Segment Information

9 Months Ended

Sep. 30, 2019

Segment Information

White Mountains has determined that its reportable segments are HG Global/BAM, NSM, Kudu, MediaAlpha (through February 26, 2019) and Other Operations. White Mountains has made its segment determination based on consideration of the following criteria: (i) the nature of the business activities of each of the Company’s subsidiaries and affiliates; (ii) the manner in which the Company’s subsidiaries and affiliates are organized; (iii) the existence of primary managers responsible for specific subsidiaries and affiliates; and (iv) the organization of information provided to the chief operating decision makers and the Board of Directors.

White Mountains deconsolidated MediaAlpha as of February 26, 2019, the date of the MediaAlpha Transaction. Kudu became a reportable segment as of April 4, 2019, the date of the Kudu Transaction. See Note 2 — “Significant Transactions”.

Significant intercompany transactions among White Mountains’s segments have been eliminated herein. The following table presents the financial information for White Mountains’s segments:



Millions	HG Global/ BAM		NSM			Kudu		Other Operations		Total
Three Months Ended September 30, 2019
Earned insurance premiums	$	5.2	$	—		$	—	$	—	$	5.2
Net investment income	5.4		—			4.6		8.4		18.4
Net realized and unrealized investment gains	7.1		—			2.7		57.2		67.0
Advertising and commission revenues	—		49.4			—		1.9		51.3
Other revenue	.3		10.5			.2		2.6		13.6
Total revenues	18.0		59.9			7.5		70.1		155.5
Insurance acquisition expenses	1.4		—			—		—		1.4
Other underwriting expenses	.1		—			—		—		.1
Cost of sales	—		—			—		2.3		2.3
General and administrative expenses	12.5		33.3			4.5		27.7		78.0
Broker commission expense	—		15.3			—		—		15.3
Change in fair value of contingent consideration earnout liabilities	—		(2.0		)	—		—		(2.0		)
Amortization of other intangible assets	—		4.4			.2		—		4.6
Interest expense	—		4.4			—		.3		4.7
Total expenses	14.0		55.4			4.7		30.3		104.4
Pre-tax income	$	4.0	$	4.5		$	2.8	$	39.8	$	51.1



Millions	HG Global/ BAM		NSM		Kudu ⁽¹⁾		MediaAlpha ⁽²⁾			Other Operations		Total
Nine Months Ended September 30, 2019
Earned insurance premiums	$	13.7	$	—	$	—	$	—		$	—	$	13.7
Net investment income	16.1		—		8.6		—			30.7		55.4
Net realized and unrealized investment gains	30.4		—		3.1		—			199.6		233.1
Realized gain and unrealized investment gain from the MediaAlpha Transaction	—		—		—		—			182.2		182.2
Advertising and commission revenues	—		147.6		—		48.8			4.5		200.9
Other revenue	1.3		27.7		.2		—			3.6		32.8
Total revenues	61.5		175.3		11.9		48.8			420.6		718.1
Insurance acquisition expenses	4.1		—		—		—			—		4.1
Other underwriting expenses	.3		—		—		—			—		.3
Cost of sales	—		—		—		40.6			5.0		45.6
General and administrative expenses	39.1		91.4		6.7		12.5			87.2		236.9
Broker commission expense	—		48.9		—		—			—		48.9
Change in fair value of contingent consideration earnout liabilities	—		5.6		—		—			—		5.6
Amortization of other intangible assets	—		13.5		.2		1.6			.1		15.4
Interest expense	—		12.2				.2			.3		12.7
Total expenses	43.5		171.6		6.9		54.9			92.6		369.5
Pre-tax income (loss)	$	18.0	$	3.7	$	5.0	$	(6.1	)	$	328.0	$	348.6

⁽¹⁾ Kudu’s results are from April 4, 2019, the date of the Kudu Transaction, to September 30, 2019.

⁽²⁾ MediaAlpha's results are from January 1, 2019 to February 26, 2019, the date of the MediaAlpha Transaction.



Millions	HG Global/BAM			NSM			MediaAlpha		Other Operations		Total
Three Months Ended September 30, 2018
Earned insurance premiums	$	3.3		$	—		$	—	$	—	$	3.3
Net investment income	4.8			—			—		8.6		13.4
Net realized and unrealized investment (losses) gains	(4.1		)	—			—		70.2		66.1
Advertising and commission revenues ⁽¹⁾	—			35.0			74.5		1.1		110.6
Other revenue	.2			4.7			—		.4		5.3
Total revenues	4.2			39.7			74.5		80.3		198.7
Insurance acquisition expenses	1.2			—			—		—		1.2
Other underwriting expenses	.1			—			—		—		.1
Cost of sales	—			—			61.8		1.1		62.9
General and administrative expenses	11.3			23.5			5.4		26.0		66.2
Broker commission expense	—			10.6			—		—		10.6
Change in fair value of contingent consideration earnout liabilities	—			2.6			—		—		2.6
Amortization of other intangible assets	—			5.0			2.4		—		7.4
Interest expense	—			3.2			.2		—		3.4
Total expenses	12.6			44.9			69.8		27.1		154.4
Pre-tax (loss) gains	$	(8.4	)	$	(5.2	)	$	4.7	$	53.2	$	44.3

⁽¹⁾Approximately 30% of MediaAlpha’s advertising revenue for the three months ended September 30, 2018 was associated with one customer.



Millions	HG Global/BAM			NSM ⁽¹⁾			MediaAlpha		Other Operations			Total
Nine Months Ended September 30, 2018
Earned insurance premiums	$	9.7		$	—		$	—	$	—		$	9.7
Net investment income	12.5			—			—		32.4			44.9
Net realized and unrealized investment (losses) gains	(14.4		)	—			—		37.3			22.9
Advertising and commission revenues ⁽²⁾	—			56.4			216.4		3.0			275.8
Other revenue	.8			6.8			1.6		.6			9.8
Total revenues	8.6			63.2			218.0		73.3			363.1
Loss and loss adjustment expenses	—						—		—			—
Insurance acquisition expenses	3.9			—			—		—			3.9
Other underwriting expenses	.3			—			—		—			.3
Cost of sales	—			—			179.1		2.9			182.0
General and administrative expenses	36.5			35.7			21.2		79.0			172.4
Broker commission expense	—			17.1			—		—			17.1
Change in fair value of contingent consideration earnout liabilities	—			2.6			—		—			2.6
Amortization of other intangible assets	—			5.0			7.8		.1			12.9
Interest expense	—			4.8			.9		.3			6.0
Total expenses	40.7			65.2			209.0		82.3			397.2
Pre-tax (loss) gains	$	(32.1	)	$	(2.0	)	$	9.0	$	(9.0	)	$	(34.1	)

⁽¹⁾NSM’s results are from May 11, 2018, the date of acquisition, to September 30, 2018.

⁽²⁾Approximately 31% of MediaAlpha’s advertising revenue for the nine months ended September 30, 2018 was associated with one customer.