Industry Segments

3 Months Ended

Mar. 31, 2012

Industry Segments Disclosure [Abstract]

Industry Segments

Industry Segments

The Company’s operations are presently conducted in five segments of the insurance business: Specialty, Regional, Alternative Markets, Reinsurance and International.

Our Specialty lines companies underwrite risks within the excess and surplus lines market and on an admitted basis. The risks are highly complex, often unique exposures that typically fall outside the underwriting guidelines of the standard insurance market or are best served by specialized knowledge of a particular industry. The Specialty lines of business include premises operations, commercial automobile, property, products liability and professional liability lines. The customers in this segment are highly diverse. Business is conducted through 20operating units, each delivering their products through a variety of distribution channels, depending on the customer base and particular risks insured.

Our Regional companies provide insurance products and services that meet the specific needs of each regionally differentiated customer base by developing expertise in the niches that drive local communities. They provide commercial insurance products to customers primarily in 45 states and the District of Columbia. Key clients of this segment are small-to-mid-sized businesses and state and local governmental entities. The Regional business is sold through a network of non-exclusive independent agents who are compensated on a commission basis. Our Regional operating units are organized geographically in order to provide them with the flexibility to adapt quickly to local market conditions and customer needs.

Our Alternative Markets operating units offer insurance products, analytical tools and risk management services such as loss control and claims management that enable clients to select their risk tolerance and manage it appropriately. These units specialize in insuring, reinsuring and administering self-insurance programs and other alternative risk transfer mechanisms for clients such as commercial and governmental entity employers, employer groups, insurers, and other groups or entities seeking alternative ways to manage their exposure to risks. In addition to providing insurance products, the Alternative Markets segment also provides a wide variety of fee-based services, including claims, administrative and consulting services.

Our Reinsurance companies provide other insurance companies and self-insureds with assistance in managing their net risk through reinsurance on either a portfolio basis, through treaty reinsurance, or on an individual basis, through facultative reinsurance.

Our International operating units write business in almost 40 countries worldwide, with branches or offices in 15 locations outside the United States, including the United Kingdom, Continental Europe, South America, Australia, the Asia Pacific region, Scandinavia and Canada. In each of our international operating territories, we have built decentralized structures that allow products and services to be tailored to each regional customer base. Our International businesses are managed by teams of professionals with expertise in local markets and knowledge of regional environments.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies. Income tax expense and benefits are calculated based upon the Company’s overall effective tax rate.

Summary financial information about the Company’s operating segments is presented in the following table. Income before income taxes by segment consists of revenues, less expenses, related to the respective segment’s operations, including allocated investment income. Identifiable assets by segment are those assets used in or allocated to the operation of each segment.

	Revenues
(Dollars in thousands)	Earned Premiums		Investment Income		Other		Total		Pre-Tax Income (Loss)			Net Income (Loss)
For the three months ended March 31, 2012:
Specialty	$	387,110	$	49,306	$	618	$	437,034	$	68,261		$	48,704
Regional	264,266		21,397		1,285		286,948		31,787			22,542
Alternative Markets	158,693		41,383		21,974		222,050		47,687			34,634
Reinsurance	106,338		25,884		—		132,222		27,697			20,278
International	183,244		13,134		—		196,378		19,640			9,324
Corporate and eliminations (1)	—		6,515		50,067		56,582		(55,260		)	(31,246		)
Net investment gains	—		—		47,491		47,491		47,491			31,082
Consolidated	$	1,099,651	$	157,619	$	121,435	$	1,378,705	$	187,303		$	135,318
For the three months ended March 31, 2011:
Specialty	$	330,207	$	50,286	$	710	$	381,203	$	89,914		$	63,995
Regional	261,517		21,507		1,021		284,045		24,435			18,257
Alternative Markets	148,337		34,755		20,445		203,537		41,537			30,836
Reinsurance	105,478		27,278		—		132,756		25,337			19,481
International	136,958		10,558		—		147,516		2,253			1,861
Corporate and eliminations (1)	—		1,742		54,268		56,010		(53,566		)	(37,630		)
Net investment gains	—		—		29,284		29,284		29,284			18,790
Consolidated	$	982,497	$	146,126	$	105,728	$	1,234,351	$	159,194		$	115,590

Identifiable assets by segment are as follows:

(Dollars in thousands)	March 31, 2012		December 31, 2011
Specialty	$	6,223,195	$	6,157,853
Regional	2,520,652		2,488,940
Alternative Markets	4,166,892		4,044,915
Reinsurance	2,761,580		2,732,489
International	1,700,414		1,569,749
Corporate and eliminations	1,760,899		1,409,927
Consolidated	$	19,133,632	$	18,403,873

___________

(1) Corporate and eliminations represent corporate revenues and expenses that are not allocated to business segments.

Net premiums earned by major line of business are as follows:

	For the Three Months Ended
	March 31,
(Dollars in thousands)	2012		2011
Specialty
Premises operations	$	122,239	$	101,310
Property	63,017		54,394
Professional liability	62,692		53,512
Commercial automobile	38,333		31,447
Products liability	25,433		23,402
Other	75,396		66,142
Total specialty	387,110		330,207
Regional
Commercial multiple peril	100,365		96,707
Commercial automobile	70,411		72,129
Workers’ compensation	53,733		53,567
Other	39,757		39,114
Total regional	264,266		261,517
Alternative Markets
Primary workers’ compensation	75,085		64,175
Excess workers’ compensation	35,593		43,733
Accident and health	30,647		24,048
Other liability	7,513		6,517
Other	9,855		9,864
Total alternative markets	158,693		148,337
Reinsurance
Casualty	76,877		76,686
Property	29,461		28,792
Total reinsurance	106,338		105,478
International
Professional liability	28,624		23,302
Property	37,590		31,643
Reinsurance	17,330		20,827
Automobile	30,735		17,969
Workers’ compensation	18,632		17,338
Other liability	21,591		11,306
Other	28,742		14,573
Total international	183,244		136,958
Total	$	1,099,651	$	982,497