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Risk Factors - WTM

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Item 1A. Risk Factors

The information contained in this report may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. See “FORWARD-LOOKING STATEMENTS” on page 101 for specific important factors that could cause actual results to differ materially from those contained in forward-looking statements. The Company’s actual future results and trends may differ materially depending on a variety of factors including, but not limited to, the risks and uncertainties discussed below.

Risks Related to White Mountains

We have successfully created shareholder value through acquisitions and dispositions. We may not be able to continue to create shareholder value through such transactions in the future, which could materially adversely affect our results of operations and financial condition.

In past years, we have completed numerous acquisitions and dispositions, many of which have contributed significantly to creating shareholder value. Even if we were to identify and complete future acquisitions and dispositions, there is no assurance that such transactions will ultimately achieve their anticipated benefits, and such transactions could materially adversely affect our results of operations and financial condition.

If we are required to write down goodwill and other intangible assets, it could materially adversely affect our results of operations and financial condition.

As of December 31, 2025, we had total goodwill and other intangible assets of $1,020 million on our consolidated balance sheet, of which $578 million relates to Distinguished and $293 million relates to Ark.

We periodically review goodwill and other intangible assets to determine whether an impairment has occurred. The evaluation of goodwill or other intangible assets for impairment requires the use of significant judgment in determining fair value, including assumptions about the future performance of the associated business. Our consolidated operating companies may experience unexpected circumstances that cause future performance to differ significantly from those assumptions, which could cause us to conclude that goodwill and other intangible assets are impaired. Such an impairment would result in a non-cash charge to income that could materially adversely affect our results of operations and financial condition.

Risks Related to Ark/WM Outrigger’s Business and Industry

Unpredictable catastrophic events could materially adversely affect our results of operations and financial condition.

Ark underwrites insurance and reinsurance policies that cover unpredictable catastrophic events all over the world. Ark has exposure to losses caused by natural disasters and other events such as hurricanes, windstorms, earthquakes, floods, wildfires, tornadoes, tsunamis and severe weather. Catastrophes can also include large losses driven by public health crises, terrorist attacks, war and war-like actions, explosions, infrastructure failures and cyber attacks.

The extent of a catastrophe loss is a function of both the severity of the event and the total amount of insured exposure to the event, as well as the coverage provided to customers. Climate change, which is characterized by higher temperatures, sea level rise and more extreme weather events including droughts, heavy storms, wildfires and stronger hurricanes, increases the frequency and severity of certain major natural catastrophes. In addition, following a large loss event, Ark could have diminished capacity to write new insurance and reinsurance policies due to reductions in its capital levels.

Ark seeks to manage its exposure to catastrophic losses by limiting and monitoring the aggregate insured value of policies in geographic areas with exposure to catastrophic events and by buying reinsurance. Ark incorporates the physical risk of climate change in its underwriting process through sensitivity and stress testing of its catastrophe models, including increased frequency of U.S. windstorms and the implications of storm surge. Ark’s estimates of potential losses are dependent on many variables, including assumptions about storm intensity, storm surge, loss amplification, loss adjustment expenses and insurance-to-value in the aftermath of weather-related catastrophes. In addition, Ark has to account for quality of data provided by insureds.

Ark and its subsidiaries benefit from favorable financial strength ratings from A.M. Best, Standard & Poor’s and others, the deterioration of which could materially adversely affect its ability to conduct business and, consequently, could materially adversely affect our results of operations and financial condition.

Third-party rating agencies assess and rate the financial strength, including claims-paying ability, of insurers, reinsurers and the Lloyd’s marketplace. These ratings are based upon criteria established by the rating agencies and are subject to revision at any time at the sole discretion of the agencies. Some of the criteria relate to general economic conditions and other circumstances outside the rated company’s control. These financial strength ratings are used by policyholders, agents and brokers to assess the suitability of insurers and reinsurers as business counterparties and are an important factor in establishing the competitive position of insurance and reinsurance companies.

The maintenance of an “A-” or better financial strength rating is particularly important to Ark’s ability to write property and casualty insurance and reinsurance business in most markets. Ark writes insurance and reinsurance through Lloyd’s Syndicates 4020 and 3902, each of which benefits from the financial strength rating of “A+/stable” by A.M. Best and “AA-/stable” by Standard & Poor’s assigned to the Lloyd’s marketplace. GAIL, Ark’s wholly-owned Bermuda-based insurance and reinsurance company, has an “A/stable” financial strength rating by A.M. Best. See “RATINGS” on page 28.

A downgrade, withdrawal or negative watch/outlook of these financial strength ratings could severely limit or prevent Ark from writing new policies or renewing existing policies, which could materially adversely affect our results of operations and financial condition.

Ark may not adequately alleviate risk through reinsurance and retrocessional arrangements, which could materially adversely affect our results of operations and financial condition.

Ark attempts to limit its risk of loss through reinsurance and retrocessional arrangements. Retrocessional arrangements refer to reinsurance purchased by a reinsurer to cover its own risks assumed from ceding companies.

The inability to collect amounts due from reinsurers, including Outrigger Re Ltd., can result from a number of scenarios, including: (i) reinsurers withholding payment due to a dispute, including coverage terms, adverse judicial rulings or failed arbitration, or other factors beyond Ark’s control; (ii) reinsurers becoming unable to pay amounts owed to Ark as a result of a deterioration in their financial condition; and (iii) in the case of Outrigger Re Ltd., losses exceeding amounts within the collateral trust accounts.

The property and casualty insurance and reinsurance industries are highly competitive and cyclical, and Ark may not be able to compete effectively in the future, which could materially adversely affect our results of operations and financial condition.

The property and casualty insurance and reinsurance industries are highly competitive and have historically been cyclical, experiencing periods of severe price competition and less selective underwriting standards (soft markets) followed by periods of relatively high prices and more selective underwriting standards (hard markets). Ark competes with other Lloyd’s syndicates, London market participants and major U.S., Bermuda, European and other international insurance and reinsurance companies.

The supply of reinsurance is also related to the level of reinsured losses and the level of industry capital which, in turn, may fluctuate in response to changes in rates of return earned in the reinsurance industry. In addition, the ease of entry into the reinsurance sector facilitates competition from third-party capital in the property catastrophe excess reinsurance line. This alternative capital provides collateralized property catastrophe protection in the form of catastrophe bonds, industry loss warranties, sidecars and other vehicles that facilitate the ability for non-reinsurance entities, such as hedge funds and pension funds, to compete for property catastrophe excess reinsurance business outside of the traditional treaty market.

Ark’s loss and LAE reserves may be inadequate to cover the ultimate liability for losses, which could materially adversely affect our results of operations and financial condition.

Ark maintains reserves to cover its estimated ultimate liabilities for loss and LAE. Loss and LAE reserves are typically comprised of (i) case reserves for reported claims and (ii) incurred but not reported (“IBNR”) reserves for losses that have occurred but for which claims have not yet been reported and for expected future development on case reserves. Loss and LAE reserves are estimates of what Ark believes the settlement and administration of claims will cost based on facts and circumstances then known. These estimates involve actuarial and claims assessments and require Ark to make a number of assumptions about future events that are subject to unexpected changes and are beyond Ark’s control, such as future trends in claim severity, emerging coverage issues, frequency, inflation, legislative and judicial changes, regulatory changes, adverse court rulings and other factors. Because of uncertainties associated with estimating ultimate loss and LAE reserves, we cannot be certain that Ark’s reserves are adequate. In the event that Ark’s reserves are insufficient to cover the actual loss and LAE, Ark may need to add to the reserves, which could materially adversely affect our results of operations and financial condition. For further discussion of our loss and LAE reserves, see “CRITICAL ACCOUNTING ESTIMATES — Loss and LAE Reserves” on page 90.

Risks Related to HG Global’s Business and Industry

HG Re is only licensed to provide reinsurance to BAM. If BAM does not maintain its favorable financial strength rating from Standard & Poor’s, it could materially adversely affect HG Re’s business and, consequently, could materially adversely affect our results of operations and financial condition.

HG Re is only licensed to provide reinsurance to BAM. Accordingly, HG Re, through its reinsurance treaties with BAM, is dependent on BAM’s ability to write municipal bond insurance policies. The maintenance of an “AA” or better financial strength rating from Standard & Poor’s is particularly important to BAM’s ability to conduct its business.

Third-party rating agencies assess and rate the financial strength of insurers, including claims-paying ability. These ratings are based upon criteria established by the rating agencies and are subject to revision at any time at the sole discretion of the rating agencies. Some of the criteria relate to general economic conditions and other circumstances outside the rated insurer’s control. The financial strength rating of Standard & Poor’s is used by outside parties to assess the suitability of BAM as a business counterparty and is an important factor in establishing BAM’s competitive position.

Standard & Poor’s periodically evaluates BAM to confirm that it continues to meet the criteria of the rating previously assigned to it. On June 6, 2017, Standard & Poor’s placed BAM on credit watch negative and initiated a detailed review of BAM’s financial strength rating. On June 26, 2017, Standard & Poor’s concluded its review and affirmed BAM’s “AA/stable” financial strength rating. During the time that BAM’s financial strength rating was placed on credit watch negative by Standard & Poor’s, it voluntarily withdrew from the marketplace and did not write any municipal bond insurance policies.

On July 11, 2025, Standard & Poor’s concluded its most recent review and affirmed BAM’s “AA/stable” financial strength rating.

Certain sectors of the municipal bond insurance industry are highly competitive, and BAM may not be able to compete effectively in the future, which could materially adversely affect HG Re’s business and, consequently, could materially adversely affect our results of operations and financial condition.

Certain sectors of the municipal bond insurance industry are highly competitive. HG Re is only licensed to provide reinsurance to BAM. Accordingly, HG Re, through its reinsurance treaties with BAM, is indirectly exposed to this competition. BAM’s primary competitor is Assured, which also provides financial guarantees on non-municipal debt, including structured finance. BAM and Assured each seek to differentiate themselves through risk selection, financial strength ratings, claims paying resources and underwriting strategies. If BAM is unable to compete effectively against Assured, it could result in fewer policies issued, lower premium levels and less favorable policy terms and conditions, which could materially adversely affect HG Re’s business, and, consequently, could materially adversely affect our results of operations and financial condition.

We are exposed to losses from municipal bond insurance written by BAM through our reinsurance treaties between HG Re and BAM, which could materially adversely affect our results of operations and financial condition.

Our reinsurance subsidiary, HG Re, provides (i) first-loss reinsurance protection of up to 15%-of-par outstanding for each policy assumed from BAM and (ii) last-dollar protection for exposures on municipal bonds insured by BAM in excess of the NYDFS single issuer limits.

If BAM does not pay some or all of the principal and interest due on the BAM Surplus Notes, it could materially adversely affect our results of operations and financial condition.

As of December 31, 2025, White Mountains owned BAM Surplus Notes with a principal balance of $277 million and accrued interest receivable of $214 million, both at nominal value. The BAM Surplus Notes were carried at a fair value of $339 million as of December 31, 2025. No payment of principal or interest on the BAM Surplus Notes may be made without the approval of the NYDFS. Under its agreements with HG Global, BAM is required to seek regulatory approval to pay principal and interest on the BAM Surplus Notes only to the extent that its capital resources continue to support its outstanding obligations, business plan and rating. It is unlikely that BAM would pay principal and interest on the BAM Surplus Notes if such payments could lead to a rating downgrade. In 2025, the NYDFS approved cash payments of principal and interest on the BAM Surplus Notes totaling $35 million. We cannot guarantee that the NYDFS will approve payments on the BAM Surplus Notes in the future.

BAM also could incur significant losses from the municipal bonds it insures.

We may be subject to volatility from the valuation of the BAM Surplus Notes, which could materially adversely affect our results of operations and financial condition.

As of December 31, 2025, the fair value of the BAM Surplus Notes was $339 million using a discounted cash flow analysis. White Mountains’s reported book value per share may be subject to volatility in the future, as the valuation of the BAM Surplus Notes under the discounted cash flow analysis could be volatile. For example, in 2025 White Mountains recognized a decrease of $38 million in the fair value of the BAM Surplus Notes. We use judgment in selecting the key inputs to the discounted cash flow analysis. With a discounted cash flow analysis, small changes to key inputs may result in significant changes to fair value. See “BAM Surplus Notes” under “CRITICAL ACCOUNTING ESTIMATES — Fair Value Measurements” on page 88 for a description of the methodology and key inputs we use to determine the valuation of the BAM Surplus Notes. Given the inherent subjectivity and uncertainty in the methodology and inputs used to determine the fair value of the BAM Surplus Notes, the value established using this methodology may not be fully realized.

The municipal bond industry is highly regulated at the federal and state level, and certain municipal bonds enjoy preferential tax treatment. Significant changes to these regulations or to the tax treatment of municipal bonds could materially adversely affect BAM’s and HG Re’s business and, consequently, could materially adversely affect our results of operations and financial condition.

The municipal bond market is subject to regulations at both the federal and state level, and certain municipal bonds enjoy preferential tax treatment. Changes to such regulations or to the tax treatment of municipal bonds could affect the issuance of certain municipal bonds or could reduce the attractiveness of and market for BAM’s financial guarantee solutions. This could decrease the amount of bond insurance issued by BAM and thereby reduce payments on the BAM Surplus Notes and risk premiums ceded to HG Re, both of which could materially adversely affect our results of operations and financial condition.

Risks Related to Kudu’s Business and Industry

Kudu’s financial performance is dependent upon its clients’ asset and performance-based fees, which are subject to a variety of economic, market and other risks. Additionally, Kudu’s managers participate in a highly competitive, highly regulated industry. Kudu’s managers may not be able to compete effectively in the future, which could materially adversely affect our results of operations and financial condition.

Kudu provides capital solutions for asset and wealth management firms through Participation Contracts. See Risk Factors, “Our investment portfolio may suffer reduced returns or losses, which could materially adversely affect our results of operations and financial condition. Adverse changes in equity markets, interest rates, debt markets or foreign currency exchange rates could result in significant losses to the value of our investment portfolio.” on page 35.

Additionally, Kudu’s managers participate in a highly competitive, highly regulated industry that subjects their operations to a number of other risks that are out of our control, including (i) changes in investor preference from the actively-managed investments offered by Kudu’s managers to passively-managed investments; (ii) the ability of Kudu’s managers to successfully attract new clients and retain existing ones; (iii) the ability of Kudu’s managers to avoid fee compression; (iv) the reliance of Kudu’s managers on a small number of key personnel; and (v) future changes to regulations that make Kudu’s managers’ businesses more cumbersome and expensive to operate. If Kudu’s managers are unable to compete effectively in the future, Kudu’s business may be materially adversely affected, which could materially adversely affect our results of operations and financial condition.

Risks Related to Distinguished’s Business and Industry

Distinguished’s commission revenues are dependent on many factors, some of which are beyond its control, including the pricing and profitability of certain segments of the property and casualty insurance industry, which is highly competitive and cyclical. Distinguished may not be able to compete effectively in the future, which could materially adversely affect our results of operations and financial condition.

Distinguished is an MGA and program administrator with delegated binding authorities, and as such, its carrier partners bear the insurance risk on the programs designed and underwritten by Distinguished.

Distinguished’s future commission revenues could also be materially adversely affected by other factors beyond its control, including (i) the increasing availability of capital markets-based products designed to replace traditional insurance and reinsurance products; (ii) growth in the direct-to-consumer sales channel at the expense of insurance intermediaries including agents and brokers; (iii) the percentage of premium insurance carriers will pay for placement services; (iv) the availability and cost of reinsurance; and (v) future trends in claim severity, emerging coverage issues, frequency, inflation, legislative and judicial changes, regulatory changes, adverse court rulings and other factors.

  We expect to continue to experience the effects of cyclicality. If Distinguished is unable to successfully manage the risks associated with soft markets, Distinguished’s business may be materially adversely affected, which could materially adversely affect our results of operations and financial condition.

A substantial portion of Distinguished’s business is placed with one insurance carrier, and most of Distinguished’s business is placed with a small number of carriers.

Distinguished primarily relies on third-party agents and brokers to distribute its products, and any deterioration in the relationships with these parties could adversely affect Distinguished’s business, which could materially adversely affect our results of operations and financial condition.

Substantially all of Distinguished’s products are distributed through third-party agents and brokers who have the principal relationships with policyholders. Agents and brokers have significant influence over renewals, and thus Distinguished’s business model is dependent on its relationships with, and the success of, the agents and brokers with whom Distinguished does business.

Because Distinguished primarily relies on third-party agents and brokers as its sales channel, any deterioration in the relationships with these parties or failure to provide competitive compensation could lead them to place less premium with Distinguished. Distinguished places a substantial portion of its premium through a limited number of agents and broker relationships. For the year ended December 31, 2025, the top three relationships accounted for 10% of Distinguished’s managed premiums. Loss of all or a substantial portion of the business provided by one or more of these agents and brokers could materially adversely affect Distinguished’s business, which could materially adversely affect our results of operations and financial condition.

Risks Related to Investments

Our investment portfolio may suffer reduced returns or losses, which could materially adversely affect our results of operations and financial condition. Adverse changes in equity markets, interest rates, debt markets or foreign currency exchange rates could result in significant losses to the value of our investment portfolio.

Our investment portfolio primarily consists of fixed maturity investments, short-term investments, common equity securities, our investment in MediaAlpha and other long-term investments. Other long-term investments consist primarily of Kudu’s Participation Contracts, the Bamboo SPV, PassportCard/DavidShield, the BroadStreet SPV, private equity funds and hedge funds, a bank loan fund and Lloyd’s trust deposits. We invest to maximize long-term after-tax total returns while taking prudent levels of risk and maintaining a diversified portfolio subject to our investment guidelines and various regulatory restrictions. However, investing entails substantial risks. We may not achieve our investment objectives, and our investment performance may vary substantially over time. Losses or volatility in the equity or fixed income markets could materially adversely affect our results of operations and financial condition.

A significant decline in the equity markets such as that experienced from September 2008 to March 2009 could materially adversely affect our results of operations and financial condition. We are also exposed to changes in debt markets. Interest rates are highly sensitive to many factors, including governmental monetary policies, economic and political conditions and other factors beyond our control. In particular, a significant increase in interest rates, as experienced in 2022, could result in significant losses in the fair value of our investment portfolio. A significant increase in interest rates that causes severe losses could materially adversely affect our results of operations and financial condition.

In addition, certain of our other long-term investments are not regularly traded in active investment markets and may be illiquid. These investments can experience volatility in their returns or valuations, which could materially adversely affect our results of operations and financial condition.

We may be subject to volatility from our investment in MediaAlpha, which could materially adversely affect our results of operations and financial condition.

White Mountains’s investment in MediaAlpha is valued based on the publicly-traded share price of MediaAlpha’s common stock, which at the December 31, 2025 closing price of $12.95 per share was $231 million. As a result, White Mountains’s reported book value per share may be subject to future volatility, as the valuation of its investment in MediaAlpha is based on the publicly-traded share price of MediaAlpha’s common stock. Should there be a significant decrease in the publicly-traded share price of MediaAlpha’s common stock, it could materially adversely affect our results of operations and financial condition.

Our investment portfolio includes securities that do not have readily observable market prices.

On a quarterly basis, we make a good faith determination of the fair value of our Level 3 investments in our GAAP financial statements using valuation techniques that are inherently subjective and uncertain.

In determining the GAAP fair value of these securities, we use judgment in selecting the fair value methodology and the significant inputs that are employed by that methodology for each such investment. See “CRITICAL ACCOUNTING ESTIMATES — Fair Value Measurements” on page 87 for a description of the methodologies we use to determine the GAAP fair value of our investments without a readily observable market price. Given the inherent subjectivity and uncertainty in the methodologies we use to determine the fair value of our investments without a readily observable market price, the values of such investments established using these methodologies may never be realized, which could materially adversely affect our results of operations and financial condition.

Risks Related to Taxation

We may not meet the requirements of the five-year deferral from the Bermuda corporate income tax or the OECD Pillar Two Undertaxed Profits Rule, which could materially adversely affect our results of operations and financial condition.

On December 27, 2023, Bermuda enacted a 15% corporate income tax that became effective on January 1, 2025. The Bermuda legislation defers the effective date for five years for Bermuda companies in consolidated groups that meet certain requirements. To qualify for the deferral, generally the group must (i) have consolidated affiliates and permanent establishments in six or fewer countries, (ii) have no more than €50 million of net tangible assets outside of the country where the group has the largest amount of net tangible assets and (iii) not have a consolidated Bermuda affiliate or Bermuda permanent establishment directly or indirectly owned by a parent entity that is subject to the Income Inclusion Rule of Pillar Two in any jurisdiction. White Mountains expects to meet the requirements to be exempt from the Bermuda corporate income tax until January 1, 2030.

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

On July 11, 2023, the United Kingdom enacted conforming Pillar Two legislation including the IIR and QDMTT. On March 20, 2025, the United Kingdom enacted legislation adopting the Pillar Two UTPR. Under the legislation, the effective date of the UTPR is deferred for five years to fiscal years beginning on or after December 31, 2029 for U.K. companies in consolidated groups that meet certain requirements. To qualify for the deferral, generally the group must (i) have consolidated affiliates and permanent establishments in six or fewer countries and (ii) have no more than €50 million of net tangible assets outside of the country where the group has the largest amount of net tangible assets. White Mountains expects to meet the requirements to be exempt from the U.K. UTPR until January 1, 2030.

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

The failure by White Mountains to meet the requirements of the five-year deferral under the Bermuda corporate income tax or the OECD Pillar Two UTPR could materially adversely affect our results of operations and financial condition.

We may be treated as a PFIC, in which case a U.S. holder of our common shares could be subject to disadvantageous rules under U.S. federal income tax laws.

Significant potential adverse U.S. federal income tax consequences apply to any U.S. person who owns shares in a passive foreign investment company (“PFIC”). In general, a non-U.S. corporation is classified as a PFIC for a taxable year in which, after taking into account the income and assets of the corporation and certain subsidiaries pursuant to certain “look-through” rules, either (i) 75% or more of its gross income is passive income or (ii) 50% or more of the average quarterly value of its gross assets is attributable to assets that produce passive income or are held for the production of passive income. If a corporation is treated as a PFIC for a taxable year, it is generally treated as a PFIC for all later taxable years. Passive income for PFIC purposes generally includes interest, dividends and other investment income, subject to certain exceptions.

While we believe that White Mountains should not currently be treated as a PFIC based upon the income and assets of White Mountains and the income and assets of its subsidiaries (taking into account certain applicable subsidiary “look-through” rules), there is no assurance that White Mountains will not become a PFIC in the future as a result of changes in law or regulations (or their application to White Mountains) or changes in our assets, income or business operations. Nor is there assurance that the Internal Revenue Service will not successfully argue that White Mountains is now, or in the future may become, a PFIC.

If we are determined to be a PFIC, a U.S. person may be subject to less advantageous tax consequences upon the sale, exchange or receipt of dividends with respect to our common shares and may be required to pay U.S. federal income tax at ordinary income rates for gains and dividends, as well as an interest charge on certain “excess distributions. If you are a U.S. person, we encourage you to consult your own tax advisor concerning the potential tax consequences to you under the PFIC rules.

The Company and certain of our non-U.S. subsidiaries may become subject to U.S. tax, which could materially adversely affect our results of operations and financial condition.

The Company and our non-U.S. subsidiaries without U.S. branches operate in a manner such that none of these companies should be subject to U.S. tax (other than U.S. excise tax on insurance and reinsurance premium income attributable to insuring or reinsuring U.S. risks and U.S. withholding tax on some types of U.S. source investment income) because none of these companies should be treated as engaged in a trade or business within the United States. However, because there is considerable uncertainty as to the activities that constitute being engaged in a trade or business within the United States, we cannot be certain that the Internal Revenue Service will not contend successfully that the Company or its non-U.S. subsidiaries without U.S. branches are engaged in a trade or business in the United States. If the Company or any of its non-U.S. subsidiaries without U.S. branches were considered to be engaged in a trade or business in the United States, such entity could be subject to U.S. corporate income and branch profits taxes on the portion of its earnings effectively connected to such U.S. business, which could materially adversely affect our results of operations and financial condition.

Changes in tax laws or tax treaties could materially adversely affect our results of operations and financial condition.

The income of our U.S. subsidiaries is subject to U.S. federal, state and local income tax and other taxes. The income of our non-U.S. subsidiaries is generally subject to a lower tax rate than that imposed by the United States. Certain of our non-U.S. subsidiaries are eligible for the benefits of tax treaties between the United States and other countries. We believe our non-U.S. subsidiaries will continue to be eligible for treaty benefits. However, it is possible that factual changes or changes to U.S. tax laws or changes to tax treaties that presently apply to our non-U.S. subsidiaries could increase income subject to tax, or the tax rate on income, in the United States. Similarly, changes to the applicable tax laws, treaties or regulations of other countries could subject the income of members of our group to higher rates of tax outside the United States. Additionally, the base erosion and profit shifting (“BEPS”) project currently being undertaken by the OECD and the European Commission’s investigation into illegal state aid may result in changes to long standing tax principles. The Bermuda corporate income tax and the Pillar Two worldwide minimum tax currently being enacted around the world are examples of the effects of the BEPS project.

Our non-U.S. subsidiaries are treated as CFCs and may subject a U.S. 10% shareholder of our common shares to disadvantageous rules under U.S. federal income tax laws.

The Tax Cuts and Jobs Act of 2017 (“TCJA”) modified certain U.S. tax rules that apply to controlled foreign corporations (“CFCs”). As a result of these changes, each of our non-U.S. subsidiaries is treated as a CFC. If any of our shareholders is a “U.S. 10% shareholder” (as described below) that directly or indirectly owns stock in White Mountains, that shareholder must include in its taxable income each year its pro rata share of our CFC subsidiaries’ “subpart F income” and global intangible low-taxed income (“GILTI”) for that year, even if no distributions are received by the U.S. 10% shareholder.

Due to changes made by the TCJA, a shareholder is treated as a U.S. 10% shareholder if the shareholder is a U.S. person who owns directly, indirectly or through constructive ownership rules 10% or more of either the voting power or the total value of our shares. As a result, a U.S. person that owns (directly, indirectly or through constructive ownership rules) 10% or more of our shares will generally be treated as a U.S. 10% shareholder of our CFC subsidiaries, notwithstanding the voting power restrictions of our shares. However, a person that is a U.S. 10% shareholder solely as a result of constructive ownership rules (i.e., such person does not directly or indirectly own stock of White Mountains) should not have a subpart F income inclusion or GILTI inclusion with respect to our CFC subsidiaries.

On July 4, 2025, the U.S. enacted the One Big Beautiful Bill Act (“OBBBA”). The OBBBA reinstated the pre-TCJA rules for determining status as a U.S. 10% shareholder and made certain changes to the subpart F and GILTI rules (including renaming GILTI “net CFC tested income”), effective for tax years beginning after December 31, 2025.

The OBBBA enacted a separate inclusion regime for a “foreign controlled U.S.” (“FCUS”) shareholder of a “foreign controlled foreign corporation” (“FCFC”). A FCUS shareholder of a FCFC must include in its taxable income each year its pro rata share of a FCFC’s subpart F income and CFC tested income for that year, even if no distributions are received by the FCUS shareholder. A FCUS shareholder is a U.S. person who owns more than 50% of a foreign corporation directly, indirectly or through certain constructive ownership rules. A FCFC is a foreign corporation (other than a CFC) where FCUS shareholders own more than 50% of the stock of the foreign corporation directly, indirectly or through certain constructive ownership rules. The enacted provisions apply to tax years of foreign corporations beginning after December 31, 2025.

If you are a U.S. person who might be a U.S. 10% shareholder or a FCUS shareholder, we encourage you to consult your own tax advisor concerning these rules.

Proposed regulations could subject U.S. persons who are shareholders to disadvantageous rules under U.S. federal income tax laws pertaining to “related person insurance income.”

Proposed regulations issued on January 24, 2022 address the subpart F “related person insurance income” (“RPII”) tax regime. The proposed regulations would expand the scope of relationships giving rise to RPII by treating intra-group reinsurance transactions as generating RPII if a non-U.S. parent entity of the group is majority owned by U.S. persons. If the proposed regulations are finalized as written, U.S. shareholders of the Company could be required to include in their taxable income a proportionate share of White Mountains’s RPII annually as subpart F income, even if no distributions are received by the U.S. shareholder.

The proposed regulations generally would apply to tax years of corporations beginning on or after the date on which finalized regulations are published in the Federal Register and to tax years of U.S. persons in which or with which those corporations' tax years end. We encourage shareholders who are U.S. persons to consult their own tax advisors concerning the proposed regulations.

Risks Related to Laws and Regulation

Regulation may have a material adverse effect on our operations and financial condition.

We are subject to supervision and regulation by regulatory authorities in the various jurisdictions in which we conduct business, including state and national insurance regulators. Regulatory authorities have broad regulatory, supervisory and administrative powers relating to, among other things, data protection and data privacy, solvency standards, licensing, coverage requirements, policy rates and forms and the form and content of financial reports. Regulatory authorities continue to implement new or enhanced regulatory requirements. Regulatory authorities also may seek to exercise their supervisory or enforcement authority in new or more extensive ways. These actions, if they occur, could affect the competitive market and the way in which we conduct our business and manage our capital and could result in lower revenues and higher costs.

Bermuda law differs from the laws in effect in the United States and may afford less protection to shareholders.

As a result, it may not be possible for our shareholders to enforce court judgments obtained in the United States against us based on the civil liability provisions of the federal or state securities laws of the United States, either in Bermuda or in countries other than the United States where we have assets. In addition, there is some doubt as to whether the courts of Bermuda and other countries would recognize or enforce judgments of U.S. courts obtained against us or our directors or officers based on the civil liabilities provisions of the federal or state securities laws of the United States or would hear actions against us or those persons based on those laws.

Our corporate affairs are governed by the Bermuda Companies Act. The Companies Act differs in some material respects from laws generally applicable to U.S. corporations and shareholders, including the provisions relating to interested directors, amalgamations, mergers and acquisitions, takeovers, shareholder lawsuits and indemnification of directors. Generally, the duties of directors and officers of a Bermuda company are owed to the company only. Shareholders of Bermuda companies generally do not have rights to take action against directors or officers of the company and may only do so in limited circumstances. Class actions and derivative actions are generally not available to shareholders under Bermuda law. The Bermuda courts, however, would ordinarily be expected to permit a shareholder to commence an action in the name of a company to remedy a wrong to the company where the act complained of is alleged to be beyond the corporate power of the company or illegal, or would result in the violation of the company’s memorandum of association or bye-laws. Furthermore, a Bermuda court would ordinarily be expected to permit a shareholder to commence an action that alleges a fraud against noncontrolling shareholders or, for instance, where an act requires the approval of a greater percentage of the company’s shareholders than that which actually approved it.

When the affairs of a company are being conducted in a manner that is oppressive or prejudicial to the interests of some part of the shareholders, one or more shareholders may apply to the Supreme Court of Bermuda, which may make such order as it sees fit, including an order regulating the conduct of the company’s affairs in the future or ordering the purchase of the shares of any shareholders by other shareholders or by the company. Additionally, under our bye-laws and as permitted by Bermuda law, each shareholder has waived any claim or right of action against our directors or officers for any action taken by directors or officers in the performance of their duties, except for actions involving fraud or dishonesty. In addition, the rights of our shareholders and the fiduciary responsibilities of our directors under Bermuda law are not as clearly established as under statutes or judicial precedent in existence in jurisdictions in the United States, particularly the State of Delaware. Therefore, our shareholders may have more difficulty protecting their interests than would shareholders of a corporation incorporated in a jurisdiction within the United States.

We could be materially adversely affected if our controls designed to ensure compliance with guidelines, policies, and legal and regulatory standards are not effective.

Our business is highly dependent on our ability to successfully execute a large number of transactions, many of which are complex. These processes are often subject to internal guidelines and policies and government regulation. A control system, no matter how well designed and operated, can provide only reasonable assurance that the control system’s objectives will be met. If controls are not effective, it could lead to unanticipated risk exposure or damage to our reputation and, consequently, could materially adversely affect our results of operations and financial condition.

Other Risks Related to White Mountains and its Subsidiaries

We may be unable to adequately maintain our systems and safeguard the security of our data, which could adversely impact our ability to operate our business and cause reputational harm and, consequently, could materially adversely affect our results of operations and financial condition.

The functioning of these systems may be impacted by any number of events, including power outages, natural and manmade catastrophes and cyber attacks. In the event we are unable to access any of our systems, or any third-party system that we rely upon, our ability to operate our business effectively may be significantly impaired.

Our business also depends upon our ability to securely process, store, transmit and safeguard confidential and proprietary information that is in our possession. Because our systems may be vulnerable to a variety of forms of unauthorized access that could result in a data breach, including hackers, computer viruses and other cyber attacks, as well as breaches that result from dishonest employees, errors by employees or lost or stolen computer devices, we may not be able to protect the confidentiality of such information.

Third parties present an additional risk of cyber-related events. We outsource certain technological and business process functions to third-party providers. We rely on these third parties to maintain and store PII and PHI and other confidential information on their systems. We also routinely transmit such information by e-mail and other electronic means. Although we attempt to establish sufficient controls and secure capabilities to transmit such information and to prevent unauthorized disclosure, these controls may not be sufficient. Furthermore, third-party providers may not have appropriate controls in place to protect such information.

Our computer systems have been and will continue to be the target of cyber attacks, although we are not aware that we have experienced a material cybersecurity breach. We are also not aware of any third-party vendor having experienced a material cybersecurity breach that materially impacted our data.

The risks identified above could expose us to data breaches, disruptions of service, financial losses and significant increases in compliance costs and reputational harm. In addition, a data breach could subject us to legal liability or regulatory action under data protection and privacy laws and regulations enacted by federal, state and foreign governments or other regulatory bodies.

We may suffer losses from unfavorable outcomes from litigation and other legal proceedings, which could materially adversely affect our results of operations and financial condition.

From time to time we are subject to legal proceedings. In the event of an unfavorable outcome in one or more legal matters, our ultimate liability may be in excess of amounts we have reserved and such additional amounts could materially adversely affect our results of operations and financial condition. Furthermore, it is possible that these legal proceedings could result in equitable remedies or other unexpected outcomes that could materially adversely affect our results of operations and financial condition.

We depend on our key personnel to manage our business effectively, and they may be difficult to replace, which could materially adversely affect our results of operations and financial condition.

Much of our competitive advantage is based on the expertise, experience and know-how of our key personnel. Our success also depends on the ability to hire and retain additional personnel. Difficulty in hiring or retaining personnel could materially adversely affect our results of operations and financial condition.

Item 1B. Unresolved Staff Comments

As of the date of this report, the Company had no unresolved comments from the Commission staff regarding its periodic or current reports under the Exchange Act.

Cybersecurity

Risk Management and Strategy

Identifying, assessing and managing cybersecurity risks is an important component of White Mountains’s overall enterprise risk management program. As with the management of risks generally, given our holding company structure, the management of cybersecurity risks involves coordination between the Company and its consolidated subsidiaries/affiliates.

The Company and each of its consolidated subsidiaries/affiliates are responsible for developing a cybersecurity program appropriate for their respective businesses. The design of these cybersecurity programs is informed by the ISO 27001 standards and the Center for Internet Security Critical Security Controls framework (“CISCSC”). This does not imply that these programs meet all specifications of ISO 27001 and CISCSC, but rather that we use them as a guide to help us identify, assess and manage cybersecurity risks relevant to our business. The cybersecurity programs developed by the Company and its consolidated subsidiaries/affiliates include, among other things, (i) advanced threat protection and detection systems; (ii) vulnerability scanning and testing of network defenses; (iii) user authentication, role-based access and privileged access management; (iv) data encryption, loss prevention, backup and recovery mechanisms; (v) employee testing and training; (vi) technical and business team-focused incident response tabletop exercises; (vii) disaster recovery testing and (viii) security assessments of third-party service providers. White Mountains engages both its internal auditors and third-party information security experts to assist management in assessing the effectiveness of these cybersecurity programs.

Risks from cybersecurity threats may cause material disruptions to our operations and reputational harm, which could materially adversely affect our results of operations and financial condition. See Item 1.A Risk Factors, “We may be unable to adequately maintain our systems and safeguard the security of our data, which could adversely impact our ability to operate our business and cause reputational harm and, consequently, could materially adversely affect our results of operations and financial condition.” on page 41 for more information about these risks.

Governance

The Company’s Board of Directors has assigned oversight of White Mountains’s cybersecurity risk management to the Audit Committee. The Audit Committee receives periodic reports on White Mountains’s cybersecurity risks and any material cybersecurity incidents at the direction of White Mountains’s senior management. In addition, the Audit Committee receives reports addressing cybersecurity risks as part of the Company’s overall enterprise risk management program.

White Mountains’s Information Technology (“IT”) Steering Committee, which includes its Chief Information Security Officer, Chief Technology Officer and various members of senior management, as well as the senior IT leadership at each of its consolidated subsidiaries/affiliates are responsible for assessing and managing White Mountains’s cybersecurity risk. These individuals include IT and cybersecurity professionals with relevant education, including degrees and/or certifications, and prior work experience. These individuals also monitor the prevention, detection, mitigation and remediation of cybersecurity incidents as part of the cybersecurity programs described above.

Senior IT leadership at our consolidated subsidiaries/affiliates communicate information regarding cybersecurity risks to Company personnel through a variety of channels, including discussions between or among subsidiary/affiliate management and the Company, reports made to subsidiary/affiliate boards and direct updates to the Company’s senior management and/or IT Steering Committee.

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