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Loss and Loss Adjustment Expense Reserves | 9 Months Ended
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Sep. 30, 2012
Insurance Loss Reserves [Abstract] |
Loss and Loss Adjustment Expense Reserves | Loss and Loss Adjustment Expense Reserves The following table summarizes the loss and loss adjustment expense (“LAE”) reserve activities of White Mountains’ insurance and reinsurance subsidiaries for the three and nine months ended September 30, 2012 and 2011:
|  | Three Months Ended |  | Nine Months Ended
|  | September 30, |  | September 30,
Millions |  | 2012 |  | 2011 |  | 2012 |  | 2011
Gross beginning balance |  | $ | 5,329.8 |  |  | $ | 5,642.4 |  |  | $ | 5,702.3 |  |  | $ | 5,736.8 |
Less beginning reinsurance recoverable on unpaid losses |  | (2,369.4 | ) |  | (2,193.0 | ) |  | (2,507.3 | ) |  | (2,344.0 | )
Net loss and LAE reserves |  | 2,960.4 |  |  | 3,449.4 |  |  | 3,195.0 |  |  | 3,392.8 |
Less: Beginning net loss and LAE reserves for AutoOne and OneBeacon's runoff business (1) |  | (296.0 | ) |  | (503.2 | ) |  | (384.1 | ) |  | (620.6 | )
Loss and LAE incurred relating to: |  |  |  |  |  |  |  |  |  |  |  |
Current year losses |  | 318.2 |  |  | 307.1 |  |  | 842.9 |  |  | 968.0 |
Prior year losses |  | (10.1 | ) |  | (26.9 | ) |  | (21.2 | ) |  | (47.6 | )
Total incurred losses and LAE |  | 308.1 |  |  | 280.2 |  |  | 821.7 |  |  | 920.4 |
Accretion of fair value adjustment to loss and LAE reserves |  | 1.1 |  |  | 2.1 |  |  | 9.4 |  |  | 6.2 |
Foreign currency translation adjustment to loss and LAE reserves |  | 12.0 |  |  | (25.5 | ) |  | 11.7 |  |  | 5.7 |
Loss and LAE paid relating to: |  |  |  |  |  |  |  |  |  |  |  |
Current year losses |  | (101.1 | ) |  | (109.7 | ) |  | (223.9 | ) |  | (226.3 | )
Prior year losses |  | (181.5 | ) |  | (186.9 | ) |  | (726.8 | ) |  | (571.8 | )
Total loss and LAE payments |  | (282.6 | ) |  | (296.6 | ) |  | (950.7 | ) |  | (798.1 | )
Plus: Ending net loss and LAE reserves for AutoOne and OneBeacon's runoff business (1) |  | — |  |  | 394.4 |  |  | — |  |  | 394.4 |
Net ending balance |  | 2,703.0 |  |  | 3,300.8 |  |  | 2,703.0 |  |  | 3,300.8 |
Plus ending reinsurance recoverable on unpaid losses |  | 356.8 |  |  | 2,581.2 |  |  | 356.8 |  |  | 2,581.2 |
Gross ending balance |  | $ | 3,059.8 |  |  | $ | 5,882.0 |  |  | $ | 3,059.8 |  |  | $ | 5,882.0 |
(1) Loss and LAE reserve balances for OneBeacon's run-off business prior to September 30, 2012 and AutoOne prior to September 30, 2011 were not classified as held for sale. Adjustment is to present loss and LAE reserve activities from continuing operations.
Loss and LAE incurred relating to prior year losses for the three and nine months ended September 30, 2012 During the three and nine months ended September 30, 2012, White Mountains experienced $10.1 million and $21.2 million of net favorable loss reserve development. For the three and nine months ended September 30, 2012, OneBeacon had net favorable loss reserve development of $2.3 million and $7.6 million, primarily related to professional liability lines, multiple peril liability lines and other general liability lines. For the three and nine months ended September 30, 2012, Sirius Group had net favorable loss reserve development of $7.8 million and $13.6 million. With the completion of a ground-up asbestos reserve study in the quarter, Sirius Group increased asbestos loss reserves by $33.0 million and $45.0 million in the three and nine months ended September 30, 2012. These increases were more than offset by reductions in liability and property loss reserves. Loss and LAE incurred relating to prior year losses for the three and nine months ended September 30, 2011 During the three and nine months ended September 30, 2011, White Mountains experienced $26.9 million and $47.6 million of net favorable loss reserve development. For the three and nine months ended September 30, 2011, OneBeacon had net favorable loss reserve development of $6.0 million and $14.4 million, primarily related to professional liability lines, multiple peril liability lines and other general liability lines. For the three and nine months ended September 30, 2011, Sirius Group had net favorable loss reserve development of $20.9 million and $33.2 million, primarily attributable to property lines. Fair value adjustment to loss and LAE reserves In connection with purchase accounting for acquisitions, White Mountains was required to adjust loss and LAE reserves and the related reinsurance recoverables to fair value on their respective acquired balance sheets. The net reduction to loss and LAE reserves is being recognized through an income statement charge ratably with and over the period the claims are settled. White Mountains recognized $1.1 million and $9.4 million of such charges, recorded as loss and LAE for the three and nine months ended September 30, 2012, and $2.1 million and $6.2 million for the three and nine months ended September 30, 2011. Accretion of fair value adjustment to losses and LAE reserves for the nine months ended September 30, 2012 included $5.0 million from the first quarter of 2012 due to the acceleration of the amortization of the purchase accounting established for the acquisition of Scandinavian Re. This acceleration was a result of a final settlement and commutation of Scandinavian Re’s multi-year retrocessional Casualty Aggregate Stop Loss Agreement with St. Paul Fire & Marine Insurance Company (“St Paul”). As of September 30, 2012, the remaining unamortized fair value adjustment for Scandinavian Re was $2.0 million.

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