SCHEDULE 14A INFORMATION

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the Securities Exchange Act of 1934 (Amendment No. )

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240.14a-12

Fund American Enterprises Holdings, Inc.White Mountains Insurance Group Ltd.
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NOTICE OF 1999
ANNUAL MEETING
OF SHAREHOLDERS
AND PROXY STATEMENT
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Notice of 2000
Annual Meeting
of Shareholders
and Proxy Statement
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TABLE OF CONTENTSTable of Contents
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PAGE
----

LETTER FROM K. THOMAS KEMP, CEO AND PRESIDENT . . . . . . . . . . . . . . 1

NOTICE OF 1999 ANNUAL MEETING OF SHAREHOLDERS. . . . . . . . . . . . . . . 2

PROXY STATEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

PROPOSAL 1: ELECTION OF DIRECTORS. . . . . . . . . . . . . . . . . . . 3

Procedures for Nominating Directors . . . . . . . . . . . . . . . . . 6

Voting Securities and Principal Holders Thereof . . . . . . . . . . . 7

Compensation of Directors . . . . . . . . . . . . . . . . . . . . . . 8

Compensation of Executive Officers. . . . . . . . . . . . . . . . . . 9

Reports of the Compensation Committees on
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . 11

Shareholder Return Graph. . . . . . . . . . . . . . . . . . . . . . . 14

Compensation Plans. . . . . . . . . . . . . . . . . . . . . . . . . . 15

Compensation Committee Interlocks and Insider Participation
in Compensation Decisions . . . . . . . . . . . . . . . . . . . . . 16

PROPOSAL 2: CHARTER AMENDMENT TO CHANGE THE CORPORATE NAME . . . . . . 16

PROPOSAL 3: CHARTER AMENDMENT TO REDUCE THE NUMBER OF
AUTHORIZED SHARES OF CAPITAL STOCK . . . . . . . . . . . . . . . . . 17

PROPOSAL 4: APPOINTMENT OF INDEPENDENT AUDITORS. . . . . . . . . . . . 17

OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PAGE

LETTER FROM JOHN J. BYRNE....................................................................... 1

NOTICE OF 2000 ANNUAL MEETING OF SHAREHOLDERS.................................................... 2

PROXY STATEMENT.................................................................................. 3

PROPOSAL 1: ELECTION OF DIRECTORS............................................................ 3

Procedures for Nominating Directors....................................................... 6

Voting Securities and Principal Holders Thereof........................................... 7

Compensation of Directors................................................................. 10

Compensation of Executive Officers........................................................ 11

Reports of the Compensation Committees on Executive Compensation.......................... 13

Shareholder Return Graph.................................................................. 16

Compensation Plans........................................................................ 17

Compensation Committee Interlocks and Insider Participation in Compensation Decisions .... 18

PROPOSAL 2: APPOINTMENT OF INDEPENDENT AUDITORS.............................................. 18

OTHER MATTERS................................................................................. 18

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Fund American Enterprises Holdings, Inc.White Mountains Insurance Group, Ltd. (the "Company" and, together with its
subsidiaries, "Fund American""White Mountains") is a New Hampshire-basedBermuda-domiciled financial services
holding company. The Company's principal businesses are conducted through White
Mountains Holdings, Inc. and its operating subsidiaries ("White Mountains"). White Mountains' insurance operations are conducted through its
subsidiaries and affiliates in the businesses of property and casualty
insurance, reinsurance and financial guaranty insurance.

White Mountains' mortgage banking operations are
conducted through Source One Mortgage Services Corporation and its subsidiaries
("Source One").

White Mountains' insurance operations principally include: (i) Folksamerica
Holding Company, Inc. ("Folksamerica"), a New York-based broker-market
reinsurer; (ii) ValleyPeninsula Insurance CompaniesCompany ("Valley"PIC"), a collection of
Oregon-basedMaryland-based property
and casualty insurance companies;insurer; (iii) Charter IndemnityAmerican Centennial Insurance Company ("Charter"ACIC"), a
Texas-based non-standard automobileDelaware-based property and casualty insurer; (iv) White
MountainsBritish Insurance Company of
Cayman ("WMIC"BICC"), a New Hampshire-based commercialCayman Island-based property and casualty insurer; (v) a 25%26%
economic interest in Financial Security Assurance Holdings Ltd. ("FSA"), a New
York-based Aaa/AAA writer of financial guarantee insurance; and (vi) a 50% stake
in Main Street America Holdings, Inc. ("MSA"), a unit of National Grange Mutual
Insurance Company, a New Hampshire-based property and casualty insurer.

[LOGO]

K. THOMAS KEMP
PRESIDENT AND CHIEF EXECUTIVE OFFICER[WHITE MOUNTAINS LOGO]

JOHN J. BYRNE
CHAIRMAN

March 29, 199924, 2000

Dear Shareholder:

I cordiallyam pleased to invite you to attend the 19992000 Annual Meeting of Fund American
Enterprises Holdings, Inc.White Mountains
Insurance Group, Ltd., to be held on Thursday,Monday, May 27, 1999, at 9:00 a.m.22, 2000. This year's meeting
will take place onat the campus of Dartmouth College, not far
from our corporate officePrincess Hotel in Hanover, New Hampshire.Hamilton, Bermuda beginning at 9:00
a.m. Atlantic Time (8:00 a.m. Eastern Time). I welcome you all to join me for
the morning in beautiful New Hampshire.lovely Bermuda.

We will begin the meeting with a discussion and shareholder vote on the
proposals set forth in the accompanying Proxy Statement and on such other
matters properly brought before the meeting. At the meeting you will be asked to
consider and vote on the following issues:

1) to re-elect three directors to Class II and to elect one director to Class III;I, one director to Class II and four
directors to Class III and,

2) to change the name of the Company to "White Mountains Insurance Group,
Inc.";

3) to reduce the number of authorized shares of the Company's capital
stock; and

4) to ratify the appointment of independent auditors for 1999.

Proposals 1 and 42000.

The 2000 proposals are routine itemsmatters that are addressed annually and are
more fully explained herein. Proposals 2 and 3 require some background as to their
nature and purpose. With the acquisition of Folksamerica in August 1998, the
Company has largely concluded its seven year transformation (post Fireman's Fund
sale) from a lumpy collection of dissimilar assets (primarily passive
investments and mortgage operations) to a full-fledged financial services
operating company primarily focused on property and casualty insurance and
reinsurance. To highlight this transformation, I recommend changing the name of
the Company to "White Mountains Insurance Group, Inc." which I believe better
describes the Company's business focus and locale as well as the probable nature
of any future acquisitions. Also, since our initial public offering in 1985,
the Company has reduced its common shares outstanding from approximately
sixty-six million shares to less than six million shares today. In this regard,
I recommend a reduction in authorized shares of the capital stock of the Company
as further described herein.

This actionManagement expects to provide shareholders with a brief summary of each of
its major operating subsidiaries and affiliates at the meeting. For those of
you unable to attend the 2000 Annual Meeting, we will reduce various fees the Company
is requiredrepeat this business
presentation at an informational meeting to pay annually (which are based on shares authorized) andbe held shortly thereafter in New
York City (details of which will not
adversely limit our options going forward.follow at a later date).

Your vote is very important to us.important. Whether or not you plan to attend the meeting, you
can ensure that your shares are properly represented at the meeting by promptly
completing, signing, dating and returning your proxy card in the enclosed
envelope. Shareholders who hold their shares in a brokerage account, an employee
benefit plan or through a nominee will likely have the added flexibility of
voting their shares by telephone or over the internet.

Respectfully submitted,
K. THOMAS KEMPJACK BYRNE

FUND AMERICAN ENTERPRISES HOLDINGS, INC.WHITE MOUNTAINS INSURANCE GROUP, LTD.

NOTICE OF 19992000 ANNUAL MEETING OF SHAREHOLDERS

MAY 27, 199922, 2000

March 29, 199924, 2000

Notice is hereby given that the 19992000 Annual Meeting of Shareholders of
Fund
American Enterprises Holdings, Inc.White Mountains Insurance Group, Ltd. will be held on Thursday,Monday, May 27, 1999,22, 2000, at
9:00 a.m. Atlantic Time at Byrne Hall, Amos Tuck School of Business at Dartmouth College,
Hanover, New Hampshire.the Princess Hotel, Hamilton, Bermuda. At the meeting
you will be asked to consider and vote upon the following proposals:

(a) to elect three directors to Class II with terms ending in 2002 and to
elect one director to Class IIII with a term ending in 2000;2001, one
director to Class II with a term ending in 2002 and four directors to
Class III with terms ending in 2003,

(b) to amend the Company's Charter to change the corporate name to "White
Mountains Insurance Group, Inc.";

(c) to amend the Company's Charter to reduce the total number of shares of
common and preferred stock that the Company has the authority to issue
from 135.0 million shares to 16.0 million shares;

(d) to appoint PricewaterhouseCoopers LLP as Independent Auditors for the 19992000
audit examination; and

(e)(c) to transact such other business, if any, as may be properly brought
before the meeting.

Shareholders of record on the record date, March 29, 1999,24, 2000, (i) who are
individuals, may attend and vote at the meeting in person or by proxy or (ii)
which are corporations or other entities, may be represented and vote at the
meeting by a duly authorized representative or by proxy. A list of all
shareholders entitled to vote at the meeting will be open for public examination
by shareholders during regular business hours from May 3, 1999,1, 2000, until 12:00 noon on May 27, 1999,22,
2000, at the corporateWhite Mountains Insurance Group, Ltd.'s registered office of Fund American Enterprises Holdings,
Inc., 80 South Mainlocated at
Clarendon House, 12 Church Street, Hanover, New Hampshire 03755-2053.Suite 322, Hamilton HM 11, Bermuda.

All shareholders are invited to attend this meeting.

By Order of the Board of Directors,

DENNIS P. BEAULIEU
Corporate Secretary

SHAREHOLDERS ARE INVITED TO COMPLETE AND SIGN THE ACCOMPANYING PROXY CARD
TO BE RETURNED TO FUND AMERICAN ENTERPRISES HOLDINGS, INC.WHITE MOUNTAINS INSURANCE GROUP, LTD., C/O FIRST CHICAGO TRUST
COMPANY OF NEW YORK A DIVISION OF EQUISERVE, POST OFFICE BOX 8085, EDISON, NEW
JERSEY 08818-9052, IN THE ENVELOPE PROVIDED, WHETHER OR NOT THEY EXPECT TO
ATTEND THE MEETING. IT IS IMPORTANT THATSHAREHOLDERS WHO HOLD THEIR SHARES IN A BROKERAGE ACCOUNT,
AN EMPLOYEE BENEFIT PLAN OR THROUGH A NOMINEE WILL LIKELY HAVE THE ENCLOSED PROXY CARD BE COMPLETED AND RETURNED PROMPTLY.ADDED
FLEXIBILITY OF VOTING THEIR SHARES BY TELEPHONE OR OVER THE INTERNET.

FUND AMERICAN ENTERPRISES HOLDINGS, INC.WHITE MOUNTAINS INSURANCE GROUP, LTD.

PROXY STATEMENT

This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Company's Board of Directors (the "Board") for the 19992000
Annual Meeting of Shareholders (the "1999"2000 Annual Meeting"), to be held on May
27, 1999.22, 2000 in Bermuda. The solicitation of proxies will be made primarily by mail,
and this Proxy Statement and proxy materials will be distributed to registered
shareholders on or about April 2, 1999.March 27, 2000.

Holders of shares of the Company's Common Stock, par value $1.00 per share
("Shares"), registered in their name as of the close of business on March 29,
1999,24, 2000, the record date, are
entitled to vote at the meeting. Holders of Shares
are entitled to one vote per Share.

You can ensure that your Shares are properly voted at the meeting by
completing, signing, dating and returning the enclosed proxy card in the
envelope provided. Shareholders who hold their Shares in a brokerage account, an
employee benefit plan or through a nominee will likely have the added
flexibility of voting their Shares by telephone or over the internet. A
shareholder has the right to appoint another person (who need not be a
shareholder) to represent the shareholder at the meeting by completing an
alternative form of proxy which can be obtained from the Corporate Secretary or
by notifying the Inspectors of Election.Election (see page 19). Shareholders have the
right to revoke their proxies, at any time prior to the time their sharesShares are
actually voted, by (i) filing a written notice of revocation with the Corporate
Secretary, (ii) presenting another proxy with a later date or (iii) notifying
the Inspectors of Election in writing of such revocation. Sending in a signed
proxy will not affect your right to attend the meeting and vote. If a
shareholder attends the meeting and votes in person, his or her proxy is
considered revoked.

PROPOSAL 1

ELECTION OF DIRECTORS

The Board is divided into three classes (each a "Class"). Each Class serves
a three-year term.

Mr. Terry L. Baxter, currently a Class III director, will not stand for
re-election at the 2000 Annual Meeting.

At the 19992000 Annual Meeting, Messrs. Jack Byrne,Mr. Fass is nominated to be elected to Class I
with a term ending in 2001, Mr. John Gillespie and Olson areis nominated to be elected to
Class II with termsa term ending in 2002 and Mr.Messrs. Barrette, Clark, Cochran and
Zankel isare nominated to be elected to Class III with a termterms ending 2000.2003. THE
BOARD RECOMMENDS A VOTE FOR PROPOSAL 1 WHICH CALLS FOR THE ELECTION OF THE 19992000
NOMINEES.

The current and proposed members of the Board and terms of each Class are
set forth below:

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Director
Director Age since
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Class I - Terms Ending in 2001
Patrick M. Byrne 36 1997
K. Thomas Kemp 58 1994
Gordon S. Macklin 70 1987
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Class II - Terms Ending in 1999
John J. ("Jack") Byrne* 66 1985
George J. Gillespie, III*- --------------------------------------------------------------------------------
Director
Director Age since
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Class I - Term Ending in 2001
Patrick M. Byrne 37 1997
Steven E. Fass* 54 2000
K. Thomas Kemp 59 1994
Gordon S. Macklin 71 1987
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Class II - Term Ending in 2002
John J. ("Jack") Byrne 67 1985
George J. Gillespie, III 69 1986
John D. Gillespie** 41 1999
Frank A. Olson 67 1996
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Class III - Term Ending in 2000
Raymond Barrette*** 49 2000
Howard L. Clark, Jr.*** 56 1986
Robert P. Cochran*** 50 1994
Arthur Zankel*** 68 1986
Frank A. Olson* 66 1996
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Class III - Terms Ending in 2000
Howard L. Clark, Jr. 55 1986
Robert P. Cochran 49 1994
Arthur Zankel** 67 1992
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* Nominee at the 19992000 Annual Meeting to a term ending in 2001.
** Nominee at the 2000 Annual Meeting to a term ending in 2002.
*** Nominee at the 19992000 Annual Meeting to a term ending in 2000.2003.

The following information with respect to the principal occupation, business
experience, recent business activities involving White Mountains and other
affiliations of the nominees and directors has been furnished to the Company by
the nominees and directors.

3
CLASS I

PATRICK M. BYRNE has been a director of the Company since October 1997. Mr. Byrne
serves as President and CEO of Overstock.com, an internet shopping service. Mr.
Byrne formerly served as President and CEO of Fecheimer Bros. CoCo. (a
wholly-owned subsidiary of Berkshire Hathaway Inc.), a manufacturer of uniforms
and accessories, from 1997 to 1999 and President and CEO of Centricut, LLC, a
manufacturer of industrial torch consumable parts.parts, from 1994 to 1999. In
addition, since 1991, Mr. Byrne has been the managing general partner of a
number of limited partnerships investing in real estate, gaming, insurance and
international trade. Mr. Byrne is also a
director of White Mountains. Mr. Byrne is the son of Chairman Jack Byrne.

STEVEN E. FASS was appointed to the Board in February 2000. Mr. Fass has
served as President and Chief Executive Officer of Folksamerica and its
subsidiaries including Folksamerica Reinsurance Company since 1984. He joined
Folksamerica as its Vice President, Treasurer and Chief Financial Officer in
1980.

K. THOMAS KEMP has been a directorserved as Deputy Chairman of the Company since January
2000 and has been a director since 1994. Mr. Kemp has served as the Company's
President and CEO since Octoberfrom 1997 to January 2000 and is also White
Mountains' Chairman and CEO. Mr. Kemp served as the Company's Executive Vice
President from 1993 to 1997, Vice President, Treasurer and Secretary from 1991
to 1993 and was formerly a Vice President of Fireman's Fund Insurance Company
("Fireman's Fund"). Mr. Kemp is also a director of FSA, MSA, Folksamerica,
Eldorado Bancshares,
Inc., and Amlin plc and Fund American Enterprises, Inc.
("FAE"), a wholly-owned subsidiary of the Company.plc.

GORDON S. MACKLIN has been a director of the Company since 1987. Mr.
Macklin is currently a corporate financial advisor. Mr. Macklin formerly served
as Chairman President and CEO of White River Corporation, until
its sale in July 1998. Mr. Macklin was formerlyan information services company, from
1993 to 1998, as Chairman of Hambrecht and Quist Group, a venture capital and
investment banking company, from 1987 until 1992, and served as President of the
National Association of Securities Dealers, Inc. from 1970.1970 until 1987. He is a
director of MCI Worldcom, Inc., Martek Biosciences Corporation, MedImmune Inc.,
Real 3DOverstock.com and Spacehab, Inc., and is a trustee, director or managing general
partner (as the case may be) of 5247 of the investment companies in the Franklin
Templeton Group of Funds.

CLASS II

JOHN J. ("JACK") BYRNE has beenserved as Chairman of the Company since 1985 and
retired from his officer positions in October 1997.as the Company's CEO since January 2000. Mr. Byrne formerly served as President
and CEO of the Company from 1990 to 1997 and as CEO from 1985 to 1990. Mr. Byrne
is Vice Chairman of FSA, a director of White MountainsOverstock.com and is an advisory director
of Terra Nova (Bermuda) Holdings Ltd.Markel Corp. Mr. Byrne's son, Patrick M. Byrne,
is also a director of the Company.

GEORGE J. GILLESPIE, III has been a director of the Company since 1986. Mr.
Gillespie has been a Partner in the law firm of Cravath, Swaine & Moore ("CS&M")
since 1963. He is also a director of The Washington Post Company. CS&M has been
retained by Fund AmericanWhite Mountains from time to time to perform legal services. See
"Compensation Committee Interlocks and Insider Participation in Compensation
Decisions." Mr. Gillespie's son, John Gillespie, is also a director of the
Company.

JOHN D. GILLESPIE was appointed to the board in August 1999. He is the
founder and Managing Partner of his own investment firm, Prospector Partners,
LLC, in Hartford, Connecticut. Prior to forming Prospector Partners, Mr.
Gillespie was President of the T. Rowe Price Growth Stock Fund and the New Age
Media Fund, Inc. White Mountains owns limited partnership investment interests
which are managed by Mr. Gillespie. See "Certain Relationships and Related
Transactions". Mr. Gillespie's father, George Gillespie, is also a director of
the Company.

FRANK A. OLSON has been a director of the Company since 1996. He isserves as
Chairman and CEO of The Hertz Corporation ("Hertz"). Mr. Olson served as the CEO of
Hertz from 1977 to 1999 and has been with that company since 1964. He is also a
director of Becton Dickinson and Company, Cooper Industries and Commonwealth
Edison Co. and was formerly Chairman and CEO of Allegis Corporation and United
Airlines.

CLASS III

RAYMOND BARRETTE was appointed to the board in February 2000. Mr. Barrette
has served as President of the Company since January 2000 and served as
Executive Vice President and Chief Financial Officer of the Company since 1997.
He was formerly a consultant with Tillinghast-Towers Perrin from 1994 to 1996
and was with Fireman's Fund from 1973 to 1993. Mr. Barrette is also a director
of Folksamerica, PIC, ACIC and BICC.

HOWARD L. CLARK, JR. washas been a director of the Company from 1986 until 1990,
was anor advisor to the Board from 1990 to 1993 and was re-elected as a director
in 1993.board since
1986. He is currently Vice Chairman of Lehman Brothers Inc. ("Lehman") and was
Chairman and CEO of Shearson Lehman Brothers Inc. from 1990 to 1993. Prior to
joining Shearson Lehman Brothers Inc., Mr. Clark was Executive Vice President
and Chief Financial Officer of American Express. He is also a director of TheLehman
Brothers Inc., Maytag Corporation, Compass International Services CorporationMoneyTran.com and Walter Industries, Inc.
Lehman provides various services to Fund AmericanWhite Mountains from time to time. See
"Compensation Committee Interlocks and Insider Participation in Compensation
Decisions."

ROBERT P. COCHRAN has been a director of the Company since 1994. Mr.
Cochran was a founding principal of FSA and has served FSA in various capacities
since 1985. He has been President and CEO and a director of FSA since 1990 and
became Chairman in 1997. He is also Chairman of Financial Security Assurance
Inc. and Financial Security Assurance (U.K.) Ltd. and is a director of White Mountains. Fund AmericanMountains has a 25%26%
economic interest in FSA. See "Compensation Committee Interlocks and Insider
Participation in Compensation Decisions."

ARTHUR ZANKEL washas been a director of the Company from 1992 to 1998, was anor advisor to the Board from 1998 to 1999 and has been nominated by the Board for
election at the 1999 Annual Meeting. Mr. Zankel retired from the Board in May
1998board since 1992. He
served as his busy schedule was often in conflict with meetings of the Board. In
November 1998, Mr. Zankel mentioned to the Board that his schedule would now
permit him to rejoin the Board as a director, if the Board so desired. In
February 1999, the Board determined that it would propose Mr. Zankel's
re-election at the 1999 Annual Meeting. Mr. Zankel is presently a General Partner of First Manhattan Co., an investment advisor and broker-dealer. He has
been a General Partner of First Manhattan Co. since from 1965 to 1999 and was
Co-ManagingCo- Managing Partner of First Manhattan from 1979 to 1997. Mr. Zankel is
currently Managing Member of Zankel Capital Advisors, LLC in which White
Mountains owns a limited partnership investment interest. See "Compensation
Committee Interlocks and Insider Participation in Compensation Decisions."
Mr. Zankel is also a director of Citigroup, Inc., Travelers Property Casualty
Corp. and VICORP Restaurants, Inc.

COMMITTEES OF THE BOARD OF DIRECTORS

The Audit Committee, comprised of certain nonemployee directors (Messrs.
Clark, Olson and Olson)Zankel), has general responsibility for the oversight and
surveillance of the accounting, reporting and financial control practices of
Fund American.White Mountains. The Audit Committee annually reviews the qualifications of the
Independent Auditors; makes recommendations to the Board as to their selection;
and reviews the plan, fees and results of their audit. The Company currently intends to add
Mr. Zankel to the Audit Committee upon his election at the 1999 Annual Meeting.
Mr. Clark is Chairman of
the Audit Committee.

The Compensation Committee, comprised of certain nonemployee directors
(Messrs. Patrick Byrne; Cochran;Byrne, Cochran, Macklin, Olson and Olson)Zankel), oversees Fund American'sWhite
Mountains' stock-based compensation and benefit policies and programs, including
administration of the Long-Term Incentive Plan (the "Incentive Plan"), the
Fund
American Voluntary Deferred Compensation Plan (the "Deferred Compensation Plan") and the
Fund American Deferred Benefit Plan (the "Deferred Benefit Plan"). The
Company currently intends to add Mr. Zankel to the Compensation Committee upon
his election at the 1999 Annual Meeting. Mr. Macklin is Chairman of
the Compensation Committee.

The Human Resources Committee, comprised of certain nonemployee directors
(Messrs. Patrick Byrne; Clark; Cochran; Gillespie;Byrne, Clark, Cochran, George Gillespie, Macklin, Olson and
Olson)Zankel), sets the annual salaries and bonuses for elected officers and certain
other key employees. The Company currently intends to add Mr. Zankel to the Human
Resources Committee upon his election at the 1999 Annual Meeting. Mr. Macklin is Chairman of the Human Resources Committee.

The Finance Committee, comprised of Messrs. Jack Byrne, Clark, George
Gillespie, Kemp, Macklin and MacklinZankel has general responsibility for the oversight
of all significant investing, financing, tax and acquisition/disposition activities of
Fund
American. The Finance Committee oversees the activities of White Mountains'
Finance Committee to which it has delegated responsibility for the oversight of
certain investment policy and related financial matters. The Company currently
intends to add Mr. Zankel to the Finance Committee upon his election at the 1999
Annual Meeting.Mountains. Mr. Jack Byrne is Chairman of the Finance Committee.

The Investment Committee is an advisory committee to the Board and is
comprised of Messrs. Barrette, Jack Byrne (emeritus), John Gillespie, Kemp,
Zankel, certain members of senior management and investment professionals. The
Investment Committee formulates the Company's investment policy and oversees all
the Company's significant investing activities. Mr. John Gillespie is Chairman
of the Investment Committee.

MEETINGS OF THE BOARD OF DIRECTORS

During 19981999 the following meetings of the Board were held: fiveeight meetings
of the full Board; two meetings of the Audit Committee; three meetings of the
Compensation Committee, three meetings of the Human Resources Committee, one
meeting of the Audit Committee; one meeting of the
CompensationFinance Committee and one meeting of the Human ResourcesInvestment Committee. During
1998 one meeting of the Finance Committee was held. In
19981999 each director attended more than 75% of all meetings of the Board and each memberits
various committees, except Messrs. Macklin and Patrick Byrne who were unable to
attend one of the Audit
Committee,three Compensation Committee and the Human Resources Committee
attended
more than 75% of all such committee meetings exceptand Mr. George Gillespie who was unable to attend two of the five Board meetings and Mr. Olson who was unable to
attend the 1998 Compensation Committee and the 1998 Human ResourcesFinance Committee
meeting.

PROCEDURES FOR NOMINATING DIRECTORS

Under the Company's Bylaws,Bye-laws, nominations for the election of directors may
be made by the Board or by any shareholder entitled to vote for the election of
directors that is a qualified holder of record of Shares having an
aggregate market value of at least $2,000(a "Qualified Shareholder"). A Qualified Shareholder may nominate
persons for election as director,directors only if the following procedures are followed:

In general, the shareholder must give written notice of such shareholder's
intent to make such nomination is delivered to the Corporate Secretary not later than 90 days in advance of the meetingthan: (i)
with respect to an election to be held at an annual meetingAnnual Meeting, 90 days prior to
the anniversary date of shareholders. Withthe immediately preceding Annual Meeting or not later
than 10 days after notice or public disclosure of the date of the Annual Meeting
is given or made available to shareholders, whichever date is earlier, and (ii)
with respect to an election to be held at a special general meeting for the
election of shareholders,directors, the shareholder must
give written notice to the Corporate Secretary not later thanclose of business on the seventh day following the
date on which notice of such meeting is first given to shareholders.

TheEach such notice must include: (i)shall set forth: (a) the name and address of the
shareholder who intends to make the nomination and the name and address of the person or persons to
be nominated; (ii)(b) a representation that the shareholder is a qualified
holder of record of
Shares having an aggregate market value ofentitled to vote at least $2,000such meeting and that the shareholder intends to appear at the meeting, in person or by
proxy at the meeting to nominate the person or persons specified in the notice;
(iii)(c) a description of all arrangements or understandings between the shareholder
and each such nominee and any other person or persons (naming such person or
persons) pursuant to which the nomination or nominations are to be made by the
shareholder; (iv)(d) such other information regarding each nominee proposed by such
shareholder as would have been required to be included in a proxy statement
filed pursuant to the proxy rules of the United States Securities and Exchange
Commission (the "SEC") had each such nominee been nominated, or intended to be
nominated, by the Company;Board; and (v)(e) the consent of each such nominee to serve as a
director of the Company if so elected. The chairman of the meeting may refuse to
acknowledge the nomination of any person not made in compliance with the
foregoing procedure.

VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

VOTING RIGHTS OF SHAREHOLDERS

As of March 29, 1999,24, 2000, there were 5,843,7315,904,534 Shares outstanding, each Shareoutstanding. Shareholders
of record shall be entitled to one vote.vote per Share, provided that if and so long
as the votes conferred by "Controlled Shares" (as defined below) of any person
constitute ten percent (10%) or more of the votes conferred by the outstanding
Shares of the Company, each outstanding Share comprised in such Controlled
Shares shall confer only a fraction of a vote that would otherwise be applicable
according to the following formula:

[(T divided by 10)-1] divided by C

Where: "T" is the aggregate number of votes conferred by all the
outstanding Shares; and "C" is the number of votes conferred by the Controlled
Shares of such person.

"Controlled Shares" in reference to any person means:

(i) all Shares directly, indirectly or constructively owned by such
person within the meaning of Section 958 of the Internal Revenue
Code of 1986, as amended, of the United States of America; and

(ii) all Shares directly, indirectly or constructively owned by any
person or "group" of persons within the meaning of Section
13(d)(3) of the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder; provided that
this clause (ii) shall not apply to (a) any person (or any group
that includes any person) that has been exempted from the
provisions of this clause or (b) any person or group that the
Board, by the affirmative vote of at least seventy-five percent
(75%) of the entire Board, may exempt from the provisions of this
clause.

The limitations set forth above do not apply to any shareholder which is a
"Byrne Entity" (as defined below) for any matter submitted to the vote of
shareholders, except with respect to the election of directors. "Byrne Entity"
means any of John J. Byrne, any foundation or trust established by John J.
Byrne, Patrick Byrne, and any associate or affiliate of any of them (or any
group of which any of them is a part), as defined under Section 13(d) of the
United States Securities Exchange Act of 1934, as amended.

If, as a result of giving effect to the forgoing provisions or otherwise,
the votes conferred by the Controlled Shares of any person would otherwise
represent 10% or more of the votes conferred by all the outstanding Shares, the
votes conferred by the Controlled Shares of such person shall be reduced in
accordance with the foregoing provisions. Such process shall be repeated until
the votes conferred by the Controlled Shares of each person represent less than
10% of the votes conferred by all Shares.

PRINCIPAL HOLDERS OF SHARES

To the knowledge of the Company, there was no person or entity
beneficially owning more than 5% of Shares outstanding as of March 29,
1999,24, 2000,
except as shown below:

PRINCIPAL HOLDERS OF SHARES

JACK BYRNE 80 South Main Street, Hanover, NH 03755 (a) 1,725,973 25.2%1,194,030 20.2%

FRANKLIN MUTUAL ADVISORS, INC. 777 Mariners Island Blvd., San Mateo, CA 94403 (b) 1,216,071 20.8%(c) 750,271 12.7%

ALLIANZ ASSET ACCUMULATION PLAN 777 San Marin Drive, Novato, CA 94998 (c) 575,187 9.8%

GSB INVESTMENT MANAGEMENT, INC. 301 Commerce Street, Fort Worth, TX 76102 (b) 378,936 6.5%(d) 431,945 7.3%
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(a) Includes warrants to purchase 1,000,000 Shares, which warrants Mr. Byrne
purchased from American Express in 1985. The warrants are exercisable at
$21.66 per Share through January 2, 2002. Mr. Byrne has sole voting and
investment power (or shares such power with his spouse) with respect to the
Shares for which he claims beneficial ownership. Does not include 3,00053,500 Shares donated to charitable foundations for which
Mr. Byrne disclaims beneficial ownership, but for which his spouse retains
voting power.
(b) Represents voting power with respect to all proposals except the election
of directors. For the election of directors, Mr. Byrne's voting power will
be reduced to no more than 10% which would serve to increase the relative
voting power of all other shareholders with regard to such proposals. See
"Voting Rights of Shareholders".
(c) According to filings by such holders with the SEC, the Shares beneficially
owned by the holders named aboveFranklin Mutual Advisors, Inc. were acquired solely for investment
purposes on behalf of client investment advisory accounts of such holders.
(c)(d) Represents Shares beneficially owned by employees of Fireman's Fund
pursuant to an employee incentive savings plan. The trustee for such plan
generally votes the Shares held by the plan in accordance with directions
given by the participating Fireman's Fund employees to whose accounts
Shares have been allocated.

(d) Determined based on the beneficial ownership provisions specified in Rule
13d-3(d)(1) of the Securities Exchange Act of 1934 (the "Exchange Act").

BENEFICIAL STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth, as of March 29, 1999,24, 2000, beneficial ownership
of Shares by each director of the Company, by each of the "Named Executive
Officers" as defined herein currently holding office, and by all Directorsdirectors and
Executive Officersexecutive officers as a group.

RAYMOND BARRETTE 2,131 20,76427,192 59,745
TERRY L. BAXTER 3,642 33,62718,742 33,288
JACK BYRNE (c)(d) 1,725,973 1,730,973 1,194,030 1,204,030
PATRICK M. BYRNE (d) 105,000 105,461106,395 106,395
HOWARD L. CLARK, JR. 1,000 1,000
ROBERT P. COCHRAN 0 1,8790
MORGAN W. DAVIS 13,574 44,10826,574 30,574
STEVEN E. FASS 1,446 1,446
GEORGE J. GILLESPIE, III 1,000 1,000
JOHN D. GILLESPIE 1,176 1,176
K. THOMAS KEMP (e) 29,446 90,79781,690 102,760
GORDON S. MACKLIN 8,000 8,00015,000 15,000
FRANK A. OLSON 500 5003,000 3,000
MICHAEL S. PAQUETTE 2,025 14,86612,371 25,871
DAVID G. STAPLES 4,283 17,283
ARTHUR ZANKEL 11,600 11,600
All Directorsdirectors and Executive Officersexecutive officers as a group (15(17 persons) (c)(d)(e) 1,849,091 2,023,373
- -------------------------------------------------------------------------------------------------------- 1,510,501 1,632,169
=================================================================================================================

(a) The beneficial ownership positions of Messrs Jack Byrne, Patrick Byrne,
Kemp and all Directorsdirectors and Executive Officersexecutive officers as a group represent 25.2%20.2%,
1.8%, 1.4% and 27.8%25.6% of the total Shares outstanding at March 29, 1999,24, 2000,
respectively. All other Directorsdirectors and Executive Officersexecutive officers beneficially owned
less than 1% of the total Shares outstanding at that date.
Percentages are determined
based on the beneficial ownership provisions specified in Rule 13d-3(d)(1)
of the Exchange Act.
(b) Shares shown as economically owned by Directorsdirectors and Executive Officersexecutive officers
include unvested performance share awards outstanding, unvested stock
options outstanding and vestedearned phantom shares held
pursuant to the Deferred Compensation Plan and the Deferred Benefit Plan.on compensation deferred. See
"Compensation Plans - Fund AmericanWhite Mountains Retirement Plans." Each performance
share, stock option and each phantom share are economically equivalent to one
Share. Unvested performance shares and stock options outstanding at March
29, 199924, 2000 represented 14,500, 18,500, 5,000, 12,500, 29,000, 9,10025,000, 8,000, 10,000, 4,000, 11,000, 13,500, 13,000
and 100,60097,500 Shares for Messrs. Barrette, Baxter, Jack Byrne, Davis, Kemp,
Paquette, Staples and all Directorsdirectors and Officersofficers as a group, respectively.
(c) Includes warrants to purchase 1,000,000 Shares, which warrants Mr. Byrne
purchased from American Express in 1985. The warrants are exercisable at
$21.66 per Share through January 2, 2002. Does not include 3,00053,500 Shares donated to charitable foundations for which
Mr. Byrne disclaims beneficial ownership, but for which his spouse retains
voting power.

(d) The individual ownership positions of Mr. Jack Byrne and Mr. Patrick Byrne
each include 55,000 Shares owned by High Plains Investments ("High
Plains"), a partnership in which they share beneficial ownership and
control. The 55,000 Shares owned by High Plains have been included only
once in arriving at Shares owned by all Directors and Executive Officers as
a group.
(e) Includes currently exercisable stock options held by Mr. Kemp to purchase
2,000 Shares.9

COMPENSATION OF DIRECTORS

COMPENSATION OF DIRECTORS EXCEPT FOR JACK BYRNE

Messrs. Patrick Byrne, Clark, Cochran, George Gillespie, Macklin, Olson and
OlsonZankel each received a retainer of $48,000 for 1998$50,000 during 1999 and a feefees of $1,000 for
each Board meeting and committeeCommittee meeting attended. The annual retainer relates
to the twelve month period from May 1999 to May 2000. Mr. John Gillespie
received a prorated retainer of $37,500 during 1999. Messrs. Clark, John
Gillespie and Macklin also received an additional retainerretainers of $3,000, $100,000 and
$6,000 during 1999 for 1998their roles as Chairman of the Audit Committee, Chairman
of the Investment Committee and Chairman of the Compensation Committee and Human Resources
Committee,Committees, respectively. Messrs. Patrick Byrne, Cochran and CochranJohn Gillespie also
received a retainermeeting fees of $18,000 for 1998 for$3,500, $5,250 and $5,250 in their servicescapacity as
directors of White Mountains and meeting
fees of $1,750 per meeting attended. Mr. Zankel received a total of $39,000
during 1998 consisting of: (i) 1998 Board meeting fees of $5,000; (ii) a $24,000
installment under the directors retirement plan; and (iii) a retainer of $10,000
for his services asHoldings, Inc., an advisory director. For 1998, Mr. Jack Byrne received a
$100,000 all-inclusive annual retainer for his services as Chairmanindirect wholly-owned subsidiary
of the Board
and his participation in Fund American's various committees and subsidiary
boardsCompany. Directors who are also officers of White Mountains do not
receive compensation for their role as a director.

During 1999, the Company terminated its nonqualified director retirement
plan (the "Retirement Plan") whereby non-management directors and also received $6,500 in attendance fees. In addition,
Mr. Jack Byrne had 5,000 performance shares eligible for payout on December 31,
1998 which were paid on February 24, 1999. See "Reports of the Compensation
Committees on Executive Compensation - Compensation Committee - Long-Term
Incentive Awards."

Any non-management director who retiresretiring from the
Board with at least five years of service as a director of the Company iswould be
entitled to an annual retirement benefit equal to 50% of the amount of the
annual retainer for the year in which the retirement occurs. EligibleIn connection with
the Retirement Plan termination, Messrs. Patrick Byrne, Clark, Cochran, George
Gillespie, Macklin, Olson and Zankel received $50,000, $275,000, $125,000,
$325,000, $300,000, $75,000 and $125,000, respectively, in Retirement Plan
benefits.

Through 1999, certain directors are entitled to receiveparticipated voluntarily in the annual benefit for a period of years equalDeferred
Compensation Plan, an unfunded, nonqualified, deferred compensation savings
plan. Pursuant to the numberDeferred Compensation Plan, directors could defer all or a
portion of yearsqualifying remuneration payable by White Mountains. During 1999, the
Company terminated the Deferred Compensation Plan and paid-out account balances
to its participants. In connection with the early termination of service
or, if sooner,the Deferred
Compensation Plan, Messrs. Patrick Byrne, Cochran and John Gillespie were paid a
special payment of $26,289, $72,807 and $26,289, respectively, in additional to
their plan balances in order to compensate them for the early termination.

COMPENSATION OF JACK BYRNE

Mr. Byrne has served as Chairman of the Company since 1985 and served as
CEO of the Company from 1985 to 1997. In January 2000, Mr. Byrne returned as CEO
of the Company.

As a director, during 1999, Mr. Byrne received a $100,000 all-inclusive
annual retainer for his services as Chairman of the Board and his participation
in White Mountains' various committees and subsidiary boards of directors. In
connection with the Retirement Plan termination, Mr. Byrne received $50,000 in
Retirement Plan benefits.

As former President and CEO, Mr. Byrne received $650,000 in performance
shares during 1999 which were awarded to him in 1997 when he was Chairman and
CEO of the Company. See "Reports of the Compensation Committees on Executive
Compensation - Compensation Committee - Long-Term Incentive Awards." In
addition, as both an officer and a director, Mr. Byrne participated in the
Deferred Compensation Plan and the related Deferred Benefit Plan ("See
Compensation Plans - Retirement Plans"). During 1999, Mr. Byrne was paid
$2,769,398 in addition to his plan balances in connection with the termination
of the Deferred Compensation Plan and the Deferred Benefit Plan.

At the Board's request, in October 1999 Mr. Byrne exercised all of his
remaining warrants to acquire 1,000,000 Shares from the Company at a strike
price per share of $21.66. The warrants were awarded to him in 1985 and were
exercisable until death.January 2, 2002. In order to entice Mr. Byrne to exercise his
warrants early, the Company paid Mr. Byrne $6,000,000 to compensate him for the
estimated interest cost of borrowing to pay the strike price and the income tax
liability associated with his accelerated warrant exercise. The amount of income
realized by Mr. Byrne in exercising his warrants, including the $6,000,000
payment, was $102,460,000.

COMPENSATION OF EXECUTIVE OFFICERS

SUMMARY COMPENSATION TABLE

The following tables set forth certain information regarding the salary,
incentive compensation and benefits paid by Fund AmericanWhite Mountains to its CEO, its four
most highly compensated executive officers other than the CEOand one former executive officer
(collectively, the "Named Executive Officers").

SUMMARY COMPENSATION TABLE

The following table reflects the cash and non-cash compensation for the
Named Executive Officers.

- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Annual compensation Long-term compensation
------------------- ------------------------------------------------------ ------------------------
Awards Payouts
------ ----------------- -------------
Other Restricted
annual Stock, All other
Name and compen- Options, LTIP compensation (b)All other
principal position Year Salary BonusBonus(a) sation SARs (#) payouts (a)(b) compensation (c)
- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

K. THOMAS KEMP 1998 $386,923 $304,0001999 $400,000 $1,308,809 $ 0 0 $1,995,000 $275,185$2,600,000 $269,490
President and CEO 1998 386,923 304,000 0 0 1,995,000 275,185
1997 312,692 241,500 0 0 1,152,957 169,698

CEO 1996 288,300 171,000RAYMOND BARRETTE 1999 262,692 1,278,776 0 0 1,896,903 135,455

RAYMOND BARRETTE1,105,000 462,291
Executive Vice President 1998 250,000 217,000 0 0 0 294,175
Executive Vice President
and CFO 1997 28,846 25,000 0 0 0 28,769
(began November 17, 1997)

1996TERRY L. BAXTER 1999 262,692 738,853 0 0 1,625,000 475,451
Executive Vice President 1998 247,692 180,000 0 0 931,000 758,588
1997 195,000 200,000 0 0 516,500 70,714

MORGAN W. DAVIS 1999 173,752 667,062 0 0 1,625,000 67,568
Former Executive Officer (d) 1998 247,692 205,000 0 0 1,197,000 52,821
Executive Vice President of 1997 233,462 155,000 0 0 1,475,770 30,458

White Mountains 1996 218,000 112,500MICHAEL S. PAQUETTE 1999 144,539 341,368 0 0 0 22,309

TERRY L. BAXTER 1998 247,692 180,000 0 0 931,000 758,588858,000 28,356
Senior Vice President of 1997 195,000 200,000 0 0 516,500 70,714
White Mountains 1996 194,200 200,000 0 0 739,688 47,238

MICHAEL S. PAQUETTEand 1998 139,308 94,000 0 0 532,000 30,223
Senior Vice President andController 1997 123,423 97,500 0 0 387,375 19,079

Controller 1996 115,600 70,500DAVID G. STAPLES 1999 135,077 1,081,313 0 0 810,735 10,980
- -------------------------------------------------------------------------------------------------------------------------------520,000 19,489
Vice President 1998 128,769 106,000 0 0 399,000 15,330
1997 121,450 97,500 0 0 0 22,058
==================================================================================================================

(a) Includes cash paymentsRepresents the payment of 1999 regular bonuses as well as 1999 "special"
bonuses relating primarily to the Company's 1999 redomestication to Bermuda
(the "Redomestication"). See "Reports of the Compensation Committees on
Executive Compensation - Human Resources Committee Annual Bonus."
(b) Represents the payment of performance shares during 1999 relating to the
performance periods running from 1997 to 1999 and 1998 to 1999. See
"Reports of the total market value of awards distributed.
(b)Compensation Committees on Executive Compensation -
Compensation Committee - Long-Term Incentive Awards."
(c) Amounts for 1999, 1998 1997 and 19961997 represent principal credited to the
Deferred Benefit Plan, and amounts for 1998 and 1997 represent employer
matching contributions to the Company's 401(k) Savings Plan matching contributions (which
did not exceed $5,000 annually$6,000 per individual) in addition to the amounts
specifically listed. The amounts for 1998, 1997 and 1996, respectively,
also include: $75,100, $61,900 and $54,230 for Mr. Kemp; $15,475, $0 and
$0 for Mr. Barrette; $21,700, $20,300, and $22,380 for Mr. Baxter; and
$2,400, $0, and $0 for Mr. Davis in, certain director fees and retainers
(those paid by companies for which Fund AmericanWhite Mountains is entitled to board
representation as a result of the Company's sizable ownership position in
such companies.companies) and certain other compensation as described below. The
amounts for 1999, 1998 amountand 1997, respectively, relating to director fees
and retainers of affiliates include: $71,650, $75,100 and $51,900 for Mr.
Kemp; $22,450, $15,475 and $0 for Mr. Barrette; $41,342, $21,700, and
$20,300 for Mr. Baxter and $21,000, $2,400, and $0 for Mr. Davis. The 1999
and 1998 amounts for Mr. Barrette also includesinclude $42,545 and $249,646,
respectively, in reimbursements principally associated with a
Company sponsoredCompany-sponsored relocation. The 1999 amount for Mr. Davis includes
$21,268 in transportation reimbursements. The 1999 amounts for Messrs.
Barrette and Baxter also include $351,917 in phantom stock awards resulting
from the sale of the mortgage banking assets of White Mountains Services
Corporation ("WMSC"). The 1998 amount for Mr. Baxter also includes $665,000
in incentive compensation paid in 1998 for
the period in which he acted as interim Chairman of Source One.

9WMSC.
(d) Mr. Davis was formerly Executive Vice President of White Mountains
Holdings, Inc. which owned the Company's property and casualty insurance
operations. As a result of a sale of a substantial amount of the Company's
property and casualty insurance operations, Mr. Davis ceased to be an
Executive Officer during 1999. The Summary Compensation Table above
reflects Mr. Davis' total compensation for 1999.

OPTIONS AND WARRANTS

The following table summarizes, for the Named Executive Officers, stock
options warrants and SARs exercised during the Company's latest fiscal year, and the
number and in-the-money value of stock options outstanding as of the end of the
fiscal year.

- ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
As of December 31, 1998
--------------------------------------------------------------1999
----------------------------------------------------------
Stock options warrants and SARs Number of unexercised stock In-the-money value of all
SARs exercised during the year ended stock options warrants outstanding stock
options,
year ended December 31, 19981999 (a) and SARs warrants(a) options and SARs (a)
------------------------------- ---------------------------- ---------------------------- --------------------------
Shares Value Not Not
Name acquired realized Exercisable exercisable Exercisable exercisable
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

K. Thomas Kemp 1,000(a) $80,610(a) 2,000(b) 0 $225,865(b) $0
Raymond Barrette2,000 $188,740 0 0 0 0 0 0
Morgan W. Davis 0 0 0 0 0 0
Terry L. Baxter 0 0 0 0 0 0
Michael S. Paquette 0 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------$0 $0
=====================================================================================================================

(a) Represents the exercise ofNo other Named Executive Officers had stock options to acquire shares of the common
stock of White River ("White River Shares") from the Company. Such stock
options were issued to holders of Fund American stock options upon the
December 1993 distribution of approximately 74% of theor SAR's outstanding
White
River Shares to Fund American's shareholders.
(b) Represents stock options outstanding to acquire Shares that were issued in
1990. The Company has not issued stock options since that date.during 1999.

LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR

The following table summarizes the Incentive Plan awards made to the Named
Executive Officers during the latest fiscal year. Such awards consisted entirely
of performance shares. Since 1991, all long-term incentive compensation awards
have been in the form of performance shares.

K. Thomas Kemp 10,0009,000 3 yrs. 0 10,000 20,0009,000 18,000
Raymond Barrette 7,5006,000 3 yrsyrs. 0 7,500 15,0006,000 12,000
Terry L. Baxter 6,000 3 yrs. 0 6,000 12,000
Morgan W. Davis 6,5002,000 3 yrs. 0 6,500 13,000
Terry L. Baxter 6,5002,000 4,000
Michael S. Paquette 2,500 3 yrs. 0 6,500 13,000
Michael S. Paquette2,500 5,000
David G. Staples 2,000 3 yrs. 0 2,000 4,000
3 yrs 0 4,000 8,000
- ----------------------------------------------------------------------------------------------------====================================================================================================================

(a) Such performance shares are payable upon completion of pre-defined business
goals and are payable in cash based on the market value of Shares at the
time of payment.payment or Shares. The "Target" performance for the 19981999
performance share award is the attainment of a corporate annualized return
on equity ("ROE") of 13%. after tax. The determination of ROE considersis generally
based on the rate of growth of the book
value, market value and economic value of Shares with dividends reinvested. At an ROE
of 6% or less ("Threshold") the percentage of performance shares payable
will be 0% and at an ROE of 20%25% or more ("Maximum") the percentage of
performance shares payable will become 200% of Target.

Straight-line
interpolations are used for ROE results that fall between Threshold and
Target or between Target and Maximum.

1012

OTHER COMPENSATION ARRANGEMENTS

Pursuant to the Incentive Plan, under some circumstances such as a "Change
in Control" followed by a termination without cause, constructive termination or
an "Adverse Change" in the Incentive Plan, stock options will generally become
fully exercisable and performance shares will become partially or fully payable.
Such circumstances are more fully described in the Incentive Plan.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

For corporate travel purposes Fund AmericanWhite Mountains Holdings, Inc. jointly owns
two short-range aircraft with Haverford Utah, LLC ("Haverford"). Messrs. Jack
Byrne, Patrick Byrne and Kemp are principals of Haverford. Both aircraft were
acquired from unaffiliated third parties during 1996. In exchange for
Haverford's 20% ownership interest in the aircraft, Haverford contributed
capital equal to 20% of the total initial cost of the aircraft and Haverford bearspays a pro
rata share of all fixed costs plus the fulldirect operating costs of
its usage and maintenance ofwhen onboard the
aircraft pursuant to a Joint Ownership Agreement dated September 16, 1996.

In September 1998 Fund American sold its 25% joint ownership interest inAgreement.

White Mountains owns limited partnership investment interests which are
managed by Mr. John Gillespie, a private jet operated by a third party to Haverford for cash proceedsdirector of $500,000. The purchase price received from Haverford represented a payment of
$437,500 for Fund American's joint ownership interest (which resulted in Fund
American recognizing a pretax gainthe Company.

White Mountains believes that the above transactions were on sale of approximately $75,000)terms that
were reasonable and $62,500
for reimbursement of prepaid aircraft expenses which were required to be paid to
the operator prior to the sale to Haverford.

COMPLIANCE WITHcompetitive.

DEDUCTIBILITY OF COMPENSATION - SECTION 162(m)162(M) OF THE INTERNAL REVENUE CODE

Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for certain compensation over $1
million. The Compensation Committee intends to preserve the Company's deduction
forCompany has determined that approximately 80% of all compensation
paid by mandating that allto the Named Executive Officers automatically defer any potentially nondeductibleduring 1999 is expected to be tax
deductible. Effective upon the "Redomestication", the Company will no longer be
entitled to a tax deduction on compensation payable in any
given year in excess of $1 million into the Deferred Compensation Plan until
such a time as the compensation would be fully deductible by the Company.Company is no longer subject
to United States income tax.

REPORTS OF THE COMPENSATION
COMMITTEES ON EXECUTIVE COMPENSATION

The Human Resources Committee and the Compensation Committee (collectively,
the "Committees") are comprised entirely of certain non-employee directors. The
Committees are responsible for developing, administering and monitoring the
executive compensation policies of the Company. Fund American'sWhite Mountains' salary and
bonus compensation is established by the Human Resources Committee of the Board.
Fund American'sWhite Mountains' stock based compensation (performance shares, stock options and
warrants) is established by the Compensation Committee of the Board.

Fund American'sWhite Mountains' executive compensation policies are designed with one goal
in mind-maximizationmind - maximization of shareholder value over long periods of time. The
Committees believe that this goal is best pursued by utilizing a
pay-for-performance program which serves to attract and retain superior
executive talent and provide management with performance-based incentives to
maximize shareholder value. Through the compensation program, the Committees
seek to maximize shareholder value by aligning closely the financial interests
of Fund American'sWhite Mountains' management with those of the Company's shareholders.

The Committees believe that the most appropriate indicator of shareholder
return is the Company's ROE as measured by growth in market value, book value
and economic value per Share, each
measured with dividends reinvested. The Committees believe that, over long
periods of time, maximizing the Company's ROE will optimize shareholder returns.

The Committees believe that the performance-based compensation of the
Company's key employees should be payable only if the Company achieves truly
superior returns for its shareholders. Therefore, the target of many of Fund
American'sWhite
Mountains' performance-based compensation programs are directly linked to
achievement of an annualized ROE for the Company at least equal to the market
yield available from ten-year United States Treasury notes plus 700 basis
points, or currently approximately 12%-13%13%. The Committees believe that this return
is a challenging target for the Company in its current form.

1113

Compensation of Fund American'sWhite Mountains' management team, including the Named
Executive Officers, consists primarily of three components: base salary, annual
bonus and long-term incentive awards.

HUMAN RESOURCES COMMITTEE

BASE SALARY. Base salary for each Named Executive Officer is established
annually, generally as of March 1. When establishing base salaries of the Named
Executive Officers, the Human Resources Committee considers numerous factors
including: qualifications of the executive; the corporate responsibilities of
the executive; the executive's performance since his or her last salary
adjustment; and, for all executives except Mr. Kemp,the CEO, the recommendations of Mr.
Kemp.the
CEO.

ANNUAL BONUS. For 19981999 the target annual bonus pool for all officers of the
Company was equal to 50% of eligible base salary at a 13% annual ROE and the
maximum bonus attainable was equal to 100% of eligible base salary at a 20%
annual ROE. When establishing the aggregate size of the annual bonus pool, the
Human Resources Committee considers numerous factors including performance
versus the objectives set forth in the Company's Annual Business Plan, in
particular the Company's financial performance for the latest fiscal year as
measured by ROE, and the recommendations of Mr. Kemp.the CEO. The Human Resources
Committee reviews the Annual Business Plan with management near the beginning of
the year and approves the plan after changes required by the Human Resources
Committee, if any, are made.

After establishing the aggregate size of the annual bonus pool, the Human
Resources Committee then considers the distribution of the bonus pool among the
key employees of the Company. Each participant's allocation of the pool is
determined after considering numerous factors including individual achievements
as compared to objectives included in the Annual Business Plan, the contribution
of such achievements to the Company's overall financial performance, and the
recommendations of Mr. Kemp.the CEO.

The CEO receives annual bonuses, as a percent of his salary in effect at
the time the bonus percentage is determined, equal to the average bonus
percentage received by all officers eligible to participate in the bonus pool.
For 1998,1999, Mr. Kemp received a bonus that was determined using the average bonus
percentage.

For 19981999 the Human Resources Committee determined that the financial
results of the Company warranted a bonus pool equal to 76%50% of aggregate base
salary. The principal factors considered by the Human Resources Committee in
determining the size of the 19981999 pool were: (i) the Company's 19981999 ROE
performance of 14.0%12.1%, as measured by change in economic value per Share, versus
a 13% target ROE (the predominant factor); (ii) the Company's 1998 ROE
performancesignificant
repurchases of 17.2% as measured by change in market valueits common stock during 1999 at an average price per Share;share less
than its current economic value; and (iii) the
Company's 1998 ROE performance of 14.3%, as measured by change in book value per
Share (including the unamortized portion of the Company's deferred credit
resulting from its acquisition of Folksamerica in 1998); (iv) the progress made
in re-deploying the Company's passive investment portfolio into strategic
operating investments including the acquisition of Folksamerica during 1998; and
(v) overall favorable results versus
certain specific objectives contained in the 19981999 Annual Business Plan.

SPECIAL BONUS. During 1999 the Human Resources Committee also approved special
bonuses to Messrs. Kemp, Barrette, Baxter, Davis, Paquette and Staples in the
amounts of $1,109,000, $1,146,000, $606,000, $605,000, $269,000 and $1,013,000
which were based primarily on the contributions of these individuals in
accomplishing the Redomestication. The amount of such special bonuses were
determined by the Human Resources Committee.

GORDON S. MACKLIN, Chairman
PATRICK M. BYRNE
HOWARD L. CLARK, JR.
ROBERT P. COCHRAN
GEORGE J. GILLESPIE, III
FRANK A. OLSON
ARTHUR ZANKEL

COMPENSATION COMMITTEE

LONG-TERM INCENTIVE AWARDS. The Incentive Plan provides for granting to
executive officers and certain other key employees of the Company various types
of stock-based incentive awards including stock options and performance shares.

Stock options are rights to purchase a specified number of Shares at or
aboveOver the fair market value of Shares atpast several years the time the option is granted. Stock
options generally vest over a four-year period and expire no later than ten
years after the date on which they are granted. The Company has granted no new
stock options since 1990.predominantly used performance
shares in its long-term compensation plans. Performance shares are conditional
grants (payable subject to the achievement of specific financial goals) of a
specified maximum number of Shares, payable generally at the end of a three-year
period or as otherwise determined by the Compensation Committee. Performance
shares are denominated in Shares at market value and for 1998, wereare payable in cash, Shares
or a combination thereof.thereof at the discretion of the Compensation Committee.

The Compensation Committee believes that performance share awards made
pursuant to the Incentive Plan are the mostan effective method of providing incentives
for management to strive to maximize shareholder value over the long term. The
Compensation Committee's conclusion is based on the
following factors: (i) such awards vest or are earned over multi-year periods;
(ii) such awards are generally made in the form of Shares or derivatives
thereof, which helps to align the interests of management with those of the
Company's shareholders; and (iii) the Incentive Plan awards made over the last
three fiscal years were linked to the achievement of a 13% ROE over the
applicable performance period.

In 19981999 Messrs. Kemp, Barrette, Baxter, Davis, BaxterPaquette and PaquetteStaples were
granted 10,000, 7,500, 6,500, 6,5009,000, 6,000, 6,000, 2,000, 2,500 and 4,0002,000 performance shares,
respectively, which
were awarded by the Compensation Committee. The performance period for such
awards began on January 1, 19981999 and will continue through December 31, 2000.2001. The
"target" performance for the 19981999 performance share award is the attainment of a
ROE of 13%. The determination of ROE considers the rate of growth of the
book value, market value and
economic value of Shares with dividends reinvested. At a "threshold" ROE of 6%
or less the percentage of performance shares payable will be 0% and at a
"maximum" ROE of 20%25% or more the percentage of performance shares payable will
become 200% of target.

Straight-line interpolations are
used for ROE results that fall between threshold and target or between target
and maximum.

As of December 31, 1998During 1999 Messrs. Kemp, Barrette, Baxter, Davis, BaxterPaquette and PaquetteStaples
had, pursuant to a 19961997 grant of performance shares, 15,000, 0, 9,000, 7,00010,000, 1,000, 6,000,
6,000, 2,600 and 4,0002,000 performance shares eligible for payout, respectively, on
December 31, 19981999 subject to the attainment of a 13% target ROE. During the 19961997
to 19981999 performance period, the Company attained an ROE of 18.2%, 24.7% and 12.6%12.0% as measured by
the change economic value (the predominant factor), market value and
book value, (including the unamortized portion of the Company's deferred credit
resulting from its acquisition of Folksamerica in 1998), respectively, calculated in accordance with the Incentive Plan. In
light of the ROE'sROE attained and in consideration of the perceived benefits
resulting from the Redomestication which are not reflected in this return, the
Compensation Committee at its February 22, 1999 meeting determined that 100% of such performance shares would
become immediately payable and were paid on February 24,October 22, 1999. In determining the
ROE attained, the Compensation Committee adjusted the Company's 1999 performance
for certain long-term expenditures which were accelerated into the current
period in order to provide the Company with increased tax deductible expenses.
The performance share payouts are included in the Summary Compensation Table.

During 1999 Messrs. Kemp, Barrette, Baxter, Davis, Paquette and Staples
had, pursuant to a 1997 grant of performance shares, 10,000, 7,500, 6,500,
6,500, 4,000 and 2,000 performance shares eligible for payout, respectively, on
December 31, 2000 subject to the attainment of a 13% target ROE. During the 1998
to 1999 performance period, the Company attained an ROE of 11.5% as measured by
the change economic value calculated in accordance with the Incentive Plan. In
light of the ROE attained and in consideration of the perceived benefits
resulting from the Redomestication which are not reflected in this return, the
Compensation Committee determined that 100% of such performance shares would
become immediately payable and were paid on October 22, 1999. In determining the
ROE attained, the Compensation Committee adjusted the Company's 2000 performance
for certain long-term expenditures which were accelerated into the current
period in order to provide the Company with increased tax deductible expenses.
The performance share payouts are included in the Summary Compensation Table.

As of December 31, 1998October 22, 1999 Mr. Jack Byrne had, pursuant to a 19961997 grant of
performance shares, 5,000 performance shares eligible for payout on December 31,
19981999 which also became immediately payable and were paid on February 24,October 22, 1999.
These performance shares were granted to Mr. Byrne prior to his retirement from
active service in 1997. Mr. Byrne has no further performance share awards
outstanding.

GORDON S. MACKLIN, Chairman
PARTRICK M. BYRNE
ROBERT P. COCHRAN
FRANK A. OLSON
13ARTHUR ZANKEL

SHAREHOLDER RETURN GRAPH

The following graph shows the five-year cumulative total return for a
shareholder who invested $100 in Shares (New York Stock Exchange symbol "FFC""WTM")
at the close of business on December 31, 1993,January 1, 1995, assuming re-investment of dividends. For comparison, cumulativeCumulative returns for
the five-year period ended December 31, 1998,1999 are also shown for the Standard &
Poor's 500 Stocks (Property & Casualty) Capitalization Weighted Index ("S&P
P&C") and the Standard & Poor's 500 Stocks Capitalization Weighted Index ("S&P
500"). for comparison.

As stated herein, the Company's various compensation plans are based on its
growth in its book value, market value and economic value (the predominant
factor).which is believed to be conservative proxy for its
perceived intrinsic business value. The Company's long-term goal is to maximize
Fund American's annual
rate of gain in itsWhite Mountains' intrinsic business value per Share which will in turn affect
its market value per Share. Management believes that the Company's growth in
intrinsic value over the past five years has exceedexceeded that of its market value.

[GRAPH]

- -----------------------------------------------------------------------

1994 1995 1996 1997 1998

FFC $ 92.0 $ 95.2 $123.6 $157.2 $184.1

S&P P&C 104.9 142.0 172.6 251.0 233.6

S&P 500 101.3 139.4 171.4 228.6 293.9
- -----------------------------------------------------------------------

14(TABULAR REPRESENTATION OF LINE CHART)

FIVE-YEAR CUMULATIVE TOTAL RETURN
(value of $100 invested December 31, 1994)

1995 1996 1997 1998 1999

WTM $103.4 $134.1 $170.8 $200.0 $174.1

S&P P&C 135.4 135.4 239.3 222.7 166.0

S&P 500 137.6 137.6 225.6 290.1 351.1

COMPENSATION PLANS

RETIREMENT PLANS

In 19981999 Messrs. Kemp, Barrette, Baxter, Davis, BaxterPaquette and PaquetteStaples
received retirement benefits pursuant to the Deferred Benefit Plan, an unfunded,
nonqualified, defined contribution plan established for the purpose of providing
retirement and postretirement benefits. The amount of annual contributions to
the Deferred Benefit Plan are determined using actuarial assumptions and are
based on the present value of the benefit table figures presented below.

Eligible compensation (which includes salary and bonus) is computed as the
average of the five highest paid consecutive years in the last ten years of
service. Participants in the Deferred Benefit Plan may choose between four
investment options for their plan balances including Phantom Shares. Amounts
credited to the Deferred Benefit Plan accounts of such individuals have been
included in the Summary Compensation Table.

$125,000 $ 24,540 $ 33,137 $ 42,984 $ 52,831 $ 62,678
150,000 29,915 40,387 52,359 64,331 76,303
175,000 35,290 47,637 61,734 75,831 89,928
200,000 40,665 54,887 71,109 87,331 103,553
225,000 46,040 62,137 80,484 98,831 117,178
250,000 51,415 69,387 89,859 110,331 130,803
300,000 62,165 83,887 108,609 133,331 158,053
400,000 83,665 112,887 146,109 179,331 212,553
450,000 94,415 127,387 164,859 202,331 239,803
500,000 105,165 141,887 183,609 225,331 267,053
- ----------------------------------------------------------------------------------------------------------------===================================================================================================================

Eligible compensation (which includes salary and bonus) is computed as the
average of the five highest paid consecutive years in the last ten years of
service. Participants in the Deferred Benefit Plan may choose between four
investment options for their plan balances including phantom shares. Amounts
credited to the Deferred Benefit Plan accounts of such individuals have been
included in the Summary Compensation Table. During 1999, the Company terminated
the Deferred Benefit Plan and paid-out all account balances to its participants.

Also in 19981999 Messrs. Kemp, Barrette, Davis, Baxter, andDavis, Paquette and certain
DirectorsStaples
participated voluntarily in the Deferred Compensation Plan, an unfunded,
nonqualified, deferred compensation savings plan. Pursuant to the Deferred
Compensation Plan, Executive Officersexecutive officers and Directorsdirectors may defer all or a portion
of qualifying remuneration payable by Fund American.White Mountains. Amounts deferred pursuant
to the Deferred Compensation Plan are included in the Summary Compensation
Table. Participants in the Deferred Compensation Plan may choose between four
investment options including Phantom Sharesphantom shares for their plan balances. 15During
1999, the Company terminated the Deferred Compensation Plan and paid-out account
balances to its participants.

At the request of the Board, Messrs. Kemp, Barrette and Baxter deferred
$1,300,000, $975,000 and $845,000 of their 1999 compensation in phantom shares
for a period of no less than one year. These compensation amounts are included
in the Summary Compensation Table.

COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION IN
COMPENSATION DECISIONS

FUND AMERICAN COMMITTEE

The Company notes the following relationships and transactions pertaining
to Messrs. Clark, Cochran, George Gillespie and GillespieZankel who are members of the
Compensation Committee and/or the Human Resources Committee.

Mr. Clark is Vice Chairman of Lehman. Lehman has, from time to time,
provided various services to Fund AmericanWhite Mountains including investment banking
services, brokerage services, underwriting of debt and equity securities and
financial consulting services. The amounts paid or payable by Fund AmericanWhite Mountains to
Lehman during 19981999 were immaterialnot material to both Fund American andeither White Mountains or Lehman.

Mr. Cochran is Chairman and CEO of FSA. As of December 31, 1998 Fund
American1999 White
Mountains had a 25%26% economic interest in FSA. During 1998,1999, Mr. Kemp served as
the Chairman of FSA's compensation committee which determines Mr. Cochran's
compensation.

Mr. George Gillespie is a Partnerpartner in CS&M, which has been retained by Fund
AmericanWhite
Mountains from time to time to perform legal services. The amounts paid or
payable by Fund
AmericanWhite Mountains to CS&M during 19981999 were immaterialnot material to both Fund American andeither White
Mountains or CS&M.

Fund AmericanWhite Mountains owns a limited partnership investment interest which is
managed by Mr. Zankel. The amounts paid or payable by White Mountains to
Mr. Zankel during 1999 were not material to either White Mountains or
Mr. Zankel.

White Mountains believes that all the preceding transactions were on terms
that were reasonable and competitive and did not serve to impair the
independence of any of the Compensation Committee and/or the Human Resources Committee.parties involved. Additional transactions of this
nature may be expected to take place in the ordinary course of business in the
future.

CERTAIN FILINGS UNDER SECTION 16

Pursuant to SEC rules relating to the reporting of changes in beneficial
ownership of the Company, Mr. Barrette amended aMacklin failed to file three Form 4's relating to
open market purchases of Shares made during the fourth quarter of 1999. Upon
discovering that no Form 4 filing in February 1999
that servedfilings had been made with respect to correct a filing originally made in August 1998.

PROPOSAL 2

CHARTER AMENDMENT TO CHANGE
THE CORPORATE NAME

The second proposal to be acted upon at the 1999
Annual Meeting calls for
the Restated Certificate of Incorporation of the Company to be amended to change
the corporate name of the Company to "White Mountains Insurance Group, Inc."
(the "Name Change").

Because the Company has largely concluded its transformation from a passive
holding company to a financial services operating company specializingpurchase transactions, Mr. Macklin promptly made all necessary filings in
property and casualty insurance and reinsurance, management and the Board
believe it appropriate for the corporate name to reflect such a change in
orientation and purpose and to formally recognize the Company's corporate
presence in Northern New England. Accordingly, Proposal 2 seeks shareholder
approval to amend the Company's Restated Certificate of Incorporation by
deleting the present First Article thereof and substituting therefor a new First
Article as follows:

First: The name of the Corporation is "White Mountains Insurance Group,
Inc."

If the Name Change is approved by the holders of Shares representing a
majority of the votes entitled to be cast with respect thereto, the Name Change
shall become effective upon the execution and filing by the Company of a
certificate of amendment with the appropriate Delaware governmental authorities
(which is expected to occur promptly after the 1999 Annual Meeting). If the
Name Change is approved, it is expected that the Company would undertake a
change to its New York Stock Exchange ticker symbol from "FFC" to a new symbol
more reflective of the Company's new name.

THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FORJanuary 2000.

PROPOSAL 2 WHICH WOULD
CHANGE THE NAME OF THE COMPANY TO "WHITE MOUNTAINS INSURANCE GROUP, INC."

PROPOSAL 3

CHARTER AMENDMENT TO REDUCE
THE NUMBER OF AUTHORIZED SHARES
OF CAPITAL STOCK

The third proposal to be acted upon at the 1999 Annual Meeting calls for
the Restated Certificate of Incorporation of the Company to be amended to reduce
the total number of Shares and shares of preferred stock ("Preferred Shares")
the Company has the authority to issue from one hundred twenty-five million to
fifteen million and from ten million to one million, respectively (the "Capital
Stock Reduction").

Because the Company has dramatically reduced its Shares outstanding from
more than sixty-six million in 1985 to less than six million in 1999, management
and the Board believe that the Company should reduce the total number of Shares
and Preferred Shares that it has the authority to issue from a total of one
hundred thirty-five million to sixteen million which would reduce certain annual
fees (which are based solely on the total shares authorized) yet would continue
to provide the Company with sufficient flexibility with regard to any potential
future capital stock transactions.

Accordingly, Proposal 3 seeks shareholder approval to amend the Company's
Restated Certificate of Incorporation by deleting the present Fourth Article
thereof and substituting therefor a new Fourth Article as follows:

Fourth: The total number of shares of Common Stock which the Corporation
shall have the authority to issue is fifteen million (15,000,000) shares of
Common Stock having a par value of one dollar ($1.00) per Share. The total
number of shares of Preferred Stock which the Corporation shall have the
authority to issue is one million (1,000,000) shares having a par value of one
dollar ($1.00) per preferred share."

If the Capital Stock Reduction is approved by the holders of Shares
representing a majority of the votes entitled to be cast with respect thereto,
the Capital Stock Reduction shall become effective upon the execution and filing
by the Company of a certificate of amendment with the appropriate Delaware
governmental authorities (which is expected to occur promptly after the 1999
Annual Meeting).

THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR PROPOSAL 3 WHICH WOULD
REDUCE THE NUMBER OF AUTHORIZED SHARES OF ITS CAPITAL STOCK FROM A TOTAL OF ONE
HUNDRED THIRTY-FIVE MILLION TO SIXTEEN MILLION.

PROPOSAL 4

APPOINTMENT OF INDEPENDENT AUDITORS

Subject to shareholder approval, the Audit Committee of the Board has
appointed PricewaterhouseCoopers LLP ("PwC") as Fund American'sWhite Mountains' Independent
Auditors for 1999. A representative2000. Representatives from PwC will attend the 19992000 Annual Meeting
and will be provided with the opportunity to make a statement and will be
available to answer appropriate questions.

PwC has served as Folksamerica's Independent Auditors since 1981 and has
served as FSA's Independent Auditors since 1989. The Audit Committee has
recommended that PwC succeed KPMG LLP as the
Company's Independent Auditors for
1999 due to the significance of Folksamerica and FSA to the Company's 1999
financial position and results of operations.since 1999.

THE BOARD RECOMMENDS A VOTE FOR PROPOSAL 42 APPROVING THE APPOINTMENT OF PWC
AS FUND AMERICAN'SWHITE MOUNTAINS' INDEPENDENT AUDITORS FOR 1999.2000.

OTHER MATTERS

MANNER OF VOTING PROXIES

Shares represented by all valid proxies received will be voted in the
manner specified in the proxies. Where specific choices are not indicated, the
Shares represented by all valid proxies received will be voted: (i)voted for the election
of the nominees named earlier in this Proxy Statement as directors; (ii)
for the Name Change; (iii) for the Capital Stock Reduction;directors and (iv) for the
appointment of PwC as Independent Auditors.

1718

Should any matter not described above be acted upon at the meeting, the
persons named in the proxy card will vote in accordance with their judgment. The
Board knows of no other matters which are to be considered at the 19992000 Annual
Meeting.

VOTES REQUIRED FOR APPROVAL

Proposals 1 and 4The proposals require a favorable vote of a majority of the votes actually
cast with respect thereto (excluding abstentions and Shares not voted).
Proposals 2 and 3 require a favorable vote of a majority of the votes entitled
to be cast.

INSPECTORS OF ELECTION

First Chicago Trust Company of New York a division of EquiServe, P.O. Box
2500, Jersey City, New Jersey 07303-2500, has been appointed as Inspectors of
Election for the 19992000 Annual Meeting. Representatives of First Chicago Trust
Company of New York will
attend the 19992000 Annual Meeting to receive votes and ballots, supervise the
counting and tabulating of all votes and ballots, and determine the results of
the vote.

COSTS OF SOLICITATION

The solicitation of proxies will be made primarily by mail; however,
directors, officers, employees and agents of the Company may also solicit
proxies by telephone, telegram or personal interview. Solicitation costs will be
paid by the Company. Upon request, the Company will reimburse banks, brokerage
houses and other custodians, nominees and fiduciaries for their reasonable
expenses incurred in forwarding proxy materials to their principals.

AVAILABLE INFORMATION

The Company and Source One areis subject to the informational reporting requirements of the
Exchange Act. In accordance therewith, the Company files reports, proxy
statements and other information with the SEC, and Source One
files reports and other information with the SEC.

THE COMPANY WILL PROVIDE TO EACH PERSON TO WHOM A COPY OF THIS PROXY
STATEMENT IS DELIVERED, UPON REQUEST AND WITHOUT CHARGE, COPIES OF ALL DOCUMENTS
(EXCLUDING EXHIBITS)EXHIBITS UNLESS SPECIFICALLY REQUESTED) FILED BY THE COMPANY WITH THE
SEC. Written or telephone requests should be directed to the Corporate
Secretary, Fund American
Enterprises Holdings, Inc.White Mountains Insurance Group, Ltd., 80 South Main Street, Hanover,
New Hampshire 03755-2053, telephone number (603) 643-1567. www.FUNDAMERICAN.COMAdditionally, copies
of all such documents are available at the Company's registered office at
Clarendon House, 2 Church Street, Suite 332, Hamilton, HM 11 Bermuda.

WWW.WHITEMOUNTAINS.COM

All reports, including press releases, SEC filings and other information
for the Company, its subsidiaries and its affiliates are available for viewing
or download at our new website. PLEASE VISIT US!

PROPOSALS BY SHAREHOLDERS FOR THE 20002001 ANNUAL MEETING OF SHAREHOLDERS

If any shareholder that is a qualified holder of record of Shares having an
aggregate market value of at least $2,000 wishesShareholder proposals (other than those proposals to present a proposal for
action at the 2000 Annual Meeting of Shareholders, such proposalnominate persons as
directors) must be received in writing by the Corporate Secretary at 80 South Main Street, Hanover, New
Hampshire 03755-2053,of the Company no later
than February 25,December 31, 2000 and must comply with the requirements of the SEC in order
to be considered for inclusion in the Company's 2000 Proxy Statement. Underproxy statement relating to the Company's
Bylaws, a shareholder proposal shall include (in addition to any requirements of
law): (i) a brief description of the proposal and the reasons for action upon
it at the 2000
Annual Meeting of Shareholders (andto be held in the event that the
proposal includes an amendment to the Company's Certificate of Incorporation,
the language of the proposed amendment); (ii) the name and address of the
shareholder making the proposal; (iii) a representation that the shareholder is
a qualified holder of record of Shares having an aggregate market value of at
least $2,000 and that the shareholder intends to appear at the meeting, in
person or by proxy; and (iv) any material interest of the shareholder in such
proposal.2001.

By Order of the Board of Directors

DENNIS P. BEAULIEU, Corporate Secretary
March 29, 1999

1824, 2000

PROXY

FUND AMERICAN ENTERPRISES HOLDINGS, INC.WHITE MOUNTAINS INSURANCE GROUP, LTD.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR THE ANNUAL MEETING MAY 27, 199922, 2000

The undersigned hereby appoints K. Thomas Kemp and Robert P. Cochran,George J. Gillespie, III,
and each of them, proxies with full power of substitution, to vote all Shares
of the undersigned at the 19992000 Annual Meeting of shareholdersShareholders to be held May
27,
1999,22, 2000, and at any adjournment thereof, upon all subjects that may properly
come before the meeting including the matters described in the proxy
statement furnished herewith, subject to any directions indicated on the
reverse of this card or below. IF NO DIRECTIONS ARE GIVEN, THE PROXIES WILL
VOTE FOR THE ELECTION OF DIRECTORS, FOR THE NAME CHANGE, FOR THE CAPITAL
STOCK REDUCTION, FOR THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT AUDITORS, AND AT THEIR DISCRETION
ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING.

Your vote for the Election of Directors may be indicated on the reverse. The
following Directors are being nominated at this meeting for election to terms
ending in the year indicated.
2000. Arthur Zankel
2002. John J. Byrne
George J. Gillespie, III
Frank A. Olson

(Change of address/comments)

- ------------------------------------

- ------------------------------------2001. Steven E. Fass ---------------------------------------
2002. John D. Gillespie ---------------------------------------
2003. Raymond Barrette ---------------------------------------
Howard L. Clark, Jr. ---------------------------------------
Robert P. Cochran ---------------------------------------
Arthur Zankel ---------------------------------------
(If you have written in the above
space, please mark the corresponding
box on the reverse side of this card.)

YOUR VOTE IS IMPORTANT! PLEASE SIGN AND DATE ON THE REVERSE SIDE AND RETURN
PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE OR OTHERWISE TO FIRST CHICAGO
TRUST COMPANY OF NEW YORK, A DIVISION OF EQUISERVE, POST OFFICE BOX 8085,
EDISON, NEW JERSEY 08818-9052.

PLEASE RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE SEE REVERSE
SIDE

/X/ PLEASE MARK YOUR 0278 VOTES
AS IN THIS EXAMPLE.

This proxy when properly executed will be voted in the manner directed
herein. If no directions are made, this proxy will be voted FOR the Election
of Directors FOR the Name Change, FOR the Capital Stock Reduction and FOR the Appointment of Independent Auditors.

THE BOARD OF DIRECTORS RECOMENDS A VOTEThe Board of Directors recommends a vote "FOR" PROPOSALSProposals 1 2, 3 AND 4.

FOR WITHHELD

1. Election of / / / /
Directors
(see reverse)

FOR, except vote withheld from the following nominee(s):

- --------------------------------------------------------

FOR AGAINST ABSTAINand 2.

Name Change / / / / / /

Change of Address / /
Comments on
Reverse Side

FOR AGAINST ABSTAIN

3. Capital Stock Reduction / / / / / /

4. Appointment of / / / / / /
Independent Auditors

The signer hereby revokes all proxies heretofore given by the signer to vote
at said meeting or any adjournment thereof.

Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
FOR WITHHELD FOR AGAINST ABSTAIN

1. Election of / / / / 2. Appointment of / / / / / /
Directors Independent
(see reverse) Auditors

FOR, except vote withheld from the Change of Address / /
following nominee(s): Comments on
Reverse Side
- -------------------------------------

The signer hereby revokes all proxies heretofore
given by the signer to vote at said meeting or any
adjournment thereof.

Please sign exactly as name appears hereon. Joint
owners should each sign. When signing as attorney,
executor, administrator, trustee or guardian,
please give full title as such.

---------------------------------------------------

SIGNATURE(S) DATE