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Loss and Loss Adjustment Expense Reserves
 9 Months Ended
Sep. 30, 2014
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’s insurance and reinsurance subsidiaries for the three and nine months ended September 30, 2014 and 2013:
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
Millions
 
2014
 
2013
 
2014
 
2013
Gross beginning balance
 
$
3,053.3

 
$
3,057.9

 
$
3,079.3

 
$
3,168.9

Less beginning reinsurance recoverable on unpaid losses
 
(433.2
)
 
(388.6
)
 
(428.1
)
 
(429.1
)
Net loss and LAE reserves
 
2,620.1

 
2,669.3

 
2,651.2

 
2,739.8

 
 
 
 
 
 
 
 
 
Loss and LAE reserves acquired (1)
 
—

 
—

 
—

 
21.3

Loss and LAE reserves consolidated — SSIE
 
—

 
—

 
13.6

 
—

 
 
 
 
 
 
 
 
 
Loss and LAE incurred relating to:
 
 
 
 
 
 

 
 

Current year losses
 
301.2

 
289.9

 
820.1

 
822.8

Prior year losses
 
(12.1
)
 
(11.6
)
 
(19.0
)
 
(25.6
)
Total incurred losses and LAE
 
289.1

 
278.3

 
801.1

 
797.2

 
 
 
 
 
 
 
 
 
Accretion of fair value adjustment to loss and LAE reserves
 
.1

 
.2

 
.5

 
1.5

Foreign currency translation adjustment to loss and LAE reserves
 
(23.5
)
 
12.3

 
(22.2
)
 
(1.9
)
 
 
 
 
 
 
 
 
 
Loss and LAE paid relating to:
 
 
 
 
 
 

 
 

Current year losses
 
(86.2
)
 
(90.0
)
 
(187.0
)
 
(209.9
)
Prior year losses
 
(207.4
)
 
(178.0
)
 
(665.0
)
 
(655.9
)
Total loss and LAE payments
 
(293.6
)
 
(268.0
)
 
(852.0
)
 
(865.8
)
 
 
 
 
 
 
 
 
 
Net ending balance
 
2,592.2

 
2,692.1

 
2,592.2

 
2,692.1

Plus ending reinsurance recoverable on unpaid losses
 
430.7

 
416.0

 
430.7

 
416.0

Gross ending balance
 
$
3,022.9

 
$
3,108.1

 
$
3,022.9

 
$
3,108.1

(1) Loss and LAE reserves acquired relate to WM Solutions purchase of Ashmere in the first quarter of 2013.

Loss and LAE incurred relating to prior year losses for the three and nine months ended September 30, 2014
For the three and nine months ended September 30, 2014, White Mountains experienced net favorable loss reserve development of $12.1 million and $19.0 million.
For the three months ended September 30, 2014, OneBeacon had net unfavorable loss reserve development of $7.3 million primarily related to unfavorable development in professional liability, management liability and financial services businesses included within OneBeacon Professional Insurance (“OBPI”), in OneBeacon Accident and in the inland marine business within International Marine Underwriters (“IMU”), partially offset by favorable development in the healthcare business within OBPI and in OneBeacon Technology. For the nine months ended September 30, 2014, OneBeacon had net unfavorable loss reserve development of $14.3 million primarily related to unfavorable development in professional liability and management liability businesses included within OBPI, in OneBeacon Accident and in the inland marine business within IMU, partially offset by favorable development in the healthcare business within OBPI, in OneBeacon Specialty Property and in the ocean marine business within IMU.
For the three months ended September 30, 2014, Sirius Group had net favorable loss reserve development of $19.2 million primarily due to decreases in property loss reserves, including reductions for prior period catastrophe losses, in addition to decreases in aviation and accident and health loss reserves. For the nine months ended September 30, 2014, Sirius Group had net favorable loss reserve development of $35.3 million primarily due to decreases in property loss reserves, including reductions for prior period catastrophe losses, in addition to decreases in aviation, accident and health, and trade credit loss reserves.
For the three and nine months ended September 30, 2014, SSIE had net favorable loss reserve development of $0.2 million and net unfavorable loss reserve development of $2.0 million.

Loss and LAE incurred relating to prior year losses for the three and nine months ended September 30, 2013
For the three and nine months ended September 30, 2013, White Mountains experienced $11.6 million and $25.6 million of net favorable loss reserve development.
For the three months ended September 30, 2013, OneBeacon had net unfavorable loss reserve development of $3.8 million primarily driven by its property and entertainment business. For the nine months ended September 30, 2013, OneBeacon had net favorable loss reserve development of $0.1 million. For the three and nine months ended September 30, 2013, Sirius Group had net favorable loss reserve development of $15.4 million and $25.5 million primarily due to decreases in property loss reserves, mostly from recent underwriting years, in addition to reductions in loss reserves for the Japan earthquake.
Fair value adjustment to loss and LAE reserves
In connection with purchase accounting for acquisitions, White Mountains is 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 $0.1 million and $0.5 million of such charges, recorded as loss and LAE for the three and nine months ended September 30, 2014, and $0.2 million and $1.5 million for the three and nine months ended September 30, 2013.  As of September 30, 2014, the remaining pre-tax un-accreted adjustment was $4.2 million.