Municipal Bond Guarantee Insurance (Notes)

12 Months Ended

Dec. 31, 2013

Schedule of Insured Financial Obligations with Credit Deterioration [Line Items]

Financial Guarantee Insurance Contracts [Text Block]

Note 9. Municipal Bond Guarantee Insurance

In 2012, HG Global was capitalized with $594.5 million from White Mountains and $14.5 million from non-controlling interests to fund BAM, a newly formed mutual municipal bond insurer. As of December 31, 2013, White Mountains owned 97.3% of HG Global’s preferred equity and 88.7% of its common equity. HG Global, together with its subsidiaries, provided the initial capitalization of BAM through the purchase of $503.0 million of BAM surplus notes. HG Global provides first loss reinsurance protection for policies underwritten by BAM of up to 15% of par outstanding on a per policy basis through HG Re, which had statutory capital of $436.9 million at December 31, 2013. HG Re’s obligations to BAM are collateralized in trusts, and there is an aggregate loss limit that is equal to the total assets in the collateral trusts at any point in time. At December 31, 2013 and 2012, HG Global had pre-tax income of $38.1 million and $14.2 million, which included $40.2 million and $18.4 million of interest income on the BAM surplus notes. At December 31, 2013 and 2012, BAM had a pre-tax loss of $78.6 million and $36.3 million that was recorded in net loss attributable to non-controlling interests, which included $40.2 million and $18.4 million of interest expense on the BAM surplus notes. As of December 31, 2013, HG Global has accrued $58.6 million of interest receivable on the BAM surplus notes.

The following table provides a schedule of BAM’s insured obligations:

	December 31, 2013		December 31, 2012
Contracts issued and outstanding	218		3
Remaining weighted average contract period (in years)	13.8		10.4
Contractual debt service outstanding (in millions):
Principal	$	4,703.7	$	25.8
Interest	$	3,264.4	$	8.9
Gross unearned insurance premiums	$	13.2	$	.1