Investments in Unconsolidated Affiliates

White Mountains’ investments in unconsolidated affiliates represent investments in other companies in which White Mountains has a significant voting and economic interest but does not control the entity.



Millions	March 31, 2013		December 31, 2012
Symetra common shares	$	296.8	$	288.4
Unrealized gains from Symetra's fixed maturity portfolio	54.1		62.8
Carrying value of Symetra common shares	350.9		351.2
Symetra warrants	26.6		30.3
Total investment in Symetra	377.5		381.5
Hamer	3.8		4.0
Bri-Mar	1.8		1.9
Pentelia Capital Management	.5		.5
Total investments in unconsolidated affiliates	$	383.6	$	387.9

Symetra

At March 31, 2013 and December 31, 2012, White Mountains owned 17.4 million common shares of Symetra Financial Corporation (“Symetra”) and warrants to acquire an additional 9.5 million common shares. White Mountains accounts for its investment in common shares of Symetra using the equity method. At December 31, 2011, due to the prolonged low interest rate environment in which life insurance companies currently operate, White Mountains concluded that its investment in Symetra common shares was other-than-temporarily impaired and wrote down the GAAP book value of the investment to its estimated fair value of $261.0 million, or $15 per share at December 31, 2011. White Mountains recorded $45.9 million of after-tax equity in losses of unconsolidated affiliates and $136.6 million of after-tax equity in net unrealized losses of unconsolidated affiliates.

Under the equity method, the GAAP carrying value of White Mountains’ investment in Symetra common shares is normally equal to the percentage of Symetra’s GAAP book value represented by White Mountains’ common share ownership, which was 15% at March 31, 2013. As a result of recording the write-down, White Mountains’ carrying value of its investment in Symetra differs from the carrying value by applying its ownership share against Symetra’s GAAP equity as normally done under the equity method. The pre-tax basis difference of $195.8 million as of December 31, 2011 is being amortized over a 30 year period pro rata based on estimated future cash flows associated with Symetra’s underlying assets and liabilities to which the basis difference has been attributed. White Mountains continues to record its equity in Symetra’s earnings and net unrealized gains (losses). In addition, White Mountains recognizes the amortization of the basis difference through equity in earnings of unconsolidated affiliates and equity in net unrealized gains (losses) from investments in unconsolidated affiliates consistent with the original attribution of the writedown between equity in earnings and equity in net unrealized gains (losses). For the three months ended March 31, 2013, White Mountains recognized after-tax amortization of $0.7 million through equity in earnings of unconsolidated affiliates and $2.5 million through equity in net unrealized gains from investments in unconsolidated affiliates. At March 31, 2013, the pre-tax unamortized basis difference was $175.7 million.

White Mountains accounts for its Symetra warrants as derivatives with changes in fair value recognized through the income statement as a gain or loss recognized through other revenues. White Mountains uses a Black Scholes valuation model to determine the fair value of the Symetra warrants. The major assumptions used in valuing the Symetra warrants at March 31, 2013 were a risk free rate of 0.17%, volatility of 29.1%, an expected life of 1.33 years, a strike price of $11.49 per share and a share price of $13.41 per share.

The following table summarizes amounts recorded by White Mountains relating to its investment in Symetra for the three months ended March 31, 2013 and 2012:



	Three Months Ended									Three Months Ended
	March 31, 2013									March 31, 2012
Millions	Common Shares			Warrants			Total			Common Shares			Warrants		Total
Carrying value of investment in Symetra as of January 1	$	351.2		$	30.3		$	381.5		$	261.0		$	12.6	$	273.6
Equity in earnings ⁽¹⁾⁽²⁾	9.8			—			9.8			10.9			—		10.9
Equity in net unrealized gains from Symetra’s fixed maturity portfolio⁽³⁾	(8.7		)	—			(8.7		)	(1.2		)	—		(1.2		)
Dividends received	(1.4		)	—			(1.4		)	(1.2		)	—		(1.2		)
(Decrease) increase in value of warrants	—			(3.7		)	(3.7		)	—			11.1		11.1
Carrying value of investment in Symetra as March 31 ⁽⁴⁾⁽⁵⁾	$	350.9		$	26.6		$	377.5		$	269.5		$	23.7	$	293.2

⁽¹⁾Equity in earnings excludes tax expense of $0.8 and $0.7.

⁽²⁾Equity in earnings includes $0.7 and $1.1 increase relating to the pre-tax amortization of Symetra common share impairment from March 31, 2013 and 2012.

⁽³⁾Net unrealized gains includes $2.7 and $3.2 increase relating to the pre-tax amortization of Symetra common share impairment from March 31, 2013 and 2012.

⁽⁴⁾Includes White Mountains’ equity in net unrealized gains from Symetra’s fixed maturity portfolio of $(8.7) and $(1.2) as of March 31, 2013 and 2012, which exclude tax benefit of $0.7 and $0.0.

⁽⁵⁾The aggregate value of White Mountains’ investment in common shares of Symetra was $233.3 based upon the quoted market price of $13.41 per share at

March 31, 2013.

During the three months ended March 31, 2013, White Mountains received cash dividends from Symetra of $1.4 million on its common share investment that was recorded as a reduction of White Mountains’ investment in Symetra. During the three months ended March 31, 2013, White Mountains also received cash dividends of $0.8 million from Symetra on its investment in Symetra warrants that was recorded in net investment income.

Hamer and Bri-Mar

White Mountains received equity interests in Hamer and Bri-Mar, two small manufacturing companies distributed to White Mountains in connection with the dissolution of the Tuckerman Capital, LP fund. Effective October 1, 2012, these investments are accounted for under the equity method. For the three months ended March 31, 2013, White Mountains recorded equity in earnings of $0.3 million for Hamer. Bri-Mar did not have any earnings for the three months ended March 31, 2013. As of March 31, 2013, White Mountains' investments in Hamer and Bri-Mar was $3.8 million and $1.8 million, respectively.