Held for Sale and Discontinued Operations

6 Months Ended

Jun. 30, 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. During the three and six months ended June 30, 2017, net income from discontinued operations related to OneBeacon was $3.4 million and $35.7 million.

Tranzact

On July 21, 2016, White Mountains completed its sale of Tranzact to Clayton, Dubilier & Rice, LLC. During the six months ended June 30, 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. During the six months ended June 30, 2018, White Mountains recorded a $0.1 million gain from the sale of Sirius Group as a result of a change to the valuation of the accrued incentive compensation payable to Sirius Group employees. During the three and six months ended June 30, 2017, White Mountains recorded a $0.6 million reduction to the 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 June 30, 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

For the six months ended June 30, 2018, the $0.1 million gain recorded within discontinued operations relates to Sirius Group. The following table presents the results of operations, including related income taxes, associated with the business classified as discontinued operations for the three and six months ended June 30, 2017. For the three and six months ended June 30, 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									Six Months Ended
	June 30, 2017									June 30, 2017
Millions	OneBeacon			Sirius Group			Total			OneBeacon		Sirius Group			Other Disc Ops			Total
Revenues
Earned insurance premiums	$	277.4		$	—		$	277.4		$	539.2	$	—		$	—		$	539.2
Net investment income	14.5			—			14.5			26.7		—			—			26.7
Net realized and unrealized gains	12.3			—			12.3			27.3		—			—			27.3
Other revenue	2.1			—			2.1			5.5		—			—			5.5
Total revenues	306.3			—			306.3			598.7		—			—			598.7
Expenses
Loss and loss adjustment expenses	188.6			—			188.6			339.2		—			—			339.2
Insurance and reinsurance acquisition expenses	48.4			—			48.4			93.7		—			—			93.7
Other underwriting expenses	59.6			—			59.6			111.3		—			—			111.3
General and administrative expenses	8.8			—			8.8			13.8		—			—			13.8
Interest expense	3.3			—			3.3			6.6		—			—			6.6
Total expenses	308.7			—			308.7			564.6		—			—			564.6
Pre-tax (loss) income	(2.4		)	—			(2.4		)	34.1		—			—			34.1
Income tax expense	5.8			—			5.8			1.6		—			—			1.6
Net income from discontinued operations	3.4			—			3.4			35.7		—			—			35.7
Net loss from sale of discontinued operations	—			(.6		)	(.6		)	—		(.6		)	(1.0		)	(1.6		)
Total income (loss) from discontinued operations	3.4			(.6		)	2.8			35.7		(.6		)	(1.0		)	34.1
Change in foreign currency translation and other from discontinued operations	.2			—			.2			.3		—			—			.3
Comprehensive income (loss) from discontinued operations	$	3.6		$	(.6	)	$	3.0		$	36.0	$	(.6	)	$	(1.0	)	$	34.4

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:



	Six Months Ended
	June 30,
Millions	2018			2017
Net cash provided from (used for) operations	$	.1		$	87.3
Net cash (used for) provided from investing activities	(.1		)	(43.6		)
Net cash used for financing activities	—			(42.0		)
Net change in cash during the period	—			1.7
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	$	—		$	71.3
Supplemental cash flows information:
Interest paid	$	—		$	(6.3	)
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 and six months ended June 30, 2018 and 2017:



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
Basic and diluted earnings per share numerators (in millions):
Net income (loss) attributable to White Mountains’s common shareholders	$	3.5		$	13.6		$	(44.5	)	$	42.6
Less total loss from continuing operations, net of tax	3.5			10.8			(44.6		)	8.5
Net income from discontinued operations attributable to White Mountains’s common shareholders	$	—		$	2.8		$	.1		$	34.1
Allocation of earnings to participating restricted common shares ⁽¹⁾	—			—			—			(.4		)
Basic and diluted earnings per share numerators	$	—		$	2.8		$	.1		$	33.7
Basic earnings per share denominators (in thousands):
Total average common shares outstanding during the period	3,432.0			4,572.1			3,588.2			4,568.4
Average unvested restricted common shares ⁽³⁾	(41.5		)	(57.2		)	(38.7		)	(54.9		)
Basic earnings per share denominator	3,390.5			4,514.9			3,549.5			4,513.5
Diluted earnings per share denominator (in thousands):
Total average common shares outstanding during the period	3,432.0			4,572.1			3,588.2			4,568.4
Average unvested restricted common shares ⁽³⁾	(41.5		)	(57.2		)	(38.7		)	(54.9		)
Diluted earnings per share denominator	3,390.5			4,514.9			3,549.5			4,513.5
Basic and diluted earnings per share (in dollars) - discontinued operations:	$	—		$	.61		$	.03		$	7.47

⁽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 and six months ended June 30, 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”.