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Investment Securities
 3 Months Ended
Mar. 31, 2019
Investments, Debt and Equity Securities [Abstract]  
Investment Securities Investment Securities

White Mountains’s portfolio of investment securities held for general investment purposes consists of fixed maturity investments, short-term investments, common equity securities and other long-term investments, which are all classified as trading securities. Trading securities are reported at fair value as of the balance sheet date.  Net realized and unrealized investment gains (losses) on trading securities are reported in pre-tax revenues.
White Mountains’s fixed maturity investments are generally valued using industry standard pricing methodologies. Key inputs include benchmark yields, benchmark securities, reported trades, issuer spreads, bids, offers, credit ratings and prepayment speeds. Income on mortgage and asset-backed securities is recognized using an effective yield based on anticipated prepayments and the estimated economic life of the securities. When actual prepayments differ significantly from anticipated prepayments, the estimated economic life is recalculated and the remaining unamortized premium or discount is amortized prospectively over the remaining economic life.
Realized investment gains (losses) resulting from sales of investment securities are accounted for using the specific identification method. Premiums and discounts on all fixed maturity investments are amortized or accreted to income over the anticipated life of the investment. Short-term investments consist of interest-bearing money market funds and other securities, which at the time of purchase, mature or become available for use within one year.  Short-term investments are carried at amortized or accreted cost, which approximated fair value as of March 31, 2019 and December 31, 2018.
Other long-term investments consist primarily of unconsolidated entities, private equity funds and hedge funds.

Net Investment Income

White Mountains’s net investment income is comprised primarily of interest income associated with White Mountains’s fixed maturity investments and short-term investments and dividend income from its common equity securities and other long-term investments.
The following table presents pre-tax net investment income for the three months ended March 31, 2019 and 2018:
 
 
Three Months Ended
 
 
March 31,
Millions
 
2019
 
2018
Fixed maturity investments
 
$
8.1

 
$
10.9

Short-term investments
 
1.3

 
2.6

Common equity securities
 
5.4

 
5.0

Other long-term investments
 
1.6

 
1.9

Total investment income
 
16.4

 
20.4

Third-party investment expenses
 
(.4
)
 
(.7
)
Net investment income, pre-tax
 
$
16.0

 
$
19.7




Net Realized and Unrealized Investment Gains (Losses)

The following table presents net realized and unrealized investment gains (losses) for the three months ended March 31, 2019 and 2018:
 
 
Three Months Ended
 
 
March 31,
Millions
 
2019
 
2018
Net realized investment gains (losses), pre-tax
 
$
25.7

 
$
(5.1
)
Net unrealized investment gains (losses), pre-tax (1)
 
219.9

 
(48.6
)
Net realized and unrealized investment gains (losses), pre-tax
 
245.6

 
(53.7
)
Income tax (expense) benefit attributable to net realized and
     unrealized investment gains (losses)
 
(52.2
)
 
5.7

Net realized and unrealized investment gains (losses), after-tax
 
$
193.4

 
$
(48.0
)
(1) Includes $114.7 in unrealized investment gains associated with the MediaAlpha Transaction. See Note 2 — “Significant Transactions.”

For the three months ended March 31, 2019 and 2018, all of White Mountains’s net realized and unrealized investment gains (losses) were recorded in the consolidated statements of operations. There were no investment gains (losses) recorded in other comprehensive income.
Net Realized Investment Gains (Losses)
The following table presents net realized investment gains (losses) for the three months ended March 31, 2019 and 2018:
 
 
Three Months Ended
 
Three Months Ended
 
 
March 31, 2019
 
March 31, 2018
Millions
 
Net
Realized (Losses) Gains
 
Net
Foreign
Exchange Gains (Losses)
 
Total Net Realized
(Losses) Gains
Reflected in
Earnings
 
Net
Realized (Losses) Gains
 
Net
Foreign
Exchange Gains (Losses)
 
Total Net Realized
Gains (Losses)
Reflected in
Earnings
Fixed maturity investments
 
$
(.9
)
 
$
—

 
$
(.9
)
 
$
(13.7
)
 
$
18.2

 
$
4.5

Short-term investments
 
—

 
—

 
—

 
(.1
)
 
—

 
(.1
)
Common equity securities
 
25.8

 
—

 
25.8

 
1.2

 
—

 
1.2

Other long-term investments
 
.8

 
—

 
.8

 
(3.5
)
 
(7.2
)
 
(10.7
)
Net realized investment gains (losses), pre-tax
 
25.7

 
—

 
25.7

 
(16.1
)
 
11.0

 
(5.1
)
Income tax expense attributable to net realized investment gains (losses)
 
(1.7
)
 
—

 
(1.7
)
 
(.6
)
 
—

 
(.6
)
Net realized investment gains (losses), after-tax
 
$
24.0

 
$
—

 
$
24.0

 
$
(16.7
)
 
$
11.0

 
$
(5.7
)

Net Unrealized Investment Gains (Losses)
The following table presents net unrealized investment gains (losses) and changes in the carrying value of investments measured at fair value for the three months ended March 31, 2019 and 2018:
 
 
Three Months Ended
 
Three Months Ended
 
 
March 31, 2019
 
March 31, 2018
Millions
 
Net
Unrealized Gains
 
Net
Foreign
Exchange Losses
 
Total Net Unrealized Gains
Reflected in
Earnings
 
Net
Unrealized Losses
 
Net
Foreign
Exchange (Losses)
Gains
 
Total Net Unrealized (Losses)
Gains
Reflected in
Earnings
Fixed maturity investments
 
$
22.0

 
$
—

 
$
22.0

 
$
(18.6
)
 
$
(14.8
)
 
$
(33.4
)
Short-term investments
 
—

 
—

 
—

 
(.7
)
 
—

 
(.7
)
Common equity securities
 
85.5

 
—

 
85.5

 
(16.7
)
 
—

 
(16.7
)
Other long-term investments(1)
 
112.7

 
(.3
)
 
112.4

 
(1.9
)
 
4.1

 
2.2

Net unrealized investment gains (losses), pre-tax
 
220.2

 
(.3
)
 
219.9

 
(37.9
)
 
(10.7
)
 
(48.6
)
Income tax expense attributable to net unrealized
   investment gains (losses)
 
(50.5
)
 
—

 
(50.5
)
 
6.3

 
—

 
6.3

Net unrealized investment gains (losses), after-tax
 
$
169.7

 
$
(.3
)
 
$
169.4

 
$
(31.6
)
 
$
(10.7
)
 
$
(42.3
)

(1) Includes $114.7 in unrealized investment gains associated with the MediaAlpha Transaction. See Note 2 — “Significant Transactions.”

The following table presents total gains (losses) included in earnings attributable to net unrealized investment gains (losses) for Level 3 investments for the three months ended March 31, 2019 and 2018:
 
 
Three Months Ended
 
 
March 31,
Millions
 
2019
 
2018
Other long-term investments
 
$
114.0

 
$
(5.1
)
Total net unrealized investment gains (losses), pre-tax - Level 3 investments
 
$
114.0

 
$
(5.1
)


Investment Holdings

The following tables present the cost or amortized cost, gross unrealized investment gains (losses) and carrying values of White Mountains’s fixed maturity investments as of March 31, 2019 and December 31, 2018:
 
 
March 31, 2019
Millions
 
Cost or
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Carrying
Value
U.S. Government and agency obligations
 
$
153.1

 
$
.4

 
$
(.5
)
 
$
153.0

Debt securities issued by corporations
 
538.4

 
7.3

 
(.9
)
 
544.8

Municipal obligations
 
279.7

 
6.1

 
(.4
)
 
285.4

Mortgage and asset-backed securities
 
149.4

 
.6

 
(1.2
)
 
148.8

Total fixed maturity investments
 
$
1,120.6

 
$
14.4

 
$
(3.0
)
 
$
1,132.0


 
 
December 31, 2018
Millions
 
Cost or
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Carrying
Value
U.S. Government and agency obligations
 
$
154.0

 
$
.1

 
$
(.9
)
 
$
153.2

Debt securities issued by corporations
 
519.0

 
1.0

 
(9.5
)
 
510.5

Municipal obligations
 
279.0

 
2.4

 
(1.1
)
 
280.3

Mortgage and asset-backed securities
 
136.1

 
.1

 
(2.7
)
 
133.5

Total fixed maturity investments
 
$
1,088.1

 
$
3.6

 
$
(14.2
)
 
$
1,077.5


The following tables present the cost or amortized cost, gross unrealized investment gains (losses), net foreign currency losses, and carrying values of White Mountains’s common equity securities and other long-term investments as of March 31, 2019 and December 31, 2018:
 
 
March 31, 2019
Millions
 
Cost or
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Net Foreign
Currency
Losses
 
Carrying
Value
Common equity securities
 
$
798.6

 
$
107.3

 
$
(.9
)
 
$
—

 
$
905.0

Other long-term investments
 
$
389.8

 
$
164.3

 
$
(54.3
)
 
$
(2.2
)
 
$
497.6

 
 
December 31, 2018
Millions
 
Cost or
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Net Foreign
Currency
Losses
 
Carrying
Value
Common equity securities
 
$
904.7

 
$
51.0

 
$
(30.1
)
 
$
—

 
$
925.6

Other long-term investments
 
$
330.3

 
$
52.2

 
$
(54.9
)
 
$
(2.0
)
 
$
325.6


Other Long-Term Investments

The following table presents the carrying values of White Mountains’s other long-term investments as of March 31, 2019 and December 31, 2018:

 
 
Carrying Value at
Millions
 
March 31, 2019
 
December 31, 2018
MediaAlpha (1)
 
$
114.7

 
$
—

PassportCard/DavidShield (1)
 
75.0

 
75.0

Kudu
 
71.7

 
30.7

Other unconsolidated entities (1)(2)
 
54.4

 
60.0

Total unconsolidated entities(1)(2)
 
315.8

 
165.7

Private equity funds and hedge funds
 
150.7

 
146.1

Other
 
31.1

 
13.8

Total other long-term investments
 
$
497.6

 
$
325.6

(1) See Fair Value Measurements by Level table.
(2) Includes White Mountains’s non-controlling interests in certain private common equity securities, limited liability companies and convertible preferred securities.

Private Equity Funds and Hedge Funds
White Mountains invests in private equity funds and hedge funds, which are included in other long-term investments. The fair value of these investments is generally estimated using the NAV of the funds. As of March 31, 2019, White Mountains held investments in twelve private equity funds and one hedge fund.  The largest investment in a single fund was $53.1 million as of March 31, 2019 and $54.3 million as of December 31, 2018.
The following table presents investments in private equity funds and hedge funds by investment objective and sector as of March 31, 2019 and December 31, 2018:
 
 
March 31, 2019
 
December 31, 2018
Millions
 
Fair Value
 
Unfunded
Commitments
 
Fair Value
 
Unfunded
Commitments
Private equity funds
 
 

 
 

 
 

 
 

Manufacturing/Industrial
 
$
42.1

 
$
10.5

 
$
42.9

 
$
10.5

Aerospace/Defense/Government
 
32.8

 
29.8

 
27.6

 
34.9

Direct lending
 
13.6

 
16.8

 
13.0

 
17.7

Financial services
 
9.1

 
12.8

 
8.3

 
13.6

Total private equity funds
 
97.6

 
69.9

 
91.8

 
76.7

 
 
 
 
 
 
 
 
 
Hedge funds
 
 

 
 

 
 

 
 

Long/short banks and financials
 
53.1

 
—

 
54.3

 
—

Total hedge funds
 
53.1

 
—

 
54.3

 
—

 
 
 
 
 
 
 
 
 
Total private equity funds and hedge funds
   included in other long-term investments
 
$
150.7

 
$
69.9

 
$
146.1

 
$
76.7

 

Investments in private equity funds are generally subject to a lock-up period during which investors may not request a redemption. Distributions prior to the expected termination date of the fund may be limited to dividends or proceeds arising from the liquidation of the fund’s underlying investments. In addition, certain private equity funds have the option to extend the lock-up period.
The following table presents investments in private equity funds that were subject to lock-up periods as of March 31, 2019:
Millions
 
1 – 3 years
 
3 – 5 years
 
5 – 10 years
 
>10 years
 
Total
Private equity funds — expected lock-up period remaining
 
$7.0
 
$—
 
$67.9
 
$22.7
 
$97.6


Investors in private equity funds are generally subject to indemnification obligations outside of the capital commitment period and prior to the winding up of the fund. As of March 31, 2019 and December 31, 2018, White Mountains is not aware of any indemnification claims relating to its investments in private equity funds. 
Redemption of investments in most hedge funds is subject to restrictions, including lock-up periods where no redemptions or withdrawals are allowed, restrictions on redemption frequency and advance notice periods for redemptions. Amounts requested for redemptions remain subject to market fluctuations until the redemption effective date, which generally falls at the end of the defined redemption period. As of March 31, 2019, White Mountains held one active hedge fund with a fair value of $53.1 million. The hedge fund is subject to a semi-annual restriction on redemptions and an advance notice period requirement of 45 days.

Fair Value Measurements as of March 31, 2019
Fair value measurements are categorized into a hierarchy that distinguishes between inputs based on market data from independent sources (“observable inputs”) and a reporting entity’s internal assumptions based upon the best information available when external market data is limited or unavailable (“unobservable inputs”). Quoted prices in active markets for identical assets or liabilities have the highest priority (“Level 1”), followed by observable inputs other than quoted prices, including prices for similar but not identical assets or liabilities (“Level 2”) and unobservable inputs, including the reporting entity’s estimates of the assumptions that market participants would use, having the lowest priority (“Level 3”). As of March 31, 2019 and December 31, 2018, White Mountains used quoted market prices or other observable inputs to determine fair value for approximately 82% and 87% of the investment portfolio.
Fair Value Measurements by Level
The following tables present White Mountains’s fair value measurements for investments as of March 31, 2019 and December 31, 2018 by level. The major security types were based on the legal form of the securities. White Mountains has disaggregated its fixed maturity investments based on the issuing entity type, which impacts credit quality, with debt securities issued by U.S. government entities carrying minimal credit risk, while the credit and other risks associated with other issuers, such as corporations, foreign governments, municipalities or entities issuing mortgage and asset-backed securities vary depending on the nature of the issuing entity type. White Mountains further disaggregates debt securities issued by corporations and common equity securities by industry sector because investors often reference commonly used benchmarks and their subsectors to monitor risk and performance. Accordingly, White Mountains has further disaggregated these asset classes into subclasses based on the similar sectors and industry classifications it uses to evaluate investment risk and performance against commonly used benchmarks, such as the Bloomberg Barclays U.S. Intermediate Aggregate and S&P 500 indices.
 
 
March 31, 2019
Millions
 
Fair Value
 
Level 1
 
Level 2
 
Level 3
Fixed maturity investments:
 
 

 
 

 
 

 
 

U.S. Government and agency obligations
 
$
153.0

 
$
153.0

 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
Debt securities issued by corporations:
 
 

 
 
 
 
 
 
Financials
 
139.7

 
—

 
139.7

 
—

Healthcare
 
74.7

 
—

 
74.7

 
—

Energy
 
66.0

 
—

 
66.0

 
—

Consumer
 
61.0

 
—

 
61.0

 
—

Industrial
 
57.0

 
—

 
57.0

 
—

Technology
 
55.0

 
—

 
55.0

 
—

Communications
 
40.4

 
—

 
40.4

 
—

Utilities
 
28.5

 
—

 
28.5

 
—

Materials
 
22.5

 
—

 
22.5

 
—

Total debt securities issued by corporations
 
544.8

 
—

 
544.8

 
—

 
 
 
 
 
 
 
 
 
Mortgage and asset-backed securities
 
148.8

 
—

 
148.8

 
—

Municipal obligations
 
285.4

 
—

 
285.4

 
—

Total fixed maturity investments
 
1,132.0

 
153.0

 
979.0

 
—

 
 
 
 
 
 
 
 
 
Short-term investments (1)
 
269.8

 
249.0

 
20.8

 
—

 
 
 
 
 
 
 
 
 
Common equity securities:
 
 

 
 

 
 

 
 

Exchange traded funds (2)
 
712.3

 
646.3

 
66.0

 
—

Other (3)
 
192.7

 
—

 
192.7

 
—

Total common equity securities
 
905.0

 
646.3

 
258.7

 
—

 
 
 
 
 
 
 
 
 
Other long-term investments
 
275.1

 
—

 
—

 
275.1

Other long-term investments — NAV (4)
 
222.5

 
—

 
—

 
—

Total investments
 
$
2,804.4

 
$
1,048.3

 
$
1,258.5

 
$
275.1


(1) Short-term investments are measured at amortized cost, which approximates fair value.
(2) ETFs traded on foreign exchanges are priced using the fund’s published NAV to account for the difference in market close times and are therefore designated a level 2 measurement.
(3) Consists of two investments in unit trusts that primarily invest in international equities.
(4) Consists of unconsolidated entities, private equity funds and one hedge fund for which fair value is measured at NAV using the practical expedient. Investments for which fair value is measured at NAV are not classified within the fair value hierarchy.

 
 
December 31, 2018
Millions
 
Fair Value
 
Level 1
 
Level 2
 
Level 3
Fixed maturity investments:
 
 

 
 

 
 

 
 

U.S. Government and agency obligations
 
$
153.2

 
$
153.2

 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
Debt securities issued by corporations:
 
 

 
 

 
 

 
 

Financials
 
143.4

 
—

 
143.4

 
—

Consumer
 
68.5

 
—

 
68.5

 
—

Technology
 
60.5

 
—

 
60.5

 
—

Energy
 
57.6

 
—

 
57.6

 
—

Healthcare
 
55.0

 
—

 
55.0

 
—

Industrial
 
47.6

 
—

 
47.6

 
—

Communications
 
31.8

 
—

 
31.8

 
—

Materials
 
26.3

 
—

 
26.3

 
—

Utilities
 
19.8

 
—

 
19.8

 
—

Total debt securities issued by corporations
 
510.5

 
—

 
510.5

 
—

 
 
 
 
 
 
 
 
 
Mortgage and asset-backed securities
 
133.5

 
—

 
133.5

 
—

Municipal obligations
 
280.3

 
—

 
280.3

 
—

Total fixed maturity investments
 
1,077.5

 
153.2

 
924.3

 
—

 
 
 
 
 
 
 
 
 
Short-term investments (1)
 
214.2

 
204.4

 
9.8

 
—

 
 
 
 
 
 
 
 
 
Common equity securities:
 
 

 
 

 
 

 
 

Exchange traded funds (2)
 
675.3

 
617.0

 
58.3

 
—

Healthcare
 
14.0

 
14.0

 
—

 
—

Financials
 
13.5

 
13.5

 
—

 
—

Communications
 
12.7

 
12.7

 
—

 
—

Industrial
 
11.4

 
11.4

 
—

 
—

Technology
 
7.4

 
7.4

 
—

 
—

Consumer
 
6.2

 
6.2

 
—

 
—

Energy
 
4.1

 
4.1

 
—

 
—

Materials
 
3.1

 
3.1

 
—

 
—

Other (3)
 
177.9

 
—

 
177.9

 
—

Total common equity securities
 
925.6

 
689.4

 
236.2

 
—

 
 
 
 
 
 
 
 
 
Other long-term investments
 
138.7

 
—

 
—

 
138.7

Other long-term investments — NAV (4)
 
186.9

 
—

 
—

 
—

Total investments
 
$
2,542.9

 
$
1,047.0

 
$
1,170.3

 
$
138.7


(1) Short-term investments are measured at amortized cost, which approximates fair value.
(2) ETFs traded on foreign exchanges are priced using the fund’s published NAV to account for the difference in market close times and are therefore designated a level 2 measurement.
(3) Consists of two investments in unit trusts that primarily invest in international equities.
(4) Consists of unconsolidated entities, private equity funds and one hedge fund for which fair value is measured at NAV using the practical expedient. Investments for which fair value is measured at NAV are not classified within the fair value hierarchy.






Debt Securities Issued by Corporations

The following table presents the ratings of debt securities issued by corporations held in White Mountains’s investment portfolio as of March 31, 2019 and December 31, 2018:
 
 
Fair Value at
Millions
 
March 31, 2019
 
December 31, 2018
AAA
 
$
9.6

 
$
8.9

AA
 
83.8

 
88.7

A
 
300.3

 
270.5

BBB
 
151.1

 
142.4

Debt securities issued by corporations (1)
 
$
544.8

 
$
510.5

(1) 
Credit ratings are based upon issuer credit ratings provided by Standard & Poor’s Financial Services LLC (“Standard & Poor’s”), or if unrated by Standard & Poor’s, long-term obligation ratings provided by Moody’s Investor Service, Inc.

Mortgage and Asset-backed Securities

The following table presents the fair value of White Mountains’s mortgage and asset-backed securities as of March 31, 2019 and December 31, 2018:
 
 
March 31, 2019
 
December 31, 2018
Millions
 
Fair Value
 
Level 2
 
Level 3
 
Fair Value
 
Level 2
 
Level 3
Mortgage-backed securities:
 
 

 
 

 
 

 
 

 
 

 
 

Agency:
 
 

 
 

 
 

 
 

 
 

 
 

FNMA
 
$
59.8

 
$
59.8

 
$
—

 
$
53.6

 
$
53.6

 
$
—

FHLMC
 
43.0

 
43.0

 
—

 
38.1

 
38.1

 
$
—

GNMA
 
25.6

 
25.6

 
—

 
23.7

 
23.7

 
$
—

Total agency (1)
 
128.4

 
128.4

 
—

 
115.4

 
115.4

 
—

  Total mortgage-backed securities
 
128.4

 
128.4

 
—

 
115.4

 
115.4

 
—

Other asset-backed securities:
 
 

 
 
 
 
 
 

 
 
 
 
Vehicle receivables
 
11.5

 
11.5

 
—

 
9.2

 
9.2

 
—

Credit card receivables
 
8.9

 
8.9

 
—

 
8.9

 
8.9

 
—

  Total other asset-backed securities
 
20.4

 
20.4

 
—

 
18.1

 
18.1

 
—

Total mortgage and asset-backed securities
 
$
148.8

 
$
148.8

 
$
—

 
$
133.5

 
$
133.5

 
$
—


(1) 
Represents publicly traded mortgage-backed securities which carry the full faith and credit guaranty of the U.S. Government (i.e., GNMA) or are guaranteed by a government sponsored entity (i.e., FNMA, FHLMC).

Rollforward of Fair Value Measurements by Level

 White Mountains uses quoted market prices where available as the inputs to estimate fair value for its investments in active markets. Such measurements are considered to be either Level 1 or Level 2 measurements, depending on whether the quoted market price inputs are for identical securities (Level 1) or similar securities (Level 2). Level 3 measurements for fixed maturity investments, common equity securities and other long-term investments as of March 31, 2019 and 2018 consist of securities for which the estimated fair value has not been determined based upon quoted market price inputs for identical or similar securities.
The following tables present the changes in White Mountains’s fair value measurements by level for the three months ended March 31, 2019 and 2018:
 
 
 
Level 3 Investments
Unconsolidated Entities, Private Equity Funds and Hedge Funds Measured at NAV (3)
 
 
 
Millions
Level 1 Investments
Level 2 
Investments
Other Long-term
Investments(2)
 
Total
 
Balance at December 31, 2018
$
842.6

$
1,160.5

$
138.7

$
186.9

 
$
2,328.7

(1) 
Net realized and unrealized gains (losses)
91.7

40.7

114.0

(.8
)
 
245.6

 
Amortization/Accretion
.1

(.4
)
—

—

 
(.3
)
 
Purchases
14.6

142.3

11.5

49.2

 
217.6

 
Sales
(149.7
)
(105.4
)
—

(1.9
)
 
(257.0
)
 
Transfers in
—

—

10.9

—

 
10.9

  
Transfers out
—

—

—

(10.9
)
 
(10.9
)
  
Balance at March 31, 2019
$
799.3

$
1,237.7

$
275.1

$
222.5

 
$
2,534.6

(1) 

(1)  Excludes carrying value of $269.8 million and $214.2 as of March 31, 2019 and December 31, 2018, respectively classified as short-term investments.
(2) Includes $114.7 in unrealized investment gains associated with the MediaAlpha Transaction. See Note 2 — “Significant Transactions”.
(3) Investments for which fair value is measured at NAV using the practical expedient are no longer classified within the fair value hierarchy. See Note 1 — “Basis of Presentation and Significant Accounting Policies”.

 
 
 
Level 3 Investments
Unconsolidated Entities, Private Equity Funds and Hedge Funds Measured at NAV (3)
 
 
Millions
Level 1 Investments
Level 2 
Investments
Other Long-term
Investments
Total
 
Balance at December 31, 2017
$
890.4

$
2,105.4

$
77.2

$
135.3

$
3,208.3

(1)(2) 
Net realized and unrealized (losses) gains
(14.3
)
(26.0
)
(7.8
)
2.7

(45.4
)
(4) 
Amortization/Accretion
—

(1.2
)
—

—

(1.2
)
 
Purchases
238.9

407.7

44.0

2.0

692.6

 
Sales
(240.7
)
(1,080.8
)
—

(.3
)
(1,321.8
)
 
Transfers in
—

—

—

—

—

 
Transfers out
—

—

—

—

—

 
Balance at March 31, 2018
$
874.3

$
1,405.1

$
113.4

$
139.7

$
2,532.5

(1) 

(1) Excludes carrying value of $763.0 and $176.1 as of March 31, 2018 and December 31, 2017, respectively classified as short-term investments.
(2)  Excludes carrying value of $(3.7) as of December 31, 2017 associated with foreign currency forward contracts.
(3) Investments for which fair value is measured at NAV using the practical expedient are no longer classified within the fair value hierarchy. See Note 1 — “Basis of Presentation and Significant Accounting Policies”.
(4) Excludes realized and unrealized losses associated with foreign currency forward contracts, foreign currency on cash and open trades and short-term investments of $3.5, $4.2 and $0.6 for the three months ended March 31, 2018.


Fair Value Measurements — Transfers Between Levels - Three-months ended March 31, 2019 and 2018
Transfers between levels are recorded using the fair value measurement as of the end of the quarterly period in which the event or change in circumstance giving rise to the transfer occurred.
During the first three months of 2019 and 2018, there were no fixed maturity investments or other long-term investments classified as Level 3 measurements in the prior period that were transferred to Level 2 measurements.

Significant Unobservable Inputs

The following tables present significant unobservable inputs used in estimating the fair value of other long-term investments, other than private equity funds and hedge funds, classified within Level 3 as of March 31, 2019 and December 31, 2018. The fair value of investments in certain unconsolidated entities, private equity funds and hedge funds are generally estimated using the NAV of the funds.

$ in Millions, Except Share Price
 
March 31, 2019
Description
 
Valuation Technique(s)
 
Fair Value (1)
 
Unobservable Input
MediaAlpha
 
Share price of recent transaction(2)
 
$114.7
 
Unit price
-
$208.98
PassportCard/DavidShield
 
Discounted cash flow
 
$75.0
 
Discount rate
-
18.0%
 
 
 
 
 
 
Revenue exit multiple
-
1.00
Compare.com
 
Discounted cash flow
 
$16.9
 
Discount rate
-
22.0%
 
 
 
 
 
 
Revenue exit multiple
-
2.75
YOUSURE Tarifvergleich GmbH (“durchblicker”)
 
Discounted cash flow
 
$15.2
 
Discount rate
-
23.0%
 
 
 
 
 
 
Revenue exit multiple
-
2.25
Captricity, Inc.
 
Discounted cash flow
 
$14.5
 
Discount rate
-
23.0%
 
 
 
 
 
 
Revenue exit multiple
-
3.75
Galvanic Applied Sciences
 
Multiple of EBITDA
 
$2.7
 
EBITDA multiple
-
6.00
Private debt instrument
 
Discounted cash flow
 
$10.0
 
Discount rate
-
9.23%
Private debt instrument
 
Discounted cash flow
 
$10.9
 
Discount rate
-
7.00%
(1) Includes the net unrealized investment gains (losses) associated with foreign currency; foreign currency effects based on observable inputs.
(2) The MediaAlpha Transaction was completed on February 26, 2019. See Note 2 - “Significant Transactions”.


$ in Millions, Except Share Price
 
December 31, 2018
Description
 
Valuation Technique(s)
 
Fair Value (1)
 
Unobservable Input
PassportCard/DavidShield
 
Discounted cash flow
 
$75.0
 
Discount rate
-
18.0%
 
 
 
 
 
 
Revenue exit multiple
-
1.00
Compare.com
 
Discounted cash flow
 
$16.9
 
Discount rate
-
22.0%
 
 
 
 
 
 
Revenue exit multiple
-
2.75
durchblicker
 
Discounted cash flow
 
$15.5
 
Discount rate
-
23.0%
 
 
 
 
 
 
Revenue exit multiple
-
2.25
Captricity, Inc.
 
Discounted cash flow
 
$14.5
 
Discount rate
-
23.0%
 
 
 
 
 
 
Revenue exit multiple
-
3.75
Galvanic Applied Sciences
 
Multiple of EBITDA
 
$3.1
 
EBITDA multiple
-
6.00
Private debt instrument
 
Discounted cash flow
 
$10.0
 
Discount rate
-
9.23%
(1) Includes the net unrealized investment gains (losses) associated with foreign currency; foreign currency effects based on observable inputs.