Investments in Unconsolidated Affiliates

White Mountains’s investments in unconsolidated affiliates represent investments in other companies in which White Mountains has a significant voting and economic interest but does not control the entity.

Symetra

In August 2015, Symetra announced it had entered into a definitive merger agreement with Sumitomo Life pursuant to which Sumitomo Life would acquire all of the outstanding shares of Symetra. Following the announcement and Symetra shareholders’ November 5, 2015 meeting to approve the transaction, White Mountains relinquished its representation on Symetra’s board of directors. As a result, White Mountains changed its accounting for Symetra common shares from the equity method to fair value as of December 31, 2015. During the fourth quarter of 2015, White Mountains recognized $258.8 million ($241.1 million after tax) of unrealized investment gains through net income, representing the difference between the carrying value of Symetra common shares under the equity method at the date of change and fair value at December 31, 2015. On February 1, 2016, Symetra closed its definitive merger agreement with Sumitomo Life and White Mountains received proceeds of $658.0 million, or $32.00 per common share. White Mountains recognized $4.7 million in pre-tax net investment gains associated with Symetra in the first quarter of 2016.

During the three and six months ended June 30, 2015, White Mountains received cash dividends from Symetra of $2.2 million and $4.4 million, which were accounted for as a reduction of White Mountains’s investment in Symetra in accordance with equity method accounting.

As of December 31, 2011, White Mountains concluded that its investment in Symetra common shares was other-than-temporarily impaired and wrote down the GAAP book value of the investment to its estimated fair value of or $15 per share. This impairment, as well as the effect of Symetra capital transactions, resulted in a basis difference between the GAAP carrying value of White Mountains’s investment in Symetra common shares under the equity method and the amount derived by multiplying the percentage of White Mountains common share ownership by Symetra’s total GAAP equity. As of June 30, 2015, the pre-tax unamortized basis difference was $164.1 million, of which $33.0 million is attributable to equity in earnings of unconsolidated affiliates and $131.1 million is attributable to equity in net unrealized gains of unconsolidated affiliates. The pre-tax basis difference was amortized over a 30-year period, based on estimated future cash flows associated with Symetra’s underlying assets and liabilities to which the basis differences was attributed. White Mountains recognized the amortization of the basis difference through equity in earnings of unconsolidated affiliates and equity in net unrealized gains (losses) from investments in unconsolidated affiliates consistent with the original attribution of the basis differences between equity in earnings and equity in net unrealized gains (losses). For the three and six months ended June 30, 2015, White Mountains recognized after-tax amortization of $0.7 million and $1.4 million and through equity in earnings of unconsolidated affiliates and $2.7 million and $5.5 million through equity in net unrealized gains from investments in unconsolidated affiliates.

The following table summarizes amounts recorded by White Mountains under the equity method relating to its investment in Symetra for the three and six months ended June 30, 2015:



	Three Months Ended			Six Months Ended
Millions	June 30, 2015			June 30, 2015
Equity method carrying value of investment in Symetra at the beginning of the period	$	447.3		$	411.4
Equity in earnings ⁽¹⁾⁽²⁾	6.1			13.3
Equity in net unrealized losses from Symetra’s fixed maturity portfolio ⁽³⁾	(66.4		)	(35.5		)
Dividends received	(2.2		)	(4.4		)
Distribution from Prospector Offshore Fund	12.4			12.4
Equity method carrying value of investment in Symetra at the end of the period⁽⁴⁾	$	397.2		$	397.2

⁽¹⁾For the three and six months ended June 30, 2015, equity in earnings excludes tax expense of $0.4 and $0.8.

⁽²⁾For the three and six months ended June 30, 2015, equity in earnings includes $0.7 and $1.4 increase relating to the pre-tax amortization of the Symetra common share basis difference.

⁽³⁾For the three and six months ended June 30, 2015, net unrealized gains includes $2.8 and $5.7 increase relating to the pre-tax amortization of the Symetra common share basis difference.

⁽⁴⁾Includes White Mountains’s equity in net unrealized gains from Symetra’s fixed maturity portfolio of $2.0 as of June 30, 2015, which excludes tax expense of $0.0.

Hamer

On May 27, 2015, White Mountains sold its interest in Hamer LLC, which resulted in a gain of $20.0 million recorded in other revenue. Prior to the sale, White Mountains recorded equity in earnings of $1.1 million and $1.6 million for the three and six months ended June 30, 2015.