Segment Information

White Mountains has determined that its reportable segments are OneBeacon, HG Global/BAM and Other Operations. As a result of the Sirius Group and Tranzact sale, the results of operations for Sirius Group and Tranzact have been classified as discontinued operations and are now presented as such, net of related income taxes, in the statement of operations and comprehensive income. Prior year amounts have been reclassified to conform to the current period’s presentation. See Note 22 — “Held for Sale and Discontinued 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 chief operating decision makers and the Board of Directors.

OneBeacon is a specialty property and casualty insurance writer that offers a wide range of insurance products through independent agencies, regional and national brokers, wholesalers and managing general agencies.

The HG Global/BAM segment consists of White Mountains’s investment in HG Global and the consolidated results of BAM. BAM is a municipal bond insurer domiciled in New York that was established to provide insurance on bonds issued to support essential U.S. public purposes such as schools, utilities, core governmental functions and existing transportation facilities. HG Global, together with its subsidiaries, provided the initial capitalization of BAM through the purchase of BAM Surplus Notes. HG Global also provides 15%-of-par, first loss reinsurance protection for policies underwritten by BAM. BAM's results are attributed to non-controlling interests.

Other Operations consists of the Company and its intermediate holding companies, its wholly-owned investment management subsidiary, WM Advisors, WM Life Re, WM Capital Investments, which includes the consolidated results of MediaAlpha, Wobi, Buzzmove and Star & Shield, and various other investments. In 2016, White Mountains reached an agreement to sell Star & Shield and its investment in SSIE Surplus Notes. As a result, White Mountains has presented Star & Shield’s and SSIE’s assets and liabilities as held for sale as of December 31, 2016 and 2015. SSIE’s results are attributed to non-controlling interests.

Significant intercompany transactions among White Mountains’s segments have been eliminated herein.

Financial information for White Mountains’s segments follows:



			HG Global/BAM
Millions	OneBeacon		HG Global		BAM⁽¹⁾			Other Operations				Total
Year Ended December 31, 2016
Earned insurance and reinsurance premiums	$	1,100.6	$	4.4	$	1.5		$	7.5			$	1,114.0
Net investment income	50.6		2.2		6.8			27.2				86.8
Net investment income (loss) - BAM Surplus Note	—		17.8		(17.8		)	—				—
Net realized and unrealized investment gains (losses)	37.7		.1		.6			(28.1		)		10.3
Other revenue	5.5		—		1.1			143.0			⁽⁴⁾	149.6
Total revenues⁽³⁾	1,194.4		24.5		(7.8		)	149.6				1,360.7
Losses and LAE	656.0		—		—			8.0				664.0
Insurance and reinsurance acquisition expenses	206.0		.9		2.5			2.2				211.6
Other underwriting expenses	209.0		—		.4			.1				209.5
General and administrative expenses	13.0		1.4		38.2			234.8			⁽⁵⁾	287.4
Amortization of intangible assets	1.2		—		—			11.3				12.5
Interest expense	13.1		—		—			3.0				16.1
Total expenses	1,098.3		2.3		41.1			259.4				1,401.1
Pre-tax income (loss)	$	96.1	$	22.2	$	(48.9	)	$	(109.8	)		$	(40.4	)



				HG Global/BAM
Millions	OneBeacon			HG Global			BAM⁽¹⁾			Other Operations			Total
Year Ended December 31, 2015
Earned insurance and reinsurance premiums	$	1,176.2		$	2.5		$	.8		$	8.7		$	1,188.2
Net investment income	45.9			1.9			4.2			8.8			60.8
Net investment income (loss) - BAM Surplus Note	—			15.8			(15.8		)	—			—
Net realized and unrealized investment (losses) gains	(35.1		)	(.3		)	.9			259.9		⁽²⁾	225.4
Other (loss) revenue	(.6		)	—			.7			147.2		⁽⁴⁾	147.3
Total revenues⁽³⁾	1,186.4			19.9			(9.2		)	424.6			1,621.7
Losses and LAE	700.7			—			—			8.2			708.9
Insurance and reinsurance acquisition expenses	213.8			.6			2.3			3.4			220.1
Other underwriting expenses	218.2			—			.4			—			218.6
General and administrative expenses	14.1			1.4			35.4			240.7		⁽⁵⁾	291.6
Amortization of intangible assets	1.3			—			—			9.3			10.6
Interest expense	13.0			—			—			1.6			14.6
Total expenses	1,161.1			2.0			38.1			263.2			1,464.4
Pre-tax income (loss)	$	25.3		$	17.9		$	(47.3	)	$	161.4		$	157.3



			HG Global/BAM
Millions	OneBeacon		HG Global		BAM⁽¹⁾			Other Operations				Total
Year Ended December 31, 2014
Earned insurance and reinsurance premiums	$	1,177.1	$	1.4	$	.4		$	6.1			$	1,185.0
Net investment income	43.4		1.4		5.7			9.0				59.5
Net investment income (loss) - BAM Surplus Note	—		15.7		(15.7		)	—				—
Net realized and unrealized investment gains	40.4		1.7		6.6			29.8				78.5
Other revenue	5.8		—		.6			81.7			⁽⁴⁾	88.1
Total revenues⁽³⁾	1,266.7		20.2		(2.4		)	126.6				1,411.1
Losses and LAE	815.1		—		—			8.9				824.0
Insurance and reinsurance acquisition expenses	203.3		.3		1.8			0.8				206.2
Other underwriting expenses	179.2		—		.4			—				179.6
General and administrative expenses	12.4		1.6		35.9			158.3			⁽⁵⁾	208.2
Amortization of intangible assets	1.4		—		—			6.9				8.3
Interest expense	13.0		—		—			1.2				14.2
Total expenses	1,224.4		1.9		38.1			176.1				1,440.5
Pre-tax income (loss)	$	42.3	$	18.3	$	(40.5	)	$	(49.5	)		$	(29.4	)


⁽¹⁾	BAM manages its affairs on a statutory accounting basis. BAM’s statutory surplus includes BAM Surplus Notes and is not reduced by accruals of interest expense on the BAM Surplus Notes. BAM’s statutory surplus is reduced only after a payment of principal or interest has been approved by the New York Department of Financial Services.


⁽²⁾	Net realized and unrealized investment gains (losses) in the Other Operations segment includes the unrealized investment gain of $258.8 related to the investment in Symetra common shares, representing the difference between the carrying value under the equity method at November 5, 2015 and the fair value at December 31, 2015. See Note 17 — “Investments in Unconsolidated Affiliates”.


⁽³⁾	Total revenues includes both revenues from customers, as well as, investment performance.


⁽⁴⁾	Includes $116.5 from MediaAlpha for the year ended December 31, 2016; $105.5 from MediaAlpha for the year ended December 31, 2015; $65.3 from MediaAlpha for the year ended December 31, 2014.


⁽⁵⁾	Includes $109.6 from MediaAlpha for the year ended December 31, 2016; and $99.0 from MediaAlpha for the year ended December 31, 2015; $60.6 from MediaAlpha for the year ended December 31, 2014.



			HG Global/BAM
Selected Balance Sheet Data Millions	OneBeacon		HG Global		BAM				Other Operations		Eliminations			Held for Sale			Total
December 31, 2016:
Total investments	$	2,620.4	$	161.6	$	468.1			$	2,084.7	$	—		$	—		$	5,334.8
Reinsurance recoverable on paid and unpaid losses	179.5		—		—				—		—			—			179.5
Assets held for sale	—		—		—				—		—			10.1			10.1
Total assets	3,589.4		787.0		(78.9		)	⁽¹⁾	2,417.3		(180.2		)	10.1			6,544.7
Loss and LAE reserves	1,365.6		—		—				—		—			—			1,365.6
Liabilities held for sale	—		—		—				—		—			5.1			5.1
Total liabilities	2,564.2		247.6		72.0				98.8		(180.2		)	5.1			2,807.5
Total White Mountains’s common shareholders’ equity	780.6		522.8		—				2,294.9		—			5.0			3,603.3
Non-controlling interest	244.6		16.6		(150.9		)		23.6		—			—			133.9
December 31, 2015:
Total investments	$	2,591.4	$	136.2	$	460.3			$	1,083.2	$	—		$	—		$	4,271.1
Reinsurance recoverable on paid and unpaid losses	193.5		—		—				—		—			—			193.5
Assets held for sale	—		—		—				—		—			4,790.4			4,790.4
Total assets	3,600.8		739.0		(91.1		)	⁽¹⁾	1,378.8		(135.3		)	4,790.4			10,282.6
Loss and LAE reserves	1,389.8		—		—				—		—			—			1,389.8
Liabilities held for sale	—		—		—				—		—			3,047.4			3,047.4
Total liabilities	2,596.3		181.2		48.9				176.1		(135.3		)	3,047.4			5,914.6
Total White Mountains’s common shareholders’ equity	755.2		540.7		—				1,124.3		—			1,493.0			3,913.2
Non-controlling interest	249.3		17.1		(140.0		)		78.4		—			—		⁽²⁾	204.8


⁽¹⁾	BAM total assets reflect the elimination of $503.0 in the BAM Surplus Notes issued to HG Global and its subsidiaries, and $108.0 and $90.2 in accrued interest related to the BAM Surplus Notes as of December 31, 2016 and 2015.

⁽²⁾ Excludes $250.0 related to SIG Preference Shares. See Note 14 — “Common Shareholders’ Equity and Non-controlling Interests”.

As of December 31, 2016 and 2015, HG Global has accrued $180.2 million and $135.3 million of preferred dividends payable to Lone Tree Holdings, which is included in the Other Operations segment and eliminated in consolidation. As of December 31, 2016 and 2015, the total amount of capital White Mountains has committed to HG Global/BAM, comprised of total common shareholders’ equity and the preferred dividends receivable at Lone Tree Holdings, is $703.0 million and $676.0 million.