Segment Information

6 Months Ended

Jun. 30, 2012

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. 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. American Safety specializes in a full range of contract and commercial bonds for small to medium size surety businesses, including bonds for environmental contractors, consultants and other professionals. 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 liability insurance coverages for certain classes of specialty risks including, but not limited to general and trade contractors, pest control operators, tanning salons, auto dealers, pizza delivery operators and federal employees. 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 $20 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 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, 2012 and 2011, respectively (dollars in thousands):

	Three Months Ended June 30, 2012
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	50,448		$	21,498		$	15,603		$	—		$	87,549
Net written premiums		39,735			14,579			15,603			—			69,917
Net earned premiums		33,600			13,157			15,260			—			62,017
Fee & other income		—			738			—			(9	)		729
Losses & loss adjustment expenses		20,221			11,875			8,751			(28	)		40,819
Acquisition & other underwriting expenses***		15,140			5,865			4,471			874			26,350
Underwriting profit (loss)		(1,761	)		(3,845	)		2,038			(855	)		(4,423	)
Net investment income		4,285			1,348			1,595			174			7,402
Pre-tax operating income (loss)		2,524			(2,497	)		3,633			(681	)		2,979
Net realized losses		—			—			—			—			(13	)
Interest and corporate expenses****		—			—			—			—			1,215
Earnings before income taxes		—			—			—			—			1,751
Income tax benefit		—			—			—			—			(234	)
Net earnings		—			—			—			—		$	1,985
Less: Net losses attributable to the non-controlling interest		—			—			—			—			(182	)
Net earnings attributable to ASIH, Ltd.		—			—			—			—		$	2,167
Loss ratio		60.2	%		90.3	%		57.3	%		*NM			65.8	%
Expense ratio		45.1	%		39.0	%		29.3	%		NM			41.3	%
Combined ratio**		105.3	%		129.3	%		86.6	%		NM			107.1	%

	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***		12,412			5,916			4,249			833			23,410
Underwriting profit (loss)		(1,217	)		(2,360	)		1,048			(802	)		(3,331	)
Net investment income		5,081			1,232			1,586			151			8,050
Pre-tax operating income (loss)		3,864			(1,128	)		2,634			(651	)		4,719
Net realized gains		—			—			—			—			194
Interest and corporate expenses****		—			—			—			—			1,380
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		42.7	%		33.0	%		29.4	%		NM			38.2	%
Combined ratio**		104.2	%		115.2	%		92.7	%		NM			105.6	%

* NM = Ratio is not meaningful

** The U.S. GAAP 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.

*** Reclassifications between divisions and segments were made to allocate indirect corporate overhead costs.

**** Excise taxes have been classified as corporate expenses resulting in a reclassification of expenses for prior year.

The following table presents key financial data by segment for the six months ended June 30, 2012 and 2011, respectively (dollars in thousands):

	Six Months Ended June 30, 2012
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	89,059		$	42,676		$	29,579		$	—		$	161,314
Net written premiums		70,468			30,722			29,579			—			130,769
Net earned premiums		64,750			29,501			29,178			—			123,429
Fee & other income		—			1,402			—			8			1,410
Losses & loss adjustment expenses		39,138			21,862			17,100			—			78,100
Acquisition & other underwriting expenses***		29,057			12,253			8,801			1,734			51,845
Underwriting profit (loss)		(3,445	)		(3,212	)		3,277			(1,726	)		(5,106	)
Net investment income		8,910			2,778			3,216			310			15,214
Pre-tax operating income (loss)		5,465			(434	)		6,493			(1,416	)		10,108
Net realized gains		—			—			—			—			39
Interest and corporate expenses****		—			—			—			—			2,889
Earnings before income taxes		—			—			—			—			7,258
Income tax expense		—			—			—			—			872
Net earnings		—			—			—			—		$	6,386
Less: Net earnings attributable to the non-controlling interest		—			—			—			—			163
Net earnings attributable to ASIH, Ltd.		—			—			—			—		$	6,223
Loss ratio		60.4	%		74.1	%		58.6	%		*NM			63.3	%
Expense ratio		44.9	%		36.8	%		30.2	%		NM			40.9	%
Combined ratio**		105.3	%		110.9	%		88.8	%		NM			104.2	%

	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***		24,633			11,964			7,114			1,653			45,364
Underwriting profit (loss)		(3,192	)		(2,207	)		(5,292	)		(1,610	)		(12,301	)
Net investment income		9,896			2,352			2,935			303			15,486
Pre-tax operating income (loss)		6,704			145			(2,357	)		(1,307	)		3,185
Net realized gains		—			—			—			—			11,302
Interest and corporate expenses****		—			—			—			—			2,592
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		43.2	%		34.5	%		26.9	%		NM			38.5	%
Combined ratio**		105.6	%		107.4	%		120.0	%		NM			110.8	%

* NM = Ratio is not meaningful

** The U.S. GAAP 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.

*** Reclassifications between divisions and segments were made to allocate indirect corporate overhead costs.

**** Excise taxes have been classified as corporate expenses resulting in a reclassification of expenses for prior year.

The Company conducts business in two geographic segments: the United States and Bermuda. Significant differences exist in the regulatory environment in each country.

The following table provides financial data about the geographic locations for the three months ended June 30, 2012 and 2011 (dollars in thousands):

	United States			Bermuda		Total
June 30, 2012
Income tax benefit	$	(234	)	$	—	$	(234	)
Net (loss) earnings attributable to American Safety Insurance Holdings, Ltd.	$	(273	)	$	2,440	$	2,167
	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

The following table provides financial data about the geographic locations for the six months ended June 30, 2012 and 2011 (dollars in thousands):

	United States			Bermuda		Total
June 30, 2012
Income tax expense	$	872		$	—	$	872
Net (loss) earnings attributable to American Safety Insurance Holdings, Ltd.	$	1,266		$	4,957	$	6,223
Assets	$	690,251		$	637,806	$	1,328,057
Equity	$	144,004		$	206,370	$	350,374
	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