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Discontinued Operations | 9 Months Ended
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Sep. 30, 2011
Discontinued Operations |
Discontinued Operations |
Note 14. Discontinued Operations Esurance On October 7, 2011, White Mountains completed the sale of Esurance Insurance and AFI to The Allstate Corporation (see Note 15). As a result of the transaction, Esurance Insurance, AFI and the business Esurance Insurance cedes to Sirius Group (collectively, “the Esurance Disposal Group”) are reported as discontinued operations. Effective for the nine months ended September 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, 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 to capital that was used by Esurance but contained within Sirius Group’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 Sirius Group segment. For the three and nine month periods ended September 30, 2011, $0.9 million and $(2.4) 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 nine month periods ended September 30, 2010, $0.9 million and $3.7 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. AutoOne On August 30, 2011, OneBeacon entered into an agreement to sell the AutoOne business to Interboro. AutoOne operates as a division within OneBeacon, offering products and services to automobile assigned risk markets. The transaction includes the sale of two insurance entities, AOIC and AOSIC, through which substantially all of the AutoOne business is written on a direct basis. For the nine months ended September 30, 2011, the results of operations for the AutoOne business have been classified as discontinued operations and are presented, net of related income taxes, in the statement of comprehensive income. Prior year results of operations have been reclassified to conform to the current period’s presentation. The AutoOne disposal group excludes investing and financing activities from amounts classified as discontinued operations. OneBeacon’s investing and financing operations are conducted on an overall consolidated level and accordingly, there were no separately identifiable cash investing or financing cash flows associated with AutoOne. Prior to the sale of AutoOne, OneBeacon will ensure that the AutoOne legal entities hold an agreed upon level of invested assets and capital. The assets and liabilities associated with the AutoOne business as of September 30, 2011 have been presented in the balance sheet as held for sale sheet assuming the investing and financing steps required to effect the sale were completed as of the current balance sheet date. The prior year balance sheet has not been reclassified to conform to the current period’s presentation because the assets and liabilities associated with AutoOne in the prior year would not provide a meaningful comparison to the assets and liabilities presented as held for sale at September 30, 2011. The following summarizes the assets and liabilities associated with the businesses classified as held for sale:
Millions |  | September 30, 2011 |  | December 31, 2010 |
Assets held for sale |  |  |  |  |
Fixed maturity investments, at fair value |  | $ | 585.0 |  | $ | 593.8 |
Short-term investments, at amortized cost (which approximates fair value) |  | 224.9 |  | 131.0 |
Common equity securities, at fair value |  | — |  | 43.0 |
Convertible fixed maturity investments, at fair value |  | — |  | 17.2 |
Other long-term investments |  | — |  | 4.0 |
Total investments |  | 809.9 |  | 789.0 |
Cash |  | 235.7 |  | 39.8 |
Reinsurance recoverable on paid and unpaid losses |  | 34.6 |  | 34.4 |
Insurance premiums receivable |  | 128.2 |  | 102.9 |
Deferred acquisition costs |  | 42.8 |  | 34.7 |
Deferred tax asset |  | 88.2 |  | 67.8 |
Other assets |  | 60.1 |  | 54.2 |
Total assets held for sale |  | $ | 1,399.5 |  | $ | 1,122.8 |
Liabilities held for sale |  |  |  |  |
Loss and loss adjustment expense reserves |  | $ | 514.9 |  | $ | 450.4 |
Unearned insurance premiums |  | 258.3 |  | 201.6 |
Accrued incentive compensation |  | 31.5 |  | 19.1 |
Other liabilities |  | 104.7 |  | 80.4 |
Total liabilities held for sale |  | 909.4 |  | 751.5 |
Net assets held for sale |  | $ | 490.1 |  | $ | 371.3 |
The following summarizes the results of operations, including related income taxes associated with the businesses classified as discontinued operations:
|  | Three Months Ended September 30, |  | Nine Months Ended September 30, |
Millions, except per share amounts |  | 2011 |  | 2010 |  | 2011 |  | 2010 |
Revenues |  |  |  |  |  |  |  |  |
Earned insurance premiums |  | $ | 233.8 |  | $ | 234.6 |  | $ | 698.7 |  | $ | 683.6 |
Net investment income |  | 3.8 |  | 5.8 |  | 11.8 |  | 15.4 |
Net realized and unrealized investment gains (losses) |  | (6.4 | ) | 10.4 |  | 1.4 |  | 17.0 |
Other revenue |  | 17.5 |  | 15.3 |  | 52.4 |  | 44.7 |
Total revenues |  | 248.7 |  | 266.1 |  | 764.3 |  | 760.7 |
Expenses |  |  |  |  |  |  |  |  |
Loss and loss adjustment expenses |  | 180.5 |  | 172.7 |  | 518.7 |  | 508.0 |
Insurance and reinsurance acquisition expenses |  | 51.4 |  | 50.8 |  | 154.5 |  | 142.2 |
Other underwriting expenses |  | 32.3 |  | 21.4 |  | 76.3 |  | 66.9 |
General and administrative expenses |  | 1.7 |  | 12.1 |  | 37.5 |  | 36.5 |
Total expenses |  | 265.9 |  | 257.0 |  | 787.0 |  | 753.6 |
Pre-tax income (loss) |  | (17.2 | ) | 9.1 |  | (22.7 | ) | 7.1 |
Income tax (expense) benefit |  | 5.3 |  | (5.5 | ) | 12.0 |  | (5.9 | )
Income (loss) from discontinued operations |  | (11.9 | ) | 3.6 |  | (10.7 | ) | 1.2 |
Loss from sale of AutoOne, net of tax |  | (18.2 | ) | — |  | (18.2 | ) | — |
Net income (loss) from discontinued operations |  | $ | (30.1 | ) | $ | 3.6 |  | $ | (28.9 | ) | $ | 1.2 |
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 nine months ended September 30, 2011 and 2010:
|  | Three Months Ended September 30, |  | Nine Months Ended September 30, |
|  | 2011 |  | 2010 |  | 2011 |  | 2010 |
Basic and diluted earnings (loss) per share numerators (in millions): |  |  |  |  |  |  |  |  |
Net income (loss) |  | $ | (30.1 | ) | $ | 3.6 |  | $ | (28.9 | ) | $ | 1.2 |
Basic earnings (loss) per share denominators (in thousands): |  |  |  |  |  |  |  |  |
Average common shares outstanding during the period |  | 7,845 |  | 8,332 |  | 7,902 |  | 8,547 |
Average unvested restricted shares |  | 74 |  | 99 |  | 68 |  | 97 |
Basic earnings (loss) per share denominator |  | 7,919 |  | 8,431 |  | 7,970 |  | 8,644 |
Diluted earnings (loss) per share denominator (in thousands): |  |  |  |  |  |  |  |  |
Average common shares outstanding during the period |  | 7,845 |  | 8,332 |  | 7,902 |  | 8,547 |
Average unvested restricted shares |  | 74 |  | 99 |  | 68 |  | 97 |
Average outstanding dilutive options to acquire common shares |  | — |  | — |  | — |  | 1 |
Diluted earnings (loss) per share denominator |  | 7,919 |  | 8,431 |  | 7,970 |  | 8,645 |
Basic and diluted earnings (loss) per share (in dollars): |  | $ | (3.81 | ) | $ | 0.43 |  | $ | (3.63 | ) | $ | 0.13 |

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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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