Segment Information

6 Months Ended

Jun. 30, 2013

Segment Information [Abstract]

Segment Information

Note 3 – Segment Information

Our business is classified into insurance operations and other, with the insurance operations consisting of three divisions: E&S, 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 products provide 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. Fully funded policies provide our insureds the ability to fund their liability exposure via a self-insurance vehicle. Fully funded policies consist of 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 assumed 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 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 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, 2013 and 2012, respectively (dollars in thousands):

American Safety Insurance Holdings, Ltd. and Subsidiaries

Segment Data

(Unaudited) (Dollars in thousands)

	Three Months Ended June 30, 2013
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	52,063		$	16,156		$	15,641		$	—		$	83,860
Net written premiums		41,669			3,000			15,641			—			60,310
Net earned premiums		38,844			8,093			15,255			—			62,192
Fee & other income		(362	)		697			—			12			347
Losses & loss adjustment expenses		23,317			5,226			9,130			—			37,673
Acquisition & other underwriting expenses		17,275			3,528			4,623			770			26,196
Underwriting profit (loss)		(2,110	)		36			1,502			(758	)		(1,330	)
Net investment income		3,380			815			1,304			83			5,582
Pre-tax operating income (loss)		1,270			851			2,806			(675	)		4,252
Net realized gains														37,482
Interest and corporate expenses														1,013
Earnings before income taxes														40,721
Income tax expense														5,900
Net earnings													$	34,821
Less: Net earnings attributable to the non-controlling interest														10
Net earnings attributable to ASIH, Ltd.													$	34,811
Loss ratio		60.0	%		64.6	%		59.8	%		NM			60.6	%
Expense ratio		45.4	%		35.0	%		30.3	%		NM			41.6	%
Combined ratio (2)		105.4	%		99.6	%		90.1	%		(1) NM			102.2	%
	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 loss 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 (2)		105.3	%		129.3	%		86.6	%		(1) NM			107.1	%

(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.

The following table presents key financial data by segment for the six months ended June 30, 2013 and 2012, respectively (dollars in thousands):

American Safety Insurance Holdings, Ltd. and Subsidiaries

Segment Data

(Unaudited) (Dollars in thousands)

	Six Months Ended June 30, 2013
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	100,016		$	32,758		$	32,285		$	—		$	165,059
Net written premiums		79,215			12,879			32,285			—			124,379
Net earned premiums		75,385			19,255			29,476			—			124,116
Fee & other income		(30	)		1,468			—			149			1,587
Losses & loss adjustment expenses		45,344			12,619			17,673			—			75,636
Acquisition & other underwriting expenses		33,871			8,358			9,272			1,590			53,091
Underwriting profit (loss)		(3,860	)		(254	)		2,531			(1,441	)		(3,024	)
Net investment income		7,978			2,045			2,974			217			13,214
Pre-tax operating income (loss)		4,118			1,791			5,505			(1,224	)		10,190
Net realized gains														38,936
Interest and corporate expenses														2,148
Earnings before income taxes														46,978
Income tax expense														6,577
Net earnings													$	40,401
Less: Net earnings attributable to the non-controlling interest														98
Net earnings attributable to ASIH, Ltd.													$	40,303
Loss ratio		60.1	%		65.5	%		60.0	%		NM			60.9	%
Expense ratio		45.0	%		35.8	%		31.5	%		NM			41.5	%
Combined ratio (2)		105.1	%		101.3	%		91.5	%		(1) NM			102.4	%
	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 (2)		105.3	%		110.9	%		88.8	%		(1) NM			104.2	%

(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.

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, 2013 and 2012 (dollars in thousands):

	United States			Bermuda		Total
June 30, 2013
Income tax expense	$	5,900		$	—	$	5,900
Net earnings attributable to American Safety Insurance Holdings, Ltd.	$	11,483		$	23,328	$	34,811
	United States			Bermuda		Total
June 30, 2012
Income tax benefit	$	(234	)	$	—	$	(234	)
Net earnings (loss) attributable to American Safety Insurance Holdings, Ltd.	$	(273	)	$	2,440	$	2,167

The following table provides financial data about the geographic locations for the six months ended June 30, 2013 and 2012 (dollars in thousands):

	United States		Bermuda		Total
June 30, 2013
Income tax expense	$	6,577	$	—	$	6,577
Net earnings attributable to American Safety Insurance Holdings, Ltd.	$	12,426	$	27,877	$	40,303
Assets	$	662,631	$	688,531	$	1,351,162
Equity	$	132,400	$	201,663	$	334,063
	United States		Bermuda		Total
June 30, 2012
Income tax expense	$	872	$	—	$	872
Net 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