.9
Net income (loss) (1)
 88.6
 (.9) 87.7
 470.4
 (5.1) 465.3
Net loss (income) attributable to
   non-controlling interests
 3.1
 —
 3.1
 (24.6) —
 (24.6)
Net income (loss) attributable to
   White Mountains's common shareholders
 91.7
 (.9) 90.8
 445.8
 (5.1) 440.7
Other comprehensive income (loss), net of tax .2
 (.2) —
 145.6
 (.2) 145.4
Comprehensive income (loss) 91.9
 (1.1) 90.8
 591.4
 (5.3) 586.1
Comprehensive loss attributable to
   non-controlling interests
 .1
 —
 .1
 .1
 —
 .1
Comprehensive income (loss) attributable to
   White Mountains's common shareholders
 $92.0
 $(1.1) $90.9
 $591.5
 $(5.3) $586.2
             
Basic and diluted earnings per share -
   continuing operations
 $1.50
 $(.18) $1.32
 $(13.49) $(1.00) $(14.49)
(1) The adjustment to net income resulted in a corresponding adjustment in the statement of cash flows, with an offsetting adjustment to the change in other assets and liabilities within the operating cash flows section. There was no change to cash flows from operations, cash flows from investing activities or cash flows from financing activities.


CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited)

  Six months ended June 30, 2017
Millions, except for per share amounts As previously reported Adjustments As revised
Revenues:      
Earned insurance premiums $5.2
 $—
 $5.2
Net investment income 27.5
 —
 27.5
Net realized and unrealized investment gains 70.0
 —
 70.0
Advertising and commission revenues 71.7
 (6.6) 65.1
Other revenue 4.5
 —
 4.5
Total revenues 178.9
 (6.6) 172.3
Expenses:      
Loss and loss adjustment expenses 1.1
 —
 1.1
Insurance and acquisition expenses 2.2
 —
 2.2
Other underwriting expenses .2
 —
 .2
Cost of sales 55.6
 —
 55.6
General and administrative expenses 117.9
 .1
 118.0
Interest expense on debt .9
 —
 .9
Total expenses 177.9
 .1
 178.0
Pre-tax income (loss) 1.0
 (6.7) (5.7)
Income tax benefit 1.3
 —
 1.3
Net income (loss) from continuing operations 2.3
 (6.7) (4.4)
Loss on sale of discontinued operations (1.6) —
 (1.6)
Net income from discontinued operations 35.7
 —
 35.7
Net income (loss) 36.4
 (6.7) 29.7
Net loss (income) attributable to non-controlling interests 13.4
 (.4) 13.0
Net income (loss) attributable to White Mountains's common shareholders 49.8
 (7.1) 42.7
Other comprehensive income (loss), net of tax 1.7
 (1.3) .4
Comprehensive income (loss) 51.5
 (8.4) 43.1
Comprehensive income attributable to non-controlling interests (.1) —
 (.1)
Comprehensive income (loss) attributable to White Mountains's
   common shareholders
 $51.4
 $(8.4) $43.0
       
Basic and diluted earnings per share - continuing operations $3.42
 $(1.59) $1.83



CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
  As previously reported Adjustments As revised
   Years ended December 31,
Millions, except for per share amounts 2016 2015 2014 2016 2015 2014 2016 2015 2014
Revenues:                  
Earned insurance premiums $13.4
 $12.0
 $7.9
 $—
 $—
 $—
 $13.4
 $12.0
 $7.9
Net investment income 32.1
 10.9
 12.2
 —
 —
 —
 32.1
 10.9
 12.2
Net realized and unrealized
   investment gains
 (27.4) 260.5
 38.1
 —
 —
 —
 (27.4) 260.5
 38.1
Advertising and commission
   revenues
 126.9
 110.1
 65.7
 (8.6) (2.7) (.2) 118.3
 107.4
 65.5
Other revenue (1)
 21.3
 41.8
 20.5
 —
 7.4
 (6.9) 21.3
 49.2
 13.6
Total revenues 166.3
 435.3
 144.4
 (8.6) 4.7
 (7.1) 157.7
 440.0
 137.3
Expenses:                  
Loss and loss adjustment expenses 8.0
 8.2
 8.9
 —
 —
 —
 8.0
 8.2
 8.9
Insurance and acquisition
   expenses
 5.6
 6.3
 2.9
 —
 —
 —
 5.6
 6.3
 2.9
Other underwriting expenses .5
 .4
 .4
 —
 —
 —
 .5
 .4
 .4
Cost of sales 102.0
 93.6
 57.8
 —
 —
 —
 102.0
 93.6
 57.8
General and administrative
   expenses
 183.7
 193.2
 144.9
 2.2
 7.5
 —
 185.9
 200.7
 144.9
Interest expense on debt 3.0
 1.6
 1.2
 —
 —
 —
 3.0
 1.6
 1.2
Total expenses 302.8
 303.3
 216.1
 2.2
 7.5
 —
 305.0
 310.8
 216.1
Pre-tax income (136.5) 132.0
 (71.7) (10.8) (2.8) (7.1) (147.3) 129.2
 (78.8)
Income benefit (expense) 32.9
 (12.7) 2.5
 —
 —
 —
 32.9
 (12.7) 2.5
Net income from
   continuing operations
 (103.6) 119.3
 (69.2) (10.8) (2.8) (7.1) (114.4) 116.5
 (76.3)
Gain on sale of discontinued operations 415.1
 17.9
 17.2
 —
 —
 —
 415.1
 17.9
 17.2
Net income from discontinued operations 108.3
 117.2
 296.4
 —
 —
 —
 108.3
 117.2
 296.4
Income (loss) before equity
   in earnings of
   unconsolidated affiliates
 419.8
 254.4
 244.4
 (10.8) (2.8) (7.1) 409.0
 251.6
 237.3
Equity in earnings of
   unconsolidated affiliates
 —
 25.1
 45.6
 
 —
 —
 —
 25.1
 45.6
Net income (loss)(2)
 419.8
 279.5
 290.0
 (10.8) (2.8) (7.1) 409.0
 276.7
 282.9
Net (income) loss attributable to
   non-controlling interests
 (7.3) 18.1
 22.2
 .1
 .4
 .1
 (7.2) 18.5
 22.3
Net income (loss) attributable to
   White Mountains's
   common shareholders
 412.5
 297.6
 312.2
 (10.7) (2.4) (7.0) 401.8
 295.2
 305.2
Other comprehensive income,
   net of tax (1)
 145.6
 (100.4) (104.9) —
 (7.4) 6.9
 145.6
 (107.8) (98.0)
Comprehensive income (loss) 558.1
 197.2
 207.3
 (10.7) (9.8) (.1) 547.4
 187.4
 207.2
Comprehensive (income) loss
   attributable to
   non-controlling interests
 (.3) —
 3.3
 —
 —
 —
 (.3) —
 3.3
Comprehensive income (loss)
  attributable to White
  Mountains's common shareholders
 $557.8
 $197.2
 $210.6
 $(10.7) $(9.8) $(.1) $547.1
 $187.4
 $210.5
                   
Basic and diluted earnings per
   share - continuing operations
 $(22.13) $27.63
 $(.24) $(2.15) $(.42) $(1.16) $(24.28) $27.21
 $(1.40)
(1) In 2015 and 2014, White Mountains recorded a foreign currency translation gain related to its investment in Symetra in net income when it should have been recorded through other comprehensive income. The correction to properly reflect the translation amount through other comprehensive income did not have any impact on comprehensive income attributable to White Mountains's common shareholders or to book value per share.
(2) The adjustment to net income resulted in a corresponding adjustment in the statement of cash flows, with an offsetting adjustment to the change in other assets and liabilities within the operating cash flows section. There was no change to cash flows from operations, cash flows from investing activities or cash flows from financing activities.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

  As previously reported Adjustments As revised
   Years ended December 31,
Millions 2016 2015 2014 2016 2015 2014 2016 2015 2014
                   
Common shares and
   paid-in surplus
 $810.7
 $978.2
 $1,034.7
 $—
 $—
 $—
 $810.7
 $978.2
 $1,034.7
                   
Retained earnings,
  beginning of year
 3,084.9
 3,010.5
 2,801.9
 (9.9) (7.5) (.5) 3,075.0
 3,003.0
 2,801.4
Share repurchases (694.8) (217.2) (97.4) —
 —
 —
 (694.8) (217.2) (97.4)
Net income (loss) 412.5
 297.6
 312.2
 (10.7) (2.4) (7.0) 401.8
 295.2
 305.2
Dividends (5.4) (6.0) (6.2) —
 —
 —
 (5.4) (6.0) (6.2)
Retained earnings, end of year 2,797.2
 3,084.9
 3,010.5
 (20.6) (9.9) (7.5) 2,776.6
 3,075.0
 3,003.0
                   
Accumulated other
   comprehensive income,
   after tax, beginning of year
 (149.9) (49.5) 52.1
 —
 7.4
 .5
 (149.9) (42.1) 52.6
Net change in
   foreign currency translation
 31.4
 (65.8) (168.2) —
 (7.4) 6.9
 31.4
 (73.2) (161.3)
Net other changes in AOCI 113.9
 (34.6) 66.6
 —
 —
 —
 113.9
 (34.6) 66.6
Accumulated other
   comprehensive income,
   after tax, end of year
 (4.6) (149.9) (49.5) —
 —
 7.4
 (4.6) (149.9) (42.1)
                   
Total White Mountains
   Common Shareholders'
   Equity
 3,603.3
 3,913.2
 3,995.7
 (20.6) (9.9) (.1) 3,582.7
 3,903.3
 3,995.6
                   
Non-controlling interests,
   beginning of year
 454.8
 542.7
 491.7
 (.5) (.1) —
 454.3
 542.6
 491.7
Net income (loss) 7.3
 (18.1) (22.2) (.1) (.4) (.1) 7.2
 (18.5) (22.3)
Other changes in NCI (328.2) (69.8) 73.2
 —
 —
 —
 (328.2) (69.8) 73.2
Non-controlling interests,
   end of year
 133.9
 454.8
 542.7
 (.6) (.5) (.1) 133.3
 454.3
 542.6
                   
Total equity $3,737.2
 $4,368.0
 $4,538.4
 $(21.2) $(10.4) $(.2) $3,716.0
 $4,357.6
 $4,538.2



CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)

  Nine months ended September 30, 2016 Six months ended June 30, 2017
Millions As previously reported Adjustments As revised As previously reported Adjustments As revised
             
Common shares and paid-in surplus $809.8
 $—
 $809.8
 $815.1
 $.7
 $815.8
             
Retained earnings, beginning of year 3,084.9
 (9.9) 3,075.0
 2,797.2
 (20.6) 2,776.6
Share repurchases (678.6) —
 (678.6) (7.2) —
 (7.2)
Net income (loss) 445.8
 (5.1) 440.7
 49.8
 (7.1) 42.7
Dividends (5.4) —
 (5.4) (4.6) —
 (4.6)
Retained earnings, end of period 2,846.7
 (15.0) 2,831.7
 2,835.2
 (27.7) 2,807.5
             
Accumulated other comprehensive income,
   after tax, beginning of year
 (149.9) —
 (149.9) (4.6) —
 (4.6)
Net change in foreign currency translation 32.0
 (.2) 31.8
 1.6
 (1.3) .3
Net other changes in AOCI 113.6
 —
 113.6
 —
 —
 —
Accumulated other comprehensive
   income, after tax, end of year
 (4.3) (.2) (4.5) (3.0) (1.3) (4.3)
             
Total White Mountains Common
   Shareholders' Equity
 3,652.2
 (15.2) 3,637.0
 3,647.3
 (28.3) 3,619.0
             
Non-controlling interests,
   beginning of year
 454.8
 (.5) 454.3
 133.9
 (.6) 133.3
Net income (loss) 24.6
 —
 24.6
 (13.4) .4
 (13.0)
Other changes in NCI (330.2) —
 (330.2) (3.7) (.7) (4.4)
Non-controlling interests, end of period 149.2
 (.5) 148.7
 116.8
 (.9) 115.9
             
Total equity $3,801.4
 $(15.7) $3,785.7
 $3,764.1
 $(29.2) $3,734.9



CONSOLIDATED BALANCE SHEETS

  December 31, 2016 December 31, 2015
Millions As previously reported Adjustments As revised As previously reported Adjustments As revised
Assets            
Investments $2,714.4
 $—
 $2,714.4
 $1,679.7
 $—
 $1,679.7
Cash 80.2
 —
 80.2
 77.8
 —
 77.8
Insurance premiums receivable 1.6
 —
 1.6
 1.3
 —
 1.3
Deferred acquisition costs 10.6
 —
 10.6
 6.9
 —
 6.9
Deferred tax asset —
 —
 —
 —
 —
 —
Accrued investment income 14.8
 —
 14.8
 3.8
 —
 3.8
Accounts receivable on unsettled investment sales 4.8
 —
 4.8
 11.4
 —
 11.4
Goodwill 31.7
 (5.8) 25.9
 24.1
 (5.5) 18.6
Intangible assets 23.0
 (3.7) 19.3
 28.9
 (2.0) 26.9
Assets held for sale 3,599.5
 —
 3,599.5
 8,365.6
 —
 8,365.6
Other assets 64.1
 (15.0) 49.1
 83.1
 (3.9) 79.2
Total assets $6,544.7
 $(24.5) $6,520.2
 $10,282.6
 $(11.4) $10,271.2
Liabilities            
Unearned insurance premiums $82.9
 $—
 $82.9
 $50.2
 $—
 $50.2
Debt 12.7
 —
 12.7
 64.7
 —
 64.7
Deferred tax liability —
 —
 —
 27.4
 —
 27.4
Accrued incentive compensation 95.7
 —
 95.7
 96.2
 —
 96.2
Liabilities held for sale 2,569.3
 —
 2,569.3
 5,618.1
 —
 5,618.1
Other liabilities 46.9
 (3.3) 43.6
 58.0
 (1.0) 57.0
Total liabilities 2,807.5
 (3.3) 2,804.2
 5,914.6
 (1.0) 5,913.6
             
Equity            
White Mountains's common shares 4.6
 —
 4.6
 5.6
 —
 5.6
Paid in surplus 806.1
 —
 806.1
 972.6
 —
 972.6
Retained earnings 2,797.2
 (20.6) 2,776.6
 3,084.9
 (9.9) 3,075.0
Accumulated other comprehensive income,
   net of tax
 (4.6) —
 (4.6) (149.9) —
 (149.9)
Total White Mountains's
   common shareholders' equity
 3,603.3
 (20.6) 3,582.7
 3,913.2
 (9.9) 3,903.3
Non-controlling interests 133.9
 (.6) 133.3
 454.8
 (.5) 454.3
Total equity 3,737.2
 (21.2) 3,716.0
 4,368.0
 (10.4) 4,357.6
Total liabilities and equity $6,544.7
 $(24.5) $6,520.2
 $10,282.6
 $(11.4) $10,271.2


CONSOLIDATED BALANCE SHEET (Unaudited)

  June 30, 2017
Millions As previously reported Adjustments As revised
Assets      
Investments $2,692.9
 $—
 $2,692.9
Cash 53.3
 —
 53.3
Insurance and reinsurance premiums receivable 2.8
 —
 2.8
Deferred acquisition costs 13.0
 —
 13.0
Accrued investment income 16.0
 —
 16.0
Accounts receivable on unsettled investment sales 199.5
 —
 199.5
Goodwill 31.7
 (5.8) 25.9
Intangible assets 17.8
 (3.4) 14.4
Assets held for sale 3,696.4
 —
 3,696.4
Other assets 62.8
 (19.7) 43.1
Total assets $6,786.2
 $(28.9) $6,757.3
Liabilities      
Unearned insurance premiums $109.9
 $—
 $109.9
Debt 10.6
 —
 10.6
Accrued incentive compensation 63.3
 —
 63.3
Accounts payable for unsettled investment purchases 114.6
 —
 114.6
Liabilities held for sale 2,678.8
 —
 2,678.8
Other liabilities 44.9
 .3
 45.2
Total liabilities 3,022.1
 .3
 3,022.4
       
Equity      
White Mountains's common shares 4.6
 —
 4.6
Paid in surplus 810.5
 .7
 811.2
Retained earnings 2,835.2
 (27.7) 2,807.5
Accumulated other comprehensive income, net of tax (3.0) (1.3) (4.3)
Total White Mountains's common shareholders' equity 3,647.3
 (28.3) 3,619.0
Non-controlling interests 116.8
 (.9) 115.9
Total equity 3,764.1
 (29.2) 3,734.9
Total liabilities and equity $6,786.2
 $(28.9) $6,757.3

Note 17. Contingencies

Legal Contingencies
White Mountains is subject to litigation and arbitration in the normal course of business. White Mountains considers the requirements of ASC 450 when evaluating its exposure to litigation and arbitration. ASC 450 requires that accruals be established for litigation and arbitration if it is probable that a loss has been incurred and it can be reasonably estimated. ASC 450 also requires that litigation and arbitration be disclosed if it is probable that a loss has been incurred or if there is a reasonable possibility that a loss may have been incurred. White Mountains does not have any current litigation that may have a material adverse effect on White Mountains’s financial condition, results of operations or cash flows.



Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
 
The followingfollowing discussion contains “forward-looking statements”.statements.” White Mountains intends statements that are not historical in nature, which are hereby identified as forward-looking statements, to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. White Mountains cannot promise that its expectations in such forward-looking statements will turn out to be correct. WhiteMountains’s actual results could be materially different from and worse than its expectations. See “FORWARD-LOOKING STATEMENTS” on page 65for specific important factors that could cause actual results to differ materially from those contained in forward-looking statements.
The following discussion also include sixincludes five non-GAAP financial measuresmeasures: (i) adjusted book value per share, (ii) percentage change in adjusted book value per share for the third quarter of 2017, which includes the estimated gain from the OneBeacon Transaction as if it had closed on June 30, 2017, (iii) adjusted capital, (iv) return on common equity securities and other long-term investments including high-yield fixed maturity investments, (v) return on fixed maturity investments excluding high-yield fixed maturity investments and (vi)Kudu’s earnings before interest, taxes, depreciation and amortization ("EBITDA"(“EBITDA”), (iii) Kudu’s adjusted EBITDA, (iv) total consolidated portfolio returns excluding MediaAlpha, and (v) adjusted capital, that have been reconciled from their most comparable GAAP financial measures on page 76.63. White Mountains believes these measures to be useful in evaluating White Mountains’s financial performance and condition.


RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2017MARCH 31, 2023 AND 20162022


Overview
White Mountains ended the third quarter of 2017 withreported book value per share of $925$1,522 and adjusted book value per share of $906.$1,567 as of March 31, 2023. Book value per share increased 17% and 18% for the third quarter and first nine months of 2017, including dividends, and adjusted book value per share both increased 17% and 15% for5% in the thirdfirst quarter and first nine months of 2017,2023, including dividends. On September 28, 2017, OneBeacon was acquired by Intact Financial Corporation in an all-cash transaction for $18.10 per share (the “OneBeacon Transaction”). The increases in book value per share and adjusted book value per share were driven primarily by investment returns, including MediaAlpha, and solid operating results at the operating companies. White Mountains reported book value per share of $1,183 and adjusted book value per share of $1,204 as of March 31, 2022. Book value per share and adjusted book value per share both increased 1% in the first quarter of 2022, including dividends.
During the first quarter of 2023, White Mountains repurchased and retired 18,623 of its common shares for $25 million at an average share price of $1,360.30, or 89% of White Mountains’s March 31, 2023 book value per share and 87% of White Mountains’s March 31, 2023 adjusted book value per share. As of March 31, 2023, White Mountains’s undeployed capital was approximately $720 million.
In the HG Global/BAM segment, gross written premiums and MSC collected totaled $21 million in first quarter of 2023 compared to $22 million in the first quarter of 2022. Total pricing was 73 basis points in the first quarter of 2023 compared to 63 basis points in first quarter of 2022. BAM insured municipal bonds with par value of $2.9 billion in the first quarter of 2023 compared to $3.5 billion in the first quarter of 2022. BAM’s total claims paying resources were $1,433 million as of March 31, 2023 compared to $1,423 million as of December 31, 2022 and $1,201 million as of March 31, 2022.
The Ark/WM Outrigger segment’s combined ratio was 92% in the first quarter of 2023. Ark/WM Outrigger reported gross written premiums of $809 million, net written premiums of $614 million and net earned premiums of $255 million in the first quarter of 2023. Ark/WM Outrigger reported pre-tax income of $42 million in the first quarter of 2023. Ark’s combined ratio was 94% in the first quarter of 2023 compared to 100% in the first quarter of 2022. Ark’s combined ratio in the first quarter of 2023 included three points of unfavorable prior year loss reserve development, primarily due to Winter Storm Elliot, compared to two points of favorable prior year loss reserve development in the first quarter of 2022. Ark’s combined ratio in the first quarter of 2023 included negligible catastrophe losses compared to 17 points of catastrophe losses, driven primarily by the gainlosses from the OneBeacon Transaction, goodconflict in Ukraine, in the first quarter of 2022. Ark reported gross written premiums of $809 million, net written premiums of $570 million and net earned premiums of $250 million in the first quarter of 2023 compared to gross written premiums of $633 million, net written premiums of $544 million and net earned premiums of $194 million in the first quarter of 2022. Ark reported pre-tax income (loss) of $36 million in the first quarter of 2023 compared to $(23) million in first quarter of 2022. Ark’s results included net realized and unrealized investment returns,gains (losses) of $25 million in the first quarter of 2023 compared to $(18) million in the first quarter of 2022. WM Outrigger Re’s combined ratio was 21% in the first quarter of 2023. WM Outrigger Re reported gross and net written premiums of $44 million and net earned premiums of $5 million in the first quarter of 2023.
Kudu reported total revenues of $44 million, pre-tax income of $35 million and adjusted EBITDA of $11 million in the first quarter of 2023 compared to total revenues of $35 million, pre-tax income of $29 million and adjusted EBITDA of $10 million in the first quarter of 2022. Kudu’s revenues and pre-tax income included $30 million of net realized and unrealized investment gains in the first quarter of 2023 compared to $22 million in the first quarter of 2022.
As of March 31, 2023, the market value of White Mountains’s investment in MediaAlpha was $254 million, which increased from $169 million as of December 31, 2022. As of March 31, 2023, MediaAlpha’s closing price was $14.98 per share, repurchases at a discount towhich increased from $9.95 as of December 31, 2022. Based on White Mountains’s ownership of 16.9 million shares of MediaAlpha as of March 31, 2023, each $1.00 per share increase or decrease in the stock price of MediaAlpha will result in an approximate $6.60 per share increase or decrease in White Mountains’s book value per share and adjusted book value per share asshare. At the April 2023 month-end closing price of September 30, 2017.
During the second quarter of 2017, White Mountains changed its calculation of adjusted book value$7.40 per share, (i) to include a discount for the timefair value of money arising from the expected timingWhite Mountains’s investment in MediaAlpha was $125 million, which would result in a decrease of cash payments of principal and interest on the BAM Surplus Notes and (ii) to add back the unearned premium reserve, net of deferred acquisition costs, at HG Global. See “NON-GAAP FINANCIAL MEASURES” on page 76.
Including the estimated net gain from the OneBeacon Transaction as if it had closed on June 30, 2017, book value per share would have been approximately $908 and adjusted book value per share would have been approximately $890 as of June 30, 2017. Had the OneBeacon Transaction closed on June 30, 2017,$50.00 in White Mountains’s book value per share would have increased 1.9% and adjusted book value per share would have increased 1.8% for the third quarter of 2017, driven primarily by good investment returns. See NON-GAAP FINANCIAL MEASURES on page 76.
The net gain from the OneBeacon Transaction recorded in the third quarter of 2017 increased by $34 per share to $150 per share from the estimated net gain reported in the second quarter of 2017. Approximately $26 per share was attributable to the decrease in the book value per share denominator from share repurchases in the third quarter of 2017. The remainder of the increase was attributable to (1) $4 per share from OneBeacon’s regular dividend, which was paid during the third quarter of 2017, and (2) $4 per share from OneBeacon’s loss from operations. OneBeacon’s results from operations reduced OneBeacon’s equity in the period between signing and closing, thereby increasing the gain recorded on the OneBeacon Transaction because the OneBeacon Transaction was a fixed price deal.
The GAAP total return on invested assets, including continuing operations and discontinued operations, was 1.4% and 4.3% for the third quarter and first nine months of 2017 compared to 0.9% and 3.3% for the third quarter and first nine months of 2016.

The fixed income portfolio returned 0.9% and 2.7% for the third quarter and first nine months of 2017, outperforming the longer duration Bloomberg Barclays U.S. Intermediate Aggregate Index returns of 0.7% and 2.3%, as interest rates rose in both periods. White Mountains’s portfolio of common equity securities, other long-term investments and high-yield fixed maturity investments returned 2.4% and 8.6% for the third quarter and first nine months of 2017, underperforming the S&P 500 Index returns of 4.5% and 14.2%. The underperformance versus the S&P 500 Index return for the third quarter and first nine months of 2017 was primarily a result of asset allocation, as high yield fixed maturity investments failed to keep pace with the S&P 500 Index, and unfavorable performance in other long-term investments, primarily attributable to losses from foreign currency forward contracts. The losses from the foreign currency forward contracts were offset by the currency gains from non-USD denominated fixed maturity investments and non-USD denominated common equity securities. See Summary of Investment Results on page 65.
During the third quarter of 2017, White Mountains repurchased and retired 821,842 of its common shares for $715
million at an average price per share of $870, or approximately 94% of White Mountains’s September 30, 2017 book value per share and 96% of White Mountains’s September 30, 2017 adjusted book value per share.
BAM’s gross written premiums and member surplus contributions totaled $19 million and $68 million in the third quarter and first nine months of 2017, compared to $21 million and $53 million in the third quarter and first nine months of 2016. Total pricing, which is premiums plus member surplus contributions weighted by the par value of bonds insured,
43

White Mountains’s total consolidated portfolio return on invested assets was 103 and 99 basis points in the third quarter and first nine months of 2017, up from 69 and 63 basis points in the third quarter and first nine months of 2016. BAM insured municipal bonds with par value of $2.0 billion and $7.1 billion in the third quarter and first nine months of 2017, compared to $3.0 billion and $8.5 billion in the third quarter and first nine months of 2016. For the third quarter of 2017, the decrease was primarily due to lower new municipal bond issuance volume compared to the third quarter of 2016. For the first nine months of 2017, the lower insured volume was also due to rating uncertainty during Standard & Poor's review of BAM in the second quarter of 2017. BAM’s total claims paying resources increased $43 million to $687 million4.5% in the first nine monthsquarter of 2017, compared to an increase2023, which included $85 million of $28 million to $629 millionunrealized investment gains from White Mountains’s investment in MediaAlpha. Excluding MediaAlpha, the total consolidated portfolio return on invested assets was 3.0% in the first nine monthsquarter of 2016.
MediaAlpha’s pre-tax loss was $1 million2023, driven primarily by net realized and $3 millionunrealized investment gains from other long-term investments and common equity securities, as well as net unrealized investment gains in the third quarter and first nine months of 2017, comparedfixed income portfolio due to $1 million and $3 milliona decline in both the third quarter and first nine months of 2016. MediaAlpha’s earnings before interest taxes, depreciation and amortization (“EBITDA”) of $2 million and $5 millionrates. White Mountains’s total consolidated portfolio return on invested assets was 0.8% in the thirdfirst quarter and first nine months of 2017, compared to $12022, which included $19 million and $6 millionof unrealized investment gains from White Mountains’s investment in MediaAlpha. Excluding MediaAlpha, the total consolidated portfolio return on invested assets was 0.3% in the third quarter and first nine months of 2016. For the third quarter of 2017,2022, driven primarily by net realized and unrealized investment gains from other long-term investments, which more than offset net unrealized investment losses in the increasefixed income portfolio due to a rise in EBITDA was primarily driven by increased gross profit contributions from the P&C and Health/Life verticals of $1 million. For the first nine months of 2017, the decrease in EBITDA was primarily driven by increased operating expenses of $2 million, partially offset by an increase in gross profit of $1 million.interest rates.
In October 2017, White Mountains discovered that the former CEO of Wobi, one of its overseas portfolio companies, had been reporting overstated commission revenues and related receivables to White Mountains. As a result, White Mountains has revised certain of its previously issued financial statements. The revisions resulted in reductions to commission revenues and commissions receivable. In addition, the overstatements led White Mountains to write down the goodwill and other intangible assets related to Wobi to zero. See Note 16 — “Financial Statement Revisions” on page 43. Upon discovery of the overstatements, White Mountains initiated an investigation, conducted by outside counsel, of the reporting of these overstatements by Wobi to White Mountains. That investigation is complete. Wobi is conducting a separate investigation with the assistance of Israeli counsel to support the preparation of Wobi’s standalone financial statements. The results of that separate investigation, which is ongoing, are not expected to impact White Mountains’s financial statements.


Adjusted Book Value Per Share
During the second quarter of 2017, White Mountains changed its calculation of adjusted book value per share (i) to include a discount for the time value of money arising from the expected timing of cash payments of principal and interest on the BAM Surplus Notes and (ii) to add back the unearned premium reserve, net of deferred acquisition costs, at HG Global. See NON-GAAP FINANCIAL MEASURES on page 76.
The following table presents White Mountains’s book value per share and reconciles it to adjusted book value per share, a non-GAAP measure.
  September 30, 2017 June 30, 2017 December 31, 2016 September 30, 2016
Book value per share numerators (in millions):        
White Mountains’s common shareholders’ equity $3,468.8
 $3,619.0
 $3,582.7
 $3,637.0
Future proceeds from options (1)
 —
 —
 29.7
 89.0
Time-value of money discount on expected future payments
   on the BAM Surplus Notes (2)
 (161.8) (166.7) N/A N/A
HG Global’s unearned premium reserve (2)
 88.4
 81.5
 N/A N/A
HG Global’s net deferred acquisition costs (2)
 (19.6) (17.6) N/A N/A
Adjusted book value per share numerator $3,375.8
 $3,516.2
 $3,612.4
 $3,726.0
Book value per share denominators (in thousands of shares):    
  
  
Common shares outstanding 3,750.0
 4,571.6
 4,563.8
 4,578.7
Unearned restricted shares (22.7) (27.4) (25.9) (31.8)
Options assumed issued (1)
 —
 —
 40.0
 120.0
Adjusted book value per share denominator 3,727.3
 4,544.2
 4,577.9
 4,666.9
GAAP book value per share $925.04
 $791.61
 $785.01
 $794.33
Adjusted book value per share $905.72
 $773.77
 $789.08
 $798.40
Year-to-date dividends paid per share $1.00
 $1.00
 $1.00
 $1.00
(1) Adjusted book value per share atmeasure as of March 31, 2023, December 31, 20162022, and September 30, 2016 includes the impact of non-qualified stock options that were exercisable for $742 per common share. All non-qualified options were exercised prior to their expiration date of January 20, 2017.March 31, 2022. See NON-GAAP FINANCIAL MEASURES on page 63.
(2)
MillionsMarch 31, 2023December 31, 2022March 31, 2022
Book value per share numerators (in millions):
White Mountains’s common shareholders’ equity - GAAP book
   value per share numerator		$3,902.4 $3,746.9 $3,542.1 
Time value of money discount on expected future payments on
   the BAM Surplus Notes (1)
(93.4)(95.1)(120.9)
HG Global’s unearned premium reserve (1)
243.3 242.1 215.8 
HG Global’s net deferred acquisition costs (1)
(69.4)(69.0)(60.6)
Adjusted book value per share numerator$3,982.9 $3,824.9 $3,576.4 
Book value per share denominators (in thousands of shares):
Common shares outstanding - GAAP book value per share
   denominator		2,564.5 2,572.1 2,994.2 
Unearned restricted common shares(22.3)(14.1)(24.2)
Adjusted book value per share denominator2,542.2 2,558.0 2,970.0 
GAAP book value per share$1,521.73 $1,456.74 $1,183.00 
Adjusted book value per share$1,566.73 $1,495.28 $1,204.17 
Year-to-date dividends paid per share$1.00 $1.00 $1.00 
(1) Amount reflects White Mountains’s preferred share ownership in HG Global of 96.9%.


Goodwill and Other Intangible Assets

The following table is a summary ofpresents goodwill and other intangible assets that are included in White Mountains’s adjusted book value as of September 30, 2017,March 31, 2023, December 31, 2016,2022, and September 30, 2016:March 31, 2022:
MillionsMarch 31, 2023December 31, 2022March 31, 2022
Goodwill:
Ark$116.8 $116.8 $116.8 
Kudu7.6 7.6 7.6
Other Operations44.4 52.1 17.9
Total goodwill168.8176.5142.3
Other intangible assets:
Ark175.7 175.7 175.7
Kudu.9 1.0 1.3
Other Operations30.8 39.2 20.2
Total other intangible assets207.4215.9197.2
Total goodwill and other intangible assets (1)
$376.2 $392.4 $339.5 
Millions September 30, 2017 December 31, 2016 September 30, 2016
Goodwill      
MediaAlpha $18.3
 $18.3
 $18.3
Buzzmove 7.6
 7.6
 7.6
Total goodwill 25.9
 25.9
 25.9
Other intangible assets      
MediaAlpha 11.0
 18.3
 20.7
Buzzmove 0.9
 1.0
 1.1
Total other intangible assets 11.9
 19.3
 21.8
Total goodwill and other intangible assets (1)
 37.8
 45.2
 47.7
Goodwill and other intangible assets held for sale —
 1.2
 6.7
Goodwill and other intangible assets attributed to non-controlling interests (13.7) (17.1) (18.2)
Goodwill and other intangible assets included in White Mountains's
common shareholders' equity		 $24.1
 $29.3
 $36.2
(1)See Note 4 — “Goodwill and Other Intangible Assets” on page 22 for details of other intangible assets.

44


ReviewSummary of Consolidated Results

The following table presents White Mountains’s consolidated financial results for the three and nine months ended September 30, 2017March 31, 2023 and 2016 follow:2022:
Three Months Ended March 31,
Millions20232022
Revenues  
Financial Guarantee revenues$32.7 $(31.3)
P&C Insurance and Reinsurance revenues287.5 175.7 
Asset Management revenues43.8 34.9 
Other Operations revenues167.9 81.1 
Total revenues531.9 260.4 
Expenses
Financial Guarantee expenses24.5 19.3 
P&C Insurance and Reinsurance expenses245.4 198.8 
Asset Management expenses8.5 5.6 
Other Operations expenses54.4 51.5 
Total expenses332.8 275.2 
Pre-tax income (loss)
Financial Guarantee pre-tax income (loss)8.2 (50.6)
P&C Insurance and Reinsurance pre-tax income (loss)42.1 (23.1)
Asset Management pre-tax income (loss)35.3 29.3 
Other Operations pre-tax income (loss)113.5 29.6 
Total pre-tax income (loss) from continuing operations199.1 (14.8)
Income tax (expense) benefit(11.9)2.7 
Net income (loss) from continuing operations187.2 (12.1)
Net income (loss) from discontinued operations, net of tax - NSM Group— 3.7 
Net income (loss)187.2 (8.4)
Net (income) loss attributable to noncontrolling interests(7.7)41.8 
Net income (loss) attributable to White Mountains’s common
   shareholders		179.5 33.4 
Other comprehensive income (loss), net of tax1.2 (.4)
Other comprehensive income (loss) from discontinued operations,
   net of tax - NSM Group		— (1.9)
Comprehensive income (loss)180.7 31.1 
Other comprehensive (income) loss attributable to noncontrolling interests(.4).2 
Comprehensive income (loss) attributable to White Mountains’s common
   shareholders		$180.3 $31.3 




45
  Three Months Ended Nine Months Ended
  September 30, September 30,
Millions 2017 2016 2017 2016
Gross written premiums $10.9
 $12.3
 $42.9
 $35.9
Net written premiums $10.9
 $10.7
 $43.7
 $30.3
Revenues      
  
Earned insurance premiums $2.4
 $3.4
 $7.6
 $10.2
Net investment income 12.2
 9.6
 39.7
 18.2
Net realized and unrealized investment gains 32.5
 10.9
 102.5
 27.2
Advertising and commission revenues 38.8
 28.2
 103.9
 89.6
Other revenue 1.6
 4.7
 6.1
 18.0
Total revenues 87.5
 56.8
 259.8
 163.2
Expenses      
  
Loss and loss adjustment expenses —
 2.2
 1.1
 6.8
Insurance acquisition expenses .9
 1.3
 3.1
 4.4
Other underwriting expenses .1
 .2
 .3
 .4
Cost of sales 33.1
 24.0
 88.7
 76.9
General and administrative expenses 41.7
 39.9
 154.9
 137.0
General and administrative expenses—intangible asset amortization 2.4
 2.5
 7.3
 7.9
Interest expense .9
 .5
 1.8
 2.6
Total expenses 79.1
 70.6
 257.2
 236.0
Pre-tax (loss) income from continuing operations 8.4
 (13.8) 2.6
 (72.8)
Income tax benefit 4.0
 17.1
 5.3
 22.7
Net income (loss) from continuing operations 12.4
 3.3
 7.9
 (50.1)
Income on sale of discontinued operations, net of tax 554.3
 47.9
 552.7
 414.5
Net (loss) income from discontinued operations, net of tax (15.2) 36.5
 20.5
 100.9
Net income 551.5
 87.7
 581.1
 465.3
Net loss (income) attributable to non-controlling interests 10.6
 3.1
 23.6
 (24.6)
Net income attributable to White Mountains’s common shareholders 562.1
 90.8
 604.7
 440.7
Change in foreign currency translation, net of tax —
 .2
 .2
 (.4)
Change in foreign currency translation and other from
    discontinued operations, net of tax
 3.0
 (.3) 3.2
 145.8
Comprehensive income 565.1
 90.7
 608.1
 586.1
Comprehensive income attributable to non-controlling interests —
 .1
 (.1) .1
Comprehensive income attributable to White Mountains’s
    common shareholders
 $565.1
 $90.8
 $608.0
 $586.2


Consolidated Results - Three Months EndedSeptember 30, 2017 versus Three Months EndedSeptember 30, 2016
White Mountains’s total revenues increased 54% to $88 million in the second quarter of 2017, driven by higher investment returns. Net realized and unrealized investment gains increased to $33 million in the third quarter of 2017, compared to $11 million in the third quarter of 2016. Net investment income was $12 million in the third quarter of 2017 compared to $10 million in the third quarter of 2016. The improved investment results were driven primarily by higher equity returns in the third quarter of 2017 compared to the third quarter of 2016. See Summary of Investment Results on page 65. Advertising and commission revenues were $39 million in the third quarter of 2017, compared to $28 million in third quarter of 2016. The increase was primarily driven by $6 million of revenue growth in MediaAlpha's property and casualty (“P&C”) verticals, which includes auto, motorcycle, and home insurance, and $5 million of revenue growth in the non-P&C verticals, which include Health/Life, Travel and other verticals.
White Mountains’s total expenses increased 12% to $79 million in the third quarter of 2017, primarily due to cost of sales, which increased 38% to $33 million in the third quarter of 2017, compared to $24 million in the third quarter of 2016. The increase in cost of sales was driven by the 37% increase in revenue at MediaAlpha.


White Mountains’s effective tax rate for the third quarter 2017 was (47.6)%. White Mountains’s effective tax rate related to pre-tax income from continuing operations for the third quarter of 2017 was different from the U.S. statutory rate of 35% primarily due to a full valuation allowance on all U.S. operations, a tax benefit recorded at BAM, and consolidated pre-tax loss being near break-even.  For the third quarter of 2017, BAM had amounts recorded in shareholders’ equity related to its member surplus contributions that were available to partially offset its loss from continuing operations.  As a result, BAM recorded a tax benefit of $2 million in net income from continuing operations, with an offsetting amount recorded in shareholders’ equity. 
White Mountains’s effective tax rate for the third quarter of 2016 was (123.9)%. White Mountains’s effective tax rate related to pre-tax loss from continuing operations for the third quarter of 2016 was different from the U.S. statutory rate of 35%, primarily due to a full valuation allowance on all U.S. operations and changes in forecasted earnings by jurisdiction used in determining interim tax expense. The rate was also impacted by a $14 million tax benefit recognized in continuing operations related to the reversal of a valuation allowance on income that was recognized within discontinued operations. For the third quarter of 2016, BAM had amounts recorded in shareholders’ equity related to member surplus contributions that were available to partially offset its loss from continuing operations. As a result, BAM recorded a tax benefit of $3 million in net income from continuing operations, with an offsetting amount recorded in shareholders’ equity.

Consolidated Results - Nine Months Ended September 30, 2017 versus Nine Months Ended September 30, 2016
White Mountains’s total revenues increased 59% to $260 million in the first nine months of 2017, driven by higher investment returns. Net realized and unrealized investment gains increased to $103 million in the first nine months of 2017, compared to $27 million in the first nine months of 2016. Net investment income was $40 million in the first nine months of 2017 compared to $18 million in the first nine months of 2016. The improved investment results were driven primarily by higher equity returns in the first nine months of 2017 compared to the first nine months of 2016 and a larger invested asset base after receiving the proceeds from the sale of Sirius Group in the second quarter of 2016. See Summary of Investment Results on page 65. Advertising and commission revenues were $104 million in the first nine months of 2017, compared to $90 million in the first nine months of 2016. The increase was primarily driven by the continued growth in MediaAlpha’s non-P&C verticals.
White Mountains’s total expenses increased 9% to $257 million in the first nine months of 2017, primarily due to general and administrative expenses, which increased 13% to $155 million in the first nine months of 2017, and cost of sales, which increased 15% to $89 million in the first nine months of 2017. The increase in general and administrative expenses was driven by compensation expenses related to former company executives and higher incentive compensation costs resulting from the OneBeacon Transaction.  The increase in cost of sales was driven by the 14% increase in revenue at MediaAlpha.
White Mountains’s effective tax rate for the first nine months of 2017 was (203.9)%. White Mountains’s effective tax rate related to pre-tax income from continuing operations for the first nine months of 2017 was different from the U.S. statutory rate of 35%, primarily due to a full valuation allowance on all U.S. operations, a tax benefit recorded at BAM and consolidated pre-tax income being near break-even.  For the first nine months of 2017, BAM had amounts recorded in shareholders’ equity related to its member surplus contributions that were available to partially offset its loss from continuing operations.  As a result, BAM recorded a tax benefit of $7 million in net income from continuing operations, with an offsetting amount recorded in shareholders’ equity. 
White Mountains’s effective tax rate for the first nine months of 2016 was (31.2)%. White Mountains’s effective tax rate related to pre-tax loss from continuing operations for the first nine months of 2016 was different from the U.S. statutory rate of 35%, primarily due to a full valuation allowance on all U.S. operations and changes in forecasted earnings by jurisdiction used in determining interim tax expense. The rate was also impacted by a $14 million tax benefit recognized in continuing operations related to the reversal of a valuation allowance on income that was recognized within discontinued operations. For the first nine months of 2016, BAM had amounts recorded in shareholders’ equity related to member surplus contributions that were available to partially offset its loss from continuing operations. As a result, BAM recorded a tax benefit of $8 million in net income from continuing operations, with an offsetting amount recorded in shareholders’ equity.


I. Summary of Operations By SegmentSUMMARY OF OPERATIONS BY SEGMENT
 
As of March 31, 2023, White Mountains conductsconducted its operations through three segments: (1) HG Global/BAM, (2) MediaAlphaArk/WM Outrigger, and (3) Kudu, with our remaining operating businesses, holding companies and other assets included in Other Operations. While investment results are included in HG Global/BAM and Other Operations, White Mountains manageshas made its segment determination based on consideration of the majorityfollowing criteria: (i) the nature of the business activities of each of the Company’s subsidiaries and affiliates; (ii) the manner in which the Company’s subsidiaries and affiliates are organized; (iii) the existence of primary managers responsible for specific subsidiaries and affiliates; and (iv) the organization of information provided to the Company’s chief operating decision makers and its investments through its wholly-owned subsidiary, WM Advisors. Accordingly, a discussionBoard of Directors. Significant intercompany transactions among White Mountains’s consolidated investment operations is included after the discussion of operations by segment.segments have been eliminated herein. White Mountains’s segment information is presented in Note 1114 — “Segment Information”to the Consolidated Financial Statements.
During the fourth quarter of 2022, Ark sponsored the formation of Outrigger Re Ltd. to provide reinsurance protection on Ark’s Bermuda global property catastrophe excess of loss portfolio written in calendar year 2023. White Mountains consolidates its segregated account of Outrigger Re Ltd., WM Outrigger Re, in its financial statements. WM Outrigger Re’s quota share reinsurance agreement with GAIL eliminates in White Mountains’s consolidated financial statements. WM Outrigger Re exclusively provides reinsurance protection to Ark. As a result, WM Outrigger Re was aggregated with Ark within the Ark/WM Outrigger segment starting in 2023. See Note 2 — “Significant Transactions.” As a result of the Sirius Group and Tranzact sales and the OneBeaconNSM Transaction, the results of operations for Sirius Group, Tranzact and OneBeaconNSM, previously reported as a segment, have been classified as discontinued operations and are now presented separately, net of related income taxes, in the statementstatements of operations and comprehensive income.income through the closing of the transaction. See Note 19 — “Held for Sale and Discontinued Operations.” Prior yearperiod amounts have been reclassified to conform to the current period’s presentation. See Note 15 — “Held for Sale and Discontinued Operations”.


HG Global/BAM


BAM is a mutual insurance company whose affairs are managed on a statutory accounting basis, and it does not report stand-alone GAAP financial results. BAM is owned by its members, the municipalities that purchase BAM’s insurance for their debt issuances. BAM charges an insurance premium on each municipal bond insurance policy it insures. A portion of the premium is a member surplus contribution, which is contributed to BAM’s qualified statutory capital and conveys to the issuer certain interests in BAM, including the right to receive dividends in the future, subject to regulatory approval. The remainder is a risk premium, which is recorded as gross written premiums.
During the second quarter of 2017, in order to further support BAM’s long-term capital position and business prospects, HG Global agreed to contribute the $203 million Series A BAM Surplus Notes (“Series A Notes”) into the supplemental collateral trust (the “Supplemental Trust”) at HG Re, HG Global’s wholly owned reinsurance subsidiary. The Supplemental Trust already holds the $300 million Series B BAM Surplus Notes (“Series B Notes” and, collectively with the Series A Notes, the “BAM Surplus Notes”). Assets held in the Supplemental Trust serve to collateralize HG Re’s obligations to BAM under the first loss reinsurance treaty between BAM and HG Re. HG Global and BAM also agreed to change the payment terms of the Series B Notes, so that payments will reduce principal and accrued interest on a pro rata basis, consistent with the payment terms on the Series A Notes. The terms of the Series B Notes had previously stipulated that payments would first reduce interest owed, then reduce principal owed once all accrued interest had been paid. The New York Department of Financial Services approved these changes in the third quarter of 2017.
During the second quarter of 2017, HG Global and BAM also made certain changes to the ceding commission arrangements under the reinsurance treaty between HG Re and BAM. These changes will accelerate growth in BAM’s statutory capital but will not impact the net risk premium ceded from BAM to HG Re. 
On June 6, 2017, S&P placed BAM on credit watch negative and initiated a detailed review of BAM’s financial strength rating. On June 26, 2017, S&P concluded its review and affirmed BAM’s “AA/Stable” financial strength rating.
The following table presentstables present the components of pre-tax income (loss) included in White Mountains’sthe HG Global/BAM segment related to the consolidation of HG Global, which includes HG Re and its other wholly-owned subsidiaries, and BAM for the three and nine months endedSeptember 30, 2017 March 31, 2023 and 2016:2022:

 Three Months Ended March 31, 2023
MillionsHG GlobalBAMEliminationsTotal
Direct written premiums$— $9.2 $— $9.2 
Assumed written premiums7.7 — (7.7)— 
Gross written premiums7.7 9.2 (7.7)9.2 
Ceded written premiums— (7.7)7.7 — 
Net written premiums$7.7 $1.5 $— $9.2 
Earned insurance premiums$6.4 $1.3 $— $7.7 
Net investment income4.0 3.2 — 7.2 
Net investment income - BAM Surplus Notes6.6 — (6.6)— 
Net realized and unrealized investment gains (losses)7.9 9.1 — 17.0 
Other revenues— .8 — .8 
Total revenues24.9 14.4 (6.6)32.7 
Acquisition expenses1.8 .9 — 2.7 
General and administrative expenses1.1 16.2 — 17.3 
Interest expense4.5 — — 4.5 
Interest expense - BAM Surplus Notes— 6.6 (6.6)— 
Total expenses7.4 23.7 (6.6)24.5 
Pre-tax income (loss)$17.5 $(9.3)$— $8.2 
Supplemental information:
MSC collected (1)
$— $11.8 $— $11.8 
  Three Months Ended September 30, 2017
Millions HG Global BAM Eliminations Total
Gross written premiums $—
 $10.9
 $—
 $10.9
Assumed (ceded) written premiums 9.0
 (9.0) —
 —
Net written premiums $9.0
 $1.9
 $—
 $10.9
         
Earned insurance premiums $1.8
 $.6
 $—
 $2.4
Net investment income 1.0
 2.3
 —
 3.3
Net investment income - BAM Surplus Notes 4.8
 —
 (4.8) —
Net realized and unrealized investment gains .1
 .7
 —
 0.8
Other revenue —
 .2
 —
 .2
Total revenues 7.7
 3.8
 (4.8) 6.7
Insurance acquisition expenses .4
 .5
 —
 .9
Other underwriting expenses —
 .1
 —
 .1
General and administrative expenses .3
 10.3
 —
 10.6
Interest expense - BAM Surplus Notes —
 4.8
 (4.8) —
Total expenses .7
 15.7
 (4.8) 11.6
Pre-tax income (loss) $7.0
 $(11.9) $—
 $(4.9)
Supplemental information:        
     Member Surplus Contributions (1)
 $—
 $8.4
 $—
 $8.4
  Three Months Ended September 30, 2016
Millions HG Global BAM Eliminations Total
Gross written premiums $—
 $9.2
 $—
 $9.2
Assumed (ceded) written premiums 6.2
 (6.2) —
 —
Net written premiums $6.2
 $3.0
 $—
 $9.2
         
Earned insurance premiums $1.2
 $.3
 $—
 $1.5
Net investment income .6
 1.7
 —
 2.3
Net investment income - BAM Surplus Notes 4.5
 —
 (4.5) —
Net realized and unrealized investment gains (.3) (1.6) —
 (1.9)
Other revenue —
 .4
 —
 .4
Total revenues 6.0
 .8
 (4.5) 2.3
Insurance acquisition expenses .2
 .6
 —
 .8
Other underwriting expenses —
 .1
 —
 .1
General and administrative expenses .6
 9.3
 —
 9.9
Interest expense - BAM Surplus Notes —
 4.5
 (4.5) —
Total expenses .8
 14.5
 (4.5) 10.8
Pre-tax income (loss) $5.2
 $(13.7) $—
 $(8.5)
Supplemental information:        
     Member Surplus Contributions (1)
 $—
 $11.5
 $—
 $11.5
(1) Member surplus contributionsMSC collected are recorded directly to BAM'sBAM’s equity, which is recorded as non-controllingnoncontrolling interest on White Mountains'sMountains’s balance sheet.



46

 Nine Months Ended September 30, 2017 Three Months Ended March 31, 2022
Millions HG Global BAM Eliminations TotalMillionsHG GlobalBAMEliminationsTotal
Direct written premiumsDirect written premiums$— $9.4 $— $9.4 
Assumed written premiumsAssumed written premiums8.1 — (8.1)— 
Gross written premiums $—
 $42.0
 $—
 $42.0
Gross written premiums8.1 9.4 (8.1)9.4 
Assumed (ceded) written premiums 35.4
 (35.4) —
 —
Ceded written premiumsCeded written premiums— (8.1)8.1 — 
Net written premiums $35.4
 $6.6
 $—
 $42.0
Net written premiums$8.1 $1.3 $— $9.4 
        
Earned insurance premiums $5.0
 $1.6
 $—
 $6.6
Earned insurance premiums$6.9 $1.5 $— $8.4 
Net investment income 2.4
 6.5
 —
 8.9
Net investment income2.1 2.5 — 4.6 
Net investment income - BAM Surplus Notes 14.3
 —
 (14.3) —
Net investment income - BAM Surplus Notes2.9 — (2.9)— 
Net realized and unrealized investment gains .4
 2.8
 —
 3.2
Other revenue —
 .8
 —
 .8
Net realized and unrealized investment gains (losses)Net realized and unrealized investment gains (losses)(23.5)(21.6)— (45.1)
Other revenuesOther revenues.1 .7 — .8 
Total revenues 22.1
 11.7
 (14.3) 19.5
Total revenues(11.5)(16.9)(2.9)(31.3)
Insurance acquisition expenses 1.0
 2.0
 —
 3.0
Other underwriting expenses —
 .3
 —
 .3
Acquisition expensesAcquisition expenses2.6 .4 — 3.0 
General and administrative expenses .8
 30.7
 —
 31.5
General and administrative expenses.7 15.6 — 16.3 
Interest expense - BAM Surplus Notes —
 14.3
 (14.3) —
Interest expense - BAM Surplus Notes— 2.9 (2.9)— 
Total expenses 1.8
 47.3
 (14.3) 34.8
Total expenses3.3 18.9 (2.9)19.3 
Pre-tax income (loss) $20.3
 $(35.6) $—
 $(15.3)Pre-tax income (loss)$(14.8)$(35.8)$— $(50.6)
Supplemental information:        Supplemental information:
Member Surplus Contributions (1)
 $—
 $25.7
 $—
 $25.7
MSC collected (1)
MSC collected (1)
$— 12.3 $— $12.3 
(1) Member Surplus ContributionsMSC collected are recorded directly to BAM'sBAM’s equity, which is recorded as non-controllingnoncontrolling interest on White Mountains'sMountains’s balance sheet.
  Nine Months Ended September 30, 2016
Millions HG Global BAM Eliminations Total
Gross written premiums $—
 $24.9
 $—
 $24.9
Assumed (ceded) written premiums 18.0
 (18.0) —
 —
Net written premiums $18.0
 $6.9
 $—
 $24.9
         
Earned insurance premiums $3.1
 $1.0
 $—
 $4.1
Net investment income 1.6
 5.1
 —
 6.7
Net investment income - BAM Surplus Notes 13.4
 —
 (13.4) —
Net realized and unrealized investment gains 2.3
 6.5
 —
 8.8
Other revenue —
 .8
 —
 .8
Total revenues 20.4
 13.4
 (13.4) 20.4
Insurance acquisition expenses .6
 1.9
 —
 2.5
Other underwriting expenses —
 .3
 —
 .3
General and administrative expenses 1.4
 28.1
 —
 29.5
Interest expense - BAM Surplus Notes —
 13.4
 (13.4) —
Total expenses 2.0
 43.7
 (13.4) 32.3
Pre-tax income (loss) $18.4
 $(30.3) $—
 $(11.9)
Supplemental information:        
     Member Surplus Contributions (1)
 $—
 $28.2
 $—
 $28.2
(1) Member Surplus Contributions are recorded directly to BAM's equity, which is recorded as non-controlling interest on White Mountains's balance sheet.



HG Global/BAM Results—Three Months Ended September 30, 2017March 31, 2023 versus Three Months Ended September 30, 2016March 31, 2022
InGross written premiums and MSC collected in the thirdHG Global/BAM segment totaled $21 million in the first quarter of 2017,2023 compared to $22 million in the first quarter of 2022. BAM insured $2.0$2.9 billion of municipal bonds, $1.9$2.2 billion of which were in the primary market, in the first quarter of 2023 compared to $3.0$3.5 billion of municipal bonds, $2.7$2.8 billion of which were in the primary market, insured in the thirdfirst quarter of 2016. The decrease in par value insured by BAM in the third quarter of 2017 was primarily due to 22% lower new municipal bond issuance volume in the third quarter of 2017 compared to the third quarter of 2016. Gross written premiums and member surplus contributions totaled $19 million for the third quarter of 2017, compared to $21 million for the third quarter of 2016. Total pricing, which is gross written premiums plus member surplus contributions, weighted by the par value of bonds insured, was 103 basis points in the third quarter of 2017, up from 69 basis points in the third quarter of 2016. HG Global reported GAAP pre-tax income of $7 million in the third quarter of 2017, compared to $5 million the third quarter of 2016. Results for the third quarter of 2017 and 2016 were both driven by $5 million of interest income on the BAM Surplus Notes.2022.
As a mutual insurance company that is owned by its members, BAM’s results do not affect White Mountains’s book value per share and adjusted book value per share. However, White Mountains consolidates BAM’s results in its GAAP financial statements and its results are attributed to non-controlling interests. White Mountains reported$12 million of GAAP pre-tax loss from BAM in the third quarter of 2017, compared to $14 million in the third quarter of 2016. The decrease in pre-tax loss was primarily due to higher investment returns. Results for the third quarter of 2017 include $5 million of interest expense on the BAM Surplus Notes and $10 million of operating expenses, compared to $5 millionof interest expense and$9 million of operating expenses in the third quarter of 2016.

HG Global/BAM Results—Nine Months Ended September 30, 2017 versus Nine Months Ended September 30, 2016
In the first nine months of 2017, BAM insured $7.1 billion of municipal bonds, $6.5 billion of which wereInsured penetration in the primary market compareddecreased to $8.5 billion of municipal bonds, $7.9 billion of which were in the primary market, insured7.7% in the first nine monthsquarter of 2016. The decrease in par value insured by BAM2023 compared to 8.1% in the first nine months of 2017 was primarily due to lower new municipal bond issuance volume in the third quarter of 20172022, driven primarily by increased issuances by large, highly-rated issuers that do not typically utilize financial guarantee insurance, compared to the thirdfirst quarter of 2016 and rating uncertainty during S&P’s review of BAM in the second quarter of 2017. Gross2022.
Total pricing, which reflects both gross written premiums and member surplus contributions totaled $68 million for the first nine months of 2017, comparedMSC, increased to $53 million for the first nine months of 2016. Total pricing was 9973 basis points in the first nine monthsquarter of 2017, up from2023 compared to 63 basis points in the first ninequarter of 2022. The increase in total pricing was driven primarily by higher pricing in both the primary and secondary markets, as well as increased secondary market activity relative to the primary market. Pricing in the primary market increased to 52 basis points in the first quarter of 2023 compared to 45 basis points in the first quarter of 2022. Pricing in the secondary market, which is more transaction specific than pricing in the primary market, increased to 137 basis points in the first quarter of 2023 compared to 134 basis points in the first quarter of 2022.
The following table presents the gross par value of primary and secondary market policies issued, the gross written premiums and MSC collected and total pricing for the three months of 2016.ended March 31, 2023 and 2022:
Three Months Ended March 31,
$ in Millions20232022
Gross par value of primary market policies issued$2,185.4 $2,755.1 
Gross par value of secondary market policies issued704.2 699.1 
Total gross par value of market policies issued$2,889.6 $3,454.2 
Gross written premiums$9.2 $9.4 
MSC collected11.8 12.3 
Total gross written premiums and MSC collected$21.0 $21.7 
Total pricing73 bps63 bps

47

HG Global reported GAAP pre-tax income (loss) of $20 million in the first nine months of 2017, compared to $18 million in the first nine monthsquarter of 2016. Results for2023 compared to $(15) million in the first nine monthsquarter of 2017 were driven by $142022. HG Global’s results included net realized and unrealized investment gains (losses) on its fixed income portfolio of $8 million in the first quarter of 2023 as interest rates decreased compared to $(24) million in the first quarter of 2022 as interest rates increased. HG Global’s results in the first quarter of 2023 also included $7 million of interest income on the BAM Surplus Notes compared to $13$3 million of interest income in the first nine monthsquarter of 2016. The increase in2022 as the interest incomerate increased to 8% from 3%.
BAM is duea mutual insurance company that is owned by its members. BAM’s results are consolidated into White Mountains’s GAAP financial statements and attributed to the increase in the variable rate of the BAM Surplus Notes which is set annually. The variable rate is 3.78% for 2017 and was 3.54% for 2016.
noncontrolling interests. White MountainsMountains reported $36$9 million of GAAP pre-tax loss from BAM in the first nine monthsquarter of 2017,2023 compared to $30$36 million in the first nine monthsquarter of 2016. Results for2022. BAM’s results included net realized and unrealized investment gains (losses) on its fixed income portfolio of $9 million in the first nine monthsquarter of 2017 include $142023 as interest rates decreased compared to $(22) million in the first quarter of 2022 as interest rates increased. BAM’s results in the first quarter of 2023 also included $7 million of interest expense on the BAM Surplus Notes and $31 million of operating expenses, compared to $13$3 million interest expense and $28 million of operating expenses in the first nine monthsquarter of 2016. The increase in pre-tax loss in the first nine months of 2017 was primarily due to lower realized and unrealized investment gains.2022.



Claims Paying Resources
BAM’s “claimsclaims paying resources”resources represent the capital and other financial resources BAM has available to pay claims and, as such, is a key indication of BAM’s financial strength. BAM’s claims-paying resources include BAM’s qualified statutory capital, including member surplus contributions and contingency reserves, net unearned premiums, present value of future installment premiums and member surplus contributions and the first loss reinsurance protection provided by HG Re, which is collateralized and held in trusts. BAM expects member surplus contributions and HG Re’s reinsurance protection to be the primary drivers of continued growth of its claims-paying resources.
As of September 30, 2017, BAM’s claims paying resources increased 7%were $1,433 million as of March 31, 2023 compared to $687 million from $644$1,423 million as of December 31, 2016.2022 and $1,201 million as of March 31, 2022. The increase in claims paying resources as of March 31, 2023 compared to December 31, 2022 was driven primarily driven by a $26 millionan increase in the HG Re collateral trusts and $26 millionCollateral Trusts resulting from deposits of member surplus contributions, partially offset by BAM’s $19 million statutory net lossceded premiums for the nine months ended September 30, 2017.
The following table presents BAM’s total claims paying resources asfirst quarter of September 30, 2017 and December 31, 2016:
Millions September 30, 2017 December 31, 2016
Policyholders’ surplus $429.2
 $431.5
Contingency reserve 31.6
 22.7
     Qualified statutory capital 460.8
 454.2
Net unearned premiums 27.9
 23.2
Present value of future installment premiums and member surplus
contributions
 8.8
 3.3
Collateral trusts 189.2
 163.0
     Claims paying resources $686.7
 $643.7

As2023. In the fourth quarter of September 30, 2016,2022, BAM completed a reinsurance agreement with Fidus Re that increased BAM’s claims paying resources increased 5% to $629 million from $601 million as of December 31, 2015. The increase was primarily driven by $28 million of member surplus contributions and $18 million increase in the HG Re collateral trusts, partially offset by BAM’s statutory net loss for the nine months ended of $24$150 million.
The following table presents BAM’s total claims paying resources as of September 30, 2016 andMarch 31, 2023, December 31, 2015:2022 and March 31, 2022:
MillionsMarch 31, 2023December 31, 2022March 31, 2022
Policyholders’ surplus$279.9 $283.4 $294.7 
Contingency reserve122.5 118.2 105.7 
     Qualified statutory capital402.4 401.6 400.4 
Statutory net unearned premiums56.1 55.3 49.8 
Present value of future installment premiums and MSC12.4 13.3 13.8 
HG Re Collateral Trusts at statutory value562.5 553.1 486.7 
Fidus Re collateral trusts at statutory value400.0 400.0 250.0 
     Claims paying resources$1,433.4 $1,423.3 $1,200.7 

48
Millions September 30, 2016 December 31, 2015
Policyholders’ surplus $432.8
 $437.2
Contingency reserve 19.9
 12.4
     Qualified statutory capital 452.7
 449.6
Net unearned statutory premiums 18.8
 12.5
Present value of future installment premiums and member surplus
contributions
 3.3
 2.6
Collateral trusts 154.2
 136.6
     Claims paying resources $629.0
 $601.3


HG Global/BAM Balance Sheets
The following table presentstables present amounts from HG Global, which includes HG Re and its other wholly-owned subsidiaries, and BAM that are contained within White Mountains’s consolidated balance sheet as of September 30, 2017March 31, 2023 and December 31, 2016:2022:
March 31, 2023
MillionsHG GlobalBAMEliminations and Segment AdjustmentsTotal
Assets
Fixed maturity investments, at fair value$501.8 $423.0 $— $924.8 
Short-term investments, at fair value47.3 18.6 — 65.9 
Total investments549.1 441.6 — 990.7 
Cash3.6 1.2 — 4.8 
BAM Surplus Notes340.0 — (340.0)— 
Accrued interest receivable on BAM Surplus Notes164.5 — (164.5)— 
Insurance premiums receivable4.0 6.3 (4.0)6.3 
Deferred acquisition costs71.7 36.9 (71.7)36.9 
Other assets6.6 15.2 (.2)21.6 
Total assets$1,139.5 $501.2 $(580.4)$1,060.3 
Liabilities
BAM Surplus Notes (1)
$— $340.0 $(340.0)$— 
Accrued interest payable on BAM Surplus Notes (2)
— 164.5 (164.5)— 
Preferred dividends payable to White Mountains (3)
355.5 — — 355.5 
Preferred dividends payable to noncontrolling interests13.0 — — 13.0 
Unearned insurance premiums251.1 48.7 — 299.8 
Debt146.6 — — 146.6 
Intercompany debt (4)
1.5 — — 1.5 
Accrued incentive compensation.8 11.3 — 12.1 
Other liabilities4.1 88.9 (75.9)17.1 
Total liabilities772.6 653.4 (580.4)845.6 
Equity
White Mountains’s common shareholders’ equity (3) (4)
367.2 — — 367.2 
Noncontrolling interests(.3)(152.2)— (152.5)
Total equity366.9 (152.2)— 214.7 
Total liabilities and equity$1,139.5 $501.2 $(580.4)$1,060.3 
  September 30, 2017
Millions HG Global BAM Eliminations and Segment Adjustment Total
Assets        
Fixed maturity investments $185.1
 $446.3
 $—
 $631.4
Short-term investments 32.6
 43.2
 —
 75.8
Total investments 217.7
 489.5
 —
 707.2
Cash 1.1
 18.1
 —
 19.2
BAM Surplus Notes 503.0
 —
 (503.0) —
Accrued interest receivable on BAM Surplus Notes 122.3
 —
 (122.3) —
Deferred acquisition costs 20.1
 (6.0) —
 14.1
Insurance premiums receivable 2.6
 4.6
 (2.8) 4.4
Accounts receivable on unsettled investment sales 12.4
 .1
 —
 12.5
Other assets .5
 7.9
 —
 8.4
Total assets $879.7
 $514.2
 $(628.1) $765.8
         
Liabilities        
BAM Surplus Notes(1)
 $—
 $503.0
 $(503.0) $—
Accrued interest payable on BAM Surplus Notes(2)
 —
 122.3
 (122.3) —
Preferred dividends payable to White Mountains’s subsidiaries(3)
 216.1
 —
 —
 216.1
Preferred dividends payable to non-controlling interests 6.9
 —
 —
 6.9
Unearned insurance premiums 91.3
 27.2
 —
 118.5
Accounts payable on unsettled investment purchases 41.8
 2.3
 —
 44.1
Other liabilities .7
 19.6
 (2.8) 17.5
Total liabilities 356.8
 674.4
 (628.1) 403.1
         
Equity        
White Mountains’s common shareholders’ equity 506.7
 —
 —
 506.7
Non-controlling interests 16.2
 (160.2) —
 (144.0)
Total equity 522.9
 (160.2) —
 362.7
Total liabilities and equity $879.7
 $514.2
 $(628.1) $765.8
(1)    Under GAAP, the BAM Surplus Notes are classified as debt. Under U.S. Statutory accounting, they are classified as policyholders’ surplus.
(1)
Under GAAP, the BAM Surplus Notes are classified as debt by the issuer. Under U.S. Statutory accounting, they are classified as surplus.
(2)
(2)    Under GAAP, interest accrues daily on the BAM Surplus Notes. Under U.S. Statutory accounting, interest is not accrued on the BAM Surplus Notes until it has been approved for payment by insurance regulators.
(3)
Dividends on HG Global preferred shares payable to White Mountains's subsidiaries are eliminated in White Mountains's consolidated financial statements.


  December 31, 2016
Millions HG Global BAM Eliminations and Segment Adjustment Total Segment
Assets        
Fixed maturity investments $155.2
 $430.0
 $—
 $585.2
Short-term investments 6.4
 38.1
 —
 44.5
Total investments 161.6
 468.1
 —
 629.7
Cash 1.9
 25.1
 —
 27.0
BAM Surplus Notes 503.0
 —
 (503.0) —
Accrued interest receivable on BAM Surplus Notes 108.0
 —
 (108.0) —
Deferred acquisition costs 11.0
 (.4) —
 10.6
Insurance premiums receivable .9
 1.7
 (1.0) 1.6
Other assets .6
 38.6
 —
 39.2
Total assets $787.0
 $533.1
 $(612.0) $708.1
Liabilities        
BAM Surplus Notes(1)
 $—
 $503.0
 $(503.0) $—
Accrued interest payable on BAM Surplus Notes(2)
 —
 108.0
 (108.0) —
Preferred dividends payable to White Mountains’s subsidiaries(3)
 180.5
 —
 —
 180.5
Preferred dividends payable to non-controlling interests 5.7
 —
 —
 5.7
Unearned insurance premiums 60.7
 22.2
 —
 82.9
Other liabilities .7
 50.8
 (1.0) 50.5
Total liabilities 247.6
 684.0
 (612.0) 319.6
Equity        
White Mountains’s common shareholders’ equity 522.8
 —
 —
 522.8
Non-controlling interests 16.6
 (150.9) —
 (134.3)
Total equity 539.4
 (150.9) —
 388.5
Total liabilities and equity $787.0
 $533.1
 $(612.0) $708.1
(1)
Under GAAP, the BAM Surplus Notes are classified as debt by the issuer. Under U.S. Statutory accounting, they are classified as surplus.
(2)
Under GAAP, interest accrues daily on the BAM Surplus Notes. Under U.S. Statutory accounting, interest is not accrued on the BAM Surplus Notes until it has been approved for payment by insurance regulators.
(3)
Dividends on HG Global preferred shares payable to White Mountains's subsidiaries are eliminated in White Mountains's consolidated financial statements.

Par Value of Policies Issued and Priced by BAM
Periodically, BAM publishes the gross par value of policies priced during the period while amounts recorded for accounting purposes are based on the gross par value of policies issued. BAM Surplus Notes. Under U.S. Statutory accounting, interest is not accrued on the BAM Surplus Notes until it has been approved for payment by insurance regulators.
(3)    HG Global’s preferred dividends payable to White Mountains are eliminated in White Mountains’s consolidated financial statements. For segment reporting, HG Global’s preferred dividends payable to White Mountains included within the HG Global/BAM segment are eliminated against the offsetting receivable included within Other Operations.
(4)    HG Global’s intercompany debt is eliminated in White Mountains’s consolidated financial statements. For segment reporting, HG Global’s intercompany debt included within the HG Global/BAM segment is eliminated against the offsetting receivable included within Other Operations.
49

December 31, 2022
MillionsHG GlobalBAMEliminations and Segment AdjustmentsTotal Segment
Assets
Fixed maturity investments, at fair value$489.6 $420.3 $— $909.9 
Short-term investments, at fair value42.0 23.9 — 65.9 
Total investments531.6 444.2 — 975.8 
Cash13.2 5.0 — 18.2 
BAM Surplus Notes340.0 — (340.0)— 
Accrued interest receivable on BAM Surplus Notes157.9 — (157.9)— 
Insurance premiums receivable4.3 6.6 (4.3)6.6 
Deferred acquisition costs71.2 36.0 (71.2)36.0 
Other assets7.0 15.1 (.2)21.9 
Total assets$1,125.2 $506.9 $(573.6)$1,058.5 
Liabilities
BAM Surplus Notes (1)
$— $340.0 $(340.0)$— 
Accrued interest payable on BAM Surplus Notes (2)
— 157.9 (157.9)— 
Preferred dividends payable to White Mountains (3)
341.4 — — 341.4 
Preferred dividends payable to noncontrolling interests12.5 — — 12.5 
Unearned insurance premiums249.8 48.5 — 298.3 
Debt146.5 — — 146.5 
Intercompany debt (4)
6.0 — — 6.0 
Accrued incentive compensation1.3 26.7 — 28.0 
Other liabilities3.7 88.5 (75.7)16.5 
Total liabilities761.2 661.6 (573.6)849.2 
Equity
White Mountains’s common shareholders’ equity (3) (4)
364.6 — — 364.6 
Noncontrolling interests(.6)(154.7)— (155.3)
Total equity364.0 (154.7)— 209.3 
Total liabilities and equity$1,125.2 $506.9 $(573.6)$1,058.5 
(1)    Under GAAP, the BAM Surplus Notes are classified as debt. Under U.S. Statutory accounting, they are classified as policyholders’ surplus.
(2)    Under GAAP, interest accrues daily on the BAM Surplus Notes. Under U.S. Statutory accounting, interest is not accrued on the BAM Surplus Notes until it has been approved for payment by insurance regulators.
(3)    HG Global’s preferred dividends payable to White Mountains are eliminated in White Mountains’s consolidated financial statements. For segment reporting, HG Global’s preferred dividends payable to White Mountains included within the HG Global/BAM segment are eliminated against the offsetting receivable included within Other Operations.
(4)    HG Global’s intercompany debt is eliminated in White Mountains’s consolidated financial statements. For segment reporting, HG Global’s intercompany debt included within the HG Global/BAM segment is eliminated against the offsetting receivable included within Other Operations.




50

Ark/WM Outrigger

The following table reconcilespresents the gross par valuecomponents of policies issuedpre-tax income (loss) included in the Ark/WM Outrigger segment for the three months ended March 31, 2023 and 2022:
Three Months Ended March 31,
20232022
MillionsArkWM
Outrigger Re		EliminationsTotalArk
Direct written premiums$246.2 $— $— $246.2 $230.9 
Assumed written premiums563.2 44.1 (44.1)563.2 402.2 
Gross written premiums809.4 44.1 (44.1)809.4 633.1 
Ceded written premiums(239.3)— 44.1 (195.2)(89.3)
Net written premiums$570.1 $44.1 $— $614.2 $543.8 
Earned insurance premiums$249.9 $5.2 $— $255.1 $194.4 
Net investment income8.4 2.2 — 10.6 1.6 
Net realized and unrealized investment gains (losses)24.5 — — 24.5 (17.5)
Other revenues(2.7)— — (2.7)(2.8)
Total revenues280.1 7.4 — 287.5 175.7 
Losses and LAE147.6 .2 — 147.8 122.0 
Acquisition expenses58.9 .9 — 59.8 49.9 
General and administrative expenses -
   other underwriting		27.5 — — 27.5 22.1 
General and administrative expenses - all other7.6 .1 — 7.7 (1.1)
Change in fair value of contingent consideration(2.4)— — (2.4)2.1 
Interest expense5.0 — — 5.0 3.8 
Total expenses244.21.2— 245.4 198.8 
Pre-tax income (loss)$35.9 $6.2 $— $42.1 $(23.1)

For the years of account subsequent to the gross par value of policies pricedArk Transaction, Ark is no longer using TPC Providers to provide underwriting capital for the threeSyndicates. During the first quarter of 2023, an RITC agreement was executed such that the outstanding loss and nineLAE reserves for claims arising out of the 2020 year of account, for which the TPC Providers’ participation in the total net results of the Syndicates was 43%, were reinsured into the 2021 year of account, for which the TPC Providers’ participation in the total net results of the Syndicates was 0%. Captions within Ark’s results of operations for the three months ended September 30, 2017 March 31, 2022 are shown net of amounts relating to TPC Providers’ share of the Syndicates’ results, including investment results.

Ark/WM Outrigger Results—Three Months Ended March 31, 2023 versus Three Months Ended March 31, 2022
The Ark/WM Outrigger segment’s combined ratio was 92% in the first quarter of 2023.The Ark/WM Outrigger segment reported gross written premiums of $809 million, net written premiums of $614 million and 2016:net earned premiums of $255 million in the first quarter of 2023. The Ark/WM Outrigger segment reported pre-tax income of $42 million in the first quarter of 2023.
Ark’s combined ratio was 94% in the first quarter of 2023 compared to 100% in the first quarter of 2022. Ark’s combined ratio in the first quarter of 2023 included three points of unfavorable prior year loss reserve development, primarily due to Winter Storm Elliot, compared to two points of favorable prior year loss reserve development in the first quarter of 2022. Ark’s combined ratio in the first quarter of 2023 included negligible catastrophe losses compared to 17 points of catastrophe losses, driven primarily by losses from the conflict in Ukraine, in the first quarter of 2022. Ark reported gross written premiums of $809 million, net written premiums of $570 million and net earned premiums of $250 million in the first quarter of 2023 compared to gross written premiums of $633 million, net written premiums of $544 million and net earned premiums of $194 million in the first quarter of 2022. Ark reported pre-tax income (loss) of $36 million in the first quarter of 2023 compared to $(23) million in first quarter of 2022. Ark’s results included net realized and unrealized investment gains (losses) of $25 million in the first quarter of 2023 compared to $(18) million in the first quarter of 2022.
WM Outrigger Re’s combined ratio was 21% in the first quarter of 2023. WM Outrigger Re reported gross and net written premiums of $44 million and net earned premiums of $5 million in the first quarter of 2023.
51

  Three Months Ended Nine Months Ended
  September 30, September 30,
Millions 2017 2016 2017 2016
Gross par value of primary market policies issued $1,872.5
 $2,736.6
 $6,487.8
 $7,917.0
Gross par value of secondary market policies issued 170.9
 236.7
 627.6
 574.1
Total gross par value of policies issued 2,043.4
 2,973.3
 7,115.4
 8,491.1
         
Gross par value of policies priced yet to close 535.2
 428.8
 535.2
 428.8
     Less: Gross par value of policies closed that were
               previously priced
 (163.7) (861.8) (353.3) (298.6)
Total gross par value of policies priced $2,414.9
 $2,540.3
 $7,297.3
 $8,621.3
The following table presents the Ark/WM Outrigger segment’s insurance premiums, insurance expenses and insurance ratios for the three months ended March 31, 2023 and 2022:



MediaAlpha
Three Months Ended March 31,
20232022
$ in MillionsArkWM Outrigger ReEliminationsTotalArk
Insurance premiums:
Gross written premiums$809.4 $44.1 $(44.1)$809.4 $633.1 
Net written premiums$570.1 $44.1 $— $614.2 $543.8 
Net earned premiums$249.9 $5.2 $— $255.1 $194.4 
Insurance expenses:
Loss and loss adjustment expenses$147.6 $.2 $— $147.8 $122.0 
Acquisition expenses58.9 .9 — 59.8 49.9 
Other underwriting expenses (1)
27.5 — — 27.5 22.1 
Total insurance expenses$234.0 $1.1 $— $235.1 $194.0 
Insurance ratios:
Loss and loss adjustment expense59.0 %3.9 %— %58.0 %62.7 %
Acquisition expense23.6 17.3 — 23.4 25.7 
Other underwriting expense11.0 — — 10.8 11.4 
   Combined Ratio93.6 %21.2 %— %92.2 %99.8 %
(1) Included within general and administrative expenses

Gross Written Premiums
Gross written premiums increased 28% to $809 million in the first quarter of 2023 compared to the first quarter of 2022, with risk adjusted rate change up approximately 14% year over year. The increase in gross written premiums was driven primarily by the property line of business for both insurance and reinsurance across London and Bermuda, reflecting the additional capacity provided by Outrigger Re Ltd., as well as specialty lines. The risk adjusted rate change on the Outrigger Re Ltd. portfolio of global property reinsurance was 41% in the first quarter of 2023. The following table presents the Ark/WM Outrigger segment’s gross written premiums by line of business for the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,
Millions20232022
Property$279.7 $173.4 
Specialty268.5 217.3 
Marine & Energy194.9 178.0 
Accident & Health36.1 39.5 
Casualty30.2 24.9 
   Total Gross Written Premium$809.4 $633.1 

52

Ark/WM Outrigger Balance Sheets
The following tables present amounts from Ark and WM Outrigger Re that are contained within White Mountains’s consolidated balance sheet as of March 31, 2023 and December 31, 2022:
March 31, 2023
MillionsArkWM Outrigger ReEliminations and Segment AdjustmentsTotal
Assets
Fixed maturity investments, at fair value$765.0 $— $— $765.0 
Common equity securities, at fair value340.4 — — 340.4 
Short-term investments, at fair value347.7 206.0 — 553.7 
Other long-term investments393.9 — — 393.9 
Total investments1,847.0 206.0 — 2,053.0 
Cash132.4 .2 — 132.6 
Reinsurance recoverables609.7 — (39.1)570.6 
Insurance premiums receivable909.7 36.1 (36.1)909.7 
Deferred acquisition costs201.4 7.1 — 208.5 
Goodwill and other intangible assets292.5 — — 292.5 
Other assets71.5 — — 71.5 
Total assets$4,064.2 $249.4 $(75.2)$4,238.4 
Liabilities
Loss and loss adjustment expense reserves$1,345.6 $.2 $(.2)$1,345.6 
Unearned insurance premiums1,123.5 38.9 (38.9)1,123.5 
Debt184.5 — — 184.5 
Reinsurance payable229.1 — (36.1)193.0 
Contingent consideration42.9 — — 42.9 
Dividends payable to White Mountains (1)
17.3 — — 17.3 
Dividends payable to noncontrolling interests6.7 — — 6.7 
Other liabilities137.0 .1 — 137.1 
Total liabilities3,086.6 39.2 (75.2)3,050.6 
Equity
White Mountains’s common shareholders’ equity (1)
726.3 210.2 — 936.5 
Noncontrolling interests251.3 — — 251.3 
Total equity977.6 210.2 — 1,187.8 
Total liabilities and equity$4,064.2 $249.4 $(75.2)$4,238.4 
(1)    Ark’s dividends payable to White Mountains are eliminated in White Mountains’s consolidated financial statements. For segment reporting, Ark’s dividends payable to White Mountains included within the Ark/WM Outrigger segment are eliminated against the offsetting receivable included within Other Operations.

53

December 31, 2022
MillionsArk
WM Outrigger Re (1)
Eliminations and Segment AdjustmentsTotal
Assets
Fixed maturity investments, at fair value$772.8 $— $— $772.8 
Common equity securities, at fair value334.6 — — 334.6 
Short-term investments, at fair value280.9 203.7 — 484.6 
Other long-term investments373.6 — — 373.6 
Total investments1,761.9 203.7 — 1,965.6 
Cash100.0 1.5 — 101.5 
Reinsurance recoverables595.3 — — 595.3 
Insurance premiums receivable544.1 — — 544.1 
Deferred acquisition costs127.2 — — 127.2 
Goodwill and other intangible assets292.5 — — 292.5 
Other assets65.2 — — 65.2 
Total assets$3,486.2 $205.2 $— $3,691.4 
Liabilities
Loss and loss adjustment expense reserves$1,296.5 $— $— $1,296.5 
Unearned insurance premiums623.2 — — 623.2 
Debt183.7 — — 183.7 
Reinsurance payable251.1 — — 251.1 
Contingent consideration45.3 — — 45.3 
Other liabilities121.1 1.2 — 122.3 
Total liabilities2,520.9 1.2 — 2,522.1 
Equity
White Mountains’s common shareholders’ equity717.4 204.0 — 921.4 
Noncontrolling interests247.9 — — 247.9 
Total equity965.3 204.0 — 1,169.3 
Total liabilities and equity$3,486.2 $205.2 $— $3,691.4 
(1) Amounts as of December 31, 2022 for WM Outrigger Re have been reclassified from Other Operations to the Ark/WM Outrigger segment to conform to the presentation as of March 31, 2023.


54

Kudu

As of March 31, 2023, Kudu had deployed a total of $744 million, including transaction costs, in 21 asset and wealth management firms globally, including three that have been exited. As of March 31, 2023, the asset and wealth management firms had combined assets under management of approximately $74 billion, spanning a range of asset classes, including real estate, wealth management, hedge funds, private equity and alternative credit strategies.
The following table presents the components of GAAP net lossincome, EBITDA and adjusted EBITDA included in White Mountains’s MediaAlphathe Kudu segment for the three and nine months ended September 30, 2017 March 31, 2023 and 2016:2022:
Three Months Ended March 31,
Millions20232022
Net investment income$14.2 $12.6 
Net realized and unrealized investment gains (losses)29.6 22.3 
Total revenues43.8 34.9 
General and administrative expenses3.8 2.8 
Interest expense4.7 2.8 
Total expenses8.5 5.6 
GAAP pre-tax income (loss)35.3 29.3 
Income tax (expense) benefit(7.5)(6.1)
GAAP net income (loss)27.8 23.2 
Add back:
Interest expense4.7 2.8 
Income tax expense (benefit)7.5 6.1 
General and administrative expenses - depreciation— — 
Amortization of other intangible assets— .1 
EBITDA (1)
40.0 32.2 
Exclude:
Net realized and unrealized investment (gains) losses(29.6)(22.3)
Non-cash equity-based compensation expense— .1 
Transaction expenses.5 — 
Adjusted EBITDA (1)
$10.9 $10.0 
(1) See “NON-GAAP FINANCIAL MEASURES” on page 63.

The following table presents the changes the fair value of Kudu’s Participation Contracts:
Three Months Ended March 31,
Millions20232022
Beginning balance of Kudu’s Participation Contracts$695.9 $669.5 
Contributions to Participation Contracts (1)
66.7 — 
Proceeds from Participation Contracts sold (1) (2)
(109.0)— 
Net realized and unrealized investment gains (losses) on Participation Contracts
   sold and pending sale (3)
(2.1)3.5 
Net unrealized investment gains (losses) on Participation Contracts - all other (4)
31.7 18.8 
Ending balance of Kudu’s Participation Contracts$683.2 $691.8 
(1) Includes $35.8 of non-cash contributions to (proceeds from) Participation Contracts
(2) Includes $10.3 of proceeds receivable from Participation Contracts sold during the quarter.
(3) Includes realized and unrealized investment gains (losses) recognized from Participation Contracts beginning in the quarter a contract is classified as pending sale.
(4) Includes unrealized investment gains (losses) recognized from (i) ongoing Participation Contracts and (ii) Participation Contracts prior to classification as pending sale.

55

  Three Months Ended September 30, Nine Months Ended September 30,
Millions 2017 2016 2017 2016
Advertising and commission revenues $37.9
 $27.6
 $101.2
 $88.4
Cost of sales 32.2
 23.0
 86.0
 74.0
Gross profit 5.7
 4.6
 15.2
 14.4
General and administrative expenses—other 3.8
 3.2
 10.7
 8.7
General and administrative expenses—amortization of intangible assets 2.3
 2.5
 7.2
 7.6
Interest expense .1
 .2
 .6
 .7
GAAP pre-tax loss (.5) (1.3) (3.3) (2.6)
Income tax expense —
 —
 —
 —
GAAP net loss (.5) (1.3) (3.3) (2.6)
         
Add back:        
Interest expense .1
 .2
 .6
 .7
Income tax expense —
 —
 —
 —
General and administrative expenses—depreciation —
 —
 .1
 .1
General and administrative expenses—amortization of intangible assets 2.3
 2.5
 7.2
 7.6
EBITDA $1.9
 $1.4
 $4.6
 $5.8

MediaAlphaKudu Results—Three Months EndedSeptember 30, 2017 March 31, 2023 versus Three Months EndedSeptember 30, 2016 March 31, 2022
MediaAlphaKudu reported net losstotal revenues of $1$44 million, in both the third quarter pre-tax income of 2017$35 million and the third quarteradjusted EBITDA of 2016. EBITDA was $2 million in the third quarter of 2017, compared to $1 million in the third quarter of 2016. For the third quarter of 2017, the increase in EBITDA was primarily driven by increased gross profit contributions from the P&C and Health/Life verticals of $1 million.
Advertising and commission revenues were $38 million in the third quarter of 2017, compared to $28 million in third quarter of 2016. The increase was primarily driven by $6 million of revenue growth in MediaAlpha's P&C verticals and $5 million of revenue growth in the non-P&C verticals.
MediaAlpha’s cost of sales is comprised primarily of revenue share based payments to partners. Cost of sales were $32 million in the third quarter of 2017, compared to $23 million in the third quarter of 2016. The 40% increase in cost of sales was driven by the 37% increase in revenue.

MediaAlpha Results—Nine Months Ended September 30, 2017 versus Nine Months Ended September 30, 2016
MediaAlpha reported net loss of $3 million in both the first nine months of 2017 and the first nine months of 2016. EBITDA was $5$11 million in the first nine monthsquarter of 2017,2023 compared to $6total revenues of $35 million, pre-tax income of $29 million and adjusted EBITDA of $10 million in the first nine monthsquarter of 2016. For the first nine months of 2017, the decrease in EBITDA was primarily driven by increased operating expenses of $2 million, partially offset by an increase in gross profit of $1 million.
Advertising2022. Total revenues and commission revenues were $101 million in the first nine months of 2017, compared to $88 million in the first nine months of 2016. The increase was primarily driven by the continued growth in MediaAlpha’s non-P&C verticals. Advertising and commission revenues in MediaAlpha’s P&C verticals were flat in the first nine months of 2017 compared to the first nine months of 2016.
Cost of sales were $86 million in the first nine months of 2017, compared to $74 million in the first nine months of 2016. The 16% increase in cost of sales was driven by the 14% increase in revenue.


Other Operations

A summary of White Mountains’s financial results from its Other Operations segment for the three and nine months endedSeptember 30, 2017 and 2016 follows:
  Three Months Ended Nine Months Ended
  September 30, September 30,
Millions 2017 2016 2017 2016
Earned insurance premiums $—
 $1.9
 $1.0
 $6.1
Net investment income 8.9
 7.3
 30.8
 11.5
Net realized and unrealized investment gains 31.7
 12.8
 99.3
 18.4
Advertising and commission revenues 0.9
 .6
 2.7
 1.2
Other revenues 1.4
 4.3
 5.3
 17.2
Total revenues 42.9
 26.9
 139.1
 54.4
Loss and loss adjustment expenses —
 2.2
 1.1
 6.8
Insurance acquisition expenses —
 .5
 .1
 1.9
Other underwriting expenses —
 .1
 —
 .1
Cost of sales .9
 1.0
 2.7
 2.9
General and administrative expenses — other 27.3
 26.8
 112.7
 98.8
General and administrative expenses — amortization of intangible assets .1
 —
 .1
 .3
Interest expense .8
 .3
 1.2
 1.9
Total expenses 29.1
 30.9
 117.9
 112.7
Pre-tax income (loss) $13.8
 $(4.0) $21.2
 $(58.3)

Other Operations Results—Three Months Ended September 30, 2017 versus Three Months Ended September 30, 2016
White Mountains’s Other Operations segment reported pre-tax income of $14 million in the third quarter of 2017, compared to pre-tax loss of $4 million in the third quarter of 2016. The improved resultsprimarily were driven by higher investment returns. White Mountains’s Other Operations segment reported $32included $30 million of net realized and unrealized investment gains in the thirdfirst quarter of 20172023 compared to $13 million of net realized and unrealized investment gains in the third quarter of 2016. White Mountains’s Other Operations segment reported $9 million of net investment income in the third quarter of 2017 compared to net investment income of $7 million in the third quarter of 2016. See Summary of Investment Results on page 65. White Mountains’s Other Operations segment other revenues were $1 million in the third quarter of 2017, compared to $4 million in the third quarter of 2016, primarily driven by third party fees at WM Advisors. During the third quarter of 2016, WM Advisors received asset management fees from Symetra and Sirius Group during the transitional periods subsequent to each transaction, both of which expired before the end of 2016. 

Other Operations Results—Nine Months Ended September 30, 2017 versus Nine Months Ended September 30, 2016
White Mountains’s Other Operations segment reported pre-tax income of $21$22 million in the first nine monthsquarter of 2017, compared to pre-tax loss of $58 million in the first nine months of 2016. White Mountains’s Other Operations segment reported net realized and unrealized investment gains of $99 million in the first nine months of 2017 compared to net realized and unrealized investment gains of $18 million in the first nine months of 2016. White Mountains’s Other Operations segment reported $312022. Kudu’s results also included $14 million of net investment income in the first nine monthsquarter of 20172023 compared to net investment income of $12$13 million in the first nine months quarter of 2016. See Summary2022.

Other Operations

The following table presents the components of Investment Results on page 65.pre-tax income (loss) included in White Mountains’s Other Operations segment other revenues were $5for the three months ended March 31, 2023 and 2022:
Three Months Ended March 31,
Millions20232022
Net investment income$7.0 $1.8 
Net realized and unrealized investment gains (losses)41.8 31.9 
Net realized and unrealized investment gains (losses) from investment in
  MediaAlpha		85.2 18.8 
Commission revenues3.3 2.9 
Other revenues30.6 25.7 
Total revenues167.9 81.1 
Cost of sales13.9 21.4 
General and administrative expenses39.7 29.8 
Interest expense.8 .3 
Total expenses54.4 51.5 
Pre-tax income (loss)$113.5 $29.6 
Other Operations Results—Three Months Ended March 31, 2023 versus Three Months Ended March 31, 2022
White Mountains’s Other Operations reported pre-tax income of $114 million in the first nine monthsquarter of 2017,2023 compared to $17$30 million in the first nine monthsquarter of 2016. The decrease was primarily driven by lower third party fees at WM Advisors. During the first nine months of 2016, WM Advisors received asset management fees from Symetra and Sirius Group during the transitional periods subsequent to each transaction, both of which expired before the end of 2016.2022. White Mountains’s Other Operations segmentresults included unrealized investment gains from its investment in MediaAlpha of $85 million in the first quarter of 2023 compared to $19 million in the first quarter of 2022. Excluding MediaAlpha, White Mountains’s Other Operations results included net realized and unrealized investment gains of $42 million in the first quarter of 2023 compared to $32 million in the first quarter of 2022. White Mountains’s Other Operations results included net investment income of $7 million in the first quarter of 2023 compared to $2 million in the first quarter of 2023, driven primarily by the increase in invested assets resulting from the sale of NSM in the third quarter of 2022. See Summary of Investment Results on page 57.
White Mountains’s Other Operations reported $31 million of other revenues in the first quarter of 2023 compared to $26 million in the first quarter of 2022. The increase in other revenues was driven primarily by a transaction gain from a sale within Other Operations in the first quarter of 2023, partially offset by a reduction in operating revenues for the sold entity. White Mountains’s Other Operations reported $14 million of cost of sales in the first quarter of 2023 compared to $21 million in the first quarter of 2022. The decrease in cost of sales was driven primarily by a recent sale transaction.
White Mountains’s Other Operations reported general and administrative expenses were $113of $40 million in the first nine monthsquarter of 2017,2023 compared to $99$30 million in the first nine monthsquarter of 2016.2022. The increase in general and administrative expenses in the first quarter of 2023 compared to the first quarter of 2022 was driven by additional compensation expenses related to former company executives and higher incentive compensation costs, resulting fromprimarily in connection with the OneBeacon Transaction. 

Discontinued Operations

OneBeacon
On September 28, 2017, White Mountains received $1.3 billion in cash proceeds from the OneBeaconNSM Transaction and recorded a gain of $555 million, net of transaction costs. As a result of the OneBeacon Transaction, OneBeacon’s results have been reported as discontinued operations within White Mountains’s GAAP financial statements.higher share price.
White Mountains reported a net loss of $15 million from OneBeacon in discontinued operations in the third quarter of 2017, driven primarily by underwriting losses. OneBeacon’s combined ratio for the third quarter of 2017 was 113%, driven by 9 points of net unfavorable loss reserve development, primarily in the Program, Healthcare and Government Risk businesses, and 9 points of catastrophe losses primarily due to losses from Hurricane Harvey.
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White Mountains reported net income from OneBeacon of $21 million in discontinued operations in the first nine months of 2017. OneBeacon’s combined ratio for the first nine months of 2017 was 105%, driven by 4 points of net unfavorable loss reserve development, primarily in the Program, Healthcare and Government Risk businesses, and 4 points of catastrophe losses, primarily due to losses from Hurricane Harvey. See Note 15 — “Held for Sale and Discontinued Operations”.


Tranzact
On July 21, 2016, White Mountains completed the sale of Tranzact to an affiliate of Clayton, Dubilier & Rice, LLC. Tranzact’s results inured to White Mountains until the closing date of the transaction. Net loss from discontinued operations related to Tranzact was $2 million and $3 million for the third quarter and first nine months of 2016. See Note 15 — “Held for Sale and Discontinued Operations”.

Sirius Group
On April 18, 2016, White Mountains completed the sale of Sirius Group to CMI. Sirius Group’s results inured to White Mountains until the closing date of the transaction. For the second quarter stub period up until the closing date of the transaction, Sirius Group reported a comprehensive loss of $9 million, primarily due to $17 million of recorded losses from the Ecuador earthquake that occurred on April 16, 2016. For the first quarter of 2016, Sirius Group reported comprehensive income of $36 million, reflecting a combined ratio of 93%. See Note 15 — “Held for Sale and Discontinued Operations”.

II. Summary of Investment Results
 
White Mountains’s total investment results include continuing operations and discontinued operations. The OneBeacon and Sirius Group investment results are included in discontinued operations for each respective period.
During the third quarter of 2016, White Mountains established a portfolio of high-yield fixed maturity investments. Given the risk profile of these investments, White Mountains has included the returns associated with the high-yield fixed maturity investments with the returns from common equity securities and other long-term investments. See “NON-GAAP FINANCIAL MEASURES” on page 76.
all segments. For purposes of discussing rates of return, all percentages are presented gross of management fees and trading expensesexpenses. For 2022 returns, percentages are calculated before any adjustments for TPC Providers in order to produce a better comparison to benchmark returns, while all dollar amounts are presented net of management feesreturns.

Gross Investment Returns and trading expenses. 

Benchmark Returns
The following table summarizespresents the pre-tax investment returns for White Mountains’s consolidated total operations’ pre-tax investment results, including returns from discontinued operations,portfolio for the three and nine months ended September 30, 2017March 31, 2023 and 2016:  2022:


Gross investment returns and benchmark returns
Three Months Ended March 31,
 20232022
Fixed income investments1.9 %(3.2)%
Bloomberg Barclays U.S. Intermediate Aggregate Index2.4 %(4.7)%
Common equity securities4.5 %0.2 %
Investment in MediaAlpha50.6 %7.2 %
Other long-term investments4.2 %6.0 %
Total common equity securities, investment in MediaAlpha and other long-term investments7.6 %5.3 %
Total common equity securities and other long-term investments4.4 %5.0 %
S&P 500 Index (total return)7.5 %(4.6)%
Total consolidated portfolio4.5 %0.8 %
Total consolidated portfolio - excluding MediaAlpha3.0 %0.3 %
  Three Months Ended Nine Months Ended
  September 30, September 30,
  2017 2016 2017 2016
Short-term investments 0.3 % 0.1% 0.5 % 0.7%
Investment grade fixed maturity investments 0.9 % 0.4% 2.8 % 3.1%
High-yield fixed maturity investments 1.7 % 1.0% 7.1 % 1.0%
Total GAAP fixed income investments 1.0 % 0.4% 3.0 % 2.9%
Total fixed income investments, excluding high-yield fixed maturity investments: 0.9 % 0.4% 2.7 % 2.9%
Bloomberg Barclays U.S. Intermediate Aggregate Index 0.7 % 0.3% 2.3 % 4.1%
         
Common equity securities 4.3 % 4.9% 14.4 % 5.2%
Other long-term investments (2.3)% 2.6% (2.9)% 6.4%
Total GAAP common equity securities and other long-term investments 2.6 % 3.9% 9.0 % 5.6%
Total common equity securities, other long-term investments and high-yield fixed
     maturity investments
 2.4 % 3.5% 8.6 % 5.4%
S&P 500 Index 4.5 % 3.9% 14.2 % 7.8%
Bloomberg Barclays U.S. High Yield Ba 2% Issuer Capped (minus Energy & Financials) 1.9 % 1.6% 6.7 % 1.6%
         
Total consolidated portfolio 1.4 % 0.9% 4.3 % 3.3%


Investment Returns—Three and Nine Months Ended September 30, 2017March 31, 2023 versus Three and Nine Months Ended September 30, 2016March 31, 2022

White Mountains’s GAAP pre-tax total consolidated portfolio return on invested assets was 1.4% and 4.3% for4.5% in the thirdfirst quarter and first nine months of 2017.2023, which included $85 million of unrealized investment gains from White Mountains’s GAAP pre-taxinvestment in MediaAlpha. Excluding MediaAlpha, the total consolidated portfolio return on invested assets was 0.9% and 3.3% for the third quarter and first nine months of 2016. The returns for the third quarter and first nine months of 2017 were driven by the continued equity market rally, while returns for the 2016 periods were impacted by strong equity returns3.0% in the thirdfirst quarter of 20162023, driven primarily by net realized and unrealized investment gains from other long-term investments and common equity securities, as well as net unrealized investment gains in the fixed income portfolio due to a decline in interest rates forrates.
White Mountains’s total consolidated portfolio return on invested assets was 0.8% in the first nine monthsquarter of 2016.

Fixed income results
2022, which included $19 million of unrealized investment gains from White Mountains maintains a high-quality, short-duration fixed income portfolio. AsMountains’s investment in MediaAlpha. Excluding MediaAlpha, the total consolidated portfolio return on invested assets was 0.3% in the first quarter of September 30, 2017,2022, driven primarily by net realized and unrealized investment gains from other long-term investments, which more than offset net unrealized investment losses in the fixed income portfolio duration,due to a rise in interest rates.

Fixed Income Results
White Mountains’s fixed income portfolio, including short-term investments, but excluding high-yieldwas $2.8 billion as of both March 31, 2023 and December 31, 2022, which represented 52% and 55% of total invested assets. The duration of White Mountains’s fixed maturityincome portfolio, including short-term investments, was approximately 2.7 years, compared to 2.62.3 years as of March 31, 2023 and December 31, 2016 and 2.0 years as of September 30, 2016. Including both short-term and high-yield fixed maturity investments, duration was approximately 2.9 years as of September 30, 2017.
The increase in the duration of the2022. White Mountains’s fixed income portfolio over this period was primarily a result of establishing a new medium duration British Pound Sterling (GBP) investment grade corporate bond mandate with Legal & General Investment Management, Ltd. (“LGIM”), a third-party manager, in the fourth quarter of 2016. The duration of the LGIM portfolio was approximately 7.5 yearsincludes fixed maturity and short-term investments held on deposit or as of September 30, 2017. collateral. See Note 3 — “Investment Securities.”
White Mountains has entered into a foreign currency forward contract, which is recorded in other long-term investments, to manage its GBP foreign currency exposure relating to this mandate. As of September 30, 2017, the contract had a total gross notional value of approximately $201.3 million (GBP 150 million) and a carrying value of $(14.1) million.
TheMountains’s fixed income portfolio returned 0.9%1.9% in the first quarter of 2023 compared to -3.2% in the first quarter of 2022, underperforming and 2.7% for the third quarter and first nine months of 2017, outperforming the longer duration Bloomberg Barclays U.S. Intermediate Aggregate Index returns of 0.7%2.4% and 2.3%, as interest rates rose-4.7% for the comparable periods. The results in both periods. The fixed income portfolio returned 0.4% and 2.9% for the third quarter and first nine months of 2016, slightly outperforming the longer duration Bloomberg Barclays U.S. Intermediate Aggregate Index return of 0.3% for the third quarter of 2016 and underperforming the Bloomberg Barclays U.S. Intermediate Aggregate Index return of 4.1% for the first nine months of 2016. The underperformance relative to the benchmark for the first nine months of 2016 wasperiods were driven primarily attributable toby the short duration positioning of theWhite Mountains’s fixed income portfolio as interest rates declined over thefluctuated in each respective period.



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Common equity securities, other long-term investmentsEquity Securities, Investment in MediaAlpha and high-yield fixed maturity investments resultsOther Long-Term Investments Results
White Mountains maintains aMountains’s portfolio of common equity securities, its investment in MediaAlpha and other long-term investments was $2.6 billion and high-yield fixed maturity investments. White Mountains’s management believes that prudent levels$2.3 billion as of investments in common equity securities, other long-term investmentsMarch 31, 2023 and high-yield fixed maturity investments are likely to enhance long-term after-taxDecember 31, 2022, which represented 48% and 45% of total returns.invested assets. See Note 3 — “Investment Securities.”
White Mountains’s portfolio of common equity securities, its investment in MediaAlpha and other long-term investments and high-yield fixed maturity investments represented approximately 37%, 20%, and 19% of total GAAP invested assets as of September 30, 2017, December 31, 2016, and September 30, 2016. The increasereturned 7.6% in the percentagefirst quarter of this2023, which included $85 million of unrealized investment gains from MediaAlpha. White Mountains’s portfolio is primarily attributable to management’s conscious decision to addof common equity exposure during the yearsecurities and a declineother long-term investments returned 4.4% in the first quarter of 2023. White Mountains’s portfolio of common equity securities, its investment asset base due toin MediaAlpha and other long-term investments returned 5.3% in the OneBeacon Transactionfirst quarter of 2022, which included $19 million of unrealized investment gains from MediaAlpha. White Mountains’s portfolio of common equity securities and share repurchase activity.other long-term investments returned 5.0% in the first quarter of 2022.
White Mountains’s portfolio of common equity securities other long-term investments and high-yield fixed maturity investments returned 2.4% and 8.6% forconsists of passive ETFs that seek to provide investment results generally corresponding to the third quarter and first nine monthsperformance of 2017, underperforming the S&P 500 Index returns of 4.5% and 14.2%. The underperformance versus the S&P 500 Index return for the third quarter and first nine months of 2017 was primarily a result of asset allocation, as high yield fixed maturity investments failed to keep pace with the S&P 500 Index and unfavorable performance in other long-term investments, primarily attributable to losses from foreign currency forward contracts. The losses on the foreign currency forward contracts were offset by the currency gains from non-USD denominated fixed maturity investments and non-USD denominatedinternational listed equity funds. White Mountains’s portfolio of common equity securities.securities was $698 million and $668 million as of March 31, 2023 and December 31, 2022.
White Mountains’s portfolio of common equity securities primarily consistsreturned 4.5% in the first quarter of passive ETFs and publicly-traded common equity securities that are actively managed by third party managers. White Mountains’s portfolio2023 compared to 0.2% in the first quarter of common equity securities returned 4.3% and 14.4% for the third quarter and first nine months of 2017,2022, underperforming the S&P 500 Index return of 4.5% for the third quarter and outperforming the S&P 500 Index returnreturns of 14.2% for the first nine months of 2017.
The portfolio of ETFs seeks to provide investment results that, before expenses, generally correspond to the performance of broad market indices. As of September 30, 20177.5% and December 31, 2016, White Mountains had $493 million and $322 million invested in S&P 500 ETFs. During the third quarter and first nine months of 2017 and 2016, the ETFs essentially earned the effective index return, before expenses, over the period in which White Mountains was invested in these funds.
White Mountains’s third party manager relationships (the “actively managed portfolios”) have been with Silchester International Investors (“Silchester”), who invests in value-oriented non-U.S. equity securities through a unit trust, and Lateef Investment Management (“Lateef”), a growth at a reasonable price adviser managing a highly concentrated portfolio of mid-cap and large-cap growth companies. During the first quarter of 2017, White Mountains established a new third party manager relationship with Lazard Asset Management (“Lazard”), to manage a Pan-European common equity portfolio, of which the majority of the securities are denominated in Euros (EUR). In September 2017, White Mountains terminated its relationship with Lazard in order to concentrate its non-U.S. equity exposure in small to mid-cap international equities through other third-party managers. During the third quarter of 2017 and prior to terminating Lazard, White Mountains established a new third party manager relationship with Highclere International Investors ("Highclere"), who invests in small to mid-cap equity securities listed in markets outside of North America through a unit trust.
The actively managed portfolios of common equity securities returned 5.0% and 19.4% for the third quarter and first nine months of 2017, outperforming the S&P 500 Index return of 4.5% and 14.2%-4.6% for the comparable periods. The actively managed portfoliosresults in the first quarter of common2023 and 2022 were driven primarily by relative underperformance and outperformance in White Mountains’s international listed equity securities returned 5.4% and 3.4% for the third quarter and first nine months of 2016, outperformingfunds as compared to the S&P 500 Index return of 3.9% for the third quarter and underperforming the S&P 500 Index return of 7.8% for the first nine months of 2016.
White Mountains entered into foreign currency forward contracts, which are recorded in other long-term investments, to manage its foreign currency exposure relating to the equity portfolio managed by Lazard and a portion of the equity portfolios managed by Silchester and Highclere. As of September 30, 2017, these contracts had a total gross notional value of approximately $60.5 million (EUR 19 million, GBP 11 million and JPY 2,646 million) and a carrying value of $(1.3) million.Index.
White Mountains maintains a portfolio of other long-term investments that consists primarily of hedge funds,unconsolidated entities, including Kudu’s Participation Contracts, private equity funds unconsolidatedand hedge funds, a bank loan fund, Lloyd’s trust deposits, ILS funds and private capital investments, foreign currency forward contracts and various other investments. Asdebt instruments. White Mountains’s portfolio of September 30, 2017, approximately 63% of these other long-term investments excluding foreign currency forward contracts, were invested in private equity funds with a general emphasis on narrow, sector-focused investments,was $1.6 billion and hedge funds with a general emphasis on long-short equities.

$1.5 billion as of March 31, 2023 and December 31, 2022.
White Mountains’s other long-term investments portfolio returned -2.3% and -2.9% for4.2% in the third quarter and first nine months of 2017. The results for the third quarter and first nine months were primarily attributable to losses from foreign currency forward contracts, partially offset by a favorable mark-to-market adjustment to the OneBeacon Surplus Notes during the third quarter of 2017 and strong private equity fund and hedge fund results2023 compared to 6.0% in the first quarter of 2022. Investment returns for the first nine monthsquarter of 2017.
White Mountains’s other long-term investments returned 2.6%2023 were driven primarily by net investment income and 6.4%net realized and unrealized investment gains from Kudu’s Participation Contracts. Investment returns for the thirdfirst quarter of 2022 were driven primarily by net investment income and first nine months of 2016. The results for the third quarternet realized and first nine months of 2016 were primarily driven by write-downs in energy-exposedunrealized investment gains from private equity funds partially offset by favorable mark-to-market adjustments to the OneBeacon Surplus Notes.and from net investment income and net unrealized investment gains from Kudu’s Participation Contracts.
During the third quarter of 2016, White Mountains established a new relationship with Principal Global Investors, LLC (“Principal”), a third-party manager, to actively manage a relatively concentrated portfolio of high-yield fixed maturity investments. The Principal separate account is invested in issuers of U.S. dollar denominated publicly traded and 144A debt securities issued by corporations with generally at least one rating between "B-" and “BB+” inclusive by Standard and Poor’s or similar ratings from other rating agencies. The high-yield fixed maturity investments returned 1.7% and 7.1% for the third quarter and first nine months of 2017, underperforming the Bloomberg Barclays U.S. High Yield Ba 2% Issuer Capped (minus Energy & Financials) Index return of 1.9% for the quarter but outperforming the return of 6.7% for the first nine months of 2017.


Foreign Currency TranslationExposure

As of September 30, 2017,March 31, 2023, White Mountains had gross foreign currency exposure on approximately $412.7$210 million of net assets relatingprimarily related to cashArk/WM Outrigger’s non-U.S. business, Kudu’s non-U.S. Participation Contracts, and fixed maturity investments managed by LGIM, common equity securities managed by Silchester and Highclere and variouscertain other foreign consolidated and unconsolidated private capital investments.
White Mountains entered into foreign currency forward contracts to mitigate its foreign currency exposure for the invested assets managed by LGIM and a portion of the invested assets managed by Silchester and Highclere.entities.
The following table summarizespresents the fair value of White Mountains’s foreign denominated net assets (liabilities) by segment as of March 31, 2023:
$ in Millions

Currency		Ark/WM OutriggerKuduOther OperationsTotal Fair Value
% of Total Shareholders’ Equity
CAD$65.9 $75.5 $— $141.4 3.4 %
AUD15.8 37.0 — 52.8 1.3 
GBP43.5 — — 43.5 1.1 
EUR(43.4)— 13.1 (30.3)(.7)
All other— — 2.8 2.8 — 
Total$81.8 $112.5 $15.9 $210.2 5.1 %


58

III. Income Taxes

The Company and its Bermuda domiciled subsidiaries are not subject to Bermuda income tax under current Bermuda law. In the event there is a change in the current law and taxes are imposed, the Bermuda Exempted Undertakings Tax Protection Act of 1966 states that the Company and its Bermuda domiciled subsidiaries would be exempt from such tax until March 31, 2035. The Company has subsidiaries and branches that operate in various other jurisdictions around the world that are subject to tax in the jurisdictions in which they operate.  As of March 31, 2023, the primary jurisdictions in which the Company’s subsidiaries and branches were subject to tax include Ireland, Israel, Luxembourg, the United Kingdom and the associated foreign currency forward contracts asUnited States.
White Mountains’s income tax expense related to pre-tax income from continuing operations for the three months ended March 31, 2023 represented an effective tax rate of September 30, 2017:6%. The effective tax rate was different from the U.S. statutory rate of 21%, driven primarily by full year forecasted income in jurisdictions with lower tax rates than the United States.
White Mountains’s income tax benefit related to pre-tax loss from continuing operations for the three months ended March 31, 2022 represented an effective tax rate of 18%. The effective tax rate was different from the U.S. statutory rate of 21%, driven primarily by full year forecasted income in jurisdictions with lower tax rates than the United States, a decrease in the full valuation allowance on net deferred tax assets in certain U.S. operations within Other Operations, partially offset by an increase in the full valuation allowance at BAM and state income taxes.
On April 1, 2023, the U.K. corporate tax rate increased from 19% to 25%.

IV. Discontinued Operations
Currency(1)
 Fair Value (Gross) % of Common Shareholders' Equity Currency Hedge Fair Value (Net) % of Common Shareholders' Equity
GBP $253.2
 7.3% $(215.8) $37.4
 1.1%
JPY 60.4
 1.8% (23.6) 36.8
 1.1%
EUR 52.6
 1.5% (22.4) 30.2
 .9%
All other 46.5
 1.3% —
 46.5
 1.3%
Total $412.7
 11.9% $(261.8) $150.9
 4.4%

(1) Includes net assets of Wobi and Buzzmove.NSM


Investment in Symetra Common Shares
DuringOn August 1, 2022, White Mountains closed the third quarter of 2015, Symetra Financial Corporation (“Symetra”) announced that it entered into a definitive merger agreement with Sumitomo Life pursuant to which Sumitomo Life would acquire all of the outstanding shares of Symetra. On February 1, 2016, Symetra closed its definitive merger agreement with Sumitomo Life andNSM Transaction. White Mountains received $1.4 billion in net cash proceeds at closing and recognized a net gain of $658$876 million, or $32 per common share. which was comprised of $887 million of net gain from sale of discontinued operations and $3 million of comprehensive income related to the recognition of foreign currency translation gains (losses) from the sale, partially offset by $14 million of compensation and other costs related to the transaction recorded in Other Operations. See Note 2 — “Significant Transactions.”
White Mountains recognized $5reported net income from discontinued operations, net of tax, for NSM Group of $4 million in pre-tax net investment gains associated with Symetra duringfor the first quarter of 2016. White Mountains also received a special dividend of $.50 per share as part of the transaction that was paid in the third quarter of 2015.three months ended March 31, 2022. See Note 19 — “Held for Sale and Discontinued Operations.”



LIQUIDITY AND CAPITAL RESOURCES
 
Operating Cash and Short-term Investments


Holding company level. Company Level
The primary sources of cash for the Company and certain of its intermediate holding companies are expected to be distributions and tax sharing payments received from its insurance, reinsurance and other operating subsidiaries, capital raising activities, net investment income, proceeds from sales, repayments and maturities of investments, capital raising activities and, from time to time, proceeds from sales of operating subsidiaries. The primary uses of cash are expected to be repurchasesgeneral and administrative expenses, purchases of the Company’s common shares,investments, payments to tax authorities, payments on and repurchases/retirements of its debt obligations, dividend payments to holders of the Company’s common shares, distributions to non-controllingnoncontrolling interest holders of consolidated subsidiaries, purchases of investments, payments to tax authorities, contributions to operating subsidiaries operating expenses and, from time to time, purchases of operating subsidiaries.subsidiaries and repurchases of the Company’s common shares.

Operating subsidiary level. Subsidiary Level
The primary sources of cash for White Mountains’s insurance, reinsurance and other operating subsidiaries are expected to be premium and fee collections, commissions, net investment income, proceeds from sales, repayments and maturities of investments, contributions from holding companies and capital raising activities and, from time to time, proceeds from the sales of operating subsidiaries.activities. The primary uses of cash are expected to be lossclaim payments, policy acquisition costs, general and other underwriting costs,administrative expenses, broker commission expenses, cost of sales, purchases of investments, payments to tax authorities, payments on and repurchases/retirements of its debt obligations, distributions and tax sharing payments made to holding companies, distributions to non-controllingnoncontrolling interest holders operating expenses and, from time to time, purchases of operating subsidiaries.
Both internal and external forces influence White Mountains’s financial condition, results of operations and cash flows. Premium and fee levels, losscollections, investment returns, claim payments and cost of sales and investment returns may be impacted by changing rates of inflation and other economic conditions. Some time may lapse between the occurrence of an insured loss, the reporting of the loss to White MountainsMountains’s insurance and reinsurance operating subsidiaries and the settlement of the liability for that loss. The exact timing of the payment of losses and benefits cannot be predicted with certainty. White Mountains’s insurance and reinsurance subsidiary maintains a portfoliooperating subsidiaries maintain portfolios of invested assets with varying maturities and a substantial amount of cash and short-term investments to provide adequate liquidity for the payment of losses.claims.
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Management believes that White Mountains’s cash balances, cash flows from operations and routine sales and maturities of investments and the liquidity provided by the WTM Bank Facility and the MediaAlpha Bank Facility are adequate to meet expected cash requirements for the foreseeable future onat both a holding company and insurance, reinsurance and other operating subsidiary level.


Dividend Capacity


Following is a description of the dividend capacity of White Mountains’s insurance and reinsurance and other operating subsidiaries:


HG Global/BAM:BAM
At September 30, 2017,As of March 31, 2023, HG Global had $619 million face value of preferred shares outstanding, of which White Mountains owned 96.9%. Holders of the HG Global preferred shares receive cumulative dividends at a fixed annual rate of 6.0% on a quarterly basis, when and if declared by HG Global. HG Global did not declare or pay any preferred dividends in the third quarter of 2017. As of September 30, 2017,March 31, 2023, HG Global has accrued $223$369 million of dividends payable to holders of its preferred shares, $216$356 million of which is payable to White Mountains and is eliminated in consolidation. As of March 31, 2023, HG Global and its subsidiaries had $2 million of net unrestricted cash outside of HG Re.
HG Re is a Special Purpose Insurerspecial purpose insurer subject to regulation and supervision by the BMA, butBMA. HG Re does not require regulatory approval to pay dividends. However, HG Re’sdividends, however, its dividend capacity is limited to amounts held outside of the collateral trustsCollateral Trusts pursuant to the first loss reinsurance treaty (“FLRT”)FLRT with BAM. As of September 30, 2017,March 31, 2023, HG Re had $1 million of net unrestricted cash and investments and $112 million of accrued interest on the BAM Surplus Notes held outside the Collateral Trusts. As of March 31, 2023, HG Re had $745 million of statutory capital and surplus of $677 million, $702and $881 million of assets held in the collateral trusts pursuantCollateral Trusts.
On a monthly basis, BAM deposits cash equal to ceded premiums, net of ceding commissions, due to HG Re under the FLRT directly into the Regulation 114 Trust.  The Regulation 114 Trust target balance is equal to HG Re’s unearned premiums and unpaid loss and LAE reserves, if any.  If, at the end of any quarter, the Regulation 114 Trust balance is below the target balance, funds will be withdrawn from the Supplemental Trust and deposited into the Regulation 114 Trust in an amount equal to the FLRT withshortfall.  If, at the end of any quarter, the Regulation 114 Trust balance is above 102% of the target balance, funds will be withdrawn from the Regulation 114 Trust and deposited into the Supplemental Trust. 
The Supplemental Trust Target Balance is $603 million, less the amount of cash and securities in the Regulation 114 Trust in excess of its target balance.  If, at the end of any quarter, the Supplemental Trust balance exceeds the Supplemental Trust Target Balance, such excess may be distributed to HG Re.  The distribution will be made first as an assignment of accrued interest on the BAM Surplus Notes and less than $1second in cash and/or fixed income securities.  As the BAM Surplus Notes are repaid over time, the BAM Surplus Notes will be replaced in the Supplemental Trust by cash and fixed income securities. The Supplemental Trust balance as of March 31, 2023 was $580 million.
As of March 31, 2023, the Collateral Trusts held assets of $881 million, which included $521 million of cash and investments, outside$340 million of BAM Surplus Notes and $20 million of interest receivable on the collateral trusts.BAM Surplus Notes.
Effective January 1, 2014, HG Global and BAM agreed to changeThrough 2024, the interest rate on the BAM Surplus Notes for the five years ending December 31, 2018 from a fixed rate of 8.0% tois a variable rate equal to the one-year U.S. treasuryTreasury rate plus 300 basis points, set annually, whichannually. During 2023, the interest rate on the BAM Surplus Notes is 3.78% for 2017. Prior to the end of 2018, BAM has the option to extend the variable rate period for an additional three years.  At the end of the variable rate period,7.7%. Beginning in 2025, the interest rate will be fixed at the higher of the then current variable rate or 8.0%. Under its agreements with HG Global, BAM is required to seek regulatory approval to pay principal and interest on the BAM Surplus Notes only to the extent that its remaining qualified statutory capital and other capital resources continue to support its outstanding obligations, its business plan and its “AA/stable” rating from Standard & Poor’s. No payment of interestprincipal or principalinterest on the BAM Surplus Notes may be made without the approval of the New York State DepartmentNYDFS.
During the three months ended March 31, 2023, BAM made no repayments of Financial Services. BAM has stated its intention to seek regulatory approval to pay interest and principal on its surplus notes only to the extent that its remaining qualified statutory capital (“QSC”) exceeds $500 million and its remaining QSC and other capital resources continue to support its outstanding obligations, business plan and its AA stable rating from S&P.

In order to further support BAM’s long-term capital position and business prospects, on August 14, 2017, HG Global contributed the $203 million Series A BAM Surplus Notes intoor accrued interest. See Note 10 — “Municipal Bond Guarantee Insurance.”

Ark/WM Outrigger
During any 12-month period, GAIL, a class 4 licensed Bermuda insurer, has the Supplemental Trust at HG Re, HG Global’s wholly owned reinsurance subsidiary. The Supplemental Trust already held the $300 million Series B BAM Surplus Notes. Assets held in the Supplemental Trust serveability to collateralize HG Re’s obligations(i) make capital distributions of up to BAM under the first loss reinsurance treaty between BAM and HG Re. HG Global and BAM also changed the payment terms15% of the Series B Notes, so that payments will reduce principal and accrued interest on a pro rata basis, consistent with the payment terms on the Series A Notes. The terms of the Series B Notes had previously stipulated that payments would first reduce interest owed, then reduce principal owed once all accrued interest had been paid.
HG Global and BAM also made certain changes to the ceding commission arrangements under the reinsurance treaty between HG Re and BAM. These changes will accelerate growth in BAM’sits total statutory capital butper the previous year’s statutory financial statements, or (ii) make dividend payments of up to 25% of its total statutory capital and surplus per the previous year’s statutory financial statements, without prior approval of Bermuda regulatory authorities. Accordingly, GAIL will not impacthave the net risk premium ceded from BAMability to HG Re.

MediaAlpha:make capital distributions of up to $113 million during 2023, which is equal to 15% of its December 31, 2022 statutory capital of $755 million, subject to meeting all appropriate liquidity and solvency requirements. During the three months ended March 31, 2023, GAIL paid a $15 million dividend to its immediate parent.
During the first ninethree months of 2017, MediaAlpha paid $2ended March 31, 2023, Ark declared a $24 million of dividends, $1dividend to its shareholders, including $17 million ofto White Mountains, which was paid to White Mountains.on April 28, 2023. As of September 30, 2017, MediaAlpha had $5 million of net unrestricted cash.

Other Operations:
During the first nine months of 2017, White Mountains paid a $5 million common share dividend. As of September 30, 2017, the CompanyMarch 31, 2023, Ark and its intermediate holding companies had $1,741$27 million of net unrestricted cash, short-term investments and fixed maturity investments $774outside of its regulated and unregulated insurance and reinsurance operating subsidiaries.

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WM Outrigger Re is a special purpose insurer subject to regulation and supervision by the BMA. WM Outrigger Re does not require regulatory approval to pay dividends, however, its dividend capacity is limited to amounts held outside of the collateral trust pursuant to the reinsurance agreement with GAIL. As of March 31, 2023, WM Outrigger Re had less than $1 million of net unrestricted cash and investments held outside the collateral trust. As of March 31, 2023, WM Outrigger Re had $203 million of statutory capital and surplus and $206 million of assets held in the collateral trusts pursuant to the reinsurance agreement with GAIL.

Kudu
During three months ended March 31, 2023, Kudu distributed $56 million to unitholders, substantially all of which was paid to White Mountains. As of March 31, 2023, Kudu had $24 million of net unrestricted cash.

Other Operations
During three months ended March 31, 2023, White Mountains paid a $3 million common share dividend. As of March 31, 2023, the Company and its intermediate holding companies had $554 million of net unrestricted cash, short-term investments and fixed maturity investments, $254 million of MediaAlpha common stock, $357 million of common equity securities and $81$386 million of other long-term investments included in its Other Operations segment.private equity and hedge funds, ILS funds and unconsolidated entities.
As of September 30, 2017, White Mountains has contractual unfunded commitments of $105 million to fund certain other long-term investments and $10 million to fund a surplus note facility.
Financing
Financing

The following table summarizespresents White Mountains’s capital structure as of September 30, 2017March 31, 2023 and December 31, 2016:2022:
$ in MillionsMarch 31, 2023December 31, 2022
HG Global Senior Notes (1)
$146.6 $146.5 
Ark 2007 Subordinated Notes (1)
30.0 30.0 
Ark 2021 Subordinated Notes (1)(2)
154.5 153.7 
Kudu Credit Facility (1)(2)
191.6 208.3 
Other Operations debt (1)(2)
33.6 36.7 
Total debt556.3 575.2 
Noncontrolling interests—excluding BAM342.6 342.8 
Total White Mountains’s common shareholders’ equity3,902.4 3,746.9 
Total capital4,801.3 4,664.9 
Time-value discount on expected future payments on the BAM Surplus Notes (3)
(93.4)(95.1)
HG Global’s unearned premium reserve (3)
243.3 242.1 
HG Global’s net deferred acquisition costs (3)
(69.4)(69.0)
Total adjusted capital$4,881.8 $4,742.9 
Total debt to total adjusted capital11.4 %12.1 %
($ in millions) September 30,
2017		 December 31,
2016
WTM Bank Facility $—
 $—
MediaAlpha Bank Facility, carrying value 9.4
 —
Previous MediaAlpha Bank Facility, carrying value —
 12.7
Total debt in continuing operations 9.4
 12.7
Debt included in discontinued operations —
 273.2
Total debt 9.4
 285.9
Non-controlling interest—OneBeacon Ltd. —
 244.6
Non-controlling interests—other, excluding mutuals and reciprocals 28.6
 35.8
Total White Mountains’s common shareholders’ equity 3,468.8
 3,582.7
Total capital 3,506.8
 4,149.0
Time-value discount on expected future payments on the BAM Surplus Notes (1)
 (161.8) —
HG Global’s unearned premium reserve (1)
 88.4
 —
HG Global’s net deferred acquisition costs (1)
 (19.6) —
Total adjusted capital $3,413.8
 $4,149.0
     
Total debt to total adjusted capital 0.3% 6.9%
(1) See Note 7 — “Debt” for details of debt arrangements.
(1) (2) Net of unamortized issuance costs.
(3) Amount reflects White Mountains'sMountains’s preferred share ownership in HG Global of 96.9%.



Management believes that White Mountains has the flexibility and capacity to obtain funds externally as needed through debt or equity financing on both a short-term and long-term basis. However, White Mountains can provide no assurance that, if needed, it would be able to obtain additional debt or equity financing on satisfactory terms, if at all.
White Mountains has an unsecured revolving credit facility with a syndicate of lenders administered by Wells Fargo Bank, N.A., which has a total commitment of $425 million and a maturity date of August 14, 2018 (the “WTM Bank Facility”). During the third quarter of 2017, White Mountains borrowed $350 million under the WTM Bank Facility to partially fund a tender offer and subsequently repaid the $350 million after receiving the proceeds from the OneBeacon Transaction. White Mountains borrowed the funds As of September 30, 2017, the WTM Bank Facility was undrawn.
The WTM Bank Facility contain various affirmative, negative and financial covenants that White Mountains considers to be customary for such borrowings, including certain minimum net worth and maximum debt to capitalization standards. These covenants can restrict White Mountains in several ways, including its ability to incur additional indebtedness. An uncured breach of these covenants could result in an event of default under the WTM Bank Facility, which would allow lenders to declare any amounts owed under the WTM Bank Facility to be immediately due and payable. In addition, a default under the WTM Bank Facility could occur if certain of White Mountains’s subsidiaries fail to pay principal and interest on a credit facility, mortgage or similar debt agreement (collectively, “covered debt”), or fail to otherwise comply with obligations in such covered debt agreements where such a default gives the holder of the covered debt the right to accelerate at least $75 million of principal amount of covered debt.
It is possible that, in the future, one or more of the rating agencies may lower White Mountains’s existing ratings. If one or more of its ratings were lowered, White Mountains could incur higher borrowing costs on future borrowings and its ability to access the capital markets could be impacted.
On May 12, 2017, MediaAlpha entered into a secured credit facility (the “MediaAlpha Bank Facility”) with Western Alliance Bank, which has a total commitment of $20 million and has a maturity date of May 12, 2020.  The MediaAlpha Bank Facility replaced MediaAlpha’s previous credit facility (the “Previous MediaAlpha Bank Facility”), which had a total commitment of $20 million. The MediaAlpha Bank Facility consists of a $5 million term loan facility, which had an outstanding balance of $3 million as of September 30, 2017, and a revolving credit facility for $15 million, which had an outstanding balance of $6 million as of September 30, 2017. During the nine months ended September 30, 2017, MediaAlpha borrowed $5.0 million on the term loan and $6.0 million on the revolving loan, under the MediaAlpha Bank Facility. During the nine months ended September 30, 2017, MediaAlpha repaid $13 million under the Previous MediaAlpha Bank Facility. The MediaAlpha Bank Facility carries a variable interest rate that is based on the Prime Rate, as published by the Wall Street Journal, plus a spread of 1.5% on the term loan facility and 0.25% on the revolving credit facility.
The MediaAlpha Bank Facility is secured by intellectual property and the common stock of MediaAlpha’s subsidiaries, and contains various affirmative, negative and financial covenants that White Mountains considers to be customary for such borrowings, including a maximum leverage ratio. 


Covenant Compliance
As of September 30, 2017,March 31, 2023, White Mountains was in compliance in all material respects with all of the covenants under all of its debt instruments and expects to remain in compliance for the foreseeable future.instruments.



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Share Repurchases

Repurchase Programs
White Mountains’s boardBoard of directorsDirectors has authorized the Company to repurchase its common shares from time to time, subject to market conditions. The repurchase authorizations do not have a stated expiration date. As of September 30, 2017,March 31, 2023, White Mountains may repurchase an additional 643,130306,556 shares under these boardBoard authorizations. In addition, from time to time, White Mountains has also repurchased its common shares through tenderself-tender offers that were separately approved by its boardBoard of directors. Directors.
During the third quarter of 2017,three months ended March 31, 2023, White Mountains completed a "modified Dutch auction" tender offer, through which it repurchased 586,732and retired 18,623 of its common shares for $25 million at a purchasean average share price of $875 per share for a total cost of$1,360, which was approximately $515 million, including expenses.
The following table presents common shares repurchased by the Company through the first 10 months of 2017 and 2016, as well as the average price per share as a percent of adjusted book value per share. When applicable, the average price per share as a percent of adjusted book value per share including the estimated gain from significant transactions is also presented.
        Average price per share as % of
Dates Shares Repurchased Cost (millions) Average price per share 
Adjusted book value per share(1)
 
Adjusted book value per share, including estimated
transaction gains (2)
           
1st quarter 2017 7,699
 $6.4
 $836.05
 105% N/A
2nd quarter 2017 3,184
 2.8
 869.70
 112% 97%
3rd quarter 2017 821,842
 714.7
 869.60
 96% N/A
Year-to-date September 30, 2017 832,725
 723.9
 869.29
 96% N/A
October 2017 —
 —
 —
 N/A
 N/A
Year-to-date October 31, 2017(3)
 832,725
 $723.9
 $869.29
 96% N/A
           
1st quarter 2016 228,688
 $172.7
 $755.36
 108% 95%
2nd quarter 2016 463,276
 374.7
 808.76
 103% 101%
3rd quarter 2016 389,373
 319.4
 820.17
 103% N/A
Year-to-date September 30, 2016 1,081,337
 866.8
 801.57
 100% N/A
October 2016 13,458
 11.1
 824.48
 103% N/A
Year-to-date October 31, 2016(3)
 1,094,795
 $877.9
 $801.86
 100% N/A
(1) Average price per share is expressed as a percentage87% of White Mountains'sMountains’s adjusted book value per share as of March 31, 2017 for2023. Of the shares White Mountains repurchased in the first quarter 2017, June 30, 2017 for the second quarter 2017 and September 30, 2017 for all other 2017 periods presented and as of March 31, 2016 for the first quarter 2016, June 30, 2016 for the second quarter 2016 and September 30, 2016 for all other 2016 periods presented periods presented.
(2) For the second quarter 2017, adjusted book value per share includes estimated gain from the OneBeacon transaction. For the first quarter 2016, adjusted book value per share includes estimated gain from the sale of Sirius Group. For the second quarter 2016, adjusted book value per share includes estimated gain from the sale of Tranzact.
(3) Includes 10,993 and 8,022 common shares repurchased by the Company during the first tenthree months of 2017 and 20162023, 4,629 were to satisfy employee income tax withholding pursuant to employee benefit plans. Shares repurchased pursuant to employee benefit plans, which do not reduce the board authorization referred to above.amount available under the Board repurchase authorizations.


Cash Flows


Detailed information concerning White Mountains’s cash flows from continuing operations during the ninethree months ended September 30, 2017March 31, 2023 and 20162022 follows:
 
Cash flows from continuing operations for the ninethree months ended September 30, 2017March 31, 2023 and September 30, 2016March 31, 2022

Net cash used for continuingprovided from (used for) operations was $64$86 million infor the first ninethree months of 2017 and $175 million in the first nine months of 2016. Cash used for continuing operations was lower in the first nine months of 2017ended March 31, 2023 compared to $(46) million for the first ninethree months of 2016, primarily due to payments related to the settlement of certain liabilities and transaction costs in connection with the Sirius Group sale in the first nine months of 2016. This decreaseended March 31, 2022. The increase in cash usedprovided from operations was driven primarily by cash provided from Ark’s operations in 2023 and proceeds from Kudu’s Participation Contracts sold, partially offset by an increase in incentive compensationcontributions to Kudu’s Participation Contracts. As of March 31, 2023, the Company and employee retirement payments in the first nine monthsits intermediate holding companies had $554 million of 2017 relative to the first nine monthsnet unrestricted cash, short-term investments and fixed maturity investments, $254 million of 2016. White Mountains made long-term incentive payments totaling $22MediaAlpha common stock, $357 million of common equity securities and $41$386 million during the first nine months of 2017private equity funds, hedge funds, ILS funds and the first nine months of 2016. During the first nine months of 2017, White Mountains also paid $28 million in cash related to the departures of the Company’s former Chairman and CEO and former CFO. White Mountains does not believe these trends will have a meaningful impact on its future liquidity or its ability to meet its future cash requirements.unconsolidated entities.


Cash flows from investing and financing activities for the ninethree months ended September 30, 2017March 31, 2023

Financing and Other Capital Activities
During the first ninethree months of 2017,ended March 31, 2023, the Company declared and paid a $5$3 million cash dividend to its common shareholders.
During the first ninethree months of 2017,ended March 31, 2023, White Mountains repurchased and retired 832,72518,623 of its common shares for $724 million, which included 10,993 for $9 million under$25 million. Of the shares White Mountains repurchased in the first three months of 2023, 4,629 were to satisfy employee income tax withholding pursuant to employee benefit plans for statutory withholding tax payments.plans.
During the first ninethree months of 2017, White Mountains borrowed and repaid $350ended March 31, 2023, BAM received $12 million under the WTM Bank Facility.in MSC.
During the first ninethree months of 2017, BAM received $26ended March 31, 2023, Kudu repaid $17 million in surplus contributions from its members.
During the first nine months of 2017, MediaAlpha paid $2 million of dividends, of which $1 million was paid to White Mountains.
During the first nine months of 2017, MediaAlpha borrowed $11 million and repaid $2 millionterm loans under the MediaAlpha Bank Facility and repaid $13 million under the Previous MediaAlpha BankKudu Credit Facility.
During the first nine months of 2017, Wobi borrowed ILS 43 million (approximately $12 million) from White Mountains under an internal credit facility.
During the first nine months of 2017, White Mountains received $45 million of dividends from OneBeacon.

Acquisitions and Dispositions
On August 1, 2017, White Mountains purchased 37,409 newly-issued preferred shares of Buzzmove for GBP 4 million (approximately $5 million based upon the foreign exchange spot rate at the date of acquisition) and 5,808 common shares from the company founders for GBP $0.5 million (approximately $0.7 million based upon the foreign exchange spot rate at the date of acquisition).
On September 28, 2017, OneBeacon closed its definitive merger agreement with Intact and White Mountains received proceeds of $1,299 million, or $18.10 per OneBeacon common share.

Cash flows from investing and financing activities for the ninethree months ended September 30, 2016March 31, 2022

Financing and Other Capital Activities
During the first ninethree months of 2016,ended March 31, 2022, the Company declared and paid a $5$3 million cash dividend to its common shareholders.
During the first ninethree months of 2016,ended March 31, 2022, White Mountains repurchased and retired 1,081,33737,435 of its common shares for $867 million, which included 8,022 common$39 million. Of the shares for $6 million underWhite Mountains repurchased in the first three months of 2022, 4,011 were to satisfy employee income tax withholding pursuant to employee benefit plans for statutory withholding tax payments.plans.
During the first ninethree months of 2016, White Mountains borrowed a total of $350 million and repaid a total of $400 million under the WTM Bank Facility.
During the first nine months of 2016, HG Global raised $6 million of additional capital through the issuance of preferred shares, 97% of which were purchased by White Mountains. HG Global used $3 million of the proceeds to repay and cancel an internal credit facility with White Mountains.
During the first nine months of 2016,ended March 31, 2022, BAM received $28$12 million in surplus contributions from its members.MSC.
During the first nine months of 2016, MediaAlpha paid $2 million of dividends, of which $1 million was paid to White Mountains.
During the first nine months of 2016, MediaAlpha borrowed $3 million under the Previous MediaAlpha Bank Facility.
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During the first nine months of 2016, White Mountains contributed $15 million to WM Advisors.
During the first nine months of 2016, White Mountains received $45 million of dividends from OneBeacon.


Acquisitions and Dispositions
On January 7, 2016, Wobi settled its acquisition of the remaining share capital of Cashboard for NIS 16 million (approximately $4 million based upon the foreign exchange spot rate at the date of acquisition).
On February 1, 2016, Symetra closed its definitive merger agreement with Sumitomo Life and White Mountains received proceeds of $658 million, or $32.00 per Symetra common share.
On February 26, 2016, White Mountains paid $8 million in settlement of the contingent purchase adjustment for its acquisition of MediaAlpha in 2014.
On April 18, 2016, White Mountains completed the sale of Sirius Group to CMI for approximately $2.6 billion. $162 million of this amount was used to purchase certain assets to be retained by White Mountains out of Sirius Group, including shares of OneBeacon.
On April 27, 2016, White Mountains purchased NIS 16 million (approximately $4 million based upon the foreign exchange spot rate at the date of acquisition) of convertible preferred shares of Wobi, increasing its ownership share to 96.5% on a fully converted basis.
On July 21, 2016, White Mountains completed the sale of Tranzact and received net proceeds of $221 million.
On August 4, 2016, White Mountains purchased 110,461 common shares of Buzzmove for GBP 4 million (approximately $5 million based upon the foreign exchange spot rate at the date of acquisition) and 54,172 shares of newly issued convertible preferred shares for GBP 2 million (approximately $3 million based upon the foreign exchange spot rate at the date of acquisition), representing a 70.9% ownership share of Buzzmove on a fully converted basis.

FAIR VALUE CONSIDERATIONS
General
White Mountains records certain assets and liabilities at fair value in its consolidated financial statements, with changes therein recognized in current period earnings. In addition, White Mountains discloses estimated fair value for certain liabilities measured at historical or amortized cost. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants (an exit price) at a particular measurement date. Fair value measurements are categorized into a hierarchy that distinguishes between inputs based on market data from independent sources (“observable inputs”) and a reporting entity’s internal assumptions based upon the best information available when external market data is limited or unavailable (“unobservable inputs”). Quoted prices in active markets for identical assets have the highest priority (“Level 1”), followed by observable inputs other than quoted prices including prices for similar but not identical assets or liabilities (“Level 2”), and unobservable inputs, including the reporting entity’s estimates of the assumptions that market participants would use, having the lowest priority (“Level 3”).
Assets and liabilities carried at fair value include substantially all of the investment portfolio, derivative instruments, both exchange traded and over the counter instruments, and reinsurance assumed liabilities associated with variable annuity benefit guarantees. Valuation of assets and liabilities measured at fair value require management to make estimates and apply judgment to matters that may carry a significant degree of uncertainty. In determining its estimates of fair value, White Mountains uses a variety of valuation approaches and inputs. Whenever possible, White Mountains estimates fair value using valuation methods that maximize the use of observable prices and other inputs. Where appropriate, assets and liabilities measured at fair value have been adjusted for the effect of counterparty credit risk.

Invested Assets
As of September 30, 2017, approximately 93% of the investment portfolio recorded at fair value was priced based upon quoted market prices or other observable inputs. Investments valued using Level 1 inputs include fixed maturity investments, primarily investments in U.S. Treasuries, short-term investments, which include U.S. Treasury Bills and common equity securities. Investments valued using Level 2 inputs include fixed maturity investments, which have been disaggregated into classes, including debt securities issued by corporations, mortgage and asset-backed securities, municipal obligations, and foreign government, agency and provincial obligations. Investments valued using Level 2 inputs also include certain passive exchange traded funds (“ETFs”) that track U.S. stock indices such as the S&P 500 but are traded on foreign exchanges, which management values using the fund manager’s published NAV to account for the difference in market close times. Fair value estimates for investments that trade infrequently and have few or no observable market prices are classified as Level 3 measurements. Investments valued using Level 3 fair value estimates are based upon unobservable inputs and include investments in certain fixed maturity investments, equity securities and other long-term investments where quoted market prices are unavailable or are not considered reasonable. Transfers between levels are based on investments held as of the beginning of the period.

White Mountains uses brokers and outside pricing services to assist in determining fair values. For investments in active markets, White Mountains uses the quoted market prices provided by outside pricing services to determine fair value. The outside pricing services White Mountains uses have indicated that they will only provide prices where observable inputs are available. In circumstances where quoted market prices are unavailable or are not considered reasonable, White Mountains estimates the fair value using industry standard pricing methodologies and observable inputs such as benchmark yields, reported trades, broker-dealer quotes, issuer spreads, benchmark securities, bids, offers, credit ratings, prepayment speeds, reference data including research publications and other relevant inputs. Given that many fixed maturity investments do not trade on a daily basis, the outside pricing services evaluate a wide range of fixed maturity investments by regularly drawing parallels from recent trades and quotes of comparable securities with similar features. The characteristics used to identify comparable fixed maturity investments vary by asset type and take into account market convention.
White Mountains’s process to assess the reasonableness of the market prices obtained from the outside pricing sources covers substantially all of its fixed maturity investments and includes, but is not limited to, the evaluation of pricing methodologies and a review of the pricing services’ quality control procedures on at least an annual basis, a comparison of its invested asset prices obtained from alternate independent pricing vendors on at least a semi-annual basis, monthly analytical reviews of certain prices and a review of the underlying assumptions utilized by the pricing services for select measurements on an ad hoc basis throughout the year. White Mountains also performs back-testing of selected sales activity to determine whether there are any significant differences between the market price used to value the security prior to sale and the actual sale price on an ad-hoc basis throughout the year. Prices provided by the pricing services that vary by more than 5% and $1.0 million from the expected price based on these assessment procedures are considered outliers. Also considered outliers are prices that have not changed from period to period and prices that have trended unusually compared to market conditions. In circumstances where the results of White Mountains’s review process does not appear to support the market price provided by the pricing services, White Mountains challenges the vendor provided price. If White Mountains cannot gain satisfactory evidence to support the challenged price, it relies upon its own pricing methodologies to estimate the fair value of the security in question.
The valuation process described above is generally applicable to all of White Mountains’s fixed maturity investments. For more detail on the techniques and inputs specific to asset classes within White Mountains’s fixed maturity investments, see Note 3 — “Investment Securities.”
Level 3 valuations are generated from techniques that use assumptions not observable in the market. These unobservable assumptions reflect White Mountains’s assumptions that market participants would use in valuing the investment. Generally, certain securities may start out as Level 3 when they are originally issued but as observable inputs become available in the market, they may be reclassified to Level 2.
White Mountains employs a number of procedures to assess the reasonableness of the fair value measurements for its other long-term investments, including obtaining and reviewing periodic and audited annual financial statements of hedge funds and private equity funds and discussing each fund’s pricing with the fund manager throughout the year. However, since the fund managers do not provide sufficient information to evaluate the pricing inputs and methods for each underlying investment, the inputs are considered to be unobservable. The fair value of White Mountains’s investments in hedge funds and private equity funds has generally been determined using the fund manager’s NAV.


NON-GAAP FINANCIAL MEASURES

This report includes sixfive non-GAAP financial measures (i) adjusted book value per share, (ii) percentage change in adjusted book value per share for the third quarter of 2017, which includes the estimated gain from the OneBeacon Transaction as if it had closed on June 30, 2017, (iii) adjusted capital, (iv) return on common equity securities and other long-term investments including high-yield fixed maturity investments, (v) return on fixed maturity investments excluding high-yield fixed maturity investments and (vi) earnings before interest, taxes, depreciation and amortization ("EBITDA"), that have been reconciled with from their most comparable GAAP financial measures.


Adjusted book value per share
Adjusted book value per share is a non-GAAP financial measure, which is derived by adjusting (i) the GAAP book value per share numerator and (ii) the common shares outstanding denominator, as described below.
The GAAP book value per share numerator is adjusted (i) to include a discount for the time value of money arising from the expectedmodeled timing of cash payments of principal and interest on the BAM Surplus Notes and (ii) to add back the unearned premium reserve, net of deferred acquisition costs, at HG Global. In addition, the number of common shares outstanding used in the calculation of adjusted book value per share are adjusted to exclude unearned restricted common shares, the compensation cost of which, at the date of calculation, has yet to be amortized. The calculation of adjusted book value per share also includes the dilutive effects of outstanding non-qualified options for periods prior to January 20, 2017, the expiration date of the non-qualified options.

Beginning in the second quarter of 2017, in its calculation of adjusted book value per share, White Mountains has included a discount for the time value of money arising from the expected timing of cash payments of principal and interest on the BAM Surplus Notes. Under GAAP, White Mountains is required to carry the BAM Surplus Notes, including accrued interest, at nominal value with no consideration for time value of money. Based on a debt service model that forecasts operating results for BAM through maturity of the surplus notes,BAM Surplus Notes, the present value of the BAM Surplus Notes, including accrued interest isand using an 8% discount rate, was estimated to be $172$96 million, $98 million and $167$125 million less than the nominal GAAP carrying values as of June 30, 2017March 31, 2023, December 31, 2022 and September 30, 2017. White Mountains has also included theMarch 31, 2022, respectively.
The value of HG Global’s unearned premium reserve, net of deferred acquisition costs. costs, was $179 million, $179 million and $160 million as of March 31, 2023, December 31, 2022 and March 31, 2022, respectively.
White Mountains believes these adjustments are useful to management and investors in analyzing the intrinsic value of HG Global, including the intrinsic value of the surplus notesBAM Surplus Notes and the value of the in-force business at HG Re, HG Global’s reinsurance subsidiary’s (HG Re’s) in-force business.subsidiary.
The denominator used in the calculation of adjusted book value per share equals the number of common shares outstanding, adjusted to exclude unearned restricted common shares, the compensation cost of which, at the date of calculation, has yet to be amortized. Restricted common shares are earned on a straight-line basis over their vesting periods. The reconciliation of GAAP book value per share to adjusted book value per share is included on page 53.44.


Kudu’s EBITDA and adjusted EBITDA
Kudu's EBITDA and adjusted EBITDA are non-GAAP financial measures. EBITDA is a non-GAAP financial measure that excludes interest expense on debt, income tax (expense) benefit, depreciation and amortization of other intangible assets from GAAP net income (loss). Adjusted EBITDA is a non-GAAP financial measure that excludes certain other items in GAAP net income (loss) in addition to those excluded from EBITDA. The growthadjustments relate to (i) net realized and unrealized investment gains (losses) on Kudu's Participation Contracts, (ii) non-cash equity-based compensation expense and (iii) transaction expenses. A description of each adjustment follows:
•Net realized and unrealized investment gains (losses) - Represents net unrealized investment gains and losses on Kudu’s Participation Contracts, which are recorded at fair value under GAAP, and realized investment gains and losses on Kudu’s Participation Contracts sold during the period.
•Non-cash equity-based compensation expense - Represents non-cash expenses related to Kudu’s management compensation that are settled with equity units in Kudu.
•Transaction expenses - Represents costs directly related to Kudu’s mergers and acquisitions activity, such as external lawyer, banker, consulting and placement agent fees, which are not capitalized and are expensed under GAAP.
White Mountains believes that these non-GAAP financial measures are useful to management and investors in evaluating Kudu’s performance.The reconciliation of Kudu’s GAAP net income (loss) to EBITDA and adjusted book value per shareEBITDA is included on page 53 reflects55.


63

Total consolidated portfolio return excluding MediaAlpha
Total consolidated portfolio return excluding MediaAlpha is a non-GAAP financial measure that removes the estimated gainnet investment income and net realized and unrealized investment gains (losses) from White Mountains’s investment in MediaAlpha. White Mountains believes this measure to be useful to management and investors by showing the OneBeacon Transaction as if it had been calculated and realized on June 30, 2017. A reconciliationunderlying performance of White Mountains’s investment portfolio without regard to MediaAlpha.
The following tables present reconciliations from GAAP to the reported percentage is as follows:percentages for the three months ended March 31, 2023 and 2022:
Three Months Ended March 31, 2023Three Months Ended March 31, 2022
GAAP ReturnRemove MediaAlphaReturn - Excluding MediaAlphaGAAP ReturnRemove MediaAlphaReturn - Excluding MediaAlpha
Total consolidated portfolio
   return		4.5 %(1.5)%3.0 %0.8 %(0.5)%0.3 %
  
As of
September 30, 2017
 
As of
June 30, 2017
 Growth %
GAAP book value per share $925.04
 $791.61
 16.9%
Estimated gain from OneBeacon Transaction as of June 30, 2017 —
 116.00
  
GAAP book value per share including the estimated gain from the
 OneBeacon Transaction as of June 30, 2017
 925.04
 907.61
 1.9%
Adjustments to book value per share (see reconciliation on page 53) (19.32) (17.84)  
Adjusted book value per share including the estimated
     gain from the OneBeacon Transaction as of June 30, 2017
 $905.72
 $889.77
 1.8%


Total adjusted capital
Total capital at White Mountains is comprised of White Mountains’s common shareholders’ equity, debt and non-controllingnoncontrolling interests other than non-controllingnoncontrolling interests attributable to mutuals and reciprocals.BAM. Total adjusted capital is a non-GAAP financial measure, which is derived by adjusting total capital (i) to include a discount for the time value of money arising from the expected timing of cash payments of principal and interest on the BAM Surplus Notes and (ii) to add back the unearned premium reserve, net of deferred acquisition costs, at HG Global. The reconciliation of total capital to total adjusted capital is included on page 70.61.



In the third quarter of 2016, White Mountains purchased high-yield fixed maturity investments, which are U.S. dollar denominated publicly traded and 144A debt securities issued by corporations with generally at least one rating between “B-” and “BB+” inclusive by S&P or similar ratings from other rating agencies. Given the risk profile of these investments, the returns on high-yield fixed maturity investments have been included with the returns on common equity securities and other long-term investments and excluded from the returns on fixed income investments. A reconciliation of GAAP returns to the reported returns are as follows:

  September 30, 2017
  Three Months Ended Nine Months Ended
  GAAP return 
Impact of high-yield fixed maturity investments (1)
 Reported return GAAP return 
Impact of high-yield fixed maturity investments (1)
 Reported return
Common equity securities and other long-term investment returns 2.6
% (0.2)% 2.4
% 9.0
% (0.4)% 8.6
%
Fixed income investment returns 1.0
% (0.1)% 0.9
% 3.0
% (0.3)% 2.7
%
(1) High-yield fixed maturity investments returned 1.7% and 7.1% for the third quarter and first nine months of 2017.

In the second quarter of 2017, MediaAlpha became a reportable segment, and White Mountains has included MediaAlpha’s EBITDA calculation as a non-GAAP financial measure. EBITDA is defined as net income (loss) excluding interest expense on debt, income tax benefit (expense), depreciation and amortization. White Mountains believes that this non-GAAP financial measure is useful to management and investors in analyzing MediaAlpha’s economic performance without the effects of interest rates, levels of debt, effective tax rates, depreciation and amortization resulting from purchase accounting. In addition, White Mountains believes that investors use EBITDA as a supplemental measurement to evaluate the overall operating performance of companies within the same industry. See page 63 for the reconciliation of MediaAlpha’s GAAP net income to EBITDA.

CRITICAL ACCOUNTING ESTIMATES
As described in White Mountains’s Annual Report on Form 10-K for the year ended December 31, 2016 under “CRITICAL ACCOUNTING ESTIMATES”, the determination of the recoverability of the BAM Surplus Notes is based on a debt service model that forecasts operating results for BAM through maturity of the BAM Surplus Notes. In its most recent update of this model, White Mountains has (1) reflected the impact of the changes to the terms of the BAM Surplus Notes on expected future payments and (2) made more conservative assumptions about BAM’s future operating results, specifically forecasted increases in annual par insured volume and total premium rates.  As a result, although the model continues to project that BAM can begin making payments on the BAM Surplus Notes in 2019, White Mountains now projects that the BAM Surplus Notes will be fully repaid approximately eight years prior to final maturity, which is seven years later than projected under the previous forecast.
Refer to the Company’s 20162022 Annual Report on Form 10-K for a complete discussion regarding White Mountains’s critical accounting estimates.

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FORWARD-LOOKING STATEMENTS
 
This report may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included or referenced in this report which address activities, events or developments which White Mountains expects or anticipates will or may occur in the future are forward-looking statements. The words “could”, “will”, “believe”, “intend”, “expect”, “anticipate”, “project”, “estimate”, “predict” and similar expressions are also intended to identify forward-looking statements. These forward-looking statements include, among others, statements with respect to White Mountains’s:

changes•change in book value per share, adjusted book value per share or return on equity;
•business strategy;
•financial and operating targets or plans;
•incurred loss and loss adjustment expensesLAE and the adequacy of its loss and loss adjustment expenseLAE reserves and related reinsurance;
•projections of revenues, income (or loss), earnings (or loss) per share, EBITDA, adjusted EBITDA, dividends, market share or other financial forecasts;forecasts of White Mountains or its businesses;
•expansion and growth of its business and operations; and
•future capital expenditures.

These statements are based on certain assumptions and analyses made by White Mountains in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors believed to be appropriate in the circumstances. However, whether actual results and developments will conform withto its expectations and predictions is subject to risks and uncertainties that could cause actual results to differ materially from expectations, including:

•the risks associated with Item 1A ofthat are described from time to time in White Mountains’s 2016filings with the Securities and Exchange Commission, including but not limited to White Mountains’s Annual Report on Form 10-K;10-K for the fiscal year ended December 31, 2022;
•claims arising from catastrophic events, such as hurricanes, windstorms, earthquakes, floods, fires,wildfires, tornadoes, tsunamis, severe winter weather, public health crises, terrorist attacks, war and war-like actions, explosions, infrastructure failures or severe winter weather;cyber attacks;
•recorded loss reserves subsequently proving to have been inadequate;
•the continued availabilitymarket value of capitalWhite Mountains’s investment in MediaAlpha;
•the trends and financing;uncertainties from the COVID-19 pandemic, including judicial interpretations on the extent of insurance coverage provided by insurers for COVID-19 pandemic related claims;
general economic, market or business conditions;
•business opportunities (or lack thereof) that may be presented to it and pursued;
•actions taken by rating agencies, such as financial strength or credit ratings downgrades or placing ratings on negative watch;
•the continued availability of capital and financing;
•deterioration of general economic, market or business conditions, including due to outbreaks of contagious disease (including the COVID-19 pandemic) and corresponding mitigation efforts;
•competitive forces, including the conduct of other property and casualty insurers and reinsurers;insurers;
•changes in domestic or foreign laws or regulations, or their interpretation, applicable to White Mountains, its competitors or its customers; and
an economic downturn or other economic conditions adversely affecting its financial position;
recorded loss reserves subsequently proving to have been inadequate;
actions taken by ratings agencies from time to time, such as financial strength or credit ratings downgrades or placing ratings on negative watch; and
•other factors, most of which are beyond White Mountains’s control.

Consequently, all of the forward-looking statements made in this report are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by White Mountains will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, White Mountains or its business or operations. White Mountains assumes no obligation to publicly update any such forward-looking statements, whether as a result of new information, future events or otherwise.


65

Item 3.Quantitative and Qualitative Disclosures About Market Risk.

Item 3.Quantitative and Qualitative Disclosures About Market Risk.

Refer to White Mountains’s 20162022 Annual Report on Form 10-K and in particular Item 7A. - “Quantitative and Qualitative Disclosures About Market Risk”. Risk.”



Item 4.
Controls and Procedures.
Item 4.Controls and Procedures.
 
The Principal Executive Officer (“PEO”) and the Principal Financial Officer (“PFO”) of White Mountains have evaluated the effectiveness of its disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this report.March 31, 2023. Based on that evaluation, the PEO and PFO have concluded that White Mountains’s disclosure controls and procedures are adequate and effective.
There were no significant changes with respect to the Company’sWhite Mountains’s internal control over financial reporting or in other factors that occurred during the first quarter of 2023 that have materially affected, or are reasonably likely to materially affect White Mountains’s internal control over financial reporting during the quarter ended September 30, 2017.reporting.


Part II.OTHER INFORMATION
Part II.OTHER INFORMATION
 
Item 1.
Legal Proceedings.
Item 1.Legal Proceedings.
 
None.


Item 1A. Risk Factors.

There have been no material changes to any of the risk factors previously disclosed in the Registrant’s 20162022 Annual Report
on Form 10-K.



Item 2.Issuer Purchases of Equity Securities.

Item 2.Issuer Purchases of Equity Securities.

Months 
Total Number of
Shares Purchased
 
Average Price
Paid per Share
 
Total Number of Shares 
Purchased as Part of 
Publicly Announced Plan (1)
 
Maximum Number
of Shares that May
Yet Be Purchased
Under the Plan (1)
July 1-July 31, 2017 235,000
 $850.00
 235,000
 643,130
August 1-August 31, 2017 —
 $—
 —
 643,130
September 1-September 30, 2017 586,842
 $877.44
 —
 643,130
Total 821,842
 $869.60
 235,000
 643,130
MonthsTotal Number of
Shares Purchased		Average Price
Paid per Share
Total Number of Shares 
Purchased as Part of 
Publicly Announced Plans (1)
Maximum Number
of Shares that May
Yet Be Purchased
Under the Plans (1)
January 1 - January 31, 20234,629 $1,414.33 — 320,550 
February 1 - February 28, 2023— $— — 320,550 
March 1 - March 31, 202313,994 $1,342.42 13,994 306,556 
Total18,623 $1,360.30 13,994 306,556 
(1) White Mountains’s boardBoard of directorsDirectors has authorized the Company to repurchase its common shares, from time to time, subject to market conditions. The repurchase authorizations do not have a stated expiration date.


Item 3. Defaults Upon Senior Securities.
 
None.
 
Item 4.Mine Safety Disclosures.

Item 4.Mine Safety Disclosures.

None.
 
Item 5.
Other Information.
Item 5.Other Information.
 
None.
 

66

Item 6.Exhibits.
Item 6.
Exhibits.
(a)Exhibit numberName
2.1 — 
103.1 —
— 
113.2 —
— 
31.1—
— 
31.2—
— 
32.1—
— 
32.2—
— 
101—
— 		The following financial information from White Mountains’s Quarterly Report on Form 10-Q forXBRL Instance Document - the quarter ended September 30, 2017 formattedinstance document does not appear in XBRL: (i) Consolidated Balance Sheets, September 30, 2017 and December 31, 2016; (ii) Consolidated Statements of Operations and Comprehensive Income, Three and Nine Months Ended September 30, 2017 and 2016; (iii) Consolidated Statements of Changes in Equity, Nine Months Ended September 30, 2017 and 2016; (iv) Consolidated Statements of Cash Flows, Nine Months Ended September 30, 2017 and 2016; and (v) Notes to Consolidated Financial Statements. *the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
(*)Included herein
*Included herein
**
Not included as an exhibit as the information is contained elsewhere within this report. See Note 9 — “Earnings Per Share” of the Notes to Consolidated Financial Statements.

SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
WHITE MOUNTAINS INSURANCE GROUP, LTD.
(Registrant)
Date:November 8, 2017May 9, 2023
By: /s/ Michaela J. Brian PalmerHildreth
Michaela J. Brian PalmerHildreth
Managing Director and Chief Accounting Officer


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