Leases

6 Months Ended

Jun. 30, 2022

White Mountains has entered into lease agreements, primarily for office space. These leases are classified as operating leases, with lease expense recognized on a straight-line basis over the term of the lease. Lease incentives, such as free rent or landlord reimbursements for leasehold improvements, are recognized at lease inception and amortized on a straight-line basis over the term of the lease. Lease expense and the amortization of leasehold improvements are recognized within general and administrative expenses. Lease payments related to options to extend or renew the lease term are excluded from the calculation of lease liabilities unless White Mountains is reasonably certain of exercising those options.

As of June 30, 2022 and December 31, 2021, the right of use (“ROU”) asset was $26.2 million and $28.1 million and lease liabilities were $28.2 million and $30.0 million.

The following table summarizes net lease expense recognized in White Mountains’s consolidated statements of operations for the three and six months ended June 30, 2022 and 2021:


Millions	Three Months Ended June 30,				Six Months Ended June 30,
Lease Cost	2022		2021		2022		2021
Lease cost	$	2.0	$	1.8	$	4.0	$	2.9
Less: sublease income	.1		.1		.3		.2
Net lease cost	$	1.9	$	1.7	$	3.7	$	2.7

The following table presents the contractual maturities of the lease liabilities associated with White Mountains’s operating lease agreements as of June 30, 2022:


Millions	As of June 30, 2022
Remainder of 2022	$	3.4
2023	8.2
2024	7.2
2025	4.9
2026	2.6
Thereafter	5.0
Total undiscounted lease payments	31.3
Less: present value adjustment	3.1
Operating lease liability	$	28.2

The following tables present lease related assets and liabilities by reportable segment as of June 30, 2022 and December 31, 2021:


	As of June 30, 2022
Millions	HG/BAM		Ark		Kudu		Other Operations		Total		Weighted Average Incremental Borrowing Rate (1)
ROU lease asset	$	6.7	$	7.3	$	6.1	$	6.1	$	26.2	4.1%
Lease liability	$	7.2	$	7.3	$	6.9	$	6.8	$	28.2

(1) The present value of the remaining lease payments was determined by discounting the lease payments using the incremental borrowing rate.


	As of December 31, 2021
Millions	HG/BAM		Ark		Kudu		Other Operations		Total		Weighted Average Incremental Borrowing Rate (1)
ROU lease asset	$	7.6	$	7.0	$	6.4	$	7.1	$	28.1	4.0%
Lease liability	$	8.1	$	7.0	$	7.1	$	7.8	$	30.0

(1) The present value of the remaining lease payments was determined by discounting the lease payments using the incremental borrowing rate.