Held for Sale and Discontinued Operations

3 Months Ended

Mar. 31, 2018

Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]

Held for Sale and Discontinued Operations

OneBeacon

On September 28, 2017, Intact Financial Corporation completed its acquisition of OneBeacon in an all-cash transaction for $18.10 per share. White Mountains received total proceeds of $1.3 billion and recorded a gain of $554.6 million, net of transaction costs. Net income from discontinued operations related to OneBeacon was $32.3 million for the three months ended March 31, 2017.

Tranzact

On July 21, 2016, White Mountains completed its sale of Tranzact to Clayton, Dubilier & Rice, LLC 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. 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.

During the three months ended March 31, 2017, White Mountains recorded a $1.0 million reduction to the gain from sale of Tranzact in discontinued operations as a result of 2016 state tax payments.

Sirius Group

On April 18, 2016, White Mountains completed the sale of Sirius Group to CMI for $2.6 billion. During 2016, White Mountains recorded a $363.2 million gain from the sale of Sirius Group in discontinued operations in the statement of operations and $113.3 million in other comprehensive income from discontinued operations.

During the three months ended March 31, 2018, White Mountains recorded a $0.1 million gain from sale of Sirius Group as a result of a change to the valuation of the accrued incentive compensation payable to Sirius Group employees.

Other

As of December 31, 2017, White Mountains has classified its Guilford, Connecticut property, which consists of an office building and adjacent land, as held for sale. The property has been measured at its estimated fair value net of costs of disposal, of $3.3 million as of March 31, 2018 and December 31, 2017.

Discontinued Operations

Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]

Held for Sale and Discontinued Operations

Net Income (Loss) from Discontinued Operations

The following table presents the results of operations, including related income taxes, associated with the business classified as discontinued operations. For the three months ended March 31, 2018, the amounts presented relate to Sirius Group. For the three months ended March 31, 2017, the amounts presented relate to OneBeacon and Tranzact. The results of discontinued operations from Sirius Group and Tranzact up to the closing date of the transaction inured to White Mountains. Given the fixed price nature of the OneBeacon Transaction, OneBeacon’s results were economically transferred to the buyer at signing.



	Three Months Ended				Three Months Ended
	March 31, 2018				March 31, 2017
Millions	Sirius Group		Total		OneBeacon			Tranzact			Total
Revenues
Earned insurance premiums	$	—	$	—	$	261.8		$	—		$	261.8
Net investment income	—		—		12.2			—			12.2
Net realized and unrealized gains	—		—		15.0			—			15.0
Other revenue	—		—		3.4			—			3.4
Total revenues	—		—		292.4			—			292.4
Expenses
Loss and loss adjustment expenses	—		—		150.6			—			150.6
Insurance and reinsurance acquisition expenses	—		—		45.3			—			45.3
Other underwriting expenses	—		—		51.7			—			51.7
General and administrative expenses	—		—		5.0			—			5.0
Interest expense	—		—		3.3			—			3.3
Total expenses	—		—		255.9			—			255.9
Pre-tax income	—		—		36.5			—			36.5
Income tax expense	—		—		(4.2		)	—			(4.2		)
Net income from discontinued operations	—		—		32.3			—			32.3
Net gain (loss) from sale of discontinued operations	.1		.1		—			(1.0		)	(1.0		)
Total income (loss) from discontinued operations	.1		.1		32.3			(1.0		)	31.3
Change in foreign currency translation and other from discontinued operations	—		—		(.1		)	—			(.1		)
Comprehensive income (loss) from discontinued operations	$	.1	$	.1	$	32.2		$	(1.0	)	$	31.2

Net Change in Cash from Discontinued Operations

The following tables presents the net change in cash, including income tax payments to national governments and interest paid associated with the business classified as discontinued operations:



	Three Months Ended
	March 31,
Millions	2018			2017
Net cash provided from (used for) operations	$	.1		$	(1.3	)
Net cash (used for) provided from investing activities	(.1		)	32.3
Net cash used for financing activities	—			(21.0		)
Net change in cash during the period	—			10.0
Cash balances at beginning of period	—			70.5
Net change in cash held for sale, excluding discontinued operations	—			(.9		)
Cash balances at end of period	$	—		$	79.6
Supplemental cash flows information:
Interest paid	$	—		$	—
Net income tax payment to national governments	$	—		$	—

Earnings Per Share from Discontinued Operations

White Mountains calculates earnings per share using the two-class method, which allocates earnings between common and unvested restricted common shares. Both classes of shares participate equally in earnings on a per share basis. Basic earnings per share amounts are based on the weighted average number of common shares outstanding adjusted for unvested restricted common shares. Diluted earnings per share amounts are also impacted by the net effect of potentially dilutive common shares outstanding.

The following table presents the Company’s computation of earnings per share for discontinued operations for the three months ended March 31, 2018 and 2017:



	Three Months Ended
	March 31,
	2018			2017
Basic and diluted earnings per share numerators (in millions):
Net income attributable to White Mountains’s common shareholders	$	(48.0	)	$	29.0
Less total loss from continuing operations, net of tax	48.1			2.3
Net income from discontinued operations attributable to White Mountains’s common shareholders	$	.1		$	31.3
Allocation of earnings to participating restricted common shares ⁽¹⁾	—			(.4		)
Basic and diluted earnings per share numerators	$	.1		$	30.9
Basic earnings per share denominators (in thousands):
Total average common shares outstanding during the period	3,746.1			4,564.6
Average unvested restricted common shares ⁽³⁾	(35.9		)	(52.5		)
Basic earnings per share denominator	3,710.2			4,512.1
Diluted earnings per share denominator (in thousands):
Total average common shares outstanding during the period	3,746.1			4,564.6
Average unvested restricted common shares ⁽³⁾	(35.9		)	(52.5		)
Diluted earnings per share denominator	3,710.2			4,512.1
Basic earnings per share (in dollars) - discontinued operations:	$	.03		$	6.86
Diluted earnings per share (in dollars) - discontinued operations:	$	.03		$	6.86

⁽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, 2018 and 2017.

⁽³⁾ Restricted common shares outstanding vest either in equal annual installments or upon a stated date. See Note 10 — “Employee Share-Based Incentive Compensation Plans”.