WHITE MOUNTAINS INSURANCE GROUP LTD

Operating Cash and Short-term Investments

Holding Company Level

The primary sources of cash for the Company and certain of its intermediate holding companies are expected to be distributions from its insurance, reinsurance and other operating subsidiaries, net investment income, proceeds from sales, repayments and maturities of investments, borrowings from credit facilities, capital raising activities and, from time to time, proceeds from sales of operating subsidiaries. The primary uses of cash are expected to be general and administrative expenses, purchases of investments, payments to tax authorities, payments on and repurchases/retirements of debt obligations, dividend payments to holders of the Company’s common shares, distributions to noncontrolling interest holders of consolidated subsidiaries, contributions to operating subsidiaries and, from time to time, purchases of operating subsidiaries and repurchases of the Company’s common shares.

Operating Subsidiary Level

The primary sources of cash for White Mountains’s insurance, reinsurance and other operating subsidiaries are expected to be premium and fee collections, commissions, net investment income, proceeds from sales, repayments and maturities of investments, contributions from holding companies, borrowings from credit facilities and capital raising activities. The primary uses of cash are expected to be claim payments, policy acquisition costs, general and administrative expenses, broker commission expenses, cost of sales, purchases of investments, payments to tax authorities, payments on and repurchases/retirements of debt obligations, distributions to holding companies, distributions to noncontrolling interest holders and, from time to time, purchases of operating subsidiaries.

Both internal and external forces influence White Mountains’s financial condition, results of operations and cash flows. Premium and fee collections, investment returns, claim payments and cost of sales may be impacted by changing rates of inflation and other economic conditions. Some time may lapse between the occurrence of an insured loss, the reporting of the loss to White Mountains’s insurance and reinsurance operating subsidiaries and the settlement of the liability for that loss. The exact timing of the payment of losses cannot be predicted with certainty. White Mountains’s insurance and reinsurance operating subsidiaries maintain portfolios of invested assets with varying maturities and a substantial amount of cash and short-term investments to provide adequate liquidity for the payment of claims.

Management believes that White Mountains’s cash balances, cash flows from operations and routine sales and maturities of investments are adequate to meet expected cash requirements for the foreseeable future at both a holding company and insurance, reinsurance and other operating subsidiary level.

Dividend Capacity

Following is a description of the dividend capacity of White Mountains’s insurance and reinsurance and other operating subsidiaries:

During any 12-month period, GAIL, a class 4 licensed Bermuda insurer, has the ability to (i) make capital distributions of up to 15% of its total statutory capital per the previous year’s statutory financial statements or (ii) make dividend payments of up to 25% of its total statutory capital and surplus per the previous year’s statutory financial statements, without prior approval of Bermuda regulatory authorities. Accordingly, GAIL will have the ability to pay a dividend of up to $425 million during 2026, which is equal to 25% of its statutory capital and surplus of $1,700 million as of December 31, 2025, subject to meeting all appropriate liquidity and solvency requirements and the filing of its December 31, 2025 statutory financial statements. During 2025, GAIL did not pay any dividends to its immediate parent.

During 2025, Ark paid a $41 million dividend to shareholders, including $30 million that was paid to White Mountains. As of December 31, 2025, Ark and its intermediate holding companies had $9 million of net unrestricted cash and short-term investments outside of its regulated and unregulated insurance and reinsurance operating subsidiaries.

WM Outrigger Re is a special purpose insurer subject to regulation and supervision by the BMA. WM Outrigger Re does not require regulatory approval to pay dividends; however, its dividend capacity is limited to amounts held outside of the collateral trust pursuant to its reinsurance agreement with GAIL. As of December 31, 2025, WM Outrigger Re had less than $1 million of net unrestricted cash held outside the collateral trust. As of December 31, 2025, WM Outrigger Re had $232 million of statutory capital and surplus and $246 million of assets held in the collateral trusts pursuant to the reinsurance agreement with GAIL. During 2025, White Mountains received a distribution of $10 million from WM Outrigger Re.

As of December 31, 2025, HG Global had $619 million face value of preferred shares outstanding, of which White Mountains owned 96.9%. Holders of the HG Global preferred shares are entitled to receive cumulative dividends at a fixed annual rate of 6.0% on a quarterly basis, payable when and if declared by HG Global. As of December 31, 2025, HG Global has accrued $544 million of dividends payable to holders of its preferred shares, $527 million of which is payable to White Mountains and is eliminated in consolidation. As of December 31, 2025, HG Global and its subsidiaries had $32 million of net unrestricted cash and short-term investments outside of HG Re.

HG Re is a special purpose insurer subject to regulation and supervision by the BMA. HG Re does not require regulatory approval to pay dividends; however, its dividend capacity is limited to amounts held outside of the Collateral Trusts. As of December 31, 2025, HG Re had $4 million of net unrestricted cash and short-term investments. As of December 31, 2025, HG Re had $179 million of accrued interest on the BAM Surplus Notes held outside the Collateral Trusts. As of December 31, 2025, HG Re had $732 million of statutory capital and surplus and $1,007 million of assets held in the Collateral Trusts.

HG Global has two primary sources of cash flows: (i) interest payments on the BAM Surplus Notes that are made outside the Collateral Trusts and (ii) releases of excess balances from the Collateral Trusts. During 2025, HG Global received cash payments of principal and interest on the BAM Surplus Notes totaling $35 million. Of these payments, $24 million was a repayment of principal held in the Supplemental Trust, less than $1 million was a payment of accrued interest held in the Supplemental Trust and $11 million was a payment of accrued interest held outside the Supplemental Trust. During 2025, HG Re received a distribution from the Supplemental Trust of $61 million, which consisted of an assignment of accrued interest on the BAM Surplus Notes of $30 million and a cash distribution of $31 million.

See Note 10 — “Municipal Bond Guarantee Reinsurance”on page F-60.

Kudu

During 2025, Kudu distributed $15 million to unitholders, substantially all of which was paid to White Mountains. As of December 31, 2025, Kudu had $49 million of net unrestricted cash and short-term investments.

Bamboo

During the period from January 1, 2025 through December 5, 2025, Bamboo distributed $121 million to shareholders, $87 million of which was paid to White Mountains.

For the period from September 2, 2025, the date of acquisition, through December 31, 2025, Distinguished did not make any distributions to unitholders. As of December 31, 2025, Distinguished had $40 million of net unrestricted cash and short-term investments.

During 2025, White Mountains paid a $3 million common share dividend. As of December 31, 2025, the Company and its intermediate holding companies had $975 million of net unrestricted cash, short-term investments and fixed maturity investments, $231 million of MediaAlpha common stock, $31 million of common equity securities and $294 million of private equity and hedge funds, ILS funds and certain unconsolidated entities.

During 2025, White Mountains received a distribution of $17 million from the Bamboo CRVs.

Financing

The following table presents White Mountains’s capital structure as of December 31, 2025 and 2024:

(1)See Note 7 — “Debt” on page F-49 for details of debt arrangements.

(2)Net of unamortized issuance costs and original issue discount.

On July 16, 2025, the Company entered into a credit agreement, which established a senior unsecured revolving credit facility of up to $250 million that matures on July 16, 2028 (the “WTM Credit Facility”). As of December 31, 2025, the WTM Credit Facility is undrawn.

Management believes that White Mountains has the flexibility and capacity to obtain funds externally through debt or equity financing on both a short-term and long-term basis. However, White Mountains can provide no assurance that, if needed, it would be able to obtain additional debt or equity financing on satisfactory terms, if at all.

It is possible that, in the future, one or more of the rating agencies may lower White Mountains’s existing ratings. If one or more of its ratings were lowered, White Mountains could incur higher borrowing costs on future borrowings, and its ability to access the capital markets could be impacted.

Covenant Compliance

As of December 31, 2025, White Mountains was in compliance, in all material respects, with all of the covenants under its debt instruments.

Contractual Obligations and Commitments

The following table presents White Mountains’s material contractual obligations and commitments as of December 31, 2025:

(1) Represents expected future cash outflows resulting from loss and LAE payments. The amounts presented are gross of reinsurance recoverables on unpaid losses of $508 as of December 31, 2025.

(2) See “Contingent Consideration Liabilities” in Note 1 — “Basis of Presentation and Significant Accounting Policies”on page F-18.

(3) See “Redeemable Noncontrolling Interests” in Note 13 — “Common Shareholders’ Equity and Noncontrolling Interests”on page F-68.

The long-term incentive compensation balances included in the table above include amounts payable for performance shares. Exact amounts to be paid for performance shares cannot be predicted with certainty, as the ultimate amounts of these liabilities are based on the future performance of White Mountains and the market price of the Company’s common shares at the time the payments are made.

The estimated payments reflected in the table are based on current accrual factors (including performance relative to targets and common share price) and assume that all outstanding balances were 100% vested as of December 31, 2025.

There are no provisions within White Mountains’s operating lease agreements that would trigger acceleration of future lease payments.

White Mountains does not finance its operations through the securitization of its trade receivables, through special purpose entities or through synthetic leases. Further, White Mountains has not entered into any material arrangements requiring it to guarantee payment of third-party debt or lease payments or to fund losses of an unconsolidated special purpose entity.

White Mountains also has future binding commitments to fund certain other long-term investments. These commitments, which totaled approximately $176 million as of December 31, 2025, do not have fixed funding dates and are therefore excluded from the table above.

Share Repurchase Programs

The Company’s Board of Directors has authorized the Company to repurchase its common shares from time to time, subject to market conditions. Shares may be repurchased on the open market or through privately negotiated transactions. The repurchase authorizations do not have a stated expiration date. As of December 31, 2025, White Mountains may repurchase an additional 269,594 shares under these Board authorizations. In addition, from time to time White Mountains has also repurchased its common shares through self-tender offers that were separately authorized by its Board of Directors.

The following table presents common shares repurchased by the Company as well as the average price per share as a percent of December 31, 2025 book value per share and market value per share.

Cash Flows

Detailed information concerning White Mountains’s cash flows during 2025, 2024 and 2023 follows:

Cash flows from operations for the years ended 2025, 2024 and 2023

Net cash flows provided from operations was $551 million, $587 million and $404 million for the years ended December 31, 2025, 2024 and 2023. The decrease in cash provided from operations in 2025 was driven primarily by higher deployments at Kudu and an increase in cash outflows from Other Operations, partially offset by an increase in cash provided from operations at Ark/WM Outrigger, HG Global and Bamboo. The increase in cash provided from operations in 2024 was driven primarily by cash provided from operations at Ark/WM Outrigger Re, Kudu and Bamboo. As of December 31, 2025, the Company and its intermediate holding companies had $975 million of net unrestricted cash, short-term investments and fixed maturity investments, $231 million of MediaAlpha common stock, $31 million of common equity securities and $294 million of private equity funds and hedge funds, ILS funds and certain unconsolidated entities.

Cash flows from investing and financing activities for the year ended December 31, 2025

During 2025, the Company declared and paid a $3 million cash dividend to its common shareholders.

During 2025, White Mountains repurchased and retired 100,581 of its common shares for $203 million. The majority of these shares were repurchased through the self-tender offer that White Mountains completed in December 2025, through which it repurchased 64,064 of its common shares at a purchase price of $2,082.60 per share ($2,050.00 excluding expenses) for a total cost of approximately $133 million, including expenses. Of the shares White Mountains repurchased in 2025, 5,097 were to satisfy employee income tax withholding pursuant to employee benefit.

During 2025, HG Global received $24 million in cash payments of principal on the BAM Surplus Notes.

During 2025, Kudu borrowed $113 million in term loans under the Kudu Credit Facility.

During 2025, White Mountains contributed $76 million to Kudu, of which $15 million was used to repurchase certain management equity incentives that were then replaced with new equity incentive units.

During 2025, Bamboo borrowed $110 million in term loans under the Bamboo Credit Facility.

On April 1, 2025, White Mountains closed on its acquisition of Enterprise Solutions. White Mountains paid $58 million of cash consideration, which included a post-acquisition contribution of $2 million, and Enterprise Solutions borrowed $15 million in new debt as part of the transaction.

On July 18, 2025, White Mountains deployed $150 million into BroadStreet through the BroadStreet SPV.

On September 2, 2025, White Mountains closed its acquisition of Distinguished. White Mountains paid $225 million of cash consideration, including a post-closing purchase price adjustment of $1 million. In addition, Distinguished borrowed $50 million of incremental debt and utilized $7 million of cash on hand as part of the transaction.

On December 5, 2025, White Mountains completed the Bamboo Sale Transaction for net cash proceeds at closing of $848 million.

Cash flows from investing and financing activities for the year ended December 31, 2024

During 2024, the Company declared and paid a $3 million cash dividend to its common shareholders.

During 2024, White Mountains repurchased and retired 5,269 of its common shares for $8 million, all of which were to satisfy employee income tax withholding pursuant to employee benefit plans.

During 2024, Ark repaid the outstanding balance of $30 million and extinguished the Ark 2007 Subordinated Notes.

During 2024, Kudu borrowed $35 million in term loans under the Kudu Credit Facility.

During the six months ended December 31, 2024, subsequent to BAM’s deconsolidation, HG Global received a $16 million cash payment of principal on the BAM Surplus Notes.

BAM received $26 million in MSC during the six months ended June 30, 2024, prior to its deconsolidation.

On January 2, 2024, White Mountains completed the acquisition of Bamboo, investing $297 million in equity into Bamboo, which included the contribution of $36 million to retire Bamboo’s legacy credit facility and the contribution of $20 million of primary capital.

On May 10, 2024, MediaAlpha completed a secondary offering of 7.6 million shares at $19.00 per share ($18.24 per share net of underwriting fees). In the secondary offering, White Mountains sold 5.0 million shares for net proceeds of $91 million.

Cash flows from investing and financing activities for the year ended December 31, 2023

During 2023, the Company declared and paid a $3 million cash dividend to its common shareholders.

During 2023, White Mountains repurchased and retired 24,165 of its common shares for $33 million. Of the shares White Mountains repurchased in 2023, 4,629 were to satisfy employee income tax withholding pursuant to employee benefit plans.

During 2023, Kudu borrowed $12 million in term loans under the Kudu Credit Facility.

During 2023, Kudu repaid $17 million in term loans under the Kudu Credit Facility.

On June 28, 2023, White Mountains completed a tender offer to purchase 5.9 million additional shares of MediaAlpha at a purchase price of $10.00 per share for a total cost of $59 million.