Bermuda | 94-2708455 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) | |
80 South Main Street, | ||
Hanover, New Hampshire | 03755-2053 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer ý | Accelerated filer o | Non-accelerated filer o | |
Smaller reporting company o | Emerging growth company o |
Page No. | ||
Consolidated Balance Sheets, March 31, 2017 and December 31, 2016 | ||
Three Months Ended March 31, 2017 and 2016 | ||
Consolidated Statements of Changes in Equity, Three Months Ended March 31, 2017 and 2016 | ||
Consolidated Statements of Cash Flows, Three Months Ended March 31, 2017 and 2016 | ||
Results of Operations for the Three Months Ended March 31, 2017 and 2016 | ||
Item 1. | Financial Statements |
(Millions, except share amounts) | March 31, 2017 | December 31, 2016 | ||||||
Assets | Unaudited | |||||||
Fixed maturity investments, at fair value | $ | 4,175.4 | $ | 4,250.2 | ||||
Short-term investments, at amortized cost (which approximates fair value) | 230.9 | 287.0 | ||||||
Common equity securities, at fair value | 601.0 | 474.3 | ||||||
Other long-term investments | 331.7 | 323.3 | ||||||
Total investments | 5,339.0 | 5,334.8 | ||||||
Cash | 125.0 | 149.8 | ||||||
Reinsurance recoverable on unpaid losses | 174.7 | 172.9 | ||||||
Reinsurance recoverable on paid losses | 3.4 | 6.6 | ||||||
Insurance premiums receivable | 227.5 | 229.9 | ||||||
Deferred acquisition costs | 110.4 | 106.9 | ||||||
Deferred tax asset | 125.5 | 126.7 | ||||||
Ceded unearned insurance premiums | 52.4 | 44.2 | ||||||
Accrued investment income | 27.2 | 26.1 | ||||||
Accounts receivable on unsettled investment sales | 24.5 | 6.2 | ||||||
Goodwill and other intangible assets | 53.0 | 55.9 | ||||||
Other assets | 254.3 | 274.6 | ||||||
Assets held for sale | — | 10.1 | ||||||
Total assets | $ | 6,516.9 | $ | 6,544.7 | ||||
Liabilities | ||||||||
Loss and loss adjustment expense reserves | $ | 1,368.8 | $ | 1,365.6 | ||||
Unearned insurance premiums | 678.1 | 658.0 | ||||||
Debt | 284.7 | 285.9 | ||||||
Accrued incentive compensation | 83.2 | 140.0 | ||||||
Funds held under insurance contracts | 148.7 | 153.0 | ||||||
Accounts payable on unsettled investment purchases | 17.3 | — | ||||||
Other liabilities | 178.5 | 199.9 | ||||||
Liabilities held for sale | — | 5.1 | ||||||
Total liabilities | 2,759.3 | 2,807.5 | ||||||
Equity | ||||||||
White Mountains’s common shareholders’ equity | ||||||||
White Mountains’s common shares at $1 par value per share - authorized 50,000,000 shares; | ||||||||
issued and outstanding 4,572,792 and 4,563,814 shares | 4.6 | 4.6 | ||||||
Paid-in surplus | 802.5 | 806.1 | ||||||
Retained earnings | 2,821.8 | 2,797.2 | ||||||
Accumulated other comprehensive loss, after tax: | ||||||||
Net unrealized foreign currency translation losses | (.6 | ) | (1.4 | ) | ||||
Pension liability | (3.1 | ) | (3.2 | ) | ||||
Total White Mountains’s common shareholders’ equity | 3,625.2 | 3,603.3 | ||||||
Non-controlling interests | 132.4 | 133.9 | ||||||
Total equity | 3,757.6 | 3,737.2 | ||||||
Total liabilities and equity | $ | 6,516.9 | $ | 6,544.7 |
Three Months Ended | ||||||||
March 31, | ||||||||
(Millions, except per share amounts) | 2017 | 2016 | ||||||
Revenues: | ||||||||
Earned insurance premiums | $ | 264.8 | $ | 282.1 | ||||
Net investment income | 26.1 | 17.9 | ||||||
Net realized and unrealized investment gains | 51.3 | 29.5 | ||||||
Other revenue | 43.7 | 39.8 | ||||||
Total revenues | 385.9 | 369.3 | ||||||
Expenses: | ||||||||
Loss and loss adjustment expenses | 151.7 | 161.1 | ||||||
Insurance acquisition expenses | 46.6 | 52.7 | ||||||
Other underwriting expenses | 51.8 | 55.4 | ||||||
General and administrative expenses | 94.2 | 87.1 | ||||||
Interest expense | 3.7 | 4.5 | ||||||
Total expenses | 348.0 | 360.8 | ||||||
Pre-tax income from continuing operations | 37.9 | 8.5 | ||||||
Income tax (expense) benefit | (3.9 | ) | 9.7 | |||||
Net income from continuing operations | 34.0 | 18.2 | ||||||
Loss from sale of discontinued operations, net of tax | (1.0 | ) | — | |||||
Net income from discontinued operations, net of tax | — | 1.1 | ||||||
Net income | 33.0 | 19.3 | ||||||
Net loss (income) attributable to non-controlling interests | 1.3 | (6.3 | ) | |||||
Net income attributable to White Mountains’s common shareholders | 34.3 | 13.0 | ||||||
Other comprehensive income, net of tax: | ||||||||
Change in foreign currency translation, pension liability and other, net of tax | .9 | .1 | ||||||
Change in foreign currency translation and other from discontinued operations, net of tax | — | 37.2 | ||||||
Comprehensive income attributable to White Mountains’s common shareholders | $ | 35.2 | $ | 50.3 | ||||
Income per share attributable to White Mountains’s common shareholders | ||||||||
Basic income (loss) per share | ||||||||
Continuing operations | $ | 7.72 | $ | 2.14 | ||||
Discontinued operations | (.22 | ) | .20 | |||||
Total consolidated operations | $ | 7.50 | $ | 2.34 | ||||
Diluted income (loss) per share | ||||||||
Continuing operations | $ | 7.72 | $ | 2.14 | ||||
Discontinued operations | (.22 | ) | .20 | |||||
Total consolidated operations | $ | 7.50 | $ | 2.34 | ||||
Dividends declared per White Mountains’s common share | $ | 1.00 | $ | 1.00 |
White Mountains’s Common Shareholders’ Equity | ||||||||||||||||||||||||
(Millions) | Common shares and paid-in surplus | Retained earnings | AOCI, after tax | Total | Non-controlling interest | Total Equity | ||||||||||||||||||
Balance at January 1, 2017 | $ | 810.7 | $ | 2,797.2 | $ | (4.6 | ) | $ | 3,603.3 | $ | 133.9 | $ | 3,737.2 | |||||||||||
Net income | — | 34.3 | — | 34.3 | (1.3 | ) | 33.0 | |||||||||||||||||
Net change in foreign currency translation and pension liability | — | — | .9 | .9 | — | .9 | ||||||||||||||||||
Total comprehensive income | — | 34.3 | .9 | 35.2 | (1.3 | ) | 33.9 | |||||||||||||||||
Dividends declared on common shares | — | (4.6 | ) | — | (4.6 | ) | — | (4.6 | ) | |||||||||||||||
Dividends to non-controlling interests | — | — | — | — | (6.6 | ) | (6.6 | ) | ||||||||||||||||
Repurchases and retirements of common shares | (1.4 | ) | (5.1 | ) | — | (6.5 | ) | (1.1 | ) | (7.6 | ) | |||||||||||||
Deconsolidation of non-controlling interests associated with the sale of Star & Shield | — | — | — | — | (4.4 | ) | (4.4 | ) | ||||||||||||||||
Issuance of shares to non-controlling interests | (4.8 | ) | — | — | (4.8 | ) | 4.8 | — | ||||||||||||||||
Net contributions from non-controlling interests | — | — | — | — | 6.9 | 6.9 | ||||||||||||||||||
Amortization of restricted share awards | 2.6 | — | — | 2.6 | .2 | 2.8 | ||||||||||||||||||
Balance at March 31, 2017 | $ | 807.1 | $ | 2,821.8 | $ | (3.7 | ) | $ | 3,625.2 | $ | 132.4 | $ | 3,757.6 | |||||||||||
White Mountains’s Common Shareholders’ Equity | ||||||||||||||||||||||||
(Millions) | Common shares and paid-in surplus | Retained earnings | AOCI, after tax | Total | Non-controlling interest | Total Equity | ||||||||||||||||||
Balance at January 1, 2016 | $ | 978.2 | $ | 3,084.9 | $ | (149.9 | ) | $ | 3,913.2 | $ | 454.8 | $ | 4,368.0 | |||||||||||
Net income | — | 13.0 | — | 13.0 | 6.3 | 19.3 | ||||||||||||||||||
Net change in foreign currency translation and pension liability | — | — | 37.3 | 37.3 | — | 37.3 | ||||||||||||||||||
Total comprehensive income | — | 13.0 | 37.3 | 50.3 | 6.3 | 56.6 | ||||||||||||||||||
Dividends declared on common shares | — | (5.4 | ) | — | (5.4 | ) | — | (5.4 | ) | |||||||||||||||
Dividends to non-controlling interests | — | — | — | — | (6.2 | ) | (6.2 | ) | ||||||||||||||||
Repurchases and retirements of common shares | (39.8 | ) | (132.9 | ) | — | (172.7 | ) | — | (172.7 | ) | ||||||||||||||
Acquisition from non-controlling interests - OneBeacon | (2.7 | ) | — | — | (2.7 | ) | (8.8 | ) | (11.5 | ) | ||||||||||||||
Issuances of shares to non-controlling interests | — | — | — | — | .3 | .3 | ||||||||||||||||||
Net contributions from non-controlling interests | — | — | — | — | 4.8 | 4.8 | ||||||||||||||||||
Amortization of restricted share awards | 3.2 | — | — | 3.2 | .2 | 3.4 | ||||||||||||||||||
Balance at March 31, 2016 | $ | 938.9 | $ | 2,959.6 | $ | (112.6 | ) | $ | 3,785.9 | $ | 451.4 | $ | 4,237.3 |
Three Months Ended March 31, | ||||||||
(Millions) | 2017 | 2016 | ||||||
Cash flows from operations: | Unaudited | Unaudited | ||||||
Net income | $ | 33.0 | $ | 19.3 | ||||
Charges (credits) to reconcile net income to net cash used for operations: | ||||||||
Net realized and unrealized investment (gains) losses | (51.3 | ) | (29.5 | ) | ||||
Deferred income tax (benefit) expense | (1.1 | ) | 5.0 | |||||
Net income from discontinued operations | — | (1.1 | ) | |||||
Net loss on sale of discontinued operations | 1.0 | — | ||||||
Amortization and depreciation | 14.6 | 11.4 | ||||||
Other operating items: | ||||||||
Net change in loss and loss adjustment expense reserves | 2.9 | (46.2 | ) | |||||
Net change in reinsurance recoverable on paid and unpaid losses | 1.4 | 26.5 | ||||||
Net change in unearned insurance premiums | 20.7 | 13.9 | ||||||
Net change in deferred acquisition costs | (3.5 | ) | (2.2 | ) | ||||
Net change in ceded unearned premiums | (8.2 | ) | (6.8 | ) | ||||
Net change in funds held under insurance treaties | (4.3 | ) | (2.8 | ) | ||||
Net change in insurance premiums receivable | 2.7 | (11.0 | ) | |||||
Net change in restricted cash | — | (2.6 | ) | |||||
Net change in other assets and liabilities, net | (64.0 | ) | (19.8 | ) | ||||
Net cash used for operations - continuing operations | (56.1 | ) | (45.9 | ) | ||||
Net cash used for operations - discontinued operations | — | (40.7 | ) | |||||
Net cash used for operations | (56.1 | ) | (86.6 | ) | ||||
Cash flows from investing activities: | ||||||||
Net change in short-term investments | 55.6 | (50.4 | ) | |||||
Sales of fixed maturity and convertible investments | 868.5 | 202.3 | ||||||
Maturities, calls and paydowns of fixed maturity and convertible investments | 175.8 | 155.9 | ||||||
Sales of common equity securities | 17.7 | 767.5 | ||||||
Distributions and redemptions of other long-term investments | 16.5 | 3.0 | ||||||
Net settlement of investment cash flows and contributions with discontinued operations | — | (559.8 | ) | |||||
Purchases of other long-term investments | (22.4 | ) | (10.9 | ) | ||||
Purchases of common equity securities | (113.4 | ) | (86.1 | ) | ||||
Purchases of fixed maturity and convertible investments | (957.6 | ) | (315.2 | ) | ||||
Purchases of unconsolidated affiliates and consolidated subsidiaries, net of cash acquired | — | (8.1 | ) | |||||
Net change in unsettled investment purchases and sales | (1.0 | ) | 44.3 | |||||
Net acquisitions of property and equipment | (.4 | ) | (1.3 | ) | ||||
Net cash provided from investing activities - continuing operations | 39.3 | 141.2 | ||||||
Net cash provided from investing activities - discontinued operations | — | 33.6 | ||||||
Net cash provided from investing activities | 39.3 | 174.8 | ||||||
Cash flows from financing activities: | ||||||||
Draw down of debt and revolving line of credit | — | 102.5 | ||||||
Repayment of debt and revolving line of credit | (1.2 | ) | — | |||||
Cash dividends paid to the Company’s common shareholders | (4.6 | ) | (5.4 | ) | ||||
Common shares repurchased | — | (166.8 | ) | |||||
OneBeacon Ltd. common shares repurchased and retired | — | (10.6 | ) | |||||
Distribution to non-controlling interest shareholders | (5.1 | ) | (4.7 | ) | ||||
Contributions to discontinued operations | — | (3.0 | ) | |||||
Payments of contingent consideration related to purchases of consolidated subsidiaries | — | (7.8 | ) | |||||
Capital contributions from BAM members | 9.6 | 6.7 | ||||||
Other financing activities, net | (7.6 | ) | (7.2 | ) | ||||
Net cash used for financing activities - continuing operations | (8.9 | ) | (96.3 | ) | ||||
Net cash used for financing activities - discontinued operations | — | (8.3 | ) | |||||
Net cash used for financing activities | (8.9 | ) | (104.6 | ) | ||||
Effect of exchange rate changes on cash (excludes $0.0 and $4.2 related to discontinued operations) | — | — | ||||||
Net change in cash during the period - continuing operations | (25.7 | ) | (1.0 | ) | ||||
Cash balances at beginning of period (excludes restricted cash balances of $0.0 and $5.8 and discontinued operations cash balances of $0.0 and $150.2) | 149.8 | 167.2 | ||||||
Add: cash held for sale at the beginning of period | .9 | 1.2 | ||||||
Less: cash held for sale at the end of period | — | 2.1 | ||||||
Cash balances at end of period (excludes restricted cash balances of $0.0 and $8.4 and discontinued operations cash balances of $0.0 and $139.9) | $ | 125.0 | $ | 165.3 | ||||
Supplemental cash flows information: | ||||||||
Interest paid | $ | (.2 | ) | $ | (.2 | ) | ||
Net income tax refund from national governments | $ | — | $ | 13.5 |
Gain from sale of Tranzact reported in discontinued operations | $ | 51.9 | ||
Add back reclassification from continuing operations for the release of a tax valuation allowance | 30.2 | |||
Increase to White Mountains book value from sale of Tranzact | $ | 82.1 |
Three Months Ended | ||||||||
March 31, | ||||||||
Millions | 2017 | 2016 | ||||||
Gross beginning balance | $ | 1,365.6 | $ | 1,389.8 | ||||
Less beginning reinsurance recoverable on unpaid losses | (172.9 | ) | (186.0 | ) | ||||
Net loss and LAE reserves | 1,192.7 | 1,203.8 | ||||||
Add: SSIE reserves held for sale at beginning of the period (1) | 4.7 | 5.5 | ||||||
Loss and LAE incurred relating to: | ||||||||
Current year losses | 151.7 | 161.2 | ||||||
Prior year losses | — | (.1 | ) | |||||
Total incurred losses and LAE | 151.7 | 161.1 | ||||||
Loss and LAE paid relating to: | ||||||||
Current year losses | (21.5 | ) | (23.1 | ) | ||||
Prior year losses | (129.1 | ) | (148.6 | ) | ||||
Total loss and LAE payments | (150.6 | ) | (171.7 | ) | ||||
Less: Deconsolidation of SSIE (1) | 4.4 | — | ||||||
Less: SSIE reserves held for sale at end of the period (1) | — | 5.3 | ||||||
Net ending balance | 1,194.1 | 1,193.4 | ||||||
Plus ending reinsurance recoverable on unpaid losses | 174.7 | 150.4 | ||||||
Gross ending balance | $ | 1,368.8 | $ | 1,343.8 |
Three Months Ended | ||||||||
March 31, | ||||||||
Millions | 2017 | 2016 | ||||||
Investment income: | ||||||||
Fixed maturity investments | $ | 24.5 | $ | 14.5 | ||||
Short-term investments | .3 | .2 | ||||||
Common equity securities | 2.1 | 1.2 | ||||||
Other long-term investments | (.1 | ) | 2.8 | |||||
Total investment income | 26.8 | 18.7 | ||||||
Third-party investment expenses | (.7 | ) | (.8 | ) | ||||
Net investment income, pre-tax | $ | 26.1 | $ | 17.9 |
Three Months Ended | ||||||||
March 31, | ||||||||
Millions | 2017 | 2016 | ||||||
Net realized investment gains, pre-tax | $ | 1.1 | $ | 256.8 | ||||
Net unrealized investment gains (losses), pre-tax | 50.2 | (227.3 | ) | |||||
Net realized and unrealized investment gains, pre-tax | 51.3 | 29.5 | ||||||
Income tax expense attributable to net realized and unrealized investment gains | (7.2 | ) | (8.5 | ) | ||||
Net realized and unrealized investment gains, after tax | $ | 44.1 | $ | 21.0 |
Three Months Ended | Three Months Ended | |||||||||||||||||||||||
March 31, 2017 | March 31, 2016 | |||||||||||||||||||||||
Millions | Net realized (losses) gains | Net foreign currency gains | Total net realized (losses) gains reflected in earnings | Net realized (losses) gains | Net foreign currency gains (losses) | Total net realized (losses) gains reflected in earnings | ||||||||||||||||||
Fixed maturity investments | $ | (2.2 | ) | $ | .1 | $ | (2.1 | ) | $ | (1.1 | ) | $ | — | $ | (1.1 | ) | ||||||||
Common equity securities | 1.2 | .1 | 1.3 | 257.6 | — | 257.6 | ||||||||||||||||||
Other long-term investments | 1.9 | — | 1.9 | .3 | — | .3 | ||||||||||||||||||
Net realized investment gains, pre-tax | .9 | .2 | 1.1 | 256.8 | — | 256.8 | ||||||||||||||||||
Income tax expense attributable to net realized investment gains | (.7 | ) | — | (.7 | ) | (42.9 | ) | — | (42.9 | ) | ||||||||||||||
Net realized investment gains, after tax | $ | .2 | $ | .2 | $ | .4 | $ | 213.9 | $ | — | $ | 213.9 |
Three Months Ended | Three Months Ended | |||||||||||||||||||||||
March 31, 2017 | March 31, 2016 | |||||||||||||||||||||||
Millions | Net unrealized gains | Net foreign currency gains (losses) | Total net unrealized gains reflected in earnings | Net unrealized gains (losses) | Net foreign currency gains | Total net unrealized gains (losses) reflected in earnings | ||||||||||||||||||
Fixed maturity investments | $ | 17.5 | $ | 1.7 | $ | 19.2 | $ | 21.7 | $ | — | $ | 21.7 | ||||||||||||
Common equity securities | 29.1 | .5 | 29.6 | (249.8 | ) | 2.4 | (247.4 | ) | ||||||||||||||||
Other long-term investments | 4.2 | .2 | 4.4 | (2.0 | ) | .4 | (1.6 | ) | ||||||||||||||||
Forward contracts | — | (3.0 | ) | (3.0 | ) | — | — | — | ||||||||||||||||
Net unrealized investment gains (losses), pre-tax | 50.8 | (.6 | ) | 50.2 | (230.1 | ) | 2.8 | (227.3 | ) | |||||||||||||||
Income tax (expense) benefit attributable to net unrealized investment gains (losses) | (6.5 | ) | — | (6.5 | ) | 34.4 | — | 34.4 | ||||||||||||||||
Net unrealized investment gains (losses), after tax | $ | 44.3 | $ | (.6 | ) | $ | 43.7 | $ | (195.7 | ) | $ | 2.8 | $ | (192.9 | ) |
Three Months Ended | ||||||||
March 31, | ||||||||
Millions | 2017 | 2016 | ||||||
Fixed maturity investments | $ | .2 | $ | .5 | ||||
Other long-term investments | (1.9 | ) | 1.1 | |||||
Total unrealized investment (losses) gains, pre-tax - Level 3 investments | $ | (1.7 | ) | $ | 1.6 |
March 31, 2017 | ||||||||||||||||||||
Millions | Cost or amortized cost | Gross unrealized gains | Gross unrealized losses | Net foreign currency gains | Carrying value | |||||||||||||||
U.S. Government and agency obligations | $ | 110.7 | $ | — | $ | (.4 | ) | $ | — | $ | 110.3 | |||||||||
Debt securities issued by corporations | 1,680.2 | 10.5 | (7.6 | ) | 3.7 | 1,686.8 | ||||||||||||||
Municipal obligations | 328.9 | 2.8 | (1.4 | ) | — | 330.3 | ||||||||||||||
Mortgage and asset-backed securities | 2,020.0 | 5.1 | (8.7 | ) | — | 2,016.4 | ||||||||||||||
Foreign government, agency and provincial obligations | 17.3 | .4 | — | .2 | 17.9 | |||||||||||||||
Preferred stocks | 8.3 | 5.4 | — | — | 13.7 | |||||||||||||||
Total fixed maturity investments | $ | 4,165.4 | $ | 24.2 | $ | (18.1 | ) | $ | 3.9 | $ | 4,175.4 |
December 31, 2016 | ||||||||||||||||||||
Millions | Cost or amortized cost | Gross unrealized gains | Gross unrealized losses | Net foreign currency gains | Carrying value | |||||||||||||||
U.S. Government and agency obligations | $ | 281.7 | $ | .1 | $ | (3.5 | ) | $ | — | $ | 278.3 | |||||||||
Debt securities issued by corporations | 1,512.6 | 8.4 | (13.7 | ) | 2.1 | 1,509.4 | ||||||||||||||
Municipal obligations | 308.8 | 1.9 | (1.7 | ) | — | 309.0 | ||||||||||||||
Mortgage and asset-backed securities | 2,141.7 | 2.6 | (11.4 | ) | — | 2,132.9 | ||||||||||||||
Foreign government, agency and provincial obligations | 12.9 | .3 | — | — | 13.2 | |||||||||||||||
Preferred stocks | 8.3 | 5.7 | — | — | 14.0 | |||||||||||||||
Total fixed maturity investments | $ | 4,266.0 | $ | 19.0 | $ | (30.3 | ) | $ | 2.1 | $ | 4,256.8 | |||||||||
Less: fixed maturity investments reclassified to assets held for sale related to SSIE | (6.6 | ) | ||||||||||||||||||
Total fixed maturity investments | $ | 4,250.2 |
March 31, 2017 | ||||||||||||||||||||
Millions | Cost or amortized cost | Gross unrealized gains | Gross unrealized losses | Net foreign currency gains (losses) | Carrying value | |||||||||||||||
Common equity securities | $ | 537.9 | $ | 65.0 | $ | (2.4 | ) | $ | .5 | $ | 601.0 | |||||||||
Other long-term investments | $ | 321.9 | $ | 39.7 | $ | (23.3 | ) | $ | (6.6 | ) | $ | 331.7 |
December 31, 2016 | ||||||||||||||||||||
Millions | Cost or amortized cost | Gross unrealized gains | Gross unrealized losses | Net foreign currency (losses) | Carrying value | |||||||||||||||
Common equity securities | $ | 440.8 | $ | 35.9 | $ | (2.4 | ) | $ | — | $ | 474.3 | |||||||||
Other long-term investments | $ | 314.9 | $ | 40.3 | $ | (28.0 | ) | $ | (3.9 | ) | $ | 323.3 |
Carrying Value at | ||||||||
Millions | March 31, 2017 | December 31, 2016 | ||||||
Hedge funds and private equity funds, at fair value | $ | 147.2 | $ | 131.0 | ||||
Private equity securities and limited liability companies, at fair value (1)(2) | 72.4 | 72.0 | ||||||
OneBeacon Surplus Notes, at fair value (1) | 69.6 | 71.9 | ||||||
Private convertible preferred securities, at fair value (1) | 30.7 | 30.6 | ||||||
Tax advantaged federal affordable housing development fund (3) | 11.7 | 12.3 | ||||||
Partnership investments accounted for under the equity method | 3.0 | 3.5 | ||||||
Forward Contracts | (4.2 | ) | (1.2 | ) | ||||
Other | 1.3 | 3.2 | ||||||
Total other-long term investments | $ | 331.7 | $ | 323.3 |
March 31, 2017 | December 31, 2016 | |||||||||||||||
Millions | Fair Value | Unfunded Commitments | Fair Value | Unfunded Commitments | ||||||||||||
Hedge funds | ||||||||||||||||
Long/short banks and financials | $ | 54.2 | $ | — | $ | 36.5 | $ | — | ||||||||
Long/short equity REIT | 19.7 | — | 19.9 | — | ||||||||||||
Other | 2.2 | — | 3.4 | — | ||||||||||||
Total hedge funds | 76.1 | — | 59.8 | — | ||||||||||||
Private equity funds | ||||||||||||||||
Aerospace/Defense/Government | 24.4 | 23.6 | 19.4 | 25.9 | ||||||||||||
Manufacturing/Industrial | 18.8 | 22.2 | 15.9 | 22.4 | ||||||||||||
Multi-sector | 11.0 | 2.0 | 11.4 | 2.0 | ||||||||||||
Direct lending/Mezzanine debt | 5.5 | 32.0 | 1.8 | 35.7 | ||||||||||||
Healthcare | 3.4 | .4 | 3.5 | .4 | ||||||||||||
Energy infrastructure & services | 2.8 | 3.0 | 14.1 | 3.2 | ||||||||||||
Private equity secondaries | 2.5 | 2.1 | 3.0 | 2.1 | ||||||||||||
Financial Services | 1.5 | 4.5 | 1.0 | 5.0 | ||||||||||||
Insurance | .9 | 41.3 | .8 | 41.3 | ||||||||||||
Real estate | .3 | .1 | .3 | .1 | ||||||||||||
Total private equity funds | 71.1 | 131.2 | 71.2 | 138.1 | ||||||||||||
Total hedge funds and private equity funds included in other long-term investments | $ | 147.2 | $ | 131.2 | $ | 131.0 | $ | 138.1 |
Notice Period | ||||||||||||||||
Millions Redemption frequency | 30-59 days notice | 60-89 days notice | 90-119 days notice | Total | ||||||||||||
Monthly | $ | — | $ | — | $ | — | $ | — | ||||||||
Quarterly | 15.9 | — | — | 15.9 | ||||||||||||
Semi-annual | 38.3 | 19.7 | — | 58.0 | ||||||||||||
Annual | — | — | 2.2 | 2.2 | ||||||||||||
Total | $ | 54.2 | $ | 19.7 | $ | 2.2 | $ | 76.1 |
Millions | 1-3 years | 3 – 5 years | 5 – 10 years | >10 years | Total | |||||
Private Equity Funds — expected lock-up period remaining | $18.4 | $23.3 | $22.2 | $7.2 | $71.1 |
Type of Surplus Note | Total as of March 31, 2017 | Total as of December 31, 2016 | ||||||||||||||
Millions | Seller Priority | Pari Passu | ||||||||||||||
Par Value | $ | 57.9 | $ | 43.1 | $ | 101.0 | $ | 101.0 | ||||||||
Fair value adjustments to reflect: | ||||||||||||||||
Current market rates on public debt and contract-based repayments(1) | 7.2 | 1.8 | 9.0 | 5.1 | ||||||||||||
Regulatory approval (2) | 2.9 | (13.2 | ) | (10.3 | ) | (15.6 | ) | |||||||||
Liquidity adjustment (3) | (19.9 | ) | (10.2 | ) | (30.1 | ) | (18.6 | ) | ||||||||
Total adjustments | (9.8 | ) | (21.6 | ) | (31.4 | ) | (29.1 | ) | ||||||||
Fair value (4) | $ | 48.1 | $ | 21.5 | $ | 69.6 | $ | 71.9 |
(1) | Represents the value of the surplus notes, at current market yields on comparable publicly traded debt, and assuming issuer is allowed to make principal and interest payments when its financial capacity is available, as measured by statutory capital in excess of a 250% RBC score under the National Association of Insurance Commissioners’ risk-based capital standards for property and casualty companies. The favorable year-to-date change in impact is due principally to the narrowing of non-investment grade credit spreads as well as the time value of money benefit from moving three months closer to modeled cash receipts. |
(2) | Represents anticipated delay in securing regulatory approvals of interest and principal payments to reflect graduated changes in Issuer's statutory surplus. The monetary impact of the anticipated delay is measured based on credit spreads of public securities with roughly equivalent percentages of discounted payments missed. The favorable year-to-date change in impact is driven primarily by the narrowing of non-investment grade credit spreads, which causes negative valuation impact from the anticipated delay in securing regulatory approval to be lower. |
March 31, 2017 | ||||||||||||||||
Millions | Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||
Fixed maturity investments: | ||||||||||||||||
U.S. Government and agency obligations | $ | 110.3 | $ | 100.8 | $ | 9.5 | $ | — | ||||||||
Debt securities issued by corporations: | ||||||||||||||||
Consumer | 362.9 | — | 362.9 | — | ||||||||||||
Financials | 263.3 | — | 263.3 | — | ||||||||||||
Health Care | 248.4 | — | 248.4 | — | ||||||||||||
Utilities | 229.3 | — | 229.3 | — | ||||||||||||
Industrial | 174.5 | — | 174.5 | — | ||||||||||||
Communications | 135.9 | — | 135.9 | — | ||||||||||||
Technology | 118.1 | — | 118.1 | — | ||||||||||||
Materials | 101.9 | — | 101.9 | — | ||||||||||||
Energy | 52.5 | — | 52.5 | — | ||||||||||||
Total debt securities issued by corporations | 1,686.8 | — | 1,686.8 | — | ||||||||||||
Mortgage and asset-backed securities | 2,016.4 | — | 1,958.1 | 58.3 | ||||||||||||
Municipal obligations | 330.3 | — | 330.3 | — | ||||||||||||
Foreign government, agency and provincial obligations | 17.9 | .6 | 17.3 | — | ||||||||||||
Preferred stocks | 13.7 | — | 13.7 | — | ||||||||||||
Total fixed maturity investments | 4,175.4 | 101.4 | 4,015.7 | 58.3 | ||||||||||||
Short-term investments(4) | 230.9 | 227.9 | 3.0 | — | ||||||||||||
Common equity securities: | ||||||||||||||||
Exchange traded funds (1) | 384.8 | 330.6 | 54.2 | — | ||||||||||||
Consumer | 32.2 | 32.2 | — | — | ||||||||||||
Health Care | 27.1 | 27.1 | — | — | ||||||||||||
Financials | 18.2 | 18.2 | — | — | ||||||||||||
Technology | 16.1 | 16.1 | — | — | ||||||||||||
Communications | 13.9 | 13.9 | — | — | ||||||||||||
Industrial | 9.0 | 9.0 | — | — | ||||||||||||
Energy | 7.7 | 7.7 | — | — | ||||||||||||
Materials | 5.1 | 5.1 | — | — | ||||||||||||
Utilities | 1.0 | 1.0 | — | — | ||||||||||||
Other | 85.9 | — | 85.9 | — | ||||||||||||
Total common equity securities | 601.0 | 460.9 | 140.1 | — | ||||||||||||
Other long-term investments (2)(3) | 174.0 | — | — | 174.0 | ||||||||||||
Total investments | $ | 5,181.3 | $ | 790.2 | $ | 4,158.8 | $ | 232.3 |
December 31, 2016 | ||||||||||||||||
Millions | Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||
Fixed maturity investments: | ||||||||||||||||
U.S. Government and agency obligations | $ | 278.3 | $ | 268.8 | $ | 9.5 | $ | — | ||||||||
Debt securities issued by corporations: | ||||||||||||||||
Consumer | 385.6 | — | 385.6 | — | ||||||||||||
Health Care | 244.2 | — | 244.2 | — | ||||||||||||
Utilities | 180.3 | — | 180.3 | — | ||||||||||||
Financials | 176.0 | — | 176.0 | — | ||||||||||||
Industrial | 146.4 | — | 146.4 | — | ||||||||||||
Communications | 131.4 | — | 131.4 | — | ||||||||||||
Materials | 102.6 | — | 102.6 | — | ||||||||||||
Technology | 89.4 | — | 89.4 | — | ||||||||||||
Energy | 53.5 | — | 53.5 | — | ||||||||||||
Total debt securities issued by corporations | 1,509.4 | — | 1,509.4 | — | ||||||||||||
Mortgage and asset-backed securities | 2,132.9 | — | 2,132.9 | — | ||||||||||||
Municipal obligations | 309.0 | — | 309.0 | — | ||||||||||||
Foreign government, agency and provincial obligations | 13.2 | .6 | 12.6 | — | ||||||||||||
Preferred stocks | 14.0 | — | 14.0 | — | ||||||||||||
Total fixed maturity investments(4) | 4,256.8 | 269.4 | 3,987.4 | — | ||||||||||||
Short-term investments(4)(5) | 287.1 | 274.4 | 12.7 | — | ||||||||||||
Common equity securities: | ||||||||||||||||
Exchange traded funds(1) | 321.6 | 270.4 | 51.2 | — | ||||||||||||
Health Care | 20.9 | 20.9 | — | — | ||||||||||||
Consumer | 12.9 | 12.9 | — | — | ||||||||||||
Financials | 11.6 | 11.6 | — | — | ||||||||||||
Technology | 11.0 | 11.0 | — | — | ||||||||||||
Communications | 10.5 | 10.5 | — | — | ||||||||||||
Energy | 3.7 | 3.7 | — | — | ||||||||||||
Industrial | 2.2 | 2.2 | — | — | ||||||||||||
Other | 79.9 | — | 79.9 | — | ||||||||||||
Total common equity securities | 474.3 | 343.2 | 131.1 | — | ||||||||||||
Other long-term investments (2)(3) | 177.7 | — | — | 177.7 | ||||||||||||
Total investments(4) | $ | 5,195.9 | $ | 887.0 | $ | 4,131.2 | $ | 177.7 |
Fair Value at | ||||||||
Millions | March 31, 2017 | December 31, 2016 | ||||||
AA | 93.1 | 100.9 | ||||||
A | 484.7 | 381.9 | ||||||
BBB | 846.5 | 786.5 | ||||||
BB | 240.2 | 214.0 | ||||||
B | 22.3 | 26.1 | ||||||
Debt securities issued by corporations(1) | $ | 1,686.8 | $ | 1,509.4 |
March 31, 2017 | December 31, 2016 | |||||||||||||||||||||||
Millions | Fair Value | Level 2 | Level 3 | Fair Value | Level 2 | Level 3 | ||||||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||||||
Agency: | ||||||||||||||||||||||||
GNMA | $ | 249.0 | $ | 249.0 | $ | — | $ | 283.9 | $ | 283.9 | $ | — | ||||||||||||
FNMA | 270.1 | 270.1 | — | 278.3 | 278.3 | — | ||||||||||||||||||
FHLMC | 86.1 | 86.1 | — | 89.8 | 89.8 | — | ||||||||||||||||||
Total Agency(1) | 605.2 | 605.2 | — | 652.0 | 652.0 | — | ||||||||||||||||||
Non-agency: | ||||||||||||||||||||||||
Residential | 309.9 | 251.6 | 58.3 | 205.3 | 205.3 | — | ||||||||||||||||||
Commercial | 126.9 | 126.9 | — | 127.5 | 127.5 | — | ||||||||||||||||||
Total Non-agency | 436.8 | 378.5 | 58.3 | 332.8 | 332.8 | — | ||||||||||||||||||
Total mortgage-backed securities | 1,042.0 | 983.7 | 58.3 | 984.8 | 984.8 | — | ||||||||||||||||||
Other asset-backed securities: | ||||||||||||||||||||||||
Credit card receivables | 383.0 | 383.0 | — | 438.3 | 438.3 | — | ||||||||||||||||||
Vehicle receivables | 353.0 | 353.0 | — | 479.5 | 479.5 | — | ||||||||||||||||||
Other | 238.4 | 238.4 | — | 230.3 | 230.3 | — | ||||||||||||||||||
Total other asset-backed securities | 974.4 | 974.4 | — | 1,148.1 | 1,148.1 | — | ||||||||||||||||||
Total mortgage and asset-backed securities | $ | 2,016.4 | $ | 1,958.1 | $ | 58.3 | $ | 2,132.9 | $ | 2,132.9 | $ | — |
Security Issuance Year | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Millions | Fair Value | 2004 | 2005 | 2006 | 2008 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | |||||||||||||||||||||||||||||||||||||||
Non-agency RMBS | $ | 309.9 | $ | 18.1 | $ | 5.3 | $ | 2.8 | $ | 2.4 | $ | 6.0 | $ | 8.4 | $ | 4.2 | $ | 19.8 | $ | 49.4 | $ | 104.2 | $ | 34.5 | $ | 54.8 | ||||||||||||||||||||||||||
Non-agency CMBS | 126.9 | — | — | — | — | 4.1 | — | 18.1 | 11.5 | 23.4 | 44.2 | 25.6 | — | |||||||||||||||||||||||||||||||||||||||
Total | $ | 436.8 | $ | 18.1 | $ | 5.3 | $ | 2.8 | $ | 2.4 | $ | 10.1 | $ | 8.4 | $ | 22.3 | $ | 31.3 | $ | 72.8 | $ | 148.4 | $ | 60.1 | $ | 54.8 |
Millions | Fair Value | Super Senior (1) | Senior (2) | Subordinate (3) | ||||||||||||
Prime | $ | 309.9 | $ | 104.9 | $ | 205.0 | $ | — | ||||||||
Non-prime | — | — | — | — | ||||||||||||
Sub-prime | — | — | — | — | ||||||||||||
Total | $ | 309.9 | $ | 104.9 | $ | 205.0 | $ | — |
Millions | Fair Value | Super Senior (1) | Senior (2) | Subordinate (3) | ||||||||||||
Fixed rate CMBS | $ | 115.2 | $ | 1.6 | $ | 70.1 | $ | 43.5 | ||||||||
Floating rate CMBS | 11.7 | — | — | 11.7 | ||||||||||||
Total | $ | 126.9 | $ | 1.6 | $ | 70.1 | $ | 55.2 |
Level 3 Investments | |||||||||||||||||||||||
Millions | Level 1 investments | Level 2 investments | Fixed maturity investments | Common equity securities | Other long-term investments | Hedge Funds and Private Equity Funds measured at NAV(3) | Total | ||||||||||||||||
Balance at January 1, 2017 | $ | 612.5 | $ | 4,118.5 | $ | — | $ | — | $ | 177.7 | $ | 131.0 | $ | 5,039.7 | (1)(2)(4) | ||||||||
Total realized and unrealized gains (losses) | 22.4 | 25.5 | .2 | — | (1.9 | ) | 8.2 | 54.4 | |||||||||||||||
Amortization/Accretion | — | (6.5 | ) | — | — | — | — | (6.5 | ) | ||||||||||||||
Purchases | 124.5 | 890.4 | 58.1 | — | .2 | 22.1 | 1,095.3 | ||||||||||||||||
Sales | (197.1 | ) | (866.9 | ) | — | (2.0 | ) | (14.1 | ) | (1,080.1 | ) | ||||||||||||
Deconsolidation of SSIE | — | (5.2 | ) | — | — | — | (5.2 | ) | |||||||||||||||
Transfers in | — | — | — | — | — | — | — | ||||||||||||||||
Transfers out | — | — | — | — | — | — | — | ||||||||||||||||
Balance at March 31, 2017 | $ | 562.3 | $ | 4,155.8 | $ | 58.3 | $ | — | $ | 174.0 | $ | 147.2 | $ | 5,097.6 | (1)(2) |
Level 3 Investments | ||||||||||||||||||||||
Millions | Level 1 investments | Level 2 investments | Fixed maturity investments | Common equity securities | Other long-term investments | Hedge Funds and Private Equity Funds measured at NAV(3) | Total | |||||||||||||||
Balance at January 1, 2016 | $ | 1,152.2 | $ | 2,531.4 | $ | 70.0 | $ | — | $ | 169.5 | $ | 127.8 | $ | 4,050.9 | (1)(2)(4) | |||||||
Total realized and unrealized gains (losses) | 11.3 | 19.1 | .5 | — | 1.1 | (2.4 | ) | 29.6 | ||||||||||||||
Amortization/Accretion | — | (4.2 | ) | — | — | — | — | (4.2 | ) | |||||||||||||
Purchases | 109.0 | 292.4 | — | — | 2.1 | 8.9 | 412.4 | |||||||||||||||
Sales | (852.9 | ) | (272.6 | ) | — | — | — | (3.0 | ) | (1,128.5 | ) | |||||||||||
Transfers in | — | — | — | — | — | — | — | |||||||||||||||
Transfers out | — | — | — | — | — | — | — | |||||||||||||||
Balance at March 31, 2016 | $ | 419.6 | $ | 2,566.1 | $ | 70.5 | $ | — | $ | 172.7 | $ | 131.3 | $ | 3,360.2 | (1)(2)(4) |
Description | March 31, 2017 | |||||||||
$ in millions, except share price | Rating(6) | Valuation Technique(s) | Fair Value(1) | Unobservable Input | ||||||
Non-agency residential mortgage-backed securities | AAA | Broker pricing | $58.3 | Broker quote | 102.56 | |||||
Private equity security | NR | Share price of most recent transaction | $21.0 | Share price | - | $1.00 | ||||
Private equity security | NR | Discounted cash flow | $22.1 | Discount rate | - | 25.0% | ||||
Private equity security | NR | Share price of most recent transaction | $3.4 | Share price | - | $2.52 | ||||
Private convertible preferred security | NR | Multiple of EBITDA | $3.7 | EBITDA multiple | - | 6.00 | ||||
Private convertible preferred security | NR | Share price of most recent transaction | $27.0 | Share price | - | $3.83 | ||||
Community development tax incentive investment | NR | Member share of GAAP net equity | $14.5 | GAAP net equity | $14.5 | |||||
Private equity security | NR | Discounted cash flow/ Option pricing method | $9.4 | Discount rate | - | 21.0% | ||||
Time until expiration | - | 4 years | ||||||||
Volatility/Standard deviation | - | 50.0% | ||||||||
Risk free rate | - | 1.00% | ||||||||
OneBeacon Surplus Notes: | NR | |||||||||
- Seller priority | Discounted cash flow | $48.1 | Discount rate (2) | - | 10.6% | |||||
Timing of interest payments (4) | - | 2020 | ||||||||
Timing of principal payments (4) | - | 2030 | ||||||||
- Pari passu | Discounted cash flow | $21.5 | Discount rate (3) | - | 15.0% | |||||
Timing of interest payments (5) | - | 2021 | ||||||||
Timing of principal payments (5) | - | 2035 |
Description | December 31, 2016 | |||||||
$ in millions, except share price | Valuation Technique(s) | Fair Value (1) | Unobservable Input | |||||
Private equity security | Share price of most recent transaction | $21.0 | Share price | - | $1.00 | |||
Private equity security | Discounted cash flow | $22.1 | Discount rate | - | 25.0% | |||
Private equity security | Share price of most recent transaction | $3.2 | Share price | - | $2.52 | |||
Private convertible preferred security | Multiple of EBITDA | $3.6 | EBITDA multiple | - | 6.00 | |||
Private convertible preferred security | Share price of most recent transaction | $27.0 | Share price | - | $3.83 | |||
Community development tax incentive investment | Member share of GAAP net equity | $14.3 | GAAP net equity | $14.3 | ||||
Private equity security | Discounted cash flow/ Option pricing method | $9.3 | Discount rate | - | 21.0% | |||
Time until expiration | - | 4 years | ||||||
Volatility/Standard deviation | - | 50.0% | ||||||
Risk free rate | - | 1.00% | ||||||
OneBeacon Surplus Notes: | ||||||||
- Seller priority | Discounted cash flow | $51.1 | Discount rate (2) | - | 9.6% | |||
Timing of interest payments (4) | - | 2020 | ||||||
Timing of principal payments (4) | - | 2030 | ||||||
- Pari passu | Discounted cash flow | $20.8 | Discount rate (3) | - | 15.0% | |||
Timing of interest payments (5) | - | 2021 | ||||||
Timing of principal payments (5) | - | 2035 |
Three Months Ended March 31, | ||||||||||||||||||||||||
Millions | 2017 | 2016 | ||||||||||||||||||||||
Goodwill | Other intangible assets | Total | Goodwill | Other intangible assets | Total | |||||||||||||||||||
Beginning balance | $ | 31.7 | $ | 24.2 | $ | 55.9 | $ | 24.1 | $ | 31.3 | $ | 55.4 | ||||||||||||
Add: Amounts held for sale at beginning of the period (1) | — | — | — | — | .4 | .4 | ||||||||||||||||||
Acquisition of businesses | — | — | — | — | 3.9 | 3.9 | ||||||||||||||||||
Amortization, including foreign currency translation | — | (2.9 | ) | (2.9 | ) | — | (3.1 | ) | (3.1 | ) | ||||||||||||||
Less: Amounts held for sale at end of the period (1) | — | — | — | — | .3 | .3 | ||||||||||||||||||
Ending balance | $ | 31.7 | $ | 21.3 | $ | 53.0 | $ | 24.1 | $ | 32.2 | $ | 56.3 |
Millions | March 31, 2017 | Effective Rate (1) | December 31, 2016 | Effective Rate (1) | ||||||||
WTM Bank Facility | $ | — | N/A | $ | — | N/A | ||||||
OBH Senior Notes, at face value | 275.0 | 4.7% | 275.0 | 4.7% | ||||||||
Unamortized original issue discount and debt issuance costs | (1.8 | ) | (1.8 | ) | ||||||||
OBH Senior Notes, carrying value | 273.2 | 273.2 | ||||||||||
OneBeacon Bank Facility | — | N/A | — | N/A | ||||||||
MediaAlpha Bank Facility | 11.7 | 6.1% | 12.9 | 5.7% | ||||||||
Unamortized issuance cost | (.2 | ) | (.2 | ) | ||||||||
MediaAlpha Bank Facility, carrying value | 11.5 | 12.7 | ||||||||||
Total debt | $ | 284.7 | $ | 285.9 |
Three Months Ended | ||||
March 31, | ||||
Millions | 2016 | |||
Fees, included in other revenue | $ | 1.0 | ||
Change in fair value of variable annuity liability, included in other revenue | (.4 | ) | ||
Change in fair value of derivatives, included in other revenue | (1.7 | ) | ||
Foreign exchange, included in other revenue | .9 | |||
Other investment income and losses | — | |||
Total revenue | (.2 | ) | ||
Death benefit claims paid, included in general and administrative expenses | (.1 | ) | ||
General and administrative expenses | (.8 | ) | ||
Pre-tax loss | $ | (1.1 | ) |
Gains (losses) | ||||||||
Three Months Ended | Carrying Value | |||||||
March 31, | As of | |||||||
Millions | 2016 | December 31, 2016 | ||||||
Fixed income/interest rate | $ | 1.8 | $ | — | ||||
Foreign exchange | (4.2 | ) | — | |||||
Equity | .7 | — | ||||||
Total | $ | (1.7 | ) | $ | — |
Three Months Ended March 31, 2016 | ||||||||||||||||||||
Variable Annuity Liabilities | Derivative Instruments | |||||||||||||||||||
Millions | Level 3 | Level 3 (1) | Level 2 (1)(2) | Level 1 (3) | Total | |||||||||||||||
Beginning of period | $ | .3 | $ | 2.7 | $ | 16.5 | $ | .9 | $ | 20.1 | ||||||||||
Purchases | — | — | — | — | — | |||||||||||||||
Realized and unrealized (losses) gains | (.4 | ) | 1.2 | 1.1 | (4.0 | ) | (1.7 | ) | ||||||||||||
Transfers in | — | — | — | — | — | |||||||||||||||
Sales/settlements | — | (1.3 | ) | (7.3 | ) | 3.3 | (5.3 | ) | ||||||||||||
End of period | $ | (.1 | ) | $ | 2.6 | $ | 10.3 | $ | .2 | $ | 13.1 |
March 31, 2016 | ||||||||||||
Millions | Gross asset amounts before offsets (1) | Gross liability amounts offset under master netting arrangements | Net amounts recognized in Other Assets | |||||||||
Interest rate contracts | ||||||||||||
OTC | $ | 2.2 | $ | (2.5 | ) | $ | (.3 | ) | ||||
Foreign exchange contracts | ||||||||||||
OTC | 12.7 | — | 12.7 | |||||||||
Exchange traded | — | (.1 | ) | (.1 | ) | |||||||
Equity contracts | ||||||||||||
OTC | 1.5 | (.9 | ) | .6 | ||||||||
Exchange traded | .3 | (.1 | ) | .2 | ||||||||
Total(2) | $ | 16.7 | $ | (3.6 | ) | $ | 13.1 |
March 31, 2016 | |||||||||||||||||||||||||||||||||||
Millions | Net amount of assets reflected in Balance Sheet | Collateral provided to counter-party - Cash | Collateral provided to counter-party - Financial Instruments | Net amount of exposure after effect of collateral provided | Excess collateral provided to counter-party- Cash | Excess collateral provided - Financial Instruments | Counter-party collateral held by WM Life Re- Cash | Net amount of exposure to counter-party | Standard & Poor's Rating(1) | ||||||||||||||||||||||||||
JP Morgan | $ | 6.5 | $ | — | $ | — | $ | 6.5 | $ | — | $ | — | $ | 5.4 | $ | 1.1 | A | + | |||||||||||||||||
Bank of America | 1.4 | — | — | 1.4 | — | — | — | 1.4 | A | ||||||||||||||||||||||||||
Citigroup - OTC | 5.0 | — | — | 5.0 | — | — | .5 | 4.5 | A | ||||||||||||||||||||||||||
Citigroup - Exchange Traded | .2 | — | — | .2 | 7.9 | — | — | 8.1 | A | ||||||||||||||||||||||||||
Total | $ | 13.1 | $ | — | $ | — | $ | 13.1 | $ | 7.9 | $ | — | $ | 5.9 | $ | 15.1 |
March 31, 2017 | ||||||||||
Millions | Notional Amount | Carrying Value | Standard & Poor's Rating (1) | |||||||
Barclays Bank PLC | $ | 247.2 | $ | (3.2 | ) | A- | ||||
JP Morgan | 52.7 | (1.0 | ) | A- | ||||||
Total | $ | 299.9 | $ | (4.2 | ) |
March 31, 2017 | December 31, 2016 | |||||||
Contracts outstanding | 5,191 | 4,807 | ||||||
Remaining weighted average contract period outstanding (in years) | 10.8 | 10.8 | ||||||
Contractual debt service outstanding (in millions): | ||||||||
Principal | $ | 35,222.1 | $ | 33,057.3 | ||||
Interest | 17,589.9 | 16,396.6 | ||||||
Total debt service outstanding | $ | 52,812.0 | $ | 49,453.9 | ||||
Gross unearned insurance premiums | $ | 99.8 | $ | 83.0 |
Millions | March 31, 2017 | |||
April 1, 2017 - December 31, 2017 | $ | 6.3 | ||
January 1, 2018 - March 31, 2018 | 2.1 | |||
April 1, 2018 - June 30, 2018 | 2.0 | |||
July 1, 2018 - September 30, 2018 | 2.0 | |||
October 1, 2018 - December 31, 2018 | 2.0 | |||
8.1 | ||||
2019 | 7.8 | |||
2020 | 7.4 | |||
2021 | 7.0 | |||
2022 and thereafter | 63.2 | |||
Total gross unearned insurance premiums | $ | 99.8 |
Three Months Ended | ||||||||
March 31, | ||||||||
2017 | 2016 | |||||||
Basic and diluted earnings per share numerators (in millions): | ||||||||
Net income (loss) from continuing operations attributable to White Mountains’s common shareholders | $ | 35.3 | $ | 11.9 | ||||
Allocation of income for unvested restricted common shares | (.4 | ) | (.1 | ) | ||||
Dividends declared on participating restricted common shares(1) | (.1 | ) | (.1 | ) | ||||
Total allocation to restricted common shares | (.5 | ) | (.2 | ) | ||||
Net income (loss) attributable to White Mountains’s common shareholders, net of restricted common share amounts | $ | 34.8 | $ | 11.7 | ||||
Undistributed net earnings (in millions): | ||||||||
Net income (loss) attributable to White Mountains’s common shareholders, net of restricted common share amounts | $ | 34.8 | $ | 11.7 | ||||
Dividends declared net of restricted common share amounts(1) | (4.5 | ) | (5.9 | ) | ||||
Total undistributed net earnings, net of restricted common share amounts | $ | 30.3 | $ | 5.8 | ||||
Basic earnings per share denominators (in thousands): | ||||||||
Total average common shares outstanding during the period | 4,564.6 | 5,539.6 | ||||||
Average unvested restricted shares(2) | (52.5 | ) | (54.0 | ) | ||||
Basic earnings per share denominator | 4,512.1 | 5,485.6 | ||||||
Diluted earnings per share denominator (in thousands): | ||||||||
Total average common shares outstanding during the period(3) | 4,564.6 | 5,540.5 | ||||||
Average unvested restricted common shares(2) | (52.5 | ) | (54.0 | ) | ||||
Diluted earnings per share denominator(3) | 4,512.1 | 5,486.5 | ||||||
Basic earnings per share (in dollars): | ||||||||
Net income (loss) attributable to White Mountains’s common shareholders | $ | 7.72 | $ | 2.14 | ||||
Dividends declared and paid | (1.00 | ) | (1.00 | ) | ||||
Undistributed earnings | $ | 6.72 | $ | 1.14 | ||||
Diluted earnings per share (in dollars): | ||||||||
Net income (loss) attributable to White Mountains’s common shareholders | $ | 7.72 | $ | 2.14 | ||||
Dividends declared and paid | (1.00 | ) | (1.00 | ) | ||||
Undistributed earnings | $ | 6.72 | $ | 1.14 |
March 31, 2017 | December 31, 2016 | |||||||||||||
$ in millions | Non-controlling Percentage | Non-controlling Equity | Non-controlling Percentage | Non-controlling Equity | ||||||||||
OneBeacon Ltd. | 24.3 | % | $ | 250.7 | 23.9 | % | $ | 244.6 | ||||||
Other, excluding mutuals and reciprocals | ||||||||||||||
HG Global | 3.1 | 16.5 | 3.1 | 16.6 | ||||||||||
MediaAlpha | 40.0 | 11.0 | 40.0 | 11.7 | ||||||||||
Wobi | 5.0 | 1.0 | 5.0 | .7 | ||||||||||
Dewar | 18.8 | 3.4 | 18.8 | 3.9 | ||||||||||
Buzzmove | 29.1 | 2.8 | 29.1 | 2.9 | ||||||||||
Total other, excluding mutuals and reciprocals | 34.7 | 35.8 | ||||||||||||
Mutuals and reciprocals | ||||||||||||||
BAM | 100.0 | (153.0 | ) | 100.0 | (150.9 | ) | ||||||||
SSIE | — | — | 100.0 | 4.4 | ||||||||||
Total mutuals and reciprocals | (153.0 | ) | (146.5 | ) | ||||||||||
Total non-controlling interests | $ | 132.4 | $ | 133.9 |
HG Global/BAM | ||||||||||||||||||||
Millions | OneBeacon | HG | BAM(1) | Other Operations | Total | |||||||||||||||
Three Months Ended March 31, 2017 | ||||||||||||||||||||
Earned insurance premiums | $ | 261.8 | $ | 1.5 | $ | .5 | $ | 1.0 | $ | 264.8 | ||||||||||
Net investment income | 12.2 | .6 | 2.0 | 11.3 | 26.1 | |||||||||||||||
Net investment income (loss) - surplus note interest | — | 4.8 | (4.8 | ) | — | — | ||||||||||||||
Net realized and unrealized investment gains | 15.0 | .3 | 1.0 | 35.0 | 51.3 | |||||||||||||||
Other revenue | 3.4 | — | .4 | 39.9 | (2) | 43.7 | ||||||||||||||
Total revenues | 292.4 | 7.2 | (.9 | ) | 87.2 | 385.9 | ||||||||||||||
Losses and LAE | 150.6 | — | — | 1.1 | 151.7 | |||||||||||||||
Insurance acquisition expenses | 45.3 | .3 | .9 | .1 | 46.6 | |||||||||||||||
Other underwriting expenses | 51.7 | — | .1 | — | 51.8 | |||||||||||||||
General and administrative expenses | 4.7 | .3 | 10.3 | 76.0 | (3) | 91.3 | ||||||||||||||
Amortization of other intangible assets | .3 | — | — | 2.6 | 2.9 | |||||||||||||||
Interest expense | 3.3 | — | — | .4 | 3.7 | |||||||||||||||
Total expenses | 255.9 | .6 | 11.3 | 80.2 | 348.0 | |||||||||||||||
Pre-tax income (loss) | $ | 36.5 | $ | 6.6 | $ | (12.2 | ) | $ | 7.0 | $ | 37.9 |
HG Global/BAM | ||||||||||||||||||||
Millions | OneBeacon | HG | BAM(1) | Other Operations | Total | |||||||||||||||
Three Months Ended March 31, 2016 | ||||||||||||||||||||
Earned insurance premiums | $ | 278.6 | $ | .9 | $ | .3 | $ | 2.3 | $ | 282.1 | ||||||||||
Net investment income | 14.4 | .5 | 1.6 | 1.4 | 17.9 | |||||||||||||||
Net investment income (loss) - surplus note interest | — | 4.5 | (4.5 | ) | — | — | ||||||||||||||
Net realized and unrealized investment gains | 16.6 | 2.1 | 4.9 | 5.9 | 29.5 | |||||||||||||||
Other revenue | .9 | — | .1 | 38.8 | (2) | 39.8 | ||||||||||||||
Total revenues | 310.5 | 8.0 | 2.4 | 48.4 | 369.3 | |||||||||||||||
Losses and LAE | 158.8 | — | — | 2.3 | 161.1 | |||||||||||||||
Insurance acquisition expenses | 51.0 | .2 | .7 | .8 | 52.7 | |||||||||||||||
Other underwriting expenses | 55.3 | — | .1 | — | 55.4 | |||||||||||||||
General and administrative expenses | 3.6 | .5 | 9.2 | 70.7 | (3) | 84.0 | ||||||||||||||
Amortization of other intangible assets | .3 | — | — | 2.8 | 3.1 | |||||||||||||||
Interest expense | 3.3 | — | — | 1.2 | 4.5 | |||||||||||||||
Total expenses | 272.3 | .7 | 10.0 | 77.8 | 360.8 | |||||||||||||||
Pre-tax income (loss) | $ | 38.2 | $ | 7.3 | $ | (7.6 | ) | $ | (29.4 | ) | $ | 8.5 |
Three Months Ended March 31, | ||||||||||||||
2017 | 2016 | |||||||||||||
Millions, except share amounts | Target Performance Shares Outstanding | Accrued Expense | Target Performance Shares Outstanding | Accrued Expense | ||||||||||
Beginning of period | 80,353 | $ | 42.4 | 93,654 | $ | 57.7 | ||||||||
Shares paid or expired(1) | (30,167 | ) | (20.8 | ) | — | — | ||||||||
New grants | 16,460 | — | 16,215 | — | ||||||||||
Forfeitures and cancellations(2) | (9,841 | ) | (5.7 | ) | (1,186 | ) | (.6 | ) | ||||||
Expense recognized | — | 8.1 | — | 14.2 | ||||||||||
End of period(3) | 56,805 | $ | 24.0 | 108,683 | $ | 71.3 |
Millions, except share amounts | Target Performance Shares Outstanding | Accrued Expense | |||||
Performance cycle: | |||||||
2017 – 2019 | 16,460 | $ | 1.2 | ||||
2016 – 2018 | 19,415 | 7.3 | |||||
2015 – 2017 | 21,795 | 15.8 | |||||
Sub-total | 57,670 | 24.3 | |||||
Assumed forfeitures | (865 | ) | (.3 | ) | |||
March 31, 2017 | 56,805 | $ | 24.0 |
Three Months Ended March 31, | ||||||||||||||
2017 | 2016 | |||||||||||||
Millions, except share amounts | Restricted Shares | Unamortized Issue Date Fair Value | Restricted Shares | Unamortized Issue Date Fair Value | ||||||||||
Non-vested, | ||||||||||||||
Beginning of period | 70,620 | $ | 19.7 | 70,675 | $ | 15.7 | ||||||||
Issued | 16,735 | 15.8 | 21,215 | 16.8 | ||||||||||
Vested | (22,015 | ) | — | (24,620 | ) | — | ||||||||
Forfeited | (5,200 | ) | (2.8 | ) | (800 | ) | (.3 | ) | ||||||
Expense recognized | — | (3.6 | ) | — | (3.0 | ) | ||||||||
End of period (1) | 60,140 | $ | 29.1 | 66,470 | $ | 29.2 |
Three Months Ended March 31, | ||||||||||||||
2017 | 2016 | |||||||||||||
Millions, except share amounts | Target Performance Shares Outstanding | Accrued Expense | Target Performance Shares Outstanding | Accrued Expense | ||||||||||
Beginning of period | 452,519 | $ | 1.6 | 449,435 | $ | 1.4 | ||||||||
Shares paid or expired(1) | (142,710 | ) | — | (167,300 | ) | (.7 | ) | |||||||
New grants | — | — | 163,150 | — | ||||||||||
Assumed forfeitures and cancellations(2) | (13 | ) | — | (4,079 | ) | — | ||||||||
Expense recognized | — | .3 | — | .4 | ||||||||||
End of period | 309,796 | $ | 1.9 | 441,206 | $ | 1.1 |
Millions, except share amounts | Target Performance Shares Outstanding | Accrued Expense | |||||
Performance cycle: | |||||||
2016 – 2018 | 163,150 | $ | 1.1 | ||||
2015 – 2017 | 146,646 | .8 | |||||
Sub-total | 309,796 | 1.9 | |||||
Assumed forfeitures | — | — | |||||
March 31, 2017 | 309,796 | $ | 1.9 |
Three Months Ended March 31, | ||||||||||||||
2017 | 2016 | |||||||||||||
Millions, except share amounts | Restricted Shares | Unamortized Issue Date Fair Value | Restricted Shares | Unamortized Issue Date Fair Value | ||||||||||
Non-vested, | ||||||||||||||
Beginning of period | 395,872 | $ | 2.1 | 382,722 | $ | 2.5 | ||||||||
Issued | 461,160 | 7.4 | 170,650 | 2.3 | ||||||||||
Vested | (157,500 | ) | — | (157,500 | ) | — | ||||||||
Forfeited | — | — | — | — | ||||||||||
Expense recognized | — | (.9 | ) | — | (.5 | ) | ||||||||
End of period | 699,532 | $ | 8.6 | 395,872 | $ | 4.3 |
March 31, 2017 | December 31, 2016 | |||||||||||||||
Millions | Fair Value | Carrying Value | Fair Value | Carrying Value | ||||||||||||
OBH Senior Notes | $ | 279.4 | $ | 273.2 | $ | 274.2 | $ | 273.2 | ||||||||
MediaAlpha Bank Facility | 11.7 | 11.5 | 13.0 | 12.7 |
Millions | December 31, 2016 | |||
Assets held for sale | ||||
Fixed maturity investments, at fair value | $ | 6.6 | ||
Short-term investments, at amortized cost (which approximates fair value) | .2 | |||
Total investments | 6.8 | |||
Cash | .9 | |||
Reinsurance recoverable on unpaid losses | .3 | |||
Insurance and reinsurance premiums receivable | 1.5 | |||
Other assets | .6 | |||
Total assets held for sale | $ | 10.1 | ||
Liabilities held for sale | ||||
Loss and loss adjustment expense reserves | $ | 5.0 | ||
Unearned insurance and reinsurance premiums | 1.2 | |||
Other liabilities | (1.1 | ) | ||
Total liabilities held for sale | 5.1 | |||
Net assets held for sale | $ | 5.0 |
Three Months Ended | Three Months Ended | |||||||||||||||||||||||
March 31, 2017 | March 31, 2016 | |||||||||||||||||||||||
Millions | Sirius Group | Other Disc Ops | Total | Sirius Group | Other Disc Ops | Total | ||||||||||||||||||
Revenues | ||||||||||||||||||||||||
Earned insurance premiums | $ | — | $ | — | $ | — | $ | 202.4 | $ | — | $ | 202.4 | ||||||||||||
Net investment income | — | — | — | 12.2 | — | 12.2 | ||||||||||||||||||
Net realized and unrealized losses | — | — | — | (8.8 | ) | — | (8.8 | ) | ||||||||||||||||
Other revenue | — | — | — | (4.1 | ) | 57.8 | 53.7 | |||||||||||||||||
Total revenues | — | — | — | 201.7 | 57.8 | 259.5 | ||||||||||||||||||
Expenses | ||||||||||||||||||||||||
Loss and loss adjustment expenses | — | — | — | 113.7 | — | 113.7 | ||||||||||||||||||
Insurance and reinsurance acquisition expenses | — | — | — | 48.4 | — | 48.4 | ||||||||||||||||||
Other underwriting expenses | — | — | — | 26.7 | — | 26.7 | ||||||||||||||||||
General and administrative expenses | — | — | — | 8.1 | 53.4 | 61.5 | ||||||||||||||||||
Interest expense | — | — | — | 6.6 | 1.4 | 8.0 | ||||||||||||||||||
Total expenses | — | — | — | 203.5 | 54.8 | 258.3 | ||||||||||||||||||
Pre-tax (loss) income | — | — | — | (1.8 | ) | 3.0 | 1.2 | |||||||||||||||||
Income tax expense (benefit) | — | — | — | .9 | (1.0 | ) | (.1 | ) | ||||||||||||||||
Net (loss) income from discontinued operations | — | — | — | (.9 | ) | 2.0 | 1.1 | |||||||||||||||||
Net loss from sale of discontinued operations | — | (1.0 | ) | (1.0 | ) | — | — | — | ||||||||||||||||
Total (loss) income from discontinued operations | $ | — | $ | (1.0 | ) | $ | (1.0 | ) | $ | (.9 | ) | $ | 2.0 | $ | 1.1 | |||||||||
Change in foreign currency translation and other from discontinued operations | — | — | — | 37.2 | — | 37.2 | ||||||||||||||||||
Comprehensive (loss) income from discontinued operations | $ | — | $ | (1.0 | ) | $ | (1.0 | ) | $ | 36.3 | $ | 2.0 | $ | 38.3 |
Three Months Ended | ||||||||
March 31, | ||||||||
(Millions) | 2017 | 2016 | ||||||
Net cash (used for) provided from operations | $ | — | $ | (40.7 | ) | |||
Net cash provided from investing activities | — | 33.6 | ||||||
Net cash (used for) provided from financing activities | — | (8.3 | ) | |||||
Effect of exchange rate changes on cash | — | 4.2 | ||||||
Net change in cash during the period | — | (11.2 | ) | |||||
Cash balances at beginning of period | .9 | 150.2 | ||||||
Net change in cash held for sale | (.9 | ) | .9 | |||||
Cash balances at end of period | $ | — | $ | 139.9 | ||||
Supplemental cash flows information: | ||||||||
Interest paid | $ | — | $ | (1.4 | ) | |||
Net income tax payment to national governments | $ | — | $ | (36.4 | ) |
Three Months Ended | ||||||||
March 31, | ||||||||
2017 | 2016 | |||||||
Basic and diluted earnings per share numerators (in millions): | ||||||||
Net income attributable to White Mountains’s common shareholders | $ | (1.0 | ) | $ | 1.1 | |||
Allocation of income for participating unvested restricted common shares(1) | — | — | ||||||
Net income attributable to White Mountains’s common shareholders, net of restricted common share amounts (2) | $ | (1.0 | ) | $ | 1.1 | |||
Basic earnings per share denominators (in thousands): | ||||||||
Total average common shares outstanding during the period | 4,564.6 | 5,539.6 | ||||||
Average unvested restricted common shares(3) | (52.5 | ) | (54.0 | ) | ||||
Basic earnings per share denominator | 4,512.1 | 5,485.6 | ||||||
Diluted earnings per share denominator (in thousands): | ||||||||
Total average common shares outstanding during the period(4) | 4,564.6 | 5,540.5 | ||||||
Average unvested restricted common shares(3) | (52.5 | ) | (54.0 | ) | ||||
Diluted earnings per share denominator(4) | 4,512.1 | 5,486.5 | ||||||
Basic earnings per share (in dollars): | $ | (.22 | ) | $ | .20 | |||
Diluted earnings per share (in dollars): | $ | (.22 | ) | $ | .20 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
March 31, 2017 | December 31, 2016 | March 31, 2016 | ||||||||||
Book value per share numerators (in millions): | ||||||||||||
White Mountains’s common shareholders’ equity | $ | 3,625.2 | $ | 3,603.3 | $ | 3,785.9 | ||||||
Future proceeds from options (1) | — | 29.7 | — | |||||||||
Adjusted book value per share numerator | $ | 3,625.2 | $ | 3,633.0 | $ | 3,785.9 | ||||||
Book value per share denominators (in thousands of shares): | ||||||||||||
Common shares outstanding | 4,572.8 | 4,563.8 | 5,415.5 | |||||||||
Unearned restricted shares | (34.7 | ) | (25.9 | ) | (41.1 | ) | ||||||
Options assumed issued (1) | — | 40.0 | — | |||||||||
Adjusted book value per share denominator | 4,538.1 | 4,577.9 | 5,374.4 | |||||||||
Book value per share | $ | 792.77 | $ | 789.53 | $ | 699.10 | ||||||
Adjusted book value per share | $ | 798.83 | $ | 793.58 | $ | 704.45 | ||||||
Year-to-date dividends paid per share | $ | 1.00 | $ | 1.00 | $ | 1.00 |
Millions | March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||
Goodwill | ||||||||||||
MediaAlpha | $ | 18.3 | $ | 18.3 | $ | 18.3 | ||||||
Wobi | 5.8 | 5.8 | 5.8 | |||||||||
Buzzmove | 7.6 | 7.6 | — | |||||||||
Total goodwill | 31.7 | 31.7 | 24.1 | |||||||||
Other intangible assets | ||||||||||||
MediaAlpha | 15.9 | 18.3 | 25.8 | |||||||||
Wobi and other | 5.4 | 5.9 | 6.4 | |||||||||
Total other intangible assets | 21.3 | 24.2 | 32.2 | |||||||||
Total goodwill and other intangible assets (1) | 53.0 | 55.9 | 56.3 | |||||||||
Goodwill and other intangible assets held for sale | — | — | 325.4 | |||||||||
Goodwill and other intangible assets attributed to non-controlling interests | (16.9 | ) | (17.6 | ) | (134.4 | ) | ||||||
Goodwill and other intangible assets included in book value | $ | 36.1 | $ | 38.3 | $ | 247.3 |
Three Months Ended | ||||||||
March 31, | ||||||||
Millions | 2017 | 2016 | ||||||
Gross written premiums | $ | 317.0 | $ | 321.7 | ||||
Net written premiums | $ | 277.2 | $ | 289.1 | ||||
Revenues | ||||||||
Earned insurance premiums | $ | 264.8 | $ | 282.1 | ||||
Net investment income | 26.1 | 17.9 | ||||||
Net realized and unrealized investment gains | 51.3 | 29.5 | ||||||
Other revenue | 43.7 | 39.8 | ||||||
Total revenues | 385.9 | 369.3 | ||||||
Expenses | ||||||||
Losses and LAE | 151.7 | 161.1 | ||||||
Insurance acquisition expenses | 46.6 | 52.7 | ||||||
Other underwriting expenses | 51.8 | 55.4 | ||||||
General and administrative expenses | 91.3 | 84.0 | ||||||
General and administrative expenses—intangible asset amortization | 2.9 | 3.1 | ||||||
Interest expense | 3.7 | 4.5 | ||||||
Total expenses | 348.0 | 360.8 | ||||||
Pre-tax income from continuing operations | 37.9 | 8.5 | ||||||
Income (expense) benefit | (3.9 | ) | 9.7 | |||||
Net income from continuing operations | 34.0 | 18.2 | ||||||
Net loss on sale of discontinued operations, net of tax | (1.0 | ) | — | |||||
Net income from discontinued operations, net of tax | — | 1.1 | ||||||
Net income | 33.0 | 19.3 | ||||||
Net loss (income) attributable to non-controlling interests | 1.3 | (6.3 | ) | |||||
Net income attributable to White Mountains’s common shareholders | 34.3 | 13.0 | ||||||
Change in foreign currency translation and pension liability, net of tax | .9 | .1 | ||||||
Change in foreign currency translation and other from discontinued operations, net of tax | — | 37.2 | ||||||
Comprehensive income attributable to White Mountains’s common shareholders | $ | 35.2 | $ | 50.3 |
Three Months Ended | ||||||||
March 31, | ||||||||
Millions | 2017 | 2016 | ||||||
Gross written premiums | $ | 297.3 | $ | 310.5 | ||||
Net written premiums | $ | 256.9 | $ | 280.1 | ||||
Earned insurance premiums | $ | 261.8 | $ | 278.6 | ||||
Net investment income | 12.2 | 14.4 | ||||||
Net realized and unrealized investment gains | 15.0 | 16.6 | ||||||
Other revenue | 3.4 | .9 | ||||||
Total revenues | 292.4 | 310.5 | ||||||
Losses and LAE | 150.6 | 158.8 | ||||||
Insurance acquisition expenses | 45.3 | 51.0 | ||||||
Other underwriting expenses | 51.7 | 55.3 | ||||||
General and administrative expenses | 4.7 | 3.6 | ||||||
General and administrative expenses—intangible asset amortization | .3 | .3 | ||||||
Interest expense | 3.3 | 3.3 | ||||||
Total expenses | 255.9 | 272.3 | ||||||
Pre-tax income | $ | 36.5 | $ | 38.2 | ||||
GAAP ratios: | ||||||||
Losses and LAE | 58 | % | 57 | % | ||||
Expense | 37 | % | 38 | % | ||||
Combined | 95 | % | 95 | % |
(Millions, except per share amounts) | March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||
OneBeacon book value per share: | ||||||||||||
OneBeacon’s common shareholders’ equity | $ | 1,033.4 | $ | 1,021.3 | $ | 1,016.6 | ||||||
OneBeacon common shares outstanding | 94.7 | 94.3 | 94.3 | |||||||||
OneBeacon book value per common share (1) | $ | 10.91 | $ | 10.82 | $ | 10.78 |
Three Months Ended March 31, 2017 | ||||||||||||||||
Millions | HG Global | BAM | Eliminations | Total | ||||||||||||
Gross written premiums | $ | — | $ | 18.7 | $ | — | $ | 18.7 | ||||||||
Assumed (ceded) written premiums | 12.6 | (12.6 | ) | — | — | |||||||||||
Net written premiums | $ | 12.6 | $ | 6.1 | $ | — | $ | 18.7 | ||||||||
Earned insurance premiums | $ | 1.5 | $ | .5 | $ | — | $ | 2.0 | ||||||||
Net investment income | .6 | 2.0 | — | 2.6 | ||||||||||||
Net investment income - BAM Surplus Notes | 4.8 | — | (4.8 | ) | — | |||||||||||
Net realized and unrealized investment losses | .3 | 1.0 | — | 1.3 | ||||||||||||
Other revenue | — | .4 | — | .4 | ||||||||||||
Total revenues | 7.2 | 3.9 | (4.8 | ) | 6.3 | |||||||||||
Insurance acquisition expenses | .3 | .9 | — | 1.2 | ||||||||||||
Other underwriting expenses | — | .1 | — | .1 | ||||||||||||
General and administrative expenses | .3 | 10.3 | — | 10.6 | ||||||||||||
Interest expense - BAM Surplus Notes | — | 4.8 | (4.8 | ) | — | |||||||||||
Total expenses | .6 | 16.1 | (4.8 | ) | 11.9 | |||||||||||
Pre-tax income (loss) | $ | 6.6 | $ | (12.2 | ) | $ | — | $ | (5.6 | ) | ||||||
Supplemental information: | ||||||||||||||||
Member Surplus Contributions (1) | $ | — | $ | 9.6 | $ | — | $ | 9.6 |
Three Months Ended March 31, 2016 | ||||||||||||||||
Millions | HG Global | BAM | Eliminations | Total | ||||||||||||
Gross written premiums | $ | — | $ | 6.8 | $ | — | $ | 6.8 | ||||||||
Assumed (ceded) written premiums | 5.1 | (5.1 | ) | — | — | |||||||||||
Net written premiums | $ | 5.1 | $ | 1.7 | $ | — | $ | 6.8 | ||||||||
Earned insurance premiums | $ | .9 | $ | .3 | $ | — | $ | 1.2 | ||||||||
Net investment income | .5 | 1.6 | — | 2.1 | ||||||||||||
Net investment income - BAM Surplus Notes | 4.5 | — | (4.5 | ) | — | |||||||||||
Net realized and unrealized investment gains | 2.1 | 4.9 | — | 7.0 | ||||||||||||
Other revenue | — | .1 | — | .1 | ||||||||||||
Total revenues | 8.0 | 6.9 | (4.5 | ) | 10.4 | |||||||||||
Insurance acquisition expenses | .2 | .7 | — | .9 | ||||||||||||
Other underwriting expenses | — | .1 | — | .1 | ||||||||||||
General and administrative expenses | .5 | 9.2 | — | 9.7 | ||||||||||||
Interest expense - BAM Surplus Notes | — | 4.5 | (4.5 | ) | — | |||||||||||
Total expenses | .7 | 14.5 | (4.5 | ) | 10.7 | |||||||||||
Pre-tax income (loss) | $ | 7.3 | $ | (7.6 | ) | $ | — | $ | (.3 | ) | ||||||
Supplemental information: | ||||||||||||||||
Member Surplus Contributions (1) | $ | — | $ | 6.7 | $ | — | $ | 6.7 |
Millions | March 31, 2017 | December 31, 2016 | ||||||
Policyholders’ surplus | $ | 429.2 | $ | 431.5 | ||||
Contingency reserve | 25.5 | 22.7 | ||||||
Qualified statutory capital | 454.7 | 454.2 | ||||||
Net unearned premiums | 29.2 | 23.2 | ||||||
Present value of future installment premiums | 3.3 | 3.3 | ||||||
Collateral trusts | 175.0 | 163.0 | ||||||
Claims paying resources | $ | 662.2 | $ | 643.7 |
Millions | March 31, 2016 | December 31, 2015 | ||||||
Policyholders’ surplus | $ | 433.4 | $ | 437.2 | ||||
Contingency reserve | 14.8 | 12.4 | ||||||
Qualified statutory capital | 448.2 | 449.6 | ||||||
Net unearned premiums | 14.0 | 12.5 | ||||||
Present value of future installment premiums | 2.7 | 2.6 | ||||||
Collateral trusts | 142.2 | 136.6 | ||||||
Claims paying resources | $ | 607.1 | $ | 601.3 |
March 31, 2017 | ||||||||||||||||
Millions | HG Global | BAM | Eliminations and Segment Adjustment | Total | ||||||||||||
Assets | ||||||||||||||||
Fixed maturity investments | $ | 155.3 | $ | 447.8 | $ | — | $ | 603.1 | ||||||||
Short-term investments | 18.6 | 43.5 | — | 62.1 | ||||||||||||
Total investments | 173.9 | 491.3 | — | 665.2 | ||||||||||||
Cash | 1.4 | 10.5 | — | 11.9 | ||||||||||||
BAM Surplus Notes | 503.0 | — | (503.0 | ) | — | |||||||||||
Accrued interest receivable on BAM Surplus Notes | 112.8 | — | (112.8 | ) | — | |||||||||||
Other assets | 13.5 | 9.6 | (1.0 | ) | 22.1 | |||||||||||
Total assets | $ | 804.6 | $ | 511.4 | $ | (616.8 | ) | $ | 699.2 | |||||||
Liabilities | ||||||||||||||||
BAM Surplus Notes(1) | $ | — | $ | 503.0 | $ | (503.0 | ) | $ | — | |||||||
Accrued interest payable on BAM Surplus Notes(2) | — | 112.8 | (112.8 | ) | — | |||||||||||
Preferred dividends payable to White Mountains’s subsidiaries(3) | 191.9 | — | — | 191.9 | ||||||||||||
Preferred dividends payable to non-controlling interests | 6.4 | — | — | 6.4 | ||||||||||||
Other liabilities | 72.4 | 48.6 | (1.0 | ) | 120.0 | |||||||||||
Total liabilities | 270.7 | 664.4 | (616.8 | ) | 318.3 | |||||||||||
Equity | ||||||||||||||||
White Mountains’s common shareholders’ equity | 517.4 | — | — | 517.4 | ||||||||||||
Non-controlling interests | 16.5 | (153.0 | ) | — | (136.5 | ) | ||||||||||
Total equity | 533.9 | (153.0 | ) | — | 380.9 | |||||||||||
Total liabilities and equity | $ | 804.6 | $ | 511.4 | $ | (616.8 | ) | $ | 699.2 |
December 31, 2016 | ||||||||||||||||
Millions | HG Global | BAM | Eliminations and Segment Adjustment | Total Segment | ||||||||||||
Assets | ||||||||||||||||
Fixed maturity investments | $ | 155.2 | $ | 430.0 | $ | — | $ | 585.2 | ||||||||
Short-term investments | 6.4 | 38.1 | — | 44.5 | ||||||||||||
Total investments | 161.6 | 468.1 | — | 629.7 | ||||||||||||
Cash | 1.9 | 25.1 | — | 27.0 | ||||||||||||
BAM Surplus Notes | 503.0 | — | (503.0 | ) | — | |||||||||||
Accrued interest receivable on BAM Surplus Notes | 108.0 | — | (108.0 | ) | — | |||||||||||
Other assets | 12.5 | 39.9 | (1.0 | ) | 51.4 | |||||||||||
Total assets | $ | 787.0 | $ | 533.1 | $ | (612.0 | ) | $ | 708.1 | |||||||
Liabilities | ||||||||||||||||
BAM Surplus Notes(1) | $ | — | $ | 503.0 | $ | (503.0 | ) | $ | — | |||||||
Accrued interest payable on BAM Surplus Notes(2) | — | 108.0 | (108.0 | ) | — | |||||||||||
Preferred dividends payable to White Mountains’s subsidiaries(3) | 180.5 | — | — | 180.5 | ||||||||||||
Preferred dividends payable to non-controlling interests | 5.7 | — | — | 5.7 | ||||||||||||
Other liabilities | 61.4 | 73.0 | (1.0 | ) | 133.4 | |||||||||||
Total liabilities | 247.6 | 684.0 | (612.0 | ) | 319.6 | |||||||||||
Equity | ||||||||||||||||
White Mountains’s common shareholders’ equity | 522.8 | — | — | 522.8 | ||||||||||||
Non-controlling interests | 16.6 | (150.9 | ) | — | (134.3 | ) | ||||||||||
Total equity | 539.4 | (150.9 | ) | — | 388.5 | |||||||||||
Total liabilities and equity | $ | 787.0 | $ | 533.1 | $ | (612.0 | ) | $ | 708.1 |
(1) | Under GAAP, the BAM Surplus Notes are classified as debt by the issuer. Under U.S. Statutory accounting, they are classified as Surplus. |
(2) | Under GAAP, interest accrues daily on the BAM Surplus Notes. Under U.S. Statutory accounting, interest is not accrued on the BAM Surplus Notes until it has been approved for payment by insurance regulators. |
(3) | Dividends on HG Global preferred shares payable to White Mountains's subsidiaries are eliminated in White Mountains's consolidated financial statements. |
Three Months Ended | ||||||||
March 31, | ||||||||
Millions | 2017 | 2016 | ||||||
Gross par value of primary market policies issued | $ | 2,041.0 | $ | 2,096.8 | ||||
Gross par value of secondary market policies issued | 338.1 | 81.8 | ||||||
Total gross par value of policies issued | 2,379.1 | 2,178.6 | ||||||
Gross par value of policies priced yet to close | 328.3 | 724.5 | ||||||
Less: Gross par value of policies closed that were previously priced | (353.3 | ) | (298.6 | ) | ||||
Total gross par value of policies priced | $ | 2,354.1 | $ | 2,604.5 |
Three Months Ended | ||||||||
March 31, | ||||||||
Millions | 2017 | 2016 | ||||||
Earned insurance premiums | $ | 1.0 | $ | 2.3 | ||||
Net investment income | 11.3 | 1.4 | ||||||
Net realized and unrealized investment gains | 35.0 | 5.9 | ||||||
Other revenue—MediaAlpha | 32.5 | 32.7 | ||||||
Other revenue—Other | 7.4 | 6.1 | ||||||
Total revenues | 87.2 | 48.4 | ||||||
Loss and loss adjustment expenses | 1.1 | 2.3 | ||||||
Insurance acquisition expenses | .1 | .8 | ||||||
General and administrative expenses—MediaAlpha | 30.9 | 30.5 | ||||||
General and administrative expenses—Other | 45.1 | 40.2 | ||||||
General and administrative expenses—amortization of intangible assets | 2.6 | 2.8 | ||||||
Interest expense | .4 | 1.2 | ||||||
Total expenses | 80.2 | 77.8 | ||||||
Pre-tax income (loss) | $ | 7.0 | $ | (29.4 | ) |
Three Months Ended | ||||||
March 31, | ||||||
2017 | 2016 | |||||
Short-term investments | 0.1 | % | 0.5 | % | ||
Investment grade fixed maturity investments | 0.9 | % | 1.6 | % | ||
High-yield fixed maturity investments | 2.2 | % | N/A | |||
Total GAAP fixed income investments(1) | 0.9 | % | 1.5 | % | ||
Bloomberg Barclays U.S. Intermediate Aggregate Index | 0.7 | % | 2.3 | % | ||
Common equity securities | 6.1 | % | 2.0 | % | ||
Other long-term investments | 1.0 | % | 0.2 | % | ||
Total GAAP common equity securities and other long-term investments | 4.2 | % | 1.5 | % | ||
Total common equity securities, other long-term investments and high-yield fixed maturity investments | 3.7 | % | 1.5 | % | ||
S&P 500 Index (total return) | 6.1 | % | 1.3 | % | ||
Bloomberg Barclays U.S. High Yield Ba 2% Issuer Capped (minus Energy & Financials) | 2.0 | % | N/A | |||
Total consolidated portfolio | 1.5 | % | 1.5 | % |
$ in millions | Fair Value of Investment Portfolio | Fair Value of Foreign Currency Forward Contract | Gross Notional Value of Foreign Currency Forward Contract | |||||||||||||||
Investment Mandate | Currency | (in USD) | (in USD) | (Local Currency) | (in USD) | |||||||||||||
LGIM | GBP | $ | 252.3 | $ | 250.3 | GBP | 200.0 | $ | 247.2 | |||||||||
Lazard | EUR | 56.0 | 53.7 | EUR | 50.0 | 52.7 | ||||||||||||
Total | $ | 308.3 | $ | 304.0 | Total | $ | 299.9 |
($ in millions) | March 31, 2017 | December 31, 2016 | |||||
Loss and LAE reserves | $ | 1,368.8 | $ | 1,365.6 | |||
Unearned insurance and reinsurance premiums | 678.1 | 658.0 | |||||
Ceded reinsurance payable | 11.2 | 17.0 | |||||
Funds held under insurance and reinsurance contracts | 148.7 | 153.0 | |||||
Insurance liabilities | 2,206.8 | 2,193.6 | |||||
Cash in regulated insurance and reinsurance subsidiaries | $ | 20.9 | $ | 13.6 | |||
Reinsurance recoverable on paid and unpaid losses | 178.1 | 179.5 | |||||
Insurance and reinsurance premiums receivable | 227.5 | 229.9 | |||||
Deferred acquisition costs | 110.4 | 106.9 | |||||
Ceded unearned insurance and reinsurance premiums | 52.4 | 44.2 | |||||
Insurance assets | 589.3 | 574.1 | |||||
Insurance float | $ | 1,617.5 | $ | 1,619.5 | |||
Insurance float as a multiple of total capital | 0.4x | 0.4x | |||||
Insurance float as a multiple of White Mountains’s common shareholders’ equity | 0.4x | 0.4x |
($ in millions) | March 31, 2017 | December 31, 2016 | ||||||
WTM Bank Facility | $ | — | $ | — | ||||
OBH Senior Notes, carrying value | 273.2 | 273.2 | ||||||
OneBeacon Bank Facility | — | — | ||||||
MediaAlpha Bank Facility, carrying value | 11.5 | 12.7 | ||||||
Total debt | 284.7 | 285.9 | ||||||
Non-controlling interest—OneBeacon Ltd. | 250.7 | 244.6 | ||||||
Non-controlling interests—other, excluding mutuals and reciprocals | 34.7 | 35.8 | ||||||
Total White Mountains’s common shareholders’ equity | 3,625.2 | 3,603.3 | ||||||
Total capital | 4,195.3 | 4,169.6 | ||||||
Total debt to total capital | 7 | % | 7 | % |
Average price per share as % of | |||||||||||||||||
Adjusted book | |||||||||||||||||
Average | value per share, | ||||||||||||||||
Shares | Cost | price | Adjusted book | including estimated | |||||||||||||
Dates | Repurchased | (millions) | per share | value per share(1) | gain from Sirius sale | ||||||||||||
1st quarter 2017(2) | 7,699 | $ | 6.5 | $ | 836.05 | 105 | % | N/A | |||||||||
April 2017 | — | — | — | — | % | N/A | |||||||||||
Year-to-date April 30, 2017 | 7,699 | $ | 6.5 | $ | 836.05 | 105 | % | N/A | |||||||||
1st quarter 2016(2) | 228,688 | $ | 172.7 | $ | 755.36 | 107 | % | 95 | % | ||||||||
April 2016 | 356,423 | 287.5 | 806.52 | 114 | % | 102 | % | ||||||||||
Year-to-date April 30, 2016 | 585,111 | $ | 460.2 | $ | 786.53 | 112 | % | 99 | % |
March 31, 2017 | ||||||||||||
Common equity securities and other long-term investment returns | GAAP return | Include: Impact of high-yield fixed maturity investments (1)(2) | Reported return | |||||||||
Quarter-to-date | 4.2 | % | (0.5 | ) | % | 3.7 | % |
• | changes in adjusted book value per share or return on equity; |
• | business strategy; |
• | financial and operating targets or plans; |
• | incurred loss and loss adjustment expenses and the adequacy of its loss and loss adjustment expense reserves and related reinsurance; |
• | projections of revenues, income (or loss), earnings (or loss) per share, dividends, market share or other financial forecasts; |
• | expansion and growth of its business and operations; and |
• | future capital expenditures. |
• | the risk that OneBeacon's proposed merger with Intact Financial Corporation (the “Transaction”) may not be completed on the currently contemplated timeline or at all; |
• | the possibility that any or all of the various conditions to the consummation of the Transaction may not be satisfied or waived, including the failure to receive any required regulatory approvals from any applicable governmental entities (or any conditions, limitations or restrictions placed on such approvals); |
• | the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement dated May 2, 2017, among OneBeacon, Intact Financial Corporation and the other parties thereto (the “Merger Agreement”), including in circumstances which would require OneBeacon to pay a termination fee or other expenses; |
• | risks related to diverting management’s attention from White Mountains’s or OneBeacon’s ongoing business operations and other risks related to the announcement or pendency of the Transaction, including on White Mountains’s or OneBeacon’s ability to retain and hire key personnel, their ability to maintain relationships with its customers, policyholders, brokers, service providers and others with whom they do business and their operating results and business generally; |
• | the risk that shareholder litigation in connection with the transactions contemplated by the Merger Agreement may result in significant costs of defense, indemnification and liability; |
• | the risks associated with Item 1A of White Mountains’s 2016 Annual Report on Form 10-K; |
• | claims arising from catastrophic events, such as hurricanes, earthquakes, floods, fires, terrorist attacks or severe winter weather; |
• | the continued availability of capital and financing; |
• | general economic, market or business conditions; |
• | business opportunities (or lack thereof) that may be presented to it and pursued; |
• | competitive forces, including the conduct of other property and casualty insurers and reinsurers; |
• | changes in domestic or foreign laws or regulations, or their interpretation, applicable to White Mountains, its competitors or its customers; |
• | an economic downturn or other economic conditions adversely affecting its financial position; |
• | recorded loss reserves subsequently proving to have been inadequate; |
• | actions taken by ratings agencies from time to time, such as financial strength or credit ratings downgrades or placing ratings on negative watch; and |
• | other factors, most of which are beyond White Mountains’s control. |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk. |
Item 4. | Controls and Procedures. |
Part II. | OTHER INFORMATION |
Item 1. | Legal Proceedings. |
Item 2. | Issuer Purchases of Equity Securities. |
Months | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plan (1) | Maximum Number of Shares that May Yet Be Purchased Under the Plan (1) | |||||||||
January 1-January 31, 2017 | 7,699 | $ | 836.05 | — | 878,130 | ||||||||
February 1-February 28, 2017 | — | $ | — | — | 878,130 | ||||||||
March 1-March 31, 2017 | — | $ | — | — | 878,130 | ||||||||
Total | 7,699 | $ | 836.05 | — | 878,130 |
Item 4. | Mine Safety Disclosures. |
Item 5. | Other Information. |
Item 6. | Exhibits. |
(a) | Exhibit number | Name | |||||
3 | — | ||||||
10.1 | — | ||||||
10.2 | — | ||||||
10.3 | — | ||||||
10.4 | — | ||||||
10.5 | — | ||||||
10.6 | — | ||||||
11 | — | ||||||
31.1 | — | ||||||
31.2 | — | ||||||
32.1 | — | ||||||
32.2 | — | ||||||
101 | — | The following financial information from White Mountains’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 formatted in XBRL: (i) Consolidated Balance Sheets, March 31, 2017 and December 31, 2016; (ii) Consolidated Statements of Operations and Comprehensive Income, Three Ended March 31, 2017 and 2016; (iii) Consolidated Statements of Changes in Equity, Three Months Ended March 31, 2017 and 2016; (iv) Consolidated Statements of Cash Flows, Three Months Ended March 31, 2017 and 2016; and (v) Notes to Consolidated Financial Statements. * |
* | Included herein |
** | Not included as an exhibit as the information is contained elsewhere within this report. See Note 11 — “Earnings Per Share” of the Notes to Consolidated Financial Statements. |
WHITE MOUNTAINS INSURANCE GROUP, LTD. | ||||
(Registrant) | ||||
Date: | May 2, 2017 | By: /s/ J. Brian Palmer | ||
J. Brian Palmer | ||||
Managing Director and Chief Accounting Officer |
Bye-law | Page | ||
1. | Interpretation | 1 | |
2. | Management of the Company | 3 | |
3. | Power to appoint managing director or chief executive officer | 3 | |
4. | Power to appoint manager | 3 | |
5. | Power to authorize specific actions | 3 | |
6. | Power to appoint attorney | 3 | |
7. | Power to delegate to a committee | 4 | |
8. | Power to appoint and dismiss employees | 4 | |
9. | Power to borrow and charge property | 4 | |
10. | Exercise of power to purchase shares of or discontinue the Company | 4 | |
11. | Election of Directors | 5 | |
12. | Defects in appointment of Directors | 6 | |
13. | Notification of Nominations | 6 | |
14. | Alternate Directors | 6 | |
15. | Vacancies on the Board, Etc | 6 | |
16. | Notice of meetings of the Board; Adjournment | 7 | |
17. | Quorum at meetings of the Board | 7 | |
18. | Meetings of the Board | 7 | |
19. | Regular Board Meetings | 8 | |
20. | Special Board Meetings | 8 | |
21. | Chairman of meetings | 8 | |
22. | Unanimous written resolutions | 8 | |
23. | Contracts and disclosure of Directors' interests | 8 | |
24. | Remuneration of Directors | 8 | |
25. | Register of Directors and Officers | 9 | |
26. | Principal Officers | 9 | |
27. | Other Officers | 9 | |
28. | Remuneration of Officers | 9 | |
29. | Duties of Officers | 9 | |
30. | Election | 9 | |
31. | Removal | 9 | |
32. | Obligations of Board to keep minutes | 10 | |
33. | Right to Indemnification | 10 | |
34. | Waiver of claims | 11 | |
35. | Indemnification of Employees | 11 | |
36. | Place of Meeting | 11 | |
37. | Annual Meeting | 11 | |
38. | Business to be conducted at Meetings | 12 | |
39. | Notice of general meeting | 12 | |
40. | Accidental omission of notice of general meeting | 12 | |
41. | Call of Special General Meeting | 12 | |
42. | Postponement of meetings | 13 | |
43. | Quorum for general meeting | 13 | |
44. | Adjournment of meetings | 13 | |
45. | Written resolutions | 13 | |
46. | Attendance of Directors | 13 | |
47. | Limitation on voting rights of Controlled Shares | 13 | |
48. | Voting at meetings | 15 | |
49. | Presiding Officer | 16 | |
50. | Conduct of meeting; Decision of chairman | 16 | |
51. | Seniority of joint holders voting | 16 | |
52. | Proxies | 17 | |
53. | Representation of corporations at meetings | 17 | |
54. | Rights of shares | 17 | |
55. | Power to issue shares | 19 | |
56. | Variation of rights, alteration of share capital and purchase of shares | ||
of the Company | 19 | ||
57. | Registered holder of shares | 20 | |
58. | Death of a joint holder | 20 | |
59. | Share certificates | 20 | |
60. | Determination of record dates | 21 | |
61. | Instrument of transfer | 21 | |
62. | Restriction on transfer | 21 | |
63. | Transfers by joint holders | 24 | |
64. | Representative of deceased Member | 25 | |
65. | Registration on death or bankruptcy | 25 | |
66. | Declaration of dividends by the Board | 25 | |
67. | Unclaimed Dividends | 25 | |
68. | Undelivered Payments | 25 | |
69. | Interest on Dividends | 26 | |
70. | Issue of bonus shares | 26 | |
71. | Financial year end | 26 | |
72. | Appointment of Auditor | 26 | |
73. | Remuneration of Auditor | 26 | |
74. | Notices to Members of the Company | 26 | |
75. | Notices to joint Members | 27 | |
76. | Service and delivery of notice | 27 | |
77. | Certain Subsidiaries | 27 | |
78. | The seal | 27 | |
79. | Winding-up/distribution by liquidator | 28 | |
80. | Business Combinations | 28 | |
81. | Alteration of Bye-laws | 33 | |
1. | Interpretation |
(1) | In these Bye-laws the following words and expressions shall, where not inconsistent with the context, have the following meanings respectively: |
(2) | In these Bye-laws, where not inconsistent with the context: |
(a) | words denoting the plural number include the singular number and vice versa; |
(b) | words denoting the masculine gender include the feminine gender; |
(c) | words importing persons include companies, associations or bodies of persons whether corporate or not; |
(d) | the word: |
(i) | “may” shall be construed as permissive; |
(ii) | “shall” shall be construed as imperative; and |
(e) | unless otherwise provided herein words or expressions defined in the Act shall bear the same meaning in these Bye-laws. |
(3) | Expressions referring to writing or written shall, unless the contrary intention appears, include facsimile, printing, lithography, photography and other modes of representing words in a visible form. |
(4) | Headings used in these Bye-laws are for convenience only and are not to be used or relied upon in the construction hereof. |
2. | Management of the Company |
(1) | The business of the Company shall be managed and conducted by the Board. In managing the business of the Company, the Board may exercise all corporate and other powers of the Company as are not, by statute or by these Bye-laws, required to be exercised by the Company in general meeting, and the business and affairs of the Company shall be so controlled by the Board. The Board may also present any petition and make any application in connection with the liquidation or reorganization of the Company. |
(2) | No regulation or alteration to these Bye-laws made by the Company in general meeting shall invalidate any prior act of the Board. |
(3) | The Board may procure that the Company pays all expenses incurred in promoting and incorporating the Company. |
3. | Power to appoint managing director or chief executive officer |
4. | Power to appoint manager |
5. | Power to authorize specific actions |
6. | Power to appoint attorney |
7. | Power to delegate to a committee |
(1) | The Board may appoint Board Committees from among its members to consist of not less than one (1) director for each Board Committee. The Board may designate one or more Directors as alternate members of any Board Committee, who may replace any absent or disqualified members at a meeting of such Board Committee. The Board Committees shall have such of the powers and authority of the Board in the management of the business and affairs of the Company as shall, from time to time, so be delegated to them by the Board. |
(2) | The Board may appoint other committees to consist of such number of members as may be fixed by the Board, none of whom need be a member of the Board, and may prescribe the powers and authority of such committees. |
(3) | Meetings and actions of Board Committees and other committees of the Company shall be governed by, held and taken in accordance with these Bye-laws, with such changes in the context of those Bye-laws as are necessary to substitute the committee and its members for the Board and its members, except that the time of regular meetings of committees may also be called by resolution of the Board and notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. Further, the Board or the committee may adopt rules for the governance of any committee not inconsistent with the provisions of these Bye-laws. |
8. | Power to appoint and dismiss employees |
9. | Power to borrow and charge property |
10. | Exercise of power to purchase shares of or discontinue the Company |
(1) | The Board may exercise all the powers of the Company to purchase all or any part of its own shares pursuant to Section 42A of the Act. |
(2) | Without limiting the foregoing, subject to Section 42A of the Act, if the Board in its absolute and unfettered discretion determines that share ownership by any Member may result in adverse tax, regulatory or legal consequences to the Company, any of its subsidiaries or any of its Members, the Company will have the option, but not the obligation, to purchase all or part of the shares held by such Member (to the extent the Board, in the reasonable exercise of its discretion, determines it is necessary to avoid or cure such adverse consequences) with immediately available funds in an amount equal to the Fair Market Value of such shares on the date the Company sends the Purchase Notice referred to below (the “Purchase Price”); provided, that the Board will use |
(3) | The Board may exercise all the powers of the Company to discontinue the Company to a named country or jurisdiction outside Bermuda pursuant to Section 132G of the Act. |
11. | Election of Directors |
(1) | The Board shall consist of not less than two Directors nor more than eighteen Directors with the exact number of Directors to be determined from time to time by resolution adopted by the affirmative vote of a majority of the Board. |
(2) | The Directors shall be divided into three classes designated Class I, Class II and Class III. Each class shall consist, as nearly as may be possible, of one-third of the total number of Directors constituting the entire Board. At each succeeding annual general meeting beginning in 2000, successors to the class of directors whose term expires at that annual general meeting shall be elected for a three-year term. If the number of Directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of Directors in each class as nearly equal as possible, and any additional Director of any class elected to fill a vacancy resulting from an increase in such class shall hold office for a term that shall coincide with the remaining term of that class, but in no case will a decrease in the number of Directors shorten the term of any incumbent Director. A Director shall hold office until the annual general meeting for the year in which his term expires and until his successor shall be elected and shall qualify, subject, however, to prior death, resignation, retirement, disqualification or removal from office. |
(3) | Notwithstanding the foregoing, whenever the holders of any one or more classes or series of Preference Shares issued by the Company shall have the right, voting separately by class or series, to elect Directors at an annual or special general meeting, the election, term of office, filling of vacancies and other features of such directorships shall be governed by the terms of the Board resolution creating such classes or series of Preference Shares, and such directors so elected shall not be divided into classes pursuant to this Bye-law II unless expressly provided by such terms. |
12. | Defects in appointment of Directors |
13. | Notification of Nominations |
14. | Alternate Directors |
15. | Vacancies on the Board, Etc. |
(1) | Except in the case of vacancies on the Board that under applicable law must be filled by the Members, any vacancy on the Board that results from an increase in the number of directors shall be filled by a majority of the Board then in office, provided that a quorum is present, and any other vacancy occurring in the Board shall be filled by a majority of the directors then in office, even if less than a quorum, or a sole remaining director and the Board shall have the power to appoint an Alternate Director for any Director appointed to fill a vacancy. Any director |
(2) | Unless otherwise determined by the Board, the Members shall not be entitled to remove a Director. |
16. | Notice of meetings of the Board; Adjournment |
(1) | Notice of the time and place of each meeting of the Board, whether regular or special, shall be served upon or telephoned or mailed or telegraphed or transmitted by facsimile to each director at his residence or usual place of business, at least twenty-four (24) hours before the time fixed for the meeting. |
(2) | A majority of the Directors present, whether or not a quorum is present, may adjourn any Directors meeting to another time and place. Notice of the time and place of holding an adjourned meeting need not be given to absent Directors if the time and place be fixed at the meeting adjourned. |
(3) | Notice of any meeting or any irregularity in any notice may be waived by any Director before the meeting is held. Attendance of a Director at a meeting shall constitute a waiver of notice of such meeting by such Director. |
17. | Quorum at meetings of the Board |
18. | Meetings of the Board |
(1) | All meetings of the Directors shall be held at the principal office of the Company or at such other place either within or without Bermuda as shall be designated by the Board. |
(2) | The Board may meet for the transaction of business, adjourn and otherwise regulate its meetings as it sees fit. |
(3) | Directors may participate in a meeting of the Board through use of conference telephone or similar communications equipment, so long as all Directors participating in such meeting can hear one another. Participation in a meeting of the Board by this means constitutes presence in person at such meeting. |
(4) | Unless a greater number is otherwise expressly required by statute or these Bye-laws, every act or decision done or made by a majority of the Directors present at a meeting duly held, at which a quorum is present, shall be regarded as the act of the Board. |
19. | Regular Board Meetings |
20. | Special Board Meetings |
21. | Chairman of meetings |
22. | Unanimous written resolutions |
23. | Contracts and disclosure of Directors' interests |
(1) | Any Director, or any Director's firm, partner or any company with whom any Director is associated, may act in a professional capacity for the Company and such Director or such Director's firm, partner or such company shall be entitled to remuneration for professional services as if such Director were not a Director. |
(2) | A Director who is directly or indirectly interested in a contract or proposed contract or arrangement with the Company shall declare the nature of such interest. |
(3) | Following a declaration being made pursuant to this Bye-law, and unless disqualified by the chairman of the relevant Board meeting, a Director may vote in respect of any contract or proposed contract or arrangement in which such Director is interested and may be counted in the quorum at such meeting. |
24. | Remuneration of Directors |
(1) | The remuneration (if any) of the Directors shall be as determined by the Directors and shall be deemed to accrue from day to day. The Directors shall also be paid all travel, hotel and other expenses properly incurred by them in attending and returning from meetings of the Board, any committee appointed by the Board, general meetings of the Company, or in connection with the business of the Company or their duties as Directors generally. |
(2) | The Directors may by resolution award special remuneration to any Director of the Company undertaking any special work or services for, or undertaking any special mission on behalf of, the Company other than his ordinary routine work as a Director. Any fees paid to a Director who is also counsel or solicitor to the Company, or otherwise serves it in a professional capacity, shall be in addition to his remuneration as a Director. |
25. | Register of Directors and Officers |
26. | Principal Officers |
27. | Other Officers |
28. | Remuneration of Officers |
29. | Duties of Officers |
30. | Election |
31. | Removal |
32. | Obligations of Board to keep minutes |
(1) | The Board shall cause minutes to be duly entered in books provided for the purpose: |
(a) | of all elections and appointments of Officers; |
(b) | of the names of the Directors present at each meeting of the Board and of any committee appointed by the Board; and |
(c) | all resolutions and proceedings of general meetings of the Members, meetings of the Board and meetings of committees appointed by the Board. |
(2) | Minutes prepared in accordance with the Act and these Bye-laws shall be kept by the Secretary at the registered office of the Company. |
33. | Right to Indemnification |
(1) | The Company may purchase and maintain insurance to protect itself and any Director, Officer or other person entitled to indemnification pursuant to this Bye-law to the fullest extent permitted by law. |
(2) | All reasonable expenses incurred by or on behalf of any person entitled to indemnification pursuant to Bye-law 33(l) in connection with any proceeding shall be advanced to such person by the Company within twenty (20) business days after the receipt by the Company of a statement or statements from |
(3) | The right of indemnification and advancement of expenses provided in this Bye-law shall not be exclusive of any other rights to which those seeking indemnification may otherwise be entitled, and the provisions of this Bye-law shall inure to the benefit of the heirs and legal representatives of any person entitled to indemnity under this Bye-law and shall be applicable to proceedings commenced or continuing after the adoption of this Bye-law, whether arising from acts or omissions occurring before or after such adoption. Any repeal or modification of the foregoing provisions of this section shall not adversely affect any right or protection existing at the time of such repeal or modification. |
34. | Waiver of claims |
35. | Indemnification of Employees |
36. | Place of Meeting |
37. | Annual Meeting |
(1) | The annual general meeting shall be held on such date, at such time and at such place as shall be designated by the Board and any annual general meeting may be adjourned as provided by law or pursuant to these Bye-laws. At each annual general meeting there shall be elected Directors to serve for the designated term, and such other business shall be transacted as shall properly come before the meeting. |
(2) | Any business properly brought before an annual general meeting of the Members of the Company may be transacted at such meeting. |
38. | Business to be conducted at Meetings |
39. | Notice of general meeting |
(1) | Notice of each general meeting, whether annual or special, shall be given in writing to the Members entitled to vote thereat, not less than ten (10) nor more than sixty (60) days before such meeting. Notice of any meeting of Members shall specify the place, the day, and the hour of the meeting, as well as the general nature of the business to be transacted. A notice may be given by the Company to any Member either personally or by mail or by transmitting it by electronic means (including facsimile and electronic mail) or in accordance with Bye-law 39(2). |
(2) | Where a Member indicates his consent (in a form and manner satisfactory to the Board) to receive information or documents by accessing them on a website rather than by other means, or receipt in this manner is otherwise permitted by the Act, the Company may deliver such information or documents by notifying the Member of their availability and including therein the address of the website, the place on the website where the information or document may be found, and instructions as to how the information or document may be accessed on the website. |
40. | Accidental omission of notice of general meeting |
41. | Call of Special General Meeting |
(1) | Special general meetings for any purpose or purposes may be called only (i) by the Chairman of the Board; (ii) by the President; (iii) by a majority of the entire Board or (iv) as required by the Act. |
(2) | Only such business as is specified in the notice of any special general meeting shall come before such meeting. |
42. | Postponement of meetings |
43. | Quorum for general meeting |
44. | Adjournment of meetings |
(1) | Any general meeting, annual or special, whether or not a quorum is present, may be adjourned from time to time by the vote of the majority of the voting power represented by the shares represented at the meeting, either in person or by proxy, but in the absence of a quorum no other business may be transacted at that meeting. |
(2) | When any general meeting, either annual or special, is adjourned to another time or place, notice need not be given of the adjourned meeting if the date, time and place are announced at a meeting at which the adjournment occurs, unless a new record date for the adjourned meeting is fixed, or unless the adjournment is for more than thirty (30) days from the date set for the original meeting, in which case the Board shall set a new record date. Notice of any such adjourned meeting, if required, shall be given to each Member of record entitled to vote at the adjourned meeting in accordance with the provisions of Bye-law 39. At any adjourned meeting the Company may transact any business that might have been transacted at the original meeting. |
45. | Written resolutions |
46. | Attendance of Directors |
47. | Limitation on voting rights of Controlled Shares |
(1) | Every Member of record owning shares conferring the right to vote present in person or by proxy shall have one vote, or such other number of votes as may be specified in the terms of the issue and rights and privileges attaching to such shares or in these Bye-laws, for each such share registered in such Member's name, provided that if and so long as the votes conferred by the |
(i) | all shares of the Company directly, indirectly or constructively owned by such person within the meaning of Section 958 of the Internal Revenue Code of 1986, as amended, of the United States of America; and |
(ii) | all shares of the Company directly, indirectly or constructively owned by any person or “group” of persons within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, of the United States of America and the rules and regulations promulgated thereunder; provided that this clause (ii) shall not apply to (a) any person (or any group that includes any person) that is excluded from the definition of Interested Member (set forth in Bye-law 80) or (b) any person or group that the Board, by the affirmative vote of at least seventy-five percent (75%) of the entire Board, may exempt from the provisions of this clause (ii). |
(2) | If, as a result of giving effect to the forgoing provisions of Bye-law 47 or otherwise, the votes conferred by the Controlled Shares of any person would otherwise represent 10% or more of the votes conferred by all the issued shares of the Company, the votes conferred by the Controlled Shares of such person shall be reduced in accordance with the foregoing provisions of Bye-law 47. Such process shall be repeated until the votes conferred by the Controlled Shares of each person represent less than 10% of the votes conferred by all the issued shares of the Company. |
(3) | Upon written notification by a Member to the Board, the number of votes conferred by the total number of shares held by such Member shall be reduced to that percentage of the total voting power of the Company, as so designated by such Member (subject to acceptance of such reduction |
(4) | Notwithstanding the foregoing provisions of this Bye-law 47, after having applied such provisions as best as they consider reasonably practicable, the Board may make such final adjustments to the aggregate number of votes conferred by the Controlled Shares of any person that they consider fair and reasonable in all the circumstances to ensure that such votes represent less than 10% (or the percentage designated by a Member pursuant to paragraph (3) of this Bye-law 47) of the aggregate voting power of the votes conferred by all the issued shares of the Company. |
48. | Voting at meetings |
(1) | Unless a different number is otherwise expressly required by statute (without modification of these Bye-laws) or these Bye-laws, every act or decision (including any act or resolution regarding any amalgamation, scheme of arrangement, merger, consolidation or sale or transfer of assets that has been approved by the affirmative vote of at least two-thirds of the entire Board) done or made by a majority of the voting power held by the Members present in person or by proxy at a meeting duly held, at which a quorum is present, shall be regarded as the act or resolution of the Members. |
(2) | At any election of Directors, each Director shall be elected by a majority of the votes cast with respect to that Director’s election, provided, however, that (i) in a contested director election in which the number of nominees exceeds the number of Directors to be elected, the nominees receiving the highest number of votes, up to the number of Directors to be elected, shall be elected (a “Plurality Vote”); and (ii) in an uncontested election, any Director who receives less than a majority of the votes cast with respect to that Director’s election but whose resignation is declined in accordance with this Bye-law shall be elected by a Plurality Vote. For purposes of this Bye-Law, a majority of the votes cast with respect to a Director’s election shall mean that the number of votes cast “for” a Director’s election exceeds the number of votes cast “against” that Director’s election (with “abstentions”, “withholds” and “broker non-votes” and other comparable absences of expression of a Member’s intentions not being counted as a vote cast either “for” or “against” that Director’s election). If an incumbent Director receives less than a majority of the votes cast in an uncontested election, such Director shall tender his or her resignation to the Board, whereupon the Board shall, within ninety (90) days after the receipt thereof, either (i) accept the resignation of such Director, and determine a date on which such resignation will take effect within ninety (90) days of the date of such decision and make public the effective date of such resignation, or (ii) upon the vote of at least a majority of the Board (excluding any such resigning Director(s)), decline to accept such resignation and, not later than five business days thereof, make public, together with a summary of the analysis used in reaching the conclusion, the specific reasons why the Board chose not to accept the resignation and believes that decision was in the best interest of the Company. |
(3) | No Member shall be entitled to vote at any general meeting unless he or she is a Member on the record date for such meeting. |
(4) | No objection shall be raised to the qualification of any voter except at the general meeting or adjourned general meeting at which the vote objected to is given or tendered and every vote not disallowed at such general meeting shall be valid for all purposes. Any such objection made in due time shall be referred to the Chairman of the general meeting whose decision shall be final and conclusive. Notwithstanding the foregoing, however, the Chairman of the general meeting may, in his discretion, whether or not an objection has been raised, and if the Chairman considers that such action is necessary to determine accurately the vote count, defer until after the conclusion of the general meeting a decision as to the proper application of Bye-law 47 to any vote at such meeting. If the decision has been so deferred, then the Chairman of the general meeting or, failing such decision within ninety (90) days of the general meeting, the Board, shall make such decision and such decision shall be final and conclusive. |
49. | Presiding Officer |
50. | Conduct of meeting; Decision of chairman |
(1) | At any general meeting if an amendment shall be proposed to any resolution under consideration but shall be ruled out of order by the chairman of the meeting the proceedings on the substantive resolution shall not be invalidated by any error in such ruling. |
(2) | At any general meeting a declaration by the chairman of the meeting that a question proposed for consideration has, on a show of hands, been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect in a book containing the minutes of the proceedings of the Company shall, subject to the provisions of these Bye-laws, be conclusive evidence of that fact. |
51. | Seniority of joint holders voting |
52. | Proxies |
53. | Representation of corporations at meetings |
54. | Rights of shares |
(1) | At the date these Bye-laws become effective, the total number of authorized common shares is fifty million (50,000,000) common shares having a par value of U.S. one dollar ($1.00) per share (the “Common Shares”), and the total number of authorized preference shares is twenty million (20,000,000) preference shares having a par value of U.S. one dollar ($1.00) per share (the “Preference Shares”). |
(2) | The holders of Common Shares shall, subject to the provisions of these Bye-laws: |
(a) | be entitled (subject to Bye-law 47) to one vote per share; |
(b) | be entitled to such dividends as the Board may from time to time declare; |
(c) | in the event of a winding-up or dissolution of the Company, whether voluntary or involuntary or for the purpose of a reorganisation or otherwise or upon any distribution of capital, be entitled to the surplus assets of the Company; and |
(d) | generally be entitled to enjoy all of the rights attaching to shares. |
(3) | The Board shall have the full power to issue any unissued shares of the Company on such terms and conditions as it may, in its absolute discretion, determine. The Board is authorized to provide for the issuance of the Preference Shares in one or more series, and to establish from time to time the number of shares to be included in each such series, and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof. |
(a) | The number of shares constituting that series and the distinctive designation of that series; |
(b) | The dividend rate on the shares of that series, whether dividends shall be cumulative, and, if so, from which date or dates, and the relative rights of priority, if any, of payment of dividends on shares of that series; |
(c) | Whether that series shall have voting rights, in addition to the voting rights provided by law, and, if so, the terms of such voting rights; |
(d) | Whether that series shall have conversion or exchange privileges (including, without limitation, conversion into Common Shares), and, if so, the terms and conditions of such conversion or exchange, including provision for adjustment of the conversion or exchange rate in such events as the Board shall determine; |
(e) | Whether or not the shares of that series shall be redeemable, and, if so, the terms and conditions of such redemption, including the manner of selecting shares for redemption if less than all shares are to be redeemed, the date or dates upon or after which they shall be redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates; |
(f) | Whether that series shall have a sinking fund for the redemption or purchase of shares of that series, and, if so, the terms and amount of such sinking fund; |
(g) | The right of the shares of that series to the benefit of conditions and restrictions upon the creation of indebtedness of the Company or any subsidiary, upon the issue of any additional shares (including additional shares of such series or any other series) and upon the payment of dividends or the making of other distributions on, and the purchase, redemption or other acquisition by the Company or any subsidiary of any outstanding shares of the Company; |
(h) | The rights of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the Company, and the relative rights of priority, if any, of payment of shares of that series; and |
(i) | Any other relative participating, optional or other special rights, qualifications, limitations or restrictions of that series. |
55. | Power to issue shares |
(1) | The issuance of any authorized Common Shares or Preference Shares and any other actions permitted to be taken by the Board pursuant to Bye-law 54 must be authorized by the affirmative vote of at least sixty-six and two-thirds percent (66 2/3%) of the entire Board. |
(2) | Any Preference Shares of any series which have been redeemed (whether through the operation of a sinking fund or otherwise) or which, if convertible or exchangeable, have been converted into or exchanged for shares of any other class or classes shall have the status of authorized and unissued Preference Shares of the same series and may be reissued as a part of the series of which they were originally a part or may be reclassified and reissued as part of a new series of Preference Shares to be created by resolution or resolutions of the Board or as part of any other series of Preference Shares, all subject to the conditions and the restrictions on issuance set forth in the resolution or resolutions adopted by the Board providing for the issue of any series of Preference Shares. |
(3) | At the discretion of the Board, whether or not in connection with the issuance and sale of any of its shares or other securities, the Company may issue securities, contracts, warrants or other instruments evidencing any shares, option rights, securities having conversion or option rights, or obligations on such terms, conditions and other provisions as are fixed by the Board, including, without limiting the generality of this authority, conditions that preclude or limit any person or persons owning or offering to acquire a specified number or percentage of the outstanding Common Shares, other shares, option rights, securities having conversion or option rights, or obligations of the company or transferee of the person or persons from exercising, converting, transferring or receiving the shares, option rights, securities having conversion or option rights, or obligations. |
56. | Variation of rights, alteration of share capital and purchase of shares of the Company |
(1) | If at any time the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may, whether or not the Company is being wound-up, be varied with the consent in writing of the holders of a majority of the voting power represented by the issued shares of that class or with the sanction of a resolution passed by a majority of the voting power represented by the votes cast at a separate general meeting of the holders of the shares of the class in accordance with Section 47(7) of the Act. The rights conferred upon the holders of the shares of any class issued with preferred or other fights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking pari passu therewith. |
(2) | The Company may from time to time if authorized by resolution of the Members change the currency denomination of, increase, alter or reduce its share capital in accordance with the provisions of Sections 45 and 46 of the Act. Where, on any alteration of share capital, fractions of shares or some other difficulty would arise, the Board may deal with or resolve the same in such |
(3) | The Company may from time to time, acting through the Board, purchase its own shares in accordance with the provisions of Section 42A of the Act. |
57. | Registered holder of shares |
(1) | The Company shall be entitled to treat the registered holder of any share as the absolute owner thereof and accordingly shall not be bound to recognise any equitable or other claim to, or interest in, such share on the part of any other person. |
(2) | Any dividend, interest or other moneys payable in cash in respect of shares may be paid by cheque or draft sent through the post directed to the Member at such Member's address in the Register of Members or, in the case of joint holders, to such address of the holder first named in the Register of Members, or to such person and to such address as the holder or joint holders may in writing direct. If two or more persons are registered as joint holders of any shares any one can give an effectual receipt for any dividend paid in respect of such shares. |
58. | Death of a joint holder |
59. | Share certificates |
(1) | Share certificates shall be in such form as shall be required by law and as shall be approved by the Board. Each certificate shall have the corporate seal affixed thereto by impression or in facsimile and shall be signed by the Chairman of the Board, the President, or any Vice President, and countersigned by the Secretary or any Assistant Secretary; provided that certificates may be signed, countersigned or authenticated by facsimile signatures as provided by law. |
(2) | Except as provided in this Bye-law 59, new certificates for shares shall not be issued to replace an old certificate unless the latter is surrendered to the Company and cancelled at the same time. The Board may, in case any share certificate or certificate for any other security is lost, stolen, or destroyed, authorize the issuance of a replacement certificate on such terms and conditions as the Board may require, including provision for indemnification of the Company secured by a bond or other adequate security which the Board deems sufficient to protect the Company against any claim that may be made against it, including any expense or liability, on account of the alleged loss, theft, or destruction of the certificate or the issuance of the replacement certificate. |
60. | Determination of record dates |
(a) | determining the Members entitled to receive any dividend; and |
(b) | determining the Members entitled to receive notice of and to vote at any general meeting of the Company. |
61. | Instrument of transfer |
62. | Restriction on transfer |
63. | Transfers by joint holders |
64. | Representative of deceased Member |
65. | Registration on death or bankruptcy |
66. | Declaration of dividends by the Board |
67. | Unclaimed Dividends |
68. | Undelivered Payments |
69. | Interest on Dividends |
70. | Issue of bonus shares |
71. | Financial year end |
72. | Appointment of Auditor |
73. | Remuneration of Auditor |
74. | Notices to Members of the Company |
75. | Notices to joint Members |
76. | Service and delivery of notice |
77. | Certain Subsidiaries |
78. | The seal |
79. | Winding-up/distribution by liquidator |
80. | Business Combinations |
(1) | The Company shall not engage in any business combination with any Interested Member for a period of three years following the time that such Member became an Interested Member, unless: |
(a) | prior to such time the Board approved either the business combination or the transaction which resulted in the Member becoming an Interested Member, or |
(b) | upon consummation of the transaction which resulted in the Member becoming an Interested Member, the Interested Member owned at least 85% of the voting shares of the Company outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding those shares owned (i) by persons who are Directors and also officers and (ii) employee share plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer, or |
(c) | at or subsequent to such time the business combination is approved by the Board and authorized at an annual or special general meeting, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting shares which are not owned by the Interested Member. |
(2) | The restrictions contained in this Bye-law shall not apply if: |
(a) | a Member becomes an Interested Member inadvertently and (i) as soon as practicable divests itself of ownership of sufficient shares so that the Member ceases to be an Interested Member and (ii) would not, at any time within the 3-year period immediately prior to a business combination between the Company and such Member, have been an Interested Member but for the inadvertent acquisition of ownership; or |
(b) | the business combination is proposed prior to the consummation or abandonment of and subsequent to the earlier of the public announcement or the notice required hereunder of a proposed transaction which (i) constitutes one of the transactions described in the second |
(3) | As used in this Bye-law only, the term: |
(a) | “affiliate” means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, another person. |
(b) | “associate,” when used to indicate a relationship with any person, means (i) any corporation, partnership, unincorporated association or other entity of which such person is a director, officer or partner or is, directly or indirectly, the owner of 20% or more of any class of voting shares, (ii) any trust or other estate in which such person has at least a 20% beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity, and (iii) any relative or spouse of such person, or any relative of such spouse, who has the same residence as such person. |
(c) | “business combination,” when used in reference to the Company and any Interested Member of the Company, means: |
(i) | any amalgamation, scheme of arrangement, merger, consolidation or similar transaction involving the Company or any direct or indirect subsidiary of the Company with (A) the Interested Member, or (B) with any other corporation, partnership, unincorporated association or other entity if such transaction is caused by the Interested Member and as a result of such transaction subsection (a) of this section is not applicable to the surviving entity; |
(ii) | any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), except proportionately as a Member of such Company, to or with the Interested Member, whether as part of a dissolution or otherwise, of assets of the Company or of any direct or indirect subsidiary of the Company |
(iii) | any transaction which results in the issuance or transfer by the Company or by any direct or indirect subsidiary of the Company of any shares of the Company or of such subsidiary to the Interested Member, except (A) pursuant to the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into shares of the Company or any such subsidiary which securities were outstanding prior to the time that the Interested Member became such, (B) pursuant to a Subsidiary Amalgamation, (C) pursuant to a dividend or distribution paid or made, or the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into shares of the Company or any such subsidiary which security is distributed, pro rata to all holders of a class or series of shares of the Company subsequent to the time the Interested Member became such, (D) pursuant to an exchange offer by the Company to purchase shares made on the same terms to all holders of said shares, or (E) any issuance or transfer of shares by the Company, provided however, that in no case under (C)-(E) above shall there be an increase in the Interested Member's proportionate share of the shares of any class or series of the Company or of the voting shares of the Company; |
(iv) | any transaction involving the Company or any direct or indirect subsidiary of the Company which has the effect, directly or indirectly, of increasing the proportionate share of the shares of any class or series, or securities convertible into the shares of any class or series, of the Company or of any such subsidiary which is owned by the Interested Member, except as a result of immaterial changes due to fractional share adjustments or as a result of any purchase or redemption of any shares of stock not caused, directly or indirectly, by the Interested Member; or |
(v) | any receipt by the Interested Member of the benefit, directly or indirectly (except proportionately as a Member of the Company) of any loans, advances, guarantees, pledges, or other financial benefits (other than those expressly permitted in subparagraphs (i)-(iv) above) provided by or through the Company or any direct or indirect subsidiary. |
(d) | “control,” including the term “controlling,” “controlled by” and “under common control with,” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting stock, by contract, or otherwise. A person who is the owner of 20% or more of the outstanding voting stock of any corporation, partnership, unincorporated association or other entity shall be presumed to have control of such entity, in the absence of proof by a preponderance of the evidence to the contrary. Notwithstanding the foregoing, a presumption of control shall not apply where such person holds voting stock, in good faith and not for the purpose of circumventing this Bye-law, as an agent, bank, broker, nominee, custodian or trustee for one or more owners who do not individually or as a group have control of such entity. |
(e) | “Interested Member” means any person (other than the Company and any direct or indirect subsidiary of the Company) that (i) is the owner of 15% or more of the outstanding voting shares of the Company, or (ii) is an affiliate or associate of the Company and was the owner |
(f) | “stock” means, with respect to any corporation, capital stock and, with respect to any other entity, any equity interest. |
(g) | “voting stock” means, with respect to any corporation, stock of any class or series entitled to vote generally in the election of directors and, with respect to any entity that is not a corporation, any equity interest entitled to vote generally in the election of the governing body of such entity. |
(h) | “owner” including the terms “own” and “owned” when used with respect to any stock means a person that individually or with or through any of its affiliates or associates: |
(i) | beneficially owns such stock, directly or indirectly; or |
(ii) | has (A) the right to acquire such stock (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise; provided, however, that a person shall not be deemed the owner of stock tendered pursuant to a tender or exchange offer made by such person or any of such person's affiliates or associates until such tendered stock is accepted for purchase or exchange; or (B) the right to vote such stock pursuant to any agreement, arrangement or understanding; provided, however, that a person shall not be deemed the owner of any stock because of such person's right to vote such stock if the agreement, arrangement or understanding to vote such stock arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made to 10 or more persons; or |
(iii) | has any arrangement or understanding for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent as described in item (B) of clause (ii) of this paragraph), or disposing of such stock with any other person that beneficially owns, or whose affiliates or associates beneficially own, directly or indirectly, such stock. |
(i) | “Subsidiary Amalgamation” means an amalgamation, scheme of arrangement, merger, consolidation or similar transaction with or into a single direct or indirect wholly-owned subsidiary of the Company if: (1) the Company and the direct or indirect wholly-owned subsidiary of the Company are the only constituent companies to such transaction; (2) each share or fraction of a share of the Company outstanding immediately prior to the effective time of such transaction is converted in such transaction into a share or equal fraction of a share of shares of a holding company having the same designations, rights, powers and preferences, and the qualifications, limitations and restrictions thereof, as the share of the constituent company being converted in such transaction; (3) the holding company and each of the constituent companies to such transaction are companies incorporated in Bermuda; (4) the memorandum of association and bye-laws of the holding company immediately following the effective time of such transaction contain provisions identical to the memorandum of continuance and bye-laws of the Company immediately prior to the effective time of such transaction (other than provisions, if any, regarding the incorporator or incorporators, the corporate name, the registered office and agent, the initial board of directors and the initial subscribers for shares and such provisions contained in any amendment to the charter documents as were necessary to effect a change, exchange, reclassification or cancellation of shares, if such change, exchange, reclassification or cancellation has become effective); (5) as a result of such transaction the Company or its successor or continuing company becomes or remains a direct or indirect wholly-owned subsidiary of the holding company; (6) the directors of the Company become or remain the directors of the holding company upon the effective time of such transaction; (7) the memorandum of association and bye-laws of the surviving or continuing company immediately following the effective time of such transaction are identical to the memorandum of association and bye-laws of the Company immediately prior to the effective time of such transaction (other than provisions, if any, regarding the incorporator or incorporators, the corporate name, the registered office and agent, the initial board of directors and the initial subscribers for shares and such provisions contained in any amendment to the charter documents as were necessary to effect a change, exchange, reclassification or cancellation of shares, if such change, exchange, reclassification or cancellation has become effective); provided, however, that (i) the memorandum of association and bye-laws of the surviving or continuing company shall be amended in such transaction to contain a provision requiring that any act or transaction by or involving the surviving or continuing company that requires for its adoption under the Act or its bye-laws the approval of the Members of the surviving or continuing company shall, by specific reference to this subsection, require, in addition, the approval of the Members of the holding company (or any successor), by the same vote as is required by the Act and/or by its bye-laws of the surviving or continuing company, and (ii) the bye-laws of the surviving or continuing company may be amended in such transaction to reduce the number of classes and shares of capital stock that the surviving or continuing company is authorized to issue; and (8) the Members of the Company do not recognize gain or loss for United States federal income tax purposes as determined by the board of directors of the constituent company. |
(j) | Notwithstanding any other provisions of these Bye-laws (and notwithstanding the fact that a lesser percentage or separate class vote may be specified by law or these Bye-laws), the affirmative vote of the holders of not less than sixty-six and two-thirds percent (66 2/3%) of the voting power represented by the votes entitled to be cast by the holders of all the then outstanding voting shares voting together as a single class, excluding voting shares beneficially owned by any Interested Member, shall be required to amend, alter, change or repeal, or adopt any provision |
81. | Alteration of Bye-laws |
White Mountains Insurance Group, Ltd. | |
By: | /s/ Robert L. Seelig |
Name: Robert L. Seelig | |
Title: Managing Director & General Counsel |
Raymond Barrette |
CR | Performance Factor |
91% | 175% |
92% | 160% |
93% | 145% |
94% | 130% |
95% | 115% |
96% | 100% |
97% | 85% |
98% | 70% |
99% | 55% |
100% | 40% |
101% | 25% |
1. | PURPOSE |
2. | ADMINISTRATION |
(a) | The Plan shall be administered by the Committee; provided, that each member of the Committee qualifies as (a) a “non-employee director” under Rule 16b-3 of the Exchange Act and (b) an “outside director” under Section 162(m) of the Code. In the event that any member of the Committee does not so qualify, the Plan shall be administered by a subcommittee of at least two Committee members who do so qualify. If it is later determined that one or more members of the Committee do not so qualify, actions taken by the Committee prior to such determination shall be valid despite such failure to qualify, to the greatest extent permitted by applicable law. |
(b) | The Committee shall have exclusive authority to select the employees, consultants and directors to be granted Awards, to determine the type, size, terms and conditions of Awards (including those relating to vesting, cancelation, accelerations or waivers thereof, methods and form of settlement, and methods of exercise), and to prescribe the form of the instruments embodying Awards. The Committee shall specify the terms and conditions applicable to such Awards in an Award Agreement. The Committee shall be authorized to interpret the Plan and the Awards granted under the Plan, to establish, amend and rescind any rules and regulations relating to the Plan, and to make any other determinations which it believes necessary or advisable for the administration of the Plan. In connection with any Award, the Committee in its sole discretion may provide for vesting provisions that are different from the default vesting provisions that are contained in the Plan and such alternative provisions shall not be deemed to conflict with the Plan. The Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any Award in the manner and to the extent the Committee deems desirable to carry it into effect. Any decision of the Committee in the administration of the Plan, as described herein, shall be final and conclusive. Notwithstanding the foregoing, the full Board, acting by a majority of its members in office, shall conduct the general administration of the Plan with respect to Awards granted to Non-Employee Directors. |
(c) | The Committee may act only by a majority of its members in office, except that the members thereof may authorize any one or more of the members of the Committee or any officer of the Company to execute and deliver documents on behalf of the Committee. The Committee, in its discretion and subject in all instances to applicable law, may delegate to one or more directors or committees of the Board all or part of the Committee’s authority and duties with respect to administering the Plan and granting Awards; provided, however, that in no event shall an officer be delegated the authority to grant awards to, or amend awards held by, the following individuals: (i) individuals who are subject to Section 16 of the Exchange Act, (ii) Covered Employees, or (iii) officers of the Company (or directors) to whom authority to grant or amend Awards has been delegated hereunder. Any delegation hereunder shall be subject to the restrictions and limits that the Board or Committee specifies at the time of such delegation, and the Board may at any time rescind the authority so delegated or appoint a new delegatee. At all times, the delegatee appointed under this Section 2(c) shall serve in such capacity at the pleasure of the Board and the Committee. |
(d) | Neither the Committee nor any member of the Board, or any administrator of the Plan or any employee or agent of the Company shall be liable for action, determination or interpretation taken or made, or omitted to be taken or made, by him or by any other Person in connection with the Plan or any Award hereunder (unless constituting fraud or a willful criminal act or omission, or as expressly provided by statute). The duties and obligations of the Company, the Committee and each member of the Committee shall be determined only with reference to the Plan, and no implied duties or obligations shall be read into the Plan or any Award Agreement on the part of the Company, the Committee, or any member of the Board or the Committee. |
(e) | Notwithstanding anything to the contrary contained in the Plan, the Board may, in its sole discretion, at any time and from time to time, grant Awards and administer the Plan with respect to such Awards. Any such actions by the Board shall be subject to the applicable rules of the New York Stock Exchange (or other principal securities market on which Common Shares are traded). In any such case, the Board shall have all the authority granted to the Committee under the Plan. |
(a) | Eligible Individuals. Any Non-Employee Director, or any employee or consultant of the Company or any of its Subsidiaries (provided such employee or consultant has executed a OneBeacon Confidentiality and Nonsolicitation Agreement in a form satisfactory to the Company), is eligible to receive an Award hereunder. The Committee shall select which eligible employees, consultants or Non-Employee Directors shall be granted Awards hereunder. No employee, director or consultant shall have a right to receive an Award hereunder, and the grant of an Award to an employee, director or consultant shall not obligate the Committee to continue to grant Awards to such employee, director or consultant in subsequent periods. |
(b) | Type of Awards. Awards shall be limited to the following seven types: (i) Stock Options, (ii) Restricted Stock, (iii) Restricted Stock Units, (iv) Performance Compensation Awards, (v) Performance Shares, (vi) Performance Units and (vii) Other Incentive Awards. |
(c) | Maximum Number of Shares That May Be Issued. |
(i) | Subject to adjustment as provided in Section 12, the maximum aggregate number of Shares that may be issued or transferred pursuant to Awards under the Plan is the sum of (i) the number of Shares which as of the Effective Date are available for issuance under the Prior Plan, less any Shares which are the subject of awards made under the Prior Plan after the Effective Date and prior to the date this Plan is approved by the Company’s shareholders, and (ii) any Shares which become available for issuance upon the forfeiture or lapse of awards under the Prior Plan, without such awards having been exercised or settled. All of the Shares subject to the Plan Limit may be issued pursuant to Incentive Stock Options. |
(ii) | To the extent that an Award terminates, expires, or lapses for any reason, or an Award is settled in cash without the delivery of Shares to the Participant, then any Shares subject to the Award shall again be available for the grant of an Award pursuant to the Plan. Any Shares tendered or withheld to satisfy the grant or exercise price or tax withholding obligation pursuant to any Award shall not be added back to the Plan Limit. Any Shares repurchased by the Company prior to vesting at par value or for no consideration (including by way of the Repurchase Right) will again be available for Awards. The payment of Dividend Equivalents in cash in conjunction with any outstanding Awards shall not be counted against |
(iii) | Notwithstanding anything to the contrary in Section 3(c)(i), but subject to adjustment under Section 12, the following special limits shall apply to Shares available for Awards under the Plan: |
(A) | the maximum number of Shares that may be issued pursuant to Stock Options and Stock Appreciation Rights granted to any Participant in any calendar year shall equal 1,000,000 Shares; |
(B) | the maximum amount that may be issued pursuant to Performance Compensation Awards (other than Stock Options and Stock Appreciation Rights) awarded to any Participant in any calendar year is $25,000,000 measured as of the date of grant (with respect to Awards denominated in cash (based on the fair value of Shares on the date of grant as determined in accordance with applicable financial accounting rules)) or 750,000 Shares measured as of the date of grant (with respect to Awards denominated in Shares); and |
(C) | the maximum amount that may be issued pursuant to Awards awarded to any Non-Employee Director in any calendar year is $1,000,000 measured as of the date of grant (with respect to Awards denominated in cash (based on the fair value of Shares on the date of grant as determined in accordance with applicable financial accounting rules)) or 50,000 Shares measured as of the date of grant (with respect to Awards denominated in Shares). |
(iv) | To the extent permitted by applicable law or any exchange rule, Shares issued pursuant to any Substitute Award shall not be counted against the Plan Limit and shall not be counted against the special limitations set forth in Section 3(c)(iii); provided, however, that Substitute Awards issued or intended as “incentive stock options” within the meaning of Section 422 of the Code shall be counted against the aggregate number of Incentive Stock Options available under the Plan. |
(v) | Shares delivered by the Company in settlement of Awards may be authorized and unissued shares, shares purchased on the open market or by private purchase or a combination of the foregoing. |
i. | A Participant to whom Restricted Stock has been issued shall have, prior to the expiration of the Restricted Period or Repurchase Right, ownership of such Shares, including the right to vote the same and to receive dividends thereon, subject, however, to the options, restrictions and limitations imposed thereon pursuant hereto. The Company, in its discretion, may hold custody during the Restricted Period of any Shares of Restricted Stock. |
ii. | A Participant to whom Stock Options, Restricted Stock Units, Performance Compensation Awards, Performance Shares, Performance Units or Other Incentive Awards are granted (and any Person succeeding to such Participant’s rights pursuant to the Plan) shall have no rights as a shareholder with respect to any Shares issuable pursuant thereto unless and until the date the Participant becomes the record owner of such Shares. (For the avoidance of doubt, with respect to any Restricted Stock Units, Performance Compensation Awards, Performance Shares, Performance Units or Other Incentive Awards which are ultimately settled in cash, the Participant shall never have any rights as a shareholder with respect to the referenced or underlying Shares of such Awards.) Except as provided in Sections 4, 5(c) or 12, no adjustment shall be made for dividends, distributions or other rights (whether ordinary or extraordinary, and whether in cash, securities or other property) the record date for which is prior to the date the Participant becomes the record owner of such Shares. |
iii. | Any dividends or Dividend Equivalents permitted by the Plan may be payable in cash, Shares, other securities, other Awards or other property, on a current or deferred basis, on such terms and conditions as may be determined by the Committee, including, without limitation, payment directly to the Participant, withholding of such amounts by the Company subject to vesting of the Award or reinvestment in additional Shares, Restricted Stock or other Awards. Dividend Equivalents may be accumulated in respect of unearned Awards and paid as soon as administratively practicable, but no more than 60 days, after such Awards are earned and become payable or distributable (and the right to any such accumulated dividends or Dividend Equivalents shall be forfeited upon the forfeiture of the Award to which such dividends or Dividend Equivalents relate). |
(d) | Release Condition. |
(i) | Except as otherwise determined by the Committee, if a Participant’s employment terminates before the payment, exercise, settlement or removal of restrictions with respect to an Award, any subsequent payment, exercise, settlement or removal of restrictions (to the extent not otherwise forfeited) shall be conditioned upon the Participant signing and delivering an effective and irrevocable general release of claims, in the form provided by the Company (“Release”), as consideration for such payment, exercise, settlement or removal of restrictions. The Participant shall be required to execute and deliver such release to the Company within the time period specified in this Section 3(e) (or as set forth in the applicable Award Agreement or other written agreement between the Participant and the Company or its Subsidiary, as applicable) in a manner that complies with Sections 409A and 457A of the Code. The requirement to execute and deliver a Release under this Section release to the Company within the time period specified in this Section 3(e) is referred to as the “Release Condition.” |
(ii) | Unless otherwise set forth in the applicable Award Agreement or other written agreement between the Participant and the Company or its Subsidiary, the Release shall be subject to the following timing requirements: |
(A) | With respect to (i) an Award that relates to a single-year or multi-year performance period, for which the performance results are contemplated to be certified in the first quarter following the end of the applicable performance period (including Performance Share Awards and Performance Unit Awards), and (ii) any other Award then held by the Participant which would vest on the same date and under the same performance cycle (including any service-vesting Restricted Stock or Restricted Stock Units), the Participant (or his legal guardian or estate, if applicable) must execute the Release after such certification, and such Release must become effective and irrevocable no later than April 30th of the same calendar year in which the certification occurred (or such earlier date occurring between the date of certification and April 30th of the same calendar year, as may be specified by the Company). Payments pursuant to such Award or Awards will be made in the same calendar year in which the certification occurred, and in all events no later than the next available payroll date following the date such Release becomes effective and irrevocable (subject to further delay, if required pursuant to Section 15(d) below). |
(B) | With respect to any Award not described in subsection 2(a) above, the Participant (or his legal guardian or estate, if applicable) must execute the Release on or after such Participant’s termination of employment, and such Release must become effective and irrevocable no later than the 61st day after termination of such Participant’s employment. |
(1) | Payments pursuant to such Award which do not constitute nonqualified deferred compensation and are not subject to Section 409A of the Code shall commence on the next available payroll date following the date such Release becomes effective and irrevocable (and in all events no later than March 15th of the calendar year following the year in which such termination of employment occurs). |
(2) | Payments pursuant to such Award which are subject to Section 409A of the Code shall commence on the next available payroll date following the date such Release becomes effective and irrevocable (subject to further delay, if required pursuant to Section 15(d) below), provided that if the period between termination and payment could cross two tax years, such payment shall commence in the later tax year. |
(C) | Without limiting the foregoing, the Company shall have the authority to provide in the applicable Award Agreement or other written agreement between the Participant and the Company or its Subsidiary, for modified timing requirements for any Release required under this Section 3(e) if and to the extent necessary or advisable to (i) comply with Section 409A or 457A of the Code (as determined by the Company) or (ii) achieve a reasonable business objective, subject to compliance with Section 409A or 457A of the Code (as determined by the Company). |
(D) | Without limiting the foregoing, except as otherwise determined by the Committee, if a Participant’s employment is terminated due to a reduction in force before the payment, exercise, settlement or removal of restrictions with respect to an Award, any subsequent payment, exercise, settlement or removal of restrictions shall also be conditioned upon the Participant signing any separation agreement and general release of claims provided by the Company to the Participant at the time of the termination of employment. The Participant shall be required to execute and deliver such separation agreement and release to the Company within the time period specified in the applicable separation agreement and release, in a manner that complies with Section 409A and 457A of the Code (as determined by the Company). |
(a) | The per Share exercise price shall not be less than the greater of (i) the Fair Market Value per Share as of the date of grant or (ii) the par value per Share. Notwithstanding the foregoing, the exercise price of an Incentive Stock Option granted to a Ten-Percent Participant shall not be less than the greater of 110% of such Fair Market Value, or the par value per Share. |
(b) | The Committee shall initially determine the number of Shares to be subject to each Stock Option, which number shall be set forth in the applicable Award Agreement. |
(c) | The Stock Option shall not be transferable by the Participant other than by will or the laws of descent and distribution, and shall be exercisable during his lifetime only by him. |
(d) | The Stock Option shall not be exercisable: |
(i) | after the expiration of (A) ten years from the date it is granted or (B) five years from the date it is granted in the case of an Incentive Stock Options granted to a Ten-Percent Participant, and may be exercised during such period only at such time or times as the Committee may establish; |
(ii) | unless payment in full is made for the Shares being acquired thereunder at the time of exercise (including any U.S. Federal, state or local income or other taxes which the Committee determines are required to be withheld in respect of such shares); such payment shall be made (A) in United States dollars by cash, check or cash equivalent, (B) by tendering to the Company Shares owned by the Person exercising the Stock Option and having a Fair Market Value equal to the amount needed to pay for the aggregate exercise price and all applicable required withholding taxes (provided that such Shares are not subject to any pledge or other security interest), (C) if there is a public market for the Shares at such time, by the Company delivering for sale to a registered securities broker acceptable to the Company a number of the Shares being acquired by the Person exercising the Stock Option being sufficient, after brokerage commissions, to cover the aggregate exercise price thereof and all applicable required withholding taxes, together with instructions to the broker to remit to the Company the aggregate exercise price thereof and amounts sufficient to satisfy all applicable required withholding taxes, and the remainder to the Participant, (D) if there is a public market for the Shares at such time, by means of a “net exercise” procedure effected by withholding the minimum number of Shares otherwise deliverable in respect of a Stock Option that are needed to pay for the aggregate exercise price and all applicable required withholding taxes, (E) by such other method as the Committee may permit or (F) by a combination of the foregoing; |
(iii) | by Participants who were employees of the Company or one of its Subsidiaries at the time of the grant of the Stock Option unless such Participant has been, at all times during the period beginning with the date of grant of the Stock Option and ending on the date three months prior to such exercise, an employee of the Company or a Subsidiary, or of a corporation, or a parent or subsidiary of a corporation, issuing or assuming the Stock Option in a transaction to which Section 424(a) of the Code is applicable, except that: |
(A) | if such Participant shall cease to be an employee of the Company and its Subsidiaries solely by reason of a period of Related Employment, the Committee, in its direction, may permit such Participant, during such period of Related Employment and for three months thereafter (but in no event after the Stock Option has expired under the provisions of Section 4(d)(i) hereof), to exercise such Stock Option as if he continued to be an employee of the Company and its Subsidiaries; or |
(B) | if such Participant’s employment with the Company and its Subsidiaries is terminated by the Company due to such Participant’s Disability, he may, at any time within three years from the date of such termination of employment (but in no event after the Stock Option has expired under the provisions of Section 4(d)(i) hereof), exercise the Stock Option with respect to (i) any Shares as to which he could have exercised the Stock Option on such termination date and (ii) subject to the Participant’s satisfaction of the Release Condition, if any portion of the Stock Option is not fully exercisable on such termination date, the number of additional Shares as to which the Stock Option would have become exercisable had he remained an employee through the end of the calendar year in which the termination of employment occurred; or |
(C) | if such Participant shall die while holding a Stock Option, his executors, administrators, heirs or distributees, as the case may be, at any time within one year after the date of such death (but in no event after the Stock Option has expired under the provisions of Section 4(d)(i) hereof), may exercise the Stock Option with respect to (i) any Shares as to which the decedent could have exercised the Stock Option at the time of his death, and (ii) if the Stock Option is not fully exercisable on the date of his death, the number of additional Shares as to which the Stock Option would have become exercisable had he remained an employee through the end of the calendar year in which his death occurred; provided, however, that if his death occurs during the three-year period following a Disability as described in Section 4(d)(iii)(A) hereof or any period in respect of which the Committee has exercised its discretion to grant continuing exercise rights (including upon Retirement, as provided in Section 4(d)(iii)(C)), this clause (ii) shall not apply; or |
(D) | if such Participant shall voluntarily terminate his employment with the Company due to Retirement, and the Participant executes and delivers a separation and release agreement in the form provided by the Company, containing noncompetition, nonsolicitation and other restrictive covenants, as well as a general release of claims in the manner contemplated by the Release Condition, the Committee, in its sole discretion, may determine to (i) provide for continued vesting of the Participant’s Stock Option through the last day of the calendar year in which the Participant’s termination of employment occurs (it being understood that any unvested portion of the Stock Option which is not otherwise scheduled to vest through such date shall be forfeited upon termination of employment), (ii) permit such Participant to exercise the Stock Option any time within three years from the date of such Participant’s termination of employment, with respect to any Shares as to which the Participant could have exercised the Stock Option on such termination date plus any additional Shares as to which the Stock Option becomes exercisable by application of clause (i) hereof, and/or (iii) provide for tolling of the applicable post-termination exercise period until the final vesting date; provided, however, that in no event may any post-termination exercise under this subsection 2(d) take place after the Stock Option has expired under the provisions of Section 4(d)(i) hereof; provided, further, that if the Participant breaches the noncompetition, nonsolicitation or other restrictive covenants in his separation and release agreement, then the Participant’s outstanding Stock Option shall be immediately canceled upon such breach, and the full amount recognized from any prior exercise of his Stock Option (and any gain thereto) shall be forfeited and the Participant shall be required to promptly repay such amounts to the Company within ten days following such breach. |
(e) | The aggregate Fair Market Value of Shares (determined as of the date of grant of the Stock Option) with respect to which Incentive Stock Options granted to any Participant under the Plan are exercisable for the first time by such Participant during any calendar year may not exceed the maximum amount permitted under Section 422(d) of the Code at the time of the Award grant. In the event this limitation would be exceeded in any year, the Participant may elect either (i) to defer to a succeeding year the date on which some or all of such Incentive Stock Options would first become exercisable or (ii) convert some or all of such Incentive Stock Options into non-qualified Stock Options. |
(f) | No fractional Shares shall be delivered upon the exercise of any Stock Option, but in lieu thereof a cash settlement shall be made. |
(g) | Notwithstanding anything herein to the contrary, in the event a Change in Control occurs and within 24 months thereafter: (A) there is a Termination Without Cause of an Participant’s employment; or (B) there is a Constructive Termination of an Participant’s employment; or (C) there occurs an Adverse Change in the Plan with respect to an Participant affecting any Award held by such Participant, and if the Participant then holds a Stock Option, |
(A) | in the case of a Termination Without Cause or a Constructive Termination, the Participant may exercise the entire Stock Option, at any time within 30 days following such Termination Without Cause or such Constructive Termination (but in no event after the Stock Option has expired under the provisions of Section 4(d)(i)); and |
(B) | in the case of an Adverse Change in the Plan with respect to a Participant, the Participant may exercise the entire Stock Option at any time after such Adverse Change in the Plan until the 30th day following any subsequent termination of his employment as a result of a Termination Without Cause or a Constructive Termination (but in no event after the Stock Option has expired under the provisions of Section 4(d)(i)); |
5. | RESTRICTED STOCK AND RESTRICTED STOCK UNITS |
(a) | The Committee may grant to Participants Restricted Stock and/or Restricted Stock Unit Awards. |
(b) | Except as may otherwise be set forth in any Award Agreement, each Award of Restricted Stock shall comply with the following terms and conditions: |
(i) | The Committee shall determine the number of Shares of Restricted Stock to be issued to a Participant, which number shall be set forth in the applicable Award Agreement. |
(ii) | Restricted Stock may be subject to such restrictions and other terms and conditions as the Committee determines appropriate, including service-based or performance-based vesting requirements, during the applicable Restricted Period. Shares of Restricted Stock issued may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of, except by will or the laws of descent and distribution, for the applicable Restricted Period. Upon the expiration of the Restricted Period and the attainment of any other vesting criteria, (A) the restrictions set forth in the applicable Award Agreement shall be of no further force or effect, except as set forth in the Award Agreement, and (B) any dividends attributable to the Restricted Stock that may have been accumulated and withheld by the Committee shall be distributed to the Participant in cash or in Shares having a Fair Market Value (on the date of distribution) equal to the amount of such dividends, upon the release of restrictions on such Share. |
(iii) | Any Shares of Restricted Stock (A) held by a Participant whose employment with the Company and its Subsidiaries terminates prior to the expiration of the Restricted Period for any reason other than by reason of an event described in Section 5(b)(iv), or (B) which fail to vest upon a Participant’s termination of employment after application of Section 5(b)(iv)(B) or (C), as applicable, shall be automatically repurchased by the Company in exchange for their aggregate par value, in a manner intended to comply with the Companies Act 1981 (Bermuda) as determined by the Company (the “Repurchase Right”) upon such termination of employment. For the avoidance of doubt, any rights to dividends that may have been accumulated or withheld during the Restricted Period in respect of the repurchased Shares shall terminate upon such termination of employment, without further action or obligation of the Company. |
(iv) | Upon the grant of Restricted Stock, the Committee shall cause Shares to be registered in the name of the Participant and held in book-entry form subject to the Company’s directions. The Committee also may cause a stock certificate registered in the name of the Participant to be issued. In such event, such certificate shall bear an appropriate legend referring to the Repurchase Right and other restrictions. Any attempt to dispose of any such Shares in contravention of the Repurchase Right and other restrictions shall be null and void and without effect. If Shares issued pursuant to a Restricted Stock Award shall be repurchased pursuant to the Repurchase Right, the Participant to whom the Award was granted, or in the event of his death after such Repurchase Right becomes exercisable, his executor or administrator, shall forthwith deliver to the Secretary of the Company any certificates for the Shares awarded to the Participant, accompanied by such instruments of transfer, if any, as may reasonably be required by the Secretary of the Company. |
(v) | If a Participant who has been in the continuous employment of the Company or of a Subsidiary shall: |
(A) | terminate employment during the Restricted Period due to the Participant’s death or Disability, the Repurchase Right and any and all other restrictions on the Restricted Stock Award shall lapse and cease to be effective as of the date on which such termination of employment occurs; provided, that if such termination of employment is due to the Participant’s Disability, the Participant (or his representative, as appropriate) must satisfy the Release Condition; provided, further, that for purposes of the foregoing, any performance condition on such Restricted Stock Award shall be deemed satisfied at the target level; |
(B) | Retire during the Restricted Period, and the Participant executes and delivers a separation and release agreement in the form provided by the Company, containing noncompetition, nonsolicitation and other restrictive covenants, as well as a general release of claims in the manner contemplated by the Release Condition, the Committee, in its sole discretion, may determine to provide for (i) continued vesting of the Participant’s Restricted Stock Award through the last day of the calendar year in which the Participant’s termination of employment occurs (it being understood that any unvested Shares of Restricted Stock which are not otherwise scheduled to vest through such date shall be forfeited upon termination of employment), and (ii) tolling of the Repurchase Right until such final vesting date; provided, that if the Restricted Stock Award is a Performance Compensation Award or otherwise subject to performance-based vesting requirements, any such vesting credit applied upon Retirement shall be subject to the achievement of applicable Performance Objectives; provided, further, that if the Participant breaches the noncompetition, nonsolicitation or other restrictive covenants in his separation and release agreement, then upon such breach, the Participant’s Restricted Stock Award shall be automatically repurchased pursuant to the Repurchase Right, and the full amount recognized from any prior vesting of such Restricted Stock Award (and any gain thereto) shall be forfeited and the Participant shall be required to promptly repay such amounts to the Company within ten days following such breach; or |
(C) | cease to be an employee of the Company and its Subsidiaries solely by reason of a period of Related Employment, the Committee, in its sole discretion, may determine to provide for continued vesting of the Participant’s Restricted Stock Award during such period of Related Employment as if the Participant continued to be an employee of the Company and its Subsidiaries. |
(vi) | In the event that, within 24 months after a Change in Control and during the Restricted Period: |
(A) | there is a Termination Without Cause of the employment of a Participant; |
(B) | there is a Constructive Termination of the employment of a Participant; or |
(C) | there occurs an Adverse Change in the Plan with respect to a Participant, then |
(c) | Except as may otherwise be set forth in any Award Agreement, each Award of Restricted Stock Units shall comply with the following terms and conditions: |
(i) | The Committee shall determine the target number of Restricted Stock Units to be granted to a Participant, which number shall be set forth in the applicable Award Agreement. |
(ii) | Each Restricted Stock Unit will represent one Share and the value of such Share shall be credited to a notional account maintained by the Company. No Shares shall be issued at the time an Award of Restricted Stock Units is made, and the Company will not be required to set aside a fund for the payment of any such Award. At the sole discretion of the Committee, an Award Agreement may provide that each Restricted Stock Unit shall also entitle the Participant to Dividend Equivalents. |
(iii) | Restricted Stock Units may be subject to such restrictions and other terms and conditions as the Committee determines appropriate, including service-based or performance-based vesting requirements, during the applicable Restricted Period. Unless otherwise provided by the Committee in an Award Agreement and subject to the Release Condition (if applicable), upon the expiration of the Restricted Period and the attainment of any other vesting criteria established by the Committee, with respect to any outstanding Restricted Stock Units, the Company shall deliver to the Participant, or his beneficiary (via book entry notation or, if applicable, in stock certificate form), one Share (or other securities or other property, as applicable) for each such outstanding Restricted Stock Unit which has not then been forfeited and with respect to which the applicable restrictions have expired and any other such vesting criteria are attained. |
(iv) | Except as otherwise provided in a Restricted Stock Unit Award Agreement or in Sections 5(c)(v) or (vi), Restricted Stock Units shall be canceled if the Participant’s continuous employment with the Company and its Subsidiaries shall terminate for any reason prior to the end of expiration of the applicable Restricted Period. For the avoidance of doubt, any Dividend Equivalents that may have been accumulated or withheld during the Restricted Period in respect of any forfeited Restricted Stock Units shall terminate without further action or obligation of the Company. |
(v) | If a Participant who has been in the continuous employment of the Company or of a Subsidiary shall: |
(A) | terminate employment during the Restricted Period due to the Participant’s death or Disability, any and all other restrictions on a pro rata portion of the Restricted Stock Units shall lapse and cease to be effective as of the date on which such termination of employment occurs. In such event, the Participant shall be entitled to a pro rata vesting of the Restricted Stock Unit Award determined as follows: (A) the number of Restricted Stock Units subject to the Award multiplied by (B) a percentage, the numerator of which is equal to the number of full or partial months from the beginning of the Restricted Period through the last day of the calendar year in which the Participant’s termination of employment occurs, and the denominator of which is equal to the number of months in the Restricted Period. For purposes of the foregoing calculation, any performance condition on the Restricted Stock Award shall be deemed satisfied at the target level. Notwithstanding the foregoing, in the case of termination of employment due to Disability, unless the Committee otherwise determines, the vesting of such pro rata portion of the Restricted Stock Units shall be subject to the Participant (or his representative, as appropriate) satisfying the Release Condition; |
(B) | Retire, and the Participant executes and delivers a separation and release agreement in the form provided by the Company, containing noncompetition, nonsolicitation and other restrictive covenants, as well as a general release of claims in the manner contemplated by the Release Condition, the Committee, in its sole discretion, may determine to provide for continued vesting of the Participant’s Restricted Stock Unit Award through the last day of the calendar year in which the Participant’s termination of employment occurs (it being understood that any unvested Restricted Stock Units which are not otherwise scheduled to vest through such date shall be forfeited upon termination of employment); provided, that if the Restricted Stock Unit Award is a Performance Compensation Award or otherwise subject to performance-based vesting requirements, any such vesting credit applied upon Retirement shall be subject to the achievement of applicable Performance Objectives; provided, further, that if the Participant breaches the noncompetition, nonsolicitation or other restrictive covenants in his separation and release agreement, then upon such breach, the Participant’s Restricted Stock Unit Award shall be immediately forfeited, and the full amount recognized from any prior vesting or settlement of such Restricted Stock Unit Award (and any gain thereto) shall be forfeited and the Participant shall be required to promptly repay such amounts to the Company within ten days following such breach; or |
(C) | cease to be an employee of the Company and its Subsidiaries solely by reason of a period of Related Employment, the Committee, in its sole discretion, may determine to provide for continued vesting of the Participant’s Restricted Stock Unit Award during such period of Related Employment as if the Participant continued to be an employee of the Company and its Subsidiaries. |
(vi) | In the event that, within 24 months after a Change in Control and during the Restricted Period: |
(A) | there is a Termination Without Cause of the employment of a Participant; |
(B) | there is a Constructive Termination of the employment of a Participant; or |
(C) | there occurs an Adverse Change in the Plan with respect to a Participant, then |
(vii) | Unless payment is deferred in accordance with Section 409A of the Code and subject to the Release Condition (if applicable), the Committee shall cause an amount equal to the value of the Restricted Stock Units earned by the Participant to be paid to him or his beneficiary no later than 2-1/2 months after the end of the Company’s fiscal year in which such Restricted Stock Units are earned. Restricted Stock Units may be settled in cash, in Shares or partly in cash and partly in Shares as determined by the Committee. If a cash payment is made in lieu of delivering Shares, the amount of such payment shall be equal to the Fair Market Value of the Shares as of the date on which the applicable restrictions lapsed with respect to such Restricted Stock Units. |
(a) | Generally. Performance Compensation Awards are intended to qualify as “performance-based compensation” under Section 162(m) of the Code. The Committee shall have the authority to designate any Award as a Performance Compensation Award, including (i) Restricted Stock, the restrictions with respect to which lapse upon the attainment of specified Performance Objectives (together with any applicable service-based or other vesting conditions), and (ii) any Restricted Stock Units or other performance or incentive Awards described in Sections 5, 7, 8 or 9 that vest or become exercisable or payable upon the attainment of one or more specified Performance Objectives (together with any applicable service-based or other vesting conditions). In addition, the Committee shall have the authority to make an award of a cash bonus to any Participant and designate such Award as a Performance Compensation Award intended to qualify as “performance-based compensation” under Section 162(m) of the Code. Notwithstanding the foregoing, (i) any Award to a Participant who is a Covered Employee for a fiscal year that satisfies the requirements of this Section 6 may be treated as a Performance Compensation Award in the absence of any such Committee designation and (ii) if the Company determines that a Participant who has been granted an Award designated as a Performance Compensation Award is not (or is no longer) a Covered Employee, the terms and conditions of such Award may be modified without regard to any restrictions or limitations set forth in this Section 6 (but subject otherwise to the provisions of Section 16). The Committee may in its sole discretion grant Awards to other Participants that are based on Performance Criteria or Performance Objectives but that do not satisfy the requirements of this Section 6 and that are not intended to qualify as “performance-based compensation” under Section 162(m) of the Code. |
(b) | Committee Discretion on Performance Compensation Awards. The Committee may select the length of an Award Period, the type(s) of Performance Compensation Awards to be issued, the Performance Criteria used to establish the Performance Objective(s), the kind(s) and/or level(s) of the Performance Objective(s) and the Performance Formula. Within the first 90 days of an Award Period (or the maximum period allowed under Section 162(m) of the Code), the Committee shall determine each of the matters enumerated in the immediately preceding sentence and record the same in writing (which may be in the form of minutes of a meeting of the Committee). |
(c) | Certification; Determination of Awards. Following the completion of an Award Period, the Committee shall review and certify in writing (which may be in the form of minutes of a meeting of the Committee) whether, and to what extent, the Performance Objectives for the Award Period have been achieved and, if so, calculate and certify in writing (which may be in the form of minutes of a meeting of the Committee) that amount of the Performance Compensation Award earned for the period based upon the Performance Formula. The Committee shall then determine the amount of each Participant’s Performance Compensation Award actually payable for the Award Period. |
(d) | Negative Discretion. In determining the amount of each Participant’s Performance Compensation Award actually payable for the Award Period, the Committee may, in its sole and absolute discretion, reduce or eliminate the size of the Performance Compensation Award consistent with Section 162(m) of the Code, even if applicable Performance Objectives have been attained; provided, that following a Change in Control, this discretion shall not apply to Awards outstanding at the time of the Change in Control. |
(e) | Payment of Performance Awards. Unless otherwise provided in the applicable Award Agreement and only to the extent otherwise permitted by Section 162(m)(4)(C) of the Code, with respect to any Performance Compensation Award, the Participant must be employed by the Company or a Subsidiary throughout the Award Period. Unless otherwise provided in the applicable Award Agreement or permitted by Section 162(m) of the Code, the Committee shall not have the discretion to (i) provide payment or delivery in respect of a Performance Compensation Award for an Award Period if the Performance Objectives for such Award Period have not been attained; or (ii) increase a Performance Compensation Award above the applicable limitations set forth in Section 3(c). |
(f) | Timing of Award Payments. Unless otherwise provided in the applicable Award Agreement, Performance Compensation Awards granted for an Award Period shall be paid to Participants as soon as administratively practicable following completion of the certifications required by this Section 6. Any deferral of payment or settlement of any Performance Compensation Award shall not (between (x) the date as of which the Award is deferred and (y) the payment or settlement date) increase (i) with respect to a Performance Compensation Award that is payable in cash, by a measuring factor for each fiscal year greater than a reasonable rate of interest set by the Committee, or (ii) with respect to a Performance Compensation Award that is payable in Shares, by an amount greater than the appreciation of a Share from the date such Award is deferred to the payment date. Unless otherwise provided in an Award Agreement, any Performance Compensation Award that is deferred and is otherwise payable in Shares may be credited (during the period between the date as of which the Award is deferred and the payment date) with Dividend Equivalents. |
(g) | Additional Limitations. Notwithstanding any other provision of the Plan, Performance Compensation Awards shall be subject to any additional limitations set forth in Section 162(m) of the Code or any regulations or rulings issued thereunder that are requirements for qualification as “performance-based compensation” under Section 162(m) of the Code, and the Plan and the Award Agreement shall be deemed amended to the extent necessary to conform to such requirements. |
(a) | The Committee shall determine the target number of Performance Shares to be granted to a Participant, which number shall be set forth in the applicable Award Agreement. Performance Share Awards may be granted in different classes or series having different terms and conditions. |
(b) | The Actual Value of a Performance Share Award shall be the product of (i) the target number of Performance Shares subject to the Performance Share Award, (ii) the Performance Percentage (as determined below) applicable to the Performance Share Award and (iii), if the Performance Share Award is settled in cash, the Fair Market Value of a Share on the date the Committee certifies the Performance Percentage. The “Performance Percentage” applicable to a Performance Share Award shall be a percentage of no less than 0% and no more than 200%, which percentage shall be determined by the Committee based upon the extent to which the Performance Objectives (as determined below) established for such Award are achieved during the Award Period. The method for determining the applicable Performance Percentage shall also be established by the Committee. |
(c) | At the time each Performance Share Award is granted, the Committee shall establish Performance Objectives to be attained within the Award Period as the means of determining the Performance Percentage applicable to such Award, in the manner contemplated by Section 6(b). |
(d) | The Award Period in respect of any grant of a Performance Share Award shall be such period as the Committee shall determine commencing as of the beginning of the fiscal year of the Company in which such grant is made. An Award Period with respect to a Performance Share Award may contain a number of sub-periods designated as “Performance Periods.” Each Performance Period shall commence on or after the first day of the Award Period and shall end no later than the last day of the Award Period. If the Committee does not specify in a Performance Share Award Agreement or elsewhere the Performance Periods contained in an Award Period, each 12-month period beginning with the first day of such Award Period shall be deemed to be a Performance Period. |
(e) | Performance Shares shall be canceled if the Participant’s continuous employment with the Company and its Subsidiaries shall terminate for any reason prior to the end of the Award Period, except (i) by reason of a period of Related Employment (unless otherwise determined by the Committee), (ii) as otherwise specified in this Section 7(e) or in Section 7(f) or (iii) as otherwise determined by the Committee. Notwithstanding the foregoing, if a Participant’s employment shall terminate due to death or Disability, the provisions of Section 5(c)(v)(A) shall apply mutatis mutandis as if fully set forth herein with respect to Performance Shares. |
(f) | If within 24 months after a Change in Control: |
(i) | there is a Termination Without Cause of the employment of a Participant; |
(ii) | there is a Constructive Termination of the employment of a Participant; or |
(iii) | there occurs an Adverse Change in the Plan with respect to a Participant (any such occurrence under the above clauses (i), (ii) or (iii), a “Trigger Event”), then |
(g) | Except as otherwise provided in Sections 7(e) or (f), as soon as practicable after the end of the Award Period or such earlier date as the Committee in its sole discretion may designate, the Committee shall (i) determine, based on the extent to which the applicable Performance Objectives have been achieved, the Performance Percentage applicable to an Award of Performance Shares, (ii) calculate the Actual Value of the Performance Share Award and (iii) shall certify in writing the foregoing, in the manner contemplated by Section 6. |
(a) | The Committee shall determine (i) the target number of Performance Units to be granted to a Participant and (ii) the amount designated as the Unit Value or method for calculating the Unit Value, which shall be set forth in the applicable Award Agreement. Performance Unit Awards may be granted in different classes or series having different terms and conditions. |
(b) | The Actual Value of a Performance Unit Award shall be the product of (i) the target number of Performance Units subject to the Performance Unit Award, (ii) the Performance Percentage (as determined below) applicable to the Performance Unit Award and (iii) the Unit Value (or, if the relevant Performance Unit is settled in Shares, the Unit Value divided by the Fair Market Value of a Share on the date the Committee certifies the Performance Percentage). The “Performance Percentage” applicable to a Performance Unit Award shall be a percentage of no less than 0% and no more than 200%, which percentage shall be determined by the Committee based upon the extent to which the Performance Objectives (as determined below) established for such Award are achieved during the Award Period. The method for determining the applicable Performance Percentage shall also be established by the Committee. |
(c) | At the time each Performance Unit Award is granted, the Committee shall establish Performance Objectives to be attained within the Award Period as the means of determining the Performance Percentage applicable to such Award, in the manner contemplated by Section 6(b). |
(d) | The Award Period in respect of any grant of a Performance Unit Award shall be such period as the Committee shall determine commencing as of the beginning of the fiscal year of the Company in which such grant is made. An Award Period with respect to a Performance Unit Award may contain a number of sub-periods designated as “Performance Periods.” Each Performance Period shall commence on or after the first day of the Award Period and shall end no later than the last day of the Award Period. If the Committee does not specify in a Performance Unit Award Agreement or elsewhere the Award Periods contained in an Award Period, each 12-month period beginning with the first day of such Award Period shall be deemed to be a Performance Period. |
(e) | Performance Units shall be canceled if the Participant’s continuous employment with the Company and its Subsidiaries shall terminate for any reason prior to the end of the Award Period, except (i) by reason of a period of Related Employment (unless otherwise determined by the Committee), (ii) as otherwise specified in this Section 8(e) or in Section 8(f) or (iii) as otherwise determined by the Committee. Notwithstanding the foregoing, if a Participant’s employment shall terminate due to death or Disability, the provisions of Section 5(c)(v)(A) shall apply mutatis mutandis as if fully set forth herein with respect to Performance Units. |
(f) | If within 24 months after a Change in Control, a Trigger Event occurs, then with respect to Performance Unit Awards that were outstanding on the date of the Trigger Event (each, an “Applicable Award”), each such Applicable Award shall be immediately canceled and, in respect thereof, such Participant, or the Participant’s legal representative, as the case may be, shall be entitled to receive a cash payment equal to the product of (A) the target number of Performance Units for such Applicable Award multiplied by (B) a fraction, the numerator of which is equal to the number of full or partial months from the beginning of the Award Period through the date of the Trigger Event, and the denominator of which is equal to the total number of months within such Award Period, multiplied by (C) the greater of (i) the Unit Value immediately prior to the Change in Control and (ii) the Unit Value on the date the applicable Trigger Event occurs, multiplied by (D) the greater of (i) the Performance Percentage calculated through the end of the quarter preceding the Trigger Event, or (ii) 100%. For purposes of this Section 8(f), the Performance Percentage calculated as of the end of the quarter preceding the Trigger Event shall be calculated using actual financial results achieved through the end of the quarter preceding the Trigger Event and including any gain or loss related to the Change in Control as it relates to the Company recognized or to be recognized in the Company’s consolidated financial statements prepared in accordance with GAAP. If following a Change in Control, a Participant’s employment remains continuous through the end of an Award Period, then the Participant shall be paid with respect to such Awards for which he would have been paid had there not been a Change in Control and the Actual Value shall be determined in accordance with Section 8(g) below. |
(g) | Except as otherwise provided in Sections 8(e) and (f), as soon as practicable after the end of the Award Period or such earlier date as the Committee in its sole discretion may designate, the Committee shall (i) determine, based on the extent to which the applicable Performance Objectives have been achieved, the Performance Percentage applicable to an Award of Performance Units, (ii) calculate the Actual Value of the Performance Unit Award and (iii) shall certify in writing the foregoing, in the manner contemplated by Section 6. |
9. | OTHER INCENTIVE AWARDS |
10. | CERTAIN DEFINED TERMS |
(a) | “Acquirer Group” means, with respect to any Change in Control, a third-party acquirer, the ultimate parent of such third-party acquirer or any of its subsidiaries. |
(b) | “Actual Value” has the meaning set forth in Section 7 or 8, as the case may be. |
(c) | “Adverse Change in the Plan” means: |
(i) | any amendment or termination of the Plan pursuant to Sections 16 or 17 that materially diminishes the value of Awards that may be granted under the Plan to Participants, either individually or in the aggregate, without the written consent of such affected Participant(s), unless there is substituted concurrently authority to grant long-term incentive awards of comparable value to Participants, either individually or in the aggregate, as the case may be; or |
(ii) | in respect of any Participant, a material diminution in his rights held under such Award (except as may occur under the terms of the Award as originally granted), unless there is substituted concurrently a long-term incentive award with a value at least comparable to the loss in value attributable to such diminution in rights. |
(d) | “Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by or is under common control with the first Person. The term “control” means the possession, directly or indirectly, of the power to direct the management and policies of such Person, whether through the ownership of voting or other securities, by contract or otherwise. |
(e) | “Applicable Award” has the meaning set forth in Section 7(f) with respect to Performance Shares, and Section 8(f) with respect to Performance Units, as the case may be. |
(f) | “Award” means a Stock Option, Restricted Stock, Restricted Stock Unit, Performance Compensation Award, Performance Share, Performance Unit or Other Incentive Award which may be awarded or granted under the Plan (collectively, “Awards”). |
(g) | “Award Agreement” means any written notice, agreement, terms and conditions, contract or other instrument or document evidencing an Award, including through electronic medium, which shall contain such terms and conditions with respect to an Award as the Committee shall determine consistent with the Plan. |
(h) | “Award Period” means, with respect to any Performance Compensation Award or other Award that is subject to the achievement of one or more Performance Objectives (including Awards of Performance Shares or Performance Units), one or more periods of time as the Committee may select, over which the attainment of one or more Performance Objectives will be measured for the purpose of determining the Participant’s right to, and the payment of, such Award. |
(i) | “Beneficial Ownership” (and correlative “beneficial owner”) has the meaning set forth in Rule 13d-3 promulgated under Section 13 of the Exchange Act. |
(j) | “Board” means the Board of Directors of the Company. |
(k) | “Cause” means any of the following, as determined by the Committee in good faith: (i) the Participant’s dereliction of duties or negligence or failure to perform his duties, or willful refusal to follow any lawful directive of his immediate supervisor, the Company’s Chief Executive Officer or the Board, as applicable; (ii) the Participant’s conviction of, or plea of nolo contendere to, a felony or any crime involving moral turpitude or dishonesty; (iii) the Participant’s commission of fraud, embezzlement, theft or any deliberate misappropriation of money or other assets of the Company; (iv) the Participant’s breach of any term of any employment or similar agreement entered into between the Company and the Participant, or breach of his fiduciary duties to the Company; (v) any willful act, or failure to act, by the Participant in bad faith to the detriment of the Company, a Subsidiary or business unit thereof (whether financially or reputationally) (as determined by the Committee); or (vi) the Participant’s willful failure to cooperate in good faith with a governmental or internal investigation of the Company or any of its directors, managers, officers or employees, if the Company requests his cooperation. Notwithstanding anything herein to the contrary, if the Participant’s employment with the Company, a Subsidiary or business unit thereof shall terminate due to a Change in Control, where (x) the Participant continues employment with the Acquirer Group (including the Company or any Subsidiary), and (y) the applicable member of the Acquirer Group formally assumes the Company’s obligations under the Plan or places the Participant in a similar or like plan with no diminution of the value of the Participant’s Awards (as determined by the Committee in its sole discretion), such termination of employment shall not be deemed to be a “Termination Without Cause.” |
(l) | “Change in Control” means the occurrence of one or more of the following: |
(i) | A transaction or series of transactions whereby any Person directly or indirectly acquires Beneficial Ownership of 35% or more of the total combined voting power of the Company’s securities outstanding immediately after such acquisition; provided, that such percentage exceeds the Beneficial Ownership percentage, immediately after such acquisition, of the total combined voting power of the Company’s securities attributed to White Mountains, together with its direct or indirect wholly owned subsidiaries; |
(ii) | the Continuing Directors cease for any reason to constitute a majority of the Board; |
(iii) | the business of the Company for which the Participant’s services are principally performed is, sold or transferred to another Person; provided, that, for the avoidance of doubt, a sale or transfer of such business shall be considered a Change in Control only for such Participant, and not for all Participants or the Plan as a whole; or |
(iv) | all or substantially all of the business-related assets of the Company are sold or transferred to another Person. |
(m) | “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the applicable Treasury rules, regulations, and guidance promulgated thereunder. |
(n) | “Committee” means the Compensation Committee of the Board, or a subcommittee thereof appointed to assume the functions of the Committee under the Plan, as provided in Section 2(a). |
(o) | “Common Shares” means the common shares of the Company, par value $0.01 per share, including Class A and Class B common shares. |
(p) | “Company” has the meaning set forth in Section 1. |
(q) | “Constructive Termination” means a termination of employment with the Company and its Subsidiaries at the initiative of the Participant that the Participant declares by prior written notice delivered to the Secretary of the Company to be a Constructive Termination by the Company or a Subsidiary, and which follows (a) a material decrease in his total annual compensation opportunity (calculated as a the sum of such Participant’s annual base salary plus target annual bonus) or (b) a material diminution in the authority, duties or responsibilities of his position such that the Participant cannot continue to carry out his job in substantially the same manner as it was intended to be carried out immediately before such diminution. Notwithstanding anything herein to the contrary, Constructive Termination shall not occur unless and until (i) the Participant delivers such notice within 30 days following the initial existence of the circumstances giving rise to Constructive Termination, (ii) 30 days have elapsed from the date the Company receives such notice from the Participant without the Company curing or causing to be cured the circumstances giving rise to Constructive Termination, and (iii) the Participant’s effective date of resignation is no later than ten days following the Company’s failure to cure. For the avoidance of doubt, in connection with a Change in Control, (A) if the Participant becomes an employee of an Acquirer Group, “Constructive Termination” for that Participant shall thereafter refer to his employment status with the Acquirer Group, and (B) if the Participant remains an employee of the Company or |
(r) | “Continuing Director” means a member of the Board (A) who is not an employee of the Company or its Subsidiaries or of a holder, employee or Affiliate of a Person or group that holds, 35% or more of the total combined voting power of the Company’s securities outstanding as of the date of determination and (B) who either was a member of the Board on October 18, 2006, or who subsequently became a director of the Company and whose election, or nomination for election, by the Company’s shareholders was approved by a vote of a majority of the Continuing Directors then on the Board (which term, for purposes of this definition, shall mean the whole Board and not any committee thereof). Any action, approval of which shall require the approval of a majority of the Continuing Directors, may be authorized by one Continuing Director, if he is the only Continuing Director on the Board, but no such action may be taken if there are not Continuing Directors on the Board. |
(s) | “Covered Employee” means any employee of the Company or its Subsidiaries who is, or could be, a “covered employee” within the meaning of Section 162(m) of the Code (unless such employee is employed by a non-U.S. Subsidiary and Section 162(m) of the Code is not applicable to such employee’s compensation). |
(t) | “Disability” (or the correlative “Disabled”) means a determination that the Participant is disabled in accordance with a long-term disability insurance program maintained by the Company or a determination by the U.S. Social Security Administration that the Participant is totally disabled. |
(u) | “Dividend Equivalent” means a right to receive the equivalent value (in cash or Share) of dividends paid on Shares, awarded under Section 5(c). |
(v) | “Effective Date” shall mean the date the Plan is approved by the Board, subject to approval of the Plan by the Company’s shareholders. |
(w) | “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time. |
(x) | “Fair Market Value” means, as of any date of determination, the value of a Share determined as follows: |
(y) | “GAAP” means generally accepted accounting principles in the United States. |
(z) | “Incentive Stock Option” means a Stock Option that is intended to qualify as an incentive stock option and conforms to the applicable provisions of Section 422 of the Code. |
(aa) | “Non-Employee Director” means a member of the Board (as constituted from time to time) who is not an officer or other employee of the Company, White Mountains or any of their respective direct or indirect Subsidiaries. |
(bb) | “Other Incentive Award” has the meaning set forth in Section 9. |
(cc) | “Participant” means a person who has been granted an Award. |
(dd) | “Performance Compensation Award” means an Award granted pursuant to Section 6, which is intended to qualify as “performance-based compensation” as described in Section 162(m)(4)(C) of the Code. |
(ee) | “Performance Criteria” means the criteria (and adjustments) that the Committee selects, in its sole discretion, for an Award for purposes of establishing the Performance Objective or Performance Objectives for an Award Period, determined as follows: shall be the specific performance criteria (and adjustments) selected by the Committee with respect to one or more of the following: (i) consolidated earnings before or after taxes (including earnings before interest, taxes, depreciation and amortization); (ii) net income; (iii) operating income; (iv) earnings per Share; (v) book value per Share; (vi) return on shareholders’ equity; (vii) expense management; (viii) return on investment; (ix) improvements in capital structure; (x) share price; (xi) combined ratio; (xii) operating ratio; (xiii) profitability of an identifiable business unit or product; (xiv) maintenance or improvement of profit margins; (xv) market share; (xvi) revenues or sales; (xvii) costs; (xviii) investment returns; (xix) cash flow; (xx) working capital; (xxi) return on assets; (xxii) customer satisfaction; (xxiii) employee satisfaction; (xxiv) economic value per Share; (xxv) underwriting return on capital; or (xxvi) underwriting return on equity. The foregoing criteria may relate to the Company, one or more of its Subsidiaries or one or more of its divisions, units, partnerships, joint ventures or minority investments, product lines or products or any combination of the foregoing, and may be applied on an absolute basis and/or be relative to one or more peer group companies or indices, or any combination thereof, all as the Committee shall determine. |
(ff) | “Performance Formula” means, for an Award Period, the one or more objective formulae applied against the relevant Performance Objective to determine, with regard to the Performance Compensation Award of a particular Participant, whether all, some portion but less than all, or none of the Performance Compensation Award has been earned for the Award Period. |
(gg) | “Performance Objectives” means, for an Award Period, the one or more goals established by the Committee for the Award Period based upon the Performance Criteria. |
(hh) | “Performance Percentage” has the meaning set forth in Section 7(b) with respect to Performance Shares, and Section 8(b) with respect to Performance Units, as the case may be. |
(ii) | “Performance Period” has the meaning set forth in Section 7(d) with respect to Performance Shares, and Section 8(d) with respect to Performance Units, as the case may be. |
(jj) | “Performance Shares” has the meaning set forth in Section 7(a). |
(kk) | “Performance Units” has the meaning set forth in Section 8(a). |
(ll) | “Person” means “person” (or related “group” of “persons”) as such terms are used in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that for purposes of the definitions of “Change in Control” and “Unfriendly Change in Control” used in this Plan, “Person” shall not include (i) the Company or any of its Subsidiaries, or White Mountains or one of its direct or indirect wholly owned subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of the Common Shares, or (iv) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of Common Shares. |
(mm) | “Plan” means this OneBeacon 2017 Long-Term Incentive Plan. |
(nn) | “Plan Limit” means the maximum aggregate number of Common Shares that may be issued for all purposes under the Plan as set forth in Section 3(c)(i). |
(oo) | “Prior Plan” means the OneBeacon Long-Term Incentive Plan (2007). |
(pp) | “Related Employment” means the employment of a Participant by an employer which is neither the Company nor a Subsidiary provided: (i) such employment is undertaken by the Participant and continued at the request of, or with the consent of, the Company or the Compensation Committee; (ii) immediately prior to undertaking such employment, the Participant was an employee or non-employee officer, director or consultant of the Company or a Subsidiary, or was engaged in Related Employment as herein defined; and (iii) such employment is recognized by the Committee, in its sole discretion, as Related Employment for the purposes of the Plan. The death or Disability of a Participant during a period of Related Employment shall be treated, for purposes of the Plan, as if the death or onset of Disability had occurred while the Participant was an employee of the Company. If, immediately prior to the undertaking of such Related Employment, the Participant was a non-employee officer, director or consultant of the Company or a Subsidiary, then references herein to the Participant’s “employment” with the Company and its Subsidiaries immediately prior to undertaking such Related Employment, or the cessation thereof, or terms of like import, shall be interpreted as the Participant’s “services” with the Company and its Subsidiaries, or the cessation thereof. |
(qq) | “Restricted Period” means the period from the date on which an Award of Restricted Stock or Restricted Stock Unit, as applicable, is granted until the Award vests in accordance with the terms established by the Committee or as the Committee shall otherwise determine. |
(rr) | “Repurchase Right” has the meaning set forth in Section 5(b)(iii). |
(ss) | “Restricted Stock” means Shares granted under Section 5(b) that are subject to transferability restrictions and may be subject to risk of forfeiture or repurchase. |
(tt) | “Restricted Stock Units” means the right to receive Shares (or cash payments based on the value or future value of Shares), granted under Section 5(c), subject to the satisfaction of the applicable terms and conditions. |
(uu) | “Retainer Election” has the meaning set forth in Section 11. |
(vv) | “Retirement” (or the correlative “retire”) means a Participant’s voluntary resignation from employment with the Company and its Subsidiaries at any time after attaining age 60 under circumstances which the Committee, in its sole discretion, determines to constitute “Retirement.” For the avoidance of doubt, the Committee’s determination of whether “Retirement” has occurred shall be made on an individual Award basis, and “Retirement” treatment for any one Award shall not require that all Awards held by the same Participant will receive “Retirement” treatment. |
(ww) | “Securities Act” means the Securities Act of 1933, as amended from time to time. |
(xx) | “Shares” means Class A Common Shares. |
(yy) | “Stock Appreciation Right” means a right to receive, without payment to the Company, the excess, if any, of the Fair Market Value of a Share at exercise over a fixed Share price set at the date of grant (which fixed Share price shall equal 100% of the Fair Market Value of a Share on the date of grant, except for any Substitute Award or as otherwise determined by the Committee), subject to vesting, manner of exercise, and other terms and conditions determined by the Committee at the time of grant. |
(zz) | “Stock Option” means a right to purchase Shares at a specified exercise price, granted under Section 4. |
(aaa) | “Subsidiary” means any entity (other than the Company), whether domestic or foreign, in an unbroken chain of entities beginning with the Company if each of the entities other than the last entity in the unbroken chain beneficially owns, at the time of the determination, securities or interests representing more than 50% of the total combined voting power of all classes of securities or interests in one of the other entities in such chain. |
(bbb) | “Substitute Award” means an Award granted under the Plan upon the assumption of, or in substitution for, outstanding equity awards previously granted by a company or other entity in connection with a corporate transaction, such as a merger, combination, consolidation or acquisition of property or stock; provided, however, that in no event shall the term “Substitute Award” be construed to refer to an award made in connection with the cancellation and repricing of a Stock Option or Stock Appreciation Right. |
(ccc) | “Ten-Percent Participant” means a Participant who owns stock representing more than 10% of the voting power of all classes of stock of the Company, a Subsidiary or a parent of the Company. |
(ddd) | “Termination Without Cause” means a termination of the Participant’s employment with the Company or a Subsidiary, or business unit thereof, by the Company (or the Subsidiary or business unit, as applicable) or, by any member of the Acquirer Group other than due to (i) the Participant’s death or Disability or (ii) Cause. For the avoidance of doubt, in connection with a Change in Control, (A) if the Participant becomes an employee of a member of the Acquirer Group, “Termination Without Cause” for that Participant shall thereafter refer to his employment status with the Acquirer Group, (B) if the Participant remains an employee of the Company or any of its Subsidiaries following the Change in Control, “Termination Without |
(eee) | “Trigger Event” has the meaning set forth in Section 7(f). |
(fff) | “Unfriendly Change in Control” means (i) any Person becomes the Beneficial Owner of 35% or more of the then outstanding common shares of White Mountains through a transaction that is deemed an “Unfriendly Change in Control” by the Committee; and (ii) a majority of the Continuing Directors, by resolution (or other action) adopted within 30 days following the date the Company becomes aware clause (i) hereof has been satisfied, determines that an “Unfriendly Change in Control” has occurred. |
(ggg) | “Unit Value” means (i) the initial value of each Performance Unit granted under Section 8, which may be a fixed dollar value, plus (ii) if applicable, any growth factor to the initial value of such Performance Unit, in each case as set forth in the applicable Award Agreement. |
12. | DILUTION AND OTHER ADJUSTMENTS |
(a) | In the event of any change in the outstanding Shares of the Company by reason of any stock split, stock or extraordinary cash dividend, recapitalization, merger, consolidation, reorganization, combination or exchange of Shares or other distribution (other than normal cash dividends) of Company assets to shareholders, or any other change affecting the shares of the Company’s stock or the share price of the Company’s stock (including any transaction constituting a Change in Control), or any unusual or infrequent transactions or events affecting the Company, any Affiliate of the Company, or the financial statements of the Company or any Affiliate, or of changes in applicable laws, regulations or accounting principles, the Committee is hereby authorized in connection therewith to take any one or more of the following actions whenever the Committee determines that such action is appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to any Award under the Plan, to facilitate such transactions or events or to give effect to such changes in laws, regulations or principles, to (i) make equitable adjustments, if any, in the terms and conditions of any Award, including an adjustment in the number or kind of Shares or other property that may be issued under the Plan Limit, in the number or kind of Shares or other property subject to, or the exercise price per Share under, any outstanding Stock Option or Stock Appreciation Right, in the number or kind of Shares or other property which have been awarded as Restricted Stock or Restricted |
(b) | The Committee may, in its sole discretion, include such further provisions and limitations in any Award, agreement or certificate, as it may deem equitable and in the best interests of the Company that are not inconsistent with the provisions of the Plan. |
(c) | No action shall be taken under this Section 12 which shall cause an Award to fail to comply with Section 409A or 457A of the Code (as determined by the Company), to the extent applicable to such Award. Any adjustment affecting a Performance Compensation Award shall be made consistent with the requirements of Section 162(m) of the Code (as determined by the Company). |
(d) | In the event of any pending stock dividend, stock split, combination or exchange of shares, merger, consolidation or other distribution (other than normal cash dividends) of Company assets to shareholders, or any other change affecting the Shares or the price of Common Shares, including any Change in Control, for reasons of administrative convenience, the Company in its sole discretion may refuse to permit the exercise of any Award during a period of up to 30 days prior to the anticipated date of consummation of any such transaction. |
14. | MISCELLANEOUS PROVISIONS |
(a) | Award Agreements; Other Agreements. Each Award under the Plan shall be evidenced by an Award Agreement, which shall be delivered to the Participant and shall specify the terms and conditions of the Award and any rules applicable thereto. An Award Agreement may be in written or electronic form and shall be signed (either in written or electronic form) by the Participant and a duly authorized representative of the Company. The terms of any Award Agreement, or any employment, change-in-control, severance or other agreement in effect with the Participant, may have terms or features different from and/or additional to those set forth in the Plan, and, unless expressly provided otherwise in such Award or other agreement, shall control in the event of any conflict with the terms of the Plan. |
(b) | No Rights to Awards; No Right to Uniform Treatment. No employee, director, consultant or other person shall have any claim or right to be granted an Award under the Plan. Neither the Plan nor any action taken hereunder shall be construed as giving an employee any right to be retained in the employ of the Company or any Subsidiary. Neither the Company nor the Committee is obligated to treat eligible individuals, Participants or any other Persons uniformly. |
(c) | No Assignment or Transfer by Participant. A Participant’s rights and interest under the Plan may not be assigned or transferred in whole or in part either directly or by operation of law or otherwise (except in the event of a Participant’s death), including execution, levy, garnishment, attachment, pledge, bankruptcy or in any other manner and no such right or interest of any Participant in the Plan shall be subject to any obligation or liability of such Participant. |
(d) | Clawback/Forfeiture. Notwithstanding anything to the contrary contained herein, an Award Agreement may provide that the Committee may cancel such Award if the Participant, without the consent of the Company, has engaged in or engages in activity that is in conflict with or adverse to the interest of the Company or any Affiliate while employed by or providing services to the Company or any Affiliate, including fraud or conduct contributing to any financial restatements or irregularities, or violates a non-competition, non-solicitation, non-disparagement or non-disclosure covenant or agreement with the Company or any Affiliate, as determined by the Committee. The Committee may also provide in an Award Agreement that in such event, the Participant will forfeit any compensation, gain or other value realized thereafter on the vesting, exercise or settlement of such Award, the sale or other transfer of such Award, or the sale of Shares acquired in respect of such Award, and must promptly repay such amounts to the Company. The Committee may also provide in an Award Agreement that if the Participant receives any amount in excess of what the Participant should have received under the terms of the Award for any reason (including without limitation by reason of a financial restatement, mistake in calculations or other administrative error), all as determined by the Committee, then the Participant shall be required to promptly repay any such excess amount to the Company. To the extent required by applicable law (including, without limitation, Section 304 of the Sarbanes-Oxley Act and Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act) and/or the rules and regulations of the New York Stock Exchange or other securities exchange or inter-dealer quotation system on which the Shares are listed or quoted, or if so required pursuant to a written policy adopted by the Company, Awards shall be subject (including on a retroactive basis) to clawback, forfeiture or similar requirements (and such requirements shall be deemed incorporated by reference into all outstanding Award Agreements). |
(e) | Repricing. Except as otherwise permitted under Section 12, if (i) the Committee reduces the exercise price of any Stock Option or Stock Appreciation Right, (ii) the Committee cancels any outstanding Stock Option or Stock Appreciation Right and replaces it with a new Stock Option or Stock Appreciation Right with a lower exercise price or other Award or cash in a manner which would either (A) be reportable on the Company’s proxy statement or Form 10-K (if applicable) as Stock Options which have been “repriced” (as such term is used in Item 402 of Regulation S-K promulgated under the Exchange Act), or (B) result in any “repricing” for financial statement reporting purposes (or otherwise cause the Award to fail to qualify for equity accounting treatment) or (iii) the Committee takes any other action which is considered a “repricing” for purposes of the shareholder approval rules of the applicable securities exchange or inter-dealer quotation service on which the Shares are listed or quoted, then, in the case of the immediately preceding clauses (i) through (iii), any such action shall not be effective without shareholder approval. |
(f) | Compliance with Laws. No Shares shall be issued hereunder unless counsel for the Company shall be satisfied that such issuance will be in compliance with applicable U.S. Federal and state securities laws, Bermuda law or other applicable laws, rules, and regulations, and to such approvals by governmental agencies as may be required. Nothing in this Plan shall be deemed to authorize the Committee or Board or any members thereof to take any action contrary to applicable law or regulation, or rules of the New York Stock Exchange. The Company shall be under no obligation to offer to sell or to sell, and shall be prohibited from offering to sell or selling, any Shares pursuant to an Award unless such shares have been properly registered for sale pursuant to the Securities Act, with the Securities and Exchange Commission or unless the Company has received an opinion of counsel, satisfactory to the Company, that such shares may be offered or sold without such registration pursuant to and in compliance with the terms of an available exemption. The Company shall be under no obligation to register for sale under the Securities Act any of the Shares to be offered or sold under the Plan. The Committee shall have the authority to provide that all Shares or other securities of the Company or any Affiliate delivered under the Plan shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan, the applicable Award Agreement, the U.S. Federal securities laws, or the rules, regulations and other requirements of the U.S. Securities and Exchange Commission, any securities exchange or inter-dealer quotation service upon which such shares or other securities of the Company are then listed or quoted and any other applicable U.S. Federal, state, local or non-U.S. laws, rules, regulations and other requirements, and the Committee may cause a legend or legends to be put on any such certificates of Shares or other securities of the Company or any Affiliate delivered under the Plan to make appropriate reference to such restrictions or may cause such Shares or other securities of the Company or any Affiliate delivered under the Plan in book-entry form to be held subject to the Company’s instructions or subject to appropriate stop-transfer orders. The Committee may cancel an Award or any portion thereof if it determines that legal or contractual restrictions and/or blockage and/or other market considerations would make the Company’s acquisition of Shares from the public markets, the Company’s issuance of Shares to the Participant, the Participant’s acquisition of Shares from the Company and/or the Participant’s sale of Shares to the public markets, illegal, impracticable or inadvisable. |
(g) | Tax Withholding. The Company and its Subsidiaries shall have the right and is hereby authorized to deduct from any payment made under the Plan (in cash, Shares, other securities or other property) any U.S. Federal, state or local income or other taxes required by law to be withheld with respect to such payment, and to take such other action as the Committee or the Company deem necessary to satisfy all obligations for the payment of such withholding taxes. Unless otherwise provided by the Company, tax withholding shall be at the applicable minimum statutory rate. It shall be a condition to the obligation of the Company to issue Shares upon exercise of a Stock Option, upon settlement of a Stock Appreciation Right, vesting of Restricted Stock or Performance Share (if applicable) or upon vesting or payment of a Performance Unit or a Restricted Stock Unit that the Participant (or any beneficiary or Person entitled to payment pursuant to the Plan) pay to the Company, upon its demand, such amount as may be required by the Company for the purpose of satisfying any liability to withhold U.S. Federal, state or local income or other taxes. If the amount requested is not paid, the Company may refuse to issue Shares. |
(h) | Expenses. The expenses of the Plan shall be borne by the Company. However, if an Award is made to an employee of a Subsidiary: |
(i) | if such Award results in payment of cash to the Participant, such Subsidiary shall pay to the Company an amount equal to such cash payment; and |
(ii) | if the Award results in the issuance to the Participant of Shares, such Subsidiary shall pay to the Company an amount equal to Fair Market Value thereof, as determined by the Committee, on the date such Shares are issued (or, in the case of issuance of Restricted Stock or of Shares subject to transfer and forfeiture conditions, equal to the Fair Market Value thereof on the date on which such Shares are no longer subject to applicable restriction), minus the amount, if any received by the Company in exchange for such Shares. |
(i) | No Trust or Fund Created. The Plan shall be unfunded. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure the payment of any Award under the Plan. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in this Plan or any Award Agreement shall give the Participant any rights that are greater than those of a general creditor of the Company or any of its Subsidiaries. |
(j) | Acceptance of Award. By accepting any Award or other benefit under the Plan, each Participant and each Person claiming under or through him shall be conclusively deemed to have indicated his acceptance and ratification of, and consent to, any action taken under the Plan by the Company, the Board or the Committee. |
(k) | No Section 83(b) Elections without Consent of Company. No election under Section 83(b) of the Code (to include in gross income in the year of transfer the amounts specified in Section 83(b) of the Code) or under a similar provision of law may be made unless expressly permitted by the terms of the applicable Award Agreement or by action of the Committee in writing prior to the making of such election. If a Participant, in connection with the acquisition of Shares under the Plan or otherwise, is expressly permitted under the terms of the applicable Award Agreement or by such Committee action to make such an election and the Participant makes the election, the Participant shall notify the Committee of such election within ten days of filing notice of the election with the Internal Revenue Service or other governmental authority, in addition to any filing and notification required pursuant to regulations issued under Section 83(b) of the Code or any other applicable provision. |
(l) | Notification of Disqualifying Dispositions. If any Participant shall make any disposition of Shares delivered pursuant to the exercise of an Incentive Stock Option under the circumstances described in Section 421(b) of the Code (relating to certain disqualifying dispositions) or any successor provision of the Code, such Participant shall notify the Company of such disposition within ten days of such disposition. |
(m) | No Representations or Covenants With Respect to Tax Qualification. Although the Company may endeavor to (i) qualify an Award for favorable U.S. or non-U.S. tax treatment or (ii) avoid adverse tax treatment, the Company makes no representation to that effect and expressly disavows any covenant to maintain favorable or avoid unfavorable tax treatment. The Company shall be unconstrained in its corporate activities without regard to the potential negative tax impact on Participants under the Plan. |
(n) | No Interference. The existence of the Plan, any Award Agreement and the Awards granted hereunder shall not affect or restrict in any way the right or power of the Company, the Board, the Committee or the shareholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of stock or of options, warrants or rights to purchase stock or of bonds, debentures, preferred or prior preference stocks whose rights are superior to or affect the Common Shares or the rights thereof or which are convertible into or exchangeable for Common Shares, or the dissolution or liquidation of the Company or any Affiliate, or any sale or transfer of all or any part of their assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise. |
(o) | Obligations Binding on Successors; Divisional Sale. The obligations of the Company under this Plan shall be binding upon any successor corporation or organization resulting from the merger, consolidation or other reorganization of the Company, or upon any successor corporation or organization succeeding to substantially all of the assets and business of the Company. If a Person who acquires a Subsidiary or business unit agrees to fully assume the obligations of the Company under a Participant’s outstanding Awards under the Plan or to replace them with similar or like awards with no diminution of value of the Awards, then the Company shall be released from its obligations to such Participant with respect to such Awards without the requirement of any action by or approval of the Participant. If a Person who acquires a Subsidiary or business unit declines to assume or replace such obligations, the Company shall remain obligated under the Awards as provided in the Plan. |
(p) | Indemnification. To the extent allowable pursuant to applicable law, each member of the Committee or of the Board shall be indemnified and held harmless by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such member in connection with or resulting from any claim, action, suit, or proceeding to which he may be a party or in which he may be involved by reason of any action or failure to act pursuant to the Plan and against and from any and all amounts paid by him in satisfaction of judgment in such action, suit, or proceeding against him, provided that he gives the Company an opportunity, at its own expense, to handle and defend the same before he undertakes to handle and defend it on his own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such Persons may be entitled pursuant to the Company’s Bye-Laws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless. |
(q) | Reliance on Reports. Each member of the Committee and each member of the Board (and their respective designees) shall be fully justified in acting or failing to act, as the case may be, and shall not be liable for having so acted or failed to act in good faith, in reliance upon any report made by the independent registered public accounting firm of the Company and |
(r) | No Limit on Other Compensation Arrangements. Nothing contained in this Plan shall prevent the Company or any Subsidiary from adopting or continuing in effect other compensation arrangements, which may, but need not, provide for the grant of options, restricted stock, shares, performance shares, performance units, stock appreciation rights, other types of equity-based awards (subject to shareholder approval if such approval is required) and cash awards, and such arrangements may be either generally applicable or applicable only in specific cases. |
(s) | Relationship to other Benefits. No payment pursuant to the Plan shall be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any Subsidiary except to the extent otherwise expressly provided in writing in such other plan or an agreement thereunder. |
(t) | Severability. If any provision of the Plan or any Award or Award Agreement is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any person or entity or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be construed or deemed stricken as to such jurisdiction, person or entity or Award and the remainder of the Plan and any such Award shall remain in full force and effect. |
(u) | Titles and Headings; Gender; References to Law. The titles and headings of the Sections in the Plan are for convenience of reference only and, in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control. Masculine pronouns and other words of masculine gender shall refer to both men and women. References to sections of the Code, the Exchange Act, the Securities Act or other statutes shall include any amendment or successor thereto, and any rules, regulations or other interpretative guidance under such statute. |
(a) | At the sole discretion of the Committee, the payment or settlement of an Award may be deferred by the Committee or the Participant in accordance with procedures adopted by the Committee. Notwithstanding the preceding sentence, if an Award is subject to Section 409A or 457A of the Code, or the deferral of such Award or settlement causes the Award to be subject to Section 409A or 457A of the Code, any such deferral must comply (as determined by the Company) with Section 409A and 457A of the Code, as applicable, and the terms of the Plan and Award Agreement shall be interpreted consistent therewith. |
(b) | Notwithstanding any provision of the Plan or any Award Agreement to the contrary, each Award granted under the Plan either shall be excepted from the requirements of Section 409A or 457A of the Code, as applicable, or shall comply with the requirements of Section 409A or 457A of the Code, and the terms of the Plan and each Award Agreement shall be interpreted consistent therewith. An Award that is excepted from the requirements of Section 409A of the Code may not be amended or otherwise modified in such a manner that the Award becomes subject to Section 409A of the Code unless the Committee expressly provides that the amendment or modification is intended to subject the Award to the requirements of Section 409A of the Code and the amended or modified Award complies with such requirements. An Award that is subject to the requirements of Section 409A or 457A of the Code may not be amended or otherwise modified in such a manner that the Award no longer complies with Section 409A or 457A of the Code, as applicable (as determined by the Company), unless the |
(c) | Each Participant is solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on or in respect of such Participant in connection with this Plan, including any taxes and penalties under Section 409A and 457A of the Code, as applicable, and neither the Company nor any Affiliate shall have any obligation to indemnify or otherwise hold such Participant or any beneficiary harmless from such taxes or penalties. With respect to any Award that is considered “deferred compensation” subject to Section 409A or 457A of the Code, as applicable, references in the Plan to “termination of employment” (and substantially similar phrases) shall mean “separation from service” within the meaning of Section 409A of the Code. For purposes of Section 409A of the Code, each of the payments that may be made in respect of any Award granted under the Plan is designated as a separate payment. |
(d) | Notwithstanding anything in the Plan to the contrary, if a Participant is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, no payments or deliveries in respect of any Awards that are “deferred compensation” subject to Section 409A of the Code shall be made to such Participant prior to the date that is six months after the date of such Participant’s “separation from service” or, if earlier, the Participant’s date of death. All such delayed payments or deliveries will be paid or delivered (without interest) in a single lump sum on the next available payroll date following the earliest date permitted under Section 409A of the Code. |
(e) | In the event that the timing of payments in respect of any Award that would otherwise be considered “deferred compensation” subject to Section 409A of the Code would be accelerated upon the occurrence of (i) a Change in Control, no such acceleration shall be permitted unless the event giving rise to the Change in Control satisfies the definition of a change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation pursuant to Section 409A of the Code or (ii) a Disability, no such acceleration shall be permitted unless the Disability also satisfies the definition of “Disability” pursuant to Section 409A of the Code. |
(a) | Subject to any applicable law or government regulation, to any requirement that must be satisfied if the Plan is intended to be a shareholder-approved plan for purposes of Section 162(m) of the Code, to the rules of the New York Stock Exchange or any successor exchange or quotation system on which the Shares may be listed or quoted, and for changes in GAAP to new accounting standards (in each case, as determined by the Company), the Plan may be amended at any time and from time to time by the Board, but no amendment which increases the aggregate number of Shares which may be issued pursuant to the Plan or the class of persons eligible to participate shall be effective unless and until the same is approved by the shareholders of the Company. No amendment of the Plan shall materially and adversely affect any right of any Participant with respect to any Award previously granted without such Participant’s written consent, unless the Board determines that such amendment is required or advisable in order for the Company, the Plan or the Award to satisfy any applicable law or regulation. |
(b) | The Committee may waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate any Award theretofore granted or any associated Award Agreement, prospectively or retroactively (including after a Participant’s termination of employment or service with the Company and its Subsidiaries); provided, however, that, except as set forth in the Plan, unless otherwise provided by the Committee in the applicable Award Agreement or unless the Committee determines that such either is required or advisable |
(a) | the adoption of a resolution of the Board terminating the Plan; or |
(b) | ten years from the date the Plan is initially or subsequently approved and adopted by the shareholders of the Company in accordance with Section 19 hereof. |
18. | GOVERNING LAW |
19. | SHAREHOLDER ADOPTION |
OneBeacon Insurance Group, Ltd. | ||||
By: | By: | /s/ T. Michael Miller | ||
<first><last> | T. Michael Miller | |||
President and Chief Executive Officer |
OneBeacon Insurance Group, Ltd. | ||||
By: | By: | /s/ T. Michael Miller | ||
<first><last> | T. Michael Miller | |||
President and Chief Executive Officer |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
• | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and, |
• | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the periods presented in the Report. |
/s/ G. Manning Rountree | |
Chief Executive Officer (Principal Executive Officer) | |
May 2, 2017 |
• | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and, |
• | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the periods presented in the Report. |
/s/ David T. Foy | |
Executive Vice President and Chief Financial Officer (Principal Financial Officer) | |
May 2, 2017 |
Document and Entity Information - $ / shares |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017 |
Apr. 28, 2017 |
Dec. 31, 2016 |
|
Document and Entity Information [Abstract] | |||
Entity Registrant Name | WHITE MOUNTAINS INSURANCE GROUP LTD | ||
Entity Central Index Key | 0000776867 | ||
Document Type | 10-Q | ||
Document Period End Date | Mar. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 4,572,792 | ||
Document Fiscal Year Focus | 2017 | ||
Document Fiscal Period Focus | Q1 | ||
Common shares, par value per share (in dollars per share) | $ 1.00 | $ 1.00 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions |
Mar. 31, 2017 |
Dec. 31, 2016 |
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Cash | $ 0.0 | $ 0.0 |
Common shares, par value per share (in dollars per share) | $ 1.00 | $ 1.00 |
Common shares, authorized shares | 50,000,000 | 50,000,000 |
Common shares, issued shares | 4,572,792 | 4,563,814 |
Common shares, outstanding shares | 4,572,792 | 4,563,814 |
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - USD ($) $ in Millions |
Total |
Common shares and paid-in surplus |
Retained earnings |
AOCI, after tax |
Total |
Non-controlling interest |
Total Equity |
Foreign Currency Gain (Loss)
Common shares and paid-in surplus
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Foreign Currency Gain (Loss)
Retained earnings
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Foreign Currency Gain (Loss)
AOCI, after tax
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Foreign Currency Gain (Loss)
Total
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Foreign Currency Gain (Loss)
Non-controlling interest
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Foreign Currency Gain (Loss)
Total Equity
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Star & Shield LLC [Member]
Common shares and paid-in surplus
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Star & Shield LLC [Member]
Retained earnings
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Star & Shield LLC [Member]
AOCI, after tax
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Star & Shield LLC [Member]
Total
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Star & Shield LLC [Member]
Non-controlling interest
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Star & Shield LLC [Member]
Total Equity
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Balances at Dec. 31, 2015 | $ 978.2 | $ 3,084.9 | $ (149.9) | $ 3,913.2 | $ 454.8 | $ 4,368.0 | |||||||||||||
Increase (Decrease) in Shareholders' Equity | |||||||||||||||||||
Net income | $ 19.3 | 0.0 | 13.0 | 0.0 | 13.0 | 6.3 | 19.3 | ||||||||||||
Net change in foreign currency translation | 0.1 | $ 0.0 | $ 0.0 | $ 37.3 | $ 37.3 | $ 0.0 | $ 37.3 | ||||||||||||
Total comprehensive income | 0.0 | 13.0 | 37.3 | 50.3 | 6.3 | 56.6 | |||||||||||||
Dividends declared on common shares | 0.0 | (5.4) | 0.0 | (5.4) | 0.0 | (5.4) | |||||||||||||
Dividends to non-controlling interests | 0.0 | 0.0 | 0.0 | 0.0 | (6.2) | (6.2) | |||||||||||||
Repurchases and retirements of common shares | (39.8) | (132.9) | 0.0 | (172.7) | 0.0 | (172.7) | |||||||||||||
Acquisition from non-controlling interests - OneBeacon | (2.7) | 0.0 | 0.0 | (2.7) | (8.8) | (11.5) | |||||||||||||
Net contributions from non-controlling interests | 0.0 | 0.0 | 0.0 | 0.0 | 0.3 | 0.3 | |||||||||||||
Noncontrolling Interest, Period Increase (Decrease) | 0.0 | 0.0 | 0.0 | 0.0 | 4.8 | 4.8 | |||||||||||||
Amortization of restricted share awards | 3.2 | 0.0 | 0.0 | 3.2 | 0.2 | 3.4 | |||||||||||||
Balances at Mar. 31, 2016 | 938.9 | 2,959.6 | (112.6) | 3,785.9 | 451.4 | 4,237.3 | |||||||||||||
Balances at Dec. 31, 2016 | 3,737.2 | 810.7 | 2,797.2 | (4.6) | 3,603.3 | 133.9 | 3,737.2 | ||||||||||||
Increase (Decrease) in Shareholders' Equity | |||||||||||||||||||
Net income | 33.0 | 0.0 | 34.3 | 0.0 | 34.3 | (1.3) | 33.0 | ||||||||||||
Net change in foreign currency translation | 0.9 | $ 0.0 | $ 0.0 | $ 0.9 | $ 0.9 | $ 0.0 | $ 0.9 | ||||||||||||
Total comprehensive income | 0.0 | 34.3 | 0.9 | 35.2 | (1.3) | 33.9 | |||||||||||||
Dividends declared on common shares | 0.0 | (4.6) | 0.0 | (4.6) | 0.0 | (4.6) | |||||||||||||
Dividends to non-controlling interests | 0.0 | 0.0 | 0.0 | 0.0 | (6.6) | (6.6) | |||||||||||||
Repurchases and retirements of common shares | (1.4) | (5.1) | 0.0 | (6.5) | (1.1) | (7.6) | |||||||||||||
Deconsolidation of non-controlling interests associated with the sale of Star & Shield | $ 0.0 | $ 0.0 | $ 0.0 | $ 0.0 | $ (4.4) | $ (4.4) | |||||||||||||
Net contributions from non-controlling interests | (4.8) | 0.0 | 0.0 | (4.8) | 4.8 | 0.0 | |||||||||||||
Noncontrolling Interest, Period Increase (Decrease) | 0.0 | 0.0 | 0.0 | 0.0 | 6.9 | 6.9 | |||||||||||||
Amortization of restricted share awards | 2.6 | 0.0 | 0.0 | 2.6 | 0.2 | 2.8 | |||||||||||||
Balances at Mar. 31, 2017 | $ 3,757.6 | $ 807.1 | $ 2,821.8 | $ (3.7) | $ 3,625.2 | $ 132.4 | $ 3,757.6 |
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 31, 2017 |
Mar. 31, 2016 |
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Cash and Cash Equivalents, at Carrying Value | $ 125.0 | $ 165.3 |
Restricted cash balances | 0.0 | 8.4 |
Effect of Exchange Rate on Cash and Cash Equivalents, Discontinued Operations | 0.0 | 4.2 |
Discontinued Operations [Member] | ||
Cash and Cash Equivalents, at Carrying Value | $ 0.0 | $ 139.9 |
Summary of Significant Accounting Policies |
3 Months Ended |
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Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation These interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and include the accounts of White Mountains Insurance Group, Ltd. (the “Company” or the “Registrant”), its subsidiaries (collectively, with the Company, “White Mountains”) and other entities required to be consolidated under GAAP. The Company is an exempted Bermuda limited liability company whose principal businesses are conducted through its insurance 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 80 South Main Street, Hanover, New Hampshire 03755-2053 and its registered office is located at Clarendon House, 2 Church Street, Hamilton, Bermuda HM 11. White Mountains’s reportable segments are OneBeacon, HG Global/BAM and Other Operations. As discussed further in the Company’s consolidated financial statements in Note 2 — “Significant Transactions”, on April 18, 2016, White Mountains completed its sale of Sirius International Insurance Group, Ltd., and its subsidiaries (collectively, “Sirius Group”) to CM International Holding PTE Ltd. (“CMI”), the Singapore-based investment arm of China Minsheng Investment Corp., Ltd. Also, on July 21, 2016, White Mountains completed its sale of Tranzact Holdings, LLC (“Tranzact”) to an affiliate of Clayton, Dubilier & Rice, LLC. For the three months ended March 31, 2016, Sirius Group and Tranzact have been presented as discontinued operations in the statement of operations and comprehensive income. See Note 17 — “Held for Sale and Discontinued Operations”. The OneBeacon segment consists of OneBeacon Insurance Group, Ltd. (“OneBeacon Ltd.”), an exempted Bermuda limited liability company that owns a family of property and casualty insurance companies (collectively, “OneBeacon”). OneBeacon is a specialty property and casualty insurance writer that offers a wide range of insurance products in the United States through independent agencies, regional and national brokers, wholesalers and managing general agencies. As of March 31, 2017 and December 31, 2016, White Mountains owned 75.7% and 76.1% of OneBeacon Ltd.’s outstanding common shares. The HG Global/BAM segment consists of HG Global Ltd. (“HG Global”) and the consolidated results of Build America Mutual Assurance Company (“BAM”). BAM is the first and only mutual bond insurance company in the United States. By insuring the timely payment of principal and interest, BAM provides market access to, and lowers interest expense for, issuers of municipal bonds used to finance essential public purposes such as schools, utilities and transportation facilities. BAM is owned by and operated for the benefit of its members, the municipalities that purchase BAM's insurance for their debt issuances. HG Global was established to fund the startup of BAM and, through its wholly-owned subsidiary, HG Re Ltd. (“HG Re”), to provide 15%-of-par, first loss reinsurance protection for policies underwritten by BAM. HG Global, together with its subsidiaries, provided the initial capitalization of BAM through the purchase of $503.0 million of surplus notes issued by BAM (the “BAM Surplus Notes”). As of March 31, 2017 and December 31, 2016, White Mountains owned 96.9% of HG Global’s preferred equity and 88.4% of its common equity. White Mountains does not have an ownership interest in BAM. However, GAAP requires White Mountains to consolidate BAM’s results in its financial statements. BAM’s results are attributed to non-controlling interests. White Mountains’s Other Operations segment consists of the Company and its intermediate holding companies, its wholly-owned investment management subsidiary, White Mountains Advisors LLC (“WM Advisors”) and certain consolidated and unconsolidated private capital investments. The consolidated private capital investments consist of QL Holdings LLC (“MediaAlpha”), Wobi Insurance Agency Ltd. (“Wobi”) and Removal Stars Ltd. (“Buzzmove”). White Mountains’s Other Operations segment also includes its variable annuity reinsurance business, White Mountains Life Reinsurance (Bermuda) Ltd. (“Life Re Bermuda”), which completed its runoff with all of its contracts maturing by June 30, 2016, and its U.S.-based service provider, White Mountains Financial Services LLC (collectively, “WM Life Re”) and Star & Shield Services LLC, Star & Shield Risk Management LLC, and Star & Shield Claims Services LLC (collectively “Star & Shield”). Star & Shield provides management services for a fee to Star & Shield Insurance Exchange (“SSIE”), a reciprocal that is owned by its members, who are policyholders. White Mountains was required to consolidate SSIE in its GAAP financial statements until White Mountains completed the sale of Star & Shield and its investment in SSIE Surplus Notes to K2 Insurance Services, LLC on March 7, 2017. White Mountains has presented Star & Shield’s and SSIE’s assets and liabilities as held for sale as of December 31, 2016. See Note 17 — “Held for Sale and Discontinued Operations”. All significant intercompany transactions have been eliminated in consolidation. Certain amounts in the prior period financial statements have been reclassified to conform to the current presentation. 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 2016 Annual Report on Form 10-K. 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. Refer to the Company’s 2016 Annual Report on Form 10-K for a complete discussion regarding White Mountains’s significant accounting policies. Recently Adopted Changes in Accounting Principles Stock Compensation Effective January 1, 2017, White Mountains adopted ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (ASC 718) which simplifies certain aspects of the accounting for share-based compensation. The new guidance provides an accounting policy election to account for forfeitures by either applying an assumption, as required under existing guidance, or by recognizing forfeitures when they actually occur. At adoption, White Mountains did not change its accounting policy for forfeitures, which is to apply an assumed forfeiture rate. The new guidance has also changed the threshold for partial cash settlement to settle statutory withholding requirements for equity classified awards, increasing the threshold up to the maximum statutory tax rate. As a result of adoption White Mountains reported $6.5 million and $5.8 million of statutory withholding tax payments made in connection with the settlement of restricted shares as financing cash flows for the three-month periods ended March 31, 2017 and 2016. Such payments were classified as operating cash flows prior to adoption. In addition, the new guidance changed the treatment for excess tax benefits which arise from the difference between the deduction for tax purposes and the compensation costs recognized for financial reporting. Under the new guidance, a reporting entity will recognize excess tax benefits or expense in current period earnings, regardless of whether it is in a taxes payable position. Short-Duration Contracts Effective December 31, 2016, White Mountains adopted ASU 2015-09, Disclosures about Short Duration Contracts (ASC 944), which requires expanded footnote disclosures about loss and loss adjustment expense (“LAE”) reserves. Upon adoption, White Mountains modified its footnote disclosures to include loss development tables on a disaggregated basis by accident year and a reconciliation of loss development data to the loss and LAE reserves reflected on the balance sheet. The footnotes disclosures have also been expanded to include information about claim frequency data, including a description of how the claims frequency data is measured. Prior year disclosures have been modified to conform to the new disclosures. See Note 3 — “Reserves for Unpaid Losses and Loss Adjustment Expenses”. Business Combinations - Measurement Period Adjustments Effective January 1, 2016, White Mountains adopted ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments, which requires adjustments to provisional amounts recorded in connection with a business combination that are identified during the measurement period to be recorded in the reporting period in which the adjustment amounts are determined, rather than as retroactive adjustments to prior periods. White Mountains has not recognized any adjustments to estimated purchase accounting amounts for the year to date period ended March 31, 2016 and accordingly, there was no effect to White Mountains’s financial statements upon adoption. Amendments to Consolidation Analysis On January 1, 2016, White Mountains adopted ASU 2015-02, Amendments to the Consolidation Analysis (ASC 810) which amends the guidance for determining whether an entity is a variable interest entity (“VIE”). ASU 2015-02 eliminates the separate consolidation guidance for limited partnerships and, with it, the presumption that a general partner should consolidate a limited partnership. In addition, ASU 2015-02 changes the guidance for determining if fee arrangements qualify as variable interests and the effect fee arrangements have on the determination of the primary beneficiary. Adoption of ASU 2015-02 did not affect the consolidation analysis for any of White Mountains’s investments. Share-Based Compensation Awards On January 1, 2016, White Mountains adopted ASU 2014-12, Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (ASC 718). The new guidance requires that a performance target that affects vesting and that can be achieved after the requisite service period be treated as a performance condition. Compensation cost is to be recognized in the period when it becomes probable the performance target will be achieved in an amount equal to the compensation cost attributable to the periods for which service has been rendered. Adoption did not have a significant effect on White Mountains’s financial position, results of operations, cash flows, presentation or disclosures. Debt Issuance Costs On January 1, 2016, White Mountains adopted ASU 2015-03, Imputation of Interest (ASC 835), which requires debt issuance costs to be presented as a deduction from the carrying amount of the related debt, consistent with the treatment required for debt discounts. The new guidance requires amortization of debt issuance costs to be classified within interest expense and also requires disclosure to the debt’s effective interest rate. White Mountains has applied the guidance retrospectively and as a result has reclassified $1.9 million of unamortized debt issuance costs from other assets to debt as of December 31, 2015, reflecting these amounts as a reduction from the related debt, and has modified its disclosures to include the required effective interest rate on its debt. As of March 31, 2017, the unamortized debt issuance costs included in debt is $1.8 million. Recently Issued Accounting Pronouncements Cash Flow Statement In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (ASC 230), which addresses the classification and presentation of certain items, including debt prepayment and extinguishment costs, contingent consideration payments made after a business combination and distributions received from equity method investees, for which there was diversity in practice. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows: Restricted Cash (ASC 230). Under current guidance, restricted amounts of cash or cash equivalents are excluded from the cash flow statement. The new guidance requires restricted cash and restricted cash equivalents to be included in the reconciliation of beginning and end-of-period amounts presented on the statement of cash flows. In addition, the new guidance requires a description of the nature of the changes in restricted cash and cash equivalents during the periods presented. The updated guidance in ASU 2016-15 and ASU 2016-18 are both effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted. White Mountains is evaluating the expected impact of this new guidance. Credit Losses In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (ASC 326), which establishes new guidance for the recognition of credit losses for financial assets measured at amortized cost. The new ASU, which applies to financial assets that have the contractual right to receive cash requires reporting entities to estimate the credit losses expected over the life of a credit exposure using historical information, current information and reasonable and supportable forecasts that affect the collectability of the financial asset. The types of assets included in the scope of the new guidance includes premium receivables, reinsurance recoverables and loans. ASU 2016-13 is effective for annual periods beginning after January 1, 2020, including interim periods. White Mountains is evaluating the expected impact of this new guidance. Leases In February 2016, the FASB issued ASU 2016-02, Leases (ASC 842). The new guidance requires lessees to recognize lease assets and liabilities on the balance sheet for both operating and financing leases, with the exception of leases with an original term of 12 months or less. Under existing guidance recognition of lease assets and liabilities is not required for operating leases. The lease assets and liabilities to be recognized are both measured initially based on the present value of the lease payments. Under the new guidance, a sale-leaseback transaction must meet the recognition criteria under ASC 606, Revenues in order to be accounted for as sale. The new guidance is effective for White Mountains for years beginning after December 15, 2018, including interim periods therein. White Mountains is evaluating the expected impact of this new guidance and available adoption methods. Financial Instruments - Recognition and Measurement In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (ASC 825-10). The new ASU modifies the guidance for financial instruments, including investments in equity securities. Under the new guidance, all equity securities with readily determinable fair values are required to be measured at fair value with changes therein recognized through current period earnings. In addition, the new ASU requires a qualitative assessment for equity securities without readily determinable fair values to identify impairment, and for impaired equity securities to be measured at fair value. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, with early adoption permitted. White Mountains measures its portfolio of investment securities at fair value with changes therein recognized through current period earnings accordingly, does not expect the adoption of ASU 2016-01 to have a significant impact on its financial statements. Revenue Recognition In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (ASC 606), which modifies the guidance for revenue recognition. Under ASU 2014-09, revenue is to be recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for goods or services transferred to customers. The new guidance sets forth the steps to be followed to recognize revenue: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue when (or as) the entity satisfies a performance obligation. Subsequently, the FASB issued additional ASUs clarifying the guidance in and providing implementation guidance for ASU 2014-09. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers, which delays the effective date of ASU 2014-09 and all related ASUs to annual and interim reporting periods beginning after December 15, 2017. Most of White Mountains’s revenue from customers relates to insurance contracts, which are excluded from the scope of ASU 2014-09, as are investment income and investments gains and losses. However, the new guidance is applicable to some of White Mountains’s revenue streams, including certain fee arrangements as well as commissions and other non-insurance revenues. White Mountains is evaluating the new guidance, but does not expect ASU 2014-09 to have a significant effect on recognition of White Mountains’s non-insurance revenues from customers. |
Significant Transactions |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||
Significant Transactions | Significant Transactions Sale of Star and Shield On March 7, 2017, White Mountains completed its sale of Star & Shield and its investment in SSIE Surplus Notes to K2 Insurances LLC. White Mountains did not recognize any gain or loss on the sale. Through December 31, 2016, Star & Shield’s assets and liabilities are reported as held for sale within White Mountains's GAAP financial statements. See Note 17 — “Held for Sale and Discontinued Operations”. Buzzmove On August 4, 2016, White Mountains acquired a 70.9% ownership share in Buzzmove for a purchase price of GBP 6.1 million (approximately $8.1 million based upon the foreign exchange spot rate at the date of acquisition). White Mountains recognized total assets acquired related to Buzzmove of $11.5 million, including $7.6 million of goodwill and $1.1 million of intangible assets, and total liabilities assumed of $0.1 million, reflecting acquisition date fair values. Sale of Tranzact On July 21, 2016, White Mountains completed the sale of Tranzact to Clayton, Dubilier & Rice, LLC and received net proceeds of $221.3 million. In connection with the sale of Tranzact, the purchaser directly repaid $56.3 million for the portion of Tranzact's debt attributable to White Mountains's common shareholders. On October 5, 2016, White Mountains received additional proceeds of $1.2 million following the release of the post-closing purchase price adjustment escrow. White Mountains recorded a $51.9 million gain from the sale of Tranzact in discontinued operations, which included a $30.2 million tax expense for the reversal of a tax valuation allowance that is offset by a tax benefit recorded in continuing operations. See Note 8 — “Income Taxes”. The increase to White Mountains’s book value from the sale of Tranzact was $82.1 million. A reconciliation of the gain reported in discontinued operations to the impact to White Mountains's book value is as follows:
In the first quarter of 2017, White Mountains recorded a $1.0 million reduction to the gain from sale of Tranzact in discontinued operations as a result of 2016 tax payments. Through July 21, 2016, Tranzact’s results of operations are reported as discontinued operations and assets and liabilities held for sale within White Mountains’s GAAP financial statements. See Note 17 — “Held for Sale and Discontinued Operations”. Sale of Sirius Group On April 18, 2016, White Mountains completed the sale of Sirius Group to CMI for approximately $2.6 billion. $161.8 million of this amount was used to purchase certain assets to be retained by White Mountains out of Sirius Group, including shares of OneBeacon. The amount paid at closing was based on an estimate of Sirius Group’s closing date tangible common shareholder’s equity. During the third quarter of 2016, there was a final true-up to Sirius Group’s tangible common shareholder’s equity that resulted in a $4.0 million reduction to the gain. During 2016, White Mountains recorded $363.2 million of gain from sale of Sirius Group in discontinued operations and $113.3 million in other comprehensive income from discontinued operations. Through April 18, 2016, Sirius Group’s results are reported as discontinued operations and assets and liabilities held for sale within White Mountains’s GAAP financial statements. The transactions to purchase the investments in OneBeacon and the other investments held by Sirius Group prior to the closing are presented in the statement of cash flows as net settlement of investment cash flows within discontinued operations. See Note 17 — “Held for Sale and Discontinued Operations”. Symetra On February 1, 2016, Symetra closed its merger agreement with Sumitomo Life Insurance Company (“Sumitomo Life”) and White Mountains received proceeds of $658.0 million, or $32.00 per common share. White Mountains also received a special dividend of $0.50 per share as part of the transaction that was paid in the third quarter of 2015. See Note 14 — “Investments in Unconsolidated Affiliates” OneBeacon Crop Business On July 31, 2015, OneBeacon exited its multiple peril crop insurance (“MPCI”) and its related crop-hail business (collectively, “Crop Business”) as its exclusive managing general agency, Climate Crop Insurance Agency (“CCIA”), exited the business through a sale of the agency to an affiliate of AmTrust. As a result of the transaction, OneBeacon and CCIA agreed to an early termination of the existing five-year agreement. In connection with the termination of the agreement, OneBeacon received a payment of $3.0 million. Also related to the transaction, OneBeacon withdrew its 2016 Plan of Operations, which previously authorized it to write MPCI for the 2016 Reinsurance Year, and affiliates of AmTrust agreed to reinsure the Company’s remaining net Crop Business exposure for the 2015 Reinsurance Year under a related 100% quota share reinsurance agreement which, coupled with other transfer and assignment agreements as well as communications with policyholders and agents, had the effect of assumption reinsurance. As a result of this transaction, the Company has no material net exposure related to the Crop Business. MediaAlpha On March 14, 2014, White Mountains acquired 60.0% of the outstanding Class A common units of MediaAlpha. White Mountains paid an initial purchase price of $28.1 million. The purchase price was subject to adjustment equal to 62.5% of the 2015 gross profit in excess of the 2013 gross profit. On February 26, 2016, White Mountains paid $7.8 million in settlement of the final purchase adjustment. After adjustment for the estimated contingent purchase price adjustment, White Mountains recognized total assets acquired related to MediaAlpha of $70.1 million, including $18.3 million of goodwill and $38.5 million of other intangible assets, and total liabilities assumed of $10.0 million, reflecting acquisition date fair values. On January 15, 2016, MediaAlpha acquired certain assets from Oversee.net for a purchase price of $3.9 million. The majority of assets acquired, which are included in other intangible assets, consists of customer relationships, a customer contract, a non-compete agreement from the seller, domain names and technology. Wobi On February 19, 2014, White Mountains acquired 54% of the outstanding common shares of Wobi for NIS 14.4 million (approximately $4.1 million based upon the foreign exchange spot rate at the date of acquisition). During 2014, in addition to the common shares, White Mountains also purchased NIS 31.5 million (approximately $9.0 million based upon the foreign exchange spot rate at the dates of acquisition) of convertible preferred shares of Wobi. As of the acquisition date, White Mountains recognized total assets acquired related to Wobi of $13.4 million, including $5.5 million of goodwill and $2.9 million of other intangible assets; and total liabilities assumed of $0.7 million at their estimated acquisition date fair values. During 2015, White Mountains purchased NIS 79.6 million (approximately $20.7 million based upon the foreign exchange spot rate at the dates of acquisition) of convertible preferred shares of Wobi. In addition, during 2015 White Mountains also purchased NIS 11.8 million (approximately $3.1 million based upon the foreign exchange spot rate at the date of acquisition) of common shares of Wobi. On February 23, 2015, Wobi acquired 56.2% of the outstanding share capital of Tnuva Finansit Ltd. (“Cashboard”) for NIS 9.5 million (approximately $2.4 million). The acquisition of Cashboard accelerated Wobi’s development of its pension products comparison service. As of the acquisition date, Wobi recognized total assets acquired of $5.5 million, including $0.3 million of goodwill and $2.8 million of other intangible assets; and total liabilities assumed of $1.2 million at their estimated acquisition date fair values. During 2015, Wobi purchased the remaining share capital of Cashboard for NIS 26.4 million (approximately $6.5 million). During 2016, White Mountains purchased NIS 35.9 million (approximately $9.6 million based upon the foreign exchange spot rates at the dates of acquisitions) of convertible preferred shares of Wobi. As of both March 31, 2017 and December 31, 2016, White Mountains’s ownership share was 95.0% . |
Loss and Loss Adjustment Expense Reserves |
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Insurance Loss Reserves [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss and Loss Adjustment Expense Reserves | Loss and Loss Adjustment Expense Reserves The following table summarizes the loss and loss adjustment expense (“LAE”) reserve activities of White Mountains’s insurance and reinsurance subsidiaries for the three months ended March 31, 2017 and 2016:
(1) Resulting from the sale of Star & Shield in the first quarter of 2017, SSIE is no longer consolidated. See Note 17 — “Held for Sale and Discontinued Operations”. Loss and LAE incurred relating to prior year losses for the three months ended March 31, 2017 For the three months ended March 31, 2017, White Mountains did not experience any net loss reserve development on prior accident year reserves, as unfavorable reserve development at OneBeacon, primarily in Healthcare due to an adverse settlement on a single claim was offset by favorable reserve development driven by Technology, Accident & Health and Entertainment resulting from favorable loss experience. Loss and LAE incurred relating to prior year losses for the three months ended March 31, 2016 For the three months ended March 31, 2016, White Mountains experienced net favorable loss reserve development of $0.1 million. For the three months ended March 31, 2016, OneBeacon did not experience any net loss reserve development on prior accident year reserves, as favorable development from several businesses, including Technology and Accident, was offset by unfavorable development primarily in Healthcare. For the three months ended March 31, 2016, SSIE had net favorable loss reserve development of $0.1 million. |
Third Party Reinsurance |
3 Months Ended |
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Mar. 31, 2017 | |
Reinsurance Disclosures [Abstract] | |
Third Party Reinsurance | Third Party Reinsurance In the normal course of business, White Mountains’s insurance subsidiaries may seek to limit losses that may arise from catastrophes or other events by reinsuring with third party reinsurers. White Mountains remains liable for risks reinsured in the event that the reinsurer does not honor its obligations under reinsurance contracts. OneBeacon At March 31, 2017, OneBeacon had $3.4 million and $174.7 million of reinsurance recoverables on paid and unpaid losses. At December 31, 2016, OneBeacon had $6.6 million and $172.9 million of reinsurance recoverables on paid and unpaid losses. Reinsurance contracts do not relieve OneBeacon of its obligation to its policyholders. OneBeacon is selective with its reinsurers, placing reinsurance with only those reinsurers having a strong financial condition. OneBeacon monitors the financial strength and ratings of its reinsurers on an ongoing basis. Uncollectible amounts related to the ongoing specialty business historically have not been significant. Effective May 1, 2017, OneBeacon renewed its property catastrophe reinsurance program through April 30, 2018. The program provides coverage for OneBeacon's property business as well as certain acts of terrorism. Under the program, the first $20.0 million of losses resulting from any single catastrophe are retained, with 100.0% of the next $110.0 million of losses resulting from the catastrophe being reinsured. Any part of a catastrophe loss in excess of $130.0 million would be retained in full. In the event of a catastrophe, OneBeacon's property catastrophe reinsurance program is reinstated for the remainder of the original contract term by paying a reinstatement premium that is based on the percentage of coverage reinstated and the original property catastrophe coverage premium. |
Investment Securities |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Securities | Investments Securities White Mountains’s invested assets consist of investment securities and other long-term investments held for general investment purposes. The portfolio of investment securities includes fixed maturity investments, short-term investments, common equity securities, and other-long term investments, which are all classified as trading securities. Trading securities are reported at fair value as of the balance sheet date. Net realized and unrealized investment gains (losses) on trading securities are reported in pre-tax revenues. White Mountains’s fixed maturity investments are generally valued using industry standard pricing methodologies. Key inputs include benchmark yields, benchmark securities, reported trades, issuer spreads, bids, offers, credit ratings and prepayment speeds. Income on mortgage and asset-backed securities is recognized using an effective yield based on anticipated prepayments and the estimated economic life of the securities. When actual prepayments differ significantly from anticipated prepayments, the estimated economic life is recalculated and the remaining unamortized premium or discount is amortized prospectively over the remaining economic life. Realized investment gains (losses) resulting from sales of investment securities are accounted for using the specific identification method. Premiums and discounts on all fixed maturity investments are amortized or accreted to income over the anticipated life of the investment. Short-term investments consist of interest-bearing money market funds, certificates of deposit and other securities which, at the time of purchase, mature or become available for use within one year. Short-term investments are carried at amortized or accreted cost, which approximated fair value as of March 31, 2017 and December 31, 2016. Other long-term investments consist primarily of hedge funds, private equity funds, unconsolidated private capital investments and the OneBeacon Surplus Notes. Net Investment Income White Mountains’s net investment income is comprised primarily of interest income associated with White Mountains’s fixed maturity investments and short-term investments and dividend income from its common equity securities and other long- term investments. Pre-tax net investment income for the three months ended March 31, 2017 and 2016 consisted of the following:
Net Realized and Unrealized Investment Gains (Losses) Net realized and unrealized investment gains (losses) consisted of the following:
Net realized investment gains (losses) Net realized investment gains (losses) for the three months ended March 31, 2017 and 2016 consisted of the following:
Net unrealized investment gains (losses) The following table summarizes net unrealized investment gains (losses) and changes in the carrying value of investments measured at fair value:
The following table summarizes the amount of total gains (losses) included in earnings attributable to unrealized investment gains (losses) for Level 3 investments for the three months ended March 31, 2017 and 2016:
Investment Holdings The cost or amortized cost, gross unrealized investment gains (losses), net foreign currency gains (losses), and carrying values of White Mountains’s fixed maturity investments as of March 31, 2017 and December 31, 2016 were as follows:
The cost or amortized cost, gross unrealized investment gains (losses), net foreign currency gains (losses), and carrying values of White Mountains’s common equity securities and other long-term investments as of March 31, 2017 and December 31, 2016 were as follows:
Other Long-term Investments Other long-term investments consist of the following as of March 31, 2017 and December 31, 2016:
(1) See Fair Value Measurements by Level table. (2) White Mountains holds a 20% ownership interest in OneTitle Holdings LLC (“OTH”) and has provided a $10.0 million surplus note facility under which OTH’s wholly-owned insurance subsidiary, OneTitle National Guaranty Company, Inc. may, under certain circumstances, draw funds. At March 31, 2017, no funds had been drawn on the surplus note facility. (3) Fund accounted for using the proportional amortization method. Hedge Funds and Private Equity Funds White Mountains holds investments in hedge funds and private equity funds, which are included in other long-term investments. The fair value of these investments are generally estimated using the net asset value (“NAV”) of the funds. As of March 31, 2017, White Mountains held investments in 5 hedge funds and 20 private equity funds. The largest investment in a single fund was $54.2 million as of March 31, 2017 and $36.5 million as of December 31, 2016. The following table summarizes investments in hedge funds and private equity funds by investment objective and sector as of March 31, 2017 and December 31, 2016:
Redemption of investments in certain hedge funds is subject to restrictions including lock-up periods where no redemptions or withdrawals are allowed, restrictions on redemption frequency and advance notice periods for redemptions. Amounts requested for redemptions remain subject to market fluctuations until the redemption effective date, which generally falls at the end of the defined redemption period. As of March 31, 2017, one hedge fund with a fair value of $38.3 million was subject to a lock-up period that expires on September 1, 2018. The following summarizes the March 31, 2017 fair value of hedge funds subject to restrictions on redemption frequency and advance notice period requirements for investments in active hedge funds:
Certain of White Mountains’s investments in hedge funds are no longer active and are in the process of disposing of their underlying investments. Distributions from such funds are remitted to investors as the fund’s underlying investments are liquidated. As of March 31, 2017, the hedge funds in liquidation had no value. The actual amount of any final distribution remittances remain subject to market fluctuations. The date at which such remittances, if any, will be received is not determinable as of March 31, 2017. White Mountains has also submitted redemption requests for certain of its investments in active hedge funds. As of March 31, 2017, redemptions of $2.2 million are outstanding that would be subject to market fluctuations. The date at which such redemptions will be received is not determinable as of March 31, 2017. Redemptions are recorded as receivables when the investment is no longer subject to market fluctuations. Investments in private equity funds are generally subject to a lock-up period during which investors may not request a redemption. Distributions prior to the expected termination date of the fund may be limited to dividends or proceeds arising from the liquidation of the fund’s underlying investments. In addition, certain private equity funds provide an option to extend the lock-up period at either, the sole discretion of the fund manager or upon agreement between the fund and the investors. As of March 31, 2017, investments in private equity funds were subject to lock-up periods as follows:
OneBeacon Surplus Notes In the fourth quarter of 2014, in conjunction with OneBeacon's sale of its runoff business to an affiliate of Armour Group Holdings Limited (the “OneBeacon Runoff Transaction”), OneBeacon provided financing in the form of the OneBeacon Surplus Notes with a par value of $101.0 million, which had a fair value of $69.6 million and $71.9 million as of March 31, 2017 and December 31, 2016. Subsequent to closing, the OneBeacon Surplus Notes are included in OneBeacon’s investment portfolio, classified within other long-term investments. The internal valuation model used to estimate the fair value of the OneBeacon Surplus Notes is based on discounted expected cash flows using information as of the measurement date. The estimated fair value of the surplus notes is sensitive to changes in public debt credit spreads, as well as changes in estimates with respect to other variables including a discount to reflect the private nature of the notes (and the related lack of liquidity), the credit quality of the notes, based on the financial performance of the Issuer relative to expectations, and the timing, amount, and likelihood of interest and principal payments on the notes, which are subject to regulatory approval and therefore may vary from the contractual terms. For the purposes of estimating fair value, OneBeacon has assumed that all accrued but unpaid interest on the seller priority note since the date of issuance is paid in 2020, with regular annual interest payments on both the seller priority note and the pari passu note beginning in 2021, all accrued but unpaid interest on the pari passu note since the date of issuance is paid in 2025 and principal repayments begin on a graduated basis in 2030 for the seller priority note and 2035 for the pari passu note. Although these variables involve considerable judgment, OneBeacon does not currently expect any resulting changes in the estimated value of the surplus notes to be material to its financial position. An interest payment of $2.4 million was received in the three months ended March 31, 2016. Below is a table illustrating the valuation adjustments taken to arrive at estimated fair value of the OneBeacon Surplus Notes as of March 31, 2017 and December 31, 2016:
(3) Represents impact of liquidity spread to account for OneBeacon's sole ownership of the notes, lack of a trading market, and unique nature of the ongoing regulatory approval process. The unfavorable year-to-date change in impact is due largely to an increase in the assumed liquidity spread to 400 basis points at March 31, 2017 from 250 basis points at December 31, 2016. (4) The decrease in the fair value of the surplus notes during the three months ended March 31, 2017 was driven primarily by an increase in the assumed liquidity spread, partially offset by the narrowing of non-investment grade credit spreads as well as the time value of money benefit generated by moving three months closer to modeled cash receipts. Fair value measurements as of March 31, 2017 Fair value measurements are categorized into a hierarchy that distinguishes between inputs based on market data from independent sources (“observable inputs”) and a reporting entity’s internal assumptions based upon the best information available when external market data is limited or unavailable (“unobservable inputs”). Quoted prices in active markets for identical assets or liabilities have the highest priority (“Level 1”), followed by observable inputs other than quoted prices, including prices for similar but not identical assets or liabilities (“Level 2”) and unobservable inputs, including the reporting entity’s estimates of the assumptions that market participants would use, having the lowest priority (“Level 3”). As of March 31, 2017 and December 31, 2016, White Mountains used quoted market prices or other observable inputs to determine fair value for approximately 93% and 94% of its investment portfolio. Investments valued using Level 1 inputs include fixed maturity investments, primarily investments in U.S. Treasuries, short-term investments, which include U.S. Treasury Bills and common equity securities. Investments valued using Level 2 inputs are primarily comprised of fixed maturity investments, which have been disaggregated into classes, including debt securities issued by corporations, municipal obligations, mortgage and asset-backed securities, foreign government, agency and provincial obligations and preferred stocks. Investments valued using Level 2 inputs also include certain passive exchange traded funds (“ETFs”) that track U.S. stock indices such as the S&P 500 but are traded on foreign exchanges and that management values using the fund manager’s published NAV to account for the difference in market close times. Fair value estimates for investments that trade infrequently and have few or no observable market prices are classified as Level 3 measurements. Level 3 fair value estimates based upon unobservable inputs include White Mountains’s investments in the OneBeacon Surplus Notes, as well as certain investments in fixed maturity investments, common equity securities and other long-term investments where quoted market prices are unavailable or are not considered reasonable. Transfers between levels are based on investments held as of the beginning of the period. White Mountains uses brokers and outside pricing services to assist in determining fair values. For investments in active markets, White Mountains uses the quoted market prices provided by outside pricing services to determine fair value. The outside pricing services White Mountains uses have indicated that they will only provide prices where observable inputs are available. In circumstances where quoted market prices are unavailable or are not considered reasonable, White Mountains estimates the fair value using industry standard pricing methodologies and observable inputs such as benchmark yields, reported trades, broker-dealer quotes, issuer spreads, benchmark securities, bids, offers, credit ratings, prepayment speeds, reference data including research publications and other relevant inputs. Given that many fixed maturity investments do not trade on a daily basis, the outside pricing services evaluate a wide range of fixed maturity investments by regularly drawing parallels from recent trades and quotes of comparable securities with similar features. The characteristics used to identify comparable fixed maturity investments vary by asset type and take into account market convention. White Mountains’s process to assess the reasonableness of the market prices obtained from the outside pricing sources covers substantially all of its fixed maturity investments and includes, but is not limited to, the evaluation of pricing methodologies and a review of the pricing services’ quality control processes and procedures on at least an annual basis, a comparison of its invested asset prices obtained from alternate independent pricing vendors on at least a semi-annual basis, monthly analytical reviews of certain prices and a review of the underlying assumptions utilized by the pricing services for select measurements on an ad hoc basis throughout the year. White Mountains also performs back-testing of selected sales activity to determine whether there are any significant differences between the market price used to value the security prior to sale and the actual sale price on an ad-hoc basis throughout the year. Prices provided by the pricing services that vary by more than 5% and $1.0 million from the expected price based on these assessment procedures are considered outliers. Also considered outliers are prices that have not changed from period to period and prices that have trended unusually compared to market conditions. In circumstances where the results of White Mountains’s review process does not appear to support the market price provided by the pricing services, White Mountains challenges the vendor provided price. If White Mountains cannot gain satisfactory evidence to support the challenged price, it relies upon its own pricing methodologies to estimate the fair value of the security in question. The valuation process described above is generally applicable to all of White Mountains’s fixed maturity investments. The techniques and inputs specific to asset classes within White Mountains’s fixed maturity investments for Level 2 securities that use observable inputs are as follows: Debt securities issued by corporations: The fair value of debt securities issued by corporations is determined from a pricing evaluation technique that uses information from market sources and integrates relative credit information, observed market movements, and sector news. Key inputs include benchmark yields, reported trades, broker-dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including sector, coupon, credit quality ratings, duration, credit enhancements, early redemption features and market research publications. Mortgage and asset-backed securities: The fair value of mortgage and asset-backed securities is determined from a pricing evaluation technique that uses information from market sources and leveraging similar securities. Key inputs include benchmark yields, reported trades, underlying tranche cash flow data, collateral performance, plus new issue data, as well as broker-dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including issuer, vintage, loan type, collateral attributes, prepayment speeds, default rates, recovery rates, cash flow stress testing, credit quality ratings and market research publications. Municipal obligations: The fair value of municipal obligations is determined from a pricing evaluation technique that uses information from market makers, brokers-dealers, buy-side firms, and analysts along with general market information. Key inputs include benchmark yields, reported trades, issuer financial statements, material event notices and new issue data, as well as broker-dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including type, coupon, credit quality ratings, duration, credit enhancements, geographic location and market research publications. Foreign government, agency and provincial obligations: The fair value of foreign government, agency and provincial obligations is determined from a pricing evaluation technique that uses feeds from data sources in each respective country, including active market makers and inter-dealer brokers. Key inputs include benchmark yields, reported trades, broker-dealer quotes, two-sided markets, benchmark securities, bids, offers, local exchange prices, foreign exchange rates and reference data including coupon, credit quality ratings, duration and market research publications. Preferred stocks: The fair value of preferred stocks is determined from a pricing evaluation technique that calculates the appropriate spread over a comparable security for each issue. Key inputs include exchange prices (underlying and common stock of same issuer), benchmark yields, reported trades, broker-dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including sector, coupon, credit quality ratings, duration, credit enhancements, early redemption features and market research publications. Level 3 valuations are generated from techniques that use assumptions not observable in the market. These unobservable assumptions reflect White Mountains’s assumptions that market participants would use in valuing the investment. Generally, certain securities may start out as Level 3 when they are originally issued but as observable inputs become available in the market, they may be reclassified to Level 2. White Mountains employs a number of procedures to assess the reasonableness of the fair value measurements for its other long-term investments, including obtaining and reviewing periodic and audited annual financial statements of hedge funds and private equity funds and discussing each fund’s pricing with the fund manager throughout the year. However, since the fund managers do not provide sufficient information to evaluate the pricing inputs and methods for each underlying investment, the inputs are considered to be unobservable. The fair value of White Mountains’s investments in hedge funds and private equity funds has generally been determined using the fund manager's NAV. In the event White Mountains believes that its estimate of NAV of a hedge fund or private equity fund differs from that reported by the fund manager due to illiquidity or other factors, White Mountains will adjust the reported NAV to more appropriately represent the fair value of its interest in the hedge fund or private equity fund investment. As of March 31, 2017 and December 31, 2016, White Mountains recorded negative adjustments of $1.0 million and $5.0 million to the reported NAV of certain investments in hedge funds and private equity funds. Fair Value Measurements by Level The following tables summarize White Mountains’s fair value measurements for investments as of March 31, 2017 and December 31, 2016 by level. The major security types were based on the legal form of the securities. White Mountains has disaggregated its fixed maturity investments based on the issuing entity type, which impacts credit quality, with debt securities issued by U.S. government entities carrying minimal credit risk, while the credit and other risks associated with other issuers, such as corporations, foreign governments, municipalities or entities issuing mortgage and asset-backed securities vary depending on the nature of the issuing entity type. White Mountains further disaggregates debt securities issued by corporations and common equity securities by industry sector because investors often reference commonly used benchmarks and their subsectors to monitor risk and performance. Accordingly, White Mountains has further disaggregated these asset classes into subclasses based on the similar sectors and industry classifications it uses to evaluate investment risk and performance against commonly used benchmarks, such as the Bloomberg Barclays U.S. Intermediate Aggregate and S&P 500 indices. The fair value measurements for derivative assets associated with White Mountains’s variable annuity business are presented in Note 9.
(1) ETFs traded on foreign exchanges are priced using the fund's published NAV to account for the difference in market close times and are therefore designated a level 2 measurement. (2) Excludes carrying value of $3.0 associated with other long-term investment limited partnerships accounted for using the equity method and $(4.2) related to foreign currency forward contracts. Excludes carrying value of $11.7 associated with a tax advantaged federal affordable housing development fund accounted for using the proportional amortization method. (3) Excludes carrying value of $147.2 associated with hedge funds and private equity funds for which fair value is measured at NAV using the practical expedient. (4) Short-term investments are measured at amortized cost, which approximates fair value.
(1) ETFs traded on foreign exchanges are priced using the fund's published NAV to account for the difference in market close times and are therefore designated a level 2 measurement. (2) Excludes carrying value of $3.5 associated with other long-term investment limited partnerships accounted for using the equity method and $(1.2) related to foreign currency forward contracts. Excludes carrying value of $12.3 associated with a tax advantaged federal affordable housing development fund accounted for using the proportional amortization method. (3) Excludes carrying value of $131.0 associated with hedge funds and private equity funds for which fair value is measured at NAV using the practical expedient. (4) Includes carrying value of $6.6 in fixed maturity investments and $0.1 in short-term investments that are classified as assets held for sale related to SSIE. (5) Short-term investments are measured at amortized cost, which approximates fair value. Debt securities issued by corporations The following table summarizes the ratings of debt securities issued by corporations held in White Mountains’s investment portfolio as of March 31, 2017 and December 31, 2016:
(1) Credit ratings are assigned based on the following hierarchy: 1) Standard & Poor’s Financial Services LLC ("Standard & Poor's") and 2) Moody's Investor Services ("Moody’s"). Mortgage and Asset-backed Securities White Mountains purchases commercial mortgage-backed securities (“CMBS”) and residential mortgage-backed securities (“RMBS”) with the goal of maximizing risk adjusted returns in the context of a diversified portfolio. White Mountains considers sub-prime mortgage-backed securities as those that have underlying loan pools that exhibit weak credit characteristics, or those that are issued from dedicated sub-prime shelves or dedicated second-lien shelf registrations (i.e., White Mountains considers investments backed primarily by second-liens to be sub-prime risks regardless of credit scores or other metrics). White Mountains did not hold any RMBS categorized as sub-prime as of March 31, 2017. White Mountains categorizes mortgage-backed securities as “non-prime” (also called “Alt A” or “A-”) if they are backed by collateral that has overall credit quality between prime and sub-prime based on White Mountains’s review of the characteristics of their underlying mortgage loan pools, such as credit scores and financial ratios. As of March 31, 2017, White Mountains did not hold any RMBS classified as non-prime. White Mountains’s non-agency RMBS portfolio is generally moderate-term and structurally senior. White Mountains does not own any collateralized loan obligations. White Mountains does not own any collateralized debt obligations, with the exception of $33.9 million of non-agency RMBS resecuritization tranches, each a senior tranche in its own right and each collateralized by a single earlier vintage Super Senior or Senior non-agency RMBS. The following table summarizes the carrying value of White Mountains’s mortgage and asset-backed securities as of March 31, 2017 and December 31, 2016:
(1) Represents publicly traded mortgage-backed securities which carry the full faith and credit guaranty of the U.S. government (i.e., GNMA) or are guaranteed by a government sponsored entity (i.e., FNMA, FHLMC). Non-agency Mortgage-backed Securities The security issuance years of White Mountains’s investments in non-agency RMBS and non-agency CMBS securities as of March 31, 2017 are as follows:
Non-agency Residential Mortgage-backed Securities The classification of the underlying collateral quality and the tranche levels of White Mountains’s non-agency RMBS securities are as follows as of March 31, 2017:
(1) At issuance, Super Senior, or in the case of resecuritization, the underlying securities, were rated “AAA” by Standard & Poor’s, “Aaa” by Moody’s or “AAA” by Fitch and were senior to other “AAA” or “Aaa” bonds. (2) At issuance, Senior, or in the case of resecuritization, the underlying securities, were rated “AAA” by Standard & Poor’s, “Aaa” by Moody’s or “AAA” by Fitch and were senior to non-“AAA” or non-“Aaa” bonds. (3) At issuance, Subordinate were not rated “AAA” by Standard & Poor’s, “Aaa” by Moody’s or “AAA” by Fitch and were junior to “AAA” or “Aaa” bonds. Non-agency Commercial Mortgage-backed Securities White Mountains’s non-agency CMBS portfolio is generally short-term and structurally senior, with more than 25 points of subordination on average for both fixed rate and floating rate as of March 31, 2017. In general, subordination represents the percentage principal loss on the underlying collateral that would have to be absorbed by other securities lower in the capital structure before the more senior security incurs a loss. As of March 31, 2017, none of the underlying loans of the non-agency CMBS held by White Mountains were reported as non-performing. The amount of fixed and floating rate securities and their tranche levels of White Mountains’s non-agency CMBS securities are as follows as of March 31, 2017:
(1) At issuance, Super Senior, or in the case of resecuritization, the underlying securities, were rated “AAA” by Standard & Poor’s, “Aaa” by Moody’s or “AAA” by Fitch Ratings (“Fitch”) and were senior to other “AAA” or “Aaa” bonds. (2) At issuance, Senior, or in the case of resecuritization, the underlying securities, were rated “AAA” by Standard & Poor’s, “Aaa” by Moody’s or “AAA” by Fitch and were senior to non-“AAA” or non-“Aaa” bonds. (3) At issuance, Subordinate were not rated “AAA” by Standard & Poor’s, “Aaa” by Moody’s or “AAA” by Fitch and were junior to “AAA” or “Aaa” bonds. Rollforward of Fair Value Measurements by Level White Mountains uses quoted market prices where available as the inputs to estimate fair value for its investments in active markets. Such measurements are considered to be either Level 1 or Level 2 measurements, depending on whether the quoted market price inputs are for identical securities (Level 1) or similar securities (Level 2). Level 3 measurements for fixed maturity investments, common equity securities, and other long-term investments as of March 31, 2017 and 2016 consist of securities for which the estimated fair value has not been determined based upon quoted market price inputs for identical or similar securities. The following tables summarize the changes in White Mountains’s fair value measurements by level for the three months ended March 31, 2017 and 2016:
(1) Excludes carrying value of $3.5 and $3.0 at January 1, 2017 and March 31, 2017 associated with other long-term investments accounted for using the equity method and $(1.2) and $(4.2) related to foreign currency forward contracts. Excludes carrying value of $12.3 and $11.7 at January 1, 2017 and March 31, 2017 associated with a tax advantaged federal affordable housing development fund accounted for using the proportional amortization method. (2) Excludes carrying value of $287.1 and $230.9 at January 1, 2017 and March 31, 2017 associated with short-term investments, of which $0.1 is classified as held for sale at January 1, 2017. (3) Investments for which fair value is measured at NAV using the practical expedient are no longer classified within the fair value hierarchy. See Note 1 — “Summary of Significant Accounting Policies”. (4) Includes carrying value of $6.6 of fixed maturity investments at January 1, 2017 that is classified as assets held for sale related to SSIE.
(1) Excludes carrying value of $3.8 and $3.7 at January 1, 2016 and March 31, 2016 associated with other long-term investment limited partnerships accounted for using the equity method. Excludes carrying value of $14.7 and $14.1 at January 1, 2016 and March 31, 2016 associated with a tax advantaged federal affordable housing development fund accounted for using the proportional amortization method. (2) Excludes carrying value of $211.3 million and $261.7 million at January 1, 2016 and March 31, 2016 associated with short-term investments of which $0.1 and $0.3 is classified as held for sale at January 1, 2016 and March 31, 2016. (3) Investments for which fair value is measured at NAV using the practical expedient are no longer classified within the fair value hierarchy. See Note 1 — “Summary of Significant Accounting Policies”. (4) Includes carrying value of $9.5 and $9.4 of fixed maturity investments at January 1, 2016 and March 31, 2016 that is classified as assets held for sale related to SSIE. Fair Value Measurements — transfers between levels - Three-month period ended March 31, 2017 and 2016 Transfers between levels are recorded using the fair value measurement as of the end of the quarterly period in which the event or change in circumstance giving rise to the transfer occurred. During the first three months of 2017 and the first three months of 2016, there were no fixed maturity investments classified as Level 3 measurements in the prior period that were transferred to Level 2 measurements. Significant Unobservable Inputs The following summarizes significant unobservable inputs used in estimating the fair value of investment securities, other than hedge funds and private equity funds, classified within Level 3 as of March 31, 2017 and December 31, 2016. The fair value of investments in hedge funds and private equity funds are generally estimated using the NAV of the funds.
(1) Includes the net unrealized investment gains (losses) associated with foreign currency; foreign currency effects based on observable inputs. (2) Stochastic modeling supporting the fair value estimation indicates that the average percentage of discounted payments missed on the seller priority note is roughly equivalent to that of a conventional debt security with a credit rating of ‘B’. The corresponding credit spread, increased to 400 bps as of March 31, 2017 from 250 bps as of December 31, 2016 to reflect an increase in the assumed liquidity spread for the seller priority note. (3) Stochastic modeling supporting the fair value estimation indicates that the average percentage of discounted payments missed on the pari passu note is roughly equivalent to that of a conventional debt security with a credit rating of ‘CCC’. The corresponding credit spread, increased to 400 bps as of March 31, 2017 from 250 bps as of December 31, 2016 to reflect an increase in the assumed liquidity spread for the pari passu note. (4) As of March 31, 2017, OneBeacon has assumed for the purpose of estimating fair value that all accrued but unpaid interest on the seller priority note since the date of issuance is paid in 2020, with regular annual interest payments beginning thereafter. Principal repayments are assumed to begin on a graduated basis in 2030. (5) As of March 31, 2017, OneBeacon has assumed for the purpose of estimating fair value that regular annual interest payments on the pari passu note begin in 2021. All accrued but unpaid interest since the date of issuance is assumed to be paid in 2025. Principal repayments are assumed to begin on a graduated basis in 2035. (6) Credit ratings are assigned based on the following hierarchy: 1) Standard and Poor's and 2) Moody’s.
(1) Includes the net unrealized investment gains (losses) associated with foreign currency; foreign currency effects based on observable inputs. (2) Stochastic modeling supporting the fair value estimation indicates that the average percentage of discounted payments missed on the seller priority note is roughly equivalent to that of a conventional debt security with a credit rating of ‘B’. The corresponding credit spread increased by an additional 250 basis points to reflect both a liquidity discount for a private debt instrument and regulatory payment approval uncertainty, was added to the treasury rate to determine the discount rate for the seller priority note. (3) Stochastic modeling supporting the fair value estimation indicates that the average percentage of discounted payments missed on the pari passu note is roughly equivalent to that of a conventional debt security with a credit rating of ‘CCC’. The corresponding credit spread increased by an additional 250 basis points to reflect both a liquidity discount for a private debt instrument and regulatory payment approval uncertainty, was added to the treasury rate to determine the discount rate for the pari passu note. (4) As of December 31, 2016, OneBeacon has assumed for the purpose of estimating fair value that all accrued but unpaid interest on the seller priority note since the date of issuance is paid in 2020, with regular annual interest payments beginning thereafter. Principal repayments are assumed to begin on a graduated basis in 2030. (5) As of December 31, 2016, OneBeacon has assumed for the purpose of estimating fair value that regular annual interest payments on the pari passu note begin in 2021. All accrued but unpaid interest since the date of issuance is assumed to be paid in 2025. Principal repayments are assumed to begin on a graduated basis in 2035. |
Goodwill and Other Intangible Assets |
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Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets White Mountains has recognized goodwill and other intangible assets at the acquisition date fair values in connection with its purchases of subsidiaries. On January 15, 2016, MediaAlpha acquired certain assets from Oversee.net for a purchase price of $3.9 million. The majority of assets acquired, which are included in other intangible assets, consists of customer relationships, a customer contract, a non-compete agreement from the seller, domain names and technology. The following table shows the change in goodwill and other intangible assets:
(1) See Note 17 — “Held for Sale and Discontinued Operations”. |
Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt White Mountains’s debt outstanding as of March 31, 2017 and December 31, 2016 consisted of the following:
(1) Effective rate considers the effect of the debt issuance costs. WTM Bank Facility On August 14, 2013, White Mountains entered into a revolving credit facility with a syndicate of lenders administered by Wells Fargo Bank, N.A., which has a total commitment of $425.0 million and has a maturity date of August 14, 2018 (the “WTM Bank Facility”). As of March 31, 2017, the WTM Bank Facility was undrawn. The WTM Bank Facility contains various affirmative, negative and financial covenants which White Mountains considers to be customary for such borrowings, including certain minimum net worth and maximum debt to capitalization standards. OBH Senior Notes In November 2012, OneBeacon U.S. Holdings, Inc. (“OBH”) issued $275.0 million face value of senior unsecured notes (“OBH Senior Notes”) through a public offering, at an issue price of 99.9% and received $272.9 million of proceeds. The OBH Senior Notes bear an annual interest rate of 4.6% payable semi-annually in arrears on May 9 and November 9, until maturity on November 9, 2022, and are fully and unconditionally guaranteed as to the payment of principal and interest by OneBeacon Ltd. Taking into effect the amortization of the original issue discount and all underwriting and issuance expenses, the OBH Senior Notes have an effective yield to maturity of approximately 4.7% per annum. The OBH Senior Notes were issued under indentures that contain restrictive covenants which, among other things, limit the ability of OneBeacon Ltd., OBH, and their respective subsidiaries to create liens and enter into sale and leaseback transactions and limits the ability of OneBeacon Ltd. and OBH to consolidate, merge or transfer its properties and assets. The indentures do not contain any financial ratios or specified levels of net worth or liquidity to which the OneBeacon Ltd. or OBH must adhere. In addition, a failure by OneBeacon Ltd. or OBH or their respective subsidiaries to pay principal and interest on covered debt, where such failure results in the acceleration of at least $75.0 million of the principal amount of covered debt, could trigger the acceleration of the OBH Senior Notes. OneBeacon Bank Facility On September 29, 2015, OneBeacon Ltd. and OneBeacon U.S. Holdings, Inc. (“OBH”), as co-borrowers and co-guarantors, entered into a revolving credit facility administered by U.S. Bank N.A. and also including BMO Harris Bank N.A., which has a total commitment of $65.0 million and has a maturity date of September 29, 2019 (the “OneBeacon Bank Facility”). As of March 31, 2017, the OneBeacon Bank Facility was undrawn. The OneBeacon Bank Facility contains various affirmative, negative and financial covenants which White Mountains considers to be customary for such borrowings, including certain minimum net worth and maximum debt to capitalization standards. MediaAlpha Bank Facility On July 23, 2015, MediaAlpha entered into a secured credit facility with Opus Bank, which has a total commitment of $20.0 million and has a maturity date of July 23, 2019 (the “MediaAlpha Bank Facility”). The MediaAlpha Bank Facility consists of a $15.0 million term loan facility, which has an outstanding balance of $11.7 million as of March 31, 2017, and a revolving loan facility for $5.0 million, which is undrawn as of March 31, 2017. During the three months ended March 31, 2017, MediaAlpha repaid $1.2 million under the term loan facility. The MediaAlpha Bank Facility carries a variable interest rate that is based on the Prime Rate, as published by the Wall Street Journal, plus a spread of 1.5% as of March 31, 2017. The MediaAlpha Bank Facility is secured by intellectual property and the common stock of MediaAlpha’s subsidiaries, and contains various affirmative, negative and financial covenants that White Mountains considers to be customary for such borrowings, including a maximum leverage ratio. Compliance At March 31, 2017, White Mountains was in compliance with the covenants under all of its debt instruments. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company and its Bermuda domiciled subsidiaries are not subject to Bermuda income tax under current Bermuda law. In the event there is a change in the current law such that taxes are imposed, the Company and its Bermuda domiciled subsidiaries would be exempt from such tax until March 31, 2035, pursuant to the Bermuda Exempted Undertakings Tax Protection Act of 1966. The Company has subsidiaries and branches that operate in various other jurisdictions around the world that are subject to tax in the jurisdictions in which they operate. The jurisdictions in which the Company’s subsidiaries and branches are subject to tax are Barbados, Gibraltar, Ireland, Israel, Luxembourg, the Netherlands, the United Kingdom and the United States. White Mountains’ income tax expense related to pre-tax income from continuing operations for the three months ended March 31, 2017, represented a net effective tax rate of 10.3%. The effective tax rate for the three months ended March 31, 2017 was lower than the U.S. statutory rate of 35% due to income generated in jurisdictions other than the United States. White Mountains’s income tax benefit related to pre-tax income from continuing operations for the three months ended March 31, 2016, represented a net effective tax rate of (114.1)%. As noted below, the effective tax rate for the three months ended March 31, 2016 was impacted by a $12.8 million tax benefit on the settlement of the 2007-2009 IRS exam. Without the tax benefit on the settlement of the 2007-2009 IRS exam there would have been tax expense, which would have resulted in a net effective tax rate that is approximately the same as the U.S. statutory rate of 35%. In arriving at the effective tax rate for the three months ended March 31, 2017 and 2016, White Mountains forecasted all income and expense items including the change in unrealized investment gains (losses) and realized investment gains (losses) for the years ending December 31, 2017 and 2016. White Mountains records a valuation allowance against deferred tax assets if it becomes more likely than not that all or a portion of a deferred tax asset will not be realized. Changes in valuation allowances from period to period are included in income tax expense in the period of change. In determining whether or not a valuation allowance, or change therein, is warranted, White Mountains considers factors such as prior earnings history, expected future earnings, carryback and carryforward periods and strategies that if executed would result in the realization of a deferred tax asset. It is possible that certain planning strategies or projected earnings in certain subsidiaries may not be feasible to utilize the entire deferred tax asset, which could result in material changes to White Mountains’s deferred tax assets and tax expense. In the first and second quarters of 2016 White Mountains recorded tax benefits of $12.8 million and $3.5 million respectively related to the settlement of IRS audits of certain subsidiaries of OneBeacon for tax years 2007-2009 and 2010-2012. In the second quarter of 2016 White Mountains recorded an increase in deferred tax assets of $0.6 million and a corresponding increase in valuation allowance of $0.6 million related to the settlement of the IRS audit of Guilford Holdings, Inc. and subsidiaries for tax year 2012. With few exceptions, White Mountains is no longer subject to U.S. federal, state, or non-U.S. income tax examinations by tax authorities for years before 2013. |
Derivatives |
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Derivatives | Derivatives Variable Annuity Reinsurance White Mountains entered into agreements to reinsure death and living benefit guarantees associated with certain variable annuities in Japan. During the third quarter of 2015, the variable annuity contracts reinsured by WM Life Re began to mature and were fully runoff by June 30, 2016. The reinsurance agreement was commuted in December 2016. The following table summarizes the pre-tax operating results of WM Life Re for the three months ended March 31, 2016.
The following summarizes realized and unrealized derivative gains (losses) recognized in other revenue for the three months ended March 31, 2016 and the carrying values, included in other assets, as of December 31, 2016 by type of instrument:
The following tables summarize the changes in White Mountains’s variable annuity reinsurance liabilities and derivative instruments for the three months ended March 31, 2016.
(1) Consists of over-the-counter instruments. (2) Consists of interest rate swaps, total return swaps, foreign currency forward contracts, and bond forwards. Fair value measurement based upon bid/ask pricing quotes for similar instruments that are actively traded, where available. Swaps for which an active market does not exist have been priced using observable inputs including the swap curve and the underlying bond index. (3) Consists of exchange traded equity index, foreign currency and interest rate futures. Fair value measurements based upon quoted prices for identical instruments that are actively traded. All of White Mountains’s variable annuity reinsurance liabilities were classified as Level 3 measurements. The fair value of White Mountains’s variable annuity reinsurance liabilities were estimated using actuarial and capital market assumptions related to the projected discounted cash flows over the term of the reinsurance agreement. Actuarial assumptions regarding future policyholder behavior, including surrender and lapse rates, were generally unobservable inputs and significantly impacted the fair value estimates. Generally, the liabilities associated with these guarantees increased with declines in the equity markets, interest rates and currencies against the Japanese yen, as well as with increases in market volatilities. White Mountains used derivative instruments to mitigate the risks associated with changes in the fair value of the reinsured variable annuity guarantees. The types of inputs used to estimate the fair value of these derivative instruments, with the exception of actuarial assumptions regarding policyholder behavior and risk margins, were generally the same as those used to estimate the fair value of variable annuity liabilities. WM Life Re entered into both over-the-counter (“OTC”) and exchange traded derivative instruments to economically hedge the liability from the variable annuity benefit guarantee. In the case of OTC derivatives, WM Life Re had exposure to credit risk for amounts that were uncollateralized by counterparties. WM Life Re’s internal risk management guidelines established net counterparty exposure thresholds that took into account OTC counterparties’ credit ratings. The OTC derivative contracts were subject to restrictions on liquidation of the instruments and distribution of proceeds under collateral agreements. In the case of exchange traded instruments, WM Life Re had exposure to credit risk for amounts uncollateralized by margin balances. WM Life Re had master netting agreements with certain of its counterparties whereby the collateral provided (held) was calculated on a net basis. The following summarizes amounts offset under master netting agreements:
(1) Amount equal to fair value of instrument as recognized in other assets (2) All derivative instruments held by WM Life Re were subject to master netting arrangements. There were no open derivatives instruments and no exposure to credit losses on OTC and exchanged traded derivatives subsequent to June 30, 2016. The following summarizes the value, collateral held or provided by WM Life Re and net exposure to credit losses on OTC and exchange traded derivative instruments by counterparty recorded within other assets as of March 31, 2016:
(1) Standard & Poor’s ratings as detailed above are: “A+” (Strong, which is the fifth highest of twenty-three creditworthiness ratings), “A” (Strong, which is the sixth highest of twenty-three creditworthiness ratings), “A-” (Strong, which is the seventh highest of twenty-three creditworthiness ratings) and “BBB+” (Adequate, which is the eighth highest of twenty-three creditworthiness ratings). |
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Forward Contracts | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives | Forward Contracts White Mountains investment portfolio contains investment grade fixed maturity investments denominated in British Pound Sterling (GBP) and common equity securities denominated in Euro (EUR). White Mountains entered into foreign currency forward contracts to manage its GBP and EUR foreign currency exposure. The contracts do not meet the criteria to be accounted for as a hedge. White Mountains monitors its exposure to foreign currency and adjusts its foreign currency positions within the risk guidelines and ranges established by senior management. While White Mountains actively manages its foreign currency positions, mismatches between movements in foreign currency rates and its foreign currency forward contract may result in foreign currency positions being outside pre-defined ranges and/or foreign currency losses. At March 31, 2017, White Mountains held $299.9 million (GBP 200.0 million and EUR 50.0 million) total gross notional value of foreign currency forward contracts. White Mountains’s foreign currency forward contracts are traded over-the-counter. The fair value of the contracts have been estimated using OTC quotes for similar instruments and accordingly, the measurements have been classified as Level 2 measurements at March 31, 2017. The net realized and unrealized derivative loss recognized in net realized and unrealized investment gains (losses) for the period ended March 31, 2017 was $3.0 million. White Mountains’s forward contracts are subject to master netting agreements. As of March 31, 2017 and December 31, 2016, the gross liability amount offset under the master netting agreement and the net amount recognized in other long-term investments was $(4.2) million and $(1.2) million. White Mountains does not hold or provide any collateral under its forward contracts. The following table summarizes the notional amount and the uncollateralized balance associated with the forward currency contracts:
(1) Standard & Poor’s ratings “A-” (Strong, which is the ninth highest of twenty-one creditworthiness ratings). |
Municipal Bond Guarantee |
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Guarantees [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Municipal Bond Guarantee Insurance | Municipal Bond Guarantee Insurance In 2012, HG Global was capitalized with $594.5 million from White Mountains and $14.5 million from non-controlling interests to fund BAM, a newly formed mutual municipal bond insurer. As of March 31, 2017, White Mountains owned 96.9% of HG Global’s preferred equity and 88.4% of its common equity. HG Global, together with its subsidiaries, provided the initial capitalization of BAM through the purchase of $503.0 million of BAM Surplus Notes. Through HG Re, which had statutory capital and surplus of $467.4 million at December 31, 2016, HG Global provides first loss reinsurance protection for policies underwritten by BAM of up to 15% of par outstanding, on a per policy basis. HG Re’s obligations to BAM are collateralized in trusts, and there is an aggregate loss limit that is equal to the total assets in the collateral trusts at any point in time. For the three months ended March 31, 2017, HG Global had pre-tax income of $6.6 million, which included $4.8 million of interest income on the BAM Surplus Notes. For the three months ended March 31, 2016, HG Global had pre-tax income of $7.3 million, which included $4.5 million of interest income on the BAM Surplus Notes. For the three months ended March 31, 2017, White Mountains reported pre-tax losses of $12.2 million on BAM that were recorded in net loss attributable to non-controlling interests, which included $4.8 million of interest expense on the BAM Surplus Notes. For the three months ended March 31, 2016, White Mountains reported pre-tax losses of $7.6 million on BAM that were recorded in net loss attributable to non-controlling interests, which included $4.5 million of interest expense on the BAM Surplus Notes. Effective January 1, 2014, HG Global and BAM agreed to change the interest rate on the BAM Surplus Notes for the five years ending December 31, 2018 from a fixed rate of 8% to a variable rate equal to the one-year U.S. treasury rate plus 300 basis points, set annually, which is 3.54% and 3.78% for 2016 and 2017. Prior to the end of 2018, BAM has the option to extend the variable rate period for an additional three years. At the end of the variable rate period, the interest rate will be fixed at the higher of the then current variable rate or 8%. BAM is required to seek regulatory approval to pay interest and principal on its surplus notes only when adequate capital resources have accumulated beyond BAM’s initial capitalization and a level that continues to support its outstanding obligations, business plan and ratings. All of the contracts issued by BAM are accounted for as insurance contracts under ASC 944-605, Financial Guarantee Insurance Contracts. Premiums are received upfront and an unearned premium revenue liability, equal to the amount of the cash received, is established at contract inception. Premium revenues are recognized in revenue over the period of the contracts in proportion to the amount of insurance protection provided using a constant rate. The constant rate is calculated based on the relationship between the par outstanding in a given reporting period compared with the sum of each of the par amounts outstanding for all periods. The following table provides a schedule of BAM’s insured obligations:
The following table is a schedule of BAM’s future premium revenues as of March 31, 2017:
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Earnings Per Share |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share Basic earnings per share amounts are based on the weighted average number of common shares outstanding including unvested restricted shares that are considered participating securities. Diluted earnings per share amounts are based on the weighted average number of common shares including unvested restricted shares and the net effect of potentially dilutive common shares outstanding. The following table outlines the Company’s computation of earnings per share from continuing operations for the three months ended March 31, 2017 and 2016. See Note 17 — “Held for Sale and Discontinued Operations”.
(1) Restricted shares issued by White Mountains receive dividends, and therefore, are considered participating securities. (2) Restricted shares outstanding vest either in equal annual installments or upon a stated date. See Note 15 — “Employee Share-Based Compensation Plans”. (3) The diluted earnings per share denominator for the three months ended March 31, 2016 includes the impact of 125,000 common shares issuable upon exercise of the non-qualified options outstanding, which resulted in 882 incremental shares outstanding over the period. The incremental shares had an effect on diluted earning per share of less than $0.01. |
Non-controlling Interest |
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Noncontrolling Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-controlling Interests | The following table details the balance of non-controlling interests included in White Mountains’s total equity and the related percentage of each consolidated entity’s total equity owned by non-controlling shareholders as of March 31, 2017 and December 31, 2016:
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Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Informartion | 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 sales, the results of operations for Sirius Group, previously reported in its own segment, and Tranzact, previously reported in the Other Operations segment, have been classified as discontinued operations and are now presented, net of related income taxes, as such in the statement of operations and comprehensive income. Prior year amounts have been reclassified to conform to the current period’s presentation. See Note 17 — “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. Significant intercompany transactions among White Mountains’s segments have been eliminated herein. Financial information for White Mountains’s segments follows:
(1) BAM manages its affairs on a statutory accounting basis. BAM’s statutory surplus includes surplus notes and is not reduced by accruals of interest expense on the 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) Includes $32.5 from MediaAlpha for the three months ended March 31, 2017, and $32.7 from MediaAlpha for the three months ended March 31, 2016. (3) Includes $30.9 from MediaAlpha for the three months ended March 31, 2017, and $30.5 from MediaAlpha for the three months ended March 31, 2016. |
Investments in Unconsolidated Affiliates Investments in Unconsolidated Affiliates |
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Mar. 31, 2017 | |
Investments in and Advances to Affiliates, Schedule of Investments [Abstract] | |
Investments in Unconsolidated Affiliates | 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. Symetra In August 2015, Symetra announced it had entered into a definitive merger agreement with Sumitomo Life Insurance Company (“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 as of December 31, 2015. 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. White Mountains also received a special dividend of $0.50 per share as part of the transaction that was paid in the third quarter of 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. White Mountains recognized $4.7 million in pre-tax net investment gains associated with Symetra in the first quarter of 2016. |
Employee Share-Based Incentive Compensation Plans |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Share-Based Incentive Compensation Plans | Employee Share-Based Incentive Compensation Plans White Mountains’s Long-Term Incentive Plan (the “WTM Incentive Plan”) provides for grants of various types of share-based and non share-based incentive awards to key employees and service providers of White Mountains. White Mountains’s share-based compensation incentive awards consist of performance shares, restricted shares and stock options. Share-Based Compensation Based on White Mountains Common Shares WTM Performance Shares Performance shares are conditional grants of a specified maximum number of common shares or an equivalent amount of cash. Awards generally vest at the end of a three-year period, are subject to the attainment of pre-specified performance goals, and are valued based on the market value of common shares at the time awards are paid. The following table summarizes performance share activity for the three months ended March 31, 2017 and 2016 for performance shares granted under the WTM Incentive Plan:
(1) WTM performance share payments in 2017 for the 2014-2016 performance cycle, which were paid in March 2017, ranged from 34% to 76% of target. WTM performance share payments in 2016 for the 2013-2015 performance cycle ranged from 140% to 142% of target. (2) Amounts include changes in assumed forfeitures, as required under GAAP. (3) Outstanding performance share awards as of March 31, 2017 and 2016 exclude 2,195 and 10,826 performance share awards granted to employees of Sirius Group. For performance shares earned in the 2014-2016 performance cycle, all performance shares earned were settled in cash. For the performance shares earned in the 2013-2015 performance cycle, the Company issued 5,000 common shares and settled the remainder in cash. If all the outstanding WTM performance shares had vested on March 31, 2017, the total additional compensation cost to be recognized would have been $30.5 million, based on accrual factors at March 31, 2017 (common share price and payout assumptions). Performance Shares granted under the WTM Incentive Plan The following table summarizes performance shares outstanding and accrued expense for performance shares awarded under the WTM Incentive Plan at March 31, 2017 for each performance cycle:
Restricted Shares The following table summarizes the unrecognized compensation cost associated with the outstanding restricted share awards for the three months ended March 31, 2017 and 2016:
(1) Restricted share awards outstanding as of March 31, 2017 and 2016 include 5,235 and 2,195 restricted shares issued to employees of Sirius Group, which was accounted for as discontinued operations. During the three months ended March 31, 2017, White Mountains issued 16,735 restricted shares that vest on January 1, 2020. During the first three months of 2016, White Mountains issued 21,215 restricted shares that vest on January 1, 2019. The unrecognized compensation cost at March 31, 2017 is expected to be recognized ratably over the remaining vesting periods. Stock Options Non-Qualified Options As March 31, 2017, the 125,000 Non-Qualified options issued to the Company’s former Chairman and CEO have been exercised. During the first quarter of 2017, 40,000 Non-Qualified Options, with an intrinsic value of $4.4 million, were exercised in exchange for 5,142 common shares with an equal total market value. During 2016, 5,000 Non-Qualified Options, with an intrinsic value of $0.4 million, were exercised at $742 per common share and 80,000 Non-Qualified Options, with an intrinsic value of $8.4 million, were exercised in exchange for 9,930 common shares with an equal total market value. Intrinsic value represents the difference between the market price of the Company’s common shares at the date of exercise less the fixed strike price of $742 per common share. The Non-Qualified Options were fully amortized as of 2011. Share-Based Compensation Based on OneBeacon Ltd. Common Shares The OneBeacon Long-Term Incentive Plan (the “OneBeacon Incentive Plan”) provides for grants to key employees of OneBeacon various types of share-based and non share-based incentive awards. OneBeacon’s share-based incentive awards include OneBeacon performance shares and restricted shares. OneBeacon Performance Shares OneBeacon performance shares are conditional grants of a specified maximum number of common shares or an equivalent amount of cash. OneBeacon performance share awards generally vest at the end of a three-year period, are subject to the attainment of pre-specified performance goals, and are valued based on the market value of OneBeacon Ltd. common shares at the time awards are paid. No OneBeacon performance shares were issued for the 2017-2019 cycle. The following table summarizes performance share activity for the three months ended March 31, 2017 and 2016 for OneBeacon performance shares granted under the OneBeacon Incentive Plan:
(1) There were no payments made in 2017 for the 2014-2016 performance cycle; those performance shares did not meet the threshold performance goals and expired. OneBeacon performance share payments in 2016 for the 2013-2015 performance cycle were at 24.3% of target. (2) Amounts include changes in assumed forfeitures, as required under GAAP. If the outstanding OneBeacon performance shares had been vested on March 31, 2017, the total additional compensation cost to be recognized would have been $1.8 million, based on accrual factors at March 31, 2017 (common share price, accumulated dividends and payout assumptions). The following table summarizes OneBeacon performance shares outstanding awarded under the OneBeacon Incentive Plan at March 31, 2017 for each performance cycle:
OneBeacon Restricted Shares The following table summarizes the unrecognized compensation cost associated with the outstanding OneBeacon restricted stock awards for the three months ended March 31, 2017 and 2016:
On February 28, 2017, OneBeacon issued 461,160 restricted shares, of which 235,000 are scheduled to cliff vest on August 28, 2018, 115,450 are scheduled to cliff vest on January 1, 2020, and 110,710 are scheduled to vest in two equal installments on February 24, 2018 and February 24, 2019. On February 24, 2016, OneBeacon issued 170,650 shares of restricted shares, of which 92,500 restricted shares vest on February 24, 2018 and 78,150 vest on January 1, 2019. On May 25, 2011, OneBeacon issued 630,000 restricted shares to its CEO that vest in four equal annual installments. The first installment vested on February 22, 2014. Concurrently with the grant of the restricted shares, 35,000 OneBeacon performance shares issued to OneBeacon’s CEO for the 2011-2013 performance share cycle were forfeited and performance share awards to OneBeacon’s CEO for the subsequent five years were reduced by 35,000 shares. As of March 31, 2017, unrecognized compensation expense of $8.6 million related to restricted stock awards is expected to be recognized over the remaining vesting periods. OneBeacon Restricted Stock Units During the first three months of 2017, the OneBeacon Compensation Committee awarded to certain employees 240,160 restricted stock units (“RSUs”) that are schedule to vest on December 31, 2019, contingent upon the approval of the OneBeacon 2017 Long-Term Incentive Plan at the 2017 Annual General Meeting to be held May 24, 2017, all of which were outstanding as of March 31, 2017. During the first three months of 2016, the OneBeacon Compensation Committee awarded to certain employees 222,449 RSUs that are scheduled to vest on December 31, 2018, of which, net of forfeiture assumptions, 208,499 were outstanding as of March 31, 2017. At vesting the RSUs will be paid out in cash or shares at the discretion of the OneBeacon Compensation Committee. For the three months ended March 31, 2017 and 2016, the expense associated with the RSUs was $0.6 million and $0.4 million. If all of the outstanding RSUs had been vested on March 31, 2017, the total additional compensation cost to be recognized would have been $7.0 million, based on current accrual factors (common share price and accumulated dividends) as of March 31, 2017. |
Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments White Mountains accounts for its financial instruments at fair value with the exception of the OBH Senior Notes and MediaAlpha Bank Facility, which are recorded as debt at face value less unamortized original issue discount. The following table summarizes the fair value and carrying value of these financial instruments as of March 31, 2017 and December 31, 2016:
The fair value estimate for the OBH Senior Notes has been determined using quoted market prices. The OBH Senior Notes are considered a Level 2 measurement. The fair value estimate for the MediaAlpha Bank Facility has been determined based on a discounted cash flows approach and is considered to be a Level 3 measurement. |
Discontinued Operations |
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Discontinued Operations | Held for Sale and Discontinued Operations Sirius Group On April 18, 2016, White Mountains completed the sale of Sirius Group to CMI for approximately $2.6 billion. $161.8 million of this amount was used to purchase certain assets to be retained by White Mountains out of Sirius Group, including shares of OneBeacon. The amount paid at closing was based on an estimate of Sirius Group’s closing date tangible common shareholder’s equity. During 2016, White Mountains recorded $363.2 million of gain from sale of Sirius Group in discontinued operations in the statement of operations and $113.3 million in other comprehensive income from discontinued operations. Through April 18, 2016, Sirius Group’s results are reported as discontinued operations and assets and liabilities held for sale within White Mountains’s GAAP financial statements. Assets held for sale did not include White Mountains’s investment in OneBeacon and certain other investments that are in the Sirius Group legal entities. As of December 31, 2015, the value of these investments, net of related tax effects, was $686.2 million, of which $528.6 million related to Symetra. Net loss from discontinued operations does not include White Mountains’s net investment income and realized and unrealized investment gains and losses associated with these investments. For the three months ended March 31, 2016, $4.1 million of realized and unrealized investment gains and losses, net of related tax effects, that are included in the Sirius Group legal entities have been excluded from net loss from discontinued operations. For the three months ended March 31, 2016, White Mountains recorded $0.9 million of net loss from discontinued operations and $37.2 million of other comprehensive income from Sirius Group. Tranzact On June 9, 2016, White Mountains announced that it had entered into an agreement for the sale of Tranzact to an affiliate of Clayton, Dubilier & Rice, LLC. On July 21, 2016, White Mountains completed the sale of Tranzact and received net proceeds of $221.3 million at closing. On October 5, 2016, White Mountains received additional proceeds of $1.2 million following the release of the post-closing purchase price adjustment escrow. See Note 2 — “Significant Transactions”. During 2016, White Mountains recorded a $51.9 million gain from the sale of Tranzact in discontinued operations, which included a $30.2 million tax expense for the reversal of a tax valuation allowance that is offset by a tax benefit recorded in continuing operations. In the first quarter of 2017, White Mountains recorded a $1.0 million reduction to the gain from sale of Tranzact in discontinued operations as a result of 2016 tax payments. During 2016, White Mountains recognized a $21.4 million tax benefit in continuing operations related to the reversal of a valuation allowance that resulted from the gain on the sale of Tranzact recognized within discontinued operations. This tax benefit was recorded in continuing operations with an offsetting amount of net tax expense recorded in discontinued operations, $30.2 million of tax expense was recorded to gain from sale of Tranzact in discontinued operations and a $8.8 million tax benefit was recorded to net income from discontinued operations. Through July 21, 2016, Tranzact’s results of operations are reported as discontinued operations and assets and liabilities held for sale within White Mountains’s GAAP financial statements. For the three months ended March 31 2016, White Mountains recorded a net loss from discontinued operations of $2.0 million from Tranzact. Star & Shield On July 1, 2016, SSIE voluntarily ceased writing new policies. As a result, White Mountains wrote off its investment in SSIE Surplus Notes which resulted in a $21.0 million total decrease to net income attributable to White Mountains's common shareholders and a corresponding increase to net income attributable to non-controlling interests. On January 13, 2017, White Mountains reached an agreement to sell Star & Shield and its investment in SSIE Surplus Notes to K2 Insurance Services, LLC and the sale was completed on March 7, 2017. White Mountains did not recognize any gain or loss on the sale. Through December 31, 2016, Star & Shield’s assets and liabilities are reported as held for sale within White Mountains’s GAAP financial statements. |
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Discontinued Operations [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations | Summary of Reclassified Balances and Related Items Net Assets Held for Sale The following summarizes the assets and liabilities associated with business classified as held for sale. At December 31, 2016, amounts presented relate to Star & Shield and SSIE.
Net Income (Loss) from Discontinued Operations The following summarizes the results of operations, including related income taxes associated with the business classified as discontinued operations. For the three months ended March 31, 2016, the amounts presented relate to Sirius Group and Tranzact. The results of discontinued operations from Sirius Group and Tranzact up to the closing date of the transaction inure to White Mountains.
Net Change in Cash from Discontinued Operations The following summarizes the net change in cash, including income tax (payment to) refund from national governments and interest paid associated with the business classified as discontinued operations:
Earnings Per Share Basic earnings per share amounts are based on the weighted average number of common shares outstanding including unvested restricted shares that are considered participating securities. Diluted earnings per share amounts are based on the weighted average number of common shares including unvested restricted shares and the net effect of potentially dilutive common shares outstanding. The following table outlines the computation of earnings per share for discontinued operations for the three months ended March 31, 2017 and 2016:
(1) Restricted shares issued by White Mountains contain dividend participation features, and therefore, are considered participating securities. (2) Net earnings attributable to White Mountains’s common shareholders, net of restricted share amounts, is equal to undistributed earnings for the three months ended March 31, 2017 and 2016. (3) Restricted common shares outstanding vest either in equal annual installments or upon a stated date. See Note 15 - “Employee Share-Based Compensation Plans”. (4) The diluted earnings per share denominator for the three months ended March 31, 2016 includes the impact of 125,000 common shares issuable upon exercise of the non-qualified options outstanding, which results in 882 incremental shares outstanding over the period. The incremental shares had an effect on diluted earning per share of less than $0.01 per share. |
Contingencies |
3 Months Ended |
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Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies Legal Contingencies White Mountains, and the insurance and reinsurance industry in general, are routinely subject to claims related litigation and arbitration in the normal course of business, as well as litigation and arbitration that do not arise from, or are directly related to, claims activity. White Mountains’s estimates of the costs of settling matters routinely encountered in claims activity are reflected in the reserves for unpaid loss and LAE. See Note 3 — “Loss and Loss Adjustment Expense Reserves”. White Mountains considers the requirements of ASC 450 when evaluating its exposure to non-claims related litigation and arbitration. ASC 450 requires that accruals be established for litigation and arbitration if it is probable that a loss has been incurred and it can be reasonably estimated. ASC 450 also requires that litigation and arbitration be disclosed if it is probable that a loss has been incurred or if there is a reasonable possibility that a loss may have been incurred. Although the ultimate outcome of claims and non-claims related litigation and arbitration, and the amount or range of potential loss at any particular time, is often inherently uncertain, management does not believe that the ultimate outcome of such claims and non-claims related litigation and arbitration will have a material adverse effect on White Mountains’s financial condition, results of operations or cash flows. The following summarizes significant legal contingencies, ongoing non-claims related litigation or arbitration as of March 31, 2017: Tribune Company In June 2011, Deutsche Bank Trust Company Americas, Law Debenture Company of New York and Wilmington Trust Company (collectively referred to as “Plaintiffs”), in their capacity as trustees for certain senior notes issued by the Tribune Company (“Tribune”), filed lawsuits in various jurisdictions (the “Noteholder Actions”) against numerous defendants including OneBeacon, OneBeacon-sponsored benefit plans and other affiliates of White Mountains in their capacity as former shareholders of Tribune seeking recovery of the proceeds from the sale of common stock of Tribune in connection with Tribune's leveraged buyout in 2007 (the “LBO”). Tribune filed for bankruptcy in 2008 in the Delaware bankruptcy court (the “Bankruptcy Court”). The Bankruptcy Court granted Plaintiffs permission to commence these LBO-related actions, and in 2011, the Judicial Panel on Multidistrict Litigation granted a motion to consolidate the actions for pretrial matters and transferred all such proceedings to the U.S. District Court for the Southern District of New York (the “SDNY”). Plaintiffs seek recovery of the proceeds received by the former Tribune shareholders on a theory of constructive fraudulent transfer asserting that Tribune purchased or repurchased its common shares without receiving fair consideration at a time when it was, or as a result of the purchases of shares, was rendered, insolvent. OneBeacon and OneBeacon-sponsored benefit plans received approximately $32.0 million, for Tribune common stock tendered in connection with the LBO. The Court granted an omnibus motion to dismiss the Noteholder Actions in September 2013 and Plaintiffs’ appealed. On March 29, 2016, a three judge panel of the U.S Second Circuit Court of Appeals affirmed the dismissal of the Noteholder Actions. On July 22, 2016, the Plaintiff's petition to the Second Circuit for reconsideration or for a rehearing en banc was denied in full. On September 9, 2016 the Plaintiffs filed for a writ of certiorari, seeking review in the U. S. Supreme Court. In addition, OneBeacon, OneBeacon-sponsored benefit plans and other affiliates of White Mountains in their capacity as former shareholders of Tribune, along with thousands of former Tribune shareholders, have been named as defendants in an adversary proceeding brought by the Official Committee of Unsecured Creditors of the Tribune Company (the “Committee”), on behalf of the Tribune Company, which seeks to avoid the repurchase of shares by Tribune in the LBO on a theory of intentional fraudulent transfer (the “Committee Action”). Tribune emerged from bankruptcy in 2012, and a litigation trustee replaced the Committee as plaintiff in the Committee Action. This matter was consolidated for pretrial matters with the Noteholder Actions in the SDNY and was stayed pending the motion to dismiss in the Noteholder Actions. An omnibus motion to dismiss the shareholder defendants in the Committee Action was filed in May 2014 and the motion was granted on January 6, 2017. The plaintiff has requested permission to move the SDNY to certify the decision as a final judgment capable of immediate appeal. No amount has been accrued in connection with this matter as of March 31, 2017, as the amount of loss, if any, cannot be reasonably estimated. |
OneBeacon Pension Plan |
3 Months Ended |
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Mar. 31, 2017 | |
Compensation Related Costs [Abstract] | |
OneBeacon Pension Plan | Note 19. OneBeacon Pension Plan OneBeacon previously sponsored the OneBeacon qualified pension plan (the “Qualified Plan”). During the three months ended March 31, 2016, the Qualified Plan finalized its termination by purchasing group annuity contracts from the Principal Financial Group (“Principal Financial”), and making lump sum distributions to Qualified Plan participants electing such payments, which eliminated the remaining Qualified Plan liability, and also ceased administratively paying benefits. As a result of these transactions, the Company recognized a pre-tax pension settlement charge of $0.3 million during the three months ended March 31, 2016, and no longer has a projected benefit obligation with respect to the Qualified Plan. OneBeacon transferred $47.1 million of excess invested assets from the Qualified Plan into the trust supporting the OneBeacon 401(k) Savings and Employee Stock Ownership Plan (“KSOP”), which OneBeacon determined to be the Qualified Replacement Plan (“QRP”) with $13.8 million of excess invested assets remaining in the Qualified Plan trust as of March 31, 2017 in order to wind-down potential post-termination obligations of that plan, as approved by way of a March 2016 private letter ruling from the IRS. The invested assets related to both the legacy Qualified Plan trust and the QRP are included in other assets and are accounted for at fair value with related income recognized in net other revenues. OneBeacon continues to sponsor a non-qualified, non-contributory, defined benefit pension plan (“Non-qualified Plan”) covering certain employees who were employed as of December 31, 2001 and former employees who had met the eligibility requirements, as well as retirees. The Non-qualified Plan was frozen and curtailed in 2002, resulting in the pension benefit obligation being equal to the accumulated benefit obligation. The benefits are based primarily on years of service and employees’ compensation through December 31, 2002. OneBeacon’s funding policy is generally to contribute amounts to satisfy actual disbursements for the calendar year. |
Subsequent Event Subsequent Event |
3 Months Ended |
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Mar. 31, 2017 | |
Subsequent Event [Line Items] | |
Subsequent Events [Text Block] | Note 20. Subsequent Event On May 2, 2017, OneBeacon announced it had entered into a definitive agreement to be acquired by Intact Financial Corporation in an all-cash transaction for $18.10 per share, or roughly 1.65x tangible book value (the “Transaction”). In addition, White Mountains entered into a definitive agreement to vote its shares of OneBeacon Ltd. in favor of the “Transaction”. White Mountains owns 75.7% of OneBeacon’s outstanding common shares, representing 96.9% of the voting power. White Mountains expects to receive gross proceeds of $1.3 billion from the Transaction, which is expected to close in the fourth quarter of 2017. It is subject to regulatory approval and other customary closing conditions. |
Summary of Significant Accounting Policies (Policies) |
3 Months Ended |
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Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Recently Adopted Changes in Accounting Principles and Recently Issued Accounting Pronouncements | Recently Adopted Changes in Accounting Principles Stock Compensation Effective January 1, 2017, White Mountains adopted ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (ASC 718) which simplifies certain aspects of the accounting for share-based compensation. The new guidance provides an accounting policy election to account for forfeitures by either applying an assumption, as required under existing guidance, or by recognizing forfeitures when they actually occur. At adoption, White Mountains did not change its accounting policy for forfeitures, which is to apply an assumed forfeiture rate. The new guidance has also changed the threshold for partial cash settlement to settle statutory withholding requirements for equity classified awards, increasing the threshold up to the maximum statutory tax rate. As a result of adoption White Mountains reported $6.5 million and $5.8 million of statutory withholding tax payments made in connection with the settlement of restricted shares as financing cash flows for the three-month periods ended March 31, 2017 and 2016. Such payments were classified as operating cash flows prior to adoption. In addition, the new guidance changed the treatment for excess tax benefits which arise from the difference between the deduction for tax purposes and the compensation costs recognized for financial reporting. Under the new guidance, a reporting entity will recognize excess tax benefits or expense in current period earnings, regardless of whether it is in a taxes payable position. Short-Duration Contracts Effective December 31, 2016, White Mountains adopted ASU 2015-09, Disclosures about Short Duration Contracts (ASC 944), which requires expanded footnote disclosures about loss and loss adjustment expense (“LAE”) reserves. Upon adoption, White Mountains modified its footnote disclosures to include loss development tables on a disaggregated basis by accident year and a reconciliation of loss development data to the loss and LAE reserves reflected on the balance sheet. The footnotes disclosures have also been expanded to include information about claim frequency data, including a description of how the claims frequency data is measured. Prior year disclosures have been modified to conform to the new disclosures. See Note 3 — “Reserves for Unpaid Losses and Loss Adjustment Expenses”. Business Combinations - Measurement Period Adjustments Effective January 1, 2016, White Mountains adopted ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments, which requires adjustments to provisional amounts recorded in connection with a business combination that are identified during the measurement period to be recorded in the reporting period in which the adjustment amounts are determined, rather than as retroactive adjustments to prior periods. White Mountains has not recognized any adjustments to estimated purchase accounting amounts for the year to date period ended March 31, 2016 and accordingly, there was no effect to White Mountains’s financial statements upon adoption. Amendments to Consolidation Analysis On January 1, 2016, White Mountains adopted ASU 2015-02, Amendments to the Consolidation Analysis (ASC 810) which amends the guidance for determining whether an entity is a variable interest entity (“VIE”). ASU 2015-02 eliminates the separate consolidation guidance for limited partnerships and, with it, the presumption that a general partner should consolidate a limited partnership. In addition, ASU 2015-02 changes the guidance for determining if fee arrangements qualify as variable interests and the effect fee arrangements have on the determination of the primary beneficiary. Adoption of ASU 2015-02 did not affect the consolidation analysis for any of White Mountains’s investments. Share-Based Compensation Awards On January 1, 2016, White Mountains adopted ASU 2014-12, Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (ASC 718). The new guidance requires that a performance target that affects vesting and that can be achieved after the requisite service period be treated as a performance condition. Compensation cost is to be recognized in the period when it becomes probable the performance target will be achieved in an amount equal to the compensation cost attributable to the periods for which service has been rendered. Adoption did not have a significant effect on White Mountains’s financial position, results of operations, cash flows, presentation or disclosures. Debt Issuance Costs On January 1, 2016, White Mountains adopted ASU 2015-03, Imputation of Interest (ASC 835), which requires debt issuance costs to be presented as a deduction from the carrying amount of the related debt, consistent with the treatment required for debt discounts. The new guidance requires amortization of debt issuance costs to be classified within interest expense and also requires disclosure to the debt’s effective interest rate. White Mountains has applied the guidance retrospectively and as a result has reclassified $1.9 million of unamortized debt issuance costs from other assets to debt as of December 31, 2015, reflecting these amounts as a reduction from the related debt, and has modified its disclosures to include the required effective interest rate on its debt. As of March 31, 2017, the unamortized debt issuance costs included in debt is $1.8 million. Recently Issued Accounting Pronouncements Cash Flow Statement In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (ASC 230), which addresses the classification and presentation of certain items, including debt prepayment and extinguishment costs, contingent consideration payments made after a business combination and distributions received from equity method investees, for which there was diversity in practice. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows: Restricted Cash (ASC 230). Under current guidance, restricted amounts of cash or cash equivalents are excluded from the cash flow statement. The new guidance requires restricted cash and restricted cash equivalents to be included in the reconciliation of beginning and end-of-period amounts presented on the statement of cash flows. In addition, the new guidance requires a description of the nature of the changes in restricted cash and cash equivalents during the periods presented. The updated guidance in ASU 2016-15 and ASU 2016-18 are both effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted. White Mountains is evaluating the expected impact of this new guidance. Credit Losses In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (ASC 326), which establishes new guidance for the recognition of credit losses for financial assets measured at amortized cost. The new ASU, which applies to financial assets that have the contractual right to receive cash requires reporting entities to estimate the credit losses expected over the life of a credit exposure using historical information, current information and reasonable and supportable forecasts that affect the collectability of the financial asset. The types of assets included in the scope of the new guidance includes premium receivables, reinsurance recoverables and loans. ASU 2016-13 is effective for annual periods beginning after January 1, 2020, including interim periods. White Mountains is evaluating the expected impact of this new guidance. Leases In February 2016, the FASB issued ASU 2016-02, Leases (ASC 842). The new guidance requires lessees to recognize lease assets and liabilities on the balance sheet for both operating and financing leases, with the exception of leases with an original term of 12 months or less. Under existing guidance recognition of lease assets and liabilities is not required for operating leases. The lease assets and liabilities to be recognized are both measured initially based on the present value of the lease payments. Under the new guidance, a sale-leaseback transaction must meet the recognition criteria under ASC 606, Revenues in order to be accounted for as sale. The new guidance is effective for White Mountains for years beginning after December 15, 2018, including interim periods therein. White Mountains is evaluating the expected impact of this new guidance and available adoption methods. Financial Instruments - Recognition and Measurement In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (ASC 825-10). The new ASU modifies the guidance for financial instruments, including investments in equity securities. Under the new guidance, all equity securities with readily determinable fair values are required to be measured at fair value with changes therein recognized through current period earnings. In addition, the new ASU requires a qualitative assessment for equity securities without readily determinable fair values to identify impairment, and for impaired equity securities to be measured at fair value. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, with early adoption permitted. White Mountains measures its portfolio of investment securities at fair value with changes therein recognized through current period earnings accordingly, does not expect the adoption of ASU 2016-01 to have a significant impact on its financial statements. Revenue Recognition In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (ASC 606), which modifies the guidance for revenue recognition. Under ASU 2014-09, revenue is to be recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for goods or services transferred to customers. The new guidance sets forth the steps to be followed to recognize revenue: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue when (or as) the entity satisfies a performance obligation. Subsequently, the FASB issued additional ASUs clarifying the guidance in and providing implementation guidance for ASU 2014-09. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers, which delays the effective date of ASU 2014-09 and all related ASUs to annual and interim reporting periods beginning after December 15, 2017. Most of White Mountains’s revenue from customers relates to insurance contracts, which are excluded from the scope of ASU 2014-09, as are investment income and investments gains and losses. However, the new guidance is applicable to some of White Mountains’s revenue streams, including certain fee arrangements as well as commissions and other non-insurance revenues. White Mountains is evaluating the new guidance, but does not expect ASU 2014-09 to have a significant effect on recognition of White Mountains’s non-insurance revenues from customers. |
Significant Transactions (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||
Reconciliation to the increase in book value | A reconciliation of the gain reported in discontinued operations to the impact to White Mountains's book value is as follows:
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Loss and Loss Adjustment Expense Reserves (Tables) |
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Insurance Loss Reserves [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loss and loss adjustment expense ("LAE") reserve activities | The following table summarizes the loss and loss adjustment expense (“LAE”) reserve activities of White Mountains’s insurance and reinsurance subsidiaries for the three months ended March 31, 2017 and 2016:
(1) Resulting from the sale of Star & Shield in the first quarter of 2017, SSIE is no longer consolidated. See Note 17 — “Held for Sale and Discontinued Operations”. |
Investment Securities (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pre-tax net investment income | Pre-tax net investment income for the three months ended March 31, 2017 and 2016 consisted of the following:
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Schedule of Realized and Unrealized Gain (Loss) on Investments | Net realized and unrealized investment gains (losses) consisted of the following:
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Realized Gain (Loss) on Investments | Net realized investment gains (losses) for the three months ended March 31, 2017 and 2016 consisted of the following:
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Schedule of unrealized gain (loss) on investments | The following table summarizes net unrealized investment gains (losses) and changes in the carrying value of investments measured at fair value:
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Net unrealized investment gains (losses) for Level 3 investments | The following table summarizes the amount of total gains (losses) included in earnings attributable to unrealized investment gains (losses) for Level 3 investments for the three months ended March 31, 2017 and 2016:
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Investment holdings, equity securities, convertible fixed maturities and other long-term investments | The cost or amortized cost, gross unrealized investment gains (losses), net foreign currency gains (losses), and carrying values of White Mountains’s fixed maturity investments as of March 31, 2017 and December 31, 2016 were as follows:
The cost or amortized cost, gross unrealized investment gains (losses), net foreign currency gains (losses), and carrying values of White Mountains’s common equity securities and other long-term investments as of March 31, 2017 and December 31, 2016 were as follows:
Other Long-term Investments Other long-term investments consist of the following as of March 31, 2017 and December 31, 2016:
(1) See Fair Value Measurements by Level table. (2) White Mountains holds a 20% ownership interest in OneTitle Holdings LLC (“OTH”) and has provided a $10.0 million surplus note facility under which OTH’s wholly-owned insurance subsidiary, OneTitle National Guaranty Company, Inc. may, under certain circumstances, draw funds. At March 31, 2017, no funds had been drawn on the surplus note facility. (3) Fund accounted for using the proportional amortization method. |
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Other long-term investments | The following table summarizes investments in hedge funds and private equity funds by investment objective and sector as of March 31, 2017 and December 31, 2016:
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Fair value of hedge funds subject to restrictions on redemption frequency and advance notice period requirements for investments in active hedge funds | The following summarizes the March 31, 2017 fair value of hedge funds subject to restrictions on redemption frequency and advance notice period requirements for investments in active hedge funds:
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Fair Value of private equity funds subject to lock-up periods | As of March 31, 2017, investments in private equity funds were subject to lock-up periods as follows:
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Par Value to Fair Value Reconciliation of Surplus Notes | Below is a table illustrating the valuation adjustments taken to arrive at estimated fair value of the OneBeacon Surplus Notes as of March 31, 2017 and December 31, 2016:
(3) Represents impact of liquidity spread to account for OneBeacon's sole ownership of the notes, lack of a trading market, and unique nature of the ongoing regulatory approval process. The unfavorable year-to-date change in impact is due largely to an increase in the assumed liquidity spread to 400 basis points at March 31, 2017 from 250 basis points at December 31, 2016. (4) The decrease in the fair value of the surplus notes during the three months ended March 31, 2017 was driven primarily by an increase in the assumed liquidity spread, partially offset by the narrowing of non-investment grade credit spreads as well as the time value of money benefit generated by moving three months closer to modeled cash receipts. |
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Fair value measurements by level, investment securities | The following tables summarize White Mountains’s fair value measurements for investments as of March 31, 2017 and December 31, 2016 by level. The major security types were based on the legal form of the securities. White Mountains has disaggregated its fixed maturity investments based on the issuing entity type, which impacts credit quality, with debt securities issued by U.S. government entities carrying minimal credit risk, while the credit and other risks associated with other issuers, such as corporations, foreign governments, municipalities or entities issuing mortgage and asset-backed securities vary depending on the nature of the issuing entity type. White Mountains further disaggregates debt securities issued by corporations and common equity securities by industry sector because investors often reference commonly used benchmarks and their subsectors to monitor risk and performance. Accordingly, White Mountains has further disaggregated these asset classes into subclasses based on the similar sectors and industry classifications it uses to evaluate investment risk and performance against commonly used benchmarks, such as the Bloomberg Barclays U.S. Intermediate Aggregate and S&P 500 indices. The fair value measurements for derivative assets associated with White Mountains’s variable annuity business are presented in Note 9.
(1) ETFs traded on foreign exchanges are priced using the fund's published NAV to account for the difference in market close times and are therefore designated a level 2 measurement. (2) Excludes carrying value of $3.0 associated with other long-term investment limited partnerships accounted for using the equity method and $(4.2) related to foreign currency forward contracts. Excludes carrying value of $11.7 associated with a tax advantaged federal affordable housing development fund accounted for using the proportional amortization method. (3) Excludes carrying value of $147.2 associated with hedge funds and private equity funds for which fair value is measured at NAV using the practical expedient. (4) Short-term investments are measured at amortized cost, which approximates fair value.
(1) ETFs traded on foreign exchanges are priced using the fund's published NAV to account for the difference in market close times and are therefore designated a level 2 measurement. (2) Excludes carrying value of $3.5 associated with other long-term investment limited partnerships accounted for using the equity method and $(1.2) related to foreign currency forward contracts. Excludes carrying value of $12.3 associated with a tax advantaged federal affordable housing development fund accounted for using the proportional amortization method. (3) Excludes carrying value of $131.0 associated with hedge funds and private equity funds for which fair value is measured at NAV using the practical expedient. (4) Includes carrying value of $6.6 in fixed maturity investments and $0.1 in short-term investments that are classified as assets held for sale related to SSIE. (5) Short-term investments are measured at amortized cost, which approximates fair value. |
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Debt securities issued by corporations, credit ratings | The following table summarizes the ratings of debt securities issued by corporations held in White Mountains’s investment portfolio as of March 31, 2017 and December 31, 2016:
(1) Credit ratings are assigned based on the following hierarchy: 1) Standard & Poor’s Financial Services LLC ("Standard & Poor's") and 2) Moody's Investor Services ("Moody’s"). |
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Mortgage-backed, asset-backed securities | The following table summarizes the carrying value of White Mountains’s mortgage and asset-backed securities as of March 31, 2017 and December 31, 2016:
(1) Represents publicly traded mortgage-backed securities which carry the full faith and credit guaranty of the U.S. government (i.e., GNMA) or are guaranteed by a government sponsored entity (i.e., FNMA, FHLMC). |
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Schedule of security issuance years of investments in non-agency RMBS and non-agency CMBS securities | The security issuance years of White Mountains’s investments in non-agency RMBS and non-agency CMBS securities as of March 31, 2017 are as follows:
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Non-agency residential mortgage securities, collateral quality and tranche levels | The classification of the underlying collateral quality and the tranche levels of White Mountains’s non-agency RMBS securities are as follows as of March 31, 2017:
(1) At issuance, Super Senior, or in the case of resecuritization, the underlying securities, were rated “AAA” by Standard & Poor’s, “Aaa” by Moody’s or “AAA” by Fitch and were senior to other “AAA” or “Aaa” bonds. (2) At issuance, Senior, or in the case of resecuritization, the underlying securities, were rated “AAA” by Standard & Poor’s, “Aaa” by Moody’s or “AAA” by Fitch and were senior to non-“AAA” or non-“Aaa” bonds. (3) At issuance, Subordinate were not rated “AAA” by Standard & Poor’s, “Aaa” by Moody’s or “AAA” by Fitch and were junior to “AAA” or “Aaa” bonds. |
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Non-agency commercial mortgage securities, type of interest rate and tranche levels | The amount of fixed and floating rate securities and their tranche levels of White Mountains’s non-agency CMBS securities are as follows as of March 31, 2017:
(1) At issuance, Super Senior, or in the case of resecuritization, the underlying securities, were rated “AAA” by Standard & Poor’s, “Aaa” by Moody’s or “AAA” by Fitch Ratings (“Fitch”) and were senior to other “AAA” or “Aaa” bonds. (2) At issuance, Senior, or in the case of resecuritization, the underlying securities, were rated “AAA” by Standard & Poor’s, “Aaa” by Moody’s or “AAA” by Fitch and were senior to non-“AAA” or non-“Aaa” bonds. (3) At issuance, Subordinate were not rated “AAA” by Standard & Poor’s, “Aaa” by Moody’s or “AAA” by Fitch and were junior to “AAA” or “Aaa” bonds. |
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Rollforward of fair value investments by level | The following tables summarize the changes in White Mountains’s fair value measurements by level for the three months ended March 31, 2017 and 2016:
(1) Excludes carrying value of $3.5 and $3.0 at January 1, 2017 and March 31, 2017 associated with other long-term investments accounted for using the equity method and $(1.2) and $(4.2) related to foreign currency forward contracts. Excludes carrying value of $12.3 and $11.7 at January 1, 2017 and March 31, 2017 associated with a tax advantaged federal affordable housing development fund accounted for using the proportional amortization method. (2) Excludes carrying value of $287.1 and $230.9 at January 1, 2017 and March 31, 2017 associated with short-term investments, of which $0.1 is classified as held for sale at January 1, 2017. (3) Investments for which fair value is measured at NAV using the practical expedient are no longer classified within the fair value hierarchy. See Note 1 — “Summary of Significant Accounting Policies”. (4) Includes carrying value of $6.6 of fixed maturity investments at January 1, 2017 that is classified as assets held for sale related to SSIE.
(1) Excludes carrying value of $3.8 and $3.7 at January 1, 2016 and March 31, 2016 associated with other long-term investment limited partnerships accounted for using the equity method. Excludes carrying value of $14.7 and $14.1 at January 1, 2016 and March 31, 2016 associated with a tax advantaged federal affordable housing development fund accounted for using the proportional amortization method. (2) Excludes carrying value of $211.3 million and $261.7 million at January 1, 2016 and March 31, 2016 associated with short-term investments of which $0.1 and $0.3 is classified as held for sale at January 1, 2016 and March 31, 2016. (3) Investments for which fair value is measured at NAV using the practical expedient are no longer classified within the fair value hierarchy. See Note 1 — “Summary of Significant Accounting Policies”. (4) Includes carrying value of $9.5 and $9.4 of fixed maturity investments at January 1, 2016 and March 31, 2016 that is classified as assets held for sale related to SSIE. |
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Schedule of significant unobservable inputs used in estimating the fair value of investment securities | The following summarizes significant unobservable inputs used in estimating the fair value of investment securities, other than hedge funds and private equity funds, classified within Level 3 as of March 31, 2017 and December 31, 2016. The fair value of investments in hedge funds and private equity funds are generally estimated using the NAV of the funds.
(1) Includes the net unrealized investment gains (losses) associated with foreign currency; foreign currency effects based on observable inputs. (2) Stochastic modeling supporting the fair value estimation indicates that the average percentage of discounted payments missed on the seller priority note is roughly equivalent to that of a conventional debt security with a credit rating of ‘B’. The corresponding credit spread, increased to 400 bps as of March 31, 2017 from 250 bps as of December 31, 2016 to reflect an increase in the assumed liquidity spread for the seller priority note. (3) Stochastic modeling supporting the fair value estimation indicates that the average percentage of discounted payments missed on the pari passu note is roughly equivalent to that of a conventional debt security with a credit rating of ‘CCC’. The corresponding credit spread, increased to 400 bps as of March 31, 2017 from 250 bps as of December 31, 2016 to reflect an increase in the assumed liquidity spread for the pari passu note. (4) As of March 31, 2017, OneBeacon has assumed for the purpose of estimating fair value that all accrued but unpaid interest on the seller priority note since the date of issuance is paid in 2020, with regular annual interest payments beginning thereafter. Principal repayments are assumed to begin on a graduated basis in 2030. (5) As of March 31, 2017, OneBeacon has assumed for the purpose of estimating fair value that regular annual interest payments on the pari passu note begin in 2021. All accrued but unpaid interest since the date of issuance is assumed to be paid in 2025. Principal repayments are assumed to begin on a graduated basis in 2035. (6) Credit ratings are assigned based on the following hierarchy: 1) Standard and Poor's and 2) Moody’s.
(1) Includes the net unrealized investment gains (losses) associated with foreign currency; foreign currency effects based on observable inputs. (2) Stochastic modeling supporting the fair value estimation indicates that the average percentage of discounted payments missed on the seller priority note is roughly equivalent to that of a conventional debt security with a credit rating of ‘B’. The corresponding credit spread increased by an additional 250 basis points to reflect both a liquidity discount for a private debt instrument and regulatory payment approval uncertainty, was added to the treasury rate to determine the discount rate for the seller priority note. (3) Stochastic modeling supporting the fair value estimation indicates that the average percentage of discounted payments missed on the pari passu note is roughly equivalent to that of a conventional debt security with a credit rating of ‘CCC’. The corresponding credit spread increased by an additional 250 basis points to reflect both a liquidity discount for a private debt instrument and regulatory payment approval uncertainty, was added to the treasury rate to determine the discount rate for the pari passu note. (4) As of December 31, 2016, OneBeacon has assumed for the purpose of estimating fair value that all accrued but unpaid interest on the seller priority note since the date of issuance is paid in 2020, with regular annual interest payments beginning thereafter. Principal repayments are assumed to begin on a graduated basis in 2030. (5) As of December 31, 2016, OneBeacon has assumed for the purpose of estimating fair value that regular annual interest payments on the pari passu note begin in 2021. All accrued but unpaid interest since the date of issuance is assumed to be paid in 2025. Principal repayments are assumed to begin on a graduated basis in 2035. |
Goodwill and Other Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Intangible Assets and Goodwill | The following table shows the change in goodwill and other intangible assets:
(1) See Note 17 — “Held for Sale and Discontinued Operations”. |
Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of debt outstanding | White Mountains’s debt outstanding as of March 31, 2017 and December 31, 2016 consisted of the following:
(1) Effective rate considers the effect of the debt issuance costs. |
Derivatives (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Collateral | White Mountains does not hold or provide any collateral under its forward contracts. The following table summarizes the notional amount and the uncollateralized balance associated with the forward currency contracts:
(1) Standard & Poor’s ratings “A-” (Strong, which is the ninth highest of twenty-one creditworthiness ratings). |
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Variable Annuity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pre-tax operating results of WM Life Re | The following table summarizes the pre-tax operating results of WM Life Re for the three months ended March 31, 2016.
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Realized and unrealized derivative gains (losses) recognized in other revenues and carrying values, by the type of instrument | The following summarizes realized and unrealized derivative gains (losses) recognized in other revenue for the three months ended March 31, 2016 and the carrying values, included in other assets, as of December 31, 2016 by type of instrument:
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Fair Value of Assets and Liabilities Measured on Recurring and Non-recurring Basis Table | The following tables summarize the changes in White Mountains’s variable annuity reinsurance liabilities and derivative instruments for the three months ended March 31, 2016.
(1) Consists of over-the-counter instruments. (2) Consists of interest rate swaps, total return swaps, foreign currency forward contracts, and bond forwards. Fair value measurement based upon bid/ask pricing quotes for similar instruments that are actively traded, where available. Swaps for which an active market does not exist have been priced using observable inputs including the swap curve and the underlying bond index. (3) Consists of exchange traded equity index, foreign currency and interest rate futures. Fair value measurements based upon quoted prices for identical instruments that are actively traded. |
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Exchange traded and OTC derivative instruments | The following summarizes amounts offset under master netting agreements:
(1) Amount equal to fair value of instrument as recognized in other assets (2) All derivative instruments held by WM Life Re were subject to master netting arrangements. |
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Net exposure to collateral | The following summarizes the value, collateral held or provided by WM Life Re and net exposure to credit losses on OTC and exchange traded derivative instruments by counterparty recorded within other assets as of March 31, 2016:
(1) Standard & Poor’s ratings as detailed above are: “A+” (Strong, which is the fifth highest of twenty-three creditworthiness ratings), “A” (Strong, which is the sixth highest of twenty-three creditworthiness ratings), “A-” (Strong, which is the seventh highest of twenty-three creditworthiness ratings) and “BBB+” (Adequate, which is the eighth highest of twenty-three creditworthiness ratings). |
Municipal Bond Guarantee (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Guarantees [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Municipal Bond Guarantee Insured Obligations | The following table provides a schedule of BAM’s insured obligations:
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Financial Guarantee Insurance Contracts, Premium Received over Contract Period [Table Text Block] | The following table is a schedule of BAM’s future premium revenues as of March 31, 2017:
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Earnings Per Share (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of earnings per share | The following table outlines the Company’s computation of earnings per share from continuing operations for the three months ended March 31, 2017 and 2016. See Note 17 — “Held for Sale and Discontinued Operations”.
(1) Restricted shares issued by White Mountains receive dividends, and therefore, are considered participating securities. (2) Restricted shares outstanding vest either in equal annual installments or upon a stated date. See Note 15 — “Employee Share-Based Compensation Plans”. (3) The diluted earnings per share denominator for the three months ended March 31, 2016 includes the impact of 125,000 common shares issuable upon exercise of the non-qualified options outstanding, which resulted in 882 incremental shares outstanding over the period. The incremental shares had an effect on diluted earning per share of less than $0.01. |
Non-controlling Interest (Tables) |
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Noncontrolling Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling Interest Disclosure | The following table details the balance of non-controlling interests included in White Mountains’s total equity and the related percentage of each consolidated entity’s total equity owned by non-controlling shareholders as of March 31, 2017 and December 31, 2016:
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Segment Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial information for White Mountains' segments | Significant intercompany transactions among White Mountains’s segments have been eliminated herein. Financial information for White Mountains’s segments follows:
(1) BAM manages its affairs on a statutory accounting basis. BAM’s statutory surplus includes surplus notes and is not reduced by accruals of interest expense on the 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) Includes $32.5 from MediaAlpha for the three months ended March 31, 2017, and $32.7 from MediaAlpha for the three months ended March 31, 2016. (3) Includes $30.9 from MediaAlpha for the three months ended March 31, 2017, and $30.5 from MediaAlpha for the three months ended March 31, 2016. |
Employee Share-Based Incentive Compensation Plans (Tables) |
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
White Mountains | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation arrangement by share-based payment award | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of performance shares outstanding and accrued expense for performance shares awarded under the WTM Incentive Plan | The following table summarizes performance share activity for the three months ended March 31, 2017 and 2016 for performance shares granted under the WTM Incentive Plan:
(1) WTM performance share payments in 2017 for the 2014-2016 performance cycle, which were paid in March 2017, ranged from 34% to 76% of target. WTM performance share payments in 2016 for the 2013-2015 performance cycle ranged from 140% to 142% of target. (2) Amounts include changes in assumed forfeitures, as required under GAAP. (3) Outstanding performance share awards as of March 31, 2017 and 2016 exclude 2,195 and 10,826 performance share awards granted to employees of Sirius Group. |
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Share-based Compensation, Performance Shares Award Outstanding Activity [Table Text Block] | The following table summarizes performance shares outstanding and accrued expense for performance shares awarded under the WTM Incentive Plan at March 31, 2017 for each performance cycle:
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Summary of restricted shares activity | The following table summarizes the unrecognized compensation cost associated with the outstanding restricted share awards for the three months ended March 31, 2017 and 2016:
(1) Restricted share awards outstanding as of March 31, 2017 and 2016 include 5,235 and 2,195 restricted shares issued to employees of Sirius Group, which was accounted for as discontinued operations. |
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OneBeacon [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation arrangement by share-based payment award | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of performance shares outstanding and accrued expense for performance shares awarded under the WTM Incentive Plan | The following table summarizes performance share activity for the three months ended March 31, 2017 and 2016 for OneBeacon performance shares granted under the OneBeacon Incentive Plan:
(1) There were no payments made in 2017 for the 2014-2016 performance cycle; those performance shares did not meet the threshold performance goals and expired. OneBeacon performance share payments in 2016 for the 2013-2015 performance cycle were at 24.3% of target. (2) Amounts include changes in assumed forfeitures, as required under GAAP. |
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Share-based Compensation, Performance Shares Award Outstanding Activity [Table Text Block] | The following table summarizes OneBeacon performance shares outstanding awarded under the OneBeacon Incentive Plan at March 31, 2017 for each performance cycle:
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Summary of restricted shares activity | The following table summarizes the unrecognized compensation cost associated with the outstanding OneBeacon restricted stock awards for the three months ended March 31, 2017 and 2016:
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Fair Value of Financial Instruments (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the fair value and carrying value of financial instruments | The following table summarizes the fair value and carrying value of these financial instruments as of March 31, 2017 and December 31, 2016:
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Discontinued Operations (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Disposal Groups, Including Discontinued Operations [Table Text Block] | Summary of Reclassified Balances and Related Items Net Assets Held for Sale The following summarizes the assets and liabilities associated with business classified as held for sale. At December 31, 2016, amounts presented relate to Star & Shield and SSIE.
Net Income (Loss) from Discontinued Operations The following summarizes the results of operations, including related income taxes associated with the business classified as discontinued operations. For the three months ended March 31, 2016, the amounts presented relate to Sirius Group and Tranzact. The results of discontinued operations from Sirius Group and Tranzact up to the closing date of the transaction inure to White Mountains.
Net Change in Cash from Discontinued Operations The following summarizes the net change in cash, including income tax (payment to) refund from national governments and interest paid associated with the business classified as discontinued operations:
Earnings Per Share Basic earnings per share amounts are based on the weighted average number of common shares outstanding including unvested restricted shares that are considered participating securities. Diluted earnings per share amounts are based on the weighted average number of common shares including unvested restricted shares and the net effect of potentially dilutive common shares outstanding. The following table outlines the computation of earnings per share for discontinued operations for the three months ended March 31, 2017 and 2016:
(1) Restricted shares issued by White Mountains contain dividend participation features, and therefore, are considered participating securities. (2) Net earnings attributable to White Mountains’s common shareholders, net of restricted share amounts, is equal to undistributed earnings for the three months ended March 31, 2017 and 2016. (3) Restricted common shares outstanding vest either in equal annual installments or upon a stated date. See Note 15 - “Employee Share-Based Compensation Plans”. (4) The diluted earnings per share denominator for the three months ended March 31, 2016 includes the impact of 125,000 common shares issuable upon exercise of the non-qualified options outstanding, which results in 882 incremental shares outstanding over the period. The incremental shares had an effect on diluted earning per share of less than $0.01 per share. |
Summary of Significant Accounting Policies (Basis of Presentation) (Details) - USD ($) $ in Millions |
Mar. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Jul. 31, 2012 |
---|---|---|---|---|
Basis of Presentation | ||||
Debt Issuance Cost | $ 1.8 | |||
OneBeacon Ltd. | ||||
Basis of Presentation | ||||
Ownership interest (as a percent) | 75.70% | 76.10% | ||
HG Global | ||||
Basis of Presentation | ||||
Noncontrolling equity percentage | 3.10% | 3.10% | ||
Surplus Notes | $ 503.0 | |||
Percentage of par value of policy reinsured | 15.00% | |||
OneBeacon [Member] | ||||
Basis of Presentation | ||||
Noncontrolling equity percentage | 24.30% | 23.90% | ||
Debt Issuance Cost | $ 1.9 | |||
Preferred Stock | HG Global | ||||
Basis of Presentation | ||||
Noncontrolling equity percentage | 96.90% | |||
Ownership interest (as a percent) | 96.90% | |||
Common Stock | HG Global | ||||
Basis of Presentation | ||||
Noncontrolling equity percentage | 88.40% | |||
Ownership interest (as a percent) | 88.40% |
Loss and Loss Adjustment Expense Reserves (Loss and Loss Adjustment Expense) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Gross beginning balance | $ 1,365.6 | $ 1,389.8 |
Less beginning reinsurance recoverable on unpaid losses | (172.9) | (186.0) |
Net loss and LAE reserves | 1,192.7 | 1,203.8 |
Loss and LAE incurred relating to current year losses | 151.7 | 161.2 |
Net (favorable) and unfavorable loss reserve development | 0.0 | 0.1 |
Total incurred losses and LAE | 151.7 | 161.1 |
Current year losses | (21.5) | (23.1) |
Prior year losses | (129.1) | (148.6) |
Total loss and LAE payments | (150.6) | (171.7) |
Net ending balance | 1,194.1 | 1,193.4 |
Plus ending reinsurance recoverable on unpaid losses | 174.7 | 150.4 |
Gross ending balance | 1,368.8 | 1,343.8 |
Star & Shield Insurance Exchange | ||
Net ending balance | 0.0 | |
Star & Shield Insurance Exchange | ||
Net (favorable) and unfavorable loss reserve development | 0.1 | |
Star & Shield Insurance Exchange | ||
Net loss and LAE reserves | 4.7 | 5.5 |
Net ending balance | $ 4.4 | $ 5.3 |
Loss and Loss Adjustment Expense Reserves (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Jun. 30, 2016 |
|
Loss and Loss Adjustment, Expense Reserves [Line Items] | |||
Net (favorable) and unfavorable loss reserve development | $ 0.0 | $ (0.1) | |
Loss and LAE incurred relating to current year losses | $ 151.7 | 161.2 | |
Star & Shield Insurance Exchange | |||
Loss and Loss Adjustment, Expense Reserves [Line Items] | |||
Net (favorable) and unfavorable loss reserve development | $ (0.1) | ||
OneBeacon [Member] | |||
Loss and Loss Adjustment, Expense Reserves [Line Items] | |||
Net (favorable) and unfavorable loss reserve development | $ 0.0 |
Investment Securities (Net Investment Income) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Investment income | ||
Total investment income | $ 26.8 | $ 18.7 |
Third-party investment expenses | (0.7) | (0.8) |
Net investment income, pre-tax | 26.1 | 17.9 |
Fixed maturity investments. | ||
Investment income | ||
Investment Income, Net, Amortization of Discount and Premium | 24.5 | 14.5 |
Short-term investments | ||
Investment income | ||
Investment Income, Net, Amortization of Discount and Premium | 0.3 | 0.2 |
Common Stock | ||
Investment income | ||
Investment Income, Net, Amortization of Discount and Premium | 2.1 | 1.2 |
Other long-term investments | ||
Investment income | ||
Investment Income, Net, Amortization of Discount and Premium | $ (0.1) | $ 2.8 |
Investment Securities (Investment Holding Common Equities/ Other Investments) (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2017 |
Dec. 31, 2016 |
|
Schedule of Trading Securities and Other Trading Assets [Line Items] | ||
Fixed maturity investments, at fair value | $ 4,175.4 | $ 4,250.2 |
Common Stock | ||
Schedule of Trading Securities and Other Trading Assets [Line Items] | ||
Cost or amortized cost | 537.9 | 440.8 |
Trading Securities, Unrealized Holding Gain | 65.0 | 35.9 |
Trading Securities, Unrealized Holding Loss | (2.4) | (2.4) |
Net foreign currency gains (losses) | 0.5 | 0.0 |
Fixed maturity investments, at fair value | 601.0 | 474.3 |
Other long-term investments. | ||
Schedule of Trading Securities and Other Trading Assets [Line Items] | ||
Cost or amortized cost | 321.9 | 314.9 |
Trading Securities, Unrealized Holding Gain | 39.7 | 40.3 |
Trading Securities, Unrealized Holding Loss | (23.3) | (28.0) |
Net foreign currency gains (losses) | (6.6) | (3.9) |
Fixed maturity investments, at fair value | $ 331.7 | $ 323.3 |
Investment Securities (Hedge Funds and Private Equity Funds) (Details) $ in Millions |
Mar. 31, 2017
USD ($)
fund
|
Dec. 31, 2016
USD ($)
|
---|---|---|
Schedule of Trading Securities and Other Trading Assets [Line Items] | ||
Other Investments | $ | $ 331.7 | $ 323.3 |
Hedge funds | ||
Schedule of Trading Securities and Other Trading Assets [Line Items] | ||
Number of investments | fund | 5 | |
Private equity funds | ||
Schedule of Trading Securities and Other Trading Assets [Line Items] | ||
Number of investments | fund | 20 | |
Hedge and private equity funds included in other long-term investments | ||
Schedule of Trading Securities and Other Trading Assets [Line Items] | ||
Largest single fund investment | $ | $ 54.2 | $ 36.5 |
Investment Securities (Investments In Private Equity Funds Subject to Lock-Up Periods) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Schedule of Trading Securities and Other Trading Assets [Line Items] | ||
Net Income (Loss) Attributable to Noncontrolling Interest | $ (1.3) | $ 6.3 |
Private equity funds | ||
Schedule of Trading Securities and Other Trading Assets [Line Items] | ||
Other long-term investments | 71.1 | |
1-3 years | Private equity funds | ||
Schedule of Trading Securities and Other Trading Assets [Line Items] | ||
Other long-term investments | 18.4 | |
3-5 years | Private equity funds | ||
Schedule of Trading Securities and Other Trading Assets [Line Items] | ||
Other long-term investments | 23.3 | |
5-10 years | Private equity funds | ||
Schedule of Trading Securities and Other Trading Assets [Line Items] | ||
Other long-term investments | 22.2 | |
Greater than 10 years | Private equity funds | ||
Schedule of Trading Securities and Other Trading Assets [Line Items] | ||
Other long-term investments | $ 7.2 |
Investment Securities (Fair Value Measurements) (Details) (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2017 |
Dec. 31, 2016 |
|
Maximum percentage of price difference provided by pricing services | 5.00% | |
Maximum price difference provided by pricing services | $ 1.0 | |
Hedge Funds and Private Equity Funds [Member] | ||
Other than Temporary Impairment Losses, Investments | $ 1.0 | $ 5.0 |
Investment Securities (Mortgage-backed, Asset-backed Securities) (Details) - USD ($) $ in Millions |
Mar. 31, 2017 |
Dec. 31, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|---|---|
Schedule of Trading Securities and Other Trading Assets [Line Items] | ||||
Fair value investments | $ 5,097.6 | $ 5,039.7 | $ 3,360.2 | $ 4,050.9 |
Non-Agency Residential Mortgage [Member] | ||||
Schedule of Trading Securities and Other Trading Assets [Line Items] | ||||
Fair value investments | 33.9 | |||
Commercial Mortgage Backed Securities | ||||
Schedule of Trading Securities and Other Trading Assets [Line Items] | ||||
Fair value investments | $ 126.9 | $ 127.5 |
Goodwill and Other Intangible Assets (Details) - USD ($) $ in Millions |
3 Months Ended | ||||
---|---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Mar. 31, 2016 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Payments to Acquire Businesses and Interest in Affiliates | $ 0.0 | $ 8.1 | |||
Goodwill | 31.7 | $ 24.1 | 24.1 | $ 31.7 | $ 24.1 |
Intangible Assets, Net (Excluding Goodwill) | $ 21.3 | 32.2 | 32.2 | $ 24.2 | $ 31.3 |
LowFares.com | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Payments to Acquire Businesses and Interest in Affiliates | $ 3.9 | $ 3.9 |
Goodwill and Other Intangible Assets - Goodwill Rollforward (Details) - USD ($) $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Goodwill | $ 31.7 | $ 24.1 | $ 31.7 | $ 24.1 |
Intangible Assets, Net (Excluding Goodwill) | 21.3 | 32.2 | 24.2 | 31.3 |
Goodwill and other intangible assets | 53.0 | 56.3 | 55.9 | 55.4 |
Acquisition of businesses | 0.0 | 3.9 | ||
Disposal Group, Including Discontinued Operation, Intangible Assets | 0.0 | 0.3 | 0.0 | 0.4 |
Amortization of Intangible Assets | (2.9) | (3.1) | ||
Intangible Asset and Goodwill [Member] | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Acquisition of businesses | 3.9 | |||
Disposal Group, Including Discontinued Operation, Intangible Assets | 0.0 | 0.3 | $ 0.0 | $ 0.4 |
Amortization of Intangible Assets | $ (2.9) | $ (3.1) |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Mar. 31, 2017 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2016 |
|
Income Tax Contingency [Line Items] | |||||
Effective Income Tax Rate Reconciliation, Percent | 10.30% | (114.10%) | |||
U.S. statutory rate (as a percent) | 35.00% | 35.00% | 35.00% | ||
Income Tax Expense (Benefit) | $ 3.9 | $ (9.7) | |||
Tax Year 2012 [Member] | |||||
Income Tax Contingency [Line Items] | |||||
Deferred Tax Assets, Gross | $ 0.6 | ||||
Operating Loss Carryforwards, Valuation Allowance | 0.6 | ||||
Tax Assessment Year 2010 to 2012 [Member] | |||||
Income Tax Contingency [Line Items] | |||||
Income Tax Expense (Benefit) | $ (3.5) | ||||
Tax Assessment Year 2007 to 2009 [Member] | |||||
Income Tax Contingency [Line Items] | |||||
Income Tax Expense (Benefit) | $ (12.8) | ||||
Discontinued Operations [Member] | Tranzact [Member] | |||||
Income Tax Contingency [Line Items] | |||||
Income Tax Expense (Benefit) | $ (21.4) |
Derivatives (Details) - USD ($) $ in Millions |
Mar. 31, 2017 |
Dec. 31, 2015 |
---|---|---|
Notional amount | $ 299.9 | |
Collective account values of underlying variable annuities as a percentage of the guarantee value | 113.00% |
Derivatives Pre-Tax Operating Results of WM Life Re (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Pre-tax operating results of WM Life Re | ||
Total revenues | $ 385.9 | $ 369.3 |
General and administrative expenses | (94.2) | (87.1) |
Pre-tax income from continuing operations | $ 37.9 | 8.5 |
White Mountains Life Re | ||
Pre-tax operating results of WM Life Re | ||
Fees, included in other revenue | 1.0 | |
Change in fair value of variable annuity liability, included in other revenue | (0.4) | |
Realized and unrealized gains (losses) | (1.7) | |
Foreign exchange, included in other revenue | 0.9 | |
Other investment income and losses | 0.0 | |
Total revenues | (0.2) | |
Liability for Future Policy Benefits, Other Increase (Decrease) | (0.1) | |
General and administrative expenses | (0.8) | |
Pre-tax income from continuing operations | $ (1.1) |
Derivatives Forward Contracts (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Dec. 31, 2016 |
|
Derivative [Line Items] | ||
Notional amount | $ 299.9 | |
Forward Contracts | ||
Derivative [Line Items] | ||
Notional amount | 299.9 | |
Derivative, fair value, net | (4.2) | |
Realized and unrealized gains (losses) | (3.0) | |
Other Investments [Member] | ||
Derivative [Line Items] | ||
Derivative Liability | (4.2) | $ (1.2) |
United Kingdom, Pounds | ||
Derivative [Line Items] | ||
Notional amount | 200.0 | |
Euro Member Countries, Euro | ||
Derivative [Line Items] | ||
Notional amount | 50.0 | |
Barclays [Member] | Standard & Poor's, A- Rating [Member] | Forward Contracts | ||
Derivative [Line Items] | ||
Notional amount | 247.2 | |
Derivative, fair value, net | (3.2) | |
JP Morgan | Standard & Poor's, A- Rating [Member] | Forward Contracts | ||
Derivative [Line Items] | ||
Notional amount | 52.7 | |
Derivative, fair value, net | $ (1.0) |
Contingencies (Details) $ in Millions |
1 Months Ended |
---|---|
Jun. 30, 2007
USD ($)
| |
Tribune Company Litigation | Pending Litigation | OneBeacon [Member] | |
Loss Contingencies [Line Items] | |
Proceeds from Sale, Maturity and Collection of Investments | $ 32.0 |
OneBeacon Pension Plan (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
Pension Plan | ||
Defined Contribution Plan Disclosure [Line Items] | ||
Transfer of assets | $ 47.1 | |
Qualified Plan | ||
Defined Contribution Plan Disclosure [Line Items] | ||
Defined Benefit Plan, Fair Value of Plan Assets | $ 13.8 | |
Principal Financial Group | ||
Defined Contribution Plan Disclosure [Line Items] | ||
Pre-tax settlement charge | $ 0.3 |
Subsequent Event (Details) $ / shares in Units, $ in Billions |
3 Months Ended | ||
---|---|---|---|
May 02, 2017
$ / shares
|
Dec. 31, 2017
USD ($)
|
Mar. 31, 2017 |
|
Scenario, Forecast | |||
Subsequent Event [Line Items] | |||
Proceeds from acquisition | $ | $ 1.3 | ||
Intact Financial Corporation | OneBeacon [Member] | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Acquisition price per share (in USD per share) | $ / shares | $ 18.10 | ||
Transaction book value multiple | 1.65 | ||
OneBeacon [Member] | |||
Subsequent Event [Line Items] | |||
Percentage of voting interest acquired | 96.90% | ||
Ownership interest (as a percent) | 75.70% |
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