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Statutory Capital and Surplus | 12 Months Ended
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Dec. 31, 2017
Insurance [Abstract] |
Statutory Capital and Surplus | Statutory Capital and Surplus White Mountains’s insurance operations are subject to regulation and supervision in each of the jurisdictions where they are domiciled and licensed to conduct business. Generally, regulatory authorities have broad supervisory and administrative powers over such matters as licenses, standards of solvency, premium rates, policy forms, investments, security deposits, methods of accounting, form and content of financial statements, minimum capital and surplus requirements, dividends and other distributions to shareholders, periodic examinations and annual and other report filings. In general, such regulation is for the protection of policyholders rather than shareholders. The Insurance Act 1978 of Bermuda and related regulations, as amended (“Insurance Act”), regulates the insurance business of Bermuda-domiciled insurers. Under the Insurance Act, insurers are required to maintain available statutory capital and surplus at a level equal to or in excess of its enhanced capital requirement which is established by reference to either a Bermuda Solvency Capital Requirement (“BSCR”) model or an approved internal capital model. Generally, the Bermuda Monetary Authority (“BMA”) has broad supervisory and administrative powers over such matters as licenses, standards of solvency, investments, methods of accounting, form and content of financial statements, minimum capital and surplus requirements, and annual and other report filings. HG Global/BAM HG Re is a Special Purpose Insurer under Bermuda insurance regulations and is subject to regulation and supervision by the BMA. As of December 31, 2017, HG Re had statutory capital and surplus of $677.0 million. As a Special Purpose Insurer, HG Re has a nominal minimum regulatory capital requirement of $1. BAM is domiciled in New York and is subject to regulation by the NYDFS. New York financial guarantee insurance law establishes single risk and aggregate limits with respect to insured obligations insured by financial guarantee insurers. BAM’s statutory net loss for the years ended December 31, 2017, 2016 and 2015 was $25.4 million, $32.7 million and $32.0 million. BAM’s members’ surplus, as reported to regulatory authorities as of December 31, 2017, was $427.3 million, which exceeds the minimum members’ surplus necessary for BAM to maintain its New York State financial guarantee insurance license of $66.0 million. Dividend Capacity There are no restrictions under Bermuda law or the law of any other jurisdiction on the payment of dividends from retained earnings by White Mountains, provided that after the payment of any dividend, the Company would continue to be able to pay its liabilities as they become due and the realizable value of the Company’s assets would remain greater that its liabilities. Following is a description of the dividend capacity of White Mountains’s reinsurance and other operating subsidiaries: HG Global/BAM As of December 31, 2017, HG Global had $619.0 million face value of preferred shares outstanding, of which White Mountains owned 96.9%. Holders of the HG Global preferred shares receive cumulative dividends at a fixed annual rate of 6.0% on a quarterly basis, when and if declared by HG Global. HG Global did not declare or pay any preferred dividends in 2017. As of December 31, 2017, HG Global has accrued $235.6 million of dividends payable to holders of its preferred shares, $227.9 million of which is payable to White Mountains and eliminated in consolidation. HG Re is a Special Purpose Insurer subject to regulation and supervision by the BMA, but does not require regulatory approval to pay dividends. However, HG Re’s dividend capacity is limited to amounts held outside of the collateral trusts pursuant to the FLRT with BAM. As of December 31, 2017, HG Re had statutory capital and surplus of $677.0 million, $715.1 million of assets held in the collateral trusts pursuant to the FLRT with BAM and less than $1.0 million of cash and investments outside the collateral trusts. Effective January 1, 2014, HG Global and BAM agreed to change the interest rate on the BAM Surplus Notes for the five years ending December 31, 2018 from a fixed rate of 8.0% to a variable rate equal to the one-year U.S. treasury rate plus 300 basis points, set annually, which was 3.78% for 2017 and is 4.60% for 2018. Prior to the end of 2018, BAM has the option to extend the variable rate period for an additional three years. At the end of the variable rate period, the interest rate will be fixed at the higher of the then current variable rate or 8.0%. BAM is required to seek regulatory approval to pay interest and principal on the BAM Surplus Notes only to the extent that its capital resources continues to support its outstanding obligations, business plan and ratings. No payment of interest or principal on the BAM Surplus Notes may be made without the approval of the NYDFS. BAM has stated its intention to seek regulatory approval to pay interest and principal on its surplus notes only to the extent that its remaining qualified statutory capital other capital resources continue to support its outstanding obligations, business plan and its AA stable rating from S&P. During 2017, HG Global and BAM agreed to change the payment terms of the Series B Notes, so that payments will reduce principal and accrued interest on a pro rata basis, consistent with the payment terms on the Series A Notes. The terms of the Series B Notes had previously stipulated that payments would first reduce interest owed, then reduce principal owed once all accrued interest had been paid. The NYDFS approved the change during the third quarter of 2017. During 2017, BAM repaid $4.0 million on the BAM Surplus Notes and $1.0 million on the accrued interest. BAM did not make any payments on the BAM Surplus Notes in 2016 or 2015. MediaAlpha During 2017, MediaAlpha paid $5.2 million of dividends, $3.3 million of which was paid to White Mountains. As of December 31, 2017, MediaAlpha had $9.1 million of net unrestricted cash. Other Operations During 2017, White Mountains paid a $4.6 million common share dividend. As of December 31, 2017, the Company and its intermediate holding companies held $1,682.6 million of net unrestricted cash, short-term investments and fixed maturity investments, $866.1 million of common equity securities and $62.0 million of other long-term investments included in its Other Operations segment.

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