WHITE MOUNTAINS INSURANCE GROUP LTD (WTM) FY 2024 MD&A

Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion contains “forward-looking statements.” White Mountains intends statements that are not historical in nature, which are hereby identified as forward-looking statements, to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. White Mountains cannot promise that its expectations in such forward-looking statements will turn out to be correct. White Mountains’s actual results could be materially different from and worse than its expectations. See “FORWARD-LOOKING STATEMENTS” on page 101 for specific important factors that could cause actual results to differ materially from those contained in forward-looking statements.

The following discussion also includes 11 non-GAAP financial measures: (i) adjusted book value per share, (ii) value of BAM Surplus Notes for adjusted book value purposes, (iii) Kudu’s earnings before interest, taxes, depreciation and amortization (“EBITDA”), (iv) Kudu’s adjusted EBITDA, (v) Bamboo’s MGA pre-tax income (loss), (vi) Bamboo’s MGA net income (loss), (vii) Bamboo’s MGA EBITDA, (viii) Bamboo’s MGA adjusted EBITDA, (ix) total consolidated portfolio return excluding MediaAlpha, (x) total adjusted capital and (xi) total debt to total adjusted capital, that have been reconciled from their most comparable GAAP financial measures on page 79. White Mountains believes these measures to be useful in evaluating White Mountains’s financial performance and condition.

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2024, 2023 AND 2022

Overview—Year Ended December 31, 2024 versus Year Ended December 31, 2023

White Mountains ended 2024 with book value per share of $1,746 and adjusted book value per share of $1,834. During 2024, book value per share and adjusted book value per share increased 6% and 8%, including dividends. Comprehensive income attributable to common shareholders was $230 million in 2024 compared to $511 million in 2023.

Results in 2024 were driven primarily by solid results from White Mountains’s operating businesses and good returns in the investment portfolio. Results in 2023 were driven primarily by good results from White Mountains’s operating businesses and strong returns in the investment portfolio. White Mountains’s results included net realized and unrealized investment gains of $147 million in 2024 compared to $407 million in 2023. Results in 2024 also included $38 million of net realized and unrealized investment gains from White Mountains’s investment in MediaAlpha compared to $27 million in 2023.

As of December 31, 2024, White Mountains’s undeployed capital was approximately $0.7 billion, including the net proceeds received from the debt recapitalization completed in January 2025 at Bamboo.

Ark’s combined ratio was 83% in 2024, compared to 82% in 2023. Ark’s combined ratio included 13 points of catastrophe losses in 2024, driven primarily by Hurricanes Milton, Helene, Debby and Beryl, compared to two points of catastrophe losses in 2023, driven primarily by Hurricanes Otis and Idalia as well as the Maui wildfires. The combined ratio in 2024 included four points of net favorable prior year loss reserve development, driven primarily by specialty and property lines of business, compared to two points of net unfavorable prior year loss reserve development in 2023, driven primarily by Hurricane Ian and Winter Storm Elliott.

Ark reported gross written premiums of $2,207 million, net written premiums of $1,593 million and net earned premiums of $1,500 million in 2024 compared to gross written premiums of $1,898 million, net written premiums of $1,411 million and net earned premiums of $1,305 million in 2023. Ark reported pre-tax income of $253 million in 2024 compared to $249 million in 2023. Ark’s results in 2023 included a $51 million net deferred tax benefit related to the Bermuda economic transition adjustment. In November 2024, AM Best affirmed Ark’s financial strength rating at “A/stable.”

WM Outrigger Re’s combined ratio was 60% in 2024, compared to 44% in 2023. The 2024 combined ratio included catastrophe losses from Hurricanes Milton, Helene, Debby and Beryl. Major catastrophe losses affecting WM Outrigger Re in 2023 were minimal. WM Outrigger Re reported gross and net written premiums of $87 million, net earned premiums of $88 million and pre-tax income of $46 million in 2024, compared to gross and net written premiums of $110 million, net earned premiums of $104 million and pre-tax income of $69 million in 2023. Net earned premiums in 2024 decreased due to White Mountains’s lower capital commitment to WM Outrigger Re in 2024 compared to 2023. During the fourth quarter of 2024, Ark renewed Outrigger Re Ltd. for the 2025 underwriting year. White Mountains’s total commitment toward the 2025 underwriting year is $150 million.

As of July 1, 2024, White Mountains no longer consolidates BAM. Upon deconsolidation, the BAM Surplus Notes, including accrued interest receivable, were fair valued in accordance with GAAP at $387 million, which resulted in an unrealized loss on deconsolidation of $115 million. As of December 31, 2024, the BAM Surplus Notes were fair valued at $382 million. The decrease in fair value of $5 million was driven by a $22 million cash payment of principal and interest, partially offset by $16 million of accrued interest and a $1 million increase in fair value as a result of lower market interest rates. As of June 30, 2024, for adjusted book value purposes, the BAM Surplus Notes were valued at $415 million, including an $87 million time value discount.

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HG Global reported gross written premiums and earned premiums of $52 million and $29 million in 2024 compared to $50 million and $26 million in 2023. HG Global reported gross written premiums net of ceding commission paid of $37 million in 2024 compared to $35 million in 2023. HG Global’s total par value of policies assumed, which represents its first-loss exposure on policies assumed from BAM, was $2,952 million in 2024 compared to $2,356 million in 2023. HG Global’s total gross pricing was 177 basis points in 2024 compared to 213 basis points in 2023.

Kudu reported total revenues of $119 million, pre-tax income of $81 million and adjusted EBITDA of $55 million in 2024 compared to total revenues of $177 million, pre-tax income of $137 million and adjusted EBITDA of $57 million in 2023. Total revenues and pre-tax income in 2024 included $67 million of net investment income and $51 million of net realized and unrealized investment gains compared to $71 million and $106 million in 2023.

Kudu deployed $104 million, including transaction costs, into two new asset management firms in 2024. As of December 31, 2024, Kudu had deployed $989 million, including transaction costs, into 27 asset and wealth management firms globally, including three that have been exited. As of December 31, 2024, the asset and wealth management firms have combined assets under management of approximately $125 billion, spanning a range of asset classes.

Bamboo reported commission and fee revenues of $135 million and pre-tax income of $33 million in 2024. Bamboo reported MGA pre-tax income of $32 million and MGA adjusted EBITDA of $53 million in 2024. Managed premiums, which represent the total premium placed by Bamboo, were $484 million in 2024 compared to $215 million in 2023 (prior to White Mountains’s ownership of Bamboo). The increase in managed premiums was driven by growth in new business volume as well as a growing renewal book.

On May 10, 2024, MediaAlpha completed a secondary offering of 7.6 million shares at $19.00 per share ($18.24 per share net of underwriting fees). In the secondary offering, White Mountains sold 5.0 million shares for net proceeds of $91 million.

As of December 31, 2024, White Mountains owned 17.9 million shares of MediaAlpha, representing a 27% basic ownership interest (25% on a fully-diluted/fully-converted basis). As of December 31, 2024, MediaAlpha’s share price was $11.29, which increased from $11.15 per share as of December 31, 2023. The carrying value of White Mountains’s investment in MediaAlpha was $202 million as of December 31, 2024, which decreased from $255 million as of December 31, 2023 as a result of the secondary offering. Based on White Mountains’s ownership as of December 31, 2024, each $1.00 per share increase or decrease in the stock price of MediaAlpha will result in an approximate $7.00 per share increase or decrease in White Mountains’s book value per share and adjusted book value per share.

White Mountains’s total consolidated portfolio return on invested assets was 6.9% in 2024, which included $38 million of net realized and unrealized investment gains from White Mountains’s investment in MediaAlpha. Excluding MediaAlpha, the total consolidated portfolio return on invested assets was 6.5% in 2024. Excluding MediaAlpha, investment returns in 2024 were driven primarily by net investment income and net realized and unrealized investment gains from other long-term investments, net investment income from the fixed income portfolio and net unrealized gains from common equity securities.

White Mountains’s total consolidated portfolio return on invested assets, both including and excluding White Mountains’s investment in MediaAlpha, was 11.4% in 2023. The total consolidated portfolio return included $27 million of net unrealized investment gains from White Mountains’s investment in MediaAlpha. Excluding MediaAlpha, investment returns in 2023 were driven primarily by net investment income and net realized and unrealized investment gains from the other long-term investments and fixed income portfolios.

Overview—Year Ended December 31, 2023 versus Year Ended December 31, 2022

White Mountains ended 2023 with book value per share of $1,656 and adjusted book value per share of $1,704. During 2023, book value per share and adjusted book value per share both increased 14%, including dividends. Comprehensive income (loss) attributable to common shareholders was $511 million in 2023 compared to $788 million in 2022.

Results in 2023 were driven primarily by good results from White Mountains’s operating businesses and strong returns in the investment portfolio. Results in 2022 were driven primarily by the net gain of $876 million from the NSM Transaction. Results in 2023 also included $27 million of unrealized investment gains (losses) from White Mountains’s investment in MediaAlpha compared to $(93) million in 2022.

As of December 31, 2023, White Mountains’s undeployed capital was approximately $0.5 billion reflecting the Bamboo Transaction and redeployment to WM Outrigger Re.

Ark’s combined ratio was 82% in both 2023 and 2022. The combined ratio in 2023 included two points of net unfavorable prior year loss reserve development compared to six points of net favorable prior year loss reserve development in 2022. The combined ratio for 2023 included two points of catastrophe losses, which included losses from Hurricanes Otis and Idalia as well as the Maui wildfires, compared to 13 points in 2022, driven primarily by losses from Hurricane Ian and the conflict in Ukraine. Ark reported gross written premiums of $1,898 million, net written premiums of $1,411 million and net earned premiums of $1,305 million in 2023 compared to gross written premiums of $1,452 million, net written premiums of $1,195 million and net earned premiums of $1,043 million in 2022. Ark reported pre-tax income of $249 million in 2023 compared to $95 million in 2022. In December 2023, AM Best affirmed Ark’s financial strength rating at “A/stable.”

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WM Outrigger Re’s combined ratio was 44% in 2023. WM Outrigger Re reported gross and net written premiums of $110 million, net earned premiums of $104 million and pre-tax income of $69 million in 2023. During the fourth quarter of 2023, White Mountains agreed to redeploy $130 million into Outrigger Re Ltd. for business written in the 2024 underwriting year.

HG Global reported gross written premiums and earned premiums of $50 million and $26 million in 2023 compared to $56 million and $28 million in 2022. HG Global reported gross written premiums net of ceding commission paid of $35 million in 2023 compared to $38 million in 2022. HG Global’s total par value of policies assumed, which represents its first-loss exposure on policies assumed from BAM, was $2,356 million in 2023 compared to $2,421 million in 2022. HG Global’s total gross pricing was 213 basis points in 2023 compared to 231 basis points in 2022.

Kudu reported total revenues of $177 million, pre-tax income of $137 million and adjusted EBITDA of $57 million in 2023 compared to total revenues of $119 million, pre-tax income of $89 million and adjusted EBITDA of $42 million in 2022. Total revenues and pre-tax income in 2023 included $71 million of net investment income and $106 million of net realized and unrealized investment gains compared to $54 million and $64 million in 2022.

Kudu deployed $165 million, including transaction costs, into five new asset management firms in 2023. As of December 31, 2023, Kudu had deployed $884 million, including transaction costs, into 25 asset and wealth management firms globally, including three that have been exited. As of December 31, 2023, the asset and wealth management firms have combined assets under management of approximately $104 billion, spanning a range of asset classes.

During the second quarter of 2023, White Mountains completed a tender offer to purchase 5.9 million additional shares of MediaAlpha at a purchase price of $10.00 per share. As of December 31, 2023, White Mountains owned 22.9 million shares of MediaAlpha, representing a 34.9% basic ownership interest (33.1% on a fully-diluted/fully-converted basis). As of December 31, 2023, MediaAlpha’s share price was $11.15, which increased from $9.95 per share as of December 31, 2022. The carrying value of White Mountains’s investment in MediaAlpha was $255 million as of December 31, 2023, which increased from $169 million as of December 31, 2022. Based on White Mountains’s ownership as of December 31, 2023, each $1.00 per share increase or decrease in the stock price of MediaAlpha will result in an approximate $9.00 per share increase or decrease in White Mountains’s book value per share and adjusted book value per share.

White Mountains’s total consolidated portfolio return on invested assets, both including and excluding White Mountains’s investment in MediaAlpha, was 11.4% in 2023. The total consolidated portfolio return included $27 million of net unrealized investment gains from White Mountains’s investment in MediaAlpha. Excluding MediaAlpha, investment returns in 2023 were driven primarily by net investment income and net realized and unrealized investment gains from the other long-term investments and fixed income portfolios.

White Mountains’s total consolidated portfolio return on invested assets was -1.6% in 2022, which included $93 million of net unrealized investment losses from White Mountains’s investment in MediaAlpha. Excluding MediaAlpha, the total consolidated portfolio return on invested assets was 0.3% in 2022. Excluding MediaAlpha, investment returns in 2022 were driven primarily by net investment income and net realized and unrealized gains from other long-term investments, which more than offset net unrealized investment losses in the fixed income portfolio due to rising interest rates.

During 2023, White Mountains repurchased and retired 24,165 of its common shares for $33 million at an average share price of $1,354.88, or 82% of White Mountains’s book value per share and 80% of White Mountains’s adjusted book value per share as of December 31, 2023.

Bermuda Corporate Income Tax

On December 27, 2023, Bermuda enacted a 15% corporate income tax that became effective on January 1, 2025. White Mountains expects to meet the requirements to be exempt from the Bermuda corporate income tax and the Pillar Two worldwide minimum tax until January 1, 2030. The Bermuda legislation also provides for an economic transition adjustment that will reduce future years’ taxable income. Under GAAP, this economic transition adjustment was required to be recognized as a net deferred tax asset as of December 31, 2023. Accordingly, White Mountains’s net income for 2023 included a net deferred tax benefit of $68 million, of which $51 million was recorded at Ark and $17 million was recorded at HG Global. This tax benefit increased both book value per share and adjusted book value per share in 2023 by approximately $14, net of noncontrolling interest and the impact on the fair value of Ark’s contingent consideration. As of July 1, 2024, White Mountains no longer consolidates BAM. As a result of the deconsolidation, the BAM Surplus Notes are recorded at fair value, which resulted in the reversal of a $5 million deferred tax liability related to the Bermuda economic transition adjustment, generating a $5 million tax benefit in the third quarter of 2024.

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Adjusted Book Value Per Share

The following table presents White Mountains’s adjusted book value per share, a non-GAAP financial measure, as of December 31, 2024, 2023 and 2022 and reconciles this non-GAAP measure from book value per share, the most comparable GAAP measure. See “NON-GAAP FINANCIAL MEASURES” on page 79.

(1) Amounts reflect White Mountains’s preferred share ownership in HG Global of 96.9%.

(2) For periods subsequent to July 1, 2024, White Mountains carries the BAM Surplus Notes under GAAP at fair value, which incorporates time value into its estimate.

Goodwill and Other Intangible Assets

The following table presents goodwill and other intangible assets that are included in White Mountains’s adjusted book value as of December 31, 2024, 2023 and 2022:

(1) See Note 4 — “Goodwill and Other Intangible Assets” on page F-32 for details of other intangible assets.

(2) Amounts reflect the basic ownership percentage of the noncontrolling shareholders.

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Summary of Consolidated Results

The following table presents White Mountains’s consolidated financial results by industry for the years ended December 31, 2024, 2023 and 2022:

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I. SUMMARY OF OPERATIONS BY SEGMENT

As of December 31, 2024, White Mountains conducted its operations through four reportable segments: (1) Ark/WM Outrigger, (2) HG Global, (3) Kudu and (4) Bamboo, with our remaining operating businesses, holding companies and other assets included in Other Operations. White Mountains has made its segment determination based on consideration of the following criteria: (i) the nature of the business activities of each of the Company’s subsidiaries and affiliates; (ii) the manner in which the Company’s subsidiaries and affiliates are organized; (iii) the existence of primary managers responsible for specific subsidiaries and affiliates; and (iv) the organization of information provided to the Company’s chief operating decision makers and its Board of Directors. Significant intercompany transactions among White Mountains’s segments have been eliminated herein. White Mountains’s segment information is presented in Note 15 — “Segment Information” on page F-65.

During the fourth quarter of 2022, Ark sponsored the formation of Outrigger Re Ltd. to provide collateralized reinsurance protection on Ark’s Bermuda global property catastrophe excess of loss portfolio written in the 2023 underwriting year. Ark renewed its quota share reinsurance agreement with Outrigger Re Ltd. for the 2024 and 2025 underwriting years. White Mountains consolidates its segregated account of Outrigger Re Ltd., WM Outrigger Re, in its financial statements. WM Outrigger Re’s quota share reinsurance agreement with GAIL eliminates in White Mountains’s consolidated financial statements. WM Outrigger Re exclusively provides reinsurance protection to Ark. As a result, WM Outrigger Re was aggregated with Ark within the Ark/WM Outrigger segment starting in 2023. See Note 2 — “Significant Transactions” on page F-19.

Effective July 1, 2024, White Mountains no longer consolidates BAM. Through June 30, 2024, BAM’s assets, liabilities and noncontrolling interests, as well as its results of operations, are presented within the HG Global segment. See Note 2 — “Significant Transactions” on page F-19.

As a result of the Bamboo Transaction, White Mountains began consolidating Bamboo in its financial statements as of January 2, 2024. See Note 2 — “Significant Transactions” on page F-19.

As a result of the NSM Transaction, the results of operations for NSM, previously reported as a segment, have been classified as discontinued operations in the statements of operations and comprehensive income through the closing of the transaction in 2022. See Note 20 — “Held for Sale and Discontinued Operations” on page F-73.

A discussion of White Mountains’s consolidated investment operations is included after the discussion of operations by segment.

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Ark/WM Outrigger

Ark is a specialty property and casualty insurance and reinsurance company that offers a wide range of niche insurance and reinsurance products, including property, specialty, marine & energy, casualty and accident & health. Ark underwrites select coverages through its two major subsidiaries in the United Kingdom and Bermuda.

During the fourth quarter of 2022, Ark sponsored the formation of Outrigger Re Ltd., a Bermuda company registered as a special purpose insurer and segregated accounts company, to provide collateralized reinsurance protection on Ark’s Bermuda global property catastrophe excess of loss portfolio written in the 2023 underwriting year. Ark renewed its quota share reinsurance agreement with Outrigger Re Ltd. for the 2024 and 2025 underwriting years. White Mountains consolidates its segregated account of Outrigger Re Ltd., WM Outrigger Re, in its financial statements.

The following tables present the components of pre-tax income (loss) included in the Ark/WM Outrigger segment for the years ended December 31, 2024, 2023 and 2022:

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Combined Ratio

The following tables present the Ark/WM Outrigger segment’s insurance premiums, insurance expenses and insurance ratios for the years ended December 31, 2024, 2023 and 2022:

(1) Included within general and administrative expenses in the consolidated statement of operations.

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(1) Included within general and administrative expenses in the consolidated statement of operations.

The following table presents WM Outrigger Re’s insurance premiums, combined ratio and pre-tax income by underwriting year for the years ended December 31, 2024 and 2023:

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Ark/WM Outrigger Results—Year Ended December 31, 2024 versus Year Ended December 31, 2023

Ark/WM Outrigger segment’s combined ratio was 82% in 2024, compared to 80% in 2023. The Ark/WM Outrigger segment reported gross written premiums of $2,207 million, net written premiums of $1,679 million and net earned premiums of $1,588 million in 2024, compared to gross written premiums of $1,898 million, net written premiums of $1,521 million and net earned premiums of $1,410 million in 2023. The Ark/WM Outrigger segment reported pre-tax income of $299 million in 2024 compared to $318 million in 2023.

Ark’s combined ratio was 83% in 2024 compared to 82% in 2023. Ark’s combined ratio included 13 points of catastrophe losses in 2024, driven primarily by Hurricanes Milton, Helene, Debby and Beryl, compared to two points of catastrophe losses in 2023, driven primarily by Hurricanes Otis and Idalia as well as the Maui wildfires. Ark’s combined ratio included four points of net favorable prior year development in 2024, driven primarily by the specialty and property lines of business, compared to two points of net unfavorable prior year development in 2023, driven primarily by Hurricane Ian and Winter Storm Elliott, partially offset by net favorable prior year loss reserve development within the specialty and casualty–runoff reserving lines of business.

Ark reported gross written premiums of $2,207 million, net written premiums of $1,593 million and net earned premiums of $1,500 million in 2024, compared to gross written premiums of $1,898 million, net written premiums of $1,411 million and net earned premiums of $1,305 million in 2023.

Ark reported pre-tax income of $253 million in 2024 compared to $249 million in 2023. Ark’s results included net realized and unrealized investment gains of $50 million in 2024, driven primarily by net unrealized investment gains on other long-term investments and common equity securities, partially offset by foreign currency losses, compared to $86 million in 2023, driven primarily by net unrealized investment gains on other long-term investments, fixed maturity investments and common equity securities. Ark’s results in 2024 also included a $61 million increase in the fair value of contingent consideration compared to $49 million in 2023. Ark’s results in 2023 included a $51 million net deferred tax benefit related to the Bermuda economic transition adjustment.

WM Outrigger Re’s combined ratio was 60% in 2024, compared to 44% in 2023. The 2024 combined ratio included catastrophe losses from Hurricanes Milton, Helene, Debby and Beryl. Major catastrophe losses affecting WM Outrigger Re in 2023 were minimal. Losses in 2023 included $16 million for smaller catastrophes such as the Maui wildfires, Hurricane Idalia and Typhoon Doksuri. WM Outrigger Re reported gross and net written premiums of $87 million and net earned premiums of $88 million in 2024, compared to gross and net written premiums of $110 million and net earned premiums of $104 million in 2023. Net earned premiums in 2024 decreased due to White Mountains’s lower capital commitment to WM Outrigger Re in 2024 compared to 2023. WM Outrigger Re reported pre-tax income of $46 million in 2024, compared to pre-tax income of $69 million in 2023.

California Wildfires in January 2025

The California wildfires represent a significant industry loss event in the first quarter of 2025. Industry estimates are still preliminary and range widely. Ark/WM Outrigger will have exposure to this event primarily through the property line of business. There is also potential for limited specialty and excess casualty claims over time. Ark does not participate on the reinsurance program backing the California FAIR plan. At this time, Ark does not expect the wildfire losses will cause full year 2025 actual catastrophe losses for Ark/WM Outrigger to diverge materially from 2025 planned catastrophe losses.

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Ark/WM Outrigger Results—Year Ended December 31, 2023 versus Year Ended December 31, 2022

Ark/WM Outrigger segment’s combined ratio was 80% in 2023. The Ark/WM Outrigger segment reported gross written premiums of $1,898 million, net written premiums of $1,521 million and net earned premiums of $1,410 million in 2023. The Ark/WM Outrigger segment reported pre-tax income of $318 million in 2023.

Ark’s combined ratio was 82% in both 2023 and 2022. The combined ratio for 2023 included two points of catastrophe losses, which included losses from Hurricanes Otis and Idalia as well as the Maui wildfires, compared to 13 points of catastrophe losses in 2022, driven primarily by losses from Hurricane Ian and the conflict in Ukraine. The combined ratio for 2023 included two points of net unfavorable prior year loss reserve development, driven primarily by Hurricane Ian and Winter Storm Elliott, partially offset by net favorable prior year loss reserve development within the specialty and casualty–runoff reserving lines of business. This compared to six points of net favorable prior year loss reserve development in 2022, driven primarily by the property and accident & health, specialty and marine & energy reserving lines of business, predominantly from business underwritten in London.

Ark reported gross written premiums of $1,898 million, net written premiums of $1,411 million and net earned premiums of $1,305 million in 2023, compared to gross written premiums of $1,452 million, net written premiums of $1,195 million and net earned premiums of $1,043 million in 2022.

Ark reported pre-tax income of $249 million in 2023 compared to $95 million in 2022. Ark’s results included net realized and unrealized investment gains (losses) of $86 million in 2023, driven primarily by net unrealized investment gains on other long-term investments, fixed maturity investments and common equity securities, compared to $(55) million in 2022, driven primarily by net unrealized investment losses on fixed income securities and the impact of foreign currency on its investment portfolio. Ark’s results in 2023 also included a $51 million net deferred tax benefit related to the Bermuda economic transition adjustment. Ark’s results in 2023 also included a $49 million increase in the fair value of contingent consideration compared to $17 million in 2022.

WM Outrigger Re’s combined ratio was 44% in 2023. The combined ratio benefited from a lack of major catastrophe losses in 2023. Losses included $16 million for smaller catastrophes such as the Maui wildfires, Hurricane Idalia and Typhoon Doksuri. WM Outrigger Re reported gross and net written premiums of $110 million and net earned premiums of $104 million in 2023. Premium levels were supported by the strong rate environment in property reinsurance. WM Outrigger Re reported pre-tax income of $69 million in 2023.

Gross Written Premiums

Ark’s gross written premiums increased 16% to $2,207 million in 2024 compared to 2023, with flat risk adjusted rate change. The increase in gross written premiums was across all lines of business but driven primarily by structured property transactions placed in Bermuda and the addition of new products and teams, including accident & health, marine liability and political violence. The risk adjusted rate change on the Outrigger Re Ltd. portfolio of global property reinsurance was -3% in 2024.

Ark’s gross written premiums increased 31% to $1,898 million in 2023 compared to 2022, with risk adjusted rate change of 15%. The increase in gross written premiums was driven primarily by the property line of business for both insurance and reinsurance across London and Bermuda, reflecting the strong rate environment and additional capacity provided by Outrigger Re Ltd., as well as the specialty and marine & energy lines of business. The risk adjusted rate change on the Outrigger Re Ltd. portfolio of global property reinsurance was 33% in 2023.

The following table presents Ark’s gross written premiums by line of business for the years ended December 31, 2024, 2023 and 2022:

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Ark/WM Outrigger Balance Sheets

The following tables present amounts from Ark and WM Outrigger Re that are contained within White Mountains’s consolidated balance sheet as of December 31, 2024 and 2023:

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HG Global

HG Global was established to fund the startup of BAM and, through its reinsurance subsidiary HG Re, to provide up to 15%-of-par, first-loss reinsurance protection for policies underwritten by BAM.

The following tables present the components of pre-tax income (loss) included in the HG Global segment for the years ended December 31, 2024, 2023 and 2022. The HG Global segment consists of HG Global, which includes HG Re and its other wholly-owned subsidiaries, and, prior to its deconsolidation on July 1, 2024, BAM. Through June 30, 2024, BAM’s results of operations are presented within the HG Global segment.

(1) Effective July 1, 2024, White Mountains no longer consolidates BAM. For the period from January 1, 2024 through June 30, 2024, BAM’s results of operations are presented within the HG Global segment.

(2) Amount includes $0.5 of intercompany revenues that are eliminated in White Mountains’s consolidated financial statements. For segment reporting, HG Global’s intercompany other revenues included within the HG Global segment are eliminated against the offsetting intercompany expense included within Other Operations.

(3) Amount includes $1.0 of intercompany interest expense that is eliminated in White Mountains’s consolidated financial statements. For segment reporting, HG Global’s intercompany interest expense included within the HG Global segment is eliminated against the offsetting intercompany interest income included within Other Operations.

(4) MSC collected are recorded directly to BAM’s equity, which was recorded as noncontrolling interest on White Mountains’s balance sheet through June 30, 2024.

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(1) Amount includes $0.5 of intercompany interest expense that is eliminated in White Mountains’s consolidated financial statements. For segment reporting, HG Global’s intercompany interest expense included within the HG Global segment is eliminated against the offsetting intercompany interest income included within Other Operations.

(2) MSC collected are recorded directly to BAM’s equity, which is recorded as noncontrolling interest on White Mountains’s balance sheet.

(1) MSC collected are recorded directly to BAM’s equity, which is recorded as noncontrolling interest on White Mountains’s balance sheet.

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HG Global Results—Year Ended December 31, 2024 versus Year Ended December 31, 2023

Effective July 1, 2024, White Mountains no longer consolidates BAM. Upon deconsolidation, the BAM Surplus Notes, including accrued interest receivable, were fair valued in accordance with GAAP at $387 million, which resulted in an unrealized loss on deconsolidation of $115 million. As of December 31, 2024, the BAM Surplus Notes were fair valued at $382 million. The decrease in fair value of $5 million was driven by a $22 million cash payment of principal and interest, partially offset by $16 million of accrued interest and a $1 million increase in fair value as a result of lower market interest rates. As of June 30, 2024, for adjusted book value purposes, the BAM Surplus Notes were valued at $415 million, including an $87 million time value discount.

HG Global reported gross written premiums of $52 million and earned premiums of $29 million in 2024 compared to gross written premiums of $50 million and earned premiums of $26 million in 2023. HG Global reported gross written premiums net of ceding commission paid of $37 million in 2024 compared to $35 million in 2023. HG Global’s total par value of policies assumed, which represents its first-loss exposure on policies assumed from BAM, was $2,952 million in 2024, of which $2,614 million was in the primary market and $338 million in the secondary market, compared to $2,356 million in 2023, of which $1,930 million was in the primary market and $426 million in the secondary market.

HG Global’s total gross pricing was 177 basis points in 2024, compared to 213 basis points in 2023. Pricing in the primary market decreased to 140 basis points in 2024 compared to 164 basis points in 2023, due to narrower municipal bond spreads and an increase in the volume of large, higher-credit issuances insured by BAM. Pricing in the secondary market, which is more transaction specific than pricing in the primary market, increased to 464 basis points in 2024 compared to 434 basis points in 2023. Total pricing net of ceding commission paid decreased to 125 basis points in 2024 compared to 148 basis points in 2023.

The following table presents HG Global’s par value assumed, reinsurance premiums and pricing for the years ended December 31, 2024 and 2023:

(1) For capital appreciation bonds, par is adjusted to the estimated equivalent par value for current interest paying bonds.

HG Global reported pre-tax income (loss) of $(66) million in 2024 compared to $56 million in 2023. The change in pre-tax income (loss) was driven primarily by the loss on deconsolidation of BAM of $115 million in 2024. HG Global’s results included net realized and unrealized investment gains (losses) on its fixed income portfolio of $(6) million in 2024 compared to $14 million in 2023, driven by interest rate movements in each period. HG Global’s results included interest income on the BAM Surplus Notes of $29 million in 2024 compared to $26 million in 2023. The increase in interest income is driven by an increase in the interest rate on the BAM Surplus Notes in 2024. See Note 10 “Municipal Bond Guaranty Insurance - BAM Surplus Notes” on page F-56 HG Global’s results also included a $5 million net deferred tax benefit related to the Bermuda economic transition adjustment in 2024 compared to $17 million in 2023.

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During 2024, HG Global received cash payments of principal and interest on the BAM Surplus Notes totaling $30 million. Of these payments, $21 million was a repayment of principal held in the Supplemental Trust, $1 million was a payment of accrued interest held in the Supplemental Trust and $8 million was a payment of accrued interest held outside the Supplemental Trust.

During 2023, HG Global received a cash payment of principal and interest on the BAM Surplus Notes of $27 million. Of this payment, $18 million was a repayment of principal held in the Supplemental Trust, $2 million was a payment of accrued interest held in the Supplemental Trust and $7 million was a payment of accrued interest held outside the Supplemental Trust.

During 2024, HG Re received a distribution out of the Supplemental Trust of $80 million, which was comprised of the assignment of $59 million of accrued interest on the BAM Surplus Notes and a cash distribution of $21 million. During 2023, HG Re did not receive any distributions out of the Supplemental Trust.

HG Global Results—Year Ended December 31, 2023 versus Year Ended December 31, 2022

HG Global reported gross written premiums of $50 million and earned premiums of $26 million in 2023 compared to gross written premiums of $56 million and earned premiums of $28 million in 2022. HG Global reported gross written premiums net of ceding commission paid of $35 million in 2023 compared to $38 million in 2022. HG Global’s total par value of policies assumed, which represents its first-loss exposure on policies assumed from BAM, was $2,356 million in 2023, of which $1,930 million was in the primary market and $426 million in the secondary market, compared to $2,421 million in 2022, of which $1,815 million was in the primary market and $606 million in the secondary market.

HG Global’s total gross pricing was 213 basis points in 2023 compared to 231 basis points in 2022. Pricing in the primary market decreased to 164 basis points in 2023 compared to 183 basis points in 2022, due to tighter municipal bond spreads and an increase in the volume of large, higher-credit issuances insured by BAM. Pricing in the secondary market, which is more transaction specific than pricing in the primary market, increased to 434 basis points in 2023 compared to 374 basis points in 2022. Total pricing net of ceding commission paid decreased to 148 basis points in 2023 compared to 157 basis points in 2022.

The following table presents HG Global’s par value assumed, reinsurance premiums and pricing for the years ended December 31, 2023 and 2022:

(1) For capital appreciation bonds, par is adjusted to the estimated equivalent par value for current interest paying bonds.

HG Global reported pre-tax income (loss) of $56 million in 2023 compared to $(23) million in 2022. HG Global’s results included net realized and unrealized investment gains (losses) on its fixed income portfolio of $14 million in 2023 compared to $(53) million in 2022, driven by interest rate movements in each period. HG Global’s results in 2023 included interest income on the BAM Surplus Notes of $26 million compared to $12 million in 2022, as the interest rate increased to 7.7% in 2023 from 3.2% in 2022. HG Global’s results in 2023 also included a $17 million net deferred tax benefit related to the Bermuda economic transition adjustment.

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During 2023, HG Global received a cash payment of principal and interest on the BAM Surplus Notes of $27 million. Of this payment, $18 million was a repayment of principal held in the Supplemental Trust, $2 million was a payment of accrued interest held in the Supplemental Trust and $7 million was a payment of accrued interest held outside the Supplemental Trust.

During 2022, HG Global received a cash payment of principal and interest on the BAM Surplus Notes of $36 million. Of this payment, $25 million was a repayment of principal held in the Supplemental Trust, $1 million was a payment of accrued interest held in the Supplemental Trust and $10 million was a payment of accrued interest held outside the Supplemental Trust.

During 2023, HG Re did not receive any distributions out of the Supplemental Trust. During 2022, HG Re received a distribution out of the Supplemental Trust of $3 million, which consisted of an assignment of accrued interest on the BAM Surplus Notes.

HG Global Balance Sheets

The following tables present amounts for the HG Global segment that are presented within White Mountains’s consolidated balance sheet as of December 31, 2024 and 2023. The HG Global segment consists of HG Global, which includes HG Re and its other wholly-owned subsidiaries, and, prior to its deconsolidation on July 1, 2024, BAM. Effective July 1, 2024, White Mountains no longer consolidates BAM. Through June 30, 2024, BAM’s assets, liabilities and noncontrolling interests are presented within the HG Global segment.

(1) The fair value of the BAM Surplus Notes includes accrued interest receivable.

(2) HG Global’s preferred dividends payable to White Mountains are eliminated in White Mountains’s consolidated financial statements.

For segment reporting, these amounts are included within the HG Global segment and are eliminated against the offsetting receivables

included within Other Operations.

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(1)    Under GAAP, the BAM Surplus Notes were classified as debt prior to the deconsolidation of BAM on July 1, 2024. Under U.S. Statutory accounting, they are classified as policyholders’ surplus.

(2)    Under GAAP, interest accrues daily on the BAM Surplus Notes. Under U.S. Statutory accounting, interest is not accrued on the BAM Surplus Notes until it has been approved for payment by insurance regulators.

(3)    HG Global’s preferred dividends payable to White Mountains and intercompany debt are eliminated in White Mountains’s consolidated financial statements. For segment reporting, these amounts are included within the HG Global segment and are eliminated against the offsetting receivables included within Other Operations.

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Kudu

Kudu provides capital solutions for boutique asset and wealth managers for a variety of purposes including generational ownership transfers, management buyouts, acquisition and growth finance and legacy partner liquidity. Kudu also provides strategic assistance to investees from time to time.

As of December 31, 2024, Kudu had deployed a total of $989 million, including transaction costs, into 27 asset and wealth management firms globally, including three that have been exited. As of December 31, 2024, the asset and wealth management firms have combined assets under management (“AUM”) of approximately $125 billion, spanning a range of asset classes, including real estate, wealth management, hedge funds, private equity and alternative credit strategies. Kudu’s capital was deployed at an average gross cash yield at inception of approximately 9.6% based on expected cash flows in the first year following deployment.

The following table presents the components of GAAP net income (loss), EBITDA and adjusted EBITDA included in the Kudu segment for the years ended December 31, 2024, 2023 and 2022:

(1) Net investment income includes revenues from participation contracts and income from short-term and other long-term investments.

(2) See “NON-GAAP FINANCIAL MEASURES” on page 79.

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The following table presents the changes to the fair value of Kudu’s Participation Contracts for the years ended December 31, 2024 and 2023:

(1) As of December 31, 2024 and 2023, Kudu’s other long-term investments also include $5.6 and $5.8 related to a private debt instrument.

(2) Includes $35.8 of non-cash contributions to (proceeds from) Participation Contracts for the year ended December 31, 2023.

(3) Includes $28.1 of proceeds receivable from Participation Contracts sold during the year ended December 31, 2024

(4) Includes net realized and unrealized investment gains (losses) recognized from Participation Contracts beginning in the quarter a contract is classified as pending sale.

(5) Includes net unrealized investment gains (losses) recognized from (i) ongoing Participation Contracts and (ii) Participation Contracts prior to classification as pending sale.

Kudu Results — Year Ended December 31, 2024 versus Year Ended December 31, 2023

Kudu reported total revenues of $119 million, pre-tax income of $81 million and adjusted EBITDA of $55 million in 2024 compared to total revenues of $177 million, pre-tax income of $137 million and adjusted EBITDA of $57 million in 2023.

Total revenues, pre-tax income and adjusted EBITDA included $67 million of net investment income in 2024 compared to $71 million in 2023. The decrease in net investment income was driven primarily by a $12 million realization of carried interest for one of Kudu’s Participation Contracts in 2023, partially offset by amounts earned from $269 million in new deployments that Kudu made during 2023 and 2024. Total revenues and pre-tax income also included $51 million of net realized and unrealized investment gains in 2024 compared to $106 million in 2023. Investment gains in 2024 were driven primarily by increases in the fair value of Kudu’s Participation Contracts as a result of lower discount rates across the portfolio and growth in assets under management at several Kudu investees, partially offset by foreign exchange losses resulting from a strengthening U.S. dollar and an unrealized loss from a publicly listed security received by Kudu in a prior sales transaction. Investment gains in 2023 were driven primarily by increases in the fair value of Kudu’s Participation Contracts as a result of a step-up in valuation related to a pending transaction, lower discount rates across the portfolio and growth in assets under management at several Kudu investees.

Kudu Results—Year Ended December 31, 2023 versus Year Ended December 31, 2022

Kudu reported total revenues of $177 million, pre-tax income of $137 million and adjusted EBITDA of $57 million in 2023 compared to total revenues of $119 million, pre-tax income of $89 million and adjusted EBITDA of $42 million in 2022.

Total revenues, pre-tax income and adjusted EBITDA included $71 million of net investment income compared to $54 million in 2022. The increase in net investment income was driven primarily by amounts earned from $266 million in new deployments that Kudu made during 2022 and 2023 and a $12 million realization of carried interest for one of Kudu’s Participation Contracts, partially offset by the negative impact on net investment income from sale transactions. Total revenues and pretax income also included $106 million of net realized and unrealized investment gains on Kudu’s Participation Contracts in 2023 compared to $64 million in 2022. Investment gains in 2023 were driven primarily by increases in the fair value of Kudu’s Participation Contracts as a result of a step-up in valuation related to a pending transaction, lower discount rates across the portfolio and growth in assets under management at several Kudu investees. Investment gains in 2022 were driven primarily by step-up valuations related to two sale transactions, partially offset by higher discount rates across the portfolio.

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Bamboo

On January 2, 2024, White Mountains closed the Bamboo Transaction in accordance with the terms of the Bamboo Merger Agreement, investing $297 million of equity into Bamboo, which included the contribution of $36 million to retire Bamboo’s legacy credit facility and the contribution of $20 million of primary capital. The consideration is subject to customary purchase price adjustments. At closing, White Mountains owned 72.8% of Bamboo on a basic shares outstanding basis (63.7% on a fully-diluted/fully-converted basis, taking account of management’s equity incentives), while Bamboo management owned 16.1% of basic shares outstanding (26.6% on a fully-diluted/fully-converted basis). See Note 2 — “Significant Transactions” on page F-19.

The following table presents the components of GAAP net income (loss), MGA net income (loss), MGA EBITDA and MGA adjusted EBITDA included in White Mountains’s Bamboo segment for the year ended December 31, 2024:

(1) See “NON-GAAP FINANCIAL MEASURES” on page 79.

Bamboo Results—Year Ended December 31, 2024

Bamboo reported commission and fee revenues of $135 million and pre-tax income of $33 million in 2024. Commission and fee revenues were more than double Bamboo’s commissions and fee revenues in 2023 (prior to White Mountains’s ownership of Bamboo), driven primarily by higher managed premiums. Bamboo reported MGA pre-tax income of $32 million and MGA adjusted EBITDA of $53 million in 2024.

Bamboo reported approximately 260 thousand policies in force as of December 31, 2024 compared to approximately 135 thousand as of December 31, 2023 (prior to White Mountains’s ownership of Bamboo). Bamboo’s policy retention rate during 2024 was 87%.

In January 2025, Bamboo entered into a new credit facility comprised of a $110 million, six-year term loan and a $10 million revolving credit loan. On January 24, 2025, Bamboo received proceeds of $110 million under the term loan. In turn, Bamboo paid an $84 million cash dividend to shareholders, of which $61 million was paid to White Mountains. The revolving credit loan remains undrawn.

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California Wildfires in January 2025

Given its focus on the residential property market in California, Bamboo has exposure to the recent California wildfires. Bamboo does not expect the wildfires will have a material impact on its MGA earnings in the first quarter of 2025. Bamboo’s fronted programs will incur losses, which are estimated to be well within the reinsurance limits supporting those programs. The bulk of the losses will therefore be absorbed by Bamboo’s catastrophe excess of loss and quota share reinsurance partners. Bamboo’s captive insurance company will retain a share of the losses, which Bamboo expects to be capped at roughly $3 million. The treaty year for Bamboo’s largest MGA program renews on April 1. The impact of this event on go-forward primary market conditions and reinsurance renewal terms and conditions is yet to be determined, with a number of forces at work.

Managed Premiums

Managed premiums represent the total premiums placed by Bamboo during the period. Managed premiums were $484 million in 2024 compared to $215 million in 2023 (prior to White Mountains’s ownership of Bamboo). The increase in managed premiums was driven primarily by growth in new business volume as well as a growing renewal book.

The following table presents Bamboo’s managed premiums for the years ended December 31, 2024, 2023 and 2022, which includes periods prior to White Mountains’s ownership of Bamboo. White Mountains believes this information is useful in understanding the overall growth in Bamboo’s premium base.

Other Operations

The following table presents the components of pre-tax income (loss) included in White Mountains’s Other Operations for the years ended December 31, 2024, 2023 and 2022:

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Other Operations Results—Year Ended December 31, 2024 versus Year Ended December 31, 2023

White Mountains’s Other Operations reported pre-tax income of $9 million in 2024 compared to $113 million in 2023. White Mountains’s Other Operations reported net realized and unrealized investment gains of $57 million in 2024 compared to $189 million in 2023. The decrease in net realized and unrealized investment gains was driven primarily by lower unrealized gains from other long-term investments in 2024 compared to 2023. White Mountains’s Other Operations also reported net realized and unrealized investment gains from its investment in MediaAlpha of $38 million in 2024 compared to $27 million in 2023. White Mountains’s Other Operations reported net investment income of $36 million in 2024 compared to $30 million in 2023. See “Summary of Investment Results” on page 69.

White Mountains’s Other Operations reported $57 million of other revenues in 2024 compared to $81 million in 2023. White Mountains’s Other Operations reported $30 million of cost of sales in 2024 compared to $40 million in 2023. The decreases in other revenues and cost of sales were driven primarily by a business sold within Other Operations in 2023.

White Mountains’s Other Operations reported general and administrative expenses of $170 million in 2024 compared to $182 million in 2023. Other Operations general and administrative expenses in 2024 included $92 million of parent company compensation and benefits compared to $94 million in 2023.

White Mountains’s Other Operations reported $9 million of pre-tax income in 2024 related to the Bamboo CRV, which incepted on April 1, 2024. The Bamboo CRV’s results included $33 million of earned premiums, $12 million of loss and loss adjustment expenses and $12 million of acquisition expenses.

Share Repurchases

In the year ended December 31, 2024, White Mountains repurchased and retired 5,269 of its common shares for $8 million at an average share price of $1,505.01.

California Wildfires in January 2025

The Bamboo CRV, which provides quota share reinsurance on one of Bamboo’s fronted programs for the treaty year ending in March 2025, expects to incur a loss in the first quarter of 2025 related to the recent California wildfires that is capped at roughly $12 million.

Other Operations Results—Year Ended December 31, 2023 versus Year Ended December 31, 2022

White Mountains’s Other Operations reported pre-tax income (loss) of $113 million in 2023 compared to $(198) million in 2022. White Mountains’s Other Operations reported net realized and unrealized investment gains (losses) of $189 million in 2023 compared to $(2) million in 2022. The increase in net realized and unrealized investment gains (losses) was driven primarily by higher net realized and unrealized gains from other long-term investments and common equity securities in 2023 compared to 2022. White Mountains’s Other Operations also reported net realized and unrealized investment gains (losses) from its investment in MediaAlpha of $27 million in 2023 compared to $(93) million in 2022. White Mountains’s Other Operations reported net investment income of $30 million in 2023 compared to $32 million in 2022. See “Summary of Investment Results” on page 69.

White Mountains’s Other Operations reported $81 million of other revenues in 2023 compared to $127 million in 2022. White Mountains’s Other Operations reported $40 million of cost of sales in 2023 compared to $99 million in 2022. The decreases in other revenues and cost of sales were driven primarily by the business sold within Other Operations in 2023.

White Mountains’s Other Operations reported general and administrative expenses of $182 million in 2023 compared to $174 million in 2022. The increase in general and administrative expenses in 2023 compared to 2022 was driven primarily by two acquisitions within Other Operations in the second half of 2022, partially offset by a decrease due to the business sold within Other Operations in 2023 and lower parent company compensation and benefits. Other Operations general and administrative expenses in 2023 included $94 million of parent company compensation and benefits compared to $101 million in 2022.

Share repurchases

In the year ended December 31, 2023, White Mountains repurchased and retired 24,165 of its common shares for $33 million at an average share price of $1,354.88.

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II. Summary of Investment Results

White Mountains’s total investment results include results from all segments. Effective July 1, 2024, White Mountains no longer consolidates BAM. White Mountains’s consolidated financial statements through June 30, 2024 included BAM’s fixed income portfolio and related investment results. See Note 2 — “Significant Transactions” on page F-19. For purposes of discussing rates of return, percentages are presented gross of management fees and trading expenses and before any adjustments for TPC Providers, in order to produce a better comparison to benchmark returns.

Gross Investment Returns and Benchmark Returns

The following table presents the pre-tax time-weighted investment returns for White Mountains’s consolidated portfolio for the years ended December 31, 2024, 2023 and 2022:

Investment Returns—Year Ended December 31, 2024 versus Year Ended December 31, 2023

White Mountains’s total consolidated portfolio return on invested assets was 6.9% in 2024, which included $38 million of net realized and unrealized investment gains from White Mountains’s investment in MediaAlpha. Excluding MediaAlpha, the total consolidated portfolio return on invested assets was 6.5% in 2024. Excluding MediaAlpha, investment returns in 2024 were driven primarily by net investment income and net realized and unrealized investment gains from other long-term investments, net investment income from the fixed income portfolio and net unrealized gains from common equity securities.

White Mountains’s total consolidated portfolio return on invested assets, both including and excluding White Mountains’s investment in MediaAlpha, was 11.4% in 2023. The total consolidated portfolio return included $27 million of net unrealized investment gains from White Mountains’s investment in MediaAlpha. Excluding MediaAlpha, investment returns in 2023 were driven primarily by net investment income and net realized and unrealized investment gains from the other long-term investments and fixed income portfolios.

Fixed Income Results

White Mountains’s fixed income portfolio, including short-term investments, totaled $3.5 billion and $3.6 billion as of December 31, 2024 and 2023, which represented 54% and 56% of total invested assets. The duration of White Mountains’s fixed income portfolio, including short-term investments, was 1.9 years as of both December 31, 2024 and 2023. White Mountains’s fixed income portfolio includes fixed maturity and short-term investments held on deposit or as collateral. See Note 3 — “Investment Securities” on page F-21.

White Mountains’s fixed income portfolio returned 4.3% in 2024 compared to 5.8% in 2023, outperforming the Bloomberg U.S. Intermediate Aggregate Index returns of 2.5% and 5.2% for the comparable periods. The results in 2024 were driven primarily by net investment income and White Mountain’s short duration positioning as interest rates rose in the period. The results in 2023 were driven primarily by net investment income and net unrealized investment gains as shorter-term interest rates declined marginally in the period.

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Common Equity Securities, Investment in MediaAlpha and Other Long-Term Investments Results

White Mountains’s portfolio of common equity securities, its investment in MediaAlpha and other long-term investments totaled $3.0 billion and $2.8 billion as of December 31, 2024 and 2023, which represented 46% and 44% of total invested assets. See Note 3 — “Investment Securities” on page F-21.

White Mountains’s portfolio of common equity securities, its investment in MediaAlpha and other long-term investments returned 10.0% in 2024, which included $38 million of net realized and unrealized investment gains from White Mountains’s investment in MediaAlpha. White Mountains’s portfolio of common equity securities and other long-term investments returned 9.4% in 2024. White Mountains’s portfolio of common equity securities, its investment in MediaAlpha and other long-term investments returned 18.5% in 2023, which included $27 million of net unrealized investment gains from MediaAlpha. White Mountains’s portfolio of common equity securities and other long-term investments returned 19.0% in 2023.

White Mountains’s portfolio of common equity securities consists of international listed equity funds, primarily held at Ark, and passive ETFs. White Mountains’s ETFs seek to provide investment results generally corresponding to the performance of the S&P 500 Index. White Mountains’s portfolio of common equity securities was $650 million and $538 million as of December 31, 2024 and 2023.

White Mountains’s portfolio of common equity securities returned 11.3% in 2024 compared to 13.4% in 2023, underperforming the S&P 500 Index returns of 25.0% and 26.3% for the comparable periods. The underperformance in 2024 and 2023 was driven primarily by certain international listed equity funds that employ a market neutral strategy.

White Mountains maintains a portfolio of other long-term investments that consists primarily of unconsolidated entities, including Kudu’s Participation Contracts, private equity funds and hedge funds, a bank loan fund, Lloyd’s trust deposits, ILS funds and private debt instruments. White Mountains’s portfolio of other long-term investments totaled $2.2 billion and $2.0 billion as of December 31, 2024 and 2023.

White Mountains’s portfolio of other long-term investments returned 8.9% in 2024 compared to 20.6% in 2023. Investment returns for 2024 were driven primarily by net investment income and net realized and unrealized investment gains from Kudu’s Participation Contracts, as well as net unrealized investment gains from a bank loan fund and ILS funds. Investment returns for 2023 were driven primarily by net investment income and net realized and unrealized investment gains from Kudu’s Participation Contracts, net realized and unrealized investment gains from private equity funds, hedge funds and unconsolidated entities, as well as unrealized gains from ILS funds.

Investment Returns—Year Ended December 31, 2023 versus Year Ended December 31, 2022

White Mountains’s total consolidated portfolio return on invested assets, both including and excluding White Mountains’s investment in MediaAlpha, was 11.4% in 2023. The total consolidated portfolio return included $27 million of net unrealized investment gains from White Mountains’s investment in MediaAlpha. Excluding MediaAlpha, investment returns in 2023 were driven primarily by net investment income and net realized and unrealized investment gains from the other long-term investments and fixed income portfolios.

White Mountains’s total consolidated portfolio return on invested assets was -1.6% in 2022, which included $93 million of net unrealized investment losses from White Mountains’s investment in MediaAlpha. Excluding MediaAlpha, the total consolidated portfolio return on invested assets was 0.3% in 2022. Excluding MediaAlpha, investment returns in 2022 were driven primarily by net investment income and net realized gains from other long-term investments, which more than offset net unrealized investment losses in the fixed income portfolio due to rising interest rates.

Fixed Income Results

White Mountains’s fixed income portfolio, including short-term investments, totaled $3.6 billion and $2.8 billion as of December 31, 2023 and 2022, which represented 56% and 55% of total invested assets. The duration of White Mountains’s fixed income portfolio, including short-term investments, was 1.9 years and 2.3 years as of December 31, 2023 and 2022. White Mountains’s fixed income portfolio includes fixed maturity and short-term investments held on deposit or as collateral. See Note 3 — “Investment Securities” on page F-21.

White Mountains’s fixed income portfolio returned 5.8% in 2023 compared to -4.8% in 2022, outperforming the Bloomberg U.S. Intermediate Aggregate Index returns of 5.2% and -9.5% for the comparable periods. The results in 2023 were driven primarily by net investment income and net unrealized investment gains as shorter-term interest rates declined marginally in the period. The results in 2022 were driven primarily by net unrealized investment losses due to the impact of rising interest rates on White Mountains’s short duration portfolio, partially offset by net investment income.

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Common Equity Securities, Investment in MediaAlpha and Other Long-Term Investments Results

White Mountains’s portfolio of common equity securities, its investment in MediaAlpha and other long-term investments totaled $2.8 billion and $2.3 billion as of December 31, 2023 and 2022, which represented 44% and 45% of total invested assets. See Note 3 — “Investment Securities” on page F-21.

White Mountains’s portfolio of common equity securities, its investment in MediaAlpha and other long-term investments returned 18.5% in 2023, which included $27 million of net unrealized investment gains from MediaAlpha. White Mountains’s portfolio of common equity securities and other long-term investments returned 19.0% in 2023. White Mountains’s portfolio of common equity securities, its investment in MediaAlpha and other long-term investments returned 2.3% in 2022, which included $93 million of net unrealized investment losses from MediaAlpha. White Mountains’s portfolio of common equity securities and other long-term investments returned 8.1% in 2022.

White Mountains’s portfolio of common equity securities was $538 million and $668 million as of December 31, 2023 and 2022. White Mountains’s portfolio of common equity securities returned 13.4% in 2023 compared to -1.0% in 2022, underperforming and outperforming the S&P 500 Index returns of 26.3% and -18.1% for the comparable periods. The underperformance in 2023 and outperformance in 2022 was driven primarily by certain international listed equity funds that employ a market neutral strategy.

White Mountains’s portfolio of other long-term investments totaled $2.0 billion and $1.5 billion as of December 31, 2023 and 2022. White Mountains’s portfolio of other long-term investments returned 20.6% in 2023 compared to 10.5% in 2022. Investment returns for 2023 were driven primarily by net investment income and net realized and unrealized investment gains from Kudu’s Participation Contracts, net realized and unrealized investment gains from private equity funds, hedge funds and unconsolidated entities, as well as unrealized gains from ILS funds. Investment returns for 2022 were driven primarily by net investment income and net realized and unrealized investment gains from Kudu’s Participation Contracts and net investment income and net realized and unrealized investment gains from private equity funds, partially offset by unrealized losses from foreign currency.

Portfolio Composition

The following table presents the composition of White Mountains’s total investment portfolio as of December 31, 2024 and 2023:

The following table presents the breakdown of White Mountains’s fixed maturity investments as of December 31, 2024 by credit class, based upon issuer credit ratings provided by Standard & Poor’s, or if unrated by Standard & Poor’s, long-term obligation ratings provided by Moody’s:

(1)Includes mortgage-backed securities, which carry the full faith and credit guaranty of the U.S. government (i.e., GNMA) or are guaranteed by a government sponsored entity (i.e., FNMA, FHLMC).

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The following table presents the cost or amortized cost and carrying value of White Mountains’s fixed maturity investments by contractual maturity as of December 31, 2024. Actual maturities could differ from contractual maturities because borrowers may have the right to call or prepay certain obligations with or without call or prepayment penalties.

The following table presents the composition of White Mountains’s other long-term investments portfolio as of December 31, 2024 and 2023:

Foreign Currency Exposure

As of December 31, 2024, White Mountains had net assets of $192 million denominated in foreign currencies primarily related to Ark/WM Outrigger’s non-U.S. contracts, Kudu’s non-U.S. Participation Contracts and a private debt instrument, as well as certain other foreign consolidated and unconsolidated entities.

The following table presents the fair value of White Mountains’s foreign denominated net assets (liabilities) by segment as of December 31, 2024:

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III. Income Taxes

As of December 31, 2024, the primary jurisdictions in which the Company’s subsidiaries and branches operated and were subject to tax are Israel, Luxembourg, the United Kingdom and the United States.

On December 27, 2023, Bermuda enacted a 15% corporate income tax that became effective on January 1, 2025. The Bermuda legislation defers the effective date for five years, for Bermuda companies in consolidated groups that meet certain requirements. To qualify for the deferral, generally the group must (i) have consolidated affiliates and permanent establishments in six or fewer countries, (ii) have no more than €50 million of net tangible assets outside of the country where the group has the largest amount of net tangible assets and (iii) not have a consolidated Bermuda affiliate or Bermuda permanent establishment directly or indirectly owned by a parent entity that is subject to the Income Inclusion Rule of Pillar Two in any jurisdiction. White Mountains expects to meet the requirements to be exempt from the Bermuda corporate income tax until January 1, 2030. The Bermuda legislation also provides for an economic transition adjustment that will reduce future years’ taxable income. Under GAAP, this economic transition adjustment was required to be recognized as a net deferred tax asset as of December 31, 2023. Accordingly, White Mountains’s net income for 2023 included a net deferred tax benefit of $68 million, of which $51 million was recorded at Ark and $17 million was recorded at HG Global. As of July 1, 2024, White Mountains no longer consolidates BAM. As a result of the deconsolidation, the BAM Surplus Notes are recorded at fair value, which resulted in the reversal of a $5 million deferred tax liability related to the economic transition adjustment, generating a $5 million tax benefit in the third quarter of 2024.

On December 15, 2022, European Union Member States voted to adopt the EU Minimum Tax Directive in conformity with the OECD Pillar Two initiative. The Pillar Two initiative includes a set of model rules that are generally designed to impose a top-up tax on a large multinational enterprise group to the extent the group is not subject to an effective tax rate of at least 15% in each jurisdiction in which the group has a consolidated affiliate or permanent establishment. The EU Minimum Tax Directive required European Union Member States to enact conforming law by December 31, 2023. The main rule of the EU Minimum Tax Directive, the IIR, was to become effective for fiscal years beginning on or after December 31, 2023, while the UTPR was to become effective for fiscal years beginning on or after December 31, 2024. The EU Minimum Tax Directive also permits European Union Member States to elect to apply a QDMTT for fiscal years beginning on or after December 31, 2023.

On December 20, 2023, Luxembourg enacted conforming Pillar Two legislation including the IIR, UTPR and QDMTT. The Luxembourg legislation defers the effective date of the UTPR until fiscal years beginning on or after December 31, 2029 for Luxembourg companies in consolidated groups with a non-EU parent company that meet certain requirements. To qualify for the deferral, generally the group must (i) have consolidated affiliates and permanent establishments in six or fewer countries and (ii) have no more than €50 million of net tangible assets outside of the country where the group has the largest amount of net tangible assets. White Mountains expects to meet the requirements to be exempt from the Luxembourg UTPR until January 1, 2030.

On July 11, 2023, the U.K. enacted conforming legislation adopting the Pillar Two IIR and QDMTT, which became effective for fiscal years beginning on or after December 31, 2023. The U.K. has proposed legislation to adopt the Pillar Two UTPR effective for fiscal years beginning on or after December 31, 2024; however, this legislation has not yet been enacted.

On January 15, 2025, the OECD released administrative guidance on its Pillar Two model rules. The January 2025 OECD Administrative Guidance provides that, subject to limited exceptions, deferred tax expense attributable to deferred tax assets resulting from the introduction of a new corporate income tax after November 30, 2021 is to be excluded when assessing whether a multinational enterprise group has an effective tax rate of at least 15% in the jurisdiction that adopted the corporate income tax. Deferred tax assets associated with the economic transition adjustment recognized under the Bermuda corporate income tax are expected to be within the scope of the January 2025 OECD Administrative Guidance. As of December 31, 2024, no country had enacted the January 2025 OECD Administrative Guidance, and no changes had been enacted with respect to the Bermuda corporate income tax to repeal or otherwise limit the economic transition adjustment. Accordingly, under GAAP, White Mountains is required to maintain the net deferred tax asset attributable to the economic transition adjustment as of December 31, 2024.

On August 16, 2022, the U.S. enacted the Inflation Reduction Act (the “IRA”). White Mountains has evaluated the tax provisions of the IRA, the most significant of which relate to the corporate alternative minimum tax and the tax on share repurchases, and does not expect the legislation to have a material impact on its results of operations.

White Mountains reported income tax expense of $33 million in 2024 on pre-tax income from continuing operations of $317 million. The difference between White Mountains’s effective tax rate and the current U.S. statutory rate of 21% was driven primarily by income generated in jurisdictions with lower tax rates than the United States, a full valuation allowance on net deferred tax assets in certain U.S. operations (consisting of Other Operations and BAM), withholding taxes and state income taxes.

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White Mountains reported income tax benefit of $16 million in 2023 on pre-tax income from continuing operations of $565 million. The difference between White Mountains’s effective tax rate and the current U.S. statutory rate of 21% was driven primarily by income generated in jurisdictions with lower tax rates than the United States, a full valuation allowance on net deferred tax assets in certain U.S. operations (consisting of Other Operations and BAM), withholding taxes and state income taxes. The effective rate also differed from the U.S. statutory rate of 21% due to the recording of the $68 million deferred tax benefit related to the Bermuda economic transition adjustment.

White Mountains reported income tax expense of $41 million in 2022 on pre-tax loss from continuing operations of $149 million. The difference between White Mountains’s effective tax rate and the current U.S. statutory rate of 21% was driven primarily by losses generated in jurisdictions with lower tax rates than the United States, a full valuation allowance on net deferred tax assets in certain U.S. operations (consisting of Other Operations and BAM), withholding taxes and state income taxes.

IV. Discontinued Operations

NSM

On August 1, 2022, White Mountains closed the NSM Transaction. White Mountains received $1.4 billion in net cash proceeds at closing and recognized a net gain of $876 million in the third quarter of 2022, which was comprised of $887 million of net gain from sale of discontinued operations and $3 million of comprehensive income related to the recognition of foreign currency translation gain (loss) from the sale, partially offset by $14 million of compensation and other costs related to the transaction recorded in Other Operations. See Note 2 — “Significant Transactions” on page F-19.

White Mountains reported net income from discontinued operations, net of tax, for NSM Group of $16 million for the period from January 1, 2022 to August 1, 2022. See Note 20 — “Held for Sale and Discontinued Operations” on page F-73.

LIQUIDITY AND CAPITAL RESOURCES

Operating Cash and Short-term Investments

Holding Company Level

The primary sources of cash for the Company and certain of its intermediate holding companies are expected to be distributions from its insurance, reinsurance and other operating subsidiaries, net investment income, proceeds from sales, repayments and maturities of investments, capital raising activities and, from time to time, proceeds from sales of operating subsidiaries. The primary uses of cash are expected to be general and administrative expenses, purchases of investments, payments to tax authorities, payments on and repurchases/retirements of debt obligations, dividend payments to holders of the Company’s common shares, distributions to noncontrolling interest holders of consolidated subsidiaries, contributions to operating subsidiaries and, from time to time, purchases of operating subsidiaries and repurchases of the Company’s common shares.

Operating Subsidiary Level

The primary sources of cash for White Mountains’s insurance, reinsurance and other operating subsidiaries are expected to be premium and fee collections, commissions, net investment income, proceeds from sales, repayments and maturities of investments, contributions from holding companies and capital raising activities. The primary uses of cash are expected to be claim payments, policy acquisition costs, general and administrative expenses, broker commission expenses, cost of sales, purchases of investments, payments to tax authorities, payments on and repurchases/retirements of debt obligations, distributions to holding companies, distributions to noncontrolling interest holders and, from time to time, purchases of operating subsidiaries.

Both internal and external forces influence White Mountains’s financial condition, results of operations and cash flows. Premium and fee collections, investment returns, claim payments and cost of sales may be impacted by changing rates of inflation and other economic conditions. Some time may lapse between the occurrence of an insured loss, the reporting of the loss to White Mountains’s insurance and reinsurance operating subsidiaries and the settlement of the liability for that loss. The exact timing of the payment of losses cannot be predicted with certainty. White Mountains’s insurance and reinsurance operating subsidiaries maintain portfolios of invested assets with varying maturities and a substantial amount of cash and short-term investments to provide adequate liquidity for the payment of claims.

Management believes that White Mountains’s cash balances, cash flows from operations and routine sales and maturities of investments are adequate to meet expected cash requirements for the foreseeable future at both a holding company and insurance, reinsurance and other operating subsidiary level.

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Dividend Capacity

Following is a description of the dividend capacity of White Mountains’s insurance and reinsurance and other operating subsidiaries:

Ark/WM Outrigger

During any 12-month period, GAIL, a class 4 licensed Bermuda insurer, has the ability to (i) make capital distributions of up to 15% of its total statutory capital per the previous year’s statutory financial statements or (ii) make dividend payments of up to 25% of its total statutory capital and surplus per the previous year’s statutory financial statements, without prior approval of Bermuda regulatory authorities. Accordingly, GAIL will have the ability to pay a dividend of up to $337 million during 2025, which is equal to 25% of its statutory capital and surplus of $1,347 million as of December 31, 2024, subject to meeting all appropriate liquidity and solvency requirements and the filing of its December 31, 2024 statutory financial statements. During 2024, GAIL did not pay any dividends to its immediate parent.

During 2024, Ark paid $33 million of dividends to shareholders, $24 million of which were paid to White Mountains. As of December 31, 2024, Ark and its intermediate holding companies had $6 million of net unrestricted cash and short-term investments outside of its regulated and unregulated insurance and reinsurance operating subsidiaries.

WM Outrigger Re is a special purpose insurer subject to regulation and supervision by the BMA. WM Outrigger Re does not require regulatory approval to pay dividends; however, its dividend capacity is limited to amounts held outside of the collateral trust pursuant to its reinsurance agreement with GAIL. As of December 31, 2024, WM Outrigger Re had less than $1 million of net unrestricted cash held outside the collateral trust. As of December 31, 2024, WM Outrigger Re had $196 million of statutory capital and surplus and $204 million of assets held in the collateral trusts pursuant to its reinsurance agreement with GAIL.

During 2024, White Mountains received net distributions of $123 million from WM Outrigger Re, which included a net return of capital related to changes in White Mountains’s capital commitments for the 2024 and 2025 underwriting years and reinsurance profits for the 2023 underwriting year.

HG Global

As of December 31, 2024, HG Global had $619 million face value of preferred shares outstanding, of which White Mountains owned 96.9%. Holders of the HG Global preferred shares are entitled to receive cumulative dividends at a fixed annual rate of 6.0% on a quarterly basis, payable when and if declared by HG Global. As of December 31, 2024, HG Global had accrued $476 million of dividends payable to holders of its preferred shares, $462 million of which are payable to White Mountains and eliminated in consolidation. As of December 31, 2024, HG Global and its subsidiaries had $5 million of net unrestricted cash outside of HG Re.

HG Re is a special purpose insurer subject to regulation and supervision by the BMA. HG Re does not require regulatory approval to pay dividends; however, its dividend capacity is limited to amounts held outside of the Collateral Trusts pursuant to the FLRT with BAM. As of December 31, 2024, HG Re had $7 million of net unrestricted cash. As of December 31, 2024, HG Re had $158 million of accrued interest on the BAM Surplus Notes held outside the Collateral Trusts. As of December 31, 2024, HG Re had $718 million of statutory capital and surplus and $950 million of assets held in the Collateral Trusts.

HG Global has two primary sources of cash flows: (i) interest payments on the BAM Surplus Notes that are made outside the Collateral Trusts and (ii) releases of excess balances from the Collateral Trusts. During 2024, HG Global received cash payments of principal and interest on the BAM Surplus Notes of $30 million. Of these payments, $21 million was a repayment of principal held in the Supplemental Trust, $1 million was a payment of accrued interest held in the Supplemental Trust and $8 million was a payment of accrued interest held outside the Supplemental Trust. During 2024, HG Re received a distribution out of the Supplemental Trust of $80 million, which was comprised of the assignment of $59 million of accrued interest on the BAM Surplus Notes and a cash distribution of $21 million.

See Note 10 — “Municipal Bond Guarantee Reinsurance” on page F-55.

Kudu

During 2024, Kudu distributed $32 million to unitholders, $29 million of which was paid to White Mountains. As of December 31, 2024, Kudu had $13 million of net unrestricted cash and short-term investments.

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Bamboo

Bamboo Captive is a protected cell captive domiciled in the state of Arizona and is subject to regulation and supervision by the Arizona DIFI. As an Arizona-domiciled protected cell, Bamboo Captive is required to maintain $0.5 million of minimum capital. As of December 31, 2024, Bamboo Captive had statutory capital and surplus of $7 million. Bamboo Captive cannot pay any dividends without the approval of Arizona DIFI. Bamboo Captive did not pay any dividends during 2024. As of December 31, 2024, Bamboo Captive had $11 million of net unrestricted cash and short-term investments.

During 2024, Bamboo paid $25 million of dividends to shareholders, $18 million of which were paid to White Mountains. As of December 31, 2024, Bamboo had $17 million of net unrestricted cash and short-term investments outside of Bamboo Captive.

Other Operations

During 2024, White Mountains paid a $3 million common share dividend. As of December 31, 2024, the Company and its intermediate holding companies had $540 million of net unrestricted cash, short-term investments and fixed maturity investments, $202 million of MediaAlpha common stock, $225 million of common equity securities and $345 million of private equity and hedge funds, ILS funds and certain unconsolidated entities.

Financing

The following table presents White Mountains’s capital structure as of December 31, 2024 and 2023:

(1)See Note 7 — “Debt” on page F-47 for details of debt arrangements.

(2) Net of unamortized issuance costs and original issue discount.

(3) As of July 1, 2024, White Mountains no longer consolidates BAM. Noncontrolling interests as of December 31, 2023 excludes BAM.

(4) Amount reflects White Mountains’s preferred share ownership in HG Global of 96.9%.

(5) For periods subsequent to July 1, 2024, White Mountains carries the BAM Surplus Notes under GAAP at fair value, which incorporates time value into its estimate.

Management believes that White Mountains has the flexibility and capacity to obtain funds externally through debt or equity financing on both a short-term and long-term basis. However, White Mountains can provide no assurance that, if needed, it would be able to obtain additional debt or equity financing on satisfactory terms, if at all.

It is possible that, in the future, one or more of the rating agencies may lower White Mountains’s existing ratings. If one or more of its ratings were lowered, White Mountains could incur higher borrowing costs on future borrowings, and its ability to access the capital markets could be impacted.

Covenant Compliance

As of December 31, 2024, White Mountains was in compliance, in all material respects, with all of the covenants under its debt instruments.

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Contractual Obligations and Commitments

The following table presents White Mountains’s material contractual obligations and commitments as of December 31, 2024: