WHITE MOUNTAINS INSURANCE GROUP LTD FILES (8-K) Disclosing Results of Operations and Financial Condition, Financial Statements and Exhibits

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On February 7, 2023, White Mountains Insurance Group, Ltd. issued a press
release announcing its results for the three months and year ended December 31,
2022. The press release furnished herewith is attached as Exhibit 99.1 to this
Form 8-K.
Certain information included in the press release constitutes non-GAAP financial
measures (as defined in Regulation G of the Securities and Exchange Commission).
Specifically, there are 12 non-GAAP financial measures: (i) adjusted book value
per share, (ii) Ark's adjusted loss and loss adjustment expense ratio, (iii)
Ark's adjusted insurance acquisition expense ratio, (iv) Ark's adjusted other
underwriting expense ratio, (v) Ark's adjusted combined ratio, (vi) Kudu's
EBITDA, (vii) Kudu's adjusted EBITDA, (viii) Kudu's annualized adjusted EBITDA,
(ix) Kudu's annualized revenue, (x) Kudu's cash revenue yield, (xi) total
consolidated portfolio return excluding MediaAlpha and (xii) total equity
portfolio return excluding MediaAlpha. These non-GAAP financial measures have
been reconciled from 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 $98 million, $114 million,
$130 million and $132 million less than the nominal GAAP carrying values as of
December 31, 2022, September 30, 2022, December 31, 2021 and September 30, 2021,
respectively. The value of HG Global's unearned premium reserve, net of deferred
acquisition costs, was $179 million, $172 million, $159 million and $154 million
as of December 31, 2022, September 30, 2022, December 31, 2021 and September 30,
2021, 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 of Exhibit 99.1 to this Form 8-K.
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 attributable 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 (i.e., 100% of the syndicates'
results). The reconciliation from the GAAP ratios to the adjusted ratios is
included on page 18 of Exhibit 99.1 to this Form 8-K.
Kudu's EBITDA, adjusted EBITDA, annualized adjusted EBITDA, annualized revenue
and cash revenue yield 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.

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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 partial
year revenues related to revenue and earnings participation contracts sold
during the previous 12-month period. Annualized revenue is a non-GAAP financial
measure that adds the adjustments for annualized adjusted EBITDA to GAAP net
investment income. Cash revenue yield is a non-GAAP financial measure that is
derived using annualized revenue as a percentage of total net capital drawn and
invested. 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 in understanding the full earnings profile of Kudu's business as
of the end of any 12-month period. See page 20 of Exhibit 99.1 to this Form 8-K
for the reconciliation of Kudu's GAAP net income (loss) to EBITDA, adjusted
EBITDA and annualized adjusted EBITDA, and the reconciliation of Kudu's GAAP net
investment income to annualized revenue.
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,
                                                   2022                               2021                          2022                               2021
Total consolidated portfolio
return                                        2.1                %                   0.3         %            (1.6)               %                  (3.4)        %
Remove MediaAlpha                            (0.4)               %                   1.5         %             1.9                %                   9.8         %
Total consolidated portfolio
return
  excluding MediaAlpha                        1.7                %                      1.8      %             0.3                %                      6.4      %



                                               Three Months Ended                Twelve Months Ended
                                               December 31, 2022                  December 31, 2022

     Total equity portfolio return                  3.0     %                        2.3     %
     Remove MediaAlpha                             (1.0)    %                        5.8     %
     Total equity portfolio return
       excluding MediaAlpha                         2.0     %                        8.1     %






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ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

(d) Exhibits

99.1 Press Release of White Mountains Insurance Group, Ltd. dated February 7,
2023, furnished herewith.