Segment Information

12 Months Ended

Dec. 31, 2012

Segment Reporting [Abstract]

Segment Information

SEGMENT INFORMATION

We have two reportable business segments in our operations: property and casualty insurance and life insurance. The property and casualty insurance segment has six domestic locations from which it conducts its business. The life insurance segment operates from our home office. The accounting policies of the segments are the same as those described in Note 1 to our Consolidated Financial Statements. We analyze results based on profitability (i.e., loss ratios), expenses and return on equity. Because all of our insurance is sold domestically, we have no revenues allocable to foreign operations.

Property and Casualty Insurance Segment

We write both commercial and personal lines of property and casualty insurance. We focus on our commercial lines, which represented 90.0 percent of our property and casualty insurance premiums earned for 2012. Our personal lines represented 10.0 percent of our property and casualty insurance premiums earned for 2012.

Products

Our primary commercial policies are tailored business packages that include the following coverages: fire and allied lines, other liability, automobile, workers’ compensation and surety. Our personal lines consist primarily of automobile and fire and allied lines coverage, including homeowners.

Pricing

Pricing levels for our property and casualty insurance products are influenced by many factors, including an estimation of expected losses, the expenses of producing, issuing and servicing business and managing claims, the time value of money associated with such loss and expense cash flows, and a reasonable allowance for profit. We have a disciplined approach to underwriting and risk management that emphasizes profitable growth rather than premium volume or market share. Our insurance subsidiaries are subject to state laws and regulations regarding rate and policy form approvals. The applicable state laws and regulations establish standards in certain lines of business to ensure that rates are not excessive, inadequate, unfairly discriminatory, or used to engage in unfair price competition. Our ability to increase rates and the relative timing of the process are dependent upon each respective state's requirements, as well as the competitive market environment.

Seasonality

Our property and casualty insurance segment experiences some seasonality with regard to premiums written, which are generally highest in January and July and lowest during the fourth quarter. Although we experience some seasonality in our premiums written, premiums are earned ratably over the period of coverage. Losses and loss settlement expenses incurred tend to remain consistent throughout the year, with the exception of catastrophe losses. Catastrophes inherently are unpredictable and can occur at any time during the year from man-made or natural disaster events that include, but which are not limited to, hail, tornadoes, hurricanes and windstorms.

Life Insurance Segment

Products

United Life Insurance Company underwrites all of our life insurance business and sells annuities. Our principal products are single premium annuities, universal life products and traditional life (primarily single premium whole life insurance) products. We also underwrite and market other traditional products, including term life insurance and whole life insurance. We do not write variable annuities or variable insurance products.

Life insurance in force, before ceded reinsurance, totaled $5,206,087 and $4,916,875 as of December 31, 2012 and 2011, respectively. Traditional life insurance products represented 65.4 percent and 65.5 percent of our insurance in-force at December 31, 2012 and 2011, respectively. Universal life insurance represented 29.8 percent and 31.8 percent of insurance in force at December 31, 2012 and 2011, respectively.

Pricing

Premiums for our life and health insurance products are based on assumptions with respect to mortality, morbidity, investment yields, expenses, and lapses and are also affected by state laws and regulations, as well as competition. Pricing assumptions are based on our experience, as well as the industry in general, depending upon the factor being considered. The actual profit or loss produced by a product will vary from the anticipated profit if the actual experience differs from the assumptions used in pricing the product.

Premiums Earned by Segment

The following table sets forth our net premiums earned by segment before intersegment eliminations:

Years Ended December 31	2012		2011		2010
Property and Casualty Insurance Segment
Net premiums earned
Fire and allied lines	$	173,249	$	153,839	$	123,341
Other liability	197,842		159,977		113,555
Automobile	155,572		133,974		107,776
Workers’ compensation	68,643		54,404		45,174
Fidelity and surety	17,713		16,665		19,113
Reinsurance assumed	14,473		13,261		10,163
Other	1,919		1,651		1,251
Total net premiums earned	$	629,411	$	533,771	$	420,373
Life Insurance Segment
Net premiums earned
Ordinary life (excluding universal life)	$	44,468	$	30,374	$	28,463
Universal life policy fees	11,768		10,995		10,774
Accident and health	1,363		1,472		1,538
Immediate annuities with life contingencies	8,158		10,276		8,354
Other	274		262		286
Total net premiums earned	$	66,031	$	53,379	$	49,415

Total revenue by segment includes sales to external customers and intersegment sales that are eliminated to arrive at the total revenues as reported in the accompanying Consolidated Statements of Income and Comprehensive Income. We account for intersegment sales on the same basis as sales to external customers.

The following table sets forth certain data for each of our business segments and is reconciled to our Consolidated Financial Statements. Depreciation and amortization expense and property and equipment acquisitions for 2012, 2011 and 2010, are reported in the property and casualty insurance segment.

	2012			2011			2010
Property and Casualty Insurance:
Revenues:
Net premiums earned	$	629,411		$	533,771		$	420,373
Investment income, net of investment expenses	40,305			35,690			34,968
Net realized investment gains	3,896			3,066			3,402
Other income	316			1,592			147
Total revenues before eliminations	$	673,928		$	574,119		$	458,890
Intersegment eliminations	(646		)	(162		)	10
Total revenues	$	673,282		$	573,957		$	458,900
Net income (loss) before income taxes:
Revenues	$	673,928		$	574,119		$	458,890
Benefit, losses and expenses	637,648			598,684			420,374
Total net income (loss) before eliminations	$	36,280		$	(24,565	)	$	38,516
Intersegment eliminations	(199		)	335			324
Income (loss) before income taxes	$	36,081		$	(24,230	)	$	38,840
Income tax expense (benefit)	2,569			(16,591		)	4,114
Net income (loss)	$	33,512		$	(7,639	)	$	34,726
Assets
Total segment	$	2,149,356		$	2,117,352		$	1,591,392
Intersegment eliminations	(244,041		)	(252,205		)	(245,419		)
Total assets	$	1,905,315		$	1,865,147		$	1,345,973
Life Insurance:
Revenues:
Net premiums earned	$	66,031		$	53,379		$	49,415
Investment income, net of investment expenses	70,026			73,977			76,898
Net realized investment gains	3,777			3,647			4,896
Other income	575			699			1,278
Total revenues before eliminations	$	140,409		$	131,702		$	132,487
Intersegment eliminations	(448		)	(651		)	(315		)
Total revenues	$	139,961		$	131,051		$	132,172
Net income before income taxes:
Revenues	$	140,409		$	131,702		$	132,487
Benefit, losses and expenses	130,135			119,712			112,810
Total net income before eliminations	$	10,274		$	11,990		$	19,677
Intersegment eliminations	(281		)	(475		)	(134		)
Income before income taxes	$	9,993		$	11,515		$	19,543
Income tax expense	3,293			3,865			6,756
Net income	$	6,700		$	7,650		$	12,787
Assets	$	1,789,338		$	1,753,777		$	1,661,466
Consolidated Totals
Total revenues	$	813,243		$	705,008		$	591,072
Total net income	$	40,212		$	11		$	47,513
Total assets	$	3,694,653		$	3,618,924		$	3,007,439