0000776867wtm:NSMInsuranceGroupMemberus-gaap:ProductMember2022-01-012022-03-31


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the period ended March 31,September 30, 2022
 
OR
 
        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from          to         
Commission file number 1-8993

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

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

As of May 5,November 3, 2022, 2,981,7042,576,232 common shares with a par value of $1.00 per share were outstanding (which includes 38,20038,350 restricted common shares that were not vested at such date).




WHITE MOUNTAINS INSURANCE GROUP, LTD.

Table of Contents
 
  Page No.
   
 
   
 
   
 
  
 
 
     Three and Nine Months Ended March 31,September 30, 2022 and 2021
 
 
     Three and Nine Months Ended March 31,September 30, 2022 and 2021
 
  
 
  
  
 
  
 
  
 
 
  
 
  
  
  
  
  




Part I.FINANCIAL INFORMATION.
Item 1.Financial Statements
WHITE MOUNTAINS INSURANCE GROUP, LTD.
CONSOLIDATED BALANCE SHEETS
March 31, 2022December 31, 2021
Millions, except share and per share amounts
AssetsUnaudited
Financial Guarantee (HG Global/BAM)
Fixed maturity investments, at fair value$873.8 $934.1 
Short-term investments, at fair value36.5 32.4 
Total investments910.3 966.5 
Cash22.3 19.8 
Insurance premiums receivable6.9 6.9 
Deferred acquisition costs33.1 33.1 
Other assets18.4 18.5 
Total Financial Guarantee assets991.0 1,044.8 
P&C Insurance and Reinsurance (Ark)
Fixed maturity investments, at fair value692.4 688.6 
Common equity securities, at fair value290.1 251.1 
Short-term investments, at fair value198.0 296.2 
Other long-term investments334.5 326.2 
Total investments1,515.0 1,562.1 
Cash115.5 67.8 
Reinsurance recoverables412.7 448.4 
Insurance premiums receivable759.6 416.0 
Ceded unearned premiums86.8 67.1 
Deferred acquisition costs and value of in-force business acquired179.8 108.2 
Goodwill and other intangible assets292.5 292.5 
Other assets73.3 64.9 
Total P&C Insurance and Reinsurance assets3,435.2 3,027.0 
Specialty Insurance Distribution (NSM)
     Cash (restricted $90.2 and $89.2)113.5 111.5 
Premiums and commissions receivable97.6 85.0 
     Goodwill and other intangible assets712.0 725.4 
     Other assets53.0 55.4 
Total Specialty Insurance Distribution assets976.1 977.3 
Asset Management (Kudu)
     Other long-term investments691.8 669.5 
     Cash (restricted $4.5 and $4.5)25.4 21.4 
     Accrued investment income11.8 16.9 
     Goodwill and other intangible assets8.9 8.9 
     Other assets9.6 10.4 
Total Asset Management assets747.5 727.1 
Other Operations
     Fixed maturity investments, at fair value249.3 286.2 
     Short-term investments, at fair value87.0 137.3 
Investment in MediaAlpha, at fair value280.4 261.6 
     Other long-term investments402.2 382.1 
     Total investments1,018.9 1,067.2 
     Cash50.4 38.8 
     Goodwill and other intangible assets38.1 39.1 
     Other assets83.6 63.3 
Assets held for sale15.9 16.1 
     Total Other Operations assets1,206.9 1,224.5 
Total assets$7,356.7 $7,000.7 
(Unaudited)
September 30, 2022December 31, 2021
Millions, except share and per share amounts
Assets
Financial Guarantee (HG Global/BAM)
Fixed maturity investments, at fair value$874.4 $934.1 
Short-term investments, at fair value62.3 32.4 
Total investments936.7 966.5 
Cash17.3 19.8 
Insurance premiums receivable6.6 6.9 
Deferred acquisition costs34.9 33.1 
Other assets22.3 18.5 
Total Financial Guarantee assets1,017.8 1,044.8 
P&C Insurance and Reinsurance (Ark)
Fixed maturity investments, at fair value741.8 688.6 
Common equity securities, at fair value286.4 251.1 
Short-term investments, at fair value309.4 296.2 
Other long-term investments329.7 326.2 
Total investments1,667.3 1,562.1 
Cash123.4 67.8 
Reinsurance recoverables550.9 448.4 
Insurance premiums receivable698.6 416.0 
Ceded unearned premiums59.7 67.1 
Deferred acquisition costs and value of in-force business acquired151.4 108.2 
Goodwill and other intangible assets292.5 292.5 
Other assets62.9 64.9 
Total P&C Insurance and Reinsurance assets3,606.7 3,027.0 
Asset Management (Kudu)
     Other long-term investments813.2 669.5 
     Cash (restricted $8.9 and $4.5)76.6 21.4 
     Accrued investment income12.5 16.9 
     Goodwill and other intangible assets8.7 8.9 
     Other assets9.7 10.4 
Total Asset Management assets920.7 727.1 
Other Operations
     Fixed maturity investments, at fair value238.1 286.2 
     Short-term investments, at fair value824.7 129.5 
     Common equity securities, at fair value46.4 — 
Investment in MediaAlpha, at fair value148.2 261.6 
     Other long-term investments479.8 382.1 
     Total investments1,737.2 1,059.4 
     Cash28.4 38.7 
     Goodwill and other intangible assets92.0 39.1 
     Other assets142.2 59.5 
Assets held for sale - NSM Group 989.0 
Assets held for sale - Other 16.1 
     Total Other Operations assets1,999.8 2,201.8 
Total assets$7,545.0 $7,000.7 
See Notes to Consolidated Financial Statements
1




CONSOLIDATED BALANCE SHEETS (CONTINUED)
March 31, 2022December 31, 2021
Millions, except share and per share amounts
LiabilitiesUnaudited
Financial Guarantee (HG Global/BAM)
Unearned insurance premiums$267.3 $266.3 
Accrued incentive compensation11.2 24.7 
Other liabilities28.3 30.9 
Total Financial Guarantee liabilities306.8 321.9 
P&C Insurance and Reinsurance (Ark)
Loss and loss adjustment expense reserves999.6 894.7 
Unearned insurance premiums883.1 495.9 
Debt184.8 185.9 
Reinsurance payable348.9 424.1 
Contingent consideration30.1 28.0 
Other liabilities108.4 93.8 
Total P&C Insurance and Reinsurance liabilities2,554.9 2,122.4 
Specialty Insurance Distribution (NSM)
Debt270.6 272.1 
Premiums payable146.0 135.9 
Contingent consideration 6.8 
     Other liabilities77.4 80.5 
Total Specialty Insurance Distribution liabilities494.0 495.3 
Asset Management (Kudu)
Debt218.2 218.2 
     Other liabilities42.3 42.8 
     Total Asset Management liabilities260.5 261.0 
Other Operations
Debt17.3 16.8 
Accrued incentive compensation25.3 48.5 
Other liabilities28.6 30.1 
Total Other Operations liabilities71.2 95.4 
Total liabilities3,687.4 3,296.0 
Equity
White Mountains’s common shareholders’ equity
White Mountains’s common shares at $1 par value per share—authorized 50,000,000
   shares; issued and outstanding 2,994,162 and 3,017,772 shares
3.0 3.0 
Paid-in surplus583.3585.9
Retained earnings2,956.2 2,957.5 
Accumulated other comprehensive income (loss), after-tax:
Net unrealized gains (losses) from foreign currency translation and
    interest rate swap
(.4)1.7 
Total White Mountains’s common shareholders’ equity3,542.1 3,548.1 
Non-controlling interests127.2 156.6 
Total equity3,669.3 3,704.7 
Total liabilities and equity$7,356.7 $7,000.7 
(Unaudited)
September 30, 2022December 31, 2021
Millions, except share and per share amounts
Liabilities
Financial Guarantee (HG Global/BAM)
Unearned insurance premiums$286.7 $266.3 
Debt146.4 — 
Accrued incentive compensation21.6 24.7 
Other liabilities29.5 30.9 
Total Financial Guarantee liabilities484.2 321.9 
P&C Insurance and Reinsurance (Ark)
Loss and loss adjustment expense reserves1,329.4 894.7 
Unearned insurance premiums781.3 495.9 
Debt180.0 185.9 
Reinsurance payable312.7 424.1 
Contingent consideration32.9 28.0 
Other liabilities107.6 93.8 
Total P&C Insurance and Reinsurance liabilities2,743.9 2,122.4 
Asset Management (Kudu)
Debt253.5 218.2 
     Other liabilities59.7 42.8 
     Total Asset Management liabilities313.2 261.0 
Other Operations
Debt35.6 16.8 
Accrued incentive compensation67.2 48.5 
Other liabilities34.6 30.1 
Liabilities held for sale - NSM Group 495.3 
Total Other Operations liabilities137.4 590.7 
Total liabilities3,678.7 3,296.0 
Equity
White Mountains’s common shareholders’ equity
White Mountains’s common shares at $1 par value per share—authorized 50,000,000
   shares; issued and outstanding 2,576,232 and 3,017,772 shares
2.6 3.0 
Paid-in surplus532.7585.9
Retained earnings3,175.9 2,957.5 
Accumulated other comprehensive income (loss), after-tax:
Net unrealized gains (losses) from foreign currency translation and
    interest rate swap
(3.2)1.7 
Total White Mountains’s common shareholders’ equity3,708.0 3,548.1 
Non-controlling interests158.3 156.6 
Total equity3,866.3 3,704.7 
Total liabilities and equity$7,545.0 $7,000.7 
See Notes to Consolidated Financial Statements
2


WHITE MOUNTAINS INSURANCE GROUP, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

Three Months Ended March 31,Three Months Ended September 30,Nine Months Ended September 30,
MillionsMillions20222021Millions2022202120222021
Revenues:Revenues:Revenues:
Financial Guarantee (HG Global/BAM)Financial Guarantee (HG Global/BAM)Financial Guarantee (HG Global/BAM)
Earned insurance premiumsEarned insurance premiums$8.4 $6.4 Earned insurance premiums$7.1 $6.7 $26.0 $19.6 
Net investment incomeNet investment income4.6 4.5 Net investment income5.7 4.4 15.1 13.2 
Net realized and unrealized investment gains (losses)Net realized and unrealized investment gains (losses)(45.1)(17.9)Net realized and unrealized investment gains (losses)(38.8)(4.0)(114.0)(15.6)
Other revenuesOther revenues.8 .3 Other revenues1.3 .3 3.7 .9 
Total Financial Guarantee revenuesTotal Financial Guarantee revenues(31.3)(6.7)Total Financial Guarantee revenues(24.7)7.4 (69.2)18.1 
P&C Insurance and Reinsurance (Ark)P&C Insurance and Reinsurance (Ark)P&C Insurance and Reinsurance (Ark)
Earned insurance premiumsEarned insurance premiums194.4 $104.6 Earned insurance premiums346.1 213.4 757.8 435.8 
Net investment incomeNet investment income1.6 .8 Net investment income4.9 .6 9.7 1.8 
Net realized and unrealized investment gains (losses)Net realized and unrealized investment gains (losses)(17.5)1.1 Net realized and unrealized investment gains (losses)(14.4).3 (76.5)10.3 
Other revenuesOther revenues(2.8)2.6 Other revenues6.6 3.4 10.1 9.4 
Total P&C Insurance and Reinsurance revenuesTotal P&C Insurance and Reinsurance revenues175.7 109.1 Total P&C Insurance and Reinsurance revenues343.2 217.7 701.1 457.3 
Specialty Insurance Distribution (NSM)
Commission revenues70.1 59.6 
Other revenues18.4 15.2 
Total Specialty Insurance Distribution revenues88.5 74.8 
Asset Management (Kudu)Asset Management (Kudu)Asset Management (Kudu)
Net investment incomeNet investment income12.6 8.2 Net investment income14.8 9.5 41.2 26.1 
Net realized and unrealized investment gains (losses)Net realized and unrealized investment gains (losses)22.3 15.8 Net realized and unrealized investment gains (losses)41.1 18.9 45.8 62.5 
Other revenuesOther revenues .1 Other revenues .1  .2 
Total Asset Management revenuesTotal Asset Management revenues34.9 24.1 Total Asset Management revenues55.9 28.5 87.0 88.8 
Other OperationsOther OperationsOther Operations
Net investment income Net investment income1.8 7.1  Net investment income8.5 5.0 13.6 16.1 
Net realized and unrealized investment gains (losses) Net realized and unrealized investment gains (losses)31.9 2.1  Net realized and unrealized investment gains (losses)(17.3)15.3 2.8 34.0 
Net realized and unrealized investment gains (losses) from
investment in MediaAlpha
Net realized and unrealized investment gains (losses) from
investment in MediaAlpha
18.8 (41.7) Net realized and unrealized investment gains (losses) from
investment in MediaAlpha
(18.6)(396.8)(113.3)(325.5)
Commission revenues Commission revenues2.9 2.3  Commission revenues3.2 2.4 8.7 7.0 
Other revenues Other revenues25.7 7.1  Other revenues33.0 28.1 89.6 57.6 
Total Other Operations revenuesTotal Other Operations revenues81.1 (23.1)Total Other Operations revenues8.8 (346.0)1.4 (210.8)
Total revenuesTotal revenues$348.9 $178.2 Total revenues$383.2 $(92.4)$720.3 $353.4 
See Notes to Consolidated Financial Statements
3


CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
(Unaudited)

Three Months Ended March 31,Three Months Ended September 30,Nine Months Ended September 30,
MillionsMillions20222021Millions2022202120222021
Expenses:Expenses:Expenses:
Financial Guarantee (HG Global/BAM)Financial Guarantee (HG Global/BAM)Financial Guarantee (HG Global/BAM)
Insurance acquisition expensesInsurance acquisition expenses$3.0 $1.9 Insurance acquisition expenses$1.7 $3.0 $9.5 $6.5 
General and administrative expensesGeneral and administrative expenses16.3 16.4 General and administrative expenses15.8 12.4 49.5 42.7 
Interest expenseInterest expense2.0 — 5.4 — 
Total Financial Guarantee expensesTotal Financial Guarantee expenses19.3 18.3 Total Financial Guarantee expenses19.5 15.4 64.4 49.2 
P&C Insurance and Reinsurance (Ark)P&C Insurance and Reinsurance (Ark)P&C Insurance and Reinsurance (Ark)
Loss and loss adjustment expensesLoss and loss adjustment expenses122.0 66.0 Loss and loss adjustment expenses213.7 129.2 456.2 247.8 
Insurance and reinsurance acquisition expensesInsurance and reinsurance acquisition expenses49.9 36.7 Insurance and reinsurance acquisition expenses74.8 53.7 174.9 124.4 
General and administrative expensesGeneral and administrative expenses23.1 37.8 General and administrative expenses26.9 21.8 79.8 84.4 
Interest expenseInterest expense3.8 1.1 Interest expense3.7 2.1 10.6 4.5 
Total P&C Insurance and Reinsurance expensesTotal P&C Insurance and Reinsurance expenses198.8 141.6 Total P&C Insurance and Reinsurance expenses319.1 206.8 721.5 461.1 
Specialty Insurance Distribution (NSM)
General and administrative expenses54.0 46.0 
Broker commission expenses20.6 18.9 
Change in fair value of contingent consideration.1 — 
Amortization of other intangible assets9.1 8.6 
Loss on assets held for sale 28.7 
Interest expense2.1 5.9 
Total Specialty Insurance Distribution expenses85.9 108.1 
Asset Management (Kudu)Asset Management (Kudu)Asset Management (Kudu)
General and administrative expensesGeneral and administrative expenses2.7 2.5 General and administrative expenses4.5 3.3 10.2 9.0 
Amortization of other intangible assetsAmortization of other intangible assets.1 .1 Amortization of other intangible assets — .2 .2 
Interest expenseInterest expense2.8 5.8 Interest expense4.2 1.9 10.3 9.2 
Total Asset Management expensesTotal Asset Management expenses5.6 8.4 Total Asset Management expenses8.7 5.2 20.7 18.4 
Other OperationsOther OperationsOther Operations
Cost of sales Cost of sales21.4 4.0  Cost of sales25.0 24.0 68.8 45.9 
General and administrative expenses General and administrative expenses28.9 35.7  General and administrative expenses39.9 14.4 118.9 79.4 
Amortization of other intangible assets Amortization of other intangible assets.9 .5  Amortization of other intangible assets1.4 2.0 3.2 2.9 
Interest expense Interest expense.3 .3  Interest expense.6 .4 1.2 1.1 
Total Other Operations expensesTotal Other Operations expenses51.5 40.5 Total Other Operations expenses66.9 40.8 192.1 129.3 
Total expensesTotal expenses361.1 316.9 Total expenses414.2 268.2 998.7 658.0 
Pre-tax income (loss) from continuing operationsPre-tax income (loss) from continuing operations(12.2)(138.7)Pre-tax income (loss) from continuing operations(31.0)(360.6)(278.4)(304.6)
Income tax (expense) benefit Income tax (expense) benefit3.8 9.5  Income tax (expense) benefit7.4 (28.6)26.1 (52.2)
Net income (loss) from continuing operationsNet income (loss) from continuing operations(8.4)(129.2)Net income (loss) from continuing operations(23.6)(389.2)(252.3)(356.8)
Net gain (loss) from sale of discontinued operations, net of tax 18.7 
Net income (loss) from discontinued operations, net of tax -
NSM Group
Net income (loss) from discontinued operations, net of tax -
NSM Group
6.3 5.3 16.4 (23.8)
Net gain (loss) from sale of discontinued operations, net of tax -
NSM Group
Net gain (loss) from sale of discontinued operations, net of tax -
NSM Group
886.8 — 886.8  
Net gain (loss) from sale of discontinued operations, net of tax -
Sirius Group
Net gain (loss) from sale of discontinued operations, net of tax -
Sirius Group
 —  18.7 
Net income (loss)Net income (loss)(8.4)(110.5)Net income (loss)869.5 (383.9)650.9 (361.9)
Net (income) loss attributable to non-controlling interests Net (income) loss attributable to non-controlling interests41.8 35.2  Net (income) loss attributable to non-controlling interests18.7 12.5 101.5 53.7 
Net income (loss) attributable to White Mountains’s
common shareholders
Net income (loss) attributable to White Mountains’s
common shareholders
$33.4 $(75.3)Net income (loss) attributable to White Mountains’s
common shareholders
$888.2 $(371.4)$752.4 $(308.2)
See Notes to Consolidated Financial Statements
4


WHITE MOUNTAINS INSURANCE GROUP, LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

Three Months Ended March 31,Three Months Ended September 30,Nine Months Ended September 30,
MillionsMillions20222021Millions2022202120222021
Net income (loss) attributable to White Mountains’s
common shareholders
Net income (loss) attributable to White Mountains’s
common shareholders
$33.4 $(75.3)Net income (loss) attributable to White Mountains’s
common shareholders
$888.2 $(371.4)$752.4 $(308.2)
Other comprehensive income (loss), net of taxOther comprehensive income (loss), net of tax(2.3)1.8 Other comprehensive income (loss), net of tax(1.4)— (3.0)(.3)
Other comprehensive income (loss) from discontinued operations,
net of tax - NSM Group
Other comprehensive income (loss) from discontinued operations,
net of tax - NSM Group
.7 (2.2)(5.2).9 
Net gain (loss) from foreign currency translation from sale of
discontinued operations, net of tax - NSM Group
Net gain (loss) from foreign currency translation from sale of
discontinued operations, net of tax - NSM Group
2.9 — 2.9 — 
Comprehensive income (loss)Comprehensive income (loss)31.1 (73.5)Comprehensive income (loss)890.4 (373.6)747.1 (307.6)
Other comprehensive (income) loss attributable to non-controlling interestsOther comprehensive (income) loss attributable to non-controlling interests.2 (.1)Other comprehensive (income) loss attributable to
non-controlling interests
(.3).2 .4 — 
Comprehensive income (loss) attributable to
White Mountains’s common shareholders
Comprehensive income (loss) attributable to
White Mountains’s common shareholders
$31.3 $(73.6)Comprehensive income (loss) attributable to
White Mountains’s common shareholders
$890.1 $(373.4)$747.5 $(307.6)

Earnings (loss) per share attributable to White Mountains’s common shareholders:Earnings (loss) per share attributable to White Mountains’s common shareholders:Earnings (loss) per share attributable to White Mountains’s common shareholders:
Basic earnings (loss) per shareBasic earnings (loss) per shareBasic earnings (loss) per share
Continuing operationsContinuing operations$11.10 $(30.33)Continuing operations$(1.66)$(121.90)$(50.73)$(98.16)
Discontinued operationsDiscontinued operations 6.03 Discontinued operations308.59 1.72 304.97 (1.29)
Total consolidated operationsTotal consolidated operations$11.10 $(24.30)Total consolidated operations$306.93 $(120.18)$254.24 $(99.45)
Diluted earnings (loss) per shareDiluted earnings (loss) per shareDiluted earnings (loss) per share
Continuing operationsContinuing operations$11.10 $(30.33)Continuing operations$(1.66)$(121.90)$(50.73)$(98.16)
Discontinued operationsDiscontinued operations 6.03 Discontinued operations308.59 1.72 304.97 (1.29)
Total consolidated operationsTotal consolidated operations$11.10 $(24.30)Total consolidated operations$306.93 $(120.18)$254.24 $(99.45)
Dividends declared and paid per White Mountains’s
common share
Dividends declared and paid per White Mountains’s
common share
$1.00 $1.00 Dividends declared and paid per White Mountains’s
common share
$ $— $1.00 $1.00 
See Notes to Consolidated Financial Statements.

5


WHITE MOUNTAINS INSURANCE GROUP, LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)

 White Mountains’s Common Shareholders’ Equity 
MillionsCommon shares and paid-in surplusRetained earningsAOCI, after taxTotalNon-controlling interestTotal Equity
Balance at January 1, 2022$588.9 $2,957.5 $1.7 $3,548.1 $156.6 $3,704.7 
Net income (loss) 33.4  33.4 (41.8)(8.4)
Other comprehensive income (loss), net of tax  (2.1)(2.1)(.2)(2.3)
Total comprehensive income (loss) 33.4 (2.1)31.3 (42.0)(10.7)
Dividends declared on common shares (3.0) (3.0) (3.0)
Dividends to non-controlling interests    (.6)(.6)
Issuances of common shares.8   .8  .8 
Repurchases and retirements of common shares(7.3)(31.7) (39.0) (39.0)
BAM member surplus contributions, net of tax    12.3 12.3 
Amortization of restricted share awards2.9   2.9  2.9 
Recognition of equity-based compensation expense
   of subsidiaries
1.2   1.2 .2 1.4 
Net contributions and dilution from other
   non-controlling interests
(.2)  (.2).7 .5 
Balance at March 31, 2022$586.3 $2,956.2 $(.4)$3,542.1 $127.2 $3,669.3 
 White Mountains’s Common Shareholders’ Equity 
MillionsCommon shares and paid-in surplusRetained earningsAOCI, after taxTotalNon-controlling interestTotal Equity
Balance at June 30, 2022$603.2 $2,725.1 $(5.0)$3,323.3 $168.7 $3,492.0 
Net loss 888.2  888.2 (18.7)869.5 
Net change in foreign currency translation and other  (1.1)(1.1).3 (.8)
Net gain (loss) from foreign currency translation from sale of discontinued operations, net of tax - NSM Group  2.9 2.9  2.9 
Total comprehensive loss 888.2 1.8 890.0 (18.4)871.6 
Dividends to non-controlling interests    (.5)(.5)
Repurchases and retirements of common shares(71.5)(437.4) (508.9) (508.9)
BAM member surplus contribution, net of tax    26.0 26.0 
Amortization of restricted share awards3.8   3.8  3.8 
Recognition of equity-based compensation expense
   of subsidiaries
.4   .4 .2 .6 
Net contributions and dilution from other
   non-controlling interests
(.6)  (.6)(.2)(.8)
Disposition of non-controlling interests    (17.5)(17.5)
Balance at September 30, 2022$535.3 $3,175.9 $(3.2)$3,708.0 $158.3 $3,866.3 

White Mountains’s Common Shareholders’ Equity  White Mountains’s Common Shareholders’ Equity 
MillionsMillionsCommon shares and paid-in surplusRetained earningsAOCI, after taxTotalNon-controlling interestTotal EquityMillionsCommon shares and paid-in surplusRetained earningsAOCI, after taxTotalNon-controlling interestTotal Equity
Balance at January 1, 2021$595.2 $3,311.2 $(.4)$3,906.0 $(88.1)$3,817.9 
Balance at June 30, 2021Balance at June 30, 2021$597.2 $3,378.6 $2.4 $3,978.2 $129.8 $4,108.0 
Net income (loss)Net income (loss)— (75.3)— (75.3)(35.2)(110.5)Net income (loss)— (371.4)— (371.4)(12.5)(383.9)
Other comprehensive income (loss), net of tax— — 1.7 1.7 .1 1.8 
Net change in foreign currency translation and otherNet change in foreign currency translation and other— — (2.2)(2.2)(.2)(2.4)
Total comprehensive income (loss)Total comprehensive income (loss)— (75.3)1.7 (73.6)(35.1)(108.7)Total comprehensive income (loss)— (371.4)(2.2)(373.6)(12.7)(386.3)
Dividends declared on common shares— (3.1)— (3.1)— (3.1)
Dividends to non-controlling interestsDividends to non-controlling interests— — — — (.6)(.6)Dividends to non-controlling interests— — — — (.6)(.6)
Issuances of common shares— — — — — — 
Repurchases and retirements of common sharesRepurchases and retirements of common shares(1.4)(6.1)— (7.5)— (7.5)Repurchases and retirements of common shares(15.2)(71.9)— (87.1)— (87.1)
BAM member surplus contributions, net of taxBAM member surplus contributions, net of tax— — — — 13.8 13.8 BAM member surplus contributions, net of tax— — — — 14.7 14.7 
Amortization of restricted share awardsAmortization of restricted share awards4.0 — — 4.0 — 4.0 Amortization of restricted share awards3.6 — — 3.6 — 3.6 
Recognition of equity-based compensation expense
of subsidiary
Recognition of equity-based compensation expense
of subsidiary
.5 — — .5 — .5 Recognition of equity-based compensation expense
of subsidiary
.2 — — .2 — .2 
Net contributions and dilution from other
non-controlling interests
Net contributions and dilution from other
non-controlling interests
(.4)— — (.4)(.2)(.6)Net contributions and dilution from other
non-controlling interests
.4 — — .4 1.4 1.8 
Acquisition of non-controlling interests— — — — 220.2 220.2 
Balance at March 31, 2021$597.9 $3,226.7 $1.3 $3,825.9 $110.0 $3,935.9 
Balance at September 30, 2021Balance at September 30, 2021$586.2 $2,935.3 $.2 $3,521.7 $132.6 $3,654.3 
See Notes to Consolidated Financial Statements.
6


CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONTINUED)
(Unaudited)

 White Mountains’s Common Shareholders’ Equity 
MillionsCommon shares and paid-in surplusRetained earningsAOCI, after taxTotalNon-controlling interestTotal Equity
Balance at January 1, 2022$588.9 $2,957.5 $1.7 $3,548.1 $156.6 $3,704.7 
Net income (loss) 752.4  752.4 (101.5)650.9 
Other comprehensive income (loss), net of tax  (7.8)(7.8)(.4)(8.2)
Net gain (loss) from foreign currency translation from sale of discontinued operations, net of tax - NSM Group  2.9 2.9  2.9 
Total comprehensive income (loss) 752.4 (4.9)747.5 (101.9)645.6 
Dividends declared on common shares (3.0) (3.0) (3.0)
Dividends to non-controlling interests    (7.5)(7.5)
Issuances of common shares3.0   3.0  3.0 
Issuance of shares of non-controlling interests    74.6 74.6 
Repurchases and retirements of common shares(89.2)(521.3) (610.5) (610.5)
BAM member surplus contributions, net of tax    62.3 62.3 
Amortization of restricted share awards10.3   10.3  10.3 
Recognition of equity-based compensation expense
   of subsidiaries
8.1   8.1 .8 8.9 
Net contributions and dilution from other
   non-controlling interests
14.2 (9.7) 4.5 (9.1)(4.6)
Disposition of non-controlling interests    (17.5)(17.5)
Balance at September 30, 2022$535.3 $3,175.9 $(3.2)$3,708.0 $158.3 $3,866.3 

 White Mountains’s Common Shareholders’ Equity 
MillionsCommon shares and paid-in surplusRetained earningsAOCI, after taxTotalNon-controlling interestTotal Equity
Balance at January 1, 2021$595.2 $3,311.2 $(.4)$3,906.0 $(88.1)$3,817.9 
Net income (loss)— (308.2)— (308.2)(53.7)(361.9)
Other comprehensive income (loss), net of tax— — .4 .4 — .4 
Total comprehensive income (loss)— (308.2).4 (307.8)(53.7)(361.5)
Dividends declared on common shares— (3.1)— (3.1)— (3.1)
Dividends to non-controlling interests— — — — (1.8)(1.8)
Issuances of common shares1.7 — — 1.7 — 1.7 
Issuance of shares of non-controlling interests— — — — 6.1 6.1 
Repurchases and retirements of common shares(16.6)(78.0)— (94.6)— (94.6)
BAM member surplus contributions, net of tax— — — — 44.8 44.8 
Amortization of restricted share awards11.1 — — 11.1 — 11.1 
Recognition of equity-based compensation expense
   of subsidiary
2.0 — — 2.0 .3 2.3 
Net contributions and dilution from other
   non-controlling interests
(7.2)13.4 .2 6.4 (5.3)1.1 
Acquisition of non-controlling interests— — — — 230.3 230.3 
Balance at September 30, 2021$586.2 $2,935.3 $.2 $3,521.7 $132.6 $3,654.3 
See Notes to Consolidated Financial Statements.
7


WHITE MOUNTAINS INSURANCE GROUP, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended March 31,
(Unaudited)(Unaudited)Nine Months Ended September 30,
MillionsMillions20222021Millions20222021
Cash flows from operations:Cash flows from operations:Cash flows from operations:
Net income (loss)Net income (loss)$(8.4)$(110.5)Net income (loss)$650.9 $(361.9)
Adjustments to reconcile net income to net cash provided from (used for) operations:Adjustments to reconcile net income to net cash provided from (used for) operations:  Adjustments to reconcile net income to net cash provided from (used for) operations:  
Net realized and unrealized investment (gains) lossesNet realized and unrealized investment (gains) losses8.4 (1.1)Net realized and unrealized investment (gains) losses141.9 (91.2)
Net realized and unrealized investment (gains) losses from investment in MediaAlphaNet realized and unrealized investment (gains) losses from investment in MediaAlpha(18.8)41.7 Net realized and unrealized investment (gains) losses from investment in MediaAlpha113.3 325.5 
Deferred income tax expenseDeferred income tax expense4.6 (1.4)Deferred income tax expense22.1 36.7 
Net (gain) loss from sale of discontinued operations, net of tax (18.7)
Amortization of restricted share awardsAmortization of restricted share awards2.9 4.0 Amortization of restricted share awards10.3 11.1 
Amortization and depreciationAmortization and depreciation16.0 12.8 Amortization and depreciation7.0 13.6 
Net (income) loss from discontinued operation, net of tax - NSM GroupNet (income) loss from discontinued operation, net of tax - NSM Group(16.4)23.8 
Net (gain) loss from sale of discontinued operations, net of tax - NSM Group and Sirius GroupNet (gain) loss from sale of discontinued operations, net of tax - NSM Group and Sirius Group(886.8)(18.7)
Other operating items:Other operating items: Other operating items: 
Net change in reinsurance recoverablesNet change in reinsurance recoverables35.7 (15.7)Net change in reinsurance recoverables(102.5)(32.3)
Net change in insurance premiums receivableNet change in insurance premiums receivable(343.6)(199.7)Net change in insurance premiums receivable(282.3)(245.7)
Net change in premiums and commissions receivable(12.6)(.2)
Net change in ceded unearned premiumsNet change in ceded unearned premiums(19.7)24.8 Net change in ceded unearned premiums7.4 78.1 
Net change in loss and loss adjustment expense reservesNet change in loss and loss adjustment expense reserves104.9 56.0 Net change in loss and loss adjustment expense reserves434.7 194.9 
Net change in premiums payable10.1 2.6 
Net change in unearned insurance premiumsNet change in unearned insurance premiums388.2 245.5 Net change in unearned insurance premiums305.8 290.0 
Net change in deferred acquisition costsNet change in deferred acquisition costs(71.6)(51.3)Net change in deferred acquisition costs(45.0)(60.0)
Net change in reinsurance payableNet change in reinsurance payable(75.2)(40.7)Net change in reinsurance payable(111.4)(46.8)
Net change in restricted cashNet change in restricted cash1.0 4.8 Net change in restricted cash4.4 4.5 
Investments in Kudu Participation ContractsInvestments in Kudu Participation Contracts (11.0)Investments in Kudu Participation Contracts(97.9)(141.6)
Net change in other assets and liabilities, netNet change in other assets and liabilities, net(63.4)(34.7)Net change in other assets and liabilities, net(37.3)25.7 
Net cash provided from (used for) operations - continuing operationsNet cash provided from (used for) operations - continuing operations118.2 5.7 
Net cash provided from (used for) operations - NSM Group discontinued operations (Note 19)
Net cash provided from (used for) operations - NSM Group discontinued operations (Note 19)
38.7 40.3 
Net cash provided from (used for) operationsNet cash provided from (used for) operations(41.5)(92.8)Net cash provided from (used for) operations156.9 46.0 
Cash flows from investing activities:Cash flows from investing activities:  Cash flows from investing activities:  
Net change in short-term investmentsNet change in short-term investments144.5 (103.1)Net change in short-term investments(735.4)(83.7)
Sales of fixed maturity investmentsSales of fixed maturity investments86.5 97.8 Sales of fixed maturity investments212.4 215.9 
Maturities, calls and paydowns of fixed maturity investmentsMaturities, calls and paydowns of fixed maturity investments39.0 31.4 Maturities, calls and paydowns of fixed maturity investments107.3 144.6 
Sales of common equity securities and investment in MediaAlphaSales of common equity securities and investment in MediaAlpha 160.3 Sales of common equity securities and investment in MediaAlpha 176.8 
Distributions and redemptions of other long-term investments and settlements of forward contracts39.8 40.1 
Distributions and redemptions of other long-term investmentsDistributions and redemptions of other long-term investments55.0 98.2 
Proceeds from the sale of NSM Group, net of cash sold of $143.9 and $0.0Proceeds from the sale of NSM Group, net of cash sold of $143.9 and $0.01,364.8 — 
Proceeds from the sale of Other Operations, net of cash sold of $0.5 and $0.0Proceeds from the sale of Other Operations, net of cash sold of $0.5 and $0.019.5 — 
Release of cash pre-funded/placed in escrow for Ark TransactionRelease of cash pre-funded/placed in escrow for Ark Transaction 646.3 Release of cash pre-funded/placed in escrow for Ark Transaction 646.3 
Purchases of consolidated subsidiaries, net of cash acquired of $— and $52.0 11.1 
Purchases of consolidated subsidiaries, net of cash acquired of $0.3 and $52.2Purchases of consolidated subsidiaries, net of cash acquired of $0.3 and $52.2(67.9)10.6 
Purchases of other long-term investmentsPurchases of other long-term investments(21.4)(101.0)Purchases of other long-term investments(136.9)(206.5)
Purchases of common equity securitiesPurchases of common equity securities(38.0)(68.8)Purchases of common equity securities(88.0)(119.7)
Purchases of fixed maturity investmentsPurchases of fixed maturity investments(115.0)(411.1)Purchases of fixed maturity investments(474.1)(996.0)
Other investing activities, netOther investing activities, net4.4 60.9 Other investing activities, net3.7 (1.3)
Net cash provided from (used for) investing activities - continuing operationsNet cash provided from (used for) investing activities - continuing operations260.4 (114.8)
Net cash provided from (used for) investing activities - NSM Group discontinued operations (Note 19)
Net cash provided from (used for) investing activities - NSM Group discontinued operations (Note 19)
7.1 (54.6)
Net cash provided from (used for) investing activitiesNet cash provided from (used for) investing activities139.8 363.9 Net cash provided from (used for) investing activities267.5 (169.4)
Cash flows from financing activities:Cash flows from financing activities:  Cash flows from financing activities:  
Draw down of debt and revolving line of creditDraw down of debt and revolving line of credit15.0 105.3 Draw down of debt and revolving line of credit211.8 368.9 
Repayment of debt and revolving line of creditRepayment of debt and revolving line of credit(14.8)(93.7)Repayment of debt and revolving line of credit(10.5)(94.8)
Cash dividends paid to the Company’s common shareholdersCash dividends paid to the Company’s common shareholders(3.0)(3.1)Cash dividends paid to the Company’s common shareholders(3.0)(3.1)
Common shares repurchasedCommon shares repurchased(34.8)— Common shares repurchased(610.5)(94.6)
Net contributions from non-controlling interest shareholders.3 (1.3)
Net distributions from non-controlling interest shareholdersNet distributions from non-controlling interest shareholders(9.2)1.1 
Contributions from discontinued operationsContributions from discontinued operations11.6 — 
Contingent consideration payments related to acquisitions of subsidiaries (6.7)
Capital contributions from BAM membersCapital contributions from BAM members12.3 13.8 Capital contributions from BAM members62.3 44.8 
Acquisition of subsidiary shares by non-controlling interest shareholdersAcquisition of subsidiary shares by non-controlling interest shareholders74.6 6.1 
Fidus Re premium paymentFidus Re premium payment(1.9)(3.2)Fidus Re premium payment(5.6)(6.9)
Other financing activities, netOther financing activities, net(4.2)(4.6)Other financing activities, net(2.1)(13.0)
Net cash provided from (used for) financing activities - continuing operationsNet cash provided from (used for) financing activities - continuing operations(280.6)208.5 
Net cash provided from (used for) financing activities - NSM Group discontinued operations (Note 19)
Net cash provided from (used for) financing activities - NSM Group discontinued operations (Note 19)
(17.5)13.8 
Net cash provided from (used for) financing activitiesNet cash provided from (used for) financing activities(298.1)222.3 
Net change in cash during the period - continuing operationsNet change in cash during the period - continuing operations98.0 99.4 
Cash balances at beginning of period (includes restricted cash balances of $4.5 and $0.0 and excludes
discontinued operations cash balances of $111.6 and $126.6)
Cash balances at beginning of period (includes restricted cash balances of $4.5 and $0.0 and excludes
discontinued operations cash balances of $111.6 and $126.6)
147.7 84.6 
Net cash provided from (used for) financing activities(31.1)6.5 
Effect of exchange rate changes on cash.6 (.3)
Net change in cash during the period - continuing operations, including the effect of exchange rate changes67.8 277.3 
Cash balances at beginning of period (includes restricted cash balances of $89.2 and $78.4)259.3 211.2 
Cash balances at end of period (includes restricted cash balances of $94.7 and $83.2)$327.1 $488.5 
Cash balances at end of period (includes restricted cash balances of $8.9 and $4.0 and excludes discontinued
operations cash balances of $0.0 and 126.7)
Cash balances at end of period (includes restricted cash balances of $8.9 and $4.0 and excludes discontinued
operations cash balances of $0.0 and 126.7)
$245.7 $184.0 
Supplemental cash flows information:Supplemental cash flows information: Supplemental cash flows information: 
Interest paidInterest paid$(8.4)$(7.5)Interest paid$(10.9)$(5.3)
Net income tax paymentsNet income tax payments$(.3)$(1.4)Net income tax payments$(3.2)$(2.1)
See Notes to Consolidated Financial Statements
78


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1. Basis of Presentation and Significant Accounting Policies

Basis of Presentation

White Mountains Insurance Group, Ltd. (the “Company” or the “Registrant”) is an exempted Bermuda limited liability company whose principal businesses are conducted through its subsidiaries and other affiliates. The Company’s headquarters is located at 26 Reid Street, Hamilton, Bermuda HM 11, its principal executive office is located at 23 South Main Street, Suite 3B, Hanover, New Hampshire 03755-2053 and its registered office is located at Clarendon House, 2 Church Street, Hamilton, Bermuda HM 11. The Company’s website is located at www.whitemountains.com. The information contained on White Mountains’s website is not incorporated by reference into, and is not a part of, this report.
The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and include the accounts of the Company, its subsidiaries (collectively with the Company, “White Mountains”) and other entities required to be consolidated under GAAP. Intercompany transactions have been eliminated in consolidation. Certain amounts in the prior period financial statements have been reclassified to conform to the current presentation.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
These interim financial statements include all adjustments considered necessary by management to fairly state the financial position, results of operations and cash flows of White Mountains. These interim financial statements may not be indicative of financial results for the full year and should be read in conjunction with the Company’s 2021 Annual Report on Form 10-K.

Reportable Segments
White Mountains has determined its reportable segments based on the nature of the underlying businesses, the manner in which the Company’s subsidiaries and affiliates are organized and managed and the organization of the financial information provided to the chief operating decision maker to assess performance and make decisions regarding allocation of resources. As of March 31,September 30, 2022, White Mountains’s reportable segments were HG Global/BAM, Ark NSM,and Kudu, with our remaining operating businesses, holding companies and other assets included in Other Operations.
The HG Global/BAM segment consists of HG Global Ltd. and its wholly-owned subsidiaries (“HG Global”) and the consolidated results of Build America Mutual Assurance Company (“BAM”) (collectively, “HG Global/BAM”). BAM is the first and only mutual municipal bond insurance company in the United States. By insuring the timely payment of principal and interest, BAM provides market access to, and lowers interest expense for, issuers of municipal bonds used to finance essential public purpose projects, such as schools, utilities and transportation facilities. BAM is owned by and operated for the benefit of its members, the municipalities that purchase BAM’s insurance for their debt issuances. HG Global was established to fund the startup of BAM and, through its reinsurance subsidiary, HG Re Ltd. (“HG Re”), to provide up to 15%-of-par, first loss reinsurance protection for policies underwritten by BAM. HG Global, together with its subsidiaries, funded the initial capitalization of BAM through the purchase of $503.0 million of surplus notes issued by BAM (the “BAM Surplus Notes”). As of March 31,September 30, 2022 and December 31, 2021, White Mountains owned 96.9% of HG Global’s preferred equity and 88.4% of its common equity. White Mountains does not have an ownership interest in BAM. However, White Mountains is required to consolidate BAM’s results in its financial statements because BAM is a variable interest entity for which White Mountains is the primary beneficiary. BAM’s results are all attributed to non-controlling interests.
The Ark segment consists of Ark Insurance Holdings Limited and its subsidiaries (collectively, “Ark”). Ark is a specialty property and casualty insurance and reinsurance company that offers a wide range of niche insurance and reinsurance products, including property, marine & energy, specialty, accident & health and casualty. Ark underwrites select coverages through Lloyd’s Syndicates 4020 and 3902 (the “Syndicates”) and its wholly-owned subsidiary Group Ark Insurance Limited (“GAIL”). White Mountains acquired a controlling ownership interest in Ark on January 1, 2021 (the “Ark Transaction”). See Note 2 — “Significant TransactionsTransactions.. As of March 31,September 30, 2022 and December 31, 2021, White Mountains owned 72.0% of Ark on a basic shares outstanding basis (63.0% after taking account of management’s equity incentives). The remaining shares are owned by current and former employees. In the future, management rollover shareholders could earn additional shares in Ark if and to the extent that White Mountains achieves certain multiple of invested capital return thresholds. If fully earned, these additional shares would represent 12.5% of the shares outstanding at closing. For the years of account prior to the Ark Transaction, a significant proportion of the Syndicates’ underwriting capital was provided by third-party insurance and reinsurance groups (“TPC Providers”) using whole account reinsurance contracts with Ark’s corporate member. For the years of account subsequent to the Ark Transaction, Ark is no longer using TPC Providers to provide underwriting capital for the Syndicates. Captions within results of operations and other comprehensive income are shown net of amounts relating to the TPC Providers share of the Syndicates’ results, including investment results.
89


NSM is a full-service managing general agent (“MGA”) and program administrator with delegated binding authorities for specialty property and casualty insurance. The company places insurance in niche sectors such as specialty transportation, real estate, social services and pet. On behalf of its insurance carrier partners, NSM typically manages all aspects of the placement process, including product development, marketing, underwriting and policy issuance. NSM earns commissions based on the volume and profitability of the insurance that it places. NSM does not take insurance risk. As of March 31, 2022 and December 31, 2021, White Mountains owned 96.5% of the basic units outstanding of NSM (87.3% on a fully diluted, fully converted basis).
The Kudu segment consists of Kudu Investment Management, LLC and its subsidiaries (collectively “Kudu”). Kudu provides capital solutions for boutique asset and wealth managers for a variety of purposes including generational ownership transfers, management buyouts, acquisition and growth finance and legacy partner liquidity. Kudu also provides strategic assistance to investees from time to time. Kudu’s capital solutions typically are structured as minority preferred equity stakes with distribution rights, generally tied to gross revenues and designed to generate strong, stable cash yields. As of March 31,September 30, 2022 and December 31, 2021, White Mountains owned 99.1%89.3% and 99.3% of the basic units outstanding (84.5%(76.1% and 84.7% on a fully diluted, fully converted basis).
TheWhite Mountains’s Other Operations segment consists of the Company and its wholly-owned subsidiary, White Mountains Capital, LLC (“WM Capital”), its other intermediate holding companies, its wholly-owned investment management subsidiary, White Mountains Advisors LLC (“WM Advisors”), investment assets managed by WM Advisors, its interests in MediaAlpha, Inc. (“MediaAlpha”), PassportCard Limited (“PassportCard”) and DavidShield Life Insurance Agency (2000) Ltd. (“DavidShield”) (collectively, “PassportCard/DavidShield”), Elementum Holdings LP (“Elementum”), and certain other consolidated and unconsolidated entities (“Other Operating Businesses”) and certain other assets.

Discontinued Operations
On August 1, 2022, White Mountains Holdings (Luxembourg) S.à r.l. (“WTM Holdings Seller”), an indirect wholly owned subsidiary of White Mountains, completed the previously announced sale of White Mountains Catskill Holdings, Inc. and NSM Insurance HoldCo, LLC (“NSM” and, collectively with White Mountains Catskill Holdings, Inc., the “NSM Group”) to Riser Merger Sub, Inc., an affiliate of The Carlyle Group Inc. (the “NSM Transaction”), pursuant to the terms of the securities purchase agreement, dated as of May 9, 2022. See Note 2 — “Significant Transactions.” NSM is a full-service managing general agent (“MGA”) and program administrator with delegated binding authorities for specialty property and casualty insurance. As of December 31, 2021, White Mountains owned 96.5% of the basic units outstanding of NSM (87.3% on a fully diluted, fully converted basis).
As a result of the NSM Transaction, the assets and liabilities of NSM Group have been presented in the balance sheet as held for sale for periods prior to the closing of the transaction, and the results of operations for NSM Group have been classified as discontinued operations in the statements of operations and comprehensive income through the closing of the transaction. Prior period amounts have been reclassified to conform to the current period’s presentation. See Note 19 — “Held for Sale and Discontinued Operations.”

Significant Accounting Policies

Refer to the Company’s 2021 Annual Report on Form 10-K for a complete discussion regarding White Mountains’s significant accounting policies.

Note 2. Significant Transactions

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

Kudu
On May 26, 2022, Kudu raised $114.5 million of equity capital (the “Kudu Transaction”) from Massachusetts Mutual Life Insurance Company (“Mass Mutual”), White Mountains and Kudu management. Mass Mutual, White Mountains and Kudu management contributed $64.1 million, $50.0 million and $0.4 million and in each case, at a pre-money valuation of 1.3x, or $114.0 million above the December 31, 2021 equity value of Kudu’s go-forward portfolio of participation contracts. As of September 30, 2022, Kudu’s go-forward portfolio of participation contracts excludes $41.1 million of enterprise value relating to two portfolio companies that had announced sale transactions prior to the capital raise. As a result of the Kudu Transaction, White Mountains’s basic ownership of Kudu decreased from 99.1% to 89.3%.
10


Ark
On October 1, 2020, White Mountains entered into a subscription and purchase agreement (the “Ark SPA”) with Ark and certain selling shareholders (collectively with Ark, the “Ark Sellers”). Under the terms of the Ark SPA, White Mountains agreed to contribute $605.4 million of equity capital to Ark, at a pre-money valuation of $300.0 million, and to purchase $40.9 million of shares from the Ark Sellers. White Mountains also agreed to contribute up to an additional $200.0 million of equity capital to Ark in 2021. In accordance with the Ark SPA, in the fourth quarter of 2020, White Mountains pre-funded/placed in escrow a total of $646.3 million in preparation for closing the Ark Transaction, including $280.0 million funded directly to Lloyd’s on behalf of Ark under the terms of a credit facility agreement and $366.3 million placed in escrow.
On January 1, 2021, White Mountains completed the Ark Transaction in accordance with the terms of the Ark SPA. As of March 31,September 30, 2022, White Mountains owned 72.0% of Ark on a basic shares outstanding basis (63.0%) after taking account of management’s equity incentives). The remaining shares are owned by current and former employees. In the future, management rollover shareholders could earn additional shares in Ark if and to the extent that White Mountains achieves certain multiple of invested capital return thresholds. If fully earned, these additional shares would represent 12.5% of the shares outstanding at closing.
White Mountains recognized total assets acquired related to the Ark Transaction of $2.5 billion, including goodwill and other intangible assets of $292.5 million, and total liabilities of $1.7 billion, including contingent consideration of $22.5 million and non-controlling interest of $220.2 million. Ark incurred transaction costs of $25.3 million in the first quarter of 2021.     
In the third quarter of 2021, Ark issued $163.3 million of floating rate unsecured subordinated notes (the “Ark 2021 Subordinated Notes”) in three separate transactions. See Note 7 — “Debt”“Debt.”. In connection with the issuance of the Ark 2021 Subordinated Notes, White Mountains and Ark terminated White Mountains’s commitment to provide up to $200.0 million of additional equity capital to Ark in 2021.
9


The following presents additional details of the assets acquired and liabilities assumed as of the January 1, 2021 acquisition date:
MillionsAs of January 1, 2021
Investments$594.3
Cash52.0(1)
Reinsurance recoverables433.4
Insurance premiums receivable236.7
Ceded unearned premiums170.2
Value of in-force business acquired71.7
Other assets88.9
Loss and loss adjustment expense reserves(696.0)
Unearned insurance premiums(326.1)
Debt(46.4)
Ceded reinsurance payable(528.3)
Other liabilities(25.9)
   Net tangible assets acquired24.5
Goodwill116.8
Other intangible assets - syndicate underwriting capacity175.7
Deferred tax liability on other intangible assets(33.4)
  Net assets acquired$283.6
(1) Cash excludes the White Mountains cash contribution of $605.4 as part of the Ark transaction.

The values of net tangible assets acquired and the resulting goodwill, other intangible assets and contingent consideration were recorded at fair value using Level 3 inputs. The majority of the tangible assets acquired and liabilities assumed were recorded at their carrying values, as their carrying values approximated their fair values due to their short-term nature. The fair values of goodwill, other intangible assets and the contingent consideration liability were internally estimated primarily based on the income approach. The income approach estimates fair value based on the present value of the cash flows that the assets are expected to generate in the future. White Mountains developed internal estimates for the expected future cash flows and discount rates used in the present value calculations.
11


The value of in-force business acquired represents the estimated profits relating to the unexpired contracts, net of related prepaid reinsurance, at the acquisition date through the expiration date of the contracts. For the three and nine months ended March 31,September 30, 2022, Ark recognized $0.7 million and $6.8 million of amortization expense on the value of in-force business acquired. For the three and nine months ended September 30, 2021, Ark recognized $4.7$11.0 million and $28.8$54.9 million of amortization expense on the value of in-force business acquired. The value of the syndicate underwriting capacity intangible asset was estimated using net cash flows attributable to Ark’s rights to write business in the Lloyd’s market. The value of the in-force business acquired and the syndicate underwriting capacity were estimated using a discounted cash flow method. Significant inputs to the valuation models include estimates of growth in premium revenues, investment returns, claim costs, expenses and discount rates based on a weighted average cost of capital.
In evaluating the fair value of Ark’s loss and loss adjustment expense reserves (“LAE”), White Mountains determined that the risk-free rate of interest was approximately equal to the risk factor reflecting the uncertainty within the reserves and that no adjustment was necessary.
As of March 31,September 30, 2022 and December 31, 2021, Ark recognized total contingent consideration liabilities of $30.1$32.9 million and $28.0 million. Any future adjustments to contingent consideration liabilities will be recognized through pre-tax income (loss). For the three and nine months ended March 31,September 30, 2022, Ark recognized pre-tax expense of $2.1$2.7 million and $4.9 million for the change in the fair value of its contingent consideration liabilities. For both the three and nine months ended March 31,September 30, 2021, Ark did not recognize anyrecognized pre-tax income (loss)expense of $1.5 million for the change in the fair value of its contingent consideration liabilities.

10


MediaAlpha
On October 30, 2020, MediaAlpha completed an initial public offering (the “MediaAlpha IPO”). In the offering, White Mountains sold 3.6 million shares at $19.00 per share ($17.67 per share net of underwriting fees) and received total proceeds of $63.8 million. White Mountains also received $55.0 million of net proceeds related to a dividend recapitalization at MediaAlpha.
Subsequent to the MediaAlpha IPO, White Mountains’s investment in MediaAlpha is accounted for at fair value based on the publicly traded share price of MediaAlpha’s common stock, and White Mountains presents its investment in MediaAlpha as a separate line item on the balance sheet.
On March 23, 2021, MediaAlpha completed a secondary offering of 8.05 million shares. In the secondary offering, White Mountains sold 3.6 million shares at $46.00 per share ($44.62 per share net of underwriting fees) for net proceeds of $160.3 million.
As of March 31,September 30, 2022, White Mountains owned 16.9 million shares, representing a 27.7%27.4% basic ownership interest (25.0% fully-diluted/fully-converted basis). At this current level of ownership, each $1.00 per share increase or decrease in the share price of MediaAlpha will result in an approximate $5.65$6.60 per share increase or decrease in White Mountains’s book value per share. At the March 31,September 30, 2022 closing price of $16.55$8.75 per share, the fair value of White Mountains’s investment in MediaAlpha was $280.4$148.2 million. See Note 16 — “Equity-Method Eligible Investments”Investments.”.

NSM
On May 18, 2018, NSM acquired 100% of Fresh Insurance, which is an insurance broker that offers non-standard personal lines products in the United Kingdom. NSM paid $49.6 million of upfront cash consideration for Fresh Insurance. NSM borrowed $51.0 million to fund the transaction. During the nine months ended September 30, 2019, NSM paid a purchase price adjustment of an additional $0.7 million of consideration. The purchase price was subject to additional adjustments based upon growth in EBITDA during 2 earnout periods, which ended in February 2020 and 2022. NSM did not make any payments related to the Fresh Insurance earnout.
As of March 31, 2021, the Fresh Insurance motor business was classified as held for sale, and NSM recognized a loss of $28.7 million in the first quarter of 2021. See Note 19 — “Held for Sale and Discontinued Operations”. On April 12, 2021, NSM sold Fresh Insurance’s motor business for net proceeds of £1.1 million ($1.5 million based upon the foreign exchange spot rate as of the transaction date).
On December 3, 2018, NSM acquired all the net assets of KBK Insurance Group, Inc. (“KBK”), a specialized MGA focused on the towing and transportation space. NSM paid $60.0 million of upfront cash consideration for KBK. White Mountains contributed $29.0 million to NSM and NSM borrowed $30.1 million to fund the transaction. NSM recognized $32.6 million of goodwill and $32.7 million of other intangible assets, reflecting acquisition date fair values, and recorded a liability of $5.9 million relating to the fair value of contingent consideration made in connection with the acquisition. The purchase price was subject to adjustments based upon growth in EBITDA during three earnout periods, which ended in December 2019, 2020 and 2021. In the first quarter of 2022 and 2021, NSM paid $6.8 million and $6.7 million related to the second and third KBK earnout periods.
On April 1, 2019, NSM acquired 100% of Embrace Pet Insurance (“Embrace”), a nationwide provider of pet health insurance for dogs and cats. NSM paid $71.5 million of cash consideration, net of cash acquired, for Embrace. White Mountains contributed $58.2 million to NSM and NSM borrowed $20.4 million to fund the transaction. NSM recognized $52.2 million of goodwill and $15.4 million of other intangible assets, reflecting acquisition date fair values.
On June 28, 2019, NSM acquired the renewal rights on its U.S. collector car business (the “Renewal Rights”) from American International Group, Inc. (“AIG”) for $82.5 million. The acquisition satisfied NSM’s obligation to acquire the Renewal Rights from AIG. White Mountains contributed $59.1 million to NSM and NSM borrowed $22.5 million to fund the transaction. NSM recognized $82.5 million of other intangible assets, reflecting the acquisition date fair value.
On April 7, 2020, NSM acquired 100% of Kingsbridge Group Limited (“Kingsbridge”), a leading provider of commercial lines insurance and consulting services for the professional contractor and freelancer markets in the United Kingdom. NSM paid £107.2 million ($132.2 million based upon the foreign exchange spot rate at the date of acquisition) of upfront cash consideration for Kingsbridge. White Mountains contributed $80.3 million to NSM and NSM borrowed £42.5 million ($52.4 million based upon the foreign exchange spot rate at the date of acquisition) to fund the transaction. NSM recognized $111.5 million of goodwill and $20.2 million of other intangible assets, reflecting acquisition date fair values. The purchase price was subject to adjustment based upon growth in EBITDA during an earnout period, which ended in January 2022. NSM did not make any payments related to the Kingsbridge earnout.
11


On August 6, 2021, NSM acquired 100% of J.C. Taylor Insurance (“J.C. Taylor”), an MGA offering classic and antique collector car insurance. NSM paid $49.6 million of upfront cash consideration for J.C. Taylor. NSM borrowed $35.0 million under its credit facility to fund the acquisition. NSM recognized total assets acquired related to the J.C. Taylor transaction of $60.3 million, including goodwill and other intangible assets of $55.7 million, and total liabilities of $10.7 million. During 2021, NSM determined that the relative values of goodwill and other intangible assets recorded in connection with the J.C. Taylor transaction were $28.5 million and $27.2 million, reflecting acquisition date fair values.
See Note 4 — “Goodwill and Other Intangible Assets”.
The contingent consideration liabilities related to NSM’s acquisitions are subject to adjustments based upon EBITDA, EBITDA projections, and present value factors for acquired entities. For the three months ended March 31, 2022, NSM recognized pre-tax loss of $0.1 million for the change in the fair value of its contingent consideration liabilities. For the three months ended March 31, 2021, NSM did not recognize any pre-tax income (loss) for the change in the fair value of its contingent consideration liabilities. As of March 31, 2022 and December 31, 2021, NSM had $0.0 million and $6.8 million of contingent consideration liabilities.

PassportCard/DavidShield
On January 24, 2018, White Mountains acquired a 50.0% ownership interest in DavidShield, its joint venture partner in PassportCard. DavidShield is an MGA that is the leading provider of expatriate medical insurance in Israel and uses the same card-based delivery system as PassportCard. As part of the transaction, White Mountains reorganized its equity stake in PassportCard so that White Mountains and its partner in DavidShield would each own 50.0% of both businesses. To facilitate the transaction, White Mountains provided financing to its partner in the form of a non-interest bearingnon-interest-bearing loan that is secured by the partner’s equity in PassportCard and DavidShield. The gross purchase price for the 50.0% interest in DavidShield was $41.8 million, or $28.3 million net of the financing provided for the restructuring.
On May 7, 2020, White Mountains made an additional $15.0 million investment in PassportCard/DavidShield to support operations through the ongoing COVID-19 pandemic. The transaction increased White Mountains’s ownership interest from 50.0% to 53.8%, but had no impact on the governance structure of the companies, including White Mountains’s board representation or other investor rights. The governance structures for both PassportCard and DavidShield were designed to give White Mountains and its co-investor equal power to make the decisions that most significantly impact the operations of PassportCard and DavidShield. Because White Mountains does not have the unilateral power to direct the operations of PassportCard or DavidShield, White Mountains does not hold a controlling financial interest in either PassportCard or DavidShield and does not consolidate either entity. White Mountains’s ownership interest gives White Mountains the opportunity to exert significant influence over the significant financial and operating activities of PassportCard and DavidShield. Accordingly, PassportCard and DavidShield meet the criteria to be accounted for under the equity method. White Mountains has taken the fair value option for its investment in PassportCard and DavidShield. Changes in the fair value of PassportCard and DavidShield are recorded in realized and unrealized investment gains. White Mountains’s maximum exposure to loss on its equity investment in PassportCard/DavidShield and the non-interest bearingnon-interest-bearing loan to its partner is limited to the total carrying value of $134.5$143.0 million.
12


Note 3.  Investment Securities

White Mountains’s portfolio of investment securities held for general investment purposes consists of fixed maturity investments, short-term investments, common equity securities, its investment in MediaAlpha and other long-term investments, which are classified as trading securities. Trading securities are reported at fair value as of the balance sheet date.  Net realized and unrealized investment gains (losses) on trading securities are reported in pre-tax revenues.
White Mountains���sMountains’s fixed maturity investments are generally valued using industry standard pricing methodologies. Key inputs include benchmark yields, benchmark securities, reported trades, issuer spreads, bids, offers, credit ratings and prepayment speeds. Income on mortgage and asset-backed securities is recognized using an effective yield based on anticipated prepayments and the estimated economic life of the securities. When actual prepayments differ significantly from anticipated prepayments, the estimated economic life is recalculated and the remaining unamortized premium or discount is amortized prospectively over the remaining economic life.
Realized investment gains (losses) resulting from sales of investment securities are accounted for using the specific identification method. Premiums and discounts on all fixed maturity investments are amortized or accreted to income over the anticipated life of the investment. Short-term investments consist of interest-bearing money market funds, certificates of deposit and other securities, which at the time of purchase, mature or become available for use within one year.  Short-term investments are carried at fair value, which approximated amortized cost, as of March 31,September 30, 2022 and December 31, 2021.
Other long-term investments consist primarily of unconsolidated entities, including Kudu’s Participation Contracts, private equity funds and hedge funds, a bank loan fund, Lloyd’s trust deposits, insurance-linked securities (“ILS”) funds and private debt investments.

Net Investment Income

White Mountains’s net investment income is comprised primarily of interest income associated with White Mountains’s fixed maturity investments and short-term investments, dividend income from common equity securities, distributions from its investment in MediaAlpha and distributions from other long-term investments.
The following table presents pre-tax net investment income for the three and nine months ended March 31,September 30, 2022 and 2021:
Three Months EndedThree Months EndedNine Months Ended
March 31,September 30,September 30,
MillionsMillions20222021Millions2022202120222021
Fixed maturity investmentsFixed maturity investments$8.2 $6.5 Fixed maturity investments$11.1 $8.2 $28.6 $21.9 
Short-term investmentsShort-term investments.1 1.6 Short-term investments6.7 — 7.2 .5 
Common equity securitiesCommon equity securities.1 .1 .2 .1 
Other long-term investmentsOther long-term investments13.2 13.8 Other long-term investments17.1 12.0 45.9 37.1 
Amount attributable to TPC ProvidersAmount attributable to TPC Providers(.5)(.9)Amount attributable to TPC Providers(.3)(.2)(.8)(.8)
Total investment incomeTotal investment income21.0 21.0 Total investment income34.7 20.1 81.1 58.8 
Third-party investment expensesThird-party investment expenses(.4)(.4)Third-party investment expenses(.8)(.6)(1.5)(1.6)
Net investment income, pre-taxNet investment income, pre-tax$20.6 $20.6 Net investment income, pre-tax$33.9 $19.5 $79.6 $57.2 

13


Net Realized and Unrealized Investment Gains (Losses)

The following table presents net realized and unrealized investment gains (losses) for the three and nine months ended March 31,September 30, 2022 and 2021:

Three Months Ended March  31,Three Months Ended September 30,Nine Months Ended September 30,
MillionsMillions20222021Millions2022202120222021
Realized investment gains (losses)Realized investment gains (losses)Realized investment gains (losses)
Fixed maturity investmentsFixed maturity investments$(1.1)$1.9 Fixed maturity investments$(4.9)$1.0 $(10.8)$3.8 
Short-term investmentsShort-term investments(.2)(.3)Short-term investments(.1)(.3)(.4)— 
Common equity securitiesCommon equity securities —  .4 
Investment in MediaAlphaInvestment in MediaAlpha 160.3 Investment in MediaAlpha —  160.3 
Other long-term investmentsOther long-term investments18.7 (18.9)Other long-term investments3.4 9.2 24.1 0.9 
Net realized investment gains (losses)Net realized investment gains (losses)17.4 143.0 Net realized investment gains (losses)(1.6)9.9 12.9 165.4 
Unrealized investment gains (losses)Unrealized investment gains (losses)Unrealized investment gains (losses)
Fixed maturity investmentsFixed maturity investments(79.5)(27.3)Fixed maturity investments(58.8)(7.9)(192.9)(27.0)
Short-term investmentsShort-term investments.2 (1.0)Short-term investments(2.1)— (2.6)— 
Common equity securitiesCommon equity securities1.0 1.0 Common equity securities4.3 1.6 (6.3)7.3 
Investment in MediaAlphaInvestment in MediaAlpha18.8 (202.0)Investment in MediaAlpha(18.6)(396.8)(113.3)(485.8)
Other long-term investmentsOther long-term investments50.4 47.0 Other long-term investments27.5 28.4 40.8 112.3 
Net unrealized investment gains (losses)Net unrealized investment gains (losses)(9.1)(182.3)Net unrealized investment gains (losses)(47.7)(374.7)(274.3)(393.2)
Net realized and unrealized investment gains (losses), before
amount attributable to TPC providers(1)
Net realized and unrealized investment gains (losses), before
amount attributable to TPC providers(1)
8.3 (39.3)
Net realized and unrealized investment gains (losses), before
amount attributable to TPC providers(1)
(49.3)(364.8)(261.4)(227.8)
Amount attributable to TPC ProvidersAmount attributable to TPC Providers2.1 (1.3)Amount attributable to TPC Providers1.3 (1.7)6.2 (6.5)
Net realized and unrealized investment gains (losses)
Net realized and unrealized investment gains (losses)
$10.4 $(40.6)
Net realized and unrealized investment gains (losses)
$(48.0)$(366.5)$(255.2)$(234.3)
Fixed maturity and short-term investmentsFixed maturity and short-term investmentsFixed maturity and short-term investments
Net realized and unrealized investment gains (losses) Net realized and unrealized investment gains (losses)$(80.6)$(26.7) Net realized and unrealized investment gains (losses)$(65.9)$(7.2)$(206.7)$(23.2)
Less: net realized and unrealized gains (losses) on investment
securities sold during the period
Less: net realized and unrealized gains (losses) on investment
securities sold during the period
(1.0)(0.9)Less: net realized and unrealized gains (losses) on investment
securities sold during the period
.1 (5.7)(3.0)(6.9)
Net unrealized investment gains (losses) on investment
securities held at the end of the period
Net unrealized investment gains (losses) on investment
securities held at the end of the period
$(79.6)$(25.8)Net unrealized investment gains (losses) on investment
securities held at the end of the period
$(66.0)$(1.5)$(203.7)$(16.3)
Common equity securities and investment in MediaAlphaCommon equity securities and investment in MediaAlphaCommon equity securities and investment in MediaAlpha
Net realized and unrealized investment gains (losses) on
common equity securities
Net realized and unrealized investment gains (losses) on
common equity securities
$1.0 $1.0 Net realized and unrealized investment gains (losses) on common
equity securities
$4.3 $1.6 $(6.3)$7.7 
Net realized and unrealized investment gains (losses) from
investment in MediaAlpha
Net realized and unrealized investment gains (losses) from
investment in MediaAlpha
18.8 (41.7)Net realized and unrealized investment gains (losses) from
investment in MediaAlpha
(18.6)(396.8)(113.3)(325.5)
Total net realized and unrealized investment gains (losses)Total net realized and unrealized investment gains (losses)19.8 (40.7)Total net realized and unrealized investment gains (losses)(14.3)(395.2)(119.6)(317.8)
Less: net realized and unrealized gains (losses) on investment
securities sold during the period
Less: net realized and unrealized gains (losses) on investment
securities sold during the period
 19.9 Less: net realized and unrealized gains (losses) on investment
securities sold during the period
 .4  20.3 
Net unrealized investment gains (losses) on investment
securities held at the end of the period
Net unrealized investment gains (losses) on investment
securities held at the end of the period
$19.8 $(60.6)Net unrealized investment gains (losses) on investment
securities held at the end of the period
$(14.3)$(395.6)$(119.6)$(338.1)
(1) For the three months ended March 31,September 30, 2022 and 2021, includes $2.6$(22.6) and $(0.2)$(7.0) of realized and unrealized investment gains (losses) related to foreign currency exchange. For the nine months ended September 30, 2022 and 2021, includes $(44.4) and $(7.4) of realized and unrealized investment gains (losses) related to foreign currency exchange.

The following table presents total gains included in earnings attributable to net unrealized investment gains for Level 3 investments for the three and nine months ended March 31,September 30, 2022 and 2021 for investments still held at the end of the period:
Three Months Ended
 March 31,
Millions20222021
Other long-term investments$27.2 $16.7 
Total net unrealized investment gains, pre-tax - Level 3 investments$27.2 $16.7 

Three Months EndedNine Months Ended
 September 30,September 30,
Millions2022202120222021
Other long-term investments$40.8 $26.5 $57.7 $75.5 
Total net unrealized investment gains, pre-tax - Level 3 investments$40.8 $26.5 $57.7 $75.5 
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Investment Holdings

The following tables present the cost or amortized cost, gross unrealized investment gains (losses), net foreign currency gains (losses) and carrying values of White Mountains’s fixed maturity investments as of March 31,September 30, 2022 and December 31, 2021:
March 31, 2022 September 30, 2022
MillionsMillionsCost or
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Net Foreign
Currency Gains (Losses)
Carrying
Value
MillionsCost or
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Net Foreign
Currency Gains (Losses)
Carrying
Value
U.S. Government and agency obligationsU.S. Government and agency obligations$181.4 $— $(5.3)$— $176.1 U.S. Government and agency obligations$227.9 $— $(11.0)$— $216.9 
Debt securities issued by corporationsDebt securities issued by corporations1,013.4 1.4 (45.4).2 969.6 Debt securities issued by corporations1,068.8 — (91.2)(3.1)974.5 
Municipal obligationsMunicipal obligations272.2 6.0 (5.9)— 272.3 Municipal obligations289.3 — (24.4)— 264.9 
Mortgage and asset-backed securitiesMortgage and asset-backed securities278.2 .2 (14.3)— 264.1 Mortgage and asset-backed securities278.3 — (37.6)— 240.7 
Collateralized loan obligationsCollateralized loan obligations136.5 — (1.6)(1.5)133.4 Collateralized loan obligations169.7 — (7.6)(4.8)157.3 
Total fixed maturity investmentsTotal fixed maturity investments$1,881.7 $7.6 $(72.5)$(1.3)$1,815.5 Total fixed maturity investments$2,034.0 $ $(171.8)$(7.9)$1,854.3 

 December 31, 2021
MillionsCost or
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Net Foreign
Currency
Gains (Losses)
Carrying
Value
U.S. Government and agency obligations$212.1 $.5 $(1.1)$— $211.5 
Debt securities issued by corporations993.3 8.7 (8.7)(.4)992.9 
Municipal obligations276.4 16.8 (1.3)— 291.9 
Mortgage and asset-backed securities277.2 2.9 (2.5)— 277.6 
Collateralized loan obligations136.5 — (.4)(1.1)135.0 
Total fixed maturity investments$1,895.5 $28.9 $(14.0)$(1.5)$1,908.9 

The following table presents the cost or amortized cost and carrying values of White Mountains’s fixed maturity investments by contractual maturity as of March 31,September 30, 2022. Actual maturities could differ from contractual maturities because borrowers may have the right to call or prepay certain obligations with or without call or prepayment penalties.
March 31, 2022September 30, 2022
MillionsMillionsCost or Amortized CostCarrying ValueMillionsCost or Amortized CostCarrying Value
Due in one year or lessDue in one year or less$157.7 $157.1 Due in one year or less$207.5 $203.8 
Due after one year through five yearsDue after one year through five years858.2 825.6 Due after one year through five years917.9 849.4 
Due after five years through ten yearsDue after five years through ten years338.4 321.2 Due after five years through ten years354.8 309.3 
Due after ten yearsDue after ten years112.7 114.1 Due after ten years105.8 93.8 
Mortgage and asset-backed securities and
collateralized loan obligations
Mortgage and asset-backed securities and
collateralized loan obligations
414.7 397.5 Mortgage and asset-backed securities and collateralized loan obligations448.0 398.0 
Total fixed maturity investmentsTotal fixed maturity investments$1,881.7 $1,815.5 Total fixed maturity investments$2,034.0 $1,854.3 


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The following tables present the cost or amortized cost, gross unrealized investment gains (losses), net foreign currency gains (losses), and carrying values of common equity securities, White Mountains’s investment in MediaAlpha and other long-term investments as of March 31,September 30, 2022 and December 31, 2021:
March 31, 2022 September 30, 2022
MillionsMillionsCost or
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Net Foreign
Currency Gains (Losses)
Carrying
Value
MillionsCost or
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Net Foreign
Currency Gains (Losses)
Carrying
Value
Common equity securitiesCommon equity securities$274.3 $20.8 $(1.9)$(3.1)$290.1 Common equity securities$324.2 $32.7 $(8.7)$(15.4)$332.8 
Investment in MediaAlphaInvestment in MediaAlpha$ $280.4 $ $ $280.4 Investment in MediaAlpha$ $148.2 $ $ $148.2 
Other long-term investmentsOther long-term investments$1,187.0 $291.6 $(52.8)$2.7 $1,428.5 Other long-term investments$1,390.7 $345.0 $(90.0)$(23.0)$1,622.7 
 December 31, 2021
MillionsCost or
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Net Foreign
Currency
Gains (Losses)
Carrying
Value
Common equity securities$236.3 $16.1 $— $(1.3)$251.1 
Investment in MediaAlpha$— $261.6 $— $— $261.6 
Other long-term investments$1,186.7 $239.0 $(44.1)$(3.8)$1,377.8 

Fair Value Measurements

Fair value measurements are categorized into a hierarchy that distinguishes between inputs based on market data from independent sources (observable inputs) and a reporting entity’s internal assumptions based upon the best information available when external market data is limited or unavailable (unobservable inputs). Quoted prices in active markets for identical assets or liabilities have the highest priority (Level 1), followed by observable inputs other than quoted prices, including prices for similar but not identical assets or liabilities (Level 2) and unobservable inputs, including the reporting entity’s estimates of the assumptions that market participants would use, having the lowest priority (Level 3). See Note 1917 — “Fair Value of Financial Instruments”.Instruments.”
As of March 31,September 30, 2022 and December 31, 2021, White Mountains used quoted market prices or other observable inputs to determine fair value for approximately 66%69% and 68% of the investment portfolio.

Fair Value Measurements by Level

The following tables present White Mountains’s fair value measurements for investments as of March 31,September 30, 2022 and December 31, 2021 by level. The major security types were based on the legal form of the securities. White Mountains has disaggregated its fixed maturity investments based on the issuing entity type, which impacts credit quality, with debt securities issued by U.S. government entities carrying minimal credit risk, while the credit and other risks associated with other issuers, such as corporations, municipalities or entities issuing mortgage and asset-backed securities vary depending on the nature of the issuing entity type. White Mountains further disaggregates debt securities issued by corporations by industry sector because investors often reference commonly used benchmarks and their subsectors to monitor risk and performance. Accordingly, White Mountains has further disaggregated this asset class into subclasses based on the similar sectors and industry classifications it uses to evaluate investment risk and performance against commonly used benchmarks, such as the Bloomberg Barclays U.S. Intermediate Aggregate.
16


March 31, 2022 September 30, 2022
MillionsMillionsFair ValueLevel 1Level 2Level 3MillionsFair ValueLevel 1Level 2Level 3
Fixed maturity investments:Fixed maturity investments:    Fixed maturity investments:    
U.S. Government and agency obligationsU.S. Government and agency obligations$176.1 $176.1 $ $ U.S. Government and agency obligations$216.9 $216.9 $ $ 
Debt securities issued by corporations:Debt securities issued by corporations: Debt securities issued by corporations: 
FinancialsFinancials266.7  266.7  Financials269.0  269.0  
ConsumerConsumer180.6  180.6  Consumer181.4  181.4  
Technology109.5  109.5  
IndustrialIndustrial105.4  105.4  Industrial115.8  115.8  
HealthcareHealthcare100.6  100.6  Healthcare114.3  114.3  
TechnologyTechnology110.8  110.8  
UtilitiesUtilities72.5  72.5  Utilities75.9  75.9  
CommunicationsCommunications63.5  63.5  Communications49.1  49.1  
EnergyEnergy41.7  41.7  Energy36.1  36.1  
MaterialsMaterials29.1  29.1  Materials22.1  22.1  
Total debt securities issued by corporationsTotal debt securities issued by corporations969.6  969.6  Total debt securities issued by corporations974.5  974.5  
Municipal obligationsMunicipal obligations272.3  272.3  Municipal obligations264.9  264.9  
Mortgage and asset-backed securitiesMortgage and asset-backed securities264.1  264.1  Mortgage and asset-backed securities240.7  240.7  
Collateralized loan obligationsCollateralized loan obligations133.4  133.4  Collateralized loan obligations157.3  157.3  
Total fixed maturity investmentsTotal fixed maturity investments1,815.5 176.1 1,639.4  Total fixed maturity investments1,854.3 216.9 1,637.4  
Short-term investmentsShort-term investments321.5 321.5   Short-term investments1,196.4 1,196.4   
Common equity securities (1)
Common equity securities (1)
290.1  290.1  
Common equity securities (1)
332.8 46.4 286.4  
Investment in MediaAlphaInvestment in MediaAlpha280.4 280.4   Investment in MediaAlpha148.2 148.2   
Other long-term investmentsOther long-term investments894.9  9.2 885.7 Other long-term investments1,058.0  13.9 1,044.1 
Other long-term investments NAV (2)
Other long-term investments NAV (2)
533.6    
Other long-term investments NAV (2)
564.7    
Total other long-term investmentsTotal other long-term investments1,428.5  9.2 885.7 Total other long-term investments1,622.7  13.9 1,044.1 
Total investmentsTotal investments$4,136.0 $778.0 $1,938.7 $885.7 Total investments$5,154.4 $1,607.9 $1,937.7 $1,044.1 
(1) Consist of investments in exchange traded funds (“ETFs”) and listed funds that predominantly invest in international equities.
(2) Consists of private equity funds and hedge funds, a bank loan fund, Lloyd’s trust deposits and ILS funds for which fair value is measured at net asset value (“NAV”) using the practical expedient. Investments for which fair value is measured at NAV are not classified within the fair value hierarchy.


17


 December 31, 2021
MillionsFair ValueLevel 1Level 2Level 3
Fixed maturity investments:    
U.S. Government and agency obligations$211.5 $211.5 $— $— 
Debt securities issued by corporations:    
Financials264.2 — 264.2 — 
Consumer178.1 — 178.1 — 
Technology117.9 — 117.9 — 
Industrial112.9 — 112.9 — 
Healthcare112.8 — 112.8 — 
Utilities70.9 — 70.9 — 
Communications56.0 — 56.0 — 
Energy48.0 — 48.0 — 
Materials32.1 — 32.1 — 
Total debt securities issued by corporations992.9 — 992.9 — 
Municipal obligations291.9 — 291.9 — 
Mortgage and asset-backed securities277.6 — 277.6 — 
Collateralized loan obligations135.0 — 135.0 — 
Total fixed maturity investments1,908.9 211.5 1,697.4 — 
Short-term investments465.9 465.9 — — 
Common equity securities (1)
251.1 — 251.1 — 
Investment in MediaAlpha261.6 261.6 — — 
Other long-term investments895.3 — 4.7 890.6 
Other long-term investments NAV (2)
482.5 — — — 
Total other long-term investments1,377.8 — 4.7 890.6 
Total investments$4,265.3 $939.0 $1,953.2 $890.6 
(1) Consist of investments in listed funds that predominantly invest in international equities.
(2) Consists of private equity funds and hedge funds, a bank loan fund, Lloyd’s trust deposits and ILS funds for which fair value is measured at NAV using the practical expedient. Investments for which fair value is measured at NAV are not classified within the fair value hierarchy.


Investments Held on Deposit or as Collateral

As of March 31,September 30, 2022 and December 31, 2021, investments of $463.7$455.1 million and $479.5 million were held in trusts required to be maintained in relation to HG Global’s reinsurance agreements with BAM.
BAM and one of the Other Operating Businesses areis required to maintain deposits with certain insurance regulatory agencies in order to maintain their insurance licenses. The fair value of such deposits, which represent state deposits and are included within the investment portfolio, totaled $4.6 million and $4.8 million as of March 31,September 30, 2022 and December 31, 2021.
Lloyd’s trust deposits are generally required of Lloyd's syndicates to protect policyholders in non-U.K. markets and are pledged into Lloyd’s trust accounts to provide a portion of the capital needed to support obligations at Lloyd’s. As of March 31,September 30, 2022 and December 31, 2021, Ark held Lloyd’s trust deposits with a fair value of $113.2$117.8 million and $113.8 million
The underwriting capacity of a member of Lloyd’s must be supported by providing a deposit (“Funds at Lloyd’s”) in the form of cash, securities or letters of credit in an amount determined by Lloyd’s. The amount of such deposit is calculated for each member through the completion of an annual capital adequacy exercise. These requirements allow Lloyd’s to evaluate that each member has sufficient assets to meet its underwriting liabilities plus a required solvency margin. As of March 31,September 30, 2022 and December 31, 2021, the fair value of Ark’s Funds at Lloyd’s investment deposits totaled $305.6$311.4 million and $342.8 million.
As of March 31,September 30, 2022 and December 31, 2021, Ark hashad $49.8 million and $50.0 million of short-term investments pledged as collateral under an uncommitted standby letter of credit. See Note 7 — “Debt”.




“Debt.”


18


Debt Securities Issued by Corporations

The following table presents the credit ratings of debt securities issued by corporations held in White Mountains’s investment portfolio as of March 31,September 30, 2022 and December 31, 2021:
Fair Value atFair Value at
MillionsMillionsMarch 31, 2022December 31, 2021MillionsSeptember 30, 2022December 31, 2021
AAAAAA$10.8 $12.0 AAA$11.2 $12.0 
AAAA84.3 85.0 AA90.5 85.0 
AA468.3 490.4 A524.0 490.4 
BBBBBB398.5 396.8 BBB343.0 396.8 
OtherOther7.7 8.7 Other5.8 8.7 
Debt securities issued by corporations (1)
Debt securities issued by corporations (1)
$969.6 $992.9 
Debt securities issued by corporations (1)
$974.5 $992.9 
(1)    Credit ratings are based upon issuer credit ratings provided by Standard & Poor’s Financial Services LLC (“Standard & Poor’s”), or if unrated by Standard & Poor’s, long-term obligation ratings provided by Moody’s Investor Service, Inc.

Mortgage and Asset-backed Securities and Collateralized Loan Obligations

The following table presents the fair value of White Mountains’s mortgage and asset-backed securities and collateralized loan obligations as of March 31,September 30, 2022 and December 31, 2021:
March 31, 2022December 31, 2021 September 30, 2022December 31, 2021
MillionsMillionsFair ValueLevel 2Level 3Fair ValueLevel 2Level 3MillionsFair ValueLevel 2Level 3Fair ValueLevel 2Level 3
Mortgage-backed securities:Mortgage-backed securities:      Mortgage-backed securities:      
Agency:Agency:      Agency:      
FNMAFNMA$119.3 $119.3 $ $125.4 $125.4 $— FNMA$114.1 $114.1 $ $125.4 $125.4 $— 
FHLMCFHLMC86.5 86.5  90.5 90.5 — FHLMC74.5 74.5  90.5 90.5 — 
GNMAGNMA35.6 35.6  40.1 40.1 — GNMA28.9 28.9  40.1 40.1 — 
Total agency (1)
Total agency (1)
241.4 241.4  256.0 256.0 — 
Total agency (1)
217.5 217.5  256.0 256.0 — 
Non-agency: ResidentialNon-agency: Residential.5 .5  .5 .5 — Non-agency: Residential.4 .4  .5 .5 — 
Total non-agencyTotal non-agency.5 .5  .5 .5 — Total non-agency.4 .4  .5 .5 — 
Total mortgage-backed securities Total mortgage-backed securities241.9 241.9  256.5 256.5 —  Total mortgage-backed securities217.9 217.9  256.5 256.5 — 
Other asset-backed securities:Other asset-backed securities:  Other asset-backed securities:  
Credit card receivablesCredit card receivables9.8 9.8  12.3 12.3 — Credit card receivables11.9 11.9  12.3 12.3 — 
Vehicle receivablesVehicle receivables12.4 12.4  8.8 8.8 — Vehicle receivables10.9 10.9  8.8 8.8 — 
Total other asset-backed securities Total other asset-backed securities22.2 22.2  21.1 21.1 —  Total other asset-backed securities22.8 22.8  21.1 21.1 — 
Total mortgage and asset-backed securitiesTotal mortgage and asset-backed securities264.1264.1 277.6 277.6 — Total mortgage and asset-backed securities240.7240.7 277.6 277.6 — 
Collateralized loan obligationsCollateralized loan obligations133.4 133.4  135.0 135.0 — Collateralized loan obligations157.3 157.3  135.0 135.0 — 
Total mortgage and asset-backed securities and collateralized loan obligationsTotal mortgage and asset-backed securities and collateralized loan obligations$397.5 $397.5 $ $412.6 $412.6 $— Total mortgage and asset-backed securities and collateralized loan obligations$398.0 $398.0 $ $412.6 $412.6 $— 
(1)    Represents publicly traded mortgage-backed securities which carry the full faith and credit guaranty of the U.S. Government (i.e., GNMA) or are guaranteed
by a government sponsored entity (i.e., FNMA, FHLMC).

As of March 31,September 30, 2022, White Mountains’s investment portfolio included $133.4$157.3 million of collateralized loan obligations that are within the senior tranches of their respective fund securitization structures. All of White Mountains’s collateral loan obligations were rated AAA or AA as of March 31,September 30, 2022.

Investment in MediaAlpha

Following the MediaAlpha IPO, White Mountains’s investment in MediaAlpha is accounted for at fair value based on the publicly traded share price of MediaAlpha’s common stock and is presented as a separate line item on the balance sheet.
At the March 31,September 30, 2022 closing price of $16.55$8.75 per share, the fair value of White Mountains’s investment in MediaAlpha was $280.4$148.2 million. See Note 2 — “Significant Transactions”.Transactions.”
19


Other Long-Term Investments

The following table presents the carrying values of White Mountains’s other long-term investments as of March 31,September 30, 2022 and December 31, 2021:
Fair Value atFair Value at
MillionsMillionsMarch 31, 2022December 31, 2021MillionsSeptember 30, 2022December 31, 2021
Kudu’s Participation ContractsKudu’s Participation Contracts$691.8 $669.5 Kudu’s Participation Contracts$813.2 $669.5 
PassportCard/DavidShield
PassportCard/DavidShield
125.0 120.0 
PassportCard/DavidShield
132.0 120.0 
Elementum Holdings, L.P.Elementum Holdings, L.P.45.0 45.0 Elementum Holdings, L.P.45.0 45.0 
Other unconsolidated entities (1)
Other unconsolidated entities (1)
5.0 34.4 
Other unconsolidated entities (1)
37.0 34.4 
Total unconsolidated entitiesTotal unconsolidated entities866.8 868.9 Total unconsolidated entities1,027.2 868.9 
Private equity funds and hedge fundsPrivate equity funds and hedge funds206.3 153.8 Private equity funds and hedge funds239.8 153.8 
Bank loan fundBank loan fund162.4 163.0 Bank loan fund155.7 163.0 
Lloyd’s trust depositsLloyd’s trust deposits113.2 113.8 Lloyd’s trust deposits117.8 113.8 
ILS fundsILS funds51.7 51.9 ILS funds49.4 51.9 
Private debt investmentsPrivate debt investments11.5 14.1 Private debt investments13.0 14.1 
OtherOther16.6 12.3 Other19.8 12.3 
Total other long-term investmentsTotal other long-term investments$1,428.5 $1,377.8 Total other long-term investments$1,622.7 $1,377.8 
(1) Includes White Mountains’s non-controlling equity interests in certain private common equity securities, convertible preferred securities, limited liability company units and Simple Agreement for Future Equity (“SAFE”) investments.

Private Equity Funds and Hedge Funds
White Mountains invests in private equity funds and hedge funds, which are included in other long-term investments. The fair value of these investments is generally estimated using the NAV of the funds. As of March 31,September 30, 2022, White Mountains held investments in 1516 private equity funds and 1two hedge fund.funds. The largest investment in a single private equity fund or hedge fund was $33.9$49.3 million and $31.3 million as of March 31,September 30, 2022 and December 31, 2021.
The following table presents the fair value of investments and unfunded commitments in private equity funds and hedge funds by investment objective and sector as of March 31,September 30, 2022 and December 31, 2021:
March 31, 2022December 31, 2021 September 30, 2022December 31, 2021
MillionsMillionsFair ValueUnfunded
Commitments
Fair ValueUnfunded
Commitments
MillionsFair ValueUnfunded
Commitments
Fair ValueUnfunded
Commitments
Private equity fundsPrivate equity funds    Private equity funds    
Aerospace/Defense/GovernmentAerospace/Defense/Government$112.5 $47.5 $69.8 $11.8 Aerospace/Defense/Government$102.9 $45.1 $69.8 $11.8 
Financial servicesFinancial services78.5 28.7 67.7 29.3 Financial services77.9 54.9 67.7 29.3 
Real estateReal estate4.8 2.8 4.3 2.9 Real estate4.3 2.5 4.3 2.9 
Total private equity fundsTotal private equity funds195.8 79.0 141.8 44.0 Total private equity funds185.1 102.5 141.8 44.0 
Hedge fundsHedge funds    Hedge funds    
Long/short equity financials and business servicesLong/short equity financials and business services49.3  — — 
European small/mid capEuropean small/mid cap10.5  12.0 — European small/mid cap5.4  12.0 — 
Total hedge fundsTotal hedge funds10.5  12.0 — Total hedge funds54.7  12.0 — 
Total private equity funds and hedge funds
included in other long-term investments
Total private equity funds and hedge funds
included in other long-term investments
$206.3 $79.0 $153.8 $44.0 
Total private equity funds and hedge funds
included in other long-term investments
$239.8 $102.5 $153.8 $44.0 
 

Investments in private equity funds are generally subject to a lock-up period during which investors may not request a redemption. Distributions prior to the expected termination date of the fund may be limited to dividends or proceeds arising from the liquidation of the fund’s underlying investments. In addition, certain private equity funds have the option to extend the lock-up period.

20


The following table presents investments in private equity funds that were subject to lock-up periods as of March 31,September 30, 2022:
MillionsMillions1 – 3 years3 – 5 years5 – 10 years>10 yearsTotalMillions1 – 3 years3 – 5 years5 – 10 years>10 yearsTotal
Private equity funds — expected lock-up period remainingPrivate equity funds — expected lock-up period remaining$.1$48.7$137.0$10.0$195.8Private equity funds — expected lock-up period remaining$27.5$19.0$135.4$3.2$185.1

Investors in private equity funds are generally subject to indemnification obligations outside of the capital commitment period and prior to the winding up of the fund. As of March 31,September 30, 2022 and December 31, 2021, White Mountains is not aware of any indemnification claims relating to its investments in private equity funds. 
Redemption of investments in most hedge funds is subject to restrictions, including lock-up periods where no redemptions or withdrawals are allowed, restrictions on redemption frequency and advance notice periods for redemptions. Amounts requested for redemptions remain subject to market fluctuations until the redemption effective date, which generally falls at the end of the defined redemption period. Advance notice requirements for redemptions from White Mountains’s hedge funds investments range from 45 to 90 days. One of White Mountains’s hedge fund investment is subjectinvestments also limits redemptions to a perpetual two-year restriction on redemption frequency fromevery second anniversary following the date of the initial investment in the fund and a 90 days advanced notice period requirement.investment.

Bank Loan Fund
White Mountains’s other long-term investments include a bank loan fund with a fair value of $162.4$155.7 million as of March 31,September 30, 2022. The fair value of this investment is estimated using the NAV of the fund. The bank loan fund’s investment objective is to provide, on an unleveraged basis, high current income consistent with preservation of capital and low duration. The bank loan fund primarily invests in a broad portfolio of U.S. dollar-denominated, non-investment grade, floating-rate senior secured loans and may invest in other financial instruments, such as secured and unsecured corporate debt, credit default swaps, reverse repurchase agreements, synthetic indices and cash and cash equivalents.
The investment in the bank loan fund is subject to restrictions on redemption frequency and advance notice periods for redemptions. Amounts requested for redemptions remain subject to market fluctuations until the redemption effective date, which generally falls at the end of the defined redemption period. White Mountains may redeem all or a portion of its bank loan fund investment as of any calendar month-end upon 15 calendar days advanced written notice.

Lloyd’s Trust Deposits
White Mountains’s other long-term investments include Lloyd’s trust deposits, which consist of non-U.K. deposits and Canadian comingled pooled funds. The Lloyd’s trust deposits invest primarily in short-term government securities, agency securities and corporate bonds held in trusts that are managed by Lloyd's of London. These investments are generally required of Lloyd's syndicates to protect policyholders in non-U.K. markets and are pledged into Lloyd’s trust accounts to provide a portion of the capital needed to support obligations at Lloyd’s. The fair value of the Lloyd’s trust deposits is generally estimated using the NAV of the funds. As of March 31,September 30, 2022, White Mountains held Lloyd’s trust deposits with a fair value of $113.2$117.8 million.

Insurance-Linked Securities Funds
White Mountains’s other long-term investments include ILS fund investments. The fair value of these investments is generally estimated using the NAV of the funds. As of March 31,September 30, 2022, White Mountains held investments in ILS funds with a fair value of $51.7$49.4 million.
Investments in ILS funds are generally subject to restrictions, including lock-up periods where no redemptions or withdrawals are allowed, non-renewal clauses, restrictions on redemption frequency and advance notice periods for redemptions. From time to time, natural catastrophe, liquidity, market or other events will occur that make the determination of fair value for underlying investments in ILS funds less certain due to the potential for loss development. In such circumstances, the impacted investments may be subject to additional lock-up provisions.


21


ILS funds are typically subject to monthly and annual restrictions on redemptions and advance redemption notice period requirements that range between 30 and 90 days. Amounts requested for redemption remain subject to market fluctuations until the redemption effective date, which generally falls at the end of the defined redemption period.
One of the ILS funds in White Mountains’s portfolio requires shareholders to provide advance redemption notice on or before September 15 of each calendar year. Amounts requested for redemption in this fund remain subject to market fluctuation until the underlying investment has fully matured or been commuted, which may be up to a period of three years from the start of each calendar year.

Rollforward of Level 3 Investments

Level 3 measurements as of March 31,September 30, 2022 and 2021 consist of securities for which the estimated fair value has not been determined based upon quoted market price inputs for identical or similar securities. The following table presents the changes in White Mountains’s fair value measurements for Level 3 investments for the threenine months ended March 31,September 30, 2022 and 2021:
Level 3 InvestmentsLevel 3 InvestmentsLevel 3 Investments
MillionsMillionsOther Long-term
Investments
Other Long-term
Investments
MillionsOther Long-term
Investments
Other Long-term
Investments
Balance at December 31, 2021Balance at December 31, 2021$890.6 Balance at December 31, 2020$614.2 Balance at December 31, 2021$890.6 Balance at December 31, 2020$614.2 
Net realized and unrealized gainsNet realized and unrealized gains26.8 Net realized and unrealized gains16.7 Net realized and unrealized gains57.3 Net realized and unrealized gains79.0 
Amortization/accretionAmortization/accretion Amortization/accretion— Amortization/accretion Amortization/accretion— 
PurchasesPurchases Purchases17.5 Purchases127.9 Purchases143.6 
SalesSales(31.7)Sales(1.6)Sales(31.7)Sales(31.9)
Effect of Ark TransactionEffect of Ark Transaction Effect of Ark Transaction9.6 Effect of Ark Transaction Effect of Ark Transaction9.6 
Transfers inTransfers in Transfers in— Transfers in Transfers in— 
Transfers outTransfers out Transfers out— Transfers out Transfers out— 
Balance at March 31, 2022$885.7 Balance at March 31, 2021$656.4 
Balance at September 30, 2022Balance at September 30, 2022$1,044.1 Balance at September 30, 2021$814.5 

Fair Value Measurements — Transfers Between Levels - ThreeNine months ended March 31,September 30, 2022 and 2021
Transfers between levels are recorded using the fair value measurement as of the end of the quarterly period in which the event or change in circumstance giving rise to the transfer occurred.
During the threenine months ended March 31,September 30, 2022 and 2021, there were no fixed maturity investments or other long-term investments classified as Level 3 measurements in the prior period that were transferred to Level 2 measurements.
During the threenine months ended March 31,September 30, 2022 and 2021, there were no fixed maturity investments or other long-term investments classified as Level 2 measurements in the prior period that were transferred to Level 3 measurements.


22


Significant Unobservable Inputs

The following tables present significant unobservable inputs used in estimating the fair value of White Mountains’s other long-term investments, classified within Level 3 as of March 31,September 30, 2022 and December 31, 2021. The tables below exclude $14.4$42.9 million and $46.7 million of Level 3 other long-term investments generally valued based on recent or expected transaction prices. The fair value of investments in private equity funds and hedge funds, bank loan funds, Lloyd’s trust deposits and ILS funds are generally estimated using the NAV of the funds.

$ in Millions$ in MillionsMarch 31, 2022$ in MillionsSeptember 30, 2022
DescriptionDescription
Valuation Technique(s) (1)
Fair Value (2)
Unobservable InputsDescription
Valuation Technique(s) (1)
Fair Value (2)
Unobservable Inputs
Discount Rate (5)
Terminal Cash Flow Exit Multiple (x) or Terminal Revenue Growth Rate (%) (5)
Discount Rate (6)
Terminal Cash Flow Exit Multiple (x) or Terminal Revenue Growth Rate (%) (6)
Kudu’s Participation Contracts (4)(5)
Kudu’s Participation Contracts (4)(5)
Discounted cash flow
$691.818% - 23%7x - 13x
Kudu’s Participation Contracts (4)(5)
Discounted cash flow
$813.217% - 24%7x - 16x
PassportCard/DavidShieldPassportCard/DavidShieldDiscounted cash flow$125.023%4%PassportCard/DavidShieldDiscounted cash flow$132.024%4%
Elementum Holdings, L.P.Elementum Holdings, L.P.Discounted cash flow$45.017%4%Elementum Holdings, L.P.Discounted cash flow$45.018%4%
Private debt investmentsPrivate debt investmentsDiscounted cash flow$9.59%N/APrivate debt investmentsDiscounted cash flow$11.010%N/A
(1) Key inputs to the discounted cash flow analysis generally include projections of future revenue and earnings, discount rates and terminal exit multiples or growth rates.
(2) Includes the net unrealized investment gains (losses) associated with foreign currency; foreign currency effects based on observable inputs.
(3) Since Kudu’s Participation Contracts are not subject to corporate taxes within Kudu Investment Management, LLC, pre-tax discount rates are applied to pre-tax cash flows in determining fair values. The weighted average discount rate and weighted average terminal cash flow exit multiple applied to Kudu’s Participation Contracts is 20% and 10x.9.7x.
(4) As of March 31,September 30, 2022, onethree of Kudu’s Participation Contracts with a total fair value of $81.9 was$312.4 were valued using a probability weighted expected return method, which was based on a discounted cash flow analysis and an expected sale transaction.
(5)In 2022, Kudu deployed a total of $97.9 into new and existing Kudu Participation Contracts, including Gramercy Funds Management, GenTrust, EC Management Services, and TK Partners.
(6) Increases (decreases) to the discount rates in isolation would result in lower (higher) fair value measurements, while increases (decreases) to the terminal cash flow exit multiples or terminal revenue growth rates in isolation would result in higher (lower) fair value measurements.

$ in MillionsDecember 31, 2021
Description
Valuation Technique(s) (1)
Fair Value (2)
Unobservable Inputs
Discount Rate (6)
Terminal Cash Flow Exit Multiple (x) or Terminal Revenue Growth Rate (%) (6)
Kudu’s Participation Contracts (3)(4)(5)
Discounted cash flow
$669.518% - 23%7x - 13x
PassportCard/DavidShieldDiscounted cash flow$120.023%4%
Elementum Holdings, L.P.Discounted cash flow$45.017%4%
Private debt investmentsDiscounted cash flow$9.48%N/A
(1) Key inputs to the discounted cash flow analysis generally include projections of future revenue and earnings, discount rates and terminal exit multiples or growth rates.
(2) Includes the net unrealized investment gains (losses) associated with foreign currency; foreign currency effects based on observable inputs.
(3) Since Kudu’s Participation Contracts are not subject to corporate taxes within Kudu Investment Management, LLC, pre-tax discount rates are applied to pre-tax cash flows in determining fair values. The weighted average discount rate and weighted average terminal cash flow exit multiple applied to Kudu’s Participation Contracts is 20% and 10x.
(4) In 2021, Kudu deployed a total of $223.4 ininto new and existing Kudu Participation Contracts, including TIG Advisors, TK Partners, Third Eye Capital Management, Douglass Winthrop Advisors, Granahan Investment Management and Radcliffe Capital Management.
(5) As of December 31, 2021, one of Kudu’s Participation Contracts with a total fair value of $78.8 was valued using a probability weighted expected return method, which was based on a discounted cash flow analysis and an expected sale transaction.
(6) Increases (decreases) to the discount rates in isolation would result in lower (higher) fair value measurements, while increases (decreases) to the terminal cash flow exit multiples or terminal revenue growth rates in isolation would result in higher (lower) fair value measurements.


23


Note 4. Goodwill and Other Intangible Assets

    White Mountains accounts for purchases of businesses using the acquisition method. Under the acquisition method, White Mountains recognizes and measures the assets acquired, liabilities assumed and any non-controlling interest in the acquired entities at their acquisition date fair values. The estimated acquisition date fair values, generally consisting of intangible assets and liabilities for contingent consideration, may be recorded at provisional amounts in circumstances where the information necessary to complete the acquisition accounting is not available at the reporting date. Any such provisional amounts are finalized as measurement period adjustments within one year of the acquisition date.
The following table presents the economic lives, acquisition date fair values, accumulated amortization and net carrying values for other intangible assets and goodwill, by reportable segment as of March 31,September 30, 2022 and December 31, 2021:
$ in MillionsWeighted Average Economic
 Life
(in years)
March 31, 2022December 31, 2021
Acquisition Date Fair ValueAccumulated AmortizationImpairments and Amounts Allocated to Held for SaleNet Carrying ValueAcquisition Date Fair ValueAccumulated AmortizationImpairments and Amounts Allocated to Held for SaleNet Carrying Value
Goodwill:
ArkN/A$116.8 $ $ $116.8 $116.8 $— $— $116.8 
NSM (1)
N/A529.3  30.2 499.1 533.4 — 30.2 503.2 
KuduN/A7.6   7.6 7.6 — — 7.6 
Other OperationsN/A17.9   17.9 17.9 — — 17.9 
Total goodwill671.6  30.2 641.4 675.7 — 30.2 645.5 
Other intangible assets:
Ark
Underwriting
   Capacity
N/A175.7   175.7 175.7 — — 175.7 
NSM (1)
Customer
   relationships
9.2159.4 62.3 3.5 93.6 159.9 57.0 3.5 99.4 
   Trade names1868.5 12.9 1.0 54.6 68.6 11.9 1.0 55.7 
   Information
      technology
      platform
03.1 1.4 1.7  3.1 1.4 1.7 — 
Renewal
   rights
1282.5 18.3  64.2 82.5 15.8 — 66.7 
Other3.31.2 .7  .5 1.1 .7 — .4 
      Subtotal314.7 95.6 6.2 212.9 315.2 86.8 6.2 222.2 
Kudu
   Trade names72.2 .9  1.3 2.2 .9 — 1.3 
Other Operations
   Trade names17.58.2 1.7  6.5 8.2 1.5 — 6.7 
Customer
   relationships
13.018.8 5.2  13.6 18.8 4.5 — 14.3 
Other5.3.3 .2  .1 .3 .1 — .2 
       Subtotal27.3 7.1  20.2 27.3 6.1 — 21.2 
Total other intangible assets519.9 103.6 6.2 410.1 520.4 93.8 6.2 420.4 
Total goodwill and other
   intangible assets
$1,191.5 $103.6 $36.4 1,051.5 $1,196.1 $93.8 $36.4 1,065.9 
Goodwill and other intangible assets attributed to non-controlling interests(117.1)(117.6)
Goodwill and other intangible assets included in White Mountains’s
   common shareholders’ equity
$934.4 $948.3 
(1) During the three months ended March 31, 2022, NSM’s goodwill included $(4.1) of the effect of foreign currency translation. During the three months ended March 31, 2022, NSM’s intangible assets included $(0.5) and 0.3 of the effect of foreign currency translation on the acquisition date fair value and accumulated amortization.
$ in MillionsWeighted Average Economic
 Life
(in years)
September 30, 2022December 31, 2021
Acquisition Date Fair ValueAccumulated AmortizationNet Carrying ValueAcquisition Date Fair ValueAccumulated AmortizationNet Carrying Value
Goodwill:
ArkN/A$116.8 $ $116.8 $116.8 $— $116.8 
KuduN/A7.6  7.6 7.6 7.6 
Other OperationsN/A51.1  51.1 17.9 — 17.9 
Total goodwill175.5  175.5 142.3 — 142.3 
Other intangible assets:
Ark
Underwriting capacityN/A175.7  175.7 175.7 — 175.7 
Kudu
   Trade names72.2 1.1 1.1 2.2 .9 1.3 
Other Operations
   Trade names15.917.9 2.4 15.5 8.2 1.5 6.7 
Customer relationships12.429.5 6.6 22.9 18.8 4.5 14.3 
Other12.12.8 .3 2.5 .3 .1 .2 
       Subtotal50.2 9.3 40.9 27.3 6.1 21.2 
Total other intangible assets228.1 10.4 217.7 205.2 7.0 198.2 
Total goodwill and other intangible assets
$403.6 $10.4 393.2 $347.5 $7.0 340.5 
Goodwill and other intangible assets attributed to
   non-controlling interests
(103.1)(91.8)
Goodwill and other intangible assets included in White Mountains’s
   common shareholders’ equity
$290.1 $248.7 


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Intangible Assets Valuation Methods

The goodwill recognized for the entities shown above is attributed to expected future cash flows. The acquisition date fair values of other intangible assets with finite lives are estimated using income approach techniques, which use future expected cash flows to develop a discounted present value amount.
The multi-period-excess-earnings method estimates fair value using the present value of the incremental after-tax cash flows attributable solely to the other intangible asset over its remaining life. This approach was used to estimate the fair value of other intangible assets associated with the underwriting capacity, trade names, customer relationships and contracts and information technology.
The relief-from-royalty method was used to estimate fair value for other intangible assets that relate to rights that could be obtained via a license from a third-party owner. Under this method, the fair value is estimated using the present value of license fees avoided by owning rather than leasing the asset. This technique was used to estimate the fair value of domain names, certain trademarks and brand names.

24


The with-or-without method estimates the fair value of other intangible assets that provide an incremental benefit. Under this method, the fair value of the other intangible asset is calculated by comparing the value of the entity with and without the other intangible asset. This approach was used to estimate the fair value of favorable lease terms.
On at least an annual basis beginning no later than the interim period included in the one-year anniversary of an acquisition, White Mountains evaluates goodwill and other intangible assets for potential impairment. Between annual evaluations, White Mountains considers changes in circumstances or events subsequent to the most recent evaluation that may indicate that an impairment may exist and, if necessary will perform an interim review for potential impairment.
The following table presents a summary of the acquisition date fair values of goodwill and other intangible assets for acquisitions completed from January 1, 2021 through March 31,September 30, 2022:
$ in Millions
Acquisition of subsidiary/ asset
Goodwill and
Other intangible asset (1)
Acquisition Date
Acquisition of subsidiary/ asset
Ark$292.5 January 1, 2021
J.C. Taylor$55.7August 6, 2021
Other Operations$15.986.6 April 27, 2021Various
(1) Acquisition date fair values include the effect of adjustments during the measurement period and excludesexclude the effect of foreign currency translation subsequent to the acquisition date.

The following tabletables present the change in goodwill and other intangible assets for the three and nine months ended March 31,September 30, 2022 and 2021:
Three Months Ended March 31,Three Months Ended September 30,
2022202120222021
MillionsMillionsGoodwillOther Intangible AssetsTotal Goodwill and Other Intangible AssetsGoodwillOther Intangible AssetsTotal Goodwill and Other Intangible AssetsMillionsGoodwillOther Intangible AssetsTotal Goodwill and Other Intangible AssetsGoodwillOther Intangible AssetsTotal Goodwill and Other Intangible Assets
Beginning balanceBeginning balance$645.5 $420.4 $1,065.9 $525.5 $256.9 $782.4 Beginning balance$201.8 $196.2 $398.0 $151.5 $201.1 $352.6 
Ark Transaction   116.8 175.7 292.5 
Attribution of acquisition date fair value estimates
between goodwill and other intangible assets (1)
Attribution of acquisition date fair value estimates
between goodwill and other intangible assets (1)
(22.9)22.9  (9.3)9.3 — 
Measurement period adjustments (1)(2)
Measurement period adjustments (1)(2)
   (.2)— (.2)
Measurement period adjustments (1)(2)
(3.4) (3.4)(.4)— (.4)
AmortizationAmortization (10.1)(10.1)— (9.2)(9.2)Amortization (1.4)(1.4)— (2.0)(2.0)
Loss on assets held for sale (2)
   (30.2)— (30.2)
Foreign currency translation(4.1)(.2)(4.3)1.5 .2 1.7 
Ending balanceEnding balance$641.4 $410.1 $1,051.5 $613.4 $423.6 $1,037.0 Ending balance$175.5 $217.7 $393.2 $141.8 $208.4 $350.2 
(1) Relates to acquisitions within Other Operations. The relative fair values of goodwill and other intangible assets recognized in connection with acquisitions during 2022 had not yet been finalized as of the end of the period.
(2) Measurement period adjustments relate to updated information about acquisition date fair values of assets acquired and liabilities assumed. During the three months ended March 31,September 30, 2022 and 2021, adjustments primarily relate to goodwill of $0.2 in connection with the acquisition in theacquisitions within Other Operations segment.
(2) Relates to the sale of Fresh Insurance’s motor business recorded in the first quarter of 2021. This amount excludes $1.5 of net proceeds related to the sale.Operations.

Nine Months Ended September 30,
20222021
MillionsGoodwillOther Intangible AssetsTotal Goodwill and Other Intangible AssetsGoodwillOther Intangible AssetsTotal Goodwill and Other Intangible Assets
Beginning balance$142.3 $198.2 $340.5 $19.2 $26.4 $45.6 
Ark Transaction   116.8 175.7 292.5 
Acquisition of businesses (1)
59.5  59.5 15.8 — 15.8 
Attribution of acquisition date fair value estimates
   between goodwill and other intangible assets (1)
(22.9)22.9  (9.3)9.3 — 
Measurement period adjustments (2)
(3.4)(3.4)(.7).1 (.6)
Amortization (3.4)(3.4)— (3.1)(3.1)
Ending balance$175.5 $217.7 $393.2 $141.8 $208.4 $350.2 
On April 12, 2021, NSM sold Fresh Insurance’s motor business. In connection with the sale, White Mountains recognized a loss of $28.7 million during the three months ended March 31, 2021. See (1)Note 19 — “Held for Sale and Discontinued Operations”. There were no impairmentsRelates to acquisitions within Other Operations.The relative fair values of goodwill and other intangible assets forrecognized in connection with acquisitions during 2022 had not yet been finalized as of the three end of the period.
(2) Measurement period adjustments relate to updated information about acquisition date fair values of assets acquired and liabilities assumed. During the nine
months ended March 31,September 30, 2022 and 2021.

2021, adjustments relate to acquisitions within Other Operations.
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Note 5.  Loss and Loss Adjustment Expense Reserves

The following table summarizes the loss and LAE reserve activity of Ark’s insurance and reinsurance subsidiaries for the three and nine months ended March 31,September 30, 2022 and 2021:

Three Months Ended March 31,Three Months Ended September 30,Nine Months Ended September 30,
MillionsMillions20222021Millions2022202120222021
Gross beginning balanceGross beginning balance$894.7 $696.0 Gross beginning balance$1,022.1 $760.0 $894.7 $696.0 
Less: beginning reinsurance recoverable on unpaid losses (1)
Less: beginning reinsurance recoverable on unpaid losses (1)
(428.9)(433.4)
Less: beginning reinsurance recoverable on unpaid losses (1)
(375.5)(425.3)(428.9)(433.4)
Net loss and loss adjustment expense reserves465.8 262.6 
Net loss and LAE reservesNet loss and LAE reserves646.6 334.7 465.8 262.6 
Loss and loss adjustment expenses incurred relating to:
Loss and LAE incurred relating to:Loss and LAE incurred relating to:
Current year lossesCurrent year losses125.7 65.5 Current year losses222.9 141.9 491.8 269.0 
Prior year lossesPrior year losses(3.7).5 Prior year losses(9.2)(12.7)(35.6)(21.2)
Net incurred losses and loss adjustment expenses122.0 66.0 
Net incurred losses and LAENet incurred losses and LAE213.7 129.2 456.2 247.8 
Loss and loss adjustment expenses paid relating to:
Loss and LAE paid relating to:Loss and LAE paid relating to:
Current year lossesCurrent year losses(0.6)(5.2)Current year losses(6.1)(9.0)(20.8)(11.5)
Prior year lossesPrior year losses(39.4)(19.7)Prior year losses(37.0)(20.3)(130.8)(62.1)
Net loss and loss adjustment expenses(40.0)(24.9)
Net paid loss and LAENet paid loss and LAE(43.1)(29.3)(151.6)(73.6)
Change in TPC Providers’ participation(2)Change in TPC Providers’ participation(2)57.5 (2.2)Change in TPC Providers’ participation(2) — 57.5 (2.2)
Foreign currency translation and other adjustments
to loss and loss adjustment expense reserves
(1.7)2.9 
Foreign currency translation and other adjustments
to loss and LAE reserves
Foreign currency translation and other adjustments
to loss and LAE reserves
(9.2)(1.2)(19.9)(1.2)
Net ending balanceNet ending balance603.6 304.4 Net ending balance808.0 433.4 808.0 433.4 
Plus: ending reinsurance recoverable on unpaid losses (2)(3)
Plus: ending reinsurance recoverable on unpaid losses (2)(3)
396.0 447.5 
Plus: ending reinsurance recoverable on unpaid losses (2)(3)
521.4 457.5 521.4 457.5 
Gross ending balanceGross ending balance$999.6 $751.9 Gross ending balance$1,329.4 $890.9 $1,329.4 $890.9 
(1) The beginning reinsurance recoverable on unpaid losses includes amounts attributable to TPC Providers of $182.4 and $314.6 for the three months ended September 30, 2022 and 2021 and $276.8 and $319.2.$319.2 for the nine months ended September 30, 2022 and 2021.
(2) Amount represents the impact to net loss and LAE reserves due to a change in the TPC Providers’ participation related to the annual reinsurance to close (“RITC”) process.
(3) The ending reinsurance recoverable on unpaid losses includes amounts attributable to TPC Providers of $207.3$168.0 and $331.0.$299.9 as of September 30, 2022 and 2021.

For the three and nine months ended March 31,September 30, 2022, Ark experienced $3.7recognized $9.2 million and $35.6 million of net favorable prior year loss reserve development. Ark’s net favorable prior year loss reserve development in 2022 was driven primarily by good claims experience across most classes including the property and accident & health and specialty reserving lines of business, predominantly from business underwritten in London. For the three and nine months ended September 30, 2021, Ark recognized $12.7 million and $21.2 million of net favorable prior year loss reserve development. Ark’s net favorable prior year loss reserve development in 2021 was driven primarily by the property linesand accident & health reserving line of business.

TPC Providers’ Participation

For the years of account prior to the Ark Transaction, a significant proportion of the Syndicates’ underwriting capital was provided by TPC Providers using whole account reinsurance contracts with Ark’s corporate member. The TPC Providers’ participation in the Syndicates for the 2020 open year of account is 42.8% of the total net result of the Syndicates. For the years of account subsequent to the Ark Transaction, Ark is no longer using TPC Providers to provide underwriting capital for the Syndicates.
A Reinsurance to Close (“RITC”)
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An RITC agreement is generally put in place after the third year of operations for a year of account such that the outstanding loss and LAE reserves, including future development thereon, are reinsured into the next year of account. As a result, and in combination with the changing participation provided by TPC Providers, Ark’s participation on outstanding loss and LAE reserves reinsured into the next year of account may change, perhaps significantly. During the first quarter of 2022, an RITC was executed such that the outstanding loss and LAE reserves for claims arising out of the 2019 year of account, for which the TPC Providers’ participation in the total net results of the Syndicates was 58.3%, were reinsured into the 2020 year of account, for which the TPC Providers’ participation in the total net results of the Syndicates is 42.8%. During the first quarter of 2021, an RITC was executed such that the outstanding loss and LAE reserves for claims arising out of the 2018 year of account, for which the TPC Providers’ participation in the total net results of the Syndicates was 57.6%, were reinsured into the 2019 year of account, for which the TPC Providers’ participation in the total net results of the Syndicates was 58.3%.

Municipal Bond Guarantee Insurance

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

26


Note 6.  Third-Party Reinsurance

In the normal course of business, Ark may seek to limit losses that may arise from catastrophes or other events by reinsuring certain risks with third-party reinsurers. Ark remains liable for risks reinsured in the event that the reinsurer does not honor its obligations under reinsurance contracts.
The following table summarizes the effects of reinsurance on written and earned premiums and on losses and LAE for Ark.Ark for the three and nine months ended September 30, 2022 and 2021:
Three Months Ended March 31,Three Months Ended September 30,Nine Months Ended September 30,
MillionsMillions20222021Millions2022202120222021
Written premiums:Written premiums:Written premiums:
GrossGross$633.1 $404.5 Gross$215.5 $162.4 $1,252.5 $895.0 
CededCeded(89.3)(62.1)Ceded(22.9)(41.5)(246.0)(169.5)
Net written premiumsNet written premiums$543.8 $342.4 Net written premiums$192.6 $120.9 $1,006.5 $725.5 
Earned premiums:Earned premiums:Earned premiums:
GrossGross$245.3 $162.6 Gross$454.9 $284.5 $966.6 $622.0 
CededCeded(50.9)(58.0)Ceded(108.8)(71.1)(208.8)(186.2)
Net earned premiumsNet earned premiums$194.4 $104.6 Net earned premiums$346.1 $213.4 $757.8 $435.8 
Losses and loss adjustment expenses:Losses and loss adjustment expenses:Losses and loss adjustment expenses:
GrossGross$183.1 $115.6 Gross$391.4 $193.5 $712.9 $372.7 
CededCeded(61.1)(49.6)Ceded(177.7)(64.3)(256.7)(124.9)
Net losses and loss adjustment expensesNet losses and loss adjustment expenses$122.0 $66.0 Net losses and loss adjustment expenses$213.7 $129.2 $456.2 $247.8 

As of March 31,September 30, 2022, Ark had $396.0$521.4 million and $16.7$29.5 million of reinsurance recoverables on unpaid and paid losses. As of September 30, 2021, Ark had $457.5 million and $8.1 million of reinsurance recoverables on unpaid and paid losses. As reinsurance contracts do not relieve Ark of its obligation to its policyholders, Ark seeks to reduce the credit risk associated with reinsurance balances by avoiding over-reliance on specific reinsurers through the application of concentration limits and thresholds. Ark is selective with its reinsurers, placing reinsurance with only those reinsurers having a strong financial condition. Ark monitors the financial strength of its reinsurers on an ongoing basis.
As of March 31,September 30, 2022, Ark’s reinsurance recoverables of $412.7$550.9 million included $207.3$168.0 million attributable to TPC Providers, which are collateralized. As of September 30, 2021, Ark’s reinsurance recoverables of $465.6 million included $299.9 million related to TPC Providers, which are collateralized.

27


The following table provides a listing of Ark’s remaining gross and net reinsurance recoverables, excluding amounts attributable to TPC Providers, by the reinsurer’s A.M. Best Company, Inc (“A.M. Best”) rating and the percentage of total recoverables.recoverables as of September 30, 2022:

$ in Millions$ in MillionsAs of March 31, 2022$ in MillionsAs of September 30, 2022
A.M. Best Rating(1)
A.M. Best Rating(1)
GrossCollateralNet% of Total
A.M. Best Rating(1)
GrossCollateralNet% of Total
A+ or betterA+ or better$135.5 $15.1 $120.4 74.3 %A+ or better$178.3 $— $178.3 67.7 %
A- to AA- to A54.614.140.525.0 A- to A78.9— 78.929.9 
B++ or lower and not ratedB++ or lower and not rated15.314.21.10.7 B++ or lower and not rated125.7119.46.3 2.4 
TotalTotal$205.4 $43.4 $162.0 100.0 %Total$382.9 $119.4 $263.5 100.0 %
(1) A.M. Best ratings as detailed above are: “A+ or better” (Superior) “A- to A” (Excellent), “B++” (Good).

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

Reinsurance Contracts Accounted for as Deposits

Ark has an aggregate excess of loss contract with SiriusPoint Ltd. (“SiriusPoint”), which is accounted for using the deposit method and recorded within other assets. Ark earns an annual crediting rate of 3.0%, which is recorded within other revenue. During the fourth quarter of 2021, Ark negotiated a reduction of $31.7 million, including accrued interest, to the aggregate excess of loss contract with SiriusPoint. As of March 31,September 30, 2022, the carrying value of Ark’s deposit in SiriusPoint, including accrued interest, was $20.6$20.3 million.
See Note 10 — “Municipal Bond Guarantee Insurance” for reinsurance contracts accounted for as deposits related to White Mountains’s financial guarantee business.
27


Note 7.  Debt
 
The following table presents White Mountains’s debt outstanding as of March 31,September 30, 2022 and December 31, 2021:
$ in Millions$ in MillionsMarch 31,
2022
Effective
  Rate
 (1)December 31,
2021
Effective
  Rate
 (1)$ in MillionsSeptember 30,
2022
Effective
  Rate
 (1)December 31,
2021
Effective
  Rate
 (1)
HG Global Senior NotesHG Global Senior Notes$150.0 8.6%$— N/A
Unamortized discount and issuance costUnamortized discount and issuance cost(3.6)— 
HG Global Senior Notes, carrying valueHG Global Senior Notes, carrying value146.4 — 
Ark 2007 Subordinated Notes, carrying valueArk 2007 Subordinated Notes, carrying value$30.0 $30.0 Ark 2007 Subordinated Notes, carrying value30.0 30.0 
Ark 2021 Notes Tranche 1Ark 2021 Notes Tranche 142.9 44.2 Ark 2021 Notes Tranche 137.6 44.2 
Ark 2021 Notes Tranche 2Ark 2021 Notes Tranche 247.0 47.0 Ark 2021 Notes Tranche 247.0 47.0 
Ark 2021 Notes Tranche 3Ark 2021 Notes Tranche 370.0 70.0 Ark 2021 Notes Tranche 370.0 70.0 
Unamortized issuance costUnamortized issuance cost(5.1)(5.3)Unamortized issuance cost(4.6)(5.3)
Ark 2021 Subordinated Notes, carrying valueArk 2021 Subordinated Notes, carrying value154.8 155.9 Ark 2021 Subordinated Notes, carrying value150.0 155.9 
Total Ark Subordinated Notes, carrying value Total Ark Subordinated Notes, carrying value184.8 6.6%185.9 6.9% Total Ark Subordinated Notes, carrying value180.0 7.3%185.9 6.9%
NSM Bank Facility275.9 7.0%(2)277.6 7.3%(2)
Unamortized issuance cost(5.9)(6.4)
NSM Bank Facility, carrying value270.0 271.2 
Other NSM debt.6 5.8%.9 2.9%
Kudu Credit FacilityKudu Credit Facility225.4 5.0%225.4 4.3%Kudu Credit Facility260.4 5.6%225.4 4.3%
Unamortized issuance costUnamortized issuance cost(7.2)(7.2)Unamortized issuance cost(6.9)(7.2)
Kudu Credit Facility, carrying valueKudu Credit Facility, carrying value218.2 218.2 Kudu Credit Facility, carrying value253.5 218.2 
Other Operations debtOther Operations debt17.8 7.3%17.1 7.5%Other Operations debt36.4 7.1%17.1 7.5%
Unamortized issuance costUnamortized issuance cost(.5)(.3)Unamortized issuance cost(.8)(.3)
Other Operations debt, carrying valueOther Operations debt, carrying value17.3 16.8 Other Operations debt, carrying value35.6 16.8 
Total debtTotal debt$690.9 $693.0 Total debt$615.5 $420.9 
 (1) Effective rate includes the effect of the amortization of debt issuance costs.
(2)
28

NSM’s effective
HG Global Senior Notes

On April 29, 2022, HG Global received the proceeds of its $150.0 million face value floating rate excludessecured senior notes (the “HG Global Senior Notes”). The HG Global Senior Notes, which mature in April 2032, accrue interest at a floating rate equal to the effectthree-month Secured Overnight Financing Rate (“SOFR”) plus 6.3% per annum. Subsequent to the five-year anniversary of the funding date, absent the occurrence of an early amortization trigger event, HG Global will make payments of principal on a quarterly basis totaling $15.0 million annually. Upon the occurrence of an early amortization trigger event, HG Global is required to use all available cash flow to repay the notes. Early amortization trigger events include scenarios in which HG Re is effectively in run off. HG Global has the option to redeem, in whole or in part, the HG Global Senior Notes after the five-year anniversary of the funding date at the outstanding principal amounts plus accrued interest.
The HG Global Senior Notes require HG Global to maintain an interest rate swap andreserve account of eight times the interest rate cap on the debt. See Note 9 — “Derivatives”. The weighted average interest rateaccrued for the quarter ended March 31,most recent quarterly interest period, which is included in short-term investments. As of September 30, 2022, and December 31, 2021, excluding the effect of amortization of debt issuance costs, was 6.1% and 6.5%. The weighted average interest rate for the quarter ended March 31, 2022 and December 31, 2021 on the total NSM Bank Facility including both the effect of the amortization of debt issuance costs and the effect of the interest rate swapreserve account is $26.4 million.
The HG Global Senior Notes are secured by the capital stock and other equity interests of HG Global’s subsidiaries, the interest rate cap was 2.9%reserve account, and 8.2%.all cash and non-cash proceeds from the foregoing collateral. The HG Global Senior Notes contain various affirmative and negative covenants that White Mountains considers to be customary for such borrowings.
If the payments of principal and interest under the HG Global Senior Notes become subject to tax withholding on behalf of a relevant governmental authority for certain indemnified taxes, the HG Global Senior Notes require the payment of additional amounts such that the amount received by the noteholders is the same as would have been received absent the tax withholding being imposed. The HG Global Senior Notes require the payment of additional interest of 1.0% per annum if the HG Global Senior Notes receive a non-investment grade rating or are no longer rated.
As of September 30, 2022, the HG Global Senior Notes had an outstanding principal balance of $150.0 million.

Ark Subordinated Notes

In March 2007, GAIL issued $30.0 million face value of floating rate unsecured junior subordinated deferrable interest notes to Alesco Preferred Funding XII Ltd., Alesco Preferred Funding XIII Ltd. and Alesco Preferred Funding XIV Ltd (the “Ark 2007 Subordinated Notes”). The Ark 2007 Subordinated Notes, which mature in June 2037, accrue interest at a floating rate equal to the three-month U.S. LIBORLondon Inter-Bank Offered Rate (“LIBOR”) plus 4.6%. per annum. As of March 31,September 30, 2022, the Ark 2007 Subordinated Notes had an outstanding principal balance of $30.0 million.
In the third quarter of 2021, GAIL issued $163.3 million face value floating rate subordinated notes at par in three separate transactions for proceeds of $157.8 million, net of debt issuance costs. The unsecured subordinated notes (the “Ark 2021 Subordinated Notes”) were issued in private placement offerings that were exempt from the registration requirements of the Securities Act of 1933. On July 13, 2021, Ark issued €39.1 million ($46.3 million based upon the foreign exchange spot rate as of the date of the transaction) face value floating rate unsecured subordinated notes (“Ark 2021 Notes Tranche 1”). The Ark 2021 Notes Tranche 1, which mature in July 2041, accrue interest at a floating rate equal to the three-month EURIBOR plus 5.75%. per annum. On August 11, 2021, Ark issued $47.0 million face value floating rate unsecured subordinated notes (“Ark 2021 Notes Tranche 2”). The Ark 2021 Notes Tranche 2, which mature in August 2041, accrue interest at a floating rate equal to the three-month U.S. LIBOR plus 5.75%. per annum. On September 8, 2021, Ark issued $70.0 million face value floating rate unsecured subordinated notes (“Ark 2021 Notes Tranche 3”). The Ark 2021 Notes Tranche 3, which mature in September 2041, accrue interest at a floating rate equal to the three-month U.S. LIBOR plus 6.1%. per annum. On the ten-year anniversary of the issue dates, the interest rate for the Ark 2021 Subordinated Notes will increase by 1.0% per annum. Ark has the option to redeem, in whole or in part, the Ark 2021 Subordinated Notes ahead of contractual maturity at the outstanding principal amounts plus accrued interest at the ten-year anniversary or any subsequent interest payment date.

28


All payments of principal and interest under the Ark 2021 Subordinated Notes are conditional upon GAIL’s solvency and compliance with the enhanced capital requirements of the Bermuda Monetary Authority (“BMA”). The deferral of payments of principal and interest under these conditions does not constitute a default by Ark and does not give the noteholders any rights to accelerate repayment of the Ark 2021 Subordinated Notes or take any enforcement action under the Ark 2021 Subordinated Notes.

29


If the payments of principal and interest under the Ark 2021 Subordinated Notes become subject to tax withholding on behalf of Bermuda or any political subdivision there, the Ark 2021 Subordinated Notes require the payment of additional amounts such that the amount received by the noteholders is the same as would have been received absent the tax withholding being imposed. The Ark 2021 Notes Tranche 3 require the payment of additional interest of 1.0% per annum upon the occurrence of a Premium Load Eventpremium load event until such event is remedied. Premium Load Eventsload events include the failure to meet payment obligations of the Ark 2021 Notes Tranche 3 when due, failure of GAIL to maintain an investment grade credit rating, failure to maintain 120% of GAIL’s Bermuda solvency capital requirement, failure of GAIL to maintain a debt to capital ratio below 40%, late filing of GAIL’s or Ark’s financial information, and making a restricted payment or distribution on GAIL’s common stock or other securities that rank junior or pari passu with the Ark 2021 Notes Tranche 3 when a different Premium Load Eventpremium load event exists or will be caused by the restricted payment.
As of March 31,September 30, 2022, the Ark 2021 Notes Tranche 1 had an outstanding principal balance of €39.1 million ($42.937.6 million based upon the foreign exchange spot rate as of March 31,September 30, 2022), the Ark 2021 Notes Tranche 2 had an outstanding principal balance of $47.0 million, and the Ark 2021 Notes Tranche 3 had an outstanding principal balance of $70.0 million.
The Ark Subordinated Notes contain various affirmative and negative covenants that White Mountains considers to be customary for such borrowings.

Ark Standby Letter of Credit Facilities

In December 2021, Ark entered into two uncommitted secured standby letter of credit facility agreements to support the continued growth and expansion of its GAIL insurance and reinsurance operations. The standby letter of credit facility agreements were executed with ING Bank N.V., London Branch (the “ING LOC Facility”) with capacity of $50.0 million on an uncollateralized basis and with Citibank Europe Plc (the “Citibank LOC Facility”) with capacity of $100.0 million on a collateralized basis. In September 2022, Ark entered another uncommitted standby letter of credit facility agreement with Lloyds Bank Corporate Markets PLC (the “Lloyds LOC Facility”) with capacity of $50.0 million on a collateralized basis.
As of March 31,September 30, 2022, the ING LOC Facility wasand Lloyds LOC Facility were undrawn. As of March 31,September 30, 2022, the Citibank LOC Facility had an outstanding principal balance of $36.2 million. As of March 31,September 30, 2022, $50.0$49.8 million of short-term investments were pledged as collateral under the Citibank LOC Facility. Ark’s uncommitted secured standby letter of credit facility agreements contain various representations, warranties and covenants that White Mountains considers to be customary for such borrowings.

NSM Bank Facility

NSM maintains a secured credit facility (the “NSM Bank Facility”) with Ares Capital Corporation. On June 2, 2021, NSM amended the NSM Bank Facility to reduce the margin over the reference interest rate for USD LIBOR loans from a range of 5.50% to 6.00% to a range of 4.50% to 5.00% and reduce the margin over the reference rate for GBP loans from a range of 6.00% to 6.50% to a range of 5.00% to 5.50%. The amendment also increased the revolving credit loan commitment to $40.0 million and added a $50.0 million delayed-draw term loan commitment. The amendment also changed the reference interest rate for the GBP loan from GBP-LIBOR to SONIA. The maturity dates of the term loans and the revolving credit loans were not changed as part of the amendment. The term loans under the NSM Bank Facility mature on May 11, 2026, and the revolving loan matures on November 11, 2025. The reference interest rates under the NSM Bank Facility are generally subject to a 1.25% rate floor.
Under GAAP, if the terms of a debt instrument are amended, unless there is greater than 10% change in the expected discounted future cash flows of such instrument, the instrument’s carrying value does not change. White Mountains has determined that the impact of the 2021 amendment to the NSM Bank Facility was less than 10% on the expected discounted future cash flows.
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The following table presents the change in debt under the NSM Bank Facility for the three months ended March 31, 2022 and 2021:
MillionsThree Months Ended March 31,
NSM Bank Facility20222021
Beginning balance$277.6 $277.4 
Term loans
Borrowings — 
Repayments(.7)(.7)
Foreign currency translation(1.5).6 
Revolving credit loan
Borrowings13.0 — 
Repayments(12.5)— 
Ending balance$275.9 $277.3 
As of March 31, 2022, the term loans had an outstanding balance of $271.9 million, including £41.8 million ($55.1 million based upon the foreign exchange spot rate as of March 31, 2022) in a GBP term loan, and the revolving credit loan had an outstanding balance of $4.0 million.
On June 15, 2018, NSM entered into an interest rate swap agreement to hedge its exposure to interest rate risk on $151.0 million of its USD denominated variable rate term loans. As of March 31, 2022, the swap no longer qualified for hedge accounting. As a result, the previously hedged term loans are classified as unhedged term loans. During the three months ended March 31, 2022, NSM recognized interest income of $2.4 million from the effect of the interest rate swap.
The following table presents the NSM weighted average interest rate for the three months ended March 31, 2022 and 2021:

$ in MillionsThree Months Ended March 31,
20222021
NSM Weighted Average Interest RateWeighted Average
Interest Expense (1)
Weighted Average Interest rateWeighted Average
Interest Expense (2)
Weighted Average Interest rate
Term loan - hedged$ $  %$147.6 $3.4 9.2 %
Term loan - unhedged273.52.02.9 %129.82.57.7 %
Total NSM Bank Facility$273.5 $2.0 2.9 %$277.4 $5.9 8.5 %
(1) For the three months ended March 31, 2022, interest expense includes the amortization of debt issuance costs of $0.5 and the effect of the interest rate swap and interest rate cap of $(2.7). For the three months ended March 31, 2022, interest expense excludes $0.1 related to the revolving credit loan.
(2) For the three months ended March 31, 2021, interest expense includes the amortization of debt issuance costs of $0.3 and the effect of the interest rate swap and interest rate cap of $0.6.

The NSM Bank Facility is secured by all property of the loan parties and contains various affirmative, negative and financial covenants that White Mountains considers to be customary for such borrowings, including a maximum consolidated total leverage ratio covenant.


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Other NSM Debt

NSM also has a secured term loan related to its U.K. vertical. As of March 31, 2022, the secured term loan had an outstanding balance of $0.6 million and a maturity date of December 31, 2022.

Kudu Credit Facility and Kudu Bank Facility

On December 23, 2019, Kudu entered into a secured credit facility with Monroe Capital Management Advisors, LLC (the “Kudu Bank Facility”). On March 23, 2021, Kudu replaced the Kudu Bank Facility and entered into a secured revolving credit facility (the “Kudu Credit Facility”) with MassachusettsMass Mutual Life Insurance Company to repay the Kudu Bank Facility, and to fund new investments and related transaction expenses. The maximum borrowing capacity of the Kudu Credit Facility is $300.0 million. The Kudu Credit Facility matures on March 23, 2036. In connection with the replacement of the Kudu Bank Facility, Kudu recognized a total loss of $4.1 million, representing debt issuance costs and prepayment fees, which are included within interest expense for the three monthsyear to date period ended March 31,September 30, 2021.
The Kudu Credit Facility requires Kudu to maintain an interest reserve account, which is included in restricted cash. As of March 31,September 30, 2022, the interest reserve account is $4.5$8.9 million. The Kudu Credit Facility requires Kudu to maintain a ratio of the outstanding balance to the sum of the fair market value of the participation contracts and cash held in certain accounts (the “LTV Percentage”) of less than 50% in years 0-3, 40% in years 4-6, 25% in years 7-8, 15% in years 9-10, and 0% thereafter. As of March 31,September 30, 2022, Kudu has a 33%35% LTV Percentage.
Kudu may borrow undrawn balances within the initial three-year availability period, subject to customary terms and conditions, to the extent the amount borrowed under the Kudu Credit Facility does not exceed the borrowing base, which is equal to 35% of the fair value of qualifying Kudu Participation Contracts. When considering White Mountains’s remaining equity commitment to Kudu and the fair valueAs of Kudu’s qualifying participation contracts as of March 31,September 30, 2022, the available undrawn balance was $34.2$39.6 million.

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The following table presents the change in debt under the Kudu Bank Facility and Kudu Credit Facility for the three and nine months ended March 31,September 30, 2022 and 2021:

Three Months Ended March 31,Three Months Ended September 30,Nine Months Ended September 30,
MillionsMillions20222021Millions2022202120222021
Kudu Bank FacilityKudu Bank FacilityKudu Bank Facility
Beginning balanceBeginning balance$ $89.2 Beginning balance$ $— $— $89.2 
Term loansTerm loansTerm loans
BorrowingsBorrowings 3.0 Borrowings — — 3.0 
RepaymentsRepayments (92.2)Repayments — — (92.2)
Ending balanceEnding balance$ $— Ending balance$ $ $— $— 
Kudu Credit FacilityKudu Credit FacilityKudu Credit Facility
Beginning balanceBeginning balance$225.4 $— Beginning balance$260.4 $203.0 $225.4 $— 
Term loansTerm loansTerm loans
BorrowingsBorrowings 102.0 Borrowings — 35.0 203.0 
RepaymentsRepayments — Repayments —  — 
Ending balanceEnding balance$225.4 $102.0 Ending balance$260.4 $203.0 $260.4 $203.0 

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

As of March 31,September 30, 2022, debt in White Mountains’s Other Operations segmenthad debt with an outstanding principal balance of $36.4 million, which consisted of 3five secured credit facilities (collectively, “Other Operations debt”).
The first credit facility has a maximum borrowing capacity of $16.3 million, which is comprised of a term loan of $11.3 million, a delayed-draw term loan of $3.0 million and a revolving credit loan commitment of $2.0 million, all with a maturity date of March 12, 2024. The second credit facility has a maximum borrowing capacity of $15.0 million, which is comprised of a term loan of $9.0 million, a delayed-draw term loan of $4.0 million and a revolving credit loan commitment of $2.0 million, all with a maturity date of July 2, 2025. The third credit facility has a maximum borrowing capacity of $8.0 million, which is comprised of a revolving credit loan commitment, with a maturity date of October 26, 2021.
During the three months ended March 31, 2022 and 2021, White Mountains’s Other Operations segment borrowed $2.0 million and $0.9 million. During the three months ended March 31, 2022 and 2021, White Mountains’s Other Operations segment made repayments of $1.3 million and $0.2 million. As of March 31, 2022 and 2021, the Other Operations debt had an outstanding balance of $17.8 million and $17.5 million.

Compliance

At March 31,September 30, 2022, White Mountains was in compliance in all material respects with the covenants under all of its debt instruments.

Note 8.  Income Taxes
 
The Company and its Bermuda domiciled subsidiaries are not subject to Bermuda income tax under current Bermuda law. In the event there is a change in the current law such that taxes are imposed, the Bermuda Exempted Undertakings Tax Protection Act of 1966 states that the Company and its Bermuda domiciled subsidiaries would be exempt from such tax until March 31, 2035. The Company has subsidiaries and branches that operate in various other jurisdictions around the world and are subject to tax in the jurisdictions in which they operate.  As of March 31,September 30, 2022, the primary jurisdictions in which the Company’s subsidiaries and branches were subject to tax were Ireland, Israel, Luxembourg, the United Kingdom and the United States.
White Mountains’s income tax benefit related to pre-tax loss from continuing operations for the three and nine months ended March 31,September 30, 2022 represented an effective tax rate of 31.1%23.9% and 9.4%. The effective tax rate was different from the U.S. statutory rate of 21.0%, due todriven primarily by full year forecasted income in jurisdictions with lower tax rates than the United States, andpartially offset by a decline in the full valuation allowance on net deferred tax assets in certain U.S. operations, consisting of the WM Adams, Inc. consolidated tax group within the Other Operations segment, offset by an increase in the full valuation allowance atand BAM, and state income taxes.

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White Mountains’s income tax benefitexpense related to pre-tax loss from continuing operations for the three and nine months ended March 31,September 30, 2021 represented an effective tax rate of 6.9%(7.9)% and (17.1)%. The effective tax rate was different from the U.S. statutory rate of 21.0% due to income generated, driven primarily by losses in jurisdictions with lower tax rates than the United States.States, a full valuation allowance on net deferred tax assets in certain U.S. operations, consisting of the WM Adams, Inc. consolidated tax group within Other Operations and BAM, and state income taxes. For the nine months ended September 30, 2021, the effective rate was also different from the U.S. statutory rate of 21.0% due to additional tax expense related to the revaluation of U.K. deferred tax assets and liabilities.
On June 10, 2021, the U.K. enacted an increase in its corporate tax rate from 19.0% to 25.0% for periods after April 1, 2023. On June 30, 2021, White Mountains increased its net U.K. deferred tax liability to reflect the higher tax rate on temporary differences projected to reverse after the new rate becomes effective.
On August 16, 2022, the U.S. enacted the Inflation Reduction Act (the “IRA”). White Mountains has evaluated the tax provisions of the IRA, the most significant of which relate to the corporate alternative minimum tax and the tax on share repurchases, and does not expect the legislation to have a material impact on its results of operations.
In arriving at the effective tax rate for the three and nine months ended March 31,September 30, 2022 and 2021, White Mountains forecasted all income and expense items including the change in unrealized investment gains (losses) and realized investment gains (losses) for the years ending December 31, 2022 and 2021.
White Mountains records a valuation allowance against deferred tax assets if it becomes more likely than not that all or a portion of a deferred tax asset will not be realized. Changes in valuation allowances from period to period are included in income tax expense in the period of change. In determining whether or not a valuation allowance, or change therein, is warranted, White Mountains considers factors such as prior earnings history, expected future earnings, carryback and carryforward periods and strategies that if executed would result in the realization of a deferred tax asset.
With few exceptions, White Mountains is no longer subject to U.S. federal, state, or non-U.S. income tax examinations by tax authorities for years before 2016.

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Note 9. Derivatives

NSM Interest Rate Swap

On June 15, 2018, NSM entered into an interest rate swap agreement to hedge its exposure to interest rate risk on $151.0 million of its USD-denominated variable rate term loans under the NSM Bank Facility. Under the terms of the swap agreement, NSM pays a fixed-rate of 2.97% and receives a variable rate, which is reset monthly, based on the then-current one-month USD-LIBOR rate. As of March 31, 2022, the variable rate received by NSM under the swap agreement was 1.00%. Over the term of the swap, the notional amount decreases in accordance with the principal repayments NSM expects to make on its initial term loans. The interest rate swap is scheduled to mature on June 30, 2024. NSM evaluated the effectiveness of the swap to hedge its interest rate risk associated with its variable rate debt and concluded at the swap inception date that the swap was highly effective in hedging that risk.
For the three months ended March 31, 2022 and 2021, White Mountains recognized net interest expense of $0.6 million and $0.6 million for the periodic net settlement payments on the swap. As of March 31, 2022 and December 31, 2021, the estimated fair value of the swap and the accrual of the periodic net settlement payments recorded in other liabilities was $1.3 million and $4.8 million. As of March 31, 2022, the swap no longer qualified for hedge accounting. As a result, the unrealized loss on the swap liability as of December 31, 2021 of $4.8 million will be reclassified from accumulated other comprehensive income and amortized to interest expense over the remaining term of the swap on a straight-line basis. In the first quarter of 2022, $0.5 million of amortization was recognized within interest expense. In addition, NSM recognized $3.5 million of income related to the change in fair value of the swap within interest expense for the three months ended March 31, 2022.
For the three months ended March 31, 2021, the $1.0 million change in the fair value of the swap is included within White Mountains’s accumulated other comprehensive income (loss).
NSM’s obligations under the swap are secured by the same collateral securing the NSM Bank Facility on a pari passu basis. NSM does not currently hold any collateral deposits from or provide any collateral deposits to the swap counterparty.

NSMHG Global Interest Rate Cap

On June 4, 2020, NSM16, 2022, HG entered into an interest rate cap agreement, effective on July 25, 2022, to limit its exposure to the risk of interest rate increases on the GBP-denominated term loan under the NSM Bank Facility.HG Global Senior Notes. The notional amount of the interest rate cap is £42.5$150.0 million ($52.4 million based upon the foreign exchange spot rate as of the date of the transaction), and the termination date is June 4, 2022. On August 18, 2020, NSM entered into a separate interest rate cap agreement to extend the term of the original interest rate cap agreement by one year. The second interest rate cap agreement has an effective date of June 15, 2022 and a termination date of June 15, 2023.July 25, 2025.
NSMHG paid total initial premiums of $0.1$3.3 million for the interest rate caps.cap. Under the terms of the interest rate cap agreements,agreement, if the current three-month GBP-LIBORSOFR rate at the measurement date exceeds 1.25%3.5%, NSMHG will receive payments from the counterparty equal to the difference between the three-month GBP-LIBORSOFR rate lesson the 1.25%determination date and 3.5%, multiplied by the notional amount of the cap rate.based on the number of days in the quarter and a year equal to 360 days. As of March 31,September 30, 2022, the three-month GBP-LIBORSOFR rate was 1.04%3.6%.
NSMHG accounts for the interest rate capscap as derivativesa derivative at fair value, with changes in fair value recognized in current period earnings within interest expense. For the three and nine months ended March 31,September 30, 2022, and 2021, White Mountains recognized $0.3a gain of $2.1 million and less than $0.1$0.6 million related to the change in fair value on the interest rate capscap within interest expense. As of March 31,September 30, 2022, and December 31, 2021, the estimated fair value of the capsinterest rate cap recorded in other assets was $0.5 million and $0.2$3.9 million. White Mountains classifies the interest rate cap as a Level 2 measurement.

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Note 10. Municipal Bond Guarantee Insurance

HG Global was established to fund the startup of BAM, a mutual municipal bond insurer. HG Global, together with its subsidiaries, provided the initial capitalization of BAM through the purchase of $503.0 million of the BAM Surplus Notes.

Reinsurance Treaties

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

Fidus Re
BAM is party to a collateralized financial guarantee excess of loss reinsurance agreement that serves to increase BAM’s claims paying resources and is provided by Fidus Re Ltd. (“Fidus Re”).
In 2018, Fidus Re was initially capitalized by the issuance of $100.0 million of insurance-linked securities (the “Fidus Re 2018 Agreement”). The proceeds from issuance were placed in a collateral trust supporting Fidus Re’s obligations to BAM. The insurance-linked securities were issued by Fidus Re with an initial term of 12 years and are callable five years after the date of issuance. Under the Fidus Re 2018 Agreement, Fidus Re reinsures 90% of aggregate losses exceeding $165.0 million on a portion of BAM’s financial guarantee portfolio (the “2018 Covered Portfolio”) up to a total reimbursement of $100.0 million. The Fidus Re 2018 Agreement does not provide coverage for losses in excess of $276.1 million. The 2018 Covered Portfolio consists of approximately 32%28% of BAM’s portfolio of financial guaranty policies issued through March 31,September 30, 2022.
In the first quarter of 2021, Fidus Re issued an additional $150.0 million of insurance-linked securities (the “Fidus Re 2021 Agreement”) with an initial term of 12 years and are callable five years after the date of issuance. The proceeds from issuance were placed in a collateral trust supporting Fidus Re’s obligations to BAM. Under the Fidus Re 2021 Agreement, Fidus Re reinsures 90% of aggregate losses exceeding $135.0 million on a portion of BAM’s financial guarantee portfolio (the “2021 Covered Portfolio”) up to a total reimbursement of $150.0 million. The Fidus Re 2021 Agreement does not provide coverage for losses in excess of $301.7 million. The 2021 Covered Portfolio consists of approximately 36%33% of BAM’s portfolio of financial guaranty policies issued through March 31,September 30, 2022.
The Fidus Re agreements are accounted for using deposit accounting and any related financing expenses are recorded in general and administrative expenses as they do not meet the risk transfer requirements necessary to be accounted for as reinsurance.

XOLT
In January 2020, BAM entered into an excess of loss reinsurance agreement (the “XOLT”) with HG Re. Under the XOLT, HG Re provides last dollar protection for exposures on municipal bonds insured by BAM in excess of New York State Department of Financial Services (“NYDFS”) single issuer limits. TheAs of September 30, 2022, the XOLT is subject to an aggregate limit equal to the lesser of $75.0$125.0 million or the assets held in the supplemental collateral trust (the “Supplemental Trust”) at any point in time. The agreement is accounted for using deposit accounting and any related financing expenses are recorded in general and administrative expenses as the agreement does not meet the risk transfer requirements necessary to be accounted for as reinsurance.


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Collateral Trusts

HG Re’s obligations under the FLRT are limited to the assets in two collateral trusts: the Supplemental Trust and a Regulation 114 Trust (together, the “Collateral Trusts”). Losses required to be reimbursed under the FLRT are subject to an aggregate limit equal to the assets held in the Collateral Trusts at any point in time.
On a monthly basis, BAM deposits cash equal to ceded premiums, net of ceding commissions, due to HG Re under the FLRT directly into the Regulation 114 Trust. The Regulation 114 Trust target balance is equal to gross ceded unearned premiums and unpaid ceded loss and LAE, if any. If, at the end of any quarter, the Regulation 114 Trust balance is below the target balance, funds will be withdrawn from the Supplemental Trust and deposited into the Regulation 114 Trust in an amount equal to the shortfall. If, at the end of any quarter, the Regulation 114 Trust balance is above 102% of the target balance, funds will be withdrawn from the Regulation 114 Trust and deposited into the Supplemental Trust. The Regulation 114 Trust balance as of March 31,September 30, 2022 and December 31, 2021 was $244.8$259.4 million and $250.2 million.
The Supplemental Trust target balance is $603.0 million, less the amount of cash and securities in the Regulation 114 Trust in excess of its target balance (the “Supplemental Trust Target Balance”). If, at the end of any quarter, the Supplemental Trust balance exceeds the Supplemental Trust Target Balance, such excess may be distributed to HG Re. The distribution will be made first as an assignment of accrued interest on the BAM Surplus Notes and second in cash and/or fixed income securities.
As the BAM Surplus Notes are repaid over time, the BAM Surplus Notes will be replaced in the Supplemental Trust by cash and fixed income securities. The Supplemental Trust balance as of March 31,September 30, 2022 and December 31, 2021 was $591.5$574.5 million and $601.8 million.
As of March 31,September 30, 2022 and December 31, 2021, the Collateral Trusts held assets of $836.3$833.9 million and $852.0 million, which included $466.0$457.7 million and $481.7 million of cash and investments, $364.6 million and $364.6 million of BAM Surplus Notes and $5.7$11.6 million and $5.7 million of interest receivable on the BAM Surplus Notes.

BAM Surplus Notes

Through 2024, the interest rate on the BAM Surplus Notes is a variable rate equal to the one-year U.S. Treasury rate plus 300 basis points, set annually. During 2022, the interest rate on the BAM Surplus Notes is 3.2%. Beginning in 2025, the interest rate will be fixed at the higher of the then current variable rate or 8.0%. Under its agreements with HG Global, BAM is required to seek regulatory approval to pay interest and principal on the BAM Surplus Notes only to the extent that its remaining qualified statutory capital and other capital resources continue to support its outstanding obligations, its business plan and its “AA/stable” rating from Standard & Poor’s. No payment of principal or interest on the BAM Surplus Notes may be made without the approval of the NYDFS.
In December 2021, BAM made a $33.8 million cash payment of principal and interest on the BAM Surplus Notes held by HG Global. Of this payment, $23.6 million was a repayment of principal held in the Supplemental Trust, $0.4 million was a payment of accrued interest held inside the Supplemental Trust and $9.8 million was a payment of accrued interest held outside the Supplemental Trust.
During the three and nine months ended March 31,September 30, 2022 and 2021, BAM made no repayments of the BAM Surplus Notes or accrued interest.
As of March 31,September 30, 2022 and December 31, 2021, the principal balance on the BAM Surplus Notes was $364.6 million and $364.6 million and total interest receivable on the BAM Surplus Notes was $160.6$166.4 million and $157.6 million.


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Insured Obligations and Premiums

The following table presents a schedule of BAM’s insured obligations as of March 31,September 30, 2022 and December 31, 2021:
March 31, 2022December 31, 2021September 30, 2022December 31, 2021
Contracts outstandingContracts outstanding12,611 12,350 Contracts outstanding13,094 12,350 
Remaining weighted average contract period outstanding (in years)Remaining weighted average contract period outstanding (in years)10.810.8Remaining weighted average contract period outstanding (in years)10.810.8
Contractual debt service outstanding (in millions):Contractual debt service outstanding (in millions):Contractual debt service outstanding (in millions):
PrincipalPrincipal$91,609.8 $89,196.5 Principal$98,619.0 $89,196.5 
InterestInterest42,353.7 41,486.5 Interest47,595.0 41,486.5 
Total debt service outstandingTotal debt service outstanding$133,963.5 $130,683.0 Total debt service outstanding$146,214.0 $130,683.0 
Gross unearned insurance premiums (in millions)Gross unearned insurance premiums (in millions)$267.3 $266.3 Gross unearned insurance premiums (in millions)$286.7 $266.3 

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The following table presents a schedule of BAM’s future premium revenues as of March 31,September 30, 2022:
MillionsMillionsMarch 31, 2022MillionsSeptember 30, 2022
April 1, 2022 - December 31, 2022$19.1 
October 1, 2022 - December 31, 2022October 1, 2022 - December 31, 2022$6.9 
January 1, 2023 - March 31, 2023January 1, 2023 - March 31, 20236.2 January 1, 2023 - March 31, 20236.8 
April 1, 2023 - June 30, 2023April 1, 2023 - June 30, 20236.1 April 1, 2023 - June 30, 20236.7 
July 1, 2023 - September 30, 2023July 1, 2023 - September 30, 20236.0 July 1, 2023 - September 30, 20236.6 
October 1, 2023 - December 31, 2023October 1, 2023 - December 31, 20235.9 October 1, 2023 - December 31, 20236.4 
Total 2023Total 202324.2 Total 202326.5 
2024202422.7 202424.9 
2025202521.1 202523.2 
2026202619.6 202621.6 
2027202718.1 202720.1 
2028 and thereafter2028 and thereafter142.5 2028 and thereafter163.5 
Total gross unearned insurance premiumsTotal gross unearned insurance premiums$267.3 Total gross unearned insurance premiums$286.7 

The following table presents a schedule of written premiums and earned premiums included in White Mountains’s HG Global/BAM segment for the three and nine months ended March 31,September 30, 2022 and 2021:
Three Months Ended March 31,Three Months Ended September 30,Nine Months Ended September 30,
MillionsMillions20222021Millions2022202120222021
Written premiums:Written premiums:Written premiums:
DirectDirect$9.4 $8.0 Direct$18.4 $12.8 $44.9 $34.5 
AssumedAssumed 4.5 Assumed1.3 — 1.3 4.5 
Gross written premiums (1)
Gross written premiums (1)
$9.4 $12.5 
Gross written premiums (1)
$19.7 $12.8 $46.2 $39.0 
Earned premiums:Earned premiums:Earned premiums:
DirectDirect$7.6 $5.3 Direct$6.5 $5.9 $22.0 $16.8 
AssumedAssumed.8 1.1 Assumed.6 .8 4.0 2.8 
Gross earned premiums (1)
Gross earned premiums (1)
$8.4 $6.4 
Gross earned premiums (1)
$7.1 $6.7 $26.0 $19.6 
(1) There are no ceded premium amounts in the periods presented and gross earned premiums are equivalent to net written premiums and net earned premiums.

In January 2021, BAM entered into a 100% facultative quota share reinsurance agreement under which it assumed a portfolio of municipal bond guarantee contracts with a par value of $805.5 million.
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In September 2022, BAM entered into a 100% facultative quota share reinsurance agreement under which it assumed a portfolio of municipal bond guarantee contracts with a par value of $42.5 million.
None of the contracts assumed under these reinsurance agreements were non-performing, and no loss reserves have been established for any of the contracts, either as of the transaction date or as of March 31,September 30, 2022. The agreement,agreements, which coverscover future claims exposure only, meetsmeet the risk transfer criteria under ASC 944-20, Insurance Activities and accordingly hashave been accounted for as reinsurance.
35


Note 11. Earnings Per Share
 
White Mountains calculates earnings per share using the two-class method, which allocates earnings between common shares and unvested restricted common shares. Both classes of shares participate equally in dividends and earnings on a per share basis. Basic earnings per share amounts are based on the weighted average number of common shares outstanding adjusted for unvested restricted common shares.
The following table presents the Company’s computation of earnings per share from continuing operations for the three and nine months ended March 31,September 30, 2022 and 2021. See Note 19 — “Held for Sale and Discontinued Operations”.Operations.”
Three Months EndedThree Months EndedNine Months Ended
March 31, September 30,September 30,
20222021 2022202120222021
Basic and diluted earnings per share numerators (in millions):Basic and diluted earnings per share numerators (in millions): Basic and diluted earnings per share numerators (in millions): 
Net income (loss) attributable to White Mountains’s
common shareholders
Net income (loss) attributable to White Mountains’s
common shareholders
$33.4 $(75.3)Net income (loss) attributable to White Mountains’s
common shareholders
$888.2 $(371.4)$752.4 $(308.2)
Less: total income (loss) from discontinued operations, net of tax(1)Less: total income (loss) from discontinued operations, net of tax(1) 18.7 Less: total income (loss) from discontinued operations, net of tax(1)893.1 5.3 903.2 (5.1)
Less: net (income) loss from discontinued operations attributable
to non-controlling interests
Less: net (income) loss from discontinued operations attributable
to non-controlling interests
$(.1)$— $(.7)$1.1 
Net income (loss) from continuing operations attributable to
White Mountains’s common shareholders
Net income (loss) from continuing operations attributable to
White Mountains’s common shareholders
$33.4 $(94.0)Net income (loss) from continuing operations attributable to
White Mountains’s common shareholders
$(4.8)$(376.7)$(150.1)$(304.2)
Allocation of (earnings) losses to participating restricted common shares (1)
(.3).9 
Allocation of (earnings) losses to participating restricted
common shares (2)
Allocation of (earnings) losses to participating restricted
common shares (2)
.1 4.6 1.8 3.5 
Basic and diluted earnings (losses) per share numeratorsBasic and diluted earnings (losses) per share numerators$33.1 $(93.1)Basic and diluted earnings (losses) per share numerators$(4.7)$(372.1)$(148.3)$(300.7)
Basic earnings per share denominators (in thousands):Basic earnings per share denominators (in thousands):Basic earnings per share denominators (in thousands):
Total average common shares outstanding during the periodTotal average common shares outstanding during the period3,006.2 3,100.2 Total average common shares outstanding during the period2,893.8 3,090.3 2,959.3 3,099.4 
Average unvested restricted common shares(2)
(29.6)(32.4)
Average unvested restricted common shares (3)
Average unvested restricted common shares (3)
(38.3)(37.8)(35.5)(36.0)
Basic earnings (losses) per share denominatorBasic earnings (losses) per share denominator2,976.6 3,067.8 Basic earnings (losses) per share denominator2,855.5 3,052.5 2,923.8 3,063.4 
Diluted earnings per share denominator (in thousands):Diluted earnings per share denominator (in thousands):Diluted earnings per share denominator (in thousands):
Total average common shares outstanding during the periodTotal average common shares outstanding during the period3,006.2 3,100.2 Total average common shares outstanding during the period2,893.8 3,090.3 2,959.3 3,099.4 
Average unvested restricted common shares (2)
(29.6)(32.4)
Average unvested restricted common shares (3)
Average unvested restricted common shares (3)
(38.3)(37.8)(35.5)(36.0)
Diluted earnings (losses) per share denominatorDiluted earnings (losses) per share denominator2,976.6 3,067.8 Diluted earnings (losses) per share denominator2,855.5 3,052.5 2,923.8 3,063.4 
Basic and diluted earnings per share (in dollars) - continuing operations:Basic and diluted earnings per share (in dollars) - continuing operations:Basic and diluted earnings per share (in dollars) - continuing
operations:
Distributed earnings - dividends declared and paidDistributed earnings - dividends declared and paid$1.00 $1.00 Distributed earnings - dividends declared and paid$ $— $1.00 $1.00 
Undistributed earnings (losses)Undistributed earnings (losses)10.10 (31.33)Undistributed earnings (losses)(1.66)(121.90)(51.73)(99.16)
Basic and diluted earnings (losses) per shareBasic and diluted earnings (losses) per share$11.10 $(30.33)Basic and diluted earnings (losses) per share$(1.66)$(121.90)$(50.73)$(98.16)
(1)Includes net income (loss) from discontinued operations, net of tax - NSM Group, net gain (loss) from sale of discontinued operations, net of tax - NSM Group and net gain (loss) from sale of discontinued operations, net of tax - Sirius Group. See Note 19 — “Held for Sale and Discontinued Operations.
(2) Restricted shares issued by White Mountains receive dividends and are therefore considered participating securities.
(2)(3) Restricted shares outstanding vest upon a stated date. See Note 12 — “Employee Share-Based Incentive Compensation Plans”.Plans.”


The following table presents the undistributed net earnings (losses) from continuing operations for the three and nine months ended March 31,September 30, 2022 and 2021. See Note 19 — “Held for Sale and Discontinued Operations”.Operations.”
Three Months EndedThree Months EndedNine Months Ended
March 31, September 30,September 30,
MillionsMillions20222021Millions2022202120222021
Undistributed net earnings (losses) - continuing operations:Undistributed net earnings (losses) - continuing operations:Undistributed net earnings (losses) - continuing operations:
Net income (losses) attributable to White Mountains’s common shareholders, net of restricted common share amountsNet income (losses) attributable to White Mountains’s common shareholders, net of restricted common share amounts$33.1 $(93.1)Net income (losses) attributable to White Mountains’s common
shareholders, net of restricted common share amounts
$(4.7)$(372.1)$(148.3)$(300.7)
Dividends declared, net of restricted common share amounts (1)
Dividends declared, net of restricted common share amounts (1)
(3.0)(3.1)
Dividends declared, net of restricted common share amounts (1)
 — (3.0)(3.1)
Total undistributed net earnings (losses), net of restricted common share amountsTotal undistributed net earnings (losses), net of restricted common share amounts$30.1 $(96.2)Total undistributed net earnings (losses), net of restricted
common share amounts
$(4.7)$(372.1)$(151.3)$(303.8)
(1) Restricted shares issued by White Mountains receive dividends and are therefore considered participating securities.

3736


Note 12. Employee Share-Based Incentive Compensation Plans
 
White Mountains’s Long-Term Incentive Plan (the “WTM Incentive Plan”) provides for grants of various types of share-based and non-share-based incentive awards to key employees of White Mountains. As of March 31,September 30, 2022 and 2021, White Mountains’s share-based compensation incentive awards consist of performance shares and restricted shares.

Performance Shares

Performance shares are designed to reward employees for meeting company-wide performance targets. Performance shares are conditional grants of a specified maximum number of common shares or an equivalent amount of cash. Awards generally vest at the end of a three-year service period, are subject to the attainment of pre-specified performance goals, and are valued based on the market value of common shares at the time awards are paid. Performance shares earned under the WTM Incentive Plan are typically paid in cash but may be paid in common shares. Compensation expense is recognized for the vested portion of the awards over the related service periods. The level of payout ranges from zero to 2two times the number of shares initially granted, depending on White Mountains’s financial performance. Performance shares become payable at the conclusion of a performance cycle (typically 3 years) if pre-defined financial targets are met. The performance measures used for determining performance share payouts are growth in White Mountains’s adjusted book value per share and intrinsic value per share. Intrinsic value per share is generally calculated by adjusting adjusted book value per share for differences between the adjusted book value of certain assets and liabilities and White Mountains’s estimate of their underlying intrinsic values.
The following table presents the performance share activity for the three and nine months ended March 31,September 30, 2022 and 2021 for performance shares granted under the WTM Incentive Plan:
Three Months Ended March 31, Three Months Ended September 30,Nine Months Ended September 30,
20222021 2022202120222021
Millions, except share amountsMillions, except share amountsTarget Performance
Shares Outstanding
Accrued
Expense
Target Performance
Shares Outstanding
Accrued
Expense
Millions, except share amountsTarget Performance
Shares Outstanding
Accrued
Expense
Target Performance
Shares Outstanding
Accrued
Expense
Target Performance
Shares Outstanding
Accrued
Expense
Target Performance
Shares Outstanding
Accrued
Expense
Beginning of periodBeginning of period40,828 $42.2 42,458 $56.3 Beginning of period39,449 $41.2 41,252 $45.7 40,828 $42.2 42,458 $56.3 
Shares paid (1)
Shares paid (1)
(14,625)(26.4)(14,117)(34.6)
Shares paid (1)
  (219)(.6)(14,625)(26.4)(14,336)(35.2)
New grantsNew grants13,075  13,000 — New grants  — — 13,225  13,475 — 
Forfeitures and
cancellations (2)
Forfeitures and
cancellations (2)
24 .3 (557).4 
Forfeitures and
cancellations (2)
 (.1)(205).2 21 (.2)(769).4 
Expense recognizedExpense recognized 5.8 — 16.1 Expense recognized 11.9 — (6.5) 37.4 — 17.3 
End of periodEnd of period39,302 $21.9 40,784 $38.2 End of period39,449 $53.0 40,828 $38.8 39,449 $53.0 40,828 $38.8 
(1) Includes WTM performance share payments in 2022 for the 2019-2021 performance cycle, which were paid in cash in March 2022 at 172% of target.target and WTM performance share payments in 2021 for the 2018-2020 performance cycle, which were paid in cash in March 2021 at 200% of target. 
(2) Amounts include changes in assumed forfeitures, as required under GAAP.

During the threenine months ended March 31,September 30, 2022, White Mountains granted 13,07513,225 performance shares for the 2022-2024 performance cycle. During the threenine months ended March 31,September 30, 2021, White Mountains granted 13,00013,475 performance shares for the 2021-2023 performance cycle.
For the 2019-2021 performance cycle, the Company issued common shares for 750 performance shares earned and all other performance shares earned were settled in cash. For the 2018-2020 performance cycle, all performance shares earned were settled in cash. If all the outstanding WTM performance shares had vested on March 31,September 30, 2022, the total additional compensation cost to be recognized would have been $25.8$41.2 million, based on accrual factors (common share price and payout assumptions) as of March 31,September 30, 2022.

3837


The following table presents performance shares outstanding and accrued expense for performance shares awarded under the WTM Incentive Plan as of March 31,September 30, 2022 for each performance cycle:
Three Months Ended March 31, 2022Nine Months Ended September 30, 2022
Millions, except share amountsMillions, except share amountsTarget Performance
Shares Outstanding
Accrued
Expense
Millions, except share amountsTarget Performance
Shares Outstanding
Accrued
Expense
Performance cycle:Performance cycle:  Performance cycle:  
2020 – 20222020 – 202213,350 $19.0 2020 – 202213,350 $31.9 
2021 – 20232021 – 202313,475 2.9 2021 – 202313,475 14.7 
2022 – 20242022 – 202413,075 .3 2022 – 202413,225 7.2 
Sub-totalSub-total39,900 22.2 Sub-total40,050 53.8 
Assumed forfeituresAssumed forfeitures(598)(.3)Assumed forfeitures(601)(.8)
March 31, 202239,302 $21.9 
September 30, 2022September 30, 202239,449 $53.0 

Restricted Shares

Restricted shares are grants of a specified number of common shares that generally vest at the end of a 34-month service period. The following table presents the unrecognized compensation cost associated with the outstanding restricted share awards for the three and nine months ended March 31,September 30, 2022 and 2021:
Three Months Ended March 31, Three Months Ended September 30,Nine Months Ended September 30,
20222021 2022202120222021
Millions,
except share amounts
Millions,
except share amounts
Restricted
Shares
Unamortized Issue Date
Fair Value
Restricted
Shares
Unamortized Issue Date
Fair Value
Millions,
except share amounts
Restricted
Shares
Unamortized
Issue Date
Fair Value
Restricted
Shares
Unamortized
Issue Date
Fair Value
Restricted
Shares
Unamortized Issue Date
Fair Value
Restricted
Shares
Unamortized Issue Date
Fair Value
Non-vested,Non-vested,    Non-vested,    
Beginning of periodBeginning of period37,850 $15.9 43,105 $15.2 Beginning of period38,350 $23.0 38,280 $23.2 37,850 $15.9 43,105 $15.2 
IssuedIssued13,075 13.6 13,000 15.6 Issued  — — 13,225 13.8 13,475 16.1 
VestedVested(12,725) (17,717)— Vested  (219)— (12,725) (17,936)— 
ForfeitedForfeited  (583)(.6)Forfeited  (211)(.2)  (794)(.8)
Expense recognizedExpense recognized (3.0)— (4.0)Expense recognized (3.8)— (3.6) (10.5)— (11.1)
End of periodEnd of period38,200 $26.5 37,805 $26.2 End of period38,350 $19.2 37,850 $19.4 38,350 $19.2 37,850 $19.4 

During the threenine months ended March 31,September 30, 2022, White Mountains issued 13,07513,225 restricted shares that vest on January 1, 2025. During the threenine months ended March 31,September 30, 2021, White Mountains issued 13,00013,475 restricted shares that vest on January 1, 2024. The unamortized issue date fair value as of March 31,September 30, 2022 is expected to be recognized ratably over the remaining vesting periods. 
3938


Note 13. Leases

White Mountains has entered into lease agreements, primarily for office space. These leases are classified as operating leases, with lease expense recognized on a straight-line basis over the term of the lease. Lease incentives, such as free rent or landlord reimbursements for leasehold improvements, are recognized at lease inception and amortized on a straight-line basis over the term of the lease. Lease expense and the amortization of leasehold improvements are recognized within general and administrative expenses. Lease payments related to options to extend or renew the lease term are excluded from the calculation of lease liabilities unless White Mountains is reasonably certain of exercising those options.
As of March 31,September 30, 2022 and December 31, 2021, the right of use (“ROU”) asset was $41.6lease assets were $24.5 million and $42.2$28.1 million and lease liabilities were $44.8$26.5 million and $45.2$30.0 million.
The following table summarizes net lease expense recognized in White Mountains’s consolidated statementstatements of operations for the three and nine months ended March 31,September 30, 2022 and 2021:
MillionsMillionsThree Months Ended March 31,MillionsThree Months Ended September 30,Nine Months Ended September 30,
Lease CostLease Cost20222021Lease Cost2022202120222021
Lease costLease cost$2.8 $1.9 Lease cost$1.9 $1.9 $5.9 $4.8 
Less: sublease incomeLess: sublease income.2 .1 Less: sublease income.2 .1 .5 .3 
Net lease costNet lease cost$2.6 $1.8 Net lease cost$1.7 $1.8 $5.4 $4.5 

The following table presents the contractual maturities of the lease liabilities associated with White Mountains’s operating lease agreements as of March 31,September 30, 2022:
MillionsMillionsAs of March 31, 2022MillionsAs of September 30, 2022
Remainder of 2022Remainder of 2022$7.6 Remainder of 2022$1.7 
2023202311.5 20238.1 
2024202410.0 20247.1 
202520256.8 20254.9 
202620264.3 20262.6 
ThereafterThereafter11.8 Thereafter5.0 
Total undiscounted lease paymentsTotal undiscounted lease payments52.0 Total undiscounted lease payments29.4 
Less: present value adjustmentLess: present value adjustment7.2 Less: present value adjustment2.9 
Operating lease liability$44.8 
Operating lease liabilitiesOperating lease liabilities$26.5 
40


The following tables present lease related assets and liabilities by reportable segment as of March 31,September 30, 2022 and December 31, 2021:
As of March 31, 2022
MillionsHG/BAMArkNSMKuduOther OperationsTotal
Weighted Average Incremental Borrowing Rate (1)
ROU lease asset$7.1 $8.1 $13.3 $6.4 $6.7 $41.6 5.1%
Lease liability$7.7 $8.1 $14.5 $7.1 $7.4 $44.8 
As of September 30, 2022
MillionsHG/BAMArkKuduOther OperationsTotal
Weighted Average Incremental Borrowing Rate (1)
ROU lease assets$6.2 $6.6 $5.9 $5.8 $24.5 4.1%
Lease liabilities$6.7 $6.6 $6.8 $6.4 $26.5 
(1) The present value of the remaining lease payments was determined by discounting the lease payments using the incremental borrowing rate.
As of December 31, 2021
MillionsHG/BAMArkNSMKuduOther OperationsTotal
Weighted Average Incremental Borrowing Rate (1)
ROU lease asset$7.6 $7.0 $14.0 $6.5 $7.1 $42.2 5.0%
Lease liability$8.1 $7.0 $15.2 $7.1 $7.8 $45.2 
As of December 31, 2021
MillionsHG/BAMArkKuduOther OperationsTotal
Weighted Average Incremental Borrowing Rate (1)
ROU lease assets$7.6 $7.0 $6.4 $7.1 $28.1 4.0%
Lease liabilities$8.1 $7.0 $7.1 $7.8 $30.0 
(1) The present value of the remaining lease payments was determined by discounting the lease payments using the incremental borrowing rate.


39


Note 14. Non-controlling Interests

Non-controlling interests consist of the ownership interests of non-controlling shareholders in consolidated entities and are presented separately on the balance sheet.
The following table presents the balance of non-controlling interests included in White Mountains’s total equity and the ownership interests held by non-controlling shareholders as of March 31,September 30, 2022 and December 31, 2021:
March 31, 2022December 31, 2021 September 30, 2022December 31, 2021
$ in Millions$ in Millions
Non-controlling Percentage (1)
Non-controlling Equity
Non-controlling Percentage (1)
Non-controlling Equity$ in Millions
Non-controlling Percentage (1)
Non-controlling Equity
Non-controlling Percentage (1)
Non-controlling Equity
Non-controlling interests, excluding BAMNon-controlling interests, excluding BAMNon-controlling interests, excluding BAM
HG GlobalHG Global3.1 %$5.4 3.1 %$8.9 HG Global3.1 %$(.3)3.1 %$8.9 
ArkArk28.0 %224.1 28.0 %230.7 Ark28.0 %217.1 28.0 %230.7 
NSM3.5 %16.7 3.5 %16.7 
KuduKudu.9 %17.3 .7 %12.4 Kudu10.7 %80.8 .7 %12.4 
NSM (2)
NSM (2)
 % 3.5 %16.7 
OtherOthervarious11.2 various11.9 Othervarious20.8 various11.9 
Total, excluding BAMTotal, excluding BAM274.7 280.6 Total, excluding BAM318.4 280.6 
BAMBAM100.0 %(147.5)100.0 %(124.0)BAM100.0 %(160.1)100.0 %(124.0)
Total non-controlling interestsTotal non-controlling interests$127.2 $156.6 Total non-controlling interests$158.3 $156.6 
(1) The non-controlling percentage represents the basic ownership interests held by non-controlling shareholders with the exception of HG Global, for which the non-controlling percentage represents the preferred share ownership held by non-controlling shareholders.
41(2) As a result of the NSM Transaction, NSM has been classified as discontinued operations through the closing of the transaction. See Note 19 — “Held for Sale and Discontinued Operations.”


Note 15. Segment Information
 
As of March 31,September 30, 2022, White Mountains conducted its operations through 5four segments: (1) HG Global/BAM, (2) Ark, (3) NSM, (4) Kudu, and (5)(4) Other Operations. A discussionAs a result of White Mountains’s consolidated investment operations is included after the discussionNSM Transaction, the results of operations by segment.for NSM, previously reported as a segment, have been classified as discontinued operations in the statements of operations and comprehensive income through the closing of the transaction. Prior period amounts have been reclassified to conform to the current period’s presentation. See Note 19 — “Held for Sale and Discontinued Operations.”
White Mountains has made its segment determination based on consideration of the following criteria: (i) the nature of the business activities of each of the Company’s subsidiaries and affiliates; (ii) the manner in which the Company’s subsidiaries and affiliates are organized; (iii) the existence of primary managers responsible for specific subsidiaries and affiliates; and (iv) the organization of information provided to the chief operating decision makers and the Board of Directors. Significant intercompany transactions among White Mountains’s segments have been eliminated herein.

40


The following tables present the financial information for White Mountains’s segments:
MillionsMillionsHG Global/ BAMArkNSM
Kudu
Other OperationsTotalMillionsHG Global/ BAMArk
Kudu
Other OperationsTotal
Three Months Ended March 31, 2022
Three Months Ended September 30, 2022Three Months Ended September 30, 2022
Earned insurance premiumsEarned insurance premiums$8.4 $194.4 $— $— $— $202.8 Earned insurance premiums$7.1 $346.1 $— $— $353.2 
Net investment incomeNet investment income4.6 1.6 — 12.6 1.8 20.6 Net investment income5.7 4.9 14.8 8.5 33.9 
Net realized and unrealized investment
gains (losses)
Net realized and unrealized investment
gains (losses)
(45.1)(17.5)— 22.3 31.9 (8.4)Net realized and unrealized investment
gains (losses)
(38.8)(14.4)41.1 (17.3)(29.4)
Net realized and unrealized investment gains
(losses) from investment in MediaAlpha
Net realized and unrealized investment gains
(losses) from investment in MediaAlpha
— — — — 18.8 18.8 Net realized and unrealized investment gains
(losses) from investment in MediaAlpha
— — — (18.6)(18.6)
Commission revenuesCommission revenues— — 70.1 — 2.9 73.0 Commission revenues— — — 3.2 3.2 
Other revenuesOther revenues.8 (2.8)18.4 — 25.7 42.1 Other revenues1.3 6.6 — 33.0 40.9 
Total revenues Total revenues(31.3)175.7 88.5 34.9 81.1 348.9  Total revenues(24.7)343.2 55.9 8.8 383.2 
Loss and loss adjustment expensesLoss and loss adjustment expenses— 122.0 — — — 122.0 Loss and loss adjustment expenses— 213.7 — — 213.7 
Insurance and reinsurance acquisition expensesInsurance and reinsurance acquisition expenses3.0 49.9 — — — 52.9 Insurance and reinsurance acquisition expenses1.7 74.8 — — 76.5 
Cost of salesCost of sales— — — — 21.4 21.4 Cost of sales— — — 25.0 25.0 
General and administrative expensesGeneral and administrative expenses16.3 23.1 54.0 2.7 28.9 125.0 General and administrative expenses15.8 26.9 4.5 39.9 87.1 
Broker commission expense— — 20.6 — — 20.6 
Change in fair value of contingent consideration— — .1 — — .1 
Amortization of other intangible assetsAmortization of other intangible assets— — 9.1 .1 .9 10.1 Amortization of other intangible assets— — — 1.4 1.4 
Loss on assets held for sale— — — — —  
Interest expenseInterest expense— 3.8 2.1 2.8 .3 9.0 Interest expense2.0 3.7 4.2 .6 10.5 
Total expenses Total expenses19.3 198.8 85.9 5.6 51.5 361.1  Total expenses19.5 319.1 8.7 66.9 414.2 
Pre-tax income (loss)$(50.6)$(23.1)$2.6 $29.3 $29.6 $(12.2)
Pre-tax income (loss) from continuing operationsPre-tax income (loss) from continuing operations$(44.2)$24.1 $47.2 $(58.1)$(31.0)

MillionsHG Global/ BAMArkKuduOther OperationsTotal
Three Months Ended September 30, 2021
Earned insurance premiums$6.7 $213.4 $— $— $220.1 
Net investment income4.4 .6 9.5 5.0 19.5 
Net realized and unrealized investment
   gains (losses)
(4.0).3 18.9 15.3 30.5 
Net realized and unrealized investment gains
   (losses) from investment in MediaAlpha
— — — (396.8)(396.8)
Commission revenues— — — 2.4 2.4 
Other revenues.3 3.4 .1 28.1 31.9 
     Total revenues7.4 217.7 28.5 (346.0)(92.4)
Losses and loss adjustment expenses— 129.2 — — 129.2 
Insurance and reinsurance acquisition expenses3.0 53.7 — — 56.7 
Cost of sales— — — 24.0 24.0 
General and administrative expenses12.4 21.8 3.3 14.4 51.9 
Amortization of other intangible assets— — — 2.0 2.0 
Interest expense— 2.1 1.9 .4 4.4 
     Total expenses15.4 206.8 5.2 40.8 268.2 
Pre-tax income (loss) from continuing operations$(8.0)$10.9 $23.3 $(386.8)$(360.6)

41


MillionsHG Global/ BAMArk
Kudu
Other OperationsTotal
Nine Months Ended September 30, 2022
Earned insurance premiums$26.0 $757.8 $— $— $783.8 
Net investment income15.1 9.7 41.2 13.6 79.6 
Net realized and unrealized investment
   gains (losses)
(114.0)(76.5)45.8 2.8 (141.9)
Net realized and unrealized investment gains
   (losses) from investment in MediaAlpha
— — — (113.3)(113.3)
Commission revenues— — — 8.7 8.7 
Other revenues3.7 10.1 — 89.6 103.4 
     Total revenues(69.2)701.1 87.0 1.4 720.3 
Loss and loss adjustment expenses— 456.2 — — 456.2 
Insurance and reinsurance acquisition expenses9.5 174.9 — — 184.4 
Cost of sales— — — 68.8 68.8 
General and administrative expenses49.5 79.8 10.2 118.9 258.4 
Amortization of other intangible assets— — .2 3.2 3.4 
Interest expense5.4 10.6 10.3 1.2 27.5 
     Total expenses64.4 721.5 20.7 192.1 998.7 
Pre-tax income (loss) from continuing operations$(133.6)$(20.4)$66.3 $(190.7)$(278.4)

MillionsHG Global/ BAMArk
Kudu
Other OperationsTotal
Nine Months Ended September 30, 2021
Earned insurance premiums$19.6 $435.8 $— $— $455.4 
Net investment income13.2 1.8 26.1 16.1 57.2 
Net realized and unrealized investment
   gains (losses)
(15.6)10.3 62.5 34.0 91.2 
Net realized and unrealized investment gains
   (losses) from investment in MediaAlpha
— — — (325.5)(325.5)
Commission revenues— — — 7.0 7.0 
Other revenues.9 9.4 .2 57.6 68.1 
     Total revenues18.1 457.3 88.8 (210.8)353.4 
Losses and loss adjustment expenses— 247.8 — — 247.8 
Insurance and reinsurance acquisition expenses6.5 124.4 — — 130.9 
Cost of sales— — — 45.9 45.9 
General and administrative expenses42.7 84.4 9.0 79.4 215.5 
Amortization of other intangible assets— — .2 2.9 3.1 
Interest expense— 4.5 9.2 1.1 14.8 
     Total expenses49.2 461.1 18.4 129.3 658.0 
Pre-tax income (loss) from continuing operations$(31.1)$(3.8)$70.4 $(340.1)$(304.6)

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MillionsHG Global/ BAMArkNSMKuduOther OperationsTotal
Three Months Ended March 31, 2021
Earned insurance premiums$6.4 $104.6 $— $— $— $111.0 
Net investment income4.5 .8 — 8.2 7.1 20.6 
Net realized and unrealized investment
   gains (losses)
(17.9)1.1 — 15.8 2.1 1.1 
Net realized and unrealized investment gains
   (losses) from investment in MediaAlpha
— — — — (41.7)(41.7)
Commission revenues— — 59.6 — 2.3 61.9 
Other revenues.3 2.6 15.2 .1 7.1 25.3 
     Total revenues(6.7)109.1 74.8 24.1 (23.1)178.2 
Losses and loss adjustment expenses— 66.0 — — — 66.0 
Insurance and reinsurance acquisition expenses1.9 36.7 — — — 38.6 
Cost of sales— — — — 4.0 4.0 
General and administrative expenses16.4 37.8 46.0 2.5 35.7 138.4 
Broker commission expense— — 18.9 — — 18.9 
Amortization of other intangible assets— — 8.6 .1 .5 9.2 
Loss on assets held for sale— — 28.7 — — 28.7 
Interest expense— 1.1 5.9 5.8 .3 13.1 
     Total expenses18.3 141.6 108.1 8.4 40.5 316.9 
Pre-tax income (loss)$(25.0)$(32.5)$(33.3)$15.7 $(63.6)$(138.7)
In compliance with ASC 606, Revenues from Contracts with Customers, the following tables present White Mountains’s total revenues by revenue source for the three months ended March 31, 2022 and 2021:
MillionsHG Global/BAMArkNSMKuduOther
Operations
Total
Three Months Ended March 31, 2022
Commission and other revenue
Specialty Transportation$— $— $26.5 $— $— $26.5 
Pet— — 23.4 — — 23.4 
United Kingdom— — 12.6 — — 12.6 
Real Estate— — 10.5 — — 10.5 
Social Services— — 7.0 — — 7.0 
Diversified B2B— — 8.5 — — 8.5 
Other— — — — 2.9 2.9 
Total commission and other revenue— — 88.5 — 2.9 91.4 
Product and service revenues— — — — 26.4 26.4 
     Revenues from contracts with customers— — 88.5 — 29.3 117.8 
Other (1)
(31.3)175.7 — 34.9 51.8 231.1 
  Total revenues$(31.3)$175.7 $88.5 $34.9 $81.1 $348.9 
(1)    Other consists of earned insurance premiums, net investment income, net realized and unrealized investment gains (losses) and other revenues outside the scope of ASC 606, Revenues from Contracts with Customers.


43


MillionsHG Global/BAMArkNSMKuduOther
Operations
Total
Three Months Ended March 31, 2021
Commission and other revenue
Specialty Transportation$— $— $20.7 $— $— $20.7 
Pet— — 17.1 — — 17.1 
United Kingdom— — 13.1 — — 13.1 
Real Estate— — 9.8 — — 9.8 
Social Services— — 6.7 — — 6.7 
Diversified B2B— — 7.4 — — 7.4 
Other— — — — 2.3 2.3 
Total commission and other revenue— — 74.8 — 2.3 77.1 
Product revenues— — — — 6.5 6.5 
     Revenues from contracts with customers— — 74.8 — 8.8 83.6 
Other (1)
(6.7)109.1 — 24.1 (31.9)94.6 
  Total revenues$(6.7)$109.1 $74.8 $24.1 $(23.1)$178.2 
(1) Other consists of earned insurance premiums, net investment income, net realized and unrealized investment gains (losses) and other revenues outside the scope of ASC 606, Revenues from Contracts with Customers.

Note 16. Equity-Method Eligible Investments
 
White Mountains’s equity method eligible investments include White Mountains’s investment in MediaAlpha, certain other unconsolidated entities, including Kudu’s Participation Contracts, private equity funds and hedge funds in which White Mountains has the ability to exert significant influence over the investee’s operating and financial policies.
The following table presents the ownership interests and carrying values of White Mountains’s equity method eligible investments as of March 31,September 30, 2022 and December 31, 2021:
March 31, 2022December 31, 2021September 30, 2022December 31, 2021
MillionsMillionsOwnership InterestCarrying ValueOwnership InterestCarrying ValueMillionsOwnership InterestCarrying ValueOwnership InterestCarrying Value
Kudu Participation Contracts (1)
Kudu Participation Contracts (1)
3.2 - 33.4%$691.8 3.2 - 32.0%669.5 
Kudu Participation Contracts (1)
4.1 - 33.0%$813.2 3.2 - 32.0%$669.5 
Investment in MediaAlphaInvestment in MediaAlpha27.7 %280.4 28.0 %$261.6 Investment in MediaAlpha27.4 %148.2 28.0 %261.6 
PassportCard/DavidShieldPassportCard/DavidShield53.8 %125.0 53.8 %120.0 PassportCard/DavidShield53.8 %132.0 53.8 %120.0 
Elementum Holdings, L.P.Elementum Holdings, L.P.29.7 %45.0 29.7 %45.0 Elementum Holdings, L.P.29.7 %45.0 29.7 %45.0 
Other equity method eligible investments, at fair valueOther equity method eligible investments, at fair valueUnder 50.0%104.9 Under 50.0%109.3 Other equity method eligible investments, at fair valueUnder 50.0%102.7 Under 50.0%109.3 
Other equity method eligible investments, at fair valueOther equity method eligible investments, at fair value50.0% and over33.9 50.0% and over17.8 Other equity method eligible investments, at fair value50.0% and over27.7 50.0% and over17.8 
(1) Ownership interest generally references basic ownership interest with the exception of Kudu’s Participation Contracts, which are non-controlling equity interests in the form of revenue and earnings participation contracts.

For the three and nine months ended March 31,September 30, 2022, White Mountains received dividend and income distributions from equity method eligible investments of $16.1 million and $42.9 million, which were recorded within net investment income in the consolidated statements of operations. For the three and nine months ended September 30, 2021, White Mountains received dividend and income distributions from equity method eligible investments of $13.1$13.0 million, and $13.7$37.7 million, which were recorded within net investment income in the consolidated statementstatements of operations.
Subsequent to the MediaAlpha IPO, White Mountains’s investment in MediaAlpha is accounted for at fair value based on the publicly traded share price of MediaAlpha’s common stock, and White Mountains presents its investment in MediaAlpha as a separate line item on the balance sheet. See Note 2 — “Significant Transactions”.Transactions.” For the threenine months ended March 31, 2022 andSeptember 30, 2021, MediaAlpha was considered a significant subsidiary.
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The following tables present summarized financial information for MediaAlpha as of March 31,September 30, 2022 and December 31, 2021 and for the three and nine months ended March 31,September 30, 2022 and 2021:
MillionsMillionsMarch 31, 2022December 31, 2021MillionsSeptember 30, 2022December 31, 2021
Balance sheet data:Balance sheet data:Balance sheet data:
Total assetsTotal assets$275.2 $289.8 Total assets$265.2 $289.8 
Total liabilitiesTotal liabilities$332.9 $351.4 Total liabilities$333.6 $351.4 
Three Months Ended March 31,Three Months Ended September 30,Nine Months Ended September 30,
MillionsMillions20222021Millions2022202120222021
Income statement data:Income statement data:Income statement data:
Total revenuesTotal revenues$142.6 $173.6 Total revenues$89.0 $152.7 $335.1 $483.7 
Total expensesTotal expenses$152.4 $173.4 Total expenses$110.2 $157.0 $379.2 $488.2 
Net income (loss)Net income (loss)$(9.8)$.2 Net income (loss)$(21.2)$(4.3)$(44.1)$(4.5)

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Note 17. Fair Value of Financial Instruments

    White Mountains records its financial instruments at fair value with the exception of debt obligations, which are recorded as debt at face value less unamortized original issue discount. See Note 7 — “Debt”.“Debt.”
    The following tables presents the fair value and carrying value of these financial instruments as of March 31,September 30, 2022 and December 31, 2021:
March 31, 2022December 31, 2021 September 30, 2022December 31, 2021
MillionsMillionsFair
Value
Carrying
Value
Fair
Value
Carrying
Value
MillionsFair
Value
Carrying
Value
Fair
Value
Carrying
Value
HG Global Senior NotesHG Global Senior Notes$146.1 $146.4 $— $— 
Ark 2007 Subordinated NotesArk 2007 Subordinated Notes$27.8 $30.0 $27.6 $30.0 Ark 2007 Subordinated Notes$26.2 $30.0 $27.6 $30.0 
Ark 2021 Subordinated NotesArk 2021 Subordinated Notes$163.4 $154.8 $162.8 $155.9 Ark 2021 Subordinated Notes$149.4 $150.0 $162.8 $155.9 
NSM Bank Facility$273.1 $270.0 $275.8 $271.2 
Other NSM debt$.7 $.6 $1.0 $.9 
Kudu Credit FacilityKudu Credit Facility$241.8 $218.2 $246.8 $218.2 Kudu Credit Facility$265.5 $253.5 $246.8 $218.2 
Other Operations debtOther Operations debt$17.7 $17.3 $17.7 $16.8 Other Operations debt$36.8 $35.6 $17.7 $16.8 

The fair value estimates for the HG Global Senior Notes, Ark 2007 Subordinated Notes, the Ark 2021 Subordinated Notes, NSM Bank Facility, the Other NSM debt, the Kudu Credit Facility and Other Operations debt have been determined based on a discounted cash flow approach and are considered to be Level 3 measurements.

For the fair value level measurements associated with White Mountains’s investment securities. See
Note 3 — “Investment Securities.” For the fair value level measurements associated with White Mountains’s derivative instruments. See Note 9 — “Derivatives.”
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Note 18. Commitments and Contingencies

Legal Contingencies

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

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Note 19. Held for Sale and Discontinued Operations

NSM

On August 1, 2022, White Mountains closed the NSM Transaction. See Note 2 — “Significant Transactions.” As a result of the NSM Transaction, the assets and liabilities of NSM Group have been presented in the balance sheet as held for sale for periods prior to the closing of the transaction, and the results of operations for NSM Group have been classified as discontinued operations in the statements of operations and comprehensive income through the closing of the transaction. Prior period amounts have been reclassified to conform to the current period’s presentation.

Sirius Group

On April 18, 2016, White Mountains completed the sale of Sirius International Insurance Group, Ltd. (“Sirius Group”) to CM International Pte. Ltd. and CM Bermuda Limited (collectively “CMI”). In connection with the sale, White Mountains indemnified Sirius Group against the loss of certain interest deductions claimed by Sirius Group related to periods prior to the sale of Sirius Group to CMI that had been disputed by the Swedish Tax Agency. In late October 2018, the Swedish Administrative Court ruled against Sirius Group on its appeal of the Swedish Tax Agency’s denial of these interest deductions. As a result, in 2018 White Mountains recorded a loss of $17.3 million within net gain (loss) on sale of discontinued operations reflecting the value of these interest deductions.
As of December 31, 2020, White Mountains’s liability related to the tax indemnification provided in connection with the sale of Sirius Group in 2016 was $18.7 million. In April 2021, the Swedish Tax Agency informed the Swedish Administrative Court of Appeal that Sirius Group should prevail in its appeal and that the interest deductions should not be disallowed. In June 2021, the Swedish Administrative Court of Appeal ruled in Sirius Group’s favor. For the threenine months ended March 31,September 30, 2021, White Mountains recorded a gain of $17.6 million in discontinued operations to reverse the liability accrued as of December 31, 2020 and $1.1 million gain related to foreign currency translation.

NSMSummary of Reclassified Balances and Related Items

On April 12, 2021, NSM completedNet Assets Held for Sale
The following summarizes the sale of the Fresh Insurance motor business for net proceeds of £1.1 million ($1.5 million based upon the foreign exchange spot rate as of the transaction date). The assets and liabilities included in the transaction were measured at their estimated fair values, net of disposal, andassociated with NSM Group classified as held for sale at March 31, 2021. However, the transaction did not meet the criteria to be classified as discontinued operations. In the first quarter of 2021, NSM recorded a loss of $28.7 million related to the sale.

Other

As of March 31, 2022 and December 31, 2021, White Mountains classified one of the Other Operating Businesses, which included $15.9 million andamounts presented exclude $16.1 million of insurance licenses, investments and cash classified as assets held for sale.sale related to one of the Other Operating Businesses.
MillionsDecember 31, 2021
Assets held for sale
Short-term investments, at fair value$7.8 
Cash (restricted $89.2)111.6 
Premiums and commissions receivable85.0 
Goodwill and other intangible assets725.4 
Other assets59.2 
Total assets held for sale$989.0 
Liabilities held for sale
Debt$272.1 
Premiums payable135.9 
Contingent consideration6.8 
Other liabilities80.5 
Total liabilities held for sale495.3 
Net assets held for sale$493.7 

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Net Income (Loss) from Discontinued Operations
The following summarizes the results of operations, including related income taxes associated with the businesses classified as discontinued operations for the three and nine months ended September 30, 2022 and 2021:
Three Months Ended September 30,Nine Months Ended September 30,
Millions
2022 (1)
2021
2022 (1)
2021
Revenues 
Commission revenues$26.6 $67.0 $176.9 $194.6 
Other revenues7.0 15.3 48.1 46.8 
Total revenues - NSM Group33.6 82.3 225.0 241.4 
Expenses
General and administrative expenses15.7 48.9 126.8 142.4 
Broker commission expenses8.2 20.4 52.9 60.9 
Change in fair value of contingent consideration .6 .1 .8 
Amortization of other intangible assets 8.2 9.1 25.0 
Loss on assets held for sale —  28.7 
Interest expense1.6 5.9 12.1 17.7 
Total expenses - NSM Group25.5 84.0 201.0 275.5 
Pre-tax income (loss) from discontinued operations -
   NSM Group
8.1 (1.7)24.0 (34.1)
Income tax (expense) benefit(1.8)7.0 (7.6)10.3 
Net income (loss) from discontinued operations, net of
   tax - NSM Group
6.3 5.3 16.4 (23.8)
Net gain (loss) from sale of discontinued operations, net of
   tax - NSM Group
886.8 — 886.8 — 
Net gain (loss) from sale of discontinued operations, net of
   tax - Sirius Group
 —  18.7 
Total income (loss) from discontinued operations,
   net of tax
893.1 5.3 903.2 (5.1)
Net (income) loss from discontinued operations
   attributable to non-controlling interests
(.2)— (.8)1.1 
Total income (loss) from discontinued operations
   attributable to White Mountains’s common
   shareholders
892.9 5.3 902.4 (4.0)
Other comprehensive income (loss) from discontinued
   operations, net of tax - NSM Group
.7 (1.7)(5.2).9 
Net gain (loss) from foreign currency translation from sale
   of discontinued operations, net of tax - NSM Group
2.9 — 2.9 — 
Comprehensive income (loss) from discontinued
   operations
896.5 3.6 900.1 (3.1)
Other comprehensive income (loss) from discontinued
   operations attributable to non-controlling interests
(.1)— .2 (.1)
Comprehensive income (loss) from discontinued
   operations attributable to White Mountains’s common
   shareholders
$896.4 $3.6 $900.3 $(3.2)
(1) As a result of the NSM Transaction, the results of operations for NSM Group are presented for the periods from July 1, 2022 to August 1, 2022 and January 1, 2022 to August 1, 2022.

46


Net Change in Cash from Discontinued Operations
The following summarizes the net change in cash associated with the businesses classified as discontinued operations for the nine months ended September 30, 2022 and 2021:
Nine Months Ended September 30,
Millions20222021
Net cash provided from (used for) operations$38.7 $40.3 
Net cash provided from (used for) investing activities7.1 (54.6)
Net cash used from (used for) financing activities(17.5)13.8 
Effect of exchange rate changes on cash4.0 .6 
Net change in cash during the period32.3 .1 
Cash balances at beginning of period (includes restricted cash of $89.2 and $78.4)111.6 126.6 
Cash sold as part of the sale of NSM Group (includes restricted cash of $105.1 and $0.0)(143.9)— 
Cash balances at end of period (includes restricted cash of $0.0 and $92.2) 126.7 
Supplemental cash flows information:
Interest paid$(12.0)$(16.6)
Net income tax payments$ $— 

Earnings Per Share from Discontinued Operations

White Mountains calculates earnings per share using the two-class method, which allocates earnings between common and unvested restricted common shares. Both classes of shares participate equally in earnings on a per share basis. Basic earnings per share amounts are based on the weighted average number of common shares outstanding adjusted for unvested restricted common shares. Diluted earnings per share amounts are also impacted by the net effect of potentially dilutive common shares outstanding. The following table presents the Company’s computation of earnings per share for discontinued operations for the three and nine months ended March 31,September 30, 2022 and 2021:
Three Months Ended
 March 31,
20222021
Basic and diluted earnings per share numerators (in millions):
Net income (loss) attributable to White Mountains’s common shareholders$33.4 $(75.3)
Less: total income (loss) from continuing operations, net of tax33.4 (94.0)
Net gain from discontinued operations attributable to White Mountains’s common shareholders$ $18.7 
Allocation of earnings to participating restricted common shares (1)
 (.2)
Basic and diluted earnings per share numerators (2)
$ $18.5 
Basic earnings per share denominators (in thousands): 
Total average common shares outstanding during the period3,006.2 3,100.2 
Average unvested restricted common shares (3)
(29.6)(32.4)
Basic earnings per share denominator2,976.6 3,067.8 
Diluted earnings per share denominator (in thousands): 
Total average common shares outstanding during the period3,006.2 3,100.2 
Average unvested restricted common shares (3)
(29.6)(32.4)
Diluted earnings per share denominator2,976.6 3,067.8 
Basic and diluted earnings (losses) per share (in dollars) - discontinued operations:$ $6.03 
Three Months EndedNine Months Ended
 September 30,September 30,
2022202120222021
Basic and diluted earnings per share numerators (in millions):
Net income (loss) attributable to White Mountains’s
   common shareholders
$888.2 $(371.4)$752.4 $(308.2)
Less: net income (loss) from continuing operations$(23.6)$(389.2)$(252.3)$(356.8)
Less: net (income) loss from continuing operations attributable to
   non-controlling interests
$18.8 $12.5 $102.2 $52.6 
Total gain (loss) from discontinued operations attributable to White
   Mountains’s common shareholders (1)
$893.0 $5.3 $902.5 $(4.0)
Allocation of earnings to participating restricted common shares (2)
(11.8)(.1)(10.8)— 
Basic and diluted earnings per share numerators (3)
$881.2 $5.2 $891.7 $(4.0)
Basic earnings per share denominators (in thousands): 
Total average common shares outstanding during the period2,893.8 3,090.3 2,959.3 3,099.4 
Average unvested restricted common shares (4)
(38.3)(37.8)(35.5)(36.0)
Basic earnings per share denominator2,855.5 3,052.5 2,923.8 3,063.4 
Diluted earnings per share denominator (in thousands): 
Total average common shares outstanding during the period2,893.8 3,090.3 2,959.3 3,099.4 
Average unvested restricted common shares (4)
(38.3)(37.8)(35.5)(36.0)
Diluted earnings per share denominator2,855.5 3,052.5 2,923.8 3,063.4 
Basic and diluted earnings (losses) per share (in dollars) -
   discontinued operations:
$308.59 $1.72 $304.97 $(1.29)
(1)Includes net income (loss) from discontinued operations, net of tax - NSM Group, net gain (loss) from sale of discontinued operations, net of tax - NSM Group, net gain (loss) from sale of discontinued operations, net of tax - Sirius Group and net (income) loss from discontinued operations attributable to non-controlling interests.
(2) Restricted shares issued by White Mountains receive dividends and are therefore considered participating securities.
(2)(3) Net earnings attributable to White Mountains’s common shareholders, net of restricted share amounts, is equal to undistributed earnings for the three and nine months ended March 31,September 30, 2022 and 2021.
(3)(4) Restricted shares outstanding vest upon a stated date. See Note 12 — “Employee Share-Based Incentive Compensation Plans”.Plans.”

Note 20. Subsequent Event

On April 29, 2022, HG Global received the proceeds of a new $150.0 million, 10-year term loan credit facility. In turn, on May 2, 2022, HG Global paid a $120.0 million cash dividend to shareholders, of which $116.3 million was paid to White Mountains.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
 
The following discussion contains “forward-looking statements”.statements.” White Mountains intends statements that are not historical in nature, which are hereby identified as forward-looking statements, to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. White Mountains cannot promise that its expectations in such forward-looking statements will turn out to be correct. White Mountains’s actual results could be materially different from and worse than its expectations. See “FORWARD-LOOKING STATEMENTS” on page 7576 for specific important factors that could cause actual results to differ materially from those contained in forward-looking statements.
The following discussion also includes twelvenine non-GAAP financial measures: (i) adjusted book value per share, (ii) BAM’s gross written premiums and member surplus contributions (“MSC”) from new business, (iii) Ark’s adjusted loss and LAE ratio, (iv)(iii) Ark’s adjusted insurance acquisition expense ratio, (v)(iv) Ark’s adjusted other underwriting expense ratio, (vi)(v) Ark’s adjusted combined ratio (vii) NSM’s(vi) Kudu’s earnings before interest, taxes, depreciation and amortization (“EBITDA”), (viii) NSM’s adjusted EBITDA, (ix) Kudu’s EBITDA, (x)(vii) Kudu’s adjusted EBITDA, (xi)(viii) total consolidated portfolio returns excluding MediaAlpha, and (xii)(ix) adjusted capital, that have been reconciled from their most comparable GAAP financial measures on page 72.74. White Mountains believes these measures to be useful in evaluating White Mountains’s financial performance and condition.

RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED MARCH 31,SEPTEMBER 30, 2022 AND 2021

Overview
White Mountains reported book value per share of $1,183$1,439 and adjusted book value per share of $1,204$1,471 as of March 31,September 30, 2022. Book value per share and adjusted book value per share both increased 1%28% in the firstthird quarter of 2022. For the first nine months of 2022, book value increased 23% and adjusted book value increased 24%, including dividends. ResultsThe increases in the first quarter of 2022book value per share and adjusted book value per share were driven primarily by positive resultsthe net gain from the sale of NSM of approximately $300 per share (based on 2.9 million shares outstanding at August 1, 2022). In addition, the growth in White Mountains’s book value per share and adjusted book value per share reflect good operating companies as well as positive returns from other long-term investments and White Mountains’s investment in MediaAlpha,results at its businesses, partially offset by net realized and unrealized losses in theits fixed income portfolio due to rising interest rates.and investment in MediaAlpha. White Mountains reported book value per share of $1,231$1,162 and adjusted book value per share of $1,242$1,176 as of March 31,September 30, 2021. Book value per share and adjusted book value per share both decreased 2%9% in the third quarter of 2021. Book value per share decreased 8% and adjusted book value per share decreased 7% in the first quarternine months of 2021, including dividends. Results in the third quarter and first quarternine months of 2021 were driven primarily by $397 million and $326 million of net realized and unrealized investment losses from White Mountains’s investment in MediaAlpha, resulting from decreases in the MediaAlpha share price.
On August 1, 2022, White Mountains closed the NSM Transaction. White Mountains received $1.4 billion in net cash proceeds at closing and recognized a lossnet gain of $876 million, which was comprised of $887 million of net gain from sale of discontinued operations and $3 million of comprehensive income related to NSM’sthe recognition of foreign currency translation gains (losses) from the sale, partially offset by $14 million of compensation and other costs related to the transaction recorded in Other Operations.
During the third quarter of 2022, White Mountains repurchased and retired 366,645 of its Fresh Insurance motor business.common shares for $509 million at an average share price of $1,388.24, or 96% of White Mountains’s September 30, 2022 book value per share and 94% of White Mountains’s September 30, 2022 adjusted book value per share. As of September 30, 2022, White Mountains’s undeployed capital was approximately $1.1 billion.
In the HG Global/BAM segment, gross written premiums and MSC collected totaled $22$46 million and $109 million in the third quarter and first quarternine months of 2022 compared to $26$28 million and $84 million in the third quarter and first quarternine months of 2021. Total pricing was 63110 and 81 basis points in the third quarter and first quarternine months of 2022 compared to 7469 and 66 basis points in the third quarter and first quarternine months of 2021. BAM insured municipal bonds with par value of $3.5$4.1 billion and $13.5 billion in the third quarter and first quarternine months of 2022 compared to $3.5$4.0 billion and $12.6 billion in the third quarter and first quarternine months of 2021, which included $806 million from an assumed reinsurance transaction.2021. BAM’s total claims paying resources were $1,201$1,260 million as of March 31,September 30, 2022 compared to $1,192 million as of December 31, 2021 and $1,144$1,181 million as of March 31,September 30, 2021. On April 29, 2022, HG Global received the proceeds of a new $150 million, 10-year term loan credit facility. In turn, on May 2, 2022, HG Global paid a $120 million cash dividend to shareholders, of which $116 million was paid to White Mountains.
48


Ark reported a GAAP combined ratio of 100%87% and 90% in the third quarter and first quarternine months of 2022 compared to 109%92% and 95% in the third quarter and first quarternine months of 2021. Ark’s adjusted combined ratio, which adds back amounts attributable to TPC providers, was 101%86% and 90% in the third quarter and first quarternine months of 2022 compared to 108%89% and 93% in the third quarter and first quarternine months of 2021. The adjusted combined ratio infor the third quarter and first quarternine months of 2022 included 1621 points and 17 points of catastrophe losses compared to 21 points and 16 points in the third quarter and first nine months of which 11 points2021. Catastrophe losses for the third quarter and first nine months of 2022 included $51 million related to an estimate for incurred losses emanating from the conflict in Ukraine.Hurricane Ian on a net basis after reinstatement premiums. The adjusted combined ratio in the third quarter and first nine months of 2022 also included four points and five points of favorable prior year development compared to six points and five points in the third quarter and first nine months of 2021, included 17 points of catastrophe losses, of which 14 points related to Winter Storm Uri. In the first quarter of 2022,principally in property lines. Ark reported gross written premiums of $633$216 million and $1,253 million, net written premiums of $544$193 million and $1,007 million and net earned premiums of $194 million. In$346 million and $758 million in the third quarter and first quarternine months of 2021, Ark reported2022 compared to gross written premiums of $405$162 million and $895 million, net written premiums of $342$121 million and $726 million and net earned premiums of $105 million. Ark’s gross written premiums$213 million and $436 million and in the third quarter and first quarternine months of 2022 were up 57% from the first quarter of 2021, with risk-adjusted rate change up approximately 9% year over year.2021. Ark reported pre-tax lossincome (loss) of $23$24 million and $(20) million in the third quarter and first quarternine months of 2022 compared to $33$11 million and $(4) million in third quarter and first nine months of 2021. Ark’s results included net realized and unrealized investment gains (losses) of $(14) million and $(77) million in the third quarter and first nine months of 2022 compared to $0.3 million and $10 million in the third quarter and first nine months of 2021. Ark’s pre-tax loss for the first quarternine months of 2022 included $18 million of net unrealized investment losses, driven primarily by losses on fixed income securities. Results in the first quarter of 2021 also included $25 million of transaction expenses related to White Mountains’s transaction with Ark.
NSM reported commission and other revenues of $89 million, pre-tax income of $3 million and adjusted EBITDA of $18 million in the first quarter of 2022 compared to commission and other revenues of $75 million, pre-tax loss of $33 million and adjusted EBITDA of $14 million in the first quarter of 2021. Results in the first quarter of 2022 include the results of J.C. Taylor, an MGA offering classic and antique collector car insurance, which was acquired on August 6, 2021. Results in the first quarter of 2021 include a loss of $29 million related to the sale of NSM’s Fresh Insurance motor business, which was sold on April 12, 2021.
48


Ark
Kudu reported total revenue of $35$56 million, pre-tax income of $29$47 million and adjusted EBITDA of $10$12 million in the firstthird quarter of 2022 compared to total revenue of $24$29 million, pre-tax income of $16$23 million and adjusted EBITDA of $6$7 million in the firstthird quarter of 2021. Total revenues and pre-tax income in the firstthird quarter of 2022 included $22$41 million of net realized and unrealized investment gains on Kudu’s participation contracts compared to $16$19 million of net realized and unrealized investment gains on Kudu’s participation contracts in the third quarter of 2021. Kudu reported total revenue of $87 million, pre-tax income of $66 million and adjusted EBITDA of $33 million in the first nine months of 2022 compared to total revenue of $89 million, pre-tax income of $70 million and adjusted EBITDA of $19 million in the first nine months of 2021. Total revenues and pre-tax income in the first nine months of 2022 included $46 million of net realized and unrealized investment gains on Kudu’s participation contracts compared to $63 million of net realized and unrealized investment gains on Kudu’s participation contracts in the first quarternine months of 2021.
As of March 31,September 30, 2022, the market value of White Mountains’s investment in MediaAlpha was $280$148 million, which was updown from $262$167 million as of December 31, 2021.June 30, 2022. As of March 31,September 30, 2022, the closing price was $16.55$8.75 per share, which increaseddecreased from $15.44 at December 31, 2021.$9.85 as of June 30, 2022. Based on White Mountains’s ownership of 16.9 million shares of MediaAlpha as of March 31,September 30, 2022, each $1.00 per share increase or decrease in the stock price of MediaAlpha will result in an approximate $5.65$6.60 per share increase or decrease in White Mountains’s book value per share and adjusted book value per share.
White Mountains’s pre-tax total consolidated portfolio return on invested assets was 0.8%0.4% in the firstthird quarter of 2022. This return included $19 million of unrealized investment gainslosses from White Mountains’s investment in MediaAlpha. Excluding MediaAlpha, the total consolidated portfolio return on invested assets was 0.3%0.5% in the firstthird quarter of 2022. Excluding MediaAlpha, investment returns in the firstthird quarter of 2022 were driven primarily by net unrealized investments gains in thefavorable other long-term investments portfolio,investment results, which more than offset net realized and unrealized investment losses in the fixed income portfolio due to rising interest rates. White Mountains’s pre-tax total consolidated portfolio return on invested assets was -0.3%-8.0% in the firstthird quarter of 2021. This return included $42$397 million of unrealized investment losses from White Mountains’s investment in MediaAlpha. Excluding MediaAlpha, the total consolidated portfolio return on invested assets was 1.4% in the third quarter of 2021. Excluding MediaAlpha, investment returns in the third quarter of 2021 were driven primarily by favorable other long-term investments results.
White Mountains’s pre-tax total consolidated portfolio return on invested assets was -3.6% in the first nine months of 2022. This return included $113 million of net unrealized investment losses from White Mountains’s investment in MediaAlpha. Excluding MediaAlpha, the total consolidated portfolio return on invested assets was -1.4% in the first nine months of 2022. Excluding MediaAlpha, investment returns in the first nine months of 2022 were driven primarily by net unrealized investment losses in the fixed income portfolio due to rising interest rates, partially offset by favorable other long-term investment results. White Mountains’s pre-tax total consolidated portfolio return on invested assets was -3.7% in the first nine months of 2021. This return included $326 million of net realized and unrealized investment losses from White Mountains’s investment in MediaAlpha. Excluding MediaAlpha, the total consolidated portfolio return on invested assets was 0.7%4.6% in the first quarternine months of 2021. Excluding MediaAlpha, investment returns in the first quarternine months of 2021 were driven primarily by net unrealized investments gains in thefavorable other long-term investments portfolio, which more than offset net unrealized investment losses in the fixed income portfolio due to rising interest rates.results.


49


Adjusted Book Value Per Share

The following table presents White Mountains’s book value per share and reconciles it to adjusted book value per share, a non-GAAP measure.measure as of September 30, 2022, June 30, 2022, December 31, 2021, and September 30, 2021. See NON-GAAP FINANCIAL MEASURES on page 72.74.
March 31, 2022December 31, 2021March 31, 2021 September 30, 2022June 30,
2022
December 31,
2021
September 30, 2021
Book value per share numerators (in millions):Book value per share numerators (in millions):Book value per share numerators (in millions):
White Mountains’s common shareholders’ equity -
GAAP book value per share numerator
White Mountains’s common shareholders’ equity -
GAAP book value per share numerator
$3,542.1 $3,548.1 $3,825.9 White Mountains’s common shareholders’ equity -
GAAP book value per share numerator
$3,708.0 $3,323.3 $3,548.1 $3,521.7 
Time value of money discount on expected future
payments on the BAM Surplus Notes (1)
Time value of money discount on expected future
payments on the BAM Surplus Notes (1)
(120.9)(125.9)(137.7)
Time value of money discount on expected future
payments on the BAM Surplus Notes (1)
(110.8)(115.9)(125.9)(128.0)
HG Global’s unearned premium reserve (1)
HG Global’s unearned premium reserve (1)
215.8 214.6 195.3 
HG Global’s unearned premium reserve (1)
232.2 221.6 214.6 206.8 
HG Global’s net deferred acquisition costs (1)
HG Global’s net deferred acquisition costs (1)
(60.6)(60.8)(54.2)
HG Global’s net deferred acquisition costs (1)
(65.9)(62.6)(60.8)(58.1)
Adjusted book value per share numeratorAdjusted book value per share numerator$3,576.4 $3,576.0 $3,829.3 Adjusted book value per share numerator$3,763.5 $3,366.4 $3,576.0 $3,542.4 
Book value per share denominators
(in thousands of shares):
Book value per share denominators
(in thousands of shares):
Book value per share denominators (in thousands of shares): 
Common shares outstanding - GAAP book value per
share denominator
Common shares outstanding - GAAP book value per
share denominator
2,994.2 3,017.8 3,107.3 Common shares outstanding - GAAP book value
per share denominator
2,576.2 2,942.9 3,017.8 3,029.6 
Unearned restricted common sharesUnearned restricted common shares(24.2)(13.7)(23.4)Unearned restricted common shares(17.5)(20.9)(13.7)(17.0)
Adjusted book value per share denominatorAdjusted book value per share denominator2,970.0 3,004.1 3,083.9 Adjusted book value per share denominator2,558.7 2,922.0 3,004.1 3,012.6 
GAAP book value per shareGAAP book value per share$1,183.00 $1,175.73 $1,231.27 GAAP book value per share$1,439.31 $1,129.27 $1,175.73 $1,162.44 
Adjusted book value per shareAdjusted book value per share$1,204.17 $1,190.39 $1,241.71 Adjusted book value per share$1,470.84 $1,152.12 $1,190.39 $1,175.86 
Year-to-date dividends paid per shareYear-to-date dividends paid per share$1.00 $1.00 $1.00 Year-to-date dividends paid per share$1.00 $1.00 $1.00 $1.00 
(1) Amount reflects White Mountains’s preferred share ownership in HG Global of 96.9%.
49


Goodwill and Other Intangible Assets

The following table presents a summary of goodwill and other intangible assets that are included in White Mountains’s book value as of March 31,September 30, 2022, June 30, 2022, December 31, 2021, and March 31,September 30, 2021:
MillionsMillionsMarch 31, 2022December 31, 2021March 31, 2021MillionsSeptember 30, 2022June 30,
2022
December 31, 2021September 30, 2021
Goodwill:Goodwill:Goodwill:
ArkArk$116.8 $116.8 $116.8 Ark$116.8 $116.8 $116.8 $116.8 
NSM499.1 503.2 477.7 
KuduKudu7.6 7.6 7.6 Kudu7.6 7.6 7.6 7.6 
Other OperationsOther Operations17.9 17.9 11.3 Other Operations51.1 (1)77.4 (1)17.9 17.4 
Total goodwillTotal goodwill641.4 645.5 613.4 Total goodwill175.5 201.8 142.3 141.8 
Other intangible assets:Other intangible assets:Other intangible assets:
ArkArk175.7 175.7 175.7 Ark175.7 175.7 175.7 175.7 
NSM212.9 222.2 222.0 
KuduKudu1.3 1.3 1.5 Kudu1.1 1.1 1.3 1.4 
Other OperationsOther Operations20.2 21.2 24.4 Other Operations40.9 19.4 21.2 31.3 
Total other intangible assetsTotal other intangible assets410.1 420.4 423.6 Total other intangible assets217.7 196.2 198.2 208.4 
Total goodwill and other intangible assets (1)(2)
Total goodwill and other intangible assets (1)(2)
1,051.5 1,065.9 1,037.0 
Total goodwill and other intangible assets (1)(2)
393.2 398 340.5 350.2 
Goodwill and other intangible assets attributed to
�� non-controlling interests
(117.1)(117.6)(108.4)
Goodwill and other intangible assets attributed to
non-controlling interests
Goodwill and other intangible assets attributed to
non-controlling interests
(103.1)(103.4)(91.8)(92.0)
Goodwill and other intangible assets included in
White Mountains’s common shareholders’ equity
Goodwill and other intangible assets included in
White Mountains’s common shareholders’ equity
$934.4 $948.3 $928.6 Goodwill and other intangible assets included in
White Mountains’s common shareholders’
equity
$290.1 $294.6 $248.7 $258.2 
(1)The relative fair values of goodwill and other intangible assets recognized in connection with recent acquisitions had not yet been finalized as of September 30, 2022 and June 30, 2022.
(2) See Note 4 — “Goodwill and Other Intangible Assets” for details of goodwill and other intangible assets.

50


Summary of Consolidated Results

The following table presents White Mountains’s consolidated financial results for the three and nine months ended March 31,September 30, 2022 and 2021:
Three Months EndedThree Months EndedNine Months Ended
March 31, September 30,September 30,
MillionsMillions20222021Millions2022202120222021
RevenuesRevenues  Revenues  
Financial Guarantee revenuesFinancial Guarantee revenues$(31.3)$(6.7)Financial Guarantee revenues$(24.7)$7.4 $(69.2)$18.1 
P&C Insurance and Reinsurance revenuesP&C Insurance and Reinsurance revenues175.7 109.1 P&C Insurance and Reinsurance revenues343.2 217.7 701.1 457.3 
Specialty Insurance Distribution revenues88.5 74.8 
Asset Management revenuesAsset Management revenues34.9 24.1 Asset Management revenues55.9 28.5 87.0 88.8 
Other Operations revenuesOther Operations revenues81.1 (23.1)Other Operations revenues8.8 (346.0)1.4 (210.8)
Total revenuesTotal revenues348.9 178.2 Total revenues383.2 (92.4)720.3 353.4 
ExpensesExpensesExpenses
Financial Guarantee expensesFinancial Guarantee expenses19.3 18.3 Financial Guarantee expenses19.5 15.4 64.4 49.2 
P&C Insurance and Reinsurance expensesP&C Insurance and Reinsurance expenses198.8 141.6 P&C Insurance and Reinsurance expenses319.1 206.8 721.5 461.1 
Specialty Insurance Distribution expenses85.9 108.1 
Asset Management expensesAsset Management expenses5.6 8.4 Asset Management expenses8.7 5.2 20.7 18.4 
Other Operations expensesOther Operations expenses51.5 40.5 Other Operations expenses66.9 40.8 192.1 129.3 
Total expensesTotal expenses361.1 316.9 Total expenses414.2 268.2 998.7 658.0 
Pre-tax income (loss)Pre-tax income (loss)Pre-tax income (loss)
Financial Guarantee pre-tax income (loss)Financial Guarantee pre-tax income (loss)(50.6)(25.0)Financial Guarantee pre-tax income (loss)(44.2)(8.0)(133.6)(31.1)
P&C Insurance and Reinsurance pre-tax income (loss)P&C Insurance and Reinsurance pre-tax income (loss)(23.1)(32.5)P&C Insurance and Reinsurance pre-tax income (loss)24.1 10.9 (20.4)(3.8)
Specialty Insurance Distribution pre-tax income (loss)2.6 (33.3)
Asset Management pre-tax income (loss)Asset Management pre-tax income (loss)29.3 15.7 Asset Management pre-tax income (loss)47.2 23.3 66.3 70.4 
Other Operations pre-tax income (loss)Other Operations pre-tax income (loss)29.6 (63.6)Other Operations pre-tax income (loss)(58.1)(386.8)(190.7)(340.1)
Total pre-tax income (loss)(12.2)(138.7)
Total pre-tax income (loss) from continuing operationsTotal pre-tax income (loss) from continuing operations(31.0)(360.6)(278.4)(304.6)
Income tax (expense) benefitIncome tax (expense) benefit3.8 9.5 Income tax (expense) benefit7.4 (28.6)26.1 (52.2)
Net income (loss) from continuing operationsNet income (loss) from continuing operations(8.4)(129.2)Net income (loss) from continuing operations(23.6)(389.2)(252.3)(356.8)
Gain (loss) on sale of discontinued operations, net
of tax
 18.7 
Net income (loss) from discontinued operations, net of tax -
NSM Group
Net income (loss) from discontinued operations, net of tax -
NSM Group
6.3 5.3 16.4 (23.8)
Net gain (loss) from sale of discontinued operations, net of
tax - NSM Group
Net gain (loss) from sale of discontinued operations, net of
tax - NSM Group
886.8 — 886.8 — 
Net gain (loss) from sale of discontinued operations, net of
tax - Sirius Group
Net gain (loss) from sale of discontinued operations, net of
tax - Sirius Group
 —  18.7 
Net income (loss)Net income (loss)(8.4)(110.5)Net income (loss)869.5 (383.9)650.9 (361.9)
Net (income) loss attributable to non-controlling interestsNet (income) loss attributable to non-controlling interests41.8 35.2 Net (income) loss attributable to non-controlling interests18.7 12.5 101.5 53.7 
Net income (loss) attributable to White Mountains’s
common shareholders
Net income (loss) attributable to White Mountains’s
common shareholders
33.4 (75.3)Net income (loss) attributable to White Mountains’s
common shareholders
888.2 (371.4)752.4 (308.2)
Other comprehensive income (loss), net of taxOther comprehensive income (loss), net of tax(2.3)1.8 Other comprehensive income (loss), net of tax(1.4)— (3.0)(.3)
Other comprehensive income (loss) from discontinued
operations, net of tax - NSM Group
Other comprehensive income (loss) from discontinued
operations, net of tax - NSM Group
.7 (2.2)(5.2).9 
Recognition of foreign currency translation from sale of
NSM Group, net of tax
Recognition of foreign currency translation from sale of
NSM Group, net of tax
2.9 — 2.9 — 
Comprehensive income (loss)Comprehensive income (loss)31.1 (73.5)Comprehensive income (loss)890.4 (373.6)747.1 (307.6)
Other comprehensive (income) loss attributable to non-controlling
interests
Other comprehensive (income) loss attributable to non-controlling
interests
.2 (.1)Other comprehensive (income) loss attributable to
non-controlling interests
(.3).2 .4 — 
Comprehensive income (loss) attributable to White
Mountains’s common shareholders
Comprehensive income (loss) attributable to White
Mountains’s common shareholders
$31.3 $(73.6)Comprehensive income (loss) attributable to White
Mountains’s common shareholders
$890.1 $(373.4)$747.5 $(307.6)




51


I. Summary of Operations By Segment
 
As of March 31,September 30, 2022, White Mountains conducted its operations through fivefour segments: (1) HG Global/BAM, (2) Ark, (3) NSM, (4) Kudu and (5)(4) Other Operations. A discussion of White Mountains’s consolidated investment operations is included after the discussion of operations by segment. White Mountains’s segment information is presented in Note 15 — “Segment Information” to the Consolidated Financial Statements.
As a result of the NSM Transaction, the results of operations for NSM Group have been classified as discontinued operations and are presented separately, net of related income taxes, in the statement of comprehensive income through the closing of the transaction. Prior year amounts have been reclassified to conform to the current period’s presentation. See Note 19 — “Held for Sale and Discontinued Operations.”

HG Global/BAM

HG Global/BAM consists of the consolidated results of HG Global, HG Re and BAM. BAM is the first and only mutual municipal bond insurance company in the United States. By insuring the timely payment of principal and interest, BAM provides market access to, and lowers interest expense for, issuers of municipal bonds used to finance essential public purpose projects, such as schools, utilities and transportation facilities. BAM is owned by and operated for the benefit of its members, the municipalities that purchase BAM’s insurance for their debt issuances. HG Global was established to fund the startup of BAM and, through HG Re, to provide up to 15%-of-par, first loss reinsurance protection for policies underwritten by BAM.
The following tables present the components of pre-tax income (loss) included in White Mountains’s HG Global/BAM segment related to the consolidation of HG Global, which includes HG Re and its other wholly-owned subsidiaries, and BAM for the three and nine months ended March 31,September 30, 2022 and 2021:
 Three Months Ended March 31, 2022
MillionsHG GlobalBAMEliminationsTotal
Direct written premiums$— $9.4 $— $9.4 
Assumed written premiums8.1 — (8.1) 
Gross written premiums8.1 9.4 (8.1)9.4 
Ceded written premiums— (8.1)8.1  
Net written premiums$8.1 $1.3 $— $9.4 
Earned insurance premiums$6.9 $1.5 $— $8.4 
Net investment income2.1 2.5 — 4.6 
Net investment income - BAM Surplus Notes2.9 — (2.9) 
Net realized and unrealized investment gains (losses)(23.5)(21.6)— (45.1)
Other revenues.1 .7 — .8 
Total revenues(11.5)(16.9)(2.9)(31.3)
Insurance acquisition expenses2.6 .4 — 3.0 
General and administrative expenses.7 15.6 — 16.3 
Interest expense - BAM Surplus Notes— 2.9 (2.9) 
Total expenses3.3 18.9 (2.9)19.3 
Pre-tax income (loss)$(14.8)$(35.8)$— $(50.6)
Supplemental information:
     MSC collected (1)
$— 12.3 $— $12.3 

 Three Months Ended September 30, 2022
MillionsHG GlobalBAMEliminationsTotal
Direct written premiums$ $18.4 $ $18.4 
Assumed written premiums16.8 1.3 (16.8)1.3 
Gross written premiums16.8 19.7 (16.8)19.7 
Ceded written premiums (16.8)16.8  
Net written premiums$16.8 $2.9 $ $19.7 
Earned insurance premiums$5.9 $1.2 $ $7.1 
Net investment income2.8 2.9  5.7 
Net investment income - BAM Surplus Notes2.9  (2.9) 
Net realized and unrealized investment gains (losses)(19.6)(19.2) (38.8)
Other revenues.1 1.2  1.3 
Total revenues(7.9)(13.9)(2.9)(24.7)
Insurance acquisition expenses1.6 .1  1.7 
General and administrative expenses.6 15.2  15.8 
Interest expense - HG Global Senior Notes2.0   2.0 
Interest expense - BAM Surplus Notes 2.9 (2.9) 
Total expenses4.2 18.2 (2.9)19.5 
Pre-tax income (loss)$(12.1)$(32.1)$ $(44.2)
Supplemental information:
     MSC collected (1)
$ $26.0 $ $26.0 
(1) MSC collected are recorded directly to BAM’s equity, which is recorded as non-controlling interest on White Mountains’s balance sheet.
52


Three Months Ended March 31, 2021 Three Months Ended September 30, 2021
MillionsMillionsHG GlobalBAMEliminationsTotalMillionsHG GlobalBAMEliminationsTotal
Direct written premiumsDirect written premiums$— $8.0 $— $8.0 Direct written premiums$— $12.8 $— $12.8 
Assumed written premiumsAssumed written premiums10.7 4.5 (10.7)4.5 Assumed written premiums10.9 — (10.9)— 
Gross written premiumsGross written premiums10.7 12.5 (10.7)12.5 Gross written premiums10.9 12.8 (10.9)12.8 
Ceded written premiumsCeded written premiums— (10.7)10.7 — Ceded written premiums— (10.9)10.9 — 
Net written premiumsNet written premiums$10.7 $1.8 $— $12.5 Net written premiums$10.9 $1.9 $— $12.8 
Earned insurance premiumsEarned insurance premiums$5.3 $1.1 $— $6.4 Earned insurance premiums$5.5 $1.2 $— $6.7 
Net investment incomeNet investment income1.8 2.7 — 4.5 Net investment income1.9 2.5 — 4.4 
Net investment income - BAM Surplus NotesNet investment income - BAM Surplus Notes3.0 — (3.0)— Net investment income - BAM Surplus Notes3.1 — (3.1)— 
Net realized and unrealized investment gains (losses)(9.9)(8.0)— (17.9)
Net realized and unrealized investment gainsNet realized and unrealized investment gains(2.0)(2.0)— (4.0)
Other revenuesOther revenues.1 .2 — .3 Other revenues.1 .2 — .3 
Total revenuesTotal revenues0.3 (4.0)(3.0)(6.7)Total revenues8.6 1.9 (3.1)7.4 
Insurance acquisition expensesInsurance acquisition expenses1.5 .4 — 1.9 Insurance acquisition expenses1.5 1.5 — 3.0 
General and administrative expensesGeneral and administrative expenses.6 15.8 — 16.4 General and administrative expenses.2 12.2 — 12.4 
Interest expense - BAM Surplus NotesInterest expense - BAM Surplus Notes— 3.0 (3.0)— Interest expense - BAM Surplus Notes— 3.1 (3.1)— 
Total expensesTotal expenses2.1 19.2 (3.0)18.3 Total expenses1.7 16.8 (3.1)15.4 
Pre-tax loss$(1.8)$(23.2)$— $(25.0)
Pre-tax income (loss)Pre-tax income (loss)$6.9 $(14.9)$— $(8.0)
Supplemental information:Supplemental information:Supplemental information:
MSC collected (1)
MSC collected (1)
$— $13.8 $— $13.8 
MSC collected (1)
$— $14.7 $— $14.7 
(1) MSC collected are recorded directly to BAM’s equity, which is recorded as non-controlling interest on White Mountains’s balance sheet.

 Nine Months Ended September 30, 2022
MillionsHG GlobalBAMEliminationsTotal
Direct written premiums$ $44.9 $ $44.9 
Assumed written premiums39.6 1.3 (39.6)1.3 
Gross written premiums39.6 46.2 (39.6)46.2 
Ceded written premiums (39.6)39.6  
Net written premiums$39.6 $6.6 $ $46.2 
Earned insurance premiums$21.5 $4.5 $ $26.0 
Net investment income7.1 8.0  15.1 
Net investment income - BAM Surplus Notes8.8  (8.8) 
Net realized and unrealized investment gains (losses)(57.8)(56.2) (114.0)
Other revenues.3 3.4  3.7 
Total revenues(20.1)(40.3)(8.8)(69.2)
Insurance acquisition expenses7.6 1.9  9.5 
General and administrative expenses2.1 47.4  49.5 
Interest expense - HG Global Senior Notes5.4   5.4 
Interest expense - BAM Surplus Notes 8.8 (8.8) 
Total expenses15.1 58.1 (8.8)64.4 
Pre-tax income (loss)$(35.2)$(98.4)$ $(133.6)
Supplemental information:
     MSC collected (1)
$ $62.3 $ $62.3 
(1) MSC collected are recorded directly to BAM’s equity, which is recorded as non-controlling interest on White Mountains’s balance sheet.

53


 Nine Months Ended September 30, 2021
MillionsHG GlobalBAMEliminationsTotal
Direct written premiums$— $34.5 $— $34.5 
Assumed written premiums33.4 4.5 (33.4)4.5 
Gross written premiums33.4 39.0 (33.4)39.0 
Ceded written premiums— (33.4)33.4 — 
Net written premiums$33.4 $5.6 $— $39.0 
Earned insurance premiums$16.1 $3.5 $— $19.6 
Net investment income5.4 7.8 — 13.2 
Net investment income - BAM Surplus Notes9.1 — (9.1)— 
Net realized and unrealized investment losses(9.5)(6.1)— (15.6)
Other revenues.3 .6 — .9 
Total revenues21.4 5.8 (9.1)18.1 
Insurance acquisition expenses4.3 2.2 — 6.5 
General and administrative expenses1.3 41.4 — 42.7 
Interest expense - BAM Surplus Notes— 9.1 (9.1)— 
Total expenses5.6 52.7 (9.1)49.2 
Pre-tax income (loss)$15.8 $(46.9)$— $(31.1)
Supplemental information:
     MSC collected (1)
$— 44.8 $— $44.8 
(1) MSC are recorded directly to BAM’s equity, which is recorded as non-controlling interest on White Mountains’s balance sheet.

HG Global/BAM Results—Three Months Ended March 31,September 30, 2022 versus Three Months Ended March 31,September 30, 2021
BAM is required to prepare its financial statements on a statutory accounting basis for the NYDFS and does not report stand-alone GAAP financial results. BAM charges an insurance premium on each municipal bond insurance policy it writes. A portion of the premium is MSC and the remainder is a risk premium. In the event of a municipal bond refunding, a portion of the MSC from original issuance can be reutilized, in effect serving as a credit against the total insurance premium on the refunding of the municipal bond.
Gross written premiums and MSC collected in the HG Global/BAM segment totaled $22$46 million in the firstthird quarter of 2022 compared to $26$28 million in the firstthird quarter of 2021. BAM insured $3.5$4.1 billion of municipal bonds, $2.8$3.3 billion of which were in the primary market, in the firstthird quarter of 2022 compared to $3.5$4.0 billion of municipal bonds, $2.5$3.8 billion of which were in the primary market, in the firstthird quarter of 2021. In the firstthird quarter of 2021,2022, BAM completed an assumed reinsurance transaction to insurereinsure municipal bonds with a par value of $806$43 million. Demand remained strong for insured bonds in the primary market, as insured
Insured penetration in the primary market was 8.1%decreased to 6.2% in the firstthird quarter of 2022 compared to 7.5%8.6% in the firstthird quarter of 2021, primarily as a result of a decrease in large transactions insured in the third quarter of 2022 compared to the third quarter of 2021.
Total pricing, which reflects both gross written premiums and MSC, from new business, decreasedincreased to 63110 basis points in the firstthird quarter of 2022 compared to 7469 basis points in the firstthird quarter of 2021. See “NON-GAAP FINANCIAL MEASURES” on page 72. The decreaseincrease in total pricing was driven primarily by a decrease inincreased secondary market activity, higher pricing in the primary market partially offset byand an increase in pricing for the combined secondary and assumed reinsurance marketstransaction in the firstthird quarter of 2022. Pricing in the primary market increased to 79 basis points in the third quarter of 2022 compared to the first quarter of 2021. Pricing in the primary market decreased to 4559 basis points in the first quarter of 2022 compared to 58 basis points in the firstthird quarter of 2021. Pricing in the combined secondary and assumed reinsurance markets, increasedwhich is more transaction specific than pricing in the primary market, decreased to 134229 basis points in the firstthird quarter of 2022 compared to 117309 basis points in the firstthird quarter of 2021.
5354


The following table presents the gross par value of primary and secondary market policies issued, the gross par value of assumed reinsurance, the gross written premiums and MSC collected and total pricing for the three months ended March 31,September 30, 2022 and 2021:
Three Months Ended March 31,
$ in Millions20222021
Gross par value of primary market policies issued2,755.1 $2,542.0 
Gross par value of secondary market policies issued699.1 177.1 
Gross par value of assumed reinsurance 805.5 
Total gross par value of market policies issued$3,454.2 $3,524.6 
Gross written premiums9.4 $12.5 
MSC collected12.3 13.8 
Total gross written premiums and MSC collected$21.7 $26.3 
Present value of future installment MSC collections — 
Gross written premium adjustments on existing installment policies — 
Gross written premiums and MSC from new business (1)
$21.7 $26.3 
Total pricing63 bps74 bps
(1) See “NON-GAAP FINANCIAL MEASURES” on page 72.
Three Months Ended September 30,
$ in Millions20222021
Gross par value of primary market policies issued$3,269.0 $3,813.7 
Gross par value of secondary market policies issued826.5 157.4 
Gross par value of assumed reinsurance42.5 — 
Total gross par value of market policies issued$4,138.0 $3,971.1 
Gross written premiums$19.7 $12.8 
MSC collected26.0 14.7 
Total gross written premiums and MSC collected$45.7 $27.5 
Total pricing110 bps69 bps

HG Global reported pre-tax lossincome (loss) of $15$(12) million in the firstthird quarter of 2022 compared to $2$7 million in the firstthird quarter of 2021. The change in pre-tax income (loss) was driven primarily by $20 million of net unrealized investment losses on the HG Global fixed income portfolio, as interest rates increased in the third quarter of 2022. Results in the third quarter of 2022 and 2021 both included $3 million of interest income on the BAM Surplus Notes.
BAM is a mutual insurance company that is owned by its members. BAM’s results are consolidated into White Mountains’s GAAP financial statements and attributed to non-controlling interests. White Mountains reported $32 million of GAAP pre-tax loss from BAM in the third quarter of 2022 compared to $15 million in the third quarter of 2021. The change in pre-tax loss was driven primarily by lower$19 million of net unrealized investment returnslosses on the BAM fixed income portfolio, as interest rates increased in the third quarter of 2022. Results in the third quarter of 2022 included $3 million of interest expense on the BAM Surplus Notes and $15 million of general and administrative expenses, compared to $3 million of interest expense and $12 million of general and administrative expenses in the third quarter of 2021.

HG Global/BAM Results—Nine Months Ended September 30, 2022 versus Nine Months Ended September 30, 2021
Gross written premiums and MSC collected in the HG Global/BAM segment totaled $109 million in the first nine months of 2022 compared to $84 million in the first nine months of 2021. BAM insured $13.5 billion of municipal bonds, $10.1 billion of which were in the primary market, in the first nine months of 2022 compared to $12.6 billion of municipal bonds, $11.2 billion of which were in the primary market, in the first nine months of 2021. In the first nine months of 2022 and 2021, BAM completed assumed reinsurance transactions to reinsure municipal bonds with par values of $43 million and $806 million.
Total pricing, which reflects both gross written premiums and MSC, increased to 81 basis points in the first nine months of 2022 compared to 66 basis points in the first nine months of 2021. The increase in total pricing was driven primarily by increased secondary market activity in the first nine months of 2022 compared to the first nine months of 2021. Pricing in the primary market increased to 57 basis points in the first nine months of 2022, compared to 56 basis points in the first nine months of 2021. Pricing in the secondary and assumed reinsurance markets, which is more transaction specific than pricing in the primary market, increased to 152 basis points in the first nine months of 2022, compared to 150 basis points in the first nine months of 2021.
55


The following table presents the gross par value of primary and secondary market policies issued, the gross par value of assumed reinsurance, the gross written premiums and MSC collected and total pricing for the nine months ended September 30, 2022 and 2021:

Nine Months Ended September 30,
$ in Millions20222021
Gross par value of primary market policies issued$10,147.8 $11,171.2 
Gross par value of secondary market policies issued3,269.4 646.6 
Gross par value of assumed reinsurance42.5 805.5 
Total gross par value of market policies issued$13,459.7 $12,623.3 
Gross written premiums46.2 39.0 
MSC collected62.3 44.8 
Total gross written premiums and MSC collected$108.5 $83.8 
Total pricing81 bps66 bps

HG Global reported pre-tax income (loss) of $(35) million in the first nine months of 2022 compared to $16 million in the first nine months of 2021. The change in pre-tax income (loss) was driven primarily by $58 million of net unrealized investment losses on the HG Global fixed income portfolio, as interest rates increased in the first quarternine months of 2022 resulting in net unrealized losses.2022. Results in the first quarternine months of 2022 and 2021 both included $3$9 million of interest income on the BAM Surplus Notes.
On April 29, 2022, HG Global received the proceeds of aits new $150 million, 10-year term loan credit facility. In turn, on May 2, 2022, HG Global paid a $120 million cash dividend to shareholders, of which $116 million was paid to White Mountains.
BAM is a mutual insurance company that is owned by its members. BAM’s results are consolidated into White Mountains’s GAAP financial statements and attributed to non-controlling interests. White MountainsMountains reported $36$98 million of GAAP pre-tax loss from BAM in the first quarternine months of 2022 compared to $23$47 million in the first quarternine months of 2021. The changeincrease in pre-tax loss was driven primarily by lower$56 million of net unrealized investment returnslosses on the BAM fixed income portfolio, as interest rates increased in the first quarternine months of 2022 resulting in net unrealized losses.2022. Results in the first quarternine months of 2022 and 2021 both included $3$9 million of interest expense on the BAM Surplus Notes and $16$47 million of general and administrative expenses.
54


Throughexpenses, compared to $9 million of interest expense and $41 million of general and administrative expenses in the COVID-19 pandemic, BAM’s portfolio has performed well. All BAM-insured bond payments due
through May 1, 2022 have been made by insureds, and there are no credits on BAM’s watchlist.first nine months of 2021.

Claims Paying Resources
BAM’s claims paying resources represent the capital and other financial resources BAM has available to pay claims and, as such, is a key indication of BAM’s financial strength.
BAM’s claims paying resources were $1,201$1,260 million as of March 31,September 30, 2022 compared to $1,192 million as of December 31, 2021 and $1,144$1,181 million as of March 31,September 30, 2021. The increase in claims paying resources as of March 31,September 30, 2022 compared to December 31, 2021 was driven primarily by increases in the statutory value of the collateral trusts resulting from deposits of ceded premiums. Inpremiums and an increase in BAM’s qualified statutory capital resulting from business operations for the first quarter of 2021, BAM completed a reinsurance agreement with Fidus Re that increased BAM’s claims paying resources by $150 million. The reinsurance agreement with Fidus Re is accounted for using deposit accounting and any related financing expenses are recorded in general and administrative expenses, as the agreement does not meet the risk transfer requirements necessary to be accounted for as reinsurance.nine months ended September 30, 2022.
The following table presents BAM’s total claims paying resources as of March 31,September 30, 2022, December 31, 2021 and March 31,September 30, 2021:
MillionsMarch 31, 2022December 31, 2021March 31, 2021
Policyholders’ surplus$294.7 $298.1 $321.3 
Contingency reserve105.7 101.8 92.2 
     Qualified statutory capital400.4 399.9 413.5 
Net unearned premiums49.8 49.5 46.2 
Present value of future installment premiums and MSC13.8 13.8 13.9 
HG Re Collateral trusts at statutory value486.7 478.9 420.7 
Fidus Re Collateral trust at statutory value250.0 250.0 250.0 
     Claims paying resources$1,200.7 $1,192.1 $1,144.3 




MillionsSeptember 30, 2022December 31, 2021September 30, 2021
Policyholders’ surplus$316.9 $298.1 $322.8 
Contingency reserve113.9 101.8 102.7 
     Qualified statutory capital430.8 399.9 425.5 
Net unearned premiums53.3 49.5 48.3 
Present value of future installment premiums and MSC13.3 13.8 13.9 
HG Re Collateral trusts at statutory value512.7 478.9 442.8 
Fidus Re Collateral trust at statutory value250.0 250.0 250.0 
     Claims paying resources$1,260.1 $1,192.1 $1,180.5 

5556


HG Global/BAM Balance Sheets
The following tables present amounts from HG Global, which includes HG Re and its other wholly-owned subsidiaries, and BAM that are contained within White Mountains’s consolidated balance sheet as of March 31,September 30, 2022 and December 31, 2021:
March 31, 2022September 30, 2022
MillionsMillionsHG GlobalBAMEliminations and Segment AdjustmentTotalMillionsHG GlobalBAMEliminations and Segment AdjustmentTotal
AssetsAssetsAssets
Fixed maturity investments, at fair valueFixed maturity investments, at fair value$430.6 $443.2 $ $873.8 Fixed maturity investments, at fair value$443.6 $430.8 $ $874.4 
Short-term investments, at fair valueShort-term investments, at fair value33.1 3.4  36.5 Short-term investments, at fair value38.0 24.3  62.3 
Total investmentsTotal investments463.7 446.6  910.3 Total investments481.6 455.1  936.7 
CashCash12.2 10.1  22.3 Cash5.2 12.1  17.3 
BAM Surplus NotesBAM Surplus Notes364.6  (364.6) BAM Surplus Notes364.6  (364.6) 
Accrued interest receivable on BAM Surplus NotesAccrued interest receivable on BAM Surplus Notes160.6  (160.6) Accrued interest receivable on BAM Surplus Notes166.4  (166.4) 
Insurance premiums receivableInsurance premiums receivable4.4 6.9 (4.4)6.9 Insurance premiums receivable4.7 6.6 (4.7)6.6 
Deferred acquisition costsDeferred acquisition costs62.6 33.1 (62.6)33.1 Deferred acquisition costs68.0 34.9 (68.0)34.9 
Other assetsOther assets2.3 16.4 (.3)18.4 Other assets6.5 16.1 (.3)22.3 
Total assetsTotal assets$1,070.4 $513.1 $(592.5)$991.0 Total assets$1,097.0 $524.8 $(604.0)$1,017.8 
LiabilitiesLiabilitiesLiabilities
BAM Surplus Notes(1)
BAM Surplus Notes(1)
$ $364.6 $(364.6)$ 
BAM Surplus Notes(1)
$ $364.6 $(364.6)$ 
Accrued interest payable on BAM Surplus Notes(2)
Accrued interest payable on BAM Surplus Notes(2)
 160.6 (160.6) 
Accrued interest payable on BAM Surplus Notes(2)
 166.4 (166.4) 
Preferred dividends payable to White Mountains’s subsidiaries(3)
415.5   415.5 
Preferred dividends payable to White Mountains(3)
Preferred dividends payable to White Mountains(3)
327.2   327.2 
Preferred dividends payable to non-controlling interestsPreferred dividends payable to non-controlling interests14.7   14.7 Preferred dividends payable to non-controlling interests12.1   12.1 
Unearned insurance premiumsUnearned insurance premiums222.6 44.7  267.3 Unearned insurance premiums239.7 47.0  286.7 
Debt - HG Global Senior NotesDebt - HG Global Senior Notes146.4  — 146.4 
Accrued incentive compensationAccrued incentive compensation.5 10.7 — 11.2 Accrued incentive compensation1.0 20.6 — 21.6 
Other liabilitiesOther liabilities.9 80.0 (67.3)13.6 Other liabilities4.1 86.3 (73.0)17.4 
Total liabilitiesTotal liabilities654.2 660.6 (592.5)722.3 Total liabilities730.5 684.9 (604.0)811.4 
EquityEquityEquity
White Mountains’s common shareholders’ equityWhite Mountains’s common shareholders’ equity410.8   410.8 White Mountains’s common shareholders’ equity366.8   366.8 
Non-controlling interestsNon-controlling interests5.4 (147.5) (142.1)Non-controlling interests(0.3)(160.1) (160.4)
Total equityTotal equity416.2 (147.5) 268.7 Total equity366.5 (160.1) 206.4 
Total liabilities and equityTotal liabilities and equity$1,070.4 $513.1 $(592.5)$991.0 Total liabilities and equity$1,097.0 $524.8 $(604.0)$1,017.8 
(1)    Under GAAP, the BAM Surplus Notes are classified as debt by the issuer. Under U.S. Statutory accounting, they are classified as policyholders’ surplus.
(2)    Under GAAP, interest accrues daily on the BAM Surplus Notes. Under U.S. Statutory accounting, interest is not accrued on the BAM Surplus Notes until it has been approved for payment by insurance regulators.
(3)    HG Global preferred dividends payable to White Mountains’s subsidiaries isMountains are eliminated in White Mountains’s consolidated financial statements. For segment reporting, the HG Global preferred dividends payable to White Mountains’s subsidiariesMountains included within the HG Global/BAM segment are eliminated against the offsetting receivable included within the Other Operations, segment, and therefore are added back to White Mountains’s common shareholders’ equity within the HG Global/BAM segment.
5657


December 31, 2021December 31, 2021
MillionsMillionsHG GlobalBAMEliminations and Segment AdjustmentTotal SegmentMillionsHG GlobalBAMEliminations and Segment AdjustmentTotal Segment
AssetsAssetsAssets
Fixed maturity investments, at fair valueFixed maturity investments, at fair value$461.7 $472.4 $— $934.1 Fixed maturity investments, at fair value$461.7 $472.4 $— $934.1 
Short-term investments, at fair valueShort-term investments, at fair value17.8 14.6 — 32.4 Short-term investments, at fair value17.8 14.6 — 32.4 
Total investmentsTotal investments479.5 487.0 — 966.5 Total investments479.5 487.0 — 966.5 
CashCash13.4 6.4 — 19.8 Cash13.4 6.4 — 19.8 
BAM Surplus NotesBAM Surplus Notes364.6 — (364.6)— BAM Surplus Notes364.6 — (364.6)— 
Accrued interest receivable on BAM Surplus NotesAccrued interest receivable on BAM Surplus Notes157.6 — (157.6)— Accrued interest receivable on BAM Surplus Notes157.6 — (157.6)— 
Insurance premiums receivableInsurance premiums receivable4.3 6.9 (4.3)6.9 Insurance premiums receivable4.3 6.9 (4.3)6.9 
Deferred acquisition costsDeferred acquisition costs62.7 33.1 (62.7)33.1 Deferred acquisition costs62.7 33.1 (62.7)33.1 
Other assetsOther assets2.1 16.6 (.2)18.5 Other assets2.1 16.6 (.2)18.5 
Total assetsTotal assets$1,084.2 $550.0 $(589.4)$1,044.8 Total assets$1,084.2 $550.0 $(589.4)$1,044.8 
LiabilitiesLiabilitiesLiabilities
BAM Surplus Notes(1)
BAM Surplus Notes(1)
$— $364.6 $(364.6)$— 
BAM Surplus Notes(1)
$— $364.6 $(364.6)$— 
Accrued interest payable on BAM Surplus Notes(2)
Accrued interest payable on BAM Surplus Notes(2)
— 157.6 (157.6)— 
Accrued interest payable on BAM Surplus Notes(2)
— 157.6 (157.6)— 
Preferred dividends payable to White Mountains’s subsidiaries(3)
400.5 — — 400.5 
Preferred dividends payable to White Mountains(3)
Preferred dividends payable to White Mountains(3)
400.5 — — 400.5 
Preferred dividends payable to non-controlling interestsPreferred dividends payable to non-controlling interests14.2 — — 14.2 Preferred dividends payable to non-controlling interests14.2 — — 14.2 
Unearned insurance premiumsUnearned insurance premiums221.5 44.8 — 266.3 Unearned insurance premiums221.5 44.8 — 266.3 
Accrued incentive compensationAccrued incentive compensation1.1 23.6 — 24.7 Accrued incentive compensation1.1 23.6 — 24.7 
Other liabilitiesOther liabilities.5 83.4 (67.2)16.7 Other liabilities.5 83.4 (67.2)16.7 
Total liabilitiesTotal liabilities637.8 674.0 (589.4)722.4 Total liabilities637.8 674.0 (589.4)722.4 
EquityEquityEquity
White Mountains’s common shareholders’ equityWhite Mountains’s common shareholders’ equity437.5 — — 437.5 White Mountains’s common shareholders’ equity437.5 — — 437.5 
Non-controlling interestsNon-controlling interests8.9 (124.0)— (115.1)Non-controlling interests8.9 (124.0)— (115.1)
Total equityTotal equity446.4 (124.0)— 322.4 Total equity446.4 (124.0)— 322.4 
Total liabilities and equityTotal liabilities and equity$1,084.2 $550.0 $(589.4)$1,044.8 Total liabilities and equity$1,084.2 $550.0 $(589.4)$1,044.8 
(1)    Under GAAP, the BAM Surplus Notes are classified as debt by the issuer. Under U.S. Statutory accounting, they are classified as policyholders’ surplus.
(2)    Under GAAP, interest accrues daily on the BAM Surplus Notes. Under U.S. Statutory accounting, interest is not accrued on the BAM Surplus Notes until it has been approved for payment by insurance regulators.
(3)    HG Global preferred dividends payable to White Mountains’s subsidiaries isMountains are eliminated in White Mountains’s consolidated financial statements. For segment reporting, the HG Global preferred dividends payable to White Mountains’s subsidiariesMountains included within the HG Global/BAM segment are eliminated against the offsetting receivable included within the Other Operations, segment, and therefore are added back to White Mountains’s common shareholders’ equity within the HG Global/BAM segment.




5758


Ark
Ark is a specialty property and casualty insurance and reinsurance company that offers a wide range of niche insurance and reinsurance products, including property, marine & energy, specialty, accident & health and casualty. Ark underwrites select coverages through its two major subsidiaries in the United Kingdom and Bermuda.
The following table presents the components of pre-tax lossincome (loss) included in White Mountains’s Ark segment for the three and nine months ended March 31,September 30, 2022 and 2021:
Three Months Ended March 31,Three Months Ended September 30,Nine Months Ended September 30,
MillionsMillions20222021Millions2022202120222021
Earned insurance and reinsurance premiums$194.4 $104.6 
Earned insurance premiumsEarned insurance premiums$346.1 $213.4 $757.8 $435.8 
Net investment incomeNet investment income1.6 .8 Net investment income4.9 .6 9.7 1.8 
Net realized and unrealized investment gains (losses)Net realized and unrealized investment gains (losses)(17.5)1.1 Net realized and unrealized investment gains (losses)(14.4).3 (76.5)10.3 
Other revenuesOther revenues(2.8)2.6 Other revenues6.6 3.4 10.1 9.4 
Total revenuesTotal revenues175.7 109.1 Total revenues343.2 217.7 701.1 457.3 
Losses and LAELosses and LAE122.0 66.0 Losses and LAE213.7 129.2 456.2 247.8 
Insurance and reinsurance acquisition expensesInsurance and reinsurance acquisition expenses49.9 36.7 Insurance and reinsurance acquisition expenses74.8 53.7 174.9 124.4 
General and administrative expenses - other underwritingGeneral and administrative expenses - other underwriting22.1 11.2 General and administrative expenses - other underwriting13.2 13.3 53.9 43.6 
General and administrative expenses - all otherGeneral and administrative expenses - all other1.0 26.6 General and administrative expenses - all other13.7 8.5 25.9 40.8 
Interest expenseInterest expense3.8 1.1 Interest expense3.7 2.1 10.6 4.5 
Total expensesTotal expenses198.8141.6Total expenses319.1 206.8721.5461.1
Pre-tax income (loss)Pre-tax income (loss)$(23.1)$(32.5)Pre-tax income (loss)$24.1 $10.9 $(20.4)$(3.8)

For the years of account prior to the Ark Transaction, a significant proportion of the Syndicates’ underwriting capital was provided by TPC Providers using whole account reinsurance contracts with Ark’s corporate member. The TPC Providers’ participation in the Syndicates for the 2020 open year of account is 43% of the total net result of the Syndicates. For the years of account subsequent to the Ark Transaction, Ark is no longer using TPC Providers to provide underwriting capital for the Syndicates. Captions within Ark’s results of operations are shown net of amounts relating to the TPC ProvidersProviders’ share of the Syndicates’ results, including investment results.

Ark Results—Three Months Ended March 31,September 30, 2022 versus Three Months Ended March 31,September 30, 2021
Ark reported gross written premiums of $633$216 million, net written premiums of $544$193 million and net earned premiums of $194$346 million in the firstthird quarter of 2022 compared to gross written premiums of $405$162 million, net written premiums of $342$121 million and net earned premiums of $105$213 million in the firstthird quarter of 2021. Premium growth at Ark has been supported by favorable market conditions across most classes with general inflationary concerns, capacity withdrawal in catastrophe lines, and the ongoing conflict in Ukraine driving positive rate momentum.
Ark reported pre-tax lossincome of $23$24 million in the firstthird quarter of 2022 compared to $33$11 million in firstthe third quarter of 2021. Ark’s pre-tax lossincome for the firstthird quarter of 2022 included $18$14 million of net realized and unrealized investment losses, driven primarily by unrealized losses on fixed income securities inand the impact of foreign currency on its investment portfolio. Ark’s pre-tax loss forportfolio, compared to $0.3 million of net realized and unrealized investment gains in the firstthird quarter of 2021 reflected $25 million of transaction expenses related to the Ark Transaction.2021.
Ark’s GAAP combined ratio was 100%87% in the firstthird quarter of 2022 compared to 109%92% in the firstthird quarter of 2021. The GAAP combined ratio for the third quarter of 2022 included 21 points of natural catastrophe losses, driven primarily by Hurricane Ian, compared to 23 points of natural catastrophe losses in the third quarter of 2021, driven primarily by Hurricane Ida and European floods. Catastrophe losses for the third quarter of 2022 included $51 million related to Hurricane Ian on a net basis after reinstatement premiums. The GAAP combined ratio for the third quarter of 2022 included three points of favorable prior year development, driven primarily by the property and accident & health and specialty reserving lines of business, predominantly from business underwritten in London. This compared to six points of favorable prior year development in the third quarter of 2021, driven primarily by the property and accident & health reserving line of business.
Ark’s adjusted combined ratio, which adds back amounts attributable to TPC Providers, was 101%86% in the firstthird quarter of 2022 compared to 108%89% in the firstthird quarter of 2021. The GAAP combined ratio for the first quarter of 2022 included 17 points of catastrophe losses, of which 11 points related to an estimate for incurred losses emanating from the conflict in Ukraine, compared to 16 points in the first quarter of 2021, of which 12 points related to Winter Storm Uri. The adjusted combined ratio for the firstthird quarter of 2022 and 2021 both included 21 points of natural catastrophe losses. The adjusted combined ratio for the third quarter of 2022 included 16four points of catastrophe losses, of which 11 points related to an estimate for incurred losses emanating from the conflict in Ukraine,favorable prior year development compared to 17six points of favorable prior year development in the firstthird quarter of 2021,2021. The underlying drivers of which 14 points related to Winter Storm Uri. Incurred losses related to Ukraine could increaseyear-over-year changes were the same as those impacting the conflict continues.

GAAP combined ratio.
5859


The following table presents Ark’s loss and LAE, insurance acquisition expense, other underwriting expense and combined ratios on both a GAAP-basis and an adjusted basis, which adds back amounts attributable to TPC Providers, for the three and nine months ended March 31,September 30, 2022 and 2021:

Three Months Ended March 31, 2022Three Months Ended September 30, 2022
$ in Millions$ in MillionsGAAPTPC Providers’ Share
Adjusted (1)
$ in MillionsGAAPTPC Providers’ Share
Adjusted (1)
Insurance premiums:Insurance premiums:Insurance premiums:
Gross written premiumsGross written premiums$633.1 $ $633.1 Gross written premiums$215.5 $ $215.5 
Net written premiumsNet written premiums$543.8 $1.8 $545.6 Net written premiums$192.6 $2.1 $194.7 
Net earned premiumsNet earned premiums$194.4 $4.8 $199.2 Net earned premiums$346.1 $3.3 $349.4 
Insurance expenses:Insurance expenses:Insurance expenses:
Loss and loss adjustment expensesLoss and loss adjustment expenses$122.0 $5.7 $127.7 Loss and loss adjustment expenses$213.7 $(1.5)$212.2 
Insurance and reinsurance acquisition expensesInsurance and reinsurance acquisition expenses49.9  49.9 Insurance and reinsurance acquisition expenses74.8  74.8 
Other underwriting expensesOther underwriting expenses22.1 1.0 23.1 Other underwriting expenses13.2 .9 14.1 
Total insurance expensesTotal insurance expenses$194.0 $6.7 $200.7 Total insurance expenses$301.7 $(.6)$301.1 
Ratios:Ratios:Ratios:
Loss and loss adjustment expenseLoss and loss adjustment expense62.7 %64.1 %Loss and loss adjustment expense61.7 %60.7 %
Insurance and reinsurance acquisition expenseInsurance and reinsurance acquisition expense25.7 %25.1 %Insurance and reinsurance acquisition expense21.6 21.4 
Other underwriting expenseOther underwriting expense11.4 %11.6 %Other underwriting expense3.8 4.0 
Combined RatioCombined Ratio99.8 %100.8 %Combined Ratio87.1 %86.1 %
(1) See “NON-GAAP FINANCIAL MEASURES” on page 72.74.

Three Months Ended March 31, 2021Three Months Ended September 30, 2021
$ in Millions$ in MillionsGAAPThird Party Capital Share
Adjusted (1)
$ in MillionsGAAPTPC Providers’ Share
Adjusted (1)
Insurance premiums:Insurance premiums:Insurance premiums:
Gross written premiumsGross written premiums$404.5 $— $404.5 Gross written premiums$162.4 $— $162.4 
Net written premiumsNet written premiums$342.4 $(5.0)$337.4 Net written premiums$120.9 $2.0 $122.9 
Net earned premiumsNet earned premiums$104.6 $31.2 $135.8 Net earned premiums$213.4 $18.2 $231.6 
Insurance expenses:Insurance expenses:Insurance expenses:
Loss and loss adjustment expensesLoss and loss adjustment expenses$66.0 $31.6 $97.6 Loss and loss adjustment expenses$129.2 $9.0 $138.2 
Insurance and reinsurance acquisition expensesInsurance and reinsurance acquisition expenses36.7 — 36.7 Insurance and reinsurance acquisition expenses53.7 — 53.7 
Other underwriting expensesOther underwriting expenses11.2 1.3 12.5 Other underwriting expenses13.3 .4 13.7 
Total insurance expensesTotal insurance expenses$113.9 $32.9 $146.8 Total insurance expenses$196.2 $9.4 $205.6 
Ratios:Ratios:Ratios:
Loss and loss adjustment expenseLoss and loss adjustment expense63.1 %71.9 %Loss and loss adjustment expense60.5 %59.7 %
Insurance and reinsurance acquisition expenseInsurance and reinsurance acquisition expense35.1 %27.0 %Insurance and reinsurance acquisition expense25.2 23.2 
Other underwriting expenseOther underwriting expense10.7 %9.2 %Other underwriting expense6.2 5.9 
Combined RatioCombined Ratio108.9 %108.1 %Combined Ratio91.9 %88.8 %
(1) See “NON-GAAP FINANCIAL MEASURES” on page 72.74.


5960


Gross Written Premiums
Gross written premiums increased 33% to $216 million in the third quarter of 2022 compared to the third quarter of 2021, with risk adjusted rate change up approximately 6% year over year. The increase in gross written premiums was driven primarily by the property line of business for both insurance and reinsurance across London and Bermuda resulting from favorable market conditions, as well as increased writings in specialty lines, predominantly in cyber. The following table presents Ark’s gross written premiums by line of business for the three months ended March 31,September 30, 2022 and 2021:

Three Months Ended September 30,
Millions20222021
Property$102.6 $74.7 
Specialty43.5 32.0 
Marine & Energy36.0 29.5 
Casualty21.4 17.3 
Accident & Health12.0 8.9 
   Total Gross Written Premium$215.5 $162.4 

Ark Results— Nine Months Ended September 30, 2022 versus Nine Months Ended September 30, 2021
Ark reported gross written premiums of $1,253 million, net written premiums of $1,007 million and net earned premiums of $758 million in the first nine months of 2022 compared to gross written premiums of $895 million, net written premiums of $726 million and net earned premiums of $436 million in the first nine months of 2021. Premium growth at Ark has been supported by favorable market conditions across most classes with inflationary concerns, capacity withdrawal in catastrophe lines, and the ongoing conflict in Ukraine driving positive rate momentum.
Ark reported pre-tax loss of $20 million in the first nine months of 2022 compared to $4 million in the first nine months of 2021. Ark’s pre-tax loss for the first nine months of 2022 included $77 million of net realized and unrealized investment losses, driven primarily by unrealized losses on fixed income securities and the impact of foreign currency on its investment portfolio, compared to $10 million of net realized and unrealized investment gains in the third quarter of 2021. Ark’s pre-tax loss for the first nine months of 2021 also reflected $25 million of transaction expenses related to the Ark Transaction.
Ark’s GAAP combined ratio was 90% in the first nine months of 2022 compared to 95% in the first nine months of 2021. The GAAP combined ratio for the first nine months of 2022 included 13 points of natural catastrophe losses, driven primarily by Hurricane Ian. This compared to 16 points of natural catastrophe losses in the first nine months of 2021, driven primarily by Hurricane Ida, Winter Storm Uri and European floods. Catastrophe losses for the first nine months of 2022 included $51 million related to Hurricane Ian on a net basis after reinstatement premiums. The GAAP combined ratio for the first nine months of 2022 also included four points related to the ongoing conflict in Ukraine within the specialty and marine & energy lines of business. The GAAP combined ratio for the first nine months of 2022 included five points of favorable prior year development, driven primarily by the property and accident & health and specialty reserving lines of business, predominantly from business underwritten in London. This compared to five points of prior year favorable development in the first nine months to 2021, driven primarily by the property and accident & health reserving line of business.
Ark’s adjusted combined ratio, which adds back amounts attributable to TPC Providers, was 90% in the first nine months of 2022 compared to 93% in the first nine months of 2021. The adjusted combined ratio for the first nine months of 2022 included 13 points of natural catastrophe losses compared to 16 points of natural catastrophe losses in the first nine months of 2021. The adjusted combined ratio for the first nine months of 2022 also included four points related to the ongoing conflict in Ukraine. The adjusted combined ratio for the first nine months of 2022 and 2021 both included five points of favorable prior year development. The underlying drivers of year-over-year changes were the same as those impacting the GAAP combined ratio.


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The following table presents Ark’s loss and loss adjustment expense, insurance acquisition expense, other underwriting expense and combined ratios on both a GAAP-basis and an adjusted basis, which adds back amounts ceded to TPC Providers, for the nine months ended September 30, 2022 and 2021:

Nine Months Ended September 30, 2022
$ in MillionsGAAPTPC Providers’ Share
Adjusted (1)
Insurance premiums:
Gross written premiums$1,252.5 $ $1,252.5 
Net written premiums$1,006.5 $3.4 $1,009.9 
Net earned premiums$757.8 $9.2 $767.0 
Insurance expenses:
Loss and loss adjustment expenses$456.2 $1.9 $458.1 
Insurance and reinsurance acquisition expenses174.9  174.9 
Other underwriting expenses53.9 2.7 56.6 
Total insurance expenses$685.0 $4.6 $689.6 
Ratios:
Loss and loss adjustment expense60.2 %59.7 %
Insurance and reinsurance acquisition expense23.1 22.8 
Other underwriting expense7.1 7.4 
Combined Ratio90.4 %89.9 %
(1) See “NON-GAAP FINANCIAL MEASURES” on page 74.

Nine Months Ended September 30, 2021
$ in MillionsGAAPTPC Providers’ Share
Adjusted (1)
Insurance premiums:
Gross written premiums$895.0 $— $895.0 
Net written premiums$725.5 $(5.9)$719.6 
Net earned premiums$435.8 $65.0 $500.8 
Insurance expenses:
Loss and loss adjustment expenses$247.8 $47.2 $295.0 
Insurance and reinsurance acquisition expenses124.4 — 124.4 
Other underwriting expenses43.6 1.6 45.2 
Total insurance expenses$415.8 $48.8 $464.6 
Ratios:
Loss and loss adjustment expense56.9 %58.9 %
Insurance and reinsurance acquisition expense28.5 24.8 
Other underwriting expense10.0 9.0 
Combined Ratio95.4 %92.7 %
(1) See “NON-GAAP FINANCIAL MEASURES” on page 74.


62


Gross Written Premiums
Gross written premiums increased 57%40% to $633$1,253 million in the first quarternine months of 2022, compared to the first quarternine months of 2021, with risk adjusted rate change up approximately 9% year over year. During. Ark’s premium growth has impacted almost all lines of business supported by the first quarterbuild out of 2022,the Bermuda platform launched in response to the continuing firm2021 and favorable market conditions, notably within the property and a full complementspecialty lines of underwriters at GAIL, Ark substantially increased itsbusiness. The following table presents Ark’s gross written premiums principally inby line of business for the specialty, property,first nine months ended September 30, 2022 and marine & energy lines of business.2021:

Three Months Ended March 31,For the Nine Months Ended
MillionsMillions20222021MillionsSeptember 30, 2022September 30, 2021
PropertyProperty$521.7 $355.0 
SpecialtySpecialty$217.3 $120.1 Specialty327.2 210.5 
Marine & EnergyMarine & Energy178.0 131.1 Marine & Energy271.2 219.7 
Property173.4 103.6 
CasualtyCasualty72.2 48.1 
Accident & HealthAccident & Health39.5 36.4 Accident & Health60.2 61.7 
Casualty24.9 13.3 
Total Gross Written Premium Total Gross Written Premium$633.1 $404.5  Total Gross Written Premium$1,252.5 $895.0 

Catastrophe Risk Management
Ark has exposure to losses caused by unpredictable catastrophic events including natural and other disasters such as hurricanes, windstorms, earthquakes, floods, wildfires, tornadoes, tsunamis, and severe winter weather all over the world. Catastrophes can also include large losses driven by public health crises, terrorist attacks, explosions, infrastructure failures, cyber-attacks and armed conflicts. The extent of a catastrophe loss is a function of both the severity of the event and total amount of insured exposure to the event, as well as the coverage provided to customers.
Ark seeks to manage its exposure to catastrophic losses by limiting and monitoring the aggregate insured value of policies in geographic areas with exposure to catastrophic events and by buying reinsurance. To manage, monitor and analyze insured values and potential losses, Ark utilizes proprietary and third-party catastrophe management software to estimate potential losses for many different catastrophe scenarios.
Ark estimates that its twoWith peak U.S. windstorm season substantially over, Ark’s near-term largest modeled probable maximum loss natural catastrophe scenariosscenario on a per occurrence basis at a 1-in-250-year return period areis U.S. windstorms and U.S. earthquakes.earthquake. The AprilOctober 2022 net after-tax estimated impact of a 1-in-250-year return period U.S. earthquake loss is 32% and 16%represents roughly 25% of Ark’s total tangible capital (shareholders equity and subordinated debt) for U.S. windstorms and U.S. earthquakes, respectively. In each case, the. This net impact is after income taxes, reinstatement premiums, amounts ceded to third-party reinsurers and amounts attributable to TPC Providers. The April 2022 net after-tax exposure to U.S. windstorms does not reflect the full placement of Ark’s outwards reinsurance program planned for 2022. Once the placement of the outwards reinsurance program is completed in advance of the peak U.S. windstorm season, and as underlying tangible capital grows with expected earnings during the course of the year, Ark expects the net after-tax exposure to this zone to be roughly 25-30% of total tangible capital, generally in line with its business plan for 2022.
In addition, Ark also has loss exposures to other global events including, but not limited to, Japanese earthquakes, Japanese windstorms, European windstorms, Southeast U.S. windstorms and U.S. wildfires. Outside of natural catastrophe losses, Ark has exposure to non-natural or man-made large losses. The current largest exposures are cyber, offshore energy production platforms, terrorism events and political risk.

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NSM
NSM is a full-service MGA and program administrator with delegated binding authorities for specialty property and casualty insurance. The company places insurance in niche sectors such as specialty transportation, pet, real estate, and social services. On behalf of its insurance carrier partners, NSM typically manages all aspects of the placement process, including product development, marketing, underwriting, policy issuance and claims. NSM earns commissions based on the volume and profitability of the insurance that it places. NSM does not take insurance risk.
The following table presents the components of GAAP net income (loss), EBITDA and adjusted EBITDA included in White Mountains’s NSM segment for the three months ended March 31, 2022 and 2021.
Three Months Ended March 31,
Millions20222021
Commission revenues$70.1 $59.6 
Broker commission expenses20.6 18.9 
Gross profit49.5 40.7 
Other revenues18.4 15.2 
General and administrative expenses54.0 46.0 
Change in fair value of contingent consideration.1 — 
Amortization of other intangible assets9.1 8.6 
Loss on assets held for sale 28.7 
Interest expense2.1 5.9 
GAAP pre-tax income (loss)2.6 (33.3)
Income tax (expense) benefit.4 8.0 
GAAP net income (loss)3.0 (25.3)
Add back:
Interest expense2.1 5.9 
Income tax expense (benefit)(.4)(8.0)
General and administrative expenses — depreciation1.2 1.1 
Amortization of other intangible assets9.1 8.6 
EBITDA (1)
15.0 (17.7)
Exclude:
Change in fair value of contingent consideration.1 — 
Non-cash equity-based compensation expense.8 .6 
Impairments of intangible assets — 
Loss on assets held for sale 28.7 
Transaction expenses1.3 — 
Investments made in the development of new business lines.3 — 
Restructuring expenses.6 2.8 
Legal settlements — 
Adjusted EBITDA (1)
$18.1 $14.4 
(1) See “NON-GAAP FINANCIAL MEASURES” on page 72.


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NSM Results—Three Months Ended March 31, 2022 versus Three Months Ended March 31, 2021
NSM reported commission and other revenues of $89 million, pre-tax income of $3 million and adjusted EBITDA of $18 million in the first quarter of 2022. NSM reported commission and other revenues of $75 million, pre-tax loss of $33 million and adjusted EBITDA of $14 million in the first quarter of 2021. Results for the first quarter of 2022 include the results of J.C. Taylor, an MGA offering classic and antique collector car insurance, which was acquired on August 6, 2021. See Note2 — “Significant Transactions”. In addition to the acquisition of J.C. Taylor, commission and other revenues, pre-tax income and adjusted EBITDA benefited from growth in the pet and diversified B2B verticals. Beginning in the first quarter of 2022, NSM changed the name of the “other” vertical to “diversified B2B”. NSM’s general and administrative expenses were $54 million in the first quarter of 2022 compared to $46 million in the first quarter of 2021, driven primarily by the acquisition of J.C. Taylor and increases in personnel costs. NSM’s pre-tax loss in the first quarter of 2021 included a loss of $29 million related to the sale of its Fresh Insurance motor business, which was sold on April 12, 2021.

NSM Business Trends
NSM’s business consists of approximately 25 active programs that are broadly categorized into six market verticals. J.C. Taylor was added to the Specialty Transportation vertical in the third quarter of 2021. The following table presents the controlled premium and commission and other revenues by vertical for the three months ended March 31, 2022 and 2021:
Three Months Ended March 31,
20222021
$ in Millions
Controlled Premium (1)
Commission and Other Revenues
Controlled Premium (1)
Commission and Other Revenues
Specialty Transportation$91.5 $26.5 $74.8 $20.7 
Pet59.6 23.4 43.7 17.1 
United Kingdom55.4 12.6 52.3 13.1 
Real Estate44.8 10.5 42.8 9.8 
Social Services27.4 7.0 27.0 6.7 
Diversified B2B46.4 8.5 39.4 7.4 
Total$325.1 $88.5 $280.0 $74.8 
(1) Controlled Premium are total premiums placed by NSM during the period.

Specialty Transportation: NSM’s specialty transportation controlled premium and commission and other revenues increased 22% and 28% in the first quarter of 2022 compared to the first quarter of 2021, driven primarily by the acquisition of J.C. Taylor, unit growth and the impact of higher profit commissions in collector car, and unit growth in the trucking business.
Pet: NSM’s pet controlled premium and commission and other revenues increased by 36% and 37% in the first quarter of 2022 compared to the first quarter of 2021, driven primarily by substantial increases in both rates and units.
United Kingdom: NSM’s U.K. controlled premium increased 6% in the first quarter of 2022 compared to the first quarter of 2021, driven primarily by growth in the MGA business, partially offset by a decline in Kingsbridge.U.K. commission and other revenues declined 4% in the first quarter of 2022 compared to the first quarter of 2021, driven primarily by a shift to lower rate products.
Real Estate: NSM’s real estate controlled premium and commission and other revenues increased 5% and 7% in the first quarter of 2022 compared to the first quarter of 2021, driven primarily by increases in both rates and units in the excess and surplus habitational program, partially offset by unit declines in the coastal condominium program due to lower insurance carrier capacity.
Social Services:NSM’s social services controlled premium and commission and other revenues increased 1% and 4% in the first quarter of 2022 compared to the first quarter of 2021, driven primarily by increases in rates.
Diversified B2B:NSM’s diversified B2B controlled premium and commission and other revenues increased 18% and 15% in the first quarter of 2022 compared to the first quarter of 2021. The increase in controlled premium was driven primarily by unit growth in the workers compensation and architects and engineers businesses. The increase in commission and other revenues was driven primarily by the increase in controlled premium, slightly offset by a shift in mix to lower rate products.

62


Kudu

Kudu provides capital solutions for boutique asset and wealth managers for a variety of purposes including generational ownership transfers, management buyouts, acquisition and growth finance, and legacy partner liquidity. Kudu also provides strategic assistance to investees from time to time.
As of March 31,September 30, 2022, Kudu hashad deployed a total of $612$711 million in 1720 asset and wealth management firms globally, including one that was exited. As of March 31,September 30, 2022, the asset and wealth management firms havehad combined assets under management of approximately $65$67 billion, spanning a range of asset classes, including real estate, real assets, wealth management, hedge funds, private equity and alternative credit strategies.
On March 23, 2021, Kudu replaced the Kudu Bank Facility with the Kudu Credit Facility. Subject to maximum loan to value (“LTV”) levels, the total borrowing capacityAs a result of the Kudu Credit Facility is $300 million (which includes the current advanced amountTransaction, White Mountains’s basic ownership of $225 million)Kudu decreased from 99.1% to 89.3%. See Note 72“Debt”“Significant Transactions.”
63

.
The following table presents the components of GAAP net income, EBITDA and adjusted EBITDA included in White Mountains’s Kudu segment for the three and nine months ended March 31,September 30, 2022 and 2021:
Three Months Ended March 31,Three Months Ended September 30,Nine Months Ended September 30,
MillionsMillions20222021Millions2022202120222021
Net investment incomeNet investment income$12.6 $8.2 Net investment income$14.8 $9.5 $41.2 $26.1 
Net realized and unrealized investment gains (losses)Net realized and unrealized investment gains (losses)22.3 15.8 Net realized and unrealized investment gains (losses)41.1 18.9 45.8 62.5 
Other revenuesOther revenues .1 Other revenues .1  .2 
Total revenuesTotal revenues34.9 24.1 Total revenues55.9 28.5 87.0 88.8 
General and administrative expensesGeneral and administrative expenses2.7 2.5 General and administrative expenses4.5 3.3 10.2 9.0 
Amortization of other intangible assetsAmortization of other intangible assets.1 .1 Amortization of other intangible assets — .2 .2 
Interest expenseInterest expense2.8 5.8 Interest expense4.2 1.9 10.3 9.2 
Total expensesTotal expenses5.6 8.4 Total expenses8.7 5.2 20.7 18.4 
GAAP pre-tax income (loss)GAAP pre-tax income (loss)29.3 15.7 GAAP pre-tax income (loss)47.2 23.3 66.3 70.4 
Income tax (expense) benefitIncome tax (expense) benefit(6.1)(7.8)Income tax (expense) benefit(16.6)(7.9)(21.1)(25.4)
GAAP net income (loss)GAAP net income (loss)23.2 7.9 GAAP net income (loss)30.6 15.4 45.2 45.0 
Add back:Add back:Add back:
Interest expenseInterest expense2.8 5.8 Interest expense4.2 1.9 10.3 9.2 
Income tax expense (benefit)Income tax expense (benefit)6.1 7.8 Income tax expense (benefit)16.6 7.9 21.1 25.4 
General and administrative expenses - depreciationGeneral and administrative expenses - depreciation — General and administrative expenses - depreciation —  — 
Amortization of other intangible assetsAmortization of other intangible assets.1 .1 Amortization of other intangible assets — .2 .2 
EBITDA (1)
EBITDA (1)
32.2 21.6 
EBITDA (1)
51.4 25.2 76.8 79.8 
Exclude:Exclude:Exclude:
Net realized and unrealized investment (gains) lossesNet realized and unrealized investment (gains) losses(22.3)(15.8)Net realized and unrealized investment (gains) losses(41.1)(18.9)(45.8)(62.5)
Non-cash equity-based compensation expenseNon-cash equity-based compensation expense.1 .1 Non-cash equity-based compensation expense .2 .1 .4 
Transaction expensesTransaction expenses — Transaction expenses1.2 .9 1.4 .9 
Adjusted EBITDA (1)
Adjusted EBITDA (1)
$10.0 $5.9 
Adjusted EBITDA (1)
$11.5 $7.4 $32.5 $18.6 
(1) See “NON-GAAP FINANCIAL MEASURES” on page 72.74.

Kudu Results—Three Months Ended March 31,September 30, 2022 versus Three Months Ended March 31,September 30, 2021
Kudu reported total revenues of $35$56 million, pre-tax income of $29$47 million and adjusted EBITDA of $10$12 million in the firstthird quarter of 2022 compared to total revenues of $24$29 million, pre-tax income of $16$23 million and adjusted EBITDA of $6$7 million in the firstthird quarter of 2021. TheTotal revenues and pre-tax income in the third quarter of 2022 included $41 million of net realized and unrealized gains on Kudu’s Participation Contracts compared to $19 million in the third quarter of 2021. Net realized and unrealized gains on Kudu’s Participation Contracts in the third quarter of 2022 were driven primarily by $59 million of increases in the fair value of two Participation Contracts resulting from pending sale transactions, partially offset by declines in assets under management at several managers with public equity exposure and unrealized foreign currency losses. However, Kudu’s totalParticipation Contracts performed well relative to market benchmarks in a volatile quarter. Total revenues, pre-tax income and adjusted EBITDA werein the third quarter of 2022 also included $15 million of net investment income compared to $10 million in the third quarter of 2021. The increase in net investment income was driven primarily by amounts earned from $225the $182 million in new deployments, including $2 million of transaction costs, that Kudu made duringsubsequent to September 30, 2021.

Kudu Results—Nine Months Ended September 30, 2022 versus Nine Months Ended September 30, 2021
Kudu reported total revenues of $87 million, pre-tax income of $66 million and adjusted EBITDA of $33 million in the first nine months of 2022 compared to total revenues of $89 million, pre-tax income of $70 million and adjusted EBITDA of $19 million in the first nine months of 2021. Total revenues and pre-tax income in the first quarternine months of 2022 included $22$46 million of net realized and unrealized gains on Kudu’s Participation Contracts compared to $16$63 million in the first quarternine months of 2021. Net realized and unrealized gains on Kudu’s Participation Contracts in the first nine months of 2022 were driven primarily by $92 million of increases in the fair value of two Participation Contracts resulting from pending sale transactions, partially offset by declines in assets under management at several managers with public equity exposure and unrealized foreign currency losses. Total revenues, pre-tax income and adjusted EBITDA in the first quarternine months of 2022 also included $13$41 million of net investment income compared to $8$26 million in the first quarternine months of 2021. The increase in net investment income was driven primarily by amounts earned from $324 million in new deployments, including $3 million of transaction costs, that Kudu made in 2022 and 2021.

6364


Other Operations

The following table presents the components of pre-tax income (loss) included in White Mountains’s Other Operations segment for the three and nine months ended March 31,September 30, 2022 and 2021:
Three Months Ended March 31,Three Months Ended September 30,Nine Months Ended September 30,
MillionsMillions20222021Millions2022202120222021
Net investment incomeNet investment income$1.8 $7.1 Net investment income$8.5 $5.0 $13.6 $16.1 
Net realized and unrealized investment gains (losses)Net realized and unrealized investment gains (losses)31.9 2.1 Net realized and unrealized investment gains (losses)(17.3)15.3 2.8 34.0 
Net realized and unrealized investment gains (losses) from
investment in MediaAlpha
Net realized and unrealized investment gains (losses) from
investment in MediaAlpha
18.8 (41.7)Net realized and unrealized investment gains (losses) from
investment in MediaAlpha
(18.6)(396.8)(113.3)(325.5)
Commission revenuesCommission revenues2.9 2.3 Commission revenues3.2 2.4 8.7 7.0 
Other revenuesOther revenues25.7 7.1 Other revenues33.0 28.1 89.6 57.6 
Total revenuesTotal revenues81.1 (23.1)Total revenues8.8 (346.0)1.4 (210.8)
Cost of salesCost of sales21.4 4.0 Cost of sales25.0 24.0 68.8 45.9 
General and administrative expensesGeneral and administrative expenses28.9 35.7 General and administrative expenses39.9 14.4 118.9 79.4 
Amortization of other intangible assetsAmortization of other intangible assets.9 .5 Amortization of other intangible assets1.4 2.0 3.2 2.9 
Interest expenseInterest expense.3 .3 Interest expense.6 .4 1.2 1.1 
Total expensesTotal expenses51.5 40.5 Total expenses66.9 40.8 192.1 129.3 
Pre-tax income (loss)Pre-tax income (loss)$29.6 $(63.6)Pre-tax income (loss)$(58.1)$(386.8)$(190.7)$(340.1)

Other Operations Results—Three Months Ended March 31,September 30, 2022 versus Three Months Ended March 31,September 30, 2021
White Mountains’s Other Operations segment reported pre-tax income (loss)loss of $30$58 million in the firstthird quarter of 2022 compared to $(64)$387 million in the firstthird quarter of 2021. White Mountains’s Other Operations segment reported net realized and unrealized investment gains (losses)losses from its investment in MediaAlpha of $19 million in the firstthird quarter of 2022 compared to $(42)$397 million in the firstthird quarter of 2021. Excluding MediaAlpha, White Mountains’s Other Operations segmentreported net realized and unrealized investment gains (losses) of $(17) million in the third quarter of 2022 compared to $15 million in the third quarter of 2021, driven primarily by losses in the fixed income portfolio due to rising interest rates in the third quarter of 2022 and gains on other long-term investments in the third quarter of 2021. White Mountains’s Other Operations reported net investment income of $9 million in the third quarter of 2022 compared to $5 million in the third quarter of 2021, driven primarily by higher yields and an increase in the asset base of short-term investments and fixed maturity investments within Other Operations in the third quarter of 2022 compared to the third quarter of 2021. See Summary of Investment Results on page 66.
White Mountains’s Other Operations reported $33 million of other revenues in the third quarter of 2022 compared to $28 million in the third quarter of 2021. White Mountains’s Other Operations reported $25 million of cost of sales in the third quarter of 2022 compared to $24 million in the third quarter of 2021. The increase in other revenues was driven primarily by recent acquisitions within Other Operations.
White Mountains’s Other Operations reported general and administrative expenses of $40 million in the third quarter of 2022 compared to $14 million in the third quarter of 2021. The increase in general and administrative expenses in the third quarter of 2022 compared to the third quarter of 2021 was driven by higher incentive compensation costs, primarily in connection with the NSM Transaction and a higher share price.

Other Operations Results—Nine Months Ended September 30, 2022 versus Nine Months Ended September 30, 2021
White Mountains’s Other Operations reported pre-tax loss of $191 million in the first nine months of 2022 compared to $340 million in the first nine months of 2021. White Mountains’s Other Operations reported net realized and unrealized investment losses from its investment in MediaAlpha of $113 million in the first nine months of 2022 compared to $326 million in the first nine months of 2021. Excluding MediaAlpha, White Mountains’s Other Operations reported net realized and unrealized investment gains of $32$3 million in the first quarternine months of 2022 compared to $2$34 million in the first quarternine months of 2021, driven primarily by unrealized investment gains from private equity funds in the first quarter of 2022.2021. White Mountains’s Other Operations segment reported net investment income of $2$14 million in the first quarternine months of 2022 compared to $7$16 million in the first quarternine months of 2021, driven primarily by lower distributions from private equity funds in the first quarternine months of 2022 compared to the first quarternine months of 2021. See Summary of Investment Results on page 65.66.
The
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White Mountains’s Other Operations segment reported $26$90 million of other revenues in the first quarternine months of 2022 compared to $7$58 million in the first quarternine months of 2021. TheWhite Mountains’s Other Operations segment reported $21$69 million of cost of sales in the first quarternine months of 2022 compared to $4$46 million in the first quarternine months of 2021. The increases in other revenues and cost of sales were driven primarily by an acquisitionrecent acquisitions within theOther Operations.
White Mountains’s Other Operations segment in the second quarter of 2021.
The Other Operations segment reported general and administrative expenses of $29$119 million in the first quarternine months of 2022 compared to $36$79 million in the first quarternine months of 2021. The decreasesincrease in general and administrative expenses in the first quarternine months of 2022 compared to the first quarternine months of 2021 werewas driven primarily by lowerhigher incentive compensation costs.costs, primarily in connection with the NSM Transaction and a higher share price.

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II. Summary of Investment Results
 
White Mountains’s total investment results include results from all segments. For purposes of discussing rates of return, all percentages are presented gross of management fees and trading expenses and are calculated before any adjustments for TPC Providers in order to produce a better comparison to benchmark returns.

Gross Investment Returns and Benchmark Returns

Prior to the MediaAlpha IPO, White Mountains’s investment in MediaAlpha was presented within other long-term investments. Following the MediaAlpha IPO, White Mountains presents its investment in MediaAlpha in a separate line item on the balance sheet. Amounts for periods prior to the MediaAlpha IPO have been reclassified to be comparable to the current period.
The following table presents the pre-tax investment returns for White Mountains’s consolidated portfolio for the three and nine months ended March 31,September 30, 2022 and 2021:

Three Months EndedThree Months EndedNine Months Ended
March 31, September 30,September 30,
20222021 2022202120222021
Fixed income investmentsFixed income investments(3.2)%(1.0)%Fixed income investments(0.8)%— %(6.3)%(0.1)%
Bloomberg Barclays U.S. Intermediate Aggregate IndexBloomberg Barclays U.S. Intermediate Aggregate Index(4.7)%(1.6)%Bloomberg Barclays U.S. Intermediate Aggregate Index(3.8)%— %(11.0)%(0.8)%
Common equity securitiesCommon equity securities0.2 %1.8 %Common equity securities1.8 %1.2 %(2.0)%7.0 %
Investment in MediaAlphaInvestment in MediaAlpha7.2 %(8.5)%Investment in MediaAlpha(11.2)%(55.6)%(43.3)%(51.8)%
Other long-term investmentsOther long-term investments6.0 %4.1 %Other long-term investments3.0 %4.0 %7.7 %14.5 %
Total common equity securities, investment in MediaAlpha and other long-term investmentsTotal common equity securities, investment in MediaAlpha and other long-term investments5.3 %0.8 %Total common equity securities, investment in MediaAlpha and other long-term investments1.6 %(17.2)%(0.7)%(8.2)%
Total common equity securities and other long-term investmentsTotal common equity securities and other long-term investments5.0 %3.8 %Total common equity securities and other long-term investments2.8 %3.7 %6.0 %13.5 %
S&P 500 Index (total return)S&P 500 Index (total return)(4.6)%6.2 %S&P 500 Index (total return)(4.9)%0.6 %(23.9)%15.9 %
Total consolidated portfolioTotal consolidated portfolio0.8 %(0.3)%Total consolidated portfolio0.4 %(8.0)%(3.6)%(3.7)%
Total consolidated portfolio - excluding MediaAlphaTotal consolidated portfolio - excluding MediaAlpha0.3 %0.7 %Total consolidated portfolio - excluding MediaAlpha0.5 %1.4 %(1.4)%4.6 %

Investment Returns—Three and Nine Months Ended March 31,September 30, 2022 versus Three and Nine Months Ended March 31,September 30, 2021

White Mountains’s pre-tax total consolidated portfolio return on invested assets was 0.8%0.4% in the firstthird quarter of 2022. This return included $19 million of unrealized investment gainslosses from White Mountains’s investment in MediaAlpha. Excluding MediaAlpha, the total consolidated portfolio return on invested assets was 0.3%0.5% in the firstthird quarter of 2022. Excluding MediaAlpha, investment returns in the firstthird quarter of 2022 were driven primarily by net unrealized investments gains in thefavorable other long-term investments portfolio,investment results, which more than offset net unrealized investment losses in the fixed income portfolio due to rising interest rates. White Mountains’s pre-tax total consolidated portfolio return on invested assets was -0.3%-8.0% in the firstthird quarter of 2021. This return included $42$397 million of unrealized investment losses from White Mountains’s investment in MediaAlpha. Excluding MediaAlpha, the total consolidated portfolio return on invested assets was 1.4% in the third quarter of 2021. Excluding MediaAlpha, investment returns in the third quarter of 2021 were driven primarily by favorable other long-term investments results.

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White Mountains’s pre-tax total consolidated portfolio return on invested assets was -3.6% in the first nine months of 2022. This return included $113 million of net unrealized investment losses from White Mountains’s investment in MediaAlpha. Excluding MediaAlpha, the total consolidated portfolio return on invested assets was -1.4% in first nine months of 2022. Excluding MediaAlpha, investment returns in the first nine months of 2022 were driven primarily by net unrealized investment losses in the fixed income portfolio due to rising interest rates, partially offset by favorable other long-term investment results. White Mountains’s pre-tax total consolidated portfolio return on invested assets was -3.7% in the first nine months of 2021. This return included $326 million of net realized and unrealized investment losses from White Mountains’s investment in MediaAlpha. Excluding MediaAlpha, the total consolidated portfolio return on invested assets was 0.7%4.6% in the first quarternine months of 2021. Excluding MediaAlpha, investment returns in the first quarternine months of 2021 were driven primarily by net unrealized investments gains in thefavorable other long-term investments portfolio, which more than offset net unrealized investment losses in the fixed income portfolio due to rising interest rates.results.


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Fixed Income Results
White Mountains’s fixed income portfolio, including short-term investments, was $2.1$3.1 billion and $2.4 billion as of March 31,September 30, 2022 and December 31, 2021, which represented 52%59% and 56% of total invested assets. The increase was driven primarily by the receipt of cash proceeds from the NSM Transaction, partially offset by cash outflows relating to White Mountains’s self-tender offer in the third quarter of 2022. The duration of White Mountains’s fixed income portfolio, including short-term investments, was 2.92.2 years and 2.6 years as of March 31,September 30, 2022 and December 31, 2021. White Mountains’s fixed income portfolio includes fixed maturity investments and short-term investments in the HG Re Collateral Trusts of $464$455 million and $480 million as of March 31,September 30, 2022 and December 31, 2021.
White Mountains’s fixed income portfolio return was -3.2%-0.8% in the firstthird quarter of 2022 compared to -1.0%a flat return in the third quarter of 2021, outperforming and in line with the Bloomberg Barclays U.S. Intermediate Aggregate Index returns of -3.8% and 0.0% for the comparable periods. White Mountains’s fixed income portfolio returned -6.3% in the first quarternine months of 2022, compared to -0.1% in the first nine months of 2021, outperforming the Bloomberg Barclays U.S. Intermediate Aggregate Index returns of -4.7%-11.0% and -1.6%-0.8% for the comparable periods.
The relative results in the third quarter and first quarternine months of 2022 were driven primarily by the impact of White Mountains’s short duration positioning as interest rates increased in both periods. The results in the third quarter and first nine months of 2021 were driven primarily by the short duration positioning of White Mountains’s fixed income portfolio as interest rates increased in both periods.

Common Equity Securities, Investment in MediaAlpha and Other Long-Term Investments Results
White Mountains’s portfolio of common equity securities, its investment in MediaAlpha and other long-term investments was $2.0$2.1 billion and $1.9 billion as of March 31,September 30, 2022 and December 31, 2021, which represented 48%41% and 44% of total invested assets. See Note 3 — “Investment Securities”Securities.”.
White Mountains’s portfolio of common equity securities, its investment in MediaAlpha and other long-term investments returned 5.3%1.6% in the firstthird quarter of 2022, which included $19 million of unrealized investment gainslosses from MediaAlpha. White Mountains’s portfolio of common equity securities and other long-term investments returned 5.0%2.8% in the firstthird quarter of 2022. White Mountains’s portfolio of common equity securities, its investment in MediaAlpha and other long-term investments returned -17.2% in the third quarter of 2021, which included $397 million of unrealized investment losses from MediaAlpha. White Mountains’s portfolio of common equity securities and other long-term investments returned 3.7% in the third quarter of 2021.
White Mountains’s portfolio of common equity securities, its investment in MediaAlpha and other long-term investments returned 0.8%-0.7% in the first quarternine months of 2022, which included $113 million of net unrealized investment losses from MediaAlpha. White Mountains’s portfolio of common equity securities and other long-term investments returned 6.0% in the first nine months of 2022. White Mountains’s portfolio of common equity securities, its investment in MediaAlpha and other long-term investments returned -8.2% in the first nine months of 2021, which included $42$326 million of net realized and unrealized investment losses from MediaAlpha. White Mountains’s portfolio of common equity securities and other long-term investments returned 3.8%13.5% in the first quarternine months of 2021.
White Mountains maintains aMountains’s portfolio of common equity securities that consists of passive ETFs that seek to provide investment results that generally correspond to the performance of the S&P 500 Index and international listed funds held in the Ark portfolio.equity funds. White Mountains’s portfolio of common equity securities was $290$333 million and $251 million as of March 31,September 30, 2022 and December 31, 2021.
White Mountains’s portfolio of common equity securities returned 0.2%1.8% in the firstthird quarter of 2022 compared to 1.8%1.2% in the third quarter of 2021, outperforming the S&P 500 Index, returns of -4.9% and 0.6% for the comparable periods. White Mountains’s portfolio of common equity securities returned -2.0% in the first quarternine months of 2022 compared to 7.0% in the first nine months of 2021, outperforming and underperforming the S&P 500 Index returns of -4.6%-23.9% and 6.2%15.9% for the comparable periods. The results in the third quarter and first quarternine months of 2022 and 2021 were driven primarily by relative outperformance and underperformance in White Mountains’s international listed equity funds as compared to the S&P 500 Index.

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White Mountains maintains a portfolio of other long-term investments that consists primarily of unconsolidated entities, including Kudu’s Participation Contracts, private equity funds and hedge funds, a bank loan fund, Lloyd’s trust deposits, ILS funds and private debt investments. White Mountains’s portfolio of other long-term investments was $1.6 billion and $1.4 billion as of March 31,September 30, 2022 and December 31, 2021.
White Mountains’s other long-term investments portfolio returned 6.0%3.0% in the firstthird quarter of 2022 compared to 4.1%4.0% in the firstthird quarter of 2021.Investment returns for the firstthird quarter of 2022 were driven primarily by $45 millionnet investment income, net unrealized investment gains and unrealized foreign currency losses from Kudu’s Participation Contracts, partially offset by net unrealized and realized investment losses from private equity funds and hedge funds and unrealized losses from foreign currency on Lloyd’s trust deposits. Investment returns for the third quarter of 2021 were driven primarily by net investment income and unrealized investment gains from Kudu’s Participation Contracts, an increase in the fair value of White Mountains’s investment in PassportCard/DavidShield and net investment income and realized and unrealized investment gains from private equity funds.
White Mountains’s other long-term investments portfolio returned 7.7% in the first nine months of 2022 compared to 14.5% in the first nine months of 2021. Investment returns for the first nine months of 2022 were driven primarily by net investment income, net realized and unrealized investment gains and unrealized foreign currency losses from Kudu’s Participation Contracts, net investment income and net realized and unrealized investment gains from private equity funds and $35 millionhedge funds and unrealized losses from foreign currency on Lloyd’s trust deposits. Investment returns in the first nine months of 2021 were driven primarily by net investment income and net unrealized investment gains from Kudu’s Participation Contracts.Investment returnsContracts, an increase in the first quarterfair value of 2021 were driven primarily by $15 million of netWhite Mountain’s investment incomein PassportCard/DavidShield and net realized and unrealized investment gains from private equity funds and $24 million of net investment income and net unrealized investment gains from Kudu’s Participation Contracts.Investment results from Kudu’s Participation Contracts were driven primarily by asset growth and solid performance across Kudu’s underlying asset management businesses in both periods.funds.



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Foreign Currency Exposure

As of March 31,September 30, 2022, White Mountains had foreign currency exposure on $290$168 million of net assets from continuing operations primarily related to Ark’s non-U.S. business, NSM’s U.K.-based operations, Kudu’s non-U.S. Participation Contracts, and certain other foreign consolidated and unconsolidated entities within Other Operations.
The following table presents the fair value of White Mountains’s foreign denominated net assets (net liabilities) by segment as of March 31,September 30, 2022:
Currency
$ in Millions
Currency
$ in Millions
ArkNSMKuduOther OperationsTotal Fair Value
% of Total Shareholders Equity
Currency
$ in Millions
ArkKuduOther OperationsTotal Fair Value
% of Total Shareholders Equity
CADCAD$53.9 $— $84.8 $— $138.7 3.8 %CAD$57.4 $72.7 $— $130.1 3.4 %
AUDAUD18.1 35.7 — 53.8 1.4 
GBPGBP16.4 112.1 — — 128.5 3.5 GBP16.3 — — 16.3 .4 
AUD24.9 — 42.6 — 67.5 1.8 
EUREUR(60.1)— — 12.6 (47.5)(1.3)EUR(46.4)— 11.2 (35.2)(.9)
All otherAll other— — — 3.2 3.2 .1 All other— — 3.0 3.0 .1 
TotalTotal$35.1 $112.1 $127.4 $15.8 $290.4 7.9 %Total$45.4 $108.4 $14.2 $168.0 4.4 %

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III. Income Taxes

The Company and its Bermuda domiciled subsidiaries are not subject to Bermuda income tax under current Bermuda law. In the event there is a change in the current law such that taxes are imposed, the Bermuda Exempted Undertakings Tax Protection Act of 1966 states that the Company and its Bermuda domiciled subsidiaries would be exempt from such tax until March 31, 2035. The Company has subsidiaries and branches that operate in various other jurisdictions around the world and are subject to tax in the jurisdictions in which they operate.  As of March 31,September 30, 2022, the primary jurisdictions in which the Company’s subsidiaries and branches were subject to tax were Ireland, Israel, Luxembourg, the United Kingdom and the United States.
White Mountains’s income tax benefit related to pre-tax loss from continuing operations for the three and nine months ended March 31,September 30, 2022 represented an effective tax rate of 31%24% and 9%. The effective tax rate was different from the U.S. statutory rate of 21% due to, driven primarily by full year forecasted income in jurisdictions with lower tax rates than the United States, andpartially offset by a decline in the full valuation allowance on net deferred tax assets in certain U.S. operations, consisting of the WM Adams, Inc. consolidated tax group within the Other Operations segment, offset by an increase in the full valuation allowance atand BAM, and state income taxes.
White Mountains’s income tax benefitexpense related to pre-tax loss from continuing operations for the three and nine months ended March 31,September 30, 2021 represented an effective tax rate of 7%(8)% and (17)%. The effective tax rate was different from the U.S. statutory rate of 21%, due to income generateddriven primarily by losses in jurisdictions with lower tax rates than the United States.States, a full valuation allowance on net deferred tax assets in certain U.S. operations, consisting of the WM Adams, Inc. consolidated tax group within Other Operations and BAM, and state income taxes. For the nine months ended September 30, 2021, the effective rate was also different from the U.S. statutory rate of 21.0% due to additional tax expense related to the revaluation of U.K. deferred tax assets and liabilities. On June 10, 2021, the U.K. enacted an increase in its corporate tax rate from 19% to 25% for periods after April 1, 2023. On June 30, 2021, White Mountains increased its net U.K. deferred tax liability to reflect the higher tax rate on temporary differences projected to reverse after the new rate becomes effective.

IV. Discontinued Operations

NSM

On August 1, 2022, White Mountains closed the NSM Transaction. White Mountains received $1.4 billion in net cash proceeds at closing and recognized a net gain of $876 million, which was comprised of $887 million of net gain from sale of discontinued operations and $3 million of comprehensive income related to the recognition of foreign currency translation gains (losses) from the sale, partially offset by $14 million of compensation and other costs related to the transaction recorded in Other Operations. See Note 2 — “Significant Transactions.”
White Mountains reported net income from discontinued operations, net of tax, for NSM Group of $6 million for the period from July 1, 2022 to August 1, 2022 and $16 million for the period from January 1, 2022 to August 1, 2022. White Mountains reported net income (losses) from discontinued operations, net of tax, for NSM Group of $5 million and $(24) million for the third quarter and first nine months of 2021. The net income (losses) from discontinued operations, net of tax, for NSM Group in the first nine months of 2021 included a loss of $29 million related to the sale of a subsidiary. See Note 19 — “Held for Sale and Discontinued Operations.”

Sirius Group

In the first quarter of 2021, White Mountains recorded an $18 million gain within discontinued operations as a result of reversing a liability arising from the tax indemnification provided in connection with the sale of Sirius Group in 2016 and a $1 million gain related to foreign currency translation. The liability related to certain interest deductions claimed by Sirius Group that had been disputed by the Swedish Tax Agency. In April 2021, the Swedish Tax Agency informed the Swedish Administrative Court of Appeal that Sirius Group should prevail in its appeal (and that the interest deductions should not be disallowed). In June 2021, the Swedish Administrative Court of Appeal ruled in Sirius Group’s favor. See Note 19 — “Held for Sale and Discontinued Operations” on page 46.Operations.”

6769


LIQUIDITY AND CAPITAL RESOURCES
 
Operating Cash and Short-term Investments

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

Operating Subsidiary Level 
The primary sources of cash for White Mountains’s insurance, reinsurance and other operating subsidiaries are expected to be premium andpremiums, fee collections,revenues, commissions, net investment income, proceeds from sales, repayments and maturities of investments, contributions from holding companies and capital raising activities. The primary uses of cash are expected to be claim payments, policy acquisition costs, general and administrative expenses, broker commission expenses, cost of sales, purchases of investments, payments to tax authorities, payments on and repurchases/retirements of debt obligations, distributions made to holding companies, distributions to non-controlling interest holders and, from time to time, purchases of operating subsidiaries.
Both internal and external forces influence White Mountains’s financial condition, results of operations and cash flows. Premium andPremiums, fee collections,revenues, investment returns, claims payments and cost of sales may be impacted by changing rates of inflation and other economic conditions. Some time may lapse between the occurrence of an insured loss, the reporting of the loss to White Mountains’s insurance and reinsurance operating subsidiaries and the settlement of the liability for that loss. The exact timing of the payment of losses cannot be predicted with certainty. White Mountains’s insurance and reinsurance operating subsidiaries maintain portfolios of invested assets with varying maturities and a substantial amount of cash and short-term investments to provide adequate liquidity for the payment of claims.

Management believes that White Mountains’s cash balances, cash flows from operations and routine sales and maturities of investments are adequate to meet expected cash requirements for the foreseeable future on both a holding company and insurance, reinsurance and other operating subsidiary level.

Dividend Capacity

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

HG Global/BAM
As of March 31,September 30, 2022, HG Global had $619 million face value of preferred shares outstanding, of which White Mountains owned 96.9%. Holders of the HG Global preferred shares receive cumulative dividends at a fixed annual rate of 6.0% on a quarterly basis, when and if declared by HG Global. As of March 31,September 30, 2022, HG Global has accrued $430$339 million of dividends payable to holders of its preferred shares, $416$327 million of which is payable to White Mountains and is eliminated in consolidation. As of March 31, 2022, HG Global and its subsidiaries had $9 million of cash outside of HG Re.
During the first quarter of 2022, HG Global did not declare any preferred dividends. On April 29, 2022, HG Global received the proceeds of aits new $150 million, 10-year term loan credit facility. In turn, on May 2, 2022, HG Global paid a $120 million cash dividend to shareholders, of which $116 million was paid to White Mountains.
As of September 30, 2022, HG Global and its subsidiaries had $3 million of net unrestricted cash outside of HG Re.
HG Re is a Special Purpose Insurer subject to regulation and supervision by the BMA, but it does not require regulatory approval to pay dividends. However, HG Re’s dividend capacity is limited to amounts held outside of the Collateral Trusts pursuant to the FLRT with BAM. As of March 31,September 30, 2022, HG Re had $739$1 million of net unrestricted cash and investments and $120 million of accrued interest on the BAM Surplus Notes held outside the Collateral Trusts. As of September 30, 2022, HG Re had $718 million of statutory capital and surplus and $836$834 million of assets held in the Collateral Trusts pursuant to the FLRT with BAM.
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On a monthly basis, BAM deposits cash equal to ceded premiums, net of ceding commissions, due to HG Re under the FLRT directly into the Regulation 114 Trust.  The Regulation 114 Trust target balance is equal to gross ceded unearned premiums and unpaid ceded loss and LAE expenses, if any.  If, at the end of any quarter, the Regulation 114 Trust balance is below the target balance, funds will be withdrawn from the Supplemental Trust and deposited into the Regulation 114 Trust in an amount equal to the shortfall.  If, at the end of any quarter, the Regulation 114 Trust balance is above 102% of the target balance, funds will be withdrawn from the Regulation 114 Trust and deposited into the Supplemental Trust. 
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The Supplemental Trust Target Balance is $603 million, less the amount of cash and securities in the Regulation 114 Trust in excess of its target balance.  If, at the end of any quarter, the Supplemental Trust balance exceeds the Supplemental Trust Target Balance, such excess may be distributed to HG Re.  The distribution will be made first as an assignment of accrued interest on the BAM Surplus Notes and second in cash and/or fixed income securities.  As the BAM Surplus Notes are repaid over time, the BAM Surplus Notes will be replaced in the Supplemental Trust by cash and fixed income securities.
As of March 31,September 30, 2022, the Collateral Trusts held assets of $836$834 million, which included $466$458 million of cash and investments, $365 million of BAM Surplus Notes and $5$11 million of interest receivable on the BAM Surplus Notes.
As of March 31, 2022, HG Re had $2 million of cash and investments and $120 million of accrued interest on the BAM Surplus Notes held outside the Collateral Trusts.
Through 2024, the interest rate on the BAM Surplus Notes is a variable rate equal to the one-year U.S. Treasury rate plus 300 basis points, set annually. During 2022, the interest rate on the BAM Surplus Notes is 3.2%. Beginning in 2025, the interest rate will be fixed at the higher of the then current variable rate or 8.0%. Under its agreements with HG Global, BAM is required to seek regulatory approval to pay interest and principal on the BAM Surplus Notes only to the extent that its remaining qualified statutory capital and other capital resources continue to support its outstanding obligations, its business plan and its “AA/stable” rating from Standard & Poor’s. No payment of principal or interest on the BAM Surplus Notes may be made without the approval of the NYDFS.
During the three and nine months ended March 31,September 30, 2022, BAM made no repayments of the BAM Surplus Notes or accrued interest. See Note 10 — “Municipal Bond Guarantee Insurance”.Insurance.”

Ark
During any 12-month period, GAIL, a class 4 licensed Bermuda insurer, has the ability to (i) make capital distributions based on 15% of its total statutory capital per the previous year’s statutory financial statements, or (ii) make dividend payments based on 25% of its total statutory capital and surplus per the previous year’s statutory financial statements, without prior approval of Bermuda regulatory authorities. Accordingly, White Mountains expects GAIL will have the ability to make capital distributions of $114 million during 2022, which is equal to 15% of its December 31, 2021 statutory capital of $758 million, subject to meeting all appropriate liquidity and solvency requirements. During the threenine months ended March 31,September 30, 2022, GAIL did not pay a dividend to its immediate parent.
During the nine months ended September 30, 2022, Ark paid $11 million of dividend to shareholders, $8 million of which was paid to White Mountains. As of March 31,September 30, 2022, Ark and its intermediate holding companies had $27$21 million of net unrestricted cash, short-term investments and fixed maturity investments outside of its regulated and unregulated insurance and reinsurance operating subsidiaries. During the three months ended March 31, 2021, Ark did not pay any dividends to its immediate parent.

NSMKudu
During the threenine months ended March 31,September 30, 2022, NSMKudu distributed $2$19 million to unitholders, substantially all of which was paid to White Mountains. As of March 31, 2022, NSM had $23 million of net unrestricted cash.

Kudu
During the three months ended March 31, 2022, Kudu distributed $4 million to unitholders, substantially all of which was paid to White Mountains. As of March 31,September 30, 2022, Kudu had $21$68 million of net unrestricted cash.

Other Operations
During the threenine months ended March 31,September 30, 2022, White Mountains paid a $3 million common share dividend. As of March 31,September 30, 2022, the Company and its intermediate holding companies had $352$1,076 million of net unrestricted cash, short-term investments and fixed maturity investments, $280$148 million of MediaAlpha common stock, $46 million of common equity securities and $223$292 million of private equity and hedge funds, ILS funds and ILS funds.unconsolidated entities.


6971


Financing

The following table presents White Mountains’s capital structure as of March 31,September 30, 2022 and December 31, 2021:
$ in Millions$ in MillionsMarch 31,
2022
December 31,
2021
$ in MillionsSeptember 30,
2022
December 31,
2021
HG Global Senior Notes (1)
HG Global Senior Notes (1)
$146.4 $— 
Ark 2007 Subordinated Notes (1)
Ark 2007 Subordinated Notes (1)
$30.0 $30.0 
Ark 2007 Subordinated Notes (1)
30.0 30.0 
Ark 2021 Subordinated Notes (1)(2)
Ark 2021 Subordinated Notes (1)(2)
154.8 155.9 
Ark 2021 Subordinated Notes (1)(2)
150.0 155.9 
NSM Bank Facility (1)(2)
270.0 271.2 
Other NSM debt (1)
0.6 0.9 
Kudu Credit Facility (1)(2)
Kudu Credit Facility (1)(2)
218.2 218.2 
Kudu Credit Facility (1)(2)
253.5 218.2 
Other Operations debt (1)(2)
Other Operations debt (1)(2)
17.3 16.8 
Other Operations debt (1)(2)
35.6 16.8 
Total debt from continuing operationsTotal debt from continuing operations615.5 420.9 
Debt from discontinued operations (2)(3)
Debt from discontinued operations (2)(3)
 272.1 
Total debtTotal debt690.9 693.0  Total debt615.5 693.0 
Non-controlling interests—excluding BAMNon-controlling interests—excluding BAM274.7 280.6 Non-controlling interests—excluding BAM318.4 280.6 
Total White Mountains’s common shareholders’ equityTotal White Mountains’s common shareholders’ equity3,542.1 3,548.1 Total White Mountains’s common shareholders’ equity3,708.0 3,548.1 
Total capitalTotal capital4,507.7 4,521.7 Total capital4,641.9 4,521.7 
Time-value discount on expected future payments on the BAM Surplus Notes (3)
(120.9)(125.9)
HG Global’s unearned premium reserve (3)
215.8 214.6 
HG Global’s net deferred acquisition costs (3)
(60.6)(60.8)
Time-value discount on expected future payments on the BAM Surplus Notes (4)
Time-value discount on expected future payments on the BAM Surplus Notes (4)
(110.8)(125.9)
HG Global’s unearned premium reserve (4)
HG Global’s unearned premium reserve (4)
232.2 214.6 
HG Global’s net deferred acquisition costs (4)
HG Global’s net deferred acquisition costs (4)
(65.9)(60.8)
Total adjusted capitalTotal adjusted capital$4,542.0 $4,549.6 Total adjusted capital$4,697.4 $4,549.6 
Total debt to total adjusted capitalTotal debt to total adjusted capital15.2 %15.2 %Total debt to total adjusted capital13.1 %15.2 %
(1) See Note 7 — “Debt” for details of debt arrangements.arrangements from continuing operations.
(2) Net of unamortized issuance costs.
(3) The NSM bank facility with Ares Capital Corporation and the other NSM debt was settled in conjunction with the closing of the NSM Transaction and has been classified as held for sale as of December 31, 2021.
(4) Amount reflects White Mountains’s preferred share ownership in HG Global of 96.9%.

Management believes that White Mountains has the flexibility and capacity to obtain funds externally through debt or equity financing on both a short-term and long-term basis. However, White Mountains can provide no assurance that, if needed, it would be able to obtain additional debt or equity financing on satisfactory terms, if at all.
It is possible that, in the future, one or more of the rating agencies may lower White Mountains’s existing ratings. If one or more of its ratings were lowered, White Mountains could incur higher borrowing costs on future borrowings and its ability to access the capital markets could be impacted.

Covenant Compliance
As of March 31,September 30, 2022, White Mountains was in compliance in all material respects with all of the covenants under its debt instruments.


Share Repurchases

White Mountains’s board of directors has authorized the Company to repurchase its common shares from time to time, subject to market conditions. The repurchase authorizations do not have a stated expiration date. As of March 31,September 30, 2022, White Mountains may repurchase an additional 417,800324,626 shares under these board authorizations. In addition, from time to time White Mountains has also repurchased its common shares through tenderself-tender offers that were separately approved by its board of directors.
During the threenine months ended March 31,September 30, 2022, White Mountains repurchased and retired 37,435457,180 of its common shares for $39$611 million at an average share price of $1,039,$1,335, which was approximately 86%91% of White Mountains’s adjusted book value per share as of March 31,September 30, 2022. The majority of these shares were repurchased through a “modified Dutch auction” self-tender offer that White Mountains completed on September 26, 2022, through which it repurchased 327,795 of its common shares at a purchase price of $1,400 per share for a total cost of approximately $461 million, including expenses. Of the shares White Mountains repurchased in the first threenine months of 2022, 4,011 were to satisfy employee income tax withholding pursuant to employee benefit plans, which do not reduce the board authorizations.
During the threenine months ended March 31,September 30, 2021, White Mountains repurchased and retired 7,16186,512 of its common shares for $7$95 million, at an average share price of $1,039,$1,094, which was approximately 84%93% of White Mountains’s September 30, 2021 adjusted book value per share as of March 31, 2021. All ofshare. Of the shares White Mountains repurchased in the first threenine months of 2021, 7,218 were to satisfy employee income tax withholding pursuant to employee benefit plans.


plans, which do not reduce the board authorizations.
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Cash Flows

Detailed information concerning White Mountains’s cash flows during the threenine months ended March 31,September 30, 2022 and 2021 follows:
 
Cash flows from operations for the threenine months ended March 31,September 30, 2022 and March 31,September 30, 2021

Net cash used forprovided from (used for) operations was $42$118 million for the threenine months ended March 31,September 30, 2022 compared to $93$6 million for the threenine months ended March 31,September 30, 2021. The decreaseincrease in cash used forprovided from operations was driven primarily by cash provided from Ark’s operations in 2022 compared to cash used for Ark’s operations in 2021, which included expenses from the Ark Transaction. This increase in cash provided from operations was partially offset by the increase in investments in Kudu Participation Contracts in 2022. As of March 31,September 30, 2022, the Company and its intermediate holding companies had $352$1,076 million of net unrestricted cash, short-term investments and fixed maturity investments, $280$148 million of MediaAlpha common stock, $46 million of common equity securities and $223$292 million of private equity funds, hedge funds, ILS funds and ILS funds.unconsolidated entities.

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

Financing and Other Capital Activities
During the threenine months ended March 31,September 30, 2022, the Company declared and paid a $3 million cash dividend to its common shareholders.
During the threenine months ended March 31,September 30, 2022, White Mountains repurchased and retired 37,435457,180 of its common shares for $39 million, 4,011$611 million. The majority of whichthese shares were repurchased and retiredthrough a “modified Dutch auction” self-tender offer that White Mountains completed on September 26, 2022, through which it repurchased 327,795 of its common shares at a purchase price of $1,400 per share for a total cost of approximately $461 million, including expenses. Of the shares White Mountains repurchased in the first nine months of 2022, 4,011 were to satisfy employee income tax withholding pursuant to employee benefit plans.
During the threenine months ended March 31,September 30, 2022, HG Global received net proceeds of $147 million from the issuance of the HG Global Senior Notes.
During the nine months ended September 30, 2022, BAM received $12$62 million in MSC.
During the threenine months ended March 31,September 30, 2022, NSMKudu borrowed and repaid $13$35 million in revolvingterm loans under the Kudu Credit Facility.

Acquisitions and Dispositions
On May 26, 2022, Kudu raised $115 million of equity capital from the Kudu Transaction. Mass Mutual, White Mountains and Kudu management contributed $64 million, $50 million and $1 million in the Kudu Transaction, respectively.
On August 1, 2022, White Mountains closed the previously announced NSM Bank Facility.Transaction. White Mountains received $1.4 billion in net cash proceeds at closing.

Cash flows from investing and financing activities for the threenine months ended March 31,September 30, 2021

Financing and Other Capital Activities
During the threenine months ended March 31,September 30, 2021, the Company declared and paid a $3 million cash dividend to its common shareholders.
During the threenine months ended March 31,September 30, 2021, White Mountains repurchased and retired 7,16186,512 of its common shares for $7$95 million, all7,218 of which were repurchased and retired to satisfy employee income tax withholding pursuant tounder employee benefit plans.plans for statutory withholding tax payments.
During the threenine months ended March 31,September 30, 2021, BAM received $14$45 million in MSC.
During the threenine months ended March 31,September 30, 2021, HG Global declared and paid $22 million of preferred dividends, of which $21 million was paid to White Mountains.
During the third quarter of 2021, Ark issued $163 million face value floating rate unsecured subordinated notes at par in three months ended March 31, 2021, NSM repaid $1transactions for proceeds of $158 million, in term loans under the NSM Bank Facility.net of debt issuance costs.
During the threenine months ended March 31,September 30, 2021, Kudu borrowed $3 million in term loans under the Kudu Bank Facility.
On March 23, 2021, Kudu entered into the Kudu Credit Facility with an initial draw of $102 million, of which $92 million was used to repay the outstanding principal balance on its term loans under the Kudu Bank Facility.

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Acquisitions and Dispositions
On January 1, 2021 White Mountains completed the Ark Transaction, which included contributing $605 million of equity capital to Ark, at a pre-money valuation of $300 million, and purchasing $41 million of shares from certain selling shareholders. In the fourth quarter of 2020, White Mountains prefunded/placed in escrow a total of $646 million in preparation for closing the Ark Transaction.
On March 23, 2021, MediaAlpha completed a secondary offering of 8.05 million shares. In the secondary offering, White Mountains sold 3.6 million shares at $46.00 per share ($44.62 per share net of underwriting fees) for net proceeds of $160 million.
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NON-GAAP FINANCIAL MEASURES

This report includes twelvenine non-GAAP financial measures that have been reconciled from their most comparable GAAP financial measures.

Adjusted book value per share
Adjusted book value per share is a non-GAAP financial measure, which is derived by adjusting (i) the GAAP book value per share numerator and (ii) the common shares outstanding denominator, as described below.
The GAAP book value per share numerator is adjusted (i) to include a discount for the time value of money arising from the modeled timing of cash payments of principal and interest on the BAM Surplus Notes and (ii) to add back the unearned premium reserve, net of deferred acquisition costs, at HG Global.
Under GAAP, White Mountains is required to carry the BAM Surplus Notes, including accrued interest, at nominal value with no consideration for time value of money. Based on a debt service model that forecasts operating results for BAM through maturity of the BAM Surplus Notes, the present value of the BAM Surplus Notes, including accrued interest and using an 8% discount rate, was estimated to be $125$114 million, $120 million, $130 million and $142$132 million less than the nominal GAAP carrying values as of March 31,September 30, 2022, June 30, 2022, December 31, 2021 and March 31,September 30, 2021, respectively.
The value of HG Global’s unearned premium reserve, net of deferred acquisition costs, was $160$172 million, $164 million, $159 million and $146$154 million as of March 31,September 30, 2022, June 30, 2022, December 31, 2021 and March 31,September 30, 2021, respectively.
White Mountains believes these adjustments are useful to management and investors in analyzing the intrinsic value of HG Global, including the value of the BAM Surplus Notes and the value of the in-force business at HG Re, HG Global’s reinsurance subsidiary.
The denominator used in the calculation of adjusted book value per share equals the number of common shares outstanding, adjusted to exclude unearned restricted common shares, the compensation cost of which, at the date of calculation, has yet to be amortized. Restricted common shares are earned on a straight-line basis over their vesting periods. The reconciliation of GAAP book value per share to adjusted book value per share is included on page 49.

BAM’s gross written premiums and MSC from new business
BAM’s gross written premiums and MSC from new business is a non-GAAP financial measure, which is derived by adjusting gross written premiums and MSC collected (i) to include the present value of future installment MSC not yet collected and (ii) to exclude the impact of gross written premium adjustments related to policies closed in prior periods. White Mountains believes these adjustments are useful to management and investors in evaluating the volume and pricing of new business closed during the period. The reconciliation from GAAP gross written premiums to gross written premiums and MSC from new business is included on page 54.50.

Ark’s adjusted loss and LAE, adjusted insurance acquisition expense, adjusted other underwriting expense and adjusted combined ratios
Ark’s adjusted loss and LAE ratio, adjusted insurance acquisition expense ratio, adjusted other underwriting expense ratio and adjusted combined ratio are non-GAAP financial measures, which are derived by adjusting the GAAP ratios to add back the impact of whole-account quota-share reinsurance arrangements attributable to TPC Providers for the Syndicates. The impact of these reinsurance arrangements relates to years of account prior to the Ark Transaction. White Mountains believes these adjustments are useful to management and investors in evaluating Ark’s results on a fully aligned basis (i.e., 100% of the Syndicates’ results). The reconciliation from the GAAP ratios to the adjusted ratios is included on page 58.60.


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NSM’s EBITDA and NSM’s adjusted EBITDA
NSM’s EBITDA and adjusted EBITDA are non-GAAP financial measures. EBITDA is a non-GAAP financial measure that excludes interest expense on debt, income tax (expense) benefit, depreciation and amortization of other intangible assets from GAAP net income (loss). Adjusted EBITDA is a non-GAAP financial measure that excludes certain other items in GAAP net income (loss) in addition to those excluded from EBITDA. The adjustments relate to (i) change in fair value of contingent consideration, (ii) non-cash equity-based compensation expense, (iii) impairments of intangible assets, (iv) loss on assets held for sale, (v) transaction expenses, (vi) investments made in the development of new business lines, (vii) restructuring expenses and (viii) legal settlements. A description of each follows:
Change in fair value of contingent consideration - Contingent consideration consists of amounts payable to the sellers of businesses purchased by NSM that are contingent on the earnings of such businesses in periods subsequent to their acquisition. Under GAAP, contingent consideration amounts are initially recorded as liabilities at fair value as part of purchase accounting, with the periodic change in the fair value of these liabilities recorded as income or an expense.
Non-cash equity-based compensation expense - Represents non-cash expenses related to NSM’s management compensation emanating from the grants of equity units.
Impairments of intangible assets - Represents expense related to NSM’s write-off of intangible assets. For the periods presented, the impairments related primarily to NSM’s write-off of intangible assets in its U.K. vertical. The impairments related to lower premium volumes, including due to the impact of the COVID-19 pandemic, and certain reorganization initiatives in the U.K. vertical.
Loss on assets held for sale - Represents the loss on net assets held for sale related to the Fresh Insurance motor business.
Transaction expenses - Represents costs directly related to NSM’s mergers and acquisitions activity, such as transaction-related compensation, banking, accounting and external lawyer fees, which are not capitalized and are expensed under GAAP.
Investments made in the development of new business lines - Represents the net loss related to the start-up of newly established lines of business, which NSM views as investments.
Restructuring expenses - Represents expenses associated with eliminating redundant work force and facilities that often arise as a result of NSM’s post-acquisition integration strategies. For the periods presented, this adjustment relates primarily to NSM’s expenses incurred in certain reorganization initiatives in the U.K. vertical.
Legal settlements -Represents amounts recognized from legal settlements.
White Mountains believes that these non-GAAP financial measures are useful to management and investors in evaluating NSM’s performance. See page 61 for the reconciliation of NSM’s GAAP net income (loss) to EBITDA and adjusted EBITDA.

Kudu’s EBITDA and Kudu’s adjusted EBITDA
Kudu's EBITDA and adjusted EBITDA are non-GAAP financial measures. EBITDA is a non-GAAP financial measure that excludes interest expense on debt, income tax (expense) benefit, depreciation and amortization of other intangible assets from GAAP net income (loss). Adjusted EBITDA is a non-GAAP financial measure that excludes certain other items in GAAP net income (loss) in addition to those excluded from EBITDA. The adjustments relate to (i) net realized and unrealized investment gains (losses) on Kudu's Participation Contracts, (ii) non-cash equity-based compensation expense and (iii) transaction expenses. A description of each adjustment follows:
Net realized and unrealized investment gains (losses) - Represents net unrealized investment gains and losses on Kudu’s Participation Contracts, which are recorded at fair value under GAAP, and realized investment gains and losses on Kudu’s Participation Contracts sold during the period.
Non-cash equity-based compensation expense - Represents non-cash expenses related to Kudu’s management compensation that are settled with equity units in Kudu.
Transaction expenses - Represents costs directly related to Kudu’s mergers and acquisitions activity, such as external lawyer, banker, consulting and placement agent fees, which are not capitalized and are expensed under GAAP.
White Mountains believes that these non-GAAP financial measures are useful to management and investors in evaluating Kudu’s performance. The reconciliation of Kudu’s GAAP net income (loss) to EBITDA and adjusted EBITDA is included on page 63.64.

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Total consolidated portfolio return excluding MediaAlpha
Total consolidated portfolio return excluding MediaAlpha is a non-GAAP financial measure that removes the net investment income and net realized and unrealized investment gains (losses) from White Mountains’s investment in MediaAlpha. White Mountains believes this measure to be useful to management and investors by showing the underlying performance of White Mountains’s investment portfolio without regard to MediaAlpha. The following tables present reconciliations from GAAP to the reported percentages:percentages for the three and nine months ended September 30, 2022 and 2021:
Three Months Ended March 31, 2022Three Months Ended March 31, 2021
GAAP ReturnRemove MediaAlphaReturn - Excluding MediaAlphaGAAP ReturnRemove MediaAlphaReturn - Excluding MediaAlpha
Total consolidated portfolio
   return
0.8 %(0.5)%0.3 %(0.3)%1.0 %0.7 %
Three Months Ended September 30, 2022Three Months Ended September 30, 2021
GAAP ReturnRemove MediaAlphaReturn - Excluding MediaAlphaGAAP ReturnRemove MediaAlphaReturn - Excluding MediaAlpha
Total consolidated portfolio
   return
0.4 %0.1 %0.5 %(8.0)%9.4 %1.4 %
Nine Months Ended September 30, 2022Nine Months Ended September 30, 2021
GAAP ReturnRemove MediaAlphaReturn - Excluding MediaAlphaGAAP ReturnRemove MediaAlphaReturn - Excluding MediaAlpha
Total consolidated portfolio
   return
(3.6)%2.2 %(1.4)%(3.7)%8.3 %4.6 %

Adjusted capital
Total capital at White Mountains is comprised of White Mountains’s common shareholders’ equity, debt and non-controlling interests other than non-controlling interests attributable to BAM. Total adjusted capital is a non-GAAP financial measure, which is derived by adjusting total capital (i) to include a discount for the time value of money arising from the expected timing of cash payments of principal and interest on the BAM Surplus Notes and (ii) to add back the unearned premium reserve, net of deferred acquisition costs, at HG Global. The reconciliation of total capital to total adjusted capital is included on page 70.72.

CRITICAL ACCOUNTING ESTIMATES

Refer to the Company’s 2021 Annual Report on Form 10-K for a complete discussion regarding White Mountains’s critical accounting estimates.
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FORWARD-LOOKING STATEMENTS
 
This report may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included or referenced in this report which address activities, events or developments which White Mountains expects or anticipates will or may occur in the future are forward-looking statements. The words “could”, “will”, “believe”, “intend”, “expect”, “anticipate”, “project”, “estimate”, “predict” and similar expressions are also intended to identify forward-looking statements. These forward-looking statements include, among others, statements with respect to White Mountains’s:

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

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

the risks that are described from time to time in White Mountains’s filings with the Securities and Exchange Commission, including but not limited to White Mountains’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021;
claims arising from catastrophic events, such as hurricanes, earthquakes, floods, fires, severe winter weather, public health crises, terrorist attacks, explosions, infrastructure failures, cyber-attacks or armed conflicts;
recorded loss reserves subsequently proving to have been inadequate;
the market value of White Mountains’s investment in MediaAlpha;
the trends and uncertainties from the COVID-19 pandemic, including judicial interpretations on the extent of insurance coverage provided by insurers for COVID-19 pandemic related claims;
business opportunities (or lack thereof) that may be presented to it and pursued;
actions taken by rating agencies, such as financial strength or credit ratings downgrades or placing ratings on negative watch;
the continued availability of capital and financing;
deterioration of general economic, market or business conditions, including due to outbreaks of contagious disease (including the COVID-19 pandemic) and corresponding mitigation efforts;
competitive forces, including the conduct of other insurers;
changes in domestic or foreign laws or regulations, or their interpretation, applicable to White Mountains, its competitors or its customers; and
other factors, most of which are beyond White Mountains’s control.

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

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Item 3.Quantitative and Qualitative Disclosures About Market Risk.

Refer to White Mountains’s 2021 Annual Report on Form 10-K and in particular Item 7A. - “Quantitative and Qualitative Disclosures About Market Risk”Risk.”. 

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Item 4.Controls and Procedures.
 
The Principal Executive Officer (“PEO”) and the Principal Financial Officer (“PFO”) of White Mountains have evaluated the effectiveness of its disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, the PEO and PFO have concluded that White Mountains’s disclosure controls and procedures are effective.
There were no significant changes with respect to the Company’s internal control over financial reporting or in other factors that materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the quarter ended March 31,September 30, 2022.

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

Item 1A. Risk Factors.

There have been no material changes to any of the risk factors previously disclosed in the Registrant’s 2021 Annual Report
on Form 10-K.

Item 2.Issuer Purchases of Equity Securities.

MonthsTotal Number of
Shares Purchased
Average Price
Paid per Share
Total Number of Shares 
Purchased as Part of 
Publicly Announced Plans (1)
Maximum Number
of Shares that May
Yet Be Purchased
Under the Plans (1)
January 1- January 31, 20224,011 $1,013.90  451,224 
February 1 - February 28, 202218,692 $1,041.00 18,692 432,532 
March 1 - March 31, 202214,732 $1,042.84 14,732 417,800 
Total37,435 $1,038.82 33,424 417,800 
MonthsTotal Number of
Shares Purchased
Average Price
Paid per Share
Total Number of Shares 
Purchased as Part of 
Publicly Announced Plans (1)
Maximum Number
of Shares that May
Yet Be Purchased
Under the Plans (1)
July 1 - July 30, 202233,926 $1,238.15 33,926 329,550 
August 1 - August 31, 20224,924 $1,247.63 4,924 324,626 
September 1 - September 30, 2022(2)
327,795 $1,405.89  324,626 
Total366,645 $1,388.24 38,850 324,626 
(1) White Mountains’s board of directors has authorized the Company to repurchase its common shares, from time to time, subject to market conditions. The repurchase authorizations do not have a stated expiration date.
(2) On September 26, 2022, White Mountains completed a “modified Dutch auction” self-tender offer, through which it repurchased 327,795 of its common shares at a purchase price of $1,400 per share ($1,406 including expenses).

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

None.
 
Item 5.Other Information.
 
None.
 
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Item 6.Exhibits.
(a)Exhibit numberName
 22.1 — 
 3.1 — 
 3.2 — 
10.1 — 
10.2 — 
 31.1 — 
 31.2 — 
 32.1 — 
 32.2 — 
 101 — XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
(*)Included herein
(**)Portions of this exhibit are redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K.

SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 WHITE MOUNTAINS INSURANCE GROUP, LTD.
 (Registrant)
  
Date:May 6,November 7, 2022 
By: /s/ Michaela J. Hildreth
  Michaela J. Hildreth
  Managing Director and Chief Accounting Officer

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