Debt

9 Months Ended

Sep. 30, 2019

The following table presents White Mountains’s debt outstanding as of September 30, 2019 and December 31, 2018:



Millions	September 30, 2019			Effective Rate ⁽¹⁾	December 31, 2018			Effective Rate ⁽¹⁾
NSM Bank Facility	$	221.8		7.7%	$	180.4		7.4%
Unamortized issuance cost	(4.1		)		(3.8		)
NSM Bank Facility, carrying value	217.7				176.6
Other NSM debt	1.7			2.5%	1.9			2.2%
MediaAlpha Bank Facility	—				14.3			7.1%
Unamortized issuance cost	—				(.1		)
MediaAlpha Bank Facility, carrying value	—				14.2
Other Operations debt	11.2			9.6%	—
Unamortized issuance cost	(.4		)		—
Other Operations, carrying value	10.8				—
Total debt	$	230.2			$	192.7

⁽¹⁾Effective rate considers the effect of the debt issuance costs.

NSM Bank Facility

On May 11, 2018, NSM entered into a secured credit facility (the “NSM Bank Facility”) with Ares Capital Corporation in order to refinance NSM’s existing debt and to fund the acquisitions of subsidiaries. The NSM Bank Facility is comprised of term loans totaling $224.0 million and a revolving credit loan commitment of $10.0 million, under which NSM initially borrowed $2.0 million. The term loans under the NSM Bank Facility mature on May 11, 2024, and the revolving loan under the NSM Bank Facility matures on May 11, 2023. During the three and nine months ended September 30, 2019, NSM repaid $0.5 million and $1.4 million on the term loans. During the three months ended September 30, 2019, NSM did not make any borrowings on the term loans or revolving credit loans. During the nine months ended September 30, 2019, NSM repaid $6.5 million on the revolving credit loan. During the nine months ended September 30, 2019, NSM borrowed $42.9 million on the term loans, which included $20.4 million and $22.5 million for the funding of the acquisitions of Embrace and the Renewal Rights. During the nine months ended September 30, 2019, NSM borrowed $6.5 million on the revolving credit loan. As of September 30, 2019, the term loans had an outstanding balance of $221.8 million and the revolving credit loans were undrawn.

Interest on the NSM Bank Facility accrues at a floating interest rate equal to the three month LIBOR or the Prime Rate, as published by the Wall Street Journal plus, in each case, an applicable margin. The margin over LIBOR may vary between 4.25% and 4.75%, and the margin over the Prime Rate may vary between 3.25% and 3.75%, in each case, depending on the consolidated total leverage ratio of the borrower.

On June 15, 2018, NSM entered into an interest rate swap agreement to hedge its exposure to interest rate risk on $151.0 million of its variable rate term loans. Under the terms of the swap agreement, NSM pays a fixed rate of 2.97% and receives a variable rate, which is reset monthly, based on then-current LIBOR. As of September 30, 2019, the variable rate received by NSM under the swap agreement was 2.11%. As of September 30, 2019, the interest rate, including the effect of the swap, for the outstanding term loans of $149.1 million that are hedged by the swap was 7.47%. The effective interest on the outstanding term loans of $72.7 million that are unhedged was 7.12%. The effective interest rate on the total outstanding term loans under the NSM Bank Facility of $221.8 million was 7.17%, excluding the effect of debt issuance costs.

The NSM Bank Facility is secured by all property of the loan parties and contains various affirmative, negative and financial covenants that White Mountains considers to be customary for such borrowings, including a maximum consolidated total leverage ratio covenant.

Compliance

At September 30, 2019, White Mountains was in compliance with the covenants under all of its debt instruments.