Financial Statement Revisions

In October 2017, White Mountains discovered that the former CEO of Wobi, one of its overseas portfolio companies, had been reporting overstated commission revenues and related receivables to White Mountains. As a result, White Mountains has revised certain of its previously issued financial statements. The revisions resulted in reductions to commission revenues (included in advertising and commission revenues) and commissions receivable (included in other assets). In addition, the overstatements led White Mountains to write down the goodwill and other intangible assets related to Wobi to zero. This write down is recorded in general and administrative expenses in the years ended December 31, 2016 and 2015.

White Mountains evaluated the impact of the misstatements resulting from the overstatements at Wobi on prior periods’ financial statements in accordance with SEC Staff Accounting Bulletin (“SAB”) Topic 1.M, Materiality, and concluded the misstatements were not material to any previously reported financial statements. However, while not material to any previously reported annual or quarterly period, the aggregate amount of prior period misstatements could be material to White Mountains's results for the full fiscal year ended December 31, 2017. White Mountains has therefore revised all periods impacted including its consolidated balance sheet as of June 30, 2017 and December 31, 2016 and 2015; and its consolidated statements of operations and comprehensive income, consolidated statements of changes in equity, cash flows and earnings per share for the years ended December 31, 2016, 2015 and 2014, the six month period ended June 30, 2017, and the three and nine month periods ended September 30, 2016. The revisions also reflect a previously recorded out of period adjustment in 2015 and 2014. The impact of these revisions to each of the previously reported consolidated statements are disclosed below. Amounts previously reported reflect the reclassification of OneBeacon, Sirius Group and Tranzact to discontinued operations for all applicable periods presented.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited)



	Three months ended									Nine months ended
	September 30, 2016
Millions, except for per share amounts	As previously reported			Adjustments			As revised			As previously reported			Adjustments			As revised
Revenues:
Earned insurance premiums	$	3.4		$	—		3.4			$	10.2		$	—		$	10.2
Net investment income	9.6			—			9.6			18.2			—			18.2
Net realized and unrealized investment gains	10.9			—			10.9			27.2			—			27.2
Advertising and commission revenues	29.4			(1.2		)	28.2			92.4			(2.8		)	89.6
Other revenue	4.7			—			4.7			18.0			—			18.0
Total revenues	58.0			(1.2		)	56.8			166.0			(2.8		)	163.2
Expenses:
Loss and loss adjustment expenses	2.2			—			2.2			6.8			—			6.8
Insurance and acquisition expenses	1.3			—			1.3			4.4			—			4.4
Other underwriting expenses	.2			—			.2			.4			—			.4
Cost of sales	24.0			—			24.0			76.9			—			76.9
General and administrative expenses	42.7			(.3		)	42.4			142.6			2.3			144.9
Interest expense on debt	.5			—			.5			2.6			—			2.6
Total expenses	70.9			(.3		)	70.6			233.7			2.3			236.0
Pre-tax loss	(12.9		)	(.9		)	(13.8		)	(67.7		)	(5.1		)	(72.8		)
Income tax benefit	17.1			—			17.1			22.7			—			22.7
Net income (loss) from continuing operations	4.2			(.9		)	3.3			(45.0		)	(5.1		)	(50.1		)
Gain on sale of discontinued operations	47.9			—			47.9			414.5			—			414.5
Net income from discontinued operations	36.5			—			36.5			100.9			—			100.9
Net income (loss) ⁽¹⁾	88.6			(.9		)	87.7			470.4			(5.1		)	465.3
Net loss (income) attributable to non-controlling interests	3.1			—			3.1			(24.6		)	—			(24.6		)
Net income (loss) attributable to White Mountains's common shareholders	91.7			(.9		)	90.8			445.8			(5.1		)	440.7
Other comprehensive income (loss), net of tax	.2			(.2		)	—			145.6			(.2		)	145.4
Comprehensive income (loss)	91.9			(1.1		)	90.8			591.4			(5.3		)	586.1
Comprehensive loss attributable to non-controlling interests	.1			—			.1			.1			—			.1
Comprehensive income (loss) attributable to White Mountains's common shareholders	$	92.0		$	(1.1	)	$	90.9		$	591.5		$	(5.3	)	$	586.2

Basic and diluted earnings per share - continuing operations	$	1.50		$	(.18	)	$	1.32		$	(13.49	)	$	(1.00	)	$	(14.49	)

⁽¹⁾The adjustment to net income resulted in a corresponding adjustment in the statement of cash flows, with an offsetting adjustment to the change in other assets and liabilities within the operating cash flows section. There was no change to cash flows from operations, cash flows from investing activities or cash flows from financing activities.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited)



	Six months ended June 30, 2017
Millions, except for per share amounts	As previously reported			Adjustments			As revised
Revenues:
Earned insurance premiums	$	5.2		$	—		$	5.2
Net investment income	27.5			—			27.5
Net realized and unrealized investment gains	70.0			—			70.0
Advertising and commission revenues	71.7			(6.6		)	65.1
Other revenue	4.5			—			4.5
Total revenues	178.9			(6.6		)	172.3
Expenses:
Loss and loss adjustment expenses	1.1			—			1.1
Insurance and acquisition expenses	2.2			—			2.2
Other underwriting expenses	.2			—			.2
Cost of sales	55.6			—			55.6
General and administrative expenses	117.9			.1			118.0
Interest expense on debt	.9			—			.9
Total expenses	177.9			.1			178.0
Pre-tax income (loss)	1.0			(6.7		)	(5.7		)
Income tax benefit	1.3			—			1.3
Net income (loss) from continuing operations	2.3			(6.7		)	(4.4		)
Loss on sale of discontinued operations	(1.6		)	—			(1.6		)
Net income from discontinued operations	35.7			—			35.7
Net income (loss)	36.4			(6.7		)	29.7
Net loss (income) attributable to non-controlling interests	13.4			(.4		)	13.0
Net income (loss) attributable to White Mountains's common shareholders	49.8			(7.1		)	42.7
Other comprehensive income (loss), net of tax	1.7			(1.3		)	.4
Comprehensive income (loss)	51.5			(8.4		)	43.1
Comprehensive income attributable to non-controlling interests	(.1		)	—			(.1		)
Comprehensive income (loss) attributable to White Mountains's common shareholders	$	51.4		$	(8.4	)	$	43.0

Basic and diluted earnings per share - continuing operations	$	3.42		$	(1.59	)	$	1.83

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME



	As previously reported									Adjustments									As revised
	Years ended December 31,
Millions, except for per share amounts	2016			2015			2014			2016			2015			2014			2016			2015			2014
Revenues:
Earned insurance premiums	$	13.4		$	12.0		$	7.9		$	—		$	—		$	—		$	13.4		$	12.0		$	7.9
Net investment income	32.1			10.9			12.2			—			—			—			32.1			10.9			12.2
Net realized and unrealized investment gains	(27.4		)	260.5			38.1			—			—			—			(27.4		)	260.5			38.1
Advertising and commission revenues	126.9			110.1			65.7			(8.6		)	(2.7		)	(.2		)	118.3			107.4			65.5
Other revenue ⁽¹⁾	21.3			41.8			20.5			—			7.4			(6.9		)	21.3			49.2			13.6
Total revenues	166.3			435.3			144.4			(8.6		)	4.7			(7.1		)	157.7			440.0			137.3
Expenses:
Loss and loss adjustment expenses	8.0			8.2			8.9			—			—			—			8.0			8.2			8.9
Insurance and acquisition expenses	5.6			6.3			2.9			—			—			—			5.6			6.3			2.9
Other underwriting expenses	.5			.4			.4			—			—			—			.5			.4			.4
Cost of sales	102.0			93.6			57.8			—			—			—			102.0			93.6			57.8
General and administrative expenses	183.7			193.2			144.9			2.2			7.5			—			185.9			200.7			144.9
Interest expense on debt	3.0			1.6			1.2			—			—			—			3.0			1.6			1.2
Total expenses	302.8			303.3			216.1			2.2			7.5			—			305.0			310.8			216.1
Pre-tax income	(136.5		)	132.0			(71.7		)	(10.8		)	(2.8		)	(7.1		)	(147.3		)	129.2			(78.8		)
Income benefit (expense)	32.9			(12.7		)	2.5			—			—			—			32.9			(12.7		)	2.5
Net income from continuing operations	(103.6		)	119.3			(69.2		)	(10.8		)	(2.8		)	(7.1		)	(114.4		)	116.5			(76.3		)
Gain on sale of discontinued operations	415.1			17.9			17.2			—			—			—			415.1			17.9			17.2
Net income from discontinued operations	108.3			117.2			296.4			—			—			—			108.3			117.2			296.4
Income (loss) before equity in earnings of unconsolidated affiliates	419.8			254.4			244.4			(10.8		)	(2.8		)	(7.1		)	409.0			251.6			237.3
Equity in earnings of unconsolidated affiliates	—			25.1			45.6						—			—			—			25.1			45.6
Net income (loss)⁽²⁾	419.8			279.5			290.0			(10.8		)	(2.8		)	(7.1		)	409.0			276.7			282.9
Net (income) loss attributable to non-controlling interests	(7.3		)	18.1			22.2			.1			.4			.1			(7.2		)	18.5			22.3
Net income (loss) attributable to White Mountains's common shareholders	412.5			297.6			312.2			(10.7		)	(2.4		)	(7.0		)	401.8			295.2			305.2
Other comprehensive income, net of tax ⁽¹⁾	145.6			(100.4		)	(104.9		)	—			(7.4		)	6.9			145.6			(107.8		)	(98.0		)
Comprehensive income (loss)	558.1			197.2			207.3			(10.7		)	(9.8		)	(.1		)	547.4			187.4			207.2
Comprehensive (income) loss attributable to non-controlling interests	(.3		)	—			3.3			—			—			—			(.3		)	—			3.3
Comprehensive income (loss) attributable to White Mountains's common shareholders	$	557.8		$	197.2		$	210.6		$	(10.7	)	$	(9.8	)	$	(.1	)	$	547.1		$	187.4		$	210.5

Basic and diluted earnings per share - continuing operations	$	(22.13	)	$	27.63		$	(.24	)	$	(2.15	)	$	(.42	)	$	(1.16	)	$	(24.28	)	$	27.21		$	(1.40	)

⁽¹⁾In 2015 and 2014, White Mountains recorded a foreign currency translation gain related to its investment in Symetra in net income when it should have been recorded through other comprehensive income. The correction to properly reflect the translation amount through other comprehensive income did not have any impact on comprehensive income attributable to White Mountains's common shareholders or to book value per share.

⁽²⁾The adjustment to net income resulted in a corresponding adjustment in the statement of cash flows, with an offsetting adjustment to the change in other assets and liabilities within the operating cash flows section. There was no change to cash flows from operations, cash flows from investing activities or cash flows from financing activities.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY



	As previously reported									Adjustments									As revised
	Years ended December 31,
Millions	2016			2015			2014			2016			2015			2014			2016			2015			2014

Common shares and paid-in surplus	$	810.7		$	978.2		$	1,034.7		$	—		$	—		$	—		$	810.7		$	978.2		$	1,034.7

Retained earnings, beginning of year	3,084.9			3,010.5			2,801.9			(9.9		)	(7.5		)	(.5		)	3,075.0			3,003.0			2,801.4
Share repurchases	(694.8		)	(217.2		)	(97.4		)	—			—			—			(694.8		)	(217.2		)	(97.4		)
Net income (loss)	412.5			297.6			312.2			(10.7		)	(2.4		)	(7.0		)	401.8			295.2			305.2
Dividends	(5.4		)	(6.0		)	(6.2		)	—			—			—			(5.4		)	(6.0		)	(6.2		)
Retained earnings, end of year	2,797.2			3,084.9			3,010.5			(20.6		)	(9.9		)	(7.5		)	2,776.6			3,075.0			3,003.0

Accumulated other comprehensive income, after tax, beginning of year	(149.9		)	(49.5		)	52.1			—			7.4			.5			(149.9		)	(42.1		)	52.6
Net change in foreign currency translation	31.4			(65.8		)	(168.2		)	—			(7.4		)	6.9			31.4			(73.2		)	(161.3		)
Net other changes in AOCI	113.9			(34.6		)	66.6			—			—			—			113.9			(34.6		)	66.6
Accumulated other comprehensive income, after tax, end of year	(4.6		)	(149.9		)	(49.5		)	—			—			7.4			(4.6		)	(149.9		)	(42.1		)

Total White Mountains Common Shareholders' Equity	3,603.3			3,913.2			3,995.7			(20.6		)	(9.9		)	(.1		)	3,582.7			3,903.3			3,995.6

Non-controlling interests, beginning of year	454.8			542.7			491.7			(.5		)	(.1		)	—			454.3			542.6			491.7
Net income (loss)	7.3			(18.1		)	(22.2		)	(.1		)	(.4		)	(.1		)	7.2			(18.5		)	(22.3		)
Other changes in NCI	(328.2		)	(69.8		)	73.2			—			—			—			(328.2		)	(69.8		)	73.2
Non-controlling interests, end of year	133.9			454.8			542.7			(.6		)	(.5		)	(.1		)	133.3			454.3			542.6

Total equity	$	3,737.2		$	4,368.0		$	4,538.4		$	(21.2	)	$	(10.4	)	$	(.2	)	$	3,716.0		$	4,357.6		$	4,538.2

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited)



	Nine months ended September 30, 2016									Six months ended June 30, 2017
Millions	As previously reported			Adjustments			As revised			As previously reported			Adjustments			As revised

Common shares and paid-in surplus	$	809.8		$	—		$	809.8		$	815.1		$	.7		$	815.8

Retained earnings, beginning of year	3,084.9			(9.9		)	3,075.0			2,797.2			(20.6		)	2,776.6
Share repurchases	(678.6		)	—			(678.6		)	(7.2		)	—			(7.2		)
Net income (loss)	445.8			(5.1		)	440.7			49.8			(7.1		)	42.7
Dividends	(5.4		)	—			(5.4		)	(4.6		)	—			(4.6		)
Retained earnings, end of period	2,846.7			(15.0		)	2,831.7			2,835.2			(27.7		)	2,807.5

Accumulated other comprehensive income, after tax, beginning of year	(149.9		)	—			(149.9		)	(4.6		)	—			(4.6		)
Net change in foreign currency translation	32.0			(.2		)	31.8			1.6			(1.3		)	.3
Net other changes in AOCI	113.6			—			113.6			—			—			—
Accumulated other comprehensive income, after tax, end of year	(4.3		)	(.2		)	(4.5		)	(3.0		)	(1.3		)	(4.3		)

Total White Mountains Common Shareholders' Equity	3,652.2			(15.2		)	3,637.0			3,647.3			(28.3		)	3,619.0

Non-controlling interests, beginning of year	454.8			(.5		)	454.3			133.9			(.6		)	133.3
Net income (loss)	24.6			—			24.6			(13.4		)	.4			(13.0		)
Other changes in NCI	(330.2		)	—			(330.2		)	(3.7		)	(.7		)	(4.4		)
Non-controlling interests, end of period	149.2			(.5		)	148.7			116.8			(.9		)	115.9

Total equity	$	3,801.4		$	(15.7	)	$	3,785.7		$	3,764.1		$	(29.2	)	$	3,734.9

CONSOLIDATED BALANCE SHEETS



	December 31, 2016									December 31, 2015
Millions	As previously reported			Adjustments			As revised			As previously reported			Adjustments			As revised
Assets
Investments	$	2,714.4		$	—		$	2,714.4		$	1,679.7		$	—		$	1,679.7
Cash	80.2			—			80.2			77.8			—			77.8
Insurance premiums receivable	1.6			—			1.6			1.3			—			1.3
Deferred acquisition costs	10.6			—			10.6			6.9			—			6.9
Deferred tax asset	—			—			—			—			—			—
Accrued investment income	14.8			—			14.8			3.8			—			3.8
Accounts receivable on unsettled investment sales	4.8			—			4.8			11.4			—			11.4
Goodwill	31.7			(5.8		)	25.9			24.1			(5.5		)	18.6
Intangible assets	23.0			(3.7		)	19.3			28.9			(2.0		)	26.9
Assets held for sale	3,599.5			—			3,599.5			8,365.6			—			8,365.6
Other assets	64.1			(15.0		)	49.1			83.1			(3.9		)	79.2
Total assets	$	6,544.7		$	(24.5	)	$	6,520.2		$	10,282.6		$	(11.4	)	$	10,271.2
Liabilities
Unearned insurance premiums	$	82.9		$	—		$	82.9		$	50.2		$	—		$	50.2
Debt	12.7			—			12.7			64.7			—			64.7
Deferred tax liability	—			—			—			27.4			—			27.4
Accrued incentive compensation	95.7			—			95.7			96.2			—			96.2
Liabilities held for sale	2,569.3			—			2,569.3			5,618.1			—			5,618.1
Other liabilities	46.9			(3.3		)	43.6			58.0			(1.0		)	57.0
Total liabilities	2,807.5			(3.3		)	2,804.2			5,914.6			(1.0		)	5,913.6

Equity
White Mountains's common shares	4.6			—			4.6			5.6			—			5.6
Paid in surplus	806.1			—			806.1			972.6			—			972.6
Retained earnings	2,797.2			(20.6		)	2,776.6			3,084.9			(9.9		)	3,075.0
Accumulated other comprehensive income, net of tax	(4.6		)	—			(4.6		)	(149.9		)	—			(149.9		)
Total White Mountains's common shareholders' equity	3,603.3			(20.6		)	3,582.7			3,913.2			(9.9		)	3,903.3
Non-controlling interests	133.9			(.6		)	133.3			454.8			(.5		)	454.3
Total equity	3,737.2			(21.2		)	3,716.0			4,368.0			(10.4		)	4,357.6
Total liabilities and equity	$	6,544.7		$	(24.5	)	$	6,520.2		$	10,282.6		$	(11.4	)	$	10,271.2

CONSOLIDATED BALANCE SHEET (Unaudited)



	June 30, 2017
Millions	As previously reported			Adjustments			As revised
Assets
Investments	$	2,692.9		$	—		$	2,692.9
Cash	53.3			—			53.3
Insurance and reinsurance premiums receivable	2.8			—			2.8
Deferred acquisition costs	13.0			—			13.0
Accrued investment income	16.0			—			16.0
Accounts receivable on unsettled investment sales	199.5			—			199.5
Goodwill	31.7			(5.8		)	25.9
Intangible assets	17.8			(3.4		)	14.4
Assets held for sale	3,696.4			—			3,696.4
Other assets	62.8			(19.7		)	43.1
Total assets	$	6,786.2		$	(28.9	)	$	6,757.3
Liabilities
Unearned insurance premiums	$	109.9		$	—		$	109.9
Debt	10.6			—			10.6
Accrued incentive compensation	63.3			—			63.3
Accounts payable for unsettled investment purchases	114.6			—			114.6
Liabilities held for sale	2,678.8			—			2,678.8
Other liabilities	44.9			.3			45.2
Total liabilities	3,022.1			.3			3,022.4

Equity
White Mountains's common shares	4.6			—			4.6
Paid in surplus	810.5			.7			811.2
Retained earnings	2,835.2			(27.7		)	2,807.5
Accumulated other comprehensive income, net of tax	(3.0		)	(1.3		)	(4.3		)
Total White Mountains's common shareholders' equity	3,647.3			(28.3		)	3,619.0
Non-controlling interests	116.8			(.9		)	115.9
Total equity	3,764.1			(29.2		)	3,734.9
Total liabilities and equity	$	6,786.2		$	(28.9	)	$	6,757.3