~~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, ~~2022~~2023

☐ 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 class

Trading Symbol(s)

Name of each exchange on which registered

Common Shares, par value $1.00 per share

WTM

New York Stock Exchange

~~per share~~

WTM.BH

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 filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging 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, ~~2022, 2,981,704~~2023, 2,563,384 common shares with a par value of $1.00 per share were outstanding (which includes ~~38,200~~37,595 restricted common shares that were not vested at such date).

WHITE MOUNTAINS INSURANCE GROUP, LTD.

Table of Contents


		Page No.

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Consolidated Balance Sheets, March 31, ~~2022~~2023 and December 31, ~~202~~12022	1

	Consolidated Statements of Operations and Comprehensive Income,
	Three Months Ended March 31, ~~2022~~2023 and ~~2021~~2022	3

	Consolidated Statements of Changes in Equity,	6
	Three Months Ended March 31, ~~2022~~2023 and ~~2021~~2022

	Consolidated Statements of Cash Flows, Three Months Ended March 31,~~, 202~~2 2023 anand ~~d 202~~12022	7

	Notes to Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4843

	Results of Operations for the ThreeMonths Ended March 31,~~, 202~~2 2023 and ~~202~~12022	4843

	Liquidity and Capital Resources	6859

	Non-GAAP Financial Measures	7263

	Critical Accounting Estimates	7464

	Forward-Looking Statements	7565

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	7566

Item 4.	Controls and Procedures	7666

PART II.	OTHER INFORMATION	7666

Items 1 through 6.		7666

SIGNATURES		7767

Part I.FINANCIAL INFORMATION.

Item 1.Financial Statements

WHITE MOUNTAINS INSURANCE GROUP, LTD.

CONSOLIDATED BALANCE SHEETS

March 31, 2022 December 31, 2021
Millions, except share and per share amounts
Assets Unaudited
Financial Guarantee (HG Global/BAM)
Fixed maturity investments, at fair value $ 873.8 $ 934.1
Short-term investments, at fair value 36.5 32.4
Total investments 910.3 966.5
Cash 22.3 19.8
Insurance premiums receivable 6.9 6.9
Deferred acquisition costs 33.1 33.1
Other assets 18.4 18.5
Total Financial Guarantee assets 991.0 1,044.8
P&C Insurance and Reinsurance (Ark)
Fixed maturity investments, at fair value 692.4 688.6
Common equity securities, at fair value 290.1 251.1
Short-term investments, at fair value 198.0 296.2
Other long-term investments 334.5 326.2
Total investments 1,515.0 1,562.1
Cash 115.5 67.8
Reinsurance recoverables 412.7 448.4
Insurance premiums receivable 759.6 416.0
Ceded unearned premiums 86.8 67.1
Deferred acquisition costs and value of in-force business acquired 179.8 108.2
Goodwill and other intangible assets 292.5 292.5
Other assets 73.3 64.9
Total P&C Insurance and Reinsurance assets 3,435.2 3,027.0
Specialty Insurance Distribution (NSM)
     Cash (restricted $90.2 and $89.2) 113.5 111.5
Premiums and commissions receivable 97.6 85.0
     Goodwill and other intangible assets 712.0 725.4
     Other assets 53.0 55.4
Total Specialty Insurance Distribution assets 976.1 977.3
Asset Management (Kudu)
     Other long-term investments 691.8 669.5
     Cash (restricted $4.5 and $4.5) 25.4 21.4
     Accrued investment income 11.8 16.9
     Goodwill and other intangible assets 8.9 8.9
     Other assets 9.6 10.4
Total Asset Management assets 747.5 727.1
Other Operations
     Fixed maturity investments, at fair value 249.3 286.2
     Short-term investments, at fair value 87.0 137.3
Investment in MediaAlpha, at fair value 280.4 261.6
     Other long-term investments 402.2 382.1
     Total investments 1,018.9 1,067.2
     Cash 50.4 38.8
     Goodwill and other intangible assets 38.1 39.1
     Other assets 83.6 63.3
Assets held for sale 15.9 16.1
     Total Other Operations assets 1,206.9 1,224.5
Total assets $ 7,356.7 $ 7,000.7
(Unaudited)


	March 31, 2023		December 31, 2022
Millions, except share and per share amounts
Assets
Financial Guarantee (HG Global/BAM)
Fixed maturity investments, at fair value	$	924.8	$	909.9
Short-term investments, at fair value	65.9		65.9
Total investments	990.7		975.8
Cash	4.8		18.2
Insurance premiums receivable	6.3		6.6
Deferred acquisition costs	36.9		36.0


Other assets	21.6		21.9
Total Financial Guarantee assets	1,060.3		1,058.5
P&C Insurance and Reinsurance (Ark/WM Outrigger)
Fixed maturity investments, at fair value	765.0		772.8
Common equity securities, at fair value	340.4		334.6
Short-term investments, at fair value	553.7		484.6
Other long-term investments	393.9		373.6
Total investments	2,053.0		1,965.6
Cash	132.6		101.5
Reinsurance recoverables	570.6		595.3
Insurance premiums receivable	909.7		544.1

Deferred acquisition costs	208.5		127.2

Goodwill and other intangible assets	292.5		292.5
Other assets	71.5		65.2
Total P&C Insurance and Reinsurance assets	4,238.4		3,691.4
Asset Management (Kudu)

Other long-term investments	683.2		695.9

Cash (restricted $13.0 and $12.2)	36.6		101.4
Accrued investment income	19.1		12.4
Goodwill and other intangible assets	8.5		8.6
Other assets	20.6		7.6
Total Asset Management assets	768.0		825.9







Other Operations
Fixed maturity investments, at fair value	266.1		238.2
Short-term investments, at fair value	264.6		373.6
Common equity securities, at fair value	357.4		333.8
Investment in MediaAlpha, at fair value	253.8		168.6
Other long-term investments	565.9		418.5
Total investments	1,707.8		1,532.7
Cash	28.7		33.9



Goodwill and other intangible assets	75.2		91.3
Other assets	80.7		155.6


Total Other Operations assets	1,892.4		1,813.5
Total assets	$	7,959.1	$	7,389.3

See Notes to Consolidated Financial Statements

CONSOLIDATED BALANCE SHEETS (CONTINUED)

March 31, 2022 December 31, 2021
Millions, except share and per share amounts
Liabilities Unaudited
Financial Guarantee (HG Global/BAM)
Unearned insurance premiums $ 267.3 $ 266.3
Accrued incentive compensation 11.2 24.7
Other liabilities 28.3 30.9
Total Financial Guarantee liabilities 306.8 321.9
P&C Insurance and Reinsurance (Ark)
Loss and loss adjustment expense reserves 999.6 894.7
Unearned insurance premiums 883.1 495.9
Debt 184.8 185.9
Reinsurance payable 348.9 424.1
Contingent consideration 30.1 28.0
Other liabilities 108.4 93.8
Total P&C Insurance and Reinsurance liabilities 2,554.9 2,122.4
Specialty Insurance Distribution (NSM)
Debt 270.6 272.1
Premiums payable 146.0 135.9
Contingent consideration — 6.8
     Other liabilities 77.4 80.5
Total Specialty Insurance Distribution liabilities 494.0 495.3
Asset Management (Kudu)
Debt 218.2 218.2
     Other liabilities 42.3 42.8
     Total Asset Management liabilities 260.5 261.0
Other Operations
Debt 17.3 16.8
Accrued incentive compensation 25.3 48.5
Other liabilities 28.6 30.1
Total Other Operations liabilities 71.2 95.4
Total liabilities 3,687.4 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 surplus 583.3 585.9
Retained earnings 2,956.2 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’ equity 3,542.1 3,548.1
Non-controlling interests 127.2 156.6
Total equity 3,669.3 3,704.7
Total liabilities and equity $ 7,356.7 $ 7,000.7
(Unaudited)


	March 31, 2023		December 31, 2022
Millions, except share and per share amounts
Liabilities
Financial Guarantee (HG Global/BAM)
Unearned insurance premiums	$	299.8	$	298.3
Debt	146.6		146.5
Accrued incentive compensation	12.1		28.0

Other liabilities	30.1		29.0
Total Financial Guarantee liabilities	488.6		501.8
P&C Insurance and Reinsurance (Ark/WM Outrigger)
Loss and loss adjustment expense reserves	1,345.6		1,296.5
Unearned insurance premiums	1,123.5		623.2
Debt	184.5		183.7
Reinsurance payable	193.0		251.1
Contingent consideration	42.9		45.3

Other liabilities	143.8		122.3
Total P&C Insurance and Reinsurance liabilities	3,033.3		2,522.1









Asset Management (Kudu)

Debt	191.6		208.3

Other liabilities	54.8		65.0
Total Asset Management liabilities	246.4		273.3







Other Operations
Debt	33.6		36.7

Accrued incentive compensation	40.0		86.1

Other liabilities	24.4		34.3


Total Other Operations liabilities	98.0		157.1
Total liabilities	3,866.3		3,454.3
Equity
White Mountains’s common shareholders’ equity
White Mountains’s common shares at $1 par value per share—authorized 50,000,000 shares; issued and outstanding 2,564,484 and 2,572,156 shares	2.6		2.6
Paid-in surplus	535.2		536.0
Retained earnings	3,367.3		3,211.8
Accumulated other comprehensive income (loss), after-tax:
Net unrealized gains (losses) from foreign currency translation and interest rate swap	(2.7)		(3.5)

Total White Mountains’s common shareholders’ equity	3,902.4		3,746.9
Noncontrolling interests	190.4		188.1
Total equity	4,092.8		3,935.0
Total liabilities and equity	$	7,959.1	$	7,389.3

See Notes to Consolidated Financial Statements

WHITE MOUNTAINS INSURANCE GROUP, LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


		Three Months Ended March 31,						Three Months Ended March 31,
Millions	Millions		2022		2021		Millions		2023		2022
Revenues:	Revenues:						Revenues:
Financial Guarantee (HG Global/BAM)	Financial Guarantee (HG Global/BAM)						Financial Guarantee (HG Global/BAM)
Earned insurance premiums	Earned insurance premiums		$	8.4	$	6.4	Earned insurance premiums		$	7.7	$	8.4
Net investment income	Net investment income		4.6		4.5		Net investment income		7.2		4.6
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)		17.0		(45.1)
Other revenues	Other revenues		.8		.3		Other revenues		.8		.8
Total Financial Guarantee revenues	Total Financial Guarantee revenues		(31.3)		(6.7)		Total Financial Guarantee revenues		32.7		(31.3)

P&C Insurance and Reinsurance (Ark)
P&C Insurance and Reinsurance (Ark/WM Outrigger)							P&C Insurance and Reinsurance (Ark/WM Outrigger)
Earned insurance premiums	Earned insurance premiums		194.4		$	104.6	Earned insurance premiums		255.1		194.4
Net investment income	Net investment income		1.6		.8		Net investment income		10.6		1.6
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)		24.5		(17.5)
Other revenues	Other revenues		(2.8)		2.6		Other revenues		(2.7)		(2.8)
Total P&C Insurance and Reinsurance revenues	Total P&C Insurance and Reinsurance revenues		175.7		109.1		Total P&C Insurance and Reinsurance revenues		287.5		175.7

Specialty Insurance Distribution (NSM)
Commission revenues			70.1		59.6

Other revenues			18.4		15.2
Total Specialty Insurance Distribution revenues			88.5		74.8

Asset Management (Kudu)	Asset Management (Kudu)						Asset Management (Kudu)
Net investment income	Net investment income		12.6		8.2		Net investment income		14.2		12.6
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)		29.6		22.3
Other revenues			—		.1

Total Asset Management revenues	Total Asset Management revenues		34.9		24.1		Total Asset Management revenues		43.8		34.9

Other Operations	Other Operations						Other Operations

Net investment income	Net investment income		1.8		7.1		Net investment income		7.0		1.8
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)		41.8		31.9
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		85.2		18.8
Commission revenues	Commission revenues		2.9		2.3		Commission revenues		3.3		2.9
Other revenues	Other revenues		25.7		7.1		Other revenues		30.6		25.7
Total Other Operations revenues	Total Other Operations revenues		81.1		(23.1)		Total Other Operations revenues		167.9		81.1
Total revenues	Total revenues		$	348.9	$	178.2	Total revenues		$	531.9	$	260.4

See Notes to Consolidated Financial Statements

CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)

(Unaudited)


		Three Months Ended March 31,						Three Months Ended March 31,
Millions	Millions		2022		2021		Millions		2023		2022
Expenses:	Expenses:						Expenses:
Financial Guarantee (HG Global/BAM)	Financial Guarantee (HG Global/BAM)						Financial Guarantee (HG Global/BAM)
Insurance acquisition expenses			$	3.0	$	1.9

General and administrative expenses			16.3		16.4
Total Financial Guarantee expenses			19.3		18.3

P&C Insurance and Reinsurance (Ark)
Loss and loss adjustment expenses			122.0		66.0
Insurance and reinsurance acquisition expenses			49.9		36.7
Acquisition expenses							Acquisition expenses		$	2.7	$	3.0

General and administrative expenses	General and administrative expenses		23.1		37.8		General and administrative expenses		17.3		16.3
Interest expense	Interest expense		3.8		1.1		Interest expense		4.5		—
Total Financial Guarantee expenses							Total Financial Guarantee expenses		24.5		19.3

P&C Insurance and Reinsurance (Ark/WM Outrigger)							P&C Insurance and Reinsurance (Ark/WM Outrigger)
Loss and loss adjustment expenses							Loss and loss adjustment expenses		147.8		122.0
Acquisition expenses							Acquisition expenses		59.8		49.9

General and administrative expenses							General and administrative expenses		35.2		21.0
Change in fair value of contingent consideration							Change in fair value of contingent consideration		(2.4)		2.1
Interest expense							Interest expense		5.0		3.8
Total P&C Insurance and Reinsurance expenses	Total P&C Insurance and Reinsurance expenses		198.8		141.6		Total P&C Insurance and Reinsurance expenses		245.4		198.8

Specialty Insurance Distribution (NSM)
General and administrative expenses			54.0		46.0
Broker commission expenses			20.6		18.9
Change in fair value of contingent consideration			.1		—
Amortization of other intangible assets			9.1		8.6
Loss on assets held for sale			—		28.7
Interest expense			2.1		5.9
Total Specialty Insurance Distribution expenses			85.9		108.1

Asset Management (Kudu)	Asset Management (Kudu)						Asset Management (Kudu)
General and administrative expenses	General and administrative expenses		2.7		2.5		General and administrative expenses		3.8		2.8
Amortization of other intangible assets			.1		.1

Interest expense	Interest expense		2.8		5.8		Interest expense		4.7		2.8
Total Asset Management expenses	Total Asset Management expenses		5.6		8.4		Total Asset Management expenses		8.5		5.6

Other Operations	Other Operations						Other Operations

Cost of sales	Cost of sales		21.4		4.0		Cost of sales		13.9		21.4
General and administrative expenses	General and administrative expenses		28.9		35.7		General and administrative expenses		39.7		29.8
Amortization of other intangible assets			.9		.5

Interest expense	Interest expense		.3		.3		Interest expense		.8		.3
Total Other Operations expenses	Total Other Operations expenses		51.5		40.5		Total Other Operations expenses		54.4		51.5
Total expenses	Total expenses		361.1		316.9		Total expenses		332.8		275.2
Pre-tax income (loss) from continuing operations	Pre-tax income (loss) from continuing operations		(12.2)		(138.7)		Pre-tax income (loss) from continuing operations		199.1		(14.8)
Income tax (expense) benefit	Income tax (expense) benefit		3.8		9.5		Income tax (expense) benefit		(11.9)		2.7
Net income (loss) from continuing operations	Net income (loss) from continuing operations		(8.4)		(129.2)		Net income (loss) from continuing operations		187.2		(12.1)
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		—		3.7

Net income (loss)	Net income (loss)		(8.4)		(110.5)		Net income (loss)		187.2		(8.4)
Net (income) loss attributable to non-controlling interests			41.8		35.2
Net (income) loss attributable to noncontrolling interests							Net (income) loss attributable to noncontrolling interests		(7.7)		41.8
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		$	179.5	$	33.4

See Notes to Consolidated Financial Statements

WHITE MOUNTAINS INSURANCE GROUP, LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


		Three Months Ended March 31,						Three Months Ended March 31,
Millions	Millions		2022		2021		Millions		2023		2022
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		$	179.5	$	33.4

Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax		(2.3)		1.8		Other comprehensive income (loss), net of tax		1.2		(.4)

Other comprehensive income (loss) from discontinued operations, net of tax - NSM Group							Other comprehensive income (loss) from discontinued operations, net of tax - NSM Group		—		(1.9)
Comprehensive income (loss)	Comprehensive income (loss)		31.1		(73.5)		Comprehensive income (loss)		180.7		31.1
Other comprehensive (income) loss attributable to non-controlling interests			.2		(.1)
Other comprehensive (income) loss attributable to noncontrolling interests							Other comprehensive (income) loss attributable to noncontrolling interests		(.4)		.2
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		$	180.3	$	31.3


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 share	Basic earnings (loss) per share						Basic earnings (loss) per share
Continuing operations	Continuing operations		$	11.10	$	(30.33)	Continuing operations	$	69.83	$	9.90
Discontinued operations	Discontinued operations		—		6.03		Discontinued operations	—		1.20
Total consolidated operations	Total consolidated operations		$	11.10	$	(24.30)	Total consolidated operations	$	69.83	$	11.10
Diluted earnings (loss) per share	Diluted earnings (loss) per share						Diluted earnings (loss) per share
Continuing operations	Continuing operations		$	11.10	$	(30.33)	Continuing operations	$	69.83	$	9.90
Discontinued operations	Discontinued operations		—		6.03		Discontinued operations	—		1.20
Total consolidated operations	Total consolidated operations		$	11.10	$	(24.30)	Total consolidated operations	$	69.83	$	11.10
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.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)


		White Mountains’s Common Shareholders’ Equity													White Mountains’s Common Shareholders’ Equity
Millions	Millions	Common shares and paid-in surplus		Retained earnings		AOCI, after tax		Total		Non-controlling interest		Total Equity		Millions	Common shares and paid-in surplus		Retained earnings		AOCI, after tax		Total		Non-controlling interest		Total Equity
Balance at January 1, 2022		$	588.9	$	2,957.5	$	1.7	$	3,548.1	$	156.6	$	3,704.7
Balance at January 1, 2023														Balance at January 1, 2023	$	538.6	$	3,211.8	$	(3.5)	$	3,746.9	$	188.1	$	3,935.0
Net income (loss)	Net income (loss)	—		33.4		—		33.4		(41.8)		(8.4)		Net income (loss)	—		179.5		—		179.5		7.7		187.2
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	—		—		(2.1)		(2.1)		(.2)		(2.3)		Other comprehensive income (loss), net of tax	—		—		.8		.8		.4		1.2

Total comprehensive income (loss)	Total comprehensive income (loss)	—		33.4		(2.1)		31.3		(42.0)		(10.7)		Total comprehensive income (loss)	—		179.5		.8		180.3		8.1		188.4
Dividends declared on common shares	Dividends declared on common shares	—		(3.0)		—		(3.0)		—		(3.0)		Dividends declared on common shares	—		(2.6)		—		(2.6)		—		(2.6)
Dividends to non-controlling interests		—		—		—		—		(.6)		(.6)
Dividends to noncontrolling interests														Dividends to noncontrolling interests	—		—		—		—		(7.2)		(7.2)
Issuances of common shares	Issuances of common shares	.8		—		—		.8		—		.8		Issuances of common shares	.1		—		—		.1		—		.1

Repurchases and retirements of common shares	Repurchases and retirements of common shares	(7.3)		(31.7)		—		(39.0)		—		(39.0)		Repurchases and retirements of common shares	(3.9)		(21.4)		—		(25.3)		—		(25.3)
BAM member surplus contributions, net of tax	BAM member surplus contributions, net of tax	—		—		—		—		12.3		12.3		BAM member surplus contributions, net of tax	—		—		—		—		11.8		11.8
Amortization of restricted share awards	Amortization of restricted share awards	2.9		—		—		2.9		—		2.9		Amortization of restricted share awards	3.1		—		—		3.1		—		3.1
Recognition of equity-based compensation expense of subsidiaries	Recognition of equity-based compensation expense of subsidiaries	1.2		—		—		1.2		.2		1.4		Recognition of equity-based compensation expense of subsidiaries	.4		—		—		.4		.2		.6
Net contributions and dilution from other non-controlling interests		(.2)		—		—		(.2)		.7		.5
Net contributions (distributions) and dilution from other noncontrolling interests														Net contributions (distributions) and dilution from other noncontrolling interests	(.5)		—		—		(.5)		(1.2)		(1.7)
Disposition of noncontrolling interests														Disposition of noncontrolling interests	—		—		—		—		(9.4)		(9.4)

Balance at March 31, 2022		$	586.3	$	2,956.2	$	(.4)	$	3,542.1	$	127.2	$	3,669.3
Balance at March 31, 2023														Balance at March 31, 2023	$	537.8	$	3,367.3	$	(2.7)	$	3,902.4	$	190.4	$	4,092.8


														White Mountains’s Common Shareholders’ Equity
Millions													Millions	Common shares and paid-in surplus		Retained earnings		AOCI, after tax		Total		Non-controlling interest		Total Equity
Balance at January 1, 2022													Balance at January 1, 2022	$	588.9	$	2,957.5	$	1.7	$	3,548.1	$	156.6	$	3,704.7
Net income (loss)													Net income (loss)	—		33.4		—		33.4		(41.8)		(8.4)
Other comprehensive income (loss), net of tax													Other comprehensive income (loss), net of tax	—		—		(.2)		(.2)		(.2)		(.4)
Net gain (loss) from foreign currency translation from sale of discontinued operations, net of tax - NSM Group													Net gain (loss) from foreign currency translation from sale of discontinued operations, net of tax - NSM Group	—		—		(1.9)		(1.9)		—		(1.9)
Total comprehensive income (loss)													Total comprehensive income (loss)	—		33.4		(2.1)		31.3		(42.0)		(10.7)
Dividends declared on common shares													Dividends declared on common shares	—		(3.0)		—		(3.0)		—		(3.0)
Dividends to noncontrolling interests													Dividends to noncontrolling interests	—		—		—		—		(.6)		(.6)
Issuances of common shares													Issuances of common shares	.8		—		—		.8		—		.8

Repurchases and retirements of common shares													Repurchases and retirements of common shares	(7.3)		(31.7)		—		(39.0)		—		(39.0)
BAM member surplus contributions, net of tax													BAM member surplus contributions, net of tax	—		—		—		—		12.3		12.3
Amortization of restricted share awards													Amortization of restricted share awards	2.9		—		—		2.9		—		2.9
Recognition of equity-based compensation expense of subsidiaries													Recognition of equity-based compensation expense of subsidiaries	1.2		—		—		1.2		.2		1.4
Net contributions and dilution from other noncontrolling interests													Net contributions and dilution from other noncontrolling interests	(.2)		—		—		(.2)		.7		.5

	White Mountains’s Common Shareholders’ Equity
Millions	Common shares and paid-in surplus		Retained earnings		AOCI, after tax		Total		Non-controlling interest		Total Equity
Balance at January 1, 2021	$	595.2	$	3,311.2	$	(.4)	$	3,906.0	$	(88.1)	$	3,817.9
Net income (loss)	—		(75.3)		—		(75.3)		(35.2)		(110.5)
Other comprehensive income (loss), net of tax	—		—		1.7		1.7		.1		1.8
Total comprehensive income (loss)	—		(75.3)		1.7		(73.6)		(35.1)		(108.7)
Dividends declared on common shares	—		(3.1)		—		(3.1)		—		(3.1)
Dividends to non-controlling interests	—		—		—		—		(.6)		(.6)
Issuances of common shares	—		—		—		—		—		—
Repurchases and retirements of common shares	(1.4)		(6.1)		—		(7.5)		—		(7.5)
BAM member surplus contributions, net of tax	—		—		—		—		13.8		13.8
Amortization of restricted share awards	4.0		—		—		4.0		—		4.0
Recognition of equity-based compensation expense of subsidiary	.5		—		—		.5		—		.5
Net contributions and dilution from other non-controlling interests	(.4)		—		—		(.4)		(.2)		(.6)
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 March 31, 2022													Balance at March 31, 2022	$	586.3	$	2,956.2	$	(.4)	$	3,542.1	$	127.2	$	3,669.3

See Notes to Consolidated Financial Statements.

WHITE MOUNTAINS INSURANCE GROUP, LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)
Three Months Ended March 31,
Millions 2022 2021
Cash flows from operations:
Net income (loss) $ (8.4) $ (110.5)
Adjustments to reconcile net income to net cash provided from (used for) operations:
Net realized and unrealized investment (gains) losses 8.4 (1.1)
Net realized and unrealized investment (gains) losses from investment in MediaAlpha (18.8) 41.7
Deferred income tax expense 4.6 (1.4)
Net (gain) loss from sale of discontinued operations, net of tax — (18.7)
Amortization of restricted share awards 2.9 4.0
Amortization and depreciation 16.0 12.8
Other operating items:
Net change in reinsurance recoverables 35.7 (15.7)
Net change in insurance premiums receivable (343.6) (199.7)
Net change in premiums and commissions receivable (12.6) (.2)
Net change in ceded unearned premiums (19.7) 24.8
Net change in loss and loss adjustment expense reserves 104.9 56.0
Net change in premiums payable 10.1 2.6
Net change in unearned insurance premiums 388.2 245.5
Net change in deferred acquisition costs (71.6) (51.3)
Net change in reinsurance payable (75.2) (40.7)
Net change in restricted cash 1.0 4.8
Investments in Kudu Participation Contracts — (11.0)
Net change in other assets and liabilities, net (63.4) (34.7)
Net cash provided from (used for) operations (41.5) (92.8)
Cash flows from investing activities:
Net change in short-term investments 144.5 (103.1)
Sales of fixed maturity investments 86.5 97.8
Maturities, calls and paydowns of fixed maturity investments 39.0 31.4
Sales of common equity securities and investment in MediaAlpha — 160.3
Distributions and redemptions of other long-term investments and settlements of forward contracts 39.8 40.1
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 other long-term investments (21.4) (101.0)
Purchases of common equity securities (38.0) (68.8)
Purchases of fixed maturity investments (115.0) (411.1)
Other investing activities, net 4.4 60.9
Net cash provided from (used for) investing activities 139.8 363.9
Cash flows from financing activities:
Draw down of debt and revolving line of credit 15.0 105.3
Repayment of debt and revolving line of credit (14.8) (93.7)
Cash dividends paid to the Company’s common shareholders (3.0) (3.1)
Common shares repurchased (34.8) —
Net contributions from non-controlling interest shareholders .3 (1.3)
Contingent consideration payments related to acquisitions of subsidiaries — (6.7)
Capital contributions from BAM members 12.3 13.8
Fidus Re premium payment (1.9) (3.2)
Other financing activities, net (4.2) (4.6)
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 changes 67.8 277.3
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
Supplemental cash flows information:
Interest paid $ (8.4) $ (7.5)
Net income tax payments $ (.3) $ (1.4)


	Three Months Ended March 31,
Millions	2023		2022
Cash flows from operations:
Net income (loss)	$	187.2	$	(8.4)
Adjustments to reconcile net income to net cash provided from (used for) operations:
Net realized and unrealized investment (gains) losses	(112.9)		8.4
Net realized and unrealized investment (gains) losses from investment in MediaAlpha	(85.2)		(18.8)
Deferred income tax expense (benefit)	(3.6)		5.7
Amortization of restricted share awards	3.1		2.9
Amortization (accretion) and depreciation	(2.4)		4.3
Net (income) loss from discontinued operation, net of tax - NSM Group	—		(3.7)

Other operating items:
Net change in reinsurance recoverables	24.7		16.0
Net change in insurance premiums receivable	(365.3)		(343.6)
Net change in deferred acquisition costs	(82.2)		(71.6)
Net change in loss and loss adjustment expense reserves	49.1		104.9
Net change in unearned insurance premiums	501.8		388.2
Net change in reinsurance payable	(58.1)		(75.2)
Net change in restricted cash	.8		—
Proceeds from Kudu’s Participation Contracts sold	62.9		—
Contributions to Kudu’s Participation Contracts	(30.9)		—
Net change in other assets and liabilities	(3.4)		(55.0)
Net cash provided from (used for) operations - continuing operations	85.6		(45.9)
Net cash provided from (used for) operations - NSM Group discontinued operations (Note 19)	—		4.4
Net cash provided from (used for) operations	85.6		(41.5)
Cash flows from investing activities:
Net change in short-term investments	47.6		136.7
Sales of fixed maturity investments	54.6		86.5
Maturities, calls and paydowns of fixed maturity investments	66.8		39.0

Distributions and redemptions of other long-term investments	2.0		39.8



Proceeds from the sale of Other Businesses, net of cash sold of $0.8 and $0.0	17.3		—


Purchases of fixed maturity investments	(127.6)		(115.0)
Purchases of common equity securities	—		(38.0)
Purchases of other long-term investments	(146.1)		(21.4)
Net other investing activities	(11.2)		4.9
Net cash provided from (used for) investing activities - continuing operations	(96.6)		132.5
Net cash provided from (used for) investing activities - NSM Group discontinued operations (Note 19)	—		7.3
Net cash provided from (used for) investing activities	(96.6)		139.8
Cash flows from financing activities:
Draw down of debt and revolving line of credit	—		2.0
Repayment of debt and revolving line of credit	(20.0)		(1.3)

Cash dividends paid to common shareholders	(2.6)		(3.0)
Common shares repurchased	(25.3)		(39.0)

Net contributions from (distributions to) other noncontrolling interests	(1.7)		.4
Net (contributions to) distributions from discontinued operations	—		9.7




BAM member surplus contributions	11.8		12.3

Fidus Re premium payments	(3.5)		(1.9)

Net cash provided from (used for) financing activities - continuing operations	(41.3)		(20.8)
Net cash provided from (used for) financing activities - NSM Group discontinued operations (Note 19)	—		(10.3)
Net cash provided from (used for) financing activities	(41.3)		(31.1)

Net change in cash during the period - continuing operations	(52.3)		65.8
Cash balances at beginning of period (includes restricted cash balances of $12.2 and $4.5 and excludes discontinued operations cash balances of $0.0 and $111.6)	255.0		147.7


Cash balances at end of period (includes restricted cash balances of $13.0 and $4.5 and excludes discontinued operations cash balances of $0.0 and $113.6)	$	202.7	$	213.5
Supplemental cash flows information:
Interest paid	$	(5.8)	$	(5.5)
Net income tax payments	$	(17.8)	$	(.3)

See Notes to Consolidated Financial Statements

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~~2022 Annual Report on Form 10-K.

Reportable Segments

As of March 31, 2023, White Mountains conducted its operations through three reportable segments: (1) HG Global/BAM, (2) Ark/WM Outrigger, and (3) Kudu, with our remaining operating businesses, holding companies and other assets included in Other Operations. White Mountains has ~~determined~~made its ~~reportable segments~~segment determination based on consideration of the following criteria: (i) the nature of the ~~underlying businesses,~~business activities of each of the Company’s subsidiaries and affiliates; (ii) the manner in which the Company’s subsidiaries and affiliates are ~~organized~~organized; (iii) the existence of primary managers responsible for specific subsidiaries and ~~managed~~affiliates; and (iv) the organization of ~~the financial~~ information provided to the Company’s chief operating decision ~~maker to assess performance~~makers and ~~make decisions regarding allocation~~its Board of ~~resources. As of March 31, 2022, White Mountains’s reportable segments were HG Global/BAM, Ark, NSM, Kudu and Other Operations.~~Directors. See Note 14 — “Segment Information.”

The HG Global/BAM segment consists of HG Global Ltd. and its wholly-owned subsidiaries ~~(“HG~~(collectively, “HG Global”) and the consolidated results of Build America Mutual Assurance Company (“BAM”) (collectively with HG Global, “HG Global/BAM”). BAM is the first and only mutual municipal bond insurance company in the United States. By insuring the timely payment of principal and interest, BAM provides market access to, and lowers interest expense for, issuers of municipal bonds used to finance essential public purpose projects, such as schools, utilities and transportation facilities. BAM is owned by and operated for the benefit of its members, the municipalities that purchase BAM’s insurance for their debt issuances. HG Global was established to fund the startup of BAM and, through its reinsurance subsidiary, HG Re Ltd. (“HG Re”), to provide up to 15%-of-par, first loss reinsurance protection for policies underwritten by BAM. HG Global, together with its subsidiaries, funded the initial capitalization of BAM through the purchase of $503.0 million of surplus notes issued by BAM (the “BAM Surplus Notes”). As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, White Mountains owned 96.9% of HG Global’s preferred equity and 88.4% of its common equity. White Mountains does not have an ownership interest in BAM. However, White Mountains is required to consolidate BAM’s results in its financial statements because BAM is a variable interest entity (“VIE”) for which White Mountains is the primary beneficiary. BAM’s results are all attributed to ~~non-controlling~~noncontrolling interests.

The ~~Ark~~Ark/WM Outrigger segment consists of Ark Insurance Holdings Limited and its subsidiaries (collectively, “Ark”) and Outrigger Re Ltd. Segregated Account 2023-1 (“WM Outrigger Re”) (collectively with Ark, “Ark/WM Outrigger”). Ark is a specialty property and casualty insurance and reinsurance company that offers a wide range of niche insurance and reinsurance products, including property, specialty, marine & energy, ~~specialty,~~casualty and accident & ~~health and casualty.~~health. Ark underwrites select coverages through Lloyd’s Syndicates 4020 and 3902 (the “Syndicates”) and its wholly-owned subsidiary Group Ark Insurance Limited (“GAIL”). White Mountains acquired a controlling ownership interest in Ark on January 1, 2021 (the “Ark Transaction”). ~~See~~ ~~Note 2 — “Significant Transactions~~”. As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, White Mountains owned 72.0% of Ark on a basic shares outstanding basis (63.0% after taking account of management’s equity incentives). The remaining shares are owned by current and former employees. In the future, management rollover shareholders could earn additional shares in Ark if and to the extent that White Mountains achieves certain multiple of invested capital return thresholds. If fully earned, these additional shares would represent 12.5% of the shares outstanding at closing. For the years of account prior to the Ark Transaction, a significant proportion of the Syndicates’ underwriting capital was provided by third-party insurance and reinsurance groups (“TPC Providers”) using whole account reinsurance contracts with Ark’s corporate member. For the years of account subsequent to the Ark Transaction, Ark is no longer using TPC Providers to provide underwriting capital for the Syndicates. Captions within results of operations and other comprehensive income for the three months ended March 31, 2022 are shown net of amounts relating to the TPC ~~Providers~~Providers’ share of the Syndicates’ results, including investment results.

~~NSM is~~ During the fourth quarter of 2022, Ark sponsored the formation of Outrigger Re Ltd., a ~~full-service managing general agent (“MGA”)~~Bermuda company registered as a special purpose insurer and ~~program administrator with delegated binding authorities for specialty~~segregated accounts company, to provide collateralized reinsurance protection on Ark’s Bermuda global property ~~and casualty insurance. The company places insurance~~catastrophe excess of loss portfolio written in ~~niche sectors such as specialty transportation, real estate, social services and pet. On~~calendar year 2023. Outrigger Re Ltd. issued non-voting redeemable preference shares on behalf of four segregated accounts to White Mountains and unrelated third party investors. White Mountains consolidates the results of its 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.segregated account, WM Outrigger Re, in its financial statements. See Note 2 — “Significant Transactions.” As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, White Mountains owned ~~96.5%~~100.0% of ~~the basic units outstanding of NSM (87.3% on a fully diluted, fully converted basis).~~WM Outrigger Re’s preferred equity.

The Kudu segment consists of Kudu Investment Management, LLC and its subsidiaries (collectively “Kudu”). Kudu provides capital solutions for boutique asset and wealth managers for a variety of purposes including generational ownership transfers, management buyouts, acquisition and growth finance and legacy partner liquidity. Kudu also provides strategic assistance to investees from time to time. Kudu’s capital solutions ~~typically~~generally are structured as minority preferred equity stakes with distribution rights, ~~generally~~typically tied to gross revenues and designed to generate ~~strong, stable~~immediate cash yields. As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, White Mountains owned ~~99.1%~~89.2% and ~~99.3%~~89.3% of ~~the~~Kudu’s basic units outstanding ~~(84.5%~~(76.1% and ~~84.7%~~76.1% on a fully diluted, fully converted basis).

~~The~~White 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 sale of White Mountains Catskill Holdings, Inc. and NSM Insurance HoldCo, LLC (“NSM” and, collectively with White Mountains Catskill Holdings, Inc., the “NSM Group”) to Riser Merger Sub, Inc., an affiliate of The Carlyle Group Inc. (the “NSM Transaction”), pursuant to the terms of the securities purchase agreement dated as of May 9, 2022. See Note 2 — “Significant Transactions.” NSM is a full-service managing general agent (“MGA”) and program administrator with delegated binding authorities for specialty property and casualty insurance.

As a result of the NSM Transaction, the assets and liabilities of NSM Group have been presented in the balance sheet as held for sale for periods prior to the closing of the transaction, and the results of operations for NSM Group have been classified as discontinued operations in the statements of operations and comprehensive income through the closing of the transaction. Prior period amounts have been reclassified to conform to the current period’s presentation. See Note 19 — “Held for Sale and Discontinued Operations.”

Significant Accounting Policies

Refer to the Company’s ~~2021~~2022 Annual Report on Form 10-K for a complete discussion regarding White Mountains’s significant accounting policies.

Note 2. Significant Transactions

~~Ark~~NSM

On ~~October~~August 1, ~~2020,~~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.

WM Outrigger Re

During the fourth quarter of 2022, Ark sponsored the formation of Outrigger Re Ltd., a Bermuda company registered as a special purpose insurer and segregated accounts company, to provide reinsurance capacity to Ark. On December 20, 2022, Outrigger Re Ltd. issued $250.0 million of non-voting redeemable preference shares on behalf of four segregated accounts to White Mountains and unrelated third party investors. Upon issuance of the preference shares, Outrigger Re Ltd. entered into ~~a subscription and purchase agreement (the “Ark SPA”)~~collateralized quota share agreements with ~~Ark and certain selling shareholders (collectively~~GAIL to provide reinsurance protection on Ark’s Bermuda global property catastrophe excess of loss portfolio written in calendar year 2023. The proceeds from the issuance of the preference shares were deposited into collateral trust accounts to fund any potential obligations under the reinsurance agreements with ~~Ark,~~GAIL. Outrigger Re Ltd.’s obligations under the ~~“Ark Sellers”). Under~~reinsurance agreements with GAIL are subject to an aggregate limit equal to the assets in the collateral trusts at any point in time. The terms of the reinsurance agreements are renewable upon the mutual agreement of Ark ~~SPA,~~ and the applicable preference shareholder.

White Mountains ~~agreed to contribute $605.4~~purchased 100% of the preference shares issued by its segregated account, WM Outrigger Re, for $205.0 million. White Mountains consolidates WM Outrigger Re’s results in its financial statements. WM Outrigger Re’s quota share reinsurance agreement with GAIL eliminates in White Mountains’s consolidated financial statements.

Kudu

On May 26, 2022, Kudu raised $114.5 million of equity capital ~~to Ark,~~(the “Kudu Transaction”) from Massachusetts Mutual Life Insurance Company (“Mass Mutual”), White Mountains and Kudu management. Mass Mutual, White Mountains and Kudu management contributed $64.1 million, $50.0 million and $0.4 million at a pre-money valuation of ~~$300.0~~1.3x, or $114.0 million ~~and to purchase $40.9 million of shares from~~above 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, 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”~~. 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.

~~The following presents additional details of the assets acquired and liabilities assumed as of the January 1, 2021 acquisition date:~~

Millions As of January 1, 2021
Investments $ 594.3
Cash 52.0 (1)
Reinsurance recoverables 433.4
Insurance premiums receivable 236.7
Ceded unearned premiums 170.2
Value of in-force business acquired 71.7
Other assets 88.9
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 acquired 24.5
Goodwill 116.8
Other intangible assets - syndicate underwriting capacity 175.7
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.

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 months ended March 31, 2022 and 2021, Ark recognized $4.7 million and $28.8 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, 2022 and~~ December 31, 2021 Ark recognized total contingent consideration liabilities of $30.1 million and $28.0 million. Any future adjustments to contingent consideration liabilities will be recognized through pre-tax income (loss). For the three months ended March 31, 2022, Ark recognized pre-tax expense of $2.1 million and for the change in the fairequity value of ~~its contingent consideration liabilities. For the three months ended March~~Kudu’s go-forward portfolio of revenue and earnings participation contracts (“Participation Contracts”). The go-forward portfolio of Kudu’s Participation Contracts excluded $54.3 million of enterprise value as of December 31, 2021 ~~Ark did not recognize any pre-tax income (loss) for~~relating to two portfolio companies that had announced sale transactions prior to the ~~change in~~capital raise. As a result of the ~~fair value~~Kudu Transaction, White Mountains’s basic ownership of ~~its contingent consideration liabilities.~~Kudu decreased from 99.1% to 89.3%.

~~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.

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, 2022, White Mountains owned 16.9 million shares, representing a 27.7% 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 per share increase or decrease in White Mountains’s book value per share. At the March 31, 2022 closing price of $16.55 per share, the fair value of White Mountains’s investment in MediaAlpha was $280.4 million. See ~~Note 16 — “Equity-Method Eligible 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.

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 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 bearing loan to its partner is limited to the total carrying value of $134.5 million.

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��s~~Mountains’s fixed maturity investments are generally valued using industry standard pricing methodologies. Key inputs include benchmark yields, benchmark securities, reported trades, issuer spreads, bids, offers, credit ratings and prepayment speeds. Income on mortgage and asset-backed securities is recognized using an effective yield based on anticipated prepayments and the estimated economic life of the securities. When actual prepayments differ significantly from anticipated prepayments, the estimated economic life is recalculated and the remaining unamortized premium or discount is amortized prospectively over the remaining economic life.

Realized investment gains (losses) resulting from sales of investment securities are accounted for using the specific identification method. Premiums and discounts on all fixed maturity investments are amortized or accreted to income over the anticipated life of the investment. Short-term investments consist of interest-bearing money market funds, certificates of deposit and other securities, which at the time of purchase, mature or become available for use within one year. Short-term investments are carried at fair value, which approximated amortized cost, as of March 31, ~~2022~~2023 and December 31, ~~2021.~~2022.

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.~~instruments.

Net Investment Income

White Mountains’s net investment income is comprised primarily of interest income associated with White Mountains’s fixed maturity investments and short-term investments, 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 months ended March 31, ~~2022~~2023 and ~~2021:~~2022:


		Three Months Ended
		March 31,					Three Months Ended March 31,
Millions	Millions	2022		2021		Millions		2023		2022
Fixed maturity investments	Fixed maturity investments	$	8.2	$	6.5	Fixed maturity investments		$	14.5	$	8.2
Short-term investments	Short-term investments	.1		1.6		Short-term investments		9.7		.1

Common equity securities						Common equity securities		1.3		—

Other long-term investments	Other long-term investments	13.2		13.8		Other long-term investments		14.1		13.2
Amount attributable to TPC Providers	Amount attributable to TPC Providers	(.5)		(.9)		Amount attributable to TPC Providers		—		(.5)
Total investment income	Total investment income	21.0		21.0		Total investment income		39.6		21.0
Third-party investment expenses	Third-party investment expenses	(.4)		(.4)		Third-party investment expenses		(.6)		(.4)
Net investment income, pre-tax	Net investment income, pre-tax	$	20.6	$	20.6	Net investment income, pre-tax		$	39.0	$	20.6

1311

Net Realized and Unrealized Investment Gains (Losses)

The following table presents net realized and unrealized investment gains (losses) for the three months ended March 31, ~~2022~~2023 and ~~2021:~~2022:


		Three Months Ended March 31,					Three Months Ended March 31,
Millions	Millions	2022		2021		Millions		2023		2022
Realized investment gains (losses)	Realized investment gains (losses)					Realized investment gains (losses)
Fixed maturity investments	Fixed maturity investments	$	(1.1)	$	1.9	Fixed maturity investments		$	(.1)	$	(1.1)
Short-term investments	Short-term investments	(.2)		(.3)		Short-term investments		(.4)		(.2)

Investment in MediaAlpha		—		160.3

Other long-term investments	Other long-term investments	18.7		(18.9)		Other long-term investments		47.2		18.7
Net realized investment gains (losses)	Net realized investment gains (losses)	17.4		143.0		Net realized investment gains (losses)		46.7		17.4

Unrealized investment gains (losses)	Unrealized investment gains (losses)					Unrealized investment gains (losses)
Fixed maturity investments	Fixed maturity investments	(79.5)		(27.3)		Fixed maturity investments		29.7		(79.5)
Short-term investments	Short-term investments	.2		(1.0)		Short-term investments		1.2		.2
Common equity securities	Common equity securities	1.0		1.0		Common equity securities		29.4		1.0
Investment in MediaAlpha	Investment in MediaAlpha	18.8		(202.0)		Investment in MediaAlpha		85.2		18.8
Other long-term investments	Other long-term investments	50.4		47.0		Other long-term investments		5.9		50.4
Net unrealized investment gains (losses)	Net unrealized investment gains (losses)	(9.1)		(182.3)		Net unrealized investment gains (losses)		151.4		(9.1)
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)		198.1		8.3
Amount attributable to TPC Providers	Amount attributable to TPC Providers	2.1		(1.3)		Amount attributable to TPC Providers		—		2.1
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)		$	198.1	$	10.4

Fixed maturity and short-term investments	Fixed maturity and short-term investments					Fixed 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)		$	30.4	$	(80.6)
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		1.8		(1.0)
Net unrealized investment gains (losses) on investment securities held at the end of the period		$	(79.6)	$	(25.8)

Net unrealized investment gains (losses) recognized during the period on investment securities held at the end of the period						Net unrealized investment gains (losses) recognized during the period on investment securities held at the end of the period		$	28.6	$	(79.6)
Common equity securities and investment in MediaAlpha	Common equity securities and investment in MediaAlpha					Common 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		$	29.4	$	1.0
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		85.2		18.8
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)		114.6		19.8
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		—		—
Net unrealized investment gains (losses) on investment securities held at the end of the period		$	19.8	$	(60.6)
Net unrealized investment gains (losses) recognized during the period on investment securities held at the end of the period						Net unrealized investment gains (losses) recognized during the period on investment securities held at the end of the period		$	114.6	$	19.8

(1) For the three months ended March 31, 2023 and 2022, includes $5.4 and ~~2021, includes~~ $2.6 ~~and $(0.2)~~ of realized and unrealized investment gains ~~(losses)~~ related to foreign currency exchange.

The following table presents total net unrealized gains ~~included in earnings~~(losses) attributable to ~~net unrealized investment gains for~~ Level 3 investments for the three months ended March 31, ~~2022~~2023 and ~~2021~~2022 for investments still held at the end of the period:

Three Months Ended
March 31,
Millions 2022 2021
Other long-term investments $ 27.2 $ 16.7
Total net unrealized investment gains, pre-tax - Level 3 investments $ 27.2 $ 16.7


	Three Months Ended March 31,
Millions		2023		2022



Total net unrealized investment gains on other long-term investments held at the end of the period, pre-tax		$	37.0	$	27.2

1412

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, ~~2022~~2023 and December 31, ~~2021:~~2022:


		March 31, 2022											March 31, 2023
Millions	Millions	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Net Foreign Currency Gains (Losses)		Carrying Value		Millions	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Net Foreign Currency Gains (Losses)		Carrying Value
U.S. Government and agency obligations	U.S. Government and agency obligations	$	181.4	$	—	$	(5.3)	$	—	$	176.1	U.S. Government and agency obligations	$	245.7	$	.1	$	(8.0)	$	—	$	237.8
Debt securities issued by corporations	Debt securities issued by corporations	1,013.4		1.4		(45.4)		.2		969.6		Debt securities issued by corporations	1,073.9		1.3		(63.1)		(1.7)		1,010.4
Municipal obligations	Municipal obligations	272.2		6.0		(5.9)		—		272.3		Municipal obligations	280.0		—		(17.0)		—		263.0
Mortgage and asset-backed securities	Mortgage and asset-backed securities	278.2		.2		(14.3)		—		264.1		Mortgage and asset-backed securities	289.5		—		(30.7)		—		258.8

Collateralized loan obligations	Collateralized loan obligations	136.5		—		(1.6)		(1.5)		133.4		Collateralized loan obligations	192.1		.1		(5.2)		(1.1)		185.9
Total fixed maturity investments	Total fixed maturity investments	$	1,881.7	$	7.6	$	(72.5)	$	(1.3)	$	1,815.5	Total fixed maturity investments	$	2,081.2	$	1.5	$	(124.0)	$	(2.8)	$	1,955.9


		December 31, 2021											December 31, 2022
Millions	Millions	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Net Foreign Currency Gains (Losses)		Carrying Value		Millions	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Net Foreign Currency Gains (Losses)		Carrying Value
U.S. Government and agency obligations	U.S. Government and agency obligations	$	212.1	$	.5	$	(1.1)	$	—	$	211.5	U.S. Government and agency obligations	$	216.6	$	—	$	(10.2)	$	—	$	206.4
Debt securities issued by corporations	Debt securities issued by corporations	993.3		8.7		(8.7)		(.4)		992.9		Debt securities issued by corporations	1,098.3		.6		(78.3)		(1.8)		1,018.8
Municipal obligations	Municipal obligations	276.4		16.8		(1.3)		—		291.9		Municipal obligations	281.6		.4		(23.4)		—		258.6
Mortgage and asset-backed securities	Mortgage and asset-backed securities	277.2		2.9		(2.5)		—		277.6		Mortgage and asset-backed securities	288.7		—		(34.5)		—		254.2

Collateralized loan obligations	Collateralized loan obligations	136.5		—		(.4)		(1.1)		135.0		Collateralized loan obligations	190.8		.1		(6.0)		(2.0)		182.9
Total fixed maturity investments	Total fixed maturity investments	$	1,895.5	$	28.9	$	(14.0)	$	(1.5)	$	1,908.9	Total fixed maturity investments	$	2,076.0	$	1.1	$	(152.4)	$	(3.8)	$	1,920.9

The following table presents the cost or amortized cost and carrying values of White Mountains’s fixed maturity investments by contractual maturity as of March 31, ~~2022.~~2023. Actual maturities could differ from contractual maturities because borrowers may have the right to call or prepay certain obligations with or without call or prepayment penalties.


		March 31, 2022					March 31, 2023
Millions	Millions	Cost or Amortized Cost		Carrying Value		Millions	Cost or Amortized Cost		Carrying Value
Due in one year or less	Due in one year or less	$	157.7	$	157.1	Due in one year or less	$	223.8	$	219.2
Due after one year through five years	Due after one year through five years	858.2		825.6		Due after one year through five years	943.6		891.9
Due after five years through ten years	Due after five years through ten years	338.4		321.2		Due after five years through ten years	338.8		314.2
Due after ten years	Due after ten years	112.7		114.1		Due after ten years	93.4		85.9
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 obligations	481.6		444.7

Total fixed maturity investments	Total fixed maturity investments	$	1,881.7	$	1,815.5	Total fixed maturity investments	$	2,081.2	$	1,955.9

1513

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, ~~2022~~2023 and December 31, ~~2021:~~2022:


		March 31, 2022											March 31, 2023
Millions	Millions	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Net Foreign Currency Gains (Losses)		Carrying Value		Millions	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Net Foreign Currency Gains (Losses)		Carrying Value
Common equity securities	Common equity securities	$	274.3	$	20.8	$	(1.9)	$	(3.1)	$	290.1	Common equity securities	$	660.6	$	48.0	$	(2.8)	$	(8.0)	$	697.8
Investment in MediaAlpha	Investment in MediaAlpha	$	—	$	280.4	$	—	$	—	$	280.4	Investment in MediaAlpha	$	—	$	253.8	$	—	$	—	$	253.8

Other long-term investments	Other long-term investments	$	1,187.0	$	291.6	$	(52.8)	$	2.7	$	1,428.5	Other long-term investments	$	1,489.7	$	264.3	$	(96.2)	$	(14.8)	$	1,643.0


		December 31, 2021											December 31, 2022
Millions	Millions	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Net Foreign Currency Gains (Losses)		Carrying Value		Millions	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Net Foreign Currency Gains (Losses)		Carrying Value
Common equity securities	Common equity securities	$	236.3	$	16.1	$	—	$	(1.3)	$	251.1	Common equity securities	$	660.6	$	26.7	$	(8.4)	$	(10.5)	$	668.4
Investment in MediaAlpha	Investment in MediaAlpha	$	—	$	261.6	$	—	$	—	$	261.6	Investment in MediaAlpha	$	—	$	168.6	$	—	$	—	$	168.6

Other long-term investments	Other long-term investments	$	1,186.7	$	239.0	$	(44.1)	$	(3.8)	$	1,377.8	Other long-term investments	$	1,340.8	$	271.1	$	(107.1)	$	(16.8)	$	1,488.0

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, ~~2022~~2023 and December 31, ~~2021,~~2022, White Mountains used quoted market prices or other observable inputs to determine fair value for approximately ~~66%~~70% and ~~68%~~72% 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, ~~2022~~2023 and December 31, ~~2021~~2022 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.

1614


		March 31, 2022									March 31, 2023
Millions	Millions	Fair Value		Level 1		Level 2		Level 3		Millions	Fair Value		Level 1		Level 2		Level 3
Fixed maturity investments:	Fixed maturity investments:									Fixed maturity investments:
U.S. Government and agency obligations	U.S. Government and agency obligations	$	176.1	$	176.1	$	—	$	—	U.S. Government and agency obligations	$	237.8	$	237.8	$	—	$	—

Debt securities issued by corporations:	Debt securities issued by corporations:									Debt securities issued by corporations:
Financials	Financials	266.7		—		266.7		—		Financials	281.9		—		281.9		—
Consumer	Consumer	180.6		—		180.6		—		Consumer	194.9		—		194.9		—
Healthcare										Healthcare	124.8		—		124.8		—
Technology	Technology	109.5		—		109.5		—		Technology	123.3		—		123.3		—
Industrial	Industrial	105.4		—		105.4		—		Industrial	119.8		—		119.8		—
Healthcare		100.6		—		100.6		—
Utilities	Utilities	72.5		—		72.5		—		Utilities	64.0		—		64.0		—
Communications	Communications	63.5		—		63.5		—		Communications	45.2		—		45.2		—
Energy	Energy	41.7		—		41.7		—		Energy	36.4		—		36.4		—
Materials	Materials	29.1		—		29.1		—		Materials	20.1		—		20.1		—

Total debt securities issued by corporations	Total debt securities issued by corporations	969.6		—		969.6		—		Total debt securities issued by corporations	1,010.4		—		1,010.4		—

Municipal obligations	Municipal obligations	272.3		—		272.3		—		Municipal obligations	263.0		—		263.0		—
Mortgage and asset-backed securities	Mortgage and asset-backed securities	264.1		—		264.1		—		Mortgage and asset-backed securities	258.8		—		258.8		—

Collateralized loan obligations	Collateralized loan obligations	133.4		—		133.4		—		Collateralized loan obligations	185.9		—		185.9		—
Total fixed maturity investments	Total fixed maturity investments	1,815.5		176.1		1,639.4		—		Total fixed maturity investments	1,955.9		237.8		1,718.1		—

Short-term investments	Short-term investments	321.5		321.5		—		—		Short-term investments	884.2		878.4		5.8		—

Common equity securities (1)		290.1		—		290.1		—
Common equity securities:										Common equity securities:
Exchange-traded funds										Exchange-traded funds	357.4		357.4		—		—
Other (1)										Other (1)	340.4		—		340.4		—
Total common equity securities										Total common equity securities	697.8		357.4		340.4		—
Investment in MediaAlpha	Investment in MediaAlpha	280.4		280.4		—		—		Investment in MediaAlpha	253.8		253.8		—		—

Other long-term investments	Other long-term investments	894.9		—		9.2		885.7		Other long-term investments	970.2		—		15.5		954.7
Other long-term investments — NAV (2)	Other long-term investments — NAV (2)	533.6		—		—		—		Other long-term investments — NAV (2)	672.8		—		—		—
Total other long-term investments	Total other long-term investments	1,428.5		—		9.2		885.7		Total other long-term investments	1,643.0		—		15.5		954.7
Total investments	Total investments	$	4,136.0	$	778.0	$	1,938.7	$	885.7	Total investments	$	5,434.7	$	1,727.4	$	2,079.8	$	954.7

(1) ~~Consist~~Consists 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 net asset value (“NAV”)~~ using ~~the~~NAV as a practical expedient. Investments for which fair value is measured at NAV are not classified within the fair value hierarchy.

1715


		December 31, 2021									December 31, 2022
Millions	Millions	Fair Value		Level 1		Level 2		Level 3		Millions	Fair Value		Level 1		Level 2		Level 3
Fixed maturity investments:	Fixed maturity investments:									Fixed maturity investments:
U.S. Government and agency obligations	U.S. Government and agency obligations	$	211.5	$	211.5	$	—	$	—	U.S. Government and agency obligations	$	206.4	$	206.4	$	—	$	—

Debt securities issued by corporations:	Debt securities issued by corporations:									Debt securities issued by corporations:
Financials	Financials	264.2		—		264.2		—		Financials	291.2		—		291.2		—
Consumer	Consumer	178.1		—		178.1		—		Consumer	191.9		—		191.9		—
Healthcare										Healthcare	121.3		—		121.3		—
Technology	Technology	117.9		—		117.9		—		Technology	123.7		—		123.7		—
Industrial	Industrial	112.9		—		112.9		—		Industrial	115.4		—		115.4		—
Healthcare		112.8		—		112.8		—
Utilities	Utilities	70.9		—		70.9		—		Utilities	73.8		—		73.8		—
Communications	Communications	56.0		—		56.0		—		Communications	47.9		—		47.9		—
Energy	Energy	48.0		—		48.0		—		Energy	33.9		—		33.9		—
Materials	Materials	32.1		—		32.1		—		Materials	19.7		—		19.7		—

Total debt securities issued by corporations	Total debt securities issued by corporations	992.9		—		992.9		—		Total debt securities issued by corporations	1,018.8		—		1,018.8		—

Municipal obligations	Municipal obligations	291.9		—		291.9		—		Municipal obligations	258.6		—		258.6		—
Mortgage and asset-backed securities	Mortgage and asset-backed securities	277.6		—		277.6		—		Mortgage and asset-backed securities	254.2		—		254.2		—

Collateralized loan obligations	Collateralized loan obligations	135.0		—		135.0		—		Collateralized loan obligations	182.9		—		182.9		—
Total fixed maturity investments	Total fixed maturity investments	1,908.9		211.5		1,697.4		—		Total fixed maturity investments	1,920.9		206.4		1,714.5		—

Short-term investments	Short-term investments	465.9		465.9		—		—		Short-term investments	924.1		924.1		—		—

Common equity securities (1)		251.1		—		251.1		—
Common equity securities:										Common equity securities:
Exchange-traded funds										Exchange-traded funds	333.8		333.8		—		—
Other (1)										Other (1)	334.6		—		334.6		—
Total common equity securities										Total common equity securities	668.4		333.8		334.6		—
Investment in MediaAlpha	Investment in MediaAlpha	261.6		261.6		—		—		Investment in MediaAlpha	168.6		168.6		—		—

Other long-term investments	Other long-term investments	895.3		—		4.7		890.6		Other long-term investments	926.4		—		14.8		911.6
Other long-term investments — NAV (2)	Other long-term investments — NAV (2)	482.5		—		—		—		Other long-term investments — NAV (2)	561.6		—		—		—
Total other long-term investments	Total other long-term investments	1,377.8		—		4.7		890.6		Total other long-term investments	1,488.0		—		14.8		911.6
Total investments	Total investments	$	4,265.3	$	939.0	$	1,953.2	$	890.6	Total investments	$	5,170.0	$	1,632.9	$	2,063.9	$	911.6

(1)~~Consist~~ Consists 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 atusing NAV ~~using the~~as a 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, ~~2022~~2023 and December 31, ~~2021,~~2022, investments of ~~$463.7~~$517.5 million and ~~$479.5~~$500.5 million were held in trusts required to be maintained in relation to HG Global’s reinsurance agreements with BAM.

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

BAM is required to maintain deposits with certain insurance regulatory agencies in order to maintain ~~their~~its insurance licenses. The fair value of such deposits, which represent state deposits and are included within the investment portfolio, totaled ~~$4.8~~$4.6 million as of both March 31, ~~2022~~2023 and December 31, ~~2021.~~2022.

Lloyd’s trust deposits are generally required of Lloyd's syndicates to protect policyholders in non-U.K. markets and are pledged into Lloyd’s trust accounts to provide a portion of the capital needed to support obligations at Lloyd’s. As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, Ark held Lloyd’s trust deposits with a fair value of ~~$113.2~~$148.7 million and ~~$113.8 million~~$137.4 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~~whether each member has sufficient assets to meet its underwriting liabilities plus a required solvency margin. As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, the fair value of Ark’s Funds at Lloyd’s investment deposits totaled ~~$305.6~~$326.3 million and ~~$342.8~~$319.2 million.

As of March 31, 2023 and December 31, 2022, Ark held additional investments on deposit or as collateral for insurance regulators and reinsurance counterparties of $263.3 million and $257.0 million.

As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, Ark ~~has $50.0~~had $144.1 million and $90.3 million of short-term investments pledged as collateral under an uncommitted standby ~~letter~~letters of credit. See Note 7 — ~~“Debt”.~~“Debt.”

As of March 31, 2023 and December 31, 2022, short-term investments of $206.0 million and $203.7 million were held in a collateral trust account required to be maintained in relation to WM Outrigger Re’s reinsurance agreement with GAIL.

Debt Securities Issued by Corporations

The following table presents the credit ratings of debt securities issued by corporations held in White Mountains’s investment portfolio as of March 31, ~~2022~~2023 and December 31, ~~2021:~~2022:


		Fair Value at					Fair Value at
Millions	Millions	March 31, 2022		December 31, 2021		Millions	March 31, 2023		December 31, 2022
AAA	AAA	$	10.8	$	12.0	AAA	$	11.4	$	11.3
AA	AA	84.3		85.0		AA	95.9		96.0
A	A	468.3		490.4		A	558.8		567.9
BBB	BBB	398.5		396.8		BBB	338.0		337.7

Other	Other	7.7		8.7		Other	6.3		5.9
Debt securities issued by corporations (1)	Debt securities issued by corporations (1)	$	969.6	$	992.9	Debt securities issued by corporations (1)	$	1,010.4	$	1,018.8

(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, ~~2022~~2023 and December 31, ~~2021:~~2022:


		March 31, 2022						December 31, 2021							March 31, 2023						December 31, 2022
Millions	Millions	Fair Value		Level 2		Level 3		Fair Value		Level 2		Level 3		Millions	Fair Value		Level 2		Level 3		Fair Value		Level 2		Level 3
Mortgage-backed securities:	Mortgage-backed securities:													Mortgage-backed securities:
Agency:	Agency:													Agency:
FNMA	FNMA	$	119.3	$	119.3	$	—	$	125.4	$	125.4	$	—	FNMA	$	129.7	$	129.7	$	—	$	124.5	$	124.5	$	—
FHLMC	FHLMC	86.5		86.5		—		90.5		90.5		—		FHLMC	81.2		81.2		—		78.8		78.8		—
GNMA	GNMA	35.6		35.6		—		40.1		40.1		—		GNMA	33.0		33.0		—		28.3		28.3		—
Total agency (1)	Total agency (1)	241.4		241.4		—		256.0		256.0		—		Total agency (1)	243.9		243.9		—		231.6		231.6		—

Non-agency: Residential	Non-agency: Residential	.5		.5		—		.5		.5		—		Non-agency: Residential	.3		.3		—		.3		.3		—

Total non-agency	Total non-agency	.5		.5		—		.5		.5		—		Total non-agency	.3		.3		—		.3		.3		—
Total mortgage-backed securities	Total mortgage-backed securities	241.9		241.9		—		256.5		256.5		—		Total mortgage-backed securities	244.2		244.2		—		231.9		231.9		—
Other asset-backed securities:	Other asset-backed securities:													Other asset-backed securities:
Credit card receivables	Credit card receivables	9.8		9.8		—		12.3		12.3		—		Credit card receivables	4.4		4.4		—		11.9		11.9		—
Vehicle receivables	Vehicle receivables	12.4		12.4		—		8.8		8.8		—		Vehicle receivables	10.2		10.2		—		10.4		10.4		—

Total other asset-backed securities	Total other asset-backed securities	22.2		22.2		—		21.1		21.1		—		Total other asset-backed securities	14.6		14.6		—		22.3		22.3		—
Total mortgage and asset-backed securities	Total mortgage and asset-backed securities	264.1		264.1		—		277.6		277.6		—		Total mortgage and asset-backed securities	258.8		258.8		—		254.2		254.2		—
Collateralized loan obligations	Collateralized loan obligations	133.4		133.4		—		135.0		135.0		—		Collateralized loan obligations	185.9		185.9		—		182.9		182.9		—
Total mortgage and asset-backed securities and collateralized loan obligations	Total 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	$	444.7	$	444.7	$	—	$	437.1	$	437.1	$	—

(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, ~~2022,~~2023, White Mountains’s investment portfolio included ~~$133.4~~$185.9 million of collateralized loan obligations that are within the senior tranches of their respective fund securitization structures. All of White Mountains’s collateral loan obligations were rated AAA or AA as of March 31, ~~2022.~~2023.

Investment in MediaAlpha

In 2020, MediaAlpha completed an initial public offering (the “MediaAlpha IPO”). Following the MediaAlpha IPO, White Mountains’s investment in MediaAlpha is accounted for at fair value based on the publicly traded share price of MediaAlpha’s common stock and is presented as a separate line item on the balance sheet.

As of March 31, 2023, White Mountains owned 16.9 million shares, representing a 26.8% basic ownership interest (24.3% on a fully diluted, fully converted basis). See Note 16 — “Equity Method Eligible Investments.” At this current level of ownership, each $1.00 per share increase or decrease in the share price of MediaAlpha will result in an approximate $6.60 per share increase or decrease in White Mountains’s book value per share. At the March 31, ~~2022~~2023 closing price of ~~$16.55~~$14.98 per share, the fair value of White Mountains’s investment in MediaAlpha was ~~$280.4~~$253.8 million. ~~See~~ ~~Note 2 — “Significant Transactions”.~~

Other Long-Term Investments

The following table presents the carrying values of White Mountains’s other long-term investments as of March 31, ~~2022~~2023 and December 31, ~~2021:~~

Fair Value at
Millions March 31, 2022 December 31, 2021
Kudu’s Participation Contracts $ 691.8 $ 669.5
PassportCard/DavidShield
125.0 120.0
Elementum Holdings, L.P. 45.0 45.0
Other unconsolidated entities (1)
5.0 34.4
Total unconsolidated entities 866.8 868.9
Private equity funds and hedge funds 206.3 153.8
Bank loan fund 162.4 163.0
Lloyd’s trust deposits 113.2 113.8
ILS funds 51.7 51.9
Private debt investments 11.5 14.1
Other 16.6 12.3
Total other long-term investments $ 1,428.5 $ 1,377.8
2022:


	Fair Value at
Millions	March 31, 2023		December 31, 2022
Kudu’s Participation Contracts	$	683.2	$	695.9
PassportCard/DavidShield	140.0		135.0
Elementum Holdings, L.P.	30.0		30.0
Other unconsolidated entities (1)	87.5		37.2





Total unconsolidated entities	940.7		898.1
Private equity funds and hedge funds	218.5		197.8

Bank loan fund	179.5		174.8
Lloyd’s trust deposits	148.7		137.4
ILS funds	123.6		49.3
Private debt instruments	10.1		9.6
Other	21.9		21.0
Total other long-term investments	$	1,643.0	$	1,488.0

(1) Includes White Mountains’s ~~non-controlling~~noncontrolling 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, ~~2022,~~2023, White Mountains held investments in 15seventeen private equity funds and 1two hedge ~~fund.~~funds. The largest investment in a single private equity fund or hedge fund was ~~$33.9 million and $31.3~~$49.9 million as of March 31, ~~2022~~2023 and $49.0 million and December 31, ~~2021.~~2022.

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, ~~2022~~2023 and December 31, ~~2021:~~2022:


		March 31, 2022				December 31, 2021					March 31, 2023				December 31, 2022
Millions	Millions	Fair Value		Unfunded Commitments		Fair Value		Unfunded Commitments		Millions	Fair Value		Unfunded Commitments		Fair Value		Unfunded Commitments
Private equity funds	Private equity funds									Private equity funds
Aerospace/Defense/Government	Aerospace/Defense/Government	$	112.5	$	47.5	$	69.8	$	11.8	Aerospace/Defense/Government	$	78.0	$	37.5	$	59.4	$	37.5
Financial services	Financial services	78.5		28.7		67.7		29.3		Financial services	77.3		52.6		77.1		54.3
Real estate	Real estate	4.8		2.8		4.3		2.9		Real estate	4.1		2.5		4.1		2.5

Total private equity funds	Total private equity funds	195.8		79.0		141.8		44.0		Total private equity funds	159.4		92.6		140.6		94.3
Hedge funds	Hedge funds									Hedge funds

Long/short equity financials and business services										Long/short equity financials and business services	49.8		—		49.0		—
European small/mid cap	European small/mid cap	10.5		—		12.0		—		European small/mid cap	9.3		—		8.2		—

Total hedge funds	Total hedge funds	10.5		—		12.0		—		Total hedge funds	59.1		—		57.2		—
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	$	218.5	$	92.6	$	197.8	$	94.3

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

The following table presents investments in private equity funds that were subject to lock-up periods as of March 31, ~~2022:~~2023:

Millions

1 – 3 years

3 – 5 years

5 – 10 years

>10 years

Total

Millions

1 – 3 years

3 – 5 years

5 – 10 years

>10 years

Total

Private equity funds — expected lock-up period remaining

$.1

$48.7

$137.0

$10.0

$195.8

Private equity funds — expected lock-up period remaining

$4.1

$18.6

$132.3

$4.4

$159.4

Investors in private equity funds are generally subject to indemnification obligations outside of the capital commitment period and prior to the winding up of the fund. As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, White Mountains is not aware of any indemnification claims relating to its investments in private equity funds.

Redemption of investments in most hedge funds is subject to restrictions, including lock-up periods where no redemptions or withdrawals are allowed, restrictions on redemption frequency and advance notice periods for redemptions. Amounts requested for redemptions remain subject to market fluctuations until the redemption effective date, which generally falls at the end of the defined redemption period. Advance notice requirements for redemptions from White Mountains’s hedge fund ~~investment is subject~~investments range from 45 to ~~a perpetual two-year restriction on redemption frequency from~~90 days. One of White Mountains’s hedge fund investments also limits redemptions to every 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~~$179.5 million and $174.8 million as of March 31, 2023 and December 31, 2022. The fair value of this investment is estimated using the NAV of the fund. The bank loan fund’s investment objective is to provide, on an unleveraged basis, high current income consistent with preservation of capital and low duration. The bank loan fund primarily invests in a broad portfolio of U.S. dollar-denominated, non-investment grade, floating-rate senior secured loans and may invest in other financial instruments, such as secured and unsecured corporate debt, credit default swaps, reverse repurchase agreements, synthetic indices and cash and cash equivalents.

The investment in the bank loan fund is subject to restrictions on redemption frequency and advance notice periods for redemptions. Amounts requested for redemptions remain subject to market fluctuations until the redemption effective date, which generally falls at the end of the defined redemption period. White Mountains may redeem all or a portion of its bank loan fund investment as of any calendar month-end upon 15 calendar days advanced written notice.

Lloyd’s Trust Deposits

White Mountains’s other long-term investments include Lloyd’s trust deposits, which consist of non-U.K. deposits and Canadian comingled pooled funds. The Lloyd’s trust deposits invest primarily in short-term government securities, agency securities and corporate bonds held in trusts that are managed by Lloyd's of London. These investments are generally required of Lloyd's syndicates to protect policyholders in non-U.K. markets and are pledged into Lloyd’s trust accounts to provide a portion of the capital needed to support obligations at Lloyd’s. The fair value of the Lloyd’s trust deposits is generally estimated using the NAV of the funds. As of March 31, 2023 and December 31, 2022, White Mountains held Lloyd’s trust deposits with a fair value of ~~$113.2~~$148.7 million and $137.4 million.

Insurance-Linked Securities Funds

White Mountains’s other long-term investments include ILS fund investments. The fair value of these investments is generally estimated using the NAV of the funds. As of March 31, 2023 and December 31, 2022, White Mountains held investments in ILS funds with a fair value of ~~$51.7~~$123.6 million and $49.3 million.

Investments in ILS funds are generally subject to restrictions, including lock-up periods where no redemptions or withdrawals are allowed, non-renewal clauses, restrictions on redemption frequency and advance notice periods for redemptions. From time to time, natural catastrophe, liquidity, market or other events will occur that make the determination of fair value for underlying investments in ILS funds less certain due to the potential for loss development. In such circumstances, the impacted investments may be subject to additional lock-up provisions.

ILS funds are typically subject to monthly and annual restrictions on redemptions and advance redemption notice period requirements that range between 30 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~~period, 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.~~commuted.

Rollforward of Level 3 Investments

Level 3 measurements as of March 31, ~~2022~~2023 and ~~2021~~2022 consist of securities for which the estimated fair value has not been determined based upon quoted market price inputs for identical or similar securities. The following table presents the changes in White Mountains’s fair value measurements for Level 3 investments for the three months ended March 31, ~~2022~~2023 and ~~2021:~~2022:


Level 3 Investments	Level 3 Investments			Level 3 Investments
Millions	Millions	Other Long-term Investments				Other Long-term Investments		Millions		Other Long-term Investments			Other Long-term Investments
Balance at December 31, 2021		$	890.6		Balance at December 31, 2020	$	614.2
Balance at December 31, 2022									Balance at December 31, 2022		$	911.6	Balance at December 31, 2021	$	890.6
Net realized and unrealized gains	Net realized and unrealized gains	26.8			Net realized and unrealized gains	16.7			Net realized and unrealized gains		35.1		Net realized and unrealized gains	26.8
Amortization/accretion	Amortization/accretion	—			Amortization/accretion	—			Amortization/accretion		—		Amortization/accretion	—
Purchases		—			Purchases	17.5
Sales		(31.7)			Sales	(1.6)
Effect of Ark Transaction		—			Effect of Ark Transaction	9.6
Purchases and contributions									Purchases and contributions		117.0		Purchases and contributions	—
Sales and distributions									Sales and distributions		(109.0)		Sales and distributions	(31.7)
Transfers in	Transfers in	—			Transfers in	—			Transfers in		—		Transfers in	—
Transfers out	Transfers out	—			Transfers out	—			Transfers out		—		Transfers out	—
Balance at March 31, 2022		$	885.7		Balance at March 31, 2021	$	656.4
Balance at March 31, 2023									Balance at March 31, 2023		$	954.7	Balance at March 31, 2022	$	885.7

Fair Value Measurements — Transfers Between Levels - Three months ended March 31, ~~2022~~2023 and ~~2021~~2022

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 three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, 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 three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, 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.

2220

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, ~~2022~~2023 and December 31, ~~2021.~~2022. The tables below exclude ~~$14.4~~$91.8 million and ~~$46.7~~$41.1 million of Level 3 other long-term investments generally valued based on recent or expected transaction prices. The fair value of investments in private equity funds and hedge funds, bank loan funds, Lloyd’s trust deposits and ILS funds are generally estimated using the NAV of the funds.

$ in Millions

March 31, 2022

$ in Millions

March 31, 2023

Description

Valuation Technique(s) (1)

Fair Value (2)

Unobservable Inputs

Description

Valuation Technique(s) (1)

Fair Value (2)

Unobservable Inputs

Discount Rate (5)

Terminal Cash Flow Exit Multiple (x) or Terminal Revenue Growth Rate (%) (5)

Discount Rate (5)

Terminal Cash Flow Exit Multiple (x) or Terminal Revenue Growth Rate (%) (5)

Kudu’s Participation Contracts (3)(4)

Discounted cash flow

$691.8

18% - 23%

7x - 13x

Kudu’s Participation Contracts (3)(4)

Discounted cash flow

$683.2

18% - 25%

7x - 22x

PassportCard/DavidShield

Discounted cash flow

$125.0

23%

PassportCard/DavidShield

Discounted cash flow

$140.0

23%

Elementum Holdings, L.P.

Discounted cash flow

$45.0

17%

Elementum Holdings, L.P.

Discounted cash flow

$30.0

20%

Private debt investments

Discounted cash flow

$9.5

N/A

Private debt instruments

Discounted cash flow

$9.7

11%

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%~~21% and ~~10x.~~12.7x.

(4) ~~As of March 31, 2022, one of Kudu’s Participation Contracts with~~In 2023, Kudu deployed a total ~~fair value~~ of ~~$81.9 was valued using a probability weighted expected return method, which was based on a discounted cash flow analysis~~$30.9 into new and ~~an expected sale transaction.~~existing Participation Contracts.

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

$ in Millions

December 31, 2021

$ in Millions

December 31, 2022

Description

Valuation Technique(s) (1)

Fair Value (2)

Unobservable Inputs

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)

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

$669.5

18% - 23%

7x - 13x

Kudu’s Participation Contracts (3)(4)(5)

Discounted cash flow

$695.9

18% - 25%

7x - 16x

PassportCard/DavidShield

Discounted cash flow

$120.0

23%

PassportCard/DavidShield

Discounted cash flow

$135.0

24%

Elementum Holdings, L.P.

Discounted cash flow

$45.0

17%

Elementum Holdings, L.P.

Discounted cash flow

$30.0

21%

Private debt investments

Discounted cash flow

$9.4

N/A

Private debt instruments

Discounted cash flow

$9.6

11%

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.

(4) In ~~2021,~~2022, Kudu deployed a total of ~~$223.4 in~~$99.8 into 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.~~Contracts.

(5) As of December 31, ~~2021, one~~2022, two of Kudu’s Participation Contracts with a total fair value of ~~$78.8 was~~$189.0 were valued using a probability weighted expected return method, which ~~was based on~~takes into account factors such as a discounted cash flow analysis, the expected value to be received in a pending sale transaction and ~~an expected sale transaction.~~the likelihood that a sales transaction will take place.

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

2321

Note 4. Goodwill and Other Intangible Assets

White Mountains accounts for ~~purchases of businesses~~business combinations using the acquisition method. Under the acquisition method, White Mountains recognizes and measures the assets acquired, liabilities assumed and any ~~non-controlling~~noncontrolling interest in the acquired entities at their acquisition date fair values. Goodwill represents the excess of the amount paid to acquire businesses over the fair value of identifiable net assets at the date of acquisition. The estimated acquisition date fair values, generally consisting of intangible assets and liabilities for contingent consideration, may be recorded at provisional amounts in circumstances where the information necessary to complete the acquisition accounting is not available at the reporting date. Any such provisional amounts are finalized as measurement period adjustments within one year of the acquisition date.

The following table presents the economic lives, acquisition date fair values, accumulated amortization and net carrying values for other intangible assets and goodwill ~~by reportable segment~~ as of March 31, ~~2022~~2023 and December 31, ~~2021:~~2022:

$ in Millions Weighted Average Economic
Life
(in years) March 31, 2022 December 31, 2021
Acquisition Date Fair Value Accumulated Amortization Impairments and Amounts Allocated to Held for Sale Net Carrying Value Acquisition Date Fair Value Accumulated Amortization Impairments and Amounts Allocated to Held for Sale Net Carrying Value
Goodwill:
Ark N/A $ 116.8 $ — $ — $ 116.8 $ 116.8 $ — $ — $ 116.8
NSM (1)
N/A 529.3 — 30.2 499.1 533.4 — 30.2 503.2
Kudu N/A 7.6 — — 7.6 7.6 — — 7.6
Other Operations N/A 17.9 — — 17.9 17.9 — — 17.9
Total goodwill 671.6 — 30.2 641.4 675.7 — 30.2 645.5
Other intangible assets:
Ark
Underwriting
   Capacity N/A 175.7 — — 175.7 175.7 — — 175.7
NSM (1)
Customer
   relationships 9.2 159.4 62.3 3.5 93.6 159.9 57.0 3.5 99.4
   Trade names 18 68.5 12.9 1.0 54.6 68.6 11.9 1.0 55.7
   Information
      technology
      platform 0 3.1 1.4 1.7 — 3.1 1.4 1.7 —
Renewal
   rights 12 82.5 18.3 — 64.2 82.5 15.8 — 66.7
Other 3.3 1.2 .7 — .5 1.1 .7 — .4
      Subtotal 314.7 95.6 6.2 212.9 315.2 86.8 6.2 222.2
Kudu
   Trade names 7 2.2 .9 — 1.3 2.2 .9 — 1.3
Other Operations
   Trade names 17.5 8.2 1.7 — 6.5 8.2 1.5 — 6.7
Customer
   relationships 13.0 18.8 5.2 — 13.6 18.8 4.5 — 14.3
Other 5.3 .3 .2 — .1 .3 .1 — .2
       Subtotal 27.3 7.1 — 20.2 27.3 6.1 — 21.2
Total other intangible assets 519.9 103.6 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 Millions	Weighted Average Economic Life (in years)	March 31, 2023						December 31, 2022
		Acquisition Date Fair Value		Accumulated Amortization		Net Carrying Value		Acquisition Date Fair Value		Accumulated Amortization		Net Carrying Value
Goodwill:
Ark	N/A	$	116.8	$	—	$	116.8	$	116.8	$	—	$	116.8
Kudu	N/A	7.6		—		7.6		7.6				7.6
Other Operations	N/A	44.4		—		44.4		52.1		—		52.1
Total goodwill		168.8		—		168.8		176.5		—		176.5
Other intangible assets:
Ark
Underwriting capacity	N/A	175.7		—		175.7		175.7		—		175.7








Kudu
Trade names	7	2.2		1.3		.9		2.2		1.2		1.0
Other Operations
Trade names	13.3	13.3		2.6		10.7		17.9		3.0		14.9
Customer relationships	11.0	24.8		7.0		17.8		29.5		7.5		22.0


Other	12.1	2.8		.5		2.3		2.8		.5		2.3
Subtotal		40.9		10.1		30.8		50.2		11.0		39.2
Total other intangible assets		218.8		11.4		207.4		228.1		12.2		215.9
Total goodwill and other intangible assets		$	387.6	$	11.4	376.2		$	404.6	$	12.2	392.4

2422

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,~~and customer ~~relationships and contracts and information technology.~~relationships.

The relief-from-royalty method was used to estimate fair value for other intangible assets that relate to rights that could be obtained via a license from a third-party owner. Under this method, the fair value is estimated using the present value of license fees avoided by owning rather than leasing the asset. This technique was used to estimate the fair value of ~~domain~~trade names ~~certain trademarks~~ and ~~brand names.~~other intangible assets.

The with-or-without method estimates the fair value of other intangible assets that provide an incremental benefit. Under this method, the fair value of the other intangible asset is calculated by comparing the value of the entity with and without the other intangible asset. This approach was used to estimate the fair value of favorable lease terms.

On at least an annual basis beginning no later than the interim period included in the one-year anniversary of an acquisition, White Mountains evaluates goodwill and other intangible assets 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~~During the ~~acquisition date fair values of~~three months ended March 31, 2023 and 2022, White Mountains did not recognize any impairments to goodwill and other intangible ~~assets for acquisitions completed from January 1, 2021 through March 31, 2022:~~

~~$ in Millions~~

~~Acquisition of subsidiary/ asset~~

~~Goodwill and~~

~~Other intangible asset~~ ~~(1)~~assets.

~~Acquisition Date~~

~~Ark~~

~~292.5~~

~~January 1, 2021~~

~~J.C. Taylor~~

~~55.7~~

~~August 6, 2021~~

~~Other Operations~~

~~15.9~~

~~April 27, 2021~~

~~(1)~~
~~Acquisition date fair values include the effect~~

Rollforward of ~~adjustments during the measurement period~~Goodwill and ~~excludes the effect of foreign currency translation subsequent to the acquisition date.~~Other Intangible Assets

The following table ~~present~~presents the change in goodwill and other intangible assets for the three months ended March 31, ~~2022~~2023 and ~~2021:~~2022:


		Three Months Ended March 31,													Three Months Ended March 31,
		2022						2021							2023						2022
Millions	Millions	Goodwill		Other Intangible Assets		Total Goodwill and Other Intangible Assets		Goodwill		Other Intangible Assets		Total Goodwill and Other Intangible Assets		Millions	Goodwill		Other Intangible Assets		Total Goodwill and Other Intangible Assets		Goodwill		Other Intangible Assets		Total Goodwill and Other Intangible Assets
Beginning balance	Beginning balance	$	645.5	$	420.4	$	1,065.9	$	525.5	$	256.9	$	782.4	Beginning balance	$	176.5	$	215.9	$	392.4	$	142.3	$	198.2	$	340.5
Ark Transaction		—		—		—		116.8		175.7		292.5
Dispositions (1)														Dispositions (1)	(6.7)		(6.9)		(13.6)		—		—		—

Measurement period adjustments (1)		—		—		—		(.2)		—		(.2)

Measurement period adjustments (2)														Measurement period adjustments (2)	(1.0)		—		(1.0)		—		—		—
Amortization	Amortization	—		(10.1)		(10.1)		—		(9.2)		(9.2)		Amortization	—		(1.6)		(1.6)		—		(1.0)		(1.0)

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 balance	Ending balance	$	641.4	$	410.1	$	1,051.5	$	613.4	$	423.6	$	1,037.0	Ending balance	$	168.8	$	207.4	$	376.2	$	142.3	$	197.2	$	339.5

(1) Relates to a disposition within Other Operations.

(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, ~~2021,~~2023 adjustments ~~primarily~~ relate to ~~goodwill of $0.2 in connection with the~~an acquisition ~~in the~~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.~~

~~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~~ ~~Note 19 — “Held for Sale and Discontinued Operations”. There were no impairments~~Operations. The relative fair values of goodwill and other intangible assets ~~for~~recognized in connection with this acquisition during 2022 had not yet been finalized as of the ~~three months ended March 31, 2022 and 2021.~~end of the period.

2523

Note 5. Loss and Loss Adjustment Expense Reserves

P&C Insurance and Reinsurance

The following table summarizes the loss and ~~LAE~~loss adjustment expense (“LAE”) reserve activity of ~~Ark’s insurance and reinsurance subsidiaries~~ the Ark/WM Outrigger segmentfor the three months ended March 31, ~~2022~~2023 and ~~2021:~~2022:


		Three Months Ended March 31,					Three Months Ended March 31,
Millions	Millions	2022		2021		Millions		2023		2022
Gross beginning balance	Gross beginning balance	$	894.7	$	696.0	Gross beginning balance		$	1,296.5	$	894.7
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)		(505.0)		(428.9)
Net loss and loss adjustment expense reserves		465.8		262.6
Net loss and LAE reserves						Net loss and LAE reserves		791.5		465.8

Loss and loss adjustment expenses incurred relating to:
Loss and LAE incurred relating to:						Loss and LAE incurred relating to:
Current year losses	Current year losses	125.7		65.5		Current year losses		139.2		125.7
Prior year losses	Prior year losses	(3.7)		.5		Prior year losses		8.6		(3.7)
Net incurred losses and loss adjustment expenses		122.0		66.0
Net incurred losses and LAE						Net incurred losses and LAE		147.8		122.0

Loss and loss adjustment expenses paid relating to:
Loss and LAE paid relating to:						Loss and LAE paid relating to:
Current year losses	Current year losses	(0.6)		(5.2)		Current year losses		(4.0)		(.6)
Prior year losses	Prior year losses	(39.4)		(19.7)		Prior year losses		(87.7)		(39.4)
Net loss and loss adjustment expenses		(40.0)		(24.9)
Net paid loss and LAE						Net paid loss and LAE		(91.7)		(40.0)

Change in TPC Providers’ participation(2)	Change in TPC Providers’ participation(2)	57.5		(2.2)		Change in TPC Providers’ participation(2)		145.4		57.5
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		3.7		(1.7)

Net ending balance	Net ending balance	603.6		304.4		Net ending balance		996.7		603.6
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)		348.9		396.0
Gross ending balance	Gross ending balance	$	999.6	$	751.9	Gross ending balance		$	1,345.6	$	999.6

(1) The beginning reinsurance recoverable on unpaid losses includes amounts attributable to TPC Providers of $145.4 and $276.8 as of December 31, 2022 and ~~$319.2.~~2021.

(2) Amount represents the impact to net loss and LAE reserves due to a change in the TPC Providers’ participation related to the annual reinsurance to close process.

(3) The ending reinsurance recoverable on unpaid losses includes amounts attributable to TPC Providers of $0.0 and $207.3 as of March 31, 2023 and ~~$331.0.~~2022.

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

~~TPC Providers’ Participation~~

Impact of Third-Party Capital

A ~~Reinsurance~~reinsurance to ~~Close~~close (“RITC”) agreement is generally put in place after the third year of operations for a year of account such that the outstanding loss and LAE reserves, including future development thereon, are reinsured into the next year of account. As a result, and in combination with the changing participation provided by TPC Providers, Ark’s participation on outstanding loss and LAE reserves reinsured into the next year of account may change, perhaps significantly. During the first quarter of 2023, an RITC agreement was executed such that the outstanding loss and LAE reserves for claims arising out of the 2020 year of account, for which the TPC Providers’ participation in the total net results of the Syndicates was 42.8%, were reinsured into the 2021 year of account, for which the TPC Providers’ participation in the total net results of the Syndicates was 0.0%. During the first quarter of 2022, an RITC agreement was executed such that the outstanding loss and LAE reserves for claims arising out of the 2019 year of account, for which the TPC Providers’ participation in the total net results of the Syndicates was 58.3%, were reinsured into the 2020 year of account, for which the TPC Providers’ participation in the total net results of the Syndicates iswas 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.

Note 6. Third-Party Reinsurance

P&C Insurance and Reinsurance

In the normal course of business, Ark may seek to limit losses that may arise from catastrophes or other events by reinsuring certain risks with third-party reinsurers. Ark remains liable for risks reinsured in the event that the reinsurer does not honor its obligations under reinsurance contracts.

The following table summarizes the effects of reinsurance on written and earned premiums and on losses and LAE for ~~Ark.~~the Ark/WM Outrigger segment for the three months ended March 31, 2023 and 2022:


	Three Months Ended March 31,
Millions		2023			2022
Written premiums:
Direct		$	246.2		$	230.9
Assumed		563.2			402.2
Gross written premiums		809.4			633.1
Ceded		(195.2)		(1)	(89.3)
Net written premiums		$	614.2		$	543.8
Earned premiums:
Direct		$	150.4		$	138.7
Assumed		162.1			106.6
Gross earned premiums		312.5			245.3
Ceded		(57.4)		(2)	(50.9)
Net earned premiums		$	255.1		$	194.4
Losses and LAE:
Gross		$	162.4		$	183.1


Ceded		(14.6)		(3)	(61.1)
Net losses and LAE		$	147.8		$	122.0

Three Months Ended March 31,
Millions 2022 2021
Written premiums:
Gross $ 633.1 $ 404.5
Ceded (89.3) (62.1)
Net written premiums $ 543.8 $ 342.4
Earned premiums:
Gross $ 245.3 $ 162.6
Ceded (50.9) (58.0)
Net earned premiums $ 194.4 $ 104.6
Losses and loss adjustment expenses:
Gross $ 183.1 $ 115.6
Ceded (61.1) (49.6)
Net losses and loss adjustment expenses $ 122.0 $ 66.0
(1) The ceded written premiums exclude $44.1 ceded by Ark to WM Outrigger Re for the three months ended March 31, 2023, which eliminate in White Mountains’s consolidated financial statements.

(2) The ceded earned premiums exclude $5.2 ceded by Ark to WM Outrigger Re for the three months ended March 31, 2023, which eliminate in White Mountains’s consolidated financial statements.

(3) The ceded loss and LAE exclude $0.2 ceded by Ark to WM Outrigger Re for the three months ended March 31, 2023, which eliminate in White Mountains’s consolidated financial statements.

The following table presents the Ark/WM Outrigger segment’s reinsurance recoverables as of March 31, ~~2022, Ark had $396.0 million~~2023 and ~~$16.7 million of~~December 31, 2022:


Millions	March 31, 2023			December 31, 2022
Reinsurance recoverables on unpaid losses	$	348.9	(1)	$	505.0	(3)
Reinsurance recoverables on paid losses	23.1			31.1
Ceded unearned premiums	198.6		(2)	59.2
Reinsurance recoverables	$	570.6		$	595.3

(1) The reinsurance recoverables on unpaid ~~and paid losses.~~ losses exclude $0.2 ceded by Ark to WM Outrigger Re as of March 31, 2023, which eliminate in White Mountains’s consolidated financial statements.

(2) The ceded unearned premiums exclude $38.9 ceded by Ark to WM Outrigger Re as of March 31, 2023, which eliminate in White Mountains’s consolidated financial statements.

(3) The reinsurance recoverables on unpaid losses include $145.4 attributable to TPC Providers as of December 31, 2022, which are collateralized.

As reinsurance contracts do not relieve Ark of its obligation to its policyholders, Ark seeks to reduce the credit risk associated with reinsurance balances by avoiding over-reliance on specific reinsurers through the application of concentration limits and thresholds. Ark is selective with its reinsurers, placing reinsurance with only those reinsurers having a strong financial condition. Ark monitors the financial strength of its reinsurers on an ongoing basis.

~~As of March 31, 2022, Ark’s reinsurance recoverables of $412.7 million included $207.3 million attributable to TPC Providers, which are collateralized.~~ The following table ~~provides a listing of Ark’s remaining~~presents the Ark/WM Outrigger segment’s 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~~ratings as of ~~total recoverables.~~March 31, 2023:


$ in Millions	$ in Millions	As of March 31, 2022								$ in Millions	As of March 31, 2023
A.M. Best Rating(1)	A.M. Best Rating(1)	Gross		Collateral		Net		% of Total		A.M. Best Rating(1)	Gross		Collateral		Net		% of Total
A+ or better	A+ or better	$	135.5	$	15.1	$	120.4	74.3	%	A+ or better	$	173.8	$	—	$	173.8	64.7	%
A- to A	A- to A	54.6		14.1		40.5		25.0		A- to A	77.9		—		77.9		29.0
B++ or lower and not rated	B++ or lower and not rated	15.3		14.2		1.1		0.7		B++ or lower and not rated	120.3		103.2		17.1		6.3
Total	Total	$	205.4	$	43.4	$	162.0	100.0	%	Total	$	372.0	$	103.2	$	268.8	100.0	%

(1) A.M. Best ratings as detailed above are: “A+ or better” (Superior) “A- to A” (Excellent), “B++” (Good).

~~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, ~~2022,~~2023, the carrying value of Ark’s deposit in SiriusPoint, including accrued interest, was $20.6 million.

Municipal Bond Guarantee Insurance

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

Note 7. Debt

The following table presents White Mountains’s debt outstanding as of March 31, ~~2022~~2023 and December 31, ~~2021:~~2022:


$ in Millions	$ in Millions	March 31, 2022		Effective Rate	(1)	December 31, 2021		Effective Rate	(1)	$ in Millions	March 31, 2023		Effective Rate	(1)	December 31, 2022		Effective Rate	(1)

HG Global Senior Notes										HG Global Senior Notes	$	150.0	11.0%		$	150.0	8.9%
Unamortized discount and issuance cost										Unamortized discount and issuance cost	(3.4)				(3.5)
HG Global Senior Notes, carrying value										HG Global Senior Notes, carrying value	146.6				146.5
Ark 2007 Subordinated Notes, carrying value	Ark 2007 Subordinated Notes, carrying value	$	30.0			$	30.0			Ark 2007 Subordinated Notes, carrying value	30.0				30.0

Ark 2021 Notes Tranche 1		42.9				44.2
Ark 2021 Notes Tranche 2		47.0				47.0
Ark 2021 Notes Tranche 3		70.0				70.0
Ark 2021 Subordinated Notes Tranche 1										Ark 2021 Subordinated Notes Tranche 1	42.0				41.3
Ark 2021 Subordinated Notes Tranche 2										Ark 2021 Subordinated Notes Tranche 2	47.0				47.0
Ark 2021 Subordinated Notes Tranche 3										Ark 2021 Subordinated Notes Tranche 3	70.0				70.0
Unamortized issuance cost	Unamortized issuance cost	(5.1)				(5.3)				Unamortized issuance cost	(4.5)				(4.6)
Ark 2021 Subordinated Notes, carrying value	Ark 2021 Subordinated Notes, carrying value	154.8				155.9				Ark 2021 Subordinated Notes, carrying value	154.5				153.7
Total Ark Subordinated Notes, carrying value	Total Ark Subordinated Notes, carrying value	184.8		6.6%		185.9		6.9%		Total Ark Subordinated Notes, carrying value	184.5		10.3%		183.7		7.6%
NSM Bank Facility		275.9		7.0%	(2)	277.6		7.3%	(2)
Unamortized issuance cost		(5.9)				(6.4)
NSM Bank Facility, carrying value		270.0				271.2
Other NSM debt		.6		5.8%		.9		2.9%
Kudu Credit Facility	Kudu Credit Facility	225.4		5.0%		225.4		4.3%		Kudu Credit Facility	198.3		8.7%		215.2		6.1%
Unamortized issuance cost	Unamortized issuance cost	(7.2)				(7.2)				Unamortized issuance cost	(6.7)				(6.9)
Kudu Credit Facility, carrying value	Kudu Credit Facility, carrying value	218.2				218.2				Kudu Credit Facility, carrying value	191.6				208.3

Other Operations debt	Other Operations debt	17.8		7.3%		17.1		7.5%		Other Operations debt	34.3		8.5%		37.4		6.6%
Unamortized issuance cost	Unamortized issuance cost	(.5)				(.3)				Unamortized issuance cost	(.7)				(.7)
Other Operations debt, carrying value	Other Operations debt, carrying value	17.3				16.8				Other Operations debt, carrying value	33.6				36.7
Total debt	Total debt	$	690.9			$	693.0			Total debt	$	556.3			$	575.2

(1) Effective rate includes the effect of the amortization of debt issuance ~~costs.~~costs and, where applicable, the original issue discount.

~~(2)~~

HG Global Senior Notes

~~NSM’s~~

On April 29, 2022, HG Global received the proceeds from the issuance of its $150.0 million face value floating rate secured senior notes (the “HG Global Senior Notes”). The HG Global Senior Notes, which mature in April 2032, accrue interest at a floating rate equal to the three-month Secured Overnight Financing Rate (“SOFR”) plus 6.3% per annum. Subsequent to the five-year anniversary of the funding date, absent the occurrence of an early amortization trigger event, HG Global will be required to make payments of principal on a quarterly basis totaling $15.0 million annually. Upon the occurrence of an early amortization trigger event, HG Global is required to use all available cash flow to repay the notes. Early amortization trigger events include scenarios in which HG Re is effectively in runoff. HG Global has the option to redeem, in whole or in part, the HG Global Senior Notes after the five-year anniversary of the funding date at the outstanding principal amount plus accrued interest.

On June 16, 2022, HG entered into an interest rate cap agreement, effective on July 25, 2022, to limit its exposure to the risk of interest rate ~~excludes~~increases on the ~~effect~~HG Global Senior Notes. The notional amount of the interest rate ~~swap~~cap is $150.0 million and the ~~interest rate cap on the debt.~~termination date is July 25, 2025. See Note 9 ~~— “Derivatives~~— “Derivatives.”.

The ~~weighted average~~HG Global Senior Notes require HG Global to maintain an interest ~~rate~~reserve account of eight times the interest accrued for the ~~quarter ended~~most recent quarterly interest period. As of March 31, ~~2022 and December 31, 2021, excluding~~2023, 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 effectfair value of the interest ~~rate swap~~reserve account, which is included in short-term investments, is $31.6 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 such collateral. The HG Global Senior Notes contain various affirmative and negative covenants that White Mountains considers to be customary for such borrowings.

If the payment of principal and interest under the HG Global Senior Notes becomes 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 March 31, 2023, the HG Global Senior Notes had an investment grade rating.

As of March 31, 2023, the HG Global Senior Notes had an outstanding balance of $150.0 million.

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. ~~LIBOR~~London Inter-Bank Offered Rate (“LIBOR”) plus 4.6%. per annum. As of March 31, ~~2022,~~2023, the Ark 2007 Subordinated Notes had an outstanding balance of $30.0 million.

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

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

If the payments of principal and interest under the Ark 2021 Subordinated Notes become subject to tax withholding on behalf of Bermuda or any political subdivision there, the Ark 2021 Subordinated Notes require the payment of additional amounts such that the amount received by the noteholders is the same as would have been received absent the tax withholding being imposed. The Ark 2021 Subordinated Notes Tranche 3 require the payment of additional interest of 1.0% per annum upon the occurrence of a ~~Premium Load Event~~premium load event until such event is remedied. Premium ~~Load Events~~load events include the failure to meet payment obligations of the Ark 2021 Subordinated Notes Tranche 3 when due, failure of GAIL to maintain an investment grade credit rating, failure to maintain 120% of GAIL’s Bermuda solvency capital requirement, failure of GAIL to maintain a debt to capital ratio below 40%, late filing of GAIL’s or Ark’s financial information, and making a restricted payment or distribution on GAIL’s common stock or other securities that rank junior or pari passu with the Ark 2021 Subordinated Notes Tranche 3 when a different ~~Premium Load Event~~premium load event exists or will be caused by the restricted payment. As of March 31, 2023, there were no premium load events.

As of March 31, ~~2022,~~2023, the Ark 2021 Subordinated Notes Tranche 1 had an outstanding balance of €39.1 million ($~~42.9~~42.0 million based upon the foreign exchange spot rate as of March 31, ~~2022)~~2023), the Ark 2021 Subordinated Notes Tranche 2 had an outstanding balance of $47.0 million, and the Ark 2021 Subordinated Notes Tranche 3 had an outstanding balance of $70.0 million.

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

Ark Standby Letter of Credit Facilities

In December 2021, Ark entered into two uncommitted secured standby letter of credit facility agreements to support the continued growth and expansion of its GAIL insurance and reinsurance operations. The standby letter of credit facility agreements were executed with ING Bank N.V., London Branch (the “ING LOC Facility”) with capacity of $50.0 million on an uncollateralized basis and with Citibank Europe Plc (the “Citibank LOC Facility”) with capacity of $100.0 million on a collateralized basis. In September 2022, Ark entered into an additional uncommitted standby letter of credit facility agreement with Lloyds Bank Corporate Markets PLC (the “Lloyds LOC Facility”) with capacity of $50.0 million on a collateralized basis.

As of March 31, ~~2022,~~2023, the ING LOC Facility was undrawn. As of March 31, ~~2022,~~2023, the Citibank LOC Facility had an outstanding balance of ~~$36.2~~$92.3 million and short-term investments pledged as collateral of $106.3 million. As of March 31, ~~2022, $50.0~~2023, the Lloyds LOC Facility had an outstanding balance of $35.0 million ofand short-term investments ~~were~~ pledged as collateral ~~under the Citibank LOC Facility.~~of $37.8 million. Ark’s uncommitted secured standby letter of credit facility agreements contain various representations, warranties and covenants that White Mountains considers to be customary for such borrowings.

~~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.

2928

~~The following table~~ ~~presents the change in debt under the NSM Bank Facility for the three months ended March 31, 2022 and 2021:~~

Millions Three Months Ended March 31,
NSM Bank Facility 2022 2021
Beginning balance $ 277.6 $ 277.4
Term loans
Borrowings — —
Repayments (.7) (.7)
Foreign currency translation (1.5) .6
Revolving credit loan
Borrowings 13.0 —
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 Millions Three Months Ended March 31,
2022 2021
NSM Weighted Average Interest Rate Weighted Average
Interest Expense (1)
Weighted Average Interest rate Weighted Average
Interest Expense (2)
Weighted Average Interest rate
Term loan - hedged $ — $ — — % $ 147.6 $ 3.4 9.2 %
Term loan - unhedged 273.5 2.0 2.9 % 129.8 2.5 7.7 %
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.

~~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 ~~Massachusetts~~Mass Mutual ~~Life Insurance Company~~ to repay ~~the Kudu Bank Facility,~~its prior credit facility and to fund new investments and related transaction expenses. The maximum borrowing capacity of the Kudu Credit Facility is $300.0 million. The Kudu Credit Facility matures on March 23, 2036. ~~In connection with~~

Interest on the ~~replacement~~Kudu Credit Facility accrues at a floating interest rate equal to the greater 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 ~~months ended March 31, 2021.~~

month LIBOR or 0.25% plus, in each case, 4.30%. The Kudu Credit Facility requires Kudu to maintain an interest reserve account, which is included in restricted cash. As of March 31, ~~2022,~~2023, the interest reserve account ~~is $4.5~~had a balance of $13.0 million. The Kudu Credit Facility requires Kudu to maintain a ratio of the outstanding balance to the sum of the fair market value of ~~the participation contracts~~Kudu’s Participation Contracts and cash held in certain accounts (the “LTV Percentage”) of less than 50% in years 0-3, 40% in years 4-6, 25% in years 7-8, 15% in years 9-10, and 0% thereafter. As of March 31, ~~2022,~~2023, Kudu ~~has~~had a ~~33%~~28.8% LTV Percentage.

Kudu may borrow undrawn balances within the initial three-year availability period, subject to customary terms and conditions, to the extent the amount borrowed under the Kudu Credit Facility does not exceed the borrowing base, which is equal to 35% of the fair value of Kudu’s qualifying ~~Kudu~~ Participation Contracts. When considering ~~White Mountains’s remaining equity commitment to Kudu and~~ the fair value of Kudu’s qualifying ~~participation contracts~~Participation Contracts as of March 31, ~~2022,~~2023, the available undrawn balance was ~~$34.2~~$47.4 million.

The following table presents the change in debt under the Kudu ~~Bank Facility and Kudu~~ Credit Facility for the three months ended March 31, ~~2022~~2023 and ~~2021:~~2022:


		Three Months Ended March 31,					Three Months Ended March 31,
Millions	Millions	2022		2021		Millions		2023		2022
Kudu Bank Facility
Beginning balance		$	—	$	89.2
Term loans
Borrowings		—		3.0
Repayments		—		(92.2)
Ending balance		$	—	$	—

Kudu Credit Facility	Kudu Credit Facility					Kudu Credit Facility
Beginning balance	Beginning balance	$	225.4	$	—	Beginning balance		$	215.2	$	225.4
Term loans	Term loans					Term loans
Borrowings	Borrowings	—		102.0		Borrowings		—		—
Repayments	Repayments	—		—		Repayments		(16.9)		—
Ending balance	Ending balance	$	225.4	$	102.0	Ending balance		$	198.3	$	225.4

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

Other Operations Debt

As of March 31, ~~2022, debt in~~2023, White Mountains’s Other Operations ~~segment~~had debt with an outstanding balance of $34.3 million, which consisted of 3four 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, ~~2022,~~2023, White Mountains was in compliance, in all material respects, with all of 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, ~~2022,~~2023, the primary jurisdictions in which the Company’s subsidiaries and branches were subject to tax ~~were~~include Ireland, Israel, Luxembourg, the United Kingdom and the United States.

White Mountains’s income tax expense related to pre-tax income from continuing operations for the three months ended March 31, 2023 represented an effective tax rate of 6.0%. The effective tax rate was different from the U.S. statutory rate of 21.0%, driven primarily by full year forecasted income in jurisdictions with lower tax rates than the United States.

White Mountains’s income tax benefit related to pre-tax loss from continuing operations for the three months ended March 31, 2022 represented an effective tax rate of ~~31.1%~~18.2%. The effective tax rate was different from the U.S. statutory rate of 21.0%, ~~due to~~driven primarily by income in jurisdictions with lower tax rates than the United States and a ~~decline~~decrease 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,~~partially offset by an increase in the full valuation allowance at BAM and state income taxes.

~~White Mountains’s income tax benefit related to pre-tax loss from continuing operations for~~On April 1, 2023, the ~~three months ended March 31, 2021 represented an effective~~U.K. corporate tax rate ~~of 6.9%~~increased from 19.0% to 25.0%. ~~The effective tax rate was different from~~

On August 16, 2022, the U.S. ~~statutory rate~~enacted the Inflation Reduction Act (the “IRA”). White Mountains has evaluated the tax provisions of ~~21.0% due~~the IRA, the most significant of which relate to ~~income generated in jurisdictions with lower~~the corporate alternative minimum tax ~~rates than~~and the ~~United States.~~tax on share repurchases, and does not expect the legislation to have a material impact on the results of its operations.

In arriving at the effective tax rate for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, White Mountains forecasted all income and expense items including the change in unrealized investment gains (losses) and realized investment gains (losses) for the years ending December 31, ~~2022~~2023 and ~~2021.~~2022.

White Mountains records a valuation allowance against deferred tax assets if it becomes more likely than not that all or a portion of a deferred tax asset will not be realized. Changes in valuation allowances from period to period are included in income tax expense in the period of change. In determining whether or not a valuation allowance, or change therein, is warranted, White Mountains considers factors such as prior earnings history, expected future earnings, carryback and carryforward periods and strategies that if executed would result in the realization of a deferred tax asset.

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.~~2017.

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.

~~NSM~~HG Global Interest Rate Cap

On June ~~4, 2020, NSM~~16, 2022, HG entered into an interest rate cap agreement, effective on July 25, 2022, to limit its exposure to the risk of interest rate increases on the ~~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.

~~NSM~~HG 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-LIBOR~~SOFR rate at the measurement date exceeds ~~1.25%~~3.5%, ~~NSM~~HG will receive payments from the counterparty equal to the difference between the three-month ~~GBP-LIBOR~~SOFR rate ~~less~~on 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. As of March 31, ~~2022,~~2023, the three-month ~~GBP-LIBOR~~SOFR rate was ~~1.04%~~4.9%.

~~NSM~~HG accounts for the interest rate ~~caps~~cap as ~~derivatives~~a derivative at fair value, with changes in fair value recognized in current period earnings within interest expense. For the three months ended March 31, ~~2022 and 2021,~~2023, White Mountains recognized ~~$0.3 million and less than $0.1~~a loss of $0.7 million related to the change in fair value on the interest rate ~~caps~~cap within interest expense. For the three months ended March 31, 2023, White Mountains received a payment of $0.2 million related to the periodic settlement of the interest rate cap. As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, the estimated fair value of the ~~caps~~interest rate cap recorded in other assets was ~~$0.5~~$3.4 million and ~~$0.2~~$4.1 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~~approximately 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”)., which have an initial term of 12 years and are callable five years after the date of issuance. The proceeds from issuance were placed in a collateral trust supporting Fidus Re’s obligations to BAM. ~~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%~~26% of BAM’s ~~portfolio~~gross par outstanding as of ~~financial guaranty policies issued through~~ March 31, ~~2022.~~2023.

In ~~the first quarter of~~ 2021, Fidus Re issued an additional $150.0 million of insurance-linked securities (the “Fidus Re 2021 Agreement”) ~~with~~, which have an initial term of 12 years and are callable five years after the date of issuance. The proceeds from issuance were placed in a collateral trust supporting Fidus Re’s obligations to BAM. Under the Fidus Re 2021 Agreement, Fidus Re reinsures 90% of aggregate losses exceeding $135.0 million on a portion of BAM’s financial guarantee portfolio (the “2021 Covered Portfolio”) up to a total reimbursement of $150.0 million. The Fidus Re 2021 Agreement does not provide coverage for losses in excess of $301.7 million. The 2021 Covered Portfolio consists of approximately ~~36%~~31% of BAM’s ~~portfolio~~gross par outstanding as of ~~financial guaranty policies issued through~~ March 31, ~~2022.~~2023.

In 2022, Fidus Re issued an additional $150.0 million of insurance linked securities (the “Fidus Re 2022 Agreement”), which have an initial term of 12 years and are callable seven years after the date of issuance. The proceeds from issuance were placed in a collateral trust supporting Fidus Re’s obligations to BAM. Under the Fidus Re 2022 Agreement, Fidus Re reinsures 90% of aggregate losses exceeding $110.0 million on a portion of BAM’s financial guarantee portfolio (the “2022 Covered Portfolio”) up to a total reimbursement of $150.0 million. The Fidus Re 2022 Agreement does not provide coverage for losses in excess of $276.7 million. The 2022 Covered Portfolio consists of approximately 32% of BAM’s gross par outstanding as of March 31, 2023.

The Fidus Re agreements are accounted for using deposit accounting and any related financing expenses are recorded in general and administrative expenses as they do not meet the risk transfer requirements necessary to be accounted for as reinsurance.

XOLT

In January 2020, BAM 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 the New York State Department of Financial Services (“NYDFS”) single issuer limits. ~~The~~As of March 31, 2023, 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 two collateral trusts, the ~~Collateral Trusts~~Supplemental Trust and the Regulation 114 Trust (together, the “Collateral Trusts”), at any point in time.

On a monthly basis, BAM deposits cash equal to ceded premiums, net of ceding commissions, due to HG Re under the FLRT directly into the Regulation 114 Trust. The Regulation 114 Trust target balance is equal to ~~gross ceded~~HG Re’s unearned premiums and unpaid ~~ceded~~ loss and LAE reserves, if any. If, at the end of any quarter, the Regulation 114 Trust balance is below the target balance, funds will be withdrawn from the Supplemental Trust and deposited into the Regulation 114 Trust in an amount equal to the 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, ~~2022~~2023 and December 31, ~~2021~~2022 was ~~$244.8~~$300.8 million and ~~$250.2~~$288.6 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, ~~2022~~2023 and December 31, ~~2021~~2022 was ~~$591.5~~$579.9 million and ~~$601.8~~$568.3 million.

As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, the Collateral Trusts held assets of ~~$836.3~~$880.7 million and ~~$852.0~~$856.9 million, which included ~~$466.0~~$520.6 million and ~~$481.7~~$503.3 million of cash and investments, ~~$364.6~~$340.0 million and ~~$364.6~~$340.0 million of BAM Surplus Notes and ~~$5.7~~$20.1 million and ~~$5.7~~$13.6 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,~~2023, the interest rate on the BAM Surplus Notes is ~~3.2%~~7.7%. Beginning in 2025, the interest rate will be fixed at the higher of the then current variable rate or 8.0%. Under its agreements with HG Global, BAM is required to seek regulatory approval to pay ~~interest~~principal and ~~principal~~interest on the BAM Surplus Notes only to the extent that its remaining qualified statutory capital and other capital resources continue to support its outstanding obligations, its business plan and its “AA/stable” rating from Standard & Poor’s. No payment of principal or interest on the BAM Surplus Notes may be made without the approval of the NYDFS.

In December ~~2021,~~2022, BAM made a ~~$33.8~~$36.0 million cash payment of principal and interest on the BAM Surplus Notes held by HG Global. Of this payment, ~~$23.6~~$24.6 million was a repayment of principal held in the Supplemental Trust, ~~$0.4~~$1.0 million was a payment of accrued interest held ~~inside~~in the Supplemental Trust and ~~$9.8~~$10.4 million was a payment of accrued interest held outside the Supplemental Trust.

During the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, BAM made no repayments of the BAM Surplus Notes or accrued interest.

As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, the principal balance on the BAM Surplus Notes was ~~$364.6~~$340.0 million ~~and $364.6 million~~for both periods and total interest receivable on the BAM Surplus Notes was ~~$160.6~~$164.5 million and ~~$157.6~~$157.9 million.

Insured Obligations and Premiums

The following table presents a schedule of BAM’s insured obligations as of March 31, ~~2022~~2023 and December 31, ~~2021:~~2022:


		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Contracts outstanding	Contracts outstanding	12,611		12,350		Contracts outstanding	13,607		13,382
Remaining weighted average contract period outstanding (in years)		10.8		10.8
Remaining weighted average contract period (in years)						Remaining weighted average contract period (in years)	10.8		10.8
Contractual debt service outstanding (in millions):	Contractual debt service outstanding (in millions):					Contractual debt service outstanding (in millions):
Principal	Principal	$	91,609.8	$	89,196.5	Principal	$	101,785.7	$	99,996.9
Interest	Interest	42,353.7		41,486.5		Interest	49,801.9		48,880.6
Total debt service outstanding	Total debt service outstanding	$	133,963.5	$	130,683.0	Total debt service outstanding	$	151,587.6	$	148,877.5

Gross unearned insurance premiums (in millions)	Gross unearned insurance premiums (in millions)	$	267.3	$	266.3	Gross unearned insurance premiums (in millions)	$	299.8	$	298.3

The following table presents a schedule of BAM’s future premium revenues as of March 31, ~~2022:~~2023:

Millions March 31, 2022
April 1, 2022 - December 31, 2022 $ 19.1
January 1, 2023 - March 31, 2023 6.2
April 1, 2023 - June 30, 2023 6.1
July 1, 2023 - September 30, 2023 6.0
October 1, 2023 - December 31, 2023 5.9
Total 2023 24.2
2024 22.7
2025 21.1
2026 19.6
2027 18.1
2028 and thereafter 142.5
Total gross unearned insurance premiums $ 267.3


Millions	March 31, 2023
April 1, 2023 - December 31, 2023	$	20.9
January 1, 2024 - March 31, 2024	6.8
April 1, 2024 - June 30, 2024	6.7
July 1, 2024 - September 30, 2024	6.5
October 1, 2024 - December 31, 2024	6.4
Total 2024	26.4
2025	24.7
2026	23.1
2027	21.5
2028	19.8
2029 and thereafter	163.4
Total gross unearned insurance premiums	$	299.8

The following table presents a schedule of written premiums and earned premiums included in ~~White Mountains’s~~the HG Global/BAM segment for the three months ended March 31, ~~2022~~2023 and ~~2021:~~2022:


		Three Months Ended March 31,						Three Months Ended March 31,
Millions	Millions		2022		2021		Millions		2023		2022
Written premiums:	Written premiums:						Written premiums:
Direct	Direct		$	9.4	$	8.0	Direct		$	9.2	$	9.4
Assumed	Assumed		—		4.5		Assumed		—		—
Gross written premiums (1)	Gross written premiums (1)		$	9.4	$	12.5	Gross written premiums (1)		$	9.2	$	9.4
Earned premiums:	Earned premiums:						Earned premiums:
Direct	Direct		$	7.6	$	5.3	Direct		$	7.0	$	7.6
Assumed	Assumed		.8		1.1		Assumed		.7		.8
Gross earned premiums (1)	Gross earned premiums (1)		$	8.4	$	6.4	Gross earned premiums (1)		$	7.7	$	8.4

(1) There are no ceded premium amounts in the periods presented, and gross earned premiums are equivalent to net written premiums and net earned premiums.

~~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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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, 2022. The agreement, which covers future claims exposure only, meets the risk transfer criteria under ASC 944-20, ~~Insurance Activities~~ ~~and accordingly has been accounted for as reinsurance.~~

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 months ended March 31, ~~2022~~2023 and ~~2021.~~2022. See Note 19 — “Held for Sale and Discontinued ~~Operations”~~.Operations.”


		Three Months Ended
		March 31,						Three Months Ended March 31,
			2022		2021				2023		2022
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		$	179.5	$	33.4
Less: total income (loss) from discontinued operations, net of tax			—		18.7
Less: total income (loss) from discontinued operations, net of tax (1)							Less: total income (loss) from discontinued operations, net of tax (1)		—		3.7
Less: net (income) loss from discontinued operations attributable to noncontrolling interests							Less: net (income) loss from discontinued operations attributable to noncontrolling interests		—		(.1)
Net income (loss) from continuing operations attributable to White Mountains’s common shareholders	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		179.5		29.8

Allocation of (earnings) losses to participating restricted common shares ~~(1)~~(2)	Allocation of (earnings) losses to participating restricted common shares ~~(1)~~(2)		(.3)		.9		Allocation of (earnings) losses to participating restricted common shares ~~(1)~~(2)		(2.2)		(.3)
Basic and diluted earnings (losses) per share numerators	Basic and diluted earnings (losses) per share numerators		$	33.1	$	(93.1)	Basic and diluted earnings (losses) per share numerators		$	177.3	$	29.5
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 period	Total average common shares outstanding during the period		3,006.2		3,100.2		Total average common shares outstanding during the period		2,569.9		3,006.2
Average unvested restricted common shares(2)			(29.6)		(32.4)
Average unvested restricted common shares (3)							Average unvested restricted common shares (3)		(31.1)		(29.6)
Basic earnings (losses) per share denominator	Basic earnings (losses) per share denominator		2,976.6		3,067.8		Basic earnings (losses) per share denominator		2,538.8		2,976.6
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 period	Total average common shares outstanding during the period		3,006.2		3,100.2		Total average common shares outstanding during the period		2,569.9		3,006.2
Average unvested restricted common shares (2)			(29.6)		(32.4)
Average unvested restricted common shares (3)							Average unvested restricted common shares (3)		(31.1)		(29.6)

Diluted earnings (losses) per share denominator	Diluted earnings (losses) per share denominator		2,976.6		3,067.8		Diluted earnings (losses) per share denominator		2,538.8		2,976.6

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 paid	Distributed 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)		68.83		8.90
Basic and diluted earnings (losses) per share	Basic and diluted earnings (losses) per share		$	11.10	$	(30.33)	Basic and diluted earnings (losses) per share		$	69.83	$	9.90

(1)Includes net income (loss) from discontinued operations, net of tax - NSM Group. See Note 19 — “Held for Sale and Discontinued Operations.”

(2) Restricted shares issued by White Mountains receive dividends, and therefore, 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 months ended March 31, ~~2022~~2023 and ~~2021.~~2022. See Note 19 — “Held for Sale and Discontinued ~~Operations”~~.Operations.”


		Three Months Ended
		March 31,						Three Months Ended March 31,
Millions	Millions		2022		2021		Millions		2023		2022
Undistributed net earnings (losses) - continuing operations:
Net income (losses) attributable to White Mountains’s common shareholders, net of restricted common share amounts			$	33.1	$	(93.1)
Undistributed net earnings - continuing operations:							Undistributed net earnings - continuing operations:
Net income (loss) attributable to White Mountains’s common shareholders, net of restricted common share amounts							Net income (loss) attributable to White Mountains’s common shareholders, net of restricted common share amounts		$	177.3	$	29.5
Dividends declared, net of restricted common share amounts (1)	Dividends declared, net of restricted common share amounts (1)		(3.0)		(3.1)		Dividends declared, net of restricted common share amounts (1)		(2.5)		(3.0)
Total undistributed net earnings (losses), net of restricted common share amounts	Total 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		$	174.8	$	26.5

(1) Restricted shares issued by White Mountains receive dividends, and therefore, are ~~therefore~~ considered participating securities.

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Note 12. Employee Share-Based Incentive Compensation Plans

White Mountains’s share-based incentive compensation plans are designed to incentivize key employees to maximize shareholder value over long periods of time. White Mountains believes that this is best pursued by utilizing a pay-for-performance program that closely aligns the financial interests of management with those of its shareholders while rewarding appropriate risk taking. White Mountains accomplishes this by emphasizing variable long-term compensation that is contingent on performance over a number of years rather than fixed entitlements. White Mountains expenses all its share-based compensation. As a result, White Mountains’s calculation of its owners’ returns includes the expense of all outstanding share-based compensation awards.

White Mountains’s Long-Term Incentive Plan (the “WTM Incentive Plan”) provides for grants of various types of share-based and non-share-based incentive awards to key employees and directors of White Mountains. As of March 31, ~~2022~~2023 and ~~2021,~~2022, White Mountains’s share-based incentive 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 3three 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 months ended March 31, ~~2022~~2023 and ~~2021~~2022 for performance shares granted under the WTM Incentive Plan:


		Three Months Ended March 31,						Three Months Ended March 31,
			2022	2021								2023	2022
Millions, except share amounts				Target Performance Shares Outstanding	Accrued Expense		Target Performance Shares Outstanding		Accrued Expense
$ in Millions											$ in Millions			Target Performance Shares Outstanding	Accrued Expense		Target Performance Shares Outstanding	Accrued Expense
Beginning of period	Beginning of period			40,828	$	42.2	42,458		$	56.3	Beginning of period			39,449	$	67.5	40,828	$	42.2
Shares paid (1)	Shares paid (1)			(14,625)	(26.4)		(14,117)		(34.6)		Shares paid (1)			(13,350)	(40.8)		(14,625)	(26.4)
New grants	New grants			13,075	—		13,000		—		New grants			10,895	—		13,075	—
Forfeitures and cancellations (2)	Forfeitures and cancellations (2)			24	.3		(557)		.4		Forfeitures and cancellations (2)			37	.4		24	.3
Expense recognized	Expense recognized			—	5.8		—		16.1		Expense recognized			—	9.3		—	5.8
End of period	End of period			39,302	$	21.9	40,784		$	38.2	End of period			37,031	$	36.4	39,302	$	21.9

(1) WTM performance share payments in 2023 for the 2020-2022 performance cycle, which were paid in March 2023 at 200% of target.

WTM performance share payments in 2022 for the 2019-2021 performance cycle, which were paid in ~~cash in~~ March 2022 at 172% of target. ~~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 three months ended March 31, 2023, White Mountains granted 10,895 performance shares for the 2023-2025 performance cycle. During the three months ended March 31, 2022, White Mountains granted 13,075 performance shares for the 2022-2024 performance cycle. ~~During~~

For the ~~three months ended March 31, 2021, White Mountains granted 13,000~~2020-2022 performance cycle, all performance shares ~~for the 2021-2023 performance cycle.~~

earned were settled in cash. For the 2019-2021 performance cycle, the Company issued common shares for 750 performance shares earned, and all other performance shares earned were settled in cash. ~~For~~If 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, ~~2022,~~2023, the total additional compensation cost to be recognized would have been ~~$25.8~~$44.6 million, based on accrual factors as of March 31, 2023 (common share price and payout assumptions) ~~as of March 31, 2022.~~.

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The following table presents performance shares outstanding and accrued expense for performance shares awarded under the WTM Incentive Plan as of March 31, ~~2022~~2023 for each performance cycle:


		Three Months Ended March 31, 2022				March 31, 2023
Millions, except share amounts		Target Performance Shares Outstanding	Accrued Expense
$ in Millions					$ in Millions	Target Performance Shares Outstanding	Accrued Expense
Performance cycle:	Performance cycle:				Performance cycle:
2020 – 2022		13,350	$	19.0
2021 – 2023	2021 – 2023	13,475	2.9		2021 – 2023	13,475	$	22.6
2022 – 2024	2022 – 2024	13,075	.3		2022 – 2024	13,225	14.0
2023 – 2025					2023 – 2025	10,895	.4

Sub-total	Sub-total	39,900	22.2		Sub-total	37,595	37.0
Assumed forfeitures	Assumed forfeitures	(598)	(.3)		Assumed forfeitures	(564)	(.6)
March 31, 2022		39,302	$	21.9
Total					Total	37,031	$	36.4

Restricted Shares

Restricted shares are grants of a specified number of common shares that generally vest at the end of a 34-month service period. The following table presents the unrecognized compensation cost associated with the outstanding restricted share awards under the WTM Incentive Plan for the three months ended March 31, ~~2022~~2023 and ~~2021:~~

Three Months Ended March 31,
2022 2021
Millions,
except share amounts
Restricted
Shares Unamortized Issue Date
Fair Value Restricted
Shares Unamortized Issue Date
Fair Value
Non-vested,
Beginning of period 37,850 $ 15.9 43,105 $ 15.2
Issued 13,075 13.6 13,000 15.6
Vested (12,725) — (17,717) —
Forfeited — — (583) (.6)
Expense recognized — (3.0) — (4.0)
End of period 38,200 $ 26.5 37,805 $ 26.2
2022:


	Three Months Ended March 31,
		2023	2022
$ in Millions			Restricted Shares	Unamortized Issue Date Fair Value		Restricted Shares	Unamortized Issue Date Fair Value
Non-vested,
Beginning of period			38,350	$	15.5	37,850	$	15.9
Issued			10,895	16.0		13,075	13.6
Vested			(11,650)	—		(12,725)	—
Forfeited			—	—		—	—
Expense recognized			—	(3.2)		—	(3.0)
End of period			37,595	$	28.3	38,200	$	26.5

During the three months ended March 31, 2023, White Mountains issued 10,895 restricted shares that vest on January 1, 2026. During the three months ended March 31, 2022, White Mountains issued 13,075 restricted shares that vest on January 1, 2025. ~~During the three months ended March 31, 2021, White Mountains issued 13,000 restricted shares that vest on January 1, 2024.~~ The unamortized issue date fair value as of March 31, ~~2022~~2023 is expected to be recognized ratably over the remaining vesting periods.

~~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, 2022 and December 31, 2021, the right of use (“ROU”) asset was $41.6 million and $42.2 million and lease liabilities were $44.8 million and $45.2 million.~~

~~The following table summarizes net lease expense recognized in White Mountains’s consolidated statement of operations for the three months ended March 31, 2022 and 2021:~~

Millions Three Months Ended March 31,
Lease Cost 2022 2021
Lease cost $ 2.8 $ 1.9
Less: sublease income .2 .1
Net lease cost $ 2.6 $ 1.8

~~The following table presents the contractual maturities of the lease liabilities associated with White Mountains’s operating lease agreements as of March 31, 2022:~~

Millions As of March 31, 2022
Remainder of 2022 $ 7.6
2023 11.5
2024 10.0
2025 6.8
2026 4.3
Thereafter 11.8
Total undiscounted lease payments 52.0
Less: present value adjustment 7.2
Operating lease liability $ 44.8

4036

~~The following tables present lease related assets and liabilities by reportable segment as of March 31, 2022 and December 31, 2021:~~

As of March 31, 2022
Millions HG/BAM Ark NSM Kudu Other Operations Total
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

~~(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
Millions HG/BAM Ark NSM Kudu Other Operations Total
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

~~(1)~~ ~~The present value of the remaining lease payments was determined by discounting the lease payments using the incremental borrowing rate.~~

Note ~~14. Non-controlling~~13. Noncontrolling Interests

~~Non-controlling~~Noncontrolling interests consist of the ownership interests of ~~non-controlling~~noncontrolling shareholders in consolidated entities and are presented separately on the balance sheet.

The following table presents the balance of ~~non-controlling~~noncontrolling interests included in White Mountains’s total equity and the ~~ownership interests held~~related percentage of each consolidated entity’s total equity owned by ~~non-controlling~~noncontrolling shareholders as of March 31, ~~2022~~2023 and December 31, ~~2021:~~2022:


		March 31, 2022				December 31, 2021					March 31, 2023				December 31, 2022
$ in Millions	$ in Millions	Non-controlling Percentage (1)		Non-controlling Equity		Non-controlling Percentage (1)		Non-controlling Equity		$ in Millions	Noncontrolling Percentage (1)		Noncontrolling Equity		Noncontrolling Percentage (1)		Noncontrolling Equity
Non-controlling interests, excluding BAM
Noncontrolling interests, excluding BAM										Noncontrolling interests, excluding BAM
HG Global	HG Global	3.1	%	$	5.4	3.1	%	$	8.9	HG Global	3.1	%	$	(.3)	3.1	%	$	(.6)
Ark	Ark	28.0	%	224.1		28.0	%	230.7		Ark	28.0	%	251.3		28.0	%	247.9
NSM		3.5	%	16.7		3.5	%	16.7

Kudu	Kudu	.9	%	17.3		.7	%	12.4		Kudu	10.8	%	81.3		10.8	%	75.1

Other	Other	various		11.2		various		11.9		Other	various		10.3		various		20.4
Total, excluding BAM	Total, excluding BAM			274.7				280.6		Total, excluding BAM			342.6				342.8
BAM	BAM	100.0	%	(147.5)		100.0	%	(124.0)		BAM	100.0	%	(152.2)		100.0	%	(154.7)

Total non-controlling interests				$	127.2			$	156.6
Total noncontrolling interests										Total noncontrolling interests			$	190.4			$	188.1

(1) The ~~non-controlling~~noncontrolling percentage represents the basic ownership interests held by ~~non-controlling~~noncontrolling shareholders with the exception of HG Global, for which the ~~non-controlling~~noncontrolling percentage represents the preferred share ownership held by ~~non-controlling~~noncontrolling shareholders.

Note ~~15.~~14. Segment Information

As of March 31, ~~2022,~~2023, White Mountains conducted its operations through 5three reportable segments: (1) HG Global/BAM, (2) ~~Ark,~~Ark/WM Outrigger, and (3) ~~NSM, (4)~~ Kudu, with our remaining operating businesses, holding companies and ~~(5)~~other assets included in Other Operations. ~~A discussion of White Mountains’s consolidated investment operations is included after the discussion of operations by segment.~~

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.

During the fourth quarter of 2022, Ark sponsored the formation of Outrigger Re Ltd. to provide reinsurance protection on Ark’s Bermuda global property catastrophe excess of loss portfolio written in calendar year 2023. White Mountains consolidates its segregated account of Outrigger Re Ltd., WM Outrigger Re, in its financial statements. WM Outrigger Re’s quota share reinsurance agreement with GAIL eliminates in White Mountains’s consolidated financial statements. WM Outrigger Re exclusively provides reinsurance protection to Ark. As a result, WM Outrigger Re was aggregated with Ark within the Ark/WM Outrigger segment starting in 2023. See Note 2 — “Significant Transactions.” As a result of the NSM Transaction, the results of operations for NSM, previously reported as a segment, have been classified as discontinued operations in the statements of operations and comprehensive income through the closing of the transaction. See Note 19 — “Held for Sale and Discontinued Operations.” Prior period amounts have been reclassified to conform to the current period’s presentation.

The following tables present the financial information for White Mountains’s ~~segments:~~

Millions HG Global/ BAM Ark NSM
Kudu
Other Operations Total
Three Months Ended March 31, 2022
Earned insurance premiums $ 8.4 $ 194.4 $ — $ — $ — $ 202.8
Net investment income 4.6 1.6 — 12.6 1.8 20.6
Net realized and unrealized investment
   gains (losses) (45.1) (17.5) — 22.3 31.9 (8.4)
Net realized and unrealized investment gains
   (losses) from investment in MediaAlpha — — — — 18.8 18.8
Commission revenues — — 70.1 — 2.9 73.0
Other revenues .8 (2.8) 18.4 — 25.7 42.1
     Total revenues (31.3) 175.7 88.5 34.9 81.1 348.9
Loss and loss adjustment expenses — 122.0 — — — 122.0
Insurance and reinsurance acquisition expenses 3.0 49.9 — — — 52.9
Cost of sales — — — — 21.4 21.4
General and administrative expenses 16.3 23.1 54.0 2.7 28.9 125.0
Broker commission expense — — 20.6 — — 20.6
Change in fair value of contingent consideration — — .1 — — .1
Amortization of other intangible assets — — 9.1 .1 .9 10.1
Loss on assets held for sale — — — — — —
Interest expense — 3.8 2.1 2.8 .3 9.0
     Total expenses 19.3 198.8 85.9 5.6 51.5 361.1
Pre-tax income (loss) $ (50.6) $ (23.1) $ 2.6 $ 29.3 $ 29.6 $ (12.2)

Millions HG Global/ BAM Ark NSM Kudu Other Operations Total
Three Months Ended March 31, 2021
Earned insurance premiums $ 6.4 $ 104.6 $ — $ — $ — $ 111.0
Net investment income 4.5 .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 expenses 1.9 36.7 — — — 38.6
Cost of sales — — — — 4.0 4.0
General and administrative expenses 16.4 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 expenses 18.3 141.6 108.1 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~~segments for the three months ended March 31, ~~2022~~2023 and ~~2021:~~2022:


Millions	HG Global/BAM				Ark/WM Outrigger
	HG Global		BAM (1)		Ark		WM Outrigger Re		Kudu		Other Operations		Total
Three Months Ended March 31, 2023
Earned insurance premiums	$	6.4	$	1.3	$	249.9	$	5.2	$	—	$	—	$	262.8
Net investment income	4.0		3.2		8.4		2.2		14.2		7.0		39.0
Net investment income (expense) - BAM Surplus Note interest	6.6		(6.6)		—		—		—		—		—
Net realized and unrealized investment gains (losses)	7.9		9.1		24.5		—		29.6		41.8		112.9
Net realized and unrealized investment gains (losses) from investment in MediaAlpha	—		—		—		—		—		85.2		85.2
Commission revenues	—		—		—		—		—		3.3		3.3

Other revenues	—		.8		(2.7)		—		—		30.6		28.7
Total revenues	24.9		7.8		280.1		7.4		43.8		167.9		531.9

Loss and loss adjustment expenses	—		—		147.6		.2		—		—		147.8
Acquisition expenses	1.8		.9		58.9		.9		—		—		62.5

Cost of sales	—		—		—		—		—		13.9		13.9
General and administrative expenses	1.1		16.2		35.1		.1		3.8		39.7		96.0


Change in fair value of contingent consideration	—		—		(2.4)		—		—		—		(2.4)

Interest expense	4.5		—		5.0		—		4.7		.8		15.0
Total expenses	7.4		17.1		244.2		1.2		8.5		54.4		332.8
Pre-tax income (loss) from continuing operations	$	17.5	$	(9.3)	$	35.9	$	6.2	$	35.3	$	113.5	$	199.1

(1) BAM manages its affairs on a statutory accounting basis. BAM’s statutory surplus includes the BAM Surplus Notes and is not reduced by accruals of interest expense on the BAM Surplus Notes. BAM’s statutory surplus is reduced only after a payment of principal or interest has been approved by the NYDFS.

Millions HG Global/BAM Ark NSM Kudu Other
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


Millions	HG Global/BAM				Ark/WM Outrigger				Other Operations
	HG Global		BAM (1)		Ark		Kudu					Total
Three Months Ended March 31, 2022
Earned insurance premiums	$	6.9	$	1.5	$	194.4	$	—		$	—	$	202.8
Net investment income	2.1		2.5		1.6		12.6			1.8		20.6
Net investment income (expense) - BAM Surplus Note interest	2.9		(2.9)		—		—			—		—
Net realized and unrealized investment gains (losses)	(23.5)		(21.6)		(17.5)		22.3			31.9		(8.4)
Net realized and unrealized investment gains (losses) from investment in MediaAlpha	—		—		—		—			18.8		18.8
Commission revenues	—		—		—		—			2.9		2.9

Other revenues	.1		.7		(2.8)		—			25.7		23.7
Total revenues	(11.5)		(19.8)		175.7		34.9			81.1		260.4
Losses and loss adjustment expenses	—		—		122.0		—			—		122.0
Acquisition expenses	2.6		.4		49.9		—			—		52.9

Cost of sales	—		—		—		—			21.4		21.4
General and administrative expenses	.7		15.6		21.0		2.8			29.8		69.9


Change in fair value of contingent consideration	—		—		2.1		—			—		2.1

Interest expense	—		—		3.8		2.8			.3		6.9
Total expenses	3.3		16.0		198.8		5.6			51.5		275.2
Pre-tax income (loss) from continuing operations	$	(14.8)	$	(35.8)	$	(23.1)	$	29.3		$	29.6	$	(14.8)

(1) ~~Other consists~~BAM manages its affairs on a statutory accounting basis. BAM’s statutory surplus includes the BAM Surplus Notes and is not reduced by accruals of ~~earned~~interest expense on the BAM Surplus Notes. BAM’s statutory surplus is reduced only after a payment of principal or interest has been approved by the NYDFS.

Note 15. Variable Interest Entities

BAM

BAM is owned by and operated for the benefit of its members, the municipalities that purchase BAM’s insurance ~~premiums, net~~for their debt issuances. However, the equity at risk funded by BAM’s members is not sufficient to fund its operations without the additional financial support provided by the BAM Surplus Notes and accordingly, White Mountains has determined that BAM is a VIE.

Pursuant to the FLRT, BAM’s underwriting guidelines may only be amended with the consent of HG Re. In addition, HG Holdings Ltd, a subsidiary of HG Global, has the right to designate two directors for election to BAM’s Board of Directors. As a result, we have determined that White Mountains is the primary beneficiary and is required to consolidate BAM’s results in its financial statements. Since BAM is owned by its members, its equity and results of operations are included in noncontrolling interests.

HG Re’s obligations under the FLRT are subject to an aggregate limit equal to the assets in the Collateral Trusts at any point in time.

WM Outrigger Re

White Mountains has determined that Outrigger Re Ltd. and WM Outrigger Re are VIEs. White Mountains is not the primary beneficiary of Outrigger Re Ltd. or the other segregated accounts. White Mountains is the primary beneficiary of WM Outrigger Re, as it has both the power to direct the activities that most significantly impact WM Outrigger Re’s economic performance and the obligation to absorb losses, or the right to receive returns, that could potentially be significant to WM Outrigger Re. As a result, White Mountains consolidates WM Outrigger Re’s results in its financial statements. The assets of WM Outrigger Re can only be used to settle the liabilities of WM Outrigger Re, and there is no recourse to the Company for any creditors of WM Outrigger Re.

PassportCard/DavidShield

As of March 31, 2023, White Mountains’s ownership interest in PassportCard/DavidShield was 53.8%. White Mountains has determined that both PassportCard and DavidShield are VIEs but that White Mountains is not the primary beneficiary and therefore does not consolidate either PassportCard or DavidShield. The governance structures for both PassportCard and DavidShield were designed to give White Mountains and its co-investor equal power to make the decisions that most significantly impact operations. White Mountains does not have the unilateral power to direct the operations of PassportCard or DavidShield and does not hold a controlling financial interest. White Mountains’s ownership interest gives White Mountains the ability to exert significant influence over the significant financial and operating activities of PassportCard/DavidShield. Accordingly, White Mountains’s investment ~~income,~~in PassportCard/DavidShield meets the criteria to be accounted for under the equity method. White Mountains has taken the fair value option for its investment in PassportCard/DavidShield. Changes in the fair value of PassportCard/DavidShield are recorded in net realized and unrealized investment gains (losses). As of March 31, 2023, White Mountains’s maximum exposure to loss on its equity investment in PassportCard/DavidShield and ~~other revenues outside~~ the ~~scope~~non-interest-bearing loan to its partner is the total carrying value of ~~ASC 606,~~ ~~Revenues from Contracts with Customers.~~$149.7 million.

Elementum

Millions HG Global/BAM Ark NSM Kudu Other
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~~As of ~~earned insurance premiums, net~~March 31, 2023, White Mountains’s ownership interest in Elementum was 26.6%. White Mountains has determined that Elementum is a VIE but that White Mountains is not the primary beneficiary and therefore does not consolidate Elementum. White Mountains’s ownership interest gives White Mountains the ability to exert significant influence over the significant financial and operating activities of Elementum. Accordingly, Elementum meets the criteria to be accounted for under the equity method. White Mountains has taken the fair value option for its investment ~~income,~~in Elementum. Changes in the fair value of Elementum are recorded in net realized and unrealized investment gains (losses). As of March 31, 2023, White Mountains’s maximum exposure to loss on its limited partnership interest in Elementum is the carrying value of $30.0 million.

Limited Partnerships

White Mountains’s investments in limited partnerships are generally considered VIEs because the limited partnership interests do not have substantive kick-out rights or participating rights. White Mountains does not have the unilateral power to direct the operations of these limited partnerships, and ~~other revenues outside~~therefore White Mountains is not the ~~scope~~primary beneficiary and does not consolidate the limited partnerships. White Mountains has taken the fair value option for its investments in limited partnerships, which are generally measured at NAV as a practical expedient. As of ~~ASC 606,~~ ~~Revenues from Contracts with Customers.~~March 31, 2023, White Mountains’s maximum exposure to loss on its investments in limited partnerships is the carrying value of $159.4 million.

Note 16. ~~Equity-Method~~Equity Method Eligible Investments

White Mountains’s equity method eligible investments include Kudu’s Participation Contracts, White Mountains’s investment in MediaAlpha, PassportCard/DavidShield, Elementum Holdings, L.P. and 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, ~~2022~~2023 and December 31, ~~2021:~~2022:


		March 31, 2022				December 31, 2021					March 31, 2023			December 31, 2022
Millions		Ownership Interest		Carrying Value		Ownership Interest		Carrying Value
Kudu Participation Contracts (1)		3.2 - 33.4%		$	691.8	3.2 - 32.0%		669.5
$ in Millions										$ in Millions	Ownership Interest (1)	Carrying Value		Ownership Interest (1)	Carrying Value
Kudu’s Participation Contracts (1)										Kudu’s Participation Contracts (1)	4.1% - 30.0%	$	683.2	4.1% - 30.0%	$	695.9
Investment in MediaAlpha	Investment in MediaAlpha	27.7	%	280.4		28.0	%	$	261.6	Investment in MediaAlpha	26.8%	253.8		27.1%	168.6
PassportCard/DavidShield	PassportCard/DavidShield	53.8	%	125.0		53.8	%	120.0		PassportCard/DavidShield	53.8%	140.0		53.8%	135.0
Elementum Holdings, L.P.	Elementum Holdings, L.P.	29.7	%	45.0		29.7	%	45.0		Elementum Holdings, L.P.	26.6%	30.0		29.7%	30.0
Other equity method eligible investments, at fair value	Other equity method eligible investments, at fair value	Under 50.0%		104.9		Under 50.0%		109.3		Other equity method eligible investments, at fair value	Under 50.0%	180.8		Under 50.0%	84.4
Other equity method eligible investments, at fair value	Other equity method eligible investments, at fair value	50.0% and over		33.9		50.0% and over		17.8		Other equity method eligible investments, at fair value	50.0% and over	10.5		50.0% and over	—

(1) Ownership interest generally references basic ownership interest with the exception of Kudu’s Participation Contracts, which are ~~non-controlling~~noncontrolling equity interests in the form of revenue and earnings participation contracts.

For the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, White Mountains received dividend and income distributions from equity method eligible investments of ~~$13.1~~$7.7 million and ~~$13.7~~$13.1 million, which were recorded within net investment income in the consolidated ~~statement~~statements 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”.~~ ~~For the three months ended March 31, 2022 and 2021, MediaAlpha was considered a significant subsidiary.~~

~~The following tables present summarized financial information for MediaAlpha as of March 31, 2022 and December 31, 2021 and for the three months ended March 31, 2022 and 2021:~~

Millions March 31, 2022 December 31, 2021
Balance sheet data:
Total assets $ 275.2 $ 289.8
Total liabilities $ 332.9 $ 351.4

Three Months Ended March 31,
Millions 2022 2021
Income statement data:
Total revenues $ 142.6 $ 173.6
Total expenses $ 152.4 $ 173.4
Net income (loss) $ (9.8) $ .2

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~~table presents the fair value and carrying value of these financial instruments as of March 31, ~~2022~~2023 and December 31, ~~2021:~~2022:


		March 31, 2022				December 31, 2021					March 31, 2023				December 31, 2022
Millions	Millions	Fair Value		Carrying Value		Fair Value		Carrying Value		Millions	Fair Value		Carrying Value		Fair Value		Carrying Value
HG Global Senior Notes										HG Global Senior Notes	$	158.8	$	146.6	$	155.7	$	146.5
Ark 2007 Subordinated Notes	Ark 2007 Subordinated Notes	$	27.8	$	30.0	$	27.6	$	30.0	Ark 2007 Subordinated Notes	$	29.2	$	30.0	$	28.4	$	30.0
Ark 2021 Subordinated Notes	Ark 2021 Subordinated Notes	$	163.4	$	154.8	$	162.8	$	155.9	Ark 2021 Subordinated Notes	$	165.5	$	154.5	$	163.1	$	153.7
NSM Bank Facility		$	273.1	$	270.0	$	275.8	$	271.2
Other NSM debt		$	.7	$	.6	$	1.0	$	.9
Kudu Credit Facility	Kudu Credit Facility	$	241.8	$	218.2	$	246.8	$	218.2	Kudu Credit Facility	$	208.2	$	191.6	$	223.9	$	208.3

Other Operations debt	Other Operations debt	$	17.7	$	17.3	$	17.7	$	16.8	Other Operations debt	$	35.4	$	33.6	$	38.2	$	36.7

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.”

4540

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.

Note 19. Held for Sale and Discontinued Operations

~~Sirius Group~~NSM

On ~~April 18, 2016,~~August 1, 2022, White Mountains ~~completed~~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 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 tofor 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~~closing of the ~~Swedish Tax Agency’s denial~~transaction, and the results 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~~operations for NSM Group have been classified as discontinued operations ~~reflecting~~in the ~~value~~statements of ~~these interest deductions.~~

Asoperations and comprehensive income through the closing of ~~December 31, 2020, White Mountains’s liability related~~the transaction. Prior period amounts have been reclassified to conform to the ~~tax indemnification provided in connection~~current period’s presentation.

Net Income (Loss) from Discontinued Operations

The following table summarizes the results of operations, including related income taxes associated 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. Forbusinesses classified as discontinued operations for the three months ended March 31, 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.2022:

~~NSM~~

On April 12, 2021, NSM completed 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, and 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 and $16.1 million of insurance licenses, investments and cash, as assets held for sale.


Millions	Three Months Ended March 31, 2022
Revenues
Commission revenues	$	70.1
Other revenues	18.4
Total revenues	88.5
Expenses
General and administrative expenses	54.0
Broker commission expenses	20.6
Change in fair value of contingent consideration	.1
Amortization of other intangible assets	9.1

Interest expense	2.1
Total expenses	85.9
Pre-tax income (loss) from discontinued operations	2.6
Income tax (expense) benefit	1.1
Net income (loss) from discontinued operations, net of tax	3.7



Net (income) loss from discontinued operations attributable to noncontrolling interests	(.1)
Total income (loss) from discontinued operations attributable to White Mountains’s common shareholders	3.6
Other comprehensive income (loss) from discontinued operations, net of tax	(1.9)

Comprehensive income (loss) from discontinued operations	1.7
Other comprehensive income (loss) from discontinued operations attributable to noncontrolling interests	.1
Comprehensive income (loss) from discontinued operations attributable to White Mountains’s common shareholders	$	1.8

4641

Net Change in Cash from Discontinued Operations

The following table summarizes the net change in cash associated with the businesses classified as discontinued operations for the three months ended March 31, 2022:


Millions	Three Months Ended March 31, 2022
Net cash provided from (used for) operations	$	4.4
Net cash provided from (used for) investing activities	7.3
Net cash used from (used for) financing activities	(10.3)
Effect of exchange rate changes on cash	.6
Net change in cash during the period	2.0
Cash balances at beginning of period (includes restricted cash of $89.2)	111.6

Cash balances at end of period (includes restricted cash of $90.2 )	113.6
Supplemental cash flows information:
Interest paid	$	(2.9)
Net income tax payments	$	—

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 months ended March 31, ~~2022 and 2021:~~2022:

Three Months Ended
March 31,
2022 2021
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 tax 33.4 (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 period 3,006.2 3,100.2
Average unvested restricted common shares (3)
(29.6) (32.4)
Basic earnings per share denominator 2,976.6 3,067.8
Diluted earnings per share denominator (in thousands):
Total average common shares outstanding during the period 3,006.2 3,100.2
Average unvested restricted common shares (3)
(29.6) (32.4)
Diluted earnings per share denominator 2,976.6 3,067.8
Basic and diluted earnings (losses) per share (in dollars) - discontinued operations: $ — $ 6.03



	Three Months Ended March 31, 2022
Basic and diluted earnings per share numerators (in millions):
Net income (loss) attributable to White Mountains’s common shareholders	$	33.4
Less: net income (loss) from continuing operations	(12.1)
Less: net (income) loss from continuing operations attributable to noncontrolling interests	41.9
Total gain (loss) from discontinued operations attributable to White Mountains’s common shareholders (1)	3.6
Allocation of earnings to participating restricted common shares (2)	—
Basic and diluted earnings per share numerators (3)	$	3.6
Basic earnings per share denominators (in thousands):
Total average common shares outstanding during the period	3,006.2
Average unvested restricted common shares (4)	(29.6)
Basic earnings per share denominator	2,976.6
Diluted earnings per share denominator (in thousands):
Total average common shares outstanding during the period	3,006.2
Average unvested restricted common shares (4)	(29.6)

Diluted earnings per share denominator	2,976.6

Basic and diluted earnings (losses) per share (in dollars) - discontinued operations:	$	1.20

(1)Includes net income (loss) from discontinued operations, net of tax - NSM Group

(2) Restricted shares issued by White Mountains receive dividends, and therefore, 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 months ended March 31, ~~2022 and 2021.~~2022.

~~(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.

4742

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 7565 for specific important factors that could cause actual results to differ materially from those contained in forward-looking statements.

The following discussion also includes ~~twelve~~five 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) Ark’s adjusted insurance acquisition expense ratio, (v) Ark’s adjusted other underwriting expense ratio, (vi) Ark’s adjusted combined ratio (vii) NSM’sKudu’s earnings before interest, taxes, depreciation and amortization (“EBITDA”), ~~(viii) NSM’s adjusted EBITDA, (ix) Kudu’s EBITDA, (x)~~(iii) Kudu’s adjusted EBITDA, ~~(xi)~~(iv) total consolidated portfolio returns excluding MediaAlpha, and ~~(xii)~~(v) adjusted capital, that have been reconciled from their most comparable GAAP financial measures on page ~~72.~~63. White Mountains believes these measures to be useful in evaluating White Mountains’s financial performance and condition.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, ~~2022~~2023 AND ~~2021~~2022

Overview

White Mountains reported book value per share of $1,522 and adjusted book value per share of $1,567 as of March 31, 2023. Book value per share and adjusted book value per share both increased 5% in the first quarter of 2023, including dividends. The increases in book value per share and adjusted book value per share were driven primarily by investment returns, including MediaAlpha, and solid operating results at the operating companies. White Mountains reported book value per share of $1,183 and adjusted book value per share of $1,204 as of March 31, 2022. Book value per share and adjusted book value per share both increased 1% in the first quarter of 2022, including dividends. ~~Results in~~

During the first quarter of ~~2022 were driven primarily by positive results from~~2023, White Mountains repurchased and retired 18,623 of its common shares for $25 million at an average share price of $1,360.30, or 89% of White Mountains’s operating companies as well as positive returns from other long-term investments and White Mountains’s investment in MediaAlpha, partially offset by losses in the fixed income portfolio due to rising interest rates. White Mountains reportedMarch 31, 2023 book value per share and 87% of ~~$1,231 and~~White Mountains’s March 31, 2023 adjusted book value per ~~share of $1,242 as~~share. As of March 31, 2021. Book value per share and adjusted book value per share both decreased 2% in the first quarter of 2021, including dividends. Results in the first quarter of 2021 were driven by net realized and unrealized investment losses from2023, White Mountains’s ~~investment in MediaAlpha and a loss related to NSM’s sale of its Fresh Insurance motor business.~~undeployed capital was approximately $720 million.

In the HG Global/BAM segment, gross written premiums and MSC collected totaled $21 million in first quarter of 2023 compared to $22 million in the first quarter of ~~2022 compared to $26 million in the first quarter of 2021.~~2022. Total pricing was 6373 basis points in the first quarter of ~~2022~~2023 compared to 7463 basis points in ~~the~~ first quarter of ~~2021.~~2022. BAM insured municipal bonds with par value of ~~$3.5~~$2.9 billion in the first quarter of ~~2022~~2023 compared to $3.5 billion in the first quarter of ~~2021, which included $806 million from an assumed reinsurance transaction.~~2022. BAM’s total claims paying resources were $1,433 million as of March 31, 2023 compared to $1,423 million as of December 31, 2022 and $1,201 million as of March 31, ~~2022~~2022.

The Ark/WM Outrigger segment’s combined ratio was 92% in the first quarter of 2023. Ark/WM Outrigger reported gross written premiums of $809 million, net written premiums of $614 million and net earned premiums of $255 million in the first quarter of 2023. Ark/WM Outrigger reported pre-tax income of $42 million in the first quarter of 2023. Ark’s combined ratio was 94% in the first quarter of 2023 compared to $1,192 million as of December 31, 2021 and $1,144 million as of March 31, 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.

~~Ark reported a GAAP combined ratio of~~ 100% in the first quarter of ~~2022 compared to 109% in the first quarter of 2021.~~2022. Ark’s ~~adjusted combined ratio, which adds back amounts attributable to TPC providers, was 101% in the first quarter of 2022 compared to 108% in the first quarter of 2021. The adjusted~~ combined ratio in the first quarter of ~~2022~~2023 included 16three points of ~~catastrophe losses,~~unfavorable prior year loss reserve development, primarily due to Winter Storm Elliot, compared to two points of ~~which 11 points related to an estimate for incurred losses emanating from~~favorable prior year loss reserve development in the ~~conflict in Ukraine. The adjusted~~first quarter of 2022. Ark’s combined ratio in the first quarter of ~~2021~~2023 included negligible catastrophe losses compared to 17 points of catastrophe losses, ~~of which 14 points related to Winter Storm Uri. In~~driven primarily by losses from the conflict in Ukraine, in the first quarter of ~~2022,~~2022. Ark reported gross written premiums of $809 million, net written premiums of $570 million and net earned premiums of $250 million in the first quarter of 2023 compared to gross written premiums of $633 million, net written premiums of $544 million and net earned premiums of $194 ~~million. In~~million in the first quarter of ~~2021,~~2022. Ark reported pre-tax income (loss) of $36 million in the first quarter of 2023 compared to $(23) million in first quarter of 2022. Ark’s results included net realized and unrealized investment gains (losses) of $25 million in the first quarter of 2023 compared to $(18) million in the first quarter of 2022. WM Outrigger Re’s combined ratio was 21% in the first quarter of 2023. WM Outrigger Re reported gross ~~written premiums of $405 million,~~and net written premiums of ~~$342~~$44 million and net earned premiums of $105 million. Ark’s gross written premiums in the first quarter of 2022 were up 57% from the first quarter of 2021, with risk-adjusted rate change up approximately 9% year over year. Ark reported pre-tax loss of $23$5 million in the first quarter of ~~2022 compared to $33~~2023.

Kudu reported total revenues of $44 million, pre-tax income of $35 million and adjusted EBITDA of $11 million in the first quarter of ~~2021. Ark’s pre-tax loss for the first quarter 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 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~~2023 compared to ~~commission and other~~total 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.

~~Kudu reported total revenue~~ of $35 million, pre-tax income of $29 million and adjusted EBITDA of $10 million in the first quarter of ~~2022~~2022. Kudu’s revenues and pre-tax income included $30 million of net realized and unrealized investment gains in the first quarter of 2023 compared to ~~total revenue of $24 million, pre-tax income of $16 million and adjusted EBITDA of $6~~$22 million in the first quarter of 2021. Total revenues and pre-tax income in the first quarter of 2022 included $22 million of net unrealized investment gains on Kudu’s participation contracts compared to $16 million of net unrealized investment gains on Kudu’s participation contracts in the first quarter of 2021.2022.

As of March 31, ~~2022,~~2023, the market value of White Mountains’s investment in MediaAlpha was ~~$280~~$254 million, which ~~was up~~increased from ~~$262~~$169 million as of December 31, ~~2021.~~2022. As of March 31, ~~2022, the~~2023, MediaAlpha’s closing price was ~~$16.55~~$14.98 per share, which increased from ~~$15.44 at~~$9.95 as of December 31, ~~2021.~~2022. Based on White Mountains’s ownership of 16.9 million shares of MediaAlpha as of March 31, ~~2022,~~2023, 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. At the April 2023 month-end closing price of $7.40 per share, the fair value of White Mountains’s investment in MediaAlpha was $125 million, which would result in a decrease of approximately $50.00 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 4.5% in the first quarter of 2023, which included $85 million of unrealized investment gains from White Mountains’s investment in MediaAlpha. Excluding MediaAlpha, the total consolidated portfolio return on invested assets was 3.0% in the first quarter of 2023, driven primarily by net realized and unrealized investment gains from other long-term investments and common equity securities, as well as net unrealized investment gains in the fixed income portfolio due to a decline in interest rates. White Mountains’s total consolidated portfolio return on invested assets was 0.8% in the first quarter of ~~2022. This return~~2022, which included $19 million of unrealized investment gains from White Mountains’s investment in MediaAlpha. Excluding MediaAlpha, the total consolidated portfolio return on invested assets was 0.3% in the first quarter of ~~2022. Excluding MediaAlpha, investment returns in the first quarter of~~ 2022, ~~were~~ driven primarily by net realized and unrealized ~~investments~~investment gains ~~in the~~from other long-term investments, ~~portfolio,~~ 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%~~a rise in the first quarter of 2021. This return included $42 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% in the first quarter of 2021. Excluding MediaAlpha, investment returns in the first quarter of 2021 were driven primarily by net unrealized investments gains in the other long-term investments portfolio, which more than offset net unrealized investment losses in the fixed income portfolio due to rising interest rates.

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 March 31, 2023, December 31, 2022, and March 31, 2022. See NON-GAAP FINANCIAL MEASURES on page ~~72.~~63.


		March 31, 2022		December 31, 2021		March 31, 2021
Millions								Millions	March 31, 2023		December 31, 2022		March 31, 2022
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	$	3,902.4	$	3,746.9	$	3,542.1

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)	(93.4)		(95.1)		(120.9)
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)	243.3		242.1		215.8
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)	(69.4)		(69.0)		(60.6)
Adjusted book value per share numerator	Adjusted book value per share numerator	$	3,576.4	$	3,576.0	$	3,829.3	Adjusted book value per share numerator	$	3,982.9	$	3,824.9	$	3,576.4
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	2,564.5		2,572.1		2,994.2
Unearned restricted common shares	Unearned restricted common shares	(24.2)		(13.7)		(23.4)		Unearned restricted common shares	(22.3)		(14.1)		(24.2)

Adjusted book value per share denominator	Adjusted book value per share denominator	2,970.0		3,004.1		3,083.9		Adjusted book value per share denominator	2,542.2		2,558.0		2,970.0
GAAP book value per share	GAAP book value per share	$	1,183.00	$	1,175.73	$	1,231.27	GAAP book value per share	$	1,521.73	$	1,456.74	$	1,183.00
Adjusted book value per share	Adjusted book value per share	$	1,204.17	$	1,190.39	$	1,241.71	Adjusted book value per share	$	1,566.73	$	1,495.28	$	1,204.17
Year-to-date dividends paid per share	Year-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) Amount reflects White Mountains’s preferred share ownership in HG Global of 96.9%.

Goodwill and Other Intangible Assets

The following table presents ~~a summary of~~ goodwill and other intangible assets that are included in White Mountains’s adjusted book value as of March 31, ~~2022,~~2023, December 31, ~~2021,~~2022, and March 31, ~~2021:~~2022:


Millions	Millions	March 31, 2022		December 31, 2021		March 31, 2021		Millions	March 31, 2023		December 31, 2022		March 31, 2022
Goodwill:	Goodwill:							Goodwill:
Ark	Ark	$	116.8	$	116.8	$	116.8	Ark	$	116.8	$	116.8	$	116.8
NSM		499.1		503.2		477.7
Kudu	Kudu	7.6		7.6		7.6		Kudu	7.6		7.6		7.6
Other Operations	Other Operations	17.9		17.9		11.3		Other Operations	44.4		52.1		17.9
Total goodwill	Total goodwill	641.4		645.5		613.4		Total goodwill	168.8		176.5		142.3
Other intangible assets:	Other intangible assets:							Other intangible assets:
Ark	Ark	175.7		175.7		175.7		Ark	175.7		175.7		175.7
NSM		212.9		222.2		222.0
Kudu	Kudu	1.3		1.3		1.5		Kudu	.9		1.0		1.3
Other Operations	Other Operations	20.2		21.2		24.4		Other Operations	30.8		39.2		20.2
Total other intangible assets	Total other intangible assets	410.1		420.4		423.6		Total other intangible assets	207.4		215.9		197.2
Total goodwill and other intangible assets (1)	Total goodwill and other intangible assets (1)	1,051.5		1,065.9		1,037.0		Total goodwill and other intangible assets (1)	$	376.2	$	392.4	$	339.5
Goodwill and other intangible assets attributed to �� non-controlling interests		(117.1)		(117.6)		(108.4)
Goodwill and other intangible assets included in White Mountains’s common shareholders’ equity		$	934.4	$	948.3	$	928.6

(1) See Note 4 — “Goodwill and Other Intangible Assets” on page 22for details of ~~goodwill and~~ other intangible assets.

5044

Summary of Consolidated Results

The following table presents White Mountains’s consolidated financial results for the three months ended March 31, ~~2022~~2023 and ~~2021:~~2022:


		Three Months Ended
		March 31,						Three Months Ended March 31,
Millions	Millions		2022		2021		Millions		2023		2022
Revenues	Revenues						Revenues

Financial Guarantee revenues	Financial Guarantee revenues		$	(31.3)	$	(6.7)	Financial Guarantee revenues		$	32.7	$	(31.3)
P&C Insurance and Reinsurance revenues	P&C Insurance and Reinsurance revenues		175.7		109.1		P&C Insurance and Reinsurance revenues		287.5		175.7
Specialty Insurance Distribution revenues			88.5		74.8

Asset Management revenues	Asset Management revenues		34.9		24.1		Asset Management revenues		43.8		34.9

Other Operations revenues	Other Operations revenues		81.1		(23.1)		Other Operations revenues		167.9		81.1
Total revenues	Total revenues		348.9		178.2		Total revenues		531.9		260.4
Expenses	Expenses						Expenses
Financial Guarantee expenses	Financial Guarantee expenses		19.3		18.3		Financial Guarantee expenses		24.5		19.3
P&C Insurance and Reinsurance expenses	P&C Insurance and Reinsurance expenses		198.8		141.6		P&C Insurance and Reinsurance expenses		245.4		198.8
Specialty Insurance Distribution expenses			85.9		108.1

Asset Management expenses	Asset Management expenses		5.6		8.4		Asset Management expenses		8.5		5.6

Other Operations expenses	Other Operations expenses		51.5		40.5		Other Operations expenses		54.4		51.5
Total expenses	Total expenses		361.1		316.9		Total expenses		332.8		275.2
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)		8.2		(50.6)
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)		42.1		(23.1)
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)		35.3		29.3

Other Operations pre-tax income (loss)	Other Operations pre-tax income (loss)		29.6		(63.6)		Other Operations pre-tax income (loss)		113.5		29.6
Total pre-tax income (loss)			(12.2)		(138.7)
Total pre-tax income (loss) from continuing operations							Total pre-tax income (loss) from continuing operations		199.1		(14.8)
Income tax (expense) benefit	Income tax (expense) benefit		3.8		9.5		Income tax (expense) benefit		(11.9)		2.7
Net income (loss) from continuing operations	Net income (loss) from continuing operations		(8.4)		(129.2)		Net income (loss) from continuing operations		187.2		(12.1)
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		—		3.7

Net income (loss)	Net income (loss)		(8.4)		(110.5)		Net income (loss)		187.2		(8.4)
Net (income) loss attributable to non-controlling interests			41.8		35.2
Net (income) loss attributable to noncontrolling interests							Net (income) loss attributable to noncontrolling interests		(7.7)		41.8
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		179.5		33.4
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax		(2.3)		1.8		Other comprehensive income (loss), net of tax		1.2		(.4)
Other comprehensive income (loss) from discontinued operations, net of tax - NSM Group							Other comprehensive income (loss) from discontinued operations, net of tax - NSM Group		—		(1.9)

Comprehensive income (loss)	Comprehensive income (loss)		31.1		(73.5)		Comprehensive income (loss)		180.7		31.1
Other comprehensive (income) loss attributable to non-controlling interests			.2		(.1)
Other comprehensive (income) loss attributable to noncontrolling interests							Other comprehensive (income) loss attributable to noncontrolling interests		(.4)		.2
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		$	180.3	$	31.3

5145

I. ~~Summary of Operations By Segment~~SUMMARY OF OPERATIONS BY SEGMENT

As of March 31, ~~2022,~~2023, White Mountains conducted its operations through ~~five~~three segments: (1) HG Global/BAM, (2) ~~Ark,~~Ark/WM Outrigger, and (3) ~~NSM, (4)~~ Kudu, with our remaining operating businesses, holding companies and ~~(5)~~other assets included in Other Operations. ~~A discussion~~White Mountains has made its segment determination based on consideration of the following criteria: (i) the nature of the business activities of each of the Company’s subsidiaries and affiliates; (ii) the manner in which the Company’s subsidiaries and affiliates are organized; (iii) the existence of primary managers responsible for specific subsidiaries and affiliates; and (iv) the organization of information provided to the Company’s chief operating decision makers and its Board of Directors. Significant intercompany transactions among White Mountains’s ~~consolidated investment operations is included after the discussion of operations by segment.~~segments have been eliminated herein. White Mountains’s segment information is presented in Note 1514 — “Segment Information”to the Consolidated Financial Statements.

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~~the 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 months ended March 31, ~~2022~~2023 and ~~2021:~~2022:


		Three Months Ended March 31, 2022									Three Months Ended March 31, 2023
Millions	Millions	HG Global		BAM		Eliminations		Total		Millions	HG Global		BAM		Eliminations		Total
Direct written premiums	Direct written premiums	$	—	$	9.4	$	—	$	9.4	Direct written premiums	$	—	$	9.2	$	—	$	9.2
Assumed written premiums	Assumed written premiums	8.1		—		(8.1)		—		Assumed written premiums	7.7		—		(7.7)		—
Gross written premiums	Gross written premiums	8.1		9.4		(8.1)		9.4		Gross written premiums	7.7		9.2		(7.7)		9.2
Ceded written premiums	Ceded written premiums	—		(8.1)		8.1		—		Ceded written premiums	—		(7.7)		7.7		—
Net written premiums	Net written premiums	$	8.1	$	1.3	$	—	$	9.4	Net written premiums	$	7.7	$	1.5	$	—	$	9.2

Earned insurance premiums	Earned insurance premiums	$	6.9	$	1.5	$	—	$	8.4	Earned insurance premiums	$	6.4	$	1.3	$	—	$	7.7
Net investment income	Net investment income	2.1		2.5		—		4.6		Net investment income	4.0		3.2		—		7.2
Net investment income - BAM Surplus Notes	Net investment income - BAM Surplus Notes	2.9		—		(2.9)		—		Net investment income - BAM Surplus Notes	6.6		—		(6.6)		—
Net realized and unrealized investment gains (losses)	Net realized and unrealized investment gains (losses)	(23.5)		(21.6)		—		(45.1)		Net realized and unrealized investment gains (losses)	7.9		9.1		—		17.0
Other revenues	Other revenues	.1		.7		—		.8		Other revenues	—		.8		—		.8
Total revenues	Total revenues	(11.5)		(16.9)		(2.9)		(31.3)		Total revenues	24.9		14.4		(6.6)		32.7
Insurance acquisition expenses		2.6		.4		—		3.0
Acquisition expenses										Acquisition expenses	1.8		.9		—		2.7

General and administrative expenses	General and administrative expenses	.7		15.6		—		16.3		General and administrative expenses	1.1		16.2		—		17.3
Interest expense										Interest expense	4.5		—		—		4.5
Interest expense - BAM Surplus Notes	Interest expense - BAM Surplus Notes	—		2.9		(2.9)		—		Interest expense - BAM Surplus Notes	—		6.6		(6.6)		—
Total expenses	Total expenses	3.3		18.9		(2.9)		19.3		Total expenses	7.4		23.7		(6.6)		24.5
Pre-tax income (loss)	Pre-tax income (loss)	$	(14.8)	$	(35.8)	$	—	$	(50.6)	Pre-tax income (loss)	$	17.5	$	(9.3)	$	—	$	8.2
Supplemental information:	Supplemental information:									Supplemental information:
MSC collected (1)	MSC collected (1)	$	—	12.3		$	—	$	12.3	MSC collected (1)	$	—	$	11.8	$	—	$	11.8

(1) MSC collected are recorded directly to BAM’s equity, which is recorded as ~~non-controlling~~noncontrolling interest on White Mountains’s balance sheet.


		Three Months Ended March 31, 2021									Three Months Ended March 31, 2022
Millions	Millions	HG Global		BAM		Eliminations		Total		Millions	HG Global		BAM		Eliminations		Total
Direct written premiums	Direct written premiums	$	—	$	8.0	$	—	$	8.0	Direct written premiums	$	—	$	9.4	$	—	$	9.4
Assumed written premiums	Assumed written premiums	10.7		4.5		(10.7)		4.5		Assumed written premiums	8.1		—		(8.1)		—
Gross written premiums	Gross written premiums	10.7		12.5		(10.7)		12.5		Gross written premiums	8.1		9.4		(8.1)		9.4
Ceded written premiums	Ceded written premiums	—		(10.7)		10.7		—		Ceded written premiums	—		(8.1)		8.1		—
Net written premiums	Net written premiums	$	10.7	$	1.8	$	—	$	12.5	Net written premiums	$	8.1	$	1.3	$	—	$	9.4

Earned insurance premiums	Earned insurance premiums	$	5.3	$	1.1	$	—	$	6.4	Earned insurance premiums	$	6.9	$	1.5	$	—	$	8.4
Net investment income	Net investment income	1.8		2.7		—		4.5		Net investment income	2.1		2.5		—		4.6
Net investment income - BAM Surplus Notes	Net investment income - BAM Surplus Notes	3.0		—		(3.0)		—		Net investment income - BAM Surplus Notes	2.9		—		(2.9)		—
Net realized and unrealized investment gains (losses)	Net realized and unrealized investment gains (losses)	(9.9)		(8.0)		—		(17.9)		Net realized and unrealized investment gains (losses)	(23.5)		(21.6)		—		(45.1)
Other revenues	Other revenues	.1		.2		—		.3		Other revenues	.1		.7		—		.8
Total revenues	Total revenues	0.3		(4.0)		(3.0)		(6.7)		Total revenues	(11.5)		(16.9)		(2.9)		(31.3)
Insurance acquisition expenses		1.5		.4		—		1.9
Acquisition expenses										Acquisition expenses	2.6		.4		—		3.0

General and administrative expenses	General and administrative expenses	.6		15.8		—		16.4		General and administrative expenses	.7		15.6		—		16.3
Interest expense - BAM Surplus Notes	Interest expense - BAM Surplus Notes	—		3.0		(3.0)		—		Interest expense - BAM Surplus Notes	—		2.9		(2.9)		—
Total expenses	Total expenses	2.1		19.2		(3.0)		18.3		Total expenses	3.3		18.9		(2.9)		19.3
Pre-tax loss		$	(1.8)	$	(23.2)	$	—	$	(25.0)
Pre-tax income (loss)										Pre-tax income (loss)	$	(14.8)	$	(35.8)	$	—	$	(50.6)
Supplemental information:	Supplemental information:									Supplemental information:
MSC collected (1)	MSC collected (1)	$	—	$	13.8	$	—	$	13.8	MSC collected (1)	$	—	12.3		$	—	$	12.3

(1) MSC collected are recorded directly to BAM’s equity, which is recorded as ~~non-controlling~~noncontrolling interest on White Mountains’s balance sheet.

HG Global/BAM Results—Three Months Ended March 31, ~~2022~~2023 versus Three Months Ended March 31, ~~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.2022

Gross written premiums and MSC collected in the HG Global/BAM segment totaled $21 million in the first quarter of 2023 compared to $22 million in the first quarter of ~~2022 compared to $26 million~~2022. BAM insured $2.9 billion of municipal bonds, $2.2 billion of which were in the primary market, in the first quarter of ~~2021. BAM insured~~2023 compared to $3.5 billion of municipal bonds, $2.8 billion of which were in the primary market, in the first quarter of ~~2022 compared to $3.5 billion of municipal bonds, $2.5 billion of which were~~2022.

Insured penetration in the primary market decreased to 7.7% in the first quarter of ~~2021. In the first quarter of 2021, BAM completed an assumed reinsurance transaction~~2023 compared to ~~insure municipal bonds with a par value of $806 million. Demand remained strong for insured bonds in the primary market, as insured penetration in the primary market was~~ 8.1% in the first quarter of 2022, driven primarily by increased issuances by large, highly-rated issuers that do not typically utilize financial guarantee insurance, compared to ~~7.5% in~~ the first quarter of ~~2021.~~2022.

Total pricing, which reflects both gross written premiums and MSC, ~~from new business, decreased~~increased to 73 basis points in the first quarter of 2023 compared to 63 basis points in the first quarter of ~~2022 compared~~2022. The increase in total pricing was driven primarily by higher pricing in both the primary and secondary markets, as well as increased secondary market activity relative to 74the primary market. Pricing in the primary market increased to 52 basis points in the first quarter of ~~2021. See~~ ~~“NON-GAAP FINANCIAL MEASURES”~~ on page 72. The decrease in total pricing was driven primarily by a decrease in pricing in the primary market, partially offset by an increase in pricing for the combined secondary and assumed reinsurance markets in the first quarter of 20222023 compared ~~to the first quarter of 2021. Pricing in the primary market decreased~~ to 45 basis points in the first quarter of ~~2022 compared~~2022. Pricing in the secondary market, which is more transaction specific than pricing in the primary market, increased to 58137 basis points in the first quarter of ~~2021. Pricing in the combined secondary and assumed reinsurance markets increased~~2023 compared to 134 basis points in the first quarter of ~~2022 compared to 117 basis points in the first quarter of 2021.~~

2022.

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, ~~2022~~2023 and ~~2021:~~2022:

Three Months Ended March 31,
$ in Millions 2022 2021
Gross par value of primary market policies issued 2,755.1 $ 2,542.0
Gross par value of secondary market policies issued 699.1 177.1
Gross par value of assumed reinsurance — 805.5
Total gross par value of market policies issued $ 3,454.2 $ 3,524.6
Gross written premiums 9.4 $ 12.5
MSC collected 12.3 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 pricing 63 bps 74 bps

~~(1)~~ ~~See “NON-GAAP FINANCIAL MEASURES” on page 72.~~



	Three Months Ended March 31,
$ in Millions	2023		2022




Gross par value of primary market policies issued	$	2,185.4	$	2,755.1
Gross par value of secondary market policies issued	704.2		699.1

Total gross par value of market policies issued	$	2,889.6	$	3,454.2
Gross written premiums	$	9.2	$	9.4
MSC collected	11.8		12.3
Total gross written premiums and MSC collected	$	21.0	$	21.7



Total pricing	73 bps		63 bps

HG Global reported pre-tax ~~loss~~income (loss) of ~~$15~~$18 million in the first quarter of 2023 compared to $(15) million in the first quarter of 2022. HG Global’s results included net realized and unrealized investment gains (losses) on its fixed income portfolio of $8 million in the first quarter of 2023 as interest rates decreased compared to $(24) million in the first quarter of 2022 ~~compared to $2 million~~as interest rates increased. HG Global’s results in the first quarter of 2021. The change in pre-tax loss was driven primarily by lower investment returns on the HG Global fixed income portfolio, as interest rates increased in the first quarter of 2022 resulting in net unrealized losses. Results in the first quarter of 2022 and 2021 both2023 also included $3$7 million of interest income on the BAM Surplus ~~Notes.~~

~~On April 29,~~Notes compared to $3 million in the first quarter of 2022 ~~HG Global received~~as 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~~interest rate increased to ~~shareholders, of which $116 million was paid to White Mountains.~~8% from 3%.

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~~noncontrolling interests. White Mountains reported ~~$36~~$9 millionof GAAP pre-tax loss from BAM in the first quarter of ~~2022~~2023 compared to ~~$23~~$36 million in the first quarter of ~~2021. The change in pre-tax loss was driven primarily by lower~~2022. BAM’s results included net realized and unrealized investment ~~returns~~gains (losses) on ~~the BAM~~its fixed income portfolio of $9 million in the first quarter of 2023 as interest rates ~~increased~~decreased compared to $(22) million in the first quarter of 2022 ~~resulting in net unrealized losses. Results~~as interest rates increased. BAM’s results in the first quarter of ~~2022 and 2021 both~~2023 also included $3$7 million of interest expense on the BAM Surplus Notes ~~and $16~~compared to $3 million in the first quarter of ~~general and administrative expenses.~~2022.

~~Through 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.~~

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 $1,433 million as of March 31, 2023 compared to $1,423 million as of December 31, 2022 and $1,201 million as of March 31, ~~2022 compared to $1,192 million as of December 31, 2021 and $1,144 million as of March 31, 2021.~~2022. The increase in claims paying resources as of March 31, ~~2022~~2023 compared to December 31, ~~2021~~2022 was driven primarily by ~~increases~~an increase in the ~~statutory value of the collateral trusts~~HG Re Collateral Trusts resulting from deposits of ceded ~~premiums. In~~premiums for the first quarter of ~~2021,~~2023. In the fourth quarter of 2022, 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.

The following table presents BAM’s total claims paying resources as of March 31, ~~2022,~~2023, December 31, ~~2021~~2022 and March 31, ~~2021:~~2022:

Millions March 31, 2022 December 31, 2021 March 31, 2021
Policyholders’ surplus $ 294.7 $ 298.1 $ 321.3
Contingency reserve 105.7 101.8 92.2
Qualified statutory capital 400.4 399.9 413.5
Net unearned premiums 49.8 49.5 46.2
Present value of future installment premiums and MSC 13.8 13.8 13.9
HG Re Collateral trusts at statutory value 486.7 478.9 420.7
Fidus Re Collateral trust at statutory value 250.0 250.0 250.0
Claims paying resources $ 1,200.7 $ 1,192.1 $ 1,144.3


Millions	March 31, 2023		December 31, 2022		March 31, 2022
Policyholders’ surplus	$	279.9	$	283.4	$	294.7
Contingency reserve	122.5		118.2		105.7
Qualified statutory capital	402.4		401.6		400.4
Statutory net unearned premiums	56.1		55.3		49.8
Present value of future installment premiums and MSC	12.4		13.3		13.8
HG Re Collateral Trusts at statutory value	562.5		553.1		486.7
Fidus Re collateral trusts at statutory value	400.0		400.0		250.0
Claims paying resources	$	1,433.4	$	1,423.3	$	1,200.7

5548

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, ~~2022~~2023 and December 31, ~~2021:~~2022:


		March 31, 2022									March 31, 2023
Millions	Millions	HG Global		BAM		Eliminations and Segment Adjustment		Total		Millions	HG Global		BAM		Eliminations and Segment Adjustments		Total
Assets	Assets									Assets
Fixed maturity investments, at fair value	Fixed maturity investments, at fair value	$	430.6	$	443.2	$	—	$	873.8	Fixed maturity investments, at fair value	$	501.8	$	423.0	$	—	$	924.8
Short-term investments, at fair value	Short-term investments, at fair value	33.1		3.4		—		36.5		Short-term investments, at fair value	47.3		18.6		—		65.9
Total investments	Total investments	463.7		446.6		—		910.3		Total investments	549.1		441.6		—		990.7
Cash	Cash	12.2		10.1		—		22.3		Cash	3.6		1.2		—		4.8
BAM Surplus Notes	BAM Surplus Notes	364.6		—		(364.6)		—		BAM Surplus Notes	340.0		—		(340.0)		—
Accrued interest receivable on BAM Surplus Notes	Accrued interest receivable on BAM Surplus Notes	160.6		—		(160.6)		—		Accrued interest receivable on BAM Surplus Notes	164.5		—		(164.5)		—
Insurance premiums receivable	Insurance premiums receivable	4.4		6.9		(4.4)		6.9		Insurance premiums receivable	4.0		6.3		(4.0)		6.3
Deferred acquisition costs	Deferred acquisition costs	62.6		33.1		(62.6)		33.1		Deferred acquisition costs	71.7		36.9		(71.7)		36.9

Other assets	Other assets	2.3		16.4		(.3)		18.4		Other assets	6.6		15.2		(.2)		21.6
Total assets	Total assets	$	1,070.4	$	513.1	$	(592.5)	$	991.0	Total assets	$	1,139.5	$	501.2	$	(580.4)	$	1,060.3
Liabilities	Liabilities									Liabilities
BAM Surplus Notes(1)	BAM Surplus Notes(1)	$	—	$	364.6	$	(364.6)	$	—	BAM Surplus Notes (1)	$	—	$	340.0	$	(340.0)	$	—
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)	—		164.5		(164.5)		—
Preferred dividends payable to White Mountains’s subsidiaries(3)		415.5		—		—		415.5
Preferred dividends payable to non-controlling interests		14.7		—		—		14.7
Preferred dividends payable to White Mountains (3)										Preferred dividends payable to White Mountains (3)	355.5		—		—		355.5
Preferred dividends payable to noncontrolling interests										Preferred dividends payable to noncontrolling interests	13.0		—		—		13.0
Unearned insurance premiums	Unearned insurance premiums	222.6		44.7		—		267.3		Unearned insurance premiums	251.1		48.7		—		299.8
Debt										Debt	146.6		—		—		146.6
Intercompany debt (4)										Intercompany debt (4)	1.5		—		—		1.5
Accrued incentive compensation	Accrued incentive compensation	.5		10.7		—		11.2		Accrued incentive compensation	.8		11.3		—		12.1

Other liabilities	Other liabilities	.9		80.0		(67.3)		13.6		Other liabilities	4.1		88.9		(75.9)		17.1
Total liabilities	Total liabilities	654.2		660.6		(592.5)		722.3		Total liabilities	772.6		653.4		(580.4)		845.6
Equity	Equity									Equity
White Mountains’s common shareholders’ equity		410.8		—		—		410.8
Non-controlling interests		5.4		(147.5)		—		(142.1)
White Mountains’s common shareholders’ equity (3) (4)										White Mountains’s common shareholders’ equity (3) (4)	367.2		—		—		367.2
Noncontrolling interests										Noncontrolling interests	(.3)		(152.2)		—		(152.5)
Total equity	Total equity	416.2		(147.5)		—		268.7		Total equity	366.9		(152.2)		—		214.7
Total liabilities and equity	Total liabilities and equity	$	1,070.4	$	513.1	$	(592.5)	$	991.0	Total liabilities and equity	$	1,139.5	$	501.2	$	(580.4)	$	1,060.3

(1) Under GAAP, the BAM Surplus Notes are classified as ~~debt by the issuer.~~debt. Under U.S. Statutory accounting, they are classified as policyholders’ surplus.

(2) Under GAAP, interest accrues daily on the BAM Surplus Notes. Under U.S. Statutory accounting, interest is not accrued on the BAM Surplus Notes until it has been approved for payment by insurance regulators.

(3) HG ~~Global~~Global’s preferred dividends payable to White ~~Mountains’s subsidiaries is~~Mountains are eliminated in White Mountains’s consolidated financial statements. For segment reporting, ~~the~~ HG ~~Global~~Global’s preferred dividends payable to White ~~Mountains’s subsidiaries~~Mountains 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~~Operations.

(4) HG Global’s intercompany debt is eliminated in White Mountains’s ~~common shareholders’ equity~~consolidated financial statements. For segment reporting, HG Global’s intercompany debt included within the HG Global/BAM ~~segment.~~segment is eliminated against the offsetting receivable included within Other Operations.

5649


		December 31, 2021									December 31, 2022
Millions	Millions	HG Global		BAM		Eliminations and Segment Adjustment		Total Segment		Millions	HG Global		BAM		Eliminations and Segment Adjustments		Total Segment
Assets	Assets									Assets
Fixed maturity investments, at fair value	Fixed maturity investments, at fair value	$	461.7	$	472.4	$	—	$	934.1	Fixed maturity investments, at fair value	$	489.6	$	420.3	$	—	$	909.9
Short-term investments, at fair value	Short-term investments, at fair value	17.8		14.6		—		32.4		Short-term investments, at fair value	42.0		23.9		—		65.9
Total investments	Total investments	479.5		487.0		—		966.5		Total investments	531.6		444.2		—		975.8
Cash	Cash	13.4		6.4		—		19.8		Cash	13.2		5.0		—		18.2
BAM Surplus Notes	BAM Surplus Notes	364.6		—		(364.6)		—		BAM Surplus Notes	340.0		—		(340.0)		—
Accrued interest receivable on BAM Surplus Notes	Accrued interest receivable on BAM Surplus Notes	157.6		—		(157.6)		—		Accrued interest receivable on BAM Surplus Notes	157.9		—		(157.9)		—
Insurance premiums receivable	Insurance premiums receivable	4.3		6.9		(4.3)		6.9		Insurance premiums receivable	4.3		6.6		(4.3)		6.6
Deferred acquisition costs	Deferred acquisition costs	62.7		33.1		(62.7)		33.1		Deferred acquisition costs	71.2		36.0		(71.2)		36.0

Other assets	Other assets	2.1		16.6		(.2)		18.5		Other assets	7.0		15.1		(.2)		21.9
Total assets	Total assets	$	1,084.2	$	550.0	$	(589.4)	$	1,044.8	Total assets	$	1,125.2	$	506.9	$	(573.6)	$	1,058.5
Liabilities	Liabilities									Liabilities
BAM Surplus Notes(1)	BAM Surplus Notes(1)	$	—	$	364.6	$	(364.6)	$	—	BAM Surplus Notes (1)	$	—	$	340.0	$	(340.0)	$	—
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)	—		157.9		(157.9)		—
Preferred dividends payable to White Mountains’s subsidiaries(3)		400.5		—		—		400.5
Preferred dividends payable to non-controlling interests		14.2		—		—		14.2
Preferred dividends payable to White Mountains (3)										Preferred dividends payable to White Mountains (3)	341.4		—		—		341.4
Preferred dividends payable to noncontrolling interests										Preferred dividends payable to noncontrolling interests	12.5		—		—		12.5
Unearned insurance premiums	Unearned insurance premiums	221.5		44.8		—		266.3		Unearned insurance premiums	249.8		48.5		—		298.3
Debt										Debt	146.5		—		—		146.5��
Intercompany debt (4)										Intercompany debt (4)	6.0		—		—		6.0
Accrued incentive compensation	Accrued incentive compensation	1.1		23.6		—		24.7		Accrued incentive compensation	1.3		26.7		—		28.0

Other liabilities	Other liabilities	.5		83.4		(67.2)		16.7		Other liabilities	3.7		88.5		(75.7)		16.5
Total liabilities	Total liabilities	637.8		674.0		(589.4)		722.4		Total liabilities	761.2		661.6		(573.6)		849.2
Equity	Equity									Equity
White Mountains’s common shareholders’ equity		437.5		—		—		437.5
Non-controlling interests		8.9		(124.0)		—		(115.1)
White Mountains’s common shareholders’ equity (3) (4)										White Mountains’s common shareholders’ equity (3) (4)	364.6		—		—		364.6
Noncontrolling interests										Noncontrolling interests	(.6)		(154.7)		—		(155.3)
Total equity	Total equity	446.4		(124.0)		—		322.4		Total equity	364.0		(154.7)		—		209.3
Total liabilities and equity	Total liabilities and equity	$	1,084.2	$	550.0	$	(589.4)	$	1,044.8	Total liabilities and equity	$	1,125.2	$	506.9	$	(573.6)	$	1,058.5

(1) Under GAAP, the BAM Surplus Notes are classified as ~~debt by the issuer.~~debt. Under U.S. Statutory accounting, they are classified as policyholders’ surplus.

5750

~~Ark~~Ark/WM Outrigger

Ark is a specialty property and casualty insurance and reinsurance company that offers a wide range of niche insurance and reinsurance products, including property, 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 ~~loss~~income (loss) included in ~~White Mountains’s Ark~~the Ark/WM Outrigger segment for the three months ended March 31, ~~2022~~2023 and ~~2021:~~2022:


							Three Months Ended March 31,
		Three Months Ended March 31,						2023								2022
Millions	Millions	2022		2021		Millions		Ark		WM Outrigger Re		Eliminations		Total		Ark
Earned insurance and reinsurance premiums		$	194.4	$	104.6
Direct written premiums						Direct written premiums		$	246.2	$	—	$	—	$	246.2	$	230.9
Assumed written premiums						Assumed written premiums		563.2		44.1		(44.1)		563.2		402.2
Gross written premiums						Gross written premiums		809.4		44.1		(44.1)		809.4		633.1
Ceded written premiums						Ceded written premiums		(239.3)		—		44.1		(195.2)		(89.3)
Net written premiums						Net written premiums		$	570.1	$	44.1	$	—	$	614.2	$	543.8

Earned insurance premiums						Earned insurance premiums		$	249.9	$	5.2	$	—	$	255.1	$	194.4
Net investment income	Net investment income	1.6		.8		Net investment income		8.4		2.2		—		10.6		1.6
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)		24.5		—		—		24.5		(17.5)
Other revenues	Other revenues	(2.8)		2.6		Other revenues		(2.7)		—		—		(2.7)		(2.8)
Total revenues	Total revenues	175.7		109.1		Total revenues		280.1		7.4		—		287.5		175.7
Losses and LAE	Losses and LAE	122.0		66.0		Losses and LAE		147.6		.2		—		147.8		122.0
Insurance and reinsurance acquisition expenses		49.9		36.7
Acquisition expenses						Acquisition expenses		58.9		.9		—		59.8		49.9
General and administrative expenses - other underwriting	General and administrative expenses - other underwriting	22.1		11.2		General and administrative expenses - other underwriting		27.5		—		—		27.5		22.1
General and administrative expenses - all other	General and administrative expenses - all other	1.0		26.6		General and administrative expenses - all other		7.6		.1		—		7.7		(1.1)
Change in fair value of contingent consideration						Change in fair value of contingent consideration		(2.4)		—		—		(2.4)		2.1
Interest expense	Interest expense	3.8		1.1		Interest expense		5.0		—		—		5.0		3.8
Total expenses	Total expenses	198.8		141.6		Total expenses		244.2		1.2		—		245.4		198.8
Pre-tax income (loss)	Pre-tax income (loss)	$	(23.1)	$	(32.5)	Pre-tax income (loss)		$	35.9	$	6.2	$	—	$	42.1	$	(23.1)

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. During the first quarter of 2023, an RITC agreement was executed such that the outstanding loss and LAE reserves for claims arising out of the 2020 year of account, for which the TPC Providers’ participation in the total net results of the Syndicates was 43%, were reinsured into the 2021 year of account, for which the TPC Providers’ participation in the total net results of the Syndicates was 0%. Captions within Ark’s results of operations for the three months ended March 31, 2022 are shown net of amounts relating to ~~the~~ TPC ~~Providers~~Providers’ share of the Syndicates’ results, including investment results.

~~Ark~~Ark/WM Outrigger Results—Three Months Ended March 31, ~~2022~~2023 versus Three Months Ended March 31, ~~2021~~2022

The Ark/WM Outrigger segment’s combined ratio was 92% in the first quarter of 2023.The Ark/WM Outrigger segment reported gross written premiums of $809 million, net written premiums of $614 million and net earned premiums of $255 million in the first quarter of 2023. The Ark/WM Outrigger segment reported pre-tax income of $42 million in the first quarter of 2023.

Ark’s combined ratio was 94% in the first quarter of 2023 compared to 100% in the first quarter of 2022. Ark’s combined ratio in the first quarter of 2023 included three points of unfavorable prior year loss reserve development, primarily due to Winter Storm Elliot, compared to two points of favorable prior year loss reserve development in the first quarter of 2022. Ark’s combined ratio in the first quarter of 2023 included negligible catastrophe losses compared to 17 points of catastrophe losses, driven primarily by losses from the conflict in Ukraine, in the first quarter of 2022. Ark reported gross written premiums of $809 million, net written premiums of $570 million and net earned premiums of $250 million in the first quarter of 2023 compared to gross written premiums of $633 million, net written premiums of $544 million and net earned premiums of $194 million in the first quarter of ~~2022~~2022. Ark reported pre-tax income (loss) of $36 million in the first quarter of 2023 compared to $(23) million in first quarter of 2022. Ark’s results included net realized and unrealized investment gains (losses) of $25 million in the first quarter of 2023 compared to $(18) million in the first quarter of 2022.

WM Outrigger Re’s combined ratio was 21% in the first quarter of 2023. WM Outrigger Re reported gross ~~written premiums of $405 million,~~and net written premiums of ~~$342~~$44 million and net earned premiums of ~~$105~~$5 million in the first quarter of 2021. Ark reported pre-tax loss of $23 million in the first quarter of 2022 compared to $33 million in first quarter of 2021. Ark’s pre-tax loss for the first quarter of 2022 included $18 million of net unrealized investment losses, driven primarily by losses on fixed income securities in its investment portfolio. Ark’s pre-tax loss for the first quarter of 2021 reflected $25 million of transaction expenses related to the Ark Transaction.

Ark’s GAAP combined ratio was 100% in the first quarter of 2022 compared to 109% in the first quarter of 2021. Ark’s adjusted combined ratio, which adds back amounts attributable to TPC Providers, was 101% in the first quarter of 2022 compared to 108% in the first 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 first quarter of 2022 included 16 points of catastrophe losses, of which 11 points related to an estimate for incurred losses emanating from the conflict in Ukraine, compared to 17 points in the first quarter of 2021, of which 14 points related to Winter Storm Uri. Incurred losses related to Ukraine could increase as the conflict continues.

2023.

5851

The following table presents ~~Ark’s loss~~the Ark/WM Outrigger segment’s insurance premiums, insurance expenses 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 months ended March 31, ~~2022~~2023 and ~~2021:~~2022:


											Three Months Ended March 31,
		Three Months Ended March 31, 2022									2023												2022
$ in Millions	$ in Millions	GAAP			TPC Providers’ Share		Adjusted (1)			$ in Millions	Ark			WM Outrigger Re			Eliminations			Total			Ark
Insurance premiums:	Insurance premiums:									Insurance premiums:
Gross written premiums	Gross written premiums	$	633.1		$	—	$	633.1		Gross written premiums	$	809.4		$	44.1		$	(44.1)		$	809.4		$	633.1
Net written premiums	Net written premiums	$	543.8		$	1.8	$	545.6		Net written premiums	$	570.1		$	44.1		$	—		$	614.2		$	543.8
Net earned premiums	Net earned premiums	$	194.4		$	4.8	$	199.2		Net earned premiums	$	249.9		$	5.2		$	—		$	255.1		$	194.4

Insurance expenses:	Insurance expenses:									Insurance expenses:
Loss and loss adjustment expenses	Loss and loss adjustment expenses	$	122.0		$	5.7	$	127.7		Loss and loss adjustment expenses	$	147.6		$	.2		$	—		$	147.8		$	122.0
Insurance and reinsurance acquisition expenses		49.9			—		49.9
Other underwriting expenses		22.1			1.0		23.1
Acquisition expenses										Acquisition expenses	58.9			.9			—			59.8			49.9
Other underwriting expenses (1)										Other underwriting expenses (1)	27.5			—			—			27.5			22.1
Total insurance expenses	Total insurance expenses	$	194.0		$	6.7	$	200.7		Total insurance expenses	$	234.0		$	1.1		$	—		$	235.1		$	194.0

Ratios:
Insurance ratios:										Insurance ratios:
Loss and loss adjustment expense	Loss and loss adjustment expense	62.7		%			64.1		%	Loss and loss adjustment expense	59.0		%	3.9		%	—		%	58.0		%	62.7		%
Insurance and reinsurance acquisition expense		25.7		%			25.1		%
Acquisition expense										Acquisition expense	23.6			17.3			—			23.4			25.7
Other underwriting expense	Other underwriting expense	11.4		%			11.6		%	Other underwriting expense	11.0			—			—			10.8			11.4
Combined Ratio	Combined Ratio	99.8		%			100.8		%	Combined Ratio	93.6		%	21.2		%	—		%	92.2		%	99.8		%

(1)~~See~~ ~~“NON-GAAP FINANCIAL MEASURES”~~ ~~on page 72.~~Included within general and administrative expenses

Three Months Ended March 31, 2021
$ in Millions GAAP Third Party Capital Share
Adjusted (1)
Insurance premiums:
Gross written premiums $ 404.5 $ — $ 404.5
Net written premiums $ 342.4 $ (5.0) $ 337.4
Net earned premiums $ 104.6 $ 31.2 $ 135.8
Insurance expenses:
Loss and loss adjustment expenses $ 66.0 $ 31.6 $ 97.6
Insurance and reinsurance acquisition expenses 36.7 — 36.7
Other underwriting expenses 11.2 1.3 12.5
Total insurance expenses $ 113.9 $ 32.9 $ 146.8
Ratios:
Loss and loss adjustment expense 63.1 % 71.9 %
Insurance and reinsurance acquisition expense 35.1 % 27.0 %
Other underwriting expense 10.7 % 9.2 %
Combined Ratio 108.9 % 108.1 %

~~(1)~~ ~~See~~ ~~“NON-GAAP FINANCIAL MEASURES”~~ ~~on page 72.~~

Gross Written Premiums

Gross written premiums increased 28% to $809 million in the first quarter of 2023 compared to the first quarter of 2022, with risk adjusted rate change up approximately 14% year over year. The increase in gross written premiums was driven primarily by the property line of business for both insurance and reinsurance across London and Bermuda, reflecting the additional capacity provided by Outrigger Re Ltd., as well as specialty lines. The risk adjusted rate change on the Outrigger Re Ltd. portfolio of global property reinsurance was 41% in the first quarter of 2023. The following table presents ~~Ark’s~~the Ark/WM Outrigger segment’s gross written premiums by line of business for the three months ended March 31, ~~2022~~2023 and 2021. Gross written premiums increased 57% to $633 million in the first quarter of 2022 compared to the first quarter of 2021, with risk adjusted rate change up approximately 9% year over year. During the first quarter of 2022, in response to the continuing firm market conditions and a full complement of underwriters at GAIL, Ark substantially increased its gross written premiums, principally in the specialty, property, and marine & energy lines of business.2022:

Three Months Ended March 31,
Millions 2022 2021
Specialty $ 217.3 $ 120.1
Marine & Energy 178.0 131.1
Property 173.4 103.6
Accident & Health 39.5 36.4
Casualty 24.9 13.3
Total Gross Written Premium $ 633.1 $ 404.5

~~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 two largest modeled probable maximum loss natural catastrophe scenarios on a per occurrence basis at a 1-in-250-year return period are U.S. windstorms and U.S. earthquakes. The April 2022 net after-tax estimated impact of a 1-in-250-year return period loss is 32% and 16% of total tangible capital (shareholders equity and subordinated debt) for U.S. windstorms and U.S. earthquakes, respectively. In each case, the 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.


	Three Months Ended March 31,
Millions	2023		2022
Property	$	279.7	$	173.4
Specialty	268.5		217.3
Marine & Energy	194.9		178.0
Accident & Health	36.1		39.5
Casualty	30.2		24.9
Total Gross Written Premium	$	809.4	$	633.1

6052

~~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.Ark/WM Outrigger Balance Sheets

The following ~~table presents the components of GAAP net income (loss), EBITDA~~tables present amounts from Ark and ~~adjusted EBITDA included in~~WM Outrigger Re that are contained within White Mountains’s ~~NSM segment for the three months ended~~consolidated balance sheet as of March 31, ~~2022~~2023 and ~~2021.~~December 31, 2022:

Three Months Ended March 31,
Millions 2022 2021
Commission revenues $ 70.1 $ 59.6
Broker commission expenses 20.6 18.9
Gross profit 49.5 40.7
Other revenues 18.4 15.2
General and administrative expenses 54.0 46.0
Change in fair value of contingent consideration .1 —
Amortization of other intangible assets 9.1 8.6
Loss on assets held for sale — 28.7
Interest expense 2.1 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 expense 2.1 5.9
Income tax expense (benefit) (.4) (8.0)
General and administrative expenses — depreciation 1.2 1.1
Amortization of other intangible assets 9.1 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 expenses 1.3 —
Investments made in the development of new business lines .3 —
Restructuring expenses .6 2.8
Legal settlements — —
Adjusted EBITDA (1)
$ 18.1 $ 14.4


	March 31, 2023
Millions	Ark		WM Outrigger Re		Eliminations and Segment Adjustments		Total
Assets
Fixed maturity investments, at fair value	$	765.0	$	—	$	—	$	765.0
Common equity securities, at fair value	340.4		—		—		340.4
Short-term investments, at fair value	347.7		206.0		—		553.7
Other long-term investments	393.9		—		—		393.9
Total investments	1,847.0		206.0		—		2,053.0
Cash	132.4		.2		—		132.6
Reinsurance recoverables	609.7		—		(39.1)		570.6
Insurance premiums receivable	909.7		36.1		(36.1)		909.7

Deferred acquisition costs	201.4		7.1		—		208.5

Goodwill and other intangible assets	292.5		—		—		292.5
Other assets	71.5		—		—		71.5
Total assets	$	4,064.2	$	249.4	$	(75.2)	$	4,238.4
Liabilities
Loss and loss adjustment expense reserves	$	1,345.6	$	.2	$	(.2)	$	1,345.6
Unearned insurance premiums	1,123.5		38.9		(38.9)		1,123.5
Debt	184.5		—		—		184.5
Reinsurance payable	229.1		—		(36.1)		193.0
Contingent consideration	42.9		—		—		42.9

Dividends payable to White Mountains (1)	17.3		—		—		17.3
Dividends payable to noncontrolling interests	6.7		—		—		6.7
Other liabilities	137.0		.1		—		137.1
Total liabilities	3,086.6		39.2		(75.2)		3,050.6
Equity
White Mountains’s common shareholders’ equity (1)	726.3		210.2		—		936.5
Noncontrolling interests	251.3		—		—		251.3
Total equity	977.6		210.2		—		1,187.8
Total liabilities and equity	$	4,064.2	$	249.4	$	(75.2)	$	4,238.4

(1) ~~See~~ Ark’s dividends payable to White Mountains are eliminated in White Mountains’s consolidated financial statements. For segment reporting, Ark’s dividends payable to White Mountains included within the Ark/WM Outrigger segment are eliminated against the offsetting receivable included within Other Operations.

~~“NON-GAAP FINANCIAL MEASURES”~~


	December 31, 2022
Millions	Ark		WM Outrigger Re (1)		Eliminations and Segment Adjustments		Total
Assets
Fixed maturity investments, at fair value	$	772.8	$	—	$	—	$	772.8
Common equity securities, at fair value	334.6		—		—		334.6
Short-term investments, at fair value	280.9		203.7		—		484.6
Other long-term investments	373.6		—		—		373.6
Total investments	1,761.9		203.7		—		1,965.6
Cash	100.0		1.5		—		101.5
Reinsurance recoverables	595.3		—		—		595.3
Insurance premiums receivable	544.1		—		—		544.1

Deferred acquisition costs	127.2		—		—		127.2

Goodwill and other intangible assets	292.5		—		—		292.5
Other assets	65.2		—		—		65.2
Total assets	$	3,486.2	$	205.2	$	—	$	3,691.4
Liabilities
Loss and loss adjustment expense reserves	$	1,296.5	$	—	$	—	$	1,296.5
Unearned insurance premiums	623.2		—		—		623.2
Debt	183.7		—		—		183.7
Reinsurance payable	251.1		—		—		251.1
Contingent consideration	45.3		—		—		45.3



Other liabilities	121.1		1.2		—		122.3
Total liabilities	2,520.9		1.2		—		2,522.1
Equity
White Mountains’s common shareholders’ equity	717.4		204.0		—		921.4
Noncontrolling interests	247.9		—		—		247.9
Total equity	965.3		204.0		—		1,169.3
Total liabilities and equity	$	3,486.2	$	205.2	$	—	$	3,691.4

(1) ~~on page 72.~~Amounts as of December 31, 2022 for WM Outrigger Re have been reclassified from Other Operations to the Ark/WM Outrigger segment to conform to the presentation as of March 31, 2023.

~~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,
2022 2021
$ 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
Pet 59.6 23.4 43.7 17.1
United Kingdom 55.4 12.6 52.3 13.1
Real Estate 44.8 10.5 42.8 9.8
Social Services 27.4 7.0 27.0 6.7
Diversified B2B 46.4 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.

6254

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, ~~2022,~~2023, Kudu ~~has~~had deployed a total of ~~$612~~$744 million, including transaction costs, in 1721 asset and wealth management firms globally, including ~~one~~three that ~~was~~have been exited. As of March 31, ~~2022,~~2023, the asset and wealth management firms ~~have~~had combined assets under management of approximately ~~$65~~$74 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 capacity of the Kudu Credit Facility is $300 million (which includes the current advanced amount of $225 million). See ~~Note 7 — “Debt”~~.

The following table presents the components of GAAP net income, EBITDA and adjusted EBITDA included in ~~White Mountains’s~~the Kudu segment for the three months ended March 31, ~~2022~~2023 and ~~2021:~~2022:


		Three Months Ended March 31,						Three Months Ended March 31,
Millions	Millions		2022		2021		Millions		2023		2022

Net investment income	Net investment income		$	12.6	$	8.2	Net investment income		$	14.2	$	12.6
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)		29.6		22.3
Other revenues			—		.1

Total revenues	Total revenues		34.9		24.1		Total revenues		43.8		34.9
General and administrative expenses	General and administrative expenses		2.7		2.5		General and administrative expenses		3.8		2.8
Amortization of other intangible assets			.1		.1

Interest expense	Interest expense		2.8		5.8		Interest expense		4.7		2.8
Total expenses	Total expenses		5.6		8.4		Total expenses		8.5		5.6
GAAP pre-tax income (loss)	GAAP pre-tax income (loss)		29.3		15.7		GAAP pre-tax income (loss)		35.3		29.3
Income tax (expense) benefit	Income tax (expense) benefit		(6.1)		(7.8)		Income tax (expense) benefit		(7.5)		(6.1)
GAAP net income (loss)	GAAP net income (loss)		23.2		7.9		GAAP net income (loss)		27.8		23.2
Add back:	Add back:						Add back:
Interest expense	Interest expense		2.8		5.8		Interest expense		4.7		2.8
Income tax expense (benefit)	Income tax expense (benefit)		6.1		7.8		Income tax expense (benefit)		7.5		6.1
General and administrative expenses - depreciation	General and administrative expenses - depreciation		—		—		General and administrative expenses - depreciation		—		—
Amortization of other intangible assets	Amortization of other intangible assets		.1		.1		Amortization of other intangible assets		—		.1
EBITDA (1)	EBITDA (1)		32.2		21.6		EBITDA (1)		40.0		32.2
Exclude:	Exclude:						Exclude:
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		(29.6)		(22.3)
Non-cash equity-based compensation expense	Non-cash equity-based compensation expense		.1		.1		Non-cash equity-based compensation expense		—		.1
Transaction expenses	Transaction expenses		—		—		Transaction expenses		.5		—
Adjusted EBITDA (1)	Adjusted EBITDA (1)		$	10.0	$	5.9	Adjusted EBITDA (1)		$	10.9	$	10.0

(1) See “NON-GAAP FINANCIAL MEASURES” on page ~~72.~~63.

The following table presents the changes the fair value of Kudu’s Participation Contracts:


	Three Months Ended March 31,
Millions	2023		2022
Beginning balance of Kudu’s Participation Contracts	$	695.9	$	669.5
Contributions to Participation Contracts (1)	66.7		—
Proceeds from Participation Contracts sold (1) (2)	(109.0)		—
Net realized and unrealized investment gains (losses) on Participation Contracts sold and pending sale (3)	(2.1)		3.5
Net unrealized investment gains (losses) on Participation Contracts - all other (4)	31.7		18.8

Ending balance of Kudu’s Participation Contracts	$	683.2	$	691.8

(1) Includes $35.8 of non-cash contributions to (proceeds from) Participation Contracts

(2) Includes $10.3 of proceeds receivable from Participation Contracts sold during the quarter.

(3) Includes realized and unrealized investment gains (losses) recognized from Participation Contracts beginning in the quarter a contract is classified as pending sale.

(4) Includes unrealized investment gains (losses) recognized from (i) ongoing Participation Contracts and (ii) Participation Contracts prior to classification as pending sale.

Kudu Results—Three Months Ended March 31, ~~2022~~2023 versus Three Months Ended March 31, ~~2021~~2022

Kudu reported total revenues of $44 million, pre-tax income of $35 million and adjusted EBITDA of $11 million in the first quarter of 2023 compared to total revenues of $35 million, pre-tax income of $29 million and adjusted EBITDA of $10 million in the first quarter of ~~2022~~2022. Total revenues and pre-tax income included $30 million of net realized and unrealized investment gains in the first quarter of 2023 compared to ~~total revenues of $24 million, pre-tax income of $16 million and adjusted EBITDA of $6~~$22 million in the first quarter of ~~2021. The increases in~~2022. Kudu’s ~~total revenues, pre-tax income and adjusted EBITDA were driven primarily by amounts earned from $225~~results also included $14 million ~~in new deployments, including transaction costs, that Kudu made during 2021. Total revenues and pre-tax~~of net investment income in the first quarter of ~~2022 included $22 million of net unrealized gains on Kudu’s Participation Contracts~~2023 compared to ~~$16~~$13 million in the first quarter of ~~2021. Total revenues, pre-tax income and adjusted EBITDA in the first quarter of 2022 also included $13 million of net investment income compared to $8 million in the first quarter of 2021.~~2022.

Other Operations

The following table presents the components of pre-tax income (loss) included in White Mountains’s Other Operations ~~segment~~ for the three months ended March 31, ~~2022~~2023 and ~~2021:~~2022:


		Three Months Ended March 31,						Three Months Ended March 31,
Millions	Millions		2022		2021		Millions		2023		2022
Net investment income	Net investment income		$	1.8	$	7.1	Net investment income		$	7.0	$	1.8
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)		41.8		31.9
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		85.2		18.8
Commission revenues	Commission revenues		2.9		2.3		Commission revenues		3.3		2.9
Other revenues	Other revenues		25.7		7.1		Other revenues		30.6		25.7
Total revenues	Total revenues		81.1		(23.1)		Total revenues		167.9		81.1
Cost of sales	Cost of sales		21.4		4.0		Cost of sales		13.9		21.4
General and administrative expenses	General and administrative expenses		28.9		35.7		General and administrative expenses		39.7		29.8
Amortization of other intangible assets			.9		.5

Interest expense	Interest expense		.3		.3		Interest expense		.8		.3
Total expenses	Total expenses		51.5		40.5		Total expenses		54.4		51.5
Pre-tax income (loss)	Pre-tax income (loss)		$	29.6	$	(63.6)	Pre-tax income (loss)		$	113.5	$	29.6

Other Operations Results—Three Months Ended March 31, ~~2022~~2023 versus Three Months Ended March 31, ~~2021~~2022

White Mountains’s Other Operations ~~segment~~ reported pre-tax income ~~(loss)~~ of ~~$30~~$114 million in the first quarter of ~~2022~~2023 compared to ~~$(64)~~$30 million in the first quarter of 2021. White Mountains’s Other Operations segment reported net realized and unrealized investment gains (losses) from its investment in MediaAlpha of $19 million in the first quarter of 2022 compared to $(42) million in the first quarter of 2021. Excluding MediaAlpha, White Mountains’s Other Operations segment reported net realized and unrealized investment gains of $32 million in the first quarter of 2022 compared to $2 million in the first quarter of 2021, driven primarily by unrealized investment gains from private equity funds in the first quarter of 2022. White Mountains’s Other Operations ~~segment reported~~results included unrealized investment gains from its investment in MediaAlpha of $85 million in the first quarter of 2023 compared to $19 million in the first quarter of 2022. Excluding MediaAlpha, White Mountains’s Other Operations results included net realized and unrealized investment gains of $42 million in the first quarter of 2023 compared to $32 million in the first quarter of 2022. White Mountains’s Other Operations results included net investment income of $7 million in the first quarter of 2023 compared to $2 million in the first quarter of ~~2022 compared to $7 million in the first quarter of 2021,~~2023, driven primarily by ~~lower distributions~~the increase in invested assets resulting from ~~private equity funds~~the sale of NSM in the ~~first~~third quarter of ~~2022 compared to the first quarter of 2021.~~2022. See Summary of Investment Results on page ~~65.~~57.

~~The~~White Mountains’s Other Operations ~~segment~~ reported ~~$26~~$31 million of other revenues in the first quarter of ~~2022~~2023 compared to $7$26 million in the first quarter of ~~2021.~~2022. The increase in other revenues was driven primarily by a transaction gain from a sale within Other Operations ~~segment~~in the first quarter of 2023, partially offset by a reduction in operating revenues for the sold entity. White Mountains’s Other Operations reported ~~$21~~$14 million of cost of sales in the first quarter of ~~2022~~2023 compared to $4$21 million in the first quarter of ~~2021.~~2022. The ~~increases~~decrease in ~~other revenues and~~ cost of sales ~~were~~was driven primarily by ~~an acquisition within the~~a recent sale transaction.

White Mountains’s Other Operations ~~segment in the second quarter of 2021.~~

~~The Other Operations segment~~ reported general and administrative expenses of ~~$29~~$40 million in the first quarter of ~~2022~~2023 compared to ~~$36~~$30 million in the first quarter of ~~2021.~~2022. The ~~decreases~~increase in general and administrative expenses in the first quarter of ~~2022~~2023 compared to the first quarter of ~~2021 were~~2022 was driven ~~primarily~~ by ~~lower~~higher incentive compensation ~~costs.~~

costs, primarily in connection with the NSM Transaction and a higher share price.

6456

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~~expenses. For 2022 returns, percentages 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 months ended March 31, ~~2022~~2023 and ~~2021:~~2022:


		Three Months Ended
		March 31,					Three Months Ended March 31,
		2022		2021				2023		2022

Fixed income investments	Fixed income investments	(3.2)	%	(1.0)	%	Fixed income investments		1.9	%	(3.2)	%
Bloomberg Barclays U.S. Intermediate Aggregate Index	Bloomberg Barclays U.S. Intermediate Aggregate Index	(4.7)	%	(1.6)	%	Bloomberg Barclays U.S. Intermediate Aggregate Index		2.4	%	(4.7)	%

Common equity securities	Common equity securities	0.2	%	1.8	%	Common equity securities		4.5	%	0.2	%

Investment in MediaAlpha	Investment in MediaAlpha	7.2	%	(8.5)	%	Investment in MediaAlpha		50.6	%	7.2	%
Other long-term investments	Other long-term investments	6.0	%	4.1	%	Other long-term investments		4.2	%	6.0	%
Total common equity securities, investment in MediaAlpha and other long-term investments	Total common equity securities, investment in MediaAlpha and other long-term investments	5.3	%	0.8	%	Total common equity securities, investment in MediaAlpha and other long-term investments		7.6	%	5.3	%
Total common equity securities and other long-term investments	Total common equity securities and other long-term investments	5.0	%	3.8	%	Total common equity securities and other long-term investments		4.4	%	5.0	%
S&P 500 Index (total return)	S&P 500 Index (total return)	(4.6)	%	6.2	%	S&P 500 Index (total return)		7.5	%	(4.6)	%

Total consolidated portfolio	Total consolidated portfolio	0.8	%	(0.3)	%	Total consolidated portfolio		4.5	%	0.8	%
Total consolidated portfolio - excluding MediaAlpha	Total consolidated portfolio - excluding MediaAlpha	0.3	%	0.7	%	Total consolidated portfolio - excluding MediaAlpha		3.0	%	0.3	%

Investment Returns—Three Months Ended March 31, ~~2022~~2023 versus Three Months Ended March 31, ~~2021~~2022

White Mountains’s total consolidated portfolio return on invested assets was 0.8% in the first quarter of ~~2022. This return~~2022, which included $19 million of unrealized investment gains from White Mountains’s investment in MediaAlpha. Excluding MediaAlpha, the total consolidated portfolio return on invested assets was 0.3% in the first quarter of ~~2022. Excluding MediaAlpha, investment returns in the first quarter of~~ 2022, ~~were~~ driven primarily by net realized and unrealized ~~investments~~investment gains ~~in the~~from other long-term investments, ~~portfolio,~~ 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%~~a rise in the first quarter of 2021. This return included $42 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% in the first quarter of 2021. Excluding MediaAlpha, investment returns in the first quarter of 2021 were driven primarily by net unrealized investments gains in the other long-term investments portfolio, which more than offset net unrealized investment losses in the fixed income portfolio due to rising interest rates.

Fixed Income Results

White Mountains’s fixed income portfolio, including short-term investments, was ~~$2.1 billion and $2.4~~$2.8 billion as of both March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, which represented 52% and ~~56%~~55% of total invested assets. The duration of White Mountains’s fixed income portfolio, including short-term investments, was ~~2.9 years and 2.6~~2.3 years as of March 31, ~~2022~~2023 and December 31, ~~2021.~~2022. White Mountains’s fixed income portfolio includes fixed maturity ~~investments~~ and short-term investments ~~in the HG Re Collateral Trusts of $464 million and $480 million~~held on deposit or as ~~of March 31, 2022 and December 31, 2021.~~collateral. See Note 3 — “Investment Securities.”

White Mountains’s fixed income portfolio ~~return was~~returned 1.9% in the first quarter of 2023 compared to -3.2% in the first quarter of 2022, ~~compared to -1.0% in the first quarter of 2021,~~underperforming and outperforming the Bloomberg Barclays U.S. Intermediate Aggregate Index returns of ~~-4.7%~~2.4% and ~~-1.6%~~-4.7% for the comparable periods. The ~~relative~~ results in ~~the first quarter of 2022 and 2021~~both periods were driven primarily by the short duration positioning of White Mountains’s fixed income portfolio as interest rates ~~increased~~fluctuated in ~~both periods.~~each respective period.

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~~$2.6 billion and ~~$1.9~~$2.3 billion as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, which represented 48% and ~~44%~~45% of total invested assets. See~~See~~ Note 3 — “Investment ~~Securities”~~Securities.”.

White Mountains’s portfolio of common equity securities, its investment in MediaAlpha and other long-term investments returned 7.6% in the first quarter of 2023, which included $85 million of unrealized investment gains from MediaAlpha. White Mountains’s portfolio of common equity securities and other long-term investments returned 4.4% in the first quarter of 2023. White Mountains’s portfolio of common equity securities, its investment in MediaAlpha and other long-term investments returned 5.3% in the first quarter of 2022, which included $19 million of unrealized investment gains from MediaAlpha. White Mountains’s portfolio of common equity securities and other long-term investments returned 5.0% in the first quarter of 2022.

White Mountains’s portfolio of common equity securities its investment in MediaAlpha and other long-term investments returned 0.8% in the first quarter of 2021, which included $42 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% in the first quarter of 2021.

~~White Mountains maintains a portfolio of common equity securities that~~ consists of passive ETFs that seek to provide investment results generally corresponding 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~~$698 million and ~~$251~~$668 million as of March 31, ~~2022~~2023 and December 31, ~~2021.~~2022.

White Mountains’s portfolio of common equity securities returned 4.5% in the first quarter of 2023 compared to 0.2% in the first quarter of 2022, ~~compared to 1.8% in the first quarter of 2021,~~underperforming and outperforming ~~and underperforming~~ the S&P 500 Index returns of ~~-4.6%~~7.5% and ~~6.2%~~-4.6% for the comparable periods. The results in the first quarter of ~~2022~~2023 and ~~2021~~2022 were driven primarily by relative ~~outperformance~~underperformance and ~~underperformance~~outperformance in White Mountains’s international listed equity funds as compared to the S&P 500 Index.

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.~~instruments. White Mountains’s portfolio of other long-term investments was ~~$1.4~~$1.6 billion and $1.5 billion as of March 31, ~~2022~~2023 and December 31, ~~2021.~~2022.

White Mountains’s other long-term investments portfolio returned 4.2% in the first quarter of 2023 compared to 6.0% in the first quarter of ~~2022 compared to 4.1% in~~2022. Investment returns for the first quarter of ~~2021.~~2023 were driven primarily by net investment income and net realized and unrealized investment gains from Kudu’s Participation Contracts. Investment returns for the first quarter of 2022 were driven primarily by ~~$45 million of~~ net investment income and net realized and unrealized investment gains from private equity funds and ~~$35 million of~~from net investment income and net unrealized investment gains from Kudu’s Participation Contracts.Investment returns in the first quarter of 2021 were driven primarily by $15 million of net investment income 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.~~

Foreign Currency Exposure

As of March 31, ~~2022,~~2023, White Mountains had foreign currency exposure on ~~$290~~$210 million of net assets primarily related to ~~Ark’s~~Ark/WM Outrigger’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~~entities.

The following table presents the fair value of White Mountains’s foreign denominated net assets ~~(net liabilities)~~(liabilities) by segment as of March 31, ~~2022:~~2023:


Currency $ in Millions		Ark		NSM		Kudu		Other Operations		Total Fair Value		% of Total Shareholders’ Equity
$ in Millions Currency														$ in Millions Currency	Ark/WM Outrigger				Kudu	Other Operations			Total Fair Value			% of Total Shareholders’ Equity
CAD	CAD	$	53.9	$	—	$	84.8	$	—	$	138.7	3.8	%			CAD	$	65.9			$	75.5		$	—		$	141.4	3.4	%
AUD														AUD	15.8				37.0	—			52.8			1.3
GBP	GBP	16.4		112.1		—		—		128.5		3.5				GBP	43.5				—			—			43.5		1.1
AUD		24.9		—		42.6		—		67.5		1.8
EUR	EUR	(60.1)		—		—		12.6		(47.5)		(1.3)				EUR	(43.4)				—			13.1			(30.3)		(.7)
All other	All other	—		—		—		3.2		3.2		.1				All other	—				—			2.8			2.8		—
Total	Total	$	35.1	$	112.1	$	127.4	$	15.8	$	290.4	7.9	%			Total	$	81.8			$	112.5		$	15.9		$	210.2	5.1	%

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~~and taxes are imposed, the Bermuda Exempted Undertakings Tax Protection Act of 1966 states that the Company and its Bermuda domiciled subsidiaries would be exempt from such tax until March 31, 2035. The Company has subsidiaries and branches that operate in various other jurisdictions around the world ~~and~~that are subject to tax in the jurisdictions in which they operate. As of March 31, ~~2022,~~2023, the primary jurisdictions in which the Company’s subsidiaries and branches were subject to tax ~~were~~include Ireland, Israel, Luxembourg, the United Kingdom and the United States.

White Mountains’s income tax expense related to pre-tax income from continuing operations for the three months ended March 31, 2023 represented an effective tax rate of 6%. The effective tax rate was different from the U.S. statutory rate of 21%, driven primarily by full year forecasted income in jurisdictions with lower tax rates than the United States.

White Mountains’s income tax benefit related to pre-tax loss from continuing operations for the three months ended March 31, 2022 represented an effective tax rate of ~~31%~~18%. 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, ~~and~~ a ~~decline~~decrease 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,~~partially offset by an increase in the full valuation allowance at BAM and state income taxes.

~~White Mountains’s income tax benefit related to pre-tax loss from continuing operations for~~On April 1, 2023, the ~~three months ended March 31, 2021 represented an effective~~U.K. corporate tax rate ~~of 7%. The effective tax rate was different~~increased from ~~the U.S. statutory rate of 21%, due~~19% to ~~income generated in jurisdictions with lower tax rates than the United States.~~25%.

IV. Discontinued Operations

NSM

~~In the first quarter of 2021,~~

On August 1, 2022, White Mountains ~~recorded an $18~~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 ~~within~~from sale of discontinued operations ~~as a result~~and $3 million of ~~reversing a liability arising~~comprehensive income related to the recognition of foreign currency translation gains (losses) from the ~~tax indemnification provided in connection with the~~ sale, partially offset by $14 million of ~~Sirius Group in 2016~~compensation and ~~a $1 million gain~~other costs related to ~~foreign currency translation. The liability related to certain interest deductions claimed by Sirius~~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 ~~that had been disputed by~~of $4 million for 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.three months ended March 31, 2022. See Note 19 — “Held for Sale and Discontinued ~~Operations”~~ ~~on page 46.~~Operations.”

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~~noncontrolling 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 and fee collections, 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~~noncontrolling 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 and fee collections, investment returns, ~~claims~~claim 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 onat both a holding company and insurance, reinsurance and other operating subsidiary level.

Dividend Capacity

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

HG Global/BAM

As of March 31, ~~2022,~~2023, HG Global had $619 million face value of preferred shares outstanding, of which White Mountains owned 96.9%. Holders of the HG Global preferred shares receive cumulative dividends at a fixed annual rate of 6.0% on a quarterly basis, when and if declared by HG Global. As of March 31, ~~2022,~~2023, HG Global has accrued ~~$430~~$369 million of dividends payable to holders of its preferred shares, ~~$416~~$356 million of which is payable to White Mountains and is eliminated in consolidation. As of March 31, ~~2022,~~2023, HG Global and its subsidiaries had $9$2 million of net unrestricted 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 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.

HG Re is a ~~Special Purpose Insurer~~special purpose insurer subject to regulation and supervision by the ~~BMA, but it~~BMA. HG Re does not require regulatory approval to pay ~~dividends. However, HG Re’s~~dividends, however, its dividend capacity is limited to amounts held outside of the Collateral Trusts pursuant to the FLRT with BAM. As of March 31, ~~2022,~~2023, HG Re had ~~$739~~$1 million of net unrestricted cash and investments and $112 million of accrued interest on the BAM Surplus Notes held outside the Collateral Trusts. As of March 31, 2023, HG Re had $745 million of statutory capital and surplus and ~~$836~~$881 million of assets held in the Collateral ~~Trusts pursuant to the FLRT with BAM.~~Trusts.

On a monthly basis, BAM deposits cash equal to ceded premiums, net of ceding commissions, due to HG Re under the FLRT directly into the Regulation 114 Trust. The Regulation 114 Trust target balance is equal to ~~gross ceded~~HG Re’s unearned premiums and unpaid ~~ceded~~ loss and LAE ~~expenses,~~reserves, if any. If, at the end of any quarter, the Regulation 114 Trust balance is below the target balance, funds will be withdrawn from the Supplemental Trust and deposited into the Regulation 114 Trust in an amount equal to the 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 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. The Supplemental Trust balance as of March 31, 2023 was $580 million.

As of March 31, ~~2022,~~2023, the Collateral Trusts held assets of ~~$836~~$881 million, which included ~~$466~~$521 million of cash and investments, ~~$365~~$340 million of BAM Surplus Notes and $5$20 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.~~

During the three months ended March 31, ~~2022,~~2023, BAM made no repayments of the BAM Surplus Notes or accrued interest. See Note 10 — “Municipal Bond Guarantee ~~Insurance”~~.Insurance.”

~~Ark~~Ark/WM Outrigger

During any 12-month period, GAIL, a class 4 licensed Bermuda insurer, has the ability to (i) make capital distributions ~~based on~~of up to 15% of its total statutory capital per the previous year’s statutory financial statements, or (ii) make dividend payments ~~based on~~of up to 25% of its total statutory capital and surplus per the previous year’s statutory financial statements, without prior approval of Bermuda regulatory authorities. Accordingly, ~~White Mountains expects~~ GAIL will have the ability to make capital distributions of ~~$114~~up to $113 million during ~~2022,~~2023, which is equal to 15% of its December 31, ~~2021~~2022 statutory capital of ~~$758~~$755 million, subject to meeting all appropriate liquidity and solvency requirements. During the three months ended March 31, ~~2022,~~2023, GAIL ~~did not pay~~paid a $15 million dividend to its immediate parent.

During the three months ended March 31, 2023, Ark declared a $24 million dividend to its shareholders, including $17 million to White Mountains, which was paid on April 28, 2023. As of March 31, ~~2022,~~2023, Ark and its intermediate holding companies had $27 million of net unrestricted cash, short-term investments and fixed maturity investments outside of its regulated and unregulated insurance and reinsurance operating subsidiaries.

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

Kudu

During ~~the~~ three months ended March 31, ~~2021, Ark did not pay any dividends to its immediate parent.~~

~~NSM~~

~~During the three months ended March 31, 2022, NSM~~2023, Kudu distributed $2$56 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, 2022,~~2023, Kudu had ~~$21~~$24 million of net unrestricted cash.

Other Operations

During ~~the~~ three months ended March 31, ~~2022,~~2023, White Mountains paid a $3 million common share dividend. As of March 31, ~~2022,~~2023, the Company and its intermediate holding companies had ~~$352~~$554 million of net unrestricted cash, short-term investments and fixed maturity investments, ~~$280~~$254 million of MediaAlpha common stock, $357 million of common equity securities and ~~$223~~$386 million of private equity and hedge funds, ILS funds and ~~ILS funds.~~unconsolidated entities.

Financing

The following table presents White Mountains’s capital structure as of March 31, ~~2022~~2023 and December 31, ~~2021:~~2022:


$ in Millions	$ in Millions	March 31, 2022			December 31, 2021			$ in Millions	March 31, 2023			December 31, 2022

HG Global Senior Notes (1)								HG Global Senior Notes (1)	$	146.6		$	146.5
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)	154.5			153.7
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)	191.6			208.3
Other Operations debt (1)(2)	Other Operations debt (1)(2)	17.3			16.8			Other Operations debt (1)(2)	33.6			36.7

Total debt	Total debt	690.9			693.0			Total debt	556.3			575.2
Non-controlling interests—excluding BAM		274.7			280.6
Noncontrolling interests—excluding BAM								Noncontrolling interests—excluding BAM	342.6			342.8
Total White Mountains’s common shareholders’ equity	Total White Mountains’s common shareholders’ equity	3,542.1			3,548.1			Total White Mountains’s common shareholders’ equity	3,902.4			3,746.9
Total capital	Total capital	4,507.7			4,521.7			Total capital	4,801.3			4,664.9
Time-value discount on expected future payments on the BAM Surplus Notes (3)	Time-value discount on expected future payments on the BAM Surplus Notes (3)	(120.9)			(125.9)			Time-value discount on expected future payments on the BAM Surplus Notes (3)	(93.4)			(95.1)
HG Global’s unearned premium reserve (3)	HG Global’s unearned premium reserve (3)	215.8			214.6			HG Global’s unearned premium reserve (3)	243.3			242.1
HG Global’s net deferred acquisition costs (3)	HG Global’s net deferred acquisition costs (3)	(60.6)			(60.8)			HG Global’s net deferred acquisition costs (3)	(69.4)			(69.0)
Total adjusted capital	Total adjusted capital	$	4,542.0		$	4,549.6		Total adjusted capital	$	4,881.8		$	4,742.9

Total debt to total adjusted capital	Total debt to total adjusted capital	15.2		%	15.2		%	Total debt to total adjusted capital	11.4		%	12.1		%

(1) See Note 7 — “Debt” for details of debt arrangements.

(2) Net of unamortized issuance costs.

(3) 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, ~~2022,~~2023, White Mountains was in compliance in all material respects with all of the covenants under its debt instruments.

Share ~~Repurchases~~

Repurchase Programs

White Mountains’s ~~board~~Board of ~~directors~~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, ~~2022,~~2023, White Mountains may repurchase an additional ~~417,800~~306,556 shares under these ~~board~~Board authorizations. In addition, from time to time, White Mountains has also repurchased its common shares through ~~tender~~self-tender offers that were separately approved by its ~~board~~Board of ~~directors.~~Directors.

During ~~the~~ three months ended March 31, ~~2022,~~2023, White Mountains repurchased and retired ~~37,435~~18,623 of its common shares for ~~$39~~$25 million at an average share price of ~~$1,039,~~$1,360, which was approximately ~~86%~~87% of White Mountains’s adjusted book value per share as of March 31, ~~2022.~~2023. Of the shares White Mountains repurchased in the first three months of ~~2022, 4,011~~2023, 4,629 were to satisfy employee income tax withholding pursuant to employee benefit plans, which do not reduce the ~~board~~amount available under the Board repurchase authorizations.

During the three months ended March 31, 2021, White Mountains repurchased and retired 7,161 of its common shares for $7 million, at an average share price of $1,039, which was approximately 84% of White Mountains’s adjusted book value per share as of March 31, 2021. All of the shares White Mountains repurchased in the first three months of 2021 were to satisfy employee income tax withholding pursuant to employee benefit plans.

Cash Flows

Detailed information concerning White Mountains’s cash flows from continuing operations during the three months ended March 31, ~~2022~~2023 and ~~2021~~2022 follows:

Cash flows from operations for the three months ended March 31, ~~2022~~2023 and March 31, ~~2021~~2022

Net cash ~~used for~~provided from (used for) operations was ~~$42~~$86 million for the three months ended March 31, ~~2022~~2023 compared to ~~$93~~$(46) million for the three months ended March 31, ~~2021.~~2022. The ~~decrease~~increase in cash ~~used for~~provided from operations was driven primarily by cash provided from Ark’s operations in ~~2022 compared~~2023 and proceeds from Kudu’s Participation Contracts sold, partially offset by contributions to ~~cash used for Ark’s operations in 2021, which included expenses from the Ark Transaction.~~Kudu’s Participation Contracts. As of March 31, ~~2022,~~2023, the Company and its intermediate holding companies had ~~$352~~$554 million of net unrestricted cash, short-term investments and fixed maturity investments, ~~$280~~$254 million of MediaAlpha common stock, $357 million of common equity securities and ~~$223~~$386 million of private equity funds, hedge funds, ILS funds and ~~ILS funds.~~unconsolidated entities.

Cash flows from investing and financing activities for the three months ended March 31, 2023

Financing and Other Capital Activities

During the three months ended March 31, 2023, the Company declared and paid a $3 million cash dividend to its common shareholders.

During the three months ended March 31, 2023, White Mountains repurchased and retired 18,623 of its common shares for $25 million. Of the shares White Mountains repurchased in the first three months of 2023, 4,629 were to satisfy employee income tax withholding pursuant to employee benefit plans.

During the three months ended March 31, 2023, BAM received $12 million in MSC.

During the three months ended March 31, 2023, Kudu repaid $17 million in term loans under the Kudu Credit Facility.

Cash flows from investing and financing activities for the three months ended March 31, 2022

Financing and Other Capital Activities

During the three months ended March 31, 2022, the Company declared and paid a $3 million cash dividend to its common shareholders.

During the three months ended March 31, 2022, White Mountains repurchased and retired 37,435 of its common shares for $39 ~~million,~~million. Of the shares White Mountains repurchased in the first three months of 2022, 4,011 ~~of which~~ were ~~repurchased and retired~~ to satisfy employee income tax withholding pursuant to employee benefit plans.

During the three months ended March 31, 2022, BAM received $12 million in MSC.

~~During the three months ended March 31, 2022, NSM borrowed and repaid $13 million in revolving loans under the NSM Bank Facility.~~

~~Cash flows from investing and financing activities for the three months ended March 31, 2021~~

~~Financing and Other Capital Activities~~

~~During the three months ended March 31, 2021, the Company declared and paid a $3 million cash dividend to its common shareholders.~~

During the three months ended March 31, 2021, White Mountains repurchased and retired 7,161 of its common shares for $7 million, all of which were repurchased and retired to satisfy employee income tax withholding pursuant to employee benefit plans.

~~During the three months ended March 31, 2021, BAM received $14 million in MSC.~~

~~During the three months ended March 31, 2021, HG Global declared and paid $22 million of preferred dividends, of which $21 million was paid to White Mountains.~~

~~During the three months ended March 31, 2021, NSM repaid $1 million in term loans under the NSM Bank Facility.~~

~~During the three months ended March 31, 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.

~~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.

7162

NON-GAAP FINANCIAL MEASURES

This report includes ~~twelve~~five non-GAAP financial measures that have been reconciled with from their most comparable GAAP financial measures.

Adjusted book value per share

Adjusted book value per share is a non-GAAP financial measure, which is derived by adjusting (i) the GAAP book value per share numerator and (ii) the common shares outstanding denominator, as described below.

The GAAP book value per share numerator is adjusted (i) to include a discount for the time value of money arising from the 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~~$96 million, ~~$130~~$98 million and ~~$142~~$125 million less than the nominal GAAP carrying values as of March 31, ~~2022,~~2023, December 31, ~~2021~~2022 and March 31, ~~2021,~~2022, respectively.

The value of HG Global’s unearned premium reserve, net of deferred acquisition costs, was ~~$160~~$179 million, ~~$159~~$179 million and ~~$146~~$160 million as of March 31, ~~2022,~~2023, December 31, ~~2021~~2022 and March 31, ~~2021,~~2022, 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.~~

44.

~~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.

~~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.

~~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.~~55.

7363

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 months ended March 31, 2023 and 2022:

Three Months Ended March 31, 2022 Three Months Ended March 31, 2021
GAAP Return Remove MediaAlpha Return - Excluding MediaAlpha GAAP Return Remove MediaAlpha Return - Excluding MediaAlpha
Total consolidated portfolio
return 0.8 % (0.5) % 0.3 % (0.3) % 1.0 % 0.7 %


	Three Months Ended March 31, 2023			Three Months Ended March 31, 2022
		GAAP Return		Remove MediaAlpha		Return - Excluding MediaAlpha		GAAP Return		Remove MediaAlpha		Return - Excluding MediaAlpha
Total consolidated portfolio return		4.5	%	(1.5)	%	3.0	%	0.8	%	(0.5)	%	0.3	%

~~Adjusted~~Total adjusted capital

Total capital at White Mountains is comprised of White Mountains’s common shareholders’ equity, debt and ~~non-controlling~~noncontrolling interests other than ~~non-controlling~~noncontrolling 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.~~61.

CRITICAL ACCOUNTING ESTIMATES

Refer to the Company’s ~~2021~~2022 Annual Report on Form 10-K for a complete discussion regarding White Mountains’s critical accounting estimates.

7464

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;~~2022;

•claims arising from catastrophic events, such as hurricanes, windstorms, earthquakes, floods, ~~fires,~~wildfires, tornadoes, tsunamis, severe winter weather, public health crises, terrorist attacks, war and war-like actions, explosions, infrastructure failures ~~cyber-attacks~~ or ~~armed conflicts;~~cyber attacks;

•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.

Item 3.Quantitative and Qualitative Disclosures About Market Risk.

Refer to White Mountains’s ~~2021~~2022 Annual Report on Form 10-K and in particular Item 7A. - “Quantitative and Qualitative Disclosures About Market ~~Risk”~~Risk.”.

Item 4.Controls and Procedures.

The Principal Executive Officer (“PEO”) and the Principal Financial Officer (“PFO”) of White Mountains have evaluated the effectiveness of its disclosure controls and procedures (as defined in Rule 13a-15(e) ~~and 15d-15(e)~~ of the Exchange Act) as of ~~the end of the period covered by this report.~~March 31, 2023. Based on that evaluation, the PEO and PFO have concluded that White Mountains’s disclosure controls and procedures are adequate and effective.

There were no ~~significant~~ changes ~~with respect~~ to ~~the Company’s~~White Mountains’s internal control over financial reporting ~~or in other factors~~ that occurred during the first quarter of 2023 that have materially affected, or are reasonably likely to materially affect White Mountains’s internal control over financial ~~reporting during the quarter ended March 31, 2022.~~reporting.

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~~2022 Annual Report

on Form 10-K.

Item 2.Issuer Purchases of Equity Securities.

Months Total Number of
Shares Purchased Average Price
Paid per Share
Total Number of Shares
Purchased as Part of
Publicly Announced Plans (1)
Maximum Number
of Shares that May
Yet Be Purchased
Under the Plans (1)
January 1- January 31, 2022 4,011 $ 1,013.90 — 451,224
February 1 - February 28, 2022 18,692 $ 1,041.00 18,692 432,532
March 1 - March 31, 2022 14,732 $ 1,042.84 14,732 417,800
Total 37,435 $ 1,038.82 33,424 417,800


Months	Total 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, 2023	4,629	$	1,414.33	—	320,550
February 1 - February 28, 2023	—	$	—	—	320,550
March 1 - March 31, 2023	13,994	$	1,342.42	13,994	306,556
Total	18,623	$	1,360.30	13,994	306,556

(1) White Mountains’s ~~board~~Board of ~~directors~~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.

Item 3. Defaults Upon Senior Securities.

None.

Item 4.Mine Safety Disclosures.

None.

Item 5.Other Information.

None.

7666

Item 6.Exhibits.


(a)	Exhibit number		Name
	22.1	—	Plan of Reorganization (incorporated by reference herein to the Company’s Registration Statement on S-4 (No. 333-87649) dated September 23, 1999)
	3.1	—	Memorandum of Continuance of the Company (incorporated by reference herein to Exhibit (3)(i) of the Company’s Current Report on Form 8-K dated November 1, 1999)
	3.2	—	Amended and Restated Bye-Laws of the Company (incorporated by reference herein to Exhibit 3 of the Company’s Report on Form 10-Q dated May 2, 2017)
	~~10.1~~	—	~~White Mountains Bonus Plan~~ ~~(*)~~
	~~10.2~~	—	~~Loan and Security Agreement, dated as of March 31, 2022 among HG Global Ltd., Hudson Structured Capital Management Ltd. and the lenders from time to time party thereto~~ ~~() (*)~~
	31.1	—	Principal Executive Officer Certification Pursuant to Rule 13a-14 (a) of the Securities Exchange Act of 1934, as Amended. (*)
	31.2	—	Principal Financial Officer Certification Pursuant to Rule 13a-14 (a) of the Securities Exchange Act of 1934, as Amended. (*)
	32.1	—	Principal Executive Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (*))
	32.2	—	Principal Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (*))
	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, 2022~~9, 2023

By: /s/ Michaela J. Hildreth

Michaela J. Hildreth

Managing Director and Chief Accounting Officer

7767


Millions	As of January 1, 2021
Investments	$	594.3
Cash	52.0		(1)
Reinsurance recoverables	433.4
Insurance premiums receivable	236.7
Ceded unearned premiums	170.2
Value of in-force business acquired	71.7
Other assets	88.9
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 acquired	24.5
Goodwill	116.8
Other intangible assets - syndicate underwriting capacity	175.7
Deferred tax liability on other intangible assets	(33.4)
Net assets acquired	$	283.6


Millions	March 31, 2022
April 1, 2022 - December 31, 2022	$	19.1
January 1, 2023 - March 31, 2023	6.2
April 1, 2023 - June 30, 2023	6.1
July 1, 2023 - September 30, 2023	6.0
October 1, 2023 - December 31, 2023	5.9
Total 2023	24.2
2024	22.7
2025	21.1
2026	19.6
2027	18.1
2028 and thereafter	142.5
Total gross unearned insurance premiums	$	267.3


Millions	Three Months Ended March 31,
Lease Cost		2022		2021
Lease cost		$	2.8	$	1.9
Less: sublease income		.2		.1
Net lease cost		$	2.6	$	1.8


Millions	As of March 31, 2022
Remainder of 2022	$	7.6
2023	11.5
2024	10.0
2025	6.8
2026	4.3
Thereafter	11.8
Total undiscounted lease payments	52.0
Less: present value adjustment	7.2
Operating lease liability	$	44.8


	As of March 31, 2022
Millions	HG/BAM		Ark		NSM		Kudu		Other Operations		Total		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 December 31, 2021
Millions	HG/BAM		Ark		NSM		Kudu		Other Operations		Total		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


Millions	HG Global/ BAM		Ark		NSM		Kudu		Other Operations		Total
Three Months Ended March 31, 2022
Earned insurance premiums	$	8.4	$	194.4	$	—	$	—	$	—	$	202.8
Net investment income	4.6		1.6		—		12.6		1.8		20.6
Net realized and unrealized investment gains (losses)	(45.1)		(17.5)		—		22.3		31.9		(8.4)
Net realized and unrealized investment gains (losses) from investment in MediaAlpha	—		—		—		—		18.8		18.8
Commission revenues	—		—		70.1		—		2.9		73.0

Other revenues	.8		(2.8)		18.4		—		25.7		42.1
Total revenues	(31.3)		175.7		88.5		34.9		81.1		348.9

Loss and loss adjustment expenses	—		122.0		—		—		—		122.0
Insurance and reinsurance acquisition expenses	3.0		49.9		—		—		—		52.9

Cost of sales	—		—		—		—		21.4		21.4
General and administrative expenses	16.3		23.1		54.0		2.7		28.9		125.0
Broker commission expense	—		—		20.6		—		—		20.6
Change in fair value of contingent consideration	—		—		.1		—		—		.1
Amortization of other intangible assets	—		—		9.1		.1		.9		10.1
Loss on assets held for sale	—		—		—		—		—		—
Interest expense	—		3.8		2.1		2.8		.3		9.0
Total expenses	19.3		198.8		85.9		5.6		51.5		361.1
Pre-tax income (loss)	$	(50.6)	$	(23.1)	$	2.6	$	29.3	$	29.6	$	(12.2)