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Segment Information

12 Months Ended

Dec. 31, 2019

As of December 31, 2019, White Mountains conducted its operations through four segments: (1) HG Global/BAM, (2) NSM, (3) Kudu and (4) Other Operations. In addition, MediaAlpha was consolidated as a reportable segment until the date of the MediaAlpha Transaction. A discussion of White Mountains’s consolidated investment operations is included after the discussion of operations by segment.

As a result of the Kudu Transaction, White Mountains began consolidating Kudu in its financial statements in the second quarter of 2019. White Mountains’s segment disclosures for the year ended December 31, 2019 include Kudu’s results of operations for the period from April 4, 2019, the date of the Kudu Transaction, to December 31, 2019. See Note 2 — “Significant Transactions”.

As a result of the MediaAlpha Transaction, White Mountains no longer consolidated MediaAlpha, and consequently it was no longer a reportable segment. White Mountains’s segment disclosures for the year ended December 31, 2019 include MediaAlpha’s results of operations for the period from January 1, 2019 to February 26, 2019, the date of the MediaAlpha Transaction. See Note 2 — “Significant Transactions”.

As a result of the OneBeacon Transaction, the results of operations for OneBeacon for the year ended December 31, 2017 have been classified as discontinued operations, and are now presented separately, net of related income taxes, in the statement of comprehensive income. See Note 19 — “Held for Sale and Discontinued Operations”.

White Mountains has made its segment determination based on consideration of the following criteria: (i) the nature of the business activities of each of the Company’s subsidiaries and affiliates; (ii) the manner in which the Company’s subsidiaries and affiliates are organized; (iii) the existence of primary managers responsible for specific subsidiaries and affiliates; and (iv) the organization of information provided to the chief operating decision makers and the Board of Directors. Significant intercompany transactions among White Mountains’s segments have been eliminated herein. The following tables present the financial information for White Mountains’s segments:



Millions	HG Global/BAM ⁽¹⁾		NSM			Kudu ⁽²⁾		MediaAlpha ⁽³⁾			Other Operations		Total
Year Ended December 31, 2019
Earned insurance premiums	$	16.3	$	—		$	—	$	—		$	—	$	16.3
Net investment income	21.6		—			14.7		—			43.4		79.7
Net realized and unrealized investment gains	27.1		—			6.3		—			285.1		318.5
Gain from deconsolidation of MediaAlpha	—		—			—		—			182.2		182.2
Advertising and commission revenues ⁽⁴⁾	—		193.4			—		48.8			6.9		249.1
Other revenues	1.6		39.7			.2		—			6.1		47.6
Total revenues	66.6		233.1			21.2		48.8			523.7		893.4
Insurance acquisition expenses	5.7		—			—		—			—		5.7
Other underwriting expenses	.4		—			—		—			—		.4
Cost of sales	—		—			—		40.6			7.5		48.1
General and administrative expenses	50.5		132.2			10.1		12.5			122.5		327.8
Broker commission expense	—		64.8			—		—			—		64.8
Change in fair value of contingent consideration earnout liabilities	—		2.1			—		—			—		2.1
Amortization of other intangible assets	—		19.4			.2		1.6			.6		21.8
Interest expense	—		16.7			.1		.2			.6		17.6
Total expenses	56.6		235.2			10.4		54.9			131.2		488.3
Pre-tax income (loss)	$	10.0	$	(2.1	)	$	10.8	$	(6.1	)	$	392.5	$	405.1


⁽¹⁾	BAM manages its affairs on a statutory accounting basis. BAM’s statutory surplus includes the BAM Surplus Notes and is not reduced by accruals of interest expense on the BAM Surplus Notes. BAM’s statutory surplus is reduced only after a payment of principal or interest has been approved by the NYDFS.


⁽²⁾	Kudu’s results are from April 4, 2019, the date of the Kudu Transaction, to December 31, 2019.


⁽³⁾	MediaAlpha’s results are from January 1, 2019 to February 26, 2019, the date of the MediaAlpha Transaction.


⁽⁴⁾	Approximately 17% of NSM’s commission revenue was associated with one single carrier.



Millions	HG Global/BAM ⁽¹⁾			NSM			MediaAlpha		Other Operations			Total
Year Ended December 31, 2018
Earned insurance premiums	$	13.9		$	—		$	—	$	—		$	13.9
Net investment income	16.7			—			—		42.3			59.0
Net realized and unrealized investment losses	(7.5		)	—			—		(100.8		)	(108.3		)
Advertising and commission revenues ⁽²⁾	—			89.6			295.5		4.1			389.2
Other revenues	1.2			12.0			1.6		.5			15.3
Total revenues	24.3			101.6			297.1		(53.9		)	369.1
Insurance acquisition expenses	5.3			—			—		—			5.3
Other underwriting expenses	.4			—			—		—			.4
Cost of sales	—			—			245.0		3.7			248.7
General and administrative expenses	48.0			59.4			31.7		94.4			233.5
Broker commission expense	—			28.4			—		—			28.4
Change in fair value of contingent consideration earnout liabilities	—			2.7			—		—			2.7
Amortization of other intangible assets	—			8.3			10.3		.2			18.8
Interest expense	—			8.0			1.2		.3			9.5
Total expenses	53.7			106.8			288.2		98.6			547.3
Pre-tax (loss) income	$	(29.4	)	$	(5.2	)	$	8.9	$	(152.5	)	$	(178.2	)


⁽¹⁾	BAM manages its affairs on a statutory accounting basis. BAM’s statutory surplus includes the BAM Surplus Notes and is not reduced by accruals of interest expense on the BAM Surplus Notes. BAM’s statutory surplus is reduced only after a payment of principal or interest has been approved by the NYDFS.


⁽²⁾	As of December 31, 2018, approximately 29% of MediaAlpha’s advertising revenue was associated with one customer.As of December 31, 2018, approximately 33% of NSM’s commission revenue was associated with one single carrier.



Millions	HG Global/BAM ⁽¹⁾			MediaAlpha			Other Operations		Total
Year Ended December 31, 2017
Earned insurance premiums	$	9.4		$	—		$	1.0	$	10.4
Net investment income	12.3			—			43.7		56.0
Net realized and unrealized investment gains	.6			—			132.7		133.3
Advertising and commission revenues⁽²⁾	—			163.2			3.8		167.0
Other revenues	1.0			—			6.1		7.1
Total revenues	23.3			163.2			187.3		373.8
Losses and LAE	—			—			1.1		1.1
Insurance acquisition expenses	4.0			—			.1		4.1
Other underwriting expenses	.4			—			—		.4
Cost of sales	—			135.9			3.5		139.4
General and administrative expenses	42.9			16.2			148.9		208.0
Amortization of other intangible assets	—			10.5			.2		10.7
Interest expense	—			1.0			1.3		2.3
Total expenses	47.3			163.6			155.1		366.0
Pre-tax (loss) income	$	(24.0	)	$	(.4	)	$	32.2	$	7.8


⁽¹⁾	BAM manages its affairs on a statutory accounting basis. BAM’s statutory surplus includes the BAM Surplus Notes and is not reduced by accruals of interest expense on the BAM Surplus Notes. BAM’s statutory surplus is reduced only after a payment of principal or interest has been approved by the NYDFS.


⁽²⁾	As of December 31, 2017, approximately 27% of MediaAlpha’s advertising revenue was associated with one customer.



Millions Selected Balance Sheet Data	HG Global/BAM				NSM		Kudu		MediaAlpha		Other Operations				Held for Sale		Total
December 31, 2019:
Total investments	$	845.6			$	—	$	266.6	$	—	$	1,835.0			$	—	$	2,947.2
Total assets	$	924.0		⁽¹⁾	$	825.2	$	290.5	$	—	$	1,940.5		⁽²⁾	$	3.0	$	3,983.2
Total liabilities	$	246.8		⁽²⁾	$	401.1	$	57.0	$	—	$	133.6			$	—	$	838.5
Total White Mountains’s common shareholders’ equity	$	809.5		⁽²⁾	$	409.3	$	231.3	$	—	$	1,808.4		⁽²⁾	$	3.0	$	3,261.5
Non-controlling interest	$	(132.3	)		$	14.8	$	2.2	$	—	$	(1.5	)		$	—	$	(116.8	)
December 31, 2018:
Total investments	$	768.3			$	—	$	—	$	—	$	1,774.6			$	—	$	2,542.9
Total assets	$	816.2		⁽¹⁾	$	623.6	$	—	$	88.4	$	1,831.1		⁽²⁾	$	3.3	$	3,362.6
Total liabilities	$	212.5		⁽²⁾	$	314.8	$	—	$	46.9	$	70.2			$	—	$	644.4
Total White Mountains’s common shareholders’ equity	$	759.8		⁽²⁾	$	294.9	$	—	$	25.3	$	1,759.8		⁽²⁾	$	3.3	$	2,843.1
Non-controlling interest	$	(156.1	)		$	13.9	$	—	$	16.2	$	1.1			$	—	$	(124.9	)


⁽¹⁾	As of December 2019 and 2018, total assets in the HG Global/BAM segment reflected the elimination of $457.6 and $481.3 of BAM Surplus Notes issued to HG Global and its subsidiaries, and $162.7 and $143.7 in accrued interest related to the BAM Surplus Notes.

⁽²⁾

HG Global preferred dividends payable to White Mountains’s subsidiaries is eliminated in White Mountains’s consolidated financial statements. For segment reporting, the HG Global preferred dividends payable to White Mountains’s subsidiaries included within the HG Global/BAM segment are eliminated against the offsetting receivable included within the Other Operations segment and therefore added back to White Mountains’s common shareholders’ equity within the HG Global/BAM segment. As of December 31, 2019 and 2018, the HG Global preferred dividends payable to White Mountains’s subsidiaries was $330.3 and $278.5.

In compliance with ASC 606, Revenues from Contracts with Customers, the following tables present White Mountains’s total revenues by revenue source:



Millions	HG Global/BAM		NSM		Kudu ⁽²⁾		MediaAlpha ⁽³⁾		Other Operations		Total
Year Ended December 31, 2019
Commission and Other Revenue
Specialty Transportation	$	—	$	77.6	$	—	$	—	$	—	$	77.6
Real Estate	—		34.7		—		—		—		34.7
Social Services	—		25.9		—		—		—		25.9
Pet	—		30.0		—		—		—		30.0
United Kingdom	—		45.9		—		—		—		45.9
Other	—		19.0		—		—		6.9		25.9
Total Commission and Other Revenue	—		233.1		—		—		6.9		240.0
Advertising revenues	—		—		—		48.8		—		48.8
Products	—		—		—		—		5.5		5.5
Total revenues from contracts with customers	—		233.1		—		48.8		12.4		294.3
Other revenues⁽¹⁾	66.6		—		21.2		—		511.3		599.1
Total revenues	$	66.6	$	233.1	$	21.2	$	48.8	$	523.7	$	893.4


⁽¹⁾	Other revenues consist of premiums, investment income, investment gains and losses and other revenues outside the scope of ASC 606, Revenues from Contracts with Customers.


⁽²⁾	Kudu’s results are from April 4, 2019, the date of the Kudu Transaction, to December 31, 2019.


⁽³⁾	MediaAlpha’s results are from January 1, 2019 to February 26, 2019, the date of the MediaAlpha Transaction.



Millions	HG Global/BAM		NSM		MediaAlpha		Other Operations			Total
Year Ended December 31, 2018
Commission and Other Revenue
Specialty Transportation	$	—	$	28.3	$	—	$	—		$	28.3
Real Estate	—		17.8		—		—			17.8
Social Services	—		14.7		—		—			14.7
United Kingdom	—		28.0		—		—			28.0
Other	—		12.8		—		4.1			16.9
Total Commission and Other Revenue	—		101.6		—		4.1			105.7
Advertising revenues	—		—		295.5		—			295.5
Total revenues from contracts with customers	—		101.6		295.5		4.1			401.2
Other revenues⁽¹⁾	24.3		—		1.6		(58.0		)	(32.1		)
Total revenues	$	24.3	$	101.6	$	297.1	$	(53.9	)	$	369.1

⁽¹⁾ Other revenues consist of premiums, investment income, investment gains and losses and other revenues outside the scope of ASC 606, Revenues from Contracts with Customers.



Millions	HG Global/BAM		MediaAlpha		Other Operations		Total
Year Ended December 31, 2017
Commission and Other Revenue
Other	$	—	$	—	$	.4	$	.4
Total Commission and Other Revenue	—		—		.4		.4
Advertising revenues	—		163.2		—		163.2
Total revenues from contracts with customers	—		163.2		.4		163.6
Other revenues⁽¹⁾	23.3		—		186.9		210.2
Total revenues	$	23.3	$	163.2	$	187.3	$	373.8

⁽¹⁾ Other revenues consist of premiums, investment income, investment gains and losses and other revenues outside the scope of ASC 606, Revenues from Contracts with Customers.