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Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 31, 2012	Feb. 28, 2013	Jun. 30, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	WHITE MOUNTAINS INSURANCE GROUP LTD
Entity Central Index Key	0000776867
Document Type	10-K
Document Period End Date	Dec. 31, 2012
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 3,254,686,935
Entity Common Stock, Shares Outstanding		6,316,210
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	FY

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Dec. 31, 2012	Dec. 31, 2011
Assets
Fixed maturity investments, at fair value	$ 5,196.2	$ 6,221.9
Short-term investments, at amortized cost (which approximates fair value)	630.6	846.0
Common equity securities, at fair value	1,029.7	755.0
Convertible fixed maturity investments, at fair value	127.4	143.8
Other long-term investments	294.2	301.3
Total investments	7,278.1	8,268.0
Cash (restricted $249.8 and $453.5)	462.4	705.4
Reinsurance recoverable on unpaid losses	429.1	2,507.3
Reinsurance recoverable on paid losses	17.9	30.5
Insurance and reinsurance premiums receivable	556.3	489.2
Funds held by ceding companies	127.4	106.5
Investments in unconsolidated affiliates	387.9	275.3
Deferred acquisition costs	195.3	187.0
Deferred tax asset	569.6	536.9
Ceded unearned insurance and reinsurance premiums	91.8	87.3
Accrued investment income	45.9	51.4
Accounts receivable on unsettled investment sales	3.9	4.7
Other assets	503.0	681.9
Assets held for sale	2,226.8	132.6
Total assets	12,895.4	14,064.0
Liabilities
Loss and loss adjustment expense reserves	3,168.9	5,702.3
Unearned insurance and reinsurance premiums	924.1	846.9
Variable annuity benefit guarantee	441.5	768.5
Debt	751.2	677.5
Deferred tax liability	341.3	365.5
Accrued incentive compensation	159.0	187.9
Funds held under reinsurance treaties	43.7	42.9
Ceded reinsurance payable	116.5	134.6
Accounts payable on unsettled investment purchases	11.4	34.6
Other liabilities	452.8	527.8
Liabilities held for sale	2,226.8	107.6
Total liabilities	8,637.2	9,396.1
White Mountains’ common shareholders’ equity
White Mountains’ common shares at $1 par value per share—authorized 50,000,000 shares; issued and outstanding 6,290,964 and 7,577,855 shares	6.3	7.6
Paid-in surplus	1,050.9	1,253.7
Retained earnings	2,542.7	2,789.7
Accumulated other comprehensive income (loss), after-tax:
Equity in unrealized gains from investments in Symetra common shares	57.7	0.0
Net unrealized foreign currency translation gains	85.7	46.1
Pension liability and other	(11.5)	(9.4)
Total White Mountains’ common shareholders’ equity	3,731.8	4,087.7
Non-controlling interests
Non-controlling interest — OneBeacon, Ltd.	251.4	273.1
Non-controlling interest — SIG Preference Shares	250.0	250.0
Non-controlling interest — HG Global	16.6	0.0
Non-controlling interest — BAM	(36.0)	0.0
Non-controlling interest — consolidated limited partnerships and A.W.G. Dewar	44.4	57.1
Total Non-controlling interests	526.4	580.2
Total equity	4,258.2	4,667.9
Total liabilities and equity	$ 12,895.4	$ 14,064.0

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions	Dec. 31, 2012	Dec. 31, 2011
Cash restricted (in dollars)	$ 249.8	$ 453.5
Common shares, par value per share (in dollars per share)	$ 1	$ 1
Common shares, authorized shares	50,000,000	50,000,000
Common shares, issued shares	0	7,577,855
Common shares, outstanding shares	0	7,577,855

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Revenues
Earned insurance and reinsurance premiums	$ 2,063.6	$ 1,924.5	$ 2,029.0
Net investment income	153.6	184.5	208.9
Net realized and unrealized investment gains	118.2	74.1	77.6
Other revenue	100.3	(10.0)	18.2
Total revenues	2,435.7	2,173.1	2,333.7
Expenses
Loss and loss adjustment expenses	1,193.9	1,174.3	1,216.6
Insurance and reinsurance acquisition expenses	430.2	402.2	419.6
Other underwriting expenses	321.8	268.1	295.9
General and administrative expenses	182.2	175.3	155.0
Interest expense on debt	44.8	55.2	57.3
Total expenses	2,172.9	2,075.1	2,144.4
Pre-tax income	262.8	98.0	189.3
Income tax benefit (expense)	15.7	110.0	(29.6)
Net income from continuing operations	278.5	208.0	159.7
Net loss from other discontinued operations, net of tax	(24.0)	(36.7)	(30.1)
Income before equity in earnings of unconsolidated affiliates	163.5	829.6	129.6
Equity in earnings (losses) of unconsolidated affiliates	29.9	(20.2)	9.9
Net income	193.4	809.4	139.5
Net loss (income) attributable to non-controlling interests	14.0	(41.5)	(53.0)
Net income attributable to White Mountains’ common shareholders	207.4	767.9	86.5
Comprehensive income (loss), net of tax:
Change in equity in net unrealized gains (losses) from investments in Symetra common shares, net of tax	57.7	(58.5)	73.5
Net change in foreign currency translation	39.6	(15.2)	49.8
Net change in pension liability and other, net of tax	(2.9)	(10.8)	6.3
Comprehensive income	301.8	683.4	216.1
Comprehensive loss (income) attributable to non-controlling interests	0.8	2.8	(1.7)
Comprehensive income attributable to White Mountains’ common shareholders	$ 302.6	$ 686.2	$ 214.4
Basic earnings (loss) per share
Continuing operations	$ 47.41	$ 18.56	$ 13.63
Discontinued operations	(16.91)	78.88	(3.51)
Total consolidated operations (in dollars per share)	30.50	97.44	10.12
Diluted earnings (loss) per share
Total consolidated operations	47.41	18.56	13.63
Discontinued operations	(16.91)	78.88	(3.51)
Total consolidated operations (in dollars per share)	30.50	97.44	10.12
Dividends declared and paid per White Mountains’ common share	$ 1.00	$ 1.00	$ 1.00
OneBeacon
Expenses
Gain (loss) on sale of discontinued operation, net of tax	$ (91.0)	$ (19.2)	$ 0.0
Esurance
Expenses
Gain (loss) on sale of discontinued operation, net of tax	$ 0.0	$ 677.5	$ 0.0

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Millions	Total	Non-controlling Interests	Total Equity includes Noncontrolling Interest [Member]	White Mountains Common shareholders’ equity	White Mountains Common shares and paid-in surplus	White Mountains Retained earnings	White Mountains AOCI, after-tax	White Mountains White Mountains excluding noncontrolling interest [Member]	HG Global Common shares and paid-in surplus	HG Global Non-controlling Interests	HG Global Total Equity includes Noncontrolling Interest [Member]	HG Global White Mountains Common shareholders’ equity	HG Global White Mountains Retained earnings	HG Global White Mountains AOCI, after-tax
Beginning balance at Dec. 31, 2009		$ 684.1	$ 4,341.5		$ 1,445.0	$ 2,215.9	$ (3.5)	$ 3,657.4
Increase (Decrease) in Shareholders' Equity
Tax basis change due to intercompany transfer		0.0	(10.4)	$ (10.4)	0.0	(4.4)	(6.0)
Net income	$ 139.5	53.0	139.5	86.5	0.0	86.5	0.0
Net change in unrealized gains from investments in unconsolidated affiliates	73.5	0.0	73.5	73.5	0.0	0.0	73.5
Net change in foreign currency translation	49.8	0.0	49.8	49.8	0.0	0.0	49.8
Net change in pension liability and other accumulated comprehensive items	6.3	1.7	6.3	4.6	0.0	0.0	4.6
Comprehensive income (loss)	216.1	54.7	269.1	214.4	0.0	86.5	127.9
Dividends declared on common shares		0.0	(8.8)	(8.8)	0.0	(8.8)	0.0
Dividends/distributions to non-controlling interests		(94.7)	(94.7)	0.0	0.0	0.0	0.0
Issuances of common shares		0.0	0.7	0.7	0.7	0.0	0.0
Repurchase and retirement of common shares	(225.5)	0.0	(225.6)	(225.6)	(112.4)	(113.2)	0.0
Contribution from (Distribution to) Non-Controlling Interests		(13.6)	(13.6)	0.0	0.0	0.0	0.0
Amortization of restricted share and option awards		0.1	25.8	25.7	25.7	0.0	0.0
Ending balance at Dec. 31, 2010		607.8	4,260.8		1,359.0	2,175.6	118.4	3,653.0
Increase (Decrease) in Shareholders' Equity
Cumulative effect adjustment — ASU 2009-17			(23.2)
Cumulative effect adjustment — ASU 2009-17 \| Accounting Standards Update 2009-17		(22.8)		(0.4)	0.0	(0.4)	0.0
Net income	809.4	41.5	809.4	767.9	0.0	767.9	0.0
Net change in unrealized gains from investments in unconsolidated affiliates	(58.5)	0.0	(58.5)	(58.5)	0.0	0.0	(58.5)
Net change in foreign currency translation	(15.2)	0.0	(15.2)	(15.2)	0.0	0.0	(15.2)
Net change in pension liability and other accumulated comprehensive items	(10.8)	(2.8)	(10.8)	(8.0)	0.0	0.0	(8.0)
Comprehensive income (loss)	683.4	38.7	724.9	686.2	0.0	767.9	(81.7)
Dividends declared on common shares		0.0	(8.0)	(8.0)	0.0	(8.0)	0.0
Dividends/distributions to non-controlling interests		(61.5)	(61.5)	0.0	0.0	0.0	0.0
Issuances of common shares		0.0	0.9	0.9	0.9	0.0	0.0
Repurchase and retirement of common shares	(253.0)	0.0	(253.0)	(253.0)	(107.2)	(145.8)	0.0
Contribution from (Distribution to) Non-Controlling Interests		(8.6)	(8.6)	0.0	0.0	0.0	0.0
Amortization of restricted share and option awards		0.4	12.4	12.0	12.0	0.0	0.0
Non-controlling interest attributable to intercompany sale of subsidiary		3.4	0.0	(3.4)	(3.4)	0.0	0.0
Ending balance at Dec. 31, 2011	4,087.7	580.2	4,667.9		1,261.3	2,789.7	36.7	4,087.7
Increase (Decrease) in Shareholders' Equity
Net income	193.4	(14.0)	193.4	207.4	0.0	207.4	0.0
Net change in unrealized gains from investments in unconsolidated affiliates	57.7	0.0	57.7	57.7	0.0	0.0	57.7
Net change in foreign currency translation	39.6	0.0	39.6	39.6	0.0	0.0	39.6
Net change in pension liability and other accumulated comprehensive items	(2.9)	(0.8)	(2.9)	(2.1)	0.0	0.0	(2.1)
Comprehensive income (loss)	301.8	(14.8)	287.8	302.6	0.0	207.4	95.2
Dividends declared on common shares		0.0	(6.6)	(6.6)	0.0	(6.6)	0.0
Dividends/distributions to non-controlling interests		(39.1)	(39.1)	0.0	0.0	0.0	0.0
Issuances of common shares		0.0	5.8	5.8	5.8	0.0	0.0
Repurchase and retirement of common shares	(669.1)	0.0	(669.1)	(669.1)	(221.3)	(447.8)	0.0
Contribution from (Distribution to) Non-Controlling Interests		1.6	1.6	0.0	0.0	0.0	0.0
Amortization of restricted share and option awards		0.8	14.4	13.6	13.6	0.0	0.0
Deconsolidation of Hamer and Bri-Mar		(4.5)	(4.5)	$ 0.0	0.0	0.0	0.0
Allocation of fair value of net assets acquired to non-controlling interests									$ (2.2)	$ 2.2	$ 0.0	$ (2.2)	$ 0.0	$ 0.0
Ending balance at Dec. 31, 2012	$ 3,731.8	$ 526.4	$ 4,258.2		$ 1,057.2	$ 2,542.7	$ 131.9	$ 3,731.8

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Cash flows from operations:
Net income	$ 193.4	$ 809.4	$ 139.5
Charges (credits) to reconcile net income to net cash (used for) provided from operations:
Net realized and unrealized investment gains	(118.2)	(74.1)	(77.6)
Excess of fair value of acquired net assets over cost and gain on sale of subsidiaries	(34.2)	(7.2)	(12.8)
Deferred income tax (benefit) expense	(16.8)	(71.0)	70.7
Undistributed equity in (earnings) loss from unconsolidated affiliates, after-tax	(29.9)	20.2	(9.9)
Net loss from other discontinued operations	24.0	36.7	30.1
Other operating items:
Net change in loss and loss adjustment expense reserves	(172.2)	(23.4)	(73.6)
Net change in reinsurance recoverable on paid and unpaid losses	42.4	66.0	115.2
Net change in unearned insurance and reinsurance premiums	63.1	67.0	(24.7)
Net change in ceded reinsurance premiums payable	3.8	39.5	0.5
Net change in ceded unearned insurance and reinsurance premiums	0.0	(8.6)	4.4
Net change in insurance and reinsurance premiums receivable	(79.2)	(42.4)	(123.4)
Net change in variable annuity benefit guarantee liabilities	(327.1)	158.3	229.5
Net change in variable annuity benefit derivative instruments	192.1	57.1	(153.0)
Net change in deferred acquisition costs	(5.7)	(15.3)	(2.3)
Net change in funds held by ceding companies	(17.7)	11.6	16.4
Net change in funds held under reinsurance treaties	10.6	(42.4)	(10.6)
Net change in other assets and liabilities, net	151.0	(229.0)	(89.5)
Net cash (used for) provided from continuing operations	(29.6)	94.1	28.9
Net cash (used for) provided from discontinuing operations	(196.2)	(208.6)	27.1
Net cash (used for) provided from operations	(225.8)	(114.5)	56.0
Cash flows from investing activities:
Net change in short-term investments	145.3	174.5	475.6
Sales of fixed maturity and convertible fixed maturity investments	6,040.0	3,481.9	2,447.8
Maturities, calls and paydowns of fixed maturities and convertible fixed maturities	678.4	1,163.6	1,744.1
Sales of common equity securities	192.4	237.8	167.5
Distributions and redemptions of other long-term investments	86.7	150.7	133.2
Sales of unconsolidated affiliates, net of cash sold and held in escrow	24.8	1,010.6	188.3
Contributions to other long-term investments	(96.7)	(65.8)	(111.1)
Contributions to discontinued operations	(196.2)	(171.8)	(48.1)
Purchases of common equity securities	(365.2)	(297.8)	(273.6)
Purchases of fixed maturity and convertible fixed maturity investments	(5,810.1)	(5,200.6)	(4,217.7)
Purchases of consolidated and unconsolidated affiliates, net of cash acquired	(41.3)	(3.2)	(4.9)
Net change in unsettled investment purchases and sales	(22.4)	47.0	1.6
Net acquisitions of property and equipment	(2.3)	(5.5)	(5.8)
Net cash provided from investing activities — continuing operations	633.4	521.4	496.9
Net cash provided from (used for) investing activities — discontinued operations	196.2	278.2	(11.6)
Net cash provided from investing activities	829.6	799.6	485.3
Cash flows from financing activities:
Repayment of debt	(75.0)	0.0	(14.0)
Repurchase of debt	(275.9)	(161.6)	(197.3)
Issuance of debt, net of debt issuance costs	271.9	0.0	0.0
Draw down of revolving line of credit	150.0	0.0	0.0
Repayments of Long-term Capital Lease Obligations	(4.9)
Capital lease obligation		23.1	0.0
Cash dividends paid to the Company’s common shareholders	(6.6)	(8.0)	(8.8)
Cash dividends paid to OneBeacon Ltd.’s non-controlling common shareholders	(19.8)	(42.8)	(75.9)
Cash dividends paid on SIG Preference Shares	(18.8)	(18.8)	(18.8)
Common shares repurchased	(669.1)	(253.0)	(225.6)
OneBeacon Ltd. common shares repurchased and retired	0.0	0.0	(10.5)
Proceeds from issuances of common shares	0.0	0.9	0.7
Net cash used for financing activities — continuing operations	(648.2)	(460.2)	(550.2)
Net cash provided from financing activities — discontinued operations	0.0	0.0	0.0
Net cash used for financing activities	(648.2)	(460.2)	(550.2)
Effect of exchange rate changes on cash	3.1	(1.5)	8.1
Net change in cash during the period	(41.3)	223.4	(0.8)
Net change in cash from discontinued operations	0.0	(69.6)	(15.5)
Cash reclassified to assets held for sale (net of cash sold of $3.5, $0, and $0)	2.0	(5.5)	0.0
Cash balance at beginning of year (excludes restricted cash balances of $453.5, $286.7 and $217.1 and AutoOne cash of $0, $4.7 and $3.9)	251.9	103.6	119.9
Cash balance at end of year (excludes restricted cash balances of $249.8, $453.5, and $286.7 and AutoOne cash of $0, $0, and $4.7)	212.6	251.9	103.6
OneBeacon
Charges (credits) to reconcile net income to net cash (used for) provided from operations:
Gain (loss) on sale of discontinued operation, net of tax	91.0	19.2	0.0
Esurance
Charges (credits) to reconcile net income to net cash (used for) provided from operations:
Gain (loss) on sale of discontinued operation, net of tax	$ 0.0	$ (677.5)	$ 0.0

CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Statement of Cash Flows [Abstract]
Cash restricted end of period	$ 249.8	$ 453.5	$ 286.7	$ 217.1
AutoOne Cash, end of period	0.0	0.0	4.7	$ 3.9
Cash reclassified to assets held-for-sale	$ 3.5	$ 0.0	$ 0.0

- Definition

For the disposal group, including a component of the entity (discontinued operation), cash includes currency on hand as well as demand deposits with banks or financial institutions. Cash equivalents, excluding items classified as marketable securities, include short-term, highly liquid investments that are both readily convertible to known amounts of cash, and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Generally, only investments with original maturities of three months or less qualify under that definition. Original maturity means original maturity to the entity holding the investment. For example, both a three-month US Treasury bill and a three-year Treasury note purchased three months from maturity qualify as cash equivalents. However, a Treasury note purchased three years ago does not become a cash equivalent when its remaining maturity is three months.

+ References + Details

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2012

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Basis of Presentation

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 White Mountains Insurance Group, Ltd. (the “Company” or the “Registrant”), its subsidiaries (collectively with the Company, “White Mountains”) and other entities required to be consolidated under GAAP. The Company is an exempted Bermuda limited liability company whose principal businesses are conducted through its property and casualty insurance and reinsurance subsidiaries and affiliates. The Company’s headquarters is located at 14 Wesley Street, Hamilton, Bermuda HM 11, its principal executive office is located at 80 South Main Street, Hanover, New Hampshire 03755-2053 and its registered office is located at Clarendon House, 2 Church Street, Hamilton, Bermuda HM 11. White Mountains’ reportable segments are OneBeacon, Sirius Group, HG Global/BAM and Other Operations.

The OneBeacon segment consists of OneBeacon Insurance Group, Ltd. (“OneBeacon Ltd.”), an exempted Bermuda limited liability company that owns a family of U.S. based property and casualty insurance companies (collectively “OneBeacon”). OneBeacon is a specialty property and casualty insurance writer that offers a wide range of insurance products through independent agencies, regional and national brokers, wholesalers and managing general agencies. As of December 31, 2012 and 2011, White Mountains owned 75.2% and 75.5% of OneBeacon Ltd.’s outstanding common shares.

As discussed further in Note 2, OneBeacon entered into a definitive agreement to sell its runoff business in October 2012 (the “Runoff Transaction”) and sold its AutoOne Insurance business (“AutoOne”) in February 2012. Accordingly, the runoff business and AutoOne are presented as discontinued operations. Assets and liabilities associated with the runoff business as of December 31, 2012 and AutoOne as of December 31, 2011 have been presented as held for sale in the financial statements. Prior year income statement and cash flow amounts have been reclassified to conform to the current year’s presentation. (See Note 20 for discontinued operations).

The Sirius Group segment consists of Sirius International Insurance Group, Ltd., an exempted Bermuda limited liability company, and its subsidiaries (collectively, “Sirius Group”). Sirius Group provides insurance and reinsurance products for property, accident and health, aviation and space, trade credit, marine, agriculture and certain other exposures on a worldwide basis through its subsidiaries, Sirius International Insurance Corporation (“Sirius International”), Sirius America Insurance Company (“Sirius America”) and Lloyds Syndicate 1945 (“Syndicate 1945”). Sirius Group also specializes in the acquisition and management of runoff insurance and reinsurance companies both in the United States and internationally through its White Mountains Solutions division (“WM Solutions”).

The HG Global/BAM segment consists of White Mountains’ investment in HG Global Ltd. (“HG Global”) and the consolidated results of Build America Mutual Assurance Company (“BAM”). During the third quarter of 2012, White Mountains capitalized HG Global with approximately $600 million to fund the start-up of BAM. BAM is a municipal bond insurer domiciled in New York that was established to provide insurance on bonds issued to support essential U.S. public purposes such as schools, utilities, core governmental functions and existing transportation facilities. HG Global, together with its subsidiaries, provided the initial capitalization of BAM through the purchase of $503 million of surplus notes issued by BAM (the “BAM Surplus Notes”). HG Global, through its wholly-owned subsidiary, HG Re Ltd. (“HG Re”), also provides 15%-of-par, first loss reinsurance protection for policies underwritten by BAM. As of December 31, 2012, White Mountains owned 97.3% of HG Global's preferred equity and 88.7% of its common equity. White Mountains does not have an ownership interest in BAM, which is a mutual insurance company owned by its members. However, GAAP requires White Mountains to consolidate BAM's results in its financial statements. BAM's results are attributed to non-controlling interests.

White Mountains’ Other Operations segment consists of the Company and its intermediate holding companies, its wholly-owned investment management subsidiary, White Mountains Advisors LLC (“WM Advisors”), White Mountains’ variable annuity reinsurance business, White Mountains Life Reinsurance (Bermuda) Ltd. (“WM Life Re”), which is in runoff, as well as various other entities not included in other segments. For 2011, the Other Operations segment also included the consolidated results of the Tuckerman Capital, LP fund (“Tuckerman Fund I”). On December 31, 2011, Tuckerman Fund I was dissolved and all of the net assets of the fund were distributed to the owners of the fund, of which White Mountains owned approximately 94%. In conjunction with the dissolution, White Mountains received a portion of the shares of Hamer, LLC (“Hamer”) and Bri-Mar Manufacturing, LLC (“Bri-Mar”), two small manufacturing companies. Prior to the dissolution, Tuckerman Fund I was consolidated within White Mountains' financial statements. The consolidated results of Hamer and Bri-Mar are included in the Other Operations segment from January 1, 2012 through September 30, 2012, from which point these companies are no longer consolidated by White Mountains.

White Mountains’ discontinued operations consist of Esurance Holdings, Inc. and its subsidiaries (“Esurance Insurance”), Answer Financial Inc. and its subsidiaries (“AFI”), the Runoff Transaction and AutoOne. Esurance Insurance wrote personal auto insurance directly to customers in 30 states through its website and over the phone and also sold other lines of personal insurance for unaffiliated insurance companies. Esurance Insurance also wrote personal auto policies through select online agents and provided other insurance products through partnerships with industry leading online providers. Esurance Insurance earned commissions and fees by referring to unaffiliated insurance companies those shoppers that it could not underwrite because of pricing or underwriting eligibility. AFI sold insurance online and through call centers for both Esurance Insurance and unaffiliated companies utilizing a comparison quoting platform. The OneBeacon runoff business included assets, liabilities and capital that was principally related to non-specialty commercial lines and certain other runoff business that it no longer writes, including nearly all of of its asbestos and environmental reserves. AutoOne was formed by OneBeacon in 2001 to provide products and services to automobile assigned risk markets primarily in New York and New Jersey.

All significant intercompany transactions have been eliminated in consolidation. 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. Certain amounts in the prior period financial statements have been reclassified to conform to the current presentation.

Significant Accounting Policies

Investment Securities

At December 31, 2012, White Mountains’ invested assets consisted of securities and other investments held for general investment purposes. White Mountains’ portfolio of fixed maturity investments and common equity securities held for general investment purposes are classified as trading and are reported at fair value as of the balance sheet date. Changes in unrealized gains and losses are reported pre-tax in revenues. Realized investment gains and losses are accounted for using the specific identification method and are reported pre-tax in revenues. Premiums and discounts on all fixed maturity investments are accreted to income over the anticipated life of the investment.

White Mountains’ invested assets that are measured at fair value include fixed maturity securities, common and preferred equity securities, convertible fixed maturity securities and other long-term investments, such as interests in hedge funds and private equities. In determining its estimates of fair value, White Mountains uses a variety of valuation approaches and inputs. Whenever possible, White Mountains estimates fair value using valuation methods that maximize the use of quoted prices and other observable inputs.

As of both December 31, 2012 and 2011, approximately 95% of the investment portfolio recorded at fair value was priced based upon quoted market prices or other observable inputs. Investments valued using Level 1 inputs include fixed maturities, primarily investments in U.S. Treasuries, common equities and short-term investments, which include U.S. Treasury Bills. Investments valued using Level 2 inputs comprise fixed maturities including corporate debt, state and other governmental debt, convertible fixed maturity securities and mortgage and asset-backed securities. Fair value estimates for investments that trade infrequently and have few or no observable market prices are classified as Level 3 measurements. Level 3 fair value estimates based upon unobservable inputs include White Mountains’ investments in hedge funds and private equity funds, as well as investments in certain debt securities, including asset-backed securities, where quoted market prices are unavailable. White Mountains uses brokers and outside pricing services to assist in determining fair values. For investments in active markets, White Mountains uses the quoted market prices provided by outside pricing services to determine fair value. The outside pricing services used by White Mountains have indicated that if no observable inputs are available for a security, they will not provide a price. In those circumstances, White Mountains estimates the fair value using industry standard pricing models and observable inputs such as benchmark interest rates, matrix pricing, market comparables, broker quotes, issuer spreads, bids, offers, credit rating prepayment speeds and other relevant inputs. White Mountains performs procedures to validate the market prices obtained from the outside pricing sources. Such procedures, which cover substantially all of its fixed maturity investments include, but are not limited to, evaluation of model pricing methodologies and review of the pricing services’ quality control processes and procedures on at least an annual basis, comparison of market prices to prices obtained from a different independent pricing vendors on at least a semi-annual basis, monthly analytical reviews of certain prices, and review of assumptions utilized by the pricing service for selected measurements on an ad hoc basis throughout the year. White Mountains also performs back-testing of selected sales activity to determine whether there are any significant differences between the market price used to value the security prior to sale and the actual sale price on an ad-hoc basis throughout the year. Prices provided by the pricing services that vary by more than 5% and $1 million from the expected price based on these procedures are considered outliers. In circumstances where the results of White Mountains’ review process do not appear to support the market price provided by the pricing services, White Mountains challenges the price. During the past year, approximately fifteen securities fell outside White Mountains’ expected results, thereby triggering the challenge with the pricing service. If White Mountains cannot gain satisfactory evidence to support the challenged price, it relies upon its own pricing methodologies to estimate the fair value of the security in question. The fair values of such securities are considered to be Level 3 measurements.

White Mountains’ investments in debt securities, including asset-backed securities, are generally valued using matrix and other pricing models. Key inputs include benchmark yields, benchmark securities, reported trades, issuer spreads, bids, offers, credit ratings and prepayment speeds. Income on mortgage-backed 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.

Short-term investments consist of 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 amortized cost, which approximated fair value as of December 31, 2012 and 2011.

Other Long-term Investments

White Mountains’ other long-term investments comprise primarily of hedge funds and private equity funds. White Mountains made the fair value election for most of its investments in hedge funds and private equity interests. For the hedge fund and private equity investments for which White Mountains has made the fair value election, changes in fair value are reported in revenues on a pre-tax basis. For those hedge fund and private equity investments for which White Mountains has not made the fair value election, White Mountains accounts for its interests under the equity method.

Derivative Financial Instruments

White Mountains holds a variety of derivative financial instruments for both risk management and investment purposes. White Mountains recognizes all derivatives as either assets or liabilities, measured at fair value, in the consolidated balance sheets.

Warrants

White Mountains holds warrants to acquire common shares of Symetra which are included as investments in unconsolidated affiliates. White Mountains also holds warrants that it has received in the restructuring (e.g., securities received from bankruptcy proceedings) of certain of its common equity and/or fixed maturity investments. The Symetra warrants held by White Mountains are entitled to dividends declared to common shareholders. White Mountains accounts for its investments in warrants as derivatives.

Derivatives—Variable Annuity Reinsurance

White Mountains has entered into agreements to reinsure death and living benefit guarantees associated with certain variable annuities in Japan through its wholly owned subsidiary, WM Life Re. The accounting for benefit guarantees differs depending on whether or not the guarantee is classified as a derivative or an insurance liability.

Guaranteed minimum accumulation benefits (“GMABs”) are paid to an annuitant for any shortfall between accumulated account value at the end of the accumulation period and the annuitant’s total deposit, less any withdrawal payments made to the annuitant during the accumulation period. GMABs meet the definition of a derivative for accounting purposes. Therefore, GMABs are carried at fair value, with changes thereon recognized in income in the period of the change. The liability for the reinsured GMAB contracts has been determined using internal valuation models that use assumptions for interest rates, equity markets, foreign exchange rates and market volatilities at the valuation date, as well as annuitant-related actuarial assumptions, including surrender and mortality rates.

If an annuitant dies during the accumulation period of an annuity contract, guaranteed minimum death benefits (“GMDBs”) are paid to the annuitant’s beneficiary for shortfalls between accumulated account value at the time of an annuitant’s death and the annuitant’s total deposit, less any living benefit payments or withdrawal payments previously made to the annuitant. White Mountains has elected to measure its GMDB liabilities at fair value.

The valuation of these liabilities involves significant judgment and is subject to change based upon changes in capital market assumptions and emerging surrender and mortality experience of the underlying contracts in force.

WM Life Re has entered into derivative contracts that are designed to economically hedge against changes in the fair value of living and death benefit liabilities associated with its variable annuity reinsurance arrangements. The derivatives include futures and over-the-counter option contracts on interest rates, major bond and equity indices, and foreign currencies. All WM Life Re’s derivative instruments are recorded as assets or liabilities at fair value on the balance sheet within other assets. These derivative financial instruments do not meet the criteria for hedge accounting treatment, and accordingly, changes in fair value are recognized in the current period as gains or losses in the income statement within other revenues.

WM Life Re includes the effect of counterparty credit risk when determining the fair value of its derivative contracts and its GMAB and GMDB liabilities.

Cash

Cash includes amounts on hand and demand deposits with banks and other financial institutions. Amounts presented in the statement of cash flows are shown net of balances acquired and sold in the purchase or sale of the Company’s consolidated subsidiaries and exclude changes in amounts of restricted cash (See Note 8).

Insurance and Reinsurance Operations

White Mountains accounts for insurance and reinsurance policies that it writes in accordance with ASC 944. Premiums written are recognized as revenues and are earned ratably over the term of the related policy or reinsurance treaty. Unearned premiums represent the portion of premiums written that are applicable to future insurance or reinsurance coverage provided by policies or treaties in force. White Mountains charges fees on certain of its insurance policies. Refundable fees are classified with premiums and recognized in earnings over the policy term. Fees that represent a reimbursement of expenses, such as installment fees, are recorded as a reduction of underwriting expenses.

Deferred acquisition costs represent commissions, premium taxes, brokerage expenses and other costs which are directly attributable to and vary with the production of business. These costs are deferred and amortized to the extent they relate to successful contract acquisitions over the applicable premium recognition period as insurance and reinsurance acquisition expenses. Deferred acquisition costs are limited to the amount expected to be recovered from future earned premiums and anticipated investment income. This limitation is referred to as a premium deficiency. A premium deficiency is recognized if the sum of expected loss and loss adjustment expenses (“LAE”), expected dividends to policyholders, unamortized acquisition costs, and maintenance costs exceeds related unearned premiums and anticipated investment income. A premium deficiency is recognized by charging any unamortized acquisition costs to expense to the extent required in order to eliminate the deficiency. If the premium deficiency exceeds unamortized acquisition costs then a liability is accrued for the excess deficiency.

Losses and LAE are charged against income as incurred. Unpaid insurance losses and LAE are based on estimates (generally determined by claims adjusters, legal counsel and actuarial staff) of the ultimate costs of settling claims, including the effects of inflation and other societal and economic factors. Unpaid reinsurance losses and LAE are based primarily on reports received from ceding companies and actuarial projections. Unpaid loss and LAE reserves represent management’s best estimate of ultimate losses and LAE, net of estimated salvage and subrogation recoveries, if applicable. Such estimates are regularly reviewed and updated and any adjustments resulting there from are reflected in current operations. The process of estimating loss and LAE involves a considerable degree of judgment by management and the ultimate amount of expense to be incurred could be considerably greater than or less than the amounts currently reflected in the financial statements.

OneBeacon discounts certain of its long-term workers compensation loss and LAE reserves when such liabilities constitute unpaid but settled claims under which the payment pattern and ultimate costs are fixed and determinable on an individual claim basis. OneBeacon discounts these reserves using an average discount rate which is determined based on the various assumptions including consideration of when the claims will be settled (3.5% and 4.5% at December 31, 2012 and 2011). As of December 31, 2012, the discount on OneBeacon’s workers compensation loss and LAE reserves amounted to $4.6 million (excluding $77.9 million on reserves classified as discontinued operations). As of December 31, 2011, the discount on OneBeacon’s workers compensation loss and LAE reserves amounted to $108.3 million.

White Mountains’ insurance and reinsurance subsidiaries enter into ceded reinsurance contracts from time to time to protect their businesses from losses due to concentration of risk, to manage their operating leverage ratios and to limit losses arising from catastrophic events. Such reinsurance contracts are executed through excess of loss treaties and catastrophe contracts under which the reinsurer indemnifies White Mountains for a specified part or all of certain types of losses over stipulated amounts arising from any one occurrence or event. White Mountains has also entered into quota share treaties with reinsurers under which all risks meeting prescribed criteria are covered on a pro-rata basis. The amount of each risk ceded by White Mountains is subject to maximum limits which vary by line of business and type of coverage.

Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured policies. The collectability of reinsurance recoverables is subject to the solvency of the reinsurers. White Mountains is selective in regard to its reinsurers, principally placing reinsurance with those reinsurers with a strong financial condition, industry ratings and underwriting ability. Management monitors the financial condition and ratings of its reinsurers on an ongoing basis.

Reinsurance premiums, commissions, expense reimbursements and reserves related to reinsured business are accounted for on a basis consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. Premiums ceded to other companies are reported as a reduction of premiums written. Expense allowances received in connection with reinsurance ceded have been accounted for as a reduction of the related policy acquisition costs and are deferred and amortized accordingly. Funds held by ceding companies represent amounts due to White Mountains in connection with certain assumed reinsurance agreements in which the ceding company retains a portion of the premium to provide security against future loss payments. The funds held by ceding companies are generally invested by the ceding company and a contractually agreed interest amount is credited to the Company and recognized as investment income. Funds held under reinsurance treaties represent contractual payments due to the reinsurer that White Mountains has retained to secure obligations of the reinsurer. Such amounts are recorded as liabilities in the consolidated financial statements.

Accruals for contingent commission liabilities are established for reinsurance contracts that provide for the stated commission percentage to increase or decrease based on the loss experience of the contract. Changes in the estimated liability for such arrangements are recorded as contingent commissions. Accruals for contingent commission liabilities are determined through the review of the contracts that have these adjustable features and are estimated based on expected loss and LAE.

Municipal Bond Insurance

All of the contracts issued by BAM are accounted for as insurance contracts under ASC 944-605, Financial Guarantee Insurance Contracts. Premiums are received upfront and an unearned premium revenue liability, equal to the amount of the cash received, is established at contract inception. Premium revenues are recognized in revenue over the period of the contracts in proportion to the amount of insurance protection provided using a constant rate. The constant rate is calculated based on the relationship between the par outstanding in a given reporting period compared with the sum of each of the par amounts outstanding for all periods.

Deferred acquisition costs represent commissions, premium taxes, excise taxes and other costs which are directly attributable to and vary with the production of business. These costs are deferred and amortized to the extent they relate to successful contract acquisitions over the applicable premium recognition period as acquisition expenses. Deferred acquisition costs are limited to the amount expected to be recovered from future earned premiums and anticipated investment income.

Mandatory Shared Market Mechanisms

As a condition to its licenses to do business in certain states, White Mountains’ insurance operations must participate in various mandatory shared market mechanisms commonly referred to as “residual” or “involuntary” markets. These markets generally consist of risks considered to be undesirable from a standard or routine underwriting perspective. Each state dictates the levels of insurance coverage that are mandatorily assigned to participating insurers within these markets. The total amount of such business an insurer must accept in a particular state is generally based on that insurer’s market share of voluntary business written within that state. In certain cases, White Mountains is obligated to write business from shared market mechanisms at a future date based on its historical market share of all voluntary policies written within that state. Involuntary business generated from mandatory shared market mechanisms is accounted for as direct insurance business or as assumed reinsurance depending upon the structure of the mechanism.

OneBeacon’s market assignments are typically required to be written in the current period, however, in certain cases OneBeacon is required to accept policy assignments at a future date. Anticipated losses associated with future market assignments are recognized when the amount of such anticipated losses is determined to be probable and can be reasonably estimated.

Insurance-related Assessments

Under existing guaranty fund laws in all states, insurers licensed to do business in those states can be assessed for certain obligations of insolvent insurance companies to policyholders and claimants. White Mountains records guaranty fund assessments when it is probable that an assessment will be made and the amount can be reasonably estimated.

Deferred Software Costs

White Mountains capitalizes costs related to computer software developed for internal use during the application development stage of software development projects. These costs generally consist of certain external, payroll and payroll-related costs. White Mountains begins amortization of these costs once the project is completed and ready for its intended use. Amortization is on a straight-line basis and over a useful life of three to five years. At December 31, 2012 and 2011, White Mountains had unamortized deferred software costs of $17.1 million and $22.8 million.

Federal and Foreign Income Taxes

A significant portion of White Mountains’ subsidiaries file consolidated tax returns in the United States. Income earned or losses generated by companies outside the United States are generally subject to an overall effective tax rate lower than that imposed by the United States.

Deferred tax assets and liabilities are recorded when a difference between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for tax purposes exists, and for other temporary differences. The deferred tax asset or liability is recorded based on tax rates expected to be in effect when the difference reverses. The deferred tax asset is recognized when it is more likely than not that it will be realized.

Foreign Currency Exchange

The U.S. dollar is the functional currency for all of White Mountains’ businesses except for Sirius International, the Canadian reinsurance operations of Sirius America and certain other smaller international activities. White Mountains also invests in securities denominated in foreign currencies. Assets and liabilities recorded in these foreign currencies are translated into U.S. dollars at exchange rates in effect at the balance sheet date, and revenues and expenses are converted using the average exchange rates for the period. Net foreign exchange gains and losses arising from the translation are generally reported in shareholders’ equity, in accumulated other comprehensive income or loss.

Assets and liabilities relating to foreign operations are translated into the functional currency using current exchange rates; revenues and expenses are translated into the functional currency using the weighted average exchange rate for the period. The resulting exchange gains and losses are reported as a component of net income in the period in which they arise. As of December 31, 2012 and 2011, White Mountains had unrealized foreign currency translation gains of $85.7 million and $46.1 million recorded in accumulated other comprehensive income on its consolidated balance sheet.

The following rates of exchange for the U.S. dollar have been used for the most significant operations:



Currency	Opening Rate 2012	Closing Rate 2012	Opening Rate 2011	Closing Rate 2011
Swedish kronor	6.8645	6.4973	6.7030	6.8645
British pound	0.6434	0.6154	0.6420	0.6434
Canadian dollar	1.0193	0.9955	0.9981	1.0193

Non-controlling Interest

Non-controlling interests consist of the ownership interests of non-controlling shareholders in consolidated subsidiaries, and are presented separately on the balance sheet. The portion of comprehensive income attributable to non-controlling interests is presented net of related income taxes in the statement of operations and comprehensive income. The percentage of the non-controlling shareholders’ ownership interest in OneBeacon Ltd. at December 31, 2012 and 2011 was 24.8% and 24.5%.

In 2012, HG Global was capitalized with $594.5 million from White Mountains and $14.5 million from certain management members of BAM, the latter of which is included in non-controlling interest. Upon closing, certain BAM management members also received additional common and preferred shares of HG Global that resulted in a $2.2 million allocation of the carrying value of White Mountains' investment in HG Global to the non-controlling interest, which was recorded as an adjustment to paid-in surplus in White Mountains' consolidated statement of changes in equity.

White Mountains is required to consolidate BAM in its GAAP financial statements. However, since BAM is a mutual insurance company that is owned by its members, BAM's results do not affect White Mountains' common shareholders' equity as they are attributable to non-controlling interests. For the year ended December 31, 2012, BAM reported $36.3 million in pre-tax losses that have been allocated to non-controlling interest.

On May 24, 2007, Sirius International Group, Ltd. (“SIG”), an intermediate holding company of Sirius Group, issued $250.0 million non-cumulative perpetual preference shares, with a $1,000 per share liquidation preference (the “SIG Preference Shares”), and received $245.7 million of proceeds, net of $4.3 million of issuance costs and commissions. These shares were issued in an offering that was exempt from the registration requirements of the Securities Act of 1933. Holders of the SIG Preference Shares receive dividends on a non-cumulative basis when and if declared by SIG. The holders of the SIG Preference Shares have the right to elect two directors to SIG’s board in the event of non-payment of dividends for six quarterly dividend periods. The right ceases upon the payment of dividends for four quarterly periods or the redemption of the SIG Preference Shares. In addition, SIG may not declare or pay dividends on its common shares (other than stock dividends and dividends paid for purposes of any employee benefit plans of SIG and its subsidiaries) unless it is current on its most recent dividend period. The dividend rate is fixed at an annual rate of 7.506% until June 30, 2017 and dividends are paid on a semi-annual basis. After June 30, 2017, the dividend rate will be paid at a floating annual rate, equal to the greater of (1) the 3 month LIBOR plus 3.20% or (2) 7.506% and dividends will be paid on a quarterly basis. The SIG Preference Shares are redeemable solely at the discretion of SIG on or after June 30, 2017 at their liquidation preference of $1,000 per share, plus any declared but unpaid dividends. Prior to June 30, 2017, SIG may elect to redeem the SIG Preference Shares at an amount equal to the greater of (1) the aggregate liquidation preference of the shares to be redeemed and (2) the sum of the present values of the aggregate liquidation preference of the shares to be redeemed and the remaining scheduled dividend payments on the shares to be redeemed (excluding June 30, 2017), discounted to the redemption date on a semi-annual basis at a rate equal to the rate on a comparable treasury issue plus 45 basis points. In the event of liquidation of SIG, the holders of the SIG Preference Shares would have preference over the common shareholders and would receive a distribution equal to the liquidation preference per share, subject to availability of funds. SIG Preference Shares and dividends thereon are included in non-controlling interest on the balance sheet and as non-controlling interest expense on the statement of income and comprehensive income.

At December 31, 2012 and 2011, the non-controlling equity interest in White Mountains, consolidated limited partnerships was $41.5 million and $54.2 million. At December 31, 2012 and 2011, the non-controlling equity interest in A.W.G. Dewar Inc, a subsidiary of OneBeacon, was $2.8 million and $2.3 million. At December 31, 2012 and December 31, 2011, the non-controlling equity interest in Passage2Health Limited, a subsidiary of Sirius Group, was $0.2 million and $0.6 million.

Recently Adopted Changes in Accounting Principles

Transfers of Financial Assets and Amendments to FIN 46R

On June 12, 2009, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2009-16, Accounting for Transfers of Financial Assets, an amendment of FASB Statement No. 140 (included in ASC 860) and ASU 2009-17, Amendments to FIN46(R) (included in ASC 810). Both ASU 2009-16 and ASU 2009-17 became effective as of the beginning of the first annual reporting period that began after November 15, 2009. White Mountains adopted the new guidance on January 1, 2010.

Upon adoption, White Mountains determined that its ownership interest in Tuckerman Fund II did not meet the criteria for consolidation under the revised guidance for variable interest entities and, accordingly, effective January 1, 2010, White Mountains deconsolidated its investment in Tuckerman Fund II. Upon deconsolidation, White Mountains made the fair value election for its investment in Tuckerman Fund II and recognized an adjustment to decrease opening retained earnings by $0.4 million.

Policy Acquisition Costs

On January 1, 2012, White Mountains adopted ASU 2010-26, Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts (ASC 944). The new standard changes the types of policy acquisition costs that are eligible for deferral. Specifically, the new guidance limits deferrable costs to those that are incremental direct costs of contract acquisition and certain costs related to acquisition activities performed by the insurer, such as underwriting, policy issuance and processing, medical and inspection costs and sales force contract selling. The ASU defines incremental direct costs as those costs that result directly from and were essential to the contract acquisition and would not have been incurred absent the acquisition. Accordingly, under the new guidance, deferrable acquisition costs are limited to costs related to successful contract acquisitions. Acquisition costs that are not eligible for deferral are to be charged to expense in the period incurred.

White Mountains adopted ASU 2010-26 prospectively. Upon adoption, certain acquisition costs, primarily a portion of the profit sharing commissions associated with OneBeacon’s collector car and boats business, no longer met the criteria for deferral. During the year ended December 31, 2012, White Mountains recognized $5.6 million of expense related to such previously deferrable acquisition costs that, if White Mountains had adopted ASU 2010-26 retrospectively, would have been recognized during 2011.

Fair Value Measurements

On January 1, 2012, White Mountains adopted ASU 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS. The ASU clarifies existing guidance with respect to the concepts of highest and best use and valuation premise and measuring instruments classified within a reporting entity’s shareholders’ equity. The ASU also clarifies disclosure requirements, requiring disclosure of quantitative information about unobservable inputs used in Level 3 fair value measurements. The ASU also amends existing guidance. In circumstances where a reporting entity manages a portfolio of financial assets and liabilities based on the net market and counterparty credit risk exposures, the ASU permits determination of the fair value of those instruments to be based on the net risk exposure. In addition, the ASU permits the application of premiums or discounts to be applied in a fair value measurement to the extent that market participants would consider them in valuing the financial instruments. The ASU also expands the required disclosures for Level 3 measurements, requiring that reporting entities provide a narrative description of the sensitivity of Level 3 fair value measurements to changes in unobservable inputs and the interrelationships between those inputs, if any. (See Note 5).

Comprehensive Income

For fiscal periods beginning after December 15, 2011, ASU 2011-05, Comprehensive Income (ASC 220) became effective, which requires all components of comprehensive income to be reported in a continuous financial statement or in consecutive statements displaying the components of net income and the components of other comprehensive income. Since White Mountains presents comprehensive income in a continuous financial statement, adoption of ASU 2011-05 had no effect on White Mountains’ financial statement presentation.

Recent Accounting Pronouncements

Offsetting Assets and Liabilities

On December 16, 2011, the FASB issued ASU 2011-11, Disclosures about Offsetting Assets and Liabilities (ASC 210). The new standard expands the required disclosures in circumstance where either balances have been offset or the right of offset exists. The required disclosures are intended to provide information to enable financial statement users to evaluate the effect or potential effect of netting arrangements on a reporting entity’s financial position. Disclosures required under the new standard include the gross amount of assets and liabilities recognized; the amounts that have been offset to arrive at the amounts presented in the statement of financial position; and any amounts subject to an enforceable master netting arrangement, whether or not such amounts have been offset. In addition, a description of the rights of set off should be disclosed. ASU 2011-11 is effective for periods beginning on or after January 1, 2013. White Mountains is party to master netting arrangements in connection with the derivative instruments held by WM Life Re and discloses information regarding the amounts covered under such agreements as well as the amounts of collateral held and provided. Accordingly, White Mountains does not expect any significant changes to its disclosures upon adoption.

Significant Transactions	12 Months Ended
Significant Transactions	Dec. 31, 2012
Business Combinations [Abstract]
Significant Transactions	Significant Transactions Formation of HG Global and BAM In 2012, White Mountains capitalized HG Global with $594.5 million to fund BAM, a newly formed mutual municipal bond insurer. As of December 31, 2012, White Mountains owned 97.3% of HG Global’s preferred equity and 88.7% of its common equity. HG Global, together with its subsidiaries, provided the initial capitalization of BAM through the purchase of $503.0 million of BAM Surplus Notes. Through HG Re, which had statutory capital of $412.0 million at December 31, 2012, HG Global provides first loss reinsurance protection for policies underwritten by BAM of up to 15% of par outstanding, on a per policy basis. HG Re’s obligations to BAM are collateralized in trusts, and there is an aggregate loss limit that is equal to the total assets in the collateral trusts at any point in time. For the year ended December 31, 2012, HG Global had pre-tax income of $14.2 million, which included $18.4 million of interest income on the BAM Surplus Notes. For the year ended December 31, 2012, BAM had a pre-tax loss of $36.3 million that was recorded in net loss attributable to non-controlling interests, which included $18.4 million of interest expense on the BAM Surplus Notes. Sale of OneBeacon Runoff Business On October 17, 2012, one of OneBeacon’s indirect wholly-owned subsidiaries, OneBeacon Insurance Group LLC, entered into a definitive agreement with Trebuchet US Holdings, Inc. (“Trebuchet”), a wholly-owned subsidiary of Armour Group Holdings Limited (together with Trebuchet, “Armour”), to sell its runoff business (the “Runoff Transaction”). Pursuant to the terms of the agreement, at closing OneBeacon will transfer to Trebuchet all of the issued and outstanding shares of common stock of certain legal entities that will contain the assets, liabilities (including gross and ceded loss reserves) and capital supporting the runoff business as well as certain elements of the runoff business infrastructure, including staff and office space. The transaction is subject to regulatory approvals. For the year ended December 31, 2012, White Mountains recorded $91.5 million after-tax loss on sale and a $24.0 million in loss from operations, which included a $9.0 million after-tax loss related to an reduction in the workers compensation loss reserve discount rate on reserves being transferred as part of the sale (see Note 20). WM Solutions On December 3, 2012, WM Solutions acquired four runoff entities including Physicians Insurance Company of Ohio (“PICO”) and Citation Insurance Company (“Citation”) from PICO Holdings and two AIG runoff subsidiaries, American General Indemnity Company (“American General”) and American General Property Insurance Company (“American General Property”). The transactions resulted in a gain of $14.5 million recorded in other revenues. On December 30, 2011, WM Solutions acquired the runoff loss reserve portfolio of Old Lyme, a Bermuda-based reinsurer in runoff, for $6.0 million in cash and a purchase note for $2.1 million (see Note 6). The transaction resulted in a gain of $7.2 million recorded in other revenues. On February 26, 2010, WM Solutions acquired Central National for $5 million in cash. Central National ceased writing business in 1989 and has operated under the control of the Nebraska Department of Insurance since 1990. The transaction resulted in a gain of $12.8 million recorded in other revenues. Sale of AutoOne On August 30, 2011, OneBeacon entered into a definitive agreement (the “Purchase Agreement”) to sell the AutoOne business to Interboro Holdings, Inc. (“Interboro”). On February 22, 2012, OneBeacon completed the sale of AutoOne to Interboro Holdings, Inc. (“Interboro”). OneBeacon formed AutoOne in 2001 to provide products and services to automobile assigned risk markets primarily in New York and New Jersey. OneBeacon transferred to the buyer AutoOne Insurance Company (“AOIC”) and AutoOne Select Insurance Company (“AOSIC”), which contained the assets, liabilities (including loss reserves and unearned premiums), and the capital of the AutoOne business, and transferred substantially all of the AutoOne infrastructure including systems and office space as well as certain staff. As a result of the sale, AutoOne is reported as discontinued operations (see Note 20). Sale of Esurance On October 7, 2011, White Mountains completed the sale of Esurance Insurance and AFI to The Allstate Corporation (“Allstate”) for $700.0 million in excess of tangible book value. White Mountains recorded a gain on the sale of $677.5 million in discontinued operations. The transaction is subject to a true-up of the estimated tangible book value of the entities sold through the date of closing and certain other contingencies (see Note 19). OneBeacon Personal Lines and Commercial Lines Sales In July 2010, OneBeacon completed the sale of its traditional personal lines business (the “Personal Lines Transaction”) to Tower Group, Inc. (“Tower”). The Personal Lines Transaction included two insurance companies, York Insurance Company of Maine (“York”) and Massachusetts Homeland Insurance Company (“MHIC”), through which the majority of the traditional personal lines business was written on a direct basis. Subsequent to the transaction, OneBeacon cedes to Tower, on a 100% quota share basis, traditional personal lines business not directly written by York and MHIC; and OneBeacon assumes, on a 100% quota share basis, certain specialty lines business written directly by York. The Personal Lines Transaction also included two attorneys-in-fact managing the reciprocal insurance exchanges (“reciprocals”) that wrote the traditional personal lines business in New York and New Jersey, the surplus notes issued by the New York and New Jersey reciprocals, and the remaining renewal rights to certain other traditional personal lines insurance policies. The sale of the two attorneys-in-fact and the transfer of the surplus notes triggered deconsolidation of the reciprocals by White Mountains. OneBeacon and Tower also entered into a Transition Services Agreement (“TSA”), pursuant to which OneBeacon provides certain services to Tower during a three-year term. OneBeacon received $166.6 million as consideration, which was based upon the carrying value of the traditional personal lines business as of July 1, 2010. For the year ended December 31, 2010, OneBeacon recorded an after-tax net gain of $24.6 million on the sale that is comprised of $8.5 million included in other revenues and a $16.1 million tax benefit. OneBeacon’s second quarter financial statements included $5.6 million of the tax benefit, which related to the difference between the tax basis of the companies sold as part of the Personal Lines Transaction and the net asset value of those entities under GAAP. Net written premiums for the business sold were approximately $420.0 million for the year ended December 31, 2009. On December 3, 2009, OneBeacon sold the renewal rights to approximately $490.0 million in premiums from its non-specialty commercial lines business to The Hanover Insurance Group (“The Hanover”). The transaction includes small commercial accounts and the non-specialty portion of the middle-market business, beginning with January 1, 2010 effective dates (the “Commercial Lines Transaction”). As consideration for the Commercial Lines Transaction, OneBeacon received $23.2 million, reflected in other revenues. In accordance with the terms of the Commercial Lines Transaction, during the years ended December 31, 2011 and 2010, OneBeacon was paid additional consideration of $0.8 million and $10.2 million, reflected in other revenues, for aggregate premium renewals exceeding $200.0 million.

Reserves for Unpaid Losses and Loss Adjustment Expenses

12 Months Ended

Dec. 31, 2012

Insurance Loss Reserves [Abstract]

Reserves for Unpaid Losses and Loss Adjustment Expenses

Insurance

White Mountains’ insurance subsidiaries establish loss and LAE reserves that are estimates of amounts needed to pay claims and related expenses in the future for insured events that have already occurred. The process of estimating reserves involves a considerable degree of judgment by management and, as of any given date, is inherently uncertain.

Loss and LAE reserves are typically comprised of (1) case reserves for claims reported and (2) reserves for losses that have occurred but for which claims have not yet been reported, referred to as incurred but not reported (“IBNR”) reserves, which include a provision for expected future development on case reserves. Case reserves are estimated based on the experience and knowledge of claims staff regarding the nature and potential cost of each claim and are adjusted as additional information becomes known or payments are made. IBNR reserves are derived by subtracting paid loss and LAE and case reserves from estimates of ultimate loss and LAE. Actuaries estimate ultimate loss and LAE using various generally accepted actuarial methods applied to known losses and other relevant information. Like case reserves, IBNR reserves are adjusted as additional information becomes known or payments are made.

Ultimate loss and LAE are generally determined by extrapolation of claim emergence and settlement patterns observed in the past that can reasonably be expected to persist into the future. In forecasting ultimate loss and LAE with respect to any line of business, past experience with respect to that line of business is the primary resource, but cannot be relied upon in isolation. White Mountains’ own experience, particularly claims development experience, such as trends in case reserves, payments on and closings of claims, as well as changes in business mix and coverage limits, is the most important information for estimating its reserves. External data, available from organizations such as statistical bureaus, consulting firms and reinsurance companies, is sometimes used to supplement or corroborate White Mountains’ own experience, and can be especially useful for estimating costs of new business. For some lines of business, such as “long-tail” coverages discussed below, claims data reported in the most recent accident year is often too limited to provide a meaningful basis for analysis due to the typical delay in reporting of claims. For this type of business, White Mountains uses a selected loss ratio method for the initial accident year or years. This is a standard and accepted actuarial reserve estimation method in these circumstances in which the loss ratio is selected based upon information used in pricing policies for that line of business, as well as any publicly available industry data, such as industry pricing, experience and trends, for that line of business.

Uncertainties in estimating ultimate loss and LAE are magnified by the time lag between when a claim actually occurs and when it is reported and settled. This time lag is sometimes referred to as the “claim-tail”. The claim-tail for most property coverages is typically short (usually a few days up to a few months). The claim-tail for liability/casualty coverages, such as automobile liability, general liability, products liability, multiple peril coverage, and workers compensation, can be especially long as claims are often reported and ultimately paid or settled years, even decades, after the related loss events occur. During the long claims reporting and settlement period, additional facts regarding coverages written in prior accident years, as well as about actual claims and trends may become known and, as a result, White Mountains may adjust its reserves. If management determines that an adjustment is appropriate, the adjustment is booked in the accounting period in which such determination is made in accordance with GAAP. Accordingly, should reserves need to be increased or decreased in the future from amounts currently established, future results of operations would be negatively or positively impacted, as applicable.

In determining ultimate loss and LAE, the cost to indemnify claimants, provide needed legal defense and other services for insureds and administer the investigation and adjustment of claims are considered. These claim costs are influenced by many factors that change over time, such as expanded coverage definitions as a result of new court decisions, inflation in costs to repair or replace damaged property, inflation in the cost of medical services and legislated changes in statutory benefits, as well as by the particular, unique facts that pertain to each claim. As a result, the rate at which claims arose in the past and the costs to settle them may not always be representative of what will occur in the future. The factors influencing changes in claim costs are often difficult to isolate or quantify and developments in paid and incurred losses from historical trends are frequently subject to multiple and conflicting interpretations. Changes in coverage terms or claims handling practices may also cause future experience and/or development patterns to vary from the past. A key objective of actuaries in developing estimates of ultimate loss and LAE, and resulting IBNR reserves, is to identify aberrations and systemic changes occurring within historical experience and accurately adjust for them so that the future can be projected reliably. Because of the factors previously discussed, this process requires the use of informed judgment and is inherently uncertain.

White Mountains’ actuaries use several generally accepted actuarial methods to evaluate its loss reserves, each of which has its own strengths and weaknesses. Management places more or less reliance on a particular method based on the facts and circumstances at the time the reserve estimates are made.

These methods generally fall into one of the following categories or are hybrids of one or more of the following categories:

•

Historical paid loss development methods: These methods use historical loss payments over discrete periods of time to estimate future losses. Historical paid loss development methods assume that the ratio of losses paid in one period to losses paid in an earlier period will remain constant. These methods necessarily assume that factors that have affected paid losses in the past, such as inflation or the effects of litigation, will remain constant in the future. Because historical paid loss development methods do not use case reserves to estimate ultimate losses, they can be more reliable than the other methods discussed below that look to case reserves (such as actuarial methods that use incurred losses) in situations where there are significant changes in how case reserves are established by a company’s claims adjusters. However, historical paid loss development methods are more leveraged, meaning that small changes in payments have a larger impact on estimates of ultimate losses, than actuarial methods that use incurred losses because cumulative loss payments take much longer to equal the expected ultimate losses than cumulative incurred amounts. In addition, and for similar reasons, historical paid loss development methods are often slow to react to situations when new or different factors arise than those that have affected paid losses in the past.

•

Historical incurred loss development methods: These methods, like historical paid loss development methods, assume that the ratio of losses in one period to losses in an earlier period will remain constant in the future. However, instead of using paid losses, these methods use incurred losses (i.e., the sum of cumulative historical loss payments plus outstanding case reserves) over discrete periods of time to estimate future losses. Historical incurred loss development methods can be preferable to historical paid loss development methods because they explicitly take into account open cases and the claims adjusters’ evaluations of the cost to settle all known claims. However, historical incurred loss development methods necessarily assume that case reserving practices are consistently applied over time. Therefore, when there have been significant changes in how case reserves are established, using incurred loss data to project ultimate losses can be less reliable than other methods.

•

Expected loss ratio methods: These methods are based on the assumption that ultimate losses vary proportionately with premiums. Expected loss ratios are typically developed based upon the information used in pricing, and are multiplied by the total amount of premiums written to calculate ultimate losses. Expected loss ratio methods are useful for estimating ultimate losses in the early years of long-tailed lines of business, when little or no paid or incurred loss information is available.

•

Adjusted historical paid and incurred loss development methods: These methods take traditional historical paid and incurred loss development methods and adjust them for the estimated impact of changes from the past in factors such as inflation, the speed of claim payments or the adequacy of case reserves. Adjusted historical paid and incurred loss development methods are often more reliable methods of predicting ultimate losses in periods of significant change, provided the actuaries can develop methods to reasonably quantify the impact of changes.

White Mountains performs an actuarial review of its recorded reserves each quarter. White Mountains’ actuaries compare the previous quarter’s estimates of paid loss and LAE, case reserves and IBNR to amounts indicated by actual experience. Differences between previous estimates and actual experience are evaluated to determine whether a given actuarial method for estimating loss and LAE should be relied upon to a greater or lesser extent than it had been in the past. While some variance is expected each quarter due to the inherent uncertainty in loss and LAE, persistent or large variances would indicate that prior assumptions and/or reliance on certain reserving methods may need to be revised going forward.

The actuarial analysis is a primary consideration for management in determining its best estimate of loss and LAE reserves. In making its best estimate, management also considers other qualitative factors that may lead to a difference between its best estimate of loss and LAE reserves and the actuarial point estimate. Typically, these factors exist when management and the company’s actuaries conclude that there is insufficient historical incurred and paid loss information or that trends included in the historical incurred and paid loss information are unlikely to repeat in the future. These factors may include, among others, changes in the techniques used to assess underwriting risk, more accurate and detailed levels of data submitted with reinsurance applications, the uncertainty of the current reinsurance pricing environment, the level of inflation in loss costs, changes in ceding company reserving practices, and legal and regulatory developments.

Reinsurance

Sirius Group establishes loss and LAE reserves that are estimates of future amounts needed to pay claims and related expenses for events that have already occurred. Sirius Group also obtains reinsurance whereby another reinsurer contractually agrees to indemnify White Mountains for all or a portion of the reinsurance risks underwritten by White Mountains. Such arrangements, where one reinsurer provides reinsurance to another reinsurer, are usually referred to as “retrocessional reinsurance” arrangements. White Mountains establishes estimates of amounts recoverable from retrocessional reinsurance in a manner consistent with the loss and LAE liability associated with reinsurance contracts offered to its customers (the “ceding companies”), net of an allowance for uncollectible amounts. Net reinsurance loss reserves represent loss and LAE reserves reduced by retrocessional reinsurance recoverable on unpaid losses.

The estimation of net reinsurance loss and LAE reserves is subject to the same risk as the estimation of insurance loss and LAE reserves. In addition to those risk factors which give rise to inherent uncertainties in establishing insurance loss and LAE reserves, the inherent uncertainties of estimating such reserves are even greater for the reinsurer, due primarily to: (1) the claim-tail for reinsurers being further extended because claims are first reported to the original primary insurance company and then through one or more intermediaries or reinsurers, (2) the diversity of loss development patterns among different types of reinsurance treaties or facultative contracts, (3) the necessary reliance on the ceding companies for information regarding reported claims and (4) the differing reserving practices among ceding companies.

As with insurance reserves, the process of estimating reinsurance reserves involves a considerable degree of judgment by management and, as of any given date, is inherently uncertain. Based on the above, such uncertainty may be larger relative to the reserves for a company that principally writes reinsurance compared to an insurance company, and certainty may take a longer time to emerge.

Upon notification of a loss from an insured (typically a ceding company), Sirius Group establishes case reserves, including LAE reserves, based upon Sirius Group’s share of the amount of reserves established by the insured and Sirius Group’s independent evaluation of the loss. In cases where available information indicates that reserves established by a ceding company are inadequate, Sirius Group establishes case reserves or IBNR in excess of its share of the reserves established by the ceding company. Also, in certain instances, Sirius Group may decide not to establish case reserves or IBNR, when the information available indicates that reserves established by ceding companies are not adequately supported. In addition, specific claim information reported by insureds or obtained through claim audits can alert management to emerging trends such as changing legal interpretations of coverage and liability, claims from unexpected sources or classes of business, and significant changes in the frequency or severity of individual claims where customary. Generally, ceding company audits are not customary outside the United States. This information is often used to supplement estimates of IBNR.

Although loss and LAE reserves are initially determined based on underwriting and pricing analyses, Sirius Group regularly reviews the adequacy of its recorded reserves by using a variety of generally accepted actuarial methods, including historical incurred and paid loss development methods. If actual loss activity differs substantially from expectations, an adjustment to recorded reserves may be warranted. As time passes, loss reserve estimates for a given year will rely more on actual loss activity and historical patterns than on initial assumptions based on pricing indications.

The actuarial methods described above are used to calculate a point estimate of loss and LAE reserves for each company within Sirius Group. These point estimates are then aggregated to produce an actuarial point estimate for the entire segment. Once a point estimate is established, Sirius Group’s actuaries estimate loss reserve ranges to measure the sensitivity of the actuarial assumptions used to set the point estimates. These ranges are calculated from historical variations in loss ratios, payment and reporting patterns by class and type of business.

Loss and Loss Adjustment Expense Reserve Summary

The following table summarizes the loss and LAE reserve activities of White Mountains’ insurance and reinsurance subsidiaries for the years ended December 31, 2012, 2011 and 2010:



	Year Ended December 31,
Millions	2012			2011			2010
Gross beginning balance	$	5,702.3		$	5,736.8		$	6,379.2
Less beginning reinsurance recoverable on unpaid losses	(2,507.3		)	(2,344.0		)	(2,771.5		)
Net loss and LAE reserves	3,195.0			3,392.8			3,607.7

Less: Beginning net loss and LAE reserves for AutoOne and the Runoff Transaction ⁽¹⁾	(383.3		)	(619.6		)	(759.0		)

Loss and LAE reserves acquired ⁽²⁾	17.0			21.0			17.6
Loss and LAE reserves sold—OneBeacon Personal Lines	—			—			(231.0		)

Losses and LAE incurred relating to:
Current year losses	1,235.8			1,251.0			1,309.7
Prior year losses	(41.9		)	(76.7		)	(93.1		)
Total incurred losses and LAE	1,193.9			1,174.3			1,216.6

Accretion of fair value adjustment to net loss and LAE reserves	10.6			8.3			8.5
Foreign currency translation adjustment to net loss and LAE reserves	12.9			.1			4.7

Loss and LAE paid relating to:
Current year losses	(404.7		)	(387.9		)	(445.9		)
Prior year losses	(901.6		)	(777.3		)	(646.0		)
Total loss and LAE payments	(1,306.3		)	(1,165.2		)	(1,091.9		)

Plus: Ending net loss and LAE reserves for AutoOne and the Runoff Transaction ⁽¹⁾	—			383.3			619.6

Net ending balance	2,739.8			3,195.0			3,392.8
Plus ending reinsurance recoverable on unpaid losses	429.1			2,507.3			2,344.0
Gross ending balance	$	3,168.9		$	5,702.3		$	5,736.8


⁽¹⁾	Loss and LAE reserve balances from OneBeacon’s runoff business prior to December 31, 2012 and AutoOne prior to December 31, 2011 were not classified as held for sale. Adjustment is to present loss and LAE reserve activities for continuing operations.


⁽²⁾	Loss and LAE reserves acquired relate to WM Solutions purchases of PICO, Citation, American General and American General Property in 2012, Old Lyme in 2011 and Central National in 2010.

Loss and LAE development —2012

During the year ended December 31, 2012, White Mountains experienced $41.9 million of net favorable loss reserve development, which consisted of $7.4 million of net favorable loss reserve development at OneBeacon and $34.5 million of net favorable loss reserve development at Sirius Group.

During 2012, OneBeacon experienced $7.4 million of net favorable loss and LAE reserve development on prior accident year reserves. The favorable reserve development at OneBeacon was primarily from workers' compensation, multiple peril liability and general liability lines. This favorable development was offset somewhat by adverse development on excess property claims.

In 2012, Sirius Group had net favorable loss reserve development of $34.5 million. The major reductions in loss reserve estimates at Sirius Group were recognized in casualty runoff ($31.5 million), property ($28.4 million), marine/energy ($11.6 million), trade credit ($6.8 million) and aviation/space ($5.3 million) lines, partially offset by a $46.4 million increase in asbestos loss reserves and a $4.3 million increase in accident and health.

Loss and LAE development —2011

During the year ended December 31, 2011, White Mountains experienced $76.7 million of net favorable loss reserve development, which consisted of $29.8 million of net favorable loss and LAE reserve development on prior accident year loss reserves at OneBeacon and $46.9 million of net favorable loss reserve development at Sirius Group.

OneBeacon’s net favorable loss and LAE reserve development was primarily due to lower than expected severity on non catastrophe losses related to professional liability lines, multiple peril liability lines and other general liability lines. With respect to the favorable loss reserve development in specialty insurance operations, at December 31, 2010, management had revised its expectations downward for future loss emergence in the professional liability business, which had initially been based on market analysis when this business was initiated in 2002 and 2003. However, during 2011, losses continued to be significantly lower than these revised expectations. As a result, management lowered its selected reserves on the earliest years which affected more recent years as total loss expectations for those years are based in part on prior years’ results. The impact of this revised estimate was a decrease to professional liability reserves of $11.5 million.

During 2010, management began separately reviewing loss reserves for some business which had been previously managed as a part of OneBeacon’s former commercial lines underwriting unit. As of December 31, 2010, the reserves for these businesses had been selected based on expected emergence that was based on the historic loss development of former commercial lines underwriting unit. However, during 2011 the actual emerged experience for these businesses was

significantly lower than the expected emergence. As a result of this favorable emergence, management lowered the loss

reserves for these businesses by $14.0 million during 2011.

In addition to the development described for the lines of business above, OneBeacon also recorded a $4.3 million net decrease in reserves in other lines of business as a result of its review of loss reserves at December 31, 2011.

The net favorable loss reserve development at Sirius Group was primarily attributable to $41.2 million of favorable development on property lines including, $13.1 million of loss reserve reductions for the 2010 Chile earthquake, partially offset by asbestos and environmental increases of $12.3 million.

Loss and LAE development —2010

During the year ended December 31, 2010, White Mountains experienced $93.1 million of net favorable loss reserve development, which consisted of $36.0 million of net favorable loss and LAE reserve development on prior accident year loss reserves at OneBeacon and $57.1 million of net favorable loss reserve development at Sirius Group.

OneBeacon’s net favorable loss reserve development was primarily due to lower than expected severity on non-catastrophe losses related to professional liability lines, multiple peril liability lines and other general liability lines, as well as development on personal lines business. The favorable development also included a $7.5 million release of commercial catastrophe reserves associated with storms occurring in 2004 and 2005.

Specifically, at December 31, 2009, management had revised its expectations downward with respect to future loss emergence in the professional liability business, which had initially been based on market analysis when this business was initiated in 2002 and 2003. However, during 2010, losses continued to be significantly lower than these revised expectations. As a result, management lowered its selected reserves on the earliest years which affected more recent years as total loss expectations for those years are based in part on prior years’ results. The impact of this revised estimate was a decrease to professional liability reserves of $19.3 million.

At December 31, 2009, OneBeacon had recorded $7.5 million of reserves for certain claims related to catastrophes from accident years 2004 and 2005 related to OneBeacon’s excess property business. During 2010, these claims were resolved for amounts below OneBeacon’s policy coverage therefore the reserves were no longer necessary.

In addition to the development described for the lines of business above, OneBeacon also recorded a $9.2 million net decrease in IBNR in other lines of business, primarily personal lines, as a result of its review of loss reserves at December 31, 2010.

The net favorable loss reserve development at Sirius Group was primarily related to short-tailed lines, such as property, accident and health and marine, in recent underwriting years. Included in the $57.1 million favorable loss reserve development was the recognition of $16.3 million in deferred gains from a retrocessional reinsurance contract that incepted in 2000 and was fully collected in 2010.

Fair value adjustment to loss and LAE reserves

In connection with purchase accounting for acquisitions, White Mountains is required to adjust loss and LAE reserves and the related reinsurance recoverables to fair value on their respective acquired balance sheets. The net reduction to loss and LAE reserves is being recognized through an income statement charge ratably with and over the period the claims are settled.

White Mountains recognized $10.6 million, $8.3 million and $8.5 million of such charges, recorded as loss and LAE during 2012, 2011 and 2010. As of December 31, 2012, the pre-tax un-accreted adjustment was $5.7 million.

Asbestos and Environmental Loss and Loss Adjustment Expense Reserve Activity

White Mountains’ reserves include provisions made for claims that assert damages from asbestos and environmental related exposures. Asbestos claims relate primarily to injuries asserted by those who came in contact with asbestos or products containing asbestos. Environmental claims relate primarily to pollution and related clean-up cost obligations, particularly as mandated by U.S. federal and state environmental protection agencies. In addition to the factors described above regarding the reserving process, White Mountains estimates its A&E reserves based upon, among other factors, facts surrounding reported cases and exposures to claims, such as policy limits and deductibles, current law, past and projected claim activity and past settlement values for similar claims, as well as analysis of industry studies and events, such as recent settlements and asbestos-related bankruptcies. The cost of administering A&E claims, which is an important factor in estimating loss reserves, tends to be higher than in the case of non-A&E claims due to the higher legal costs typically associated with A&E claims.

Substantially all of OneBeacon's reserves for unpaid loss and LAE for asbestos and environmental exposures relates to discontinued operations (see Note 20). As of December 31, 2012, the remaining unpaid loss and LAE loss reserves for asbestos and environmental exposures related to continuing operations is less than $1.0 million on both a gross and net basis at December 31, 2012.

In 2012, Sirius Group increased its net A&E exposure through two incoming runoff portfolios acquired by White Mountains Solutions. These acquisitions added $11.0 million in net asbestos reserves and $0.7 million in net environmental reserves.

The acquisition of companies having modest portfolios of A&E exposure has been typical of several prior White Mountains Solutions transactions and is likely to be an element of at least some future acquisitions. However, the acquisitions of new A&E liabilities is undertaken only after careful due diligence and utilizing conservative reserving assumptions in relation to industry benchmarks. In the case of those portfolios acquired during 2012, the exposures arise almost entirely from old assumed reinsurance contracts having small limits of liability.

In addition to the $11.0 million increase in asbestos reserves from the two incoming portfolios acquired by White Mountains Solutions mentioned above, Sirius Group recorded $46.4 million and $10.3 million of asbestos-related incurred losses and LAE on its already existing asbestos reserves in 2012 and 2011, respectively. In the first six months of 2012, Sirius Group increased net asbestos reserves by $12.0 million in response to its quarterly monitoring of newly reported claims. Based on the monitoring trends noted in the first six months 2012, Sirius Group conducted an in-depth analysis of its asbestos exposure, which was completed in third quarter. The main focus of the analysis was on the internal claims analysis of all treaty and facultative contracts likely to have asbestos exposure. An external expert with extensive asbestos claims experience was utilized to enhance the review. This analysis entailed examining total expected asbestos losses and LAE from a variety of information sources, including previous asbestos studies, reported client data and external benchmarking scenarios. The analysis resulted in a net asbestos loss reserve increase of $33.0 million recognized in third quarter. An additional $2.0 million of asbestos losses were recognized in fourth quarter 2012. The 2011 incurred losses were primarily the result of management's monitoring of a variety of metrics including: actual paid and reported claims activity; net survival ratios; peer comparisons; and industry benchmarks.

Offsetting the $0.7 million increase in environmental reserves mentioned above, Sirius Group recorded a decrease of $0.5 million in 2012 of environmental-related losses on its already existing reserves in 2012. In 2011, Sirius Group recorded $2.0 million of environmental losses.

Sirius Group’s net reserves for A&E losses were $189.4 million and $162.7 million at December 31, 2012 and 2011, respectively. Sirius Group’s A&E three-year net loss paid survival ratio was approximately 9.0 years and 11.1 years at December 31, 2012 and 2011. The decrease in the paid survival ratio in 2012 was driven by an unusually high net paid loss of $8.5 million made in first quarter 2012 to commute one of Sirius Group's top five asbestos exposures.

White Mountains’ reserves for A&E losses at December 31, 2012 represent management’s best estimate of its ultimate liability based on information currently available. However, as case law expands, and medical and clean-up costs increase and industry settlement practices change, White Mountains may be subject to asbestos and environmental losses beyond currently estimated amounts. White Mountains cannot reasonably estimate at the present time loss reserve additions arising from any such future adverse developments and cannot be sure that allocated loss reserves, plus the remaining capacity under the NICO Cover and other reinsurance contracts, will be sufficient to cover additional liability arising from any such adverse developments.

Sirius Group



Net A&E Loss Reserve Activity	Year Ended December 31,
	2012						2011						2010
Millions	Gross			Net			Gross			Net			Gross			Net
Asbestos:
Beginning balance	$	185.1		$	146.2		$	191.9		$	151.5		$	187.0		$	146.6
Losses and LAE acquired	11.0			11.0			—			—			10.4			9.7
Incurred losses and LAE	46.8			46.4			13.6			10.3			9.0			7.3
Paid losses and LAE	(34.7		)	(29.4		)	(20.4		)	(15.6		)	(14.5		)	(12.1		)
Ending balance	208.2			174.2			185.1			146.2			191.9			151.5
Environmental:
Beginning balance	22.1			16.5			22.4			18.1			22.2			17.9
Losses and LAE acquired	0.7			0.7			—			—			3.5			2.4
Incurred losses and LAE	(0.1		)	(0.5		)	2.9			2.0			(2.5		)	(1.3		)
Paid losses and LAE	(2.3		)	(1.5		)	(3.2		)	(3.6		)	(.8		)	(.9		)
Ending balance	20.4			15.2			22.1			16.5			22.4			18.1
Total asbestos and environmental:
Beginning balance	207.2			162.7			214.3			169.6			209.2			164.5
Losses and LAE acquired	11.7			11.7			—			—			13.9			12.1
Incurred losses and LAE	46.7			45.9			16.5			12.3			6.5			6.0
Paid losses and LAE	(37.0		)	(30.9		)	(23.6		)	(19.2		)	(15.3		)	(13.0		)
Ending balance	$	228.6		$	189.4		$	207.2		$	162.7		$	214.3		$	169.6

- Definition

The entire disclosure for liabilities related to future policy benefits and unpaid claims and claim adjustments.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 40
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=6482852&loc=d3e14931-158439

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 40
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6482485&loc=d3e14754-158437

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 210
-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-03.13(a)(1),(b))
-URI http://asc.fasb.org/extlink&oid=6879938&loc=d3e572229-122910

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 40
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6482485&loc=d3e14764-158437

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Statement of Position (SOP)
-Number 94-5
-Paragraph 11
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 60
-Paragraph 60
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 13
-Article 7

+ Details

Third Party Reinsurance

12 Months Ended

Dec. 31, 2012

Reinsurance Disclosures [Abstract]

Third-Party Reinsurance

In the normal course of business, White Mountains’ insurance and reinsurance subsidiaries may seek to limit losses that may arise from catastrophes or other events by reinsuring with third-party reinsurers. White Mountains remains liable for risks reinsured in the event that the reinsurer does not honor its obligations under reinsurance contracts. The effects of reinsurance on White Mountains’ insurance and reinsurance subsidiaries’ written and earned premiums and on losses and LAE were as follows:



	Year ended December 31, 2012
Millions	OneBeacon			Sirius Group			Total
Written premiums:
Direct	$	1,204.0		$	186.1		$	1,390.1
Assumed	55.2			992.7			1,047.9
Gross written premiums	1,259.2			1,178.8			2,438.0
Ceded	(80.0		)	(231.1		)	(311.1		)
Net written premiums	$	1,179.2		$	947.7		$	2,126.9
Earned premiums:
Direct	$	1,158.3		$	169.9		$	1,328.2
Assumed	52.8			988.3			1,041.1
Gross earned premiums	1,211.1			1,158.2			2,369.3
Ceded	(79.1		)	(226.6		)	(305.7		)
Net earned premiums	$	1,132.0		$	931.6		$	2,063.6
Losses and LAE:
Direct	$	687.5		$	96.9		$	784.4
Assumed	29.6			523.9			553.5
Gross losses and LAE	717.1			620.8			1,337.9
Ceded	(67.1		)	(76.9		)	(144.0		)
Net losses and LAE	$	650.0		$	543.9		$	1,193.9



	Year ended December 31, 2011
Millions	OneBeacon			Sirius Group			Total
Written premiums:
Direct	$	1,079.2		$	139.5		$	1,218.7
Assumed	49.1			988.6			1,037.7
Gross written premiums	1,128.3			1,128.1			2,256.4
Ceded	(65.6		)	(212.4		)	(278.0		)
Net written premiums	$	1,062.7		$	915.7		$	1,978.4
Earned premiums:
Direct	$	1,035.9		$	128.5		$	1,164.4
Assumed	42.3			989.8			1,032.1
Gross earned premiums	1,078.2			1,118.3			2,196.5
Ceded	(66.0		)	(206.0		)	(272.0		)
Net earned premiums	$	1,012.2		$	912.3		$	1,924.5
Losses and LAE:
Direct	$	551.8		$	80.0		$	631.8
Assumed	9.2			627.8			637.0
Gross losses and LAE	561.0			707.8			1,268.8
Ceded	(12.7		)	(81.8		)	(94.5		)
Net losses and LAE	$	548.3		$	626.0		$	1,174.3



	Year ended December 31, 2010
Millions	OneBeacon			Sirius Group			Total
Written premiums:
Direct	$	1,236.7		$	121.6		$	1,358.3
Assumed	55.8			957.5			1,013.3
Gross written premiums	1,292.5			1,079.1			2,371.6
Ceded	(124.8		)	(213.3		)	(338.1		)
Net written premiums	$	1,167.7		$	865.8		$	2,033.5
Earned premiums:
Direct	$	1,242.5		$	117.9		$	1,360.4
Assumed	60.7			929.7			990.4
Gross earned premiums	1,303.2			1,047.6			2,350.8
Ceded	(122.1		)	(199.7		)	(321.8		)
Net earned premiums	$	1,181.1		$	847.9		$	2,029.0
Losses and LAE:
Direct	$	677.1		$	59.4		$	736.5
Assumed	45.1			684.4			729.5
Gross losses and LAE	722.2			743.8			1,466.0
Ceded	(36.6		)	(212.8		)	(249.4		)
Net losses and LAE	$	685.6		$	531.0		$	1,216.6

OneBeacon

In the normal course of its business, OneBeacon purchases reinsurance from high-quality, highly rated, third-party reinsurers in order to minimize loss from large losses or catastrophic events.

The timing and size of catastrophe losses are unpredictable and the level of losses experienced in any year could be material to OneBeacon’s operating results and financial position. Examples of catastrophes include losses caused by earthquakes, wildfires, hurricanes and other types of storms and terrorist acts. The extent of losses caused by catastrophes is a function of the amount and type of insured exposure in the area affected by the event as well as the severity of the event. OneBeacon uses models (primarily AIR Worldwide (“AIR”) Version 12) to estimate the probability of the occurrence of a catastrophic event as well as potential losses under various scenarios. OneBeacon uses this model output in conjunction with other data to manage its exposure to catastrophe losses through individual risk selection and by limiting its concentration of insurance written in catastrophe-prone areas such as coastal regions. In addition, OneBeacon imposes wind deductibles on

existing coastal windstorm exposures.

Since the terrorist attacks of September 11, 2001, OneBeacon has sought to mitigate the risk associated with any future terrorist attacks by limiting the aggregate insured value of policies in geographic areas with exposure to losses from terrorist attacks. This is accomplished by either limiting the total insured values exposed, or, where applicable, through the use of terrorism exclusions.

In December 2007, the U.S. government extended the Terrorism Risk Insurance Act of 2002 (the “Terrorism Act” or “TRIA”) until December 31, 2014. The Terrorism Act established a federal “backstop” for commercial property and casualty losses, including workers compensation, resulting from acts of terrorism by or on behalf of any foreign person or foreign interest. As extended, the law now also covers domestic acts of terrorism. The law limits the industry’s aggregate liability by requiring the federal government to share 85% of certified losses once a company meets a specific retention or deductible as determined by its prior year’s direct written premiums and limits the aggregate liability to be paid by the government and industry without further action by Congress at $100.0 billion. In exchange for this “backstop,” primary insurers are required to make coverage available to commercial insureds for losses from acts of terrorism as specified in the Terrorism Act. The following types of coverage are excluded from the program: commercial automobile, burglary and theft, surety, farmowners multi-peril and all professional liability coverage except directors and officers coverage.

OneBeacon estimates its individual retention level for commercial policies subject to the Terrorism Act to be approximately $100.0 million in 2013, which is based on 2012 net written premiums. The federal government will pay 85% of covered terrorism losses that exceed OneBeacon’s or the industry’s retention levels in 2013 up to a total of $100.0 billion.

OneBeacon seeks to further reduce its potential loss from catastrophe exposures through the purchase of catastrophe reinsurance. Effective May 1, 2012, OneBeacon renewed its property catastrophe reinsurance program through April 30, 2013. The program provides coverage for OneBeacon’s property business as well as certain acts of terrorism. Under the program, the first $25.0 million of losses resulting from any single catastrophe are retained and the next $155.0 million of losses resulting from the catastrophe are reinsured in three layers, although OneBeacon retains a co-participation of 55% of losses from $25.0 million to $40.0 million, 15% of losses from $40.0 million to $80.0 million and 10% of losses from $80.0 million to $180.0 million. Thus, for a $180.0 million loss, OneBeacon would retain $49.3 million. Any loss above $180.0 million would be retained in full. In the event of a catastrophe, OneBeacon’s property catastrophe reinsurance program is reinstated for the remainder of the original contract term by paying a reinstatement premium that is based on the percentage of coverage reinstated and the original property catastrophe coverage premium. This $180.0 million limit was reduced from the $225.0 million limit that OneBeacon’s previous catastrophe reinsurance program provided, as a result of lower catastrophe exposure as a specialty-focused company. As a result of hurricane Sandy in October 2012, OneBeacon recorded ceded losses of $15.6 million and reinstatement premiums of $1.9 million related to this treaty.

In addition to the corporate catastrophe reinsurance protection that it secures, OneBeacon may also purchase dedicated reinsurance protection for specific businesses. In 2012, OneBeacon purchased insurance to protect its collector cars and boats business from catastrophic losses. This treaty covered losses in excess of $2.5 million up to $25.0 million in two layers. The first layer, $2.5 million in excess of $2.5 million, carried a 5% co-participation. The company had a 20% co-participation on the second layer, $20.0 million in excess of $5 million. Catastrophe losses above $25.0 million are retained by the company in full. Reinstatement premiums are paid if the coverage is attached. As a result of hurricane Sandy in October 2012, OneBeacon recorded ceded losses of $11.9 million and reinstatement premiums of $1.4 million related to this treaty.

OneBeacon also purchased a per-occurrence treaty for its Inland Marine Underwriters business (“IMU”) that protects against large occurrences, whether a single large claim or a catastrophe. The IMU treaty attaches at $2.0 million per occurrence. Coverage is provided up to $60.0 million. The first layer of the marine treaty is $5.0 million in excess of $2.0 million, with an annual aggregate deductible of $1.5 million for large losses and $5.0 million for catastrophes losses. For losses in the layer $10.0 million excess of $50.0 million, the company retains half of the loss. The portion of loss above $60.0 million is retained in full by the company. Reinstatement premiums are paid in full or in part depending on the layer and the occurrence if the coverage is attached. As a result of hurricane Sandy in October 2012, OneBeacon recorded ceded loss of $41.0 million and reinstatement premiums of $5.4 million related to this treaty. Losses retained under both the collector cars and boats and marine reinsurance treaties are subject to the corporate catastrophe treaty.

Through June 30, 2010 OneBeacon ceded $25.6 million of written premiums from its Northeast homeowners business written through OneBeacon Insurance Company (“OBIC”) and its subsidiary companies, along with Adirondack and New Jersey Skylands Insurance Association. Effective July 1, 2010, the closing date of the Personal Lines Transaction, the agreement was amended to remove OneBeacon as a signatory.

OneBeacon’s property catastrophe reinsurance program does not cover property losses resulting from any nuclear events or biological, chemical or radiological terrorist attacks or losses resulting from acts of terrorism as defined under the Terrorism Act, as amended, committed by an individual or individuals acting on behalf of any foreign person or foreign interest, as well as domestic acts of terrorism. Such losses are subject to coverage provided to insurance companies by TRIA.

OneBeacon also purchases property-per-risk reinsurance coverage to reduce large loss volatility. The property-per-risk reinsurance program reinsures losses in excess of $10.0 million up to $100.0 million. Individual risk facultative reinsurance may be purchased above $100.0 million where OneBeacon deems it appropriate. Under the property-per-risk program, OneBeacon retains a co-participation of 10% for losses in excess of $20.0 million up to $50.0 million and a co-participation of 20% for losses in excess of $50.0 million. The property-per-risk treaty also provides one limit of reinsurance protection for losses in excess of $10.0 million up to $100.0 million on an individual risk basis for terrorism losses. However, any nuclear events, or biological, chemical or radiological terrorist attacks are not covered.

OneBeacon also maintains a casualty reinsurance program that provides protection for individual policies involving general liability, automobile liability, professional liability or umbrella liability. OneBeacon's healthcare professional liability treaty covers losses in excess of $5.0 million up to $20.0 million in two layers. The first layer, $5.0 million excess of $5.0 million has a 20% co-participation. All other casualty business is covered in a separate treaty covering losses in excess of $5.0 million up to $21.0 million. This treaty has a 22.5% co-participation in the first layer ($6.0 million excess of $5.0 million) and a 10% co-participation in the second layer of $10.0 million excess of $11.0 million. OneBeacon purchases a treaty to protect against large workers compensation losses that covers 100% of the loss in excess of $1.0 million up to $10.0 million per person. In addition, for casualty losses involving more than one insured, OneBeacon maintains a dedicated treaty that covers up to $40.0 million in excess of a $10.0 million retention.

At December 31, 2012, OneBeacon had $3.3 million and $107.3 million of reinsurance recoverables on paid and unpaid losses. Reinsurance contracts do not relieve OneBeacon of its obligation to its policyholders. OneBeacon is selective with its reinsurers, placing reinsurance with only those reinsurers having a strong financial condition. OneBeacon monitors the financial strength of its reinsurers on an ongoing basis. Uncollectible amounts historically have not been significant. As of December 31, 2012, 90% of reinsurance recoverables on paid and unpaid losses are from reinsurers with an A.M. Best rating of A (Excellent, which is the third highest of 16 financial strength ratings) or better. The largest recoverable from an individual reinsurer was $10.1 million with Hannover Ruckversich, which has an A.M. Best Company (“A.M. Best”) ratings of A++ (Superior, which is the highest of 16 financial strength ratings). The reinsurance balances associated with the runoff business are included in discontinued operations (see Note 20).

Sirius Group

Sirius Group's reinsurance protection primarily consists of pro-rata and excess of loss protections to cover aviation, trade credit, and certain property exposures. Sirius Group's proportional reinsurance programs provide protection for part of the non-proportional treaty accounts written in Europe, the Americas, Asia, the Middle East, and Australia. These reinsurance protections are designed to increase underwriting capacity where appropriate, and to reduce exposure both to large catastrophe losses and to a frequency of smaller loss events. Attachment points and coverage limits vary by region around the world. In addition to its proportional reinsurance, Sirius Group also purchases excess of loss reinsurance protection for $15.0 million in excess of a retention of $5.0 million for the facultative and direct property portfolios written by the Stockholm, Hamburg and London branches (excluding business written in the United States). For the facultative and direct property portfolios written by the Hamburg and Stockholm branches, an additional $15.0 million of reinsurance protection in excess of the $20.0 million coverage has been purchased for 2013. Sirius Group also has $5.0 million of protection in excess of a retention of $5.0 million for the London branch for facultative and direct U.S.-catastrophe exposed business (excluding Florida risks), which was renewed through June 30, 2013. As a result of hurricane Sandy in October 2012, Sirius Group recognized a full $5.0 million recovery on this account.

In 2012, 2011 and 2010, Sirius Group has had in place group excess of loss retrocessional coverage for its non-U.S. and non-Japan earthquake-related exposures. This cover was renewed for one year at April 1, 2012, providing $17.0 million of reinsurance protection through partially placed coverage of a $40.0 million layer in excess of Sirius Group's retention of

$35.0 million. In addition, Sirius Group purchased two industry loss warranty (“ILW”) contracts that provide $10.0 million of coverage for a first event non-U.S. and non-Japan earthquake loss at a market loss event of $7.5 billion or more, with $5.0 million of additional coverage for a second market loss event at this level. Sirius Group also has $37.5 million of New Madrid earthquake ILW coverage through March 2013 that provides reinsurance protection both on a first and second market event of $20.0 billion.

In addition, Sirius Group has an ILW providing $5.0 million of coverage for a first loss European windstorm and flood at a market loss event of $5.0 billion, which expires March 2013. During the fourth quarter 2012, additional ILW protections providing $40.0 million of reinsurance coverage were purchased at different market loss levels for wind, flood, and all natural perils in Europe or Scandinavia, with the majority of these covers expiring in March 2013.

As of December 31, 2012, losses incurred for the February 2011 New Zealand earthquake totaled $47.0 million, $2.0 million of which was covered by Sirius Group’s non-U.S. and non-Japan earthquake coverage. During 2010, as a result of the Chile Earthquake in February 2010, Sirius Group recovered $65.0 million under its non-U.S. and non-Japan earthquake coverage, which was a full limit loss.

Sirius Group's aviation reinsurance program is intended to reduce exposure to a frequency of small losses, a single large loss, or a combination of both. In 2013, for the proportional and facultative aviation portfolios, reinsurance protection purchases were generally for coverage on losses from events that cause a market loss in excess of $150.0 million up to a full airline policy limit of $2.25 billion, including clash coverage. This program is in effect through November 2013. For the non-proportional aviation portfolio, reinsurance protection includes a 15% quota share treaty. In addition, the non-proportional portfolio is protected by $33.0 million in the form of first event ILWs, and $5.0 million of available limit in the form of second event ILWs. The first event ILWs attach at industry loss levels between $400.0 million and $1.0 billion. The majority of the reinsurance protections, excluding ILWs, include a reinstatement of the cover in case of loss.

For the marine yacht portfolio written by the London branch, reinsurance coverage is in place for $9.8 million in excess of a retention of $0.3 million.

For accident and health, Sirius Group has excess of loss protection covering personal accident and life of €10.0 million ($13.0 million based on the December 31, 2012 EUR to USD exchange rate) of protection in excess of a €5.0 million ($7.0 million based on the December 31, 2012 EUR to USD exchange rate) retention for the Stockholm, Hamburg, Liege and Singapore branches.

For 2012, Sirius Group ceded 20% and 50% of its trade credit and bond business, respectively, under a quota share retrocession, which supported growth in this line. The treaty was renewed for 2013.

Almost all of Sirius Group's excess of loss reinsurance protections, excluding ILWs, include provisions that reinstate coverage at a cost of 100% or more of the original reinsurance premium.

At December 31, 2012, Sirius Group had $14.6 million of reinsurance recoverables on paid losses and $321.8 million of reinsurance recoverables on unpaid losses that will become recoverable if claims are paid in accordance with current reserve estimates. Because retrocessional reinsurance contracts do not relieve Sirius Group of its obligation to its insureds, the collectability of balances due from Sirius Group's reinsurers is critical to its financial strength. Sirius Group monitors the financial strength and ratings of retrocessionaires on an ongoing basis.

The following table provides a listing of Sirius Group’s top reinsurers based upon recoverable amounts, the percentage of total recoverables and the reinsurer’s A.M. Best Rating.



Top Reinsurers ($ in millions)	Balance at December 31, 2012		% of Total		A.M. Best Rating⁽¹⁾	% Collateralized
General Reinsurance Corporation	$	56.2	17	%	A++	—	%
Swiss Re Group	36.4		11	%	A+	2	%
Olympus Re ⁽²⁾	29.6		9	%	NR-5	100	%
Lloyds of London ⁽³⁾	19.4		6	%	A	8	%
Michigan Catastrophic Claims Association ⁽⁴⁾	14.7		4	%	N/A	—	%

⁽¹⁾ A.M. Best ratings as detailed above are: “A++” (Superior, which is the highest of 16 financial strength ratings), “A+” (Superior, which is the

second highest of 16 financial strength ratings), and “A” (Excellent, which is the third highest of 16 financial strength ratings).

⁽²⁾ Non-U.S. insurance entity. The balance is fully collateralized through funds held, letters of credit or trust agreements.

⁽³⁾ Represents the total of reinsurance recoverables due to Sirius Group from all Lloyds Syndicates.

⁽⁴⁾ Michigan Catastrophic Claims Association (”MCCA”) is a non-profit unincorporated association., established by the State of Michigan with

the power to issue and collect assessments, to which every insurance company that sells automobile coverage in Michigan is required to be a

member. A.M. Best does not rate MCCA. Sirius Group acquired its recoverable from MCCA in the acquisition of Stockbridge Insurance

Company. As part of the acquisition, Sirius Group obtained $25.0 of reinsurance protection from the seller (currently rated A+ by A.M. Best)

for unfavorable loss reserve development, including uncollectible reinsurance.

- Definition

The entire disclosure pertaining to the existence, magnitude and information about insurance that has been ceded to or assumed from another insurance company, including the methodologies and assumptions used in determining recorded amounts.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 20
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6480758&loc=d3e6816-158387

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 605
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6486672&loc=d3e27374-158547

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 210
-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-03.6,13)
-URI http://asc.fasb.org/extlink&oid=6879938&loc=d3e572229-122910

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 20
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6480758&loc=d3e6811-158387

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 605
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6486672&loc=d3e27261-158547

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 605
-Section 55
-Paragraph 13
-URI http://asc.fasb.org/extlink&oid=6588590&loc=d3e27795-158548

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 605
-Section 55
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=6588590&loc=d3e27703-158548

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 944
-SubTopic 310
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6485557&loc=d3e21549-158491

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 113
-Paragraph 120
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 113
-Paragraph 27
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Statement of Position (SOP)
-Number 92-5
-Paragraph 19
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 6
-Article 7

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 03
-Paragraph 13
-Article 7

+ Details

Investment Securities

12 Months Ended

Dec. 31, 2012

Investments, Debt and Equity Securities [Abstract]

Investment Securities

Net Investment Income

White Mountains’ net investment income is comprised primarily of interest income associated with White Mountains’ fixed maturity investments, dividend income from its equity investments and interest income from its short-term investments.

Pre-tax net investment income for 2012, 2011 and 2010 consisted of the following:



	Year Ended December 31,
Millions	2012			2011			2010
Investment income:
Fixed maturity investments	$	132.0		$	166.2		$	194.7
Short-term investments	3.1			4.5			3.0
Common equity securities	22.2			15.4			10.2
Convertible fixed maturity investments	6.0			5.5			5.6
Other long-term investments	3.1			4.2			6.0
Interest on funds held under reinsurance treaties	.6			(.4		)	(1.7		)
Total investment income	167.0			195.4			217.8
Third-party investment expenses	(13.4		)	(10.9		)	(8.9		)
Net investment income, pre-tax	$	153.6		$	184.5		$	208.9

Net Realized and Unrealized Investment Gains and Losses

The following table summarizes net realized investment gains (losses) and changes in the carrying value of investments measured at fair value:



	Year Ended December 31, 2012
Millions	Net realized and unrealized gains (losses)			Net foreign currency gains (losses)			Total net realized and unrealized gains (losses) reflected in earnings
Fixed maturity investments	$	101.0		$	(48.4	)	$	52.6
Short-term investments	—			(4.2		)	(4.2		)
Common equity securities	67.2			(.1		)	67.1
Convertible fixed maturity investments	2.5			—			2.5
Other long-term investments	5.0			(4.5		)	.5
Forward contracts	(.3		)	—			(.3		)
Net realized and unrealized investment gains (losses), pre-tax	175.4			(57.2		)	118.2
Income taxes attributable to realized and unrealized investment gains (losses)	(41.7		)	14.9			(26.8		)
Net realized and unrealized investment gains (losses), after-tax	$	133.7		$	(42.3	)	$	91.4



	Year Ended December 31, 2011
Millions	Net realized and unrealized gains (losses)			Net foreign currency gains (losses)			Total net realized and unrealized gains (losses) reflected in earnings
Fixed maturity investments	$	57.0		$	30.6		$	87.6
Short-term investments	—			(11.0		)	(11.0		)
Common equity securities	(6.0		)	(1.8		)	(7.8		)
Convertible fixed maturity investments	(13.7		)	—			(13.7		)
Other long-term investments	16.1			2.9			19.0
Net realized and unrealized investment gains, pre-tax	53.4			20.7			74.1
Income taxes attributable to realized and unrealized investment gains	(13.0		)	(5.1		)	(18.1		)
Net realized and unrealized investment gains, after-tax	$	40.4		$	15.6		$	56.0



	Year Ended December 31, 2010
Millions	Net realized and unrealized gains (losses)			Net foreign currency gains (losses)			Total net realized and unrealized gains (losses) reflected in earnings
Fixed maturity investments	$	29.5		$	(61.6	)	$	(32.1	)
Short-term investments	—			(9.1		)	(9.1		)
Common equity securities	79.3			(8.0		)	71.3
Convertible fixed maturity investments	11.3			—			11.3
Other long-term investments	33.5			2.7			36.2
Net realized and unrealized investment gains (losses), pre-tax	153.6			(76.0		)	77.6
Income taxes attributable to realized and unrealized investment gains (losses)	(41.6		)	20.1			(21.5		)
Net realized and unrealized investment gains (losses), after-tax	$	112.0		$	(55.9	)	$	56.1

White Mountains recognized gross realized investment gains of $162.2 million, $191.6 million and $205.0 million and gross realized investment losses of $94.1 million, $123.3 million and $73.6 million on sales of investment securities during 2012, 2011 and 2010.

As of December 31, 2012 and 2011 White Mountains reported $11.4 million and $34.6 million in accounts payable on unsettled investment purchases and $3.9 million and $4.7 million in accounts receivable on unsettled investment sales.

The following table summarizes the amount of total gains (losses) included in earnings attributable to unrealized investment gains (losses) for Level 3 investments for the years ended December 31, 2012, 2011 and 2010.



	Year Ended December 31,
Millions	2012		2011			2010
Fixed maturities	$	7.7	$	(12.2	)	$	10.2
Common equity securities	3.0		(16.6		)	(19.2		)
Convertible fixed maturities	—		—			—
Other long-term investments	7.0		(16.8		)	39.0
Total net unrealized investment gains (losses), pre-tax - Level 3 investments	$	17.7	$	(45.6	)	$	30.0

The components of White Mountains’ net realized and unrealized investment gains (losses), after-tax, as recorded on the statements of operations and comprehensive income were as follows:



	Year Ended December 31,
Millions	2012			2011			2010
Net change in pre-tax unrealized gains (losses) on investments in unconsolidated affiliates	$	62.8		$	(63.6	)	$	72.7
Income taxes	(5.1		)	5.1			.8
Net change in unrealized gains (losses) on investments in unconsolidated affiliates, after tax	57.7			(58.5		)	73.5
Net realized and unrealized foreign currency gains (losses) on investments through OCI	95.5			(41.7		)	107.9
Total investments gains (losses) through accumulated other comprehensive income	153.2			(100.2		)	181.4
Net realized and unrealized investment gains, after-tax	91.4			56.0			56.1
Total investment gains (losses) recorded during the period, after-tax	$	244.6		$	(44.2	)	$	237.5

Investment Holdings

The cost or amortized cost, gross unrealized investment gains and losses, net foreign currency gains and losses, and carrying values of White Mountains’ fixed maturity investments as of December 31, 2012 and 2011, were as follows:



	December 31, 2012
Millions	Cost or amortized cost		Gross unrealized gains		Gross unrealized losses			Net foreign currency losses			Carrying value
US Government and agency obligations	$	440.4	$	1.0	$	(0.1	)	$	(1.2	)	$	440.1
Debt securities issued by industrial corporations	2,321.4		88.3		(1.6		)	(23.0		)	2,385.1
Municipal obligations	5.3		—		(0.1		)	—			5.2
Mortgage-backed and asset-backed securities	2,081.0		25.1		(1.1		)	(9.4		)	2,095.6
Foreign government, agency and provincial obligations	526.6		6.9		(3.0		)	(8.6		)	521.9
Preferred stocks	79.9		6.7		—			(0.2		)	86.4
Total fixed maturity investments including assets held for sale	$	5,454.6	$	128.0	$	(5.9	)	$	(42.4	)	$	5,534.3
Fixed maturity investments reclassified to assets held for sale ⁽¹⁾											(338.1		)
Total fixed maturity investments											$	5,196.2

⁽¹⁾ Assets held for sale related to discontinued operations. See Note 20.



	December 31, 2011
Millions	Cost or amortized cost		Gross unrealized gains		Gross unrealized losses			Net foreign currency gains (losses)			Carrying value
US Government and agency obligations	$	299.4	$	5.3	$	(0.1	)	$	0.4		$	305.0
Debt securities issued by industrial corporations	2,072.1		73.7		(7.8		)	(2.9		)	2,135.1
Municipal obligations	2.7		—		—			—			2.7
Mortgage-backed and asset-backed securities	3,190.5		25.9		(3.9		)	10.4			3,222.9
Foreign government, agency and provincial obligations	581.2		11.0		(0.1		)	(2.9		)	589.2
Preferred stocks	82.3		3.2		(6.7		)	—			78.8
Total fixed maturity investments including assets held for sale	$	6,228.2	$	119.1	$	(18.6	)	$	5.0		$	6,333.7
Fixed maturity investments reclassified to assets held for sale ⁽¹⁾											(111.8		)
Total fixed maturity investments											$	6,221.9

⁽¹⁾ Assets held for sale related to discontinued operations. See Note 20.

The weighted average duration of White Mountains’ fixed maturity portfolio at December 31, 2012 was approximately 2.4 years, including short-term investments, and approximately 2.7 years excluding short-term investments.

The cost or amortized cost and carrying value of White Mountains’ fixed maturity investments and convertible fixed maturity investments at December 31, 2012 is presented below by contractual maturity. 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.



	December 31, 2012
Millions	Cost or amortized cost		Carrying value
Due in one year or less	$	395.9	$	396.7
Due after one year through five years	2,297.8		2,336.7
Due after five years through ten years	648.9		671.6
Due after ten years	72.8		74.7
Mortgage-backed and asset-backed securities	2,081.0		2,095.6
Preferred stocks	79.9		86.4
Total	$	5,576.3	$	5,661.7

The cost or amortized cost, gross unrealized investment gains and losses, net foreign currency gains and losses, and carrying values of White Mountains’ common equity securities, convertible fixed maturity investments and other long-term investments as of December 31, 2012 and 2011 were as follows:



	December 31, 2012
Millions	Cost or amortized cost		Gross unrealized gains		Gross unrealized losses			Net foreign currency losses			Carrying value
Common equity securities	$	895.2	$	143.4	$	(8.8	)	$	(.1	)	$	1,029.7
Convertible fixed maturity investments	$	121.7	$	6.1	$	(.4	)	$	—		$	127.4
Other long-term investments	$	257.2	$	65.9	$	(22.8	)	$	(6.1	)	$	294.2



	December 31, 2011
Millions	Cost or amortized cost		Gross unrealized gains		Gross unrealized losses			Net foreign currency losses			Carrying value
Common equity securities	$	691.7	$	72.0	$	(8.7	)	$	—		$	755.0
Convertible fixed maturity investments	$	139.2	$	6.2	$	(1.6	)	$	—		143.8
Other long-term investments	$	274.4	$	55.5	$	(25.2	)	$	(3.4	)	$	301.3

Sales and maturities of investments, excluding short-term investments, totaled $6,997.5 million, $5,034.0 million and $4,492.6 million for the years ended December 31, 2012, 2011 and 2010. There were no non-cash exchanges or involuntary sales of investment securities during 2012, 2011 and 2010.

Investments Held on Deposit or as Collateral

As of December 31, 2012 and 2011, investments of $169.9 million and $79.2 million, respectively, were held in trusts required to be maintained in relation to various reinsurance agreements. White Mountains’ consolidated insurance and reinsurance operations are required to maintain deposits with certain insurance regulatory agencies in order to maintain their insurance licenses. The fair value of such deposits which are included within total investments totaled $319.3 million and $313.4 million as of December 31, 2012 and 2011.

Fair value measurements at December 31, 2012

White Mountains used quoted market prices or other observable inputs to determine fair value for the 95.0% of its investment portfolio. Investments valued using Level 1 inputs include fixed maturity investments, primarily investments in U.S. Treasuries, common equities and short-term investments, which include U.S. Treasury Bills. Investments valued using Level 2 inputs consist of fixed maturity investments including corporate debt, state and other governmental debt, convertible fixed maturity securities and mortgage and asset-backed securities. Fair value estimates for investments that trade infrequently and have few or no observable market prices are classified as Level 3 measurements. Level 3 fair value estimates based upon unobservable inputs include White Mountains’ investments in hedge funds and private equity funds, as well as investments in certain debt securities where quoted market prices are unavailable. White Mountains uses brokers and outside pricing services to assist in determining fair values. For investments in active markets, White Mountains uses the quoted market prices provided by outside pricing services to determine fair value. The outside pricing services used by White Mountains have indicated that if no observable inputs are available for a security, they will not provide a price. In those circumstances, White Mountains estimates the fair value using industry standard pricing models and observable inputs such as benchmark interest rates, matrix pricing, market comparables, broker quotes, issuer spreads, bids, offers, credit rating, prepayment speeds and other relevant inputs. White Mountains performs procedures to validate the market prices obtained from the outside pricing sources. Such procedures, which cover substantially all of its fixed maturity investments include, but are not limited to, evaluation of model pricing methodologies and review of the pricing services’ quality control processes and procedures on at least an annual basis, comparison of market prices to prices obtained from different independent pricing vendors on at least a semi-annual basis, monthly analytical reviews of certain prices, and review of assumptions utilized by the pricing service for selected measurements on an ad hoc basis throughout the year. White Mountains also performs back-testing of selected sales activity to determine whether there are any significant differences between the market price used to value the security prior to sale and the actual sale price on an ad-hoc basis throughout the year. Prices provided by the pricing services that vary by more than 5.0% and $1.0 million from the expected price based on these procedures are considered outliers. In circumstances where the results of White Mountains’ review process do not appear to support the market price provided by the pricing services, White Mountains challenges the price. If White Mountains cannot gain satisfactory evidence to support the challenged price, it relies upon its own pricing methodologies to estimate the fair value of the security in question. The fair values of such securities are considered to be Level 3 measurements.

White Mountains’ investments in debt securities are generally valued using matrix and other pricing models. Key inputs include benchmark yields, benchmark securities, reported trades, issuer spreads, bids, offers, credit ratings and prepayment speeds. Income on mortgage-backed 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 or accreted prospectively over the remaining economic life.

White Mountains employs a number of procedures to assess the reasonableness of the fair value measurements for its other long-term investments, including obtaining and reviewing the audited annual financial statements of each hedge fund and private equity fund and periodically discussing each fund’s pricing with the fund manager. However, since the fund managers do not provide sufficient information to evaluate the pricing inputs and methods for each underlying investment, the inputs are considered to be unobservable. Accordingly, the fair value of White Mountains’ investments in hedge funds and private equity funds has been classified as Level 3 measurements. The fair value of White Mountains’ investments in hedge funds and private equity funds has been determined using net asset value.

In addition to the investments described above, White Mountains has $79.7 million and $68.1 million of investment-related liabilities recorded at fair value and included in other liabilities as of December 31, 2012 and December 31, 2011. These liabilities relate to securities that have been sold short by limited partnerships in which White Mountains has investments and is required to consolidate under GAAP. All of the liabilities included have a Level 1 designation.

Fair Value Measurements by Level

The following tables summarize White Mountains’ fair value measurements for investments at December 31, 2012 and 2011 by level. The fair value measurements for derivative assets associated with White Mountains’ variable annuity business are presented in Note 8.



	December 31, 2012
Millions	Fair value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
Fixed maturity investments:
U.S. Government and agency obligations	$	440.1	$	369.1	$	71.0	$	—
Debt securities issued by corporations:
Consumer	727.1		—		727.1		—
Industrial	330.8		—		330.8		—
Financials	401.4		1.0		400.4		—
Communications	276.1		—		276.1		—
Energy	181.5		—		181.5		—
Basic materials	189.1		—		189.1		—
Utilities	204.2		—		204.2		—
Technology	54.0		—		54.0		—
Other	20.9		—		20.9		—
Total debt securities issued by corporations:	2,385.1		1.0		2,384.1		—

Municipal obligations	5.2		—		5.2		—
Mortgage-backed and asset-backed securities	2,095.6		—		2,073.5		22.1
Foreign government, agency and provincial obligations	521.9		52.1		469.8		—
Preferred stocks	86.4		—		15.6		70.8
Total fixed maturity investments⁽¹⁾	5,534.3		422.2		5,019.2		92.9

Short-term investments	630.6		630.6		—		—

Common equity securities:
Financials	324.5		286.3		.9		37.3
Consumer	255.6		255.6		—		—
Basic materials	103.3		103.3		—		—
Energy	101.0		101.0		—		—
Utilities	43.6		43.4		.2		—
Technology	90.2		90.2		—		—
Other	111.5		53.1		58.4		—
Total common equity securities	1,029.7		932.9		59.5		37.3
Convertible fixed maturity investments	127.4		—		127.4		—
Other long-term investments ⁽²⁾	259.3		—		—		259.3
Total investments	$	7,581.3	$	1,985.7	$	5,206.1	$	389.5

⁽¹⁾ Carrying value includes $338.1 that is classified as assets held for sale relating to discontinued operations.

⁽²⁾ Excludes carrying value of $35.0 associated with other long-term investment limited partnerships accounted for using the equity method and $(0.1) related to currency forward contracts.



	December 31, 2011
Millions	Fair value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
Fixed maturity investments:
US Government and agency obligations	$	305.0	$	296.2	$	8.8	$	—
Debt securities issued by corporations:
Consumer	790.7		—		790.7		—
Industrial	359.4		—		359.4		—
Financials	239.6		3.8		235.8		—
Communications	225.8		—		225.8		—
Basic materials	195.7		—		195.7		—
Energy	155.8		—		155.8		—
Utilities	140.1		—		140.1		—
Technology	24.5		—		24.5		—
Diversified	3.5		—		3.5		—
Total debt securities issued by corporations:	2,135.1		3.8		2,131.3		—

Municipal obligations	2.7		—		2.7		—
Mortgage-backed and asset-backed securities	3,222.9		—		3,207.8		15.1
Foreign government, agency and provincial obligations	589.2		65.7		523.5		—
Preferred stocks	78.8		—		15.0		63.8
Total fixed maturity investments ⁽¹⁾	6,333.7		365.7		5,889.1		78.9

Short-term investments	846.0		846.0		—		—

Common equity securities:
Financials	219.2		185.8		1.5		31.9
Consumer	188.8		188.5		.3		—
Basic materials	121.0		119.9		1.1		—
Energy	72.6		72.6		—		—
Utilities	42.0		41.8		.2		—
Technology	25.8		25.8		—		—
Other	85.6		33.0		52.2		.4
Total common equity securities	755.0		667.4		55.3		32.3
Convertible fixed maturity investments	143.8		—		143.8		—
Other long-term investments ⁽²⁾	268.3		—		—		268.3
Total investments	$	8,346.8	$	1,879.1	$	6,088.2	$	379.5

⁽¹⁾ Carrying value includes $111.8 that is classified as assets held for sale relating to discontinued operations.

⁽²⁾ Excludes carrying value of $33.0 associated with other long-term investments accounted for using the equity method.

Debt securities issued by corporations

The following table summarizes the ratings of the corporate debt securities held in White Mountains’ investment portfolio as of December 31, 2012 and 2011:



	Fair Value at
	December 31,
Millions	2012		2011
AAA	$	—	$	—
AA	193.4		206.8
A	1,061.0		802.8
BBB	1,116.9		1,110.8
BB	7.0		6.2
Other	6.8		8.5
Debt securities issued by corporations ⁽¹⁾	$	2,385.1	$	2,135.1

⁽¹⁾ Credit ratings are assigned based on the following hierarchy: 1) Standard & Poor’s Financial Services LLC (“Standard & Poor’s”) and 2) Moody’s Investor Service (“Moody’s”).

Mortgage-backed, Asset-backed Securities

White Mountains purchases commercial and residential mortgage-backed securities with the goal of maximizing risk adjusted returns in the context of a diversified portfolio. White Mountains’ non-agency commercial mortgage-backed portfolio (“CMBS”) is generally short-term and structurally senior, with more than 25 points of subordination on average for fixed rate CMBS and more than 50 points of subordination on average for floating rate CMBS as of December 31, 2012. In general, subordination represents the percentage principal loss on the underlying collateral that would be absorbed by other securities lower in the capital structure before the more senior security incurs a loss. White Mountains believes these levels of protection will mitigate the risk of loss tied to the refinancing challenges facing the commercial real estate market. As of December 31, 2012, on average less than 1.0% of the underlying loans were reported as non-performing for all non-agency CMBS held by White Mountains. White Mountains is not an originator of residential mortgage loans and did not hold any residential mortgage-backed securities (“RMBS”) categorized as sub-prime as of December 31, 2012. White Mountains’ investments in hedge funds and private equity funds contain negligible amounts of sub-prime mortgage-backed securities at December 31, 2012. White Mountains considers sub-prime mortgage-backed securities as those that have underlying loan pools that exhibit weak credit characteristics, or those that are issued from dedicated sub-prime shelves or dedicated second-lien shelf registrations (i.e., White Mountains considers investments backed primarily by second-liens to be sub-prime risks regardless of credit scores or other metrics).

White Mountains categorizes mortgage-backed securities as “non-prime” (also called “Alt A” or “A-”) if they are backed by collateral that has overall credit quality between prime and sub-prime based on White Mountains’ review of the characteristics of their underlying mortgage loan pools, such as credit scores and financial ratios. White Mountains’ non-agency residential mortgage-backed portfolio is generally moderate-term and structurally senior. White Mountains does not own any collateralized debt obligations, including residential mortgage-backed collateralized debt obligations.



	December 31, 2012						December 31, 2011
Millions	Fair Value		Level 2		Level 3		Fair Value		Level 2		Level 3
Mortgage-backed securities:
Agency:
GNMA	$	1,013.4	$	1,013.4	$	—	$	1,365.8	$	1,365.8	$	—
FNMA	74.6		74.6		—		712.6		712.6		—
FHLMC	55.8		55.8		—		35.9		35.9		—
Total Agency ⁽¹⁾	1,143.8		1,143.8		—		2,114.3		2,114.3		—
Non-agency:
Residential	160.6		160.6		—		83.1		68.0		15.1
Commercial	334.1		334.1		—		276.7		276.7		—
Total Non-agency	494.7		494.7		—		359.8		344.7		15.1

Total mortgage-backed securities	1,638.5		1,638.5		—		2,474.1		2,459.0		15.1
Other asset-backed securities:
Credit card receivables	173.5		151.4		22.1		380.6		380.6		—
Vehicle receivables	265.1		265.1		—		345.6		345.6		—
Other	18.5		18.5		—		22.6		22.6		—
Total other asset-backed securities	457.1		435.0		22.1		748.8		748.8		—
Total mortgage and asset-backed securities	$	2,095.6	$	2,073.5	$	22.1	$	3,222.9	$	3,207.8	$	15.1

⁽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).

Non-agency Mortgage-backed Securities

The security issuance years of White Mountains’ investments in non-agency RMBS and non-agency CMBS securities as of December 31, 2012 are as follows:



			Security Issuance Year
Millions	Fair Value		2003		2006		2007		2009		2010		2011		2012
Non-agency RMBS	$	160.6	$	2.0	$	21.4	$	5.9	$	1.7	$	54.0	$	75.6	$	—
Non-agency CMBS	334.1		—		8.8		15.6		—		13.4		99.8		196.5
Total	494.7		$	2.0	$	30.2	$	21.5	$	1.7	$	67.4	$	175.4	$	196.5

Non-agency Residential Mortgage-backed Securities

The classification of the underlying collateral quality and the tranche levels of White Mountains’ non-agency RMBS securities are as follows as of December 31, 2012:



Millions	Fair Value		Super Senior ⁽¹⁾		Senior ⁽²⁾		Subordinate ⁽³⁾
Prime	$	160.1	$	9.7	$	150.4	$	—
Non-prime	.5		—		.5		—
Sub-prime	—		—		—		—
Total	$	160.6	$	9.7	$	150.9	$	—

⁽¹⁾ At issuance, Super Senior were rated AAA by Standard & Poor’s, Aaa by Moody’s or AAA by Fitch Ratings (“Fitch”) and were senior to other AAA or Aaa bonds.

⁽²⁾ At issuance, Senior were rated AAA by Standard & Poor’s, Aaa by Moody’s or AAA by Fitch and were senior to non-AAA or non-Aaa bonds.

⁽³⁾ At issuance, Subordinate were not rated AAA by Standard & Poor’s, Aaa by Moody’s or AAA by Fitch and were junior to AAA or Aaa bonds.

Non-agency Commercial Mortgage-backed Securities

The amount of fixed and floating rate securities and their tranche levels of White Mountains’ non-agency CMBS securities are as follows as of December 31, 2012:



Millions	Fair Value		Super Senior ⁽¹⁾		Senior ⁽²⁾		Subordinate ⁽³⁾
Fixed rate CMBS	$	311.5	$	212.3	$	90.4	$	8.8
Floating rate CMBS	22.6		15.6		1.4		5.6
Total	$	334.1	$	227.9	$	91.8	$	14.4

⁽¹⁾ At issuance, Super Senior were rated AAA by Standard & Poor’s, Aaa by Moody’s or AAA by Fitch and were senior to other AAA or Aaa bonds.

⁽²⁾ At issuance, Senior were rated AAA by Standard & Poor’s, Aaa by Moody’s or AAA by Fitch and were senior to non-AAA or non-Aaa bonds.

⁽³⁾ At issuance, Subordinate were not rated AAA by Standard & Poor’s, Aaa by Moody’s or AAA by Fitch and were junior to AAA or Aaa bonds.

Other long-term investments

White Mountains holds investments in hedge funds and private equity funds, which are included in other long-term investments. The fair value of these investments has been estimated using the net asset value of the funds. At December 31, 2012, White Mountains held investments in 16 hedge funds and 38 private equity funds. The largest investment in a single fund was $16.0 million at December 31, 2012 and $27.4 million at December 31, 2011. The following table summarizes investments in hedge funds and private equity interests by investment objective and sector at December 31, 2012 and December 31, 2011:



	December 31, 2012				December 31, 2011
Millions	Fair Value		Unfunded Commitments ⁽¹⁾		Fair Value		Unfunded Commitments
Hedge funds
Long/short equity	$	60.3	$	—	$	48.8	$	—
Long/short credit & distressed	22.7		—		32.3		—
Long diversified strategies	1.7		—		16.9		—
Long/short equity REIT	16.0		—		14.5		—
Long/short equity activist	13.6		—		12.3		—
Long bank loan	.3		—		.5		—
Total hedge funds	114.6		—		125.3		—

Private equity funds
Multi-sector	23.3		5.4		26.9		8.2
Energy infrastructure & services	36.3		15.6		28.0		9.9
Distressed residential real estate	15.8		—		27.4		—
Real estate	11.6		3.3		9.5		3.3
Private equity secondaries	10.5		3.1		11.3		4.0
International multi-sector, Europe	5.1		5.0		7.8		4.7
Manufacturing/Industrial	9.9		15.1		6.2		—
Healthcare	4.3		5.4		2.3		7.0
International multi-sector, Asia	.4		2.7		3.6		2.6
Insurance	3.0		41.3		3.5		41.3
Aerospace/Defense/Government	2.8		22.2		—		—
Venture capital	2.2		.3		2.4		.5
Total private equity funds	125.2		119.4		128.9		81.5

Total hedge and private equity funds included in other long-term investments	$	239.8	$	119.4	$	254.2	$	81.5

⁽¹⁾ White Mountains also has unfunded commitments to a tax advantaged federal affordable housing development fund of $5.3 at December 31, 2012.

Redemption of investments in certain 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. The following summarizes the December 31, 2012 fair value of hedge funds subject to restrictions on redemption frequency and advance notice period requirements for investments in active hedge funds:



	Notice Period
Millions Redemption frequency	30-59 days notice		60-89 days notice		90-119 days notice		120+ days notice		Total
Monthly	—		—		—		6.7		6.7
Quarterly	28.4		29.3		8.7		9.9		76.3
Semi-annual	—		21.8		—		—		21.8
Annual	1.7		—		7.8		0.3		9.8
Total	$	30.1	$	51.1	$	16.5	$	16.9	$	114.6

Certain of the hedge fund investments in which White Mountains is invested are no longer active and are in the process of disposing of their underlying investments. Distributions from such funds are remitted to investors as the fund’s underlying investments are liquidated. At December 31, 2012, distributions of $3.3 million were outstanding from these investments. The actual amount of the final distribution remittances remain subject to market fluctuations. The date at which such remittances will be received is not determinable at December 31, 2012.

White Mountains has also submitted redemption requests for certain of its investments in active hedge funds. At December 31, 2012, redemptions of $1.9 million are outstanding and are subject to market fluctuations. Redemptions are recorded as receivables when approved by the hedge funds and no longer subject to market fluctuations.

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 provide an option to extend the lock-up period at either the sole discretion of the fund manager or upon agreement between the fund and the investors.

At December 31, 2012, investments in private equity funds were subject to lock-up periods as follows:



Millions	1-3 years		3 – 5 years		5 – 10 years	>10 years		Total
Private Equity Funds — expected lock-up period remaining	$	24.6	$	11.7	79.0	$	9.9	125.2

Rollforward of Fair Value Measurements by Level

White Mountains uses quoted market prices where available as the inputs to estimate fair value for its investments in active markets. Such measurements are considered to be either Level 1 or Level 2 measurements, depending on whether the quoted market price inputs are for identical securities (Level 1) or similar securities (Level 2). Level 3 measurements for fixed maturity investments, common equity securities, convertible fixed maturity investments and other long-term investments at December 31, 2012 and 2011 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 tables summarize the changes in White Mountains’ fair value measurements by level for the year ended December 31, 2012 and 2011:



							Level 3 Investments
Millions	Level 1 Investments			Level 2 Investments			Fixed Maturities			Common equity securities			Convertible fixed maturities		Other long-term investments			Total
Balance at January 1, 2012	$	1,879.1		$	6,088.2		$	78.9		$	32.3		$	—	$	268.3		$	8,346.8		⁽¹⁾⁽²⁾
Total realized and unrealized gains (losses)	46.8			53.6			8.7			12.4			—		(3.3		)	118.2
Foreign currency gains (losses) in OCI and other revenue	8.9			81.9			.8			.2			—		3.7			95.5
Amortization/Accretion	(.8		)	(48.0		)	(.8		)	—			—		—			(49.6		)
Purchases	7,266.5			4,927.1			144.4			3.1			—		39.4			12,380.5
Sales	(7,214.8		)	(5,937.0		)	(99.4		)	(10.1		)	—		(48.8		)	(13,310.1		)
Transfers in	—			62.4			22.1			—			—		—			84.5
Transfers out	—			(22.1		)	(61.8		)	(.6		)	—		—			(84.5		)
Balance at December 31, 2012	$	1,985.7		$	5,206.1		$	92.9		$	37.3		$	—	$	259.3		$	7,581.3		⁽¹⁾⁽²⁾

⁽¹⁾ Excludes carrying value of $33.0 and $35.0 at January 1, 2012 and December 31, 2012 associated with other long-term investments accounted for using the equity method and $(0.1) at December 31, 2012 related to currency forward contracts.

⁽²⁾ Carrying value includes $111.8 and $338.1 at January 1, 2012 and December 31, 2012 that is classified as assets held for sale relating to discontinued operations.



							Level 3 Investments
Millions	Level 1 Investments			Level 2 Investments			Fixed Maturities			Common equity securities			Convertible fixed maturities		Other long-term investments				Total
Balance at January 1, 2011	$	1,894.4		$	5,477.4		$	128.4		$	71.2		$	—	$	330.2		⁽¹⁾	$	7,901.6		⁽¹⁾
Total realized and unrealized (losses) gains	(1.4		)	113.2			(8.1		)	(4.7		)	—		19.5				118.5
Foreign currency gains (losses) in OCI and other revenue	4.6			(76.1		)	(4.4		)	1.6			—		(5.0		)		(79.3		)
Amortization/Accretion	2.3			(54.2		)	0.3			—			—		—				(51.6		)
Purchases	10,653.6			8,905.6			213.7			19.7			—		58.4				19,851.0
Sales	(10,674.4		)	(8,528.7		)				(55.5		)	—		(134.8		)		(19,393.4		)
Transfers in	—			269.2			18.2			—			—		—				287.4
Transfers out	—			(18.2		)	(269.2		)	—			—		—				(287.4		)
Balance at December 31, 2011	$	1,879.1		$	6,088.2		$	78.9		$	32.3		$	—	$	268.3		⁽¹⁾	$	8,346.8		⁽¹⁾⁽²⁾

⁽¹⁾Excludes carrying value of $33.0 and $41.9 at December 31, 2011 and January 1, 2011 associated with other long-term investment limited partnerships accounted for using the equity method.

⁽²⁾ Carrying value includes $111.8 that is classified as assets held for sale relating to AutoOne discontinued operations.

Fair Value Measurements — transfers between levels

During 2012, two fixed maturity securities classified as Level 3 measurements in the prior period was recategorized as Level 2 measurements because quoted market prices for similar securities that were considered reliable and could be validated against an alternative source were available at December 31, 2012. These measurements comprise “Transfers out” of Level 3 and “Transfers in” to Level 2 of $61.8 million for the period ended December 31, 2012. For the year-ended December 31, 2012, “Transfers out” of Level 2 and “Transfers in” to Level 3 fixed maturity investments of $22.1 million consists of one asset-backed security for which the estimated fair value was determined using a single broker quote.

At December 31, 2011, ten fixed maturity securities which had been classified as Level 3 measurements at January 1, 2011 were recategorized as Level 2 measurements because quoted market prices for similar securities that were considered reliable and could be validated against an alternative source were available at December 31, 2011. These measurements comprise “Transfers out” of Level 3 and “Transfers in” to Level 2 of $269.2 million for the period ended December 31, 2011. One security that was classified as a Level 2 investment at January 1, 2011 was priced with unobservable inputs and represents “Transfers in” of $18.2 million in Level 3 investments. The fair value of this security was estimated using industry standard pricing models, in which management selected inputs using its best judgment. The pricing models used by White Mountains use the same valuation methodology for all Level 3 measurements for fixed maturities. The security is considered to be Level 3 because the measurements are not directly observable. At December 31, 2011, the estimated fair value for this security determined using the industry standard pricing models was $1.6 million less than the estimated fair value based upon quoted prices provided by a third party pricing vendor.

Significant Unobservable Inputs

The following summarizes significant unobservable inputs used in estimating the fair value of investment securities classified within Level 3 at December 31, 2012:



($ in Millions)	December 31, 2012
Description	Fair Value	Rating	Valuation Technique(s)	Unobservable Input
Asset-backed securities ⁽¹⁾	$22.1	AA+	Broker pricing	Broker quote
Preferred Stock ⁽¹⁾	$70.8	NR	Discounted cash flow	Discount yield	7.6	%
Private equity securities	$36.9	NR	Multiple of GAAP book value	Book value multiple	1.0

⁽¹⁾ As of December 31, 2012 each asset type consists of one security.

- Definition

The entire disclosure for investments in certain debt and equity securities.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 320
-Glossary Debt Security
-URI http://asc.fasb.org/extlink&oid=6509901

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 310
-SubTopic 30
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6379141&loc=d3e15032-111544

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 320
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27290-111563

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 320
-Glossary Equity Security
-URI http://asc.fasb.org/extlink&oid=6511694

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 320
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27232-111563

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 320
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6957658&loc=d3e62557-112803

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 320
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27357-111563

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 320
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27161-111563

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 320
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27405-111563

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 115
-Paragraph 3, 19, 20, 21, 22, 137
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

Debt

12 Months Ended

Dec. 31, 2012

Debt Disclosure [Abstract]

Debt

White Mountains’ debt outstanding as of December 31, 2012 and 2011 consisted of the following:



Millions	December 31, 2012			December 31, 2011
2012 OBH Senior Notes, at face value	$	275.0		$	—
Unamortized original issue discount	(.3		)	—
2012 OBH Senior Notes, carrying value	274.7			—
2003 OBH Senior Notes, at face value	—			269.9
Unamortized original issue discount	—			(.1		)
2003 OBH Senior Notes, carrying value	—			269.8
SIG Senior Notes, at face value	400.0			400.0
Unamortized original issue discount	(.6		)	(.7		)
SIG Senior Notes, carrying value	399.4			399.3
WTM Bank Facility	75.0			—
Old Lyme Note	2.1			2.1
Other debt ⁽¹⁾	—			6.3
Total debt	$	751.2		$	677.5

⁽¹⁾ Other debt represents debt of Hamer and Bri-Mar, which are no longer consolidated as of October 1, 2012. See Note 16.

A schedule of contractual repayments of White Mountains’ debt as of December 31, 2012, follows:



Millions	December 31, 2012
Due in one year or less	$	—
Due in two to three years	75.0
Due in four to five years	402.1
Due after five years	275.0
Total	$	752.1

2012 OBH Senior Notes

In November 2012, OneBeacon U.S. Holdings, Inc. (“OBH”), an intermediate holding company of OneBeacon, issued $275 million face value of senior unsecured debt (the "2012 OBH Senior Notes") through a public offering, at an issue price of 99.9% and received $272.9 million of proceeds. The 2012 OBH Senior Notes bear an annual interest rate of 4.6% payable semi-annually in arrears on May 9 and November 9, until maturity on November 9, 2022, and are fully and unconditionally guaranteed as to the payment of principal and interest by OneBeacon Ltd.

OBH incurred $2.8 million in expenses related to the issuance of the 2012 OBH Senior Notes (including $1.8 million in underwriting fees), which have been deferred and are being recognized into interest expense over the life of the 2012 OBH Senior Notes. Taking into effect the amortization of the original issue discount and all underwriting and issuance expenses, the 2012 OBH Senior Notes have an effective yield to maturity of approximately 4.7% per annum.

OBH recorded $1.8 million in interest expense on the 2012 OBH Senior Notes for the year ended December 31, 2012.

2003 OBH Senior Notes

In May 2003, OBH issued $700.0 million face value of senior unsecured debt (the “2003 OBH Senior Notes”) through a public offering, at an issue price of 99.7% and received $693.4 million of proceeds. The 2003 OBH Senior Notes had an annual interest rate of 5.875%, payable semi-annually in arrears on May 15 and November 15, until maturity in May 2013. White Mountains fully and unconditionally guaranteed the payment of principal and interest on the 2003 OBH Senior Notes for a fee equal to 25 basis points per annum on the outstanding principal amount of the 2003 OBH Senior Notes.

OBH incurred $7.3 million in expenses related to the issuance of the 2003 OBH Senior Notes (including $4.5 million in underwriting fees), which were recognized into interest expense over the life of the 2003 OBH Senior Notes. Taking into effect the amortization of the original issue discount and all underwriting and issuance expenses, the 2003 OBH Senior Notes had an effective yield to maturity of approximately 6.0% per annum. OBH recorded $15.1 million, $20.5 million and $29.5 million in interest expense, inclusive of amortization of issuance costs, on the 2003 OBH Senior Notes for the years ended December 31, 2012, 2011 and 2010.

On June 1, 2010, through a cash tender offer, OBH repurchased and retired $156.4 million aggregate principal amount of 2003 OBH Senior Notes for an aggregate purchase price of $165.4 million, which resulted in a $9.6 million loss, including transaction fees.

In addition to the cash tender offer, during 2010 OBH repurchased and retired $29.7 million of outstanding 2003 OBH Senior Notes for $30.8 million, which resulted in a $1.2 million loss and OBIC purchased $1.1 million of outstanding 2003 OBH Senior Notes for $1.1 million.

On April 6, 2011, through a cash tender offer, OBH purchased and retired $150.0 million aggregate principal amount of 2003 OBH Senior Notes for $161.6 million, which resulted in a $12.0 million loss, including transaction fees.

In December 2012, OBH repurchased the remaining $269.8 million of 2003 OBH Senior Notes for $275.9 million, which resulted in a $6.3 million loss, including transaction fees and the write-off of the remaining $0.2 million in unamortized deferred costs and original issue discount at the time of repurchase, in the year ended December 31, 2012.

SIG Senior Notes

In March 2007, SIG issued $400.0 million face value of senior unsecured notes (“SIG Senior Notes”) at an issue price of 99.715% for net proceeds of $392.0 million after taking into effect both deferrable and non-deferrable issuance costs, including the interest rate lock agreement described below. The SIG Senior Notes were issued in an offering that was exempt from the registration requirements of the Securities Act of 1933. The SIG Senior Notes bear an annual interest rate of 6.375%, payable semi-annually in arrears on March 20 and September 20, until maturity in March 2017.

SIG incurred $3.6 million in expenses related to the issuance of the SIG Senior Notes (including $2.6 million in underwriting fees), which have been deferred and are being recognized into interest expense over the life of the SIG Senior Notes.

In anticipation of the issuance of the SIG Senior Notes, SIG entered into an interest rate lock agreement to hedge its interest rate exposure from the date of the agreement until the pricing of the SIG Senior Notes. The agreement was terminated on March 15, 2007 with a loss of $2.4 million, which was recorded in other comprehensive income. The loss is being reclassified from accumulated other comprehensive income over the life of the SIG Senior Notes using the interest method and is included in interest expense. At December 31, 2012, the unamortized balance of the loss remaining in accumulated other comprehensive income was $1.2 million.

Taking into effect the amortization of the original issue discount and all underwriting and issuance expenses, including the interest rate lock agreement, the SIG Senior Notes yield an effective rate of approximately 6.5% per annum. White Mountains recorded $26.2 million of interest expense, inclusive of amortization of issuance costs and the interest rate lock agreement, on the SIG Senior Notes for the years ended December 31, 2012, 2011, and 2010.

WTM Bank Facility

On August 12, 2011, White Mountains entered into a revolving credit facility with a total commitment of $375.0 million (the “WTM Bank Facility”) with a syndicate of lenders administered by Bank of America, N.A. that has a maturity date of August 12, 2015. The WTM Bank Facility replaces the previous revolving credit facility which had a total commitment of $475.0 million. White Mountains recorded $1.7 million, $3.1 million and $1.1 million of interest expense on the WTM Bank Facility for the years ended December 31, 2012, 2011 and 2010.

In December 2012, White Mountains borrowed $150.0 million under the WTM Bank Facility at a blended interest rate of 3.53%. White Mountains repaid $75.0 million in December 2012. As of December 31, 2012, White Mountains had a balance of $75.0 million outstanding under the revolving credit facility, which was fully repaid in January 2013.

The WTM Bank Facility contains various affirmative, negative and financial covenants which White Mountains considers to be customary for such borrowings, including certain minimum net worth and maximum debt to capitalization standards. Failure to meet one or more of these covenants could result in an event of default, which ultimately could eliminate availability under these facilities and result in acceleration of principal repayment on any amounts outstanding.

Old Lyme Note

On December 31, 2011 Sirius Group acquired the runoff loss reserve portfolio of Old Lyme (see Note 2). As part of the acquisition, Sirius Group entered into a five-year $2.1 million purchase note. The principal amount of the purchase note is subject to upward adjustments for favorable loss reserve development (up to 50% of $6.0 million) and downward adjustments for any adverse loss reserve development.

Sierra Note

In connection with its acquisition of the Sierra Insurance Group Companies (“Sierra Group”) on March 31, 2004, Sirius Group entered into a $62.0 million purchase note (the “Sierra Note”), $58.0 million of which may be adjusted over its six-year term to reflect favorable or adverse loss reserve development on the acquired reserve portfolio and runoff of remaining policies in force (mainly workers compensation business), as well as certain other balance sheet protections. Since inception the principal of the Sierra Note had been reduced by $29.0 million as a result of adverse development on the acquired reserves and runoff of unearned premium, which includes $5.2 million and $22.8 million of adverse development which occurred during 2008 and 2005 and $1.9 million and $9.1 million of favorable development in 2010 and 2007. Interest accrued on the unpaid balance of the Sierra Note at a rate of 4.0% per annum, compounded quarterly, and was payable at its maturity.

On October 31, 2008, White Mountains disposed of its remaining interest in the Sierra Group as part of the Berkshire Exchange transaction. White Mountains was still obligated to repay the Sierra Note, but Berkshire provided White Mountains an indemnity, whereby Berkshire reimbursed White Mountains all amounts due under the Sierra Note at its maturity, as adjusted for future reserve development, except for the portion of interest on the Sierra Note that accrued from its issue date through December 31, 2007, plus interest on this accrued amount through the date of repayment.

The Sierra Note matured on March 31, 2010. However, the final amount due was in dispute with respect to the amount of loss reserve development. On September 15, 2010, White Mountains paid Sierra the undisputed amounts owed of $42.8 million on the Sierra Note which consisted of $33.0 million for the principal repayment and $9.8 million for accrued interest. Berkshire reimbursed White Mountains $36.7 million, which consisted of the $33.0 million principal balance and $3.7 million for accrued interest.

During the fourth quarter of 2011, the dispute was settled through arbitration. White Mountains paid additional interest accrued on the Sierra Note and recognized $5.5 million of interest expense.

Atlantic Specialty Note

In connection with its acquisition of Atlantic Specialty Insurance Company on March 31, 2004, OneBeacon issued a $20.0 million ten-year note to the seller (the “Atlantic Specialty Note”). The note accrued interest at a rate of 5.2%, except that the outstanding principal amount in excess of $15.0 million accrued interest at a rate of 3.6%. In 2010, OneBeacon repaid the remaining $14.0 million outstanding principal on the note.

Debt Covenants

At December 31, 2012, White Mountains was in compliance with all of the covenants under the WTM Bank Facility, the 2012 OBH Senior Notes and the SIG Senior Notes.

Interest

Total interest expense incurred by White Mountains for its indebtedness was $44.8 million, $55.2 million and $57.3 million in 2012, 2011 and 2010. Total interest paid by White Mountains for its indebtedness was $44.6 million, $59.0 million, and $64.1 million in 2012, 2011 and 2010.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References + Details

Income Taxes

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Abstract]

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 Company and its Bermuda domiciled subsidiaries would be exempt from such tax until March 31, 2035, pursuant to the Bermuda Exempted Undertakings Tax Protection Act of 1966. The Company has subsidiaries and branches that operate in various other jurisdictions around the world that are subject to tax in the jurisdictions in which they operate. The jurisdictions in which the Company’s subsidiaries and branches are subject to tax are Australia, Belgium, Canada, Germany, Gibraltar, Luxembourg, the Netherlands, Singapore, Sweden, Switzerland, the United Kingdom and the United States.

The total income tax benefit (expense) for the years ended December 31, 2012, 2011 and 2010 consisted of the following:



	Year Ended December 31,
Millions	2012			2011			2010
Current tax benefit (expense):
U.S. federal	$	8.2		$	36.3		$	52.4
State	(3.4		)	(2.4		)	(2.2		)
Non-U.S.	(5.9		)	5.1			(9.1		)
Total current tax benefit (expense)	(1.1		)	39.0			41.1
Deferred tax benefit (expense):
U.S. federal	(55.5		)	(43.7		)	(74.3		)
State	—			—			—
Non-U.S.	72.3			114.7			3.6
Total deferred tax benefit (expense)	16.8			71.0			(70.7		)
Total income tax benefit (expense)	$	15.7		$	110.0		$	(29.6	)

Effective Rate Reconciliation

A reconciliation of taxes calculated using the 35% U.S. statutory rate (the tax rate at which the majority of White Mountains’ worldwide operations are taxed) to the income tax (expense) benefit on pre-tax income follows:



	Year Ended December 31,
Millions	2012			2011			2010
Tax (expense) benefit at the U.S. statutory rate	$	(92.0	)	$	(34.3	)	$	(66.2	)
Differences in taxes resulting from:
Tax rate change enacted in Sweden	65.4			—			—
Non-U.S. earnings, net of foreign taxes	43.0			6.2			22.8
Change in valuation allowance	(14.1		)	128.2			2.6
Tax rate change enacted in Luxembourg	7.2			1.2			2.8
Purchase of subsidiaries	5.1			—			4.5
Tax exempt interest and dividends	3.1			2.9			2.3
Withholding tax	(2.9		)	.2			(.2		)
Tax reserve adjustments	(1.3		)	4.3			(2.8		)
Sale of subsidiaries	—			—			4.2
Other, net	2.2			1.3			.4
Total income tax benefit (expense) on pre-tax income	$	15.7		$	110.0		$	(29.6	)

In 2012, new tax legislation was enacted in Sweden, which was effective January 1, 2013, that reduces the corporate tax rate from 26.3% to 22.0%. This resulted in a reduction of $65.4 million in Sirius Group’s deferred tax liabilities in Sweden.

The non-U.S. component of pre-tax income was $250.0 million, $65.4 million and $74.4 million for the years ended December 31, 2012, 2011 and 2010.

Tax Payments and Receipts

Net income tax payments to (receipts from) national governments (primarily the United States) totaled $17.5 million, $12.5 million, and $(47.0) million for the years ended December 31, 2012, 2011 and 2010.

Deferred Tax Inventory

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for tax purposes.

An outline of the significant components of White Mountains’ deferred tax assets and liabilities follows:



	December 31,
Millions	2012			2011
Deferred income tax assets related to:
Non-U.S. net operating loss carryforwards	$	509.5		$	503.7
U.S. federal net operating and capital loss carryforwards	165.2			102.7
Loss reserve discount	88.6			114.2
Runoff Transaction	49.3			—
Unearned premiums	45.5			41.2
Incentive compensation	36.8			43.4
Tax credit carryforwards	17.0			13.5
Deferred compensation	10.4			11.4
Pension and benefit accruals	10.3			8.0
Accrued interest	8.0			8.0
Fixed assets	2.8			(.1		)
Sale of AutoOne	—			10.4
Other items	7.7			6.4
Total gross deferred income tax assets	951.1			862.8
Less: valuation allowances	(254.0		)	(232.6		)
Total net deferred income tax assets	697.1			630.2
Deferred income tax liabilities related to:
Safety reserve	326.7			369.6
Net unrealized investment gains	54.2			34.8
Deferred acquisition costs	49.8			48.8
Investment basis difference	21.0			(.9		)
Purchase accounting	9.5			.6
Other items	7.6			5.9
Total deferred income tax liabilities	468.8			458.8
Net deferred tax asset	$	228.3		$	171.4

White Mountains’ deferred tax assets are net of U.S. federal, state, and non-U.S. valuation allowances and, to the extent they relate to non-U.S. jurisdictions, they are shown at year-end exchange rates.

Valuation Allowance

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. It is possible that certain planning strategies or projected earnings in certain subsidiaries may not be feasible to utilize the entire deferred tax asset, which could result in material changes to White Mountains' deferred tax assets and tax expense.

Of the $254.0 million valuation allowance at December 31, 2012, $192.0 million relates to deferred tax assets on net operating losses in Luxembourg subsidiaries (discussed below under “Net Operating Loss and Capital Loss Carryforwards”) and $62.0 million relates to deferred tax assets on U.S. losses and other federal deferred tax benefits. Of the $232.6 million valuation allowance at December 31, 2011, $225.5 million relates to deferred tax assets on net operating losses in Luxembourg subsidiaries (discussed below under “Net Operating Loss and Capital Loss Carryforwards”) and $6.9 million relates to deferred tax assets on U.S. losses and other federal deferred tax benefits.

Luxembourg

During the fourth quarters of 2012 and 2011, White Mountains recorded net tax benefits of $41.3 million and $129.5 million from the net release of valuation allowances against deferred tax assets in Luxembourg-domiciled subsidiaries. These companies had built up substantial deferred tax assets due to net operating loss carryforwards (“NOLs”). The loss carryforwards primarily relate to tax deductible write downs in 2007 and 2008 of investments in U.S. subsidiaries. There were partial valuation allowances on these deferred tax assets in periods prior to the fourth quarter of 2012 and 2011 because the companies did not expect sufficient future taxable income to utilize them.

During the fourth quarter of 2012 and 2011, Sirius Group undertook a series of reorganizations to optimize operational and capital efficiency. As part of the reorganizations, investments and outstanding internal debt instruments were contributed to Luxembourg-domiciled subsidiaries with net operating loss carryforwards. One of the companies, S.I. Holdings (Luxembourg) S.à r.l., (“SI Holdings”) (formerly OneBeacon Holdings (Luxembourg) S.à r.l.), was acquired from OneBeacon on January 24, 2012. As the plan for the Sirius Group to acquire SI Holdings and contribute the notes was in place on December 31, 2011, and this was a transaction between entities under common control, White Mountains accounted for the tax effects of the transaction as if it had occurred in 2011. An investment portfolio was contributed to SI Holdings in January 2013, pursuant to a plan in place on December 31, 2012, that will generate income utilizing the deferred tax asset over an extended period of time. The deferred tax assets for the remaining NOLs at the companies are offset by a valuation allowance as no additional taxable income is expected.

United States

During the fourth quarter 2012, White Mountains recorded tax expense of $37.8 million to establish a valuation allowance against deferred tax assets of Guilford Holdings, Inc. and subsidiaries (“Guilford”), as White Mountains management determined that the strategies supporting the deferred tax assets were no longer feasible to utilize the assets. Guilford consists of service companies that are included in the Other Operations segment.

During the fourth quarter 2012, White Mountains recorded tax expense of $3.9 million to establish a valuation allowance against deferred tax assets related to foreign tax credit carryforwards at Sirius Re Holdings, Inc. and subsidiaries (“SRHI”) that expire in 2016 and 2017. SRHI is no longer expected to generate sufficient taxable income to utilize these credits. SRHI has an additional $4.6 million of foreign tax credits that expire in 2018-2022 that are still expected to be utilized.

During 2012, White Mountains recorded tax expense of $13.7 million to establish valuation allowances against deferred tax assets of BAM and Houston General Insurance Exchange (“Houston General Insurance”) as it is uncertain if these companies will have sufficient taxable income to utilize their deferred tax assets. However, since BAM and Houston General Insurance are mutual insurance companies that are owned by their members, their results do not affect White Mountains’ common shareholders’ equity as they are attributable to non-controlling interests.

Net Operating Loss and Capital Loss Carryforwards

Net operating loss and capital loss carryforwards as of December 31, 2012, the expiration dates and the deferred tax assets thereon are as follows:



	December 31, 2012
Millions	United States			Luxembourg			Sweden		Total
2013	$	—		$	—		$	—	$	—
2014-2018	—			—			—		—
2019-2023	20.2			—			—		20.2
2024-2033	467.0			—			—		467.0
No expiration date	—			1,743.6			.1		1,743.7
Total	487.2			1,743.6			.1		2,230.9
Gross deferred tax asset	165.2			509.5			—		674.7
Valuation allowance	(32.3		)	(192.0		)	—		(224.3		)
Net deferred tax asset	$	132.9		$	317.5		$	—	$	450.4

White Mountains expects to utilize net operating loss carryforwards in Luxembourg of $1,308.5 million but does not expect to utilize the remainder as they belong to companies that are not expected to have sufficient income in the future. These losses primarily relate to tax deductible write-downs in 2007 and 2008 of investments in U.S. subsidiaries held by Luxembourg subsidiaries. Included in the U.S. net operating loss carryforwards are losses of $29.0 million subject to an annual limitation on utilization under Internal Revenue Code Section 382. At December 31, 2012, there were U.S. foreign tax credit carryforwards available of $10.6 million, which begin to expire in 2016. As discussed above, a deferred tax valuation allowance of $3.9 million has been established for these credits. At December 31, 2012, there were U.S. low-income housing tax credit carryforwards available of $4.8 million, which begin to expire in 2031. At December 31, 2012, there were U.S. investment tax credit carryforwards available of $0.2 million, which begin to expire in 2031. Also, at December 31, 2012, there were U.S. alternative minimum tax credit carryforwards of $1.5 million which do not expire.

During 2010, White Mountains International S.à r.l. (“WMI”) received a tax ruling in Luxembourg which allowed it to change its tax functional currency in Luxembourg to the Swedish krona from the euro. Pursuant to the ruling, WMI revalued its NOL carryforwards in Luxembourg using the December 31, 2008 euro/krona exchange rate. This resulted in WMI recording an $11.9 million deferred tax benefit in 2010 for the increase in its NOLs in Luxembourg.

Uncertain Tax Positions

Under ASC 740-10, recognition of the benefit of a given tax position is based upon whether a company determines that it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. In evaluating the more-likely-than-not recognition threshold, White Mountains must presume that the tax position will be subject to examination by a taxing authority with full knowledge of all relevant information. If the recognition threshold is met, then the tax position is measured at the largest amount of benefit that is more than 50% likely of being realized upon ultimate settlement.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:



Millions	Permanent Differences ⁽¹⁾			Temporary Differences ⁽²⁾			Interest and Penalties ⁽³⁾			Total
Balance at January 1, 2010	$	13.9		$	78.7		$	4.3		$	96.9
Changes in prior year tax positions	.5			(8.5		)	1.9			(6.1		)
Tax positions taken during the current year	.4			5.0			—			5.4
Lapse in statute of limitations	—			—			—			—
Settlements with tax authorities	(.3		)	(.1		)	—			(.4		)
Balance at December 31, 2010	14.5			75.1			6.2			95.8
Changes in prior year tax positions	(.9		)	.1			2.0			1.2
Tax positions taken during the current year	—			(20.4		)	—			(20.4		)
Lapse in statute of limitations	(3.4		)	(5.7		)	(1.4		)	(10.5		)
Settlements with tax authorities	(.6		)	—			—			(.6		)
Balance at December 31, 2011	9.6			49.1			6.8			65.5
Changes in prior year tax positions	.5			—			1.4			1.9
Tax positions taken during the current year	—			(20.2		)	—			(20.2		)
Lapse in statute of limitations	—			—			—			—
Settlements with tax authorities	(.4		)	—			(.2		)	(.6		)
Balance at December 31, 2012	$	9.7		$	28.9		$	8.0		$	46.6


⁽¹⁾	Represents the amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate.


⁽²⁾	Represents the amount of unrecognized tax benefits that, if recognized would create a temporary difference between the reported amount

of an item in the Company’s Consolidated Balance Sheet and its tax basis.


⁽³⁾	Net of tax benefit.

If White Mountains determines in the future that its reserves for unrecognized tax benefits on permanent differences and interest and penalties are not needed, the reversal of $17.7 million of such reserves at December 31, 2012 would be recorded as an income tax benefit and would impact the effective tax rate. If White Mountains determines in the future that its reserves for unrecognized tax benefits on temporary differences are not needed, the reversal of $28.9 million of such reserves at December 31, 2012 would not impact the effective tax rate due to deferred tax accounting but would accelerate the payment of cash to the taxing authority. The vast majority of White Mountains’ reserves for unrecognized tax benefits on temporary differences relate to deductions for loss reserves that the timing of the deductions is uncertain.

White Mountains classifies all interest and penalties on unrecognized tax benefits as part of income tax expense. During the years ended December 31, 2012, 2011 and 2010 White Mountains recognized $1.2 million, $0.6 million, $1.9 million in interest (benefit) expense, net of any tax benefit. The balance of accrued interest at December 31, 2012 and 2011 is $8.0 million and $6.8 million, net of any tax benefit.

Tax Examinations

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 2005.

The IRS is conducting an examination of income tax returns for 2005 and 2006 for certain U.S. subsidiaries of OneBeacon. On January 5, 2011, White Mountains received Form 4549-A (Income Tax Discrepancy Adjustments) from the IRS relating to the examination of tax years 2005 and 2006. The estimated total assessment, including interest and utilization of alternative minimum and foreign tax credit carryovers, is $20.8 million. White Mountains disagrees with the adjustments proposed by the IRS and is defending its position. Although the timing of the resolution of these issues is uncertain, it is reasonably possible that the resolution could occur within the next 12 months. An estimate of the range of potential outcomes cannot be made at this time. When ultimately settled, White Mountains does not expect the resolution of this examination to result in a material change to its financial position.

On July 28, 2011, the IRS commenced an examination of the income tax returns for 2007, 2008 and 2009 for certain U.S. subsidiaries of OneBeacon. White Mountains has received proposed adjustments but does not expect the resolution of this examination to result in a material change to its financial position.

On December 15, 2011, the IRS commenced an examination of the income tax returns for 2010 for certain U.S. subsidiaries of AFI. Pursuant to a Stock Purchase Agreement dated as of May 17, 2011 between White Mountains and Allstate, White Mountains is required to indemnify Allstate for any changes in pre-closing taxes. White Mountains does not expect the resolution of this examination to result in a material change to its financial position.

The IRS conducted an examination of income tax returns for 2006 and 2007 for certain U.S. subsidiaries of Sirius Group. On October 26, 2011, the Sirius Group received and signed the IRS Revenue Agent’s Report, which contained no proposed adjustments. The IRS also examined the U.S. income tax return filed by WM Belvaux S.à r.l., a Luxembourg subsidiary, for tax year 2007. On May 3, 2011, the exam was completed with no proposed adjustments.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

+ Details

Derivatives

12 Months Ended

Dec. 31, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives

Variable Annuity Reinsurance

White Mountains has entered into agreements to reinsure death and living benefit guarantees associated with certain variable annuities in Japan. At December 31, 2012, the total guarantee value was approximately ¥230.0 billion (approximately $2.7 billion at exchange rates on that date). The collective account values of the underlying variable annuities were approximately 87% of the guarantee value at December 31, 2012. The following table summarizes the pre-tax operating results of WM Life Re for the years ended December 31, 2012, 2011 and 2010:



	Year Ended December 31,
Millions	2012			2011			2010
Fees, included in other revenues	$	31.8		$	32.5		$	30.2
Change in fair value of variable annuity liability, included in other revenues	312.8			(156.5		)	(223.5		)
Change in fair value of derivatives, included in other revenues	(339.0		)	92.9			127.0
Foreign exchange, included in other revenues	(30.3		)	15.1			21.4
Other investment income and gains (losses)	2.5			(.9		)	(.9		)
Total revenues	(22.2		)	(16.9		)	(45.8		)
Change in fair value of variable annuity death benefit liabilities, included in general and administrative expenses	14.2			(1.8		)	(6.0		)
Death benefit claims paid, included in general and administrative expenses	(5.7		)	(3.8		)	(2.7		)
General and administrative expenses	(5.2		)	(4.7		)	(6.3		)
Pre-tax loss	$	(18.9	)	$	(27.2	)	$	(60.8	)

For the years ended December 31, 2011 and 2010 the change in the fair value of the variable annuity liability included $7.2 million, and $47.7 million of losses associated with changes in projected surrender assumptions. There was no change in projected surrender assumptions in 2012.

All of White Mountains’ variable annuity reinsurance liabilities were classified as Level 3 measurements at December 31, 2012.

The following table summarizes the changes in White Mountains’ variable annuity reinsurance liabilities and derivative instruments for the year ended December 31, 2012, 2011 and 2010:



	Variable Annuity (Liabilities)			Derivative Instruments
Millions	Level 3			Level 3 ⁽¹⁾			Level 2 ⁽¹⁾⁽²⁾			Level 1 ⁽³⁾			Total ⁽⁴⁾
Balance at January 1, 2012	$	(768.5	)	$	247.1		$	39.2		$	4.1		$	290.4
Purchases	—			6.1			—			—			6.1
Realized and unrealized gains (losses)	327.0			(84.0		)	(186.9		)	(68.1		)	(339.0		)
Transfers in (out)	—			—			—			—			—
Sales/settlements	—			(28.7		)	127.2			42.3			140.8
Balance at December 31, 2012	$	(441.5	)	$	140.5		$	(20.5	)	$	(21.7	)	$	98.3



	Variable Annuity (Liabilities)			Derivative Instruments
Millions	Level 3			Level 3 ⁽¹⁾			Level 2 ⁽¹⁾⁽²⁾			Level 1 ⁽³⁾			Total ⁽⁴⁾
Balance at January 1, 2011	$	(610.2	)	$	275.3		$	72.2		$	—		$	347.5
Purchases	—			5.0			—			—			5.0
Realized and unrealized (losses) gains	(158.3		)	14.5			67.7			10.7			92.9
Transfers in (out)	—			—			—			—			—
Sales/settlements	—			(47.7		)	(100.7		)	(6.6		)	(155.0		)
Balance at December 31, 2011	$	(768.5	)	$	247.1		$	39.2		$	4.1		$	290.4



	Variable Annuity (Liabilities)			Derivative Instruments
Millions	Level 3			Level 3 ⁽¹⁾			Level 2 ⁽¹⁾⁽²⁾			Level 1 ⁽³⁾			Total ⁽⁴⁾
Balance at January 1, 2010	$	(380.7	)	$	208.5		$	23.8		$	(38.0	)	$	194.3
Purchases	—			19.4			—			—			19.4
Realized and unrealized (losses) gains	(229.5		)	66.4			80.0			(19.4		)	127.0
Transfers in (out)	—			—			—			—			—
Sales/settlements	—			(19.0		)	(31.6		)	57.4			6.8
Balance at December 31, 2010	$	(610.2	)	$	275.3		$	72.2		$	—		$	347.5

⁽¹⁾ Consists of over-the-counter instruments.

⁽²⁾ Consists of interest rate swaps, total return swaps, foreign currency forward contracts, and bond forwards. Fair value measurement based upon bid/ask pricing quotes for similar instruments that are actively traded, where available. Swaps for which an active market does not exist have been priced using observable inputs including the swap curve and the underlying bond index.

⁽³⁾ Consists of exchange traded equity index, foreign currency and interest rate futures. Fair value measurements based upon quoted prices for identical instruments that are actively traded.

⁽⁴⁾ In addition to derivative instruments, WM Life Re held cash, short-term and fixed maturity investments of , $393.6, $485.3 and $326.0 at December 31, 2012, 2011 and 2010 posted as collateral to its reinsurance counterparties.

The fair value of White Mountains’ variable annuity reinsurance liabilities are estimated using actuarial and capital market assumptions related to the projected discounted cash flows over the term of the reinsurance agreement. Assumptions regarding future policyholder behavior, including surrender and lapse rates, are generally unobservable inputs and significantly impact the fair value estimates. Market conditions including, but not limited to, changes in interest rates, equity indices, market volatility and foreign currency exchange rates as well as the variations in actuarial assumptions regarding policyholder behavior may result in significant fluctuations in the fair value estimates. Generally, the liabilities associated with these guarantees increase with declines in the equity markets, interest rates and currencies against the Japanese yen, as well as with increases in market volatilities. White Mountains uses derivative instruments, including put options, interest rate swaps, total return swaps on bond and equity indices and forwards and futures contracts on major equity indices, currency pairs and government bonds, to mitigate the risks associated with changes in the fair value of the reinsured variable annuity guarantees. The types of inputs used to estimate the fair value of these derivative instruments, with the exception of actuarial assumptions regarding policyholder behavior and risk margins, are generally the same as those used to estimate the fair value of variable annuity liabilities.

The following summarizes quantitative information about significant unobservable inputs associated with the fair value estimates for variable annuity reinsurance liabilities and derivative instruments that have been classified as Level 3 measurements:



	December 31, 2012
($ in Millions) Description	Fair Value		Valuation Technique(s)	Unobservable Input	Range					Weighted Average
Variable annuity benefit guarantee liabilities	$	441.5	Discounted cash flows	Surrenders
				1 year	0.3	%	-	3.0	%	0.5	%
				2 year	0.2	%	-	3.0	%	0.4	%
				3 and more years	0.1	%	-	3.0	%	0.4	%
				Mortality	0.0	%	-	4.8	%	0.9	%
				Foreign exchange volatilities
				1 year	11.3	%	-	12.5	%	12.2	%
				2 year	10.7	%	-	13.2	%	12.1	%
				3 and more years	10.0	%	-	15.4	%	13.1	%
				Index volatilities
				1 year	13.6	%	-	19.3	%	14.5	%
				2 year	17.5	%	-	22.7	%	19.2	%
				3 and more years	19.9	%	-	22.7	%	21.8	%

Foreign Exchange Options	$	76.8	Counterparty valuations, adjusted for unwind quote discount	Adjustment to counterparty valuations	(2.2	)%	-	(7.9	)%	(3.4	)%
			Counterparty valuations, adjusted for unwind quote discount	Adjustment to counterparty valuations

Equity Index Options	$	63.7	Counterparty valuations, adjusted for unwind quote discount	Adjustment to counterparty valuations	(1.1	)%	-	(2.5	)%	(1.5	)%
			Counterparty valuations, adjusted for unwind quote discount	Adjustment to counterparty valuations

The following summarizes realized and unrealized gains (losses) recognized in other revenues for the years ended December 31, 2012, 2011 and 2010 and the carrying values at December 31, 2012 and 2011 by type of instrument:



									Carrying Value
	Year Ended December 31,								December 31,
Millions	2012			2011		2010			2012		2011
Fixed income/interest rate	$	(149.5	)	$	8.9	$	17.6		$	4.3	$	31.1
Foreign exchange	(102.3		)	29.5		144.6			51.3		161.3
Equity	(87.2		)	54.5		(35.2		)	42.7		98.0
Total	$	(339.0	)	$	92.9	$	127.0		$	98.3	$	290.4

WM Life Re enters into both over-the-counter (“OTC”) and exchange traded derivative instruments to economically hedge the liability from the variable annuity benefit guarantee. In the case of OTC derivatives, WM Life Re has exposure to credit risk for amounts that are uncollateralized by counterparties. WM Life Re’s internal risk management guidelines establish net counterparty exposure thresholds that take into account over-the-counter counterparties’ credit ratings. WM Life Re has entered into master netting agreements with certain of its OTC counterparties whereby the collateral provided (held) is calculated on a net basis. Collateral held consists of money-market instruments, carried at amortized cost, which approximates fair value. The OTC derivative contracts are subject to restrictions on liquidation of the instruments and distribution of proceeds under collateral agreements.

The following summarizes the value of collateral provided (held) by WM Life Re and net exposure on OTC derivative instruments recorded within other assets:



Millions	December 31, 2012			December 31, 2011
OTC derivative instruments ⁽¹⁾	$	123.5		$	295.4
Collateral held	(30.6		)	(73.2		)
Collateral provided	119.3			83.0
Net exposure on fair value of OTC instruments	$	212.2		$	305.2

(1)Value of OTC derivative instruments as of December 31, 2012 and 2011 excludes adjustments for

counterparty credit risk of $(3.6) and $(9.1) included in fair value under GAAP.

The following table summarizes uncollateralized amounts due under WM Life Re’s OTC derivative contracts as of December 31, 2012 by counterparty:



Millions	Uncollateralized balance as of December 31, 2012		Standard & Poor’s Rating ⁽¹⁾
Citigroup⁽²⁾	$	54.9	A
Bank of America	49.6		A
Royal Bank of Scotland	34.5		A
JP Morgan Chase ⁽²⁾	30.9		A+
Nomura ⁽²⁾	26.9		BBB+
Barclays	12.3		A+
Goldman Sachs	3.1		A-
Total	$	212.2


⁽¹⁾	Standard & Poor’s ratings as detailed above are: “A+” (Strong, which is the fifth highest of twenty-one creditworthiness ratings),“A” (which is the sixth highest of twenty-one creditworthiness ratings), “A-” (which is the seventh highest of twenty-one creditworthiness ratings), and BBB+ (which is the eighth highest of twenty-one creditworthiness ratings).


⁽²⁾	Collateral provided (held) calculated under master netting agreement.

In addition, WM Life Re held cash and short-term investments posted as collateral to its variable annuity reinsurance counterparty. The total collateral comprises the following:



	Year Ended December 31,
Millions	2012		2011
Cash	$	249.8	$	453.5
Short-term investments	5.1		.6
Fixed maturity investments	138.7		31.2
Total	$	393.6	$	485.3

Forward Contracts

White Mountains is exposed to foreign currency risk related to Sirius International as its functional currency is the Swedish krona (SEK). In addition, Sirius International holds net assets denominated in euros (EUR), British pound sterling (GBP), and U.S. Dollars (USD). Beginning in September 2012, White Mountains entered into forward contracts through a twelve month trial program with a third-party currency specialist manager to determine whether purchasing external forward currency contracts would improve the management of foreign currency exposure at Sirius Group. White Mountains monitors its exposure to foreign currency and adjusts its forward positions within the risk guidelines and ranges established by senior management for each currency, as necessary. While White Mountains actively manages its forward positions, mismatches between movements in foreign currency rates and its forward contracts may result in currency positions being outside the pre-defined ranges and/or foreign currency losses. At December 31, 2012, White Mountains held approximately $31.2 million (SEK 202.8 million) total gross notional value of foreign currency forward contracts.

All of White Mountains’ forward contracts are traded over-the-counter. The fair value of the contracts has been estimated using OTC quotes for similar instruments and accordingly, the measurements have been classified as Level 2 measurements at December 31, 2012.

The following tables summarize the changes in White Mountains’ forward contracts for the year ended December 31, 2012:



Millions	Year ended December 31, 2012
Beginning of period	$	—
Purchases	—
Realized and unrealized gains(losses)	(.3		)
Sales/settlements	.2
End of period	$	(.1	)

The following summarizes realized and unrealized derivative gains (losses) recognized in net realized and unrealized investment gains and the carrying values, included in other long-term investments, at December 31, 2012 by type of currency:



	December 31, 2012
Millions	Gains (Losses)			Carrying Value
USD	$	(.2	)	$	—
SEK	—			—
EUR	(.1		)	(.1		)
GBP	—			—
Currency Translation	—			—
Total	$	(.3	)	$	(.1	)

White Mountains does not hold or provide any collateral for the forward contracts. The following table summarizes the notional amounts and the uncollateralized balances associated with forward currency contracts by counterparty:



	December 31, 2012
Millions	Notional amount		Uncollateralized Balance			S&P Rating ⁽¹⁾
Deutsche Bank	$	11.1	$	—		A+
Barclays Bank London	7.7		(.1		)	A+
HSBC Bank plc	10.1		—			AA-
JP Morgan	1.9		—			A+
Goldman Sachs	.4		—			A-
Total	$	31.2	$	(.1	)

⁽¹⁾ Standard & Poor’s (“S&P”) ratings as detailed above are: “AA-” (Very Strong, which is the sixth highest of twenty-one creditworthiness ratings), “A+” (Strong, which is the seventh highest of twenty-one creditworthiness ratings) and “A” (Strong, which is the eighth highest

of twenty-one creditworthiness ratings).

Earnings Per Share

12 Months Ended

Dec. 31, 2012

Earnings Per Share [Abstract]

Earnings per share

Earnings Per Share

Basic earnings per share amounts are based on the weighted average number of common shares outstanding including unvested restricted shares that are considered participating securities. Diluted earnings per share amounts are based on the weighted average number of common shares including unvested restricted shares and the net effect of potentially dilutive common shares outstanding. The following table outlines the Company’s computation of earnings per share for the years ended December 31, 2012, 2011 and 2010:



	Year Ended December 31,
	2012			2011			2010
Basic and diluted earnings per share numerators (in millions):
Net income attributable to White Mountains’ common shareholders	$	322.4		$	146.3		$	116.6
Allocation of income for participating unvested restricted common shares	(4.3		)	(1.2		)	(1.3		)
Dividends declared on participating restricted common shares ⁽¹⁾	(.1		)	(.1		)	(.1		)
Total allocation to restricted common shares	(4.4		)	(1.3		)	(1.4		)
Net income attributable to White Mountains’ common shareholders, net of restricted share amounts	$	318.0		$	145.0		$	115.2
Undistributed net earnings:
Net income attributable to White Mountains’ common shareholders, net of restricted common share amounts	$	318.0		$	145.0		$	115.2
Dividends declared net of restricted common share amounts ⁽¹⁾	(6.5		)	(7.9		)	(8.7		)
Total undistributed net earnings, net of restricted common share amounts	$	311.5		$	137.1		$	106.5
Basic earnings per share denominators (in thousands):
Total average common shares outstanding during the period	6,799.8			7,881.0			8,548.4
Average unvested restricted common shares ⁽²⁾	(91.1		)	(69.4		)	(97.3		)
Basic earnings per share denominator	6,708.7			7,811.6			8,451.1
Diluted earnings per share denominator (in thousands):
Total average common shares outstanding during the period	6,799.8			7,881.0			8,548.4
Average unvested restricted common shares ⁽²⁾	(91.1		)	(69.4		)	(97.3		)
Average outstanding dilutive options to acquire common shares ⁽³⁾	—			—			.5
Diluted earnings per share denominator	6,708.7			7,811.6			8,451.6
Basic earnings per share (in dollars):
Net income attributable to White Mountains’ common shareholders	$	47.41		$	18.56		$	13.63
Dividends declared and paid	(1.00		)	(1.00		)	(1.00		)
Undistributed earnings	$	46.41		$	17.56		$	12.63
Diluted earnings per share (in dollars)
Net income attributable to White Mountains’ common shareholders	$	47.41		$	18.56		$	13.63
Dividends declared and paid	(1.00		)	(1.00		)	(1.00		)
Undistributed earnings	$	46.41		$	17.56		$	12.63


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


⁽²⁾	Restricted common shares outstanding vest either in equal annual installments or upon a stated date (see Note 11).


⁽³⁾	The diluted earnings per share denominator for the year ended December 31, 2010 includes 1,200 common shares issuable upon exercise of incentive options at an average strike price of $189.31 per common share. The non-qualified options were not included in the diluted earnings per share denominator for any of the periods presented as their inclusion would be anti-dilutive.

Retirement and Postretirement Plans

12 Months Ended

Dec. 31, 2012

Compensation and Retirement Disclosure [Abstract]

Retirement and Postretirement Plans

OneBeacon sponsors qualified and non-qualified, non-contributory, defined benefit pension plans covering substantially all employees who were employed as of December 31, 2001, as well as former employees and retirees that had met the eligibility requirements. Current plans include the OneBeacon qualified pension plan (the “Qualified Plan”) and the OneBeacon non-qualified pension plan (the “Non-qualified Plan”) (collectively the “Plans”). The Plans were frozen and curtailed in 2002 and, as a result, the projected benefit obligation is equal to the accumulated benefit obligation.

The benefits for the Plans are based primarily on years of service and employees’ compensation through December 31, 2002. OneBeacon’s funding policy is consistent with the funding requirements of U.S. federal laws and regulations.

The following tables set forth the obligations and funded status, assumptions, plan assets and cash flows associated with the various pension plans at December 31, 2012 and 2011:



	Pension Benefits
Millions	2012			2011
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	113.0		$	110.2
Service cost	.7			.8
Interest cost	4.7			5.2
Settlement gain	(.7		)	(.6		)
Special termination benefit cost	.6			.8
Assumption changes	11.2			7.7
Actuarial (gain) loss	(.2		)	(.3		)
Benefits and expenses paid with plan assets, net of participant contributions	(7.5		)	(8.4		)
Benefits paid directly by OneBeacon	(2.3		)	(2.4		)
Projected benefit obligation at end of year	$	119.5		$	113.0
Change in plan assets:
Fair value of plan assets at beginning of year	$	120.8		$	133.0
Actual return on plan assets	11.4			(3.8		)
Benefits and expenses paid, net of participant contributions	(7.5		)	(8.4		)
Fair value of plan assets at end of year	$	124.7		$	120.8
Funded status at end of year	$	5.2		$	7.8

The funded status of the consolidated pension plans at December 31, 2012 was $5.2 million, which represents an over-funding of $32.8 million related to the Qualified Plan and an under-funding of $27.6 million related to the Non-qualified Plan. The Non-qualified Plan, which is unfunded, does not hold any assets. OneBeacon has set aside $13.4 million in an irrevocable rabbi trust for the benefit of Non-qualified Plan participants. In accordance with GAAP, the assets held in the rabbi trust are not reflected in the funded status of the consolidated pension plans as presented.

Amounts recognized in the financial statements as of December 31, 2012 and 2011 consist of:



	December 31,
Millions	2012			2011
Net assets of the Qualified Plan recorded in other assets	$	32.8		$	34.3
Net liabilities of the Non-qualified Plan recorded in other liabilities	(27.6		)	(26.5		)
Net amount accrued in the financial statements	$	5.2		$	7.8

Information for the Non-qualified Plan, which had accumulated benefit obligations in excess of plan assets, was as follows:



	December 31,
Millions	2012		2011
Projected benefit obligation	$	27.6	$	26.5
Accumulated benefit obligation	$	27.6	$	26.5
Fair value of plan assets	$	—	$	—

Information for the Qualified Plan, which had accumulated benefit obligations less than plan assets, was as follows:



	December 31,
Millions	2012		2011
Projected benefit obligation	$	91.9	$	86.5
Accumulated benefit obligation	$	91.9	$	86.5
Fair value of plan net assets ⁽¹⁾	$	124.7	$	120.8


⁽¹⁾	Includes receivables related to securities sold, interest and dividends as well as payables related to securities purchased.

The amounts recognized in accumulated other comprehensive income (loss) on a pre-tax basis and before non-controlling interest for the years ended December 31, 2012 and 2011 were as follows:



	December 31,
Millions	2012			2011
Accumulated other comprehensive (loss) income beginning balance	$	(16.7	)	$	.5
Increase (decrease) in accumulated other comprehensive income (loss):
Amortization of net actuarial losses recognized during the year	.8			.5
Net actuarial losses occurring during the year ⁽¹⁾	(5.9		)	(18.2		)
Other adjustments	.6			.5
Accumulated other comprehensive loss ending balance	$	(21.2	)	$	(16.7	)


⁽¹⁾	Net actuarial losses resulted from a decrease in investment returns on plan assets in the year ended December 31, 2011 and changes in assumptions in estimating the projected benefit obligation in the years ended December 31, 2012 and 2011.

During 2012, OneBeacon expects $0.9 million will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost. The components of net periodic benefit cost for the years ended December 31, 2012, 2011 and 2010 were as follows:



	Year Ended December 31,
Millions	2012			2011			2010
Service cost	$	.7		$	.8		$	.8
Interest cost	4.7			5.2			6.0
Expected return on plan assets	(6.9		)	(7.6		)	(7.3		)
Amortization of unrecognized loss	$	.8		$	.5		$	.6
Net periodic pension (income) cost before settlements, curtailments and special termination benefits	$	(.7	)	$	(1.1	)	$	.1
Settlement gain (loss)	.6			.5			(.1		)
Special termination benefits expense ⁽¹⁾	.6			.8			1.9
Total net periodic benefit cost	$	.5		$	.2		$	1.9


⁽¹⁾	Special termination benefits represent additional payments made from the Qualified Plan to certain vested participants when their employment was terminated due to a reduction in force.

Assumptions

The weighted average discount rate assumptions used to determine benefit obligations was 3.64% and 4.38% at December 31, 2012 and 2011. The weighted average assumptions used to determine net periodic benefit cost included a 4.38% discount rate and 5.75% expected long-term rate of return on plan assets for the year ended December 31, 2012. The weighted average assumptions used to determine net periodic benefit cost included a 4.94% discount rate and 5.75% expected long-term rate of return on plan assets for the year ended December 31, 2011.

OneBeacon’s discount rate assumptions used to account for the Plans reflect the rates at which the benefit obligations could be effectively settled. For 2012 and 2011, in addition to consideration of published yields for high quality long-term corporate bonds, U.S. Treasuries and insurance company annuity contract pricing, consideration was given to a cash flow matching analysis.

OneBeacon performed an analysis of expected long-term rates of return based on the allocation of its Qualified Plan assets at December 31, 2012 and 2011 to develop expected rates of return for 2012 and 2011 for each significant asset class or economic indicator. A range of returns was developed based both on forecasts and on broad market historical benchmarks for expected return, correlation, and volatility for each asset class.

Plan Assets

The majority of the Qualified Plans’ assets are managed by Prospector Partners, LLC (“Prospector”), a related party (see Note 18). The investment policy places an emphasis on preserving invested assets through a diversified portfolio of high-quality income producing investments and equity investments.

The investment management process integrates the risks and returns available in the investment markets with the risks and returns available to the Qualified Plan in establishing the proper allocation of invested assets. The asset classes include fixed maturity, equity, convertible fixed maturities, and cash and short-term investments. Fixed maturity and convertible fixed maturities include bonds, convertible fixed maturities and convertible preferred stocks of companies from diversified industries. Equity securities primarily include investments in large-cap and mid-cap companies primarily located in the United States. Cash and short-term investments include registered investment companies and common/collective trust funds.

The factors examined in establishing the appropriate investment mix include the outlook for risk and return in the various investment markets and sectors and the long-term need for capital growth.

The Qualified Plan’s investments are stated at fair value. Many factors are considered in arriving at fair market value. In general, fixed maturity investments such as corporate bonds and government securities are valued based on yields currently available on comparable securities of issuers with similar credit ratings. Shares of common and preferred stock are valued at quoted market prices when available. Convertible fixed maturities are valued based on quoted market prices, analysis of listed markets and use of sensitivity analyses. Registered investment companies are valued at the net asset value as reported by the fund at year-end.

The fair value of the Qualified Plan’s assets and their related inputs at December 31, 2012 by asset category were as follows:



	December 31, 2012								December 31, 2011
Millions	Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
Fixed maturity investments	$	1.9	$	—	$	1.9	$	—	$	2.4	$	—	$	2.4	$	—
Common equity securities	79.5		79.5		—		—		72.2		72.2		—		—
Convertible fixed maturities	34.5		—		34.5		—		42.8		—		42.8		—
Cash and short-term investments	8.1		8.1		—		—		3.1		3.1		—		—
Total	$	124.0	$	87.6	$	36.4	$	—	$	120.5	$	75.3	$	45.2	$	—

There were no transfers between Levels 1, 2 or 3 during the years ended December 31, 2012 or 2011.

The Qualified Plan’s asset allocations at December 31, 2012 and 2011, by asset category were as follows:



	Plan Assets at December 31,
Asset Category	2012		2011
Fixed maturity investments	1.5	%	2.0	%
Common equity securities	64.2	%	59.9	%
Convertible fixed maturities	27.8	%	35.5	%
Cash and short-term investments	6.5	%	2.6	%
Total	100.0	%	100.0	%

As described above, the Qualified Plan’s investment securities are exposed to various risks such as interest rate, market, and credit risks. Market prices of common equity securities, in general, are subject to fluctuations which would cause the amount to be realized upon sale or exercise of the instruments to differ significantly from the current reported value. The fluctuations may result from perceived changes in the underlying economic characteristics of the investee, the relative price of alternative investments, general market conditions and supply and demand imbalances for a particular security. Increases and decreases in prevailing interest rates generally translate into decreases and increases in fair values of fixed maturity and convertible fixed maturity investments, respectively. Additionally, fair values of interest rate sensitive instruments may be affected by the creditworthiness of the issuer, prepayment options, relative values of alternative investments, the liquidity of the instrument and other general market conditions.

Cash Flows

OneBeacon does not expect to make a contribution to its Qualified Plan in 2013. OneBeacon anticipates contributing $2.4 million to the Non-qualified Plan, for which OneBeacon has assets held in a rabbi trust.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:



Millions	Expected Benefit Payments
2013	$	5.2
2014	5.5
2015	5.8
2016	6.0
2017	6.2
2018-2022	35.0

Other Benefit Plans

OneBeacon sponsors an employee savings plan (defined contribution plan) covering the majority of its employees. The contributory plan provides qualifying employees with matching contributions of 50% up to the first six percent of salary (subject to U.S. federal limits on allowable contributions in a given year). Total expense for the plan was $2.8 million, $3.0 million and $3.8 million in 2012, 2011 and 2010.

OneBeacon’s employee stock ownership plan (“ESOP”) provides all of its participants with an annual base contribution in common shares equal to 3% of their salary, up to the applicable Social Security wage base ($110,100 for 2012). Additionally, those participants not otherwise eligible to receive certain other OneBeacon benefits can earn a variable contribution of up to 6% of their salary, subject to the applicable IRS annual covered compensation limits ($250,000 for 2012) and contingent upon OneBeacon’s performance. In April 2007, the ESOP was merged into the 401(k) Plan to form the OneBeacon 401(k) Savings and ESOP Plan (“KSOP”). White Mountains recorded $4.8 million, $6.3 million and $3.0 million in compensation expense to pay benefits and allocate common shares to participant’s accounts for the years ended 2012, 2011 and 2010.

OneBeacon had a post-employment benefit liability, which primarily relates to disability coverage for former employees, of $7.1 million and $6.7 million at December 31, 2012 and 2011.

Sirius Group sponsors an employee savings plan (defined contribution plan) covering the majority of its U.S. employees. The contributory plan provides qualifying employees with matching contributions of 100% up to the first two percent and 50% of the next four percent of salary (subject to U.S. federal limits on allowable contributions in a given year). Total expense for the plan was $1.0 million, $1.1 million and $1.0 million in 2012, 2011 and 2010.

Sirius Group provides all of its participants with a variable contribution up to 7% of their salary, contingent upon Sirius Group’s performance.

Sirius Group funds other governmental pension plans and other employee savings plans in various countries for its global employees. The expense for those plans totaled $7.5 million, $9.6 million and $8.1 million in 2012, 2011 and 2010.

- Definition

The entire disclosure for pension and other postretirement benefits.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 715
-URI http://asc.fasb.org/topic&trid=2235017

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Implementation Guide (Q and A)
-Number FAS88
-Paragraph 63
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 5
-Subparagraph b
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 106
-Paragraph 518
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 5
-Subparagraph a
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Emerging Issues Task Force (EITF)
-Number 03-2
-Paragraph 8
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 87
-Paragraph 264
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Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 5
-Subparagraph q
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 8
-Subparagraph m
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 132R
-Paragraph 5, 6, 7, 8
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 158
-Paragraph 7, 21, 22
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Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Staff Position (FSP)
-Number FAS106-2
-Paragraph 20, 21, 22
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

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-Name Accounting Principles Board Opinion (APB)
-Number 30
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+ Details

Employee Share-Based Incentive Compensation Plans

12 Months Ended

Dec. 31, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Employee Share-Based Incentive Compensation Plans

White Mountains’ share-based incentive compensation plans are designed to incentivize key employees and service providers 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. White Mountains accomplishes this by emphasizing highly variable long-term compensation that is contingent on performance over a number of years rather than entitlements. White Mountains expenses all its share-based compensation. As a result, White Mountains’ calculation of its owners’ returns includes the expense of all outstanding share-based compensation awards.

Incentive Compensation Plans

White Mountains’ 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 service providers of White Mountains. The WTM Incentive Plan was adopted by the Board, was approved by the Company’s sole shareholder in 1985 and was subsequently amended by its shareholders in 1995, 2001, 2003, 2005 and 2010. Share-based incentive awards that may be granted under the plan include performance shares, restricted shares, performance units, incentive stock options and non-qualified stock options (“Non-Qualified Options”). 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 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 or by deferral into certain non-qualified compensation plans of White Mountains. Compensation expense is recognized on a pro rata basis over the vesting period of the awards.

The OneBeacon Long-Term Incentive Plan (the “OneBeacon Incentive Plan”) provides for grants to key employees of OneBeacon Ltd various types of share-based incentive awards, including performance shares, restricted shares, restricted stock units and Non-Qualified Options.

The Sirius Group Performance Plan provides for granting phantom White Mountains performance shares (the “WTM Phantom Share Plan”) to certain key employees of Sirius Group. Beginning with the 2011-2013 performance cycle, employees of Sirius Group were granted performance shares from the WTM Incentive Plan. The performance goals for full payment of performance shares issued under these plans are identical to those of the WTM Incentive Plan. Performance shares earned under the WTM Phantom Share Plan are typically paid in cash but could be paid in common shares or by deferral into certain non-qualified compensation plans of White Mountains. Compensation expense is recognized on a pro rata basis over the vesting period of the awards.

White Mountains offers certain types of share-based compensation under qualified retirement plans. The defined contribution plans of OneBeacon and Sirius Group (the “401(k) Plans”) offer its participants the ability to invest their balances in several different investment options, including the Company’s or OneBeacon’s common shares. OneBeacon’s employee stock ownership plan (“ESOP”) is a OneBeacon-funded benefit plan that provides all of its participants with an annual base contribution in common shares equal to 3% of their salary, up to the applicable Social Security wage base ($110,100 for 2012). Additionally, those participants not otherwise eligible to receive certain other OneBeacon benefits can earn a variable contribution of up to 6% of their salary, subject to the applicable IRS annual covered compensation limits ($250,000 for 2012) and contingent upon OneBeacon’s performance. In April 2007, the ESOP was merged into the 401(k) Plan to form the OneBeacon 401(k) Savings and ESOP Plan (“KSOP”). Sirius Group’s profit sharing plan is a Sirius Group-funded benefit plan that provides all of its participants with a variable contribution up to 7% of their salary, contingent upon Sirius Group’s performance.

Performance Shares

Performance shares are designed to reward company-wide performance. The level of payout ranges from zero to two times the number of shares initially granted, depending on White Mountains’ financial performance. Performance shares become payable at the conclusion of a performance cycle (typically three years) if pre-defined financial targets are met.

The principal performance measure used for determining performance share payouts is after-tax growth in White Mountains’ intrinsic business value per share. The Compensation Committee historically has considered the growth in intrinsic business value per share to be based equally on the growth of economic value per share and growth in adjusted book value per share, both inclusive of dividends. Economic value is calculated by adjusting the GAAP book value per share for differences between the GAAP carrying values of certain assets and liabilities and White Mountains’ estimate of their underlying economic values (for example, the time value discount in loss reserves).

The following summarizes performance share activity for the years ended December 31, 2012, 2011 and 2010 for performance shares granted under the WTM Incentive Plan and the WTM Phantom Share Plan:



	Year Ended December 31,
	2012					2011					2010
Millions, except share amounts	Target Performance Shares Outstanding		Accrued Expense			Target Performance Shares Outstanding		Accrued Expense			Target Performance Shares Outstanding		Accrued Expense
Beginning of period	150,064		$	66.1		163,184		$	29.4		172,454		$	12.2
Shares paid or expired ⁽¹⁾	(68,357	)	(58.3		)	(51,131	)	—			(49,127	)	—
New grants	38,432		—			37,675		—			47,880		—
Assumed forfeitures and cancellations ⁽²⁾	(782	)	.6			336		(.9		)	(8,023	)	(.7		)
Expense recognized	—		21.0			—		37.6			—		17.9
Ending December 31,	119,357		$	29.4		150,064		$	66.1		163,184		$	29.4


⁽¹⁾	WTM performance share payments in 2012 for the 2009-2011 performance cycle ranged from 147% to 155% of target. At December 31, 2012, White Mountains paid $9.9 as a partial payment for the 2010-2012 performance cycle. There were no payments made in 2011 and 2010 for the 2008-2010 and 2007-2009 performance cycles; those performance shares did not meet the threshold performance goals and expired.


⁽²⁾	Amounts include changes in assumed forfeitures, as required under GAAP.

For the 2009-2011 performance cycle, the Company issued common shares for 9,577 performance shares earned and all other performance shares earned were settled in cash.

If all outstanding performance shares had vested on December 31, 2012, the total additional compensation cost to be recognized would have been $21.1 million, based on accrual factors at December 31, 2012 (common share price and payout assumptions).

Performance shares granted under the WTM Incentive Plan

The following table summarizes performance shares outstanding and accrued expense for performance shares awarded under the WTM Incentive Plan at December 31, 2012 for each performance cycle:



Millions, except share amounts	Target WTM Performance Shares Outstanding		Accrued Expense
Performance cycle:
2012 – 2014	37,977		$	7.6
2011 – 2013	37,130		12.7
2010 – 2012	42,320		7.3
Sub-total	117,427		27.6
Assumed forfeitures	(2,935	)	(.8		)
Total at December 31, 2012	114,492		$	26.8

The targeted performance goal for full payment of outstanding performance shares granted under the WTM Incentive Plan to non-investment personnel for the 2012-2014 performance cycles is an 8% growth in intrinsic business value per share. Growth of 2% or less would result in no payout and growth of 14% or more would result in a payout of 200%.

The targeted performance goal for full payment of outstanding performance shares granted under the WTM Incentive Plan to non-investment personnel for the 2011-2013 performance cycles is a 10% growth in intrinsic business value per share. Growth of 3% or less would result in no payout and growth of 17% or more would result in a payout of 200%.

The targeted performance goal for full payment of outstanding performance shares granted under the WTM Incentive Plan to non-investment personnel for the 2010-2012 performance cycles is an 11% growth in intrinsic business value per share. Growth of 4% or less would result in no payout and growth of 18% or more would result in a payout of 200%.

For investment personnel, the targeted performance goal for full payment of outstanding performance shares granted under the WTM Incentive Plan is based one-third on growth in intrinsic business value per share (as described above), one-third on achieving a total return on invested assets as measured against metrics based on U.S. Treasury Note returns and one-third on achieving a total return on invested assets as measured against metrics based on the Barclays U.S. Intermediate Aggregate Index returns.

For Prospector Partners, the targeted performance goal for full payment of outstanding performance shares granted under the WTM Incentive Plan is based equally on growth in intrinsic business value per share (as described above) and achieving a total return on invested assets as measured against metrics based on U.S. Treasury Note returns.

Phantom Performance Shares granted under the WTM Phantom Share Plan

The following summarizes phantom performance shares outstanding and accrued expense for awards made under the WTM Phantom Share Plan at December 31, 2012 for each performance cycle:



Millions, except share amounts	Target WTM Phantom Performance Shares Outstanding		Accrued Expense
Performance cycle:
2012 – 2014 ⁽¹⁾	—		$	—
2011 – 2013 ⁽¹⁾	—		—
2010 – 2012	4,990		2.6
Sub-total	4,990		2.6
Assumed forfeitures	(125	)	—
Total at December 31, 2012	4,865		$	2.6

⁽¹⁾ All performance shares for the 2011–2013 and 2012–2014 performance cycles were granted from the WTM Incentive Plan.

The performance goals for full payment of performance shares issued under the WTM Phantom Share Plan are identical to those of the WTM Incentive Plan.

Restricted Shares

The following outlines the unrecognized compensation cost associated with the outstanding restricted share awards under the WTM Incentive Plan for the years ended December 31, 2012, 2011 and 2010:



	Year Ended December 31,
	2012					2011					2010
Millions, except share amounts	Restricted Shares		Unamortized Issue Date Fair Value			Restricted Shares		Unamortized Issue Date Fair Value			Restricted Shares		Unamortized Issue Date Fair Value
Non-vested,
Beginning of period	72,000		$	13.3		46,250		$	14.1		91,900		$	23.7
Issued	32,160		15.7			27,250		9.9			19,750		6.7
Vested	(32,945	)	—			(1,500	)	—			(65,150	)	—
Forfeited	(1,305	)	(.2		)	—		—			(250	)	(.1		)
Modified ⁽¹⁾	—		—			—		—			—		(3.3		)
Expense recognized	—		(12.0		)	—		(10.7		)	—		(12.9		)
Non-vested at December 31,	69,910		$	16.8		72,000		$	13.3		46,250		$	14.1

⁽¹⁾

During the first quarter of 2007, White Mountains issued 15,000 restricted shares to the Company’s Chairman and CEO in connection with his hiring that would vest in the event of a change in control of the Company before January 20, 2012. During 2010, the Compensation Committee modified the vesting terms so that the 15,000 restricted shares time vest in three equal annual installments beginning on January 20, 2013. During 2012, the Compensation Committee accelerated the vesting date of the first installment from January 20, 2013 to December 31, 2012.

During the third quarter of 2012, White Mountains issued 2,500 restricted shares that vest on January 1, 2015 and 1,200 restricted shares that vest on July 16, 2015. During the first quarter of 2012, White Mountains issued 25,460 restricted shares that vest on January 1, 2015 and 3,000 restricted shares that vest in two equal annual installments beginning in February 2014. During the second quarter of 2011, White Mountains issued 250 restricted shares that vest on January 1, 2014. During the first quarter of 2011, White Mountains issued 27,000 restricted shares that vest on January 1, 2014. During the first quarter of 2010, White Mountains issued 19,750 restricted shares that vested on December 31, 2012. The unrecognized compensation cost associated with outstanding restricted share awards at December 31, 2012 is expected to be recognized ratably over the remaining vesting periods.

Stock Options

Non-Qualified Options

In January 2007, the Company issued 200,000 seven-year Non-Qualified Options to the Company’s Chairman and CEO (the “original grant”) that vest in equal annual installments over five years and that had an initial exercise price of $650 per common share that escalated at an annual rate of 5% less the annual regular dividend rate (the “Escalator”). The fair value of the Non-Qualified Options was $27.2 million at the grant date. The fair value of the Non-Qualified Options at the grant date was estimated using a closed-form option model using an expected volatility assumption of 29.7%, a risk-free interest rate assumption of 1.1% (or 4.7% less the Escalator), a forfeiture assumption of 0%, an expected dividend rate assumption of 1.4% and a term assumption of seven years.

At the 2010 Annual General Meeting of Members held on May 26, 2010 (the “modification date”), the Company’s shareholders approved the following amendments to the Non-Qualified Options (the “amended grant”): (1) extend the term of the Non-Qualified Options by three years to January 20, 2017; (2) freeze the exercise price at $742 per common share, the exercise price on February 24, 2010; (3) extinguish 75,000 of the 200,000 Non-Qualified Options; and (4) limit the potential in-the-money value of the Non-Qualified Options in excess of $100 million to 50% of the amount in excess of $100 million. The fair value of the amended grant was $4.4 million at the modification date, while the fair value of the original grant as of the modification date was $3.5 million. The fair value of the amended grant was estimated using a closed-form option model using an expected volatility assumption of 34.0%, a risk-free interest rate assumption of 2.43%, a forfeiture assumption of 0%, an expected dividend rate assumption of 0.32% and a term assumption of 6.67 years. The fair value of the original grant as of the modification date was estimated using a closed-form option model using an expected volatility assumption of 41.0%, a risk-free interest rate assumption of 1.57%, a forfeiture assumption of 0%, an expected dividend rate assumption of 0.32% and a term assumption of 3.67 years.

Prior to the modification, $18.2 million of the original grant fair value had been amortized into income. In connection with the modification, White Mountains recognized $8.7 million of the remaining $9.0 million of unamortized option expense related to the original grant. As of the first quarter in 2011, the Non-Qualified Options have been fully amortized.

For the years ended December 31, 2011 and 2010 White Mountains recognized a total of $0.1 million and $11.9 million of expense related to amortizing the Non-Qualified Options.

Share-Based Compensation Based on OneBeacon Ltd. Common Shares

OneBeacon Performance Shares

The following summarizes activity for the years ended December 31, 2012, 2011 and 2010 for OneBeacon performance shares granted under the OneBeacon Incentive Plan:



	Year Ended December 31,
	2012					2011					2010
Millions, except share amounts	Target Performance Shares Outstanding		Accrued Expense			Target Performance Shares Outstanding		Accrued Expense			Target Performance Shares Outstanding		Accrued Expense
Beginning of period	642,667		$	9.7		1,464,295		$	18.5		2,224,215		$	15.1
Payments and deferrals⁽¹⁾⁽²⁾	(258,901	)	(7.7		)	(936,150	)	(10.5		)	(889,594	)	(4.6		)
New awards	181,290		—			194,900		—			270,691		—
Forfeitures and cancellations ⁽³⁾	(1,866	)	—			(80,378	)	(.5		)	(141,017	)	(2.2		)
Expense recognized	—		(.8		)	—		2.2			—		10.2
End of period	563,190		$	1.2		642,667		$	9.7		1,464,295		$	18.5

⁽¹⁾ OneBeacon performance share payments in 2012 for the 2009-2011 performance cycle were at 138.6% of target. OneBeacon performance shares payments in 2011 for the 2008-2010 performance cycle were at 68.5% of target. OneBeacon performance share payments in 2010 for the 2007-2009 performance cycle were at 14.2% of target. Amounts include deposits into OneBeacon’s deferred compensation plan.

⁽²⁾ OneBeacon performance share payments in 2010 also include accelerated payments resulting from the OneBeacon Personal Lines and Commercial Lines Transactions to employees of those businesses. The accelerated OneBeacon performance shares payments for the 2009-2011 and 2010-2012 performance cycles were on a pro rata basis and at a performance factor of 100%.

⁽³⁾ Amounts include changes in assumed forfeitures, as required under GAAP.

The following summarizes OneBeacon performance shares outstanding awarded under the OneBeacon Incentive Plan at December 31, 2012 for each performance cycle:



Millions, except share amounts	Target OneBeacon Performance Shares Outstanding		Accrued Expense
Performance cycle:
2012 – 2014	181,290		$	.9
2011 – 2013	151,563		.3
2010 – 2012	238,658		—
Sub-total	571,511		1.2
Assumed forfeitures	(8,321	)	—
Total at December 31, 2012	563,190		$	1.2

If the outstanding OneBeacon performance shares had been vested on December 31, 2012, the total additional compensation cost to be recognized would have been $1.9 million, based on December 31, 2012 accrual factors (common share price and payout assumptions).

The targeted performance goal for full payment of the outstanding OneBeacon performance shares granted during 2012 is growth in intrinsic business value per share of 10%. At a growth in intrinsic business value per share of 3% or less, no performance shares would be earned and at a growth in intrinsic business value per share of 17% or more, 200% of performance shares would be earned.

The targeted performance goal for full payment of the outstanding OneBeacon performance shares granted during 2011 is growth in intrinsic business value per share of 11%. At a growth in intrinsic business value per share of 4% or less, no performance shares would be earned and at a growth in intrinsic business value per share of 18% or more, 200% of performance shares would be earned.

The targeted performance goal for full payment of the outstanding OneBeacon performance shares granted during 2010 is growth in intrinsic business value per share of 12%. At a growth in intrinsic business value per share of 5% or less, no performance shares would be earned and at a growth in intrinsic business value per share of 19% or more, 200% of performance shares would be earned.

Non-Qualified Options

In November 2006, in connection with its initial public offering, OneBeacon Ltd. issued to its key employees 1,420,000 fixed price OneBeacon Non-Qualified Options to acquire OneBeacon Ltd. common shares at an above-market fixed exercise price. The options vest in equal installments on each of the third, fourth and fifth anniversaries of their issuance and expire 5.5 years from the date of issuance. The fair value of each option award at grant was estimated using a Black-Scholes option pricing model using an expected volatility assumption of 30%, a risk-free interest rate assumption of 4.6%, a forfeiture assumption of 5%, an expected dividend rate assumption of 3.4% and an expected term assumption of 5.5 years. The options originally had a per share exercise price of $30.00. On May 27, 2008, the OneBeacon Compensation Committee of the Board of Directors (the “OB Compensation Committee”) amended the exercise price to $27.97 as a result of the $2.03 per share special dividend paid in the first quarter of 2008. On November 16, 2010, the OB Compensation Committee adjusted the exercise price to $25.47 as a result of the $2.50 per share special dividend paid in the third quarter of 2010.

The compensation expense associated with the options and the incremental fair value of the award modifications is being recognized ratably over the remaining period.

The following table summarizes option activity for the years ended December 31, 2012, 2011 and 2010:



	Year ended December 31,
	2012				2011				2010
Millions	Target Outstanding Options		Expense Recognized		Target Outstanding Options		Expense Recognized		Target Outstanding Options		Expense Recognized
Beginning of period	740,870		$	—	768,652		$	—	1,015,610		$	—
New awards	—		—		—		—		—		—
Forfeitures	—		—		(27,782	)	—		(37,044	)	—
Vested and expired ⁽¹⁾	(740,870	)	—		—		—		(209,914	)	—
Exercised	—		—		—		—		—		—
Expense recognized	—		—		—		.5		—		.9
End of period	—		$	—	740,870		$	.5	768,652		$	.9


⁽¹⁾	During the year ended December 31, 2010, as a result of the Commercial Lines Transaction and Personal Lines Transaction, 209,914 options vested that were unexercised and expired. All remaining options expired in May 2012.

OneBeacon Restricted Shares

The following table summarizes the unrecognized compensation cost associated with the outstanding OneBeacon restricted stock awards for the years ended December 31, 2012 and 2011.



	Year ended December 31,
	2012					2011
Millions, except share amounts	Restricted Shares		Unamortized Issue Date Fair Value			Restricted Shares	Unamortized Issue Date Fair Value
Non-vested,
Beginning of period	630,000		$	7.7		—	$	—
Issued	300,000		4.5			630,000	8.6
Vested	(667	)	—			—	—
Forfeited	(2,333	)	—			—	—
Expense recognized	—		(2.6		)	—	(.9		)
End of period	927,000		$	9.6		630,000	$	7.7

On March 1, 2012, OneBeacon issued 300,000 restricted shares to key employees that vest in two equal installments on February 28, 2014 and 2015. On May 25, 2011, OneBeacon issued 630,000 restricted shares to its CEO that vest four equal annual installments beginning on February 22, 2014, 2015, 2016 and 2017. Concurrently with the grant of the restricted shares, 35,000 OneBeacon performance shares issued to OneBeacon’s CEO for the 2011-2013 performance share cycle were forfeited and performance share awards to OneBeacon’s CEO for the subsequent 5 years have been or will also be reduced by 35,000 shares. The restricted shares contain dividend participation features, and therefore, are considered participating securities. The unrecognized compensation cost associated with outstanding restricted share awards at December 31, 2012 is expected to be recognized ratably over the remaining vesting periods.

Restricted Stock Units

The Non-Qualified Options granted by OneBeacon Ltd., in connection with its initial public offering, did not include a mechanism in the options to reflect the contribution to total return from the regular quarterly dividend. As a result, during the first quarter of 2008, OneBeacon granted 116,270 Restricted Stock Units (“RSUs”) to actively employed option holders. The RSUs were scheduled to vest in three equal installments on each of November 9, 2009, 2010 and 2011 subject to, for each vesting tranche of units, the attainment of 4% growth in OneBeacon’s book value per share from January 1, 2008 through the end of the calendar year immediately following the applicable vesting date.

Consistent with the terms of the RSU plan, all of the tranches of RSUs vested and were deferred into a OneBeacon non-qualified deferred compensation plan that was paid out in May 2012.

The expense associated with the RSUs was recognized ratably over the vesting period. For the years ended December 31, 2011 and 2010, OneBeacon recognized expense of $0.1 million and $0.5 million.

Share-based Compensation Under Qualified Retirement Plans

Contributions to the KSOP with respect to the years ended 2012, 2011 and 2010 were made with either the Company’s or OneBeacon Ltd.’s common shares, dependent on the employer. The variable contribution amounts for eligible participants of the KSOP constituted approximately 3%, 2% and 1% of salary for the years ended 2012, 2011 and 2010. White Mountains recorded $4.8 million, $6.3 million and $3.0 million in compensation expense to pay benefits and allocate common shares to participant’s accounts for the years ended 2012, 2011 and 2010. As of December 31, 2012 and 2011, the plans owned 3% or less of either of the Company’s or OneBeacon Ltd.’s total common shares outstanding. All White Mountains common shares held by the KSOP are considered outstanding for earnings (loss) per share computations.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 14

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph 64, 65, A240
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Statement of Position (SOP)
-Number 93-6
-Paragraph 53
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

Common Shareholders' Equity	12 Months Ended
Common Shareholders' Equity	Dec. 31, 2012
Stockholders' Equity Note [Abstract]
Common Shareholder's Equity	Common Shareholders’ Equity Common Shares Repurchased and Retired In 2006, White Mountains’ Board of Directors authorized the Company to repurchase up to 1,000,000 of its common shares, from time to time, subject to market conditions. In 2010 and 2012, White Mountains' board of directors authorized the Company to repurchase an additional 600,000 and 1,000,000, respectively, of its common shares, for a total authorization of 2,600,000 shares. Shares may be repurchased on the open market or through privately negotiated transactions. The repurchase authorizations do not have a stated expiration date. As of December 31, 2012, White Mountains may repurchase an additional 685,496 shares under these board authorizations. In addition, from time to time White Mountains has also repurchased its common shares through tender offers that were separately approved by its board of directors. During 2012, the Company repurchased 1,329,640 common shares for $669.1 million at an average share price of $503, which were comprised of (1) 502,801 common shares repurchased under the board authorization for $256.0 million at an average share price of $508; (2) 816,829 common shares repurchased through a fixed-price tender offer for $408.6 million at a share price of $500; and (3) 10,010 common shares repurchased to satisfy employee income tax withholding, pursuant to employee benefit plans. Shares repurchased pursuant to employee benefit plans do not fall under the board authorizations referred to above. During 2011, the Company repurchased 646,502 common shares for $253.0 million at an average share price of $390, which were comprised of (1) 313,967 common shares repurchased under the board authorization for $114.0 million at an average share price of $364; (2) 332,346 common shares repurchased through two “modified Dutch auction” self-tender offers for $138.8 million at an average share price of $418; and (3) 189 common shares repurchased to satisfy employee income tax withholdings, pursuant to employee benefit plans. During 2010, White Mountains repurchased a total of 687,871 of its common shares for $225.5 million at an average share price of $328, which were comprised of (1) 677,125 common shares repurchased under the board authorization for $222.0 million at an average share price of $264; and (2) 10,746, common shares repurchased to satisfy employee income tax withholdings, pursuant to employee benefit plans. Common Shares Issued During 2012, the Company issued a total of 44,054 common shares, which consisted of 32,160 restricted shares issued to key management personnel and 1,617 shares issued to directors of the Company. During 2011, the Company issued a total of 29,432 common shares, which consisted of 27,250 restricted shares issued to key management personnel and 2,182 shares issued to directors of the Company. During 2010, the Company issued a total of 23,050 common shares, which consisted of 2,400 shares issued in satisfaction of options exercised, 19,750 restricted shares issued to key management personnel and 900 shares issued to directors of the Company. Dividends on Common Shares For the years ended December 31, 2012, 2011 and 2010, the Company declared and paid cash dividends totaling $6.6 million, $8.0 million, and $8.8 million (or $1.00 per common share).

- Definition

The entire disclosure for shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, if any, including other comprehensive income (as applicable). Including, but not limited to: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms, and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables, effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
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-Subparagraph (SX 210.4-08.(d),(e))
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-Name Accounting Standards Codification
-Glossary Preferred Stock
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-Name Accounting Research Bulletin (ARB)
-Number 43
-Section B
-Paragraph 7, 11A
-Chapter 1
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-Name Accounting Principles Board Opinion (APB)
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-Name Statement of Financial Accounting Standard (FAS)
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Reference 17: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
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Reference 18: http://www.xbrl.org/2003/role/presentationRef
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-Name Regulation S-X (SX)
-Number 210
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+ Details

Statutory Capital and Surplus	12 Months Ended
Statutory Capital and Surplus	Dec. 31, 2012
Statutory Capital and Surplus
Statutory Capital and Surplus	Statutory Capital and Surplus White Mountains’ insurance and reinsurance operations are subject to regulation and supervision in each of the jurisdictions where they are domiciled and licensed to conduct business. Generally, regulatory authorities have broad supervisory and administrative powers over such matters as licenses, standards of solvency, premium rates, policy forms, investments, security deposits, methods of accounting, form and content of financial statements, reserves for unpaid loss and LAE, reinsurance, minimum capital and surplus requirements, dividends and other distributions to shareholders, periodic examinations and annual and other report filings. In general, such regulation is for the protection of policyholders rather than shareholders. In addition, the NAIC uses risk-based capital (“RBC”) standards for property and casualty insurers as a means of monitoring certain aspects affecting the overall financial condition of insurance companies. At December 31, 2012, White Mountains’ active insurance and reinsurance operating subsidiaries exceeded their respective RBC requirements. OneBeacon’s consolidated combined policyholders’ surplus of its insurance operating subsidiaries as reported to regulatory authorities as of December 31, 2012 and 2011 was $0.9 billion and $1.0 billion. OneBeacon’s consolidated combined statutory net income for the years ended December 31, 2012, 2011 and 2010 was $82.0 million, $119.6 million and $257.2 million. The principal differences between OneBeacon’s combined statutory amounts and the amounts reported in accordance with GAAP include deferred acquisition costs, deferred taxes, and market value adjustments for debt securities. The minimum policyholders' surplus necessary to satisfy OneBeacon's regulatory requirements was $207.5 million at December 31, 2012, which equals the authorized control level of the NAIC risk-based capital of OneBeacon’s primary top tier regulated operating subsidiary. Sirius International is subject to regulation and supervision in Sweden by the Financial Supervisory Authority (“FSA”). Sirius International’s total regulatory capital at December 31, 2012 was $2.5 billion. In accordance with FSA regulations, Sirius International holds restricted equity of $1.6 billion as a component of Swedish regulatory capital. This restricted equity cannot be paid as dividends. The minimum regulatory capital held by Sirius International necessary to satisfy the requirements established by the FSA was $109.2 million at December 31, 2012. Sirius America’s policyholders’ surplus, as reported to regulatory authorities as of December 31, 2012 and 2011, was $528.3 million and $533.7 million. Sirius America’s statutory net income for the years ended December 31, 2012, 2011 and 2010 was $26.2 million, $101.4 million and $70.2 million The principal differences between Sirius America’s statutory amounts and the amounts reported in accordance with GAAP include deferred acquisition costs, deferred taxes, gains recognized under retroactive reinsurance contracts and market value adjustments for debt securities. The minimum policyholders’ surplus necessary to satisfy Sirius America’s regulatory requirements was $127.8 million at December 31, 2012, which equals the authorized control level of the NAIC risk-based capital based on Sirius America’s policyholders’ surplus. Central National’s policyholders’ surplus, as reported to regulatory authorities as of December 31, 2012 and 2011, was $11.2 million and $13.4 million. Central National’s statutory net income for the years ended December 31, 2012 and 2011 was $1.7 million and $0.1 million. The minimum policyholders’ surplus necessary to satisfy Central National’s regulatory requirements was $1.7 million at December 31, 2012, which equals the authorized control level of the NAIC risk-based capital based on Central National’s policyholders’ surplus. American General's policyholders' surplus, as reported to regulatory authorities as of December 31, 2012 was $8.6 million. The minimum policyholders' surplus necessary to satisfy American General’s regulatory requirements was $0.1 million at December 31, 2012, which equals the authorized control level of the NAIC risk-based capital based on American General’s policyholders' surplus. American General Property's policyholders' surplus, as reported to regulatory authorities as of December 31, 2012 was $24.5 million. The minimum policyholders' surplus necessary to satisfy American General Property's regulatory requirements was $2.5 million at December 31, 2012, which equals the authorized control level of the NAIC risk-based capital based on American General Property’s policyholders' surplus. PICO's policyholders' surplus, as reported to regulatory authorities as of December 31, 2012 was $6.3 million. The minimum policyholders' surplus necessary to satisfy PICO's regulatory requirements was $0.2 million at December 31, 2012, which equals the authorized control level of the NAIC risk-based capital based on PICO's policyholders' surplus. Citation's policyholders' surplus, as reported to regulatory authorities as of December 31, 2012 was $13.1 million. The minimum policyholders' surplus necessary to satisfy Citation's regulatory requirements was $0.9 million at December 31, 2012, which equals the authorized control level of the NAIC risk-based capital based on Citation's policyholders' surplus. White Shoals Re Ltd. (“White Shoals Re”) is also subject to regulation and supervision by the Bermuda Monetary Authority (“BMA”). Generally, the BMA has broad supervisory and administrative powers over such matters as licenses, standards of solvency, investments, methods of accounting, form and content of financial statements, minimum capital and surplus requirements, and annual and other report filings. In general, such regulation is for the protection of policyholders rather than shareholders. As of December 31, 2012, White Shoals Re had statutory capital and surplus of $15.5 million. The minimum regulatory capital held by White Shoals Re necessary to satisfy the requirements established by the BMA was $7.0 million at December 31, 2012. WM Life Re is subject to regulation and supervision by the BMA. As of December 31, 2012, WM Life Re had statutory capital and surplus of $33.7 million. The minimum regulatory capital held by WM Life Re necessary to satisfy the requirements established by the BMA was $0.4 million at December 31, 2012. HG Re is a Special Purpose Insurer under Bermuda insurance regulations and is subject to regulation and supervision by the BMA. As of December 31, 2012, HG Re had statutory capital of $412.0 million. As a Special Purpose Insurer, HG Re does not have minimum regulatory capital requirements. BAM is domiciled in New York and is subject to regulation by the New York Department of Financial Services. New York financial guarantee insurance law establishes single risk and aggregate limits with respect to insured obligations insured by financial guarantee insurers. BAM’s members’ surplus, as reported to regulatory authorities as of December 31, 2012 was $483.7 million, which exceeds the minimum members’ surplus necessary for BAM to maintain its New York State financial guarantee insurance license of $65.0 million. Dividend Capacity There are no restrictions under Bermuda law or the law of any other jurisdiction on the payment of dividends from retained earnings by White Mountains. However, under the insurance laws of the states and jurisdictions under which White Mountains' insurance and reinsurance operating subsidiaries are domiciled, an insurer is restricted with respect to the timing and the amount of dividends it may pay without prior approval by regulatory authorities. At December 31, 2012, White Mountains’ top tier insurance and reinsurance subsidiaries have approximately $2.9 billion of GAAP shareholders' equity (net of $268 million of noncontrolling interest at OneBeacon), $1.2 billion of which can be distributed to White Mountains without prior regulatory approval. As a result, at December 31, 2012, $1.7 billion of White Mountains' GAAP shareholders' equity held in its insurance and reinsurance subsidiaries was not available for the payment of dividends without prior regulatory approval, and approximately $800 million of White Mountains’ retained earnings is unrestricted with respect to the payment of dividends to White Mountains’ common shareholders. When determining whether to make distributions from its insurance and reinsurance operating subsidiaries, White Mountains also considers factors such as internal capital targets and rating agency capital requirements. Accordingly, there can be no assurance regarding the amount of such dividends that may be paid by such subsidiaries in the future. Following is a description of the dividend capacity of White Mountains’ insurance and reinsurance operating subsidiaries: OneBeacon: Generally, OneBeacon's top tier regulated insurance operating subsidiaries have the ability to pay dividends during any twelve-month period without the prior approval of regulatory authorities in an amount set by formula based on the greater of prior year statutory net income or 10% of prior year end statutory surplus, subject to the availability of unassigned funds. OneBeacon Insurance Company (“OBIC”), OneBeacon's primary top tier regulated insurance operating subsidiary, has the ability to pay $329.9 million of dividends during 2013 (based on its 2012 statutory net income of $329.9 million) without prior approval of regulatory authorities, subject to the availability of unassigned funds. The amount of dividends available to be paid by OBIC in any given year is also subject to cash flow and earnings generated by OBIC's business, which now just comprises the Runoff Business, as well as to dividends received from its subsidiaries, including Atlantic Specialty Insurance Company (“ASIC”). At December 31, 2012, OBIC had $0.7 billion of unassigned funds and $0.9 billion of statutory surplus. As disclosed in Note 2 - “Significant Transactions”, during the fourth quarter of 2012, OneBeacon executed various intercompany reinsurance agreements which, along with other internal capital transactions among our insurance operating subsidiaries, resulted in ASIC becoming the lead insurance company for the ongoing specialty business and OBIC becoming the lead insurance company for the Runoff Business. As a result of the internal restructuring transactions, OBIC’s 2012 statutory net income was significantly higher than that of the OneBeacon’s consolidated combined statutory net income as statutory net losses at lower-tiered subsidiaries more than offset the income recorded at OBIC. Notwithstanding these restructuring transactions, OneBeacon continues to manage its statutory capital on a combined basis. Although OBIC remains a top tier regulated insurance operating subsidiary and maintains sufficient statutory capital to support the Runoff Business, the majority of the group's statutory capital is now included in ASIC to support the ongoing specialty business. ASIC has the ability to pay dividends during any twelve-month period without the prior approval of regulatory authorities in an amount set by formula based on the lesser of net investment income, as defined by statute, or 10% of statutory surplus, in both cases as most recently reported to regulatory authorities, subject to the availability of earned surplus. Given the changes in structure noted above, ASIC will likely require prior approval by regulatory authorities in order to pay dividends until it builds up a historical net investment income and earned surplus balance under its new structure. At December 31, 2012, ASIC had negative earned surplus and $0.7 billion of statutory surplus. During 2012, OneBeacon's top tier regulated insurance operating subsidiaries paid $173.1 million of dividends to their immediate parent, which included the distribution of a regulated insurance subsidiary with a value of $34.0 million. During 2012, OneBeacon's unregulated insurance operating subsidiaries paid $4.9 million of dividends to their immediate parent. At December 31, 2012, OneBeacon's unregulated insurance operating subsidiaries had $28.6 million of net unrestricted cash, short-term investments and fixed maturity investments. During 2012, OneBeacon Ltd. paid $80.0 million of regular quarterly dividends to its common shareholders. White Mountains received $60.0 million of these dividends. At December 31, 2012, OneBeacon Ltd. and its intermediate holding companies had $272.4 million of net unrestricted cash, short-term investments and fixed maturity investments and $33.3 million of common equity securities and convertible fixed maturity investments outside of its regulated and unregulated insurance operating subsidiaries. Sirius Group: Subject to certain limitations under Swedish law, Sirius International is permitted to transfer a portion of its pre-tax income to its Swedish parent companies to minimize taxes (referred to as a group contribution). In 2012, Sirius International transferred $82.0 million of its 2011 pre-tax income to its Swedish parent companies as a group contribution. In 2013, Sirius International currently intends to transfer approximately $110.0 million (based on the December 31, 2012 SEK to USD exchange rate) of its 2012 pre-tax income to its Swedish parent companies as a group contribution. Sirius International has the ability to pay dividends subject to the availability of unrestricted statutory surplus. Historically, Sirius International has allocated the majority of its pre-tax income, after group contributions to its Swedish parent companies, to the Safety Reserve (see “Safety Reserve” below). At December 31, 2012, Sirius International had $852.0 million (based on the December 31, 2012 SEK to USD exchange rate) of unrestricted statutory surplus, which is available for distribution in 2013. The amount of dividends available to be paid by Sirius International in any given year is also subject to cash flow and earnings generated by Sirius International’s business, as well as to dividends received from its subsidiaries, including Sirius America. During 2012, Sirius International distributed $24.0 million of dividends to its immediate parent and declared an additional $75.0 million of dividends at December 31, 2012 (for a total of $99.0 million). The $75.0 million was paid in January 2013. In connection with the Reorganization, Sirius International’s unrestricted statutory surplus increased by $436.3 million due to the contribution of the remaining shares of Sirius America. In 2013, Sirius International currently intends to distribute $50.0 million of dividends to its immediate parent. Sirius America has the ability to pay dividends during any twelve-month period without the prior approval of regulatory authorities in an amount set by formula based on the lesser of net investment income, as defined by statute, or 10% of statutory surplus, in both cases as most recently reported to regulatory authorities, subject to the availability of earned surplus. Based upon 2012 statutory net investment income, Sirius America has the ability to pay $15.0 million of dividends during 2013 without prior approval of regulatory authorities, subject to the availability of earned surplus. At December 31, 2012, Sirius America had $528.3 million of statutory surplus and $56.1 million of earned surplus. In 2012, Sirius America paid $55.0 million of dividends to its immediate parent. During 2012, Sirius Group distributed $40.0 million to its immediate parent and declared an additional $75.0 million at December 31, 2012 (for a total of $115.0 million). The $75.0 million was paid in January 2013. At December 31, 2012, Sirius Group and its intermediate holding companies had $72.0 million of net unrestricted cash, short-term investments and fixed maturity investments and $18.0 million of other long-term investments outside of its regulated and unregulated insurance and reinsurance operating subsidiaries. Capital Maintenance In connection with Sirius Group's reorganization in October 2011, Sirius International and Sirius America entered into a capital maintenance agreement, which obligates Sirius International to make contributions to Sirius America's surplus in order for Sirius America to maintain surplus equal to at least 125% of the company action level risk based capital as defined in the NAIC Property/Casualty Risk-Based Capital Report. The agreement provides for a maximum contribution to Sirius America of $200.0 million. Sirius International also provides Sirius America with accident year stop loss reinsurance, which protects Sirius America's accident year loss and allocated loss adjustment expense ratio in excess of 70%, with a limit of $110.0 million. Safety Reserve Subject to certain limitations under Swedish law, Sirius International is permitted to transfer pre-tax amounts into an untaxed reserve referred to as a safety reserve. At December 31, 2012, Sirius International’s safety reserve amounted to SEK 9.6 billion or $1.5 billion at the December 31, 2012 exchange rate of 6.50 USD to SEK. Under GAAP, an amount equal to the safety reserve, net of a related deferred tax liability established at the Swedish tax rate, is classified as shareholder's equity. The tax rate in effect on December 31, 2011 was 26.3%. The tax rate utilized on December 31, 2012 was the new Swedish tax rate of 22.0%. Generally, this deferred tax liability is only required to be paid by Sirius International if it fails to maintain predetermined levels of premium writings and loss reserves in future years. As a result of the indefinite deferral of these taxes, Swedish regulatory authorities do not apply any taxes to the safety reserve when calculating solvency capital under Swedish insurance regulations. Accordingly, under local statutory requirements, an amount equal to the deferred tax liability on Sirius International’s safety reserve ($326.7 million at December 31, 2012) is included in solvency capital. Access to the safety reserve is restricted to coverage of reinsurance losses. Access for any other purpose requires the approval of Swedish regulatory authorities. Similar to the approach taken by Swedish regulatory authorities, most major rating agencies generally include the $1.5 billion balance of the safety reserve, without any provision for deferred taxes, in Sirius International’s capital when assessing Sirius International’s financial strength. HG Global/BAM: HG Global has $613.0 million face value of preferred shares outstanding, of which White Mountains owns 97.3%. 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. HG Global did not declare or pay any preferred dividends in 2012. As of December 31, 2012, HG Global has accrued $16.8 million of dividends payable to holders of its preferred shares, $16.3 million of which is payable to White Mountains and eliminated in consolidation. HG Re is a Special Purpose Insurer subject to regulation and supervision by the BMA, but does not require regulatory approval to pay dividends. However, HG Re’s dividend capacity is limited by amounts held in the collateral trusts pursuant to the FLRT with BAM. As of December 31, 2012, HG Re had statutory capital of $412.0 million, of which $12.0 million (which primarily relates to accrued interest on the BAM Surplus Notes held by HG Re) was available for dividends to HG Global and $400.0 million was held as collateral in the Supplemental Trust pursuant to the FLRT with BAM. Interest on the BAM Surplus Notes is payable quarterly at a fixed annual rate of 8.0%. Interest and principal payments on the BAM Surplus Notes are subject to approval of the New York State Department of Financial Services. BAM did not pay any interest on the BAM Surplus Notes in 2012. As of December 31, 2012, HG Global has accrued $18.4 million of interest receivable on the BAM Surplus Notes. Other Operations: During 2012, WM Advisors did not pay any dividends to its immediate parent. At December 31, 2012, WM Advisors had approximately $18.4 million of net unrestricted cash and short-term investments. At December 31, 2012, the Company and its intermediate holding companies had $132.1 million of net unrestricted cash, short-term investments and fixed maturity investments, $540.4 million of common equity securities and $77.6 million of other long-term investments included in its Other Operations segment. During 2012, White Mountains paid a $6.6 million common share dividend.

Segment Information

12 Months Ended

Dec. 31, 2012

Segment Reporting [Abstract]

Segment Information

NOTE 14. Segment Information

White Mountains has determined that its reportable segments are OneBeacon, Sirius Group, HG Global/BAM and Other Operations. As a result of the Esurance Sale, the results of operations for Esurance have been classified as discontinued operations and are now presented, net of related income taxes, as such in the statement of comprehensive income. Prior year amounts have been reclassified to conform to the current period’s presentation (see Note 20).

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.

OneBeacon is a specialty property and casualty insurance writer that offers a wide range of insurance products through independent agencies, regional and national brokers, wholesalers and managing general agencies.

Sirius Group provides insurance and reinsurance products for property, accident and health, aviation and space, trade credit, marine, agriculture and certain other exposures on a worldwide basis.

The HG Global/BAM segment consists of White Mountains’ investment in HG Global and the consolidated results of BAM. BAM is a municipal bond insurer domiciled in New York that was established to provide insurance on bonds issued to support essential U.S. public purposes such as schools, utilities, core governmental functions and existing transportation facilities. HG Global, together with its subsidiaries, provided the initial capitalization of BAM through the purchase of BAM Surplus Notes. HG Global also provides 15%-of-par, first loss reinsurance protection for policies underwritten by BAM. BAM's results are attributed to non-controlling interests.

Other Operations consists of the Company, the Company’s intermediate holding companies, WM Advisors and WM Life Re as well as and various other entities not included in other segments. Significant intercompany transactions among White Mountains’ segments have been eliminated herein.

Financial information for White Mountains’ segments follows:



						HG Global/BAM
Millions	OneBeacon			Sirius Group		HG Global		BAM			Other Operations			Total
Year ended December 31, 2012
Earned insurance and reinsurance premiums	$	1,132.0		$	931.6	$	—	$	—		$	—		$	2,063.6
Net investment income	53.6			65.0		.3		1.9			32.8			153.6
Net investment income (loss) - surplus note interest	—			—		18.4		(18.4		)	—		—	—
Net realized and unrealized investment gains	55.7			17.3		—		—			45.2			118.2
Other revenue	(.5		)	70.6		—		—			30.2			100.3
Total revenues	1,240.8			1,084.5		18.7		(16.5		)	108.2			2,435.7
Losses and LAE	650.0			543.9		—		—			—			1,193.9
Insurance and reinsurance acquisition expenses	249.4			180.8		—		—			—			430.2
Other underwriting expenses	205.2			116.4		—		.2			—			321.8
General and administrative expenses	13.4			45.9		4.5		19.6			98.8			182.2
Interest expense on debt	16.9			26.2		—		—			1.7			44.8
Total expenses	1,134.9			913.2		4.5		19.8			100.5			2,172.9
Pre-tax income (loss)	$	105.9		$	171.3	$	14.2	$	(36.3	)	$	7.7		$	262.8



Millions	OneBeacon			Sirius Group		Other Operations			Total
Year ended December 31, 2011
Earned insurance and reinsurance premiums	$	1,012.2		$	912.3	$	—		$	1,924.5
Net investment income	71.4			89.9		23.2			184.5
Net realized and unrealized investment gains	10.6			53.2		10.3			74.1
Other revenue	(12.4		)	4.1		(1.7		)	(10.0		)
Total revenues	1,081.8			1,059.5		31.8			2,173.1
Losses and LAE	548.3			626.0		—			1,174.3
Insurance and reinsurance acquisition expenses	221.2			181.0		—			402.2
Other underwriting expenses	162.3			105.8		—			268.1
General and administrative expenses	9.8			34.1		131.4			175.3
Interest expense on debt	20.5			31.6		3.1			55.2
Total expenses	962.1			978.5		134.5			2,075.1
Pre-tax income (loss)	$	119.7		$	81.0	$	(102.7	)	$	98.0



Millions	OneBeacon			Sirius Group			Other Operations			Total
Year ended December 31, 2010
Earned insurance and reinsurance premiums	$	1,181.1		$	847.9		$	—		$	2,029.0
Net investment income	96.6			96.5			15.8			208.9
Net realized and unrealized investment gains (losses)	74.6			(14.8		)	17.8			77.6
Other revenue	(.6		)	40.9			(22.1		)	18.2
Total revenues	1,351.7			970.5			11.5			2,333.7
Losses and LAE	685.6			531.0			—			1,216.6
Insurance and reinsurance acquisition expenses	252.1			167.5			—			419.6
Other underwriting expenses	196.1			99.8			—			295.9
General and administrative expenses	12.9			31.6			110.5			155.0
Interest expense on debt	29.6			26.6			1.1			57.3
Total expenses	1,176.3			856.5			111.6			2,144.4
Pre-tax income (loss)	$	175.4		$	114.0		$	(100.1	)	$	189.3



					HG Global/BAM
Selected Balance Sheet Data Millions	OneBeacon		Sirius Group		HG Global		BAM					Other Operations		Total
December 31, 2012
Total investments	$	2,291.5	$	3,534.3	$	101.5	$	472.4				$	878.4	$	7,278.1
Reinsurance recoverable on paid and unpaid losses	110.7		336.3		—		—					—		447.0
Assets held for sale	2,226.8		—		—		—					—		2,226.8
Total assets	5,382.3		5,962.0		623.6		(28.6		)	⁽¹	⁾	956.1		12,895.4
Loss and LAE reserves	1,000.0		2,168.9		—		—					—		3,168.9
Liabilities held for sale	2,226.8		—		—		—					—		2,226.8
Total liabilities	4,365.0		4,123.2		.9		7.4					140.7		8,637.2
Total White Mountains’ common shareholders’ equity	763.1		1,559.7		606.2		—					802.8		3,731.8
Non-controlling interest	254.2		279.1		16.5		(36.0		)			12.6		526.4

December 31, 2011
Total investments	$	2,707.6	$	3,640.5	$	—	$	—				$	1,919.9	$	8,268.0
Reinsurance recoverable on paid and unpaid losses	2,184.1		353.7		—		—					—		2,537.8
Assets held for sale	132.6		—		—		—					—		132.6
Total assets	5,792.4		5,337.9		—		—					2,933.7		14,064.0
Loss and LAE reserves	3,358.6		2,343.7		—		—					—		5,702.3
Liabilities held for sale	107.6		—		—		—					—		107.6
Total liabilities	4,678.5		3,784.1		—		—					933.5		9,396.1
Total White Mountains’ common shareholders’ equity	826.7		1,264.3		—		—					1,996.7		4,087.7
Non-controlling interest	287.2		289.5		—		—					3.5		580.2

⁽¹⁾ BAM total assets reflect the elimination of $503.0 in surplus notes issued to HG Global and its subsidiaries, and $18.4 in accrued interest related to those surplus notes.

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 34
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8981-108599

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 41
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9038-108599

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
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-Paragraph 33
-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8971-108599

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8380-108599

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
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-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8933-108599

Reference 7: http://www.xbrl.org/2003/role/presentationRef
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-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8844-108599

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
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Reference 9: http://www.xbrl.org/2003/role/presentationRef
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Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
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Reference 12: http://www.xbrl.org/2003/role/presentationRef
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Reference 13: http://www.xbrl.org/2003/role/presentationRef
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Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 15: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 131
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

Investments in Unconsolidated Affiliates

12 Months Ended

Dec. 31, 2012

Equity Method Investments and Joint Ventures [Abstract]

Investments in Unconsolidated Affiliates

White Mountains’ investments in unconsolidated affiliates represent investments in other companies in which White Mountains has a significant voting and economic interest but does not control the entity.



	December 31,
Millions	2012		2011
Symetra common shares	$	288.4	$	261.0
Unrealized gains from Symetra’s fixed maturity portfolio	62.8		—
Carrying value of Symetra common shares	$	351.2	$	261.0
Symetra warrants	30.3		12.6
Total investment in Symetra	381.5		273.6

Hamer, LLC ⁽¹⁾	4.0		—
Bri-Mar Manufacturing, LLC ⁽¹⁾	1.9		—
Pentelia Capital Management	.5		1.7
Total investments in unconsolidated affiliates	$	387.9	$	275.3

⁽¹⁾ As of October 1, 2012, Hamer and Bri-Mar are no longer consolidated and are accounted for as investments in unconsolidated affiliates.

Symetra

At December 31, 2012, White Mountains owned 17.4 million common shares of Symetra and warrants to acquire an additional 9.5 million common shares. In January 2010, Symetra completed an initial public offering at a price of $12.00 per share, with 25.3 million shares sold by Symetra and 9.7 million shares sold by existing shareholders. White Mountains did not sell any of its shares in the offering. As a result of the offering, White Mountains’ fully converted ownership in Symetra decreased from 24% to approximately 20% during the first quarter of 2010. The issuance of the new Symetra shares at a price below its adjusted book value per share diluted White Mountains’ investment in Symetra’s common shares, resulting in a $16.0 million decrease to White Mountains’ carrying value in Symetra.

White Mountains accounts for its investment in common shares of Symetra using the equity method. Under the equity method, the GAAP carrying value of White Mountains’ investment in Symetra common shares is normally equal to the percentage of Symetra’s GAAP book value represented by White Mountains’ common share ownership, which was 15% at December 31, 2012. At December 31, 2011, due to the prolonged low interest rate environment in which life insurance companies currently operate, White Mountains concluded that its investment in Symetra common shares was other-than-temporarily impaired and wrote down the GAAP book value of the investment to its estimated fair value of $261.0 million, or $15 per share at December 31, 2011. White Mountains recorded $45.9 million of after-tax equity in losses of unconsolidated affiliates and $136.6 million of after-tax equity in net unrealized losses of unconsolidated affiliates.

Under GAAP, a decline in the fair value of an investment is considered to be other-than-temporary when the fair value of the investment is not expected to recover to its GAAP carrying value in the near term. Declines in the fair value of an investment that are considered to be other-than-temporary are recognized as a write-down to the GAAP carrying value of the investment. The GAAP fair value of an investment is the price that would be paid by a market participant to acquire it in the investment’s principal (or most advantageous) market. For investments that are publicly traded, quoted market prices generally provide the best measurement of GAAP fair value. However, a decline in the quoted market price of an investment below its GAAP carrying value is not necessarily indicative of a loss in value that is other-than-temporary, and in circumstances where the characteristics of the investment being measured are not the same as those for which quoted market prices are available, unadjusted quoted market prices do not represent GAAP fair value. White Mountains’ investment in Symetra common shares is different than the shares that are traded on the public stock exchange, principally due to the size of its position and its representation on Symetra’s Board of Directors. In circumstances like this, GAAP requires that fair value be determined giving consideration to multiple valuation techniques. Management considered three different valuation techniques to determine the GAAP fair value of White Mountains’ investment in Symetra common shares at December 31, 2011.

Valuation techniques based on actuarial appraisal

When determining the value of life insurance holding companies that are acquisition targets, market participants commonly utilize an approach that values the company as the sum of (A) adjusted statutory net worth of any regulated life insurance companies (i.e. statutory surplus plus asset valuation reserve) plus the GAAP net assets of any non-life businesses, less holding company debt and (B) the present value of future earnings related to business in force as of the valuation date plus the present value of future earnings related to business written after the valuation date. Part A of the calculation can be performed using observable inputs from the statutory and GAAP financial statements. Part B of the calculation requires a large number of actuarial calculations including assumptions such as discount rates, mortality, persistency and future investment results that, while based on historical data and are supportable, are nonetheless judgmental and largely unobservable. For Symetra, part A is approximately $15 per share as of December 31, 2011. Symetra management provided White Mountains with an actuarial appraisal that demonstrates that part B would be a meaningful positive value in most reasonable scenarios. When determining the GAAP fair value of White Mountains’ investment in Symetra common shares at December 31, 2011, management ascribed the greatest weight to part A, as it is observable and less subjective.

Valuation techniques based on multiples from recent transactions

White Mountains uses growth in adjusted book value to assess Symetra’s financial performance. Adjusted book value excludes unrealized gains and losses from Symetra’s fixed maturity investment portfolio. Life insurance industry analysts and market participants commonly use multiples of adjusted book value per share to determine relative values of companies in the life insurance industry. Applying this approach to Symetra at December 31, 2011, utilizing multiples which were observed in a recently announced transaction within the life insurance industry provides an estimated fair value range from $16 to $30 per share. However, the range of fair value estimates generated by applying the adjusted book value per share multiple and market premium observed in the recently announced transaction is wide, and there have been no other significant acquisitions of life insurance companies in 2011. Therefore, management did not ascribe significant weight to valuations determined using the adjusted book value per share multiple or market price premium observed in recent acquisition activity when determining the GAAP fair value of White Mountains’ investment in Symetra common shares at December 31, 2011.

Valuation techniques based on quoted market prices

White Mountains’ representation on Symetra’s Board of Directors gives it the ability to exercise significant influence over Symetra’s operations and policies. Generally, market participants are willing to pay a premium to obtain the ability to exert influence over the operations and policies of an investee, which is not reflected in the quoted market price of Symetra’s common shares. There is no reliable means to calculate the value of this premium for an investment in a life insurance company. The actuarial appraisals used by market participants described above implicitly consider the ability to influence an investee’s operations and policies in the actuarial assumptions underlying projected future earnings, but the value associated with the ability to exert influence is not explicitly calculated separately from other components of value. As a result, management did not ascribe significant weight to valuations based on quoted market prices when determining the GAAP fair value of White Mountains’ investment in Symetra common shares at December 31, 2011, as the premium associated with the ability to exert influence over the operations and policies of Symetra is unobservable and highly subjective.

After considering these valuation techniques, management determined that the best estimate of the GAAP fair value of White Mountains’ investment in Symetra’s common shares at December 31, 2011 was $15 per share. Given the scarcity of relevant observable inputs and the wide range of estimates developed under the approaches used, the estimated GAAP fair value of White Mountains’ investment in Symetra’s common shares involved a significant degree of judgment, is very subjective in nature and, accordingly, is considered a Level 3 fair value measurement.

As a result of recording the write-down, White Mountains’ carrying value of its investment in Symetra differs from the carrying value by applying its ownership share against Symetra’s GAAP equity as normally done under the equity method. The pre-tax basis difference of $195.8 million as of December 31, 2011 is being amortized over a 30 year period pro rata based on estimated future cash flows associated with Symetra’s underlying assets and liabilities to which the basis difference has been attributed. White Mountains continues to record its equity in Symetra’s earnings and net unrealized gains (losses). In addition, White Mountains recognizes the amortization of the basis difference through equity in earnings of unconsolidated affiliates and equity in net unrealized gains (losses) from investments in unconsolidated affiliates consistent with the original attribution of the writedown between equity in earnings and equity in net unrealized gains (losses). For the year ended December 31, 2012, White Mountains recognized after-tax amortization of $3.3 million through equity in earnings of unconsolidated affiliates and $12.1 million through equity in net unrealized gains from investments in unconsolidated affiliates. At December 31, 2012, the pre-tax unamortized basis difference was $179.2 million. Management does not believe that the investment in Symetra’s common shares is other-than-temporarily impaired at December 31, 2012.

White Mountains accounts for its Symetra warrants as derivatives with changes in fair value recognized through the income statement as a gain or loss recognized through other revenues. White Mountains uses a Black Scholes valuation model to determine the fair value of the Symetra warrants. The major assumptions used in valuing the Symetra warrants at December 31, 2012 were a risk free rate of 0.21%, volatility of 38.9%, an expected life of 1.6 years, a strike price of $11.49 per share and a share price of $12.98 per share.

During 2012, White Mountains received cash dividends from Symetra of $4.9 million on its common share investment which is accounted for as a reduction of White Mountains’ investment in Symetra in accordance with equity accounting. During 2012, White Mountains also received cash dividends from Symetra of $2.7 million on its investment in Symetra warrants that was recorded as net investment income.

The following table summarizes amounts recorded by White Mountains relating to its investment in Symetra:



Millions	Common shares			Warrants			Total
Carrying value of investment in Symetra as of December 31, 2009 ⁽²⁾	$	269.2		$	38.5		$	307.7
Equity in earnings ^(1)(3)(8)	11.1			—			11.1
Net unrealized gains from Symetra’s fixed maturity portfolio ⁽⁶⁾⁽⁷⁾	72.7			—			72.7
Dividends received	(2.6		)	—			(2.6		)
Decrease in value of warrants	—			(1.4		)	(1.4		)
Carrying value of investment in Symetra as of December 31, 2010⁽²⁾	350.4			37.1			387.5
Equity in earnings ⁽¹⁾⁽⁸⁾	28.2			—			28.2
Impairment of equity in earnings of Symetra ⁽⁴⁾	(50.0		)	—			(50.0		)
Equity in net unrealized gains from Symetra’s fixed maturity portfolio ⁽⁷⁾	85.0			—			85.0
Impairment of net unrealized gains from Symetra’s fixed maturity portfolio ⁽⁵⁾	(148.6		)	—			(148.6		)
Dividends received	(4.0		)	—			(4.0		)
Decrease in value of warrants	—			(24.5		)	(24.5		)
Carrying value of investment in Symetra as of December 31, 2011 ⁽²⁾	261.0			12.6			273.6
Equity in earnings ^(1)(8)(9)	32.3			—			32.3
Equity in net unrealized gains from Symetra’s fixed maturity portfolio ⁽⁷⁾	62.8			—			62.8
Dividends received	(4.9		)	—			(4.9		)
Increase in value of warrants	—			17.7			17.7
Carrying value of investment in Symetra as of December 31, 2012 ^(2)(11)	$	351.2		$	30.3		$	381.5


⁽¹⁾	Equity in earnings for the years end December 31, 2012, 2011 and 2010 excludes tax expense of $2.6, $2.3, and $1.4


⁽²⁾	Includes White Mountains’ equity in net unrealized gains (losses) from Symetra’s fixed maturity portfolio of $62.8, $0, and $63.7 as of December 31, 2012, 2011 and 2010, which excludes tax expense of $5.1, $0 and $5.2


⁽³⁾	Includes a $17.9 loss from the dilutive effect of Symetra’s public offering


⁽⁴⁾	Impairment of equity in earnings of Symetra excludes tax benefit of $4.1


⁽⁵⁾	Impairment of net unrealized gains from Symetra’s fixed maturity portfolio excludes tax benefit of $12.0


⁽⁶⁾	Includes a $1.9 gain from the dilutive effect of Symetra’s public offering.


⁽⁷⁾	Net unrealized gains (losses) from Symetra’s fixed maturity portfolio excludes tax (expense) benefit of $(5.1), $(6.9) and $0.8 for the years ended December 31, 2012, 2011 and 2010.


⁽⁸⁾	Equity in earnings for the years end December 31, 2012, 2011 and 2010 includes $1.3, $1.0, and $0.8 loss from the dilutive effect of Symetra’s yearly dividend and the issuance of restricted shares by Symetra


⁽⁹⁾	Equity in earnings includes $3.5 increase relating to the pre-tax amortization of Symetra common share impairment from December 31, 2012.


⁽¹⁰⁾	Net unrealized gains includes $13.1 increase relating to the pre-tax amortization of Symetra common share impairment from December 31, 2012.


⁽¹¹⁾	The aggregate value of White Mountains’ investment in common shares of Symetra was $225.9 based upon the quoted market price of $12.98 per share

at December 31, 2012.

The following table summarizes financial information for Symetra as of December 31, 2012 and 2011:



	December 31,
Millions	2012		2011
Symetra balance sheet data:
Total investments	$	27,556.4	$	26,171.7
Separate account assets	807.7		795.8
Total assets⁽¹⁾	29,460.9		28,183.3
Policyholder liabilities	23,735.2		23,140.6
Long-term debt	449.4		449.2
Separate account liabilities	807.7		795.8
Total liabilities ⁽¹⁾	25,830.8		25,068.4
Common shareholders’ equity ⁽¹⁾	3,630.1		3,114.9

⁽¹⁾2011 balances have been restated for the effect of Symetra’s adoption of ASU 2010-26.

The following table summarizes financial information for Symetra for the years ended December 31, 2012, 2011 and 2010:



	Years ended December 31,
Millions	2012		2011		2010
Symetra income statement data:
Net premiums earned	$	605.0	$	540.5	$	473.0
Net investment income	1,275.2		1,270.9		1,199.4
Total revenues ⁽¹⁾	2,101.2		1,999.3		1,878.8
Policy benefits	1,371.8		1,307.3		1,234.6
Total expenses ⁽¹⁾	1,831.1		1,726.1		1,600.5
Net income ⁽¹⁾	205.4		195.8		193.8
Comprehensive net income	549.3		785.5		679.0

⁽¹⁾Amounts for the years ended December 31, 2011 and 2010 have been restated for the effect of Symetra’s adoption of

ASU 2010-26.

Hamer and Bri-Mar

White Mountains received equity interests in Hamer and Bri-Mar, two small manufacturing companies distributed to White Mountains in connection with the dissolution of the Tuckerman Capital, LP fund (see Note 16). Effective October 1, 2012, these investments are accounted for under the equity method. For the three months ended December 31, 2012, White Mountains recorded equity in earnings of $0.4 million for Hamer. Bri-Mar did not have any earnings for the three months ended December 31, 2012. As of December 31, 2012, White Mountains’ investments in Hamer and Bri-Mar was $4.0 million and $1.9 million, respectively.

Pentelia

White Mountains obtained an equity interest of 33% in Pentelia Capital Management (“PCM”) for $1.6 million in April 2007. This investment is accounted for under the equity method. For the year ended December 31, 2012, 2011 and 2010, White Mountains recorded $(1.3) million, $(0.2) million, and $0.5 million of equity in earnings in PCM. As of December 31, 2012 and 2011, White Mountains investment in PCM was $0.5 million and $1.7 million.

Delos

In August 2006, Sirius Group sold a wholly-owned subsidiary to an investor group led by Lightyear Capital for $138.8 million in cash and recognized a pre-tax gain of $14.0 million in other revenue. As part of this transaction, White Mountains acquired an equity interest of approximately 18% for $32.0 million in the acquiring entity, Delos, and accounted for its investment in Delos under the equity method. In December 2010, White Mountains sold its investment in Delos for $21.7 million and recognized a pre-tax loss of $10.9 million in other revenue.

- Definition

The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group.

+ References + Details

Variable Interest Entities	12 Months Ended
Variable Interest Entities	Dec. 31, 2012
Variable Interest Entity, Not Primary Beneficiary, Disclosures [Abstract]
Variable Interest Entities	Variable Interest Entities BAM BAM is a newly formed mutual insurance company. As a mutual company BAM is owned by its members and a portion of each member’s charges represents a contribution to member’s surplus. During 2012, White Mountains capitalized HG Global to fund BAM through the purchase of $503.0 million of BAM Surplus Notes. The equity at risk funded by BAM’s members is not sufficient to fund its operations without the additional subordinated financial support provided by the BAM Surplus Notes and accordingly, BAM is considered to be a variable interest entity (“VIE”). The proceeds from the issuance of the BAM Surplus Notes represent substantially all of the equity at risk in BAM at December 31, 2012. BAM and HG Global, through its wholly-owned subsidiary, HG Re, entered into a first loss reinsurance treaty (“FLRT”), under which HG Re will provide first loss protection up to 15% of par outstanding on each bond insured by BAM in exchange for 60% of the premium, net of a ceding commission, charged by BAM. HG Re's obligations under the FLRT are satisfied by the assets in two collateral trusts: a Regulation 114 Trust and a Supplemental Trust. Losses required to be reimbursed to BAM by HG Re are subject to an aggregate limit equal to the assets held in the collateral trusts at any point in time. In addition, HG Global has the right to designate two directors for election to BAM’s board of directors. White Mountains is required to consolidate the results of BAM. Since BAM is owned by its members, its equity and results of operations are included in non-controlling interests. Reciprocals Reciprocals are policyholder-owned insurance carriers organized as unincorporated associations. Each policyholder insured by the reciprocal shares risk with the other policyholders. Policyholders share profits and losses in the same proportion as the amount of insurance purchased but are not subject to assessment for net losses of the reciprocal. OneBeacon had capitalized three reciprocals by loaning funds to them in exchange for surplus notes. In 2002, OneBeacon formed New Jersey Skylands Management LLC (“NJSM”) to provide management services for a fee to New Jersey Skylands Insurance Association, a reciprocal, and its wholly-owned subsidiary New Jersey Skylands Insurance Company (together, “New Jersey Skylands Insurance”). In 2004, OneBeacon formed Houston General Management Company to provide management services for a fee to another reciprocal, Houston General Insurance. In 2006, Adirondack AIF, LLC (“AAIF”), a wholly-owned subsidiary of OneBeacon, entered into an agreement to provide management services for a fee to Adirondack Insurance, a reciprocal. OneBeacon has no ownership interest in the reciprocals. Under the provisions of ASC 810, OneBeacon had determined that each of the reciprocals qualifies as a VIE. Further, OneBeacon had determined that it is the primary beneficiary as it has both the power to direct the activities of the VIE that most significantly impact the entity’s economic performance and the obligation to absorb losses or receive benefits of the entity that could potentially be significant to the VIE as a result of the management services provided to the reciprocal and the funds loaned to it. Accordingly, OneBeacon consolidates Houston General Insurance and, until the completion of the Personal Lines Transaction on July 1, 2010, consolidated New Jersey Skylands Insurance and Adirondack Insurance. As described in Note 2, the Personal Lines Transaction, which was completed on July 1, 2010, included the sale of NJSM and AAIF and the transfer of the surplus notes issued by New Jersey Skylands Insurance and Adirondack Insurance. Completion of the Personal Lines Transaction triggered deconsolidation of New Jersey Skylands Insurance and Adirondack Insurance. Subsequent to the Personal Lines Transaction, Houston General Insurance is OneBeacon’s only reciprocal. At December 31, 2012 and 2011, consolidated amounts related to Houston General Insurance included total assets of $97.7 million and $105.9 million, respectively, and total liabilities of $120.4 million and $126.2 million, respectively. At December 31, 2012, the net amount of capital at risk is equal to the surplus note of $23.7 million less the accumulated losses of $22.7 million which includes accrued interest on the surplus note of $19.7 million which eliminates in consolidation. Prospector Offshore Fund White Mountains has determined that the Prospector Offshore Fund, Ltd. (“the Prospector Fund”) is a VIE for which White Mountains is the primary beneficiary and is required to consolidate the Prospector Fund. At December 31, 2012 and 2011, White Mountains consolidated total assets of $151.0 million and $135.8 million and total liabilities of $51.1 million and $31.6 million of the Prospector Offshore Fund. In addition, at December 31, 2012 and 2011, White Mountains recorded non-controlling interest of $28.9 million and $38.9 million in the Prospector Offshore Fund. For the years ended December 31, 2012, 2011 and 2010 White Mountains recorded $2.6 million, $0.2 million and $(3.2) million of non-controlling interest income (expense) related to the Prospector Offshore Fund. At December 31, 2012, the net amount of capital at risk is equal to White Mountains’ investment in the Fund of $71.1 million, which represents White Mountains’ ownership interest of 71.1% in the Prospector Fund. Tuckerman Fund I On December 31, 2011, the Tuckerman Capital, LP fund (“Tuckerman Fund I”) was dissolved and all of the net assets of the fund were distributed to the owners of the fund, of which White Mountains owned approximately 94%. In conjunction with the dissolution, White Mountains received a portion of the shares of Hamer and Bri-Mar, two small manufacturing companies that were owned by the Tuckerman Fund I. The consolidated results of Hamer and Bri-Mar are included in the Other Operations segment from January 1, 2012 through September 30, 2012, at which point the results of these companies were no longer consolidated by White Mountains. Prior to the dissolution, White Mountains had determined that Tuckerman Fund I was a VIE for which White Mountains was the primary beneficiary and was required to consolidate Tuckerman Fund I. At December 31, 2011, White Mountains consolidated assets of $17.6 million, liabilities of $9.9 million, non-controlling interests of $3.5 million and $2.2 million of non-controlling interest expense related to the companies distributed by Tuckerman Fund I. At December 31, 2010, White Mountains consolidated total assets of $19.4 million and total liabilities of $12.3 million of Tuckerman Fund I. In addition, at December 31, 2010, White Mountains recorded non-controlling interest of $2.4 million in Tuckerman Fund I. For the year ended December 31, 2010 White Mountains recorded $1.0 million of non-controlling interest expense related to Tuckerman Fund I.

Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2012

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

White Mountains carries its financial instruments on its balance sheet at fair value with the exception of its fixed-rate, long-term indebtedness and the SIG Preference Shares, which are recorded as non-controlling interest.

The following table summarizes the fair value and carrying value of financial instruments as of December 31, 2012 and 2011:



	December 31, 2012				December 31, 2011
Millions	Fair Value		Carrying Value		Fair Value		Carrying Value
2012 OBH Senior Notes	$	282.4	$	274.7	$	—	$	—
2003 OBH Senior Notes	—		—		277.4		269.8
SIG Senior Notes	441.9		399.4		418.6		399.3
SIG Preference Shares	257.5		250.0		217.5		250.0

The fair value estimate for the 2012 and 2003 OBH Senior Senior Notes has been determined using quoted market prices and is considered a Level 2 measurement. The fair value estimates for the SIG Senior Notes and the SIG Preference Shares have been determined based on indicative broker quotes and is considered a Level 3 measurement.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 820
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=7578670&loc=d3e19207-110258

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 30
-URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 21
-URI http://asc.fasb.org/extlink&oid=7491637&loc=d3e13537-108611

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 28
-URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 16
-URI http://asc.fasb.org/extlink&oid=7491637&loc=d3e13504-108611

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=7491637&loc=d3e13433-108611

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15B
-Subparagraph a, b
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 133
-Paragraph 44A, 44B
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 159
-Paragraph 17-22, 27, 28
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15A
-Subparagraph a-d
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15C, 15D
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 157
-Paragraph 32, 33, 34
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 3, 10, 14, 15
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

Transactions with Related Persons	12 Months Ended
Transactions with Related Persons	Dec. 31, 2012
Related Party Transactions [Abstract]
Transactions with Related Persons	Transactions with Related Persons Prospector Mr. John Gillespie is the founder and Managing Member of Prospector. Prospector serves as a discretionary adviser with respect to specified assets, primarily equity securities, managed by WM Advisors on behalf of White Mountains and other clients of WM Advisors. Pursuant to an investment management agreement with WM Advisors (the “WMA Agreement”), Prospector charges WM Advisors fees based on the following schedule: 100 basis points on the first $200.0 million of assets under management; 50 basis points on the next $200.0 million; and 25 basis points on amounts over $400.0 million. At December 31, 2012, Prospector managed a total of $465.9 million of assets for White Mountains (excluding OneBeacon and Symetra) under this arrangement. Prospector has a separate investment management agreement with Symetra that began on July 1, 2010. Until that date, Symetra was a party to the WMA Agreement and subject to the above fee schedule. Prospector has separate investment management agreements with OneBeacon (the “OneBeacon Agreements”) pursuant to which Prospector supervises and directs specified assets, primarily equity securities, including assets in OneBeacon’s defined benefit and defined contribution plans (the “ERISA Assets”). All assets managed under the OneBeacon Agreements are subject to a single fee schedule that is substantially similar to the terms of the WMA Agreement fee schedule. At December 31, 2012, Prospector managed $533.6 million of assets for OneBeacon under this arrangement, including $205.9 million of ERISA Assets. During 2012, 2011 and 2010, Prospector earned $6.4 million, $6.0 million, and $6.6 million in total fees pursuant to the WMA Agreement and the OneBeacon Agreements. Prospector also advises White Mountains on matters including capital management, asset allocation, private equity investments and mergers and acquisitions. Pursuant to a Consulting Agreement for those services, Prospector was granted 7,000 performance shares for the 2013-2015 cycle, 7,750 performance shares for the 2012-2014 cycle and 8,500 performance shares for the 2011-2013 performance cycle. In accordance with the terms of the WTM Incentive Plan, performance against target governing the performance shares will be confirmed by the Compensation Committee of the Board following the end of each performance cycle and the number of performance shares actually awarded at that time will range from 0% to 200% of the target number granted. Based on the Company’s performance, Prospector received 49% of the 9,200 performance shares granted for the 2010-2012 performance cycle for a total payout of $2.5 million. Unless and until the Consulting Agreement has been terminated, and subject to the approval of the Compensation Committee, at the beginning of each performance cycle Prospector is to be granted performance shares with a value of approximately $4.5 million. The Compensation Committee establishes the performance target for such performance shares. Pursuant to a revenue sharing agreement, Prospector has agreed to pay White Mountains 6% of the revenues in excess of $500,000 of certain of Prospector’s funds in return for White Mountains having made a founding investment in 1997. During 2012, 2011 and 2010, White Mountains earned $0.5 million, $0.2 million, and $0.7 million under this arrangement. At December 31, 2012, White Mountains had $117.2 million invested in limited partnership investment interests managed by Prospector (the “Funds”). This total includes $12.9 million of OneBeacon assets. Under the limited partnership agreements, Prospector serves as general partner and general manager of the Funds and is paid management and incentive performance fees by White Mountains and OneBeacon. For the year ended December 31, 2012, White Mountains and OneBeacon incurred $1.1 million in management fees and $1.3 million in incentive fees. In addition, Messrs. Barrette, Davis, Gillespie and Waters, each a director of the Company, and Mr. Campbell, an executive officer of the Company, owned limited partnership investment interests managed by Prospector as of such date. Oakum Bay Capital Mr. Kernan Oberting, a Managing Director of White Mountains Capital, is the Founder, Chairman of the Board and Chairman of the Risk Committee of Oakum Bay Capital (“OBC”). OBC serves as the general manager of, and owns general partnership interests in, the KVO Capital Partners (“KCP”) and the Trimarc Capital Fund (“TCF”), which are hedge funds with an aggregate of $66 million under management as of December 31, 2012. Mr. Brooke Parish, who is Mr. Oberting's brother-in-law, is the CEO of OBC. Mr. David Oberting, who is Mr. Oberting's brother, is the portfolio manager of KCP. In connection with Mr. Oberting commencing employment with White Mountains Capital, on July 16, 2012, the Company purchased $2 million of preferred equity and received 7.5% of the common equity of OBC. The preferred equity is entitled to dividends at a rate of 5% per annum, increasing to 10% per annum after four years, and is mandatorily redeemable after six years. After giving effect to the common equity investment, Mr. Oberting and Mr. Parish beneficially owned 27.5% and 45%, respectively, of the common equity of OBC. In addition, at the time it purchased the preferred equity in OBC, the Company invested $6 million in TCF. In 2010, the Company had invested $4 million in TCF. As of December 31, 2012, White Mountains had $9.9 million invested in TCF. Under TCF's limited partnership agreements, OBC is paid management and incentive performance fees by White Mountains. For the year ended December 31, 2012, White Mountains paid $56,811 of management fees and $88,090 of incentive fees. OBC receives the management fees and 40% of the incentive fees. Mr. Oberting has limited partnership investments in KCP and TCF. Mr. Barrette had a limited partnership investment in KCP that was redeemed in full in September 2012. Other Relationships and Transactions WMA provides investment advisory and management services to Symetra. At December 31, 2012 and 2011, WMA had $27.4 billion and $26.3 billion of assets under management from Symetra. During 2012, 2011 and 2010, WMA earned $15.9 million, $15.2 million and $13.8 million in fees from Symetra. On July 12, 2012, the Company repurchased 50,000 WTM common shares from John J. Byrne, a beneficial owner of the Company. The price per share was $528.45, the market price at the time the agreement was reached. On December 19, 2012, the Company repurchased 285,000 WTM common shares from mutual funds managed by Franklin Mutual Advisers, a beneficial owner of the Company. The price per share was $519.06, the market price at the time the agreement was reached. On January 7, 2011, the Company repurchased 140,000 WTM common shares from mutual funds managed by Franklin Mutual Advisers at a price per share of $342.50, which was $2.50 less than the market price at the time the agreement was reached. Mr. Gillespie, a director of the Company, indirectly through general and limited partnership interests holds a 33% interest in Dowling & Partners Connecticut Fund III, LP (“Fund III”). Two of the Company’s indirect subsidiaries, OneBeacon Professional Insurance (“OB Professional Insurance”) and White Mountains Specialty Underwriting, Inc. (“WMSUI”), had previously borrowed approximately $8.0 million and $7.0 million, respectively, from Fund III in connection with an incentive program sponsored by the State of Connecticut known as the Connecticut Insurance Reinvestment Act (the “CIR Act”). The CIR Act provides for Connecticut income tax credits to be granted for qualifying investments made by approved fund managers. Both loans were repaid in full during 2006. The loans were qualifying investments which generated tax credits to be shared equally between Fund III on the one hand and OB Professional Insurance and WMSUI on the other. As a result of his interest in Fund III, during 2009, Mr. Gillespie generated approximately $0.5 million in such tax credits.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 850
-SubTopic 10
-Section 50
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-URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39603-107864

Reference 2: http://www.xbrl.org/2003/role/presentationRef
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Reference 3: http://www.xbrl.org/2003/role/presentationRef
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-Publisher SEC
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Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
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Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 57
-Paragraph 1-4
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

Commitments and Contingencies	12 Months Ended
Commitments and Contingencies	Dec. 31, 2012
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies White Mountains leases certain office space under non-cancellable operating leases that expired on various dates through 2021. Rental expense for all of White Mountains’ locations was $18.8 million, $22.8 million and $28.1 million for the years ended December 31, 2012, 2011 and 2010. White Mountains also has various other lease obligations that are immaterial in the aggregate. White Mountains’ future annual minimum rental payments required under non-cancellable leases, which are primarily for office space, are $14.8 million, $13.5 million, $11.8 million, and $33.3 million for 2013, 2014, 2015 and 2016 and thereafter, respectively. White Mountains also has future binding commitments to fund certain other-long term investments. These commitments, which total $124.7 million, do not have fixed funding dates. Capital Lease OBIC sold the majority of its fixed assets and capitalized software to OneBeacon Services LLC (“OB Services”) at a cost equal to book value with no gain or loss recorded on the sale. Subsequent to purchasing the fixed assets and capitalized software from OBIC, OB Services entered into lease financing arrangements with US Bancorp and Fifth Third whereby OB Services sold its furniture and equipment and its capitalized software, respectively, to US Bancorp and Fifth Third. The assets were sold at a cost equal to net book value. OB Services then leased the fixed assets back from US Bancorp for a lease term of five years and leased the capitalized software back from Fifth Third for a lease term of four years. OB Services received cash proceeds of $23.1 million as a result of entering into the sale-leaseback transactions. At the end of the lease terms, OB Services will be obligated to purchase the leased assets for a nominal fee, after which all rights, title and interest would transfer to OB Services. In accordance with ASC 840, OBIC recorded the sale of the assets with no gain or loss recognized while OB Services has recorded a capital lease obligation and a capital lease asset. As of December 31, 2012 and 2011, OB Services had a capital lease obligation of $18.2 million and $23.1 million, respectively, included within other liabilities and a capital lease asset of $16.1 million and $22.9 million included within other assets. The underlying assets will continue to be depreciated over their respective useful lives. OB Services’ future annual minimum rental payments are $5.3 million for each of the years ended December 31, 2013, 2014 and 2015 and $1.9 million for the year ended December 31, 2016. Assigned Risks As a condition of its license to do business in certain states, White Mountains’ insurance operations are required to participate in mandatory shared market mechanisms. Each state dictates the types of insurance and the level of coverage that must be provided. The total amount of business an insurer is required to accept is based on its market share of voluntary business in the state. In certain cases, White Mountains is obligated to write business from mandatory shared market mechanisms at some time in the future based on the market share of voluntary policies it is currently writing. Underwriting results related to assigned risk plans are typically adverse and are not subject to the predictability associated with White Mountains’ voluntarily written business. Under existing guaranty fund laws in all states, insurers licensed to do business in those states can be assessed for certain obligations of insolvent insurance companies to policyholders and claimants. White Mountains accrues any significant insolvencies when the loss is probable and the assessment amount can be reasonably estimated. The actual amount of such assessments will depend upon the final outcome of rehabilitation proceedings and will be paid over several years. At December 31, 2012, the reserve for such assessments totaled $12.9 million. Esurance On October 7, 2011, the Company completed the sale of its Esurance and Answer Financial subsidiaries (the “Transferred Subsidiaries”) to Allstate pursuant a Stock Purchase Agreement dated as of May 17, 2011 (filed as an exhibit to the Company’s current report on Form 8-K on May 18, 2011, the “Agreement”). The Company has certain contingent liabilities under the Agreement as follows: (i) the final purchase price payable by Allstate under the Agreement, which is based upon the book value of the Transferred Subsidiaries at the closing date, is subject to a true-up process that has not yet been concluded, (ii) subject to specified thresholds and limits, the Company generally indemnifies Allstate for breaches of its representations and warranties in the Agreement for a period of eighteen months (although longer for specified representations and warranties) from the closing, (iii) the Company indemnifies Allstate for breaches of certain covenants in the Agreement, including certain agreements by the Company not to engage in certain competing business activities for two years after the closing and not to solicit certain employees of the Transferred Subsidiaries for three years after the closing, and (iv) subject to specified thresholds and limits, the Company indemnifies Allstate for specified matters related to the pre-closing period, including (a) specified litigation matters, (b) losses of the Transferred Subsidiaries arising from extra-contractual claims and claims in excess of policy limits (“ECO/EPL losses”), (c) certain corporate reorganizations effected to remove entities from the Transferred Subsidiaries that were not being sold in the transaction, and (d) certain tax matters, including certain net operating losses being less than stated levels. In addition, the Company retains 90% of positive or negative development in the loss reserves of the Transferred Subsidiaries as of the closing date (net of ECO/EPL losses), to be computed annually on the first three anniversaries of the closing date. Legal Contingencies White Mountains, and the insurance and reinsurance industry in general, are 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, or are directly related to, claims activity. White Mountains’ estimates of the costs of settling matters routinely encountered in claims activity are reflected in the reserves for unpaid loss and LAE. See Note 3. 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 it there is a reasonable possibility that a loss may have been incurred. Although the ultimate outcome of claims and non-claims related litigation and arbitration, and the amount or range of potential loss at any particular time, is often inherently uncertain, management does not believe that the ultimate outcome of such claims and non-claims related litigation and arbitration will have a material adverse effect on White Mountains’ financial condition, results of operations or cash flows. The following summarizes significant ongoing non-claims related litigation or arbitration as of December 31, 2012: Esurance Sale In 2011, the Company sold its Esurance and Answer Financial businesses (the “Transferred Companies”) to The Allstate Corporation (”Allstate”) for a purchase price of approximately $1.01 billion. The purchase price consisted of $700.0 million plus the tangible book value of the Transferred Companies at the closing, which was estimated to be $308.0 million. Following closing, Allstate was required to prepare a final closing statement, including an audited balance sheet for the Transferred Companies as of the closing date. The Company is disputing Allstate’s calculation of tangible book value in the closing statement. The amount in dispute is approximately $20.0 million, after tax. The dispute principally relates to (i) the elimination of $24.7 million (pre-tax) of deferred acquisition costs ($16.0 million, after tax) and (ii) the inclusion of a liability equal to the costs associated with an Esurance extra-contractual (“ECO”) matter settled in April 2012 of $5.2 million ($3.4 million, after tax). Per the agreement governing the sale of the Transferred Companies (the “Sale Agreement”), disputes over the closing statement are to be arbitrated by an independent accountant. The Company believes this final closing statement was required to be prepared and audited no later than January 5, 2012. Allstate did not deliver the final closing statement to the Company until June 6, 2012, with an audit report dated June 1, 2012. As a result, in addition to the substantive disputes over the final closing statement, the Company also believes that Allstate's failure to have the final closing statement prepared and audited by the required date constituted a breach of Allstate's obligations under the Sale Agreement. The Company brought suit in the United States District Court for the Southern District of New York in connection with such breach. The court concluded that the Company’s breach claim should also be arbitrated by the independent accountant under the Sale Agreement. That process is proceeding. Tribune Company In June 2011, Deutsche Bank Trust Company Americas, Law Debenture Company of New York and Wilmington Trust Company (collectively referred to as “Plaintiffs”), in their capacity as trustees for certain senior notes issued by the Tribune Company (”Tribune”), filed lawsuits in various jurisdictions (the “Noteholder Actions”) against numerous defendants including OneBeacon, OBIC-sponsored benefit plans and other affiliates of White Mountains in their capacity as former shareholders of Tribune seeking recovery of the proceeds from the sale of common stock of Tribune in connection with Tribune’s leveraged buyout in 2007 (the “LBO”). Tribune filed for bankruptcy in 2008 in the Delaware bankruptcy court (the "Bankruptcy Court") and emerged from bankruptcy at the end of 2012 in a Chapter 11 reorganization. During the bankruptcy proceedings, the Bankruptcy Court granted Plaintiffs permission to commence these LBO-related actions. Plaintiffs seek recovery of the proceeds received by the former Tribune shareholders on a theory of constructive fraudulent transfer asserting that Tribune purchased or repurchased its common shares without receiving fair consideration at a time when it was, or as a result of the purchases of shares, was rendered, insolvent. OneBeacon has entered into a joint defense agreement with other affiliates of White Mountains that are defendants in the action. Certain subsidiaries of White Mountains received approximately $39 million for Tribune common stock tendered in connection with the LBO. In December 2011, the Judicial Panel on Multidistrict Litigation granted a motion to consolidate all of the Noteholder Actions for pretrial matters and transfer all such proceedings to the United States District Court for the Southern District of New York. In addition, OneBeacon, OBIC-sponsored benefit plans and other affiliates of White Mountains in their capacity as former shareholders of Tribune, along with thousands of former Tribune shareholders, have been named as defendants in an adversary proceeding brought by the Official Committee of Unsecured Creditors of the Tribune Company, on behalf of the Tribune Company, which seeks to avoid the repurchase of shares by Tribune in the LBO on a theory of intentional fraudulent transfer (the “Committee Action”). The Committee Action has since been consolidated with the Noteholder Actions. In September 2012, a case management order was entered in the consolidated cases, setting forth, among other things, a briefing schedule for an omnibus motion to dismiss in the Noteholder Actions. The court is expected to hear oral argument on that motion in March 2013. Discovery and other motion practice (other than motions to amend the complaints) in the Committee Action and the Noteholder Actions is stayed until further order of the court. Ace American Insurance Company A subsidiary of OneBeacon, OBH, was sued in Federal Court in the Eastern District of Pennsylvania on August 17, 2012 by Ace American Insurance Company (“Ace”). The complaint alleges that OBH, through a professional recruiting firm, improperly hired a group of Ace employees from Ace's surety division. The complaint sought injunctive relief and unspecified damages. After court-ordered expedited discovery was completed, the claims for injunctive relief were resolved pursuant to a confidential agreement. The remaining claim against OBH is for damages only and is scheduled to be heard in April. After the claims against OBH for injunctive relief were resolved, Ace filed a Demand for Arbitration against five of the former Ace surety employees hired by OneBeacon, alleging breach of their duty of loyalty to Ace and misappropriation of Ace trade secrets. OneBeacon believes that Ace's damages claim against OBH and the claims against the individual employees are without merit and intends to vigorously defend both

- Definition

The entire disclosure for commitments and contingencies.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 20
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6449706&loc=d3e16207-108621

Reference 2: http://www.xbrl.org/2003/role/presentationRef
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Reference 3: http://www.xbrl.org/2003/role/presentationRef
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Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
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Reference 5: http://www.xbrl.org/2003/role/presentationRef
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Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name FASB Interpretation (FIN)
-Number 14
-Paragraph 3
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 5
-Paragraph 9, 10, 11, 12
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

Discontinued Operations

12 Months Ended

Dec. 31, 2012

Discontinued Operations and Disposal Groups [Abstract]

Discontinued operations

Discontinued Operations

Esurance

On October 7, 2011, White Mountains completed the sale of Esurance Insurance and AFI to Allstate (see Note 2). As a result of the transaction, Esurance Insurance, AFI and the business Esurance Insurance cedes to Sirius Group (collectively, “the Esurance Disposal Group”) are reported as discontinued operations. White Mountains recognized a gain of $677.5 million on the Esurance Sale which is recorded net of tax in discontinued operations. Effective as of December 31, 2011, the results of operations for the Esurance Disposal Group have been classified as discontinued operations and are presented, net of related income taxes, in the statement of comprehensive income.

AutoOne

On February 22, 2012, OneBeacon completed the sale of the AutoOne business to Interboro. AutoOne operated as a division within OneBeacon that offered products and services to automobile assigned risk markets. The transaction included the sale of two insurance entities, AOIC and AOSIC, through which substantially all of the AutoOne business was written on a direct basis. The results of operations for the AutoOne business have been classified as discontinued operations and are presented, net of related income taxes, in the statement of comprehensive income. The assets and liabilities associated with the AutoOne business as of December 31, 2011 have been presented in the balance sheet as held for sale.

During 2012, OneBeacon and Interboro finalized the post-closing adjustments to the closing balance sheet resulting in OneBeacon recording a net gain of $0.5 million after tax. This after-tax net gain is included in loss from sale of discontinued operations in the statements of comprehensive income (loss) for the year ended December 31, 2012. During 2011, OneBeacon recorded an after-tax loss of $19.2 million in loss from sale of discontinued operations for the estimated loss on sale of AutoOne.

Runoff Transaction

On October 17, 2012, OneBeacon entered into an agreement to sell its runoff business to Armour. During 2012, the results of operations for the runoff business have been classified as discontinued operations and are presented, net of related income taxes, in the statement of comprehensive income. Prior year results of operations have been reclassified to conform to the current period’s presentation. The assets and liabilities associated with the runoff business as of December 31, 2012 have been presented in the balance sheet as held for sale. The amounts classified as discontinued operations exclude investing and financing activities that are conducted on an overall consolidated level and, accordingly, there were no separately identifiable investments associated with the runoff business. Therefore, the prior period balance sheet has not been reclassified to conform to the current period’s presentation.

For the year ended December 31, 2012, White Mountains recorded a $91.5 million after-tax loss on sale and a $24.0 million loss from operations which included a $9.0 million after-tax loss related to an reduction in the workers compensation loss reserve discount rate on reserves being transferred as part of the sale.

Loss and LAE reserve development. During 2012, OneBeacon experienced $40.0 million of net unfavorable loss reserve development from the runoff business. The net unfavorable loss reserve development was primarily related to related to case incurred development on multiple peril liability and general liability claims and the impact of an adverse court ruling in Mississippi regarding a disputed assessment from an involuntary pool for hurricane Katrina claims. In addition, there was a change in the workers' compensation tabular discount rate from 4.5% to 3.5% that resulted in a charge of $15.2 million.

During 2011, OneBeacon experienced $26.7 million of net unfavorable loss reserve development from the runoff business. The net unfavorable loss reserve development resulted from a detailed review of runoff expenses, principally unallocated loss adjustment expenses (“ULAE”), completed during the fourth quarter of 2011. Specifically, OneBeacon completed a detailed review of loss and defense and cost containment expenses (allocated LAE or “ALAE”) and other adjusting expenses (ULAE) during the fourth quarter of 2011. The analysis considered costs, based on current non-staff expenses and staffing projections for the runoff business, as OneBeacon continued efforts to segregate its claims operations between ongoing claims and runoff claims. The analysis also factored in the revised definition of runoff claims to include the non-specialty commercial lines business that was exited via the renewal rights agreement sale beginning with January 1, 2010 effective dates.

During 2010, OneBeacon experienced $23.1 million of net favorable loss reserve development from the runoff business. The net favorable loss reserve development was primarily due to lower than expected severity on multiple peril liability lines and other general liability lines, particularly for accident years 2004 through 2009. As a result of the lower than expected case incurred loss and ALAE, actuarial methods based on case incurred losses produced lower estimated ultimate losses, resulting in lower estimates of required IBNR.

Reinsurance. Included in the assets held for sale are reinsurance recoverables from two reinsurance contracts with subsidiaries of Berkshire Hathaway Inc. that OneBeacon was required to purchase in connection with White Mountains’ acquisition of OneBeacon in 2001: a reinsurance contract with National Indemnity Company (“NICO”) for up to $2.5 billion in old asbestos and environmental (“A&E”) claims and certain other exposures (the “NICO Cover”) and an adverse loss reserve development cover from General Reinsurance Corporation (“GRC”) for up to $570.0 million, comprised of $400.0 million of adverse loss reserve development occurring in years 2000 and prior in addition to $170.0 million of reserves ceded as of the date of the OneBeacon Acquisition (the “GRC Cover”) . The NICO Cover and GRC Cover, which were contingent on and occurred contemporaneously with the OneBeacon Acquisition, were put in place in lieu of a seller guarantee of loss and LAE reserves and are therefore accounted for under GAAP as a seller guarantee. As of December 31, 2012, the total reinsurance recoverable on paid and unpaid losses of $1,401.9 million related to both the NICO cover and the GRC cover has been included in assets held for sale. Both NICO and GRC have an A.M Best rating of A++, Superior, which is the highest of fifteen ratings.

The total reinsurance recoverables on paid and unpaid losses in assets held for sale were $15.6 million and $1,840.8 million as of December 31, 2012. The reinsurance recoverable on unpaid amount is gross of $150.1 million in purchase accounting adjustments that will become recoverable if claims are paid in accordance with current reserve estimates. In addition, $36.7 million of the amount that is currently included in assets held for sale on the balance sheet will be reported in reinsurance recoverables on unpaid losses when the Runoff Transaction closes (at the then current value) as a result of a related reinsurance contract.

Asbestos and environmental loss and LAE reserve activity. OneBeacon's reserves include provisions made for claims that assert damages from A&E related exposures. Substantially all of these reserves have been reclassified to liabilities held for sale as of December 31, 2012, as they relate to the runoff business. Asbestos claims relate primarily to injuries asserted by those who came in contact with asbestos or products containing asbestos. Environmental claims relate primarily to pollution and related clean-up obligations, particularly as mandated by Federal and state environmental protection agencies. In addition to the factors regarding the reserving process, OneBeacon estimates its A&E reserves based upon, among other factors, facts surrounding reported cases and exposures to claims, such as policy limits and deductibles, current law, past and projected claim activity and past settlement values for similar claims, as well as analysis of industry studies and events, such as recent settlements and asbestos-related bankruptcies. The cost of administering A&E claims, which is an important factor in estimating loss reserves, tends to be higher than in the case of non-A&E claims due to the higher legal costs typically associated with A&E claims.

OneBeacon's reserves for A&E losses at December 31, 2012 represent management's best estimate of its ultimate liability based on information currently available. However, significant uncertainties, including but not limited to case law developments, medical and clean up cost increases and industry settlement practices, limit OneBeacon's ability to accurately

estimate ultimate liability and OneBeacon may be subject to A&E losses beyond currently estimated amounts. In addition,

OneBeacon remains liable for risks reinsured in the event that a reinsurer does not honor its obligations under reinsurance

contracts. OneBeacon cannot reasonably estimate at the present time loss reserve additions arising from any such future adverse loss reserve developments and cannot be sure that allocated loss reserves, plus the remaining capacity under the NICO Cover and other reinsurance contracts, will be sufficient to cover additional liability arising from any such adverse loss reserve

developments.

The following tables summarize reported A&E loss and LAE reserve activities (gross and net of reinsurance) for

OneBeacon for the years ended December 31, 2012, 2011 and 2010, respectively.



Net A&E Loss	Year Ended December 31,
Reserve Activity	2012									2011									2010
				Pre-NICO									Pre-NICO									Pre-NICO
Millions	Gross			Net ⁽¹⁾			Net⁽²⁾			Gross			Net ⁽¹⁾			Net⁽²⁾			Gross			Net ⁽¹⁾			Net⁽²⁾
Asbestos:
Beginning balance	$	1,074.3		$	681.2		$	2.2		$	904.0		$	647.3		$	6.4		$	985.6		$	688.8		$	6.5
Incurred losses and LAE	(.3		)	(.5		)	(.5		)	256.8			32.2			(4.0		)	—			—			—
Paid losses and LAE	(144.6		)	(78.2		)	.7			(86.5		)	1.7			(.2		)	(81.6		)	(41.5		)	(.1		)
Ending balance	929.4			602.5			2.4			1,074.3			681.2			2.2			904.0			647.3			6.4
Environmental:
Beginning balance	279.8			151.6			9.0			119.0			93.8			9.2			350.7			218.6			7.6
Incurred losses and LAE	(.9		)	(.5		)	(.5		)	231.8			62.2			10.0			6.2			6.0			6.0
Paid losses and LAE	(45.9		)	(25.7		)	(2.1		)	(71.0		)	(4.4		)	(10.2		)	(237.9		)	(130.8		)	(4.4		)
Ending balance	233.0			125.4			6.4			279.8			151.6			9.0			119.0			93.8			9.2
Total asbestos and environmental:
Beginning balance	1,354.1			832.8			11.2			1,023.0			741.1			15.6			1,336.3			907.4			14.1
Incurred losses and LAE	(1.2		)	(1.0		)	(1.0		)	488.6			94.4			6.0			6.2			6.0			6.0
Paid losses and LAE	(190.5		)	(103.9		)	(1.4		)	(157.5		)	(2.7		)	(10.4		)	(319.5		)	(172.3		)	(4.5		)
Ending balance	$	1,162.4		$	727.9		$	8.8		$	1,354.1		$	832.8		$	11.2		$	1,023.0		$	741.1		$	15.6

⁽¹⁾Represents A&E reserve activity, net of third-party reinsurance, but prior to the NICO Cover.

⁽²⁾ Includes NICO cover

Net Assets Held for Sale

The following summarizes the assets and liabilities associated with the businesses classified as held for sale:



	December 31,
Millions	2012		2011
Assets held for sale
Fixed maturity investments, at fair value	$	338.1	$	111.8
Cash	—		5.5
Reinsurance recoverable on unpaid losses	1,840.8		—
Reinsurance recoverable on paid losses	15.6		—
Insurance premiums receivable	11.0		8.8
Deferred acquisition costs	—		2.2
Deferred tax asset	5.1		1.9
Other assets	16.2		2.4
Total assets held for sale	$	2,226.8	$	132.6
Liabilities held for sale
Loss and loss adjustment expense reserves	$	2,052.6	$	64.7
Unearned insurance premiums	.5		34.1
Ceded reinsurance payable	21.9		—
Other liabilities	151.8		8.8
Total liabilities held for sale	2,226.8		107.6
Net assets held for sale	$	—	$	25.0

Net (Loss) Income from Discontinued Operations

The following summarizes the results of operations, including related income taxes associated with the businesses classified as discontinued operations:



	Year Ended December 31,
Millions, except per share amounts	2012			2011			2010
Revenues
Earned insurance premiums	$	10.6		$	731.2		$	1,133.4
Net investment income	—			12.0			19.6
Net realized and unrealized investment gains	—			.7			13.3
Other revenue	—			55.1			71.1
Total revenues	10.6			799.0			1,237.4
Expenses
Loss and loss adjustment expenses	48.4			574.9			851.4
Insurance and reinsurance acquisition expenses	(2.1		)	157.0			251.2
Other underwriting expenses	1.7			91.4			124.9
General and administrative expenses	—			38.3			48.7
Total expenses	48.0			861.6			1,276.2
Pre-tax loss	(37.4		)	(62.6		)	(38.8		)
Income tax benefit	13.4			25.9			8.7
Loss from discontinued operations	(24.0		)	(36.7		)	(30.1		)
Gain on sale of Esurance and AFI, net of tax	—			677.5			—
Loss on sale of AutoOne and Runoff Transaction, net of tax	(91.0		)	(19.2		)	—
Net (loss) income from discontinued operations	$	(115.0	)	$	621.6		$	(30.1	)

Earnings (Loss) Per Share

Basic earnings (loss) per share amounts are based on the weighted average number of common shares outstanding including unvested restricted shares that are considered participating securities. Diluted earnings (loss) per share amounts are based on the weighted average number of common shares including unvested restricted shares and the net effect of potentially dilutive common shares outstanding. The following table outlines the computation of earnings (loss) per share for discontinued operations for the years ended December 31, 2012, 2011 and 2010:



	Year Ended December 31,
	2012			2011			2010
Basic and diluted earnings (loss) per share numerators (in millions):
Net (loss) income attributable to White Mountains’ common shareholders	$	(115.0	)	$	621.6		$	(30.1	)
Allocation of income for participating unvested restricted common shares ⁽¹⁾	1.5			(5.4		)	.4
Net (loss) income attributable to White Mountains’ common shareholders, net of restricted common share amounts ⁽³⁾	$	(113.5	)	$	616.2		$	(29.7	)
Basic earnings (loss) per share denominators (in thousands):
Total average common shares outstanding during the period	6,799.8			7,881.0			8,548.4
Average unvested restricted common shares ⁽¹⁾	(91.1		)	(69.4		)	(97.3		)
Basic earnings (loss) per share denominator	6,708.7			7,811.6			8,451.1
Diluted earnings (loss) per share denominator (in thousands):
Total average common shares outstanding during the period	6,799.8			7,881.0			8,548.4
Average unvested restricted common shares⁽¹⁾	(91.1		)	(69.4		)	(97.3		)
Average outstanding dilutive options to acquire common shares⁽²⁾	—			—			.5
Diluted earnings (loss) per share denominator	6,708.7			7,811.6			8,451.6
Basic and diluted (loss) earnings per share (in dollars):	$	(16.91	)	$	78.88		$	(3.51	)


⁽¹⁾	Restricted common shares outstanding vest either in equal annual installments or upon a stated date (see Note 11).


⁽²⁾	The diluted earnings per share denominator for the year ended December 31, 2010 includes 1,200 common shares issuable upon exercise of incentive options at an average strike price of $189.31 per common share. The non-qualified options were not included in the diluted earnings per share denominator for any of the periods presented as their inclusion would be anti-dilutive.


⁽³⁾	Net income (loss) attributable to White Mountains’ common shareholders, net of restricted share amounts, is equal to undistributed earnings (loss) for the years ended December 31, 2012, 2011 and 2010.


⁽⁴⁾	Restricted shares issued by White Mountains contain dividend participation features, and therefore, are considered participating securities.

- Definition

The entire disclosure for the facts and circumstances leading to the completed or expected disposal, manner and timing of disposal, the gain (loss) recognized in the income statement and the income statement caption that includes that gain (loss), amounts of revenues and pretax profit or loss reported in discontinued operations, the segment in which the disposal group was reported, and the classification (whether sold or classified as held for sale) and carrying value of the assets and liabilities comprising the disposal group. Includes all disposal groups, including those classified as components of the entity (discontinued operations).

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1361-107760

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1436-107760

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1510-107760

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1474-107760

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 45
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e1020-107759

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 45
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e957-107759

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 45
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e1012-107759

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 360
-SubTopic 10
-Section 45
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=8077374&loc=d3e2443-110228

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 360
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6391110&loc=d3e2941-110230

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 144
-Paragraph 43-48
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

Subsequent Event (Notes)	12 Months Ended
Subsequent Event (Notes)	Dec. 31, 2012
Subsequent Events [Abstract]
Subsequent Event	Subsequent Event Sale of Essentia On January 2, 2013, OneBeacon completed the sale of Essentia Insurance Company (“Essentia”), an indirect wholly owned subsidiary that wrote policies for the Hagerty collector car and boat business, to Markel Corporation. OneBeacon will recognize a pre-tax gain on sale of approximately $23 million ($15 million after tax) in the first quarter of 2013. The Hagerty business associated with this agreement generated net written premiums of approximately $179.7 million, $166.6 million and $153 million (8.0% of WhiteMountains’ consolidated written premiums for all periods), for the years ended December 31, 2012, 2011 and 2010.

Selected Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2012

Quarterly Financial Information Disclosure [Abstract]

Selected Quartely Financial Data

SELECTED QUARTERLY FINANCIAL DATA

(Unaudited)

Selected quarterly financial data for 2012 and 2011 is shown in the following table. The quarterly financial data includes, in the opinion of management, all recurring adjustments necessary for a fair presentation of the results of operations for the interim periods. As a result of the Esurance Sale and AutoOne Sale, the results of operations for Esurance and AutoOne have been classified as discontinued operations and are now presented, net of related income taxes, as such in the statement of comprehensive income. Prior year amounts have been reclassified to conform to the current period’s presentation (see Note 20).



	2012 Three Months Ended												2011 Three Months Ended
Millions, except per share amounts	Dec. 31			Sept. 30			June 30			Mar. 31			Dec. 31			Sept. 30			June 30			Mar. 31
Revenues	$	566.4		$	697.4		$	542.3		$	629.7		$	593.4		$	501.7		$	552.4		$	525.6
Expenses	617.2			562.3			504.7			488.8			495.0			500.5			516.6			563.0
Pre-tax income (loss)	(50.8		)	135.1			37.6			140.9			98.4			1.2			35.8			(37.4		)
Tax benefit (expense)	101.0			(47.8		)	(6.4		)	(31.1		)	110.9			0.6			(8.8		)	7.3
Income (loss) from continuing operations	50.2			87.3			31.2			109.8			209.3			1.8			27.0			(30.1		)
Income (loss) from discontinued operations, net of tax	0.5			(106.8		)	0.5			(9.2		)	647.6			(30.1		)	(2.4		)	6.5
Non-controlling interest in consolidated subsidiaries	12.0			30.9			(12.1		)	(16.8		)	(20.3		)	11.0			(20.8		)	(11.4		)
Equity in (loss) earnings of unconsolidated affiliates	5.5			7.7			6.5			10.2			(36.4		)	1.5			7.9			6.8
Income (loss) attributable to White Mountains’ common shareholders	$	68.2		$	19.1		$	26.1		$	94.0		$	800.2		$	(15.8	)	$	11.7		$	(28.2	)
Income (loss) attributable to White Mountains’ common shareholders:
Basic
Continuing operations	$	10.36		$	19.11		$	3.85		$	13.85		$	20.03		$	1.80		$	1.78		$	(4.33	)
Discontinued operations	0.07			(16.21		)	0.07			(1.24		)	85.01			(3.80		)	(0.30		)	0.82
Total consolidated operations	10.43			2.90			3.92			12.61			105.04			(2.00		)	1.48			(3.51		)
Diluted
Continuing operations	$	10.36		$	19.11		$	3.85		$	13.85		$	20.03		$	1.80		$	1.78		$	(4.33	)
Discontinued operations	0.07			(16.21		)	0.07			(1.24		)	85.01			(3.80		)	(0.30		)	0.82
Total consolidated operations	10.43			2.90			3.92			12.61			105.04			(2.00		)	1.48			(3.51		)
Adjusted book value per share	$	587.63		$	573.66		$	564.77		$	565.38		$	542.11		$	436.18		$	542.11		$	446.70

- Definition

The entire disclosure for the quarterly financial data in the annual financial statements. The disclosure may include a tabular presentation of financial information for each fiscal quarter for the current and previous year, including revenues, gross profit, income or loss before extraordinary items and earnings per share data. It also includes an indication if the information in the note is unaudited, comments on the aggregate effect of year-end adjustments, and an explanation of matters or transactions that affect comparability or are pertinent to an understanding of the information furnished.

+ References + Details

SCHEDULE I SUMMARY OF INVESTMENTS-OTHER THAN INVESTMENTS IN RELATED PARTIES

12 Months Ended

Dec. 31, 2012

Summary of Investments, Other than Investments in Related Parties [Abstract]

SCHEDULE I SUMMARY OF INVESTMENTS-OTHER THAN INVESTMENTS IN RELATED PARTIES

WHITE MOUNTAINS INSURANCE GROUP, LTD.

SUMMARY OF INVESTMENTS—OTHER THAN

INVESTMENTS IN RELATED PARTIES

At December 31, 2012



Millions	Cost		Carrying Value ⁽¹⁾		Fair Value
Fixed maturities:
Bonds:
U.S. Government and government agencies and authorities	$	440.4	$	440.1	$	440.1
Debt securities issued by industrial corporations	2,321.4		2,385.1		2,385.1
Mortgage-backed and asset-backed securities	2,081.0		2,095.6		2,095.6
States, municipalities and political subdivisions	5.3		5.2		5.2
Foreign governments	526.6		521.9		521.9
Redeemable preferred stocks	79.9		86.4		86.4
Total fixed maturities⁽¹⁾	5,454.6		5,534.3		5,534.3
Short-term investments	630.6		630.6		630.6
Common equity securities:
Banks, trust and insurance companies	268.6		324.5		324.5
Public utilities	39.1		43.6		43.6
Industrial, miscellaneous and other	587.5		661.6		661.6
Total common equity securities	895.2		1,029.7		1,029.7
Convertible fixed maturities	121.7		127.4		127.4
Other long-term investments	257.2		294.2		294.2
Total investments ⁽¹⁾	$	7,359.3	$	7,616.2	$	7,616.2


⁽¹⁾	Carrying value and fair value includes $338.1 that is classified as assets held for sale relating to discontinued operations.

SCHEDULE II CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT

12 Months Ended

Dec. 31, 2012

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

SCHEDULE II CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT

CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT

CONDENSED BALANCE SHEETS



	December 31,
Millions	2012		2011
Assets:
Cash	$	.5	$	.7
Fixed maturity investments, at fair value ^{(1) (2)}	39.0		1,334.5
Common equity securities, at fair value	—		1.9
Short-term investments, at amortized cost ⁽²⁾	8.9		72.3
Receivable due from subsidiary ⁽²⁾	96.6		2.8
Other assets	1.0		5.1
Investments in consolidated and unconsolidated affiliates ⁽¹⁾⁽³⁾	3,664.6		2,687.3
Total assets	$	3,810.6	$	4,104.6
Liabilities:
Debt	$	75.0	$	—
Accounts payable and other liabilities	3.8		16.9
Total liabilities	78.8		16.9
White Mountains’ common shareholders’ equity	3,731.8		4,087.7
Total liabilities and equity ⁽³⁾	$	3,810.6	$	4,104.6

CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)



	Year Ended December 31,
Millions	2012			2011			2010
Revenues (including realized gains and losses)	$	20.8		$	6.4		$	1.1
Expenses	32.4			51.7			42.2
Pre-tax loss	(11.6		)	(45.3		)	(41.1		)
Income tax (expense) benefit	(.3		)	6.5			(.6		)
Net loss	(11.9		)	(38.8		)	(41.7		)
Equity in earnings from consolidated and unconsolidated affiliates⁽³⁾	219.3			806.7			128.2
Net income attributable to White Mountains’ common shareholders	207.4			767.9			86.5
Other comprehensive loss items, after-tax	95.2			(81.7		)	127.9
Comprehensive income attributable to White Mountains’ common shareholders	$	302.6		$	686.2		$	214.4
Computation of net income available to common shareholders:
Net income available to common shareholders	$	207.4		$	767.9		$	86.5

⁽¹⁾During 2012, the Company sold the majority of its fixed maturity investments and used the proceeds to (a) contribute $663.0 to its subsidiaries, the majority of which was used to fund HG Global and (b) repurchase 1,329,640 of its common shares for $669.1.

⁽²⁾In November 2011, Lone Tree Insurance Group Ltd., a direct wholly-owned subsidiary of the Registrant, was liquidated into the Registrant. Significant non-cash balances that were transferred to the Registrant as part of the liquidation included fixed maturity investments of $1,146.9, short-term investments of $284.7 and a payable to subsidiary of $417.5.

⁽³⁾ In 2011, the Company revised the presentation of investments in consolidated and unconsolidated affiliates, total liabilities and equity and equity in earnings (losses) from consolidated and unconsolidated affiliates to be net of non-controlling interests for all periods presented.

SCHEDULE II

(continued)

CONDENSED STATEMENTS OF CASH FLOWS



	Year Ended December 31,
Millions	2012			2011			2010
Net income attributable to White Mountains’ common shareholders ⁽²⁾	$	207.4		$	767.9		$	86.5
Charges (credits) to reconcile net income to net cash from operations:
Net realized and unrealized (gains) losses on sales of investments	(11.0		)	(3.1		)	.1
Undistributed current earnings from subsidiaries ⁽²⁾	(219.3		)	(806.7		)	(128.2		)
Net change in other assets and other liabilities	12.1			13.7			27.9
Net cash used for operations	(10.8		)	(28.2		)	(13.7		)
Cash flows from investing activities:
Net decrease in short-term investments ⁽³⁾	63.3			267.3			166.5
Purchases of investment securities ⁽³⁾	(706.2		)	(237.3		)	(5.8		)
Sales and maturities of investment securities ⁽¹⁾	2,009.7			59.0			—
Issuance of debt (to) from subsidiaries	(121.0		)	—			86.8
Repayment of debt from subsidiaries ⁽³⁾	28.5			192.5			—
Contributions to subsidiaries ⁽¹⁾	(663.0		)	—			—
Distributions from subsidiaries	—			7.2			—
Net cash provided from investing activities	611.3			288.7			247.5
Cash flows from financing activities:
Draw down of revolving line of credit	150.0			—			—
Repayment of debt	(75.0		)	—			—
Proceeds from issuances of common shares	—			.9			.7
Repurchases and retirement of common shares⁽¹⁾	(669.1		)	(253.0		)	(225.6		)
Dividends paid on common shares	(6.6		)	(8.0		)	(8.8		)
Net cash used for financing activities	(600.7		)	(260.1		)	(233.7		)
Net (decrease) increase in cash during the year	(.2		)	.4			.1
Cash balance at beginning of year	.7			.3			.2
Cash balance at end of year	$	.5		$	.7		$	.3

⁽¹⁾ During 2012, the Company sold the majority of its fixed maturity investments and used the proceeds to (a) contribute $663.0 to its subsidiaries, the majority of which was used to fund HG Global and (b) repurchase 1,329,640 of its common shares for $669.1.

⁽²⁾In 2011, the Company revised the presentation of net income attributable to White Mountains’ common shareholders and undistributed current

earnings from subsidiaries to be net of non-controlling interests for all periods presented.

⁽³⁾ In November 2011, Lone Tree Insurance Group Ltd., a direct wholly-owned subsidiary of the Registrant, was liquidated into the Registrant.

Significant non-cash balances that were transferred to the Registrant as part of the liquidation included fixed maturity investments of $1,146.9, short-term investments of $284.7 and a payable to subsidiary of $417.5

- Definition

The entire disclosure for condensed financial information, including the financial position, cash flows, and the results of operations of the registrant (parent company) as of the same dates or for the same periods for which audited consolidated financial statements are being presented. Alternatively, the details of this disclosure can be reported by the specific parent company taxonomy elements, indicating the appropriate date and period contexts in an instance document.

+ References + Details

SCHEDULE III SUPPLEMENTARY INSURANCE INFORMATION

12 Months Ended

Dec. 31, 2012

Supplementary Insurance Information [Abstract]

SCHEDULE III SUPPLEMENTARY INSURANCE INFORMATION

WHITE MOUNTAINS INSURANCE GROUP, LTD.

SUPPLEMENTARY INSURANCE INFORMATION

(Millions)



Column A	Column B		Column C		Column D		Column E		Column F		Column G			Column H		Column I		Column J		Column K
Segment	Deferred acquisition costs		Future policy benefits, losses, claims and loss expenses		Unearned premiums		Other policy claims and benefits payable		Premiums earned		Net investment income⁽¹⁾			Benefits, claims, losses, and settlement expenses		Amortization of deferred policy acquisition costs		Other operating expenses		Premiums written
Years ended:
December 31, 2012:
OneBeacon	$	123.9	$	1,000.0	$	573.8	$	—	$	1,132.0	$	53.6		$	650.0	$	249.4	$	205.2	$	1,179.2
Sirius Group	71.4		2,168.9		350.2		—		931.6		65.0			543.9		180.8		116.4		947.7
HG Global/BAM	—		—		—		—		—		2.2			—		—		.2		—
Other operations	—		—		—		—		—		0.5			—		—		—		—
December 31, 2011:
OneBeacon	$	123.5	$	3,358.6	$	528.0	$	—	$	1,012.2	$	71.4		$	548.3	$	221.2	$	162.3	$	1,062.7
Sirius Group	63.5		2,343.7		319.0		—		912.3		89.9			626.0		181.0		105.8		915.7
Other operations	—		—		—		—		—		(0.1		)	—		—		—		—
December 31, 2010:
OneBeacon	$	114.5	$	3,295.5	$	627.5	$	—	$	1,181.1	$	96.6		$	685.6	$	252.1	$	196.1	$	1,167.7
Sirius Group	61.6		2,441.3		311.2		—		847.9		90.5			531.0		167.5		99.8		865.8
Other operations	—		—		—		—		—		(0.1		)	—		—		—		—


⁽¹⁾	The amounts shown exclude net investment income relating to non-insurance operations in the other operations segment of $32.3, $23.3 and $21.9 for the twelve months ended December 31, 2012, 2011 and 2010, respectively.

SCHEDULE IV REINSURANCE

12 Months Ended

Dec. 31, 2012

Supplemental Schedule of Reinsurance Premiums for Insurance Companies [Abstract]

SCHEDULE IV REINSURANCE

WHITE MOUNTAINS INSURANCE GROUP, LTD.

REINSURANCE

(Millions)



Column A	Column B		Column C			Column D		Column E		Column F
Premiums earned	Gross amount		Ceded to other companies			Assumed from other companies		Net amount		Percentage of amount assumed to net
Years ended:
December 31, 2012
OneBeacon	$	1,158.3	$	(79.1	)	$	52.8	$	1,132.0	4.7	%
Sirius Group	169.9		(226.6		)	988.3		931.6		106.1	%
December 31, 2011
OneBeacon	$	1,035.9	$	(66.0	)	$	42.3	$	1,012.2	4.2	%
Sirius Group	128.5		(206.0		)	989.8		912.3		108.5	%
December 31, 2010
OneBeacon	$	1,242.5	$	(122.1	)	$	60.7	$	1,181.1	5.1	%
Sirius Group	117.9		(199.7		)	929.7		847.9		109.6	%

SCHEDULE V VALUATION AND QUALIFYING ACCOUNTS

12 Months Ended

Dec. 31, 2012

Valuation and Qualifying Accounts [Abstract]

SCHEDULE V VALUATION AND QUALIFYING ACCOUNTS

WHITE MOUNTAINS INSURANCE GROUP, LTD.

VALUATION AND QUALIFYING ACCOUNTS



Column A	Column B		Column C						Column D			Column E
			Additions (subtractions)
Millions	Balance at beginning of period		Charged to costs and expenses			Charged to other accounts			Deductions described ⁽¹⁾			Balance at end of period
Years ended:

December 31, 2012
Reinsurance recoverable on paid losses:
Allowance for reinsurance balances	$	34.4	$	(.6	)	$	—		$	1.7		$	35.5
Property and casualty insurance and reinsurance premiums receivable:
Allowance for uncollectible accounts	3.4		1.1			—			(.1		)	4.4

December 31, 2011
Reinsurance recoverable on paid losses:
Allowance for reinsurance balances	$	29.4	$	8.5		$	—		$	(3.5	)	$	34.4
Property and casualty insurance and reinsurance premiums receivable:
Allowance for uncollectible accounts	3.9		—			(.5		)	—			3.4

December 31, 2010
Reinsurance recoverable on paid losses:
Allowance for reinsurance balances	$	30.0	$	(.4	)	$	—		$	(.2	)	$	29.4
Property and casualty insurance and reinsurance premiums receivable:
Allowance for uncollectible accounts	6.3		.2			(1.0		)	(1.6		)	3.9


⁽¹⁾	Represents net collections (charge-offs) of balances receivables and foreign currency translation.

SCHEDULE VI SUPPLEMENTAL INFORMATION FOR PROPERTY AND CASUALTY INSURANCE UNDERWRITERS

12 Months Ended

Dec. 31, 2012

Supplemental Information for Property, Casualty Insurance Underwriters [Abstract]

SCHEDULE VI SUPPLEMENTAL INFORMATION FOR PROPERTY AND CASUALTY INSURANCE UNDERWRITERS

WHITE MOUNTAINS INSURANCE GROUP, LTD.

SUPPLEMENTAL INFORMATION FOR PROPERTY AND CASUALTY INSURANCE UNDERWRITERS

(Millions)



Column A	Column B		Column C		Column D			Column E		Column F		Column G		Column H					Column I		Column J		Column K
	Deferred acquisition costs		Reserves for Unpaid Claims and Claims Adjustment Expenses		Discount, if any, deducted in Column C			Unearned Premiums		Earned Premiums		Net investment income		Claims and Claims Adjustment Expenses Incurred Related to					Amortization of deferred policy acquisition costs		Paid Claims and Claims Adjustment Expenses		Premiums written
Affiliation with registrant	Deferred acquisition costs		Reserves for Unpaid Claims and Claims Adjustment Expenses		Discount, if any, deducted in Column C			Unearned Premiums		Earned Premiums		Net investment income		(1) Current Year		(2) Prior Year			Amortization of deferred policy acquisition costs		Paid Claims and Claims Adjustment Expenses		Premiums written
OneBeacon:
2012	$	123.9	$	1,000.0	$	4.6	⁽¹⁾	$	573.8	$	1,132.0	$	53.6	$	657.4	$	(7.4	)	$	249.4	$	565.1	$	1,179.2
2011	123.5		3,358.6		271.6		⁽¹⁾	528.0		1,012.2		71.4		578.1		(29.8		)	221.2		523.2		1,062.7
2010	114.5		3,295.5		295.9		⁽¹⁾	627.5		1,181.1		96.6		721.6		(36.0		)	252.1		654.8		1,167.7
Sirius Group:
2012	$	71.4	$	2,168.9	$	2.4	⁽²⁾	$	350.2	$	931.6	$	65.0	$	578.4	$	(34.5	)	$	180.8	$	741.2	$	947.7
2011	63.5		2,343.7		12.8		⁽²⁾	319.0		912.3		89.9		672.9		(46.9		)	181.0		642.0		915.7
2010	61.6		2,441.3		21.1		⁽²⁾	311.2		847.9		90.5		588.1		(57.1		)	167.5		437.0		865.8

⁽¹⁾

The amounts shown represent OneBeacon’s discount on its long-term workers compensation loss and LAE reserves, as such liabilities constitute unpaid but settled claims under which the payment pattern and ultimate costs are fixed and determinable on an individual basis. OneBeacon discounts these reserves using a discount rate which is determined based on the facts and circumstances applicable at the time the claims are settled (3.5%, 4.5% and 5.0% at December 31, 2012, 2011 and 2010). Also the amounts shown include unamortized fair value adjustments to reserves for unpaid claims and claims adjustment expenses made in purchase accounting as a result of White Mountains’ purchase of OneBeacon for the years ended December 31, 2012, 2011 and 2010.


⁽²⁾	The amount shown represents unamortized fair value adjustments to reserves for unpaid claims and claims adjustment expenses made in purchase accounting as a result of White Mountains’ purchase of Sirius International during 2004.

Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2012

Accounting Policies [Abstract]

Investment securities

Investment Securities

Other long-term investments

Other Long-term Investments

Derivative financial instruments

Derivative Financial Instruments

Warrants

Derivatives - Variable annuity reinsurance

Derivatives—Variable Annuity Reinsurance

WM Life Re includes the effect of counterparty credit risk when determining the fair value of its derivative contracts and its GMAB and GMDB liabilities.

Cash

Insurance and reinsurance operations

Insurance and Reinsurance Operations

Municipal Bond Insurance

Mandatory Shared Market Mechanisms

Insurance-Related Assessments

Insurance-related Assessments

Deferred Software Costs

Federal and foreign income taxes

Federal and Foreign Income Taxes

Foreign currency exchange

Foreign Currency Exchange

The following rates of exchange for the U.S. dollar have been used for the most significant operations:



Currency	Opening Rate 2012	Closing Rate 2012	Opening Rate 2011	Closing Rate 2011
Swedish kronor	6.8645	6.4973	6.7030	6.8645
British pound	0.6434	0.6154	0.6420	0.6434
Canadian dollar	1.0193	0.9955	0.9981	1.0193

Noncontrolling Interest

Interest

Transferes of Financial Assets and amendments to FIN 46

Transfers of Financial Assets and Amendments to FIN 46R

Policy Acquisition Costs

Fair Value Measurements

Offsetting Assets and Liabilities

Comprehensive Income

Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2012

Accounting Policies [Abstract]

Schedule of rates of exchange for the U.S. dollar that have been used for the most significant operations

The following rates of exchange for the U.S. dollar have been used for the most significant operations:



Currency	Opening Rate 2012	Closing Rate 2012	Opening Rate 2011	Closing Rate 2011
Swedish kronor	6.8645	6.4973	6.7030	6.8645
British pound	0.6434	0.6154	0.6420	0.6434
Canadian dollar	1.0193	0.9955	0.9981	1.0193

Reserves for Unpaid Losses and Loss Adjustment Expenses (Tables)

12 Months Ended

Dec. 31, 2012

Insurance Loss Reserves [Abstract]

Loss and LAE reserve activities

The following table summarizes the loss and LAE reserve activities of White Mountains’ insurance and reinsurance subsidiaries for the years ended December 31, 2012, 2011 and 2010:



	Year Ended December 31,
Millions	2012			2011			2010
Gross beginning balance	$	5,702.3		$	5,736.8		$	6,379.2
Less beginning reinsurance recoverable on unpaid losses	(2,507.3		)	(2,344.0		)	(2,771.5		)
Net loss and LAE reserves	3,195.0			3,392.8			3,607.7

Less: Beginning net loss and LAE reserves for AutoOne and the Runoff Transaction ⁽¹⁾	(383.3		)	(619.6		)	(759.0		)

Loss and LAE reserves acquired ⁽²⁾	17.0			21.0			17.6
Loss and LAE reserves sold—OneBeacon Personal Lines	—			—			(231.0		)

Losses and LAE incurred relating to:
Current year losses	1,235.8			1,251.0			1,309.7
Prior year losses	(41.9		)	(76.7		)	(93.1		)
Total incurred losses and LAE	1,193.9			1,174.3			1,216.6

Accretion of fair value adjustment to net loss and LAE reserves	10.6			8.3			8.5
Foreign currency translation adjustment to net loss and LAE reserves	12.9			.1			4.7

Loss and LAE paid relating to:
Current year losses	(404.7		)	(387.9		)	(445.9		)
Prior year losses	(901.6		)	(777.3		)	(646.0		)
Total loss and LAE payments	(1,306.3		)	(1,165.2		)	(1,091.9		)

Plus: Ending net loss and LAE reserves for AutoOne and the Runoff Transaction ⁽¹⁾	—			383.3			619.6

Net ending balance	2,739.8			3,195.0			3,392.8
Plus ending reinsurance recoverable on unpaid losses	429.1			2,507.3			2,344.0
Gross ending balance	$	3,168.9		$	5,702.3		$	5,736.8


⁽¹⁾	Loss and LAE reserve balances from OneBeacon’s runoff business prior to December 31, 2012 and AutoOne prior to December 31, 2011 were not classified as held for sale. Adjustment is to present loss and LAE reserve activities for continuing operations.


⁽²⁾	Loss and LAE reserves acquired relate to WM Solutions purchases of PICO, Citation, American General and American General Property in 2012, Old Lyme in 2011 and Central National in 2010.

Schedule of asbestos and environmental loss and LAE reserve activities

Sirius Group



Net A&E Loss Reserve Activity	Year Ended December 31,
	2012						2011						2010
Millions	Gross			Net			Gross			Net			Gross			Net
Asbestos:
Beginning balance	$	185.1		$	146.2		$	191.9		$	151.5		$	187.0		$	146.6
Losses and LAE acquired	11.0			11.0			—			—			10.4			9.7
Incurred losses and LAE	46.8			46.4			13.6			10.3			9.0			7.3
Paid losses and LAE	(34.7		)	(29.4		)	(20.4		)	(15.6		)	(14.5		)	(12.1		)
Ending balance	208.2			174.2			185.1			146.2			191.9			151.5
Environmental:
Beginning balance	22.1			16.5			22.4			18.1			22.2			17.9
Losses and LAE acquired	0.7			0.7			—			—			3.5			2.4
Incurred losses and LAE	(0.1		)	(0.5		)	2.9			2.0			(2.5		)	(1.3		)
Paid losses and LAE	(2.3		)	(1.5		)	(3.2		)	(3.6		)	(.8		)	(.9		)
Ending balance	20.4			15.2			22.1			16.5			22.4			18.1
Total asbestos and environmental:
Beginning balance	207.2			162.7			214.3			169.6			209.2			164.5
Losses and LAE acquired	11.7			11.7			—			—			13.9			12.1
Incurred losses and LAE	46.7			45.9			16.5			12.3			6.5			6.0
Paid losses and LAE	(37.0		)	(30.9		)	(23.6		)	(19.2		)	(15.3		)	(13.0		)
Ending balance	$	228.6		$	189.4		$	207.2		$	162.7		$	214.3		$	169.6

The following tables summarize reported A&E loss and LAE reserve activities (gross and net of reinsurance) for

OneBeacon for the years ended December 31, 2012, 2011 and 2010, respectively.



Net A&E Loss	Year Ended December 31,
Reserve Activity	2012									2011									2010
				Pre-NICO									Pre-NICO									Pre-NICO
Millions	Gross			Net ⁽¹⁾			Net⁽²⁾			Gross			Net ⁽¹⁾			Net⁽²⁾			Gross			Net ⁽¹⁾			Net⁽²⁾
Asbestos:
Beginning balance	$	1,074.3		$	681.2		$	2.2		$	904.0		$	647.3		$	6.4		$	985.6		$	688.8		$	6.5
Incurred losses and LAE	(.3		)	(.5		)	(.5		)	256.8			32.2			(4.0		)	—			—			—
Paid losses and LAE	(144.6		)	(78.2		)	.7			(86.5		)	1.7			(.2		)	(81.6		)	(41.5		)	(.1		)
Ending balance	929.4			602.5			2.4			1,074.3			681.2			2.2			904.0			647.3			6.4
Environmental:
Beginning balance	279.8			151.6			9.0			119.0			93.8			9.2			350.7			218.6			7.6
Incurred losses and LAE	(.9		)	(.5		)	(.5		)	231.8			62.2			10.0			6.2			6.0			6.0
Paid losses and LAE	(45.9		)	(25.7		)	(2.1		)	(71.0		)	(4.4		)	(10.2		)	(237.9		)	(130.8		)	(4.4		)
Ending balance	233.0			125.4			6.4			279.8			151.6			9.0			119.0			93.8			9.2
Total asbestos and environmental:
Beginning balance	1,354.1			832.8			11.2			1,023.0			741.1			15.6			1,336.3			907.4			14.1
Incurred losses and LAE	(1.2		)	(1.0		)	(1.0		)	488.6			94.4			6.0			6.2			6.0			6.0
Paid losses and LAE	(190.5		)	(103.9		)	(1.4		)	(157.5		)	(2.7		)	(10.4		)	(319.5		)	(172.3		)	(4.5		)
Ending balance	$	1,162.4		$	727.9		$	8.8		$	1,354.1		$	832.8		$	11.2		$	1,023.0		$	741.1		$	15.6

⁽¹⁾Represents A&E reserve activity, net of third-party reinsurance, but prior to the NICO Cover.

⁽²⁾ Includes NICO cover

Third Party Reinsurance (Tables)

12 Months Ended

Dec. 31, 2012

Reinsurance Disclosures [Abstract]

Schedule of direct assumed and ceded amounts

The effects of reinsurance on White Mountains’ insurance and reinsurance subsidiaries’ written and earned premiums and on losses and LAE were as follows:



	Year ended December 31, 2012
Millions	OneBeacon			Sirius Group			Total
Written premiums:
Direct	$	1,204.0		$	186.1		$	1,390.1
Assumed	55.2			992.7			1,047.9
Gross written premiums	1,259.2			1,178.8			2,438.0
Ceded	(80.0		)	(231.1		)	(311.1		)
Net written premiums	$	1,179.2		$	947.7		$	2,126.9
Earned premiums:
Direct	$	1,158.3		$	169.9		$	1,328.2
Assumed	52.8			988.3			1,041.1
Gross earned premiums	1,211.1			1,158.2			2,369.3
Ceded	(79.1		)	(226.6		)	(305.7		)
Net earned premiums	$	1,132.0		$	931.6		$	2,063.6
Losses and LAE:
Direct	$	687.5		$	96.9		$	784.4
Assumed	29.6			523.9			553.5
Gross losses and LAE	717.1			620.8			1,337.9
Ceded	(67.1		)	(76.9		)	(144.0		)
Net losses and LAE	$	650.0		$	543.9		$	1,193.9



	Year ended December 31, 2011
Millions	OneBeacon			Sirius Group			Total
Written premiums:
Direct	$	1,079.2		$	139.5		$	1,218.7
Assumed	49.1			988.6			1,037.7
Gross written premiums	1,128.3			1,128.1			2,256.4
Ceded	(65.6		)	(212.4		)	(278.0		)
Net written premiums	$	1,062.7		$	915.7		$	1,978.4
Earned premiums:
Direct	$	1,035.9		$	128.5		$	1,164.4
Assumed	42.3			989.8			1,032.1
Gross earned premiums	1,078.2			1,118.3			2,196.5
Ceded	(66.0		)	(206.0		)	(272.0		)
Net earned premiums	$	1,012.2		$	912.3		$	1,924.5
Losses and LAE:
Direct	$	551.8		$	80.0		$	631.8
Assumed	9.2			627.8			637.0
Gross losses and LAE	561.0			707.8			1,268.8
Ceded	(12.7		)	(81.8		)	(94.5		)
Net losses and LAE	$	548.3		$	626.0		$	1,174.3



	Year ended December 31, 2010
Millions	OneBeacon			Sirius Group			Total
Written premiums:
Direct	$	1,236.7		$	121.6		$	1,358.3
Assumed	55.8			957.5			1,013.3
Gross written premiums	1,292.5			1,079.1			2,371.6
Ceded	(124.8		)	(213.3		)	(338.1		)
Net written premiums	$	1,167.7		$	865.8		$	2,033.5
Earned premiums:
Direct	$	1,242.5		$	117.9		$	1,360.4
Assumed	60.7			929.7			990.4
Gross earned premiums	1,303.2			1,047.6			2,350.8
Ceded	(122.1		)	(199.7		)	(321.8		)
Net earned premiums	$	1,181.1		$	847.9		$	2,029.0
Losses and LAE:
Direct	$	677.1		$	59.4		$	736.5
Assumed	45.1			684.4			729.5
Gross losses and LAE	722.2			743.8			1,466.0
Ceded	(36.6		)	(212.8		)	(249.4		)
Net losses and LAE	$	685.6		$	531.0		$	1,216.6

Listing of Sirius's top reinsurers

The following table provides a listing of Sirius Group’s top reinsurers based upon recoverable amounts, the percentage of total recoverables and the reinsurer’s A.M. Best Rating.



Top Reinsurers ($ in millions)	Balance at December 31, 2012		% of Total		A.M. Best Rating⁽¹⁾	% Collateralized
General Reinsurance Corporation	$	56.2	17	%	A++	—	%
Swiss Re Group	36.4		11	%	A+	2	%
Olympus Re ⁽²⁾	29.6		9	%	NR-5	100	%
Lloyds of London ⁽³⁾	19.4		6	%	A	8	%
Michigan Catastrophic Claims Association ⁽⁴⁾	14.7		4	%	N/A	—	%