Industry Segments

6 Months Ended

Jun. 30, 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. Operating units deliver 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 June 30, 2012
Specialty	$	408,142	$	52,940	$	593	$	461,675	$	76,466		$	53,835
Regional	268,177		23,209		1,790		293,176		14,205			11,046
Alternative Markets	170,415		44,507		24,653		239,575		53,969			38,554
Reinsurance	109,515		25,439		—		134,954		25,927			18,827
International	191,108		14,206		—		205,314		15,309			6,088
Corporate and eliminations (1)	—		949		55,818		56,767		(61,723		)	(35,362		)
Net investment gains	—		—		24,286		24,286		24,286			15,850
Consolidated	$	1,147,357	$	161,250	$	107,140	$	1,415,747	$	148,439		$	108,838
For the three months ended June 30, 2011
Specialty	$	349,943	$	51,144	$	691	$	401,778	$	77,109		$	55,717
Regional	266,764		21,853		1,149		289,766		(16,042		)	(8,037		)
Alternative Markets	148,999		35,386		23,196		207,581		41,486			30,838
Reinsurance	105,836		26,311		—		132,147		25,336			19,346
International	145,702		11,393		—		157,095		11,248			6,742
Corporate and eliminations (1)	—		2,985		56,707		59,692		(52,999		)	(36,758		)
Net investment gains	—		—		22,890		22,890		22,890			14,336
Consolidated	$	1,017,244	$	149,072	$	104,633	$	1,270,949	$	109,028		$	82,184
For the six months ended June 30, 2012:
Specialty	$	795,252	$	102,246	$	1,211	$	898,709	$	144,727		$	102,539
Regional	532,443		44,606		3,075		580,124		45,992			33,588
Alternative Markets	329,108		85,890		46,627		461,625		101,656			73,188
Reinsurance	215,853		51,323		—		267,176		53,624			39,105
International	374,352		27,340		—		401,692		34,949			15,412
Corporate and eliminations (1)	—		7,464		105,885		113,349		(116,983		)	(66,608		)
Net investment gains	—		—		71,777		71,777		71,777			46,932
Consolidated	$	2,247,008	$	318,869	$	228,575	$	2,794,452	$	335,742		$	244,156
For the six months ended June 30, 2011:
Specialty	$	680,150	$	101,430	$	1,401	$	782,981	$	167,023		$	119,712
Regional	528,281		43,360		2,170		573,811		8,393			10,220
Alternative Markets	297,336		70,141		43,641		411,118		83,023			61,674
Reinsurance	211,314		53,589		—		264,903		50,673			38,827
International	282,660		21,951		—		304,611		13,501			8,603
Corporate and eliminations (1)	—		4,727		110,975		115,702		(106,565		)	(74,388		)
Net investment gains	—		—		52,174		52,174		52,174			33,126
Consolidated	$	1,999,741	$	295,198	$	210,361	$	2,505,300	$	268,222		$	197,774

Identifiable assets by segment are as follows:

(Dollars in thousands)	June 30, 2012		December 31, 2011
Specialty	$	6,384,209	$	6,157,853
Regional	2,536,206		2,488,940
Alternative Markets	4,220,272		4,044,915
Reinsurance	2,745,633		2,732,489
International	1,763,691		1,569,749
Corporate and eliminations	1,812,095		1,409,927
Consolidated	$	19,462,106	$	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				For the Six Months Ended
	June 30,				June 30,
(Dollars in thousands)	2012		2011		2012		2011
Specialty
Premises operations	$	128,590	$	110,651	$	250,829	$	211,961
Property	70,818		60,718		133,835		115,112
Professional liability	62,469		55,497		125,161		109,009
Workers’ compensation	41,915		29,596		78,780		57,517
Commercial automobile	40,359		34,168		78,692		65,615
Products liability	25,854		23,500		51,287		46,902
Other	38,137		35,813		76,668		74,034
Total specialty	408,142		349,943		795,252		680,150
Regional
Commercial multiple peril	101,282		97,123		201,647		193,830
Commercial automobile	70,501		72,355		140,912		144,484
Workers’ compensation	55,882		54,902		109,615		108,469
Other	40,512		42,384		80,269		81,498
Total regional	268,177		266,764		532,443		528,281
Alternative Markets
Primary workers’ compensation	79,754		65,421		154,839		129,596
Excess workers’ compensation	35,279		43,169		70,872		86,902
Accident and health	36,593		23,060		67,240		47,108
Other liability	8,766		6,146		16,279		12,663
Other	10,023		11,203		19,878		21,067
Total alternative markets	170,415		148,999		329,108		297,336
Reinsurance
Casualty	75,178		75,926		152,055		152,612
Property	34,337		29,910		63,798		58,702
Total reinsurance	109,515		105,836		215,853		211,314
International
Automobile	29,606		26,097		60,274		54,251
Casualty reinsurance	28,095		16,294		56,308		33,067
Property	26,727		20,568		51,621		37,103
Professional liability	23,421		21,591		50,008		44,893
Primary workers’ compensation	19,898		18,258		38,516		35,596
Marine	21,225		11,895		37,384		21,563
Accident and health	16,235		10,857		28,062		20,521
Property reinsurance	8,721		5,328		20,031		9,382
Other liability	9,857		7,799		17,611		14,432
Fidelity and surety	7,323		7,015		14,537		11,852
Total international	191,108		145,702		374,352		282,660
Total	$	1,147,357	$	1,017,244	$	2,247,008	$	1,999,741