Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

White Mountains accounts for business combinations using the acquisition method. Under the acquisition method, White Mountains recognizes and measures the assets acquired, liabilities assumed and any non-controlling interest in the acquired entities at their acquisition date fair values. The estimated acquisition date fair values, generally consisting of intangible assets and liabilities for contingent consideration, may be recorded at provisional amounts in circumstances where the information necessary to complete the acquisition accounting is not available at the reporting date. Any such provisional amounts are finalized as measurement period adjustments within one year of the acquisition date.

The following table presents the economic lives, acquisition date fair values, accumulated amortization and net carrying values for other intangible assets and goodwill, by company as of December 31, 2020 and 2019:


$ in Millions	Weighted Average Economic Life (in years)	December 31, 2020								December 31, 2019
		Acquisition Date Fair Value		Accumulated Amortization		Impairments		Net Carrying Value		Acquisition Date Fair Value		Accumulated Amortization		Impairments		Net Carrying Value
Goodwill:
NSM (1)(2)	N/A	$	506.4	$	—	$	—	$	506.4	$	381.6	$	—	$	—	$	381.6
Kudu	N/A	7.6		—		—		7.6		7.6		—		—		7.6


Other Operations	N/A	11.5		—		—		11.5		13.1		—		7.6		5.5
Total goodwill		525.5		—		—		525.5		402.3		—		7.6		394.7
Other intangible assets:
NSM (1)(2)
Customer relationships	8.9	136.2		36.7		3.5		96.0		121.7		19.8		1.4		100.5
Trade names	16	65.4		8.3		1.0		56.1		61.9		5.3		.4		56.2
Information technology platform	0	3.1		1.4		1.7		—		3.9		1.4		.6		1.9
Renewal rights	12	82.5		4.9		—		77.6		82.5		.7		—		81.8
Other	3.4	1.7		1.0		—		.7		1.7		.7		—		1.0
Subtotal		288.9		52.3		6.2		230.4		271.7		27.9		2.4		241.4
Kudu
Trade names	7	2.2		.6		—		1.6		2.2		.2		—		2.0





Other Operations
Trade names	9.6	3.6		.3		—		3.3		1.7		.5		.2		1.0
Customer relationships	10.7	14.2		1.4		—		12.8		7.2		.4		—		6.8
Information technology platform	5	—		—		—		—		.5		.3		.2		—
Insurance licenses	N/A	8.6		—		—		8.6		8.6		—		—		8.6
Other	5.4	.3		.1		—		.2		.2		—		—		.2
Subtotal		26.7		1.8				24.9		18.2		1.2		.4		16.6
Total other intangible assets		317.8		54.7		6.2		256.9		292.1		29.3		2.8		260.0
Total goodwill and other intangible assets		$	843.3	$	54.7	$	6.2	782.4		$	694.4	$	29.3	$	10.4	656.7
Goodwill and other intangible assets attributed to non-controlling interests								(28.1)								(23.4)
Goodwill and other intangible assets included in White Mountains’s common shareholders’ equity								$	754.3							$	631.3

(1) During 2020, NSM’s goodwill and intangible assets includes $13.4 and $1.6 of the effect of foreign currency translation. During 2019, NSM’s goodwill and intangible assets includes $1.8 and $0.7 of the effect of foreign currency translation.

(2) The attribution of acquisition date fair value estimates between goodwill and other intangible assets for Kingsbridge was completed during 2020.The attribution of acquisition date fair value estimates between goodwill and other intangible assets for KBK was completed during 2019.

The goodwill recognized for the entities shown above is attributed to expected future cash flows. The acquisition date fair values of other intangible assets with finite lives are estimated using income approach techniques, which use future expected cash flows to develop a discounted present value amount.

The multi-period-excess-earnings method estimates fair value using the present value of the incremental after-tax cash flows attributable solely to the other intangible asset over its remaining life. This approach was used to estimate the fair value of other intangible assets associated with trade names, customer relationships and contracts and information technology.

The relief-from-royalty method was used to estimate fair value for other intangible assets that relate to rights that could be obtained via a license from a third-party owner. Under this method, the fair value is estimated using the present value of license fees avoided by owning rather than leasing the asset. This technique was used to estimate the fair value of domain names, certain trademarks and brand names.

The with-or-without method estimates the fair value of an other intangible asset that provides an incremental benefit. Under this method, the fair value of the other intangible asset is calculated by comparing the value of the entity with and without the other intangible asset. This approach was used to estimate the fair value of favorable lease terms.

The following table presents a summary of the acquisition date fair values of goodwill and other intangible assets for acquisitions completed during 2020 and 2019:


$ in Millions
Acquisition of Subsidiary/ Asset	Goodwill and Other Intangible Assets (1)		Acquisition Date
Embrace(2)	$	67.6	April 1, 2019
Renewal Rights (3)	82.5		June 28, 2019
Kingsbridge	131.7		April 7, 2020
Total NSM segment	$	281.8
Kudu Transaction	$	9.8	April 4, 2019
Other Operations	$	38.1	Various

(1) Acquisition date fair values include the effect of adjustments during the measurement period and excludes the effect of foreign currency translation subsequent to the acquisition date.

(2) Excludes $3.4 of software classified within other assets.

(3) NSM’s purchase of the Renewal Rights from AIG was an asset acquisition.

On at least an annual basis beginning no later than the interim period included in the one-year anniversary of an acquisition, White Mountains evaluates goodwill for potential impairment.

During 2020, White Mountains recognized impairments of other intangible assets of $6.2 million related to Fresh Insurance. The impairments related to lower premium volumes, including due to the impact of the COVID-19 pandemic, and certain reorganization initiatives at Fresh Insurance. During 2020, White Mountains performed its periodic reviews for potential impairment, including a quantitative review of the goodwill associated with NSM. During 2019, White Mountains recognized an impairment of other intangible assets of $2.4 million related to Fresh Insurance and impairments of goodwill and other intangible assets of $7.6 million and $0.4 million, respectively, related to Other Operations. During 2020 and 2019, White Mountains concluded that there was no impairment of the goodwill associated with NSM. During 2018, there were no impairments of goodwill and other intangible assets. Impairment charges are presented within general and administrative expenses for the segments affected on the statement of operations.

The following table presents the change in goodwill and other intangible assets:


	December 31,
	2020						2019
Millions	Goodwill		Other Intangible Assets		Total Goodwill and Other Intangible Assets		Goodwill		Other Intangible Assets		Total Goodwill and Other Intangible Assets
Beginning balance	$	394.7	$	260.0	$	654.7	$	379.9	$	157.6	$	537.5
Acquisitions of businesses (1)	140.0		—		140.0		64.8		34.6		99.4
Acquisition of collector car renewal rights	—		—		—		—		82.5		82.5
Dispositions of businesses (2)	—		—		—		(18.3)		(23.5)		(41.8)
Attribution of acquisition date fair value estimates between goodwill and other intangible assets (3)	(23.2)		23.2		—		(26.8)		26.8		—
Impairments (4)	—		(6.2)		(6.2)		(7.6)		(2.8)		(10.4)
Measurement period adjustments(5)	.6		6.6		7.2		.9		5.9		6.8
Foreign currency translation	13.4		1.6		15.0		1.8		.7		2.5
Amortization	—		(28.3)		(28.3)		—		(21.8)		(21.8)
Ending balance	$	525.5	$	256.9	$	782.4	$	394.7	$	260.0	$	654.7

(1) During 2020, amounts include acquisitions of Kingsbridge and Other Operations. During 2019, amounts include acquisitions related to Kudu, Other Operations and Embrace.

(2) Dispositions relate to the 2019 MediaAlpha Transaction. See Note 2 — “Significant Transactions”.

(3) The determination of the relative fair values of goodwill and other intangible assets recognized in connection with the acquisition of Kingsbridge and Other Operations were completed in 2020. The determination of the relative fair values of goodwill and other intangible assets recognized in connection with the acquisition of KBK was completed in 2019.

(4) In 2020, impairments relate to NSM’s UK vertical. In 2019, impairments of $7.6 and $0.4 of goodwill and other intangible assets relate to Other Operations and $2.4 of impairments to other intangible assets relate to NSM’s UK vertical.

(5) Measurement period adjustments relate to updated information about acquisition date fair values of assets acquired and liabilities assumed. During 2020, adjustments primarily relate to contingent considerations of $4.1 in connection with the acquisition of Kingsbridge. During 2019, $5.9 in connection with the acquisition of KBK.

Amortization expense was $28.3 million, $21.8 million and $18.8 million for the years ended December 31, 2020, 2019 and 2018.

White Mountains expects to recognize amortization expense in each of the next five years as the following table presents:


Millions	Amortization Expense
2021	$	36.3
2022	35.2
2023	34.1
2024	28.6
2025 and years after	114.1
Total (1)	$	248.3

(1) Excludes indefinite-lived intangible assets of $8.6.