Segment Information

9 Months Ended

Sep. 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, 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 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. Surety provides contract and commercial bonds for small to medium size 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 coverages 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 September 30, 2012 and 2011, respectively (dollars in thousands):

	Three Months Ended September 30, 2012
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	49,192		$	16,146		$	13,807		$	—		$	79,145
Net written premiums		39,004			8,772			13,806			—			61,582
Net earned premiums		35,650			13,295			14,150			—			63,095
Fee & other income		294			915			—			54			1,263
Losses & loss adjustment expenses		20,979			10,423			8,887			—			40,289
Acquisition & other underwriting expenses***		16,812			6,280			4,303			972			28,367
Underwriting profit (loss)		(1,847	)		(2,493	)		960			(918	)		(4,298	)
Net investment income		4,452			1,030			1,745			137			7,364
Pre-tax operating income (loss)		2,605			(1,463	)		2,705			(781	)		3,066
Net realized gains		—			—			—			—			5,693
Interest and corporate expenses****		—			—			—			—			1,331
Earnings before income taxes		—			—			—			—			7,428
Income tax expense		—			—			—			—			1,350
Net earnings		—			—			—			—		$	6,078
Less: Net losses attributable to the non-controlling interest		—			—			—			—			(128	)
Net earnings attributable to ASIH, Ltd.		—			—			—			—		$	6,206
Loss ratio		58.8	%		78.4	%		62.8	%		NM			63.9	%
Expense ratio		46.3	%		40.4	%		30.4	%		NM			43.0	%
Combined ratio**		105.2	%		118.8	%		93.2	%		NM			106.9	%
	Three Months Ended September 30, 2011
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	39,782		$	18,952		$	14,512		$	—		$	73,246
Net written premiums		31,621			14,040			14,559			—			60,220
Net earned premiums		30,752			15,552			12,688			—			58,992
Fee & other income		(8	)		806			—			57			855
Losses & loss adjustment expenses		19,019			8,466			8,382			—			35,867
Acquisition & other underwriting expenses***		12,778			6,464			4,491			895			24,628
Underwriting profit (loss)		(1,053	)		1,428			(185	)		(838	)		(648	)
Net investment income		5,280			1,186			1,593			137			8,196
Pre-tax operating income (loss)		4,227			2,614			1,408			(701	)		7,548
Net realized gains		—			—			—			—			10
Interest and corporate expenses****		—			—			—			—			661
Earnings before income taxes		—			—			—			—			6,897
Income tax expense		—			—			—			—			1,169
Net earnings		—			—			—			—		$	5,728
Less: Net losses attributable to the non-controlling interest		—			—			—			—			(69	)
Net earnings attributable to ASIH, Ltd.		—			—			—			—		$	5,797
Loss ratio		61.8	%		54.4	%		66.1	%		*NM			60.8	%
Expense ratio		41.6	%		36.4	%		35.4	%		NM			40.3	%
Combined ratio**		103.4	%		90.8	%		101.5	%		NM			101.1	%

* 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 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 nine months ended September 30, 2012 and 2011, respectively (dollars in thousands):

	Nine Months Ended September 30, 2012
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	138,251		$	58,822		$	43,386		$	—		$	240,459
Net written premiums		109,472			39,494			43,385			—			192,351
Net earned premiums		100,400			42,796			43,328			—			186,524
Fee & other income		294			2,317			—			62			2,673
Losses & loss adjustment expenses		60,117			32,285			25,987			—			118,389
Acquisition & other underwriting expenses***		45,869			18,533			13,104			2,705			80,211
Underwriting profit (loss)		(5,292	)		(5,705	)		4,237			(2,643	)		(9,403	)
Net investment income		13,362			3,807			4,961			447			22,577
Pre-tax operating income (loss)		8,070			(1,898	)		9,198			(2,196	)		13,174
Net realized gains		—			—			—			—			5,732
Interest and corporate expenses****		—			—			—			—			4,220
Earnings before income taxes		—			—			—			—			14,686
Income tax expense		—			—			—			—			2,222
Net earnings		—			—			—			—		$	12,464
Less: Net earnings attributable to the non-controlling interest		—			—			—			—			35
Net earnings attributable to ASIH, Ltd.		—			—			—			—		$	12,429
Loss ratio		59.9	%		75.4	%		60.0	%		NM			63.5	%
Expense ratio		45.4	%		37.9	%		30.2	%		NM			41.6	%
Combined ratio**		105.3	%		113.3	%		90.2	%		NM			105.1	%
	Nine Months Ended September 30, 2011
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	119,706		$	64,753		$	46,012		$	(1	)	$	230,470
Net written premiums		95,636			46,086			44,925			(1	)		186,646
Net earned premiums		87,831			45,523			39,158			(1	)		172,511
Fee & other income		(8	)		2,436			—			101			2,529
Losses & loss adjustment expenses		54,657			30,310			33,030			—			117,997
Acquisition & other underwriting expenses***		37,411			18,428			11,605			2,548			69,992
Underwriting profit (loss)		(4,245	)		(779	)		(5,477	)		(2,448	)		(12,949	)
Net investment income		15,176			3,538			4,528			440			23,682
Pre-tax operating income (loss)		10,931			2,759			(949	)		(2,008	)		10,733
Net realized gains		—			—			—			—			11,311
Interest and corporate expenses****		—			—			—			—			3,252
Earnings before income taxes		—			—			—			—			18,792
Income tax expense		—			—			—			—			588
Net earnings		—			—			—			—		$	18,204
Less: Net earnings attributable to the non-controlling interest		—			—			—			—			454
Net earnings attributable to ASIH, Ltd.		—			—			—			—		$	17,750
Loss ratio		62.2	%		66.6	%		84.4	%		*NM			68.4	%
Expense ratio		42.6	%		35.1	%		29.6	%		NM			39.1	%
Combined ratio**		104.8	%		101.7	%		114.0	%		NM			107.5	%

* 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 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 September 30, 2012 and 2011 (dollars in thousands):

	United States		Bermuda		Total
September 30, 2012
Income tax expense	$	1,350	$	—	$	1,350
Net (loss) earnings attributable to American Safety Insurance Holdings, Ltd.	$	2,702	$	3,504	$	6,206
	United States		Bermuda		Total
September 30, 2011
Income tax expense	$	1,169	$	—	$	1,169
Net (loss) earnings attributable to American Safety Insurance Holdings, Ltd.	$	2,198	$	3,599	$	5,797
The following table provides financial data about the geographic locations for the nine months ended September 30, 2012 and 2011 (dollars in thousands):
	United States		Bermuda		Total
September 30, 2012
Income tax expense	$	2,222	$	—	$	2,222
Net (loss) earnings attributable to American Safety Insurance Holdings, Ltd.	$	3,968	$	8,461	$	12,429
Assets	$	680,844	$	687,744	$	1,368,588
Equity	$	138,576	$	210,673	$	349,249
	United States		Bermuda		Total
September 30, 2011
Income tax expense	$	588	$	—	$	588
Net (loss) earnings attributable to American Safety Insurance Holdings, Ltd.	$	799	$	16,951	$	17,750
Assets	$	664,526	$	612,873	$	1,277,399
Equity	$	111,130	$	228,819	$	339,949