Segment Information

6 Months Ended

Jun. 30, 2016

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 11 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) 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 tables present the Company's operating results by reportable segment:

	Three Months Ended
	June 30, 2016								June 30, 2015
	Property & Casualty Lines			Other (1)		Total			Property & Casualty Lines		Other (1)		Total
	(Amounts in millions)
Net premiums earned	$	768.6		$	10.7	$	779.3		$	718.5	$	13.1	$	731.6
Less:
Losses and loss adjustment expenses	589.4			5.7		595.1			514.1		7.1		521.2
Underwriting expenses	193.4			4.2		197.6			194.9		4.8		199.7
Underwriting (loss) gain	(14.2		)	0.8		(13.4		)	9.5		1.2		10.7
Investment income						31.5							31.7
Net realized investment gains (losses)						45.4							(39.3		)
Other income						1.9							2.2
Interest expense						(1.0		)					(0.8		)
Pre-tax income						$	64.4						$	4.5
Net income						$	48.9						$	9.6

	Six Months Ended
	June 30, 2016								June 30, 2015
	Property & Casualty Lines			Other (1)		Total			Property & Casualty Lines		Other (1)		Total
	(Amounts in millions)
Net premiums earned	$	1,524.4		$	22.0	$	1,546.4		$	1,425.7	$	26.6	$	1,452.3
Less:
Losses and loss adjustment expenses	1,177.4			11.8		1,189.2			1,020.9		14.7		1,035.6
Underwriting expenses	391.3			9.1		400.4			388.8		10.4		399.2
Underwriting (loss) gain	(44.3		)	1.1		(43.2		)	16.0		1.5		17.5
Investment income						61.1							63.2
Net realized investment gains (losses)						70.5							(49.3		)
Other income						4.0							4.5
Interest expense						(2.0		)					(1.5		)
Pre-tax income						$	90.4						$	34.4
Net income						$	72.2						$	35.8

The following tables present the Company’s net premiums earned and direct premiums written by line of insurance business:

	Three Months Ended
	June 30, 2016						June 30, 2015
	Property & Casualty Lines		Other (1)		Total		Property & Casualty Lines		Other (1)		Total
	(Amounts in millions)
Private passenger automobile	$	607.1	$	—	$	607.1	$	570.9	$	—	$	570.9
Homeowners	102.0		—		102.0		93.8		—		93.8
Commercial automobile	39.9		—		39.9		35.5		—		35.5
Other	19.6		10.7		30.3		18.3		13.1		31.4
Net premiums earned	$	768.6	$	10.7	$	779.3	$	718.5	$	13.1	731.6
Private passenger automobile	$	595.4	$	—	$	595.4	$	562.6	$	—	$	562.6
Homeowners	116.3		—		116.3		105.1		—		105.1
Commercial automobile	42.4		—		42.4		38.5		—		38.5
Other	23.0		6.9		29.9		21.3		8.4		29.7
Direct premiums written	$	777.1	$	6.9	$	784.0	$	727.5	$	8.4	$	735.9

	Six Months Ended
	June 30, 2016						June 30, 2015
	Property & Casualty Lines		Other (1)		Total		Property & Casualty Lines		Other (1)		Total
	(Amounts in millions)
Private passenger automobile	$	1,206.1	$	—	$	1,206.1	$	1,134.7	$	—	$	1,134.7
Homeowners	201.5		—		201.5		185.8		—		185.8
Commercial automobile	78.6		—		78.6		69.3		—		69.3
Other	38.2		22.0		60.2		35.9		26.6		62.5
Net premiums earned	$	1,524.4	$	22.0	$	1,546.4	$	1,425.7	$	26.6	1,452.3
Private passenger automobile	$	1,227.2	$	—	$	1,227.2	$	1,154.1	$	—	$	1,154.1
Homeowners	215.4		—		215.4		194.2		—		194.2
Commercial automobile	83.3		—		83.3		74.7		—		74.7
Other	43.9		14.3		58.2		40.3		15.4		55.7
Direct premiums written	$	1,569.8	$	14.3	$	1,584.1	$	1,463.3	$	15.4	$	1,478.7

__________

(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 primarily sold through auto dealerships and credit unions.