

Millions	September 30, 2020			Effective Rate ⁽¹⁾	December 31, 2019			Effective Rate ⁽¹⁾
NSM Bank Facility	$	275.0		7.4%	$	221.3		7.5%
Unamortized issuance cost	(6.2		)		(3.9		)
NSM Bank Facility, carrying value	268.8				217.4
Other NSM debt, carrying value	1.4			2.8%	1.8			3.0%
Kudu Bank Facility	74.0			8.4%	57.0			8.3%
Unamortized issuance cost	(3.0		)		(3.4		)
Kudu Bank Facility, carrying value	71.0				53.6
Other Operations debt	18.8			10.1%	11.1			8.3%
Unamortized issuance cost	(.6		)		(.4		)
Other Operations, carrying value	18.2				10.7
Total debt	$	359.4			$	283.5

On April 7, 2020, NSM amended its secured credit facility (the “NSM Bank Facility”) with Ares Capital Corporation in connection with the acquisition of Kingsbridge. Under the amendment, the total commitment increased from $234.0 million, comprised of term loans of $224.0 million and a revolving credit loan commitment of $10.0 million, to $291.4 million, comprised of term loans of $276.4 million, including £42.5 million (approximately $52.4 million based upon the foreign exchange spot rate as of the date of the transaction) in a GBP term loan, and a revolving credit loan commitment of $15.0 million. The term loans under the NSM Bank Facility mature on May 11, 2026, and the revolving loan matures on November 11, 2025.

Under GAAP, if the terms of a debt instrument are amended, unless there is greater than 10% change in the expected discounted future cash flows of such instrument, the instrument’s carrying value does not change. White Mountains has determined that the impact of the changes to the terms of the NSM Bank Facility on the expected discounted future cash flows was less than 10%.

Interest on the NSM Bank Facility accrues at a floating interest rate equal to the three-month LIBOR plus an applicable margin. In connection with the amendment, the reference rates for USD denominated borrowings increased. The USD-LIBOR rate floor increased is 1.25% and the margin over USD-LIBOR increased from a range of 4.25% to 4.75% to a range of 5.50% to 6.00%. For GBP denominated borrowings, the GBP-LIBOR rate floor is 1.25% and the margin over GBP-LIBOR ranges from 6.0% to 6.5%. The margins over the reference interest rates vary within the range depending on the consolidated total leverage ratio of NSM. As of September 30, 2020 and December 31, 2019, the weighted average interest rate on the NSM Bank Facility was 6.91% and 6.60%.



NSM Bank Facility	Three Months Ended						Nine Months Ended
	September 30						September 30
Millions	2020			2019			2020			2019
Beginning balance	$	273.4		$	222.3		$	221.3		$	180.4
Term loans
Borrowings⁽¹⁾	—			—			52.4			42.9
Repayments	(.7		)	(.4		)	(1.3		)	(1.4		)
Foreign currency translation	2.3			—			2.6			—
Revolving credit loan
Borrowings	—			—			—			6.5
Repayments	—			—			—			(6.5		)
Ending balance	275.0			221.9			275.0			221.9

⁽¹⁾ Borrowings for the nine months ended September 30, 2020 included $52.4 for the funding of the acquisition of Kingsbridge. Borrowings for the nine months ended September 30, 2019, included $20.4 and $22.5 for the funding of the acquisitions of Embrace and the Renewal Rights.

As of September 30, 2020, the term loans had an outstanding balance of $275.0 million, including £42.5 million (approximately $52.4 million based upon the foreign exchange spot rate as of the date of the transaction) in a GBP term loan, and the revolving credit loan was undrawn.

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 USD denominated 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 USD-LIBOR. As of September 30, 2020, the variable rate received by NSM under the swap agreement was 1.00%. As of September 30, 2020, the interest rate, including the effect of the swap, for the outstanding term loans of $148.0 million that are hedged by the swap was 8.72%, excluding the effect of debt issuance costs. See Note 7 — “Derivatives”.

For the nine months ended September 30, 2020, the weighted average effective interest rate on the outstanding term loans of $148.0 million that are hedged by the swap, excluding the effect of the swap, was 6.84%. The weighted average effective interest rate on the outstanding term loans of $127.0 million that are unhedged was 7.03%. The effective interest rate on the total outstanding term loans under the NSM Bank Facility of $275.0 million was 6.98%, excluding the effect of debt issuance costs.

On June 4, 2020, NSM entered into an interest rate cap agreement to limit its exposure to the risk of interest rate increases on the GBP denominated term loan. The notional amount of the interest rate cap is £42.5 million (approximately $52.4 million based upon the foreign exchange spot rate as the date of the transaction) and the termination date is June 4, 2022. On August 18, 2020, NSM entered into a separate interest rate cap agreement to effectively extend the term of the original interest rate cap agreement by one year. The second interest rate cap agreement has an effective date of June 15, 2022 and a termination date of June 15, 2023. Under the terms of the interest rate cap agreements, if the current GBP-LIBOR at the measurement date exceeds 1.25%, NSM will receive payments from the counterparty equal to the then-current GBP-LIBOR rate, less the 1.25% cap rate. See Note 7 — “Derivatives”.

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.

NSM also has a secured term loan related to its U.K. vertical. As of September 30, 2020, the secured term loan had an outstanding balance of $1.6 million and a maturity date of December 31, 2022.

On December 23, 2019, Kudu entered into a secured credit facility (the “Kudu Bank Facility”) with Monroe Capital Management Advisors, LLC to provide funding for distributions to unitholders and fund new investments and related transaction expenses. As of September 30, 2020, the Kudu Bank Facility has a maximum borrowing capacity of $124.0 million, which is comprised of a revolving credit loan commitment of $5.0 million, an initial term loan of $57.0 million and a delayed-draw term loan of $62.0 million. The term loans and revolving credit loans, under the Kudu Bank Facility, mature in 2025. During the three months ended September 30, 2020, Kudu had no borrowings or repayments in term loans under the Kudu Bank Facility.

During the nine months ended September 30, 2020, Kudu borrowed $17.0 million in term loans under the Kudu Bank Facility and made no repayments. As of September 30, 2020, the term loans had an outstanding balance of $74.0 million and the revolving credit loan was undrawn.

Interest on the Kudu Bank Facility accrues at a floating interest rate equal to the greater of the one-month USD-LIBOR and 1.0% or the Prime Rate plus 1.0%, plus in each case, an applicable margin. The margin over USD-LIBOR may vary between 5.50% and 6.25% and the margin over the Base Rate may vary between 4.50% and 5.25%, depending on the consolidated total leverage ratio of the borrower.

The Kudu 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.

As of September 30, 2020, debt in White Mountains’s Other Operations segment consisted of two secured credit facilities. The first credit facility has a maximum borrowing capacity of $16.3 million, which is comprised of a term loan of $11.3 million, a delayed-draw term loan of $3.0 million and a revolving credit loan commitment of $2.0 million, all with a maturity date of March 12, 2024. As of September 30, 2020, the term loans had an outstanding balance of $9.8 million and the revolving credit loan was undrawn. The second credit facility has a maximum borrowing capacity of $15.0 million, which is comprised of a term loan of $9.0 million, a delayed-draw term loan of $4.0 million and a revolving credit loan commitment of $2.0 million, all with a maturity date of July 2, 2025. As of September 30, 2020, the term loans had an outstanding balance of $9.0 million and the revolving credit loan was undrawn.