XML 34 R17.htm IDEA: XBRL DOCUMENT
v3.22.0.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The Company and its Bermuda-domiciled subsidiaries are not subject to Bermuda income tax under current Bermuda law. In the event there is a change in the current law such that taxes are imposed, the Bermuda Exempted Undertakings Tax Protection Act of 1966 states that the Company and its Bermuda-domiciled subsidiaries would be exempt from such tax until March 31, 2035. The Company has subsidiaries and branches that operate in various other jurisdictions around the world and are subject to tax in the jurisdictions in which they operate. As of December 31, 2021, the primary jurisdictions in which the Company’s subsidiaries and branches were subject to tax were Ireland, Israel, Luxembourg, the United Kingdom and the United States. The following table presents the total income tax (expense) benefit for the years ended December 31, 2021, 2020 and 2019:
|  | Year Ended December 31,
Millions |  | 2021 |  | 2020 |  | 2019
Current income tax (expense) benefit: |  |  |  |  |  |
U.S. federal |  | $ | (3.8) |  |  | $ | (10.4) |  |  | $ | .9 |
State |  | (2.1) |  |  | (4.2) |  |  | (3.7) |
Non-U.S. |  | (3.9) |  |  | (1.1) |  |  | (1.7) |
Total current income tax (expense) benefit |  | (9.8) |  |  | (15.7) |  |  | (4.5) |
Deferred income tax (expense) benefit: |  |  |  |  |  |
U.S. federal |  | (4.9) |  |  | 23.2 |  |  | (14.9) |
State |  | (5.6) |  |  | 10.3 |  |  | (10.4) |
Non-U.S. |  | (18.3) |  |  | 2.7 |  |  | .5 |
Total deferred income tax (expense) benefit |  | (28.8) |  |  | 36.2 |  |  | (24.8) |
Total income tax (expense) benefit |  | $ | (38.6) |  |  | $ | 20.5 |  |  | $ | (29.3) |
Effective Rate Reconciliation The following table presents a reconciliation of taxes calculated for 2021, 2020 and 2019 using the 21% U.S. federal statutory rate U.S. federal statutory rate (the tax rate at which the majority of White Mountains’s worldwide operations are taxed) to the income tax (expense) benefit on pre-tax income (loss):
|  | Year Ended December 31,
Millions |  | 2021 |  | 2020 |  | 2019
Tax (expense) benefit at the U.S. statutory rate |  | $ | 63.4 |  |  | $ | (135.5) |  |  | $ | (85.1) |
Differences in taxes resulting from: |  |  |  |  |  |
Non-U.S. earnings, net of foreign taxes |  | (77.2) |  |  | 78.4 |  |  | 27.1 |
Tax rate changes |  | (11.2) |  |  | 2.7 |  |  | (5.7) |
State taxes |  | (6.2) |  |  | (8.5) |  |  | (17.5) |
Member’s surplus contributions |  | (5.6) |  |  | (4.8) |  |  | (3.6) |
Change in valuation allowance |  | (2.4) |  |  | (29.2) |  |  | 63.6 |
Officer compensation |  | (1.5) |  |  | (1.1) |  |  | — |
Withholding tax |  | (.3) |  |  | (5.0) |  |  | (1.6) |
Tax exempt interest and dividends |  | .2 |  |  | .8 |  |  | 1.1 |
Reorganization |  | — |  |  | 130.5 |  |  | — |
Tax reserve adjustments |  | — |  |  | 1.9 |  |  | (.7) |
Other, net |  | 2.2 |  |  | (9.7) |  |  | (6.9) |
Total income tax (expense) benefit on pre-tax income (loss) |  | $ | (38.6) |  |  | $ | 20.5 |  |  | $ | (29.3) |
The non-U.S. component of pre-tax (loss) income was $(319.0) million, $327.8 million and $100.4 million for the years ended December 31, 2021, 2020 and 2019. The reorganization benefit resulted from the release of a deferred tax liability following an internal reorganization completed in connection with the MediaAlpha IPO. Tax Payments and Receipts Net income tax (refunds) payments totaled $(0.1) million, $16.2 million, and $3.7 million for the years ended December 31, 2021, 2020 and 2019. Deferred Tax Assets and Liabilities Deferred taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for tax purposes. The following table presents an outline of the significant components of White Mountains’s U.S. federal, state and non-U.S. deferred tax assets and liabilities:
|  | December 31,
Millions |  | 2021 |  | 2020
Deferred tax assets related to: |  |  |  |
U.S. federal and state net operating and capital loss carryforwards |  | $ | 102.8 |  |  | $ | 79.6 |
Non-U.S. net operating loss carryforwards |  | 47.1 |  |  | 50.5 |
Incentive compensation |  | 14.6 |  |  | 17.5 |
Accrued interest |  | 10.8 |  |  | 7.9 |
Deferred acquisition costs |  | 6.4 |  |  | 5.5 |
Tax credit carryforwards |  | 4.9 |  |  | 5.5 |
Other items |  | .7 |  |  | 1.3 |
Total gross deferred tax assets |  | 187.3 |  |  | 167.8 |
Less: valuation allowances |  | 92.3 |  |  | 97.4 |
Total net deferred tax assets |  | 95.0 |  |  | 70.4 |
Deferred tax liabilities related to: |  |  |  |
Member’s surplus contributions |  | 60.4 |  |  | 52.9 |
Purchase accounting |  | 48.5 |  |  | 5.1 |
Investment basis difference |  | 33.7 |  |  | 11.8 |
Net unrealized investment gains (losses) |  | 10.7 |  |  | .3 |
Deferred underwriting |  | 4.1 |  | — |
Other items |  | 2.7 |  |  | 2.8 |
Total deferred tax liabilities |  | 160.1 |  |  | 72.9 |
Net deferred tax asset (liability) |  | $ | (65.1) |  |  | $ | (2.5) |
White Mountains’s deferred tax assets (liabilities) are net of U.S. federal, state and non-U.S. valuation allowances and, to the extent they relate to non-U.S. jurisdictions, they are shown at year-end exchange rates. Valuation Allowance White Mountains records a valuation allowance against deferred tax assets if it becomes more likely than not that all or a portion of a deferred tax asset will not be realized. Changes in valuation allowances from period to period are included in income tax expense in the period of change. In determining whether or not a valuation allowance, or change therein, is warranted, White Mountains considers factors such as prior earnings history, expected future earnings, carryback and carryforward periods and strategies that if executed would result in the realization of a deferred tax asset. It is possible that certain planning strategies or projected earnings in certain subsidiaries may not be sufficient to utilize the entire deferred tax asset, which could result in material changes to White Mountains’s deferred tax assets and tax expense. Of the $92.3 million valuation allowance as of December 31, 2021, $42.9 million related to deferred tax assets on net operating losses in U.S. subsidiaries and other federal and state deferred tax benefits, $25.2 million related to deferred tax assets on net operating losses and net investment unrealized gains and losses in Luxembourg subsidiaries, $21.9 million related to net operating losses and other deferred tax benefits in Israeli subsidiaries and $2.3 million related to net operating losses and other deferred tax benefits in U.K. subsidiaries. Of the $97.4 million valuation allowance as of December 31, 2020, $46.5 million related to deferred tax assets on net operating losses in U.S. subsidiaries and other federal and state deferred tax benefits, $26.8 million related to deferred tax assets on net operating losses and net investment unrealized gains and losses in Luxembourg subsidiaries, $20.0 million related to net operating losses and other deferred tax benefits in Israeli subsidiaries and $4.1 million related to net operating losses and other deferred tax benefits in U.K. subsidiaries. United States During 2021, White Mountains recorded income tax benefit of $3.6 million to reflect the decrease in the valuation allowance on the net deferred tax assets in certain U.S. operations, consisting of the WM Adams Holdings, Inc. (“WM Adams”) consolidated tax group included within the Other Operations segment, as White Mountains management does not currently anticipate sufficient taxable income to utilize the remaining deferred tax assets. WM Adams includes WM Lincoln Holdings Inc. (“WM Lincoln”), WM Capital, WM Advisors and certain other entities and investments that are included in the Other Operations segment. During 2020, White Mountains recorded income tax expense of $14.9 million to establish a full valuation allowance on the deferred tax assets in certain U.S. operations, consisting of the WM Lincoln consolidated tax group included within the Other Operations segment, as White Mountains management did not currently anticipate sufficient taxable income to utilize the deferred tax assets. WM Lincoln includes WM Capital, WM Advisors and certain other entities and investments that are included in the Other Operations segment. During 2021 and 2020, White Mountains recorded income tax expense of $7.8 million and $4.5 million to reflect the increase in the valuation allowance on net deferred tax assets of BAM. On January 1, 2020, White Mountains adopted ASU 2019-12. For periods subsequent to the adoption of ASU 2019-12, White Mountains records both the tax expense related to BAM’s MSC and the related changes in valuation allowance on such taxes directly through non-controlling interest equity. Prior to the adoption of ASU 2019-12, White Mountains recorded the tax expense related to BAM’s MSC to non-controlling interest equity, while the change in valuation allowance on such taxes was recorded through the income statement. During 2021 and 2020, BAM had income included in equity due to MSC that was available to offset its loss from continuing operations. In 2021 and 2020, based on the adoption of ASU 2019-12, BAM recorded both the income tax benefit on MSC of $7.5 million and $9.7 million and the offsetting expense in paid-in surplus. During 2021 and 2020, BAM continued to have a full valuation allowance recorded against its net deferred tax assets, as White Mountains management is unsure it will generate sufficient taxable income to utilize the deferred tax assets. During 2021 and 2020, White Mountains recorded income tax (benefit) expense of $(0.8) million and $1.9 million to reflect the decrease or increase of the valuation allowance against a deferred tax asset related to foreign tax credits at White Mountains Catskill Holdings, Inc., as White Mountains management is unsure it will generate sufficient taxable income to utilize the deferred tax asset. During 2021, White Mountains recorded income tax expense of $0.6 million to reflect the establishment of a valuation allowance against deferred tax assets relating to net operating losses at the US branches of the White Mountains U.K. holding companies. Non-U.S. Jurisdictions During 2021, White Mountains recorded income tax benefit of $1.6 million to reflect the decrease of the full valuation allowance against deferred tax assets which primarily relate to losses on the write-down of foreign subsidiaries and the unrealized losses on investments held in Luxembourg-domiciled subsidiaries. During 2020, White Mountains recorded income tax expense of $4.2 million to reflect the increase of the valuation allowance against most of the deferred tax assets which primarily relate to losses on the write-down of foreign subsidiaries and the unrealized losses on investments held in Luxembourg-domiciled subsidiaries. During 2021 and 2020, White Mountains recorded income tax expense of $1.9 million and $2.7 million to establish a full valuation allowance against deferred tax assets at certain Israel-domiciled subsidiaries, as White Mountains management does not currently anticipate sufficient taxable income to utilize the deferred tax assets. During 2021, White Mountains recorded income tax benefit of $1.9 million to reflect the decrease of the valuation allowance against certain deferred tax assets at U.K. subsidiaries, as White Mountains management does not currently anticipate sufficient taxable income to utilize the deferred tax assets. During 2020, White Mountains recorded income tax expense of $1.0 million to reflect the increase of the full valuation allowance against deferred tax assets at certain U.K. subsidiaries, as White Mountains management does not currently anticipate sufficient taxable income to utilize the deferred tax assets. Net Operating Loss and Capital Loss Carryforwards The following table presents net operating loss and capital loss carryforwards as of December 31, 2021, the expiration dates and the deferred tax assets thereon:
|  | December 31, 2021
Millions |  | United States |  | Luxembourg |  |  |  |  |  | United Kingdom |  | Israel |  | Total
2021-2025 |  | $ | — |  |  | $ | — |  |  |  |  |  |  | $ | — |  |  | $ | — |  |  | $ | — |
2026-2030 |  | — |  |  | — |  |  |  |  |  |  | — |  |  | — |  |  | — |
2031-2040 |  | 250.7 |  |  | 68.3 |  |  |  |  |  |  | — |  |  | — |  |  | 319.0 |
No expiration date |  | 213.8 |  |  | 28.8 |  |  |  |  |  |  | 6.9 |  |  | 93.3 |  |  | 342.8 |
Total |  | $ | 464.5 |  |  | $ | 97.1 |  |  |  |  |  |  | $ | 6.9 |  |  | $ | 93.3 |  |  | $ | 661.8 |
Gross deferred tax asset |  | $ | 97.6 |  |  | $ | 24.3 |  |  |  |  |  |  | $ | 1.4 |  |  | $ | 21.4 |  |  | $ | 144.7 |
Valuation allowance |  | (83.2) |  |  | (24.3) |  |  |  |  |  |  | (.4) |  |  | (21.4) |  |  | (129.3) |
Net deferred tax asset |  | $ | 14.4 |  |  | $ | — |  |  |  |  |  |  | $ | 1.0 |  |  | $ | — |  |  | $ | 15.4 |
As of December 31, 2021, there are U.S. foreign tax credit carryforwards available of $4.7 million, which begin to expire in 2028. Uncertain Tax Positions Recognition of the benefit of a given tax position is based upon whether a company determines that it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. In evaluating the more-likely-than-not recognition threshold, White Mountains must presume that the tax position will be subject to examination by a taxing authority with full knowledge of all relevant information. If the recognition threshold is met, then the tax position is measured at the largest amount of benefit that is more than 50% likely of being realized upon ultimate settlement. The following table presents a reconciliation of the beginning and ending amount of unrecognized tax benefits from 2019 to 2021:
Millions |  | Permanent Differences (1) |  | Temporary Differences (2) |  | Interest and Penalties (3) |  | Total
Balance at December 31, 2018 |  | $ | 1.1 |  |  | $ | — |  |  | $ | — |  |  | $ | 1.1 |
Changes in prior year tax positions |  | 1.3 |  |  | — |  |  | — |  |  | 1.3 |
Balance at December 31, 2019 |  | 2.4 |  |  | — |  |  | — |  |  | 2.4 |
Changes in prior year tax positions |  | .1 |  |  | — |  |  | — |  |  | .1 |
Tax positions taken during the current year |  | .1 |  |  | — |  |  | — |  |  | .1 |
Changes in prior year tax positions |  | (2.6) |  |  | — |  |  | — |  |  | (2.6) |
Balance at December 31, 2020 |  | — |  |  | — |  |  | — |  |  | — |
Changes in prior year tax positions |  | — |  |  | — |  |  | — |  |  | — |
Balance at December 31, 2021 |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
(1)Represents the amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate. (2)Represents the amount of unrecognized tax benefits that, if recognized, would create a temporary difference between the reported amount of an item in White Mountains’s Consolidated Balance Sheet and its tax basis. (3)Net of tax benefit. White Mountains classifies all interest and penalties on unrecognized tax benefits as part of income tax expense. During the years ended December 31, 2021, 2020 and 2019, White Mountains did not recognize any net interest (income) expense. There was no accrued interest as of December 31, 2021 and 2020. Tax Examinations With a few immaterial exceptions, White Mountains is no longer subject to U.S. federal, state, or non-U.S. income tax examinations by tax authorities for years before 2016.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration