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Debt
 12 Months Ended
Dec. 31, 2021
Debt Disclosure [Abstract]  
Debt Debt
 
The following table presents White Mountains’s debt outstanding as of December 31, 2021 and 2020:
December 31,Effective
 (1)
December 31,Effective
 (1)
$ in Millions2021Rate2020
Rate (1)
Ark 2007 Notes Tranche 1$30.0 $— 
Ark 2007 Notes Tranche 2— — 
Ark 2007 Subordinated Notes, carrying value30.0 — 
Ark 2021 Notes Tranche 144.2 — 
Ark 2021 Notes Tranche 247.0 — 
Ark 2021 Notes Tranche 370.0 — 
Unamortized issuance cost(5.3)— 
Ark 2021 Subordinated Notes, carrying value155.9 — 
Total Ark Subordinated Notes, carrying value185.9 6.9%— 
NSM Bank Facility277.6 7.3%
 (2)
277.4 7.5%
(2)
Unamortized issuance cost(6.4)(6.1)
NSM Bank Facility, carrying value271.2 271.3 
Other NSM debt.9 2.9%1.3 2.5%
Kudu Credit Facility225.4 4.3%— 
Unamortized issuance cost(7.2)— 
Kudu Credit Facility, carrying value218.2 — 
Kudu Bank Facility— 89.2 8.3%
Unamortized issuance cost— (2.9)
Kudu Bank Facility, carrying value— 86.3 
Other Operations debt17.1 7.5%18.0 7.4%
Unamortized issuance cost(.3)(.5)
Other Operations debt, carrying value16.8 17.5 
   Total debt$693.0 $376.4 
(1) Effective rate includes the effect of the amortization of debt issuance costs.
(2) NSM’s effective rate excludes the effect of the interest rate swap on the hedged portion of the debt. The weighted average interest rate for the years ended December 31, 2021 and 2020, excluding the effect of the amortization of debt issuance costs, was 6.5% and 7.0%. The weighted average interest rate for the years ended December 31, 2021 and 2020 on the total NSM Bank Facility including both the effect of the amortization of debt issuance costs and the effect of the interest rate swap and interest rate cap was 8.2% and 8.4%.

The following table presents a schedule of contractual repayments of White Mountains’s debt as of December 31, 2021:
MillionsDecember 31, 2021
Due in one year or less$5.7 
Due in two to three years14.5 
Due in four to five years221.6 
Due after five years470.4 
Total$712.2 
Ark Subordinated Notes

In March 2007, GAIL issued $30.0 million face value of floating rate unsecured junior subordinated deferrable interest notes to Alesco Preferred Funding XII Ltd., Alesco Preferred Funding XIII Ltd. and Alesco Preferred Funding XIV Ltd (the “Ark 2007 Notes Tranche 1”) and a €12.0 million floating rate subordinated note to Dekania Europe CDO II plc (the “Ark 2007 Notes Tranche 2”) (together, the “Ark 2007 Subordinated Notes”). The Ark 2007 Notes Tranche 1, which mature in June 2037, accrue interest at a floating rate equal to the three-month U.S. LIBOR plus 4.6%. The Ark 2007 Notes Tranche 2, which matures in June 2027, accrues interest at a floating rate equal to the three-month EURIBOR plus 4.6%. During 2021, Ark repaid €12.0 million ($13.5 million based upon the foreign exchange spot rate at the date of repayment) of the outstanding principal balance on the Ark 2007 Notes Tranche 2. As of December 31, 2021, the Ark 2007 Notes Tranche 1 had an outstanding balance of $30.0 million.
In the third quarter of 2021, GAIL issued $163.3 million face value floating rate subordinated notes at par in three separate transactions for proceeds of $157.8 million, net of debt issuance costs. The unsecured subordinated notes (the “Ark 2021 Subordinated Notes”) were issued in private placement offerings that were exempt from the registration requirements of the Securities Act of 1933. On July 13, 2021, Ark issued €39.1 million ($46.3 million based upon the foreign exchange spot rate as of the date of the transaction) face value floating rate unsecured subordinated notes (“Ark 2021 Notes Tranche 1”). The Ark 2021 Notes Tranche 1, which mature in July 2041, accrue interest at a floating rate equal to the three-month EURIBOR plus 5.75%. On August 11, 2021, Ark issued $47.0 million face value floating rate unsecured subordinated notes (“Ark 2021 Notes Tranche 2”). The Ark 2021 Notes Tranche 2, which mature in August 2041, accrue interest at a floating rate equal to the three-month U.S. LIBOR plus 5.75%. On September 8, 2021, Ark issued $70.0 million face value floating rate unsecured subordinated notes (“Ark 2021 Notes Tranche 3”). The Ark 2021 Notes Tranche 3, which mature in September 2041, accrue interest at a floating rate equal to the three-month U.S. LIBOR plus 6.1%. On the ten-year anniversary of the issue dates, the interest rate for the Ark 2021 Subordinated Notes will increase by 1.0% per annum. Ark has the option to redeem, in whole or in part, the Ark 2021 Subordinated Notes ahead of contractual maturity at the outstanding principal amounts plus accrued interest at the ten-year anniversary or any subsequent interest payment date.
All payments of principal and interest under the Ark 2021 Subordinated Notes are conditional upon GAIL’s solvency and compliance with the enhanced capital requirements of the Bermuda Monetary Authority (“BMA”). The deferral of payments of principal and interest under these conditions does not constitute a default by Ark and does not give the noteholders any rights to accelerate repayment of the Ark 2021 Subordinated Notes or take any enforcement action under the Ark 2021 Subordinated Notes.
If the payments of principal and interest under the Ark 2021 Subordinated Notes become subject to tax withholding on behalf of Bermuda or any political subdivision there, the Ark 2021 Subordinated Notes require the payment of additional amounts such that the amount received by the noteholders is the same as would have been received absent the tax withholding being imposed. The Ark 2021 Notes Tranche 3 require the payment of additional interest of 1.0% per annum upon the occurrence of a Premium Load Event until such event is remedied. Premium Load Events include the failure to meet payment obligations of the Ark 2021 Notes Tranche 3 when due, failure of GAIL to maintain an investment grade credit rating, failure to maintain 120% of GAIL’s Bermuda solvency capital requirement, failure of GAIL to maintain a debt to capital ratio below 40%, late filing of GAIL’s or Ark’s financial information, and making a restricted payment or distribution on GAIL’s common stock or other securities that rank junior or pari passu with the Ark 2021 Notes Tranche 3 when a different Premium Load Event exists or will be caused by the restricted payment.
As of December 31, 2021, the Ark 2021 Notes Tranche 1 had an outstanding balance of €39.1 million ($44.2 million based upon the foreign exchange spot rate as of December 31, 2021), the Ark 2021 Notes Tranche 2 had an outstanding balance of $47.0 million, and the Ark 2021 Notes Tranche 3 had an outstanding balance of $70.0 million.

Ark Stand By Letter of Credit Facilities

In December 2021, Ark entered into two uncommitted secured stand by letter of credit facility agreements to support the continued growth and expansion of its GAIL insurance and reinsurance operations. The stand by letter of credit facility agreements were executed with ING Bank N.V., London Branch (the “ING LOC Facility”) with capacity of $50.0 million on an uncollateralized basis and with Citibank Europe Plc (the “Citibank LOC Facility”) with capacity of $100.0 million on a collateralized basis. As of December 31, 2021, $50.0 million of short-term investments were pledged as collateral under the Citibank LOC Facility. As of December 31, 2021, the ING LOC Facility and the Citibank LOC Facility were undrawn. Ark’s uncommitted secured stand by letter of credit facility agreements contain various representations, warranties and covenants that White Mountains considers to be customary such borrowings.
NSM Bank Facility

NSM maintains a secured credit facility (the “NSM Bank Facility”) with Ares Capital Corporation. In both 2021 and 2020, NSM amended the terms of the facility. On April 7, 2020, NSM amended the NSM Bank Facility to increase the total commitment from $234.0 million, comprised of term loans of $224.0 million and a revolving credit loan of $10.0 million, to $291.4 million, comprised of term loans of $276.4 million, including £42.5 million ($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. In connection with the April 7, 2020 amendment, the reference rates for USD denominated borrowings increased. The USD-LIBOR rate floor increased to 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%.
On June 2, 2021, NSM amended the NSM Bank Facility to reduce the margin over the reference interest rate for USD LIBOR loans from a range of 5.50% to 6.00% to a range of 4.50% to 5.00%, and reduce the margin over the reference rate for GBP loans from a range of 6.00% to 6.50% to a range of 5.00% to 5.50%. The amendment also increased the revolving credit loan commitment to $40.0 million and added a $50.0 million delayed-draw term loan commitment. The amendment also changed the reference interest rate for the GBP loan from GBP-LIBOR to SONIA. The maturity dates of the term loans and the revolving credit loans were not changed as part of the amendment. The term loans under the NSM Bank Facility mature on May 11, 2026, and the revolving loan matures on November 11, 2025. The reference interest rates under the NSM Bank Facility are generally subject to a 1.25% rate floor.
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 2021 and 2020 amendments to the NSM Bank Facility was less than 10% on the expected discounted future cash flows.
The following table presents the change in debt under the NSM Bank Facility for the years ended December 31, 2021, 2020 and 2019:
MillionsYear Ended December 31,
NSM Bank Facility202120202019
Beginning balance$277.4 $221.3 $180.4 
Term loans
Borrowings (1)
— 52.4 42.9 
Repayments(2.8)(2.0)(2.0)
Foreign currency translation(.5)5.7 — 
Revolving credit loan
Borrowings (2)
35.0 — 6.5 
Repayments(31.5)— (6.5)
Ending balance$277.6 $277.4 $221.3 
(1) Borrowings for the year ended December 31, 2020 included $52.4 for the funding of the acquisition of Kingsbridge. Borrowings for the year ended December 31, 2019 included $20.4 and $22.5 for the funding of the acquisitions of Embrace and the Renewal Rights.
(2) Borrowings for the year ended December 31, 2021 included $35.0 for the funding of the acquisition of J.C. Taylor.

As of December 31, 2021, the term loans had an outstanding balance of $274.1 million, including £41.9 million ($56.7 million based upon the foreign exchange spot rate as of December 31, 2021) in a GBP term loan, and the revolving credit loan had an outstanding balance of $3.5 million.
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.
As of December 31, 2021, $146.1 million of the outstanding term loans were hedged by the swap and $128.0 million of the outstanding term loans were unhedged.
The following table presents the NSM weighted average interest rate for the year ended December 31, 2021 and 2020:

NSM Weighted Average Interest RateYear Ended December 31,
20212020
MillionsWeighted Average
Interest Expense (1)
Weighted Average Interest rateWeighted Average
Interest Expense (1)
Weighted Average Interest rate
Term loan - hedged$146.9 $13.2 9.0 %$148.4 $13.4 9.0 %
Term loan - unhedged129.19.47.3 %125.88.66.8 %
Total NSM Facility$276.0 $22.6 8.2 %$274.2 $22.0 8.0 %
(1) Interest expense includes the amortization of debt issuance costs and the effect of the interest rate swap and interest rate cap and excludes $0.7 and $0.1, for the year ended December 31, 2021 and 2020, of interest expense related to the revolving credit loan and Other NSM Debt.

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.

Other NSM Debt

NSM also has a secured term loan related to its U.K. vertical. As of December 31, 2021, the secured term loan had an outstanding balance of $1.0 million and a maturity date of December 31, 2022.

Kudu Credit Facility and Kudu Bank Facility

On December 23, 2019, Kudu entered into a secured credit facility with Monroe Capital Management Advisors, LLC (the “Kudu Bank Facility”). On March 23, 2021, Kudu replaced the Kudu Bank Facility and entered into a secured revolving credit facility (the “Kudu Credit Facility”) with Massachusetts Mutual Life Insurance Company to repay the Kudu Bank Facility, and to fund new investments and related transaction expenses. The maximum borrowing capacity of the Kudu Credit Facility is $300.0 million. The Kudu Credit Facility matures on March 23, 2036. In connection with the replacement of the Kudu Bank Facility, Kudu recognized a total loss of $4.1 million, representing debt issuance costs and prepayment fees, which are included within interest expense for the period ended December 31, 2021.
Interest on the Kudu Bank Facility accrues at a floating interest rate equal to the greater of the one-month USD-LIBOR and 0.25%, plus in each case, the applicable spread of 4.30%. The Kudu Credit Facility requires Kudu to maintain an interest reserve account, which is included in restricted cash. As of December 31, 2021, the interest reserve account was $4.5 million. The Kudu Credit Facility requires Kudu to maintain a ratio of outstanding balance to the sum of fair market value of participation contracts and cash held in certain accounts (the “LTV Percentage”) of less than 50% in years 0-3, 40% in years 4-6, 25% in years 7-8, 15% in years 9-10, and 0% thereafter. As of December 31, 2021, Kudu has a 34% LTV Percentage.
Kudu may borrow undrawn balances within the initial three-year availability period, subject to customary terms and conditions, to the extent the amount borrowed under the Kudu Credit Facility does not exceed the borrowing base, which is equal to 35% of the fair value of qualifying Kudu Participation Contracts. When considering the fair value of qualifying Kudu Participation Contracts as of December 31, 2021, the available undrawn balance was $8.9 million.
The following table presents the change in debt under the Kudu Bank Facility and Kudu Credit Facility for the years ended December 31, 2021, 2020 and 2019:
Year Ended December 31,
Millions202120202019
Kudu Bank Facility
Beginning balance$89.2 $57.0 $— 
Term loans
Borrowings3.0 32.2 57.0 
Repayments(92.2)— — 
Ending balance$— $89.2 $57.0 
Kudu Credit Facility
Beginning balance$— $— $— 
Term loans
Borrowings 232.0 — — 
Repayments(6.6)— — 
Ending balance$225.4 $— $— 

The Kudu Credit Facility is secured by all property of the loan parties and contains various affirmative and negative covenants that White Mountains considers to be customary for such borrowings.

Other Operations Debt

As of December 31, 2021, debt in White Mountains’s Other Operations segment consisted of three secured credit facilities (collectively, “Other Operations Debt”).
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. 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. The third credit facility has a maximum borrowing capacity of $8.0 million, which is comprised of a revolving credit loan commitment, with a maturity date of December 9, 2026.
For the year ended December 31, 2021, White Mountains’s Other Operations segment borrowed $3.4 million and had no borrowings in 2020 or 2019. For the year ended December 31, 2021, 2020 and 2019, White Mountains’s Other Operations segment made repayments of $7.7 million, $2.1 million and $0.2 million. As of December 31, 2021 and 2020, the Other Operations Debt had an outstanding balance of $17.1 million and $18.0 million.

Compliance

As of December 31, 2021, White Mountains was in compliance in all material respects with all of the covenants under all of its debt facilities.

Interest

Total interest expense incurred by White Mountains for its indebtedness was $43.8 million, $29.5 million and $17.6 million for the years ended December 31, 2021, 2020 and 2019. Total interest paid by White Mountains for its indebtedness was $35.8 million, $27.0 million, and $16.3 million for the years ended December 31, 2021, 2020 and 2019.