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. Upon discovery of the overstatements, White Mountains initiated an investigation, conducted by outside counsel, of the reporting of these overstatements by Wobi to White Mountains. As a result of this investigation, 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. Wobi also conducted a separate investigation with the assistance of Israeli counsel to support the preparation of Wobi’s standalone financial statements. That separate investigation has been completed and its results did not materially impact White Mountains’s financial statements.

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 March 31, 2017 and its consolidated statements of operations and comprehensive income, consolidated statements of changes in equity, cash flows and earnings per share for the three months March 31, 2017. The impact of these revisions to each of the previously reported consolidated statements are disclosed below.

Amounts previously reported reflect the reclassification of OneBeacon to discontinued operations for all applicable periods presented.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited)



	Three months ended March 31, 2017
Millions, except for per share amounts	As previously reported			Adjustments			As revised
Revenues:
Financial Guarantee (HG Global/BAM)
Financial Guarantee revenues	$	6.3		$	—		$	6.3
Marketing Technology (MediaAlpha)
Marketing Technology revenues	32.5			—			32.5
Other
Advertising & commission revenues	6.0			(4.7		)	1.3
Other revenues ⁽¹⁾	48.7			—			48.7
Total revenues	93.5			(4.7		)	88.8

Expenses:
Financial Guarantee (HG Global/BAM)
Financial Guarantee expenses	11.9			—			11.9
Marketing Technology (MediaAlpha)
Marketing Technology expenses	33.5			—			33.5
Other
Other expenses ⁽²⁾⁽³⁾	46.8			.2			47.0
Total expenses	92.2			.2			92.4
Pre-tax income (loss)	1.3			(4.9		)	(3.6		)
Income tax benefit	.3			—			.3
Net income (loss) from continuing operations	1.6			(4.9		)	(3.3		)
Loss on sale of discontinued operations	(1.0		)	—			(1.0		)
Net income from discontinued operations	32.3			—			32.3
Net income (loss) ⁽⁴⁾	32.9			(4.9		)	28.0
Net loss (income) attributable to non-controlling interests	1.3			(.3		)	1.0
Net income (loss) attributable to White Mountains’s common shareholders	34.2			(5.2		)	29.0
Other comprehensive income (loss), net of tax	.9			(.7		)	.2
Comprehensive income (loss)	35.1			(5.9		)	29.2
Comprehensive loss attributable to non-controlling interests	—			—			—
Comprehensive income (loss) attributable to White Mountains’s common shareholders	$	35.1		$	(5.9	)	$	29.2

Basic and diluted earnings per share - continuing operations	$	7.49		$	(1.15	)	$	6.34

⁽¹⁾Total other revenues include earned insurance premiums, net investment income, net realized and unrealized losses, and other revenues.

⁽²⁾Total other expenses include loss and loss adjustment expenses, insurance acquisition expenses, cost of sales, general and administrative expenses, and interest expense.

⁽³⁾The adjustments to other expenses is primarily related to the write-off of goodwill and intangible assets for Wobi.

⁽⁴⁾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



	Three months ended March 31, 2017
Millions	As previously reported			Adjustments			As revised

Common shares and paid-in surplus	$	807.1		$	.7		$	807.8

Retained earnings, beginning of year	2,797.2			(20.6		)	2,776.6
Share repurchases	(5.1		)	—			(5.1		)
Net income (loss)	34.2			(5.2		)	29.0
Dividends	(4.6		)	—			(4.6		)
Retained earnings, end of period	2,821.7			(25.8		)	2,795.9

Accumulated other comprehensive loss, after tax, beginning of year	(4.6		)	—			(4.6		)
Net change in foreign currency translation	.9			(.7		)	.2
Accumulated other comprehensive income, after tax, end of period	(3.7		)	(.7		)	(4.4		)

White Mountains’s common shareholders’ equity	3,625.1			(25.8		)	3,599.3

Non-controlling interests, beginning of year	133.9			(.6		)	133.3
Net loss	(1.3		)	.3			(1.0		)
Other changes in non-controlling interests	(.2		)	(.6		)	(.8		)
Non-controlling interests, end of period	132.4			(.9		)	131.5
Total equity	$	3,757.5		$	(26.7	)	$	3,730.8

CONSOLIDATED BALANCE SHEETS (Unaudited)



	March 31, 2017
Millions	As previously reported			Adjustments			As revised
Assets
Financial Guarantee (HG Global/BAM)
Financial Guarantee assets	$	699.1		$	—		$	699.1
Marketing Technology (MediaAlpha)
Marketing Technology assets	53.2			—			53.2
Other
Goodwill	13.4			(5.8		)	7.6
Other intangible assets	4.5			(3.4		)	1.1
Other assets — commissions receivable	21.4			(17.2		)	4.2
Other assets	2,146.3			—			2,146.3
Assets held for sale	3,578.9			—			3,578.9
Total assets	$	6,516.8		$	(26.4	)	$	6,490.4
Liabilities
Financial Guarantee (HG Global/BAM)
Financial Guarantee liabilities	$	126.4		$	—		$	126.4
Marketing Technology (MediaAlpha)
Marketing Technology liabilities	25.6			—			25.6
Other
Liabilities held for sale	2,535.2			—			2,535.2
Other liabilities	72.1			.3			72.4
Total liabilities	2,759.3			.3			2,759.6

Equity
White Mountains’s common shares	4.6			—			4.6
Paid in surplus	802.5			.7			803.2
Retained earnings	2,821.7			(25.8		)	2,795.9
Accumulated other comprehensive income, net of tax	(3.7		)	(.7		)	(4.4		)
White Mountains’s common shareholders’ equity	3,625.1			(25.8		)	3,599.3
Non-controlling interests	132.4			(.9		)	131.5
Total equity	3,757.5			(26.7		)	3,730.8
Total liabilities and equity	$	6,516.8		$	(26.4	)	$	6,490.4