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Discontinued Operations | 6 Months Ended
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Jun. 30, 2011
Discontinued Operations |
Discontinued Operations |
Note 14. Discontinued Operations On May 17, 2011, White Mountains entered into an agreement to sell Esurance and the business Esurance Insurance cedes to White Mountains Re. (“the Esurance Disposal Group”). Effective for the six-months ended June 30, 2011, the results of operations for the Esurance Disposal Group have been classified as discontinued operations and are presented, net of related income taxes, as such in the statement of comprehensive income. The assets and liabilities of the Esurance Disposal Group have been presented in the balance sheet as held for sale. Prior year amounts have been reclassified to conform to the current period’s presentation. The amounts reflected within discontinued operations differ from amounts previously presented within the Esurance segment. The segment results of operations for Esurance reported in previous periods included investment income and realized and unrealized investment gains and losses allocated to Esurance related capital that was used by Esurance but contained within White Mountains Re’s legal entities. These allocations do not have separately identifiable cash flows and have therefore been excluded from amounts classified in discontinued operations and are now included in the White Mountains Re segment. For the three and six month periods of June 30, 2011, $0.9 million and $(3.3) million of net investment income and realized and unrealized investment gains and losses that had been previously included in the Esurance segment were excluded from net income (loss) from discontinued operations. For the three and six month period June 30, 2010, $1.7 million and $2.8 million of net investment income and realized and unrealized investment gains and losses that had been previously included in the Esurance segment were excluded from net income (loss) from discontinued operations. The following summarizes the assets and liabilities associated with the businesses classified as held for sale:
Millions |  | June 30, 2011 |  | December 31, 2010 |
Assets held for sale |  |  |  |  |
Fixed maturity investments, at fair value |  | $ | 761.2 |  | $ | 593.8 |
Short-term investments, at amortized cost (which approximates fair value) |  | 24.6 |  | 131.0 |
Common equity securities, at fair value |  | 43.9 |  | 43.0 |
Convertible fixed maturity investments, at fair value |  | 15.0 |  | 17.2 |
Other long-term investments |  | — |  | 4.0 |
Total investments |  | 844.7 |  | 789.0 |
Cash |  | 57.3 |  | 39.8 |
Reinsurance recoverable on paid and unpaid losses |  | 34.8 |  | 34.4 |
Insurance premiums receivable |  | 107.8 |  | 102.9 |
Deferred acquisition costs |  | 43.0 |  | 34.7 |
Deferred tax asset |  | 74.4 |  | 67.8 |
Other assets |  | 51.9 |  | 54.2 |
Total assets held for sale |  | $ | 1,213.9 |  | $ | 1,122.8 |
Liabilities held for sale |  |  |  |  |
Loss and loss adjustment expense reserves |  | $ | 456.1 |  | $ | 450.4 |
Unearned insurance premiums |  | 215.3 |  | 201.6 |
Accrued incentive compensation |  | 22.5 |  | 19.1 |
Other liabilities |  | 86.0 |  | 80.4 |
Total liabilities held for sale |  | 779.9 |  | 751.5 |
Net assets held for sale |  | $ | 434.0 |  | $ | 371.3 |
The following summarizes the results of operations, including related income taxes associated with the businesses classified as discontinued operations:
|  | Three Months Ended June 30, |  | Six Months Ended June 30, |
Millions, except per share amounts |  | 2011 |  | 2010 |  | 2011 |  | 2010 |
Revenues |  |  |  |  |  |  |  |  |
Earned insurance premiums |  | $ | 219.7 |  | $ | 209.7 |  | $ | 429.0 |  | $ | 408.6 |
Net investment income |  | 4.0 |  | 4.8 |  | 8.0 |  | 9.6 |
Net realized and unrealized investment gains |  | 4.4 |  | 1.6 |  | 7.8 |  | 6.6 |
Other revenue |  | 17.2 |  | 15.0 |  | 34.9 |  | 29.4 |
Total revenues |  | 245.3 |  | 231.1 |  | 479.7 |  | 454.2 |
Expenses |  |  |  |  |  |  |  |  |
Loss and loss adjustment expenses |  | 156.2 |  | 152.5 |  | 310.1 |  | 303.8 |
Insurance and reinsurance acquisition expenses |  | 51.7 |  | 44.5 |  | 99.2 |  | 86.6 |
Other underwriting expenses |  | 19.1 |  | 18.6 |  | 37.5 |  | 38.9 |
General and administrative expenses |  | 23.3 |  | 12.4 |  | 35.8 |  | 24.4 |
Total expenses |  | 250.3 |  | 228.0 |  | 482.6 |  | 453.7 |
Pre-tax income (loss) |  | (5.0 | ) | 3.1 |  | (2.9 | ) | .5 |
Income tax (expense) benefit |  | 4.7 |  | (1.3 | ) | 5.8 |  | (1.3 | )
Net income (loss) from discontinued operations |  | $ | (.3 | ) | $ | 1.8 |  | $ | 2.9 |  | $ | (.8 | )
Earnings (Loss) Per Share Basic earnings (loss) per share amounts are based on the weighted average number of common shares outstanding including unvested restricted shares that are considered participating securities. Diluted earnings (loss) per share amounts are based on the weighted average number of common shares including unvested restricted shares and the net effect of potentially dilutive common shares outstanding. The following table outlines the computation of earnings (loss) per share for discontinued operations for the three and six months ended June 30, 2011 and 2010:
|  | Three Months Ended June 30, |  | Six Months Ended June 30, |
|  | 2011 |  | 2010 |  | 2011 |  | 2010 |
Basic and diluted earnings (loss) per share numerators (in millions): |  |  |  |  |  |  |  |  |
Net income (loss) |  | $ | (.3 | ) | $ | 1.8 |  | $ | 2.9 |  | $ | (.8 | )
Basic earnings (loss) per share denominators (in thousands): |  |  |  |  |  |  |  |  |
Average common shares outstanding during the period |  | 7,886 |  | 8,571 |  | 7,930 |  | 8,656 |
Average unvested restricted shares |  | 73 |  | 100 |  | 65 |  | 96 |
Basic earnings (loss) per share denominator |  | 7,959 |  | 8,671 |  | 7,995 |  | 8,752 |
Diluted earnings (loss) per share denominator (in thousands): |  |  |  |  |  |  |  |  |
Average common shares outstanding during the period |  | 7,886 |  | 8,571 |  | 7,930 |  | 8,656 |
Average unvested restricted shares |  | 73 |  | 100 |  | 65 |  | 96 |
Average outstanding dilutive options to acquire common shares |  | — |  | — |  | — |  | — |
Diluted earnings (loss) per share denominator |  | 7,959 |  | 8,671 |  | 7,995 |  | 8,752 |
Basic and diluted earnings (loss) per share (in dollars): |  | $ | (.03 | ) | $ | .20 |  | $ | .36 |  | $ | (.09 | )

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- Definition The entire disclosure for the facts and circumstances leading to the completed or expected disposal, manner and timing of disposal, the gain (loss) recognized in the income statement and the income statement caption that includes that gain (loss), amounts of revenues and pretax profit or loss reported in discontinued operations, the segment in which the disposal group was reported, and the classification (whether sold or classified as held for sale) and carrying value of the assets and liabilities comprising the disposal group. Includes all disposal groups, including those classified as components of the entity (discontinued operations). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 45 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e957-107759 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6391110&loc=d3e2941-110230 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1436-107760 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1361-107760 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 45 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6390789&loc=d3e2443-110228 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 144 -Paragraph 43-48 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1474-107760 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 45 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e1020-107759 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1510-107760 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 45 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e1012-107759 + Details
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