776867--2/26/2010--WHITE_MOUNTAINS_INSURANCE_GROUP

related topics

{regulation, change, law}

{loss, insurance, financial}

{debt, indebtedness, cash}

{financial, litigation, operation}

{operation, international, foreign}

{capital, credit, financial}

{acquisition, growth, future}

{tax, income, asset}

{competitive, industry, competition}

{operation, natural, condition}

{personnel, key, retain}

{loan, real, estate}

Our investment portfolio may suffer reduced returns or losses which could adversely affect our results of operations and financial condition. Any adverse changes in interest or foreign currency exchange rates or volatility in the equity or debt markets could result in significant losses in the fair value of our investment portfolio and generate significant losses from our life reinsurance business. Unpredictable catastrophic events could adversely affect our financial condition or results of operations. We may not maintain favorable financial strength or creditworthiness ratings which could adversely affect our ability to conduct business. Our loss and loss adjustment expense reserves may be inadequate to cover our ultimate liability for losses and as a result our financial results could be adversely affected. Item 7 - CRITICAL ACCOUNTING ESTIMATES - Loss and Loss Adjustment Expenses We may not be able to successfully alleviate risk through reinsurance and retrocessional arrangements. Additionally, we may be not be able to collect all amounts due from our reinsurers under our existing reinsurance and retrocessional arrangements. We have significant foreign operations that expose us to certain additional risks, including foreign currency risks and political risk. Our debt, preferred stock and related service obligations could adversely affect our business. We are a holding company with no direct operations, and our insurance and reinsurance subsidiaries ability to pay dividends to us is restricted by law. Item 7 - LIQUIDITY AND CAPITAL RESOURCES We may suffer losses from unfavorable outcomes from litigation and other legal proceedings. The property and casualty insurance and reinsurance industries are highly competitive and cyclical and we may not be able to compete effectively in the future. Regulation may restrict our ability to operate. We could be subject to litigation, regulatory enforcement action and damage to our reputation if confidential personally identifiable information is mishandled or stolen. Our profitability may be adversely impacted by inflation, legislative actions and judicial decisions. We have successfully created shareholder value through acquisitions and dispositions of insurance and reinsurance entities. We may not be able to continue to create shareholder value through such transactions in the future. We have significant deferred tax assets which we may be unable to utilize if we do not generate sufficient future taxable income. We may become subject to taxes in Bermuda after 2016. Changes in tax laws or tax treaties may cause more of the income of certain non-U.S. companies in our group to become subject to taxes in the United States. We depend on our key personnel to manage our business effectively and they may be difficult to replace. Bermuda law differs from the laws in effect in the United States and may afford less protection to shareholders. Our reinsurance operations are largely dependent upon our ceding companies evaluation of risk. We have surety bonds in Latin America and write credit and bond reinsurance that could expose us to an economic downturn, or changes to the regulatory or legal environment, in certain countries and regions as a whole.

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776867--2/26/2010--WHITE_MOUNTAINS_INSURANCE_GROUP_LTD