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Notice of 20112012

Annual General Meeting

Of Members and

Proxy Statement

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White Mountains Insurance Group, Ltd. (the “Company”, “Registrant” or “WTM”) is an exempted Bermuda limited liability company whose principal businesses are conducted through its property and casualty insurance and reinsurance subsidiaries.  Within this proxy statement, the term “White Mountains” is used to refer to one or more entities within the consolidated organization, as the context requires.

White Mountains’ property and casualty insurance and reinsurance operations principally include: (1) OneBeacon Insurance Group, Ltd. (“OneBeacon” or “OB”), a 76%75%-owned Bermuda-based company which, through its U.S.-based subsidiaries, offers a wide range of specialty property and casualty insurance products through independent agencies, regional and national brokers, wholesalers and managing general agencies; and (2) White Mountains ReSirius International Insurance Group, Ltd. (“White Mountains Re” or “WMRe”Sirius Group”), a wholly-owned Bermuda-based company, which provides insurance and reinsurance products for property, accident and health, aviation and space, trade credit, marine, casualty, agriculture and certain other exposures on a worldwide basis through its subsidiaries, Sirius International Insurance Corporation (“WMRe Sirius”Sirius International”), Sirius America Insurance Company and White Mountains Reinsurance Company of America (“WMRe America”) and; (3) Esurance Holdings, Inc., which writes personal auto insurance directly to customers in 30 states through its website and over the phone and through select online agents, and Answer Financial, Inc., which is one of the largest  independent personal insurance agencies in the United States (collectively, “Esurance”).Lloyd’s Syndicate 1945.  White Mountains’ invested assets are managed by White Mountains Advisors LLC (“WM Advisors”), the Company’s wholly-owned investment management subsidiary.

The 20112012 Annual General Meeting will be confined to a Member vote on the proposals set forth in this Proxy Statement and on such other matters properly brought before the meeting.

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WHITE MOUNTAINS INSURANCE GROUP, LTD.

NOTICE OF 20112012 ANNUAL GENERAL MEETING OF MEMBERS

TO BE HELD MAY 26, 201124, 2012

Notice is hereby given that the 20112012 Annual General Meeting of Members of White Mountains Insurance Group, Ltd. will be held on Thursday, May 26, 201124, 2012 at 12:00 noon Atlantic Time at Tucker’s Point Hotel, 60 Tucker’s Point Drive, Hamilton Parish, Bermuda.  At this meeting you will be asked to consider and vote upon the following proposals:

The Company’s audited financial statements for the year ended December 31, 2010,2011, as approved by the Company’s Board of Directors, will be presented at this Annual General Meeting.

Members of record of common shares on the record date, Monday,Friday, March 28, 2011,30, 2012, (1) who are individuals, may attend and vote at the meeting in person or by proxy or (2) that are corporations or other entities, may have their duly authorised representative attend and vote at the meeting in person or by proxy.  A list of all Members entitled to vote at the meeting will be open for public examination during regular business hours beginning on or about April 18, 20119, 2012 at the Company’s registered office located at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.

All Members are invited to attend this meeting.

Members are invited to complete and sign the accompanying proxy card to be returned to White Mountains Insurance Group, Ltd., c/o Computershare, P.O. Box 8069, Edison, New Jersey, 08818-8069, in the envelope provided, whether or not they expect to attend the meeting. Members may also vote their shares by telephone or via the internet in accordance with the instructions on your proxy card.

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WHITE MOUNTAINS INSURANCE GROUP, LTD.

PROXY STATEMENT

This Proxy Statement is being furnished in connection with the solicitation of proxies on behalf of the Company’s Board of Directors (the “Board”) for the 20112012 Annual General Meeting of Members (the “2011“2012 Annual Meeting”), to be held on Thursday, May 26, 201124, 2012 at Tucker’s Point Hotel, 60 Tucker’s Point Drive, Hamilton Parish, Bermuda. The solicitation of proxies will be made primarily by mail, and the Proxy Statement and related proxy materials will be distributed to registered Members on or about April 18, 2011.16, 2012.

Holders of the Company’s common shares (“Members”), par value $1.00 per share, as of the close of business on Monday,Friday, March 28, 2011,30, 2012, the record date, are entitled to vote at the meeting.

You can ensure that your common shares are properly voted at the meeting by completing, signing, dating and returning the enclosed proxy card in the envelope provided.  Members may also vote their shares by telephone or via the internet in accordance with the instructions on your proxy card. A Member has the right to appoint another person (who need not be a Member) to represent the Member 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 (see page 38)37).  Every Member entitled to vote has the right to do so either in person or by one or more persons authorised by a written proxy executed by such Member and filed with the Corporate Secretary.  Any proxy duly executed will continue in full force and effect unless revoked by the person executing it in writing or by the filing of a subsequent proxy.

Sending in a signed proxy will not affect your right to attend the meeting and vote.  If a Member attends the meeting and votes in person, his or her signed proxy is considered revoked.

IMPORTANT VOTING INFORMATION

If you hold your shares through a broker, bank or other financial institution, in order for your vote to be counted on any matter other than Proposal 10 (the ratification of the selection of PwC as the Company’s auditor for 2011)2012), you must provide specific voting instructions to your broker, bank or financial institution by completing and returning the proxy card or following the instructions provided to you to vote your shares via telephone or the Internet. Voting deadlines vary by institution.  Please check with your broker, bank or other financial institution for the voting cut-off date for WTM.

Your Participation in Voting the Shares You Own Is Important

Voting your shares is important to ensure that you have a say in the governance of your company. Please review the proxy materials and follow the instructions on the proxy card to vote your shares.  We hope you will exercise your rights and fully participate in your company’s future.

More Information Is Available

If you have any questions about this new rule or the proxy voting process in general, please contact the broker, bank or other financial institution where you hold your shares. The U.S. Securities and Exchange Commission (“SEC”) has information available on the internet at: www.sec.gov/investor/alerts/votingrules2010.htm  with more information about your voting rights as a shareholder.

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PROPOSAL 1 - ELECTION OF THE COMPANY’S DIRECTORS

THE BOARD OF DIRECTORS

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

At the 20112012 Annual General Meeting, Messrs. Raymond Barrette, Yves BrouilletteHoward L. Clark, A. Michael Frinquelli and John GillespieAllan L. Waters are nominated to be elected to Class IIIII with a term ending in 2014.  Mr. George Gillespie, III will retire from the Board at the end of his current term on May 26, 2011.2015.

The Board recommends a vote FOR Proposal 1 which calls for the election of the 20112012 nominees.

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

* Nominated to be elected at the 20112012 Annual Meeting to Class IIIII with a term ending in 2014.

**Mr. George Gillespie, III will retire from the Board effective May 26, 2011.2015.

All three of the nominees for election at the 20112012 Annual Meeting, Messrs. Barrette, BrouilletteClark, Frinquelli and John Gillespie,Waters, were previously elected by Members.

The Board believes its members should have a diversity of skills and experience and be willing to devote adequate time and effort to Board responsibilities.  In evaluating director candidates, the Nominating and Governance Committee evaluates attributes such as independence, integrity, expertise, breadth of experience, knowledge about the Company’s business and industry, and ownership interest in the Company.  Key aspects of the directors’ experiences, qualifications and skills are included in their individual biographies.

Class I - Term Ending in 2013

Morgan W. Davis has been a director of the Company since 2006.  Mr. Davis was formerly a Managing Director of OneBeacon from 2001 to 2005 and served in a variety of capacities for subsidiaries of White Mountains from 1994 to 2001.  Prior to joining the CompanyWhite Mountains in 1994, Mr. Davis had 21 years of experience in the insurance business, mostly at Fireman’s Fund Insurance Company and INA/Cigna.  Mr. Davis also serves as a director of OneBeacon, Esurance, Answer Financial, Inc. and Montpelier Re Holdings.Holdings and Valen Technology.  Mr. Davis has extensive executive and board-level experience gained over the course of his almost forty yearforty-year career in the property and casualty insurance industry.

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Edith E. Holiday has been a director of the Company since 2004.  Ms. Holiday formerly served as Operating Trustee for TWE Holdings I and II Trusts from 2002 to 2007.  Ms. Holiday was also the President, Secretary and Treasurer of Comcast TW Holdings, Inc. from 2006-2007.  From 1990 to 1993 Ms. Holiday served as Assistant to the President of the United States and Secretary of the Cabinet.  From 1989 to 1990 she was General Counsel to the United States Treasury Department. Ms. Holiday also holds directorships at Hess Corporation (since 1993), Canadian National Railway Company (since 2001), H. J. Heinz Company (since 1994) and RTI International Metals, Inc. (since 1999) and is a director or trustee of 41 investment companies in the Franklin Templeton Group of Mutual Funds (since 1996).  Ms. Holiday has extensive board-level experience across diverse industries and significant experience with the U.S. Federal government.

Lowndes A. Smith has been a director of the Company since 2003.  Mr. Smith has served as Managing Partner of Whittington Gray Associates since 2001.  Mr. Smith formerly served as Vice Chairman of The Hartford Financial Services Group, Inc., (“The Hartford”) (1989-2001) and President and CEO of Hartford Life Insurance Company (1989-2001).  Mr. Smith also serves as Chairman of the Board and a member of the Compensation Committee of OneBeacon, and as Chairman of the Board and a member of the Audit, Compensation and Executive Committees of Symetra Financial Corporation.  Mr. Smith is a director of 8491 investment companies in the mutual funds of The Hartford (since 1990).  Mr. Smith has more than 40 years of experience in the insurance industry andas well as broad management and financial experience.

Class II - Term Ending in 2011 (up for re-election)2014

Raymond Barrette has served as Chairman and CEO of the Company since January 2007 and has been a director since August 2006.  He previously served as a director of the Company (2000-2005), as President and CEO of the Company (2003-2005), as CEO of OneBeacon (2001-2002), as President of the Company (2000-2001) and as Executive Vice President and Chief Financial Officer of the Company (1997-2000).  Prior to joining the Company in 1997, Mr. Barrette had 23 years of experience in the insurance business, mostly at Fireman’s Fund Insurance Company.  Mr. Barrette is also Chairman of White Mountains Re and EsuranceSirius Group and a director of OneBeacon.  Additionally, Mr. Barrette served as a director for Montpelier Re Holdings, Ltd. (2001-2007).  Mr. Barrette is an actuary and has significant experience in all facets of the property and casualty insurance industry.

Yves Brouillette has been a director of the Company since 2007.  He has been the President of Beluca Investment, Inc. since 2005.  Previously, Mr. Brouillette had been with ING since 1989, serving in many leadership positions at ING companies, including most recently as the CEO for ING Latin America operations in Mexico, Brazil, Chile and Peru (2002-2005).  Mr. Brouillette is a director of Intact Financial Corporation (formerly ING Canada) and was its Chairman of the Board (2003-2007). Mr. Brouillette is an actuary and has over 30 years of experience in the property and casualty insurance industry in North and South America.

John D. Gillespie has been a director of the Company since 1999. Mr. Gillespie is the founder and Managing Member of Prospector Partners, LLC (“Prospector”) and has been the Chairman and President of Prospector Funds, Inc. since 2007 and a Director of Prospector Offshore Fund (Bermuda) Ltd. since 1997.  Mr. Gillespie served as Chairman and President of WM Advisors (2003-2005), as a Managing Director of OneBeacon (2001-2003) and was a director of Symetra Financial Corporation (2004-2007).  Mr. Gillespie also served as a director for Montpelier Re (2004-2005). Prior to forming Prospector, Mr. Gillespie was President of the T. Rowe Price Growth Stock Fund and the New Age Media Fund, Inc.  Mr. Gillespie’s father, George J. Gillespie, III, is also a director of the Company.  Mr. Gillespie possesses extensive financial and investment experience.

Class III - Term Ending in 2012 (up for re-election)

Howard L. Clark, Jr. was a director of the Company (1986-1990), an advisor to the Board (1990-1993), and was re-elected as a director in 1993.  From 2008 to 2011, Mr. Clark has served as Vice Chairman at Barclays Capital, Inc. (“Barclays”) since 2008..  Prior to joining Barclays, Mr. Clark was Vice Chairman of Lehman Brothers, Inc. (“Lehman”), the broker/dealer subsidiary of Lehman Brothers Holdings (1993-2008), and Chairman and CEO of Shearson Lehman Brothers Holdings Inc. (1990-1993).  Previously, Mr. Clark was Executive Vice President and Chief Financial Officer of the American Express Company.  HeMr. Clark is also a director of Walter Energy, Inc., formerly Walter Industries, Inc., (since 1995), United Rentals, Inc., Walter Industries, Inc. (since 2004) and Mueller Water Products, Inc. (since 2006).  Mr. Clark has extensive board-level experience across diverse industries and extensive executive experience in the financial services industry.

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Robert P. Cochran has been a director of the Company since 1994 and serves as its Deputy Chairman.  Mr. Cochran is a founding principal of Financial Security Assurance Holdings, Ltd. (“FSA”) and, until his retirement from FSA in July 2009, served as FSA’s CEO from 1990 and as its Chairman and CEO from 1997. Mr. Cochran possesses a broad background of insurance industry management, financial analysis, compensation philosophy and strategy experience.

A. Michael Frinquelli has been a director of the Company since June 2005.  Mr. Frinquelli is co-founder and Manager of Renaissance Fund Advisors, Inc.  Until 2004, Mr. Frinquelli was a general partner of Renaissance Executive Partners, which he co-founded in April 1997. Prior to that, he was a managing director at Merrill Lynch and a managing director at Salomon Brothers.  Mr. Frinquelli also served as a director for Primus Financial Products, LLC, a wholly-owned subsidiary of Primus Guaranty, Ltd. from 2004 until 2010.  Mr. Frinquelli has extensive insurance industry expertise, serving as an insurance industry equity analyst for 33 years.

Allan L. Waters was appointed President and CEO of Sirius International Insurance Group, Ltd. (formerly White Mountains ReRe) in March 2007.  He served as a director of the Company from 2003 to 2004 and was re-elected as a director in 2005.  Mr. Waters was the founder and Managing Member of Mulherrin Capital Advisors, LLC (1998-2007).  Mr. Waters formerly served as Senior Vice President and Chief Financial Officer of the Company (1993-1997), as Vice President and Controller (1990-1993), as Vice President of Finance (1987-1990) and as Assistant Vice President of Finance (1985-1987).  Mr. Waters possesses long-term knowledge of the Company and has significant executive and board-level experience in the property and casualty industry.

CORPORATE GOVERNANCE

Corporate governance is the system by which companies are directed and controlled and involves the distribution of rights and responsibilities among the Board, management and the Company’s Members.  The Company has established Corporate Governance Guidelines that spell out its overall approach towards corporate governance.

The Company also has a Code of Business Conduct that applies to all directors, officers and employees in carrying out their responsibilities to, and on behalf of, the Company. No waivers of the Code of Business Conduct were requested of, or granted by, the Board for any director or executive officer during 2010.2011.

The Company’s Corporate Governance Guidelines and Code of Business Conduct are available at our website, www.whitemountains.com. These documents are available in print, free of charge, to any Member upon request.

The Board

The day-to-day management of the Company, including preparation of financial statements and short-term and long-term strategic planning, is the responsibility of management. The primary responsibility of the Board is to oversee and review management’s performance of these functions in order to advance the long-term interests of the Company and its Members.

In fulfilling this responsibility, directors must exercise common sense business judgment and act in what they reasonably believe to be in the best interests of the Company and its Members. Directors are entitled to rely on the honesty and integrity of senior management and the Company’s outside advisors and auditors. However, it is the Board’s responsibility to establish that they have a reasonable basis for such reliance by ensuring that they have a strong foundation for trusting the integrity, honesty and undivided loyalty of the senior management team upon whom they are relying and the independence and expertise of outside advisors and auditors.

Mr. Barrette serves as Chairman of the Board and as CEO of the Company.  The Board believes that the most effective leadership structure for the Company at the present time is for Mr. Barrette to serve in both roles.  As CEO, Mr. Barrette is effective at overseeing the complex, decentralized operations of the Company.  By virtue of his broad knowledge of the insurance industry and his long experience and track record with the Company, the Board believes Mr. Barrette is best suited to preside over the Board and set its agendas. The Board is composed of directors that, together, are knowledgeable and experienced in all aspects of the Company’s business, and the Board is satisfied that the current structure provides strong oversight of the Company’s affairs.

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Mr. Cochran, an independent director, serves as Deputy Chairman of the Board.  At most regularly quarterly meetings of the Board, Mr. Cochranan independent director presides over a separate session of non-management directors without Company management present.

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Director Independence

The Board has determined that a majority of the Company’s current directors are independent, as defined in Section 303A of the New York Stock Exchange (“NYSE”) Listed Company Manual.  Those directors determined to be independent are Messrs. Brouillette, Clark, Cochran,Davis, Frinquelli and Smith and Ms. Holiday.  For a director to be independent, the Board must determine that the director has no relationship with the Company (other than being a director or shareholder of the Company)Company or its subsidiaries) or has only immaterial relationships with the Company.  The Company does not apply categorical standards as a basis for determining director independence.  Accordingly, the Board considers all relevant facts and circumstances, on a case-by-case basis, in making an independence determination.

The Board notes no current relationships (other than being directors or shareholders) with Messrs. Brouillette, Cochran,Clark, Davis, Frinquelli and Smith or Ms. Holiday.  The Board notes a relationship with Mr. Clark that ended in 2011, as disclosed herein under “Transactions with Related Persons, Promoters and Certain Control Persons”, and that it concluded iswas immaterial and doesdid not impair his independence.  In making its independence determinations, the Board considers all such relationships in light of NYSE standards as well as the attributes it believes should be possessed by independent-minded directors. Those attributes include the relative impact of the transactions to the director’s personal finances, the perceived degree of dependence by the director or the Company upon the relationship or transactions continuing in the future and whether the transactions were on terms that were reasonable and competitive.  The Board concluded that Mr. Clark’s prior relationship did not and does not impair his independence.

Board Meetings and Committees; Annual Meeting Attendance

During 2010,2011, the following meetings of the Board were held: fourseven meetings of the full Board, eightnine meetings of the Audit Committee, fourfive meetings of the Compensation Committee, twothree meetings of the Nominating and Governance Committee, and one meetingtwo meetings of the Finance Committee.  During 2010,2011, each director attended more than 75% of the aggregate of: (1) the total number of meetings of the Board (held during the period for which he or she has been a director); and (2) the total number of meetings held by all committees of the Board on which he or she served. It is WTM practice that all directors are invited to and generally attend all Committee meetings.  In addition, each Committee Chair provides regular updates to the Board regarding Committee activities.

Directors are encouraged, but are not required, to attend annual meetings.  All of the Company’s directors were in attendance at the 20102011 Annual General Meeting, which was held on May 26, 2010.2011.

Committees of the Board

Nominating and Governance Committee

The primary purposes of the Nominating and Governance Committee are to: (1) identify individuals qualified to become Board members and recommend such individuals to the Board for nomination for election to the Board; (2) make recommendations to the Board concerning committee appointments; (3) develop, recommend and annually review corporate governance guidelines applicable to the Company and oversee corporate governance matters and (4) oversee the evaluation of the Board and management.

The Nominating and Governance Committee is currently comprised of Messrs. Clark (as Chairman), Brouillette and CochranDavis and Ms. Holiday.  The Board has determined that each current member of the Nominating and Governance Committee satisfies applicable NYSE requirements.

The Nominating and Governance Committee Charter, which outlines the duties and responsibilities of the Nominating and Governance Committee, is available at www.whitemountains.com.  The Nominating and Governance Committee Charter is available in print, free of charge, to any Member upon request.

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General Criteria and Process for Selection of Director Candidates.  In identifying and evaluating director candidates, the Nominating and Governance Committee does not set specific criteria for directors.  Under its charter, the Committee is responsible for determining desired Board skills and evaluating attributes such as independence, integrity, expertise, breadth of experience, knowledge about the Company’s business or industry and ownership interest in the Company. In selecting director candidates, the Company seeks a diversity of skills and experience, but does not affirmatively seek diversity based on race, gender, or national origin.  Directors must be willing to devote adequate time and effort to Board responsibilities.  As set forth in the Company’s Corporate Governance Guidelines and its Charter, the Committee is responsible for recommending director candidates to the Board.

Consideration of Director Candidates Nominated by Members.  The Company has not adopted a specific policy regarding consideration of director candidates from Members.  Members who wish to recommend candidates for consideration by the Committee may submit their nominations in writing to the Corporate Secretary at the address provided in this Proxy Statement.  The Committee may consider such Member recommendations when it evaluates and recommends candidates to the Board for submission to Members at each annual general meeting.  In addition, Members may nominate director candidates for election without consideration by the Committee by complying with the eligibility, advance notice and other provisions of our Bye-laws as described below.

Procedures for Nominating Director Candidates.  Under the Company’s Bye-laws, nominations for the election of directors may be made by the Board or by any Member entitled to vote for the election of directors (a “Qualified Member”).  A Qualified Member may nominate persons for election as directors only if written notice of such Qualified Member’s intent to make such nomination is delivered to the Secretary not later than: (1) with respect to an election to be held at an annual general meeting, 90 days prior to the anniversary date of the immediately preceding annual general meeting or not later than 10 days after notice or public disclosure of the date of the annual general meeting is given or made available to Qualified Members, whichever date is earlier, and (2) with respect to an election to be held at a special general meeting for the election of directors, the close of business on the seventh day following the date on which notice of such meeting is first given to Qualified Members.  Each such notice shall set forth:  (a) the name and address of the Qualified Member who intends to make the nomination and of the person or persons to be nominated; (b) a representation that the Qualified Member is a holder of record of common shares entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of all arrangements or understandings between the Qualified Member and each such candidate and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the Qualified Member; (d) such other information regarding each candidate proposed by such Qualified Member as would have been required to be included in a proxy statement filed pursuant to the proxy rules of the SEC had each such candidate been nominated, or intended to be nominated, by the Board; and (e) the consent of each such candidate to serve as a director of the Company if so elected.

Audit Committee

The primary purposes of the Audit Committee are to: (1) assist with Board oversight of: the integrity of the Company’s financial statements; the qualifications and independence of the independent auditors; the performance of the internal audit function and the independent auditors; and the Company’s compliance with legal and regulatory requirements; (2) provide an avenue of communication among the independent auditors, management, the internal auditors and the Board; (3) approve certain related or affiliated person transactions and review disclosures thereof and (4) prepare the Audit Committee Report (which appears on page 32)31).  In addition, with respect to risk management, the Committee discusses with management the Company’s policies with respect to risk assessment and risk management, including the Company’s major financial risk exposures and the steps management has taken to monitor and control those exposures.

The Audit Committee is comprised of Messrs. Smith (as Chairman), Brouillette and Frinquelli and Ms. Holiday. The Board has determined that, of the persons on the Audit Committee, at a minimum Mr. Smith meets the requirements of being an Audit Committee Financial Expert as defined in Item 401(h) of Regulation S-K of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Board has also determined that each current member of the Audit Committee satisfies applicable NYSE requirements as well as the separate independence standards set forth by the SEC.

The Audit Committee Charter, which outlines the duties and responsibilities of the Audit Committee, is available at www.whitemountains.com.  The Audit Committee Charter is available in print, free of charge, to any Member upon request.

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Compensation Committee

The primary purposes of the Compensation Committee are to: (1) review and make recommendations on director compensation; (2) discharge the Board’s responsibilities relating to the compensation of executives; (3) oversee the administration of the Company’s compensation plans (and, to the extent the Compensation Committee deems appropriate, the plans of the Company’s major subsidiaries), in particular the incentive compensation and equity-based plans and (4) review and discuss the Compensation Discussion and Analysis with management and prepare the Compensation Committee Report (which appears on page 20)19).

The Compensation Committee is currently comprised of Messrs. CochranDavis (as Chairman), Frinquelli and Smith and Ms. Holiday. The Board has determined that each current member of the Compensation Committee satisfies applicable NYSE requirements.

The Compensation Committee Charter, which outlines the duties and responsibilities of the Compensation Committee, is available at www.whitemountains.com.  The Compensation Committee Charter is available in print, free of charge, to any Member upon request.

Interlocks and Insider Participation

No member of the Compensation Committee was an employee of the Registrant during the last fiscal year or has served as an officer or employee of White Mountains.the Registrant.

Finance Committee

The primary purposes of the Finance Committee are to: (1) formulate and approve the Company’s (including OneBeacon’s) investment policy and investment guidelines; (2) review the performance and asset allocation of the Company’s (including OneBeacon’s) investment portfolio on a regular basis and (3) monitor the capital, debt, and corporate structure of the Company (including OneBeacon) and, in coordination with the Audit Committee, review the adequacy of risk management, including with respect to new business opportunities outside of traditional property and casualty insurance and reinsurance. The Finance Committee is currently comprised of Messrs. Frinquelli (as Chairman), Barrette, Brouillette, John Gillespie and Smith.

Risk Oversight

The Board, directly and through its Committees, plays an active role in the oversight of the Company’s risk management.  The subject of risk management is a recurring agenda item, for which the Board regularly receives reports from management on capital, investments, and operations, including the risks associated with each and the steps management is taking to manage those risks.  The Board also discusses with management the Company’s business strategy, risk appetite and appropriate levels of risk.

The Board’s committees are assigned oversight responsibility for particular areas of risk.  For example, the Audit Committee receives a report, at least annually, on company-wide risks which encompass operational, financial, legal, compliance and reputational risks.  The Compensation Committee oversees risk related to executive compensation plans and implementation.  The Finance Committee oversees the risks related to managing the Company’s investment portfolio.

Shareholder Communications

Members, employees and others interested in communicating directly with the Board, any of the Board’s Committees or any individual member of the Board should write to the addressee, c/o the Corporate Secretary, at the address presented under “Available Information” (which appears on page 38)37).

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Philosophy

Our executive compensation policies are designed with the primary goal of maximizing shareholder value over long periods of time.  We believe that this goal is best pursued by utilizing a pay-for-performance program that closely aligns the financial interests of management with those of our shareholders and encourages appropriate risk taking.  We accomplish this by emphasizing variable long-term compensation, the value of which is tied to performance over a number of years rather than entitlements (such as base salary, pensions and employee benefits).  To that end, the Compensation Committee (the “Committee”) has established base salaries and target annual bonuses for our executives that tend to be lower than those paid by comparable property and casualty insurers and reinsurers, while granting the bulk of an executive’s target compensation as long-term incentive compensation.

We generally have structured our long-term incentive compensation as performance shares, restricted shares or performance units.  At our parent company, long-term incentive compensation is typically in the form of WTM performance shares and restricted shares, which reward company-wide performance.  The number of WTM common shares earned from a grant of performance shares, which can be from 0x to 2x the target number granted, is tied to our after-tax annual growth in intrinsic business value per share (as defined by the Committee) over the performance cycle.  Performance shares, restricted shares and/or performance units are typically granted annually, and performance is tied to a three-year period.

Typically, we have set the performance target for a 100% payout of WTM performance shares at roughly 700 basis points above the risk-free rate, a level consistent with the risk premium that the market has demanded for investing in equities.  To establish the risk-free rate, the Committee typically looks to the yield on the 10-year treasury at the beginning of the performance cycle.  In general, no shares are earned if annual growth in intrinsic business value per share is less than the risk-free rate and 200% are earned if performance is 1,400 basis points above the risk-free rate.  We use linear interpolation to determine the payout percentage for results in between.

Under our performance share system,long-term incentive programs, at any given time an executive usually has three overlapping performance cycles running.  This approach avoids cliffs that could foster a short-term outlook and also serves as an effective retention tool.  Based on the Company’s poor performance in 2008, no WTM performance shares were earned for the 2006-2008, 2007-2009 or 2008-2010 cycles.  To reflect the loss of retention incentives for key employees during this time, at its February 2009 meeting, the Committee determined to bridge the gap to the next potential long-term incentive payout in early 2012 by issuing restricted common shares to selected executives other than Ray Barrette that vested at the end of 2010. Subsequently, the Committee decided to structure a portion of new long-term incentive grants as restricted shares to temper the effect of extreme events, good or bad.  The Committee believes that the mix of long-term instruments that have been granted in the current running performance cycles of 2009-2011, 2010-2012 and 2011-2013 provide appropriate retention incentives.

In the case of our Chairman & CEO, Mr. Barrette, to induce him to rejoin the Company and to incent him as an owner, in January 2007 he was granted a package of 200,000 out of the money,out-of-the-money, escalating strike price options and 35,000 restricted shares, each of which vestsvested in annual installments over five years.  Mr. Barrette also received a tranche of 15,000 restricted shares that were structured to vest in the event of a change in control prior to January 20, 2012. As discussed below under “Compensation for 2010—Long-Term Incentive Compensation—CEO”, last yearIn 2010, shareholders approved modifications to Mr. Barrette’s options and, in conjunction with those changes, the Compensation Committee amended the vesting terms of the tranche of 15,000 restricted shares so that those shares time vest in three equal annual installments beginning on January 20, 2013.  Mr. Barrette does not receive other long-term incentive grants.

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Since OneBeacon’s initial public offering in November 2006, its long-term compensation had been structured primarily in the form of OneBeacon performance shares, which reward OneBeacon’s overall performance.  Beginning with the 2009-2011 performance cycle, OneBeacon’s long-term incentives were re-designed with the CEO and CFO receiving half in the form of performance units that are tied to underwriting performance and half in OneBeacon performance shares.  Other OneBeacon executives receive a greater proportion or all of their long-term incentives in performance units or in long-term cash awards that are tied to the results of theirOneBeacon’s specialty business as a whole and the executive’s individual business units.unit. The number of OneBeacon common shares earned from a performance share grant, which can be from 0x to 2x the target number granted, is tied to OneBeacon’s after-tax annual growth in book value per share over the performance cycle.  The payout earned from a OneBeacon performance unit grant, which also can be from 0x to 2x the target number granted, is tied to OneBeacon’s adjusted combined ratio over the performance cycle.

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At our major non-public operating subsidiaries, White Mountains ReSirius Group and, until its sale in 2011, Esurance, long-term incentive compensation is typically in the form of performance units.  Performance units reward the performance of the particular operating group.  The number of units earned at the end of the performance cycle is tied to those elements of performance for which the operating group’s management has primary responsibility.  As an example, because the parent company keeps responsibility for investing the assets of our non-public operating subsidiaries, in calculating performance the operating subsidiaries are credited with a “standard” return on their investible assets.  At WMRe,Sirius Group, the number of units earned can be from 0x to 2x the target number granted.  At Esurance, the number of performance units that are earned is calculated such that 10% of the value added over the risk-free hurdle is shared with Esurance management (assuming no forfeitures).In addition, for the most senior non-public operating group executives, including our Named Executive Officers atwho work for our wholly owned operating companies, in order to better align their interests with those of our shareholders, we typically denominate a portion of their long-term incentives in WTM performance shares and/or restricted shares.

In our long-term incentive compensation programs, we target sharing with management an aggregate of 13% to 17% of the value added above a risk-free return on our shareholders’ equity.  We take this approach because producing a rate of return equal to a risk free rate does not add value to the capital owners put in the business–our shareholders would be better off putting their money in U.S. treasuries and avoiding entirely the risk of owning a portion of a business.  We target sharing 13% to 17% because we compete for talent and investment opportunities where such sharing is common and because we believe that this is a fair sharing of value between owners who put their capital at risk and employees who dedicate their time and talent. In addition, as an additional guideline, we generally limit annual share grants to less than 1% of the Company’s outstanding shares.

Each year, the Committee compares the originally targeted sharing percentage to the actual sharing percentage that resulted from the most recently completed performance cycle.  In addition, when making new grants, the Committee assesses the impact of different performance scenarios on the potential sharing percentage.  Further, in order to test our beliefs about the size of the awards we make and their variability, annually the Committee has reviewed and considered a systematic analysis prepared by management of the public disclosures about compensation made by other property and casualty insurers and reinsurers and of the amount and variability of compensation at those companies at differing levels of performance.  These analyses have supported the Committee’s view that our compensation programs are appropriately sized and more variable than most other insurers and reinsurers, have fewer fixed elements of compensation and perquisites, and do not lead to significant rewards for poor performance as can happen with long-term options granted with a fixed exercise price equal to the market price on the date of grant.

The Committee believes that the compensation structures that have been developed for the Company and its subsidiaries closely align the financial interests of management with those of our shareholders and encourage appropriate, but not excessive, risk taking. In the case of WMRe,Sirius Group, given its exposure to catastrophic events, beginning in 2008 we implemented a catastrophe spreading mechanism with respect to both its performance units and annual bonus.  This mechanism ensures that WMReSirius Group is charged with at least 50% of its expected annual catastrophe losses whether or not any catastrophe losses are actually incurred.  Through this mechanism and WMRe’sSirius Group’s management of its aggregate exposure to very large catastrophic events through the monitoring of its maximummodeled 10,000-year net financial impact, underwriting limit, the Company’s management and the Committee believe that WMRe’sSirius Group’s incentive plans are appropriate and do not encourage excessive risk taking.

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Our Compensation Process

The Committee is responsible for approving our compensation practices that affect executive officers, and it specifically approves all compensation for our executive officers and for any employee with target annual compensation in excess of $1.5 million.  Our CEO annually presents the Committee with his evaluation of our executives, their individual performances, responsibilities and the contributions they made to the Company’s accomplishments over the past year, as well as over the last long-term incentive plan cycle and his expectations for the future and succession plans.  In connection with this evaluation, the CEO presents the Committee with his recommendations for establishing the compensation for these executives for its consideration.  The Committee assesses the performance, responsibilities and contributions of the CEO, considers CEO succession plans, and sets the compensation of the CEO.

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With the exception of significant promotions and new hires, compensation matters are usually addressed at the first meeting of the Committee each year (typically late February) following the availability of financial results for the prior year.  This allows us to determine the results of prior period grants and to set targets for the current year and newest long-term performance cycle.  Performance cycles for long-term compensation typically run for three years beginning on January 1st of the year of grant.

Following the OneBeacon initial public offering (the “OB IPO”) in November 2006, the Committee determined that it would fully delegate to the OneBeacon Compensation Committee (the “OneBeacon Committee”) authority for the compensation of OneBeacon’s officers, including those who might be Named Executive Officers of the Company.  Accordingly, compensation actions for OneBeacon personnel following the date of the OB IPO (including new annual and long-term incentives and approval of payouts on existing annual and long-term incentives) have been taken by the OneBeacon Committee (which is currently comprised of Lowndes Smith (Chair), Lois Grady and Kent Urness, who are independent directors of OneBeacon, and Mr. Barrette) and, to the extent necessary to comply with applicable regulations, a subcommittee that excludes Mr. Barrette.

Compensation for 20102011

The principal elements of compensation for our executives are long-term incentive compensation, base salary, and annual incentive bonuses.

Long-Term Incentive Compensation

CEO.  In late 2009 and early 2010, the Committee reviewed Mr. Barrette’s compensation and the incentives created by his options.  Given that the options were deeply out of the money and subject to continuing exercise price increases, the Committee determined that the existing incentives were no longer appropriate for performance and retention purposes. Mr. Barrette and the Committee agreed to amend the terms of the options, subject to the approval of the Company’s shareholders, which was received at the May 2010 annual general meeting.  The amendments to the options were as follows:

·Extend the term by three years to January 20, 2017

·Freeze the exercise price at $742, the exercise price on February 24, 2010, which was more than double stock price at the time

·Extinguish 75,000 of the 200,000 options

·Limit the potential in-the-money value of the optionsno new long-term incentive grants in excess of $100 million to 50% of the amount in excess of $100 million (for the options to be worth in excess of $100 million, the share price will need to be in excess of $1,540 by January 20, 2017)

In conjunction with the amendment of the option terms, the Committee also amended the vesting terms of the tranche of 15,000 restricted shares that were to vest if there was a change in control prior to January 20, 2012 so that those shares time vest in three equal annual installments beginning on January 20, 2013.

As of the end of 2010, 120,000 of the 125,000 outstanding options had vested, and 28,000 of the 50,000 restricted shares had vested.

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Named Executive Officers.  In the case of Messrs. Foy, CampbellRountree and Waters, in determining the amount of new long-term incentive compensation grants for 2010,2011, the Committee assessed each executive’s scope of authority and ability to impact the success of the Company.  Based on the Committee’s general experience and the recommendation of the CEO, the Committee established a grant level that it believed was appropriate to reflect each such executive’s expected contribution to the Company over the next performance cycle.  In addition, after reflecting on the impact of the financial crisis on past grants of long-term incentives, the Committee structured a portion of the incentives as restricted shares to temper the effect of extreme events, good or bad, and to have a more robust retention tool.  Mr. Miller’s level of compensation was established by the OneBeacon Committee.

For each Named Executive Officer recipient of a WTM performance share grant for the 2010-20122011-2013 performance cycle, the Committee established 11%10% annual growth in intrinsic business value per share as the performance target that would result in a payout of 100% of the target shares.  Annual growth of 4%3% or less would result in a payout of 0% and annual growth of 18%17% or more would result in a payout of 200%.  The targets were consistent with the Company’s compensation philosophy described above as the yield on the 10-year treasury at the beginning of 20102011 was 3.85%3.3%.  To measure growth in intrinsic business value per share, the Committee looks to growth in economic value per share (weighted 50%) and growth in adjusted GAAP book value per share (weighted 50%), in each case including dividends.

In total, the WTM performance share and restricted share grants made to all employees of the Company for the 2010-20122011-2013 performance cycle totaled approximately 0.7% of the then outstanding shares, within the Committee’s 1% guideline.

In addition, with respect to the 2009-2011 performance cycle which matured at the end of 2011, 10% annual growth in intrinsic business value per share (“GIBVPS”) was the performance target for a payout of 100% of the target shares.  Annual growth of 3% or less would have resulted in a payout of 0% and annual growth of 17% or more would have resulted in a payout of 200%.  At its meeting in February 2012, based on an average annual GIBVPS of 13.8%, the Committee confirmed that the payout that was earned was 155% of target.  The Committee permitted the earned performance shares to be paid in cash or in WTM common shares.

David Foy.  Mr. Foy has been the CFO of the Company since 2003.  For the 2009-2011 cycle, Mr. Foy had been granted 9,000 target performance shares.  Based on the Company’s performance over the 2008-2010 performance cycle, there was no payouthe earned 13,950 WTM common shares.

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Table of WTM performance shares.  Mr. Foy had 9,000 restricted shares that vested in 2010.Contents

For the performance cycle from 2010-2012,2011-2013, Mr. Foy was granted 5,8504,250 WTM performance shares and 3,1504,250 restricted shares.  The grant date value was approximately $3.1 million. The number of performance shares that will be earned will be determined after the end of 20122013 based on the Company’s performance over the cycle compared to the target described above. The restricted shares will vest on December 31, 2012,January 1, 2014, subject to Mr. Foy’s continued employment.

Reid CampbellG. Manning Rountree.  Mr. Campbell has beenRountree is a Managing Director of White Mountains Capital since 2004 and has served in a varietythe President of financial management positions with White Mountains since 1994.Advisors.  He joined the Company in 2004.  For the 2009-2011 cycle, Mr. Rountree had been granted 5,000 target performance shares.  Based on the Company’s performance over the 2008-2010 performance cycle, there was no payout ofhe earned 7,750 WTM performancecommon shares.  Mr. Campbell had 7,500 restricted shares that vested in 2010.

For the performance cycle from 2010-2012,2011-2013, Mr. CampbellRountree was granted 3,9002,800 WTM performance shares and 2,1002,800 restricted shares.  The grant date value was approximately $2.0 million. The number of performance shares that will be earned will be determined after the end of 20122013 based on the Company’s performance over the cycle compared to the target described above. The restricted shares will vest on December 31, 2012,January 1, 2014, subject to Mr. Campbell’sRountree’s continued employment.

Allan Waters.  Mr. Waters has been the CEO of White Mountains ReSirius Group since 2007.  In addition, from time to time Mr. Waters takes on responsibility for certain projects at the Company.  For the 2009-2011 cycle, Mr. Waters had been granted 3,950 target performance shares.  Based on the Company’s performance over the 2008-2010 performance cycle, there was no payout ofhe earned 6,122.5 WTM performancecommon shares.  Mr. Waters had 1,200 restricted shares that vested in 2010.  The payout of Mr. Waters’ WMRe performance units is calculated excluding any net adverse reserve development through the end of 2008Based on reserves relating to business written in 2006 and prior.  As a result, based on WMRe’sSirius Group’s performance for the 2008-20102009-2011 performance cycle, excluding net adverse development on old reserves, which was an annualized after-tax, levered underwriting return on deployed capital (“UROC”) of 13.2%11.5%, Mr. Waters received a payout of 117%106.5% of the WMReSirius Group units granted to him for the 2008-20102009-2011 cycle at a value of $1,451$1,384 per unit, which equaled approximately $4.4$3.9 million.

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For the performance cycle from 2010-2012,2011-2013, Mr. Waters was granted 2,560 WMRe2,569 Sirius Group performance units, 2,2751,650 WTM performance shares and 1,2251,650 restricted shares.  The grant date value was approximately $3.8 million.   The performance target for the WMReSirius Group units is an annual 12%11% UROC, with a UROC of 5%4% or less resulting on no payout and a UROC of 19%18% or more resulting in a 200% payout.  The number of performance shares and units that will be earned will be determined after the end of 20122013 based, respectively, on the Company’s and WMRe’sSirius Group’s performance over the cycle compared to the targets described above.  The restricted shares will vest on December 31, 2012,January 1, 2014, subject to Mr. Waters’ continued employment.

T. Michael Miller.  Mr. Miller has been the CEO of OneBeacon since 2005.  For the 2008-20102009-2011 OneBeacon performance share cycle, Mr. Miller received a total combined payout of $3.0$4.7 million from the OneBeacon performance shares and OneBeacon performance units he had been granted andgranted.  In addition, he received approximately $0.2 million from the vesting of a cash retention award that was put in place following the financial crisis in 2008/2009.2008 OneBeacon restricted stock unit award.  The payout of Mr. Miller’s OneBeacon performance shares was tied to weighted average annual growth in intrinsic businessOneBeacon’s book value per share (“OB GIBVPS”GBVPS”).  This was calculated as the average of annual growth in adjusted book value per share and underwriting return on equity.  Based on a weightedan average OB GIBVPSGBVPS of 8.8%14.7% over the cycle, the OneBeacon Committee approved a payout of 68.5%138.6% of the OneBeacon performance shares originally granted.  This resulted in a payout of approximately $2.3$3.5 million to Mr. Miller.  In addition, based on OneBeacon’s 97.6% adjusted economic combined ratio for the 2009-2011 performance cycle compared to a 95% target, Mr. Miller hadreceived a $3 million retention award that vested in February 2011 which was reduced to $0.7 million in order to offsetpayout of 47% of the $2.3 million paidOneBeacon performance units granted to him for the 2008-20102009-2011 cycle, which equaled approximately $1.2 million.

In early 2011, the OneBeacon board reached an agreement with Mr. Miller to secure his continued services for an extended period of time.  The OneBeacon Committee made a one-time grant of 630,000 OneBeacon restricted shares to Mr. Miller, which vest in equal annual installments from February 2014 through February 2017.  In exchange, Mr. Miller agreed that his OneBeacon performance share cycle.grants would be reduced by 35,000 shares per year for 6 years (i.e., 210,000 performance shares in total), commencing retroactive to February 2011. The restricted share grant was submitted to and approved by the shareholders of OneBeacon in May 2011.

For the performance cycle from 2010-2012,2011-2013, the OneBeacon Committee granted Mr. Miller 25,00022,500 OneBeacon performance units and 107,481108,748 OneBeacon performance shares.  The grant date value was approximately $4.1$3.7 million. The number of performance shares was subsequently reduced to 73,748 in light of the restricted share grant described above.  The number of performance units and performance shares that will be earned will be determined after the end of 20122013 based on OneBeacon’s performance over the cycle compared to the targets described below.  The performance target for the performance units is 95%94% average adjusted combined ratio, with a combined ratio of 99%98% or more resulting in no payout and a combined ratio of 91%90% or less resulting in a 200% payout.  The OneBeacon performance units have a fixed value of $100 per unit.  For the performance shares, the OneBeacon Committee set 12%11% annual growth in book value per share as target performance, with a range of 5%4% to 19%18%.

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Base Salary

We pay our executive officers salaries that we believe to be below-market. In 2008, we limited base salaries to a maximum of $500,000, which was the salary each$500,000.  Each of our Named Executive Officers received,receives a salary of $500,000, other than Mr. Campbell,Rountree, who receivedreceives a salary of $450,000.  No changes to base salaries of the Named Executive Officers have been made since that time.

Annual Incentive Bonuses

We provide annual bonus opportunities to our executive officers.  Each Named Executive Officer participates in the annual bonus pool of his respective business unit.  The aggregate bonus pool size for each business unit could range from 0% to 200% of target, depending upon performance.  Individual bonuses can vary widely around the pool average based on individual performance and no cap (other than the size of the pool) applies to any single individual. Typically, the head of a business unit receives the average bonus percentage applicable to his business unit.

For the Named Executive Officers at the WTM level (Messrs. Barrette, Foy and Campbell)Rountree), the Committee established target annual bonuses of 75% of salary for 2010.  The Committee reduced2011, which was the target amount of the long-term incentive compensation grantssame as for Messrs. Foy and Campbell for the 2010-2012 performance cycle by the amount of the increase in their target annual bonus compared to the 50% target in 2008.  The Committee took this action to moderately increase the percentage of total compensation provided by annual incentives.  However, the bulk of each Named Executive Officer’s compensation remains based on the long-term performance of the Company.

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For Messrs. Barrette, Foy and Campbell,Rountree, their annual incentive bonuses are designed to reward company-wide performance.  Based on the Company’s performance in 2010,2011, the Committee awarded a bonus pool of 65%150% of target taking into account the Company’s 6%23% growth in adjusted book value per share, 7%9% growth in economic value per share, and its performance in achieving qualitative objectives over the course of the year.  These qualitative objectives included pursuing appropriateavoiding big mistakes in uncertain investment opportunities, completing the transition ofmarkets, developing specialty platforms and rationalizing capital and structure at OneBeacon, into a specialty company, maintaining a disciplined reinsurance operation regainingand extracting additional capital, accelerating profitable growth momentum at Esurance, optimizing the runoff of Life Re,Esurance/AFI, and actively pursuing attractive opportunities while maintaining plenty of financial flexibility.  Messrs. Barrette, Foy and CampbellRountree received bonuses of $243,750, $232,500$450,000, $600,000 and $210,000,$450,000, which represented 65%120%, 62%160% and 62%133% of target.  In setting the annual bonus amount for these individuals, at Mr. Barrette’s recommendation, the Committee reduced the annual bonus payouts for those individuals who had received special bonuses following the completion of the sale of Esurance/AFI, which are discussed below.

For our operating subsidiaries (including for our Named Executive Officers at operating subsidiaries), we design our annual incentives to reward performance of the applicable subsidiary operating group.  Messrs. Waters and Miller, who participate in the WMReSirius Group and OneBeacon bonus pools, respectively, have annual bonus targets equal to 50% and 75% of base salary.

For White Mountains Re,Sirius Group, including for Mr. Waters, the performance objective was the UROC.  Based on a UROC of 11.3%8.0% compared to the target of 12%11%, the indicated bonus pool was 90%57% of target.  However, in light of Sirius Group’s strong relative performance compared to peers in a year of heavy worldwide catastrophes, its structural reorganization which freed up substantial capital for the parent company, and the successful launch of its Lloyd’s syndicate, the Committee awarded a bonus pool of 85% of target.  As CEO, Mr. Waters received the pool average of 90%85%, or $225,000.$212,500.

For OneBeacon, including for Mr. Miller, the primary performance objective required to achieve a bonus pool of 100% of target was the achievement of a combined ratio of 96%95% or better.  OneBeacon’s actual combined ratio was 100.7%95.8%.  Other performance goals included the management of expenses in conjunction with OneBeacon’s changing earned premium levels, as a resultthe management of the sale of its personal lines business,Company’s ongoing specialty businesses, and optimizing capital management ensuring smooth execution of the commercial lines renewal rights saleincluding debt and the personal lines sale,share repurchases and effective catastrophe management.special dividends as appropriate.  Based on its assessment of OneBeacon’s overall performance in 2010, the OneBeacon Committee established a bonus pool of 80%90% of target.  It awarded Mr. Miller a cash bonus of $281,300,$337,500, which equaled 75%90% of target and was slightly below the overall pool percentagetarget.

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Table of 80% as more of the pool was allocated to specialty businesses that had strong performance during the year.Contents

Special OneBeaconEsurance / AFI Bonus

RecognizingFollowing the transformational year at OneBeacon through the executionclosing of the commercial lines renewal rights sale of Esurance/AFI, the Committee approved special bonuses totaling $6.75 million for key corporate executives who greatly contributed to the success of Esurance and AFI over the personal lines sale, alongyears, concluding with the returnsale of $326those businesses in early October 2011 for a price of $700 million over tangible book value. Named Executive Officers were awarded $3 million of this amount, including $2 million to shareholders through dividendsMr. Barrette and share repurchases, the OneBeacon Committee awarded one-time discretionary bonuses totaling $4.8$1 million to members of management responsible for effecting those transactions.  Mr. Miller was awarded a discretionary bonus of $1,000,000.Rountree.

20112012 Compensation Actions

New Long-term Incentive Grants and Annual Bonus Targets

In February 2011,2012, the Committee and the OneBeacon Committee made new long-term incentive grants to and established annual bonus target levels for the Named Executive Officers based on the same factors described above with respect to grants made in 2010.2011.  Mr. Barrette did not receive any new long-term incentive grants.

In 2010, theThe new long-term incentive grants for White Mountains executives (other than Mr. Barrette and operating company executives) were allocated 65% as performance shares and 35% as restricted shares vesting on December 31, 2012.  In 2011, the new long term incentive grants were allocated 50% as performance shares and 50% as restricted shares.  The Committee made this adjustment to further reduceshares, which was the impact of extreme events, good or bad, on compensation while maintaining good alignment with shareholders.same allocation as in 2011.

For each Named Executive Officer recipient of a WTM performance share grant for the 2011-20132012-2014 performance cycle, the Committee established 10%8% annual growth in intrinsic business value per share as the performance target that would result in a payout of 100% of the target shares.  Annual growth of 3%2% or less would result in a payout of 0% and annual growth of 17%14% or more would result in a payout of 200%. To measure growth in intrinsic business value per share, the Committee looks to growth in economic value per share (weighted 50%) and growth in adjusted GAAP book value per share (weighted 50%), in each case including dividends.

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Table  The yield on the 10-year Treasury at the beginning of Contents

OneBeacon Restricted Share Grant for Mr. Miller

The OneBeacon board has reached an agreement with Mr. Miller2012 was 1.89%.  In setting the target at 8%, which equaled the yield on incentives to secure his continued services for an extended periodthe 10-year Treasury + roughly 600 basis points, the Committee considered many factors including its typical practice of time.  In exchange for foregoing some future performance share allocations, the OneBeacon Committee has proposed to make a one-time grant of OneBeacon restricted shares to Mr. Miller equal to three times the foregone performance shares.  The grant is subjectadding roughly 700 basis points to the approval ofyield as well as the shareholders of OneBeacon.

The proposed grant is comprised of 630,000 OneBeacon restricted shares, and Mr. Miller’s OneBeacon performance share grants would be reduced by 35,000 shares per year for each of the next 6 years (i.e., 210,000 performance shares in total), retroactive to February 2011, if the proposal is approved by shareholders.  25% of the restricted shares will vest on each of February 22, 2014, 2015, 2016 and 2017.  In the event of a change in control, the restricted shares would vest if Mr. Miller was terminated other than for cause, was demoted or suffered a material reduction in his compensation opportunity within 24 months of the change in control.historically low interest rate environment.  In addition, the shares would vest following a change in control if Mr. MillerCommittee considered the impact of the Company’s significant amount of undeployed capital on expected returns.  The Committee determined that 8% was required to commute to another officean appropriate target that properly balanced the competing demands of effectively deploying capital and remaining patient for more than 18 months or was required to relocate his principal residence.  If Mr. Miller is terminated without cause, the restricted shares would vest pro-rata for time with a minimum vesting of 50%, taking into account already vested shares, in lieu of any severance payments.  If he voluntarily terminates his employment or is terminated for cause, he would forfeit all unvested shares.

As a recipient of long-term incentive grants from OneBeacon, Mr. Miller is subject to a confidentiality and non-solicitation agreement.  The agreement includes provisions that, for a period of 12 months following the termination of his employment for any reason, prohibit him from soliciting customers or certain potential customers of OneBeacon and from soliciting or hiring its employees.great opportunities.

Clawback Policy

In 2010, the Company adopted a clawback policy applicable to bonuses and long-term incentive awards.  If the Company is required to restate any financial statement included in an SEC filing as a result of an employee’s misconduct, the Board may, without prejudice to any other remedies available to the Company, seek reimbursement of any bonus or long-term incentive award received by such person that relates in whole or in part to any period for which such financial statements were restated.  If the misconduct was fraud, then in addition to other actions, the Board mandatorily will seek such reimbursement.

Other Elements of Compensation

Retirement Benefits

We have no active U.S. pension plans.  Benefit accruals under all our U.S. qualified pension plans and all our U.S. supplemental pension plans were frozen for all employees in 2002.

Our Named Executive Officers who are not employees of Bermuda-domiciled entities may participate in our voluntary non-qualified deferred compensation plans whereby they may defer all or a portion of their compensation. Investment options in these plans are those available in our 401(k) plans, including White Mountains common shares and OneBeacon common shares.  None of the investment options offered under these plans provides an above-market rate of interest.

Our employees may participate in our qualified 401(k) plans and eligible employees can participate in a qualified employee stock ownership plan.  We do not provide supplemental retirement benefits to any employees in connection with these plans.

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Perquisites

We review the perquisites that our senior management receives.  The primary perquisites include housing allowances in special circumstances and personal use of corporate aircraft.

We allow our Named Executive Officers to use our corporate aircraft from time to time for personal reasons. The aggregate incremental cost to the Company is included, for proxy reporting purposes, as compensation to the Named Executive Officer.  For tax purposes, we comply with IRS regulations.  We do not “gross-up” our Named Executive Officers for their taxes associated with perquisites, including with respect to personal use of our aircraft.

Our Named Executive Officers also participate in our other benefit plans on the same terms as our other employees.  These plans include medical and health insurance, company paid life insurance (which is currently capped at $150,000 in coverage at our parent company) and charitable gift matching.

Certain Board Fees

Our Named Executive Officers do not receive director fees for serving on the Company’s board of directors or for serving on the boards of directors of our wholly-owned or majority-owned subsidiaries.  However, those Named Executive Officers who serve on the boards of directors of other companies in which we have a minority interest may receive director fees.  We consider those board fees when evaluating the compensation of our Named Executive Officers.

Employment and Severance Agreements; Change in Control

We have no long-term employment agreements with our Named Executive Officers although, from time to time, we have entered into short-term arrangements with newly hired executives governing their compensation and severance during up to their first three years with the Company. No such arrangements are in effect with our Named Executive Officers.

At our parent company, severance benefits, if any, are determined by the Committee in its sole discretion.  At our operating subsidiaries, our Named Executive Officers participate in the severance plans, if any, generally applicable at those companies.

If any of our most senior executives were to retire, in order to enable the Company to ensure a smooth transition, to receive a non-compete/non-solicit from the executive and to retain access to valuable knowledge, talents and relationships, we generally will consider entering into a one to three year consulting agreement with the executive, which would permit the executive to earn some or all of such executive’s long-term incentive compensation then outstanding.

While the Company has no employment or severance agreement with Mr. Barrette, pursuant to the terms of his inducement grantgrants discussed above under “Philosophy”, if Mr. Barrette is terminated without cause, any of these grants that are outstanding but unvested at that timerestricted shares would vest in such circumstance.

We have no standalone change in control agreements with our Named Executive Officers.  However, under our long-term incentive plans, if a change in control of the Company (or a business unit, as applicable) were to occur, certain events, such as involuntary or constructive employment termination or amendments to our incentive plans which are materially adverse to its participants, may cause stock options to become fully exercisable, restricted shares to become immediately vested and performance shares and performance units to become payable in full or in part.  Our plans do not provide for tax gross-ups for excess parachute payments that may result from a change in control.

The stock option and restricted share grants made to Mr. Barrette include provisions pursuant to which such grants vest upon the occurrence of a change in control.  While the Company typically has “double-trigger” change in control provisions in its long-term incentive plans, when originally making the grant to Mr. Barrette, the Committee determined that, in light of the design of Mr. Barrette’s grants and as an inducement to Mr. Barrette, immediate vesting upon a change in control was appropriate.

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Tax Considerations

As a Bermuda-domiciled company, we do not receive a tax deduction for compensation paid to employees of White Mountains Insurance Group, Ltd. and, accordingly, the limitation of Section 162(m) of the Internal Revenue Code does not impact compensation paid to our Named Executive Officers who are employees of non-U.S. companies (Messrs. Barrette, Foy and Waters).  However, in the case of Named Executive Officers who are employees of subsidiaries that are organizedorganised in the United States (Messrs. Miller and Campbell)Rountree), Section 162(m) would limitlimits the deductibility of their compensation to $1,000,000 per individual to the extent that such compensation is not “performance-based” as defined in Section 162(m).  The Company is cognizant of Section 162(m) and generally seeks to structure its long-term incentive programs to permit the deductibility of the bulk of such compensation paid to these Named Executive Officers.  However, the Committee may approve compensation that will not meet the Section 162(m) requirements if, in the Committee’s judgment, structuring compensation in such manner better promotes the Company’s interests (such as with a grant of restricted shares).

Compensation Committee Report

The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

Robert P. Cochran,Morgan W. Davis, Chairman

A. Michael Frinquelli

Edith E. Holiday

Lowndes A. Smith

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Summary Compensation Table

The following table presents compensation in 2011, 2010 2009 and 20082009 for the Company’s CEO, CFO and its three other most highly compensated executive officers (collectively, the “Named Executive Officers”).

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All Other Compensation

The following table presents a breakout of “All Other Compensation” included in the Summary Compensation Table for 2011, 2010 2009 and 2008:2009:

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Grants of Plan-Based Awards

The following table presents grants of plan-based awards granted, except as otherwise noted, under the White Mountains Long-Term Incentive Plan (the “WTM Incentive Plan”) to the Named Executive Officers during 2010.2011.