Goodwill and Other Intangible Assets

3 Months Ended

Mar. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

White Mountains accounts for purchases of businesses using the acquisition method. Under the acquisition method, White Mountains recognizes and measures the assets acquired, liabilities assumed and any non-controlling interest in the acquired entities at their acquisition date fair values. The acquisition date fair values of certain assets and liabilities, generally consisting of intangible assets and liabilities for contingent consideration, may be recorded at provisional amounts in circumstances where the information necessary to complete the acquisition accounting is not available at the reporting date. Any such provisional amounts are finalized as measurement period adjustments within one year of the acquisition date.

The following table presents the acquisition date fair values, accumulated amortization and net carrying values for other intangible assets and goodwill, by segment as of March 31, 2021 and December 31, 2020:


$ in Millions	Weighted Average Economic Life (in years)	March 31, 2021								December 31, 2020
		Acquisition Date Fair Value		Accumulated Amortization		Impairments and Amounts Allocated to Held for Sale		Net Carrying Value		Acquisition Date Fair Value		Accumulated Amortization		Impairments		Net Carrying Value
Goodwill:
Ark	N/A	$	116.8	$	—	$	—	$	116.8	$	—	$	—	$	—	$	—
NSM (1)	N/A	507.9		—		30.2		477.7		506.4		—		—		506.4
Kudu	N/A	7.6		—		—		7.6		7.6		—		—		7.6
Other Operations	N/A	11.3		—		—		11.3		11.5		—		—		11.5
Total goodwill		643.6		—		30.2		613.4		525.5		—		—		525.5

Other intangible assets:
Ark
Underwriting Capacity	N/A	175.7		—		—		175.7		—		—		—		—

NSM (1)
Customer relationships	8.9	136.4		41.7		3.5		91.2		136.2		36.7		3.5		96.0
Trade names	16	65.4		9.1		1.0		55.3		65.4		8.3		1.0		56.1
Information technology platform	0	3.1		1.4		1.7		—		3.1		1.4		1.7		—
Renewal rights	12	82.5		7.6		—		74.9		82.5		4.9				77.6
Other	3.4	1.7		1.1		—		.6		1.7		1.0				.7
Subtotal		289.1		60.9		6.2		222.0		288.9		52.3		6.2		230.4

Kudu
Trade names	7	2.2		.7		—		1.5		2.2		.6		—		1.6

Other Operations
Trade names	9.6	3.6		.4		—		3.2		3.6		.3		—		3.3
Customer relationships	10.7	14.2		1.8		—		12.4		14.2		1.4		—		12.8

Insurance Licenses	N/A	8.6		—		—		8.6		8.6		—		—		8.6
Other	5.4	.3		.1		—		.2		.3		.1		—		.2
Subtotal		26.7		2.3		—		24.4		26.7		1.8		—		24.9
Total other intangible assets		493.7		63.9		6.2		423.6		317.8		54.7		6.2		256.9
Total goodwill and other intangible assets		$	1,137.3	$	63.9	$	36.4	1,037.0		$	843.3	$	54.7	6.2		782.4
Goodwill and other intangible assets attributed to non-controlling interests								(108.4)								(28.1)
Goodwill and other intangible assets included in White Mountains’s common shareholders’ equity								$	928.6							$	754.3

(1) As of March 31, 2021, NSM’s goodwill and intangible assets included $1.5 and $0.2 of the effect of foreign currency translation. As of December 31, 2020, NSM’s goodwill and intangible assets included $13.4 and $1.6 of the effect of foreign currency translation.

The goodwill recognized for the entities shown above is attributed to expected future cash flows. The acquisition date fair values of other intangible assets with finite lives are estimated using income approach techniques, which use future expected cash flows to develop a discounted present value amount.

The multi-period-excess-earnings method estimates fair value using the present value of the incremental after-tax cash flows attributable solely to the other intangible asset over its remaining life. This approach was used to estimate the fair value of other intangible assets associated with the underwriting capacity, trade names, customer relationships and contracts and information technology.

The relief-from-royalty method was used to estimate fair value for other intangible assets that relate to rights that could be obtained via a license from a third-party owner. Under this method, the fair value is estimated using the present value of license fees avoided by owning rather than leasing the asset. This technique was used to estimate the fair value of domain names, certain trademarks and brand names.

The with-or-without method estimates the fair value of an other intangible asset that provides an incremental benefit. Under this method, the fair value of the other intangible asset is calculated by comparing the value of the entity with and without the other intangible asset. This approach was used to estimate the fair value of favorable lease terms.

The following table presents a summary of the acquisition date fair values of goodwill and other intangible assets for

acquisitions completed from January 1, 2020 through March 31, 2021:

$ in Millions

Acquisition of subsidiary/ asset

Goodwill and

Other intangible asset (1)

Acquisition Date

Kingsbridge

131.7

April 7, 2020

Ark

292.5

January 1, 2021

Other Operations

15.2

July 2, 2020

(1) Acquisition date fair values include the effect of adjustments during the measurement period and excludes the effect of foreign currency translation subsequent to the acquisition date.

On at least an annual basis beginning no later than the interim period included in the one-year anniversary of an acquisition, White Mountains evaluates goodwill and other intangible assets for potential impairment. Between annual evaluations, White Mountains considers changes in circumstances or events subsequent to the most recent evaluation that may indicate that an impairment may exist and, if necessary will perform an interim review for potential impairment.

In April 2021, NSM sold Fresh Insurance’s motor business. The assets and liabilities included in the transaction, principally goodwill, have been classified as held for sale as of March 31, 2021 and have been measured at their estimated fair values, net of disposal costs. In connection with the classification of the Fresh Insurance’s motor business as held for sale, White Mountains recognized a loss of $28.7 million. See Note 2 — “Significant Transactions”.

During the three months ended March 31, 2021, White Mountains concluded that there was no impairment of the intangible assets associated with NSM.

The following tables present the change in goodwill and other intangible assets for the three months ended March 31, 2021 and 2020:


	Three Months Ended March 31,
	2021						2020
Millions	Goodwill		Other Intangible Assets		Total Goodwill and Other Intangible Assets		Goodwill		Other Intangible Assets		Total Goodwill and Other Intangible Assets
Beginning balance	$	525.5	$	256.9	$	782.4	$	394.7	$	260.0	$	654.7

Ark Transaction	116.8		175.7		292.5		—		—		—

Foreign currency translation	1.5		.2		1.7		(2.5)		(.5)		(3.0)

Loss on assets held for sale (1)	(30.2)		—		(30.2)		—		—		—
Measurement period adjustments (2)	(.2)		—		(.2)		.2		—		.2
Amortization	—		(9.2)		(9.2)		—		(5.1)		(5.1)
Ending balance	$	613.4	$	423.6	$	1,037.0	$	392.4	$	254.4	$	646.8

(1) Relates to the sale of NSM’s Fresh motor business recorded in the first quarter of 2021.This amounts excludes $1.5 of net proceeds related to the sale.

(2) Measurement period adjustments relate to updated information about acquisition date fair values of assets acquired and liabilities assumed. During the three months ended March 31, 2021, adjustments primarily relate to the acquisition in the Other Operations segment.