wtm-20200205
FALSE000077686700007768672020-02-052020-02-05

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

February 5, 2020
Date of Report (Date of earliest event reported)

WHITE MOUNTAINS INSURANCE GROUP, LTD.
(Exact name of registrant as specified in its charter)

Bermuda
(State or other jurisdiction of
 incorporation or organization)
1-8993
(Commission file number)
94-2708455
(I.R.S. Employer Identification No.)

80 South Main Street, Hanover, New Hampshire 03755
(Address of principal executive offices)

(603) 640-2200
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Shares, par value $1.00WTMNew York Stock Exchange
per shareBermuda Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933(§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).          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



ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On February 5, 2020, White Mountains Insurance Group, Ltd. issued a press release announcing its results for the three months and year ended December 31, 2019. The press release furnished herewith is attached as Exhibit 99.1 to this Form 8-K. Certain information included in the press release constitutes non-GAAP financial measures (as defined in Regulation G of the Securities and Exchange Commission). Specifically, the eight non-GAAP financial measures disclosed in the press release include (i) adjusted book value per share, (ii) underlying growth in adjusted book value per share, (iii) gross written premiums and member surplus contributions (“MSC”) from new business, (iv) NSM’s earnings before interest, taxes, depreciation and amortization (“EBITDA”), (v) NSM’s adjusted EBITDA, (vi) NSM’s pro forma adjusted EBITDA, (vii) total consolidated portfolio returns excluding the MediaAlpha transaction, and (viii) other long-term investments return excluding the MediaAlpha transaction. These non-GAAP financial measures have been reconciled to their most comparable GAAP financial measures.
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 surplus notes, the present value of the BAM surplus notes, including accrued interest, was estimated to be $157 million, $137 million, $146 million and $151 million less than the nominal GAAP carrying values as of December 31, 2019, September 30, 2019, December 31, 2018, and September 30, 2018, respectively. The value of HG Global’s unearned premium reserve, net of deferred acquisition costs, was $119 million, $122 million, $106 million and $94 million as of December 31, 2019, September 30, 2019, December 31, 2018, and September 30, 2018, 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 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 6 of Exhibit 99.1 to this Form 8-K.
The growth in adjusted book value per share on page 1 of Exhibit 99.1 reflects the estimated gain from the MediaAlpha transaction as if it had closed on December 31, 2018. A reconciliation from GAAP to the reported percentage is as follows:
As of
December 31, 2019
As of
December 31, 2018
Growth % (1)
GAAP book value per share$1,023.91  $896.00  14.4 %
Estimated gain from MediaAlpha transaction
as of December 31, 2018
—  55.07  
GAAP book value per share including the estimated gain
from the MediaAlpha transaction as of December 31, 2018
1,023.91  951.07  7.8 %
Adjustments to book value per share (see reconciliation
on page 6 of Exhibit 99.1 to this Form 8-K)
(5.50) (8.15) 
Adjusted book value per share including the estimated
gain from the MediaAlpha transaction as of December 31, 2018
$1,018.41  $942.92  8.1 %
(1) Growth includes $1.00 per share dividend paid during the first quarter of 2019.
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 14 of Exhibit 99.1 to this Form 8-K.


2


NSM’s EBITDA, adjusted EBITDA and pro forma adjusted EBITDA are non-GAAP financial measures. EBITDA is a non-GAAP financial measure that excludes interest expense on debt, income tax benefit (expense), depreciation and amortization 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 earnout liabilities, (ii) acquisition-related transaction expenses, (iii) fair value purchase accounting adjustment for deferred revenue, (iv) investments made in the development of new business lines and (v) restructuring expenses. A description of each follows:
Change in fair value of contingent consideration earnout liabilities - Earnout liabilities are 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, earnout liabilities are not capitalized as part of the purchase price. Earnout liabilities are recorded at fair value, with the periodic change in the fair value of these liabilities recorded as income or an expense.
Acquisition-related transaction expenses - Represents costs directly related to NSM’s transactions to acquire businesses, such as transaction-related compensation, impairments of intangible assets, banking, accounting and external lawyer fees, which are not capitalized and are expensed under GAAP.
Fair value purchase accounting adjustment for deferred revenue - Represents the amount of deferred revenue that had already been collected but subsequently written down in connection with establishing the fair value of deferred revenue as part of NSM’s purchase accounting for Embrace Pet Insurance.
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. For the periods presented, this adjustment relates primarily to NSM’s investment expenditures, net of revenues generated, in the organic development of (i) its pet insurance line and (ii) its MGA in the United Kingdom. NSM has recently decided to cease investment in the organic development of its pet insurance line and, instead, to acquire Embrace Pet Insurance, which closed in April 2019.
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.
Pro forma adjusted EBITDA is a non-GAAP financial measure that starts with adjusted EBITDA and also includes the earnings of acquired businesses for the period of time over the previous twelve months that the businesses were not owned by White Mountains. White Mountains believes that these non-GAAP financial measures are useful to management and investors in evaluating NSM’s performance. White Mountains also believes that pro forma adjusted EBITDA is useful to management and investors to demonstrate the current earnings profile of NSM’s business for a full twelve month period. See page 15 of Exhibit 99.1 to this Form 8-K for the reconciliation of NSM’s GAAP net income (loss) to EBITDA, adjusted EBITDA and pro forma adjusted EBITDA.
Total consolidated portfolio return excluding the MediaAlpha transaction and other long-term investments return excluding the MediaAlpha transaction are non-GAAP financial measures that remove the $115 million pre-tax unrealized investment gain resulting from the MediaAlpha transaction recognized in the first quarter of 2019. White Mountains believes this measure to be useful to management and investors by making the return in the current period comparable to the prior periods. A reconciliation from GAAP to the reported percentages is as follows:
For the twelve months ended December 31, 2019
GAAP returnsRemove MediaAlpha transactionReturns - excluding MediaAlpha transaction
Total consolidated portfolio returns20.4 %(4.9)%15.5 %
Other long-term investments returns52.4 %(37.2)%15.2 %


3


ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits

99.1 Press Release of White Mountains Insurance Group, Ltd. dated February 5, 2020, furnished herewith.


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.
February 5, 2020By:
/s/   J. BRIAN PALMER    
       J. Brian Palmer
      Managing Director and
       Chief Accounting Officer

4
Document
Exhibit 99.1
https://cdn.kscope.io/fd48ce983a1a011ebee67c45a5a996d2-image11.jpg
CONTACT: Todd Pozefsky
(203) 458-5807

WHITE MOUNTAINS REPORTS FOURTH QUARTER RESULTS

HAMILTON, Bermuda (February 5, 2020) - White Mountains Insurance Group, Ltd. (NYSE: WTM) reported book value per share of $1,024 and adjusted book value per share of $1,018 as of December 31, 2019. Book value per share and adjusted book value per share increased 2% and 1% in the fourth quarter of 2019. Book value per share and adjusted book value per share increased 14% and 15% in the year ended December 31, 2019, including dividends. The results for the year ended December 31, 2019 include the gain from MediaAlpha's sale of a significant minority stake to Insignia Capital Group on February 26, 2019 (the “MediaAlpha Transaction”). Excluding the gain on the MediaAlpha Transaction, book value per share and adjusted book value per share both would have increased 8% in the year ended December 31, 2019, including dividends.(1)

Manning Rountree, CEO, commented, “We had a solid 4th quarter to cap off a satisfying year. Our investment portfolio was up 4% in the quarter, a strong result that included a $30 million increase in the fair value of our investment in MediaAlpha, which continues to produce outstanding results. In the quarter, BAM produced $23 million of premiums and member surplus contributions on good volume but lower pricing. In December and January, BAM made cash payments of surplus note principal and interest totaling $97 million. Quarter over quarter, NSM produced solid top line growth and a flat bottom line result, reflecting continuing investment in the business. In the quarter, Kudu continued to grow revenues and profits and closed two new investments, marking the full deployment of our initial $250 million commitment. In December, Kudu raised another $225 million of capital, comprised of a new $125 million committed bank facility and an incremental $100 million equity capital commitment from White Mountains. We ended the year with $1.0 billion of undeployed capital.”

Comprehensive income attributable to common shareholders was $65 million and $413 million in the fourth quarter and year ended December 31, 2019, compared to comprehensive loss attributable to common shareholders of $141 million and $146 million in the fourth quarter and year ended December 31, 2018.

HG Global/BAM

BAM’s gross written premiums and member surplus contributions (MSC) collected were $23 million and $107 million in the fourth quarter and year ended December 31, 2019, compared to $51 million and $107 million in the fourth quarter and year ended December 31, 2018. BAM insured municipal bonds with par value of $3.9 billion and $12.8 billion in the fourth quarter and year ended December 31, 2019, compared to $5.4 billion and $12.0 billion in the fourth quarter and year ended December 31, 2018. In the third quarter of 2019, BAM completed assumed reinsurance transactions to insure municipal bonds with a par value of $1.1 billion. In the fourth quarter of 2018, BAM completed assumed reinsurance transactions to insure municipal bonds with a par value of $2.2 billion. Total pricing was 58 and 83 basis points in the fourth quarter and year ended December 31, 2019, compared to 94 and 93 basis points in the fourth quarter and year ended December 31, 2018. BAM’s total claims paying resources were $938 million at December 31, 2019, compared to $930 million at September 30, 2019 and $871 million at December 31, 2018.

(1) See “Regulation G” on page 16.
1


Seán McCarthy, CEO of BAM, said, “BAM completed a successful year, posting record par insured in both the primary and secondary markets, albeit at lower pricing levels given the lower interest rate environment. In the primary market, BAM’s par insured was up 19% versus 2018, as the low interest rate environment created significant opportunities for municipal bond issuers to save money by refinancing existing debt. In the secondary market, institutional investor demand drove par insured to $1.3 billion, a 37% increase from 2018. In November, S&P Global Ratings affirmed BAM’s rating and outlook at “AA/Stable” after applying its new global insurance ratings criteria to the financial guaranty industry.”

HG Global reported pre-tax income of $10 million and $54 million in the fourth quarter and year ended December 31, 2019, compared to pre-tax income of $11 million and $32 million in the fourth quarter and year ended December 31, 2018. White Mountains reported pre-tax loss related to BAM of $18 million and $44 million in the fourth quarter and year ended December 31, 2019, compared to pre-tax loss of $8 million and $61 million in the fourth quarter and year ended December 31, 2018. The period over period changes were driven primarily by investment results in the HG Global and BAM investment portfolios.

In December 2019, BAM made a $32 million cash payment of surplus note principal and interest. In January 2020, BAM made an additional $65 million special cash payment of surplus note principal and interest. Previously, BAM made cash payments of surplus note principal and interest of $23 million in 2018 and $5 million in 2017.

During the fourth quarter of 2019, White Mountains updated its debt service model for the BAM surplus notes to reflect (i) the cash payments of surplus note principal and interest made in December 2019 and January 2020, (ii) certain amendments made to the terms of the surplus notes in January 2020, including an extension of the variable interest rate period and (iii) in light of the current interest rate environment, a more conservative forecast of future operating results for BAM. This has resulted in slower modeled future payments on the surplus notes and, in turn, a $20 million increase to the time value of money discount on the surplus notes as reflected in adjusted book value per share.

BAM is a mutual insurance company that is owned by its members.  BAM’s results are consolidated into White Mountains’s GAAP financial statements and attributed to non-controlling interests.

NSM

NSM reported pre-tax loss of $6 million, adjusted EBITDA of $9 million, and commission and other revenues of $58 million in the fourth quarter of 2019. NSM reported pre-tax loss of $2 million, adjusted EBITDA of $48 million, and commission and other revenues of $233 million in the year ended December 31, 2019. Results for the fourth quarter and year ended December 31, 2019 include the results of Embrace Pet Insurance, a nationwide provider of pet health insurance for dogs and cats, which NSM acquired on April 1, 2019, and KBK Insurance Group, a specialized MGU focused on the towing and transportation space, which NSM acquired on December 3, 2018.

Geof McKernan, CEO of NSM, said, “NSM had a solid quarter to finish a good year. For the quarter, trailing 12 months pro forma controlled premiums were up 4% to a new high of $919 million, driven by strong growth in the pet and social services verticals. Pro forma adjusted EBITDA was flat at $50 million, as we made significant investments in people and technology that will position us well for continued growth in 2020 and beyond.”

Kudu

In the fourth quarter of 2019, Kudu reported total revenues of $9 million and pre-tax income of $6 million. For the period from April 4, 2019 through December 31, 2019, Kudu reported total revenues of $21 million and pre-tax income of $11 million.

2


In the fourth quarter of 2019, Kudu deployed $44 million, comprised of a $20 million investment in Pennybacker Capital Management, a real estate private equity firm, and a $24 million follow-on investment in TIG Advisors, an existing portfolio company. Kudu has now deployed a total of $266 million in nine investment management firms with combined assets under management of over $33 billion, spanning a range of asset classes, including real estate, real assets, wealth management, hedge funds and alternative credit strategies.

Rob Jakacki, CEO of Kudu, said, “Kudu had an active end to the year, closing two transactions in the fourth quarter and seven transactions in 2019 overall. We have now deployed $266 million across nine firms with an average cash yield to Kudu at inception of 10.6%. The fourth quarter saw profitability more than double from the third quarter, with higher revenues driven by strong organic growth in assets under management across the existing portfolio, the impact of year-end incentive fees and the addition of the new transactions. We enter 2020 with $225 million of fresh capital commitments and a robust pipeline.”

Other Operations

White Mountains’s Other Operations segment reported pre-tax income of $65 million and $393 million in the fourth quarter and year ended December 31, 2019, compared to pre-tax loss of $144 million and $153 million in the fourth quarter and year ended December, 2018. Pre-tax income in the year ended December 31, 2019 included $182 million of realized and unrealized gains from the MediaAlpha Transaction. Excluding the MediaAlpha Transaction, net realized and unrealized investment gains were $86 million and $285 million in the fourth quarter and year ended December 31, 2019, compared to net realized and unrealized investment losses of $138 million and $101 million in the fourth quarter and year ended December 31, 2018.

Investments

The total return on invested assets was 3.9% in the fourth quarter of 2019 compared to -4.4% in the fourth quarter of 2018. The total return on invested assets was 20.4% for the year ended December 31, 2019, which included $115 million of unrealized investment gains from the MediaAlpha Transaction. Excluding the MediaAlpha Transaction, the total return on invested assets was 15.5% for the year ended December 31, 2019 compared to -1.7% for the year ended December 31, 2018.

Mark Plourde, Managing Director of White Mountains Advisors, said, “The total portfolio was up 3.9% for the quarter and 15.5% for the year, a strong result, driven primarily by our asset allocation to equities and our ongoing investment in MediaAlpha. Our fixed income portfolio returned 0.4% for the quarter and 6.1% for the year, lagging the BBIA Index returns of 0.5% and 6.7%, respectively, primarily due to our short duration positioning. Our portfolio of common stocks and ETFs returned 9.1% for the quarter, in line with the S&P 500 return, and 29.1% for the year, lagging the S&P 500 return of 31.5%, primarily due to our international stock positions. Other long-term investments returned 5.8% for the quarter and 15.2% for the year, including the impact of increases in the fair value of our ongoing investment in MediaAlpha of $30 million in the quarter and $65 million from the date of the MediaAlpha Transaction through the end of the year.”

Additional Information

White Mountains is a Bermuda-domiciled financial services holding company traded on the New York Stock Exchange and the Bermuda Stock Exchange under the symbol WTM. Additional financial information and other items of interest are available at the company’s website located at www.whitemountains.com. White Mountains expects to file its Form 10-K on or before March 2, 2020 with the Securities and Exchange Commission and urges shareholders to refer to that document for more complete information concerning its financial results.
3


WHITE MOUNTAINS INSURANCE GROUP, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(millions)
(Unaudited)
December 31,
2019
September 30,
2019
December 31,
2018
Assets 
   Financial Guarantee (HG Global/BAM)
     Fixed maturity investments$799.3  $794.5  $701.4  
     Short-term investments46.3  57.1  66.9  
Total investments845.6  851.6  768.3  
     Cash 24.2  11.3  12.5  
     Insurance premiums receivable6.7  6.7  6.4  
     Deferred acquisition costs22.1  21.4  19.0  
     Accrued investment income5.4  5.5  4.9  
     Other assets 20.0  16.4  5.1  
Total Financial Guarantee assets924.0  912.9  816.2  
Specialty Insurance Distribution (NSM)
     Cash (restricted $56.3, $67.0 and $50.0)89.7  105.7  66.2  
Premium and commission receivable70.8  53.6  44.0  
     Goodwill and other intangible assets623.0  630.6  486.2  
     Other assets41.7  35.1  27.2  
Total Specialty Insurance Distribution assets825.2  825.0  623.6  
Global Asset and Wealth Management (Kudu)
Short-term investments.1  .1  —  
Other long-term investments266.5  219.3  —  
Total investments266.6  219.4  —  
Cash5.8  4.9  —  
Accrued investment income5.8  4.7  —  
Goodwill and other intangible assets9.6  9.6  —  
Other assets2.7  3.7  —  
Total Global Asset and Wealth Management assets290.5  242.3  —  
   Marketing Technology (MediaAlpha)
     Cash—  —  5.7  
     Goodwill and other intangible assets—  —  43.4  
     Accounts receivable from publishers and advertisers—  —  37.0  
     Other assets—  —  2.3  
Total Marketing Technology assets—  —  88.4  
   Other Operations
     Fixed maturity investments406.5  371.5  376.1  
     Short-term investments154.8  215.3  147.3  
     Common equity securities683.9  629.7  925.6  
     Other long-term investments589.8  554.4  325.6  
Total investments1,835.0  1,770.9  1,774.6  
     Cash41.3  27.3  25.9  
     Accrued investment income5.7  5.1  5.5  
     Goodwill and other intangible assets22.1  20.7  7.9  
     Other assets36.4  29.3  17.2  
     Assets held for sale3.0  2.8  3.3  
Total Other Operations assets1,943.5  1,856.1  1,834.4  
Total assets$3,983.2  $3,836.3  $3,362.6  

4


WHITE MOUNTAINS INSURANCE GROUP, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(millions)
(Unaudited)
December 31,
2019
September 30,
2019
December 31,
2018
Liabilities
   Financial Guarantee (HG Global/BAM)
     Unearned insurance premiums$198.4  $203.5  $176.0  
     Accrued incentive compensation21.7  19.0  20.4  
     Other liabilities26.7  31.0  16.1  
Total Financial Guarantee liabilities246.8  253.5  212.5  
Specialty Insurance Distribution (NSM)
Debt219.2  219.4  178.5  
Premiums payable102.3  92.6  77.2  
Contingent consideration earnout liabilities20.6  28.7  20.2  
     Other liabilities59.0  60.1  38.9  
Total Specialty Insurance Distribution liabilities401.1  400.8  314.8  
Global Asset and Wealth Management (Kudu)
Debt53.6  —  —  
Other liabilities3.4  5.3  —  
Total Global Asset and Wealth Management liabilities57.0  5.3  —  
   Marketing Technology (MediaAlpha)
     Debt—  —  14.2  
     Amounts due to publishers and advertisers—  —  27.0  
     Other liabilities—  —  5.7  
Total Marketing Technology liabilities—  —  46.9  
   Other Operations
     Debt10.7  10.8  —  
     Accrued incentive compensation55.1  44.9  38.9  
     Other liabilities67.8  50.1  31.3  
Total Other Operations liabilities133.6  105.8  70.2  
Total liabilities838.5  765.4  644.4  
Equity
White Mountains's common shareholder's equity
     White Mountains’s common shares and paid-in surplus596.3  593.2  584.0  
     Retained earnings2,672.4  2,611.5  2,264.9  
Accumulated other comprehensive loss, after tax:
  Net unrealized foreign currency translation losses and interest rate swap(7.2) (11.3) (5.8) 
Total White Mountains’s common shareholders’ equity3,261.5  3,193.4  2,843.1  
Non-controlling interests(116.8) (122.5) (124.9) 
Total equity3,144.7  3,070.9  2,718.2  
Total liabilities and equity$3,983.2  $3,836.3  $3,362.6  

5


WHITE MOUNTAINS INSURANCE GROUP, LTD.
BOOK VALUE AND ADJUSTED BOOK VALUE PER SHARE
(Unaudited)
 December 31,
2019
September 30,
2019
December 31,
2018
September 30,
2018
Book value per share numerators (in millions):
White Mountains’s common shareholders’ equity -
GAAP book value per share numerator
$3,261.5  $3,193.4  $2,843.1  $2,984.0  
Time value of money discount on expected future payments on the BAM Surplus Notes (1)
(151.6) (132.8) (141.2) (146.3) 
HG Global’s unearned premium reserve (1)
156.7  160.4  136.9  120.2  
HG Global’s net deferred acquisition costs (1)
(41.5) (42.0) (34.6) (29.4) 
Adjusted book value per share numerator$3,225.1  $3,179.0  $2,804.2  $2,928.5  
Book value per share denominators (in thousands of shares):
Common shares outstanding - GAAP book value per share denominator3,185.4  3,185.4  3,173.1  3,180.5  
Unearned restricted common shares  (18.5) (21.5) (14.6) (18.5) 
Adjusted book value per share denominator3,166.9  3,163.9  3,158.5  3,162.0  
GAAP book value per share$1,023.91  $1,002.53  $896.00  $938.19  
Adjusted book value per share$1,018.41  $1,004.76  $887.85  $926.14  
(1) Amount reflects White Mountains's preferred share ownership in HG Global of 96.9%.
December 31,
2019
September 30,
2019
December 31,
2018
September 30,
2018
Quarter-to-date change in GAAP book value per share,
including dividends:
2.1 %1.6 %(4.5) % 1.5 %
Quarter-to-date change in adjusted book value per share,
including dividends:
1.4 %1.9 %(4.1) % 1.5 %
Year-to-date change in GAAP book value per share,
including dividends:
14.4 %12.0 %(3.7) % 0.8 %
Year-to-date change in adjusted book value per share,
including dividends:
14.8 %13.3 %(2.8) % 1.4 %
Year-to-date dividends per share$1.00  $1.00  $1.00  $1.00  
December 31,
2019
September 30,
2019
December 31,
2018
September 30,
2018
Summary of goodwill and other intangible assets (in millions):
Goodwill:
NSM $381.6  $397.0  
(1)
$354.3  
(2)
$295.5  
Kudu7.6  7.6  —  —  
MediaAlpha—  —  18.3  18.3  
Other Operations5.5  20.2  
(1)
7.3  7.6  
Total goodwill394.7  424.8  379.9  321.4  
Other intangible assets:
NSM241.4  233.6  
(1)
131.9  
(2)
135.5  
Kudu2.0  2.0  —  —  
MediaAlpha—  —  25.1  27.6  
Other Operations16.6  .5  
(1)
.6  .7  
Total other intangible assets260.0  236.1  157.6  163.8  
Total goodwill and other intangible assets654.7  660.9  537.5  485.2  
Goodwill and other intangible assets attributed to
non-controlling interests
(23.4) (25.0) (40.6) (40.6) 
Goodwill and other intangible assets included in
White Mountains's common shareholders' equity
$631.3  $635.9  $496.9  $444.6  
(1) The relative fair values of goodwill and of other intangible assets recognized in connection with the acquisition of Embrace and Other Operations had not yet been finalized at September 30, 2019.
(2) The relative fair values of goodwill and of other intangible assets recognized in connection with the acquisition of KBK had not yet been finalized at December 31, 2018.



6


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

Three Months Ended December 31,Twelve Months Ended December 31,
2019201820192018
Revenues:
   Financial Guarantee (HG Global/BAM)
     Earned insurance premiums$2.6  $4.2  $16.3  $13.9  
     Net investment income5.5  4.2  21.6  16.7  
     Net realized and unrealized investment (losses) gains(3.3) 6.9  27.1  (7.5) 
     Other revenues.3  .4  1.6  1.2  
Total Financial Guarantee revenues5.1  15.7  66.6  24.3  
Specialty Insurance Distribution (NSM)
Commission revenues45.8  33.2  193.4  89.6  
Other revenues12.0  5.2  39.7  12.0  
Total Specialty Insurance Distribution revenues57.8  38.4  233.1  101.6  
Global Asset and Wealth Management (Kudu)
Net investment income6.1  —  14.7  —  
Net realized and unrealized investment gains3.2  —  6.3  —  
Other revenues—  —  .2  —  
Total Global Asset and Wealth Management revenues9.3  —  21.2  —  
   Marketing Technology (MediaAlpha)
     Advertising and commission revenues—  79.1  48.8  295.5  
     Other revenues—  —  —  1.6  
Total Marketing Technology revenues—  79.1  48.8  297.1  
   Other Operations
     Net investment income12.7  9.9  43.4  42.3  
     Net realized and unrealized investment gains (losses)85.5  (138.1) 285.1  (100.8) 
  Realized gain and unrealized investment gain from the
MediaAlpha Transaction
—  —  182.2  —  
     Advertising and commission revenues2.4  1.1  6.9  4.1  
     Other revenues2.5  (.1) 6.1  .5  
Total Other Operations revenues103.1  (127.2) 523.7  (53.9) 
Total revenues$175.3  $6.0  $893.4  $369.1  


7


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

Three Months Ended December 31,Twelve Months Ended December 31,
2019201820192018
Expenses:
Financial Guarantee (HG Global/BAM)
Insurance acquisition expenses$1.6  $1.4  $5.7  $5.3  
     Other underwriting expenses
.1  .1  .4  .4  
General and administrative expenses11.4  11.5  50.5  48.0  
Total Financial Guarantee expenses13.1  13.0  56.6  53.7  
Specialty Insurance Distribution (NSM)
General and administrative expenses40.8  23.7  132.2  59.4  
Broker commission expenses15.9  11.3  64.8  28.4  
Change in fair value of contingent consideration earnout liabilities(3.5) .1  2.1  2.7  
Amortization of other intangible assets5.9  3.3  19.4  8.3  
Interest expense4.5  3.2  16.7  8.0  
Total Specialty Insurance Distribution expenses63.6  41.6  235.2  106.8  
Global Asset and Wealth Management (Kudu)
General and administrative expenses3.4  —  10.1  —  
Amortization of other intangible assets—  —  .2  —  
Interest expense.1  —  .1  —  
Total Global Asset and Wealth Management expenses3.5  —  10.4  —  
Marketing Technology (MediaAlpha)
Cost of sales—  65.9  40.6  245.0  
General and administrative expenses—  10.5  12.5  31.7  
Amortization of other intangible assets—  2.5  1.6  10.3  
Interest expense—  .3  .2  1.2  
Total Marketing Technology expenses—  79.2  54.9  288.2  
Other Operations
Cost of sales2.5  .8  7.5  3.7  
General and administrative expenses35.3  15.4  122.5  94.4  
Amortization of other intangible assets.5  .1  .6  .2  
Interest expense.3  —  .6  .3  
Total Other Operations expenses38.6  16.3  131.2  98.6  
Total expenses118.8  150.1  488.3  547.3  
Pre-tax income (loss) from continuing operations56.5  (144.1) 405.1  (178.2) 
Income tax (expense) benefit(10.4) 3.6  (29.3) 4.0  
Net income (loss) from continuing operations46.1  (140.5) 375.8  (174.2) 
Net (loss) gain from sale of discontinued operations, net of tax(.8) —  .8  (17.2) 
Net income (loss)45.3  (140.5) 376.6  (191.4) 
Net loss attributable to non-controlling interests15.6  3.0  37.9  50.2  
Net income (loss) attributable to White Mountains’s
common shareholders
$60.9  $(137.5) $414.5  $(141.2) 

8


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

Three Months Ended December 31,Twelve Months Ended December 31,
2019201820192018
Net income (loss) attributable to White Mountains’s
common shareholders
$60.9  $(137.5) $414.5  $(141.2) 
Other comprehensive income (loss), net of tax4.4  (3.1) (1.4) (4.8) 
Comprehensive income (loss) 65.3  (140.6) 413.1  (146.0) 
Other comprehensive (income) loss attributable to non-controlling interests(.3) .1  —  .3  
Comprehensive income (loss) attributable to White Mountains’s
common shareholders
$65.0  $(140.5) $413.1  $(145.7) 




WHITE MOUNTAINS INSURANCE GROUP, LTD.
EARNINGS PER SHARE
(Unaudited)

Income (loss) per share attributable to White Mountains’s common shareholdersThree Months Ended December 31,Twelve Months Ended December 31,
2019201820192018
Basic earnings (loss) per share
Continuing operations$19.37  $(43.24) $130.02  $(36.67) 
Discontinued operations(.25) —  .25  (5.09) 
Total consolidated operations$19.12  $(43.24) $130.27  $(41.76) 
Diluted earnings (loss) per share
Continuing operations$19.37  $(43.24) $130.02  $(36.67) 
Discontinued operations(.25) —  .25  (5.09) 
Total consolidated operations$19.12  $(43.24) $130.27  $(41.76) 
Dividends declared per White Mountains’s common share$—  $—  $1.00  $1.00  

9


WHITE MOUNTAINS INSURANCE GROUP, LTD.
QTD SEGMENT STATEMENTS OF PRE-TAX INCOME (LOSS)
(millions)
(Unaudited)


For the Three Months Ended December 31, 2019HG Global/BAM
HG GlobalBAMNSMKuduOther OperationsTotal
Revenues:
Earned insurance premiums$2.1  $.5  $—  $—  $—  $2.6  
Net investment income1.9  3.6  —  6.1  12.7  24.3  
Net investment income (expense) -
BAM surplus note interest
6.8  (6.8) —  —  —  —  
Net realized and unrealized investment (loss) gains(.1) (3.2) —  3.2  85.5  85.4  
Advertising and commission revenues—  —  45.8  —  2.4  48.2  
Other revenues—  .3  12.0  —  2.5  14.8  
Total revenues10.7  (5.6) 57.8  9.3  103.1  175.3  
Expenses:
Insurance acquisition expenses.5  1.1  —  —  —  1.6  
Other underwriting expenses—  .1  —  —  —  .1  
Cost of sales—  —  —  —  2.5  2.5  
General and administrative expenses.4  11.0  40.8  3.4  35.3  90.9  
Broker commission expenses—  —  15.9  —  —  15.9  
Change in fair value of contingent consideration
earnout liabilities
—  —  (3.5) —  —  (3.5) 
Amortization of other intangible assets—  —  5.9  —  .5  6.4  
Interest expense—  —  4.5  .1  .3  4.9  
Total expenses.9  12.2  63.6  3.5  38.6  118.8  
Pre-tax income (loss)$9.8  $(17.8) $(5.8) $5.8  $64.5  $56.5  


10


WHITE MOUNTAINS INSURANCE GROUP, LTD.
QTD SEGMENT STATEMENTS OF PRE-TAX INCOME (LOSS) (CONTINUED)
(millions)
(Unaudited)


For the Three Months Ended December 31, 2018HG Global/BAM
HG GlobalBAMNSMMediaAlphaOther OperationsTotal
Revenues:
Earned insurance premiums$3.4  .8  $—  $—  $—  $4.2  
Net investment income1.6  2.6  —  —  9.9  14.1  
Net investment income (expense) -
BAM surplus note interest
5.7  (5.7) —  —  —  —  
Net realized and unrealized investment gains (losses)1.4  5.5  —  —  (138.1) (131.2) 
Advertising and commission revenues—  —  33.2  79.1  1.1  113.4  
Other revenues—  .4  5.2  —  (.1) 5.5  
Total revenues12.1  3.6  38.4  79.1  (127.2) 6.0  
Expenses:
Insurance acquisition expenses.9  .5  —  —  —  1.4  
Other underwriting expenses—  .1  —  —  —  .1  
Cost of sales—  —  —  65.9  .8  66.7  
General and administrative expenses.3  11.2  23.7  10.5  15.4  61.1  
Broker commission expenses—  —  11.3  —  —  11.3  
Change in fair value of contingent consideration
earnout liabilities
—  —  .1  —  —  .1  
Amortization of other intangible assets—  —  3.3  2.5  .1  5.9  
Interest expense—  —  3.2  .3  —  3.5  
Total expenses1.2  11.8  41.6  79.2  16.3  150.1  
Pre-tax income (loss)$10.9  $(8.2) $(3.2) $(.1) $(143.5) $(144.1) 


11




WHITE MOUNTAINS INSURANCE GROUP, LTD.
YTD SEGMENT STATEMENTS OF PRE-TAX INCOME (LOSS)
(millions)
(Unaudited)


For the Twelve Months Ended December 31, 2019HG Global/BAM
HG GlobalBAMNSM
Kudu (1)
MediaAlpha (2)
Other OperationsTotal
Revenues:
Earned insurance premiums$13.1  $3.2  $—  $—  $—  $—  $16.3  
Net investment income7.5  14.1  —  14.7  —  43.4  79.7  
Net investment income (expense) -
BAM surplus note interest
27.4  (27.4) —  —  —  —  —  
Net realized and unrealized
investment gains
11.0  16.1  —  6.3  —  285.1  318.5  
Realized and unrealized gains from
MediaAlpha Transaction
—  —  —  —  —  182.2  182.2  
Advertising and commission revenues—  —  193.4  —  48.8  6.9  249.1  
Other revenue—  1.6  39.7  .2  —