Segment Information

12 Months Ended

Dec. 31, 2015

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company is primarily engaged in writing personal automobile insurance and provides related property and casualty insurance products to its customers through 14 subsidiaries in 13 states, principally in California.

The Company has one reportable business segment - the Property and Casualty business segment.

Property and Casualty Lines

The Property and Casualty business segment offers several insurance products to the Company’s individual customers and small business customers. These insurance products are: private passenger automobile which is the Company’s primary business, and related insurance products such as homeowners, commercial automobile and commercial property. These insurance products are primarily sold to the Company’s individual customers and small business customers, which increases retention of the Company’s private personal automobile client base. The insurance products comprising the Property and Casualty business segment are sold through the same distribution channels, mainly through independent and 100% owned insurance agents, and go through a similar underwriting process.

The Company’s Chief Operating Decision Maker evaluates operating results based on pre-tax underwriting results which is calculated as net premiums earned less (i) incurred losses and loss adjustment expenses; and (ii) underwriting expenses (policy acquisition costs and other operating expenses).

Expenses are allocated based on certain assumptions that are primarily related to premiums and losses. The Company’s net investment income, net realized investment (losses) gains, other income, and interest expense are excluded in evaluating pre-tax underwriting profit. The Company does not allocate its assets, including investments, or income taxes in evaluating pre-tax underwriting profit.

The following table presents operating results by reportable segment for the years ended:

	December 31, 2015							December 31, 2014								December 31, 2013
	Property & Casualty Lines		Other (1)		Total			Property & Casualty Lines		Other (1)			Total			Property & Casualty Lines		Other (1)			Total
(Amounts in millions)
Net premiums earned	$	2,906.6	$	51.3	$	2,957.9		$	2,737.3	$	58.9		$	2,796.2		$	2,638.4	$	59.8		$	2,698.2
Less:
Incurred expenses	2,117.3		28.2		2,145.5			1,951.4		34.7			1,986.1			1,926.4		36.3			1,962.7
Underwriting expenses	770.0		20.0		790.0			749.7		25.9			775.6			701.0		23.9			724.9
Underwriting gain	19.3		3.1		22.4			36.2		(1.7		)	34.5			11.0		(0.4		)	10.6
Investment income					126.3								125.7								124.5
Net realized investment (losses) gains					(83.8		)						81.1								(11.4		)
Other income					8.9								8.7								9.7
Interest expense					(3.2		)						(2.6		)						(1.3		)
Pre-tax income					$	70.6							$	247.4							$	132.1
Net income					$	74.5							$	177.9							$	112.1

The following table presents the Company’s direct premiums written and net premiums earned by line of insurance business for the years ended:

	December 31, 2015						December 31, 2014						December 31, 2013
	Property & Casualty Lines		Other (1)		Total		Property & Casualty Lines		Other (1)		Total		Property & Casualty Lines		Other (1)		Total
(Amounts in millions)
Private passenger automobile	$	2,345.8	$	—	$	2,345.8	$	2,223.1	$	—	$	2,223.1	$	2,165.6	$	—	$	2,165.6
Homeowners	402.2		—		402.2		374.5		—		374.5		340.0		—		340.0
Commercial automobile	153.5		—		153.5		135.9		—		135.9		104.7		—		104.7
Other	81.6		29.8		111.4		75.4		44.3		119.7		64.4		62.8		127.2
Direct premiums written	$	2,983.1	$	29.8	$	3,012.9	$	2,808.9	$	44.3	2,853.2		$	2,674.7	$	62.8	$	2,737.5
Private passenger automobile	$	2,308.6	$	—	$	2,308.6	$	2,203.0	$	—	$	2,203.0	$	2,163.4	$	—	$	2,163.4
Homeowners	379.7		—		379.7		347.9		—		347.9		328.5		—		328.5
Commercial automobile	144.4		—		144.4		121.8		—		121.8		88.3		—		88.3
Other	73.9		51.3		125.2		64.6		58.9		123.5		58.2		59.8		118.0
Net premiums earned	$	2,906.6	$	51.3	$	2,957.9	$	2,737.3	$	58.9	$	2,796.2	$	2,638.4	$	59.8	$	2,698.2

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(1) "Other" represents net premiums written and earned from an operating segment that does not meet the quantitative thresholds required to be considered a reportable segment. This operating segment offers automobile mechanical breakdown warranties which are sold through auto dealerships and credit unions.