Held for Sale and Discontinued Operations

12 Months Ended

Dec. 31, 2019

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. For 2017 through the closing date of the transaction, net income from discontinued operations related to OneBeacon was $20.5 million.

Tranzact

On July 21, 2016, White Mountains completed the sale of Tranzact to an affiliate of Clayton, Dubilier & Rice, LLC and received net proceeds of $221.3 million at closing. During 2017, White Mountains recorded a $3.2 million increase to the gain from sale of Tranzact in discontinued operations as a result of state income tax expense.

Sirius Group

On April 18, 2016, White Mountains completed the sale of Sirius Group to CMI for approximately $2.6 billion. Of this amount, $161.8 million of this amount was used to purchase certain assets to be retained by White Mountains out of Sirius Group, including shares of OneBeacon. The amount paid at closing was based on an estimate of Sirius Group’s closing date tangible common shareholder’s equity. During 2017, White Mountains recorded a $0.7 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.

In October 2018, the Swedish Administrative Court ruled against Sirius Group on its appeal of the Swedish Tax Agency’s denial of certain interest deductions relating to periods prior to the sale of Sirius Group to CMI. In connection with the sale, White Mountains indemnified Sirius Group against the loss of certain tax attributes, including those related to these interest deductions. As a result, for the year ended December 31, 2018, White Mountains recorded a $17.3 million loss on sale of discontinued operations reflecting the value of these interest deductions. As of December 31, 2019 and 2018, White Mountains reported a liability of $16.5 million and $17.3 million. During 2019, the decrease in the liability of $0.8 million is related to foreign currency translation and included within net gain on sale of discontinued operations. Sirius Group has appealed the decision to the Swedish Administrative Court of Appeal. See Note 19 — “Commitments and Contingencies”.

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 related write-down of $3.7 million was recorded within general and administrative expenses during 2017. As of December 31, 2019 and 2018, the property has been measured at its estimated fair value net of disposal costs of $3.0 million and $3.3 million.

Net Income (Loss) from Discontinued Operations

The following table present the results of operations, including related income taxes associated with the business classified as discontinued operations. For the year ended December 31, 2017, the amounts presented relate to OneBeacon, Sirius Group and Tranzact.



	Year Ended December 31, 2017
Millions	OneBeacon		Sirius Group			Tranzact		Total
Revenues
Earned insurance premiums	$	807.6	$	—		$	—	$	807.6
Net investment income	39.7		—			—		39.7
Net realized and unrealized investment gains	38.8		—			—		38.8
Other revenues	7.7		—			—		7.7
Total revenues	893.8		—			—		893.8
Expenses
Loss and loss adjustment expenses	546.0		—			—		546.0
Insurance and reinsurance acquisition expenses	145.6		—			—		145.6
Other underwriting expenses	156.2		—			—		156.2
General and administrative expenses	21.2		—			—		21.2
Interest expense	10.0		—			—		10.0
Total expenses	879.0		—			—		879.0
Pre-tax income	14.8		—			—		14.8
Income tax benefit	5.7		—			—		5.7
Net income from discontinued operations	20.5		—			—		20.5
Gain (loss) from sale of discontinued operations, net of tax	554.5		(.7		)	3.2		557.0
Total income (loss) from discontinued operations	575.0		(.7		)	3.2		577.5
Change in foreign currency translation and other comprehensive income from discontinued operations, net of tax	.3		—			—		.3
Recognition of benefit plan assets and obligations from the sale of OneBeacon, net of tax	2.9		—			—		2.9
Comprehensive income (loss) from discontinued operations	$	578.2	$	(.7	)	$	3.2	$	580.7

Net Change in Cash from Discontinued Operations

The transactions to purchase the investments in OneBeacon and other investments held by Sirius Group prior to the closing are presented in the statement of cash flows as net settlement of investment cash flows with discontinued operations. The following table presents the net change in cash associated with the businesses classified as discontinued operations:



	December 31, 2017
Millions	December 31, 2017
Net cash provided from operations	$	157.0
Net cash provided from investing activities	3.0
Net cash used for financing activities	(61.9		)
Net change in cash during the period	98.1
Cash balances at beginning of period	70.5
Net change in cash held for sale	(.9		)
Cash sold as part of sale of consolidated subsidiaries	(167.7		)
Cash balances at end of period	$	—

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 years ended December 31, 2019, 2018 and 2017:



	Year Ended December 31,
	2019			2018			2017
Basic and diluted earnings per share numerators (in millions):
Net income (loss) attributable to White Mountains’s common shareholders	$	414.5		$	(141.2	)	$	627.2
Less: total income (loss) from continuing operations, net of tax	413.7			(124.0		)	49.7
Net income (loss) from discontinued operations attributable to White Mountains’s common shareholders	.8			(17.2		)	577.5
Allocation of (earnings) losses to participating restricted common shares ⁽¹⁾	—			.2			(7.3		)
Basic and diluted earnings (loss) per share numerators	$	.8		$	(17.0	)	$	570.2
Basic earnings per share denominators (in thousands):
Total average common shares outstanding during the period	3,181.6			3,382.5			4,293.8
Average unvested restricted common shares ⁽³⁾	(40.5		)	(40.1		)	(54.3		)
Basic earnings (loss) per share denominator	3,141.1			3,342.4			4,239.5
Diluted earnings per share denominator (in thousands):
Total average common shares outstanding during the period	3,181.6			3,382.5			4,293.8
Average unvested restricted common shares ⁽³⁾	(40.5		)	(40.1		)	(54.3		)
Diluted earnings (loss) per share denominator	3,141.1			3,342.4			4,239.5
Basic earnings (loss) per share (in dollars) - discontinued operations:	$	.25		$	(5.09	)	$	134.50
Diluted earnings (loss) per share (in dollars) - discontinued operations:	$	.25		$	(5.09	)	$	134.50


⁽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 years ended December 31, 2019, 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 Compensation Plans”.