Leases
White Mountains has entered into lease agreements, primarily for office space. These leases are classified as operating leases, with lease expense recognized on a straight-line basis over the term of the lease. Lease incentives, such as free rent or landlord reimbursements for leasehold improvements, are recognized at lease inception and amortized on a straight-line basis over the term of the lease. Lease expense and the amortization of leasehold improvements are recognized within general and administrative expenses. Lease payments related to options to extend or renew the lease term are excluded from the calculation of lease liabilities unless White Mountains is reasonably certain of exercising those options.
As of December 31, 2022 and 2021, the right-of-use (“ROU”) asset was $25.2 million and $28.1 million and lease liabilities were $27.1 million and $30.0 million.
The following table summarizes net lease expense recognized in White Mountains’s consolidated statement of operations for the years ended December 31, 2022 and 2021:
| | | | | | | | | | | | | | | | |
| | December 31, | | |
| Millions | | 2022 | | 2021 | | |
| Lease cost | | $ | 8.0 | | | $ | 6.7 | | | |
| Less: sublease income | | .7 | | | .4 | | | |
| Net lease cost | | $ | 7.3 | | | $ | 6.3 | | | |
The following table presents the contractual maturities of the lease liabilities associated with White Mountains’s operating lease agreements as of December 31, 2022:
| | | | | | | | |
| Millions | | December 31, 2022 |
| 2023 | | $ | 8.7 | |
| 2024 | | 7.6 | |
| 2025 | | 5.1 | |
| 2026 | | 2.8 | |
| 2027 | | 1.6 | |
| Thereafter | | 3.9 | |
| Total undiscounted lease payments | | 29.7 | |
| Less: present value adjustment | | (2.6) | |
| Operating lease liability | | $ | 27.1 | |
The following table presents lease related assets and liabilities by reportable segment as of December 31, 2022 and 2021:
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| | As of December 31, 2022 |
| $ in Millions | | HG/BAM | | Ark | | Kudu | | Other Operations | | Total | | Weighted Average Incremental Borrowing Rate (1) |
| ROU lease asset | | $ | 5.7 | | | $ | 6.6 | | | $ | 5.8 | | | $ | 7.1 | | | $ | 25.2 | | | 4.1% |
| Lease liability | | $ | 6.2 | | | $ | 6.6 | | | $ | 6.5 | | | $ | 7.8 | | | $ | 27.1 | | |
(1) The present value of the remaining lease payments was determined by discounting the lease payments using the incremental borrowing rate.
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| | As of December 31, 2021 |
| $ in Millions | | HG/BAM | | Ark | | Kudu | | Other Operations | | Total | | Weighted Average Incremental Borrowing Rate (1) |
| ROU lease asset | | $ | 7.6 | | | $ | 7.0 | | | $ | 6.4 | | | $ | 7.1 | | | 28.1 | | 4.0% |
| Lease liability | | $ | 8.1 | | | $ | 7.0 | | | $ | 7.1 | | | $ | 7.8 | | | $ | 30.0 | | |
(1) The present value of the remaining lease payments was determined by discounting the lease payments using the incremental borrowing rate.
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.