Segment Information

12 Months Ended

Dec. 31, 2012

Segment Information [Abstract]

Segment Information

(11) Segment Information

Our business is classified into insurance operations and other, with the insurance operations consisting of three divisions: E&S lines, ART and Reinsurance. E&S includes eight products: environmental, construction, products liability, excess, property, surety, healthcare, and professional liability. ART includes two business lines: specialty programs and fully funded. In our Assumed Re segment, the Company assumes specialty property and casualty business from unaffiliated insurers and reinsurers.

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. Construction provides general liability insurance for residential and commercial contractors. Products liability provides general liability and product liability coverages for smaller manufacturers and 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, with a focus on construction risks. Our property coverage 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 coverage for primary and following-form excess directors and officers liability for public, private and non-profit entities; standalone employment practices liability insurance (EPLI); and fiduciary liability. Primary and excess coverage for miscellaneous professional liability risks such as lawyers and insurance agents.

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, small auto dealers, real estate brokers, restaurant and tavern owners and bail bondsmen. Fully funded policies provide our insureds the ability to fund their liability exposure via a self-insurance vehicle. We write fully funded general and professional liability for businesses operating primarily in the healthcare and construction industries.

Our Reinsurance division focuses on treaty reinsurance for captives, Risk Retention Groups and specialty insurance companies. Lines of business written include medical malpractice, general liability across multiple sectors, commercial automobile liability, professional liability, workers compensation and one property catastrophe treaty that provides a finite limit over the exposure period. Business is sourced from a combination of London, U.S. and Bermuda based reinsurance brokers. The portfolio is a spread of smaller treaties across multiple lines of business written on both an excess of loss and quota share basis.

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 and 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 by net earned premiums, incurred losses and loss adjustment expenses and acquisition expenses. Assets are not allocated to the reportable insurance divisions.

The following table presents key financial data by segment for years ended December 31, 2012, 2011 and 2010 (dollars in thousands):

	Twelve Months Ended December 31, 2012
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	185,948		$	75,590		$	57,706		$	0		$	319,244
Net written premiums		148,297			49,357			57,706			—			255,360
Net earned premiums		138,464			56,466			58,936			—			253,866
Fee & other income		138			3,131			17			79			3,365
Losses & loss adjustment expenses		82,470			47,396			42,063			(231	)		171,698
Acquisition & other underwriting expenses(3)		61,269			23,508			17,705			3,628			106,110
Underwriting loss		(5,137	)		(11,307	)		(815	)		(3,318	)		(20,577	)
Net investment income		17,615			5,173			6,849			561			30,198
Pre-tax operating income (loss)		12,478			(6,134	)		6,034			(2,757	)		9,621
Net realized gains														9,693
Interest and corporate expenses(4)														5,365
Earnings before income taxes														13,949
Income tax benefit														841
Net earnings													$	13,108
Less: Net earnings attributable to the non-controlling interest														1,269
Net earnings attributable to ASIH, Ltd.													$	11,839
Loss ratio		59.6	%		83.9	%		71.4	%		NM			67.6	%
Expense ratio		44.1	%		36.1	%		30.0	%		NM			40.5	%
Combined ratio(2)		103.7	%		120.0	%		101.4	%		(1)NM			108.1	%

	Twelve Months Ended December 31, 2011
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	155,534		$	83,820		$	59,192		$	(1	)	$	298,545
Net written premiums		125,107			57,329			58,183			(1	)		240,618
Net earned premiums		119,225			60,667			52,988			(1	)		232,879
Fee & other income (loss)		(4	)		3,203			—			157			3,356
Losses & loss adjustment expenses		60,532			57,130			49,705			2,000			169,367
Acquisition & other underwriting expenses(3)		50,956			24,988			14,785			3,581			94,310
Underwriting profit (loss)		7,733			(18,248	)		(11,502	)		(5,425	)		(27,442	)
Net investment income		18,572			5,681			6,358			727			31,338
Pre-tax operating income (loss)		26,305			(12,567	)		(5,144	)		(4,698	)		3,896
Net realized gains														10,966
Interest and corporate expenses(4)														4,132
Earnings before income taxes														10,730
Income tax benefit														(3,394	)
Net earnings													$	14,124
Less: Net earnings attributable to the non-controlling interest														3,282
Net earnings attributable to ASIH, Ltd.													$	10,842
Loss ratio		50.8	%		94.2	%		93.8	%		NM			72.7	%
Expense ratio		42.7	%		35.9	%		27.9	%		NM			39.1	%
Combined ratio(2)		93.5	%		130.1	%		121.7	%		(1)NM			111.8	%

	Twelve Months Ended December 31, 2010
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	138,166		$	88,784		$	50,618		$	(7	)	$	277,561
Net written premiums		114,223			62,366			46,658			(7	)		223,240
Net earned premiums		102,907			53,752			44,081			(7	)		200,733
Fee & other income (loss)		501			3,615			269			(197	)		4,188
Losses & loss adjustment expenses		58,119			34,663			28,880			(1,367	)		120,295
Acquisition & other underwriting expenses(3)		47,621			22,068			12,810			2,703			85,202
Underwriting profit (loss)		(2,332	)		636			2,660			(1,540	)		(576	)
Net investment income		21,331			4,891			5,231			685			32,138
Pre-tax operating income (loss)		18,999			5,527			7,891			(855	)		31,562
Net realized gains														2,251
Interest and corporate expenses(4)														5,944
Earnings before income taxes														27,869
Income tax benefit														(2,082	)
Net earnings													$	29,951
Less: Net earnings attributable to the non-controlling interest														(557	)
Net earnings attributable to ASIH, Ltd.													$	30,508
Loss ratio		56.5	%		64.5	%		65.5	%		NM			59.9	%
Expense ratio		45.6	%		34.3	%		28.4	%		NM			40.1	%
Combined ratio(2)		102.1	%		98.8	%		93.9	%		(1)NM			100.0	%

(1) NM = Ratio is not meaningful

(2) 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.

(3) Reclassifications between divisions and segments were made to allocate indirect corporate overhead costs.

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

The Company does not allocate assets and equity between the Insurance and Other business segments and considers all assets and equity to be attributable to the Insurance segment.

Additionally, the Company conducts business in the following geographic locations: United States and Bermuda. Significant differences exist in the regulatory environment in each country. Those differences include laws regarding the measurable information about the insurance operations. Geographic locations for the years ended December 31, 2012, December 31, 2011 and December 31, 2010 (dollars in thousands):

December 31, 2012	United States		Bermuda		Total
Income tax	$	841	$	—	$	841
Net earnings attributable to American Safety Insurance Holdings, Ltd.	$	60	$	11,779	$	11,839
Assets	$	719,235	$	653,896	$	1,373,131
Equity	$	140,011	$	205,037	$	345,048

December 31, 2011	United States			Bermuda		Total
Income tax	$	(3,394	)	$	—	$	(3,394	)
Net earnings (loss) attributable to American Safety Insurance Holdings, Ltd.	$	(7,029	)	$	17,871	$	10,842
Assets	$	671,619		$	614,913	$	1,286,532
Equity	$	106,689		$	227,991	$	334,680

December 31, 2010	United States			Bermuda		Total
Income tax	$	(2,082	)	$	—	$	(2,082	)
Net earnings attributable to American Safety Insurance Holdings, Ltd.	$	918		$	29,590	$	30,508
Assets	$	652,109		$	569,146	$	1,221,255
Equity	$	99,373		$	219,162	$	318,535

The income tax expense totaled $0.8 million for the year ended December 31, 2012 compared to a tax benefit of $3.4 million for the year ended December 31, 2011. During 2010 and 2011, the RRG was in an NOL position and carrying a valuation allowance and therefore did not provide income tax expense (benefit). During 2012, the RRG generated income before taxes of $1.9 million and tax expense of $0.6 million. The $0.6 million of tax expense for the RRG is included in total tax expense of $0.8 million.