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.



	November 5,			December 31,
Millions	2015			2014
Symetra common shares	$	394.4		$	373.8
Unrealized (losses) gains from Symetra’s fixed maturity portfolio	(1.6		)	37.6
Carrying value of Symetra common shares	392.8			411.4

Hamer	—			3.0
Total investments in unconsolidated affiliates	$	392.8		$	414.4

Symetra

In August 2015, Symetra announced it had entered into a definitive merger agreement with Sumitomo Life pursuant to which Sumitomo Life would acquire all of the outstanding shares of Symetra. Following the announcement and Symetra shareholders’ November 5, 2015 meeting to approve the transaction, White Mountains relinquished its representation on Symetra’s board of directors. As a result, White Mountains changed its accounting for Symetra common shares from the equity method to fair value. During the fourth quarter of 2015, White Mountains recognized $258.8 million ($241.1 million after tax) of unrealized investment gains through net income, representing the difference between the carrying value of Symetra common shares under the equity method at the date of change and fair value at December 31, 2015. On February 1, 2016, Symetra closed its definitive merger agreement with Sumitomo Life and White Mountains received proceeds of $658.0 million, or $32.00 per common share.

During 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. As of November 5, 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, respectively. During the period of January 1, 2015 through November 5, 2015, White Mountains received cash dividends from Symetra of $16.9 million on its common share investment which was accounted for as a reduction of White Mountains’s investment in Symetra in accordance with equity accounting.

White Mountains previously owned warrants to acquire an additional 9.49 million common shares of Symetra at $11.49 per share. On June 20, 2013, White Mountains exercised these warrants in a cashless transaction and received 2.65 million common shares of Symetra in exchange for the warrants. Prior to their exercise, White Mountains accounted for its Symetra warrants as derivatives with changes in fair value recognized as a gain or loss recognized through other revenue in the income statement. White Mountains used a Black Scholes valuation model to determine the fair value of the Symetra warrants. During the six months ended June 30, 2013, White Mountains recognized a $10.8 million increase in the value of the warrants through other revenues based on the final Black Scholes valuation that was agreed upon between Symetra and White Mountains. During the six months ended June 30, 2013, White Mountains also received $1.5 million of dividends from Symetra on the warrants that were recorded in net investment income.

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 November 5, 2015, the pre-tax unamortized basis difference was $159.9 million, of which $32.6 million is attributable to equity in earnings of unconsolidated affiliates and $127.3 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 differences were amortized over a 30-year period, based on estimated future cash flows associated with Symetra’s underlying assets and liabilities to which the basis differences were attributed. White Mountains continued to record its equity in Symetra's earnings and net unrealized gains (losses) under the equity method through November 5, 2015. In addition, White Mountains recognized the amortization of the basis differences 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 period ended November 5, 2015, White Mountains recognized after-tax amortization of $2.2 million through equity in earnings of unconsolidated affiliates and $8.9 million through equity in net unrealized gains from investments in unconsolidated affiliates. For the period ended December 31, 2014, White Mountains recognized after-tax amortization of $2.8 million through equity in earnings of unconsolidated affiliates and $11.7 million through equity in net unrealized gains from investments in unconsolidated affiliates. For the period ended December 31, 2013, White Mountains recognized after-tax amortization of $2.7 million through equity in earnings of unconsolidated affiliates and $10.8 million through equity in net unrealized gains from investments in unconsolidated affiliates.

The following table summarizes amounts recorded by White Mountains under the equity method relating to its investment in Symetra through November 5, 2015:



Millions	Common shares			Warrants			Total
Equity method carrying value of investment in Symetra as of December 31, 2012⁽²⁾	$	351.2		$	30.3		$	381.5
Equity in earnings^(1)(3)(6)	37.8			—			37.8
Equity in net unrealized gains from Symetra’s fixed maturity portfolio⁽⁴⁾⁽⁵⁾	(106.4		)	—			(106.4		)
Dividends received	(6.4		)	—			(6.4		)
Increase in value of warrants	—			10.8			10.8
Exercise of warrants	41.1			(41.1		)	—
Equity method carrying value of investment in Symetra as of December 31, 2013⁽²⁾	317.3			—			317.3
Equity in earnings^(1)(3)(6)	47.0			—			47.0
Equity in net unrealized losses from Symetra’s fixed maturity portfolio⁽⁴⁾⁽⁵⁾	81.2			—			81.2
Dividends received	(34.1		)	—			(34.1		)
Equity method carrying value of investment in Symetra as of December 31, 2014⁽²⁾	411.4			—			411.4
Equity in earnings^(1)(3)(6)	25.1			—			25.1
Equity in net unrealized gains from Symetra’s fixed maturity portfolio⁽⁴⁾⁽⁵⁾	(39.2		)	—			(39.2		)
Distribution from Prospector Offshore Fund	12.4			—			12.4
Dividends received	(16.9		)	—			(16.9		)
Equity method carrying value of investment in Symetra as of November 5, 2015⁽²⁾⁽⁷⁾	$	392.8		$	—		$	392.8


⁽¹⁾	Equity in earnings for the period ended November 5, 2015 and years ended December 31, 2014 and 2013 excludes tax expense of $1.6, $3.3, and $2.8


⁽²⁾	Includes White Mountains’s equity in net unrealized gains (losses) from Symetra’s fixed maturity portfolio of $(1.6), $37.6, and $(43.6) as of November 5, 2015 and December 31, 2014 and 2013, which excludes tax benefit (expense) of $0.2, $(2.7) and $3.2


⁽³⁾	Equity in earnings for the period ended November 5, 2015 and years ended December 31, 2014 and 2013 includes $2.3, $3.0 and $3.0 increases relating to the pre-tax amortization of the Symetra common share basis difference.


⁽⁴⁾	Net unrealized gains for the period ended November 5, 2015 and years ended December 31, 2014 and 2013 includes $9.4, $12.7 and $11.8 increases relating to the pre-tax amortization of the Symetra common share basis difference.


⁽⁵⁾	Net unrealized gains (losses) from Symetra’s fixed maturity portfolio excludes tax benefit (expense) of $2.9, $(5.9) and $8.3 for the period ended November 5, 2015 and years ended December 31, 2014 and 2013.


⁽⁶⁾	Equity in earnings for the period ended November 5, 2015 and years ended December 31, 2014 and 2013 includes $(0.1), $(0.1), and $0.2 (gain) loss from the dilutive effect of Symetra’s yearly dividend and the issuance of restricted shares by Symetra


⁽⁷⁾	The aggregate value of White Mountains’s investment in common shares of Symetra was $651.2 based upon the quoted market price of $31.67 per share as of November 5, 2015.

The following table summarizes financial information for Symetra as of September 30, 2015 and December 31, 2014:



	September 30,		December 31,
Millions	2015		2014
Symetra balance sheet data:
Total investments	$	32,409.2	$	30,634.3
Separate account assets	885.9		949.8
Total assets	34,962.8		33,001.7
Policyholder liabilities	29,492.0		27,276.0
Long-term debt	697.5		697.2
Separate account liabilities	885.9		949.8
Total liabilities	31,836.7		29,641.1
Common shareholders’ equity	3,126.1		3,360.6

The following table summarizes financial information for Symetra for the nine months ended September 30, 2015 and years ended December 31, 2014 and 2013:



	Nine months ended September 30,			Year ended December 31,
Millions	2015			2014		2013
Symetra income statement data:
Net premiums earned	$	539.3		$	629.1	$	627.2
Net investment income	994.3			1,320.5		1,285.0
Total revenues	1,605.9			2,182.4		2,139.5
Policy benefits	1,143.7			1,399.7		1,394.9
Total expenses	1,543.6			1,882.5		1,865.4
Net income	89.6			254.4		220.7
Comprehensive net (loss) income	(234.1		)	397.0		(777.6		)

Hamer and Bri-Mar

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 $1.6 million for the six months ended June 30, 2015 and $1.9 million and $0.9 million for the years ended December 31, 2014 and 2013.

On October 10, 2013, White Mountains sold its interest in Bri-Mar under an asset purchase agreement. For the year ended December 31, 2013, White Mountains recorded $1.1 million of cash proceeds from the sale and a $1.7 million loss on sale. Prior to the sale, White Mountains recorded equity in earnings of $0.9 million for Bri-Mar for the nine months ended September 30, 2013.