Income Taxes (Tables)

12 Months Ended

Dec. 31, 2015

Schedule of total income tax benefit (expense)

The total income tax (expense) benefit for the years ended December 31, 2015, 2014 and 2013 consisted of the following:



	Year Ended December 31,
Millions	2015			2014			2013
Current tax (expense) benefit:
U.S. federal	$	9.1		$	(4.3	)	$	(20.3	)
State	(1.8		)	(2.0		)	(1.0		)
Non-U.S.	(1.5		)	(1.4		)	(1.2		)
Total current tax expense	5.8			(7.7		)	(22.5		)
Deferred tax (expense) benefit:
U.S. federal	(5.1		)	22.5			(10.1		)
Total deferred tax benefit (expense)	(5.1		)	22.5			(10.1		)
Total income tax (expense) benefit	$	.7		$	14.8		$	(32.6	)

Reconciliation of the U.S. federal statutory income tax rate and actual effective tax rate on pre-tax income

A reconciliation of taxes calculated using the 35% U.S. 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 follows:



	Year Ended December 31,
Millions	2015			2014			2013
Tax (expense) benefit at the U.S. statutory rate	$	(54.2	)	$	10.2		$	(55.5	)
Differences in taxes resulting from:
Non-U.S. earnings, net of foreign taxes	76.7			37.8			75.1
Change in valuation allowance	(18.7		)	(36.0		)	(49.9		)
Tax exempt interest and dividends	2.6			2.5			2.4
Tax reserve adjustments	(1.7		)	5.2			(1.2		)
Withholding tax	(1.2		)	(2.4		)	(1.0		)
Other, net	(2.8		)	(2.5		)	(2.5		)
Total income tax (expense) benefit on pre-tax income	$	.7		$	14.8		$	(32.6	)

Schedule of components of deferred income tax assets and liabilities

An outline of the significant components of White Mountains’s deferred tax assets and liabilities follows:



	December 31,
Millions	2015			2014
Deferred income tax assets related to:
U.S. federal net operating and capital loss carryforwards	$	186.6		$	152.3
Incentive compensation	45.4			40.2
Unearned premiums	37.5			38.3
Non-U.S. net operating loss carryforwards	33.8			33.1
Loss reserve discount	26.8			41.4
Tax credit carryforwards	16.9			13.4
Runoff Transaction	12.6			12.6
Deferred compensation	6.2			6.7
Fixed assets	1.7			2.3
Accrued interest	1.3			5.0
Other items	3.0			2.8
Total gross deferred income tax assets	371.8			348.1
Less: valuation allowances	(156.8		)	(140.5		)
Total net deferred income tax assets	215.0			207.6
Deferred income tax liabilities related to:
Deferred acquisition costs	34.9			32.0
Net unrealized investment gains	28.2			31.1
Members surplus contributions	19.0			10.3
Investment basis difference	13.8			17.0
Purchase accounting	9.3			—
Pension and benefit accruals	3.5			2.5
Other items	.5			.1
Total deferred income tax liabilities	109.2			93.0
Net deferred tax asset	$	105.8		$	114.6

Schedule of net operating and capital loss carryforwards by expiration dates and the deferred tax assets thereon

Net operating loss and capital loss carryforwards as of December 31, 2015, the expiration dates and the deferred tax assets thereon are as follows:



	December 31, 2015
Millions	United States			Luxembourg			Netherlands			Israel			Total
2016 - 2020	$	.8		$	—		$	—		$	—		$	.8
2021 - 2025	2.0			—			.3			—			2.3
2026 - 2035	540.6			—			—			—			540.6
No expiration date	—			96.8			—			21.8			118.6
Total	$	543.4		$	96.8		$	.3		$	21.8		$	662.3
Gross deferred tax asset	$	186.6		$	28.3		$	.1		$	5.5		$	220.5
Valuation allowance	(121.2		)	(28.3		)	(.1		)	(5.5		)	(155.1		)
Net deferred tax asset	$	65.4		$	—		$	—		$	—		$	65.4

Reconciliation of changes in the amount of unrecognized tax benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:



Millions	Permanent Differences⁽¹⁾			Temporary Differences⁽²⁾			Interest and Penalties⁽³⁾			Total
Balance at January 1, 2013	$	8.4		$	23.6		$	8.0		$	40.0
Changes in prior year tax positions	—			—			1.0			1.0
Tax positions taken during the current year	—			(7.0		)	—			(7.0		)
Lapse in statute of limitations	—			—			—			—
Settlements with tax authorities	—			—			(.3		)	(.3		)
Balance at December 31, 2013	8.4			16.6			8.7			33.7
Changes in prior year tax positions	(2.2		)	(.8		)	(1.9		)	(4.9		)
Tax positions taken during the current year	—			7.3			—			7.3
Lapse in statute of limitations	(.8		)	—			(.3		)	(1.1		)
Balance at December 31, 2014	5.4			23.1			6.5			35.0
Changes in prior year tax positions	—			(12.4		)	1.7			(10.7		)
Tax positions taken during the current year	—			—			—			—
Lapse in statute of limitations	—			—			—			—
Settlements with tax authorities	—			—			—			—
Balance at December 31, 2015	$	5.4		$	10.7		$	8.2		$	24.3


⁽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 the Company’s Consolidated Balance Sheet and its tax basis.


⁽³⁾	Net of tax benefit.