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WHITE MOUNTAINS INSURANCE GROUP LTD

WHITE MOUNTAINS INSURANCE GROUP LTDWTMEarnings & Financial Report

NYSE · Financials · Fire, Marine & Casualty Insurance

White Mountains Insurance Group is a diversified insurance and related financial services holding company based in Hamilton, Bermuda. Redomiciled from Delaware, United States, on October 25, 1999, the company conducts most of its business through its insurance subsidiaries and other affiliates.

What changed in WHITE MOUNTAINS INSURANCE GROUP LTD's 10-K — 2023 vs 2024

Top changes in WHITE MOUNTAINS INSURANCE GROUP LTD's 2024 10-K

745 paragraphs added · 736 removed · 509 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

159 edited+75 added−67 removed119 unchanged
In the United Kingdom, Ark operates through the Syndicates with Lloyd’s approved brokers and MGAs. In Bermuda, Ark primarily derives its reinsurance business through reinsurance intermediaries that represent the ceding company and its insurance business through brokers based in Bermuda and London.
In the United Kingdom, Ark operates through the Syndicates with Lloyd’s approved brokers and MGAs. In Bermuda, Ark primarily derives its reinsurance business through insurance and reinsurance intermediaries that represent the ceding company and its insurance business through brokers based in Bermuda and London.
Outside of natural catastrophe losses, Ark has exposure to non-natural or man-made large losses. Ark uses data from clients and combines this with accumulation tools and PML assessments to obtain potential loss scenarios. The current largest exposures are cyber, offshore energy production platforms, terrorism events, war and war-like actions and political risk.
Outside of natural catastrophe losses, Ark has exposure to non-natural or man-made large losses. The current largest exposures are cyber, offshore energy production platforms, terrorism events, war and war-like actions and political risk. Ark uses data from clients and combines this with accumulation tools and PML assessments to obtain potential loss scenarios.
The required amount of Funds at Lloyd’s is determined by Lloyd’s based on each syndicate’s solvency and capital requirement as calculated through its internal model. Intervention Powers The Lloyd’s Council has wide discretionary powers to regulate Members’ underwriting at Lloyd’s. It may, for instance, withdraw a Member’s permission to underwrite business or to underwrite a particular class of business.
The required amount of Funds at Lloyd’s is determined by Lloyd’s based on each syndicate’s solvency and capital requirement as calculated through its internal model. 26 Intervention Powers The Lloyd’s Council has wide discretionary powers to regulate Members’ underwriting at Lloyd’s. It may, for instance, withdraw a Member’s permission to underwrite business or to underwrite a particular class of business.
Ark actively monitors price adequacy at various points between individual risks and the portfolio level to measure and evaluate overall performance. In addition, Ark updates rates to achieve targeted returns on capital at an individual risk as well as portfolio level to enhance return on capital. Competition Specialized lines of insurance and reinsurance are highly competitive.
Ark actively monitors price adequacy at various points between individual risks and the portfolio level to measure and evaluate overall performance. In addition, Ark updates rates to achieve targeted returns on capital at an individual risk as well as portfolio level to enhance return on capital. 7 Competition Specialized lines of insurance and reinsurance are highly competitive.
In addition, the Companies Act regulates return of capital, reduction of capital and any purchase or redemption of shares by the Company. 23 The Economic Substance Act 2018, as amended (“ESA”) impacts every Bermuda registered entity engaged in a “relevant activity,” requiring impacted entities to maintain a substantial economic presence in Bermuda and to satisfy economic substance requirements.
In addition, the Companies Act regulates return of capital, reduction of capital and any purchase or redemption of shares by the Company. The Economic Substance Act 2018, as amended (“ESA”) impacts every Bermuda registered entity engaged in a “relevant activity,” requiring impacted entities to maintain a substantial economic presence in Bermuda and to satisfy economic substance requirements.
Ark believes in a disciplined underwriting strategy that aims to consistently outperform the market. In hard market conditions, Ark aims to grow premiums rapidly, as pricing, terms and conditions and limit deployment are more favorable and can lead to enhanced returns on capital.
Ark believes in a disciplined underwriting strategy that aims to consistently outperform the market. In hard market conditions, Ark aims to grow premiums, as pricing, terms and conditions and limit deployment are more favorable and can lead to enhanced returns on capital.
Ark also leads two Lloyd’s market consortia that target renewable energy clients including wind farms, solar plants, hydroelectric plants, geothermal plants and wave and tidal projects.
Ark also leads certain Lloyd’s market consortia, including two that target renewable energy clients including wind farms, solar plants, hydroelectric plants, geothermal plants and wave and tidal projects.
As of December 31, 2023, White Mountains’s portfolio of common equity securities consists of international listed equity funds and passive exchange traded funds (“ETFs”). White Mountains’s other long-term investments consist primarily of unconsolidated entities, Kudu’s Participation Contracts, private equity funds and hedge funds, a bank loan fund, Lloyd’s trust deposits, ILS funds and private debt instruments.
As of December 31, 2024, White Mountains’s portfolio of common equity securities consists of international listed equity funds and passive exchange traded funds (“ETFs”). White Mountains’s other long-term investments consist primarily of unconsolidated entities, Kudu’s Participation Contracts, private equity funds and hedge funds, a bank loan fund, Lloyd’s trust deposits, ILS funds and private debt instruments.
(the “NSM Transaction”), pursuant to the terms of the securities purchase agreement, dated May 9, 2022. See Note 2 — “Significant Transactions ” on page F- 17 . NSM is a full-service MGA and program administrator with delegated binding authorities for specialty property and casualty insurance.
(the “NSM Transaction”), pursuant to the terms of the securities purchase agreement, dated May 9, 2022. See Note 2 — “Significant Transactions ” on page F- 19 . NSM is a full-service MGA and program administrator with delegated binding authorities for specialty property and casualty insurance.
Its principal goals are to improve the correlation between capital and risk, effect group supervision of insurance and reinsurance affiliates, implement a uniform capital adequacy structure for (re)insurers across the EU Member States, establish consistent corporate governance standards for insurance and reinsurance companies, and establish transparency through standard reporting of insurance operations.
Its principal goals are to improve the correlation between capital and risk, effect group supervision of insurance and reinsurance affiliates, implement a uniform capital adequacy structure for insurers and reinsurers across the EU Member States, establish consistent corporate governance standards for insurance and reinsurance companies, and establish transparency through standard reporting of insurance operations.
Ark’s two largest natural catastrophe PML zones on a per occurrence basis for a 1-in-250 year event as of January 2024, as measured on a net after-tax exposure basis, are U.S. windstorm and U.S. earthquake. The net after-tax exposure is net of amounts ceded to reinsurers and reinstatement premiums.
Ark’s two largest natural catastrophe PML zones on a per occurrence basis for a 1-in-250 year event as of January 2025, as measured on a net after-tax exposure basis, are U.S. windstorm and U.S. earthquake. The net after-tax exposure is net of amounts ceded to reinsurers and reinstatement premiums.
White Mountains has established relationships with select third-party registered investment advisers to manage a portion of its fixed income portfolio. See “ Portfolio Composition ” on page 64 . White Mountains maintains an equity portfolio that consists of common equity securities, its investment in MediaAlpha and other long-term investments.
White Mountains has established relationships with select third-party registered investment advisers to manage a portion of its fixed income portfolio. See “ Portfolio Composition ” on page 71 . White Mountains maintains an equity portfolio that consists of common equity securities, its investment in MediaAlpha and other long-term investments.
These models rely on several factors depending on the class of business, including exposure analysis, historical experience, estimates of future loss costs, claims experience and natural catastrophe outlook, including the physical risk of climate change and inflation. See “Ark — Catastrophe Risk Management and Reinsurance Protection ” on page 13 .
These models rely on several factors depending on the class of business, including exposure analysis, historical experience, estimates of future loss costs, claims experience and natural catastrophe outlook, including the physical risk of climate change and inflation. See “Ark — Catastrophe Risk Management and Reinsurance Protection ” on page 8 .
These restrictions on declaring or paying dividends and distributions under the Insurance Act are in addition to the solvency requirements under the Companies Act 1981 of Bermuda, as amended (the “Companies Act”). See “LIQUIDITY AND CAPITAL RESOURCES — Dividend Capacity” on page 67 for further discussion.
These restrictions on declaring or paying dividends and distributions under the Insurance Act are in addition to the solvency requirements under the Companies Act 1981 of Bermuda, as amended (the “Companies Act”). See “LIQUIDITY AND CAPITAL RESOURCES — Dividend Capacity” on page 75 for further discussion.
White Mountains invests in fixed maturity investments that are attractively priced in relation to their investment risks and actively manages the average duration of the fixed income portfolio. As of December 31, 2023, the fixed income portfolio duration, including short-term investments, was 1.9 years.
White Mountains invests in fixed maturity investments that are attractively priced in relation to their investment risks and actively manages the average duration of the fixed income portfolio. As of December 31, 2024, the fixed income portfolio duration, including short-term investments, was 1.9 years.
Ark pays acquisition costs to brokers, MGAs and reinsurance intermediaries as compensation for facilitating the flow and processing of business, typically on industry standard percentages of premium underwritten. In addition, Ark pays certain MGAs profit commissions based on the underwriting profit of the business they produce.
Ark pays commissions to brokers, MGAs and reinsurance intermediaries as compensation for facilitating the flow and processing of business, typically on industry standard percentages of premium underwritten. In addition, Ark pays certain MGAs profit commissions based on the underwriting profit of the business they produce.
Bamboo operates primarily through Bamboo MGA, its full-service MGA business, where the company manages all aspects of the placement process on behalf of its fronting and reinsurance partners, including product development, marketing, underwriting, policy issuance and claims oversight, and it earns commissions based on the volume and profitability of the insurance that it places.
Bamboo operates primarily through Bamboo MGA, its full-service MGA business, where the company manages all aspects of the placement process on behalf of its fronting and reinsurance carrier partners (“Capacity Providers”), including product development, marketing, underwriting, policy issuance and claims oversight, and it earns commissions based on the volume and profitability of the insurance that it places.
The 2023 BSCR must be filed with the BMA before April 30, 2024; at this time, we believe GAIL will exceed the minimum amount required to be maintained under Bermuda law.
The 2024 BSCR must be filed with the BMA before April 30, 2025; at this time, we believe GAIL will exceed the minimum amount required to be maintained under Bermuda law.
As a result of the Ark Transaction, GAIL underwent significant expansion of operations during 2021, with the recruitment of staff and enhancement of operations, to support this growth. GAIL underwrites a range of third-party business from Bermuda including property, specialty, marine & energy and casualty lines.
As a result of the Ark Transaction, GAIL underwent significant expansion of operations during 2021 and 2022, with the recruitment of staff and enhancement of operations, to support this growth. GAIL underwrites a range of third-party business from Bermuda including property, marine & energy, specialty, casualty and accident & health lines.
During the years ended December 31, 2023, 2022 and 2021, Ark received a significant portion of its gross written premiums from four insurance and reinsurance intermediaries.
During the years ended December 31, 2024, 2023 and 2022, Ark received a significant portion of its gross written premiums from four insurance and reinsurance intermediaries.
Specialty Ark’s specialty business is underwritten on both an insurance and reinsurance basis covering a range of individual risks and treaties primarily including aviation, space, political and credit, cyber, terrorism and political violence, product defect and contamination, nuclear, fine art & specie, surety and mortgage. Ark’s specialty insurance and reinsurance business is underwritten on a worldwide basis.
Specialty Ark’s specialty business is underwritten on both an insurance and reinsurance basis covering a range of individual risks and treaties primarily including aviation, space, political and credit, cyber, terrorism and political violence, nuclear, fine art & specie, surety and mortgage. Ark’s specialty insurance and reinsurance business is underwritten on a worldwide basis.
Certain Other Bermuda Law Considerations The Company is an exempted company incorporated and organized under the Companies Act. As a result, the Company is required to comply with the provisions of the Companies Act regulating the payment of dividends and making of distributions from contributed surplus.
Certain Other Bermuda Law Considerations The Company is an exempted company registered under the Companies Act. As a result, the Company is required to comply with the provisions of the Companies Act regulating the payment of dividends and making of distributions from contributed surplus.
Ark competes with insurance and reinsurance companies who operate in the Bermuda and Lloyd’s markets such as: • Bermuda insurance and reinsurance market: American International Group, Inc., Arch Capital Group Ltd., Aspen Insurance Holdings Ltd., Everest Re Group, RenaissanceRe Holdings Ltd. and others; • Lloyd’s market: MS Amlin Ltd, Lancashire Holdings Ltd, Beazley plc, Hiscox plc, and other syndicates.
Ark competes with insurance and reinsurance companies who operate in the Bermuda and Lloyd’s markets such as: • Bermuda insurance and reinsurance market: American International Group, Inc., Arch Capital Group Ltd., Aspen Insurance Holdings Ltd., AXIS Capital Holdings Ltd., Chubb Ltd., Everest Re Group, Markel Group, Inc., RenaissanceRe Holdings Ltd., SiriusPoint Ltd. and others; • Lloyd’s market: Beazley plc, Hiscox plc, Lancashire Holdings Ltd., MS Amlin Ltd. and other syndicates.
On a monthly basis, BAM deposits cash equal to ceded premiums, net of ceding commissions, due to HG Re under the FLRT directly into the Regulation 114 Trust. The Regulation 114 Trust target balance is equal to HG Re’s unearned premiums and unpaid loss and loss adjustment expense (“LAE”) reserves, if any.
On a monthly basis, BAM deposits cash equal to ceded premiums net of ceding commissions, due to HG Re under the FLRT directly into the Regulation 114 Trust. The Regulation 114 Trust target balance is equal to HG Re’s unearned premiums and unpaid loss and LAE reserves, if any.
Collateral Trusts HG Re’s obligations under the FLRT are subject to an aggregate limit equal to the assets in two collateral trusts: a Regulation 114 Trust and a supplemental collateral trust (the “Supplemental Trust” and, together with the Regulation 114 Trust, the “Collateral Trusts”) at any point in time.
Collateral Trusts HG Re’s obligations under the FLRT are subject to an aggregate limit equal to the assets in two collateral trusts, the Supplemental Trust and the Regulation 114 Trust (together, the “Collateral Trusts”), at any point in time.
As of December 31, 2023, BAM had assigned one credit to surveillance category 3 and did not assign any credits to surveillance category 4. Insured municipal bonds on the watchlist are monitored closely and are subject to BAM’s distressed credit management procedures, including a remediation plan developed in consultation with BAM’s legal counsel and consultants.
As of December 31, 2024, BAM had assigned two credits to surveillance category 3 and did not assign any credits to surveillance category 4. Insured municipal bonds on the watchlist are monitored closely and are subject to BAM’s distressed credit management procedures, including a remediation plan developed in consultation with BAM’s legal counsel and consultants and HG Re.
The Chief Risk Officer reports to the Ark Board on climate change matters on a quarterly basis. 25 General Cybersecurity We are subject to various state, federal and international laws and regulations that address the collection, storing, use, disclosure, security, privacy, transfer and other processing of personal information and other data, including SEC rules, Part 500, GDPR, the California Consumer Privacy Act, and the California Privacy Rights Act, among others.
The Chief Risk Officer reports to the Ark Board on climate change matters. 27 General Cybersecurity We are subject to various state, federal and international laws and regulations that address the collection, storing, use, disclosure, security, privacy, transfer and other processing of personal information and other data, including SEC rules, GDPR, the California Consumer Privacy Act and the California Privacy Rights Act, among others.
One of White Mountains’s key strengths lies in its people, and it proactively supports each employee’s well-being and development. White Mountains’s Board of Directors receives periodic reporting on employee satisfaction and concerns and interacts with employees across the organization. White Mountains has an inclusive, team-oriented culture in which all employees are treated with respect.
White Mountains’s strength lies in its people, and it proactively supports each employee’s well-being and development. The Company’s Board of Directors receives periodic reporting on employee satisfaction and concerns and interacts with employees across White Mountains. White Mountains has an inclusive, team-oriented culture in which all employees are treated with respect.
As of December 31, 2023 and 2022, White Mountains owned 72.0% of Ark on a basic shares outstanding basis (61.9% and 63.0% after taking account of management’s equity incentives) and reported $337 million and $248 million of noncontrolling interests related to Ark. The remaining shares are owned by current and former employees.
As of December 31, 2024 and 2023, White Mountains owned 72.1% and 72.0% of Ark on a basic shares outstanding basis (61.9% and 61.9% after taking account of management’s equity incentives) and reported $410 million and $337 million of noncontrolling interests related to Ark. The remaining shares are owned by current and former employees of Ark.
Gallagher & Co 16.9 12.5 8.6 Aon plc 16.7 17.1 15.6 Willis Towers Watson plc 5.0 9.4 13.8 Total proportion of business produced by the top four insurance and reinsurance intermediaries 66.1 % 66.1 % 64.5 % Underwriting and Pricing Ark aims to build a diversified and balanced portfolio of risks that generates an underwriting profit each year.
Gallagher & Co 12.5 16.9 12.5 Willis Towers Watson plc 4.9 5.0 9.4 Total proportion of business produced by the top four insurance and reinsurance intermediaries 56.6 % 66.1 % 66.1 % Underwriting and Pricing Ark aims to build a diversified and balanced portfolio of risks that generates an underwriting profit each year.
Geographic Concentration The following table shows Ark’s gross written premiums by geographic region based on the location of Ark’s underwriting offices for the years ended December 31, 2023, 2022 and 2021: Millions Year Ended December 31, Gross written premiums by country 2023 2022 2021 United Kingdom $ 1,027.8 $ 833.4 $ 695.9 Bermuda 870.6 618.6 362.8 Total $ 1,898.4 $ 1,452.0 $ 1,058.7 Marketing and Distribution Ark offers its products and services through a network of brokers, MGAs and reinsurance intermediaries (collectively, “insurance and reinsurance intermediaries”).
Geographic Concentration The following table shows Ark’s gross written premiums by geographic region based on the location of Ark’s underwriting offices for the years ended December 31, 2024, 2023 and 2022: Millions Year Ended December 31, Gross written premiums by country 2024 2023 2022 United Kingdom $ 1,229.5 $ 1,027.8 $ 833.4 Bermuda 977.5 870.6 618.6 Total $ 2,207.0 $ 1,898.4 $ 1,452.0 6 Marketing and Distribution Ark offers its products and services through a network of brokers, MGAs and reinsurance intermediaries (collectively, “insurance and reinsurance intermediaries”).
The following table presents Ark’s gross written premiums by line of business for the years ended December 31, 2023, 2022 and 2021: Year Ended December 31, Millions 2023 2022 2021 Property $ 917.0 $ 605.0 $ 438.4 Specialty 436.6 380.1 256.7 Marine & Energy 375.7 315.1 242.2 Casualty 98.7 85.4 54.4 Accident & Health 70.4 66.4 67.0 Total Gross Written Premiums $ 1,898.4 $ 1,452.0 $ 1,058.7 A description of Ark’s business written within each line of business follows: Property Ark’s property business is underwritten on both an insurance and reinsurance basis covering the financial consequences of accidental losses to an insured’s property, such as a business’s building, inventory and equipment, or personal property.
The following table presents Ark’s gross written premiums by line of business for the years ended December 31, 2024, 2023 and 2022: Year Ended December 31, Millions 2024 2023 2022 Property $ 1,080.8 $ 917.0 $ 605.0 Specialty 450.0 436.6 380.1 Marine & Energy 449.6 375.7 315.1 Casualty 130.6 98.7 85.4 Accident & Health 96.0 70.4 66.4 Total gross written premiums $ 2,207.0 $ 1,898.4 $ 1,452.0 4 A description of Ark’s business written within each line of business follows: Property Ark’s property business is underwritten on both an insurance and reinsurance basis covering the financial consequences of accidental losses to an insured’s property, such as a business’s building, inventory and equipment, or personal property.
Ark’s accident & health insurance business consists of direct and facultative contracts written in the open market and through Accident & Health Underwriting Limited (“AHU”), Ark’s wholly-owned MGA domiciled in the United Kingdom. Ark’s accident & health insurance and reinsurance business is underwritten on a worldwide basis.
Ark’s accident & health insurance and reinsurance business consists of direct and facultative contracts written under the binding authority of external MGAs and through Accident & Health Underwriting Limited (“AHU”), Ark’s wholly-owned MGA domiciled in the United Kingdom. Ark’s accident & health insurance and reinsurance business is underwritten on a worldwide basis.
WM Outrigger Re’s two largest natural catastrophe PML zones on a per occurrence basis for a 1-in-250 year event as of January 2024, as measured on a net after-tax exposure basis, are U.S. windstorm and U.S. earthquake.
WM Outrigger Re’s two largest natural catastrophe PML zones on a per occurrence basis for a 1-in-250 year event as of January 2025, as measured net of reinstatement premiums, are U.S. windstorm and U.S. earthquake.
Once the placement of Ark’s 2024 outwards reinsurance program is completed, Ark expects its net after-tax exposure for a 1-in-250 year event to each of these PML zones to approximate 25-35% of total tangible capital (tangible shareholders equity and subordinated debt) . Total tangible capital was $1,261 million as of December 31, 2023.
Once the placement of Ark’s 2025 outwards reinsurance program is completed, Ark expects its net after-tax exposure for a 1-in-250 year event related to its largest PML zone to approximate 25-35% of total tangible capital (tangible shareholders equity and subordinated debt). Ark’s total tangible capital was $1,499 million as of December 31, 2024.
Following the U.K.'s exit from the EU, and the expiry of the transition period on December 31, 2020, U.K. authorized insurers are subject to the U.K.'s separate domestic prudential regime. This regime was identical to the Solvency II regime from January 1, 2021, although the PRA has made proposals that may cause the two regimes to diverge.
Following the U.K.'s exit from the EU, and the expiry of the transition period on December 31, 2020, U.K. authorized insurers are subject to the U.K.'s separate domestic prudential regime. This regime was identical to the Solvency II regime from January 1, 2021, although the two regimes have begun to diverge.
As of December 31, 2023, White Mountains owned 22.9 million shares, representing a 34.9% basic ownership interest (33.1% on a fully-diluted/fully-converted basis). As of the December 31, 2023 closing price of $11.15 per share, the fair value of White Mountains’s investment in MediaAlpha was $255 million.
At the December 31, 2024 share price of $11.29, the fair value of White Mountains’s investment in MediaAlpha was $202 million. As of December 31, 2023, White Mountains owned 22.9 million MediaAlpha shares, representing a 34.9% ownership interest (33.1% on a fully-diluted/fully-converted basis).
Lloyd’s is required to implement certain rules prescribed by the PRA and by the FCA; such rules are to be implemented by Lloyd’s pursuant to its powers under the Lloyd’s Act 1982 relating to the operation of the Lloyd’s market.
Lloyd’s Regulation Lloyd’s as a whole is authorized by the PRA and regulated by both the FCA and the PRA. Lloyd’s is required to implement certain rules prescribed by the PRA and by the FCA; such rules are to be implemented by Lloyd’s pursuant to its powers under the Lloyd’s Act 1982 relating to the operation of the Lloyd’s market.
PassportCard is a U.K. domiciled global MGA. PassportCard receives commissions for placing policies with its insurance carrier partners and licensing fees for use of its card-based technology. PassportCard distributes its products through the broker channel and on a direct-to-consumer basis and also franchises its solutions in certain markets to major travel insurance and medical assistance companies.
PassportCard receives commissions for placing policies with its insurance carrier partners and licensing fees for use of its card-based technology. PassportCard distributes its products through the broker channel and on a direct-to-consumer basis and also franchises its solutions in certain markets to major travel insurance and medical assistance companies. DavidShield Life Insurance Agency (2000) Ltd.
In December 2023, AM Best affirmed Ark’s financial strength rating at “A/stable.” In both jurisdictions, Ark underwrites business primarily through insurance and reinsurance brokers and wholesalers, both in the open market and through managing general agencies (“MGA”).
In November 2024, AM Best affirmed Ark’s financial strength rating at “A/stable.” In both jurisdictions, Ark underwrites business primarily through insurance and reinsurance brokers and wholesalers, both in the open market and through managing general agents (“MGAs”).
As special purpose insurers, HG Re and Outrigger Re Ltd. are not subject to this requirement. 22 Restrictions on Dividends, Distributions and Reductions of Capital As a Class 4 insurer, GAIL is prohibited from declaring or paying any dividends if in breach of the required minimum solvency margin or minimum liquidity ratio (the “Relevant Margins”) or if the declaration or payment of such dividend would cause the insurer to fail to meet the Relevant Margins.
Restrictions on Dividends, Distributions and Reductions of Capital As a Class 4 insurer, GAIL is prohibited from declaring or paying any dividends if in breach of the required minimum solvency margin or minimum liquidity ratio (the “Relevant Margins”) or if the declaration or payment of such dividend would cause the insurer to fail to meet the Relevant Margins.
Once the placement of Ark’s 2024 outwards reinsurance program is completed, White Mountains expects its consolidated net after-tax exposure for a 1-in-250 year event to each of these PML zones will be roughly 10% of White Mountains’s common shareholders’ equity as of December 31, 2023.
Once the placement of Ark’s 2025 outwards reinsurance program is completed, White Mountains expects its consolidated net after-tax exposure from Ark/WM Outrigger for a 1-in-250 year event related to its largest PML zone will be roughly 10% of White Mountains’s common shareholders’ equity as of December 31, 2024.
Insured Credit Surveillance BAM management maintains a surveillance committee that evaluates the credit profile of each insured municipal bond on a periodic basis. The surveillance committee places each insured municipal bond into one of four surveillance categories, the last two of which represent insured municipal bonds that are on BAM’s insured credit watchlist.
Insured Credit Surveillance HG Re attends BAM’s monthly surveillance committee meetings. The surveillance committee evaluates the credit profile of each insured municipal bond on a periodic basis and places each insured municipal bond into one of four surveillance categories, the last two of which represent insured municipal bonds that are on BAM’s insured credit watchlist.
This risk is mitigated through the application of strict guidelines, managed by a dedicated team within the Ark compliance department. This team reviews MGA and third-party binding authority approvals pre-bind and monitors a program of audits to ensure compliance with regulations and guidelines. Ark uses bespoke pricing models for each of the products that it underwrites.
This team reviews MGA and third-party binding authority approvals pre-bind and monitors a program of audits to ensure compliance with regulations and guidelines. Ark uses bespoke pricing models for each of the products that it underwrites.
BAM is exposed to climate-related events to the extent that those events impact a municipal issuer’s ability to service its debt obligations. BAM incorporates climate change risk in its credit underwriting process.
HG Re, through its reinsurance treaties with BAM, is exposed to climate-related events to the extent that those events impact a municipal issuer’s ability to service its debt obligations. Under the FLRT underwriting guidelines, BAM incorporates climate change risk in its credit underwriting process.
The following table shows the proportion of business produced by the top four insurance and reinsurance intermediaries for the years ended December 31, 2023, 2022 and 2021: Year Ended December 31, Gross written premiums by insurance and reinsurance intermediary 2023 2022 2021 Marsh & McLennan Companies, Inc. 27.5 % 27.1 % 26.5 % Arthur J.
The following table shows the proportion of business produced by the top four insurance and reinsurance intermediaries for the years ended December 31, 2024, 2023 and 2022: Year Ended December 31, Gross written premiums by insurance and reinsurance intermediary 2024 2023 2022 Marsh & McLennan Companies, Inc. 25.8 % 27.5 % 27.1 % Aon plc 13.4 16.7 17.1 Arthur J.
In the future, management rollover shareholders could earn additional shares in Ark if and to the extent that White Mountains achieves certain thresholds for its multiple of invested capital return. If fully earned, these additional shares would represent 12.5% of the shares outstanding at closing.
In the future, management rollover shareholders could earn additional shares in Ark if and to the extent that White Mountains achieves certain thresholds for its multiple of invested capital return.
On October 25, 2023, White Mountains announced the launch of White Mountains Partners LLC (“WTM Partners”), which will acquire businesses in non-insurance, non-financial services sectors including essential services, light industrial and specialty consumer. White Mountains expects to deploy up to $500 million of equity capital through WTM Partners over time. WTM Partners is included within Other Operations.
WTM Partners In October 2023, White Mountains announced the launch of WTM Partners, which will acquire businesses in non-insurance, non-financial services sectors including essential services, light industrial and specialty consumer. White Mountains expects to deploy up to $500 million of equity capital through WTM Partners over time. WTM Partners did not deploy any equity capital in 2024.
White Mountains’s other operations consists of the Company and its wholly-owned subsidiary, White Mountains Capital, LLC (“WM Capital”), its other intermediate holding companies, its wholly-owned investment management subsidiary, White Mountains Advisors LLC (“WM Advisors”), investment assets managed by WM Advisors, its interests in MediaAlpha, Inc. (“MediaAlpha”), PassportCard Limited (“PassportCard”) and DavidShield Life Insurance Agency (2000) Ltd.
White Mountains’s other operations consist of the Company and its wholly-owned subsidiary, White Mountains Capital, LLC (“WM Capital”), its other intermediate holding companies, its wholly-owned investment management subsidiary, White Mountains Advisors LLC (“WM Advisors”), investment assets managed by WM Advisors, its interests in MediaAlpha, Inc.
If, at the end of any quarter, the Regulation 114 Trust balance is above 102% of the target balance, funds will be withdrawn from the Regulation 114 Trust and deposited into the Supplemental Trust. The Regulation 114 Trust balance as of December 31, 2023 and 2022 was $342 million and $289 million.
If, at the end of any quarter, the Regulation 114 Trust balance is above 102% of the target balance, funds will be withdrawn from the Regulation 114 Trust and deposited into the Supplemental Trust.
Ark’s casualty reinsurance business is underwritten on an excess of loss and proportional treaty basis. 11 Accident & Health Ark’s accident & health business is underwritten on both an insurance and reinsurance basis covering a wide range of personal accident, sickness, disability, travel and medical insurance risks.
Accident & Health Ark’s accident & health business is underwritten on both an insurance and reinsurance basis covering a wide range of personal accident, sickness, disability, travel, short-term life, health and medical insurance and reinsurance risks.
It offers both admitted and non-admitted insurance products. Bamboo also operates two separate but integrated business models: (i) a retail agency, within Bamboo MGA, offering ancillary products (e.g., flood, earthquake) on behalf of third parties and (ii) Bamboo Captive, a Bermuda-domiciled captive reinsurer that participates in the underwriting risk of Bamboo’s MGA programs to align interests with reinsurance partners.
Bamboo also operates two separate but integrated businesses: (i) a retail agency, within Bamboo MGA, offering ancillary products (e.g., flood, earthquake) on behalf of third parties and (ii) Bamboo Captive, a U.S.-domiciled captive reinsurer that participates in the underwriting risk of Bamboo’s MGA programs to align interests with Capacity Providers.
Upon issuance of the preference shares, Outrigger Re Ltd. entered into collateralized quota share agreements with GAIL to provide reinsurance protection on Ark’s Bermuda global property catastrophe excess of loss portfolio written in the 2023 underwriting year.
Outrigger Re Ltd. entered into collateralized quota share agreements with GAIL to provide reinsurance protection on Ark’s Bermuda global property catastrophe excess of loss portfolio written in the 2023 underwriting year. The proceeds from the issuance of the preference shares were deposited into collateral trust accounts to fund any potential obligations under the reinsurance agreements with GAIL.
In general, such regulation is for the protection of policyholders rather than shareholders. White Mountains believes that BAM is in compliance with all applicable laws and regulations pertaining to its business that would have a material effect on its financial condition and results of operations in the event of non-compliance.
White Mountains believes that Bamboo is in compliance with all applicable laws and regulations pertaining to its business that would have a material effect on its financial condition or results of operations in the event of non-compliance.
As of December 31, 2023 and 2022, White Mountains reported $959 million and $826 million of total assets and $684 million and $553 million of total equity related to Kudu.
As of December 31, 2024 and 2023, White Mountains reported $1,108 million and $959 million of total assets and $792 million and $684 million of total equity related to Kudu.
Bamboo is a capital-light, tech- and data-enabled insurance distribution platform providing homeowners’ insurance and related products to the residential property market in California.
See Note 2 — “Significant Transactions” on page F- 19 . Bamboo is a capital-light, tech- and data-enabled insurance distribution platform providing homeowners’ insurance and related products to the residential property market in California.
Ark’s casualty insurance business is generally written on an excess of loss basis arising from operations of a wide range of predominantly large U.S. companies, including energy companies, with global operations.
Ark’s casualty insurance business is generally written on an excess of loss and primary basis arising from operations of a wide range of predominantly large U.S. companies with global operations, including energy companies, lawyers, accountants, consultants and construction firms. Ark’s casualty reinsurance business is underwritten on an excess of loss and proportional treaty basis.
As of December 31, 2023 and 2022, White Mountains reported $4,133 million and $3,486 million of total assets and $1,230 million and $965 million of total equity related to Ark.
As of December 31, 2024 and 2023, White Mountains reported $5,134 million and $4,133 million of total assets and $1,438 million and $1,230 million of total equity related to Ark.
PassportCard/DavidShield offers its products to both individuals and organizations, primarily in Israel (its home market) as well as the European Union and Australia. In 2020, PassportCard/DavidShield received regulatory approval for its wholly-owned carrier. The carrier writes both leisure travel and expatriate medical insurance in Israel and cedes 100% of the underwriting risks to its reinsurance partners.
PassportCard/DavidShield offers its products to both individuals and organizations, primarily in Israel (its home market) as well as the European Union and Australia. PassportCard/DavidShield, through its wholly-owned carrier, writes both leisure travel and expatriate medical insurance in Israel and cedes 100% of the underwriting risks to its reinsurance partners. PassportCard Limited (“PassportCard”) is a U.K.-domiciled global MGA.
During the fourth quarter of 2022, Ark entered into a 40% collateralized quota share agreement with Outrigger Re Ltd., a Bermuda special purpose insurer, covering Ark’s Bermuda global property catastrophe excess of loss portfolio written in the 2023 underwriting year. During the fourth quarter of 2023, Ark renewed the Outrigger Re Ltd. quota share agreement for the 2024 underwriting year.
During the fourth quarter of 2023 and 2024, Ark renewed its collateralized quota share agreements with Outrigger Re Ltd., a Bermuda special purpose insurer, covering Ark’s Bermuda global property catastrophe excess of loss portfolio written in the 2024 and 2025 underwriting years, respectively.
Best”) and “AA-/stable” by Standard & Poor’s assigned to the Lloyd’s marketplace. “A” is the third highest of 16 financial strength ratings assigned by A.M. Best and “AA-” is the fourth highest of 23 financial strength ratings assigned by Standard & Poor’s. As of February 23, 2024, Ark was rated “A/stable” by A.M. Best.
Best and “AA-” is the fourth highest of 23 financial strength ratings assigned by Standard & Poor’s. As of February 27, 2025, Ark’s financial strength rating was “A/stable” by A.M. Best. “A” is the third highest of 16 financial strength ratings assigned by A.M. Best.
In soft markets, Ark is willing to reduce its business volume when pricing, terms and conditions and limit deployment can make it more difficult to achieve an adequate return on capital.
In soft markets, Ark is willing to reduce its business volume when pricing, terms and conditions and limit deployment can make it more difficult to achieve an adequate return on capital. Ark is willing to forgo business if it believes it is not priced appropriately for the exposure or risk assumed.
BAM seeks to build a relatively low risk insurance portfolio with prudent single risk limits. White Mountains believes that municipal bonds insured by BAM have strong appeal to retail investors, who buy smaller, less liquid issues, have less portfolio diversification and have fewer credit differentiation skills and analytical resources than institutional investors.
White Mountains believes that municipal bonds insured by BAM have strong appeal to retail investors, who buy smaller, less liquid issuances, have less portfolio diversification and have fewer credit differentiation skills and analytical resources than institutional investors.
The underlying assureds cover a variety of industries including construction, oil & gas, hotel & leisure, and transportation projects. Mortgage Mortgage insurance covers financial guarantee risks between a lending institution and a borrower designed to address responsibility for debt payments and default.
Ark underwrites this portfolio on a reinsurance basis, primarily excess of loss, for U.S.-domiciled clients. The underlying assureds cover a variety of industries including construction, oil & gas, hotel & leisure and transportation projects. Mortgage Mortgage insurance covers financial guarantee and credit risks between a lending institution and a borrower designed to address responsibility for debt payments and default.
Lloyd’s approved stamp capacity in 2024 for Syndicate 4020 is £525 million ($667 million based upon the foreign exchange spot rate as of December 31, 2023), and for Syndicate 3902 is £250 million ($318 million based upon the foreign exchange spot rate as of December 31, 2023).
Lloyd’s approved stamp capacity in 2025 for Syndicate 4020, including ACSN 3832, is £750 million ($938 million based upon the foreign exchange spot rate as of December 31, 2024) and for Syndicate 3902 is £250 million ($313 million based upon the foreign exchange spot rate as of December 31, 2024).
Kudu’s philosophy is to partner with asset and wealth management firms that exhibit strong cash flow generation and growth. Kudu seeks to provide its solutions across a diverse mix of investment strategies and asset classes in the middle market. Kudu’s average capital deployment to date has been approximately $35 million, with a range from $14 million to $81 million.
Kudu seeks to provide its solutions across a diverse mix of investment strategies and asset classes in the middle market. Kudu’s average capital deployment to date has been approximately $37 million, with a range from $14 million to $81 million.
The Supplemental Trust balance as of December 31, 2023 and 2022 was $607 million and $568 million, which included $247 million and $214 million of cash, investments and accrued investment income, $322 million and $340 million of BAM Surplus Notes and $38 million and $14 million of interest receivable on the BAM Surplus Notes.
The Supplemental Trust balance as of December 31, 2024 and 2023 was $598 million and $607 million, which included $289 million and $247 million of cash, investments and accrued investment income, $301 million and $322 million of BAM Surplus Notes at nominal value and $8 million and $38 million of accrued interest receivable on the BAM Surplus Notes at nominal value.
As of December 31, 2023 and 2022, White Mountains reported $1 million and $(1) million of noncontrolling interests related to HG Global. As of December 31, 2023 and 2022, White Mountains reported $530 million and $507 million of total assets and $(140) million and $(155) million of noncontrolling interests related to BAM.
As of December 31, 2024 and 2023, White Mountains reported $(13) million and $1 million of noncontrolling interests related to HG Global. As of December 31, 2023, White Mountains reported $530 million of total assets and $(140) million of noncontrolling interests related to BAM, prior to its deconsolidation on July 1, 2024.
As a result of the NSM Transaction, the assets and liabilities of NSM Group have been presented in the balance sheet as held for sale for periods prior to the closing of the transaction, and the results of operations for NSM Group have been classified as discontinued operations in the statements of operations and comprehensive income through the closing of the transaction.
As a result of the NSM Transaction, the results of operations for NSM Group have been classified as discontinued operations in the statements of operations and comprehensive income through the closing of the transaction.
Special purpose insurers may be registered to carry on either restricted special purpose business or unrestricted special purpose business. Restricted special purpose business is special purpose business conducted between a special purpose insurer and specific insureds approved by the BMA. Unrestricted special purpose business means special purpose business conducted by a special purpose insurer with any insured.
Special purpose insurers may be registered to carry on either restricted special purpose business or unrestricted special purpose business. Restricted special purpose business is special purpose business conducted between a special purpose insurer and specific insureds approved by the BMA. Both HG Re and Outrigger Re Ltd. are only able to carry on restricted purpose business.
As special purpose insurers, HG Re and Outrigger Re Ltd. are also required to file annually with the BMA a statutory return which includes, among other matters, the statutory financial statements, a statement of control and changes of control, a solvency certificate, an annual statutory declaration, an own-risk assessment, alternative capital arrangements report, cyber risk management report and compliance with sanctions report. 21 Financial Condition Report As a Class 4 insurer, GAIL is required to prepare and publish a financial condition report (“FCR”), which provides, among other things, details of measures governing the business operations, corporate governance framework and solvency and financial performance of the insurer/insurance group.
As special purpose insurers, HG Re and Outrigger Re Ltd. are also required to file annually with the BMA a statutory return which includes, among other matters, the statutory financial statements, a statement of control and changes of control, a solvency certificate, an annual statutory declaration, an own-risk assessment, alternative capital arrangements report, cyber risk management report and compliance with sanctions report.
Minimum Solvency Margin As a general business insurer, GAIL is required to maintain statutory assets in excess of its statutory liabilities by an amount, equal to or greater than the prescribed minimum solvency margin.
As special purpose insurers, HG Re and Outrigger Re Ltd. are not subject to this requirement. 23 Minimum Solvency Margin As a general business insurer, GAIL is required to maintain statutory assets in excess of its statutory liabilities by an amount, equal to or greater than the prescribed minimum solvency margin.
The net after-tax exposure is net of amounts ceded to reinsurers and reinstatement premiums. Different perils are more prevalent at different times of the year, and Ark tailors its outwards reinsurance program to incept accordingly.
Different perils are more prevalent at different times of the year, and Ark tailors its outwards reinsurance program to incept accordingly.
As of February 23, 2024, BAM was rated “AA/stable” by Standard & Poor’s. “AA” is the third highest of 23 financial strength ratings assigned by Standard & Poor’s. As of February 23, 2024, each of Lloyd’s Syndicates 4020 and 3902, benefits from the financial strength rating of “A/stable” by A.M. Best Company, Inc. (“A.M.
As of February 27, 2025, each of Lloyd’s Syndicates 4020 and 3902 benefits from the financial strength rating of “A+/stable” by A.M. Best Company, Inc. (“A.M. Best”) and “AA-/stable” by Standard & Poor’s assigned to the Lloyd’s marketplace. “A+” is the second highest of 16 financial strength ratings assigned by A.M.
DavidShield is an MGA that is the leading provider of expatriate medical insurance in Israel. Since 2000, DavidShield has delivered industry-leading medical insurance solutions to diplomats, non-governmental organizations and thousands of multinational corporations and individuals in over 95 countries. DavidShield receives structured commissions for placing policies with its insurance carrier partners and licensing fees for use of its card-based technology.
(“DavidShield”) is an MGA that is the leading provider of expatriate medical insurance in Israel. Since 2000, DavidShield has delivered industry-leading medical insurance solutions to diplomats, non-governmental organizations and thousands of multinational corporations and individuals in over 95 countries.
The highest capital is classified as Tier 1 capital and lesser quality capital is classified as either Tier 2 capital or Tier 3 capital. Under this regime, not more than certain specified percentages of Tier 1, Tier 2 and Tier 3 capital may be used to satisfy the Class 4 insurers' minimum solvency margin, ECR requirements and target capital level.
Under this regime, not more than certain specified percentages of Tier 1, Tier 2 and Tier 3 capital may be used to satisfy the Class 4 insurers' minimum solvency margin, ECR requirements and target capital level. As special purpose insurers, HG Re and Outrigger Re Ltd. are not subject to this requirement.
The Syndicates underwrite a diversified portfolio of insurance and reinsurance, including property, specialty, marine & energy, casualty and accident & health. Syndicate 4020 commenced underwriting on April 1, 2007 and Syndicate 3902 on January 1, 2017.
Ark Syndicate Management Limited (“ASML”), Ark’s wholly-owned Lloyd’s managing agent, oversees the underwriting of the Syndicates. The Syndicates underwrite a diversified portfolio of insurance and reinsurance, including property, specialty, marine & energy, casualty and accident & health. Syndicate 4020 commenced underwriting on April 1, 2007, Syndicate 3902 on January 1, 2017 and ACSN 3832 on July 1, 2024.
Losses and LAE are categorized by the year in which the policy is underwritten (the year of account or underwriting year) for purposes of Ark’s claims management and estimation of the ultimate loss and LAE reserves. For purposes of Ark’s reporting under GAAP, losses and LAE are categorized by the year in which the claim is incurred (the accident year).
For purposes of Ark’s reporting under GAAP, loss and LAE are categorized by the year in which the claim is incurred (the accident year).
PassportCard/DavidShield PassportCard/DavidShield is principally an MGA that provides two insurance products: leisure travel insurance and expatriate medical insurance. PassportCard/DavidShield delivers a real-time, paperless insurance solution that facilitates claims payouts in minutes, wherever customers need them around the world.
At the December 31, 2023 share price of $11.15, the fair value of White Mountains’s investment in MediaAlpha was $255 million. PassportCard/DavidShield PassportCard/DavidShield is principally an MGA that provides two insurance products: leisure travel insurance and expatriate medical insurance. PassportCard/DavidShield delivers a real-time, paperless insurance solution that facilitates claims payouts in minutes, wherever customers need them around the world.
Political and Credit Political and credit insurance primarily covers risks relating to the confiscation, expropriation, nationalization and deprivation of insured assets due to war, political, or government action as well as contract frustration and non-payment by obligors. 10 Cyber Cyber insurance primarily covers the physical damage and liabilities arising from cyber attacks, including coverage for ransomware, loss of data and third-party liabilities.
Political and Credit Political and credit insurance primarily covers risks relating to the confiscation, expropriation, nationalization and deprivation of insured assets due to war, political or government action as well as contract frustration and non-payment by obligors.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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If the proposed regulations are finalized as written, U.S. shareholders of the Company could be required to include in their taxable income a proportionate share of White Mountains’s RPII income annually as subpart F income, even if no distributions are received by the U.S. shareholder.
If the proposed regulations are finalized as written, U.S. shareholders of the Company could be required to include in their taxable income a proportionate share of White Mountains’s RPII annually as subpart F income, even if no distributions are received by the U.S. shareholder.
Should there be a significant decrease in the publicly-traded share price of MediaAlpha’s common stock, it could materially adversely affect our results of operations and financial condition. 33 Our investment portfolio includes securities that do not have readily observable market prices. We use valuation methodologies that are inherently subjective and uncertain to value these securities.
Should there be a significant decrease in the publicly-traded share price of MediaAlpha’s common stock, it could materially adversely affect our results of operations and financial condition. Our investment portfolio includes securities that do not have readily observable market prices. We use valuation methodologies that are inherently subjective and uncertain to value these securities.
If you are a U.S. person, we encourage you to consult your own tax advisor concerning the potential tax consequences to you under the PFIC rules. The Company and certain of our non-U.S. subsidiaries may become subject to U.S. tax, which could materially adversely affect our results of operations and financial condition.
If you are a U.S. person, we encourage you to consult your own tax advisor concerning the potential tax consequences to you under the PFIC rules. 37 The Company and certain of our non-U.S. subsidiaries may become subject to U.S. tax, which could materially adversely affect our results of operations and financial condition.
As a result, such actions could have a material adverse effect on our results of operations and financial condition. Bermuda law differs from the laws in effect in the United States and may afford less protection to shareholders. We are organized under the laws of Bermuda, and a portion of our assets are located outside the United States.
As a result, such actions could have a material adverse effect on our results of operations and financial condition. 39 Bermuda law differs from the laws in effect in the United States and may afford less protection to shareholders. We are organized under the laws of Bermuda, and a portion of our assets are located outside the United States.
We encourage shareholders who are U.S. persons to consult their own tax advisors concerning the proposed regulations. 36 Risks Related to Laws and Regulation Regulation may have a material adverse effect on our operations and financial condition.
We encourage shareholders who are U.S. persons to consult their own tax advisors concerning the proposed regulations. Risks Related to Laws and Regulation Regulation may have a material adverse effect on our operations and financial condition.
Our computer systems have been and will continue to be the target of cyber attacks, although we are not aware that we have experienced a material cybersecurity breach. We are also not aware of any third-party vendor having experienced a material cybersecurity breach that impacted our data.
Our computer systems have been and will continue to be the target of cyber attacks, although we are not aware that we have experienced a material cybersecurity breach. We are also not aware of any third-party vendor having experienced a material cybersecurity breach that materially impacted our data.
Kudu’s clients generate their revenues and earnings by charging asset-based fees, which are typically a percentage of the value of the assets they manage for their clients, and/or performance-based fees, which are typically a portion of actual returns achieved for their clients above a target return.
Kudu’s investees generate their revenues and earnings by charging asset-based fees, which are typically a percentage of the value of the assets they manage for their clients, and/or performance-based fees, which are typically a portion of actual returns achieved for their clients above a target return.
Our success also depends on the ability to hire and retain additional personnel. Difficulty in hiring or retaining personnel could materially adversely affect our results of operations and financial condition.
Our success also depends on the ability to hire and retain additional personnel. Difficulty in hiring or retaining personnel could materially adversely affect our results of operations and financial condition. 41
If Ark is unable to maintain its competitive position throughout soft and hard market cycles, its business may be adversely affected, and it may not be able to compete effectively in the future, which could materially adversely affect our results of operations and financial condition. 30 Ark/WM Outrigger’s loss and LAE reserves may be inadequate to cover the ultimate liability for losses, and as a result, our results of operations and financial condition could be adversely affected.
If Ark is unable to maintain its competitive position throughout soft and hard market cycles, its business may be adversely affected, and it may not be able to compete effectively in the future, which could materially adversely affect our results of operations and financial condition. 31 Ark/WM Outrigger’s loss and LAE reserves may be inadequate to cover the ultimate liability for losses, and as a result, our results of operations and financial condition could be adversely affected.
If controls are not effective, it could lead to unanticipated risk exposure or damage to our reputation and, consequently, could materially adversely affect our results of operations and financial condition. 37 Other Risks Related to White Mountains and its Subsidiaries We may be unable to adequately maintain our systems and safeguard the security of our data, which could adversely impact our ability to operate our business and cause reputational harm and, consequently, could materially adversely affect our results of operations and financial condition.
If controls are not effective, it could lead to unanticipated risk exposure or damage to our reputation and, consequently, could materially adversely affect our results of operations and financial condition. 40 Other Risks Related to White Mountains and its Subsidiaries We may be unable to adequately maintain our systems and safeguard the security of our data, which could adversely impact our ability to operate our business and cause reputational harm and, consequently, could materially adversely affect our results of operations and financial condition.
A downgrade, withdrawal or negative watch/outlook of these financial strength ratings also could limit Ark’s ability to raise new debt or could cause new and certain existing debt to be costlier and/or have more restrictive conditions. 29 Ark may not successfully alleviate risk through reinsurance and retrocessional arrangements, which could materially adversely affect our results of operations and financial condition.
A downgrade, withdrawal or negative watch/outlook of these financial strength ratings also could limit Ark’s ability to raise new debt or could cause new and certain existing debt to be costlier and/or have more restrictive conditions. 30 Ark may not successfully alleviate risk through reinsurance and retrocessional arrangements, which could materially adversely affect our results of operations and financial condition.
Item 1A. Risk Factors The information contained in this report may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. See “FORWARD-LOOKING STATEMENTS” on page 95 for specific important factors that could cause actual results to differ materially from those contained in forward-looking statements.
Item 1A. Risk Factors The information contained in this report may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. See “FORWARD-LOOKING STATEMENTS” on page 101 for specific important factors that could cause actual results to differ materially from those contained in forward-looking statements.
We are subject to supervision and regulation by regulatory authorities in the various jurisdictions in which we conduct business, including state, national and international insurance regulators.
We are subject to supervision and regulation by regulatory authorities in the various jurisdictions in which we conduct business, including state and national insurance regulators.
The maintenance of an “A-” or better financial strength rating is particularly important to Ark’s ability to write new and renewal property and casualty insurance and reinsurance business in most markets. Ark writes insurance and reinsurance through Lloyd’s Syndicates 4020 and 3902, each of which benefits from the financial strength rating of “A/stable” by A.M.
The maintenance of an “A-” or better financial strength rating is particularly important to Ark’s ability to write property and casualty insurance and reinsurance business in most markets. Ark writes insurance and reinsurance through Lloyd’s Syndicates 4020 and 3902, each of which benefits from the financial strength rating of “A+/stable” by A.M.
Should its fronting partner reduce the volume of business accepted from Bamboo or adversely change the terms and conditions of placement, we cannot guarantee that Bamboo would be able to find other fronting partners to write its programs, which could materially adversely affect its results of operations and financial condition.
Should this fronting partner reduce the volume of business accepted from Bamboo or adversely change the terms and conditions of placement, we cannot guarantee that Bamboo would be able to find other fronting partners to write its full programs, which could materially adversely affect its results of operations and financial condition.
The revenue that Kudu generates from its clients is subject to the same general economic and market risks that may affect our investment portfolio. See “ Our investment portfolio may suffer reduced returns or losses, which could materially adversely affect our results of operations and financial condition.
The revenue that Kudu generates from its clients is subject to the same general economic and market risks that may affect our investment portfolio. See Risk Factors, “ Our investment portfolio may suffer reduced returns or losses, which could materially adversely affect our results of operations and financial condition.
Best and “AA-/stable” by Standard & Poor’s assigned to the Lloyd’s marketplace. Beginning in January 2021, Ark began writing certain classes of its business through GAIL, Ark’s wholly-owned Bermuda-based insurance and reinsurance company, which has been assigned an “A/stable” financial strength rating by A.M. Best. See “ RATINGS ” on page 26 .
Best and “AA-/stable” by Standard & Poor’s assigned to the Lloyd’s marketplace. Beginning in January 2021, Ark began writing certain classes of its business through GAIL, Ark’s wholly-owned Bermuda-based insurance and reinsurance company, which has an “A/stable” financial strength rating by A.M. Best. See “ RATINGS ” on page 28 .
Ark attempts to limit its risk of loss through reinsurance and retrocessional arrangements, including through its quota share reinsurance agreements with Outrigger Re Ltd. Retrocessional arrangements refer to reinsurance purchased by a reinsurer to cover its own risks assumed from ceding companies.
Ark attempts to limit its risk of loss through reinsurance and retrocessional arrangements, including through its quota share reinsurance agreement with Outrigger Re Ltd. Retrocessional arrangements refer to reinsurance purchased by a reinsurer to cover its own risks assumed from ceding companies.
The fair market value of our investment portfolio is affected by general economic and market conditions that are outside of our control, including (i) fluctuations in equity market levels, interest rates, debt market levels and foreign currency exchange rates; (ii) public health crises, natural disasters, terrorist attacks and other outside events; and (iii) credit losses sustained by issuers.
The fair market value of our investment portfolio is affected by general economic and market conditions that are outside of our control, including (i) fluctuations in equity market levels, interest rates, debt market levels and foreign currency exchange rates; (ii) public health crises, natural disasters, terrorist attacks, war and war-like actions and other outside events; and (iii) credit losses sustained by issuers.
These investments can experience volatility in their returns or valuation, which could materially adversely affect our results of operations and financial condition. We may be subject to greater volatility from our investment in MediaAlpha, which could materially adversely affect our results of operations and financial condition.
These investments can experience volatility in their returns or valuation, which could materially adversely affect our results of operations and financial condition. 35 We may be subject to volatility from our investment in MediaAlpha, which could materially adversely affect our results of operations and financial condition.
Ark incorporates the physical risk of climate change to its underwriting process through sensitivity and stress testing of its catastrophe models, including increased frequency of U.S. windstorms and the implications of storm surge.
Ark incorporates the physical risk of climate change in its underwriting process through sensitivity and stress testing of its catastrophe models, including increased frequency of U.S. windstorms and the implications of storm surge.
Adverse changes in equity markets, interest rates, debt markets or foreign currency exchange rates could result in significant losses to the value of our investment portfolio.” on page 33 .
Adverse changes in equity markets, interest rates, debt markets or foreign currency exchange rates could result in significant losses to the value of our investment portfolio.” on page 35 .
These estimates involve actuarial and claims assessments and require Ark/WM Outrigger to make a number of assumptions about future events that are subject to unexpected changes and are beyond Ark/WM Outrigger’s control, such as future trends in claim severity, emerging coverage issues, frequency, inflation, legislative and judicial changes and other factors.
These estimates involve actuarial and claims assessments and require Ark/WM Outrigger to make a number of assumptions about future events that are subject to unexpected changes and are beyond Ark/WM Outrigger’s control, such as future trends in claim severity, emerging coverage issues, frequency, inflation, legislative and judicial changes, regulatory changes, adverse court rulings and other factors.
As of December 31, 2023, White Mountains owned $1,138 million in securities, including our investments in Kudu’s Participation Contracts and PassportCard/DavidShield, that are not actively traded in public markets, do not have readily observable market prices and are classified as Level 3 investments in the GAAP fair value hierarchy.
As of December 31, 2024, White Mountains owned $1,263 million in securities, including our investments in Kudu’s Participation Contracts and PassportCard/DavidShield, that are not actively traded in public markets, do not have readily observable market prices and are classified as Level 3 investments in the GAAP fair value hierarchy.
In addition, Bamboo relies on its fronting partner’s financial strength rating in establishing the competitive position of its products. A ratings downgrade of Bamboo’s fronting partner could result in a substantial loss of business should policyholders choose to move to other companies with higher financial strength ratings. Bamboo, in conjunction with its fronting partners, purchases various forms of reinsurance.
In addition, Bamboo relies on its fronting partners’ financial strength ratings in establishing the competitive position of its products. A ratings downgrade of Bamboo’s primary fronting partner could result in a substantial loss of business should policyholders choose to move to other companies with higher financial strength ratings. Bamboo, in conjunction with its fronting partners, purchases various forms of reinsurance.
However, a person that is a U.S. 10% shareholder solely as a result of constructive ownership rules (i.e., such person does not directly or indirectly own stock of White Mountains) should not have a subpart F income inclusion with respect to our CFC subsidiaries.
However, a person that is a U.S. 10% shareholder solely as a result of constructive ownership rules (i.e., such person does not directly or indirectly own stock of White Mountains) should not have a subpart F income inclusion or global intangible low-taxed income with respect to our CFC subsidiaries.
If any of our shareholders is a “U.S. 10% shareholder” (as described below) that directly or indirectly owns stock in White Mountains, that shareholder must include in its taxable income each year its pro rata share of our CFC subsidiaries’ “subpart F income” for that year, even if no distributions are received by the U.S. 10% shareholder.
If any of our shareholders is a “U.S. 10% shareholder” (as described below) that directly or indirectly owns stock in White Mountains, that shareholder must include in its taxable income each year its pro rata share of our CFC subsidiaries’ “subpart F income” and global intangible low-taxed income for that year, even if no distributions are received by the U.S. 10% shareholder.
WM Outrigger Re’s obligations under the quota share reinsurance agreement with GAIL are subject to an aggregate limit equal to the assets in the collateral trust account at any point in time.
WM Outrigger Re’s obligations under its quota share reinsurance agreement with GAIL is subject to an aggregate limit equal to the assets in the collateral trust account at any point in time.
For the year ended December 31, 2023, Bamboo placed substantially all of its business with one fronting partner.
For the year ended December 31, 2024, Bamboo placed substantially all of its business with one fronting partner.
The EU Minimum Tax Directive requires European Union Member States to enact conforming law by December 31, 2023.
The EU Minimum Tax Directive required European Union Member States to enact conforming law by December 31, 2023.
In the event that Ark/WM Outrigger’s reserves become insufficient to cover the actual losses and LAE, Ark/WM Outrigger may need to add to the reserves, which could have a material adverse effect on our results of operations and financial condition.
In the event that Ark/WM Outrigger’s reserves are insufficient to cover the actual loss and LAE, Ark/WM Outrigger may need to add to the reserves, which could have a material adverse effect on our results of operations and financial condition.
White Mountains expects to meet the requirements to be exempt from the Luxembourg UTPR until January 1, 2030. On July 11, 2023, the U.K. enacted conforming legislation adopting the Pillar Two IIR, which will become effective for fiscal years beginning on or after December 31, 2023.
White Mountains expects to meet the requirements to be exempt from the Luxembourg UTPR until January 1, 2030. On July 11, 2023, the U.K. enacted conforming legislation adopting the Pillar Two IIR and QDMTT, which became effective for fiscal years beginning on or after December 31, 2023.
To qualify for the deferral, the group must (i) have permanent establishments in six or fewer countries, and (ii) have less than €50 million of net tangible assets outside of the country where the group has the largest amount of net tangible assets.
To qualify for the deferral, the group must (i) have consolidated affiliates and permanent establishments in six or fewer countries, and (ii) have no more than €50 million of net tangible assets outside of the country where the group has the largest amount of net tangible assets.
Additionally, the base erosion and profit shifting (“BEPS”) project currently being undertaken by the Organization for Economic Cooperation and Development (“OECD”) and the European Commission’s investigation into illegal state aid may result in changes to long standing tax principles, which could materially adversely affect our results of operations and financial condition.
Additionally, the base erosion and profit shifting (“BEPS”) project currently being undertaken by the OECD and the European Commission’s investigation into illegal state aid may result in changes to long standing tax principles, which could materially adversely affect our results of operations and financial condition.
See “ Level 3 Measurements” under “ CRITICAL ACCOUNTING ESTIMATES - Fair Value Measurements” on page 76 for a description of the methodologies we use to determine GAAP fair value of our investments without a readily observable market price.
See “ CRITICAL ACCOUNTING ESTIMATES — Fair Value Measurements” on page 82 for a description of the methodologies we use to determine the GAAP fair value of our investments without a readily observable market price.
White Mountains expects to meet the requirements to be exempt from the Bermuda corporate income tax until January 1, 2030. On December 15, 2022, European Union Member States voted to adopt the European Union Minimum Tax Directive (the “EU Minimum Tax Directive”) in conformity with OECD’s Pillar Two initiative.
White Mountains expects to meet the requirements to be exempt from the Bermuda corporate income tax until January 1, 2030. On December 15, 2022, European Union Member States voted to adopt the European Union Minimum Tax Directive (the “EU Minimum Tax Directive”) in conformity with the Organization for Economic Cooperation and Development (“OECD”) Pillar Two initiative.
The evaluation of goodwill or other intangible assets for impairment requires the use of significant judgment in determining fair value, including assumptions about the future performance of the associated business.
An impairment of goodwill or other intangible assets occurs when the carrying value of the asset exceeds its fair value. The evaluation of goodwill or other intangible assets for impairment requires the use of significant judgment in determining fair value, including assumptions about the future performance of the associated business.
Additionally, Kudu’s clients participate in a highly competitive, highly regulated industry that subjects their operations to a number of other risks that are out of our control and could materially adversely affect our results of operations and financial condition, including (i) changes in investor preference from the actively-managed investments offered by Kudu’s clients to passively-managed investments; (ii) the ability of Kudu’s clients to successfully attract new clients and retain existing ones; (iii) the ability of Kudu’s clients to avoid fee compression; (iv) the reliance of Kudu’s clients on a small number of key personnel; and (v) future changes to regulations that make Kudu’s clients’ businesses more cumbersome and expensive to operate. 31 Risks Related to Bamboo’s Business and Industry Bamboo’s business is dependent on its capacity providers (both fronting and reinsurance), and a change in availability or terms could materially impact Bamboo’s results of operations and financial condition or adversely affect its ability to write business.
Additionally, Kudu’s investees participate in a highly competitive, highly regulated industry that subjects their operations to a number of other risks that are out of our control and could materially adversely affect our results of operations and financial condition, including (i) changes in investor preference from the actively-managed investments offered by Kudu’s investees to passively-managed investments; (ii) the ability of Kudu’s investees to successfully attract new clients and retain existing ones; (iii) the ability of Kudu’s investees to avoid fee compression; (iv) the reliance of Kudu’s investees on a small number of key personnel; and (v) future changes to regulations that make Kudu’s investees’ businesses more cumbersome and expensive to operate.
Bamboo is an MGA and program administrator with delegated binding authorities, and as such, is generally dependent on its fronting and reinsurance carrier partners (“Capacity Providers”) to bear the insurance risk on the programs designed and underwritten by Bamboo.
Bamboo is an MGA and program administrator with delegated binding authorities, and as such, is generally dependent on its Capacity Providers to bear the insurance risk on the programs designed and underwritten by Bamboo.
See “ RATINGS ” on page 26 . A downgrade, withdrawal or negative watch/outlook of BAM’s financial strength rating could severely limit or prevent BAM’s ability to write municipal bond insurance policies, which could materially adversely affect our results of operations and financial condition.
A downgrade, withdrawal or negative watch/outlook of BAM’s financial strength rating could severely limit or prevent BAM’s ability to write municipal bond insurance policies, which could materially adversely affect HG Re’s business, and, consequently, could materially adversely affect our results of operations and financial condition.
Third-party rating agencies assess and rate the financial strength of insurers, including claims-paying ability. These ratings are based upon criteria established by the rating agencies and are subject to revision at any time at the sole discretion of the rating agencies. Some of the criteria relate to general economic conditions and other circumstances outside the rated insurer’s control.
These ratings are based upon criteria established by the rating agencies and are subject to revision at any time at the sole discretion of the rating agencies. Some of the criteria relate to general economic conditions and other circumstances outside the rated insurer’s control.
During the time that BAM’s financial strength rating was placed on credit watch negative by Standard & Poor’s, it voluntarily withdrew from the marketplace and did not write any municipal bond insurance policies.
During the time that BAM’s financial strength rating was placed on credit watch negative by Standard & Poor’s, it voluntarily withdrew from the marketplace and did not write any municipal bond insurance policies. On May 29, 2024, Standard & Poor’s concluded its most recent review and affirmed BAM’s “AA/stable” financial strength rating.
The main rule of the EU Minimum Tax Directive, the Income Inclusion Rule (“IIR”), will become effective for fiscal years beginning on or after December 31, 2023, while the Undertaxed Profits Rule (“UTPR”) will become effective for fiscal years beginning on or after December 31, 2024. On December 20, 2023, Luxemburg enacted conforming Pillar Two legislation.
The main rule of the EU Minimum Tax Directive, the Income Inclusion Rule (“IIR”), was to become effective for fiscal years beginning on or after December 31, 2023, while the Undertaxed Profits Rule (“UTPR”) was to become effective for fiscal years beginning on or after December 31, 2024.
Following the MediaAlpha IPO in October 2020, White Mountains’s investment in MediaAlpha is valued based on the publicly-traded share price of MediaAlpha’s common stock, which at the December 31, 2023 closing price of $11.15 per share was $255 million.
White Mountains’s investment in MediaAlpha is valued based on the publicly-traded share price of MediaAlpha’s common stock, which at the December 31, 2024 closing price of $11.29 per share was $202 million.
We cannot guarantee that the NYDFS will approve payments on the BAM Surplus Notes in the future. If BAM does not repay some or all of the principal and interest on the BAM Surplus Notes, it could materially adversely affect our results of operations and financial condition.
If BAM does not repay some or all of the principal and interest on the BAM Surplus Notes, it could materially adversely affect our results of operations and financial condition.
To qualify for the deferral, the group must (i) have permanent establishments in six or fewer countries, (ii) have less than €50 million of net tangible assets outside of the country where the group has the largest amount of net tangible assets and (iii) not have a Bermuda company subject to the Income Inclusion Rule of Pillar Two in any jurisdiction.
To qualify for the deferral, generally the group must (i) have consolidated affiliates and permanent establishments in six or fewer countries, (ii) have no more than €50 million of net tangible assets outside of the country where the group has the largest amount of net tangible assets and (iii) not have a consolidated Bermuda affiliate or Bermuda permanent establishment directly or indirectly owned by a parent entity that is subject to the Income Inclusion Rule of Pillar Two in any jurisdiction.
It is unlikely that BAM would pay principal and interest on the BAM Surplus Notes if such payments could lead to a rating downgrade. In December 2023, the NYDFS approved a $27 million cash payment of principal and interest on the BAM Surplus Notes.
It is unlikely that BAM would pay principal and interest on the BAM Surplus Notes if such payments could lead to a rating downgrade. In 2024, the NYDFS approved cash payments of principal and interest on the BAM Surplus Notes totaling $30 million. We cannot guarantee that the NYDFS will approve payments on the BAM Surplus Notes in the future.
Inadequate pricing or selection of risk could materially adversely affect Bamboo’s results of operations and financial condition. 32 Risks Related to Investments Our investment portfolio may suffer reduced returns or losses, which could materially adversely affect our results of operations and financial condition.
Additionally, state regulators could restrict market access or place undue burdens on Bamboo’s ability to manage risk selection. Inadequate pricing or selection of risk could materially adversely affect Bamboo’s results of operations and financial condition. Risks Related to Investments Our investment portfolio may suffer reduced returns or losses, which could materially adversely affect our results of operations and financial condition.
In particular, a significant increase in interest rates, as experienced in 2022, could result in significant losses in the fair value of our investment portfolio. A significant increase in interest rates that causes severe losses could materially adversely affect our results of operations and financial condition.
A significant increase in interest rates that causes severe losses could materially adversely affect our results of operations and financial condition.
Should its Capacity Providers reduce the volume of business accepted from Bamboo or adversely change the terms and conditions, we cannot guarantee that Bamboo would be able to find other Capacity Providers to write the business, which could materially adversely affect its results of operations and financial condition.
Should its Capacity Providers reduce the volume of business accepted from Bamboo or adversely change the terms and conditions, we cannot guarantee that Bamboo would be able to find other Capacity Providers to write the business, which could materially adversely affect its results of operations and financial condition. 34 Bamboo primarily relies on third-party agents and brokers to distribute its products, and any deterioration in the relationships with these parties could adversely affect Bamboo’s business.
Agents and brokers generally own the “renewal rights,” and thus Bamboo’s business model is dependent on its relationships with, and the success of, the agents and brokers with whom Bamboo does business.
Substantially all of Bamboo’s products are distributed through third-party agents and brokers who have the principal relationships with policyholders. Agents and brokers generally own the “renewal rights,” and thus Bamboo’s business model is dependent on its relationships with, and the success of, the agents and brokers with whom Bamboo does business.
As a result, White Mountains’s reported book value per share and adjusted book value per share may be subject to greater volatility in the future, as the valuation of its investment in MediaAlpha based on the publicly-traded share price of MediaAlpha’s common stock could be more volatile than the valuation of its investment in MediaAlpha based on the private discounted cash flow model used in White Mountains’s financial statements in periods prior to the MediaAlpha IPO.
As a result, White Mountains’s reported book value per share and adjusted book value per share may be subject to future volatility, as the valuation of its investment in MediaAlpha is based on the publicly-traded share price of MediaAlpha’s common stock.
Given the inherent subjectivity and uncertainty in the methodologies we use to determine the fair value of our investments without a readily observable market price, the values of such investments established using these methodologies may never be realized, which could materially adversely affect our results of operations and financial condition.
Given the inherent subjectivity and uncertainty in the methodologies we use to determine the fair value of our investments without a readily observable market price, the values of such investments established using these methodologies may never be realized, which could materially adversely affect our results of operations and financial condition. 36 Risks Related to Taxation We may not meet the requirements of the five-year deferral from the Bermuda corporate income tax or the OECD Pillar Two Undertaxed Profits Rule, which could materially adversely affect our results of operations and financial condition.
We may experience unexpected circumstances that cause future results to differ significantly from those assumptions used in our estimation of the fair value of our goodwill and other intangible assets that could cause us to conclude that goodwill and other intangible assets are impaired.
Our consolidated operating companies may experience unexpected circumstances that cause future performance to differ significantly from those assumptions, which could cause us to conclude that goodwill and other intangible assets are impaired.
For the year ended December 31, 2023, the (re)insurance capacity for Bamboo’s programs was concentrated, with two Capacity Providers representing approximately 45% of Bamboo’s premium.
For the year ended December 31, 2024, the insurance risk for Bamboo’s programs was concentrated, with two third-party Capacity Providers representing approximately 28% of Bamboo’s managed premiums.
The Bermuda legislation defers the effective date until January 1, 2030, for Bermuda companies in consolidated groups that meet certain requirements.
On December 27, 2023, Bermuda enacted a 15% corporate income tax that became effective on January 1, 2025. The Bermuda legislation defers the effective date until January 1, 2030, for Bermuda companies in consolidated groups that meet certain requirements.
If White Mountains fails to meet the requirements of the five-year deferral under the Bermuda corporate income tax or the OECD Pillar Two UTPR, its results of operations and financial condition could be materially adversely affected. 34 We may be treated as a PFIC, in which case a U.S. holder of our common shares could be subject to disadvantageous rules under U.S. federal income tax laws.
If White Mountains fails to meet the requirements of the five-year deferral under the Bermuda corporate income tax or the OECD Pillar Two UTPR, its results of operations and financial condition could be materially adversely affected.
For the year ended December 31, 2023, the top three relationships accounted for 47% of managed premium. Certain of these agents and brokers also have wholly-owned insurance subsidiaries that may compete with Bamboo, and these brokers may favor their own insurers and reinsurers over other companies.
For the year ended December 31, 2024, the top three relationships accounted for 41% of managed premiums. Certain of these agents and brokers are affiliated with insurance entities that compete with Bamboo. These agents and brokers may favor their own insurance entities over Bamboo.
In addition, in recent years the persistent low interest rate environment and ease of entry into the reinsurance sector has led to increased competition from third-party capital in the property catastrophe excess reinsurance line.
In addition, the ease of entry into the reinsurance sector facilitates competition from third-party capital in the property catastrophe excess reinsurance line.
If we are required to write down goodwill and other intangible assets, it could materially adversely affect our results of operations and financial condition. As of December 31, 2023, we had total goodwill and other intangible assets of $371 million on our consolidated balance sheet, $293 million of which relates to our acquisition of Ark.
If we are required to write down goodwill and other intangible assets, it could materially adversely affect our results of operations and financial condition.
Significant potential adverse U.S. federal income tax consequences apply to any U.S. person who owns shares in a passive foreign investment company (“PFIC”).
We may be treated as a PFIC, in which case a U.S. holder of our common shares could be subject to disadvantageous rules under U.S. federal income tax laws. Significant potential adverse U.S. federal income tax consequences apply to any U.S. person who owns shares in a passive foreign investment company (“PFIC”).
Our reinsurance subsidiary, HG Re, reinsures (i) losses up to the first 15%-of-par outstanding on each municipal bond insured by BAM and (ii) certain municipal bonds insured by BAM on an excess of loss basis.
Our reinsurance subsidiary, HG Re, provides (i) first-loss reinsurance protection of up to 15%-of-par outstanding for each policy assumed from BAM and (ii) last-dollar protection for exposures on municipal bonds insured by BAM in excess of the NYDFS single issuer limits.
Such an impairment would result in a non-cash charge to income that could materially adversely affect our results of operations and financial condition. 27 Risks Related to HG Global/BAM’s Business and Industry BAM may not maintain a favorable financial strength rating, which could materially adversely affect its ability to conduct business and, consequently, could materially adversely affect our results of operations and financial condition.
Such an impairment would result in a non-cash charge to income that could materially adversely affect our results of operations and financial condition. 29 Risks Related to Ark/WM Outrigger’s Business and Industry Unpredictable catastrophic events could materially adversely affect our results of operations and financial condition.
If BAM does not pay some or all of the principal and interest due on the BAM Surplus Notes, it could materially adversely affect our results of operations and financial condition. As of December 31, 2023, White Mountains owned $322 million in BAM Surplus Notes and had accrued $175 million of interest thereon.
Should the policies assumed from BAM experience insured losses for any reason, this could materially adversely affect our results of operations and financial condition. If BAM does not pay some or all of the principal and interest due on the BAM Surplus Notes, it could materially adversely affect our results of operations and financial condition.
We are exposed to losses from municipal bond insurance written by BAM through our reinsurance arrangements between BAM and HG Re, which could materially adversely affect our results of operations and financial condition.
If BAM is unable to compete effectively against Assured, it could result in fewer policies issued, lower premium levels and less favorable policy terms and conditions, which could materially adversely affect HG Re’s business, and, consequently, could materially adversely affect our results of operations and financial condition. 32 We are exposed to losses from municipal bond insurance written by BAM through our reinsurance treaties between HG Re and BAM, which could materially adversely affect our results of operations and financial condition.
For example, reductions of travel, including travel restrictions and bans imposed by governments due to the COVID-19 pandemic, negatively impacted revenues at PassportCard/DavidShield in 2020. We are also exposed to changes in debt markets. Interest rates are highly sensitive to many factors, including governmental monetary policies, economic and political conditions and other factors beyond our control.
For example, reductions of leisure travel, due to (i) travel restrictions imposed by governments due to the COVID-19 pandemic and (ii) fewer international flights in and out of Israel as a result of the regional conflict in the Middle East negatively impacted revenues at PassportCard/DavidShield. We are also exposed to changes in debt markets.
The maintenance of an “AA” or better financial strength rating from Standard & Poor’s is particularly important to BAM’s ability to write municipal bond insurance policies and meet its debt service obligations under the BAM Surplus Notes. On July 12, 2023, Standard & Poor’s concluded its most recent review and affirmed BAM’s “AA/stable” financial strength rating.
Accordingly, HG Re, through its reinsurance treaties with BAM, is dependent on BAM’s ability to write municipal bond insurance policies. The maintenance of an “AA” or better financial strength rating from Standard & Poor’s is particularly important to BAM’s ability to conduct its business. Third-party rating agencies assess and rate the financial strength of insurers, including claims-paying ability.
The recently enacted Bermuda corporate income tax and the Pillar Two worldwide minimum tax currently being enacted around the world are examples of the effects of the BEPS project. 35 Our non-U.S. subsidiaries are treated as CFCs and may subject a U.S. 10% shareholder of our common shares to disadvantageous rules under U.S. federal income tax laws.
The recently enacted Bermuda corporate income tax and the Pillar Two worldwide minimum tax currently being enacted around the world are examples of the effects of the BEPS project. On January 15, 2025, the OECD released administrative guidance on its Pillar Two model rules (the “January 2025 OECD Administrative Guidance”).
For further discussion of our loss and LAE reserves, see “ CRITICAL ACCOUNTING ESTIMATES — Loss and LAE Reserves ” on page 79 . Risks Related to Kudu’s Business and Industry Kudu’s financial performance is dependent upon its clients’ asset and performance-based fees, which are subject to a variety of economic, market and other risks.
This could decrease the amount of bond insurance issued by BAM and thereby reduce payments on the Surplus Notes and risk premiums ceded to HG Re, both of which could materially adversely affect our results of operations and financial condition. 33 Risks Related to Kudu’s Business and Industry Kudu’s financial performance is dependent upon its clients’ asset and performance-based fees, which are subject to a variety of economic, market and other risks.
White Mountains’s total goodwill and other intangible assets will increase in 2024 as a result of the Bamboo Transaction. We periodically review goodwill and other intangible assets to determine whether an impairment has occurred. An impairment of goodwill or other intangible assets occurs when the carrying value of the asset exceeds its fair value.
As of December 31, 2024, we had total goodwill and other intangible assets of $720 million on our consolidated balance sheet, $355 million of which relates to our acquisition of Bamboo and $293 million of which relates to our acquisition of Ark. We periodically review goodwill and other intangible assets to determine whether an impairment has occurred.
Removed
In addition, the municipal bond insurance industry is highly competitive. BAM’s primary competitor is Assured. BAM and Assured each seek to differentiate themselves through financial strength ratings, claims paying resources and underwriting strategies. If BAM i s unable to compete effectively against Assured, it could result in fewer policies issued, lower premium levels and less favorable policy terms and conditions.
Added
For further discussion of our loss and LAE reserves, see “CRITICAL ACCOUNTING ESTIMATES — Loss and LAE Reserves” on page 85 . Risks Related to HG Global’s Business and Industry HG Re is only licensed to provide reinsurance to BAM.
Removed
Should the policies underwritten by BAM experience insured losses for any reason, this could materially adversely affect our results of operations and financial condition. 28 Risks Related to Ark/WM Outrigger’s Business and Industry Unpredictable catastrophic events could materially adversely affect our results of operations and financial condition.
Added
If BAM does not maintain its favorable financial strength rating from Standard & Poor’s, it could materially adversely affect HG Re’s business and, consequently, could materially adversely affect our results of operations and financial condition. HG Re is only licensed to provide reinsurance to BAM.
Removed
Bamboo primarily relies on third-party agents and brokers to distribute its products, and any deterioration in the relationships with these parties could adversely affect Bamboo’s business. Substantially all of Bamboo’s products are distributed through third-party agents and brokers who have the principal relationships with policyholders.
Added
Certain sectors of the municipal bond insurance industry are highly competitive, and BAM may not be able to compete effectively in the future, which could materially adversely affect HG Re’s business and, consequently, could materially adversely affect our results of operations and financial condition. Certain sectors of the municipal bond insurance industry are highly competitive.
Removed
Additionally, state regulators could restrict market access or place undue burdens on Bamboo’s ability to manage risk selection.
Added
HG Re is only licensed to provide reinsurance to BAM. Accordingly, HG Re, through its reinsurance treaties with BAM, is indirectly exposed to this competition. BAM’s primary competitor is Assured, which also provides financial guarantees on non-municipal debt, including structured finance.
Removed
Risks Related to Taxation We may not meet the requirements of the five-year deferral from the Bermuda corporate income tax or the OECD Pillar Two Undertaxed Profits Rule, which could materially adversely affect our results of operations and financial condition. On December 27, 2023, Bermuda enacted a corporate income tax that will generally become effective on January 1, 2025.
Added
BAM and Assured each seek to differentiate themselves through risk selection, financial strength ratings, claims paying resources and underwriting strategies.

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Item 2. Properties

Properties — owned and leased real estate

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In addition, White Mountains maintains a professional office in Guilford, Connecticut, which houses its corporate finance and investment functions, and in Boston, Massachusetts, which houses its corporate accounting, reporting and internal audit functions. All of the Company’s professional offices are leased. HG Global’s, WM Outrigger Re’s and Ark’s headquarters are located in Hamilton, Bermuda.
In addition, White Mountains maintains professional offices in Guilford, Connecticut, which houses its corporate finance and investment functions, and Boston, Massachusetts, which houses its corporate accounting, reporting and internal audit functions. All of the Company’s professional offices are leased. HG Global’s, WM Outrigger Re’s and Ark’s headquarters are located in Hamilton, Bermuda.
In addition, Ark maintains underwriting offices in London, England and Hamilton, Bermuda. BAM’s and Kudu’s headquarters are located in New York, New York. The various offices and facilities of the consolidated Other Operating Businesses are owned or leased. Management considers its office facilities suitable and adequate for its current level of operations. Item 3. Legal Proceedings None. 39
In addition, Ark maintains underwriting offices in London, England and Hamilton, Bermuda. Kudu’s and WTM Partners’s headquarters are located in New York, New York. Bamboo’s headquarters are located in Midvale, Utah. The various offices and facilities of the consolidated Other Operating Businesses are owned or leased.
Added
Management considers its office facilities suitable and adequate for its current level of operations. 42 Item 3. Legal Proceedings None.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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ITEM 3. Legal Proceedings 39 ITEM 4. Mine Safety Disclosures 40 Available Information 40 Information About Our Executive Officers 40 PART II ITEM 5. Market for the Company’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities 41
ITEM 3. Legal Proceedings 43 ITEM 4. Mine Safety Disclosures 43 Available Information 43 Information About Our Executive Officers 43 PART II ITEM 5. Market for the Company’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities 44

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Seelig Executive Vice President and General Counsel 55 2002 All executive officers of the Company and its subsidiaries are elected by the Board for a term of one year or until their successors have been elected and have duly qualified. Information with respect to the principal occupation and relevant business experience of the Executive Officers follows: Mr.
Seelig Executive Vice President and General Counsel 56 2002 All executive officers of the Company and its subsidiaries are elected by the Board for a term of one year or until their successors have been elected and have duly qualified. Information with respect to the principal occupation and relevant business experience of the Executive Officers follows: Mr.
Hildreth spent 13 years with PricewaterhouseCoopers. Mr. Seelig is Executive Vice President and General Counsel of the Company. Prior to joining White Mountains in 2002, Mr. Seelig was with the law firm of Cravath, Swaine & Moore. 40 PART II
Hildreth spent 13 years with PricewaterhouseCoopers. Mr. Seelig is Executive Vice President and General Counsel of the Company. Prior to joining White Mountains in 2002, Mr. Seelig was with the law firm of Cravath, Swaine & Moore. 43 PART II
Caffrey served as Chief Executive Officer of Aon’s Global Affinity business. Prior to that, he served as Chief Financial Officer of Aon Risk Solutions globally and as Chief Financial Officer of Aon Risk Solutions Americas. Prior to joining Aon, Mr. Caffrey spent 12 years with McKinsey & Company. Ms.
Prior to joining White Mountains in March 2022, Mr. Caffrey served as Chief Executive Officer of Aon’s Global Affinity business. Prior to that, he served as Chief Financial Officer of Aon Risk Solutions globally and as Chief Financial Officer of Aon Risk Solutions Americas. Prior to joining Aon, Mr. Caffrey spent 12 years with McKinsey & Company. Mr.
INFORMATION ABOUT OUR EXECUTIVE OFFICERS (as of February 23, 2024) Name Position Age Executive Officer Since G. Manning Rountree Chief Executive Officer 51 2009 Liam P. Caffrey Executive Vice President and Chief Financial Officer 51 2022 Michaela J. Hildreth Managing Director and Chief Accounting Officer 56 2021 Robert L.
INFORMATION ABOUT OUR EXECUTIVE OFFICERS (as of February 27, 2025) Name Position Age Executive Officer Since G. Manning Rountree Chief Executive Officer 52 2009 Liam P. Caffrey President and Chief Financial Officer 52 2022 Giles E. Harrison Executive Vice President and Chief Strategy Officer 56 2024 Michaela J. Hildreth Managing Director and Chief Accounting Officer 57 2021 Robert L.
Rountree was a Senior Vice President at Putnam Investments for two years. Prior to joining Putnam Investments, Mr. Rountree spent three years with McKinsey & Company. Mr. Rountree also serves as a director of BAM. Mr. Caffrey was appointed Executive Vice President and Chief Financial Officer of the Company in March 2022. Prior to joining the Company, Mr.
Rountree was a Senior Vice President at Putnam Investments for two years. Prior to joining Putnam Investments, Mr. Rountree spent three years with McKinsey & Company. Mr. Caffrey was appointed as President and Chief Financial Officer of the Company in April 2024. Prior to that, he served as Executive Vice President and Chief Financial Officer of the Company.
Added
Harrison was appointed Executive Vice President and Chief Strategy Officer of the Company in June 2024. Prior to joining White Mountains, Mr. Harrison worked for the Zurich Insurance Group from 2015 to 2024, most recently as the Chief Financial Officer of Farmers Group, Inc.
Added
Prior to joining Farmers, he was CEO of Regional Markets EMEA for Zurich Insurance Group, based in Zurich. Prior to this, he led the Zurich Group’s mergers, acquisitions and partnership activities globally. Prior to Zurich, Mr. Harrison was an investment banker at Lehman Brothers and HSBC. Mr. Harrison also serves as a director of BAM. Ms.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Cumulative returns for the five-year period ended December 31, 2023 are also shown for the Standard & Poor’s 500 Stocks Capitalization Weighted Index (“S&P 500”) and the Standard & Poor’s 500 Stocks (Property & Casualty) Capitalization Weighted Index (“S&P P&C”) for comparison.
Cumulative returns for the five-year period ended December 31, 2024 are also shown for the Standard & Poor’s 500 Stocks Capitalization Weighted Index (“S&P 500”) and the Standard & Poor’s 500 Stocks (Property & Casualty) Capitalization Weighted Index (“S&P P&C”) for comparison.
For information on securities authorized for issuance under the Company’s equity compensation plans, see “ Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ” on page 99 . The following graph presents the five-year cumulative total return for a shareholder who invested $100 in common shares as of December 31, 2018, assuming re-investment of dividends.
For information on securities authorized for issuance under the Company’s equity compensation plans, see “ Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ” on page 104 . The following graph presents the five-year cumulative total return for a shareholder who invested $100 in common shares as of December 31, 2019, assuming re-investment of dividends.
Purchases of Equity Securities by the Company The following table provides information regarding common shares repurchased by the Company during the fourth quarter of 2023: 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) October 1 - October 31, 2023 — $ — — 301,014 November 1 - November 30, 2023 — $ — — 301,014 December 1 - December 31, 2023 — $ — — 301,014 Total — $ — — 301,014 (1) White Mountains’s board of directors has authorized the Company to repurchase its common shares, from time to time, subject to market conditions.
Purchases of Equity Securities by the Company The following table provides information regarding common shares repurchased by the Company during the fourth quarter of 2024: 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) October 1 - October 31, 2024 — $ — — 301,014 November 1 - November 30, 2024 — $ — — 301,014 December 1 - December 31, 2024 — $ — — 301,014 Total — $ — — 301,014 (1) The Company’s Board of Directors has authorized it to repurchase its common shares, from time to time, subject to market conditions.
Item 5. Market for the Company’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities White Mountains’s common shares are listed on the New York Stock Exchange (symbol “WTM”) and the Bermuda Stock Exchange (symbol “WTM-BH”). As of February 21, 2024, there were 234 registered holders of White Mountains common shares, par value $1.00 per share.
Item 5. Market for the Company’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities White Mountains’s common shares are listed on the New York Stock Exchange (symbol “WTM”) and the Bermuda Stock Exchange (symbol “WTM-BH”). As of February 24, 2025, there were 231 registered holders of White Mountains common shares, par value $1.00 per share.
The repurchase authorizations do not have a stated expiration date. Item 6. Selected Financial Data None. 41
The repurchase authorizations do not have a stated expiration date. Item 6. Reserved None. 44

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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ITEM 6. Selected Financial Data 41 ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 42 Results of Operations 42 Liquidity and Capital Resources 67 Transactions with Related Persons 73 Non-GAAP Financial Measures 73 Critical Accounting Estimates 74 Forward-Looking Statements 95 ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 96 ITEM 8.
ITEM 6. Reserved 44 ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 45 Results of Operations 45 Liquidity and Capital Resources 74 Transactions with Related Persons 79 Non-GAAP Financial Measures 79 Critical Accounting Estimates 81 Forward-Looking Statements 101 ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 101 ITEM 8.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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White Mountains’s total consolidated portfolio return on invested assets, both including and excluding White Mountains’s investment in MediaAlpha, was 11.4% in 2023. The total consolidated portfolio return included $27 million of net unrealized investment gains from White Mountains’s investment in MediaAlpha in 2023.
White Mountains’s total consolidated portfolio return on invested assets, both including and excluding White Mountains’s investment in MediaAlpha, was 11.4% in 2023. The total consolidated portfolio return included $27 million of net unrealized investment gains from White Mountains’s investment in MediaAlpha.
Of this payment, $18 million was a repayment of principal held in the Supplemental Trust, $2 million was a payment of accrued interest held in the Supplemental Trust and $7 million was a payment of accrued interest held outside the Supplemental Trust.
Of this payment, $18 million was a repayment of principal held in the Supplemental Trust, $2 million was a payment of accrued interest held in the Supplemental Trust and $7 million was a payment of accrued interest held outside the Supplemental Trust.
Ark categorizes and tracks insurance and reinsurance reserves by “reserving class of business” for each underwriting office, London and Bermuda, and then aggregates the reserving classes by line of business, which are summarized herein as property and accident & health, specialty, marine & energy, casualty-active and casualty-runoff.
Ark categorizes and tracks insurance and reinsurance reserves by “reserving class of business” for each underwriting office, London and Bermuda, and then aggregates the reserving classes by line of business, which are summarized herein as property and accident & health, marine & energy, specialty, casualty-active and casualty-runoff.
The difference between White Mountains’s effective tax rate and the current U.S. statutory rate of 21% was driven primarily by losses generated in jurisdictions with lower tax rates than the United States, a full valuation allowance on net deferred tax assets in certain U.S. operations (consisting of Other Operations and BAM), withholding taxes and state income taxes.
The difference between White Mountains’s effective tax rate and the current U.S. statutory rate of 21% was driven primarily by losses generated in jurisdictions with lower tax rates than the United States, a full valuation allowance on net deferred tax assets in certain U.S. operations (consisting of Other Operations and BAM), withholding taxes and state income taxes. IV.
On an ongoing basis, management evaluates its estimates and bases its estimates on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. 1.
On an ongoing basis, management evaluates its estimates and bases its estimates on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. 81 1.
Valuation of PassportCard/DavidShield On a quarterly basis, White Mountains values its investment in PassportCard/DavidShield using a discounted cash flow analysis. The discounted cash flow analysis used to fair value PassportCard/DavidShield includes key inputs, such as projections of future revenues and earnings, a discount rate and a terminal revenue growth rate.
On a quarterly basis, White Mountains values its investment in PassportCard/DavidShield using a discounted cash flow analysis. The discounted cash flow analysis used to fair value PassportCard/DavidShield includes key inputs, such as projections of future revenues and earnings, a discount rate and a terminal revenue growth rate.
The increase in gross written premiums was driven primarily by the property line of business for both insurance and reinsurance across London and Bermuda, reflecting the rate environment and additional capacity provided by Outrigger Re Ltd., as well as the specialty and marine & energy lines of business.
The increase in gross written premiums was driven primarily by the property line of business for both insurance and reinsurance across London and Bermuda, reflecting the strong rate environment and additional capacity provided by Outrigger Re Ltd., as well as the specialty and marine & energy lines of business.
Fixed Income Results White Mountains’s fixed income portfolio, including short-term investments, was $3.6 billion and $2.8 billion as of December 31, 2023 and 2022, which represented 56% and 55% of total invested assets. The duration of White Mountains’s fixed income portfolio, including short-term investments, was 1.9 years and 2.3 years as of December 31, 2023 and 2022.
Fixed Income Results White Mountains’s fixed income portfolio, including short-term investments, totaled $3.6 billion and $2.8 billion as of December 31, 2023 and 2022, which represented 56% and 55% of total invested assets. The duration of White Mountains’s fixed income portfolio, including short-term investments, was 1.9 years and 2.3 years as of December 31, 2023 and 2022.
A description of each adjustment follows: • Net realized and unrealized investment gains (losses) - Represents net unrealized investment gains and losses on Kudu’s Participation Contracts, which are recorded at fair value under GAAP, and net realized investment gains and losses on Kudu’s Participation Contracts sold during the period. • Non-cash equity-based compensation expense - Represents non-cash expenses related to Kudu’s management compensation that are settled with equity units in Kudu. • Transaction expenses - Represents costs directly related to Kudu’s mergers and acquisitions activity, such as external lawyer, banker, consulting and placement agent fees, which are not capitalized and are expensed under GAAP.
A description of each item follows: • Net realized and unrealized investment gains (losses) - Represents net unrealized investment gains and losses on Kudu’s Participation Contracts, which are recorded at fair value under GAAP, and realized investment gains and losses recorded on Kudu’s Participation Contracts sold during the period. • Non-cash equity-based compensation expense - Represents non-cash expenses related to Kudu’s management compensation that are settled with equity units in Kudu. • Transaction expenses - Represents costs directly related to Kudu’s mergers and acquisitions activity, such as external lawyer, banker, consulting and placement agent fees, which are not capitalized and are expensed under GAAP.
White Mountains assumes no obligation to publicly update any such forward-looking statements, whether as a result of new information, future events or otherwise.
White Mountains assumes no obligation to publicly update any such forward-looking statements, whether as a result of new information, future events or otherwise. 101
The estimated payments reflected in the table are based on current accrual factors (including performance relative to targets and common share price) and assume that all outstanding balances were 100% vested as of December 31, 2023. There are no provisions within White Mountains’s operating lease agreements that would trigger acceleration of future lease payments.
The estimated payments reflected in the table are based on current accrual factors (including performance relative to targets and common share price) and assume that all outstanding balances were 100% vested as of December 31, 2024. There are no provisions within White Mountains’s operating lease agreements that would trigger acceleration of future lease payments.
White Mountains believes this measure to be useful to management and investors by showing the underlying performance of White Mountains’s investment portfolio without regard to MediaAlpha.
White Mountains believes this measure to be useful to management and investors by showing the underlying performance of White Mountains’s investment portfolio without regard to White Mountains’s investment in MediaAlpha.
White Mountains cannot promise that its expectations in such forward-looking statements will turn out to be correct. White Mountains’s actual results could be materially different from and worse than its expectations. See “ FORWARD-LOOKING STATEMENTS ” on page 95 for specific important factors that could cause actual results to differ materially from those contained in forward-looking statements.
White Mountains cannot promise that its expectations in such forward-looking statements will turn out to be correct. White Mountains’s actual results could be materially different from and worse than its expectations. See “ FORWARD-LOOKING STATEMENTS ” on page 101 for specific important factors that could cause actual results to differ materially from those contained in forward-looking statements.
See Note 5 — “Loss and Loss Adjustment Expense Reserves” on page F- 33 for a description of Ark’s loss and LAE reserves and actuarial methods. Ark performs an actuarial review of its recorded loss and LAE reserves each quarter, using several generally accepted actuarial methods to evaluate its loss reserves, each of which has its own strengths and weaknesses.
See Note 5 — “Loss and Loss Adjustment Expense Reserves” on page F- 34 for a description of Ark’s loss and LAE reserves and actuarial methods. Ark performs an actuarial review of its recorded loss and LAE reserves each quarter, using several generally accepted actuarial methods to evaluate its loss reserves, each of which has its own strengths and weaknesses.
For segment reporting, HG Global’s intercompany interest expense included within the HG Global/BAM segment is eliminated against the offsetting intercompany interest income included within Other Operations.
For segment reporting, HG Global’s intercompany interest expense included within the HG Global segment is eliminated against the offsetting intercompany interest income included within Other Operations.
The top section of the table presents, for each of the previous 10 accident years, (1) cumulative total undiscounted incurred loss and LAE as of each of the previous 10 year-end evaluations, (2) total IBNR plus expected development on reported claims as of December 31, 2023 and (3) the cumulative number of reported claims as of December 31, 2023.
The top section of the table presents, for each of the previous 10 accident years, (1) cumulative total undiscounted incurred loss and LAE as of each of the previous 10 year-end evaluations, (2) total IBNR plus expected development on reported claims as of December 31, 2024 and (3) the cumulative number of reported claims as of December 31, 2024.
Based on a debt service model that forecasts operating results for BAM through maturity of the BAM Surplus Notes, the present value of the BAM Surplus Notes, including accrued interest and using an 8.0% discount rate, was estimated to be $91 million, $98 million and $130 million less than the nominal GAAP carrying values as of December 31, 2023, 2022 and 2021, respectively.
Based on a debt service model that forecasts operating results for BAM through maturity of the BAM Surplus Notes, the present value of the BAM Surplus Notes, including accrued interest and using an 8% discount rate, was estimated to be $91 million and $98 million less than the nominal GAAP carrying values as of December 31, 2023 and 2022, respectively.
For example, the first column is calculated as the incremental paid loss and LAE in the first calendar year for each given accident year (e.g., calendar year 2023 for accident year 2023, calendar year 2022 for accident year 2022) divided by the cumulative incurred loss and LAE as of December 31, 2023 for that accident year.
For example, the first column is calculated as the incremental paid loss and LAE in the first calendar year for each given accident year (e.g., calendar year 2024 for accident year 2024, calendar year 2023 for accident year 2023) divided by the cumulative incurred loss and LAE as of December 31, 2024 for that accident year.
The increase in net investment income in 2023 compared to 2022 was driven primarily by amounts earned from $266 million in new deployments that Kudu made during 2023 and 2022 and a $12 million realization of carried interest for one of Kudu’s Participation Contracts, partially offset by the negative impact on net investment income from recent sale transactions.
The increase in net investment income was driven primarily by amounts earned from $266 million in new deployments that Kudu made during 2022 and 2023 and a $12 million realization of carried interest for one of Kudu’s Participation Contracts, partially offset by the negative impact on net investment income from sale transactions.
The discounted cash flow analyses used to fair value Kudu’s Participation Contracts include key inputs, such as projections of future revenues and earnings of Kudu’s underlying managers, a discount rate and a terminal cash flow exit multiple. The expected future cash flows are based on management judgment, considering current performance, budgets and projected future results.
The discounted cash flow analyses used to fair value Kudu’s Participation Contracts include key inputs, such as projections of future revenues and earnings of Kudu’s investees, a discount rate and a terminal cash flow exit multiple. The expected future cash flows are based on management judgment, considering current performance, budgets and projected future results.
However, White Mountains can provide no assurance that, if needed, it would be able to obtain additional debt or equity financing on satisfactory terms, if at all. It is possible that, in the future, one or more of the rating agencies may lower White Mountains’s and its subsidiaries’ existing ratings.
However, White Mountains can provide no assurance that, if needed, it would be able to obtain additional debt or equity financing on satisfactory terms, if at all. It is possible that, in the future, one or more of the rating agencies may lower White Mountains’s existing ratings.
The discount rates reflect the weighted average cost of capital, considering comparable public company data and adjusted for risks specific to the business and industry. The terminal cash flow exit multiple is generally based on expectations of annual cash flow to Kudu from each of its underlying managers in the terminal year of the discounted cash flow analysis.
The discount rates reflect the weighted average cost of capital, considering comparable public company data and adjusted for risks specific to the business and industry. The terminal cash flow exit multiple is generally based on expectations of annual cash flow to Kudu from each of its investees in the terminal year of the discounted cash flow analysis.
Range of Reserves The following table shows the recorded loss and LAE reserves and the high and low ends of Ark’s range of reasonable loss and LAE reserve estimates, net of reinsurance recoverables on unpaid losses, as of December 31, 2023.
Range of Reserves The following table shows the recorded loss and LAE reserves and the high and low ends of Ark’s range of reasonable loss and LAE reserve estimates, net of reinsurance recoverables on unpaid losses, as of December 31, 2024.
The results in 2022 were driven primarily by net unrealized investment losses due to the impact of rising interest rates on White Mountains’s short duration portfolio, partially offset by net investment income. 62 Common Equity Securities, Investment in MediaAlpha and Other Long-Term Investments Results White Mountains’s portfolio of common equity securities, its investment in MediaAlpha and other long-term investments was $2.8 billion and $2.3 billion as of December 31, 2023 and 2022, which represented 44% and 45% of total invested assets.
The results in 2022 were driven primarily by net unrealized investment losses due to the impact of rising interest rates on White Mountains’s short duration portfolio, partially offset by net investment income. 70 Common Equity Securities, Investment in MediaAlpha and Other Long-Term Investments Results White Mountains’s portfolio of common equity securities, its investment in MediaAlpha and other long-term investments totaled $2.8 billion and $2.3 billion as of December 31, 2023 and 2022, which represented 44% and 45% of total invested assets.
The following table presents common shares repurchased by the Company as well as the average price per share as a percent of December 31, 2023 GAAP book value per share, adjusted book value per share and market value per share.
The following table presents common shares repurchased by the Company as well as the average price per share as a percent of December 31, 2024 GAAP book value per share, adjusted book value per share and market value per share.
Also included in this section is a calculation of the loss and LAE reserves as of December 31, 2023, which is then included in the reconciliation to the consolidated balance sheet presented above.
Also included in this section is a calculation of the loss and LAE reserves as of December 31, 2024, which is then included in the reconciliation to the consolidated balance sheet presented above.
Of the shares White Mountains repurchased in 2022, 4,011 were to satisfy employee income tax withholding pursuant to employee benefit plans. During 2022, HG Global received net proceeds of $147 million from the issuance of the HG Global Senior Notes. During 2022, BAM received $81 million in MSC.
Of the shares White Mountains repurchased in 2022, 4,011 were to satisfy employee income tax withholding pursuant to employee benefit plans. During 2022, HG Global received net proceeds of $147 million from the issuance of the HG Global Senior Notes.
White Mountains expects to meet the requirements to be exempt from the Luxembourg UTPR until January 1, 2030. On July 11, 2023, the U.K. enacted conforming legislation adopting the Pillar Two IIR and the associated QDMTT which will become effective for fiscal years beginning on or after December 31, 2023.
White Mountains expects to meet the requirements to be exempt from the Luxembourg UTPR until January 1, 2030. On July 11, 2023, the U.K. enacted conforming legislation adopting the Pillar Two IIR and QDMTT, which became effective for fiscal years beginning on or after December 31, 2023.
WM Outrigger Re does not require regulatory approval to pay dividends; however, its dividend capacity is limited to amounts held outside of the collateral trust pursuant to the reinsurance agreement with GAIL. As of December 31, 2023, WM Outrigger Re had less than $1 million of net unrestricted cash and investments held outside the collateral trust.
WM Outrigger Re does not require regulatory approval to pay dividends; however, its dividend capacity is limited to amounts held outside of the collateral trust pursuant to its reinsurance agreement with GAIL. As of December 31, 2024, WM Outrigger Re had less than $1 million of net unrestricted cash held outside the collateral trust.
The following table presents return reconciliations from GAAP to the reported percentages: Year Ended December 31, 2023 2022 Total consolidated portfolio return 11.4 % (1.6) % Remove MediaAlpha — % 1.9 % Total consolidated portfolio return excluding MediaAlpha 11.4 % 0.3 % Total adjusted capital Total capital at White Mountains is comprised of White Mountains’s common shareholders’ equity, debt and noncontrolling interests other than noncontrolling interests attributable to BAM.
The following table presents return reconciliations from GAAP to the reported percentages: Year Ended December 31, 2024 2023 Total consolidated portfolio return 6.9 % 11.4 % Remove MediaAlpha (0.4) — Total consolidated portfolio return excluding MediaAlpha 6.5 % 11.4 % Total adjusted capital and total debt to total adjusted capital Total capital at White Mountains is comprised of White Mountains’s common shareholders’ equity, debt and noncontrolling interests other than noncontrolling interests attributable to BAM.
The effective rate was also different from the U.S. statutory rate of 21% due to the recording of a $68 million deferred tax benefit related to the Bermuda economic transition adjustment. White Mountains reported income tax expense of $41 million in 2022 on pre-tax loss from continuing operations of $149 million.
The effective rate also differed from the U.S. statutory rate of 21% due to the recording of the $68 million deferred tax benefit related to the Bermuda economic transition adjustment. White Mountains reported income tax expense of $41 million in 2022 on pre-tax loss from continuing operations of $149 million.
White Mountains also has future binding commitments to fund certain other long-term investments. These commitments, which totaled approximately $61 million as of December 31, 2023, do not have fixed funding dates and are therefore excluded from the table above.
White Mountains also has future binding commitments to fund certain other long-term investments. These commitments, which totaled approximately $94 million as of December 31, 2024, do not have fixed funding dates and are therefore excluded from the table above.
See Note 3 — “Investment Securities ” . White Mountains’s portfolio of common equity securities, its investment in MediaAlpha and other long-term investments returned 18.5% in 2023, which included $27 million of net unrealized investment gains from MediaAlpha. White Mountains’s portfolio of common equity securities and other long-term investments returned 19.0% in 2023.
See Note 3 — “Investment Securities ” on page F- 21 . White Mountains’s portfolio of common equity securities, its investment in MediaAlpha and other long-term investments returned 18.5% in 2023, which included $27 million of net unrealized investment gains from MediaAlpha. White Mountains’s portfolio of common equity securities and other long-term investments returned 19.0% in 2023.
On December 27, 2023, Bermuda enacted a 15% corporate income tax that will generally become effective on January 1, 2025. White Mountains expects to meet the requirements to be exempt from the Bermuda corporate income tax and the Pillar Two worldwide minimum tax until January 1, 2030.
Bermuda Corporate Income Tax On December 27, 2023, Bermuda enacted a 15% corporate income tax that became effective on January 1, 2025. White Mountains expects to meet the requirements to be exempt from the Bermuda corporate income tax and the Pillar Two worldwide minimum tax until January 1, 2030.
The increase in general and administrative expenses in 2023 compared to 2022 was driven primarily by two acquisitions within Other Operations in the second half of 2022, partially offset by a decrease due to the recent sale within Other Operations and lower parent company compensation and benefits.
The increase in general and administrative expenses in 2023 compared to 2022 was driven primarily by two acquisitions within Other Operations in the second half of 2022, partially offset by a decrease due to the business sold within Other Operations in 2023 and lower parent company compensation and benefits.
The EU Minimum Tax Directive requires European Union Member States to enact conforming law by December 31, 2023. The main rule of the EU Minimum Tax Directive, the IIR will become effective for fiscal years beginning on or after December 31, 2023, while the UTPR will become effective for fiscal years beginning on or after December 31, 2024.
The EU Minimum Tax Directive required European Union Member States to enact conforming law by December 31, 2023. The main rule of the EU Minimum Tax Directive, the IIR, was to become effective for fiscal years beginning on or after December 31, 2023, while the UTPR was to become effective for fiscal years beginning on or after December 31, 2024.
Results in 2022 were driven primarily by the net gain of $876 million from the NSM Transaction. Results in the year ended December 31, 2023 also included $27 million of unrealized investment gains (losses) from White Mountains’s investment in MediaAlpha compared to $(93) million in the year ended December 31, 2022.
Results in 2022 were driven primarily by the net gain of $876 million from the NSM Transaction. Results in 2023 also included $27 million of unrealized investment gains (losses) from White Mountains’s investment in MediaAlpha compared to $(93) million in 2022.
The GAAP book value per share numerator is adjusted (i) to add back the unearned premium reserve, net of deferred acquisition costs, at HG Global and (ii) to include a discount for the time value of money arising from the modeled timing of cash payments of principal and interest on the BAM Surplus Notes.
The GAAP book value per share numerator is adjusted (i) for periods prior to July 1, 2024, to include a discount for the time value of money arising from the modeled timing of cash payments of principal and interest on the BAM Surplus Notes and (ii) for all periods, to add back the unearned premium reserve, net of deferred acquisition costs, at HG Global.
White Mountains believes this information is useful to management and investors in evaluating Ark’s loss and LAE reserves on a fully aligned basis (i.e., 100% of the Syndicates’ results) by excluding the impact of changing levels of TPC Providers’ participation from one year of account to the next.
White Mountains believes this information is useful to management and investors in evaluating Ark’s loss and LAE reserves on a fully aligned basis (i.e., 100% of the Syndicates’ results) by excluding the impact of changing levels of TPC Providers’ participation from one year of account to the next. Each of the ten tables includes three sections.
Total adjusted capital is a non-GAAP financial measure, which is derived by adjusting total capital (i) to include a discount for the time value of money arising from the expected timing of cash payments of principal and interest on the BAM Surplus Notes and (ii) to add back the unearned premium reserve, net of deferred acquisition costs, at HG Global.
Total adjusted capital is a non-GAAP financial measure, which is derived by adjusting total capital (i) for periods prior to July 1, 2024, to include a discount for the time value of money arising from the modeled timing of cash payments of principal and interest on the BAM Surplus Notes and (ii) to add back the unearned premium reserve, net of deferred acquisition costs, at HG Global.
White Mountains maintains a portfolio of other long-term investments that consists primarily of unconsolidated entities, including Kudu’s Participation Contracts, private equity funds and hedge funds, a bank loan fund, Lloyd’s trust deposits, ILS funds and private debt instruments. White Mountains’s portfolio of other long-term investments was $2.0 billion and $1.5 billion as of December 31, 2023 and 2022.
White Mountains maintains a portfolio of other long-term investments that consists primarily of unconsolidated entities, including Kudu’s Participation Contracts, private equity funds and hedge funds, a bank loan fund, Lloyd’s trust deposits, ILS funds and private debt instruments. White Mountains’s portfolio of other long-term investments totaled $2.2 billion and $2.0 billion as of December 31, 2024 and 2023.
As of December 31, 2023, Ark and its intermediate holding companies had $1 million of net unrestricted cash, short-term investments and fixed maturity investments outside of its regulated and unregulated insurance and reinsurance operating subsidiaries. WM Outrigger Re is a special purpose insurer subject to regulation and supervision by the BMA.
As of December 31, 2024, Ark and its intermediate holding companies had $6 million of net unrestricted cash and short-term investments outside of its regulated and unregulated insurance and reinsurance operating subsidiaries. WM Outrigger Re is a special purpose insurer subject to regulation and supervision by the BMA.
White Mountains’s fixed income portfolio includes fixed maturity and short-term investments held on deposit or as collateral. See Note 3 — “Investment Securities” . White Mountains’s fixed income portfolio returned 5.8% in 2023 compared to -4.8% in 2022, outperforming the Bloomberg Barclays U.S. Intermediate Aggregate Index returns of 5.2% and -9.5% for the comparable periods.
White Mountains’s fixed income portfolio includes fixed maturity and short-term investments held on deposit or as collateral. See Note 3 — “Investment Securities ” on page F- 21 . White Mountains’s fixed income portfolio returned 5.8% in 2023 compared to -4.8% in 2022, outperforming the Bloomberg U.S. Intermediate Aggregate Index returns of 5.2% and -9.5% for the comparable periods.
Total revenues and pre-tax income in 2023 included $71 million of net investment income and $106 million of net realized and unrealized investment gains compared to $54 million and $64 million in 2022. Kudu deployed $172 million, including transaction costs, into seven asset management firms in 2023.
Total revenues and pre-tax income in 2023 included $71 million of net investment income and $106 million of net realized and unrealized investment gains compared to $54 million and $64 million in 2022. Kudu deployed $165 million, including transaction costs, into five new asset management firms in 2023.
However, whether actual results and developments will conform to its expectations and predictions is subject to risks and uncertainties that could cause actual results to differ materially from expectations, including: • the risks associated with Item 1A of this Report on Form 10-K; • claims arising from catastrophic events, such as hurricanes, windstorms, earthquakes, floods, wildfires, tornadoes, tsunamis, severe weather, public health crises, terrorist attacks, war and war-like actions, explosions, infrastructure failures or cyber attacks; • recorded loss reserves subsequently proving to have been inadequate; • the market value of White Mountains’s investment in MediaAlpha; • the trends and uncertainties from the COVID-19 pandemic, including judicial interpretations on the extent of insurance coverage provided by insurers for COVID-19 pandemic related claims; • business opportunities (or lack thereof) that may be presented to it and pursued; • actions taken by rating agencies, such as financial strength or credit ratings downgrades or placing ratings on negative watch; • the continued availability of capital and financing; • the continued availability of fronting and reinsurance capacity; • deterioration of general economic, market or business conditions, including due to outbreaks of contagious disease (including the COVID-19 pandemic) and corresponding mitigation efforts; • competitive forces, including the conduct of other insurers; • changes in domestic or foreign laws or regulations, or their interpretation, applicable to White Mountains, its competitors or its customers; and • other factors, most of which are beyond White Mountains’s control. 95 Consequently, all of the forward-looking statements made in this report are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by White Mountains will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, White Mountains or its business or operations.
However, whether actual results and developments will conform to its expectations and predictions is subject to risks and uncertainties that could cause actual results to differ materially from expectations, including: • the risks associated with Item 1A of this Report on Form 10-K; • claims arising from catastrophic events, such as hurricanes, windstorms, earthquakes, floods, wildfires, tornadoes, tsunamis, severe weather, public health crises, terrorist attacks, war and war-like actions, explosions, infrastructure failures or cyber-attacks; • recorded loss reserves subsequently proving to have been inadequate; • the market value of White Mountains’s investment in MediaAlpha; • the trends and uncertainties from the COVID-19 pandemic, including judicial interpretations on the extent of insurance coverage provided by insurers for COVID-19 pandemic related claims; • business opportunities (or lack thereof) that may be presented to it and pursued; • actions taken by rating agencies, such as financial strength or credit ratings downgrades or placing ratings on negative watch; • the continued availability of capital and financing; • the continued availability of fronting and reinsurance capacity; • deterioration of general economic, market or business conditions, including due to outbreaks of contagious disease (including the COVID-19 pandemic) and corresponding mitigation efforts; • competitive forces, including the conduct of other insurers; • changes in domestic or foreign laws or regulations, or their interpretation, applicable to White Mountains, its competitors or its customers; and • other factors, most of which are beyond White Mountains’s control.
White Mountains believes these measures to be useful in evaluating White Mountains’s financial performance and condition. RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021 Overview—Year Ended December 31, 2023 versus Year Ended December 31, 2022 White Mountains ended 2023 with book value per share of $1,656 and adjusted book value per share of $1,704.
White Mountains believes these measures to be useful in evaluating White Mountains’s financial performance and condition. RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2024, 2023 AND 2022 Overview—Year Ended December 31, 2024 versus Year Ended December 31, 2023 White Mountains ended 2024 with book value per share of $1,746 and adjusted book value per share of $1,834.
(2) MSC collected are recorded directly to BAM’s equity, which is recorded as noncontrolling interest on White Mountains’s balance sheet. 47 December 31, 2022 Millions HG Global BAM Eliminations Total Direct written premiums $ — $ 63.8 $ — $ 63.8 Assumed written premiums 55.9 1.3 (55.9) 1.3 Gross written premiums 55.9 65.1 (55.9) 65.1 Ceded written premiums — (55.9) 55.9 — Net written premiums $ 55.9 $ 9.2 $ — $ 65.1 Earned insurance and reinsurance premiums $ 27.5 $ 5.8 $ — $ 33.3 Net investment income (loss) 10.3 11.2 — 21.5 Net investment income (loss) - BAM Surplus Notes 11.7 — (11.7) — Net realized and unrealized investment gains (losses) (52.5) (53.3) — (105.8) Other revenues .5 4.1 — 4.6 Total revenues (2.5) (32.2) (11.7) (46.4) Insurance and reinsurance acquisition expenses 9.3 1.9 — 11.2 General and administrative expenses 2.8 66.3 — 69.1 Interest expense 8.3 — — 8.3 Interest expense - BAM Surplus Notes — 11.7 (11.7) — Total expenses 20.4 79.9 (11.7) 88.6 Pre-tax income (loss) $ (22.9) $ (112.1) $ — $ (135.0) Supplemental information: MSC collected (1) $ — $ 81.4 $ — $ 81.4 (1) MSC collected are recorded directly to BAM’s equity, which is recorded as noncontrolling interest on White Mountains’s balance sheet.
December 31, 2022 Millions HG Global BAM Eliminations Total Direct written premiums $ — $ 63.8 $ — $ 63.8 Assumed written premiums 55.9 1.3 (55.9) 1.3 Gross written premiums 55.9 65.1 (55.9) 65.1 Ceded written premiums — (55.9) 55.9 — Net written premiums $ 55.9 $ 9.2 $ — $ 65.1 Earned insurance and reinsurance premiums $ 27.5 $ 5.8 $ — $ 33.3 Net investment income 10.3 11.2 — 21.5 Net realized and unrealized investment gains (losses) (52.5) (53.3) — (105.8) Interest income from BAM Surplus Notes 11.7 — (11.7) — Other revenues .5 4.1 — 4.6 Total revenues (2.5) (32.2) (11.7) (46.4) Insurance and reinsurance acquisition expenses 9.3 1.9 — 11.2 General and administrative expenses 2.8 66.3 — 69.1 Interest expense 8.3 — — 8.3 Interest expense from BAM Surplus Notes — 11.7 (11.7) — Total expenses 20.4 79.9 (11.7) 88.6 Pre-tax income (loss) $ (22.9) $ (112.1) $ — $ (135.0) Supplemental information: MSC collected (1) $ — $ 81.4 $ — $ 81.4 (1) MSC collected are recorded directly to BAM’s equity, which is recorded as noncontrolling interest on White Mountains’s balance sheet. 59 HG Global Results—Year Ended December 31, 2024 versus Year Ended December 31, 2023 Effective July 1, 2024, White Mountains no longer consolidates BAM.
As time has passed, the emerging claims information for major loss events has been better than expected. As of December 31, 2023, Ark has recorded $75 million of loss and LAE reserves, net of reinsurance recoverables on unpaid losses, for major loss events, of which $48 million is held as IBNR reserves.
As time has passed, the emerging claims information for major loss events has been better than expected. As of December 31, 2024, Ark has recorded $158 million of loss and LAE reserves, net of reinsurance recoverables on unpaid losses, for major loss events, of which $135 million is held as IBNR reserves.
To qualify for the deferral, the group must (i) have permanent establishments in six or fewer countries, (ii) have less than €50 million of net tangible assets outside of the country where the group has the largest amount of net tangible assets and (iii) not have a Bermuda company directly or indirectly owned by a parent entity that is subject to the Income Inclusion Rule of Pillar Two in any jurisdiction.
To qualify for the deferral, generally the group must (i) have consolidated affiliates and permanent establishments in six or fewer countries, (ii) have no more than €50 million of net tangible assets outside of the country where the group has the largest amount of net tangible assets and (iii) not have a consolidated Bermuda affiliate or Bermuda permanent establishment directly or indirectly owned by a parent entity that is subject to the Income Inclusion Rule of Pillar Two in any jurisdiction.
Kudu also provides strategic assistance to investees from time to time. As of December 31, 2023, Kudu had deployed a total of $884 million, including transaction costs, into 25 asset and wealth management firms globally, including three that have been exited.
Kudu also provides strategic assistance to investees from time to time. As of December 31, 2024, Kudu had deployed a total of $989 million, including transaction costs, into 27 asset and wealth management firms globally, including three that have been exited.
Accordingly, GAIL will have the ability to pay a dividend of up to $272 million during 2024, which is equal to 25% of its December 31, 2023 statutory capital and surplus of $1,088 million, subject to meeting all appropriate liquidity and solvency requirements and the filing of its December 31, 2023 statutory financial statements.
Accordingly, GAIL will have the ability to pay a dividend of up to $337 million during 2025, which is equal to 25% of its statutory capital and surplus of $1,347 million as of December 31, 2024, subject to meeting all appropriate liquidity and solvency requirements and the filing of its December 31, 2024 statutory financial statements.
In determining fair value, White Mountains considers factors for each underlying manager, such as performance of products and vehicles, expected client growth rates, new fund launches, fee rates by products, capacity constraints, operating cash flows and other qualitative factors, including the assessment of key personnel.
In determining fair value, White Mountains considers factors for each of Kudu’s investees, such as performance of products and vehicles, expected asset growth rates, new fund launches, fee rates by product, capacity constraints, operating cash flows and other qualitative factors, including the assessment of key personnel.
To qualify for the deferral, the group must (i) have permanent establishments in six or fewer countries and (ii) have less than €50 million of net tangible assets outside of the country where the group has the largest amount of net tangible assets.
To qualify for the deferral, generally the group must (i) have consolidated affiliates and permanent establishments in six or fewer countries and (ii) have no more than €50 million of net tangible assets outside of the country where the group has the largest amount of net tangible assets.
The combined ratio for 2023 included two points of catastrophe losses, which included losses from Hurricane Idalia, the Maui wildfires, Hurricane Otis and various smaller events, compared to 13 points in 2022, driven primarily by losses from Hurricane Ian and the conflict in Ukraine.
The combined ratio for 2023 included two points of catastrophe losses, which included losses from Hurricanes Otis and Idalia as well as the Maui wildfires, compared to 13 points in 2022, driven primarily by losses from Hurricane Ian and the conflict in Ukraine.
The combined ratio for 2023 included two points of catastrophe losses, which included losses from Hurricane Idalia, the Maui wildfires, Hurricane Otis and various smaller events, compared to 13 points of catastrophe losses in 2022, driven primarily by losses from the conflict in Ukraine and Hurricane Ian.
The combined ratio for 2023 included two points of catastrophe losses, which included losses from Hurricanes Otis and Idalia as well as the Maui wildfires, compared to 13 points of catastrophe losses in 2022, driven primarily by losses from Hurricane Ian and the conflict in Ukraine.
Losses and LAE are categorized by the year in which the policy is underwritten (the year of account, or underwriting year) for purposes of Ark’s claims management and estimation of the ultimate loss and LAE reserves.
Loss and LAE are categorized by the year in which the policy is underwritten (the year of account, or underwriting year) for purposes of Ark’s claims management and estimation of the ultimate loss and LAE reserves. For purposes of Ark’s reporting under GAAP, loss and LAE are categorized by the accident year.
White Mountains does not expect the war to have a material impact on White Mountains’s results of operations or financial condition. With a discounted cash flow analysis, small changes to key inputs may result in significant changes to fair value.
White Mountains does not anticipate the continuation of the geopolitical unrest in the region to have a material impact on White Mountains’s results of operations or financial condition. With a discounted cash flow analysis, small changes to key inputs may result in significant changes to fair value.
Gross Investment Returns and Benchmark Returns The following table presents the pre-tax investment returns for White Mountains’s consolidated portfolio for the years ended December 31, 2023, 2022 and 2021: Year Ended December 31, 2023 2022 2021 Fixed income investments 5.8 % (4.8) % (0.4) % Bloomberg Barclays U.S.
Gross Investment Returns and Benchmark Returns The following table presents the pre-tax time-weighted investment returns for White Mountains’s consolidated portfolio for the years ended December 31, 2024, 2023 and 2022: Year Ended December 31, 2024 2023 2022 Fixed income investments 4.3 % 5.8 % (4.8) % Bloomberg U.S.
White Mountains’s portfolio of common equity securities returned 13.4% in 2023 compared to -1.0% in 2022, underperforming and outperforming the S&P 500 Index returns of 26.3% and -18.1% for the comparable periods.
White Mountains’s portfolio of common equity securities was $538 million and $668 million as of December 31, 2023 and 2022. White Mountains’s portfolio of common equity securities returned 13.4% in 2023 compared to -1.0% in 2022, underperforming and outperforming the S&P 500 Index returns of 26.3% and -18.1% for the comparable periods.
SUMMARY OF OPERATIONS BY SEGMENT As of December 31, 2023, White Mountains conducted its operations through three segments: (1) HG Global/BAM, (2) Ark/WM Outrigger and (3) Kudu, with our remaining operating businesses, holding companies and other assets included in Other Operations.
SUMMARY OF OPERATIONS BY SEGMENT As of December 31, 2024, White Mountains conducted its operations through four reportable segments: (1) Ark/WM Outrigger, (2) HG Global, (3) Kudu and (4) Bamboo, with our remaining operating businesses, holding companies and other assets included in Other Operations.
The exact timing of the payment of losses cannot be predicted with certainty. White Mountains’s insurance and reinsurance operating subsidiaries maintain portfolios of invested assets with varying maturities and a substantial amount of cash and short-term investments to provide adequate liquidity for the payment of claims.
White Mountains’s insurance and reinsurance operating subsidiaries maintain portfolios of invested assets with varying maturities and a substantial amount of cash and short-term investments to provide adequate liquidity for the payment of claims.
The results in 2023 were driven primarily by net investment income from higher yields and net unrealized investment gains as interest rates declined marginally in the period.
The results in 2023 were driven primarily by net investment income and net unrealized investment gains as shorter-term interest rates declined marginally in the period.
Excluding MediaAlpha, investment returns in 2022 were driven primarily by net investment income and net realized and unrealized gains from other long-term investments, which more than offset net unrealized investment losses in the fixed income portfolio due to rising interest rates.
Excluding MediaAlpha, the total consolidated portfolio return on invested assets was 0.3% in 2022. Excluding MediaAlpha, investment returns in 2022 were driven primarily by net investment income and net realized gains from other long-term investments, which more than offset net unrealized investment losses in the fixed income portfolio due to rising interest rates.
See Note 2 — “Significant Transactions” on page F- 17 . White Mountains reported net income from discontinued operations, net of tax, for NSM Group of $16 million for the period from January 1, 2022 to August 1, 2022.
See Note 2 — “Significant Transactions” on page F- 19 . White Mountains reported net income from discontinued operations, net of tax, for NSM Group of $16 million for the period from January 1, 2022 to August 1, 2022. See Note 20 — “Held for Sale and Discontinued Operations” on page F- 73 .
Goodwill and Other Intangible Assets The following table presents goodwill and other intangible assets that are included in White Mountains’s adjusted book value as of December 31, 2023, 2022 and 2021: December 31, Millions 2023 2022 2021 Goodwill: Ark $ 116.8 $ 116.8 $ 116.8 Kudu 7.6 7.6 7.6 Other Operations 44.4 52.1 17.9 Total goodwill 168.8 176.5 142.3 Other intangible assets: Ark 175.7 175.7 175.7 Kudu .7 1.0 1.3 Other Operations 25.4 39.1 21.2 Total other intangible assets 201.8 215.8 198.2 Total goodwill and other intangible assets (1) 370.6 392.3 340.5 Total goodwill and other intangible assets attributed to noncontrolling interests (2) (94.9) (102.7) (91.8) Total goodwill and other intangible assets included in White Mountains’s common shareholders’ equity $ 275.7 $ 289.6 $ 248.7 (1) See Note 4 — “Goodwill and Other Intangible Assets” on page F- 31 for details of other intangible assets.
Goodwill and Other Intangible Assets The following table presents goodwill and other intangible assets that are included in White Mountains’s adjusted book value as of December 31, 2024, 2023 and 2022: December 31, Millions 2024 2023 2022 Goodwill: Ark $ 116.8 $ 116.8 $ 116.8 Kudu 7.6 7.6 7.6 Bamboo 270.4 — — Other Operations 44.4 44.4 52.1 Total goodwill 439.2 168.8 176.5 Other intangible assets: Ark 175.7 175.7 175.7 Kudu .4 .7 1.0 Bamboo 84.6 — — Other Operations 20.4 25.4 39.1 Total other intangible assets 281.1 201.8 215.8 Total goodwill and other intangible assets (1) 720.3 370.6 392.3 Total goodwill and other intangible assets attributed to noncontrolling interests (2) (190.5) (94.9) (102.7) Total goodwill and other intangible assets included in White Mountains’s common shareholders’ equity $ 529.8 $ 275.7 $ 289.6 (1) See Note 4 — “Goodwill and Other Intangible Assets” on page F- 32 for details of other intangible assets.
As of December 31, 2023, the combined fair value of Kudu’s Participation Contracts was $891 million. On a quarterly basis, White Mountains fair values each of Kudu’s Participation Contracts, typically using a discounted cash flow analysis.
As of December 31, 2024, the total fair value of Kudu’s Participation Contracts was $1,008 million. On a quarterly basis, White Mountains fair values each of Kudu’s Participation Contracts, typically using a discounted cash flow analysis.
During the fourth quarter of 2022, Ark sponsored the formation of Outrigger Re Ltd. to provide reinsurance protection on Ark’s Bermuda global property catastrophe excess of loss portfolio written in the 2023 underwriting year. During the fourth quarter of 2023, Ark renewed Outrigger Re Ltd. for the 2024 underwriting year.
During the fourth quarter of 2022, Ark sponsored the formation of Outrigger Re Ltd. to provide collateralized reinsurance protection on Ark’s Bermuda global property catastrophe excess of loss portfolio written in the 2023 underwriting year. Ark renewed its quota share reinsurance agreement with Outrigger Re Ltd. for the 2024 and 2025 underwriting years.
Ark reported gross written premiums of $1,898 million, net written premiums of $1,411 million and net earned premiums of $1,305 million in 2023, compared to gross written premiums of $1,452 million, net written premiums of $1,195 million and net earned premiums of $1,043 million in 2022. 55 Ark reported pre-tax income of $249 million in 2023 compared to $95 million in 2022.
Ark reported gross written premiums of $1,898 million, net written premiums of $1,411 million and net earned premiums of $1,305 million in 2023, compared to gross written premiums of $1,452 million, net written premiums of $1,195 million and net earned premiums of $1,043 million in 2022.
Revenues from leisure travel insurance placed by PassportCard grew through the first nine months of 2023 but declined significantly in the fourth quarter due to the events of October 7, 2023 and the resulting war in Gaza.
Revenues from the Israeli leisure travel insurance placed by PassportCard declined significantly in the fourth quarter of 2023 due to the events of October 7, 2023 and the resulting war in Gaza.
December 31, 2023 2022 2021 Book value per share numerators (in millions): White Mountains’s common shareholders’ equity - GAAP book value per share numerator $ 4,240.5 $ 3,746.9 $ 3,548.1 HG Global’s unearned premium reserve (1) 265.4 242.1 214.6 HG Global’s net deferred acquisition costs (1) (76.5) (69.0) (60.8) Time-value of money discount on expected future payments on the BAM Surplus Notes (1) (87.9) (95.1) (125.9) Adjusted book value per share numerator $ 4,341.5 $ 3,824.9 $ 3,576.0 Book value per share denominators (in thousands of shares): Common shares outstanding - GAAP book value per share denominator 2,560.5 2,572.1 3,017.8 Unearned restricted common shares (12.4) (14.1) (13.7) Adjusted book value per share denominator 2,548.1 2,558.0 3,004.1 GAAP book value per share $ 1,656.14 $ 1,456.74 $ 1,175.73 Adjusted book value per share $ 1,703.82 $ 1,495.28 $ 1,190.39 Year-to-date dividends paid per share $ 1.00 $ 1.00 $ 1.00 (1) Amounts reflect White Mountains’s preferred share ownership in HG Global of 96.9%.
December 31, 2024 2023 2022 Book value per share numerators (in millions): White Mountains’s common shareholders’ equity - GAAP book value per share numerator $ 4,483.7 $ 4,240.5 $ 3,746.9 HG Global’s unearned premium reserve (1) 288.1 265.4 242.1 HG Global’s net deferred acquisition costs (1) (83.9) (76.5) (69.0) Time-value of money discount on expected future payments on the BAM Surplus Notes (1) (2) — (87.9) (95.1) Adjusted book value per share numerator $ 4,687.9 $ 4,341.5 $ 3,824.9 Book value per share denominators (in thousands of shares): Common shares outstanding - GAAP book value per share denominator 2,568.1 2,560.5 2,572.1 Unearned restricted common shares (11.9) (12.4) (14.1) Adjusted book value per share denominator 2,556.2 2,548.1 2,558.0 GAAP book value per share $ 1,745.87 $ 1,656.14 $ 1,456.74 Adjusted book value per share $ 1,833.92 $ 1,703.82 $ 1,495.28 Year-to-date dividends paid per share $ 1.00 $ 1.00 $ 1.00 (1) Amounts reflect White Mountains’s preferred share ownership in HG Global of 96.9%.
See “NON-GAAP FINANCIAL MEASURES” on page 73 .
See “NON-GAAP FINANCIAL MEASURES” on page 79 .
The combined ratio for 2023 included two points of net unfavorable prior year loss reserve development, driven primarily by unfavorable loss reserve development in the property and accident & health reserving line of business including Hurricane Ian, Winter Storm Elliott and a power outage claim, partially offset by favorable prior year loss reserve development within the specialty and casualty–runoff reserving lines of business.
The combined ratio for 2023 included two points of net unfavorable prior year loss reserve development, driven primarily by Hurricane Ian and Winter Storm Elliott, partially offset by net favorable prior year loss reserve development within the specialty and casualty–runoff reserving lines of business.
The difference between White Mountains’s effective tax rate and the current U.S. statutory rate of 21% was driven primarily by losses generated in jurisdictions with lower tax rates than the United States, a full valuation allowance on net deferred tax assets in certain U.S. operations (consisting of Other Operations and BAM), and state income taxes.
The difference between White Mountains’s effective tax rate and the current U.S. statutory rate of 21% was driven primarily by income generated in jurisdictions with lower tax rates than the United States, a full valuation allowance on net deferred tax assets in certain U.S. operations (consisting of Other Operations and BAM), withholding taxes and state income taxes. 73 White Mountains reported income tax benefit of $16 million in 2023 on pre-tax income from continuing operations of $565 million.
Ark’s combined ratio was 82% in both 2023 and 2022. The combined ratio in 2023 included two points of unfavorable prior year loss reserve development compared to six points of favorable prior year loss reserve development in 2022.
The combined ratio in 2023 included two points of net unfavorable prior year loss reserve development compared to six points of net favorable prior year loss reserve development in 2022.
Ark’s results in 2023 also included a $51 million net deferred tax benefit related to the Bermuda economic transition adjustment. Ark’s results in 2023 also included $49 million for the increase in the fair value of its contingent consideration compared to $17 million in 2022.
Ark’s results in 2023 also included a $51 million net deferred tax benefit related to the Bermuda economic transition adjustment. Ark’s results in 2023 also included a $49 million increase in the fair value of contingent consideration compared to $17 million in 2022. WM Outrigger Re’s combined ratio was 44% in 2023.
Significant intercompany transactions among White Mountains’s segments have been eliminated herein. White Mountains’s segment information is presented in Note 15 — “Segment Information” on page F- 63 to the Consolidated Financial Statements.
Significant intercompany transactions among White Mountains’s segments have been eliminated herein. White Mountains’s segment information is presented in Note 15 — “Segment Information” on page F- 65 .
The primary uses of cash are expected to be claim payments, policy acquisition costs, general and administrative expenses, broker commission expenses, cost of sales, purchases of investments, payments to tax authorities, payments on and repurchases/retirements of debt obligations, distributions to holding companies, distributions to noncontrolling interest holders and, from time to time, purchases of operating subsidiaries. 67 Both internal and external forces influence White Mountains’s financial condition, results of operations and cash flows.
The primary uses of cash are expected to be claim payments, policy acquisition costs, general and administrative expenses, broker commission expenses, cost of sales, purchases of investments, payments to tax authorities, payments on and repurchases/retirements of debt obligations, distributions to holding companies, distributions to noncontrolling interest holders and, from time to time, purchases of operating subsidiaries.
Investment returns for 2021 were driven primarily by net investment income and net realized and unrealized investment gains from Kudu’s Participation Contracts, net investment income and net realized and unrealized investment gains from private equity funds, and net unrealized gains from certain unconsolidated entities.
Investment returns for 2023 were driven primarily by net investment income and net realized and unrealized investment gains from Kudu’s Participation Contracts, net realized and unrealized investment gains from private equity funds, hedge funds and unconsolidated entities, as well as unrealized gains from ILS funds.
The total consolidated portfolio return included $27 million of net unrealized investment gains from White Mountains’s investment in MediaAlpha in 2023. Excluding MediaAlpha, investment returns in 2023 were driven primarily by net investment income and net realized and unrealized investment gains from the other long-term investments and fixed income portfolios.
Excluding MediaAlpha, investment returns in 2023 were driven primarily by net investment income and net realized and unrealized investment gains from the other long-term investments and fixed income portfolios. White Mountains’s total consolidated portfolio return on invested assets was -1.6% in 2022, which included $93 million of net unrealized investment losses from White Mountains’s investment in MediaAlpha.
As of December 31, 2023, HG Re had $106 million of accrued interest on the BAM Surplus Notes held outside the Collateral Trusts. As of December 31, 2023, HG Re had $784 million of statutory capital and surplus and $949 million of assets held in the Collateral Trusts.
As of December 31, 2024, HG Re had $158 million of accrued interest on the BAM Surplus Notes held outside the Collateral Trusts. As of December 31, 2024, HG Re had $718 million of statutory capital and surplus and $950 million of assets held in the Collateral Trusts.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

10 edited+5 added−3 removed5 unchanged
Assuming a hypothetical 10% and 30% increase or decrease in the value of White Mountains’s common equity securities, investment in MediaAlpha and other long-term investments as of December 31, 2023, the carrying value of White Mountains’s common equity securities, investment in MediaAlpha and other long-term investments would increase or decrease by $279 million and $837 million on a pre-tax basis, respectively.
Assuming a hypothetical 10% and 30% increase or decrease in the value of White Mountains’s common equity securities, investment in MediaAlpha and other long-term investments as of December 31, 2024, the carrying value of White Mountains’s common equity securities, investment in MediaAlpha and other long-term investments would increase or decrease by $300 million and $901 million on a pre-tax basis, respectively.
The following table presents the estimated effects of hypothetical increases and decreases in market interest rates on White Mountains’s fixed maturity investments: $ in Millions Fair Value at December 31, 2023 Assumed Change in Relevant Interest Rate Estimated Fair Value After Change in Interest Rate Pre-Tax Increase (Decrease) in Fair Value Fixed maturity investments $ 2,109.3 100 bps decrease $ 2,174.2 $ 64.9 50 bps decrease 2,142.0 32.7 50 bps increase 2,076.4 (32.9) 100 bps increase 2,043.5 (65.8) The magnitude of the fair value decrease in rising interest rate scenarios may be more significant than the fair value increase in comparable falling interest rate scenarios.
The following table presents the estimated effects of hypothetical increases and decreases in market interest rates on White Mountains’s fixed maturity investments: $ in Millions Fair Value at December 31, 2024 Assumed Change in Relevant Interest Rate Estimated Fair Value After Change in Interest Rate Pre-Tax Increase (Decrease) in Fair Value Fixed maturity investments $ 2,511.6 100 bps decrease $ 2,577.0 $ 65.4 50 bps decrease 2,544.5 32.9 50 bps increase 2,478.5 (33.1) 100 bps increase 2,445.6 (66.0) The magnitude of the fair value decrease in rising interest rate scenarios may be more significant than the fair value increase in comparable falling interest rate scenarios.
Increases and decreases in prevailing interest rates generally translate into decreases and increases in fair values of 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 various other market factors.
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 various other market factors.
Widening and tightening of credit spreads translate into decreases and increases in fair values of fixed maturity investments, respectively. 96 The following table presents the estimated pre-tax effects of hypothetical widening and tightening of credit spreads on White Mountains’s fixed maturity investments by asset class: December 31, 2023 Millions Fair Value Tighten 50 Tighten 25 Widen 25 Widen 50 U.S. government and agency obligations $ 204.9 $ — $ — $ — $ — Tighten 100 Tighten 50 Widen 50 Widen 100 Agency mortgage-backed securities 366.2 8.9 8.4 (10.2) (20.0) Other asset-backed securities 23.0 .2 .2 (.2) (.4) Non-agency: residential mortgage-backed securities .2 — — — — Tighten 200 Tighten 100 Widen 100 Widen 200 Debt securities issued by corporations 1,045.0 21.2 19.4 (30.6) (61.1) Municipal obligations 260.9 11.6 9.7 (12.5) (25.0) Tighten 300 Tighten 200 Widen 200 Widen 300 Collateralized loan obligations 209.1 15.3 13.4 (18.3) (27.4) The magnitude of the fair value decrease in wider credit spread scenarios may be more significant than the fair value increase in comparable tighter credit spread scenarios.
The following table presents the estimated pre-tax effects of hypothetical widening and tightening of credit spreads on White Mountains’s fixed maturity investments by asset class: December 31, 2024 Millions Fair Value Tighten 50 Tighten 25 Widen 25 Widen 50 U.S. government and agency obligations $ 462.1 $ — $ — $ — $ — Foreign government and agency obligations 21.5 — — — — Tighten 100 Tighten 50 Widen 50 Widen 100 Agency mortgage-backed securities 369.6 8.6 8.5 (11.0) (21.5) Other asset-backed securities 3.9 — — — (.1) Non-agency: mortgage-backed securities .4 — — — — Tighten 200 Tighten 100 Widen 100 Widen 200 Debt securities issued by corporations 1,414.2 23.6 22.4 (37.4) (74.8) Municipal obligations 3.2 .1 .1 (.2) (.3) Tighten 300 Tighten 200 Widen 200 Widen 300 Collateralized loan obligations 236.7 14.5 14.3 (22.7) (34.1) The magnitude of the fair value decrease in wider credit spread scenarios may be more significant than the fair value increase in comparable tighter credit spread scenarios.
White Mountains’s overall strategy for fixed maturity investments is to purchase securities that are attractively priced in relation to their investment risks.
White Mountains’s overall strategy for fixed maturity investments is to purchase securities that are attractively priced in relation to their investment risks. Widening and tightening of credit spreads translate into decreases and increases in fair values of fixed maturity investments, respectively.
Common Equity Securities, Investment in MediaAlpha and Other Long-Term Investments Price Risk The carrying values of White Mountains’s common equity securities, investment in MediaAlpha and other long-term investments are based on quoted market prices or management’s estimates of fair value as of the balance sheet date.
This can occur because the analysis limits the credit spread tightening in order to establish a floor for yields of non-government bonds above yields of government bonds, thereby muting price increases. 102 Common Equity Securities, Investment in MediaAlpha and Other Long-Term Investments Price Risk The carrying values of White Mountains’s common equity securities, investment in MediaAlpha and other long-term investments are based on quoted market prices or management’s estimates of fair value as of the balance sheet date.
White Mountains generally manages the interest rate risk associated with its portfolio of fixed maturity investments by monitoring the average duration of the portfolio. As of December 31, 2023, White Mountains’s fixed maturity investments are comprised primarily of debt securities issued by corporations, U.S. government and agency obligations, municipal obligations, mortgage and asset-backed securities and collateralized loan obligations.
As of December 31, 2024, White Mountains’s fixed maturity investments are comprised primarily of debt securities issued by corporations, U.S. government and agency obligations, foreign government and agency obligations, municipal obligations, mortgage and asset-backed securities and collateralized loan obligations. Increases and decreases in prevailing interest rates generally translate into decreases and increases in fair values of fixed maturity investments, respectively.
The following table presents the fair value of White Mountains’s foreign denominated net assets (liabilities) by segment as of December 31, 2023: Currency $ in Millions Ark/ WM Outrigger Kudu Other Operations Total Fair Value % of Total Shareholders ’ Equity CAD $ 84.0 $ 73.6 $ — $ 157.6 3.5 % AUD 26.8 60.0 — 86.8 1.9 EUR (50.9) 19.1 14.3 (17.5) (.4) GBP (24.0) — — (24.0) (.5) All other — — .9 .9 — Total $ 35.9 $ 152.7 $ 15.2 $ 203.8 4.5 % The following table illustrates the pre-tax effect that a hypothetical 20% increase (i.e., U.S. dollar strengthening) or decrease (i.e., U.S. dollar weakening) in the rate of exchange from the foreign currencies to the U.S. dollar would have on the carrying value of White Mountains’s foreign denominated net assets as of December 31, 2023: $ in Millions Carrying Value of Foreign Denominated Net Assets Hypothetical Change Hypothetical Pre-Tax Increase (Decrease) in Carrying Value Hypothetical Percentage Increase (Decrease) in Stockholders’ Equity $ 203.8 20% increase $ (40.8) (1.0) % 20% decrease $ 40.8 1.0 %
The following table illustrates the pre-tax effect of a hypothetical 20% increase/decrease in the U.S. dollar exchange rate on the carrying value of net assets denominated in foreign currencies as of December 31, 2024: $ in Millions Carrying Value of Foreign Denominated Net Assets Hypothetical Change Hypothetical Pre-Tax Increase (Decrease) in Carrying Value Hypothetical Percentage Increase (Decrease) in Stockholders’ Equity $ 191.7 20% increase $ (38.3) (0.7) % 20% decrease $ 38.3 0.7 %
Long-Term Obligations White Mountains records its financial instruments at fair value with the exception of debt obligations, which are recorded as debt at face value less unamortized original issue discount.
See “CRITICAL ACCOUNTING ESTIMATES — Fair Value Measurements” on page 82 for further discussion related to the valuation of the BAM Surplus Notes. Long-Term Obligations White Mountains carries its debt obligations at face value less unamortized debt issuance costs and original issue discount.
The fair value estimates for the HG Global Senior Notes, Ark 2007 Subordinated Notes, Ark 2021 Subordinated Notes, Kudu Credit Facility and Other Operations debt have been determined based on a discounted cash flow approach and are considered to be Level 3 measurements. 97 Foreign Currency Exposure As of December 31, 2023, White Mountains had foreign currency exposure on $204 million of net assets primarily related to Ark/WM Outrigger’s non-U.S. business, Kudu’s non-U.S.
Foreign Currency Exposure As of December 31, 2024, White Mountains had net assets of $192 million denominated in foreign currencies primarily related to Ark/WM Outrigger’s non-U.S. contracts, Kudu’s non-U.S. Participation Contracts and a private debt instrument, as well as certain other foreign consolidated and unconsolidated entities.
Removed
This can occur because the analysis limits the credit spread tightening in order to establish a floor for yields of non-government bonds above yields of government bonds, thereby muting price increases.
Added
White Mountains generally manages the interest rate risk associated with its portfolio of fixed maturity investments by monitoring the average duration of the portfolio.
Removed
The following table presents the fair value and carrying value of these financial instruments as of December 31, 2023 and December 31, 2022: December 31, 2023 December 31, 2022 Millions Fair Value Carrying Value (1) Fair Value Carrying Value (1) HG Global Senior Notes $ 158.7 $ 146.9 $ 155.7 $ 146.5 Ark 2007 Subordinated Notes $ 30.5 $ 30.0 $ 28.4 $ 30.0 Ark 2021 Subordinated Notes $ 171.8 $ 155.5 $ 163.1 $ 153.7 Kudu Credit Facility $ 225.6 $ 203.8 $ 223.9 $ 208.3 Other Operations debt $ 30.0 $ 28.4 $ 38.2 $ 36.7 (1) See Note 7 — “Debt” for details of debt arrangements.
Added
See “CRITICAL ACCOUNTING ESTIMATES — Fair Value Measurements” on page 82 for further discussion related to the valuation of Kudu’s Participation Contracts and White Mountains’s investment in PassportCard/DavidShield. BAM Surplus Notes The carrying value of the BAM Surplus Notes is based on management’s estimate of fair value as of the balance sheet date.
Removed
Participation Contracts and certain other foreign consolidated and unconsolidated entities.
Added
Assuming a hypothetical 10% and 30% increase or decrease in the value of the BAM Surplus Notes as of December 31, 2024, the carrying value of the BAM Surplus Notes would increase or decrease by $38 million and $115 million on a pre-tax basis, respectively.
Added
White Mountains is required to disclose the fair value of certain financial instruments not carried at fair value, including the debt obligations. See Note 18 — “Fair Value of Financial Instruments” on page F- 72 for the fair value and carrying value of White Mountains’s debt obligations as of December 31, 2024 and 2023.
Added
See “ Summary of Investment Results - Foreign Currency Exposure” on page 72 for fair value of White Mountains’s foreign denominated net assets (liabilities) by segment as of December 31, 2024.

Other WTM 10-K year-over-year comparisons