Investments in Unconsolidated Affiliates

White Mountains’s investments in unconsolidated affiliates represent investments in other companies in which White Mountains has a significant voting and economic interest but does not control the entity.



Millions	September 30, 2015		December 31, 2014
Symetra common shares	$	386.9	$	373.8
Unrealized gains from Symetra’s fixed maturity portfolio	5.7		37.6
Carrying value of Symetra common shares	392.6		411.4
Hamer	—		3.0
Total investments in unconsolidated affiliates	$	392.6	$	414.4

Symetra

During the third quarter of 2015, Symetra announced that it entered into a definitive merger agreement with Sumitomo Life pursuant to which Sumitomo Life will acquire all of the outstanding shares of Symetra. White Mountains expects to receive $32.00 per share in cash at closing. White Mountains also received a special dividend of $.50 per share as part of the transaction that was paid in the third quarter of 2015. The transaction is expected to close in the first quarter of 2016 and is subject to regulatory approval and other customary closing conditions.

For the nine months ended September 30, 2015, Symetra reported total revenues of $1,605.9 million, total benefits and expenses of $1,543.6 million, pre-tax income of $62.3 million and net income of $89.6 million. For the nine months ended September 30, 2014, Symetra reported total revenues of $1,601.6 million, total benefits and expenses of $1,387.0 million, pre-tax income of $214.6 million and net income of $186.8 million.

On June 30, 2015, pursuant to the redemption of White Mountains's investments in the Prospector Funds, 513,500 common shares of Symetra were distributed to White Mountains. At September 30, 2015 and December 31, 2014, White Mountains owned 20,562,379 and 20,048,879 common shares of Symetra, a 17.70% and 17.31% common share ownership. White Mountains accounts for its investment in common shares of Symetra using the equity method. During the three and nine months ended September 30, 2015, White Mountains received cash dividends from Symetra of $12.5 million and $16.9 million, which included a special dividend of $10.3 million. The dividends were recorded as a reduction of White Mountains’s investment in Symetra. During the three and nine months ended September 30, 2014, White Mountains received cash dividends from Symetra of $2.0 million and $6.0 million.

As of December 31, 2011, White Mountains concluded that its investment in Symetra common shares was other-than-temporarily impaired and wrote down the GAAP book value of the investment to its estimated fair value of $261.0 million or $15 per share. This impairment, as well as the effect of Symetra capital transactions, has resulted in a basis difference between the GAAP carrying value of White Mountains’s investment in Symetra common shares and the amount derived by multiplying the percentage of White Mountains common share ownership by Symetra’s total GAAP equity. As of September 30, 2015, the pre-tax unamortized basis difference was $160.8 million, of which $32.6 million is attributable to equity in earnings of unconsolidated affiliates and $128.2 million is attributable to equity in net unrealized gains of unconsolidated affiliates. As of December 31, 2014, the pre-tax unamortized basis difference was $170.4 million, of which $36.4 million is attributable to equity in earnings of unconsolidated affiliates and $134.0 million is attributable to equity in net unrealized gains of unconsolidated affiliates.

The pre-tax basis difference is being amortized over a 30-year period with a weighted average of 28-years remaining. The amortization is based on estimated future cash flows associated with Symetra’s underlying assets and liabilities to which the basis differences have been attributed. White Mountains continues to record its equity in Symetra's earnings and net unrealized gains (losses). In addition, White Mountains recognizes the amortization of the basis difference through equity in earnings of unconsolidated affiliates and equity in net unrealized gains (losses) from investments in unconsolidated affiliates consistent with the original attribution of the basis differences between equity in earnings and equity in net unrealized gains (losses). For the three and nine months ended September 30, 2015, White Mountains recognized after-tax amortization of $0.6 million and $2.0 million through equity in earnings of unconsolidated affiliates and $2.6 million and $8.1 million through equity in net unrealized gains from investments in unconsolidated affiliates. For the three and nine months ended September 30, 2014, White Mountains recognized after-tax amortization of $0.7 million and $2.1 million through equity in earnings of unconsolidated affiliates and $2.9 million and $8.7 million through equity in net unrealized gains from investments in unconsolidated affiliates.

The following table summarizes amounts recorded by White Mountains relating to its investment in Symetra for the three and nine months ended September 30, 2015 and 2014:



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
Millions	2015			2014			2015			2014
Carrying value of investment in Symetra at beginning of period	$	397.2		$	415.5		$	411.4		$	317.3
Equity in earnings ⁽¹⁾⁽²⁾	4.2			7.0			17.5			34.5
Equity in net unrealized gains (losses) from Symetra’s fixed maturity portfolio ⁽³⁾	3.7			(10.7		)	(31.8		)	64.0
Dividends received	(12.5		)	(2.0		)	(16.9		)	(6.0		)
Distribution from Prospector Offshore Fund	—			—			12.4			—
Carrying value of investment in Symetra at end of period⁽⁴⁾⁽⁵⁾	$	392.6		$	409.8		$	392.6		$	409.8

⁽¹⁾For the three months ended September 30, 2015 and 2014, equity in earnings excludes tax expense of $0.3 and $0.5. For the nine months ended September 30, 2015 and 2014, equity in earnings excludes tax expense of $1.1 and $2.4.

⁽²⁾For the three months ended September 30, 2015 and 2014, equity in earnings includes $0.7 and $0.7 increase relating to the pre-tax amortization of the Symetra common share basis difference. For the nine months ended September 30, 2015 and 2014, equity in earnings includes $2.1 and $2.2 increase relating to the pre-tax amortization of the Symetra common share basis difference.

⁽³⁾For the three months ended September 30, 2015 and 2014, net unrealized gains includes $2.9 and $3.1 increase relating to the pre-tax amortization of the Symetra common share basis difference. For the nine months ended September 30, 2015 and 2014, net unrealized gains includes $8.6 and $9.4 increase relating to the pre-tax amortization of the Symetra common share basis difference.

⁽⁴⁾Includes White Mountains’s equity in net unrealized gains from Symetra’s fixed maturity portfolio of $5.7 and $20.5 as of September 30, 2015 and 2014, which excludes tax expense of $0.2 and $1.4.

⁽⁵⁾The aggregate value of White Mountains’s investment in common shares of Symetra was $650.6 based upon the quoted market price of $31.64 per share at September 30, 2015.

Hamer

On May 27, 2015, White Mountains sold its interest in Hamer LLC, which resulted in a gain of $20.0 million recorded in other revenue. Prior to the sale, White Mountains recorded equity in earnings of $1.1 million and $1.6 million for the three and six months ended June 30, 2015 and $0.4 million and $0.8 million for the three and six months ended June 30, 2014.