White Mountains Insurance : 2024 First Quarter Results

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

• QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the period ended March 31, 2024

OR

• TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-8993

WHITE MOUNTAINS INSURANCE GROUP, LTD.

(Exact name of Registrant as specified in its charter)

Bermuda	94-2708455
(State or other jurisdiction of incorporation or organization)
23 South Main Street, Suite 3B	(I.R.S. Employer Identification No.)
Hanover,	03755-2053
New Hampshire	(Zip Code)
(Address of principal executive offices)

Registrant's telephone number, including area code: [phone]

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, par value $1.00 per share		WTM		New York Stock Exchange
		WTM.BH	Bermuda Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer ☐	Non-accelerated filer ☐
		Smaller reporting company ☐	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 6, 2024, 2,565,733 common shares with a par value of $1.00 per share were outstanding (which includes 34,525 restricted common shares that were not vested at such date).

WHITE MOUNTAINS INSURANCE GROUP, LTD.

Table of Contents

		Page No.
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets, March 31, 2024 and December 31, 2023	1
	Consolidated Statements of Operations and Comprehensive Income,
	Three Months Ended March 31, 2024 and 2023	3
	Consolidated Statements of Changes in Equity, Three Months Ended March 31, 2024 and 2023	6
	Consolidated Statements of Cash Flows, Three Months Ended March 31, 2024 and 2023	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	44
	Results of Operations for the Three Months Ended March 31, 2024 and 2023	44
	Liquidity and Capital Resources	65
	Non-GAAP Financial Measures	70
	Critical Accounting Estimates	71
	Forward-Looking Statements	72
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	73
Item 4.	Controls and Procedures	73
PART II.	OTHER INFORMATION	73
Items 1 through 6.	73
SIGNATURES		74

Part I. FINANCIAL INFORMATION.

Item 1. Financial Statements

WHITE MOUNTAINS INSURANCE GROUP, LTD. CONSOLIDATED BALANCE SHEETS

(Unaudited)

Millions, except share and per share amounts		March 31, 2024		December 31, 2023
Assets
P&C Insurance and Reinsurance (Ark/WM Outrigger)
Fixed maturity investments, at fair value	$	946.9		$	866.8
Common equity securities, at fair value		409.9			400.6
Short-term investments, at fair value		835.3			962.8
Other long-term investments		485.0			440.9
Total investments		2,677.1			2,671.1
Cash (restricted $24.7 and $0.7)		129.1			90.5
Reinsurance recoverables		695.0			442.0
Insurance premiums receivable		1,001.5			612.2
Deferred acquisition costs		213.3			145.3
Goodwill and other intangible assets		292.5			292.5
Other assets		140.9			125.0
Total P&C Insurance and Reinsurance assets		5,149.4			4,378.6
Financial Guarantee (HG Global/BAM)
Fixed maturity investments, at fair value		1,015.7			1,012.3
Short-term investments, at fair value		54.7			70.6
Total investments		1,070.4			1,082.9
Cash		4.7			6.7
Insurance premiums receivable		5.8			5.5
Deferred acquisition costs		40.9			40.1
Other assets		36.8			36.8
Total Financial Guarantee assets		1,158.6			1,172.0
Asset Management (Kudu)
Short-term investments, at fair value		19.8			29.3
Other long-term investments		889.9			896.3
Total investments		909.7			925.6
Cash		6.5			1.4
Accrued investment income		22.1			17.6
Goodwill and other intangible assets		8.2			8.3
Other assets		6.6			6.5
Total Asset Management assets		953.1			959.4
P&C Insurance Distribution (Bamboo)					-
Fixed maturity investments, at fair value		24.6
Short-term investments, at fair value		18.6			-
Total investments		43.2			-
Cash (restricted $58.3 and $0.0)		62.0			-
Premiums, commissions and fees receivable		43.3			-
Goodwill and other intangible assets		367.2			-
Other assets		12.4			-
Total P&C Insurance Distribution assets		528.1			-
Other Operations
Fixed maturity investments, at fair value		267.4			230.2
Common equity securities, at fair value		151.6			137.8
Investment in MediaAlpha, at fair value		465.6			254.9
Short-term investments, at fair value		126.1			425.2
Other long-term investments		617.0			661.0
Total investments		1,627.7			1,709.1
Cash		23.0			23.8
Goodwill and other intangible assets		68.7			69.8
Other assets		81.7			73.2
Total Other Operations assets		1,801.1			1,875.9
Total assets	$	9,590.3		$	8,385.9

See Notes to Consolidated Financial Statements

1

CONSOLIDATED BALANCE SHEETS (CONTINUED)

(Unaudited)

Millions, except share and per share amounts		March 31, 2024		December 31, 2023
Liabilities
P&C Insurance and Reinsurance (Ark/WM Outrigger)
Loss and loss adjustment expense reserves	$	1,744.5		$	1,605.1
Unearned insurance premiums		1,234.7			743.6
Debt		155.4			185.5
Reinsurance payable		262.5			81.1
Contingent consideration		94.0			94.0
Other liabilities		190.1			166.8
Total P&C Insurance and Reinsurance liabilities		3,681.2			2,876.1
Financial Guarantee (HG Global/BAM)
Unearned insurance premiums		328.5			325.8
Debt		147.0			146.9
Accrued incentive compensation		11.9			27.2
Other liabilities		31.9			31.8
Total Financial Guarantee liabilities		519.3			531.7
Asset Management (Kudu)
Debt		203.8			203.8
Other liabilities		61.8			71.6
Total Asset Management liabilities		265.6			275.4
P&C Insurance Distribution (Bamboo)					-
Loss and loss adjustment expense reserves		12.3
Unearned insurance premiums		25.7			-
Premiums and commissions payable		61.7			-
Other liabilities		18.6			-
Total P&C Insurance Distribution liabilities		118.3			-
Other Operations
Debt		25.9			28.4
Accrued incentive compensation		47.6			87.7
Other liabilities		41.8			25.0
Total Other Operations liabilities		115.3			141.1
Total liabilities		4,699.7			3,824.3
Equity
White Mountains's common shareholders' equity
White Mountains's common shares at $1 par value per share-authorized 50,000,000		2.6			2.6
shares; issued and outstanding 2,565,733 and 2,560,452 shares
Paid-in surplus		551.9			548.7
Retained earnings		3,917.7			3,690.8
Accumulated other comprehensive income (loss), after-tax:
Net unrealized gains (losses) from foreign currency translation		(1.8)			(1.6)
Total White Mountains's common shareholders' equity		4,470.4			4,240.5
Noncontrolling interests		420.2			321.1
Total equity		4,890.6			4,561.6
Total liabilities and equity	$	9,590.3		$	8,385.9

See Notes to Consolidated Financial Statements

2

WHITE MOUNTAINS INSURANCE GROUP, LTD. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

			Three Months Ended March 31,
Millions		2024			2023
Revenues:
P&C Insurance and Reinsurance (Ark/WM Outrigger)
Earned insurance premiums	$	302.8		$	255.1
Net investment income		19.9			10.6
Net realized and unrealized investment gains (losses)		10.6			24.5
Other revenues		3.5			(2.7)
Total P&C Insurance and Reinsurance revenues		336.8			287.5
Financial Guarantee (HG Global/BAM)
Earned insurance premiums		7.8			7.7
Net investment income		9.7			7.2
Net realized and unrealized investment gains (losses)		(10.1)			17.0
Other revenues		.5			.8
Total Financial Guarantee revenues		7.9			32.7
Asset Management (Kudu)
Net investment income		17.2			14.2
Net realized and unrealized investment gains (losses)		(6.5)			29.6
Total Asset Management revenues		10.7			43.8
P&C Insurance Distribution (Bamboo)
Commission and fee revenues		21.9			-
Earned insurance premiums		8.4			-
Other revenues		.8			-
Total P&C Insurance Distribution revenues		31.1			-
Other Operations
Net investment income		9.9			7.0
Net realized and unrealized investment gains (losses)		22.2			41.8
Net realized and unrealized investment gains (losses) from investment in MediaAlpha		210.7			85.2
Commission revenues		3.6			3.3
Other revenues		14.4			30.6
Total Other Operations revenues		260.8			167.9
Total revenues	$	647.3		$	531.9

See Notes to Consolidated Financial Statements

3

CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)

(Unaudited)

			Three Months Ended March 31,
Millions		2024			2023
Expenses:
P&C Insurance and Reinsurance (Ark/WM Outrigger)
Loss and loss adjustment expenses	$	180.0		$	147.8
Acquisition expenses		66.3			59.8
General and administrative expenses		42.2			35.2
Change in fair value of contingent consideration		-		(2.4)
Interest expense		5.4			5.0
Total P&C Insurance and Reinsurance expenses		293.9			245.4
Financial Guarantee (HG Global/BAM)
Acquisition expenses		2.2			2.7
General and administrative expenses		17.3			17.3
Interest expense		3.5			4.5
Total Financial Guarantee expenses		23.0			24.5
Asset Management (Kudu)
General and administrative expenses		3.4			3.8
Interest expense		5.6			4.7
Total Asset Management expenses		9.0			8.5
P&C Insurance Distribution (Bamboo)
Broker commission expenses		9.3			-
Loss and loss adjustment expenses		5.8			-
Acquisition expenses		3.1			-
General and administrative expenses		12.0			-
Total P&C Insurance Distribution expenses		30.2			-
Other Operations
Cost of sales		7.6			13.9
General and administrative expenses		50.3			39.7
Interest expense		.7			.8
Total Other Operations expenses		58.6			54.4
Total expenses		414.7			332.8
Pre-tax income (loss)		232.6			199.1
Income tax (expense) benefit		(10.8)			(11.9)
Net income (loss)		221.8			187.2
Net (income) loss attributable to noncontrolling interests		14.6			(7.7)
Net income (loss) attributable to White Mountains's common shareholders	$	236.4		$	179.5

See Notes to Consolidated Financial Statements

4

WHITE MOUNTAINS INSURANCE GROUP, LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

			Three Months Ended March 31,
Millions		2024			2023
Net income (loss) attributable to White Mountains's common shareholders		$	236.4		$	179.5
Other comprehensive income, net of tax:
Other comprehensive income (loss), net of tax		(.3)			1.2
Comprehensive income (loss)		236.1			180.7
Other comprehensive (income) loss attributable to noncontrolling interests		.1			(.4)
Comprehensive income (loss) attributable to White Mountains's common shareholders	$	236.2		$	180.3
Earnings (loss) per share attributable to White Mountains's common shareholders:
Basic earnings (loss) per share
Continuing operations	$	92.33		$	69.83
Discontinued operations		-		-
Total consolidated operations	$	92.33		$	69.83
Diluted earnings (loss) per share	$	92.33
Continuing operations		$	69.83
Discontinued operations		-		-
Total consolidated operations	$	92.33		$	69.83
Dividends declared and paid per White Mountains's common share	$	1.00		$	1.00

See Notes to Consolidated Financial Statements.

5

WHITE MOUNTAINS INSURANCE GROUP, LTD.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited)

			White Mountains's Common Shareholders' Equity
			Common											Non-
			shares and		Retained		AOCI, after
Millions		paid-in				Total		controlling	Total Equity
	surplus		earnings		tax			interest
Balance as of January 1, 2024		$	551.3		$	3,690.8		$	(1.6)		$	4,240.5		$	321.1		$	4,561.6
Net income (loss)		-			236.4			-			236.4			(14.6)			221.8
Other comprehensive income (loss), net of tax		-		-		(.2)			(.2)			(.1)			(.3)
Total comprehensive income (loss)		-			236.4			(.2)			236.2			(14.7)			221.5
Dividends declared on common shares		-			(2.5)			-			(2.5)			-			(2.5)
Dividends to noncontrolling interests		-		-		-		-		(9.8)			(9.8)
Issuances of common shares		.3			-		-		.3			-		.3
Repurchases and retirements of common shares		(1.1)			(7.0)			-		(8.1)			-		(8.1)
BAM member surplus contributions, net of tax		-		-		-		-		11.4			11.4
Amortization of restricted share awards		3.2			-		-		3.2			-		3.2
Recognition of equity-based compensation expense		.6			-		-		.6			.2			.8
of subsidiaries
Net contributions (distributions) and dilution from		.2			-		-		.2			.9			1.1
other noncontrolling interests
Acquisition of noncontrolling interests - Bamboo		-		-		-		-		111.1			111.1
Balance as of March 31, 2024	$	554.5		$	3,917.7		$	(1.8)		$	4,470.4		$	420.2		$	4,890.6
			White Mountains's Common Shareholders' Equity
			Common											Non-
			shares and		Retained		AOCI, after
Millions		paid-in				Total		controlling	Total Equity
	surplus		earnings		tax			interest
Balance as of January 1, 2023		$	538.6		$	3,211.8		$	(3.5)		$	3,746.9		$	188.1		$	3,935.0
Net income (loss)		-			179.5			-			179.5			7.7			187.2
Other comprehensive income (loss), net of tax		-		-		.8			.8			.4			1.2
Total comprehensive income (loss)		-			179.5			.8			180.3			8.1			188.4
Dividends declared on common shares		-			(2.6)			-			(2.6)			-			(2.6)
Dividends to noncontrolling interests		-		-		-		-		(7.2)			(7.2)
Issuances of common shares		.1			-		-		.1			-		.1
Repurchases and retirements of common shares		(3.9)			(21.4)			-		(25.3)			-		(25.3)
BAM member surplus contributions, net of tax		-		-		-		-		11.8			11.8
Amortization of restricted share awards		3.1			-		-		3.1			-		3.1
Recognition of equity-based compensation expense		.4			-		-		.4			.2			.6
of subsidiaries
Net contributions and dilution from other		(.5)			-		-		(.5)			(1.2)			(1.7)
noncontrolling interests
Disposition of noncontrolling interests		-		-		-		-		(9.4)			(9.4)
Balance as of March 31, 2023	$	537.8		$	3,367.3		$	(2.7)		$	3,902.4		$	190.4		$	4,092.8

See Notes to Consolidated Financial Statements.

6

WHITE MOUNTAINS INSURANCE GROUP, LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

			Three Months Ended March 31,
Millions		2024			2023
Cash flows from operations:
Net income (loss)	$	221.8		$	187.2
Adjustments to reconcile net income to net cash provided from (used for) operations:
Net realized and unrealized investment (gains) losses		(16.2)			(112.9)
Net realized and unrealized investment (gains) losses from investment in MediaAlpha		(210.7)			(85.2)
Deferred income tax expense (benefit)		(9.8)			(3.6)
Amortization of restricted share awards		3.2			3.1
Amortization (accretion) and depreciation		(2.1)			(2.4)
Change in fair value of contingent consideration - Ark		-		(2.4)
Other operating items:
Net change in reinsurance recoverables		(253.0)			24.7
Net change in insurance premiums, commissions and fees receivable		(394.9)			(365.3)
Net change in deferred acquisition costs		(68.8)			(82.2)
Net change in loss and loss adjustment expense reserves		142.4			49.1
Net change in unearned insurance premiums		499.4			501.8
Net change in reinsurance payable		181.4			(58.1)
Net change in premiums and commissions payable		12.5			-
Contributions to Kudu's Participation Contracts		-		(30.9)
Proceeds from Kudu's Participation Contracts sold		-		62.9
Net other operating activities		(68.7)			(.2)
Net cash provided from (used for) operations
	36.5			85.6
Cash flows from investing activities:
Net change in short-term investments		441.3			47.6
Sales of fixed maturity investments		185.8			54.6
Maturities, calls and paydowns of fixed maturity investments		81.8			66.8
Distributions and redemptions of other long-term investments		91.5			2.0
Proceeds from the sale of Other Operating Businesses, net of cash sold of $0.0 and $0.8		-		17.3
Purchases of consolidated subsidiaries, net of cash acquired of $44.9 and $0.0		(231.8)			-
Purchases of fixed maturity investments		(417.3)			(127.6)
Purchases of other long-term investments		(79.9)			(146.1)
Net other investing activities		29.2			(11.2)
Net cash provided from (used for) investing activities
	100.6			(96.6)
Cash flows from financing activities:
Repayment of debt and revolving lines of credit		(32.6)			(20.0)
Cash dividends paid to common shareholders		(2.5)			(2.6)
Repurchases and retirements of common shares		(8.1)			(25.3)
BAM member surplus contributions		11.4			11.8
Net contributions from (distributions to) other noncontrolling interests		1.1			(1.7)
Fidus Re premium payments		(3.5)			(3.5)
Net cash provided from (used for) financing activities
	(34.2)			(41.3)
Net change in cash during the period			102.9			(52.3)
Cash balances at beginning of period (includes restricted cash balances of $0.7 and $12.2)		122.4			255.0
Cash balances at end of period (includes restricted cash balances of $83.0 and $13.0)	$	225.3		$	202.7
Supplemental cash flows information:
Interest paid	$	(16.7)		$	(5.8)
Net income tax payments		(5.3)			(17.8)

See Notes to Consolidated Financial Statements

7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1. Basis of Presentation and Significant Accounting Policies

Basis of Presentation

White Mountains Insurance Group, Ltd. (the "Company" or the "Registrant") is an exempted Bermuda limited liability company whose principal businesses are conducted through its subsidiaries and other affiliates. The Company's headquarters is located at 26 Reid Street, Hamilton, Bermuda HM 11, its principal executive office is located at 23 South Main Street, Suite 3B, Hanover, New Hampshire 03755-2053 and its registered office is located at Clarendon House, 2 Church Street, Hamilton, Bermuda HM 11. The Company's website is www.whitemountains.com. The information contained on White Mountains's website is not incorporated by reference into, and is not a part of, this report.

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP") and include the accounts of the Company, its subsidiaries (collectively with the Company, "White Mountains") and other entities required to be consolidated under GAAP. Intercompany transactions have been eliminated in consolidation. Certain amounts in the prior period financial statements have been reclassified to conform to the current presentation.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

These interim financial statements include all adjustments considered necessary by management to fairly state the financial position, results of operations and cash flows of White Mountains. These interim financial statements may not be indicative of financial results for the full year and should be read in conjunction with the Company's 2023 Annual Report on Form 10-K.

Reportable Segments

As of March 31, 2024, White Mountains conducted its operations through four reportable segments: (1) Ark/WM Outrigger, (2) HG Global/BAM, (3) Kudu and (4) Bamboo, with our remaining operating businesses, holding companies and other assets included in Other 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 Company's chief operating decision makers and its Board of Directors. See

Note 14 - "Segment Information."

The Ark/WM Outrigger segment consists of Ark Insurance Holdings Limited and its subsidiaries (collectively, "Ark") and Outrigger Re Ltd. Segregated Account 2023-1 ("WM Outrigger Re") (collectively with Ark, "Ark/WM Outrigger"). Ark is a specialty property and casualty insurance and reinsurance company that offers a wide range of niche insurance and reinsurance products, including property, specialty, marine & energy, accident & health and casualty. Ark underwrites select coverages through Lloyd's Syndicates 4020 and 3902 (the "Syndicates") and its wholly-owned subsidiary Group Ark Insurance Limited ("GAIL"). White Mountains acquired a controlling ownership interest in Ark on January 1, 2021 (the "Ark Transaction"). As of March 31, 2024 and December 31, 2023, White Mountains owned 72.0% of Ark on a basic shares outstanding basis (61.9% after taking account of management's equity incentives). The remaining shares are owned by current and former employees of Ark. In the future, management rollover shareholders could earn additional shares in Ark if and to the extent that White Mountains achieves certain thresholds for its multiple of invested capital return. If fully earned, these additional shares would represent 12.5% of the shares outstanding at closing. The liability related to these additional shares is recorded as contingent consideration. During the fourth quarter of 2022, Ark sponsored the formation of Outrigger Re Ltd., a Bermuda company registered as a special purpose insurer and segregated accounts company, to provide reinsurance capacity to Ark. White Mountains consolidates the results of its segregated account, WM Outrigger Re, in its financial statements. See Note 2 - "Significant Transactions." As of March 31, 2024 and December 31, 2023, White Mountains owned 100.0% of WM Outrigger Re's preferred equity.

8