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.

The Company’s Chief Operating Decision Maker evaluates operating results based on pre-tax underwriting results which is calculated as net premiums earned less (a) losses and loss adjustment expenses and (b) 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 gains (losses), 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.

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.

Other Lines

The Other business segment 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 protection warranties which are primarily sold through automobile dealerships and credit unions.

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



	Year Ended December 31,
	2018								2017								2016
	Property & Casualty			Other		Total			Property & Casualty			Other		Total			Property & Casualty			Other		Total
	(Amounts in millions)
Net premiums earned	$	3,337.9		$	30.5	$	3,368.4		$	3,160.9		$	34.5	$	3,195.4		$	3,089.9		$	41.9	$	3,131.8
Less:
Losses and loss adjustment expenses	2,562.0			14.8		2,576.8			2,427.8			17.1		2,444.9			2,333.2			21.9		2,355.1
Underwriting expenses	802.7			14.1		816.8			773.1			15.6		788.7			780.4			17.5		797.9
Underwriting (loss) gain	(26.8		)	1.6		(25.2		)	(40.0		)	1.8		(38.2		)	(23.7		)	2.5		(21.2		)
Investment income						135.8								124.9								121.9
Net realized investment (losses) gains						(133.5		)						83.7								(34.3		)
Other income						9.3								11.9								8.3
Interest expense						(17.0		)						(15.2		)						(4.0		)
Pre-tax (loss) income						$	(30.6	)						$	167.1							$	70.7
Net (loss) income						$	(5.7	)						$	144.9							$	73.0

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



	Year Ended December 31,
	2018						2017						2016
	Property & Casualty		Other		Total		Property & Casualty		Other		Total		Property & Casualty		Other		Total
	(Amounts in millions)
Private passenger automobile	$	2,602.1	$	—	$	2,602.1	$	2,473.8	$	—	$	2,473.8	$	2,435.7	$	—	$	2,435.7
Homeowners	459.4		—		459.4		431.6		—		431.6		414.0		—		414.0
Commercial automobile	190.1		—		190.1		171.9		—		171.9		161.3		—		161.3
Other	86.3		30.5		116.8		83.6		34.5		118.1		78.9		41.9		120.8
Net premiums earned	$	3,337.9	$	30.5	$	3,368.4	$	3,160.9	$	34.5	$	3,195.4	$	3,089.9	$	41.9	$	3,131.8

Private passenger automobile	$	2,703.6	$	—	$	2,703.6	$	2,480.0	$	—	$	2,480.0	$	2,452.7	$	—	$	2,452.7
Homeowners	524.9		—		524.9		469.9		—		469.9		436.9		—		436.9
Commercial automobile	198.5		—		198.5		178.2		—		178.2		166.1		—		166.1
Other	97.2		26.7		123.9		92.9		27.9		120.8		89.0		27.3		116.3
Direct premiums written	$	3,524.2	$	26.7	$	3,550.9	$	3,221.0	$	27.9	$	3,248.9	$	3,144.7	$	27.3	$	3,172.0