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WHITE MOUNTAINS INSURANCE GROUP LTD Management’s Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q)

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 76 for specific important factors that
could cause actual results to differ materially from those contained in
forward-looking statements.
The following discussion also includes nine non-GAAP financial measures: (i)
adjusted book value per share, (ii) Ark's adjusted loss and LAE 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
earnings before interest, taxes, depreciation and amortization ("EBITDA"), (vii)
Kudu's adjusted EBITDA, (viii) total consolidated portfolio returns excluding
MediaAlpha, and (ix) adjusted capital, that have been reconciled from their most
comparable GAAP financial measures on page 74. White Mountains believes these
measures to be useful in evaluating White Mountains's financial performance and
condition.

RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

Overview

White Mountains reported book value per share of $1,439 and adjusted book value
per share of $1,471 as of September 30, 2022. Book value per share and adjusted
book value per share both increased 28% in the third quarter of 2022. For the
first nine months of 2022, book value increased 23% and adjusted book value
increased 24%, including dividends. The increases in book value per share and
adjusted book value per share were driven primarily by the net gain from the
sale of NSM of approximately $300 per share (based on 2.9 million shares
outstanding at August 1, 2022). In addition, the growth in White Mountains's
book value per share and adjusted book value per share reflect good operating
results at its businesses, partially offset by net realized and unrealized
losses in its fixed income portfolio and investment in MediaAlpha. White
Mountains reported book value per share of $1,162 and adjusted book value per
share of $1,176 as of September 30, 2021. Book value per share and adjusted book
value per share both decreased 9% in the third quarter of 2021. Book value per
share decreased 8% and adjusted book value per share decreased 7% in the first
nine months of 2021, including dividends. Results in the third quarter and first
nine months of 2021 were driven primarily by $397 million and $326 million of
net realized and unrealized investment losses from White Mountains's investment
in MediaAlpha, resulting from decreases in the MediaAlpha share price.
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, 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 gains (losses) from the sale,
partially offset by $14 million of compensation and other costs related to the
transaction recorded in Other Operations.
During the third quarter of 2022, White Mountains repurchased and retired
366,645 of its common shares for $509 million at an average share price of
$1,388.24, or 96% of White Mountains's September 30, 2022 book value per share
and 94% of White Mountains's September 30, 2022 adjusted book value per share.
As of September 30, 2022, White Mountains's undeployed capital was approximately
$1.1 billion.
In the HG Global/BAM segment, gross written premiums and MSC collected totaled
$46 million and $109 million in the third quarter and first nine months of 2022
compared to $28 million and $84 million in the third quarter and first nine
months of 2021. Total pricing was 110 and 81 basis points in the third quarter
and first nine months of 2022 compared to 69 and 66 basis points in the third
quarter and first nine months of 2021. BAM insured municipal bonds with par
value of $4.1 billion and $13.5 billion in the third quarter and first nine
months of 2022 compared to $4.0 billion and $12.6 billion in the third quarter
and first nine months of 2021. BAM's total claims paying resources were $1,260
million as of September 30, 2022 compared to $1,192 million as of December 31,
2021 and $1,181 million as of September 30, 2021.
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Ark reported a GAAP combined ratio of 87% and 90% in the third quarter and first
nine months of 2022 compared to 92% and 95% in the third quarter and first nine
months of 2021. Ark's adjusted combined ratio, which adds back amounts
attributable to TPC providers, was 86% and 90% in the third quarter and first
nine months of 2022 compared to 89% and 93% in the third quarter and first nine
months of 2021. The adjusted combined ratio for the third quarter and first nine
months of 2022 included 21 points and 17 points of catastrophe losses compared
to 21 points and 16 points in the third quarter and first nine months of 2021.
Catastrophe losses for the third quarter and first nine months of 2022 included
$51 million related to Hurricane Ian on a net basis after reinstatement
premiums. The adjusted combined ratio in the third quarter and first nine months
of 2022 also included four points and five points of favorable prior year
development compared to six points and five points in the third quarter and
first nine months of 2021, principally in property lines. Ark reported gross
written premiums of $216 million and $1,253 million, net written premiums of
$193 million and $1,007 million and net earned premiums of $346 million and $758
million in the third quarter and first nine months of 2022 compared to gross
written premiums of $162 million and $895 million, net written premiums of $121
million and $726 million and net earned premiums of $213 million and $436
million and in the third quarter and first nine months of 2021. Ark reported
pre-tax income (loss) of $24 million and $(20) million in the third quarter and
first nine months of 2022 compared to $11 million and $(4) million in third
quarter and first nine months of 2021. Ark's results included net realized and
unrealized investment gains (losses) of $(14) million and $(77) million in the
third quarter and first nine months of 2022 compared to $0.3 million and $10
million in the third quarter and first nine months of 2021. Ark's pre-tax loss
for the first nine months of 2021 also included $25 million of transaction
expenses related to White Mountains's transaction with Ark
Kudu reported total revenue of $56 million, pre-tax income of $47 million and
adjusted EBITDA of $12 million in the third quarter of 2022 compared to total
revenue of $29 million, pre-tax income of $23 million and adjusted EBITDA of $7
million in the third quarter of 2021. Total revenues and pre-tax income in the
third quarter of 2022 included $41 million of net realized and unrealized
investment gains on Kudu's participation contracts compared to $19 million of
net realized and unrealized investment gains on Kudu's participation contracts
in the third quarter of 2021. Kudu reported total revenue of $87 million,
pre-tax income of $66 million and adjusted EBITDA of $33 million in the first
nine months of 2022 compared to total revenue of $89 million, pre-tax income of
$70 million and adjusted EBITDA of $19 million in the first nine months of 2021.
Total revenues and pre-tax income in the first nine months of 2022 included $46
million of net realized and unrealized investment gains on Kudu's participation
contracts compared to $63 million of net realized and unrealized investment
gains on Kudu's participation contracts in the first nine months of 2021.
As of September 30, 2022, the market value of White Mountains's investment in
MediaAlpha was $148 million, which was down from $167 million as of June 30,
2022. As of September 30, 2022, the closing price was $8.75 per share, which
decreased from $9.85 as of June 30, 2022. Based on White Mountains's ownership
of 16.9 million shares of MediaAlpha as of September 30, 2022, each $1.00 per
share increase or decrease in the stock price of MediaAlpha will result in an
approximate $6.60 per share increase or decrease in White Mountains's book value
per share and adjusted book value per share.
White Mountains's pre-tax total consolidated portfolio return on invested assets
was 0.4% in the third quarter of 2022. This return included $19 million of
unrealized investment losses from White Mountains's investment in MediaAlpha.
Excluding MediaAlpha, the total consolidated portfolio return on invested assets
was 0.5% in the third quarter of 2022. Excluding MediaAlpha, investment returns
in the third quarter of 2022 were driven primarily by favorable other long-term
investment results, which more than offset net realized and unrealized
investment losses in the fixed income portfolio due to rising interest rates.
White Mountains's pre-tax total consolidated portfolio return on invested assets
was -8.0% in the third quarter of 2021. This return included $397 million of
unrealized investment losses from White Mountains's investment in MediaAlpha.
Excluding MediaAlpha, the total consolidated portfolio return on invested assets
was 1.4% in the third quarter of 2021. Excluding MediaAlpha, investment returns
in the third quarter of 2021 were driven primarily by favorable other long-term
investments results.
White Mountains's pre-tax total consolidated portfolio return on invested assets
was -3.6% in the first nine months of 2022. This return included $113 million of
net unrealized investment losses from White Mountains's investment in
MediaAlpha. Excluding MediaAlpha, the total consolidated portfolio return on
invested assets was -1.4% in the first nine months of 2022. Excluding
MediaAlpha, investment returns in the first nine months of 2022 were driven
primarily by net unrealized investment losses in the fixed income portfolio due
to rising interest rates, partially offset by favorable other long-term
investment results. White Mountains's pre-tax total consolidated portfolio
return on invested assets was -3.7% in the first nine months of 2021. This
return included $326 million of net realized and unrealized investment losses
from White Mountains's investment in MediaAlpha. Excluding MediaAlpha, the total
consolidated portfolio return on invested assets was 4.6% in the first nine
months of 2021. Excluding MediaAlpha, investment returns in the first nine
months of 2021 were driven primarily by favorable other long-term investment
results.


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Adjusted book value per share

The following table presents The White Mountains book value per share and reconcile it with adjusted book value per share, a non-GAAP measure from
30 September 2022, 30 June 2022, December 31, 2021and 30 September 2021. See NON-GAAP FINANCIAL MEASURES on page 74.


                                                  September 30,          June 30,            December 31,         September 30,
                                                       2022                2022                  2021                  2021
Book value per share numerators (in
millions):
White Mountains's common shareholders'
equity -
 GAAP book value per share numerator              $   3,708.0          $  

3 323.3 $3,548.1 $3,521.7


Time value of money discount on expected
future
  payments on the BAM Surplus Notes (1)                (110.8)             (115.9)                (125.9)              (128.0)
HG Global's unearned premium reserve (1)                232.2               221.6                  214.6                206.8
HG Global's net deferred acquisition costs
(1)                                                     (65.9)              (62.6)                 (60.8)               (58.1)
Adjusted book value per share numerator           $   3,763.5          $  

3 366.4 $3,576.0 $3,542.4
Book value per share denominators (in thousands of shares): Common shares outstanding – GAAP book value

  per share denominator                               2,576.2             2,942.9                3,017.8              3,029.6
Unearned restricted common shares                       (17.5)              (20.9)                 (13.7)               (17.0)

Adjusted book value per share denominator             2,558.7             2,922.0                3,004.1              3,012.6
GAAP book value per share                         $  1,439.31          $ 

1 129.27 $1,175.73 $1,162.44
Adjusted book value per share

                     $  1,470.84          $ 

1 152.12 $1,190.39 $1,175.86
Year-to-date dividends paid per share

             $      1.00          $    

1.00 $1.00 $1.00

(1) Amount reflects The White Mountains preferred share ownership in HG Global of 96.9%.

Goodwill and Other Intangible Assets


The following table presents a summary of goodwill and other intangible assets
that are included in White Mountains's book value as of September 30, 2022, June
30, 2022, December 31, 2021, and September 30, 2021:

                                                     September 30,          June 30,               December 31,        September 30,
Millions                                                  2022                2022                     2021                 2021
Goodwill:
Ark                                                  $     116.8          $   116.8                $    116.8          $     116.8

Kudu                                                         7.6                7.6                       7.6                  7.6
Other Operations                                            51.1    (1)        77.4    (1)               17.9                 17.4
Total goodwill                                             175.5              201.8                     142.3                141.8
Other intangible assets:
Ark                                                        175.7              175.7                     175.7                175.7

Kudu                                                         1.1                1.1                       1.3                  1.4
Other Operations                                            40.9               19.4                      21.2                 31.3
Total other intangible assets                              217.7              196.2                     198.2                208.4
Total goodwill and other intangible assets (2)             393.2                398                     340.5                350.2
Goodwill and other intangible assets
attributed to
   non-controlling interests                              (103.1)            (103.4)                    (91.8)               (92.0)
Goodwill and other intangible assets included
in
  White Mountains's common shareholders'
  equity                                             $     290.1          $   294.6                $    248.7          $     258.2


(1) The relative fair values of goodwill and other intangible assets recognized
in connection with recent acquisitions had not yet been finalized as of
September 30, 2022 and June 30, 2022.
(2) See Note 4 - "Goodwill and Other Intangible Assets" for details of goodwill
and other intangible assets.
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Summary of Consolidated Results

The following table presents The White Mountains consolidated financial results for the three and nine months ended 30 September 2022 and 2021:


                                                       Three Months Ended   

Nine months ended

                                                         September 30,                 September 30,
Millions                                               2022           2021          2022           2021

Income


Financial Guarantee revenues                       $    (24.7)     $    7.4      $   (69.2)     $   18.1
P&C Insurance and Reinsurance revenues                  343.2         217.7 

701.1 457.3


Asset Management revenues                                55.9          28.5 

87.0 88.8

Other Operations revenues                                 8.8        (346.0)           1.4        (210.8)
Total revenues                                          383.2         (92.4)         720.3         353.4
Expenses
Financial Guarantee expenses                             19.5          15.4           64.4          49.2
P&C Insurance and Reinsurance expenses                  319.1         206.8 

721.5 461.1


Asset Management expenses                                 8.7           5.2 

20.7 18.4


Other Operations expenses                                66.9          40.8          192.1         129.3
Total expenses                                          414.2         268.2          998.7         658.0
Pre-tax income (loss)
Financial Guarantee pre-tax income (loss)               (44.2)         (8.0)        (133.6)        (31.1)
P&C Insurance and Reinsurance pre-tax income
(loss)                                                   24.1          10.9 

(20.4) (3.8)


Asset Management pre-tax income (loss)                   47.2          23.3 

66.3 70.4


Other Operations pre-tax income (loss)                  (58.1)       (386.8)        (190.7)       (340.1)
Total pre-tax income (loss) from continuing
operations                                              (31.0)       (360.6)        (278.4)       (304.6)
Income tax (expense) benefit                              7.4         (28.6)          26.1         (52.2)
Net income (loss) from continuing operations            (23.6)       (389.2)        (252.3)       (356.8)
Net income (loss) from discontinued operations,
net of tax -
  NSM Group                                               6.3           5.3           16.4         (23.8)
Net gain (loss) from sale of discontinued
operations, net of
  tax - NSM Group                                       886.8             -          886.8             -
Net gain (loss) from sale of discontinued
operations, net of
  tax - Sirius Group                                        -             -              -          18.7
Net income (loss)                                       869.5        (383.9)         650.9        (361.9)
Net (income) loss attributable to
non-controlling interests                                18.7          12.5          101.5          53.7
Net income (loss) attributable to White
Mountains's
  common shareholders                                   888.2        (371.4)         752.4        (308.2)
Other comprehensive income (loss), net of tax            (1.4)            -           (3.0)          (.3)
Other comprehensive income (loss) from
discontinued
  operations, net of tax - NSM Group                       .7          (2.2)          (5.2)           .9
Recognition of foreign currency translation
from sale of
  NSM Group, net of tax                                   2.9             -            2.9             -
Comprehensive income (loss)                             890.4        (373.6)         747.1        (307.6)
Other comprehensive (income) loss attributable
to
  non-controlling interests                               (.3)           .2             .4             -
Comprehensive income (loss) attributable to
White
  Mountains's common shareholders                  $    890.1      $ (373.4)     $   747.5      $ (307.6)






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I. Summary of operations by segment


As of September 30, 2022, White Mountains conducted its operations through four
segments: (1) HG Global/BAM, (2) Ark, (3) Kudu and (4) Other Operations. A
discussion of White Mountains's consolidated investment operations is included
after the discussion of operations by segment. White Mountains's segment
information is presented in Note 15 - "Segment Information" to the Consolidated
Financial Statements.
As a result of the NSM Transaction, the results of operations for NSM Group have
been classified as discontinued operations and are presented separately, net of
related income taxes, in the statement of comprehensive income through the
closing of the transaction. Prior year amounts have been reclassified to conform
to the current period's presentation. See Note 19 - "Held for Sale and
Discontinued Operations."

HG Global/BAM


HG Global/BAM consists of the consolidated results of HG Global, HG Re and BAM.
BAM is the first and only mutual municipal bond insurance company in the United
States. By insuring the timely payment of principal and interest, BAM provides
market access to, and lowers interest expense for, issuers of municipal bonds
used to finance essential public purpose projects, such as schools, utilities
and transportation facilities. BAM is owned by and operated for the benefit of
its members, the municipalities that purchase BAM's insurance for their debt
issuances. HG Global was established to fund the startup of BAM and, through 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
White Mountains's HG Global/BAM segment related to the consolidation of HG
Global, which includes HG Re and its other wholly-owned subsidiaries, and BAM
for the three and nine months ended September 30, 2022 and 2021:

                                                                            Three Months Ended September 30, 2022
Millions                                                      HG Global             BAM            Eliminations            Total
Direct written premiums                                    $          -          $  18.4          $          -          $   18.4
Assumed written premiums                                           16.8              1.3                 (16.8)              1.3
Gross written premiums                                             16.8             19.7                 (16.8)             19.7
Ceded written premiums                                                -            (16.8)                 16.8                 -
Net written premiums                                       $       16.8          $   2.9          $          -          $   19.7

Earned insurance premiums                                  $        5.9          $   1.2          $          -          $    7.1
Net investment income                                               2.8              2.9                     -               5.7
Net investment income - BAM Surplus Notes                           2.9                -                  (2.9)                -
Net realized and unrealized investment gains
(losses)                                                          (19.6)           (19.2)                    -             (38.8)
Other revenues                                                       .1              1.2                     -               1.3
Total revenues                                                     (7.9)           (13.9)                 (2.9)            (24.7)
Insurance acquisition expenses                                      1.6               .1                     -               1.7

General and administrative expenses                                  .6             15.2                     -              15.8
Interest expense - HG Global Senior Notes                           2.0                -                     -               2.0
Interest expense - BAM Surplus Notes                                  -              2.9                  (2.9)                -
Total expenses                                                      4.2             18.2                  (2.9)             19.5
Pre-tax income (loss)                                      $      (12.1)         $ (32.1)         $          -          $  (44.2)
Supplemental information:
   MSC collected (1)                                       $          -          $  26.0          $          -          $   26.0

(1) MSC collected is recorded directly against BAM’s equity, which as non-controlling interest on The White Mountains balance sheet.

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                                                                           Three Months Ended September 30, 2021
Millions                                                    HG Global             BAM            Eliminations            Total
Direct written premiums                                   $         -          $  12.8          $          -          $   12.8
Assumed written premiums                                         10.9                -                 (10.9)                -
Gross written premiums                                           10.9             12.8                 (10.9)             12.8
Ceded written premiums                                              -            (10.9)                 10.9                 -
Net written premiums                                      $      10.9          $   1.9          $          -          $   12.8

Earned insurance premiums                                 $       5.5          $   1.2          $          -          $    6.7
Net investment income                                             1.9              2.5                     -               4.4
Net investment income - BAM Surplus Notes                         3.1                -                  (3.1)                -
Net realized and unrealized investment gains                     (2.0)            (2.0)                    -              (4.0)
Other revenues                                                     .1               .2                     -                .3
Total revenues                                                    8.6              1.9                  (3.1)              7.4
Insurance acquisition expenses                                    1.5              1.5                     -               3.0

General and administrative expenses                                .2             12.2                     -              12.4
Interest expense - BAM Surplus Notes                                -              3.1                  (3.1)                -
Total expenses                                                    1.7             16.8                  (3.1)             15.4
Pre-tax income (loss)                                     $       6.9          $ (14.9)         $          -          $   (8.0)
Supplemental information:
   MSC collected (1)                                      $         -          $  14.7          $          -          $   14.7

(1) MSC collected is recorded directly against BAM’s equity, which as non-controlling interest on The White Mountains balance sheet.



                                                                           Nine Months Ended September 30, 2022
Millions                                                    HG Global             BAM            Eliminations            Total
Direct written premiums                                   $         -          $  44.9          $          -          $   44.9
Assumed written premiums                                         39.6              1.3                 (39.6)              1.3
Gross written premiums                                           39.6             46.2                 (39.6)             46.2
Ceded written premiums                                              -            (39.6)                 39.6                 -
Net written premiums                                      $      39.6          $   6.6          $          -          $   46.2

Earned insurance premiums                                 $      21.5          $   4.5          $          -          $   26.0
Net investment income                                             7.1              8.0                     -              15.1
Net investment income - BAM Surplus Notes                         8.8                -                  (8.8)                -
Net realized and unrealized investment gains
(losses)                                                        (57.8)           (56.2)                    -            (114.0)
Other revenues                                                     .3              3.4                     -               3.7
Total revenues                                                  (20.1)           (40.3)                 (8.8)            (69.2)
Insurance acquisition expenses                                    7.6              1.9                     -               9.5

General and administrative expenses                               2.1             47.4                     -              49.5
Interest expense - HG Global Senior Notes                         5.4                -                     -               5.4
Interest expense - BAM Surplus Notes                                -              8.8                  (8.8)                -
Total expenses                                                   15.1             58.1                  (8.8)             64.4
Pre-tax income (loss)                                     $     (35.2)         $ (98.4)         $          -          $ (133.6)
Supplemental information:
   MSC collected (1)                                      $         -          $  62.3          $          -          $   62.3

(1) MSC collected is recorded directly against BAM’s equity, which as non-controlling interest on The White Mountains balance sheet.

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                                                                           Nine Months Ended September 30, 2021
Millions                                                    HG Global            BAM            Eliminations            Total
Direct written premiums                                   $        -          $  34.5          $          -          $   34.5
Assumed written premiums                                        33.4              4.5                 (33.4)              4.5
Gross written premiums                                          33.4             39.0                 (33.4)             39.0
Ceded written premiums                                             -            (33.4)                 33.4                 -
Net written premiums                                      $     33.4          $   5.6          $          -          $   39.0

Earned insurance premiums                                 $     16.1          $   3.5          $          -          $   19.6
Net investment income                                            5.4              7.8                     -              13.2
Net investment income - BAM Surplus Notes                        9.1                -                  (9.1)                -
Net realized and unrealized investment losses                   (9.5)            (6.1)                    -             (15.6)
Other revenues                                                    .3               .6                     -                .9
Total revenues                                                  21.4              5.8                  (9.1)             18.1
Insurance acquisition expenses                                   4.3              2.2                     -               6.5

General and administrative expenses                              1.3             41.4                     -              42.7
Interest expense - BAM Surplus Notes                               -              9.1                  (9.1)                -
Total expenses                                                   5.6             52.7                  (9.1)             49.2
Pre-tax income (loss)                                     $     15.8          $ (46.9)         $          -          $  (31.1)
Supplemental information:
   MSC collected (1)                                      $        -             44.8          $          -          $   44.8

(1) MSC is recorded directly in BAM’s equity, which as non-controlling interest on The White Mountains balance sheet.



HG Global/BAM Results-Three Months Ended September 30, 2022 versus Three Months
Ended September 30, 2021
BAM is required to prepare its financial statements on a statutory accounting
basis for the NYDFS and does not report stand-alone GAAP financial results. BAM
charges an insurance premium on each municipal bond insurance policy it writes.
A portion of the premium is MSC and the remainder is a risk premium. In the
event of a municipal bond refunding, a portion of the MSC from original issuance
can be reutilized, in effect serving as a credit against the total insurance
premium on the refunding of the municipal bond.
Gross written premiums and MSC collected in the HG Global/BAM segment totaled
$46 million in the third quarter of 2022 compared to $28 million in the third
quarter of 2021. BAM insured $4.1 billion of municipal bonds, $3.3 billion of
which were in the primary market, in the third quarter of 2022 compared to $4.0
billion of municipal bonds, $3.8 billion of which were in the primary market, in
the third quarter of 2021. In the third quarter of 2022, BAM completed an
assumed reinsurance transaction to reinsure municipal bonds with a par value of
$43 million.
Insured penetration in the primary market decreased to 6.2% in the third quarter
of 2022 compared to 8.6% in the third quarter of 2021, primarily as a result of
a decrease in large transactions insured in the third quarter of 2022 compared
to the third quarter of 2021.
Total pricing, which reflects both gross written premiums and MSC, increased to
110 basis points in the third quarter of 2022 compared to 69 basis points in the
third quarter of 2021. The increase in total pricing was driven primarily by
increased secondary market activity, higher pricing in the primary market and an
assumed reinsurance transaction in the third quarter of 2022. Pricing in the
primary market increased to 79 basis points in the third quarter of 2022
compared to 59 basis points in the third quarter of 2021. Pricing in the
combined secondary and assumed reinsurance markets, which is more transaction
specific than pricing in the primary market, decreased to 229 basis points in
the third quarter of 2022 compared to 309 basis points in the third quarter of
2021.
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The following table presents the gross par value of primary and secondary market
policies issued, the gross par value of assumed reinsurance, the gross written
premiums and MSC collected and total pricing for the three months ended
September 30, 2022 and 2021:

                                                                   Three Months Ended September 30,
$ in Millions                                                          2022                 2021

Gross par value of primary market policies issued                 $   3,269.0          $   3,813.7
Gross par value of secondary market policies issued                     826.5                157.4
Gross par value of assumed reinsurance                                   42.5                    -
Total gross par value of market policies issued                   $   4,138.0          $   3,971.1
Gross written premiums                                            $      19.7          $      12.8
MSC collected                                                            26.0                 14.7
Total gross written premiums and MSC collected                    $      45.7          $      27.5

Total pricing                                                            110 bps               69 bps



HG Global reported pre-tax income (loss) of $(12) million in the third quarter
of 2022 compared to $7 million in the third quarter of 2021. The change in
pre-tax income (loss) was driven primarily by $20 million of net unrealized
investment losses on the HG Global fixed income portfolio, as interest rates
increased in the third quarter of 2022. Results in the third quarter of 2022 and
2021 both included $3 million of interest income on the BAM Surplus Notes.
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. White Mountains reported $32 million of GAAP
pre-tax loss from BAM in the third quarter of 2022 compared to $15 million in
the third quarter of 2021. The change in pre-tax loss was driven primarily by
$19 million of net unrealized investment losses on the BAM fixed income
portfolio, as interest rates increased in the third quarter of 2022. Results in
the third quarter of 2022 included $3 million of interest expense on the BAM
Surplus Notes and $15 million of general and administrative expenses, compared
to $3 million of interest expense and $12 million of general and administrative
expenses in the third quarter of 2021.

HG Global/BAM Results-Nine Months Ended September 30, 2022 versus Nine Months
Ended September 30, 2021
Gross written premiums and MSC collected in the HG Global/BAM segment totaled
$109 million in the first nine months of 2022 compared to $84 million in the
first nine months of 2021. BAM insured $13.5 billion of municipal bonds, $10.1
billion of which were in the primary market, in the first nine months of 2022
compared to $12.6 billion of municipal bonds, $11.2 billion of which were in the
primary market, in the first nine months of 2021. In the first nine months of
2022 and 2021, BAM completed assumed reinsurance transactions to reinsure
municipal bonds with par values of $43 million and $806 million.
Total pricing, which reflects both gross written premiums and MSC, increased to
81 basis points in the first nine months of 2022 compared to 66 basis points in
the first nine months of 2021. The increase in total pricing was driven
primarily by increased secondary market activity in the first nine months of
2022 compared to the first nine months of 2021. Pricing in the primary market
increased to 57 basis points in the first nine months of 2022, compared to 56
basis points in the first nine months of 2021. Pricing in the secondary and
assumed reinsurance markets, which is more transaction specific than pricing in
the primary market, increased to 152 basis points in the first nine months of
2022, compared to 150 basis points in the first nine months of 2021.
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The following table presents the gross par value of primary and secondary market
policies issued, the gross par value of assumed reinsurance, the gross written
premiums and MSC collected and total pricing for the nine months ended
September 30, 2022 and 2021:

                                                                      Nine Months Ended September 30,
$ in Millions                                                            2022                    2021

Gross par value of primary market policies issued                 $       10,147.8          $  11,171.2
Gross par value of secondary market policies issued                        3,269.4                646.6
Gross par value of assumed reinsurance                                        42.5                805.5
Total gross par value of market policies issued                   $       13,459.7          $  12,623.3
Gross written premiums                                                        46.2                 39.0
MSC collected                                                                 62.3                 44.8
Total gross written premiums and MSC collected                    $          108.5          $      83.8

Total pricing                                                                  81 bps               66 bps



HG Global reported pre-tax income (loss) of $(35) million in the first nine
months of 2022 compared to $16 million in the first nine months of 2021. The
change in pre-tax income (loss) was driven primarily by $58 million of net
unrealized investment losses on the HG Global fixed income portfolio, as
interest rates increased in the first nine months of 2022. Results in the first
nine months of 2022 and 2021 both included $9 million of interest income on the
BAM Surplus Notes.
On April 29, 2022, HG Global received the proceeds of its new $150 million,
10-year term loan credit facility. In turn, on May 2, 2022, HG Global paid a
$120 million cash dividend to shareholders, of which $116 million was paid to
White Mountains.
White Mountains reported $98 million of GAAP pre-tax loss from BAM in the first
nine months of 2022 compared to $47 million in the first nine months of 2021.
The increase in pre-tax loss was driven primarily by $56 million of net
unrealized investment losses on the BAM fixed income portfolio, as interest
rates increased in the first nine months of 2022. Results in the first nine
months of 2022 included $9 million of interest expense on the BAM Surplus Notes
and $47 million of general and administrative expenses, compared to $9 million
of interest expense and $41 million of general and administrative expenses in
the first nine months of 2021.

Claims Paying Resources
BAM's claims paying resources represent the capital and other financial
resources BAM has available to pay claims and, as such, is a key indication of
BAM's financial strength.
BAM's claims paying resources were $1,260 million as of September 30, 2022
compared to $1,192 million as of December 31, 2021 and $1,181 million as of
September 30, 2021. The increase in claims paying resources as of September 30,
2022 compared to December 31, 2021 was driven primarily by increases in the
statutory value of the collateral trusts resulting from deposits of ceded
premiums and an increase in BAM's qualified statutory capital resulting from
business operations for the nine months ended September 30, 2022.
The following table presents BAM's total claims paying resources as of
September 30, 2022, December 31, 2021 and September 30, 2021:

                                          September 30,                             September 30,
 Millions                                     2022           December 31, 2021          2021
 Policyholders' surplus                 $         316.9      $         298.1      $         322.8
 Contingency reserve                              113.9                101.8                102.7
    Qualified statutory capital                   430.8                399.9                425.5
 Net unearned premiums                             53.3                 49.5                 48.3

Present value of future installment

 premiums and MSC                                  13.3                 13.8                 13.9
 HG Re Collateral trusts at
 statutory value                                  512.7                478.9                442.8
 Fidus Re Collateral trust at
 statutory value                                  250.0                250.0                250.0
    Claims paying resources             $       1,260.1      $       1,192.1      $       1,180.5



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