Segment Information

White Mountains has determined that its reportable segments are HG Global/BAM, MediaAlpha and Other Operations. As a result of the Sirius Group and Tranzact sales and the OneBeacon Transaction, the results of operations for Sirius Group and OneBeacon, previously reported in their own respective segments, 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. See Note 19 — “Held for Sale and Discontinued Operations”.

Beginning in the second quarter of 2017, MediaAlpha’s results have been presented as a separate segment within White Mountains’s consolidated financial statements. Prior year amounts have been reclassified to conform to the current period’s presentation.

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.

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

MediaAlpha is a marketing technology company that develops transparent and efficient platforms for the buying and selling of insurance and other vertical-specific performance media (i.e., clicks, calls and leads). MediaAlpha’s exchange technology, machine learning and analytical tools facilitate transparent, real-time transactions between advertisers (buyers of advertising inventory) and publishers (sellers of advertising inventory).

White Mountains’s Other Operations segment consists of the Company, its wholly-owned subsidiary, WM Capital, its wholly-owned investment management subsidiary, WM Advisors, and its other intermediate holding companies, as well as certain consolidated and unconsolidated private capital and other investments. The consolidated private capital investments consist of Wobi and Buzzmove. White Mountains’s Other Operations segment also includes its variable annuity reinsurance business, WM Life Re.

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

The following tables present the financial information for White Mountains’s segments:



Millions	HG Global/BAM ⁽¹⁾			MediaAlpha			Other Operations		Total
Year Ended December 31, 2017
Earned insurance premiums	$	9.4		$	—		$	1.0	$	10.4
Net investment income	12.3			—			43.7		56.0
Net realized and unrealized investment gains	.6			—			132.7		133.3
Advertising and commission revenues ⁽²⁾	—			163.2			3.8		167.0
Other revenues	1.0			—			6.1		7.1
Total revenues	23.3			163.2			187.3		373.8
Losses and LAE	—			—			1.1		1.1
Insurance acquisition expenses	4.0			—			.1		4.1
Other underwriting expenses	.4			—			—		.4
Cost of sales	—			135.9			3.5		139.4
General and administrative expenses	42.9			26.7			149.1		218.7
Interest expense	—			1.0			1.3		2.3
Total expenses	47.3			163.6			155.1		366.0
Pre-tax (loss) income	$	(24.0	)	$	(.4	)	$	32.2	$	7.8


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


⁽²⁾	Approximately 27% of MediaAlpha’s advertising revenue was associated with one customer for the years ended December 31, 2017.



Millions	HG Global/BAM ⁽¹⁾			MediaAlpha			Other Operations			Total
Year Ended December 31, 2016
Earned insurance premiums	$	5.9		$	—		$	7.5		$	13.4
Net investment income	9.0			—			23.1			32.1
Net realized and unrealized investment gains (losses)	.7			—			(28.1		)	(27.4		)
Advertising and commission revenues⁽²⁾	—			116.5			1.8			118.3
Other revenues	1.1			—			20.2			21.3
Total revenues	16.7			116.5			24.5			157.7
Losses and LAE	—			—			8.0			8.0
Insurance acquisition expenses	3.4			—			2.2			5.6
Other underwriting expenses	.4			—			—			.4
Cost of sales	—			97.8			4.2			102.0
General and administrative expenses	39.6			21.9			124.5			186.0
Interest expense	—			.9			2.1			3.0
Total expenses	43.4			120.6			141.0			305.0
Pre-tax loss	$	(26.7	)	$	(4.1	)	$	(116.5	)	$	(147.3	)


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


⁽²⁾	Approximately 24% of MediaAlpha’s advertising revenue was associated with one customer for the years ended December 31, 2016.



Millions	HG Global/BAM ⁽¹⁾			MediaAlpha			Other Operations			Total
Year Ended December 31, 2015
Earned insurance premiums	$	3.3		$	—		$	8.7		$	12.0
Net investment income	6.1			—			4.8			10.9
Net realized and unrealized investment gains	.6			—			259.9		⁽²⁾	260.5
Advertising and commission revenues ⁽³⁾	—			105.5			1.9			107.4
Other revenues	.7			—			48.5			49.2
Total revenues	10.7			105.5			323.8			440.0
Losses and LAE	—			—			8.2			8.2
Insurance acquisition expenses	2.9			—			3.4			6.3
Other underwriting expenses	.4			—			—			.4
Cost of sales	—			90.7			2.9			93.6
General and administrative expenses	36.8			16.4			147.5			200.7
Interest expense	—			.4			1.2			1.6
Total expenses	40.1			107.5			163.2			310.8
Pre-tax (loss) income	$	(29.4	)	$	(2.0	)	$	160.6		$	129.2


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


⁽²⁾	Net realized and unrealized investment gains in the Other Operations segment includes the unrealized investment gain of $258.8 related to the investment in Symetra common shares, representing the difference between the carrying value under the equity method at November 5, 2015 and the fair value at December 31, 2015. See Note 14 — “Investments in Unconsolidated Affiliates”.


⁽³⁾	Approximately 52% of MediaAlpha’s advertising revenue was associated with three customers for the year ended December 31, 2015.




Selected Balance Sheet Data Millions	HG Global/BAM				MediaAlpha		Other Operations		Eliminations			Held for Sale		Total
December 31, 2017:
Total investments	$	693.4			$	—	$	2,687.3	$	—		$	—	$	3,380.7
Total assets	747.4			⁽¹⁾	96.5		3,039.9		(227.9		)	3.3		3,659.2
Total liabilities	394.9				59.8		71.6		(227.9		)	—		298.4
Total White Mountains’s common shareholders’ equity	499.8				23.6		2,965.8		—			3.3		3,492.5
Non-controlling interest	(147.3		)		13.1		2.5		—			—		(131.7		)
December 31, 2016:
Total investments	$	629.7			$	—	$	2,084.7	$	—		$	—	$	2,714.4
Assets held for sale	—				—		—		—			3,606.4		3,606.4
Total assets	677.6			⁽¹⁾	57.6		2,358.8		(180.2		)	3,606.4		6,520.2
Liabilities held for sale	—				—		—		—			2,569.3		2,569.3
Total liabilities	289.1				28.3		97.7		(180.2		)	2,569.3		2,804.2
Total White Mountains’s common shareholders’ equity	522.8				17.6		2,258.1		—			784.2		3,582.7
Non-controlling interest	(134.3		)		11.7		3.0		—			252.9		133.3


⁽¹⁾	As of December 2017 and 2016,BAM’s total assets reflect the elimination of $499.0 and $503.0 of BAM Surplus Notes issued to HG Global and its subsidiaries, and $126.0 and $108.0 in accrued interest related to the BAM Surplus Notes.

As of December 31, 2017 and 2016, HG Global’s total liabilities includes $227.9 million and $180.2 million of accrued preferred dividends payable to the Company. Other Operations total assets includes the preferred dividends receivable and its eliminated in consolidation. As of December 31, 2017 and 2016, the total amount of capital White Mountains has committed to HG Global/BAM, comprised of total common shareholders’ equity and the preferred dividends receivable at the Company, is $727.7 million and $703.0 million.