Segment Information

6 Months Ended

Jun. 30, 2011

Segment Information [Abstract]

Segment Information

Note 3 — Segment Information

We segregate our business into two segments: insurance operations and other. The insurance operations are further classified into three divisions: excess and surplus lines (E&S), alternative risk transfer (ART) and assumed reinsurance (Assumed Re). E&S consists of seven product lines: environmental, primary casualty, excess, property, surety, healthcare, and professional liability. ART consists of two product lines: specialty programs and fully funded. Assumed Re consists of property and casualty business assumed from unaffiliated specialty insurers and reinsurers. Other includes lines of business that we no longer underwrite (run-off) and other ancillary product lines. Prior year amounts have been reclassified to conform to the current year presentation.

Within E&S, our environmental insurance products provide general contractor pollution and/or professional liability coverage for contractors and consultants in the environmental remediation industry and property owners. Primary casualty provides general liability insurance for residential and commercial contractors as well as general liability and product liability for smaller manufacturers, distributors, non-habitational real estate and certain real property owner, landlord and tenant risks. Excess provides excess and umbrella liability coverages over our own and other carriers’ primary casualty polices. Our property product encompasses surplus lines commercial property business and commercial multi-peril (CMP) policies. Surety provides payment and performance bonds primarily to the environmental remediation and construction industries. Healthcare provides customized liability insurance solutions primarily for long-term care facilities. Professional Liability provides miscellaneous liability and professional liability coverage on both a primary and excess basis. Professional liability coverage is provided to lawyers, insurance agents, and other businesses, while miscellaneous liability coverage is provided to private and not for profit entities and, to a lesser extent, public companies.

In our ART division, specialty programs provide insurance to homogeneous niche groups through third party program managers. Our specialty programs consist primarily of property and casualty insurance coverages for certain classes of specialty risks including, but not limited to, construction contractors, pest control operators, auto dealers, real estate brokers, consultants, and restaurant and tavern owners. Fully funded policies provide our insureds the ability to fund their liability exposure via a self-insurance vehicle for which we generate fee income. We write fully funded general and professional liability for businesses operating primarily in the healthcare and construction industries.

Our Assumed Reinsurance division offers property and casualty reinsurance products in the form of treaty and facultative contracts targeting specialty insurers, risk retention groups and captives. We provide this coverage on an excess of loss and, to a lesser extent, a quota share basis. We reinsure casualty business, which includes medical malpractice, general liability, commercial auto, professional liability and workers’ compensation. The assumed reinsurance division also participates in one property catastrophe treaty that provides a maximum of $15 million of coverage over the treaty period. The treaty covers world-wide property catastrophe losses including hurricanes and earthquakes.

Our Other segment includes lines of business that we have placed in run-off, such as workers’ compensation, excess liability insurance for municipalities, other commercial lines, real estate and other ancillary product lines.

The Company measures segments using net income, total assets and total equity. The reportable insurance divisions are measured based on underwriting profit (loss) and pre-tax operating income (loss).

The following table presents key financial data by segment for the three months ended June 30, 2011 and 2010, respectively (dollars in thousands):

	Three Months Ended June 30, 2011
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	43,929		$	23,923		$	15,028		$	(1	)	$	82,879
Net written premiums		34,413			17,140			14,864			(1	)		66,416
Net earned premiums		29,085			15,616			14,450			(1	)		59,150
Fee & other income		(5	)		770			—			33			798
Losses & loss adjustment expenses		17,885			12,830			9,153			1			39,869
Acquisition & other underwriting expenses		13,216			6,148			4,292			(138	)		23,518
Underwriting profit (loss)		(2,021	)		(2,592	)		1,005			169			(3,439	)
Net investment income		5,081			1,232			1,586			151			8,050
Pre-tax operating income (loss)		3,060			(1,360	)		2,591			320			4,611
Net realized gains														194
Interest and corporate expenses														1,272
Earnings before income taxes														3,533
Income tax benefit														(549	)
Net earnings													$	4,082
Less: Net earnings attributable to the non-controlling interest														30
Net earnings attributable to ASIH, Ltd.													$	4,052
Loss ratio		61.5	%		82.2	%		63.3	%	*NM				67.4	%
Expense ratio		45.5	%		34.4	%		29.7	%	NM				38.4	%
Combined ratio**		107.0	%		116.6	%		93.0	%	NM				105.8	%

	Three Months Ended June 30, 2010
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	36,478		$	23,885		$	12,215		$	—		$	72,578
Net written premiums		29,475			17,346			10,945			—			57,766
Net earned premiums		24,242			12,901			10,097			—			47,240
Fee & other income		203			873			55			34			1,165
Losses & loss adjustment expenses		13,720			8,479			7,052			—			29,251
Acquisition & other underwriting expenses		11,918			3,687			2,896			343			18,844
Underwriting profit (loss)		(1,193	)		1,608			204			(309	)		310
Net investment income		5,385			1,139			1,178			227			7,929
Pre-tax operating income (loss)		4,192			2,747			1,382			(82	)		8,239
Net realized gains														509
Interest and corporate expenses														1,436
Earnings before income taxes														7,312
Income tax expense														950
Net earnings													$	6,362
Less: Net earnings attributable to the non-controlling interest														199
Net earnings attributable to ASIH, Ltd.													$	6,163
Loss ratio		56.6	%		65.7	%		69.8	%	*NM				61.9	%
Expense ratio		48.3	%		21.8	%		28.1	%	NM				37.5	%
Combined ratio**		104.9	%		87.5	%		97.9	%	NM				99.4	%

*	NM = Ratio is not meaningful
**	The combined ratio is a measure of underwriting performance and represents the relationship of losses and loss adjustment expenses, acquisition expenses, and other underwriting expenses net of fee income to earned premiums.

The following table presents key financial data by segment for the six months ended June 30, 2011 and 2010, respectively (dollars in thousands):

	Six Months Ended June 30, 2011
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	79,924		$	45,801		$	31,500		$	(1	)	$	157,224
Net written premiums		64,015			32,046			30,366			(1	)		126,426
Net earned premiums		57,079			29,971			26,469			(1	)		113,518
Fee & other income		—			1,630			—			44			1,674
Losses & loss adjustment expenses		35,638			21,844			24,647			—			82,129
Acquisition & other underwriting expenses		26,326			12,461			7,211			(420	)		45,578
Underwriting profit (loss)		(4,885	)		(2,704	)		(5,389	)		463			(12,515	)
Net investment income		9,896			2,352			2,935			303			15,486
Pre-tax operating income (loss)		5,011			(352	)		(2,454	)		766			2,971
Net realized gains														11,302
Interest and corporate expenses														2,378
Earnings before income taxes														11,895
Income tax benefit														(581	)
Net earnings													$	12,476
Less: Net earnings attributable to the non-controlling interest														523
Net earnings attributable to ASIH, Ltd.													$	11,953
Loss ratio		62.4	%		72.9	%		93.1	%	*NM				72.3	%
Expense ratio		46.1	%		36.1	%		27.2	%	NM				38.7	%
Combined ratio**		108.5	%		109.0	%		120.3	%	NM				111.0	%

	Six Months Ended June 30, 2010
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	66,106		$	42,119		$	23,670		$	—		$	131,895
Net written premiums		53,828			31,438			21,281			—			106,547
Net earned premiums		46,394			24,064			19,750			—			90,208
Fee & other income		349			1,704			171			54			2,278
Losses & loss adjustment expenses		26,883			14,894			12,876			(1	)		54,652
Acquisition & other underwriting expenses		23,428			8,424			5,971			678			38,501
Underwriting profit (loss)		(3,568	)		2,450			1,074			(623	)		(667	)
Net investment income		10,834			2,268			2,266			466			15,834
Pre-tax operating income		7,266			4,718			3,340			(157	)		15,167
Net realized gains														1,520
Interest and corporate expenses														2,910
Earnings before income taxes														13,777
Income tax expense														851
Net earnings													$	12,926
Less: Net earnings attributable to the non-controlling interest														256
Net earnings attributable to ASIH, Ltd.													$	12,670
Loss ratio		57.9	%		61.9	%		65.2	%	*NM				60.6	%
Expense ratio		49.8	%		27.9	%		29.4	%	NM				40.2	%
Combined ratio**		107.7	%		89.8	%		94.6	%	NM				100.8	%

*	NM = Ratio is not meaningful
**	The combined ratio is a measure of underwriting performance and represents the relationship of losses and loss adjustment expenses, acquisition expenses, and other underwriting expenses net of fee income to earned premiums.

The Company conducts business in the United States and Bermuda. The following table provides financial data attributable to the geographic locations for the three months ended June 30, 2011 and 2010 (dollars in thousands):

	United States			Bermuda		Total
June 30, 2011
Income tax benefit	$	(549	)	$	—	$	(549	)
Net (loss) earnings attributable to American Safety Insurance Holdings, Ltd.	$	(1,279	)	$	5,331	$	4,052

	United States		Bermuda		Total
June 30, 2010
Income tax expense	$	950	$	—	$	950
Net earnings attributable to American Safety Insurance Holdings, Ltd.	$	1,550	$	4,613	$	6,163

The following table provides financial data attributable to the geographic locations for the six months ended June 30, 2011 and 2010 (dollars in thousands):

	United States			Bermuda		Total
June 30, 2011
Income tax benefit	$	(581	)	$	—	$	(581	)
Net (loss) earnings attributable to American Safety Insurance Holdings, Ltd.	$	(1,399	)	$	13,352	$	11,953
Assets	$	664,616		$	600,708	$	1,265,324
Equity	$	99,462		$	224,778	$	324,240

	United States		Bermuda		Total
June 30, 2010
Income tax expense	$	851	$	—	$	851
Net earnings attributable to American Safety Insurance Holdings, Ltd.	$	2,214	$	10,456	$	12,670
Assets	$	648,759	$	546,125	$	1,194,884
Equity	$	102,198	$	202,071	$	304,269