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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Schedule of total income tax benefit (expense)

The following table presents the total income tax benefit for the years ended December 31, 2017, 2016 and 2015:



	Year Ended December 31,
Millions	2017			2016			2015
Current tax (expense) benefit:
U.S. federal	$	(.3	)	$	21.4		$	—
State	(1.3		)	(.7		)	(.6		)
Non-U.S.	(2.0		)	(.3		)	(.8		)
Total current tax (expense) benefit	(3.6		)	20.4			(1.4		)
Deferred tax benefit (expense):
U.S. federal	11.4			12.5			(11.3		)
Total deferred tax benefit (expense)	11.4			12.5			(11.3		)
Total income tax benefit (expense)	$	7.8		$	32.9		$	(12.7	)

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

The following table presents a reconciliation of taxes calculated using the 35% U.S. statutory rate (the tax rate at which the majority of White Mountains’s worldwide operations are taxed) to the income tax (expense) benefit on pre-tax income:



	Year Ended December 31,
Millions	2017			2016			2015
Tax (expense) benefit at the U.S. statutory rate	$	(2.7	)	$	51.6		$	(45.2	)
Differences in taxes resulting from:
Tax rate changes	(44.3		)	(3.9		)	(.5		)
Change in valuation allowance	42.6			6.9			(21.8		)
Non-U.S. earnings, net of foreign taxes	21.5			(19.2		)	58.5
Officer compensation	(4.1		)	—			—
Member surplus contributions	(3.0		)	(2.3		)	(1.5		)
Withholding tax	(2.0		)	(.2		)	(.5		)
Tax exempt interest and dividends	.5			.1			—
Tax reserve adjustments	(.3		)	—			—
Other, net	(.4		)	(.1		)	(1.7		)
Total income tax benefit (expense) on pre-tax income (loss)	$	7.8		$	32.9		$	(12.7	)

Schedule of components of deferred income tax assets and liabilities

The following table presents an outline of the significant components of White Mountains’s U.S. federal, state (net of federal benefit) and non-U.S. deferred tax assets and liabilities:



	December 31,
Millions	2017		2016
Deferred income tax assets related to:
U.S. federal and state net operating and capital loss carryforwards	$	73.0	$	104.3
Non-U.S. net operating loss carryforwards	33.9		34.0
Incentive compensation	20.4		26.5
Investment basis difference	4.9		5.6
Other items	4.9		8.5
Total gross deferred income tax assets	137.1		178.9
Less: valuation allowances	109.6		146.2
Total net deferred income tax assets	27.5		32.7
Deferred income tax liabilities related to:
Member surplus contributions	24.1		30.0
Other items	2.1		2.7
Total deferred income tax liabilities	26.2		32.7
Net deferred tax asset	$	1.3	$	—

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

The following table presents net operating loss and capital loss carryforwards as of December 31, 2017, the expiration dates and the deferred tax assets thereon:



	December 31, 2017
Millions	United States			Luxembourg			United Kingdom			Israel			Total
2018-2022	$	.3		$	—		$	—		$	—		$	.3
2023-2027	—			—			—			—			—
2028-2037	332.0			46.4			—			—			378.4
No expiration date	—			31.3			6.7			54.7			92.7
Total	$	332.3		$	77.7		$	6.7		$	54.7		$	471.4
Gross deferred tax asset	73.0			20.2			1.1			12.6			106.9
Valuation allowance	(73.0		)	(20.2		)	(1.1		)	(12.6		)	(106.9		)
Net deferred tax asset	$	—		$	—		$	—		$	—		$	—

Reconciliation of changes in the amount of unrecognized tax benefits

The following table presents a reconciliation of the beginning and ending amount of unrecognized tax benefits for 2017:



Millions	Permanent Differences ⁽¹⁾		Temporary Differences ⁽²⁾		Interest and Penalties ⁽³⁾		Total
Balance at January 1, 2017	$	—	$	—	$	—	$	—
Changes in prior year tax positions	.1		—		—		.1
Tax positions taken during the current year	.2		—		—		.2
Balance at December 31, 2017	$	.3	$	—	$	—	$	.3


⁽¹⁾	Represents the amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate.


⁽²⁾	Represents the amount of unrecognized tax benefits that, if recognized, would create a temporary difference between the reported amount of an item in White Mountains’s Consolidated Balance Sheet and its tax basis.


⁽³⁾	Net of tax benefit.