Segment Information

The Company is engaged in the sale of property and casualty insurance products and has organized its business model around two classes of insurance businesses: commercial and personal lines. Within these two insurance businesses, the Company offers various insurance products. Such insurance businesses are engaged in underwriting and marketing insurance coverages, and administering claims processing for such policies.

The Company defines its operating segments as components of the business where separate financial information is available and used by the chief operating decision maker in deciding how to allocate resources to its segments and in assessing its performance. In assessing performance of its operating segments, the Company’s chief operating decision maker, the Chief Executive Officer, reviews a number of financial measures including gross written premiums, net earned premiums, losses and LAE, net of reinsurance recoveries. However, the primary measure used for making decisions about resources to be allocated to an operating segment and assessing performance is segment underwriting gain or loss which is defined as segment revenues, consisting of net earned premiums and other income, less segment expenses, consisting of losses and LAE, policy acquisition costs and other underwriting and operating expenses of the operating segments. Other underwriting and operating expenses primarily include compensation and related benefits for underwriting personnel, licensing of policy issuance and claims systems, rent and utilities. The Company markets, distributes and sells its insurance products primarily through a network of independent agents. All of the Company’s insurance activities are conducted in the United States with a concentration of activity in Florida, Michigan, Texas and Pennsylvania. For the nine months ended September 30, 2017 and 2016, gross written premiums attributable to these four states were 60% and 58% of the Company’s total gross written premiums.

In addition to the reportable operating segments, the Company maintains a Corporate and Other category to reconcile segment results to the consolidated totals. The Corporate and Other category includes: (i) corporate operating expenses such as salaries and related benefits of the Company’s executive management team and finance and information technology personnel, and other corporate headquarters expenses, (ii) interest expense on the Company’s debt obligations; (iii) depreciation and amortization on property and equipment, and (iv) all investment income activity. All investment income activity is reported within net investment income and net realized investment gains on the consolidated statements of operations. The Company’s assets on the consolidated balance sheet are not allocated to the reportable segments.

The following tables present information by reportable operating segment (dollars in thousands):



Three Months Ended September 30, 2017	Commercial Lines			Personal Lines			Corporate & Other			Total
Gross written premiums	$	23,509		$	6,072		$	—		$	29,581
Net written premiums	$	16,221		$	2,174		$	—		$	18,395

Net earned premiums	$	15,658		$	2,001		$	—		$	17,659
Other income	162			281			34			477
Segment revenue	15,820			2,282			34			18,136
Losses and loss adjustment expenses, net	19,589			6,879			—			26,468
Policy acquisition costs	5,161			1,494			—			6,655
Operating expenses	3,322			808			344			4,474
Segment expenses	28,072			9,181			344			37,597
Segment underwriting gain (loss)	$	(12,252	)	$	(6,899	)	$	(310	)	$	(19,461	)

Net investment income							768			768
Net realized investment gains							39			39
Interest expense							$	(303	)	$	(303	)
Income (loss) before equity earnings of affiliates and income taxes							$	194		$	(18,957	)



Three Months Ended September 30, 2016	Commercial Lines		Personal Lines			Corporate & Other			Total
Gross written premiums	$	20,759	$	7,738		$	—		$	28,497
Net written premiums	$	18,230	$	6,404		$	—		$	24,634

Net earned premiums	$	17,878	$	5,502		$	—		$	23,380
Other income	81		101			121			303
Segment revenue	17,959		5,603			121			23,683
Losses and loss adjustment expenses, net	9,564		5,018			—			14,582
Policy acquisition costs	4,868		1,398			—			6,266
Operating expenses	1,803		779			2,128			4,710
Segment expenses	16,235		7,195			2,128			25,558
Segment underwriting gain (loss)	$	1,724	$	(1,592	)	$	(2,007	)	$	(1,875	)

Net investment income						560			560
Net realized investment gains						71			71
Interest expense						(168		)	(168		)
Income (loss) before equity earnings of affiliates and income taxes						$	(1,544	)	$	(1,412	)



Nine Months Ended September 30, 2017	Commercial Lines			Personal Lines			Corporate & Other			Total
Gross written premiums	$	66,258		$	16,778		$	—		$	83,036
Net written premiums	$	54,616		$	9,185		$	—		$	63,801

Net earned premiums	$	55,443		$	10,852		$	—		$	66,295
Other income	485			601			117			1,203
Segment revenue	55,928			11,453			117			67,498
Losses and loss adjustment expenses, net	43,819			15,056			—			58,875
Policy acquisition costs	15,180			4,375			—			19,555
Operating expenses	8,231			1,967			3,176			13,374
Segment expenses	67,230			21,398			3,176			91,804
Segment underwriting gain (loss)	$	(11,302	)	$	(9,945	)	$	(3,059	)	(24,306		)

Net investment income							2,008			2,008
Net realized investment gains							31			31
Other Gains							750			750
Interest Expense							$	(745	)	$	(745	)
Income (loss) before equity earnings of affiliates and income taxes							$	(1,015	)	$	(22,262	)



Nine Months Ended September 30, 2016	Commercial Lines		Personal Lines			Corporate & Other			Total
Gross written premiums	$	62,725	$	20,891		$	—		$	83,616
Net written premiums	$	55,767	$	17,094		$	—		$	72,861

Net earned premiums	$	49,641	$	15,523		$	—		$	65,164
Other income	263		419			147			829
Segment revenue	49,904		15,942			147			65,993
Losses and loss adjustment expenses, net	27,543		13,279			—			40,822
Policy acquisition costs	13,619		4,663			—			18,282
Operating expenses	5,147		2,214			6,023			13,384
Segment expenses	46,309		20,156			6,023			72,488
Segment underwriting gain (loss)	$	3,595	$	(4,214	)	$	(5,876	)	(6,495		)

Net investment income						1,625			1,625
Net realized investment gains						604			604
Interest expense						(468		)	(468		)
Income (loss) before equity earnings of affiliates and income taxes						$	(4,115	)	$	(4,734	)