Bermuda
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94-2708455
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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80 South Main Street,
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03755-2053
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Hanover, New Hampshire
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(Zip Code)
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(Address of principal executive offices)
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Title of each class
|
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Shares, par value $1.00
|
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WTM
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New York Stock Exchange
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per share
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Bermuda Stock Exchange
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Large accelerated filer ý
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company o
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Emerging growth company o
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Page No.
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Consolidated Balance Sheets, March 31, 2019 and December 31, 2018
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Three Months Ended March 31, 2019 and 2018
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Consolidated Statements of Changes in Equity, Three Months Ended March 31, 2019 and 2018
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Consolidated Statements of Cash Flows, Three Months Ended March 31, 2019 and 2018
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Results of Operations for the Three Months Ended March 31, 2019 and 2018
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Item 1.
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Financial Statements
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Millions, except share and per share amounts
|
|
|
||||||
Assets
|
|
Unaudited
|
|
|
||||
Financial Guarantee (HG Global/BAM)
|
|
|
|
|
||||
Fixed maturity investments, at fair value
|
|
$
|
737.6
|
|
|
$
|
701.4
|
|
Short-term investments, at fair value
|
|
31.8
|
|
|
66.9
|
|
||
Total investments
|
|
769.4
|
|
|
768.3
|
|
||
Cash
|
|
10.4
|
|
|
12.5
|
|
||
Insurance premiums receivable
|
|
6.5
|
|
|
6.4
|
|
||
Deferred acquisition costs
|
|
19.6
|
|
|
19.0
|
|
||
Accrued investment income
|
|
5.4
|
|
|
4.9
|
|
||
Accounts receivable on unsettled investment sales
|
|
6.1
|
|
|
—
|
|
||
Other assets
|
|
17.1
|
|
|
5.1
|
|
||
Total Financial Guarantee assets
|
|
834.5
|
|
|
816.2
|
|
||
|
|
|
|
|
||||
Specialty Insurance Distribution (NSM)
|
|
|
|
|
||||
Short-term investments, at fair value
|
|
—
|
|
|
1.7
|
|
||
Cash (restricted $60.8 and $50.0)
|
|
84.5
|
|
|
66.2
|
|
||
Premium and commission receivable
|
|
51.9
|
|
|
44.0
|
|
||
Goodwill and other intangible assets
|
|
488.7
|
|
|
486.2
|
|
||
Other assets
|
|
36.0
|
|
|
28.9
|
|
||
Total Specialty Insurance Distribution assets
|
|
661.1
|
|
|
627.0
|
|
||
|
|
|
|
|
||||
Marketing Technology (MediaAlpha)
|
|
|
|
|
||||
Cash
|
|
—
|
|
|
5.7
|
|
||
Accounts receivable from publishers and advertisers
|
|
—
|
|
|
37.0
|
|
||
Goodwill and other intangible assets
|
|
—
|
|
|
43.4
|
|
||
Other assets
|
|
—
|
|
|
2.3
|
|
||
Total Marketing Technology assets
|
|
—
|
|
|
88.4
|
|
||
|
|
|
|
|
||||
Other Operations
|
|
|
|
|
||||
Fixed maturity investments, at fair value
|
|
394.4
|
|
|
376.1
|
|
||
Short-term investments, at fair value
|
|
238.0
|
|
|
145.6
|
|
||
Common equity securities, at fair value
|
|
905.0
|
|
|
925.6
|
|
||
Other long-term investments
|
|
497.6
|
|
|
325.6
|
|
||
Total investments
|
|
2,035.0
|
|
|
1,772.9
|
|
||
Cash
|
|
37.3
|
|
|
25.9
|
|
||
Accrued investment income
|
|
5.9
|
|
|
5.5
|
|
||
Accounts receivable on unsettled investment sales
|
|
2.1
|
|
|
—
|
|
||
Goodwill and other intangible assets
|
|
21.5
|
|
|
7.9
|
|
||
Other assets
|
|
29.0
|
|
|
15.5
|
|
||
Assets held for sale
|
|
3.3
|
|
|
3.3
|
|
||
Total Other Operations assets
|
|
2,134.1
|
|
|
1,831.0
|
|
||
Total assets
|
|
$
|
3,629.7
|
|
|
$
|
3,362.6
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Millions, except share and per share amounts
|
|
|
||||||
Liabilities
|
|
Unaudited
|
|
|
||||
Financial Guarantee (HG Global/BAM)
|
|
|
|
|
||||
Unearned insurance premiums
|
|
$
|
179.6
|
|
|
$
|
176.0
|
|
Accrued incentive compensation
|
|
10.1
|
|
|
20.4
|
|
||
Accounts payable on unsettled investment purchases
|
|
1.6
|
|
|
2.2
|
|
||
Other liabilities
|
|
28.1
|
|
|
13.9
|
|
||
Total Financial Guarantee liabilities
|
|
219.4
|
|
|
212.5
|
|
||
|
|
|
|
|
||||
Specialty Insurance Distribution (NSM)
|
|
|
|
|
||||
Debt
|
|
184.5
|
|
|
178.5
|
|
||
Premiums payable
|
|
93.4
|
|
|
77.2
|
|
||
Contingent consideration earnout liabilities
|
|
27.5
|
|
|
20.2
|
|
||
Other liabilities
|
|
46.1
|
|
|
38.9
|
|
||
Total Specialty Insurance Distribution liabilities
|
|
351.5
|
|
|
314.8
|
|
||
|
|
|
|
|
||||
Marketing Technology (MediaAlpha)
|
|
|
|
|
||||
Debt
|
|
—
|
|
|
14.2
|
|
||
Amounts due to publishers and advertisers
|
|
—
|
|
|
27.0
|
|
||
Other liabilities
|
|
—
|
|
|
5.7
|
|
||
Total Marketing Technology liabilities
|
|
—
|
|
|
46.9
|
|
||
|
|
|
|
|
||||
Other Operations
|
|
|
|
|
||||
Debt
|
|
10.9
|
|
|
—
|
|
||
Accrued incentive compensation
|
|
26.1
|
|
|
38.9
|
|
||
Accounts payable on unsettled investment purchases
|
|
4.0
|
|
|
5.0
|
|
||
Other liabilities
|
|
39.5
|
|
|
26.3
|
|
||
Total Other Operations liabilities
|
|
80.5
|
|
|
70.2
|
|
||
Total liabilities
|
|
651.4
|
|
|
644.4
|
|
||
|
|
|
|
|
||||
Equity
|
|
|
|
|
||||
White Mountains’s common shareholders’ equity
|
|
|
|
|
||||
White Mountains’s common shares at $1 par value per share—authorized 50,000,000
shares; issued and outstanding 3,181,199 and 3,173,115 shares |
|
3.2
|
|
|
3.2
|
|
||
Paid-in surplus
|
|
582.6
|
|
|
580.8
|
|
||
Retained earnings
|
|
2,542.3
|
|
|
2,264.9
|
|
||
Accumulated other comprehensive loss, after-tax:
|
|
|
|
|
||||
Net unrealized foreign currency translation losses and interest rate swap
|
|
(6.1
|
)
|
|
(5.8
|
)
|
||
Total White Mountains’s common shareholders’ equity
|
|
3,122.0
|
|
|
2,843.1
|
|
||
Non-controlling interests
|
|
(143.7
|
)
|
|
(124.9
|
)
|
||
Total equity
|
|
2,978.3
|
|
|
2,718.2
|
|
||
Total liabilities and equity
|
|
$
|
3,629.7
|
|
|
$
|
3,362.6
|
|
|
|
Three Months Ended March 31,
|
||||||
Millions
|
|
2019
|
|
2018
|
||||
Revenues:
|
|
|
|
|
||||
Financial Guarantee (HG Global/BAM)
|
|
|
|
|
||||
Earned insurance premiums
|
|
$
|
4.2
|
|
|
$
|
3.0
|
|
Net investment income
|
|
5.3
|
|
|
3.7
|
|
||
Net realized and unrealized investment gains (losses)
|
|
11.8
|
|
|
(7.9
|
)
|
||
Other revenues
|
|
.6
|
|
|
.2
|
|
||
Total Financial Guarantee revenues
|
|
21.9
|
|
|
(1.0
|
)
|
||
Specialty Insurance Distribution (NSM)
|
|
|
|
|
||||
Commission revenues
|
|
43.3
|
|
|
—
|
|
||
Other revenues
|
|
6.0
|
|
|
—
|
|
||
Total Specialty Insurance Distribution revenues
|
|
49.3
|
|
|
—
|
|
||
Marketing Technology (MediaAlpha)
|
|
|
|
|
||||
Advertising and commission revenues
|
|
48.8
|
|
|
70.1
|
|
||
Other revenues
|
|
—
|
|
|
1.6
|
|
||
Total Marketing Technology revenues
|
|
48.8
|
|
|
71.7
|
|
||
Other Operations
|
|
|
|
|
||||
Net investment income
|
|
10.7
|
|
|
16.0
|
|
||
Net realized and unrealized investment gains (losses)
|
|
119.1
|
|
|
(45.8
|
)
|
||
Realized and unrealized gains from the MediaAlpha Transaction
|
|
182.2
|
|
|
—
|
|
||
Advertising and commission revenues
|
|
1.3
|
|
|
.9
|
|
||
Other revenues
|
|
.3
|
|
|
.3
|
|
||
Total Other Operations revenues
|
|
313.6
|
|
|
(28.6
|
)
|
||
Total revenues
|
|
433.6
|
|
|
42.1
|
|
||
|
|
|
|
|
||||
Expenses:
|
|
|
|
|
||||
Financial Guarantee (HG Global/BAM)
|
|
|
|
|
||||
Insurance acquisition expenses
|
|
1.3
|
|
|
1.4
|
|
||
General and administrative expenses
|
|
14.4
|
|
|
11.9
|
|
||
Total Financial Guarantee expenses
|
|
15.7
|
|
|
13.3
|
|
||
Specialty Insurance Distribution (NSM)
|
|
|
|
|
||||
General and administrative expenses
|
|
25.1
|
|
|
—
|
|
||
Broker commission expense
|
|
15.7
|
|
|
—
|
|
||
Change in fair value of contingent consideration
earnout liabilities |
|
1.3
|
|
|
—
|
|
||
Amortization of other intangible assets
|
|
5.0
|
|
|
—
|
|
||
Interest expense
|
|
3.7
|
|
|
—
|
|
||
Total Specialty Insurance Distribution expenses
|
|
50.8
|
|
|
—
|
|
||
Marketing Technology (MediaAlpha)
|
|
|
|
|
||||
Cost of sales
|
|
40.6
|
|
|
57.4
|
|
||
General and administrative expenses
|
|
12.5
|
|
|
11.2
|
|
||
Amortization of other intangible assets
|
|
1.6
|
|
|
2.9
|
|
||
Interest expense
|
|
.2
|
|
|
.4
|
|
||
Total Marketing Technology expenses
|
|
54.9
|
|
|
71.9
|
|
||
Other Operations
|
|
|
|
|
||||
Cost of sales
|
|
1.1
|
|
|
.7
|
|
||
General and administrative expenses
|
|
29.4
|
|
|
22.0
|
|
||
Interest expense
|
|
—
|
|
|
.2
|
|
||
Total Other Operations expenses
|
|
30.5
|
|
|
22.9
|
|
||
Total expenses
|
|
151.9
|
|
|
108.1
|
|
||
Pre-tax income (loss) from continuing operations
|
|
281.7
|
|
|
(66.0
|
)
|
||
Income tax expense
|
|
(10.2
|
)
|
|
(.7
|
)
|
||
Net income (loss) from continuing operations
|
|
271.5
|
|
|
(66.7
|
)
|
||
Net gain from sale of discontinued operations, net of tax
|
|
.7
|
|
|
.1
|
|
||
Net income (loss)
|
|
272.2
|
|
|
(66.6
|
)
|
||
Net loss attributable to non-controlling interests
|
|
12.2
|
|
|
18.6
|
|
||
Net income (loss) attributable to White Mountains’s common shareholders
|
|
$
|
284.4
|
|
|
$
|
(48.0
|
)
|
|
|
Three Months Ended March 31,
|
||||||
Millions
|
|
2019
|
|
2018
|
||||
Net income (loss) attributable to White Mountains’s common
shareholders
|
|
$
|
284.4
|
|
|
$
|
(48.0
|
)
|
Other comprehensive loss, net of tax
|
|
(.3
|
)
|
|
—
|
|
||
Comprehensive income
|
|
284.1
|
|
|
(48.0
|
)
|
||
Comprehensive income (loss) attributable to non-controlling interests
|
|
—
|
|
|
—
|
|
||
Comprehensive income (loss) attributable to White Mountains’s
common shareholders
|
|
$
|
284.1
|
|
|
$
|
(48.0
|
)
|
|
|
Three Months Ended March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Basic earnings (loss) per share
|
|
|
|
|
||||
Continuing operations
|
|
$
|
89.42
|
|
|
$
|
(12.85
|
)
|
Discontinued operations
|
|
.22
|
|
|
.03
|
|
||
Total consolidated operations
|
|
$
|
89.64
|
|
|
$
|
(12.82
|
)
|
Diluted earnings (loss) per share
|
|
|
|
|
||||
Continuing operations
|
|
$
|
89.42
|
|
|
$
|
(12.85
|
)
|
Discontinued operations
|
|
.22
|
|
|
.03
|
|
||
Total consolidated operations
|
|
$
|
89.64
|
|
|
$
|
(12.82
|
)
|
Dividends declared and paid per White Mountains’s common share
|
|
$
|
1.00
|
|
|
$
|
1.00
|
|
|
|
White Mountains’s Common Shareholders’ Equity
|
|
|
|
|
||||||||||||||||||
Millions
|
|
Common shares and paid-in surplus
|
|
Retained earnings
|
|
AOCI, after tax
|
|
Total
|
|
Non-controlling interest
|
|
Total Equity
|
||||||||||||
Balance at January 1, 2019
|
|
$
|
584.0
|
|
|
$
|
2,264.9
|
|
|
$
|
(5.8
|
)
|
|
$
|
2,843.1
|
|
|
$
|
(124.9
|
)
|
|
$
|
2,718.2
|
|
Net income (loss)
|
|
—
|
|
|
284.4
|
|
|
—
|
|
|
284.4
|
|
|
(12.2
|
)
|
|
272.2
|
|
||||||
Net change in foreign currency translation and other
|
|
—
|
|
|
—
|
|
|
(.3
|
)
|
|
(.3
|
)
|
|
—
|
|
|
(.3
|
)
|
||||||
Total comprehensive income (loss)
|
|
—
|
|
|
284.4
|
|
|
(.3
|
)
|
|
284.1
|
|
|
(12.2
|
)
|
|
271.9
|
|
||||||
Dividends declared on common shares
|
|
—
|
|
|
(3.2
|
)
|
|
—
|
|
|
(3.2
|
)
|
|
—
|
|
|
(3.2
|
)
|
||||||
Dividends to non-controlling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(.5
|
)
|
|
(.5
|
)
|
||||||
Repurchases and retirements of common shares
|
|
(1.0
|
)
|
|
(3.8
|
)
|
|
—
|
|
|
(4.8
|
)
|
|
—
|
|
|
(4.8
|
)
|
||||||
Capital contributions from BAM members, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.8
|
|
|
6.8
|
|
||||||
Net contributions from non-controlling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
.7
|
|
|
.7
|
|
||||||
Amortization of restricted share awards
|
|
2.5
|
|
|
—
|
|
|
—
|
|
|
2.5
|
|
|
—
|
|
|
2.5
|
|
||||||
Recognition of equity-based units of subsidiary
|
|
.3
|
|
|
—
|
|
|
—
|
|
|
.3
|
|
|
—
|
|
|
.3
|
|
||||||
Effect of deconsolidation of MediaAlpha
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13.8
|
)
|
|
(13.8
|
)
|
||||||
Acquisition of non-controlling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
.2
|
|
|
.2
|
|
||||||
Balance at March 31, 2019
|
|
$
|
585.8
|
|
|
$
|
2,542.3
|
|
|
$
|
(6.1
|
)
|
|
$
|
3,122.0
|
|
|
$
|
(143.7
|
)
|
|
$
|
2,978.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
White Mountains’s Common Shareholders’ Equity
|
|
|
|
|
||||||||||||||||||
Millions
|
|
Common shares and paid-in surplus
|
|
Retained earnings
|
|
AOCI, after tax
|
|
Total
|
|
Non-controlling interest
|
|
Total Equity
|
||||||||||||
Balance at January 1, 2018
|
|
$
|
670.6
|
|
|
$
|
2,823.2
|
|
|
$
|
(1.3
|
)
|
|
$
|
3,492.5
|
|
|
$
|
(131.7
|
)
|
|
$
|
3,360.8
|
|
Net loss
|
|
—
|
|
|
(48.0
|
)
|
|
—
|
|
|
(48.0
|
)
|
|
(18.6
|
)
|
|
(66.6
|
)
|
||||||
Net change in foreign currency translation and other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total comprehensive loss
|
|
—
|
|
|
(48.0
|
)
|
|
—
|
|
|
(48.0
|
)
|
|
(18.6
|
)
|
|
(66.6
|
)
|
||||||
Dividends declared on common shares
|
|
—
|
|
|
(3.8
|
)
|
|
—
|
|
|
(3.8
|
)
|
|
—
|
|
|
(3.8
|
)
|
||||||
Dividends to non-controlling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(.3
|
)
|
|
(.3
|
)
|
||||||
Repurchases and retirements of common shares
|
|
(1.9
|
)
|
|
(6.4
|
)
|
|
—
|
|
|
(8.3
|
)
|
|
—
|
|
|
(8.3
|
)
|
||||||
Capital contributions from BAM members, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.2
|
|
|
4.2
|
|
||||||
Amortization of restricted share awards
|
|
3.4
|
|
|
—
|
|
|
—
|
|
|
3.4
|
|
|
—
|
|
|
3.4
|
|
||||||
Recognition of equity-based units of subsidiary
|
|
4.1
|
|
|
—
|
|
|
—
|
|
|
4.1
|
|
|
2.3
|
|
|
6.4
|
|
||||||
Dilution from equity-based units of subsidiary
|
|
(.9
|
)
|
|
—
|
|
|
—
|
|
|
(.9
|
)
|
|
.9
|
|
|
—
|
|
||||||
Balance at March 31, 2018
|
|
$
|
675.3
|
|
|
$
|
2,765.0
|
|
|
$
|
(1.3
|
)
|
|
$
|
3,439.0
|
|
|
$
|
(143.2
|
)
|
|
$
|
3,295.8
|
|
|
|
Three Months Ended March 31,
|
||||||
Millions
|
|
2019
|
|
2018
|
||||
Cash flows from operations:
|
|
|
|
|
||||
Net income (loss)
|
|
$
|
272.2
|
|
|
$
|
(66.6
|
)
|
Adjustments to reconcile net income to net cash used for operations:
|
|
|
|
|
|
|
||
Net realized and unrealized investment (gains) losses
|
|
(245.6
|
)
|
|
53.7
|
|
||
Realized gain from the MediaAlpha Transaction
|
|
(66.2
|
)
|
|
—
|
|
||
Deferred income expense (benefit)
|
|
7.5
|
|
|
(.8
|
)
|
||
Net gain from sale of discontinued operations, net of tax
|
|
(.7
|
)
|
|
(.1
|
)
|
||
Amortization of restricted share and option awards
|
|
2.8
|
|
|
3.2
|
|
||
Amortization and depreciation
|
|
8.3
|
|
|
4.8
|
|
||
Other operating items:
|
|
|
|
|
|
|||
Net change in unearned insurance premiums
|
|
3.6
|
|
|
3.4
|
|
||
Net change in deferred acquisition costs
|
|
(.6
|
)
|
|
(1.1
|
)
|
||
Net change in restricted cash
|
|
10.8
|
|
|
—
|
|
||
Net change in other assets and liabilities, net
|
|
(33.2
|
)
|
|
(41.3
|
)
|
||
Net cash used for operations - continuing operations
|
|
(41.1
|
)
|
|
(44.8
|
)
|
||
Net cash provided from operations - discontinued operations
|
|
—
|
|
|
.1
|
|
||
Net cash (used for) provided from operations
|
|
(41.1
|
)
|
|
(44.7
|
)
|
||
Cash flows from investing activities:
|
|
|
|
|
|
|
||
Net change in short-term investments
|
|
(55.3
|
)
|
|
(587.5
|
)
|
||
Sales of fixed maturity and convertible investments
|
|
93.0
|
|
|
1,266.5
|
|
||
Maturities, calls and paydowns of fixed maturity and convertible investments
|
|
25.6
|
|
|
40.6
|
|
||
Sales of common equity securities
|
|
136.5
|
|
|
14.4
|
|
||
Distributions and redemptions of other long-term investments and settlements of forward contracts
|
|
1.9
|
|
|
(6.9
|
)
|
||
Net settlement of investment cash flows and contributions with discontinued operations
|
|
—
|
|
|
.1
|
|
||
Purchases of other long-term investments
|
|
(60.6
|
)
|
|
(46.0
|
)
|
||
Purchases of common equity securities
|
|
(4.6
|
)
|
|
(109.4
|
)
|
||
Purchases of fixed maturity and convertible investments
|
|
(152.3
|
)
|
|
(537.1
|
)
|
||
Purchases of consolidated subsidiaries, net of cash acquired of $0.4
|
|
(9.6
|
)
|
|
—
|
|
||
Other investing activities, net
|
|
(17.4
|
)
|
|
42.8
|
|
||
Net cash provided from investing activities - continuing operations
|
|
(42.8
|
)
|
|
77.5
|
|
||
Net cash used for investing activities - discontinued operations
|
|
—
|
|
|
(.1
|
)
|
||
Net cash provided from investing activities
|
|
(42.8
|
)
|
|
77.4
|
|
||
Cash flows from financing activities:
|
|
|
|
|
|
|
||
Draw down of debt and revolving line of credit
|
|
106.5
|
|
|
—
|
|
||
Repayment of debt and revolving line of credit
|
|
(14.8
|
)
|
|
(2.3
|
)
|
||
Cash dividends paid to the Company’s common shareholders
|
|
(3.2
|
)
|
|
(3.8
|
)
|
||
Distribution to non-controlling interest shareholders
|
|
(27.6
|
)
|
|
—
|
|
||
Repurchase of shares from non-controlling interest shareholders
|
|
(21.1
|
)
|
|
—
|
|
||
Proceeds from issuance of shares to non-controlling interest shareholders
|
|
62.7
|
|
|
—
|
|
||
Capital contributions to non-controlling interest shareholders
|
|
.7
|
|
|
—
|
|
||
Capital contributions from BAM members
|
|
7.9
|
|
|
4.9
|
|
||
Fidus Re premium payment
|
|
(.7
|
)
|
|
—
|
|
||
Restricted share statutory withholding tax payments
|
|
(4.9
|
)
|
|
(8.4
|
)
|
||
Net cash used for financing activities - continuing operations
|
|
105.5
|
|
|
(9.6
|
)
|
||
Net cash used for financing activities - discontinued operations
|
|
—
|
|
|
—
|
|
||
Net cash used for financing activities
|
|
105.5
|
|
|
(9.6
|
)
|
||
Effect of exchange rate changes on cash
|
|
.3
|
|
|
—
|
|
||
Net change in cash during the period - continuing operations, including the effect of exchange rate changes
|
|
21.9
|
|
|
23.1
|
|
||
Cash balances at beginning of period (includes restricted cash balances of $50.0 and $0.0)
|
|
110.3
|
|
|
97.1
|
|
||
Cash balances at end of period (includes restricted cash balances of $60.8 and $0.0)
|
|
$
|
132.2
|
|
|
$
|
120.2
|
|
Supplemental cash flows information:
|
|
|
|
|
|
|
||
Interest paid
|
|
$
|
(3.7
|
)
|
|
$
|
(.3
|
)
|
Net income tax refunds
|
|
$
|
—
|
|
|
$
|
.2
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
Millions
|
|
2019
|
|
2018
|
||||
Fixed maturity investments
|
|
$
|
8.1
|
|
|
$
|
10.9
|
|
Short-term investments
|
|
1.3
|
|
|
2.6
|
|
||
Common equity securities
|
|
5.4
|
|
|
5.0
|
|
||
Other long-term investments
|
|
1.6
|
|
|
1.9
|
|
||
Total investment income
|
|
16.4
|
|
|
20.4
|
|
||
Third-party investment expenses
|
|
(.4
|
)
|
|
(.7
|
)
|
||
Net investment income, pre-tax
|
|
$
|
16.0
|
|
|
$
|
19.7
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
Millions
|
|
2019
|
|
2018
|
||||
Net realized investment gains (losses), pre-tax
|
|
$
|
25.7
|
|
|
$
|
(5.1
|
)
|
Net unrealized investment gains (losses), pre-tax (1)
|
|
219.9
|
|
|
(48.6
|
)
|
||
Net realized and unrealized investment gains (losses), pre-tax
|
|
245.6
|
|
|
(53.7
|
)
|
||
Income tax (expense) benefit attributable to net realized and
unrealized investment gains (losses)
|
|
(52.2
|
)
|
|
5.7
|
|
||
Net realized and unrealized investment gains (losses), after-tax
|
|
$
|
193.4
|
|
|
$
|
(48.0
|
)
|
|
|
Three Months Ended
|
|
Three Months Ended
|
||||||||||||||||||||
|
|
March 31, 2019
|
|
March 31, 2018
|
||||||||||||||||||||
Millions
|
|
Net
Realized (Losses) Gains |
|
Net
Foreign Exchange Gains (Losses) |
|
Total Net Realized
(Losses) Gains Reflected in Earnings |
|
Net
Realized (Losses) Gains |
|
Net
Foreign Exchange Gains (Losses) |
|
Total Net Realized
Gains (Losses) Reflected in Earnings |
||||||||||||
Fixed maturity investments
|
|
$
|
(.9
|
)
|
|
$
|
—
|
|
|
$
|
(.9
|
)
|
|
$
|
(13.7
|
)
|
|
$
|
18.2
|
|
|
$
|
4.5
|
|
Short-term investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(.1
|
)
|
|
—
|
|
|
(.1
|
)
|
||||||
Common equity securities
|
|
25.8
|
|
|
—
|
|
|
25.8
|
|
|
1.2
|
|
|
—
|
|
|
1.2
|
|
||||||
Other long-term investments
|
|
.8
|
|
|
—
|
|
|
.8
|
|
|
(3.5
|
)
|
|
(7.2
|
)
|
|
(10.7
|
)
|
||||||
Net realized investment gains (losses), pre-tax
|
|
25.7
|
|
|
—
|
|
|
25.7
|
|
|
(16.1
|
)
|
|
11.0
|
|
|
(5.1
|
)
|
||||||
Income tax expense attributable to net realized investment gains (losses)
|
|
(1.7
|
)
|
|
—
|
|
|
(1.7
|
)
|
|
(.6
|
)
|
|
—
|
|
|
(.6
|
)
|
||||||
Net realized investment gains (losses), after-tax
|
|
$
|
24.0
|
|
|
$
|
—
|
|
|
$
|
24.0
|
|
|
$
|
(16.7
|
)
|
|
$
|
11.0
|
|
|
$
|
(5.7
|
)
|
|
|
Three Months Ended
|
|
Three Months Ended
|
||||||||||||||||||||
|
|
March 31, 2019
|
|
March 31, 2018
|
||||||||||||||||||||
Millions
|
|
Net
Unrealized Gains
|
|
Net
Foreign Exchange Losses |
|
Total Net Unrealized Gains
Reflected in
Earnings
|
|
Net
Unrealized Losses
|
|
Net
Foreign Exchange (Losses)
Gains
|
|
Total Net Unrealized (Losses)
Gains
Reflected in
Earnings
|
||||||||||||
Fixed maturity investments
|
|
$
|
22.0
|
|
|
$
|
—
|
|
|
$
|
22.0
|
|
|
$
|
(18.6
|
)
|
|
$
|
(14.8
|
)
|
|
$
|
(33.4
|
)
|
Short-term investments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(.7
|
)
|
|
—
|
|
|
(.7
|
)
|
||||||
Common equity securities
|
|
85.5
|
|
|
—
|
|
|
85.5
|
|
|
(16.7
|
)
|
|
—
|
|
|
(16.7
|
)
|
||||||
Other long-term investments(1)
|
|
112.7
|
|
|
(.3
|
)
|
|
112.4
|
|
|
(1.9
|
)
|
|
4.1
|
|
|
2.2
|
|
||||||
Net unrealized investment gains (losses), pre-tax
|
|
220.2
|
|
|
(.3
|
)
|
|
219.9
|
|
|
(37.9
|
)
|
|
(10.7
|
)
|
|
(48.6
|
)
|
||||||
Income tax expense attributable to net unrealized
investment gains (losses)
|
|
(50.5
|
)
|
|
—
|
|
|
(50.5
|
)
|
|
6.3
|
|
|
—
|
|
|
6.3
|
|
||||||
Net unrealized investment gains (losses), after-tax
|
|
$
|
169.7
|
|
|
$
|
(.3
|
)
|
|
$
|
169.4
|
|
|
$
|
(31.6
|
)
|
|
$
|
(10.7
|
)
|
|
$
|
(42.3
|
)
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
Millions
|
|
2019
|
|
2018
|
||||
Other long-term investments
|
|
$
|
114.0
|
|
|
$
|
(5.1
|
)
|
Total net unrealized investment gains (losses), pre-tax - Level 3 investments
|
|
$
|
114.0
|
|
|
$
|
(5.1
|
)
|
|
|
March 31, 2019
|
||||||||||||||
Millions
|
|
Cost or
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Carrying
Value
|
||||||||
U.S. Government and agency obligations
|
|
$
|
153.1
|
|
|
$
|
.4
|
|
|
$
|
(.5
|
)
|
|
$
|
153.0
|
|
Debt securities issued by corporations
|
|
538.4
|
|
|
7.3
|
|
|
(.9
|
)
|
|
544.8
|
|
||||
Municipal obligations
|
|
279.7
|
|
|
6.1
|
|
|
(.4
|
)
|
|
285.4
|
|
||||
Mortgage and asset-backed securities
|
|
149.4
|
|
|
.6
|
|
|
(1.2
|
)
|
|
148.8
|
|
||||
Total fixed maturity investments
|
|
$
|
1,120.6
|
|
|
$
|
14.4
|
|
|
$
|
(3.0
|
)
|
|
$
|
1,132.0
|
|
|
|
December 31, 2018
|
||||||||||||||
Millions
|
|
Cost or
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Carrying
Value
|
||||||||
U.S. Government and agency obligations
|
|
$
|
154.0
|
|
|
$
|
.1
|
|
|
$
|
(.9
|
)
|
|
$
|
153.2
|
|
Debt securities issued by corporations
|
|
519.0
|
|
|
1.0
|
|
|
(9.5
|
)
|
|
510.5
|
|
||||
Municipal obligations
|
|
279.0
|
|
|
2.4
|
|
|
(1.1
|
)
|
|
280.3
|
|
||||
Mortgage and asset-backed securities
|
|
136.1
|
|
|
.1
|
|
|
(2.7
|
)
|
|
133.5
|
|
||||
Total fixed maturity investments
|
|
$
|
1,088.1
|
|
|
$
|
3.6
|
|
|
$
|
(14.2
|
)
|
|
$
|
1,077.5
|
|
|
|
March 31, 2019
|
||||||||||||||||||
Millions
|
|
Cost or
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Net Foreign
Currency
Losses
|
|
Carrying
Value
|
||||||||||
Common equity securities
|
|
$
|
798.6
|
|
|
$
|
107.3
|
|
|
$
|
(.9
|
)
|
|
$
|
—
|
|
|
$
|
905.0
|
|
Other long-term investments
|
|
$
|
389.8
|
|
|
$
|
164.3
|
|
|
$
|
(54.3
|
)
|
|
$
|
(2.2
|
)
|
|
$
|
497.6
|
|
|
|
December 31, 2018
|
||||||||||||||||||
Millions
|
|
Cost or
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Net Foreign
Currency Losses |
|
Carrying
Value
|
||||||||||
Common equity securities
|
|
$
|
904.7
|
|
|
$
|
51.0
|
|
|
$
|
(30.1
|
)
|
|
$
|
—
|
|
|
$
|
925.6
|
|
Other long-term investments
|
|
$
|
330.3
|
|
|
$
|
52.2
|
|
|
$
|
(54.9
|
)
|
|
$
|
(2.0
|
)
|
|
$
|
325.6
|
|
|
|
Carrying Value at
|
||||||
Millions
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
MediaAlpha (1)
|
|
$
|
114.7
|
|
|
$
|
—
|
|
PassportCard/DavidShield (1)
|
|
75.0
|
|
|
75.0
|
|
||
Kudu
|
|
71.7
|
|
|
30.7
|
|
||
Other unconsolidated entities (1)(2)
|
|
54.4
|
|
|
60.0
|
|
||
Total unconsolidated entities(1)(2)
|
|
315.8
|
|
|
165.7
|
|
||
Private equity funds and hedge funds
|
|
150.7
|
|
|
146.1
|
|
||
Other
|
|
31.1
|
|
|
13.8
|
|
||
Total other long-term investments
|
|
$
|
497.6
|
|
|
$
|
325.6
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||||
Millions
|
|
Fair Value
|
|
Unfunded
Commitments
|
|
Fair Value
|
|
Unfunded
Commitments
|
||||||||
Private equity funds
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Manufacturing/Industrial
|
|
$
|
42.1
|
|
|
$
|
10.5
|
|
|
$
|
42.9
|
|
|
$
|
10.5
|
|
Aerospace/Defense/Government
|
|
32.8
|
|
|
29.8
|
|
|
27.6
|
|
|
34.9
|
|
||||
Direct lending
|
|
13.6
|
|
|
16.8
|
|
|
13.0
|
|
|
17.7
|
|
||||
Financial services
|
|
9.1
|
|
|
12.8
|
|
|
8.3
|
|
|
13.6
|
|
||||
Total private equity funds
|
|
97.6
|
|
|
69.9
|
|
|
91.8
|
|
|
76.7
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Hedge funds
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Long/short banks and financials
|
|
53.1
|
|
|
—
|
|
|
54.3
|
|
|
—
|
|
||||
Total hedge funds
|
|
53.1
|
|
|
—
|
|
|
54.3
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Total private equity funds and hedge funds
included in other long-term investments
|
|
$
|
150.7
|
|
|
$
|
69.9
|
|
|
$
|
146.1
|
|
|
$
|
76.7
|
|
Millions
|
|
1 – 3 years
|
|
3 – 5 years
|
|
5 – 10 years
|
|
>10 years
|
|
Total
|
Private equity funds — expected lock-up period remaining
|
|
$7.0
|
|
$—
|
|
$67.9
|
|
$22.7
|
|
$97.6
|
|
|
March 31, 2019
|
||||||||||||||
Millions
|
|
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Fixed maturity investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Government and agency obligations
|
|
$
|
153.0
|
|
|
$
|
153.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||||
Debt securities issued by corporations:
|
|
|
|
|
|
|
|
|
|
|||||||
Financials
|
|
139.7
|
|
|
—
|
|
|
139.7
|
|
|
—
|
|
||||
Healthcare
|
|
74.7
|
|
|
—
|
|
|
74.7
|
|
|
—
|
|
||||
Energy
|
|
66.0
|
|
|
—
|
|
|
66.0
|
|
|
—
|
|
||||
Consumer
|
|
61.0
|
|
|
—
|
|
|
61.0
|
|
|
—
|
|
||||
Industrial
|
|
57.0
|
|
|
—
|
|
|
57.0
|
|
|
—
|
|
||||
Technology
|
|
55.0
|
|
|
—
|
|
|
55.0
|
|
|
—
|
|
||||
Communications
|
|
40.4
|
|
|
—
|
|
|
40.4
|
|
|
—
|
|
||||
Utilities
|
|
28.5
|
|
|
—
|
|
|
28.5
|
|
|
—
|
|
||||
Materials
|
|
22.5
|
|
|
—
|
|
|
22.5
|
|
|
—
|
|
||||
Total debt securities issued by corporations
|
|
544.8
|
|
|
—
|
|
|
544.8
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Mortgage and asset-backed securities
|
|
148.8
|
|
|
—
|
|
|
148.8
|
|
|
—
|
|
||||
Municipal obligations
|
|
285.4
|
|
|
—
|
|
|
285.4
|
|
|
—
|
|
||||
Total fixed maturity investments
|
|
1,132.0
|
|
|
153.0
|
|
|
979.0
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Short-term investments (1)
|
|
269.8
|
|
|
249.0
|
|
|
20.8
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Common equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Exchange traded funds (2)
|
|
712.3
|
|
|
646.3
|
|
|
66.0
|
|
|
—
|
|
||||
Other (3)
|
|
192.7
|
|
|
—
|
|
|
192.7
|
|
|
—
|
|
||||
Total common equity securities
|
|
905.0
|
|
|
646.3
|
|
|
258.7
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other long-term investments
|
|
275.1
|
|
|
—
|
|
|
—
|
|
|
275.1
|
|
||||
Other long-term investments — NAV (4)
|
|
222.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total investments
|
|
$
|
2,804.4
|
|
|
$
|
1,048.3
|
|
|
$
|
1,258.5
|
|
|
$
|
275.1
|
|
|
|
December 31, 2018
|
||||||||||||||
Millions
|
|
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Fixed maturity investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Government and agency obligations
|
|
$
|
153.2
|
|
|
$
|
153.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||||
Debt securities issued by corporations:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Financials
|
|
143.4
|
|
|
—
|
|
|
143.4
|
|
|
—
|
|
||||
Consumer
|
|
68.5
|
|
|
—
|
|
|
68.5
|
|
|
—
|
|
||||
Technology
|
|
60.5
|
|
|
—
|
|
|
60.5
|
|
|
—
|
|
||||
Energy
|
|
57.6
|
|
|
—
|
|
|
57.6
|
|
|
—
|
|
||||
Healthcare
|
|
55.0
|
|
|
—
|
|
|
55.0
|
|
|
—
|
|
||||
Industrial
|
|
47.6
|
|
|
—
|
|
|
47.6
|
|
|
—
|
|
||||
Communications
|
|
31.8
|
|
|
—
|
|
|
31.8
|
|
|
—
|
|
||||
Materials
|
|
26.3
|
|
|
—
|
|
|
26.3
|
|
|
—
|
|
||||
Utilities
|
|
19.8
|
|
|
—
|
|
|
19.8
|
|
|
—
|
|
||||
Total debt securities issued by corporations
|
|
510.5
|
|
|
—
|
|
|
510.5
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Mortgage and asset-backed securities
|
|
133.5
|
|
|
—
|
|
|
133.5
|
|
|
—
|
|
||||
Municipal obligations
|
|
280.3
|
|
|
—
|
|
|
280.3
|
|
|
—
|
|
||||
Total fixed maturity investments
|
|
1,077.5
|
|
|
153.2
|
|
|
924.3
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Short-term investments (1)
|
|
214.2
|
|
|
204.4
|
|
|
9.8
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Common equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Exchange traded funds (2)
|
|
675.3
|
|
|
617.0
|
|
|
58.3
|
|
|
—
|
|
||||
Healthcare
|
|
14.0
|
|
|
14.0
|
|
|
—
|
|
|
—
|
|
||||
Financials
|
|
13.5
|
|
|
13.5
|
|
|
—
|
|
|
—
|
|
||||
Communications
|
|
12.7
|
|
|
12.7
|
|
|
—
|
|
|
—
|
|
||||
Industrial
|
|
11.4
|
|
|
11.4
|
|
|
—
|
|
|
—
|
|
||||
Technology
|
|
7.4
|
|
|
7.4
|
|
|
—
|
|
|
—
|
|
||||
Consumer
|
|
6.2
|
|
|
6.2
|
|
|
—
|
|
|
—
|
|
||||
Energy
|
|
4.1
|
|
|
4.1
|
|
|
—
|
|
|
—
|
|
||||
Materials
|
|
3.1
|
|
|
3.1
|
|
|
—
|
|
|
—
|
|
||||
Other (3)
|
|
177.9
|
|
|
—
|
|
|
177.9
|
|
|
—
|
|
||||
Total common equity securities
|
|
925.6
|
|
|
689.4
|
|
|
236.2
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other long-term investments
|
|
138.7
|
|
|
—
|
|
|
—
|
|
|
138.7
|
|
||||
Other long-term investments — NAV (4)
|
|
186.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total investments
|
|
$
|
2,542.9
|
|
|
$
|
1,047.0
|
|
|
$
|
1,170.3
|
|
|
$
|
138.7
|
|
|
|
Fair Value at
|
||||||
Millions
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
AAA
|
|
$
|
9.6
|
|
|
$
|
8.9
|
|
AA
|
|
83.8
|
|
|
88.7
|
|
||
A
|
|
300.3
|
|
|
270.5
|
|
||
BBB
|
|
151.1
|
|
|
142.4
|
|
||
Debt securities issued by corporations (1)
|
|
$
|
544.8
|
|
|
$
|
510.5
|
|
(1)
|
Credit ratings are based upon issuer credit ratings provided by Standard & Poor’s Financial Services LLC (“Standard & Poor’s”), or if unrated by Standard & Poor’s, long-term obligation ratings provided by Moody’s Investor Service, Inc.
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
Millions
|
|
Fair Value
|
|
Level 2
|
|
Level 3
|
|
Fair Value
|
|
Level 2
|
|
Level 3
|
||||||||||||
Mortgage-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Agency:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
FNMA
|
|
$
|
59.8
|
|
|
$
|
59.8
|
|
|
$
|
—
|
|
|
$
|
53.6
|
|
|
$
|
53.6
|
|
|
$
|
—
|
|
FHLMC
|
|
43.0
|
|
|
43.0
|
|
|
—
|
|
|
38.1
|
|
|
38.1
|
|
|
$
|
—
|
|
|||||
GNMA
|
|
25.6
|
|
|
25.6
|
|
|
—
|
|
|
23.7
|
|
|
23.7
|
|
|
$
|
—
|
|
|||||
Total agency (1)
|
|
128.4
|
|
|
128.4
|
|
|
—
|
|
|
115.4
|
|
|
115.4
|
|
|
—
|
|
||||||
Total mortgage-backed securities
|
|
128.4
|
|
|
128.4
|
|
|
—
|
|
|
115.4
|
|
|
115.4
|
|
|
—
|
|
||||||
Other asset-backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Vehicle receivables
|
|
11.5
|
|
|
11.5
|
|
|
—
|
|
|
9.2
|
|
|
9.2
|
|
|
—
|
|
||||||
Credit card receivables
|
|
8.9
|
|
|
8.9
|
|
|
—
|
|
|
8.9
|
|
|
8.9
|
|
|
—
|
|
||||||
Total other asset-backed securities
|
|
20.4
|
|
|
20.4
|
|
|
—
|
|
|
18.1
|
|
|
18.1
|
|
|
—
|
|
||||||
Total mortgage and asset-backed securities
|
|
$
|
148.8
|
|
|
$
|
148.8
|
|
|
$
|
—
|
|
|
$
|
133.5
|
|
|
$
|
133.5
|
|
|
$
|
—
|
|
(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).
|
|
|
|
Level 3 Investments
|
Unconsolidated Entities, Private Equity Funds and Hedge Funds Measured at NAV (3)
|
|
|
|
||||||||||
Millions
|
Level 1 Investments
|
Level 2
Investments
|
Other Long-term
Investments(2)
|
|
Total
|
|
|||||||||||
Balance at December 31, 2018
|
$
|
842.6
|
|
$
|
1,160.5
|
|
$
|
138.7
|
|
$
|
186.9
|
|
|
$
|
2,328.7
|
|
(1)
|
Net realized and unrealized gains (losses)
|
91.7
|
|
40.7
|
|
114.0
|
|
(.8
|
)
|
|
245.6
|
|
|
|||||
Amortization/Accretion
|
.1
|
|
(.4
|
)
|
—
|
|
—
|
|
|
(.3
|
)
|
|
|||||
Purchases
|
14.6
|
|
142.3
|
|
11.5
|
|
49.2
|
|
|
217.6
|
|
|
|||||
Sales
|
(149.7
|
)
|
(105.4
|
)
|
—
|
|
(1.9
|
)
|
|
(257.0
|
)
|
|
|||||
Transfers in
|
—
|
|
—
|
|
10.9
|
|
—
|
|
|
10.9
|
|
|
|||||
Transfers out
|
—
|
|
—
|
|
—
|
|
(10.9
|
)
|
|
(10.9
|
)
|
|
|||||
Balance at March 31, 2019
|
$
|
799.3
|
|
$
|
1,237.7
|
|
$
|
275.1
|
|
$
|
222.5
|
|
|
$
|
2,534.6
|
|
(1)
|
|
|
|
Level 3 Investments
|
Unconsolidated Entities, Private Equity Funds and Hedge Funds Measured at NAV (3)
|
|
|
||||||||||
Millions
|
Level 1 Investments
|
Level 2
Investments
|
Other Long-term
Investments
|
Total
|
|
|||||||||||
Balance at December 31, 2017
|
$
|
890.4
|
|
$
|
2,105.4
|
|
$
|
77.2
|
|
$
|
135.3
|
|
$
|
3,208.3
|
|
(1)(2)
|
Net realized and unrealized (losses) gains
|
(14.3
|
)
|
(26.0
|
)
|
(7.8
|
)
|
2.7
|
|
(45.4
|
)
|
(4)
|
|||||
Amortization/Accretion
|
—
|
|
(1.2
|
)
|
—
|
|
—
|
|
(1.2
|
)
|
|
|||||
Purchases
|
238.9
|
|
407.7
|
|
44.0
|
|
2.0
|
|
692.6
|
|
|
|||||
Sales
|
(240.7
|
)
|
(1,080.8
|
)
|
—
|
|
(.3
|
)
|
(1,321.8
|
)
|
|
|||||
Transfers in
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|||||
Transfers out
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|||||
Balance at March 31, 2018
|
$
|
874.3
|
|
$
|
1,405.1
|
|
$
|
113.4
|
|
$
|
139.7
|
|
$
|
2,532.5
|
|
(1)
|
|
||||||||
$ in Millions, Except Share Price
|
|
March 31, 2019
|
||||||
Description
|
|
Valuation Technique(s)
|
|
Fair Value (1)
|
|
Unobservable Input
|
||
MediaAlpha
|
|
Share price of recent transaction(2)
|
|
$114.7
|
|
Unit price
|
-
|
$208.98
|
PassportCard/DavidShield
|
|
Discounted cash flow
|
|
$75.0
|
|
Discount rate
|
-
|
18.0%
|
|
|
|
|
|
|
Revenue exit multiple
|
-
|
1.00
|
Compare.com
|
|
Discounted cash flow
|
|
$16.9
|
|
Discount rate
|
-
|
22.0%
|
|
|
|
|
|
|
Revenue exit multiple
|
-
|
2.75
|
YOUSURE Tarifvergleich GmbH (“durchblicker”)
|
|
Discounted cash flow
|
|
$15.2
|
|
Discount rate
|
-
|
23.0%
|
|
|
|
|
|
|
Revenue exit multiple
|
-
|
2.25
|
Captricity, Inc.
|
|
Discounted cash flow
|
|
$14.5
|
|
Discount rate
|
-
|
23.0%
|
|
|
|
|
|
|
Revenue exit multiple
|
-
|
3.75
|
Galvanic Applied Sciences
|
|
Multiple of EBITDA
|
|
$2.7
|
|
EBITDA multiple
|
-
|
6.00
|
Private debt instrument
|
|
Discounted cash flow
|
|
$10.0
|
|
Discount rate
|
-
|
9.23%
|
Private debt instrument
|
|
Discounted cash flow
|
|
$10.9
|
|
Discount rate
|
-
|
7.00%
|
|
||||||||
$ in Millions, Except Share Price
|
|
December 31, 2018
|
||||||
Description
|
|
Valuation Technique(s)
|
|
Fair Value (1)
|
|
Unobservable Input
|
||
PassportCard/DavidShield
|
|
Discounted cash flow
|
|
$75.0
|
|
Discount rate
|
-
|
18.0%
|
|
|
|
|
|
|
Revenue exit multiple
|
-
|
1.00
|
Compare.com
|
|
Discounted cash flow
|
|
$16.9
|
|
Discount rate
|
-
|
22.0%
|
|
|
|
|
|
|
Revenue exit multiple
|
-
|
2.75
|
durchblicker
|
|
Discounted cash flow
|
|
$15.5
|
|
Discount rate
|
-
|
23.0%
|
|
|
|
|
|
|
Revenue exit multiple
|
-
|
2.25
|
Captricity, Inc.
|
|
Discounted cash flow
|
|
$14.5
|
|
Discount rate
|
-
|
23.0%
|
|
|
|
|
|
|
Revenue exit multiple
|
-
|
3.75
|
Galvanic Applied Sciences
|
|
Multiple of EBITDA
|
|
$3.1
|
|
EBITDA multiple
|
-
|
6.00
|
Private debt instrument
|
|
Discounted cash flow
|
|
$10.0
|
|
Discount rate
|
-
|
9.23%
|
|
|
Three Months Ended March 31,
|
|||||||||||||||||||||||
|
|
2019
|
|
2018
|
|||||||||||||||||||||
Millions
|
|
Goodwill
|
|
Other Intangible Assets
|
|
Total Goodwill and Other Intangible Assets
|
|
Goodwill
|
|
Other Intangible Assets
|
|
Total Goodwill and Other Intangible Assets
|
|||||||||||||
Beginning balance
|
|
$
|
379.9
|
|
|
$
|
157.6
|
|
|
$
|
537.5
|
|
|
$
|
25.9
|
|
|
$
|
36.2
|
|
|
$
|
62.1
|
|
|
Deconsolidation of MediaAlpha
|
|
(18.3
|
)
|
|
(23.5
|
)
|
|
(41.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Attribution of acquisition date fair value estimates
between goodwill and other intangible assets
|
|
(26.8
|
)
|
|
26.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Acquisitions of businesses
|
|
13.4
|
|
|
—
|
|
|
13.4
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation
|
|
1.2
|
|
|
.3
|
|
|
1.5
|
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Adjustments to reflect acquisition date fair value
|
|
.3
|
|
|
5.9
|
|
|
6.2
|
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
||||||
Amortization
|
|
—
|
|
|
(6.6
|
)
|
|
(6.6
|
)
|
|
—
|
|
|
(2.9
|
)
|
|
(2.9
|
)
|
|||||||
Ending balance
|
|
$
|
349.7
|
|
|
$
|
160.5
|
|
|
$
|
510.2
|
|
|
$
|
25.9
|
|
|
$
|
33.3
|
|
|
$
|
59.2
|
|
$ in Millions
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
Acquisition Date Fair Value
|
|
Accumulated Amortization
|
|
Net Carrying Value
|
|
Acquisition Date Fair Value
|
|
Accumulated Amortization
|
|
Net Carrying Value
|
||||||||||||||
Goodwill:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
NSM (1)
|
|
$
|
328.8
|
|
|
$
|
—
|
|
|
$
|
328.8
|
|
|
$
|
354.3
|
|
|
$
|
—
|
|
|
$
|
354.3
|
|
MediaAlpha
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18.3
|
|
|
—
|
|
|
18.3
|
|
||||||
Other Operations (2)
|
|
20.9
|
|
|
—
|
|
|
20.9
|
|
|
7.3
|
|
|
—
|
|
|
7.3
|
|
||||||
Total goodwill
|
|
349.7
|
|
|
—
|
|
|
349.7
|
|
|
379.9
|
|
|
—
|
|
|
379.9
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
NSM (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer relationships
|
|
110.9
|
|
|
9.3
|
|
|
101.6
|
|
|
85.3
|
|
|
6.0
|
|
|
79.3
|
|
||||||
Trade names
|
|
57.1
|
|
|
2.7
|
|
|
54.4
|
|
|
51.2
|
|
|
1.8
|
|
|
49.4
|
|
||||||
Information technology
|
|
3.8
|
|
|
.7
|
|
|
3.1
|
|
|
3.7
|
|
|
.5
|
|
|
3.2
|
|
||||||
Other
|
|
1.4
|
|
|
.6
|
|
|
.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Subtotal
|
|
173.2
|
|
|
13.3
|
|
|
159.9
|
|
|
140.2
|
|
|
8.3
|
|
|
131.9
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
MediaAlpha
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Customer relationships
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26.8
|
|
|
4.9
|
|
|
21.9
|
|
||||||
Information technology
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33.3
|
|
|
30.9
|
|
|
2.4
|
|
||||||
Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9.8
|
|
|
9.0
|
|
|
0.8
|
|
||||||
Subtotal
|
|
—
|
|
|
—
|
|
|
—
|
|
|
69.9
|
|
|
44.8
|
|
|
25.1
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Trade names
|
|
.6
|
|
|
.2
|
|
|
.4
|
|
|
.6
|
|
|
.2
|
|
|
.4
|
|
||||||
Information technology
|
|
.5
|
|
|
.3
|
|
|
.2
|
|
|
.5
|
|
|
.3
|
|
|
.2
|
|
||||||
Subtotal
|
|
1.1
|
|
|
.5
|
|
|
.6
|
|
|
1.1
|
|
|
.5
|
|
|
.6
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total other intangible assets
|
174.3
|
|
|
13.8
|
|
|
160.5
|
|
|
211.2
|
|
|
53.6
|
|
|
157.6
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total goodwill and other
intangible assets
|
$
|
524.0
|
|
|
$
|
13.8
|
|
|
510.2
|
|
|
$
|
591.1
|
|
|
$
|
53.6
|
|
|
537.5
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Goodwill and other intangible assets
attributed to non-controlling interests
|
|
|
|
|
(24.1
|
)
|
|
|
|
|
|
(40.6
|
)
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Goodwill and other intangible assets
included in White Mountains’s
common shareholders’ equity
|
|
|
|
|
$
|
486.1
|
|
|
|
|
|
|
$
|
496.9
|
|
Millions
|
|
March 31,
2019 |
|
Effective
Rate (1)
|
|
December 31,
2018 |
|
Effective
Rate (1)
|
||||
NSM Bank Facility
|
|
$
|
186.4
|
|
|
7.8%
|
|
$
|
180.4
|
|
|
7.4%
|
Unamortized issuance cost
|
|
(3.6
|
)
|
|
|
|
(3.8
|
)
|
|
|
||
NSM Bank Facility, carrying value
|
|
182.8
|
|
|
|
|
176.6
|
|
|
|
||
Other NSM debt
|
|
1.7
|
|
|
|
|
1.9
|
|
|
|
||
MediaAlpha Bank Facility
|
|
—
|
|
|
|
|
14.3
|
|
|
7.1%
|
||
Unamortized issuance cost
|
|
—
|
|
|
|
|
(.1
|
)
|
|
|
||
MediaAlpha Bank Facility, carrying value
|
|
—
|
|
|
|
|
14.2
|
|
|
|
||
Other Operations debt
|
|
11.3
|
|
|
|
|
—
|
|
|
|
||
Unamortized issuance cost
|
|
(.4
|
)
|
|
|
|
—
|
|
|
|
||
Other Operations, carrying value
|
|
10.9
|
|
|
|
|
—
|
|
|
|
||
Total debt
|
|
$
|
195.4
|
|
|
|
|
$
|
192.7
|
|
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Contracts outstanding
|
|
7,786
|
|
|
7,525
|
|
||
Remaining weighted average contract period outstanding (in years)
|
|
10.7
|
|
|
10.7
|
|
||
Contractual debt service outstanding (in millions):
|
|
|
|
|
||||
Principal
|
|
$
|
53,715.2
|
|
|
$
|
52,201.6
|
|
Interest
|
|
27,348.9
|
|
|
26,560.3
|
|
||
Total debt service outstanding
|
|
$
|
81,064.1
|
|
|
$
|
78,761.9
|
|
|
|
|
|
|
||||
Gross unearned insurance premiums
|
|
$
|
179.6
|
|
|
$
|
176.0
|
|
Millions
|
|
March 31, 2019
|
||
April 1, 2019 - December 31, 2019
|
|
$
|
12.2
|
|
|
|
|
||
January 1, 2020 - March 31, 2020
|
|
3.9
|
|
|
April 1, 2020 - June 30, 2020
|
|
3.9
|
|
|
July 1, 2020 - September 30, 2020
|
|
3.9
|
|
|
October 1, 2020 - December 31, 2020
|
|
3.8
|
|
|
Total 2020
|
|
15.5
|
|
|
|
|
|
||
2021
|
|
14.5
|
|
|
2022
|
|
13.6
|
|
|
2023
|
|
12.8
|
|
|
2024
|
|
12.0
|
|
|
2025 and thereafter
|
|
99.0
|
|
|
Total gross unearned insurance premiums
|
|
$
|
179.6
|
|
|
|
Three Months Ended March 31,
|
||||||
Millions
|
|
2019
|
|
2018
|
||||
Written premiums:
|
|
|
|
|
||||
Direct
|
|
$
|
7.9
|
|
|
$
|
6.4
|
|
Assumed
|
|
—
|
|
|
—
|
|
||
Gross written premiums
|
|
$
|
7.9
|
|
|
$
|
6.4
|
|
Earned premiums:
|
|
|
|
|
||||
Direct
|
|
$
|
3.7
|
|
|
$
|
3.0
|
|
Assumed
|
|
0.5
|
|
|
—
|
|
||
Gross earned premiums
|
|
$
|
4.2
|
|
|
$
|
3.0
|
|
Millions
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Equity method eligible unconsolidated entities, at fair value
|
|
$
|
293.6
|
|
|
$
|
138.1
|
|
Investments accounted for under the equity method
|
|
1.0
|
|
|
1.3
|
|
||
Total investments in equity method eligible unconsolidated entities
|
|
294.6
|
|
|
139.4
|
|
||
Other unconsolidated investments (1)
|
|
203.0
|
|
|
186.2
|
|
||
Total other long-term investments
|
|
$
|
497.6
|
|
|
$
|
325.6
|
|
|
|
Basic Ownership Interest
|
|
|
||
Investee
|
|
March 31, 2019
|
|
December 31, 2018
|
|
Instrument Held
|
MediaAlpha(1)
|
|
48.3%
|
|
n/a
|
|
Units
|
PassportCard/DavidShield (2)
|
|
50.0%
|
|
50.0%
|
|
Common shares
|
Kudu
|
|
49.5%
|
|
49.5%
|
|
Units
|
durchblicker
|
|
45.0%
|
|
45.0%
|
|
Common shares
|
Tuckerman Capital Fund III, L.P.
|
|
16.0%
|
|
18.5%
|
|
Limited partnership interest
|
Compare.com
|
|
18.4%
|
|
18.4%
|
|
Common shares
|
|
|
Three Months Ended March 31,
|
||||||||||||
|
|
2019
|
|
2018
|
||||||||||
Millions, except share amounts
|
|
Target Performance
Shares Outstanding
|
|
Accrued
Expense
|
|
Target Performance
Shares Outstanding |
|
Accrued
Expense
|
||||||
Beginning of period
|
|
40,616
|
|
|
$
|
31.7
|
|
|
50,515
|
|
|
$
|
45.8
|
|
Shares paid (1)
|
|
(13,715
|
)
|
|
(18.1
|
)
|
|
(23,186
|
)
|
|
(28.4
|
)
|
||
New grants
|
|
13,700
|
|
|
—
|
|
|
14,105
|
|
|
—
|
|
||
Forfeitures and cancellations(2)
|
|
1
|
|
|
.2
|
|
|
(818
|
)
|
|
.3
|
|
||
Expense recognized
|
|
—
|
|
|
9.3
|
|
|
—
|
|
|
3.3
|
|
||
End of period
|
|
40,602
|
|
|
$
|
23.1
|
|
|
40,616
|
|
|
$
|
21.0
|
|
|
|
Three Months Ended March 31, 2019
|
|||||
Millions, except share amounts
|
|
Target Performance
Shares Outstanding
|
|
Accrued
Expense
|
|||
Performance cycle:
|
|
|
|
|
|
|
|
2017 – 2019
|
|
14,070
|
|
|
$
|
16.9
|
|
2018 – 2020
|
|
13,450
|
|
|
5.5
|
|
|
2019 – 2021
|
|
13,700
|
|
|
1.0
|
|
|
Sub-total
|
|
41,220
|
|
|
23.4
|
|
|
Assumed forfeitures
|
|
(618
|
)
|
|
(.3
|
)
|
|
March 31, 2019
|
|
40,602
|
|
|
$
|
23.1
|
|
|
|
Three Months Ended March 31,
|
||||||||||||
|
|
2019
|
|
2018
|
||||||||||
Millions,
except share amounts
|
|
Restricted
Shares |
|
Unamortized Issue Date
Fair Value |
|
Restricted
Shares |
|
Unamortized Issue Date
Fair Value |
||||||
Non-vested,
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Beginning of period
|
|
41,510
|
|
|
$
|
12.5
|
|
|
53,755
|
|
|
$
|
14.3
|
|
Issued
|
|
13,700
|
|
|
12.8
|
|
|
14,105
|
|
|
11.4
|
|
||
Vested
|
|
(13,715
|
)
|
|
—
|
|
|
(25,381
|
)
|
|
—
|
|
||
Forfeited
|
|
—
|
|
|
—
|
|
|
(969
|
)
|
|
(.2
|
)
|
||
Expense recognized
|
|
—
|
|
|
(2.5
|
)
|
|
—
|
|
|
(3.3
|
)
|
||
End of period
|
|
41,495
|
|
|
$
|
22.8
|
|
|
41,510
|
|
|
$
|
22.2
|
|
Millions
Lease Cost
|
|
Three Months Ended March 31, 2019
|
||
Lease cost
|
|
$
|
1.7
|
|
Less: sublease income
|
|
.1
|
|
|
Net lease cost
|
|
$
|
1.6
|
|
Millions
|
|
As of
March 31, 2019
|
||
Remainder of 2019
|
|
$
|
4.2
|
|
2020
|
|
4.6
|
|
|
2021
|
|
3.9
|
|
|
2022
|
|
3.7
|
|
|
2023
|
|
3.1
|
|
|
Thereafter
|
|
5.1
|
|
|
Total undiscounted lease payments
|
|
24.6
|
|
|
Less: present value adjustment
|
|
2.8
|
|
|
Operating lease liability
|
|
$
|
21.8
|
|
|
|
As of March 31, 2019
|
||||||||||||||||
Millions
|
|
HG/BAM
|
|
NSM
|
|
Other Operations
|
|
Total
|
|
Weighted Average Incremental Borrowing Rate (1)
|
||||||||
ROU lease asset
|
|
$
|
11.8
|
|
|
$
|
4.7
|
|
|
$
|
5.0
|
|
|
$
|
21.5
|
|
|
4.7%
|
Lease liability
|
|
$
|
11.8
|
|
|
$
|
4.7
|
|
|
$
|
5.3
|
|
|
$
|
21.8
|
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Basic and diluted earnings per share numerators (in millions):
|
|
|
|
|
||||
Net income (loss) attributable to White Mountains’s
common shareholders
|
|
$
|
284.4
|
|
|
$
|
(48.0
|
)
|
Less: total income from discontinued operations, net of tax
|
|
.7
|
|
|
.1
|
|
||
Net income (loss) from continuing operations attributable to
White Mountains’s common shareholders
|
|
$
|
283.7
|
|
|
$
|
(48.1
|
)
|
Allocation of earnings to participating restricted common shares(1)
|
|
(2.9
|
)
|
|
.4
|
|
||
Basic and diluted earnings (losses) per share numerators
|
|
$
|
280.8
|
|
|
$
|
(47.7
|
)
|
Basic earnings per share denominators (in thousands):
|
|
|
|
|
||||
Total average common shares outstanding during the period
|
|
3,172.2
|
|
|
3,746.1
|
|
||
Average unvested restricted common shares(2)
|
|
(32.5
|
)
|
|
(35.9
|
)
|
||
Basic earnings (losses) per share denominator
|
|
3,139.7
|
|
|
3,710.2
|
|
||
Diluted earnings per share denominator (in thousands):
|
|
|
|
|
||||
Total average common shares outstanding during the period
|
|
3,172.2
|
|
|
3,746.1
|
|
||
Average unvested restricted common shares(2)
|
|
(32.5
|
)
|
|
(35.9
|
)
|
||
Diluted earnings (losses) per share denominator
|
|
3,139.7
|
|
|
3,710.2
|
|
||
Basic and diluted earnings per share (in dollars) - continuing operations:
|
|
|
|
|
||||
Distributed earnings - dividends declared and paid
|
|
$
|
1.00
|
|
|
$
|
1.00
|
|
Undistributed earnings (losses)
|
|
88.42
|
|
|
(13.85
|
)
|
||
Basic and diluted earnings (losses) per share
|
|
$
|
89.42
|
|
|
$
|
(12.85
|
)
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
Millions
|
|
2019
|
|
2018
|
||||
Undistributed net earnings (losses) - continuing operations:
|
|
|
|
|
||||
Net income (losses) attributable to White Mountains’s common shareholders,
net of restricted common share amounts
|
|
$
|
280.8
|
|
|
$
|
(47.7
|
)
|
Dividends declared, net of restricted common share amounts (1)
|
|
(3.2
|
)
|
|
(3.7
|
)
|
||
Total undistributed net earnings (losses), net of restricted common share amounts
|
|
$
|
277.6
|
|
|
$
|
(51.4
|
)
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||
$ in Millions
|
|
Non-controlling Percentage
|
|
Non-controlling Equity
|
|
Non-controlling Percentage
|
|
Non-controlling Equity
|
||||||
Non-controlling interests, excluding BAM
|
|
|
|
|
|
|
|
|
||||||
HG Global
|
|
3.1
|
%
|
|
$
|
14.8
|
|
|
3.1
|
%
|
|
$
|
14.5
|
|
NSM
|
|
4.7
|
|
|
14.2
|
|
|
4.5
|
|
|
13.6
|
|
||
Other NSM
|
|
13.4
|
|
|
.2
|
|
|
13.4
|
|
|
.3
|
|
||
MediaAlpha
|
|
—
|
|
|
—
|
|
|
39.0
|
|
|
16.2
|
|
||
Other Operations
|
|
various
|
|
|
.9
|
|
|
various
|
|
|
1.1
|
|
||
Total, excluding BAM
|
|
|
|
30.1
|
|
|
|
|
45.7
|
|
||||
BAM
|
|
100.0
|
|
|
(173.8
|
)
|
|
100.0
|
|
|
(170.6
|
)
|
||
Total non-controlling interests
|
|
|
|
|
$
|
(143.7
|
)
|
|
|
|
$
|
(124.9
|
)
|
Millions
|
|
HG Global/ BAM
|
|
NSM
|
|
MediaAlpha (1)
|
|
Other Operations
|
|
Total
|
||||||||||
Three Months Ended March 31, 2019
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earned insurance premiums
|
|
$
|
4.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4.2
|
|
Net investment income
|
|
5.3
|
|
|
—
|
|
|
—
|
|
|
10.7
|
|
|
16.0
|
|
|||||
Net realized and unrealized investment gains
|
|
11.8
|
|
|
—
|
|
|
—
|
|
|
119.1
|
|
|
130.9
|
|
|||||
Realized and unrealized gains from the MediaAlpha
Transaction
|
|
—
|
|
|
—
|
|
|
—
|
|
|
182.2
|
|
|
182.2
|
|
|||||
Advertising and commission revenues (1)
|
|
—
|
|
|
43.3
|
|
|
48.8
|
|
|
1.3
|
|
|
93.4
|
|
|||||
Other revenue
|
|
.6
|
|
|
6.0
|
|
|
—
|
|
|
.3
|
|
|
6.9
|
|
|||||
Total revenues
|
|
21.9
|
|
|
49.3
|
|
|
48.8
|
|
|
313.6
|
|
|
433.6
|
|
|||||
Insurance acquisition expenses
|
|
1.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.3
|
|
|||||
Cost of sales
|
|
—
|
|
|
—
|
|
|
40.6
|
|
|
1.1
|
|
|
41.7
|
|
|||||
General and administrative expenses
|
|
14.4
|
|
|
25.1
|
|
|
12.5
|
|
|
29.4
|
|
|
81.4
|
|
|||||
Broker commission expense
|
|
—
|
|
|
15.7
|
|
|
—
|
|
|
—
|
|
|
15.7
|
|
|||||
Change in fair value of contingent consideration
earnout liabilities
|
|
—
|
|
|
1.3
|
|
|
—
|
|
|
—
|
|
|
1.3
|
|
|||||
Amortization of other intangible assets
|
|
—
|
|
|
5.0
|
|
|
1.6
|
|
|
—
|
|
|
6.6
|
|
|||||
Interest expense
|
|
—
|
|
|
3.7
|
|
|
.2
|
|
|
—
|
|
|
3.9
|
|
|||||
Total expenses
|
|
15.7
|
|
|
50.8
|
|
|
54.9
|
|
|
30.5
|
|
|
151.9
|
|
|||||
Pre-tax income (loss)
|
|
$
|
6.2
|
|
|
$
|
(1.5
|
)
|
|
$
|
(6.1
|
)
|
|
$
|
283.1
|
|
|
$
|
281.7
|
|
Millions
|
|
HG Global/BAM
|
|
MediaAlpha
|
|
Other Operations
|
|
Total
|
||||||||
Three Months Ended March 31, 2018
|
|
|
|
|
|
|
|
|
||||||||
Earned insurance premiums
|
|
$
|
3.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3.0
|
|
Net investment income
|
|
3.7
|
|
|
—
|
|
|
16.0
|
|
|
19.7
|
|
||||
Net realized and unrealized investment losses
|
|
(7.9
|
)
|
|
—
|
|
|
(45.8
|
)
|
|
(53.7
|
)
|
||||
Advertising and commission revenues (1)
|
|
—
|
|
|
70.1
|
|
|
.9
|
|
|
71.0
|
|
||||
Other revenue
|
|
.2
|
|
|
1.6
|
|
|
.3
|
|
|
2.1
|
|
||||
Total revenues
|
|
(1.0
|
)
|
|
71.7
|
|
|
(28.6
|
)
|
|
42.1
|
|
||||
Insurance acquisition expenses
|
|
1.4
|
|
|
—
|
|
|
—
|
|
|
1.4
|
|
||||
Cost of sales
|
|
—
|
|
|
57.4
|
|
|
.7
|
|
|
58.1
|
|
||||
General and administrative expenses
|
|
11.9
|
|
|
11.2
|
|
|
22.0
|
|
|
45.1
|
|
||||
Amortization of other intangible assets
|
|
—
|
|
|
2.9
|
|
|
—
|
|
|
2.9
|
|
||||
Interest expense
|
|
—
|
|
|
.4
|
|
|
.2
|
|
|
.6
|
|
||||
Total expenses
|
|
13.3
|
|
|
71.9
|
|
|
22.9
|
|
|
108.1
|
|
||||
Pre-tax loss
|
|
$
|
(14.3
|
)
|
|
$
|
(.2
|
)
|
|
$
|
(51.5
|
)
|
|
$
|
(66.0
|
)
|
(1)
|
Approximately 31% of MediaAlpha’s advertising revenue for the three months ended March 31, 2018 was associated with one customer.
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||||
Millions
|
|
Fair
Value
|
|
Carrying
Value
|
|
Fair
Value
|
|
Carrying
Value
|
||||||||
NSM Bank Facility
|
|
$
|
182.9
|
|
|
$
|
182.8
|
|
|
$
|
176.1
|
|
|
$
|
176.6
|
|
MediaAlpha Bank Facility
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14.6
|
|
|
$
|
14.2
|
|
Other Operations debt
|
|
$
|
10.9
|
|
(1)
|
$
|
10.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Three Months Ended
|
||
Millions
|
|
2018
|
||
Net cash provided from operations
|
|
$
|
.1
|
|
Net cash used for investing activities
|
|
(.1
|
)
|
|
Net cash used for financing activities
|
|
—
|
|
|
Net change in cash during the period
|
|
—
|
|
|
Cash balances at beginning of period
|
|
—
|
|
|
Cash balances at end of period
|
|
$
|
—
|
|
Supplemental cash flows information:
|
|
|
||
Interest paid
|
|
$
|
—
|
|
Net income tax payment to national governments
|
|
$
|
—
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
|
|
2019
|
|
2018
|
||||
Basic and diluted earnings per share numerators (in millions):
|
|
|
|
|
||||
Net income (loss) attributable to White Mountains’s common shareholders
|
|
$
|
284.4
|
|
|
$
|
(48.0
|
)
|
Less: total income (loss) from continuing operations, net of tax
|
|
283.7
|
|
|
(48.1
|
)
|
||
Net income from discontinued operations attributable to White Mountains’s
common shareholders
|
|
$
|
.7
|
|
|
$
|
.1
|
|
Allocation of earnings to participating restricted common shares (1)
|
|
—
|
|
|
—
|
|
||
Basic and diluted earnings per share numerators (2)
|
|
$
|
.7
|
|
|
$
|
.1
|
|
Basic earnings per share denominators (in thousands):
|
|
|
|
|
|
|||
Total average common shares outstanding during the period
|
|
3,172.2
|
|
|
3,746.1
|
|
||
Average unvested restricted common shares (3)
|
|
(32.5
|
)
|
|
(35.9
|
)
|
||
Basic earnings per share denominator
|
|
3,139.7
|
|
|
3,710.2
|
|
||
Diluted earnings per share denominator (in thousands):
|
|
|
|
|
|
|||
Total average common shares outstanding during the period
|
|
3,172.2
|
|
|
3,746.1
|
|
||
Average unvested restricted common shares (3)
|
|
(32.5
|
)
|
|
(35.9
|
)
|
||
Diluted earnings per share denominator
|
|
3,139.7
|
|
|
3,710.2
|
|
||
Basic and diluted earnings per share (in dollars) - discontinued operations:
|
|
$
|
.22
|
|
|
$
|
.03
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
|
|
March 31, 2019
|
|
December 31, 2018
|
|
March 31, 2018
|
||||||
Book value per share numerators (in millions):
|
|
|
|
|
|
|
||||||
White Mountains’s common shareholders’ equity
|
|
$
|
3,122.0
|
|
|
$
|
2,843.1
|
|
|
$
|
3,439.0
|
|
Time value of money discount on expected future payments
on the BAM Surplus Notes (1)
|
|
(138.6
|
)
|
|
(141.2
|
)
|
|
(154.1
|
)
|
|||
HG Global’s unearned premium reserve (1)
|
|
140.2
|
|
|
136.9
|
|
|
106.8
|
|
|||
HG Global’s net deferred acquisition costs (1)
|
|
(35.7
|
)
|
|
(34.6
|
)
|
|
(25.2
|
)
|
|||
Adjusted book value per share numerator
|
|
$
|
3,087.9
|
|
|
$
|
2,804.2
|
|
|
$
|
3,366.5
|
|
Book value per share denominators (in thousands of shares):
|
|
|
|
|
|
|
||||||
Common shares outstanding - GAAP book value per share denominator
|
|
3,181.2
|
|
|
3,173.1
|
|
|
3,753.4
|
|
|||
Unearned restricted common shares
|
|
(25.5
|
)
|
|
(14.6
|
)
|
|
(26.2
|
)
|
|||
Adjusted book value per share denominator
|
|
3,155.7
|
|
|
3,158.5
|
|
|
3,727.2
|
|
|||
GAAP book value per share
|
|
$
|
981.39
|
|
|
$
|
896.00
|
|
|
$
|
916.24
|
|
Adjusted book value per share
|
|
$
|
978.51
|
|
|
$
|
887.85
|
|
|
$
|
903.22
|
|
Year-to-date dividends paid per share
|
|
$
|
1.00
|
|
|
$
|
1.00
|
|
|
$
|
1.00
|
|
Millions
|
|
March 31, 2019
|
|
December 31, 2018
|
|
March 31, 2018
|
||||||
Goodwill:
|
|
|
|
|
|
|
||||||
NSM
|
|
$
|
328.8
|
|
|
$
|
354.3
|
|
(1)
|
$
|
—
|
|
MediaAlpha
|
|
—
|
|
|
18.3
|
|
|
18.3
|
|
|||
Other Operations
|
|
20.9
|
|
|
7.3
|
|
|
7.6
|
|
|||
Total goodwill
|
|
349.7
|
|
|
379.9
|
|
|
25.9
|
|
|||
Other intangible assets:
|
|
|
|
|
|
|
||||||
NSM
|
|
159.9
|
|
|
131.9
|
|
|
—
|
|
|||
MediaAlpha
|
|
—
|
|
|
25.1
|
|
|
32.5
|
|
|||
Other Operations
|
|
.6
|
|
|
.6
|
|
|
.8
|
|
|||
Total other intangible assets
|
|
160.5
|
|
|
157.6
|
|
|
33.3
|
|
|||
Total goodwill and other intangible assets (2)
|
|
510.2
|
|
|
537.5
|
|
|
59.2
|
|
|||
Goodwill and other intangible assets attributed
to non-controlling interests |
|
(24.1
|
)
|
|
(40.6
|
)
|
|
(21.1
|
)
|
|||
Goodwill and other intangible assets included in
White Mountains’s common shareholders’ equity |
|
$
|
486.1
|
|
|
$
|
496.9
|
|
|
$
|
38.1
|
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
Millions
|
|
2019
|
|
2018
|
||||
Revenues
|
|
|
|
|
|
|
||
Financial Guarantee revenues
|
|
$
|
21.9
|
|
|
$
|
(1.0
|
)
|
Specialty Insurance Distribution revenues
|
|
49.3
|
|
|
—
|
|
||
Marketing Technology revenues (1)
|
|
48.8
|
|
|
71.7
|
|
||
Other Operations revenues
|
|
313.6
|
|
|
(28.6
|
)
|
||
Total revenues
|
|
433.6
|
|
|
42.1
|
|
||
Expenses
|
|
|
|
|
||||
Financial Guarantee expenses
|
|
15.7
|
|
|
13.3
|
|
||
Specialty Insurance Distribution expenses
|
|
50.8
|
|
|
—
|
|
||
Marketing Technology expenses (1)
|
|
54.9
|
|
|
71.9
|
|
||
Other Operations expenses
|
|
30.5
|
|
|
22.9
|
|
||
Total expenses
|
|
151.9
|
|
|
108.1
|
|
||
Pre-tax income (loss)
|
|
|
|
|
||||
Financial Guarantee pre-tax income (loss)
|
|
6.2
|
|
|
(14.3
|
)
|
||
Specialty Insurance Distribution pre-tax loss
|
|
(1.5
|
)
|
|
—
|
|
||
Marketing Technology pre-tax loss (1)
|
|
(6.1
|
)
|
|
(.2
|
)
|
||
Other Operations pre-tax income (loss)
|
|
283.1
|
|
|
(51.5
|
)
|
||
Total pre-tax income (loss)
|
|
281.7
|
|
|
(66.0
|
)
|
||
Income tax expense
|
|
(10.2
|
)
|
|
(.7
|
)
|
||
Net income (loss) from continuing operations
|
|
271.5
|
|
|
(66.7
|
)
|
||
Net gain on sale of discontinued operations, net of tax
|
|
.7
|
|
|
.1
|
|
||
Net income (loss)
|
|
272.2
|
|
|
(66.6
|
)
|
||
Net loss attributable to non-controlling interests
|
|
12.2
|
|
|
18.6
|
|
||
Net income (loss) attributable to White Mountains’s common shareholders
|
|
284.4
|
|
|
(48.0
|
)
|
||
Other comprehensive loss, net of tax
|
|
(.3
|
)
|
|
—
|
|
||
Comprehensive income (loss)
|
|
284.1
|
|
|
(48.0
|
)
|
||
Comprehensive income (loss) attributable to White Mountains’s
common shareholders
|
|
$
|
284.1
|
|
|
$
|
(48.0
|
)
|
|
|
Three Months Ended March 31, 2019
|
||||||||||||||
Millions
|
|
HG Global
|
|
BAM
|
|
Eliminations
|
|
Total
|
||||||||
Gross written premiums
|
|
$
|
—
|
|
|
$
|
7.9
|
|
|
$
|
—
|
|
|
$
|
7.9
|
|
Assumed (ceded) written premiums
|
|
6.7
|
|
|
(6.7
|
)
|
|
—
|
|
|
—
|
|
||||
Net written premiums
|
|
$
|
6.7
|
|
|
$
|
1.2
|
|
|
$
|
—
|
|
|
$
|
7.9
|
|
|
|
|
|
|
|
|
|
|
||||||||
Earned insurance premiums
|
|
$
|
3.4
|
|
|
$
|
.8
|
|
|
$
|
—
|
|
|
$
|
4.2
|
|
Net investment income
|
|
1.9
|
|
|
3.4
|
|
|
—
|
|
|
5.3
|
|
||||
Net investment income - BAM Surplus Notes
|
|
6.9
|
|
|
—
|
|
|
(6.9
|
)
|
|
—
|
|
||||
Net realized and unrealized investment gains
|
|
5.1
|
|
|
6.7
|
|
|
—
|
|
|
11.8
|
|
||||
Other revenue
|
|
—
|
|
|
.6
|
|
|
—
|
|
|
.6
|
|
||||
Total revenues
|
|
17.3
|
|
|
11.5
|
|
|
(6.9
|
)
|
|
21.9
|
|
||||
Insurance acquisition expenses
|
|
.8
|
|
|
.5
|
|
|
—
|
|
|
1.3
|
|
||||
General and administrative expenses
|
|
.5
|
|
|
13.9
|
|
|
—
|
|
|
14.4
|
|
||||
Interest expense - BAM Surplus Notes
|
|
—
|
|
|
6.9
|
|
|
(6.9
|
)
|
|
—
|
|
||||
Total expenses
|
|
1.3
|
|
|
21.3
|
|
|
(6.9
|
)
|
|
15.7
|
|
||||
Pre-tax income (loss)
|
|
$
|
16.0
|
|
|
$
|
(9.8
|
)
|
|
$
|
—
|
|
|
$
|
6.2
|
|
Supplemental information:
|
|
|
|
|
|
|
|
|
||||||||
MSC collected (1)
|
|
$
|
—
|
|
|
$
|
7.9
|
|
|
$
|
—
|
|
|
$
|
7.9
|
|
|
|
Three Months Ended March 31, 2018
|
||||||||||||||
Millions
|
|
HG Global
|
|
BAM
|
|
Eliminations
|
|
Total
|
||||||||
Gross written premiums
|
|
$
|
—
|
|
|
$
|
6.4
|
|
|
$
|
—
|
|
|
$
|
6.4
|
|
Assumed (ceded) written premiums
|
|
5.3
|
|
|
(5.3
|
)
|
|
—
|
|
|
—
|
|
||||
Net written premiums
|
|
$
|
5.3
|
|
|
$
|
1.1
|
|
|
$
|
—
|
|
|
$
|
6.4
|
|
|
|
|
|
|
|
|
|
|
||||||||
Earned insurance premiums
|
|
$
|
2.3
|
|
|
$
|
.7
|
|
|
$
|
—
|
|
|
$
|
3.0
|
|
Net investment income
|
|
1.2
|
|
|
2.5
|
|
|
—
|
|
|
3.7
|
|
||||
Net investment income - BAM Surplus Notes
|
|
5.7
|
|
|
—
|
|
|
(5.7
|
)
|
|
—
|
|
||||
Net realized and unrealized investment losses
|
|
(3.6
|
)
|
|
(4.3
|
)
|
|
—
|
|
|
(7.9
|
)
|
||||
Other revenue
|
|
—
|
|
|
.2
|
|
|
—
|
|
|
.2
|
|
||||
Total revenues
|
|
5.6
|
|
|
(.9
|
)
|
|
(5.7
|
)
|
|
(1.0
|
)
|
||||
Insurance acquisition expenses
|
|
.5
|
|
|
.9
|
|
|
—
|
|
|
1.4
|
|
||||
Other underwriting expenses
|
|
—
|
|
|
.1
|
|
|
—
|
|
|
.1
|
|
||||
General and administrative expenses
|
|
.4
|
|
|
11.4
|
|
|
—
|
|
|
11.8
|
|
||||
Interest expense - BAM Surplus Notes
|
|
—
|
|
|
5.7
|
|
|
(5.7
|
)
|
|
—
|
|
||||
Total expenses
|
|
.9
|
|
|
18.1
|
|
|
(5.7
|
)
|
|
13.3
|
|
||||
Pre-tax income (loss)
|
|
$
|
4.7
|
|
|
$
|
(19.0
|
)
|
|
$
|
—
|
|
|
$
|
(14.3
|
)
|
Supplemental information:
|
|
|
|
|
|
|
|
|
||||||||
MSC collected (1)
|
|
$
|
—
|
|
|
$
|
4.9
|
|
|
$
|
—
|
|
|
$
|
4.9
|
|
|
|
Three Months Ended March 31,
|
||||||
$ in Millions
|
|
2019
|
|
2018
|
||||
Gross par value of primary market policies issued
|
|
$
|
1,385.8
|
|
|
$
|
1,149.5
|
|
Gross par value of secondary market policies issued
|
|
539.2
|
|
|
148.6
|
|
||
Total gross par value of market policies issued
|
|
$
|
1,925.0
|
|
|
$
|
1,298.1
|
|
Gross written premiums
|
|
$
|
7.9
|
|
|
$
|
6.4
|
|
MSC collected
|
|
7.9
|
|
|
4.9
|
|
||
Total gross written premiums and MSC collected
|
|
$
|
15.8
|
|
|
$
|
11.3
|
|
Present value of future installment MSC collections
|
|
.2
|
|
|
1.2
|
|
||
Gross written premium adjustments on existing installment policies
|
|
(.1
|
)
|
|
—
|
|
||
Gross written premiums and MSC from new business
|
|
$
|
15.9
|
|
|
$
|
12.5
|
|
Total pricing
|
|
83 bps
|
|
|
96 bps
|
|
Millions
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Policyholders’ surplus
|
|
$
|
408.9
|
|
|
$
|
413.7
|
|
Contingency reserve
|
|
54.1
|
|
|
50.3
|
|
||
Qualified statutory capital
|
|
463.0
|
|
|
464.0
|
|
||
Net unearned premiums
|
|
36.9
|
|
|
36.2
|
|
||
Present value of future installment premiums and MSC
|
|
13.3
|
|
|
12.9
|
|
||
HG Re, Ltd. collateral trusts at statutory value
|
|
264.8
|
|
|
258.3
|
|
||
Fidus Re, Ltd. collateral trusts at statutory value
|
|
100.0
|
|
|
100.0
|
|
||
Claims paying resources
|
|
$
|
878.0
|
|
|
$
|
871.4
|
|
|
|
March 31, 2019
|
||||||||||||||
Millions
|
|
HG Global
|
|
BAM
|
|
Eliminations and Segment Adjustment
|
|
Total
|
||||||||
Assets
|
|
|
|
|
|
|
|
|
||||||||
Fixed maturity investments
|
|
$
|
259.5
|
|
|
$
|
478.1
|
|
|
$
|
—
|
|
|
$
|
737.6
|
|
Short-term investments
|
|
7.8
|
|
|
24.0
|
|
|
—
|
|
|
31.8
|
|
||||
Total investments
|
|
267.3
|
|
|
502.1
|
|
|
—
|
|
|
769.4
|
|
||||
Cash
|
|
4.6
|
|
|
5.8
|
|
|
—
|
|
|
10.4
|
|
||||
BAM Surplus Notes
|
|
481.3
|
|
|
—
|
|
|
(481.3
|
)
|
|
—
|
|
||||
Accrued interest receivable on BAM Surplus Notes
|
|
150.5
|
|
|
—
|
|
|
(150.5
|
)
|
|
—
|
|
||||
Deferred acquisition costs
|
|
36.8
|
|
|
19.6
|
|
|
(36.8
|
)
|
|
19.6
|
|
||||
Insurance premiums receivable
|
|
4.1
|
|
|
6.5
|
|
|
(4.1
|
)
|
|
6.5
|
|
||||
Accounts receivable on unsettled investment sales
|
|
.1
|
|
|
6.0
|
|
|
—
|
|
|
6.1
|
|
||||
Other assets
|
|
1.5
|
|
|
21.2
|
|
|
(.2
|
)
|
|
22.5
|
|
||||
Total assets
|
|
$
|
946.2
|
|
|
$
|
561.2
|
|
|
$
|
(672.9
|
)
|
|
$
|
834.5
|
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
|
||||||||
BAM Surplus Notes(1)
|
|
$
|
—
|
|
|
$
|
481.3
|
|
|
$
|
(481.3
|
)
|
|
$
|
—
|
|
Accrued interest payable on BAM Surplus Notes(2)
|
|
—
|
|
|
150.5
|
|
|
(150.5
|
)
|
|
—
|
|
||||
Preferred dividends payable to White Mountains’s subsidiaries(3)
|
|
291.7
|
|
|
—
|
|
|
—
|
|
|
291.7
|
|
||||
Preferred dividends payable to non-controlling interests
|
|
10.0
|
|
|
—
|
|
|
—
|
|
|
10.0
|
|
||||
Unearned insurance premiums
|
|
144.6
|
|
|
35.0
|
|
|
—
|
|
|
179.6
|
|
||||
Accrued incentive compensation
|
|
—
|
|
|
10.1
|
|
|
—
|
|
|
10.1
|
|
||||
Accounts payable on unsettled investment purchases
|
|
1.6
|
|
|
—
|
|
|
—
|
|
|
1.6
|
|
||||
Other liabilities
|
|
1.1
|
|
|
58.1
|
|
|
(41.1
|
)
|
|
18.1
|
|
||||
Total liabilities
|
|
449.0
|
|
|
735.0
|
|
|
(672.9
|
)
|
|
511.1
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Equity
|
|
|
|
|
|
|
|
|
||||||||
White Mountains’s common shareholders’ equity
|
|
482.4
|
|
|
—
|
|
|
—
|
|
|
482.4
|
|
||||
Non-controlling interests
|
|
14.8
|
|
|
(173.8
|
)
|
|
—
|
|
|
(159.0
|
)
|
||||
Total equity
|
|
497.2
|
|
|
(173.8
|
)
|
|
—
|
|
|
323.4
|
|
||||
Total liabilities and equity
|
|
$
|
946.2
|
|
|
$
|
561.2
|
|
|
$
|
(672.9
|
)
|
|
$
|
834.5
|
|
(1)
|
Under GAAP, the BAM Surplus Notes are classified as debt by the issuer. Under statutory accounting principles, they are classified as policyholders’ surplus.
|
(2)
|
Under GAAP, interest accrues daily on the BAM Surplus Notes. Under statutory accounting principles, interest is not accrued on the BAM Surplus Notes until it has been approved for payment by insurance regulators.
|
(3)
|
HG Global preferred dividends payable to White Mountains’s subsidiaries is eliminated in White Mountains’s consolidated financial statements. For segment reporting, the HG Global preferred dividends payable to White Mountains’s subsidiaries included within the HG Global/BAM segment are eliminated against the offsetting receivable included within the Other Operations segment, and therefore are added back to White Mountains’s common shareholders’ equity within the HG Global/BAM segment.
|
|
|
December 31, 2018
|
||||||||||||||
Millions
|
|
HG Global
|
|
BAM
|
|
Eliminations and Segment Adjustment
|
|
Total Segment
|
||||||||
Assets
|
|
|
|
|
|
|
|
|
||||||||
Fixed maturity investments
|
|
$
|
225.8
|
|
|
$
|
475.6
|
|
|
$
|
—
|
|
|
$
|
701.4
|
|
Short-term investments
|
|
28.5
|
|
|
38.4
|
|
|
—
|
|
|
66.9
|
|
||||
Total investments
|
|
254.3
|
|
|
514.0
|
|
|
—
|
|
|
768.3
|
|
||||
Cash
|
|
6.0
|
|
|
6.5
|
|
|
—
|
|
|
12.5
|
|
||||
BAM Surplus Notes
|
|
481.3
|
|
|
—
|
|
|
(481.3
|
)
|
|
—
|
|
||||
Accrued interest receivable on BAM Surplus Notes
|
|
143.7
|
|
|
—
|
|
|
(143.7
|
)
|
|
—
|
|
||||
Deferred acquisition costs
|
|
35.7
|
|
|
19.0
|
|
|
(35.7
|
)
|
|
19.0
|
|
||||
Insurance premiums receivable
|
|
4.0
|
|
|
6.4
|
|
|
(4.0
|
)
|
|
6.4
|
|
||||
Accounts receivable on unsettled investment sales
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Other assets
|
|
1.3
|
|
|
9.0
|
|
|
(.3
|
)
|
|
10.0
|
|
||||
Total assets
|
|
$
|
926.3
|
|
|
$
|
554.9
|
|
|
$
|
(665.0
|
)
|
|
$
|
816.2
|
|
Liabilities
|
|
|
|
|
|
|
|
|
||||||||
BAM Surplus Notes(1)
|
|
$
|
—
|
|
|
$
|
481.3
|
|
|
$
|
(481.3
|
)
|
|
$
|
—
|
|
Accrued interest payable on BAM Surplus Notes(2)
|
|
—
|
|
|
143.7
|
|
|
(143.7
|
)
|
|
—
|
|
||||
Preferred dividends payable to White Mountains’s subsidiaries(3)
|
|
278.5
|
|
|
—
|
|
|
—
|
|
|
278.5
|
|
||||
Preferred dividends payable to non-controlling interests
|
|
9.6
|
|
|
—
|
|
|
—
|
|
|
9.6
|
|
||||
Unearned insurance premiums
|
|
141.3
|
|
|
34.7
|
|
|
—
|
|
|
176.0
|
|
||||
Accrued incentive compensation
|
|
—
|
|
|
20.4
|
|
|
—
|
|
|
20.4
|
|
||||
Accounts payable on unsettled investment purchases
|
|
—
|
|
|
2.2
|
|
|
—
|
|
|
2.2
|
|
||||
Other liabilities
|
|
1.1
|
|
|
43.2
|
|
|
(40.0
|
)
|
|
4.3
|
|
||||
Total liabilities
|
|
430.5
|
|
|
725.5
|
|
|
(665.0
|
)
|
|
491.0
|
|
||||
Equity
|
|
|
|
|
|
|
|
|
||||||||
White Mountains’s common shareholders’ equity
|
|
481.3
|
|
|
—
|
|
|
—
|
|
|
481.3
|
|
||||
Non-controlling interests
|
|
14.5
|
|
|
(170.6
|
)
|
|
—
|
|
|
(156.1
|
)
|
||||
Total equity
|
|
495.8
|
|
|
(170.6
|
)
|
|
—
|
|
|
325.2
|
|
||||
Total liabilities and equity
|
|
$
|
926.3
|
|
|
$
|
554.9
|
|
|
$
|
(665.0
|
)
|
|
$
|
816.2
|
|
(1)
|
Under GAAP, the BAM Surplus Notes are classified as debt by the issuer. Under statutory accounting principles, they are classified as policyholders’ surplus.
|
(2)
|
Under GAAP, interest accrues daily on the BAM Surplus Notes. Under statutory accounting principles, interest is not accrued on the BAM Surplus Notes until it has been approved for payment by insurance regulators.
|
(3)
|
HG Global preferred dividends payable to White Mountains’s subsidiaries is eliminated in White Mountains’s consolidated financial statements. For segment reporting, the HG Global preferred dividends payable to White Mountains’s subsidiaries included within the HG Global/BAM segment are eliminated against the offsetting receivable included within the Other Operations segment, and therefore are added back to White Mountains’s common shareholders’ equity within the HG Global/BAM segment.
|
|
|
Three Months Ended March 31,
|
||||||
Millions
|
|
2019
|
|
2018
|
||||
Gross par value of primary market policies issued
|
|
$
|
1,385.8
|
|
|
$
|
1,149.5
|
|
Gross par value of secondary market policies issued
|
|
539.2
|
|
|
148.6
|
|
||
Total gross par value of policies issued
|
|
1,925.0
|
|
|
1,298.1
|
|
||
|
|
|
|
|
||||
Gross par value of policies priced yet to close
|
|
487.9
|
|
|
366.4
|
|
||
Less: Gross par value of policies closed that were previously priced
|
|
(226.7
|
)
|
|
(114.4
|
)
|
||
Total gross par value of policies priced
|
|
$
|
2,186.2
|
|
|
$
|
1,550.1
|
|
Millions
|
|
Three Months Ended March 31, 2019
|
||
Commission revenues
|
|
$
|
43.3
|
|
Broker commission expenses
|
|
15.7
|
|
|
Gross profit
|
|
27.6
|
|
|
Other revenues
|
|
6.0
|
|
|
General and administrative expenses
|
|
25.1
|
|
|
Change in fair value of contingent consideration earnout liabilities
|
|
1.3
|
|
|
Amortization of other intangible assets
|
|
5.0
|
|
|
Interest expense
|
|
3.7
|
|
|
GAAP pre-tax loss
|
|
(1.5
|
)
|
|
Income tax benefit
|
|
(.3
|
)
|
|
GAAP net loss
|
|
(1.2
|
)
|
|
Add back:
|
|
|
||
Interest expense
|
|
3.7
|
|
|
Income tax benefit
|
|
(.3
|
)
|
|
General and administrative expenses — depreciation
|
|
.5
|
|
|
Amortization of other intangible assets
|
|
5.0
|
|
|
EBITDA (1)
|
|
7.7
|
|
|
Add back:
|
|
|
||
Change in fair value of contingent consideration earnout liabilities
|
|
1.3
|
|
|
Acquisition-related transaction expenses
|
|
.5
|
|
|
Investments made in the development of new business lines
|
|
.2
|
|
|
Restructuring expenses
|
|
.1
|
|
|
Adjusted EBITDA (1)
|
|
$
|
9.8
|
|
|
|
Three Months Ended March 31,
|
||||||||||||||
|
|
2019
|
|
2018
|
||||||||||||
$ in Millions
|
|
Controlled Premium (1)
|
|
Commission and Other Revenues
|
|
Controlled Premium (1)
|
|
Commission and Other Revenues
|
||||||||
Specialty Transportation
|
|
$
|
65.9
|
|
|
$
|
17.9
|
|
|
$
|
25.9
|
|
|
$
|
8.3
|
|
Real Estate
|
|
38.8
|
|
|
9.0
|
|
|
36.6
|
|
|
8.2
|
|
||||
Social Services
|
|
22.9
|
|
|
5.8
|
|
|
23.3
|
|
|
6.0
|
|
||||
United Kingdom
|
|
41.8
|
|
|
12.1
|
|
|
15.7
|
|
|
4.5
|
|
||||
Other
|
|
27.2
|
|
|
4.5
|
|
|
27.5
|
|
|
4.8
|
|
||||
Total
|
|
$
|
196.6
|
|
|
$
|
49.3
|
|
|
$
|
129.0
|
|
|
$
|
31.8
|
|
Millions
|
|
2019 Ownership Period
|
|
Three Months Ended March 31, 2018
|
||||
Advertising and commission revenues
|
|
$
|
48.8
|
|
|
$
|
70.1
|
|
Cost of sales
|
|
40.6
|
|
|
57.4
|
|
||
Gross profit
|
|
8.2
|
|
|
12.7
|
|
||
Other revenue
|
|
—
|
|
|
1.6
|
|
||
General and administrative expenses
|
|
5.7
|
|
|
11.2
|
|
||
General and administrative expenses - MediaAlpha
Transaction related costs
|
|
6.8
|
|
|
—
|
|
||
Amortization of other intangible assets
|
|
1.6
|
|
|
2.9
|
|
||
Interest expense
|
|
.2
|
|
|
.4
|
|
||
GAAP pre-tax loss
|
|
$
|
(6.1
|
)
|
|
$
|
(.2
|
)
|
|
|
Three Months Ended
|
||||||
|
|
March 31,
|
||||||
Millions
|
|
2019
|
|
2018
|
||||
Net investment income
|
|
$
|
10.7
|
|
|
$
|
16.0
|
|
Net realized and unrealized investment gains (losses)
|
|
119.1
|
|
|
(45.8
|
)
|
||
Realized and unrealized gains from the MediaAlpha Transaction
|
|
182.2
|
|
|
—
|
|
||
Advertising and commission revenues
|
|
1.3
|
|
|
.9
|
|
||
Other revenues
|
|
.3
|
|
|
.3
|
|
||
Total revenues
|
|
313.6
|
|
|
(28.6
|
)
|
||
Cost of sales
|
|
1.1
|
|
|
.7
|
|
||
General and administrative expenses
|
|
29.4
|
|
|
22.0
|
|
||
Interest expense
|
|
—
|
|
|
.2
|
|
||
Total expenses
|
|
30.5
|
|
|
22.9
|
|
||
Pre-tax income (loss)
|
|
$
|
283.1
|
|
|
$
|
(51.5
|
)
|
|
|
Three Months Ended
|
||||
|
|
March 31,
|
||||
|
|
2019
|
|
2018
|
||
|
|
|
|
|
||
Common equity securities
|
|
13.0
|
%
|
|
(0.9
|
)%
|
Other long-term investments
|
|
32.6
|
%
|
|
(2.8
|
)%
|
Other long-term investments - excluding MediaAlpha
|
|
0.2
|
%
|
|
(2.8
|
)%
|
Total common equity securities and other long-term investments
|
|
19.0
|
%
|
|
(1.2
|
)%
|
Total common equity securities and other long-term investments - excluding MediaAlpha
|
|
9.3
|
%
|
|
(1.2
|
)%
|
S&P 500 Index (total return)
|
|
13.6
|
%
|
|
(0.8
|
)%
|
|
|
|
|
|
||
Fixed income investments
|
|
2.3
|
%
|
|
(0.7
|
)%
|
Bloomberg Barclays U.S. Intermediate Aggregate Index
|
|
2.3
|
%
|
|
(1.1
|
)%
|
|
|
|
|
|
||
Total consolidated portfolio
|
|
10.1
|
%
|
|
(1.0
|
)%
|
Total consolidated portfolio - excluding MediaAlpha
|
|
5.7
|
%
|
|
(1.0
|
)%
|
Currency
$ in Millions
|
|
Fair Value
|
|
% of Common Shareholders’ Equity
|
|||
GBP
|
|
$
|
79.3
|
|
|
2.6
|
%
|
EUR
|
|
57.6
|
|
|
1.8
|
|
|
JPY
|
|
55.6
|
|
|
1.8
|
|
|
All other
|
|
68.9
|
|
|
2.2
|
|
|
Total
|
|
$
|
261.4
|
|
|
8.4
|
%
|
$ in Millions
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
NSM Bank Facility, carrying value
|
|
$
|
182.8
|
|
|
$
|
176.6
|
|
Other NSM debt
|
|
1.7
|
|
|
1.9
|
|
||
MediaAlpha Bank Facility, carrying value (1)
|
|
—
|
|
|
14.2
|
|
||
Other Operations debt
|
|
10.9
|
|
|
—
|
|
||
Total debt
|
|
195.4
|
|
|
192.7
|
|
||
Non-controlling interests—excluding BAM
|
|
30.1
|
|
|
45.7
|
|
||
Total White Mountains’s common shareholders’ equity
|
|
3,122.0
|
|
|
2,843.1
|
|
||
Total capital
|
|
3,347.5
|
|
|
3,081.5
|
|
||
Time-value discount on expected future payments on the BAM Surplus Notes (2)
|
|
(138.6
|
)
|
|
(141.2
|
)
|
||
HG Global’s unearned premium reserve (2)
|
|
140.2
|
|
|
136.9
|
|
||
HG Global’s net deferred acquisition costs (2)
|
|
(35.7
|
)
|
|
(34.6
|
)
|
||
Total adjusted capital
|
|
$
|
3,313.4
|
|
|
$
|
3,042.6
|
|
|
|
|
|
|
||||
Total debt to total adjusted capital
|
|
5.9
|
%
|
|
6.3
|
%
|
|
|
As of
March 31, 2019
|
|
As of
December 31, 2018
|
|
Growth % (1)
|
|||||
GAAP book value per share
|
|
$
|
981.39
|
|
|
$
|
896.00
|
|
|
9.6
|
%
|
Estimated gain from the MediaAlpha Transaction
as of December 31, 2018
|
|
—
|
|
|
55.07
|
|
|
|
|||
GAAP book value per share including the estimated gain
from the MediaAlpha Transaction as of December 31, 2018
|
|
981.39
|
|
|
951.07
|
|
|
3.3
|
%
|
||
Adjustments to book value per share (see reconciliation
on page 40)
|
|
(2.88
|
)
|
|
(8.15
|
)
|
|
|
|||
Adjusted book value per share including the estimated
gain from the MediaAlpha Transaction as of December 31, 2018
|
|
$
|
978.51
|
|
|
$
|
942.92
|
|
|
3.9
|
%
|
•
|
Change in fair value of contingent consideration earnout liabilities - Earnout liabilities are amounts payable to the sellers of businesses purchased by NSM that are contingent on the earnings of such businesses in periods subsequent to their acquisition. Under GAAP, earnout liabilities are not capitalized as part of the purchase price. Earnout liabilities are recorded at fair value, with the periodic change in the fair value of these liabilities recorded as income or an expense.
|
•
|
Acquisition-related transaction expenses - Represents costs directly related to transactions to acquire businesses, such as transaction-related compensation, banking, accounting and external lawyer fees, which are not capitalized and are expensed under GAAP.
|
•
|
Investments made in the development of new business lines - Represents the net loss related to the start-up of newly established lines of business, which NSM views as investments. For the periods presented, this adjustment primarily relates to NSM’s investment expenditures in the organic development of its pet insurance line and its MGA in the United Kingdom, net of revenues generated. NSM recently decided to discontinue its organic investment in the development of its pet insurance line and instead to invest in the pet insurance line through its acquisition of Embrace Pet Insurance, which closed in April 2019.
|
•
|
Restructuring expenses - Represents expenses associated with eliminating redundant work force and facilities that typically arise as a result of NSM’s post-acquisition integration strategies.
|
|
|
For the Three Months Ended March 31, 2019
|
|||||||
|
|
GAAP Returns
|
|
Remove MediaAlpha
|
|
Returns - Excluding MediaAlpha
|
|||
|
|
|
|
|
|
|
|||
Total consolidated portfolio returns
|
|
10.1
|
%
|
|
(4.4
|
)%
|
|
5.7
|
%
|
Common equity securities and
other long-term investments returns
|
|
19.0
|
%
|
|
(9.7
|
)%
|
|
9.3
|
%
|
Other long-term investments returns
|
|
32.6
|
%
|
|
(32.4
|
)%
|
|
.2
|
%
|
•
|
changes in adjusted book value per share or return on equity;
|
•
|
business strategy;
|
•
|
financial and operating targets or plans;
|
•
|
incurred loss and loss adjustment expenses and the adequacy of its loss and loss adjustment expense reserves and related reinsurance;
|
•
|
projections of revenues, income (or loss), earnings (or loss) per share, dividends, market share or other financial forecasts;
|
•
|
expansion and growth of its business and operations; and
|
•
|
future capital expenditures.
|
•
|
the risks that are described from time to time in White Mountains’s filings with the Securities and Exchange Commission, including but not limited to White Mountains’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018;
|
•
|
business opportunities (or lack thereof) that may be presented to it and pursued;
|
•
|
actions taken by ratings agencies from time to time, such as financial strength or credit ratings downgrades or placing ratings on negative watch;
|
•
|
the continued availability of capital and financing;
|
•
|
general economic, market or business conditions;
|
•
|
competitive forces, including the conduct of other insurers;
|
•
|
changes in domestic or foreign laws or regulations, or their interpretation, applicable to White Mountains, its competitors or its customers;
|
•
|
an economic downturn or other economic conditions adversely affecting its financial position; and
|
•
|
other factors, most of which are beyond White Mountains’s control.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk.
|
Item 4.
|
Controls and Procedures.
|
Part II.
|
OTHER INFORMATION
|
Item 1.
|
Legal Proceedings.
|
Item 2.
|
Issuer Purchases of Equity Securities.
|
Months
|
|
Total Number of
Shares Purchased
|
|
Average Price
Paid per Share
|
|
Total Number of Shares
Purchased as Part of
Publicly Announced Plans (1)
|
|
Maximum Number
of Shares that May
Yet Be Purchased
Under the Plans (1)
|
|||||
January 1-January 31, 2019
|
|
5,679
|
|
|
$
|
857.69
|
|
|
—
|
|
|
635,705
|
|
February 1-February 28, 2019
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
635,705
|
|
March 1-March 31, 2019
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
635,705
|
|
Total
|
|
5,679
|
|
|
$
|
857.69
|
|
|
—
|
|
|
635,705
|
|
Item 4.
|
Mine Safety Disclosures.
|
Item 5.
|
Other Information.
|
Item 6.
|
Exhibits.
|
|
|
|
WHITE MOUNTAINS INSURANCE GROUP, LTD.
|
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
Date:
|
May 6, 2019
|
|
|
By: /s/ J. Brian Palmer
|
|
|
|
|
J. Brian Palmer
|
|
|
|
|
Managing Director and Chief Accounting Officer
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
•
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and,
|
•
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the periods presented in the Report.
|
/s/ G. Manning Rountree
|
|
Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
May 6, 2019
|
|
•
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and,
|
•
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the periods presented in the Report.
|
/s/ Reid T. Campbell
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
|
|
May 6, 2019
|
|