WHITE MOUNTAINS INSURANCE GROUP LTDWTM
WHITE MOUNTAINS INSURANCE GROUP LTD Income Taxes Disclosure
Income Taxes
The Company has subsidiaries and branches that operate in various jurisdictions around the world and are subject to tax in the jurisdictions in which they operate. As of December 31, 2025, the primary jurisdictions in which the Company’s subsidiaries and branches operated and were subject to tax include Israel, Luxembourg, the United Kingdom and the United States.
Certain of the Company’s subsidiaries are subject to the global minimum tax regime of the Organization for Economic Cooperation and Development (“OECD”) Pillar Two initiative, as enacted by Luxembourg and the United Kingdom in their respective domestic laws. 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. White Mountains did not incur a top-up tax for the year ended December 31, 2025.
The Company and its Bermuda-domiciled subsidiaries were not subject to income tax in Bermuda in 2025 and prior years. 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. White Mountains expects to meet the requirements to be exempt from the Bermuda corporate income tax until January 1, 2030.
The Bermuda legislation also provides for an optional economic transition adjustment that can decrease or increase future years’ taxable income. Under GAAP, this economic transition adjustment was required to be recognized as a deferred tax asset or liability as of December 31, 2023 if a company intended to apply the adjustment to compute its taxable income. Accordingly, White Mountains recorded a net deferred tax asset of $68.0 million in 2023, of which $51.0 million was attributable to Ark and $17.0 million was attributable to HG Global. As of July 1, 2024, White Mountains no longer consolidates BAM. As a result of the deconsolidation of BAM, the BAM Surplus Notes were recorded at fair value, which resulted in the reversal of a $5.0 million deferred tax liability related to the economic transition adjustment, generating a $5.0 million deferred tax benefit in 2024. On December 11, 2025, Bermuda enacted legislation that changes the scope of assets and liabilities subject to the economic transition adjustment. This legislation resulted in the reversal of a $5.1 million deferred tax liability related to the economic transition adjustment, generating a $5.1 million deferred tax benefit in 2025.
As a result of legislation enacted by Luxembourg on December 17, 2025, White Mountains expects to incur a top-up tax under the Luxembourg UTPR equal to the amount of the deferred tax benefit for that year associated with the Bermuda economic transition adjustment. Consequently, White Mountains expects to derive no economic benefit from the economic transition adjustment and intends to opt out of the economic transition adjustment upon becoming subject to Bermuda corporate income tax. Accordingly, White Mountains recognized a deferred tax expense of $78.1 million in 2025 to reverse the net deferred tax asset related to the Bermuda economic transition adjustment.
The following table presents the total income tax (expense) benefit for the years ended December 31, 2025, 2024 and 2023:
| Year Ended December 31, | ||||||||||||||||||||
| Millions | 2025 | 2024 | 2023 | |||||||||||||||||
| Current income tax (expense) benefit: | ||||||||||||||||||||
| U.S. federal | $ | (12.2) | $ | (6.3) | $ | (12.6) | ||||||||||||||
| State | (2.4) | (.4) | (2.2) | |||||||||||||||||
| Non-U.S. | (20.2) | (14.8) | (16.6) | |||||||||||||||||
| Total current income tax (expense) benefit | (34.8) | (21.5) | (31.4) | |||||||||||||||||
| Deferred income tax (expense) benefit: | ||||||||||||||||||||
| U.S. federal | (10.7) | (18.8) | (13.2) | |||||||||||||||||
| State | (10.1) | 2.7 | (3.8) | |||||||||||||||||
| Non-U.S. | (71.3) | 5.0 | 63.9 | |||||||||||||||||
| Total deferred income tax (expense) benefit | (92.1) | (11.1) | 46.9 | |||||||||||||||||
| Total income tax (expense) benefit | $ | (126.9) | $ | (32.6) | $ | 15.5 | ||||||||||||||
Effective Rate Reconciliation
The following table presents a reconciliation of taxes calculated for 2025, 2024 and 2023 using the 21% U.S. federal statutory rate (the tax rate at which the majority of White Mountains’s worldwide operations are taxed) to the income tax (expense) benefit on pre-tax income (loss):
| Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||
$ in Millions | 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||||
| U.S. federal statutory tax rate | $ | (279.0) | 21.0 | % | $ | (66.5) | 21.0 | % | $ | (118.7) | 21.0 | % | ||||||||||||||||||||||||||
| State income taxes, net of federal income tax effect | (11.1) | 0.8 | 2.2 | (0.7) | (5.8) | 1.0 | ||||||||||||||||||||||||||||||||
| Effects of changes in tax laws or rates enacted in current period | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Effect of cross-border tax laws | ||||||||||||||||||||||||||||||||||||||
| Withholding tax | (2.4) | 0.2 | (1.0) | 0.3 | (2.3) | 0.4 | ||||||||||||||||||||||||||||||||
| Branch profits tax | (3.9) | 0.3 | (2.7) | 0.8 | (5.0) | 0.9 | ||||||||||||||||||||||||||||||||
| Other | — | — | (.3) | 0.1 | — | — | ||||||||||||||||||||||||||||||||
| Tax credits | ||||||||||||||||||||||||||||||||||||||
| Foreign tax credit | — | — | — | — | 1.6 | (0.3) | ||||||||||||||||||||||||||||||||
| Changes in valuation allowances | (9.9) | 0.8 | (12.3) | 3.9 | (1.4) | 0.3 | ||||||||||||||||||||||||||||||||
| Nontaxable or nondeductible items | ||||||||||||||||||||||||||||||||||||||
| Members surplus contribution | — | — | (2.8) | 0.9 | (5.7) | 1.0 | ||||||||||||||||||||||||||||||||
Noncontrolling interest | 6.4 | (0.5) | 3.9 | (1.2) | 6.8 | (1.2) | ||||||||||||||||||||||||||||||||
| Non-taxable foreign income | 16.0 | (1.2) | 1.4 | (0.5) | 2.5 | (0.4) | ||||||||||||||||||||||||||||||||
| Other | (6.6) | 0.5 | (4.0) | 1.3 | 1.8 | (0.3) | ||||||||||||||||||||||||||||||||
| Changes in unrecognized tax benefits | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||
| Foreign tax effects | ||||||||||||||||||||||||||||||||||||||
| United Kingdom | ||||||||||||||||||||||||||||||||||||||
| Statutory tax rate difference between U.K. and U.S. | (3.2) | 0.2 | (2.6) | 0.8 | (2.0) | 0.4 | ||||||||||||||||||||||||||||||||
| Other | (1.0) | 0.1 | 2.9 | (0.9) | (.2) | — | ||||||||||||||||||||||||||||||||
| Luxembourg | ||||||||||||||||||||||||||||||||||||||
Statutory tax rate difference between Luxembourg and U.S. | (25.3) | 1.9 | (.3) | 0.1 | (1.9) | 0.3 | ||||||||||||||||||||||||||||||||
| Changes in valuation allowances | 6.6 | (0.5) | 4.2 | (1.3) | (31.6) | 5.6 | ||||||||||||||||||||||||||||||||
| Nontaxable or nondeductible items | ||||||||||||||||||||||||||||||||||||||
| Participation exemption | 207.9 | (15.6) | — | — | 8.5 | (1.5) | ||||||||||||||||||||||||||||||||
| Write-down of investment | — | — | — | — | 35.4 | (6.3) | ||||||||||||||||||||||||||||||||
| Other | (.1) | — | (2.3) | 0.7 | (.2) | — | ||||||||||||||||||||||||||||||||
| Bermuda | ||||||||||||||||||||||||||||||||||||||
Statutory tax rate difference between Bermuda and U.S. | 53.2 | (4.0) | 44.1 | (13.9) | 63.4 | (11.2) | ||||||||||||||||||||||||||||||||
| Enacted changes in tax laws or rates | — | — | 5.0 | (1.6) | 68.0 | (12.0) | ||||||||||||||||||||||||||||||||
| Nontaxable or nondeductible items | ||||||||||||||||||||||||||||||||||||||
| Write-down of deferred tax asset | (73.0) | 5.5 | — | — | — | — | ||||||||||||||||||||||||||||||||
| Other | — | — | — | — | (.1) | — | ||||||||||||||||||||||||||||||||
| Other foreign jurisdictions | (1.5) | 0.1 | (1.5) | 0.5 | 2.4 | (0.4) | ||||||||||||||||||||||||||||||||
| Effective rate | $ | (126.9) | 9.6 | % | $ | (32.6) | 10.3 | % | $ | 15.5 | (2.7) | % | ||||||||||||||||||||||||||
Tax Payments and Receipts
The following table presents an outline of the significant components of White Mountains’s U.S. federal, state and non-U.S. tax payments (refunds):
| December 31, | ||||||||||||||||||||
Millions | 2025 | 2024 | 2023 | |||||||||||||||||
U.S. federal taxes | $ | 11.1 | $ | 12.6 | $ | 22.9 | ||||||||||||||
State and local taxes | ||||||||||||||||||||
California | 1.6 | 2.3 | — | |||||||||||||||||
New York | — | .4 | 2.0 | |||||||||||||||||
New York City | — | — | 2.3 | |||||||||||||||||
Pennsylvania | (.5) | .2 | .6 | |||||||||||||||||
Other States | .8 | .6 | 1.4 | |||||||||||||||||
Foreign taxes | ||||||||||||||||||||
United Kingdom | 16.5 | 15.1 | 11.6 | |||||||||||||||||
Other foreign | 1.2 | 3.1 | 1.9 | |||||||||||||||||
| Total income taxes paid | $ | 30.7 | $ | 34.3 | $ | 42.7 | ||||||||||||||
Deferred Tax Assets and Liabilities
Deferred taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for tax purposes.
The following table presents an outline of the significant components of White Mountains’s U.S. federal, state and non-U.S. deferred tax assets and liabilities:
| December 31, | ||||||||||||||
| Millions | 2025 | 2024 | ||||||||||||
| Deferred tax assets related to: | ||||||||||||||
| Non-U.S. net operating loss carryforwards | $ | 63.1 | $ | 62.8 | ||||||||||
| Incentive compensation | 29.3 | 23.8 | ||||||||||||
U.S. federal and state net operating and capital loss carryforwards | 15.4 | 6.4 | ||||||||||||
| Accrued interest | 6.0 | .2 | ||||||||||||
| Tax credit carryforwards | 3.7 | 2.8 | ||||||||||||
| Intangible assets | .4 | 51.5 | ||||||||||||
| Unearned premiums | — | 20.5 | ||||||||||||
| Loss reserves | — | 8.5 | ||||||||||||
| Other items | 1.6 | .9 | ||||||||||||
| Total gross deferred tax assets | 119.5 | 177.4 | ||||||||||||
| Less: valuation allowances | 95.8 | 89.2 | ||||||||||||
| Total net deferred tax assets | 23.7 | 88.2 | ||||||||||||
| Deferred tax liabilities related to: | ||||||||||||||
| Investment basis difference | 87.7 | 43.5 | ||||||||||||
| Purchase accounting | 43.9 | 43.9 | ||||||||||||
| Deferred underwriting | 27.5 | 24.3 | ||||||||||||
| Net unrealized investment gains | 22.2 | 19.0 | ||||||||||||
| Deferred acquisition costs | — | 6.5 | ||||||||||||
| Other items | 2.0 | 1.2 | ||||||||||||
| Total deferred tax liabilities | 183.3 | 138.4 | ||||||||||||
| Net deferred tax asset (liability) | $ | (159.6) | $ | (50.2) | ||||||||||
White Mountains’s deferred tax assets (liabilities) are net of U.S. federal, state and non-U.S. valuation allowances and, to the extent that they relate to non-U.S. jurisdictions, are shown at year-end exchange rates.
Valuation Allowance
White Mountains records a valuation allowance against deferred tax assets if it becomes more likely than not that all or a portion of a deferred tax asset will not be realized. Changes in valuation allowances from period to period are included in income tax expense in the period of change. In determining whether or not a valuation allowance, or change therein, is warranted, White Mountains considers factors such as prior earnings history, expected future earnings, carryback and carryforward periods and strategies that if executed would result in the realization of a deferred tax asset. It is possible that certain planning strategies or projected earnings in certain subsidiaries may not be sufficient to utilize the entire deferred tax asset, which could result in changes to White Mountains’s deferred tax assets and tax expense.
Of the $95.8 million valuation allowance as of December 31, 2025, $36.8 million related to deferred tax assets on net operating losses and net unrealized investment gains and losses in the Company’s Luxembourg subsidiary, $35.3 million related to deferred tax assets on net operating losses in U.S. subsidiaries and other federal and state deferred tax benefits, $23.6 million related to deferred tax assets on net operating losses and other deferred tax benefits in Israeli subsidiaries and $0.1 million related to deferred tax assets on net operating losses in U.K. subsidiaries. Of the $89.2 million valuation allowance as of December 31, 2024, $43.4 million related to deferred tax assets on net operating losses and net unrealized investment gains and losses in the Luxembourg subsidiary, $25.2 million related to deferred tax assets on net operating losses in U.S. subsidiaries and other federal and state deferred tax benefits and $20.6 million related to deferred tax assets on net operating losses and other deferred tax benefits in Israeli subsidiaries.
United States
For the year ended December 31, 2025, White Mountains recognized income tax expense of $10.3 million to reflect an increase in the valuation allowance on the net deferred tax assets for certain U.S. operations within Other Operations, as White Mountains does not currently anticipate sufficient taxable income to utilize the remaining deferred tax assets. For the year ended December 31, 2024, White Mountains recognized income tax expense of $8.6 million to reflect an increase in the valuation allowance on the net deferred tax assets for certain U.S. operations within Other Operations, as White Mountains did not anticipate sufficient taxable income to utilize the remaining deferred tax assets.
As of July 1, 2024, White Mountains no longer consolidates BAM. Prior to the deconsolidation, White Mountains recognized income tax expense of $5.7 million to reflect the increase in the valuation allowance on net deferred tax assets of BAM for the years ended December 31, 2024. White Mountains recognized both the tax expense related to BAM’s member surplus contributions (“MSC”) and the related changes in valuation allowance on such taxes directly through noncontrolling interest equity. For the years ended December 31, 2024, BAM had income included in equity due to MSC that was available to offset its loss from operations. For the year ended December 31, 2024, BAM recognized both the income tax benefit on MSC of $3.1 million and the offsetting expense in paid-in surplus.
Non-U.S. Jurisdictions
For the year ended December 31, 2025, White Mountains recognized income tax benefit of $6.6 million to reflect a decrease in the valuation allowance against the deferred tax assets at the Luxembourg-domiciled subsidiary. The decrease in the valuation allowance was driven by the utilization of the deferred tax assets primarily from interest income, including a $3.9 million income tax benefit for the partial release in valuation allowance related to expected future interest income. White Mountains does not currently anticipate sufficient income to utilize the remaining deferred tax assets. For the year ended December 31, 2024, White Mountains recognized income tax benefit of $4.2 million to reflect a decrease in deferred tax assets and the corresponding decrease in the full valuation allowance at the Luxembourg-domiciled subsidiary. The decrease in the deferred tax assets was driven primarily by (i) utilization from interest income and (ii) a decline in the Luxembourg tax rate. As of December 31, 2024, White Mountains did not anticipate sufficient income to utilize the remaining deferred tax assets.
For the year ended December 31, 2025, White Mountains recognized income tax expense of $3.0 million to reflect an increase in the valuation allowance against the deferred tax assets at certain Israel-domiciled subsidiaries. The increase is due to movement of foreign currency exchange rate gains during the year, which increased the Company’s net operating loss carryforward and related deferred tax asset. White Mountains does not currently anticipate sufficient taxable income to utilize the deferred tax assets. For the year ended December 31, 2024, White Mountains recognized income tax benefit of $0.2 million to reflect a decrease in the valuation allowance against the deferred tax assets at certain Israel-domiciled subsidiaries. The decrease is due to movement of foreign currency exchange rate gains during the year, which reduced the Company’s net operating loss carryforward and related deferred tax asset. As of December 31, 2024, White Mountains did not anticipate sufficient taxable income to utilize the remaining deferred tax assets.
Net Operating Loss and Capital Loss Carryforwards
The following table presents net operating loss and capital loss carryforwards as of December 31, 2025, the expiration dates and the deferred tax assets thereon:
| December 31, 2025 | ||||||||||||||||||||||||||||||||
| Millions | United States | Luxembourg | United Kingdom | Israel | Total | |||||||||||||||||||||||||||
2026-2030 | $ | 3.7 | $ | — | $ | — | $ | — | $ | 3.7 | ||||||||||||||||||||||
2031-2035 | .1 | 29.7 | — | — | 29.8 | |||||||||||||||||||||||||||
2035-2045 | — | 137.2 | — | — | 137.2 | |||||||||||||||||||||||||||
| No expiration date | 47.2 | — | .4 | 100.7 | 148.3 | |||||||||||||||||||||||||||
| Total | $ | 51.0 | $ | 166.9 | $ | .4 | $ | 100.7 | $ | 319.0 | ||||||||||||||||||||||
| Gross deferred tax asset | $ | 15.4 | $ | 39.8 | $ | .1 | $ | 23.2 | $ | 78.5 | ||||||||||||||||||||||
| Valuation allowance | (13.4) | (35.9) | (.1) | (23.2) | (72.6) | |||||||||||||||||||||||||||
| Net deferred tax asset | $ | 2.0 | $ | 3.9 | $ | — | $ | — | $ | 5.9 | ||||||||||||||||||||||
Included in the U.S. net operating loss carryforwards are losses of $8.2 million subject to an annual limitation on utilization under Internal Revenue Code Section 382 and $0.6 million subject to the limitation on utilization under the separate-return-limitation-year (SRLY) rules in the Internal Revenue Code. These loss carryforwards will begin to expire in 2026. As of December 31, 2025, there are U.K. foreign tax credit carryforwards available of $3.7 million, which do not have an expiration date.
Uncertain Tax Positions
Recognition of the benefit of a given tax position is based upon whether a company determines that it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. In evaluating the more likely than not recognition threshold, White Mountains must presume that the tax position will be subject to examination by a taxing authority with full knowledge of all relevant information. If the recognition threshold is met, then the tax position is measured at the largest amount of benefit that is more than 50% likely of being realized upon ultimate settlement.
As of December 31, 2025 and 2024, White Mountains did not have any unrecognized tax benefits.
White Mountains classifies all interest and penalties on unrecognized tax benefits as part of income tax expense. During the years ended December 31, 2025, 2024 and 2023, White Mountains did not recognize any net interest (income) expense. There was no accrued interest as of December 31, 2025, 2024 and 2023.
Tax Examinations
With few exceptions, White Mountains is no longer subject to U.S. federal, state or non-U.S. income tax examinations by tax authorities for years before 2019.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Feb 26, 2024 | |
| 2022 | Feb 27, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Feb 27, 2019 | |
| 2017 | Feb 28, 2018 | |
| 2016 | Feb 27, 2017 | |
| 2015 | Feb 29, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.