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White Mountains Insurance Group Ltd (WTM) SEC Filing 8-K Material Event for the period ending Tuesday, February 8, 2022

White Mountains Insurance Group Ltd

CIK: 776867 Ticker: WTM
Exhibit 99.1
image1a.jpg
CONTACT: Todd Pozefsky
(203) 458-5807

WHITE MOUNTAINS REPORTS FOURTH QUARTER RESULTS

HAMILTON, Bermuda (February 8, 2022) - White Mountains Insurance Group, Ltd. (NYSE: WTM) reported book value per share of $1,176 and adjusted book value per share of $1,190 as of December 31, 2021. Book value per share and adjusted book value per share both increased 1% in the fourth quarter of 2021. Book value
per share and adjusted book value per share decreased 7% and 6% in the year ended December 31, 2021,
including dividends. Excluding net realized and unrealized investment losses from White Mountains’s investment in MediaAlpha, adjusted book value per share increased 3% in the fourth quarter and 4% in the year ended December 31, 2021, including dividends.

Manning Rountree, CEO, commented, “ABVPS grew 1% in the fourth quarter. Strong results from our operating companies were partially offset by a mark-to-market decline in the value of our investment in MediaAlpha. BAM produced $34 million of total premiums and member surplus contributions in the quarter, driven by continuing primary market demand for insurance. Ark produced good underwriting results for the quarter and the year, while growing full year premiums 78%. NSM finished the year with new highs for pro forma controlled premiums and pro forma adjusted EBITDA. Likewise, Kudu finished the year by producing strong growth in adjusted EBITDA, recording $27 million of gains in the fair value of its portfolio and closing two transactions in the fourth quarter. Excluding MediaAlpha, our investment portfolio returned 1.8% for the quarter and 6.4% for the full year. We completed share repurchases of $13 million for the quarter and $108 million for the full year. We finished the year with roughly $400 million of undeployed capital.”

Comprehensive income (loss) attributable to common shareholders was $34 million and $(273) million in the fourth quarter and year ended December 31, 2021 compared to $495 million and $716 million in the fourth quarter and year ended December 31, 2020. Results in the fourth quarter and year ended December 31, 2021 included $55 million and $380 million of net realized and unrealized investment losses from White Mountains’s investment in MediaAlpha. Results in the fourth quarter and year ended December 31, 2020 included $391 million and $746 million of net investment income and realized and unrealized investment gains from White Mountains’s investment in MediaAlpha, as well as $131 million from the release of a deferred tax liability as a result of an internal reorganization in connection with the MediaAlpha IPO.

MediaAlpha

White Mountains owns 16.9 million shares of MediaAlpha, representing a 28% basic ownership interest (26% on a fully-diluted/fully-converted basis). At the December 31 closing price of $15.44, which was down from $18.68 at September 30, the value of White Mountains’s investment in MediaAlpha was $262 million, which was down from $316 million at September 30, 2021. This accounted for a decrease of $18 in both book value per share and adjusted book value per share in the quarter. At our current level of ownership, each $1.00 per share increase or decrease in the share price of MediaAlpha will result in an approximate $5.65 per share increase or decrease in White Mountains’s book value per share and adjusted book value per share. Our focus remains on MediaAlpha’s intrinsic value, not on fluctuations in its share price. We encourage you to read MediaAlpha’s fourth quarter earnings release and related shareholder letter scheduled for February 24, 2022, which will be available on MediaAlpha’s investor relations website at www.investors.mediaalpha.com.



1


HG Global/BAM

BAM’s gross written premiums and member surplus contributions (MSC) collected were $34 million and $118 million in the fourth quarter and year ended December 31, 2021 compared to $38 million and $131 million in the fourth quarter and year ended December 31, 2020. BAM insured municipal bonds with par value of $4.9 billion and $17.5 billion in the fourth quarter and year ended December 31, 2021 compared to $5.5 billion and $17.3 billion in the fourth quarter and year ended December 31, 2020. Total pricing was 70 and 67 basis points in the fourth quarter and year ended December 31, 2021 compared to 70 and 76 basis points in the fourth quarter and year ended December 31, 2020. BAM’s total claims paying resources were $1,192 million at December 31, 2021 compared to $1,181 million at September 30, 2021 and $987 million at December 31, 2020. In the first quarter of 2021, BAM completed a reinsurance agreement with Fidus Re that increased BAM’s claims paying resources by $150 million.

Seán McCarthy, CEO of BAM, said, “BAM insured $4.9 billion of par in the fourth quarter, capping off a good year. In 2021, investor demand for bond insurance remained strong, with more than 8% of new municipal bond issues insured, marking the highest penetration rate since 2009. For the full year, BAM insured a record $15.6 billion in the primary market. Total pricing was flat in the quarter and down modestly for the full year, reflecting both tighter credit spreads and higher average credit quality for new policies.”

Through the COVID-19 pandemic, BAM’s portfolio has performed well. All BAM-insured bond payments due through February 1, 2022 have been made by insureds, and there are no credits on BAM’s watchlist.

HG Global reported pre-tax income of $5 million and $21 million in the fourth quarter and year ended December 31, 2021 compared to pre-tax income of $8 million and $50 million in the fourth quarter and year ended December 31, 2020. The decreases in HG Global’s pre-tax income in the fourth quarter and year ended December 31, 2021 compared to the fourth quarter and year ended December 31, 2020, were driven primarily by lower investment returns on the HG Global investment portfolio.

BAM made a $34 million cash payment of surplus note principal and interest in December 2021 compared to $30 million in December 2020.

White Mountains reported pre-tax loss related to BAM of $16 million and $63 million in the fourth quarter and year ended December 31, 2021 compared to pre-tax loss related to BAM of $15 million and $45 million in the fourth quarter and year ended December 31, 2020. The increases in pre-tax loss related to BAM in the fourth quarter and year ended December 31, 2021 compared to the fourth quarter and year ended December 31, 2020, were driven primarily by lower investment returns on the BAM investment portfolio.

BAM is a mutual insurance company that is owned by its members. BAM’s results are consolidated into White Mountains’s GAAP financial statements and attributed to non-controlling interests.


2


Ark

Ark’s GAAP combined ratio was 70% and 87% in the fourth quarter and year ended December 31, 2021. Ark’s adjusted combined ratio, which adds back amounts ceded to third-party capital providers, was 67% and 85% in the fourth quarter and year ended December 31, 2021. The adjusted combined ratio for the year ended December 31, 2021 included ten points of catastrophe losses. The adjusted combined ratio in the fourth quarter of 2021 included five points of net favorable development on catastrophe losses incurred in 2021, principally from Hurricane Ida. The adjusted combined ratio in the fourth quarter and year ended December 31, 2021 included nine points and six points of net favorable prior year reserve development.

Ark reported gross written premiums of $164 million, net written premiums of $134 million and net earned premiums of $202 million in the fourth quarter of 2021. Ark reported gross written premiums of $1,059 million, net written premiums of $859 million and net earned premiums of $637 million in the year ended December 31, 2021. Ark reported pre-tax income of $57 million and $53 million in the fourth quarter and year ended December 31, 2021. Ark’s pre-tax income for the year ended December 31, 2021 reflected $25 million of transaction expenses related to White Mountains’s transaction with Ark.

Ian Beaton, CEO of Ark, said, “Ark had a good finish to the year with an adjusted combined ratio of 67% in the fourth quarter, benefiting from both light catastrophes and favorable reserve development. For the full year, Ark produced an adjusted combined ratio of 85%, an encouraging result in a year with heavy global catastrophe activity. Gross written premiums were $1,059 million for the year, up 78% from 2020 with risk adjusted rate change of 8%. In December, AM Best completed its annual review and affirmed Ark’s “A/stable” rating. Ark had a solid start to 2022, writing in excess of $500 million of gross written premiums in January with risk adjusted rate change up 11%.”

NSM

NSM reported commission and other revenues of $89 million, pre-tax income of $6 million and adjusted EBITDA of $18 million in the fourth quarter of 2021 compared to commission and other revenues of $73 million, pre-tax loss of $6 million and adjusted EBITDA of $15 million in the fourth quarter of 2020.

NSM reported commission and other revenues of $330 million, pre-tax loss of $28 million and adjusted EBITDA of $71 million in the year ended December 31, 2021 compared to commission and other revenues of $285 million, pre-tax loss of $13 million and adjusted EBITDA of $59 million in the year ended December 31, 2020. On April 12, 2021, NSM sold its Fresh Insurance motor business, which resulted in a loss of $29 million recorded in the first quarter of 2021. Results in the fourth quarter and year ended December 31, 2021 include the results of J.C. Taylor, an MGA offering classic and antique collector car insurance, from August 6, 2021, the date of its acquisition. Results in the fourth quarter and year ended December 31, 2021 and 2020 include the results of Kingsbridge Group Limited, a leading provider of commercial lines insurance and consulting services to the contingent workforce in the United Kingdom, from April 7, 2020, the date of its acquisition.

Geof McKernan, CEO of NSM, said, “NSM had a good fourth quarter to close out a strong year. Trailing 12 months pro forma controlled premiums increased to a record $1,203 million, up 1% quarter over quarter, while trailing 12 months pro forma adjusted EBITDA increased to a record $76 million, up 2% quarter over quarter. During 2021, we experienced significant growth, led by the Pet, Social Services and U.K. verticals.”


3


Kudu

Kudu reported total revenues of $45 million, pre-tax income of $37 million and adjusted EBITDA of $14 million in the fourth quarter of 2021 compared to total revenues of $25 million, pre-tax income of $19 million and adjusted EBITDA of $8 million in the fourth quarter of 2020. Total revenues and pre-tax income in the fourth quarter of 2021 included $22 million of realized investment gains and $5 million of unrealized investment gains on Kudu’s participation contracts compared to $14 million of unrealized investment gains on Kudu’s participation contracts in the fourth quarter of 2020.

Kudu reported total revenues of $134 million, pre-tax income of $108 million and adjusted EBITDA of $33 million in the year ended December 31, 2021 compared to total revenues of $46 million, pre-tax income of $28 million and adjusted EBITDA of $22 million in the year ended December 31, 2020. Total revenues and pre-tax income in the year ended December 31, 2021 included $22 million of realized investment gains and $68 million of unrealized investment gains on Kudu’s participation contracts compared to $16 million of unrealized investment gains on Kudu’s participation contracts in the year ended December 31, 2020.

As of December 31, 2021, Kudu had deployed $612 million in 17 asset and wealth management firms globally, including one that was exited. As of December 31, 2021, the asset and wealth management firms have combined assets under management of approximately $66 billion, spanning a range of asset classes. Kudu’s capital was deployed at an average gross cash yield at inception of 10.1%.

Rob Jakacki, CEO of Kudu, said, “Kudu had a strong fourth quarter and full year. Year over year, revenues from participation contracts increased 48% to $44 million, while adjusted EBITDA increased 48% to $33 million. Annualized adjusted EBITDA finished the year at $39 million. We were delighted to complete two transactions in the fourth quarter: Granahan Investment Management, an equity specialist managing U.S. and global small cap portfolios, and Radcliffe Capital Management, a manager of defensive credit and opportunistic strategies.”

Other Operations

White Mountains’s Other Operations segment reported pre-tax (loss) income of $(52) million and $(392) million in the fourth quarter and year ended December 31, 2021 compared to $352 million and $626 million in the fourth quarter and year ended December 31, 2020. The Other Operations segment results in the fourth quarter and year ended December 31, 2021 and 2020 were driven primarily by net realized and unrealized investment gains (losses) from White Mountains’s investment in MediaAlpha. Net realized and unrealized investment losses from White Mountains’s investment in MediaAlpha were $55 million and $380 million in the fourth quarter and year ended December 31, 2021 compared to net realized and unrealized investment gains from White Mountains’s investment in MediaAlpha of $391 million and $686 million in the fourth quarter and year ended December 31, 2020.

Excluding MediaAlpha, net realized and unrealized investment gains were $17 million and $51 million in the fourth quarter and year ended December 31, 2021 compared to net realized and unrealized investment gains (losses) of $9 million and $(9) million in the fourth quarter and year ended December 31, 2020. Net investment income was $2 million and $18 million in the fourth quarter and year ended December 31, 2021 compared to $3 million and $82 million in the fourth quarter and year ended December 31, 2020. Net investment income in the year ended December 31, 2020 included $55 million of net proceeds received from a dividend recapitalization at MediaAlpha.

White Mountains’s Other Operations segment reported general and administrative expenses of $26 million and $106 million in the fourth quarter and year ended December 31, 2021 compared to $55 million and $142 million in the fourth quarter and year ended December 31, 2020. The decreases in general and administrative expenses in the fourth quarter and year ended December 31, 2021 compared to the fourth quarter and year ended December 31, 2020 were driven primarily by lower incentive compensation costs.

4



Share Repurchases

In the fourth quarter of 2021, White Mountains repurchased and retired 11,999 of its common shares for $13 million at an average share price of $1,072.72, or 90% of White Mountains’s December 31, 2021 adjusted book value per share. In the year ended December 31, 2021, White Mountains repurchased and retired 98,511 of its common shares for $108 million at an average share price of $1,091.29, or 92% of White Mountains’s December 31, 2021 adjusted book value per share.

In the year ended December 31, 2020, White Mountains repurchased and retired 99,087 of its common shares for $85 million at an average share price of $858.81, or 68% of White Mountains’s December 31, 2020 adjusted book value per share. White Mountains did not repurchase any of its common shares in the fourth quarter of 2020.

Investments

The total consolidated portfolio return was 0.3% in the fourth quarter of 2021. Excluding MediaAlpha, the total consolidated portfolio return was 1.8% in the fourth quarter of 2021. The total consolidated portfolio return was 14.3% in the fourth quarter of 2020. Excluding MediaAlpha, the total consolidated portfolio return was 1.7% in the fourth quarter of 2020.

The total consolidated portfolio return was -3.4% for the year ended December 31, 2021. Excluding MediaAlpha, the total consolidated portfolio return was 6.4% for the year ended December 31, 2021. The total consolidated portfolio return was 31.9% for the year ended December 31, 2020. Excluding MediaAlpha, the total consolidated portfolio return was 4.6% for the year ended December 31, 2020.

Mark Plourde, Managing Director of White Mountains Advisors, said, “Excluding MediaAlpha, the total portfolio was up 1.8% in the quarter and 6.4% for the year, a solid result in a rising rate environment and driven by strong equity returns. The fixed income portfolio returned -0.3% for the quarter and -0.4% for the year, ahead of the longer duration BBIA Index returns of -0.5% and -1.3%. Excluding MediaAlpha, the equity portfolio returned 5.1% in the quarter and 19.3% for the year, strong absolute returns, but behind the S&P 500 Index returns of 11.0% and 28.7%.”

Additional Information

White Mountains is a Bermuda-domiciled financial services holding company traded on the New York Stock Exchange and the Bermuda Stock Exchange under the symbol WTM. Additional financial information and other items of interest are available at the Company’s website located at www.whitemountains.com. White Mountains expects to file its Form 10-Q today with the Securities and Exchange Commission and urges shareholders to refer to that document for more complete information concerning its financial results.
5




WHITE MOUNTAINS INSURANCE GROUP, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(millions)
(Unaudited)
December 31,
2021
September 30,
2021
December 31,
2020
Assets 
Financial Guarantee (HG Global/BAM)
Fixed maturity investments$934.1 $898.4 $859.5 
Short-term investments32.4 50.3 60.4 
Total investments966.5 948.7 919.9 
Cash19.8 21.8 42.8 
Insurance premiums receivable6.9 6.9 6.9 
Deferred acquisition costs33.1 31.7 27.8 
Other assets18.5 18.7 20.4 
Total Financial Guarantee assets1,044.8 1,027.8 1,017.8 
P&C Insurance and Reinsurance (Ark)
Fixed maturity investments688.6 618.1 — 
Common equity securities251.1 159.6 — 
Short-term investments296.2 396.5 — 
Other long-term investments326.2 320.6 — 
Total investments1,562.1 1,494.8 — 
Cash 67.8 116.5 — 
Reinsurance recoverables448.4 465.6 — 
Insurance premiums receivable416.0 482.3 — 
Ceded unearned premiums67.1 92.1 — 
Deferred acquisition costs and value of in-force business acquired108.2 127.8 — 
Goodwill and other intangible assets292.5 292.5 — 
Other assets64.9 61.3 — 
Total P&C Insurance and Reinsurance assets3,027.0 3,132.9 — 
Specialty Insurance Distribution (NSM)
Cash (restricted $89.2, $92.2 and $78.4)111.5 126.5 126.5 
Premium and commission receivable85.0 78.8 76.7 
  Goodwill and other intangible assets725.4 734.8 736.8 
  Other assets55.4 56.4 59.6 
Total Specialty Insurance Distribution assets977.3 996.5 999.6 
Asset Management (Kudu)
 Other long-term investments669.5 604.7 400.6 
 Cash (restricted $4.5, $4.5, $0.0)21.4 14.8 7.8 
 Accrued investment income16.9 9.0 9.8 
 Goodwill and other intangible assets8.9 9.0 9.2 
 Other assets10.4 8.5 2.8 
Total Asset Management assets727.1 646.0 430.2 
   Other Operations
 Fixed maturity investments286.2 316.4 347.7 
 Short-term investments137.3 162.6 82.4 
 Investment in MediaAlpha261.6 316.4 802.2 
 Other long-term investments382.1 360.2 386.2 
Total investments1,067.2 1,155.6 1,618.5 
 Cash38.8 31.1 34.1 
 Cash pre-funded/placed in escrow for Ark transaction — 646.3 
 Goodwill and other intangible assets39.1 48.7 36.4 
 Other assets63.3 75.0 46.2 
 Assets held for sale16.1 — 2.3 
Total Other Operations assets1,224.5 1,310.4 2,383.8 
Total assets$7,000.7 $7,113.6 $4,831.4 



6




WHITE MOUNTAINS INSURANCE GROUP, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(millions)
(Unaudited)
December 31,
2021
September 30,
2021
December 31,
2020
Liabilities
Financial Guarantee (HG Global/BAM)
Unearned insurance premiums$266.3 $257.0 $237.5 
Accrued incentive compensation24.7 21.0 25.7 
Other liabilities30.9 32.5 28.3 
Total Financial Guarantee liabilities321.9 310.5 291.5 
P&C Insurance and Reinsurance (Ark)
Loss and loss adjustment expense reserves894.7 890.9 — 
Unearned insurance premiums495.9 596.6 — 
Debt185.9 200.7 — 
Reinsurance payable424.1 481.4 — 
Contingent consideration28.0 24.0 — 
Other liabilities93.8 87.4 — 
Total P&C Insurance and Reinsurance liabilities2,122.4 2,281.0 — 
Specialty Insurance Distribution (NSM)
Debt272.1 295.0 272.6 
Premiums payable135.9 132.5 113.4 
Contingent consideration6.8 6.7 14.6 
      Other liabilities80.5 84.2 91.2 
Total Specialty Insurance Distribution liabilities495.3 518.4 491.8 
Asset Management (Kudu)
Debt218.2 195.6 86.3 
Other liabilities42.8 40.2 10.0 
Total Asset Management liabilities261.0 235.8 96.3 
   Other Operations
Debt16.8 19.1 17.5 
Accrued incentive compensation48.5 44.7 70.1 
Other liabilities30.1 49.8 46.3 
Total Other Operations liabilities95.4 113.6 133.9 
Total liabilities3,296.0 3,459.3 1,013.5 
Equity
White Mountains’s common shareholder’s equity
     White Mountains’s common shares and paid-in surplus588.9 586.2 595.2 
     Retained earnings2,957.5 2,935.3 3,311.2 
 Accumulated other comprehensive income (loss), after tax:
 Net unrealized gains (losses) from foreign currency translation and
    interest rate swap
1.7 .2 (.4)
Total White Mountains’s common shareholders’ equity3,548.1 3,521.7 3,906.0 
Non-controlling interests156.6 132.6 (88.1)
Total equity3,704.7 3,654.3 3,817.9 
Total liabilities and equity$7,000.7 $7,113.6 $4,831.4 

7


WHITE MOUNTAINS INSURANCE GROUP, LTD.
BOOK VALUE AND ADJUSTED BOOK VALUE PER SHARE
(Unaudited)


 December 31,
2021
September 30,
2021
December 31,
2020
September 30,
2020
Book value per share numerators (in millions):
White Mountains’s common shareholders’ equity -
  GAAP book value per share numerator
$3,548.1 $3,521.7 $3,906.0 $3,407.7 
Time value of money discount on expected future payments on the
   BAM Surplus Notes (1)
(125.9)(128.0)(142.5)(144.3)
HG Global’s unearned premium reserve (1)
214.6 206.8 190.0 181.0 
HG Global’s net deferred acquisition costs (1)
(60.8)(58.1)(52.4)(49.5)
Adjusted book value per share numerator$3,576.0 $3,542.4 $3,901.1 $3,394.9 
Book value per share denominators (in thousands of shares):
Common shares outstanding - GAAP book value per share denominator3,017.8 3,029.6 3,102.0 3,102.0 
Unearned restricted common shares(13.7)(17.0)(14.8)(19.3)
Adjusted book value per share denominator3,004.1 3,012.6 3,087.2 3,082.7 
GAAP book value per share$1,175.73 $1,162.44 $1,259.18 $1,098.56 
Adjusted book value per share$1,190.39 $1,175.86 $1,263.64 $1,101.28 
(1) Amount reflects White Mountains's preferred share ownership in HG Global of 96.9%.
December 31,
2021
September 30,
2021
December 31,
2020
September 30,
2020
Quarter-to-date change in GAAP book value per share,
   including dividends:
1.1 %(9.1)%14.6 %7.6 %
Quarter-to-date change in adjusted book value per share,
   including dividends:
1.2 %(9.0)%14.7 %7.8 %
Year-to-date change in GAAP book value per share,
   including dividends:
(6.5)%(7.6)%23.1 %7.4 %
Year-to-date change in adjusted book value per share,
   including dividends:
(5.7)%(6.9)%24.2 %8.2 %
Year-to-date dividends per share$1.00 $1.00 $1.00 $1.00 

8


WHITE MOUNTAINS INSURANCE GROUP, LTD.
GOODWILL AND OTHER INTANGIBLE ASSETS
(Unaudited)

December 31,
2021
September 30,
2021
December 31,
2020
September 30,
2020
Summary of goodwill and other intangible assets (in millions):
Goodwill:
Ark$116.8 $116.8 $— $— 
NSM 503.2 529.6 
(1)
506.4 511.8 
(2)
Kudu7.6 7.6 7.6 7.6 
Other Operations17.9 17.4 11.5 20.7 
(2)
Total goodwill645.5 671.4 525.5 540.1 
Other intangible assets:
Ark175.7 175.7 — — 
NSM222.2 205.2 230.4 218.5 
Kudu1.3 1.4 1.6 1.7 
Other Operations21.2 31.3 24.9 16.0 
Total other intangible assets420.4 413.6 256.9 236.2 
Total goodwill and other intangible assets1,065.9 1,085.0 782.4 776.3 
Goodwill and other intangible assets attributed to
   non-controlling interests
(117.6)(118.0)(28.1)(27.1)
Goodwill and other intangible assets included in
   White Mountains’s common shareholders’ equity
$948.3 $967.0 $754.3 $749.2 
(1) The relative fair values of goodwill and of other intangible assets recognized in connection with the acquisition of JC Taylor had not yet been finalized at September 30, 2021.
(2) The relative fair values of goodwill and of other intangible assets recognized in connection with the acquisition of Kingsbridge and an acquisition within Other Operations had not yet been finalized at September 30, 2020.

9




WHITE MOUNTAINS INSURANCE GROUP, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(millions)
(Unaudited)

Three Months Ended December 31,Twelve Months Ended December 31,
2021202020212020
Revenues:
Financial Guarantee (HG Global/BAM)
Earned insurance premiums$7.3 $5.6 $26.9 $22.8 
Net investment income4.3 4.4 17.5 19.5 
Net realized and unrealized investment gains (losses) (7.3)— (22.9)23.7 
Other revenues.6 .4 1.5 2.5 
Total Financial Guarantee revenues4.9 10.4 23.0 68.5 
P&C Insurance and Reinsurance (Ark)
Earned insurance premiums201.5 — 637.3 — 
Net investment income1.1 — 2.9 — 
Net realized and unrealized investment gains (losses) 6.2 — 16.5 — 
Other revenues2.4 — 11.8 — 
Total P&C Insurance and Reinsurance revenues211.2 — 668.5 — 
Specialty Insurance Distribution (NSM)
Commission revenues63.4 58.3 258.0 232.5 
Other revenues25.6 15.0 72.4 52.6 
Total Specialty Insurance Distribution revenues89.0 73.3 330.4 285.1 
Asset Management (Kudu)
Net investment income17.8 10.2 43.9 29.5 
Net realized and unrealized investment gains (losses)27.4 14.4 89.9 15.9 
Other revenues .1 .2 .3 
Total Asset Management revenues45.2 24.7 134.0 45.7 
Other Operations
Net investment income2.1 2.7 18.2 82.0 
Net realized and unrealized investment gains (losses) 16.7 8.6 50.7 (8.8)
Net realized and unrealized investment gains (losses) from
investment in MediaAlpha
(54.8)391.0 (380.3)686.0 
Commission revenues2.6 2.2 9.6 8.3 
Other revenues33.1 7.9 90.7 13.9 
Total Other Operations revenues(.3)412.4 (211.1)781.4 
Total revenues$350.0 $520.8 $944.8 $1,180.7 


10




WHITE MOUNTAINS INSURANCE GROUP, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
(millions)
(Unaudited)

Three Months Ended December 31,Twelve Months Ended December 31,
2021202020212020
Expenses:
Financial Guarantee (HG Global/BAM)
Insurance acquisition expenses$1.8 $1.6 $8.3 $7.0 
General and administrative expenses14.4 15.4 57.1 56.8 
Total Financial Guarantee expenses16.2 17.0 65.4 63.8 
P&C Insurance and Reinsurance (Ark)
Loss and loss adjustment expenses67.0 — 314.8 — 
Insurance and reinsurance acquisition expenses53.6 — 178.0 — 
General and administrative expenses31.1 — 115.5 — 
Interest expense2.8 — 7.3 — 
Total P&C Insurance and Reinsurance expenses154.5 — 615.6 — 
Specialty Insurance Distribution (NSM)
General and administrative expenses48.0 45.9 190.1 176.9 
Broker commission expenses19.3 18.9 80.2 75.3 
Change in fair value of contingent consideration.2 (1.7)1.0 (3.3)
Amortization of other intangible assets10.2 10.5 35.2 26.7 
Loss on assets held for sale — 28.7 — 
Interest expense5.6 6.0 23.3 22.1 
Total Specialty Insurance Distribution expenses83.3 79.6 358.5 297.7 
Asset Management (Kudu)
General and administrative expenses5.5 4.3 14.5 11.8 
Amortization of other intangible assets.1 — .3 .3 
Interest expense2.5 1.7 11.7 6.0 
Total Asset Management expenses8.1 6.0 26.5 18.1 
Other Operations
Cost of sales23.4 4.8 69.3 11.3 
General and administrative expenses26.0 54.8 105.7 141.9 
Amortization of other intangible assets1.4 .7 4.3 1.3 
Interest expense.4 .6 1.5 1.4 
Total Other Operations expenses51.2 60.9 180.8 155.9 
Total expenses313.3 163.5 1,246.8 535.5 
Pre-tax income (loss) from continuing operations36.7 357.3 (302.0)645.2 
 Income tax (expense) benefit3.3 117.6 (38.6)20.5 
Net income (loss) from continuing operations40.0 474.9 (340.6)665.7 
 Net gain (losses) from sale of discontinued operations, net of tax (1.5)18.7 (2.3)
Net income (loss)40.0 473.4 (321.9)663.4 
 Net income (loss) attributable to non-controlling interests(7.2)15.8 46.5 45.3 
Net income (loss) attributable to White Mountains’s
   common shareholders
$32.8 $489.2 $(275.4)$708.7 

11



WHITE MOUNTAINS INSURANCE GROUP, LTD.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(millions)
(Unaudited)

Three Months Ended December 31,Twelve Months Ended December 31,
2021202020212020
Net income (loss) attributable to White Mountains’s
   common shareholders
$32.8 $489.2 $(275.4)$708.7 
Other comprehensive income (loss), net of tax1.3 6.3 1.9 7.3 
Comprehensive income (loss) 34.1 495.5 (273.5)716.0 
Other comprehensive (income) loss attributable to non-controlling interests.2 (.2).2 (.5)
Comprehensive income (loss) attributable to White Mountains’s
   common shareholders
$34.3 $495.3 $(273.3)$715.5 




WHITE MOUNTAINS INSURANCE GROUP, LTD.
EARNINGS PER SHARE
(Unaudited)

Income (loss) per share attributable to White Mountains’s common shareholdersThree Months Ended December 31,Twelve Months Ended December 31,
2021202020212020
Basic earnings (loss) per share
Continuing operations$10.87 $158.19 $(95.53)$227.72 
Discontinued operations (.49)6.07 (.75)
Total consolidated operations$10.87 $157.70 $(89.46)$226.97 
Diluted earnings (loss) per share
Continuing operations$10.87 $158.19 $(95.53)$227.72 
Discontinued operations (.49)6.07 (.75)
Total consolidated operations$10.87 $157.70 $(89.46)$226.97 
Dividends declared per White Mountains’s common share$ $— $1.00 $1.00 

12


WHITE MOUNTAINS INSURANCE GROUP, LTD.
QTD SEGMENT STATEMENTS OF PRE-TAX INCOME (LOSS)
(millions)
(Unaudited)

For the Three Months Ended December 31, 2021HG Global/BAM
HG GlobalBAMArkNSMKuduOther OperationsTotal
Revenues:
Earned insurance premiums$6.1 $1.2 $201.5 $— $— $— $208.8 
Net investment income1.8 2.5 1.1 — 17.8 2.1 25.3 
Net investment income (expense) -
BAM surplus note interest
2.9 (2.9)— — — —  
Net realized and unrealized investment gains (losses)(4.2)(3.1)6.2 — 27.4 16.7 43.0 
Net realized and unrealized investment gains (losses)
   from investment in MediaAlpha
— — — — — (54.8)(54.8)
Commission revenues— — — 63.4 — 2.6 66.0 
Other revenues.2 .4 2.4 25.6 — 33.1 61.7 
Total revenues6.8 (1.9)211.2 89.0 45.2 (.3)350.0 
Expenses:
Loss and loss adjustment expenses— — 67.0 — — — 67.0 
Insurance acquisition expenses1.4 .4 53.6 — — — 55.4 
Cost of sales— — — — — 23.4 23.4 
General and administrative expenses.7 13.7 31.1 48.0 5.5 26.0 125.0 
Broker commission expenses— — — 19.3 — — 19.3 
Change in fair value of contingent consideration— — — .2 — — .2 
Amortization of other intangible assets— — — 10.2 .1 1.4 11.7 
Interest expense— — 2.8 5.6 2.5 .4 11.3 
Total expenses2.1 14.1 154.5 83.3 8.1 51.2 313.3 
Pre-tax income (loss)$4.7 $(16.0)$56.7 $5.7 $37.1 $(51.5)$36.7 


13


WHITE MOUNTAINS INSURANCE GROUP, LTD.
QTD SEGMENT STATEMENTS OF PRE-TAX INCOME (LOSS) (CONTINUED)
(millions)
(Unaudited)

For the Three Months Ended December 31, 2020HG Global/BAM
HG GlobalBAMNSMKuduOther OperationsTotal
Revenues:
Earned insurance premiums$4.6 $1.0 $— $— $— $5.6 
Net investment income1.7 2.7 — 10.2 2.7 17.3 
Net investment income (expense) -
 BAM surplus note interest
4.7 (4.7)— — — — 
Net realized and unrealized investment gains (losses)(.3).3 — 14.4 8.6 23.0 
   Net unrealized investment gains (losses) from
 investment in MediaAlpha
— — — — 391.0 391.0 
Commission revenues— — 58.3 — 2.2 60.5 
Other revenues— .4 15.0 .1 7.9 23.4 
Total revenues10.7 (.3)73.3 24.7 412.4 520.8 
Expenses:
Insurance acquisition expenses1.4 .2 — — — 1.6 
Cost of sales— — — — 4.8 4.8 
General and administrative expenses1.0 14.4 45.9 4.3 54.8 120.4 
Broker commission expenses— — 18.9 — — 18.9 
Change in fair value of contingent consideration— — (1.7)— — (1.7)
Amortization of other intangible assets— — 10.5 — .7 11.2 
Interest expense— — 6.0 1.7 .6 8.3 
Total expenses2.4 14.6 79.6 6.0 60.9 163.5 
Pre-tax income (loss)$8.3 $(14.9)$(6.3)$18.7 $351.5 $357.3 

14




WHITE MOUNTAINS INSURANCE GROUP, LTD.
YTD SEGMENT STATEMENTS OF PRE-TAX (LOSS) INCOME
(millions)
(Unaudited)

For the Twelve Months Ended December 31, 2021HG Global/BAM
HG GlobalBAMArkNSMKuduOther OperationsTotal
Revenues:
Earned insurance premiums$22.2 $4.7 $637.3 $— $— $— $664.2 
Net investment income7.2 10.3 2.9 — 43.9 18.2 82.5 
Net investment income (expense) -
 BAM surplus note interest
12.0 (12.0)— — — —  
Net realized and unrealized investment gains (losses)(13.7)(9.2)16.5 — 89.9 50.7 134.2 
   Net realized and unrealized investment gains (losses)
      from investment in MediaAlpha
— — — — — (380.3)(380.3)
Commission revenues— — — 258.0 — 9.6 267.6 
Other revenue.5 1.0 11.8 72.4 .2 90.7 176.6 
Total revenues28.2 (5.2)668.5 330.4 134.0 (211.1)944.8 
Expenses:
Loss and loss adjustment expenses— — 314.8 — — — 314.8 
Insurance acquisition expenses5.7 2.6 178.0 — — — 186.3 
Cost of sales— — — — — 69.3 69.3 
General and administrative expenses2.0 55.1 115.5 190.1 14.5 105.7 482.9 
Broker commission expenses— — — 80.2 — — 80.2 
Change in fair value of contingent consideration— — — 1.0 — — 1.0 
Amortization of other intangible assets— — — 35.2 .3 4.3 39.8 
Loss on assets held for sale— — — 28.7 — — 28.7 
Interest expense— — 7.3 23.3 11.7 1.5 43.8 
Total expenses7.7 57.7 615.6 358.5 26.5 180.8 1,246.8 
Pre-tax income (loss)$20.5 $(62.9)$52.9 $(28.1)$107.5 $(391.9)$(302.0)






















15




WHITE MOUNTAINS INSURANCE GROUP, LTD.
YTD SEGMENT STATEMENTS OF PRE-TAX INCOME (LOSS) (CONTINUED)
(millions)
(Unaudited)

For the Twelve Months Ended December 31, 2020HG Global/BAM
HG GlobalBAMNSMKuduOther OperationsTotal
Revenues:
Earned insurance premiums$18.7 $4.1 $— $— $— $22.8 
Net investment income7.8 11.7 — 29.5 82.0 131.0 
Net investment income (expense) -
 BAM surplus note interest
18.8 (18.8)— — — — 
Net realized and unrealized investment gains (losses)11.8 11.9 — 15.9 (8.8)30.8 
Net unrealized investment gains (losses) from
 investment in MediaAlpha
— — — — 686.0 686.0 
Commission revenues— — 232.5 — 8.3 240.8 
Other revenue.3 2.2 52.6 .3 13.9 69.3 
Total revenues57.4 11.1 285.1 45.7 781.4 1,180.7 
Expenses:
Insurance acquisition expenses4.7 2.3 — — — 7.0 
Cost of sales— — — — 11.3 11.3 
General and administrative expenses2.6 54.2 176.9 11.8 141.9 387.4 
Broker commission expenses— — 75.3 — — 75.3 
Change in fair value of contingent consideration— — (3.3)— — (3.3)
Amortization of other intangible assets— — 26.7 .3 1.3 28.3 
Interest expense— — 22.1 6.0 1.4 29.5 
Total expenses7.3 56.5 297.7 18.1 155.9 535.5 
Pre-tax income (loss)$50.1 $(45.4)$(12.6)$27.6 $625.5 $645.2 


16




WHITE MOUNTAINS INSURANCE GROUP, LTD.
SELECTED FINANCIAL DATA
($ in millions)
(Unaudited)

Three Months Ended December 31,Twelve Months Ended December 31,
BAM2021202020212020
Gross par value of primary market policies issued$4,389.6 $5,154.6 $15,560.8 $15,279.6 
Gross par value of secondary market policies issued472.3 357.2 1,118.9 2,022.9 
Gross par value of assumed reinsurance — 805.5 36.9 
Total gross par value of market policies issued$4,861.9 $5,511.8 $17,485.2 $17,339.4 
Gross written premiums$16.6 $16.1 $55.6 $61.7 
MSC collected
17.4 22.0 62.2 68.9 
Total gross written premiums and MSC collected34.0 38.1 117.8 130.6 
Present value of future installment MSC collections —  .3 
Gross written premium adjustments on existing
 installment policies
.1 .3 .2 .4 
Gross written premiums and MSC from
   new business
$34.1 $38.4 $118.0 $131.3 
Total pricing70 bps70 bps67 bps76 bps
As of
December 31, 2021
As of
September 30, 2021
As of
December 31, 2020
Policyholders’ surplus$298.1 $322.8 $324.7 
Contingency reserve101.8 102.7 86.4 
Qualified statutory capital399.9 425.5 411.1 
Statutory net unearned premiums49.5 48.3 45.2 
Present value of future installment premiums
   and MSC
13.8 13.9 14.0 
HG Re, Ltd collateral trusts at statutory value478.9 442.8 417.0 
Fidus Re, Ltd collateral trust at statutory value250.0 250.0 100.0 
Claims paying resources$1,192.1 $1,180.5 $987.3 
Three Months Ended December 31,Twelve Months Ended December 31,
HG Global2021202020212020
Net written premiums$14.2 $13.9 $47.6 $53.0 
Earned premiums$6.1 $4.6 $22.2 $18.7 
As of
December 31, 2021
As of
September 30, 2021
As of
December 31, 2020
As of
September 30, 2020
Unearned premiums$221.5 $213.4 $196.1 $186.8 
Deferred acquisition costs$62.7 $59.9 $54.1 $51.1 















17




WHITE MOUNTAINS INSURANCE GROUP, LTD.
SELECTED FINANCIAL DATA (CONTINUED)
($ in millions)
(Unaudited)

ArkFor the Three Months Ended December 31, 2021
GAAPThird-Party Capital ShareAdjusted
Insurance premiums:
Gross written premiums$163.7 $ $163.7 
Net written premiums$133.6 $(.6)$133.0 
Net earned premiums$201.5 $11.3 $212.8 
Insurance expenses:
Loss and loss adjustment expenses$67.0 $(7.4)$59.6 
Insurance acquisition expenses53.6  53.6 
Other underwriting expenses (1)
21.0 7.5 28.5 
Total insurance expenses$141.6 $.1 $141.7 
Ratios:
Loss and loss adjustment expense33.3 %28.0 %
Insurance acquisition expense26.6 %25.2 %
Other underwriting expense10.4 %13.4 %
   Combined Ratio70.3 %66.6 %
(1) Included within general and administrative expenses.

For the Twelve Months Ended December 31, 2021
GAAPThird-Party Capital ShareAdjusted
Insurance premiums:
Gross written premiums$1,058.7 $ $1,058.7 
Net written premiums$859.1 $(6.5)$852.6 
Net earned premiums$637.3 $76.3 $713.6 
Insurance expenses:
Loss and loss adjustment expenses$314.8 $39.8 $354.6 
Insurance acquisition expenses178.0  178.0 
Other underwriting expenses (1)
64.6 9.2 73.8 
Total insurance expenses$557.4 $49.0 $606.4 
Ratios:
Loss and loss adjustment expense49.4 %49.7 %
Insurance acquisition expense27.9 %24.9 %
Other underwriting expense10.1 %10.3 %
   Combined Ratio87.4 %84.9 %
(1) Included within general and administrative expenses.
18



WHITE MOUNTAINS INSURANCE GROUP, LTD.
SELECTED FINANCIAL DATA (CONTINUED)
(millions)
(Unaudited)

NSMThree Months Ended December 31, 2020Three Months Ended December 31, 2021Twelve Months Ended December 31, 2020Twelve Months Ended
December 31, 2021
Commission revenues$58.3 $63.4 $232.5 $258.0 
Broker commission expenses18.9 19.3 75.3 80.2 
Gross profit39.4 44.1 157.2 177.8 
Other revenues15.0 25.6 52.6 72.4 
General and administrative expenses45.9 48.0 176.9 190.1 
Change in fair value of contingent
   consideration
(1.7).2 (3.3)1.0 
Amortization of other intangible assets10.5 10.2 26.7 35.2 
Loss on assets held for sale—  — 28.7 
Interest expense6.0 5.6 22.1 23.3 
GAAP pre-tax income (loss)(6.3)5.7 (12.6)(28.1)
Income tax (expense) benefit2.9 (2.0)5.7 5.6 
GAAP net income (loss)(3.4)3.7 (6.9)(22.5)
Add back:
Interest expense6.0 5.6 22.1 23.3 
Income tax expense (benefit)(2.9)2.0 (5.7)(5.6)
General and administrative expenses –
   depreciation
1.6 1.7 4.5 5.4 
Amortization of other intangible assets10.5 10.2 26.7 35.2 
EBITDA11.8 23.2 40.7 35.8 
Exclude:
Change in fair value of contingent
   consideration
(1.7).2 (3.3)1.0 
Non-cash equity-based
   compensation expense
1.4 .7 2.4 2.0 
Impairments of intangible assets—  6.2  
Loss on assets held for sale—  — 28.7
Transaction expenses1.6 1.2 7.2 4.8 
Investments made in the development
   of new business lines
.3 .4 .9 .8 
Restructuring expenses1.6 .3 4.8 5.4 
Legal settlements— (7.6)— (7.6)
Adjusted EBITDA$15.0 $18.4 $58.9 70.9 
Adjustment to remove Fresh Insurance motor business’s adjusted EBITDA from January 1, 2021.7 
Adjustment to include J.C. Taylor’s adjusted EBITDA from January 1, 2021 to August 6, 20214.6 
Pro forma adjusted EBITDA$76.2 


19



WHITE MOUNTAINS INSURANCE GROUP, LTD.
SELECTED FINANCIAL DATA (CONTINUED)
(millions)
(Unaudited)

KuduThree Months Ended December 31, 2020Three Months Ended December 31, 2021Twelve Months Ended December 31, 2020Twelve Months Ended
December 31, 2021
Net investment income$10.2 $17.8 $29.5 $43.9 
Net realized and unrealized investment gains (losses) 14.4 27.4 15.9 89.9 
Other revenues.1  .3 .2 
Total revenues24.7 45.2 45.7 134.0 
General and administrative expenses4.3 5.5 11.8 14.5 
Amortization of other intangible assets— .1 .3 .3 
Interest expense1.7 2.5 6.0 11.7 
Total expenses6.0 8.1 18.1 26.5 
GAAP pre-tax income (loss)18.7 37.1 27.6 107.5 
Income tax (expense) benefit(3.8)(4.1)(7.0)(29.5)
GAAP net income (loss)14.9 33.0 20.6 78.0 
Add back:
Interest expense1.7 2.5 6.0 11.7 
Income tax expense (benefit)3.8 4.1 7.0 29.5 
General and administrative expenses – depreciation—  —  
Amortization of other intangible assets— .1 .3 .3 
EBITDA20.4 39.7 33.9 119.5 
Exclude:
Net realized and unrealized investment (gains) losses (14.4)(27.4)(15.9)(89.9)
Non-cash equity-based compensation
   expense
.3 .8 .4 1.2 
Transaction expenses2.1 1.1 3.7 2.0 
Adjusted EBITDA$8.4 $14.2 $22.1 32.8 
Adjustment to annualize partial year revenues for participation contracts acquired (1)
8.7 
Adjustment to remove partial year revenues for participation contracts sold(2.2)
Annualized adjusted EBITDA$39.3 
(1) As no revenues were due to be accrued in 2021 under the Granahan Investment Management and Radcliffe Capital Management participation contracts, they were not included in the adjustment to annualize partial year revenues for participation contracts acquired. These contracts will be included in the adjustment in the first quarter of 2022.
20


Regulation G

This earnings release includes non-GAAP financial measures that have been reconciled to their most comparable GAAP financial measures.
Adjusted book value per share is a non-GAAP financial measure which is derived by adjusting (i) the GAAP book value per share numerator and (ii) the common shares outstanding denominator, as described below.

The GAAP book value per share numerator is adjusted (i) to include a discount for the time value of money arising from the modeled timing of cash payments of principal and interest on the BAM surplus notes and (ii) to add back the unearned premium reserve, net of deferred acquisition costs, at HG Global.

Under GAAP, White Mountains is required to carry the BAM surplus notes, including accrued interest, at nominal value with no consideration for time value of money. Based on a debt service model that forecasts operating results for BAM through maturity of the surplus notes, the present value of the BAM surplus notes, including accrued interest and using an 8% discount rate, was estimated to be $130 million, $132 million, $147 million and $149 million less than the nominal GAAP carrying values as of December 31, 2021, September 30, 2021, December 31, 2020 and September 30, 2020, respectively.

The value of HG Global’s unearned premium reserve, net of deferred acquisition costs, was $159 million, $154 million, $142 million and $136 million as of December 31, 2021, September 30, 2021, December 31, 2020 and September 30, 2020, respectively.

White Mountains believes these adjustments are useful to management and investors in analyzing the intrinsic value of HG Global, including the value of the BAM surplus notes and the value of the in-force business at HG Re, HG Global’s reinsurance subsidiary.

The denominator used in the calculation of adjusted book value per share equals the number of common shares outstanding adjusted to exclude unearned restricted common shares, the compensation cost of which, at the date of calculation, has yet to be amortized. Restricted common shares are earned on a straight-line basis over their vesting periods. The reconciliation of GAAP book value per share to adjusted book value per share is included on page 8.

The growth in adjusted book value per share excluding net realized and unrealized investment losses from White Mountains’s investment in MediaAlpha on page 1 is a non-GAAP financial measure. White Mountains believes this measure to be useful to management and investors by showing the underlying performance of White Mountains without regard to the impact of changes in MediaAlpha’s share price. A reconciliation from GAAP to the reported percentages is as follows:
Three Months Ended
December 31, 2021
Twelve Months Ended
December 31, 2021
Growth in GAAP book value per share1.1%(6.5)%
Adjustments to book value per share (see reconciliation on page 8)0.1%0.8%
Remove net realized and unrealized investment losses from
     White Mountains’s investment in MediaAlpha
1.6%10.0%
Growth in adjusted book value per share excluding net realized and
     unrealized investment losses from White Mountains’s investment
     in MediaAlpha
2.8%4.3%

21



BAM’s gross written premiums and MSC from new business is a non-GAAP financial measure, which is derived by adjusting gross written premiums and MSC collected (i) to include the present value of future installment MSC not yet collected and (ii) to exclude the impact of gross written premium adjustments related to policies closed in prior periods. White Mountains believes these adjustments are useful to management and investors in evaluating the volume and pricing of new business closed during the period. The reconciliation from GAAP gross written premiums to gross written premiums and MSC from new business is included on page 17.

Ark’s adjusted loss and loss adjustment expense ratio, adjusted insurance acquisition expense ratio, adjusted other underwriting expense ratio and adjusted combined ratio are non-GAAP financial measures, which are derived by adjusting the GAAP ratios to add back the impact of whole-account quota-share reinsurance arrangements related to third-party capital providers for Ark’s Lloyd’s syndicates. The impact of these reinsurance arrangements relates to years of account prior to White Mountains’s transaction with Ark. White Mountains believes these adjustments are useful to management and investors in evaluating Ark’s results on a fully aligned basis. The reconciliation from the GAAP ratios to the adjusted ratios is included on page 18.

NSM’s EBITDA, adjusted EBITDA and pro forma adjusted EBITDA are non-GAAP financial measures.

EBITDA is a non-GAAP financial measure that excludes interest expense on debt, income tax (expense) benefit, depreciation and amortization of other intangible assets from GAAP net income (loss).

Adjusted EBITDA is a non-GAAP financial measure that excludes certain other items in GAAP net income (loss) in addition to those excluded from EBITDA. The adjustments relate to (i) change in fair value of contingent consideration liabilities, (ii) non-cash equity-based compensation expense, (iii) impairments of intangible assets, (iv) loss on assets held for sale, (v) transaction expenses, (vi) investments made in the development of new business lines, (vii) restructuring expenses and (viii) legal settlements. A description of each follows:
Change in fair value of contingent consideration liabilities - Contingent consideration liabilities are amounts payable to the sellers of businesses purchased by NSM that are contingent on the earnings of such businesses in periods subsequent to their acquisition. Under GAAP, contingent consideration liabilities are initially recorded at fair value as part of purchase accounting, with the periodic change in the fair value of these liabilities recorded as income or an expense.
Non-cash equity-based compensation expense - Represents non-cash expenses related to NSM’s management compensation emanating from the grants of equity units.
Impairments of intangible assets - Represents expense related to NSM’s write-off of intangible assets. For the periods presented, the impairments related primarily to NSM’s write-off of intangible assets in its U.K. vertical. The impairments related to lower premium volumes, including due to the impact of the COVID-19 pandemic, and certain reorganization initiatives in the U.K. vertical.
Loss on assets held for sale - Represents the loss on net assets held for sale related to the Fresh Insurance motor business.
Transaction expenses - Represents costs directly related to NSM’s mergers and acquisitions activity, such as transaction-related compensation, banking, accounting and external lawyer fees, which are not capitalized and are expensed under GAAP.
Investments made in the development of new business lines - Represents the net loss related to the start-up of newly established lines of business, which NSM views as investments.
Restructuring expenses - Represents expenses associated with eliminating redundant work force and facilities that often arise as a result of NSM’s post-acquisition integration strategies. For the periods presented, this adjustment relates primarily to NSM’s expenses incurred in certain reorganization initiatives in the U.K. vertical.
Legal settlements - Represents amounts recognized from legal settlements.
22



Pro forma adjusted EBITDA is a non-GAAP financial measure that starts with adjusted EBITDA and also (i) includes the earnings (losses) of acquired businesses for the period of time over the previous 12 months that the businesses were not owned by NSM and (ii) removes the earnings (losses) for the previous 12 months related to businesses sold by NSM.

White Mountains believes that these non-GAAP financial measures are useful to management and investors in evaluating NSM’s performance. White Mountains also believes that pro forma adjusted EBITDA is useful to management and investors to demonstrate the earnings profile of NSM’s business as of the end of the period for a full 12 month period. See page 19 for the reconciliation of NSM’s GAAP net income (loss) to EBITDA, adjusted EBITDA and pro forma adjusted EBITDA.

Kudu’s EBITDA, adjusted EBITDA and annualized adjusted EBITDA are non-GAAP financial measures.

EBITDA is a non-GAAP financial measure that excludes interest expense on debt, income tax (expense) benefit, depreciation and amortization of other intangible assets from GAAP net income (loss).

Adjusted EBITDA is a non-GAAP financial measure that excludes certain other items in GAAP net income (loss) in addition to those excluded from EBITDA. The adjustments relate to (i) net realized and unrealized investment gains (losses) on Kudu’s revenue and earnings participation contracts, (ii) non-cash equity-based compensation expense and (iii) transaction expenses. A description of each adjustment follows:
Net realized and unrealized investment gains (losses) - Represents net unrealized investment gains and losses recorded on Kudu’s revenue and earnings participation contracts, which are recorded at fair value under GAAP, and realized investment gains and losses from participation contracts sold during the period.
Non-cash equity-based compensation expense - Represents non-cash expenses related to Kudu’s management compensation that are settled with equity units in Kudu.
Transaction expenses - Represents costs directly related to Kudu’s mergers and acquisitions activity, such as external lawyer, banker, consulting and placement agent fees, which are not capitalized and are expensed under GAAP.

Annualized adjusted EBITDA is a non-GAAP financial measure that (i) annualizes partial year revenues related to Kudu’s revenue and earnings participation contracts acquired during the previous 12-month period and (ii) removes revenues related to revenue and earnings participation contracts sold during the previous 12-month period. Annualized revenues related to participation contracts acquired during the previous 12-month period are calculated on a contract-by-contract basis by annualizing the revenues received for the partial 12-month period. For example, if a participation contract was in effect for four months, the amount added equals twice that amount. The adjustment to remove revenues for contracts sold during the previous 12-month period is calculated on a contract-by-contract basis based on actual revenues earned.

White Mountains believes that these non-GAAP financial measures are useful to management and investors in evaluating Kudu’s performance. White Mountains also believes that annualized adjusted EBITDA is useful to management and investors to demonstrate the earnings profile of Kudu’s business as of the end of the period for a full 12-month period. See page 20 for the reconciliation of Kudu’s GAAP net income (loss) to EBITDA, adjusted EBITDA and annualized adjusted EBITDA.


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Total consolidated portfolio return excluding MediaAlpha and total equity portfolio return excluding MediaAlpha are non-GAAP financial measures that remove the net investment income and net realized and unrealized investment gains (losses) from White Mountains’s investment in MediaAlpha. White Mountains believes these measures to be useful to management and investors by showing the underlying performance of White Mountains’s investment portfolio and equity portfolio without regard to White Mountains’s investment in MediaAlpha. The following tables present reconciliations from GAAP to the reported percentages:
Three Months Ended December 31,Twelve Months Ended December 31,
2021202020212020
Total consolidated portfolio return0.3 %14.3 %(3.4)%31.9 %