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Loss and Loss Adjustment Expense Reserves
 6 Months Ended
Jun. 30, 2012
Insurance Loss Reserves [Abstract]  
Loss and Loss Adjustment Expense Reserves
Loss and Loss Adjustment Expense Reserves
 
The following table summarizes the loss and loss adjustment expense (“LAE”) reserve activities of White Mountains’ insurance and reinsurance subsidiaries for the three and six months ended June 30, 2012 and 2011:
 
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
June 30,
Millions
 
2012
 
2011
 
2012
 
2011
Gross beginning balance
 
$
5,510.8

 
$
5,759.8

 
$
5,702.3

 
$
5,736.8

Less beginning reinsurance recoverable on unpaid losses
 
(2,465.4
)
 
(2,304.2
)
 
(2,507.3
)
 
(2,344.0
)
Net loss and LAE reserves
 
3,045.4

 
3,455.6

 
3,195.0

 
3,392.8

 
 
 
 
 
 
 
 
 
Less:  Beginning net loss and LAE reserves for AutoOne (1)
 
—

 
(72.7
)
 
—

 
(77.3
)
 
 
 
 
 
 
 
 
 
Loss and LAE incurred relating to:
 
 

 
 

 
 

 
 

Current year losses
 
268.4

 
288.7

 
526.3

 
664.4

Prior year losses
 
(3.4
)
 
(10.2
)
 
1.4

 
(27.5
)
Total incurred losses and LAE
 
265.0

 
278.5

 
527.7

 
636.9

 
 
 
 
 
 
 
 
 
Accretion of fair value adjustment to loss and LAE reserves
 
1.2

 
2.0

 
8.3

 
4.1

Foreign currency translation adjustment to loss and LAE reserves
 
(12.1
)
 
10.1

 
(.3
)
 
31.2

 
 
 
 
 
 
 
 
 
Loss and LAE paid relating to:
 
 

 
 

 
 

 
 

Current year losses
 
(80.9
)
 
(80.6
)
 
(127.6
)
 
(125.1
)
Prior year losses
 
(258.2
)
 
(211.3
)
 
(642.7
)
 
(481.0
)
Total loss and LAE payments
 
(339.1
)
 
(291.9
)
 
(770.3
)
 
(606.1
)
 
 
 
 
 
 
 
 
 
Plus:  Ending net loss and LAE reserves for AutoOne (1)
 
—

 
67.7

 
—

 
67.7

 
 
 
 
 
 
 
 
 
Net ending balance
 
2,960.4

 
3,449.3

 
2,960.4

 
3,449.3

Plus ending reinsurance recoverable on unpaid losses
 
2,369.4

 
2,193.1

 
2,369.4

 
2,193.1

Gross ending balance
 
$
5,329.8

 
$
5,642.4

 
$
5,329.8

 
$
5,642.4

 (1) Loss and LAE reserve balances for AutoOne prior to December 31, 2011 were not classified as held for sale for three months ended March 31, 2011.  Adjustment is to present loss and LAE reserve activities from continuing operations.
Loss and LAE incurred relating to prior year losses for the three and six months ended June 30, 2012
 During the three and six months ended June 30, 2012, White Mountains experienced $3.4 million of net favorable loss reserve development and $1.4 million of net unfavorable loss reserve development, respectively. 
For the three months ended June 30, 2012, OneBeacon had $3.3 million of net favorable loss reserve development primarily related to professional liability lines, multiple peril liability lines and other general liability lines. For the six months ended June 30, 2012, OneBeacon had $7.2 million of net unfavorable loss reserve development primarily driven by unfavorable development in the run-off business, including development related to multiple peril lines and general liability lines and the impact of an adverse court ruling in Mississippi regarding a disputed assessment from an involuntary pool for hurricane Katrina claims in 2005 offset by favorable development primarily related to professional liability lines, multiple peril liability lines and other general liability lines.
For the three months ended June 30, 2012, there was no meaningful prior year loss reserve development at Sirius Group. For the six months ended June 30, 2012, Sirius Group had net favorable loss reserve development of $5.8 million that included decreases to property loss reserves mostly offset by increases to accident and health and asbestos loss reserves.
 
Loss and LAE incurred relating to prior year losses for the three and six months ended June 30, 2011
 During the three and six months ended June 30, 2011, White Mountains experienced $10.2 million and $27.5 million of net favorable loss reserve development. 
For the three and six months ended June 30, 2011, OneBeacon had net favorable loss reserve development of $10.0 million million and $15.2 million. The favorable loss reserve development was primarily due to lower than expected severity on losses related to professional liability lines, multiple peril liability lines and other general liability lines.
For the three months ended June 30, 2011, there was no meaningful prior year loss reserve development at Sirius Group. For the six months ended June 30, 2011, Sirius Group had net favorable loss reserve development of $12.3 million, primarily due to a $9.0 million reduction from the 2010 Chilean earthquake and $9.0 million of favorable loss reserve development on a 1999 aviation loss. This favorable loss reserve development was partially offset by $2.0 million of increases to asbestos and environmental reserves and $3.7 million of net unfavorable loss reserve development from other business lines, mainly marine.

Fair value adjustment to loss and LAE reserves
 In connection with purchase accounting for acquisitions, White Mountains was required to adjust loss and LAE reserves and the related reinsurance recoverables to fair value on their respective acquired balance sheets.  The net reduction to loss and LAE reserves is being recognized through an income statement charge ratably with and over the period the claims are settled.  White Mountains recognized $1.2 million and $8.3 million of such charges, recorded as loss and LAE for the three and six months ended June 30, 2012, and $2.0 million and $4.1 million for the three and six months ended June 30, 2011.  Accretion of fair value adjustment to losses and LAE reserves increased by $5.0 million in the first quarter of 2012 due to the acceleration of the amortization of the purchase accounting established for the acquisition of Scandinavian Re.  This acceleration was a result of a final settlement and commutation of Scandinavian Re’s multi-year retrocessional Casualty Aggregate Stop Loss Agreement with St. Paul Fire & Marine Insurance Company (“St Paul”). As of June 30, 2012, the remaining unamortized fair value adjustment for Scandinavian Re was $3.0 million.